[Congressional Record Volume 151, Number 45 (Friday, April 15, 2005)]
[Senate]
[Pages S3747-S3748]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. SPECTER:
  S. 813. A bill to amend part D of title XVIII of the Social Security 
Act to authorize the Secretary of Health and Human Services to 
negotiate for lower prices for medicare prescription drugs; to the 
Committee on Finance.
  Mr. SPECTER. Mr. President, I have sought recognition today to 
introduce the Prescription Drug and Health Improvement Act of 2005 to 
reduce the high prices of prescription drugs for Medicare 
beneficiaries. I introduced a similar version of this bill in the 108th 
Congress, S. 2766. To increase the likelihood that this bill may become 
law this bill does not include a costly provision which would have 
closed the gap in prescription drug costs for Medicare beneficiaries.
  Americans, specifically senior citizens, pay the highest prices in 
the world for brand-name prescription drugs. With 45 million uninsured 
Americans and many more senior citizens without an adequate 
prescription drug benefit, filling a doctor's prescription is 
unaffordable for many people in this country. The United States has the 
greatest health care system in the world; however, too many seniors are 
forced to make difficult choices between life-sustaining prescription 
drugs and daily necessities.
  The Centers for Medicare and Medicaid Services estimate that in 2004 
per capita spending on prescription drugs rose approximately 12 
percent, with a similar rate of growth expected for this year. Much of 
the increase in drug spending is due to higher utilization and the 
shift from older, lower cost drugs to newer, higher cost drugs. 
However, rapidly increasing drug prices are a critical component.
  High drug prices, combined with the surging older population, are 
also taking a toll on State budgets and private sector health insurance 
benefits. Medicaid spending on prescription drugs increased at an 
average annual rate of nearly 19 percent between 1998 and 2002. Until 
lower priced drugs are available, pressures will continue to squeeze 
public programs at both the State and Federal level.
  To address these problems, my legislation would reduce the high 
prices of prescription drugs to seniors by repealing the prohibition 
against interference by the Secretary of HHS with negotiations between 
drug manufacturers, pharmacies, and prescription drug plan sponsors and 
instead authorize the Secretary to negotiate contracts with 
manufacturers of covered prescription drugs. It will allow the 
Secretary of HHS to use Medicare's large beneficiary population to 
leverage bargaining power to obtain lower prescription drug prices for 
Medicare beneficiaries.
  Price negotiations between the Secretary of HHS and prescription drug 
manufacturers would be analogous to the ability of the Secretary of 
Veterans Affairs to negotiate prescription drug prices with 
manufacturers. This bargaining power enables veterans to receive 
prescription drugs at a significant cost savings. According to the 
National Association of Chain Drug Stores, the average ``cash cost'' of 
a prescription in 2001 was $40.22. The average cost in the Veterans 
Affairs (VA) health care system in fiscal year 2001 was $22.87.
  In the 108th Congress, in my capacity as chairman of the Veterans' 
Affairs Committee, I introduced the Veterans Prescription Drugs 
Assistance Act, S. 1153, which was reported out of committee, but was 
not considered before the full Senate. In the 109th Congress, I have 
again introduced the Veterans Prescription Drugs Assistance Act, S. 
614.
  This legislation will broaden the ability of veterans to access the 
Veterans Affairs' Prescription Drug Program. Under my bill, all 
Medicare-eligible veterans will be able to purchase medications at a 
tremendous price reduction through the Veterans Affairs' Prescription 
Drug Program. In many cases, this will save veterans who are Medicare 
beneficiaries up to 50 percent on the cost of prescribed medications, a 
significant savings for veterans. Similar savings may be available to 
America's seniors from the savings achieved using the HHS bargaining 
power, like the Veterans Affairs bargaining power for the benefit of 
veterans. These savings may provide America's seniors with fiscal 
relief from the increasing costs of prescription drugs.
  I believe this bill can provide desperately needed access to 
inexpensive, effective prescription drugs for America's seniors. The 
time has come for concerted action in this arena. I urge my colleagues 
to move this legislation forward promptly.
  I ask unanimous consent that the text of the bill be printed in the 
Record.
  There being no objection, the bill was ordered to be printed in the 
Record, as follows:

                                 S. 813

       Be it enacted by the Senate and House of Representatives of 
     the United States of America in Congress assembled,

     SECTION 1. NEGOTIATING FAIR PRICES FOR MEDICARE PRESCRIPTION 
                   DRUGS.

       (a) In General.--Section 1860D-11 of the Social Security 
     Act (42 U.S.C. 1395w-111) is amended by striking subsection 
     (i) (relating to noninterference) and by inserting the 
     following:
       ``(i) Authority To Negotiate Prices With Manufacturers.--In 
     order to ensure that beneficiaries enrolled under 
     prescription drug plans and MA-PD plans pay the lowest 
     possible price, the Secretary shall have authority similar to 
     that of other Federal entities that purchase prescription 
     drugs in bulk to negotiate contracts with manufacturers of 
     covered part D drugs, consistent with the requirements and in 
     furtherance of the goals of providing quality care and 
     containing costs under this part.''.
       (b) Effective Date.--The amendment made by this section 
     shall take effect as if included in the enactment of section 
     101 of the Medicare Prescription Drug, Improvement, and 
     Modernization Act of 2003 (Public Law 108-173; 117 Stat. 
     2066).
       (c) HHS Reports Comparing Negotiated Prescription Drug 
     Prices and Retail Prescription Drug Prices.--Beginning in 
     2007, the Secretary of Health and Human Services shall 
     regularly, but in no case less often than quarterly, submit 
     to Congress a report that compares the prices for covered 
     part D drugs (as defined in section 1860D-2(e) of the Social 
     Security Act (42 U.S.C. 1395w-102(e)) negotiated by the 
     Secretary pursuant to section 1860D-11(i) of such Act (42 
     U.S.C. 1395w-111(i)), as amended by subsection (a), with the 
     average price a retail pharmacy would charge an individual 
     who does not have health insurance coverage for purchasing 
     the same strength, quantity, and dosage form of such covered 
     part D drug.

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