[Congressional Record Volume 151, Number 72 (Thursday, May 26, 2005)]
[Senate]
[Pages S6056-S6057]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. WYDEN (for himself and Mr. Sununu):
  S. 1128. A bill to amend title XIX of the Social Security Act to 
provide for increased rebates under the medicaid program for 
prescription drugs that are directly advertised to consumers, to 
require other Federal programs purchasing or reimbursing for such drugs 
to establish payment and reimbursement mechanisms that reduce the costs 
of those drugs, and for other purposes; to the Committee on Finance.
  Mr. WYDEN. Madam President, the cost of medicine is a matter of 
concern to every Senator. Today, Senator Sununu and I have introduced 
legislation to take a fresh approach to holding down the cost of 
medicines in our country. Under our bipartisan legislation, the Federal 
Government would pay less for pharmaceuticals that are advertise when 
the Federal Government buys those medicines for Medicaid, the Veterans' 
Administration, the Department of Defense, and the Public Health 
Service.
  One can barely turn on the television or open a magazine these days 
without getting the hard sale on a hot new medicine. There is no doubt 
that medical science is making miracles for our citizens who need help 
with their health. For that, we are, of course, grateful. But the 
advent of advertising for prescription drugs presents pitfalls as well, 
not just for patients but for every American taxpayer.
  Senator Sununu and I introduced our legislation today because as the 
marketing gets savvier, the Federal Government needs to get smarter and 
contain costs wherever possible for these popular and expensive drugs. 
The fresh approach that Senator Sununu and I unveil today will amp up 
the Government's purchasing power on prescription drugs that are 
advertised directly to consumers. The Pharmaceutical Advertising and 
Prudent Purchasing Act will reduce drug costs for the beneficiaries of 
Medicaid and other Federal programs. It will ease the burden on States 
struggling to stretch their health care dollars through Medicaid, and 
it will lower the overall costs for taxpayers footing the bill for 
these advertised drugs.
  When a drug company figures the price of a pill, it passes along the 
advertising costs to consumers. Right now, Medicare and Medicaid pay 
that cost like any other consumer. But it is time to take the 
advertising costs out of the equation for taxpayer funded programs. The 
Federal Government, of course, gives drug companies a tax break for 
advertising which, of course, every other American company gets for its 
business expenses. There is no need for a double subsidy. There is a 
need for more prudent purchasing of prescription drugs by the Federal 
Government. If that is going to happen, the changes in the 
pharmaceutical market that have been caused by the explosion of 
advertising cannot be ignored any longer.
  I do not have to tell our colleagues that drug advertising in the 
United States is an immense and growing industry. The Wall Street 
Journal reported last week that the pharmaceutical industry spent 
nearly $4.5 billion on advertising to consumers. The penetration of 
this advertising may be more than most people realize. A recent Kaiser 
Family Foundation poll found that 90 percent of Americans had seen or 
heard an advertisement for prescription drugs. Today, more and more 
Americans can go to their doctor and ask to have a medication they have 
seen advertised on TV, in a magazine, on the radio or on the Internet. 
Of course, that is what is happening.
  There is a proven direct connection between the advertising of drugs 
and a big uptick in the rate of prescriptions written for them. Take a 
look at the 10 most advertised drugs in the United States. That is 
2003, and I would guess that few Americans would say they have not 
heard of any of these drugs.
  On each of these drugs, at least $100 million was spent in 2003 alone 
on direct consumer advertising. The advertising works. A study 
published in the April issue of the Journal of the American Medical 
Association demonstrates the link. Researchers sent actors to doctors' 
offices to complain of mild depression. Those who mentioned seeing an 
ad were five times more likely to get a prescription for an 
antidepressant as those who simply described their supposed symptoms 
without talking about a drug ad they had seen. It is no wonder the 
heavily advertised drugs make up most of the top 10 medicines 
prescribed under Federal health programs like Medicare, Medicaid, and 
others. Take a look.

  These are the 10 drugs on which Medicare spends the most total money 
for outpatient care. Nine are advised directly to consumers.
  Here are the 10 drugs on which Medicaid spends the most money. Four 
of the ten are advised directly to consumers. The next 4 drugs, Nos. 11 
through 14, are advertised as well. It is the view of Senator Sununu 
and I that the Federal Government is one consumer that does not need to 
receive advertising from the drug companies.
  The Federal Government is buying medicine for a lot of people with a 
limited pool of funds. It is vital to get a handle now on the 
connection between advertising and increased sales and to insist on 
more prudent purchasing.
  Our legislation does just that. It makes the Government a more 
prudent purchaser in a straightforward way. It will require Medicaid 
and other vital programs under Health and Human Services and the 
Veterans' Administration to get a discount that cuts out the 
advertising costs figured in each pill. In Medicaid, this would be done 
by adjustments in the Medicaid rebate program. That is an existing 
program that requires a pricing agreement between drug manufacturers 
and the Federal Government for any drug to be sold through the Medicaid 
program.
  The Health and Human Services Secretary and the VA Secretary will 
also

[[Page S6057]]

be able to negotiate reduced prices for other Federal programs such as 
the Public Health Service, programs administered by the Indian Health 
Service, the Department of Veterans Affairs, the Department of Defense 
and the Defense Health Program.
  This is smart and effective spending. It ends the spending of 
taxpayer dollars to fund advertising that has already received a tax 
break. It is a commonsense step, the kind of common sense that is all 
too uncommon when the Federal Government buys drugs.
  Our legislation will address another issue that speaks both to the 
taxpayers' interests and the health of patients in these programs. When 
advertised drugs are purchased, it is not enough to make sure the price 
is right, although that is important. It is vital the drug is right for 
the patient's particular problem. Taxpayer dollars should buy drugs 
that will work best for patients by a doctor's best judgment. Just 
because a patient recognizes a drug's name enough to request it from 
their provider does not mean it is the best medicine.
  More and more drug companies are treating doctors as a middleman they 
wish to skip. They make a lot more money if patients, without medical 
degrees, are encouraged to start writing their own prescriptions, 
whether the drug is the right one or not. Medicare, Medicaid, and other 
Federal programs have a charge to keep for their patients and a trust 
to maintain with American taxpayers. They should not be exploited 
financially by the pharmaceutical ``flavor of the month.''
  I close by expressing my thanks to the Senator from New Hampshire. 
This is a bipartisan approach that is going to hold down the cost of 
medicine for taxpayers in our country. It will be a benefit to 
beneficiaries certainly at a time when the Medicaid Commission is 
trying to find responsible savings. We ensure that we take the time to 
study how this approach would work for other programs such as Medicare. 
And because I see my friend in the Chamber, I will wrap up simply by 
saying that it is time to take out a sharp pencil and eliminate the 
hidden costs for taxpayers from advertised drugs.
  I yield the floor.
  The PRESIDING OFFICER. The Senator from New Hampshire.
  Mr. SUNUNU. Madam President, I am pleased to join Senator Wyden in 
the introduction of this legislation, which is a good-faith effort to 
try to find that fresh approach Senator Wyden talked about, a fresh 
approach to deal with costs in health care, specifically in those areas 
where the Federal Government is directly purchasing pharmaceuticals: in 
the VA, where we have a very large direct purchase program that exists 
today, and within Medicaid, where both the Federal Government and the 
States are directly involved in purchasing and negotiating the pricing 
of drugs.
  We are focusing on direct-to-consumer advertising. This is an area 
where activity and cost have exploded over the last 6 or 7 years. Since 
1997, when the Federal Government changed the regulations associated 
with direct-to-consumer advertising, we have seen advertising outlays 
for pharmaceuticals go from a little bit over $1 billion to nearly $5 
billion per year this year. Those costs, as any costs would be, are 
passed on to consumers. In the case of these programs where the Federal 
Government is purchasing the pharmaceuticals in the VA and in Medicaid, 
that means that the cost, the impact, is disproportionately felt by the 
taxpayer.
  This is an effort to try to find a way to reduce those costs, to give 
the Federal Government the power to make a distinction, as they 
negotiate prices--to make a distinction between those drugs that are 
advertised directly to consumers or marketed directly to consumers and 
those that are not, and to provide discounts to those companies or 
those drugs that avoid the additional costs of advertising.
  This advertising, as I say, is expensive. The cost is passed on to 
taxpayers in these particular programs. I think there are also a lot of 
questions about the value that a flood of advertising might provide.
  We have all been inundated by different types of advertisement, on TV 
or in magazines. It is costly, as I mentioned, but it also carries with 
it some risk of overutilization; of, in some cases, encouraging or 
leading consumers to believe that they need or would benefit by a 
particular medicine when it is not necessarily the best approach for 
them.
  In some cases it is clear this advertising has been used to drive 
consumers away from lower priced generic drugs. I think this is one of 
the most problematic areas, and that has been seen and discussed at 
some length in the States, in their Medicaid programs.
  This legislation presents an opportunity to get our hands around the 
cost issue, to fund some important studies, to take a closer look at 
questions of overutilization and the substitution I described. It 
represents a good start, I think, opening the debate with this 
discussion about dealing directly with health care costs in areas of 
the Federal Government as the principal purchaser.
  There may be other options. In fact, Senator Wyden and I talked about 
a few other approaches that are not included in this legislation. I 
think I can speak for the Senator from Oregon when I say we look 
forward to talking to our colleagues about other ideas that might be 
out there. We look forward to sharing ideas and information with 
producers themselves who, I hope, are willing to look at ways to help 
save the consumers money, help save taxpayers money, and help deal with 
direct-to-consumer advertising in a more responsible way.
  We are going to do a Medicaid bill this year in the Senate. While we 
also deal with some issues at HHS and the VA in this bill, certainly 
the costs associated with Medicaid and our recommendations with regard 
to Medicaid are a central part of the bill. I will work with Senator 
Wyden and any of my interested colleagues to try to include and capture 
some of these ideas in Medicaid legislation this year.
  It is a great opportunity to look at the issue of health costs and 
drug costs in a fresh way, in a different way. I very much appreciate 
the work Senator Wyden has done in helping to craft this legislation 
and his willingness to lend his strong support, as a longstanding and 
more senior Member than I, as a member of the Senate Finance Committee, 
and as a Member of the Senate on the other side of the aisle.

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