[Congressional Record Volume 153, Number 5 (Wednesday, January 10, 2007)]
[Senate]
[Pages S389-S392]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Ms. SNOWE (for herself and Mr. Wyden):
  S. 250. A bill to reduce the costs of prescription drugs for Medicare 
beneficiaries and to guarantee access to comprehensive prescription 
drug coverage under part D of the Medicare program, and for other 
purposes; to the Committee on Finance.
  Mrs. SNOWE. Mr. President, today I join with my colleague and friend 
Senator Ron Wyden, to introduce legislation which we have sponsored 
since 2004 to ensure the sound fiscal management of our Medicare 
prescription drug benefit. Together we both supported the enactment of 
the Medicare Modernization Act in 2003 (MMA), and we remain committed 
to seeing our seniors able to rely on a high quality, affordable 
benefit.
  Today millions of American seniors are at last receiving assistance 
with the high cost of prescription drugs. For so many, that will make a 
difference between choosing whether to take needed medications and the 
other necessities of life. We have indeed come a very long way. We look 
forward to realizing all the incredible benefits of this coverage as we 
see the results of more affordable access to prescription drugs--better 
health for our seniors, and substantial health care savings.
  This new benefit marks a milestone for Medicare. And that is an apt 
analogy because today Part D represents a landmark, not a destination. 
There is no doubt that this benefit is not all it could or should be, 
but it is a giant step forward in helping millions of seniors to afford 
medications which are so essential to health care today. For modem 
drugs not only treat disease, but actually can prevent its development.
  While we have seen this landmark progress, it has not come without 
difficulty. Yet today seniors are saving substantially on their 
prescription drugs and we see reports that four of five enrollees are 
pleased with the assistance they are receiving.
  It is undoubtedly the help they are getting which has resulted in 
such satisfaction. Because the confusion, the complexity, and often a 
lack of oversight on the plans has created some serious consumer issues 
which we will continue to address. But today the first issue before us 
is the cost of prescription drugs in the plans.
  Over 3 years ago the Congress was given a price tag for this benefit 
that was simply unrealistic. Recognizing an absence of cost management, 
I joined with Senator Wyden to address the escalating cost projections 
we were seeing. Today, some say all is well, as we hear that the 
estimated cost of the benefit declined somewhat from a peak estimate of 
about $720 billion over 10 years. Yet I must note that some of the 
reasons for that reduction are too quickly glossed over. Enrollment is 
lower than it was estimated to be as more Americans chose to stay in 
private coverage. We also saw this past year that we failed to reach 
many of those low income seniors who most needed help. Today as seniors 
enter their first full year of coverage, we will see a more realistic 
year--particularly in terms of more beneficiaries facing the donut 
hole.
  We have heard estimates that the average senior is saving an average 
of $1,000 per year, but we should ask how that savings is being 
achieved. The discovery by many seniors--when they reached the donut 
hole--that their cost of medications was the same or even higher than 
what they paid prior to enrolling in Part D--that should be a red flag 
that we may not be seeing the purchasing power of seniors harnessed for 
the savings they deserve.

  Back in 2005 the Medicare Actuary had estimated that drug plans would 
negotiate a discount of about 15 percent off undiscounted retail 
prices. So last year we were curious--just how were they doing in 
Maine? My staff compared prices for the top 24 medications used by 
seniors and found that our plan prices for those medications averaged 
less than 12 percent below the price any senior could already obtain, 
by simply walking into a retail pharmacy. That is not even using 
membership or association discounts, or using an on-line pharmacy like 
Drugstore.com--where seniors could obtain better prices. That result--
finding a single senior could do better than a plan--is certainly 
disappointing.
  That points to a system that is working well in terms of subsidy, but 
certainly needs to improve in terms of negotiating substantial 
discounts. But we are told that the cost of the benefit is lower, and 
that premiums were stable this year. Yet if you ask what stand-alone 
drug coverage actually costs this

[[Page S390]]

year, CMS will tell you that those premiums have gone up about 10 
percent. Not unlike increases in the deductible, the size of the donut 
hole, and out-of-pocket expense. As Senator Wyden and I learned from 
GAO reports we have received, the prices of drugs used by seniors have 
inexorably increased since 2000 at two to three times the inflation 
rate.
  So the costs of this program will remain a concern. Most of us 
envisioned that not only would the taxpayer contribute to helping 
seniors with drug expenses, but we would realize substantial savings 
from lower prices on prescription drugs.
  That is why Senator Wyden and I proposed to achieve some balance in 
the public private partnership which is Part D today, and it is why 
today we are again introducing the Medicare Enhancements for Needed 
Drugs Act--the MEND Act. In this drug benefit the HHS Secretary should 
have a proper role in negotiation. Negotiation, not price setting.
  It is clear that what the Congress intended to do was to create a 
true public-private partnership, utilizing competitive forces to bring 
more choices to seniors--in drugs, benefit plan designs, pharmacies, 
and more. So seniors can vote with their pocketbooks, and we can see 
their choices in the market influence the kind of benefit they receive. 
That is not the same as a system in which the government sets prices, 
and that is why our legislation specifically bans such a practice. 
Under our legislation, the Federal Government cannot set either prices 
or formularies--that is absolutely clear.
  What I believe most of us desire to do is give the present system the 
best tools to achieve success. That means that the Secretary must have 
an oversight role. He should be examining performance and pointing out 
where plans need to improve. But today if he noticed a product on which 
poor discounts were being achieved, and he attempted to discuss that 
publicly, he would likely be accused of interference. Further, if a 
plan reported intransigence in trying to negotiate with a manufacturer, 
the Secretary could not respond. That makes no sense. It is a 
disservice taxpayers, beneficiaries, and the plans as well.
  Our legislation rescinds the ``non-interference'' clause and directs 
the Secretary to negotiate for any necessary fallback plan, and in 
addition, to respond to requests for help from plans which cannot 
obtain reasonable negotiation.
  We have also added two additional areas in which the Secretary must 
negotiate. First, as the CBO has stated that negotiation of single-
source drugs could yield savings, our legislation directs the Secretary 
to engage in negotiation regarding those unique products. We also know 
that some drugs exist because the taxpayer provides substantial support 
to see them developed. The public deserves a fair price on those 
products it made possible, so the Secretary should weigh in those 
cases.
  Finally, our bill protects beneficiaries by assuring that seniors 
will have access to a comprehensive coverage option--at least one plan 
in each region must provide the option to avoid the coverage gap, 
dreaded ``donut hole''. Today seniors in 11 States simply cannot obtain 
such coverage and they must at least have the option of protecting 
themselves.
  These are reasonable ways to help plans succeed, and to protect both 
beneficiaries and taxpayers within the public-private partnership on 
which this benefit rests.
  I call on my colleagues to join us in this effort, so that we may 
improve the partnership between private enterprise and the Federal 
Government in serving our seniors.
  I ask consent that the bill's text be printed in the Congressional 
Record.
  There being no objection, the text of the bill was ordered to be 
printed in the Record, as follows:

                                 S. 250

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

     SECTION 1. SHORT TITLE.

       This Act may be cited as the ``Medicare Enhancements for 
     Needed Drugs Act of 2007''.

     SEC. 2. GAO STUDIES AND REPORTS ON PRICES OF PRESCRIPTION 
                   DRUGS.

       (a) Review and Reports on Retail Prices of Prescription 
     Drugs.--
       (1) Initial review.--The Comptroller General of the United 
     States shall conduct a review of the retail cost of 
     prescription drugs in the United States during 2000 through 
     2006, with an emphasis on the prescription drugs most 
     utilized for individuals age 65 or older.
       (2) Subsequent review.--After conducting the review under 
     paragraph (1), the Comptroller General shall continuously 
     review the retail cost of such drugs through December 31, 
     2010, to determine the changes in such costs.
       (3) Reports.--
       (A) Initial review.--Not later than 90 days after the date 
     of enactment of this Act, the Comptroller General shall 
     submit to Congress a report on the initial review conducted 
     under paragraph (1).
       (B) Subsequent review.--Not later than April 1 of 2008, 
     2009, 2010, and 2011, the Comptroller General shall submit to 
     Congress a report on the subsequent review conducted under 
     paragraph (2).
       (b) Annual GAO Study and Report on Retail and Acquisition 
     Prices of Certain Prescription Drugs.--
       (1) Ongoing study.--The Comptroller General of the United 
     States shall conduct an ongoing study that compares the 
     average retail cost in the United States for each of the 20 
     most utilized prescription drugs for individuals age 65 or 
     older with--
       (A) the average price at which private health plans acquire 
     each such drug;
       (B) the average price at which the Department of Defense 
     under the Defense Health Program acquires each such drug;
       (C) the average price at which the Department of Veterans 
     Affairs under the laws administered by the Secretary of 
     Veterans Affairs acquires each such drug; and
       (D) the average negotiated price for each such drug that 
     eligible beneficiaries enrolled in a prescription drug plan 
     under part D of title XVIII of the Social Security Act that 
     provides only basic prescription drug coverage have access to 
     under such plans.
       (2) Annual report.--Not later than October 1, 2007, and 
     annually thereafter, the Comptroller General shall submit to 
     Congress a report on the study conducted under paragraph (1), 
     together with such recommendations as the Comptroller General 
     determines appropriate.

     SEC. 3. INCLUSION OF AVERAGE AGGREGATE BENEFICIARY COSTS AND 
                   SAVINGS IN COMPARATIVE INFORMATION FOR BASIC 
                   MEDICARE PRESCRIPTION DRUG PLANS.

       Section 1860D-1(c)(3) of the Social Security Act (42 U.S.C. 
     1395w-101(c)(3)) is amended--
       (1) in subparagraph (A)--
       (A) in the matter preceding clause (i), by striking 
     ``subparagraph (B)'' and inserting ``subparagraphs (B) and 
     (C)''; and
       (B) by adding at the end the following new clause:
       ``(vi) Average aggregate beneficiary costs and savings.--
     With respect to plan years beginning on or after January 1, 
     2008, the average aggregate costs, including deductibles and 
     other cost-sharing, that a beneficiary will incur for covered 
     part D drugs in the year under the plan compared to the 
     average aggregate costs that an eligible beneficiary with no 
     prescription drug coverage will incur for covered part D 
     drugs in the year.''; and
       (2) by adding at the end the following new subparagraph:
       ``(C) Average aggregate beneficiary costs and savings 
     information only for basic prescription drug plans.--The 
     Secretary shall not provide comparative information under 
     subparagraph (A)(vi) with respect to--
       ``(i) a prescription drug plan that provides supplemental 
     prescription drug coverage; or
       ``(ii) a Medicare Advantage plan.''.

     SEC. 4. 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.--
       ``(1) In general.--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.
       ``(2) Mandatory responsibilities.--The Secretary shall be 
     required to--
       ``(A) negotiate contracts with manufacturers of covered 
     part D drugs when the drug is a single source drug without a 
     therapeutic equivalent;
       ``(B) participate in the negotiation of contracts with 
     respect to any covered part D drug upon the request of an 
     approved prescription drug plan or MA-PD plan;
       ``(C) participate in the negotiation of contracts for any 
     covered part D drugs for which there is a substantial amount 
     of Federal research funding in the development of the drug; 
     and
       ``(D) negotiate contracts with manufacturers of covered 
     part D drugs for each standard fallback prescription drug 
     plan under subsection (g) and each comprehensive fallback 
     prescription drug plan under subsection (k).
       ``(3) Rule of construction.--Nothing in paragraph (2) shall 
     be construed to limit the

[[Page S391]]

     authority of the Secretary under paragraph (1) to the 
     mandatory responsibilities under paragraph (2).
       ``(4) No particular formulary or price structure.--In order 
     to promote competition under this part and in carrying out 
     this part, the Secretary may not require a particular 
     formulary or institute a price structure for the 
     reimbursement of covered part D drugs.
       ``(5) Use of savings.--The savings to the Medicare 
     Prescription Drug Account through the use of the authority 
     provided under this subsection (including the mandatory 
     responsibilities under paragraph (2)) shall be used to 
     strengthen the program under this part and to reduce the 
     Federal deficit.''.
       (b) Effective Date.--The amendment made by this section 
     shall take effect on the date of enactment of this Act.

     SEC. 5. ACCESS TO A COMPREHENSIVE MEDICARE PRESCRIPTION DRUG 
                   PLAN.

       (a) Requirement for Access.--Section 1860D-3(a) of the 
     Social Security Act (42 U.S.C. 1395w-103(a)) is amended--
       (1) in paragraph (1)--
       (A) by striking ``Choice of at least two plans in each 
     area.--The Secretary'' and inserting ``Choice
       ``(A) Choice of at least two plans in each area.--The 
     Secretary''; and
       (B) by adding at the end the following new subparagraph:
       ``(B) Choice of a comprehensive prescription drug plan.--In 
     addition to the requirement under subparagraph (A), the 
     Secretary shall ensure that each part D eligible individual 
     has available a choice of enrollment in a comprehensive 
     prescription drug plan (as defined in paragraph (4)) in the 
     area in which the individual resides. In any such case in 
     which such a plan is not available, the part D eligible 
     individual shall be given the opportunity to enroll in a 
     comprehensive fallback prescription drug plan.''; and
       (2) by adding at the end the following new paragraph:
       ``(4) Comprehensive prescription drug plan.--For purposes 
     of this section, the term `comprehensive prescription drug 
     plan' means a prescription drug plan that provides coverage 
     of covered part D drugs after an individual has reached the 
     initial coverage limit under paragraph (3) of section 1860D-
     2(b) but has not reached the annual out-of-pocket threshold 
     under paragraph (4)(B) of such section that is the same as 
     the coverage for such drugs that is provided under the plan 
     after the individual has met the deductible under paragraph 
     (1) of such section but has not reached such initial coverage 
     limit.''.
       (b) Comprehensive Fallback Prescription Drug Plan.--Section 
     1860D-11 of the Social Security Act (42 U.S.C. 1395w-111) is 
     amended by adding at the end the following new subsection:
       ``(k) Guaranteeing Access to Comprehensive Coverage.--
       ``(1) Solicitation of bids.--Separate from the bidding 
     process under subsections (b) and (g), the Secretary shall 
     provide for a process for the solicitation of bids from 
     eligible comprehensive fallback entities (as defined in 
     paragraph (2)) for the offering in all comprehensive fallback 
     service areas (as defined in paragraph (3)) in one or more 
     PDP regions of a comprehensive fallback prescription drug 
     plan (as defined in paragraph (4)) during the contract period 
     specified in subsection (g)(5) (as made applicable to this 
     subsection under paragraph (6)).
       ``(2) Eligible comprehensive fallback entity.--For purposes 
     of this section, the term `eligible comprehensive fallback 
     entity' means, with respect to all comprehensive fallback 
     service areas in a PDP region for a contract period, an 
     entity that--
       ``(A) meets the requirements to be a PDP sponsor (or would 
     meet such requirements but for the fact that the entity is 
     not a risk-bearing entity); and
       ``(B) does not submit a bid under section 1860D-11(b) for 
     any prescription drug plan for any PDP region for the first 
     year of such contract period.
     For purposes of subparagraph (B), an entity shall be treated 
     as submitting a bid with respect to a prescription drug plan 
     if the entity is acting as a subcontractor of a PDP sponsor 
     that is offering such a plan. The previous sentence shall not 
     apply to entities that are subcontractors of an MA 
     organization except insofar as such organization is acting as 
     a PDP sponsor with respect to a prescription drug plan.
       ``(3) Fallback service area.--For purposes of this 
     subsection, the term `comprehensive fallback service area' 
     means, for a PDP region with respect to a year, any area 
     within such region for which the Secretary determines before 
     the beginning of the year that the access requirements of the 
     first sentence of section 1860D-3(a)(1)(B) will not be met 
     for part D eligible individuals residing in the area for the 
     year.
       ``(4) Comprehensive fallback prescription drug plan.--For 
     purposes of this part, the term `comprehensive fallback 
     prescription drug plan' means a prescription drug plan that--
       ``(A) offers the standard prescription drug coverage and 
     access to negotiated prices described in section 1860D-
     2(a)(1)(A);
       ``(B) offers coverage of covered part D drugs after an 
     individual has reached the initial coverage limit under 
     paragraph (3) of section 1860D-2(b) but has not reached the 
     annual out-of-pocket threshold under paragraph (4)(B) of such 
     section that is the same as the coverage for such drugs that 
     is offered after the individual has met the deductible under 
     paragraph (1) of such section but has not reached such 
     initial coverage limit; and
       ``(C) meets such other requirements as the Secretary may 
     specify.
       ``(5) Monthly beneficiary premium.--Except as provided in 
     section 1860D-13(b) (relating to late enrollment penalty) and 
     subject to section 1860D-14 (relating to low-income 
     assistance), the monthly beneficiary premium to be charged 
     under a comprehensive fallback prescription drug plan offered 
     in all comprehensive fallback service areas in a PDP region 
     shall be uniform and shall be an amount equal to--
       ``(A) 25.5 percent of an amount equal to the Secretary's 
     estimate of the average monthly per capita actuarial cost, 
     including administrative expenses, under the comprehensive 
     fallback prescription drug plan of providing the coverage 
     described in paragraph (4)(A) in the region, as calculated by 
     the Chief Actuary of the Centers for Medicare & Medicaid 
     Services; and
       ``(B) 100 percent of an amount equal to the Secretary's 
     estimate of the average monthly per capita actuarial cost, 
     including administrative expenses, under the comprehensive 
     fallback prescription drug plan of providing the coverage 
     described in paragraph (4)(B) in the region, as calculated by 
     the Chief Actuary of the Centers for Medicare & Medicaid 
     Services.

     In calculating such administrative expenses, the Chief 
     Actuary shall use a factor that is based on similar expenses 
     of prescription drug plans that are not standard or 
     comprehensive fallback prescription drug plans.
       ``(6) Incorporation of standard fallback prescription drug 
     plan provisions.--The provisions of paragraphs (1)(B), (5), 
     and (7) of subsection (g) shall apply to comprehensive 
     fallback prescription drug plans and entities offering such 
     plans in the same manner as such provisions apply to standard 
     fallback prescription drug plans and entities offering such 
     plans.
       ``(7) Same entity may offer both fallback prescription drug 
     plans in an area.--The Secretary may award a contract to an 
     entity under this subsection with respect to an area and 
     period and a contract under subsection (g) with respect to 
     the same area and period.''.
       (c) Conforming Amendments.--
       (1) Access.--Section 1860D-3 of the Social Security Act (42 
     U.S.C. 1395w-103) is amended--
       (A) in subsection (a)--
       (i) in paragraph (1)(A) of subsection (a), as redesignated 
     by subsection (a), by inserting ``standard'' before 
     ``fallback'';
       (ii) in paragraph (2), by striking ``paragraph (1)'' and 
     inserting ``paragraph (1)(A)''; and
       (B) in subsection (b)(2), by striking ``fallback 
     prescription drug plan for that area under section 1860D-
     11(g)'' and inserting ``standard or comprehensive fallback 
     prescription drug plan for that area under subsections (g) 
     and (k) of section 1860D-11, as applicable''.
       (2) Limited risk plans.--Section 1860D-11(f) of the Social 
     Security Act (42 U.S.C. 1395w-111(f)) is amended--
       (A) in paragraph (1)--
       (i) by striking ``1860D-3(a)'' and inserting ``1860D-
     3(a)(1)(A)''; and
       (ii) by inserting ``standard'' before ``fallback''; and
       (B) in paragraph (2)(A), by striking ``1860D-3(a)'' and 
     inserting ``1860D-3(a)(1)(A)''; and
       (C) in each of subparagraphs (A) and (B) of paragraph (4), 
     by striking ``a fallback'' and inserting ``a standard or 
     comprehensive fallback''.
       (3) Standard fallback prescription drug plan.--Section 
     1860D-11(g) of the Social Security Act (42 U.S.C. 1395w-
     111(g)) is amended--
       (A) in the heading, by inserting ``Standard Prescription 
     Drug'' after ``Access to'';
       (B) by inserting ``standard'' before ``fallback'' each 
     place it appears;
       (C) by striking ``Fallback'' each place it appears and 
     inserting ``Standard fallback'';
       (D) by inserting ``standard'' before ``fallback'' each 
     place it appears; and
       (E) in paragraph (3), by striking ``1860D-3(a)'' and 
     inserting ``1860D-3(a)(1)(A)''.
       (4) Annual report.--Section 1860D-11(h) of the Social 
     Security Act (42 U.S.C. 1395w-111(h)) is amended by striking 
     ``(f) and (g)'' and inserting ``(f), (g), and (k)''.
       (5) Limitation on entities offering fallback prescription 
     drug plans.--Section 1860D-12(b)(2) of the Social Security 
     Act (42 U.S.C. 1395w-112(b)(2)) is amended--
       (A) in the matter preceding subparagraph (A), by striking 
     ``a fallback'' and inserting ``a standard or comprehensive 
     fallback'';
       (B) in subparagraph (A)--
       (i) by striking ``section 1860D-11(g)'' and inserting 
     ``subsection (g) or (k) of section 1860D-11'';
       (ii) by striking ``such section'' and inserting ``such 
     subsections, as applicable''; and
       (iii) by striking ``a fallback'' and inserting ``a standard 
     or comprehensive fallback'';
       (C) in subparagraph (B), by striking ``a fallback'' and 
     inserting ``a standard or comprehensive fallback'';
       (D) in subparagraph (C), by striking ``a fallback'' and 
     inserting ``a standard or comprehensive fallback'' and
       (E) in the flush matter following subparagraph (C), by 
     striking ``a fallback'' and inserting ``a standard or 
     comprehensive fallback''.
       (6) Collection of premium.--Section 1860D-13(c)(3) of the 
     Social Security Act (42

[[Page S392]]

     U.S.C. 1395w-113(c)(3)) is amended by striking ``a fallback'' 
     and inserting ``a standard or comprehensive fallback''.
       (7) Payment.--Section 1860D-15(g) of the Social Security 
     Act (42 U.S.C. 1395w-115(g)) is amended by striking 
     ``offering'' and all that follows and inserting the 
     following: ``offering.--
       ``(1) a standard prescription drug plan (as defined in 
     paragraph (4) of section 1860D-11(g)), the amount payable 
     shall be the amounts determined under the contract for such 
     plan pursuant to paragraph (5) of such section; and
       ``(2) a comprehensive prescription drug plan (as defined in 
     paragraph (4) of section 1860D-11(k)), the amount payable 
     shall be the amounts determined under the contract for such 
     plan pursuant to such paragraph (5) (as made applicable to 
     section 1860D-11(k) under paragraph (6) of such section).''.
       (8) Payment from account.--Section 1860D-16(b)(1)(B) of the 
     Social Security Act (42 U.S.C. 1395w-116(b)(1)(B)) is amended 
     by inserting ``standard and comprehensive'' before 
     ``fallback''.
       (9) Definition.--Section 1860D-41(a)(5) of the Social 
     Security Act (42 U.S.C. 1395w-151(a)(5)) is amended to read 
     as follows:
       ``(5) Standard fallback prescription drug plan; 
     comprehensive fallback prescription drug plan.--The terms 
     `standard fallback prescription drug plan' and `comprehensive 
     fallback prescription drug plan' have the meaning given those 
     terms in subsection (g)(4) and (k)(4), respectively, of 
     section 1860D-11.''.
       (d) Effective Date.--The amendments made by this section 
     shall take effect on January 1, 2008.

  Mr. WYDEN. Mr. President, Senator Snowe and I said we would work to 
improve the Medicare Part D benefit ever since we voted for its 
passage. Senator Snowe and I think one of the most egregious errors in 
the Medicare drug benefit was to write into law that the Secretary 
cannot have bargaining power under any circumstances. That is why today 
we are introducing the Medicare Enhancements for Needed Drugs Act of 
2007. This legislation lifts the prohibition on bargaining power and 
requires the Secretary to negotiate on behalf of seniors.
  We believed that one of the most important things missing from the 
Part D benefit was cost containment--and allowing Medicare to negotiate 
for drug prices would be an important cost containment measure. Our 
legislation clearly prohibits price setting or the creation of a 
uniform formulary. What our legislation allows Medicare to do is to be 
a smart shopper--just as any consumer would be--by allowing Medicare to 
go in the market and use its clout just like any other big purchaser.
  Under our proposal, the Secretary could negotiate in any 
circumstance, but must negotiate in several instances: for single 
source drugs for which there is no therapeutic equivalent; drugs for 
which taxpayer funding was substantial in its research and development; 
and for any fallback plan the Secretary must provide. In addition, our 
legislation requires the Secretary to provide a fallback plan if there 
is not comprehensive coverage, including coverage for the so-called 
donut hole, available in a region.
  The Congressional Budget Office has stated there might be savings 
achieved if the Secretary could negotiate for single source drugs for 
which there is no therapeutic equivalent. To be good stewards of 
taxpayer dollars, to be able to strengthen the program and to help 
seniors truly save, we must look toward using every logical tool to 
lower costs. Not to try to achieve lower prices in areas identified as 
potentially saving the program, taxpayers and seniors would be foolish.
  I don't know of a single private entity, whether it's a timber 
company in my home State of Oregon, or a big auto company, who when 
they're buying something in bulk doesn't say, hey pal, how about a 
discount? So why shouldn't Medicare, if it needs to negotiate, have 
that authority just in case? Why wouldn't we want to assure that 
Medicare can be a smart shopper?
  I look forward to working with my colleagues as the Senate Finance 
Committee works on this issue.
                                 ______