[Congressional Record Volume 153, Number 6 (Thursday, January 11, 2007)]
[Senate]
[Page S455]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. SPECTER:
  S. 273. 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 2007 to 
reduce the high prices of prescription drugs for Medicare 
beneficiaries. I introduced a similar version of this bill in the 108th 
and the 109th Congress, S. 2766 and S. 813, respectively.
  Americans, specifically senior citizens, pay the highest prices in 
the world for brand-name prescription drugs. With 46.6 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 report that in 2005, 
per capita spending on prescription drugs rose approximately 7 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 rose by 7.5 percent 
between 2004 and 2005. 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 Health and Human Services 
(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 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 2005 was $51.89. The average cost in the Veterans 
Affairs (VA) health care system in fiscal year 2006 was $28.61.
  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 again 
introduced the Veterans Prescription Drugs Assistance Act, S. 614, 
which was not reported out of committee.
  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 text of the bill was ordered to be 
printed in the Record, as follows:

                                 S. 273

       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 ``Prescription Drug and Health 
     Improvement Act of 2007''.

     SEC. 2. NEGOTIATING FAIR PRICES FOR MEDICARE PRESCRIPTION 
                   DRUGS.

       (a) Negotiating Fair Prices.--
       (1) 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.''.
       (2) Effective date.--The amendment made by paragraph (1) 
     shall take effect on the date of enactment of this Act.
       (b) HHS Reports Comparing Negotiated Prescription Drug 
     Prices and Retail Prescription Drug Prices.--Beginning in 
     2008, 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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