Congressional Record, Volume 158 Issue 96 (Monday, June 25, 2012)

[Congressional Record Volume 158, Number 96 (Monday, June 25, 2012)]
[Senate]
[Pages S4434-S4446]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

FLOOD INSURANCE REFORM AND MODERNIZATION ACT--MOTION TO PROCEED

The ACTING PRESIDENT pro tempore. Under the previous order, the
Senate will resume consideration of the motion to proceed to S. 1940,
which the clerk will report by title.
The legislative clerk read as follows:

Motion to proceed to Calendar No. 250, S. 1940, a bill to
amend the National Flood Insurance Act of 1968, to restore
the financial solvency of the flood insurance fund, and for
other purposes.

Mr. REID. Mr. President, I suggest the absence of a quorum.
The ACTING PRESIDENT pro tempore. The clerk will call the roll.
The legislative clerk proceeded to call the roll.
Mr. GRASSLEY. I ask unanimous consent that the order for the quorum
call be rescinded.
The ACTING PRESIDENT pro tempore. Without objection, it is so
ordered.

The Economy

Mr. GRASSLEY. Mr. President, since the victory of the Socialist
candidate for the President of France, opponents of fiscal
responsibility have found renewed vigor for their pro-spending
ideology--more stimulus, as we might call it here in this country.
There is interest in this country also in more fiscal stimulus.
The new French President talked about choosing growth over austerity.
Many liberal pundits and politicians on this side of the Atlantic have
now begun to echo this call. When you put it that way, it barely sounds
like a choice at all. The term ``austerity'' sounds so severe, but
almost everybody agrees that economic growth is good.
Just what is this austerity all about? In Europe, ``austerity'' is
often used to describe an attempt to reduce budget deficits by reining
in unsustainable spending. In this country, we more often talk about
fiscal responsibility. For Europeans who have grown accustomed to
generous social benefits, even modest reforms to government programs
are apparently cause to take to the streets and demonstrate. But for
the millions of Americans who still believe in limited government and
who do not feel entitled to programs or benefits paid for by the
earnings of others, there is nothing austere about government spending
within its means.
So then what about the other aspect of it--growth? The implication of
the supposed choice between growth and austerity is that we must accept
irresponsible levels of spending in order to have that economic growth.
Obviously this is absurd. The politically convenient economic theory
was summed up by Margaret Thatcher as, ``The more you spend, the richer
you get.'' That doesn't meet the commonsense test in the Midwest of
America. It was the rationale behind President Obama's massive $800
billion stimulus bill. The bill looked suspiciously like a grab bag of
pent-up Democratic spending priorities, but we were told that all of
this spending was necessary to keep unemployment below 8 percent. Of
course, as we all know, unemployment soon soared well above 8 percent
and has never dipped below 8 percent now more than 3 years later.
I would say to all of those across the Atlantic in Europe calling for
new stimulus spending: We tried it, and it didn't work. Not only didn't
it work but it made things worse. All of that government spending
crowded out private sector activity that would have helped the recovery
and saddled our economy and our children with even more debt.
Conversely, reining in government spending will unleash the power of
free enterprise to create wealth and grow our economy in ways no
government central planner can ever accomplish.
Despite the clear results of the most recent American experience with
stimulus spending, liberal pundits are now blaming Europe's current
economic troubles on efforts to reduce government spending. They say
that savage cuts by pro-austerity governments in countries such as
Britain, France, and Spain have actually damaged their economies. So
just how deep did these countries of Europe actually cut? Spain
increased spending after the recession started, then implemented some
modest cuts but is still spending more than it did before the
recession. Britain and France have continued to increase spending. So
much for savage spending cuts. It defies common sense, but, as you
know, in this town smaller increases in spending than previously
planned can qualify somehow as a cut in spending. However, to most
Americans, cutting spending actually means spending less than you were
the year before. The fact that there have been no serious spending cuts
in these supposedly pro-austerity countries is enough to dismiss the
accusations that spending cuts are the cause of Europe's current
troubles.
But there is another part of the story that is too often ignored:
Governments that talk about the need to reduce deficits but are too
timid to enact necessary spending cuts invariably turn to tax
increases. For instance, since the recession started, Britain has
raised the top marginal income tax rate as well as increased the
capital gains tax, the national insurance tax, and the value-added tax.
Spain has enacted hikes in personal income tax and property taxes and
seems to be planning even more taxes.
This year the Spanish Government is looking to address its deficit
with a $19.2 billion package of spending reductions paired with another
$16 billion worth of tax increases. Of course, to us

[[Page S4435]]

here in the United States, that sounds a lot like what Democrats have
been calling a balanced approach. And so it is--just like giving a
patient an equal dose of medicine and poison would be a balanced
approach. However, across Europe there has been a lot more emphasis on
the poison of tax increases than on the medicine of spending cuts. In
fact, while government spending across the entire European Union fell
by just 2.6 billion euros between 2010 and 2011, taxes rose by a
staggering 235 billion euros.
So while critics of austerity are flatout wrong to blame the largely
mythical spending cuts for Europe's economic troubles, they may have
stumbled onto something. To the extent that austerity really means big
tax increases rather than serious spending cuts, I think it identifies
a big part of Europe's fiscal and economic problems.
These facts notwithstanding, if I couldn't point to an example where
economic growth resulted from spending restraint, my arguments would
ring hollow. I would sound like those radical intellectuals who still
refuse to accept that Marxism has been totally discredited both morally
and economically by claiming that it has never truly been tried.
However, what I am talking about has been tried. There are plenty of
examples of where bold leadership to dramatically rein in government
spending has resulted in economic growth. There is actually a prime
example right in Europe and in the euro area--Estonia.
In response to the 2008 economic crisis, Estonia's free enterprise-
oriented government focused on real spending cuts, including major
structural reforms. Estonia cut private sector wages, raised the
pension age, and reformed health benefits. When it comes to taxes,
Estonia already had a low flat tax and didn't raise rates. While there
was an increase in the value-added tax, the overwhelming emphasis was
on spending cuts. As a result, the Estonian economy grew at 7.6 percent
last year. And it happens that Estonia is the only country in the
eurozone with an actual budget surplus, and the country has a national
debt that is only 6 percent of GDP. Can you imagine that, a debt of
only 6 percent of GDP?
Moreover, Estonia had an especially deep hole to climb out of. The
Estonian economy was devastated by the global financial crisis. It
contracted by 18 percent, which is more than Greece. Nevertheless,
Estonia's economy is well on its way back to prerecession levels.

I should add that in response to the spending cuts, Estonians didn't
riot in the streets. Instead, they reelected their government.
Also, while Estonia is the most impressive example, a similar story
also holds true for the other Baltic countries of Latvia and Lithuania.
Perhaps their unhappy experience of Soviet domination has made them
extra skeptical of big government solutions to problems. It is possible
that the unique history of the Baltic countries makes it easier for
them to break the spending addiction, but that doesn't mean it can't be
done here. In fact, I will give you an example that is much closer to
home--Canada.
In the 1990s Canada was facing the same problem the United States is
now. It suffered a recession and had a looming debt crisis. The
Canadian Government's response was to dramatically cut spending. Again,
I am not talking about slowing the rate of growth but actual spending
cuts. In just 2 years, starting in 1995, total noninterest spending
fell 10 percent. Canadian federal spending as a share of GDP dropped
from 22 percent in 1995 to 15 percent 11 years later. Canada's federal
debt was at 68 percent of GDP in 1995 and is down to just 34 percent
today. Now a lesson for America: Compare that to our national debt,
which is more than 70 percent of GDP. Like Estonia, the overwhelming
emphasis in Canada was on spending cuts rather than tax increases.
Moreover, these cuts included structural reforms. Canada's Government
fixed its version of Social Security, which is the third rail of
American politics, as we say here. Unlike Social Security, the Canadian
pension plan is solvent for the foreseeable future. What is really
interesting is that these reforms were not implemented by some
rightwing ideologues; these reforms were all implemented by the
Canadian Liberal Party, which is a center-left party like America's
Democrats.
However, when President Bush suggested fixing Social Security upon
his reelection, the issue was relentlessly demagogued by Democrats in
Congress. More recently, when Paul Ryan unveiled a plan to save
Medicare, rather than present alternative ideas, liberal groups
depicted him in political advertisements pushing grandmother off a
cliff.
If our Democrats had shown the same leadership the Canadian Liberals
did, we would be in a lot better economic shape right now. Instead,
what we get from the other side of the aisle are demands for more
stimulus spending and head-in-the-sand denial about the impending
bankruptcy of Medicare and Social Security.
There are a lot of other examples where low taxes and spending
restraint have led an economic recovery after a downturn. In fact, a
2009 paper by two Harvard economists, Alberto Alesina and Silvia
Ardagna, reviewed 107 examples of fiscal adjustments in industrialized
countries between 1970 and the year 2007. They found that,
statistically, tax cuts are more likely to increase growth than
spending. They also found that spending cuts without tax increases are
more likely to reduce deficits and debt than increased taxes. The
historical record is clear. We know what path leads to economic growth
and prosperity. However, that is not an easy path to follow.
Unlike the ``have your cake and eat it too'' philosophy that says
more government spending will somehow make us all richer, the real road
to recovery requires real leadership and less spending.
Earlier in my comments I mentioned a statement by Margaret Thatcher's
contempt for stimulus ideology. When she took office, Britain was in
deep debt and known as ``the sick man of Europe.'' In fact, Britain had
been forced to go to the IMF for a bailout and was regularly rocked by
massive strikes. In many ways it was the Greece of the 1970s. When
Thatcher began making the difficult decisions necessary to rescue the
British economy, many people, including some of her own party, pleaded
for her to return to the big spending policies of previous British
Governments. Her response is applicable to our country today as it was
to Britain back then. I wish to quote Margaret Thatcher:

If spending money like water was the answer to our
country's problems, we would have no problems now. If ever a
nation has spent, spent, spent and spent again, ours has.
Today that dream is over. All of that money has got us
nowhere but it still has to come from somewhere. Those who
urge us to relax the squeeze, to spend yet more money
indiscriminately in the belief that it will help the
unemployed and the small businessman, are not being kind or
compassionate or caring. They are not the friends of the
unemployed or the small business. They are asking us to do
again the very thing that caused the problem in the first
place.

I leave with this proposition. Can Congress learn from the
experiences of Estonia, Canada, and Britain's Thatcher? If we can, we
can turn this U.S. economy around--and the economy and jobs are the
issue of this Presidential campaign season.
I suggest the absence of a quorum.
The ACTING PRESIDENT pro tempore. The clerk will call the roll.
The assistant legislative clerk proceeded to call the roll.
Ms. MIKULSKI. Mr. President, I ask unanimous consent that the order
for the quorum call be rescinded.
The PRESIDING OFFICER. Without objection, it is so ordered.
Ms. MIKULSKI. What is the pending business?
The ACTING PRESIDENT pro tempore. The motion to proceed to S. 1940.
Ms. MIKULSKI. Mr. President, I rise in support of voting for cloture
on the bill and wish to speak for as much time as I may consume.
The ACTING PRESIDENT pro tempore. Without objection, it is so
ordered. The Senator is recognized.

Food and Drug Administration Safety and Innovation Act

Ms. MIKULSKI. Mr. President, we have just exchanged some
parliamentary lingo to essentially say we are going to vote shortly to
see if we can pass the Food and Drug Administration Safety and
Innovation Act, and do it without a filibuster. I hope we can vote for
cloture--not to muzzle, not to have a gag rule, but so we can move
expeditiously on this bill.

[[Page S4436]]

Every single Member here should be proud of what we have accomplished
in this FDA Safety and Innovation Act. We have accomplished three major
objectives: No. 1, if the legislation is passed--and it is a conference
agreement between the House and the Senate--we will be able to move
pharmaceuticals, biotech products, and medical devices into clinical
practice faster while maintaining our ethical standards around public
safety.
No. 2, we can demonstrate we can work together and we can govern.
This is the result of the Senate working on both sides of the aisle.
Now, with the House, through the conference report, we show we can work
between the Senate and the House.
In this time of prickly politics and political posturing when more
gets said than done, we can show we cannot only pass legislation but
legislation that makes a difference in people's lives. We will also
show we can do it in a way that we will not only have a regulatory
framework but something in which the businesses cooperated so we will
have regulation without strangulation. We will have regulation that
acts in the interest of public safety but does not stifle, shackle, or
impede good business practices. Wow. Isn't this what we have been
talking about?
I am very proud of having been a member of the Health, Education,
Labor, and Pensions Committee that worked on this bill. I am also very
proud of the fact that FDA is in my State. In a nutshell, we are
passing something called PDUFA and other UFAs. PDUFA stands for the
Prescription Drug User Fee Act. There will be others that we will talk
about which relate to bio user fees and medical device user fees and
generics.

This bill was originally enacted in 1992, and the reason for that was
at that time there was an unduly long wait for patients to have access
to new medicines and new medical devices. It often took close to 3
years to even review a drug application. So Congress went to work with
then-President Bill Clinton to say where the pharmacy could agree that,
first of all, they would pay user fees to support FDA's drug review
program. It is a true public-private partnership. When we look at the
funding for FDA, the people who make pharmaceuticals, biotech, and
medical devices pay 60 percent of the FDA budget. That is $712 million.
The remainder comes from Federal appropriations--40 percent, which is
$473 million. So there is a partnership between those businesses that
profit--and we want them to do so, without profiteering--and, at the
same time, government pays its share.
Since 1992, this legislation has been an enormous success. More than
1,500 new medicines have been approved, including treatments for
cancer, infectious disease, and cardiovascular disease. It has
decreased review times from more than 3 years to 1 year and a few
months now.
In order to make sure we had the right perspective, we not only held
excellent hearings in the Senate, but I went out around my own State. I
am so proud of my State. We are the home of life sciences. We have NIH
there, which does incredible basic research. We actually have FDA,
which reviews food safety and drug safety. At the same time, we are the
home to a robust group of biotech companies. I wanted to listen to
those biotech companies. When I went out, I said to them: Tell me how
your government is helping you and tell me how your government is
impeding you. Tell me where you want your government to get out of the
way and where do you need a more muscular government. Well, we heard
quite a bit from them. The first thing they told me is they need a Food
and Drug Administration because when they are approved for public
safety and efficacy in the United States of America, they can sell
their products anywhere in the world. It often means countries--small
countries, countries of modest means with limited GDP that could never
afford an FDA--know that if the United States of America says it is OK
for their citizens, any other country in the world knows it is OK for
theirs. So it is very good to be able to export these products with
confidence and reliability. This is fantastic, in their minds.
Second, they said they needed more help from FDA not only to expedite
but they wanted better communication.
They also needed to be able to incentivize development for those rare
diseases we often hear about, where there are small markets but big
investments to achieve in it. They outlined the fact that they needed
to be viewed not in an adversarial way but a collaborative way. Well,
thanks to business sitting down with FDA, and business sitting down
with Members of Congress, we have been able to do exactly that. We have
improved efficiency, predictability, the regulatory environment, and,
at the same time, insisting on safety and efficacy.
This is going to be great for patients. Millions of Americans rely on
drugs and biologics and on medical devices. If we are going to improve
health care and rein in the cost of health care, we have to use drugs,
biotech products, and medical devices that improve lives and extend
lives.
If we fail to authorize this legislation, we are going to be in big
trouble. How are we going to be in big trouble? Well, first of all, we
will have to give notice to FDA that there are going to be layoffs.
That means we would have to send out notices in July telling 4,000
people: Look, we know you are the best and the brightest and we want
you to have integrity as well as regulatory sensibility and a great
deal of scientific competence, but we couldn't get our act together so
you are going to be laid off.
Hello. We want these people out there, helping America be able to
provide health care in a way that is safe and efficacious.
Again, as I said, if we don't act, thousands of FDA people will be
laid off. It is not about government. If those people are laid off, it
means the review process for every single drug that is now in the
pipeline will come to a halt. So we are hurting patients, thousands of
people who need new drugs; new ways of helping them, whether it is for
that dread C word--cancer--or diabetes, which takes so much of our
national budget to manage chronic illness.
What about the breakthroughs on this epidemic of Alzheimer's we have
or autism? We need all the help we can develop. If America is going to
continue to be America the exceptional, we have to do an exceptionally
good job of making sure we produce some of the newest and most reliable
drugs, biotech, and medical devices.
This is why I think we have good legislation. Is it perfect? No. But
is it pretty close to it for what business and government and
providers--the doctors themselves--say we need? Absolutely.
I urge my colleagues today, when we vote on this motion to proceed on
cloture to have in mind--whether a colleague is a Democrat or a
Republican--that we don't make the perfect the enemy of the good;
rather, we think of all those people to whom we talk every day. We talk
to them at townhall meetings and out there with diners, and they say:
You know, my little boy has leukemia; my mother has breast cancer; my
dear father who stood up for me is facing the ravages of Alzheimer's.
We need breakthroughs. We need help, then, for our private sector, so
it can go global and create jobs in this country and well-being in
other countries around the world. We have to be able to do it.
I am also pleased this bill combats drug shortages, improves the
safety of the drug supply chain, and makes permanent those special
considerations that require that children's needs are being met with
both medical devices and prescriptions, either in terms of dosage or
that a device actually fits them.
I wanted to come to the floor to lay this out. I am very proud of
FDA, and I am very proud of the Congress, including Senator Harkin and
Senator Enzi, who pulled us together. We have the right legislative
framework. Now let's act and do it in a way we can all be proud of.
Mr. President, I yield the floor, and I note the absence of a quorum.
The ACTING PRESIDENT pro tempore. The clerk will call the roll.
The assistant legislative clerk proceeded to call the roll.
Mr. HARKIN. Mr. President, I ask unanimous consent that the order for
the quorum call be rescinded.
The PRESIDING OFFICER (Mr. Tester.) Without objection, it is so
ordered.

[[Page S4437]]

Food and Drug Administration Safety and Innovation Act

Mr. HARKIN. Mr. President, after many months of bipartisan
negotiation, I have high hopes that the Senate will vote very shortly
to invoke cloture on the House message to accompany the Food and Drug
Administration Safety and Innovation Act of 2012.
I am pleased to report it is the product of excellent bipartisan
collaboration on the Health, Education, Labor, and Pensions Committee,
which I chair, and productive conversations with our colleagues in the
House. The House passed the FDA Safety and Innovation Act unanimously
last week. Now it is our turn to do our part. The backbone of this
legislation is the user fee agreement that FDA has negotiated with
industry.
I might just add this bill passed this Chamber about 3 weeks ago on a
vote of 96 to 1. So it has strong bipartisan support. A sizeable part
of FDA's budget comes from user fees that industry agrees to pay to
allow FDA to more quickly weekly review product applications. We need
to authorize FDA to implement those agreements if we want to keep FDA
running at full steam, which is critical to preserving jobs at both the
agency and in the industry and to ensuring that FDA has the resources
to get safe medical products to patients quickly.
I want to be clear. These agreements affect all of us by helping to
maintain and create jobs in our home States. For example, in my State
of Iowa, these agreements will support our burgeoning bioscience sector
which saw employment grow by 4.5 percent between 2007 and 2008. The
implementation of these agreements will continue to foster biomedical
innovation and job growth in all of our States.
The bill before us reauthorizes the prescription drug user fee
agreement and the medical device user fee agreement, both commonly
known as PDUFA and MDUFA, which will continue and improve the agency's
ability to speed market access to prescription drugs and medical
devices while ensuring patient safety.
I just might add that, again, uppermost, foremost, first is patient
safety. That does not mean we cannot do things in a better manner, get
products more readily available, speed up the process if we have the
personnel and the equipment to do so. That is why this bill is so
important. It provides that type of support so we can hire more people
to make sure we get these products to patients quickly, but to make
sure they are safe.
The bill also authorizes a new generic drug user fee agreement which
is expected to slash review time to one-third of current levels, from
30 months to 10 months, drastically improving the speed with which
generic products are made available to patients. The new generic user
fee agreement will generate significant savings for patients and our
health care system. In the last decade alone, from 2001 to 2010, the
use of generic drugs saved the U.S. health care system more than $931
billion. This agreement will ensure that we continue to see those
savings and that patients have access to cheaper drugs when they need
them.
This bill also authorizes a new biosimilars user fee agreement which
will further spur innovation by the generic biologic industry. This
chart shows again some of the savings we will get. The use of generic
drugs has saved over $931 billion over the last decade, $158 billion
just in 2010 alone. So we can see the better we are able to get generic
drugs approved and in the pipeline--again, safely--the better off we
are all going to be and more money that not only will we save as
individuals but our entire health care system will save. That is almost
$1 trillion over the last 10 years.
These agreements again, as I said, are vital to FDA's ability to do
its job, vital to the stability of the medical products industry, and
most importantly to the patients who are the primary beneficiaries of
this longstanding and valuable collaboration between FDA and the
industry.
After months of negotiation, FDA and the industry have crafted win-
win agreements they stand behind. They are doing their job. Now it is
time for us to do ours.
It is absolutely imperative that we authorize these user fee
agreements before they expire. If we do not, FDA will lose 60 percent
of its drug center budget and 20 percent of its device center budget.
They will have to lay off nearly 2,000 employees. That is why it is so
critical for us to do this at this time.
To be sure, the expiration does not happen until late this summer.
But the FDA has told us if they do not get this reauthorization done,
they will have to start sending out pink slips at the beginning of
July. That is why it is so imperative for us to pass this legislation
this week and send it to the President for his signature, so they will
not have to go through that process of sending out pink slips.
But we can see how important this is. If this were to happen, it
would have devastating consequences for patients whose health and lives
depend on new medical treatments. We cannot let that happen. That is
why for more than a year I worked closely with my colleague, the
ranking member of the HELP Committee, Senator Enzi, and other members
of the HELP Committee. Our aim has been to ensure that in addition to
the user fee agreements, the other provisions in this legislation are
also the product of consensus bipartisan policymaking.
We have used bipartisan working groups and an open, transparent
process to ensure that we had input from our members and the
stakeholder community at large throughout negotiations on the other
titles of this bill. This is quite remarkable. We do not see much of it
in this Congress these days. But we have had great cooperation from all
members of our committee on both sides of the aisle.
This legislation has benefited greatly from all of the diverse input:
from Senators, as I said, on both sides of the aisle, industry
stakeholders, consumer groups, patient groups, and more recently from
our colleagues in the House. The FDA Safety and Innovation Act is the
result of concerted efforts to define our common interests, and these
interests will directly benefit patients and the U.S. biomedical
industry.
As you can see from this chart, the bill modernizes FDA's authority
in several critical ways: It authorizes key user fee agreements to
ensure timely approval of medical products. It streamlines the device
approval process. It modernizes FDA's global drug supply chain
authority, which is so important. It spurs innovation and incentivizes
drug development for life-threatening conditions. It reauthorizes and
improves incentives for pediatric trials. It helps prevent and mitigate
drug shortages, and it increases FDA's accountability and transparency.
So it addresses the broad array of critical issues that we face in
today's global economy.
It is imperative that our regulatory system keep pace with and adapt
to technological and scientific advances and that patient protection
remains strong in this era of dynamic change. Keeping pace with the
ever-changing biomedical landscape is precisely the aim of the FDA
Safety and Innovation Act. This bill injects greater transparency into
the device approval process. It bolsters FDA's ability to help U.S.
manufacturers create innovative and safe devices, while also enhancing
FDA's ability to determine how the devices perform in the real world
and takes appropriate measures to protect patients.
The bill also reauthorizes and improves incentives for pediatric
trials. It creates incentives for the development of new antibiotics
and authorizes new drug and device provisions to help expedite the
approval of important lifesaving drugs and devices without sacrificing
safety.
In addition, the bill also helps address the national crisis
prescription drug shortages. For the past several years, hospitals
across the country and in my State of Iowa have experienced an
increasing number of shortages of life-sustaining prescription drugs.
These shortages directly threaten the public health by denying patients
access to medications that are indispensable to their care. This bill
requires all manufacturers of certain drugs to notify FDA if they
expect a manufacturing disruption that could lead to a shortage because
if FDA is aware of a potential shortage early, then the agency can work
with manufacturers and providers to find other ways to get patients the
drugs they need. This bill also addresses drug shortages by explicitly
allowing FDA to expedite drug

[[Page S4438]]

establishment inspections and application reviews when needed to help
prevent or mitigate a shortage. It establishes an FDA drug shortage
task force to develop a strategic plan to address drug shortages and to
improve communication and outreach to stakeholders preparing for drug
shortages.
Another significant advance in the bill is the much needed
modernization of the FDA's authority to ensure the safety of drug
products coming into the United States from abroad. This bill, No. 1,
allows FDA to prioritize inspections of both domestic and foreign firms
based on the risk they present to patient safety. It requires importers
to demonstrate that certain high-risk drugs are safe and compliant
before they can be imported into the United States. It requires
manufacturer accountability and oversight of the quality and compliance
of their drug producers and suppliers. It enhances penalties for
adulterating and counterfeiting drugs. It allows FDA to detain
noncompliant drugs in U.S. commerce to prevent them from reaching
patients. It permits FDA to destroy certain illegal drugs at the border
instead of releasing them back into commerce. It clarifies FDA's
authority to address criminal conduct that occurs abroad and threatens
the safety of U.S. consumers.
An important point to remember about the importance of these safety
provisions is that weaknesses in our pharmaceutical supply chain not
only affect the health of American patients, they also affect the
health of American businesses. U.S. companies that source and
manufacture drugs in this country should not be placed at a competitive
disadvantage by foreign firms that operate with less oversight and sell
substandard ingredients into this country at reduced prices. This bill
will help ensure that businesses operate on a level playing field by
holding foreign actors to the same high standards as those in the
United States.
The last policy provision I will highlight is a mix of device and
drug authorities that together can fairly be described as the most
significant advance for patients of orphan and rare diseases since the
Orphan Drug Act was passed nearly 30 years ago.
In addition to the significant resources that will be devoted to rare
diseases under the prescription drug user fee agreement itself, this
bill, No. 1, expands the accelerated approval pathway to therapies for
rare and very rare diseases, and it instructs FDA to weigh the rarity
of a disease as a factor in its approval process.
Next, it directs resources to promising therapies for unmet medical
needs, which will receive the new ``breakthrough'' designation.
Next, it requires FDA to consult with outside experts on rare
diseases.
Next, it focuses on pediatric rare diseases by requiring a strategic
plan regarding pediatric rare diseases and creating a pilot program to
incentivize new therapies for pediatric rare diseases.
Next, it helps make devices for rare diseases more available by
modernizing provisions relating to custom devices and making it easier
for companies to make profits on devices for rare disease.
Lastly, it reforms the conflict of interest rules for advisory
committees to make it easier for the FDA to fill panels, which will
have particular impact regarding rare diseases because those panels are
sometimes very hard to fill.
I am very proud of the advances this legislation represents for
patients with orphan and rare diseases.
Not only does the bill support the biomedical industry and help
patients get the medical products they need, it also reduces the
deficit. According to the nonpartisan Congressional Budget Office, this
legislation will reduce the budget deficit by more than $311 million in
the next decade. So what we have is not only good policy, but it is
fiscally responsible by contributing to deficit reduction.
As I have said, well over a year of diligent, bipartisan work has
gone into the legislation before us today. Neither Democrats nor
Republicans got everything they wanted in this bill. We sought out
consensus measures. Where we could not achieve consensus, we did not
allow our differences to distract us from the critically important goal
of producing a bill everyone could support. As a result, this is a true
bipartisan bill, and it is broadly supported by the patient groups and
industry. In fact, it has wide support from medical associations and
also from consumer groups and manufacturers throughout the entire
country--a broad base of support. In fact, it is unique because it has
the full support of manufacturers, the pharmaceutical industry, the
device manufacturers, the FDA itself, and patients groups--people
concerned about patient safety, cost, and availability of drugs and
devices. So it has a broad base of support.

The FDA Safety and Innovation Act before us, which we will be voting
on in a little while, authorizes the important FDA user fee agreements,
and it modernizes our regulatory system to ensure safety and to foster
innovation in the medical product industry. Our bipartisan work has
produced an excellent bill. We cannot allow unrelated partisan
disagreements or Presidential-election-year politics to interfere or
keep us from completing our job.
I will say it again. We must pass this vital legislation now. It is
critically important to the agency, to the industry and, most
importantly, to patients that we get this done. Let's come together,
Democrats and Republicans, to pass this legislation. Let's have a
resounding vote on cloture. Hopefully we won't have to use the 30 hours
and we can get to passage of the bill very rapidly so that we can get
it down to the President for his signature.
With that, I yield the floor.
The PRESIDING OFFICER. The Senator from Utah.

Invoking the Leahy-Thurmond Rule

Mr. LEE. Mr. President, I rise today to express my support for the
minority leader's decision to invoke the longstanding Senate tradition,
known as the Leahy-Thurmond rule. Pursuant to this tradition and
precedent, the Senate will cease confirming nominees to the Federal
courts of appeals until after the Presidential election in November.
Many of my colleagues from the other side of the aisle have previously
affirmed the propriety of this rule and enforced its standard. For
example, in the last year of the Bush administration, the majority
leader noted that ``in a Presidential election year, it is always very
tough for judges. That is the way it has been for a long time, and that
is why we have the Thurmond rule.''
The chairman of the Judiciary Committee, who has cited the Thurmond
rule more frequently than any other Senator, has likewise stated that
``in a Presidential election year, after Spring, no judges go through
except by the consent of the Republican and Democratic leaders.''
Statements from several of my Democratic colleagues likewise confirm
that it is proper to invoke the Leahy-Thurmond rule at this point in a
Presidential election year. In 2008, for example, one of my colleagues
on the Judiciary Committee argued that for Federal appeals court
nominees, once ``it comes to June . . . generally everything stops in
an election year.'' Indeed, on June 12 of that same year, another
Judiciary Committee colleague stated that the Senate was already ``way
past the time of the Thurmond rule.''
History further confirms the propriety of invoking the Leahy-Thurmond
rule at this time. It is extremely rare for the Senate to confirm an
appeals court nominee after June of a Presidential election year. In
fact, it has happened only once in almost two decades, when in 2000 the
Republican-controlled Senate confirmed one of President Clinton's
nominees. It is simply not true, as comments from some of my colleagues
have implied, that in recent Presidential election years we have
confirmed appellate court nominees in July, August, or September.
Moreover, this year we have already confirmed five of President
Obama's Federal appeals court nominees. This, incidentally, is the same
number of appeals court nominees the Senate confirmed in 2008, the most
recent Presidential election year on record. In 2004 the Senate
confirmed only four such nominees. Indeed, dating back over 100 years,
from President William Howard Taft to President Obama, the Senate has
confirmed an average of just four appeals court nominees during
Presidential election years. This year we have already exceeded the
historical average and confirmed five of President Obama's appeals
court nominees.

[[Page S4439]]

There is no reason to depart further from the historical norm and
confirm additional nominees.
The suggestion by some that application of the Leahy-Thurmond rule
somehow affects court vacancies deemed ``judicial emergencies'' is
false, and recklessly so. Of the four judicial emergencies on the
Federal court of appeals, President Obama has nominated only one
individual, and because that nomination was so recent, even absent the
Leahy-Thurmond rule, that nominee would not be scheduled for a vote
anytime soon.
I also remind my colleagues that Democrats enforced the Leahy-
Thurmond rule in June 2008, during a time when there were twice as many
judicial emergencies in the circuit courts as there are right now.
Likewise, the overall vacancy rate on our circuit courts was much
higher in June 2004 when President Bush was in the final year of his
term. Yet Democrats did not hesitate to block several qualified
appellate court nominees in the months leading up to the 2004
Presidential election.
Enforcement of the Leahy-Thurmond rule does not currently apply to
district court nominees. This year the Senate has already confirmed 23
of President Obama's district court nominees--many more than were
confirmed during comparable years during the President Bush and Clinton
Presidencies. And we will continue to confirm more qualified nominees.
Application of the Leahy-Thurmond rule, beginning now, will thus not
implicate any district court judicial emergencies.
The urgency for such vacancies lies not in the Senate, which to this
day has acted responsibly on nominees, but with President Obama, who to
this day has failed to nominate individuals for many of these seats.
There are, I add, other good reasons in addition to tradition and
historical precedent to enforce the Leahy-Thurmond rule now rather than
waiting longer to do so. Doing so now prevents a particular President
from packing the courts at the end of his term by appointing
influential, life-tenured appellate court judges whose service will
span numerous other Presidential administrations.
The Leahy-Thurmond rule also ensures that Presidential politics
during an election season will not overshadow or interfere with the
Senate's advice and consent role on such judicial nominees.
The last point bears special emphasis. The Constitution assigns to
the Senate the right and the duty to advise and consent to the
President's judicial and executive branch nominees. It is essential for
the Constitution's separation of powers that the Senate protect its
necessary and legitimate role in the nominations process against
encroachment by the executive branch of government.

Earlier this year, we witnessed a troubling demonstration of what can
happen when the President violates the Constitution's separation of
powers and tramples on the Senate's rightful prerogatives in the advise
and consent process. On January 4, 2012, at a time when the Senate was
conducting brief sessions approximately every 72 hours, President Obama
nonetheless bypassed the Senate and unilaterally appointed four
significant executive branch nominees. By asserting the power to make
recess appointments, even when the Senate--according to its own rules--
was not in recess, the President simply ignored the Senate's legitimate
constitutional right to advise and consent to nominees made by the
President.
President Obama's unconstitutional appointments cut to the very heart
of our Constitution's separation of powers and the institutional
prerogatives that rightfully belong right here, in this body.
Accordingly, since the time of those appointments, I have sought to
protect the Senate's interests by opposing President Obama's judicial
nominees. I have made clear I would do the same were a Republican
President to make similarly unconstitutional appointments under the
recess appointments clause.
As the chairman of the Senate Judiciary Committee noted at a recent
Judiciary Committee hearing, I have stated my concern with President
Obama's unconstitutional recess appointments very clearly, but I have
also been, in his words, extremely responsible in my opposition and
have not hindered the work of the Senate. In light of President Obama's
unconstitutional appointments, it is all the more proper we invoke the
Leahy-Thurmond rule now.
I agree with the ranking member of the Senate Judiciary Committee
that we should have invoked that rule back in January, at the time of
the unconstitutional appointments. By enforcing the Leahy-Thurmond rule
now, we will demonstrate for the historical record the Senate did not
acquiesce in President Obama's unconstitutional recess appointments
and, instead, took action to protect the Senate's institutional
prerogatives. When we have done so, I will again be in a position to
vote in favor of qualified consensus District Court nominees.
But I will always remain vigilant in seeking to protect the Senate
against unconstitutional encroachment by the executive branch. As
Members of this body, we have an institutional responsibility to
safeguard the Senate's essential advise and consent role and to confirm
only those nominees who are properly qualified to serve in the
positions for which they have been rightfully nominated.
I yield the floor.
The PRESIDING OFFICER. The Senator from Illinois.

Arizona Immigration Decision

Mr. DURBIN. Mr. President, today, the U.S. Supreme Court announced
its decision on S.B. 1070--the controversial Arizona immigration law.
The Court--including conservative Justices Anthony Kennedy and John
Roberts--agreed with the Obama administration that a State cannot set
up its own immigration enforcement system.
As a result, the Supreme Court struck down several parts of the
Arizona law, including the provision that would have made it a crime in
Arizona to be an undocumented immigrant and the provision that would
have required legal immigrants to carry documents proving their legal
status at all times.
The Supreme Court is right. States do not have the right, under the
Constitution, to enact immigration laws that contradict Federal law.
Many of my colleagues on the other side of the aisle strongly
criticized the Obama administration for even challenging the Arizona
immigration law. There was even an amendment offered to try to block
the Justice Department from pursuing the litigation brought to the
Supreme Court. Fortunately, the vast majority of Democrats, joined by
two Republicans--Senators Johanns and Voinovich--blocked that
amendment.
Now the Supreme Court--including Chief Justice Roberts and Justice
Kennedy--has sided with the Obama administration in holding the vast
majority of the Arizona law unconstitutional.
I am troubled the Supreme Court upheld one of the provisions in that
law in Arizona--section 2(B)--which requires Arizona police officers to
check the immigration status of suspected undocumented immigrants. But
it is important to understand the Court's decision on that section is a
narrow one. The only question for the Court was whether that section--
2(B)--was preempted by Federal immigration law. The Court said it is
open to future challenges once the law goes into effect, and this
provision may still be held unconstitutional, as the other provisions
in the Arizona law.
According to law enforcement experts, section 2(B) is likely to
encourage profiling, which would violate the Equal Protection Clause of
the 14th amendment to the Constitution. Specifically, section 2(B)
requires police officers to check the immigration status of any
individual with whom they have lawful contact if they have ``reasonable
suspicion'' the person is an undocumented immigrant.
What is the basis for a reasonable suspicion the person they pull
over is, in fact, an undocumented immigrant? The guidance on the law
issued in the State of Arizona says police officers should consider
things such as how a person is dressed or their ability to communicate
in English.
Earlier this year, I held a hearing on racial profiling in the
Judiciary's Subcommittee on the Constitution, Civil Rights and Human
Rights. It was the first hearing on racial profiling since before 9/11.
One of the witnesses at my hearing was Ron Davis. He is the chief of
police in East Palo Alto, CA, and

[[Page S4440]]

Chief Davis, along with 16 other law enforcement officials and the
Major Cities Chiefs of Police Association, filed a brief in the Arizona
case. In their brief, the police chiefs say:

The statutory standard of ``reasonable suspicion'' of
unlawful presence in the United States will as a practical
matter produce a focus on minorities, and specifically
Latinos.

Two former Arizona attorneys general, joined by 42 other former State
attorneys general, filed an amicus brief in the Arizona case, and they
said ``application of the law requires racial profiling.'' I agree with
these law enforcement experts. I am confident section 2(B) will
eventually be struck down as the other provisions of the Arizona law
were.
The Arizona law is the wrong approach for America. It is amazing to
me how this Nation of immigrants, in which we are all part of the
family, has struggled for so long to deal with the whole issue of
immigration. I think it is wrong to treat people as criminals simply
because of their immigration status, and it is not right to make
criminals of people who literally go to work every day, cooking our
food, cleaning our rooms, and caring for our children in day care
centers or caring for our parents and grandparents in nursing homes.
Here is the reality: Treating immigrants as criminals will not help
combat illegal immigration. Law enforcement doesn't have the time or
the resources to prosecute and incarcerate every undocumented immigrant
among the 10 million or 11 million in this country. Making undocumented
immigrants into criminals simply drives them into the shadows. That is
why the Arizona Association of Chiefs of Police opposes the Arizona law
considered by the Court today. They say it will make it more difficult
for them to make Arizona a safe place. Immigrants are less likely to
cooperate with the police if they fear they are going to get arrested
for even trying to help.
Instead of measures that harm law enforcement and promote racial
profiling, such as the Arizona immigration law, we need practical
solutions to fix a broken immigration system. That case was before the
Supreme Court. The Court made its decision today because this body--the
Senate and the House--have failed to accept their responsibility. We
have a responsibility, if, in fact, immigration is a Federal issue, for
a Federal response, and we failed.
The first step we should take in passing comprehensive immigration
reform is to pass the DREAM Act--legislation that would allow a select
group of immigrant students who grew up in this country to earn
citizenship either by attending college or serving in the military.
Russell Pearce is the author of the Arizona immigration law. He had
this to say about the DREAM Act:

The DREAM Act is one of the greatest legislative threats to
America's sovereignty, national security and economic future.

I see it differently and so do many others, including GEN Colin
Powell and former Defense Secretary Robert Gates. They support the
DREAM Act because it would make America a stronger country by giving
these talented immigrants the chance to serve in the military and
contribute to the future of America.
The best way to understand the problems with the Arizona immigration
law and the need for the DREAM Act and comprehensive immigration law is
to hear the stories of some of the immigrant students who would be
eligible for the DREAM Act. They call themselves DREAMers. Almost every
week in the session I come to the floor of the Senate to tell the story
of one of these young people. Over the years I have told stories of
several DREAMers from the State of Arizona. Under the Arizona law,
these young people would be targets for prosecution and incarceration.
Under the DREAM Act, they would be future citizens who could make
America and Arizona stronger.
Today, I wish to introduce one of them from Arizona. Her name is
Angelica Hernandez. She was brought to Phoenix, AZ, when she was 9
years old. She started school in the fourth grade, and by the time she
reached the sixth grade, Angelica no longer took English as a second
language. She was proficient in the language of English.
At Carl Hayden High School in Phoenix, AZ, Angelica served in Junior
ROTC and was president of the National Honor Society. She became a
dedicated member of the school's robotics club, where she found her
true love, engineering.
Angelica graduated from high school with a 4.5 GPA and in 2007 was
named Outstanding Young Woman of the Year for district 7 in Phoenix.
Last year, Angelica Hernandez graduated from Arizona State University--
we can see her holding her graduation certificate--as the outstanding
senior in the Mechanical Engineering Department, with a 4.1 GPA.
Under the Arizona immigration law, Angelica Hernandez would be a
target for prosecution and incarceration. Under the DREAM Act, she
would be a future citizen and engineer who could contribute her talents
to making this a better country. What a choice: to take this woman, who
has spent virtually her entire life, as she remembers it, in America,
attending our schools, excelling in those schools, being acknowledged
as one of the better students so her ambition takes her to a great
university, Arizona State University, where she graduated at the top of
her class in mechanical engineering and, some would say, tell her now
she must leave America, I think is wrong. Angelica Hernandez, and
people like her, will make this a better country. Unlike the Arizona
immigration law, the DREAM Act is a practical solution to a broken
immigration system. The Arizona law would harm law enforcement and
encourage profiling. The DREAM Act would make America stronger.
President Obama understands this. That is why he challenged the
Arizona law, taking the case to the Supreme Court. That is why earlier
this month I saluted the President for announcing his administration
will no longer deport people, such as Angelica Hernandez, who would be
eligible for the DREAM Act. I strongly support President Obama's
courage and his decision. It is one of the most historic, humanitarian
moments of our time. His decision will give these young immigrants the
chance to finally come out of the shadows and be part of the only
country they have ever called home. It was the right thing to do.
These students didn't make the decision to come to this country.
Angelica was brought here at the age of 9, and it is not the American
way to punish children for the wrongdoing of their parents. President
Obama's new deportation policy will make America better by giving these
talented immigrants the chance to contribute.
Studies have found DREAM Act students will literally boost the
American economy during their working lives. This policy is also
clearly legal. Throughout our history, the government has decided who
to prosecute and who not to prosecute based on law enforcement
priorities and availability resources. Past administrations of both
political parties have used their authority to stop deportation of low-
priority cases. The courts have recognized that.
Listen to what the Supreme Court said today in the Arizona
immigration law case:

A principal feature of the removal system is the broad
discretion exercised by immigration officials. . . .
Discretion in the enforcement of immigration law embraces
immediate human concerns.
The President's plan is smart and realistic. The Department of
Homeland Security has to set priorities. It is not amnesty; it is
simply a decision to focus limited government resources on those who
have committed serious crimes and are a threat to public safety, not
the DREAM Act students.
Compare President Obama's approach with the Presidential candidate
from another party who said the Arizona law was a ``model'' for the
rest of America. That other Presidential party candidate has promised
that if he is elected President he will veto the DREAM Act. He has
refused to say whether he would even maintain or rescind President
Obama's order banning the deportation of DREAM Act students. That is
the wrong approach for America.
The administration's new policy on the DREAM Act is only temporary. I
understand that. The burden is still on us in the Senate and the House
to do something about the many thousands of students across America,
just like this dynamic young lady in Arizona,

[[Page S4441]]

who simply want a chance to be a part of America and its future. Our
first step: Pass the DREAM Act. Do it and do it now.
Justice Kennedy wrote in his opinion today:

The history of the United States is in part made of the
stories, talents, and lasting contributions of those who
crossed oceans and deserts to come here.

Justice Kennedy is right. Congress should reform our immigration laws
so we can once again welcome those who cross oceans and deserts to
revitalize and strengthen this Nation of immigrants.
Mr. President, I yield the floor.
The PRESIDING OFFICER. The Senator from Arizona.
Mr. McCAIN. Mr. President, I came to the floor to discuss another
issue. But since my friend from Illinois, with whom I share many of his
comments, I have to comment. The fact is that the irony of the Supreme
Court decision today said it is a Federal responsibility to ensure our
borders and not the States' responsibility. The State of Arizona acted
because the Federal Government wouldn't act, because our borders were
broken, because the people in the southern part of our State were
living in fear, because a rancher was killed by someone who had crossed
our border illegally, because people are on mountaintops today guiding
drug runners across our border into Arizona with drugs ending up in
Phoenix, AZ, and distributed all over this Nation, $887 million wasted
on a contract for a virtual fence.
Coyotes bring these people across and then treat them in the most
abominable fashion, where they are put into drop houses and kept in the
worst kinds of conditions and held for ransom.
Because the Federal Government would not secure our borders, the
State of Arizona believed they had to act because people in the
southern part of our State and even other parts of our State were
living in fear. They are living in fear because of the drug dealers who
are coming across, because of the coyotes who are mistreating the
people they were bringing.
Of course we want to address the issue of children who weren't born
here. But we also have an obligation to have our borders secured. I
repeat--today, I say to my friend from Illinois--there are people
sitting on mountaintops hired by the drug cartels who are guiding the
drug runners across our borders and up to Phoenix. You can ask the DEA.
These drugs are then distributed throughout the country from Phoenix,
AZ. People are murdered, and the violence on the other side of the
border threatens every day to spill over to our side of the border. So
I hope, as a result of this decision, the administration will get
serious about actually securing our border. Every expert agrees that
because of the work that has been done in California and Texas it has
funneled through the State of Arizona.
Have there been improvements? Of course there have been improvements.
Is it still going on? As long as we have guides sitting on mountaintops
guiding drug dealers, we haven't got a secure border. That is what the
people of Arizona not only want but they also deserve.
By the way, Mitt Romney agrees that we have to address this issue in
a comprehensive fashion as well as concern about the plight of the
children who are brought here illegally. But I would also point out to
my friend that part of the DREAM Act, as proposed by the Senator from
Illinois, is 2 years' service in the military. We don't sign people up
for 2 years. Average citizens, in order to get on a path to a green
card and citizenship, sign up for 4 years. That is just one of the
areas that need to be worked out.
So there will be a lot of conversation about this. But I believe
people who live inside of our country--no matter whether it is in
Arizona or Illinois--deserve the right to live in a safe environment.
The people who live in the southern part of our State do not have that.
So I hope we can get our borders secure and we can move forward with
comprehensive immigration.
By the way, then-Senator Obama was one of the key reasons it failed
because he wanted to sunset the guest worker program. That is a fact,
and you can look it up, I say to my friend from Illinois. Although it
was killed by people on this side, it was also a broken promise on the
part of then-Senator Obama who assured Senator Kennedy and me that he
wouldn't vote for an amendment that would impair the progress of
comprehensive reform at that time.
I look forward to having further discussions with the Senator from
Illinois as we move forward--sooner or later--with comprehensive
immigration reform, which is absolutely needed. But we also have to
ensure the security of all of our citizens and stop the flow of drugs
across our southern border, which is killing our young Americans.
By the way, I would say to the Senator from Illinois, the price of an
ounce of cocaine on the streets of Chicago today is not one less penny
higher than it was 10 years ago, which means we are not restricting the
flow of drugs coming into our country. As we all know, the majority of
it comes across from our southern border.
Finally, I would remind my friend from Illinois that then-Senator
Obama promised in the campaign of 2008 that immigration reform would be
his first priority. The Senator had 60 votes over here and an
overwhelming majority in the House of Representatives in the first 2
years of the Obama administration. I never saw a proposal come to the
Senate for comprehensive immigration reform. Now, the DREAM Act did.
Comprehensive immigration reform? No. That is what then-Senator Obama
promised.
Mr. President, I ask unanimous consent for a colloquy between myself
and the Senator from Illinois.
The PRESIDING OFFICER. Without objection, it is so ordered.
The Senator from Illinois.
Mr. DURBIN. Let me say, the Senator from Arizona is my friend, and
there are many things we have worked on together, and I respect him
very much. He knows, as I do, when the DREAM Act was called, we thought
the introductory may be the easiest part of immigration reform. It was
stopped by a Republican filibuster.
Mr. McCAIN. I don't dispute that point, I say to my friend from
Illinois. There was no comprehensive immigration reform proposal that
came over from the White House or from the Democrats, as was promised
by then-Senator Obama when running for the Presidency. That is a fact.
Mr. DURBIN. I would say to the Senator from Arizona, as part of this
colloquy, we thought that would be the first step. We couldn't get past
the first step because of the Republican filibuster.
Mr. McCAIN. I wish that when then-Senator Obama was running for
President he would have said: But first I am coming over with the DREAM
Act. He didn't. He said: My first act will be comprehensive immigration
reform.
I was invited over to the White House in 2009. We talked about
comprehensive immigration reform and I said: I will await a proposal
from the administration on comprehensive immigration reform. My phone
never rang.
Mr. DURBIN. I say to the Senator from Arizona, perhaps the day will
come in our lifetime when we can see that, and you and I can work on it
together again as we once did before. I would look forward to that.
Mr. McCAIN. I look forward to it, and I want to say there has been no
more passionate advocate in the Senate than the Senator from Illinois.
I respect him and admire him for his compassion and his concern about
young people whose lives, as he very well described, need to have some
kind of assurance for their future since it is clearly a compelling
humanitarian situation. I thank my friend from Illinois.

Health Care Ruling

Mr. President, later this week the Supreme Court will issue its
ruling on the health care bill, designed and negotiated by the White
House and rammed through Congress during President Obama's first year
in office when the economy was near its weakest.
Instead of focusing on recovery and persistent unemployment, the
President and the Democratic majorities controlling Congress squandered
the opportunity and forced the unpopular and potentially
unconstitutional legislation on the American people.
Today we are voting on final passage on the reconciled FDA user fee
bill. During Senate consideration of this bill I offered an amendment
to allow safe drug importation from legitimate

[[Page S4442]]

Canadian pharmacies. But the pharmaceutical industry spread misleading
and inaccurate information about the amendment, as they have done time
and a time again. As I said then, there is no greater example of the
influence of special interests on this body than the failure to enact
an amendment that would have allowed drugs from legitimate Canadian
pharmacies so people could purchase their much needed medication at
sometimes half the cost of what it is in the United States of America.
I am embarrassed to this day that nine of my Republican colleagues also
voted against it.
I don't know if there was a sweetheart deal to protect PhRMA at the
expense of American patients from the vote on my amendment. But we do
know that PhRMA was protected by the White House and Senate Democrats
from provisions they didn't like in ObamaCare only after they offered
up advertising in exchange for more accommodating policies.
From a recent House Energy and Commerce Committee investigation, it
is now confirmed that PhRMA orchestrated a grand deal with the White
House and Senate Democrats to oppose importation and other policies. I
might point out then-Senator Obama supported drug importation.
This is how the New York Times described the deal that was done in
exchange for reportedly $150 million in advertising to support
ObamaCare, June 8, 2012:

After weeks of quiet talks, drug industry lobbyists were
growing nervous. If they were to cut a deal with the White
House on overhauling health care, they needed to be sure
President Obama would stop a proposal by his liberal allies
intended to bring down medicine prices.
On June 3, 2009, one of the lobbyists e-mailed Nancy-Ann
DeParle, the president's top health care adviser. Ms. DeParle
sent a message back reassuring the lobbyists. Although Mr.
Obama was overseas, she wrote, she and other top officials
had ``made a decision, based on how constructive you guys
have been, to oppose importation on the bill.'' Just like
that, Mr. Obama's staff abandoned his support for the
reimportation of prescription medicines at lower prices and
with it solidified a growing compact with an industry he had
vilified on the campaign trail the year before.
A president who had promised to air negotiations on C-SPAN
cut a closed-door deal with the powerful pharmaceutical
lobby, signifying to some disillusioned liberal supporters a
loss of innocence, or perhaps even the triumph of cynicism.
Still, what distinguishes the Obama-industry deal is that
he had so strongly rejected that very sort of business as
usual.

Ironically, candidate Obama sang a very different tune on the
campaign trail in 2008:

You know, I don't want to learn how to play the game
better. I want to put an end to the game playing.

Now, PhRMA is the lobbying group for the pharmaceutical industry. The
New York Times article continued:

The e-mails, which the House committee obtained from PhRMA
and other groups, document a tumultuous negotiation, at times
transactional. . . .
In the end, the White House got the support it needed to
pass its broader priority, but industry emerged satisfied as
well. ``We got a deal,'' wrote Bryant Hall, then senior vice
president of the pharmaceutical group.
In July, the White House made clear that it wanted
supportive ads using the same characters the industry used to
defeat Mr. Clinton's proposal 15 years earlier. ``Rahm asked
for Harry and Louise ads thru third party,'' Mr. Hall
wrote.''
Talks came close to breaking down several times. In May,
the White House was upset that the industry had not signed
onto a joint statement. One industry official wrote that they
should sign: ``Rahm is already furious. The ire will be
turned on us.''

The e-mails also detail extensive and direct negotiations with PhRMA,
its drug company members, the American Medical Association, AARP, the
American Hospital Association, unions, and many more. Members of the
alliance all participated because they thought they were getting
something more valuable--revenue to their organization or membership
because the Federal Government was going to force everyone into some
form of government-designed health insurance coverage--than what they
were going to have to spend on advertising to support the legislation.
Some reports have the PhRMA advertising commitment as high as $150
million, spread out through direct advertising in certain important
States and among groups created to sound like they were looking out for
patients or to tout the economic benefits of ObamaCare.
On June 11, 2012, the Wall Street Journal described the e-mails about
the 2009 negotiations:

The joint venture was forged in secret in spring of 2009
amid an uneasy mix of menace and opportunism. The drug makers
worried that health-care reform would revert to the liberal
default of price controls and drug re-importation that Mr.
Obama campaigned on, but they also understood that a new
entitlement could be a windfall as taxpayers bought more of
their products. . . .
Initially, the Obamateers and Senate Finance Chairman Max
Baucus asked for $100 billion, 90% of it from mandatory
``rebates'' through the Medicare prescription drug benefit
like those that are imposed in Medicaid. The drug makers
wheedled them down to $80 billion by offsetting cost-sharing
for seniors on Medicare, in an explicit quid pro quo for
protection against such rebates and re-importation.
``Terms were reached in June. . .lead PhRMA negotiator
Bryant Hall wrote on June 12 that Mr. Obama ``knows
personally about our deal and is pushing no agenda.''
But Energy and Commerce Chairman Henry Waxman then
announced that he was pocketing PhRMA's concessions and
demanding more, including re-importation. We wrote about the
double-cross in a July 16, 2009 editorial called ``Big Pharma
Gets Played,'' noting that Mr. Tauzin's ``corporate clients
and their shareholders may soon pay for his attempt to get
cozy with ObamaCare.''
Mr. Hall forwarded the piece to Ms. DeParle with the
subject line, ``This sucks.'' The White House rode to the
rescue. In September Mr. Hall informed Mr. Kindler that
deputy White House chief of staff Jim Messina ``is working on
some very explicit language on importation to kill it in
health care reform. This has to stay quiet.''
``PhRMA more than repaid the favor, with a $150 million
advertising campaign coordinated with the White House
political shop. As one of Mr. Hall's deputies put it earlier
in the minutes of a meeting when the deal was being
negotiated, ``The WHdesignated folks . . . would like us to
start to define what 'consensus health care reform' means,
and what it might include. . . . They definitely want us in
the game and on the same side.''

More on the ``WH-designated folks . . .'' in a moment. The June 11
WSJ editorial continued:

In particular, the drug lobby would spend $70 million on
two 501(c)(4) front groups called Healthy Economy Now and
Americans for Stable Quality Care. In July, Mr. Hall wrote
that ``Rahm asked for Harry and Louise ads thru third party.
We've already contacted the agent.

Other groups like the AMA were also willing to commit their
membership dollars to advertising in support of the legislation in
exchange for their policy priorities. According to the Wall Street
Journal:

``At least PhRM/I deserves backhanded credit for the
competence of its political operatives--unlike, say, the
American Medical Association. A thread running through the
emails is a hapless AMA lobbyist importuning Ms. DeParle and
Mr. Messina for face-to-face meetings to discuss reforming
the Medicare physician payment formula. The AMA supported
ObamaCare in return for this ``doc fix,'' which it never got.
``We are running out of time,'' this lobbyist, Richard
Deem, writes in October 2009. How can he ``tell my colleagues
at AMA headquarters to proceed with $2m TV buy'' without a
permanent fix? The question answers itself: It was only $2
million.''

The emails uncovered by the House committee also describe potentially
serious conflicts of interest for senior White House staff, their
former businesses, who was really writing the legislation--the White
House, Congress or affected industries--and questions about the
appearance of the White House staff orchestrating the outside
advertising campaign. On June 21, 2012 the Wall Street Journal further
reported on the 2009 secret deals:

Strassel: Axelrod's ObamaCare Dollars

(By Kimberly A. Strassel)

Rewind to 2009. The fight over ObamaCare is raging, and a
few news outlets report that something looks ethically rotten
in the White House. An outside group funded by industry is
paying the former firm of senior presidential adviser David
Axelrod to run ads in favor of the bill. That firm, AKPD
Message and Media, still owes Mr. Axelrod money and employs
his son.
The story quickly died, but emails recently released by the
House Energy and Commerce Committee ought to resurrect it.
The emails suggest the White House was intimately involved
both in creating this lobby and hiring Mr. Axelrod's firm--
which is as big an ethical no-no as it gets.
Mr. Axelrod--who left the White House last year--started
AKPD in 1985. Mr. Axelrod moved to the White House in 2009
and agreed to have AKPD buy him out for $2 million. But AKPD
chose to pay Mr. Axelrod in annual installments--even as he
worked in the West Wing.
The White House and industry were working hand-in-glove to
pass ObamaCare in 2009, and among the vehicles supplying ad
support was an outfit named Healthy Economy Now (HEN).
House emails show HEN was in fact born at an April 15, 2009
meeting arranged by then-White House aide Jim Messina and a
chief of staff for Democratic Sen. Max Baucus. The

[[Page S4443]]

two politicos met at the Democratic Senatorial Campaign
Committee (DSCC) and invited representatives of business and
labor.
The call was from Nick Baldick, a Democratic consultant who
had worked on the Obama campaign and for the DSCC. Mr.
Baldick started HEN. The only job of PhRMA and others was to
fund it.
Meanwhile, Mr. Axelrod's old firm was hired to run the ads
promoting ObamaCare. At the time, a HEN spokesman said HEN
had done the hiring. But the emails suggest otherwise. In
email after email, the contributors to HEN refer to four men
as the ``White House'' team running health care.
In one email, PhRMA consultant Steve McMahon calls these
four the ``WH-designated folks.'' He explains to colleagues
that Messrs. Grossman, Grisolano and Del Cecato ``are very
close to Axelrod,'' and that ``they have been put in charge
of the campaign to pass health reform.''
A 2009 PhRMA memo also makes clear that AKPD had been
chosen before PhRMA joined HEN. It's also clear that some
contributors didn't like the conflict of interest. When, in
July 2009, a media outlet prepared to report AKPD's hiring, a
PhRMA participant said: ``This is a big problem.'' Mr.
Baldick advises: ``just say, AKPD is not working for PhRMA.''
AKPD and another firm, GMMB, would handle $12 million in ad
business from HEN and work for a successor 501(c)4.
A basic rule of White House ethics is to avoid even the
appearance of self-dealing or nepotism. Could you imagine the
press frenzy if Karl Rove had done the same after he joined
the White House?
Until the White House explains all this, voters can fairly
conclude that the President's political team took their
Chicago brand of ethics into the White House.''

Mr. President, I ask unanimous consent to have printed in the Record
a New York Times article, June 8, 2012; a Wall Street Journal article,
June 11, 2012; and June 21 Wall Street Journal editorial, and the memos
about the e-mails associated with this report.
There being no objection, the material was ordered to be printed in
the Record, as follows:

May 16, 2012.
To: Energy and Commerce Committee Republican Members
From: Subcommittee on Oversight and Investigations Majority
Staff
Re Investigation Update: Closed-Door Obamacare Negotiations
From: Messina, Jim
Sent: Friday, January 15, 2010 6:04 PM
To: Bryant Hall
Subject: FW: TAUZIN EMAIL
What the hell? This wasn't part of our deal.

Overview

The purpose of this memorandum is to update Republican
Members on the Energy and Commerce Committee on the
Committee's ongoing investigation into the potential
agreements made by the White House and health care industry
stakeholders prior to passage of the Patient Protection and
Affordable Care Act (PPACA). As reported on April 17, 2012,
the Committee's investigation is attempting to answer the
following questions:
Were ``deals'' made between the Administration and outside
stakeholders that exchanged specific policy outcomes for
public support of the law?
Who made these deals, and to what extent was Congress
excluded?
What specifically was negotiated by the White House and
these outside interests? What policies are now law as a
result of these negotiations, and what did the White House
obtain in exchange?
This investigation has produced further information
regarding the substance of the ``deal'' between the White
House and the Pharmaceutical Manufacturers of America
(PhRMA), the details of which have never been fully disclosed
to the public. Further, based on email exchanges and other
primary source material, it appears that deal was reached not
solely between PhRMA and the United States Senate Finance
Committee, but that top personnel in the White House were
involved in negotiating and approving this deal. The
following update is based on internal records obtained from
outside stakeholders who engaged in negotiations outside the
public's view during the development and passage of PPACA.

I. Was there a deal?

The existence of an agreement or series of agreements
between powerful health care industry stakeholders and the
authors of PPACA is a widely known--albeit poorly
understood--aspect of the health care law. Media accounts
dating back to 2009 speculated on the existence and details
of such deals leading up to the law's enactment. However,
those accounts have lacked concrete evidence of exactly what
policies the White House accepted or rejected as part of
these agreements, and what the interest groups delivered in
return. Moreover, media accounts and public statements from
policymakers at the time were often conflicting or
incomplete, failing to provide a clear picture to the
American people about how this law was being written, and by
whom.
For example, while President Obama referred to the
agreement in June 2009, reports at the time also indicated
that ``many details of the . . . deal remained unclear.'' A
month later, The Wall Street Journal reported that House
Democrats had been told that the Administration ``doesn't
feel bound'' by the agreement. Because of increased pressure
from the Hill to scuttle the agreement, eventually the White
House attempted to publicly support the deal in early August
when The New York Times reported that the drug industry ``. .
. successfully demanded that the White House explicitly
acknowledge for the first time it had committed to protect
drug makers. . . .'' Yet, a week later reports still
indicated that ``[s]ince mid-July, the White House and the
drug industry's lobby, PhRMA, have denied any specific
agreement. . . .''
This investigation has confirmed the existence of a deal
between the White House and PhRMA that explicitly bound both
parties to certain commitments. As the email exchange at the
top of this memorandum demonstrates, the deal was so clearly
understood to be binding that White House Deputy Chief of
Staff Jim Messina made direct contact with PhRMA's chief
lobbyist for the negotiations regarding the deal to express
his displeasure with an apparent violation of the agreement
more than two months before the legislation was given final
approval by Congress.

II. Why did the White House hide its involvement?

On June 20, 2009, the White House issued a 296-word
statement from President Obama announcing an agreement
between the nation's pharmaceutical companies and the Senate.
The statement makes no mention of White House involvement.
The investigation has determined that the White House,
primarily through the Office of Health Reform Director Nancy
Ann DeParle and Messina, with involvement from Chief of Staff
Rahm Emmanuel, was actively engaged in these negotiations
while the role of Congress was limited. For example, three
days before the June 20 statement, the head of PhRMA promised
Messina, ``we will deliver a final yes to you by morning.''
Meanwhile, Ms. DeParle all but confirmed that half of the
Legislative Branch was shut out in an email to a PhRMA
representative: ``I think we should have included the House
in the discussions, but maybe we never would have gotten
anywhere if we had.''
Given these facts, it is unclear why the White House did
not fully disclose its involvement with outside stakeholders
in the development of the legislation. Their efforts are
particularly surprising given the President's repeated
promises of transparency.
After this Committee initiated its investigation into the
potential promises or agreements made between PhRMA, labor
unions, insurers, medical associations, and other trade and
advocacy organizations, the White House derided the
Committee's request for basic information about its
legislative efforts as ``vast and expensive.'' The White
House refused to produce any of the requested documents and
only produced to the Committee a list of meetings based on
``calendar entries and other readily available information.''
These calendar entries do not provide information on the
attendees or details of discussion. For example, the calendar
provided by the White House identifies a July 7, 2009, event
as follows: ``Meeting with PhRMA representatives.'' No
further information is provided. This investigation, however,
has revealed that this was not only a meeting between
representatives of PhRMA and top White House aides; it was
the critical meeting to solidify the deal. As a PhRMA
representative said at the time: ``It's just to go over the
principal elements of the deal w[ith] Rahm, Messina and
DeParle. ''

III. What did the White House promise to do?

Even news stories that indicated that there was a potential
agreement with the pharmaceutical industry could not report
the entirety of the agreement. The August New York Times
story that reported White House acknowledgment of the deal
``for the first time'' could not report any specifics
``beyond an agreed-upon $80 billion'' in cost savings. This
investigation will show that the agreement between the White
House and the pharmaceutical industry was much more explicit.
In the coming weeks the Committee intends to show what the
White House agreed to do as part of its deal with the
pharmaceutical industry and how the full details of this
agreement were kept from both the public and the House of
Representatives.
After two years, the health care law has failed to lower
costs while only increasing its unpopularity with the public.
According to a PhRMA official: ``[W]e got a good deal.''
The important question to answer is what did the White
House get in return.
____

May 31, 2012.
To: Energy and Commerce Committee Republican Members
From: Majority Staff
Re Investigation Update: Closed-Door Obamacare Negotiations

Executive Summary

The White House negotiated a deal with the Pharmaceutical
Research and Manufacturers of America (PhRMA) in mid-June
2009. After attempting to secure a commitment from the
industry for $100 billion in payment cuts, eventually the
White House settled for approximately $80 billion in payment
reductions through expanded and increased Medicaid rebates
and a new health reform fee. PhRMA also had direct input into
the actual legislative policies that produced the $80
billion, including the proposal for closing the Part D
doughnut hole.
Under the deal, ``the White House and Senator Baucus
agreed'' that neither price controls nor a government-run
Medicare Part D

[[Page S4444]]

plan would become law, the White House would oppose price
controls on dual eligible beneficiaries, and that savings
from a follow-on biologics proposal would be applied to the
total $80 billion commitment.
White House Office of Health Reform Director Nancy-Ann
DeParle told PhRMA's chief lobbyist for negotiating the deal
that the White House would oppose new drug importation
policies because of ``how constructive'' PhRMA had been.
According to PhRMA's lobbyist, White House Deputy Chief of
Staff Jim Messina told him that the ``WH is working on some
very explicit language on importation to kill it in health
reform.''
According to internal e-mails, PhRMA's chief lobbyist
believed the White House eventually cut a deal with the
pharmaceutical industry during the week of June 20, 2009,
because the White House had suffered a bad week politically.
Despite countless promises of televised negotiations and
transparent government, the White House met in private with
PhRMA representatives and drug company CEOs in July 2009,
``to look the other side in the eye and shake their hand on
whatever deal we work out.''
The White House was not above threatening PhRMA to get its
way. According to PhRMA's chief lobbyist, the White House was
going to have President Obama call for rebating all of
Medicare Part D, a policy PhRMA staunchly opposed, in his
Weekly Radio Address unless PhRMA cut a deal with the White
House to support health reform.
____

June 8, 2012.
To: Energy and Commerce Committee Republican Members
From: Majority Staff
Re: Investigation Update: Closed-Door Obamacare Negotiations

Executive Summary

As part of its agreement with the White House, the
Pharmaceutical Research and Manufacturers of America (PhRMA)
needed to undertake a ``significant public campaign.'' PhRMA
was willing to spend as much as $150 million on advertising,
with nearly $70 million spent on two 501(c)(4) groups that
could spend unlimited corporate money with little public
disclosure: Healthy Economy Now and Americans for Stable
Quality Care.
Healthy Economy Now was created after a meeting at the
Democratic Senatorial Campaign Committee (DSCC) organized in
part by White House Deputy Chief of Staff Jim Messina.
Participants were told that the White House wanted to see ads
linking the poor economy to the need for health care
legislation, with one attendee remarking that ``given who is
behind this ask'' their group should support the effort.
In early June 2009, PhRMA representatives met with ``the
team that is working with the White House on health care
reform'' to learn about White House messaging and ``how our
effort can be consistent with that.'' The team was a who's
who of Democratic strategists that included a previous head
of the DSCC; the producer of the 2008 Democratic National
Convention; and two partners at AKPD Message and Media, the
advertising firm founded by then Senior Advisor to the
President David Axelrod.
When PhRMA's representative indicated that PhRMA was not
prepared to run advertisements before seeing how the health
care legislation developed, the White House team specifically
referred to a meeting the PhRMA CEOs had with Jim Messina the
day before and to White House efforts on drug importation
policy which had been communicated to PhRMA's chief lobbyist
that day.
PhRMA's chief lobbyist reported that White House Chief of
Staff Rahm Emanuel asked for ``Harry and Louise ads thru
third party'' on July 7, 2009, the same day White House
officials met with PhRMA CEOs. PhRMA aired the ad a week
later.
Public revelations about the hiring of political firms
close to the White House were perceived to be a ``big
problem.'' Presumably, because the firms producing and
placing some of PhRMA's advertising, including the
advertising through both Healthy Economy Now and Americans
for Stable Quality Care, had also received over $340 million
to handle advertising for President Obama's 2008 election
campaign.
The White House attempted to steer the advertising and
advocacy tactics of a number of organizations, including the
AFL-CIO and AARP.
____

[From the Wall Street Journal, June 11, 2012]

ObamaCare's Secret History--How a Pfizer CEO and Big Pharma Colluded
With the White House at the Public's Expense.

On Friday House Republicans released more documents that
expose the collusion between the health-care industry and the
White House that produced ObamaCare, and what a story of
crony capitalism it is. If the trove of emails proves
anything, it's that the Tea Party isn't angry enough.
Over the last year, the Energy and Commerce Committee has
taken Nancy Pelosi's advice to see what's in the Affordable
Care Act and how it passed. The White House refused to
cooperate beyond printing out old press releases, but a dozen
trade groups turned over thousands of emails and other files.
A particular focus is the drug lobby, President Obama's most
loyal corporate ally in 2009 and 2010.
The business refrain in those days was that if you're not
at the table, you're on the menu. But it turns out Big Pharma
was also serving as head chef, matre d'hotel and dishwasher.
Though some parts of the story have been reported before, the
emails make clear that ObamaCare might never have passed
without the drug companies. Thank you, Pfizer.
The joint venture was forged in secret in spring 2009 amid
an uneasy mix of menace and opportunism. The drug makers
worried that health-care reform would revert to the liberal
default of price controls and drug re-importation that Mr.
Obama campaigned on, but they also understood that a new
entitlement could be a windfall as taxpayers bought more of
their products. The White House wanted industry financial
help and knew that determined business opposition could tank
the bill.
Initially, the Obamateers and Senate Finance Chairman Max
Baucus asked for $100 billion, 90% of it from mandatory
``rebates'' through the Medicare prescription drug benefit
like those that are imposed in Medicaid. The drug makers
wheedled them down to $80 billion by offsetting cost-sharing
for seniors on Medicare, in an explicit quid pro quo for
protection against such rebates and re-importation. As
Pfizer's then-CEO Jeff Kindler put it, ``our key deal points
. . . are, to some extent, as important as the total
dollars.'' Mr. Kindler played a more influential role than we
understood before, as the emails show.
Thus began a close if sometimes dysfunctional relationship
with the Pharmaceutical Research and Manufacturers of
America, or PhRMA, as led by Billy Tauzin, the Louisiana
Democrat turned Republican turned lobbyist. As a White House
staffer put it in May 2009, ``Rahm's calling Nancy-Ann and
knows Billy is going to talk to Nancy-Ann tonight. Rahm will
make it clear that PhRMA needs a direct line of
communication, separate and apart from any coalition.''
Nancy-Ann is Nancy-Ann DeParle, the White House health reform
director, and Rahm is, of course, Rahm.
Terms were reached in June. Mr. Kindler's chief of staff
wrote a memo to her industry colleagues explaining that
``Jeff would object to me telling you that his communication
skills and breadth of knowledge on the issues was very
helpful in keeping the meeting productive.'' Soon the White
House leaked the details to show that reform was making
health-care progress, and lead PhRMA negotiator Bryant Hall
wrote on June 12 that Mr. Obama ``knows personally about our
deal and is pushing no agenda.''
But Energy and Commerce Chairman Henry Waxman then
announced that he was pocketing PhRMA's concessions and
demanding more, including re-importation. We wrote about the
double-cross in a July 16, 2009 editorial called ``Big Pharma
Gets Played,'' noting that Mr. Tauzin's ``corporate clients
and their shareholders may soon pay for his attempt to get
cozy with ObamaCare.''
Mr. Hall forwarded the piece to Ms. DeParle with the
subject line, ``This sucks.'' The duo commiserated about how
unreasonable House Democrats are, unlike Mr. Baucus and the
Senators. The full exchange is among the excerpts from the
emails printed nearby.
Then New York Times reporter Duff Wilson wrote to a PhRMA
spokesman, ``Tony, you see the WSJ editorial, `Big Pharma
Gets Played' ''? I'm doing a story along that line for
Monday.'' The drug dealers had a problem.
The White House rode to the rescue. In September Mr. Hall
informed Mr. Kindler that deputy White House chief of staff
Jim Messina ``is working on some very explicit language on
importation to kill it in health care reform. This has to
stay quiet.''
PhRMA more than repaid the favor, with a $150 million
advertising campaign coordinated with the White House
political shop. As one of Mr. Hall's deputies put it earlier
in the minutes of a meeting when the deal was being
negotiated, ``The WH-designated folks . . . would like us to
start to define what `consensus health care reform' means,
and what it might include. . . . They definitely want us in
the game and on the same side.''
In particular, the drug lobby would spend $70 million on
two 501(c)(4) front groups called Healthy Economy Now and
Americans for Stable Quality Care. In July, Mr. Hall wrote
that ``Rahm asked for Harry and Louise ads thru third party.
We've already contacted the agent.''
Mr. Messina--known as ``the fixer'' in the West Wing--asked
on December 15, 2009, ``Can we get immediate robo calls in
Nebraska urging nelson to vote for cloture?'' Ben Nelson was
the last Democratic holdout toward the Senate's 60-vote
threshold, and, as Mr. Messina wrote, ``We are at 59, we have
to have him.'' They got him.
At least PhRMA deserves backhanded credit for the
competence of its political operatives--unlike, say, the
American Medical Association. A thread running through the
emails is a hapless AMA lobbyist importuning Ms. DeParle and
Mr. Messina for face-to-face meetings to discuss reforming
the Medicare physician payment formula. The AMA supported
ObamaCare in return for this ``doc fix,'' which it never got.
``We are running out of time,'' this lobbyist, Richard
Deem, writes in October 2009. How can he ``tell my colleagues
at AMA headquarters to proceed with $2m TV buy'' without a
permanent fix? The question answers itself: It was only $2
million.

[[Page S4445]]

Mr. Waxman recently put out a rebuttal memo dismissing
these email revelations as routine, ``exactly what Presidents
have always done to enact major legislation.'' Which is
precisely the point--the normality is the scandal. In 2003
PhRMA took a similar road trip with the Bush Republicans to
create the Medicare drug benefit. That effort included
building public support by heavily funding a shell outfit
called Citizens for a Better Medicare.
Of course Democrats claim to be above this kind of merger
of private profits and political power, as Mr. Obama did as a
candidate. ``The pharmaceutical industry wrote into the
prescription drug plan that Medicare could not negotiate with
drug companies,'' he said in 2008. ``And you know what? The
chairman of the committee who pushed the law through''--that
would be Mr. Tauzin--``went to work for the pharmaceutical
industry making $2 million a year.''
Outrage over this kind of cronyism is what animates the Tea
Party and Occupy Wall Street, whose members aren't powerful
enough to get special dispensations from the government--or
even a fair hearing from their putative representatives.
In one email, an AARP lobbyist writes the White House to
say ``We really need to talk,'' noting that calls from
seniors are running 14 to one against ObamaCare. But she
isn't calling to say that AARP is withdrawing support--only
that the White House needs to adjust its messaging. This is
how a bill passes over the objections of most Americans.
The lesson for Republicans if they do end up running the
country next year is that their job is to restore the free
and fair market that creates broad-based economic growth. The
temptation will be to return for the sake of power to the
methods of Tom DeLay and Jack Abramoff. If they do, voters
will return the GOP to private life as surely as they did the
Democrats in 2010.
The warning to business is also fundamental. Crony
capitalism undermines public trust in capitalism itself and
risks blowback that erodes the free market that private
companies need to prosper and that underlies the productivity
and competitiveness of the U.S. economy. The political
benefits of cronyism are inherently temporary, but the damage
it does is far more lasting.
As for Big Pharma, the lobby ultimately staved off Mr.
Waxman's revolt and avoided some truly harmful drug
policies--for now. But over the long term their products are
far more vulnerable to the command-and-control central
planning that will erode medical innovation, and their $80
billion fillip is merely the teaser rate.
Mr. Kindler resigned from Pfizer in December 2010 under
pressure from directors, its stock having lost 35% of its
value since he became CEO. Mr. Tauzin left PhRMA in February
2010, with the Affordable Care Act a month from passage.
The truth is that this destructive legislation wasn't
inevitable and far better reforms were possible. They still
are, though they might have gained more traction in 2009 and
2010 with the right support. The miracle is that, despite
this collusion of big government and big business, ObamaCare
has received the public scorn that it deserves.
____

[From the New York Times, June 8, 2012]

Lobby E-Mails Show Depth of Obama Ties to Drug Industry

(By Peter Baker)

Washington.--After weeks of quiet talks, drug industry
lobbyists were growing nervous. If they were to cut a deal
with the White House on overhauling health care, they needed
to be sure President Obama would stop a proposal by his
liberal allies intended to bring down medicine prices.
On June 3, 2009, one of the lobbyists e-mailed Nancy-Ann
DeParle, the president's top health care adviser. Ms. DeParle
sent a message back reassuring the lobbyist. Although Mr.
Obama was overseas, she wrote, she and other top officials
had ``made decision, based on how constructive you guys have
been, to oppose importation on the bill.''
Just like that, Mr. Obama's staff abandoned his support for
the reimportation of prescription medicines at lower prices
and with it solidified a growing compact with an industry he
had vilified on the campaign trail the year before. Central
to Mr. Obama's drive to overhaul the nation's health care
system was an unlikely collaboration with the pharmaceutical
industry that forced unappealing trade-offs.
The e-mail exchange that day three years ago was among a
cache of messages obtained from the industry and released in
recent weeks by House Republicans--including a new batch put
out on Friday morning detailing the industry's advertising
campaign in favor of Mr. Obama's proposal. The broad contours
of the president's dealings with the drug industry were known
in 2009 but the newly public e-mails open a window into the
compromises underlying a health care overhaul now awaiting
the judgment of the Supreme Court.
Mr. Obama's deal-making in 2009 represented a pivotal
moment in his young presidency, a juncture where the heady
idealism of the campaign trail collided with the messy
reality of Washington policymaking. A president who had
promised to air negotiations on C-Span cut a closed-door deal
with the powerful pharmaceutical lobby, signifying to some
disillusioned liberal supporters a loss of innocence, or
perhaps even the triumph of cynicism.
But if it was a Faustian bargain for the president, it was
one he deemed necessary to forestall industry opposition that
had thwarted efforts to cover the uninsured for generations.
Without the deal, in which the industry agreed to provide $80
billion for health reform in exchange for protection from
policies that would cost more, Mr. Obama and Democratic
allies calculated he might get nowhere.
``There was no way we had the votes in either the House or
the Senate if PhRMA was opposed--period,'' said a senior
Democratic official involved in the talks, referring to the
Pharmaceutical Research and Manufacturers of America, the
drug industry trade group.
Republicans see the deal as hypocritical. ``He said it was
going to be the most open and honest and transparent
administration ever and lobbyists won't be drafting the
bills,'' said Representative Michael C. Burgess of Texas, one
of the Republicans on the House Energy and Commerce
subcommittee that is examining the deal. ``Then when it came
time, the door closed, the lobbyists came in and the bills
were written.''
Some of the liberals bothered by the deal-making in 2009
now find the Republican criticism hard to take given the
party's long-standing ties to the pharmaceutical industry.
``Republicans trumpeting these e-mails is like a fox
complaining someone else raided the chicken coop,'' said
Robert Reich, the former labor secretary under President Bill
Clinton. ``Sad to say, it's called politics in an era when
big corporations have an effective veto over major
legislation affecting them and when the G.O.P. is usually the
beneficiary. In this instance, the G.O.P. was outfoxed. Who
are they to complain?''
Dan Pfeiffer, the White House communications director, said
the collaboration with industry was in keeping with the
president's promise to build consensus.
``Throughout his campaign, President Obama was clear that
he would bring every stakeholder to the table in order to
pass health reform, even longtime opponents like the
pharmaceutical industry,'' Mr. Pfeiffer said. ``He understood
correctly that the unwillingness to work with people on both
sides of the issue was one of the reasons why it took a
century to pass health reform.''
In a statement, PhRMA said that its interactions with Mr.
Obama's White House were part of its mission to ``ensure
patient access'' to quality medicine and to advance medical
progress.
``Before, during and since the health care debate, PhRMA
engaged with Congress and the administration to advance these
priorities,'' said Matthew Bennett, the group's senior vice
president.
Representative Henry Waxman of California, the top Democrat
on the House committee and one of those who balked at Mr.
Obama's deal in 2009, now defends it as traditional
Washington lawmaking.
``Presidents have routinely sought the support and lobbying
clout of private industry in passing major legislation,'' Mr.
Waxman's committee staff said in a memo released in response
to the e-mails. ``President Obama's actions, for example, are
no different than those of President Lyndon B. Johnson in
enacting Medicare in 1965 or President George W. Bush in
expanding Medicare to add a prescription drug benefit in
2003.''
Still, what distinguishes the Obama-industry deal is that
he had so strongly rejected that very sort of business as
usual. During his campaign for president, he specifically
singled out the power of the pharmaceutical industry and its
chief lobbyist, former Representative Billy Tauzin, a
Democrat-turned-Republican from Louisiana, as examples of
what he wanted to change.
``The pharmaceutical industry wrote into the prescription
drug plan that Medicare could not negotiate with drug
companies,'' Mr. Obama said in a campaign advertisement,
referring to Mr. Bush's 2003 legislation. ``And you know
what? The chairman of the committee who pushed the law
through went to work for the pharmaceutical industry making
$2 million a year.
``Imagine that,'' Mr. Obama continued. ``That's an example
of the same old game playing in Washington. You know, I don't
want to learn how to play the game better. I want to put an
end to the game playing.''
After arriving at the White House, though, he and his
advisers soon determined that one reason Mr. Clinton had
failed to pass health care reform was the resilient
opposition of industry. Led by Rahm Emanuel, his chief of
staff and a former House leader, and Jim Messina, his deputy,
White House officials set out to change that dynamic.
The e-mails, which the House committee obtained from PhRMA
and other groups after the White House declined to provide
correspondence, document a tumultuous negotiation, at times
transactional, at others prickly. Each side suspected the
other of betraying trust and operating in bad faith.
The White House depicted in the message traffic comes
across as deeply involved in the give-and-take, and not
averse to pressure tactics, including having Mr. Obama
publicly assail the industry unless it gave in on key points.
In the end, the White House got the support it needed to pass
its broader priority, but industry emerged satisfied as well.
``We got a good deal,'' wrote Bryant Hall, then senior vice
president of the pharmaceutical group.
Mr. Bryant, now head of his own firm, declined to comment.
So did Mr. Emanuel, now mayor of Chicago; Mr. Messina, now
the president's campaign manager; and Ms. DeParle, now a
White House deputy chief of

[[Page S4446]]

staff. Mr. Tauzin, who has left his post as the industry's
lobbyist, did not respond to messages.
The latest e-mails released on Friday underscore the
detailed discussions the two sides had about an advertising
campaign supporting Mr. Obama's health overhaul.``They plan
to hit up the `bad guys' for most of the $,'' a union
official wrote after an April meeting with Mr. Messina and
Senate Democratic aides. ``They want us to just put in enough
to be able to put our names in it--he is thinking @100K.''
In July, the White House made clear that it wanted
supportive ads using the same characters the industry used to
defeat Mr. Clinton's proposal 15 years earlier. ``Rahm asked
for Harry and Louise ads thru third party,'' Mr. Hall wrote.
Industry and Democratic officials said privately that the
advertising campaign was an outgrowth of the fundamental
deal, not the goal of it. The industry traditionally
advertises in favor of legislation it supports.
Either way, talks came close to breaking down several
times. In May, the White House was upset that the industry
had not signed onto a joint statement. One industry official
wrote that they should sign: ``Rahm is already furious. The
ire will be turned on us.''
By June, it came to a head again. ``Barack Obama is going
to announce in his Saturday radio address support for
rebating all of D unless we come to a deal,'' Mr. Hall wrote,
referring to a change in Medicare Part D that would cost the
industry.
In the end, the two sides averted the public confrontation
and negotiated down to $80 billion from $100 billion. But the
industry believed the White House was rushing an announcement
to deflect political criticism.
``It's pretty clear that the administration has had a
horrible week on health care reform, and we are now getting
jammed to make this announcement so the story takes a
positive turn before the Sunday talk shows beat up on
Congress and the White House,'' wrote Ken Johnson, a senior
vice president of the pharmaceutical organization.
In the end, House Democrats imposed some additional costs
on the industry that by one estimate pushed the cost above
$100 billion, but the more sweeping policies the firms wanted
to avoid remained out of the legislation. Mr. Obama signed
the bill in March. He had the victory he wanted.
____

[From the Wall Street Journal, June 22, 2012]

Strassel: Axelrod's ObamaCare Dollars

(By Kimberley A. Strassel)

Emails suggest the White House pushed business to the
presidential adviser's former firm to sell the health-care
law.
Rewind to 2009. The fight over ObamaCare is raging, and a
few news outlets report that something looks ethically rotten
in the White House. An outside group funded by industry is
paying the former firm of senior presidential adviser David
Axelrod to run ads in favor of the bill. That firm, AKPD
Message and Media, still owes Mr. Axelrod money and employs
his son.
The story quickly died, but emails recently released by the
House Energy and Commerce Committee ought to resurrect it.
The emails suggest the White House was intimately involved
both in creating this lobby and hiring Mr. Axelrod's firm--
which is as big an ethical no-no as it gets.
Mr. Axelrod--who left the White House last year--started
AKPD in 1985. The firm earned millions helping run Barack
Obama's 2008 campaign. Mr. Axelrod moved to the White House
in 2009 and agreed to have AKPD buy him out for $2 million.
But AKPD chose to pay Mr. Axelrod in annual installments--
even as he worked in the West Wing. This agreement somehow
passed muster with the Office of Government Ethics, though
the situation at the very least should have walled off AKPD
from working on White-House priorities.
It didn't. The White House and industry were working hand-
in-glove to pass ObamaCare in 2009, and among the vehicles
supplying ad support was an outfit named Healthy Economy Now
(HEN). News stories at the time described this as a
``coalition'' that included the Pharmaceutical Research and
Manufacturers of America (PhRMA), the American Medical
Association, and labor groups--suggesting these entities had
started and controlled it.
House emails show HEN was in fact born at an April 15, 2009
meeting arranged by then-White House aide Jim Messina and a
chief of staff for Democratic Sen. Max Baucus. The two
politicos met at the Democratic Senatorial Campaign Committee
(DSCC) and invited representatives of business and labor.
A Service Employees International Union attendee sent an
email to colleagues noting she'd been invited by the Baucus
staffer, explaining: ``Also present was Jim Messina. . . .
They basically want to see adds linking HC reform to the
economy . . . there were not a lot of details, but we were
told that we would be getting a phone call. Well that call
came today.''
The call was from Nick Baldick, a Democratic consultant who
had worked on the Obama campaign and for the DSCC. Mr.
Baldick started HEN. The only job of PhRMA and others was to
fund it.
Meanwhile, Mr. Axelrod's old firm was hired to run the ads
promoting ObamaCare. At the time, a HEN spokesman said HEN
had done the hiring. But the emails suggest otherwise. In
email after email, the contributors to HEN refer to four men
as the ``White House'' team running health care. They
included John Del Cecato and Larry Grisolano (partners at
AKPD), as well as Andy Grossman (who once ran the DSCC) and
Erik Smith, who had been a paid adviser to the Obama
presidential campaign.
In one email, PhRMA consultant Steve McMahon calls these
four the ``WH-designated folks.'' He explains to colleagues
that Messrs. Grossman, Grisolano and Del Cecato ``are very
close to Axelrod,'' and that ``they have been put in charge
of the campaign to pass health reform.'' Ron Pollack, whose
Families USA was part of the HEN coalition, explained to
colleagues that ``the team that is working with the White
House on health-care reform. . . . [Grossman, Smith, Del
Cecato, Grisolano] . . . would like to get together with
us.'' This would provide ``guidance from the White House
about their messaging.''
According to White House visitor logs, Mr. Smith had 28
appointments scheduled between May and August--17 made
through Mr. Messina or his assistant. Mr. Grossman appears in
the logs at least 19 times. Messrs. Del Cecato and Grisolano
of AKPD also visited in the spring and summer, at least twice
with Mr. Axelrod, who was deep in the health-care fight.
A 2009 PhRMA memo also makes clear that AKPD had been
chosen before PhRMA joined HEN. It's also clear that some
contributors didn't like the conflict of interest. When, in
July 2009, a media outlet prepared to report AKPD's hiring, a
PhRMA participant said: ``This is a big problem.'' Mr.
Baldick advises: ``just say, AKPD is not working for PhRMA.''
AKPD and another firm, GMMB, would handle $12 million in ad
business from HEN and work for a successor 501(c)4.
A basic rule of White House ethics is to avoid even the
appearance of self-dealing or nepotism. If Mr. Axelrod or his
West Wing chums pushed political business toward Mr.
Axelrod's former firm, they contributed to his son's salary
as well as to the ability of the firm to pay Mr. Axelrod what
it still owed him. Could you imagine the press frenzy if Karl
Rove had done the same after he joined the White House?
Messrs. Axelrod and Messina are now in Chicago running Mr.
Obama's campaign. Mr. Axelrod, the White House and a partner
for AKPD didn't respond to requests for comment on their role
in HEN, the tapping of Mr. Baldick, and the redolent hiring
of AKPD. Until the White House explains all this, voters can
fairly conclude that the President's political team took
their Chicago brand of ethics into the White House.

Mr. McCAIN. Mr. President, I know my other colleagues are waiting to
speak, but last month when we voted down this amendment to allow drug
reimportation from pharmacies that are accredited by both the Canadian
and American Governments, my statement was, and I will repeat it:

In a normal world, this would probably require a voice
vote. But what we are about to see is the incredible
influence of the special interests, particularly PhRMA, here
in Washington.
What you are about to see [as I predicted just before the
vote] is the reason for the cynicism the American people have
about the way we do business in Washington. PhRMA--one of the
most powerful lobbies in Washington--will exert its influence
again at the expense of average low-income Americans who
will, again, have to choose between medication and eating.

In response the Senator from New Jersey said, in opposition to my
amendment:

It is not the special interests that have caused the Senate
countless times to reject this policy. . . . .
This is about the health and security of the American
people. That is why time after time the Senate has rejected
it. It is why it should be rejected once again.

He was correct. It was rejected. The American people were rejected in
favor of one of the most powerful special interest lobbies in
Washington and it is a shame.
I suggest the absence of a quorum.
The PRESIDING OFFICER (Mr. Manchin). The clerk will call the roll.
The assistant legislative clerk proceeded to call the roll.
Mr. REID. Mr. President, I ask unanimous consent that the order for
the quorum call be rescinded.
The PRESIDING OFFICER. Without objection, it is so ordered.

____________________