[Congressional Record Volume 165, Number 194 (Thursday, December 5, 2019)]
[House]
[Pages H9287-H9290]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
PRESCRIPTION DRUG PRICING
The SPEAKER pro tempore. Under the Speaker's announced policy of
January 3, 2019, the gentleman from Arizona (Mr. Schweikert) is
recognized for 60 minutes as the designee of the minority leader.
Mr. SCHWEIKERT. Madam Speaker, what we are going to do today is
actually sort of a little follow-up with a couple of other things
sprinkled in here.
I want to walk through, once again, some of the numbers and some of
the good things that have happened. I want to talk also about H.R. 3,
which is a reference pricing bill that has gone through Ways and Means
in regard to pharmaceuticals that actually I don't think anybody
understands what the underlying mechanisms are on how Europe and those
actually do set drug pricing and to understand the rationing that will
be coming with that.
But, first off, what is the greatest threat to our society?
I am going to argue it is actually the coming mountain of debt. It is
not Republican or Democrat, it is called demographics. There are 74
million of us who are baby boomers. 74 million baby boomers were born
in an 18-year period, we have our earned entitlements coming, and we
functionally have no cash in the bank for them. So this board is
really, really important, and I can't believe I don't see it in
everyone's office here.
This is a 30-year window. Let's actually just pull out Social
Security and Medicare. Madam Speaker, you do realize that if you look
at the Social Security and Medicare from the numbers, we have $23
trillion in the bank. Now, this one is not inflation adjusted, so these
are raw numbers, but $23.1 trillion, if you want to be accurate, in the
bank, but when we roll Social Security and Medicare in and their
financing costs--the money has to be borrowed to keep the promises--we
are functioning at $103 trillion in debt.
{time} 1630
It is math. It is not Republican or Democratic. It is demographics.
We are getting older as a society.
Since 1971, our birthrates have been below replacement rates. We need
to deal with the reality of math, but as this place now proceeds, we
will make math partisan. But the math will always win.
It breaks my heart because there are things we can do policy-wise
that make it work, that keep us under or right about that 95 percent
debt-to-GDP, and we survive our demographic bubble. But we have people
around here that say crazy things that have no basis in economics, no
basis in the math, no basis in our demographics. The cruelty they are
bringing down on our society and my 4-year-old daughter, destroying her
future, is because of the unwillingness to own a calculator.
So, one more time, if we pull Social Security and Medicare out of our
30-year window, we have $23 trillion in the bank. If we put them back
in, we are $103 trillion in debt in that 30-year window. Remember, just
the growth of Social Security, Medicare, healthcare entitlements, just
the growth every 5 years equals the entire Defense Department.
When you hear some of our brothers and sisters on the left come
behind the microphone and say, ``Well, if we would just reduce defense
spending,'' you can wipe out all of defense spending, and in 5 years,
you are back where you began.
That is the reality of our demographics. How many people have you
heard come behind these microphones in the last year, other than myself
and maybe one or two others who work on these things? It is silent
because it is really hard to talk about. It is really difficult. It is
scary. It is the single thing that destroys our economic vitality for
the future. But once again, it would require owning a calculator.
[[Page H9288]]
It is lots of people's fault, but it is Congress' fault, but it is
decades old.
Here is where most of that comes from. If you take some of the math
for a couple that retires today--it is not their fault; this is just
the math--they will have put about $161,000 into Medicare. They are
going to receive just shy of $500,000 out. Take that, functionally,
$300,000-plus difference, multiply it by 74 million, and now you
understand the driver of our debt.
You will hear people come behind the microphone and say, ``Well, it
is waste and fraud,'' or, ``We don't tax rich people enough.'' Those
are all absurd. The percentage of tax revenues as the percentage of GDP
is within the margin. Waste and fraud, yes, we need to deal with it,
but it would be a fraction of these numbers.
Remember, we are about to come up on the 2-year anniversary of tax
reform. This last fiscal year, unlike every economist that the left
brought to us out of the crazy--and I know that is mean, but it is
true.
Things that were being said on this floor when we debated tax reform,
reforming our system: ``Oh, revenues are going to crash.'' ``The world
is coming to an end.'' ``It is Armageddon.''
We went up over 4 percent in what they call receipts growth last
year. Our problem is that we spent dramatically more than that. I think
our spending was approaching almost 7 percent growth because we had so
many things added to spending. About half of that 7 percent is just,
once again, demographics. But we grew revenues even with the tax reform
slightly over 4 percent.
There should have been joy around here, if you think about where we
are economically. You all saw the applications for unemployment today,
10,000 down from what the projection was.
Once again, we are demonstrating the labor markets are a miracle.
They are remarkable. I don't think there is anyone living today who has
lived in a time that is this economically stable, when you look at our
labor markets, when you look at wage growth, the lack of inflation.
There should be joy on this floor, talking about the miracle of our
brothers and sisters who were being written off just a couple years ago
because they didn't have a high school education, didn't have a certain
skill, were going to be part of the permanent underclass.
It turns out those folks who were willing to write off those brothers
and sisters, those Americans, were wrong. That population--and I hate
this term, but we use it--those lower quartiles of economics--
education, skill sets--who were being written off, they have had the
fastest movement of income. You saw the number, if anyone cares about
these things.
Last year, a single woman, no partner in the house: 7.6 percent
growth in wages. These are numbers that I can tell you from being on
the Joint Economic Committee for years that every economist we would
bring in would look at us like we were out of our minds if we predicted
numbers like that. Where is the joy?
The fact of the matter is there has been more progress in the last 24
months for our brothers and sisters who have physical issues, have had
substance abuse issues, have had criminal records, these sorts of
things, coming back into the labor force.
There is this thing called U-6 data, U-4 data, all these things. When
you see the unemployment rate and all this information of workers who
might be--we use the term ``marginally attached'' and haven't been
looking, who quit looking, the number of those who are moving into the
labor force that we barely give any credit for when we see the top-line
number because the top-line number is those who are looking.
There is an economic miracle happening right now when you see the
robustness, the stability of our labor markets. Shouldn't the debate on
this floor be: It is working for our brothers and sisters who we have
always said were poor or that we were writing off. Something is working
for them. How do we keep doing more? How do we keep adopting the
policies that are working and avoid the crazy policies of just a couple
years ago that didn't work, that punished these populations?
These are the folks who had just a really crappy decade. They fell
further behind every single year. There is some math out there, and it
is not all put together. I am being maybe a little pathologically
optimistic here, but there are some preliminary numbers that last
fiscal year could be the very first year in modern times where income
inequality did not grow and potentially shrank. It is not because
wealthy people didn't make more money. It is because poor people made
more money than they had before.
Where is the joy? Where is the discussion of how we do more of this?
It turns out, for all those out there who are busting their
backsides, working, paying into programs like Social Security and
Medicare, why aren't we being honest with them that the scale of the
unfunded nature is devastating?
If you are a young person today, do understand that when you hit your
peak earning years, your tax rate will have to be double today's just
to maintain these basic earned benefits. There is a path, but that path
requires a whole bunch of things.
It is going to be my very last board that I am going to put up
because you have to have incredible economic robustness, and you have
to have a tax system that maximizes economic vitality, an immigration
system that maximizes economic vitality, a regulatory system that uses
smart technologies to maximize labor force incentives, family formation
incentives, technology adoption incentives, all these things. And there
is a path to deal with this.
Then what happens this week is the discussion of H.R. 3, which is the
drug reference pricing model. Almost no one has read it or understood
the actual mechanisms it is offering.
Why do I bring this up as part of an economic discussion? Part of the
miracle we are about to live is that we are about to live in a time
where technology, if we legalize it, is about to crash the price of
healthcare.
Technology is something that looks like a big kazoo that you blow
into that instantly tells you that you have the flu, instantly can
update your medical records on your phone. If we make it legal, it can
instantly order your antivirals.
When I talk about healthcare technology, it is a whole string of
things that will keep us healthy. But the other side is that we are
about to live in the time of miracles. The single-shot care for
hemophilia, it is here. It is going to be really expensive, but
hemophilia is also really expensive.
We should be talking about ways to have more of these disruptive
pharmaceuticals that take care of hemophilia, ALS, Crohn's, cystic
fibrosis, and sickle cell anemia. We are on the cusp of having the
pharmaceuticals that either stabilize or cure these.
They are incredibly expensive. These are small populations, but
remember, 5 percent of the population with chronic diseases is the
majority of our healthcare spending.
If we go back to the slide here, the majority of what is about to hit
us over the next 30 years is Medicare. It is healthcare spending.
What happens if you crash the price of healthcare? Well, one of the
ways you do that is you cure people.
The Democrats are pushing a piece of legislation that sounds at first
really good. ``Hey, we are going to lower new drug prices by reaching
out to a handful of European countries and getting their prices. Then
you can't go more than that, or we are going to give you a 95 percent
tax,'' which if you reverse it is a 1,950 percent tax.
Except, you have to understand, and I know this board is really hard
to read, we are going to use the Great Britain model. What is a year of
you being healthy worth? It is an honest question because that is what
is about to be imported into the country. For you, your family, your
child, what are you willing to believe is the value of a year of
health? If you are in Great Britain, their model, their formula, is
$38,000.
If this breakthrough pharmaceutical would make you healthy for 1 more
year and costs more than $38,000, it is not purchased. It is not part
of the formulary. That is what the Democrats are saying we need to
import into this country.
So understand that the Democrats are about to say a year of you being
healthy is not worth $38,001. I don't think they know that. I don't
think anyone who has read it understood how this handful of European
countries builds their pricing mechanisms, but they do it by scarcity.
[[Page H9289]]
They basically say, ``Hey, I know this would cure you for the next
year, but you are out of luck. It is over $38,000 here in Great
Britain, so you are on your own.''
At a certain level, this is just incredibly cruel. How could you look
someone in the eyes and say: ``I value your life at $38,000 for a year
of you being healthy.'' But that is the cruelty that is being
discussed.
At first, it sounds really wonderful: ``Hey, we are going to lower
drug prices by using reference pricing.'' But the fact of the matter
is, how do you tell Americans that what this means is not only are you
not going to be able to have these things that keep you healthy anymore
because they are going to be outside the price window, but the other
thing is there was a major report put together early this week that
also said a substantial number of the drugs, like 100-plus, that are in
the pipeline, that are about to cure our brothers and sisters who are
part of that 5 percent of the chronic conditions that is the majority
of our healthcare spending, those cures are going to stop because they
are really expensive, really risky, really hard to put together?
The vast majority of them fail, so they sort of roll the dice and
say: ``If we succeed, we get a fairly decent payday, but it is going to
pay for a whole lot of failed drug trials.''
We are about to make a policy decision as a country: ``We are not
going to cure you. You get to suffer.''
The pharmaceutical industry, for all the frustrations, they will go
back to what they were doing a couple of decades ago, saying they are
just going to do a derivative on an existing drug, so, therefore, they
have very little research costs. They already know what their profit
margin is. It is nice and safe to do.
The things the Republicans did in this Congress, where we did the
CURES Act a few years ago, where we created a pipeline to cure people,
that pipeline is about to get crushed.
You have to understand the cruelty of this. This is just math. This
is what other countries do on their formula.
If you really wanted to crash the price of pharmaceuticals, it turns
out, yes, there is a whole list of things that are bipartisan: the way
you deal with the capital that is used for the investments, the way you
do the patents, the way you allow competing types of biologics and
others come to market.
But there is another crazy thought experiment here that almost no one
has ever talked about. Do you realize that half the pharmaceuticals
that will be picked up today, so half the pharmaceuticals someone is
going through a drive-through for or walking into their pharmacy for
right now, half of them will not be used or will not be used properly?
Just part of the thought experiment.
They will not be used or will not be used properly. That is going to
cost the country about half a trillion dollars this year. It is 16
percent of the total U.S. healthcare expenditures because people don't
take their prescribed pharmaceuticals properly, and they get sick and
die.
It turns out we have all sorts of things we could do today, but it
requires being creative. Let's face it, this is an absolute creativity-
free as well as a math-free zone.
The little bottle that has the top that tells you when grandma has
opened it so that you know she is taking her pharmaceuticals that keep
her alive, we have that technology. It is not very expensive. It
changes drug efficacy usage because you know when you took it.
How many of you know someone that has multiple pharmaceuticals they
take, and they have to take them at certain parts of the day? We now
have little distribution devices. There are several of them on the
market that drop the pills, tell you the time, let you know if you
don't pick them up. It rings your phone, rings the family's phone, if
they are not picked up.
{time} 1645
It turns out there are technology things that could actually change
almost a half a trillion dollars of expenses a year. This is
dramatically bigger than blowing up the cures that are coming, but it
requires some creativity to understand that half of the pharmaceuticals
that are being picked up today will not be taken or will not be taken
properly.
Another proposal--and do it more as a thought experiment: For really
high-value pharmaceuticals, go look in your own personal medicine
cabinet right now. How many of them are still sitting in there? They
are just getting old. You did not take them. They are just sitting
there.
Why don't we package those high-value ones in a double-layer blister
pack or in a pod that keeps them sterile and allow you to return them?
Maybe there are folks in our society who those really expensive
pharmaceuticals, if they were returned and could be redistributed, they
would still be sterile.
There are creative ideas where you could have this massive disruption
in the price that we as Americans put out in our drug costs. But it
requires some creativity instead of the arrogance of we are basically
going to blow up your future. Because that is what is being proposed to
us.
But this number is stunning, if I came to you and said, if you could
change the way pharmaceuticals are used and have the efficacy of proper
use, it is 16 percent of all the healthcare expenditures of this
country.
I threw this slide in as more back to: Remember how we were just
talking about Medicare and, functionally, that is the ultimate driver
of our future debt and, unless we have a disruption in healthcare
costs--not debates about how we finance, but disruption in the cost.
Let me give you a single example of what the investment in cures means.
I know this chart is almost impossible to read, but the simple point
is about 30 percent of Medicare spending is going to be diabetes. A
single cure--now, diabetes is complex. We know it is more than the
production of insulin. There are autoimmune responses. There is 1 and
2. It is complex, but do the thought experiment with me.
If you cured diabetes tomorrow, almost 30 percent of that unfunded
liability of Medicare goes away. That is why it is so incredibly
important we are investing in these cures that H.R. 3 is about to
destroy.
We always either start or end with this slide. We are trying to make
a simple point that, if we can get the policy correct here, we can have
an amazing future. The United States can have an amazing future.
But we have spent almost the year here--2019, we have, functionally,
done nothing.
Do you remember all the promises of we are going to work bipartisan
because we have a Republican Senate and then, obviously, the left, the
Democrats, control the House here? We are going to work together. We
are going to do all these creative things together. And we have done
none of it.
We have spent lots of time on impeachment. We have pushed out a
handful of bills that were just almost crazy in their policy sets to
satiate the radicalized face of the Democrats.
I am sorry. I know that is mean, but it is true.
So let's take a step backwards and pull out our calculators and
understand, once again, that 30-year window, $103 trillion of debt--if
you actually normalize it to inflation adjusted. Okay. So it is, at
today's discount rate--I am not sure. It would probably be somewhere in
the $83 trillion of debt, inflation adjusted.
So here is our argument: Get the things that grow the economy right.
We have demonstrated getting the Tax Code right has produced a miracle
of economic growth in the way of labor participation. Our brothers and
sisters, people, are working. And it turns out those have cascade
effects in everything from health to there will be falls in substance
abuse use. We see great things happening.
But with economic growth, we have to get immigration correct. We have
to get trade correct. We have to get the way we regulate, using
technology. Instead of a 1938 model of fill out lots of paperwork and
shove it in a file cabinet, and when you screw up, we pull out the file
cabinet so we can sue you, using crowdsource technology where we know,
if you screw up, we catch you instantly and we can fix it right then.
There are amazing changes right here.
Population stability: How do you encourage families? How do you build
an immigration system that actually is
[[Page H9290]]
more talent-based so you maximize economic growth so we can keep our
economic promises?
How do you encourage people to be in the labor force?
One of the very odd things we see in the data is that December, a
year ago, suddenly we saw in the data statistics millennial females
moving into the labor force at substantial numbers but millennial males
still substantially underperforming. Why? Is this the opioid crisis?
Are there other factors?
We need to know those sorts of things because, it turns out, when we
have entire quartiles of our population who are underperforming in the
labor market, it has really bad societal cascade effects.
So let's work on policies that get as many folks who are interested.
Whether you be retirement age or that millennial male, what do we have
to do as a society to encourage, to prod, to push for you to be in the
labor force? Because that is important not only to you as an
individual, but it is really important to the country's economic
stability.
Technology disruption: We just talked about the curative drugs that
are coming. We also can talk about the sensors and the other things
that are going to allow us to stay healthy. How do we update the laws
so that thing like that flu kazoo isn't illegal?
There is a reason you didn't go to Blockbuster Video last weekend.
Technology changes. We need to make sure our law sets are sympathetic
to the changes that can reduce our prices in healthcare, to protect the
environment and so many other things.
Yet we are decades behind in the way we write laws here and
understanding how to future-proof those laws so, when we have
disruptive technologies--and anyone who is really interested in this,
pull out your phone. Go to a search engine, and go look up ``MIT
ambient air capture'' and look at the miracle they have.
If what they have published is correct on, now, their price per ton--
they believe they can pull CO2 right out of the air or do it
right over a smokestack. If those numbers are correct, we now have a
major change in CO2 emissions in the world because of our
ability now, at amazing prices, to be able to pull it almost right out
of the air.
These technologies are here. Why aren't we here talking about them on
the floor, and how to encourage more of it and how to get it rolled out
in society, not only here, but across the world? Because, if you
actually care about global warming--or climate change or whatever the
current pop term is--it turns out there are amazing technology
disruptions that are here. The only problem is they don't allow you to
control other people's lives; they just solve the problem. And are we
about solving the problem or just the control freaks who are often the
Members of this body?
And then other things: The earned entitlements. You have earned your
Social Security. You have earned your Medicare. Are there things we can
do in those benefits to encourage you to stay healthier; to, if you
feel like it, work; to actually, instead of taking your benefits, say
how long would you like--if we gave you a spiff, would you wait?
There is tinkering you can do here that actually makes the programs
more sound. And if you do it all together, we believe we have a model
that provides an economic future where we are not destroyed by the
growing debt.
But there is no single answer. It is going to have to be almost a
holistic approach of lots of types of policies woven together, and
every single one of them needs to be about the reality of our
demographics.
And now the experiment I will ask you all to engage in: Watch the
floor this week and see how many people will ever come behind these
microphones and talk about the economic growth and survival of this
country because of what is about to happen, the debt that is about to
crush us and the fact that we are not talking about it. Instead, we are
busy, basically, doing levels of absurdity around here.
The cruelty you have just also subjected my 4-year-old daughter to--
and her economic future--you should all be ashamed of yourselves,
ourselves, myself, because there is a path. The problem is this path
doesn't ideologically satiate those who have just gone so extreme.
But the math is real, the math works, and the math, Madam Speaker,
always wins.
Madam Speaker, I yield back the balance of my time.
____________________