[Congressional Record (Bound Edition), Volume 148 (2002), Part 10]
[Senate]
[Pages 13213-13238]
[From the U.S. Government Publishing Office, www.gpo.gov]




  GREATER ACCESS TO AFFORDABLE PHARMACEUTICALS ACT OF 2001--Continued

  The PRESIDING OFFICER (Mr. Carper). The Senator from Mississippi.
  Mr. COCHRAN. Mr. President, under the designation of the Senator from 
New Hampshire, I yield to the distinguished Senator from Louisiana, Mr. 
Breaux.
  The PRESIDING OFFICER. The Senator from Louisiana is recognized.
  Mr. BREAUX. Thank you very much.
  I thank the distinguished Senator from Mississippi who I think is 
preparing an amendment which will be offered later on in the debate on 
the whole question of importation of drugs, which in essence is the 
same amendment that 97 Senators voted for the last time we addressed 
this issue on the question of importation of drugs.
  Let me mention, to start with, that I think the topic of the debate 
on how we can provide prescription drugs for all of our Nation's 
seniors is really the challenge that is before the Senate. We can get 
waylaid, or delayed, or sidetracked by saying we are going to fix the 
problem by opening our borders to imported drugs coming from foreign 
countries or from Canada. That is something we need to discuss. But it 
is certainly not, by any stretch of the imagination, going to solve the 
problem of prescription drugs for seniors until we come up with a 
comprehensive, across-the-board Medicare package that can guarantee 
insurance coverage for prescription drugs just as every Member of the 
Senate has when we buy prescription drugs. That is the type of plan we 
have. People compete for the right to sell us those drugs. We have a 
choice between the plans that best can serve our families' needs at the 
best possible price.
  That is the type of system on which I think we should be working and, 
in fact, on which we are spending a great deal of time.
  With regard to the specific issue before this body at the current 
time--the question of importation of prescription drugs from our 
neighbors to the north in the country of Canada--the concern I have 
with that is guaranteeing, before you allow these drugs to come into 
this country, that they are going to be just as safe and just as real 
as the drugs we buy in this country which are certified by the FDA and 
tracked from the manufacturer all the way to the pharmacist and to the 
customer.
  We had hearings just a week ago in the Senate Aging Committee where 
we discussed the issue of counterfeit drugs. We had U.S. Customs come 
in, we had the FDA Administrator come in, and give us information from 
their perspective about imported drugs coming from Canada or from other 
foreign countries. Here are some statements from the FDA about the 
issue of imported drugs.

[[Page 13214]]

  It is not just a question of whether they are cheaper. Of course, 
they could be cheaper. I can get open heart surgery in Juarez, Mexico, 
a lot cheaper than I can get it at the Houston Medical Center. The 
question is, Is that the type of open heart surgery I want? The answer, 
from my perspective--and I think most Americans--is that it is not. I 
want it to be not just the cheapest price, I also want the best 
service.
  The issue is not where you can get the cheapest drugs but where you 
can get drugs that are also affordable and are also the real thing.
  It is estimated that about 8 percent of the drugs coming into the 
United States right now are counterfeit, and the projection is, if you 
open up the borders, that amount will increase greatly.
  Here is what the FDA said when testifying before the Senate Aging 
Committee:

       For those who buy drugs overseas, we have been consistently 
     saying that you are really taking a great risk. You certainly 
     risk your pocketbook, but you may be risking your health, and 
     you may even be risking your life.

  FDA also said:

       Unapproved drugs and reimported approved medications may be 
     contaminated, subpotent, superpotent, or counterfeit.

  The final thing they said, which I think is significant because the 
argument is this is from Canada, and they are our friend, they are a 
democracy and not a third-world country, and it is all right to do it 
from Canada; we are not going to let you do it from Bangladesh, they 
said in our hearing:

       Throwing the door open to drugs purchased by individuals 
     directly from Canadian sellers will encourage unscrupulous 
     individuals to devise schemes using Canada as a transshipment 
     point for dangerous products from all points around the 
     globe.

  It is not just going to be drugs manufactured in Canada that can 
penetrate our border under an importation policy but drugs manufactured 
in Colombia, manufactured in Bangladesh, and manufactured in some very 
unsettled parts of the world that can be transshipped through Canada 
and come into the United States.
  Here is an example. I have a lot of examples. Some of our colleagues 
have held up two bottles and said: This bottle cost $350 in America, 
and this bottle of the same stuff cost $20 in Canada. That is fine, if 
it is the same stuff. The problem is when it is not the same stuff.
  Here is an example of a product that is supposed to be an anti-
inflammatory drug. This is great. This is a prescription drug. In this 
particular case, they took a white powder. They stamped the name of the 
product into the little bitty pills. You can't tell the difference in 
the pills. They put it in a blister pack and sold it as the drug 
Ponstan. The only problem is that it sure looks like Ponstan. The 
package looks like Ponstan. It has every word on it that the real thing 
has, and the dosage is the same in fine print. The pill is exactly the 
same. It has the name Ponstan stamped into it.
  Here is what is really in it. When you analyze it, the yellow powder 
which they put in it, instead of being the real thing, ended up being 
stuff that could do grave damage. This happens to be boric acid, floor 
wax, and yellow, leaded highway paint. That is a heck of a thing to be 
able to do. Is this cheaper than the real stuff? Oh, yes, it is a lot 
cheaper. But I don't want to take a pill that says it is the real thing 
but is yellow, leaded highway paint which they pressed into these 
packages and sold.
  Can they sell it a lot cheaper? Yes. I can sell it for 2 cents a 
pill. I don't care what I sell it for because it does not cost much to 
make yellow, leaded highway paint and sell it as a pill and take it 
across the border.
  It is my understanding, in reading the legislation and amendment 
before this body, that you can immediately suspend importation, but 
after the fact, after they have exhibited a pattern of importation of 
drugs ``that is counterfeit or in violation of [these] requirement[s] . 
. . or poses an additional risk to the public health.'' After we 
determine that it is being done, then you can stop it from being done.
  Isn't it better to have to have that certification up front before we 
allow them to start bringing things over the border that may be real or 
may not be real; may be half real and half not real? Shouldn't we 
establish what the rules are before we let them in?
  The Senate has discussed and debated that issue. And by a unanimous 
vote, every single one of us who voted on this issue before supported 
the Cochran amendment, 97 to 0, that said, before we can allow it to 
start coming in, we have to have a system in place that is guaranteed 
by our Food and Drug Administration that it is coming in and it is not 
counterfeited; it is safe; we have tracked the manufacturer and we know 
how they make it, what they are doing, and what is in the little 
packets of pills.
  The legislation before the committee, I fear, now says that only 
after our Government determines that there is a pattern of 
counterfeiting or a pattern of bringing in drugs that pose a risk to 
the human health--then, and only then, can we suspend their operations.
  Don't do it after the horse is already out of the barn. You have to 
stop it before it starts. How many people are going to have to take 
yellow, leaded highway paint before they can show there is a pattern of 
doing this in order to come in with a suspension of these importations? 
Do we have to have five people--to create a pattern--get sick from 
taking yellow, leaded highway paint? Do we have to have 100? I would 
not want to be 1 of the 100, if that is the establishment of what we 
have to do before we can suspend their operations.
  It is far superior to take the approach: Yes, we will let you bring 
in imported drugs from Canada, but only if there is established, prior 
to the time it starts, a guarantee that these drugs can be brought in 
and are not counterfeit and are not harmful to your human health and 
are, in fact, not yellow, leaded highway paint.
  Mr. DURBIN. Will the Senator yield for a question?
  Mr. BREAUX. I am happy to.
  Mr. DURBIN. Can the Senator tell me, in this particular instance, was 
this drug imported from Canada?
  Mr. BREAUX. I am not sure where it was from.
  The point I make is, Canada is our good friend, a civilized society, 
with high-quality manufacturers. But what Food and Drug says about 
Canada is the following:
  Throwing the door open to drugs purchased by individuals directly 
from Canadian sellers will encourage unscrupulous individuals to devise 
schemes using Canada as a transshipment point for dangerous products 
from all points around the globe.
  The PRESIDING OFFICER. The time of the Senator from Mississippi has 
expired.
  Ms. COLLINS. Mr. President, I rise in support of the amendment 
offered by my colleague from North Dakota, Senator Dorgan, to allow for 
the reimportation of prescription drugs from Canada by pharmacists and 
wholesalers.
  The United States leads the world in the discovery, development and 
manufacture of cutting-edge pharmaceuticals. Yet too many citizens who 
live in Maine and elsewhere must travel over the broader to Canada to 
buy the prescription drugs that they need to stay healthy for much 
lower prices than they would pay at their neighborhood drug store.
  It is well documented that the average price of prescription drugs is 
much lower in Canada than in the United States, with the price of some 
drugs in Maine being twice that of the same drugs that are available 
only a few miles away in a Canadian drug store.
  It simply does not seem fair that American consumers are footing the 
bill for the remarkable, yet costly, advancements in pharmaceutical 
research and development, while our neighbors across the border receive 
these medications at substantially lower prices.
  That is why I cosponsored legislation in the last Congress, the 
Medicine Equity and Drug Safety Act, to allow American consumers to 
benefit from international price competition on prescription drugs by 
permitting FDA-approved medicines made in FDA-approved facilities to be 
re-imported into

[[Page 13215]]

this country. A modified version of that bill was signed into law last 
October, and I am extremely disappointed that the Department of Health 
and Human Services continues to refuse to implement the law.
  I am therefore pleased to cosponsor this amendment, which will allow 
American consumers to benefit from international price competition in 
two ways:
  First, it allows U.S. licensed pharmacists and drug wholesalers to 
import FDA-approved medications from Canada, which has a drug approval 
and distribution system comparable to ours.
  Second, the amendment codifies existing U.S. Customs' practices that 
allow Americans to bring limited supplies of prescription drugs into 
this country from Canada for their personal use. That way, consumers 
who follow the rules won't have to worry that their medicines will be 
confiscated at the border.
  While this amendment is a step in the right direction, it is not the 
solution to the prescription drug problem in the United States. I 
believe that our top priority should be to strengthen Medicare and 
include a prescription drug benefit, and I look forward to working on a 
bipartisan basis with my colleagues to give all Americans better access 
to affordable prescription drugs.
  Mr. DORGAN. Mr. President, how much time remains for both sides.
  The PRESIDING OFFICER. The Senator from North Dakota controls 7\1/2\ 
minutes.
  Mr. DORGAN. Is that total time?
  The PRESIDING OFFICER. Total time.
  Mr. DORGAN. I yield 3 minutes to the Senator from Vermont.
  The PRESIDING OFFICER. The Senator is recognized for 3 minutes.
  Mr. JEFFORDS. Mr. President, it is not often I disagree with my good 
friend from Louisiana, but when you come from a northern State such as 
Vermont, and when you see what is happening, and you are buying a drug 
from a drugstore, which is certified under Canadian law, which is just 
as strong as ours, and you can pay half the price for it--to say you 
cannot go across the border to do that just does not make any common 
sense.
  The real threat as far as drugs coming into this country, because of 
the disproportionate pricing, is the utilization of the Internet. That 
is where the problems are. On the Internet there is no checking, and 
you can order your drugs over the Internet. That is where you ought to 
look to try to prevent sales coming into this country. And that is wide 
open now.
  When I was chairman of the committee that put together the 
pharmaceutical bill, we worked carefully with the FDA to make sure that 
when this bill passed, it gave them authority for sales across the 
border, and that they would have full authority to make sure that any 
sales are stopped that should not be allowed under the law. So I think 
the statements that are being made now just do not fit the reality of 
the situation.
  To deny our people the ability to purchase these drugs, under a 
safely designed plan, which the FDA has the authority to approve, to 
make sure there is no counterfeiting or unlawful sales--it is just 
without merit to say that we need the protection there. It is there. We 
did that before. We passed it by a large vote, I believe, and put it 
into law. But the Secretary had authority not to let it go forward. And 
under the previous administration, that happened.
  So what we should do now is pass this bill to allow our people the 
opportunity to get good pharmaceuticals that are not overpriced, which 
are safe and available. I think all the comments to the contrary are 
missing the point and missing the Bill.
  This amendment will allow pharmacists and wholesalers to import safe, 
U.S.-made, FDA-approved lower-cost prescription drugs from our neighbor 
to the north--Canada. This amendment will do nothing to undermine the 
gold standard of safety in this country because our northern friends 
have virtually the same standards. What this amendment will do is rein 
in the platinum standard we have for prices we pay for our medicines.
  Prescription drugs have revolutionized the treatment of certain 
diseases, but they are only effective if patients have access to the 
medicines that their doctors prescribe. The best medicines in the world 
will not help a person who cannot afford them.
  Americans pay by far the highest prices in the world for prescription 
drugs, and for many the prices is just too high. What's worse is that 
those Americans who can least afford it are the ones paying the highest 
prices. Americans who don't have health insurance that covers drugs are 
forced to pay the ``sticker price'' off the pharmacist's shelf.
  It is sad that during a time when the United States is experiencing 
economic problems and higher unemployment it is becoming more common to 
hear of patients who cut pills in half, or skip dosages in order to 
make prescriptions last longer, because they can't afford the refill.
  This is not about the Medicare benefit that we will also have an 
opportunity to debate later. But this too is a tripartisan effort. And, 
it is equally important because this will effect all Americans--not 
just our Medicare seniors. The question that we must ask is, can we put 
politics aside and work in a nonpartisan manner to deal with this 
national crisis? I say we must. And I am hopeful that today we can.
  This amendment is based on legislation I introduced in the last 
Congress, the Medicine Equity and Drug Safety Act. Then, as now, we 
were joined by my friends Senators Dorgan, Snowe, Wellstone, and 
Collins. I am also glad to see that this year our group has been joined 
by Senator Stabenow and Senator Levin. That measure passed on an 
overwhelming vote of 74 yeas to 21 nays. It is time for us to take that 
vote again, and again pass this legislation.
  This amendment has been substantially revised to address the concerns 
over safety that have been raised.
  Two key elements. First, the FDA approved drugs can only be brought 
in from Canada. These are the same drugs that are currently being 
brought in under existing FDA policy. There have been no reports of 
adverse events, poisonings or counterfeit by the senior citizens taking 
buses to Canada. In addition, it gives the Secretary the authority to 
suspend this program should these safety issues arise.
  I would also point out to my colleagues that this amendment 
specifically authorizes FDA to incorporate any other safeguard that it 
believes is necessary to ensure the protection of the public health of 
patients in the United States.
  It is important to remember--these are exactly the same drugs that 
have been approved by the FDA except they are sold for far less.
  Why is it that Canada and the rest of the developed world pays less 
for drugs than the U.S. It is because drugs are somehow exempt from the 
laws of the open market and free trade. And for that reason we have 
been subsidizing the rest of the world, in spite of the fact that we 
have U.S. citizens going without health care and without the medicines 
they need.
  Why should Americans pay the highest prices in the world for 
prescription drugs? All this amendment does is allow international 
competition to bring rational pricing practices to the prescription 
drug industry. It introduces competition which is the hallmark of our 
success in this Nation.
  I want the record to clearly reflect that I still feel strongly that 
Vermonters should not be in violation of Federal law if they go a few 
miles across the border into Canada to get deep discounts on 
prescriptions. We do nothing in here to indicate they should not be 
allowed to do so.
  This amendment will provide equitable treatment of Americans, 
particularly those who do not have insurance, or access to big 
discounts for large purchases like HMOs. This is not the only solution. 
I strongly believe we need a good competitive prescription drug benefit 
in the Medicare program. And I look forward to working with all of my 
colleagues to develop a balanced, generous prescription drug benefit 
that can be supported by Members from both sides of the aisle.
  But right now, this is a commonsense measure that we can enact now to 
ease

[[Page 13216]]

the burden of expensive prescription drugs on our people, for those on 
the borders, and all Americans.
  I yield the remainder of my time.
  The PRESIDING OFFICER. The Senator from North Dakota.
  Mr. DORGAN. Mr. President it is unusual we have a real debate on the 
floor of the Senate. I think it is interesting to do so. It is also 
interesting to listen to the debate and see the tactics we have heard 
about terrorists, terrorism, heart surgery in Tijuana, everything but 
poppy seeds from Afghanistan--yellow highway paint from somewhere 
around the world. He is not sure where it comes from.
  Well, he just won a debate no one is having. It is the easiest debate 
in the world to win. Congratulations.
  The real subject, however, is vastly different than the presentation 
you just heard. This is about FDA-approved drugs, only FDA-approved 
drugs produced in FDA-approved manufacturing plants, moved across the 
border by licensed pharmacists and licensed distributors, and only 
those.
  Apparently--obviously--the pharmaceutical industry does not like what 
we are doing here. I understand that. And I understand why people stand 
up and say the pharmaceutical industry does not want this to happen.
  But what they are saying is, it is OK for the manufacturers to move 
prescription drugs back and forth across the border--and they do; they 
do a lot of it every day--but it is not appropriate for licensed 
pharmacists or distributors to do so.
  Why is it we trust the manufacturers so much more than the Main 
Street pharmacists? Tell me about that, if you will. Why is one 
trustworthy and the other untrustworthy. And is it not the case that 
there might be a price differential, I say to my colleague from 
Louisiana, between the United States and Canada?
  It is a fact that there is a very substantial price differential, and 
that the American consumer is charged the highest prices in the world 
for the identical prescription drug.
  There is a lot of fog in this debate and very little light. We are 
talking about something very simple. We are not talking about 
counterfeit drugs or adulterated drugs. We are not talking about 
terrorism. We are talking about very careful circumstances under which 
a licensed pharmacist or distributor goes to Canada, which has a chain 
of custody that is similar to ours, accesses the identical prescription 
drugs that are FDA approved, brings them back across the border, and 
passes the savings along to the American consumer.
  Why don't the pharmaceutical companies like that? Because it will 
force them to reprice their drugs in this country. It will force down 
drug prices to the U.S. consumer. That is why they do not like that.
  I renew the question I have asked time and time again, for which no 
one in this Chamber has an answer--no one. Why should American citizens 
have to go to Canada to get a fair price on a prescription drug that 
was manufactured in the United States?
  There is no answer to that in this Chamber. No one has attempted an 
answer. What we have seen is a discussion about----
  Mr. SANTORUM Will the Senator from North Dakota yield for an answer?
  Mr. DORGAN. I have very limited time. I am sorry.
  Mr. SANTORUM. I would be happy to answer at some point.
  Mr. DORGAN. The Senator will have ample time to answer the question. 
I will inquire when he does so.
  In the minute or so I have remaining, let me say this: This is life 
or death for a lot of people, this issue of prescription drug pricing. 
Yes, we need to put a prescription drug benefit in the Medicare 
Program. I support that strongly. But if we do not do something to put 
downward pressure on prescription drug prices, we will simply break the 
bank, in my judgment.
  That is why we need reimportation. And we need the generic 
amendment--the base bill. We need to do both of these things. I am not 
interested in compromising safety under any condition or any 
circumstance. This amendment is very simple. It says, in part, that the 
Secretary of Health and Human Services can suspend and will suspend and 
shall suspend the implementation of this reimportation if, in fact, 
there is a counterfeiting problem, or other problems such as terrorism.
  The issue of counterfeit drugs that had been raised, the issue of 
terrorism, has nothing at all to do with this amendment. We are talking 
about licensed pharmacists, licensed distributors, FDA-approved drugs, 
FDA-approved plants--a system in which those from the U.S. who are 
licensed to do so can get the exact same prescription drug safely from 
Canada at much cheaper prices and pass those savings along to 
customers.
  I understand we will have another amendment following the vote on 
this amendment. That amendment will have the effect of essentially 
making this provision unworkable. We will have to debate that at that 
time.
  How much time remains?
  The PRESIDING OFFICER. Twenty seconds.
  Mr. DORGAN. I yield back my time.
  The PRESIDING OFFICER. All time has expired. The question is on 
agreeing to amendment No. 4300 offered by the Senator from Nevada for 
the Senator from North Dakota.
  Mr. DORGAN. Mr. President, I ask for the yeas and nays.
  The PRESIDING OFFICER. Is there a sufficient second?
  There appears to be a sufficient second. The clerk will call the 
roll.
  The senior assistant bill clerk called the roll.
  Mr. NICKLES. I announce that the Senator from North Carolina (Mr. 
Helms) is necessarily absent.
  I further announce that if present and voting the Senator from North 
Carolina (Mr. Helms) would vote ``no.''
  The PRESIDING OFFICER. Are there any other Senators in the Chamber 
desiring to vote?
  The result was announced--yeas 69, nays 30, as follows:

                      [Rollcall Vote No. 179 Leg.]

                                YEAS--69

     Akaka
     Allard
     Baucus
     Biden
     Bingaman
     Bond
     Boxer
     Brownback
     Burns
     Byrd
     Cantwell
     Carnahan
     Chafee
     Cleland
     Clinton
     Cochran
     Collins
     Conrad
     Craig
     Crapo
     Daschle
     Dayton
     Dodd
     Dorgan
     Durbin
     Edwards
     Feingold
     Feinstein
     Fitzgerald
     Graham
     Grassley
     Gregg
     Harkin
     Hollings
     Inouye
     Jeffords
     Johnson
     Kennedy
     Kerry
     Kohl
     Landrieu
     Leahy
     Levin
     Lieberman
     Lincoln
     Lott
     Lugar
     McCain
     McConnell
     Mikulski
     Miller
     Murkowski
     Murray
     Nelson (FL)
     Nelson (NE)
     Reed
     Reid
     Rockefeller
     Sarbanes
     Schumer
     Sessions
     Smith (NH)
     Smith (OR)
     Snowe
     Specter
     Stabenow
     Stevens
     Wellstone
     Wyden

                                NAYS--30

     Allen
     Bayh
     Bennett
     Breaux
     Bunning
     Campbell
     Carper
     Corzine
     DeWine
     Domenici
     Ensign
     Enzi
     Frist
     Gramm
     Hagel
     Hatch
     Hutchinson
     Hutchison
     Inhofe
     Kyl
     Nickles
     Roberts
     Santorum
     Shelby
     Thomas
     Thompson
     Thurmond
     Torricelli
     Voinovich
     Warner

                             NOT VOTING--1

     Helms
       
       
  The amendment (No. 4300) was agreed to.
  The PRESIDING OFFICER. Under the previous order the Senator from 
Mississippi is to be recognized to offer an amendment.
  The Senator from Mississippi.


                Amendment No. 4301 to Amendment No. 4299

        (Purpose: To protect the health and safety of Americans)

  Mr. COCHRAN. Mr. President, I send an amendment to the desk and ask 
that it be stated.
  The PRESIDING OFFICER. The clerk will report.
  The legislative clerk read as follows:

       The Senator from Mississippi [Mr. Cochran], for himself and 
     Mr. Breaux, proposes an amendment numbered 4301 to amendment 
     No. 4299.
       On page 15, line 17, strike ``section.''. and insert 
     ``section,'' and insert the following new subsection:
       ``(2) Conditions.--This section shall become effective only 
     if the Secretary of Health and Human Services certifies to 
     the Congress that the implementation of this section will--

[[Page 13217]]

       ``(A) pose no additional risk to the public's health and 
     safety, and
       ``(B) result in a significant reduction in the cost of 
     covered products to the American consumer.''.''
  The PRESIDING OFFICER. The Senator from Mississippi.
  Mr. COCHRAN. Mr. President, I support the effort to make prescription 
drugs more affordable for all Americans. However, I am concerned that 
creating new opportunities to bring counterfeit or dangerous drugs into 
the United States from foreign countries is not the way to do it.
  The amendment I have sent to the desk on behalf of myself and the 
Senator from Louisiana, Mr. Breaux, will provide an opportunity for the 
Secretary of Health and Human Services to make a certification that the 
reimportation of drugs from Canada will not jeopardize human safety, 
the consuming public who buys these drugs, and it will, in fact, lower 
the cost of prescription drugs for Americans.
  I have also been asked to state that other Senators who want to be 
added as cosponsors to this bill are Senator Roberts of Kansas and 
Senator Santorum of Pennsylvania. I make that request.
  The PRESIDING OFFICER (Mr. Wellstone). Without objection, it is so 
ordered.
  Mr. COCHRAN. Mr. President, the amendment of the Senator from North 
Dakota could very well make it easier to avoid U.S. standards and 
inspections at a time when we are increasing border surveillance and 
trying to prevent acts of terrorism.
  Two years ago, a similar amendment was added to the Agriculture, 
Rural Development, Food and Drug Administration and Related Agencies 
Appropriations Act for Fiscal Year 2001. However, the Senate-approved 
language that I offered at that time required the Secretary of Health 
and Human Services to certify that implementation of the amendment 
would pose no additional risk to the public's health and safety and 
would result in a significant reduction in prescription drug costs for 
U.S. consumers.
  Secretary of HHS Donna Shalala was not able to make such a 
demonstration as required by that law.
  I ask unanimous consent that a copy of her letter to President 
Clinton dated December 26, 2000, be printed in the Record.
  There being no objection, the letter was ordered to be printed in the 
Record, as follows:

                                           The Secretary of Health


                                           and Human Services,

                                 Washington, DC, December 6, 2000.
     Hon. William J. Clinton,
     The White House,
     Washington, DC.
       Dear Mr. President: The annual appropriations bill for the 
     Food and Drug Administration (FDA) (P.L. 106-387), signed 
     into law earlier this year, included a provision to allow 
     prescription drugs to be reimported from certain countries 
     for sale in the United States. The law requires that, prior 
     to implementation, the Secretary of Health and Human Services 
     demonstrate that this reimportation poses no additional risk 
     to the public's health and safety and that it will result in 
     a significant reduction in the cost of covered products to 
     the American consumer.
       I am writing to advise you that I cannot make the 
     demonstration called for in the statute because of serious 
     flaws and loopholes in the design of the new drug 
     reimportation system. As such, I will not request the $23 
     million that was conditionally appropriated for FDA 
     implementation costs for the drug reimportation system 
     included in the FY 2001 appropriations bill.
       As you know, Administration officials worked for months 
     with members of Congress and staff to help them design safe 
     and workable drug reimportation legislation. Unfortunately, 
     our most significant concerns about this proposal were not 
     addressed. These flaws, outlined below, undermine the 
     potential for cost savings associated with prescription drug 
     reimportation and could pose unnecessary public health risks.
       First, the provision allows drug manufacturers to deny U.S. 
     importers legal access to the FDA approved labeling that is 
     required for reimportation. In fact, the provision explicitly 
     states that any labeling information provided by 
     manufacturers may be used only for testing product 
     authenticity. This is a major loophole that Administration 
     officials discussed with congressional staff but was not 
     closed in the final legislation.
       Second, the drug reimportation provision fails to prevent 
     drug manufacturers from discriminating against foreign 
     distributors that import drugs to the U.S. While the law 
     prevents contracts or agreements that explicitly prohibit 
     drug importation, it does not prohibit drug manufacturers 
     from requiring distributors to charge higher prices, limit 
     supply, or otherwise treat U.S. importers less favorably than 
     foreign purchasers.
       Third, the reimportation system has both authorization and 
     funding limitations. The law requires that the system end 
     five years after it goes into effect. This ``sunset'' 
     provision will likely have a chilling effect on private-
     sector investment in the required testing and distribution 
     systems because of the uncertainty of long-term financial 
     returns. In addition, the public benefits of the new system 
     are diminished since the significant investment of taxpayer 
     funds to establish the new safety monitoring and enforcement 
     functions will not be offset by long-term savings to 
     consumers from lower priced drugs. Finally, Congress 
     appropriated the $23 million necessary for first year 
     implementation costs of the program but did so without 
     funding core and priority activities in FDA, such as 
     enforcement of standards for internet drug purchase and post-
     market surveillance activities. In addition, while FDA's 
     responsibilities last five years, its funding authorization 
     is only for one year. Without a stable funding base, FDA will 
     not be able implement the new program in a way that protects 
     the public health.
       As you and I have discussed, we in the Administration and 
     the Congress have a strong obligation to communicate clearly 
     to the American people the shortcomings in policies that 
     purport to offer relief from the high cost of prescription 
     drugs. For this reason, I feel compelled to inform you that 
     the flaws and loopholes contained in the reimportation 
     provision make it impossible for me to demonstrate that it is 
     safe and cost effective. As such, I cannot sanction the 
     allocation of taxpayer dollars to implement such a system.
       Mr. President, the changes to the reimportation legislation 
     that we have proposed can and should be enacted by the 
     Congress next year. At the same time, I know you share my 
     view that an importation provision--no matter how well 
     crafted--cannot be a substitute for a voluntary prescription 
     drug benefit provided through the Medicare program. Nor is 
     the solution a low-income, state-based prescription drug 
     program that would exclude millions of beneficiaries and 
     takes years to implement in all states. What is needed is a 
     real Medicare prescription drug option that is affordable and 
     accessible to all beneficiaries regardless of where they 
     live. It is my strong hope that, when Congress and the next 
     Administration evaluate the policy options before them, they 
     will come together on this approach and, at long last, make 
     prescription drug coverage an integral part of Medicare.
           Sincerely,
                                                 Donna E. Shalala.

  Mr. COCHRAN. More recently, on July 9, 2001, a letter from the 
current Secretary of Health and Human Services, Tommy Thompson, 
indicated that based on an analysis by the Food and Drug Administration 
on the safety issues and analysis by his planning office on the cost 
issues, he could not make the required determinations, and he stated 
his view that we should not sacrifice public safety for uncertain 
speculative cost savings.
  Secretary Thompson also indicated that prescription drug safety could 
not be adequately guaranteed if drug reimportation were allowed and 
that costs associated with documentation, sampling, and testing of 
imported drugs would make it difficult for consumers to get any 
significant price savings.
  I ask unanimous consent that Secretary Thompson's letter be printed 
in the Record at this point.
  There being no objection, the letter was ordered to be printed in the 
Record, as follows:

                                           The Secretary of Health


                                           and Human Services,

                                      Washington, DC July 9, 2001.
     Hon. James Jeffords,
     U.S. Senate,
     Washington, DC.
       Dear Senator Jeffords: I am writing to follow up on my 
     earlier response to your letter of January 31, 2001, co-
     signed by fifteen of your colleagues, regarding the Medicine 
     Equity and Drug Safety Act of 2000 (MEDS Act).
       You and other Senators and Representatives asked that I 
     reconsider former Secretary Shalala's decision and make the 
     determination necessary to implement the MEDS Act. As I 
     mentioned in my prior communication, I asked the Food and 
     Drug Administration (FDA) to carefully reexamine the law to 
     evaluate whether this new system poses additional health 
     risks to U.S. consumers, and the Office of the Assistant 
     Secretary for Planning and Evaluation (OASPE) to examine 
     whether the new law will result in a significant cost savings 
     to the American public.
       I believe very strongly that seniors should have access to 
     affordable prescription drugs. I applaud your leadership in 
     this area, and agree that helping seniors obtain affordable 
     medicines should be a priority. However, as

[[Page 13218]]

     my earlier response stated, I do not believe we should 
     sacrifice public safety for uncertain and speculative cost 
     savings.


                            safety concerns

       After a thorough review of the law, FDA has concluded that 
     it would be impossible to ensure that the MEDS Act would 
     result in no loss of protection for the drugs supplied to the 
     American people. As you know, the drug system as it exists 
     today is a closed system. Most retail stores, hospitals, and 
     other outlets obtain drugs either directly from the drug 
     manufacturer or from a small number of large wholesalers. FDA 
     and the states exercise oversight of every step within the 
     chain of commercial distribution, generating a high degree of 
     product potency, purity, and quality. In order to ensure 
     safety and compliance with current law, only the original 
     drug manufacturer is allowed to reimport FDA-approved drugs.
       Under the MEDS Act, this system of distribution would be 
     opened to allow any pharmacist or wholesaler to reimport 
     drugs from abroad; this could result in significant growth in 
     imported commercial drug shipments. As you know, the FDA and 
     the states do not have oversight of the drug distribution 
     chain outside the U.S. Yet, opening our borders as required 
     under this program would increase the likelihood that the 
     shelves of pharmacies in towns and communities across the 
     nation would include counterfeit drugs, cheap foreign copies 
     of FDA-approved drugs, expired drugs, contaminated drugs, and 
     drugs stored under inappropriate and unsafe conditions.
       While the MEDS Act requires chain of custody documentation 
     and sampling and testing of imported drugs, these 
     requirements cannot substitute for the strong protections of 
     the current distribution system. Counterfeit or adulterated 
     and misbranded drugs will be difficult to detect, and the 
     sampling and testing proposed under this program can not 
     possibly identify these unsafe products entering our country 
     in large commercial shipments.
       I can only conclude that the provisions in the MEDS Act 
     will pose a greater public health risk than we face today and 
     a loss of confidence by Americans in the safety of our drug 
     supply. Although I support the goal of reducing the cost of 
     prescription drugs in this country, no one in this country 
     should be exposed to the potential public health threat 
     identified by the FDA in their analysis. Further, the 
     expenditure of time and resources in maintaining such a 
     complex regulatory system as proposed by the MEDS Act would 
     be of questionable public health value and could drain 
     resources from other beneficial public health program.


                              cost savings

       The clear intent of the MEDS Act is to reduce the price 
     differentials between the U.S. and foreign countries. The 
     review of the Office of the Assistant Secretary for Planning 
     and Evaluation (OASPE) concludes there are significant 
     disincentives for reimportation under the MEDS Act, including 
     the costs associated with documenting, sampling and testing, 
     the potential relabeling requirements and related costs and 
     risk associated with such requirements, the overall risk of 
     increased legal liability, the costs associated with the 
     management of inventories by wholesalers and pharmacists, and 
     the risk to existing and future contractual relationships 
     between all parties involved. Moreover, there are a number of 
     reasons (including potential responses by foreign 
     governments) why lower foreign prices may not translate into 
     lower prices for U.S. consumers. Insufficient information 
     exists for me to demonstrate that implementation of the law 
     will result in significant reduction in the cost of drug 
     products to the American consumer.


                               conclusion

       Since I am unable to make the determination on the safety 
     and cost savings in the affirmative, as required under the 
     law, I cannot implement the MEDS Act. Please find attached to 
     this letter a more detailed analysis of the factors 
     influencing the public-safety and cost-savings questions. If 
     you need further clarification of my position on these 
     issues, please do not hesitate to contact me.
       Thank you for your leadership in health care. I look 
     forward to working with you on new initiatives for making 
     medicine more affordable to our citizens, and on other health 
     issues of importance to our Nation.
           Sincerely,
                                                Tommy G. Thompson.

  Mr. COCHRAN. Even though the amendment being offered by the Senator 
from North Dakota, Mr. Dorgan, would apply under its terms only to 
drugs exported to and reimported from Canada, it would seem prudent 
that the safeguards we adopted 2 years ago by a vote of 96 to 0 should 
also be applied to this reimportation proposal. That is why I am 
offering this amendment.
  We should be certain that any change we make results in no less 
protection in terms of the safety of the drugs supplied to the American 
people and will indeed make prescription drugs more affordable. 
Liberalization of protections that are designed to keep unsafe drugs 
out of this country, especially following the terrorist threats we face 
now, should occur only if the necessary safeguards are in place. This 
amendment will ensure that the concerns of the last two administrations 
regarding the safety and cost-effectiveness are addressed prior to the 
implementation of this proposal.
  Currently, under the Federal Food, Drug, and Cosmetic Act, it is 
unlawful for anyone to introduce into interstate commerce a new drug 
that is not covered by an approved new drug application or an 
abbreviated new drug application. Approval must be sought on a 
manufacturer and product-by-product basis. A product that does not 
comply with an approved application, including an imported drug not 
approved by FDA for marketing in the United States, may not be 
imported, even if approved for sale by that country.
  A product introduced into interstate commerce that does not comply 
with an approved application is considered an unapproved new drug in 
violation of the Food, Drug, and Cosmetic Act, as well as 
``misbranded'' under the section of that act.
  Under section 801 of the act, a drug that is manufactured in the 
United States pursuant to an approved new drug application and shipped 
to another country may not be reimported into the United States by 
anyone other than the original manufacturer. This prohibition on 
reimportation of products previously manufactured in the United States 
and then exported was added in 1988 to prevent the entry into this 
country of counterfeit and adulterated products.
  Section 801 was enacted not to protect the corporate interests of 
pharmaceutical companies but to protect the safety of American 
consumers. Counterfeit drugs are a very real threat and can be deadly. 
Any liberalization of drug reimportation laws must assure safety from 
this threat. Limiting reimportation of drugs from Canada does not 
necessarily solve that problem.
  During testimony before the Senate Finance Committee on March 7 of 
this year, the administrator of the Centers for Medicare and Medicaid 
Services, Tom Scully, was asked whether the administration opposes or 
supports the importation of prescription drugs into the United States. 
He said, and I quote:

       We have opposed it . . . there is no way for FDA to monitor 
     and regulate drugs coming in from Canada, Mexico or other 
     countries.

  Others have told us there is no effective way to prevent 
transshipment of drugs from other countries into Canada and then into 
the United States. Limiting reimportation to Canada will only make 
Canada a port of entry for counterfeit and substandard drugs into the 
United States.
  William Hubbard, who is FDA's Senior Associate Commissioner for 
Policy Planning and Legislation, told us at a September 5, 2001, 
hearing, before the Senate Consumer Affairs Foreign Commerce and 
Tourism Subcommittee, the following:

       Even if the Canadian system is every bit as good as ours, 
     the Canadian system is open to vulnerabilities by people who 
     will try to enter the U.S. market because, again, that is 
     where the money is.

  Last year, U.S. Customs and Drug Enforcement Administration officials 
testified before the House Energy and Commerce Committee that thousands 
of counterfeit and illegal drugs are already coming across our borders 
and through the mail from other countries. Far from supporting the 
reimportation proposals before Congress, these agencies recommended 
tightening our current regulations on reimportation of pharmaceuticals.
  In a July 11, 2001, letter to the Energy and Commerce chairman and 
ranking member, William Simpkins, Acting Administrator of the 
Department of Justice Drug Enforcement Administration, who was 
referring to reimportation amendments, said the following:

       (W)e oppose . . . these amendments because they would 
     hinder the ability of law enforcement officials to ensure 
     that drugs are imported into the United States in compliance 
     with long-standing Federal laws designed to protect the 
     public health and safety.

  On March 5 of this year, the New York Times in some articles 
explained

[[Page 13219]]

that the illegal production in the United States of popular stimulants 
such as methamphetamine reflects lax regulation in Canada for the 
chemical ingredients. As a result, Canada has become the leading supply 
route for the raw ingredient into the United States where the 
substances are more tightly controlled. In the last 11 months, the U.S. 
Customs Service has seized more than 110 million tablets of 
decongestants that contain the primary ingredient for making 
methamphetamines, or speed, as smugglers attempt to bring shipments 
across the border in everything from furniture to glassware.
  The article notes:

       An alliance of diverse organized crime groups, stretching 
     from Mexico to Iraq to Jordan, have found Canada an easy 
     entry point into a growing American market for synthetic 
     drugs.

  The Canadian Government concedes that they have relatively loose 
control on the powder used to make methamphetamine, which criminal 
elements have easily circumvented. According to an intelligence report 
by DEA and the Royal Canadian Mounted Police in January:

       The diversion of pseudoephedrine from Canadian suppliers to 
     the illicit market is reaching a critical level.

  The FBI and DEA officials have tracked the profit trail to the Middle 
East where they are probing to see if it is being used to fund 
terrorist networks.
  This amendment would also permit personal importation of drugs from 
any country. It is illegal to import unapproved drugs into the United 
States, but the FDA has for years, in the exercise of its enforcement 
discretion, allowed U.S. citizens to bring a 90-day supply of 
prescription drugs for their personal use. The reason for this policy 
is one of compassionate use. It was to allow patients with life-
threatening or serious diseases to have access to non-FDA-approved 
therapies that are available in other countries. Under this policy, the 
patient affirms it is for his or her own use and provides the name and 
address of the U.S.-licensed doctor responsible for treatment.
  The FDA has not officially permitted the importation of foreign 
versions of U.S.-approved medications because it has been unable to 
assure these products are safe or effective. In testimony before the 
Subcommittee on Oversight and Investigation in the House Committee on 
Energy and Commerce, in June 2001, William Hubbard of FDA indicated:

       Under the FD&C Act, unapproved, misbranded, and adulterated 
     drugs are prohibited from importation into the U.S., 
     including foreign versions of U.S.-approved medications, as 
     is reimportation of approved drugs made in the U.S. In 
     general, all drugs imported by individuals fall into one of 
     these prohibited categories. From a public health standpoint, 
     importing prescription drugs for personal use is a 
     potentially dangerous practice. FDA and the public do not 
     have any assurance that unapproved products are effective or 
     safe, or have been produced under U.S. good manufacturing 
     practices. U.S.-made drugs that are reimported may not have 
     been stored under proper conditions, or may not be the real 
     product, because the U.S. does not regulate foreign 
     distributors or pharmacies. Therefore, unapproved drugs and 
     reimported approved medications may be contaminated, 
     subpotent, superpotent, or counterfeit. In addition, some 
     foreign web site offer to prescribe medicines without a 
     physical examination, bypassing the traditional doctor-
     patient relationship. As a result, patients may receive 
     inappropriate medications because of misdiagnosis, or fail or 
     receive appropriate medications or other medical care, or 
     take a product that could be harmful or fatal, if taken in 
     combination with other medicines they might be taking.

  The importation of personal use amounts by mail continues to increase 
according to FDA. A 5-week survey of mail in Carson City, California, 
conducted by Customs and the FDA in 2001 found serious public health 
risks associated with drugs intercepted. These included drugs that 
could not be identified because they had no labeling, drugs once 
approved by the FDA but withdrawn from the market due to safety 
concerns, and drugs that should only be used under the supervision of a 
doctor licensed to administer the drug.
  In a letter to Congress last July, Mr. Hubbard indicated that the 
personal importation policy ``is difficult to implement'' partly ``due 
to the enormous volume of drugs being imported for personal use and the 
difficulty faced by FDA inspectors, or even health care practitioners, 
in identifying a medicine by its appearance.''
  When I was discussing the amendment of the Senator from North Dakota, 
Mr. Dorgan, which we just approved, I told the story of how Senator 
Kohl and I had a meeting in Senator Kohl's office. We were anticipating 
a second amendment to the appropriations bill last year to find out 
more about the dangers and the difficulties our inspectors have at the 
border when dealing with imported prescription drugs. The Internet and 
mail resources, buying drugs here and there by mail, were another 
example of bypassing the inspections and bypassing the enforcement of a 
lot of U.S. regulations.
  It is amazing the number of drugs that are now on the shelves in 
drugstores in America that are counterfeit and no one knows about it. 
These are difficulties that we now face. The proposal of this amendment 
by the Senator from North Dakota will further relax our capability to 
find illegal drugs, to find those drugs that are dangerous that are 
being brought into this country. It will create a new opportunity for 
transshipping drugs all over the world into our country which will be a 
great danger to the citizens of our country.
  The conditions contained in my amendment, which would be added to the 
legislative proposal before the body, are the same as those previously 
adopted by this Senate and included in the 2001 Agriculture 
appropriations bill. They were adopted at that time by a unanimous vote 
of the Senate during our consideration of that appropriations bill. I 
ask my colleagues to again support this amendment.
  The PRESIDING OFFICER. The Senator from Oklahoma.
  Mr. NICKLES. I compliment Senator Cochran for his amendment. I ask 
unanimous consent to be added as a cosponsor of the amendment.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. NICKLES. Senator Cochran alluded to 2 years ago when we passed 
this amendment unanimously. He said if we are going to do it, let's 
make sure it does not impose significant additional risk on consumers, 
thereby saving money. I don't know why anyone would vote against that 
amendment. I hope no one will vote against this amendment. It is a very 
important amendment.
  Let me make a couple of comments. Someone will ask, didn't we already 
do that in the Dorgan amendment which passed by a nice vote? The Dorgan 
amendment is full of loopholes. It says it would be suspended upon the 
discovery of a pattern of importation of prescriptions by the importer 
that is counterfeit or in violation of any requirement in this section. 
If this is the case, how many people will have to die before we realize 
there is a pattern? How many will realize those yellow tablets that 
Senator Breaux was holding up are actually paint instead of maybe a 
lifesaving drug? How many patterns have to exist before we realize this 
really didn't work?
  We have the FDA where we spend millions and millions of dollars 
inspecting, trying to make sure we have quality drugs for our citizens. 
We are just going to open up a gigantic loophole for unscrupulous 
manufacturers. I wish that were not the case, but if anyone travels 
anywhere in the world, they know it happens often. When you talk with 
our State Department about counterfeit drugs or copyright violations on 
software, they will tell you that it happens lots of time. 
Unfortunately, it should not happen. But we have a pretty closed system 
right now where FDA goes to great lengths to ensure the drugs coming 
into the United States are safe.
  Last year, Senator Dorgan said, let's have it basically open ended 
coming from Canada and Mexico. Now we are just saying Canada. How safe 
is that?
  My staff did some homework. Canada has a provision under the Canadian 
Food and Drug Act, section 37. It reads:
  This Act does not apply to any packaged food, drug, cosmetic or 
device, not manufactured for consumption in Canada and not sold for 
consumption in

[[Page 13220]]

Canada, If the package is marked in distinct overprinting with the word 
``Export'' or ``Exportation'' and a certificate that the package and 
its contents do not contravene any known requirement of the law of the 
country to which it is or is about to be consigned has been issued in 
respect of the package and its contents in prescribed form and manner.
  In other words, the Canadian Food and Drug Act does not apply to 
drugs brought in strictly for export. Canada can import drugs from 
Sudan and export them to the United States and they are not covered by 
Canadian Food and Drug regulations.
  Yet Senator Dorgan's amendment says: Bring them on, bring them on. 
Our FDA people, our leaders, both past administrations as well as 
present administration, say we cannot do that safely.
  Here is a letter that was addressed to Senator Cochran. It is an 
extensive letter that is critical of Senator Dorgan's approach. I will 
just read one paragraph:

       The bill would actually create an incentive for 
     unscrupulous individuals to find ways to sell unsafe or 
     counterfeit drugs that, while purporting to be from Canada, 
     may actually originate from any part of the world. Canada 
     could become a transshipment point for legitimate or 
     nonlegitimate manufacturing concerns throughout the world, 
     and in many cases we would not be able to determine the true 
     country of origin. For all these reasons we find this 
     provision would greatly erode the ability of the FDA to 
     ensure the safety and efficacy of the drug supply and protect 
     public health.

  I could go on.
  If Canada says we are not going to regulate drugs that are brought 
into Canada for export only, and we are saying wait a minute, Canada, 
we want to be able to import your drugs.
  I listened to a lot of the debate. Almost every example that was 
given was of United States-manufactured drugs sent to Canada that are a 
lot cheaper in Canada than they are in the United States. There is 
nothing in Senator Dorgan's amendment that says these drugs have to be 
manufactured in Canada or the United States. These drugs could come 
from Sudan.
  There was a pharmaceutical plant in Sudan that was bombed a few years 
ago. There are pharmaceutical plants all around the world. Some of them 
may have great quality controls, some of them may not. Some of them may 
be in terrorist states. Yet we are leaving ourselves wide open.
  So I urge my colleagues----
  Mr. SANTORUM. Will the Senator yield for a question?
  Mr. NICKLES. I will be happy to, but I tell my colleagues I hope and 
pray the Cochran amendment will pass. If it does not pass, I will have 
an amendment that says the drugs that are covered should be of American 
or Canadian origin, manufacture, or control. American drugs are 
controlled. Even the drugs that we import, if they have FDA approval, 
we send FDA inspectors over to those plants to certify them. We have 
what is called a pedigree requirement to follow those drugs, to know 
where they are manufactured, know where they are distributed, before 
FDA puts their approval on them.
  So we try to and do protect safety. We do not have that for all drugs 
that would be coming from Canada.
  I would just mention there is a fatal flaw, in my opinion, in the 
Dorgan amendment we just adopted. One of those is that there has to be 
a pattern. If you look at the language of the amendment we just 
adopted, there has to be a pattern of importation from each importer.
  That is too late when there are people who have already died, are 
already sick, when there are people who did not get cured because we 
waited for a pattern, we waited for evidence, we waited for unfortunate 
results--not to mention, there is no telling how many people would have 
been cheated out of money, and so on.
  So I think the amendment we just adopted is probably not worth the 
paper it was written on.
  I also find it kind of clever to think we had the original Dorgan 
amendment, then they had a second degree. They left out one paragraph, 
and then the second-degree was reinstating that one paragraph. I am 
guessing it was saying we will use this as a substitute for the Cochran 
amendment. That is a false and faulty substitute. It is not a 
satisfactory substitute.
  The Cochran amendment--and I urge my colleagues to read it, and I 
cannot imagine anyone would oppose it--says:

       This section shall become effective only if the Secretary 
     of Health and Human Services certifies to Congress that the 
     implementation of this section (A) will pose no additional 
     risk to public health and safety.

  How could anybody oppose that?
  And, second:

       . . . result in a significant reduction of cost of covered 
     products to the American consumer.

  We are all in favor of that. I compliment the Senator from 
Mississippi for his leadership on it this year and 2 years ago. As a 
result of the amendment of the Senator from Mississippi, we have saved 
lives and eliminated a lot of fraud and counterfeiting and abuse that 
would have transpired had he not been so vigilant for the last couple 
of years. I compliment him and urge all my colleagues to support the 
Cochran amendment, and I am happy to yield.
  The PRESIDING OFFICER. Is the Senator yielding the floor?
  Mr. NICKLES. I yield to the Senator for a question.
  Mr. SANTORUM. I have a question. Listening to your comments, are you 
suggesting that a product made in Iraq or Yemen or Iran or some other 
country that may have terrorists in their country, they could actually 
send a drug through Canada into the United States, without anybody 
inspecting it, and have it show up here not marked as from what country 
it came, and be sold here in America, under the Dorgan amendment?
  Mr. NICKLES. Under Canadian law, which I just read--this is section 
37 of the Canadian Food and Drug Act--it said any item, whether it be 
packaged food, drug, cosmetic, or other devices--and if that item is 
imported and exported, not to be consumed or utilized in Canada, then 
it is not under their regulatory scheme.
  Mr. SANTORUM. So it would come in here under the Dorgan amendment, 
reimportation, not being reviewed by the FDA before it came here? Only 
if we found out the terrorist attack was successful through this scheme 
would we then find out that we have a problem?
  Mr. NICKLES. That would be too late.
  Mr. SANTORUM. That would be far too late.
  Mr. NICKLES. That would be under the category of the pattern of 
action.
  Mr. DORGAN. Will the Senator yield for a question?
  Mr. NICKLES. I am happy to yield for a question.
  Mr. DORGAN. I appreciate the courtesy. The amendment deals with FDA 
drugs, so the condition under which that drug from Canada would come 
into this country would be it was purchased at a Canadian-licensed 
pharmacy or distributer by a licensed facility or distributor in this 
country, and therefore it must be FDA approved and produced in an FDA-
approved plant. Is that not the case?
  Mr. NICKLES. I am reading a letter from the FDA, and they said 
absolutely. I ask unanimous consent to have printed in the Record a 
letter dated July 17, from the Department of Health and Human Services 
addressed to Senator Cochran.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:
                                                     Department of


                                      Health & Human Services,

                                     Rockville, MD, July 17, 2002.
     Hon. Thad Cochran,
     U.S. Senate, Washington, DC.
       Dear Senator Cochran. We take this opportunity to provide 
     the views of the Food and Drug Administration (FDA) on S. 
     2244, the Prescription Drug Price Parity for Americans Act, 
     introduced by Senator Byron Dorgan on April 24, 2002.
       The Administration is sympathetic to the goal of making 
     prescription drugs more affordable for American citizens, 
     including senior citizens. However, FDA is concerned about 
     the negative impact on public health of a proposal such as S. 
     2244 that aims to open the nation's drug regulation system 
     and allow drugs from outside that system into U.S. commerce 
     and our citizens' medicine cabinets. We therefore must oppose 
     enactment of this legislation.

[[Page 13221]]

       S. 2244 would allow wholesales, pharmacists and individuals 
     to import drugs from Canada under certain specified 
     conditions. The bill would create a new section 804 of the 
     Food, Drug, and Cosmetic Act (the Act), replacing the current 
     provisions of section 804, which are the drug re-importation 
     provisions enacted in 1999 (the MEDS Act).
       Currently, drugs marketed in the United States must be 
     approved by FDA based on demonstrated safety and efficacy; 
     they must be produced in manufacturing plants inspected and 
     approved by FDA; and their shipment and storage must be 
     properly documented. This ``closed'' regulatory system has 
     been very successful in preventing unapproved, adulterated or 
     misbranded drug products from entering the U.S. stream of 
     commerce. Legislation that would establish other distribution 
     routes for drug products, particularly where those routes 
     routinely transverse a U.S. border, creates a wide inlet for 
     counterfeit drugs and other dangerous products that are 
     potentially injurious to the public health and a threat to 
     the security of our nation's drug supply.
       S. 2444 would establish two new routes for introducing 
     drugs from Canada into U.S. commerce. First, new section 
     804(b) would require the Secretary of Health and Human 
     Services (the Secretary) to promulgate regulations to permit 
     pharmacists and wholesalers to import prescription drugs from 
     Canada into the U.S. The bill purports to safeguard the 
     domestic drug supply by requiring, in new section 804(c), 
     that these drugs comply with sections 505, 501 and 502 of the 
     Act, and that importers comply with detailed recordkeeping 
     and testing requirements
       As a practical matter, meeting these requirements would be 
     an enormous undertaking, and the testing required under the 
     bill would be costly and time consuming, both for the 
     government and importers. Moreover, some of the testing 
     requirements cannot even be met, as there is no testing that 
     can ensure that a shipment of drugs does not contain 
     counterfeits. Since counterfeits can easily be commingled 
     with authentic product, either by the case, by the bottle, or 
     by the pill, there is no sampling or testing protocol 
     sufficient to protect against the grave public harm they 
     pose. No random sampling plan will be able to detect and 
     protect such criminal conduct since the threat does not 
     depend upon the nature of the reimported product, but upon 
     the integrity of those handling it. Furthermore, the 
     legislation fails to require reporting of any counterfeits 
     that may be found by testing, so even if counterfeits are 
     discovered, FDA may never learn of them.
       It is unlikely that Canadian sellers and U.S. importers 
     would be willing to endure these new requirements, but even 
     if they were, it is likely that the intended cost savings for 
     consumers would be absorbed by fees charged by exporters, 
     pharmacists, wholesalers, and testing labs. Because the bill 
     requires that the drugs comply with sections 501, 502 and 505 
     of the Act, it may be found, in practice, that for the bill 
     to have its intended effect U.S. manufacturers would have to 
     sell drug products manufactured, labeled and intended for the 
     U.S. market to Canadian distributors specifically for re-sale 
     to the U.S. Even if they were willing to do so, these sales 
     may represent illegal shipments to the Canadian market under 
     Canadian law. All of these concerns make the proposed program 
     for importation by pharmacies and wholeasalers both 
     impractical and unworkable.
       The second route proposed by S. 2244 for importing drugs 
     into the United States is by allowing individual consumers to 
     import drugs on their own from Canadian pharmacies. New 
     section 804(k)(2) would compel the Secretary to promulgate 
     guidance to allow consumers to directly import drugs and 
     medical devices from Canada. This represents an enormous 
     intrusion on the Department's enforcement discretion, and it 
     would over-ride existing statutory provisions that allow FDA 
     to refuse personal importation of prescription drugs from 
     Canada if they are believed to be unsafe, ineffective, 
     adulterated, radioactive, or contaminated.
       In surveys conducted by FDA over the past several years, we 
     have found that a wide variety of dangerous drug products 
     have been imported by individuals from outside the United 
     States, both by mail and by traveling to other countries. The 
     bill would actually create an incentive for unscrupulous 
     individuals to find ways to sell unsafe or counterfeit drugs 
     that, while purported to be from Canada, may actually 
     originate in any part of the world. Canada could become a 
     transshipment point for legitimate or non-legitimate 
     manufacturing concerns throughout the world, and in many 
     cases we would not be able to determine the true country of 
     origin. For all of these reasons, we find that this provision 
     would greatly erode the ability of FDA to ensure the safety 
     and efficacy of the drug supply, and protect the public 
     health.
       FDA has numerous other specific concerns that S. 2244 may 
     undermine current law regarding drug labeling, record 
     keeping, testing, and enforcement, and we have laid out these 
     concerns in an attachment to this letter.
       The Office of Management and Budget has advised that there 
     is no objection to the presentation of this report from the 
     standpoint of the Administration's program.
           Sincerely,
                                 Lester M. Crawford, D.V.M., Ph.D.
                                              Deputy Commissioner.
  Mr. NICKLES. This is the quote from FDA. I might say this is the 
position that is consistent, not only with this administration but the 
previous administration. They state:

       The bill would actually create an incentive for 
     unscrupulous individuals to find ways to sell unsafe or 
     counterfeit drugs that, while purporting to be from Canada, 
     may actually originate in any part of the world. Canada could 
     become the transshipment point for legitimate or 
     nonlegitimate manufacturing concerns throughout the world, 
     and in many cases we would not be able to determine the true 
     country of origin. For all these reasons we find this 
     provision would greatly erode the ability of FDA to ensure 
     the safety and efficacy of the drug supply and protect the 
     public health.

  Mr. DORGAN. If the Senator will yield for one additional question, 
the Senator is aware, I am sure, that today pharmaceutical 
manufacturers reimport a substantial amount of prescription drugs from 
Canada. What is to prevent the circumstance you just described from 
occurring now, with respect to current law?
  Mr. NICKLES. Current law requires FDA, for their certification--for 
FDA to give their certification, you have a pedigree requirement. The 
pedigree requirement means we have FDA inspectors go visit the plants 
in Canada to certify that yes, these are FDA-approved drugs. They do 
the sampling. They make sure the packages are safe. Inspections are 
done at great expense. That is already done for FDA, for drugs that are 
manufactured in the United States or reimported into the United States. 
It would not be done under any drug in Canada or under the Canadian 
law, which basically says if these drugs are purchased strictly for 
export purposes, they do not fall under Canadian regulation.
  Mr. DORGAN. But is it not then the case that they are not FDA-
approved drugs and therefore our amendment deals with that?
  Mr. NICKLES. Mr. President, I will reclaim the floor. That is not 
correct.
  Mr. DORGAN. It is correct.
  Mr. NICKLES. Again, I am reading to my colleague. I have a statement 
from the past FDA Administrator as well that says they can't guarantee 
the safety of these drugs. They do not have the regulators. The 
Senator's amendment did not have the pedigree requirement for drugs 
that would be imported into the country. That is a possible amendment 
that I am considering offering.
  If the Cochran amendment doesn't pass, we are going to be on this 
bill for a while because I am going to offer an amendment--I will tell 
my colleague, and maybe you will accept it--I am going to offer 
amendment that says all the drugs covered by this act shall be 
manufactured in the United States or Canada, because that has been 
implied but it is not factual under the bill.
  Ms. STABENOW. Will my friend from Oklahoma yield for a question?
  Mr. NICKLES. Let me finish. I am also going to offer an amendment 
that will replace language under the Dorgan amendment that says there 
is a pattern of importation of drugs, counterfeit and so on. That would 
be replaced by ``any instance.'' So we are not going to wait for a 
pattern if this amendment is adopted. Again, I hope my colleague from 
North Dakota would agree, with this amendment, that it could be 
suspended if there were an instance of counterfeit drugs, if there is 
an intent of abuse of the system. Then they can be suspended and not 
wait for a pattern.
  I think both of those amendments are very acceptable. I hope my 
colleagues will agree to consider them favorably.
  I yield the floor.
  The PRESIDING OFFICER. The Senator from Pennsylvania.
  Mr. SANTORUM. Mr. President, I think the Senator from Oklahoma has 
made a vitally important point. We have gone through I can't tell you 
the number of steps to try to stop terrorism.
  The Senator from Kansas has just come to the floor. He has been a 
leader in the area of bioterrorism and agriterrorism.

[[Page 13222]]

  Under this provision that we are debating right now--the underlying 
Dorgan bill--you are creating an incredible loophole for terrorist 
attacks and bioterrorist attacks in this country. We are creating a 
loophole that allows any foreign country to go through Canada to import 
drugs into the United States. And the Canadian Government doesn't even 
inspect it and does not even open it. It can come right in here.
  Ms. STABENOW. Mr. President, will the Senator yield for a question?
  Mr. SANTORUM. Yes. I am happy to yield for a question.
  Ms. STABENOW. The trading of drugs is probably more highly regulated 
than any kind of trade. I am wondering if my friend would also object 
to all the food that comes into the United States from Canada and other 
countries. We have foods and vegetables coming in every day. We have 
bottled water and alcoholic beverages coming in. We have all kinds of 
things that go back and forth across the border from a lot of countries 
that are not regulated nearly as much as prescription drugs. I am 
wondering if the Senator is also concerned about or would object to 
that kind of trade as well.
  Mr. SANTORUM. That is why we have Customs inspectors and FDA 
inspectors, who do, in fact, monitor things coming into this country 
for purposes that are fundamentally different. When you are talking 
about pharmaceutical products, that is a fundamentally different area.
  All I am suggesting is that what is being created in the Dorgan 
amendment is an opportunity. As the amendment says, you have to have a 
pattern of problems with these drugs before you can do anything.
  I think that creates a loophole that is in today's world of 
terrorism, one that would be certainly filled by any number of 
terrorist organizations that want to hit the United States with some 
sort of bioterrorism.
  I want to get back to what the Senator from North Dakota said prior 
to the vote on the last amendment. He said he would like to have 
someone come here and explain to him why drugs in Canada are so much 
less expensive than they are here in the United States, why we pay such 
premiums for those drugs here in the United States, and why Canada can 
sell them so much less expensively than they do here. There are a lot 
of reasons. Let me give you a few.
  No. 1, the Canadian health care system is a single-payer system. It 
is a government-run health care system. It is run through the provinces 
and the territories.
  This government-run health care system negotiates prices. Not all 
drugs that are made available in the United States are available in 
Canada. Why? Because the Canadian Government has a formulary. There may 
be four arthritis drugs that may be very effective in dealing with 
different forms of arthritis. The Canadian Government basically 
negotiates with companies, plays one against the other, and gets the 
cheapest price. They make one available. That one available may be the 
right particular drug for this group of arthritis sufferers. But it may 
not be the best drug for the whole class. That is why there is probably 
four of them. They have different little initiatives that make their 
drug more effective on certain people in certain circumstances. But in 
Canada, you get one. Maybe you get two in a general class. They 
negotiate it based on the best price they can get.
  That is one thing.
  In Canada, people don't get access to the variety of different drugs 
that may be the best therapy available. They negotiate a price because 
they are a big purchaser. They purchase for the entire 35 million 
people in Canada. They purchase drugs, and they compete it so they get 
one company getting the entire market, in many cases. So they can get a 
much reduced price as a result of the volume discount which they give.
  Again, they limit the access to a variety of different drugs to the 
people of Canada. It is a balancing act for the drug company that wants 
to compete in Canada to get access to that market.
  I am sure the Senator from North Dakota and the Senator from Michigan 
are familiar with this.
  The second thing is there is a provision in the Canadian law called 
``compulsory licensing.'' Most Senators on the other side of the aisle 
know what compulsory licensing is. But just in case they don't, let me 
explain to Members what the impact of compulsory licensing has on drug 
prices.
  Compulsory licensing is the ability for the Canadian Government, if 
they do not get a satisfactory negotiation for a drug they believe is 
necessary to be offered in Canada, and if they aren't happy with the 
price the pharmaceutical company is willing to sell that drug at, they 
can basically, in a word, steal the patent.
  Let me repeat that.
  If Merck, which happens to be a big pharmaceutical company in my 
State, wants to sell a particular drug that is effective for 
arthritis--maybe it is a very new drug, an important drug, one on which 
they have spent a lot of money, and it has tremendous results and they 
want to sell it in Canada--said: We will sell it for $2 a pill here in 
the United States. Canadian says: That is nice. We are not going to pay 
$2. We want a volume discount. Merck says: OK. We will negotiate some 
sort of volume discount. We will sell it to you for $1.50 a pill. 
Canada says: That is nice. We will pay you 50 cents. Merck says: That 
is not a fair price. So they negotiate back and forth.
  OK. Fine. We believe this is an important drug for our people. If you 
want to sell it to us for 50 cents, you lose your patent. We will 
license it to someone here in Canada. They will make the drug, and you 
get nothing.
  Most people would say that doesn't seem particularly fair. No. It is 
not fair. But under Canadian law, I would suggest to you that not just 
Canada but in most countries around the world, unfortunately, that is a 
fact of life for many drug companies. If you point to Brazil, to South 
Africa, or to France, or to some other country, and ask, How can they 
get these drugs? It is because if they do not sell the drug at the 
price the national government wants the drug sold at, they steal the 
patent, they compulsory license it.
  You are now looking at a drug company that says: Wait a minute. We 
want to sell this drug for $2. It cost us 25 cents extra to make the 
pill. They say: Wait a minute. Why do you want to sell if for $2? It 
took us $800 million to bring this thing to market. We have a few 
research costs involved in getting this drug formulated, approved, and 
all the things that are necessary to make sure it is safe and 
effective. It cost us a lot of money. Yes, but making the pill doesn't 
cost a lot. But to get to where we can make the pill, it costs an 
enormous amount of money. We would like to recoup that. Because they 
are in business, they would like to make a profit. The Canadian 
Government says: Look, it only cost you a quarter to make this pill, 
but we are giving you 50 cents. You are making money. It is better than 
making no money. If you don't sell it to us for 50 cents, you make no 
money.
  So the drug company has to make this decision. Do I sell the drug at 
50 cents and make some money, or do I choose not to sell the drug?
  They may have it be made somewhere else. Even if they don't 
compulsory license it--even if they say, no, they are not going to 
compulsory license it, they are not going to sell it, put aside 
compulsory licensing. They say: We want to sell the drug. It is 50 
cents. You don't have access to our market.
  So the drug company has to make a decision. Do I sell the drug at 50 
cents and make a small profit to help underwrite the cost of the 
research that was done on this drug, or do I choose not to sell?
  You can make the argument that they shouldn't sell. You can make the 
argument that they should try to negotiate a better deal. But there is 
one negotiator, the Government of Canada, and they set the price. If 
you do not like the price, you either don't sell, and no drug is made 
available in Canada, which is no skin off the back of Canadian 
Government because in most cases, most drugs are not available in 
Canada. It is just another drug that is not available.

[[Page 13223]]

  If they really want your drug, and if they really believe it is 
important to get your drug, they simply license it to someone in 
Canada, and they make the drug, which they buy. They can make the drug 
in such sufficient quantities that they can actually import that drug 
into the United States. So they can steal your patent. And under this 
bill, a stolen patent can be imported.
  I understand it is very, very popular to be beat up on pharmaceutical 
companies. They make money. We do not like anybody that makes money 
around here. So they make some money. They do some things that are 
cutting edge. For some reason this is a problem.
  It is very popular to go out and beat up on pharmaceutical companies 
for charging all this money for products that people need. But let me 
remind you, the Senator from Massachusetts said this bill will save $60 
billion. If I am wrong on that, that is what I thought I heard 
yesterday. The Senator from Massachusetts said this will save $60 
billion for the American consumer.
  My question is, save it from whom? Who is it going to cost? It comes 
from somewhere. The obvious answer is, it is going to save it from the 
pharmaceutical industry.
  Let's look at the pharmaceutical industry in this country, the much 
maligned pharmaceutical industry. What did this pharmaceutical industry 
do to deserve this treatment? What it did to deserve this treatment is 
invest more as an industry in research and development than any other 
industry in America.
  Let me repeat that. What have they done to incur the wrath of the 
U.S. Senate today? What they have done is invest more money in research 
and development than any other industry in America. As a result, they 
have come up with breakthrough drugs, which cost a lot of money but, by 
the way, save lives and improve the quality of life for millions in 
America.
  So what are we doing to thank them, to congratulate them, for being 
one of the leading exporters in this country, for improving our balance 
of payments in this country, for employing people in high-priced jobs 
in this country, for moving scientific research in this country, for 
curing diseases in this country, for improving the quality of life in 
this country, for extending lives in this country?
  We say we are going to whack off $60 billion out of your bottom line, 
which means, of course, the research will stop or be dramatically 
reduced.
  So understand what we are doing. We are all beating our chests 
saying: We are going to get the big, bad pharmaceutical companies that 
are pillaging the American public with outrageous drug prices, and we 
are going to cut those prices by 30 to 50 percent.
  Understand the consequences. Less money in research. Less money in 
research means fewer new drugs. Fewer new drugs mean people will die 
who would otherwise be saved by those innovations. That is what the 
consequences are.
  All I am suggesting is, if that is the tradeoff, if 30 percent less 
on your pharmaceutical price is a good tradeoff for not having the next 
generation of lifesaving drugs or quality-improving drugs, that is 
fine. That is a worthy debate in the Senate. It is one that we should 
have, but it is not one that we are having.
  The debate we are having is, corporate greed versus poor senior 
citizen. That is the debate here: These horrible pharmaceutical 
companies that are raping and pillaging the people of America while 
making these enormous profits.
  Look at their profit lines, look at the prices for their stock, and I 
will assure you, they are not showing those enormous profits.
  What is going to happen--if this were successful and we did take $60 
billion out of this industry--and that is where it is coming from. It 
is not coming from anywhere else. It is not being drawn out of whole 
cloth. It is coming out this industry, which means $60 billion less of 
research.
  We run around this country, and we are very proud in the Senate 
talking about how we are increasing the budget for the National 
Institutes of Health and how we care deeply about improving the quality 
of health in this country and how we are going to put more and more 
taxpayers' dollars into solving diseases, into fighting problems that 
perplex us, into finding out more about how our bodies work. Wonderful. 
Wonderful. That is great basic research. It is important to do. It is 
great scientific discovery. But where does all this stuff lead? Where 
does this lead?
  In many, many cases it leads to research then being handed off to a 
private-sector organization that goes ahead and develops that 
lifesaving cure, that pharmaceutical product that, in the end, saves 
lives.
  Mr. FRIST. Mr. President, will the Senator yield for a question?
  Mr. SANTORUM. I am happy to yield for a question.
  Mr. FRIST. Mr. President, I will be very brief. The Senator from 
Pennsylvania addresses a very important point, which forces us to look 
to the future in terms of future cures, whether it is for HIV/AIDS, 
emphysema or heart disease.
  He hit the point very directly, in a way that I have not heard on 
this floor, in response to one of the main reasons why drug prices are 
higher in the United States than in Canada.
  I would like to ask the Senator the following question. Typically, in 
the United States an individual company will set prices in such a way 
to cover research. They will look at supply, demand, and the efficacy 
and efficiency with which the goal of cure or prevention is carried 
out.
  In order for the prices of medicine to be sustained over time, you 
must allow some recoupment of that investment in research. We all know 
that, on average, only 3 out of 10 medicines that are eventually 
approved in this country actually generate enough revenue to pay for 
that investment over time in the United States.
  Mr. SANTORUM. Not to mention all the hundreds or thousands of 
compounds that were even tried to be researched, and they ended up 
where they decided: No, we are not even producing a drug that could be 
sought for approval.
  Mr. FRIST. That is correct. That is the United States.
  The real question goes to the following: In Canada they have a very 
different system. Everybody looks to Canada's system as if it is 
similar to or in some ways better than ours. In Canada, not the United 
States--this is what you essentially said--is it not correct that each 
company is denied the freedom to set prices for its own innovative 
medicines?
  Mr. SANTORUM. Let me explain to you exactly how that process works. 
It is not a free market. They cannot set their prices. They have to 
negotiate with a board, and it is called the Patented Medicines Price 
Review Board. That board sets the prices in Canada.
  They do so in the following way. The statute mandates that the price 
of most new patented medicines may not exceed the price of the most 
expensive drug marketed in Canada that treats the same disease.
  So let's take HIV/AIDS. You have a regiment of drugs that are out 
there to treat it. Someone comes on the market with a brand new AIDS 
drug that may cure AIDS or may substantially improve the quality of 
life for someone with AIDS.
  In Canada, they cannot, under the statute, charge more than what the 
highest priced drug already in the market is, which may have an 
improving effect on the quality of AIDS but may not be one of those 
transformational drugs.
  So, No. 1, statutorily they are limited. No. 2, the price in Canada 
of a drug constituting a breakthrough drug, in therapy, may not exceed 
the median of its price in seven countries.
  Let me tell you, all of those specified countries, with the exception 
of the U.S.--that is one of the seven--the other six, interestingly 
enough, are all price-controlled countries where the government sets 
the prices.
  So it is a spiraling-down effect. One refers to the other country as 
a way to set the price, and so they each keep setting lower and lower 
prices, and

[[Page 13224]]

they rachet the price down by having all these price control countries 
as the reference point for Canada.
  Ms. STABENOW. Will my friend from Pennsylvania yield?
  Mr. SANTORUM. I will as soon as I finish the question from the 
Senator from Tennessee.
  Mr. FRIST. Just a quick followup question.
  Based on what you have said, the only choice a manufacturer has is to 
set it at the price that Canada allows or to not sell it.
  If a manufacturer decided not to sell a medicine at a price the 
government allowed, then is it correct that the government would 
authorize a Canadian company to copy and sell the drug, even without 
the patent holder's permission, which, it would seem to me, throws out 
the meaning of patents?
  If we throw out the meaning of patents when it comes to 
pharmaceuticals and drugs, what are the implications for us in this 
country or the person listening today who has heart disease or HIV/
AIDS, as they look with hope for that cure?
  Mr. SANTORUM. There are enormous implications if we allow the 
Canadian Government to deny and basically say to the company: Either 
take it at this price or we will go ahead and manufacture it ourselves.
  By the way, once they license it in Canada, the Canadian manufacturer 
can appeal to the government and say: Look, yes, we are manufacturing 
it here, but for us to make a profit, we have to export some because we 
have to make it in sufficient quantities. And if that is approved, they 
can send the drug back here to the United States.
  Our companies could do all the research, expend all the money, and 
then be forced not to be able to sell the drug. In that case, the 
Canadian Government will say, it is not important enough. If you don't 
give it to us at the price we want, you lose the competition between 
three other drugs that may be similarly situated. You just don't sell 
the drug in Canada. Or, if we think it is important enough, if we think 
it is vital to our national health and you don't want to sell it to us 
at a price we believe is reasonable, we will have compulsory licensing. 
They simply license it to another.
  That is not some far off concept. Right after the anthrax scare in 
the Senate, the Canadian health minister said that if they cannot get 
enough quantities of Cipro, they were going to revoke the patent of 
Bayer and produce it in Canada.
  So just understand, this is not a theoretical concept. This is a real 
concept. Even if it is not done routinely, which it is not, it is 
certainly a hammer that the government uses to get prices at a level 
that they want, not that the manufacturer believes is fair for their 
product.
  Ms. STABENOW. Will my friend yield?
  Mr. SANTORUM. I yield for a question.
  Ms. STABENOW. I appreciate the ability for us to debate this 
important issue. I am wondering, as a result of what you have 
described, and I appreciate the sympathies for drug companies, if you 
then support the fact that the average pharmaceutical drug for 
Americans is going up three times the rate of inflation?
  Mr. SANTORUM. That is important because another provision of the 
Canadian system is that the price may not increase more than the 
consumer price index. They fix prices even after they have set them in 
place.
  The prices of drugs are going up. The research involved in 
discovering new drugs and the complications of doing so is driving up 
drug prices. That is a problem. I think we do need to do something.
  But the issue is not price control. It is access to insurance. That 
is the key. What we need to do is to provide, for the private-sector 
American, the Medicare-eligible American, an opportunity to get 
insurance to reduce the cost of drugs to them. That is vitally 
important.
  Ms. STABENOW. I am wondering if my friend might also respond then to 
the well-known practice now that the companies are spending 2\1/2\ 
times more on advertising than they are on research and development, 
and how you might feel about that.
  Mr. SANTORUM. I must respectfully disagree with my colleague's 
assertion on that point, for it is factually incorrect, although a 
commonly cited myth. According to recent findings by NDC Health, a 
health care information company, the pharmaceutical industry spends 
significantly more on research and development than it does on 
advertising. For 2001, $2.8 billion was spent on direct-to-consumer 
advertising. This is less than one-tenth of the $30.3 billion America's 
pharmaceutical industry spent on research and development. Moreover, I 
am someone who believes that a company is entitled to advertise and 
sell their product. Certainly, I don't know of any business that makes 
a product that doesn't tell anybody what their product is. If you look 
at the research and development cost of every other industry compared 
to their advertising cost, the pharmaceutical industry would probably 
stack up better than any other industry. You could say they are 
spending a lot on advertising. I would hope they are spending money to 
try to tell people what their products are about.
  Are you telling me they shouldn't be able to spend money to tell 
American consumers or physicians or hospitals what their product is and 
how it can be used? Of course, they should. They have an obligation to.
  Mr. FRIST. Would the Senator yield for another brief question?
  Mr. SANTORUM. Yes.
  Mr. FRIST. Mr. President, clearly the United States does subsidize 
the world in terms of research and development. For better or worse, 
many other countries do have strict price controls. Those price 
controls ultimately translate pretty uniformly across the world into 
less investment in terms of research and development and investigation 
and experimentation for future cures of a broad range of diseases that 
we globally suffer with today.
  The hope out there--whether it is Parkinson's disease, emphysema, 
heart disease, or lung disease--comes in the development of new drugs.
  My question to the Senator is to verify the data that at least has 
been made available to me. In the United States our pharmaceutical 
industry--and I will phrase this as a question--spends about how much? 
The answer is the United States spends around $30 billion for research 
and development in the private sector coming from private investment in 
this country. In Canada, the cost for all research and development in 
pharmaceutical agents is not $30 billion; it is $1 billion.
  I mention that because people glorify the Canadian system and how 
inexpensive it is. We need to be very sensitive to the fact that the 
United States is doing the world's research and development in the 
pharmaceutical arena which gives us the hope. Canada does not. The 
system described does not.
  Would the Senator agree with that?
  Mr. SANTORUM. That is absolutely right. The initial comment the 
Senator made is right. This is the fundamental issue we need to debate. 
Should the American public, through its pricing system, free market 
pricing system of drugs, continue to subsidize the rest of the world in 
pharmaceutical research? If the answer is no, we need to state that. If 
the answer is, no, we don't want that to continue, we should come out 
in front and say: We are not going to let the United States consumer 
bear the brunt of researching new drugs. If that is what we want to do, 
we need to be very upfront about that.
  That may be a very legitimate position to take. I don't share that 
view. I don't believe that is the right thing for us to do. I don't 
think that moves this country forward. I don't think that keeps us on 
the cutting edge of an industry that is a world leader.
  If that is what this body wants, then we are going to make the short-
term trade, and the underlying bill on generics is exactly in this 
direction. We are going to make the short-term trade. We will have to 
charge our consumers less, allow more generic drugs, allow 
reimportation of drugs, all of which will undermine and cut into the 
revenues and intellectual property of the pharmaceutical industry, 
which

[[Page 13225]]

will subsequently reduce their ability to do research on drugs for the 
short-term gain of having cheaper prices on the drugs available today.
  The exchange is, lower prices on the existing pot of drugs available 
today versus a cure for heart disease or cancer or emphysema or 
Parkinson's or you name it down the road. That is the tradeoff.
  Let's be honest. Of the drugs available today, many of them are very 
good, but some of them are not as accessible. You could make the 
argument, it is more important to get those drugs to people today than 
it is to get that next generation of cures tomorrow. Maybe we will have 
to wait. Instead of getting them next year or 2 years from now, we will 
have to make it 5 or 10 years. That is a tradeoff.
  Let's have a debate about that. But let's understand that all this 
other talk is just glossing over the broader issue. That is the 
fundamental issue.
  I haven't seen any polls on this issue. There may be Americans who 
believe that is the way to go. There may be others who feel strongly 
the other way. We have to understand that is the debate.
  With that, understand the bottom line: Lower prices, either on 
generic drugs or reimported drugs, versus cures tomorrow and the next. 
That is the debate. We must make a choice.
  The PRESIDING OFFICER. The Senator from Nevada has sought the floor.
  In my capacity as Chair, I might say to colleagues, I will try to 
switch back and forth on positions so I will recognize the Senator from 
North Dakota next.
  Mr. REID. I say to my friend, you should recognize who asks, not back 
and forth. Unless there is some agreement, I respectfully suggest that 
the Chair should not do that.
  The PRESIDING OFFICER. The Chair apologizes.
  Mr. REID. Mr. President, if I could have the attention of the 
minority, I have talked to Senator Cochran, and he tentatively agreed 
to this schedule. We would have a vote at approximately 5:40 today; 
that the time between now and then would be equally divided, even 
though that perhaps is unfair. The Senator from Pennsylvania has spoken 
for such an extensive time, but I don't think we need to worry much 
about that.
  So I would like to propound a unanimous consent agreement that we 
would have a vote on the Cochran amendment at 5:40; that following the 
vote, we would proceed to the Stabenow amendment, which would be in the 
form of a second-degree amendment to the underlying amendment; then 
following that, tonight, as soon as that amendment is laid down, we 
would go to the MILCON bill--which we got consent on earlier today, and 
I appreciate that--and we would complete that debate tonight and vote 
on that in the morning.
  In the morning, we will start off with the Stabenow amendment, which 
will be debatable.
  Mr. GREGG. Mr. President, if the Senator will yield, at this time we 
cannot agree to such an understanding. As the Senator has noted, this 
amendment has generated a very significant interest. Debate has been, 
obviously, substantive and there is still a fair amount of debate that 
has to flow under the bridge before we can close the game, if I can mix 
metaphors.
  Mr. REID. I understand the statement of the Senator from New 
Hampshire, even though I do not agree. We have agreed to accept the 
amendment tentatively--unless something has changed in the interim. I 
think there would be an agreement that we could accept this amendment.
  All I say to my friend is, if that is the case--and I think it is--
again, we are legislating by virtue of slow-walking. As I say, we have 
tried--and if they would like to tango, we will play music; if they 
want to rumba, we will do that. But we need to move this legislation. 
We have a lot of things to do. We are constantly told by the President 
there are things he would like done. We do our best to meet what the 
administration wants. For example, if we are going to be able to get to 
the bill where he is talking about consolidating different agencies, we 
are going to have to do that. We have to finish this first. Here it is 
Wednesday at 4 o'clock at night. We have had one vote today--that is 
all I remember--and we are not able to go ahead with anything else. As 
I indicated, the homeland security issue is something the President 
believes we should do. The majority leader wants to do it. We cannot do 
it like this. Now we want to get to the military construction bill 
tonight.
  I don't understand what we can do to be more cooperative and move 
things along. It is not as if we are asking the impossible. I am going 
to propound this request. I will yield to the Senator from Oklahoma for 
a question.
  (Mr. Dayton assumed the Chair.)
  Mr. NICKLES. Will the Senator withhold propounding the request for a 
few moments until we have a little more time to look at it?
  Mr. REID. I will be happy to do that. I say this respectfully, and I 
know the Senator from Pennsylvania has been talking and has not had an 
opportunity to look at this. We have been floating this for an hour or 
2. Another few minutes will not matter.
  I yield the floor.
  The PRESIDING OFFICER. The Senator from North Dakota is recognized.
  Mr. DORGAN. The Senator from Pennsylvania was speaking about 
advertising costs and so on. Toward the end of his speech, I know the 
Senator from Michigan wanted to be yielded to. I yield to her for a 
question at this point.
  Ms. STABENOW. Mr. President, if I might share this for the Record for 
my colleagues and ask my friend from North Dakota to respond, I did 
want to put into the Record, as we were talking about advertising 
versus research and so on, that, in fact, today two and a half times 
more is spent on advertising and marketing of a product than is spent 
on research and development. What is more startling is the fact that 
according to a report released today by Family USA, we have companies 
that are having two or three times more in profits than they spend on 
research and development. This is no longer a research and development 
driven industry--which it needs to be. It has become much more about 
sales, marketing, and ``me too'' drugs rather than new breakthrough 
drugs.
  Today, Family USA showed us in a report that, for instance, America, 
last year--in 2001--had a profit, a net income, that was three times 
more than what they spent on R&D. Pfizerpen's was one and a half times 
more. Bristol-Myers was two times more in profit.
  What is also disturbing is that, while I appreciate the sympathies 
for the drug companies, it is really quite shocking when we look at 
where the money goes as opposed to R&D. This chart shows the five 
highest-paid drug company executives. I won't say them by name, but the 
CEO of Bristol-Myers gets $74 million, not counting unexercised stock 
options. Wyeth's gets $40 million, not counting stock options. If you 
include the stock options, you are looking at another $93 million for 
one company, $76 million for another, $60 million, and so on.
  So I appreciate the concern about the drug companies and the 
different system in Canada. But if our concern is about research and 
development--which we should be concerned about because not enough is 
being done now--we have a lot of money going in a lot of other places 
that I think would be of concern to the average senior who is trying to 
figure out tonight at supper time whether they eat or get their 
medication. I appreciate the time.
  The PRESIDING OFFICER. The Senator from North Dakota has the floor.
  Mr. DORGAN. Mr. President, I have heard a generous and interesting 
presentation for 45 minutes or so--in fact, I think it was the most 
effective discourse I have heard for some while on behalf of the 
pharmaceutical industry and their pricing policies. Of course, I 
disagree with it very strongly. Nonetheless, I think it was a good 
representation of what the pharmaceutical industry believes about 
pricing strategies.
  As I listened to the back and forth, it reminded me of a small grease 
fire in a small restaurant; a lot is going on, but nothing real urgent. 
Let me react to some of the statements made recently.
  Statement: ``Some people in the Senate don't like anybody who makes 
any

[[Page 13226]]

money.'' That is absurd, but obviously in the Senate we can say those 
things, I guess. I would like to see one Member stand up and say: All 
right, here is what I stand for. I stand for a pricing strategy by 
which the American consumer is charged the highest prices for 
prescription drugs of anybody in the world. I want to see one Senator 
stand and say that I stand with the pharmaceutical industry and the 
pricing strategy, and I want the American consumer to pay the highest 
prices in the world.
  Nobody will stand and say that. Instead, they will use metaphors that 
mean something different. We are told, for example, the problem is 
that, if we don't pay those high prices, we don't get the R&D. The 
information that was used was, of course, incorrect. Actually, more 
money is spent in Europe on R&D than in the United States 37% versus 
36%--not a lot more, but more--and in every country in Europe their 
consumers pay far lower prices for prescription drugs. How does that 
figure add up?
  We just heard our colleague say to us that if you don't pay the 
highest prices for prescription drugs, you don't get the R&D. Tell us 
about the Europeans.
  Mr. SANTORUM. Will the Senator yield for a question?
  Mr. DORGAN. If the Senator will let me finish my statement first--I 
listened for 45 minutes to the great case the Senator made on behalf of 
the pharmaceutical industry--I will be happy to yield when I finish.
  The point is this: We are told that the pricing strategy by which 
Americans are charged the highest prices is fair and is necessary--fair 
because it is the only way we will get the R&D, and it is necessary 
because nobody else will pay those prices. So we need to accumulate 
that cash from the American consumer in order to pay for the R&D.
  There are a couple things wrong with that. One, we spend a 
substantial amount of taxpayers' money at the National Institutes of 
Health. We have gone from $12 billion to $24 billion. I supported that. 
It was bipartisan in the Senate. We doubled the amount of money for the 
National Institutes of Health for health and research, and the 
pharmaceutical industry benefits from that as well because they take 
that accumulated research and use it to create new and miracle 
medicine. Yes, they do research as well, and I commend them for that.
  My point is, we do a lot in public policy, such as research at the 
NIH. We passed a tax credit--I assume my colleague from Pennsylvania 
supports that, as I do--to say we will give you a tax credit for 
research and development. This country gives a very substantial tax 
credit for research and development, and I support that. I voted for it 
for two dozen years. I bet my colleague did as well.
  This is not about research and development, it is about a pricing 
policy, that says that we will do more research in Europe and charge 
them lower prices then the American consumer, and, oh, by the way, when 
someone wants to raise questions about that, we will say: No, you 
cannot raise questions about that; this is a pricing strategy that is 
fair to the American people.
  Not where I come from, and I come from a much smaller town, I am 
sure, than some others here, a town of 400 people. We had a drugstore. 
We had a fellow who came to my town when he was just out of medical 
school. His name was Doc Hill. He was the doctor and ran the drugstore 
in town. He knew everything about everything. There was not anything he 
could not treat or any diagnosis he could not make. He was just a 
wonderful guy.
  I grew up with that kind of medicine in a small town. In my small 
town, if someone said: We have a little deal here in the county--we 
have three towns--Mott, Regent, and New England. Regent is mine, by the 
way. We have a policy. What we would like to do is charge you folks in 
Regent 10 times as much for tamoxifen. If you women have breast cancer 
and are using tamoxifen, we are going to charge you 10 times as much as 
we are going to charge the people in New England and Mott.
  Do you know what the people in Regent would say about that? Are you 
nuts? Are you stark raving mad? For God's sake, what kind of a pricing 
policy is that? It is fundamentally unfair, they would say.
  Let's take that globally. We are told this is a global economy, after 
all, and just as it would be for my county, we are told by the 
pharmaceutical manufacturers that with tamoxifen, Premarin, Zocor, 
Lipitor, or dozens of other medicines, we should ask the American 
consumer to pay much more than others.
  I understood there are people here who represent the interests of 
those who want higher prices. That is not the President's position, by 
the way. This is the President's position. The third Presidential 
debate in St. Louis, from George W. Bush, now President Bush:

       Allowing the new bill passed in Congress, you know, for 
     drugs that were sold overseas to come back into the United 
     States, that makes sense.

  That is President George W. Bush. That is called reimportation. That 
is President George W. Bush in 2000 saying it makes sense. Sure, it 
makes sense. It does not make sense to the pharmaceutical industry, and 
I understand why. They have price controls. They control the price. 
People say we do not have price controls in America. Yes, we do; of 
course, we have price controls. The pharmaceutical industry controls 
the price. With respect to this global economy, it is interesting, my 
colleague said: In effect, you are going to import price controls from 
Canada. Canada has price controls on prescription drugs. Yes, that is 
true. Canada has price controls on prescription drugs. So do many other 
countries. We reimport a lot of products from other countries. That is 
one of the factors that makes the global economy interesting. If my 
friend the Senator from Pennsylvania has a necktie that is made in 
China today--and I do not know if he does or not, but there is a pretty 
good likelihood many of us are wearing neckties made in China--then one 
might make the case that the price of that necktie supports the salary 
of the leader of a Communist government.
  Does that make it tighter around our necks? I do not think so. It is 
the global economy. Do I like to buy something from a country that 
perhaps supports a Communist government? No, no, no, but a global 
economy means we move products back and forth, and sometimes we inherit 
policies we may not like. But inheriting the capability through 
reimportation to allow the American consumer to pay less for 
prescription drugs than they would otherwise pay is good public policy 
and makes good sense for our citizens.
  The Capitol is full of people who care a lot about drug prices, and 
they are very concerned about this--they are lobbying this issue on 
behalf of the pharmaceutical industry. They have every right to do 
that. I talked about a woman named Elizabeth earlier. I know there was 
some chiding about that, the teary stories about individuals. But I am 
wondering if Elizabeth has anyone who is going to grab somebody by the 
arm before they vote and say: You know, it is very important that you 
cast your vote the right way.
  Remember, Elizabeth is a farm wife who is 74 years old who drove a 
tractor until 2 years ago when she lost her husband and her lungs got 
worse.
  She has scleroderma and was diagnosed at Mayo. She talks about how 
she has been on oxygen for 2 years. She talks about the one new pill 
that would cost $3,600 or more a year. She cannot afford it. But I ask: 
If there is anybody in the Capitol Building today who is representing 
Elizabeth today? There are plenty who represent those who want to keep 
the current pricing strategy.
  Or Velma:

       I am 86 years old. I can't work.

  That is pretty reasonable. She is 86 years old and says: I can't 
work.

       I get $303 in Social Security each month, and I pay $400 a 
     month for medicines.

  She has had heart surgery and osteoporosis.
  Sylvia Miller, 70 years old, diabetes, heart problems, emphysema. She 
went with me to Emerson, Canada, to buy prescription drugs. In recent 
years, she has spent $4,900 on her medicines. It was up $1,000 from the 
previous year.

[[Page 13227]]

  The point is, this is a very important issue. This is a tripartisan 
bill that is supported by Senator Jeffords and many on both sides of 
the aisle. There is no one advocating reimportation who wants in any 
way ever to diminish the safety standards that exist that allow the 
American people to access a safe supply of prescription drugs.
  An important point is this: Prescription drugs are lifesaving and 
miracle drugs only to those who can afford them when they need them. 
They save no lives when those who need drugs cannot have access to 
them. These prices are unfair, and reimportation will help put downward 
pressure on prices.
  I say to those who oppose reimportation, what approach do you have to 
put downward pressure on prescription drugs prices, or is it simply 
Katie bar the door? Is there another approach? I am willing to embrace 
almost any approach that attempts to put downward pressure on drug 
prices.
  The Cochran amendment is offered, I know, to try to effectively 
scuttle the issue of reimportation because it was effective in doing so 
to the bill we passed 2 years ago. At the time we did not know it would 
scuttle that legislation, but it did, with two Secretaries.
  I think those who bank on the Cochran amendment effectively killing 
this legislation this time are wrong. We have changed the reimportation 
amendment this year. Our legislation now does not permit reimportation 
of medicines from Mexico. It does not allow for the reimportation of 
medicine from Bangladesh. It does not allow for the reimportation of 
medicines from China or Taiwan or South Korea. It allows for the 
reimportation of medicines from one country, Canada, a country that has 
a nearly identical chain of supply to this country.
  It will be, in my judgment, nearly impossible for a secretary to 
assert that there is additional risk by allowing the reimportation of 
prescription drugs from a country that has a nearly identical chain of 
supply, a country that is our nearest neighbor, a country that is our 
largest trading partner.
  I do not believe the Cochran amendment is effectively going to kill 
reimportation. I know some believe this is a great way on behalf of the 
pharmaceutical industry to do that, but I do not think so. As a matter 
of fact, I think the Cochran amendment will not have the impact it had 
2 years ago because the bill 2 years ago was not country specific. This 
bill is limited and deals only with the country of Canada.
  The Senator from Pennsylvania answered a question I did not ask, so 
let me ask the real question and then answer that. I was asked a 
question: Why are prices higher here than in Canada? That is not the 
question I asked. I asked the question I have asked a dozen times, 
which is: Who here believes that an American citizen ought to have to 
go to Canada to get a fair price on prescription drugs made in the 
United States? That is the question I asked. That still has not been 
answered, and I do not believe it will be answered.
  If I were to try to answer the question the Senator has asked--why 
are prescription drugs higher priced in the United States than in 
Canada?--the answer is fairly simple on two fronts. One, it is true 
that Canada does have price controls and we do not. Second, I have held 
a couple of hearing on this subject, and the answer as to why drug 
costs in the U.S. are so high for prescription drugs is because the 
charges are set in this country at whatever the consumer will bear. 
That was essentially what the pharmaceutical manufacturers told us.
  My feeling is that it is not a fair pricing system, and on behalf of 
a lot of Americans, not just senior citizens who have to find a way to 
access these prescription drugs to deal with their serious medical 
problems, I think we need to find ways to put downward pressure on 
prescription drug prices.
  I do not want people going to Canada to access prescription drugs. 
That is not the goal of this amendment. Our goal is to allow 
pharmacists and distributors to bring them back, pass the savings 
along, and that will force the pharmaceutical industry to reprice those 
prescription drugs in this country. That is our goal.
  I finish with this point. It is interesting to me that some on the 
other side say those of us who want reimportation are saying the 
pharmaceutical industry is a big, bad industry; shame on them for 
making profits. I have heard none of that rhetoric today. I certainly 
have not taken part in that myself. I have said repeatedly, the 
pharmaceutical industry is a big industry, a profitable industry. It 
has done some terrific things. I commend it. I want them to do well. I 
wish them well. Their pricing strategy is wrong, and I want them to 
change it.
  They will not change it voluntarily, and I fully understand that. If 
that is the industry I worked for, I would not change it voluntarily, I 
suppose, because their responsibility to the stockholders is to 
maximize profits. Since they have the ability to control prices in this 
country and maximize profits for their stockholders, that is exactly 
what they do. But if we are going to put a prescription drug benefit in 
the Medicare program and if we are going to care about the needs of all 
Americans, not just senior citizens, who can't afford prescription 
drugs, then we have to do more.
  We have to employ ways to put downward pressure on prescription drug 
prices. We have to do that. Failing to do so means we will break the 
bank, and I am not prepared to allow that to happen.
  So that is why we offer this, not to tarnish the prescription drug 
industry and the pharmaceutical manufacturers. I trust the Main Street 
pharmacists. I trust those distributors. I trust the Canadian system 
which is nearly identical to ours.
  I have heard this bizarre argument about counterterrorism and 
counterfeit drugs. In fact, one of my colleagues brought some yellow 
paint, I guess yellow cement paint, and some other devices, none of 
which came from Canada. Isn't that interesting? Maybe I could have 
brought some kangaroos to the floor of the Senate and watched them 
jump. Wouldn't that be interesting? Sure, it is all interesting, but it 
has no relevance to the discussion. So we can be interesting but maybe 
what we should do is care a little more about pricing of 
pharmaceuticals in this country in a manner that is fair to the 
American people. That is all we are trying to do with this amendment.
  We are not trying to tarnish anybody. We are saying, give the 
American people a fair break. If 10 cents is going to be charged for a 
breast cancer drug in Canada, then do not charge a dollar for it to a 
woman with breast cancer in the United States. Do not do that. It is 
not fair to the American consumer. That is all we are saying.
  I yield the floor.
  The PRESIDING OFFICER. The Senator from Kansas.
  Mr. ROBERTS. Mr. President, I rise today in support of the Breaux-
Cochran amendment to the Dorgan amendment on this subject of 
reimportation of prescription drugs from Canada. It is not my intent to 
stand here as an expert in regards to how much money the pharmaceutical 
companies of the United States should spend on advertising, how much 
money they should spend on R&D or to talk about the global imports 
where we have price controls in various countries, or even as to where 
my tie came from.
  I think the Senator from North Dakota indicated that we have a lot of 
imports. My tie is from Italy, by the way. It is a gift from my 
daughter. But the thing I want to talk about is safety, and this tie 
which came from Italy is safe, at least to the best of my knowledge it 
is, unless somebody gets ahold of me and yanks on the tie.
  It is not my desire to talk about the hometown druggist whether it be 
in North Dakota or in Kansas, where I grew up, or whether you trust the 
druggist. I do want to talk about safety, and I do want to talk about 
the fact that Senator Santorum was kind enough to mention that I serve 
on the Intelligence Committee, used to be chairman of the Subcommittee 
on Emerging Threats on the Armed Services Committee. I am now the 
ranking member with Senator Landrieu, who is doing an excellent job as 
chairman.
  I am a little worried about this in regards to the language--I am not 
a little

[[Page 13228]]

worried, but I am concerned about the language of the Dorgan amendment 
which passed and the safety issue that is raised by the Cochran 
amendment, which I think is the better approach.
  Basically, this amendment, for which I am a cosponsor, would require 
the Secretary of Health and Human Services to certify that prescription 
drugs that are reimported from Canada are indeed safe before--and that 
is the keyword, ``before,'' not after. You survey and you have some 
sort of a panel discussion and determine that at some date later we 
have a situation where some drug was imported from Canada and it indeed 
was unsafe. I would hate to think what would happen before we would 
take notice of that, even in terms of lives being lost. So the key word 
is ``before'' we allow my constituents in Kansas or the constituents of 
the distinguished Senator from North Dakota or the distinguished 
Senator from Michigan and others throughout the United States to 
receive them.
  As I have indicated, as a member of the Select Committee on 
Intelligence, ranking member on the Subcommittee on Emerging Threats, I 
see reimportation as another way--I would not have thought of it before 
9/11, but today I see it as another way for a terrorist organization to 
cause many human lives to be put at risk without the proper security 
measures in place.
  One might say: Now, Senator Roberts, come on. Prescription drugs from 
Canada--this really represents a threat?
  Well, we asked all the experts in the Emerging Threats Subcommittee 
some time ago, prior to 9/11, what keeps you up at night in this unsafe 
world? Bioterrorism came in No. 1, and I won't go into the rest of 
them. We could probably list 100 different threats and the terrorists 
in their own inimical way would say we are going to do 101. It is an 
asymmetrical approach. How easy would it be to reenact the Tylenol 
scare that happened some years ago in regard to some kind of a 
terrorist threat?
  We have seen the situation at the Capitol of the United States in 
regards to anthrax. Dr. Frist, the distinguished Senator from 
Tennessee, can give us about an hour lecture on that, what we saw then 
and what we see now in regard to what we have to do in terms of 
safeguards.
  I remember Operation Dark Winter, which was done about 2 years ago, 
about the possibility of using a strain of smallpox from the former 
Soviet Union in Oklahoma City. Do you know how they distributed that? 
They did it by basically walking through shopping centers and spraying 
plants. How easy would it be to use imported drugs from Canada?
  So this year and years past, during the reimportation debate, Members 
of both the House and Senate have received statements from people who 
ought to know in regard to the fact, is there a safety issue? That is 
from former FDA commissioners, the current and former heads of the 
Department of Health and Human Services. The statement was made about 
this administration, past administration--their testimony was exactly 
the same--and officials of the Food and Drug Administration.
  They state they cannot assure the American people that reimported 
drugs are safe. Cheaper, yes. I understand that. I understand the 
compassion and the caring and the difference between drugs in regard to 
border States and Canada or, for that matter, any State and Canada. I 
hope we can bring the prices down.
  However, are they safe? They have even recently given testimony, all 
the people I just talked about, as of July 9, about a week or so ago, 
before the Select Committee on Aging. Why the Select Committee on 
Aging? Obviously, every letter read by the distinguished Senator from 
North Dakota was a senior citizen who desperately needs drugs. There is 
a quote by the Senator from Michigan indicating that Mr. Hubbard said, 
on balance, he would say it would be OK for somebody who is suffering 
from some malady to use a Canadian drug.
  I suppose if I were not in your home State and I were in Canada and 
sick and I didn't have much of a choice, I would say: OK, Mr. Hubbard, 
I think that is OK. I think I will take my chances. He is the senior 
associate commissioner for policy, planning, and legislation at the 
Food and Drug Administration.
  But he also testified, as the statement demonstrated by the 
distinguished Senator from Michigan:

       FDA cannot assure the public that reimported drugs made in 
     the U.S. have been stored under proper conditions or that 
     they are even the real product because the agency does not 
     regulate foreign distributors or pharmacists. Therefore, 
     unapproved drugs and reimported approved medications may be 
     contaminated, subpotent, superpotent, or counterfeit.

  I don't know how the supporters of the underlying amendment can read 
these statements by these experts and possibly indicate we are trying 
to scuttle the bill. I don't want to scuttle the bill. I want to put in 
the proper safeguards. I don't want to put lives at risk without 
assurance to the safety of the American consumer.
  The question is, Are we, the Members of the Senate, willing to put a 
new burden of proof on an agency or agencies having to deal with a new 
set of priorities since September 11? We know in terms of trying to put 
together a new Homeland Security Agency, it is like pushing a rope; 
that we will get it done, hopefully by September 11. Here we have yet 
another large-scale security undertaking that they, the Customs 
Service, in coordination with other departments and agencies, will have 
to administer without the resources, without the manpower and training 
available to them to stop the counterfeit drugs that will put human 
lives, or could put human lives, at risk.
  An example from Mr. Hubbard's testimony outlines exact fears we 
should have in allowing reimportation without the safety guarantee. On 
May 14 of this year, the Ontario College of Pharmacists, which is a 
Canadian Government agency, filed charges under the Ontario law against 
the Canadian Drugstore, Ink. for unlawfully operating an unlicensed 
pharmacy and using an unregistered pharmacist in filling prescriptions 
for United States residents. The college also filed charges against a 
licensed pharmacy and physician in Ontario for helping to facilitate 
the delivery of prescription and nonprescription drugs to U.S. 
residents. A drug wholesaler was charged with supplying medications to 
a nonlicensed pharmacy.
  Here is the key of the whole debate. As noted by Elizabeth Durant, 
the executive director of Trade Promotions for the U.S. Customs 
Service, at the same hearing on the Select Committee on Aging, Customs 
is working with the Food and Drug Administration to better identify 
adulterated or misbranded drugs entering our borders. However, she 
said, at this time they clearly do not have the manpower nor the 
infrastructure in place to ensure adequately and screen all of the 
prescriptions that would enter our borders.
  As an example given in Ms. Durant's testimony, we have a program. 
Nothing has been said about this program during this entire debate, or 
at least I am not aware of it, and Customs has really initiated a 
program called Operation Safe Guard. During a recent phase of this 
program that took place at two international mail branches, 31 parcels 
containing 52 types of questionable pharmaceuticals underwent intensive 
analysis. The analysis shows that eight of the so-called pharmaceutical 
drugs--and, yes, they were less expensive--or 15 percent contained no 
identifiable active ingredient. They were phony. And 18 contained a 
substance that is regulated under the Federal Controlled Substances 
Act.
  There is example after example of unscrupulous practices by 
individuals looking to take advantage of consumers desperately trying 
to find a more affordable way to get the prescriptions they must have. 
Yes, we need to provide relief to Kansas seniors, to Minnesota seniors, 
to West Virginia seniors, to Massachusetts seniors, to Michigan 
seniors, North Dakota seniors, Oklahoma seniors, and Tennessee seniors. 
But I cannot in good conscience support a measure that is a public 
health safety and security risk.

[[Page 13229]]

  Instead of looking to our neighbors to the north for pricing relief 
and instead of relying on unsure and unsafe practices without the 
proper personnel and training in place to roll out a plan such as this, 
we need to focus on passing meaningful prescription drug legislation. 
Until I can assure my constituents in Kansas that the drugs they are 
receiving are indeed what is labeled on the package, or an FDA-approved 
package, I do not think the underlying amendment can be supported. This 
is why I urge my colleagues to support the Cochran-Breaux amendment.
  The key word is ``before''; before a drug gets here, it is determined 
safe. That is what this argument is all about. That is what the debate 
is all about.
  Mr. FRIST. Will the Senator yield?
  Mr. ROBERTS. I am happy to yield.
  Mr. FRIST. Mr. President, the Senator made the point which is 
important and I tried to introduce earlier today. In this environment 
where we do have a lower threshold for worrying about terrorism and 
worrying about what comes across our borders, he made the linkage, 
based on his experience dealing in the field of bioterrorism and the 
agriterrorism arena and the field of intelligence, that we are moving 
in one direction of bioterrorism to close our borders to the potential 
for counterfeit agents, potential bioterror agents coming in. I made 
the point earlier that we need to look at it in this new environment.
  My question is, Does he agree with a recent op-ed published on July 
16 in the Washington Times by a former FBI agent linking bioterrorism 
and prescription drugs and reimportation? The agent states:

       During my 3 decades with the FBI, however, I worked with 
     other Federal agencies whose main goal was preventing illegal 
     narcotics from crossing our borders. When going after 
     prescription drug shipments it usually was large quantities, 
     mostly acting on tips. Neither we nor the 3 Federal agencies 
     we cooperated with on such efforts--the U.S. Food and Drug 
     Administration, the Drug Enforcement Administration, and the 
     Customs Service--had enough personnel to go after 
     prescription drug smuggling at the time. With the massive new 
     threat of terrorism, we have even less resources to devote to 
     such activities. Terrorists easily could use the cover of 
     counterfeit drug smuggling to sneak lethal prescription drugs 
     or worse, biological and nuclear weapons, into our country.

  Do you agree with the thrust of the FBI's statement?
  Mr. ROBERTS. In the Emerging Threat Subcommittee we heard from the 
Bremmer commission, the Gilmore commission, the Hart-Rudman commission, 
the Center for Strategic and International Studies Group, and the 
Rumsfeld commission. In virtually every one of those commissions, they 
indicated the need for greater border security with all of the threats 
you have mentioned.
  We just had a hearing before the Senate Agriculture Committee, and 
Director Ridge just came before the committee. Secretary Ann Veneman of 
the Department of Agriculture came before the committee. It is another 
one of those cases where, as we try to reorganize the Department of 
Homeland Security, people get a little worried about their turf. People 
get a little worried about past practices. People say: Wait a minute; 
do we need to transfer that whole agency over to the superagency?
  There is an agency within the Department of Agriculture called the 
Animal and Plant Health Inspection Service. As you know, in working 
with the bioterrorism bill, I had an agriterrorism section. We tried to 
ramp up the funding for our basic research universities: Athens, GA, 
for salmonella; Ames, IA, for the livestock industry; Plum Island, 
where you don't want to open up any refrigerator doors under any 
circumstance because of the pathogens that are there. We found now that 
we can use 3,200 of these employees who have the capability to take a 
closer look and provide the kind of security the Senator is mentioning, 
to the Department of Homeland Security, keep the rest of the employees 
so if a farmer from Kansas or, for that matter, North Dakota says, 
``Hey, I have wheat rust,'' he doesn't have to pick up the phone and 
call Tom Ridge. Or if he is going to try to enforce the Animal Welfare 
Act, there is no need to do that. But 3,200 more people are needed just 
to prevent some kind of problem with security and danger or 
agriterrorism and food security and how easy it would be for the 
terrorist to use the pharmaceutical that you are talking about to come 
in and do great damage in our country.
  The issue is safety, and the higher bar that we must have, now, to 
guarantee it.
  The whole thing is, we used to talk about we have to detect, we have 
to deter, and then, in the worst case scenario, we have to get into 
consequence management. Are we ready? The answer to that is no.
  The new paradigm is we have to detect and preempt. We have to go on 
the offensive and then deter and then get into consequence management.
  What the Senator from Mississippi has done is simply said to the 
Department of Health and Human Services, please guarantee the safety of 
these products before they come in, not afterwards; not after we see 
some evidence that something will happen. It is a before-and-after 
question. Sure, that senior citizen before may get a drug that is more 
inexpensive. He may die. That is a dramatic kind of statement, but it 
could happen.
  That is how I would answer the Senator.
  The PRESIDING OFFICER. The Senator yielded the floor. The Chair 
recognized the Senator from West Virginia. The Chair permitted a 
question. The question has been answered. The floor belongs to the 
Senator from West Virginia.
  Mr. ROBERTS. I think the Senator already asked the question.
  The PRESIDING OFFICER. The Senator from West Virginia is recognized.
  Mr. ROCKEFELLER. We had an interesting and important discussion this 
afternoon for quite some time. I want to add a little bit to the 
discussion.
  The PRESIDING OFFICER. The Senate will be in order. Senators will 
take conversations off the floor so the Senator can be heard, and 
others will be recognized thereafter.
  The Senator from West Virginia.
  Mr. ROCKEFELLER. I say to the Presiding Officer, I would like to put 
a little perspective in what I see at least as the prescription drug 
aspect of all this, which permeates part of this discussion, although 
it is not immediately apparent in the debate of this afternoon.
  We have this historic opportunity to do something real in 
prescription drugs. We also have the historic opportunity to fail to do 
it or we have the historic opportunity to do it in such a way that it 
will make us feel good but will not do anything to help seniors. In 
other words, that we would pass something which we could say we passed 
when we went home in August but would not in fact really help seniors 
in ways that are meaningful, something that I will not have anything to 
do with, that kind of strategy.
  I say to the Presiding Officer, who is my good friend over many 
years, that nowhere is the problem more visible with respect to 
prescription drugs, and therefore creating a sensible plan that will 
address the problem of prescription drugs, than in the State I 
represent where 30 percent of the seniors have no drug coverage at all 
and 19 percent have very little drug coverage; therefore, basically 
half are more or less untouched entirely or to a great degree.
  About a third of rural seniors as opposed to about a fourth of urban 
seniors--this is a 10 percent difference, but it makes a difference--
pay more than $500 out of pocket each year. So my first overriding 
concern is the 336,000 seniors in the State of West Virginia. I will 
yield or sit down to nobody in fighting for them and for a plan which 
works for them in one of the poorest States in the Nation.
  The question is, seniors know there are no easy solutions. We talk as 
if there are, but there are not. We have to be honest with our 
constituents about that. I know there is an election coming up. So 
what. A prescription drug bill that passes is a prescription drug bill 
that lasts for a substantial period of time. We have to do it right. 
There are a variety of alternative plans. I am not going to be 
referring to any of

[[Page 13230]]

them individually, but some of them are a whole lot better than others 
and people better start thinking about some of the issues involved. I 
am going to try to raise some of those issues.
  Providing a real drug benefit to all seniors, a benefit that covers 
all seniors all the time for all drugs at a price they can afford, that 
is what we need to do. At the end of the day, to be quite honest with 
you, seniors are not really enormously moved and do not care 
tremendously about whether it is a Democratic bill or whether it is a 
Republican bill, whether it is a White House bill. That may have some 
short-term advantage, but in terms of the way it affects their lives, 
which is what I care about, which is why I am here in this body, it 
doesn't make any difference to them. They don't want to be promised 
something we cannot actually deliver. There is a lot of talk about that 
kind of stuff.
  As seniors consider all the competing prescription drug bills, they 
need to ask a number of very basic questions. One of the matters which 
I think people need to focus on is that the most important issue in all 
this is the delivery mechanism. People say: What is that? It is the 
core of the whole argument. It needs to be explained. It is a question 
of, really, who takes the risk?
  One of the plans we are looking at--that is the way I am going to 
refer to it, one, then another, et cetera--says that the insurance 
companies will take the risk. Chip Kahn was President of the Health 
Insurance Association of America. He says that is like insuring against 
haircuts. An insurance company is not in the business of taking risk. 
They can't, and they particularly can't where people are older, sicker, 
and frailer and are less likely to be able to afford either to join 
them or to pay what it is that they charge.
  On the other hand, you can also have a system where you use what you 
call a government/private partnership, PPMs. That is in another plan. I 
happen to favor that. They don't have to make a profit. They can set 
the price on the medicine which is best for the senior. But the 
business of who takes the risk is really important in all of this.
  You say: How can you prove that? I will prove it indirectly. Since we 
do not have this before us, in West Virginia we have one plan on 
Medicare+Choice. We have Medicare and we have Medicare+Choice. We have 
Medicare, but we only have one plan that affects one part of the State 
involved with one university and some counties right around it. It 
covers 2 percent of the people in the State of West Virginia. That 
means it does not cover 98 percent. That means 98 percent of the people 
in West Virginia are not covered at all. They have a cap in their plan 
of $500 on their drug benefit.
  That means if you use up your $500, you have a catastrophic something 
or other, by February, March, April, or May that is it--there is 
nothing you can do. There is no more expended. You have to pay for it 
yourself.
  One good thing, though, that can be said about Medicare+Choice is 
that, if the plan pulls out, the senior, the Medicare beneficiary, has 
the option of a fallback position. That is to go back to fee-for-
service medicine. That is not included in any of the other plans. I use 
the word ``other'' in the prescription drug plans that are before us. 
It is included in one, but it is not included in the others. It is not 
included in the one from the House. It is not included in one of the 
several that are wandering around the Senate Finance Committee.
  If you do not have a fallback position, you can't do anything. That 
means you are just out of it. The plan decides to pull out and you get 
nothing. If it is Medicare+Choice, and the plan decides to pull out 
because they can't make money, because you are poor, you have a lot of 
people using services, and at least, therefore, you have the fallback 
position and that is, you can go back to fee-for-service medicine. It 
is an extremely important aspect of all of this.
  So the question that seniors ought to ask and we ought to ask 
ourselves is, first, does the final plan that we vote on cover all 
seniors? Does it cover all seniors? Medicare does; not prescription 
drugs but in other things it does.
  Does it cover all seniors, as prescription drugs should? All seniors 
need to know that they won't be left out of the prescription drug bill 
just because they come from a State that has a lot of rural area where 
the cost of providing services is much higher. The plan I support 
covers all seniors in every State.
  Seniors can get their drugs through their local pharmacy, just as 
they do now. There is no difference. The government and the private 
sector would be working together to make sure all seniors are covered 
just like Medicare today. That makes sense to me. The other plans say 
that every senior is ``eligible'' for coverage. But, in fact, many 
seniors won't get any benefit at all under these other plans. That is 
because those plans leave up to private insurers the decision where and 
when and to whom they will offer coverage.
  The experience of rural areas--and certainly in my State--is the 
plans and insurance companies have said they want to have nothing to do 
with ensuring prescription drug benefits. They made it very plain. The 
other plans pretend they haven't said that and go ahead and include 
them.
  Private insurers are focused on profits. ``Profits'' is not a dirty 
word. But it becomes an important word when you are talking about the 
distribution and accessibility and the affordability of prescription 
drugs.
  We know from experience that the insurance companies will simply not 
voluntarily ensure seniors in parts of the State of Minnesota. They 
will in others but they won't in other parts. Or insurance companies 
will have the ability to have certain kinds of benefits in these kinds 
of areas, and other kinds of benefits in other kinds of areas. In other 
words, nothing is defined, and nothing is consistent that people can 
really count on. That is really wrong in prescription drugs. If we pass 
a bill that does that, that is wrong. That is the wrong thing to do to 
seniors.
  We need to think about that. Seniors need to be on the alert for 
exactly that kind of behavior.
  Second, does the final plan cover all seniors all the time?
  Seniors need a benefit that is universal. They do not know when they 
are going to get sick or have a catastrophic incident. They have to 
know that it is going to be there for them all the time. They need 
benefits that help them 365 days a year.
  The plan I support covers all seniors, all year, without a gap in 
benefits, and with no gaps in coverage. Other plans stop after a 
senior's drug costs exceed $2,000, and even if it happens to be in the 
first month of the year, or gives seniors no coverage at all for costs 
between $2,000 and $3,700. That is called a doughnut. It is a very 
serious problem, and a very real problem.
  When you say people do not know what you are talking about 
necessarily out there, even in here a doughnut is a bad thing to do. 
When you say that you are stop-loss at $2,000 through $3,700, you have 
to pay everything in between, that is a wrong policy. Some of the other 
plans have it. The House plans have that. One of the plans floating 
around in the Senate Finance Committee has that. It is wrong.
  Third, does the final plan cover all seniors all the time for all 
drugs?
  That is the third question seniors need to ask us and that we need to 
be asking ourselves as we evaluate what we are going to do, if we are 
going to do something.
  Seniors want to make decisions about which drugs are taken on advice 
of their doctor. They don't want to have it done on the advice of their 
insurance companies. We have heard about that for years--doctors having 
to dial insurance companies to get permission to do something which 
they know they have to do. They resent it. They are denied. Nobody can 
do anything about it. Doctors and patients should make key health 
decisions. I think that is a moral compass for how we look at a 
prescription drug bill.
  Under the plan I support, seniors have a guaranteed benefit. Seniors 
and their doctors will decide which medicines are best for them to 
take, and they will take those medicines.
  The other plans, as I say, talk about a standard benefit--the beauty 
of words in the Congress. But the fact is

[[Page 13231]]

they too often leave it up to the insurance companies to decide which 
drugs will be covered. And that is not a guaranteed benefit for all 
drugs.
  We went through this in the Medicare Commission for a year. It was a 
question about do you have a defined benefit? Do you have an actuarial? 
People ask, What does actuarial mean? The point is that in one you get 
a benefit for all seniors all across America, and in others you get a 
certain amount of money. When the money runs out, you are on your own.
  It is cruel. It is cruel. It is wrong. But it is in two of the three 
main plans that we are considering on prescription drugs, and people 
need to know about it.
  Four, does the final plan cover all seniors all the time for all 
drugs at a price which they can afford?
  None of these questions strike me as unreasonable, if we are doing 
something as stark as this.
  We have been talking about this for 5 years. I have sat for the last 
4 years in sometimes up to three meetings a day in Finance Committee 
meetings and with staff trying to discuss all of these things, and here 
we are again. That is fine, if we produce a decent product. I don't 
care. The senior Senator from Massachusetts has a theory that sometimes 
things take 10 or 12 years to pass. If you have to do that for 
prescription drugs, that is a bad thing because, in the meantime, a lot 
of people are dying and suffering needlessly. But the plan I support on 
this matter of affordability is the only one with the guaranteed 
affordable premium for every senior in the country of just $25 a 
month--not 50 percent; for every senior, therefore, in the country, 
just $25 a month, and no large, upfront deductible.
  Seniors would pay $10 for any generic drug up to $40 for more 
expensive brand name drugs. That is fair. After $4,000 in total dollars 
in out-of-pocket spending, all drug costs would be covered by--guess 
what--the Federal Government. Yes, medicine is expensive. Seniors are 
important. They are growing in size and in frailty. We are involved in 
their lives.
  Just as under Medicare, seniors pay the same amount regardless of 
where they live or how much their income is each year. Some people 
dispute that. It is the moral principle of a social contract.
  The other plans, again, as I say, in the spirit of not being unkind, 
mostly provide what they call ``estimates,'' or ``averages,'' like the 
word ``actuarially.'' It is one of those good words that makes you 
believe that everything is in good hands, except when the time comes 
for this to work it just doesn't quite work. Rather than real costs, 
seniors can compare. They talk about ``estimates,'' or ``averages.'' 
But if you look at the details, it is clear that every one of those 
plans has a higher premium, and large, upfront deductibles and higher 
copayments. That is a fact.
  For example, the premium under the House-passed bill is ``estimated'' 
at $33 a month. But the insurance companies can set it higher. Why? 
Because they are establishing the risk. They are setting the price. If 
they don't like the risk, the price goes up. If they are out in 
Westchester County, the price goes down. If they go to West Virginia, 
the price goes out of sight. So they don't come to West Virginia 
because they can't make any money.
  We are not blaming them for it. It is a fact of the way the free 
enterprise system works. Should West Virginia seniors, if anybody is 
interested, pay more than those in other States?
  The House bill also has a suggested $250 upfront deductible that 
seniors have to pay every year, although that could be set higher by 
these same insurance companies for the same reasons.
  Again, it is the benefit of how you do the mechanism which sends 
these benefits out. If you do it through the insurance company, they do 
not like risk. They don't like old, frail people. For those eligible to 
do it through the PBM, they do not have to make money, and they look at 
it differently.
  So, again, for costs between $2,000 and $3,700, seniors get nothing. 
That is a big gap in coverage. It means millions of seniors will pay 
thousands more under the House bill.
  I am about to conclude.
  Seniors have been waiting for more than a decade while we in Congress 
fight about all this. I want to repeat what I said when I started by 
saying some of my colleagues have suggested--my colleagues on my side 
of the aisle--that if we cannot achieve a fair and comprehensive 
benefit, then we should accept a weak and watered-down bill. And what 
is it that is getting us all worried?
  We all know we are going to have to get 60 votes. We are going to 
have to get 60 votes. None of the plans has enough votes right now, so 
we have to get 60 votes.
  So that is what leads you to a watered-down plan, just so we can go 
home in August and say that we have done something.
  We all get good benefits. Seniors all across America being left with 
the results of a watered-down prescription drug bill is not something 
that I am going to be a part of, I say to the Presiding Officer.
  We have a once-in-a-lifetime chance to do something extraordinarily 
meaningful for every senior and every American family. Anything else 
is, and should be, unacceptable to every single one of us.
  In the end, I want to enact a bill that guarantees West Virginians 
the same access to lifesaving and life-enhancing prescription drugs as 
people in other States. But the bill has to be right, it has to be 
fair, and it has to cover the right aspects. If it does not, we should 
not do it.
  I thank the Presiding Officer and yield the floor.
  The PRESIDING OFFICER. The Senator from Nevada.
  Mr. REID. Mr. President, we are now at a point where the Republican 
leader signed off on our being able to have a vote. We wanted to do 
that at 5:40. The last vote was at 2:30. We have been on this 
amendment, we have basically agreed to, now for 2\1/2\ hours.
  My point is, I know Senator Ensign is in the Chamber and wishes to 
speak.
  I ask my colleague how long he would like to speak.
  Mr. ENSIGN. About 15 minutes.
  Mr. REID. OK. Senator Durbin, 10 minutes; Senator Wellstone--
  Mr. WELLSTONE. Ten minutes.
  Mr. REID. And 5 minutes for Senator Kennedy. So that is 40 minutes, I 
think. Does anyone else on the Republican side wish to speak?
  Mr. ENSIGN. I understand Senator Bunning would like 15 minutes, and 
Senator Enzi would like 10 minutes.
  Mr. REID. OK. If I could have someone add up that time, that is an 
hour and 5 minutes. I wonder if we could work that out to save a few 
minutes. We need to get to military construction tonight. So rather 
than an hour and 5 minutes, let's do an hour.
  Do you think Senator Bunning could go for 14 minutes? I bet he could. 
He is a good guy. Senator Bunning for 14 minutes--I say to my friends 
in the minority, they have had most of the time this afternoon. I think 
if we can just cut a few minutes, and if I could stop talking, it would 
help a little bit, too.
  So I am wondering if we could ask unanimous consent that the vote 
will occur at 6 o'clock, with the time proportionately taken from every 
speaker that has requested time--30 seconds, something like that, from 
every speaker. I think we can work that out. The vote would be on or in 
relation to the amendment, No. 4301, and the time is as indicated.
  Mr. ENSIGN. If the Senator would yield, I will keep mine under 10 
minutes.
  Mr. REID. That will take care of the problem.
  I say to my friend from Nevada, thank you very much.
  So I ask unanimous consent that the vote occur at 6:05, as per the 
agreement, with no intervening amendment in order prior to disposition 
of the Cochran amendment.
  The PRESIDING OFFICER (Ms. Cantwell). Is there objection?
  Mr. WELLSTONE. Madam President, I will not object. But I ask the 
Senator, you locked in time?
  Mr. REID. Everybody has the time except Senator Ensign. He graciously 
took 5 minutes off his time.

[[Page 13232]]

  The PRESIDING OFFICER. Is there objection?
  Without objection, it is so ordered.
  The Senator from Nevada.
  Mr. ENSIGN. Madam President, while I support the underlying 
amendment, I want to talk about a prescription drug proposal that I 
believe, and the other authors of this bill believe, could be the 
answer that seniors are looking for around the country.
  Senator Hagel and Senator Gramm and Senator Lugar and myself have 
been working on a proposal that I have worked on for a couple years 
along with Senator Hagel.
  This proposal, to keep it very brief, has two major components. The 
first component of our proposal allows every senior to participate on a 
voluntary basis. They sign up for a $25 fee. This takes care of just 
the administrative costs. This $25 fee allows them to get a 
prescription drug discount card.
  We use the private sector. The private sector will set up what are 
called pharmaceutical benefit managers. These managers will offer 
certain drug plans. Seniors can choose between those drug plans. The 
better the drug plan, the better chance they have of attracting 
seniors.
  It is estimated there will be somewhere between 25 to 40 percent 
savings for seniors using this prescription drug discount card. The 
reason they will save money is, very simply, that they are taking 
advantage of volume buying.
  We see volume buying all the time. HMOs buy in volume, in bulk. So 
seniors will get the advantage of this volume buying when they are on 
Medicare and they sign up for this card.
  The second part of our plan caps out-of-pocket expenses.
  The biggest thing that we hear from seniors these days is that they 
are afraid they are going to be bankrupt. We had an e-mail in our 
office that came in a little after 11 o'clock Pacific Coast Time last 
week. It was from a person who said that many seniors have to choose 
between rent and prescription drugs. So they were saying: Will you step 
up to the plate, the ``moral plate,'' as this person called it, and do 
something that seniors really need?
  Our plan actually does something that seniors really need. It 
provides them the prescription drug coverage by capping out-of-pocket 
expenses.
  Let me give a couple illustrations.
  For a senior citizen who has now signed up for the plan, let's say 
they make anything less than 200 percent of poverty--which is, for an 
individual $17,700 per year; for a couple it is almost $24,000 a year--
if they are below 200 percent of poverty, our bill caps their out-of-
pocket expenses at $1,500, so basically $120 a month.
  So let's take, for instance, somebody who has diabetes or somebody 
who is a cardiac patient or a cancer patient, and they have $4,000, 
$5,000, $6,000 a year in drug expenses. This is what they are going to 
pay. Those are the seniors who need it the most.
  The nice thing about our plan is--we are hearing about cost estimates 
of the, quote, ``tripartisan'' bill as being somewhere around $370 
billion over the next 10 years. Other plans are floating around out 
there, and that may be $650 billion-plus.
  Our plan looks like it is going to come in at an estimate of about 
$150 billion over 10 years. The other plans, in the next 10 years, 
really skyrocket. Ours goes up, like every plan does, but it does not 
go up significantly.
  This is something for which the next generation can afford to pay; 
the other plans that are being talked about, the next generation 
cannot.
  The reason our bill costs so much less money is a simple fact: If you 
keep the senior citizen, who is going to be getting these prescription 
drugs--the Medicare recipient--in the accountability loop, that means 
when they are paying the first dollars out of pocket--up to, for the 
lower income seniors, $1,500 per year--they will be cost conscious. 
That means they will go out and shop. They will make sure those plans 
have the drugs they need at a price they can afford. So we will have 
seniors all across the country shopping for their prescription drugs.
  If we just give them a plan and say we will cover everything, the 
seniors quit shopping. The market forces then don't keep the 
competition where it needs to be. Because about half the seniors in 
America have less than $1,200 per year in prescription drug costs, that 
is where the huge savings comes to the taxpayer in our plan. We are 
looking out for the senior with our plan, but we are also looking out 
for the taxpayer. For the future of the next generation and the 
generation after that, we cannot afford to ignore the taxpayer because 
somebody has to pay for this prescription drug benefit.
  All of us want to take care of our parents and our grandparents, and 
we want to be taken care of someday. Especially for those who really 
cannot afford it and are having to choose between sometimes what they 
are eating and whether they are taking their medicines or whether they 
are able to pay rent that month and whether they are going to be able 
to take their medicine, it is a real problem. But we have to do it in a 
way that is fiscally responsible. We think our bill does that.
  I have a real life example--we have received some numbers--of a 
senior citizen who is around 68 years of age. This is a profile of a 
real senior, but we won't release any names because of privacy. This 
patient makes around $17,000, is being treated for diabetes, has no 
prescription drug coverage today, and pays a total of about $5,700 
currently per year. Under the Democrat proposal, at least the parts we 
can tell from it, this person would pay around $2,100 a year, saving 
about $3,900 a year. Under the tripartisan proposal, the person would 
pay about $2,300, saving about $3,700 a year. Under our proposal, this 
person would pay about $1,900 a year, saving around $3,800 a year.
  So for the person who really needs it, who has serious disease and 
has a lot of prescription drug costs, our bill actually saves that 
person more, by a couple hundred dollars at least, than either the 
Democrat proposal or the tripartisan proposal. Yet it does this in a 
way that is responsible to the taxpayer because our bill is literally 
hundreds of billions of dollars less than the competing proposals.
  I am urging my colleagues to take a look at this plan. This plan 
would go into effect at least a year earlier than any of the other 
competing plans. It can go into effect on January 1 of 2004. The other 
plans don't go into effect until January 1, 2005. Our plan is permanent 
as well. One of the other plans is sunsetted.
  Our plan is easy to understand. If you take a look at it, it doesn't 
sound that easy to understand except when compared to the other plans 
which are much more complicated. It is much easier to understand for 
the senior. It provides the benefit and most of the benefit to those 
who truly need it.
  I reiterate--and this must be reiterated time and time and time 
again--it is responsible to the next generation. We cannot afford to 
pay for seniors today and forget about the next generation. We all want 
to take care of the seniors today, but we must do it in a fiscally 
responsible way.
  To sum up, a $25 fee, you get into the plan. You get a prescription 
drug discount card which saves you 25 to 40 percent. Then, depending on 
income, we cap your out-of-pocket expenses. For those 200 percent of 
poverty and below, their cap will be $1,500. For those 200 or 400 
percent of poverty, they are capped at $3,500 out-of-pocket expenses 
for the year. For those at 400 to 600 percent, they are capped at 
$5,500. And for the wealthiest, they can still participate. But for the 
Ross Perots of the world, they have to pay 20 percent of their income 
in prescription drug costs before they benefit. So the Ross Perots of 
the world, those people who do not need the coverage like that, will 
not get the coverage.
  I yield the floor.
  The PRESIDING OFFICER. The Senator from Minnesota.
  Mr. WELLSTONE. Madam President, there are other Senators on the 
floor. I had spoken earlier. I think I can probably cover the ground in 
3 or 4 minutes.
  I think it is best to be as concrete as possible. Coumadin is a blood 
thinner

[[Page 13233]]

widely used in the United States. A bottle is $20.99. For the same 
bottle, dosage, the Canadian price is $6.23. Zocor, which is a 
cholesterol drug, in the United States: $116.69; our neighbor Canada, 
$5.51; Permax, to manage Parkinson's disease, $398.24; Canadian price, 
$189.26; tamoxifen, breast cancer drug, $287.16; the Canadian price, 
U.S. dollars, 24.78.
  That is what this amendment is about that Senator Dorgan and I, 
Senator Stabenow, and others have supported. Our amendment passed 
overwhelmingly.
  I have heard so much said in the last couple hours. That is why it is 
hard to get started, because if you get started, it goes on and on.
  Families USA came out with a study today that makes it pretty clear 
that by a 2-to-1 margin, pharmaceutical companies spend the money on 
advertising and marketing as opposed to research, with profits beyond 
belief--what I have described as Viagra-like profits--based upon the 
misery, sickness, and illness of elderly people.
  The pharmaceutical industry hates this amendment that has passed. 
They don't want to see people in Minnesota or Illinois or anywhere in 
the country get this discount, and they don't want to see downward 
pressure on prices. They don't want this to happen. The industry would 
be happy for us to pump in as much money as possible, as long as we 
give them a blank check and they can fill it in.
  The amendment we have before us, the Cochran amendment, basically 
says that this amendment we just passed, this legislation, only becomes 
effective if the Secretary of Health and Human Services certifies to 
the Congress that implementation of this section will ``pose no 
additional risk to the public health and safety and will result in a 
significant reduction in cost of covered products.''
  I don't know about the ``reduction.'' I think it is pretty clear it 
is going to be a significant reduction.
  I have two views about this. The first is, we have had two prior 
Secretaries of Health and Human Services--it creates such a loophole 
that they have refused to provide the certification. The pharmaceutical 
industry, which is so powerful and has always gotten its way, it gives 
them the perfect opportunity to lobby against it and stop it--no 
question about that.
  This amendment may have passed with all of our votes, although I must 
say I will vote for it with very mixed feelings because I believe in my 
heart of hearts that this Secretary of Health and Human Services will 
do everything to block implementation of the legislation we passed 
earlier today.
  However, there are at least two or three things that are different, 
and now the optimist in me will conclude. One is that we are only 
talking about Canada. Anybody who really looks at this with any kind of 
rigor will realize it is hard to argue when you don't have the same 
stringent health and safety guidelines, and all of this has to be FDA 
guidelines in any case, No. 1.
  Second of all, expectations are up. If you don't think this isn't a 
big deal to people--to have a dramatic reduction in the price of 
prescription drugs so they can afford it--you are wrong.
  Therefore, I believe what has happened today--this amendment will 
pass overwhelmingly, close to a 100-percent vote. It has raised 
people's expectations. I don't mind that. I would rather have 
expectations raised than lowered around the country. And it is not just 
senior citizens; it is all citizens who benefit from this.
  My final message to the Senior Federation of Minnesota and the other 
citizens groups who have been fighting so hard is that we should have 
an overwhelming vote for prescription drug reimportation, and then a 
strong vote for the Cochran amendment. I think we have more to deal 
with on health and safety issues, but we have to do it this way. But if 
this Secretary of Health and Human Services should block this in 
perpetuity--and it is clear he has no intention of certifying this--or 
any Secretary of Health and Human Services, representing either party--
as a couple colleagues on the other side of the aisle give me that 
look--I say to the seniors of Minnesota, and all other citizens, all 
those buses you have been taking to Canada, take them right here to 
Washington, DC. Come right to the office of the Secretary of Health and 
Human Services and demand that he or she not block this in the future.
  We are expecting Secretary Thompson to move on this. We are not 
expecting him to use the Cochran amendment as a gigantic loophole to 
block the legislation we passed today that would provide a serious 
discount and would provide many more affordable prescription drugs to 
people.
  As a Senator from Minnesota, I will join the buses if we need to go 
down to the office of the Secretary of Health and Human Services. Let's 
hope we don't need to go.
  The PRESIDING OFFICER. The Senator from Kentucky is recognized.
  Mr. BUNNING. Mr. President, I rise today to talk for a few minutes 
about adding a prescription drug benefit to the Medicare Program.
  Over the next few weeks, the Senate will debate one of the most 
important issues we will consider this year whether to provide a 
medicare prescription drug benefit to seniors.
  But I am afraid that if we do not get our act together and start 
really working together it will all be a huge waste of time.
  I think we can all agree that something needs to be done. The cost of 
drugs is going up and up. It is the fastest rising medical expense that 
seniors and many other Americans face.
  And it is clear that medicare now is not set up to deal with this 
problem.
  Medicare is still basically a 1965 program that is struggling to keep 
up with health care in the year 2002.
  Health care has changed dramatically in the last three and a half 
decades.
  When Medicare was first set up, prescription drug costs were low. 
People were more concerned about being able to afford hospital stays.
  Now because of medical advances and the amazing things we can do with 
these medicines, the relative costs of hospital stays are less 
important. But the cost of prescriptions are rising.
  However, the medicare fee structure is not flexible enough to adapt 
to this change.
  It must change.
  In a perfect world, we would be debating a broader Medicare reform 
bill now along with a prescription drug benefit.
  It would be the most effective way to go, and it is something I hope 
we can address before too long.
  But for today, we are talking about a drug benefit. We are all for 
it. The question is: How do we set it up and how do we pay for it?
  Before I get into the substance of this issue, I think we need to 
first talk about process.
  The Senate is built on procedure. Here we still follow precedents and 
rules that were handed down over two centuries ago.
  It is important, and it makes a big difference when it comes to 
passing legislation.
  In the case of the bill before us today, that process has not worked 
very well.
  In fact, it hasn't worked at all.
  I hope we have a long, thorough debate to make sure that members have 
time to closely examine the base bill.
  After all, it doesn't even have a committee report attached to it to 
allow Members and staff to fully examine and assess what is in the 
legislation.
  It was rushed through the help committee and to the floor for this 
debate because the committee of jurisdiction--the finance committee--
couldn't agree on its own Medicare proposal.
  Finance has had problems because this is a tricky, complicated issue. 
And the only way the majority could start today's debate was by 
bringing up the generic bill instead.
  In my book, that is putting the cart before the horse. This is too 
important an issue not to get right.
  We have to be careful.
  Procedurally, we got off on the wrong foot, and while it might not 
seem that important on the surface, little twists and turns like this 
can make a difference when it comes to the fine print of the 
legislation.

[[Page 13234]]

  We all know this is going to end up really being a debate about a 
prescription drug benefit. Generics are part of that, and I have no 
objection to considering this issue in the Senate.
  That is why we are here--to legislate and make the tough calls.
  But when the bill before us today is brought to the floor in such a 
backwards way it makes me nervous.
  The fact is that we are doing the body a disservice by not letting 
the finance committee finish its work.
  They have the most expertise in this area.
  They have been wrestling with this the longest. I sure hope the 
majority does not try to rush them, and the full Senate, anymore into 
writing a bad bill.
  This is a pattern we have seen before, and the results have been bad.
  Virtually the same thing happened with the energy bill.
  In that case, the majority leadership didn't like how things were 
going in the energy committee, so they brought their own separate bill 
to the floor and bypassed the committee.
  In the end we passed legislation, but I know that it was not as good 
a bill as we could have passed if the committee of jurisdiction had 
been able to finish working its will.
  We have seen this happen again and again--on the farm bill, the 
economic stimulus bill, the railroad retirement bill, and the patients' 
bill of rights.
  In each case, we passed something. But we as a body didn't do our 
best work.
  It is just as important to get things right than to get them done 
fast.
  In the case of Medicare and prescription drugs, the majority is 
pushing us and pushing aside the only bipartisan prescription drug 
bill.
  That should tell you something. And it can make a big difference when 
it comes to the substance.
  We all know that many older Americans are faced with making some 
tough choices when deciding how to pay for their prescription drugs.
  We have all heard of the sacrifices seniors make to afford their 
prescription drugs.
  Some cut their pills in half to make their medication last longer or 
cut back on their grocery purchases to have enough money left over for 
another month's supply of their medication.
  Many seniors can't get their doctor's prescriptions filled because 
they simply cannot afford them.
  These are decisions that no American living in the year 2002 should 
have to make, and we in Congress have a moral obligation to pass a 
prescription drug bill this year, and get it to the President to sign.
  I support the tripartisan plan that has been put together by several 
members of the Finance Committee.
  In a nutshell, this proposal establishes a new voluntary prescription 
drug benefit in the Medicare Program, along with making some changes to 
the Medicare+Choice program to make it more competitive.
  Monthly premiums are relatively low--$24. There is an affordable 
deductible of $250 per year.
  Those who need the most help--those seniors living 150 percent below 
poverty receive extra assistance with costs.
  And there is extra protection when out-of-pocket costs skyrocket too 
high.
  It is a sensible proposal that means real relief to all seniors.
  It is these seniors who benefit the most from this bill, and we have 
a responsibility to help them today--not tomorrow or the day after. But 
now.
  Because of the way this issue is being handled on the Senate floor, 
we could very easily end up at the end of this prescription drug debate 
with no bill at all.
  Because it has been rushed to the floor--because the Finance 
Committee is still working on a number of competing proposals--there is 
no real consensus about what to pass.
  This could mean that no one bill gets a majority of the votes and 
nothing passes.
  If that happens, we'll be back exactly where we started--with no 
relief for American seniors.
  Congress can pass a prescription drug bill this year, and we can 
start helping seniors with their prescription costs in the near future.
  We have been talking about it for years. Now we have a chance to do 
it.
  But it is going to take real dedication by all Members of this 
Chamber to actually pass a bill.
  And it is going to take more respect for the process, for the time 
and chance to make thoughtful, deliberative decisions.
  Personally, I hope we don't succumb to playing politics with what is 
literally a life or death issue for many older Americans.
  While the process we are working under looks like it has been set up 
to fail, I still think and hope we can come up with some sort of 
proposal.
  Madam President, I thank you for the time, and I yield the floor.
  The PRESIDING OFFICER. The Senator from Wyoming.
  Mr. ENZI. Madam President, all here today have the same goal in mind, 
and that same goal is to be sure we have the lowest priced, best, and 
most available prescription drugs in the world. We do want to make sure 
the cost is as low as possible. How we get there we have some 
disagreement over, and I would like to take a moment to address the 
first-degree amendment that is before us right now, which I hope will 
be corrected with the second-degree amendment.
  The first-degree amendment would allow for pharmacies and 
pharmaceutical distributors to reimport drugs from Canada. I continue 
to have two major concerns about the amendment.
  First, as my colleague from Mississippi has articulated, there is no 
way to assure the safety of drugs reimported from Canada. Experts, 
including two Secretaries of Health and Human Services, said it cannot 
be safely implemented for consumers. That is probably even more true 
since September 11 and the anthrax attack. Safety is the reason we do 
not have it right now.
  I believe we are presently operating under the Prescription Drug 
Marketing Act of 1987, which expressly bans the reimportation of drugs 
to protect the public health and the integrity of the distribution 
market in the United States. It passed the Senate unanimously. That 
means everybody who was here on March 31, 1988, agreed for it to go 
through.
  Former Senator Al Gore was a cosponsor, and on the House side it was 
implemented and backed by such outstanding conservatives as 
Representative John Dingell and Representative Henry Waxman. They were 
the key House sponsors of the legislation. The finding in the bill as 
passed did focus on the risk of reimportation to consumers.
  I ask unanimous consent that the findings from that bill be printed 
in the Record.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

     SEC. 2. FINDINGS.

       The Congress finds the following--
       (1) American consumers cannot purchase prescription drugs 
     with the certainty that the products are safe and effective.
       (2) The integrity of the distribution system for 
     prescription drugs is insufficient to prevent the 
     introduction and eventual retail sale of substandard, 
     ineffective, or even counterfeit drugs.
       (3) The existence and operation of a wholesale submarket, 
     commonly known as the ``diversion market'', prevents 
     effective control over or even routine knowledge of the true 
     sources of prescription drugs in a significant number of 
     cases.
       (4) Large amounts of drugs are being reimported to the 
     United States as American goods returned. These imports are a 
     health and safety risk to American consumers because they may 
     have become subpotent or adulterated during foreign handling 
     and shipping.
       (5) The ready market for prescription drug reimports has 
     been the catalyst for a continuing series of frauds against 
     American manufacturers and has provided the cover for the 
     importation of foreign counterfeit drugs.
       (6) The existing system providing drug samples to 
     physicians through manufacturer's representatives has been 
     abused for decades and has resulted in the sale to consumers 
     of misbranded, expired, and adulterated pharmaceuticals.
       (7) The bulk resale of below wholesale priced prescription 
     drugs by health care entities, for ultimate sale at retail, 
     helps fuel

[[Page 13235]]

     the diversion market and is an unfair form of competition to 
     wholesalers and retailers that must pay otherwise prevailing 
     market prices.
       (8) The effect of these several practices and conditions is 
     to create an unacceptable risk that counterfeit, adulterated, 
     misbranded, subpotent, or expired drugs will be sold to 
     American consumers.
  Mr. ENZI. Madam President, I will read a couple:

       (1) American consumers cannot purchase prescription drugs 
     with the certainty that the products are safe and effective.
       (2) The integrity of the distribution system for 
     prescription drugs is insufficient to prevent the 
     introduction and eventual retail sale of substandard, 
     ineffective, or even counterfeit drugs.
       (5) The ready market for prescription drug reimports has 
     been the catalyst for a continuing series of frauds against 
     American manufacturers and has provided the cover for 
     importation of foreign counterfeit drugs.

  It is interesting; some of the people who debated in favor of doing 
that--and, as I mentioned, it passed unanimously--we are having that 
same debate right now, and the same arguments are valid for why that 
would not provide a good solution for consumers.
  I also mention S. 2244 would create a second route for transporting 
drugs into the United States outside the existing regulatory system. 
The bill would allow pharmacists and wholesalers to purchase drugs from 
Canadian sellers over which the United States authority, the FDA, and 
others have no jurisdiction or control. It provides the threat of 
counterfeits and does not depend on the integrity of the product itself 
but on the integrity of those handling the product.
  Even worse, the bill would require drug manufacturers to disseminate 
their drug formulations and chemical fingerprints to potentially 
thousands of pharmacies and wholesalers. This information, currently 
protected as a trade secret, could be worth millions of dollars per 
drug on the black market.
  Counterfeiters could obtain drug formulations and learn how to make 
their fake drugs look real and survive chemical analysis. 
Notwithstanding these very real safety concerns, it is unlikely the 
bill would achieve the goal of bringing cheaper drug products to U.S. 
consumers.
  The cost savings we talk about might be obtained but more likely 
would be absorbed by the fees that would be charged by the exporters, 
the wholesalers, the pharmacists, and the testing labs.
  The bill also requires Canadian sellers to register with the FDA. 
However, because the FDA has no authority to inspect foreign 
facilities, the agency will have no way of knowing whether these 
registered firms are legitimate, whether they handle and store drugs 
properly, or whether the drugs were manufactured under current good 
manufacturing practices. That is the first reason.
  I hope our colleagues who support the amendment and have been on the 
floor today urging us to support the amendment so seniors can have 
access to the drug pricing structure that Canada has imposed on drug 
companies will look a little bit at Canada. Canada, which operates a 
socialized national medical system, has imposed price controls on 
prescription drugs. Canada has also imposed rationing in other health 
care services, such as dialysis for elderly patients suffering from 
kidney failure. But we probably do not want to import that policy.
  I know a lot of people from Canada who come down to the United States 
to get their health care because they cannot get all of the choices the 
United States has, and even when they can get the choices, have to wait 
in line for it. I think it has already been covered a little bit by my 
colleague from Pennsylvania that in Canada they bid for the drugs.
  You do not get all of the drugs. You get the one drug that will 
handle that general practice, and the country gets competition by 
bidding among the several people who try to handle that particular 
ailment. By bidding on it, they are able to drive some of the prices 
down. They also eliminate choices for doctors and for consumers, 
ultimately the consumers.
  If what we are trying to do is price controls, we can do price 
controls, too. We probably ought to be debating them as price controls, 
legislate them, affirmative approval, and setting U.S. price controls. 
I hope we do not do that. I am not serious at all in suggesting that 
because when my wife and I first went into the shoe business, it was at 
the time that Nixon was in office and they talked about price controls. 
As soon as they talked about price controls, the companies that were 
supplying us with shoes did a 30-percent increase in the price of the 
shoes. Then, as soon as price controls went into effect, they did the 
20-percent increase that they were allowed to do.
  People were paying 50 percent more for shoes than they should have 
been just because the companies were worried about how they were going 
to be able to continue their profits. I can say that each and every 
year on the date they were allowed to raise their prices, they raised 
their prices. It had nothing to do with what the cost of the shoes 
were, but it affected the consumer dramatically.
  Passing the Dorgan amendment is not only having Canada legislate for 
America, it is denying Congress and the American people the opportunity 
to fairly debate the matter. I do not think we are ready to do that 
yet. We all want to have the lowest priced pharmaceuticals we possibly 
can, but we do want to have the safety factor, and I do not think we 
want to have price controls or the Canada method of doing health care.
  I yield the floor and reserve the remainder of my time.
  The PRESIDING OFFICER. The Senator from Illinois.
  Mr. DURBIN. Madam President, if I understand the unanimous consent, I 
am entitled to 10 minutes; is that correct?
  The PRESIDING OFFICER. That is correct.
  Mr. DURBIN. Madam President, this debate about prescription drugs 
really comes down to a very fundamental issue. It is an issue about 
whether or not the pharmaceutical companies will prevail and continue 
to charge the highest prices in the world to American consumers or 
whether the consumers of America, the families and the small 
businesses, will prevail and finally bring to this marketplace some 
competition, some form of oversight, that gives them a fighting chance.
  America believes in its drug industry. We understand the miracles 
that have occurred because of research and hard work within that drug 
industry. Look at the money we pump every year into the National 
Institutes of Health, taxpayer dollars spent by this Congress at the 
National Institutes of Health, to find new cures for diseases--last 
year, $23.5 billion. I supported it. I will support it again this year; 
it is money well spent to find cures for diseases that plague Americans 
and the world.
  Look at what we do as well: We say to these pharmaceutical companies 
we will give them a tax credit for research and development. We give 
them a tax break to continue to find new cures, and then we say we will 
give them a tax break for advertising and other costs of business.
  Our Government is friendly, supportive, and encouraging of the drug 
industry, as it should be. What do we get in return? Well, American 
consumers get the highest drug prices in the world. That is right. Our 
taxpayers invest more money in this industry and pay more back to it 
than any other country in the world.
  Take a look at this chart. It was prepared by the House Committee on 
Government Reform. They said, if Americans pay an average of $1 for a 
pharmaceutical product, how much would that same product cost in other 
countries around the world? In other words, the American pill that we 
have paid the research money on and the tax credits for, that cost us 
$1, well, what does it cost in the other countries around the world?
  In France, it is 55 cents; Italy, 52 cents; Germany, 65 cents; 
England, 69 cents; in Canada, 62 cents.
  What is wrong with this picture, Americans? We are the ones 
subsidizing this industry, and we are paying the highest prices. Our 
thanks to PhRMA for giving them all of this assistance, all of this 
encouragement, and in return being asked to pay the highest

[[Page 13236]]

prices in the world. Why? Because, frankly, we as a government have 
never stood up and said we have had it.
  The Canadians have. I heard an allusion earlier to the socialism of 
Canada. Well, I do not consider them to be lockstep Fabian Socialists. 
This is a country which decided a long time ago that when it came to 
the health of Canadian citizens, they were going to do everything they 
could to make it affordable and available, and one of the first things 
they did was to say to the American drug companies: If you want to sell 
the same pills that you are charging so much for in America, if you 
want to sell them in Canada, you are going to have to face price 
restrictions. We will not let you sell them at those inflated prices 
that you charge your own American citizens.
  As a result, the same drugs made by the same companies, subject to 
the same inspection, cost a fraction in Canada of what they do in the 
United States.
  When you take a look at some of these drugs, for example--and you 
will recognize these names, incidentally, because they are all over 
your television screen, they are in every magazine you pick up now, 
newspapers, every single day.
  Paxil: Feel a little anxious this morning? Take your Paxil. If you 
take it, it is $2.62 in the United States. Go to Canada, and it costs 
$1.69. It is a beautiful ad they have on television. Americans, you are 
paying for that ad. You are paying for it about a dollar more a pill.
  Zocor, $3.75 in the United States, $2.32 in Canada; Prevacid, $3.91 
in the United States, $2.24 in Canada, because the Canadian Government 
said: We are not going to let you rip off Canadians. You can rip off 
Americans. They will pay for it, no questions asked. Do you know why? 
Because PhRMA, this lobby, has a death grip on Congress. Congress is 
not going to rock the boat. It is not going to pass a law to protect 
American consumers as the Canadian Parliament did, no way. That is what 
this debate is all about.
  The Dorgan amendment basically says we are so despondent, we have 
reached the point of despair where we are going to allow people to 
bring in drugs from Canada, the cheap drugs from Canada, because we 
cannot hold the American pharmaceutical companies to a standard of 
charging Americans a fair price. Boy, have we really reached that 
point, where we have to rely on the Canadians' bargaining authority to 
give American consumers a fighting chance? It appears we do. But that 
amendment passed 69 to 30. It shows you the desperation of the Senate, 
that we will not pass a law demanding fair prices for Americans; we are 
going to piggyback on the Canadians who have the political courage to 
do it.
  Now comes the Cochran amendment. Senator Cochran of Mississippi is my 
friend. He is an honorable man. There are two ways to look at this 
amendment. Let me look first at the positive side. He has said the 
Secretary of Health and Human Services has to be able to certify that 
if these drugs come in from Canada, they are going to be safe for 
American consumers. Well, I hope so. Most of them are exactly the same 
drugs we sent to pharmacies all around our country.
  The second thing is that if we import them from Canada, there is a 
significant reduction in price for the consumer.
  I think both of those tests would be met, and if that is the case, it 
is hard to vote against Senator Cochran. I am going to support him. I 
think it is a good standard. I sincerely hope this is not part of an 
agenda by the pharmaceutical companies that believe if they cannot win 
a vote on the Senate floor and they cannot win a vote on the House 
floor, they may be able to persuade one member of the President's 
Cabinet to put an end to the reimportation of drugs from Canada.
  Think about that for a second. This one person, man or woman, serving 
as Health and Human Services Secretary, will have the power to stop the 
discounted drugs from coming from Canada into the United States. It is 
a considerable amount of authority.
  We have had statements from Dr. Kessler at the FDA, and from people 
currently at the FDA, who say the Canadian drugs are safe, there is 
going to be no problem. And we know they are cheaper. This should not 
be anything other than a formal decision saying the approach of the 
Dorgan amendment--which I am proud to cosponsor--is an approach which 
is good for America.
  Step back for a minute and look at this debate. Look at the fact that 
this Congress and this President cannot pass a law that gives the 
American consumer a fighting chance when it comes to the cost of 
prescription drugs.
  We are going to rely on the political courage of the Canadians to 
stand up to the same companies and hope we can bring in discounted 
Canadian drugs into the United States. Is this upside down or what?
  I hope we go further than this underlying bill on generic drugs, than 
the Dorgan amendment on Canadian reimportation, and actually put in 
place something we can be proud of, something that says to every 
American, rich or poor, they are not going to die, they are not going 
to be forced into the hospital because they have to choose between food 
and medicine. Is that a radical, socialist notion? I don't think so. It 
sounds like an American notion that we believe in this land of 
compassion, that we can find the resources and the wherewithal to help 
our people.
  I have seen them. I have met them. Every Senator in this Chamber has 
met them. They are men and women who have worked hard all of their 
lives, have retired in their little homes with their savings accounts, 
and want to live in happiness, follow the sports page and tend to their 
garden and enjoy their retirement. Then comes an illness--unexpected, 
perhaps. The doctor tells that person--your mother, grandmother, father 
or grandfather--this pill will keep you out of the hospital. They go to 
the local drugstore and realize they cannot afford to take the medicine 
that keeps them out of the hospital.
  That is a fact of life in America.
  Meanwhile the drug companies--there will not be any tag days for the 
drug companies--are making a lot of money. They are in business for a 
profit and deserve a profit. Look at this chart showing the 
profitability of Fortune 500 companies in the last 10 years: The drug 
industry, 18.5 percent; the median for other Fortune 500 companies, 3.3 
percent.
  Drug companies are doing extremely well. They say: We need to make a 
lot of money because we have to put the money into research for new 
drugs.
  But look at this chart which shows how much they are spending on 
marketing and how much on research. The blue line is research; the 
yellow line is marketing. Look at the disparity in companies such as 
Merck, Pfizer, Bristol-Myers Squibb, Abbott, Wyeth, Pharmacia, Eli 
Lilly, and Schering-Plough. They make Claritin. You have seen that. 
They have switched over to the brand new drug called Clarinex. They 
used to show on television the people skipping through a field of 
wildflowers: I am taking Claritin and will never sneeze again.
  Schering-Plough spent more advertising Claritin than PepsiCo spent on 
Pepsi-Cola.
  Let us hold them to a standard in which we believe. The drugs are 
safe and will save the American consumer money.
  The PRESIDING OFFICER. The Senator from Pennsylvania.
  Mr. SANTORUM. I say to the Senator from Illinois, half the money in 
advertising for drug companies is for free samples, samples to 
physicians that end up going to patients for free medication. Just 
understand half of that money, roughly half, is for free samples given 
out to hospitals and doctors. That is a way many people who do not have 
prescription coverage end up getting some medication.
  I find it remarkable the Senator says that PhRMA has the Congress in 
a death grip, and then says somehow the bill that passed last year over 
PhRMA's objection will pass this year both in the House and the Senate. 
He says PhRMA has us in a death grip, but at the same time they are 
passing legislation willy-nilly. I find that inconsistent.

[[Page 13237]]

  I also find it inconsistent when the Senator says somehow or another 
we are relying on the courage of the Canadians--that is an often used 
term--to stand up to the drug companies. What courage is he talking 
about? He is talking about price controls. He was very forthright in 
saying we do not have the courage in the Congress to do price controls, 
so this is the next best thing. We all know how successful price 
controls are in America. They are an abject failure. We tried that in 
the 1970s. We have not tried it since because of the horrible disasters 
that occurred in our economy because of it.
  What we are doing here is trying to impose price controls. On whom? 
We are trying to impose price controls on an industry that invests more 
on saving lives and preserving the quality and quantity of people's 
lives than any other industry in America. How are we doing that? We are 
doing it by reimporting drugs. And the safety issue is clear.
  I encourage everyone to vote for the Cochran amendment. That is not 
going to be enough. Under this measure, the Dorgan proposal, drugs from 
all over the world--from terrorist countries--can come through Canada 
into this country without anybody inspecting them in Canada, no one. 
The law in Canada says they do not have to inspect it. As long as it is 
not to be used in Canada, all they have to do is mark it Canadian and 
ship it to the United States, and God knows what will be in the drugs. 
It could be terrorists, but it could be just phony drugs. We have no 
ability to check.
  This is a huge safety issue. While the Cochran amendment gets at it, 
it is very important we need to do other things on this legislation to 
ensure that we are not opening up another avenue for terrorism, another 
avenue for people to die. The Dorgan amendment says we are not going to 
do anything to stop the reimportation of drugs until we have a pattern 
of people dying. So if one person dies, we will keep going until we see 
three, four, or five? This is remarkable. For what? So we can get lower 
prices on pharmaceuticals.
  Understand what that means. The Senator from Illinois held up a 
picture of all the countries that have low prices for drugs. Every one 
of them have price controls, every one of them. They have price 
controls. They say to the company: Sell at the price we want you to 
sell it at or you cannot sell it.
  In Canada, yes, you pay a lower price. If the company does not take 
the lower price, No. 1, they cannot sell their drug in Canada. No. 2, 
if they do not take the lower price, Canada can go ahead and license 
someone in Canada to make it and infringe on their patent.
  What choice does the drugmaker have? None. He is absolutely correct. 
We in America subsidize that. He is absolutely right on that. There is 
no bone of contention. The question is, If we don't, what are the 
consequences? The consequences are very clear. There will be a dramatic 
reduction in the amount of research that is done. There will be less 
new drugs coming to market. There will be less cures. There will be 
less improvement of the quality of people's lives. That is a tradeoff.
  But to sit up here and say this is somehow the big bad drug companies 
against poor patients who cannot get their drugs because of the expense 
of the drugs here, we have to go to Canada to get them, is a false 
choice. The choice is, giving that drug at a lower price, yes; putting 
price controls in it. If that is what the Senator from Illinois wants, 
he ought to offer an amendment. The choice is less research and less 
cures in the future.
  The PRESIDING OFFICER. The Senator from Massachusetts.
  Mr. KENNEDY. Madam President, in just a few moments we will take a 
vote on the Cochran amendment. I intend to support the Cochran 
amendment.
  I thought it might be useful to sum up where we are on the issue of 
trying to get a handle on the costs of drugs in the United States and 
also on the availability and the accessibility of drugs for our 
population.
  There has been prescription drug legislation before the Senate for 5 
years. Four years of this 5 years we were under the Republican control 
of the Senate, both in terms of the Finance Committee and the floor of 
the Senate. During that period of time, the Republican leadership found 
all kinds of ways to circumvent various committees to prioritize issues 
they wanted to do, but they never did it with regard to the 
availability of prescription drugs.
  And now our Republican friends have been complaining all afternoon. 
We just heard another complaint.
  This debate is about is how we are going to reduce the cost of 
prescription drugs, and hopefully on how we will increase the 
availability and the accessibility of prescription drugs.
  The underlying amendment is the Dorgan amendment. It will mean many 
billions in terms of savings for consumers.
  Mr. CORZINE. Mr. President, I rise in strong support of the Cochran 
amendment to allow reimportation of drugs from Canada with important 
safety protections, and in opposition to the Dorgan amendment, which 
would allow such reimportation without these important precautions.
  As so many of my constituents, I am very concerned about increasing 
drug costs. Spiraling costs have a real impact on not just seniors but 
all Americans and health care costs generally.
  That is why we need to find ways to contain costs. And Congress needs 
to enact a Medicare prescription drug benefit that will ensure that all 
seniors have access to the medicines they need.
  Reimportation would allow American consumers to benefit from lower 
priced drugs available in Canada. It would provide much needed relief 
for seniors, and it would also provide assistance for the 39 million 
Americans who have no health care coverage at all.
  Reimportation is not without risks, however. I feel strongly that 
opening our borders without ensuring that adequate protections are in 
place puts in danger our national security and the health and safety of 
our citizens. That is why I supported the Cochran amendment, which 
would enable the Secretary of Health and Human Services to fully assess 
and determine the safety of drug reimportation before allowing it to go 
into effect.
  I opposed the Dorgan amendment because it lacked these safety 
precautions and could result in Canada becoming the portal for 
dangerous counterfeit drugs. In fact, this concern is only heightened 
now that we face bioterrorist threats, which we witnessed firsthand in 
New Jersey, where we found ourselves on the front lines of the anthrax 
attack.
  The bottom line is that without a prescription drug benefit seniors 
will continue to struggle to afford all of their drugs--be they brand 
name, generics, or reimported drugs. Before us now, we have the 
opportunity to pass a prescription drug benefit that ensures the safety 
of our pharmaceuticals and provides access to affordable medicines for 
our seniors
  For those who are watching this debate, let me share some figures. I 
want to tell the cancer patients who are watching this debate that, as 
a result of the pharmaceutical companies abusing the Hatch-Waxman Act 
and what is called the evergreening of payments, we have seen a 19 
month delay of the generic drug Taxol at a cost to consumers of $1.2 
billion. Families watching and those affected with breast cancer should 
know they paid $1.2 billion, because the pharmaceutical companies 
abused the Hatch-Waxman bill.
  For those families affected with epilepsy, the 30 month delay of 
Neurontin has cost them $1.4 billion. For patients with depression, six 
evergreened patents have delayed the generic drug Wellbutrin for 31 
months, at a cost to consumers of $1.3 billion. For the many seniors 
with high blood pressure, collusive agreements have delayed generics 
for months, costing them hundreds of millions of dollars.
  For Americans who are watching now, let me say that we are going to 
do something about it. That is, the underlying bill will do something 
about it. And we are committed to doing something about it, in spite of 
all the opposition we have heard this afternoon from those on the other 
side.
  We have the Dorgan amendment, which will make a difference for all 
the reasons that have been outlined by

[[Page 13238]]

Senator Dorgan, Senator Durbin, and others. It will help to put 
pressure on the drug companies.
  Now we are anticipating that, after this vote we will consider the 
Stabenow amendment. The Stabenow amendment will permit States to 
bargain with drug companies in order to make available to low-income, 
uninsured seniors and needy people, necessary drugs at the lowest 
possible prices.
  With all these measures we are trying to give some assurance to the 
American people that we will make every possible effort to see a 
damping down on the high costs of prescription drugs.
  There are other amendments which we will have an opportunity to 
debate through tomorrow and into Friday. Hopefully, next week we will 
have the opportunity to ensure the American people that they are going 
to have access to prescription drugs that will be dependable and 
affordable.
  I was here in the Senate when we passed the Medicare bill in 1965. I 
was here in 1964 when it failed by 16, 18 votes, and about 8 months 
later it passed with 4 or 5 votes to spare. There was a switch of 22 
votes in the Senate.
  In 1965, the Senate went on record. What we did was to give an 
assurance to the American people that, if they played by the rules and 
paid their share, that when they turned 65 they would have health 
security. We have provided that in terms of hospitalization and 
physician care.
  Prescription drugs are just as important as hospitalization and 
physician care. Can anyone believe that if we had left out physician 
care or hospitalization and instead included prescription drugs in 
1965, that we would not be debating including hospitalization or 
physician care tonight in the Medicare system? Of course we would.
  When we achieve it, people will say: Why did it take so long? What 
was the big deal about it? It is absolutely essential to our senior 
citizens.
  Finally, I think this is also a moral issue. When we find that we 
have prescription drugs that can be life sustaining for our fellow 
citizens--the elderly and the sick, the men and women who fought in 
World War II and lifted this country out of a depression and sacrificed 
for their children--and they can't afford them, that we must act. We 
have the ability to help improve their quality of life and to reduce 
their suffering, and we are talking about sending bills to 
subcommittees and committees? And it is out of order?
  It is about time we address this issue. That is what the American 
people want us to do. That is what they are challenging us to do. That 
is what the Democratic leader pledged we will do. And we will continue 
to battle and fight in the days ahead.
  I believe our time has expired and under the previous order a roll 
call vote has been ordered.
  The PRESIDING OFFICER (Mr. Corzine). The Senator from Pennsylvania.
  Mr. SANTORUM. I ask for the yeas and nays.
  The PRESIDING OFFICER. Is there a sufficient second?
  There is a sufficient second.
  The question is on agreeing to amendment No. 4301. The clerk will 
call the roll.
  The legislative clerk called the roll.
  Mr. NICKLES. I announce that the Senator from North Carolina (Mr. 
Helms) is necessarily absent.
  The PRESIDING OFFICER. Are there any other Senators in the Chamber 
desiring to vote?
  The result was announced--yeas 99, nays 0, as follows:

                      [Rollcall Vote No. 180 Leg.]

                                YEAS--99

     Akaka
     Allard
     Allen
     Baucus
     Bayh
     Bennett
     Biden
     Bingaman
     Bond
     Boxer
     Breaux
     Brownback
     Bunning
     Burns
     Byrd
     Campbell
     Cantwell
     Carnahan
     Carper
     Chafee
     Cleland
     Clinton
     Cochran
     Collins
     Conrad
     Corzine
     Craig
     Crapo
     Daschle
     Dayton
     DeWine
     Dodd
     Domenici
     Dorgan
     Durbin
     Edwards
     Ensign
     Enzi
     Feingold
     Feinstein
     Fitzgerald
     Frist
     Graham
     Gramm
     Grassley
     Gregg
     Hagel
     Harkin
     Hatch
     Hollings
     Hutchinson
     Hutchison
     Inhofe
     Inouye
     Jeffords
     Johnson
     Kennedy
     Kerry
     Kohl
     Kyl
     Landrieu
     Leahy
     Levin
     Lieberman
     Lincoln
     Lott
     Lugar
     McCain
     McConnell
     Mikulski
     Miller
     Murkowski
     Murray
     Nelson (FL)
     Nelson (NE)
     Nickles
     Reed
     Reid
     Roberts
     Rockefeller
     Santorum
     Sarbanes
     Schumer
     Sessions
     Shelby
     Smith (NH)
     Smith (OR)
     Snowe
     Specter
     Stabenow
     Stevens
     Thomas
     Thompson
     Thurmond
     Torricelli
     Voinovich
     Warner
     Wellstone
     Wyden
       

                             NOT VOTING--1
                                     

       
     Helms
       
  The amendment (No. 4301) was agreed to.
  Mr. COCHRAN. Mr. President, I move to reconsider the vote, and I move 
to lay that motion on the table.
  The motion to lay on the table was agreed to.
  Mr. REID. I suggest the absence of a quorum.
  The PRESIDING OFFICER. The clerk will call the roll.
  The bill 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.


                           Amendment No. 4305

  Mr. REID. Mr. President, I send an amendment to the desk on behalf of 
Senator Stabenow.
  The PRESIDING OFFICER. The clerk will report.
  The assistant legislative clerk read as follows:

       The Senator from Nevada [Mr. Reid], for Ms. Stabenow, 
     proposes an amendment numbered 4305.

  Mr. REID. Mr. President, I ask unanimous consent that further reading 
of the amendment be dispensed with.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  The amendment is as follows:

(Purpose: to clarify that section 1927 of the Social Security Act does 
not prohibit a State from entering into drug rebate agreements in order 
  to make outpatient prescription drugs accessible and affordable for 
   residents of the State who are not otherwise eligible for medical 
                 assistance under the medicaid program)

       At the end, add the following:

     SEC.  . CLARIFICATION OF STATE AUTHORITY RELATING TO MEDICAID 
                   DRUG REBATE AGREEMENTS.

       Section 1927 of the Social Security Act (42 U.S.C. 1396r-8) 
     is amended by adding at the end the following:
       ``(l) Rule of Construction.--Nothing in this section shall 
     be construed as prohibiting a State from--
       ``(1) directly entering into rebate agreements that are 
     similar to a rebate agreement described in subsection (b) 
     with a manufacturer for purposes of ensuring the 
     affordability of outpatient prescription drugs in order to 
     provide access to such drugs by residents of a State who are 
     not otherwise eligible for medical assistance under this 
     title; or
       ``(2) making prior authorization (that satisfies the 
     requirements of subsection (d) and that does not violate any 
     requirements of this title that are designed to ensure access 
     to medically necessary prescribed drugs for individuals 
     enrolled in the State program under this title) a condition 
     of not participating in such a similar rebate agreement.''.

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