[Congressional Record (Bound Edition), Volume 148 (2002), Part 11]
[Senate]
[Pages 15407-15442]
[From the U.S. Government Publishing Office, www.gpo.gov]




        GREATER ACCESS TO AFFORDABLE PHARMACEUTICALS ACT OF 2001

  The ACTING PRESIDENT pro tempore. Under the previous order, the 
Senate will now resume consideration of S. 812, which the clerk will 
report.
  The legislative clerk read as follows:

       A bill (S. 812) to amend the Federal Food, Drug, and 
     Cosmetic Act to provide greater access to affordable 
     pharmaceuticals.

  Pending:

       Reid (for Dorgan) amendment No. 4299, to permit commercial 
     importation of prescription drugs from Canada.
       Graham amendment No. 4345 (to amendment No. 4299), to amend 
     title XVIII of the Social Security Act to provide protection 
     for all Medicare beneficiaries against the cost of 
     prescription drugs.


                           Amendment No. 4345

  The ACTING PRESIDENT pro tempore. Under the previous order, there 
will now be 90 minutes for debate, equally divided, on the motion to 
waive the Budget Act with respect to the Graham amendment No. 4345.
  The Senator from Massachusetts.
  Mr. KENNEDY. Madam President, I yield myself 8 minutes.
  The history of the American people is one of a never-ending journey 
toward the goal of a more perfect Union. Americans believe in the ideal 
of equal opportunity so that individuals can achieve their fullest 
potential. We also believe that we are members of a great national 
family which seeks to protect all of its members. We understand that if 
one of us is hurting, all of us are hurting.
  In this quest for a more perfect Union, we have encountered and 
overcome obstacle after obstacle. At the turn of the last century, we 
passed antitrust laws to begin the long process of controlling 
corporate abuse and asserting that the public interest must take 
precedence over the selfish interests of wealthy corporations.
  We passed minimum wage laws to assert that a worker's right to a 
living wage took precedence over business rights to maximize profits.
  We passed the Social Security Act and the Medicare Act to guarantee a 
secure and dignified retirement to every American who works hard and 
pays into the system.
  Just 2 weeks ago, we passed landmark legislation to curb the modern-
day robber barons whose dishonesty and greed have done so much to 
damage our economy and to defraud so many workers and investors of 
their hard-earned savings.
  Today, Americans face a crisis in health care. The miracle medicines 
that can save and prolong life more and more are beyond the reach of 
average Americans. The prescription drugs we need to stay healthy and 
alive are just too expensive, and their costs go up and up with each 
passing day.

[[Page 15408]]

  For the last week, we have been grappling with two more obstacles to 
a more perfect Union and a better life for all of our people: The 
exploding costs of prescription drugs and the failure of Medicare to 
cover those costs. The rapid rise in the cost of drugs burdens 
families, businesses, and patients, and our economy.
  For the last 6 years, prescription drug costs have been escalating at 
double-digit rates: 10 percent in 1996, 14 percent in 1997, 15 percent 
in 1998, 16 percent in 1999, 17 percent in 2000 and 2001.
  It is unacceptable when older Americans struggle to afford their 
heart medicines and diabetes medicines. It is reprehensible when hard-
working families are impoverished trying to pay for the drugs that keep 
their children in the classroom and out of the hospital, but it is 
intolerable when much of their burden has been created by the 
wealthiest corporations in America, the brand-name drug companies, 
deploying an army of lawyers, lobbyists, and campaign contributions to 
exploit and maintain loopholes in the law to block competition and 
unfairly boost prices.
  Today, the Senate is on trial. We will vote on whether to end those 
abuses, and just as the Senate has voted resoundingly to close 
accounting loopholes abused by Enron and WorldCom, we must also close 
the loopholes in our drug patent laws that are exploited by big drug 
companies and are hurting patients each and every day.
  Ending the abuses of the law that have contributed to escalating drug 
prices will help every family. But the most important step we can take 
in this Congress towards the goal of a more perfect Union is to act at 
long last to provide prescription drug coverage under Medicare.
  Last week, the Senate failed to fulfill its responsibility to senior 
citizens and their families. This week, we have the opportunity and the 
obligation to do better and to provide a downpayment on our commitment 
to provide a prescription drug benefit in the Medicare Program.
  Medicare is a solemn promise between our Government and our citizens. 
It says: Play by the rules, contribute to the system during your 
working years, and you will be guaranteed health security in your 
retirement years. Because of Medicare, the elderly have long had 
insurance for their hospital bills and doctor bills. But the promise of 
health security at the core of Medicare is broken every single day 
because Medicare does not cover the soaring price of prescription 
drugs. We can no longer ignore the sad fact that too many senior 
citizens are living in pain because they cannot afford prescription 
drugs.
  Too many elderly citizens must choose between food on the table and 
the medicine their doctors prescribe. Too many elderly are taking half 
the drugs their doctors prescribe or none at all because they cannot 
afford them.
  Senior citizens built our country. They fought in our wars. They 
created our economic growth and prosperity. They worked hard. They 
supported their families. They played by the rules. And they stood up 
for America. Now is the time for America to stand up for them.
  Last week, a majority of the Senate voted for the Graham-Miller-
Kennedy amendment, a comprehensive program to provide prescription drug 
coverage under Medicare and mend its broken promise. A minority stood 
against the seniors and with powerful special interests, but under the 
rules of the Senate that minority was able to block action. Just as the 
Republican Party opposed the creation of the Medicare Program in 1965, 
it opposed the enactment of a comprehensive Medicare prescription drug 
benefit today.
  The Senate is once again confronted with a choice: Is our priority 
prescription drugs for the elderly or more tax breaks for the wealthy? 
Will we give senior citizens the same loyalty that they gave our 
country or will we continue to offer an open hand to the powerful 
special interests and the back of our hand to the elderly and their 
families?
  Over the coming years, Americans will spend $1.8 trillion on 
prescription drugs. So far, our Republican colleagues have said no to 
amendments that would cover only a third of those costs. Yet under the 
Senate health plan, Senators have 75 percent of their prescription 
drugs covered. How many of us are willing to face our constituents when 
we go home in August knowing we have secure coverage for 75 percent of 
our drug coverage but we reject proposals that do even less for our 
fellow citizens?
  The Graham-Smith amendment is a bipartisan compromise. It is not the 
comprehensive program that I want or that a majority of the Senate 
wants, but it is an important downpayment on the kind of program senior 
citizens need and deserve. Under this proposal, every senior citizen 
will receive assistance and those with the greatest need will receive 
the most help.
  I ask that during the quorum call, the time be charged equally 
against both sides.
  The ACTING PRESIDENT pro tempore. Without objection, it is so 
ordered.
  Mr. KENNEDY. I suggest the absence of a quorum.
  The ACTING PRESIDENT pro tempore. The clerk will call the roll.
  The legislative clerk proceeded to call the roll.
  Mr. KENNEDY. Madam President, I ask unanimous consent that the order 
for the quorum call be rescinded.
  The ACTING PRESIDENT pro tempore. Without objection, it is so 
ordered.
  Mr. KENNEDY. I yield 4 minutes to the Senator from Florida.
  The ACTING PRESIDENT pro tempore. The Senator from Florida.
  Mr. GRAHAM. Madam President, I have a somewhat longer statement I 
will deliver later, but at this point I will indicate clearly to my 
colleagues what exactly we are going to be doing in approximately an 
hour and 15 minutes. We will be voting on waiving the point of order 
that we anticipate will be raised against this amendment based on 
noncompliance with the budget resolution.
  Let's look at a few facts. In 2001, the Senate established, as the 
amount of money to be expended for a prescription drug benefit for 10 
years, from 2001 to 2011, the number of $300 billion. That is the last 
budget resolution the Senate has enacted. The Senate Budget Committee, 
in 2002, reexamined what would be required for an adequate prescription 
drug benefit, and they recommended up to $500 billion, but that 
resolution has never been adopted.
  So 18 months later, we are being constrained by a $300 billion 
number, which has been found to be inadequate by the Budget Committee. 
The irony is that both the Republican proposal, the proposal of Senator 
Grassley and others, and the Graham-Smith proposal have a total 
expenditure of $400 billion minus. There is probably not a 2- or 3-
percent difference in the amount of money the Grassley bill and the 
Graham-Smith bill have found to be necessary in order to provide our 
seniors an adequate prescription drug benefit.
  The issue of whether we are going to need to waive the Budget Act in 
order to get to the substance of this issue is one upon which both 
sides have agreed. So why do we not say yes, we have agreed that it is 
going to take more than $300 billion to have an adequate prescription 
drug benefit? Let's vote today to waive the Budget Act, and then we can 
have the full debate with amendments and all of the means by which 
Members of the Senate can express their specific policy positions on a 
variety of issues on this complex subject. If we cannot get past the 
Budget Act, the whole effort to provide 40 million Americans with some 
better access to a key component of their life and health will be 
again, for the seventh straight year, denied.
  I do not believe that is the record this Senate wants to go on. Let's 
have a vote to do what we have all agreed--that it will cost more than 
$300 billion to provide a benefit. Then let's move on to a discussion 
that justifies the title of this institution as being the world's 
greatest deliberative body. Let us deliberate. Let us not quibble over 
the issues of dollars for which there is

[[Page 15409]]

no quibbling because we both agree as to what it is going to cost to 
provide this benefit.
  This is the last opportunity we are likely to have in 2002 to provide 
America's seniors this benefit. A vote against waiving the Budget Act 
is a vote for another year of denial. It is also a vote that when we 
come back next year, we are not going to be talking about the $400 
billion that both sides have now agreed is necessary, we are going to 
be talking about a substantially higher number because of another year 
of prescription drug inflation and another year of that baby boom surge 
of entrants into the Medicare Program.
  If we think it is difficult today to vote to provide a prescription 
drug benefit, be assured it will be only more difficult every year into 
the future.
  I urge my colleagues to look at the reality of what we are doing and 
at least vote to waive the Budget Act so we can get on to a full debate 
on this issue.
  Mr. KENNEDY. Madam President, I yield 10 minutes to the Senator from 
Oregon.
  The ACTING PRESIDENT pro tempore. The Senator from Oregon.
  Mr. SMITH of Oregon. I thank Senator Kennedy, the manager of this 
bill, and my cosponsor of this legislation, Senator Graham, for the 
time.
  I say to the American people, what few may be up this morning 
watching these proceedings, that this is probably our last best chance 
to pass prescription drugs in the 107th Congress, and I think it is 
critical we do so.
  I am optimistic we are going to succeed, but if we do not, it will be 
because of that old maxim that the perfect is the enemy of the good. 
What Senator Graham and I have is the best we can produce for the 
greatest number of people, particularly the neediest, but for everyone 
in terms of discount cards and in terms of a catastrophic coverage. We 
have the best we can do with the financial constraints faced by this 
Government.
  We have produced a plan that is affordable for seniors and it is 
affordable for the U.S. Government. It is a plan at a minimum that we 
ought to pass.
  I thought what I would do in my remarks today was to try to give a 
comparison between our bill and the competing bill. Both of these bills 
can work. I have, in fact, voted for a version of the Grassley-Breaux 
bill. However, I am now on this bill because I think this is more in 
the realm of what is possible and workable.
  I will spend some time focusing on the health and financial security 
aspect, which is what is available to every American under our plan who 
is under Medicare, and then focus on the sickest and the poorest, the 
protection for the most vulnerable in our society. Let me start first 
with the most vulnerable in our society.
  Let's compare the low-income benefit. Under Grassley-Breaux, the low-
income folks are covered at 150 percent of poverty; under the Graham-
Smith bill, people 200 percent of poverty are covered. Under Grassley-
Breaux, it includes an assets test which will drop 40 percent of 
otherwise income-eligible elderly; under Graham-Smith, there is no 
asset test. Under their proposal, beneficiaries below 200 percent of 
poverty can pay up to $3,700 due to copays, deductibles, and premiums. 
Under ours, beneficiaries out of pocket are limited to drug copays of 
$2 for generic and $5 for brands. That is an enormous difference in 
terms of what they will have to pay and who will be included.
  Under their plan, they provide more limited coverage than some 
elderly get in current employer programs or State pharmacy assistance 
programs. Under our plan, coverage for low-income elderly is as 
comprehensive as State pharmacy assistance programs. CBO estimates that 
no employer will drop coverage because of what we have.
  As to the catastrophic limit, their proposal kicks in at $3,700. Our 
proposal kicks in at $3,300, a very big difference, a 12-percent 
difference. That matters a great deal at the low end of the economic 
scale in our country.
  Some may say this does not cover enough people. Let me give a few 
examples of a few States and how much this plan helps. These are 
percentages of people in various States falling below 200 percent of 
poverty: In Vermont, 42 percent of their elderly fall below that; in 
the State of Mississippi, 46 percent; in the State of Maine, 37 
percent; in the State of Ohio, 41 percent; in the State of Nevada, 41 
percent; the State of Illinois, 41 percent also; the State of Nebraska, 
43 percent; the State of Iowa, 38 percent; in the State of Louisiana, 
52 percent; in the State of Indiana, 46 percent; in the State of 
Alabama, 56 percent; in the State of Pennsylvania, 43 percent; and the 
State of Rhode Island, 48 percent.
  These are dramatic numbers. There is hardly a State in the Union that 
falls below 40 percent of people who will be covered 100 percent by the 
Graham-Smith proposal. That is significant. That is an incredible start 
on a prescription drug program.
  Let me turn to the health and financial security aspects and compare 
both bills. The premiums and fees: Under Grassley-Breaux, the elderly 
will pay $288 per year or more. The premiums imposed are imposed 
monthly, despite periods when the beneficiary receives no benefit. 
Unknown premium amounts that can vary by area dramatically, year by 
year. Under ours, there is no monthly premium.
  Now to the deductible. Under theirs there is a $250 per year 
deductible. Under Graham-Smith there is no deductible.
  Universal coverage: Under Grassley-Breaux, only low-income and those 
choosing to pay monthly premiums are covered. Under ours, all seniors 
and covered disabled are covered after a $25 annual fee.
  As to employer coverage and crowding out private plans, the CBO 
estimates a third of current employer benefits will be dropped if 
Grassley-Breaux goes through. They estimate that under the Graham-Smith 
proposal all seniors and disabled will be covered, and they estimate no 
loss of current employer coverage. I think that is terribly 
significant. Ours overlays the existing program much better than the 
Grassley-Breaux proposal.
  Now as to guarantee of current coverage levels: Under Grassley-
Breaux, some low-income elderly would receive more reduced coverage 
than under the current State pharmacy programs. But under ours, low-
income elderly are guaranteed a comprehensive benefit with a nominal 
cost sharing. CBO estimates under Grassley-Breaux one-third loss of 
current employer coverage, and coverage could be far worse than the 
elderly currently receive. CBO estimates under ours, no loss of current 
employer coverage.
  Now, the stability of the delivery system. Grassley-Breaux imposes an 
untried and untested insurance model on our Nation's elderly and 
disabled and results in employer crowd-out. I assume this insurance 
program in the private sector could be developed, but it does not exist 
right now. So we are betting that it can be developed and that people 
would like it.
  In the State of Oregon, if you ask how they like their private 
insurance, it is not much; they do not like it much. While they 
complain about Medicare, they certainly want us to support it.
  Then on this issue of a stable delivery system: Senator Graham and I 
build upon current State and market-based delivery models, and we do 
not result in an employer crowd-out. What is the overall cost? The 
Grassley-Breaux approach is scored at somewhere between $375 and $400 
billion over 10 years. Ours is scored at $390 billion over 10 years. So 
they are comparable in that regard.
  I conclude my remarks by saying we will hear this morning about the 
``cliff''--that after 200 percent of poverty the people do not get 
anything; if you make $24,000 as a couple, you fall off a cliff. I wish 
we had a more graduated program, I grant that. There are many things 
about what Senator Graham and I have that I would change if I could, 
but I can't, and get something passed and into conference. So let's 
start here.
  Let me simply say to those who would describe this as a cliff, that 
you get nothing if you make more than $24,000 a year, to me it is not 
nothing to say that for $25 a year you get a discount card that, at a 
minimum, gives

[[Page 15410]]

you 5 percent off all your prescriptions, but probably, because you get 
the benefit of pricing discounts, you get as much as 30 percent off 
every prescription drug, and, moreover, you add to that the fact that 
you never have to worry again as a senior in America that when you lose 
your health, you have to lose your home--you do not have to choose 
between food and medicine. That is significant. Tell me where in the 
private sector you can find an insurance policy that, for $25 a year, 
will do all of that.
  Have we done enough? No. Have we done a tremendous amount of good? 
Absolutely.
  I plead with my colleagues to vote to waive this point of order. We 
should not fail today. We should get this to the floor. People have 
ideas. We can perhaps make it better. But we can get on with the 
business that the seniors and citizens of this country are expecting. 
Let us get beyond the war of words and get to a prescription of 
wellness for the seniors and provide them a benefit that is workable, 
tried and true, affordable for them and our Government.
  I yield the floor.
  The ACTING PRESIDENT pro tempore. The Senator from Tennessee.
  Mr. FRIST. Madam President, I yield myself 10 minutes, to be followed 
by the Senator from Maine, 10 minutes.
  Madam President, I rise in opposition of the Graham drug Medicare 
proposal. I will make four points regarding my opposition in the few 
minutes I will speak.
  The first point is, the bills we are considering on the Senate floor 
have not gone through the committee process. That is important for the 
American people to understand. It makes it incredibly challenging to 
receive an amendment yesterday such as this and having the opportunity 
only to read it for the first time. This legislation is very 
complicated.
  In looking at this bill compared to the bill passed by the House of 
Representatives, the tripartisan proposal or the bi-partisan Hagel-
Ensign bill, the major substantive objection I have is that the bill 
costs more and yet fewer people benefit.
  We do have huge gaps of coverage. We have huge gaps in terms of being 
able to look seniors in the eye and say, yes, we understand your 
problem is affordable access to prescription drugs, and then walk away 
because they don't fall into the category. There are cliffs and gaps 
and chasms, and these vacuums exist for that individual who falls into 
one of these gaps or chasms because we do not cover everybody in the 
sense of addressing their problem; that is, health care security for 
prescription drugs.
  Of all the bills we have considered, this is not really a compromise 
bill. It is a very different bill that costs more and covers fewer and 
fewer people.
  The tripartisan comprehensive plan the Senator from Maine put on the 
table--and we will hear from her shortly, along with Senators Grassley 
and Breaux and Jeffords is a much more comprehensive bill that I argue 
gives more secure comprehensive coverage and helps a broader swathe of 
people. If you look at individuals with disabilities, it doesn't have 
these categories of exclusion. Where there are some areas that you do 
not get as complete coverage, it is gradual, and you do not have these 
cliffs, these drop-offs. If you make one dollar more, all of a sudden 
you do not get the coverage.
  In terms of how many people are covered, it is hard to factor it out. 
We have about 38 million Medicare beneficiaries, seniors and 
individuals with disabilities around this country. Of the 38 million, 
there are an estimated 18 million who are above 200 percent of poverty. 
We heard yesterday and last night about this drop-off, this cliff. Once 
you get to 200 percent of the poverty level for an individual or for a 
couple, all of a sudden you do not get benefits. There is a huge hole, 
a huge chasm, a gap that is there, this drop-off. Above 200 percent you 
get a minimum benefit of 5 percent. That does not give me the security 
to look in somebody's eye and say we are really helping you. We need to 
make affordable access to prescription drugs, which is our goal, a 
reality.
  Only about 2 million of those 18 million will ever qualify for the 
catastrophic benefit. So you have 18 million above the cutoff level of 
200 percent of poverty with very minimal benefit. But people say: Yes, 
for catastrophic coverage they will be helped. At the end of the day, 
only 2 million out of the 18 million will fall into that catastrophic 
category, again leaving essentially no benefit for 16 million seniors 
today.
  I think it is important for our seniors to understand. I do not want 
to leave this body 2 days from now saying we passed prescription drugs, 
we took care of your problem, you will have affordable access to 
prescription drugs--which seems to be the implication. It has been said 
that we cannot leave here on recess without passing a package. This 
package is a shell, and it does not give seniors affordable access to 
prescription drugs.
  If we pass it, we are not being honest going home saying we passed a 
real prescription drug package. It costs more, covers fewer people than 
what we have had on the floor, what we have been discussing. If we go 
back to the Finance Committee, I think we can come up with a very good 
bill. Under this bill, at least 15 million to 16 million seniors are 
left behind. That is, they do not get a substantial benefit; they only 
get that 5-percent discount. Fifteen million to 16 million people we 
are leaving behind.
  Second, I think from our standpoint it is irresponsible to pass a 
bill and pretend we are doing something that we are not really doing 
when we have alternatives. If we did not have alternatives, we could 
say this is our best shot, and we can build on it in the future. But, 
really, the two bills that came to the floor each had different 
approaches. The initial Graham bill was much more Government run. The 
tripartisan bill involved the public and private sector, but both of 
those bills had more comprehensive coverage. For the seniors who are 
listening, for the dollar value, they had more benefits than the bill 
before us today. Therefore, we should not, by default, end up passing a 
bill today just to say that we have passed something.
  Politically, people might be able to claim a victory saying we passed 
prescription drugs, but this particular bill never addresses the 
``affordable'' problem, affordable prescription drugs.
  The response to that is we are taking a good first step, and we have 
to do something. If we do something, maybe we can work on it later. If 
we knew what that ``later'' was, I would say yes, we should have a one-
two punch and come back. I have a great deal of confidence if we pass 
this, we will not come back and visit this in September or October and 
put together a truly comprehensive plan. We are not addressing the 
fundamental problem of seniors not being able to afford lifesaving 
drugs.
  The third point I want to make is this bill fails to recognize that 
prescription drugs are, and need to be, considered a part of the 
overall modernization of Medicare. Yes, I admit all the bills we have 
considered over the last 2 weeks have not fully addressed the fact that 
prescription drugs need to be a part of the full armamentarium of what 
a physician has to deal with, what a hospital has to deal with, that 
doctor-patient relationship and outpatient care.
  We are treating prescription drugs sort of on the outside, as if it 
is an appendage to Medicare, without in any way addressing the 
fundamental problems of Medicare. In truth, the sustainability, long-
term, of whatever we promise--whether it is acute or long-term or 
preventive care--has to be part of a more comprehensive approach which 
we addressed. I mention that because the tripartisan bill, of all the 
bills we mention on the floor, is the only one that is health care 
security for our seniors, like the surgeon's knife, like acute care, 
chronic care, or preventive medicine. Remember, the tripartisan bill 
costs $370 billion, and the more limited bill we are considering on the 
floor is even more than that because the tripartisan bill at least 
reached out and said we understand prescription drugs are a part of 
overall Medicare. This bill does not address that. It has no element of 
modernization at all.

[[Page 15411]]

  Thus, I think the bill on the floor, of all the bills we have 
considered, is the least effective in accomplishing what seniors 
expect. It does not guarantee seniors comprehensive prescription drug 
coverage. It locks into place a limited stopgap proposal. Everybody 
says this is not the answer but this is sort of a stopgap, something to 
do now. But it locks it in place at a far higher cost than it needs to. 
The taxpayers are paying for this--the people who are listening to me 
now. It is, my colleagues, constituents. All over the country, people 
are paying into this as taxpayers. So we need to give them an effective 
product as we go forward. The product itself, I think, is insufficient.
  As I mentioned, it leaves a gaping hole in coverage. This is my final 
point. We have talked about doughnuts earlier in the debate. All last 
week we talked about a doughnut, which is a gap of people who simply do 
not get the benefits that other people get. This has a much larger gap 
than, again, any other bills; than the tripartisan proposal or the 
proposal that passed the House of Representatives, for example, several 
months ago.
  It fails to provide Medicare beneficiaries with either an effective 
drug prescription benefit or some of the other much needed improvements 
that are present in the tripartisan bill.
  I will close by simply saying that I think at this juncture the most 
prudent thing to do is to table this bill because of the reasons I have 
outlined and to recognize we have made huge progress compared to even a 
year ago. It was 3 years ago that we had the Medicare Commission. It 
basically proposed a public-private approach. That approach has been 
built upon by a series of bills. We have made great progress over the 
last 2 weeks. The Medicare debate is on the floor. People have talked 
about it. We recognize deficiencies. We recognize some advantages in 
some of the bills. I think the best thing to do is to go back through 
regular order that is usually in this body, and that is to go through 
the Finance Committee.
  Let that process, based on what we know and what we talked about 
today, work so we can have that particular debate, and move forward.
  I will be voting against this bill. I will be voting, if there is a 
point of order, to table the bill. I will support that, and I encourage 
my colleagues to do so.
  I yield 15 minutes to my colleague from Maine.
  The PRESIDING OFFICER (Mr. Edwards). The Senator from Maine is 
recognized.
  Ms. SNOWE. Mr. President, I thank the Senator for yielding me the 
time.
  I concur with what has just been suggested by the Senator from 
Tennessee in terms of returning to the regular process so that we can 
go back and resume the negotiations and discussions that were well 
underway over the course of the weekend with Senators from across the 
aisle--Senators Kennedy, Baucus, and Wyden--even through Monday to 
reach an agreement that would provide for comprehensive coverage for 
Medicare beneficiaries.
  There is no reason we cannot have that discussion to develop the kind 
of plan that seniors deserve in the Medicare Program.
  As I said yesterday, we should not have this vote. Why entrench and 
polarize both sides on this issue? Why make it more intractable? Why 
not go back and begin the process of negotiations that were well 
underway using the tripartisan plan as a basis? It provides 
comprehensive coverage. There is no reason we can't begin that process. 
This doesn't have to be the last vote.
  With the Medicare give-back in the fall, we have an opportunity 
during this interim to begin this process anew so that we can achieve 
and craft a comprehensive plan that seniors need and deserve.
  Looking over this proposal, there are many troubling features. I 
think that we ought to deal with the facts.
  First of all, the proposal before us today, if you had told me more 
than a year ago--as the tripartisan group with Senator Breaux, Senator 
Jeffords, Senator Grassley, Senator Hatch, and myself, as members of 
the Senate Finance Committee invited all members of the Finance 
Committee to participate in this process--if somebody told me when we 
embarked on this legislative odyssey that somehow we would be 
considering in a serious way today a proposal that abandoned the basic 
precepts that had been the underpinning of the Medicare Program since 
its creation 37 years ago yesterday when President Johnson signed into 
law the Medicare Program--we never contemplated or considered during 
the course of this last year when we developed that tripartisan plan 
that we would abandon universal coverage. We never contemplated 
abandoning the ability to pay and resorting to a means-test program 
that is now before the Senate--a means-test program that places the 
low-income benefit in the Medicaid Program--not Medicare, in the 
Medicaid Program.
  These are huge departures from the principles that we have embraced 
here in Congress year after year. In fact, the vote last week, with 97 
votes on both sides of the aisle, was for the original plan that we 
were embracing for universal coverage--the principles that AARP and the 
major organizations representing seniors in America have always and 
consistently embraced for the 37 years of Medicare existence. Now the 
proposal before us abandons all of those principles.
  It most certainly doesn't advance or improve the prescription drug 
debate. In fact, the bill before us today has not had the advantage of 
scrutiny by the Congressional Budget Office because the language of 
this amendment specifically has not been reviewed by the Congressional 
Budget Office in order to prepare a cost estimate on the proposal. I 
think we should understand that from the outset.
  There is no certainty because the language in this legislative 
initiative has not been reviewed by the Congressional Budget Office. 
Are we to have confidence in the process and the Congressional Budget 
Office when the analysts have not even had the text of the amendment? 
We are creating a new Federal program at a cost presumably of a minimum 
of $400 billion without knowing the true fiscal impact of this 
legislative proposal.
  Here is my first chart. One of my first major concerns about this 
initiative before us, which I think all Members of the Senate should 
readily understand, is that most seniors do not get a basic drug 
coverage under this plan because it is not a universal benefit. I think 
that needs to be understood.
  The Graham proposal does not offer a basic drug benefit for 70 
percent of seniors who have incomes above $17,720 for an individual and 
$23,880 for a couple. This is according to the AARP data: The number of 
seniors who have incomes above 200 percent of the Federal poverty 
level. Seventy percent of seniors above 70 percent would not get basic 
coverage. They will have to spend $3,300 before they get any basic 
coverage. That is an important point.
  In fact, in the New York Times the other day there was an op-ed piece 
written by the Urban Institute--that is not a conservative think tank--
discussing the fact that most individuals usually have drug expenses 
between $2,000 and $3,300; and that many people are spending in that 
middle range, particularly on chronic illnesses such as high 
cholesterol, high blood pressure, and arthritis. But with a low-income 
catastrophic approach, that will provide very little help for most 
Medicare recipients with chronic illnesses. The chronically ill cannot 
get enough help under this type of an approach.
  Under our legislation, 80 percent would even exceed our benefit limit 
of $3,450, and we had a catastrophic coverage of $3,700.
  But the point here is that it now is 70 percent. In all States across 
the country, seniors are left behind.
  I heard this morning about how many seniors will be covered. But let 
us look at the other side of that equation and who won't be covered.
  If you look at these statistics, it is staggering. It is 71 percent 
in Maryland. In Oregon, 51 percent of seniors will be left behind. In 
my State of Maine, they will not get a basic drug benefit under this 
proposal; neither

[[Page 15412]]

will 50 percent in Virginia, 67 percent in Arizona, 51 percent in 
Arkansas, 66 percent in Missouri, 72 percent in Washington, 64 percent 
in Iowa, 70 percent in Colorado, and 52 percent in Montana. These 
seniors will not get a basic drug benefit under the Graham plan because 
they earn at least $1 over the strict income limit for the 
comprehensive coverage offered to low-income seniors.
  Only those seniors with incomes below 200 percent of the Federal 
poverty level obtain real prescription drug coverage under the Graham 
plan.
  Let us look at chart 3. It is not a comprehensive benefit because it 
guts the most important part of any drug benefit program; that is, 
basic coverage. There is a huge gap. We were criticized for our gap 
between $3,450 and $3,700. But this is a canyon in terms of gap in 
coverage. You have no coverage from basically zero to $3,300 in out-of-
pocket drug expenses--zero.
  Seniors above 200 percent will have to spend $3,300 before they 
receive any coverage at all. According to the Congressional Budget 
Office, two-thirds of seniors will not have prescription drug costs 
even has high as $3,000 or $2,500. That means that most of the 26 
million Medicare beneficiaries with incomes above 200 percent of the 
Federal poverty level would never spend enough to receive any 
coverage--no coverage at all. It is not a comprehensive benefit.
  What about the 125 percent of seniors who will spend $4,000 annually 
on prescription drugs? They will not have any coverage for their 
prescription drug costs until about Thanksgiving Day after 10\1/2\ 
months with no coverage at all--no coverage at all for 10\1/2\ months.
  I am told that under this plan most seniors will only get a 35-
percent discount off their drug costs through the Government-managed 
plan until they spend $3,300 a year.
  Private drug coverage plans get significantly larger discounts, 
anywhere from 20 to 40 percent, compared to a benefit such as this. I 
know the author of this amendment, Senator Graham, claims seniors will 
get up to a 30-percent discount, but I challenge him to show me where 
it says that in this legislative initiative we are considering in the 
Senate. It is not in this legislation. And study after study has shown 
that discount cards, such as the one offered for seniors in this 
coverage gap, do not offer discounts that high.
  What the typical senior actually gets from this plan is about $6 a 
month in help with drug costs. So the total annual benefit will be $72. 
What about the senior, as we said earlier, who is spending $2,000 to 
$3,000? They will get no coverage other than maybe this average of 5 
percent off on discounted drugs, which will average about $6 a month.
  This does not offer a Medicare drug benefit, in all reality, in the 
Medicare Program. This program would, in reality, be administered by 
the State Medicaid Program. This means the States will experience a 
huge unfunded Federal mandate in the Graham plan because they are 
required to pick up a large share of the cost of this new program.
  An analysis conducted by the Centers for Medicare and Medicaid 
Services of the costs passed on to the States by this Graham amendment 
shows that many States across this country will be required to shoulder 
a sizable new financial burden.
  Let's just talk about a few of the States hardest hit. I have a list 
of them, but I will go through a few: Arizona, Arkansas, California, 
Colorado, Iowa, Louisiana, Montana, Oregon, South Dakota, Washington, 
West Virginia.
  Do you know what the annual impact will be on States, just in 1 year 
alone, based on our up-to-date analysis of the impact of this 
legislation? It is $5 billion in 1 year--$5.189 billion in 1 year--as 
an unfunded mandate on the States, for a grand total of $70 billion 
over 10 years. That is $70 billion over 10 years in an unfunded mandate 
to the States as a result of this low-income benefit now being placed, 
for the first time, in the Medicaid Program, not Medicare.
  States, that as we all know are struggling in a sea of red ink, will 
be forced to raise taxes to implement the drug benefit for low-income 
seniors. Ironically, this new unfunded mandate will create a new 
funding crisis for States that we just tried to correct with the 
Rockefeller-Collins amendment last week, which was designed to give 
emergency Medicaid funding to States so they are not forced to cut 
their existing health care programs. I might add, that was returning to 
the States $9 billion for a year and a half. We are talking about an 
unfunded mandate, in 1 year, of $5.1 billion, and $70 billion over 10 
years, to the States.
  I might also say, this plan penalizes low-income seniors who earn 
extra income because it could mean they could lose their drug coverage. 
Only those beneficiaries who earn up to $17,720 for an individual and 
$23,880 for a couple will get comprehensive coverage, as I mentioned 
earlier. Any individual beneficiary who earns $17,720, plus $1, or a 
couple who earns $23,880, plus $1, gets no coverage. They are left to 
spend 18 percent of their income for prescriptions.
  Just 2 years ago--another irony here--we passed legislation, in March 
of 2000. The Senate voted 100 to 0 to repeal the Social Security 
earnings limit. Yet here we are today considering a plan that would 
effectively establish a new earnings limit almost identical to one we 
repealed. Here is another contradiction in legislative policy.
  So now we are going to penalize low-income seniors if they want to 
earn more money. Now we are creating a penalty----
  The PRESIDING OFFICER. The Senator has used 15 minutes.
  Ms. SNOWE. We are now creating a penalty on prescription drug 
coverage.
  May I ask unanimous consent for 2 more minutes.
  Mr. FRIST. I yield an additional 2 minutes to the Senator from Maine.
  The PRESIDING OFFICER. The Senator from Maine.
  Ms. SNOWE. Thank you, Mr. President.
  That is an important point, that we are now creating this type of 
penalty for low-income seniors, because if they earn $1 more, they lose 
their prescription drug coverage.
  Finally, employer-sponsored plans, labor-union sponsored plans, will 
be penalized under this legislation. There will be a disincentive for 
employers and labor unions to continue their coverage. You might ask, 
why? I will answer that question. Because now, under this legislation 
before us, they have revamped the standard for how you calculate your 
out-of-pocket cost for the catastrophic level of $3,300.
  These plans will not be counted toward the out-of-pocket costs. So 
employers will not have an incentive to continue these programs. And 
certainly employees would not want to because they would not want to 
lose their coverage. Labor unions will drop their plans. So that is 
another disincentive.
  Now 23 percent of retirees have such coverage. We do not want to 
create a disincentive for the continuation of those programs. But that 
is exactly what this Graham proposal will do that is before this Senate 
today. That is why I am urging my colleagues not to support this 
initiative. Allow us to go back to where we were on Friday, continuing 
the discussions we were holding across the aisle with our tripartisan 
group, with Senator Breaux, Senator Jeffords, Senator Grassley, Senator 
Hatch, Senator Baucus, Senator Kennedy, Senator Wyden, and others, so 
that we can have a comprehensive plan for all Medicare beneficiaries, 
with universal coverage that the AARP and all of us have embraced for 
the last 37 years with the existence of the Medicare Program.
  This isn't the last vote. This can be the beginning. And I cannot 
imagine this Senate, in September, considering a Medicare give-back to 
providers and not considering a prescription drug program for our 
Nation's seniors. They deserve better. And we can do better.
  Mr. President, I ask unanimous consent that the following material be 
printed in the Record.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

[[Page 15413]]



                [From the New York Times, July 29, 2002]

              Finding a Formula for Medicare Drug Benefits

                           (By Marilyn Moon)

       Washington.--The political debate over how to add a 
     prescription drug benefit to Medicare has dragged on now for 
     more than four years. Prescription drugs have become an 
     integral part of health care delivery, but unlike insurance 
     for most working families, the Medicare program for older and 
     disabled people provides almost no drug coverage. Politicians 
     from both parties know they have to do something, but the 
     hurdles are big: money and control.
       The debate in the Senate is still ongoing. But large 
     differences along party lines remain, and the Republican 
     House plan that was passed on a party line vote in June makes 
     hopes for compromise remote given the desires of consumers 
     for broad coverage and of drug companies for minimal 
     government controls.
       The sums needed are enormous; over the next 10 years, 
     Medicare beneficiaries are expected to spend $1.8 trillion 
     for drugs. Thus, while the Senate Republicans' top offer of 
     $370 billion over eight years is a lot of money, it 
     represents only a bit more than one-fifth of drug spending 
     over that period. The Republican plans contain big gaps in 
     coverage and allow restrictions on what drugs will be 
     covered. Democrats offer more coverage, but at a cost of $500 
     billion or more.
       Since all proposed plans would be voluntary, those who 
     spend relatively little on prescriptions need to be wooed 
     into participating with the promise of receiving some 
     benefits. Otherwise, only high users will enroll and any 
     program will become very expensive over time.
       All the competing plans offer generous coverage above a 
     certain level of spending for those with catastrophic 
     expenses. The differences arise in how to treat people who 
     spend below the catastrophic level but still spend several 
     thousand dollars annually on drugs. The Senate Democratic 
     proposal requires beneficiaries to pay a portion of the 
     costs, up to $4,000 a year. Beyond that limit, all drug costs 
     are covered. But under the House Republican plan individuals 
     must pay 100 percent of their drug expenses between $2,000 
     and $5,300.
       Increasingly, many people on Medicare are ending up in this 
     middle spending range, particularly those who take one or 
     more drugs every day for a chronic condition. Drugs for such 
     common ailments as hypertension, high cholesterol and 
     arthritis cost $1,200 to $1,500 a year, creating a 
     substantial financial burden for the chronically ill.
       A viable compromise is to offer comprehensive coverage for 
     those with low incomes and catastrophic help for all other 
     beneficiaries, an approach that seems to be gaining favor in 
     the Senate. But this plan would still cost about $400 
     billion, while providing little help for most Medicare 
     recipients with chronic illnesses.
       Money accounts for only part of the differences between the 
     two parties. A big disagreement is over how the benefit is 
     structured--and the precedent it sets for Medicare's future. 
     The Democratic approach basically would have Medicare pay for 
     drugs the way it now pays for hospital and physician 
     benefits. Republicans want instead to have the benefit 
     offered by private insurers. Compromise on this ideological 
     question is especially difficult.
       The Democratic approach is simpler and relies on Medicare's 
     well-tested structure. But drug manufacturers, fearing that 
     Medicare would impose price controls on drugs, are strongly 
     opposed to enlarging Medicare itself to cover drugs.
       Supporters of a private insurance structure argue that only 
     competition among plans can achieve substantial control over 
     rising prescription drug costs. But this theory has not been 
     proved in other contexts. The private managed-care option in 
     Medicare, for example, has raised costs to the federal 
     government. Meanwhile, many Medicare recipients have had to 
     suffer with plans that cut benefits or, worse, are withdrawn 
     altogether because the companies offering them have quit the 
     Medicare program entirely for lack of profits.
       A privately administered drug benefit would be particularly 
     problematic. If private insurers carry the risk for drug 
     costs, they will probably structure their plans in ways that 
     put high users of drugs at a disadvantage. For example, they 
     can establish a list of preferred drugs (a formulary) and 
     either not cover certain drugs or charge more for drugs that 
     are not on the list. There are, for example, many anti-
     cholesterol drugs, but a formulary may not include the drug 
     that works best for a particular patient. Consumers who need 
     many drugs are likely to find it hard to decipher which 
     medications the plans will cover and at what cost.
       Ultimately, lawmakers and the rest of us must decide 
     whether we trust government to deliver a new drug benefit 
     effectively. What we do know is that the need for drug 
     coverage is too great to let this issue remain unresolved.
                                  ____


             Seniors Left Behind by the Latest Graham Plan


                                                                Percent
Alabama..............................................................57
Alaska...............................................................68
Arizona..............................................................67
Arkansas.............................................................51
California...........................................................66
Colorado.............................................................70
Connecticut..........................................................70
Delaware.............................................................69
District of Columbia.................................................61
Florida..............................................................64
Georgia..............................................................69
Hawaii...............................................................73
Idaho................................................................61
Illinois.............................................................67
Indiana..............................................................65
Iowa.................................................................64
Kansas...............................................................68
Kentucky.............................................................50
Louisiana............................................................51
Maine................................................................61
Maryland.............................................................71
Massachusetts........................................................64
Michigan.............................................................66
Minnesota............................................................66
Mississippi..........................................................47
Missouri.............................................................66
Montana..............................................................62
Nebraska.............................................................55
Nevada...............................................................64
New Hampshire........................................................65
New Jersey...........................................................65
New Mexico...........................................................60
New York.............................................................57
North Carolina.......................................................57
North Dakota.........................................................52
Ohio.................................................................64
Oklahoma.............................................................56
Oregon...............................................................66
Pennsylvania.........................................................62
Rhode Island.........................................................54
South Carolina.......................................................58
South Dakota.........................................................59
Tennessee............................................................56
Texas................................................................56
Utah.................................................................72
Vermont..............................................................59
Virginia.............................................................62
Washington...........................................................72
West Virginia........................................................58
Wisconsin............................................................65
Wyoming..............................................................60


--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                        State share of costs of   Mandated state expenditures to pay
                                                                        expanding Medicaid drug  for expanding Medicaid drug coverage
                                                                         coverage (Percent of                   in 2005
                                                                             benefit cost)      --------------------------------------
                                                            Current   --------------------------
                                                            Medicaid       From                                                        Total cost of new
                          State                               drug       current                 New state mandate  New state mandate   Medicaid mandate
                                                          coverage (%    level of    From 120%     to cover up to   to cover 120-150%  to states in 2005
                                                          of Poverty)      drug      to 150% of   120% FPL (state       FPL (state
                                                                       coverage to    poverty    portion of costs)  portion of costs)
                                                                         120% of
                                                                         poverty
--------------------------------------------------------------------------------------------------------------------------------------------------------
All States..............................................  ...........  ...........  ...........     $3,464,769,443     $1,725,226,680     $5,189,996,123
Alabama.................................................           74         29.4        20.58         71.839,488         27,330,240         99,169,728
Alaska..................................................           74        41.73        29.21          3,992,726          1,518,920          5,511,646
Arizona.................................................           74        32,75        22.92         46,279,680         17,602,560         63,882,240
Arkansas................................................           74        25.72           18         39,374,234         14,976,000         54,350,234
California..............................................          100           50           35        242,560,000        212,240,000        454,800,000
Colorado................................................           74           50           35         47,472,000         18,060,000         65,532,000
District................................................          100           30           21          3,168,000          2,772,000          5,940,000
Georgia.................................................           74         40.4        28.28        110,017,280         41,854,400        151,871,680
Hawaii..................................................          100        41.23        28.86          7,388,416          6,464,640         13,853,056
Idaho...................................................           74        29.04        20.33         11,114,189          4,228,640         15,342,829
Iowa....................................................           74         36.5        25.55         40,027,360         15,227,800         55,255,160
Kentucky................................................           74        30.11        21.08         59,169,763         22,513,440         81,683,203
Louisiana...............................................           74        28.73         20.1         61,109,859         23,235,600         84,345,459
Mississippi.............................................          100        23.38        16.37         17,132,864         14,994,920         32,127,784
Montana.................................................           74        27.04        18.93          8,358,605          3,180,240         11,538,845
Nebraska................................................          100        40.42        28.34         11,640,960         10,202,400         21,843,360
New Hampshire...........................................           74           50           35         19,872,000          7,560,000         27,432,000
New Mexico..............................................           74        25.44        17.81         26,026,138          9,902,360         35,928,498

[[Page 15414]]

 
North Dakota............................................           74        31.64        22.15         11,876,390          4,518,600         16,394,990
Ohio....................................................           64        41.17        28.82        200,672,461         62,712,320        263,384,781
Oklahoma................................................           74        29.44        20.61         45,069,107         17,147,520         62,216,627
Oregon..................................................           74        39.84        27.89         41,930,803         15,953,080         57,883,883
South Dakota............................................           74        34.71         24.3          9,707,693          3,693,600         13,401,293
Tennessee...............................................           74        35.41        24.79         84,961,338         32,326,160        117,287,498
Texas...................................................           74        40.01        28.01        315,086,752        119,882,800        434,969,552
Utah....................................................          100        28.76        20.13          4,877,696          4,267,560          9,145,256
Virginia................................................           80        49.47        34.63        108,596,544         47,512,360        156,108,904
Washington..............................................           74           50           35         93,472,000         35,560,000        129,032,000
West Virginia...........................................           74        24.96        17.47         27,188,429         10.342,240         37,530,669
--------------------------------------------------------------------------------------------------------------------------------------------------------

  New Graham Bill Imposes Billions in Unfunded State Mandates Through 
                  Massive Mandatory Medicaid Expansion

     Why does the bill increase Medicaid cost for many states?
       The bill mandates a major expansion of a form of Medicaid 
     to provide prescription drug coverage. It creates a new 
     category of Medicare-Medicaid ``dual eligibles,'' who qualify 
     for drug coverage if they meet the means test requirement in 
     the bill. States, through their Medicaid programs, are 
     required to determine low-income eligibility and to pay the 
     enrollment fee and most of the drug costs for beneficiaries 
     with incomes below 200% of poverty. Low-income beneficiaries 
     are responsible for paying a $2 co-pay for generic drugs and 
     $5 for brand name drugs; the new drug benefit picks up all 
     the rest of the costs. This is a comprehensive drug benefit, 
     estimated to cost around $3200 per beneficiary on average in 
     2005. The Federal government pays for the Medicare portion of 
     the benefit. But most of the cost of this comprehensive 
     benefit must be paid through Medicaid. This is because the 
     Medicare benefit is a limited one: Medicare covers only 5 
     percent of the cost of drugs up to the catastrophic limit of 
     $3300, then provides catastrophic coverage with a $10 copay. 
     Thus, state Medicaid programs must pay at least two-thirds of 
     the cost of the drug benefit, around $2000 per beneficiary in 
     2005. This is a conservative estimate of Medicaid benefit 
     cost, and it will increase rapidly over time.
       The Federal government pays only part of the cost of the 
     Medicaid benefit, based on the state's Medicaid FMAP rate and 
     enhanced FMAP rate:

------------------------------------------------------------------------
                                                        Required State
     Percent of Poverty Rate       Medicaid Category     Contribution
------------------------------------------------------------------------
0-74............................  Truly Dually......  Normal Medicaid
                                                       Match
75-100..........................  QMB's.............  Normal Medicaid
                                                       Match
100-120.........................  SLMB's............  Normal Medicaid
                                                       Match
120-150.........................  Drug QMB1.........  Enhanced (SCHIP)
                                                       Match
150-200.........................  Drug QMB2.........  100% Federal Match
------------------------------------------------------------------------

       While all states have comprehensive Medicaid drug coverage 
     up to 74 percent of poverty, many states do not have coverage 
     up to 150 percent of poverty. States that currently do not 
     provide comprehensive drug coverage up to 150% of poverty 
     through either Medicaid or a state drug assistance program up 
     to 150% are thus required to pay for a significant portion of 
     the cost of comprehensive drug coverage. The cost of the new 
     mandate depends on how many beneficiaries in the state 
     currently do not have comprehensive coverage. The costs also 
     increase rapidly over time, because drug cost are rising 
     rapidly.
     How much must your State pay?
       The overall cost of this mandate to states in 2005 will 
     exceed $5 billion, and may be much more. Over the 10-year 
     budget window, the cost of the Medicaid mandate to the 
     affected states will exceed $70 billion--about 14 times the 
     2005 costs. The attached table shows states that definitely 
     will pay hundreds of millions more because of this proposal. 
     Additional states may also face higher costs, if they do not 
     already provide comprehensive drug benefits up to 150 percent 
     of poverty.
                                  ____


    No Help for Retirees With Employer or Union Coverage From Graham

       Retirees with decent coverage from a union or employer do 
     not incur actual drug costs out of their own pockets above 
     $3,300, as they would have to in order to benefit from the 
     Graham amendment. So this benefit provides nothing for them.
       The Graham bill supporters note that ``no employers drop'' 
     coverage as a result of their bill. This is because the 
     benefit is so paltry.
       In contrast, the Tripartisan bill provides a real subsidy 
     worth almost $1,600 per retiree to help union and employer 
     plans continue coverage.
       And those that decide to ``wrap around'' the strong basic 
     benefit for all Medicare beneficiaries still provide 
     comprehensive assistance to their workers. This is real help 
     for employer and union coverage.
       The Graham benefit does little to stem the trend toward 
     dropping employer coverage. And when employers drop, Graham 
     leaves retirees with nothing until they incur over $3,300 in 
     costs out of their own pockets.
       Graham would spend $390 billion yet provide virtually no 
     benefit for anyone with retiree coverage. When retirees find 
     out that they won't benefit from this, how will they react?

  Ms. SNOWE. I yield the floor.
  The PRESIDING OFFICER. The Senator from Tennessee.
  Mr. FRIST. Mr. President, I yield 10 minutes to the Senator from 
Iowa.
  The PRESIDING OFFICER. The Senator from Iowa.
  Mr. GRASSLEY. I thank the Senator from Tennessee.
  Mr. President, obviously, as you might expect, I rise in opposition 
to the latest amendment by Senator Graham--whether it is Graham 2, 3, 
or 4, I am not sure, but it is another Graham idea on drugs.
  First of all, I would like to address an argument that some Senators 
have been making on behalf of this amendment. They have argued that 
this is the Senate's very last chance to deal with the drug issue this 
year. Even though this amendment is terribly flawed, they say that 
somehow Senators should be encouraged to vote for it anyway.
  Mr. President, I am second to none in my frustration with the 
Senate's failure on this issue at this point. The Democratic leadership 
has abandoned any pretense of a fair process. And fair process is what 
the Senate is all about. Instead of leading, the Democratic leader has 
been content to cook up his own proposals or have members of his party 
cook up their own proposals and try to somehow just ram them through 
the Senate.
  For those of us who believe things in this body must be done in a 
bipartisan way, and through the committee process, and, in the end, get 
things done, this process in which we have been involved has been 
extremely frustrating.
  The good news is that this vote is not the last vote. Fortunately, 
the Senate still has time and the ability to act. Speaking for my 
colleagues in the tripartisan group, we are ready to move on and begin 
work in the Finance Committee on a truly bipartisan compromise. I wish 
Senator Daschle had the confidence in Senator Baucus I have to move a 
bipartisan bill on Medicare prescription drugs out of committee.
  No one should vote for this amendment in the misguided belief that it 
is their last chance because it is not their last chance.
  Now I would like to address the substance of the amendment before us. 
The sponsors chose to spring the text of this amendment on the Senate 
yesterday for the first time. Perhaps they thought they could slip in 
something new that we would not catch. Well, we caught it, and you know 
we have caught it by the speeches of the Senator from Maine. We 
actually have had a chance, and we have studied the Graham amendment.
  The Graham amendment imposes a massive new burden on States just when 
State treasuries are in terrible shape. What does it do? Well, it 
mandates--do you like mandates?--that

[[Page 15415]]

State Medicaid Programs provide cost-sharing assistance to an entirely 
new universe of seniors who have incomes up to 150 percent of the 
Federal poverty level. If that is not bad enough, it also socks the 
States with administrative costs of enrolling seniors with incomes up 
to 200 percent of poverty. Even beyond those costs, this enrollment 
burden is going to be an administrative nightmare for the respective 
States because of all the different populations involved.
  At a time--and we know this is true in at least 45 of the 50 States--
when they are experiencing tremendous budget pressures, massive new 
burdens of this type are the last thing the States need to have imposed 
upon them by the Federal Government. In fact, last week we heard of the 
problems of the State budgets and the problems States are having with 
their Medicare Program, because we voted for additional fiscal relief 
just last week. How ironic it would be if now we were going to add yet 
another burden.
  Let me point out another problem with the amendment before us, and 
that is the low-income benefit, focusing on the beneficiaries that it 
serves. If you earn $1 too much to qualify for coverage, you get 
nothing. That is a cliff, we call it. We try to avoid cliffs. If we do 
policy right, we do avoid cliffs. But this amendment isn't about policy 
that makes sense, this amendment is about a political statement.
  So seniors can find themselves in a situation where, if they earn 
$17,720, they qualify. If they earn an extra $1, $17,721, they lose 
drug coverage. So the Graham amendment sets up disincentives for 
beneficiaries to work at the same time as Congress has been trying to 
remove the wrong incentives from the law, and here we are considering a 
new disincentive. Once again, the policy just doesn't make sense.
  Everything I have said so far pertains to the benefit for the 30 
percent or so of low-income beneficiaries who get solid coverage under 
the Graham amendment. Unfortunately, there are another 70 percent out 
there who get very little coverage at all. Those 70 percent, in fact, 
are the biggest losers of all under this alternative.
  Just how bad is this benefit in the amendment before us? A senior 
above 200 percent of poverty with average drug spending will receive 
approximately $6 of assistance every month--only $6 towards their 
prescription drug expenses. For me, $6 a month is hardly a benefit at 
all. I would be embarrassed to go home to Iowans and tell them I voted 
for an amendment that provided only $6 a month to average 
beneficiaries.
  Why is there so little benefit? Because for 70 percent of the 
seniors, there is no coverage from zero to $3,300 in out-of-pocket 
spending. A week ago, the author of this amendment complained about a 
proposal I put forward because we had a $250 deductible. Now we are 
seeing a $3,300 deductible. Benefits paid by private insurance don't 
even count towards that.
  Another problem: Retirees with decent coverage from a union or an 
employer do not incur actual drug costs out of their own pocket above 
$3,300, so the Graham benefit provides almost nothing for them.
  I have to sound a sobering note: You don't pull the wool over the 
eyes of Americans--and seniors in particular. They don't appreciate 
false promises. I fear Senators who vote for the Graham amendment will 
have a lot to answer for down the road. I won't be one of them. I urge 
my colleagues not to be one of them either.
  We are facing another mostly partisan vote on a mostly partisan bill, 
another vote that will fail to get 60 votes and will fail to help our 
seniors. Had regular order been followed, had the Finance Committee 
been given the right to work its bipartisan will, we could be 
completing action on this issue. Instead, we are still at a beginning.
  The sponsors of the tripartisan bill, the only bipartisan bill in all 
of Washington, DC, to provide comprehensive, universal coverage, have 
always been ready and willing to talk to anyone about compromises, and 
we are still in this mode. We are ready to meet people any place, any 
time, anywhere to discuss this, including members and leaders of the 
AARP, who somehow got sucked in today to supporting something that a 
week ago they said they abhorred.
  This situation is going to continue to be the case for us in this 
group, even after this morning's vote. So this vote is an ongoing, 
evolving process to get us a successful product. I have promised my 
constituents I will not give up on this issue. Adding a drug benefit to 
Medicare is business that simply cannot wait another year to cost $100 
billion. Just as the need for prescription drug coverage in Medicare is 
not going to go away, we in the tripartisan group are not going to go 
away.
  Mrs MURRAY. Mr. President, I rise today to reluctantly support the 
Graham/Smith amendment. I am casting this vote to move the process 
forward so we can get closer to providing seniors and the disabled with 
the prescription drug coverage they need.
  I have got to tell you that I am frustrated and disappointed that 
Congress hasn't made more progress on this critical issue. Our seniors 
deserve better than the procedural fights we have seen here in the 
Senate, and they deserve better than the Graham/Smith amendment. Today 
I am voting for this amendment because it offers best hope of moving 
the process forward after so many delays.
  Part of my frustration goes back to the priorities that were set last 
year. Strengthening Medicare should have been a top priority in 
Congress. Instead, the Republican-controlled House and Senate moved 
forward with a $1.25 trillion tax cut. Now we are fighting to provide a 
minimal Medicare prescription drug benefit that will not cost more than 
$400 billion over ten years. While we have come a long away since the 
President's inadequate $190 billion proposal at the start of the year, 
we still are not where we need to be.
  I do want to applaud the efforts of our leader Senator Daschle and 
Senator Graham. I know that they share my goal of a universal, 
affordable benefit as part of Medicare. Senator Graham has worked 
especially hard on behalf of our seniors and the disabled.
  While this amendment provides some targeted relief, it falls far 
short of our original goal. I supported S. 2625, a universal, 
affordable benefit that treated all seniors the same. Like the Medicare 
program, it offered every senior access to affordable coverage. I was 
disappointed that we could not secure the necessary 60 votes on this 
package. I do want to point out that S. 2625 did receive 52 votes, 
meaning a majority of my colleagues supported this approach. 
Unfortunately, due to procedural battles and partisan bickering, 52 
votes were not enough.
  This amendment does provide immediate assistance to the most needy 
and vulnerable. Ensuring that seniors below 200 percent of poverty 
receive access to affordable coverage is critical and will offer 
coverage to a larger number of seniors and the disabled. In Washington 
State, this could mean that 290,000 Medicare beneficiaries would be 
eligible for full coverage with a nominal copayment and no monthly 
premiums. This is a big improvement. It would ease some of the 
pressures on our State Medicaid program, which has been trying to fill 
the Medicare gap for low income beneficiaries.
  But, as we all know, income is sometimes not always the best 
measurement of need. What about those seniors who earn just $1 over the 
200 percent of poverty threshold? They could have significantly higher 
drug costs yet receive no benefit, until they reach a catastrophic 
level of $3,300.
  In Washington State, this could mean 428,000 beneficiaries would not 
be eligible for the low income assistance. Yet, these seniors paid the 
same taxes and contributed the same percentage of their income while 
they were working to support the Medicare program.
  I am pleased this amendment will offer catastrophic protection to all 
seniors regardless of income. Targeted relief to those with expensive 
drug costs does provide some level of fairness to the program. Ensuring 
that seniors with more than $3,300 in out of pocket costs receive 
relief is a positive improvement and will offer some piece of mind.

[[Page 15416]]

  This amendment is a good starting point, but it cannot be the final 
product we offer our seniors. I fear that this proposal could get worse 
in conference. The House-passed bill is nothing but a false promise of 
benefits. It is based on a private insurance model that has all but 
failed in most parts of the country. It would require significant out 
of pocket costs for even the low income and could result in less 
coverage for many seniors. It has a huge hole in coverage and does not 
offer a seamless benefit as part of Medicare. It is a sham, and once it 
sees the light of day, seniors will not be fooled.
  I am willing to support this amendment with the understanding that 
this is only the beginning. This is the foundation for building a real 
universal benefit as part of Medicare. This cannot be the high water 
mark. I do not want a final conference report to offer only targeted 
limited relief based on a private insurance model. We cannot just merge 
this amendment with the House-passed bill. Instead, we must build on 
both approaches and make significant improvements. We must insist that 
the final product result in a seamless benefit that is part of Medicare 
that offers universal, affordable coverage.
  I want to make one other point about our attempts to improve 
Medicare. As my colleagues know, I am very concerned about Medicare 
reimbursement rates. These rates vary by region and don't reflect the 
true costs of providing care in many States. I am concerned that this 
amendment builds on that flawed, unfair formula.
  In Washington State, the annual per beneficiary payment from Medicare 
is $3,921 while in Louisiana it is as high as $7,336. Seniors in 
Washington State are suffering from this inequity. They cannot find a 
doctor to accept new Medicare patients and are forced to seek care in 
overcrowded emergency rooms. This inequity also puts providers in 
Washington State at a distinct economic disadvantage. Doctors are 
leaving my State for other parts of the country that offer higher 
Medicare reimbursements. In some parts of the country, Medicare 
payments are so high they subsidize private insurance payments. I can 
tell you that this is not the case in Washington State.
  Unfortunately, the Graham/Smith amendment would result in some States 
receiving much greater coverage than others. Because the benefits will 
be targeted to those below 200 percent of poverty, some States will 
again receive much more Medicare funding than other States. In 
Washington State, only 40.4 percent of seniors would be eligible. 
However, in Louisiana 66 percent would eligible for coverage. As we 
work to improve Medicare we should make the program more fair to all 
seniors.
  I understand that we will not be adding a provider package to this 
bill. We all recognize the need to address the provider shortfalls. I 
understand that the Majority Leader is committed to taking up a 
provider package in September. This must be a priority. It does little 
good to offer a prescription drug benefit if seniors cannot find a 
doctor. I urge my colleagues to work to address the inequities in the 
Medicare reimbursement formula as part of a provider package. We cannot 
continue to increase payments without a fix, as those at the top 
continue to receive a large percentage of the increased dollars.
  So I am willing to support the Graham/Smith amendment as a starting 
point for our work on crafting an affordable, universal drug benefit 
that's part of Medicare. It's clear that we still have a great deal of 
work to do. And regardless of the outcome of this vote, I'm committed 
to working on this issue until we have the coverage that seniors and 
the disabled need.
  Mr. HATCH. Mr. President, my, what a difference a week makes! Who 
would ever think that the Senate would now be considering a piece-meal, 
minimalist Medicare prescription drug coverage amendment.
  Is that what seniors want? I don't think so and that is why I want to 
express my vehement opposition to the Graham plan.
  Over the past few weeks, we have heard just about everything under 
the sun regarding prescription drug coverage. Some fact, much fiction.
  What we need to do now is to sort out the rumors and false statements 
and look just at the facts.
  The one undeniable fact where we all agree is this: the need for 
Medicare drug coverage is too great to let it become buried in a 
political quagmire.
  We have all been working hard on this issue and we must not fail our 
seniors now by passing a piece-meal Medicare prescription drug plan. 
Apparently, our Democratic Leadership does not agree. Let's look at the 
facts.
  We know that the tripartisan bill will cost $370 billion over 10 
years. We hear that the latest Graham bill will cost close to $400 
billion over 10 years, but the plan keeps changing so we do not have a 
true CBO score. We just received the legislative language late 
yesterday afternoon and CBO has not had a change to carefully review 
the legislative language.
  We know that the tripartisan bill will provide a comprehensive 
benefit package for all seniors. Every single senior receives 
comprehensive, guaranteed coverage for his or her prescriptions.
  We know that the Graham bill does not provide comprehensive coverage 
for all seniors. Under the Graham bill seniors only receive coverage 
for drugs if their incomes are below 200 percent of the Federal Poverty 
Level or if they reach their catastrophic coverage limit. What happens 
to middle-income beneficiaries? My friends, these seniors are just out 
of luck.
  We know that the tripartisan bill will work to push drug costs down 
through private sector competition.
  We know that the graham bill is going to have a new, federally-
funded, government-run drug program that has no cost-saving mechanisms. 
In my opinion, a government-run program will lead us down the dangerous 
path of prescription drug price-setting. Look what has happened to the 
reimbursement rates of other Medicare providers, like hospitals and 
physicians.
  The tripartisan bill encourages competition based on quality and 
cost. The tripartisan proposal lowers prices for all drugs without 
compromising quality and innovation. The Graham plan does not.
  The tripartisan plan offers choice--a choice of plans, a choice of 
medication and a choice of Medicare coverage through our enhanced fee-
for-service option. The Graham plan has a one size fits some proposal.
  Our tripartisan plan improves the Medicare program by taking a global 
approach to meet the changing needs of seniors. The tripartisan bill 
provides protection against high hospitalization costs and offers free 
preventions benefits. This is what modern health care demands.
  On the other hand, the Graham plan only provides minimal drug 
coverage for a small number of Medicare beneficiaries.
  Why should seniors settle for a piece-meal approach? It just doesn't 
make any sense.
  For less than the cost of the Graham catastrophic plan--or, I think, 
the catastrophic Graham plan--which would benefit less than half of 
seniors, the tripartisan approach provides comprehensive coverage with 
quality drug coverage, choice and cost savings for all Medicare 
beneficiaries.
  A piece-meal approach and last minute changes to keep the CBO score 
down to placate people is the approach my colleagues on the other side 
have taken in putting this bill together. And it is the wrong approach.
  So it is no surprise that is what their plan has offered--a 
piecemeal, band-aid approach to providing drug coverage.
  We need to provide Medicare beneficiaries with adequate prescription 
drug coverage, this year. We must put aside our differences and self 
interests.. Partisan arguments only stand in the way of Medicare drug 
legislation being passed by the Senate.
  Let's start the process of improving health care for our seniors by 
passing quality prescription drug coverage.
  Let's not fail them again by allowing the piece-meal Graham plan to 
pass the Senate. Our Medicare beneficiaries are depending on us to 
provide them the best Medicare prescription drug coverage possible.

[[Page 15417]]

  My friends, a vote in favor of the Graham plan does not accomplish 
this important goal. Our Medicare beneficiaries deserve better.
  I urge my colleagues to vote against the Graham amendment.
  Mr. HOLLINGS. Mr. President, I rise today to reluctantly oppose the 
Graham-Smith amendment. First of all, let me commend the distinguished 
Senior Senator from Florida for the leadership he has shown throughout 
the years to bring a meaningful prescription drug benefit to Medicare. 
America's senior citizens have no stronger ally in this body than 
Senator Bob Graham. He has worked tirelessly to provide real relief to 
Medicare beneficiaries from their prescription drug costs and I was 
proud to stand with him, Senator Miller, and Senator Kennedy last week 
to try to move ahead with a real drug benefit. However, I must oppose 
this amendment because it largely neglects the vast middle-class of 
senior citizens.
  Just yesterday, Secretary Thompson granted South Carolina a Section 
1115 waiver to bring our state's SilverxCard program under Medicaid, 
thereby allowing the program to expand coverage to seniors with incomes 
of up to 200 percent of the Federal poverty level. Thus, the very same 
seniors that would receive comprehensive coverage under the Graham-
Smith Amendment can already receive coverage, albeit more limited, in 
South Carolina through Medicaid or SilverxCard. This amendment would 
not make one additional Medicare beneficiary in South Carolina eligible 
for prescription drug coverage. I also have found that affluent seniors 
in South Carolina can either afford supplemental prescription drug 
coverage on their own or have a plan from a former employer that 
contains prescription drug coverage.
  Which seniors are left furthest behind in South Carolina? It is the 
middle-class, those individuals who spent their lives working in the 
textile mills, manning the assembly line, teaching in our schools, and 
tending to our farmland. They worked hard, paid taxes into Medicare, 
and deserve to receive the same benefits under Medicare as anyone else. 
I cannot in good conscience vote for an amendment that tells a senior 
citizen with an income of $17,720 that, yes, you receive a real 
prescription drug benefit and another senior citizens with an income of 
$17,721 that, no, you have to spend $3,300 out of your own pocket 
before you receive any assistance. We did this once already with 
Medicare. It failed and this Senator learned that we should not do it 
again.
  I understand the desire of many of my colleagues to pass something, 
anything to help citizens afford their prescription drugs. I talk to 
the same people and receive the same heart-wrenching letters from 
constituents as they do. I know their commitment and desire to enact 
legislation this year is real and genuine, but I simply cannot support 
this approach. All of our seniors deserve comprehensive Medicare 
prescription drug coverage.
  I still believe that we can reach agreement before the end of the 
year on a real, meaningful benefit for all our seniors and stand ready 
to work with my colleagues to make this possible.
  Mr. BUNNING. Mr. President, I rise today to speak briefly about the 
Graham-Smith amendment.
  The Senate has been debating a prescription drug benefit for Medicare 
for the past two and a half weeks. In fact, Congress has been working 
on the issue for years now. Now our colleagues in the House have passed 
a proposal. The Senate needs to do the same.
  All along I have supported the efforts of the Tripartisan group and 
their efforts to write a common sense Medicare prescription drug 
proposal. I voted for their bill because I think it targets relief in a 
fiscally responsible manner to those seniors who need it the most.
  Unfortunately, I cannot support the Graham-Smith amendment.
  While we all agree that seniors need help with their prescription 
drug costs, this amendment falls short for several reasons.
  First of all, this amendment creates an ``all or nothing'' program 
for many seniors. Seniors below 200 percent of poverty, which is 
$17,720 for singles and $23,880 for married couples, will basically 
have all of their prescription drug costs paid for, with only a $2 or 
$5 co-pay for drugs.
  However, folks who make over 200 percent of poverty, even if it is 
only by a small fraction, basically don't get a real benefit until 
catastrophic coverage kicks in at $3,300. Writing this steep of an 
income cliff into the law isn't fair. We can do better.
  The difference between having an income of $17,720 and $17,721 
shouldn't costs seniors $3,300 in prescription drug costs. In Kentucky, 
there are almost 240,000 seniors who have incomes above this threshold. 
Under Graham-Smith, they basically get nothing.
  Second, this amendment doesn't give us enough bang for our buck. The 
Congressional Budget Office estimates that this amendment will cost 
$390 billion, which is a heck of a lot of money. However, even if we 
pass it, we still aren't offering a real benefit to all seniors, like 
we did with the Tripartisan amendment.
  The Tripartisan proposal would have cost $370 billion, and all 
seniors could have had catastrophic coverage starting at $3,700, along 
with substantial help with their prescription drug costs below that. 
Even the Hagel Amendment, with a price tag of $295 billion, limited out 
of pocket expenses for folks below 200 percent of poverty at $1,500.
  I just don't understand why we would want to pay an additional $20 
billion or $95 billion more for a Medicare prescription drug plan that 
offers fewer benefits. This means that the Graham-Smith proposal 
shortchanges not only seniors, but the American taxpayer as well.
  America's seniors need our help, and the Senate needs to pass a 
prescription drug bill. But because the Senate Democrat leadership 
insisted on bypassing the usual committee process and proceeding 
straight to the Senate floor with the debate, we have been struggling 
with a legislative free-for-all that, in the end, could lead to nothing 
passing at all.
  When I made my first floor statement on this issue, I warned against 
this sort of procedural gimmickry and its possible consequences. So far 
we have voted on three prescription drug proposals, and only two have 
earned more than 50 votes, let alone the 60 that are needed under the 
budget rules. If the committee process had been allowed to work its 
will, I think there is a much better chance that we could pass a 
serious proposal to provide meaningful relief to seniors.
  I can't support Graham-Smith. It's a day late, more than a few 
dollars too short and fails to provide real help to seniors who need it 
most. I think there is still a chance, a small one, to pass a real 
bill. But the door is about to close on our seniors yet again. I hope 
we don't let them down.
  Mr. CORZINE. Mr. President, I rise today in strong support of the 
Graham-Smith amendment. I believe that this compromise represents an 
important victory for all our Nation's seniors, and particularly for 
seniors in my State of New Jersey.
  Let me be frank: this is not the proposal I would have preferred and 
is not the proposal I have talked about with my constituents for the 
last few years. I have gone around New Jersey and have heard from my 
constituents about how they struggle to deal with rising drug prices, 
how they fear being bankrupted in their last years, and how they worry 
about burdening their families. That is why I strongly support a 
comprehensive Medicare benefit, and that is why I supported the Graham-
Miller-Kennedy-Corzine amendment last week.
  But, I am also a pragmatist, and I know that the Graham-Smith 
amendment is a good and necessary start, upon which we can build. It 
will provide critical relief to the neediest of seniors, and provides 
comfort to all seniors that castatrophic drug costs will not ruin them. 
And I know that if we can get this enacted, next year I will be back 
here fighting to expand its reach.
  The Graham-Smith amendment will ensure that no senior spends more 
than $3,300 to buy their prescription drugs. It also provides 
comprehensive coverage to our Nation's neediest seniors,

[[Page 15418]]

those with incomes up to 200 percent of the federal poverty level. In 
addition, it provides a thirty to forty percent discount on 
prescription drugs for all seniors. At a cost of $390 billion over ten 
years, the Graham-Smith amendment will guarantee all seniors much-
needed prescription drug coverage at a reasonable price.
  My State of New Jersey and many other States around the Nation have 
responded to the glaring need for prescription drug coverage for our 
Nation's seniors by creating state pharmacy benefit programs. In New 
Jersey, we have the PAAD and Senior Gold programs. The PAAD program 
currently provides comprehensive drug coverage to seniors up to 220 
percent of the Federal poverty line, and the Senior Gold program 
provides more limited coverage to certain higher income seniors.
  I am pleased that the Graham-Smith amendment preserves and reinforces 
State pharmacy benefit plans like New Jersey's. I worked with Senators 
Graham and Smith to ensure that the amendment enables States with 
prescription drug programs to wrap their programs around the Medicare 
prescription drug benefit, to create more generous and more extensive 
benefits for all seniors. This is a crucial provision that will enable 
New Jersey, Pennsylvania, New York, Minnesota and the other 20 States 
that have State-funded prescription drug programs to expand and 
supplement their existing programs.
  I also worked with Senators Graham and Smith to ensure that state 
pharmacy program spending counts toward a beneficiary's out of pocket 
limit. This will ensure that New Jersey seniors reach catastrophic 
coverage as quickly as possible. I want to thank Senators Graham and 
Smith for their assistance with these provisions.
  Let me outline how the Graham-Smith amendment would benefit New 
Jersey seniors: 1,189,000 New Jersey senior citizens and disabled 
Medicare beneficiaries would be eligible for coverage under the Graham-
Smith plan; 568,000 Medicare beneficiaries, 48 percent, would be 
eligible for low-income assistance and will receive all needed drugs in 
return for nominal copayments; 621,000 senior citizens and disabled 
Medicare beneficiaries, 52 percent, who are not eligible for special 
low-income assistance would benefit from discounts of 25-30 percent on 
each prescription.
  I know many of my colleagues have raised concerns that this amendment 
does not provide comprehensive coverage for all seniors. But the basic 
fact is that this amendment provides prescription drug insurance for 
all our nation's seniors and disabled. It provides a thirty to forty 
percent discount on prescription drugs for all Medicare beneficiaries 
and would provide full prescription drug coverage to every Medicare 
beneficiary who spends at least $3,300 per year for their prescription 
drugs.
  The Congressional Budget Office has estimated that by 2005, the year 
that this amendment would take effect, at least half of all Medicare 
beneficiaries will have annual prescription drug expenditures that 
exceed $4,000.
  And, don't forget that the eighteen million Medicare beneficiaries 
with incomes below 200 percent of poverty would receive all the 
prescription drugs they need, for a small copayment of $2 for generics 
and $5 for brand name drugs.
  At a time in which this Congress has voted to give billions of 
dollars in tax breaks to the wealthiest people in our country, it is 
wrong and hypocritical to tell seniors that we simply don't have the 
funds or the will to pass an amendment that will provide them access to 
affordable, essential medicines.
  Mrs. FEINSTEIN. Mr. President, I rise today in support of the 
amendment offered by Senators Graham and Smith to add a prescription 
drug benefit to the Medicare program for low-income beneficiaries and 
those with high drug costs.
  The amendment offered today is built on consensus and compromise, and 
is the product of weeks of extensive discussion. I believe in its final 
form, this amendment strikes a balance between the Senate's proper 
exercise of fiscal responsibility and the need to expand and update the 
Medicare program to include some help with the high costs of 
prescription drugs for today's 40 million Medicare beneficiaries.
  I want to thank my good friend, Senator Lincoln Chafee, for his 
commitment to getting prescription drugs to those in our society who 
are the sickest and the poorest. I have been working with him since the 
end of June in developing a cost effective alternative that would get 
prescription drugs to the lowest income and the sickest in our society 
immediately.
  I believe that the Graham-Smith amendment we are debating today 
addresses my major concern which is to provide low-income individuals 
in our society with access to a full, prescription drug benefit at low 
cost.
  I am pleased that others in the Senate agree with me that at a minium 
we should provide a comprehensive benefit to those individuals in our 
communities who are making daily decisions about eating or paying rent 
and buying their necessary, life-saving prescription drugs.
  The prescription drug benefit created by this amendment includes 
three important components.
  First, this amendment creates a voluntary, low-income benefit so that 
seniors would no longer be forced to continue making decisions between 
food or medicine. Under this plan, beneficiaries would pay no premium, 
no annual fee, and no deductible. Their only cost would be a nominal 
copay of $2 for a generic drug and $5 for a brand name drug.
  I believe the assurance that over 18 million Medicare beneficiaries, 
47 percent of all Medicare beneficiaries, with incomes below $17,720, 
200 percent of the Federal poverty level, would have access to needed 
prescription drugs at a nominal cost is the most important component of 
this proposal.
  For California, this means that 1.8 million senior citizens and 
disabled Medicare beneficiaries, 49 percent, with incomes below $17,720 
for an individual and $23,880 for a couple would have immediate access 
to all needed drugs.
  Second, this amendment would provide all 40 million Medicare 
beneficiaries with access to catastrophic coverage. For a simple cost 
of $25 a year for those with incomes above $17,720, every beneficiary 
would have the assurance that once out-of-pocket spending for 
prescription drugs exceeds $3,300, a copayment of $10 would provide 
them with access to full coverage at no additional cost to them.
  Beneficiaries with incomes below $17,720 would not be responsible for 
the $10 copay. Low-income individuals would receive this benefit at no 
cost.
  Third, this amendment provides the 14 million Medicare beneficiaries, 
35 percent, making over $17,720 with access to discounts of about 25 
percent on each prescription. For an annual fee of $25, these 
beneficiaries would have access to the federal negotiated rate and 
would receive a 5 percent government subsidy in addition on each 
prescription they purchase.
  In California, this means an additional 1.9 million senior citizens 
and disabled Medicare beneficiaries, 51 percent, who are not eligible 
for low-income assistance would benefit from discounts of 25-30 percent 
on each prescription.
  By providing coverage to low-income individuals and those with high 
drug bills, this proposal meets the most fundamental needs of our 
nation's senior citizens and disabled.
  Passing this amendment is timely. On a daily basis, my office hears 
from California's seniors about the financial constraints they face 
which often prohibits them from buying necessary medication.
  I recently heard from Helen Cecil, a senior citizen from Paramount, 
CA on this issue. She lives on a fixed monthly income of $1,000. Her 
rent is $421 a month, and she spends $150 a month on her prescriptions 
to treat high cholesterol, hypertension and arthritis. In total, Helen 
spends $1,800 annually on medication. She admits to having only one 
option: She must cut down on food in order to buy her medications.
  Under the Graham-Smith amendment, Helen would pay no monthly premium 
and no deductible. She would

[[Page 15419]]

only pay $2 per prescription for generic drugs. Assuming she purchases 
generic drugs, her monthly bill of $150 for three medications to treat 
her chronic health conditions would drop to approximately $6. Helen 
saves about $142 monthly. This is money she can use to buy groceries.
  For the millions of Medicare beneficiaries that face the same 
predicament as Helen Cecil, I believe the government has a 
responsibility to see that they are not forced to choose between buying 
food and buying medications. Quite frankly, it is hard to think that in 
the richest nation on earth, we have allowed a situation to evolve 
where so many of our elderly must make such a choice.
  I am hopeful that the Senate won't fail our Nation's sickest, poorest 
and most frail.
  In the hopes of breaking the gridlock of this debate, and with the 
need to pass legislation that meets both the budgetary restrictions of 
these uncertain times and the needs of our nation's low-income seniors, 
I urge my colleagues to support the Graham-Smith amendment.
  Mr. LEVIN. Mr. President, I will support the Graham-Smith amendment. 
However, I would have preferred a prescription drug benefit added to 
Medicare, like the Medicare Outpatient Prescription Drug Act of 2002, 
commonly referred to as the Graham-Miller proposal. The Graham-Miller 
amendment would have provided a comprehensive, voluntary, affordable 
and reliable prescription drug benefit to Medicare beneficiaries. I 
voted for the Graham-Miller amendment, which was supported by a 
majority of the U.S. Senate in a vote last week. Unfortunately, the 
proposal required 60 votes and subsequently failed.
  On balance, I will support the Graham-Smith compromise, even though I 
have some reservations. The bill has three major points. First, the 
Graham-Smith amendment provides all Medicare beneficiaries access to a 
prescription drug card which allows Medicare beneficiaries to pool 
their purchasing power and receive drug discounts of up to 35 percent. 
The Federal Government would add an additional 5 percent subsidy to any 
negotiated price. Second, low-income beneficiaries would receive full 
drug coverage--paying only a nominal copayment for their drugs. Third, 
``catastrophic coverage'' would be available to Medicare beneficiaries 
so that someone doesn't have to spend more than $3,300 in out-of-pocket 
expenses on prescription drugs. After that, a beneficiary would only 
pay a $10 copayment for each prescription drug.
  However, I do have a number of reservations about the Graham-Smith 
proposal. First, a prescription drug card is no substitute for adding a 
prescription drug benefit to the Medicare Program. I am a strong 
advocate of making prescriptions drugs an entitlement for every 
Medicare beneficiary who wants it. A prescription drug card can be 
uncertain, relying on a possible negotiated benefit that might not 
materialize and is no substitute for a guaranteed prescription drug 
benefit. I am also opposed to a means test for Medicare. Medicare's 
beneficiaries receive services because they have paid into the system 
their entire working lives. It is unfair for Medicare beneficiaries to 
receive different benefits based on their respective incomes. This 
sends the wrong message to our Nation's 40 million Medicare 
beneficiaries who rely on its stability and its application to all 
eligible seniors.
  So, with reservation, I will be supporting the Graham-Smith proposal 
as the Senate's best chance to pass a Medicare prescription drug 
benefit this year, and I urge my colleagues to do the same.
  Mr. REED. Mr. President, I would like to take a few minutes to share 
with my colleagues my thoughts about the Graham-Smith amendment that 
the Senate will be voting on shortly. I have to say that the proposal 
currently before us is a far cry from what I have previously supported 
and certainly no where near what I had hoped for in terms of a Medicare 
prescription drug benefit.
  Indeed, this is not the benefit we ultimately should enact and, more 
importantly, this is not the benefit our seniors deserve. At best, the 
Graham-Smith proposal provides a universal catastrophic benefit to 
those seniors with the highest prescription drug costs and it will aid 
those States that do not already have a State-based prescription drug 
benefit. These concessions, offered in a spirit of compromise and 
bipartisanship, limit the effect and reach of this bill. Chief among 
these concessions has been cost. That constraint on resources is driven 
predominately by the passage of the President's tax plan, which leaves 
us with resources that are only sufficient to meet the needs of low-
income seniors and those who spend over $3,300 out of their own pocket.
  Nevertheless, the proposal does start us on the road to a universal, 
voluntary benefit for our Nation's elderly and disabled population by 
offering a comprehensive benefit for those living below 200 percent of 
the Federal poverty level. According to estimates, nearly half of the 
Medicare beneficiaries in Rhode Island would be eligible for the fully 
subsidized Federal prescription drug benefit. In addition, the 
amendment provides catastrophic coverage for drug costs above $3,300. 
And, contrary to other proposals, these benefits would be provided in 
the same manner that seniors receive all other health care benefits: 
through Medicare.
  There are however several areas where I feel this amendment falls 
short.
  First, seniors above 200 percent of poverty would receive, for a 
nominal annual enrollement fee, a discount card that would provide an 
automatic 5 percent Federal subsidy for all drug costs and additional 
savings that are expected to be captured through the negotiation of 
lower drug prices from the manufacturers. However, questions have been 
raised recently as to the effectiveness of prescription benefit 
managers, or PBMs, to achieve the best price for their subscribers. I 
believe that the potential benefits and drawbacks of PBMs on such a 
large scale have not been thoroughly explored, nor has the question of 
whether PBMs are a reliable mechanism to achieve lower drug prices been 
answered. I am also concerned about having a discount card as the sole 
source of coverage for beneficiaries above a certain income level 
because I believe it deviates from the basic tenents of the Medicare 
program and may not provide the kind of assistance seniors and disabled 
persons with substantial drug costs might need.
  Second, there is no requirement that States with existing 
pharmaceutical assistance programs for low-income seniors, like my home 
State of Rhode Island, maintain their commitment to this particularly 
vulnerable population. I believe that the Graham-Smith amendment would 
have a much greater impact if it acknowledged and rewarded the ongoing 
efforts in many States and encouraged them to work as partners with the 
Federal Government to build a far-reaching prescription drug benefit 
that would offer more robust assistance to many more of our elderly and 
disabled than the Federal Government can currently achieve on its own.
  While I understand that many of our States are facing dire budgetary 
situations, I believe our commitment to providing struggling States the 
temporary support they need has been demonstrated through the 
Rockefeller-Collins-Nelson amendment which passed the Senate by an 
overwhelming margin last week. I am disappointed that the Graham-Smith 
amendment does not take the role of the States into more serious 
consideration. If the proposal is enacted, I hope to work with my 
colleagues to strengthen the State's role in this program.
  The plan that I cosponsored and supported, the Graham-Miller-Kennedy 
amendment, was the only true Medicare prescription drug proposal to be 
presented to the Senate. It is the only one that would have created a 
guaranteed, univeral benefit for all Medicare beneficiaries, regardless 
of income. In terms of the benefit structure, it required a modest 
monthly premium and reasonable co-payment for prescriptions. However, 
this benefit was

[[Page 15420]]

deemed to be too costly by many of our Republican colleagues given the 
current Federal budget deficits. I would argue that we might be in a 
different position if we had not enacted a major tax cut bill last 
year.
  Nevertheless, my colleague, Senator Graham, has tirelessly worked to 
craft a scaled-back benefit proposal that is modeled after the Ensign-
Hagel amendment and would seem to meet the chief concern of my 
Republican colleagues and should garner their support. I commend 
Senator Graham and others for their efforts on this critical issue and 
I intend to support his amendment in the spirit of compromise and 
moving this debate forward. The Graham-Smith amendment is certainly not 
the end of the road in terms of the prescription drug issue, it is only 
the beginning. If Congress is going to have a serious chance of getting 
a Medicare prescription drug bill to the President's desk this year, we 
must take action now. I hope my colleagues will follow the lead of our 
colleagues, Senators Graham and Smith, and work towards the enactment 
of a Medicare prescription drug benefit.
  Mr. LEVIN. Mr. President, I will support the Graham-Smith amendment. 
However, I would have preferred a prescription drug benefit added to 
Medicare, like the Medicare Outpatient Prescription Drug Act of 2002, 
commonly referred to as the ``Graham-Miller proposal.'' The Graham-
Miller amendment would have provided a comprehensive, voluntary, 
affordable and reliable prescription drug benefit to Medicare 
beneficiaries. I voted for the Graham-Miller amendment, which was 
supported by a majority of the United States Senate in a vote last 
week. Unfortunately, the proposal required sixty votes and subsequently 
failed.
  On balance, I will support the Graham-Smith compromise, even though I 
have some reservations. The bill has three major points. First, the 
Graham-Smith amendment provides all Medicare beneficiaries access to a 
prescription drug card which allows Medicare beneficiaries to pool 
their purchasing power and receive drug discounts of up to 35 percent. 
The Federal Government would add an additional 5 percent subsidy to any 
negotiated price. Second, low-income beneficiaries would receive full 
drug coverage--paying only a nominal copayment for their drugs. Third, 
``catastrophic coverage'' would be available to Medicare beneficiaries 
so that someone doesn't have to spend more than $3,300 in out-of-pocket 
expenses on prescription drugs. After that, a beneficiary would only 
pay a $10 copayment for each prescription drug.
  However, I do have a number of reservations about the Graham-Smith 
proposal. First, a prescription drug card is no substitute for adding a 
prescription drug benefit to the Medicare Program. I am a strong 
advocate of making prescriptions drugs an entitlement for every 
Medicare beneficiary who wants it. A prescription drug card can be 
uncertain, relying on a possible negotiated benefit that might not 
materialize and is no substitute for a guaranteed prescription drug 
benefit. I am also opposed to a means test for Medicare. Medicare's 
beneficiaries receive services because they have paid into the system 
their entire working lives. It is unfair for Medicare beneficiaries to 
receive different benefits based on their respective incomes. This 
sends the wrong message to our Nation's 40 million Medicare 
beneficiaries who rely on its stability and its application to all 
eligible seniors.
  So, with reservation, I will be supporting the Graham-Smith proposal 
as the Senate's best chance to pass a Medicare prescription drug 
benefit this year and I urge my colleagues to do the same.
  The PRESIDING OFFICER. Who yields time?
  Mr. KENNEDY. How much time remains, Mr. President?
  The PRESIDING OFFICER. The Senator from Massachusetts has 22\1/2\ 
minutes. The Senator from Tennessee has 5 minutes.
  Mr. KENNEDY. Mr. President, I yield 18 minutes to the Senator from 
Florida.
  The PRESIDING OFFICER. The Senator from Florida is recognized.
  Mr. GRAHAM. Mr. President, we have a very simple message this 
morning. America's seniors now, for 37 years and 1 day--since 37 years 
ago yesterday was the day Lyndon Johnson signed the Medicare 
legislation into law--have been waiting for prescription drug coverage. 
It was a minor amount of their expenditures in 1965. On average, it was 
$65 a year. It is a staggering amount for seniors today--over $2,100 a 
year, on average.
  Today is the day that there are no more excuses for delay. There is 
no credible reason to vote against the motion to waive the Budget Act 
so that the Senate can then consider an affordable, bipartisan 
prescription drug proposal, and all of the modifications, amendments, 
and other alternatives that others might wish to propose.
  There have been a number of objections raised to our proposal--some 
of them last week--being contradictory to the same provisions or 
modifications that are in our current bill, and some new issues were 
raised this morning. Let me briefly comment.
  Last week, we heard that the prescription drug bill we had offered 
was too expensive, at an estimated cost of $594 billion for 10 years. 
We were told: we cannot support anything that is above $400 billion. So 
we went to work. We rolled up our sleeves, and we made a number of 
changes, and we have gotten the cost under $400 billion. In fact, the 
Congressional Budget Office states that in conjunction with the generic 
drug bill--on which our Presiding Officer has provided such 
leadership--the cost of our bill now will be $382 billion. So we have 
met the desire to have a less costly proposal.
  Now we are getting the other argument, that because it is less 
costly, it is not sufficiently comprehensive. Let me explain what this 
bill will provide, first, for all senior Americans. In my opinion, the 
most important thing it will provide is peace of mind. If you are a 
relatively well American in the early seventies, you have prescription 
drug costs you can manage. The problem is that you never know whether a 
day from now you might not suffer from some catastrophic event, such as 
a heart attack, or be found to have a chronic disease such as diabetes, 
which will suddenly escalate your prescription drug cost, potentially 
threatening the economic security of your retirement.
  This legislation will provide the peace of mind that will give you 
the assurance that, once having spent $3,300, you will get full 
coverage, but for a $10 per prescription copayment. That is a benefit 
of real value, which is available to all American seniors. The cost is 
$25 a year as an enrollment fee. There could be no greater bargain in 
the insurance market than to be able to buy the peace of mind of this 
catastrophic coverage for $25 a year.
  That is not all of the benefits that will be available to all senior 
Americans. Because we are going to have 40 million Americans with a 
champion, called a pharmacy benefit manager, negotiating with the 
pharmaceutical companies to get the best discounted prices, Families 
U.S.A., the Chain Drugstore Association, and the U.S. Department of 
Health and Human Services have all stated that, under our legislation, 
they estimate that these organizations would be able to negotiate 
discounted prices in the range of 15 to 25 percent. That will be 
available to all seniors.
  In addition to that, we are going to provide that there will be a 5-
percent Federal supplement on top of whatever the discounted amount is. 
So there will be real benefits for all Americans.
  But we did have to make some difficult choices when we reduced the 
size of this program by over $200 billion. One of those decisions was 
that we would focus our effort on those who had the largest 
prescription drug bills through a catastrophic program that would be 
available to all, and we would focus on those who were the neediest 
Americans and, therefore, had the greatest difficulty paying their 
prescription drug costs.
  This business of life is a business of making choices, and we decided 
that those were the two groups that should

[[Page 15421]]

get the most attention under the beginnings of a Medicare effort to 
provide prescription drug benefits.
  I might say that this is very consistent with what President George 
Bush said as ``candidate'' George Bush when he emphasized that he 
thought a prescription drug benefit was a priority for the Nation and 
that the priority within the priority was providing prescription drug 
coverage for those who were most in need. That is what we have done.
  For those persons who are under 200 percent of poverty--which today 
is 38 percent of America's 40 million Medicare eligibles--this will 
provide a very significant benefit; and with no premiums, with no 
deductibles, they will have access to prescription drugs for a 
copayment of $2 for generic drugs and $5 for brand name drugs. This 
will provide for the millions of senior Americans who are the most 
likely not to have any other source of assistance--they didn't work for 
an employer who provided retiree prescription drug benefits or they 
cannot afford a Medigap policy. This is the group of Americans who are 
at greatest need, and they will get the greatest assistance.
  There have been some other arguments raised today about the plan we 
are proposing. It has been suggested that there will be massive costs 
to the States as a result of this plan. Let me read you a statement we 
have just received from the Congressional Budget Office. It states:

       This plan will have almost no effect--

  I would like my colleagues on the other side of the aisle to listen 
to this Congressional Budget Office release.

       This plan will have almost no effect on State spending and 
     will have savings to States when combined with the underlying 
     generic bill. There will also be savings for States that have 
     their own State-funded drug programs. State savings come from 
     the Federal Government paying all of the catastrophic 
     benefits which are now paid by the State, as well as 5 
     percent of each beneficiary's drug cost, which is not subject 
     to a match.

  This is not a new idea. We have a program that has been in place for 
several years called the QMBs and SLMBs program. Don't ask me what the 
acronyms fully stand for, other than that they provide Medicare 
assistance to pay premiums, deductibles, and coinsurance for low-income 
Americans who are still above the Medicaid level. That has not proven 
to be an unmanageable program for State-Federal cooperation, and 
neither will this.
  It has also been stated that previous employers will drop the 
insurance coverage of their retirees if we adopt this legislation. 
Quite to the contrary. The Congressional Budget Office, again, has 
stated that with our plan there would be no employer dropping of 
coverage, whereas with the plan that has been proposed by our 
colleagues on the Republican side, the same CBO estimates that up to 
one-third of the employers would drop prescription drug coverage.
  The issue today, frankly, is not any of the questions that have been 
raised in opposition to the thoughtful proposal that is the result of 
real compromise between Democrats and Republicans, a true bipartisan 
outreach. On many provisions of this bill, we have adopted language 
verbatim from legislation that was introduced last week by, for 
instance, Senators Hagel and Ensign. Senator Gordon Smith has worked in 
the highest standards of cooperation and collaboration to give this 
Senate an opportunity to vote on a solid, significant prescription drug 
benefit.
  What we are going to vote on in a few minutes is a motion to waive 
the Budget Act. How ironic. We have a Budget Act, which is 18 months 
old, that says the maximum amount we can spend on prescription drugs is 
$300 billion over 10 years.
  Both the Republican plan and the Democratic plan are above $300 
billion, a clear recognition that people who have looked at what will 
be required to provide a prescription drug benefit have come to the 
same conclusion: we cannot provide a meaningful, responsible benefit to 
senior Americans for $300 billion.
  We are going to have an opportunity to vote to waive the Budget Act 
so we can then consider what would be a responsible prescription drug 
benefit, but unless we get 60 votes to waive the Budget Act, we will 
never get to the substance of this issue.
  I urge my colleagues to focus on the question that is before us: 
Should we maintain a slavish commitment to an 18-month-old number that 
both Republicans and Democrats have clearly indicated is inappropriate 
or should we waive the Budget Act and have an opportunity to have a 
full, substantive debate on prescription drugs?
  There have been some who said this is not the last time; that we can 
come back maybe in September or October, or some time in 2002, and act 
upon this. I admire their optimism, but as a pragmatist, I question the 
practical reality. In addition to the difficulty of passing legislation 
through the Senate, we know that we have to go to conference with the 
House, and the House is likely to have significantly different 
provisions, including different priorities in terms of where to place 
emphasis in a senior prescription drug plan for Medicare than the 
Senate will have.
  If we waste the month of August, which would be an opportunity for 
serious consultation between the House and the Senate, in hopes that in 
September we can arrive at a compromise that can be voted by the 
Congress and then signed into law by the President, we will have missed 
our greatest opportunity to achieve this long-sought goal of senior 
Americans.
  The real issue today is, we have a choice of saying, yes, we want to 
continue, we want to have the opportunity to develop a prescription 
drug benefit or we want to say no, that we are prepared to accept the 
status quo--another year in which senior Americans will be denied 
Medicare assistance in purchasing their prescription drugs, the fastest 
rising cost element in the typical health care budget of senior 
Americans.
  Mr. President, I urge my colleagues today to vote yes to waive the 
Budget Act and then vote yes to continue a serious, substantive debate 
on the issues involved in providing our senior citizens access to a 
meaningful prescription drug benefit.
  I would not like this debate to end in the ashes of a vote that says 
we are going to put a greater value on the homage to an archaic budget 
number, which nobody today is advocating as being adequate to meet the 
needs of senior Americans.
  That is the issue: Do we say yes to the opportunity or do we say no 
to further gridlock and denial of this critical element of a modern 
health care program?
  I thank the Chair.
  The PRESIDING OFFICER. Who yields time?
  Mr. KENNEDY. Mr. President, how much time remains on our side?
  The PRESIDING OFFICER. The Senator from Massachusetts has 6 minutes 
45 seconds.
  Mr. KENNEDY. I yield 2 minutes to the Senator from Michigan.
  The PRESIDING OFFICER. The Senator from Michigan.
  Ms. STABENOW. I thank the Chair. Mr. President, this is it today. We 
have a very real choice to make. I believe it boils down to this: The 
drug companies of America like the system the way it is today. They 
want nothing to happen. The seniors of America are counting on us to 
stand up and do the right thing: Not privatizing Medicare with a 
private plan that sets up insurance HMOs which, by the way, was written 
in the House in part by the drug companies knowing that this is the 
approach that is least likely to lower prices but, rather, protecting, 
preserving, and modernizing Medicare.
  This is a bipartisan effort. I commend colleagues on both sides of 
the aisle who have stepped up to say we are going to make a downpayment 
on modernizing Medicare to cover prescription drugs. That is what this 
is. Everyone gets help. Everyone's prices go down. And for those who 
need it the most, those who are the sickest, they will, in fact, 
receive comprehensive coverage. No premium. No deductible. They will 
get the help they need.
  I am proud to stand today with my colleagues, Senator Graham, Senator 
Smith, and others on both sides of the aisle who have put this together 
with

[[Page 15422]]

AARP and with the senior groups in America to say the time has come. 
The time has come for us to place this downpayment on modernizing 
Medicare and move forward until we completely provide comprehensive 
Medicare coverage for all seniors and the disabled in this country.
  I cannot imagine why we would not want to keep this process going to 
get the bill in front of us. It can always be fine tuned. We can 
continue to work together. But today is yes or no on whether we proceed 
to help the seniors of America and stand with them. Stop talking about 
it; let's act together and let the seniors know that we are willing to 
provide the leadership necessary--all of us together--to get this done. 
I thank the Chair.
  The PRESIDING OFFICER. The Senator's time has expired.
  Who yields time?
  Mr. FRIST. Mr. President, I yield 2\1/2\ minutes to the Senator from 
Oklahoma.
  The PRESIDING OFFICER. The Senator from Oklahoma.
  Mr. NICKLES. Mr. President, I urge my colleagues not to waive the 
Budget Act with respect to the point of order for a lot of different 
reasons. One, I wish we had a budget. Somebody said we could have 
passed a budget. Maybe the Budget Committee was going to pass a higher 
number.
  Unfortunately, this is the first time since 1974 that we have not had 
a budget pass the Senate. Maybe one of the most fiscally irresponsible 
things we have not done is not pass a budget. We are still under the 
constraints of last year's budget.
  Last year, we overwhelmingly passed a budget and set up $200 billion, 
$300 billion, and it was passed by the Finance Committee. Really what 
we should do is direct the Finance Committee to pass a bipartisan bill.
  I looked at the last 22 years, and the Finance Committee has dealt 
with major Medicare and Medicaid reforms, every one of which passed 
with bipartisan support except one. Only once did we bypass the 
committee.
  Unfortunately, the Democrat leadership said: We are not going to go 
through the Finance Committee because we think it will report out 
something we do not like. So they came up with a partisan bill, and we 
are playing ping-pong.
  I looked at the amendment we are considering right now. It is 102 
pages. It was still warm off the press, and nobody on this side, with 
one exception maybe, had seen this amendment before it was offered 
yesterday.
  This is the most important expensive expansion of Medicare in its 
history, and we find out that most of the expansion is not in Medicare 
but Medicaid, and the cost to States is in the billions of unfunded 
mandates to the States because we did not just expand Medicare, we 
expanded Medicaid, and we are telling the States they are going to have 
to come up with matches to provide this brand new free benefit. Thirty-
one States are going to have to pay for half of this new benefit. There 
is an increase in S-CHIP match, a 100-percent match for some, but 31 
States have a 74-percent match. They have to go up to 120 percent.
  All of that is on the States, or at least their matching portion. The 
estimated cost of unfunded mandates is $70 billion.
  We have not had a hearing. We have not had a markup. This may be a 
classic example of the best way not to mark up legislation that is this 
important.
  Let us step back a little bit. Let us work with the Finance 
Committee. Let us work in a bipartisan way. We can certainly get that 
done. We have the month of August and part of September. We can report 
a positive bipartisan bill that can become law. What is before us, 
unfortunately, is well short of that goal.
  The PRESIDING OFFICER. The Senator has used 2\1/2\ minutes.
  The Senator from Massachusetts.
  Mr. KENNEDY. I understand there are 4\1/2\ minutes remaining.
  Mr. SCHUMER. There are 4 minutes 11 seconds.
  Mr. KENNEDY. I yield 2 minutes to the Senator from North Carolina.
  Mr. EDWARDS. Mr. President, I hope the Senate, given this 
opportunity, will do something about providing a drug benefit for all 
those Americans who desperately need it. This is obviously a 
compromise, but great work has gone into this effort and it is 
important we do something for all those people who need help.
  I want to say a word about the underlying bill because while we are 
providing the prescription drug benefit, we need to make that benefit 
affordable, No. 1, and, No. 2, we need to do something about the cost 
of prescription drugs in this country.
  The Presiding Officer, Senator Schumer, led the way, along with 
Senator McCain, in doing something about the cost of prescription drugs 
in this country in getting generic drugs on to the marketplace, 
providing competition, and bringing down the costs for all Americans. 
In the HELP Committee, Senator Collins and I, working with Senator 
Schumer and Senator McCain, built on that work that had already been 
done and provided a way to deal with the problem of brand name drug 
companies abusing the patent process to keep generics out of the 
marketplace.
  What was happening was this: Brand name companies were filing 
frivolous patents. The result of filing those frivolous patents is the 
generics were not able to get into the marketplace. The brand names 
used the litigation process to keep generics out of the marketplace. 
What this underlying legislation does is to close those loopholes. It 
provides specifically for a mechanism to eliminate the use of frivolous 
patents to, in fact, give brand name companies protection when they 
have a real, new, creative, and innovative product, but at the same 
time it eliminates the patent and litigation abuses that have been 
occurring. It eliminates things such as brand name companies getting a 
patent on putting their pills in a brown bottle. Those are the kinds of 
abuses that have been occurring. In the past, they have kept generics 
out of the marketplace.
  What the underlying legislation will do is it will save $60 billion 
for American consumers over the next 10 years. It is critically 
important that we do this drug benefit, but it is also critically 
important that we do something about the cost of prescription drugs for 
all Americans.
  The PRESIDING OFFICER. The Senator has used his 2 minutes.
  The Senator from Massachusetts.
  Mr. KENNEDY. Five years ago, the first prescription drug legislation 
was introduced in the Senate. We have waited and the seniors have 
waited 5 years to see whether the Senate of the United States was going 
to take action. Under the leadership of Senator Daschle, we have the 
opportunity to do that. That is because the Democratic leader said so.
  A week ago, the Republicans said no to the comprehensive program that 
was introduced by Senator Graham and Senator Miller that would have 
provided the comprehensive approach about which so many have talked.
  I have listened to my friends on the other side of the aisle. They 
are using a favorite technique. That is to misrepresent and distort 
what is before the Senate, and then differ with it.
  Senator Graham has given the facts on this program. The basic issue 
before the Senate now, in the next few minutes, is whether we consider 
prescription drugs a priority for our senior citizens. If we vote with 
Senator Graham and Senator Smith, we are saying they are a priority.
  This bill is not going to solve all the problems, but it is a 
downpayment. It is a downpayment on those prescription drugs. Every one 
of us who is going to support that position is committed to coming back 
next year and the year after to make sure we have the comprehensive 
issue. That is what is before the Senate: Do we take the problems of 
our senior citizens seriously or are we going to get behind some kind 
of facade and say let us put it off for another day?
  Seniors have listened to that every single year since the time we 
passed Medicare in 1965. Now is the time to do something about it. This 
is a downpayment on prescription drugs, and I think

[[Page 15423]]

it is time the Senate take that action, and take it today.
  I understand our time is up.
  The PRESIDING OFFICER (Mr. Nelson of Nebraska). The Senator from 
Tennessee controls 2\1/2\ minutes.
  Mr. FRIST. Mr. President, we are about to vote on an amendment that 
very clearly costs more and covers fewer people than the tripartisan 
bill we debated last week.
  I yield the remainder of our time to one of the sponsors of that 
tripartisan, more comprehensive plan that seniors deserve better than 
the underlying bill on which we are about to vote.
  I yield the remainder of our time to the Senator from Louisiana.
  The PRESIDING OFFICER. The Senator from Louisiana.
  Mr. BREAUX. I thank the Senator from Tennessee for yielding.
  Mr. President, now is the time to do something about prescription 
drugs, but this is not the thing to do with prescription drugs. How do 
I go back to Louisiana, as in every State, and tell the Medicaid 
Program in Louisiana that this bill is going to cost my State $85 
million, which we do not have, through our State Medicaid Program to 
have the State pick up part of the costs of this prescription drug 
program? How am I going to go back to my State of Louisiana and tell 
the 240,000 people in Louisiana that, yes, Congress passed a 
prescription drug program but, guess what, you are not part of it. You 
are going to pay 95 percent of all of your costs of prescription drugs, 
and the Federal Government is going to pick up 5 percent.
  Now is the time to do something about prescription drugs, but this 
Congress can do much better than this. What we ought to do is combine 
the best of what Government can do with the best of what the private 
sector can do, and come up with a program that fits Medicare that is 
universal, that is comprehensive, that covers all seniors, not just 
some of the seniors, and gives them all a program of which they can be 
proud. That is the concept of what Medicare was 37 years ago. We should 
not now divert from that concept and say one group of seniors is going 
to have one plan, the other seniors are going to get left by the 
wayside.
  Certainly, I think this Congress can do better than that, and we will 
have the opportunity to do that, working with our colleagues over the 
August recess to put together that type of plan.
  I yield the floor.
  The PRESIDING OFFICER. The majority leader.
  Mr. DASCHLE. I will use a minute of my leader time. I know we are 
scheduled to have a vote.
  I simply remind my colleagues that almost every senior organization 
has endorsed the Graham amendment. Not one senior organization has 
endorsed the Republican plan. What does that tell us? The drug 
companies endorse the Republican plan. The insurance companies endorse 
the Republican plan. We do not find one senior organization endorsing 
the Republican plan. So what is wrong with this picture? Why is it that 
we cannot get bipartisan, overwhelming support for something every 
senior organization endorses?
  This is our opportunity to make a downpayment, a first step, and we 
ought to support it. I applaud the Graham amendment. I hope our 
colleagues will look at it carefully and support it. This is a critical 
moment. Senior organizations agree. They endorse it. They want this to 
pass.
  I yield the floor.
  Mr. FRIST. Mr. President, has all time expired?
  The PRESIDING OFFICER. The time is 29 seconds for the minority.
  Mr. FRIST. Mr. President, a point of order will be filed very 
shortly.
  In closing, it is important that people recognize the bill is 
inadequate. Seniors deserve more. A proposal has been discussed, the 
tripartisan bill, which is a more comprehensive approach for less 
money. This bill promises less, gives less, fewer benefits, for more 
money. I urge the defeat of the underlying bill.
  I yield back the remainder of our time.
  The PRESIDING OFFICER. All time has expired.
  Mr. FRIST. I make a point of order that the Graham amendment No. 4345 
violates section 302(f) of the Budget Act.
  The PRESIDING OFFICER. The Senator from Florida.
  Mr. GRAHAM. Pursuant to section 904 of the Congressional Budget Act 
of 1974, I move to waive the applicable sections of that act for 
purposes of the pending amendment, and I ask for the yeas and nays.
  The PRESIDING OFFICER. Is there a sufficient second?
  There appears to be a sufficient second.
  The question is on agreeing to the motion. The clerk will call the 
roll.
  The assistant legislative 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 result was announced--yeas 49, nays 50, as follows:

                      [Rollcall Vote No. 199 Leg.]

                                YEAS--49

     Akaka
     Baucus
     Bayh
     Biden
     Bingaman
     Boxer
     Byrd
     Cantwell
     Carnahan
     Carper
     Cleland
     Clinton
     Collins
     Conrad
     Corzine
     Daschle
     Dayton
     Dodd
     Dorgan
     Durbin
     Edwards
     Feinstein
     Graham
     Hutchinson
     Inouye
     Johnson
     Kennedy
     Kerry
     Kohl
     Landrieu
     Leahy
     Levin
     Lieberman
     Lincoln
     Mikulski
     Miller
     Murray
     Nelson (FL)
     Reed
     Reid
     Rockefeller
     Sarbanes
     Schumer
     Smith (OR)
     Specter
     Stabenow
     Torricelli
     Wellstone
     Wyden

                                NAYS--50

     Allard
     Allen
     Bennett
     Bond
     Breaux
     Brownback
     Bunning
     Burns
     Campbell
     Chafee
     Cochran
     Craig
     Crapo
     DeWine
     Domenici
     Ensign
     Enzi
     Feingold
     Fitzgerald
     Frist
     Gramm
     Grassley
     Gregg
     Hagel
     Harkin
     Hatch
     Hollings
     Hutchison
     Inhofe
     Jeffords
     Kyl
     Lott
     Lugar
     McCain
     McConnell
     Murkowski
     Nelson (NE)
     Nickles
     Roberts
     Santorum
     Sessions
     Shelby
     Smith (NH)
     Snowe
     Stevens
     Thomas
     Thompson
     Thurmond
     Voinovich
     Warner

                             NOT VOTING--1

       
     Helms
       
  The PRESIDING OFFICER. On this vote, the yeas are 49, the nays are 
50. Three-fifths of the Senators duly chosen and sworn not having voted 
in affirmative, the motion is rejected. The point of order is sustained 
and the amendment falls.


                     Amendment No. 4299, As Amended

  The PRESIDING OFFICER. Under the previous order, there are 2 minutes 
of debate equally divided before the vote on the Dorgan amendment.
  Who yields time?
  Mr. REID. Mr. President, I yield the time.
  The PRESIDING OFFICER. All time is yielded. The question is on 
agreeing to the Dorgan amendment, as amended, Without objection, the 
amendment, as amended, is agreed to.
  The amendment (No. 4299), as amended, was agreed to.
  Mr. LEVIN. Mr. President, I move to reconsider the vote.
  Mr. DASCHLE. I move to lay that motion on the table.
  The motion to lay on the table was agreed to.


                             Cloture Motion

  The PRESIDING OFFICER. Under the previous order, the Chair lays 
before the Senate the pending cloture motion, which the clerk will 
report.
  The legislative clerk read as follows:

                             Cloture Motion

       We, the undersigned Senators, in accordance with the 
     provisions of Rule XXII of the Standing Rules of the Senate, 
     do hereby move to bring to a close the debate on Calendar No. 
     491, S. 812, the Greater Access to Affordable Pharmaceuticals 
     Act of 2001.
         Harry Reid, Jon S. Corzine, Byron L. Dorgan, Ron Wyden, 
           Maria Cantwell, Paul S. Sarbanes, Debbie Stabenow, 
           Richard J. Durbin, Tom Daschle, Daniel K. Akaka, Jack 
           Reed, Kent Conrad, Zell Miller, Charles E. Schumer, 
           Ernest F. Hollings, Hillary Rodham Clinton.

  The PRESIDING OFFICER. There are 2 minutes of debate equally divided.

[[Page 15424]]


  Mr. KENNEDY. Mr. President, this is an important issue, and the 
Senate is not in order. We have 2 minutes of discussion on this, and 
important comments will be made by our colleagues who deserve to be 
heard.
  The PRESIDING OFFICER. The Senate will be in order.
  Who yields time?
  Mr. KENNEDY. Mr. President, I yield 1 minute to the Senator from New 
York.
  The PRESIDING OFFICER. The Senator from New York.
  Mr. SCHUMER. Mr. President, I think many of us regret that we could 
not succeed on the last amendment. But there are still things we can 
do, and must do, to make the cost of drugs lower for all citizens. The 
Schumer-McCain generic drug bill, the underlying bill, does just that.
  For people who are paying $100 per prescription, they will pay $30 or 
$35 or $40. It will reduce the cost of overall drug spending by $60 
billion. It will take some of the burden off our hard-pressed States as 
their Medicaid rates come down.
  It will also apply to everybody: the young and the old, the senior 
citizen who needs these drugs, as well as the family with a child who 
cannot afford a desperately needed drug to make that child better.
  It is supported by a large group, not only senior citizen groups and 
consumer groups and labor groups but GM and Caterpillar and Kodak and 
Ford.
  Please let us move forward on this amendment. We have a lot to do in 
the area of making prescription drugs cheaper, and this is a very vital 
first step.
  I urge my colleagues to vote for cloture.
  The PRESIDING OFFICER. The Senator's time has expired.
  Who yields time?
  The Senator from New Hampshire.
  Mr. GREGG. Mr. President, the underlying bill, which is the generic 
drug bill, has not really been addressed as we have moved through these 
debates on the overlying issue of whether we should have a prescription 
drug program for seniors.
  This underlying bill still has many significant issues in it. 
Probably the most significant issue is the fact that it creates a new 
cause of action, a whole new set of lawsuits which have never been used 
before. This cause of action has never been tried before, never been 
used before, involving patent law and the FDA. It really will be a 
lawyer's relief act rather than an act which is going to relieve our 
citizens of the high costs of drugs.
  We should have the opportunity to amend this bill. It can be 
improved. The basic concepts of this bill are good, but the bill can be 
improved. That is why we should not have cloture at this time. We 
simply have not had a chance to properly address this underlying bill 
because it has been sort of sidetracked as we have addressed the 
prescription issue for seniors. So I would hope we would vote against 
cloture.
  The PRESIDING OFFICER. The Senator's time has expired.
  By unanimous consent, the mandatory quorum call has been waived.
  The question is, Is it the sense of the Senate that debate on S. 812, 
a bill to amend the Federal Food, Drug, and Cosmetic Act to provide 
greater access to affordable pharmaceuticals, shall be brought to a 
close?
  The yeas and nays are required under the rule.
  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.
  I further announce that if present and voting the Senator from North 
Carolina (Mr. Helms) would vote ``No.''
  The PRESIDING OFFICER (Mrs. Carnahan). Are there any other Senators 
in the Chamber desiring to vote?
  The yeas and nays resulted--yeas 66, nays 33, as follows:

                      [Rollcall Vote No. 200 Leg.]

                                YEAS--66

     Akaka
     Baucus
     Bayh
     Biden
     Bingaman
     Boxer
     Breaux
     Byrd
     Cantwell
     Carnahan
     Carper
     Chafee
     Cleland
     Clinton
     Collins
     Conrad
     Corzine
     Daschle
     Dayton
     DeWine
     Dodd
     Dorgan
     Durbin
     Edwards
     Feingold
     Feinstein
     Fitzgerald
     Graham
     Grassley
     Harkin
     Hollings
     Hutchinson
     Inouye
     Jeffords
     Johnson
     Kennedy
     Kerry
     Kohl
     Landrieu
     Leahy
     Levin
     Lieberman
     Lincoln
     McCain
     Mikulski
     Miller
     Murray
     Nelson (FL)
     Nelson (NE)
     Reed
     Reid
     Rockefeller
     Sarbanes
     Schumer
     Sessions
     Shelby
     Smith (NH)
     Smith (OR)
     Snowe
     Specter
     Stabenow
     Torricelli
     Voinovich
     Warner
     Wellstone
     Wyden

                                NAYS--33

     Allard
     Allen
     Bennett
     Bond
     Brownback
     Bunning
     Burns
     Campbell
     Cochran
     Craig
     Crapo
     Domenici
     Ensign
     Enzi
     Frist
     Gramm
     Gregg
     Hagel
     Hatch
     Hutchison
     Inhofe
     Kyl
     Lott
     Lugar
     McConnell
     Murkowski
     Nickles
     Roberts
     Santorum
     Stevens
     Thomas
     Thompson
     Thurmond

                             NOT VOTING--1

       
     Helms
       
  The PRESIDING OFFICER. On this vote, the yeas are 66, the nays are 
33. Three-fifths of the Senators duly chosen and sworn having voted in 
the affirmative, the motion is agreed to.
  The PRESIDING OFFICER. The question is on the engrossment and third 
reading of the bill.
  The bill was ordered to be engrossed for a third reading, and was 
read the third time.
  Mr. SCHUMER. Mr. President, before I get to discussion of the 
underlying bill, I would first like to thank Senator Kennedy for his 
long-time leadership in ensuring access to affordable prescription 
drugs and especially for the strong fight he and Senators Graham and 
Miller have led here on the Senate floor for the past two weeks to add 
a meaningful prescription drug benefit to Medicare.
  I would also like to thank Senator Kennedy for his leadership in the 
HELP Committee in bringing Hatch-Waxman abuses to light, and for 
working with our Leader to move Schumer-McCain to the floor.
  I also want to thank my colleague Senator McCain, with whom I 
introduced the GAAP Act--as well our colleagues who introduced the bill 
in the house, Congressman Sherrod Brown and Congresswoman Jo Ann 
Emerson--for all their hard work in drawing attention to this issue and 
pushing to get this bill passed this year.
  When this Hatch-Waxman debate began, the Senate had two choices:
  First, we could choose not to act, and let loopholes in the law 
continue to let drug prices skyrocket; or, second, we could pass this 
bill, close the loopholes, and bring down drug prices for all 
consumers.
  Today, as the Senate approaches a vote on the Schumer-McCain bill, 
the Greater Access to Affordable Pharmaceuticals Act, the choice is 
clear.
  Consumers win. PhRMA loses.
  Not only was the bill passed out of committee on a strong bipartisan 
vote; not only have we heard strong messages of support from our 
colleagues on the floor; but the public, too, has spoken.
  Major corporations have spoken. Labor has spoken. Senior groups have 
spoken. Consumer groups have spoken. Governors have spoken. Insurers 
have spoken. Pharmacists have spoken. Disease groups have spoken.
  And they want to see action. They want to see the loopholes closed, 
and they want to see competition in the pharmaceutical marketplace.
  Last week we also heard from CBO. Its message: This Bill will bring 
the relief the public wants. A conservative estimate shows the bill 
will save consumers $60 billion on drug costs over the next 10 years. 
And it will mean nearly $8 billion to the Federal Government. When we 
pass a Medicare drug benefit, it will mean even more savings.
  Yesterday, we heard from the FTC. The report the Commission issued 
illustrates the abuses and tells Congress clear as day to plug up the 
loopholes in Hatch-Waxman. Their recommendations lead to one inexorable 
conclusion: pass Schumer-McCain.
  The study makes clear that lawyers for the pharmaceutical industry 
have picked the Hatch-Waxman law clean and that the law needs 
significant and immediate reform.

[[Page 15425]]

  The one group that doesn't want to see action is the group 
representing the name brand drug industry, PhRMA.
  Why is the support so widespread? It is quite simple, really. As most 
things do, it comes down to cold, hard, cash. Drug expenditures have 
been rising at double digit rates--at nearly 18 percent per year--
throughout the 90s.
  These increases are simply unsustainable. And closing the loopholes 
in the patent laws is a common sense way to do something about them. 
They will mean real savings for consumers, businesses, States, and 
seniors.
  We looked at 15 name-brand prescription drugs whose expiring patents 
will pave the way for billions of dollars in savings if blockbuster 
drug companies don't block the less expensive generic versions of these 
drugs from coming to market when they should.
  These drugs are used to treat a variety of illnesses, including 
allergies, high cholesterol, asthma, and depression. You have probably 
seen commercials for some of them on TV--Claritin, Zocor, Zoloft. You 
might even remember Cipro from last fall's anthrax scare.
  All of the drugs are scheduled to come off patent by 2005, which in 
English means that their less expensive versions can then go on sale.
  The savings consumers will see on these drugs alone will be at least 
$4.15 billion annually by 2008 when these less expensive generics are 
fully phased in.
  The biggest savings would come on the popular antidepressant Zoloft, 
which would see consumer savings of over $735 million if users opt to 
use the low cost generic version.
  Other savings would come on the popular allergy medicine Claritin 
which would see savings of $501 million and on the cholesterol medicine 
Zocor, which would see savings of $577 million.
  For the individual consumer, these projections are a dream come true.
  If you look at what three popular pharmacy chains charge for five 
commonly prescribed drugs--Claritin, Cipro, Zocor, Zoloft, and 
Singulair--the individual consumer would see individual savings ranging 
from $42 to $75 a month on these drugs if generic alternatives were 
available.
  Those filling a Singulair prescription at Walgreens, for example, to 
treat asthma would save about $54 on the generic version, paying only 
$34 as opposed to the current price of $87.99. Those filling a Cipro 
prescription at CVS to treat a urinary tract infection would save about 
$58, paying only $37 for a 20 pill supply as opposed to the current 
price of $95.59.
  Zocor users would save $45, paying an estimated $70 for a 30 pill 
supply to control high cholesterol instead of the $115.53 they 
currently pay at Rite Aid.
  The good news is that these numbers show that these drugs can one day 
be within reach of working Americans.
  The bad news is that if we in Congress don't act, the chances of the 
blockbuster drug companies ever letting that happen are about as likely 
as the Yankees asking me to pitch Game 7.
  We have heard time and time again from the big drug companies that 
patent protection is the key to innovating new drugs. And as I have 
said time and time again, I could not agree more.
  When drug companies innovate new drugs which benefit the patient, 
they are indeed preventing disease and saving lives. And they should be 
rewarded for doing so with a period of time to exclusively market the 
drug.
  That is how the system is supposed to work and that's how it did work 
for a very long time.
  But over the almost 20 years since Hatch-Waxman was passed, the drug 
companies have taken advantage of this system, devising new ways to 
extend the period of exclusivity they get when they patent a life-
saving drug.
  Today, I want to debunk some of the myths that the drug companies are 
perpetuating about the way they are using the patent laws and how the 
bill Senator McCain and I have introduced will impact innovation in the 
pharmaceutical industry.
  PhRMA has been circulating a list of claims that it has been calling 
a ``reality check.'' If a bank tried to cash that check, it would 
bounce.
  Today, I want to shine a light on some of the PhRMA claims and ensure 
that the public knows the truth about what is going on in the drug 
industry.
  The reality is that the drug companies are not spending all their 
time innovating new drugs, they are innovating new patents.
  Instead of devising new ways to further medical science, they are 
focusing on furthering company profits. And that often means keeping 
the competition at bay.
  But before I go on, I want to make clear that the Greater Access to 
Affordable Pharmaceuticals Act is not about robbing pharmaceutical 
companies of legitimate patent protection. It's not about theft of 
innovation, it's not about taking steps to enact laws that are not in 
the best interest of consumers.
  In fact, it is about just the opposite. It is about examining 
competition in today's marketplace and revisiting a compromise which 
was struck nearly 18 years ago.
  That compromise--the Hatch-Waxman Act--was intended to strike a 
balance and help save consumers billions of dollars on pharmaceuticals 
while rewarding brand name companies for their innovations.
  But, in recent years, as the profits and stakes have become higher, 
as I said, the drug industry lawyers have picked the Hatch-Waxman law 
clean.
  Companies are aggressively pursuing extended monopolies through 
filing weak or invalid patents and engaging in deals which the FTC is 
increasingly scrutinizing for anticompetitive motives.
  We must put an end to these abuses.
  The GAAP act does not intend to cut innovators off at the knees and 
it isn't a freebie for the generic drug industry. It is a pro-consumer 
bill that restores the balance intended by Hatch-Waxman.
  The bill would limit the delay to one 30-month stay, for brand 
companies who file suit against a generic challenger. And the only 
patents eligible for this automatic stay would be the brand company's 
original patents.
  For any patents listed after the brand drug is approved, the brand 
company would instead have to allow a court to decide whether their 
case merits a stay against generic competition.
  It would prevent abuses like those we are discussing here today by 
reducing incentives to list patents that are not truly innovative, but 
instead are intended solely to extend monopolies.
  The GAAP act reforms the so-called ``180-day rule'' by closing the 
loophole that enables a brand name company to pay a generic 
manufacturer to stay off the market, effectively putting the kibosh on 
competition.
  Closing this loophole would prevent problems like the Hytrin case 
where Abbott Laboratories allegedly paid Geneva Pharmaceuticals $4.5 
million per month to keep their hypertension drug off the market.
  Now PhRMA will tell you that the law is not broken.
  They will tell you that generics' share of the prescription market 
has increased from 18 percent in 1984 to 47 percent today.
  But what they won't tell you is that generics have been stuck right 
around 45 percent for at least the past 6 years.
  They will also tell you the games are not causing delays. But this 
chart shows that in 2000, 20 of the 30 drugs that were supposed to come 
off patent were delayed. In 2001, 23 out of 26 were delayed--88 percent 
of the drugs supposed to come off patent have been delayed, and most of 
these delays continue today.
  PhRMA will tell you that ``patents on new products never delay 
generic versions of old ones.'' And if we were talking about patents on 
new drugs, that would be a true statement. But that is not what we are 
talking about. We are talking about new patents on old drugs.
  The drug companies are coming up with different formulations or 
dosage forms, or other unapproved uses for old drugs whose patents have 
either expired or are about to expire in order to keep low-cost generic 
competitors off the market.
  Since a generic has to show that it doesn't infringe on these new 
patents before it can enter a market, the drug companies buy some extra 
time and can extend their market exclusivity.

[[Page 15426]]

  The changes Senator McCain and I have proposed protect the brand 
companies from having their patents infringed on. But they also prevent 
the brand companies from abusing their patents and keeping generics off 
the market.
  Let's take a look at some of the ``innovations'' that brand companies 
are listing in the FDA's Orange Book. It is these kinds of patents 
which can automatically delay competition.
  For Ultram, a pain medication, the brand company has come up with a 
new dosing schedule--because it's a strong medication, they suggest 
that you could take one-fourth of a pill at a time and slowly build up 
to taking a whole pill. This is a dosing method which doctors and 
pharmacists have used on many drugs, in many instances. Yet, somehow, 
J&J got a patent on it. And now that patent is preventing generic 
competition.
  On Fosamax, a drug for osteoporosis, the brand company has come up 
with a ``kit'' inside which the pills are arranged. This may be a great 
little kit, but its patent shouldn't be listed in the Orange Book where 
it can delay generic competition.
  On Pulmicort, an asthma medication, the company has a patent on the 
container the drug is in--and that patent is listed in the Orange Book, 
where it cause an automatic 30-month stay against a generic.
  On Thalomid, a cancer drug, the company has come up with not one--but 
two--computer programs that pharmacists can use when doling out 
prescriptions. Computer programs--not new drugs--computer programs.
  Cyclessa, similar to Fosamax, has a patent on a kit which reminds you 
how to take the medicine. Well the generics can make their own kit.
  A new piece of plastic shouldn't keep an old pill off the market.
  These patents are real. Sure they may be on things that are novel, 
but they have nothing to do with the drug substance that is helping the 
patient. They are put in the Orange Book for the sole purpose of 
extending a company's monopoly.
  PhRMA says the automatic 30 month stays never extend a patent. Well, 
they may not extend the amount of time a company can exclusively sell 
its particular container, but stacking them one after the other 
certainly extends the amount of time that the brand can keep its 
competition away from its customers.
  And brand companies are getting better and better at timing the 
filing of their patent applications so that their new patents are 
issued just as their original patents are expiring. This practice 
causes a delay in generic competition, which is nothing less than a de 
facto extension of the original patent.
  The delays caused by these additional patents are real, and they mean 
real money to consumers.
  Take Neurontin, a drug used to prevent partial seizures. The basic 
patents expired in July of 2000. By listing patents which do not even 
relate to the originally approved form of the drug, the brand company 
has already succeeded in preventing generic competition for 21 months--
a delay which may have already cost consumers over $800 million.
  Further, by listing an additional patent with the FDA, and 
overlapping the automatic 30-month stays, the brand company has 
effectively converted the original 30-month stay into a 54-month stay 
against generic approval, and they didn't even have to prove to a court 
that the new patent had any merit at all.
  Or take, for example, Paxil, a drug with $2.1 billion in sales used 
to treat depression.
  The basic active ingredient in Paxil was discovered back in the late 
1970s by a Danish company, Ferrosan. But it wasn't marketed as a drug 
until Glaxo SmithKline licensed the original patents, did the clinical 
trials and got it approved by the FDA.
  The company deserves a reward for bringing this old chemical to 
market, and under Hatch-Waxman, that reward was intended to be 5 years 
of market exclusivity--5 years during which a generic can't even put in 
an application on the drug.
  But that wasn't enough for Glaxo. Before marketing the drug, they 
made a slight--and some would argue unnecessary--change to the basic 
compound in order to get a new patent, a patent which would add an 
additional 8 years to their monopoly their monopoly on a drug they 
didn't even discover.
  Enter Apotex, the first generic challenger, which has gone to court 
claiming both that they do not infringe this new patent and that the 
new patent is invalid.
  The case has been in court for 3\1/2\ years. Even if the companies 
come to resolution on this first patent, Glaxo has, in the meantime, 
applied for and been issued nine additional patents on Paxil--patents 
on yet other slightly different chemical substances, as well as patents 
on different formulations of the drug. The last of these patents 
expires in 2019.
  These new patents have already invoked multiple 30-month stays 
against generic competition for Paxil. The automatic stays already 
granted add up to a delay of over 60 months. To be fair, if Glaxo 
prevails in court, these stays won't extend the time on their patent. 
But if Apotex wins the suit, these multiple 30-month stays will still 
be hanging out there preventing the generic from coming to market. And 
there's nothing to stop Glaxo from getting even more patents before 
these delays expire. Each year Glaxo can delay generic competition 
costs Paxil users up to $500 million.
  What has happened with these drugs is that the drug companies saw 
their original patents about to expire and then created new ones to 
maintain their control over the market.
  These kinds of practices have become the norm in the drug industry. 
These companies figure out a new way to keep the dollars rolling in, 
stooping to new lows every day to maintain their exclusivity rights.
  I have heard from the big drug companies that they are in the failure 
business. Well, if it's the failure business that tops the Fortune 500 
lists, sign me up.
  The big pharmaceutical companies may make their claims, but we in 
Congress know the reality. Insurers and State Medicaid directors know 
the reality. Corporations know the reality. Our seniors know the 
reality.
  The reality is that prescription drug prices are skyrocketing at a 
rate of 17 percent per year, generic penetration into the market has 
been stagnant for the past eight years, and loopholes in our patent 
laws are making the reality even worse.
  They are crippling consumers and seniors who can't afford to purchase 
or take the drugs they need.
  I agree that patent protection is important to saving lives, but I am 
sure those who dedicate their lives to finding new cures would also 
agree that a drug can do no good if it is financially out of the reach 
of patients who depend on it.
  As Congress continues to wrestle with the complexity of crafting and 
paying for a meaningful Medicare prescription drug benefit, we must not 
overlook a straightforward solution to the escalating drug prices 
facing seniors, businesses, insurers and consumers today.
  If we can ensure fair competition in the pharmaceutical marketplace--
a level playing field for both brand and generic companies--then 
everyone will win.
  I ask my colleagues in the Senate to vote yes today to S. 812: to 
vote yes for fair marketplace practices, vote yes for robust 
competition in the pharmaceutical marketplace, vote yes for access to 
affordable drugs--and vote yes for consumers.
  I ask unanimous consent that further material be printed in the 
Record.
  There being no objection, the material was ordered to be printed in 
the record, as follows:

                                     Commonwealth of Pennsylvania,


                                   Office of Attorney General,

                                    Harrisburg, PA, July 24, 2002.
     Hon. John McCain,
     U.S. Senate,
     Washington, DC.
     Hon. Charles E. Schumer,
     U.S. Senate
     Washington, DC.
       Dear Senators McCain and Schumer: As Attorney General of 
     the Commonwealth of Pennsylvania, my constituents make me

[[Page 15427]]

     aware every day about how the high cost of prescription drugs 
     adversely affects their lives. For that reason, I endorse the 
     Greater Access to Affordable Pharmaceuticals Act of 2001 (S. 
     812) which you are sponsoring.
       Pennsylvania has the second largest number of senior 
     citizens of any state in the country. As you are well aware, 
     Medicare does not provide a prescription benefit for most 
     drugs. Therefore, senior citizens without private insurance, 
     Medicaid or a special government program like Pennsylvania's 
     PACE program, pay for prescription drugs themselves. Even 
     though Pennsylvania's PACE program is a model for other state 
     and federal senior citizen prescription benefit plans, the 
     program does not cover every senior citizen. Thus, there are 
     many Pennsylvania citizens living on fixed incomes who find 
     that their income and standard of living is being eaten away 
     by prescription drugs that can cost more than $100 a month. 
     Senior citizens who are on two or three medications can face 
     monthly prescription costs of $500 to $1000.
       One factor in the high cost of prescription drugs is 
     attempts by brand name drug makers to forestall entry by 
     generic competitions. The Hatch-Waxman Act of 1984 was 
     intended to spur generic competition with brand name 
     pharmaceuticals. Unfortunately, brand name drug makers have 
     been using that act in unintended ways to block or delay 
     rather than foster generic entry. In particular, two 
     provisions have been misused. One allows for an automatic 30-
     month stay of a generic's drug application upon the filing of 
     a patent infringement suit by a brand name manufacturer. The 
     other grants the first generic drug applicant for a drug a 
     180-day period of exclusivity before other generics can enter 
     the market. These two provisions can be misused to delay 
     generic entry by years. I believe that the Greater Access to 
     Affordable Pharmaceuticals Act of 2001 provides a reasonable 
     remedy for these abuses which balances the interests of 
     consumers and the pharmaceutical industry.
       While I believe that pharmaceutical companies should be 
     compensated for their discoveries and innovation with 
     appropriate patent protection, I object to those patents 
     being lengthened by misuse of the current law. Passage of 
     your bill will address those misuses. Thank you for your work 
     and consideration on this matter.
           Very truly yours,
                                                D. Michael Fisher,
     Attorney General.
                                  ____

                                                 State of New York


                               Office of the Attorney General,

                                      New York, NY, July 24, 2002.
     Senator Edward Kennedy,
     Washington, DC.
     Senator Judd Gregg,
     Washington, DC.
       Dear Senators Kennedy and Gregg: I write to express my 
     support of the Greater Access to Affordable Pharmaceuticals 
     Act of 2001 (``GAAP''), which amends the Hatch-Waxman Act of 
     1984 (the ``HWA''). I attach a Policy Statement which details 
     the arguments made in this letter.
       In the past several years, State Attorneys General have 
     filed five antitrust suits to remedy the harm caused by 
     brand-name and generic manufacturers' manipulation of 
     loopholes in the Hatch-Waxman Act (``HWA''), thereby delaying 
     generic entry. These are:
       State of Ohio, et al. v. Bristol-Meyers Squibb, Co., 
     concerning the anti-cancer drug Taxol127 (the ``Taxol 
     litigation);
       State of Alabama, et al. v. Bristol-Myers Squibb Co., et 
     al., concerning the anti-anxiety drug Buspar127 (the ``Buspar 
     litigation'');
       State of New York, et al. v. Aventis, S.A., et al., 
     concerning the anti-hypertension drug CD127 (the ``Cardizem 
     litigation'');
       State of Florida, et al. v. Abbott Laboratories, Inc., 
     concerning the anti-hypertension drug Hytrin127 (the ``Hytrin 
     litigation''); and
       Commonwealth of Pennyslvania v. Schering-Plough Corp. et. 
     al, concerning the potassium supplement K-Dur 20 (``the K-Dur 
     20 litigation'').
     Through these cases, and other multi-state investigations, 
     this Office has gained substantial experience with the 
     shortcomings of the HWA. GAAP will be an important step in 
     correcting these problems, and in ensuring consumers access 
     to affordable medication.
       GAAP specifically alleviates two critical problems caused 
     by the HWA, which the cases brought by the Attorneys General 
     illustrate:
       The Thirty Month Stay--Under the HWA, brand-name 
     manufacturers list unexpired patents with the FDA in a 
     compendium known as the ``Orange Book.'' The FDA does not 
     evaluate the merits of the listing, and relies on the 
     manufacturer's representations as to the listing's validity. 
     An Orange Book listing carries a rich reward--an automatic 
     30-month stay against certain potential generic entrants 
     whome the manufacturer has sued for patent infringement, 
     despite the absence of any court finding that the 
     infringement claim has any validity whatsoever.
       Problems caused by this provision are illustrated by the 
     facts of the Buspar litigation. In that case, Bristol-Myers 
     Squibb (``BMS'') sought to extend its patent monopoly for its 
     profitable buspirone anti-anxiety medication. As BMS's 
     buspirone patent was about to expire, BMS received a patent 
     for a metabolite that the body naturally produces--which BMS 
     claimed was the result of introducing buspirone into the 
     body. BMS then had the FDA list the patent in the Orange Book 
     eleven hours before the first generic alternative to 
     buspirone was to otain FDA approval. Although BMS explicitly 
     stated to the United States Patent Office that its new patent 
     did not cover buspirone, it Orange Book entry made precisely 
     the opposite claim. As a result, generic makers of buspirone 
     were barred from the market, and consumers paid millions more 
     than they would have paid, had a generic alternative been 
     available.
       GAAP helps alleviate this problem in two essential ways. 
     First, a brand-name manufacturer will no longer be able to 
     obtain the 30-month stay for follow-on patents. Had GAAP been 
     in place, BMS's scheme would not have been possible. Second, 
     in certain instances, GAAP allows generic manufacturers to 
     challenge fraudulent Orange Book listings in court.
       The 180-day exclusivity period--HWA gives certain generic 
     entrants who are the first to seek FDA approval for their 
     drugs a 180-day exclusivity period during which no other 
     generic alternative to the same brand-name drug may come to 
     market. While this provision was intended to provide an 
     incentive for generic entry, in several instances, brand-name 
     manufacturers have paid their generic counterparts to staff 
     off the market, without generic forfeiting its right to 
     exclusivity. This creates a perpetual bar to entry by other 
     generics. Thus, in both the Hytrin and Cardizem cases, no 
     generic version of the brand-name drug could be sold until 
     litigation and investigations by the Federal Trade Commission 
     led the parties to cancel their agreements.
       GAAP would render impossible such permanent barriers to 
     generic entry. Under the pending bill, if generic entry does 
     not take place within sixty days of the generic drug's 
     approval, the next generic manufacturers in line may enter 
     the market. Conduct now being challenged in costly and time-
     consuming litigation would simply not have taken place had 
     GAAP been in effect.
       Case-by-case and after-the-fact investigations and 
     litigation are no substitute for fixing the problems inherent 
     in the HWA. For that reason, I applaud the efforts of 
     Senators Schumer and McCain, and those of other GAAP 
     sponsors, and urge the speedy passage of this important and 
     beneficial bill.
       Sincerely,
     Eliot Spitzer.
                                  ____

                                                    July 24, 2002.

 Statement on S. 812, the Greater Access to Affordable Pharmaceuticals 
                              Act of 2001

        In a letter issued today, Attorney General Eliot Spitzer 
     has written in support of the Greater Access to Affordable 
     Pharmaceuticals Act of 2001 (``GAAP''), introduced by 
     Senators McCain and Schumer to amend the Hatch-Waxman Act of 
     1984 (the ``HWA''). This statement explains in greater detail 
     the arguments set forth in that letter, and the problems with 
     the HWA that led to its submission.
       Protecting consumers' access to quality health care at 
     affordable prices is one way in which the State Attorneys 
     General serve the American public. To that end, State 
     Attorneys General have, in recent years, brought five 
     antitrust actions arising, in whole or in part, out of 
     efforts by brand-name drug manufacturers to manipulate the 
     HWA's procedures to keep cheaper generic drugs off the 
     market, and to maintain monopoly pricing long after the 
     brand-name drug's patent expiration date. These are:
       State of Ohio, et al. v. Bristol-Myers Squibb, Co., 
     concerning the anti-cancer drug Taxol (the ``Taxol 
     litigation'');
       State of Alabama, et al. v. Bristol-Myers Squibb Co., et 
     al., concerning the anti-anxiety drug Buspar (the 
     ``Buspar litigation'');
       State of New York, et al. v. Aventis, S.A., et al., 
     concerning the anti-hypertension drug Cardizem CD 
     (the ``Cardizem litigation'');
       State of Florida, et al. v. Abbott Laboratories, Inc., 
     concerning the anti-hypertension drug Hytrin (the 
     ``Hytrin litigation''); and
       Commonwealth of Pennsylvania v. Schering-Plough Corp. et 
     al., concerning the potassium supplement K-Dur 20 (``the K-
     Dur 20 litigation'').

       As described in more detail below, these cases starkly 
     illustrate the weaknesses of the HWA.
       The New York Attorney General has reviewed the terms of 
     GAAP against the backdrop of this experience, and believes 
     that this bill represents a substantial step towards 
     correcting the HWA's flaws, and restoring the appropriate 
     balance that Congress initially intended between protecting 
     innovation and ensuring affordable drug prices. Indeed, much 
     of the misconduct challenged in these cases would not have 
     been possible had GSSP been in force.
       By this statement and in his letter, the Attorney General 
     highlights the need for reform. After a brief summary of the 
     present law, the statement describes state enforcement 
     actions in greater detail, and show how

[[Page 15428]]

     GAAP effectively closes loopholes that allowed for the 
     misconduct addressed by these actions.
       By passing GAAP, Congress can protect consumers, lower drug 
     prices, and avoid the need for time-consuming and expensive 
     litigation. For those reasons, the New York Attorney General 
     has strongly urged that Congress enact GAAP into law.
     I. Generic Drugs and the Hatch-Waxman Act
       Generic drugs are bioequivalents of brand-name drugs in 
     dosage, form, safety strength, route of administration, 
     quality, performance characteristics and intended use. They 
     tend, however, to be priced significantly below their brand-
     name equivalents. An increase in the use of generic drugs 
     would be an important step in controlling the rising costs of 
     pharmaceuticals, and of health care in general.
       In 1984, Congress passed the HWA, which streamlined the 
     regulatory approval process for generic drugs. In particular, 
     the Act permits the manufacturer of a new generic drug to 
     submit an Abbreviated New Drug Application (``ANDA''), which 
     may rely on the safety assessments of the New Drug 
     Application (``NDA'') filed by the ``pioneerr''--i.e., brand-
     name--drug's manufacturer. An ANDA entails far less expense 
     than an NDA, and can be approved by the FDA far more 
     expeditiously.
       Although it is not necessary for purposes of this statement 
     to deve into all the intricacies of the HWA, two elements--
     the 30 month stay and the 180-day exclusivity period--play an 
     important role in allowing pharmaceutical companies to delay 
     generic entry and deny consumers the benefits of competition, 
     despite the good intentions of the HWA's drafters. These 
     elements are addressed below.
     II. The HWA's Loopholes
       A. The 30-Month Stay
       The Food and Drug Administration (``FDA'') maintains a list 
     of pharmaceutical patents commonly known as the ``Orange 
     Book.'' Upon receiving FDA approval for a brand-name drug, 
     the manufacturer must inform the FDA, in substance, of all 
     patents that would be infringed by the non-licensed sale of a 
     generic equivalent for that drug. The FDA then includes those 
     patents on its Orange Book list. Before marketing a generic 
     drug, an ANDA filer must certify that the listed patents will 
     not prevent sale of the generic version, for any of several 
     reasons, and notify the brand-name manufacturer of its 
     certification. One such certification--the so-called 
     ``paragraph IV certification''--attests that the pioneer drug 
     patent ``is invalid or will not be infringed by the 
     manufacture, use, or sale of the new drug for which the 
     application is submitted.'' Once an ANDA applicant--the 
     generic manufacturer--submits a paragraph IV certification, 
     the brand-name manufacturer has 45 days within which to bring 
     a patent infringement action against the applicant. If the 
     brand-name manufacturer initiates such a suit, the FDA's 
     approval of the NADA is automatically delayed for 30-months.
       The 30-month period is referred to as a ``stay.'' More 
     accurately, it is an injunction that takes effect immediately 
     on the brand-name manufacturer's filing of its case, 
     regardless of the strength or weakness of its patent 
     infringement claims, and without any judicial oversight 
     whatsoever. The statutorily-created injunction relieves the 
     brand-name manufacturer of the responsibility of satisfying a 
     court that it is entitled to a preliminary injunction against 
     generic entry--a threshold that the brand-name manufacturer 
     would have to meet in the absence of the HWA. The FDA itself 
     lacks the expertise or the resources to evaluate the validity 
     of patents identified for listing in the Orange Book and, in 
     consequence, lists patents solely in reliance on the brand-
     name manufacturer's listing request.
       Given the minimal standard for placement in the Orange 
     Book, and the financial rewards of such a listing--a 30-month 
     roadblock to generic entry--it is no surprise that drug 
     manufacturers go to extraordinary lengths to insure that the 
     FDA list any unexpired patent covering a profitable brand-
     name drug. Often, as the initial patent for a drug's active 
     ingredient nears expiration, the brand-name manufacturer will 
     seek ``secondary patents'' on specific aspects of the drug, 
     such as mode of delivery--the validity of which may be 
     dubious, at best--and which the manufacturer claims apply to 
     previously approved uses of the drug. Armed with such new 
     patents, manufacturers have been able to suppress generic 
     alternatives, which would otherwise be available to 
     consumers.
       The cases brought by the States illustrate the potential 
     for misuse inherent in the 30-month stay provision:
       The Buspar litigation concerns, in part, an effort by 
     Bristol-Myers Squibb (``BMS'') to extend its patent monopoly 
     for the profitable buspirone anti-anxiety medication. As 
     BMS's patent for buspirone was about to expire, it received a 
     patent for a metabolite that the body naturally produces--BMS 
     claimed--as the result of introducing buspirone into the 
     body. BMS then had the FDA list the patent in the Orange Book 
     eleven hours before the first generic ANDA was to be 
     approved. Although BMS explicitly stated to the United States 
     Patent Office that its new patent did not cover buspirone, 
     its Orange Book entry made precisely the opposite claim. As a 
     result, generic makers of buspirone were barred from the 
     market, and consumers paid hundreds of millions of dollars 
     more than they would have paid, had a generic alternative 
     been available.
       A federal district judge found that BMS's conduct before 
     the FDA was improper and ordered the patent delisted, thereby 
     permitting the sale of generic alternatives. On appeal, the 
     Federal Circuit held that, as a matter of procedure, generic 
     entrants could not sue to obtain delisting from the Orange 
     Book, and vacated the order without evaluating BMS's behavior 
     before the FDA. This past February, yet another federal 
     district judge found BMS's Orange Book filing to be 
     ``objectively baseless,'' and an effort to ``justify taking 
     property that belongs to the public.''
       The Taxol litigation addresses efforts by BMS to preserve 
     its monopoly on Taxol, an important treatment for breast 
     cancer and other tumors that the federal government itself 
     initially developed and then licensed to BMS for five years. 
     In their complaint, the States allege that BMS fraudulently 
     obtained patents for Taxol, listed them in the Orange Book, 
     and then filed litigation for the sole purpose of delaying 
     generic entry into the market via the HWA's stay provision. 
     It took nearly three years before a court rejected BMS's 
     claims, during which cancer patients were deprived of access 
     to less expensive generic alternatives.
       In a particularly egregious manipulation of the HWA, BMS 
     entered into an arrangement with generic manufacturer 
     American Bioscience, Inc., by which BMS consented to be 
     subject to a court-ordered temporary restraining order, 
     issued upon ABI filing a lawsuit demanding that BMS list one 
     of ABI's Taxol patents in the Orange Book. Based on the 
     order, BMS had the FDA list ABI's patent in the Orange Book--
     in an apparent effort to clothe the fraudulent listing with 
     the seeming legitimacy of a court decree. After generic 
     manufacturers and the Federal Trade Commission filed papers 
     challenging the collusively obtained order, the Court ruled 
     that ABI was not entitled to sue BMS to obtain an Orange Book 
     listing, and dismissed the case.
       GAAP takes important steps towards resolving the problems 
     addressed by these cases, in two ways. First, GAAP limits 
     drug manufacturers to a single 30-month stay per drug. As 
     initially drafted, GAAP eliminated the 30-month stay 
     altogether. While the original might better encourage 
     pharmaceutical competition, the compromise version passed by 
     the Senate Health, Education, Labor and Pensions Committee 
     represents a substantial improvement over the present legal 
     regime.
       In the Buspar case, BMS was able to obtain a 30-month stay 
     for the third patent it claimed barred generic versions of 
     buspirone, after the initial patent had expired and without 
     the need to obtain a court ruling on infringement. GAAP 
     instead requires drug manufacturers that obtain such follow-
     on patents to protect their intellectual property in the same 
     manner as other patent holders--by going to court, proving 
     that their case has a likelihood of success, and securing an 
     injunction against the alleged infringer. That option 
     provides recourse for genuinely aggrieved patent holders, 
     while prohibiting brand-name manufacturers from gaining an 
     advantage, to the detriment of consumers, solely on the basis 
     of their own assertion of a valid patent and their 
     willingness to file suit.
       Second, GAAP would allow generic competitors to seek 
     declaratory relief on the validity of an Orange Book listing 
     at the time an NDA is approved--when, under GAAP, the brand-
     name manufacturer would still be entitled to a thirty month 
     stay. As the Federal Circuit's Buspar ruling demonstrates, 
     the FDA's decision to list a patent in the Orange Book may 
     not be subject to any judicial review under existing law, and 
     frivolous or fraudulent listings can become impassable 
     roadblocks to generic entry. Although a previous version of 
     the bill would have afforded even greater opportunity for 
     challenging Orange Book listings, this aspect of GAAP would 
     still provide potential entrants with the means to challenge 
     such roadblocks in court, in those cases where the thirty-
     month stay would still apply.
       B. The 180-Day Exclusivity Period
       HWA gives the first ANDA filer with a paragraph IV 
     certification a 180-day exclusivity period following a court 
     ruling permitting entry, during which no other manufacturer 
     of a generic version of the same drug could enter. This 
     provision provides an incentive for generic manufacturers to 
     challenge brand-name patents. But as currently structured, 
     the HWA provides a means for brand-name and generic 
     manufacturers acting in collusion to bar new generic 
     competitors for significantly longer periods. In effect, the 
     brand-name manufacturer simply ``buys'' the first ANDA 
     filer's agreement neither to enter the market nor to transfer 
     its exclusivity rights, thereby creating a perpetual bar 
     against other generic competitors. This can have a profound 
     impact on drug prices, because generic drugs are typically 
     not priced at their full discount until

[[Page 15429]]

     the exclusivity period has expired and additional generic 
     competitors are able to enter the market.
       Cases brought by the Attorneys General illustrate this 
     abuse of the HWA:
       The Cardizem litigation arises from an agreement between 
     brand-name manufacturer Hoechst Marion Roussel, Inc. 
     (``HMRI'') and generic drug manufacturer Andrx Corporation 
     (``Andrx''), under which HMRI paid Andrx nearly $90 million 
     in exchange for Andrx's agreement to keep its cheaper 
     alternative to HMRI's Cardizem CD heart medication off the 
     market. As part of the agreement, Andrx agreed to stay off 
     the market while still prosecuting its ANDA--so as to 
     maintain its right to the 180-day exclusivity period granted 
     the first-filer under the HWA--and pledged not to transfer or 
     sell its exclusivity rights. Thus, the agreement effectively 
     barred any further generic entry. Only after private suits 
     challenged this arrangement and the FTC opened an 
     investigation, did Andrx enter the market, thereby removing 
     the block against additional generic competitors. A federal 
     district court has since held the HMRI/Andrx agreement to 
     constitute a per se violation of the antitrust laws. (That 
     ruling is now on appeal.) In yet another case, the Court of 
     Appeals for the District of Columbia Circuit reinstated a 
     generic manufacturer's claim challenging the HMRI/Andrx 
     agreement.
       The Hytrin litigation challenges an arrangement under which 
     Abbot Laboratories (``Abbott'') paid generic manufacturer 
     Geneva Pharmaceuticals, Inc. (``Geneva'') over $60 million, 
     in exchange for Geneva's agreement not to market a generic 
     version of Abbot's hypertension medication, Hytrin. In that 
     agreement--as in Cardizem--Geneva promised not to give up the 
     180-day exclusivity period as the first ANDA filer. No other 
     generic manufacturers were able to enter the market, and 
     Geneva and Abbott shared the profits from the resulting 
     exclusion of competition. The district court held this 
     arrangement per se unlawful. (That ruling, too, is on 
     appeal.)
       Under GAAP, the first ANDA filer loses its right to 
     exclusivity if it does not come to market within 60 days of 
     the date on which it is declared eligible to do so by the 
     FDA. Further, the 180-day exclusivity period runs from either 
     the date of a final court decision on the patent infringement 
     action, or the date on which a settlement order or consent 
     decree is signed by the court, whichever is earlier. These 
     provisions should severely limit the ability of the brand-
     name manufacturer and first generic entrant to act 
     collusively to bar other generic alternatives from reaching 
     consumers.
       III. Conclusion
       In the examples above, antitrust suits seeking full 
     recompense for injured consumers helped cause the wrongdoers 
     to cease their misconduct, and may aid in deterring further 
     abuses. But antitrust enforcement on a case-by-case basis 
     will not solve the problems underlying the lawsuits, which 
     are inherent in the HWA itself. As enacted, the HWA affords 
     unscrupulous manufacturers with both means and incentive to 
     extend brand-name monopolies beyond the patent exclusivity 
     period set by Congress.
       Not all such misconduct comes to the attention of law 
     enforcers or private plaintiffs; antitrust litigation is 
     time-consuming, expensive and risky; and pharmaceutical 
     companies are learning from previous legal setbacks, and are 
     adopting ways to exploit the present law that may be less 
     vulnerable to antitrust challenges--yet still deleterious to 
     the goal of harnessing competition to provide affordable 
     health care. Amending the HWA so as to remove available 
     avenues for anticompetitive and anticonsumer actions, rather 
     than relying on individual lawsuits for costly after-the-fact 
     remedies, is a far more effective means to protect consumers.

                         Whose Side Are You On?


                     In Favor of the Current System

       Pharmaceutical Research and Manufacturers Association 
     (PhRMA)


                   In Favor of Closing the Loopholes

       General Motors Corporation
       Ford Motor Company
       Daimler Chrysler
       International Union, UAW
       AFL-CIO
       AFSCME
       Verizon
       Wal-Mart
       Kodak
       Motorola
       Caterpillar, Inc.
       K-Mart
       Georgia-Pacific
       Albertsons
       UPS
       Kellogg's
       Sysco
       Constellation Energy Group
       Ahold USA
       Woodgrain Millwork
       Weyerhaeuser
       National Committee to Preserve Social Security & Medicare
       AARP
       Consumer Federation of America
       Families USA
       Gray Panthers
       National Consumer League
       Consumers Union
       Public Citizen
       U.S. PIRG
       Governor Howard Dean (VT)
       Governor William Janklow (SD)
       Governor Bob Wise (WV)
       Governor M.J. ``Mike'' Foster, Jr. (LA)
       Governor Don Siegelman (AL)
       Governor Gary Locke (WA)
       Governor Bob Holden (MO)
       Governor Jeanne Shaheen (NH)
       Governor Tony Knowles (AK)
       Governor Benjamin Cayetano (HI)
       Governor Ronnie Musgrove (MI)
       Generic Pharmaceutical Association (GPhA)
       American Association of Health Plans
       Aetna
       Blue Cross Blue Shield Association
       Anthem Blue Cross and Blue Shield
       Health Insurance Association of America
       Kaiser Permanente Health Plan
       HIP
       Association of Community Health Plans
       National Association of Health Underwriters
       National Association of Chain Drug Stores
       Advance-PCS
       Caremark Rx
       American Academy of Family Physicians
       National Committee to Preserve Social Security and Medicare
       Academy of Managed Care Pharmacy
       Alliance of Community Health Plans
       National Organization for Rare Disorders
       National Hemophilia Foundation
       Alpha One Foundation
       Gay Men's Health Crisis
       Center for Medical Consumers
       Treatment Action Group
       Interstitial Cystitis Association
       The Narcolepsy Network
       Pacific Business Group on Health
       Midwest Business Group on Health
       Washington Business Group on Health
       Food Marketing Institute
  Ms. CANTWELL. Mr. President, I rise today to express my 
disappointment regarding our current situation on Medicare prescription 
drug legislation. I am extremely disappointed that we have not been 
able to pass a prescription drug benefit, and I believe it is 
absolutely imperative that the Senate continue to work toward this end.
  The fact is, when Medicare was designed in 1965, the system relied on 
inpatient hospitalization and seldom on outpatient services, preventive 
care, or patient drug therapies. At that time, prescription drugs only 
accounted for four percent of all personal health care expenditures.
  But as we enter the 21st century, the cutting edge of health care has 
shifted. Every day, as new preventive and therapeutic drugs replace 
outdated inpatient procedures, Medicare falls further and further 
behind in providing basic care.
  Medicare was written to cover the most basic health care for seniors. 
When the original bill passed, the legislation's conference report 
explicitly says that the intent of the program is to provide adequate 
``medical aid for needy people,'' and should ``make the best of modern 
medicine more readily available to the aged.''
  Well, we are not making the best use of modern medicine when millions 
of seniors cannot afford access to the prescription drugs they need. 
Prescription drugs that had not even been developed when Medicare was 
enacted are now an essential aspect of basic health care. We owe it to 
our seniors to live up to Medicare's original mandate and provide them 
the best medical care.
  Unfortunately, today, beneficiaries' current drug coverage options 
are often expensive and unreliable. And as a result, nearly seven out 
of ten Medicare beneficiaries lack decent, dependable coverage for 
their prescription drug needs, and more than one-third have no coverage 
at all. Prescription drug expenditures for the average senior in my 
home State of Washington are over $2,100 every year, over 122,000 of my 
seniors spend more than $4,000 a year.
  On average, one out of every five dollars of every Social Security 
check to Washington State's seniors is spent on prescription drugs. And 
seniors with the most serious illnesses spend nearly 40 percent of 
their Social Security check on prescription drugs. How in the world are 
seniors on fixed incomes supposed to do this? What happens to them in 
an emergency?
  Last week I visited three senior citizen centers to discuss the 
current prescription drug debate. This is what my constituents told me: 
they want prescription drug coverage to be comprehensive, simple to 
administer, guaranteed, stable, and based on the very

[[Page 15430]]

best medical technology. And most importantly, they want the benefit 
run through Medicare, a program they understand and upon which they 
depend.
  I think this is the first point I want to make about HMOs versus 
Medicare as we continue to debate delivery mechanisms for a new 
benefit. Seniors do not want their prescription drug benefit run 
through an HMO or other private insurance company.
  According to a June 2002 survey by the Kaiser Family Foundation and 
the Kennedy School of Government, 67 percent of American people believe 
we should expand Medicare to pay for part of prescription drugs, but 
only 26 percent say we should help seniors buy private insurance to pay 
for prescription drugs costs.
  A private delivery model gives insurers complete control over whether 
to offer a benefit, how much to charge, and whether to cover drugs 
regardless of whether these drugs are medically necessary. That's too 
much control over a program that is supposed to guarantee help for 
seniors.
  The very basic issue here is that the private market will not cover 
such a high-risk population--especially a population at such risk for 
adverse selection. I don't want to see this benefit be a repeat of the 
Medicare+Choice program. And if the private insurance model hasn't 
worked for the full Medicare benefit, it certainly won't work for a 
single benefit where utilization is expected to be high.
  Putting HMOs in charge of prescription drug coverage would be like 
putting Enron in charge of Social Security.
  The second point I want to make is that seniors need a benefit that 
is comprehensive, one that covers their total prescription drug needs. 
Thirty percent of Washington seniors--212,000 people--will fall into 
the benefit hole proposed under the Tripartisan bill. But these same 
seniors will need to continue to pay their monthly premium, whatever it 
is as determined by the private HMOs or insurance companies, during 
that benefit gap. My constituents will not stand for this.
  We need to pay very close attention to the catastrophic coverage in 
all of these proposals and what it means for seniors. What we're 
talking about is covering medicines for the very sickest seniors, and 
we know that the very sickest seniors have the very highest drug costs. 
In fact, just 14 percent of the elderly population account for nearly 
half of all prescription drug expenditures.
  Seniors account for 12.6 percent of the general population, but a 
third of all prescription drug expenditures. And while prescriptions 
are expensive, in some cases, prohibitively so, these are the very same 
prescription drugs that keep people out of the hospital, out of the 
nursing home, and living vibrant and happy lives. And while it is 
difficult to quantify in economic terms, prescription drugs preserve 
health and eliminate unnecessary hospitalization, which is by far most 
expensive segment of the health care.
  Americans are becoming increasingly reliant on more effective, and 
more complicated, drug therapies. Total health care spending in the 
United States will total more than $1.5 trillion this year, an increase 
of 8.6 percent over last year, according to a March report released by 
the Centers for Medicare and Medicaid Services.
  The other part of this debate concerns the need to get generic 
medications to the market, and to our Nation's seniors and disabled, 
more quickly. Generic medicines account for 42 percent of all 
prescriptions dispensed in America and on average are put on the market 
at 75 percent of the cost of their name-brand rivals.
  But we know that the current prescription drug patent system is 
broken, and I am extremely concerned that pharmaceutical companies may 
be acting illegally to extend their patents and prevent less expensive 
generic drugs from entering the market. To fix it, we need to eliminate 
patent loopholes that drug companies use to prevent price competition 
from generic alternative drugs.
  We need to strengthen existing statutes, including antitrust laws. We 
need to stop drug company abuses that prevent generic competition and 
lower prices, stop illegitimate patent ``evergreening,'' and stop 
anticompetitive sweetheart deals between brand name and generic 
companies.
  I am pleased that the underlying bill we are considering would get 
lower-priced generics on the market faster, especially since we know 
that prescription drug expenditures are the fastest growing segment of 
the health care market, with spending on outpatient prescription drugs 
in the U.S. increasing by 17 percent over last year. It is absolutely 
incredible that outpatient drug expenditures have more than doubled in 
the last five years.
  Drug expenditures in the United States rose from about $5.5 billion 
in 1970 to a projected $161 billion this year, and CMS predicts that 
prescription drug expenditures will continue to increase faster than 
any other category of health care spending throughout the next ten 
years. Medicare beneficiaries alone will spend $1.5 trillion on 
prescription drugs over the next ten years.
  Those two factors, great dependency on drug therapies and 
skyrocketing drug prices, put us on a collision course in our efforts 
to provide affordable health care.
  I know that many of my colleagues are concerned that the money isn't 
there for this benefit, and I, too, have no doubt that a new benefit 
will be extremely expensive. The Congressional Budget Office estimates 
that the original Graham amendment will cost $576 billion over 10 
years, and it spends about $85 billion a year by the end of the decade.
  This new spending is in addition to the fact that the Medicare budget 
will reach at least $498 billion by 2012, and will begin spending out 
more than it brings in by 2016. Sustainable financing of the Medicare 
program is a looming problem that must be addressed.
  But while we discuss the potential cost of a new benefit, we also 
need to discuss national priorities. I believe we can do a prescription 
drug benefit while living within our budget, and we can do so by having 
a clear vision for our country's priorities. One of my top priorities 
is getting a new prescription drug benefit to the Medicare 
beneficiaries in Washington state. But this may mean making other tough 
choices.
  There is no doubt that if we interject all of these issues into the 
political debate surrounding the need to provide Medicare coverage of 
prescription drugs for our elderly and disabled, we have a debate to be 
rivaled by few others.
  But the reality is that the Senate needs to move past the argument of 
whether or not to include prescription drugs in the Medicare program. 
We know there is a problem, and it is up to us to find a solution.
  Congress is trying to take a reasoned and rational approach to 
integrating a new prescription drug benefit into the Medicare program.
  I strongly believe that we need to include a prescription drug 
benefit in the Medicare program and I will continue to fight to ensure 
that all Washingtonians have access to the prescription medications 
they need.
  Finally, I want to briefly address the geographic disparities in 
Medicare provider payments. I am especially concerned that providers 
serving a disproportionate number of Medicare and Medicaid patients are 
facing unsustainable fee reductions.
  Every day I hear from my constituents that they are facing increasing 
difficulty in getting primary care services, and from physicians who 
can no longer afford to take on new Medicare patients. In fact, 57 
percent of Washington state physicians are limiting the number or 
dropping all Medicare patients from their practices.
  We absolutely must ensure that Medicare providers, hospitals, 
physicians, home health agencies, physical therapists, nursing homes, 
are paid enough to cover the cost of providing care to Medicare 
beneficiaries. I certainly hope that the Finance Committee, working 
with the Leadership on both sides, will pass a reimbursement package 
before we adjourn the 107th Congress. It will do us little good to 
provide a new Medicare benefit if there are no physicians willing or

[[Page 15431]]

available to write prescriptions for Medicare beneficiaries.
  Mr. McCAIN. Mr. President, the Greater Access to Affordable 
Pharmaceuticals Act, GAAP, provides a real opportunity to benefit all 
consumers of prescription drugs. In the recently concluded study of the 
abuses of the Hatch-Waxman act, the Federal Trade Commission concluded 
that there is a need for Congress to act and to act quickly to end the 
exploitation of loopholes in current law that has delayed the entry of 
generic drugs into the market. S. 812 would allow consumers earlier 
access to generic versions of drugs while protecting the intellectual 
property rights of the brand name drug innovators--a protection that is 
necessary for their continued investment in research and development of 
new and improved pharmaceuticals.
  S. 812 would accomplish five important objectives. First, the bill 
would limit the ability of brand name drug companies to delay the 
marketing of generic competitors. It does this by limiting brand name 
drug companies to only one automatic 30-month stay. Under current law, 
brand name drug companies can prevent generic substitutes from coming 
to market by suing the generics for patent infringement, thus 
triggering an automatic stay of up to 30 months on the FDA's approval 
of the generic drug. By bringing successive patent infringement suits, 
brand name drug companies have obtained sequential stays, and kept 
generics off the market much longer than 30 months.
  Allowing for only one automatic delay is consistent with the FTC's 
recent recommendations. In its report, the FTC recommended that only 
one stay be allowed, and noted that: prior to 1998, only 1 out of 9 
blockbuster drugs products involved at least three patent lawsuits, 
whereas after 1998, 5 of the 8 blockbuster products involved at least 
three lawsuits. . . .
  [C]ases involving multiple patents take longer than those involving 
fewer patents [to resolve] the FTC wrote, and the Commission found that 
the multiple stacking of automatic stays delayed the approval of 
generic drug applications from between 4 and 40 months beyond the 
initial 30-month period.
  There is no doubt that these stays have cost consumers enormous sums 
of money by preventing their access to cheaper generic versions of 
drugs. Allowing for one 30-month stay, as S. 812 does, strikes a 
balance between the rights of brand name drug companies seeking to 
protect their legitimate patents, and the rights of consumers to access 
generic drugs without unreasonable delay due to ``gaming'' of the 
system.
  Second, the GAAP Act would modify the provision in current law that 
allows the first-to-file generic drug manufacturer an exclusive 180-day 
period to market its drug without competition from other generic 
manufacturers. The 180-exclusivity period was intended to provide a 
needed incentive for challenging dubious patents. Like the automatic 
30-month stay, however, this 180-day exclusivity has been abused. Brand 
name and generic drug companies have colluded in deals in which the 
brand name manufacturer effectively extends its own period of 
exclusivity by paying the generic drug manufacturer to stay out of the 
market for the six months during which the generic would otherwise be 
able to compete. When this occurs, the brand name manufacturer wins, 
and the generic manufacturer wins, but consumers lose. To prevent this 
type of abuse, S. 812 modifies current law so that first-to-file 
generic manufacturers that engage in anticompetitive conduct and do not 
go to market, lose the privilege of the 6-month exclusivity in the 
generic market, and, in certain circumstances, that exclusivity 
``rolls'' over to the next generic competitor.
  Third, the legislation would require generic drug applicants to the 
FDA to provide a more detailed ``paragraph IV'' filing. This means that 
the patent holder will not only receive a general notice that its 
patent is being challenged, but the generic drug applicant will be 
required to provide a more detailed legal basis of its assertions 
regarding the original patent's validity. This is an important 
protection for the brand name manufacturers because they will receive 
more information about the nature of the patent challenge as opposed to 
a simple notice that a generic application has been filed.
  Fourth, S. 812 would clarify that the FDA's existing regulations as 
they pertain to bioequivalence have the effect of law. Currently, bio-
equivalence is demonstrated through blood level studies, and only in 
some circumstances has the FDA allowed for limited human data to be 
submitted for products where blood studies are inapplicable. S. 812 
would allow the FDA to amend its regulations as necessary and clarify 
its authority over biological products under the Federal Food, Drug and 
Cosmetic Act.
  The fifth significant change to current law relates to how to clean 
up abuses of the ``Orange Book'', the manual in which the FDA lists all 
patents on pharmaceutical drugs. S. 812 allows generic manufacturers in 
certain instances to bring a cause of action to ``de-list'' or 
``rename'' a drug patent. Current law provides no means for 
``delisting'' a patent, although doing so can speed the marketing of 
generic drugs, particularly in cases involving patents that are 
patently frivolous and for which the brand name manufacturers clearly 
would not win a patent infringement suit. While purging the Orange Book 
of frivolous patents is important, I understand that some Senators are 
concerned that the new cause of action to ``delist'' will not speed the 
availability of generic drugs, but will lead to a snarl of litigation. 
I hope these concerns can be reviewed in conference.
  Over twenty years ago, Hatch-Waxman established the procedures for 
bringing generic drugs to consumers and set out to strike a balance 
that would allow drug innovators to protect their innovations, while 
allowing generic drugs easier access into the market. In large part, 
Hatch-Waxman succeeded in bringing new lower-cost alternatives to 
consumers, and encouraging more investment in U.S. pharmaceutical 
research and development. This has been evident in the years since the 
enactment of Hatch-Waxman, where research and development has increased 
from $3 billion to $21 billion. Loopholes in the law, however, have 
delayed benefits to consumers. It is time to close them.
  The Congressional Budget Office, CBO, recently released results of 
its estimate of S. 812, finding that total drug expenditures in this 
country over the next ten years, 203 to 2012, will be roughly $4.7 
trillion. If the delays resulting from numerous lawsuits and agreements 
that arise under current law were eliminated, the CBO estimates that S. 
812 would result in a savings of up to 7 percent, or $320 billion. For 
consumers, particularly seniors, the uninsured, and those on Medicare, 
this is a tremendous savings.
  Congress will improve the lives of many Americans by passing the 
underlying language of S. 812. I urge my colleagues to do this now.
  Mr. GRASSLEY. Mr. President, I'd like to say a few words about the 
Hatch-Waxman provisions that were contained in S. 812 that passed this 
morning. Ensuring access to affordable prescription drugs is a top 
priority for me. The challenge is to strike the right balance so 
consumers have timely access to medicine that's affordable and so that 
new, groundbreaking pharmaceuticals continue to be developed. I voted 
for S. 812 because I want Iowans and all Americans to benefit as much 
as possible from the competition and lower prices that generic drugs 
bring about in the marketplace. This bill starts to close loopholes in 
the current Hatch-Waxman law and stop abuses that may have contributed 
to the delay in market entry to generic drugs and kept drug prices 
high. I believe that this is a good first step toward recognizing and 
addressing concerns about abuses in the current system. However, I 
still have concerns about the drafting of a few of the provisions in 
this legislation.
  For example, I'm concerned abut the new private right of action 
created by S. 812. The current Hatch-Waxman law

[[Page 15432]]

does not allow for such a remedy, and this could cause unnecessary and 
increased litigation. I also share the concerns that Senator Frist 
expressed regarding the bioequivalency provision. I think that we need 
to clarify that this provision should in no way adversely impact or 
lessen public safety. Further, I think that we should clarify that the 
provision dealing with the 45 day paragraph IV notice does not 
eliminate all legal avenues with respect to a company being able to 
protect it's rights with respect to a patent. There might be a few 
other changes that would be beneficial to the bill. Nevertheless, I'm 
hopeful that we can improve on this legislation. We need to be able to 
close the loopholes, but also ensure that we keep the proper balance 
between promoting timely access to affordable generic drugs and giving 
brand-name companies reasonable intellectual property protections so 
they will continue to innovate and find new cures and drugs.
  I was disappointed that the Senate was not able to consider an 
amendment I wanted to offer with Senator Leahy which would have 
required brand-name and generic companies to file with the Federal 
Trade Commission and Justice Department any agreements that deal with 
the 180 day exclusivity provision of the Hatch-Waxman law. The language 
of our amendment is exactly the language contained in S. 754, as 
reported out of the Judiciary Committee last November. So everyone 
knows, this legislation is fully supported by the Federal Trade 
Commission report that came out just yesterday. In fact, the Federal 
Trade Commission report said ``we believe that notification of such 
agreements to the Federal Trade Commission and the U.S. Department of 
Justice is warranted. We support the Drug Competition Act of 2001, S. 
754, introduced by Senator Leahy, as reported by the Committee on the 
Judiciary.'' I'm putting my colleagues on notice that I will work to 
get this legislation passed to ensure that lower price drugs get to 
market as soon as possible.
  I want Iowans to benefit from new scientific research and innovative 
drug products. Patent protections help provide incentives for these 
developments. With the practice of medicine today being so dependent on 
prescription drugs and with a new, taxpayer-financed prescription drug 
benefit on the horizon, I'll continue to work to make sure Congress 
maintains the right balance between patent protection and access to 
generic drugs.
  Mr. McCain. I would like to take the opportunity to talk about the 
underlying bill, S. 812, which, until now, has been largely treated in 
this two week debate as little more than a vehicle for a grander, more 
politically salient, but also more elusive, prescription drug benefit.
  If the Senate fails to pass the underlying bill, the Greater Access 
to Affordable Pharmaceuticals Act, GAAP, will lose a real opportunity 
to benefit all consumers of prescription drugs. In a recently concluded 
study of the abuses of the Hatch-Waxman act, the Federal Trade 
Commission concluded that there is a need for Congress to act and to 
act quickly to put an end to the anti-competitive abuses that have 
delayed the entry of generic drugs into the market. S. 812 would allow 
consumers earlier access to generic versions of drugs while protecting 
the intellectual property rights of the brand name drug innovators, a 
protection that's necessary for their continued investment in research 
and development of new and improved pharmaceuticals.
  While the brand name drug manufacturers have decried this bill, which 
has been portrayed by some as a boon to generic drug makers, I assure 
you that these portrayals are not accurate. The consumer is the 
intended beneficiary of this legislation, plain and simple.
  S. 812 would accomplish five important objectives. First, the bill 
would limits the ability of brand name drug companies to delay the 
marketing of generic competitors. It does this by limiting brand name 
drug companies to only one automatic 30-month stay on the marketing of 
generic drugs. Under current law, brand name drug companies can prevent 
generic substitutes from coming to market by suing the generic for 
patent infringement and in so doing, stop the FDA, for up to 30 months, 
from approving the cheaper substitute. By bringing successive patent 
infringement suits, brand name drug companies have obtained sequential 
30-month stays, and kept generics off the market much longer than 30 
months.
  Allowing for only one automatic delay is consistent with the 
recommendation the Federal Trade Commission made recently in its 
comprehensive study of anticompetitive abuses of current law by brand 
name and generic drug companies. In its report, the FTC recommended 
that only one stay be allowed, and noted that ``prior to 1998, only 1 
out of 9 blockbuster drug products involved at least three patent 
lawsuits, whereas after 1998, 5 of the 8 blockbuster products involved 
at least three lawsuits.'' ``[C]ases involving multiple patents take 
longer than those involving fewer patents [to resolve]'' the FTC wrote, 
and the Commission found that the multiple stacking of 30-month stays 
prevented the FDA from approving generic ANDAs from 4 to 40 months 
beyond the initial 30-month stay.
  There is no doubt that these stays have prevented or delayed generic 
drugs from entering the marketplace and increased the price of 
prescription drugs. Allowing for one 30-month stay, as S. 812 does, 
strikes a balance between the rights of brand name drug companies 
seeking to protect their legitimate patents, and the rights of 
consumers to access generic drugs without unreasonable delay due to 
``gaming'' of the system. I understand that there is disagreement 
regarding which patents should be afforded protection under the 
automatic stay, however, I believe we can all acknowledge that allowing 
for one, and only one stay, is the most effective way to prevent 
frivolous lawsuits that delay consumers' access to less expensive 
pharmaceuticals.
  Second, the GAAP Act would modify the provision in current law that 
allows the first-to-file generic drug manufacturer an exclusive 180-day 
period to market its generic drug without competition from other 
generic manufacturers. The 180-exclusivity period was intended to 
provide a needed impetus for generic companies to challenge dubious 
patents. Like the automatic 30-month stay, however, this 180-day 
exclusivity has been abused. Brand name and generic drug companies have 
colluded in deals in which the brand name manufacturer effectively 
extends its own period of exclusivity by paying the generic drug 
manufacturer to stay out of the market for the six months during which 
the generic would otherwise be able to compete. When this occurs, the 
brand name manufacturer wins, and the generic manufacturer wins, but 
consumers lose. To prevent this type of abuse, S. 812 modifies current 
law so that first-to-file generic manufacturers that engage in 
anticompetitive conduct and do not go to market, lose the privilege of 
6-month exclusivity in the generic market, and, in certain 
circumstances, that exclusivity ``rolls'' over to the next generic 
competitor.
  Third, the legislation would require generic drug applicants to the 
FDA to provide a more detailed ``paragraph IV'' filing. This means that 
the patent holder will not only receive a general notice that its 
patent is being challenged, but the generic drug applicant will be 
required to provide a more detailed legal basis for its assertions 
regarding the original patent's validity. This is an important 
protection for the brand name manufacturers because they will receive 
more information about the nature of the patent challenge as opposed to 
a simple notice that a generic application has been filed.
  Fourth, S. 812 would clarify that the FDA's existing regulations as 
they pertain to bio-equivalence have the affect of law. Currently, bio-
equivalence is demonstrated through blood level studies, and only in 
some circumstances has the FDA allowed for limited human data to be 
submitted for products where blood studies are inapplicable. S. 812 
would allow the FDA to amend their regulations as necessary and clarify 
their authority over biological

[[Page 15433]]

products under the Federal Food, Drug and Cosmetic Act.
  The fifth significant change to current law relates to how to clean 
up abuses of the ``Orange Book'', the manual in which the FDA lists all 
patents on pharmaceutical drugs. The provision in the current bill, 
allows generic manufacturers in certain instances to bring a cause of 
action to ``de-list'' or ``re-name'' a drug patent. Current law 
provides no means for ``delisting'' a patent, although doing so can 
speed the marketing of generic drugs, particularly in cases involving 
patents that are patently frivolous and for which the brand name 
manufacturers clearly would not win a patent infringement suit.
  The cause of action for generic manufacturers to ``delist'' patents 
was a provision that was added to S. 812 late in the process, and it is 
controversial. Opponents argue that doing so will significantly 
increase and complicate litigation without clearly making generic drugs 
available to consumers more quickly. How the cause of action in S. 812 
will work is yet unclear. I hope that during conference on this 
legislation, we can consider not only the provision in the Senate bill, 
but also the proposal mentioned in the FTC's recent report to permit a 
claim for ``delisting'' to be brought, not as an original and separate 
action, but as a counterclaim in the context of a patent infringement 
lawsuit. Such an approach may be more appropriate in that it could 
reduce the number of lawsuits, but still allow generic manufacturers a 
way to ``delist'' frivolous patents through summary judgments or other 
motions that can be raised in the context of patent infringement 
litigation.
  Over twenty years ago, Hatch-Waxman establishes the procedures for 
bringing generic drugs to consumers and set out to strike a balance in 
the pharmaceutical industry that would allow brand name manufacturers 
to protect their innovations, while allowing generic brands easier 
access into the market. In large part, Hatch-Waxman succeeded in 
bringing new lower-cost alternatives to consumers, and encouraging more 
investment in U.S. pharmaceutical research and development. This has 
been evident in the 15 years since the enactment of Hatch-Waxman, where 
research and development has increased from $3 billion to $21 billion. 
Loopholes in the law, however, have delayed benefits to consumers. It 
is time to correct this.
  The Congressional Budget Office, CBO, recently released results of 
its estimate of S. 812 finding that total drug expenditures in this 
country over the next ten years (2003 to 2012) will be roughly $4.7 
trillion. If the delays resulting from numerous lawsuits and agreements 
were eliminated, the CBO estimates that S. 812 would result in a 
savings of up to 7 percent or $320 billion. For consumers, particularly 
seniors, the uninsured, and those on Medicare, this is a tremendous 
savings.
  Congress will improve the lives of many Americans by passing the 
underlying language of S. 812. I urge my colleagues to do this now.
  Mr. LEAHY. Mr. President, I am disappointed that at the very last 
moment, the acceptance of the Drug Competition Act of 2001 as an 
amendment to ``The Greater Access to Affordable Pharmaceuticals Act,'' 
S. 812 was withdrawn. This bill, which enjoys the justified support of 
the administration's antitrust enforcement agencies, would have brought 
lower-priced generic drugs to the marketplace. Along with Senator 
Grassley, I have every confidence that this bill would have garnered 
the overwhelming support of our colleagues on both sides of the aisle 
and would have benefitted every American purchasing prescription drugs, 
and am mystified by the reversal of the agreement to accept it. I thank 
Senator Grassley and Senator Kennedy for their support.
  Prescription drug prices are rapidly increasing, and are a source of 
considerable concern to many Americans, especially senior citizens and 
families. Generic drug prices can be as much as 80 percent lower than 
the comparable brand name version. S. 812 is a tremendous effort to 
improve timely introduction of generic pharmaceuticals into the 
marketplace, and into our medicine cabinets, and our amendment will 
provide an important tool in making that effort successful.
  While the Drug Competition Act is a small bill in terms of length, it 
is a large one in terms of impact. It will ensure that law enforcement 
agencies can take quick and decisive action against companies that are 
driven more by greed than by good sense. It gives the Federal Trade 
Commission and the Justice Department access to information about 
secret deals between drug companies that keep generic drugs off the 
market. This is a practice that hurts American families, particularly 
senior citizens, by denying them access to low-cost generic drugs, and 
further inflating medical costs.
  This had been a genuine bipartisan effort, and I must thank all my 
colleagues, including Senator Hatch who has a long-standing interest in 
these issues and who has praised S. 754 on the floor in recent days. 
Also, sub-committee Chairman Kohl has worked with me from the start on 
this effort, and I particularly want to thank our co-sponsor Senator 
Grassley, who has worked hard to reach consensus on this bill that will 
help protect consumers. This bill passed unanimously out of the 
Judiciary Committee last October, but it has been the subject of an 
anonymous hold on the floor, presumably unrelated to the merits. 
Partisan politics should not further delay enactment of this sensible, 
and universally applauded, bill into law.
  In fact, just yesterday the FTC released its long-awaited report on 
the entry of generic drugs into the pharmaceutical marketplace. The FTC 
had two recommendations to improve the current situation, to close the 
loopholes in the law that allow drug manufacturers to manipulate the 
timing of generics' introduction to the market. One of those 
recommendations was simply to enact S. 754, as the most effective 
solution to the problem of ``sweetheart'' deals between brand name and 
generic drug manufacturers that keep generic drugs off the market, thus 
depriving consumers of the benefits of quality drugs at lower prices. 
In short, this bill enjoys the unqualified endorsement of the 
Republican FTC, which follows on the support by the Clinton 
Administration's FTC during the initial stages of our formulation of 
this bill. We can all have every confidence in the common sense 
approach that S. 754 takes to ensuring that our law enforcement 
agencies have the information they need to take quick action, if 
necessary, to protect consumers from drug companies that abuse the law.
  The issue of drug companies paying generic companies not to compete 
was exposed last year by the FTC, and by articles in major newspapers, 
including an editorial in the July 26, 2000, The New York Times, titled 
``Driving Up Drug Prices.'' This editorial concluded that the problem 
``needs help from Congress to close loopholes in federal law.'' And 
while the FTC has sued pharmaceutical companies that have made such 
secret and anticompetitive deals, as the then Director of the Bureau of 
Competition Molly Boast testified before the Judiciary Committee in May 
2001, the antitrust enforcement agencies are only finding out about 
such deals by luck, or by accident.
  Under current law, the first generic manufacturer that gets 
permission to sell a generic drug before the patent on the brand-name 
drug expires, enjoys protection from competition for 180 days, a head 
start on other generic companies. That was a good idea, but the 
unfortunate loophole exploited by a few is that secret deals can be 
made that allow the manufacturer of the generic drug to claim the 180-
day grace period, to block other generic drugs from entering the 
market, while, at the same time, getting paid by the brand-name 
manufacturer to not sell the generic drug.
  The bill would have closed this loophole for those who want to cheat 
the public, but keeps the system the same for companies engaged in true 
competition. The deals would be reviewed only by those agencies--the 
agreements would not be available to the public. I think it is 
important for Congress not to overreact in this case and throw out

[[Page 15434]]

the good with the bad. Most generic companies want to take advantage of 
this 180-day provision and deliver quality generic drugs at much lower 
costs for consumers. We should not eliminate the incentive for them. 
Instead, we should let the FTC and Justice look at every deal that 
could lead to abuse, so that only the deals that are consistent with 
the intent of that law will be allowed to stand.
  This bill would have accomplished precisely that goal. Moreover, it 
fits neatly into S. 812's provisions requiring a generic drug company 
that has been granted the exclusive, 180-day period on the market to 
forfeit that privilege if it makes a deal with a brand name company, or 
otherwise delays bringing its generic drug into the marketplace. Such a 
generic company must relinquish that 180-day privilege to the next 
generic manufacturer that can come to market. Both S. 812 and S. 754 
share the goal of ensuring effective and timely access to generic 
pharmaceuticals that can lower the cost of prescription drugs for 
seniors, for families, and for all of us.
  Mr. KERRY. Mr. President, I am disappointed that the Senate was 
unable to pass the Graham-Miller-Kennedy amendment last week, as it 
would have established a comprehensive prescription drug benefit for 
our Nation's seniors. I strongly supported the Graham-Miller-Kennedy 
plan, as I believe it offered the best solution to the problem our 
senior citizens face in finding a way to afford the prescription drugs 
they need to stay healthy. Given the failure of the Senate to pass the 
Graham-Miller-Kennedy amendment, which I voted for, I now lend my 
support to the low-income, catastrophic benefit proposal that has been 
offered by my colleagues, Senators Bob Graham and Gordon Smith. While I 
would rather the Senate take a stand in support of a more comprehensive 
benefit, the Graham-Smith amendment marks an important first step in 
making sure that our country delivers on the promise that Medicare made 
to our Nation's seniors almost 30 years ago.
  Medicare was enacted in 1965, under the leadership of President 
Lyndon Johnson, as a promise to the American people that, in exchange 
for their years of hard work and service to our country, their health 
care would be protected in their golden years. But that promise has not 
been fulfilled. Across our country, millions of seniors have cried out 
for help in paying for their prescription medication. Too many of our 
parents and grandparents confess that they are unable to afford the 
drugs their doctors prescribe for them. Too many of our parents and 
grandparents have to choose between paying for their rent, getting 
their groceries or buying the medicine they need to stay healthy.
  Prescription drug expenditures are skyrocketing--with the drug prices 
facing seniors growing at four times the rate of inflation. These costs 
are forcing our Nation's elders to pile into buses, and travel into 
Canada and Mexico where they can purchase the medicine they need for 30 
percent less of the cost in the United States. These costs are driving 
Americans across our borders to obtain the prescription medications our 
very own pharmaceutical companies have developed here at home.
  I appreciate the biotechnology revolution being driven publicly, by 
the National Institutes of Health, and privately, by the pharmaceutical 
industry. The advancements in modern medicine are truly spectacular, 
and many of the most inspiring discoveries are being made by 
biotechnology companies in my own State of Massachusetts. I am proud of 
the work being done in my state and across the country. With continued 
investment in research, scientists predict that we may be 5 to 10 years 
away from major breakthroughs in medical treatment for diseases like 
Alzheimer's and Parkinson's. But I ask, of what consequence are medical 
discoveries if they never leave the laboratory or move beyond the shelf 
of a local pharmacy?
  The Graham-Smith amendment will help move those medications from 
pharmacy shelves into the hands of the seniors whose lives depend on 
them. Graham-Smith offers all seniors protection against high drug 
bills, establishing Medicare coverage of all drug costs incurred over 
$3,300. In addition to catastrophic coverage, the Graham-Smith proposal 
will provide every senior, regardless of income, up to a 30 percent 
discount on drugs purchased before they reach the $3,300 stop-loss. For 
low-income seniors, the Graham-Smith plan provides special assistance, 
covering all drug costs for those beneficiaries below 200 percent of 
the Federal poverty level.
  The Graham-Smith amendment will provide protection to all seniors 
against the high cost of prescription drugs. It is not the ideal 
solution, but it targets the seniors who need help the most. The 
sickest seniors will be protected from out-of-control costs, which 
every senior needs as insurance against a serious illness. Seniors with 
low incomes are guaranteed the drugs they need so they don't have to 
choose between prescription drugs and other necessities. This amendment 
provides a solid first step toward the goal of providing a 
comprehensive, reliable Medicare prescription drug benefit for our 
seniors.
  I urge my colleagues to join me in support of the Graham-Smith 
amendment. But let us not abandon our goal of establishing a more 
complete prescription drug benefit. Graham-Smith is a good first step, 
but we must continue the journey. Unless we establish a comprehensive 
Medicare drug benefit, the health of an entire generation will continue 
to be in jeopardy. We must act to deliver on that promise that 
President Johnson made 25 years ago. Our Nation's seniors deserve no 
less.
  Mrs. BOXER. Mr. President, I am disappointed that after nearly three 
weeks of debate, the Senate has been unable to pass a prescription drug 
benefit for seniors. Millions of senior citizens across the country 
desperately need this help.
  In California alone there are nearly 3.8 million Medicare 
beneficiaries. According to the most recent estimates, 684,000 of those 
Californians have no prescription drug coverage. Unsurprisingly, low-
income California seniors make up the majority of those currently 
suffering. However, this is an issue that cuts across socioeconomic 
lines to affect all seniors, throughout my State and throughout the 
Nation.
  It is easy to listen to numbers and forget that there are faces 
behind those numbers--real people with real health care problems. But 
that is precisely why this debate is so important. There are seniors in 
this country who are being gouged by the prices of prescription drugs, 
who are choosing to skip doses to make their drugs last, and who are 
holding off as long as possible before they fill their prescriptions 
because they simply can't afford it. This is a travesty, and one that 
we must address.
  We had a tremendous opportunity to address this situation and to 
provide seniors with a comprehensive prescription drug benefit under 
Medicare. I supported a proposal to provide a voluntary, affordable 
prescription drug benefit for all seniors under Medicare, with special 
assistance to those with low incomes. This proposal would provide a 
reliable benefit for the people who spend the most on drugs and who, in 
many cases, can least afford it: senior citizens. Unfortunately, 
because of opposition from the other side of the aisle, that effort 
failed.
  Fortunately, all is not lost. While we were unable to make 
prescription drugs more accessible to seniors, I am pleased that we 
were able to take steps to make prescription drugs more affordable for 
everyone.
  I supported--and we passed--a provision that will allow drug 
reimportation from Canada. In Canada, the exact same drugs often cost 
one-third the price. However, pharmacies in this country are not 
currently allowed to buy drugs in Canada to sell in the United States, 
which would pass these savings on to consumers. That should change as 
long as those drugs meet strict safety standards before entering our 
country. This provision will allow that to happen.
  I supported--and we passed--a provision that will allow states to 
negotiate lower drug prices for all of their citizens who currently 
lack prescription

[[Page 15435]]

drug benefits. States currently negotiate drug prices for their 
Medicaid recipients, the poorest of our Nation's citizens. This 
provision will give States an even larger market power to ensure even 
deeper discounts for all residents who lack prescription drug coverage.
  Finally, I supported--and we passed--a proposal to close the 
loopholes that currently allow brand-name drug companies to keep 
generic drugs off the market, even after the original patent on the 
drug has expired. Bringing generics to market ensures greater 
competition and ultimately reduces prices. This should not be unfairly 
stalled by brand-name companies that want to maintain their monopoly on 
the market.
  These are all important ways in which we will be able to bring the 
costs of drugs down for all Americans, young and old, rich and poor. We 
must provide seniors with a true Medicare prescription drug benefit, so 
that they are no longer forced to choose between drugs and food or 
rent. We may not have succeeded today, but I will keep fighting to see 
it happen in the very near future.
  Ms. COLLINS. Mr. President, I rise in strong support of the Greater 
Access to Affordable Pharmaceuticals Act, which will make prescription 
drugs more affordable by promoting more competition in the 
pharmaceutical industry and increasing access to lower priced generic 
drugs.
  I was very pleased to have the opportunity to work with my colleague, 
the Senator from North Carolina, in offering this compromise in the 
Health, Education, Labor, and Pensions Committee, where it was approved 
by a strong bipartisan vote. I also recognize the leadership and hard 
work of the Senators from New York and Arizona on this critical issue.
  Prescription drug spending in the United States has increased by 92 
percent over the past 5 years to almost $120 billion. These soaring 
costs are a particular burden for the millions of uninsured Americans, 
as well as for those seniors on Medicare who lack prescription drug 
coverage. Many of these individuals are simply priced out of the market 
or forced to choose between paying the bills or buying the pills they 
need to remain healthy.
  Skyrocketing prescription drug costs are also putting the squeeze on 
our Nation's employers who are struggling in the face of double-digit 
increases in their insurance premiums. They are finding it increasingly 
difficult to continue to provide health care coverage for their 
employees.
  Soaring costs are also exacerbating the Medicaid funding crisis that 
all of us are hearing about from our Governors back home who are 
struggling to bridge shortfalls in the States' budgets.
  In 1984, the Hatch-Waxman Act made significant changes in our patent 
laws that were intended to encourage pharmaceutical companies to make 
the investments necessary to develop new drug products while 
simultaneously enabling their competitors to bring lower cost, generic 
equivalents to the market. We should acknowledge that, to a large 
extent, the original Hatch-Waxman Act succeeded. The law has speeded 
access to generic drugs in the market. As a consequence, consumers are 
saving anywhere between $8 and $10 billion a year by purchasing lower 
priced generic drugs.
  Moreover, there are even greater potential savings on the horizon. 
Within the next 4 years, the patents on brand name drugs with combined 
sales of $20 billion are set to expire. If Hatch-Waxman were to work as 
it was intended, consumers could expect to save between 50 and 60 
percent on these drugs as lower-cost generic alternatives becomes 
available after these patents expire.
  But despite the past successes of this law, it has become 
increasingly evident that the Hatch-Waxman Act has been subject to 
abuse. While many pharmaceutical companies have acted in good faith, 
there is mounting evidence that others have attempted to game the 
system by exploiting legal loopholes in the current law. The result is, 
too many pharmaceutical companies have maximized their profits at the 
expense of consumers by filing frivolous lawsuits that have delayed 
access to lower priced generic drugs.
  Just yesterday, the Federal Trade Commission released its long-
awaited study that found that brand name drug manufacturers have, 
indeed, misused the law to delay the entry of lower cost generics into 
the market. The FTC found that these tactics have led to delays of 
between 4 and 40 months--over and above the first 30-month stay 
provided under Hatch-Waxman--for generic competitors of at least eight 
drugs--eight very popular drugs--since 1992. Moreover, six of these 
eight delays have occurred since 1998.
  The FTC report identifies two specific provisions of the current 
law--the automatic 30-month stay and the 180-day market exclusivity 
provision--as being susceptible to challenges and strategies that delay 
the entry of lower cost generic alternatives into the market. According 
to the FTC report, these loopholes ``continue to have the potential for 
abuse'' and, if left unchanged, ``may have [even] more significance 
[for consumers] in the future.'' I am pleased to say that these are the 
very loopholes that our bill would close.
  The Congressional Budget Office estimates that our legislation would 
cut our Nation's drug costs by an astounding $60 billion over the next 
10 years. It is no wonder that our proposal is supported by coalitions 
representing the Governors, employers, insurers, organized labor, 
seniors groups, and individual consumers who are footing the bill for 
these expensive drugs and whose costs for many popular drugs could be 
cut in half if generic alternatives were more readily available.
  I would like to pause for a moment to discuss some of the details of 
the underlying Edwards-Collins bill. Some of my colleagues have argued 
that certain provisions of the bill are unconstitutional or that the 
bill will lead to more litigation. But no amendments have been offered 
to change any of the provisions of the Edwards-Collins bill. Moreover, 
the bill itself is the product of months of work and represents a 
broad, bipartisan compromise that incorporates the views and concerns 
of a wide spectrum of interests.
  I worked particularly hard on carefully wording the cause of action 
created by the bill, and believe that criticisms of it spurring 
increased litigation are not well-founded. Our bill creates a new civil 
action that offers a remedy if companies incorrectly or frivolously 
listed patents in the Orange Book, so that these patents do not delay 
the ability of a generic drug to come to market. The bottom line is, 
the cause of action will help to reduce both the cost of prescription 
drugs and the cost of prescription drug litigation. It does so by 
allowing generic drug makers, for the first time, to directly challenge 
a patent that has been frivolously or incorrectly listed.
  I understand the concerns of some of my colleagues who are leery of 
creating new causes of action. But I would reply that, in many cases, 
litigating through narrowly-targeted suits can be quicker and less 
expensive than aggregating a number of claims in one, massive 
proceeding. Moreover, I have worked to target the new provision as 
carefully as possible. In Committee, I offered a common sense amendment 
to tailor the new cause of action in a way that will help minimize 
unintended consequences while, at the same time, ensuring that it still 
serves its intended purpose of policing frivolous or incorrectly listed 
patents. My amendment made it clear that the delisting cause of action 
is for injunctive relief only and cannot result in monetary damages. It 
also limited the new cause of actions to patents listed in the Orange 
Book up to 30 days after a New Drug Application's approval. In doing 
so, my amendment harmonized the 30-month stay provision and the cause 
of action, as it should be.
  The original Hatch-Waxman Act was a carefully constructed compromise 
that balanced an expedited FDA approval process to speed the entry of 
lower cost generic drugs into the market with additional patent 
protections to ensure continuing innovation that brings us these 
wonderful lifesaving and life-enhancing drugs.
  The bipartisan compromise bill before us restores that balance by 
closing

[[Page 15436]]

the loopholes that have reduced the original law's intent and its 
effectiveness in bringing lower cost generic drugs to market more 
quickly. I am very pleased we are going to pass this legislation. It 
really will make a difference for millions of Americans who are 
struggling to afford the high cost of prescription drugs.
  Mr. President, I ask unanimous consent that letters from various 
groups that are supporting this legislation and worked very closely 
with us in drafting it be printed in the Record.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

                                                      Business for


                                          Affordable Medicine,

                                     Washington, DC July 23, 2002.
     Hon. Susan Collins,
     US Senate,
     Russell Senate Office Building,
     Washington, DC
       Dear Senator Collins: The Business for Affordable Medicine 
     coalition encourages you to vote for the Hatch-Waxman reform 
     measures in S. 812. By closing loopholes in the Hatch-Waxman 
     Act, Congress will ensure that more affordable prescription 
     drugs reach the market without delays, which will provide 
     prescription drug purchasers with significant cost savings.
       The Congressional Budget Office estimates that closing 
     Hatch-Waxman loopholes would reduce the nation's drug costs 
     by $60 billion over the next 10 years. Preventing delays in 
     the availability of generics would also reduce federal 
     spending for prescription drugs by $6 billion while 
     increasing federal revenues by $2.2 billion.
       Consumers and institutional purchasers (including 
     employers, and federal and state governments) can no longer 
     afford the anti-competitive practices that are made possible 
     by loopholes in the Hatch-Waxman Act. Please be assured that 
     BAM supports strong intellectual property protections, and we 
     do not believe they are undermined by provisions of S. 812.
       BAM corporate members include Ahold USA, Albertsons, 
     Constellation Energy Group, General Motors, Georgia-Pacific, 
     Kellogg Company, Kmart, Kodak, Motorola, Sysco Corporation, 
     United Parcel Service, Wal-Mart, Weyerhaeuser, and Woodgrain 
     Millwork. BAM also includes governors and a number of state 
     labor leaders.
       Together, we urge you to support these limited and targeted 
     Hatch-Waxman reform provisions in S. 812 to make timely 
     access to lower-cost generics a reality.
           Sincerly,

                                                  Jody Hunter,

                                     Director, Health and Welfare,
     Georgia-Pacific Corporation.
                                  ____

                                       Coalition for a Competitive


                                        Pharmaceutical Market,

                                                    July 17, 2002.
       Dear Senator: As a broad-based coalition of large 
     employers, consumer groups, generic drug manufacturers, 
     insurers, labor unions, and others, we are writing to advise 
     you of our strong support for the S. 812, the Greater Access 
     to Affordable Pharmaceuticals Act, as reported out of the 
     Senate HELP Committee on July 11, 2002. We believe it is 
     critical that Congress act this year to pass legislation that 
     would eliminate barriers to generic drug entry into the 
     marketplace. This legislation would accomplish this long-
     overdue need.
       Prescription drug costs are increasing at double-digit 
     rates and clearly are unsustainable. Current pharmaceutical 
     cost trends are increasing premiums, raising copayments, 
     pressuring reductions in benefits, and undermining the 
     ability of businesses to compete. We believe that a major 
     contributor to the pharmaceutical cost crisis is the use of 
     the Drug Price Competition and Patent Term Restoration Act of 
     1984 in ways clearly unanticipated by Congress and which 
     effectively block generic entry into the marketplace. The 
     repeated use of the 30-month generic drug marketing 
     prohibition provision and other legal barriers have resulted 
     in increasingly unpredictable and unaffordable pharmaceutical 
     cost increases.
       Although the legislation as reported out of the Senate HELP 
     Committee does not totally eliminate the 30-month marketing 
     prohibition provision, as would be our preference, it does 
     make important process changes that will lead to a more 
     predictable, rational pharmaceutical marketplace. We 
     recognize that compromises were necessary to garner the 
     support of a bipartisan majority of the Members of the 
     Committee. However, we would strongly oppose any additional 
     amendments that would undermine the intent of this 
     legislation by further delaying generic access or reducing 
     competition and increasing costs to purchasers. We also 
     remain opposed to legislation that would increase costs to 
     purchasers either through extended monopolies or unnecessary 
     and costly litigation.
       We are convinced that the legislation currently pending 
     before the full Senate will make a major difference in 
     increasing competition in the marketplace and enhancing 
     access to more affordable, high quality prescription drugs. 
     We look forward to working with you and other Members of the 
     Senate to ensure that this important legislation is enacted 
     this year.
                                  ____

                                       Coalition for a Competitive


                                        Pharmaceutical Market,

                                                    July 30, 2002.
       Dear Senator: As a broad-based coalition of large 
     employers, consumer groups, generic drug manufacturers, 
     insurers, and others, we are writing to urge you to vote for 
     cloture on the bipartisan Greater Access to Affordable 
     Pharmaceuticals Act (S. 812). We believe it is critical that 
     Congress act this year to pass legislation that would 
     eliminate barriers to generic drug entry into the 
     marketplace. This legislation would accomplish this key 
     policy objective.
       Prescription drug costs continue to skyrocket--adversely 
     impacting consumers by increasing premiums, raising 
     copayments, pressuring reductions in benefits, and 
     undermining the ability of businesses to compete. We believe 
     that a major contributor to the pharmaceutical cost crisis is 
     the use of the Drug Price Competition and Patent Term 
     Restoration Act of 1984 in ways clearly unanticipated by 
     Congress and which effectively block entry of equivalent 
     generic drugs into the marketplace.
       Today's report from the Federal Trade Commission (FTC) 
     supports the kind of reforms contained in S. 812. For 
     example, the report supports limiting the availability of the 
     automatic 30-month marketing prohibition to just one per 
     product, per generic drug application. It also recognizes the 
     value of having a mechanism that would allow a generic 
     company to remove or correct the listing of a frivolous 
     patent with the FDA. According to the report, the lack of a 
     mechanism to delist an improperly listed patent ``may have 
     real world consequences'' given the FTC's knowledge of 
     ``instances in which a 30-month stay was generated solely by 
     a patent that raised legitimate listability questions.''
       The Coalition believes that S. 812 makes important process 
     changes that will lead to a more predictable, rational 
     pharmaceutical marketplace. CCPM members would strongly 
     oppose any additional amendments that would undermine the 
     intent of this legislation by further delaying generic access 
     or reducing competition and increasing costs to purchasers. 
     We also remain opposed to legislation that would increase 
     costs to purchasers either through extended monopolies or 
     unnecessary and costly litigation.
       We are convinced that the legislation currently pending 
     before the full Senate will make a major difference in 
     increasing competition in the marketplace and enhancing 
     access to more affordable, high quality prescription drugs. 
     We look forward to working with you and other Members of the 
     Senate to ensure that this important legislation is enacted 
     this year.
                                  ____

  Mr. BIDEN. Mr. President, today is a day of profound disappointment 
to me. We have completed a debate on proposals to provide prescription 
drug coverage to Medicare beneficiaries, the most vulnerable sector of 
our population, and we have come up empty.
  I applaud my colleagues for their earnestness and conscientiousness 
as this issue was discussed on the Senate floor, but earnestness and 
conscientiousness do not help the senior citizen who cannot afford to 
pay for needed medications. I introduced a bill, the Prescription Drug 
Benefit Act of 2002, that would have provided an excellent benefit for 
Medicare beneficiaries by adding prescription drug coverage to Medicare 
Part B with no new premiums or deductibles, and I still believe that 
should be our goal. But at this point, we don't even have a consensus 
for a first step toward a Medicare prescription drug plan for seniors.
  Last week, I voted for the Graham-Miller plan, a comprehensive 
approach to this problem that, although not as good as my own bill, was 
a worthy compromise. It was defeated. Today, I voted for the Graham-
Smith plan that would at least offer us a starting point toward a 
comprehensive prescription drug plan. It was defeated. I and all of my 
colleagues who are concerned about the welfare of our seniors are 
regrouping with an eye toward taking another run at this critical 
problem in the very near future.
  The seniors and the disabled still need their life-saving 
medications. They still have to pay large amounts out-of-pocket for 
drugs, even though the legislation we passed today should help reduce 
the overall cost of pharmaceuticals for everyone. The percentage of the 
population covered by Medicare is rising. Medical advances are leading 
to important new drugs for various diseases. Our nation's seniors 
cannot, and should not, be left behind in the race toward longer and 
healthier lives. We

[[Page 15437]]

have moved this debate forward, but it is far from over, and we will 
need to continue to be resourceful and persistent in the future. The 
life and health of 40 million Americans hang in the balance.
  Mr. KOHL. Mr. President, I rise to strongly support final passage of 
S. 812, the Greater Access to Affordable Pharmaceuticals Act. I 
cosponsored this important legislation because I believe it will 
benefit every American by ensuring that more affordable generic drugs 
get to market on time and lower costs for consumers as promised. The 
Congressional Budget Office estimates that this bill will save American 
consumers $60 billion over the next 10 years.
  Prescription drug spending represents 9 percent of all health care 
costs, but drug spending grew 17 percent in 2001--and it's the fastest 
growing part of health care. Generic drugs can cost one-quarter of the 
price of their brand-name counterparts. In a time when health care 
costs are soaring in the double-digits annually, that is no small 
point.
  The pharmaceutical industry enjoys the highest profit margins of any 
sector in the American economy. Drug companies argue that high retail 
costs reflect the high cost of investment in research and development. 
I applaud the drug companies' efforts to find new lifesaving treatments 
and cures for patients and I do not argue with their right to make a 
healthy profit from their work.
  It is important to note that many of the gains in pharmaceutical 
research are made possible by the substantial, taxpayer-funded research 
investments of the National Institutes of Health and other Federal 
grants. All Americans should have access to the benefits of that 
research, and they should expect that once a drug company has recouped 
their costs, made a healthy profit, and the patents surrounding their 
drug expire, at that point consumers should benefit from generic 
competition that lowers drug prices.
  Unfortunately, in recent years, many drug companies have used 
loopholes in our patent laws to keep less expensive generic drugs off 
the market. This raises health care costs for patients, employers and 
States that are already struggling with rising health costs.
  There are three major loopholes that this bill closes. First, it 
would stop brand-name drug companies from filing endless, frivolous 
patents to keep a generic competitor off the market. These patents 
often border on the ridiculous, such as a patent on the color of the 
pill. But ridiculous as it may seem, each of these patents triggers a 
30-month stay whereby the generic drug is kept off the market while the 
matter goes to court. And drug companies have every incentive to do 
this, after all, the cost of litigation is virtually nothing compared 
to the additional profits they can get by keeping their monopoly just a 
little longer. For example, the makers of the antidepressent Wellbutrin 
were able to make another $1.3 billion during the 31 months they were 
in litigation with the generic company. And the makers of Prilosec 
earned another $1 billion in just 7 months of delayed generic 
competition.
  This bill would also close another loophole by outlawing sweetheart 
deals where a brand company pays a generic company to stay out of the 
market. In the case of Cardizem, which treats high blood pressure, the 
brand-name company paid the generic company $90 million to stay out of 
the market. Because the generic had won the right to have 180 days of 
market exclusivity before other generic competitors could enter the 
market, this sweetheart deal allowed the brand company to earn another 
$450 million before other generics could compete.
  Finally, this bill puts some common sense back into the process by 
which brand companies list patents with the FDA in what is called the 
Orange Book. It enforces the law as it was originally intended by 
ensuring that only patents that claim the drug product or the approved 
method of use are listed in the Orange Book. It also gives generic 
companies the ability to challenge patents that may have been listed 
inappropriately just to keep generics off the market longer.
  I believe that this legislation preserves the original intent of the 
Hatch-Waxman Act to balance the competing interests of the rights of 
innovative drug companies and the rights of consumers to affordable 
medicines. It preserves the ability of drug companies to invest in 
research and development to find lifesaving cures and treatments, but 
it also makes prescription drugs more affordable for all Americans by 
getting generic drugs to the market on time. It also makes any Medicare 
prescription drug benefit we pass more affordable for seniors and 
taxpayers.
  This brings me to the real disappointment I have about the 
legislation we are about to pass today. I am extremely disappointed 
that the Senate was unable to also pass a real, comprehensive, 
affordable drug benefit within the Medicare Program. I am baffled by 
the unwillingness of many on the other side of the aisle to work 
together to help our Nation's seniors with skyrocketing drug costs.
  When Medicare was first created in 1965, prescription drugs were a 
very small part of our health care system. But today, prescription 
drugs are a critical part of that system, keeping people healthier and 
living longer. Unfortunately, according to the Kaiser Family 
Foundation, 38 percent of our Nation's elderly have absolutely no 
prescription drug coverage at all. Many seniors who do have some 
prescription drug coverage find their plan inadequate and face large 
out-of-pocket costs. Too many seniors forgo needed medicines or are 
forced to choose between buying the medicine they need and buying food 
or paying rent.
  Seniors and the disabled on Medicare need a comprehensive, universal, 
voluntary, affordable drug benefit, and that benefit should be part of 
the Medicare program that we've relied upon since 1965. While the 
Senate considered many different plans, I voted for the Graham-Miller 
approach because it was the only plan that met those important goals. 
And it was the only plan before the Senate that guaranteed that all 
Wisconsin senior citizens would have access to the medicines they need.
  By contrast, I voted against the so-called ``tripartisan'' plan 
because it relied solely on HMOs to provide prescription drugs to 
seniors. This simply won't work in Wisconsin. In our State, because of 
inadequate Medicare reimbursement, we've already seen Medicare HMO 
plans leave every year and offer fewer benefits than in other States. 
The tripartisan plan had the same Medicare reimbursement problems. 
There was no guarantee that plans would participate in Wisconsin at 
all, and those plans that did participate could cover fewer drugs or 
charge seniors more in Wisconsin than in other States.
  In fact, the HMOs themselves have said they are reluctant to offer 
such plans. And even if they do, there is no guaranteed drug benefit, 
from year to year, HMOs could change the premiums and copays seniors 
pay and which drugs will be covered. I do not believe we should hold 
Wisconsin seniors hostage to the business interests of HMOs. Seniors 
need a drug benefit that they can rely on every year to be affordable 
and one that ensures access to the medicines they need. The tripartisan 
plan did not meet that test.
  In addition, under the tripartisan plan, many seniors would still 
have high drug costs and low-income seniors would not be protected. The 
HMOs could charge whatever premiums they want; there would be a $250 
deductible; seniors would still pay 50 percent of their drug bills; and 
there is a big gap where there is no coverage at all and the senior 
pays 100 percent of their drug bills. Seniors would have to pay $3,700 
out of their own pockets before they even reach the catastrophic level. 
And low-income seniors may not qualify for any extra help at all 
because of a strict asset test that prevents them from being covered if 
they own a car worth more than $4,500, clothing and furniture worth 
more than $2,000, or even a burial fund worth $1500. This asset test 
would automatically eliminate 40 percent of Wisconsin's low-income 
seniors from being eligible for the extra help they need.

[[Page 15438]]

  Instead of the false promise of the tripartisan plan, I and 51 other 
Senators supported the Graham-Miller plan. This program provided a 
guaranteed benefit through the Medicare Program that would be available 
to all seniors, at the same price no matter where they live. It was 
voluntary, so seniors with drug coverage today could keep their plans. 
It had reasonable premiums and copays, no gaps in coverage, and low-
income seniors would get extra help with no restrictive asset test. And 
it gave seniors choices. Seniors could choose an HMO plan if they 
wanted to, but the Graham-Miller bill offered them a drug benefit 
through the traditional Medicare program that seniors have relied on 
since 1965.
  Unfortunately, even though a majority of Senators supported the 
Graham-Miller bill, it failed to gain the 60 votes that are necessary 
for any plan to pass under Senate budget rules. At that point, the 
Senate was faced the possibility of doing nothing and continuing to 
leave seniors stranded with high drug costs. For me, this was not an 
option. Seniors have waited too long for Congress to act, and it would 
be inexcusable for Congress to leave them with nothing.
  That's why I supported a bipartisan compromise that represented a 
solid down payment on a real Medicare prescription drug benefit. First, 
it would help all low-income seniors below 200 percent of poverty, 45 
percent of Wisconsin seniors, by providing comprehensive drug coverage 
through the Medicare program with nominal copays of $2 per generic 
prescription and $5 per brand-name prescription. Second, it would 
provide all seniors above 200 percent of poverty with discounts on 
prescription drugs of up to 30 percent. The Medicare program would 
utilize Pharmacy Benefit Managers, or PBMs, to negotiate these 
discounts the same system that is used today to manage benefits for 
nearly 200 Americans in the private sector.
  Third, the Graham-Smith compromise would protect seniors with very 
high drug costs of more than $3,300 in out-of-pocket costs, which 
represents nearly 17 percent of Wisconsin seniors. At that point, 
seniors would receive full Medicare coverage for their medicines with 
copays of only $10 per prescription.
  Let me be clear that I would much prefer a more comprehensive benefit 
and have voted for one. The original Graham-Miller plan would have been 
a comprehensive benefit for all Medicare beneficiaries, and I believe 
that is the direction we need to go. But the Graham-Smith compromise 
plan would have taken a real first step toward the universal benefit we 
need. It would have been a down payment upon which Congress must build 
so that all seniors have the coverage they need. But again, even this 
compromise was blocked from passing.
  I am extremely disappointed in the outcome of this debate. We missed 
a tremendous opportunity to pass a comprehensive Medicare drug benefit. 
And then we were blocked from the opportunity to take even one real 
step toward that goal. I truly hope that this is not the end of our 
journey this year. Our senior citizens made our country what it is 
today, they paid their taxes and they played by the rules. They should 
not be forced to choose between paying the rent or buying groceries, or 
buying the life-saving medicines they need to be healthy in their 
retirement years. It's time to create a reliable, affordable Medicare 
prescription drug benefit for seniors. I hope the Senate will continue 
to work toward that goal this year.
  Mr. THURMOND. Mr. President, I rise today to speak in favor of 
affordable prescription drugs. As a life-long health advocate, I 
recognize that prescription drugs are an important part of improving 
the health and quality of life for millions of Americans. These drugs 
allow Americans of every age to live a more productive and more 
enjoyable life. Our success in this area is due in large measure to our 
competitive system that allows for many different approaches to meet 
the many different needs of Americans.
  The central features of any prescription drug bill should be 
increased competition, innovation in the marketplace and increased 
access to more affordable drugs. However, the current bill does not 
accomplish these objectives. Instead, it seeks to bypass the excellent 
consumer protection provided by the FDA, decreases the return on the 
development of newer and better drugs, and may actually increase the 
cost of prescription drugs in the long run.
  This bill has been hastily assembled and rashly brought to the floor 
before committee consideration. This bill contains provisions that have 
not been analyzed for their impact upon our fine health care system. I 
fear these provisions will threaten the excellent healthcare system we 
currently enjoy. Indeed, the FTC released, just yesterday, a report 
entitled ``Generic Drug Entry Prior to Patent Expiration'' that showed 
that our system was working and that under the current Hatch-Waxman law 
innovative new drugs were being brought to market even as a thriving 
generic market was lowering overall drug costs. While the report does 
show that some minor changes may be in order, the place to make such 
important and complex changes is not the floor of the Senate after only 
a few hours study, it is in the appropriate committee with the 
requisite expertise.
  The bill contains a provision allowing for large scale re-importation 
of prescription drugs. This presents a serious safety concern of a 
variety of public health officials and has been rejected in the past. I 
am concerned that the opinions of many relevant agencies on this matter 
have been disregarded. Agencies which oppose this provision include the 
Department of Health and Human Services, the Food and Drug 
Administration, the Customs Service, and the Center ;for Medicare and 
Medicaid Services.
  Another provision which I strongly oppose which is in the bill 
relates to Medicaid recipients access to medicine. While it is 
presented as a price control, it will effectively make drugs 
unavailable to low-income Medicaid patients by imposing restrictive 
``prior authorization'' requirements on physicians. This policy is 
opposed by many patient groups and should not be part of this 
legislation.
  Finally, I am deeply concerned that this bill does not contain a 
Medicare drug benefit plan. This is a very important issue that remains 
unresolved by this body. Therefore, I do not support cloture on this 
bill, nor do I support final passage of the measure. It is my hope that 
we will revisit this issue soon and craft a bill which will improve the 
availability of affordable prescription drugs and ensure advances 
continue in this industry.
  Mr. HUTCHINSON. Mr. President, nearly 482,000 seniors in Arkansas 
desperately need a Medicare prescription drug benefit. Per capita, 
Arkansas has one of the poorest senior populations in the Nation, which 
means, more often than not, Arkansas seniors must choose between 
putting food on the table and buying much needed prescription 
medicines. I voted in favor of the Graham-Smith-Lincoln Medicare 
prescription drug compromise today, which has the full support of the 
AARP, because I believe in providing prescription drug assistance to as 
many people as possible and to those seniors who need it most. I 
regret, however, that it leaves out nearly 40 percent of Arkansas 
seniors and lacks measures to strengthen and protect Medicare. Rather, 
I believe that a universal benefit, accompanied by responsible Medicare 
reforms, is the most sensible approach to addressing the rising cost of 
drugs for our seniors and ensuring the long-term stability of the 
Medicare program. But most importantly, I am concerned about the impact 
of the Graham-Smith-Lincoln compromise on local pharmacies.
  Seniors need a Medicare prescription drug benefit just as much as 
they need access to their local pharmacies, particularly in rural 
states like Arkansas. The discount drug card established under the 
Graham-Smith-Lincoln compromise is a concept I opposed last week when I 
voted against the Hagel drug card amendment. Requiring pharmacies to 
accept discounts while doing nothing to reduce the price at which drugs 
are bought could force local

[[Page 15439]]

pharmacies to foot the bill of a Medicare prescription drug amendment. 
This is simply not right.
  To help fix these problems, I filed an amendment to the Graham-Smith-
Lincoln compromise which would have struck the drug discount card 
provisions in the bill as well as a provision giving special treatment 
for mail order pharmacies. If the Graham-Smith-Lincoln compromise 
garnered the 60 votes necessary for passage, I was prepared to offer my 
amendment so the Senate could have an open debate and vote on the 
impact of such legislation on local pharmacists. Since the Graham-
Smith-Lincoln compromise was rejected, this debate will have to wait 
until another day. In the meantime, I will continue to work for a 
bipartisan solution that provides Medicare prescription drug coverage 
for all seniors, and particularly low-income seniors, while also 
preserving access to local pharmacies.
  The PRESIDING OFFICER. Under the previous order, there are 2 minutes 
remaining equally divided.
  Who yields time?
  The Senator from New York is recognized.
  Mr. SCHUMER. Madam President, again, I urge my colleagues to support 
this legislation. Admittedly, it is incomplete legislation. We have not 
extended access, but in terms of cost cutting, this legislation is 
strong.
  The Schumer-McCain provisions will reduce the costs of so many drugs 
by 60, 65 percent for the senior citizen. For the family who has a 
child who desperately needs a drug, instead of $100 a prescription, it 
will only be $30, $35, or $40 a prescription. That is a godsend to many 
people these days.
  These drugs are wonder drugs, but their cost is so high that if you 
are not very wealthy or don't have a good medical plan, you cannot 
afford them, and that is an awful choice for people.
  This bill achieves the goal of reducing costs and reducing it very 
significantly--a $60 billion reduction over the next decade to our 
citizenry. I ask for your support of this measure.
  Madam President, I ask for the yeas and nays.
  The PRESIDING OFFICER. Is there a sufficient second?
  There is a sufficient second.
  The yeas and nays were ordered.
  The PRESIDING OFFICER. Who yields time?
  The Senator from Pennsylvania, Mr. Santorum, is recognized.
  Mr. SANTORUM. Madam President, I encourage a ``no'' vote on this 
bill. The Senator from New York says these are wonder drugs. They do 
not drop out of the air. They come from a tremendous amount of 
investment from pharmaceutical companies which create new drugs and 
save people's lives and create a better quality of life for Americans.
  We are sacrificing future cures for political payout today, which is 
cheaper drugs for our folks back home. The long-term consequence of 
what we are doing today is that more people will die as a result of 
drugs not being invented because of the reduction in the amount of 
research and development that will go on because we have now tipped the 
balance toward generic drug companies, which do no research and 
investment and create no new drugs.
  So understand what you are doing. We are sacrificing, yes, a great 
vote to say we are going to provide cheaper drugs. But long-term we are 
providing less cures and a lower quality of life.
  The PRESIDING OFFICER. The bill having been read the third time, the 
question is, Shall the bill pass?
  The yeas and nays have been ordered, and the clerk will call the 
roll.
  The assistant legislative 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 result was announced--yeas 78, nays 21, as follows:

                      [Rollcall Vote No. 201 Leg.]

                                YEAS--78

     Akaka
     Allard
     Allen
     Baucus
     Bayh
     Biden
     Bingaman
     Boxer
     Bunning
     Burns
     Byrd
     Campbell
     Cantwell
     Carnahan
     Carper
     Chafee
     Cleland
     Clinton
     Cochran
     Collins
     Conrad
     Corzine
     Craig
     Crapo
     Daschle
     Dayton
     Dodd
     Domenici
     Dorgan
     Durbin
     Edwards
     Ensign
     Feingold
     Feinstein
     Fitzgerald
     Graham
     Grassley
     Harkin
     Hollings
     Hutchinson
     Inhofe
     Inouye
     Jeffords
     Johnson
     Kennedy
     Kerry
     Kohl
     Landrieu
     Leahy
     Levin
     Lieberman
     Lincoln
     McCain
     McConnell
     Mikulski
     Miller
     Murkowski
     Murray
     Nelson (FL)
     Nelson (NE)
     Reed
     Reid
     Rockefeller
     Sarbanes
     Schumer
     Sessions
     Shelby
     Smith (NH)
     Smith (OR)
     Snowe
     Specter
     Stabenow
     Stevens
     Thomas
     Torricelli
     Warner
     Wellstone
     Wyden

                                NAYS--21

     Bennett
     Bond
     Breaux
     Brownback
     DeWine
     Enzi
     Frist
     Gramm
     Gregg
     Hagel
     Hatch
     Hutchison
     Kyl
     Lott
     Lugar
     Nickles
     Roberts
     Santorum
     Thompson
     Thurmond
     Voinovich

                             NOT VOTING--1

       
     Helms
       
  The bill (S. 812), as amended, was passed.
  The bill will be printed in a future edition of the Record.
  Mr. KENNEDY. Madam President, I move to reconsider the vote.
  Mr. DASCHLE. I move to lay that motion on the table.
  The motion to lay on the table was agreed to.
  Mr. KENNEDY. Mr. President, I am pleased today that the Senate has 
passed the Schumer-McCain bill. This bill is the Senate's answer to the 
public's demand for action on lower drug prices. The bill would end--
once and for all--the drug industry's abuses and close legal loopholes 
the industry exploits to block competition and keep drug prices 
artificially high.
  The record is clear that the pharmaceutical industry uses loopholes 
in the landmark Hatch-Waxman Act to drive up the cost of prescription 
drugs. Each and every day, pharmaceutical companies exploit those 
loopholes to maintain their monopoly over their drugs, and to keep more 
affordable generic drugs off the market. America's consumers pay the 
price, and today the Senate has said loud and clear--it's time to stop 
the abuses.
  Just yesterday, the Federal Trade Commission recommended legislative 
changes that are incorporated in Schumer-McCain. And here today, the 
Senate has approved the Schumer-McCain reforms on a strong bipartisan 
vote. The Senate has spoken and it has said: Stop these abuses. Stop 
depriving our seniors and our uninsured of safe and effective drugs 
that they can afford. Stop driving up the cost of health care for 
employers and health plans and consumers by delaying lower cost generic 
drugs.
  What is it we have done today? Schumer-McCain amends the Hatch-Waxman 
Act, which provides for the approval of generic drugs. The Hatch-Waxman 
Act has been a tremendous success in promoting competition and 
innovation in the pharmaceutical industry. Indeed, both the brand drug 
and generic drug industries have flourished under it.
  Yet there are clearly weaknesses in the Hatch-Waxman Act. Today, of 
the top 15 best-selling drugs potentially subject to generic 
competition, the basic patents on at least five have long expired. 
Their exclusive rights to market their drugs have passed. Yet there is 
no generic competition. The system needs repairs.
  Prescription drug costs are spiraling out of reach of the elderly and 
uninsured. They are draining the health care budgets of State 
governments, employers and labor unions. All because brand-name drug 
companies have exploited loopholes in the law to pocket windfall 
profits.
  Drug prices have skyrocketed at double digit rates annually since 
1996, and experts expect this trend to continue. This drug price 
inflation has been far in excess of the rate of consumer price 
inflation. And experts agree that spiraling drug prices have accounted 
for almost two-thirds of growth in drug spending especially the higher 
prices of new, aggressively promoted drugs.
  Generic drugs are clearly part of the answer. Simply put, a 1 percent 
increase in generic use can decrease the Nation's yearly bill for drugs 
by a billion dollars. And ensuring the timely

[[Page 15440]]

approval of generic drugs could save consumers $60 billion over the 
next 10 years.
  These savings are easy to understand. For patients and health plans 
alike, the costs of brand-name drugs are four times higher than for 
their generic equivalents. That difference is even higher for the 
elderly and uninsured, who must often pay full price for their 
medicines. On average, a month's supply of a generic drug costs a 
patient $4 and the health plan $16; the costs for a brand drug are 4 
times higher: $16 for the patient, $64 for the plan. For the uninsured, 
and seniors who lack prescription drug coverage, the full costs are 
either $20 for the generic or $80 for the brand drug.
  The antidepressant Prozac is a clear example. Generic companies 
challenged and defeated a Prozac patent. Today, you can buy 30 generic 
Prozac tablets for less than $30--less than a third of what brand-name 
Prozac will cost you.
  But some pharmaceutical companies game the system by listing spurious 
patents with the FDA--patents on unapproved uses, unapproved compounds, 
or formulations that they don't even market. Then they get automatic 30 
month stays delaying approval of generic drugs.
  For example, Neurontin is a drug approved by FDA to treat epilepsy. 
In 2001, Neurontin sales exceeded $1.1 billion. The basic patent on the 
drug compound expired in 1994, and the patent on the approved method of 
use expired in 2000. But the company had listed two additional patents 
on the drug that the generic companies had to certify were invalid or 
not infringed. These two patents were on an unapproved compound--just 
the addition of a water molecule to the basic compound--and on an 
unapproved use, the treatment of neurogenerative disease, patents that 
never should have been listed at FDA.
  The first 30-month stay needlessly delayed generic competition for 
half a year. But before that stay was up, Neurontin's manufacturer 
listed a third formulation patent with FDA. The generic applicant had 
to certify to that patent as well and another 30 month stay will delay 
generic approval until December 2002. In total, a generic version of 
this drug will be delayed 30 months, at a cost to consumers of $1.4 
billion.
  In effect, Neurontin's manufacturer blocked generic competition by 
obtaining a patent for simply adding a water molecule to its basic 
drug. That patent meant months of delay in which that company enjoys 
huge profits while preventing affordable generic versions from reaching 
the market. This single water molecule will cost consumers at least 
$1.4 billion in savings for their prescription drugs. We still do not 
know when a generic will get to market, but we do know that Schumer-
McCain will make it far more likely that a generic Neurontin will be 
available in 2003.
  To address the abusive mis-listing of patents at FDA, the ever-
greening of patents, and the stacking of successive 30 months stays, 
Schumer-McCain includes a series of provisions designed to work 
together to close the loopholes and foreclose future gaming of the 
system. Schumer-McCain does several things.
  First, Schumer-McCain permits only one 30-month stay per generic drug 
application, and only on those patents listed with the FDA within 30 
days of brand drug approval.
  Second, for the patents for which no 30-month stay is available, 
Schumer-McCain provides an expedited process whereby a patent owner 
can, within 45 days, seek a preliminary injunction to defend its patent 
against a particular generic drug applicant. If a patent owner elects 
not to defend its patent against that generic applicant as part of this 
process, it cannot later enforce that patent against that applicant or 
others for the manufacture, distribution, sale, or use of that 
applicant's generic drug. This provision does not preclude the patent 
owner from enforcing its patent against anyone else, including a 
subsequent generic applicant that challenges the patent in its generic 
application. Schumer-McCain includes related provisions that enhance 
protections for patents. One requires a generic applicant who 
challenges a patent to provide better information to the patent owner 
for it to assess the merits of the generic applicant's patent 
challenge, while the second clarifies that a preliminary injunction in 
a drug patent infringement case may be granted notwithstanding the 
availability of monetary damages.
  Third, Schumer-McCain clarifies the information that must be filed 
with FDA on patents that claim a drug or an approved method of using a 
drug, so that it will be more difficult for drug manufacturers to list 
inappropriate patents or incorrect or incomplete information with FDA.
  Fourth, Schumer-McCain enforces this requirement to list patent 
information at FDA by saying that failure to list a patent bars the 
patent owner from enforcing the patent against a generic applicant or 
others for the manufacture, distribution, sale, or use of a generic 
drug. This provision does not bar enforcement of the patent against 
anyone else, in particular against any brand drug company or others for 
the manufacture, distribution, sale, or use of a brand drug that 
infringes the patent. In addition, the provision provides that 
corrections to patent information may be made after it is published by 
FDA in the unusual circumstance of an inadvertent mistake or clerical 
error.
  Finally, Schumer-McCain allows generic applicants to sue brand drug 
companies to delist patents or correct patent information on patents 
that can trigger 30 month stays. This provision allows for the 
correction of misinformation in and the removal of incorrectly listed 
patents from FDA's Orange Book.
  A second tactic used by brand drug companies is to collude with a 
generic drug manufacturer to block other generic versions of the drug 
from getting to consumers. Under the Hatch-Waxman Act, the first 
generic drug company to challenge a patent on a brand drug has the 
exclusive right to market its drug for 6 months before any other 
generic can compete. In some cases, brand drug companies have paid such 
a generic drug company not to exercise its 6-month right, thereby 
blocking other generic versions of the drug.
  For example, terazosin hydrochloride is used to treat high blood 
pressure and enlarged prostate. Consumers used about $540 million of 
the drug in 1998. A generic was scheduled for market in April 1999, but 
Abbott Laboratories reached sweetheart deals with two generic 
companies, Zenith Goldline Pharmaceuticals and Geneva Pharmaceuticals, 
to keep their generic products off the market. That in turn blocked 
other generics from getting to market for 16 months. Abbott paid Zenith 
a lump sum of $3 million plus $6 million per quarter under their 
agreement, while Geneva received $4.5 million per month. The Federal 
District Court in Florida held that the agreements were illegal under 
antitrust laws. The result was that consumers paid hundreds of millions 
more than they should have because generic competition was delayed.
  Schumer-McCain closes this loophole and ensures generic challenges to 
invalid patents. How does it do this? It provides for six situations in 
which a generic drug company with the 180 days of exclusivity must 
forfeit the exclusivity--for example, if the generic is found by the 
Federal Trade Commission to have colluded with a brand drug company, if 
it withdraws its application, or otherwise delays in getting to market. 
When the first generic forfeits the 180 days, the generic applicant 
that is next ready to be approved and go to market can go to market, 
and consumers immediately enjoy generic competition and lower costs.
  If that generic applicant is the second generic to have challenged a 
patent, it gets the 180 days of exclusivity and subsequent generic 
applicants are delayed from getting final FDA approval for 180 days. If 
the generic applicant ready to go to market is not the second generic 
to have challenged a patent, but rather is the third or the fourth or 
the fifth, the 180 days of exclusivity disappears and FDA may approve 
subsequent generic applicants as soon as they are ready.
  Either way, consumers benefit because the first generic that is ready

[[Page 15441]]

gets to market as soon as it can. In addition, the 180 exclusivity 
remains as an incentive for the second generic applicant to challenge a 
patent, an incentive that is vital to maintain especially for those 
situations when a patent must be shown to be invalid. In this way, 
Schumer-McCain speeds generic drugs to market while preserving the 180 
day incentive--an incentive that has encouraged generic companies to 
break patents on several high-priced blockbuster drugs and saved 
consumers billions of dollars.
  Schumer McCain also makes some other adjustments to the 180-day 
exclusivity provision. First, it clarifies that the court decision that 
can start the 180-day period running is the earlier of the date of a 
final decision from which no appeal, other than a petition for review 
by the Supreme Court, has been or can be taken or the date of a 
settlement order or consent decree that includes a finding that the 
patent at issue is invalid or not infringed. This provision also 
clarifies that it is any such decision on the patent that will trigger 
the 180-day period, not necessarily one in the case to which the 
generic applicant with the exclusivity was a party. Second, the bill 
clarifies that the 180-day period is available only to the first 
applicant to challenge a patent on a brand drug, and that subsequent 
applicants that challenge different patents on that brand drug do not 
also receive a 180-day period of exclusivity, unless the first forfeits 
its exclusivity, as provided for by the bill. Third, the bill clarifies 
that the 180-day period is only applicable to a generic applicant that 
challenges a patent if that applicant is sued for patent infringement.
  Finally, Schumer-McCain includes a provision that is intended to 
forestall frivolous challenges by brand companies to the legal 
legitimacy of FDA's bioequivalence regulations, challenges that have 
substantially delayed the approval of some generic drugs. The court 
challenges by brand companies have taken several forms, including 
challenges to the specifics of the FDA's regulations and the FDA's 
authority to issue the regulations, and have involved drug products 
such as asthma inhalers and topicals. The challenges themselves 
frequently start as administrative challenges in the form of citizen 
petitions and progress to legal challenges. Each challenge delays 
approval or marketing of the generic, and each one consumes valuable 
FDA resources in defending against these fundamentally frivolous 
lawsuits. These lawsuits are also filed notwithstanding the holdings of 
different circuit courts of appeal upholding the regulations.
  The provision says that FDA's current regulations on bioequivalence 
shall continue in effect as legitimate exercises of FDA's statutory 
authority. The provision allows FDA to amend its regulations through 
rulemaking, but it does not preclude judicial review of those amended 
regulations, nor judicial review of an application of either the 
current or amended bioequivalence regulations. Finally, the provision 
makes it clear we are not changing FDA's authority under the Federal 
Food, Drug, and Cosmetic Act over biological products.
  The Hatch-Waxman Act has been a tremendous success in stimulating 
both competition and innovation. But there are weaknesses in this law 
that Schumer-McCain rightly closes. Drug companies are entitled to fair 
profits on their research and innovation. But when patents expire, 
those companies must innovate to succeed and help patients, not block 
competition to their old drugs.
  I also want to applaud the inclusion of a number of important 
amendments which will help lower drug costs and ensure drug coverage 
for all Americans, including Senator Stabenow's amendment to help 
States negotiate lower prices and Senator Rockefeller's amendment to 
provide emergency Medicaid relief to States in fiscal crisis.
  Schumer-McCain restores the balance of the original Hatch-Waxman Act, 
ends the abuses that block competition, and closes the gaps in the 
Hatch-Waxman Act. The Senate has said: Stop the abuses. Now the House 
of Representatives must act with us.
  I thank my health staff for all their hard work on this legislation--
David Dorsey, David Nexon, Paul Kim and Michael Myers on S. 812. David 
Dorsey made a particularly important contribution to this effort, and 
deserves high praise for his work. I also want to particularly 
recognize the hard work and unwavering dedication of Missy Rohrbach 
with Senator Schumer. And the record would be incomplete without noting 
the very important contributions of Carlos Fierro and Jeanne Bumpus 
with Senator McCain, Kyle Kinner with Senator Edwards, Michael Bopp 
with Senator Collins, Debra Barrett with Senator Dodd, Sean Donohue 
with Senator Jeffords, Anne Grady with Senator Murray, Steve Irizarry 
with Senator Gregg, and Dean Rosen with Senator Frist. And I am so 
grateful, too, for the excellent contributions of Jane Oates, Stacey 
Sachs, Brian Hickey, Scott Berkowitz, Amelia Dungan, Kent Mitchell, 
Jeffrey Teitz, Melody Barnes, Marty Walsh, Jim Manley, Stephanie Cutter 
and so many others who made this legislation possible.
  I ask unanimous consent that letters of support for S. 812 be printed 
in the Record.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

                                       Coalition for a Competitive


                                        Pharmaceutical Market,

                                    Washington, DC, July 10, 2002.
     Hon. Edward M. Kennedy,
     Chairman, Senate Health, Education, Labor and Pensions 
         Committee,
     U.S. Senate, Washington, DC.
       Dear Mr. Chairman: As a broad-based coalition of large 
     employers, consumer groups, generic drug manufacturers, 
     insurers, labor unions, and others, we are writing to advise 
     you of our strong support for the Edwards/Collins amendment 
     to S. 812, the Greater Access to Affordable Pharmaceuticals 
     Act. We believe it is critical that Congress act this year to 
     pass legislation that would eliminate barriers to generic 
     drug entry into the marketplace. The legislation you will be 
     marking up today clearly would accomplish this long-overdue 
     need.
       Prescription drug costs are increasing at double-digit 
     rates, and clearly are unsustainable. Current pharmaceutical 
     cost trends are increasing premiums, raising copayments, 
     pressuring reductions in benefits, and undermining the 
     ability of businesses to compete in the world marketplace. We 
     believe that a major contributor to the pharmaceutical cost 
     crisis is the use of the Drug Price Competition and Patent 
     Term Restoration Act of 1984 clearly in ways unanticipated by 
     Congress, which effectively block generic entry into the 
     marketplace. The repeated use of the 30-month generic drug 
     marketing prohibition provision and other legal barriers have 
     resulted in increasingly unpredictable and unaffordable 
     pharmaceutical cost increases.
       Although the compromise amendment being offered today does 
     not totally eliminate the 30-month marketing prohibition 
     provision, as would be our preference, it does make important 
     process changes that will lead to a more predictable, 
     rational pharmaceutical marketplace. We recognize that 
     compromises have been necessary to garner the support of a 
     majority of the Members of the Committee and appreciate your 
     leadership and the hard work of your staff. However, we would 
     strongly oppose any additional amendments that would 
     undermine the intent of this legislation by further delaying 
     generic access or reducing competition and increasing costs 
     to purchasers. We also remain opposed to legislation that 
     would increase costs to purchasers either through extended 
     monopolies or unnecessary and costly litigation.
       We are convinced that the legislation you are advocating 
     will make a major difference in increasing competition in the 
     marketplace and enhancing access to more affordable, high 
     quality prescription drugs. We look forward to working with 
     you and other Members of the HELP Committee to ensure that 
     this important legislation is enacted this year.
       The Coalition for a Competition Pharmaceutical Market is an 
     organization of large national employers, consumer groups, 
     generic drug manufacturers, insurers, labor unions, and 
     others. CCPM is committed to improving consumer access to 
     high quality generic drugs and restoring a vigorous, 
     competitive prescription drug market. CCPM supports 
     legislation eliminate legal barriers to timely access to less 
     costly, equally effective generic drugs.


                       ccpm participating members

       American Association of Health Plans, Aetna, Anthem Blue 
     Cross and Blue Shield, Blue Cross and Blue Shield 
     Association, Caterpillar, Inc., Consumer Federation of 
     America, Families USA, Food Marketing Institute, Generic 
     Pharmaceutical Association,

[[Page 15442]]

     General Motors Corporation, Gray Panthers, Health Insurance 
     Association of America, IVAX Pharmaceuticals, National 
     Association of Chain Drug Stores, National Association of 
     Health Underwriters, National Organization for Rare 
     Disorders, Ranbaxy Pharmaceuticals, TEVA USA, The National 
     Committee to Preserve Social Security and Medicare, United 
     Auto Workers, Watson Pharmaceuticals, and WellPoint Health 
     Networks.
                                  ____



                                               General Motors,

                                       Detroit, MI, July 15, 2002.
     Hon. Edward M. Kennedy,
     U.S. Senate, Russell Senate Office Building, Washington, DC.
       Dear Senator Kennedy: As the largest private provider of 
     health care coverage in the nation, I am writing to commend 
     you for your leadership in supporting legislation that 
     removes barriers to generic competition and reduces costs to 
     all consumers. At General Motors, we insure over 1.2 million 
     workers, retirees, and their families, and on their behalf, I 
     want to thank you for supporting and passing out of the 
     Senate Health, Education, Labor and Pensions Committee S. 
     812, the Greater Access to Affordable Pharmaceuticals Act.
       We now spend over $1.3 billion a year on prescription 
     drugs, and without relief, these costs are projected to 
     continue to grow at 15 to 20 percent a year. Such increases 
     are clearly unsustainable, and over time will make it 
     impossible for us to compete in the world market.
       We are convinced that your support of S. 812 will 
     rationalize the currently distorted marketplace that has led 
     to increasing and unpredictable pharmaceutical costs. This 
     has resulted in increasing premiums, copayments, and 
     pressures to reduce benefits. We believe that this landmark 
     legislation will close the loopholes in the Hatch-Waxman law 
     that currently block generic entry into the marketplace. 
     Moreover, we believe your leadership in supporting bipartisan 
     amendments in Committee strengthen S. 812 and assure much-
     needed predictability in the health care delivery system.
       As a large employer and payer of health care, we are 
     pleased that the Committee process clarified the so-called 
     ``de-listing'' provision. This modification makes clear that 
     the necessary ability for generics to challenge brand-name 
     companies who have inappropriately listed patents in the FDA 
     Orange Book does not in any way provide for civil and 
     monetary penalties, and solely focuses the remedy for the 
     abusive listing on the de-listing of the product from the 
     Orange Book.
       Once again, I want to thank you for the work that you and 
     your staff have put in to this effort. We believe that your 
     efforts will make a major difference in increasing 
     prescription drug competition and choice, as well as 
     expanding access to more affordable medications for our 
     current and former employees and their families.
           Sincerely,
                                                 Dick Wagoner, Jr.
     President and Chief Executive Officer.
                                  ____



                           Generic Pharmaceutical Association,

                                    Washington, DC, July 10, 2002.
     Hon. Edward M. Kennedy,
     Chairman, Senate Health, Education, Labor and Pensions 
         Committee, U.S. Senate, Russell Senate Office Building, 
         Washington, DC.
       Dear Mr. Chairman: We are writing to express our strong 
     support of the Edwards amendment to S. 812, the Greater 
     Access to Affordable Pharmaceuticals Act. As the 
     manufacturers, suppliers, and distributers of more than 90 
     percent of the nations' generic medicines, the Generic 
     Pharmaceutical Association (GPhA) is all too familiar with 
     the abusive tactics name brand pharmaceutical companies 
     employ to delay consumers access to affordable, quality 
     generic pharmaceuticals and the dire need for Congress to 
     pass legislation to close the loopholes in the law that the 
     name brand industry has grown so proficient in exploiting. We 
     believe the Edwards amendment effectively accomplishes this 
     goal and has earned the tripartisan support it is now 
     receiving.
       The high cost of prescription drugs is one of the nation's 
     most pressing public policy challenges today. Senior 
     citizens, the uninsured, major employers, governors, consumer 
     groups and public and private insurers are all looking to 
     Congress for relief from the unsustainable annual increases 
     in prescription drug costs. Increasing consumer access to 
     generic medicines by increasing competition in the 
     pharmaceutical market place can and must play a central role 
     in any legislative plan to control drug costs. The full 
     benefits increased competition can bring to the health care 
     delivery system, however, cannot be realized until Congress 
     closes the loopholes in the Hatch-Waxman Act that are 
     thwarting competition and inflating the cost of prescription 
     medicines.
       Abuse of the 30-month stay provision of the Hatch-Waxman 
     act is one of the most effective and most frequently used 
     methods to delay generic competition. The Generic 
     Pharmaceutical Association believes the most efficient way to 
     ensure this provision is no longer used to delay generic 
     competition is to abolish it completely. However, GPhA 
     recognizes that compromises were necessary to bring support 
     for the legislation to its current point and commends you, 
     the other Members of the Senate HELP Committee, and your 
     staff for your unwavering commitment to knocking down the 
     barriers that are blocking access to generic medicines.
       GPhA looks forward to working with you to secure the 
     Committee's approval of the Edwards amendment and would 
     oppose any effort to dilute or weaken it with amendments that 
     would maintain or exacerbate the problems in the existing 
     Hatch-Waxman system. As always, we appreciate your leadership 
     on this issue and stalwart commitment to ensuring all 
     Americans have access to quality, affordable health care.
       Sincerely,
                                               Kathleen D. Jaeger,
     President and CEO.
                                  ____

                                             National Organization


                                     for Rare Disorders, Inc.,

                                       Danbury, CT, July 17, 2002.
     Hon. Edward M. Kennedy,
     U.S. Senate,
     Washington, DC.
       Dear Senator Kennedy: For the sake of 25 million Americans 
     with rare ``orphan'' diseases, we want you to know that S. 
     812, the Greater Access to Affordable Pharmaceuticals Act 
     (GAAP), and the Edwards-Collins Amendment that was passed by 
     the Senate HELP Committee on July 11, 2002, will help 
     millions of uninsured and underinsured Americans to gain 
     access to affordable medications.
       GAAP will close the loopholes of the Hatch-Waxman generic 
     drug law that was enacted in 1984. This will ultimately lead 
     to availability of lower cost generic drugs in a timely 
     manner. When pharmaceutical patents expire, competition would 
     be allowed without undue delay, and competition will drive 
     prices down. We believe that S. 812 will make affordable 
     treatments accessible to uninsured and underinsured people, 
     particularly the elderly and younger Medicare beneficiaries 
     who receive Social Security Disability benefits. In the 
     absence of a Medicare prescription drug benefit, S. 812 is an 
     essential first step in the giant leap forward that Americans 
     desperately need for health care.
       We hope that Congress will close the loopholes to the 
     Hatch-Waxman Act and deter the frivolous lawsuits that have 
     repeatedly delayed availability of affordable generic drugs. 
     We hope that this will be the first step in your efforts to 
     add a much needed prescription drug benefit to Medicare.
           Very truly yours,
                                                  Abbey S. Meyers,
     President.
                                  ____



                                              Consumers Union,

                                    Washington, DC, July 16, 2002.
       Dear Senator: Consumers Union urges your support of the 
     ``Greater Access to Affordable Pharmaceuticals Act (GAAP Act) 
     of 2001 (S. 812).'' This legislation would streamline and 
     improve the generic drug approval process, saving consumers 
     billions of dollars. We believe that companies trying to 
     bring generic drugs to market face too many unnecessary 
     obstacles and that the removal of these barriers will 
     increase competition and deliver lower-priced drugs to 
     consumers.
       We support wider access to affordable medicines for all 
     Americans, especially the uninsured, the underinsured, the 
     elderly, and the disabled. Today, health care costs are 
     spiraling out of control for consumers and employers. Between 
     1999 and 2000 alone, prescription drug spending increased by 
     17.3%--the sixth year of double-digit increases. According to 
     a 2002 Brandeis University study, older Americans could save 
     $250 billion over the next ten years through the increased 
     use of generic drugs. The Schumer-McCain bill is a cost-
     saving measure that will help rein in spiraling prescription 
     drug expenditures--a critical first step toward the 
     implementation of an affordable Medicare prescription drug 
     benefit.
       This legislation will improve consumer access to generic 
     drugs by restoring the balance between innovation and 
     competition. We believe that the anticipated cost savings 
     from this measure is a necessary foundation for the Senate to 
     build a comprehensive prescription drug benefit into 
     Medicare.
           Sincerely,
                                               Janell Mayo Duncan,
                                              Legislative Counsel.

     

                          ____________________