[Congressional Record (Bound Edition), Volume 148 (2002), Part 12]
[House]
[Pages 16921-16925]
[From the U.S. Government Publishing Office, www.gpo.gov]




                 PRESCRIPTION DRUG BENEFIT FOR SENIORS

  The SPEAKER pro tempore (Mr. Shuster). Under the Speaker's announced 
policy of January 3, 2001, the gentleman from New Jersey (Mr. Pallone) 
is recognized for 60 minutes as the designee of the minority leader.
  Mr. PALLONE. Mr. Speaker, this evening, and it is certainly not the 
first time, I am coming to the floor to talk about the need for a 
prescription drug benefit under Medicare, and also to deal with the 
rising costs for prescription drugs. I think this Congress has an 
obligation before we adjourn in another month or so to address both 
issues because the bottom line is that not only more senior, more 
Americans are facing rising prescription drug costs, and I think it is 
primarily due to the fact that the brand name drug industry is trying 
to control prices in a way to make sure they receive maximum profits 
and influence the United States Congress both in terms of political 
contributions, influence the public with TV ads, all of which make it 
very difficult to address the issue and the need for a Medicare 
prescription drug benefit and some sort of effort to control prices or 
at least bring prices down because of the impact that it is having on 
our health care system.
  Mr. Speaker, I do not need to tell any American about the rising cost 
of prescription drugs. As the cost goes up, more and more Americans are 
not able to afford their medicine. That has an impact because, as we 
know, certainly in the last 20 years, certainly in the last generation, 
prescription drug medications have become a preventive measure. In 
other words, if you are able to take certain prescription drugs, you do 
not need to be hospitalized or go to a nursing home or have some sort 
of radical medical procedures. Prescription drugs essentially are a 
form of prevention, a more serious interference in terms of medical 
care.
  I just think that it is very unfortunate that we do not address the 
problem of rising cost and what it means for the average American, 
particularly for the average senior.
  I wanted to start out this evening by giving some information about 
the level of price increases. This is an analysis that was done by 
Families U.S.A. just a couple of months ago in June of this year. It 
says that the prices of the 50 most prescribed drugs rose on average by 
nearly 3 times the rate of inflation last year.
  The study analyzed price increases for the 50 most commonly 
prescribed drugs for seniors for the last year, and that is January 
2001 through January 2002, and then for the past 5 years and before 
that the last 10 years. The report found that nearly three-quarters, 36 
out of 50, of these drugs rose at least 1.5 times the rate of 
inflation, while one-third, 8 out of 50, rose 3 more times the rate of 
inflation.
  The drugs that experienced the largest price increases were the 
following, and I am not going to get into all of the details, but it 
gives some incredible examples. Demadex and Premarin rose nearly 7 
times the rate of inflation. Plavix rose more than 6 times the rate of 
inflation. Zestril, Lipitor, and Combivent rose more than 5 times the 
rate of inflation.
  The interesting thing about it is that if we compare price increases 
of generic versions of these same brand name drugs, and this is what 
the report did, the report showed that the brand name drugs rose 4.5 
times faster than the rate of price increases for generic drugs, 8.1 
percent versus 1.8 percent, and 10 of the 50 most prescribed drugs for 
seniors are generic, and the average annual price for those drugs was 
$375. Nine of these 10 drugs did not increase in price at all.
  The point that that makes, and I think it is particularly important 
in light of the Democrats making a push in the next few days to try to 
get a bill brought up in committee that seeks to encourage more generic 
drugs, is that the brand name drug prices were increasing rapidly, 
whereas generic drugs were not.
  When we talk about generic drugs, a lot of people are familiar with 
generics and understand what it means, but a lot of people are not. 
What we have found repeatedly is that if we can bring a generic drug to 
market, in other words, if the patent for the brand name drug expires 
and you can have a number of companies selling a generic drug in lieu 
of the patent drug, that will significantly bring down costs. Generics 
are one way of bringing down costs, and that also needs to be addressed 
by this Congress.
  What are the Republicans and the Democrats doing about this problem? 
We know we have a problem of price increases with prescription drugs. 
We know that Medicare right now does not include any kind of 
prescription drug benefit unless you happen to be in an HMO, and many 
of the HMOs have dropped seniors in the last couple of years.
  So what is the Congress doing about it? Well, the Democrats have 
really come up with a very simple solution. The Democrats have proposed 
basically expanding Medicare to provide a prescription drug benefit. 
Those Members who are familiar with Medicare know that under part B of 
Medicare, which takes care of the doctors' bills, basically what 
seniors do, and 99 percent of

[[Page 16922]]

the seniors do this when they participate in Medicare, they pay a 
monthly premium, so much a month. It is usually $45-50 a month, and 
they pay a deductible of $100 for their first doctor bill. But after 
that, 80 percent of the doctors' bills are paid for by the Federal 
Government under Medicare, and they pay 20 percent up to a certain 
amount when the government pays 100 percent.
  The Democrats proposed and we have legislation that would accomplish 
the same goal and do it in the same way, provide a prescription drug 
benefit under Medicare that was guaranteed, that was universal, that 
all seniors and everyone eligible for Medicare would take advantage of, 
and essentially you would pay $25 a month premium, you would have a 
deductible of $100, and after that 80 percent of your prescription drug 
costs would be paid for by Medicare by the Federal Government. There 
would be a 20 percent copay.

                              {time}  2045

  And after someone had shelled out $2,500 out of pocket, if that were 
the case in paying the 20 percent, then all of their prescription drug 
bills would be paid for 100 percent, modeled after what we do now for 
doctor bills.
  It makes sense. It is very simple. Medicare has been a very 
successful program. Given that more and more seniors do not have access 
or have problems paying for prescription drugs, this would seem to be a 
logical solution. It is certainly logical, certainly reasonable; but 
the problem is that the Republican leadership in the House, because 
they are so much in the pockets of the brand-name drug companies, would 
not even consider something like that. When the Democrats tried to 
bring it up as a substitute to the Republican bill, they ruled it out 
of order. They would not let it come up.
  What have the Republicans proposed instead of a simple expansion of 
Medicare to include prescription drugs? They have talked about the need 
for privatization. In the same way that President Bush has talked for 
privatizing Medicare as a whole, the Republican leadership in the House 
has moved a bill and passed a bill, because they have the majority, 
they have the votes, to simply provide private health insurance or try 
to encourage seniors to seek out private health insurance that would 
cover their prescription drugs, basically give seniors a certain amount 
of money like a voucher so that they could go shop around and see if 
they could find a private insurance plan that would pay for 
prescription drugs.
  I would venture to suggest to my colleagues that this is the most 
absurd idea; and the reason I say that is because if the private sector 
was able to effectively provide prescription drug benefits in the same 
way that people thought that maybe the private sector would be able to 
provide for health insurance for seniors in general, then we would not 
need a government program.
  The reason that we have Medicare in general to pay for hospital 
bills, to pay for doctor bills, is because when seniors prior to 
Medicare, 30, 40 years ago, tried to go out to buy private health 
insurance to pay for their medical bills, they could not find it 
because they were too high risk. They were using too much health care. 
They could not find a health insurance policy that would provide the 
coverage. And so that is why we started Medicare as a government 
program. Not because we were socialists and wanted a government 
program; but because, practically speaking, seniors could not find 
health insurance, they could not buy it. It was not available.
  So now why would we want to do the same thing, why would we want to 
suggest to seniors that they go out and try to buy health insurance 
privately that just covers prescription drugs? That is even less likely 
to be available because most seniors use prescription drugs and anybody 
who knows the way insurance operates, the private sector knows, that 
private insurance companies only want to provide insurance to low-risk 
individuals. They do not want to provide insurance where everybody who 
is covered by the policy is going to take advantage of the benefit and 
need the prescription drugs, because they cannot make any money if they 
sell insurance that provides that kind of a benefit. So the Republican 
proposal is essentially absurd from the get-go because it will never 
work, because if there was private insurance available, seniors would 
just go out and buy it and they cannot buy it because it is not 
available.
  I would venture to say to my colleagues that what is really going on 
here is that the Republicans are doing the bidding of the brand-name 
drug companies. The brand-name drug companies do not want a Medicare 
benefit, and they do not want anything that would interfere in the 
rising price and cost and profits that they make from selling 
prescription drugs. Even if it means selling it to fewer and fewer 
people, they are making more and more of a profit.
  In case anyone doubts what I say, I just wanted to point out very 
briefly this evening, and I have done this before, some of the things 
that are going on with the brand-name drug companies to accomplish 
their goal of preventing a real prescription drug benefit that would be 
meaningful to seniors. On the day when the Republican bill that I 
talked about, the privatization bill, was brought up and considered in 
the Committee on Energy and Commerce, which has jurisdiction over 
prescription drugs and that I am a member of, there was a fundraiser 
for the Republican National Committee the same night; and because the 
drug companies were so involved in the fundraiser for the Republican 
National Committee, the committee actually broke at 5 o'clock and 
carried over its business to the next day because all the Republicans 
had to go to this fundraiser where they would get money from the 
prescription drug industry.
  This is an article from The Washington Post on that day in June, and 
the headline says: ``Drug Firms Among Big Donors at GOP Event.''
  ``Pharmaceutical companies are among 21 donors paying $250,000 each 
for red-carpet treatment at tonight's GOP fundraising gala starring 
President Bush, two days after Republicans unveiled a prescription drug 
plan the industry is backing, according to GOP officials.
  ``Drug companies, in particular, have made a rich investment at 
tonight's event.'' It goes on to describe all the money that they were 
giving, but the article further on says that ``every company giving 
money to the event has business before Congress. But the juxtaposition 
of the prescription drug debate on Capitol Hill and drug companies 
helping underwrite a major fundraiser highlights the tight relationship 
lawmakers have with groups seeking to influence the work before them.
  ``A senior House GOP leadership aide said yesterday that Republicans 
are working hard behind the scenes on behalf of PhRMA,'' that is the 
pharmaceutical company trade group, ``to make sure that the party's 
prescription drug plan for the elderly suits drug companies.''
  What was going on here was that the big drug companies were not only 
giving to the Republican campaign coffers, they were writing the bill. 
They wanted to make sure that the bill that was written by the 
Republicans that came out of committee and came to the floor was a bill 
that suited them and suited them because either it would not work 
because it was the privatization proposal that does not work or at 
least would guarantee that there was no effort to reduce or have any 
influence over prices. And if anyone doubts that, I will read a little 
section from the Republican prescription drug bill that is entitled 
``Noninterference.''
  Basically what it says is that the administrator of their program, of 
their prescription drug program, could not in any way try to reduce 
prices. I will just read you some sections. This is the actual bill.
  It says that ``the administrator of the program may not require a 
particular formulary or institute a price structure for the 
reimbursement of covered outpatient care; two, interfere in any way 
with negotiations between PDP sponsors and Medicare+Choice 
organizations and drug manufacturers, wholesalers or other suppliers of 
covered outpatient drugs; and, three, and

[[Page 16923]]

this is most important, otherwise interfere with the competitive nature 
of providing such coverage through such sponsors and organizations.''
  So what they did with this noninterference clause in their bill, and 
I know it is a little bureaucratic there, but the bottom line is it 
says that you cannot interfere in anything that would deal with 
pricing, with price structure. Remember, I mentioned before that the 
Democratic bill expands Medicare to include a prescription drug 
benefit. It does not operate with the private sector. It simply expands 
Medicare to include a prescription drug benefit. We do the opposite 
with regard to the cost issue. In the Democratic bill we say that the 
Secretary of Health and Human Services must, is mandated, to negotiate 
and reduce prices, because the idea now is that there are going to be 
30 or 40 million seniors in the Medicare program who now have this 
prescription drug benefit; and if the Secretary of Health and Human 
Services negotiates for them, he can bring down prices maybe 30, 40 
percent because he now has the power to negotiate for all these 30, 40 
million senior citizens.
  This is what happens now with the VA. The Veterans' Administration 
does this. They negotiate for the veterans in order to bring down 
prices. The military does this, the Army, Navy. They all negotiate on 
behalf of the military personnel to bring down prices so they get a 
really good price for their prescription drugs. That is what the 
Democrats do in their bill.

  The Republicans say, You cannot do that. We do not want you to do 
that. Not only did the drug companies give all this money to the 
Republicans, not only did they write the bill to make sure that they 
were protected in the sense that there would be no effort to reduce 
price, but also they started running ads almost immediately after the 
Republican bill passed the House of Representatives touting the fact 
that certain Republicans who were running in tough races this November 
to be reelected, that those Republicans had voted for the Republican 
bill and how wonderful they were and how wonderful they were to their 
senior constituents because they voted for this bill. Amazingly, if you 
think about it, you give money to prevent the good bill from coming up, 
you make sure that your bill is the one that is written, and then you 
go out on the airwaves and you pay for advertisers who tell the 
American public that the person who voted for this pharmaceutical 
boondoggle is doing the right thing and in some way is some sort of a 
hero. But this is exactly what was done.

  There is a report that I have, and this was actually done by Public 
Citizen, another nonprofit group. They pointed out in the report issued 
in July of this year that United Seniors Association, which is the 
group that is running these ads telling you how wonderful the 
Congressmen are that voted for the Republican bill, is basically 
nothing but a front group for the drug industry. Drug companies gave 
that organization that runs these ads and pretends to be sort of 
neutral $10 million initially to push the drug bill favored by the 
industry.

  In fact, the information I have, which is really new information, 
this week, says that not only has this alleged senior group that is 
being underwritten or financed by PhRMA, by the drug companies, not 
only did they start running the ads in June or July after the 
Republican bill passed here, but they have continued to run ads and now 
as of, I guess this is dated yesterday, September 16, which I am going 
to read you now, they are just pumping even more money into these ads. 
This is a ``Daily Health Report'' from the Kaiser Network, the Henry J. 
Kaiser Family Foundation, Kaiser Network. It says that the 
Pharmaceutical Research and Manufacturers Association, that is PhRMA, 
the drug companies' trade group, has contributed millions of dollars in 
recent months for political ads in several States with tight 
congressional races.

  For example, the industry group has provided the United Seniors 
Association, which runs the ads, with more than $8 million for ads 
promoting about two dozen House candidates who support the House-passed 
GOP drug bill which includes the prescription drug benefit. The 
commercials began running last week in about 20 regions where 
Republicans face tough races this fall. The ads are tailored to each 
race, stating that the candidate understands the need to assist seniors 
with health care costs and supports adding meaningful drug coverage for 
all seniors. The ads end by encouraging viewers to call their 
respective Congressman and urge him to keep fighting for his bill. The 
association's campaign, which also includes Internet and direct mailing 
efforts, is supported by a general education grant from PhRMA.
  In addition, another group, the 60 Plus Association, has been running 
radio and newspaper advertising in selected States backing the GOP-
backed drug bill. The National Journal reports that both groups are 
helping Republican candidates and drug companies by promoting industry-
backed legislation.

  I do not want to keep going on, but the other thing that we found is 
that not only are the drug companies financing these ads telling people 
to support candidates that support their bill but now they are also 
putting pressure on companies to not support an alternative bill which 
the Democrats are pushing in particular this week that would make it 
easier for generics to come to market. This is from the same report, 
from the Kaiser Network.
  It says that in other prescription drug news, pressure from the 
pharmaceutical industry has forced several companies to drop their 
support of a Senate-passed bill, S. 812, that would ease market entry 
of generic drugs, according to a Washington Post editorial from 
yesterday.

  Earlier this month, Georgia-Pacific and Verizon Communications left 
or reduced their roles in Business for Affordable Medicine, a coalition 
lobbying for easier access to generic drugs, after brand-name drug 
makers threatened to end contracts with the companies. Georgia-Pacific 
asked to not be listed on the coalition's Web site after receiving 
pressure from Eli Lilly, and Verizon left the coalition recently after 
being pressed by Wyeth. Since then, Marriott International quit the 
coalition and UPS has asked to be removed from the Web site. ``Given 
that all these companies stand to benefit from lower drug prices, it's 
a fair guess that drug company pressure had something to do with their 
decisions,'' The Washington Post stated, concluding that it is a 
``worrying sign'' that the ``eminently reasonable reform'' passed by 
the Senate ``faces tough sledding in the House, whose Members now have 
to choose between affordable medicines and placating the drug lobby.''
  Let me explain a little bit what this generic drug bill is that the 
Democrats are pushing now, again in an effort to try to reduce costs. 
What basically has been happening is that brand-name companies get a 
patent for a particular drug, a prescription drug when they develop it, 
when they do the research and they develop it. They are able to seek a 
patent and gain a patent where they have so many years where they 
exclusively can sell the drug because they produced it, or they 
researched and developed it. The reason that that patent is given is 
because it is basically incentive for a company or an individual to 
develop a new miracle drug.
  But after so many years when this exclusivity runs out, the theory is 
that the drug companies benefited greatly and made a lot of profit on 
the drug, then generic companies, basically any company can come in and 
produce a similar generic drug which obviously is sold for 
significantly less and is one way of trying to reduce costs for 
prescription drugs.

                              {time}  2100

  But the problem is that over the years the brand name drug companies 
have tried to come up with all kinds of ways of getting around the end 
of their patent, by renewing it, or playing some kind of games or 
gimmicks, if you will, to try to get the patent extended or get a new 
patent that is similar to the old one so you cannot bring generics to 
market.

[[Page 16924]]

  I do not want to get into all the details of this, but I want to give 
one example. Under current law, when a generic drug seeks FDA approval 
and a brand company's drug is patented, the brand company can sue the 
generic for patent infringement. But under the current law, which is 
called Hatch-Waxman, it forbids the FDA from approving the generic 
application for 30 months.
  Basically what they are saying is if the patent has expired and a 
generic wants to come in and produce the same drug, but the company 
that has the patent feels that somehow the patent is going to be 
infringed, the FDA basically gives a stay for 30 months, if you will, 
before the generic can come to market. What the brand companies have 
done is they have used this provision by dragging out lawsuits and by 
obtaining a series of 30-month delays through the last-minute filing of 
new and sometimes frivolous patents.
  I do not want to get into all the details of this, but the bottom 
line is they can keep running the period when the patent is exclusive, 
essentially, and force the situation where the generic drug does not 
come to market. There are all kinds of examples like this.
  Some of my colleagues, on a bipartisan basis, the gentleman from Ohio 
(Mr. Brown), a Democrat, and the gentlewoman from Missouri (Mrs. 
Emerson), a Republican, introduced a bill called the Prescription Drug 
Fair Competition Act, H.R. 5272, that seeks to basically get rid of a 
lot of these loopholes so that the generics can easily come to market 
and these patent abuses cannot continue.
  This bill actually passed in the Senate, I am sorry, Mr. Speaker, by 
the other body, but so far our efforts, primarily by the Democrats, to 
bring this bill up in this House and have it passed here so it can go 
to the President and be signed into law have achieved nothing. The 
Republican leadership refuses to have a hearing in committee, refuses 
to allow a vote to bring it out of committee, refuses to let it come to 
the floor of the House.
  Now, this is only one way of trying to reduce costs, but a very 
effective way. Essentially what we have been seeing in the House under 
the Republican leadership is that every effort that has been made, 
either by the Democrats or on a bipartisan basis as this generic bill 
was, to try to come up with formulas that would reduce costs, the 
Republican leadership just will not allow it to come up.
  As I mentioned before, in their own benefit bill, their prescription 
drug benefit bill, the privatization bill, they have this non-
interference clause that says you cannot negotiate price reduction. The 
Democrats mandate in their bill that prices are reduced. The Democrats 
in the other body, they actually passed a bill that would plug up these 
generic loopholes. The Republicans in the House refused to bring it up.
  There are many other examples. We have bills that would allow 
reimportation from Canada. As I think many of my colleagues know, if 
you compare the United States and the price of drugs in the United 
States to almost every other developed country, you take like the top 5 
or 6 countries by gross national product, Britain, France, or even 
smaller countries like Canada or Italy, whatever, Western Europe, other 
developed countries, you will find that prescription drug prices are 
significantly less, sometimes 30 or 40 percent of the cost of what you 
would pay in the United States. So one of my colleagues, the gentleman 
from Maine (Mr. Allen), proposed a bill that said that the cost that 
companies charge for prescription drugs in the United States has to be 
comparable to what citizens in these other countries pay.
  Well, of course, we cannot get that bill posted by the Republicans. 
They will not allow that to be posted.
  We have also tried to, as I said, pass a bill that would allow you to 
reimport a drug. In other words, you could apply to a drugstore in 
Canada, for example, over the Internet, or even physically go to Canada 
and bring the drugs back into the United States. Legislation has been 
introduced by my colleague, the gentleman from Vermont (Mr. Sanders), 
that would allow reimportation from Canada. Republicans will not let 
that bill come up. That has not come to the floor.
  The list goes on and on. Probably one of the worst examples is that 
right now, when the brand name drug companies advertise for certain 
drugs on TV and encourage you to use a brand name as opposed to a 
generic for a particular drug, the advertising costs are actually 
underwritten by the taxpayers. They get a tax credit or deduction for 
that kind of advertising. That actually encourages you as the consumer 
to pay higher prices for the brand name drug.
  So all of these things, we have legislation on the Democratic side 
that would eliminate the tax subsidy or the deduction or the tax credit 
for that kind of advertising by the pharmaceutical companies. We cannot 
bring that up either. They will not allow it.
  The Republican leadership does not want us in any way to address the 
issue of cost and trying to reduce costs for prescription drugs, 
because basically the drug industry is behind the Republican efforts, 
paying for the Republican efforts, paying for the ads for their 
candidates, and they are basically in the pockets of the brand name 
drug industry.
  I do not mention this because I am trying to be evil or trying to say 
that all Republicans are bad or anything of that nature, but the 
problem is that the leadership very much does whatever the brand name 
drug industry wants, and that is the main reason why we are not able to 
get any kind of effort to reduce prices, and it is another reason why 
we are not able to get any kind of expansion of Medicare to include 
prescription drugs.
  Mr. Speaker, I just would like to take a little more time, and then I 
am going to conclude this evening, to talk about the benefit.
  My constituents in New Jersey over the last 2 or 3 years since the 
Medicare+Choice, the HMO programs effectively tried to sign up a lot of 
seniors under Medicare on the theory that if you signed up for an HMO 
you would get your prescription drug coverage, because Medicare does 
not normally cover it, but some of the HMOs that were offering Medicare 
policies in New Jersey were offering a prescription drug plan as part 
of their HMO Medicare policy.
  But what we found is that more and more of the HMOs after 6 months or 
a year would pull out of the Medicare program and would not give 
seniors the option, if you will, of joining an HMO and getting their 
prescription drug benefits.
  There was an article just last week in the New York Times dated 
September 10 entitled ``HMOs for 200,000 Pulling Out of Medicare'' by 
Robert Pear. It says, ``Health maintenance organizations serving 
200,000 elderly and disabled people said they will pull out of Medicare 
next year, raising to 2.4 million the number of beneficiaries that have 
been dropped by HMOs since 1998.''
  Again, if you talk about a privatization plan for prescription drugs, 
we already have the example with HMOs which were offering prescription 
drugs to seniors and increasingly have dropped them because they cannot 
afford to provide the benefit. It seems to me that that goes far to 
explain why a privatization program for seniors to provide seniors with 
a prescription drug will not work, and that is why you have to simply 
expand Medicare along the lines of what the Democrats have talked about 
in order to provide a decent benefit.
  Mr. Speaker, I will conclude with that, but I want to say that I am 
going to be here many times, many nights, over the next 3, 4, 5 weeks 
before we adjourn, and I know I am going to be joined by a lot of my 
colleagues on the Democratic side, saying that before we adjourn we 
need a Medicare prescription drug benefit that covers all seniors and 
everyone under Medicare and that is affordable, and, secondly, that we 
need to address the issue of price and rising costs for prescription 
drugs, pass the generic bill, provide some kind of reimportation, 
provide some sort of process whereby the agency that administers the 
Medicare program can negotiate cheaper drug prices. All these things 
have to be done.

[[Page 16925]]

  If any of my colleagues on either side of the aisle doubt that this 
is an important issue for the average American, whether they are a 
senior or not, they just should spend a couple of days at a forum or 
talking to their constituents on the street, and they will find that 
they are crying out for this Congress to address this prescription drug 
issue in an effective way.

                          ____________________