[Congressional Record (Bound Edition), Volume 148 (2002), Part 9]
[House]
[Pages 12889-12895]
[From the U.S. Government Publishing Office, www.gpo.gov]




                   MEDICARE PRESCRIPTION DRUG PROGRAM

  The SPEAKER pro tempore (Mr. Keller). 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, I wanted to spend the time this evening 
talking about the need for a Medicare prescription drug program and 
also highlight the fact that more and more of my constituents, and I 
know this is true all over the country, are concerned about the price 
of prescription drugs and their inability to buy the medicine or 
prescription drugs that they feel that is necessary.
  I have been to the floor, to the well here many times over the last 2 
years, basically saying that we need on the one hand a benefit, a 
Federal benefit under Medicare to provide prescription drug funding for 
seniors through Medicare, through the Federal Government and through 
the Medicare program. But at the same time I have said that we need the 
coverage that would come from a Federal benefit, we also need to deal 
with the issue of price because prices continue to go up.
  I know that many times during the debate that we had a few weeks ago 
over prescription drugs, when the Republican leadership would talk 
about their initiative, their bill that ultimately passed the House, 
and compare it with the Democratic proposal, which they did not allow 
to come to the floor, that there had been a hot and heated discussion 
about the differences between the two bills.
  Of course, I have been very critical of the Republican proposal 
because it is not Medicare. It does not provide a guaranteed benefit, 
and it does not address the issue of price; and essentially, what the 
Republicans did when they passed a prescription drug bill a few weeks 
ago is that they decided to give some money to private insurance 
companies to essentially subsidize private insurance companies in the 
hope that they would offer drug-only or medicine-only policies to 
seniors that the seniors would find affordable.
  My major concern over the Republican proposal is that like HMOs, 
which are private health insurance, that these private insurance 
companies simply would not offer a prescription drug plan, that there 
would be many areas in the country where there would be no coverage or 
even if there was a private insurer that decided to provide a 
prescription drug-only policy, that it would not be affordable and that 
essentially we would be passing a program that would never work and no 
one would be able to take advantage of as a senior citizen, or at least 
the average senior citizen.
  I contrasted that and I continue to with the Democratic proposal, 
which, as I said, the Republicans never allowed us to bring up; but the 
Democratic proposal was simply an expansion of Medicare. We have a 
great Medicare program that almost all seniors participate in, covers 
their hospitalization, covers their doctors' bills. And what the 
Democrats said is we would simply add another plank, or provision, to 
Medicare so that seniors could pay $25 a month in a premium. After the 
$100 deductible, would get 80 percent of their prescription drug costs 
paid for by the Federal Government under Medicare, and after $2,000 
out-of-pocket expenditures for these seniors with higher drug bills 100 
percent of the costs would be paid for by the Federal Government under 
Medicare.
  It is a very simple process, expansion of Medicare. The price issue 
was addressed by the Democrats, unlike the Republicans, because the 
Democrats said that the Secretary of Health and Human Services, who 
basically administers the Medicare program now, would have the 
bargaining power of 30 to 40 million American seniors under Medicare, 
and he would be mandated by the Democratic bill to negotiate to reduce 
prices substantially, maybe 30, 40 percent.
  So we had a price provision in there, too. The Republican bill, of 
course, could not do that kind of negotiation essentially with the 
Republican bill because it is with private insurance companies. It is 
not Medicare, and all the seniors would not be covered; but just in 
case there was some concern about trying to reduce price, the 
Republican

[[Page 12890]]

bill specifically had a noninterference clause that said that the 
administrator of the program could not set up a price stricture or 
negotiate lower prices.
  So we know the Republicans were not seeking to address the price 
issue. They wanted to make sure, in fact, that it was not addressed at 
all.
  During this whole debate, a lot of my colleagues said to me, even 
some constituents said to me, why would the Republicans want to put 
forth this sham? Why would the Republicans want to pretend that they 
are putting forth a prescription drug plan that no private insurance 
company will offer or that no senior would be able to take advantage 
of? And why do they not want to address the issue of price?
  The answer to that is fairly simple, and that is because of the 
special interests, because the brand-name companies do not want a 
Medicare benefit. They are afraid that if there is a Medicare 
prescription drug benefit like the Democrat's proposal and they are 
afraid that if there is an effort to address price, that somehow they 
will lose profits. I do not believe that because I think if they cover 
everybody under a universal program, they will be selling more medicine 
and they will make more money.

                              {time}  2045

  Even if the price does come down individually for the senior, the 
overall fact that so many more seniors are in the program should make 
the drug companies happy.
  But they do not feel that way. They are opposed to the Democratic 
proposal, and they are doing whatever they can financially to make sure 
that the Republican proposal passes and the Democratic proposal does 
not. They have been taking out ads, they have been financing a huge ad 
program, they have been giving a lot of money to Republican candidates, 
Congressmen, and Senators, but I will go into that as part of this 
special order this evening a little later.
  What I really want to point out is that this effort on the part of 
these large pharmaceutical brand name companies to do this, in my 
opinion, is very much linked to the overall problem we have in this 
country that has been highlighted in the last few weeks of corporate 
irresponsibility. We know that many of the corporations, and I do not 
have to go through the list, Enron, WorldCom, there are so many out 
there now, that basically doctored the books at the request of certain 
CEOs or financial officers, used accounting systems to basically doctor 
the books and show that they had profits when they were actually 
operating at a net loss or at a lot less profit than they reported. And 
so nationally, and here in the Congress, in the House of 
Representatives, we are getting a lot of my colleagues on both sides of 
the aisle coming up and talking about the need for corporate 
responsibility; the need for companies, large corporations, to be 
responsible in their actions.
  I would suggest to my colleagues that the effort of the prescription 
drug industry to mask what they are doing, to give large contributions 
to candidates, to run massive ad campaigns where they did not even 
indicate they are paying the cost of them in order to support 
candidates or to support the Republican bill, is another example of 
what I call corporate irresponsibility. They need to be held to task.
  Now, I want to talk a little tonight, if I could, Mr. Speaker, about 
some of the things that these pharmaceutical companies have been doing 
to promote the Republican proposal and to oppose the Democratic 
alternative. As we know, the other body, this week or next, will be 
taking up a prescription drug bill. And since the other body is 
dominated by the Democrats, the proposals that are out there are 
Medicare prescription drug programs, very much like the House 
Democratic bill. So we will probably have the opportunity at some point 
in conference to see the House Republican version and the Democratic 
version from the other body. So these efforts by the pharmaceutical 
companies to kill the House Democratic bill will obviously extend over 
the next few weeks in an effort to kill the Democratic majority bill in 
the other House as well.
  During the course of the debate that we had in the Committee on 
Energy and Commerce on the Republican proposal here in the House, we 
actually had to end our debate and our committee hearing one night in 
the middle of the markup of the bill because Republicans had to go to a 
fund-raiser that was being given by the National Republican Committee 
that was being paid for, in large part, or in significant part, by the 
pharmaceutical companies.
  I want to give a little flavor of that and then I want to talk about 
the ad campaign, because I see one of my colleagues has joined us 
tonight and I certainly want to yield to him.
  But regarding the debate a few weeks ago in the Committee on Energy 
and Commerce, there was an article in the Washington Post, and I just 
want to read a little bit from it, it 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 
fundraiser gala starring President Bush, 2 days after Republicans 
unveiled the prescription drug plan the industry is backing, according 
to GOP officials.'' Not Democrats, but GOP officials.
  ``Drug companies, in particular, have made a rich investment in 
tonight's event. Robert Ingram, Glaxo-Smith-Klein PLC's chief operating 
officer, is the chief corporate fundraiser for the gala. His company 
gave at least $250,000. Pharmaceutical Research and Manufacturers of 
America, a trade group funded by the drug companies, kicked in 
$250,000, too. PhRMA, as it is best known inside the beltway, is also 
helping underwrite a TV ad campaign touting the GOP's prescription drug 
plan. Pfizer contributed at least $100,000 to the event, enough to earn 
the company the status of a vice chair for the dinner. Eli Lilly and 
Company, Bayer, AG and Merck each paid up to $50,000 to sponsor a 
table. Republican officials said other drug companies donated money as 
part of the fund-raising extravaganza.''
  Then it says, ``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 to make sure that the party's 
prescription drug plan for the elderly suits drug companies.''
  Now, we had an editorial from the New York Times Saturday, June 22, 
and I just want to read a certain section where it says: ``House 
Republicans, who regard traditional Medicare as antiquated, would 
provide money to private insurance companies, a big source of GOP 
campaign donations, to offer prescription drug policies. The idea of 
relying on private companies seems more ideological than practical. 
Even with Federal subsidies, it is unclear that enough insurance 
companies would be willing to participate and provide the economies 
that come from competition.''
  So the bottom line is, and the reason why this scam, the reason why 
this Republican proposal, which relies on private insurance companies 
and does not address the price issue is out there and passed the House 
is because of the contributions from the drug companies.
  And just today, and there is so much more I could talk about, but I 
want to hear from my colleague from Maine, just today, Public Citizen 
issued a report and basically unmasked the ad campaign that PhRMA and 
the other drug companies have been conducting, which started, I guess, 
about a month ago and continues.
  Basically, what PhRMA and the drug companies are doing is they are 
contributing money to United Seniors Association, which is the front 
senior group that is now running these issue ads in various Republican 
districts, telling people how wonderful Republican Congressmen are 
because they voted for this Republican bill, this sham bill.

[[Page 12891]]

  It is amazing to me. I had no idea how much money we were talking 
about here. A few weeks ago we thought it was $2 million, $3 million, 
or $4 million. Now this report from Public Citizen shows clearly that 
it is already $10 million, and who knows where it is going, $20 
million, $30 million, $40 million, $50 million, maybe $100 million that 
the drug industry is going to pay to try to promote the Republican 
bill.
  I just want to give a little breakdown of some of the things that 
this report says about United Seniors Association that is fronting the 
pharmaceutical industry ads. It says today that ``Public Citizen 
estimates that USA,'' that United Seniors Association, I hate to use 
the acronym USA for them, but that is what they use, I guess, ``that 
United Seniors Association has spent $12 million on issue ads during 
the past 17 months. The lion's share of this spending, $9.6 million, 
was used to promote President Bush and House Republican leaders' 
prescription drug plan.''
  It is amazing to me, because this talks about how in the 2000 
election United Seniors Association joined Citizens for Better 
Medicare, which was also a drug industry front group created by the 
brand name drug company's trade association PhRMA, and they spent 
approximately $65 million on TV advertising, a large chunk dedicated to 
electioneering issue ads.
  So I do not know, the sky is the limit. I have to assume that we are 
probably talking, what, maybe $100 million, if 2 years ago it was 65. 
Maybe now it will be 100. With inflation and everything, it is probably 
going to go up.
  I will not go into all this now because I see my colleague from 
Maine. But we have to point out, and I want to say to my colleague, who 
has been the person that has been the most outspoken in this Congress 
on the issue of price, and how the price of prescription drugs is just 
making it impossible for so many people, and not just senior citizens 
but all Americans, to afford their medicine any more. It is just a 
shame that the reason this is happening is because of the money coming 
from the brand name drug industry.
  I said before that we keep talking about corporate responsibility. I 
think this is the height of corporate irresponsibility that they spend 
this kind of money to basically back a plan that will help no one, in 
my opinion.
  I yield to the gentleman from Maine.
  Mr. ALLEN. Mr. Speaker, I thank the gentleman from New Jersey for 
yielding to me and for his leadership on this issue; for constantly 
trying to articulate to the American people the profound differences 
between the Republican prescription drug plan and the Democratic 
alternative here in the House.
  As the gentleman knows, the Republican plan that was passed last 
month in this House was really a remarkable plan. Members on the 
Republican side stood up and said there is a $35-a-month premium. They 
repeated it over and over again, $35-a-month premium. Yet when we go to 
the bill and try to find the $35 figure in the bill, it is not there. 
It is only an estimate. This is a bill with no guaranteed monthly 
premium, no guaranteed copayment, no guaranteed reduction in price.
  It is one of those marvelous things that my friends on the other side 
of the aisle think will somehow emerge from the wonders of the private 
sector; that we will have a private stand-alone insurance policy that 
will take care of seniors. It is remarkable that they can imagine a 
world in which the insurance industry, which has said repeatedly we 
really do not want to provide these kinds of insurance policies, will 
have a change of heart and will step forward and will provide a policy 
that will not change year to year, will have a consistent premium, a 
consistent copay, and some reduction in price. We know it will not 
happen.
  Anybody who has been paying any attention to politics in the last 2 
years knows that if this prescription drug coverage for seniors were a 
priority for the Republican Party, it would have been brought up last 
year; that it would have been brought up before the tax cut. But for 
Republicans, tax cuts for the wealthy are far more important than 
prescription drug coverage for seniors. Now we can see that, as the 
gentleman referred to a few moments ago, the pharmaceutical company is 
thanking our friends on the Republican side of the aisle for coming up 
with this sham proposal and voting for it.
  This is a hope, which has proved successful in the past, that if you 
repeat something often enough to a large enough group of people, a 
certain percentage of them will actually believe it. And that is 
basically what is going on. Almost $10 million spent by the 
pharmaceutical industry in the last 15 months or so, $4.6 million in 
the last 2 months alone, thanking Republicans for supporting a bill 
that has no guaranteed premium, no guaranteed benefit, no guaranteed 
reduction in price, no guaranteed copay, but sounds good.
  It is another election year inoculation. And if we are not successful 
this year in passing a real prescription drug benefit, then 2 years 
from now Republicans will step forward and they will say, just before 
the next election, we have a plan. We have a plan, and somehow it will, 
like magic, emerge.
  There was a physician in Bangor, Maine, who wrote recently in a 
letter to the editor, and I quote, ``The bill would be dropped like a 
bad date by House Republicans if they and President Bush did not need 
it in reelection campaigns.''
  It seems to me that this really comes down to a question of values, 
and the fundamental value is whether the first priority, when it comes 
to prescription drugs, is to protect the profits of the pharmaceutical 
industry or whether the first priority is to make sure that our seniors 
can afford to buy the drugs that their doctors tell them they have to 
take.
  Now, the first half of last year, as my colleague will remember, the 
President traveled all across the country, and there was not any talk 
of prescription drugs for seniors then. It was one theme repeated over 
and over and over and over again: It was simply, ``It is not the 
government's money, it is your money.''

                              {time}  2100

  Mr. Speaker, it was an appeal to the American people to think of 
themselves first, to think of their own individual interests before the 
common good. That appeal was pounded in in the first 6 months of the 
administration, pounded in over and over again. It is not the 
government's money; it is your money.
  What is the refrain today? Now that we are deep in deficit with $165 
billion projected deficit for this year with a comparable deficit 
projected for next year, is there an effort to say, We are in this 
problem together and we have to work out of it together? No. What we 
see is the same kind of appeal to individual interests over the common 
good and the common interest.
  Mr. Speaker, the question really is when it comes to prescription 
drugs and the other issues that we face before us, whether the 
governing ideal of this House of Representatives will be me first or 
all of us together. That really is the fundamental choice. Those who 
come and say we are going to rely on private stand-alone insurance for 
prescription drugs for seniors are really saying that each individual 
should go out and buy his or her own insurance policy rather than 
having the Secretary of Health and Human Services, as in the Democratic 
bill, negotiate lower prices on behalf of all Medicare beneficiaries.
  That is what we have done in our legislation. We have said seniors 
belong to the largest health care plan in the country. It is called 
Medicare. Well, they ought to get a discount. If they are in the 
largest health care plan and 39 million Americans are getting their 
prescription drugs through Medicare, there ought to be a discount that 
reflects the market power of that buying group; but seniors on Medicare 
do not have the buying power of Aetna beneficiaries or Cigna 
beneficiaries. They do not have bargaining power at all today.
  We have this anomaly. We have the largest group of health care 
beneficiaries in the country, Medicare beneficiaries, paying the 
highest prices not just in the United States but in the

[[Page 12892]]

world for their prescription drugs. Here we have a group of seniors 
that make up 12 percent of the population, but they buy one-third of 
all prescription drugs, 33 percent of all prescription drugs. Half of 
them have either no coverage or very inadequate coverage for their 
prescription drugs, and our friends on the Republican side of the 
aisle, for fear of strengthening Medicare because it is a Federal 
health care plan, are basically saying no, no, you have to rely on the 
private insurance market.
  In Maine and many other rural States, 15 to be exact, there is no 
private managed care under Medicare, no options at all. And those who 
say the private market provides more choice ignore the fact when 
private insurance companies do not want to offer prescription drug 
coverage or health insurance in a particular area, they just pull up 
and leave.
  We have a program that works. It is called Medicare. It has kept our 
seniors with affordable health care despite its flaws, despite its 
problems. There is not a health care plan in the world that does not 
have problems. It has lifted seniors out of the condition where a trip 
to the hospital meant a trip to the bankruptcy court as well. That is 
something we have to preserve.
  But coming back to this question of values, what we have seen in all 
of the corporate scandals over the last few years is an attitude at the 
top in too many American corporations which basically comes down to the 
same thing, me first. I will get mine. We will cook the books, drive up 
the stock price, and then the CEOs and officers sellout. And who gets 
hit in the end? The shareholders get hit in the pocketbook. 
Shareholders find that their pensions have dropped dramatically. What 
happens to the workers? They get laid off. They do not have all this 
money tucked away. They cannot party on their yachts when they leave 
the company, as some CEOs have done. They are stuck. This is 
fundamentally a question about values.
  Are we going to take our common problems and deal with them as common 
problems, or are we going to say to the American people, as our friends 
on the other side of the aisle do all the time, each person on his own? 
Each person stands alone. Do the best you can with what you have got, 
but we are certainly not going to all work together.
  Well, it is time for this country to pull together. It is time for us 
to take our common challenges, our economic challenges, our health care 
challenges, our environmental challenges and work together to build a 
better and stronger America. I know we can do it; but we have to shed 
that old motto, the ``me first'' motto and get to something that really 
reflects how much we depend on each other and how much we need to work 
together to build a better country.
  Mr. Speaker, I thank the gentleman from New Jersey (Mr. Pallone) for 
his leadership on this issue.
  Mr. PALLONE. Mr. Speaker, I have to say until I saw this latest 
information about the level of funding that was going to United Seniors 
Association and how much money they were spending on this ad campaign, 
I still was under the belief that some of our Republican colleagues did 
not like the Democratic proposal and liked the private insurance option 
because ideologically they did not like Medicare, they thought Medicare 
was not a good program, they did not like government, and they had a 
hard time supporting a government program like Medicare, even if it 
works, because it is a government program.
  But I am becoming more cynical now as I see the level of funding that 
is being spent on these ad campaigns and how it is just targeting 
Republicans, and particularly Republicans that are vulnerable. If we 
talk about a $100 million ad campaign divided over some of the most 
seriously contested seats, it will be almost as much money as some of 
the candidates will spend on their own campaigns. I think the support 
on the other side is linked to the money, is linked to the fact that 
PhRMA and the drug companies are putting all this money out to promote 
Republican campaigns.
  I am so glad that the gentleman raised the value issue. That is what 
this is about. This is about some greedy people who want to make more 
profit and do not care about the consequences for the average senior.
  Last week, last Thursday I believe, there was a bus load of about 50 
seniors that came from New Jersey. They did not go to Canada; they were 
highlighting that they were taking a bus to come to Washington instead 
of Canada. The gentleman from Maine knows about all of the people that 
go over to Canada because of the cheaper drug prices. We had 15 buses 
that went the week before to Canada from all of the border States. All 
the seniors from New Jersey were talking about was the price, how the 
price of prescription drugs keeps going up, and it is so unaffordable 
to them. I do not understand how these brand-name drug companies can 
spend $100 million on ad campaigns which are going to do nothing more 
than prevent these senior citizens from getting the medicine that they 
need. It is pathetic. It really is.
  Mr. ALLEN. Mr. Speaker, they may be spending millions and millions on 
contributions to candidates, on TV ads promoting their point of view, 
or the feel-good ads about the industry itself as a way of trying to 
resurrect the industry's image; but it is also the case that many of 
the drugs that they have been developing these days are so close to 
drugs that already exist on the market that they cannot get the kind of 
sales volumes they want without a very heavy investment into direct-to-
consumer advertising. Last year the industry spent $2.5 billion on 
direct-to-consumer advertising. We can feel what has happened to the 
industry. It really has become a marketing operation. They depend very 
much on blockbuster drugs. Some of those drugs are blockbuster. This is 
an industry that does some remarkable things, but they move from the 
argument that we are earning very high profits right now to the 
conclusion that we have to sustain those profits at exactly the level 
we are at; and more particularly, that we have to charge our seniors 
the highest prices in the world in order to get enough money to do 
research. That is not true.
  Just think about it. We are 280 million people in this country. 
Thirty-nine million are on Medicare. That is a very small percentage of 
the total market for prescription drugs in this country. There are 330 
million people living in Europe, 125 million living in Japan, 25 
million living in Canada. There are lots of people around the world who 
are buying prescription drugs. They are all paying lower prices than 
the seniors, that 39 million or maybe half that, really, half that 
group which is buying their prescription drugs from the pharmacist with 
no support from an insurance company.
  Mr. Speaker, it just cannot be the 20 million Americans, very high 
prices charged to 20 million Americans, is the salvation of the 
pharmaceutical industry. It cannot be. It is not true.
  But if we give enough money to groups like United Seniors 
Association, which sounds like a legitimate seniors organization, and 
they will run ads supporting the pharmaceutical industry's solution to 
the issue that is raised here, thanking our friends on the Republican 
side of the aisle for supporting a bill that will do virtually nothing 
for America's seniors, then we begin to understand how money has 
distorted the policy-making process in this House.
  It is profoundly troubling that we cannot get a clean vote even. We 
could not get a clean vote from the Republican Committee on Rules on 
the Democratic alternative. That, I think, is a scandal that if people 
fully understood, they would be outraged about. They expect us to have 
a debate here. They expect us to have a choice between competing 
alternative plans, and we do not. The Democratic plan gets buried in a 
few minutes of debate on a procedural motion. That is another part of 
the scandal that really we need to deal with.
  If we do not pass a real Medicare prescription drug bill this year, 
we will just do it again 2 years down the road. They will come in with 
a bogus plan and hope that once again for the third

[[Page 12893]]

cycle in a row that enough of the American people will be fooled into 
thinking that for them, prescription drugs is as important as tax cuts 
for the wealthy. It is not. We know it is not; but that is the 
continuing effort, to try to prove that they care.
  Mr. PALLONE. Mr. Speaker, reclaiming my time, what I do not 
understand, it seems to me if we provide a Medicare benefit the way we 
have proposed as Democrats, and we take in that other half of the 
senior population, 20 million that are having problems, some of them 
are not buying the drugs or have difficulty, we are going to increase 
the volume of sales that the brand-name manufacturers are going to 
have. If we do some of the other things, like the gentleman has 
addressed the issue of price, not just in the context of a senior 
benefit, but we have collectively talked about doing more with 
generics, like the other body passed the bill last week that would plug 
up the loopholes and make it easier to move to generics.

                              {time}  2115

  We have talked about this: I know that in the other body, one of the 
Members has a bill which I have sponsored here that would eliminate the 
tax underwriting of advertising for pharmaceuticals. I mean, those are 
the kinds of things that would make a lot more people, even those who 
are not seniors, able to buy drugs. Even generics, a lot of the brand-
name companies own a lot of the generic companies too, so it is not 
like there is this huge division between generics and brand names. A 
lot of the brand-name companies manufacture generics too.
  So why is it that they do not see the increased volume that would 
come with that with many more Americans purchasing the drugs, even at a 
reduced price, as basically lifting their sales and their profits as 
well? That is what I do not understand.
  Mr. ALLEN. Mr. Speaker, I am confident that they do. They do, in 
fact, understand that. The evidence I would give for that is the 
largest pharmaceutical company, Pfizer, has offered to seniors living 
under 200 percent of the poverty level, with incomes of less than 200 
percent of the poverty level, they have said that we will sell to you 
all of our drugs, which average in retail $61 or $62 a month; we will 
sell all of our drugs to you for $15 a month. That is a 75 percent 
discount; $61 and $62 drugs on average, all of them for $15 a month. 
How can they do that? Well, they will sell more medication. They will 
sell more drugs. We can bet that the cost of producing pills is a very, 
very small amount of the sale price. There is a lot that goes into 
research and development, no question. There is a lot, obviously, that 
goes into marketing. But the cost of production itself is a minor 
thing.
  Mr. PALLONE. So what the gentleman is saying is that there may be one 
or two companies that see the benefit if they can get a larger volume; 
but overall, the trade group PhRMA does not see it that way, and they 
would rather keep their prices artificially high.
  Mr. ALLEN. Mr. Speaker, I would distinguish between what they say and 
what they believe. Because if we look at all of the pharmaceutical 
industry drug discount card plans, they are out there advertising their 
discounts at being between 25 and 40 percent. That is what we have been 
talking about with my legislation and with other bills, getting to a 25 
to 40 percent discount for all seniors. The pharmaceutical industry is 
out there saying, we have discount cards that will do that; we have 
discount prices that will do that.
  Now, the question is, if they are willing to do that, what is the 
problem with the legislation that requires them to do that? Well, the 
answer is, we do not want to be hemmed in. We do not want to be 
required. We do not want the government to be able to tell us what to 
charge. In fact, a promise that is made on a temporary basis to say, we 
are going to promise you 25 to 40 percent does not mean they can 
actually deliver that or will deliver it. They will, in all likelihood, 
do what they have done with all of their other markets, which is charge 
what the market will bear; and if they give a little bit of a discount 
today, they may take it away tomorrow.
  Seniors need predictability and continuity and stability in their 
Medicare plan. They need to know what the benefits are; they need to 
know what the premiums are for whatever services they are getting. If 
it is a physician service or if it is, as we have proposed, a 
prescription drug benefit on top of that, they need to have 
predictability. The pharmaceutical industry is not willing to provide 
it voluntarily. That is why we need legislation, so that seniors can 
sleep at night knowing that they are going to be able to take the 
medication that their doctors tell them they have to take.
  That ultimately is the goal, because ultimately, lifesaving 
prescription drugs should not be dispensed on the basis of seniors' 
income. They ought to be dispensed on the basis that everyone who needs 
the medication will be able to get it; everyone should be able to have 
to pay some portion of the cost, but people who need lifesaving drugs 
ought to be able to get them.
  Mr. PALLONE. Mr. Speaker, I see that the gentleman from Ohio (Mr. 
Strickland) is here joining me. I know he was there at the Committee on 
Commerce markup the day that we had to adjourn so that the chairman, 
the Republican chairman of the committee and other Republican members 
could go to the big fundraiser; and at the end, at 5 o'clock, because 
we knew that the clock was getting close to 5 and they had to leave for 
the fundraiser, we were sort of kidding them and hoping that they would 
stay for an extra half hour or hour; but boy, they certainly did not 
want to do that; they were determined to get out of there by 5 o'clock, 
no matter what. I mean, I laugh, and it really is not funny, because we 
have talked about the consequences in terms of seniors. But there is no 
question about what they were up to that night.
  Mr. STRICKLAND. Mr. Speaker, I want to thank my friend. I was there 
and, as the gentleman knows, the next day we worked all day long and 
all night long; and we finally passed out a bill which only provides 
coverage for a person who has a prescription drug need of $400 a month. 
The bill that finally passed out, the Republicans passed it out, would 
only provide coverage for 4\1/2\ months out of the 12-month year; and 
yet the poor senior would have to pay premiums every month, even during 
the months when they were receiving no coverage at all and, as the 
gentleman knows, they tell us that the premium would be on average $35 
a month, but there is no guarantee that it would not be $65 or $85 or 
$125 a month.
  So it is quite shameful, I think, that at a time when nearly every 
person in this Chamber, as they go home and talk to their constituents, 
say the right words, and they tell their seniors that they want to get 
them a prescription drug benefit and they want it to be affordable and 
they want it to provide choice, but when it comes to making the tough 
decisions here in this Chamber, they simply make the wrong decision.
  Now, the Democratic proposal would add a voluntary drug benefit to 
Medicare. Why is that important? I know the gentleman from New Jersey 
and the gentleman from Maine have been talking about the fact that 
every citizen in every other country on Earth pays less for their 
prescription medications than does the American citizen. That is really 
quite sad because, as the gentleman knows, so many of these drugs are 
discovered, developed using tax dollars. So the American citizen pays 
the taxes to help develop these drugs, and then the pharmaceutical 
companies decide they are going to charge American citizens more than 
citizens anywhere else on Earth. That is shameful, and we ought to 
change it.
  But there is something that I think is even more shameful than that, 
and that is the fact that here in America, America's most vulnerable, 
who are our elderly, our seniors citizens, end up paying more for their 
drugs than do HMOs or large insurance companies or even the Federal 
Government. Why is that? It is simply because the individual senior 
citizen does not have any clout when it comes to buying their

[[Page 12894]]

medications. They are only one little individual. And the large 
insurance companies, the large HMOs and the Federal Government, they 
buy in bulk, they buy in large quantities, and so they can get 
discounts. But the individual senior citizen, because we have no 
Medicare benefit, just simply is on their own. It is quite shameful.
  It is troubling to me that this vulnerable population, the people who 
are most likely to be on fixed incomes, are seniors; the people most 
likely to have chronic health conditions that require continuous 
medications for the rest of life are senior citizens. The population 
that is most likely to need multiple medications are senior citizens. 
Yet senior citizens are the ones who are being charged the most for the 
medications. There is something really fundamentally wrong about that. 
I believe the American people expect us to fix that problem.
  I hope the American people are paying attention, because we are going 
to have an election here in 4 months or so, and I believe that those of 
us who are willing to stand up to the pharmaceutical companies, to 
stand for America's senior citizens, to fight for a Medicare 
prescription drug benefit that is predictable, affordable, voluntary, 
accessible to any senior who wants to participate, I think we are the 
ones, quite frankly, who deserve to be returned to this lofty Chamber; 
and I believe those who will not support America's senior citizens, 
quite frankly, do not deserve to return to this Chamber.
  So I hope the American people are paying attention. It is important 
that they pay attention to the details because, as the gentleman knows, 
the devil is always in the details, and words are cheap, talk is cheap. 
Certainly actions speak louder than words, especially when it comes to 
this particular issue.
  I would like to point out another problem that I think deserves 
attention. The Congress, I think, must take action in this era of 
corporate misdeeds. They must look at the drug industry's behavior, 
including the misstatement of profits and the abuse of patents.
  Particularly damaging to consumers is when drug companies use patent 
laws to file frivolous claims that extend their market exclusivity, 
blocking far more affordable generic drugs from coming to the market. I 
would just like to use a case in point.
  Prilosec is a case study of the failure of our current patent law. 
Many seniors in my district take Prilosec. It is a good medication. It 
is the number one medication prescribed for seniors for the treatment 
of heartburn and acid reflux disease. Now, the original patent for 
Prilosec expired in October of 2001, but the manufacturer delayed 
market entry of a generic by filing nearly a dozen lawsuits and by 
claiming that Prilosec has unique benefits when administered with 
applesauce. As a result, the generic manufacturer had to do time-
consuming research on how the generic research works when given with 
applesauce before it could be approved.
  In 2001, the company had Prilosec sales of more than, and this is an 
astounding figure, more than $16 million per day. And during the year, 
the company raised the price of Prilosec by more than four times that 
of the rest of the inflation within our economy.
  Now, this specific scenario and others like it amount to an 
incredible windfall for the drug industry, one that Congress simply 
must not allow to continue. These higher drug prices hurt seniors who 
depend on Medicare the most, because they are not shielded by the full 
cost of drugs like those who have insurance coverage.
  During the past 10 years, 10 of the 50 drugs most frequently used by 
seniors were generic drugs, while the remaining 40 were brand-name 
drugs. Now, the prices of generic drugs used most frequently by seniors 
rose 1.8 percent, 1.8 percent from January 2001 to January 2002. During 
the same period, prices for the brand-name drugs increased by an 
average of 8.1 percent, or three times the rate of inflation.
  So I think this brings us to only one reasonable conclusion and that 
is that we need a voluntary prescription drug benefit with a 
predictable premium that is a part of the Medicare benefit package that 
America's seniors can depend upon, just as they depend upon the 
Medicare system today.
  As I said, I hope the American people are paying attention, because 
talk is cheap, actions speak louder than words; and those who do what 
is right for America's senior citizens, in my judgment, are those who 
deserve to remain in this institution. And those who turn their back on 
America's seniors and instead support the pharmaceutical industry, they 
are the ones that I think have relinquished their right to serve here.

                              {time}  2130

  Mr. PALLONE. Mr. Speaker, I want to thank the gentleman because he 
brought up so many good points on this issue. But particularly when the 
gentleman was talking about the roadblocks, if you will, that the 
brand-name companies put up to try to prevent generics from coming to 
the market, I think that is so significant.
  As the gentleman mentioned earlier, the other body last week actually 
passed out of committee a bill that would close a lot of these 
loopholes with the generics, and particularly this idea that once they 
file suit, it is up to 30 months that they can prevent the generic from 
coming to market. Thirty months? We are talking about almost 3 years, 
2\1/2\ years, which is absolutely crazy, when we know all these seniors 
that are out there that are suffering.
  In fact, they passed that bill before they even passed the benefit 
bill. They are probably going to attach the benefit structure to that 
bill. I have to say that the other body, I think in large part because 
they have a Democratic majority, has been trying to address this price 
issue even before, in a sense, they have addressed the benefit issue, 
because they realize how important the price issue is.
  The gentleman could argue, and I do not agree with that, but the 
gentleman could argue that if we addressed the price issue effectively, 
that that would go far toward solving the problem. I still think we 
need the benefit; but we need both, essentially.
  I just find that so often the issue of price, though, is what people 
talk about, as my colleague, the gentleman from Maine, knows. That is 
what our constituents are constantly bringing up when we have a town 
meeting or when we see them on the street. That is what they talk 
about: how to address the price issue.
  The Republicans here in the House did absolutely nothing to address 
that issue. They had that noninterference clause. I actually brought it 
with me, because it is amazing.
  The gentleman will remember, in the Committee on Commerce markup, 
they never even mentioned it. They sort of suggested they were going to 
have discounts through competition. I remember the Republican chairman 
kept saying, well, we are going to have discounts.
  I think the gentlewoman from Connecticut (Mrs. Johnson) on the floor 
said there was going to be a discount because of competition between 
the private insurance companies. But they have right in the bill, I am 
just going to read it, that ``the administrator may not institute a 
price structure for the reimbursement of covered outpatient drugs, or 
interfere in any way with negotiations between the sponsors and 
Medicare+Choice organizations and drug manufacturers'' that relate to 
price. In other words, they cannot bring up the price issue in the 
course of negotiations.
  It is just amazing to me how, on the one hand, they suggest that 
somehow these private insurance companies are going to compete with 
each other, but that has to be totally on their own. That cannot be 
anything that the administrator of the Medicare program does. They 
cannot interfere in any way to try to bring the price down.
  Mr. STRICKLAND. If the gentleman will continue to yield, Mr. Speaker, 
that provision certainly was influenced by the pharmaceutical industry. 
Basically, they are putting into law a prohibition on the Secretary of 
Health and Human Services, who is supposed to be representing the 
American people.

[[Page 12895]]

They are really going to try to prohibit him by law from doing anything 
that is going to lower the prices of these prescription drugs.
  Mr. PALLONE. Exactly.
  Mr. STRICKLAND. Why would we do that if it were not simply to satisfy 
the pharmaceutical industry?
  I want to tell the gentleman, this is not a Republican or Democratic 
issue back home at the grassroots. I went to a VFW hall this past 
Sunday morning for breakfast, and there were people there at that hall 
that were talking about not being able to afford their medicines. They 
were Republicans and Democrats. This is an issue that cuts across 
parties.
  It cuts across economic levels, as well, because people can be fairly 
well-to-do and be unable to see that their parents or their relatives 
or their neighbors, their elderly neighbors, have access to life-saving 
medications.
  People are sick of this. They are absolutely outraged at what is 
happening. Why that outrage does not result in some meaningful action 
here in the House of Representatives is beyond me. This problem has 
been with us for quite some time. We talk and we talk, and we have 
campaigns, and we say we are going to do something about it; yet time 
passes, and then we go through that kind of farcical exercise that we 
went through in our committee, where every amendment that we brought up 
that was designed to make these drugs more affordable was shot down by 
our Republican friends. They simply would not take the first step in 
trying to lower the cost of these drugs.
  They use all kinds of rhetoric. They talk about price controls. Well, 
I think when a pharmaceutical company charges a large HMO a certain 
amount for a medication and then charges some elderly, sick, income-
limited senior citizen two or three times as much for that same 
medication, I think that is price discrimination; and I think that is 
what we should be looking for, getting rid of price discrimination that 
is directed toward America's most vulnerable citizens.
  Mr. PALLONE. Mr. Speaker, if the gentleman will remember 
specifically, they actually went the opposite direction, because they 
wanted to eliminate the Medicaid, not Medicare, but the Medicaid price 
structure, if you will. And actually they did vote to do that at one 
point and suggested that somehow it was something that the 
pharmaceutical industry opposed; that somehow the pharmaceutical 
industry did not want to eliminate the pricing structure that existed 
under Medicaid. That is just not true. That was another thing that was 
a bone, basically, to the pharmaceutical industry.
  And then I remember the biggest affront to me is when, I think it was 
our colleague, the gentleman from Michigan (Mr. Stupak), who introduced 
a couple of amendments that would basically use the negotiating or 
price structure, the price negotiations that we use now for the VA and 
I guess maybe for military, as well, and we just wanted to take that 
and use it for seniors. They said no, no, we do not want that; we 
cannot do that for seniors. We can do it for the military and the 
veterans, but we cannot do it for the seniors. It was amazing.
  Mr. Speaker, I yield to the gentleman from Maine (Mr. Allen).
  Mr. ALLEN. Mr. Speaker, I thank the gentleman for yielding; and I 
agree with my friend, the gentleman from Ohio, that this is really an 
issue of price discrimination. Why do seniors in America pay the 
highest prices in the world? It is because, frankly, they do not have 
any bargaining power or leverage now. The only way they can get that 
leverage, get that bargaining power, is through Medicare, through 
giving the Secretary of Health and Human Services the ability to 
bargain on their behalf.
  I have to smile sometimes when we hear about how competition is going 
to drive down price. Well, I am open to hearing from anybody the last 
time there was a price war among brand-name pharmaceutical companies, 
where first one cut prices and then another cut prices, and then the 
original one responded with a further cut in prices. I do not remember 
that happening, ever.
  In fact, the prices basically keep going up, even though the 
utilization is also going up. Even though people are using more drugs, 
they are buying more drugs; and it does not cost that much to make 
them. So when people use more Prilosec, or whatever, the profits go up 
at a very rapid rate; but even so, the pharmaceutical companies are 
increasing prices on brand-name drugs. We do not have competition.
  Mr. PALLONE. We do not because we have a monopoly. Basically, the 
patent structure is giving a particular company a monopoly for that 
particular drug for a period of time. Unless we allow generics or 
others to come in, which they obviously try to prevent, as my 
colleague, the gentleman from Ohio, mentioned, we essentially have a 
monopoly for a period of time and do not have competition.
  The thing that was amazing to me, too, is this whole idea that they 
are going to create competition among the private insurance companies, 
but the private insurance companies do not even offer the insurance. 
How can there be any competition? That is the competition they are 
talking about with the private insurance companies.
  Mr. STRICKLAND. If my friend, the gentleman from New Jersey (Mr. 
Pallone), will continue to yield, I keep going back to the fact, how 
long are the American people going to tolerate this situation? We can 
go to Canada, we can go to Mexico, Belgium, England, Japan, we can go 
anywhere on Earth and buy medications that are developed within this 
country, many of them, in part using American taxpayer dollars; and we 
can buy those medications with much less cost to the consumer than the 
American citizen must pay.
  How much longer are the American people going to put up with that 
situation? This is just a matter of gross discrimination. American 
citizens are subsidizing the costs of prescription medications for 
citizens all over this world. When are we going to put a stop to it? 
When are we going to say that our people are being treated unfairly?
  Then, when are we going to say that in this country, America's 
seniors are not going to continue to be gouged and charged more than 
insurance companies or HMOs for the same medication? It seems like a 
no-brainer to me. I cannot understand why there is so much 
determination on the other side of the aisle to keep us from taking 
action against this situation.
  Mr. PALLONE. I want to thank my colleagues. The answer, obviously, is 
because of what the brand-name pharmaceutical companies are doing to 
pay for the ads and pay for the campaigns. It is the special interest 
money.

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