[Congressional Record (Bound Edition), Volume 149 (2003), Part 9]
[House]
[Pages 12256-12263]
[From the U.S. Government Publishing Office, www.gpo.gov]




              LOWERING PRESCRIPTION DRUG PRICES IN AMERICA

  The SPEAKER pro tempore (Mr. Cole). Under the Speaker's announced 
policy of January 7, 2003, the gentleman from Minnesota (Mr. Gutknecht) 
is recognized for 60 minutes as the designee of the majority leader.
  Mr. GUTKNECHT. Mr. Speaker, I rise tonight to talk about an issue 
that I think all of us are aware of, but I do not think most Members of 
the House really understand the dimensions of the problem.
  Mr. Speaker, I know that there is work going on in several committees 
to try and deal with the issue of prescription drug coverage for senior 
citizens. It is a rather sad story, and most of us have talked to 
constituents about the problems that they have in terms of buying the 
drugs that they need to sustain their lives.
  Unfortunately, even though I feel good that we are getting serious 
about this issue, I think, in many respects, many of my colleagues are 
missing what is the real story. The real story is how much drugs cost 
in the United States relative to the rest of the world.
  Let me say right here, I am not here tonight to beat up on the 
pharmaceutical industry. I know that I have colleagues who say shame on 
the pharmaceutical industry. Essentially what I am here tonight to do 
is to say shame on us, because we as policymakers, and especially the 
people at the FDA, have allowed this system to grow out of control and 
literally have put Americans in an incredibly difficult position in 
terms of buying the drugs that they need.
  Let me first show a chart. I know that these are hard to read, 
especially as Members are in their offices watching this on C-SPAN. 
Some of these numbers are awfully hard to read, because one of my 
colleagues the other day, I had the chart up, and he said, ``I was 
squinting very hard to read your numbers.''
  Do not take my word for this. You can actually find this chart on my 
Web site, Gill.House.Gov.

                              {time}  1845

  More importantly, these are not my numbers. These numbers have been 
developed. There is a group down in Florida called the Life Extension 
Foundation. They are one of the groups that has sent me an enormous 
amount of information. They have been studying the differences in drug 
prices for more than a decade. Frequently in Minnesota we hear from 
constituents who get on buses and go to Winnipeg or they go into Canada 
so that they can buy their prescription drugs at much lower prices.
  The interesting thing is, virtually all of the research that I have 
seen demonstrates that, yes, drugs are cheaper in Canada, but the 
amazing thing is that they are even cheaper in Europe. I want to talk 
about that tonight and perhaps some of the reasons, but, most 
importantly, what I think we as public policymakers here in Congress, 
in the administration, and especially over at the Department of Health 
and Human Services and in FDA can do to bring about some real change 
that will make real differences in real people's lives.
  Let us talk about some of those differences. I have this chart. 
Again, these are not my numbers, but, frankly, there has been research 
done by a number of different groups, and they all come to the same 
conclusion. That is that Americans pay way, way too much for the same 
drugs. Let me give some examples.
  Let us talk about the drug Augmentin, a very popular drug here in the 
United States. The average price for a 30-day supply is $50.50. But we 
can buy that drug in Canada for $12. That same drug in Europe sells for 
an average of $8.75.
  Another popular drug is Cipro. In fact, I have some Cipro here that 
we bought in Germany. The average price in the United States for a 30-
day supply of Cipro, and I am sorry, it is not a 30-day supply, I 
believe that is a 10-day supply of Cipro, is $87.99 in the United 
States. That same drug in Canada sells for $53.55, so a savings of 35 
to 40 percent. But the interesting thing is it is half-priced, more 
than half-priced, if we buy the drug in Germany. It is the same drug 
made in the same plant under the same FDA approval.
  Let us go down here and talk about a drug that my 85-year-old father 
takes, Coumadin. It is a wonderful drug, a blood thinner. It has done a 
lot in terms of preventing strokes and heart attacks in the United 
States. Coumadin in the United States today sells for almost $65 per 
month. Now, if we buy that same drug in Canada, it is only $24.94. But 
the interesting thing is, it is even cheaper in the European Union. The 
average price is only $15.80.
  To go on down the list, another very popular drug, and in many 
respects a miracle drug, and, as I say, I am not here to beat up on the 
pharmaceutical industry, all of these drugs are miracle drugs for 
Americans and millions of people around the world, but the question is 
whether we ought to pay 30 to 300 percent more than for the rest.
  Glucophage. For the people suffering from diabetes, one of the most 
debilitating diseases known to man, Glucophage is a wonderful drug, but 
the average price in the United States is over $124 for a month's 
supply. We can get that same month's supply in Canada for $26.47, but 
in Europe it is only $22.
  The list goes on and on. I am not going to read all the prices.
  Let me also talk about a drug called Zocor, down at the bottom of the 
list. Zocor, in the United States the average price for a 30-day supply 
is $123. We can buy the same drug in Canada, here is a package of Zocor 
which we bought in Germany, we can buy that same drug in Canada for 
$45.49, but we can buy that drug in Europe for $28.
  Now, again, Mr. Speaker, these are the same drugs made in the same 
FDA-approved plants under the same FDA approval.
  The story goes on and on. Again, Members do not have to take my word 
for it, but this is an ad that appeared last week in a newspaper in the 
State of Michigan. At the top it says, ``Save up to 86 percent on your 
prescription drugs,'' the same brand name drugs and generics. This is 
for a group, and I will not give the number or anything, but this is 
for a group out of Canada. They are now advertising in the United 
States.

[[Page 12257]]

  Some of the prices they list, let us take Lipitor, a very commonly 
prescribed drug that does a wonderful job for those people who have 
elevated cholesterol in their blood. The average price they list for a 
90-count package in the United States, the average price is $288. But 
we can buy it from Canada for $165. That is a savings of over 43 
percent.
  The list goes on. Members do not have to take my word for it, but 
everybody is beginning to realize the dirty little secret. That is that 
Americans are being required to pay for virtually all of the research, 
for virtually all of the marketing costs, and for virtually all of the 
profits. The list goes on.
  Let us pick some other drugs people might recognize.
  Synthroid, that is a drug that my wife takes. My wife takes 
Synthroid. They say that the average price in the United States for 100 
tablets, the average price in the U.S., $41. We can buy it in Canada 
for $14.
  We have to ask ourselves, how did we wind up in a situation like 
this? How is it that the rest of the world can buy drugs for so much 
less than we buy them for? Then the question becomes, what are we going 
to do about it? I do not think the answer for seniors is, well, we are 
not going to do anything.
  I have been joined tonight by my friend, the gentleman from Indiana 
(Mr. Burton). I would like to yield to him now, because, as the 
chairman of the Subcommittee on Wellness and Human Rights on the 
Committee on Government Reform, he is one of the few chairmen that have 
had the courage to actually have a hearing and bring in some experts to 
talk about this problem. Because it is a major problem. We will talk in 
a few minutes about the dimensions of the dollars that we are talking 
about here in the United States, what it costs American consumers.
  I welcome and yield to the gentleman from Indiana (Mr. Burton).
  Mr. BURTON of Indiana. Mr. Speaker, I say for our colleagues who are 
back in their offices and watching this special order, or anyone else 
that is paying attention, the gentleman from Minnesota (Mr. Gutknecht) 
is the fellow who has been carrying the mail on this issue. He should 
be congratulated.
  There are well over 1 million people in this country that get their 
pharmaceutical products through pharmacies in Canada because it does 
save them so much money, and those people are the people that the 
gentleman is fighting for, as well as a lot of other people who, when 
they find out about the issue, the gravity of the situation, will also 
be buying their products from up there.
  The thing I would like to start off with, because the gentleman 
covered the issue so well, when we had our subcommittee hearing and the 
gentleman was in attendance and participated, the gentleman will recall 
the Food and Drug Administration and the gentleman that was there, I 
think his name was McClellan from the FDA. Or what was the fellow's 
name? McClellan is the FDA commissioner.
  Anyway, the gentleman who was there indicated that there was a 
question about the safety of pharmaceutical products coming from 
pharmacies in Canada to the people here in the United States.
  There was an article which was in the Washington Post on Thursday, 
May 8, last week. The Canadian government said officially that it will 
be responsible for the safety and quality of the large and growing flow 
of prescription drugs across the border to American consumers.
  It was also said, the Health Ministry of Canada said that all 
imported drugs must be equally safe and effective, whether they are 
used by Canadians or for exports. They testified that Canadian laws 
require that drugs that are from third countries that come through 
Canada are also very closely regulated and scrutinized.
  The assistant health director general for the Canadian Health 
Department, Danielle Dione, said that those were very, very safe. She 
said, ``As soon as any drug crosses the border into Canada, it has to 
meet all the regulations of our laws.'' She described the new posting 
as a clarification, rather than any new policy.
  What they are telling us is these drugs in Canada, pharmaceutical 
products, are absolutely safe for Canadians and they are absolutely 
safe for Americans. So the only reason anybody could come up with, as 
far as I am concerned, that would prohibit pharmacologic products from 
being sold by Canadian pharmacists into the United States is money, 
money.
  Let us take a hard look. The stock market in the last year has 
suffered. People who own stocks have suffered. The economies of major 
companies in the United States and around the world have suffered. Yet 
the pharmaceutical industry had a 17 percent profit during one of the 
worst years that we have seen in a long time. The executives for the 
pharmaceutical companies have been making $15, $20, $25 million a year 
for the CEOs. They are making a lot of money. They want to make sure 
that the profits they are realizing do not go away.
  The country that pays the most for pharmaceutical products, as the 
gentleman stated so many times so well, is the United States. We pay 
10, 15, 20 times as much as they do in other countries for the very 
same product. I am convinced that it is not just research, which is 
very important. It is not the scientific studies, which are very 
important. It is the god-awful dollar, the money that they are making 
that they are trying to protect.
  Now, how are they trying to protect it? Well, we did a search on the 
Internet, and I think the gentleman probably has that as well.
  Mr. GUTKNECHT. We have the law.
  Mr. BURTON of Indiana. They have 600 lobbyists here in the United 
States, 600, making sure that the prices stay high. They pay those 
lobbyists a half a billion dollars a year to lobby the Members of 
Congress. In order to make absolutely sure that they have Members of 
Congress who will look with favor upon what they want, they paid $20 
million last year in contributions to our colleagues.
  I am not saying any of our colleagues and their votes can be 
purchased. I am not saying that at all. But what I am saying is that 
the money that is being spent by the pharmaceutical industry for our 
health agencies, FDA, HHS, and CDC, the revolving door policy that 
appears to be prevalent over there, because they make so much more 
money when they go with these pharmaceutical companies and they get 
these benefits and everything, a lot of the people in these health 
agencies look with a jaundiced eye to anything that might impede their 
ability to make a lot of money when they go to the pharmaceutical 
industry and get a job.
  Many of our colleagues get contributions from the pharmaceutical 
companies. Many of the people in the health agencies go from the 
pharmaceutical industry to the health agency and back again. I think 
that does have an impact on what goes on around this place.
  As a result, who suffers? The American people. We should not pay any 
more for our pharmaceutical products in this country than they do in 
Europe, Canada, Mexico, or anyplace else, or South America. Yet, as the 
gentleman said so eloquently so many times, and the gentleman has been 
the lone voice in the wilderness for a long time, the gentleman has 
said that it is because America is paying the freight for the rest of 
the world. We have to do something about that. I applaud the gentleman 
for taking the lead on this.
  I might tell the gentleman that we are going to have another hearing 
in early June, and the gentleman will be invited to be a participant in 
that hearing. We anticipate that some of the companies that are trying 
to cut off the pharmaceutical supplies coming from Canada into the 
United States will be testifying before that committee.
  We would like for the gentleman from Minnesota to participate, and 
hopefully we will get some answers from them directly as to why they 
say that they do not want to have their pharmaceutical products sold 
from a Canadian pharmacist to an American citizen for any reason other 
than the American citizen is saving money.
  We have heard, as the gentleman and I have talked about before, we 
have

[[Page 12258]]

heard them say it is a safety issue. We know that is not the case, 
because the Canadian health agencies have said very clearly and 
publicly that they test everything, they check everything before it 
goes into or out of their country.
  We want to find out from the pharmaceutical executives themselves why 
they are discriminating against American purchasers. That hearing will 
be taking place in June.
  Mr. GUTKNECHT. I want to thank the gentleman for joining this 
discussion tonight because, as I say, there are a number of us here in 
the House who have been willing to speak out, but the gentleman is 
among the few chairmen of committees who have had the courage to have 
some hearings, bring in some experts, have people talk about this, what 
really does happen in Canada.
  One of the things we have learned, for example, is that over 1 
million Americans today are actually buying their prescription drugs 
from other countries today. The FDA, the Food and Drug Administration, 
keeps very accurate records. If 1 million people are buying their drugs 
from other countries, we would think, especially along the Canadian 
border, but more importantly along the Mexican border, where, again, we 
have learned from research done by a professor at the University of 
Texas something like two out of every three Americans who cross the 
border and go into Mexico bring back with them prescription drugs, 
which they buy there for a fraction of the price that they can buy them 
in the United States for. They bring back drugs.
  More importantly, they do not just bring back a few drugs. Usually 
when they go across the border they take a list with them. They come 
from a senior center, they come from a retirement center, they come 
from a condominium project where most of the people are seniors, and 
they take a list with them when they go into Mexico, and they bring 
back thousands of dollars worth of prescriptions.

                              {time}  1900

  Now, with all those people buying drugs illegally, according to the 
FDA, you would think, if this is so dangerous, you would think that all 
of these seniors would be dropping like cord wood in Minnesota, and in 
Texas, and in California, and the other States where this is very 
common. But the fact of the matter is we know exactly how many people 
have died from taking prescription drugs which they bought from other 
countries. The FDA keeps perfect records. And according to the FDA, it 
is an easy number to remember. It is a nice round number. It is zero.
  It is called the Food and Drug Administration. They are also 
responsible for protecting us from all of the imports of food that 
comes into the United States. Every day we import millions of tons of 
food. I think last year we imported into the United States something 
like 317,000 tons of plantains. Now, I had to double-check to see what 
is a plantain. But we import tons and tons of food every day. And you 
know what the FDA says about all that imported food?
  Mr. BURTON of Indiana. Not much.
  Mr. GUTKNECHT. Not much. They wave as it goes by. But they do keep 
records as well; and according to the FDA, eating imported 
strawberries, something like 25,000 Americans have gotten ill and some 
have died from eating imported strawberries. Yet we eat strawberries 
every day, many of them are imported; and the FDA does almost nothing.
  But one area where we can absolutely guarantee safety, the FDA has 
put a wall between American consumers and being able to afford these 
drugs. Let me give an example.
  I am holding in my hand a package of Tamoxifen, and this is probably 
one of the examples that makes me angrier than any other. Tamoxifen is 
an amazing drug. It is a miracle drug, and particularly for women who 
are suffering from breast cancer. This may save their lives. This is an 
amazing drug. The most amazing thing is we helped pay for it. We, the 
taxpayers. This drug was developed almost exclusively with research and 
development dollars from the NIH.
  The company decided originally, because it was developed with 
taxpayers' money, that they would not patent it. Then they thought 
about it again and said, no, I think we will patent it. And I guess 
they had a right to patent it. But this is what really bothers me. We 
bought this drug in Munich, Germany 3 weeks ago for 60.33 Euros. Now, 
on that day the equivalent, and the dollar and the Euro vary a bit, but 
that worked out on that day to $59.05 American for this package of 100 
tablets, 20 milligrams, Tamoxifen. This same drug, we called a pharmacy 
here in Washington, D.C. and asked how much is 100 tablets, 20 
milligrams, Tamoxifen. The answer: $360. Sixty dollars in Munich, 
Germany; $360 in America.
  Mr. BURTON of Indiana. Six times the amount.
  Mr. GUTKNECHT. Six times the amount. And here is the real tragedy. 
There are American women who need this drug and they cannot afford it.
  Mr. BURTON of Indiana. Let me interject something, because this is an 
important point. How many people have died because they simply cannot 
afford the drugs that are prescribed for them?
  Mr. GUTKNECHT. The interesting thing is the FDA does not keep those 
records. They are only concerned about drugs being safe and effective. 
But Dr. Steve Schondelmeier, one of the top pharmacologists in the 
world, certainly in America, he has a great quote. He said: ``A drug 
that you cannot afford is neither safe nor effective.''
  I want to come back to something, because it fits with this point. 
There is a new book out called ``The Big Fix,'' written by Katherine 
Greider; and she has done an amazing amount of research on this. One of 
the saddest statistics in this book is that she said that 29 percent, 
29 percent of the prescriptions written to senior citizens in America 
today go unfilled.
  Mr. BURTON of Indiana. Twenty-nine percent go unfilled?
  Mr. GUTKNECHT. Twenty-nine percent. I do not know if the gentleman 
has ever experienced this, but I met this morning with community 
pharmacists, and I asked them this question: How many of you have had 
the example where a senior citizen comes in to buy a drug that they 
need and they hand you the prescription, you tell them how much it is, 
and they get a real sad look on their face?
  Mr. BURTON of Indiana. And walk away.
  Mr. GUTKNECHT. They drop their head and they say, well, maybe I will 
be back tomorrow.
  Twenty-nine percent of the prescriptions written to senior citizens 
go unfilled because they cannot afford them, and they are proud people.
  How many people, how many women in America cannot afford Tamoxifen? 
Now, maybe they could afford $60, but $360 starts to get real 
expensive. And that goes on and on and on.
  Now, I am not here to say shame on the pharmaceutical industry, but 
shame on us, because we have the power to change that.
  One of my favorite Presidents was President Ronald Reagan, and he had 
some great quotes. One of them he used often was that markets are more 
powerful than armies. It is time that we open up the markets and say to 
Americans you have legal access.
  You ought to be able to go to your local pharmacy, to your local 
pharmacist, whom you trust, and who is an important part of the health 
care delivery system, and you ought to be able to go in there and say, 
I need Tamoxifen. And he ought to be able to say to you, well, listen, 
I can fill it from my inventory in the United States on the back shelf 
and your price will be $360; or I can go on line and I can order it for 
you from a pharmaceutical supply house in Geneva, Switzerland, or 
Munich, Germany, or Paris, France, or you name the country, as long as 
they are an industrialized G-7-type country where we can expect and 
trust the equivalent of their FDAs, as the Canadians have announced; 
but he ought to be able to go on line for that customer and order that 
and say, we can have it to you in 3 days for one-sixth of the price.

[[Page 12259]]


  Mr. BURTON of Indiana. If the gentleman will yield, one of the 
arguments we heard when the FDA was before our committee, and the 
gentleman was there, was that they were concerned about counterfeit 
drugs. And one of the things that I think is very, very important, and 
it goes right along with what the gentleman is talking about, and why 
not hold that up, I think our colleagues back in their offices should 
see that, that is a device that guaranties that the package has not 
been doctored in any way. If that package were used in conjunction with 
a prescription that was filled in some other part of the world, it 
would guarantee beyond any doubt that that product was genuine and it 
was not a counterfeit and it was completely safe.
  Yet the FDA continues to use that argument, when it is absolutely 
certain that there is a way to make absolutely sure that that is a safe 
prescription drug.
  Mr. GUTKNECHT. The interesting thing, Chairman Burton, is that we 
cannot guarantee anything. You cannot guarantee that when you pull into 
a gas station and you fill your car up that that is in fact unleaded 
gasoline and not buttermilk. The truth of the matter is every time you 
put your key in your car, every time you do anything, you take a 
certain amount of risk. But with modern technology, we can make it 
absolutely as safe to buy drugs from Geneva, Switzerland, as it is to 
go down to your local pharmacy.
  As a matter of fact, the FDA has to admit that the only proven 
example where someone has tampered with prescription drugs in the 
United States happened inside the United States. There are no examples 
where contaminated drugs have been shipped from legal pharmacies in 
other parts of the world. There just are not any examples.
  Mr. BURTON of Indiana. Our colleagues might want to know how you can 
guarantee that that would not be counterfeit. I recall the gentleman 
pointed this out at the committee hearing that that is the same 
technology that is used on the twenty-dollar bill that guarantees they 
are not counterfeit any longer; and it works very, very well.
  Mr. GUTKNECHT. If this is safe enough for the U.S. Treasury, this is 
the same company that has developed these technologies to make 
counterfeit-proof packaging.
  I will be introducing a bill sometime in the next week; and I am 
trying to get, I hope, hundreds of my colleagues to vote for it. In 
fact, the last time we had a vote on this issue of opening up markets, 
we got 323 votes here in the House. The House has spoken fairly clearly 
that we want Americans to have access to world-class drugs at world 
market prices.
  But if this technology is good enough for the U.S. Treasury, if they 
can produce technology to make counterfeit-proof packaging for the 
entertainment industry, for the video game industry, they certainly can 
and they are making packaging for the pharmaceutical industry. As a 
matter of fact, I think there are four or five of the companies that 
are already using this technology.
  It goes even further. Last week, I was at a demonstration, and this 
is a little vial, and I do not expect anybody to see this, because I 
can barely see it looking at it here. But inside this vial there are 
150 tiny, tiny, almost nanocomputer chips. The interesting thing is 
this is the next UPC code. They can literally now embed these chips in 
packaging, and these chips are bringing the cost down to probably less 
than a nickel apiece. And when you are talking about a prescription 
drug package that sells for $125, that is not much to make certain that 
this is in fact whatever the drug is and it was made at such a plant on 
such-and-such a day and has gone through the channels.
  As a matter of fact, when people buy things and they have them 
shipped by UPS or FedEx or even the parcel post system, literally they 
put a bar code on that package. And literally you can go to UPS or any 
of the other package-handling companies, and now you can find out where 
that package is at any point in the delivery system.
  Now, as opposed to that, how do you think the pharmaceutical 
companies ship their drugs? Armored cars?
  Mr. BURTON of Indiana. No. UPS, FedEx?
  Mr. GUTKNECHT. They ship them the way they ship almost everything 
else.
  So the idea that somehow it is easier for somebody to contaminate a 
drug going via UPS in a sealed package with a bar coded technology 
using counterfeit-proof packaging, that it is easier somehow to 
adulterate that drug than it would be to get onto a dock in New Jersey 
where it is sitting in an evergreen container.
  Mr. BURTON of Indiana. I want to make sure I understand this 
correctly. First of all, we have had no cases that we know of where 
people have died from imported pharmaceutical products.
  Mr. GUTKNECHT. From legal FDA approved drugs; that is right.
  Mr. BURTON of Indiana. So, first of all, the argument there is a big 
risk involved holds no water because they have no proof that it has 
caused a problem.
  Mr. GUTKNECHT. We are much more likely to die from eating imported 
strawberries.
  Mr. BURTON of Indiana. Secondly, the gentleman has just pointed out 
that tampering with pharmaceuticals that are coming into the country is 
not a problem because now there is a way where you can absolutely 
guarantee that that package has not been tampered with, that it is the 
right package, that it has the right product in it, because it has a 
sealing device that guarantees that it is what it is supposed to be.
  Mr. GUTKNECHT. Right.
  Mr. BURTON of Indiana. So I still do not understand, and maybe the 
gentleman can explain it to me, because he is pretty learned on this, 
since he has been working on this a long time, the two main arguments 
were that people could be hurt, and there is no evidence of that; and, 
second, that we might be getting counterfeit products that are 
inferior, and the gentleman has proven that that can be overcome. So 
what is the argument the FDA is using beyond those two?
  Mr. GUTKNECHT. Well, the only argument they use is safety.
  MR. BURTON of Indiana. But that does not hold water.
  Mr. GUTKNECHT. As the gentleman saw at the hearing, they are very 
oblique even on that issue. Because we can demonstrate it is safer to 
buy drugs from a legal pharmacy. And we are not talking about illegal 
drugs. I want to make that very clear. We are only talking about FDA-
approved drugs that came from FDA facilities. We are not going to go 
down the path of talking about other drugs, because there are people in 
south Miami that import drugs every day. Those are not legal drugs. We 
are not talking about any of those.
  But let us talk about what the law actually says, and this is where 
they hang their hat. It says, and let me read this: ``Section 381: The 
Secretary of the Treasury shall deliver to the Secretary of Health and 
Human Services, upon his request, samples of food, drug, devices and 
cosmetics which are being imported or offered for import into the 
United States, giving notice thereof to the owner or consignee who may 
appear before the Secretary of Health and Human Services and have the 
right to introduce testimony.''
  Now, this is what they say. This is where they hang their hats and 
they keep Americans from legally buying imported drugs from countries 
around the world. Here is the operative sentence: ``if it appears from 
the examination of such samples or otherwise that (1) such article has 
been manufactured, processed, or packed under unsanitary conditions.''
  Well, there is no evidence that any of these drugs are packaged under 
unsanitary conditions.
  ``(2) That such article is forbidden or restricted for sale in the 
country in which it was produced or from which it was exported.''
  These are all legal drugs, so that one does not apply.
  ``(3) Such article is adulterated, misbranded or in violation of 
section 355 of this title.''

[[Page 12260]]

  None of that really applies, in my opinion.
  Mr. BURTON of Indiana. It does not.
  Mr. GUTKNECHT. But that is the slender reed upon which our own FDA 
has constructed this wall around the United States; and that is the 
reason, my colleagues, that American consumers pay $360 and Germans pay 
$60.
  Mr. BURTON of Indiana. We have used the logical arguments that the 
FDA has used, or illogical arguments, as to why they want to stop 
importation of pharmaceutical products from Canada and elsewhere. The 
arguments they use do not hold water. I think the gentleman has made 
that very clear here tonight. So what is the reason?
  There is only one reason, and the gentleman is reluctant to say this, 
but I am not, and that is the pharmaceutical industry makes the biggest 
share, the lion's share of their profits right here on the backs of the 
American consumer.

                              {time}  1915

  That is not right. They will say it is R&D, research and development, 
but the research and development should be shared equally around the 
world. But as far as them making huge profits on the back of American 
consumers, when they are making a profit in Europe, Canada and Mexico, 
but not to the degree they are here, is just unconscionable. It bothers 
me that the almighty dollar as far as corporate executives are 
concerned is more important than the health of American citizens.
  The facts bear this out. There are American seniors and others who 
are going wanting for pharmaceutical products because they cannot 
afford them, whereas the same products are being sold for one-sixth the 
price someplace else in the world, and that is critical. We ought to 
hold these pharmaceutical companies accountable. We cannot let them go 
on raping the American people, and that is a very strong word and I am 
using it advisedly, but they are raping the American people while the 
rest of the world is benefiting from these lower prices. We need to 
hold them accountable.
  The thing that bothers me is that the FDA comes before our committee 
with the lame excuses that they used that do not hold water, as the 
gentleman has made clear here tonight, these lame excuses, and we ask 
why? They are the regulatory agencies that are supposed to protect 
Americans to make sure that the products are safe but also to make sure 
that they get the products to which they are entitled. The FDA is 
blocking, they are like a lineman in a football game blocking for the 
pharmaceutical industry. Why are they doing that? The pharmaceutical 
industry is making huge profits on the back of the American people, but 
why is the FDA helping them?
  The only reason I can imagine is there is some kind of subliminal, 
sweetheart revolving door between the people over at FDA, HHS and CDC 
and over at the pharmaceutical companies. That is something that smacks 
of being unethical, at the very least. The FDA and HHS should be 
concerned about the safety of products and to make sure that the 
American people have access to the products that will protect their 
health. They have been blocking for the pharmaceutical industry, and it 
is something that should not be tolerated in the future. The gentleman 
does not need to say that, but I will.
  Mr. GUTKNECHT. Mr. Speaker, I try not to get into that because the 
presidents of the large pharmaceutical companies do not work for us, 
but the head of the FDA does. I think the presidents of some of the 
pharmaceutical companies have to answer to shareholders and the public, 
and one day they are going to have to answer to God.
  This book, and there is more research coming out, and the interesting 
thing is especially after Sarbanes-Oxley, we are going to find out more 
about how the money actually gets spent. I think we will find more and 
more of these pharmaceutical companies are spending more on advertising 
and marketing than they are on research and development.
  One of the things talked about in this book, there was a study done 
by the Boston Globe, and they took a close look at the 35 most 
important and top-selling drugs that the FDA approved over the previous 
5 years. All but two of them had been brought through the R&D pipeline 
with the help of the NIH or the FDA.
  Mr. BURTON of Indiana. And that is taxpayers' money.
  Mr. GUTKNECHT. That is correct, and that happens again and again. I 
am the vice chairman of the Committee on Science, and our research 
shows Americans represent something like 6 percent of the world's 
population, but we represent over 50 percent of the basic research done 
in the world. It is because of Americans that we have places like the 
Mayo Clinic, and it is because of the American spirit that we do what 
we do. It is because of the American spirit we put men on the moon and 
return them safely. We want to do this research.
  This year we will spend roughly $29 billion taxpayer dollars on 
research. The interesting thing is many of the pharmaceutical companies 
work very closely with the various research institutes that do this 
research, and they pay very close attention. Many times this research 
that is done, once the research is completed, that information is 
available free of charge. They get this research free of charge. In 
many respects, we subsidize the pharmaceutical industry with that $29 
billion of taxpayer money.
  There is a second way that we subsidize the pharmaceutical industry, 
and that is in the Tax Code. The research they do, they write it off 
dollar for dollar. Most are in at least a 40 percent tax bracket, so 
the taxpayers are subsidizing 40-50 percent of the cost of research. 
And on top of that, many qualify for research and development tax 
credits. I am not an accountant, but a credit is better than a 
deduction. On top of that, many of them have moved their facilities to 
places like Puerto Rico. Puerto Rico is part of the United States, but 
some people do not know if you are in Puerto Rico you pay no Federal 
income tax.
  Mr. BURTON of Indiana. They have the 936 program down there.
  Mr. GUTKNECHT. Exactly. I am not going to argue about the special 
benefits, but the bottom line is we subsidize the development of new 
drugs through the NIH, through the National Science Foundation, through 
the Department of Defense. They do a lot of research which ultimately 
leads to these miracle drugs. Finally, we subsidize them in the prices 
we pay.
  Now, my bottom line is I think Americans ought to pay. I think it is 
part of the American spirit. We believe in finding the new cures. It is 
something that makes us Americans. I think we ought to pay our fair 
share. I think it is the right thing to do; and, frankly, I think we 
ought to subsidize people in developing countries. I think we ought to 
pay more than the people in sub-Saharan Africa. I think we ought to pay 
more than the people in Bangladesh. I think we ought to pay more than 
some of the people around the world.
  But I think it is ridiculous that our own FDA makes Americans 
subsidize the starving Swiss. I think it is time for the Swiss, the 
Germans, the French, the Japanese, I think it is time for them to pay 
their fair share.
  I also think it is time for a much clearer account from the 
pharmaceutical industry of how much exactly do you spend developing a 
new drug? How much does it cost to get FDA approval? How much profit do 
you really make? There is a report, and I cannot confirm this, but the 
president and CEO of one of the pharmaceutical industries got $227 
million in stock options. That was above and beyond his salary. Most of 
us could live fairly comfortably on a salary of $6-10 million, which is 
what the average CEO of the nine largest pharmaceutical companies make.
  Mr. BURTON of Indiana. Mr. Speaker, because of the Enron debacle and 
the other corporations around the country that padded the books that 
made it look like they were making profits when actually they were 
losing money, and at the same time corporate executives were making 
tons, because of that, the Oxley bill that you talked

[[Page 12261]]

about a few minutes ago set certain guidelines and standards that they 
had to meet. I do not know why we couldn't propose some kind of 
legislation that would mandate the same kind of standard be applied to 
the pharmaceutical industry as well as other corporations around this 
country.
  The other thing that I think we ought to take a hard look at is when 
Congress, you and I, when we leave here, we cannot lobby our colleagues 
for a year. The reason we cannot is because there is a concern that 
there might be collusion between an incumbent congressman and some 
corporation where they are going to benefit from the judgment and the 
vote of a congressman in exchange for him lobbying down the road. So we 
make sure that a congressman has to wait a year before he can lobby his 
fellow Members.
  Why cannot we do the same thing with the FDA and HHS and CDC? Why can 
we not stop this revolving door policy that exists by saying, if you 
are working for a health agency here in the United States of America, 
you cannot work for a pharmaceutical company where you were sitting in 
judgment on their products or on their policies? I know it would be 
very difficult to draft a bill like that, but it might send a message 
if we introduced one, that that kind of chicanery must not exist.
  I cannot think of any other reason in the world other than profits 
that are keeping the pharmaceutical companies from people being able to 
buy their products in the United States from places like Canada. I 
cannot think of any other reason other than the FDA is deeply involved 
with the pharmaceutical industry, especially after what you have said 
here tonight about the reasons that they use. I cannot think of any 
reason in the world other than profit or collusion for the FDA to stand 
in the way of us being able to buy those products from Canada or 
anywhere else.
  When they sat before our committee and they looked us in the eye and 
they said it was a safety issue, which we know is not the case, then 
there has got to be a reason. I cannot put my finger on it other than 
there is some incentive for them to support the pharmaceutical 
industry's position, and we have to put a stop to that.
  Mr. GUTKNECHT. Mr. Speaker, I think there are two things that we 
ought to do.
  First of all, we ought to pass strong legislation that says very 
clearly as it relates to countries, and I have them listed in the bill 
that we are working on, countries like Canada, the European Union, 
Japan, Israel, and a few other industrialized countries where we know 
they have very effective equivalents of our FDA, there is no reason in 
the world that Americans and their pharmacists should not have the 
right to import drugs from those countries. It ought to be part of any 
prescription drug benefit package, and the truth of the matter is, and 
I did not get to this, how big this problem is.
  The estimates by our own Congressional Budget Office say that seniors 
will spend, and these are 65 and over, will spend $1.8 trillion, and 
that is a huge number, on prescription drugs over the next 10 years. 
Our estimates, and I think this is the most conservative of 
conservative, if we simply implemented and forced the FDA to do what 
they ought to do and what we do with virtually every other product, we 
could save at least 35 percent. That is minimum. In fact, the number 
may be more like 55 or 65 percent.
  Mr. BURTON of Indiana. That is $550 billion a year.
  Mr. GUTKNECHT. It is $630 billion over the next 10 years. If we do 
not do this, and I know people are coming up with discount cards and 
all of the rest. They say we can get a 20 percent or 30 percent 
discount. A 30 percent discount off of $360 is not enough to make this 
program work. Ultimately, you have to have access to markets.
  I am not in favor of price controls, and I do not like what a few of 
the countries do in terms of price controls. I want open markets 
because I know what markets do; markets level. Ultimately, we will pay 
less; the Germans will pay more. That is how this will work long term, 
and that is fair, that is reasonable, and it is time we do it.
  The second thing, to get to your point, I think we ought to sic the 
General Accounting Office after these guys and get answers to these 
questions. Because these are legitimate questions that our 
constituents, the American citizens who send us here to Washington, 
have a right to know. Somebody ought to get inside those books and find 
out if it is true.
  For example, one of the arguments that the pharmaceutical industry 
makes is that it costs $800 million to develop a new drug, but they 
never back it up. They never open their books so we can see that, yes, 
it really is $800 million.
  The truth of the matter is more and more of us are becoming very 
skeptical about how much it actually costs to bring a new drug to 
market and how much they really spend on research and development. In 
fact, this author believes they actually spend less on research than 
they do earn in profits. So maybe what we ought to do is ask the 
General Accounting Office to do some research for us, to get some of 
the facts and report back to the Congress. I am not sure what we should 
do about it because I believe in free enterprise, and if company XYZ 
wants to pay their chief executive $227 million, I am not sure we 
should do anything about it.

                              {time}  1930

  But I will tell you what we ought to do. We ought to make sure that 
everybody knows it. Because I think the pressure from the public is 
going to start to say, this is lunacy and we should not have to pay it.
  Mr. BURTON of Indiana. If the gentleman will yield further, one of 
the things that concerns me about the prescription drug benefits the 
gentleman from Minnesota alluded to a moment ago is that if we pass a 
prescription drug bill in the Congress to provide benefits for seniors 
in this country and we do not do something as he suggested to make sure 
that they are paying a fair price for their product, then the taxpayers 
are going to be paying $360 for a product that you could buy in Germany 
for $60. Six times.
  I do not think the taxpayers want to be paying six times the price of 
a drug in Germany here in the United States. It would actually just 
bankrupt the United States Treasury in a few years if we did not do 
something about that. I am not for price controls, either; but I do 
believe that the marketplace ought to dictate the prices and a free 
market not only here in the United States but around the globe. I think 
the gentleman makes a very valid point. The American people should not 
pay six, seven, eight, 10 times the price that they do in other 
countries. That is what scares me about the prescription drug benefit 
we are going to pass in this Congress this year. I think the gentleman 
and I will be down here debating that when that bill comes to the floor 
to make sure that the taxpayers are getting their dollar's worth when 
we buy these pharmaceuticals for seniors.
  Mr. GUTKNECHT. I think the people who developed this drug, 
Glucophage, are entitled to be rewarded for it. I believe in that. I 
believe in intellectual property rights. But I also say why is it we 
pay so much when the Germans can buy it so cheaply?
  Mr. BURTON of Indiana. What is the price comparison?
  Mr. GUTKNECHT. On this particular package, the price here in the 
United States is $29.95. This is a smaller package. We bought this in 
Germany for $5.
  Mr. BURTON of Indiana. So six times.
  Mr. GUTKNECHT. Six times. I do not care what kind of a discount card 
you have, the differences are still too huge. We have an obligation to 
our taxpayers to make certain that if we are going to have a 
prescription drug benefit for people who need that benefit, we have to 
make certain, as the gentleman says, that we get a fair price. But, 
frankly, as long as we are at it, why should we not get a fair price 
for all Americans? Why should we not just open up the market as we do 
for oranges or pork bellies?
  In fact, I have told this story. People ask how did I get involved in 
this. The answer is kind of ironic. It was the price of hogs. People 
say, the price of

[[Page 12262]]

hogs has something to do with the price of drugs? Let me explain. A 
number of years ago I had a meeting with some senior citizens groups in 
my district. They talked about their trips to Winnipeg to buy their 
drugs. I said, Fine. If you want to go to Winnipeg to buy your drugs, 
that's fine with me. That was it. I did not think much more about it. 
Then a few months later, the price of hogs in the United States dropped 
from about $50 or 50 cents a pound down to $9 or 9 cents a pound. All 
of a sudden our hog producers in my area were just going crazy. They 
could not afford to feed the pigs. They could not afford to slaughter 
the pigs. They were going bankrupt very fast. They were calling me 
saying, You've got to do something about it. I said, I'm not sure what 
we can do. They said, at least slow down the supply of Canadian hogs 
coming across the border to our plants in places like Austin, 
Minnesota, that are making our supply/demand situation even worse.
  So I called the Department of Commerce. I called the USDA. I got the 
same answer. It is called NAFTA. It is called free trade. All of a 
sudden a light bulb went on in my head. I said, wait a second. You mean 
we have free trade when it comes to pork bellies, but we don't have 
free trade when it comes to Prilosec? This is nuts. One area where 
American consumers could save billions and billions and billions of 
dollars and yet our own FDA puts up a barrier and says, You cannot do 
that.
  Mr. BURTON of Indiana. But why?
  Mr. GUTKNECHT. I do not know why.
  Mr. BURTON of Indiana. I think I do.
  Mr. GUTKNECHT. I am not going to get into why. All I know is that I 
took an oath of office. You took an oath of office. We are here to 
serve the public interest. The pharmaceutical industry does not work 
for me. I do not work for them. But the boys over at the FDA do work 
for us, and they are required to serve the public interest. And a drug 
that a little senior citizen who sits there with a prescription and 
cannot afford to have it filled, she deserves somebody to speak for 
her. As long as I am here, as long as I have breath in my lungs, as 
long as I can hold these charts, I am going to keep talking about this 
and somebody is going to have to explain why the FDA keeps American 
consumers from buying safe and effective drugs from other countries for 
a fraction of the price. I am not going to give up on this. Because, as 
Winston Churchill said, you know what a fanatic is? A fanatic is a 
person who cannot change their mind and will not change the subject. I 
am not going to give up on this and neither are you. We are going to 
stay on this issue until Americans have access to world-class drugs at 
world market prices.
  Mr. BURTON of Indiana. Let me say, God bless you for what you are 
doing, and I think there are seniors and people all across this country 
who cannot buy pharmaceuticals at the proper price who are saying, go 
man go. Go Gutknecht go. I am one of them. But I want to find out why. 
My committee, the Committee on Government Reform and Oversight, was 
charged with the responsibility of investigating waste, fraud and abuse 
in government and I was chairman for 6 years. We found that there were 
a lot of abuses in government. I want to find out why the FDA and HHS 
and CDC, why these kinds of problems are existing. There is no reason 
for it. The purity of the products are guaranteed by the Canadian 
Government as well as our government. That was stated by their 
government officials just this past week. They are making a profit in 
those countries, but they are making a huge profit here, eight, nine, 
10 times as much in some cases. I want to find out why the FDA appears 
to be protecting this industry. There has got to be something to that.
  The gentleman from Minnesota mentioned the GAO, a GAO investigation. 
I think a GAO investigation of this entire area is something that needs 
to be done. Not just the pharmaceutical companies and whether or not 
they are benefiting from government largesse from our research dollars 
but also I think we ought to have the GAO investigate what is going on 
with our health agencies and why this sort of appearance of chicanery 
exists. I am going to join with you in the GAO study, but I might want 
to expand it just a little bit further.
  Mr. GUTKNECHT. I think the time has come. Again, as Ronald Reagan 
said, quoting John Adams, facts are stubborn things. All we really want 
is the facts. I am not getting into motives. I do not care. I do not 
care why they do things. To me, that is not my job. My job is to stand 
up and speak for those people who cannot speak for themselves. When I 
read that statistic that 29 percent of prescriptions written to senior 
citizens go unfilled, and I have stood in pharmacies and I have watched 
them with their little slips and seen the look on their faces. It seems 
to me that we have an obligation to say on behalf of them that we are 
not going to just sit here and allow this to go on. This has gone on 
too long. The worst thing is it is getting worse and worse and worse 
per year. The difference between what we pay and what the European pays 
is not getting better; it is getting worse. Shame on us. Shame on the 
FDA.
  Mr. BURTON of Indiana. There is one last thing I would like to bring 
up. We passed a law in this Congress that allows people to buy imported 
pharmaceuticals. The gentleman recalls that. The FDA and HHS said no, 
because there were concerns about the safety of the imported 
pharmaceuticals. But the Congress of the United States, the House and 
Senate combined, have spoken on this issue. They want the American 
people to be able to buy these pharmaceuticals safely from anyplace 
where they can get the best price.
  That is a law passed by the Congress. The only thing that is stopping 
it, and this is something we should have started on earlier, the only 
thing that is stopping it is our health agencies, who are saying, wait 
a minute, we want to make sure they are safe. You have proven tonight, 
and I think conclusively, that they are safe. There has been no 
indication whatsoever, no cases where people have died from imported 
pharmaceuticals. Even if there were a problem like that, which there is 
not, there is a way to make absolutely sure that the products coming 
into the country are safe, in a sealed container where there can be no 
tampering. So there is no way that we cannot make sure these products 
are safe. Yet the FDA continues to block it. I maintain it is because 
of this relationship with our pharmaceutical companies. But in any 
event, Congress has spoken and we need to keep beating on this issue so 
that the current law passed by the Congress is enforced and FDA and HHS 
just get the hell out of the way.
  Mr. GUTKNECHT. I think that about says it all. As a matter of fact, 
let me just close with this. The Congress has spoken. When we voted on 
this matter in the House the last time, 323 of our colleagues voted 
with us on this.
  Mr. BURTON of Indiana. 324.
  Mr. GUTKNECHT. In fact, in this ad it says, look how easy Congress 
has made it for you to save. That is what it says. Congress has spoken. 
Unfortunately we, put this language into that bill, in the conference 
committee and at somebody's request that says as long as they can 
guarantee safety. Well, they cannot guarantee safety on imported 
strawberries or pork bellies or plantains. We import hundreds and 
thousands of tons of broccoli a year. They cannot guarantee the safety. 
According to the FDA's own studies, 2 percent of the fruits and 
vegetables coming into this country are contaminated with food-borne 
pathogens, including things like salmonella. Salmonella can kill you. 
It does kill Americans. Yet what does the FDA do about that? Nothing. 
But if you try to save $45 on a box of Coumadin, they will come after 
you like stink on a skunk. There is something wrong with the system. We 
need to fix it. It is not so much shame on the pharmaceutical industry. 
It is shame on us. It is time that we make certain that Americans have 
access to world-class drugs at world market prices. That is what we 
want. That is what we expect. We will not stop until we get it.

[[Page 12263]]


  Mr. BURTON of Indiana. Let me just conclude my participation in your 
Special Order by saying I am proud to be a member of the Gutknecht 
army.
  Mr. GUTKNECHT. I thank the gentleman.

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