[Congressional Record (Bound Edition), Volume 150 (2004), Part 1]
[Senate]
[Pages 216-217]
[From the U.S. Government Publishing Office, www.gpo.gov]




             MEDICARE PRESCRIPTION DRUG PRICE REDUCTION ACT

  Mrs. FEINSTEIN. Madam President, I rise today to cosponsor S. 1999, 
the Medicare Prescription Drug Price Reduction Act, which strikes 
language known as the ``noninterference clause'' included in the 
recently passed conference report accompanying the Medicare 
Prescription Drug and Modernization Act of 2003.
  I believe that language preventing the Secretary from leveraging the 
enormous purchasing power of the Federal Government will mean our 
seniors may pay more for their drugs than they could be if that 
language was modified to allow the Secretary negotiating ability. 
America's seniors already pay the highest drug prices in the world, 
even though American taxpayers subsidize the research that produces 
many of those drugs.
  So this legislation gives the Secretary of the Department of Health 
and Human Services, HHS, authority to negotiate contracts with 
manufacturers of covered Medicare Part D prescription drugs in order to 
ensure that enrollees in Medicare prescription drug plans, PDPs, pay 
the lowest possible

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price. The authority given to the HHS Secretary is similar to that 
given to other Federal entities that purchase prescription drugs in 
bulk.
  I voted for the Medicare prescription drug conference report because 
it delivered voluntary prescription drug coverage to this Nation's 41 
million Medicare beneficiaries. Too many Americans today face the 
terrible choice of paying for rent or groceries or paying for their 
prescription drugs. In fact, some of my constituents have resorted to 
skipping doses in an attempt to manage prescription drug prices.
  One of the strongest features of the Medicare bill is the assistance 
it provides for low-income Medicare recipients through the elimination 
or reduction of premiums, deductibles and copays. For those low-income 
Medicare recipients whose prescription drug spending exceeds the 
catastrophic limit, or $5,100 in total drug spending, Medicare will pay 
all of their drug costs. For seniors who do not qualify for the low-
income assistance, they will pay no more than 5 percent of their 
prescription drug costs above the catastrophic limit.
  The Medicare prescription drug bill includes essential increases in 
funding for California's health care providers. California's hospitals 
are facing financial crises across the State. In fact, over the past 7 
years, more than 62 hospitals have been forced to close.
  The bill will help hospitals meet the needs of California's 
communities by providing $882 million in additional Medicare and 
Medicaid payments over the next 10 years. Physicians will now receive 
an increase of 1.5 percent per year in Medicare payments in 2004 and 
2005, rather than the 4.5 percent payment cut they were expected to 
incur.
  However, one of the most troubling aspects of the bill was language 
intended to promote competition among prescription drug plans in order 
to lower prescription drug prices. Section 1860D-11(i) says:

       The Secretary may not interfere with the negotiations 
     between drug manufacturers and pharmacies and Prescription 
     Drug sponsors.

  I believe that this language actually takes away one of the best 
tools the Medicare program could use to bring down prescription drug 
prices by denying the Government the ability to negotiate price 
discounts on behalf of Medicare recipients.
  The Veterans' Affairs, VA, system negotiates prescription drug 
prices. This negotiating authority has been a terrific success in 
bringing down the cost of drugs purchased by the VA. Why would we 
prevent the Secretary of HHS from doing the same on behalf of our 41 
million Medicare recipients?
  Some argue that this noninterference language will spur competing 
prescription drug plans to drive down the cost of prescription drugs in 
an effort to secure contracts with the Federal Government. However, 
since the Secretary may not require a particular formulary or institute 
a price structure for covered Part D drugs, seniors may be unprotected 
from escalating drug costs in regions without plan competition.
  Here is the most recent picture of health care spending in the United 
States: Health care spending in the United States increased 9.3 percent 
to $1.55 trillion in 2002, the largest increase in 11 years. It now 
accounts for 15 percent of the Nation's gross domestic product. 
Prescription drug spending rose 15.3 percent to $162.4 billion in 2002, 
accounting for 16 percent of the overall health care spending increase.
  Spending on prescription drugs is often cited as a key contributor to 
rising health care costs. Unfortunately, the Medicare bill missed a 
significant opportunity to reign in the escalating cost of prescription 
drugs in the U.S.
  I believe the Medicare Prescription Drug Price Reduction Act will 
bring real prescription drug cost relief to seniors in California and 
across the country.
  I urge my colleagues to join me in supporting this important 
legislation.

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