[Congressional Record (Bound Edition), Volume 150 (2004), Part 17]
[Senate]
[Pages 23025-23027]
[From the U.S. Government Publishing Office, www.gpo.gov]




                       MEDICARE MODERNIZATION ACT

  Mr. HATCH. Mr. President, I have to respond to the outrageous charges 
made by my colleagues on the other side of the aisle regarding the 
Medicare statement I delivered yesterday.
  I was disturbed by several remarks, especially that seniors have 
flatly rejected the Medicare prescription drug benefit. How is that 
even possible when the drug benefit doesn't even go into effect until 
January 1, 2006?
  How is that possible when many Medicare beneficiaries are 
participating in the Medicare Drug Discount Card and have seen savings 
in their drug costs up to 20 percent per drug? I do not see that as an 
outright rejection at all.
  My colleagues need to be careful about their charges, especially when 
they do not have the facts to back them up. I also take issue with my 
colleague's assertion that our prescription drug law is only a drug law 
in name. What does he mean by that?
  Let me remind the Senator from Illinois that because of this new 
Medicare prescription drug law, 40 million Medicare beneficiaries will 
have drug coverage if they want it. The bill provides generous 
subsidies to low-income Medicare beneficiaries who, today, cannot 
afford to purchase drugs.
  Prior to enactment of the Medicare Modernization Act, these 
beneficiaries had to make tough choices between buying their 
prescription drugs and putting gas in their cars. Or buying 
prescription drugs or putting food on the table. Or buying prescription 
drugs or paying their rent. Once the Medicare prescription drug plan 
goes into effect on January 1, 2006, those Medicare beneficiaries will 
no longer have to worry. And another point that needs to be raised 
regarding this matter--if there were any proposals that deserve to be 
recognized as offering a drug benefit in name only, it's the two 
Democratic plans of two years ago--plans supported by 50 and 45 
Democrats respectively, including the Democratic Leader and Senator 
Kerry.
  My colleague, Senator Grassley, described those plans a few days ago, 
but let me take a few minutes to recap. The first Democratic plan had a 
drug benefit that lasted just six years. Talk about offering a drug 
benefit in name only.
  The second plan didn't even offer a benefit to the vast majority of 
beneficiaries. Seventy percent of beneficiaries would not have received 
any basic coverage. A plan that shuts out the vast majority of 
beneficiaries--how can you call that a drug benefit? Guess what those 
70 percent got.
  You are not going to believe this--a five percent discount on their 
drugs. Once they spent $3,300 out of pocket, they could qualify for 
catastrophic coverage.
  Some have taken issue with the MMA, saying that the ``benefit'' stops 
after an initial coverage amount. I would like to remind my colleagues 
on the other side of the aisle that their basic benefit would have 
never even started for 70 percent of beneficiaries! Talk about a 
doughnut hole; these beneficiaries didn't even get a doughnut!
  The Congressional Budget Office estimated that 66 percent of 
beneficiaries wouldn't meet the $3,330 threshold--again, for these 
folks, the only help they would get was a five percent discount! A five 
percent discount!
  I was also extremely disappointed by the arguments made by the 
Senator from Illinois and the Senator from California against what some 
have termed the ``non-interference'' provision. As I outlined, this 
provision has

[[Page 23026]]

been included in the most prominent Democrat initiatives, starting with 
the Clintons' Health Security Act over a decade ago. Despite that fact, 
here we are again listening to arguments against it. Apparently, what 
was good in a Democratic administration is bad in a Republican one.
  And what was good in a Democratic Senate is bad in a Republican 
Senate during an election year. It is almost as if my colleagues were 
not listening to what I said. The argument that there is no authority 
for the federal government to bargain with the pharmaceutical companies 
is getting to be a tired argument. Again, let me repeat myself from 
yesterday.
  First, the Democrat-sponsored bill from 2000, introduced by Senator 
Tom Daschle and supported and cosponsored by 33 Senate Democrats, had a 
specific provision which stated the following:

       In administering the prescription drug benefit program 
     established under this part, the Secretary may not (1) 
     require a particular formulary or institute a price structure 
     for benefits; (2) interfere in any way with negotiations 
     between private entities and drug manufacturers, or 
     wholesalers; or (3) otherwise interfere with the competitive 
     nature of providing a prescription drug benefit through 
     private entities.

  Again, this provision is from S. 2541, the Medicare Expansion for 
Needed Drugs, a bill that was introduced by Senator Daschle and 
cosponsored by 33 Democrats, including not only Senator Kerry but also 
Senator Durbin and Senator Boxer who spoke against it on the floor 
yesterday.
  Now, it is every Senator's right to change his or her mind, but you 
would think we would hear some discussion about the basis for this 
flip-flop. Instead, there is much dialogue about the so-called ``evil'' 
pharmaceutical companies, and virtually no admission that many 
Democrats, many prominent Democrats, have been on record in favor of 
the provision they now castigate.
  And what is even more outrageous is the fact that they are the ones 
who first came up with the concept.
  When I hear my colleague from California talk about how the Medicare 
drug law does not do much for seniors, let me just remind my colleagues 
on both sides of the aisle that she is sadly mistaken.
  On the contrary, the Medicare prescription law improves health care 
coverage for Medicare beneficiaries by first, giving them the option to 
have prescription drug coverage, something that they do not have today 
and something Medicare beneficiaries have wanted for close to 40 years!
  In addition, the MMA provides beneficiaries new preventive health 
benefits including a first-time, Welcome to Medicare Physical 
Examination, cardiovascular and diabetes screening and improved 
payments for mammography.
  It also provided rural health care providers with increased 
reimbursement so they may continue to provide Medicare beneficiaries 
living in rural areas with quality health care. I don't know about 
California or Illinois, but that is most welcome in Utah!
  It also provides beneficiaries with a choice in coverage. Seniors 
will be able to choose the drug benefit that best suits their needs, 
rather than be forced in a one-size fits all government plan which is 
what many of my colleagues on the other side of the aisle support.
  Another important provision in the bill helps all Americans by 
offering them Heath Savings Accounts, HSAs. HSAs are tax-advantaged 
savings accounts which may be used to pay for medical benefits. The 
inclusion of these new accounts is a significant part of the Medicare 
law.
  Allowing individuals to take charge of their own savings for future 
health care expenses is an important and necessary change in the 
direction of our health care policy, and is one that I support 
strongly.
  Another point raised by my colleague from California is the doughnut 
hole. I think she called the doughnut hole a ``benefit shutdown.'' I 
agree that the MMA law is not perfect and, yes, this is an area I wish 
we could have improved upon. But calling it a ``benefit shutdown'' is 
not only wrong, it is deceptive.
  The reason it is wrong to call the doughnut hole a ``benefit 
shutdown'' is that it would not affect the majority of seniors, and 
since our first responsibility is to take care of the very poor 
beneficiaries, that is entirely fitting. In fact, the Congressional 
Budget Office told us that only one-quarter of Medicare beneficiaries 
will have spending that actually reaches the non-coverage window of the 
doughnut hole.
  Finally, let me remind my colleague from California that the Medicare 
prescription drug amendment the Democrats brought to the floor in 2002 
sunsetted the Medicare prescription drug program. My good friend from 
Iowa, Senator Grassley, the Chairman of the Senate Finance Committee 
was talking about this irony the other day on the floor.
  Let me recap what Senator Grassley said.
  When we were considering the Medicare Tripartisan bill on the Senate 
floor on 2002, the first Graham-Kennedy Medicare proposal was not 
permanent. Let me read the language from their proposal:
  ``No obligations shall be incurred, no amounts shall be appropriated 
and no amounts expended, for the expenses incurred for providing 
coverage of outpatient drugs after December 31, 2010.''
  Isn't that just remarkable? And they are calling the MMA a drug plan 
in name only? Who are they trying to kid?
  The fact that the Graham-Kennedy proposal offered a drug benefit that 
ended 6 years after it started is unbelievable. But they sunsetted the 
benefit to hide the true cost of their proposal.
  At the time, the Congressional Budget Office said it would cost over 
$100 billion each year to extend the Graham-Kennedy drug benefit past 
the sunset--$100 billion a year without a plan to pay for this enormous 
cost!
  And the argument made about the MMA not going into effect until after 
the election is just more election year political jabber. That is a 
ridiculous charge, one that does not even warrant a response. But I 
will respond to it by saying that it takes time to put together a 
benefit that will cover over 40 million Americans.
  It takes time to do it correctly. The agency in charge of the 
Medicare program needs time to implement the MMA regulations, accept 
bids from plans that wish to participate in the Medicare Advantage 
programs and, most important, it takes time to educate Medicare 
beneficiaries about the options that will be offered to them.
  And let me remind all of you that even the Democrat proposals that 
have been considered in the past did not have the Medicare prescription 
drug programs go into effect immediately, so that is just a ludicrous 
charge.
  In addition, I will remind my colleagues that both the Democratic 
plans under consideration in the summer of 2002 didn't go into effect 
until 2005 because they recognized the same thing we did--that it will 
take some time to get a new program like this up and running.
  And so, there's no subterfuge behind the 2006 date in the MMA. 
Moreover, at least the MMA offers immediate assistance through the drug 
card program. Their plans offered nothing until 2005 and then very 
little after that!
  I would also like to respond to my colleague from California's 
comments about the Veterans Administration system and the deficiencies 
of which I described this yesterday morning. If she's surprised at the 
Republicans for not using the VA model, then my only guess is that 
she's even more surprised that her own party didn't.
  No--they wanted to have private plans negotiate with drug companies--
the same approach taken in the MMA. The VA system was not a model for 
any Medicare prescription drug plans considered on the Senate floor.
  Finally, let me address the idea of importing cheap drugs from 
Canada.
  First, nobody has a greater desire than I to make prescription drugs 
more affordable, particularly for our seniors and the disabled, who 
depend so heavily upon pharmaceuticals for their quality of life. I co-
authored the 1984 bill which, in essence, brought generic drugs to the 
marketplace to become the force for competition and affordability that 
they are today.
  My colleagues seem to forget that the MMA does include a provision to

[[Page 23027]]

permit the importation of prescription drugs from Canada once a program 
is in place that is approved and certified for safety and cost by the 
Secretary of the Department of Health and Human Services (HHS). The law 
also calls for the Secretary to establish a 13-member task force that 
will study proposals to make re-importation safe and cost effective.
  HHS Secretary Tommy Thompson has stated he is hopeful the panel's 
study will be completed by the end of this year. We shouldn't overlook 
the fact that the FDA has documented many cases of what appeared to be 
FDA-approved imported drugs that in fact were contaminated or 
counterfeit, contained the wrong product or incorrect dose, were 
accompanied by inadequate directions, or had outlived their expiration 
date.
  These drugs would be at a minimum ineffective, and could actually be 
harmful or fatal.
  The FDA is also concerned with the safety of allowing companies which 
are not licensed by states to practice pharmacy to sell prescription 
drugs without any limitation on the amount or frequency of drug imports 
permitted for individuals.
  In addition, reimportation legislation as it is written would allow 
risky drugs that are currently available in the U.S. only under strict 
safety controls to reimported at any amount or frequency to anyone--
even those who are at high risk to be seriously injured by the 
medication.
  The FDA underscored these concerns in the Judiciary Committee's 
hearing on drug importation last July. The agency stressed that opening 
our tightly regulated, closed system of prescription drug distribution 
will open the door to counterfeit and otherwise adulterated or 
misbranded drugs being widely distributed to an unwitting American 
public.
  Mr. William K. Hubbard, the Associate Commissioner for Policy and 
Planning for the FDA testified before the Senate Judiciary Committee on 
this important matter. I would like to take this opportunity to read 
some of his testimony to my colleagues:

       FDA remains concerned about the public health implications 
     of unapproved prescription drugs from entities seeking to 
     profit by getting around U.S. legal standards for drug safety 
     and effectiveness. Many drugs obtained from foreign sources 
     that either purport to be or appear to be the same as U.S. 
     approved prescription drugs are, in fact, of unknown quality. 
     Consumers are exposed to a number of potential risks when 
     they purchase drugs from foreign sources or from sources that 
     are not operated by pharmacies properly licensed under state 
     pharmacy laws.
       Patients also are at greater risk because there is no 
     certainty about what they are getting when they purchase some 
     of these drugs. Although some purchasers of drugs from 
     foreign sources may receive genuine product, others may 
     unknowingly buy counterfeit copies that contain only inert 
     ingredients, legitimate drugs that are outdated and have been 
     diverted to unscrupulous resellers, or dangerous sub-potent 
     or super-potent products that were improperly manufactured. 
     Furthermore, in the case of foreign-based sources, if a 
     consumer has an adverse drug reaction or any other problem, 
     the consumer may have little or no recourse either because 
     the operator of the pharmacy often is not known, or the 
     physical location of the seller is unknown or beyond the 
     consumer's reach. FDA has only limited ability to take action 
     against these foreign operators.

  These safety concerns are real, and I strongly believe that if we 
truly care about seniors and other patients who depend upon 
prescription drugs, we should not expose them to what currently amounts 
to pharmaceutical Russian roulette.
  Now the FDA is working with some of my colleagues on legislation that 
would give the FDA greater resources, limit the scope of imports, and 
provide greater power to the FDA to police imports. In recent public 
comments, former Commissioner Mark McClellan has said these measures 
would give the agency the ability to assure the safety of prescription 
drugs imported by Canada.
  In addition to these safety concerns, however, I am also concerned 
that reimported drugs pose a threat to the innovation Americans--and 
the rest of the world--have come to expect from our pharmaceutical 
industry. Canada and other countries with lower drug prices generally 
import superior American products, but impose price controls to keep 
costs down.
  However, it can cost as much as $1 billion to produce a new drug, 
test it, win FDA approval, educate doctors, and make the drug available 
to patients. No pharmaceutical company could go through this immensely 
expensive process without a chance to recover some of its costs, which 
will not be possible if we impose in America--however indirectly--
Canadian-style price controls. I do not believe that sacrificing the 
safety and future supply of our drugs by reimportation is the right 
answer to the high cost of prescription drugs.
  I hope that I have cleared up any misunderstandings that Medicare 
beneficiaries have about the MMA law. Again, we gain nothing by 
spreading mistruths about the Medicare bill.
  The only thing that results from those types of charges is confusion 
of Medicare beneficiaries--the very people who all of us are trying to 
help. And that is regrettable.

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