[Congressional Record (Bound Edition), Volume 150 (2004), Part 9]
[Senate]
[Pages 11137-11140]
[From the U.S. Government Publishing Office, www.gpo.gov]




                       COST OF PRESCRIPTION DRUGS

  Mr. DAYTON. Mr. President, when I was in Minnesota last week, I read 
a very disturbing news report about the cost of prescription drugs in 
this country. The American Association of Retired Persons Public Policy 
Institute looked at the prices charged by the manufacturers of 197 
brand-name prescription drugs most widely purchased by Americans. Last 
year, their average price increase was 6.9 percent, over three times 
the overall inflation rate of just 2.2 percent. From December of 1999 
to December of 2003, for 155 of those drugs on the market during all 4

[[Page 11138]]

years, their prices increased by a cumulative average of 27.6 percent 
compared to the general inflation rate of just over 10 percent. That is 
a price increase of over 2.5 times the overall inflation rate during 
the past 4 years.
  It is not as though those drug prices were low at the beginning. Last 
summer, my staff compared the retail prices of 52 leading prescription 
drugs in the United States and Canada. For exactly the same drug, same 
amount, same strength, made by the same company, prices in Canada were 
one-third, one-fifth, even one-eighth the prices in the United States. 
That was after factoring out the different values of the U.S. and 
Canadian dollars. So in an apples-to-apples comparison, prices for the 
exact same medicines in the United States were three times, five times, 
even eight times higher than prices in Canada. My study shows that 
Americans are being gouged by exorbitant prescription drug prices, and 
AARP's study shows that it is getting worse.
  Those excessive and rapidly increasing prices afflict all Americans, 
not only senior citizens. This year, almost 12 percent of all the money 
Americans spend for their health care will go for prescription drugs. 
That is almost one out of every eight health care dollars. Over the 
past 6 years, prescription drug costs have been the fastest growing 
part of total health care spending in this country.
  So if Americans are getting ripped off by the drug companies, and if 
the problem is getting worse, then certainly President Bush and 
Congress would do something about it, right? Well, last year, the 
President and a majority in the Senate and House did something, but 
they made things worse, not better. Let me restate that. President Bush 
and a majority in Congress made sure prescription drug prices could 
keep going higher and higher and hurt most Americans, which means more 
money and larger profits for the drug companies. President Bush and his 
friends in Congress helped the rich get even richer, while making the 
rest of America poorer.
  How did they do that? Well, on the prescription drug bill that was 
passed last year, the final version that most of my Democratic 
colleagues and I voted against, Federal health care officials are 
expressly prohibited from negotiating or in any way affecting the 
prices being charged for prescription drugs. When prescription drug 
coverage, inadequate as it will be, fully begins in the year 2006, the 
people on Medicare will be buying over half of all the prescription 
drugs purchased in America. Most of those bills will be paid at least 
in part by the Federal Government with taxpayer money at whatever 
prices are charged.
  Imagine if you had to pay whatever someone else decided to charge 
you. You couldn't negotiate. You couldn't refuse to pay above a certain 
price. You would have no say; you would just pay. And you would pay and 
pay and pay.
  No wonder a bill that was supposed to cost taxpayers $400 billion 
over the next 10 years is already projected to cost over $541 billion, 
a $141 billion increase, and the program has not even begun yet. I 
guarantee the program's cost will run even higher than that, as long as 
that prohibition against price negotiating is in law. It is a license 
to exploit Americans, all Americans, since all Americans will have to 
pay those higher prices.
  Conversely, if Federal officials negotiated lower prices for Medicare 
beneficiaries, some, most, or even all of that price reduction would 
affect the prices the rest of us have to pay for those medicines. Drug 
company lobbyists and their friends in Washington call this price 
fixing and claim the Federal Government would destroy profitability, 
end research and development, and even cause bankruptcies. Nonsense. 
The Federal Government can't force any vendors to sell their products 
or services below prices acceptable to them. It can't legally--except 
in a national emergency--it doesn't try to, and it should not want to.
  Take the Pentagon, which is often the only legal buyer of many of its 
products or services. It doesn't dictatorially set some price and 
require some company to make a product and sell it at that price. The 
Pentagon or the service branch purchaser might put the contract out for 
competitive bids or, if there is only one suitable provider, the 
Pentagon or military officials would sit down with the company 
officials and they would negotiate, truly negotiate, a mutually agreed-
upon price.
  Is that price as high as the company might charge if the company 
could set the price as high as it would like? No, probably not. Would 
the company agree to a price so low as to be unprofitable? No, 
definitely not. Does the Pentagon even want that low price? No, because 
if that company doesn't make a profit, it won't be around to keep 
producing that product or other products.
  Those national defense projects frequently require extensive research 
and development, then testing, then modifications, and then more 
testing, requiring often several years before the actual production and 
sales can begin. Those costs--research and development, testing--are 
made part of the contract, usually paid in advance of production, and 
often revised upward if unforeseen circumstances develop. The Federal 
Government is a partner in those endeavors and vested in their positive 
outcomes while still being, hopefully, a responsible purchaser, 
assuring that taxpayers get their money's worth.
  Would anybody here believe the Pentagon should be prohibited from 
negotiating the prices it will pay for what it needs, that it should be 
required to pay whatever prices its suppliers decided to charge? That 
would be ridiculous and scandalous, as it should also be for 
prescription drugs.
  That part of the new law would be bad enough for most Americans just 
by itself. But the Bush administration and its congressional allies 
were not done helping their friends in the pharmaceutical industry. In 
our economic system, if the price of something becomes too high, you 
can shop around for a lower price elsewhere.
  I come from a retail family. My great-grandfather opened a department 
store in Minneapolis in 1903. My father and uncles and thousands of 
Minnesotans and other Americans built the company into Target 
Corporation, now the country's second largest retailer after Wal-Mart. 
Retailers, especially discount retailers, understand competition. They 
expect their customers to be looking for lower prices, better deals, 
and higher value elsewhere. They don't go to the President or to 
Congress and say: Make Americans buy from us at whatever prices we 
charge and prohibit them from buying anywhere else.
  That is what the drug companies wanted. That is what President Bush 
and a majority in Congress gave them. They banned what is being called 
drug reimportation, which is actually a bit of a misnomer because many 
prescription drugs are made outside of the United States and then 
imported into this country. In fact, over $14 billion worth of those 
prescription drugs were imported legally into the United States last 
year and sold to us at the manufacturer's prices. Neither the FDA nor 
the companies objected as long as that massive drug importation was 
occurring at their high prices. But many Americans objected to paying 
those prices, and many other Americans couldn't even afford to pay 
them.
  So they want to do what Americans can do in almost every other 
situation in our economy--shop around for lower prices and buy them 
where they can find them. Lower prescription drug prices can be found 
in Canada and in other countries. The prices are much lower in Canada, 
as I said earlier, for the same product made by the same company.
  Some Americans can actually travel to Canada because they live near 
the United States-Canadian border. I donate all but $1 of my Senate 
salary to the Minnesota Senior Federation for bus trips into Canada to 
buy those lower cost medicines.
  The Canadian Government allows pharmacists in that country to fill 
only prescriptions signed by Canadian doctors, and that takes an 
appointment and time and then more time to get the prescription filled. 
Thus, when

[[Page 11139]]

I went on one bus trip from central Minnesota into Canada and back, the 
entire round trip took us 19 hours--from 7 o'clock in the morning to 2 
a.m. the following morning. That is what I call a long U-turn.
  The average savings among the 40 seniors who were on the trip was 
over $250. Almost all of them bought more than one medicine, and most 
bought a 2 or 3-month supply so they would not have to make the trip so 
often. However, even a 19-hour round-trip bus ride is not an option for 
most Minnesotans and other Americans who live too far from Canada and 
are not able to make such a trip. The Internet is their ticket, and 
many more Americans are discovering that possibility. They are 
discovering they can save hundreds, even thousands, of dollars when 
buying prescription drugs over the Internet. Thus, many Americans--
especially our senior citizens--can then afford to buy medicine they 
would otherwise have to forego at the higher U.S. prices.
  You would think our Federal Government--which, after all, is supposed 
to be a Government of, by, and for the people--you would think the 
people elected, appointed, or hired to serve the people, and being paid 
by the people to do so, would want to help the people save lots of 
money. But, again, that would mean less profits for the drug 
companies--still very high profits, but less very high profits.
  Yet, incredibly, inexcusably, for this administration and the 
majority in this Congress, higher drug company profits are more 
important than everyone else in America. So they made it illegal to buy 
prescription drugs outside the U.S. and bring them into this country, 
unless the Secretary of Health and Human Services guarantees their 
safety--which he already said he will not do. If the Secretary of 
Transportation had to guarantee in advance every commercial airplane 
trip would be safe, it would put an end to air travel as well.
  President Bush and Congress could have written the law to require the 
Secretary and his huge agency to help people make safe purchases over 
the Internet, as, to his credit, the Governor of my State of Minnesota, 
Tim Pawlenty, has instructed our State Department of Health to do. 
Hopefully, he will not be arrested by the Federal Government for 
providing that help. If he is, I promised to help him make the bail.
  But with this administration and with the majority in this Congress, 
there is no help for Americans with the overpriced prescription drug 
costs, except for another drug discount card, which, in Minnesota, is 
now a choice of 1 out of 48 possible cards for a discount on some drugs 
we now learn from AARP have increased a total of over 27 percent in 
price over the last 4 years, which means they can offer a discount and 
still make more money.
  When this bill was passed by a majority in the House and Senate last 
year, after the Bush administration and the industry lobbyists had 
written a bill in conference committee so very different from the 
earlier Senate version--which I supported--I was left with two 
questions:
  First, how could people vote for a bill they knew did not represent 
their constituents' best interests? Secondly, how did they assume they 
could do so and still get reelected?
  Americans don't deserve the highest, by far, prescription drug prices 
in the world--allowed to go even higher and higher. Americans should 
not be forced to pay those exorbitant prices and be prohibited from 
buying their medicines at much lower prices elsewhere. America's senior 
citizens don't need another 48 discount cards to choose from. They all 
need, and deserve, to be able to go to their neighborhood pharmacies 
everywhere in their country and buy prescription medicines at prices 
comparable to the rest of the world.
  That is what governments of other countries assure for their 
citizens. That is what our Government should do for our citizens. When 
Government officials don't serve the best interests of the people, they 
should no longer be Government officials. That is why we have 
elections.
  I yield the floor.
  The PRESIDING OFFICER (Mr. Graham of South Carolina). The Senator 
from Michigan is recognized for 10 minutes.
  Ms. STABENOW. Mr. President, I first thank my colleague and friend 
from Minnesota for his eloquent remarks today. I certainly agree with 
the sentiments he has expressed. I personally thank him for his 
personal commitment and willingness to help fund ways for people in 
Minnesota to be able to lower their prescription drug prices. I think 
that speaks to his personal dedication and willingness to do whatever 
he can to help.
  Ronald Reagan asked the question back in 1980, ``Are you better off 
than you were 4 years ago?'' When it comes to the issue of prescription 
drugs and the cost of medicine today, certainly the answer to that is 
no.
  I rise today to discuss the new Medicare Drug Card Program, as my 
colleague and friend from Minnesota has done. Yesterday, Tuesday, was 
the first day these cards could be used. But by any measure, this 
attempt to lower drug prices has been a complete failure. We can do 
much better. We can give our seniors real savings if we make the 
commitment to do that. Simply put, when it comes to Medicare, we need 
to do it again and we need to get it right.
  From the beginning, the drug card was designed for the pharmaceutical 
companies and not for our seniors. That is one of the reasons why there 
is an estimate that the drug companies will receive over 8 years $139 
billion in new profits because of the new Medicare law.
  That doesn't add up if the purpose is to lower prices for our 
seniors. Obviously, $139 billion in new profits demonstrates this is 
not about lowering prices. First, because the law provided no guarantee 
and no guaranteed savings for seniors, drug companies were free to 
inflate their prices before the discount cards were issued. Therefore, 
companies were free to raise their prices in the last year or two in 
excess of any possible discount seniors might receive from these drug 
cards. In fact, the prices of 14 of the top 30 brand-name drugs rose 
more than 5 times faster than the rate of inflation from 2003 to this 
year, virtually wiping out any discount a senior might receive from one 
of these Medicare cards. That is like a department store taking up its 
prices 50 percent and then putting a sign out front that says 25 
percent off. If you think about it, you are not going to save any 
money; you are actually paying more.
  Second, the new law gives the companies that distribute the Medicare 
cards complete flexibility to change their prices every 7 days but 
forces seniors to lock into one card for an entire year. That means you 
might pick a particular card because it offers you a lower price on 
medications that you take, and then in 7 days, maybe even before you 
use the card, the price of that drug has gone up or two or three of the 
drugs you are taking have gone up. That might make the card absolutely 
useless, even though seniors may have to pay up to $30 to sign up for 
the card.
  Also, we know that every 7 days the discounted drugs can be changed. 
So you wade through all of these cards, over 70 cards, to figure out 
the one that covers the most medicines you use and provides you some 
kind of help with lower prices. You purchase that card. You spend $30. 
You purchase a card, you lock yourself in for a year, and then you find 
out 7 days later the drugs you use are no longer on the list. Who does 
that benefit? Who is better off under this Medicare bill? Certainly not 
our seniors. We can do much better. We need to do it again and do it 
right. This new Medicare bill needs a complete overhaul.
  There are two ways we can lower prescription drug prices for seniors 
and all Americans if we do this right. We have two ways right now we 
can fix this situation. First, we simply need to pass bipartisan 
reimportation legislation supported by people on both sides of the 
aisle in both the House and the Senate. We have a very strong 
bipartisan coalition to allow Americans to buy American-made FDA-
approved drugs from other countries such as Canada. All of us could 
then save much

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more on prescription drugs than the small savings from the Medicare 
drug cards.
  Second, we can and should allow Medicare to negotiate directly with 
the drug companies on behalf of our seniors and the disabled to get the 
lowest possible price.
  Why on Earth wouldn't that be the first thing we would do? Right now 
States, Fortune 500 companies, large pharmacy chains, and the Veterans' 
Administration use their large bargaining clout to obtain low drug 
prices. Common sense says Medicare should be doing it.
  Regrettably, the only entity in this country that cannot bargain for 
lower group prices is Medicare. Why? Who benefits from that? Who 
benefits from locking in up to 40 million people forced to pay the 
highest prices? Certainly not our seniors and the disabled.
  Because the supporters of the drug industry in Congress at the 
eleventh hour inserted into the final Medicare bill a special interest 
provision that strictly prohibits Medicare from getting group 
discounts, our seniors are paying top dollar.
  We know the drug companies are powerful. We know they have over six 
lobbyists for every one Member in the Senate. We can do better, and 
people expect us to do better than this new law and these cards.
  If we want, we can provide real savings for Americans. I wish to 
point to charts to demonstrate with a couple of medications what the 
differences are.
  Right now for Lipitor, which lowers cholesterol, if we were to do a 
group discount, such as the Veterans' Administration does, our seniors 
would pay $40.55 for a month's supply. If we were to open the border to 
Canada and allow trade, as we do for everything else, back and forth 
between Canada and the United States, we would be able to get that 
price down to $35, from $40.55 to $35.04. However, if we continue with 
this current Medicare card, the low end is $64.67 up to $74.77. This 
makes no sense.
  Right now people are being told to go out and sign up for a Medicare 
prescription drug card that will require them to pay more than we could 
get for them if we simply negotiated group prices or open the border to 
Canada.
  Another demonstration: Norvasc, which controls high blood pressure. 
Again, with the VA, for a little over $25, you can get a month's 
supply; Canada, $28. But under the so-called discount card, it is 
anywhere from $41 to $49. These numbers just do not add up, and the 
seniors of this country, as well as all Americans who would benefit by 
opening the border and allowing us to do business across the border, 
are saying to us: Do it again, and do it right.
  One more example: Protonix, which treats ulcers and other stomach 
conditions. If we were to negotiate a group price, as does the VA, the 
individual out of pocket would pay $26.83, and through Canada, $41.60. 
Under these new cards, they would pay from $86 to $108. It just does 
not add up. These numbers do not add up for our seniors or for anyone 
who is struggling to purchase medicine or to keep up with the 
incredibly high and rising prices of their health insurance because we 
know this is a major driver.
  In conclusion, are you better off than you were 4 years ago under 
this Medicare law? We need to change it, and we need to get it right.
  The PRESIDING OFFICER. The Senator's time has expired.
  Ms. STABENOW. I thank the Chair.
  The PRESIDING OFFICER. The Senator from Nevada.
  Mr. REID. Mr. President, the Senator from Michigan has been a leader 
on this prescription drug issue for the entire time she has been in the 
Senate. The country owes a debt of gratitude to her for being 
unrelenting in pointing out the need to reform prescription drug 
availability, especially as it relates to seniors.
  I yield the remainder of the time to the Senator from Washington, Ms. 
Cantwell.
  The PRESIDING OFFICER. The Senator from Washington is recognized.
  Ms. CANTWELL. Mr. President, how much time remains?
  The PRESIDING OFFICER. There is 3 minutes 45 seconds.

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