[Congressional Record (Bound Edition), Volume 151 (2005), Part 1]
[Senate]
[Pages 330-332]
[From the U.S. Government Publishing Office, www.gpo.gov]




                           PRESCRIPTION DRUGS

  Mr. DURBIN. Mr. President, many people recall that over a year ago 
there was a debate on the Senate floor about the cost of prescription 
drugs. It was a lengthy debate, and it involved a lot of concern about 
the fact that a lot of senior citizens find the life-protecting drugs 
they are taking to be too expensive.
  We have known for a long time that Medicare, a very valuable Federal 
Government program, has been more than miraculous in its results. When 
it was instituted during the term of President Lyndon Johnson, there 
was hope it would help seniors pay for their medical bills and improve 
the quality of their lives. It has done that and more. It has become an 
extremely valuable program because seniors have used Medicare for 
access to doctors and hospitals, and the proof is in longevity. Seniors 
are living longer. They are getting better medical care. It was truly 
one of the best Government programs ever created, but there was a gap 
in those programs. It didn't cover prescription drugs for those who 
were not in the hospital. So seniors found that new drugs that kept 
them healthy and out of the hospital were too expensive. Some couldn't 
take the drugs because they couldn't afford them. Others had to make 
terrible life choices between their lifesaving drugs and basic 
necessities of life.
  For a long time we have talked about establishing under Medicare a 
prescription drug program that would help these seniors--and disabled 
people, who also qualify under Medicare. The debate got started, and it 
looked promising. There was the belief that we were finally moving to a 
goal that we have talked about for a long time. Unfortunately, during 
the course of the debate there were political forces at work in 
Washington. That is not unusual. The largest political force at work 
was the pharmaceutical drug industry. They understood that if we gave 
to Medicare the power to bargain for senior citizens in America, that 
power would force the drug companies to reduce their cost, so the 
pharmaceutical companies, one of the most powerful lobbying 
organizations in Washington, successfully lobbied the Bush 
administration and supporters of the bill to prohibit Medicare from 
creating a drug benefit program under Medicare which would hold the 
drug companies accountable for cost increases.
  They got the best of both worlds. They not only could continue to 
sell expensive drugs to seniors, there is no pressure on them to reduce 
the cost. Drug companies are very profitable, and they understood that 
with this change in the law, they would continue to make enormous sums 
of money off of seniors and the Government for a long time to come.
  Some of us who voted against the program as presented by the 
President suggested that, unless there was some cost containment here, 
this program would break the bank; it would cost too much; drug prices 
would go up, and the Federal Government could not appropriate money 
fast enough to take care of it.
  Then they started describing the prescription drug program, and it 
quickly reached the point that even a Harvard trained lawyer couldn't 
understand what it was all about. I have sat down with seniors in 
Illinois and tried to explain to them what this prescription drug plan 
was all about, and after a while they threw up their hands and said: 
Senator, wasn't there an easier way to do this? And the honest answer 
was: Yes, but we didn't choose that easier way.
  Because of some budgetary considerations and political 
considerations, we created an extremely complicated program for senior 
citizens. That program ultimately did not reach a point where seniors 
approved of it. In fact, most of the seniors in Illinois who I talked 
to are not only skeptical of this program, they are critical of it. 
They are not sure it would really help them.
  The administration--the President--was very smart. He decided to 
postpone the startup of this program until after the last election. He 
knew, and I am sure we all do now, that when this program starts a lot 
of seniors are going to see just how bad it is, how complicated it is, 
how uncertain it is, and because of those uncertainties many of them 
will be critical of the Congress that enacted the law and the President 
who presented it to us for enactment.
  So at this point we have a problem before us, a program that is about 
to go into effect which has uncertain monthly premiums, has a so-called 
donut hole, which means it covers drugs up to a certain point in their 
cost and then leaves the individual senior citizens on their own for a 
period of time as they spend the money out of pocket and then comes 
back to cover them again. It also has some curious provisions where 
seniors cannot buy supplemental insurance to make up the deficiencies 
in the prescription drug bill. They are banned, prohibited. It also 
expressly says Medicare cannot create its own prescription drug company 
and bargain for senior citizens--once again to protect the 
profitability of pharmaceutical companies.
  As bad as this bill was, we were waiting for the regulations written 
by the Bush administration which would spell out the details of how 
this process will work. Last Friday the Bush administration released 
1,500 pages of new rules and regulations related to the new Medicare 
prescription drug program--1,500 pages. I can remember when President 
Reagan showed up for the State of the Union Address with a

[[Page 331]]

huge copy of a bill we had just passed, an appropriations bill, 
slamming it on the desk saying what an embarrassment it was to the 
American people that we would have a bill of such complexity and 
magnitude. Here we have the regulations for the prescription drug bill, 
an already complicated bill, 1,500 pages in length. When you look at 
the details of this prescription drug benefit, you understand why many 
senior citizens are skeptical.
  Sally Mitchell is a 66-year-old widow who lives in Aurora, IL, and 
takes three prescription medications every day. She told the Chicago 
Tribune that she:

     wished Medicare would come up with something that would be 
     easier for people to understand and use.

  That is not an unreasonable request from Mrs. Mitchell. In her words, 
she went on to say:

       If it's too much work and too much stress, at my age it's 
     not worth it for me to just save a couple of dollars.

  That is what many senior citizens have found. As this administration 
came forward with discount cards and prescription drug benefits, a lot 
of them have said it is not going to work.
  When you take a hard look at the philosophy driving this complicated 
bill, protecting this private interest group, you get further insight 
into the concept of the ownership society. This is the new concept. 
This is the brave new world we are hearing about, which says that 
basically the Government should not be making certain that there is 
competition for these drug companies. Let them own their products. Let 
them sell their products. The Government should not be standing in the 
shoes of the senior citizens who need these prescription drugs, 
understanding the complexity of the system and the cost of the system. 
No, no, the Government should step aside. Let the seniors own the 
program.
  I believe a lot of seniors are going to disown the program. The 
President tells us that turning America into ``an ownership society'' 
will solve our retirement security problems. Just privatize part of 
Social Security and give Medicare beneficiaries a voucher so they can 
buy private prescription drug coverage and the problems are solved.
  But I think seniors see through this. They understand that what they 
are hearing from the administration about Social Security and Medicare 
does not give them peace of mind. If there are challenges in Social 
Security, they are in the distant future, as I said in an earlier floor 
statement: 37 years from now. If we are to make changes, they should be 
changes that don't cut the benefits for Social Security retirees and 
beneficiaries. They should not create an additional national debt of $2 
trillion or more, but that is the projection coming out of the 
President's suggestions.
  We will wait for the details. In fairness to the President, he should 
present this to us in its entirety. It is an interesting theory to 
think that we can start privatizing Medicare, Social Security, Medicare 
prescription drug programs, but here is the reality: 1,500 pages of 
regulatory gobbledygook, big guaranteed profits for the pharmaceutical 
industry and the HMOs and insurance companies, and precious little 
savings for people like Sally Mitchell of Aurora, IL.
  Why is this all so complicated and so costly? Because when the 
Medicare prescription drug benefit was designed, it was with the 
pharmaceutical companies and the HMOs in mind, not the seniors of 
America. Instead of simply offering a prescription drug benefit through 
Medicare and negotiating bulk prices, we divided the country into 34 
pharmaceutical regions. This is a map that shows these regions. We are 
going to have to spend $300 million to explain to seniors what region 
they live in and who is going to offer prescription drug coverage in 
each of these regions.
  Do you remember when there was a discussion about the Clinton 
proposal for dealing with the cost of health care? Senator Dole and 
others came to the Senate floor with this flowchart which showed a 
spaghetti mess of lines going every single direction. That applies as 
well to this prescription drug benefit from the Bush administration. 
Each of the 34 regions on the map that I just showed you will have at 
least 2 private options for prescription drugs, either a prescription 
drug plan or an HMO. If there are two plans in each region, it means 
instead of the Secretary of Health and Human Services negotiating on 
behalf of 41 million seniors for lower drug prices, pharmaceutical 
companies will be negotiating with 68 private companies on behalf of 
seniors.
  Think about your negotiating power at the table when you divide the 
number of seniors by 68 instead of having Medicare bargaining on behalf 
of all 40 million-plus seniors. Simple economics tells you, you lose 
your negotiating power when the number of people you are representing 
goes down, as the power of the pharmaceutical companies goes up.
  What is worse is that private plans can change their drug formularies 
after seniors sign up, but the seniors are locked into it. That is 
right. If you decide you need to sign up for a prescription drug plan 
the President is proposing, and one of these companies decides it is 
going to stop carrying the drug that the doctor told you that you 
needed, you are still stuck with that prescription drug program you 
signed up for. So if you do your research and decide on a plan in your 
area because it offers a low price for a drug you are taking, you are 
locked into that plan, but it can drop coverage of your drug during the 
year.
  The regulations released on Friday also govern bidding by HMOs 
wanting to contract with Medicare. The HMOs are divided into 26 
regions. Although most seniors are happy to receive their benefits 
directly through Medicare, we will spend $14 billion over the next 10 
years to expand coverage by HMOs. The Republicans who passed this 
argued that the HMOs and private insurance companies could do things 
more effectively and efficiently.
  Yet we have built into this proposal a Federal subsidy of millions, 
if not billions, of dollars to the HMOs to reward them for competing. 
Something is wrong with this picture. If they are supposed to be so 
efficient, why do they make it a Federal subsidy? The sponsor of the 
bill couldn't explain it. The private plans are 7 to 9 percent more 
expensive than Medicare fees for service and less efficient. And we are 
going to subsidize it so they can compete with whatever Medicare has to 
offer?
  PacifiCare CEO Howard Phanstiel told Bloomberg News over the weekend: 
``We are encouraged that CMS continues to demonstrate its commitment to 
be a good business partner with the private sector.'' But isn't it 
Government agencies' first obligation to seniors and the citizens of 
this country rather than to the businesses that will profit from this 
new arrangement?
  Let us take a look at Mr. Phanstiel and his colleagues in the HMO 
industry. He made more than $3 million in the year 2003, the year we 
passed the Medicare bill. As a result of this bill, many companies and 
many others like it will probably make even more because Mr. 
Phanstiel's company will have access to some 700,000 Medicare 
beneficiaries in addition to the ones he currently serves.
  When you look at compensation, the CEO of Aetna, $8.9 million; Larry 
Glassock's compensation, $6.8 million. Here is one CEO who earned $21.6 
million. Look at what these HMO CEOs are making. And now we are not 
going to cut into their profits but increase them.
  When Mr. Phanstiel sent this nice thank-you note to CMS, a Federal 
agency, and said they are continuing to demonstrate their commitment to 
be a good business partner, it means even more money and profits for 
the HMOs at the expense of senior citizens.
  When it comes to pharmaceutical companies, this chart tells you what 
happened to the Fortune 500 companies in America. This is the analysis 
of the 2002 profits. Look, if you will, at the return on revenues. The 
No. 1 industry, pharmaceuticals; return on assets, No. 1 industry, 
pharmaceuticals.
  When you turn on the television and you can't escape another ad for 
the ``little purple pill,'' let me tell you that company is spending 
more money on advertising than it is on research to find new drugs. 
They are trying to create an appetite and desire among

[[Page 332]]

American consumers to buy drugs they don't need; too expensive drugs, I 
might add. In this situation, you are going to find pharmaceutical 
companies doing even much better because the Medicare prescription drug 
plan says they don't have to compete.
  Is the idea of asking drug companies to reduce their costs to help 
people under Federal programs a radical, Socialist, Communist, 
collectivistic idea? I don't think so. Go to the Veterans' 
Administration. That is exactly what they do. They call in the drug 
companies and say: We have a lot of veterans in America who are going 
to VA hospitals to pick up their drugs through a program we are 
offering. If you want to sell drugs to them, you have to give us your 
best price. And the American drug companies line up and reduce their 
costs for VA. They don't scream and they don't holler and squirm away. 
They like to deal. And the VA serves the veterans. Why is it we can't 
do the same thing for Medicare? It is just that simple.
  The fact that we didn't is the reason the administration last Friday 
had to put 1,500 pages of regulations together on an already 
complicated bill to try to explain the Medicare prescription drug 
benefit that is, frankly, not what it should be. We started off 
understanding the need. We passed a bill that didn't meet that need. 
Now, in the name of the ownership society, we are saying to people: You 
own the right to be virtually defenseless in bargaining with 
pharmaceutical companies and HMOs.
  Is that what we are here for--to make certain their profitability 
goes through the roof at the expense of seniors who can't afford 
lifesaving drugs? I don't think so.
  The time will come--and I hope soon--when we will have reforms of 
this Medicare prescription drug program. When we do, let us keep our 
first obligation to our seniors.
  I yield the floor.

                          ____________________