[Congressional Record (Bound Edition), Volume 151 (2005), Part 18]
[Senate]
[Pages 24650-24653]
[From the U.S. Government Publishing Office, www.gpo.gov]




                   MEDICARE PRESCRIPTION DRUG BENEFIT

  Mr. WYDEN. Mr. President, as all Members of this body know, the 
Federal Government is about to begin one of the biggest expansions in 
Federal entitlement programs in our country's history. In a few weeks, 
the senior citizens of our country will be eligible for a much-needed 
prescription drug benefit, and I rise to talk about that program 
tonight.
  I am particularly troubled about the fact that the Federal 
Government, in launching this program, is not going to be a smart 
shopper. You would think, after Katrina, given the huge hemorrhaging in 
our Federal budget, this would be a top priority for the Federal 
budget, to shop smart, to squeeze every possible bit of value out of 
the money that is being spent for critical programs, such as purchasing 
prescription

[[Page 24651]]

drugs for senior citizens. Unfortunately, that is not the case. At a 
time when the costs for this program have escalated from about $400 
billion to over $530 billion, with a 10-year estimate for this benefit 
projected to cost over $720 billion, what is locked into current law is 
an inability to get the best value for the purchase of those medicines.
  It is well understood all across the country that anybody who goes 
shopping in the private sector tries to get the most for their dollar 
by stressing their bargaining power. Certainly, the senior citizens of 
this country have a whole lot of bargaining power. You would think it 
would be the position of the Federal Government to try to take 
advantage of that bargaining power in order to strike the best deal for 
older people and taxpayers. Notice that I emphasize the words 
``bargaining power''--not price controls, not rules set in Washington, 
DC, a one-size-fits-all approach, nothing that would discourage 
innovation among pharmaceutical companies, but simply bargaining power. 
Of course, that is what all the smart buyers do in the private sector 
today.
  Take, for example, a big timber company in my part of the world. They 
represent a lot of workers. They go out and bargain with pharmaceutical 
companies, insurance companies, and others. They get the most for their 
dollar. The small company, on the other hand, doesn't have that kind of 
leverage and, to a great extent in this country, individuals and small 
companies basically end up subsidizing the big companies and people 
with clout in the marketplace. Again, nobody is talking about price 
controls. We are talking about economics 101. If you are buying in 
volume, if you have the opportunity to use marketplace forces to get 
the most for your dollar, you try to do it. You try to use the powerful 
forces of economics 101, which is the market power of bulk purchasing.
  Unfortunately, that is not going to be done in the area of purchasing 
prescription drugs for older people in our country, beginning the first 
of the year. In fact, what the Federal Government is doing is 
essentially turning on its head the principle of smart shopping. What 
the Federal Government would be doing, unless the Congress steps in, is 
pretty much like somebody going to Costco and buying toilet paper one 
roll at a time. The Federal Government isn't using its bargaining power 
to hold down the cost of medicine. At a time when prescriptions are one 
of the fastest growing forces in American health care, that defies 
common sense.
  Some errors are known as errors of omission; others are known as 
errors of commission. The fact that the Secretary of Health and Human 
Services is prohibited from using the power of bulk buying to hold down 
the cost of medicine for seniors is, in my view, one of the most 
outrageous errors of commission in the history of health care 
legislation. The Medicare prescription drug statute didn't forget to 
give the Secretary of Health and Human Services bargaining power to 
hold down the cost of medicine; the statute specifically told the 
Secretary he could not have such authority to get a fair deal for older 
people. So what we have at a time when the cost of the program is going 
through the stratosphere, at a time when seniors are trying to decide 
whether to sign up, is we have a statute that denies the Secretary of 
Health and Human Services the same marketplace tool that any consumer 
has in our communities across the country--the power to leverage bulk 
purchasing to get a better price. Federal law now denies the Secretary 
of Health and Human Services what hundreds of other Federal officials 
have--the power to get a better price for the taxpayer.
  The Congress did not tell the Army they had to go out and buy one 
tent at a time for our soldiers in Iraq. The Congress didn't tell the 
Federal Emergency Management Agency they had to buy one mobile home at 
a time for hurricane victims. But unbelievably, Congress told Medicare 
they have to go out and buy one drug at a time as it relates to other 
people. So Medicare can't do what any savvied shopper in our country 
does, which is use their leverage in the marketplace to get lower 
prices. I think it is outrageous to have this double standard that 
prohibits Medicare from doing what all the other consumers in America 
can do, and it is time, in my view, to fix that.
  Tomorrow, the Senate will have a bipartisan opportunity to do just 
that. Senator Snowe and I, along with Senator McCain and Senator 
Stabenow and a number of others, will offer an amendment that will lift 
the outrageous restriction on the Federal Government's ability to 
bargain, and under our bipartisan amendment the Secretary of Health and 
Human Services would have the authority to negotiate for lower drug 
prices.
  I particularly wish to thank Senator Snowe. She and I have worked on 
this a number of years. Both of us voted for the prescription drug 
legislation. We have the welts on our back to show for it, and even the 
night of the vote we said we were going to come back and try to improve 
this, particularly to improve it in a way that would make sense for 
older people and for taxpayers. So we see our bipartisan amendment as 
an effort to follow up on the promise we made to our citizens back 
home.
  I thank Senator Snowe, who is always trying to find common ground, 
bipartisan common ground, which is, of course, the only way you get 
important work done in the Senate.
  I also want to say a special thanks to Senator McCain, who is 
constantly focused on ways to expose waste, get more for the taxpayer 
dollar, and also Senator Stabenow of Michigan. Senator Stabenow has 
spent enormous amounts of time on a whole host of issues advocating for 
older people and the cost of prescription drugs, and I am convinced 
that this issue would never have gotten the visibility and the 
attention that it warrants were it not for Senator Stabenow's focus on 
it.
  I also would like to say the same about Senator Feinstein. She and I 
agreed on the night of the vote that we were going to join Senator 
Snowe in a bipartisan effort to get a fairer and better deal for older 
people, and I thank her as well for all of her effort.
  Now, Mr. President, the Snowe-Wyden legislation includes specific 
language that prohibits price controls and the setting of prices in 
America. This is something I feel very strongly about, and I know the 
Presiding Officer has a great interest in encouraging innovation and 
research. I think we all understand what is going on in the 
pharmaceutical field. We are seeing breakthroughs every single day, and 
one of the most important steps we can take in the public policy arena 
is to foster innovation and research even in my fair flat tax proposal 
that I introduced this week, and I know the Presiding Officer has great 
interest in tax reform, keeping the research and development tax break 
because it is important. So I don't take a backseat to anybody in terms 
of encouraging innovation and research, and one of the key ways to 
promote innovation and research is to avoid price controls, the setting 
of prices in Washington, DC, anything that would lead to policies that 
freeze the Government's ability to encourage innovation.
  So what we have done in this particular amendment is put in a 
statutory restriction on price controls, on the setting of prices so 
that it is clear to everyone in the Senate that all we wish to do in 
our bipartisan effort is to untie the hands of the Secretary of Health 
and Human Services and put Medicare in the position of being a smart 
shopper. I cannot for the life of me think why Medicare should not have 
the same power to negotiate what other programs and governments have, 
that others in the private sector would have, and with our bipartisan 
legislation, Medicare would have that power.
  This is particularly important because savings from negotiations are 
only going to come about as it relates to single-source drugs if this 
restriction is lifted. Without it, it seems to me we will not have 
negotiations for these single-source drugs where there isn't the kind 
of competition and marketplace forces. Many single-source drugs are 
particularly important for older people. We are talking about drugs 
such as Lipator, Zocor, and Prevacid. Lipator, for example, was at

[[Page 24652]]

the top of the list of drugs most often taken by older people, and all 
of the drugs I mentioned were in the top 20 in terms of drugs used by 
seniors.
  So when it comes to savings--and this was noted by the Congressional 
Budget Office in a letter to me and Senator Snowe last year--it seems 
to me that you especially need the power to negotiate when you are 
talking about single-source drugs. Given the importance of Lipator in 
the marketplace, prevalence in terms of the older population, I hope 
that as Senators look at this amendment, they will see the value of 
giving the Secretary the power to negotiate. It is particularly 
critical when it relates to single-source drugs.
  In my view, it is disappointing that the way the underlying 
legislation was drafted, the fundamental base bill is going to require 
more than a simple majority for us to prevail. Certainly, there are a 
lot of special interests in this town that do not want the Federal 
Government to be a smart shopper. The number of lobbyists that are 
working against this legislation, which I will tell you I think is just 
about the most offensive restriction I have seen in health policy, the 
number of lobbyists working against our bipartisan amendment is just 
staggering. And make no mistake about what the special interests who 
oppose our legislation want to do. They would rather soak the taxpayer 
and add to the budget deficit than to have to negotiate with the 
Federal Government like all other businesses. They are basically 
saying: Look, we are special. Don't require us to have to go out and 
bargain. We shouldn't have to do what everybody else does.
  Everybody else in America who has marketplace clout is allowed to use 
it. That is what markets are all about. But because of the power of the 
special interests, this restriction prohibits Medicare from using the 
kind of marketplace forces that everybody else uses, and it is not 
right.
  I am sure that seniors and their families across the country are 
going to be especially concerned about the fact that this legislation 
is going to increase their Part B premiums. But it seems to me that at 
a time when their part B premiums are going to go up, when they are 
going to have to pay extra costs out of their pocket for copays and 
deductibles and other out-of-pocket expenses, that alone would be a 
reason why we would look to give Medicare more bargaining power to hold 
down the cost of this program.
  Seniors are going to have less in their pocket to pay for 
prescription drugs and to sign up for this program. But the legislation 
was carefully written to make it tough on us and to increase the number 
of Senators we would have to have to pass this legislation. We are 
going to need more than a simple majority, and I think it is 
particularly unfortunate that at a time when seniors are going to see 
their Part B premiums go up, that we are not going to give them this 
opportunity to seek some real savings in what they have to pay for 
prescription medicine.
  I hope that Senators are going to be supportive of this legislation. 
I am sure when a Senator goes home and discusses prescription drugs, 
one of the first things that folks at home are going to ask is: How are 
you going to keep the cost down? What are you doing, Senator, to hold 
down the cost of medicine? The private sector is doing it, other 
Government programs are doing it; what are you doing, Senator, to hold 
down the cost of medicine?
  Tomorrow, the bipartisan group of Senators I mentioned--Senator Snowe 
leading our effort, myself, Senator McCain, Senator Stabenow, and 
others--will be saying: Look, we have something that is going to 
provide an opportunity for the Federal Government to be a smart 
shopper, to use its marketplace clout, and to hold down the cost of 
medicine when seniors are seeing an increase in their out-of-pocket 
expenses.
  The Congressional Budget Office estimates that there is going to be 
an 8.5-percent increase in the cost of this program, and the Government 
Accountability Office has shown that the prices for existing drugs are 
increasing two and three times the rate of inflation.
  This is a prescription for a program that does not work. That is a 
failure, and I will tell you I don't want to fail our country's 
seniors. I voted for the prescription drug law. I want to make it work. 
But I will tell you, I am very troubled about the prospect that if 
steps are not taken to hold down the costs of this program, there is a 
real prospect that a great deal of money will be spent on a relatively 
small number of people because we will not have the number of seniors 
signing up that we need.
  We need to make this program work. It is important. Prescription 
drugs are a lifeline. Affordable prescription drugs are essential for 
the Nation's older people. Too many of these drugs are simply priced 
out of the reach of older people.
  At the end of the day, the bipartisan legislation that Senator Snowe 
will offer with myself and our bipartisan group is simply common sense. 
Let's make Medicare a smart shopper by allowing bargaining power. Let's 
stop this idea of forsaking our ability to be a savvy shopper, and let 
us make sure that when Medicare goes out and tries to make sure that 
the costs of this program are held down, that it has the tools it needs 
in its cost-containment arsenal to get the job done right and to make 
sure that the costs of this program, for both taxpayers and seniors, 
are held down.
  Mr. President, I ask unanimous consent that Senators Feinstein, 
Dayton, Kohl, and Feingold be added as cosponsors of the legislation.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. WYDEN. Mr. President, this bipartisan measure will be voted on 
tomorrow. My sense is that because the day will be very hectic, having 
to vote on many amendments, that there will not be much time for 
explanation of this measure. Senator Snowe, Senator Stabenow, and 
others who spent so much time on this issue are going to want to speak. 
I will tell the Senate tonight this is one of the most important issues 
to come up in a long time. This program will be one of the biggest, if 
not the biggest, expansions of Federal entitlement policy we have ever 
seen. Why we wouldn't want to go about this right and make the 
Government a smart shopper, a savvy shopper, why we wouldn't want to do 
that is beyond me.
  What we have is an error of commission. What you saw is, in this 
legislation, very powerful special interests said we want a unique set 
of rules to apply to us: We shouldn't have to negotiate, even though 
everybody else negotiates with the Government and the private sector; 
give us a free ride; restrict, as a matter of law, the ability of the 
Secretary of Health and Human Services to make sure that seniors and 
taxpayers got a square deal.
  That is not right. This is about common sense. This is about the 
Federal Government being a smart shopper. This is about standing up for 
taxpayers and seniors.
  I would like to wrap up tonight by reading a bit from the AARP letter 
of endorsement for the legislation. Mr. President, I am going to read 
briefly from this letter, but I ask unanimous consent that the AARP 
letter endorsing the bipartisan measure to contain the cost of medicine 
be printed in the Record.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:


                                                         AARP,

                                                 November 1, 2005.
     The Hon. Ron Wyden,
     U.S. Senate,
     Washington, DC.
       Dear Senator Wyden: AARP supports your amendment to the 
     Senate fiscal year 2006 Budget Reconciliation bill to provide 
     for the ability of the Secretary of Health and Human Services 
     to participate in the negotiations between pharmaceutical 
     manufacturers and prescription drug plans under the Medicare 
     Part D program.
       Prescription drug prices continue to rise much faster than 
     the rate of inflation. AARP's latest Rx Watchdog report 
     released this week found that prices for nearly 200 of the 
     most commonly used brand name medications rose 6.1 percent 
     during the 12 month period from July 2004-June 2005. At the 
     same

[[Page 24653]]

     time, the rate of general inflation was 3 percent. These drug 
     price increases particularly hit older Americans, who use 
     prescription drugs more than any other segment of the U.S. 
     population.
       In two weeks, millions of older and disabled Americans will 
     have the opportunity to choose prescription drug coverage as 
     part of their 2006 Medicare benefit options. The new Medicare 
     prescription drug benefit will help millions of beneficiaries 
     afford needed medications. Improvements to the Medicare 
     Modernization Act are necessary to strengthen the benefit and 
     the Medicare program. We believe the first step is to keep 
     the drug benefit affordable for beneficiaries as well as 
     taxpayers.
       While the competitive structure already existing in the MMA 
     may help to bring prescription drug prices down, we believe 
     that giving the Secretary the authority to participate in 
     negotiations may also help to make prescription drugs more 
     affordable for Medicare beneficiaries.
       We look forward to working with you and your colleagues on 
     both sides of the aisle to ensure that the new Medicare Part 
     D benefit remains affordable over time. If you have any 
     further questions, please feel free to contact me, or have 
     your staff contact Anna Schwamlein of our Federal Affairs 
     staff at 202-434-3770.
           Sincerely,

                                              David P. Sloane,

                                            Sr. Managing Director,
                                Government Relations and Advocacy.

  Mr. WYDEN. Mr. President, the letter says, and I will read a bit of 
it:

       AARP supports your amendment to the Senate fiscal year 2006 
     Budget Reconciliation bill to provide for the ability of the 
     Secretary of Health and Human Services to participate in the 
     negotiations between pharmaceutical manufacturers and 
     prescription drug plans under the Medicare Part D program.
       Prescription drug prices continue to rise much faster than 
     the rate of inflation. AARP's latest Rx Watchdog report 
     released this week found that prices for nearly 200 of the 
     most commonly used brand name medications rose 6.1 percent 
     during the 12 month period from July 2004-June 2005. At the 
     same time, the rate of general inflation was 3 percent. These 
     drug price increases particularly hit older Americans, who 
     use prescription drugs more than any other segment of the 
     U.S. population.
       In two weeks, millions of older and disabled Americans will 
     have the opportunity to choose prescription drug coverage as 
     part of their 2006 Medicare benefit options. The new Medicare 
     prescription drug benefit will help millions of beneficiaries 
     afford needed medications. Improvements to the Medicare 
     Modernization Act are necessary to strengthen the benefit and 
     the Medicare program. We believe the first step is to keep 
     the drug benefit affordable for beneficiaries as well as 
     taxpayers.
       While the competitive structure already existing in the MMA 
     may help to bring prescription drug prices down, we believe 
     that giving the Secretary the authority to participate in 
     negotiations may also help to make prescription drugs more 
     affordable for Medicare beneficiaries.

  Mr. President, there is a bit more to the letter, but I think the 
Senate can get the general drift.
  The AARP, the organization that represents millions of older people, 
explicitly tonight endorses our bipartisan amendment. They have pointed 
out that the cost of these medications, the ones that are so important 
to older people, are going up double the rate of inflation.
  Let me emphasize that to the Senate. The drugs that seniors use, the 
prices are going up double the rate of inflation.
  So we need some serious tools to contain these costs. At a time when 
the Federal Government ought to be using more effective tools to hold 
down the costs of medicine, we have locked into law a restriction on 
the ability of the Government to do what smart shoppers in America do 
every single day, and that is to use their marketplace clout, bulk 
purchasing power, to get the best value for them and their families. It 
is time to lift this outrageous, offensive restriction that is now in 
Medicare law that prevents the Federal Government from being a smart 
shopper. It is now time to stand up for taxpayers and stand up for the 
older people in this country. The Senate will have a chance to do that 
when it votes on the bipartisan amendment tomorrow that has been filed 
tonight, will be offered tomorrow, by Senator Snowe, a bipartisan 
group. I hope my colleagues will support it resoundingly.
  I yield the floor.

                          ____________________