[Congressional Record (Bound Edition), Volume 153 (2007), Part 20]
[Senate]
[Pages 27953-27957]
[From the U.S. Government Publishing Office, www.gpo.gov]




          STATEMENTS ON INTRODUCED BILLS AND JOINT RESOLUTIONS

      By Mr. ROBERTS:
  S. 2218. A bill to provide for the award of a military service medal 
to members of the Armed Forces who were exposed to ionizing radiation 
as a result of participation in a test of atomic weapons; to the 
Committee on Armed Services.
  Mr. ROBERTS. Mr. President, I want to take a moment to honor those 
veterans who have served their Nation as quiet heroes. These quiet 
heroes, otherwise known as Atomic Veterans, were exposed unknowingly to 
ionizing radiation resulting from atomic testing conducted between 
1945-1963.
  Sacrifice in the service of your country can take many different 
forms. We see it everyday in our military efforts in Iraq and 
Afghanistan. We see it in the hospital beds of Walter Reed and VA 
hospitals nationwide. It is our duty as Americans, to honor the 
sacrifice made by our Nation's servicemembers.
  In the case of the Atomic Veterans, sacrifice was not necessarily 
something that happened on the battlefield, nor on the navel fleet. The 
price that many Atomic Veterans paid came due after their years of 
military service, when enduring mysterious cancers and other medical 
conditions related to their exposure to ionizing radiation. Their fight 
continues and the time is long overdue to recognize what, for some, has 
become the ultimate sacrifice.
  In recognition of the silent sacrifices made by these American 
heroes, I am introducing the Atomic Veterans Medal Act. It is the 
Senate companion to H.R. 3471, offered by my colleague, Congressman 
Todd Tiahrt, in the House. We owe a debt of gratitude to brave 
Americans who have worn the uniform. It is my hope that this measure 
helps to show the respect and honor these Atomic Veterans deserve.
                                 ______
                                 
      By Mr. DURBIN (for himself, Mr. Akaka, Ms. Stabenow, Mrs. Boxer, 
        and Mr. Obama):
  S. 2219: A bill to amend title XVIII of the Social Security Act to 
deliver a meaningful benefit and lower prescription drug prices under 
the Medicare Program; to the Committee on Finance.
  Mr. DURBIN. Mr. President, nearly 4 years have passed since Congress 
enacted the Medicare Modernization Act. Adding a prescription drug 
benefit to Medicare was long overdue, and many senior citizens and 
people with disabilities are relieved to finally have drug coverage.
  But the drug benefit was not structured like the rest of Medicare. 
For all other Medicare benefits, seniors can choose whether to receive 
benefits directly through Medicare or through a private insurance plan. 
The overwhelming majority choose the Medicare-run option for their 
hospital and physician coverage.
  No such choice is available for prescription drugs. Medicare 
beneficiaries must enroll in a private insurance plan to obtain drug 
coverage.
  A report released today by the Medicare Rights Center, with the 
support of Consumers Union, identifies the problems this decision to 
rely exclusively on private drug plans has created.
  Seniors are having trouble identifying which of the dozens of private 
drug plans works best for them. Anyone who has visited a senior center 
or spoken with an elderly relative knows that the complexity of the 
drug benefit has created much confusion.
  Each drug plan has its own premium, cost-sharing requirements, list 
of covered drugs, and pharmacy network. After you have identified the 
right drug plan, you have to go through the whole process again at the 
end of the year because your plan may have changed the drugs it covers 
or added new restrictions on how to access covered drugs.
  Medicare beneficiaries often cannot obtain the drugs they need 
because they are trapped in an appeals process that the Medicare Rights 
Center calls ``hopelessly dysfunctional.'' Drug plans often do not tell 
beneficiaries that they can appeal a drug plan's decision to deny 
coverage of a drug, even though they are required to do so. 
Beneficiaries who do appeal soon find that it is a long and difficult 
process.
  The complexity of the Medicare drug benefit also has made 
beneficiaries more vulnerable to aggressive and deceptive marketing 
practices. Some insurers try to steer seniors into more profitable 
Medicare Advantage plans. Some seniors have been signed up for Medicare 
Advantage plans without their knowledge, and, unfortunately, there have 
also been unscrupulous insurance agents who have misrepresented what 
benefits would be covered.
  Adding to the frustration with the program so far is accumulating 
evidence that private drug plans have not been effective negotiators, 
which means seniors end up paying more than they should.
  Drug prices are higher in private Medicare drug plans than drug 
prices available through the Veterans Administration, Medicaid, and 
other countries like Canada.
  A report by the House Oversight and Government Reform Committee 
estimated that taxpayers and Medicare beneficiaries would have saved 
almost $15 billion in 2007 if administrative expenses in the drug 
program were as low as the traditional government-run Medicare program 
and if drug prices were the same as Medicaid levels.
  It should come as no surprise then that the average beneficiary who 
stays in their current Medicare drug plan will see their monthly 
premiums increase 21 percent in 2008.
  Today, I am introducing the Medicare Prescription Drug Savings and 
Choice Act. The bill would create a Medicare-operated drug plan that 
would compete with private drug plans

[[Page 27954]]

and would require the Health and Human Services Secretary to negotiate 
with drug companies to lower drug prices.
  This is the kind of drug plan that Medicare beneficiaries are looking 
for. According to a survey by the Kaiser Family Foundation, \2/3\ of 
seniors want the option of getting drug coverage directly from 
Medicare, and over 80 percent favor allowing the government to 
negotiate with drug companies for lower prices.
  The Health and Human Services Secretary would have the tools to 
negotiate with drug companies, including the use of drug formulary. The 
best medical evidence would determine which drugs are covered in the 
formulary, and the formulary would be used to promote safety, 
appropriate use of drugs, and value.
  The bill would establish an appeals process that is efficient, 
imposes minimal administrative burdens, and ensures timely procurement 
of nonformulary drugs or nonpreferred drugs when medically necessary.
  The Secretary would also develop a system for paying pharmacies that 
would include the prompt payment of claims.
  Seniors want the ability to choose a Medicare-administered drug plan. 
Let us give them this option, just as they have this choice with every 
other benefit covered by Medicare. Many seniors will find direct 
Medicare coverage to be a simpler, more dependable, and less costly 
option than private drug plans.
  Mr. President, I ask unanimous consent that the text of the bill be 
printed in the Record.
  There being no objection, the text of the bill was ordered to be 
placed in the Record, as follows:

                                S. 2219

       Be it enacted by the Senate and House of Representatives of 
     the United States of America in Congress assembled,

     SECTION 1. SHORT TITLE.

       This Act may be cited as the ``Medicare Prescription Drug 
     Savings and Choice Act of 2007''.

     SEC. 2. ESTABLISHMENT OF MEDICARE OPERATED PRESCRIPTION DRUG 
                   PLAN OPTION.

       (a) In General.--Subpart 2 of part D of the Social Security 
     Act is amended by inserting after section 1860D-11 (42 U.S.C. 
     1395w-111) the following new section:


           ``MEDICARE OPERATED PRESCRIPTION DRUG PLAN OPTION

       ``Sec. 1860D-11A.  (a) In General.--Notwithstanding any 
     other provision of this part, for each year (beginning with 
     2009), in addition to any plans offered under section 1860D-
     11, the Secretary shall offer one or more medicare operated 
     prescription drug plans (as defined in subsection (c)) with a 
     service area that consists of the entire United States and 
     shall enter into negotiations in accordance with subsection 
     (b) with pharmaceutical manufacturers to reduce the purchase 
     cost of covered part D drugs for eligible part D individuals 
     who enroll in such a plan.
       ``(b) Negotiations.--Notwithstanding section 1860D-11(i), 
     for purposes of offering a medicare operated prescription 
     drug plan under this section, the Secretary shall negotiate 
     with pharmaceutical manufacturers with respect to the 
     purchase price of covered part D drugs in a Medicare operated 
     prescription drug plan and shall encourage the use of more 
     affordable therapeutic equivalents to the extent such 
     practices do not override medical necessity as determined by 
     the prescribing physician. To the extent practicable and 
     consistent with the previous sentence, the Secretary shall 
     implement strategies similar to those used by other Federal 
     purchasers of prescription drugs, and other strategies, 
     including the use of a formulary and formulary incentives in 
     subsection (e), to reduce the purchase cost of covered part D 
     drugs.
       ``(c) Medicare Operated Prescription Drug Plan Defined.--
     For purposes of this part, the term `medicare operated 
     prescription drug plan' means a prescription drug plan that 
     offers qualified prescription drug coverage and access to 
     negotiated prices described in section 1860D-2(a)(1)(A). Such 
     a plan may offer supplemental prescription drug coverage in 
     the same manner as other qualified prescription drug coverage 
     offered by other prescription drug plans.
       ``(d) Monthly Beneficiary Premium.--
       ``(1) Qualified prescription drug coverage.--The monthly 
     beneficiary premium for qualified prescription drug coverage 
     and access to negotiated prices described in section 1860D-
     2(a)(1)(A) to be charged under a medicare operated 
     prescription drug plan shall be uniform nationally. Such 
     premium for months in 2009 and each succeeding year shall be 
     based on the average monthly per capita actuarial cost of 
     offering the medicare operated prescription drug plan for the 
     year involved, including administrative expenses.
       ``(2) Supplemental prescription drug coverage.--Insofar as 
     a medicare operated prescription drug plan offers 
     supplemental prescription drug coverage, the Secretary may 
     adjust the amount of the premium charged under paragraph (1).
       ``(e) Use of a Formulary and Formulary Incentives.--
       ``(1) In general.--With respect to the operation of a 
     medicare operated prescription drug plan, the Secretary shall 
     establish and apply a formulary (and may include formulary 
     incentives described in paragraph (2)(C)(ii)) in accordance 
     with this subsection in order to--
       ``(A) increase patient safety;
       ``(B) increase appropriate use and reduce inappropriate use 
     of drugs; and
       ``(C) reward value.
       ``(2) Development of initial formulary.--
       ``(A) In general.--In selecting covered part D drugs for 
     inclusion in a formulary. the Secretary shall consider 
     clinical benefit and price.
       ``(B) Role of ahrq.--The Director of the Agency for 
     Healthcare Research and Quality shall be responsible for 
     assessing the clinical benefit of covered part D drugs and 
     making recommendations to the Secretary regarding which drugs 
     should be included in the formulary. In conducting such 
     assessments and making such recommendations, the Director 
     shall--
       ``(i) consider safety concerns including those identified 
     by the Federal Food and Drug Administration;
       ``(ii) use available data and evaluations, with priority 
     given to randomized controlled trials, to examine clinical 
     effectiveness, comparative effectiveness, safety, and 
     enhanced compliance with a drug regimen;
       ``(iii) use the same classes of drugs developed by United 
     States Pharmacopeia for this part;
       ``(iv) consider evaluations made by--

       ``(I) the Director under section 1013 of Medicare 
     Prescription Drug, Improvement, and Modernization Act of 
     2003;
       ``(II) other Federal entities, such as the Secretary of 
     Veterans Affairs; and
       ``(III) other private and public entities, such as the Drug 
     Effectiveness Review Project and Medicaid programs; and

       ``(v) recommend to the Secretary--

       ``(I) those drugs in a class that provide a greater 
     clinical benefit, including fewer safety concerns or less 
     risk of side-effects, than another drug in the same class 
     that should be included in the formulary;
       ``(II) those drugs in a class that provide less clinical 
     benefit, including greater safety concerns or a greater risk 
     of side-effects, than another drug in the same class that 
     should be excluded from the formulary; and
       ``(III) drugs in a class with same or similar clinical 
     benefit for which it would be appropriate for the Secretary 
     to competitively bid (or negotiate) for placement on the 
     formulary.

       ``(C) Consideration of ahrq recommendations.--
       ``(i) In general.--The Secretary, after taking into 
     consideration the recommendations under subparagraph (B)(v), 
     shall establish a formulary, and formulary incentives, to 
     encourage use of covered part D drugs that--

       ``(I) have a lower cost and provide a greater clinical 
     benefit than other drugs;
       ``(II) have a lower cost than other drugs with same or 
     similar clinical benefit; and
       ``(III) drugs that have the same cost but provide greater 
     clinical benefit than other drugs.

       ``(ii) Formulary incentives.--The formulary incentives 
     under clause (i) may be in the form of one or more of the 
     following:

       ``(I) Tiered copayments.
       ``(II) Reference pricing.
       ``(III) Prior authorization.
       ``(IV) Step therapy.
       ``(V) Medication therapy management.
       ``(VI) Generic drug substitution.

       ``(iii) Flexibility.--In applying such formulary incentives 
     the Secretary may decide not to impose any cost-sharing for a 
     covered part D drug for which--

       ``(I) the elimination of cost sharing would be expected to 
     increase compliance with a drug regimen; and
       ``(II) compliance would be expected to produce savings 
     under part A or B or both.

       ``(3) Limitations on formulary.--In any formulary 
     established under this subsection, the formulary may not be 
     changed during a year, except--
       ``(A) to add a generic version of a covered part D drug 
     that entered the market;
       ``(B) to remove such a drug for which a safety problem is 
     found; and
       ``(C) to add a drug that the Secretary identifies as a drug 
     which treats a condition for which there has not previously 
     been a treatment option or for which a clear and significant 
     benefit has been demonstrated over other covered part D 
     drugs.
       ``(4) Adding drugs to the initial formulary.--
       ``(A) Use of advisory committee.--The Secretary shall 
     establish and appoint an advisory committee (in this 
     paragraph referred to as the `advisory committee')--
       ``(i) to review petitions from drug manufacturers, health 
     care provider organizations,

[[Page 27955]]

     patient groups, and other entities for inclusion of a drug 
     in, or other changes to, such formulary; and
       ``(ii) to recommend any changes to the formulary 
     established under this subsection.
       ``(B) Composition.--The advisory committee shall be 
     composed of 9 members and shall include representatives of 
     physicians, pharmacists, and consumers and others with 
     expertise in evaluating prescription drugs. The Secretary 
     shall select members based on their knowledge of 
     pharmaceuticals and the Medicare population. Members shall be 
     deemed to be special Government employees for purposes of 
     applying the conflict of interest provisions under section 
     208 of title 18, United States Code, and no waiver of such 
     provisions for such a member shall be permitted.
       ``(C) Consultation.--The advisory committee shall consult, 
     as necessary, with physicians who are specialists in treating 
     the disease for which a drug is being considered.
       ``(D) Request for studies.--The advisory committee may 
     request the Agency for Healthcare Research and Quality or an 
     academic or research institution to study and make a report 
     on a petition described in subparagraph (A)(ii) in order to 
     assess--
       ``(i) clinical effectiveness;
       ``(ii) comparative effectiveness;
       ``(iii) safety; and
       ``(iv) enhanced compliance with a drug regimen.
       ``(E) Recommendations.--The advisory committee shall make 
     recommendations to the Secretary regarding--
       ``(i) whether a covered part D drug is found to provide a 
     greater clinical benefit, including fewer safety concerns or 
     less risk of side-effects, than another drug in the same 
     class that is currently included in the formulary and should 
     be included in the formulary;
       ``(ii) whether a covered part D drug is found to provide 
     less clinical benefit, including greater safety concerns or a 
     greater risk of side-effects, than another drug in the same 
     class that is currently included in the formulary and should 
     not be included in the formulary; and
       ``(iii) whether a covered part D drug has the same or 
     similar clinical benefit to a drug in the same class that is 
     currently included in the formulary and whether the drug 
     should be included in the formulary.
       ``(F) Limitations on review of manufacturer petitions.--The 
     advisory committee shall not review a petition of a drug 
     manufacturer under subparagraph (A)(ii) with respect to a 
     covered part D drug unless the petition is accompanied by the 
     following:
       ``(i) Raw data from clinical trials on the safety and 
     effectiveness of the drug.
       ``(ii) Any data from clinical trials conducted using active 
     controls on the drug or drugs that are the current standard 
     of care.
       ``(iii) Any available data on comparative effectiveness of 
     the drug.
       ``(iv) Any other information the Secretary requires for the 
     advisory committee to complete its review.
       ``(G) Response to recommendations.--The Secretary shall 
     review the recommendations of the advisory committee and if 
     the Secretary accepts such recommendations the Secretary 
     shall modify the formulary established under this subsection 
     accordingly. Nothing in this section shall preclude the 
     Secretary from adding to the formulary a drug for which the 
     Director of the Agency for Healthcare Research and Quality or 
     the advisory committee has not made a recommendation.
       ``(H) Notice of changes.--The Secretary shall provide 
     timely notice to beneficiaries and health professionals about 
     changes to the formulary or formulary incentives.
       ``(f) Informing Beneficiaries.--The Secretary shall take 
     steps to inform beneficiaries about the availability of a 
     Medicare operated drug plan or plans including providing 
     information in the annual handbook distributed to all 
     beneficiaries and adding information to the official public 
     Medicare website related to prescription drug coverage 
     available through this part.
       ``(g) Application of All Other Requirements for 
     Prescription Drug Plans.--Except as specifically provided in 
     this section, any Medicare operated drug plan shall meet the 
     same requirements as apply to any other prescription drug 
     plan, including the requirements of section 1860D-4(b)(1) 
     relating to assuring pharmacy access).''.
       (b) Conforming Amendments.--
       (1) Section 1860D-3(a) of the Social Security Act (42 
     U.S.C. 1395w-103(a)) is amended by adding at the end the 
     following new paragraph:
       ``(4) Availability of the medicare operated prescription 
     drug plan.--A medicare operated prescription drug plan (as 
     defined in section 1860D-11A(c)) shall be offered nationally 
     in accordance with section 1860D-11A.''.
       (2)(A) Section 1860D-3 of the Social Security Act (42 
     U.S.C. 1395w-103) is amended by adding at the end the 
     following new subsection:
       ``(c) Provisions Only Applicable in 2006, 2007, and 2008.--
     The provisions of this section shall only apply with respect 
     to 2006, 2007, and 2008.''.
       (B) Section 1860D-11(g) of such Act (42 U.S.C. 1395w-
     111(g)) is amended by adding at the end the following new 
     paragraph:
       ``(8) No authority for fallback plans after 2008.--A 
     fallback prescription drug plan shall not be available after 
     December 31, 2008.''.
       (3) Section 1860D-13(c)(3) of such Act (42 U.S.C. 1395w-
     113(c)(3)) is amended--
       (A) in the heading, by inserting ``and medicare operated 
     prescription drug plans'' after ``Fallback plans''; and
       (B) by inserting ``or a medicare operated prescription drug 
     plan'' after ``a fallback prescription drug plan''.
       (4) Section 1860D-16(b)(1) of such Act (42 U.S.C.1395w-
     116(b)(1)) is amended--
       (A) in subparagraph (C), by striking ``and'' after the 
     semicolon at the end;
       (B) in subparagraph (D), by striking the period at the end 
     and inserting ``; and''; and
       (C) by adding at the end the following new subparagraph:
       ``(E) payments for expenses incurred with respect to the 
     operation of medicare operated prescription drug plans under 
     section 1860D-11A.''.
       (5) Section 1860D-41(a) of such Act (42 U.S.C. 1395w-
     151(a)) is amended by adding at the end the following new 
     paragraph:
       ``(19) Medicare operated prescription drug plan.--The term 
     `medicare operated prescription drug plan' has the meaning 
     given such term in section 1860D-11A(c).''.
       (c) Effective Date.--The amendments made by this section 
     shall take effect as if included in the enactment of section 
     101 of the Medicare Prescription Drug, Improvement, and 
     Modernization Act of 2003.

     SEC. 3. IMPROVED APPEALS PROCESS UNDER THE MEDICARE OPERATED 
                   PRESCRIPTION DRUG PLAN.

       Section 1860D-4(h) of the Social Security Act (42 U.S.C. 
     1305w-104(h)) is amended by adding at the end the following 
     new paragraph:
       ``(h) Appeals Process for Medicare Operated Prescription 
     Drug Plan.--
       ``(1) In general.--The Secretary shall develop a well-
     defined process for appeals for denials of benefits under 
     this part under the medicare operated prescription drug plan. 
     Such process shall be efficient, impose minimal 
     administrative burdens, and ensure the timely procurement of 
     non-formulary drugs or exemption from formulary incentives 
     when medically necessary. Medical necessity shall be based on 
     professional medical judgment, the medical condition of the 
     beneficiary, and other medical evidence. Such appeals process 
     shall include--
       ``(A) an initial review and determination made by the 
     Secretary; and
       ``(B) for appeals denied during the initial review and 
     determination, the option of an external review and 
     determination by an independent entity selected by the 
     Secretary.
       ``(2) Consultation in development of process.--In 
     developing the appeals process under paragraph (1), the 
     Secretary shall consult with consumer and patient groups, as 
     well as other key stakeholders to ensure the goals described 
     in paragraph (1) are achieved.''.

     SEC. 4. PHARMACY PAYMENT UNDER THE MEDICARE OPERATED 
                   PRESCRIPTION DRUG PLAN.

       Section 1860D-12(b) of the Social Security Act (42 U.S.C. 
     1395w-112 (b)) is amended by adding at the end the following 
     new paragraph:
       ``(4) Pharmacy payment under the medicare operated 
     prescription drug plan.--
       ``(A) In general.--Under the medicare operated prescription 
     drug plan, the Secretary shall develop a system for payment 
     to pharmacies. Such a system shall include a requirement that 
     the plan shall issue, mail, or otherwise transmit payment for 
     all clean claims submitted under this part within the 
     applicable number of calendar days after the date on which 
     the claim is received.
       ``(B) Definitions.--In this paragraph:
       ``(i) Clean claim.--The term `clean claim' means a claim, 
     with respect to a covered part D drug, that has no apparent 
     defect or impropriety (including any lack of any required 
     substantiating documentation) or particular circumstance 
     requiring special treatment that prevents timely payment from 
     being made on the claim under this part.
       ``(ii) Applicable number of calendar days.--The term 
     `applicable number of calendar days' means--

       ``(I) with respect to claims submitted electronically, 14 
     calendar days; and
       ``(II) with respect to claims submitted otherwise, 30 
     calendar days.

       ``(C) Procedures involving claims.--
       ``(i) Claims deemed to be clean claims.--

       ``(I) In general.--A claim for a covered part D drug shall 
     be deemed to be a clean claim for purposes of this paragraph 
     if the Secretary does not provide a notification of 
     deficiency to the claimant by the 10th day that begins after 
     the date on which the claim is submitted.
       ``(II) Notification of deficiency.--For purposes of 
     subclause (I), the term `notification of deficiency' means a 
     notification that specifies all defects or improprieties in 
     the claim involved and that lists all additional information 
     or documents necessary for the proper processing and payment 
     of the claim.

       ``(ii) Payment of clean portions of claims.--The Secretary 
     shall, as appropriate, pay any portion of a claim for a 
     covered part D drug under the medicare operated prescription 
     drug plan that would be a clean claim

[[Page 27956]]

     but for a defect or impropriety in a separate portion of the 
     claim in accordance with subparagraph (A).
       ``(iii) Obligation to pay.--A claim for a covered part D 
     drug submitted to the Secretary that is not paid or contested 
     by the provider within the applicable number of calendar days 
     (as defined in subparagraph (B)) shall be deemed to be a 
     clean claim and shall be paid by the Secretary in accordance 
     with subparagraph (A).
       ``(iv) Date of payment of claim.--Payment of a clean claim 
     under subparagraph (A) is considered to have been made on the 
     date on which full payment is received by the provider.
       ``(D) Electronic transfer of funds.--The Secretary shall 
     pay all clean claims submitted electronically by an 
     electronic funds transfer mechanism.''.
                                 ______
                                 
      By Mr. AKAKA (for himself, Mr. Inouye, and Mr. Martinez):
  S. 2220. A bill to amend the Outdoor Recreation Act of 1963 to 
authorize certain appropriations; to the Committee on Energy and 
Natural Resources.
  Mr. AKAKA. Mr. President, today I am introducing legislation that 
will amend the Outdoor Recreation Act of 1963, to further enhance 
education, instruction and recreation opportunities available in our 
Nation's tropical botanical gardens. I wish to also thank my 
colleagues, Senators Daniel Inouye, Mel Martinez and Bill Nelson, for 
joining me in sponsoring this measure.
  Studies have indicated that throughout the world, our plants and 
their habitats are quickly disappearing. With 90 percent of these 
species existing in tropical areas, it is imperative that we continue 
to strive for a greater understanding of how we can preserve these 
natural resources.
  The legislation that I am introducing today, the Outdoor Recreation 
Act of 1963 Amendments Act, will authorize $1 million for the National 
Botanical Gardens in fiscal year 2009, and up to $500,000 each fiscal 
year thereafter. These funds are to be matched by State and local 
governments as well as private individuals.
  Since Congress chartered the National Tropical Botanical Gardens in 
1964, the gardens have not only thrived and flourished, but have 
provided valuable research. This research is vital to enriching our 
lives through not only perpetuating the survival of ecosystems, but 
preserving the cultural knowledge of these tropical regions.
  As we, and the rest of the world, continue to develop rural areas, we 
slowly deplete our natural resources and place our Nation's tropical 
plant bio-diversity at risk. It is our responsibility to ensure that 
measures are in place that will preserve our finite natural resources, 
or we may find ourselves without the basics for survival.
  These gardens serve as safe havens for endangered tropical plants 
where scientists strive to understand the evolution, structure 
relationships and qualities of these plants for the future benefit of 
all Americans. The gardens also serve as a valuable educational tool, 
where students of all ages go to learn about environmental stewardship 
and horticultural practices, and discover that science can be fun. The 
collections at these gardens provide valuable information that 
conservationists and others utilize to study and determine how to 
protect these resources by halting further degradation of habitats so 
that at-risk species will have a better chance of surviving in the 
future.
  I urge my colleagues to support this important legislation in order 
to ensure that these gardens continue to not only thrive for 
generations to come, but ensure that these resources will be preserved.
                                 ______
                                 
      By Mr. GRASSLEY (for himself and Mr. Specter):
  S. 2221. A bill to amend title XVIII of the Social Security Act to 
provide for the reporting of sales price data for implantable medical 
devices; to the Committee on Finance.
  Mr. GRASSLEY. Mr. President, I am pleased to introduce today with 
Senator Specter the Transparency in Medical Device Pricing Act of 2007.
  As we all know, both parties to a transaction need information in 
order for the free market to properly work. If only one party has 
information, the market does not properly function because you have a 
one-sided negotiation. The purpose of this legislation is to bring 
transparency to medical device pricing so that there will be sufficient 
information available for market forces to truly work.
  In the Medicare program, most hospitals receive a single payment for 
all the health care goods and services provided during a beneficiary's 
stay. This payment structure is designed to give hospitals incentives 
to provide efficient, effective, and economical care. Why? Because when 
a hospital lowers its costs, more of the Medicare payment can go toward 
the hospital's bottom line.
  Hospitals normally have many resources like consultants or reference 
materials to help them when they negotiate prices for things like 
drugs, nursing care, or hospital gowns. Unfortunately, this is not the 
case with implantable medical devices like pacemakers, stents, and 
artificial hips and knees.
  Hospitals have no way of knowing what a fair market price for a 
medical device is, because in this one industry there is a veil of 
secrecy over pricing information. In fact, manufacturers typically 
require hospitals to agree to secrecy or gag clauses in their 
contracts. The device makers actually prohibit hospitals from 
disclosing the price of a medical device to others. So hospitals have 
no idea of what is a fair price. Instead they must engage in one-sided 
negotiations with medical device manufacturers.
  We all know that there must be enough transparency for market forces 
to work. The free market, after all, thrives on complete information 
and open competition--not on gag rules and secrecy clauses.
  As a farmer, when I go out and buy a tractor, I first go out and talk 
to a number of people to help me figure out what is a fair price. 
Having this information puts me on equal footing with the dealer when 
we negotiate the price. After all, I don't want to be taken to the 
cleaners.
  Today, there is no level playing field when hospitals negotiate with 
device manufacturers. It shows. This is a major reason why many 
hospitals pay absurdly more than others for the same medical device. 
The inflated prices many hospitals pay have implications for the health 
care system on multiple levels.
  First, higher medical device costs take up more of the Medicare 
payment. That means hospitals have less to spend on other crucial 
components of care such as staff. And hospitals have less of the 
Medicare payment to devote toward their bottom line. So they have less 
money for activities to improve hospital quality and safety. They have 
less money to spend on health information technology systems. Most 
importantly, they have less money to keep their doors open and provide 
care to Medicare beneficiaries. In rural areas in my state where 
hospitals are barely squeaking by, this is a problem.
  Also, I want to point out how hospitals paying more than the fair 
market price for medical devices adds to skyrocketing entitlement 
spending. Medicare hospital payments are updated every year. The update 
takes into account the increased cost of goods and services used to 
provide care to beneficiaries. Let us say medical device prices are 
higher than they should be. As a result, Medicare hospital payment 
updates and Medicare spending will rise faster than they should.
  Also, let us remember that there are cost-sharing requirements for 
certain hospital services. And so Medicare beneficiaries will be paying 
more out-of-pocket than they should.
  All this adds up to one thing: a need for greater transparency in 
medical device pricing. My good friend and colleague, Senator Specter, 
and I have developed a way to provide greater transparency.
  The Transparency in Medical Device Pricing Act of 2007 would bring 
this needed transparency to medical device pricing by building on 
current initiatives at the Department of Health and Human Services, 
HHS. Under the act, here are some conditions device manufacturers would 
have to receive direct or indirect payments under Medicare, Medicaid, 
or SCHIP. Every quarter they would have to submit to the HHS Secretary 
data on average and median

[[Page 27957]]

sales prices for all medical devices that are implanted during 
inpatient and outpatient procedures. Manufacturers would be subject to 
civil money penalties from $10,000 to $100,000 for failure to report or 
misrepresentations of price data.
  Collecting such data is not new to HHS. The Secretary has been 
collecting average sales price data for drugs covered under Part B of 
the Medicare program for a number of years now.
  The Secretary would also be required to make the data available to 
the public on the website of the Centers for Medicare & Medicaid 
Services, CMS. CMS would have to update the website on a quarterly 
basis.
  Again, this is nothing new at HHS. It has been promoting transparency 
in Medicare for quite some time. The Secretary already publicly reports 
quality and price data of various Medicare providers. This is so 
beneficiaries can use these resources when selecting a provider.
  Publicly reporting implantable medical device pricing would help 
hospitals negotiate fair prices. For once, they would have a resource 
to consult so negotiations would be fairer.
  Mr. President, let me be clear. I fully support the medical device 
industry making a profit. I just think it should not be at the expense 
of hospitals, beneficiaries and the American taxpayer paying much more 
than they should. We must let the market work, and markets depend on 
information.
  The Transparency in Medical Device Pricing Act of 2007 would go a 
long way toward ensuring that free market forces actually work. The act 
would enable hospitals to obtain medical devices at fair prices.
  Mr. SPECTER. Mr. President, with Senator Grassley, I introduce a bill 
that will help control Medicare spending and will increase transparency 
in our health care system. Medicare spending is a huge component of the 
Federal budget. In 2006, Medicare benefit payments totaled $374 billion 
and accounted for 12 percent of the Federal budget.
  Over the past several months I have received many letters from 
hospitals, consumer groups, employers, health and welfare funds, and 
health care journalists about the secrecy that the medical device 
industry is trying to impose around pricing for implantable medical 
devices, pacemakers, hip and knee replacements, which hospitals 
purchase. Hospitals are being told they can't share pricing information 
with any ``third parties,'' that would include patients, physicians, 
auditors, and consultants. The hospitals are not the ultimate payers. 
The payers are patients and those who provide health insurance 
coverage, which includes small businesses, large employers, and local, 
State, and Federal Government programs. But the hospitals are the ones 
who have the role of negotiating fair pricing on behalf of the patients 
and other payers.
  A New York hospital stated in a letter to me that many hospitals, 
patients, communities and Federal agencies are ``prevented from 
participating in an open and fair marketplace--culminating in inflated 
pricing and less than optimal cost effective health care.'' This 
hospital said that it has an annual health care supplies spend of 
approximately $300 million, and although the implantable items such as 
cardiac pacemakers and orthopedic implants represent only 3 percent of 
the total items the hospital buys, the expenditures are close to 40 
percent of the total spend. Moreover, these devices are characterized 
by annual cost increases of from 8 percent to 15 percent. Since 
national sales of implant
able devices are approximately $65 billion annually, with an expected 
growth in utilization of close to 20 percent, the potential of adding 8 
to 15 percent annual price increases to the expenditures clearly 
demands attention.
  A smaller health system in Jackson, MS, reports savings in 2006 of 
more than $10 million because it was able to get detailed objective and 
measurable information that neutralized the arguments from the vendors 
who were telling them that they were getting the best price. The 
National Partnership for Women and Families told me that consumers can 
learn more about the quality and price of a car than they can about 
these medical devices that are implanted in the body. The Pacific 
Business Group on Health, a collection of 50 of the Nation's largest 
purchasers of health care who spend billions of dollars annually to 
provide health care coverage to more than 3 million employees, retirees 
and dependents, also wrote to me that the critical strategy for 
improving the quality of our Nation's health care system is increasing 
its transparency.
  The Transparency in Medical Device Pricing Act of 2007 would require 
medical device manufacturers, as a condition of receiving direct or 
indirect payments under Medicare, Medicaid, and SCHIP, to submit to the 
Secretary of Health and Human Services, on a quarterly basis, data on 
average and median sales prices for all implantable medical devices 
used in inpatient and outpatient procedures. Manufacturers would be 
subject to civil monetary penalties from $10,000 to $100,000 for 
failure to report or for misrepresentation of price data. The data 
would be available to the public on the website of the centers for 
Medicare and Medicaid Services.
  Senator Grassley and I believe this bill will improve the overall 
quality and efficiency of our health care system and will help ensure 
that health care programs administered or sponsored by the Federal 
Government, in particular, promote quality and efficient delivery of 
health care through 1. the use of health information technology; 2. 
transparency regarding health care quality and price; and 3. better 
incentives for those involved in these programs--physicians, hospitals, 
and beneficiaries. By making important information available in a 
readily useable manner and in collaboration with similar initiatives in 
the private sector and nonfederal public sector, we can help control 
government spending on health care. The rising cost of health care and 
health insurance is a problem for consumers, small business owners, 
large employers and union health and welfare funds. This bill says that 
if you want to do business with the Federal Government, you have got to 
show us your prices.

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