[Pharm-policy] US debate on parallel import amendment
James Love
love@cptech.org
Tue, 08 Aug 2000 19:08:55 -0400
This is the full text of the US debate on the amendment to the
Agriculture approporiations bill that would authorize certain parallel
imports of medicines into the United States. The final vote was 74 to
21 in favor of the amendment. Jamie
[Congressional Record: July 19, 2000 (Senate)]
[Page S7193-S7216]
>From the Congressional Record Online via GPO Access
[wais.access.gpo.gov]
[DOCID:cr19jy00-126]
AGRICULTURE, RURAL DEVELOPMENT, FOOD AND DRUG ADMINISTRATION, AND
RELATED AGENCIES APPROPRIATIONS ACT, 2001--Continued
Amendment No. 3925
The PRESIDING OFFICER. The Senator from Vermont.
Mr. JEFFORDS. I thank Senators for their eloquent words about the
passing of Paul Coverdell. I see no one else seeking recognition for
that purpose, so at this time I move back to the bill. If there is
anything Paul Coverdell disliked, it was quorum calls and delaying the
process. We worked together on the education bill, and I know he was
proud when it moved expeditiously and the debate was lively.
In that spirit, I think we must return to the business before the
Senate.
Therefore, I call up amendment 3925.
The PRESIDING OFFICER. The clerk will report.
The legislative clerk read as follows:
The Senator from Vermont [Mr. Jeffords], for himself, Mr.
Wellstone, Mr. Dorgan, Ms. Snowe, Mr. Gorton, Mr. Johnson,
Mr. Levin, and Mr. Bryan, proposes an amendment numbered
3925.
Mr. JEFFORDS. Mr. President, I ask unanimous consent reading of the
amendment be dispensed with.
The PRESIDING OFFICER. Without objection, it is so ordered.
The amendment is as follows:
(Purpose: To amend the Federal Food, Drug, and Cosmetic Act to allow
importation of covered products)
At the end of title VII, add the following:
SEC. ____. AMENDMENT TO FEDERAL FOOD, DRUG, AND COSMETIC ACT.
(a) Short Title.--This section may be cited as the
``Medicine Equity and Drug Safety Act of 2000''.
(b) Findings.--Congress makes the following findings:
(1) The cost of prescription drugs for Americans continues
to rise at an alarming rate.
(2) Millions of Americans, including medicare beneficiaries
on fixed incomes, face a daily choice between purchasing
life-sustaining prescription drugs, or paying for other
necessities, such as food and housing.
(3) Many life-saving prescription drugs are available in
countries other than the United States at substantially lower
prices, even though such drugs were developed and are
approved for use by patients in the United States.
(4) Many Americans travel to other countries to purchase
prescription drugs because the medicines that they need are
unaffordable in the United States.
(5) Americans should be able to purchase medicines at
prices that are comparable to prices for such medicines in
other countries, but efforts to enable such purchases should
not endanger the gold standard for safety and effectiveness
that has been established and maintained in the United
States.
(c) Amendment.--Chapter VIII of the Federal Food, Drug, and
Cosmetic Act (21 U.S.C. 381 et seq.) is amended--
(1) in section 801(d)(1), by inserting ``and section 804''
after ``paragraph (2)''; and
(2) by adding at the end the following:
``SEC. 804. IMPORTATION OF COVERED PRODUCTS.
``(a) Regulations.--
``(1) In general.--Notwithstanding sections 301(d), 301(t),
and 801(a), the Secretary, after consultation with the United
States Trade Representative and the Commissioner of Customs,
shall promulgate regulations permitting importation into the
United States of covered products.
``(2) Limitation.--Regulations promulgated under paragraph
(1) shall--
``(A) require that safeguards are in place that provide a
reasonable assurance to the Secretary that each covered
product that is imported is safe and effective for its
intended use;
``(B) require that the pharmacist or wholesaler importing a
covered product complies with the provisions of subsection
(b); and
``(C) contain such additional safeguards as the Secretary
may specify in order to ensure the protection of the public
health of patients in the United States.
``(3) Records.--Regulations promulgated under paragraph (1)
shall require that records regarding such importation
described in subsection (b) be provided to and maintained by
the Secretary for a period of time determined to be necessary
by the Secretary.
``(b) Importation.--
``(1) In general.--The Secretary shall promulgate
regulations permitting a pharmacist or wholesaler to import
into the United States a covered product.
``(2) Regulations.--Regulations promulgated under paragraph
(1) shall require such pharmacist or wholesaler to provide
information and records to the Secretary, including--
``(A) the name and amount of the active ingredient of the
product and description of the dosage form;
``(B) the date that such product is shipped and the
quantity of such product that is shipped, points of origin
and destination for such product, the price paid for such
product, and the resale price for such product;
``(C) documentation from the foreign seller specifying the
original source of the product and the amount of each lot of
the product originally received;
``(D) the manufacturer's lot or control number of the
product imported;
``(E) the name, address, and telephone number of the
importer, including the professional license number of the
importer, if the importer is a pharmacist or pharmaceutical
wholesaler;
``(F) for a product that is--
``(i) coming from the first foreign recipient of the
product who received such product from the manufacturer--
``(I) documentation demonstrating that such product came
from such recipient and was received by such recipient from
such manufacturer;
``(II) documentation of the amount of each lot of the
product received by such recipient to demonstrate that the
amount being imported into the United States is not more than
the amount that was received by such recipient;
``(III) documentation that each lot of the initial imported
shipment was statistically sampled and tested for
authenticity and degradation by the importer or manufacturer
of such product;
``(IV) documentation demonstrating that a statistically
valid sample of all subsequent shipments from such recipient
was tested at an appropriate United States laboratory for
authenticity and degradation by the importer or manufacturer
of such product; and
[[Page S7194]]
``(V) certification from the importer or manufacturer of
such product that the product is approved for marketing in
the United States and meets all labeling requirements under
this Act; and
``(ii) not coming from the first foreign recipient of the
product, documentation that each lot in all shipments offered
for importation into the United States was statistically
sampled and tested for authenticity and degradation by the
importer or manufacturer of such product, and meets all
labeling requirements under this Act;
``(G) laboratory records, including complete data derived
from all tests necessary to assure that the product is in
compliance with established specifications and standards; and
``(H) any other information that the Secretary determines
is necessary to ensure the protection of the public health of
patients in the United States.
``(c) Testing.--Testing referred to in subparagraphs (F)
and (G) of subsection (b)(2) shall be done by the pharmacist
or wholesaler importing such product, or the manufacturer of
the product. If such tests are conducted by the pharmacist or
wholesaler, information needed to authenticate the product
being tested and confirm that the labeling of such product
complies with labeling requirements under this Act shall be
supplied by the manufacturer of such product to the
pharmacist or wholesaler, and as a condition of maintaining
approval by the Food and Drug Administration of the product,
such information shall be kept in strict confidence and used
only for purposes of testing under this Act.
``(d) Study and Report.--
``(1) Study.--The Secretary shall conduct, or contract with
an entity to conduct, a study on the imports permitted under
this section, taking into consideration the information
received under subsections (a) and (b). In conducting such
study, the Secretary or entity shall--
``(A) evaluate importers' compliance with regulations, and
the number of shipments, if any, permitted under this section
that have been determined to be counterfeit, misbranded, or
adulterated; and
``(B) consult with the United States Trade Representative
and United States Patent and Trademark Office to evaluate the
effect of importations permitted under this Act on trade and
patent rights under Federal law.
``(2) Report.--Not later than 5 years after the effective
date of final regulations issued pursuant to this section,
the Secretary shall prepare and submit to Congress a report
containing the study described in paragraph (1).
``(e) Construction.--Nothing in this section shall be
construed to limit the statutory, regulatory, or enforcement
authority of the Secretary relating to importation of covered
products, other than the importation described in subsections
(a) and (b).
``(f) Definitions.--In this section:
``(1) Covered product.--The term `covered product' means a
prescription drug under section 503(b)(1) that meets the
applicable requirements of section 505, and is approved by
the Food and Drug Administration and manufactured in a
facility identified in the approved application and is not
adulterated under section 501 or misbranded under section
502.
``(2) Pharmacist.--The term `pharmacist' means a person
licensed by a State to practice pharmacy in the United
States, including the dispensing and selling of prescription
drugs.
``(3) Wholesaler.--The term `wholesaler' means a person
licensed as a wholesaler or distributor of prescription drugs
in the United States.''.
Mr. JEFFORDS. Mr. President, I also ask unanimous consent that
Senator Bryan be added as a cosponsor to the amendment.
The PRESIDING OFFICER. Without objection, it is so ordered.
Mr. JEFFORDS. Mr. President, I will now discuss a problem we have
relative to the cost of prescription drugs.
I am joining several of my colleagues from both sides of the aisle in
offering an amendment that will take a giant step toward providing
access to affordable prescription drugs for Vermonters, and all
Americans.
Our amendment will allow pharmacists and wholesalers to import safe,
U.S.-made, FDA-approved lower-cost prescription drugs from other
countries. We maintain the gold standard of safety in this country, but
hope to rein in the platinum standard we have for prices.
Prescription drugs have revolutionized the treatment of certain
diseases, but they are only effective if patients have access to the
medicines that their doctors prescribe. The best medicines in the world
will not help a person who can not afford them.
Americans pay by far the highest prices in the world for prescription
drugs, and for many the price is just too high.
What's worse is that those Americans who can least afford it are the
ones paying the highest prices. Americans who don't have health
insurance that covers drugs are forced to pay the ``sticker price'' off
the pharmacist's shelf.
In short, the practice of price discrimination hits the uninsured and
low-income Medicare beneficiaries the hardest.
It is sad that during a time when the United States is experiencing
unprecedented economic growth, it is not uncommon to hear of patients,
like we heard in my committee's hearing yesterday, who cut pills in
half, or skip dosages in order to make prescriptions last longer,
because they can't afford the refill.
The question that we must ask is, can we put politics aside and work
in a bipartisan manner to deal with this national crisis? I say we
must. And I am hopeful that today we can.
This bipartisan amendment I am offering is based on legislation I
introduced, S. 2520, the Medicine Equity and Drug Safety Act, or the
MEDS Act. Joining me in introducing that legislation were Senators
Wellstone, Snowe, and Collins and joining as cosponsors are Senators
Dorgan and Gorton. The hearing I held yesterday allowed all of the
parties to fully examine and articulate their views on this
legislation.
Our bill, which we have revised and are offering as an amendment,
gives pharmacists and wholesalers the ability to negotiate more
favorable prices with manufacturers. They can do so because they will
have the ability to purchase in other countries--this is important--
where exactly the same drugs are sold for far less. These are areas
that have been approved by the FDA. There is no question about that
aspect.
The drug industry has argued that this amendment compromises safety.
As chairman of the Committee on Health, Education, Labor, and Pensions,
safety is my first concern. That is why these imports will be limited
to FDA-approved drugs that are made in the United States or FDA
inspected facilities. And that is why this amendment reflects weeks of
discussions with the people who enforce our drug safety laws.
The amendment before us is a revision of the MEDS Act based on input
from government experts who raised issues of public health and safety.
Specifically, I asked FDA for technical assistance on this bill, and
addressed each safety concern that the agency raised.
I also point out to my colleagues that this amendment specifically
authorizes FDA to incorporate any other safeguard that it believes is
necessary to ensure the protection of the public health of patients in
the United States.
This amendment is about free trade. Why should Americans pay the
highest prices in the world for prescription drugs? All this amendment
does is allow international competition to bring rational pricing
practices to the prescription drug industry. It introduces competition
which is the hallmark of our success in this Nation.
I point out this bipartisan amendment also drops a provision in our
original bill that would have allowed personal imports, which I would
have liked to retain because I think it is important.
We dropped the personal use provision in order to answer concerns
that some raised about safety. I was willing to compromise on that
point at this time in order to get a bill that raises no safety
concerns at all.
I want the record to clearly reflect that I still feel strongly that
Vermonters should not be in violation of federal law if they go a few
miles across the border into Canada to get deep discounts on
prescriptions. We do nothing in here to indicate they should not be
allowed to do so.
This amendment will provide equitable treatment of Americans,
particularly those who do not have insurance, or access to big
discounts for large purchases like HMOs. As I said before, this is not
the only solution. I strongly believe we need a prescription drug
benefit in the Medicare system for those people who are eligible for
Medicare. But it is a commonsense measure that we can enact now to ease
the burden of expensive prescription drugs on our people, for those on
the borders, and all Americans. I ask for the support of my colleagues.
I yield the floor.
The PRESIDING OFFICER. The Senator from Mississippi.
[[Page S7195]]
Amendment No. 3927 to Amendment No. 3925
Mr. COCHRAN. Mr. President, I send a second-degree amendment to the
desk.
The PRESIDING OFFICER. The clerk will report.
The legislative clerk read as follows:
The Senator from Mississippi [Mr. Cochran], for himself and
Mr. Kohl, proposes an amendment numbered 3927.
At the end of the amendment insert the following:
``(g) This section shall become effective only if the
Secretary of the Department of Health and Human Services
certifies to the Congress that the implementation of this
section will: (1) pose no risk to the public's health and
safety; and (2) result in a significant reduction in the cost
of covered products to the American consumer.''
Mr. COCHRAN. Mr. President, the purpose of this second-degree
amendment is to try to help ensure the result of the change in this
law, in the authority for importing drugs into the country or selling
drugs to American consumers from Canada, which I think this amendment
the Senator has offered is targeted to address, will not result in any
new dangers to the consuming public, and would require the Secretary to
certify that that would be the case for any new regulatory regime
implementing the amendment if it is adopted.
One problem we need to bring to the attention of the Senate in
connection with this amendment is the added cost that is going to
result from this, in terms of added appropriations for the Food and
Drug Administration. It is estimated by that agency that $92 million
would have to be appropriated to provide the funding necessary to
implement and carry out the obligations of that agency in connection
with supervising this amendment.
The distinguished Senator is chairman, as Senators know, of the
legislative committee that has jurisdiction over this overall subject
area in the law. I regret this is an issue being brought to the Senate
as an amendment to the Agriculture Department's appropriations bill. It
would be more appropriate, in my view, for the legislative committee
which the Senator chairs to deal with this, to report out legislation,
and in the usual way of managing changes in the law, have the Senate
address it on a freestanding bill. The body is put at a disadvantage to
try to understand all the nuances, the implications of the legislation,
what the practical results will be. It has become very controversial. I
think the Senator from North Dakota, in opening remarks as we brought
this legislation up yesterday or the day before, talked about the
advertising that was being run in the newspapers by the pharmaceutical
industry. I think that is on this subject. It is related to this
subject.
So there is a great deal of attention being focused on this highly
controversial issue. All the States along the northern tier that border
on Canada have a great interest in this. It has become a hot button
political subject for debate in senatorial campaigns and, I guess, all
the congressional elections and the Presidential campaign. So this is a
big political item here we are called upon to understand, to sort
through, and then to make sure we legislate in a fashion that serves
the public interest--not somebody's private political interest, not
somebody's private financial interest, but the broad public interests
of the United States. That is our responsibility.
So what I am seeking to do with this second-degree amendment is
ensure that is the result; that we are not putting in jeopardy, by
changing this law, if this survives the process here in the Senate and
conference with the House--we are not putting in jeopardy the well-
being of American consumers and we also prepare to add to the funding
requirements of the Food and Drug Administration to enable them to
carry out their obligations under the law.
With those words of explanation as to where I see this and how I see
this playing out, I am not going to prolong the debate.
Let me point out one other thing. Some might say this is legislation
on an appropriations bill; Why don't you just raise the issue in that
way? Make a point of order under rule XVI.
The point is the House has included language in its Agriculture
appropriations bill and this amendment, as it is drafted--as I am
advised by the Parliamentarian--is not subject to a rule XVI point of
order but, rather, it is germane and would not fall if a point of order
is made. That may be tested by somebody if they want to argue with the
Parliamentarian about it, but that is what my staff advises me.
With that information about this situation I am prepared to let
others talk about it. Let me say, before I yield the floor, just as a
matter of general information now that we are on the bill, Senator Kohl
is the cosponsor of this second-degree amendment. I have offered the
amendment with him.
Also, as we began consideration of the appropriations bill, he did
not have an opportunity to make his opening remarks. At some point this
afternoon, we will give him that opportunity or he can take that
opportunity when he gains recognition from the Chair.
I hope this will not be a long, drawn-out debate. It is not
necessary. We have heard a lot of speeches about this. We have had a
lot of information sent to our offices on this issue of reimportation
and selling drugs and pharmaceutical products across the borders,
importing from manufacturers, the rights of pharmacists--all the other
related issues. It is a serious matter. But we do not need to have a
long, drawn-out filibuster of it in my view. We need to vote on it. If
the votes are here to adopt this amendment, so be it. We will take it
to conference and try to resolve the issue in the way we always do,
give and take, trying to understand what is best for the country.
Also in connection with the broader picture of the bill itself, we do
not have a lot of troublesome issues in this bill, in my view. I have
not heard from Senators. We have asked Senators to let us know if they
have amendments, to bring them to the floor and offer them, and let's
dispose of them and complete action on this bill. I was heartened today
by conversation, as we were getting started, from the Senator from
Nevada, the assistant Democratic leader, Mr. Reid, who suggested we
could finish this bill today. He saw no reason why we could not. I see
no reason why we could not finish it today.
I hope as we proceed we will keep that goal in mind. Let's finish
this bill today. I hope we can have third reading at about 6 o'clock. I
do not see any reason why we cannot.
There are some Senators who want to offer amendments. We want to hear
them. We want to consider them and consider them fully and fairly, but
it should not take an unnecessarily long amount of time to do that. So
I encourage the Senate to act with dispatch, deliberation, but all
deliberate speed. That is a Supreme Court phrase that has been used
from time to time.
The PRESIDING OFFICER. The Senator from Vermont.
Mr. JEFFORDS. Mr. President, I respectfully disagree with my
distinguished chairman and also the ranking member on the amendment
they have proposed. This amendment is worded in such a way as to
prevent the proposal from ever taking effect because they know it will
be impossible, certainly so difficult as to be unworkable, to prove
prospectively that all savings will be passed on to the patients. There
is no way that can happen. This is just in there to clean this bill up.
I strongly oppose this amendment.
I yield the floor.
The PRESIDING OFFICER. The Senator from North Dakota.
Mr. DORGAN. Mr. President, I rise to support the legislation offered
by the Senator from Vermont. But before I speak on that let me just
mention to the Senator from Mississippi and the Senator from Wisconsin
who have brought this bill to the floor, I am a member of their
subcommittee on appropriations. I certainly respect the work they have
done. They do an outstanding job, they and their staffs, putting
together the Agriculture appropriations bill. It is not an easy bill to
construct and to bring to the floor.
One amendment that I will offer at a later time will deal with the
disaster now facing farmers who have flooded lands and especially those
farmers whose crops are burning up day after day in the deep South.
Last Friday morning, as we were taking a series of votes, I talked
with Senator Coverdell. He and I were prepared to offer an amendment to
assist farmers dealing with flooded lands in my part of the country and
drought-stricken lands in Georgia. Georgia is the hardest hit State
with drought
[[Page S7196]]
problems, and family farmers there are suffering substantially. Senator
Coverdell intended to join me in offering an amendment offering them
some emergency assistance. I will want to address this issue on this
legislation. I will certainly talk with the chairman and the ranking
member to do so in a way that relates to the needs of the Senate, but
especially in a way that meets the needs of those family farmers who,
through no fault of theirs but through natural disasters, have seen
their crops disappear and are suffering some very significant problems.
I will save further discussion of this problem for a later time in
this debate.
With regard to the amendment offered by the Senator from Vermont, I
strongly support this amendment. Several bills have been introduced in
Congress on this subject. I introduced a piece of similar legislation
along with Senator Wellstone and Senator Snowe. I am also pleased to
join as a cosponsor of the legislation authored by the Senator from
Vermont.
All of these bills relate to the same issue. That issue is very
important and one we should address. The reason it is being addressed
here and now is that the House of Representatives has already addressed
it on its Agriculture appropriations bill, and it is important that the
Senate also weigh in on this issue. The Senator from Vermont certainly
has a right, and is protected with respect to germaneness, to offer
this amendment to this bill.
Let me describe the issue before us in terms that people can better
understand, using a couple of different medicines as examples.
I ask unanimous consent that I be allowed to use these medicine
bottles in my presentation.
The PRESIDING OFFICER (Mr. Crapo). Without objection, it is so
ordered.
Mr. DORGAN. I have here bottles of 3 different prescription drugs
that are ranked among the top 20 in the United States in the number of
prescriptions filled and sales volume. All of these drugs,
incidentally, are approved by the U.S. Food and Drug Administration.
I have here the actual bottles for these medicines. This one happens
to be Zoloft, which is used to treat depression. The company that
produces these pills and puts them in different size bottles then sells
them all around the world. It is exactly the same medicine produced by
the same company, sold in different places. Buy it, for example, in
Emerson, Canada, and you will pay $1.28 for a pill. Buy it 5 miles
south of there in Pembina, ND, and you will not pay $1.28 for the same
pill. Instead you will pay $2.34. It is the same pill in the same
bottle, made by the same company in the same manufacturing plant. The
only thing different is the price. The pill costs $1.28 in Canada, and
$2.34 for an American consumer.
Or what about Zocor? Zocor is a very popular prescription drug. Pick
up any Newsweek or Time magazine and see the multipage ads for this
drug. I have here two bottles of Zocor made by the same company, with
the identical manufacturing process. One bottle is sent to Canada where
it costs $1.82 per tablet; the other is sent to a U.S. consumer who is
charged $3.82: $1.82 for someone living in Winnipeg, $3.82 for someone
living in Montpelier.
Norvasc is a prescription drug that is used to lower blood pressure.
The bottles are almost identical--again, both bottles are by the same
manufacturer, and contain the same pill. Norvasc costs the Canadian
consumer 90 cents. It costs the U.S. consumer $1.25 per pill.
Or to look at this price disparity another way, the cost of a 1-month
supply of Zocor--the same pill, by the same company, in the same
bottle--is $54 when it is sent to a Canadian. When it is sent to an
American, it costs $114.
Or Zoloft--again the same pill, by the same company, made in the same
manufacturing plant--costs the Canadian $38 for a 1-month supply; the
American pays $70.
Norvasc costs Canadians $27 for a one month supply and the same
quantity costs Americans $37. I can show you medicine where the price
inequity is 10 to 1.
The question our constituents in the States of Vermont, North Dakota,
Minnesota, and Washington ask is: How can this be justified? This is
the same product. If this is a global economy, why must I go to Canada
to try to buy a prescription drug that was manufactured in the United
States in the first place in order to buy it for half the price? That
is what Americans all across this country are asking.
The companies that produce these medicines are able to access all of
the ingredients they need to produce prescription drugs from all around
the world in order to get the lowest prices. If the pharmaceutical
manufacturers are able to benefit from the global economy, why then can
the consumer not also access that same drug made in a plant approved by
the FDA when it is being sold in Winnipeg for half the price?
What is the answer to that? Many of us believe American consumers
should be able to also benefit from the global economy. My colleague
from the State of Washington, Mr. Gorton, has sponsored his own
legislation to address this issue and he is also a cosponsor of this
amendment. All of us have to respond to our constituents.
This is not just a Canada-United States issue. Americans pay higher
prices than anywhere else in the world. How much more do we pay? If
Americans pay an average of $1 for a pharmaceutical product, that same
product has a much lower average cost in every other industrialized
nation. We pay $1; the Canadians pay 64 cents. We pay $1; the English
pay 65 cents. We pay $1; the Swedes pay 68 cents. We pay $1; the
Italians pay 51 cents. We are charged the highest prices for
prescription drugs of any country in the world. The American people ask
the question: Why?
Senior citizens are 12 percent of our population, but they consume
one-third of the prescription drugs in America. I come from a State
with a lot of senior citizens. They have reached the years of their
lives where, in most cases, they are no longer working and are living
on a fixed income. Last year, they saw, as all Americans did,
prescription drug spending in this country go up 16 percent in 1 year.
Part of that is price inflation, part is driven by increased
utilization. Nonetheless, older Americans saw a 16-percent increase in
prescription drug spending in this country in 1 year.
Those of us who have held hearings on this issue and who have heard
from senior citizens know what they say. They tell us they are forced
to go to the back of the grocery store first, where the pharmacy is, to
buy their prescription medicines because only then will they know how
much money they have left to pay for food. Only then will they know
whether they are going to get to eat after they have purchased their
prescription drugs.
This is an issue for all Americans, not just senior citizens, but it
is an especially acute problem for senior citizens.
In January on one cold, snowy day, I traveled with a group of North
Dakota senior citizens to Emerson, Canada.
First we visited the doctor's office--because it is required in
Canada--where the North Dakotans who wanted to buy prescription drugs
in the Canadian pharmacy showed the doctor their prescription from a
U.S. doctor, and the Canadian doctor wrote a prescription for them.
Then we went to a very small, one-room pharmacy just off the main
street of Emerson, Canada, a tiny little town of not more than 300 or
400 people. Emerson is 5 miles north of the North Dakota border.
I stood in that pharmacy and I watched the North Dakota senior
citizens purchase their prescription drugs, and I saw how much money
they were saving on the prescription drugs they were buying.
As is often the case, senior citizens will take 2, 3, 4, or 8
different prescription drugs. It is not at all unusual to see that.
I watched these North Dakotans compare what they were paying in the
United States to what they were paying at this little one-room pharmacy
in Emerson, Canada. It was staggering.
They asked me the question: Why do we have to come to Canada to do
this? Why can't our pharmacists come up here and access this same
supply of drugs and pass the savings along to us?
The answer is that there is a Federal law in this country that says
that only the manufacturer can import prescription drugs into the
United States.
The amendment we are considering, offered by the Senator from
Vermont,
[[Page S7197]]
proposes to change that. He does not propose to do so in any way that
would jeopardize the safety of medicines that are available in this
country. He does not propose to in any way suggest that we should not
maintain the chain of custody needed to assure a safe supply of
prescription drugs.
But he does propose that we amend that law and replace it with a
system that assures the safety of the medicine supply, while allowing
pharmacists and drug wholesalers to go to Canada and go to other
countries and access that same prescription drug, provided that it was
produced in a plant that was approved by the FDA. This amendment
assures not only the safety of the manufacturing process but also the
chain of custody of the supply. In this way we will allow U.S.
consumers the full flow and benefit of the global economy.
Why can't American pharmacists and drug wholesalers shop globally for
prescription drugs, provided it is the same pill, put in the same
bottle, manufactured by the same company in a plant that is approved by
the FDA?
The answer is that they ought to be able to do that. There is no
excuse any longer for preventing them from doing that.
Zocor, Prilosec, Zoloft, Vasotec, Norvasc, Cardizem--you can go right
on down the list of the medicines most frequently used by senior
citizens and compare what they cost here with what they cost in Canada
and Mexico. Then ask the question: Why? Why are we in America charged
so much more for the identical prescription drug?
The answer is simple: It is because the big drug companies can do it
here. The pharmaceutical industry charges what the market will bear in
the United States. The U.S. consumers are prevented from being a global
consumer.
Let me say this about the pharmaceutical industry. I want them to do
well. I support them on a range of things. I want them to be
profitable, and I want them to be able to do substantial research. I do
not wish them ill. I applaud them and thank them for the research they
do to create lifesaving, miracle drugs. They only do part of the
research, of course. A substantial part is also done through the
National Institutes of Health, through publicly funded research. And we
are dramatically increasing our investment in NIH.
But some will say to the Senator from Vermont: What you are doing
will dramatically reduce research and development by the drug
companies. These prices are what support research and development.
Hogwash. Nonsense. The fact is, a larger percentage of the research
and development is done by the drug companies in Europe than is done in
the United States. Let me say that again. More research and development
is done in Europe than in the United States. And that comes from the
pharmaceutical industry's own figures.
Take a look at the billions and billions of dollars the drug industry
spends on promotion and compare that to what they spend on research and
development.
In fact, if you pick up a weekly magazine, such as Newsweek, you will
see the multipage ads for prescription medicine. They are spending
billions of dollars on direct-to-consumer advertising. They are going
directly to the consumer and saying: We want you to go to your doctor
to demand that he or she write a prescription for this medication for
you.
That just started a few years ago. It is now rampant. Doctors will
tell you that patients come to their offices, saying: I read about this
medicine in an ad in Newsweek. I want you to prescribe that. That is
what is happening.
Billions of dollars are spent to try to induce consumers to demand
medicine that can only be given to them by a doctor who believes it is
necessary.
While all of this is going on, the Senator from Vermont offers a
piece of legislation that I fully support. If I were writing the
legislation offered by the Senator from Vermont, I would prefer that it
not leave out the provision that allows personal use importation. I
hope at some point we can allow for that.
But I just say this. I know that literally $60 or $70 million has
been spent by the pharmaceutical industry because it is scared stiff
that we are going to pass this legislation.
In fact, in the Washington Post the pharmaceutical industry has been
running a full-page ad for the last several days. I do not know what a
full-page ad costs in the Washington Post, but I know it is not cheap.
How many citizens, who support our bill, have the ability to go to the
Washington Post and buy a full-page ad?
This full-page ad is just totally bogus. It says: One of these pills
is a counterfeit. Can you guess which one? Congress is about to permit
wholesale importation of drugs from Mexico and Canada. The personal
health of American consumers is unquestionably at risk. Counterfeit
prescription drugs will inevitably make their way across our borders
and into our medicine cabinets. Counterfeit prescription drugs can
kill. Counterfeit prescription drugs have killed.
This is from the pharmaceutical industry, which wants to scare people
into believing the legislation that we are now debating is somehow bad
for our country's consumers. That is totally bogus. We are proposing an
amendment that assures the safety of the drug supply but finally
assures the American consumer that they can access drugs that are
priced reasonably.
If someone in another country is paying half the price or a third or
a tenth of the price being charged the American consumer for the same
drug that is produced in a manufacturing plant approved by the FDA, why
can't the American consumer have access to those drugs in a global
economy?
The answer is: They ought to be able to do it.
Mr. JOHNSON. Will the Senator yield for a question?
Mr. DORGAN. I am happy to yield for a question.
Mr. JOHNSON. I commend the Senator for his work and commend Senator
Jeffords for his work on this issue. In relation to the advertisement
in the Washington Post, I wonder if the Senator from North Dakota would
share with us the sponsor of that advertisement as it appears on the
ad?
Mr. DORGAN. Yes. The sponsor is Pharmaceutical Research and
Manufacturers of America. The drug industry obviously wants to keep
things as they are.
Let me just make one additional point. It is not my intention to have
the American people go to another country for their prescription drugs.
It is my intention to force the pharmaceutical industry to reprice
their drugs here in the United States. If our pharmacists and our drug
wholesalers are able to access the same drugs at a much lesser price in
Canada or England or elsewhere, and bring them back and sell them at a
savings to our consumers, it will force the industry to reprice their
drugs in this country.
That is my goal. It is not my goal to put people in minivans and send
them outside this country to access prescription drugs. I want
pressures brought through the global economy to equalize prescription
drug prices in this country vis-a-vis what they are being sold at in
other countries.
Mr. President, I yield the floor.
The PRESIDING OFFICER. The Senator from Washington.
Mr. GORTON. Mr. President, let's paint a picture, or set the stage,
for this debate.
Most of the research and development and manufacture of prescription
drugs goes on here in the United States, in a highly constructive
fashion. Drug companies, and their research and development staffs,
here in this country experiment and work, literally for years, to
develop new and effective prescription drugs.
They are magnificently successful in that quest. And at least one of
the reasons we are debating this issue today is that they are so
successful that every year the share of our health care dollar that
goes to prescription drugs increases because we now have conditions
that can be treated by prescriptions that previously required
hospitalization, if indeed they could be treated at all.
The process of taking an idea through its basic and applied research,
its testing and its development to licensing by the Food and Drug
Administration is long and arduous and is aimed both at safety and
effectiveness. During that period of time, these companies spend a
great deal of money with no return. It is clear, both to the proponents
and opponents of both the first- and second-degree amendments,
[[Page S7198]]
that these companies are entitled to recoup those long and large costs
of research and development. They are not only allowed, properly, to
recoup the costs of those drugs that are actually brought to market,
but the cost of all of the dead-end streets they run into with some of
this research and development. To that point, there is agreement.
We are also dealing with a business, as any other in the United
States, that spends a good deal of its time and effort in developing
new products. Even at the early stage, there are some factors that
favor the pharmaceutical industry because of its importance to the
United States. It, as other companies, is entitled to a research and
development tax credit, but it, unlike most other industries, also
benefits hugely from research conducted by the National Institutes of
Health, as the primary sponsor of this amendment well knows. So
approximately half of all of these research and development costs are
already underwritten by the taxpayers of the United States, either
through tax credits or through our direct appropriations to the
National Institutes of Health.
It is at this point that the wonderful line from ``Alice in
Wonderland'' comes to mind, and the situation becomes ``curiouser and
curiouser.'' At the point at which these pharmaceutical products have
been licensed, the actual manufacturing cost for that pill is,
generally speaking, not very high. And so much of the price structure
is to cover the research and development, the very large advertising
costs to which the Senator from North Dakota referred, other marketing
costs, the lobbying those companies do in the Congress, and a
reasonable and, I may say, in most cases generous profit. But these
U.S.-based, often U.S.-owned, pharmaceutical manufacturing companies
consistently charge their American customers--not the individual
patient in this case but the huge regional drugstore chains as well as
individual pharmacies--far higher prices than they charge for the
identical product overseas or across our northern and southern borders.
One would think in a normal market that prices would be
nondiscriminatory or, if anything, the manufacturers would be grateful
enough for the tremendous aid and assistance they receive from the
taxpayers of the United States perhaps to give at least a small price
break to American purchasers. But, no, as has been pointed out, they
charge Americans pretty close to twice as much as they charge anyone
else. These wholesale prices, obviously, are reflected in retail prices
for the drugs.
My experience in the State of Washington is very much similar to that
outlined both by the Senator from Vermont and the Senator from North
Dakota. We ran a little test; we went up to Canada, priced identical
drugs in the State of Washington and in British Columbia, and found a
62-percent difference. In other words, it was way less expensive to buy
them in Canada. So busloads of Americans go from Seattle and other
parts of the State of Washington across the border to buy drugs and
bring them back.
Why, one asks oneself, would American companies do this? Why would
they discriminate against Americans?
They say: There is a simple answer to that. The Canadian Government,
the Mexican Government, the Government of the United Kingdom, fix the
prices of drugs. They want their citizens to get these pharmaceutical
products less expensively than Americans do. So they, by government
fiat, set the prices. And so we sell them, the drugs, for a lower price
for a simple reason: We have already manufactured and sold lots of them
in the United States. And when you go from the ten-millionth pill to
the twenty-millionth pill, it doesn't cost you very much to manufacture
those new pills, so we can still make a profit, even though we are
selling them at half price in other countries.
Gee, isn't that unfair? Yes, I guess so, but that is the way the
world is.
Now, that particular argument that price-fixing countries do much
better for their consumers than a free market does in the United States
is really a two-edged sword. It is one heck of an argument for price
fixing in the United States. The junior Senator from Minnesota, a
couple weeks ago, put up a proposal that would do exactly that, fix the
price of drugs in the United States. This is a point at which I agree
with the drug companies. They say: You fix prices and you will dry up
research and development. I am not sure how far down we look for the
validity of that argument, given the great excess of advertising costs
over research and development costs, but let us assume that it is
totally and completely valid as an argument. Then under those
circumstances, we shouldn't be fixing prices here in the United States.
But that doesn't mean we should continue to allow Americans to suffer
the immense discrimination that goes on consistently year after year,
product after product in this country.
When I discovered the extent of this problem, basically out of a
cover story in Time magazine--I believe it was last November--it seemed
to me, as a former State attorney general who for an extended period of
time was in charge of consumer protection, fine, you just tell them by
law to stop discriminating. Don't charge Americans any more than you
are willing to charge Canadians or Italians or citizens of the United
Kingdom.
That is price fixing, the companies say. That is a terrible thing.
Well, it is not price fixing to say you don't discriminate. If you
can't make a profit at a given price, you don't have to sell the drug
in Canada or in any other place.
But they have a lot of money to spend trying to sell that bill of
goods to people. So we discovered--again, I think this was as a result
of my history as a State attorney general--that we have a statute in
the United States that prevents price discrimination. It is called the
Robinson-Patman Act. It was passed in 1936. It was a sweeping
antidiscrimination bill. It prevents price discrimination in the sale
of any commodity in interstate commerce, with certain exceptions for
actual cost savings from quantity sales and the like. So we said, fine,
and the bill we introduced just said interstate and foreign commerce,
with respect to prescription drugs.
It is interesting; the drug companies paid no attention to that
distinction at all, and they still use these millions of dollars to say
it is price fixing. Well, if so, then we have fixed the price of every
commodity in the United States for 64 years, which I think surprises
most people who believe in and have benefited from the truly free
economy in the United States.
The argument that this is price fixing is fraudulent--purely and
totally fraudulent. But I am not wedded or married to one solution to
this problem of excessive prices imposed on American consumers for
their prescription drugs because while we ban importation by law--by
custom at least--we have permitted for an extended period of time
American citizens to cross our borders--northern or southern or, for
that matter, across the ocean to Europe--and to return to the United
States with a 3-month supply of any prescription drug they are using,
without being bothered by any of the governmental agencies of the
United States. Both of my other Senate colleagues in this regard have
pointed out that that happens in their State, and I have already
pointed out that it happens in mine.
So the Senator from Vermont and the Senator from North Dakota came up
with the idea that if an individual can do it for himself or herself,
why not let our pharmacists do it and bring these prescription drugs
back to the United States, which are often manufactured in the United
States and then shipped north or south of the border--bring them back
and offer them for sale, presumably at a lower price.
I am sure the Senator from Vermont doesn't mind my saying, in a
sense, this solution is truly bizarre--that somehow or another it
should be less expensive for a pharmacist to buy from a middleman than
it should be from a manufacturer in the first place, and then have to
ship the product across a national border twice in order to get the
lower price. But the bizarre nature of the proposal is a simple and
direct result of the outrageous discrimination that is practiced in the
first place, and nothing else.
So the Senator from Vermont has written a bill and proposed an
amendment to allow the retail seller, or the wholesaler, to engage in
this reimportation. But concerned as he and the FDA are about making
sure you
[[Page S7199]]
get the real thing, most of the words in his amendment have to do with
the safety of the product, of making certain you are getting what it is
that you thought you purchased. In fact, it doesn't allow this
reimportation unless the Secretary of Health and Human Services
promulgates regulations permitting that reimportation that meet
necessary safeguards.
OK, that is where we are at this point. And then, instead of simply
opposing the proposal, my good friend from Mississippi puts up a
second-degree amendment that says the Secretary has to certify to
Congress that it would pose no risk to public health and safety and
will result in a significant reduction in the cost. It is either
absolutely unnecessary, because we are talking about something the
Secretary has already done, and the price part of it is unnecessary
because if there isn't a significant savings in the price, nobody is
going to go up and buy them in the first place or it is an attempt--and
I regret to say this--to kill the amendment of the Senator from Vermont
in its entirety and see to it that it doesn't happen. The drug
companies and their sponsors are not really wanting to justify the
situation that exists in the United States today because it can't be
justified, so they use an argument for safety that is already far more
adequately covered by the amendment proposed by the Senator from
Vermont in any event.
Now we are able to deal with this issue as part of this
appropriations bill, of course, because the House of Representatives
did. So it is properly before us. But the other matter that I find
extraordinarily odd with respect to the second-degree amendment is just
this: The distinguished chairman of the subcommittee, the manager of
the bill, knows perfectly well that individuals can go across our
borders and come back with a 3-month supply of prescription drugs. If
he and the Senator from Wisconsin are so concerned about safety that
they have to pile on with a second-degree amendment, why aren't they
banning totally and completely personal reimportation? The Senator from
Vermont isn't even touching that subject in his amendment. I wish he
did. The House of Representatives did. He is setting up a way for
reimportation to take place at the wholesale level, where safety is far
more protected than it is with respect to these individual purchases.
But the individual purchases have not created a great problem. If
they had, people would stop engaging in those policies. Whatever else
we may say about Canadians, they are not in the business of poisoning
their own citizens.
This reimportation can take place with perfect safety under the
amendment as proposed by the Senator from Vermont, and anything added
to it is simply an attempt to kill it and to maintain the status quo.
Let me go back to the stage I have set and simply say this: The
status quo is American manufacturers using American taxpayers' money to
produce products in the United States of America, which they then sell
at prices that discriminate outrageously against American purchasers.
That is really all there is on the stage today--discrimination by
American companies against American purchasers, in spite of the support
of American taxpayers.
The first-degree amendment takes at least a modest step toward curing
that situation. The second-degree amendment is designed to keep it in
place forever.
I have one final point, Mr. President. I agree with each of the
Senators who have previously spoken on the desirability and the
importance of a Medicare drug benefit. There is some debate over to
whom it should apply, how much it should cost. But Medicare covers
about 40 million Americans. We have 250 million Americans altogether.
None of the rest of them will be helped at all by even the most
generous Medicare drug benefit. All of them will be helped by this
amendment, to the extent that it is actually effective, because it will
in fact end up lowering the price of prescription drugs in the United
States of America. That is why the first-degree amendment should be
adopted and the second-degree amendment that attempts to gut it should
be rejected.
Mr. COCHRAN. Mr. President, I am pleased to announce to the Senate
that we have been able to secure an agreement on a unanimous consent
request to limit debate on the pending Cochran amendment and the
underlying Jeffords amendment. I understand it has been cleared.
I ask unanimous consent that the Senate proceed to vote in relation
to the pending Cochran amendment, No. 3927, at 5 o'clock p.m., and the
time between now and then be equally divided in the usual form. I
further ask unanimous consent that following that vote, the Senate
proceed to vote immediately in relation to amendment No. 3925, as
amended, if amended, the Jeffords amendment.
The PRESIDING OFFICER. Without objection, it is so ordered.
Mr. COCHRAN. I thank the Chair. I remind Senators that this doesn't
mean we have to use all the time between now and 5. I encourage Members
to make brief statements. We can vote before 5 and then move on to
another subject.
The PRESIDING OFFICER. The Senator from Vermont.
Mr. JEFFORDS. Mr. President, I ask unanimous consent that Senator
Gregg be added as cosponsor to amendment No. 3925.
The PRESIDING OFFICER. Without objection, it is so ordered.
Who yields time?
Mr. KENNEDY. Mr. President, will the Senator from Vermont be good
enough to yield 12 minutes?
Mr. JEFFORDS. Mr. President, I yield 12 minutes to the Senator from
Massachusetts.
The PRESIDING OFFICER. The Senator from Massachusetts is recognized
for 12 minutes.
Mr. KENNEDY. Mr. President, I support this amendment and I commend
the sponsors for their efforts to address the high cost of prescription
drugs.
I support this amendment, and I commend its sponsors for their
efforts to address the high cost of prescription drugs. The American
public wants affordable medicines, and I believe we should do all we
can to reduce the financial burden imposed on our citizens by high drug
costs.
It is worth emphasizing that imports of prescription drugs from other
countries must be accompanied by strict precautions to protect the
public. Federal standards require that all prescriptions sold in the
United States must be safe and effective. The public health protections
guaranteed by the Food, Drug, and Cosmetic Act do not end at the gates
of the manufacturer's plant but extend all the way to the doorstep of
the consumer. Congress has promised the American people that the
medications they use will be effective and be free of contaminants.
In 1988, President Reagan signed into law the Prescription Drug
Marketing Act to protect Americans from counterfeit, contaminated, and
other unsafe medications. Today counterfeit drugs continue to plague
the citizens of many countries, including our own. In 2000, at least 30
people in Cambodia died from fake malaria medications. 60,000 people in
Niger were vaccinated against a deadly epidemic of meningitis with
counterfeit vaccines, and received water injections instead of real
medicines. This past year the United Kingdom broke up a smuggling ring
to import counterfeit drugs into the U.K. from India. According to a
DEA official, 25% of the prescription drugs brought by consumers into
the U.S. from Mexico are fake. From 1989 to 1994 a counterfeit
antibiotic from China was sold in the U.S. through legal distribution
channels resulting in almost 2,000 adverse events, including 49 deaths.
In spite of an Import Alert issued by the FDA in September 1999, the
fake medication may still be entering the U.S.
I raise these problems to emphasize that without adequate
protections, legalizing importation by pharmacists and wholesalers will
increase the risks already posed by fake and contaminated drugs. This
amendment deals with these safety concerns primarily by placing the
responsibility for assuring the quality of imported products on the
importer, subject to FDA oversight--and it gives FDA broad authority to
impose additional requirements necessary to protect public health.
The FDA needs adequate tools to combat counterfeit or adulterated
drugs. Adequate funding for the FDA is essential to ensure the safety
of imported prescription drugs. FDA currently inspects less than 1% of
all drug shipments from other countries. Clearly, additional resources
will be necessary to implement this amendment.
[[Page S7200]]
As we all know, the real issue is providing an effective and
affordable prescription drug benefit to senior citizens and the
disabled under Medicare.
That is the basic and fundamental issue. We wouldn't be having this
debate if we were providing an effective prescription drug program to
the seniors under the Medicare program. It wouldn't be necessary. We
wouldn't have to be taking these additional risks. This is not a
substitute for the Senate taking action on that important measure.
The President has reiterated the fact that he would be glad in
working with our Republican friends to sign their marriage penalty
legislation if it included a prescription drug program. It is
absolutely essential. This legislation is no substitute for it.
The cost of the drugs these patients needed far exceeded their
ability to pay, even if the cost was deeply discounted. A patient with
high blood pressure, irregular heartbeat, and an enlarged prostate
would pay $3,100 annually for drugs.
This particular chart indicates the general patient profile for some
of the most common kinds of concerns, particularly for the elderly.
They are the ones who have the highest utilization of the prescription
drugs. They are the ones who need the protections under Medicare. They
are the ones who, hopefully, we are going to take action on in this
Congress to protect.
We are talking about osteoporosis, or heart trouble with a typical
cost of $2,412--that is 20 percent of the pretax income; high blood
pressure, irregular heartbeat, enlarged prostate, $3,100, 26 percent of
pretax income; severe arthritis, ulcers, gastric reflux, depression,
$3,696, 31 percent; ulcers, high blood pressure, heart disease, asthma,
$4,800, 40 percent.
This basically shows not only the access but the enormous costs of
the prescription drugs to address these particular items.
A patient with heart disease and severe anemia, $26,500, and 22
percent.
If we look at this chart, most senior citizens have very moderate
incomes. Look at this. Fifty-seven percent are under $15,000; 21
percent are under $24,000. We have virtually 80 percent below $24,000.
We are talking about a handful of senior citizens in the upper areas.
Eighty percent of our seniors are people of extremely modest means. The
cost of these drugs are going absolutely out of sight.
That is why we have to have a program that is going to provide
coverage, and that is going to be universally affordable for our
seniors and for the Federal Government as well.
This is a drug crisis for our seniors. The coverage is going down,
and the costs are going up.
I will take just a moment of the Senate's time to point out what is
happening to our senior citizens.
Twelve million--effectively a third--of our seniors have no coverage
whatsoever. Eleven million of them have employer-sponsored coverage. We
are going to show a chart in just a moment that shows employer-
sponsored drug coverage is collapsing.
Some three million have Medicare-HMO, and we will find what is
happening in the HMOs where they are putting limitations of what they
are going to be prepared to reimburse under prescription drugs.
The next is Medigap costs which are going right up through the
ceiling and becoming less and less affordable.
The only group of Americans who have dependable, reliable, affordable
prescription drugs are the 4 million Americans under Medicaid.
It is a national disgrace when we know the commitment that was made
here in the Congress in 1964 and in 1956 that said to our senior
citizens, work hard, we will pass Medicare, and you will not have to
worry about your health care needs in your golden years. We didn't
include a prescription drug program because the private sector didn't
have it then. Only 3 cents out of every dollar was expended on
prescription drugs. Now it is up 20 cents, and in some places even 30
cents, in terms of the costs of the health care dollars. Health
benefits have dropped by 25 percent. That is between 1994 and 1997.
This arrow is continuing to go right down.
The other chart showed where you have 11 million seniors getting
covered by employer-based programs. This chart indicates that they are
rapidly losing coverage at the present time.
We have 11 million who do not have any coverage, and 12 million who
have employer-sponsored coverage. But that is going down.
This shows what is happening if they get Medicare HMO drug coverage.
We see 75 percent will limit coverage to less than $1,000. They are
putting limitations on what they will pay for. The chart shows the five
major illnesses affecting and impacting our senior citizens cost vastly
higher than $1,000. Therefore, our seniors, even if they have coverage
under an HMO, are still paying an unaffordable amount of money if
$1,000 is the limitation. Mr. President, 32 percent have imposed caps
of less than $500. We are seeing the collapse of coverage that is out
there for our senior citizens.
This chart shows what is happening in the medigap coverage--which is
effectively becoming unaffordable--in the sample premium for a 75-year-
old person in various States. This is virtually unaffordable.
This chart shows the costs of drugs compared to the Consumer Price
Index over recent years, 1995, 1996, 1997, 1998, and 1999. In 1995, 2.5
percent; in 1996, 3.3 percent; in 1997, 1.7 percent; in 1999, 2.7.
The top of the chart shows the actual drug costs in terms of the
expenditures being made by seniors to get the drugs they need. We see a
very modest increase in the Consumer Price Index. Yet for senior
citizens who use three times the amount of drugs as the rest of the
population, we find out this is continuing to increase, placing
extraordinary pressure on seniors. In many instances, they are
completely unaffordable.
As mentioned earlier in the debate, the Pharmaceutical Research
Manufacturers say:
Private drug insurance lowers the prices 30 percent to 39
percent.
That says it all. It is saying you could go ahead and have a
reduction in the costs of these prescription drugs anywhere from 30
percent to 39 percent, and they can still make an adequate and generous
profit. This is from the industry itself. The seniors are hearing this
and living it, as pointed out by the Senator from North Dakota and my
friend, the Senator from Vermont. They are seeing this. They know this
has happened. They have to go abroad in order to try to get these vital
prescription drugs.
The unanswered question is, If we can go across and buy them, why
can't we do this in a way that is going to be more accessible and
available not only to those able to go over but also to our friends and
neighbors and fellow senior citizens?
It is out of that enormous frustration and these facts that this
amendment comes to the floor. That is why I believe it should be
supported. I think it is essential, but it is not going to address the
fundamental issue, which is the Medicare program that will cover all of
our senior citizens and effectively do it in a way that will see a
significant reduction of costs.
I thank the Senator from Vermont.
Mr. COCHRAN. Mr. President, I yield 10 minutes to the distinguished
Senator from Louisiana.
The PRESIDING OFFICER (Mr. Sessions). The Senator from Louisiana is
recognized for 10 minutes.
Mr. BREAUX. Mr. President, I thank the Senator from Mississippi for
yielding.
I was thinking about the argument that we had on the Senate floor
about importing medical supplies in terms of prescription drugs from
foreign countries into the United States because they might be cheaper.
I could get open-heart surgery in Mexico for a lot cheaper than at
Oschners in New Orleans or at the Mayo Clinic or at Johns Hopkins or
any other fine institution in the United States. It would be half as
expensive. I doubt many Americans want to put their lives in the hands
of people they know are not regulated.
I could buy many items in countries around the world, and many Third
World countries, which would be a lot cheaper. I remember one time
going to Hong Kong. I saw some of the Lacoste shirts with the little
alligator. My wife and I were shopping in Hong Kong and they had all
these Lacoste shirts. They were $5. I said: That is incredible, a heck
of a deal. I will buy a Lacoste alligator shirt for everyone I know for
gifts for Christmas. We bought one
[[Page S7201]]
after another. I bought one or two myself. We came home and the first
time I washed the shirt, the alligator fell off. The alligator fell off
because it was a counterfeit shirt. The shirt nearly dissolved after
the first washing and the alligator drowned in the washer. The product
was totally worthless. It was a counterfeit product.
It is one thing when you are buying a knit shirt. When someone is
sending me drugs that have been either manufactured in a foreign
country or even manufactured here and sent to a Third World country and
stored in a warehouse, God knows where, under conditions that may be
totally contrary to the safety of that drug, who knows who deals with
those products in that country in the privacy of that warehouse. Who
knows how many times somebody might go into that warehouse and take the
product, and instead of saying we will have 100 pills, if I cut it in
half, I could have 200 pills. If I could cut it into fourths and end up
not with 100 pills but 400 pills, look how much money I can make if I
do it that way.
If I can take that type of quality control, which is nonexistent in a
foreign country, and say that is how I will make my money, what kind of
products will we be giving to the American consumer? This is not a
Lacoste shirt that an alligator might fall off of. This is medicine
that is important to the safety and the life of our constituents.
Why do we have a ban on the importation of foreign drugs passed by
Congress in 1987? In order to protect U.S. consumers, to make sure that
the drugs were not improperly stored, or improperly handled, or
improperly shipped, or perhaps made to be like my Lacoste shirt,
totally, absolutely counterfeit.
How many Federal bureaucrats are we going to put in 150 countries
around the world to ensure those products in those countries are safely
stored, safely handled, and not diluted? And how many more
bureaucracies are we going to create to make sure those problems don't
develop?
We can get a lot of things cheaper in a lot of other countries. How
about buying cheaper wheat from China? They have a controlled economy
where the Government runs everything and sets the prices. Could we not
buy a lot of wheat from China and give it to our constituents a lot
cheaper? We don't do that because it is not a level playing field. In
that sense, we are competing with a micromanaged economy overseas that
the Government participates in and helps their farmers. Our people
can't compete against that. It is not a good idea.
This is the bottom line--actually two things. No. 1, there is no
guarantee we are not going to create a boondoggle with this for all the
wholesalers. There is no guarantee, without the Cochran amendment, that
anybody who is a consumer is going to have any of the benefit of any of
what we are trying to do by importing cheap Third World drugs into this
country. Nobody has a guarantee the savings would be passed on to the
consumer. I can see a wholesaler who wants to get the drug for $20
selling it for $40 over here and making one heck of a profit. There is
no guarantee without the Cochran amendment.
The final point is that this is not the answer to the problem. The
answer to the problem is to find a way to guarantee to Medicare
beneficiaries that they get the best deal, that we have some ability to
provide them with the coverage they need at the price they can afford.
That is the real answer.
People say we do not want price controls in this country; that is
anti-American. But we are going to buy the price controls from other
countries around the world. We will let them impose price controls, and
then we will buy from them. Why don't we just put on price controls in
this country and call it what it is? We are saying essentially we don't
like price controls but we like other countries' price controls and so
we will buy it from them with absolutely no ability to guarantee the
product coming over here is the product that left this country.
Here is the problem. If a Medicare beneficiary walks into the
drugstore and has no insurance because Medicare doesn't cover him, the
pharmacist tells him: It is $100 for your prescription. That Medicare
beneficiary has to take it out of his pocket or gets his children to
pay for it, or, if they are very destitute and poor, Medicare pays for
it and they pay $100. If you don't have any coverage, you pay $100 for
the prescription.
If, however, you work for the Federal Government, if you are a
Senator or one of the staff people here who happens to have the Federal
Employees Health Benefits Plan, and you go into the drugstore and buy
the same prescription, you don't pay $100, No. 1, because there is
volume purchasing because they are purchasing for all the FEHBP people
who are covered by FEHBP. The discount by volume purchasers for the
insurers gets it down to about $70, a 25-plus-percent discount. That is
the average by volume purchasing. But none of us or our staff even pays
the $70. We will probably pay a coinsurance of about $35, for some
plans even a copayment which could be $15 or $20.
So that is the answer to the problem. The answer is not to import
Third World countries' price controls. Talking about Canada is one
thing. I guarantee if this passes, we are not going to be importing a
lot from Canada. We are going to be buying from countries whose
handling of these drugs we have no ability to control. If it were
coming from Canada, it would not be a bad deal. We know how they
operate. But this amendment is not limited to Canada. Any Third World
country will be able to handle the drugs, dilute them, do anything they
want, store them where they want, and we will not be able to guarantee
the validity of that drug.
This is the answer to the problem: Not importing from other
countries, but to try to ensure that all Medicare beneficiaries have
some type of coverage that allows them to get the benefits of volume
purchasing and also to have some type of insurance where the Federal
Government assumes part of the responsibility, part of the risk, and
the providers compete and also assume some of the risk to get the price
to the Medicare beneficiary down to half or less. That is what we
should be working on.
This is a Band-Aid type approach. Really, it is worse than a Band-Aid
approach because Band-Aids help; this doesn't help. It puts the
American consumer at risk. We passed this law to prevent all the things
that are likely to happen if this amendment passes. We should not go
back to our constituents and say: We are letting you get cheap drugs
from foreign countries because they have price controls. It is the
wrong approach, and we should recognize it as such.
I yield the floor.
The PRESIDING OFFICER. The Senator from Mississippi.
Mr. COCHRAN. Mr. President, I yield 15 minutes to the distinguished
Senator from Tennessee, Mr. Frist.
The PRESIDING OFFICER. The Senator from Tennessee.
Mr. FRIST. Mr. President, I rise in opposition to the underlying
amendment to allow reimportation of prescription drugs. I have been
following the debate for the last couple of hours. I want to bring up a
new issue, an issue which I believe is a fundamental issue but which
has not been discussed, to the best of my knowledge, at all over the
last 2 hours--and that is safety.
The problem has been very clearly identified; and that is, cost. The
situation of prescription drugs costing too much in this country,
causing people to drive to Mexico and Canada, is a real problem. It has
been vividly described. It has been described accurately by almost
everybody who has talked today, holding up the bottles and the
descriptions on the charts. Today a senior who goes into a drugstore
must pay full retail price for a drug because Medicare does not include
prescription drug coverage, versus traveling on a bus to Canada, and
buying it there for much less.
The answer--and this is absolutely critical--is not reimportation.
The answer is not, to my mind, price controls. Price controls get
cloaked in all sorts of ways in policy and in various proposals. But
the answer is, I believe, not in the amendment we are talking about
today but through improved access by offering coverage and utilizing
the large purchasing power to provide affordable prescription drugs.
The issue that most bothers me is that fundamentally I believe the
underlying amendment puts at risk the safety of these drugs. I say
``puts at risk'' because clearly the authors of this bill
[[Page S7202]]
have tried to construct a bill that has safety first and foremost. But
let me just say, having read the bill and having a pretty good
understanding of the capability of the Food and Drug Administration
today, they simply cannot police the world in making absolutely sure
these are not counterfeit drugs coming back in and because of this, I
find it very hard to support the underlying bill.
If you take a look at the history of reimportation, from 1985 to 1987
in the U.S. Congress, there were a series of nine hearings and three
investigative reports regarding this whole concept of reimportation of
pharmaceuticals. It is interesting, if you go back and look at what
happened and also at what the findings were. As a result of these
hearings and investigations, in 1987 the Prescription Drug Marketing
Act passed. It was designed to specifically protect Americans' health
and safety against the risk of adulterated or counterfeit drugs from
being imported into the U.S. Let me quote one of the conclusions from
the committee report:
Reimported pharmaceuticals threaten the American public
health in two ways. First, foreign counterfeits, falsely
described as reimported U.S.-produced drugs, have entered the
distribution system.
Second, proper storage and handling of legitimate
pharmaceuticals cannot be guaranteed by U.S. law once the
drugs have left the boundaries of the United States.
I believe, we are obligated to go back and address these two critical
concerns, because we are talking about the potential for counterfeit or
adulterated drugs. We are talking about life-or-death issues. We are
talking about the ability to thin one's blood to prevent a heart attack
or a stroke, and if that drug has been altered, if it is counterfeit,
it means life or death to the people who are listening to me today.
What they have tried to fashion in this bill is to have the Food and
Drug Administration oversee and be responsible for these laboratories
which are not in the United States of America. Remember, this is a Food
and Drug Administration that, right now, admits they are unable to even
inspect the food coming into this country. I argue, whether it is
tomatoes or lettuce coming in, the inspection of drugs coming in is
much more important to the health of Americans. It is partly because I
am a physician, so I deal with patients and I know for the most part
patients believe it is much more important as well.
Is the Food and Drug Administration equipped? If you ask the people
who have run the FDA you will find the following. Dr. David Kessler,
former head of the Food and Drug Administration, in a letter to
Representative Dingell this past year, stated the following when we
talk about reimportation. I quote Dr. David Kessler:
In my view, the dangers of allowing re-importation of
prescription drugs may be even greater today than they were
in 1986. For example, with the rise of Internet pharmacies,
the opportunities of illicit distribution of adulterated and
counterfeit products have grown well beyond those available
in prior years. Repealing the prohibition on re-importation
of drugs would remove one of the principal statutory tools
for dealing with this growing issue.
We know the cost of prescription drugs is a problem. But ultimately
you don't want to do anything that jeopardizes the safety of these
drugs and ultimately the health and welfare of patients.
Let's turn to Dr. Jane Henney, who is the current Commissioner of the
Food and Drug Administration. In front of the Senate appropriations
committee March 7 of this year, she said, in expressing severe
reservations regarding the importation of drugs:
The trackability of a drug is more than in question. Where
did the bulk product come from? How is it manufactured?
You're just putting yourself at increased risk when you don't
know all of these things.
Her words--``increased risk.''
It is the risk of this legislation that bothers me in terms of safety
for our seniors. The question is whether the FDA is equipped to
implement the safety precautions necessary? Right now we are hearing
from the leaders they cannot be responsible for the safety and efficacy
of reimported pharmaceuticals. Let me point out what is going on today
in terms of how effective their inspections are.
Of the 6,030 foreign manufacturers shipping bulk drugs to the United
States since 1988, approximately 4,600 were never inspected. When we
see people holding up these two bottles and one bottle was reimported
from overseas and you are depending on the FDA--which clearly does not
have the capability to guarantee the safety of these pills--and then
you put that pill in your mouth, I believe, based on at least the
leaders at the Food and Drug Administration today and in the past, that
pill could very well be unsafe and not only cause severe illness, but
even death.
I mentioned the food issue, but as you recall, the Food and Drug
Administration is responsible for overseeing the safety of food in this
country. In our hearing at the Health, Education, Labor and Pensions
Committee last month, some said: We can safely import lettuce from
other countries, so why can't we do the same for medicines?
The analogy of lettuce versus medicine is, as a physician, very hard
for me. Last year, I joined Senator Collins in introducing the Imported
Food Safety Improvement Act because of all of the outbreaks of illness
associated with imported food products.
We introduced the food safety bill predominantly because of the FDA's
own admission--just like I believe the FDA is admitting today in terms
of reimportation of drugs--that they cannot insure the complete safety
of food coming into this country. If we cannot insure the safety of
food coming into this country, as a physician, as someone who has that
doctor-patient relationship, who has taken an oath of doing no harm--I
cannot promise my patients that the prescription medicines they may be
taking are guaranteed to be safe and effective, especially when I have
the leadership of the FDA telling me they are ill-equipped and cannot
guarantee the drugs have not been altered.
Again, the authors of this legislation basically said it is going to
be safe because the FDA can do it. I will take it one step forward and
say based on current evidence, I do not believe the FDA can do it.
Former Carter FDA Commissioner Dr. Jere Goyan said it best:
I respect the motivation of the members of Congress who
support this legislation. They are reading, as am I, stories
about the high prescription drug prices and people which are
unable to pay for the drugs they need. But the solution to
this problem lies in better insurance coverage for people who
need prescription drugs, not in threatening the quality of
medicines for us all.
The underlying amendment, although well-intended, is inadequate in
assuring the safety of potential recipients, beneficiaries, and
patients who receive pharmaceuticals that have been reimported.
Therefore, I will not vote to repeal the important consumer safety
legislation that we put in place over 10 years ago without much further
investigation to answer that critical question of safety.
Medicines today are affordable when there is coverage for them. I
believe we have to do something to help those unfortunate seniors
across the country who do not have good prescription drug coverage
today.
Senator Breaux and I have worked aggressively to develop a bipartisan
prescription drug coverage plan and have introduced such a plan.
This plan is above politics and it is above partisanship. It is time
to take the very best minds, the very best doctors, the very best
health care experts, and elected representatives and bring them
together to deal with these challenges facing Medicare in offering
affordable prescription drug coverage.
The Breaux-Frist 2000 plan, known as the Medicare Prescription Drug
and Modernization Act of 2000, takes the necessary first steps to
provide universal outpatient prescription drug coverage and strengthen
and improve the Medicare program overall. First, it restructures the
1965 model of Medicare by establishing a competitive Medicare agency to
oversee competition under Medicare+Choice and the addition of a new
drug benefit.
It establishes voluntary universal outpatient prescription drug
coverage which I believe is the answer to the cost issue.
It provides comprehensive prescription drug benefits.
It guarantees catastrophic protections so a senior is protected from
paying high drug costs out of their own pocket beyond $6,000.
[[Page S7203]]
It guarantees price discounts off prescription drugs so seniors never
pay retail prices for prescription medicines again.
It guarantees affordable drug coverage by offering all beneficiaries
a 25-percent subsidy off their premiums.
It protects low-income beneficiaries by providing beneficiaries with
incomes below 150 percent of poverty subsidies for premiums and
copayments for prescription drug benefits.
Finally, it improves benefits and health care delivery under Medicare
by stabilizing the Medicare+Choice program and introducing much needed
reforms.
The Breaux-Frist 2000 bill addresses the cost issue. Reimportation of
drugs does not. I urge my colleagues, for the safety of health care and
health care delivery today, to defeat the underlying amendment on
reimportation of drugs.
I reserve the remainder of my time.
The PRESIDING OFFICER. The Senator from Mississippi.
Mr. COCHRAN. How much time is remaining on this side of the issue?
The PRESIDING OFFICER. The Senator has 11 minutes remaining.
Mr. COCHRAN. I yield 10 minutes to the distinguished Senator from
Utah, Mr. Hatch.
The PRESIDING OFFICER. The Senator from Utah.
Mr. HATCH. Mr. President, this is a very important amendment. There
is a lot of sincerity behind it.
I rise today to offer some concerns about the Jeffords-Dorgan
Amendment to the Agriculture Appropriations bill and to support the
Cochran amendment.
I have many questions about the Jeffords-Dorgan amendment.
Let me make something perfectly clear from the start--I do not
question the good intentions of this amendment. I know that my
colleague, Senator Jeffords, is sincerely seeking to address this
difficult matter of high prices for pharmaceuticals in the United
States.
As I traveled across my state and around our country this election
year, I found that many Utahns and many Americans, particularly our
senior citizens, are having difficulty in affording prescription
medicines. Some are going across the borders to Canada and Mexico. We
have all seen the news broadcasts of those cross-border bus trips to
buy the cheaper foreign drugs. And, it may seem obvious, particularly
to two Senators who represent States on the Canadian border, that the
solution is simply to allow the importation of prescription drugs into
our country.
There is something of a cruel dilemma at play here: right at the
moment when scientists seem poised to invent an unbelievable new array
of diagnostics, therapeutics, and vaccines, many Americans are
encountering difficulties in affording these new and sometimes costly
medications.
There are many issues at play in this debate.
One issue that policymakers face is to see whether a balance can be
constructed whereby we retain the necessary investment to produce the
promised wonder cures while at the same time maintain our ability to
deliver these new products to the patients at affordable prices.
This is part of what is shaping the debate over the fashioning of a
prescription drug benefit for the Medicare program.
This balance between new drugs and affordable drugs is what shaped
the debate 16 years ago when the Congress passed the Drug Price
Competition and Patent Term Restoration Act of 1984. I am proud to have
played a leadership role in this law that helps, according to CBO,
consumers save $8 billion to $10 billion annually through the purchase
of generic drugs.
But, in our understandable and highly populist zeal to make drugs
more accessible, we must not kill the goose that lays the golden eggs.
That is to say, we must be able to continue to attract the private
sector investment into the biomedical research establishment that has
made the American drug development pipeline so promising.
While it is true enough that, at this time, the drug industry is the
most profitable sector of the economy, I do not think that success
should be a license for us to over-regulate this industry. Sometimes
well-intentioned, but ill-advised, governmental policies have hastened
the decline of American business to the detriment of American workers
and consumers alike.
But, another consideration with respect to the advisability of this
amendment is the premium that we place on our citizens receiving safe
and effective products, free from adulteration and misbranding.
Dating from the 1906 Pure Food and Drugs Act, through the 1938
Federal Food, Drug and Cosmetic Act, the 1962 efficacy amendments, and
the 1988 Prescription Drug Marketing Act, our Nation has devised a more
or less closed regulatory system that ensures that drug products will
be carefully controlled from the manufacturer to the patient's bedside.
If we are to open up our borders to a new plethora of drug
reimports--I am talking about reimports--we need to be absolutely
certain that we have not undermined the integrity of this regulatory
system by admitting products improperly manufactured, transported, or
stored. A pill may look like the real item but not contain the active
ingredient in the right concentration, or it may simply not contain the
medication at all.
Similarly, we must not allow the American public to fall prey to
counterfeit so-called ``gray market'' products. These are products
which could be made to look exactly like the real thing and may comply
with, or attempt to comply with, the requirements of the actual
approved product, but do not comply with the legal requirement of a
license from the patent holder--in short, a pirated product.
While there is a clear and obvious health danger in an adulterated,
non-conforming pirated product, there is also great detriment to the
American public if the unscrupulous are allowed to reimport America's
inventions back into America without compensating the inventor. Few
will be willing to invest the upfront capital--hundreds of millions of
dollars--to develop a drug if another party can make and sell the drug
while it is under patent protection.
It takes an average of 15 years and a half a billion dollars to
create one of the blockbuster drugs. So we have to be careful. Keep in
mind, too, as chairman of the Senate Judiciary Committee, I have a
special obligation with respect to our intellectual property laws that
we not go down any path that can be seen as inviting the development of
a gray market for prescription drugs.
After all, a fake Rolex may be right twice a day, but a bad copy of a
good drug can kill you. This is something we have to be more concerned
about around here. We can't just do what appears to be good but, in
essence, could kill people.
As we move further into the information age, protection of American
intellectual property becomes more and more vital to our national
interest. For example, if the latest computer software can be taken
without proper licensing arrangements, our national leadership in high
technology will be threatened.
Where is the pharmaceutical industry in Canada? They have price
controls, and nobody is going to invest the money into developing these
lifesaving and cost-saving drugs over the long run in those countries
with price controls.
We have had many debates over price controls. I remember those days
when Senator Pryor and I were on this floor arguing back and forth
about price controls. Fortunately, the Senate, in its wisdom, decided
not to go for price controls. This is another step toward price
controls that will stultify one of the most important industries in
America at a time when we just mapped the human genome, and we are at
the point where we can actually create more lifesaving drugs--perhaps
at even a greater cost but nevertheless at a greater health care cost
savings than ever before.
So that is why intellectual property protections are so necessary.
In fact, one of the great accomplishments of the 1995 GATT Treaty was
to put intellectual property protection front and center in our trade
relationships with the developing world. Many countries are notorious
for the lax policing of patent and copyright violations by their
citizens.
When the value of American inventions is expropriated, it is American
inventors and American consumers who suffer. The United States cannot
and
[[Page S7204]]
should not allow free riders around the world essentially to force the
American public to underwrite a disproportionate amount of the research
and development that results in a next generation breakthrough product.
One has only to read a collection of the section 301 reports the
Office of the United States Trade Representative to get a feel of just
how prevalent such intellectual property theft is worldwide.
I took the time to present this background because I think the
Jeffords-Dorgan amendment requires such analysis.
And I will be the first one to admit that the amendment, at first
blush, seems quite simple and appealing. What could be the matter with
a rule that essentially says drugs obtained from outside the United
States at prices lower than U.S. prices can be resold in the U.S.,
presumably in a manner that places pressure to lower prevailing U.S.
prices? Yet, I recall H.L. Mencken's sage observation, ``There is
always an easy solution to every human problem neat--plausible, and
wrong.''
I, too, join many of my constituents in Utah and others across the
country, in questioning why our citizens are paying higher drug prices
than those who live in other countries.
And while I recognize that there are complex economic, political, and
social factors at play that partially explain why a drug company would
charge less for a drug in a destitute region in sub-Saharan Africa, it
is more difficult to understand why drug costs less in Tijuana, Mexico,
or Alberta, Canada than in San Diego, California. This is a policy I
cannot totally defend. And I do think the pharmaceutical companies need
to address this more.
But I can say that where nations impose price controls, a flawed
economic theory which we have proven does not work in the U.S., there
are negative consequences which among other hazards could imperil the
flourishing research and development we count on to bring us miracle
cures.
I am very apprehensive about government price controls, particularly
on our most cutting-edge technologies like pharmaceuticals. Price
controls function in an economic environment the way a lid works on a
boiling pot. Price controls may temporarily keep prices down, but they
are certainly no long term solution to the problem. As soon as the lid
comes off, the pot boils over.
And, why not just keep the lid on indefinitely? Because price
controls also have a stifling effect on the incentives to conduct
research. Without the prospect of recouping a substantial, multi-
million dollar investment, there is little reason for pharmaceutical
companies to undertake such research on the next breakthrough drugs. It
would not take long for our nation's pharmaceutical industry to
atrophy.
How can we guarantee that foreign government price controllers will
not set an artificially low price on some new Alzheimer's drug? And can
we be sure that this won't have the unintended, but real, ripple effect
of convincing company officials to forgo research on this new class of
drugs for fear that, in conjunction with the new liberal re-import
policy, they will not be able to recoup their investment?
I support those who wish to instruct the United States Trade
Representative to be even more aggressive in promoting and protecting
intellectual property rights in all of our bilateral and multilateral
trade negotiations.
It seems to me that rather than importing the effects of foreign
price controls back into the U.S., a strong case can be made that we
should be using our Trade Representative to attack the foreign price
controls that many countries have enacted so that a better balance
between U.S. research costs and foreign borne research costs might be
achieved. Let's stop the free riders and cheap riders overseas while
American citizens are paying the full freight of R&D.
I have to confess that one part of me likes the feature of this
amendment that creates the challenge to the entrepreneur of bringing
goods sold cheaper abroad back to the United States at presumable
savings to U.S. citizens. Yet, the amendment provides no guarantee that
those wholesalers and pharmacists importing the products would pass
their savings on to the consumer. And so, we could be trading public
safety for middleman profits, an outcome not contemplated by proponents
of the amendment.
Mr. HATCH. I have debated the issue, as I say, of price controls many
times, so I will not spend any more time on the issue of price
controls. But it does not make sense. That is what we are headed
towards.
The greatest industry in our country, that has the greatest potential
to do the greatest amount of good to bring health care costs down in
the end--even though it is tremendously expensive to develop these
drugs--is going to be flattened by this type of legislation which is
well meaning, well intentioned, and absolutely destructive to our
innovative industries in this particular country.
We have to find a way around this drug price problem in this country
without creating a gray market in these particular goods and services.
There has not been 1 day of hearings on this particular language. How
can we guarantee that foreign government price controllers will not set
an artificially low price on some new Alzheimer's drug? And can we be
sure this will not have the unintended but real, ripple effect of
convincing company officials to forgo research----
The PRESIDING OFFICER. The Senator's time has expired.
Mr. HATCH. Mr. President, I ask unanimous consent to take 1
additional minute, with an additional minute given to the other side.
The PRESIDING OFFICER. Without objection, it is so ordered.
Mr. HATCH. Can we be sure this will not have the unintended, but
real, ripple effect of convincing company officials to forego research
on this new class of drugs for fear that, in conjunction with the new
liberal reimport policy, they will not be able to recoup their
investment?
Let us hope that the future does not come down to a choice between
two lousy alternatives, what economists call a Hobson's Choice: great
drugs that are not widely affordable or potentially great drugs
abandoned due to minimal projected revenues.
And I can tell you given my work in the area of the AIDS epidemic, as
between expensive drugs and no drugs, expensive drugs is a better
problem to have.
My conservative instincts are always against government price
controls, and I don't think that this principle should be limited to
U.S. government price controls if a by-product of this well-intentioned
re-import bill is to import some other government's price controls into
U.S. market dynamics.
Frankly, this does not seem the type of far reaching legislation that
we should rush into without pausing to try to think through all of its
ramifications.
It just seems to me that if there are areas where governments world-
wide must tread carefully in enacting legislation, if indeed they must
tread at all, it is in areas like biotechnology.
It is clear from absolutely stunning developments like the early
completion of the mapping of the human genome that there is an
incredible synergy taking place between information technology and
biotechnology. The high-speed sequencing machines that mapped the
genetic code and almost instantaneously made this information available
on the Internet represent this confluence of technology.
In our valid and justified quest to help make drugs more affordable
to the American public, we should be mindful not to unwittingly retard
the development of the next generation of innovation.
Having described the general angst I feel in relation to the possible
effect that this legislation may have on the pace of and investment in
pharmaceutical research and development as well as challenges it will
create in terms of respect for intellectual property rights, I want to
focus next on the important concerns that I have about the public
safety aspects of the amendment.
I want to commend Senators Jeffords and Dorgan for perfecting some of
the gaps and shortcomings related to drug safety contained in the
House-passed legislation.
But let me say that, as Chairman of the Committee with jurisdiction
over the Controlled Substances Act, I am not convinced that the
American public is adequately protected by this amendment.
[[Page S7205]]
Now, I know that drafting and redrafting is an unglamourous part of
the legislative process and that you and your staffs, and if the
reports are correct many in the Administration, have been working hard
to refine this amendment.
But let's be fair, legislating on an appropriations bill is not the
optimum way to change some central provisions of the Food, Drug and
Cosmetic Act.
I was involved in redrafting the Import and Export Chapter of the
Food, Drug and Cosmetic Act both in 1986 and in 1996.
While I recognize the HELP Committee had a hearing yesterday, I think
that everyone would agree with me that it is helpful to have a
legislative hearing on legislation when the ink is at least dry.
I would like to see what the FDA, the DEA, General McCaffrey and the
Patent and Trademark Office have to say about the bill when they have
had time to give thoughtful consideration to a sufficiently finalized
draft.
While it is true that the bill is drafted generally to the FDC Act,
it will be particularly important to see how this liberalized re-import
may affect controlled substances. Can't we take the time to hear from
the Drug Enforcement Administration?
Also, I don't know if this is the case, but I have heard second hand
reports that the White House has more or less limited FDA to a ``let's
make the best of this'' role and is not encouraging the agency to look
at this bill more globally.
Also, I cannot help but note that in the latest draft that I have
seen, the language covers only drug products and not biologics, which
are in the vast majority of cases perceived and used by consumers as
drugs in the non-legalistic definition.
And since it is also the case that many times it is precisely these
new generation biologics that are the most costly on the market, the
question must be asked why Americans should not get the advantage of
lower priced biologics as well as drugs?
Frankly, it is evident that each successive draft attempts to address
the many shortcomings with respect to assuring the American public that
the imported drugs are the safe and effective and unadulterated.
Clearly, this drafting would be better served if it were down in the
public forum of a mark-up.
I just don't think that we know enough about this language to be
reasonably certain that we could be sowing the seeds of a future
tragedy but I certainly don't want to take that chance. I worry that a
day will come when either a under-potent or over-potent batch of
imported drugs will leave a trail of avoidable carnage.
Yes, we can have certifications and regulations and foreign
inspections and every other thing you can think of, but the fact
remains we are opening a door that Congress carefully closed in 1988
when it enacted the Prescription Drug Marketing Act. The history of
this bill is that it was enacted after a series of serious adverse
events due to improperly stored, handled, and transported imported
drugs. It also addressed the issue of the import of counterfeit and
unapproved drugs such as the presence of counterfeit antibiotics and
contraceptives.
These were serious threats to public health and safety. These
incidents were the subject of extensive hearings of the House Energy
and Commerce Committee. These incidents were the impetus of the 1988
legislation that this amendment would unravel.
Look, I know that there is a certain attractiveness to accept this
amendment and that some members may be inclined to vote for this
measure with the expectation that the language, which is still in flux,
will be cleaned up in Conference.
But I am concerned that opening up this import loophole is either
fixable or will do more good than harm.
As interested parties study this measure, objections are beginning to
be registered. And they are not only from the big drug companies who
are the true, and, to some extent, justified target of this provision.
I am mindful that a similar provision passed the House by a wide
margin. But one vote that this legislation did not get was of that the
Dean of the House, Representative John Dingell of Michigan.
Now you would think that if ever there was a group that stood to
benefit from legislation it would be the wholesale druggists because
they are the natural middlemen in the new, liberalized import system.
Instead they call the amendment ``unworkable'' because ``(w)wholesalers
do not have the expertise, equipment or personnel to undertake such
complicated tasks''.
I will say in public right now that I fully expect that the DEA, FBI,
and other components of DOJ will weigh in when this correspondence is
answered.
I am particularly interested in learning from the DEA and FBI to what
extent importation of counterfeit and adulterated controlled substances
is a current problem and to what extent, if any, this legislation,
would likely affect the current state of affairs?
But before my colleagues vote on this measure I would ask each of you
to review the Dingell correspondence together with any response from
the administration. Here are some of the questions that were included
in Congressman Dingell's letter to FDA:
1. Please provide a detailed analysis on how (H.R. 4461 and
H.R. 3240) would affect FDA's present operations regarding
efforts to prevent misbranded or potentially dangerous drugs
from entering the U.S. Specifically, please provide: (a) a
description of how the present system now used by FDA works;
(b) what the present system is intended to accomplish; and
(c) what changes would be required (and the potential effects
of those changes) if this legislation passes in its present
form.
Please include a discussion of how these amendments would
affect the activities of other agencies, such as the U.S.
Customs Service, with responsibilities for assuring the
safety of imported prescription drugs.
2. Please determine if either of these amendments would
have any effect on FDA's ability to enforce good
manufacturing practices (GMPs) in any foreign firms that ship
drugs to the U.S. If so, please explain any potential effect
on consumer health and safety.
3. Please provide a full description regarding what a
``warning letter'' is and how it is typically used by the
FDA. Please compare this with correspondence that is sent by
Customs.
4. It appears that these amendments would directly affect
the ability of FDA to send warning letters to consumers that
purchase drugs over the Internet. As you know, some web sites
appear to be covertly linked to foreign drug suppliers. When
a consumer orders from such a site, it is not always obvious
that they are dealing with an offshore supplier, and thus a
potentially non-FDA approved facility. Often, warning letters
may be the only indication that the Internet-ordered drugs
originated from a foreign (and potentially dubious) source.
Please indicate how this legislation could affect FDA's
ability to protect consumers who purchased drugs in this way.
5. Please detail any other potential effects this
legislation could have on FDA's ability to protect consumers
from potentially dangerous drugs that originate aboard.
6. Finally, please provide technical assistance in the form
of specific suggestions for legislative or regulatory changes
that would be needed in order to facilitate the safe
importation of prescription drugs by individuals,
wholesalers, or retailers.
Only if you are convinced that FDA has the resources and
international presence to enforce the myriad of new regulations and
procedures required by the amendment should you vote for this measure.
Ask yourself how confident you are that more word-smithing during a
closed conference committee meeting is likely to prevent one or more of
your constituents from being seriously injured down the road by unsafe
drug products brought into the U.S. as a result of this amendment?
Do we really want to turn back the clock and essentially re-open a
dangerous door that was closed by the Prescription Drug Marketing Act
of 1988?
Why the rush to open a potential Pandora's box of public health
problems?
I hope that this well-intentioned amendment, offered by two highly-
respected co-sponsors, does not place Congress and the public in the
position of the old adage, those who do not understand the past are
doomed to repeat it.
I respect the men and good intentions behind this amendment.
We all want to increase access to pharmaceuticals for all Americans.
I do not think that the benefits of the Jeffords-Dorgan amendment
outweigh its downsides, and that is why I am supportive of the
alternative offered by the Senator from Mississippi.
I have to say, when this debate happened in the House, my dear
friend, Congressman John Dingell, who has
[[Page S7206]]
played a tremendous role in health care all these years I have been in
the Congress, stood up and argued against this. He lost in the House,
but he should have won.
During the House debate, Congressman Dingell said the following, ``We
now find ourselves in the regrettable position of confronting the
possibility that the easing of the law with regard to food and drug and
cosmetics, which is going to be done here under this legislation, will
in fact reduce the safety of the American consuming public.''
Mr. Dingell was Chairman of the House Energy and Commerce Committee
when the PDMA passed in 1988. He was a key mover and shaker behind the
bill. As the bill was being developed the Energy and Commerce Committee
issued a report that concluded that ``the very existence of a market
for reimported goods provides the perfect cover for foreign
counterfeits.''
Mr. President, I ask unanimous consent that his letter be printed in
the Record, as well as the National Wholesale Druggists' Association
letter, where they beg us not to pass this type of legislation because
of the harm it could cause to the American public and to the American
consumer.
There being no objection, the material was ordered to be printed in
the Record, as follows:
July 14, 2000.
Hon. Jane E. Henney, M.D.,
Commissioner, Food and Drug Administration,
Rockville, MD.
Dear Dr. Henney: Recently, the House of Representatives
adopted two amendments, one by Rep. Crowley (D-NY) and one by
Rep. Coburn (R-OK), to the Agricultural Appropriations bill
which could have a profound effect on how the Food and Drug
Administration (FDA) protects consumers from imported
prescription drugs of uncertain safety and effectiveness. I
am concerned that these amendments could seriously undermine
the Prescription Drug Marketing Act (PDMA), and thus
adversely affect public health.
During the 1980's, the House Energy and Commerce Committee
conducted a lengthy investigation into the foreign drug
market that ultimately led to enactment of the PDMA. That
investigation discovered a potentially dangerous diversion
market that prevented effective control over the true sources
of merchandise in a significant number of cases. The
integrity of the distribution system was found to be
insufficient to prevent the introduction and eventual retail
sale of substandard, ineffective, or even counterfeit
pharmaceuticals. As the resulting Committee report stated,
``pharmaceuticals which have been mislabeled, misbranded,
improperly stored or shipped, have exceeded their expiration
dates, or are bald counterfeits, are injected into the
national distribution system for ultimate sale to
consumers.''
The PDMA was designed to restore the integrity and control
over the pharmaceutical market necessary to eliminate both
the actual and potential health and safety problems before
injury to the consumer could occur. Again, the Committee
report was clear on why the PDMA was needed: ``[R]eimported
pharmaceuticals threaten the public health in two ways.
First, foreign counterfeits, falsely described as reimported
U.S. produced drugs, have entered the distribution system.
Second, proper storage and handling of legitimate
pharmaceuticals cannot be guaranteed by U.S. law once the
drugs have left the boundaries of the United States.''
Alarmingly, I find little now that suggests that the
problem with misbranded, adulterated, or even counterfeit
foreign drugs has been solved. I reiterated these concerns
with respect to the Crowley and Coburn amendments (see
enclosed remarks). In fact, the evidence suggests the problem
is getting worse. I am concerned that in our haste to find a
way to bring cheaper drugs to seniors and other needy
Americans--a clearly important and laudable goal--we risk
making changes to key health and safety laws we may later
regret. I am thus requesting that you quickly provide me with
the following information:
(1) Please provide a detailed analysis on how (H.R. 4461
and H.R. 3240) would affect FDA's present operations
regarding efforts to prevent misbranded or potentially
dangerous drugs from entering the U.S. Specially, please
provide: (a) a description of how the present system now used
by FDA works; (b) what the present system is intended to
accomplish; and (c) what changes would be required (and the
potential effects of those changes) if this legislation
passes in its present form.
Please include a discussion of how these amendments would
affects take activities of other agencies, such as the U.S.
Customs Service, with responsibilities for assuring the
safety of imported prescription drugs.
(2) Please determine if either of these amendments would
have any effect on FDA's ability to enforce good
manufacturing practices (GMPs) in any foreign firms that ship
drugs to the U.S. If so, please explain any potential effect
on consumer health and safety.
(3) Please provide a full description regarding what a
``warning letter'' is and how it is typically used by the
FDA. Please compare this with correspondence that is sent by
Customs.
(4) It appears that these amendments would directly affect
the ability of FDA to send warning letters to consumers that
purchase drugs over the Internet. As you know, some web sites
appear to be covertly linked to foreign drug suppliers. When
a consumer orders from such a site, it is not always obvious
that they are dealing with an offshore supplier, and thus a
potentially non-FDA approved facility. Often, warning letters
may be the only indication that the Internet-ordered drugs
originated from a foreign (and potentially dubious) source.
Please indicate how this legislation could affect FDA's
ability to protect consumers who purchased drugs in this way.
(5) Please detail any other potential effects this
legislation could have on FDA's ability to protect consumers
from potentially dangerous drugs that originate abroad.
(6) Finally, please provide technical assistance in the
form of specific suggestions for legislative or regulatory
changes that would be needed in order to facilitate the safe
importation of prescription drugs by individuals,
wholesalers, or retailers.
I would appreciate a full response to this letter by
Friday, July 28, 2000. Please do not delay.
Sincerely,
John D. Dingell,
Ranking Member.
____
National Wholesale
Druggists' Association,
Reston, VA, July 18, 2000.
Dear Senator: I am writing on behalf of the National
Wholesale Druggists' Association (NWDA) to request that you
oppose the pharmaceutical importation amendment Senator
Jeffords is expected to offer to the Fiscal Year 2001
Agriculture, Rural Development, Food and Drug Administration,
and Related Agencies appropriations bill.
NWDA is the national trade association representing
distributors of pharmaceuticals and health care products.
NWDA active members operate over 200 distribution centers
throughout the country, distributing over $77 billion in
these products to every state, the District of Columbia and
U.S. territories.
From NWDA's perspective, the Jeffords' amendment is
unworkable. It would require wholesalers to statistically
sample the products, test them for authenticity, develop
extensive record keeping and documentation and relabel
products from the country of origin to U.S./FDA approved
labels. In their new role, wholesalers would also now likely
have to also prepare professional package inserts to
accompany each bottle or vial. These new requirements may
reclassify ``wholesalers'' as ``relabelers'' and/or
``repackagers,'' which, under FDA regulations, would trigger
different and significant additional regulatory requirements.
I am not aware of any wholesalers who have these capabilities
and I strongly doubt that they would undertake them due to
the considerable expense.
Wholesalers do not have the experience, equipment or
personnel to undertake such complicated tasks. Our expertise
is in distributing pharmaceuticals in an efficient, timely
and cost-effective manner on a daily basis. An ``average''
NWDA-wholesaler purchases product from over 900 different
manufacturers, stores over 25,000 different health care items
at any one time and distributes them to its hundreds of
customers, including independent pharmacies, chain drug
stores, hospitals, HMO's, integrated health systems, clinics,
home health providers, physicians and government sites.
The measure also imposes numerous new reporting
requirements on wholesalers. While it is questionable if
these reports actually will help to ensure the health and
safety of Americans, they will be very burdensome and costly
for the wholesalers who must compile and maintain them.
Furthermore, as a result of the testing and reporting
requirements, lability exposure for the wholesaler is
increased dramatically. All of these new requirements and
liabilities will, in our opinion, add significant costs to
imported products.
NWDA-wholesaler members have a razor thin net profit margin
of just 0.62%. Operating in a highly competitive marketplace,
wholesale drug distributors have passed these savings from
lower operating costs through to our customers. All of these
additional responsibilities, regulatory burdens and liability
exposure will, in our opinion, ultimately be passed along to
consumers. Wholesalers simply do not have the margins to
absorb these types of added costs. Indeed, the financial
viability of some wholesalers could be jeopardized if the
Jeffords measure were to be enacted.
In closing, NWDA, as indicated in previous communications,
is concerned about the potential threat to the public health
posed by the importation of products that have been produced,
stored and/or handled in a manner that is inconsistent with
U.S. quality standards. Notwithstanding the language in the
amendment relating to documentation, the Jeffords amendment
does not ensure the safety and integrity of imported
prescription drugs. However, NWDA stands ready to work with
Senator Jeffords and others to devise an approach that will
ensure the safety and integrity of pharmaceutical products as
well as provide access to them for all Americans.
If you have any questions, please do not hesitate to
contact me or have your staff
[[Page S7207]]
contract Robert Falb, NWDA Director of Congressional Affairs,
at 703-787-0020 or rfalb@nwda.org.
Sincerely,
Ronald J. Streck,
President & CEO.
Mr. HATCH. Given the reported White House activity on this bill, I
would not be surprised that FDA will quickly respond to and brush aside
the questions this letter raises.
Mr. President, in sum, we are in danger of losing a tremendously
innovative and effective and productive industry that has made the
American Nation the leader in health care throughout the world.
I think this type of an amendment will undermine everything we have
decided to do all these years, that has really benefited the whole
world.
I yield the floor.
The PRESIDING OFFICER. The Senator from Vermont.
Mr. JEFFORDS. Mr. President, I point out, we held a hearing on this
yesterday. I wanted to correct my good chairman on that.
I yield 5 minutes to the Senator from New York.
The PRESIDING OFFICER. The Senator from New York.
Mr. MOYNIHAN. Mr. President, I very much appreciate the courtesy of
my friend from Vermont because I rise to support the views of my friend
from Utah, who spoke so carefully about the matter of price controls.
Sir, I do not expect to have any considerable influence on what we do
today. But I would like, in a very short order, to try to put what we
are doing in a perspective.
This began, for me, during the period of the Finance Committee
hearings on the health care legislation submitted to us by the
administration in 1993.
At one hearing, a professor, Charles Fahey, of Fordham University,
speaking for the Catholic Health Association, said: What we are
witnessing in the country is the commodification of medicine.
And down the table, the head of the UCLA hospital said: Can I give
you an example? In Southern California, we now have a spot market for
bone marrow transplants.
This thought stayed with me, that market forces were beginning to
shape decisions in health matters as they had not done before.
It was particularly poignant that the first institutions that would
have trouble in this new situation would be the medical schools and the
teaching hospitals, which, as economists say, are public goods.
Everybody benefits from public goods so no one has an incentive to pay
for it--and we are seeing this all over the country in a short 6 years.
Now, today, we are seeing another phenomenon of a market that comes
into being as railroads did, as oil refineries did, oil producers, as
has been going on through the history of free markets and free
enterprise, which is price controls. There is something about our
political systems in the West that responds to the creation of new
markets and the seeming rise in prices in those markets--when, in fact,
quality rises--that says perhaps we could control this by controlling
the price.
It always fails, Mr. President. It is the one thing you can say with
a large degree of confidence that in the 20th century this effort
always fails. Sometimes it fails by producing black markets where the
laws are not obeyed; others by simply depressing the quality of the
products in the market. That is what we have to watch for here in the
main.
We are dealing with thoroughly responsible organizations. The Pfizer
Corporation, from my city of New York, began work in Brooklyn in 1849,
developed the first treatment for parasitic worms in the mid-19th
century when that was a rampant endemic disease. It has since gone on
to do other extraordinary things. It was the first major producer of
penicillin in the United States, which was a drug of such enormous
consequence in the Second World War, the first time we were able to
destroy one cell in a body without destroying others.
Today Pfizer has 12,000 researchers with a budget of $4.7 billion,
larger than the budget of the National Science Foundation. I say, sir,
impose price controls, which always seems like a good idea at the time,
and in a short order there will be no such budget. A period of enormous
innovation, very recent in the history of medicine, will come to a
close.
I see my time has come to a close. I ask unanimous consent to print
in the Record the paper I gave at the 42nd annual Cartwright Lecture as
reprinted in ``Academic Medicine,'' the journal of the Association of
American Medical Colleges.
There being no objection, the material was ordered to be printed in
the Record, as follows:
[Reprinted from Academic Medicine, 1998 by the Association of American
Medical Colleges]
On the Commodification of Medicine
(By Daniel Patrick Moynihan)
Abstract
The author reviews key themes of medicine and medical
education in the 20th century, such as the revolution in
therapies and the consequent and continuing changes in the
economies of health care; workforce issues, including the
controversy over the optimum number of residency slots; and
the impact of managed care on teaching hospitals and medical
schools. This impact is part of ``the commodification of
health care,'' in which health care is beginning to be bought
and sold in a market, where prices determine outcomes, and
where the not-for-profit, service orientation of health care
providers is threatened.
He discusses in detail the pressures this new health care
environment places on medical schools and teaching hospitals,
and recounts the first Senate Finance Committee hearing in
April 1994 on the subject of academic health centers under
health care reform. Soon after, the Committee approved
legislation to create the Graduate Medical Education and
Academic Health Center Trust Fund, to be financed by a 1.5%
tax on private health care premiums in addition to Medicare
Graduate Medical Education payments. The provision was later
dropped from a similar bill that came before the full Senate,
but has since been introduced as the Medical Education Trust
Fund Act of 1997.
The author concludes by cautioning that matters will grow
more difficult in the near future, since the threats to
academic medicine's institutions have not yet become part of
the national political agenda.
Acad. Med. 1998; 73:453--459.
I must begin by expressing great gratitude to the Dean's
Advisory Committee on Honors and Awards for inviting me to be
the recipient of the 1997 Cartwright Prize. I will not,
however, dissemble my anxiety at being, evidently, the first
lay person to receive this prize in its 116-year history. I
take comfort in one respect only, which is that I propose to
address the same subject, the condition of our medical
schools, that Abraham Flexner addressed in 1910, and whilst a
historic figure of the first order, Flexner, too, was a
layman!
He was, of course, concerned with qu