To protect the health and safety of Americans.

PRESCRIPTION DRUG AND MEDICARE IMPROVEMENT ACT OF 2003--Continued

Amendment No. 946

The PRESIDING OFFICER. Under the previous order, the Senator from
North Dakota is recognized.
Mr. DORGAN. I send an amendment to the desk on behalf of myself, Ms.
Stabenow, Mr. Jeffords, Ms. Snowe, Mr. Johnson, Mr. Levin, Mrs. Boxer,
Mr. Pryor, and Mr. Feingold. I ask for its immediate consideration.
The PRESIDING OFFICER. The clerk will report.
The legislative clerk read as follows:

The Senator from North Dakota [Mr. Dorgan], for himself,
Ms. Stabenow, Mr. Jeffords, Ms. Snowe, Mr. Johnson, Mr.
Levin, Mrs. Boxer, Mr. Pryor and Mr. Feingold, proposes an
amendment numbered 946.

Mr. DORGAN. I ask unanimous consent the reading of the amendment be
dispensed with.
The PRESIDING OFFICER. Without objection, it is so ordered.

[[Page S8203]]

(The amendment is printed in Today's Record under ``Text of
Amendments.'')

Amendment No. 947 To Amendment No. 946

Mr. FRIST. Mr. President, I send a second-degree amendment to the
desk and ask for its immediate consideration.
The PRESIDING OFFICER. The clerk will report the amendment.
The legislative clerk read as follows:

The Senator from Tennessee [Mr. Frist], for Mr. Cochran,
for himself, Mr. Frist, Mr. Breaux and Mr. Santorum, proposes
an amendment numbered 947 to amendment No. 946.

Mr. FRIST. I ask unanimous consent the reading of the amendment be
dispensed with.
The PRESIDING OFFICER. Without objection, it is so ordered.
The amendment is as follows:

(Purpose: To protect the health and safety of Americans)

At the appropriate place, insert the following:
``(  ) Conditions. This section shall become effective only
if the Secretary of Health and Human Services certifies to
the Congress that the implementation of this section will--
``(A) pose no additional risk to the public's health and
safety, and
``(B) result in a significant reduction in the cost of
covered products to the American consumer.''.

Mr. FRIST. Mr. President, the amendment I send to the desk is sent on
behalf of Senators Cochran and Breaux. It addresses an issue that we
have addressed on the Senate floor this evening. It has to do with the
safety aspects of the underlying Dorgan amendment.
As everyone in the Chamber knows, we have spent the last several days
addressing the important issue of adding prescription drugs as a
benefit to our Medicare Program today and at the same time
strengthening and improving Medicare.
Just a few minutes ago, the Senate passed legislation that will speed
access of generics to the market, really making drugs overall, I
believe, more affordable and more accessible to all Americans. This
merely builds on the rule announced last week by the administration
that will enhance the overall process with generic drugs by limiting
brand drug manufacturers to only one 30-month stay. But in the midst of
the overall bipartisan progress to enhance access to and improve the
affordability of prescription drugs, once again this proposal or
proposals to look at importation of drugs from Canada have resurfaced.
Very briefly, the Senate has debated this issue several times before.
The legislation itself is already on the books. Congress passed, this
body passed, indeed President Clinton signed into law the Medicine
Equity and Drug Safety Act of 2000, which allows for the importation of
pharmaceuticals into the United States. However, the law provided that
the Secretary of Health and Human Services had to demonstrate that its
implementation, No. 1, would impose no risk to the public's health and
safety; No. 2, would result in significant reduction in the cost of
covered products to the American consumer.
Since that time, two Health and Human Services Secretaries, one a
Democrat and one a Republican, could not demonstrate safety or cost
savings from importation.
I reiterate, the law on the books is such that safety concerns have
been expressed and, indeed, two HHS Secretaries could not demonstrate
safety or cost savings from importation; therefore, the law has not
been implemented.
In addition, the FDA, two separate Secretaries of Health and Human
Services, the U.S. Customs Service, the Drug Enforcement
Administration, and almost every former FDA Commissioner have
consistently and repeatedly opposed these proposals and told us they
cannot ensure that importing drugs is safe.
I ask unanimous consent to have printed in the Record a letter dated
June 19 to Senator Cochran from Mark B. McClellan, Commissioner of Food
and Drugs.
There being no objection, the material was ordered to be printed in
the Record, as follows:

Department of Health & Human Services

Food and Drug Administration,

Rockville, MD, June 19, 2003.
Hon. Thad Cochran,
U.S. Senate, Washington, DC
Dear Senator Cochran. This letter is in response to your
request for information from the Food and Drug Administration
(FDA) on the importation of prescription drugs into the
United States from foreign countries. It is currently illegal
to import prescription drugs from foreign countries into the
United States, but Congress has been debating whether to
amend the law to allow such products to flow into the United
States and become part of the drug supply. The FDA has
serious concerns about proposals that would open America's
borders to a stream of imported prescription drugs for which
FDA cannot assure safety, effectiveness or quality.
We share with Congress deep concern for senior citizens and
other patients who have difficulty paying for their
prescription drugs. As I am writing this, the Congress is
working towards enactment of landmark legislation to provide
a prescription drug benefit that will enable millions of
America's seniors to receive coverage for their drugs in
Medicare. In addition, under my leadership, FDA has taken a
number of significant steps to provide greater access to
affordable prescription medications that are safe and
effective. These steps include new initiatives to accelerate
approval of innovate new medical procedures and drug
therapies, changes to our regulations to reduce litigation
that has been shown to unnecessarily delay access to more
affordable generic drugs and proposals to increase Agency
resources for the review and approval of generic drugs--
products that are often far less expensive than brand name
products.
The overall quality of drug products that consumers
purchase from United States pharmacies is very high, and the
American consumer can be confident that the drugs they use
are safe and effective. However, a growing number of
Americans are obtaining their prescription medications from
foreign sources and when they do so, consumers are exposing
themselves to a number of potential safety risks that must be
ignored. In FDA's experience, may drugs obtained from foreign
sources that either purport to be or appear to be the same as
U.S.--approved prescription drugs are, in fact, of unknown
quality. These outlets may dispense expired, subpotent,
contaminated or counterfeit, product, the wrong or a
contraindicated product, an innocent dose, or medication
unaccompanied by adequate directions for use. The labeling of
the drug may not be in English and important information
regarding dosage and side effects may not be available. In
addition, the drugs may not have been packaged and stored
under proper conditions to avoid degradation.
Some have suggested that limiting each drug imports to
those from Canada would address these potential safety
concerns. But FDA cannot guarantee the safety of Canadian
drugs. Additionally, Canadian health officials have made
clear in public statements that they can provide no assurance
as to the safety and authenticity of drugs products shipped
to Canada for resale in other countries. In fact, the Agency
has concrete examples of drugs purchased from Canadian
pharmacists that violate safety provisions established by FDA
and the state pharmacy authorities, and we had been instances
of internet sites that offer to sell FDA-approved drugs, but
upon further investigations we have determined that the drugs
they sell are adulterated, sub-potent, or counterfeit.
The relatively ``closed'' regulatory system that we have in
this country has been very successful in preventing
unapproved or otherwise unsafe drug products from entering
the U.S. stream of commerce. Legislation that would establish
other distribution routes for prescription drugs,
particularly where those routes traverse a U.S. border,
creates a wide inlet four counterfeit drugs and other
dangerous products that are potentially injurious to the
public health and that pose a threat of our nation's drug
apply.
In sum, while we strongly support efforts to make
prescription drugs more affordable and have taken several
recent steps to accelerate access to more affordable, safe
and effective prescription drugs, I remain concerned that
provisions to legalize importation of prescription drug
products would greatly erode the ability of the FDA to ensure
the safety and efficacy of the drug supply. At the time, the
Agency simply cannot assure the American public that drugs
imported from foreign countries are the same as products
approved by FDA, or that they are safe and effective.
Sincerely,
Mark M. McClellan, MD., Ph.D.
Commissioner of Food and Drugs.

Mr. FRIST. I will read two sentences from the letter, the entire text
of which will be in the Record. It says in the first paragraph:

The FDA has serious concerns about proposals that would
open America's borders to a stream of imported prescription
drugs for which FDA cannot assure safety, effectiveness or
quality.

In the last paragraph, one other sentence:

I remain concerned that provisions to legalize importation
of prescription drug products would greatly erode the ability
of the FDA to ensure the safety and efficacy of the drug
supply.

One final point: Canadian health officials just very recently made it
clear

[[Page S8204]]

that they cannot, and they indeed will not, vouch for the safety of
prescription drugs imported from Canada to the United States. Thus, I
would argue that there is no need for Congress to pass yet another
piece of legislation when a law is already on the books, and doing so
only further threatens the safety of the American public, particularly
in this time of sensitivity to the dangers of possible biological,
chemical, or other terrorist attacks.
Relying on medicines that have been imported from other countries, if
that were the case, I believe would lead to seniors and individuals
with disabilities opening themselves to unnecessary threats in
particular, especially in light of the current bill, where we are
giving them access to prescription drugs they simply did not have
before. Obtaining drugs from other countries has a certain appeal to
seniors who simply have no access to any prescription drugs at all, but
the underlying premise of the bill on the Senate floor is that we are
going to improve that access to each and every senior, in terms of
having better access to those prescription drugs.
I yield the floor.
Mr. COCHRAN. Mr. President, I support the effort to provide
prescription drugs to Medicare beneficiaries and to lower the costs of
medicines for all Americans. Today's therapies are too valuable, in
terms of improving health and quality of life, for Medicare
beneficiaries not to have prescription drug coverage.
However, we must not create new opportunities for counterfeit
products, or products that have been tampered with, or products of
unknown origin to be brought into this country.
The amendment I have offered requires the Secretary of Health and
Human Services to certify that the reimportation of drug products will
pose no additional risk to the public health and safety and will result
in a significant reduction in the cost of covered products to the
American consumer.
If reimportation is safe and will reduce costs, this amendment should
not pose a problem. However, these are genuine concerns that
reimportation may not be safe for Americans.
We have had this issue before the Senate on two previous occasions.
Three years ago during consideration of the annual appropriations bill
for the Department of Agriculture, Food and Drug Administration and
related agencies, a similar amendment was added to the bill. The Senate
unanimously approved that amendment.
Then again last July, when we were considering the Greater Access to
Pharmaceuticals Act, a similar amendment was offered that limited
reimportation to products from Canada. Again, the Senate, by a vote of
99-0 approved this safeguard as part of the legislation that passed the
Senate. The House did not act upon this legislation.
In both these cases the Senate has adopted this amendment by a
unanimous vote both times for an obvious reason: the safety of the
American consumer must be protected.
Three years ago, Secretary of HHS Donna Shalala was not able to make
such a demonstration as required by that law.
I ask unanimous consent that a copy of her letter to President
Clinton dated December 26, 2000, be printed in the Record.
There being no objection, the material was ordered to be printed in
the Record, as follows:
The Secretary of

Health and Human Services,

Washington, DC, December 26, 2000.
Hon. William J. Clinton,
The White House,
Washington, DC.
Dear Mr. President: The annual appropriations bill for the
Food and Drug Administration (FDA) (P.L. 106-387), signed
into law earlier this year, included a provision to allow
prescription drugs to be reimported from certain countries
for sale in the United States. The law requires that, prior
to implementation, the Secretary of Health and Human Services
demonstrate that this reimportation poses no additional risk
to the public's health and safety and that it will result in
a significant reduction in the cost of covered products to
the American consumer.
I am writing to advise you that I cannot make the
demonstration called for in the statute because of serious
flaws and loopholes in the design of the new drug
reimportation system. As such, I will not request the $23
million that was conditionally appropriated for FDA
implementation costs for the drug reimportation system
included in the FY 2001 appropriations bill.
As you know, Administration officials worked for months
with members of Congress and staff to help them design safe
and workable drug reimporation legislation. Unfortunately,
our most significant concerns about this proposal were not
addressed. There flaws, outlined below, undermine the
potential for cost savings associated with prescription drug
reimportation and could pose unnecessary public health risks.
First, the provision allows drug manufacturers to deny U.S.
importers legal access to the FDA approval labeling that is
required for reimportation. In fact, the provision explicitly
states that any labeling information provided by
manufacturers may be used only for testing product
authenticity. This is a major loophole that Administration
officials discussed with congressional staff but was not
closed in the final legislation.
Second, the drug reimportation provision fails to prevent
drug manufacturers from discriminating against foreign
distributors that import drugs to the U.S. While the law
prevents contracts or agreements that explicitly prohibit
drug importation, it does not prohibit drug manufacturers
from requiring distributors to charge higher prices, limit
supply, or otherwise treat U.S. importers less favorably than
foreign purchasers.
Third, the reimportation system has both authorization and
funding limitations. The law requires that the system end
five years after it goes into effect. This ``sunset''
provision will likely have a chilling effect on private-
sector investment in the required testing and distribution
systems because of the uncertainty of long-term financial
returns. In addition, the public benefits of the new system
are diminished since the significant investment of taxpayer
funds to establish the new safety monitoring and enforcement
functions will not be offset by long-term savings to
consumers from lower priced drugs. Finally, Congress
appropriated the $23 million necessary for first year
implementation costs of the program but did not without
funding core and priority activities in FDA, such as
enforcement of standards for internet drug purchase and post-
market surveillance activities. In addition, while FDA's
responsibilities last five years, its funding authorization
is only for one year. Without a stable funding base, FDA will
not be able to implement the new program in a way that
protects the public health.
As you and I have discussed, we in the Administration and
the Congress have a strong obligation to communicate clearly
to the American people the shortcomings in policies that
purport to offer relief from the high cost of prescription
drugs. For this reason, I feel compelled to inform you that
the flaws and loopholes contained in the reimportation
provision make it impossible for me to demonstrate that it is
safe and cost effective. As such, I cannot sanction the
allocation of taxpayer dollars to implement such a system.
Mr. President, the changes to the reimportation legislation
that we have proposed can and should be enacted by the
Congress next year. At the same time, I know you share my
view that an importation provision--no matter how well
crafted--cannot be a substitute for a voluntary prescription
drug benefit provided through the Medicare program. Nor is
the solution a low-income, state-based prescription drug
program that would exclude millions of beneficiaries and
takes years to implement in all states. What is needed is a
real Medicare prescription drug option that is affordable and
accessible to all beneficiaries regardless of where they
live. It is my strong hope that, when Congress and the next
Administration evaluate the policy options before them, they
will come together on this approach and, at long last, make
prescription drug coverage an integral part of Medicare.
Sincerely,
Donna E. Shalala.

Mr. COCHRAN. Mr. President, on July 9, 2001, a letter from the
current Secretary of Health and Human Services, Tommy Thompson,
indicated that based on an analysis by the Food and Drug Administration
on the safety issues and analysis by his planning office on the cost
issues, he could not make the required determinations, and he stated
his view that we should not sacrifice public safety for uncertain and
speculative cost savings.
Secretary Thompson also indicated that prescription drug safety could
not be adequately guaranteed if drug reimportation were allowed and
that costs associated with documentation, sampling, and testing of
imported drugs would make it difficult for consumers to get any
significant price savings.
I ask unanimous consent that Secretary Thompson's letter be printed
in the Record.
There being no objection, the material was ordered to be printed in
the Record, as follows:

The Secretary of

Health and Human Services,

Washington, DC, July 9, 2001.
Hon. James Jeffords,
U.S. Senate,
Washington, DC.
Dear Senator Jeffords: I am writing to follow up on my
earlier response to your letter January 31, 2001, co-signed
by fifteen of

[[Page S8205]]

your colleagues, regarding the Medicine Equity and Drug
Safety Act of 2000 (MEDS Act).
You and other Senators and Representatives asked that I
reconsider former Secretary Shalala's decision and make the
determination necessary to implement the MEDS Act. As I
mentioned in my prior communication, I ask the Food and Drug
Administration (FDA) to carefully reexamine the law to
evaluate whether this new system poses additional health
risks to U.S. consumers, and the Office of the Assistant
Secretary for Planning and Evaluation (OASPE) to examine
whether the new law will result in a significant cost savings
to the American public.
I believe very strongly that seniors should have access to
affordable prescription drugs. I applaud your leadership in
this area, and agree that helping seniors obtain affordable
medicines should be a priority. However, as my earlier
response stated, I do not believe we should sacrifice public
safety for uncertain and speculative cost savings.

Safety Concerns

After a thorough review of the law, FDS has concluded that
it would be impossible to ensure that the MEDS Act would
result in no loss of protection for the drugs supplied to the
American people. As you know, the drug distribution system as
it exists today is a closed system. Most retail stores,
hospitals, and other outlets obtain drugs either directly
from the drug manufacturer or from a small number of large
wholesalers. FDA and the states exercise oversight of every
step within the chain of commercial distribution, generating
a high degree of product potency, purity, and quality. In
order to ensure safety and compliance with current law, only
the original drug manufacturer is allowed to reimport FDA-
approved drugs.
Under the MEDS Act, this system of distribution would be
open to allow any pharmacist or wholesaler to reimport drugs
from abroad; this could result in significant growth in
imported commercial drug shipments. As you know, the FDA and
the states do not have oversight of the drug distribution
chain outside the U.S. Yet, opening our borders as required
under this program would increase the likelihood that the
shelves of pharmacies in towns and communities across the
nation would include counterfeit drugs, cheap foreign copies
of FDA-approved drugs, expired drugs, contaminated drugs, and
drugs stored under inappropriate and unsafe conditions.
While the MEDS Act requires chain of custody documentation
and sampling and testing of imported drugs, these
requirements cannot substitute for the strong protections of
the current distribution system. Counterfeit or adulterated
and misbranded drugs will be difficult to detect, and the
sampling and testing proposed under this program cannot
possibly identify these unsafe products entering our country
in large commercial shipments.
I can only conclude that the provisions in the MEDS Act
will pose a greater public health risk than we face today and
a loss of confidence by Americans in the safety of our drug
supply. Although I support the goal of reducing the cost of
prescription drugs in this country, no one in this country
should be exposed to the potential public health threat
identified by the FDA in their analysis. Further, the
expenditure of time and resources in maintaining such a
complex regulatory system as proposed by the MEDS Act would
be of questionable public health value and could drain
resources from other beneficial public health programs.

cost savings

The clear intent of the MEDS Act is to reduce the price
differentials between the U.S. and foreign countries. The
review by the Office of the Assistant Secretary for Planning
and Evaluation (OASPE) concludes there are significant
disincentives for reimportation under the MEDS Act, including
the costs associated with documenting, sampling and testing,
the potential relabeling requirements and related costs and
risk associated with such requirements, the overall risk of
increased legal liability, the costs associated with the
management of inventories by wholesalers and pharmacists, and
the risk to existing and future contractual relationships
between all parties involved. Moreover, there are a number of
reasons (including potential responses by foreign
governments) why lower foreign prices may not translate into
lower prices for U.S. consumers. Insufficient information
exists for me to demonstrate that implementation of the law
will result in significant reduction in the cost of drug
products to the American consumer.

conclusion

Since I am unable to make the determination on the safety
and cost savings in the affirmative, as required under the
law, I cannot implement the MEDS Act. Please find attached to
this letter a more detailed analysis of the factors
influencing the public-safety and cost-savings questions. If
you need further clarification of my position on these
issues, please do not hesitate to contact me.
Thank you for your leadership in health care. I look
forward to working with you on new initiatives for making
medicine more affordable to our citizens, and on other health
issues of importance to our Nation.
Sincerely,
Tommy G. Thompson.

Mr. COCHRAN. Mr. President, just this week, Mark McClellan,
Commissioner of the Food and Drug Administration, has written to
reiterate this point. I ask unanimous consent that Dr. McClellan's
letter of June 19, 2003 be printed in the Record.
There being no objection, the material was ordered to be printed in
the Record, as follows:

Department of Health & Human Services, Public Health
Service, Food and Drug Administration,
Rockville, MD, June 19, 2003.
Hon. Thad Cochran,
U.S. Senate,
Washington, DC.
Dear Senator Cochran: This letter is in response to your
request for information from the Food and Drug Administration
(FDA) on the importation of prescription drugs into the
United States from foreign countries. It is currently illegal
to import prescription drugs from foreign countries into the
United States, but Congress has been debating whether to
amend the law to allow such products to flow into the United
States and become part of the drug supply. The FDA has
serious concerns about proposals that would open America's
borders to a stream of imported prescription drugs for which
FDA cannot assure safety, effectiveness or quality.
We share with Congress deep concern for senior citizens and
other patients who have difficulty paying for their
prescription drugs. As I am writing this, the Congress is
working towards enactment of landmark legislation to provide
a prescription drug benefit that will enable millions of
America's seniors to receive coverage for their drugs in
Medicare. In addition, under my leadership, FDA has taken a
number of significant steps to provide greater access to
affordable prescription medications that are safe and
effective. These steps include new initiatives to accelerate
approval of innovate new medical procedures and drug
therapies, changes to our regulations to reduce litigation
that has been shown to unnecessarily delay access to more
affordable generic drugs, and proposals to increase Agency
resources for the review and approval of generic drugs--
products that are often far less expensive than brand name
products.
The overall quality of drug products that consumers
purchase from United States pharmacies is very high, and the
American consumer can be confident that the drugs they use
are safe and effective. However, a growing number of
Americans are obtaining their prescription medications from
foreign sources and when they do so, consumers are exposing
themselves to a number of potential safety risks that must
not be ignored. In FDA's experience, many drugs obtained from
foreign sources that either purport to be or appear to be the
same as U.S.--approved prescription drugs are, in fact, of
unknown quality. These outlets may dispense expired,
subpotent, contaminated or counterfeit product, the wrong or
a contraindicated product, an incorrect dose, or medication
unaccompanied by adequate directions for use. The labeling of
the drug may not be in English and important information
regarding dosage and side effects may not be available. In
addition, the drugs may not have been packaged and stored
under proper conditions to avoid degradation.
Some have suggested that limiting such drug imports to
those from Canada would address these potential safety
concerns. But FDA cannot guarantee the safety of Canadian
drugs. Additionally, Canadian health officials have made
clear in public statements that they can provide no assurance
as to the safety and authenticity of drug products shipped to
Canada for resale in other countries. In fact, the Agency has
concrete examples of drugs purchased from Canadian
pharmacists that violate safety provisions established by FDA
and by state pharmacy authorities, and we have seen instances
of internet sides that offer to sell FDA-approved drugs, but
upon further investigation we have determined that the drugs
they sell are adulterated, sub-potent, or counterfeit.
The relatively ``closed'' regulatory system that we have in
this country has been very successful in preventing
unapproved or otherwise unsafe drug products from entering
the U.S. stream of commerce. Legislation that would establish
other distribution routes for prescription drugs,
particularly where those routes traverse a U.S. border,
creates a wide inlet for counterfeit drugs and other
dangerous products that are potentially injurious to the
public health and that pose a threat to the security of our
nation's drug supply.
In sum, while we strongly support efforts to make
prescription drugs more affordable and have taken several
recent steps to accelerate access to more affordable, safe
and effective prescription drugs, I remain concerned that
provisions to legalize importation of prescription drug
products would greatly erode the ability of the FDA to ensure
the safety and efficacy of the drug supply. At this time, the
Agency simply cannot assure the American public that drugs
imported from foreign countries are the same as products
approved by FDA, or that they are safe and effective.
Sincerely,
Mark B. McClellan, M.D., Ph.D.,
Commissioner of Food and Drugs.

Mr. COCHRAN. Mr. President, it would seem prudent that the safeguards
we have adopted twice, by unanimous votes, should also be applied to

[[Page S8206]]

this proposal. That is why I offer this amendment.
We should be certain that any change we make results in no less
protection in terms of the safety of the drugs supplied to the American
people and will indeed make prescription drugs more affordable.
Liberalization of protections that are designed to keep unsafe drugs
out of this country, especially considering the terrorist threats we
face now, should occur only if the necessary safeguards are in place.
This amendment will ensure that the concerns of the last two
administrations regarding the safety and cost-effectiveness are
addressed prior to the implementation of this proposal.
Currently, under the Federal Food, Drug, and Cosmetic Act, it is
unlawful for anyone to introduce into interstate commerce a new drug
that is not covered by an approved new drug application or an
abbreviated new drug application. Approval must be sought on a
manufacturer and product-by-product basis. A product that does not
comply with an approved application, including an imported drug not
approved by FDA for marketing in the United States, may not be
imported, even if approved for sale by that country.
A product introduced into interstate commerce that does not comply
with an approved application is considered an unapproved new drug in
violation of the Food, Drug, and Cosmetic Act, as well as
``misbranded'' under the section of that act.
Under section 801 of the act, a drug that is manufactured in the
United States pursuant to an approved new drug application and shipped
to another country may not be reimported into the United States by
anyone other than the original manufacturer. This prohibition on
reimportation of products previously manufactured in the United States
and then exported was added in 1988 to prevent the entry into this
country of counterfeit and adulterated products.
Section 801 was enacted not to protect the corporate interests of
pharmaceutical companies but to protect the safety of American
consumers. Counterfeit drugs are a very real threat and can be deadly.
Any change of drug reimportation laws must assure safety from this
threat. Limiting reimportation to drugs from Canada does not
necessarily solve that problem.
In a July 11, 2001, letter to the Energy and Commerce chairman and
ranking member, William Simpkins, Acting Administrator of the
Department of Justice Drug Enforcement Administration, who was
referring to reimportation amendments, said the following:

(W)e oppose . . . these amendments because they would
hinder the ability of law enforcement officials to ensure
that drugs are imported into the United States in compliance
with long-standing Federal laws designed to protect the
public health and safety.

More recently, in letter dated November 25, 2002, Asa Hutchinson,
then Administrator of the Drug Enforcement Administration at the US
Department of Justice, reiterated this position with respect to any
type of proposal that might limit the ability of the FDA to inspect and
assure the safety and compliance with Federal law of products that
would be brought back into the United States.
I ask unanimous consent that Administrator Hutchinson's letter be
printed in the Record.
There being no objection, the material was ordered to be printed in
the Record, as follows:

U.S. Department of Justice,

Drug Enforcement Administration,

Washington, DC, November 25, 2002.
Hon. Thad Cochran,
U.S. Senate,
Washington, DC.
Dear Senator Cochran: The purpose of this letter is to
respond to your inquiry regarding the position of the Drug
Enforcement Administration (DEA) with respect to any proposal
to limit the authority of the Food and Drug Administration
(FDA) to inspect shipments of prescription drugs that are
imported into the United States.
In general, DEA opposes any such limitations because they
would hinder the ability of federal law enforcement officials
to ensure that drugs are imported into the United States in
compliance with long-standing federal laws designed to
protect the public health and safety. Since its creation in
1906, the FDA has served as the American public's watchdog to
ensure safe, medically approved prescription drugs. In
undermining the FDA's ability to do its job, we risk
undermining the public health and safety.
First, a brief explanation of DEA's role in this issue:
DEA's statutory authority is limited to controlled substances
(drugs of abuse). DEA is the primary agency responsible for
enforcement of the Controlled Substances Act (CSA).
Controlled substances can be viewed as a subset of
prescription drugs. All legal (pharmaceutical) controlled
substances are prescription drugs (e.g., OxyContin, Percocet,
Demerol, Valium). However, most prescription drugs are not
controlled substances (e.g., Claritin, Prozac, Viagra,
erythromycin, insulin). Nonetheless, for the following
reasons, limiting FDA's authority to inspect shipments of
imported prescription drugs could potentially lead to an
increase in the illegal importation of controlled substances
into the United States.
DEA is currently facing enforcement challenges on many
fronts with respect to controlled substance importation and
smuggling. Several foreign countries have been identified as
the source of a large amount of controlled substances that
have been illegally imported. Additionally, the United States
Customs Service (USCS) inspectors on the southern and
northern borders must determine whether each traveler
entering the United States with a drug is complying with the
Federal Food, Drug and Cosmetic Act (FDCA) and the CSA.
Information obtained from the USCS indicates that there is an
increased volume of prescription drugs being imported through
the mail as a result of the Internet. Sometimes the drugs are
counterfeit; other times the drugs are real drugs, including
controlled substances, sold without the required
prescription. Although the CSA clearly prohibits importation
of controlled substances in this manner, the FDA and USCS
must inspect each package to ascertain the contents.
Identifying a drug by its appearance and labeling is not an
easy task. From a practical standpoint, inspectors cannot
examine drug products and accurately determine the identity
of such drugs or the degree of risk they pose. This is
particularly true since these drugs are often intentionally
mislabeled. Persons who are willing to illegally ship
controlled substances to the United States are unlikely to
honestly label their packages as containing controlled
substances,
Therefore, in order to support DEA's efforts to curtail the
illegal importation of controlled substances into the United
States, it is crucial that FDA retain its authority to
inspect all packages that purport to contain ``prescription
drugs.'' If federal law prohibited the FDA from inspecting
foreign shipments of prescription drugs, making an exception
in the law that would allow the FDA to inspect controlled
substance shipments would serve little purpose. The foreign
shipper could simply label the package ``prescription drugs--
noncontrolled substances'' and the FDA would be powerless to
take any investigative steps or to assist the DEA in
intercepting these illegal shipments.
I trust that this has been helpful in explaining he DEA's
position on this issue. Please let me know if there is
anything else I may do to assist you in the future.
Sincerely,
Asa Hutchinson,
Administrator.

Mr. COCHRAN. Mr. President, William Hubbard, FDA's Associate
Commissioner for Policy and Planning, and the FDA's authority on the
topic of reimportation of pharmaceuticals, has testified a number of
times before Congress regarding the dangers of reimported products and
the inability of the U.S. regulatory system to assure the safety of
products brought into this country. Most recently, this month before
the House Committee on Government Reform, Dr. Hubbard testified

(T)he overall quality of drug products that consumers
purchase from United States pharmacies is very high. The
public can be confident that the drugs they use are safe and
effective. However, FDA cannot offer the same assurances to
the public about the safety of drugs they buy from foreign
sources.

There are a number of reasons why these products are not safe.
Counterfeiting of drugs is common throughout the world and the
transshipment of these counterfeit products through Canada is one of
the most serious dangers.
A recent example of the dangers of counterfeiting is the FDA alert
issue on May 23 of this year regarding counterfeit version of the
cholesterol lowering agent, Lipitor. This product is taken by over 18
million Americans. This investigation is currently ongoing and FDA is
still trying to determine the extent of this case.
In March, the FDA discovered counterfeit versions of the drug Procrit
which had been contaminated with bacteria or in some cases the product
contained no active ingredient.
There are numerous other examples. It is amazing the number of drugs
that are now on the shelves in drugstores in America that are
counterfeit and no one knows about it. These are difficulties that we
now face. The proposal of this amendment by the Senator from North
Dakota will further relax our capability to find illegal drugs, and to
find those drugs that are dangerous

[[Page S8207]]

that are being brought into this country.
It will create a new opportunity for transshipping drugs from all
over the world into our country which will be a great danger to the
citizens of our country.
The National Association of Boards of Pharmacy, the body that
represents the state boards of pharmacy in all 50 United States, as
well as eight Canadian Provinces has stated in March of this year

Of utmost concern is the lack of ability to determine the
actual country of origin. An order for what is purported to
be a Canadian drug may never be filled by a legitimate
Canadian pharmacy with a Canadian drug or even be filled in
Canada.

NABP, representing the boards that regulate the practice of pharmacy,
has also recently joined the Canadian National Association of Pharmacy
Regulatory Authorities in endorsing a statement opposing illegal
importation of prescription drugs.
The Canadian government itself has stated publicly that drug products
shipped to Canada for resale in other countries do not fall under the
Canadian regulatory system, and they can provide no assurance as to the
safety or authenticity of such drugs.
The conditions contained in my amendment, which would be added to the
legislative proposal before the body, are the same as those previously
adopted twice by this Senate. They were adopted both times by unanimous
votes of the Senate.
I ask my colleagues to again support this amendment.
The PRESIDING OFFICER. The Senator from North Dakota.
Mr. DORGAN. Mr. President, I was interested in the statement by the
majority leader. This, of course, is not the amendment the Senate
previously considered. It is not the amendment to which the Senate
previously agreed. It is not the provision of law that the Secretary of
Health and Human Services has refused to implement in two
administrations. It is not that at all.
First, we will sort out the facts.
Let me make a case for the amendment itself. My colleague just won a
debate we weren't having. His debate is about a piece of legislation
the Senate passed a couple of years ago. I supported that, and I
believe the Health and Human Services Secretary and the FDA made a
mistake in not implementing it. Nonetheless, that was all a couple of
years ago.
Yes, this particular amendment we offered deals with the
reimportation of prescription drugs, but it deals only with the
reimportation of prescription drugs from the country of Canada--only
from the country of Canada.
The Senate previously addressed this issue of reimportation in 2000
by saying reimportation from other countries--as long as it was an FDA-
approved drug and brought here under conditions of safety--would be
appropriate. We have already said the HHS and FDA did not implement the
previous legislation. But now, we will narrow this legislation very
dramatically and provide reimportation only from the country of Canada.
I will explain why that is important.
First, miracle drugs offer no miracles to those who cannot afford
them. If we don't do something to make drugs more affordable, seniors
in the country lose, and others who need prescription drugs and can't
afford them lose.
We should and must put some downward pressure on drug prices.
I understand the pharmaceutical manufacturers do not like that. I
understand why they resist it. If I were in their position, I would
certainly resist it as well.
I don't try to paint with a dark brush all of those who are on the
other side of the issue. I think the pharmaceutical industry does many
good things. They do a lot of very important research, some of which is
original and some of which they take from the National Institutes of
Health. They create medicines that are very important for the American
people.
I also said the other day that some of the pharmaceutical companies
have been providing free and discounted drugs to the lowest income
Americans. Five and a half million people have benefitted from free
medicines from American drug companies. I commend those companies. I
don't have the names of all the companies. Good for them. It is a step
in the right direction. They ought to be commended and saluted for
their program to help the lowest income Americans.
But the other issue is the larger one of the price of prescription
drugs. The fact is, we need to try to do something that puts some
downward pressure on prices. Let me describe, if I might, what the
problem is. Let me do it with some bottles of medicine.
I ask unanimous consent to be able to show some bottles of medicine
on the Senate floor. These are empty bottles.
The PRESIDING OFFICER. Without objection, it is so ordered.
Mr. DORGAN. This is Zocor. A very famous football coach advertises
this at halftime at football games. He says he takes Zocor. It is quite
a good medicine, I am sure. These are two bottles for Zocor--one from
the United States and one from Canada. The same pill is put in the same
bottle, manufactured in the same place, by the same company. In both
bottles is an FDA-approved drug. The only difference is, when that
medicine is sold in the United States to U.S. consumers, it costs $3.03
per tablet. In Canada, the same pill, in the same bottle, made by the
same company, cost $1.12 cents per tablet--$3 versus $1. The same pill,
same company, different countries. That is Zocor.
This is a drug called Lipitor. It has the same purpose as Zocor--to
reduce cholesterol. You can see that it is sold in the United States
and in Canada. These are bottles from each country. They are identical
bottles, made by the same company, again only the cost is different--$1
per tablet for the Canadians, and $1.86 for the U.S. consumer. The same
drug, same pill, manufactured in the same FDA-approved plant, put in
the same bottle, but different prices.
This is Vioxx used for arthritis. As you can see, same pill, made by
the same company, put in identical bottles. The difference? It costs
$2.20 if you buy it in the United States. If you are a Canadian
customer, it costs 78 cents for the same tablet--$2.20 versus 78 cents
for the same medicine.
Let me use one more example, if I might.
This is Prevacid: Those who are afflicted with ulcers would take this
drug. As you can see, once again, the same bottle, identical shape. The
difference? It costs $3.58 for the American consumer, and $1.26 for the
Canadian consumer--same pill, same bottle, same company, but a
different price.
Let me tell you about being in a little one-room drugstore in
Emerson, Canada, 5 miles north of the United States. Just 5 miles north
of the Canadian border, there is a drugstore. I accompanied a group of
seniors to the one-room drugstore in Emerson, Canada, just to make a
point.
The point was very simple. The medicines those seniors purchased in
Canada--the identical medicines to what they buy in the United States
and for which there is no safety concern or issue because the chain of
custody is identical in Canada--cost much less.
It begs the question. Why not let the market system resolve these
issues? As long as you have the safety of supply and the closed chain
of custody which you can be confident in--and you certainly do with
Canada because their system is very comparable to ours--allow people to
decide where they want to purchase their prescription drugs. If they
decided they would purchase their prescription drugs where they are
less expensive, it forces repricing of prescription drugs in this
country.
Let me use some charts to show what is happening. How much more does
the U.S. consumer pay? More than everyone else in the world by far. If
we pay $1 for a pharmaceutical product, that same product is 62 cents
in Canada. You can see what it is around the globe in different
countries--in England, 69 cents, Germany, 65 cents, France, 55 cents,
and Italy, 52 cents.
Let me show a chart with specific medications.
I just showed these: U.S. price versus Canadian price for Prevacid,
Zocor, Paxil--all heavily used drugs and costing nearly 40 percent more
in the United States than in Canada.
Now let me quote, if I might, President George W. Bush during the
third Presidential debate in St. Louis, MO.
During the Presidential debates, President Bush was asked about this.
Here is what he said:

[[Page S8208]]

Allowing the new bill that was passed in the Congress made
sense to allow for, you know, drugs that were sold overseas
to come back and other countries to come back into the United
States. That makes sense.

What he was saying there is that the reimportation of prescription
drugs makes sense. That is what he said in the third Presidential
debate.
I am not making this up. These are the President's words from the
debate--prescription drugs coming back into the country would make
sense. If I could put words in his mouth, I would believe, of course,
that he would say it makes sense, if this is safe.
But, nonetheless, this President, in a debate, said reimportation
makes sense.
Mr. JEFFORDS. Mr. President, will the Senator yield for a question?
Mr. DORGAN. I would be happy to yield.
Mr. JEFFORDS. I was obviously on this issue with the Senator from
North Dakota. We were forced into providing an ``out'' for them so we
could get the bill to the floor that said the Secretary would have the
authority to be able to set the bill aside and prevent this coming in.
I don't think they would be required to make any rationalization. But,
obviously, it was something we had to accept at the time in order to
get the bill voted on. And then what happened?

Mr. DORGAN. Well, Mr. President, the second-degree amendment that was
attached then dealt with safety and so on. What happened was, the
Department of Health and Human Services and the FDA indicated they
would not implement the law, so it was not implemented. But it is
important to point out that this piece of legislation dealt with the
importation of prescription drugs from many other countries.
We have narrowed this amendment to the country of Canada, to allow
the reimportation of drugs only from Canada. And because Canada has an
identical chain of custody to this country, there can be no question as
to the safety of allowing licensed distributors and pharmacists to be
able to access, from a licensed pharmacy in Canada, FDA-approved
prescription drugs. So that is why I do not have a problem accepting
the second-degree amendment offered by the Senator from Mississippi.
I cannot think of anybody at HHS or the FDA who can make a credible
case that there is a safety issue by allowing a licensed American
pharmacist to access prescription drugs from a licensed pharmacy in
Canada. There is no safety issue there. It is gone, finished.
So we, I hope, will adopt this. I believe there is no justification
for HHS or the Food and Drug Administration to fail to implement this
legislation.
Mr. JEFFORDS. I thank the Senator.
Mr. DORGAN. Mr. President, let me conclude quickly and quote what
Health Canada's Associate Director General said:

As soon as any drug crosses the border into Canada, it has
to meet all the regulations of our laws. . . .

What they are saying in Canada, with that statement, is that they do
not have drugs ricocheting around their country that are counterfeit
drugs or non-approved drugs. They have a drug safety system very much
like ours, in which drugs that go from an inspected plant into this
system, all the way through to the local licensed pharmacy, so that you
have a safety circumstance that everyone understands.
Let me continue. It was referenced a bit ago that all of the FDA--or
virtually all--of the former FDA Commissioners, oppose this. Let me
tell you what former FDA Commissioner David Kessler said:

I believe the importation of these products could be done
without causing a greater health risk to American consumers
than currently exists.

That is David Kessler, former FDA Commissioner.
Let me continue. William Hubbard, FDA Senior Associate Commissioner,
September 5, 2001, in a hearing that I chaired before the Senate
Commerce Subcommittee on Consumer Affairs said:

I think as a potential patient, were I to be ill and
purchase a drug from Canada, I think I would have a
relatively high degree of confidence in Canadian drugs. . . .

Simple and easy to understand, I think.
Finally, let me describe the systems in the United States and Canada.
Drugs must be proven to be safe and effective. We are talking only
about FDA-approved drugs. There are good manufacturing practices
required in both countries. There is appropriate labeling required in
both countries. There is the inspection of manufacturers, pharmacies,
and drug wholesalers in both countries. Pharmacists and wholesalers
must be licensed in both countries. And there is a chain of
custody required between the pharmacist, the wholesaler, and the drug
manufacturers in both countries. There is a regulatory requirement for
postmarketing surveillance required in both countries. And a national
mechanism for drug recall exists in both countries.

This is a chart that shows the same thing: The regulation in the
United States and the regulation in Canada, from the production of the
drug to the licensing of the pharmacist, are the same. There isn't any
way, in my judgment, that restricting reimportation to medicines from
Canada will allow the HHS or FDA folks to say this does not work. Of
course, it works. Of course, it will not compromise the safety of the
American consumer. The question is, Will we be able to have a
circumstance where the American consumer can access lower cost
prescription drugs?
It is not my intention--and it has never been my intention--to force
U.S. consumers to go outside of this country to access a supply of
prescription drugs. It is my intention to find ways to put downward
pressure on these prices by injecting competition that will force a re-
pricing of drugs in this country.
Now, every year, spending on prescription drugs in this country is
increasing 15 percent, 16 percent, 18 percent, every year. Just about
every year, there are double-digit increases in the cost of
prescription drugs. If we do not do something about this, we will hook
a hose up to the Federal tank and suck this tank dry. I guarantee it.
Now, let me end as I began. If I were representing the pharmaceutical
industry, I would fight like the dickens to price drugs however I
wished to price them. That is in their interest. It is in their
stockholders' interest. I understand that. It is in their company's
interest. But there is a limit.
This increase every year--15, 16, 18 percent--comes from two main
factors: one is increased utilization, the other is price inflation.
The fact is, if we do not find some way to moderate these price
increases, this system of ours isn't going to work.
I started by saying that I think the prescription drug industry, the
pharmaceutical manufacturers in this country, provide a significant
service to the American people by doing the research and providing
prescription drugs that are, in many cases, breakthrough drugs. I might
say at least a fair amount of that which they do comes from National
Institutes of Health research which is financed by the U.S. taxpayer. I
do not complain about that. Good for them. And I want those companies
out there.
I want the NIH and the pharmaceutical manufacturers searching for the
cure for diabetes and for cures for cancer and searching for new
pharmaceutical products that can help the American people. I want that
to happen. I do not want to shut off research.
The argument is made that if somehow the American people do not pay
the highest prices in the world, it will shut down research on new
drugs. That is not true. The fact is, European drug companies spend
more on research on drugs than companies do in the United States. There
is more research on drugs that occurs in Europe than in the United
States, and prices are lower in Europe than in the United States.
I just do not think it is right. I do not think it is right for the
U.S. citizen to pay the highest prices for prescription drugs in the
entire world. I just do not believe that is right.

Now, I understand all the arguments that are going to be raised by my
colleagues who oppose this and I would just ask them, what happened to
your faith in the market system? I hear a lot about this market system:
Let the market system work.
As long as you have the safety of the drug supply, and a protected
chain of custody--and that exists in Canada; no one can come to this
floor and say it does not--why not let the market system work?
Mr. SANTORUM. Will the Senator yield for a question?
Mr. DORGAN. Of course. I am happy to yield.

[[Page S8209]]

Mr. SANTORUM. Mr. President, if a drug is shipped from outside of
Canada to Canada for resale in the United States, does that go through
the same handling that the Senator from North Dakota has discussed?
Mr. DORGAN. Yes. As I indicated in one of the charts I presented, the
Canadian official said that any drug that crosses into Canada is
treated just the same as the drugs that enter the United States. As you
know, there are many drugs that are imported into this country. Just as
is the case for the importation of drugs into the United States by the
drug manufacturers, drugs that are imported into Canada from other
sources of production are certified as safe by the Canadians--just as
ours are certified by the FDA.
Mr. SANTORUM. If they are for the purposes of being resold in the
United States, not in Canada, are they also certified by the
Government?
Mr. DORGAN. First of all, the only way they can be reimported into
the United States would be if a licensed pharmacist or a licensed
distributor in the United States purchases them from a licensed
pharmacist or distributor in Canada. So at that point, they have
entered the stream of prescription drugs in the Canadian system. At
that point, the Canadians say: We assure the safety of the chain of
custody of those prescription drugs just as you do in the United
States.
I find this debate interesting because I was up on the border of
Canada one day. This was before mad cow disease occurred in Canada. My
heart goes out to the Canadian ranchers for having discovered one
instance of mad cow disease. Do you know what we do with Canada with
respect to meat. We say: We have reciprocal inspection procedures for
meat. You inspect it and that is good enough for us. What we want you
to do is cut one little strip off the meat and lay it in the back of
the truck, and we will open the back of the truck and see if it looks
decent and smells all right, and then you just run the truck through.
Why? Because we have reciprocal inspections. We say: If it is good
enough for you, it is good enough for us.

We have identical chains of custody for prescription drugs in Canada
and the U.S., but we won't say: If it is good enough for Canada with an
identical chain of custody for prescription drugs, it is good enough
for us. That doesn't make sense to me.
There is only one reason we won't say that. That is because some are
willing to support the notion that the U.S. customer, the U.S. citizen,
should pay the highest prices for prescription drugs. I happen to think
that is wrong. I believe our citizens ought to pay a good price.
Miracle medicines are not cheap. We ought to pay a good price and a
fair price. Should we pay the highest price in the world? I don't
believe so.
Mr. HARKIN. Will the Senator yield for a question?
Mr. DORGAN. I am happy to yield.
Mr. HARKIN. I thank the Senator for yielding. I compliment him on his
amendment. I see seniors from our State sometimes trying to get up to
Canada and buy drugs, the same drugs you pointed out, and paying one-
third as much as in the United States. The Senator pointed out that one
of the arguments we often have here for this higher drug price in the
United States is so the drug companies can engage in research. And we
want them to do that research. They do a lot of good research, as the
Senator just stated. They develop new drugs, and sometimes those drugs
don't pan out, and they need to cover the expense of bringing new drugs
on the market. We are all for that.
But I ask the Senator from North Dakota, is it not a fact that last
year the major drug companies in the United States spent more money on
advertising to the public than they did on research, that they actually
spent more money advertising prescription drugs which you and I can't
even buy unless we get a prescription? Yet we see full-page ads in USA
Today, three and four-page spreads in Time and Newsweek magazine, full
pages in the New York Times.
I ask the Senator, what sense does it make if, in fact, they are
going to charge us high prices for drugs in the United States and they
are using it just to advertise for drugs we can't even buy unless we
get a prescription? Isn't it a fact they actually spent more money on
advertising than they did on research?
Mr. DORGAN. I believe that is the case. I don't have the numbers in
front of me. I believe Senator Stabenow referred to that earlier. My
understanding is that the expenditures on advertising and promotion
exceed the expenditures on research.
Let me make two additional points and then yield the floor. I support
research and development, R&D, tax credits for industries, including
for the pharmaceutical industry. They benefit greatly from them. I have
always supported those tax credits. I think it makes sense to provide
credits and incentives for the development of new drugs.

Second, when these drugs are produced and then sold, I don't think we
ought to pay the highest prices in the world.
Let me give one more example, if I might. A woman with breast cancer
needs Tamoxifen. With a prescription to go buy Tamoxifen, you have one
of two choices, if you live near the border. You can pay $10 for a
supply of Tamoxifen in the United States, or you can go to Canada and
buy exactly the same amount of Tamoxifen for $1--$10 or $1. Why should
you have to fight breast cancer and fight these pricing policies at the
same time? It is not fair. It doesn't make sense that we should pay the
highest prices in the world.
Again, the majority leader started off by saying we have passed this
before and it doesn't work. Let me correct it again to say: Legislation
limited to Canada has not been enacted before. We passed something else
before. You are right, it was not implemented. It was reimportation
from other countries in the world, provided it was an FDA-approved
drug. That was not implemented.
This will be reimportation from Canada, so the legislation has been
dramatically narrowed to a country that has an identical chain of
supply for which there can be no safety concerns about unsafe drugs. We
are only talking about having licensed pharmacists and licensed
distributors accessing those drugs from licensed pharmacists or
distributors in Canada.
I am not interested in any way ever compromising the supply of
pharmaceutical drugs in America. I wouldn't offer this in a million
years if I felt it did that. I know it doesn't. There isn't any way
anyone in this Chamber can demonstrate that there is a safety issue
with respect to the medicines sold in Canada. You might be able to
demonstrate there is a safety issue dealing with Bali or Honduras or
Guatemala or Zaire, but you can't do it with Canada. You just can't.
And so that is why I have no difficulty accepting the second-degree
amendment offered by my colleague from Mississippi.
There is not a safety issue with respect to this narrow amendment.
There is only this issue: Shall the American people be able to see a
repricing of prescription drugs that results in price fairness with
respect to what U.S. and Canadian consumers are charged for identical
drugs put in identical bottles produced by the same company?
Mr. HARKIN. Will the Senator yield?
Mr. DORGAN. I am happy to yield.
Mr. HARKIN. The Senator really has made an eloquent case for why we
ought to have free trade with Canada in drugs as long as they meet the
same requirements. I ask the Senator, do we not in fact have a free
trade agreement with Canada?
Mr. DORGAN. Yes, we have free trade with Canada. It actually isn't
free trade. We could spend a long time talking about wheat and other
issues. We have a free trade agreement with Canada, but it excludes
prescription drugs. Why? Because a piece of legislation was passed a
decade and a half ago that said the only entity that will be allowed to
reimport prescription drugs into the United States is the manufacturer
of that prescription drug. That is what perverts the market. If you
assume that you have a safe supply of drugs in both countries, why then
would consumers simply not decide where to purchase the drug in
whatever represents their best interests? Why would they not be able to
make their own choice under a free trade agreement? It is perverted by
this previous legislation that prohibits the reimportation except by
the manufacturer.

[[Page S8210]]

What we are saying now is, we would allow the reimportation by the
licensed pharmacies. We are not talking about somebody shuffling around
in a T-shirt who knows nothing about prescription drugs. We are talking
about a licensed pharmacist or a licensed distributor who does this for
a living. We are saying they have the ability to go to Canada and
access medicines from a licensed pharmacist or a licensed distributor.
I would love to have somebody make a persuasive case that somehow
that compromises safety. I don't think the case exists.
Mr. HARKIN. If the Senator will yield for another question, I thank
the Senator for yielding again. The Senator continues to make an
excellent point here that seems to be lost on the proponents of this
bill on the other side.
I continue hearing how this is a bill that is supposed to promote
competition. It is supposed to promote free enterprise and the
marketplace. Yet here, as the Senator from North Dakota has pointed
out, in one place where the marketplace really could save seniors
money, by opening up the marketplace for these drugs to come in from
Canada as long as they meet all of our FDA requirements, on this the
other side says, no, we don't want the marketplace to work in this
case.
It kind of gives lie to all of the arguments about how this bill is
to promote competition in the marketplace on drugs for the elderly.
Quite frankly, it seems to me this bill is to promote higher prices and
to ensure the elderly really do not get the best deal they could
possibly get in buying prescription drugs which would mean they would
not be able to buy them from Canada, which distorts the marketplace.
Again, I thank the Senator for his well-reasoned arguments and his
well-reasoned amendment. With this amendment, we ought to strike a blow
for the marketplace and let the marketplace work by allowing our
seniors to be able to purchase these drugs under this so-called free
trade agreement that we have with Canada.
I compliment the Senator from North Dakota for this amendment.
Mr. DORGAN. Mr. President, let me say I will not put this entire
report in the record, but we asked the Congressional Research Service,
the CRS, to do a comparison of U.S. and Canadian requirements for
approving and distributing prescription drugs. This is by the
nonpartisan Congressional Research Service. They prepared a memorandum
comparing the U.S. and Canadian systems for both approving and
distributing prescription drugs. Essentially this report affirms that,
in all aspects of the U.S. and Canadian drug systems, drug approval,
drug manufacturing, drug labeling, drug distribution, the U.S. and the
Canadian systems are similar in all respects.
There just is not a circumstance here where someone can say the U.S.
system is terrific and the Canadian system is not. Both countries have
chains of custody that I think give people in Canada and the U.S.
assurance of safety.
Perhaps before I give up the floor, I should mention this has been
something Republicans and Democrats have worked on over a period of
time. We have debated these issues before, but not this amendment
because this is narrowed to Canada. I would be remiss if I didn't
mention our late colleague, Paul Wellstone. If he were in the Chamber,
he would be sitting in that back seat, and he either would have offered
the amendment, perhaps, or be waiting to be among the first to speak.
He, like many others of us--particularly in northern States--felt
strongly that the reimportation of prescription drugs was a way for
senior citizens, yes, but all Americans, to access the same
prescription drugs at a fairer price.
My expectation is that when we finish this debate and have a vote--I
believe we will vote on this tomorrow--this amendment will be further
amended by the second-degree amendment of Senator Cochran, which I
indicated I would accept. I don't believe there is a need to vote on
that. I believe that amendment will be subject to a recorded vote
tomorrow.
I hope my colleagues will do as we have done previously on broader
legislation. At least with this narrower bill, let's decide to pass
this and see if this can help provide some downward pressure on
prescription drug prices.
Ms. STABENOW. Will the Senator yield for a question?
Mr. DORGAN. Yes, I am happy to yield for a question.
Ms. STABENOW. I appreciate that. I wanted first to compliment my
friend from North Dakota, who has worked so diligently on this issue. I
am very proud to be a cosponsor of the amendment.
The PRESIDING OFFICER (Mr. Coleman). The Senator can only yield for a
question.
Mr. DORGAN. I was yielding for the purpose of a question.
Ms. STABENOW. I was in the middle of saying I wanted to ask is it not
true that even though the report you just indicated made it clear the
safety provisions, the oversight, is the same between Canada and the
U.S., isn't it true that even in light of that, you have gone the extra
mile to put into place basically a 1-year provision for reimportation,
and then at the end of that time the program would stay in effect,
unless the Secretary submits a certification that in fact there is a
problem, that based on experience, based on evidence that the benefits
do not outweigh the risks? Isn't that correct that you in fact have
gone that extra step, that extra mile to make sure even though we know
it is safe, it is the same, that we give a safety valve so that the
Secretary in fact could step in and certify if there was a problem?
Mr. DORGAN. Mr. President, Senator Stabenow has done a service by
pointing out something in the amendment I did not point out. The other
change is that this would be a 1-year pilot program, when approved by
the Senate. The certification will still be that this is safe because,
clearly, we have identical systems in the U.S. and Canada.
In addition, after a 1-year pilot project, there will be a 6-month
period in which the Secretary of Health and Human Services will certify
if there is a problem, if in fact there is one. I expect there will not
be. At that point, this program will continue. At least it creates a
specific 1-year pilot project and an evaluation, so there is a fail-
safe system if there would be any problem at all. I would not expect a
problem--particularly because we have narrowed this--with respect to
Canadian drugs.
The PRESIDING OFFICER. The Senator from Pennsylvania is recognized.
Mr. SANTORUM. Mr. President, I rise in opposition to the Dorgan
amendment, although as modified by Senator Cochran's amendment, I will
not oppose it.
Senator Cochran's amendment goes to the whole point here, which is
that reimportation of drugs is unsafe. I am not the one saying that. I
think most Members here are very concerned about the safety aspects of
reimportation. We have three Secretaries of Health and Human Services,
10 former FDA commissioners, the U.S. Customs Service, the White House,
DEA, CMS, Canadian Pharmacy Regulatory Agency, U.S. Pharmacy Regulatory
Agencies, and 44 U.S. pharmacist groups, voicing safety concerns about
the reimportation of drugs.
I am satisfied Senator Cochran's amendment will sufficiently reflect
the concern of Members of this body and of these organizations about
the issue before us. So I am going to set that aside. I could argue
until the cows come home how this is an unsafe and unwise practice to
engage in. But with this amendment, we will leave it up to the
Secretary to determine as to what he believes--and he was here a minute
ago. We have a statement from him already saying he does not believe it
is safe. I am comfortable leaving it in the hands of someone who will
study this issue in depth with respect to safety.
I want to dispel a couple of myths that have been created during this
debate. One of the myths is that American pharmaceutical companies
spend more money on advertising than they do on research. As most
people who have followed the pharmaceutical industry and followed this
debate know, the pharmaceutical industry is the most research-intensive
industry in our country. I have always said I find it remarkable that
we are here on the floor of the Senate all the time beating up on the
pharmaceutical companies, saying they make too much money or they spend
too much money on advertising or they don't spend enough money on
research and development, and we need to whack them here and

[[Page S8211]]

whack them there until they become like the steel industry, where they
become--or other industries--less and less profitable, and then we pass
loan guarantee programs to prop them up. That is sort of the way we do
things here. If anybody is doing well, whack, we are going to take a
shot at them and say they are doing too well for everybody's good.
Let me just suggest the pharmaceutical industry is doing well because
they are leading the world in curing disease and treating very serious
health problems. They are doing it because of the enormous amount of
research they are doing, not because of the money they are spending on
advertising. General Motors spends more money on advertising--some $4
billion every year. That dwarfs almost all of the spending by the
pharmaceutical industry with respect to advertising. Yet I don't hear
the Senators from Missouri or Michigan or any others out here
complaining we pay too much for cars. Cars are as much of a necessity
for most people as pharmaceuticals. Why don't we hammer General Motors,
Ford, and those other folks for wasting this money on advertising.
Companies spend money on advertising because they have an obligation
to sell their product. The way you sell your product is by promoting
the value that product hopes to bring to an individual's life--the
positive attributes of the product. Pharmaceutical companies have the
right to do that through advertising to the general public, which may
not be informed about new therapies that are available, as well as
through direct advertising to physicians who prescribe the medicine.
That is a proper role, I believe, in informing the public. We want them
to be informed.
I cannot imagine we would want a public that would not want to know
what some of the more recent developments and potential improvements to
their lives that are available to them. Some have suggested their
spending on advertising is more than they are spending on research and
development. That is not true. I know that was said in passing. Someone
said: I think this is the case. Let me clarify for the record so we do
not have this common misstatement that I think this may be the case.
Let me tell you what the facts are.

I have a chart. It is just a piece of paper. I do not have it blown
up. The black line is the spending on research and development, and the
light gray line is the total promotion. Total promotion means, yes,
advertising, but it also means the free samples of drugs many receive
when they go to the doctor's office. That goes in promotion. That is
actually, in a sense, free drugs for the purposes of advertising and
promoting the product. All that is included in here.
You can see that research and development while, yes, advertising is
going up, research and development is going up even further. In 2001,
$30 billion was spent on research and development and a little over $10
billion on advertising--three to one. I daresay General Motors does not
spend three to one on research and development versus their
advertising. I daresay most companies and most industries do not come
close to spending that amount of money. But you know what. They are the
bad guys. They are the guys we have to hit upside the head. Why? Why do
we have to hit them upside the head? Because they are increasing their
prices too much. It is too costly, and we need these products.
Let's look at why they are increasing their prices and why you can go
to Canada, Germany, or other places, and receive these drugs for less
money. There are a couple of reasons.
No. 1, there was an excellent article in the ``Weekly Standard'' just
the other day talking about the incredible cost of getting drugs
approved by the FDA.
For a company which starts out with thousands of compounds with which
they are experimenting, researching, trying to work themselves through
the process to determine what is a viable compound to experiment with
and to move forward with, they start out with thousands, tens of
thousands. They narrow it down to a few hundred. They do some more
intensive research on those. They get to about four or five they do
some trials on and some tests on and even further research. They come
down to usually one drug where they go through the extensive process of
clinical trials and testing.
By the way, the reason Europe, Canada, and other countries around the
world get drugs years before we do, in some cases, is because of the
incredible costly process the very people who are complaining the drugs
cost too much have supported, the extensive approval process that jacks
up the price of those drugs in this country.
It costs $1 billion on average for a drug to go from that basic
research of compounds all the way through the process of determining
whether it is effective, whether it is safe, what conflicts there are.
All the issues they have to deal with, it costs about $1 billion in
this country.
It does not cost $1 billion in Canada. It does not cost $1 billion in
Europe. It does not cost $1 billion in Mexico. It costs $1 billion here
because of the extraordinary lengths to which we go to make sure the
drugs here are, what? Let's hear that word again. Safe. That those
drugs are safe. We put a premium value on, yes, efficacy. They have to
be effective. They have to treat what they say they are treating, and
do so effectively, but they also have to be safe. So we put a high
value on safety, and we require these companies to go through enormous
hoops to make sure, in this country, before a drug is sold, we know it
is safe.

We are suggesting two points: No. 1, safety is a highly valued
commodity when it comes to drug use, and that reimportation is unsafe.
No. 2, one of the reasons reimportation is so popular is because the
cost of the drugs are cheaper. One of the reasons they are cheaper is
because they do not have to go through the safety measures they are put
through in this country.
You require them to prove it is safer, and then you say: Gee, why are
you charging us more money? Why don't we just get them from this other
country, that, by the way, does not require you to go through those
hoops. So they do not pass on the costs to these other countries.
There is another reason. The other reason is because in Canada,
Mexico, most of the world, they set prices. They set prices. They say:
You want to sell drugs in our country? Fine. Pfizer, you want to sell a
drug in our country? No problem. Here is what we will pay you.
Pfizer says: Wait a minute, we have all these costs. I want to make a
profit.
Fine, if you want to make a profit, here is what we will pay you.
We charge $3 for this drug in the United States. You are only
offering to pay us $1.
Well, we have looked at it and your manufacturing costs are 50 cents;
$1 is a pretty good price. You will make 50 cents on every pill.
Pfizer says: That is our manufacturing cost. We have hundreds of
billions of dollars in research costs. We have litigation costs we have
to be concerned about. We have advertising and other related costs that
are built into the cost of this drug. You are only giving us the
manufacturing cost.
If you don't like the deal, you cannot sell your drug. So if you want
to sell your drug and make your 50 cents, sell your drug. If you don't,
see ya.
The drug company has to make a decision: Do I agree to sell based on
the price the Government wants to give me or am I shut completely out
of that market?
A lot of drug companies say: OK, I am not making the money I could in
this country because we do not have those kinds of price caps on our
drugs yet, and they say: At least I am making some margin. OK, I will
agree to sell there. If they say no, they do not have any market share
at all.
That is a best case scenario. A worst case scenario in Canada is: I
have a breakthrough drug, and there are no other drugs like it in the
world. It is a new class. It is, in fact, one of these great
discoveries that we hope for every day. They go up to Canada and say:
We spent over $1 billion researching, coming up with this great
breakthrough drug for a cure or for a treatment for this illness.
Canada says: Great, we would love to sell that drug. There isn't any
other drug out there that does this. Yes, you want to charge us $10 a
pill, that is nice; we will pay you $5.
The drug company says: Well, that is nice, 10.

[[Page S8212]]

Canada says: No, you didn't hear me, 5.
The drug company says: I am just not going to sell the drug.
A lot of drug companies will sell it anyway. Why? Because they feel a
social responsibility to have that drug available, as we see with the
AIDS drugs in Africa that are being sold at well below the costs in any
other country in the world. They may feel a social responsibility to
sell it, and, in many cases, they do.
Let's assume for some reason this company says: No, I do not feel any
social responsibility here; I am going to play hard ball. What does the
Canadian Government do? What do they by law have the right to do? They
have the right to steal that patent, make the drug in Canada, and sell
it for whatever price they want.
That is a pretty strong bargaining position. It is wonderful to stand
out here on the floor of the Senate and beat up on these companies for
selling drugs for less money in Canada, for less money in Mexico, for
less money in Germany. Why?
No. 1, it is a one-sided bargaining situation. You either take the
price we give you or you are out of the market. If we want your drug
anyway, we will steal your patent. Not a lot of bargaining power. Plus,
by the way, the United States costs so much more because of the FDA
process, not to mention the litigation costs on top of the research and
development costs.
The litigation costs in this country, because of runaway malpractice
suits and liability suits, product liability suits, class action suits,
the costs associated with drugs are higher here on top of that.
So what do we do? We blame the pharmaceutical company. We blame them
because Canada sets prices. We blame them because we have an extensive
and very costly FDA process. We blame them because we cannot put our
tort liability system in place. It is their fault because they want to
advertise their product. God forbid that someone knows what my product
is. This is the bad work that is being done.
Now what are we going to do? We are going to say that, yes, well,
maybe you are right, Senator, maybe it does cost more to bring a market
here. I think everybody would admit that, yes, our litigation system is
more costly; yes, Canada sets prices and blackmails them if they do not
go along. We agree with all of that, but you know what, it is still not
fair, because our seniors--and not just seniors but anybody--our people
in America deserve the same price they get in Canada.
Okay. Let's make a decision. Let's make a decision that, in a sense,
we are going to set prices in this country, that we are going to adopt
the Canadian formula. Now, obviously not every drug is sold in Canada.
So there are a lot of drugs that will not be affected by this
reimportation because Canada does not pay for every drug. There are
certain drugs that just are not sold up there. Why? Because the drug
company decided they were not going to play ball and sell at a price
that is well below what they believe is a profitable price for them to
sell. So we are only talking about a certain group of drugs. We
understand that.
We saw an amendment earlier today that is going to make sure these
research-oriented drug companies, the ones that are creating the new
therapies for the future, now that their patents expire on time, they
have no patent extensions, even though some may be worthy or not; we
are going to tighten down on that so generics can get into the
business. Generics, by the way, make no breakthrough drugs, do no
research on new therapies to treat diseases that are heretofore
untreated or not sufficiently treated, but we are going to squeeze down
these drug companies that are making these research investments and
doing these kinds of innovative therapies. We adopted that earlier. Now
we are going to whack them again and we are going to basically take the
Canadian prices that were set in Canada and have them apply in the
United States, so there will be free trade.
I heard people say free trade, free trade with a country that sets
prices. Now, I would suspect the Senator from North Dakota would not be
for free trade if they set the price of wheat in Canada at 50 percent
below the price of wheat in the United States. I do not think the
Senator from North Dakota would call that free trade--I could be
wrong--or if we set the price of timber at half, by law, in Canada, of
what the product was here. I do not think the Senator from Iowa would
consider that free trade if they set the price of corn or the price of
milk in Canada, by law, at half the price of the product in this
country. I do not think we would be up here extolling the virtues of
Canadian free trade. I know for a fact the Senator from North Dakota
would not because he is on the floor with great frequency extolling the
evils of free trade in Canada, particularly when it comes to wheat.
They do not set the price of wheat in Canada, but he is for free trade
on a product that is artificially priced below the market to come into
this country. Interesting economic theory but certainly not consistent
economic theory.

So what happens? We now have this product coming into this country at
below what arguably it could cost to get that product approved and
researched, with the liability costs, all the other costs associated.
Now what would be the result? If it is that pervasive, we may force the
drug companies to lower their prices. It could happen. In either event,
we are going to take a significant piece of the market share away from
the pharmaceutical companies selling drugs in this country.
What is the effect of that? Well, the effect of that is obviously
lower profits for pharmaceutical companies. There are a lot of folks, I
guess, who do not want people to be profitable, not at the expense of
our consumers who want to buy pharmaceuticals. In the end, the result
is this: We have to make a decision as to whether we want an industry
that is going to spend 30-plus-billion dollars a year in finding the
next cure, in doing the next level of research for that disease someone
in our family may have or some neighbor may have, or whether we are
more concerned with having cheap drugs today.
Let's understand, with eyes wide open, what we are balancing. We
subsidize the world's research. Admit it. I accept that. People say we
pay more for drugs here than everybody else in the world. All we are
doing is subsidizing the drug companies in this country and the rest of
the world is riding along on the money we give drug companies by paying
higher prices for drugs. They piggyback on us, and that is not fair.
Okay. You are right. What do you want to do about it?
Well, one thing we could do is talk to our trade officers and get
them to pound away at these other countries so they do not set
formularies and artificially low prices. We could do that. Do we tell
Canada they cannot blackmail our companies by threatening to make the
drug and steal the patent? We could do that. Short of that, which is
not happening right now and this debate is happening right now, we have
to make this decision, and the decision is this: Do we want to
eliminate the research and development of new drugs and new therapies
to solve new problems or problems that exist, diseases that exist, and,
yes, subsidize the world in the research and development or in exchange
for that next generation of drugs coming on line next year, are we
willing to trade cheaper drugs today for no cure tomorrow or cheaper
drugs today instead of the cure tomorrow, 3, 4, or 5 years from now?
That is a legitimate debate. I say to the Senator from North Dakota
if he wants to enter into that debate--and the Senator from Michigan
who is going to speak next, if she wants to enter into that debate--I
will accept that debate. I will truly accept the integrity of people
who say it is worth it to have cheaper drugs today to get more drugs to
people today who need them than to develop the next generation of drugs
down the road for people who will need them then. That is a legitimate
argument to make.
I assume many Americans would agree with that argument, particularly
if they are the people who do not have the money to afford the drugs
they need today. There are probably a great number of Americans who
would say that is a good tradeoff.
I come down on the other side. I do not believe it is a good
tradeoff. The reason I do not believe it is a good tradeoff is I think
there is a better way to solve what seems to be an intractable problem:
either research, innovation, new disease treatment, or cheaper drugs.

[[Page S8213]]

Interestingly enough, the solution is what we are talking about in
this Chamber this week and next week, and that is drug coverage. The
solution is, let's provide drug coverage to lower the cost out of
pocket to the consumer, particularly catastrophic drug coverage.

In my mind, the most important thing we are doing, not some of what I
consider very broad coverage that we have in this bill, but most
important is including the catastrophic coverage. If we have a high
drug user or the low-income subsidies in this bill for low-income
individuals, those are the people I am most concerned about. They are
the ones who, I argue, are the most compelling cases for saying we need
cheaper drugs now as opposed to cures later.
If we can solve those compelling cases of the low-income individual
and the high user of pharmaceuticals, if we can solve those two
problems, then we take a lot of pressure off this issue of cures
tomorrow versus drugs now.
This amendment does not belong. It is an anachronism. We get to the
heart of the problem that this amendment attempts to solve. I believe
it solves it in the wrong way.
I also believe reimportation is unsafe. It is unfair to an industry
in this country which is much maligned--until, of course, you get that
diagnosis. Once you get that diagnosis and you find out within the last
few years a little white pill that keeps you alive, that keeps you
walking, keeps you breathing, keeps you eating, once you find out there
is an industry out there that you never had a good word for up until
that moment, who you thought were bad people because they were raking
these people over the coals with all this money they were making, until
you found out because of the research and development that went on,
your life will continue and you will be able to see your children grow
up or you will be able to see and play with your grandchildren, all of
a sudden these companies are not so bad after all.
I know this is not a popular view for Members of the Senate to hold.
I have been told on numerous occasions defending drug companies is not
a term extender for Senators. I understand that. This is not a populist
issue. I accept it. But I have the gift in my State of having thousands
of employees who go to work every day with the focus on creating the
next little pill, the next little serum that will save somebody's life.
They are proud of the work they do. They have a right to make money and
do it. They have an absolute right to make money and do it. I will
stand by their right to do that. It is an industry that not just makes
money, but we are saving people's lives. We are changing people's
lives. We are giving that grandson the opportunity to know his grandma.
We should be willing to pay for it.
We should not be blackmailed by other countries that want to use us
for their research ground. We have some work to do. In my opinion, we
have work to do in the international trade arena to go after these
countries that do use us as the funding of their laboratories. But the
mistake is not to adopt their policies. It is to get them to change
their policies. What this does is adopt a flawed, fatal system for far
too many people.
I yield the floor.
The PRESIDING OFFICER. The Senator from Michigan.
Ms. STABENOW. Mr. President, it is hard to know where to begin. I
would like to talk about some of the facts and realities for folks who
are struggling to pay for those medications that are being developed or
being advertised on television.
I hope we will remember in these debates we are not talking about
automobiles or tennis shoes or peanut butter or any other optional
product. We are talking about lifesaving medicine.
I celebrate the fact we have lifesaving medicine and that we have
those who have dedicated their lives to that research. We have a lot of
such individuals in Michigan. I am very proud of them and the work they
do.
At the end of the line, if you cannot afford the medicine, it does
not matter. So price does matter. Affordability does matter.
Competition to bring prices down does matter.
I am very pleased a little earlier this evening we voted together in
a bipartisan way to close loopholes the brand-name companies have been
using to game the system, to keep competition off the market, and
generic drugs. We passed a very important amendment to this bill. I
commend, again, all who have worked very hard on that. The system has
been out of whack. I suggest it is out of whack in a number of other
ways.
First, it is absolutely true that the most profitable, successful
industry in this country is the pharmaceutical industry. No question
about it. It is great they are doing well. Any other business in this
country would love to have their situation. They are, arguably, the
most highly subsidized industry by taxpayers in this country. They have
a set of rules that up to this point have been highly in their favor to
allow them to keep the competition off the market. It is a great deal
if you can get it.
I know we have hundreds if not thousands of folks working here,
lobbyists, making sure we keep that good deal for them. I appreciate
that. Unfortunately, that good deal for them, that great deal for them,
has been at the expense of every other business trying to provide
health care for their employees, every other employee trying to keep
their health care and not lose their job because of rising health care
costs, every senior, every family in this country. The debate about
pricing is about not only making sure we have a healthy pharmaceutical
industry but we have other healthy businesses and consumers who help
pay the tab for that research and can afford to buy the product at the
end of the line.
What do I mean by that? I have said this before. We start with a lot
of the basic research in this country being paid for by American
taxpayers through the National Institutes of Health. I am proud we have
greatly increased the amount of money going into basic research. We
have done that on a bipartisan basis. It makes a difference. We are
very close on many different illnesses from Parkinson's to Alzheimer's
to diabetes, critical research. We need to be doing more. But that is
done by American taxpayers, investing our money. Because we benefit, we
understand how critical this is.
That information, that research, is then given to the pharmaceutical
companies who then develop it. We give them a writeoff for their
research, tax deductions, tax credits for new research, all of which I
support, as well as deductions for their advertising, their marketing,
their administration, their other business expenses. Tax deductions,
tax credits, are subsidies from American taxpayers. So we have a real
stake in this operation. We are already helping pay for it.
Once the drug has been developed, because it is very expensive for
new breakthrough drugs, because it is very expensive, we have a policy
of creating a patent for up to 20 years to limit the competition so
that company can, in fact, be covered at cost, because with new
lifesaving drugs it is very expensive.
We have a stake in this. We have a stake in it. We helped pay for it.
We helped create rules that are favorable to the companies, so that, in
fact, they can succeed. The deal, though, I believe, is that at the end
of that process the American consumer, the American senior should be
able to afford to buy that product that they helped pay to develop, to
research, to make happen. That should be the deal.
That is the point. In too many cases right now that is just not
happening. We get to the end of the line, and there are many ways in
which the companies sue currently to keep generics off the market or
keep the border closed so we can't buy them from Canada or do a variety
of other things to make it difficult for the competition to come in and
to keep the prices low. They make sure Medicare doesn't negotiate on
behalf of all the seniors of the country to be able to force a group
discount. There are a wide variety of methods to make sure the rules
stay the way they are and we are all paying a big price for that, I
believe.
We certainly want this industry to be successful. I think it is clear
by the rules, the subsidies, the support that has been there and will
continue to be there. But this is not a pair of tennis shoes. It is not
an automobile, as much as coming from Michigan I want everybody to buy
a new automobile every single year, an American-made automobile. But if
you don't, you will not

[[Page S8214]]

lose your life. But if you don't get your cancer medicine, you might.
This is very different.
Let me speak to the issue of advertising. Since 1996, the FDA has
taken the cap off of direct consumer advertising, as we know, radio and
television, other direct consumer advertising. We know, we have seen
advertising skyrocket. We do not have to debate that. All you have to
do is turn on your television set. If not every commercial, it is every
other commercial--they are very nice commercials--but they are
commercials for prescription drugs. We do not have to argue about
whether advertising has gone up. Every single person in this country
knows that advertising has gone up.
You do not have to tell a doctor that marketing has gone up. My
doctor talks to me about the line of drug reps at the door to come in
and promote particular medicines.
We know from studies that have been done, and FCC filings, that about
2.5 times more is claimed under the line item for ``advertising,
marketing, and administration'' than is claimed under research.
What I find very interesting is that I keep hearing that more is
spent on research than on advertising and marketing. Last year, I
offered legislation to say OK, if that is true, then let's just cap the
amount you can write off for advertising and marketing to the same
level you can write off for research on your income tax form. It should
not matter to anybody because they spend more on research. You would
have thought I had proposed the worst thing you could possibly propose.
It was adamantly and is still adamantly opposed by industry. It should
not matter if they are spending more on research than on advertising
and marketing.
I would like to speak to the business at hand here, the question of
allowing Americans to buy American-made drugs, subsidized by Americans,
the research funded in part by Americans, at the price they are sold in
every other part of the world--half the price we pay here.
This particular amendment is a very conservative, cautious amendment.
It focuses only on Canada. We know, in fact, there is importation
already back and forth from Canada. Drugs are already frequently
imported into this country but predominantly by manufacturers. They are
already bringing them back across the border. In fact, according to the
International Trade Commission, $14.7 billion in drugs were imported
into the United States in the year 2000, and $2.2 billion in drugs sold
in Canada were originally made in the United States.

It is ironic that the drugmakers are saying drugs cannot safely move
between the border between the two countries. What they are saying is
they don't want individuals to be able to do it or pharmacists to be
able to do it or wholesalers to be able to do it, but they do it every
day.
Also, we hear there is a difference in terms of oversight and
inspections. According to the CRS, our Food and Drug Administration
already inspects pharmaceutical production lines in Canada for 341
prescription drugs run by about 30 drugmakers. So they are already
doing it for the pharmaceutical industry. We pay to send FDA inspectors
to Canada to inspect already.
Another report dated September 2001, a report by our Congressional
Research Service--again, the nonpartisan Congressional Research
Service--confirms that:

The U.S. and Canadian systems for drug approvals,
manufacturing, labeling and distribution are similarly strong
in all respects. Both countries have similar requirements and
processes for reviewing and approving pharmaceuticals,
including ensuring compliance with good manufacturing
practices. Both countries also maintain closed drug
distribution systems [which is very important] under which
wholesalers and pharmacists are licensed and inspected by
Federal and/or local governments. All prescription drugs
shipped in Canada must, by law, include the name and address
of each company involved along the chain of distribution.

So that is the reason this amendment is narrowly focused on Canada
because we are talking about a system that is very similar, almost
exactly the same in terms of the safety and the rigorous oversight. We
are also talking about a process that is already going on, it is just
going on by the manufacturers and not by licensed pharmacists or by
individuals or by wholesalers.
I think this amendment is very conservative because the amendment not
only has Senator Cochran's provisions in terms of certification, but
this is an amendment that would affect 1 year. We are going to affect
things for a year, to open the border to Canada. After that 1-year
period, the program would stay in effect unless the Secretary submits a
certification to Congress that, based on substantial evidence and the
experience of the 1 year, the benefits of reimportation do not outweigh
the risks. So there are multiple protections in this amendment, and
strict FDA oversight is in this amendment.
I think this is particularly important to do in the context of the
prescription drug legislation that we are working on and that will be
passed by this body because the bill in front of us to provide a
Medicare prescription drug benefit does not take effect until 2006. So
other than a discount card, which is not new to seniors, those who have
been listening to the debate we have been having all week and
anticipating help right away are going to be sorely disappointed
because there will not be a prescription drug benefit until 2006. In
the meantime, we can help not only seniors but families and businesses
and everyone who is involved in paying for prescription drugs right
away, immediately. It doesn't cost anything to open the border to
Canada for prescription drugs for pharmacists and for individuals. We
can do it now. If there is an evaluation that there is a problem, it
can stop. But we know, based on information about the inspection
systems, based on what is already occurring, that it is highly unlikely
that there would be a problem.
I think it is critically important that we give major help now. We
can cut prices in half; in some cases much more. I have had the
opportunity to go with a number of different seniors to Canada where
they have met with a Canadian physician and received a prescription and
gone to a Canadian pharmacy. We have been shocked at the difference in
prices for literally the very same drug. It is particularly significant
in Michigan where we can look right across the river which you can swim
across, and go from Detroit to Windsor and see that kind of a price
difference. We have many seniors now looking to Canada for
opportunities to see Canadian doctors because they are so desperate to
get help.

Let me mention just a couple of things. Again, we are not talking
about some optional product where people are advertising and making
good profits. We wish them well. That is the American way. That is the
capital system. Good for them. But we are talking about a health care
system where we are not seeing doctors being reimbursed, nor hospitals,
nor nursing homes, nor home health agencies. The only part of the
system that is exploding in cost and which is driving up the cost of
the health care system is in the area of pharmaceutical drugs. This is
not optional. It is medical. It should be viewed as part of the health
care system. That is what we are debating today.
Let me mention Tamoxifen. Tamoxifen is a very important drug in
battling breast cancer. I had an opportunity to visit with Barbara
Morgan from Michigan when she went to Canada and visited a Canadian
doctor and going through the process there where she was able to get
her monthly Tamoxifen for $15 instead of $136. That is a huge
difference for her. She and her husband are retired on average means.
She did not expect to get breast cancer after retirement. They had,
like many others, been saving up to do things in their retirement. They
now find themselves spending money on her treatment and on her
prescription drugs. These are not theoretical discussions about people.
This is not a theoretical debate about allowing Americans to get
American-made, American-subsidized prescription drugs from Canada. This
is very real. It can literally make the difference between life and
death for people when they are struggling for critical lifesaving
medicines.
That is why I feel so strongly about this amendment. That is why I am
hopeful the Secretary will look at the evidence, will look at the
narrow construct of this amendment and be willing to work with us, be
willing to allow the borders to be opened for 1 year. We

[[Page S8215]]

are asking for 1 year with all of the safety precautions that are in
this amendment--just 1 year to allow our seniors and others to be able
to see a dramatic cut in the prices they have to pay for their
medicines; 1 year to try this and to evaluate the issues that have been
raised by those who are opposed.
I appreciate the time. This is, I believe, a very serious part of
this debate. If we want to make the difference right now for people,
right now doesn't involve money in the budget resolution. It doesn't
involve waiting until 2006. If we want to help folks right now, the way
to do that is to give them the opportunity to get their prescription
drugs at the lowest possible price. That is what this amendment will
do.
The PRESIDING OFFICER. The Senator from Montana.
Mr. BAUCUS. Mr. President, I don't see any more speakers who wish to
speak on the second-degree amendment. Am I correct in suggesting that
the regular order is now to vote on the second-degree amendment?
The PRESIDING OFFICER. The second-degree amendment is the pending
question.
Mr. BAUCUS. Mr. President, I think we are ready to vote.

Amendment No. 947

The PRESIDING OFFICER. If there is no further debate, the question is
on agreeing to the amendment.
The amendment (No. 947) was agreed to.
Mr. BAUCUS. Mr. President, I suggest the absence of a quorum.
The PRESIDING OFFICER. The clerk will call the roll.
The bill clerk proceeded to call the roll.
Mr. ALEXANDER. Mr. President, I ask unanimous consent that the order
for the quorum call be rescinded.
The PRESIDING OFFICER. Without objection, it is so ordered.
Mr. VOINOVICH. Mr. President, the Finance Committee has laid before
the Senate a bipartisan bill that will finally provide every senior
access to affordable prescription drugs. Passing this long-awaited
legislation is one of the best things we can do right away to help
solve the health care crisis in this country.
I applaud the efforts of the committee and specifically commend the
leadership of the chairman and ranking member, Senator Grassley and
Senator Baucus, in developing this critical legislation.
The bill reported out of the Finance Committee, S. 1, is the
culmination of years of hard work in the Senate to bridge the gap
between the Medicare of 1965 and the Medicare for today and the future.
Currently, seniors are paying too much for their needed prescription
drugs out-of-pocket. The cost of these life-saving drugs is
increasingly becoming a large burden for seniors, with some even
traveling to Canada to find cheaper drugs. Seniors should not have to
go to a foreign country to receive the drugs that their doctors
prescribe. We need to provide an environment where America's seniors
don't have to go to Canada.
The bill reported out of the Finance Committee accomplishes that.
This bill not only provides every senior access to affordable
prescription drugs, but it will also provide seniors access to benefits
that a modern health plan should have, such as preventive care and
disease management--options that Medicare does not currently provide.
Moreover, these additional benefits are provided by giving seniors a
choice and control over their prescription drug plans and health care
providers.
These changes will only improve and strengthen Medicare. As my
colleagues know, when Medicare was enacted in 1965, Congress made a
commitment to our Nation's seniors and disabled to provide for their
health security. Unfortunately, that security is on shaky ground
because Medicare has not kept up with the evolving nature of health
care.
The delivery of health care has vaulted ahead so dramatically 38
years after the inception of Medicare, that this system which was once
sufficient is now antiquated and ineffective.
For example, conditions that used to require surgery or in-patient
care can now be treated on an out-patient basis with prescription
drugs. But more than the progress that has evolved from the utilization
of prescription drugs, medicine has too evolved to the extent that
preventive care can now eliminate the need for extensive reliance on
the health care system. It is time for Medicare to reflect the
realities of today's health care delivery system.
My colleagues from the Finance Committee have found a solution that
is a good compromise and is a result that can be agreed to by both
Democrats and Republicans. Is this bill a panacea for seniors' health?
No. But it is a quantum leap forward from a system that has been stuck
in a time when the Ed Sullivan Show and the Dick Van Dyke Show were
seen as original programming in America's living rooms.
While the Senate has finally begun its debate on Medicare I would be
remiss if I did not take a step back and point out the roadmap that has
lead us to this point.
The President deserves great credit in providing in his budget
substantial funding to add a prescription drug benefit to Medicare. The
amount the President allocated, $400 billion, illustrates his
commitment to our nation's seniors. Time and again, the President has
called for strengthening and improving Medicare.
Additionally, this year we are operating under a budget resolution.
Last year, the Senate operated without one because we never voted on
the fiscal year 2003 budget resolution--the first time the Senate has
not done so since 1974.
The Senate got the job done this year. Through the leadership of
Chairman Nickles of the Budget Committee, the Senate laid out a
blueprint for future spending that has brought us to where we are
today.
The Senate is standing at the brink of providing seniors access to
affordable prescription drugs. This is long overdue, and we cannot
delay any further.
Over the past year, I have traveled throughout Ohio holding health
care roundtables to hear what the citizens in my State are saying.
These roundtables have included seniors that inevitably tell me it is
past time that Congress added a prescription drug benefit to Medicare.
I believe this is the year Congress will deliver on its longstanding
promises.
I am ready to go to my constituents in Ohio and say we were finally
able to move past partisanship and provide real security for their
health.
While it is vital that we pass a prescription drug benefit this year,
it is also vital that we pass one that is fiscally responsible.
Ideally, seniors would receive the assistance they need to have access
to every medicine prescribed by their doctor. Unfortunately, we live in
the real world and are subject to limited resources.
I would like to take a few moments to shed some light on our
Government's current fiscal condition. As recently as fiscal year 2000,
the Federal Government had a combined surplus of more than $100
billion. Every penny of payroll tax was retained in the Social Security
trust fund and the General fund was generating enough revenue to fully
fund its contribution to Medicare and still pay down the National Debt.
As my colleagues know, this rosy budgetary picture is long gone.
According to the Congressional Budget Office's latest monthly budget
estimate, May 2003, the unified deficit for fiscal year 2003 will
exceed $400 billion even after borrowing every penny of this year's
Social Security trust fund surplus.
With this in mind, it is imperative that we act not only to provide
Medicare benefits for today's beneficiaries, but also for the baby
boomers that will arrive in 2011.
The Finance Committee bill strikes a balance between providing
seniors and the disabled access to needed prescription drugs today and
doing so in a fiscally sensible way that would allow benefits to extend
to future generations.
Senator Grassley and the Finance Committee have put before the Senate
a bill that will cost $400 billion as scored by CGO.
The natural question that I think the American people would like to
know is what does $400 billion buy? In my opinion, $400 billion
provides a real prescription drug benefit that is affordable to both
the beneficiaries and the Federal Government.

[[Page S8216]]

First of all, seniors would get assistance immediately through the
prescription drug card. And our neediest seniors would receive an
additional $600 on top of the discounts Medicare will provide through
this card.
When the prescription drug program begins in 2006, under the Finance
Committee bill, premiums would average $35 a month.
After a $275 deductible, the government would cover half of all
prescription drug costs up to $4,500.
Now, critics of this approach will claim that the so-called
``doughnut hole'' after $4,500 will be the financial ruin of every
senior. The truth is that the vast majority of seniors--80 percent--
would never even hit the hole.
As a matter of fact, for 2003, the Kaiser Family Foundation estimates
that the average Medicare beneficiary will consume approximately $2,300
in pharmaceuticals. And should seniors consume over $5,800 in
prescription drugs, the Federal Government would pick up 90 percent of
drug costs.
While this benefit will greatly help seniors throughout the Nation,
there are still some seniors for whom the $35 per month premium and
additional cost-sharing is too high. For those individuals, the
bipartisan Finance Committee bill provides protections that will allow
access to prescription drugs.
For those seniors under 135 percent of poverty, $12,123 for an
individual and $16,362 or a couple, the Finance Committee bill would
provide a full subsidy for monthly premiums. In addition, the
government would cover 95 percent of their prescription drug costs to
the initial benefit limit and 97.5 percent above the stop-loss limit.
And for those seniors between 135 and 160 percent of the poverty
level, S. 1 would provide assistance with their monthly premiums on a
sliding scale. In addition, these individuals would pay no more than 50
percent of their drug costs once the $250 deductible has been reached.
When we talk about dollars being spent, we should also point out to
seniors that they will receive more bang for their buck under the
Finance Committee bill through Medicare Advantage.
Under Medicare Advantage, seniors will not just receive direct
assistance from the government to cover their prescription drug bills.
Rather, private health plans will have to compete for beneficiaries and
will attempt to attract seniors by providing the best health care
plan--including prescription drugs and possibly preventive care,
disease management, vision and dental services.
To the advantage of both Medicare beneficiaries and the Federal
Government, this competition will decrease the price of prescription
drugs and permit all parties to stretch their dollars further.
This body has been playing this political posturing game with
senior's health care for too long.
I am tired of explaining partisanship as the excuse for the Senate's
failure to pass a prescription drug benefit, which has forced the least
of our brothers and sisters to choose between food and prescription
drugs.
I am pleased that the Senate will have the opportunity to show the
American people, especially our nation's seniors and disabled that we
are serious about enacting legislation to provide a prescription drug
benefit this year.
The bill before us seems to have broad support from both sides of the
aisle. The President is ready and willing to sign a bill into law this
year. It is time to get the job done.

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