H.R. 2544House108th Congress (2003-2005)In Committee

Medical Independence, Privacy, and Innovation Act of 2003

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Referred to the Subcommittee on Courts, the Internet, and Intellectual Property.

Courts, Intellectual Property, Artificial Intelligence, and the Internet Subcommittee

September 4, 2003

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HouseIntro Referral

Introduced in House

June 19, 2003

HouseIntro Referral

Referred to the Committee on Ways and Means, and in addition to the Committees on Energy and Commerce, and the Judiciary, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned.

Ways and Means Committee

June 19, 2003

HouseIntro Referral

Sponsor introductory remarks on measure. (CR H5808-5811)

June 24, 2003

HouseCommittee

Referred to the Subcommittee on Health.

Health Subcommittee

June 27, 2003

HouseCommittee

Referred to the Subcommittee on Health.

Health Subcommittee

July 1, 2003

HouseCommittee

Referred to the Subcommittee on Courts, the Internet, and Intellectual Property.

Courts, Intellectual Property, Artificial Intelligence, and the Internet Subcommittee

September 4, 2003

Floor Debate

2 members

What members said about H.R. 2544 on the floor

1 Republican1 Democrat

Rep. Dana RohrabacherR-CA-46 · Jun 24, 2003

Mr. Speaker, before my colleagues leave, let me just note that that quote from Newt Gingrich that was bandied around earlier, we have seen that quote used many times, and those of us who have been…

Mr. Speaker, before my colleagues leave, let me just note that that quote from Newt Gingrich that was bandied around earlier, we have seen that quote used many times, and those of us who have been who have seen the full quote know that that quote was taken out of context and often Mr. Gingrich pointed that out as an example of the abuse of the public trust by presenting something that was totally misrepresented.

No, I would not.

Mr. Speaker, I think I control the body. I have the floor.

I would ask that the gentleman be removed from the floor.

Mr. Speaker, I am reclaiming my time. I would ask that the Sergeant at Arms remove the gentleman from the floor if he insists on taking my time.

I would ask the Sergeant at Arms to remove him from the floor if he continues to interrupt.

Mr. Speaker, we have seen this misuse of this quote so often in this body, and I would just like to make sure that the public is aware when they hear it misused again that Mr. Gingrich has time and time again demonstrated that that quote was being misused by people who were trying to misrepresent what he said.

Mr. Speaker, I would be happy to yield.

Mr. Speaker, I thank the gentleman. Let me just note that this quote, as I have stated, has been refuted over and over again and demonstrated by Mr. Gingrich in many public forums that it was being used in a very irresponsible and dishonest manner.

I would just note now that I would like to discuss a different approach to medical independence and privacy and health insurance and the whole issue that we have been discussing tonight and will be discussing further in the next few days.

I have a piece of legislation that I would like people to consider and that I would like them to look at; it is H.R. 2544. It is a piece of legislation that I believe offers a whole new approach to medical care and health care in America.

Unfortunately, all too often, the discussion of medical reform legislation has been focusing on the allocation of more funds. Sometimes those funds would help in our society those who are lacking resources to purchase their own adequate health care and medical care; but at other times when we are talking about spending more funds, what we are not talking about is helping those who really need it and cannot provide for themselves, but what we are talking about is subsidizing everybody, whether or not they need it. Rarely does Congress, when they are focusing on just spending more money, whether or not someone needs that help, rarely do we focus on how can we do things more wisely and more efficiently, and how can we bring down the costs of getting health care that would make more people able to take care of themselves. Rarely does government focus on how to create an environment which would spur the supply of medical services, and rarely do we focus on encouraging cost-cutting innovation or to provide incentives for those who create and innovate and bring up new, cost-effective methods of dealing with illness in our society.

In essence, what government does, and what this body often does, is focus on medical care demand rather than on medical care supply. This focus all but guarantees the price of drugs and hospital care and medical treatment will continue to soar and outpace the ability of many Americans to afford the price of being healthy and; certainly, as it brings the price of health care up, it then creates even more Americans, a pool of even more Americans who cannot take care of their own health care costs. So it is a cycle that leaves even more Americans dependent on the government, and then the government creates a situation where even more Americans cannot take care of themselves.

The Federal Government took over responsibility for the health care of America's seniors back in 1965. When Medicare was first enacted into law back in 1965, very few people remember what it was like back then. But before then, our economically disadvantaged were taken care of by tax dollars. Yes, they were. But most Americans who became seniors were expected to take care of themselves. And we need to ask ourselves, what has happened to the price of health care since the government assumed responsibility of taking care of all Americans over a certain age? What has happened to our health care since the emergence of Medicare?

Today, I dare say the price of health care is so high that it is inconceivable that most of our seniors can take care of themselves. Before Medicare, people were expected, if they could, to take care of themselves. Medicare came in and decided to take care of everybody. Now, almost nobody is able to take care of themselves.

Of course, the massive escalation of health care prices have hit the rest of the population as well as our seniors. Now, the same can be expected, I might add, of the price of prescription drugs if, indeed, we end up having the government take over, providing prescription drugs for all seniors, whether or not those seniors can afford to take care of themselves. What will happen is the price of drugs will soar, not only for seniors who will be paid for by the government, but by everyone else as well, again, making it even more difficult for people, for American citizens, to take care of their own health needs.

Last week, I introduced a bill entitled the Medical Independence, Privacy, and Innovation Act of 2003. This legislation combines a creative mix of market-oriented reforms that will encourage independence and, hence, wise personal medical care choices. If enacted, this legislation will further expand the protection of our medical care privacy. It makes long overdue changes in the Federal Drug Administration procedures that will encourage innovation and invention of new pharmaceuticals and, thus, will have a major effect on bringing down the cost of health care. This legislation, if enacted, will expand the variety, quantity, and availability of medical innovation. It is innovation, new technology, and our creative genius that

will enable Americans to overcome the monumental challenge of providing health care to the baby boomer generation as this generation slips into its senior years. Today, the entire system of health care delivery needs to be reshaped if we are to prevent a collapse as the baby boomer generation begins to retire and to go on Medicare.

In my legislation, I propose a program of reforms based on sound economic principles that are vital to improving medical care in America. It assures that people make choices for themselves rather than accept bureaucratic or political mandates. Today, nonseniors, as with seniors, in fact, find that health care decisions are being taken out of their hands. So even our nonseniors now, much less our seniors, are finding that they do not control their own destiny. They do not make those health care decisions that are so important to their lives. What we have done to the nonseniors in America, while co-opting the decision of every senior in America by just suggesting no one will be taking care of themselves, even those who could, we have now taken over full responsibility and taken the decision out of their hands; but we are doing that, in a way, to the people before they become seniors.

What we have done is structured a system where the employer has become the primary source of a health care service through employer- based health insurance plans. That is a fact of life, and we just had to accept it. Well, unfortunately, it means so many resources and so much power has been co-opted that consumer sovereignty and responsibility has been all but negated. Most people really do not have a choice. It is what the boss offers. If the boss offers it, it is take it or leave it.

There is an old economic truth, by the way, and that is, if the cost of a private or public good approach is zero, that means if you are being offered something and there is no cost to you taking advantage of it, there will be overuse and a waste of that good.

Today's system leaves us with almost no personal choices, but it leaves us with a system that does not rely at all on personal responsibility. We have no choices, and there is no personal responsibility as part of the system. It leaves people, American citizens, with a sense of helplessness and hopelessness and resigned to whatever is going to happen to them that is totally inconsistent with our heritage as a free people.

We spend more and more money on health care. We spend, in fact, more money on health care supposedly than any other country of the world. So as you are listening to people debate the issue of Medicare and debate the issue of prescription drugs and debate the issues of health care in America, remember we already spend more money by far than any other country of the world.

Perhaps part of this is due to the fact that individual responsibility has all been extracted from the system because what it is is we spend more money but we do not have the best health care system in the world and our people are not getting what they pay for or what is being paid for in the United States of America. We have, as I say, all but extracted from our system the idea of individual responsibility and personal authority over one's destiny, not to mention, of course, the profiteering and exploitation of the system by lawyers.

Now, it is time to make a new approach and our system and my bill does not reflect on the exploitation of our system by lawyers. That is another bill. That is a whole different area. But those are obviously one group of people who siphon money out of the system that should be going to people's health care. It is time to take a new approach and, again, over and above the medical malpractice situation.

It is time to take a new approach and what we need, for example, in my legislation, I am proposing that we establish medical checking accounts that incorporate both deductions and credits into our system so that our people will be free to control their own destinies.

Many American families would benefit through the ideas that I am proposing in my legislation. They would benefit by being able to purchase high deductible catastrophic health insurance plans and pay for the year to year or day to day doctor, dentist and pharmaceutical costs out of a medical checking account.

I have sat in my office with self-employed constituents who would love to be able to design their own package of medical care coverage. This approach would protect their family against the huge costs of serious medical illness, of accidents or some type of illness or disease, but it would allow them to pay out of their pocket for normal month to month costs.

Now, imagine how the intelligently a consumer spending his money would help to limit overspending and over-utilization of insurance coverage. Imagine in a society where individual families could shop around for medical insurance plans that suit their needs and not have to squeeze their life-styles into their employer options. My bill would, for example, in the end and it would end the unfair discrimination against individuals who seek independent alternatives to their employer health insurance plans that are mandated in many big businesses or many normal businesses as well, I might add. It would naturally integrate market discipline through personal choice and responsibility into Medicare spending.

My plan creates a medical checking account plan where the account base of $4,000 per family or $2,000 for an individual is built with tax deductible dollars and the estimated yearly variable costs are built in with a $1,000 tax credit replenished on a yearly basis. Now, we are beginning to find out that once we have been relegated, as we are in our current system, to cogs in a machine, either big government or big business machine, that the rights of privacy are no longer paramount or even considered. My legislation would reestablish the principle that a person owns his own medical history and must consent before it is passed on to others.

The emergence of big government and big insurance as the dominant force in health care has eroded the ideas of medical privacy, if not totally just extinguished it. It is time to swing the pendulum back. My bill restores the issue of prior consent and protects the private relationship information relationship between patient and doctor. It eliminates loopholes in the current law that will result in unsolicited merchandising, disclosures of private medical information and the diminishing privacy for millions of Americans.

Americans have visited their local pharmacy and many millions of have visited the pharmacy in the past several months and have been asked to sign a new HIPAA notice. Do these Americans realize that what they are signing is a set of rules that undermines their right to disclose or not to disclose their private and personal medical history?

This country was at one time based on the principle that you owned your medical history and that your property is your property and without your concept that that information should not be placed in the hands of another, whether that person is in big government or private corporations. We need to go back to that principle. When big government starts taking the power, of course, to protect us from ourselves, and that is what they always say, they are trying to protect us from ourselves, not just protect the people who cannot help themselves but protect everybody. They are protecting us from ourselves, you better watch out.

The government can and is protecting us to death. Not from death. They are protecting us to death. Today, for example, FDA approval standards require new pharmaceuticals not just be safe, new pharmaceuticals coming on the market, the requirement is not that they be safe, they have to be nearly 100 percent effective for everyone. It is a 96 percent efficacy rate that is demanded by the Federal Government. That makes it dramatically longer more difficult and more costly for a new drug to get on the mark. By doing this we are condemning hundreds of thousands of people to needless suffering with these overly high standards, we create hurdles to development of new drugs urgently needed and we end up preventing the use of drugs that are already available to help people, but it might only help 75 percent of the people. But if it only helps 75 percent, that cannot go on the market because the rule is it has to be 96 percent effective.

No, this is not fair and it is not right. And it is no coincidence that families of victims of leukemia, cancer, AIDS and other diseases plead to no avail for the abilities to use drugs that were legally available throughout the world. I have sat if my office with constituents who have children with leukemia or siblings with AIDS or patients with cancer who beg for us to do something to allow them to have those pharmaceutical products that are available to people in other countries. Tragically at the same time, as new drugs are provided, or excuse me, are approved for both safety and efficacy, those drugs who do manage to jump all the hurdles and become effective for almost everybody, it ends up where the price is sky high and very few people can afford them.

Then there is the case, of course, where inventors often place on their shelves and innovators and researchers and developers and scientists, they put on their shelves unused and undeveloped many innovative potential technologies and products because they can not afford the exorbitant costs of passing all of these FDA efficacy tests and are making it absolutely prove that 96 percent of the people will be totally cured by this drug.

Well, that makes no sense if 85 percent of the people are going to be cured by a drug, and I have sat in my office with inventors who have told me horror stories of these new inventions that they have but they will not bring them out because they cannot jump over these FDA hurdles.

Well, why does the FDA regulation concerning, for example, drug cocktailing today block the availability of new innovation? Why are we so afraid of new innovation? That new invasion can be set on the standard of it does no harm. I am proposing that we have the standard of it does no harm rather than a 96 percent or 100 percent efficacy rate. That is, it seems to me that that is what we should leave in the hands of the American people, the right to choose drugs that will do them no harm and they should have a right to take them if they feel, especially with the doctor's prescription that they can take that drug and treat themselves even if only 85 percent are cured rather than 96 percent.

Today, websites, consumer interest groups, investigative reporting will make the people of our country, with the help of their doctors who can help them with prescriptions and give them advice, they help the American people fully able to make these choices that were not possibly available to them or maybe the American people could not do it in the past.

Another oddity in the current system that drives up the price of drugs, not just this 96 percent efficacy standard that is insisted upon, one thing that drives up the price for drugs for Americans is the way we deal with the ownership rights of inventors, of those very same inventors and innovators that develop new drugs and find new ways of treating people more efficiently and for less costs in the long run.

What we do, if an individual or a corporation invests tens of millions or hundreds of millions of dollars in developing a new health alternative, all too often it takes years for them to get through this FAA approval process and the other governmental restrictions, and by the time a new drug or health care technology can be sold to the American people, almost all of the ownership time that the innovator and the patent owner has has been used up. So you only have about 20 years or 17 years with a patent, and if it takes them 15 years to get through the process, the company has to immediately charge a huge amount of money for that drug in order to cover its cost of development, to get it back, and then, of course, the drug has been held up for all of these other years. So it has not been available to the public; and then, of course, when it gets on the market we end up putting the company in a situation where it has to charge even more money to recoup its investment.

My bill speeds up the process. It basically establishes that the patent clock does not start ticking against that company until the drug can be put on the market, until it is actually sold. Thus, new drugs, rather than waiting for 20 years or waiting for 15 years, can be put on the market sooner because people want to get this thing on the market because they have lowered those FDA restrictions and the company will make money over that time period.

My bill also makes sure that once that patent term runs out, unlike today, there are many legal maneuvers these companies can play in order to keep the generic drug manufacturers from coming in and producing their drug. We eliminate those maneuvers.

So what we have done is put a drug available on the market and in the hands of the American consumer earlier and cheaper, and then we make sure that the drug companies can make a profit, and we end up making sure that the generic manufacturers can jump in earlier without being deterred by legal maneuvers.

In the end, my bill gives the people more access, more time with the drug. It can cure more people. Hundreds of thousands of people, if not millions of people, will be available to be treated with a new, innovative approach, drug, or a new health technology if my legislation sets these new standards and we move forward with a system based on those standards, rather than protecting the people of the United States to death, which is precisely what we have been doing. When we hear the FDA say we are approving the drug today and it is going to save the lives of 10,000 people a year who are dying from this disease, and then you find out it is taking 10 years for the drug to get on the market, that FDA official has just admitted that they have been in the process of participating in the unnecessary death of 100,000 people. That is ridiculous.

As we expand the ability of our drug innovators to create and make available new drugs that will, under my legislation, be protected, they will be able to make a profit at what they are doing; and the public will actually have more choice in their hands, and what we need to know, by the way, on the other hand, if the taxpayers end up financing, and there are some drug companies, we have to admit, they get money from the government to try to develop new drugs, they are subsidized by the taxpayers in developing new drugs. My bill will say if a company does that, if a private company does that, they will be subject to price controls, meaning if Uncle Sam pays the price of research and development, Uncle Sam will tell you what is a reasonable price to have on that drug; and the consumers will be protected right off the bat, even though there will be a reasonable profit margin made as well, but my bill insists that the government then put a reasonable price on that drug if the taxpayers did pay for that research.

If a company pays for its own research and development, which we want to encourage more companies to do, they will not be limited by this type of price control.

By encouraging private investment, and whether it is in the development and research of drugs or in other types of health care technology, we will thus be increasing the supply of health care of those things in our society which treat people's illnesses. By increasing that supply, it should help bring down the cost and thus the price of health care to our people. More new drugs and more new technology that can help bring health to our people being introduced on the market, that means a healthier life and a more affordable healthy life for our people.

The medical reform bill I have introduced is a creative package of reforms. I urge all of the Members and fellow colleagues to study these proposals and to support this legislation. As health care costs are obviously going up and even ordinary Americans are struggling to pay the bill and many Americans, of course, cannot pay it all, it is imperative that we begin to seriously think about new approaches to health care.

If the only thing that comes to us while we are looking at the Medicare system and the problem of health care in America is just the only thing we come up with is spending more and more money, we are going to increase the demand for drugs in our society. For example, if all we are doing is taking now a financial situation where the people who can pay for their own health care and their own prescriptions do so and we end up having the government take over all of that, we are

going to end up not only dramatically increasing the price of drugs for the government but those people outside the government, younger people, the price of their drugs will dramatically go up.

No, we cannot just simply handle this Medicare system, of course, by dramatically increasing the price of drugs, which will happen, will make sure the Medicare goes bankrupt much earlier than is scheduled. Right now, in the outyears, we can try to do something to keep Medicare solvent. If we are just going to take responsibility for everyone, even the people who can take care of themselves in terms of a drug benefit, it is going to bankrupt the system; and we will all be worse off, and the price of drugs will soar for ordinary families who are not seniors.

We ignore half the problem if we only try to spend money. We need to free up the supply end of the medical care system, the supply of people who will be producing more health care for America. Yet we also have to be, of course, concerned about the escalating costs; but we cannot be stampeded into easy answers, quick fixes, because those just spending more money without creating any innovation in the system or any reforms in the system, it will make all of our problems worse. Backing up the Federal dump truck and just pouring in a mammoth load of tax money is not a quick fix. It will not work; and with new expenditures, it is going to bankrupt the system and cause the price of drugs to go sky high for all the American people, not just the seniors.

No, the tooth fairy is not going to leave the money that is going to be spent on health care and improving our health care system under our pillow. Each and every one of us will pay. So it is irresponsible not to try to make the system more competitive, less bureaucratic, more innovative as we are talk about expanding Medicare and trying to take care of those people who need prescription drugs but cannot afford it.

Our focus should be on those who cannot afford it rather than coopting this whole field and trying to take care of everybody. A government that tries to do everything for everybody is not going to be able to do anything for anybody in the long run as this economic insanity takes hold and has its effect on our society. We are going to make our problems for insurance worse if we do not try to make our system more effective and cost effective.

One last note about health care in America. In recent years, Americans have witnessed an explosion of alternative health care health-related nutrition, acupuncture, chiropractic, vitamins, exercise, mental health programs that are based on self-help and individual responsibility. These are exciting, new alternatives; and most of them are not even covered by insurance, much less being paid for by the tax dollars. The American people need to have these available to them, these and other vehicles for a good healthy life; and we must use mass communications and the Internet to make sure our people know what their alternatives are, but instead, now what are we focusing on here in the Federal Government, instead we are just trying to focus on spending more money.

New opportunities are needed. We do not need to just regulate these new approaches and these new things that people can do for health care. We do not need to regulate it, control it or ration it. We need, like my legislation will do, is to open up new opportunities. My legislation is based on the principles of freedom and the incentives of the market. This at least will have to be part of the solution, if not the entire solution, we seek to the challenges we face today.

Rep. Max SandlinD-TX-1 · Jun 24, 2003

Mr. Speaker, will the gentleman yield? I am just asking if the gentleman would yield. Parliamentary Inquiry Mr. Speaker, parliamentary inquiry. Mr. Speaker, Parliamentary inquiry. I do not want the…

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Introduced in HouseIssued June 19, 2003

        [Congressional Bills 108th Congress]
[From the U.S. Government Publishing Office]
[H.R. 2544 Introduced in House (IH)]

108th CONGRESS
1st Session
H. R. 2544

To improve the quality, availability, diversity, personal privacy, and
innovation of health care in the United States.

_______________________________________________________________________

IN THE HOUSE OF REPRESENTATIVES

June 19, 2003

Mr. Rohrabacher introduced the following bill; which was referred to
the Committee on Ways and Means, and in addition to the Committees on
Energy and Commerce, and the Judiciary, for a period to be subsequently
determined by the Speaker, in each case for consideration of such
provisions as fall within the jurisdiction of the committee concerned

_______________________________________________________________________

A BILL

To improve the quality, availability, diversity, personal privacy, and
innovation of health care in the United States.

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

SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

(a) Short Title.--This Act may be cited as the ``Medical
Independence, Privacy, and Innovation Act of 2003''.
(b) Table of Contents.--The table of contents of this Act is as
follows:

Sec. 1. Short title; table of contents.
TITLE I--TAX-RELATED PROVISIONS

Sec. 101. Findings.
Sec. 102. Deduction of medical expenses for individuals.
Sec. 103. Medical checking accounts.
Sec. 104. Decrease in minimum annual deductibles under a high
deductible health plan for purposes of
Archer MSAs.
TITLE II--MEDICAL PRIVACY

Sec. 201. Findings.
Sec. 202. Modification of regulations on privacy of individually
identifiable health information.
TITLE III--MODIFICATIONS REGARDING REGULATION OF DRUGS UNDER FEDERAL
FOOD, DRUG, AND COSMETIC ACT

Sec. 301. Definition of drug.
Sec. 302. Striking of effectiveness requirement; modifications
regarding patent listings, patent
certifications, and thirty-month rule.
Sec. 303. Granting of exclusive or partially exclusive licenses
regarding inventions made with Federal
assistance.
Sec. 304. Importation of certain drugs.

TITLE I--TAX-RELATED PROVISIONS

SEC. 101. FINDINGS.

The Congress finds the following:
(1) Current law confers tax benefits for health insurance
provided as an employee fringe benefit, but no similar tax
benefit for health insurance purchased by individuals thus
creating an unfair bias toward employer provided medical
insurance plans and an unfair discrimination against
individuals who seek marketplace alternatives to health
insurance.
(2) Current law confers a tax benefits for third party
payment of medical expenses but no similar tax benefits for
direct individual payment of medical expenses. This has
promoted employer-provided third party payment systems and
discouraged direct doctor-patient relationships.
(3) The current tax treatment of medical expenses has
resulted in a greatly distorted marketplace in medical
insurance where decreased opportunities for private personal
health insurance has reduced competition both for medical
insurance and health care services. This has resulted in an
increased costs of both health insurance and health care
services and fostered over use of low high premium health
insurance plans.
(4) The current tax treatment of medical expenses has
restricted the freedom of individuals to exercise direct
control over their health care dollars. The exclusion from
gross income for employer-provided health care with no
corresponding tax benefit for health insurance and health care
costs bourn by individuals represents a strong incentive toward
employers group plans.
(5) The tax codes preferment of employer-provided group
plans has triggered a marketplace response reflected in the
significant increases in large health care delivery, and the
creation of a relative few health care conglomerates in lieu of
thousands of competitive providers of medical insurance and
services. This has increasingly placed medical decisions in the
hands of health care bureaucracies and has eroded doctor-
patient relationships.
(6) The role of the marketplace in both medical insurance
and medical services should be strengthened. The discriminatory
tax policies in the area of health insurance and health care
should be ended. Private individuals should be able to contract
for their health insurance and health care delivery in
atmosphere free of discriminatory tax pressures. High
deductible low premium as well as catastrophic alternatives in
health insurance should be viable options for all Americans.

SEC. 102. DEDUCTION OF MEDICAL EXPENSES FOR INDIVIDUALS.

(a) In General.--Subsection (a) of section 213 of the Internal
Revenue Code of 1986 (relating to treatment of medical, dental, etc.,
expenses) is amended to read as follows:
``(a) Allowance of Deduction.--There shall be allowed as a
deduction the expenses paid during the taxable year, not compensated
for by insurance or otherwise, for medical care of the taxpayer, his
spouse, or a dependent (as defined by section 152).''.
(b) Deduction Allowed in Computing Adjusted Gross Income.--
Subsection (a) of section 62 of such Code is amended by inserting after
paragraph (18) the following new paragraph:
``(19) Medical care.--The deduction allowed by section
213.''.
(c) Conforming Amendments.--
(1) Section 56(b)(1) of such Code is amended by striking
subparagraph (B).
(2) Section 67(b) is amended by striking paragraph (5).
(3) Section 72(t)(B) of such Code is amended by striking
``to the extent such distributions do not exceed the amount''
and inserting ``which are''.
(4) Sections 104(a) and 105(b) of such Code are both
amended by striking ``(and not in excess of)''.
(d) Effective Date.-- The amendments made by this section shall
apply to taxable years beginning after December 31, 2003.

SEC. 103. MEDICAL CHECKING ACCOUNTS.

(a) In General.--Subchapter F of chapter 1 of the Internal Revenue
Code of 1986 (relating to exempt organizations) is amended by adding at
the end the following:

``PART IX--MEDICAL CHECKING ACCOUNTS

``Sec. 530A. Medical checking accounts.

``SEC. 530A. MEDICAL CHECKING ACCOUNTS.

``(a) General Rule.--A medical checking account shall be exempt
from taxation under this subtitle. Notwithstanding the preceding
sentence, any medical checking account shall be subject to the taxes
imposed by section 511 (relating to imposition of tax on unrelated
business income of charitable, etc., organizations). Rules similar to
the rules of paragraphs (2) and (4) of section 408(e) shall apply to
medical checking accounts, and any amount treated as distributed under
such rules shall be treated as not used to pay qualified medical
expenses.
``(b) Deduction for Contributions.--
``(1) In general.--In the case of an individual, there
shall be allowed as a deduction an amount equal to the
aggregate amount paid in cash during the taxable year to a
medical checking account of the taxpayer.
``(2) Limitations.--
``(A) Maximum annual contribution.--The deduction
under paragraph (1) for a taxable year shall not exceed
$1,000 ($2,000 in the case of a joint return).
``(B) Maximum allowable deduction based on balance
in account.--No deduction shall be allowed for a
taxable year for any amount contributed to a medical
checking account if the sum of such amount plus the
balance in the account determined as the end of the
taxable year would exceed $2,000 ($4,000 in the case of
married individuals filing a joint return, a surviving
spouse, and a head of household).
``(c) Credit for Contributions.--
``(1) In general.--In the case of an individual, there
shall be allowed as a credit against the tax imposed by this
chapter for the taxable year an amount equal to the credit
amount with respect to contributions made during the taxable
year to the medical checking account of the taxpayer.
``(2) Credit amount.--For purposes of paragraph (1), the
credit amount is the lesser of--
``(A) the total amount of contributions to the
medical checking account for the taxable year reduced
by the amount of contributions allowed as a deduction
under subsection (b), and
``(B) $1,000.
``(d) Definitions and Special Rules.--For purposes of this
section--
``(1) Medical checking account.--The term `medical checking
account' means a trust created or organized in the United
States for the exclusive benefit of a qualified individual or
his beneficiaries, but only if the written governing instrument
creating the trust meets the following requirements:
``(A) Except in the case of a rollover contribution
described in paragraph (4)(C), no contribution will be
accepted unless it is in cash, or it exceeds $1,000
($2,000 in the case of married individuals filing a
joint return, a surviving spouse, and a head of
household).
``(B) The trustee is a bank (as defined in section
408(n), an insurance company (as defined in section
816), or another person who demonstrates to the
satisfaction of the Secretary that the manner in which
such person will administer the trust will be
consistent with the requirements of this section.
``(C) No part of the trust assets will be invested
in life insurance contracts.
``(D) The assets of the trust will not be
commingled with other property except in a common trust
fund or common investment fund.
``(E) The interest of an individual in the balance
in his account is nonforfeitable.
``(2) Qualified medical expenses.--The term `qualified
medical expenses' means, with respect to an account holder,
amounts paid by such holder for medical care (as defined in
section 213(d) for such individual, the spouse of such
individual, and any dependent (as defined in section 152 of
such individual, but only to the extent such amounts are not
compensated for by insurance or otherwise (including
distributions from an Archer MSA which are not includible in
gross income by reason of section 220(f)(1)).
``(3) Change in filing status.--In the case of a taxpayer
whose filing status changes during the taxable year, the
limitation under subparagraph (B) shall be apportioned among
the filing statuses of the taxpayer in accordance with
regulations prescribed by the Secretary.
``(4) Certain rules to apply.--Rules similar to the
following rules shall apply for purposes of this section:
``(A) Section 219(d)(2) (relating to no deduction
for rollovers).
``(B) Section 219(f)(3) (relating to time when
contributions deemed made).
``(C) Section 219(f)(5) (relating to employer
payments).
``(D) Section 220(f)(5) (relating to rollover
contributions).
``(E) Section 220(f)(7) (relating to transfer of
account incident to divorce).
``(F) Section 220(f)(8) (relating to treatment
after death of account holder).
``(G) Section 408(g) (relating to community
property laws).
``(H) Section 408(h) (relating to custodial
accounts).
``(e) Tax Treatment of Distributions.--
``(1) Amounts used for qualified medical expenses.--Any
amount paid or distributed out of a medical checking account
which is used exclusively to pay qualified medical expenses of
any account holder shall not be includible in gross income.
``(2) Inclusion of amounts not used for qualified medical
expenses.--Any amount paid or distributed out of a medical
checking account which is not used exclusively to pay the
qualified medical expenses of the account holder shall be
included in the gross income of such holder.
``(3) Additional tax on distributions not used for
qualified medical expenses.--For purposes of this section,
rules similar to the rules of section 220(f)(4) shall apply.
``(4) Coordination with medical expense deduction.--For
purposes of determining the amount of the deduction under
section 213, any payment or distribution out of a medical
checking account for qualified medical expenses shall not be
treated as an expense paid for medical care.
``(f) Reports.--The Secretary may require the trustee of a medical
checking account to make such reports regarding such account to the
Secretary and to the account holder with respect to contributions,
distributions, and such other matters as the Secretary determines
appropriate. The reports required by this subsection shall be filed at
such time and in such manner and furnished to such individuals at such
time and in such manner as may be required by the Secretary.''.
(b) Tax on Excess Contributions.--Section 4973 of such Code
(relating to tax on excess contributions to individual retirement
accounts, certain section 403(b) contracts, and certain individual
retirement annuities) is amended--
(1) in subsection (a) by striking ``or'' at the end of
paragraph (3), by inserting ``or'' at the end of paragraph (4),
and by inserting after paragraph (4) the following:
``(5) a medical checking account (within the meaning of
section 530A(d)),'', and
(2) by adding at the end the following new subsection:
``(g) Excess Contributions to Medical Checking Accounts.--For
purposes of this section, in the case of medical checking accounts
(within the meaning of section 530A(d)), the term `excess
contributions' means the sum of--
``(1) the aggregate amount contributed for the taxable year
to the accounts (other than rollover contributions referred to
in section 530A(d)(4)(C)) which is neither excludable from
gross income under section 106(b) nor allowable as a deduction
or credit under section 530A for such year, and
``(2) the amount determined under this subsection for the
preceding taxable year, reduced by the sum of--
``(A) the distributions out of the accounts which
were included in gross income under section 530A(e)(2),
and
``(B) the excess (if any) of--
``(i) the sum of the maximum amount
allowable as a deduction or credit under
section 530A (determined without regard to
section 106(b)) for the taxable year, over
``(ii) the amount contributed to the
accounts for the taxable year.
For purposes of this subsection, any contribution which is distributed
out of the medical savings account in a distribution to which section
530A(d)(4)(B) applies shall be treated as an amount not contributed.''.
(c) Tax on Prohibited Transactions.--
(1) Section 4975 of such Code (relating to tax on
prohibited transactions) is amended by adding at the end of
subsection (c) the following new paragraph:
``(6) Special rule for medical checking accounts.--An
individual for whose benefit a medical checking account (within
the meaning of section 530A(d)) is established shall be exempt
from the tax imposed by this section with respect to any
transaction concerning such account (which would otherwise be
taxable under this section) if, with respect to such
transaction, the account ceases to be a medical checking
account by reason of the application of section 530A(e)(2) to
such account.''.
(2) Paragraph (1) of section 4975(e) of such Code is
amended by striking ``or'' at the end of subparagraph (E), by
redesignating subparagraph (F) as subparagraph (G), and by
inserting after subparagraph (E) the following new
subparagraph:
``(F) a medical checking account described in
section 530A(d), or''.
(d) Failure To Provide Reports on Medical Checking Accounts.--
Paragraph (2) of section 6693(a) (relating to general rule on reports)
is amended by striking ``and'' at the end of subparagraph (C), by
striking the period at the end of subparagraph (D) and inserting ``,
and'', and by inserting after subparagraph (D) the following new
subparagraph:
``(E) section 530A(g) (relating to medical savings
accounts).''.
(e) Clerical Amendment.--The table of parts for subchapter F of
chapter 1 of such Code is amended by adding at the end the following
new item:

``Part IX. Medical Checking Accounts.''.

(f) Effective Date.--The amendments made by this section shall
apply to taxable years beginning after December 31, 2003.

SEC. 104. DECREASE IN MINIMUM ANNUAL DEDUCTIBLES UNDER A HIGH
DEDUCTIBLE HEALTH PLAN FOR PURPOSES OF ARCHER MSAS.

(a) In General.--Subparagraph (A) of section 220(c)(2) of the
Internal Revenue Code of 1986 (defining high deductible health plan) is
amended--
(1) in clause (i) by striking ``$1,500'' and inserting
``$1,000'', and
(2) in clause (ii) by striking ``$3,000'' and inserting
``$2,000''.
(b) Minimum Not Increased by Inflation.--Section 220(g) of such
Code is amended by inserting ``(other than the $1,000 amount in
subparagraph (A)(i) and the $2,000 amount in subparagraph (A)(ii)
thereof)'' after ``subsection (c)(2)''.
(c) Effective Date.--The amendments made by this section shall
apply to taxable years beginning after December 31, 2003.

TITLE II--MEDICAL PRIVACY

SEC. 201. FINDINGS.

The Congress finds the following:
(1) Medical privacy is an issue that concerns a growing
number of people in the United States. The culture of the
United States has always strongly favored a close physician-
patient relationship. One of the key elements of this
relationship is the trust that a patient has that their
personal information will be treated as confidential by medical
personnel and will not be made public or accessible to other
persons without their permission.
(2) In our increasingly complex times, two trends are
combining to exert pressure on maintaining the confidentiality
of health care information. First, public policy favors an
increased ability to provide protection against harmful
prescription interactions and for the reporting of medications'
serious side effects. Second, health care insurers desire to
take advantage of economies of scale in controlling health care
costs. These trends have greatly reduced expectations for the
privacy of health care information.
(3) For the first time in our Nation's history, serious
loopholes have been written into privacy protections that were
created to protect the right of individuals. Positive changes
in privacy law have been made in recent years to guarantee that
patients are notified regarding the use of their health
information, have access to their own medical records, and are
able to request corrections of such records. These protections
must be maintained and strengthened.
(4) One of the greatest needs in the area of health privacy
is to protect individuals against the use of their confidential
health information for profit-generating consumer marketing.
Patients justifiably have objections to this use of their
information without their consent.
(5) There recently have been implemented a series of
alarming modifications to the standards previously finalized to
protect the privacy of individually identifiable health
information. These include changes in important definitions,
additions to the category of health care operations for which
patient consent for the use of their information is not
required, and changes in permitted use of patient information
without consent for public health purposes.
(6) Recent rollbacks in health privacy need to be reversed,
and the individuals' confidence that their private
conversations with medical personnel will remain private needs
to be strengthened.
(7) There is also a need to protect the integrity and
confidentiality of social security account numbers and to
prohibit Federal agencies from imposing national standards for
identification of individuals.

SEC. 202. MODIFICATION OF REGULATIONS ON PRIVACY OF INDIVIDUALLY
IDENTIFIABLE HEALTH INFORMATION.

(a) Marketing.--
(1) In general.--The modifications made by the August 2002
medical privacy rule to the definition of the term
``marketing'' in section 164.501 of title 45, Code of Federal
Regulations, shall have no force or effect.
(2) Authorizations for marketing.--Section 164.508 of title
45, Code of Federal Regulations, shall be construed and applied
so as to require that, if an authorization is required for a
use or disclosure of protected health information for
marketing, the authorization shall be considered invalid unless
it--
(A) uses the term ``marketing'';
(B) states that the purpose of the use or
disclosure involved is marketing; and
(C) describes the specific marketing uses and
disclosures authorized.
(b) Consent for Uses or Disclosures To Carry Out Treatment,
Payment, or Health Care Operations.--
(1) In general.--The modifications made to section 164.506
of title 45, Code of Federal Regulations, by the August 2002
medical privacy rule shall have no force or effect.
(2) Use or disclosure without consent.--
(A) In general.--Section 164.506 of title 45, Code
of Federal Regulations, insofar as it permits any use
or disclosure of protected health information without
consent, shall have no force or effect.
(B) Circumstances where consent not required.--A
health care provider may use or disclose an
individual's protected health information without
obtaining the prior consent of the individual only in
the following circumstances:
(i) To fill or dispense a prescription, and
to search for drug interactions related to that
prescription, if the health care provider obtains written consent from
the individual as soon as practicable.
(ii) To carry out treatment of that
individual if--
(I) the individual has not executed
a Universal Health Privacy Declaration
promulgated under subparagraph (C);
(II) the individual and the health
care provider have not had in-person
communication regarding such treatment;
and
(III) obtaining consent would be
impracticable.
(C) Universal health privacy declaration.--
(i) In general.--The Secretary of Health
and Human Services shall promulgate a document
which shall be known as the ``Universal Health
Privacy Declaration''.
(ii) Eligibility.--A Universal Health
Privacy Declaration may be executed by any
individual who is a citizen of the United
States or an alien lawfully admitted to the
United States for permanent residence.
(iii) Purpose.--A Universal Health Privacy
Declaration, once executed by an individual
described in clause (ii) and not revoked, shall
be considered to prohibit, as provided under
subparagraph (B), a health care provider from
using or disclosing the individual's protected
health information for treatment without
obtaining the prior consent of the individual.
(iv) Enforcement.--There is established in
the Department of Health and Human Services an
Office of the Health Privacy Ombudsman, which
shall be headed by an individual known as the
``Health Privacy Ombudsman''. The Health
Privacy Ombudsman shall be charged with
investigating complaints submitted by
individuals described in clause (ii) regarding
a use or disclosure of protected health
information in violation of their Universal
Health Privacy Declaration.
(c) Disclosures for Law Enforcement Purposes.--Subparagraph (C) of
section 164.506(f)(1)(ii) of title 45, Code of Federal Regulations
shall have no force or effect.
(d) Definitions.--
(1) In general.--For purposes of this section:
(A) December 2000 medical privacy rule.--The term
``December 2000 medical privacy rule'' means the final
rule on standards for privacy of individually
identifiable health information published on December
28, 2000, in the Federal Register (65 Fed. Reg. 82462),
including the provisions of title 45, Code of Federal
Regulations, revised or added by such rule.
(B) August 2002 medical privacy rule.--The term
``August 2002 medical privacy rule'' means the final
rule, published on August 14, 2002, in the Federal
Register (67 Fed. Reg. 53182), that modified the
December 2000 medical privacy rule.
(2) Other terms defined.--For purposes of this section:
(A) Health care provider.--The term ``health care
provider'' shall have the meaning given such term in
section 160.103 of title 45, Code of Federal
Regulations, as contained in the December 2000 medical
privacy rule.
(B) Disclosure; individual; protected health
information; treatment; use.--The terms ``disclosure'',
``individual'', ``protected health information'',
``treatment'', and ``use'' shall have the meaning given
such terms in section 164.501 of title 45, Code of
Federal Regulations, as contained in the December 2000
medical privacy rule.

TITLE III--MODIFICATIONS REGARDING REGULATION OF DRUGS UNDER FEDERAL
FOOD, DRUG, AND COSMETIC ACT

SEC. 301. DEFINITION OF DRUG.

Section 201(g)(1) of the Federal Food, Drug, and Cosmetic Act (21
U.S.C. 321(g)(1)) is amended in the first sentence by striking ``and
(B) articles intended'' and all that follows and inserting the
following: ``and (B) articles intended for use in the diagnosis, cure,
or treatment (but not mitigation or prevention) of disease in man or
other animals.''.

SEC. 302. STRIKING OF EFFECTIVENESS REQUIREMENT; MODIFICATIONS
REGARDING PATENT LISTINGS, PATENT CERTIFICATIONS, AND
THIRTY-MONTH RULE.

(a) Striking of Effectiveness Requirement; Prohibition Against
Listing of Certain Patents.--
(1) In general.--Section 505(b) of the Federal Food, Drug,
and Cosmetic Act (21 U.S.C. 355(b)) is amended by striking
``(b)(1)'' and all that follows through ``clinical trials
required by clause (A).'' and inserting the following:
``(b) Application.--
``(1) Contents.--
``(A) In general.--Any person may file with the
Secretary an application with respect to any drug
subject to the provisions of subsection (a). Such
persons shall submit to the Secretary as a part of the
application--
``(i) full reports of investigations which
have been made to show whether or not such drug
is safe for use;
``(ii) a full list of the articles used as
components of such drug;
``(iii) a full statement of the composition
of such drug;
``(iv) a full description of the methods
used in, and the facilities and controls used
for, the manufacture, processing, and packing
of such drug;
``(v) such samples of such drug and of the
articles used as components thereof as the
Secretary may require; and
``(vi) specimens of the labeling proposed
to be used for such drug.
``(B) Patent information.--
``(i) Requirement.--The applicant shall
file with the application the patent number and
the expiration date of any patent which claims
the drug for which the applicant submitted the
application or which claims a method of using
such drug and with respect to which a claim of
patent infringement could reasonably be
asserted if a person not licensed by the owner
engaged in the manufacture use, or sale of the
drug.
``(ii) Types of patents.--
``(I) Patents subject to
requirement.--The patents for which
information under clause (i) is
required to be filed with the Secretary
are drug substance (ingredient)
patents, drug product (formulation and
composition) patents, product by
process patents, and method of use
patents.
``(II) Prohibition regarding
certain patents.--Process patents,
patents claiming packaging, patents
claiming metabolites, and patents
claiming intermediates are not patents
described in subclause (I), and
information on such patents may not be
filed with the Secretary.
``(III) Patent regarding drug
substance.--For patents that claim the
drug substance, the applicant shall
submit information only on patents that
claim the drug substance that is the
subject of the pending or approved
application or that claim a drug
substance that is the same as the
active ingredient that is the subject
of an approved or pending application
within the meaning of subsection
(j)(2)(A)(ii).
``(IV) Patent regarding drug
product.--For patents that claim a drug
product, the applicant shall submit
information only on those patents that
claim a drug product that is the
subject of a pending or approved
application.
``(V) Patent regarding method of
use.--For patents that claim a method
of use, the applicant shall submit
information only on those patents that
claim indications or other conditions
of use that are the subject of a
pending or approved application. For
approved applications, the applicant
shall identify the indication or other
condition of use in the approved
labeling that corresponds to the listed
patent and claim identified.
``(iii) Filing of patent after submission
of application.--If an application is filed
under this subsection for a drug and a patent
which claims such drug or a method of using
such drug is issued after the filing date but before approval of the
application, the applicant shall amend the application to include the
information required by clauses (i) and (ii).
``(iv) Publication of patent information.--
Upon approval of the application, the Secretary
shall publish information submitted under
clauses (i) through (iii).
``(C) Guidance regarding inclusion of women and
minorities in clinical trials.--The Secretary shall, in
consultation with the Director of the National
Institutes of Health and with representatives of the
drug manufacturing industry, review and develop
guidance, as appropriate, on the inclusion of women and
minorities in clinical trials required by subparagraph
(A)(i).''.
(2) Conforming amendments.--The Federal Food, Drug, and
Cosmetic Act (21 U.S.C. 301 et seq.) is amended--
(A) in section 201(p)--
(i) by striking ``safety and effectiveness
of'' and inserting ``safety of''; and
(ii) by striking ``safe and effective for
use'' and inserting ``safe for use''; and
(B) in section 505--
(i) by striking ``safety and
effectiveness'' each place such term appears
and inserting ``safety'';
(ii) by striking ``safety or
effectiveness'' each place such term appears
and inserting ``safety''; and
(iii) in subsection (i)(1)(D), by striking
``pediatric safety and efficacy'' and inserting
``pediatric safety''.
(b) Abbreviated Applications; Single Certification Regarding Patent
Invalidity or Noninfringement; Single Thirty-Month Delay in Approval.--
Section 505(j)(2)(A) of the Federal Food, Drug, and Cosmetic Act (21
U.S.C. 355(j)(2)(A)) is amended in the matter after and below clause
(viii) by adding at the end the following sentence: ``With respect to a
certification under clause (vii)(IV), an abbreviated application
(whether or not amended) may not contain more than one such
certification, without regard to patents filed after the date of the
certification.''.

SEC. 303. GRANTING OF EXCLUSIVE OR PARTIALLY EXCLUSIVE LICENSES
REGARDING INVENTIONS MADE WITH FEDERAL ASSISTANCE.

No grant of an exclusive or partially exclusive license pursuant to
chapter 18 of title 35, United States Code, may be made, except in
accordance with section 209 of such title (relating to the availability
to the public of an invention and its benefits on reasonable terms).

SEC. 304. IMPORTATION OF CERTAIN DRUGS.

Chapter VIII of the Federal Food, Drug, and Cosmetic Act (21 U.S.C.
381 et seq.) is amended by striking section 804 and inserting the
following:

``importation of certain drugs

``Sec. 804. (a) Regulations.--The Secretary, after consultation
with the United States Trade Representative and the Commissioner of
Customs, shall promulgate regulations permitting pharmacists and
wholesalers to import prescription drugs from foreign nations.
``(b) Limitation.--The regulations under subsection (a) shall
require that safeguards be in place to ensure that each prescription
drug imported under the regulations complies with section 505
(including being safe for the intended use of the prescription drug)
with sections 501 and 502 and with other applicable requirements of
this Act.''.
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