Drug Competition Act of 2003

Mr. President, I strongly support Senator Kyl's sense of the Senate resolution to S. 1. His resolution asks Congress to rectify problems with the formula that is used to update Medicare physician reimbursement.

Due to flaws in this formula, payment rates for physicians and other practitioners are predicted to fall by 4.2 percent in 2004. This cut in physician compensation would be the fifth since 1991 including a 5.4 percent decrease in 2002. According to Medicare's own conservative estimates, between the years 1991 and 2003, reductions for physicians and other health professionals resulted in Medicare physician reimbursement that equates to 14 percent below their actual practice costs. The 2004 reduction would decrease Utah physician income by $13 million which translates to $3003 per physician in 2004. And this is in addition to the $9 million decrease in reimbursement that Utah physicians received in 2002. Furthermore, unless we correct this formula, it is estimated that more cuts will occur in 2005, 2006, and 2007.

The Medicare Payment Advisory Commission, MedPAC, has stated that these reimbursement reductions are the result of a problem with the Sustained Growth Rate that is used as part of the calculation to adjust rates each year. The SGR expenditure target is linked to gross domestic product. Therefore, the formula may decrease Medicare reimbursement for physicians and other practitioners when health care volume increases outstrip increases in the gross domestic product. The problem is magnified when gross domestic product decreases. Essentially, the formula penalizes physicians for factors over which they have no control.

It is true that as the population of our country ages, the volume of Medicare health care services consumed increases. However, physicians have no control over this and our Medicare system penalizes them because of it. As a result, some physicians no longer take new Medicare patients, some decline to participate in the Medicare program altogether, and young people are considering other professions.

I would submit that as the baby-boomer generation ages and increasing numbers of Americans become Medicare beneficiaries, we need physicians and other health care providers more than ever. If anything, we should be rewarding our physicians, not penalizing them.

An additional problem with the Sustained Growth Rate calculation is that it does not account for many changes in health care that improve quality but increase physician work also. The federal government actively promotes new coverage decisions, quality improvement activities and other initiatives that benefit patients but are not taken into account by the Sustained Growth Rate calculation.

MedPAC's recommendation to Congress is that annual updates in physician payments should reflect increases in the Medicare Economic Index or MEI rather than the gross domestic product. Using the Medicare Economic Index would eliminate the penalty that physicians and other practitioners currently experience when the volume of health care services increases due to factors that they are unable to control.

What we have before us is a flawed formula that is threatening the health of Americans and the future of our country. Congress has addressed this problem before, but it seems that we were only putting a bandage over the wound; we never cured the disease that caused it. The wound continues to fester and it will continue to do so until we cure the problem. And the cure, it seems, is to revise the formula.

I for one, am tired of applying bandages to this wound. I believe that it is time to address this problem directly and definitively. I urge my colleagues to join with me in supporting this resolution and in working to correct this problem.

Mr. President, I rise to speak on the Gregg-Schumer amendment which was adopted last week. This amendment was based on a piece of legislation, S. 1225, the Greater Access to Affordable Pharmaceuticals Act of 2003, reported by the HELP Committee on June 11th.

I want to take this opportunity to explain why I cast the lone vote against this amendment. It is my hope that when my colleagues consider my explanation that they may be open to making additional changes to this very important amendment as the process moves forward.

Let me start by commending Senators Gregg, Schumer, McCain, and Kennedy for their work in developing this provision which I believe is a significant improvement on legislation that was adopted by the Senate last Congress, S. 812.

The Gregg-Schumer amendment relates to a complex and often admittedly confusing law I coauthored with my friend, Representative Henry Waxman of California in 1984 the Drug Price Competition and Patent Term Restoration Act.

I chaired a hearing of the Senate Judiciary Committee in May of 2001 that helped document some abuses that were occurring in the law. Since our last hearing on this issue, much has happened.

Both the Federal Trade Commission and the Food and Drug Administration played a constructive role in attempting to end several mechanisms by which some research-based and generic

drug firms were attempting to game the system put in place by the 1984 and subsequent court decisions to avoid competition in the marketplace.

The FTC succeeded in achieving several widely-publicized consent decrees with a variety of offending firms under the existing antitrust statutes.

In addition, the FTC conducted an exhaustive survey and study of how certain provisions of the 1984 Waxman-Hatch Act affected competition in the pharmaceutical industry.

The FTC study contained two major recommendations. The first addressed the use of the statutory 30-month stay granted by the 1984 law in situations where patents are challenged by generic competitors. The FTC recommended that the law:

Permit only one automatic 30-month stay per drug product

per ANDA to resolve patent infringement disputes over patent

listed . . . prior to the filing date of the generic

applicant's ANDA.

This was precisely the position that I suggested in testimony before the HELP Committee on May 8, 2002 and argued for last year during the Senate debate on the Edwards-Collins substitute amendment to the McCain-Schumer legislation.

I would note that the 30-month stay provision in the McCain-Schumer bill last year, S. 812, and in the Edwards-Collins substitute, were both at variance with this central recommendation of the FTC report.

The second major FTC recommendation responds to those situations in which R&D and generic firms were entering into agreements not to impede generic competition. The FTC recommended that Congress:

Pass legislation to require brand-name and first generic

companies applicants to provide copies of certain agreements

to the Federal Trade Commission.

Senator Leahy, working very closely with the FTC, developed legislation, the Drug Competition Act, S. 946, that squarely addressed this second recommendation.

During the 107th Congress, I worked with Senator Leahy on refining that bill. I supported it in committee, and worked with him to pass it through the Senate late last year. I supported his efforts to have it attached to the Medicare vehicle earlier this week. I expect that the 108th Congress will adopt this measure.

The FTC study served an important purpose of cataloging the facts surrounding certain abuses of the 1984 act. In formulating public policy, the facts should matter and a legislative or regulatory response should be tailored to fit the problem.

Unfortunately, the timing of the issuance of FTC study did not allow the report to get the attention it deserved by the Senate. The FTC report was published only one day before the Senate adopted S. 812, the Greater Access to Affordable Pharmaceuticals Act of 2003, last July 31st.

The GAAP Act, developed by Senators McCain and Schumer, was substantially altered by the Edwards-Collins substitute, with active involvement of Senator Kennedy.

While there is no question my colleagues were motivated by their goal of making drugs more affordable for seniors and all Americans, and despite the fact that it garnered 78 votes in the Senate, there were significant shortcomings in the bill.

Let me briefly review a few of the most troublesome provisions of the Edwards-Collins substitute to S. 812. The proposed legislation would have created for the first time a private right of action in the Federal Food, Drug, and Cosmetic Act. The last thing the already overburdened FDA staff needs is a bunch of trial lawyers bringing the agency to a screeching halt by second-guessing its judgment calls.

The bill that passed last year would have resulted in the waiver of patent rights apparently against even third parties--if pioneer drug firms did not file its patents with the FDA and, if challenged by a generic drug applicant, pursue expensive litigation within tight time frames.

In sharp contrast to the FTC recommendation, S. 812 basically made any patents listed with the FDA after a month from the date the pioneer drug application was approved by the FDA ineligible for the 30-month stay. In most cases, this is at least four years earlier than what I and the FTC recommended--freezing the Orange Book to patents listed before a generic drug application was filed.

The American Intellectual Property Law Association opposed S. 812. The patent-dependent biotech industry worked against the bill. The Patent and Trademark Office found that ``S. 812 would forfeit unnecessarily the core right of patent holders--the right to exclude others from practicing the inventions for the entire patent term. After years of research and development and significant investment, the patent right is extinguished for the mere failure to satisfy an administrative task or respond in a timely manner.''

Here is what the July 18, 2002 Statement of Administration Policy said about the Edwards-Collins-McCain-Schumer legislation:

. . . the Administration opposes S. 812 in its current form

because it will not provide lower drug prices. S. 812 would

unnecessarily encourage litigation around the initial

approval of new drugs and would complicate the process of

filing and protecting patents on new drugs. The resulting

higher costs and delays in making new drugs available will

reduce access to new breakthrough drugs. Moreover, the new

cause of action is not necessary to address patent process

abuses. Clearly, the bill would benefit from consideration by

the Senate's experts on Hatch-Waxman law on the Judiciary

Committee, the proper committee of jurisdiction for this

bill.

While S. 812 passed by a very wide margin, it was certainly not without its critics.

Comes now S. 1225. This bill emerged from the HELP Committee. Once again, it is entitled the Greater Access to Affordable Pharmaceuticals Act. Once again, it is cosponsored by Senators McCain, Schumer, and Kennedy.

Due in large part to the leadership of Chairman Gregg, there are significant changes in the bill compared with last year's legislation.

While I have significant concerns over certain aspects of S. 1225 as adopted in its amended form on June 19, 2003, I must acknowledge Chairman Gregg and Majority Leader Frist for their roles in working with the cosponsors of last year's bill to make substantial improvements in the legislation.

Likewise, I commend Senators Schumer, McCain and Kennedy for abandoning many of the troublesome features of a bill that garnered 78 votes last Congress.

I can only believe that the factual presentation, analysis, and recommendations contained in the FTC report and subsequent public notice and comment process surrounding the recently-issued FDA final rule on patent listings and the application of the statutory 30-month stay both played a constructive role in helping to form the basis of the Gregg-Schumer legislation.

It is appropriate to recognize the efforts of the Bush administration for tackling the problem of multiple, successive 30-months stays through rulemaking. Secretary Thompson, Commissioner McClellan, and FDA Chief Counsel Dan Troy, should be saluted for their roles in so promptly completing a rulemaking regarding patent listing that generally embraced the one-and-only-one 30-month stay policy recommended in the FTC Report. Chairman Muris and the FTC staff deserve credit for a report that helped shape a more carefully targeted policy response.

There can be no doubt that this year's vehicle, S. 1225, is superior to S. 812. This new Gregg-Schumer bill, S. 1225, embraces exactly the type of one-and-only-one 30-month stay policy that I suggested to the HELP Committee last May, argued for on the floor last July, and was ultimately recommended by the FTC.

The Gregg-Schumer legislation, S. 1225 in the form adopted by the Senate, also addresses some problems that the FDA rule perhaps did not resolve satisfactorily. As FDA Chief Counsel Dan Troy stated at the June 17th Judiciary Committee hearing:

We tried as best we could to cut down on all opportunities

for gaming. We did not succeed in cutting down all

opportunities for gaming, because nothing, no legislation is

so good, no rule could be so good as to cut down all

opportunities for gaming, because there are unforeseen

circumstances and unintended consequences.

I think Mr. Troy is correct about the nature of the inherent limitations of regulatory and legislative fixes for complex problems where there are powerful incentives to game the system to gain financial advantage. We need to

keep this in mind as we analyze further the amendment the Senate adopted last week.

As I stated at the June 17th hearing, it was unfortunate that the PTO was unable to present a witness. Admittedly, the invitation was issued on short notice. I have asked PTO for its formal comments on the Gregg- Schumer amendment. I would also be interested in the PTOs comments on whatever language the House adopts. We would also be wise to hear from the Office of the United States Trade Representative if USTR finds that the legislation raises any concerns for international trade and intellectual property under the TRIPS provisions.

It is my understanding that FDA and FTC staff provided a great deal of what is known as ``technical assistance'' on the Gregg-Schumer amendment, a good deal of it between the markup on June 11th and the time the amendment was offered on June 19th. I am not aware whether PTO or USTR were consulted.

PTO and USTR should understand that this is a fast moving train, so they should be prepared to give us any comments they may have in short order. President Bush and the congressional leadership have made it plain that they expect the conference report on the Medicare bill to be completed as soon as possible.

One special area of concern to me as Chairman of the Judiciary Committee is that one provision of the amendment overwhelmingly adopted by the Senate raises significant issues with respect to civil justice policy, including a constitutional concern. Specifically, proposed section 271(e)(5) of title 35, would make the failure of a patentee to file a patent infringement action within a specified time frame sufficient to establish ``an actual controversy'' for the purpose of establishing subject matter jurisdiction for a declaratory judgement action by a generic drug firm challenging a patent.

Whether the Congress can, or should, by statute grant subject matter jurisdiction for a declaratory judgment based on the failure to bring a suit raises some interesting questions, particularly in light of manner in which the U.S. Courts of Appeals, including the Federal Circuit, have developed and applied the ``reasonable apprehension'' test. At our June 17th hearing, DOJ did not present the Judiciary Committee with its final opinion on the matter but Mr. Sheldon Bradshaw, Deputy Assistant Attorney General, Office of Legal Counsel, noted, ``that the actual case of controversy requirement is constitutionally compelled rather than statutorily required. And as a result, Congress can't simply create a case or controversy by statute but the plaintiffs must establish the constitutional requirement for bringing the case.'' The committee has received a spirited correspondence that takes differing views on the case or controversy provision of the Gregg-Schumer amendment.

I have requested the Department of Justice for its formal views on this language. At this point, I think it premature to embrace this language. It is my understanding that the bill that the House will take up does not contain the controversial case or controversy language. I stand prepared to work with the sponsors of the amendment, DOJ and others on this important issue.

Yet another improvement of S. 1225 over the bill adopted by the Senate last year relates to the manner in which the 180-day rule is addressed. In short, I am pleased that the policy embraced last year, the rolling exclusivity policy, was replaced in favor of a ``use it or lose it'' approach. I have long stated a preference for the consumer friendlier ``use it or lose it'' rule over the too open-ended rolling exclusivity.

The Waxman-Hatch law provides an incentive for generic firms to challenge patents. To encourage generic competitors to pursue patent challenges in a vigorous fashion, the 1984 law provided 180 days of marketing exclusivity in situations where a generic drug firm could show the pioneer's patents were invalidated or not infringed. For many years it was thought, as intended, that this valuable 180-day period of exclusive marketing would be granted to the first generic firm to successfully invalidate or invent around the pioneer's patents.

FDA regulations issued in 1994 required that the first generic applicant had to defend successfully against a patent claim made by a brand name company to receive the 180-day exclusivity. In a 1998 D.C. Circuit case, Mova v. Shalala, the court construed the plain language of the statute to strike down the successful defense requirement. As a result FDA now makes 180-day exclusivity decisions by applying the literal words of the statute. This results in a system that rewards first filers, not necessarily successful challengers.

The Gregg-Schumer amendment retains the preference for first filers. I believe that re-instating the successful defense requirement may prove preferable than intentionally sanctioning a first filer regime.

Frankly, I am uncertain of the policy justification for S. 1225's retention of granting the 180-day reward to the first filer rather than the first successful defendant. I believe that there is a lot to be said for giving the reward to the actual winner in court or the first not to be sued, not just the first one to enter the Parklawn Building with an application.

The amendment places a high premium on being a first filer. At our hearing last week, FTC Chairman Muris characterized the rush to be a first filer as ``the shantytown problem of people in line to file.'' FDA Chief Counsel Troy described that ``. . . right now, there are sometimes limousines, sometimes vans, sometimes cars, sometimes even tents in the Metro North parking lot that come days, weeks, and in some cases even months in advance of a particular date. Why we should reward someone because they camp out longer in the parking lot is a good question?''

I am concerned that the language that passed the Senate could allow some unintended and, in fact, counterproductive, results. Changes in current law with respect to the court decision and commercial marketing triggering mechanisms for the 180-day exclusivity provision demand careful attention and analysis. The amendment does not appear to adopt all the FTC recommendations in this area.

Other questions should be raised. What if, for example, the generic applicant that successfully challenges the validity of the patent is not also a first filer? Why should such a non-first filing but successful invalidity challenger not be granted the 180 days exclusivity? Stated another way, why should the first filer--or in Chairman Muris' ``shantytown'' situation, a whole group of first-day, exclusivity-sharing, first-filers, gain while the actual successful challenger waits out the 180-days? I am not sure that such an outcome is fair or even rational. Moreover, such a system may not result in the most efficient or aggressive pursuit of patent challenges.

One thing is for sure: You can expect a lot more first filers to appear at the door of the FDA building on the first day that successful drugs become eligible for patent challenges. As I pointed out at the Judiciary Committee hearing, some have already suggested that the first to file system might result in an increase in willful infringement cases. In fact, there was a decision last month by a Federal court in Chicago that ruled against a generic firm which filed a generic drug challenge before obtaining the opinion of outside counsel on either non-infringement or invalidity.

Another type of potential problem could arise, and frankly I am not certain how it can be avoided, if a non-first filing generic drug challenger wins a court decision on grounds of non-infringement. Unless I am wrong in my understanding of the Gregg-Schumer amendment, a generic challenger that prevailed on a non-infringement theory would have to wait for the 180-days granted the first filer, or a group of first-day, first-filers, to expire before the non-infringing firm could enter the market. Such an outcome only hurts consumers by needlessly delaying introduction of the non-infringing generic product for 180 days.

Unlike a determination of patent invalidity, a finding of non- infringement does not accrue to third parties. It is important to understand that there are two ways for a generic firm patent challenger to be awarded the 180-day exclusivity under the law. First, the generic challenger can show that the pioneer's patent is invalid. And second, the generic challenger can demonstrate

that its product will not infringe a pioneer's patent.

These are two very different theories. Al Engelberg, a highly successful and highly respected attorney engaged by generic drug firms to attack pioneer patents, has made the following observation about the difference between invalidity and non-infringement challenges:

In cases involving an assertion of non-infringement, an

adjudication in favor of one challenger is of no immediate

benefit to any other challenger and does not lead to multi-

source competition. Each case involving non-infringement is

decided on the specific facts related to that challenger's

product and provides no direct benefit to any other

challenger. In contrast, a judgment of patent invalidity or

enforceability creates an estoppel against any subsequent

attempt to enforce the patent against any party. The drafters

of the 180-day exclusivity provision failed to consider this

important distinction.

As one of the drafters of the 1984 law, I must accept a measure of responsibility for this problem. It is not clear, however, that S. 1225 has addressed this issue in a satisfactory fashion. The language adopted in the Gregg-Schumer amendment does not appear to solve the problem created by the 1998 Mova decision that effectively eliminated the successful defense requirement.

Frankly, I think we need further thought on how best to address the implications of the distinction between invalidity and non-infringement claims in the context of Hatch-Waxman patent challenges and 180-day exclusivity awards. Specifically, I question the appropriateness of continuing to group together patent invalidity and patent non- infringement challenges, particularly in light of the fact that the latter may in practice extend longer than the purported 180-day award. From what I know now, there are strong arguments to prefer the reinstatement of the successful defense requirement over the establishment of a new system based on first filing.

Let me close by once again commending Senators Gregg, Schumer, McCain, and Kennedy for all their hard work in reaching the compromise amendment that was so overwhelmingly adopted by the Senate. The Gregg- Schumer amendment represents significant improvement over the legislation passed by the Senate last year. I am pleased that the amendment adopts the one-and-only-one 30-month stay policy that I, and the FTC, advocated last year.

I am also pleased that the Senate has adopted Senator Leahy's Drug Competition Act, which also addressed a major recommendation of the FTC. I have worked with Senator Leahy to perfect and pass this measure.

As a co-author of the 1984 Drug Price Competition and Patent Term Restoration Act, I support efforts to bring affordable and innovative drugs to the American public. While I support the spirit and much of the letter of the Gregg-Schumer amendment, for the reasons I have set forth, I was unable to fully support this measure at this time.

Mr. President, I joined my colleague, the distinguished Senator from Oregon, Mr. Smith, in offering an amendment to promote better care for frail elderly and disabled. This amendment will allow the Secretary of the Department of Health and Human Services to designate health plans that disproportionately serve special needs beneficiaries as specialized Medicare Advantage plans.

A number of States have successfully chosen to serve seniors and the disabled by combining Medicare and Medicaid services through a waiver approved by the Department of Health and Human Services that integrates services under Medicare and Medicaid capitated financing arrangements. These programs provide beneficiaries with a comprehensive benefit package that combines the services traditionally provided by Medicare, Medicaid, and home and community based waiver programs.

In my home State of Wisconsin, the Wisconsin Partnership Program is one such success, a community-based program that has improved the quality, access, and cost-effectiveness of the care delivered to its beneficiaries. Perhaps most important to the beneficiaries, these programs help the disabled and the frail elderly remain in their own community, and avoid institutionalized care. Wisconsin is lucky to have four such programs across our State: Elder Care and Community Living Alliance of Dane County, Community Care for the Elderly of Milwaukee County, and Community Health Partnership Eau Claire, Dunn, and Chippewa Counties.

In order to qualify for these programs, a person must be Medicaid- eligible, have physical disabilities or frailties of aging, and require a level of care provided by nursing homes. Through programs such as the Wisconsin Partnership Program, these frail elderly and disabled beneficiaries are able to receive quality preventive care upfront, which allows more beneficiaries to stay in their communities and reduces the rate of hospitalization.

In Wisconsin, about 26 percent of all Medicaid recipients age 65 or older are in nursing homes. This rate drops dramatically for those enrolled in the Wisconsin Partnership Program, where only 5.9 percent of recipients age 65 or older are in nursing homes.

While the Wisconsin Partnership Program is a success, we must ensure that the Federal Government continues to support these State-based solutions to our long-term care needs and other specialty managed care programs that focus on frail, chronically ill seniors. Last year I introduced the Frail Elderly Act of 2002, which promoted specialty managed care programs and helped those already in existence to continue to operate. This amendment will work to accomplish both goals by providing a population-based designation that allows plans to be recognized for specialization in services for special needs beneficiaries. By establishing this specialized designation, we hope to be able to more easily move specialized plans from demonstration status to mainstream provider status, helping to promote a more effective way of caring for the frail elderly and disabled.

Mr. President I also want to point out that this amendment does not change payments, does not change administrative rules, and therefore doe not have a fiscal effect.

Fundamental long-term care reform is vital to any health care reform that

Congress may consider. As part of these reforms, we must support State and local efforts to encourage care for the most vulnerable populations. We must provide our seniors and disabled with real choices. They are entitled to the opportunity to continue to live in the homes and communities that they helped build and sustain. I urge my colleagues to support this amendment that will help provide a measure of support for the most frail elderly and disabled to allow them to stay in their own homes.

Mr. President, I ask unanimous consent that two letters of support for this amendment, from the Community Health Partnership and Elder Care of Dane County be printed in the Record.

Mr. President, I will vote for passage of the Medicare prescription drug bill that has been debated over the past several weeks.

I do so, however, with great reservations about many of the provisions in the bill.

I am voting for this measure for two principal reasons.

First, I believe that we owe our seniors a Medicare prescription drug benefit. I believe such a benefit is long overdue for our Nation's seniors. For years we have promised them we would give them the crucial help they need with their skyrocketing prescription drug costs. And I believe that it is finally time to deliver on that promise.

It has taken Congress too many years to act on this pressing need. We have been debating for years about the best way to provide this benefit, and I am afraid that if we do not take the opportunity in front of us today, it will take us even longer to provide seniors the help they deserve. Our seniors cannot wait any longer.

The costs of prescription drugs are soaring, and the financial toll they take on our seniors means that too often seniors must choose between eating and taking the medication that will help them live productive, healthy lives. Our seniors should not have to make that choice. They contributed to the Medicare system over their lifetimes. That system, which is supposed to provide health care to all seniors, needs to be able to help them obtain the prescription drugs they need to preserve their health.

The second reason I am voting for this benefit is that it takes a big step in addressing what I see as one of the biggest flaws of the current Medicare system--the geographic inequities within the Medicare reimbursement system. We need to end Medicare's continued discrimination against Wisconsin's seniors. As I have previously discussed on this floor, Wisconsin seniors already receive the short end of the stick when it comes to Medicare. Wisconsinites pay the same payroll taxes to Medicare as all American workers do, but receive fewer benefits in return. Instead, Wisconsinites' Medicare dollars are used to subsidize higher reimbursements in other parts of the country.

Wisconsin Medicare beneficiaries receive on average $4,318 in Medicare benefits per year, the eighth lowest in the country. By contrast, beneficiaries in the State with the greatest per capita reimbursement receive $7,209. This distribution of Medicare dollars among the 50 States is grossly unfair to Wisconsin. I thank the leadership of the Finance Committee for including provisions to begin to address this inequity in this prescription drug bill. But I know that we still have more to do to reverse the Medicare discrimination against States like Wisconsin.

I am pleased that key provisions have been accepted that greatly improve this bill. The Senate adopted the Gregg-Schumer-McCain-Kennedy amendment, which I was proud to cosponsor and support, which will bring more competition to the prescription drug market by preventing pharmaceutical companies from blocking generic drugs from entering the market. This amendment is one of the only provisions that will help to bring cost savings to seniors.

By adopting Senator Dorgan's amendment relating to the reimportation of prescription drugs from Canada, the Senate will help seniors obtain affordable prescription drugs. This legislation helps both consumers who buy prescription drugs and businesses which sell them. I supported this provision, both in its earlier legislative form and in this amendment, because it is the right thing to do. Our seniors and other Americans in need of affordable prescription drugs deserve no less.

I also supported Senator Enzi's amendment, which passed overwhelmingly, that will make sure that community pharmacies, like the ones in my home State of Wisconsin, can still operate within this new prescription drug program. Smaller pharmacies will be protected from being shut out by larger pharmacies through this amendment, and that means helping seniors to access the prescription drugs they need in their own communities.

I also worked with Senator Allard on an amendment to provide regulatory relief for home health care providers that the Senate adopted. Our amendment enables home health care providers to spend more time with patients and less time on paperwork. This is particularly important at a time when some home health care providers are leaving the home health industry because of burdensome paperwork requirements.

And I am pleased that an amendment I offered to bring some clarity to the Medicare Program for our seniors was adopted. The Medicare Program is already full of bureaucratic red tape, often creating barriers for seniors looking for basic information about their health care options. This prescription drug benefit is the biggest expansion of the Medicare Program since its inception in 1965. We are adding an entire new part to the program, and we need to help guide our seniors through it.

My amendment is simple. It establishes a Medicare Beneficiary Advocate Office within the Department of Health and Human Services, with the sole function of providing clear information to all Medicare beneficiaries. The office will serve as a one-stop information source on all of Medicare for our seniors.

This new office will provide a toll-free phone number, a regularly updated website and regional publications that will give our seniors all of the information they need to make informed health care decisions.

That is the good news. But as I said earlier, I have many reservations about this bill. This is not the bill I would have proposed.

This bill does not go far enough to deliver on our promise to give seniors a meaningful prescription drug benefit. It fails to provide any assistance after a senior's prescription drug costs total $3,450, until they spend another $1,850 on prescription drugs, or $5,300 total. And it adds insult to injury by making beneficiaries continue to pay a premium even during the time they receive no benefit.

I am also troubled that this bill does not provide clear, uniform benefits and premiums for all seniors. Many aspects of the benefits provided in the bill remain uncertain, and will continue to remain uncertain after the plan goes into effect. Under this bill, the premiums are not defined. The premiums for the Medicare prescription drug plan will be dictated by the private insurers who will offer the plans. The only thing we know for sure is that the Congressional Budget Office estimates that the national average for premiums will be $35. However, those premiums may vary dramatically. Just look at Medicare HMO premiums. Medicare HMO premiums in Connecticut are $99, but in Florida they are only $16.

Who will offer the plans is also uncertain. There is no guarantee that plans will be offered in regions where there may not be enough profit. History again shows us that private companies do not always find rural and smaller urban areas profitable enough to move in. All too often, private companies that do move into less desirable Medicare markets end up deciding to leave the region, leaving Medicare beneficiaries scrambling to figure out where they will turn for coverage.

Furthermore, my understanding is that this plan only offers a guaranteed Medicare-administered plan, or ``fallback plan,'' if there are less than two private plans in a region. This means that, if only one private plan offers a prescription drug benefit in the region that includes Almena, WI, a Medicare beneficiary living in Almena may instead choose the Medicare-administered fallback plan. While on the fallback plan, my Almena constituent would become familiar with the medications that are included in their formulary and the cost of their premiums. If a second private plan subsequently decides to move into that region, my understanding is that my constituent will be dropped from the Medicare fallback plan, and forced to join one of the private plans even if those plans have higher premiums, or do not include their prescriptions in their formularies.

Further, my Almena constituent can be forced to leave the plan that he or she has come to know, if that plan leaves the region. This leads to instability and uncertainty for seniors.

Benefits are also uncertain under this proposal. Again, benefit packages will be determined by the private insurers who offer the plans. And we can assume, from experience with the Medicare+Choice Program, that the benefits will vary widely. I am concerned about what this may mean for States like my home State of Wisconsin, States that have had a difficult time attracting and keeping private Medicare plans. Some Medicare prescription drug plans may be able to offer more brand name drugs at a lower cost to beneficiaries, while others in less profitable areas may limit the amount of brand name drugs they can offer at affordable rates.

I fear that as with Medicare HMOs, Wisconsin seniors may be faced with little choice with Medicare prescription drug plans.

And I am concerned that the uncertainty in this bill regarding monthly premiums, the possible differences in benefits packages and the stability of private plans that will deliver these benefits may lead to more inequity for Wisconsin seniors.

I was disappointed that Senator Durbin's amendment, the MediSAVE Act, was not adopted in the Senate. Senator Durbin's amendment, which I strongly supported, would have fixed most of the errors that exist in this bill. The MediSAVE Act would have made this benefit one that would truly help all seniors with all of their prescription drug benefit. Senator Durbin's proposal offered a meaningful, enhanced prescription drug benefit that would have covered all seniors regardless of whether their prescription drug costs are high, low, or somewhere in between.

The MediSAVE Act not only put forth cost controls so that taxpayers as well as seniors could save money, but it also would have given seniors certainty. Seniors would have known exactly what their premiums and benefits were and would have the certainty of knowing that a Medicare-administered prescription drug benefit would be available to them, no matter what private plans were offered to them. Most importantly, the MediSAVE Act provided the certainty that a senior would have assistance with their prescription drug costs year-round and would never be caught in the so-called ``donut hole'' of coverage that this bill provides.

I am voting for this bill because something, some help for our seniors with their pressing prescription drug costs, is better than nothing. I will support this legislation with the intention of working with my colleagues over the next 2 years to improve this bill and finally deliver on our promise to give seniors a meaningful prescription drug benefit under Medicare.

Mr. President, over the last 2 weeks the Senate has debated the most significant changes to the Medicare Program since it was created in 1965. Today, we passed this legislation by a 76 to 21 vote, and I would like to take a few minutes to explain why I supported this bill.

This bill will, for the first time, provide the option of modest prescription drug coverage for nearly 39 million Medicare beneficiaries, including about 103,000 beneficiaries in North Dakota. It is also intended to give Medicare beneficiaries more choices of health plans. And it takes significant steps towards equalizing the Medicare payments that rural health care providers receive, compared to their urban counterparts.

There is no question that, if Medicare were being created today, it would include prescription drug coverage. Prescription medicines are a vital part of modern medicine. Last year alone, pharmaceutical companies introduced 26 new prescription medicines into the marketplace. But these advancements in medicine mean little if Americans cannot afford to access them. That is especially true for senior citizens who have reached their declining income years.

For years now, Congress has been debating proposals to add a prescription drug benefit to Medicare. Unfortunately, however, in past years we have not been able to reach agreement on just how to do this. With each passing year, older Americans continue to struggle to pay for their medicine. In North Dakota, about 48,000 Medicare beneficiaries have no prescription drug coverage, and many more have limited drug coverage. I hear from North Dakota seniors regularly who tell me that they have to choose between taking the medicines their doctor prescribed for them and other necessities such as food and heat.

These older North Dakotans say that they want and need Medicare drug coverage, and they want and need it now. If Congress doesn't enact legislation this year, chances are that several more years will go by before there is another serious opportunity to consider this issue. In other words, we could pass the legislation before the Senate today or we could do nothing for yet another year. In my judgment, doing nothing is not an option.

The prescription drug benefit in this bill is not as helpful to seniors as I would like or as generous as I think Medicare beneficiaries deserve--but it is a start.

Frankly, I think our budget priorities have been wrong. If I had my way, Congress would have reduced the size of the tax cuts for the very wealthy and instead set aside more money for improving and modernizing Medicare. During the Senate's debate earlier this year on the budget, I offered an amendment to set aside a total of $620 billion over the next 10 years for a Medicare prescription drug benefit. This is the amount of funding I felt was needed to provide a more generous and reliable benefit. Unfortunately, the majority in the Senate rejected my amendment, so we are limited to a package of just $400 billion over 10 years. When you consider that Medicare beneficiaries are projected to spend $1.8 trillion on prescription drugs over the next 10 years, it is impossible to develop a robust benefit within the $400 billion budget constraint, in my judgment.

The benefit provided for in this legislation is better than that which President Bush proposed in several key respects. Most importantly, this bill will not force seniors to leave the traditional Medicare Program--and the doctors they depend on--in order to get the prescription drug coverage they also need. I could not support a bill that coerces seniors out of the traditional Medicare Program that virtually all of North Dakota's Medicare beneficiaries rely on.

In addition, this bill provides extra assistance above the basic drug benefit for those older or disabled beneficiaries who have low incomes or very high drug expenses. Medicare beneficiaries with incomes below about $14,400 for individuals and $19,400 for couples--about 40 percent of North Dakota's beneficiaries--would qualify for extra assistance. And those with the highest drug costs--totaling more than about $5,800--would qualify for the catastrophic drug coverage. About 7 percent of North Dakota Medicare beneficiaries would reach this threshold.

Despite these improvements over the President's proposal, there are other concerns that I worked to address during the Senate's debate. In some instances, we were able to make changes to address these concerns, and in other cases, those efforts were rejected. In those instances where concerns still exist, I intend to continue working to fix them in conference with the House of Representatives.

For instance, as I have already mentioned, I am concerned that this coverage is not as generous as it should be, and in fact, there are some holes in the coverage. Under this benefit, seniors will have to reach a $275 deductible before their Medicare drug coverage starts. In addition, seniors whose drug expenses reach $4,500 will have to pay 100 percent of their drug costs between $4,501 and $5,800. Then, when their drug spending reaches $5,800, the catastrophic drug coverage will kick in and Medicare will pay 90 percent of their drug expenses after that. This means that there could be periods--in some cases as much as 3 months--when Medicare beneficiaries will have paid a premium for drug coverage but will be getting no benefit.

That makes no sense to me. No other insurance plans that I am aware of include such gaps in coverage. I supported various amendments on the Senate floor to close these coverage gaps or at least ensure that seniors

don't have to pay premiums for the periods when they aren't receiving coverage. Regrettably, however, those efforts were rejected.

I am also concerned that rural Medicare beneficiaries may not receive a benefit that is as stable or as generous as other beneficiaries receive. This bill envisions that seniors will basically have two options for receiving drug coverage. First, this bill creates a new Medicare Advantage Program through which beneficiaries could choose to get their drug coverage, as well as the rest of their medical care, through an HMO or a PPO. Frankly, however, I am very skeptical that HMOs or PPOs will want to serve rural areas, and even if they do, I don't think most North Dakota beneficiaries will want to leave the traditional Medicare Program.

Those seniors who want to remain in the traditional Medicare Program will be able to do so and get their prescription drug coverage through private ``drug only'' insurance plans. Budget experts estimate that Medicare beneficiaries who sign up for these drug-only plans will pay an average monthly premium of about $35. However, this is only an estimate, and the actual premium that seniors pay could vary substantially from area to area. That is already the case in the current Medicare HMO program--for instance, a Medicare HMO with drug coverage currently charges $99 per month in Connecticut and only $16 a month in Florida. I am worried that it would be rural seniors who would pay the highest premiums, even though they paid the same Medicare payroll taxes as other beneficiaries.

To address this concern, I supported an amendment by Senator Daschle that would have limited the variation in premiums to only 10 percent above the national average, no matter where beneficiaries live. In other words, insurance companies could charge beneficiaries a lower premium but they couldn't charge them more than 10 percent above the national average. Unfortunately, however, Senator Daschle's amendment was rejected.

In areas where there are not at least two private drug-only plans offered to Medicare beneficiaries in any given year, Medicare would step in and ensure that there is a ``fallback'' plan available. This is a vital guarantee for beneficiaries in rural States like North Dakota where I believe it is unlikely that there will be two stable drug-only plans available. But even with this fallback plan, seniors could still be bounced back and forth between different plans, depending on how private plans move in and out of an area.

I supported an amendment that would have addressed this concern by allowing all Medicare beneficiaries to choose the fallback option, no matter how many private plans are available where they live. When that amendment failed, I cosponsored an amendment with Senator Conrad that would at least allow seniors who have the fallback option to remain in that plan for 2 years, not just 1 year. That amendment was also rejected.

Even though this bill doesn't require Medicare beneficiaries to leave traditional Medicare, I know there are some concerns that Medicare beneficiaries will be getting their drug coverage through private plans. I, too, would strongly have preferred that all seniors be able to choose from a Medicare-administered benefit.

However, let me say this if I felt that by structuring the drug coverage the way it is in this bill, we were undermining the entire underlying Medicare Program, I would not support it. Medicare has been a wonderful success, and in our efforts to modernize it, we should exercise extreme caution not to undermine it. However, virtually all of the major Medicare prescription drug proposals would have used a private entity in some way to provide the drug benefit. Indeed, the traditional Medicare Program currently contracts with private insurance companies to pay the millions of Medicare claims that come in each year. Furthermore, the Congressional Budget Office estimates that only 1 to 2 percent more beneficiaries will choose the new Medicare Advantage option, so it seems clear that the vast majority of seniors will continue to rely on the traditional Medicare Program for the bulk of their medical care.

One area where we had some success in improving the bill during the Senate's debate is in the area of reducing drug costs. This bill relies largely on private insurance companies to negotiate lower drug prices. However, we have seen from prior experience that insurance companies have not been able to keep drug spending from increasing by nearly double digits every year 9.7 percent in 2002, 17 percent in 2001, 18.8 percent in 2000, and 16 percent in 1999.

To help put downward pressure on drug prices, I offered an amendment that was passed by the Senate by a 62-to-28 vote to allow for the reimportation of lower-priced, FDA-approved medicines from Canada. As many North Dakotans know first hand, the same FDA-approved prescription drug that costs $1 in the United States costs only 62 cents in Canada, even though it is the exact same drug, in the same bottle, made by the same manufacturer.

It is not my intention with this amendment to require Americans to go to Canada in order to get lower drug prices. Rather, by allowing U.S. licensed pharmacists and drug distributors to do the importing for them, Americans can stay at home, and by breaking the monopoly that the drug companies currently have on drug pricing in this country, we will force a repricing of drugs here in the United States.

I also supported an amendment that will help to make more affordable generic drugs more readily available. Generic drugs are safe, effective, and lower priced alternatives to heavily advertised brand- name prescription drugs. Unfortunately, however, some of the big brand- name drug companies use loopholes in the patent laws to keep generic drugs off the market for longer than intended. This amendment, which passed the Senate by a 94-to-1 vote, will close these loopholes and thereby speed consumers' access to generic medicines.

I am also pleased that this bill improves Medicare's coverage of preventive services, especially by including a provision that I authored to provide for a cholesterol screening benefit for Medicare beneficiaries. I have felt for a long time that Medicare needs to do a better job of preventing disease, rather than just paying to treat it. In the case of cholesterol screening in particular, high cholesterol is one of the major, changeable risk factors for heart attacks, stroke and other cardiovascular diseases. Yet when Americans turn 65 and enter the Medicare Program, their coverage for cholesterol screening stops unless they already have cardiovascular disease. That makes no sense, and I am glad the Senate has taken steps to provide this coverage.

Finally, I am very happy that this bill includes a range of provisions that will make Medicare reimbursement more fair and equitable for our rural hospitals, physicians, and other health care providers. It is simply not right that Medicare has historically reimbursed urban health care providers at a much higher rate than their urban counterparts. This inequity in Medicare reimbursement has very real consequences for hospitals and clinics in rural States like ours. They have to reduce services, have greater difficulty recruiting staff, are less able to make capital improvements, struggle to give their patients access to the latest innovations in medical care, and in same instances, they even have to close.

I have been fighting for a long time to correct this inequity. In fact, some of the provisions in this bill are similar to legislation that I introduced in the Senate earlier this year, and I am glad they have been included in this bill.

I know there will be some who feel that this bill should have been rejected by the Senate because it relies too heavily on private plans and others because it does not place enough emphasis on enrolling seniors in private plans. Others will feel that the Medicare benefit is not generous enough, and some feel its coverage is too liberal. I agree that this legislation isn't perfect--far from it, in fact. In the coming months and years, I will continue working to improve it. But it is a start in the right direction, and that is why I have supported it.

The House of Representatives is also expected to pass its version of Medicare legislation this week. The House and the Senate will now need to have a conference committee to work out the differences between the two bills. I

have some serious concerns about the House-passed bill. I hope these concerns and the concerns that I have with the Senate bill can be resolved in the final bill, so that we can send a bill to the President for his signature this year.

Mr. President, I rise today to speak in support of S. 1, the Prescription Drug and Medicare Improvement Act of 2003. However, I do so with great trepidation. While I intend to vote for the bill that is presently before the Senate, I believe that drastic changes are still necessary to make the benefit created by this legislation one that meets the needs of our senior citizens.

I am also deeply concerned that Members on the other side of the aisle--as well as those in the House of Representatives, and the administration--will attempt to move this bill in a destructive direction during conference. Let me reiterate what I said in an earlier statement on this issue: we must not approve any Medicare reform measure that would force seniors to join private plans in order to receive a more generous prescription drug benefit. Such a measure would signal an end to the Medicare Program as we know it and should be rejected out of hand. I urge my colleagues to protect the Medicare that our seniors have come to rely on, and I urge the President not to sign any bill that privatizes Medicare. If such changes are made, I will not hesitate to oppose the conference report.

Given these concerns, it is reasonable to ask why I am supporting this bill. The answer is quite simple--seniors in my home State of Connecticut and across the country have been waiting far too long for a prescription drug benefit under Medicare. And it is time that we in Congress heard them.

Over the past month I had the opportunity to convene a series of forums on senior health care in Connecticut in an attempt to frame the scope of this debate. At these forums I heard from my constituents on many matters regarding their health care. But the present lack of coverage for prescription drugs under the Medicare program was by far the issue raised most often.

At these forums I heard from seniors who literally could not afford to fill prescriptions called for by their doctors. I heard from elderly Medicare beneficiaries forced to choose between purchasing groceries or filling their prescriptions. I heard from seniors who were forced to skip dosages of their medicines in an attempt to stretch their limited supplies of needed medicines. I heard from Medicare beneficiaries requiring more than 10 prescribed medicines a day unable to afford even half of these prescriptions. Clearly, what I heard from hundreds of Connecticut's more than 500,000 Medicare beneficiaries is their grave concern over the present lack of a prescription drug benefit under the Medicare Program.

I believe that the legislation about to be approved by this body offers an answer to those concerns. It is not the most complete answer, but it is a start--based on which we can improve in the future. It is a start because it will make so many seniors better off than they are today. And that should be our ultimate goal as legislators--to make people's lives better. Often this must be done incrementally, in steps. This bill is a positive first step.

What do I mean when I say that it will make people better off? In Connecticut, one-third of all Medicare beneficiaries have incomes below 160 percent of poverty. For many of these seniors, drug costs can be crippling. They are forced to choose between putting food on the table, and buying the medicines that they need to live healthy lives. With the passage of this bill, these seniors will no longer have to make this choice. The new Medicare prescription drug benefit will cover most, if not all, of their drug costs. I congratulate Senator Grassley and Senator Baucus, and other members of the Senate Finance Committee for including in this bill such a generous benefit for those low-income seniors.

This legislation is not as clear cut for those seniors who have incomes above 160 percent of poverty. However, I believe that the majority will be helped by passage of this bill. The break even for this benefit--the point where an individual is better off with the benefit rather than just paying for all prescription drugs our of their own pocket--is about $1,100 in total annual drug costs. The average Medicare beneficiary spends approximately $2,300 on prescription medicines today. That number will undoubtedly be higher when this new benefit goes into effect in 2006. With the benefit created by this bill, that average beneficiary will realize nearly $600 in savings. The savings will be even greater for the 11 percent of beneficiaries who spend more than $5,000 per year on prescription drugs. These are the seniors facing the most sever health problems, and most in need of financial assistance. That is what this bill provides--even if it is not to the extent that many of us would have liked.

I am voting for this bill because so many seniors in Connecticut and throughout the country stand to benefit. However, no bill is perfect and S. 1 clearly still leaves much room for improvement even as it moves toward final Senate passage. I am particularly disheartened that, despite numerous attempts over the past 2 weeks, we have failed to address concerns over the present bill's lack of adequate provisions to ensure that those companies presently providing their retirees with prescription drug coverage receive adequate Federal support for their laudable efforts. While the creation of a prescription drug benefit under the Medicare program is laudable, it should not come at the price of displacing the employer-based benefits that so many seniors have come to rely on.

Additionally, I remain concerned that the gap in coverage in the present bill, the so-called donut hole, will leave many Medicare beneficiaries facing high prescription drug costs with no assistance at the very time when it is most needed. Over the past 2 weeks, I have both offered and supported amendments designed to provide assistance to those with prescription drug costs within the hole, especially those with lower incomes who can least afford any gap in coverage, that have failed to win support by the Senate. Failure to close this gap, in my view, constitutes a glaring failure, one that I hope can be reversed as this bill moves into conference.

I also am concerned that S. 1 fails to adequately protect Medicare beneficiaries form the very understandable confusion and uncertainty that may surround them just as they begin to navigate the intricacies of a brand-new program. Specifically, if enacted the underlying bill will require Medicare beneficiaries choosing a prescription drug plan to stay with that plan for a minimum of 1 year. With the enactment of such broad and weeping changes to the Medicare program, I am fearful that many Medicare beneficiaries will face great uncertainty trying to find the best plan to meet their particular needs. For this reason, I offered an amendment to S. 1 that would have simply granted Medicare beneficiaries navigating this new benefit for the very first time the ability to switch plans as they seek to determine which plan fits their particular health care needs in the first 2 years of the bill's benefit. Unfortunately, this amendment was not agreed to and I remain concerned that without its protections, senior Medicare beneficiaries will be unfairly locked into plans that do not meet their needs.

Mr. President, I am pleased that S. 1 represents a significant departure from

previous plans supported by the administration that would have required Medicare beneficiaries to leave the traditional fee-for-service Medicare Program in order to receive coverage for their prescribed medicines. Such a move would be unconscionable as 89 percent of all Medicare beneficiaries today are in the traditional program. To force these beneficiaries to leave their present system of coverage, and most likely the doctor that they have come to know and trust, would not only create great disruption, it would also for the first time since the program's inception create a tiered benefit system under Medicare that would more greatly reward those who choose to join a private preferred provider organization, PPO, or health maintenance organization, HMO.

And while I am pleased that the bill before us soundly rejects a tiered benefit system, I am deeply concerned that the plan presently taking shape in the House of Representatives appears to rely on such a flawed plan. As I said earlier, such a measure should be soundly rejected.

So it is with great caution that we come to the final moments of debate on this important issue. Medicare's nearly 41 million beneficiaries clearly need assistance in affording their needed medicines. The result of our efforts over the past 2 weeks, and more important, the result of the coming conference committee on this legislation will greatly determine to what extent we assist our Nation's Medicare beneficiaries to afford their needed medicines.

Clearly, a great opportunity is presently before us. As the underlying bill moves to conference committee. I look forward to working with my colleagues to ensure that we seize this opportunity by strengthening the underlying bill. With passage of the bill presently before us, we now face a choice. We can insist on the good start that we have made here with passage of S. 1, and work to strengthen its provisions. Or, conversely, we can accede to the House legislation that in my view unfairly jeopardizes the traditional Medicare Program by tilting the system in favor of risky privatization schemes and against seniors.

I ask my colleagues to join with me in working to ensure that any Medicare prescription drug legislation passed by this Congress is at least as strong as the bill we are about to vote on. A tilt toward the House-drafted language would signify not a strengthening of Medicare, but rather a weakening of this vital program's foundation and must be avoided at all costs.

Nearly 38 years ago on July 9, 1965, this body passed the legislation creating the Federal Medicare Program sending it to a conference committee with the House. On that day, President Lyndon Baines Johnson remarked, ``This is a great day for older Americans. And it is a great day for America. For we have proved, once again, that the vitality of our democracy can shape the oldest of our values to the needs and obligations of today.'' Nearly four decades later, we are on the cusp of a similar challenge. Let us move Medicare toward the future without threatening its proven ability to provide for the health and well being of this Nation's senior citizens.

Mr. President, as we debate the Prescription Drug and Medicare Improvement Plan of 2003, I would like to take a few minutes today to speak in support of the overall bill, but I would also like to highlight several provisions in the bill that are of particular importance to me and my State of Vermont.

Over the last several days, we have focused much of our discussion on the aspects of this bill related to prescription drugs and the Medicare Advantage Program. These are clearly among the most important provisions of this bill and these issues warrant the attention and debate they are receiving. I especially appreciate the close relationship this bill has to last year's tripartisan effort--which effectively is the parent of the current bill Last year, my friends-- Senators Grassley, Snowe, Hatch, and Breaux--and I set out to design a bill that provided a prescription drug benefit along with other improvements, what we called ``enhancements,'' to the basic operations of the Medicare Program. The tripartisan bill was good legislation-- something all of its original cosponsors were very proud to work on together.

This year, I am pleased to say that the Grassley-Baucus bill is even better than our effort from last year, and I commend Chairman Grassley and Ranking Member Baucus for their leadership and initiative in bringing it to the Senate floor.

One of the most important reasons that the Prescription Drug and Medicare Improvement Act is stronger than the tripartisan plan from last year is because it includes provisions that begin to resolve longstanding inequities in payments to rural doctors, hospitals, and other provisions. This problem can be stated simply. Rural health care providers are paid less than providers in more densely populated areas for the same exact services. Earlier this year, I joined with my colleagues, Senators Hatch, Grassley, Lincoln, and Bingaman, in introducing the legislation that addressed geographic inequities for physician services by changes to the physician reimbursement formulas.

As many of our colleagues are aware, Senator Grassley fought to include these rural provisions in the recent tax bill that was signed by the President. And although I strongly disagreed with enacting further tax cuts, I was doubly disappointed to see the rural health provisions stripped out in the conference with the House. These unfair geographic differences in reimbursement rates have gone on far too long, and I am especially pleased to see reimbursement issues for rural providers getting the attention they deserve--including the commitment from the President to my friend from Iowa pledging his support for rural health relief as part of the effort we have underway. I am, therefore, very pleased to see that these provisions are included in the chairman's mark and are now part of this bill.

I am also glad that Chairman Grassley and Ranking Member Baucus have worked with me to address another inequity in the system. Critical access hospitals provide care in the most remote regions of my State of Vermont and all other rural States. These hospitals are small, yet serve as critical resources to their communities. The managers have agreed to include a provision in their amendment that will make a technical correction to current law, allowing hospitals like the Mt. Ascutney Hospital in Windsor, VT, to expand access to psychiatric and rehabilitative services to the most vulnerable citizens in that community.

I would also like to speak today in support of a provision in this bill that establishes Medicare demonstration programs to improve health care quality. I heard my friend from Montana speak yesterday about quality and geographic disparities, and I know how committed he is to improving the quality of services delivered under Medicare. Earlier in this Congress, I was pleased that Senators Frist, Beaux, and Gregg joined me in introducing S. 1148, the Medicare Quality Improvement Act. I want to thank Chairman

Grassley and Ranking Member Baucus for including this provision in this bill.

I became concerned about the issue of health care quality after reading the work of Dr. Jack Wennberg of Dartmouth, which has shown that higher levels of Medicare spending do not lead to better health outcomes. Let me repeat this finding. Higher levels of Medicine spending do not lead to better health outcomes. Instead, spending tends to vary by region--generally reflecting the availability of physicians and hospitals--rather than the health or needs of the population.

I have followed Dr. Wennberg's work for a very long time. One of his early studies looked at rates of surgical procedures at Vermont hospitals. He found that communities in Vermont that had many more medical procedures were not necessarily healthier. I saw how this result led Vermont health care providers to join with the business community in achieving high quality, supportable outcomes. I also saw how our State government used this effort to improve health care across our State. Today, I am happy to say that Vermonters enjoy some of the highest quality health care in the United States, at a cost that is among the lowest in the country.

As we prepare to vote for the bill before us, I think it is critically important for us to consider some of the lessons learned from Vermont. Some of my colleagues have expressed concern about the costs of the bill before us. Others have expressed concern that the bill does not go far enough. The quality demonstration program in this bill will give us some of the answers we need to these funding questions.

The need for these demonstrations is critical. RAND Health published a study today in the New England Journal of Medicine that describes the problems with overuse and underuse of needed medical care services in the United States. The RAND study will make it clear that every American is at risk--not only for failing to receive needed medical care, but also for receiving care that is not needed and may even be harmful. This is a problem that belongs to each and every one of us, and we must find ways to fix it.

The legislation before us closes a significant gap in the health benefit package available to our Nation's seniors. However, providing coverage for health care services is not enough. We must do a better job of ensuring that people are getting the care they need, and also that they need the care they get.

In closing, I would like to urge my colleagues from both sides of the aisle to support this bill as we move forward. This bill will establish a drug benefit that is universal, comprehensive, affordable, and sustainable. This bill restores necessary and long-needed fairness to our physicians and providers in rural areas. And, the bill will improve the quality of care offered under Medicare.

Mr. President, this bill is a landmark piece of legislation the most significant modernization of the Medicare Program since its inception in 1965. Its passage by the Senate is a major accomplishment on the path toward enacting a prescription drug benefit for our Nation's seniors. It is the result of years of bipartisan, I might even say tripartisan, effort and it puts in place many long- sought changes. It has many significant features for the citizens of my home State of Vermont. It provides a sustainable, universal, and comprehensive prescription drug benefit. It guarantees access to traditional Medicare for all beneficiaries. It allows Medicare beneficiaries to participate, if they choose, in new systems of care that better reflect today's dynamic health care environment. The bill recognizes the high cost of providing quality care in rural settings and closes the reimbursement

gap between rural providers and their urban counterparts. Finally, it contains a provision that will allow us to better understand how to provide quality health care--not care driven by using more and more resources, but instead one based on ensuring quality patient outcomes.

Over the past 2 weeks, I have applauded the work of my colleagues who have labored over this bill. Today, I have the pleasure of congratulating them on their success and thanking them for their efforts.

I have worked for more than 3 years with my good friends, Chairman Grassley and Senators Snowe, Breaux, and Hatch. In many meetings over many months, we delved into the details of what came to be called the Tripartisan Bill. This has been one of the finest experiences of my many years in Congress. I am very proud to have been a part of that group and that our efforts led the way to our success today.

I especially want to salute the efforts of Senator Baucus and Senator Kennedy without whose hard work and commitment to working through an agreement we would not have accomplished this remarkable victory, and they deserve our accolades.

A bill such as this is the result of great effort on the part of many different people who are not elected to this body, but upon whom we all rely. I would like to recognize the staff members who have worked so hard on this bill and deserve much of the credit for its successful passage.

On Senator Grassley's staff: Ted Tottman, Linda Fishman, Colin Roskey, Mark Hayes, Jennifer Bell, and Leah Kegler, and on Senator Baucus' staff Jeff Forbes, Liz Fowler, Jon Blum, Pat Bousliman, Kate Kirschgraber, and Andrea Cohen deserve considerable recognition for their tireless efforts. Catherine Finley, Tom Geier, and Carolyn Holmes from my friend Senator Snowe's staff; Patricia DeLoatche and Trecia Knight of Senator Hatch's office; and most especially Senator Breaux's legislative director Sarah Walters deserve enormous credit for this bill. Finally, we would not be claiming a victory today if it were not for the contributions of Senator Kennedy's staff, especially, David Nexon and Michael Meyers.

On my own staff, I particularly want to recognize the contributions of Paul Harrington during the last Congress, and most especially the work of Sean Donohue who took up that effort on the tripartisan bill and who has continued to see it through to today's success, with the recent assistance of Daniel Crimmins, our Robert Wood Johnson Health Policy Fellow. Each and all have worked tirelessly to gather the input, analyze the issues, and build a consensus toward achieving this final product.