Floor Statements

Mr. President, I rise today to join Senator Salazar in introducing a concurrent resolution which expresses the goal of the United States to provide 25 percent of the Nation's energy needs from renewable resources by 2025.

The goal of this 25 by 25 resolution is quite simple: to replace 25 percent of our total energy needs with renewable resources like wind, hydropower, solar, geothermal, biomass and biofuels by 2025. This is a bold goal, but given our current energy situation in the U.S., it is a necessary goal.

The impact of increased energy prices is being felt around the country by working families, farmers, businesses and industries. The increased cost for energy at the pump, in home heating and for industrial uses has the potential to jeopardize our economic security and vitality.

Our effort with this concurrent resolution is to signal to America's farmers, ranchers and forestry industry, that we believe they have the ability and resources to generate 25 percent of our energy needs. And, that it's in our economic and national security interest to do so.

There are many inherent virtues in producing our own domestic energy from renewable resources. It is good for our environment. It is good for our national and economic security. It will provide an economic boost for our rural economies. And perhaps most importantly, it will ensure a stable, secure, domestic supply of affordable energy.

Already, our farmers and ranchers are working hard to use their resources to produce electricity from wind, biomass and other agricultural wastes. In addition, corn, soybeans and other crops are being used to produce transportation fuels like ethanol and biodiesel. It is evident that rural America has the drive to achieve this goal.

While this concurrent resolution states our renewable energy goal, it does not prescribe a way to achieve the goal. Rather, it recognizes the benefit of implementing supportive policies and incentives to stimulate the development and use of renewable energy. It also identifies the benefits of technological improvements to the cost and market appeal of renewable energy.

The supporters of this goal commit to support sensible policies and proper incentives to work toward the goal. I am hopeful that my colleagues will recognize the importance of this effort, and will consider supporting us in this goal to produce 25 percent of our energy needs from renewable resources by 2025.

Mr. President, I ask unanimous consent that the order for the quorum call be rescinded.

Mr. President, I am going to proceed in morning business, but I want to welcome the new Senator from Virginia to the Senate. I look forward to serving with him. I am sorry that maybe the Senator's first time being in the chair he has to listen to my speech, but I am very glad to have the opportunity to speak to you and Members of the body and the people of the United States about a very important issue that is going to be coming before us. This is an issue that I have been speaking about for the last several days on the floor. In fact, I think 4 days last week I did. I talked about the Medicare prescription drug benefit and the so-called prohibition on Government negotiation with drugmakers for low prices. I spent time doing that because people need to understand that some proposals could have drastic consequences, not only for Medicare and the beneficiaries of Medicare but also for anyone else who buys prescription medicine.

I want to make this very clear because when you are talking about seniors and the disabled on Medicare, and on prescription drugs, you might get the impression that we make a decision here, and the only people it is going to affect are those on Medicare. But I hope I made it very clear last week, and I am going to go over this again today.

In other words, if we change Medicare in this instance dealing with the prices of prescription drugs, it will increase prices of prescription drugs for everybody. It is not going to impact just those on Medicare, the decisions we make. I have said it before, and I say it again: Having the Government negotiate drug prices for Medicare might be a good sound bite, but it is not sound policy if it is going to increase the price of prescription drugs for everybody regardless of age in the United States.

I think the House bill, which is numbered H.R. 4 and passed the House last week, very definitely falls into that category. It may be a good sound bite. It may be very politically beneficial. But a good sound bite is not good policy. It will be bad for Medicare beneficiaries and other consumers of prescription drugs.

That outcome was voiced by witnesses just last week when they appeared before the Senate Finance Committee, chaired by the Senator from Montana, Senator Baucus.

At that hearing, one of the witnesses, Dr. Fiona Scott Morton, a professor of economics at Yale University, made a key point about the size of the Medicare market and when you deal with the price that Medicare recipients pay for drugs, the fact that it has negative consequences for everybody else in America.

She pointed out that of course we all want to obtain discounts for drugs for seniors. But she said:

With close to half of all spending being generated by those

seniors, whatever price they pay will tend to be the average

price in the market.

Her point is, if you are half of the market, the math makes it virtually impossible for your prices to be below average. Dr. Scott Morton said that because Medicare is so large, if drugmakers had to give it the lowest price they give any customer, they would have a strong incentive to increase their prices for everybody else.

Professor Scott Morton also stated:

This approach to controlling prices harms all other

consumers of pharmaceuticals in the United States and is bad

policy.

I pointed out how Part D has already given seniors, on the 25 drugs most used by seniors, 35-percent lower prices than we anticipated when we wrote the bill. While it is great to be doing things for seniors, there is no free lunch. Everybody, regardless of age, will pay more for prescription drugs. Do you want that to happen? Do you want those unintended consequences to happen?

Then we had another witness at the hearing held by Senator Baucus before the Senate Finance Committee last week. It was a representative of the Government Accountability Office who talked about its Year 2000 report on this very issue, and echoed Professor Scott Morton's view. Remember, in 2000 the General Accounting Office concluded:

Mandating that federal prices for outpatient prescription

drugs be extended to a large group of purchasers such as

Medicare beneficiaries could lower the prices they pay, but

raise prices for others.

That is from a nonpartisan Government agency working for the Congress of the United States called the Government Accountability Office.

One thing we keep hearing is that Medicare should not pay more than the Veterans' Administration pays. We had another witness, Professor Richard Frank of Harvard University, who said that if Medicare got the same prices the Veterans' Administration gets for drug prices--if that happened--it would likely raise Veterans' Administration prices for our veterans for all drugs. Do you want to hurt veterans with these unintended consequences of some of these ideas that are floating around this new Congress?

Then we had other panelists. As they listened to Dr. Frank's response, other panelists nodded in agreement. Talk about unintended consequences, do you know who else agrees with these professors who have been testifying before our committee? I point to the Military Order of the Purple Heart. In a letter to Members of Congress, the Military Order of the Purple Heart expressed its concern about the impact that extending Veterans' Administration prices to Medicare could have on veterans. In fact, they stated that several veterans organizations passed formal resolutions opposing legislation to extend the Veterans' Administration prices to Medicare because it would threaten Veterans' Administration's current discounts.

What is the end result? Higher drug prices for those who get their drugs from the Veterans' Administration.

Another key point made at last week's hearing before the Senate Finance Committee was that it is not simply about the number of people for whom you are buying drugs. In response to a question I asked Professor Scott Morton, the professor said it doesn't matter whether you negotiate on behalf of 1 million people or 43 million people--which is the number of senior citizens in this country. What matters is what leverage you have and how you use that leverage. And if you don't have a fundamental tool, and that would be the formulary, you have no leverage over drugmakers. A formulary is a list of drugs that a plan will cover.

Here is what Professor Scott Morton said would happen if someone negotiating drug prices couldn't have a formulary:

Each manufacturer would know that, fundamentally, Medicare

must purchase all products. The Medicare ``negotiator'' would

have no bargaining leverage, and therefore, simply allowing

bargaining on its own would not lead to substantially lower

prices.

That is the end of the quote from Professor Scott Morton.

Then we had a Mr. Edmund Haislmaier, a fellow at the Heritage Foundation, talk about the limits of bulk purchasing power alone. In his written testimony he said:

. . . volume purchasing encourages manufacturer

discounting, it is not, in and of itself, sufficient to

extract large discounts. Manufacturers will only offer

substantial discounts if the buyer combines the ``carrot'' of

volume with the ``stick'' of being able to substitute one

supplier's goods with those of another.

In drug negotiation, that stick he is talking about--Mr. Haislmaier is talking about--is the formulary.

Here is what is wrong with the House bill that just passed. It prohibits the Secretary of Health and Human Services from using a formulary. Thus the stick that is necessary, that the Veterans' Administration uses to drive down the price of drugs, is not even in the bill that passed the House that is supposed to guarantee senior citizens lower drug prices.

For all of their talk about getting savings from Government negotiations, the House Democrats took away a key tool to get lower prices. That was a key lesson we also learned from last week's Finance Committee hearing that Senator Baucus chaired.

Here is what the Congressional Budget Office said about H.R. 4. Here I have a chart. The bottom line of it is that it would have negligible effect on Federal spending. To emphasize that, I want to read it all. For the benefit of new Members, I point out we will soon find out that when you refer to the Congressional Budget Office, it is like God on Capitol Hill. When the Congressional Budget Office says something costs something--and you might have intellectually honest, good reasons for disagreeing with it--the Congressional Budget Office is always right. If there is a point of order against it, then you get 60 votes. The 60- vote requirement around here almost makes anything or anybody or any agency a god, because it is difficult to get 60 votes. So CBO generally stands. Sometimes they are overridden but not very often. So this god of CBO:

CBO estimates that H.R. 4--

I want to emphasize, that is the bill that just passed the House last week, a Democratic bill--

would have negligible effect on Federal spending because we

anticipate that the Secretary--

meaning the Secretary of HHS--

would be unable to negotiate prices across a broad range of

covered Part D drugs that are more effective than those

obtained by PDPs under current law.

You heard it during the campaign. You heard it a long time before the campaign. If we do away with this noninterference clause, we are going to get drugs cheaper for the citizens. This is supposedly on top of the 35 percent of the average reduction in the price of the 25 drugs most often used by senior citizens, and the god of Capitol Hill says there is not going to be the savings. That is not only for the people who pay out of their pockets some portion for drugs, but also saving the taxpayers money.

I am going to quote another thing from the Congressional Budget Office that gets back to this carrot and stick, the stick being the formulary that is used by the Veterans' Administration to get the low prices they get--the same pattern that proponents of doing away with the noninterference clause want to follow, to get lower prices for senior citizens, and that is the formulary. The Veterans' Administration has a formulary, but the House bill passed last week does not have a national formulary, so you do not have a stick to accomplish the goals.

Without the authority to establish a formulary, we believe

the Secretary would not be able to encourage the use of

particular drugs by Part D beneficiaries, and as a result

would lack the leverage to obtain significant discounts in

his negotiations with drug manufacturers.

It is pretty clear that what we are being told you are going to get as a result of the House-passed bill is not happening. So I would quote another independent actuary--maybe not quite the god that CBO is, but the actuaries at the Center for Medicare Services, the agency that oversees the Medicare drug benefit. They said about the same thing about H.R. 4 not having a formulary.

Although the bill would require the Secretary to negotiate

with drug manufacturers regarding drug prices, the inability

to drive market share via the establishment of a formulary or

development of a preferred tier significantly undermines the

effectiveness of negotiations.

Whether you are CBO, responsible to the Congress of the United States, working for the Congress of the United States, or whether you are the actuaries downtown at the Center for Medicare Services working for the President of the United States--and maybe actuaries are fairly independent--but the point being they came to the same conclusion, that the tool that is necessary to accomplish what Democrats say they want to accomplish by doing away with the noninterference clause to negotiate prices with drug companies isn't going to be effective because the tool to be effective is not in their legislation.

Let me point out the key downside of having the Secretary establish a national formulary in my next chart. Fewer drugs would be covered. I have made a point about keeping the Government bureaucrat out of the medicine cabinet, not to be the person between the doctor and the patient. We set up, as a principle in the Medicare bill, to do it differently than the Veterans' Administration because the Veterans' Administration did not allow every therapy to be available to a veteran. A bureaucrat makes a decision that a veteran can have this, but a veteran cannot have that, the Government will not buy this. We did not want the senior citizens to be treated that way, so every therapy has to be available.

This chart shows only 30 percent of the drugs covered by Medicare will be available to seniors if done the way the Veterans' Administration does it. Do you want to get the complaints from the seniors of America, as I sometimes get from veterans? They come to my town meetings saying: My doctor says I should not take this pill because there are side effects, I should take this one. Why won't the Veterans' Administration let me buy this pill? The doctor said I ought to have it.

I can go to the Veterans' Administration and advocate for this veteran, but it is not a sure thing. We do not have to worry about that with seniors.

Let me sum up two important points from the Senate Committee on Finance hearing we had last week and from the experts from the Congressional Budget Office and the chief actuary of Medicare.

First, giving Medicare the lowest price a drugmaker gives any purchaser, whether that is a private plan or the Veterans' Administration, will increase prices of prescription drugs for everyone else in America. That means higher prices for working Americans and for small businesses. Second, in summary, the ability to use a formulary to negotiate means you have to be able to tell a drugmaker: If you do not give me a good price, I will pick another drug to put in my formulary. If you do not believe all the experts, if you do not believe all of the people that have studied this over a long period of time, whom are you going to believe?

I remind everyone from where the prohibition on negotiations came. We have 10 new Members of the Senate, and a lot of them will not be familiar with the genesis of the noninterference clause. The opponents of the drug benefits seem to conveniently forget their own bills had the same language and that they supported a benefit run by private plans. My next chart demonstrates this better.

The prohibition of Government negotiation--what is referred to as a noninterference clause--first appeared in Democratic bills; in total, seven bills introduced and supported by 34 Senate Democrats and more than 100 House Democrats had the prohibition in these legislation. On top of that, many of the Members who are now twisting that language cosponsored that very legislation.

I will not emphasize every Democratic Congressman or Senator who introduced these seven bills, but I will emphasize President Clinton, in 1999, when he proposed from the White House a plan for prescription drugs for seniors. The plan proposed by President Clinton took the same approach. President Clinton said so many good things that I didn't have to think up new things, just repeat what President Clinton said about saving money and the ability of plans to negotiate and save money, and to make sure there was a wide range of drugs available for our seniors.

We have a good basis for including in our bipartisan bill that passed in 2003 things that Democrats had in their bills before we passed our bill. I don't see any of them embarrassed about that fact even while they go on talking about how bad the provision is now that it's in a bipartisan bill. Plans are negotiating for seniors, and those negotiations are reducing the cost of the 25 most often used drugs by seniors on an average of 35 percent. President Clinton said so many good things that I don't have to say them. I wish Members would read some of the things President Clinton said about this.

Continuing to summarize, the Secretary does not need the authority to negotiate and a national formulary is a bad idea. Competition among these plans that seniors are now joining--91 percent of the seniors have prescription drug coverage; the Medicare prescription drug benefit is a voluntary program; they do not have to get in it if they don't want to--had led to lower drug prices for beneficiaries and, more importantly, lower costs for taxpayers and the States. This is saving taxpayers $189 billion. I will cover that in a minute.

Premiums are lower than they were estimated to be. I talked of lower drug prices, but now I am talking about the premiums to join the plans. Before 2006, the Medicare chief actuary estimated the average monthly premium would be $37. In fact, we struggled to make sure, when we wrote the Medicare bill, that the premium would be between $35 and $40 a month because we felt above that there would be resistance to joining, and we would not have 91 percent of the people in. We planned on $35 to $40. The chief actuary said $37. But because of competition, it ended up being only $23 in 2006. In the year 2007, premiums are going to average $22. Competition is working.

The net cost to the Federal Government is also lower than expected. This is that $189 billion. Last week, the official Medicare actuary announced the net 10-year cost has dropped by $189 over the original budget window used when the Medicare Modernization Act was enacted. That is a 30-percent drop in the actual costs compared to what was projected. Competition is working.

I ask any Member how often a Federal program comes in under cost. We always speak of overruns. Every Federal program is costing more than we anticipate when we pass it. Overruns do not seem to be the sin they ought to be. We have a program $189 billion under what we thought it would cost, so we have an underrun. We never hear of that. We could not get the lower prices and lower costs unless the prescription drug plans are, in fact, what we anticipate they would be--strong negotiators with the drugmakers. Competition is working.

I know the opponents of the drug benefit will likely keep up their attacks on the program. They have pandered through the last election and they have to deliver. What are they delivering? They are delivering a pig in a poke. They may be delivering something very negative for the seniors of America. I have been working hard this week to give people important facts that have been left out of the debate on negotiation of drug prices.

The plain and simple fact is that competition among the plans is working. The Medicare plans are delivering the benefits to Medicare beneficiaries. These private sector plans have the experience in negotiating better drug prices. As I pointed out last week, for 50 years, Federal employees, under the Federal Employee Health Benefit Program, have been doing it this way. It has successfully worked. That is why we adopted it for seniors.

These Medicare negotiators have proven their ability to get lower drug prices. The Medicare plans are negotiating with drug companies using drug formularies within the rules set by law. These plans have to be approved by the Centers for Medicare & Medicaid Services. Medicare beneficiaries have access to the drugs they need and 70 percent of the drugs that are out there under the Medicare prescription drug benefit are not offered by the Veterans' Administration to veterans.

I have an example from the ALS Association, better known as the association dealing with Lou Gehrig's disease. Here is what they said about repealing the noninterference clause in a January 4 letter to Members of Congress:

The elimination of the noninterference provision will have

particularly cruel consequences for people with ALS. It means

that even if a new drug is developed to treat ALS, many

patients likely will not have access to it. That's because

price controls can limit access to the latest technologies.

The letter continues to say that individuals with ALS:

. . . will either be forced to forego treatment, or only have

access to less effective treatment options--ones that may add

a few months to their lives but not ones that will add years

to their lives.

Just for the record, drugs to treat ALS are covered under the Medicare drug benefit right now.

I end with a statement I have so often used in the last week: If it ain't broke, don't fix it.

I ask unanimous consent to have these letters printed in the Record.

I suggest the absence of a quorum.

Mr. President, Congress will be working on a rewrite of the current farm bill during the 110th Congress and I will be looking for ways to improve the economic condition of America's farmers. However, one of the many shortcomings of the 2002 farm bill is that it failed to protect family farmers and independent livestock producers from vertical integration in the livestock industry. This is one reason why I voted against the final conference report.

Over the years, family farmers from across Iowa have contacted me to express their fears about the threat they feel from concentration in the livestock industry. They fear that if the trend toward increased concentration continues, they may be unable to compete effectively and will not be able to get a fair price for their livestock in the marketplace.

The bill I am introducing would prevent meat packers from assuming complete control of the meat supply by preventing packers from owning livestock.

This bill would make it unlawful for a packer to own or feed livestock intended for slaughter. Single pack entities and packs too small to participate in the Mandatory Price Reporting program would be excluded from the limitation. In addition, farmer cooperatives in which the members own, feed, or control the livestock themselves would be exempt under this new bill.

This is a similar version I successfully offered on the floor during the debate on the 2002 farm bill.

It's important for our colleagues to remember that family farmers ultimately derive their income from the agricultural marketplace, not the farm bill. Family farmers have unfortunately been in a position of weakness

in selling their product to large processors and in buying their inputs from large suppliers.

Today, the position of the family farmer has become weaker as consolidation in agribusiness has reached all time highs. Farmers have fewer buyers and suppliers than ever before. The result is an increasing loss of family farms and the smallest farm share of the consumer dollar in history.

One hundred years ago, this Nation reacted appropriately to citizen concerns about large, powerful companies by establishing rules constraining such businesses when they achieved a level of market power that harmed, or risked harming, the public interest, trade and commerce. The United States Congress enacted the first competition laws in the world to make commerce more free and fair. These competition laws include the Sherman Act, Clayton Act, Federal Trade Commission Act and Packers & Stockyards Act.

Since that time, many countries in the world have followed this U.S. example to constrain undue market power in their domestic economies.

Unfortunately, competition policy has been severely weakened in this country, especially in agriculture, due to Federal case law, underfunded enforcement, and unfounded reliance on efficiency claims. The result has been a significant degradation of the domestic agricultural market infrastructure. The current situation reflects a tremendous mis-allocation of resources across the food chain. Congress must strengthen competition policy within the farm sector to reclaim a properly operating marketplace.

While this legislation does not accomplish all that we need to do in this area, it's an important first step toward remedying the biggest problem facing farmers today, the problem of concentration.

Thank you Mr. President; I ask unanimous consent the text of the bill be printed in the Record.

Mr. President, Congress will be working on a rewrite of the current farm bill during the 110th Congress and I will be looking for ways to improve the economic condition of America's farmers. However, one of the many shortcomings of the 2002 farm bill is that it failed to protect family farmers and independent livestock producers from vertical integration in the livestock industry. This is one reason why I voted against the final conference report.

Over the years, family farmers from across Iowa have contacted me to express their fears about the threat they feel from concentration in the livestock industry. They fear that if the trend toward increased concentration continues, they may be unable to compete effectively and will not be able to get a fair price for their livestock in the marketplace.

The bill I am introducing would prevent meat packers from assuming complete control of the meat supply by preventing packers from owning livestock.

This bill would make it unlawful for a packer to own or feed livestock intended for slaughter. Single pack entities and packs too small to participate in the Mandatory Price Reporting program would be excluded from the limitation. In addition, farmer cooperatives in which the members own, feed, or control the livestock themselves would be exempt under this new bill.

This is a similar version I successfully offered on the floor during the debate on the 2002 farm bill.

It's important for our colleagues to remember that family farmers ultimately derive their income from the agricultural marketplace, not the farm bill. Family farmers have unfortunately been in a position of weakness

in selling their product to large processors and in buying their inputs from large suppliers.

Today, the position of the family farmer has become weaker as consolidation in agribusiness has reached all time highs. Farmers have fewer buyers and suppliers than ever before. The result is an increasing loss of family farms and the smallest farm share of the consumer dollar in history.

One hundred years ago, this Nation reacted appropriately to citizen concerns about large, powerful companies by establishing rules constraining such businesses when they achieved a level of market power that harmed, or risked harming, the public interest, trade and commerce. The United States Congress enacted the first competition laws in the world to make commerce more free and fair. These competition laws include the Sherman Act, Clayton Act, Federal Trade Commission Act and Packers & Stockyards Act.

Since that time, many countries in the world have followed this U.S. example to constrain undue market power in their domestic economies.

Unfortunately, competition policy has been severely weakened in this country, especially in agriculture, due to Federal case law, underfunded enforcement, and unfounded reliance on efficiency claims. The result has been a significant degradation of the domestic agricultural market infrastructure. The current situation reflects a tremendous mis-allocation of resources across the food chain. Congress must strengthen competition policy within the farm sector to reclaim a properly operating marketplace.

While this legislation does not accomplish all that we need to do in this area, it's an important first step toward remedying the biggest problem facing farmers today, the problem of concentration.

Thank you Mr. President; I ask unanimous consent the text of the bill be printed in the Record.

Mr. President, following the other two speakers in regard to Iraq, I want to say a couple things. No. 1, anybody who criticizes what the President is proposing or anybody else is proposing or what has been done cannot get away with criticizing. There has to be another plan. I want to hear plans from people who think that what the President is doing is wrong. What would they do?

The second thing is that even the Iraq Study Group, which is very bipartisan, said there should not be a precipitous withdrawal from Iraq.

In regard to what my distinguished leader of the Republican caucus had to

say, that there has not been any attack on Americans in the 5 years since 9/11, those who are criticizing our efforts on the war against terror would be the first ones, if we had an attack this very day, of criticizing the President of the United States: Why wasn't he on top to prevent some sort of attack? And because America has not been attacked, there tends to be a short memory about the fact that we did lose 3,000 Americans. And we know it can happen again.

We know that terrorists came into O'Hare with the idea of a dirty bomb in America. We know there were people who were going to blow up bridges in New York City who were caught and the plans known. We individual Senators have been told by the CIA and by the FBI about many instances of where terrorist attacks against Americans have been stopped, and American lives have not been lost because of that. But they cannot talk about it because we do not want the terrorists to know what we know about them.

Too much attention on Iraq detracts from the fact that there are terrorists in 60 different countries around the world waiting to kill Americans. Evidence of that was American military people working with the Filipinos over the weekend to kill two terrorists connected with radical religious groups.

We finally were able to get at some of the people who should have been arrested in the previous administration, if a proper relations with Saudi Arabia had brought it about, who thought up the bombing of the embassies in east Africa when 12 Americans were killed and 200 other people were killed. We believe one of those persons was killed in a strike we were making in Somalia over the weekend. So we are involved in more than just Iraq in the war on terror.

People who forget what happened to America on 9/11, and if it happened again, some of the people who are criticizing what the President is doing would be there saying, as they were soon after September 11: Why wasn't the President on top of what happened on September 11 so it wouldn't happen again, when there were five instances of Americans being killed: 1993, 1995, 1997, 1999, before 2001, and this body passed the Iraqi Liberation Act unanimously in 1998 because President Clinton was saying what a threat Saddam Hussein was to the United States or to the world as well and that he had to go.

When you have that bipartisan support at a time when Americans are being attacked and killed--in 1993, 1995, 1997, and 1999, before 9/11 somewhere around the world--you have to stop to think, it isn't just Iraq. It isn't just Afghanistan. It isn't just 9/11. These religious radicals have been out to kill Americans going way back to 250 marines being killed in Lebanon in 1983. And there are individual instances of terrorism before that.

The war on terrorism isn't something new. What is going on in Iraq is not the war on terrorism. What is going on in Afghanistan is not the war on terrorism. The war on terrorism covers many nations, many threats to American people. The life of every one of us in this Chamber right now, if we were to go over to some parts of the world, would be threatened. We expect the President of the United States to protect us because he is Commander in Chief and because the responsibility of the Federal Government under the Constitution, No. 1, is the protection of the American people.

Mr. President, I did not come to the floor to talk about Iraq. I am not on too many of the committees that deal with foreign relations and military issues. I am on the Finance Committee, serving as a team player with the capable chairman of that committee, Senator Baucus, to deal with health issues, tax issues, and trade issues.

One of the health issues I have been speaking on for the last several days is the issue of Medicare and prescription drugs. For 3 days you have heard this Senator say why Democratic efforts to ruin the Medicare prescription drug program by doing away with the nonintervention clause is bad for senior citizens. I will take this fourth day of speaking to quote from other experts because I don't presume that any of the other 99 Senators care what I say. I have said it anyway. But I want to back up what I have said over the last 3 days by quoting from other people whom other Senators may be listening to in the period of time between now and a couple of weeks from now when this issue of prescription drugs is going to come up.

On Monday I spoke about how the benefit uses prescription drug plans and competition to keep costs down and how well that is working. I backed that up statistically. I said it then, and I say it again: If it ain't broke, don't fix it.

I presented findings from the chief actuary at the Center for Medicare Services. And for the benefit of a new Senator chairing, this chief actuary is the one people on his side of the aisle were quoting so extensively, that there was a much higher figure coming out of the administration than what the CBO had, and there was an effort to keep that hidden--what the chief actuary said it would cost--from the Congress so that we would pass a bill that was more expensive than we said it was. And if he could be quoted then, I want people to listen to him now.

I also quoted experts from the Congressional Budget Office, explicitly rejecting opponents' claims that giving the Secretary of Health and Human Services the authority to negotiate with drug companies would produce savings.

Today I will let the words of others from across the political spectrum and from the news media do the talking. I will begin with Secretary Michael Leavitt, head of the Department of Health and Human Services, who said:

Government negotiation of prices does not work unless you

have a program completely run by the government. Federal

price negotiations would unravel the whole structure of the

Medicare drug benefit, which relies on competing private

plans.

Just today, the Secretary wrote an op-ed in the Washington Post that if the Government was required to negotiate--I am quoting the Secretary--``one government official would set more than 4,400 prices for different drugs, making decisions that would be better made by millions of individual consumers.''

The Secretary went on to say:

There are many ways the administration and Congress can

work together to make health care more affordable and

accessible. But undermining the Medicare prescription drug

benefit, which has improved the lives and health of millions

of seniors and people with disabilities, is not one of them.

The next person I would like to quote is Dan Mendelson, a former Clinton administration official, who now is president of a health care consulting firm that tracks Medicare prescription drug programs. Mr. Mendelson, a former Clinton administration official, said:

From a rhetorical perspective, Democrats may feel like they

gain a lot with this issue, but there are many substantive

hurdles that the government faces in trying to negotiate

prices. If you look historically at the government's

experience in trying to regulate prices, it's poor.

That was an official from the Clinton administration. As supporting evidence, a Chicago Tribune editorial said the following:

Richard S. Foster, the chief actuary for the Centers for

Medicare and Medicaid Services, studied whether direct

government negotiation would yield bigger discounts. His

answer: Not likely.

One reason, he said, was Medicare's unreassuring record on price negotiations, even before this new benefit was passed.

I made the point the other day that over the last 40 years, we have seen CMS, HHS, price health care, wasting a lot of taxpayers' dollars, because the Government has overpriced things, overreimbursed things. Mobile wheelchairs is just the most recent example I have used in some of my hearings in my committee while I was chairing it.

Medicare has a history, following on what I said, of paying for some drugs ``at rates that, in many instances, were substantially greater than the prevailing price levels. Translation: The feds got fleeced.''

That is the chief actuary that people on the other side of the aisle were quoting so liberally 3 years ago. I hope they will take his analysis of what is going on now in Medicare, working well for seniors, into consideration before they screw everything up with an amendment to do away with the noninterference clause.

Now I want to show you a chart. I guess this will be the first chart.

Mr. President, I ask unanimous consent that the order for the quorum call be rescinded.

Mr. President, I ask unanimous consent to speak as in morning business.

Mr. President, I am back here today, as I have been other days this week, to talk about the Medicare drug benefit and the debate about whether the Government would do a better job of negotiating with drug companies than the prescription drug plans that are doing so this very day under law of the last 2\1/2\ years. Over the past 2 days, I have talked about the fundamental structure of the drug benefit. I talked about the heart of it, of the drug benefit plan, as competition. Plans, with vast experience in negotiating with drug manufacturers, compete to get the best drug prices for Medicare. That is what is happening today to benefit our senior citizens. Plans that have been doing this for 50 years are negotiating with drug companies in a competitive way to get the best prices for Medicare senior citizens. To date, the proof is in the pudding. We have lower bids, we have lower beneficiary premiums, lower costs to the Government, and lower costs to our States. Most importantly, we have lower prices on drugs, meaning senior citizens get affordable drugs and low-income people do not have to choose between drugs and food. Remember, that was a goal we had in 2003 we passed this legislation.

I will give some examples of how this competition has worked. A draft PricewaterhouseCoopers study found in 2006 prescription drug plans achieved higher savings, 29 percent compared to unmanaged drug benefit expenditures. That is almost 100 percent greater than the 15-percent savings projected by Centers for Medicare and Medicaid Services and almost 50 percent greater than the savings estimated by the Congressional Budget Office way back when, in 2003, when we all thought if this program worked at all there would be some savings on prescription drugs for seniors. However, it has turned out to be much greater savings than we anticipated when we wrote the bill.

It isn't often that legislation we write comes back with a better benefit to the taxpayers, better benefit to our seniors or any group or population. Most often there are what we call cost overruns.

I believe it is fair to say that competition is working.

Yesterday, I talked about how this whole debate is based on nothing more than a distortion of language in what is called the noninterference clause in the existing legislation. This noninterference language was first included in legislation introduced by many of the same people now opposing it, and these people tend to be led by Members of the Democratic Party.

To be clear, that language, the noninterference language that people now are questioning, that period of time between 1999 and 2003, bills introduced by Members in the other party included this language and now, somehow, they do not like it.

I want to be clear that the impressions left by opponents of this part of the legislation that we do not have competition, we do not have negotiations, this language in the legislation does not prohibit negotiations to get drug prices down. Negotiations occur between private plans and the drug manufacturers regularly. You could not get those percentage decreases in prices I just mentioned--those percentages that are even greater than percentages we thought when we wrote the legislation--you would not get those without negotiation, you would not get those without competition.

I, also, pointed out in earlier speeches, so far, proposals to have the Secretary of HHS negotiate drug prices have not been shown to actually save

any money. Our beloved Congressional Budget Office tells us that they cannot project savings by having a Government bureaucrat negotiate instead of plans negotiating. Nevertheless, here we are, in the new Congress, discussing this matter once again.

What I want to do today is put forward a picture of what Government negotiations might look like. Admittedly, doing this will require some speculation. Why is that necessary? It is necessary because Democrats have not provided many details on how they actually envision their requirement that the Secretary negotiate how that will work. This is despite the fact that some opponents of the noninterference clause have demagoged this issue for nearly 3 years. After 3 years, they are still out there saying the noninterference clause ought to go, but there are no details on how their plan will work. They have given us a few clues as to their thinking on how they want it to work.

For the longest time, I heard it said that the Secretary of Health and Human Services should have the power to negotiate drug prices, as the Veterans' Administration does. With the Veterans' Administration as our guide, let's talk about the VA's approach to purchasing drugs and then ask you to consider, after you hear this, do you want to do it that way? This discussion will be somewhat technical, but I urge listeners to bear with me because we need to get beyond the Veteran's Administration sound bite. Everyone needs to have a good understanding of what this would mean for Medicare.

It is a fact that the Veterans' Administration uses different purchasing arrangements to get discounts on prescription drugs. But there is a big distinction between these purchasing arrangements. The Veterans' Administration has access to what we call the Federal supply schedule prices. Under the Federal supply schedule prices, the Government guarantees by law that it must get the best price in the marketplace. This means that the Federal supply schedule prices cannot exceed the lowest price that a manufacturer gives in comparable terms and conditions to a non-Federal customer such as the pharmacy benefit manager. Since that is technical, I will go over that once more. Under the Federal supply schedule, the Government guarantees by law that it must get the best price in the marketplace. But what this means is that the Federal supply schedule prices cannot exceed the lowest price that a manufacturer gives under comparable terms and conditions to a non- Federal customer, and that could include health plans, pharmacy benefit managers, and many others. Under Federal law, manufacturers must list their drug on the supply schedule to qualify for reimbursement under Medicaid.

Next, the VA can purchase drugs at the Federal ceiling price. Again, the Government passed a law to guarantee itself an automatic discount no one else can get. By law, that price is automatically 24 percent less than the average price paid by basically all non-Federal purchasers.

Isn't that a nice negotiating tactic? Pass a law and guarantee yourself a discount. The logical questions are, why not have Medicare access the Federal supply schedule--because people who want to do it such as the VA, that is where it takes you. Why not give Medicare the Federal ceiling price?

I will refer to a chart because experts have looked at this question, and we have assigned the Government Accountability Office to look into this. They had a year 2000 report on this. They say:

Mandating that federal prices for outpatient prescription

drugs be extended to a large group of purchasers, such as

Medicare beneficiaries, could lower the prices they pay but

raise prices for others.

In other words, raising prices for everybody else in America that is purchasing drugs. You heard that right: Raise prices on everybody else.

Who would face the higher prices under ``everybody else''? Small businesses, their employees, their families, to name a few. Those higher prices would likely force employers to reduce their prescription drug benefit or stop providing health insurance coverage altogether. Of course, that is an outcome I surely hope people want to avoid, but it may be an outcome that the proponents of doing away with the noninterference clause are not aware of. Or the people that are saying we ought to follow the VA practice may not be aware, that to save the taxpayers some money you are going to raise the price of drugs on everybody else in America, according to the Government Accountability Office.

The Government Accountability Office reached its conclusion by examining what happened to drug prices after Congress required drug manufacturers to pay rebates to State Medicaid Programs such as the Federal supply schedule, the Medicaid rebate program guarantees that the Government gets the best price in the marketplace.

What happened after the law was enacted? The best prices went up for everyone else. The practical effect was twofold: First, the size of rebates for State Medicare Programs got smaller. What the Federal Government wanted to accomplish to benefit the States did not happen. Second, other purchasers paid higher prices. One might ask why that might happen. Here is why: Drugmakers had to eliminate their best prices to private purchasers or face bigger rebates. That happens because if they gave 1 purchaser a best price, they then had to give the best price to 50 State Medicaid purchasers. One discount to a private purchaser could mean millions that a manufacturer would be forced to pay in rebates to the Government.

What do you think the drug companies did to counteract a well- intentioned act of Congress which ended with unintended consequences? The drug companies eliminated all the deep discounts so that they did not have to pay as much in mandatory rebates to Medicaid.

A 1996 study by the nonpartisan Congressional Budget Office examined the extent to which the Medicaid laws result in higher drug prices to everyone else. Listen to what our Congressional Budget Office concluded:

Best price discounts have fallen from an average of over 36

percent in 1991 to 19 percent in 1994. Hence, although the

Medicaid rebate appears on the surface to be attractive, it

may have had unintended consequences for private purchasers.

The Federal Government passes a law to do good, and we find out we end up not doing so good. Almost a 50-percent reduction in best-price discounts; is that good? A nearly 50-percent reduction in the discounts received by purchasers such as health plans that serve employers and their employees; is that good? Of course, it is not. What this means is when those deep discounts went away, the price that everyone else pays for drugs went up. So those mandates, rebates to Medicaid made drug prices for everyone else higher.

Talk about unintended consequences. And we in the Senate who set these things up had the right intentions for doing it, but it has not worked out--unless you want to look at the good it did to the Federal Treasury and not count or not discount the harm it did to everyone else who paid higher prices.

To state it more simply, when discounts to a large purchasing group are based on discounts to another, no one gets a good discount. That is what the Government Accountability Office said in its 2000 report:

Extending the Federal Supply Schedule . . . could also

raise the prices paid by private and federal purchasers, as

increases in prices, manufacturers charged their best

customers would, in turn, increase Federal Supply Schedule

prices.

Would opponents of the noninterference clause believe the congressional agencies, such as the CBO and the Government Accountability Office, that striking the noninterference clause would not be good? Ironic, isn't it, when the Government used price controls to mandate discounts to itself, it actually makes prices go up. I will go through that again. When the Government uses price controls to mandate discounts to itself, it actually makes prices go up. No person in their right mind concerned about the Federal Treasury or concerned about the cost of drugs to people in this country would say that meets the commonsensical test. But that is what happens.

During a 2001 hearing before the Senate Committee on Veterans' Affairs, my colleague, the senior Senator from Pennsylvania, Mr. Arlen Specter, posed a question on this very matter. He asked whether adding Medicare to the VA and Department of Defense purchasing mix would produce greater

bulk discounts. The Veterans' Administration chief consultant for its Pharmacy Benefits Management Strategic Health Group answered that adding Medicare to the Federal Supply Schedule umbrella would result in increased drug prices for both the Veterans' Administration and the Department of Defense.

So, now, in addition to the Government Accountability Office and the Congressional Budget Office, the Veterans' Administration weighs in for itself, and the Department of Defense, that doing what repealers of the noninterference clause want to do will actually increase drug prices to the Veterans' Administration and the DOD. And people want to use the Veterans' Administration as a pattern to affect Medicare. So that is saying it for the third time.

If I could say it for another time, straight from the Veterans' Administration's mouth, itself: Extending VA prices to Medicare would make the VA's own drug prices increase.

And for one last time, the basic point they are making is, if you try to mandate discounts to everyone, then--what I have said a few minutes ago--no one gets a discount. Now, I am no economist, but that is basic economics. And not only that but it is common sense.

I think I have pretty much laid out why including Medicare in the Federal Supply Schedule is not as good an idea as its proponents may have made it out to be.

So now I want to go back to how the Veterans' Administration uses competitive bidding to get the discounts they say they want to use as a pattern for the Medicare Program.

Let me start by giving you an important piece of information. The Veterans' Administration has its own pharmacy benefits manager. More than a decade ago, as part of a major initiative to improve the care delivered, the Veterans' Administration formed a pharmacy benefits manager, better known around here as a PBM.

So you will probably wonder why they did that. Because, as stated in the VA news release, they wanted to maximize a strategy used by the private sector. You have people who want to have Medicare do it like the VA does it, but the VA set up a very special program because they wanted to learn something from the private sector.

A primary responsibility of the PBM for the Veterans' Administration was to develop a national formulary. The Government learned that from the private sector, the very same people they are finding complaints about now. They wanted to set up a national formulary.

A formulary is the list of drugs that a plan will cover. Basically, if your drug is not on the list, it is not covered.

A 2005 article in the American Journal of Managed Care, coauthored by the Veterans' Administration's staff and university-based researchers, stated that the Veterans' Administration created the national formulary to achieve two main goals.

First, the Veterans' Administration wanted to reduce the variation in access to drugs across its many facilities throughout the United States. In other words, they wanted to put a VA bureaucrat between the doctor and the patient. Doctors could not subscribe to everything that they thought that patient might need because if it was not on the formulary, they could not prescribe it.

Second, the VA wanted to use the formulary as leverage to get lower prices for drugs. Let me repeat that because it is important. The Veterans' Administration created a national formulary to create the leverage it needed to get lower prices for drugs.

That goes back to the point I made a couple days ago. The ability to get good discounts does not result from the sheer number of people a purchaser buys for. The ability to get good discounts comes from how the purchaser leverages those numbers. That leverage comes from a purchaser threatening to exclude a drug from the formulary. So it eventually comes down to threats.

The Veterans' Administration uses its formulary to say: Give me a better price or else--or else we are not going to buy your drugs at all.

As I said earlier, the Veterans' Administration was intentionally adopting a private sector strategy when it started using a formulary to get lower drug prices. The Medicare prescription drug plans also use formularies to negotiate lower drug prices. The most important thing about the VA formulary is that it is one big national formulary.

The biggest difference between the VA and Medicare is that beneficiaries have choices.

Let me make that clear. The biggest difference between how the VA does it and how the plans do it--the plans that are approved by the Secretary of Health and Human Services for the senior citizens of America and Medicare--the biggest difference is the beneficiaries have choices. They can choose their plans with different formularies. So Medicare bureaucrats are not coming between the patient and the doctor like VA bureaucrats are coming between the patient and the doctor. You can run into this in your town meetings because I had people come up to me and complain about the VA: My doctor says I ought to have this drug because the drug that the VA wants me to take has side effects.

And they come to me and say: How come the VA won't pay for this drug because it is better for me, according to my doctor?

And their answer is: Because the VA wants to save money. So you have a Government bureaucrat deciding what is best for your health instead of your doctor.

But the principle behind the prescription drug bill that Senator Baucus and I wrote was that we were not going to have the bureaucrat getting in the medicine cabinet of a person, of senior citizens. We wanted every therapy available. That is the way it is written, and that is the way it is being carried out. So I wonder if people who say you ought to change this and do it the way the VA does it know how you are negatively affecting the senior citizens of America.

The way senior citizens can do it is they have choice. They can enroll in a plan that covers their drugs. They can enroll in a plan that allows them to use their neighborhood pharmacy. The VA does not do business with every pharmacist in America. So you are hurting your local pharmacist when you do business that way.

Under the Veterans' Administration programs, veterans do not have a choice. They cannot choose a different plan, and they have to use the VA's own pharmacy, not the pharmacy down the street. Using a limited number of VA-controlled pharmacies and mail-order pharmacies also helps keep VA costs down.

But one of the things we wanted to accomplish in the prescription drug bill, Part D, was to make sure the Government did not use its leverage to hurt local pharmacists. And we put several things in--a requirement you had to have a brick-and-motor pharmacist in every plan. So we have some requirements to help pharmacies that the VA does not even worry about. And I have to confess to the community pharmacists of America, we still have a lot of work to do to help them so they benefit from this program like we intended. There are some unintended consequences to what we did, even considering the fact we took the community pharmacists into consideration.

Under the VA program, then, you do not have a local pharmacist to go to. When they do not use the local pharmacist the way we do, when they use all these mail-order pharmacies, they hurt the local pharmacist, but they are saving some money.

Also, there is limited access to drugs, limited access to retail pharmacies. That is how the VA works. So do you want to force that upon the senior citizens of America?

I would like to go to another chart now. The Los Angeles Times put it best in an article on November 27 of last year. According to the Los Angeles Times:

VA officials can negotiate major price discounts because

they restrict the number of drugs on their coverage list. . .

.In other words, the VA offers lower drug prices but fewer

choices.

So do you want to offer fewer choices to our seniors? That is not what we wanted when we wrote the Medicare bill. We wanted to keep CMS bureaucrats out of the Medicare medicine cabinet of every senior citizen.

So what would it mean if the Government negotiated lower drug prices for Medicare in a national system like the Veterans' Administration? It would

mean having a more limited formulary. And it would mean having the Veterans' Administration bureaucrat between you and your doctor.

So I would go to a chart that would make this more picturesque and more clear to you. This chart shows what this would mean. It would mean that instead of having 4,300 drugs available to them, beneficiaries would have about 1,200 drugs available. If Medicare used a national formulary like the VA, it would mean that 70 percent of the prescription drugs could not be covered by Medicare. Only 30 percent of the drugs covered today would be covered.

Then let's get into some specific drugs, about major problems we are trying to treat today, such as diabetes or cholesterol. There, too, if the Government negotiated for Medicare like it does for VA, it would mean fewer drugs covered by Medicare.

In the case of treatment for depression: 65 percent covered; 35 percent not covered. In the case of treatment for high cholesterol: 54 percent covered, 46 percent not covered. It seems that by looking at these drugs, if the Government used the VA model, our senior citizens would not be as well served.

Now, maybe you can make an argument we are not treating our veterans right. We appropriate more money every year for veterans health programs. And we have to because the needs are there and we made a promise. We have to keep the promise to the veterans. But I think veterans watching this could say: Well, why not cover these? Why not cover these? Well, I have given the reason. We want to save taxpayers money. But it is completely opposite what we wanted to accomplish under the Medicare bill to serve our senior citizens: everything being available, and to save the taxpayers money through competitive bidding.

This could also mean that beneficiaries could not get their prescriptions filled at the most convenient pharmacy for them. That is not what we wanted when writing the bill. We put seniors first. Those who want to repeal it, it seems to me, they are putting bureaucrats first, or at least they are putting bureaucrats between the doctor and the senior citizen. In many cases, those realities have led Medicare- eligible veterans to enroll in Medicare drug programs so they will have coverage for drugs not covered by the VA.

When I held my town meetings as we were rolling out this new drug program, I had veterans say: Well, does this mean I have to get out of the veterans program?

I said: If you are satisfied with the veterans program, you can stay in it. You do not have to do anything. If you decide later on you want to get into one of these programs, you can do it without penalty.

So they had the best of both worlds. If they were satisfied with the VA, keep it. But we have evidence that some of them are leaving the VA program to join the program of Part D Medicare. Even though many veterans have very good drug coverage, almost 40 percent of the veterans with VA benefits and Medicare coverage are enrolled in Part D. So when you get beyond the easy sound bites, when you get to the facts, applying the VA system to Medicare is neither as easy as it sounds nor will it likely have the effect that the proponents suggest.

It now appears that even they have begun to figure this out because now, when the rubber hits the road, when they have to produce something, they introduce a bill--and I am referring now to a bill of the other body--that explicitly prohibits the Secretary from creating a formulary.

In fact, the Los Angeles Times reported last week that a House Democratic leadership aide said, ``We felt we couldn't go as far as the Veterans Affairs [Department] does.''

Under the House Democrats bill, Medicare can't have a formulary. As I tried to make clear here today, the drug formulary is the key to negotiating lower drug prices. The House Democrats bill prohibits the Government from having a national formulary. No formulary means no negotiations, no leverage over drug companies. In reality, the Democratic proposal on negotiation actually prohibits the Government from negotiating. Under their plan for Government negotiation, the Government won't be able to say no to a drug company. With no formulary to bargain with, the drug companies could say something like this: No, why should I give you that price if you can't exclude me or charge higher cost sharing?

At the same time, the House Democrats bill repeals the prohibition on the Government setting a pricing structure. So if the Government cannot negotiate because it can't have a formulary, if there is no prohibition on Government price structure, where does that leave us? Sounds like price controls to me. Experience shows that when the Government sets prices for itself, when it gives itself mandatory discount, prices go up for everyone, higher prices for everyone else. Why would anyone want that sort of a situation?

Everyone always asks, why not have Medicare work like the VA program to get lower drug prices. I think I have laid out why that idea might not be as good as the proponents have made it sound. Having Medicare work like the VA could mean fewer drugs covered, restricted access to community pharmacies, more use of mail-order pharmacies and higher drug prices for everyone else. I can't imagine that is what people want.

So where does that leave us? The Medicare plans are working today. I say that based upon several polls that show 80 or so percent of the seniors are satisfied. The plans are also delivering the benefits to Medicare beneficiaries. These private sector plans have the experience of negotiating better prices. These Medicare negotiators have proven their ability to get lower prices. The Medicare plans are negotiating with drug companies using drug formularies within the rules set by law, and the formularies are basic for that negotiation.

Last week on the Senate floor, the Senator from Illinois said that the law ``took competition out of the program so that [the drug companies] could charge whatever they want.'' That is not true. We have the 50-year experience of the Federal Employees Health Benefit Program negotiating for every Federal employee to keep costs down to the citizen as well as to the taxpayers. We patterned it something like that. And quite frankly, when we patterned it for the senior citizens under Medicare, I wasn't entirely sure we would get all the plans interested, that we would have the competition we ended up having. It has worked beyond our expectation. And thank God it did, because I am not sure we had that kind of expectation out of it. But it sure worked. Thank God something worked a little bit better than we anticipated it would work.

So we had a Senator saying that we took competition out of the program. Competition is what this program is all about, and that competition is working. Costs are lower. Premiums are lower. Let me quantify how premiums are lower, because when we were writing the bill in 2003, we were figuring at what price, somewhere between $35 and $40 a month, could we get seniors to join. Over that, we would have problems. Competition has brought it in at $23 last year and $22 this year on average. So these organizations remain in the best position to get lower prices for Medicare beneficiaries and taxpayers.

I yield the floor.

Mr. President, I welcome the new Presiding Officer to the Senate. I look forward to working with him as a new Senator. I hope he enjoys his time in the Senate.

I am back here again today, as I was yesterday, to talk about the Medicare drug benefit. Yesterday I spoke about how the benefit uses prescription drug plans and competition--with emphasis upon competition--to keep costs down for our senior citizens. I spoke about how well that system of competition that is in the prescription drug bill has been working for the last 2 years of its operation. Today I want to get to the crux of this debate and a debate that is going to take place a few days from now in this Chamber, the so-called prohibition on Government negotiation with drugmakers.

Opponents of the Medicare drug benefit have misrepresented what we call the ``noninterference clause'' language. That language doesn't prohibit Medicare from negotiation with drugmakers. It prohibits the Government from interfering in negotiations that are actually taking place.

Much of this debate hinges on a convenient lapse of memory that I am going to emphasize during my remarks about the history of the noninterference clause. So today I want to take my colleagues on a little trip down memory lane. For our first stop on memory lane, I would like to read something. This is a quote from someone talking about their very own Medicare drug benefit proposal:

Under this proposal, Medicare would not set prices of

drugs. Prices would be determined through negotiations

between private benefit administrators and drug

manufacturers.

The person who said this clearly wanted private negotiation with drug companies for a Medicare benefit, not Government negotiations. The person I quoted was proposing--and I will quote again what he said-- ``negotiations between private benefit administrators and drug manufacturers.'' I don't think that person could be more clear in what he was attempting to accomplish with his proposal.

You are going to be shocked to hear who said this. The quote is from none other than President Clinton. President Clinton made that comment as part of his June 1999 plan for strengthening and modernizing Medicare for the 21st century. President Clinton went on to say that under his plan ``prices would be determined through negotiations between the private benefit administrators and drug manufacturers.''

I quote further:

The competitive bidding process would be used to yield the

best possible drug prices and coverage, just as it is used by

large private employers and by the Federal Employees Health

Benefits Plan today.

President Clinton also described his plan as using private negotiators as opposed to Government negotiators, because ``these organizations have experienced managing drug utilization and have developed numerous tools of cost containment and utilization management.''

Does this ring any bells? It should because it is the same framework used in today's Part D Medicare prescription drug benefit, private negotiations with drug companies, and it is based on the nearly 50-year history of the Federal Employees Health Benefits Program.

I would like to refer to another part of Medicare history for memory's sake as well. This is another interesting spot on memory lane for history buffs. The Clinton plan had a coverage gap that we refer to in the Senate as the doughnut hole, just like the bill eventually signed into law in 2003.

Like many others, the brandnew Speaker of the House has questioned why one would pay premiums at a point in time when you are not receiving benefits, as is the case with the doughnut hole. Well, that is how insurance works. We all know how the insurance industry works. Go look at your homeowner and auto policies and Part B Medicare. You pay premiums to have coverage. That is how President Clinton's plan was meant to work, if it had become law.

In Sunday's Washington Post, the new Speaker of the other body, Pelosi, was quoted about having a doughnut hole. She said:

How could that be a good idea, unless you are writing a

bill for the HMOs and pharmaceutical companies and not for

America's seniors?

Was she referring to President Clinton's plan proposed in 1999? As I said, he proposed his plan in June of that year. On April 4, 2000, S. 2342 was introduced in the Senate. S. 2342 would have created a drug benefit administered through private benefit managers. So here again would be private negotiators negotiating with the drug companies to save seniors money on their prescription drugs. Does that sound familiar? It is just like today's Medicare Program that is law.

Here is another important stop down our memory lane. That bill, S. 2342, introduced in 2000, included language on noninterference:

Nothing in this section or in this part shall be construed

as authorizing the secretary to authorize a particular

formulary, or to institute a price structure for benefits, or

to otherwise interfere with the competitive nature of

providing a prescription drug benefit through benefit

managers.

This is the first bill--the very first one--where the noninterference clause appeared. This is the first prohibition in present law on Government negotiation that was introduced. But S. 2342 wasn't introduced by a Republican; it was introduced by my esteemed colleague, the late Senator Moynihan. One month later, there was a bill, S. 2541, introduced. I will read some of the language that was in that bill. That bill said this; I have it on the chart:

The secretary may not (1) require a particular formulary,

institute a price structure for benefits; (2) interfere in

any way with negotiations between private entities and drug

manufacturers, and wholesalers; or (3) otherwise interfere

with the competitive nature of providing a prescription drug

benefit through private entities.

I will make it clear that this wasn't a Republican bill, either. It was introduced, as you can see, at that time by Senator Daschle, who was joined by 33 other Democrats, including 3 who are still prominent in the Senate--Reid, Durbin, and Kennedy. That is right. I want you all to know that 33 Senate Democrats cosponsored a bill with a noninterference clause in it. You see, it turns out that the Democrats didn't want the Government--nor did President Clinton--interfering in the private sector negotiations either. They recognized then that the private sector would do a better job, and they didn't want some Government bureaucrat messing it up.

I will go to another chart. In June 2000, two Democratic bills were introduced in the House of Representatives that also included noninterference language. H.R. 4770 was introduced by then-Democratic leader Dick Gephardt. That bill had more than 100 Democrats cosponsoring, including the new Speaker of the House--then not speaker--Nancy Pelosi, and Representatives Rangel, Dingell, and Stark. Rangel, Dingell, and Stark are people whom I have worked closely with in Congress recently on a lot of health legislation or tax legislation--or trade legislation, in the case of Congressman Rangel.

The prohibition on Government negotiation included in that House bill was almost identical to the language Senator Daschle had in his bill. Here is the text of the actual noninterference clause included in the bill signed by the President in 2003, present law--what we refer to as Part D now:

Noninterference.--in order to promote competition under

this part and in carrying out this part, the secretary (1)

may not interfere with the negotiations between drug

manufacturers and pharmacies and PDP sponsors; and (2) may

not require a particular formulary or institute a price

structure for reimbursement of covered part D drugs.

Well, that sounds a bit like what was sponsored by Democrats over the last several years. Last week, the senior

Senator from Illinois described the 2003 Medicare bill--and this was in a speech on the floor--as being written by the pharmaceutical industry. But the noninterference clause first appeared in legislation introduced by Democrats who now oppose the same provision that is in present law.

Now, the opponents of the Medicare drug benefit always say that the noninterference clause is proof the present law was written by the drug industry. My question, Mr. President, is this: If that is what they want to think, then did the same pharmaceutical industry write these bills that the Democrats introduced in 2000, 2001, and 2002?

I bet you are wondering how many Democratic bills had the now infamous noninterference clause in it--that is, the prohibition on Government negotiation. Well, here is the whole timeline. As you can see from chart 4, that prohibition on the Government negotiating, the noninterference clause, has been in seven bills by Democrats between 1999 and 2003, including a bill introduced in the House on the same day, H.R. 1, which eventually became the bill the President signed. There were seven. Here they are. The first is the Moynihan bill, April 2000; Daschle-Reid bill, May 2000; Eshoo bill, June 2000; Gephardt- Pelosi-Rangel-Stark-Dingell-Stabenow--when she was in the House and is now a Senator--introduced June 2000. Stark had it in a motion to recommit in June 2000. Senator Wyden from Oregon introduced it as part of S. 1185 in July 2001. Thompson of California had it in a House bill in June of 2003.

It seems to me that on the other side of the aisle there ought to be some consideration of where did Republicans get this idea. I hate to steal ideas from Democrats, but if they work, they work. I spoke yesterday about how this provision--or the present way of doing it. The Federal Health Employee Benefit Program has been doing it for 50 years, and it has been saving senior citizens lots of money, not just on the price of prescription drugs but prescription drugs and premiums and a lot of other things--not only saving senior citizens money out of their own pockets but saving the taxpayers with a new judgment on what the cost of the drug program is going to be that was projected back when it was signed by the President. It is $189 billion less than the Congressional Budget Office, the CMS, and the OMB said it would cost.

Now, I know what the response will be. It will be that even though Democratic bills had nearly the exact same prohibition on Government negotiation--practically word for word in seven bills over a long period of time--opponents now think the approach is no longer the best for Medicare. That's sort of like ``we supported it before we opposed it.'' Beneficiaries and the public deserve more than that.

I yield the floor.

Mr. President, I compliment the Senator from Oregon, Senator Wyden, for being a bulldog on this issue and working so closely with me. Besides complimenting him on his efforts, and finally being victorious on these efforts, it gives me an opportunity to say to the country at large, people who generally believe that everything done in Washington is done on a partisan basis, this is an example of where one Democrat and one Republican, working together, have been successful, and we have been working together. So everything in Washington is not partisan.

Also, I think it brings to a point that as far as the Senate is concerned, as opposed to the other body, the fact that this probably would not have gotten done if it had not been done in a bipartisan way. For things to be successful in the Senate, it takes some bipartisanship and the broader the bipartisanship the better. But also as a substitute for bipartisan opposition to what we are doing, our bulldogging this issue for a long period of time has proven to override the bipartisan opposition to it because when we put an issue such as this to public debate, common sense has to prevail.

Getting back to what Senator Wyden quoted me as saying over the last several years, that the public's business ought to be done in public, that people who are surreptitiously trying to do things and then try to explain that to the public, the public is not going to buy into it. But the public does buy into doing what the public thinks Congress is all about, and that is being a very public body because we are representatives of the people.

I say those things aside from the merits of the issue. I cannot express those merits for myself any better than Senator Wyden has done. I don't intend to try to attempt to do that, but I will give you my version of why this is a very important issue. In doing this, I fully support everything Senator Wyden has said, and I associate myself with those remarks.

As an extension of what he said, I will say for myself, every Senator does have a right and, if he or she is representing their constituents, ought to exercise this right to object to a unanimous consent request to bringing matters before the Senate that they might feel are detrimental to their constituency or detrimental to the good of the country. Of course, an extension of unanimous consent is putting a hold as a way of protecting that right.

Since Senators cannot be on the floor all the time, a hold is essentially a way of putting the leaders on notice that a Senator intends to object to a unanimous consent request to proceed to a matter. Of course, I have exercised, and the Senator from Oregon has said he has exercised, putting on holds for various reasons. For a long time, I have made my holds public by putting a very short statement in the Congressional Record of why I was holding something up, No. 1, because I think the public's business ought to be public, and, No. 2, because I am saying holds ought to be public, so it would be unethical for me to have a secret hold, and No. 3, people who disagree with my hold ought to have an opportunity to discuss with me why they think their position is right, and I ought to have a right to discuss with them why I think something ought to be changed in their bill or some reason I am holding it up, so one can talk and know they are getting together to solve the problem so the work of the Senate can be done.

Since I have done that, I have to say I fully support the right of Senators to place holds on items that they do not consent to consider. However, a Senator has no right to register an objection anonymously. That has not been that way for decades in the Senate because some Senators feel that the public good ought to require that sometimes things ought to be done in secret. I don't happen to agree with that thought. So I am taking the position that the public's business ought to be public.

If I could expand on that a little bit, I suppose there are some legitimate exceptions to it, but except for the privacy laws, except for national security and connected with that maybe our intelligence operation and maybe in the case of executive privilege--meaning people who are in the White House very close to the President--I think there is no reason for business not to be public. That is, 99 percent of the rest of the business that the Federal Government does, from my point of view, ought to be public.

In practice, a hold can prevent a measure from coming before the Senate indefinitely. This gives tremendous

power to a single Senator that no single Senator should be able to exercise for a very long period of time, maybe in the purist way--but in the less pure way should not be able to exercise secretly because the public's business ought to be done in the public.

There is no good reason why a Senator should be able to singlehandedly block the Senate's business without public accountability. For several years now, as I have said, I have practiced using holds for various reasons, but I placed a statement in the Record of why I was doing it.

We must have transparency in the legislative process for the right of the public to know what we are doing but also to expedite the public's work. The use of secret holds damages public confidence in the institution of the Senate. I figure a secondary, subsidiary benefit of what we are doing is when people get the idea that we are not trying to do something secret, that the public's business is public, they are going to be less cynical about the institutions of Government generally. The less cynicism we have, the more confidence people are going to have in the institutions of Government and the better our Government is going to operate, the better the representative system of Government is going to operate.

But where does less cynicism start? It doesn't start necessarily with changing the rules. It starts with people such as Senator Grassley, Senator Wyden, and Senator Whitehouse because when we do things in the way the public expects us to do them and more Senators do that all the time, Senator by Senator we are going to reduce the cynicism and enhance public respect for the institutions of Government.

The purpose of the underlying bill before the Senate is to provide greater transparency in the legislative process. Therefore, the amendment by Senator Wyden and this Senator from Iowa is a natural extension of that purpose. It is quite appropriate that this underlying bill include disclosure requirements for holds that he and I have been working on for several years.

In the process, we have to compliment Senator Reid for including this in the underlying bill and Senator McConnell, and I am not sure how they individually felt about this in the past. But I think it is very clear that with the vote we had last year--I think it was in the mid- eighties--of Senators who support what we are doing, it is a foregone conclusion that regardless of how leaders might feel about it, if they were on the other side, they were very much in the minority.

Realism finally comes through when we have consistency and determination, as Senator Wyden has demonstrated and that vote demonstrates, and it is a tribute to our leaders that if they don't necessarily like what we are doing, that they have included it in their legislation. Obviously, I have to give thanks to them. I, also, give thanks to Senator Lott who, over a period of couple of years, has been working with us. I, also, wish to give credit to the President pro tempore, Senator Byrd, who a couple years back gave us some encouragement along this line.

I hope, now that everything is coming together, that within a few short weeks we can have a very open process of making holds public, bringing people together and producing results in the Senate because of one giant step we are taking here.

Doing away with holds might not sound like one giant step, but it is from the standpoint if you knew what the four-letter word ``hold'' does to the legislative process around here, it grinds everything to a halt--everything to a halt. Try to explain to your constituents back home that some Senator has a hold on a bill and try to explain that is why we can't get something done. They wonder what planet we come from. It is very difficult to explain.

We are still going to have holds, we still have to explain it, but at least I can say to people it is Senator Smith or Senator Jones or Senator Wilson who has a hold on the bill, and I am going to talk with them and see what we can do about it and get something done.

I compliment the Senator from Oregon very much and hopefully the Senate is going to work better.

Mr. President, I wish to speak as in morning business for such time as I might consume, and for other Members, it will be in the neighborhood of about 25 minutes.

Mr. President, I am back again tonight to talk about the Medicare drug benefit. As I said yesterday, the 110th Congress will consider legislation that would fundamentally change the benefit. The public and Medicare beneficiaries need to fully understand the proposed changes and how they would affect them.

When we talk about the public and Medicare beneficiaries, remember, for the most part, we are talking about the senior citizens of America and people who are on Social Security disability.

Yesterday I spoke about how the benefit uses prescription drug plans in competition to keep costs down and how well that has worked. Today I want to get to the crux of this debate, the so-called prohibition on Government negotiation with drugmakers.

Opponents of the Medicare drug benefit have twisted the law to come up with their absurd claim that Medicare will not be negotiating with drugmakers. They misrepresented the noninterference clause. The language does not prohibit Medicare from negotiating with drugmakers; it prohibits the Government from interfering in negotiations that are ongoing all the time.

So it is a prohibition on Government negotiating. It is not a prohibition on negotiation. It is very important because it is not the Government agency itself that is doing the negotiating. It is the private prescription drug plans that are doing the negotiation.

That may surprise some people who have heard about the so-called prohibition on negotiations. Of course, price negotiations occur on drugs provided to Medicare beneficiaries. Those negotiations occur between the prescription drug plans and the manufacturers. We have a precedent for this. The plans are run by organizations experienced in negotiation with drug manufacturers. They deliver prescription drug benefits to millions and millions of Americans--in other words, meaning millions and millions of Americans beyond senior citizens--and including this 50-year precedent of it being done for Federal employees through the Federal Employees Health Benefit Plans.

As I said yesterday, competition among the plans to get the best price is working. We have lower than expected bids and cost of premiums and lower than expected costs for the Government as a result. So not only is it saving the senior citizens money, as it has been saving Federal employees money for 50 years, but also lowering costs to the taxpayers because there is some subsidy for seniors in the Medicare prescription drug program.

Most importantly, we have lowered prices on drugs for beneficiaries. For the top 25 drugs used by seniors--so I am just taking the top 25 drugs used--the Medicare prescription drug plans have been able to negotiate prices that on average are 35 percent lower than the average cash price at retail pharmacies; 35 percent lower. The purpose of the prohibition on Government negotiation--in other words, getting back to what is referred to as the noninterference clause--is to keep the Government from undermining these negotiations that have been so successful and to keep the Government out of the medicine cabinet.

I have lost count of the number of times I have talked about this so- called prohibition that is not a prohibition on negotiations, because negotiations are going on every day. I am not easily discouraged and that is why I am here talking tonight on this subject. I prefer to debate more substantive issues, but unfortunately that is not the case. The debate that went on during the campaign, the debate that went on in some speeches on the floor in the last Congress, and the debate that will come here on the Senate floor in the next 3 weeks, is in fact a shell game. It is about distortion of the language of the law, it is about manipulation of beneficiaries and, in turn, the public, and it hinges on the convenient lapse in some people's memory about the history of this noninterference clause. What I want to do today is remind people about the history.

We are going to take a little trip down memory lane. For our first stop

on memory lane, let me take a second to read something to you. This is a quote from someone talking about their own Medicare drug benefit proposal.

Under this proposal, Medicare would not set prices for

drugs.

Let me start over again because that first sentence needs to be emphasized:

Under this proposal, Medicare would not set prices for

drugs. Prices would be determined through negotiations

between the private benefit administrators and drug

manufacturers. . . .

The person who said this clearly wanted private negotiations with drug companies for Medicare benefits. He was proposing, and I want to quote again from this person--and I am soon going to tell you who that is--

. . . negotiations between private benefit administrators

and drug manufacturers.

So I am taking that quote out of the previous quote for a way of emphasis.

Negotiations would go on between private benefit

administrators and drug manufacturers.

In other words, not involving the Government. So it could not be more clear what this person had in mind when he was proposing legislation a few years ago. You are going to be shocked to hear who said this. For those who thought President Bush said it, they are wrong. The quote is from none other than President Clinton. President Clinton made that comment as part of his June 1999 plan for strengthening and modernizing Medicare. President Clinton had in his idea, when we were going to strengthen and modernize Medicare with a prescription drug program, that we ought to have negotiations done by the private sector, not by the Government.

President Clinton went on to say that under his plan:

Prices would be determined through negotiations between the

private benefit administrators and drug manufacturers.

Quoting further:

The competitive bidding process would be used to yield the

best possible drug prices and coverage. . . .

And following the 50-year precedent I have been referring to, he went on to say:

. . . just as it is used by large private employers and the

Federal Employee Health Benefit Plans today.

That is the end of the quote from President Clinton.

President Clinton also described his plan as using private negotiators because:

These organizations have experience managing drug

utilization and have developed numerous tools for cost

containment and utilization management.

This is a President whom a lot of people would believe, because he comes from the Democratic Party, has great faith in big Government, that he would not be suggesting these things. But when you have a precedent of 50 years of it working for Federal employees, he believed it was good enough to use when you offer prescription drugs to the senior citizens of America.

Does this ring any bells? It should, because it is the same framework used in today's Medicare prescription drug benefit--and I had a hand, as a conferee, in writing that. Private negotiations with drug companies--and it is based on a nearly 50-year history of the Federal Employees Health Benefit Plan.

Here is another interesting spot on memory lane--if I could digress for a minute for the benefit of Members who keep ringing up about a doughnut hole--separate from the issue of pricing drugs and negotiating. I thought it would be good to remind people. The Clinton plan had a coverage gap as well. It had a doughnut hole, as we refer to it, like the bill eventually signed by President Bush in 2003. Like many others, the new Speaker of the House has questioned why one would pay premiums at a point in time when you are not receiving benefits. In other words, when you are in the doughnut hole. It happens in the private sector, in a lot of different insurances. That is how insurance works. Go look at any homeowner's policy and auto policy or even the Part B of Medicare. You pay premiums to have coverage, and that is also how President Clinton's plan would have worked if it had been passed in 1999 instead of 2003.

In Sunday's Washington Post, Speaker Pelosi was quoted on her thoughts about having a doughnut hole. She said:

How could that be a good idea unless you're writing a bill

for the HMOs and the pharmaceutical companies and not for

America's seniors?

Maybe she was referring to President Clinton's plan. As I said, President Clinton proposed this plan in June of 1999. On April 4, 2000, in a bill that is listed as S. 2342, the Medicare Modernization Act introduced here in the Senate, S. 2342 from that year, 2000, would have created a drug benefit administered through benefit managers. It even had the same title as the Medicare law that is now law. The Medicare Modernization Act is the title in 2000. It is the title of a bipartisan bill that is now law. So, here again, we have private negotiations with drug companies. It sounds familiar. It is like today's Medicare drug benefit.

Here is another important stop down our memory lane. This bill, which I referred to as S. 2342 previously, included the following language. ``Noninterference,'' nothing in this section or in this part shall be construed as authorizing the Secretary to:

require a particular formulary or to institute a price

structure for benefits; (2) interfere in any way with

negotiations . . . or (3) otherwise interfere with the

competitive nature of providing a prescription drug benefit

through private entities.

This is the first bill, the very first one where the noninterference clause appeared. You could say it is the second time it appeared because it appeared as a suggestion of President Clinton, but it was introduced the first time, and this was the language. But S. 2342 was not introduced by Republicans. It was introduced by my esteemed colleague and friend, the late Senator Moynihan. One month later there was S. 2541 introduced. I will read some language of that bill. Here I go to the first chart I have. I have four charts coming up.

(B) Noninterference . . . The Secretary may not--

(1) require a particular formulary, institute a price

structure for benefits;

(2) interfere in any way with negotiations between private

entities and drug manufacturers or wholesalers; or

(3) interfere with the competitive nature of providing a

prescription drug benefit through private entities.

That wasn't a Republican bill, either. It was introduced by Senator Daschle, who was joined by 33 other Democrats, including Senators Reid, Durbin, and Kennedy. For instance, 33 Senate Democrats cosponsored language for a bill that they now find not to their liking. I don't understand it. It turns out that the Democrats did not want Government interfering in the private sector negotiations, either. They recognized then that the private sector would do a better job. They recognized then what President Clinton recognized: something that had worked 50 years for Federal employees could be allied to senior citizens and Medicare as well and maybe do it better. And they didn't want the Government, some bureaucrat, messing it all up. At that time, they didn't want the Government in their medicine Cabinet, either.

In June 2000, two Democratic bills were introduced in the House of Representatives that also included the noninterference language. One was introduced by Dick Gephardt. That bill had more than 100 cosponsors, including then-Representative Pelosi, now Speaker of the House, but it also included Representatives Rangel, Dingell, and Stark. I want Members to know I worked very closely on some health issues with Dingell and Stark, and I worked very closely with Congressman Rangel on trade and tax issues.

That language included in H.R. 4770, introduced by Representative Gephardt and supported by more than 100 House Democrats, was almost identical to the language in Senator Daschle's bill. So we have 33 Senate Democrats, we have 100 House Democrats supporting the noninterference language.

Here is a chart with the text of the noninterference clause included in what is now Part D, the prescription drug part of Medicare, referring to it again under its official title, the Medicare Modernization Act.

It says:

(B) Noninterference--in order to promote competition under

this part and in carrying out this part, the Secretary--

(1) may not interfere with the negotiations between the

drug manufacturers and pharmacies and PDP sponsors; and

(2) may not require a particular formulary or institute a

price structure for the reimbursement of covered Part D

drugs.

It sounds exactly like what was introduced in the Democratic bill. If we compare this language to the Gephardt-Pelosi language, the Medicare Modernization Act provisions have 26 fewer words. Compare it to the Daschle-Kennedy noninterference clause--the Medicare Modernization Act has 10 fewer words. It sounds as if sponsors of those bills were pretty concerned about the potential of Government interference.

Last week, the senior Senator from Illinois described the Medicare law enacted in 2003 as being written by the pharmaceutical industry. But the noninterference clause first appeared in legislation introduced by Democrats who now oppose the same provision that is law.

Since the opponents of the Medicare drug benefit always say that the noninterference clause is proof that the drug industry wrote the law, my question is, If that is what you think, did the pharmaceutical industry also write the bills that you had put in over the previous years going back to the bills I have referred to that were introduced by Democrats? I bet you wonder just how many Democratic bills contain that now infamous ``noninterference clause''--the prohibition, in other words, on Government negotiating.

I have a timeline. As this chart shows, the prohibition on Government negotiation--the noninterference clause--has been in seven bills by Democrats between 1999 and 2003. That is in addition to the point I make clear of where the last Democratic President was on this subject: right where the law is today. Seven bills, including the bill introduced in the House on the same day as H.R. 1, which is now the law.

First it was in the Moynihan bill in 2000. There was a Daschle-Reid- Kennedy bill. That was followed in the House by a bill introduced by Representative Eshoo and then the Gephardt-Pelosi bill which has Representatives Rangel, Dingell, Stark, and our colleague who then was in the House, Senator Stabenow now, as a cosponsor. Representative Stark then had his own bill, and the senior Senator from Oregon introduced his bill in the Senate.

Finally, in the House, Representative Thomas introduced a bill. I know what the response will be. It will be that even though Democratic bills had nearly exactly the same noninterference language, practically word for word in seven bills over a long period of time, opponents now think that approach is no longer best for Medicare. It is sort of like we supported it before we opposed it.

Of course I yield for a question. We very seldom get a chance to debate. That is a welcome opportunity.

In the sense of what we can afford for veterans, we ought to think in terms of that we cannot afford enough for veterans who put their lives on the line.

When we have appropriated accounts, there are some limits, as opposed to an entitlement such as Medicare, but it is not as good as what seniors have under this because there are several therapies the Government will not pay for under the veterans program we pay for under Medicare. From that standpoint of the quality of the program, based upon the therapies that are available, it is not as good as what we have in Medicare.

The answer is yes. But you get back to the person who came to one of my town meetings and said: The doctor said I ought to have this prescription. Why won't the Veterans' Administration pay for it? I have to have this one, according to the Veterans' Administration, and there is some way it affects me that the other one wouldn't.

We have to take that into consideration as well. Yes, bulk discount gets drugs cheaper, but the Government is not going to pay for every drug. You are going to have the bureaucrat in the medicine cabinet of the veteran, and the bureaucrat is not today in the medicine cabinet of the senior citizen.

You also have to realize that, in addition to the VA having a limited formula, they also do not have the availability of the drug in the pharmacies the way we provide in this Medicare Program.

If you want to say for a period of a year or beyond a year, the answer is yes, but for 12 months, no. But also remember that every year the Secretary of Health and Human Services has to approve these plans, and there are certain basic needs they have to meet. One of those basic needs that is in the law that is not in the VA program is a requirement that every therapy be available.

That is true, but every therapy is available.

Mr. President, I say to the Senator, I want to comment on the first part of what he recently said; that is, that what you say is true in regard to plans changing what drugs can be offered. We require that every therapy be available, but you are right, not every drug is available. And you want what the VA has because it might be better.

Now, let me point out then why our program is better. In the VA, 30 percent of drugs are covered, 70 percent not covered. In our program, if a senior finds him or herself in a plan where at the end of the year it has changed, they have choices of several plans to go to. The VA does not have that choice. There is no place a veteran can go. There is no place my constituents could go when they came to me and said: Why don't you cover this drug? My doctor says I need it because of what it does to me that the other one won't--or just the opposite.

I have, too, so I agree with the Senator.

Well, can I ask a question without answering the Senator's question?

Because I was very joyful the Senator was coming out here. I saw him come out. I probably irritated him or something.

Here is what I was hoping we would be debating. Because the whole point of the last 2 days is: From President Clinton in June 1999, all the way through bills that the Senator's party introduced in 2003, we had the noninterference clause in it. I want you to know I felt very comfortable adopting a Democrat noninterference clause in my bill that is now law, and I was hoping the Senator was going to come out and give some justification why his party--mostly in his party; there were some on our side who would agree--why his party would change its mind after President Clinton thought that what we have been doing for 50 years was working so well in the Federal Employees Health Benefit Program that he wanted to do it. And he said you get lower drug prices by doing it that way.

Several bills--I think I said seven bills--introduced by Democrats had the same principle in it. And now you don't like it. I don't understand why. I was hoping that was why the Senator came out to debate.

If it is a good idea, I think the Senator from Illinois would do the consumers more good by offering a Government program to compete with Wal-Mart, maybe.

Mr. President, I think I have to give a bottom line and say it is working. Or if that is not good enough for you--after 2 years--that it is something that is working, it is something that is needed, it is something that Republicans got passed. And we did not get it passed without Democratic help, thank God--it was bipartisan-- otherwise we would not have gotten it done. But for 4 years we were waiting for something to happen on your side of the aisle. It did not happen.

So could I end by saying one thing? In case my word is not so good, I would quote from the LA Times. It is in response to what the Senator said about the VA program. And I do not have any problems with the VA program. But it says here:

VA officials can negotiate major price discounts because

they restrict the number of drugs on their coverage list. In

other words, the VA offers lower drug prices but fewer

choices.

Now, do we want to give the seniors of America fewer choices? I think you do. The route you are going, that is where you are going to end up.

So I cannot attribute this specifically to the Senator from Illinois, but the Senator is talking about choice now, and if there is anything people have choice on, it is all the plans that are available. But from your side of the aisle, starting in 2004, all I heard was there was too much choice, too much choice, too many plans.

So I do not know for sure if you and your party know where you are coming from, whether choice is OK, how much choice is OK. Maybe you are leading us down the line where we are going to end up, if you get too much Government interference, we will not have choice.

Mr. President, let me suggest to you that the committee that has jurisdiction over it, which I am no longer chairman of, has a tradition of trying to work through things. I want you to know I am committed to looking if there are better ways of doing it. But I think it is pretty difficult to argue with a program that has come in with senior citizens, by 80 percent in more than one poll, saying they are satisfied and, secondly, a program--what Government program have you ever seen come in without big cost overruns?

This one has come in now with the latest projection by CBO that it is going to cost $189 billion less than we anticipated it would cost. And we got lower Federal costs. We got lower premiums for the seniors. We got 35-percent lower drug prices for the 25 drugs most used by seniors. We got lower

State costs, because the States do not have to pick up the duel eligibles as they used to.

There is something good coming out of the discussion the Senator and I are having. If we would have had this discussion 3 years ago, you would have said what we were doing was going to bring holy hell and not do any good and it would never work. At least now there is some acceptance of the program. So maybe with a little bit more dialog we will come around to the point where you are saying: Maybe, Senator Grassley, you were right.

I noticed you have not said that so I can quote you again.

Remember, the bill you want to amend is a bipartisan bill. Remember that.

I thank you.

Mr. President, I want to finish my remarks. I am not sure finishing my remarks can be more valuable than what we just had here in this sort of discussion. But I think when the Senator came in, I was kind of needling the other party a little bit with a statement like all of this business of Democrats introducing this noninterference language, and my copying it, thinking that was the right thing to do, was the bipartisan thing to do, that now they are backing off of it, as you can see by the recent exchange I had with my friend from Illinois, that it is sort of for the Democrats like: We supported it before we opposed it.

But I want to recap. When Democrats controlled the Senate, their bills took the same approach and had basically the same noninterference language--the same prohibition on government negotiations. Looks like my colleagues across the aisle yielded--and perhaps against their own better policy judgment--to take the opportunity to make political hay by demagoguing what seems like a reasonable proposition. That proposition was that Government, with all those Medicare beneficiaries in the Medicare program, should negotiate lower prices for drugs. In reality, it is nothing but an appealing sound bite.

After the Medicare law was enacted, opponents distorted the meaning of the language and vowed to change it. They have now demagogued on this issue for 3 years. They had all that time to prepare their proposals. What has been introduced to date? The bill introduced in the House to address the so-called prohibition has been described as ``not as far-reaching as the new majority indicated before taking power.''

The Senate bill is a nonbinding sense of the Congress resolution as a placeholder with no details. I understand that some bills are introduced as markers pending further development. I have done that myself. But 3 years of talking about this issue, talking about what is wrong with the noninterference clause, and there still is no more substance behind the proposal than that?

One of the questions I should have asked the Senator from Illinois is, please describe to me how it is going to work if you take out the noninterference clause. I have never had anybody tell me that. Something like, let's do it a little bit like the VA, but the HHS is not the VA. So how is it going to be done? Somewhere along the line they are going to have to tell us.

In fact, the USA Today editorial page recognized the lack of substance when they wrote in November that House Democratic aides couldn't provide any details on their party's proposal. This is after 3 years of their finding fault with what is law.

It makes me wonder if people who led the charge against the so-called prohibition on Government negotiation truly ever did change their minds about this provision. There was actually a surprising level of agreement among Democrats and Republicans that the private sector would be able to do a better job of tough negotiation with drug companies than the Government could ever do. We had all seen the same history of the poor job Medicare does setting prices on almost anything, whether it is hospitals or whether it is wheelchairs. Everyone from President Clinton to Mr. Gephardt to Speaker Pelosi to the senior Senator from Oregon, recognized that at the time when they put their names on legislation.

The same USA Today editorial referred to opponents' plans to change the law as ``more of a campaign pander than a fully baked plan.'' Maybe the opponents finally realized that themselves.

I believe beneficiaries and the public deserve more than that. That is what the debate is going to be all about. But they are going to have to sell their point.

I yield the floor and suggest the absence of a quorum.

Mr. President, it is with a sense of sadness, but also pride, that I rise today to pay tribute to CPL. Jonathan E. Schiller of Ottumwa, IA, who gave his life on New Year's Eve in service to his country in Iraa. He is remembered by friends and family for his good humor and his patriotism. Corporal Schiller's parents, Bill and Liz Schiller, said of their son, ``Jon died doing what he loved, serving his country and protecting the freedom of our people and others. We are proud of our son's accomplishments and those of his fellow soldiers in the Army and all branches of the military. We are forever grateful to the Army for changing our boy into a man who fought and died defending something that we take for granted every day... freedom!'' My thoughts and prayers are with Bill and Liz, Jon's brothers Charlie and Max, and all of those in the Ottumwa area and elsewhere who mourn the loss of this brave young man. Jon Schiller's willingness to volunteer for military service in a time of war speaks loudly to his love of our country. He now joins the honored ranks of generations of American youth who have laid down their lives for the preservation of freedom. His courageous service and tremendous sacrifice must never be forgotten by a grateful Nation.

Mr. President, I rise to re-introduce the Fair Contracts for Growers Act of 2007. This bill would simply instill fairness into contractual dealings between farmers and processors. It ensures that parties to a dispute related to agricultural contracts have a true choice of venues.

I introduce this legislation because I believe that anti-competitive activity has become a grave threat to the family farmer. During the last Farm Bill debate, I brought this same bill forward, along with several others. Despite this policy passing the Senate, remarkably the final Farm Bill included no provisions to address concentration.

So, earlier this year, I announced that I will be putting forward a package of bills that will focus on anti-competitive activity in the agriculture industry. This bill is the first step of my agriculture concentration agenda.

Today's legislation is one piece of the puzzle to help stop the unfair impact that vertical integration is having on the family farmer. In the last several years we've seen a tremendous shift in agriculture toward contract production. Under many of these contract arrangements, large, vertically integrated agribusiness firms have the power to dictate the terms of ``take-it-or-leave-it'' production contracts to farmers.

Then, when there is a dispute between the packer and the family farmer, and the contract between the two includes an arbitration clause, the family farmer has no alternative but to accept arbitration to resolve the dispute. These clauses limit farmers' abilities to pursue remedies in court, even when violations of Federal or State law are at issue. This mandatory arbitration process puts the farmer at a see disadvantage. Even in a situation where discrimination or fraud is suspected, a farmer's only recourse under such a contract is to submit to arbitration. The farmer cannot seek redress in court, even if the result is bankruptcy or financial ruin.

Make no mistake, arbitration is very useful in certain situations. It reduces the load on our courts, and can save parties the expense of drawn-out litigation. This bill would not rule out arbitration-just forced arbitration.

The Fair Contracts for Growers Act would amend the Packers and Stockyards Act to require that any contract arbitration be voluntarily agreed upon by both parties to settle disputes at the time a dispute arises, not when the contract is signed. This would allow farmers the opportunity to choose the best form of dispute resolution and not have to submit to the packers. It ensures that a farmer, most often the ``little guy'' in these dealings, is able to maintain his constitutional right to a jury trial. It also gives him a chance to compel disclosure of relevant information, held by the company, which is necessary for a fair decision.

During consideration of the Farm Bill, the Senate passed, by a vote of 64-31, the Feingold-Grassley amendment to give farmers a choice of venues to resolve disputes associated with agricultural contracts. I urge my colleagues to join with Senator Feingold and me, along with our other cosponsors, in supporting this important legislation.

I ask unanimous consent that the text of the bill and letters of support be printed in the Record.

Mr. President, I ask unanimous consent that the text of this bill be printed in the Record.

Mr. President, I rise to re-introduce the Fair Contracts for Growers Act of 2007. This bill would simply instill fairness into contractual dealings between farmers and processors. It ensures that parties to a dispute related to agricultural contracts have a true choice of venues.

I introduce this legislation because I believe that anti-competitive activity has become a grave threat to the family farmer. During the last Farm Bill debate, I brought this same bill forward, along with several others. Despite this policy passing the Senate, remarkably the final Farm Bill included no provisions to address concentration.

So, earlier this year, I announced that I will be putting forward a package of bills that will focus on anti-competitive activity in the agriculture industry. This bill is the first step of my agriculture concentration agenda.

Today's legislation is one piece of the puzzle to help stop the unfair impact that vertical integration is having on the family farmer. In the last several years we've seen a tremendous shift in agriculture toward contract production. Under many of these contract arrangements, large, vertically integrated agribusiness firms have the power to dictate the terms of ``take-it-or-leave-it'' production contracts to farmers.

Then, when there is a dispute between the packer and the family farmer, and the contract between the two includes an arbitration clause, the family farmer has no alternative but to accept arbitration to resolve the dispute. These clauses limit farmers' abilities to pursue remedies in court, even when violations of Federal or State law are at issue. This mandatory arbitration process puts the farmer at a see disadvantage. Even in a situation where discrimination or fraud is suspected, a farmer's only recourse under such a contract is to submit to arbitration. The farmer cannot seek redress in court, even if the result is bankruptcy or financial ruin.

Make no mistake, arbitration is very useful in certain situations. It reduces the load on our courts, and can save parties the expense of drawn-out litigation. This bill would not rule out arbitration-just forced arbitration.

The Fair Contracts for Growers Act would amend the Packers and Stockyards Act to require that any contract arbitration be voluntarily agreed upon by both parties to settle disputes at the time a dispute arises, not when the contract is signed. This would allow farmers the opportunity to choose the best form of dispute resolution and not have to submit to the packers. It ensures that a farmer, most often the ``little guy'' in these dealings, is able to maintain his constitutional right to a jury trial. It also gives him a chance to compel disclosure of relevant information, held by the company, which is necessary for a fair decision.

During consideration of the Farm Bill, the Senate passed, by a vote of 64-31, the Feingold-Grassley amendment to give farmers a choice of venues to resolve disputes associated with agricultural contracts. I urge my colleagues to join with Senator Feingold and me, along with our other cosponsors, in supporting this important legislation.

I ask unanimous consent that the text of the bill and letters of support be printed in the Record.

Mr. President, I ask unanimous consent that the text of this bill be printed in the Record.