Mr. Speaker, I ask unanimous consent that all Members may have 5 legislative days in which to revise and extend their remarks and to include therein extraneous material on the subject of my Special Order today. Mr. Speaker, currently both…
Mr. Speaker, I ask unanimous consent that all Members may have 5 legislative days in which to revise and extend their remarks and to include therein extraneous material on the subject of my Special Order today.
Mr. Speaker, currently both the House and the Senate are in intense deliberations to forge a compromise on a prescription drug benefit for Medicare and Medicare recipients. I am glad to see that both Republicans and Democrats after all this time are working together to try to correct this critical deficiency in the Medicare program.
When Medicare started in the early 60s, about 10 percent of the health care costs for a senior was dedicated to out-of-pocket drug costs. Today that is around 60 percent of their health care costs, or health care dollar. And so if we are going to have a health care plan for seniors and if Medicare is going to live up to its obligations that it was originally designed to do, Medicare must have a prescription drug plan.
We all know that one of the most contentious issues in the prescription drug debate is the question of how much of the cost of drugs should be paid by government and how much should be passed on to seniors. But the crux of this problem is that both the U.S. Government and American seniors are paying too much for prescription drugs. Providing a prescription drug benefit through Medicare is unfortunately only the tip of the iceberg in addressing a widespread prescription drug access issue facing our Nation.
Much more central to the inability of many seniors and other Americans to afford the prescription drugs they need is the fact that prescription drug prices are 30 to 300 percent higher than those in other industrialized nations. The truth is one of the big problems we have here in the country is that we do not have a free market as it relates to prescription drugs and drug costs. I
really believe that one of the central points of this debate is that we need a free market.
The three things I am going to discuss today are, A, the issue that American consumers, be they elderly or others, are denied access to prescription drugs from all over the world and they are a captive market, unable to buy drugs, be they in Canada, Mexico, Germany, France, where the same drugs are much cheaper than they are here in the United States. If our consumers were allowed to have access to those drugs, there would be competition and prices would drop. But because the free market is prohibited from exercising its magic, drug costs are artificially raised.
The second point I want to discuss is the American taxpayer through two different venues provides direct and indirect assistance to the drug companies to develop the drugs. Drug companies reap all the profits, and the American taxpayers do not get any of the benefits back as an investor. If we were an investor, and I come from the private sector, private sector investors when they invest in a drug, they usually look for what is called a 30 percent IR, investment return on equity. Yet the taxpayer who provides through taxes both direct assistance to the FDA as well as through the tax write-off that pharmaceutical companies get, they do not reap any of the benefits from these drugs being developed. Yet we develop these drugs, taxpayers spend billions and billions of dollars helping develop these drugs, yet the only benefit they get besides taking the drug is they pay the highest premium price out there.
I believe the right way to get the prices under control is for the investor, known as the American taxpayer, to reap the benefits of their investment dollars. And, third, deal with the area of generics and generic markets. If we allowed generics to get to market quicker, it would also create that type of competition. I think one of the problems we have here is that the American elderly, the American taxpayer and consumer have an artificial market that is in three areas, generics, taxes and access to the same drugs in other markets around the world. Because we are a captive market, we pay artificially high prices; and the American seniors specifically are the profit margin or, as I like to call them, the guinea pig profit margin for the pharmaceutical companies. I want the free market to work. The pharmaceutical companies are treating this market as a captive market. If we had a free market, we would have reduced prices.
Medicare drug benefits being considered by Congress are very expensive. Many seniors, especially those who do not have secondary insurance, will continue to have significant out-of-pocket drug costs even with the passage of a Medicare drug benefit. In addition, the high cost of drugs remains a crisis for 42 million uninsured and countless underinsured who must pay all or most of their drug costs out of pocket. Addressing the cost of prescription drugs will both make a Medicare drug benefit less expensive for the government and greatly increase the value of what is provided for our elderly. It will also make it much more likely that millions of uninsured and underinsured in this country can afford lifesaving, life-preserving prescription drugs, what their compatriots in Germany, France, England and other industrialized nations get. Prescription drug companies are a business, and they need to earn profits in order to stay in business. But as they have the right and purpose like other businesses to earn a profit, they also have a responsibility to be a good corporate citizen and abide by the same standards as other businesses.
As I said, I have worked in the private sector. I know that any private company when investing in research and development and in another company usually looks for a 30 percent return on their equity. The United States Government invests in pharmaceutical research by providing significant tax benefits for research and development expenses and American citizens subsidize the research as drug companies recoup their margins in America because of price controls in other countries. The American Government and the American people are getting no return on their investment. The pharmaceutical companies are reaping the financial benefits of the U.S. investments in their R&D without any responsibility to pass these benefits on to the government and American taxpayers.
American consumers are bearing the burden of price controls in other countries. When 50 tablets of Synthroid cost $4 in Munich and $21.95 in the United States, the most vulnerable Americans suffer. Also it is one of the great reasons that we have inflation running at close to triple or quadruple here in health care in the United States as opposed to the market as a whole. We are using individuals as the profit guinea pigs for pharmaceutical companies.
The legislation introduced by my good friend and colleague, the gentleman from Minnesota (Mr. Gutknecht), last week takes important steps to address the shocking disparities in prescription drug prices between the U.S. and other industrialized nations. It puts essential safety precautions in place to ensure that by opening our markets, we do not expose Americans to the dangers of counterfeit drugs. When defending the high cost of prescription drugs in this country, people will often say that the U.S. has the best health care system in the world. People come here from overseas to get a better product. But we clearly have nothing close to the best prescription drug delivery system, as many individuals are now shopping overseas for their prescription drugs. If we are going to defend our status as the best place to get health care in the world, we need to make the pillar of many people's health care, prescription drugs, accessible and affordable.
I yield to my good friend, the gentleman from Minnesota (Mr. Gutknecht).
Let me ask the gentleman a question. Can you repeat again for those who are watching, as you note, this is a miracle drug and all the investment the U.S. taxpayers did, repeat again so everybody knows the difference between the price overseas versus the United States for those two drugs.
Mr. Speaker, I ask my good friend, I did not mean to interrupt him. Did he want to keep going?
Mr. Speaker, I thank the gentleman. What I would like to do is I am going to turn to the gentleman from Illinois (Mr. Davis), our good friend and my colleague from Illinois, in a second. I would like to repeat just one point on this. If you take this market on either cancer or AIDS drugs, just those segments or families of drugs, there is not a single cancer drug today or AIDS drug on the market that was not directly developed with assistance from the United States Government, NIH; and it was not directly developed with the tax dollars from the taxpayer; and yet the only benefit of those drugs, obviously besides using them and saving lives, the American consumer, be they the elderly or just families and children, they pay, as the gentleman noted, three times more than do people in Germany, France, and other major industrialized countries; and yet we were the ones who developed it.
We were the ones who gave the tax dollars to develop this. We also not only gave it from the NIH direct funding, using tax dollars to fund it, but on the back end these companies write off their R&D. So we have to make up that loss in the tax revenue pool so they can develop these drugs; and as I think the gentleman noted in his statistics, we then get a minuscule amount of return. Actually in the private sector money like that is called dumb money. That is how they refer to it. It is foolish money. It is called dumb money. It is people who put up dumb money, do not look for the 30 to 20 percent IR on equity, and that is what has been going on for years here in this country, and we are paying premium prices; and in these companies they figure that in Germany they are going to pay X, in Canada they are going to pay Y for the same drug, England is going to pay, and they have got to make up their margin. Whom are they making up the margin with? Our neighbors, our friends, our family members; and we funded this research, and we developed these drugs.
My view is I would love for the free market to come to the pharmaceutical industry. It just has not. It is a protected industry by the United States Government, from the Tax Code to importation to the development of generics.
Yes.
I thank the gentleman. If he could yield, I would like to now ask the gentleman from Illinois (Mr. Davis), my good friend, who has joined us here to also speak about his district in Chicago that borders mine, but also about this issue as it relates to the pharmaceutical industry and prescription drugs and what is going on.
Mr. Speaker, I thank the gentleman. He brought up the breast cancer; was that correct?
I think it illustrates again what our good friend from Minnesota said and has brought forth examples is that, in fact, there is not a drug today, and we can also expand this to medical choice, but no drug today that is not being developed and has not been developed that is around the country that any way you look around the world in the major industrialized countries where we have trading companies, and the gentleman noted wheat, meat, steel, cars, computers, all types of products where there is ``free trade,'' and yet here in this specific area, we are paying top price, high-premium dollar. I think again, whether it is diabetes, breast cancer, there are other drugs that are on the market that affect other types of illnesses, and I think the gentleman highlights a very important point, especially given his district and my district that abut each other, how this creates inflation, and besides the uninsured, the cost of pharmaceutical drugs is the single largest cause for health care inflation in the health care industry which has been running at 20 to 30 percent of inflation.
So he brings up, I think, a very good point, and I think it is relevant to the discussion we are having today. What I am most impressed with is the bipartisanship we have here in discussing this. And I think the truth is, and I would love to hear both their thoughts on this, that while we are doing a drug prescription benefit and we are talking about it in the Senate and we are going to be taking it up here in the House, without some type of ability to have competition in that process, we are really going to be offering a benefit at top dollar, and I think, as American taxpayers are going to be paying for the prescription drug benefit that we are going to add to Medicare, we should give them a sense of competition in the market so that we can find that drug cheaper in Canada, we can find that drug cheaper in Mexico or Germany, France, or England. We want to bring that so we can squeeze the most coverage out of our prescription drug plan for Medicare.
Right. I thank the gentleman. I yield to the gentleman from Illinois (Mr. Kirk).
I appreciate that. I yield again to the gentleman from Minnesota if he had some additional comments because I have some other things, but I would like him to go ahead.
So that is about one third.
That is a very important point.
The only reason I had a smile cross my face is when you said the word ``embedding,'' I said who knew the Pentagon was going to be so far ahead of the pharmaceutical industry, and now they are going to copy from them.
But the truth is, we all were exposed in the '80s and '90s to the notion of the $500 hammer, where the Pentagon was off buying $500 hammers, when if you just went down to the hardware store you could go down there.
The fact is, your chart up there shows exactly the similarity that is happening now to the American taxpayer and consumers, where you could buy these same drugs overseas in different markets for far cheaper than we are buying them here, and it is the equivalent.
And why is that? Just like the $500 hammer, the fix is in. So if you go down the specific area, and I do not blame the pharmaceutical industry, they are playing the game just like they are supposed to play it, and they are rigging the game and system just like they are supposed to, for maximum profit.
But take it, whether it is in the generic drug laws or in our patent laws, they are keeping generic drugs off the market, therefore driving up the cost of name brand drugs, making it more expensive for all of us. If generic drugs were on the market and the system was not being fixed, you would have real competition.
What has happened is, the Wall Street Journal did a story the other day, as generics have started to come to market quicker and there has been a quicker process set in place by the FDA to approve generics, we have allowed that patent not to be gamed for an additional 30 months, we have, in fact, seen prices drop.
They have, in relation to the importation issue, pharmaceutical industries in that area have gamed the system very well, prohibiting us from buying the same type of drugs in either Germany, Canada, France, England, Italy, Israel, wherever, they have gamed the system. We are not prohibited from buying computers, cars, food items, other types of items. We are prohibited in this space.
What is the impact? Those same drugs, cheaper over there; more expensive here at home. Yet they are the same drugs we paid for the development.
Then through the Tax Code, the IRS, where we do an R&D tax write-off, where they are allowed and subsidized by the taxpayers for the research and development, yet they get a direct subsidy from the NIH.
I highlighted the area through the NIH of cancer drugs and AIDS drugs. Not a single drug in either one of those families has been developed without direct assistance by the government, yet, again, in that area we are paying prime dollar versus our brethren in the other industrialized nations.
So I actually take my hat off to the pharmaceutical industry, because they have worked the system to their benefit. Now, my hope is, if you go back in history and look at this in fact, when Medicare and Medicaid was first developed and voted on, it received overwhelming bipartisan support. Now, these are early preliminary stories in fact.
We are seeing right now that in the Senate, as they debate the prescription drug benefit for Medicare, we are seeing the early stages of bipartisanship, and we can discuss, argue, amend about the right approach. My hope is that when we have a chance here in the House, that that same bipartisanship would be approached with regard to the prescription drug bill, but that bill would include something on generics.
Over there they have a bill. Here, the gentleman from Ohio (Mr. Brown) has a bipartisan bill dealing with generic reform, dealing with the update of the patent laws as it relates to what the gentleman from California (Mr. Waxman) developed and passed in 1984 and Senator Hatch. I would hope that we would update our laws in the generic area. I would hope we could update our laws as they relate to importation.
And we have a bipartisan bill, the gentleman and I have. We have a generic bipartisan bill here. So we would keep that spirit and that tradition as it relates to Medicare, as it relates to prescription drugs, that, through and through, that bill would be bipartisan. I would hope, obviously, it can relate to some of the funding issues and recoup some of the investment our taxpayers have made through the direct funding through the NIH or IRS piece of the Code where we pay and subsidize pharmaceutical companies to do what is in their business plan, develop drugs.
I yield additional time to my good colleague from Minnesota.
First of all, I thank the gentleman for organizing this and thank you for introducing your legislation. I think this is the right approach.
I think, again, whether it is the area of generics coming to market and updating our patent laws, whether it is the tariffs or limitations we put on importation or access to these drugs, the same drugs we see on the shelves in our pharmacies, that the American consumer has access to them, each of these, at least on the generic and reimportation, are bipartisan issues.
I think that this is the right approach, not only because it is bipartisan and it reflects our values and reflects a common set of values that we can come around, but, most important, is that in dealing with the issue of a prescription drug, the truth is, all these drug plans have some limitations. People will not be covered. So the question is, how do you squeeze the most out of that dollar? It may be $400 billion over 10 years. The final product may be $450 billion.
The question, though, we have to ask ourselves is, can we get more out of that? Can we get more people covered? Can more people get a plan, so their deductible is not as high as it is? And the only way to do that is to make sure that a prescription drug plan as it relates to Medicare, as it relates to the cost of prescription drugs in the dime stores and drugstores and pharmacies across the country, can we reduce the prices? We can do that if we would bring the free market approach to the pharmaceutical industry.
So I applaud this. I am very pleased to be a bipartisan supporter and original cosponsor of the gentleman's legislation. I am on the generic drug legislation.
I think that approach comes together, not just because we are Democrats and Republicans, we come together on a common set of values. We approach this from the basis we may need more money for a prescription drug benefit plan, but we are going to make sure this $450 billion over 10 years, we get the biggest bang for the buck, and that this game that has been going on, and they have been gaming the system, is going to come to an end.
We are not going to allow this to happen. We are not going to allow you to have frivolous lawsuits that keep patents on another 30 months. I want frivolous lawsuits to end. We are going to have them end. It is specifically how pharmaceuticals have been treating generic drugs and preventing them from coming to market.
We are not going to allow the pharmaceutical companies to keep up the game and not allow us to import the same drugs that overseas are at close to 30 percent to 300 percent cheaper than we pay here. And if you did that, you would be on your first step of controlling health care inflation that has been running at close to 20 to 25 percent, which is just suffocating our small and large businesses, who are seeing their insurance policies just go right through the roof.
The second item, obviously, and we may have a different approach to this, but the second item would be to insure the uninsured in this country. If you did that, and I also note when it relates to the working uninsured in this country, the only issue in which the Chamber of Commerce and the AFL-CIO agree on on health care, and they are both running campaigns, is we have got to insure the working uninsured.
They are showing up in emergency rooms, they are driving up the cost of insurance policies, and the hospitals pass that on to insurance policies, insurance policies pass it on to businesses, and businesses now pass it on to employees. And those two factors, controlling the cost of drugs and insuring the uninsured, would literally be taking the steam out of the pipe as it relates to health care inflation. If we do that, we will see immediately the health care tax alleviation for our middle-class and working-class families all across the country.
I applaud the bipartisanship and look forward to working with the gentleman on this. Hopefully, we will get an opportunity to offer an amendment to the prescription drug bill when it is down here on the floor, because it is going to be essential in making sure that whatever dollars we spend of the taxpayers, that we stretch those dollars to the greatest possibility. I think the American people, if they knew that we had the opportunity to offer an amendment bringing free market principles, competition to this debate, to make sure that they got a return on their dollar of investment, to make sure that the pharmaceutical companies could not prevent other choices from coming to market, be they from overseas or in the generic area, they would applaud our work, Democrats and Republicans and Independents alike; people north, south, east and west would applaud us, because we would be coming around a common set of values that we all can agree on. So there will be places that we disagree, but on these there is bipartisanship. So that would be my hope. I think we will be successful if we can come together in this area, work together, make sure the principles of the free market and our values are reflected in what we pass.
So again, I want to applaud the gentleman for introducing this, bringing this to my attention, although I have talked to many people about it but, most importantly, being open to working together across party lines so we can represent the people we came here to, not only vote on their behalf, but to give voice to their values.