[Pages S7618-S7651]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

GREATER ACCESS TO AFFORDABLE PHARMACEUTICALS ACT OF 2001

The ACTING PRESIDENT pro tempore. Under the previous order, the
Senate will now resume consideration of S. 812, which the clerk will
report.
The legislative clerk read as follows:

A bill (S. 812) to amend the Federal Food, Drug, and
Cosmetic Act to provide greater access to affordable
pharmaceuticals.

Pending:

Reid (for Dorgan) amendment No. 4299, to permit commercial
importation of prescription drugs from Canada.
Graham amendment No. 4345 (to amendment No. 4299), to amend
title XVIII of the Social Security Act to provide protection
for all Medicare beneficiaries against the cost of
prescription drugs.

Amendment No. 4345

The ACTING PRESIDENT pro tempore. Under the previous order, there
will now be 90 minutes for debate, equally divided, on the motion to
waive the Budget Act with respect to the Graham amendment No. 4345.
The Senator from Massachusetts.
Mr. KENNEDY. Madam President, I yield myself 8 minutes.
The history of the American people is one of a never-ending journey
toward the goal of a more perfect Union. Americans believe in the ideal
of equal opportunity so that individuals can achieve their fullest
potential. We also believe that we are members of a great national
family which seeks to protect all of its members. We understand that if
one of us is hurting, all of us are hurting.
In this quest for a more perfect Union, we have encountered and
overcome obstacle after obstacle. At the turn of the last century, we
passed antitrust laws to begin the long process of controlling
corporate abuse and asserting that the public interest must take
precedence over the selfish interests of wealthy corporations.
We passed minimum wage laws to assert that a worker's right to a
living wage took precedence over business rights to maximize profits.
We passed the Social Security Act and the Medicare Act to guarantee a
secure and dignified retirement to every American who works hard and
pays into the system.
Just 2 weeks ago, we passed landmark legislation to curb the modern-
day robber barons whose dishonesty and greed have done so much to
damage our economy and to defraud so many workers and investors of
their hard-earned savings.
Today, Americans face a crisis in health care. The miracle medicines
that can save and prolong life more and more are beyond the reach of
average Americans. The prescription drugs we need to stay healthy and
alive are just too expensive, and their costs go up and up with each
passing day.
For the last week, we have been grappling with two more obstacles to
a more perfect Union and a better life for all of our people: The
exploding costs of prescription drugs and the failure of Medicare to
cover those costs. The rapid rise in the cost of drugs burdens
families, businesses, and patients, and our economy.
For the last 6 years, prescription drug costs have been escalating at
double-digit rates: 10 percent in 1996, 14 percent in 1997, 15 percent
in 1998, 16 percent in 1999, 17 percent in 2000 and 2001.
It is unacceptable when older Americans struggle to afford their
heart medicines and diabetes medicines. It is reprehensible when hard-
working families are impoverished trying to pay for the drugs that keep
their children in the classroom and out of the hospital, but it is
intolerable when much of their burden has been created by the
wealthiest corporations in America, the brand-name drug companies,
deploying an army of lawyers, lobbyists, and campaign contributions to
exploit and maintain loopholes in the law to block competition and
unfairly boost prices.
Today, the Senate is on trial. We will vote on whether to end those
abuses, and just as the Senate has voted resoundingly to close
accounting loopholes abused by Enron and WorldCom, we must also close
the loopholes in our drug patent laws that are exploited by big drug
companies and are hurting patients each and every day.
Ending the abuses of the law that have contributed to escalating drug
prices will help every family. But the most important step we can take
in this Congress towards the goal of a more perfect Union is to act at
long last to provide prescription drug coverage under Medicare.
Last week, the Senate failed to fulfill its responsibility to senior
citizens and their families. This week, we have the opportunity and the
obligation to do better and to provide a downpayment on our commitment
to provide a prescription drug benefit in the Medicare Program.
Medicare is a solemn promise between our Government and our citizens.
It says: Play by the rules, contribute to the system during your
working years, and you will be guaranteed health security in your
retirement years. Because of Medicare, the elderly have long had
insurance for their hospital bills and doctor bills. But the promise of
health security at the core of Medicare is broken every single day
because Medicare does not cover the soaring price of prescription
drugs. We can no longer ignore the sad fact that too many senior
citizens are living in pain because they cannot afford prescription
drugs.
Too many elderly citizens must choose between food on the table and
the medicine their doctors prescribe. Too many elderly are taking half
the drugs their doctors prescribe or none at all because they cannot
afford them.
Senior citizens built our country. They fought in our wars. They
created our economic growth and prosperity. They worked hard. They
supported their families. They played by the rules. And they stood up
for America. Now is the time for America to stand up for them.
Last week, a majority of the Senate voted for the Graham-Miller-
Kennedy amendment, a comprehensive program to provide prescription drug
coverage under Medicare and mend its broken promise. A minority stood
against the seniors and with powerful special interests, but under the
rules of the Senate that minority was able to block action. Just as the
Republican Party opposed the creation of the Medicare Program in 1965,
it opposed the enactment of a comprehensive Medicare prescription drug
benefit today.
The Senate is once again confronted with a choice: Is our priority
prescription drugs for the elderly or more tax breaks for the wealthy?
Will we give senior citizens the same loyalty that they gave our
country or will we continue to offer an open hand to the powerful
special interests and the back of our hand to the elderly and their
families?
Over the coming years, Americans will spend $1.8 trillion on
prescription drugs. So far, our Republican colleagues have said no to
amendments that would cover only a third of those costs. Yet under the
Senate health plan, Senators have 75 percent of their prescription
drugs covered. How many of us are willing to face our constituents when
we go home in August knowing we have secure coverage for 75 percent of
our drug coverage but we reject proposals that do even less for our
fellow citizens?
The Graham-Smith amendment is a bipartisan compromise. It is not the
comprehensive program that I want or that a majority of the Senate
wants, but it is an important downpayment on the kind of program senior
citizens need and deserve. Under this proposal, every senior citizen
will receive assistance and those with the greatest need will receive
the most help.
I ask that during the quorum call, the time be charged equally
against both sides.
The ACTING PRESIDENT pro tempore. Without objection, it is so
ordered.
Mr. KENNEDY. I suggest the absence of a quorum.
The ACTING PRESIDENT pro tempore. The clerk will call the roll.
The legislative clerk proceeded to call the roll.
Mr. KENNEDY. Madam President, I ask unanimous consent that the order
for the quorum call be rescinded.
The ACTING PRESIDENT pro tempore. Without objection, it is so
ordered.
Mr. KENNEDY. I yield 4 minutes to the Senator from Florida.
The ACTING PRESIDENT pro tempore. The Senator from Florida.
Mr. GRAHAM. Madam President, I have a somewhat longer statement I
will deliver later, but at this point I

[[Page S7619]]

will indicate clearly to my colleagues what exactly we are going to be
doing in approximately an hour and 15 minutes. We will be voting on
waiving the point of order that we anticipate will be raised against
this amendment based on noncompliance with the budget resolution.
Let's look at a few facts. In 2001, the Senate established, as the
amount of money to be expended for a prescription drug benefit for 10
years, from 2001 to 2011, the number of $300 billion. That is the last
budget resolution the Senate has enacted. The Senate Budget Committee,
in 2002, reexamined what would be required for an adequate prescription
drug benefit, and they recommended up to $500 billion, but that
resolution has never been adopted.
So 18 months later, we are being constrained by a $300 billion
number, which has been found to be inadequate by the Budget Committee.
The irony is that both the Republican proposal, the proposal of Senator
Grassley and others, and the Graham-Smith proposal have a total
expenditure of $400 billion minus. There is probably not a 2- or 3-
percent difference in the amount of money the Grassley bill and the
Graham-Smith bill have found to be necessary in order to provide our
seniors an adequate prescription drug benefit.
The issue of whether we are going to need to waive the Budget Act in
order to get to the substance of this issue is one upon which both
sides have agreed. So why do we not say yes, we have agreed that it is
going to take more than $300 billion to have an adequate prescription
drug benefit? Let's vote today to waive the Budget Act, and then we can
have the full debate with amendments and all of the means by which
Members of the Senate can express their specific policy positions on a
variety of issues on this complex subject. If we cannot get past the
Budget Act, the whole effort to provide 40 million Americans with some
better access to a key component of their life and health will be
again, for the seventh straight year, denied.
I do not believe that is the record this Senate wants to go on. Let's
have a vote to do what we have all agreed--that it will cost more than
$300 billion to provide a benefit. Then let's move on to a discussion
that justifies the title of this institution as being the world's
greatest deliberative body. Let us deliberate. Let us not quibble over
the issues of dollars for which there is no quibbling because we both
agree as to what it is going to cost to provide this benefit.
This is the last opportunity we are likely to have in 2002 to provide
America's seniors this benefit. A vote against waiving the Budget Act
is a vote for another year of denial. It is also a vote that when we
come back next year, we are not going to be talking about the $400
billion that both sides have now agreed is necessary, we are going to
be talking about a substantially higher number because of another year
of prescription drug inflation and another year of that baby boom surge
of entrants into the Medicare Program.
If we think it is difficult today to vote to provide a prescription
drug benefit, be assured it will be only more difficult every year into
the future.

I urge my colleagues to look at the reality of what we are doing and
at least vote to waive the Budget Act so we can get on to a full debate
on this issue.
Mr. KENNEDY. Madam President, I yield 10 minutes to the Senator from
Oregon.
The ACTING PRESIDENT pro tempore. The Senator from Oregon.
Mr. SMITH of Oregon. I thank Senator Kennedy, the manager of this
bill, and my cosponsor of this legislation, Senator Graham, for the
time.
I say to the American people, what few may be up this morning
watching these proceedings, that this is probably our last best chance
to pass prescription drugs in the 107th Congress, and I think it is
critical we do so.
I am optimistic we are going to succeed, but if we do not, it will be
because of that old maxim that the perfect is the enemy of the good.
What Senator Graham and I have is the best we can produce for the
greatest number of people, particularly the neediest, but for everyone
in terms of discount cards and in terms of a catastrophic coverage. We
have the best we can do with the financial constraints faced by this
Government.
We have produced a plan that is affordable for seniors and it is
affordable for the U.S. Government. It is a plan at a minimum that we
ought to pass.
I thought what I would do in my remarks today was to try to give a
comparison between our bill and the competing bill. Both of these bills
can work. I have, in fact, voted for a version of the Grassley-Breaux
bill. However, I am now on this bill because I think this is more in
the realm of what is possible and workable.

I will spend some time focusing on the health and financial security
aspect, which is what is available to every American under our plan who
is under Medicare, and then focus on the sickest and the poorest, the
protection for the most vulnerable in our society. Let me start first
with the most vulnerable in our society.
Let's compare the low-income benefit. Under Grassley-Breaux, the low-
income folks are covered at 150 percent of poverty; under the Graham-
Smith bill, people 200 percent of poverty are covered. Under Grassley-
Breaux, it includes an assets test which will drop 40 percent of
otherwise income-eligible elderly; under Graham-Smith, there is no
asset test. Under their proposal, beneficiaries below 200 percent of
poverty can pay up to $3,700 due to copays, deductibles, and premiums.
Under ours, beneficiaries out of pocket are limited to drug copays of
$2 for generic and $5 for brands. That is an enormous difference in
terms of what they will have to pay and who will be included.
Under their plan, they provide more limited coverage than some
elderly get in current employer programs or State pharmacy assistance
programs. Under our plan, coverage for low-income elderly is as
comprehensive as State pharmacy assistance programs. CBO estimates that
no employer will drop coverage because of what we have.
As to the catastrophic limit, their proposal kicks in at $3,700. Our
proposal kicks in at $3,300, a very big difference, a 12-percent
difference. That matters a great deal at the low end of the economic
scale in our country.
Some may say this does not cover enough people. Let me give a few
examples of a few States and how much this plan helps. These are
percentages of people in various States falling below 200 percent of
poverty: In Vermont, 42 percent of their elderly fall below that; in
the State of Mississippi, 46 percent; in the State of Maine, 37
percent; in the State of Ohio, 41 percent; in the State of Nevada, 41
percent; the State of Illinois, 41 percent also; the State of Nebraska,
43 percent; the State of Iowa, 38 percent; in the State of Louisiana,
52 percent; in the State of Indiana, 46 percent; in the State of
Alabama, 56 percent; in the State of Pennsylvania, 43 percent; and the
State of Rhode Island, 48 percent.
These are dramatic numbers. There is hardly a State in the Union that
falls below 40 percent of people who will be covered 100 percent by the
Graham-Smith proposal. That is significant. That is an incredible start
on a prescription drug program.
Let me turn to the health and financial security aspects and compare
both bills. The premiums and fees: Under Grassley-Breaux, the elderly
will pay $288 per year or more. The premiums imposed are imposed
monthly, despite periods when the beneficiary receives no benefit.
Unknown premium amounts that can vary by area dramatically, year by
year. Under ours, there is no monthly premium.
Now to the deductible. Under theirs there is a $250 per year
deductible. Under Graham-Smith there is no deductible.
Universal coverage: Under Grassley-Breaux, only low-income and those
choosing to pay monthly premiums are covered. Under ours, all seniors
and covered disabled are covered after a $25 annual fee.
As to employer coverage and crowding out private plans, the CBO
estimates a third of current employer benefits will be dropped if
Grassley-Breaux goes through. They estimate that under the Graham-Smith
proposal all seniors and disabled will be covered, and they estimate no
loss of current employer coverage. I think that is terribly
significant. Ours overlays the existing program much better than the
Grassley-Breaux proposal.

Now as to guarantee of current coverage levels: Under Grassley-
Breaux,

[[Page S7620]]

some low-income elderly would receive reduced coverage than under the
current State pharmacy programs. But under ours, low-income elderly are
guaranteed a comprehensive benefit with a nominal cost sharing. CBO
estimates under Grassley-Breaux one-third loss of current employer
coverage, and coverage could be far worse than the elderly currently
receive. CBO estimates under ours, no loss of current employer
coverage.
Now, the stability of the delivery system. Grassley-Breaux imposes an
untried and untested insurance model on our Nation's elderly and
disabled and results in employer crowd-out. I assume this insurance
program in the private sector could be developed, but it does not exist
right now. So we are betting that it can be developed and that people
would like it.
In the State of Oregon, if you ask how they like their private
insurance, it is not much; they do not like it much. While they
complain about Medicare, they certainly want us to support it.
Then on this issue of a stable delivery system: Senator Graham and I
build upon current State and market-based delivery models, and we do
not result in an employer crowd-out. What is the overall cost? The
Grassley-Breaux approach is scored at somewhere between $375 and $400
billion over 10 years. Ours is scored at $390 billion over 10 years. So
they are comparable in that regard.
I conclude my remarks by saying we will hear this morning about the
``cliff''--that after 200 percent of poverty the people do not get
anything; if you make $24,000 as a couple, you fall off a cliff. I wish
we had a more graduated program, I grant that. There are many things
about what Senator Graham and I have that I would change if I could,
but I can't, and get something passed and into conference. So let's
start here.
Let me simply say to those who would describe this as a cliff, that
you get nothing if you make more than $24,000 a year, to me it is not
nothing to say that for $25 a year you get a discount card that, at a
minimum, gives you 5 percent off all your prescriptions, but probably,
because you get the benefit of pricing discounts, you get as much as 30
percent off every prescription drug, and, moreover, you add to that the
fact that you never have to worry again as a senior in America that
when you lose your health, you have to lose your home--you do not have
to choose between food and medicine. That is significant. Tell me where
in the private sector you can find an insurance policy that, for $25 a
year, will do all of that.
Have we done enough? No. Have we done a tremendous amount of good?
Absolutely.
I plead with my colleagues to vote to waive this point of order. We
should not fail today. We should get this to the floor. People have
ideas. We can perhaps make it better. But we can get on with the
business that the seniors and citizens of this country are expecting.
Let us get beyond the war of words and get to a prescription of
wellness for the seniors and provide them a benefit that is workable,
tried and true, affordable for them and our Government.
I yield the floor.
The ACTING PRESIDENT pro tempore. The Senator from Tennessee.
Mr. FRIST. Madam President, I yield myself 10 minutes, to be followed
by the Senator from Maine, 10 minutes.
Madam President, I rise in opposition of the Graham drug Medicare
proposal. I will make four points regarding my opposition in the few
minutes I will speak.
The first point is, the bills we are considering on the Senate floor
have not gone through the committee process. That is important for the
American people to understand. It makes it incredibly challenging to
receive an amendment yesterday such as this and having the opportunity
only to read it for the first time. This legislation is very
complicated.
In looking at the this bill compared to the bill passed by the House
of Representatives, the tripartisan proposal or the bi-partisan Hagel-
Ensign bill, the major substantive objection I have is that the bill
costs more and yet fewer people benefit.
We do have huge gaps of coverage. We have huge gaps in terms of being
able to look seniors in the eye and say, yes, we understand your
problem is affordable access to prescription drugs, and then walk away
because they don't fall into the category. There are cliffs and gaps
and chasms, and these vacuums exist for that individual who falls into
one of these gaps or chasms because we do not cover everybody in the
sense of addressing their problem; that is, health care security for
prescription drugs.

Of all the bills we have considered, this is not really a compromise
bill. It is a very different bill that costs more and covers fewer and
fewer people.
The tripartisan comprehensive plan the Senator from Maine put on the
table--and we will hear from her shortly, along with Senators Grassley
and Breaux and Jeffords is a much more comprehensive bill that I argue
gives more secure comprehensive coverage and helps a broader swathe of
people. If you look at individuals with disabilities, it doesn't have
these categories of exclusion. Where there are some areas that you do
not get as complete coverage, it is gradual, and you do not have these
cliffs, these drop-offs. If you make one dollar more, all of a sudden
you do not get the coverage.
In terms of how many people are covered, it is hard to factor it out.
We have about 38 million Medicare beneficiaries, seniors and
individuals with disabilities around this country. Of the 38 million,
there are an estimated 18 million who are above 200 percent of poverty.
We heard yesterday and last night about this drop-off, this cliff. Once
you get to 200 percent of the poverty level for an individual or for a
couple, all of a sudden you do not get benefits. There is a huge hole,
a huge chasm, a gap that is there, this drop-off. Above 200 percent you
get a minimum benefit of 5 percent. That does not give me the security
to look in somebody's eye and say we are really helping you. We need to
make affordable access to prescription drugs, which is our goal, a
reality.
Only about 2 million of those 18 million will ever qualify for the
catastrophic benefit. So you have 18 million above the cutoff level of
200 percent of poverty with very minimal benefit. But people say: Yes,
for catastrophic coverage they will be helped. At the end of the day,
only 2 million out of the 18 million will fall into that catastrophic
category, again leaving essentially no benefit for 16 million seniors
today.
I think it is important for our seniors to understand. I do not want
to leave this body 2 days from now saying we passed prescription drugs,
we took care of your problem, you will have affordable access to
prescription drugs--which seems to be the implication. It has been said
that we cannot leave here on recess without passing a package. This
package is a shell, and it does not give seniors affordable access to
prescription drugs.
If we pass it, we are not being honest going home saying we passed a
real prescription drug package. It costs more, covers fewer people than
what we have had on the floor, what we have been discussing. If we go
back to the Finance Committee, I think we can come up with a very good
bill. Under this bill, at least 15 million to 16 million seniors are
left behind. That is, they do not get a substantial benefit; they only
get that 5-percent discount. Fifteen million to 16 million people we
are leaving behind.
Second, I think from our standpoint it is irresponsible to pass a
bill and pretend we are doing something that we are not really doing
when we have alternatives. If we did not have alternatives, we could
say this is our best shot, and we can build on it in the future. But,
really, the two bills that came to the floor each had different
approaches. The initial Graham bill was much more Government run. The
tripartisan bill involved the public and private sector, but both of
those bills had more comprehensive coverage. For the seniors who are
listening, for the dollar value, they had more benefits than the bill
before us today. Therefore, we should not, by default, end up passing a
bill today just to say that we have passed something.

Politically, people might be able to claim a victory saying we passed
prescription drugs, but this particular bill never addresses the
``affordable'' problem, affordable prescription drugs.
The response to that is we are taking a good first step, and we have
to do something. If we do something, maybe

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we can work on it later. If we knew what that ``later'' was, I would
say yes, we should have a one-two punch and come back. I have a great
deal of confidence if we pass this, we will not come back and visit
this in September or October and put together a truly comprehensive
plan. We are not addressing the fundamental problem of seniors not
being able to afford lifesaving drugs.
The third point I want to make is this bill fails to recognize that
prescription drugs are, and need to be, considered a part of the
overall modernization of Medicare. Yes, I admit all the bills we have
considered over the last 2 weeks have not fully addressed the fact that
prescription drugs need to be a part of the full armamentarium of what
a physician has to deal with, what a hospital has to deal with, that
doctor-patient relationship and outpatient care.
We are treating prescription drugs sort of on the outside, as if it
is an appendage to Medicare, without in any way addressing the
fundamental problems of Medicare. In truth, the sustainability, long-
term, of whatever we promise--whether it is acute or long-term or
preventive care--has to be part of a more comprehensive approach which
we addressed. I mention that because the tripartisan bill, of all the
bills we mention on the floor, is the only one that is health care
security for our seniors, like the surgeon's knife, like acute care,
chronic care, or preventive medicine. Remember, the tripartisan bill
costs $370 billion, and the more limited bill we are considering on the
floor is even more than that because the tripartisan bill at least
reached out and said we understand prescription drugs are a part of
overall Medicare. This bill does not address that. It has no element of
modernization at all.
Thus, I think the bill on the floor, of all the bills we have
considered, is the least effective in accomplishing what seniors
expect. It does not guarantee seniors comprehensive prescription drug
coverage. It locks into place a limited stopgap proposal. Everybody
says this is not the answer but this is sort of a stopgap, something to
do now. But it locks it in place at a far higher cost than it needs to.
The taxpayers are paying for this--the people who are listening to me
now. It is, my colleagues, constituents. All over the country, people
are paying into this as taxpayers. So we need to give them an effective
product as we go forward. The product itself, I think, is insufficient.
As I mentioned, it leaves a gaping hole in coverage. This is my final
point. We have talked about doughnuts earlier in the debate. All last
week we talked about a doughnut, which is a gap of people who simply do
not get the benefits that other people get. This has a much larger gap
than, again, any other bills; than the tripartisan proposal or the
proposal that passed the House of Representatives, for example, several
months ago.
It fails to provide Medicare beneficiaries with either an effective
drug prescription benefit or some of the other much needed improvements
that are present in the tripartisan bill.
I will close by simply saying that I think at this juncture the most
prudent thing to do is to table this bill because of the reasons I have
outlined and to recognize we have made huge progress compared to even a
year ago. It was 3 years ago that we had the Medicare Commission. It
basically proposed a public-private approach. That approach has been
built upon by a series of bills. We have made great progress over the
last 2 weeks. The Medicare debate is on the floor. People have talked
about it. We recognize deficiencies. We recognize some advantages in
some of the bills. I think the best thing to do is to go back through
regular order that is usually in this body, and that is to go through
the Finance Committee.
Let that process, based on what we know and what we talked about
today, work so we can have that particular debate, and move forward.
I will be voting against this bill. I will be voting, if there is a
point of order, to table the bill. I will support that, and I encourage
my colleagues to do so.
I yield 15 minutes to my colleague from Maine.
The PRESIDING OFFICER (Mr. Edwards). The Senator from Maine is
recognized.
Ms. SNOWE. Mr. President, I thank the Senator for yielding me the
time.
I concur with what has just been suggested by the Senator from
Tennessee in terms of returning to the regular process so that we can
go back and resume the negotiations and discussions that were well
underway over the course of the weekend with Senators from across the
aisle--Senators Kennedy, Baucus, and Wyden--even through Monday to
reach an agreement that would provide for comprehensive coverage for
Medicare beneficiaries.
There is no reason we cannot have that discussion to develop the kind
of plan that seniors deserve in the Medicare Program.
As I said yesterday, we should not have this vote. Why entrench and
polarize both sides on this issue? Why make it more intractable? Why
not go back and begin the process of negotiations that were well
underway using the tripartisan plan as a basis? It provides
comprehensive coverage. There is no reason we can't begin that process.
This doesn't have to be the last vote.
With the Medicare give-back in the fall, we have an opportunity
during this interim to begin this process anew so that we can achieve
and craft a comprehensive plan that seniors need and deserve.
Looking over this proposal, there are many troubling features. I
think that we ought to deal with the facts.
First of all, the proposal before us today, if you had told me more
than a year ago--as the tripartisan group with Senator Breaux, Senator
Jeffords, Senator Grassley, Senator Hatch, and myself, as members of
the Senate Finance Committee invited all members of the Finance
Committee to participate in this process--if somebody told me when we
embarked on this legislative odyssey that somehow we would be
considering in a serious way today a proposal that abandoned the basic
precepts that had been the underpinning of the Medicare Program since
its creation 37 years ago yesterday when President Johnson signed into
law the Medicare Program--we never contemplated or considered during
the course of this last year when we developed that tripartisan plan
that we would abandon universal coverage. We never contemplated
abandoning the ability to pay and resorting to a means-test program
that is now before the Senate--a means-test program that places the
low-income benefit in the Medicaid Program--not Medicare, in the
Medicaid Program.
These are huge departures from the principles that we have embraced
here in Congress year after year. In fact, the vote last week, with 97
votes on both sides of the aisle, was for the original plan that we
were embracing for universal coverage--the principles that AARP and the
major organizations representing seniors in America have always and
consistently embraced for the 37 years of Medicare existence. Now the
proposal before us abandons all of those principles.
It most certainly doesn't advance or improve the prescription drug
debate. In fact, the bill before us today has not had the advantage of
scrutiny by the Congressional Budget Office because the language of
this amendment specifically has not been reviewed by the Congressional
Budget Office in order to prepare a cost estimate on the proposal. I
think we should understand that from the outset.
There is no certainty because the language in this legislative
initiative has not been reviewed by the Congressional Budget Office.
Are we to have confidence in the process and the Congressional Budget
Office when the analysts have not even had the text of the amendment?
We are creating a new Federal program at a cost presumably of a minimum
of $400 billion without knowing the true fiscal impact of this
legislative proposal.

Here is my first chart. One of my first major concerns about this
initiative before us, which I think all Members of the Senate should
readily understand, is that most seniors do not get a basic drug
coverage under this plan because it is not a universal benefit. I think
that needs to be understood.
The Graham proposal does not offer a basic drug benefit for 70
percent of seniors who have incomes above $17,720 for an individual and
$23,880 for a couple. This is according to the AARP data: The number of
seniors who have incomes above 200 percent of the Federal

[[Page S7622]]

poverty level. Seventy percent of seniors above 70 percent would not
get basic coverage. They will have to spend $3,300 before they get any
basic coverage. That is an important point.
In fact, in the New York Times the other day there was an op-ed piece
written by the Urban Institute--that is not a conservative think tank--
discussing the fact that most individuals usually have drug expenses
between $2,000 and $3,300; and that many people are spending in that
middle range, particularly on chronic illnesses such as high
cholesterol, high blood pressure, and arthritis. But with a low-income
catastrophic approach, that will provide very little help for most
Medicare recipients with chronic illnesses. The chronically ill cannot
get enough help under this type of an approach.
Under our legislation, 80 percent would even exceed our benefit limit
of $3,450, and we had a catastrophic coverage of $3,700.
But the point here is that it now is 70 percent. In all States across
the country, seniors are left behind.
I heard this morning about how many seniors will be covered. But let
us look at the other side of that equation and who won't be covered.
If you look at these statistics, it is staggering. It is 71 percent
in Maryland. In Oregon, 51 percent of seniors will be left behind. In
my State of Maine, they will not get a basic drug benefit under this
proposal; neither will 50 percent in Virginia, 67 percent in Arizona,
51 percent in Arkansas, 66 percent in Missouri, 72 percent in
Washington, 64 percent in Iowa, 70 percent in Colorado, and 52 percent
in Montana. These seniors will not get a basic drug benefit under the
Graham plan because they earn at least $1 over the strict income limit
for the comprehensive coverage offered to low-income seniors.
Only those seniors with incomes below 200 percent of the Federal
poverty level obtain real prescription drug coverage under the Graham
plan.
Let us look at chart 3. It is not a comprehensive benefit because it
guts the most important part of any drug benefit program; that is,
basic coverage. There is a huge gap. We were criticized for our gap
between $3,450 and $3,700. But this is a canyon in terms of gap in
coverage. You have no coverage from basically zero to $3,300 in out-of-
pocket drug expenses--zero.
Seniors above 200 percent will have to spend $3,300 before they
receive any coverage at all. According to the Congressional Budget
Office, two-thirds of seniors will not have prescription drug costs
even has high as $3,000 or $2,500. That means that most of the 26
million Medicare beneficiaries with incomes above 200 percent of the
Federal poverty level would never spend enough to receive any
coverage--no coverage at all. It is not a comprehensive benefit.
What about the 125 percent of seniors who will spend $4,000 annually
on prescription drugs? They will not have any coverage for their
prescription drug costs until about Thanksgiving Day after 10\1/2\
months with no coverage at all--no coverage at all for 10\1/2\ months.
I am told that under this plan most seniors will only get a 35-
percent discount off their drug costs through the Government-managed
plan until they spend $3,300 a year.
Private drug coverage plans get significantly larger discounts,
anywhere from 20 to 40 percent, compared to a benefit such as this. I
know the author of this amendment, Senator Graham, claims seniors will
get up to a 30-percent discount, but I challenge him to show me where
it says that in this legislative initiative we are considering in the
Senate. It is not in this legislation. And study after study has shown
that discount cards, such as the one offered for seniors in this
coverage gap, do not offer discounts that high.
What the typical senior actually gets from this plan is about $6 a
month in help with drug costs. So the total annual benefit will be $72.
What about the senior, as we said earlier, who is spending $2,000 to
$3,000? They will get no coverage other than maybe this average of 5
percent off on discounted drugs, which will average about $6 a month.
This does not offer a Medicare drug benefit, in all reality, in the
Medicare Program. This program would, in reality, be administered by
the State Medicaid Program. This means the States will experience a
huge unfunded Federal mandate in the Graham plan because they are
required to pick up a large share of the cost of this new program.
An analysis conducted by the Centers for Medicare and Medicaid
Services of the costs passed on to the States by this Graham amendment
shows that many States across this country will be required to shoulder
a sizable new financial burden.
Let's just talk about a few of the States hardest hit. I have a list
of them, but I will go through a few: Arizona, Arkansas, California,
Colorado, Iowa, Louisiana, Montana, Oregon, South Dakota, Washington,
West Virginia.
Do you know what the annual impact will be on States, just in 1 year
alone, based on our up-to-date analysis of the impact of this
legislation? It is $5 billion in 1 year--$5.189 billion in 1 year--as
an unfunded mandate on the States, for a grand total of $70 billion
over 10 years. That is $70 billion over 10 years in an unfunded mandate
to the States as a result of this low-income benefit now being placed,
for the first time, in the Medicaid Program, not Medicare.
States, that as we all know are struggling in a sea of red ink, will
be forced to raise taxes to implement the drug benefit for low-income
seniors. Ironically, this new unfunded mandate will create a new
funding crisis for States that we just tried to correct with the
Rockefeller-Collins amendment last week, which was designed to give
emergency Medicaid funding to States so they are not forced to cut
their existing health care programs. I might add, that was returning to
the States $9 billion for a year and a half. We are talking about an
unfunded mandate, in 1 year, of $5.1 billion, and $70 billion over 10
years, to the States.
I might also say, this plan penalizes low-income seniors who earn
extra income because it could mean they could lose their drug coverage.
Only those beneficiaries who earn up to $17,720 for an individual and
$23,880 for a couple will get comprehensive coverage, as I mentioned
earlier. Any individual beneficiary who earns $17,720, plus $1, or a
couple who earns $23,880, plus $1, gets no coverage. They are left to
spend 18 percent of their income for prescriptions.
Just 2 years ago--another irony here--we passed legislation, in March
of 2000. The Senate voted 100 to 0 to repeal the Social Security
earnings limit. Yet here we are today considering a plan that would
effectively establish a new earnings limit almost identical to one we
repealed. Here is another contradiction in legislative policy.
So now we are going to penalize low-income seniors if they want to
earn more money. Now we are creating a penalty----
The PRESIDING OFFICER. The Senator has used 15 minutes.
Ms. SNOWE. We are now creating a penalty on prescription drug
coverage.
May I ask unanimous consent for 2 more minutes.
Mr. FRIST. I yield an additional 2 minutes to the Senator from Maine.
The PRESIDING OFFICER. The Senator from Maine.
Ms. SNOWE. Thank you, Mr. President.
That is an important point, that we are now creating this type of
penalty for low-income seniors, because if they earn $1 more, they lose
their prescription drug coverage.
Finally, employer-sponsored plans, labor-union sponsored plans, will
be penalized under this legislation. There will be a disincentive for
employers and labor unions to continue their coverage. You might ask,
why? I will answer that question. Because now, under this legislation
before us, they have revamped the standard for how you calculate your
out-of-pocket cost for the catastrophic level of $3,300.
These plans will not be counted toward the out-of-pocket costs. So
employers will not have an incentive to continue these programs. And
certainly employees would not want to because they would not want to
lose their coverage. Labor unions will drop their plans. So that is
another disincentive.
Now 23 percent of retirees have such coverage. We do not want to
create a disincentive for the continuation of those programs. But that
is exactly what this Graham proposal will do that is before this Senate
today. That is

[[Page S7623]]

why I am urging my colleagues not to support this initiative. Allow us
to go back to where we were on Friday, continuing the discussions we
were holding across the aisle with our tripartisan group, with Senator
Breaux, Senator Jeffords, Senator Grassley, Senator Hatch, Senator
Baucus, Senator Kennedy, Senator Wyden, and others, so that we can have
a comprehensive plan for all Medicare beneficiaries, with universal
coverage that the AARP and all of us have embraced for the last 37
years with the existence of the Medicare Program.
This isn't the last vote. This can be the beginning. And I cannot
imagine this Senate, in September, considering a Medicare give-back to
providers and not considering a prescription drug program for our
Nation's seniors. They deserve better. And we can do better.
Mr. President, I ask unanimous consent that the following material be
printed in the Record.
There being no objection, the material was ordered to be printed in
the Record, as follows:

[From the New York Times, July 29, 2002]

Finding a Formula for Medicare Drug Benefits

(By Marilyn Moon)

Washington.--The political debate over how to add a
prescription drug benefit to Medicare has dragged on now for
more than four years. Prescription drugs have become an
integral part of health care delivery, but unlike insurance
for most working families, the Medicare program for older and
disabled people provides almost no drug coverage. Politicians
from both parties know they have to do something, but the
hurdles are big: money and control.
The debate in the Senate is still ongoing. But large
differences along party lines remain, and the Republican
House plan that was passed on a party line vote in June makes
hopes for compromise remote given the desires of consumers
for broad coverage and of drug companies for minimal
government controls.
The sums needed are enormous; over the next 10 years,
Medicare beneficiaries are expected to spend $1.8 trillion
for drugs. Thus, while the Senate Republicans' top offer of
$370 billion over eight years is a lot of money, it
represents only a bit more than one-fifth of drug spending
over that period. The Republican plans contain big gaps in
coverage and allow restrictions on what drugs will be
covered. Democrats offer more coverage, but at a cost of $500
billion or more.
Since all proposed plans would be voluntary, those who
spend relatively little on prescriptions need to be wooed
into participating with the promise of receiving some
benefits. Otherwise, only high users will enroll and any
program will become very expensive over time.
All the competing plans offer generous coverage above a
certain level of spending for those with catastrophic
expenses. The differences arise in how to treat people who
spend below the catastrophic level but still spend several
thousand dollars annually on drugs. The Senate Democratic
proposal requires beneficiaries to pay a portion of the
costs, up to $4,000 a year. Beyond that limit, all drug costs
are covered. But under the House Republican plan individuals
must pay 100 percent of their drug expenses between $2,000
and $5,300.
Increasingly, many people on Medicare are ending up in this
middle spending range, particularly those who take one or
more drugs every day for a chronic condition. Drugs for such
common ailments as hypertension, high cholesterol and
arthritis cost $1,200 to $1,500 a year, creating a
substantial financial burden for the chronically ill.
A viable compromise is to offer comprehensive coverage for
those with low incomes and catastrophic help for all other
beneficiaries, an approach that seems to be gaining favor in
the Senate. But this plan would still cost about $400
billion, while providing little help for most Medicare
recipients with chronic illnesses.
Money accounts for only part of the differences between the
two parties. A big disagreement is over how the benefit is
structured--and the precedent it sets for Medicare's future.
The Democratic approach basically would have Medicare pay for
drugs the way it now pays for hospital and physician
benefits. Republicans want instead to have the benefit
offered by private insurers. Compromise on this ideological
question is especially difficult.
The Democratic approach is simpler and relies on Medicare's
well-tested structure. But drug manufacturers, fearing that
Medicare would impose price controls on drugs, are strongly
opposed to enlarging Medicare itself to cover drugs.
Supporters of a private insurance structure argue that only
competition among plans can achieve substantial control over
rising prescription drug costs. But this theory has not been
proved in other contexts. The private managed-care option in
Medicare, for example, has raised costs to the federal
government. Meanwhile, many Medicare recipients have had
to suffer with plans that cut benefits or, worse, are
withdrawn altogether because the companies offering them
have quit the Medicare program entirely for lack of
profits.
A privately administered drug benefit would be particularly
problematic. If private insurers carry the risk for drug
costs, they will probably structure their plans in ways that
put high users of drugs at a disadvantage. For example, they
can establish a list of preferred drugs (a formulary) and
either not cover certain drugs or charge more for drugs that
are not on the list. There are, for example, many anti-
cholesterol drugs, but a formulary may not include the drug
that works best for a particular patient. Consumers who need
many drugs are likely to find it hard to decipher which
medications the plans will cover and at what cost.
Ultimately, lawmakers and the rest of us must decide
whether we trust government to deliver a new drug benefit
effectively. What we do know is that the need for drug
coverage is too great to let this issue remain unresolved.
____

Seniors Left Behind by the Latest Graham Plan

Percent
Alabama..............................................................57
Alaska...............................................................68
Arizona..............................................................67
Arkansas.............................................................51
California...........................................................66
Colorado.............................................................70
Connecticut..........................................................70
Delaware.............................................................69
District of Columbia.................................................61
Florida..............................................................64
Georgia..............................................................69
Hawaii...............................................................73
Idaho................................................................61
Illinois.............................................................67
Indiana..............................................................65
Iowa.................................................................64
Kansas...............................................................68
Kentucky.............................................................50
Louisiana............................................................51
Maine................................................................61
Maryland.............................................................71
Massachusetts........................................................64
Michigan.............................................................66
Minnesota............................................................66
Mississippi..........................................................47
Missouri.............................................................66
Montana..............................................................62
Nebraska.............................................................55
Nevada...............................................................64
New Hampshire........................................................65
New Jersey...........................................................65
New Mexico...........................................................60
New York.............................................................57
North Carolina.......................................................57
North Dakota.........................................................52
Ohio.................................................................64
Oklahoma.............................................................56
Oregon...............................................................66
Pennsylvania.........................................................62
Rhode Island.........................................................54
South Carolina.......................................................58
South Dakota.........................................................59
Tennessee............................................................56
Texas................................................................56
Utah.................................................................72
Vermont..............................................................59
Virginia.............................................................62
Washington...........................................................72
West Virginia........................................................58
Wisconsin............................................................65
Wyoming..............................................................60

--------------------------------------------------------------------------------------------------------------------------------------------------------
State share of costs of Mandated state expenditures to pay
expanding Medicaid drug for expanding Medicaid drug coverage
coverage (Percent of in 2005
benefit cost) --------------------------------------
Current --------------------------
Medicaid From Total cost of new
State drug current New state mandate New state mandate Medicaid mandate
coverage (% level of From 120% to cover up to to cover 120-150% to states in 2005
of Poverty) drug to 150% of 120% FPL (state FPL (state
coverage to poverty portion of costs) portion of costs)
120% of
poverty
--------------------------------------------------------------------------------------------------------------------------------------------------------
All States.............................................. ........... ........... ........... $3,464,769,443 $1,725,226,680 $5,189,996,123
Alabama................................................. 74 29.4 20.58 71.839,488 27,330,240 99,169,728
Alaska.................................................. 74 41.73 29.21 3,992,726 1,518,920 5,511,646
Arizona................................................. 74 32,75 22.92 46,279,680 17,602,560 63,882,240
Arkansas................................................ 74 25.72 18 39,374,234 14,976,000 54,350,234
California.............................................. 100 50 35 242,560,000 212,240,000 454,800,000
Colorado................................................ 74 50 35 47,472,000 18,060,000 65,532,000
District................................................ 100 30 21 3,168,000 2,772,000 5,940,000
Georgia................................................. 74 40.4 28.28 110,017,280 41,854,400 151,871,680

[[Page S7624]]

Hawaii.................................................. 100 41.23 28.86 7,388,416 6,464,640 13,853,056
Idaho................................................... 74 29.04 20.33 11,114,189 4,228,640 15,342,829
Iowa.................................................... 74 36.5 25.55 40,027,360 15,227,800 55,255,160
Kentucky................................................ 74 30.11 21.08 59,169,763 22,513,440 81,683,203
Louisiana............................................... 74 28.73 20.1 61,109,859 23,235,600 84,345,459
Mississippi............................................. 100 23.38 16.37 17,132,864 14,994,920 32,127,784
Montana................................................. 74 27.04 18.93 8,358,605 3,180,240 11,538,845
Nebraska................................................ 100 40.42 28.34 11,640,960 10,202,400 21,843,360
New Hampshire........................................... 74 50 35 19,872,000 7,560,000 27,432,000
New Mexico.............................................. 74 25.44 17.81 26,026,138 9,902,360 35,928,498
North Dakota............................................ 74 31.64 22.15 11,876,390 4,518,600 16,394,990
Ohio.................................................... 64 41.17 28.82 200,672,461 62,712,320 263,384,781
Oklahoma................................................ 74 29.44 20.61 45,069,107 17,147,520 62,216,627
Oregon.................................................. 74 39.84 27.89 41,930,803 15,953,080 57,883,883
South Dakota............................................ 74 34.71 24.3 9,707,693 3,693,600 13,401,293
Tennessee............................................... 74 35.41 24.79 84,961,338 32,326,160 117,287,498
Texas................................................... 74 40.01 28.01 315,086,752 119,882,800 434,969,552
Utah.................................................... 100 28.76 20.13 4,877,696 4,267,560 9,145,256
Virginia................................................ 80 49.47 34.63 108,596,544 47,512,360 156,108,904
Washington.............................................. 74 50 35 93,472,000 35,560,000 129,032,000
West Virginia........................................... 74 24.96 17.47 27,188,429 10.342,240 37,530,669
--------------------------------------------------------------------------------------------------------------------------------------------------------

New Graham Bill Imposes Billions in Unfunded State Mandates Through
Massive Mandatory Medicaid Expansion

Why does the bill increase Medicaid cost for many states?
The bill mandates a major expansion of a form of Medicaid
to provide prescription drug coverage. It creates a new
category of Medicare-Medicaid ``dual eligibles,'' who qualify
for drug coverage if they meet the means test requirement in
the bill. States, through their Medicaid programs, are
required to determine low-income eligibility and to pay the
enrollment fee and most of the drug costs for beneficiaries
with incomes below 200% of poverty. Low-income beneficiaries
are responsible for paying a $2 co-pay for generic drugs and
$5 for brand name drugs; the new drug benefit picks up all
the rest of the costs. This is a comprehensive drug benefit,
estimated to cost around $3200 per beneficiary on average in
2005. The Federal government pays for the Medicare portion of
the benefit. But most of the cost of this comprehensive
benefit must be paid through Medicaid. This is because the
Medicare benefit is a limited one: Medicare covers only 5
percent of the cost of drugs up to the catastrophic limit of
$3300, then provides catastrophic coverage with a $10 copay.
Thus, state Medicaid programs must pay at least two-thirds of
the cost of the drug benefit, around $2000 per beneficiary in
2005. This is a conservative estimate of Medicaid benefit
cost, and it will increase rapidly over time.
The Federal government pays only part of the cost of the
Medicaid benefit, based on the state's Medicaid FMAP rate and
enhanced FMAP rate:

------------------------------------------------------------------------
Required State
Percent of Poverty Rate Medicaid Category Contribution
------------------------------------------------------------------------
0-74............................ Truly Dually...... Normal Medicaid
Match
75-100.......................... QMB's............. Normal Medicaid
Match
100-120......................... SLMB's............ Normal Medicaid
Match
120-150......................... Drug QMB1......... Enhanced (SCHIP)
Match
150-200......................... Drug QMB2......... 100% Federal Match
------------------------------------------------------------------------

While all states have comprehensive Medicaid drug coverage
up to 74 percent of poverty, many states do not have coverage
up to 150 percent of poverty. States that currently do not
provide comprehensive drug coverage up to 150% of poverty
through either Medicaid or a state drug assistance program up
to 150% are thus required to pay for a significant portion of
the cost of comprehensive drug coverage. The cost of the new
mandate depends on how many beneficiaries in the state
currently do not have comprehensive coverage. The costs also
increase rapidly over time, because drug cost are rising
rapidly.
How much must your State pay?
The overall cost of this mandate to states in 2005 will
exceed $5 billion, and may be much more. Over the 10-year
budget window, the cost of the Medicaid mandate to the
affected states will exceed $70 billion--about 14 times the
2005 costs. The attached table shows states that definitely
will pay hundreds of millions more because of this proposal.
Additional states may also face higher costs, if they do not
already provide comprehensive drug benefits up to 150 percent
of poverty.
____

No Help for Retirees With Employer or Union Coverage From Graham

Retirees with decent coverage from a union or employer do
not incur actual drug costs out of their own pockets above
$3,300, as they would have to in order to benefit from the
Graham amendment. So this benefit provides nothing for them.
The Graham bill supporters note that ``no employers drop''
coverage as a result of their bill. This is because the
benefit is so paltry.
In contrast, the Tripartisan bill provides a real subsidy
worth almost $1,600 per retiree to help union and employer
plans continue coverage.
And those that decide to ``wrap around'' the strong basic
benefit for all Medicare beneficiaries still provide
comprehensive assistance to their workers. This is real help
for employer and union coverage.
The Graham benefit does little to stem the trend toward
dropping employer coverage. And when employers drop, Graham
leaves retirees with nothing until they incur over $3,300 in
costs out of their own pockets.
Graham would spend $390 billion yet provide virtually no
benefit for anyone with retiree coverage. When retirees find
out that they won't benefit from this, how will they react?

Ms. SNOWE. I yield the floor.
The PRESIDING OFFICER. The Senator from Tennessee.
Mr. FRIST. Mr. President, I yield 10 minutes to the Senator from
Iowa.
The PRESIDING OFFICER. The Senator from Iowa.
Mr. GRASSLEY. I thank the Senator from Tennessee.
Mr. President, obviously, as you might expect, I rise in opposition
to the latest amendment by Senator Graham--whether it is Graham 2, 3,
or 4, I am not sure, but it is another Graham idea on drugs.
First of all, I would like to address an argument that some Senators
have been making on behalf of this amendment. They have argued that
this is the Senate's very last chance to deal with the drug issue this
year. Even though this amendment is terribly flawed, they say that
somehow Senators should be encouraged to vote for it anyway.
Mr. President, I am second to none in my frustration with the
Senate's failure on this issue at this point. The Democratic leadership
has abandoned any pretense of a fair process. And fair process is what
the Senate is all about. Instead of leading, the Democratic leader has
been content to cook up his own proposals or have members of his party
cook up their own proposals and try to somehow just ram them through
the Senate.
For those of us who believe things in this body must be done in a
bipartisan way, and through the committee process, and, in the end, get
things done, this process in which we have been involved has been
extremely frustrating.
The good news is that this vote is not the last vote. Fortunately,
the Senate still has time and the ability to act. Speaking for my
colleagues in the tripartisan group, we are ready to move on and begin
work in the Finance Committee on a truly bipartisan compromise. I wish
Senator Daschle had the confidence in Senator Baucus I have to move a
bipartisan bill on Medicare prescription drugs out of committee.
No one should vote for this amendment in the misguided belief that it
is their last chance because it is not their last chance.
Now I would like to address the substance of the amendment before us.
The sponsors chose to spring the text of this amendment on the Senate
yesterday for the first time. Perhaps they thought they could slip in
something

[[Page S7625]]

new that we would not catch. Well, we caught it, and you know we have
caught it by the speeches of the Senator from Maine. We actually have
had a chance, and we have studied the Graham amendment.
The Graham amendment imposes a massive new burden on States just when
State treasuries are in terrible shape. What does it do? Well, it
mandates--do you like mandates?--that State Medicaid Programs provide
cost-sharing assistance to an entirely new universe of seniors who have
incomes up to 150 percent of the Federal poverty level. If that is not
bad enough, it also socks the States with administrative costs of
enrolling seniors with incomes up to 200 percent of poverty. Even
beyond those costs, this enrollment burden is going to be an
administrative nightmare for the respective States because of all the
different populations involved.
At a time--and we know this is true in at least 45 of the 50 States--
when they are experiencing tremendous budget pressures, massive new
burdens of this type are the last thing the States need to have imposed
upon them by the Federal Government. In fact, last week we heard of the
problems of the State budgets and the problems States are having with
their Medicare Program, because we voted for additional fiscal relief
just last week. How ironic it would be if now we were going to add yet
another burden.
Let me point out another problem with the amendment before us, and
that is the low-income benefit, focusing on the beneficiaries that it
serves. If you earn $1 too much to qualify for coverage, you get
nothing. That is a cliff, we call it. We try to avoid cliffs. If we do
policy right, we do avoid cliffs. But this amendment isn't about policy
that makes sense, this amendment is about a political statement.
So seniors can find themselves in a situation where, if they earn
$17,720, they qualify. If they earn an extra $1, $17,721, they lose
drug coverage. So the Graham amendment sets up disincentives for
beneficiaries to work at the same time as Congress has been trying to
remove the wrong incentives from the law, and here we are considering a
new disincentive. Once again, the policy just doesn't make sense.
Everything I have said so far pertains to the benefit for the 30
percent or so of low-income beneficiaries who get solid coverage under
the Graham amendment. Unfortunately, there are another 70 percent out
there who get very little coverage at all. Those 70 percent, in fact,
are the biggest losers of all under this alternative.
Just how bad is this benefit in the amendment before us? A senior
above 200 percent of poverty with average drug spending will receive
approximately $6 of assistance every month--only $6 towards their
prescription drug expenses. For me, $6 a month is hardly a benefit at
all. I would be embarrassed to go home to Iowans and tell them I voted
for an amendment that provided only $6 a month to average
beneficiaries.

Why is there so little benefit? Because for 70 percent of the
seniors, there is no coverage from zero to $3,300 in out-of-pocket
spending. A week ago, the author of this amendment complained about a
proposal I put forward because we had a $250 deductible. Now we are
seeing a $3,300 deductible. Benefits paid by private insurance don't
even count towards that.
Another problem: Retirees with decent coverage from a union or an
employer do not incur actual drug costs out of their own pocket above
$3,300, so the Graham benefit provides almost nothing for them.
I have to sound a sobering note: You don't pull the wool over the
eyes of Americans--and seniors in particular. They don't appreciate
false promises. I fear Senators who vote for the Graham amendment will
have a lot to answer for down the road. I won't be one of them. I urge
my colleagues not to be one of them either.
We are facing another mostly partisan vote on a mostly partisan bill,
another vote that will fail to get 60 votes and will fail to help our
seniors. Had regular order been followed, had the Finance Committee
been given the right to work its bipartisan will, we could be
completing action on this issue. Instead, we are still at a beginning.
The sponsors of the tripartisan bill, the only bipartisan bill in all
of Washington, DC, to provide comprehensive, universal coverage, have
always been ready and willing to talk to anyone about compromises, and
we are still in this mode. We are ready to meet people any place, any
time, anywhere to discuss this, including members and leaders of the
AARP, who somehow got sucked in today to supporting something that a
week ago they said they abhorred.
This situation is going to continue to be the case for us in this
group, even after this morning's vote. So this vote is an ongoing,
evolving process to get us a successful product. I have promised my
constituents I will not give up on this issue. Adding a drug benefit to
Medicare is business that simply cannot wait another year to cost $100
billion. Just as the need for prescription drug coverage in Medicare is
not going to go away, we in the tripartisan group are not going to go
away.
Mrs MURRAY. Mr. President, I rise today to reluctantly support the
Graham/Smith amendment. I am casting this vote to move the process
forward so we can get closer to providing seniors and the disabled with
the prescription drug coverage they need.
I have got to tell you that I am frustrated and disappointed that
Congress hasn't made more progress on this critical issue. Our seniors
deserve better than the procedural fights we have seen here in the
Senate, and they deserve better than the Graham/Smith amendment. Today
I am voting for this amendment because it offers best hope of moving
the process forward after so many delays.
Part of my frustration goes back to the priorities that were set last
year. Strengthening Medicare should have been a top priority in
Congress. Instead, the Republican-controlled House and Senate moved
forward with a $1.25 trillion tax cut. Now we are fighting to provide a
minimal Medicare prescription drug benefit that will not cost more than
$400 billion over ten years. While we have come a long away since the
President's inadequate $190 billion proposal at the start of the year,
we still are not where we need to be.
I do want to applaud the efforts of our leader Senator Daschle and
Senator Graham. I know that they share my goal of a universal,
affordable benefit as part of Medicare. Senator Graham has worked
especially hard on behalf of our seniors and the disabled.
While this amendment provides some targeted relief, it falls far
short of our original goal. I supported S. 2625, a universal,
affordable benefit that treated all seniors the same. Like the Medicare
program, it offered every senior access to affordable coverage. I was
disappointed that we could not secure the necessary 60 votes on this
package. I do want to point out that S. 2625 did receive 52 votes,
meaning a majority of my colleagues supported this approach.
Unfortunately, due to procedural battles and partisan bickering, 52
votes were not enough.
This amendment does provide immediate assistance to the most needy
and vulnerable. Ensuring that seniors below 200 percent of poverty
receive access to affordable coverage is critical and will offer
coverage to a larger number of seniors and the disabled. In Washington
State, this could mean that 290,000 Medicare beneficiaries would be
eligible for full coverage with a nominal copayment and no monthly
premiums. This is a big improvement. It would ease some of the
pressures on our State Medicaid program, which has been trying to fill
the Medicare gap for low income beneficiaries.
But, as we all know, income is sometimes not always the best
measurement of need. What about those seniors who earn just $1 over the
200 percent of poverty threshold? They could have significantly higher
drug costs yet receive no benefit, until they reach a catastrophic
level of $3,300.
In Washington State, this could mean 428,000 beneficiaries would not
be eligible for the low income assistance. Yet, these seniors paid the
same taxes and contributed the same percentage of their income while
they were working to support the Medicare program.
I am pleased this amendment will offer catastrophic protection to all
seniors regardless of income. Targeted relief to those with expensive
drug costs does provide some level of fairness to the program. Ensuring
that seniors with more than $3,300 in out of pocket

[[Page S7626]]

costs receive relief is a positive improvement and will offer some
piece of mind.
This amendment is a good starting point, but it cannot be the final
product we offer our seniors. I fear that this proposal could get worse
in conference. The House-passed bill is nothing but a false promise of
benefits. It is based on a private insurance model that has all but
failed in most parts of the country. It would require significant out
of pocket costs for even the low income and could result in less
coverage for many seniors. It has a huge hole in coverage and does not
offer a seamless benefit as part of Medicare. It is a sham, and once it
sees the light of day, seniors will not be fooled.
I am willing to support this amendment with the understanding that
this is only the beginning. This is the foundation for building a real
universal benefit as part of Medicare. This cannot be the high water
mark. I do not want a final conference report to offer only targeted
limited relief based on a private insurance model. We cannot just merge
this amendment with the House-passed bill. Instead, we must build on
both approaches and make significant improvements. We must insist that
the final product result in a seamless benefit that is part of Medicare
that offers universal, affordable coverage.
I want to make one other point about our attempts to improve
Medicare. As my colleagues know, I am very concerned about Medicare
reimbursement rates. These rates vary by region and don't reflect the
true costs of providing care in many States. I am concerned that this
amendment builds on that flawed, unfair formula.
In Washington State, the annual per beneficiary payment from Medicare
is $3,921 while in Louisiana it is as high as $7,336. Seniors in
Washington State are suffering from this inequity. They cannot find a
doctor to accept new Medicare patients and are forced to seek care in
overcrowded emergency rooms. This inequity also puts providers in
Washington State at a distinct economic disadvantage. Doctors are
leaving my State for other parts of the country that offer higher
Medicare reimbursements. In some parts of the country, Medicare
payments are so high they subsidize private insurance payments. I can
tell you that this is not the case in Washington State.
Unfortunately, the Graham/Smith amendment would result in some States
receiving much greater coverage than others. Because the benefits will
be targeted to those below 200 percent of poverty, some States will
again receive much more Medicare funding than other States. In
Washington State, only 40.4 percent of seniors would be eligible.
However, in Louisiana 66 percent would eligible for coverage. As we
work to improve Medicare we should make the program more fair to all
seniors.
I understand that we will not be adding a provider package to this
bill. We all recognize the need to address the provider shortfalls. I
understand that the Majority Leader is committed to taking up a
provider package in September. This must be a priority. It does little
good to offer a prescription drug benefit if seniors cannot find a
doctor. I urge my colleagues to work to address the inequities in the
Medicare reimbursement formula as part of a provider package. We cannot
continue to increase payments without a fix, as those at the top
continue to receive a large percentage of the increased dollars.
So I am willing to support the Graham/Smith amendment as a starting
point for our work on crafting an affordable, universal drug benefit
that's part of Medicare. It's clear that we still have a great deal of
work to do. And regardless of the outcome of this vote, I'm committed
to working on this issue until we have the coverage that seniors and
the disabled need.
Mr. Hatch. Mr. President, my, what a difference a week makes! Who
would ever think that the Senate would now be considering a piece-meal,
minimalist Medicare prescription drug coverage amendment.
Is that what seniors want? I don't think so and that is why I want to
express my vehement opposition to the Graham plan.
Over the past few weeks, we have heard just about everything under
the sun regarding prescription drug coverage. Some fact, much fiction.
What we need to do now is to sort out the rumors and false statements
and look just at the facts.
The one undeniable fact where we all agree is this: the need for
Medicare drug coverage is too great to let it become buried in a
political quagmire.
We have all been working hard on this issue and we must not fail our
seniors now by passing a piece-meal Medicare prescription drug plan.
Apparently, our Democratic Leadership does not agree. Let's look at the
facts.
We know that the tripartisan bill will cost $370 billion over 10
years. We hear that the latest Graham bill will cost close to $400
billion over 10 years, but the plan keeps changing so we do not have a
true CBO score. We just received the legislative language late
yesterday afternoon and CBO has not had a change to carefully review
the legislative language.
We know that the tripartisan bill will provide a comprehensive
benefit package for all seniors. Every single senior receives
comprehensive, guaranteed coverage for his or her prescriptions.
We know that the Graham bill does not provide comprehensive coverage
for all seniors. Under the Graham bill seniors only receive coverage
for drugs if their incomes are below 200 percent of the Federal Poverty
Level or if they reach their catastrophic coverage limit. What happens
to middle-income beneficiaries? My friends, these seniors are just out
of luck.
We know that the tripartisan bill will work to push drug costs down
through private sector competition.
We know that the graham bill is going to have a new, federally-
funded, government-run drug program that has no cost-saving mechanisms.
In my opinion, a government-run program will lead us down the dangerous
path of prescription drug price-setting. Look what has happened to the
reimbursement rates of other Medicare providers, like hospitals and
physicians.

The tripartisan bill encourages competition based on quality and
cost. The tripartisan proposal lowers prices for all drugs without
compromising quality and innovation. The Graham plan does not.
The tripartisan plan offers choice--a choice of plans, a choice of
medication and a choice of Medicare coverage through our enhanced fee-
for-service option. The Graham plan has a one size fits some proposal.
Our tripartisan plan improves the Medicare program by taking a global
approach to meet the changing needs of seniors. The tripartisan bill
provides protection against high hospitalization costs and offers free
preventions benefits. This is what modern health care demands.
On the other hand, the Graham plan only provides minimal drug
coverage for a small number of Medicare beneficiaries.
Why should seniors settle for a piece-meal approach? It just doesn't
make any sense.
For less than the cost of the Graham catastrophic plan--or, I think,
the catastrophic Graham plan--which would benefit less than half of
seniors, the tripartisan approach provides comprehensive coverage with
quality drug coverage, choice and cost savings for all Medicare
beneficiaries.
A piece-meal approach and last minute changes to keep the CBO score
down to placate people is the approach my colleagues on the other side
have taken in putting this bill together. And it is the wrong approach.
So it is no surprise that is what their plan has offered--a
piecemeal, band-aid approach to providing drug coverage.
We need to provide Medicare beneficiaries with adequate prescription
drug coverage, this year. We must put aside our differences and self
interests.. Partisan arguments only stand in the way of Medicare drug
legislation being passed by the Senate.
Let's start the process of improving health care for our seniors by
passing quality prescription drug coverage.
Let's not fail them again by allowing the piece-meal Graham plan to
pass the Senate. Our Medicare beneficiaries are depending on us to
provide them the best Medicare prescription drug coverage possible.
My friends, a vote in favor of the Graham plan does not accomplish
this important goal. Our Medicare beneficiaries deserve better.
I urge my colleagues to vote against the Graham amendment.

[[Page S7627]]

Mr. HOLLINGS. Mr. President, I rise today to reluctantly oppose the
Graham-Smith amendment. First of all, let me commend the distinguished
Senior Senator from Florida for the leadership he has shown throughout
the years to bring a meaningful prescription drug benefit to Medicare.
America's senior citizens have no stronger ally in this body than
Senator Bob Graham. He has worked tirelessly to provide real relief to
Medicare beneficiaries from their prescription drug costs and I was
proud to stand with him, Senator Miller, and Senator Kennedy last week
to try to move ahead with a real drug benefit. However, I must oppose
this amendment because it largely neglects the vast middle-class of
senior citizens.
Just yesterday, Secretary Thompson granted South Carolina a Section
1115 waiver to bring our state's SilverxCard program under Medicaid,
thereby allowing the program to expand coverage to seniors with incomes
of up to 200 percent of the Federal poverty level. Thus, the very same
seniors that would receive comprehensive coverage under the Graham-
Smith Amendment can already receive coverage, albeit more limited, in
South Carolina through Medicaid or SilverxCard. This amendment would
not make one additional Medicare beneficiary in South Carolina eligible
for prescription drug coverage. I also have found that affluent seniors
in South Carolina can either afford supplemental prescription drug
coverage on their own or have a plan from a former employer that
contains prescription drug coverage.
Which seniors are left furthest behind in South Carolina? It is the
middle-class, those individuals who spent their lives working in the
textile mills, manning the assembly line, teaching in our schools, and
tending to our farmland. They worked hard, paid taxes into Medicare,
and deserve to receive the same benefits under Medicare as anyone else.
I cannot in good conscience vote for an amendment that tells a senior
citizen with an income of $17,720 that, yes, you receive a real
prescription drug benefit and another senior citizens with an income of
$17,721 that, no, you have to spend $3,300 out of your own pocket
before you receive any assistance. We did this once already with
Medicare. It failed and this Senator learned that we should not do it
again.
I understand the desire of many of my colleagues to pass something,
anything to help citizens afford their prescription drugs. I talk to
the same people and receive the same heart-wrenching letters from
constituents as they do. I know their commitment and desire to enact
legislation this year is real and genuine, but I simply cannot support
this approach. All of our seniors deserve comprehensive Medicare
prescription drug coverage.
I still believe that we can reach agreement before the end of the
year on a real, meaningful benefit for all our seniors and stand ready
to work with my colleagues to make this possible.
Mr. BUNNING. Mr. President, I rise today to speak briefly about the
Graham-Smith amendment.
The Senate has been debating a prescription drug benefit for Medicare
for the past two and a half weeks. In fact, Congress has been working
on the issue for years now. Now our colleagues in the House have passed
a proposal. The Senate needs to do the same.
All along I have supported the efforts of the Tripartisan group and
their efforts to write a common sense Medicare prescription drug
proposal. I voted for their bill because I think it targets relief in a
fiscally responsible manner to those seniors who need it the most.
Unfortunately, I cannot support the Graham-Smith amendment.
While we all agree that seniors need help with their prescription
drug costs, this amendment falls short for several reasons.
First of all, this amendment creates an ``all or nothing'' program
for many seniors. Seniors below 200 percent of poverty, which is
$17,720 for singles and $23,880 for married couples, will basically
have all of their prescription drug costs paid for, with only a $2 or
$5 co-pay for drugs.
However, folks who make over 200 percent of poverty, even if it is
only by a small fraction, basically don't get a real benefit until
catastrophic coverage kicks in at $3,300. Writing this steep of an
income cliff into the law isn't fair. We can do better.
The difference between having an income of $17,720 and $17,721
shouldn't costs seniors $3,300 in prescription drug costs. In Kentucky,
there are almost 240,000 seniors who have incomes above this threshold.
Under Graham-Smith, they basically get nothing.
Second, this amendment doesn't give us enough bang for our buck. The
Congressional Budget Office estimates that this amendment will cost
$390 billion, which is a heck of a lot of money. However, even if we
pass it, we still aren't offering a real benefit to all seniors, like
we did with the Tripartisan amendment.
The Tripartisan proposal would have cost $370 billion, and all
seniors could have had catastrophic coverage starting at $3,700, along
with substantial help with their prescription drug costs below that.
Even the Hagel Amendment, with a price tag of $295 billion, limited out
of pocket expenses for folks below 200 percent of poverty at $1,500.
I just don't understand why we would want to pay an additional $20
billion or $95 billion more for a Medicare prescription drug plan that
offers fewer benefits. This means that the Graham-Smith proposal
shortchanges not only seniors, but the American taxpayer as well.
America's seniors need our help, and the Senate needs to pass a
prescription drug bill. But because the Senate Democrat leadership
insisted on bypassing the usual committee process and proceeding
straight to the Senate floor with the debate, we have been struggling
with a legislative free-for-all that, in the end, could lead to nothing
passing at all.
When I made my first floor statement on this issue, I warned against
this sort of procedural gimmickry and its possible consequences. So far
we have voted on three prescription drug proposals, and only two have
earned more than 50 votes, let alone the 60 that are needed under the
budget rules. If the committee process had been allowed to work its
will, I think there is a much better chance that we could pass a
serious proposal to provide meaningful relief to seniors.
I can't support Graham-Smith. It's a day late, more than a few
dollars too short and fails to provide real help to seniors who need it
most. I think there is still a chance, a small one, to pass a real
bill. But the door is about to close on our seniors yet again. I hope
we don't let them down.
Mr. CORZINE. Mr. President, I rise today in strong support of the
Graham-Smith amendment. I believe that this compromise represents an
important victory for all our Nation's seniors, and particularly for
seniors in my State of New Jersey.
Let me be frank: this is not the proposal I would have preferred and
is not the proposal I have talked about with my constituents for the
last few years. I have gone around New Jersey and have heard from my
constituents about how they struggle to deal with rising drug prices,
how they fear being bankrupted in their last years, and how they worry
about burdening their families. That is why I strongly support a
comprehensive Medicare benefit, and that is why I supported the Graham-
Miller-Kennedy-Corzine amendment last week.
But, I am also a pragmatist, and I know that the Graham-Smith
amendment is a good and necessary start, upon which we can build. It
will provide critical relief to the neediest of seniors, and provides
comfort to all seniors that castatrophic drug costs will not ruin them.
And I know that if we can get this enacted, next year I will be back
here fighting to expand its reach.
The Graham-Smith amendment will ensure that no senior spends more
than $3,300 to buy their prescription drugs. It also provides
comprehensive coverage to our Nation's neediest seniors, those with
incomes up to 200 percent of the federal poverty level. In addition, it
provides a thirty to forty percent discount on prescription drugs for
all seniors. At a cost of $390 billion over ten years, the Graham-Smith
amendment will guarantee all seniors much-needed prescription drug
coverage at a reasonable price.
My State of New Jersey and many other States around the Nation have
responded to the glaring need for prescription drug coverage for our
Nation's seniors by creating state pharmacy benefit programs. In New
Jersey,

[[Page S7628]]

we have the PAAD and Senior Gold programs. The PAAD program currently
provides comprehensive drug coverage to seniors up to 220 percent of
the Federal poverty line, and the Senior Gold program provides more
limited coverage to certain higher income seniors.
I am pleased that the Graham-Smith amendment preserves and reinforces
State pharmacy benefit plans like New Jersey's. I worked with Senators
Graham and Smith to ensure that the amendment enables States with
prescription drug programs to wrap their programs around the Medicare
prescription drug benefit, to create more generous and more extensive
benefits for all seniors. This is a crucial provision that will enable
New Jersey, Pennsylvania, New York, Minnesota and the other 20 States
that have State-funded prescription drug programs to expand and
supplement their existing programs.
I also worked with Senators Graham and Smith to ensure that state
pharmacy program spending counts toward a beneficiary's out of pocket
limit. This will ensure that New Jersey seniors reach catastrophic
coverage as quickly as possible. I want to thank Senators Graham and
Smith for their assistance with these provisions.
Let me outline how the Graham-Smith amendment would benefit New
Jersey seniors: 1,189,000 New Jersey senior citizens and disabled
Medicare beneficiaries would be eligible for coverage under the Graham-
Smith plan; 568,000 Medicare beneficiaries, 48 percent, would be
eligible for low-income assistance and will receive all needed drugs in
return for nominal copayments; 621,000 senior citizens and disabled
Medicare beneficiaries, 52 percent, who are not eligible for special
low-income assistance would benefit from discounts of 25-30 percent on
each prescription.
I know many of my colleagues have raised concerns that this amendment
does not provide comprehensive coverage for all seniors. But the basic
fact is that this amendment provides prescription drug insurance for
all our nation's seniors and disabled. It provides a thirty to forty
percent discount on prescription drugs for all Medicare beneficiaries
and would provide full prescription drug coverage to every Medicare
beneficiary who spends at least $3,300 per year for their prescription
drugs.
The Congressional Budget Office has estimated that by 2005, the year
that this amendment would take effect, at least half of all Medicare
beneficiaries will have annual prescription drug expenditures that
exceed $4,000.
And, don't forget that the eighteen million Medicare beneficiaries
with incomes below 200 percent of poverty would receive all the
prescription drugs they need, for a small copayment of $2 for generics
and $5 for brand name drugs.
At a time in which this Congress has voted to give billions of
dollars in tax breaks to the wealthiest people in our country, it is
wrong and hypocritical to tell seniors that we simply don't have the
funds or the will to pass an amendment that will provide them access to
affordable, essential medicines.
Mrs. FEINSTEIN. Mr. President, I rise today in support of the
amendment offered by Senators Graham and Smith to add a prescription
drug benefit to the Medicare program for low-income beneficiaries and
those with high drug costs.
The amendment offered today is built on consensus and compromise, and
is the product of weeks of extensive discussion. I believe in its final
form, this amendment strikes a balance between the Senate's proper
exercise of fiscal responsibility and the need to expand and update the
Medicare program to include some help with the high costs of
prescription drugs for today's 40 million Medicare beneficiaries.
I want to thank my good friend, Senator Lincoln Chafee, for his
commitment to getting prescription drugs to those in our society who
are the sickest and the poorest. I have been working with him since the
end of June in developing a cost effective alternative that would get
prescription drugs to the lowest income and the sickest in our society
immediately.
I believe that the Graham-Smith amendment we are debating today
addresses my major concern which is to provide low-income individuals
in our society with access to a full, prescription drug benefit at low
cost.
I am pleased that others in the Senate agree with me that at a minium
we should provide a comprehensive benefit to those individuals in our
communities who are making daily decisions about eating or paying rent
and buying their necessary, life-saving prescription drugs.
The prescription drug benefit created by this amendment includes
three important components.
First, this amendment creates a voluntary, low-income benefit so that
seniors would no longer be forced to continue making decisions between
food or medicine. Under this plan, beneficiaries would pay no premium,
no annual fee, and no deductible. Their only cost would be a nominal
copay of $2 for a generic drug and $5 for a brand name drug.
I believe the assurance that over 18 million Medicare beneficiaries,
47 percent of all Medicare beneficiaries, with incomes below $17,720,
200 percent of the Federal poverty level, would have access to needed
prescription drugs at a nominal cost is the most important component of
this proposal.
For California, this means that 1.8 million senior citizens and
disabled Medicare beneficiaries, 49 percent, with incomes below $17,720
for an individual and $23,880 for a couple would have immediate access
to all needed drugs.
Second, this amendment would provide all 40 million Medicare
beneficiaries with access to catastrophic coverage. For a simple cost
of $25 a year for those with incomes above $17,720, every beneficiary
would have the assurance that once out-of-pocket spending for
prescription drugs exceeds $3,300, a copayment of $10 would provide
them with access to full coverage at no additional cost to them.
Beneficiaries with incomes below $17,720 would not be responsible for
the $10 copay. Low-income individuals would receive this benefit at no
cost.
Third, this amendment provides the 14 million Medicare beneficiaries,
35 percent, making over $17,720 with access to discounts of about 25
percent on each prescription. For an annual fee of $25, these
beneficiaries would have access to the federal negotiated rate and
would receive a 5 percent government subsidy in addition on each
prescription they purchase.
In California, this means an additional 1.9 million senior citizens
and disabled Medicare beneficiaries, 51 percent, who are not eligible
for low-income assistance would benefit from discounts of 25-30 percent
on each prescription.
By providing coverage to low-income individuals and those with high
drug bills, this proposal meets the most fundamental needs of our
nation's senior citizens and disabled.
Passing this amendment is timely. On a daily basis, my office hears
from California's seniors about the financial constraints they face
which often prohibits them from buying necessary medication.

I recently heard from Helen Cecil, a senior citizen from Paramount,
CA on this issue. She lives on a fixed monthly income of $1,000. Her
rent is $421 a month, and she spends $150 a month on her prescriptions
to treat high cholesterol, hypertension and arthritis. In total, Helen
spends $1,800 annually on medication. She admits to having only one
option: She must cut down on food in order to buy her medications.
Under the Graham-Smith amendment, Helen would pay no monthly premium
and no deductible. She would only pay $2 per prescription for generic
drugs. Assuming she purchases generic drugs, her monthly bill of $150
for three medications to treat her chronic health conditions would drop
to approximately $6. Helen saves about $142 monthly. This is money she
can use to buy groceries.
For the millions of Medicare beneficiaries that face the same
predicament as Helen Cecil, I believe the government has a
responsibility to see that they are not forced to choose between buying
food and buying medications. Quite frankly, it is hard to think that in
the richest nation on earth, we have allowed a situation to evolve
where so many of our elderly must make such a choice.
I am hopeful that the Senate won't fail our Nation's sickest, poorest
and most frail.
In the hopes of breaking the gridlock of this debate, and with the
need to

[[Page S7629]]

pass legislation that meets both the budgetary restrictions of these
uncertain times and the needs of our nation's low-income seniors, I
urge my colleagues to support the Graham-Smith amendment.
Mr. LEVIN. Mr. President, I will support the Graham-Smith amendment.
However, I would have preferred a prescription drug benefit added to
Medicare, like the Medicare Outpatient Prescription Drug Act of 2002,
commonly referred to as the Graham-Miller proposal. The Graham-Miller
amendment would have provided a comprehensive, voluntary, affordable
and reliable prescription drug benefit to Medicare beneficiaries. I
voted for the Graham-Miller amendment, which was supported by a
majority of the U.S. Senate in a vote last week. Unfortunately, the
proposal required 60 votes and subsequently failed.
On balance, I will support the Graham-Smith compromise, even though I
have some reservations. The bill has three major points. First, the
Graham-Smith amendment provides all Medicare beneficiaries access to a
prescription drug card which allows Medicare beneficiaries to pool
their purchasing power and receive drug discounts of up to 35 percent.
The Federal Government would add an additional 5 percent subsidy to any
negotiated price. Second, low-income beneficiaries would receive full
drug coverage--paying only a nominal copayment for their drugs. Third,
``catastrophic coverage'' would be available to Medicare beneficiaries
so that someone doesn't have to spend more than $3,300 in out-of-pocket
expenses on prescription drugs. After that, a beneficiary would only
pay a $10 copayment for each prescription drug.
However, I do have a number of reservations about the Graham-Smith
proposal. First, a prescription drug card is no substitute for adding a
prescription drug benefit to the Medicare Program. I am a strong
advocate of making prescriptions drugs an entitlement for every
Medicare beneficiary who wants it. A prescription drug card can be
uncertain, relying on a possible negotiated benefit that might not
materialize and is no substitute for a guaranteed prescription drug
benefit. I am also opposed to a means test for Medicare. Medicare's
beneficiaries receive services because they have paid into the system
their entire working lives. It is unfair for Medicare beneficiaries to
receive different benefits based on their respective incomes. This
sends the wrong message to our Nation's 40 million Medicare
beneficiaries who rely on its stability and its application to all
eligible seniors.
So, with reservation, I will be supporting the Graham-Smith proposal
as the Senate's best chance to pass a Medicare prescription drug
benefit this year, and I urge my colleagues to do the same.
Mr. REED. Mr. President, I would like to take a few minutes to share
with my colleagues my thoughts about the Graham-Smith amendment that
the Senate will be voting on shortly. I have to say that the proposal
currently before us is a far cry from what I have previously supported
and certainly no where near what I had hoped for in terms of a Medicare
prescription drug benefit.
Indeed, this is not the benefit we ultimately should enact and, more
importantly, this is not the benefit our seniors deserve. At best, the
Graham-Smith proposal provides a universal catastrophic benefit to
those seniors with the highest prescription drug costs and it will aid
those States that do not already have a State-based prescription drug
benefit. These concessions, offered in a spirit of compromise and
bipartisanship, limit the effect and reach of this bill. Chief among
these concessions has been cost. That constraint on resources is driven
predominately by the passage of the President's tax plan, which leaves
us with resources that are only sufficient to meet the needs of low-
income seniors and those who spend over $3,300 out of their own pocket.
Nevertheless, the proposal does start us on the road to a universal,
voluntary benefit for our Nation's elderly and disabled population by
offering a comprehensive benefit for those living below 200 percent of
the Federal poverty level. According to estimates, nearly half of the
Medicare beneficiaries in Rhode Island would be eligible for the fully
subsidized Federal prescription drug benefit. In addition, the
amendment provides catastrophic coverage for drug costs above $3,300.
And, contrary to other proposals, these benefits would be provided in
the same manner that seniors receive all other health care benefits:
through Medicare.
There are however several areas where I feel this amendment falls
short.
First, seniors above 200 percent of poverty would receive, for a
nominal annual enrollement fee, a discount card that would provide an
automatic 5 percent Federal subsidy for all drug costs and additional
savings that are expected to be captured through the negotiation of
lower drug prices from the manufacturers. However, questions have been
raised recently as to the effectiveness of prescription benefit
managers, or PBMs, to achieve the best price for their subscribers. I
believe that the potential benefits and drawbacks of PBMs on such a
large scale have not been thoroughly explored, nor has the question of
whether PBMs are a reliable mechanism to achieve lower drug prices been
answered. I am also concerned about having a discount card as the sole
source of coverage for beneficiaries above a certain income level
because I believe it deviates from the basic tenents of the Medicare
program and may not provide the kind of assistance seniors and disabled
persons with substantial drug costs might need.
Second, there is no requirement that States with existing
pharmaceutical assistance programs for low-income seniors, like my home
State of Rhode Island, maintain their commitment to this particularly
vulnerable population. I believe that the Graham-Smith amendment would
have a much greater impact if it acknowledged and rewarded the ongoing
efforts in many States and encouraged them to work as partners with the
Federal Government to build a far-reaching prescription drug benefit
that would offer more robust assistance to many more of our elderly and
disabled than the Federal Government can currently achieve on its own.
While I understand that many of our States are facing dire budgetary
situations, I believe our commitment to providing struggling States the
temporary support they need has been demonstrated through the
Rockefeller-Collins-Nelson amendment which passed the Senate by an
overwhelming margin last week. I am disappointed that the Graham-Smith
amendment does not take the role of the States into more serious
consideration. If the proposal is enacted, I hope to work with my
colleagues to strengthen the State's role in this program.
The plan that I cosponsored and supported, the Graham-Miller-Kennedy
amendment, was the only true Medicare prescription drug proposal to be
presented to the Senate. It is the only one that would have created a
guaranteed, univeral benefit for all Medicare beneficiaries, regardless
of income. In terms of the benefit structure, it required a modest
monthly premium and reasonable co-payment for prescriptions. However,
this benefit was deemed to be too costly by many of our Republican
colleagues given the current Federal budget deficits. I would argue
that we might be in a different position if we had not enacted a major
tax cut bill last year.
Nevertheless, my colleague, Senator Graham, has tirelessly worked to
craft a scaled-back benefit proposal that is modeled after the Ensign-
Hagel amendment and would seem to meet the chief concern of my
Republican colleagues and should garner their support. I commend
Senator Graham and others for their efforts on this critical issue and
I intend to support his amendment in the spirit of compromise and
moving this debate forward. The Graham-Smith amendment is certainly not
the end of the road in terms of the prescription drug issue, it is only
the beginning. If Congress is going to have a serious chance of getting
a Medicare prescription drug bill to the President's desk this year, we
must take action now. I hope my colleagues will follow the lead of our
colleagues, Senators Graham and Smith, and work towards the enactment
of a Medicare prescription drug benefit.
Mr. LEVIN. Mr. President, I will support the Graham-Smith amendment.
However, I would have preferred a prescription drug benefit added to
Medicare, like the Medicare Outpatient Prescription Drug Act of 2002,
commonly

[[Page S7630]]

referred to as the ``Graham-Miller proposal.'' The Graham-Miller
amendment would have provided a comprehensive, voluntary, affordable
and reliable prescription drug benefit to Medicare beneficiaries. I
voted for the Graham-Miller amendment, which was supported by a
majority of the United States Senate in a vote last week.
Unfortunately, the proposal required sixty votes and subsequently
failed.
On balance, I will support the Graham-Smith compromise, even though I
have some reservations. The bill has three major points. First, the
Graham-Smith amendment provides all Medicare beneficiaries access to a
prescription drug card which allows Medicare beneficiaries to pool
their purchasing power and receive drug discounts of up to 35 percent.
The Federal Government would add an additional 5 percent subsidy to any
negotiated price. Second, low-income beneficiaries would receive full
drug coverage--paying only a nominal copayment for their drugs. Third,
``catastrophic coverage'' would be available to Medicare beneficiaries
so that someone doesn't have to spend more than $3,300 in out-of-pocket
expenses on prescription drugs. After that, a beneficiary would only
pay a $10 copayment for each prescription drug.
However, I do have a number of reservations about the Graham-Smith
proposal. First, a prescription drug card is no substitute for adding a
prescription drug benefit to the Medicare Program. I am a strong
advocate of making prescriptions drugs an entitlement for every
Medicare beneficiary who wants it. A prescription drug card can be
uncertain, relying on a possible negotiated benefit that might not
materialize and is no substitute for a guaranteed prescription drug
benefit. I am also opposed to a means test for Medicare. Medicare's
beneficiaries receive services because they have paid into the system
their entire working lives. It is unfair for Medicare beneficiaries to
receive different benefits based on their respective incomes. This
sends the wrong message to our Nation's 40 million Medicare
beneficiaries who rely on its stability and its application to all
eligible seniors.
So, with reservation, I will be supporting the Graham-Smith proposal
as the Senate's best chance to pass a Medicare prescription drug
benefit this year and I urge my colleagues to do the same.
The PRESIDING OFFICER. Who yields time?
Mr. KENNEDY. How much time remains, Mr. President?
The PRESIDING OFFICER. The Senator from Massachusetts has 22\1/2\
minutes. The Senator from Tennessee has 5 minutes.
Mr. KENNEDY. Mr. President, I yield 18 minutes to the Senator from
Florida.
The PRESIDING OFFICER. The Senator from Florida is recognized.
Mr. GRAHAM. Mr. President, we have a very simple message this
morning. America's seniors now, for 37 years and 1 day--since 37 years
ago yesterday was the day Lyndon Johnson signed the Medicare
legislation into law--have been waiting for prescription drug coverage.
It was a minor amount of their expenditures in 1965. On average, it was
$65 a year. It is a staggering amount for seniors today--over $2,100 a
year, on average.
Today is the day that there are no more excuses for delay. There is
no credible reason to vote against the motion to waive the Budget Act
so that the Senate can then consider an affordable, bipartisan
prescription drug proposal, and all of the modifications, amendments,
and other alternatives that others might wish to propose.
There have been a number of objections raised to our proposal--some
of them last week--being contradictory to the same provisions or
modifications that are in our current bill, and some new issues were
raised this morning. Let me briefly comment.
Last week, we heard that the prescription drug bill we had offered
was too expensive, at an estimated cost of $594 billion for 10 years.
We were told: we cannot support anything that is above $400 billion. So
we went to work. We rolled up our sleeves, and we made a number of
changes, and we have gotten the cost under $400 billion. In fact, the
Congressional Budget Office states that in conjunction with the generic
drug bill--on which our Presiding Officer has provided such
leadership--the cost of our bill now will be $382 billion. So we have
met the desire to have a less costly proposal.
Now we are getting the other argument, that because it is less
costly, it is not sufficiently comprehensive. Let me explain what this
bill will provide, first, for all senior Americans. In my opinion, the
most important thing it will provide is peace of mind. If you are a
relatively well American in the early seventies, you have prescription
drug costs you can manage. The problem is that you never know whether a
day from now you might not suffer from some catastrophic event, such as
a heart attack, or be found to have a chronic disease such as diabetes,
which will suddenly escalate your prescription drug cost, potentially
threatening the economic security of your retirement.
This legislation will provide the peace of mind that will give you
the assurance that, once having spent $3,300, you will get full
coverage, but for a $10 per prescription copayment. That is a benefit
of real value, which is available to all American seniors. The cost is
$25 a year as an enrollment fee. There could be no greater bargain in
the insurance market than to be able to buy the peace of mind of this
catastrophic coverage for $25 a year.
That is not all of the benefits that will be available to all senior
Americans. Because we are going to have 40 million Americans with a
champion, called a pharmacy benefit manager, negotiating with the
pharmaceutical companies to get the best discounted prices, Families
U.S.A., the Chain Drugstore Association, and the U.S. Department of
Health and Human Services have all stated that, under our legislation,
they estimate that these organizations would be able to negotiate
discounted prices in the range of 15 to 25 percent. That will be
available to all seniors.
In addition to that, we are going to provide that there will be a 5-
percent Federal supplement on top of whatever the discounted amount is.
So there will be real benefits for all Americans.

But we did have to make some difficult choices when we reduced the
size of this program by over $200 billion. One of those decisions was
that we would focus our effort on those who had the largest
prescription drug bills through a catastrophic program that would be
available to all, and we would focus on those who were the neediest
Americans and, therefore, had the greatest difficulty paying their
prescription drug costs.
This business of life is a business of making choices, and we decided
that those were the two groups that should get the most attention under
the beginnings of a Medicare effort to provide prescription drug
benefits.
I might say that this is very consistent with what President George
Bush said as ``candidate'' George Bush when he emphasized that he
thought a prescription drug benefit was a priority for the Nation and
that the priority within the priority was providing prescription drug
coverage for those who were most in need. That is what we have done.
For those persons who are under 200 percent of poverty--which today
is 38 percent of America's 40 million Medicare eligibles--this will
provide a very significant benefit; and with no premiums, with no
deductibles, they will have access to prescription drugs for a
copayment of $2 for generic drugs and $5 for brand name drugs. This
will provide for the millions of senior Americans who are the most
likely not to have any other source of assistance--they didn't work for
an employer who provided retiree prescription drug benefits or they
cannot afford a Medigap policy. This is the group of Americans who are
at greatest need, and they will get the greatest assistance.
There have been some other arguments raised today about the plan we
are proposing. It has been suggested that there will be massive costs
to the States as a result of this plan. Let me read you a statement we
have just received from the Congressional Budget Office. It states:

This plan will have almost no effect--

I would like my colleagues on the other side of the aisle to listen
to this Congressional Budget Office release.

This plan will have almost no effect on State spending and
will have savings to States when combined with the underlying
generic bill. There will also be savings for

[[Page S7631]]

States that have their own State-funded drug programs. State
savings come from the Federal Government paying all of the
catastrophic benefits which are now paid by the State, as
well as 5 percent of each beneficiary's drug cost, which is
not subject to a match.

This is not a new idea. We have a program that has been in place for
several years called the QMBs and SLMBs program. Don't ask me what the
acronyms fully stand for, other than that they provide Medicare
assistance to pay premiums, deductibles, and coinsurance for low-income
Americans who are still above the Medicaid level. That has not proven
to be an unmanageable program for State-Federal cooperation, and
neither will this.
It has also been stated that previous employers will drop the
insurance coverage of their retirees if we adopt this legislation.
Quite to the contrary. The Congressional Budget Office, again, has
stated that with our plan there would be no employer dropping of
coverage, whereas with the plan that has been proposed by our
colleagues on the Republican side, the same CBO estimates that up to
one-third of the employers would drop prescription drug coverage.
The issue today, frankly, is not any of the questions that have been
raised in opposition to the thoughtful proposal that is the result of
real compromise between Democrats and Republicans, a true bipartisan
outreach. On many provisions of this bill, we have adopted language
verbatim from legislation that was introduced last week by, for
instance, Senators Hagel and Ensign. Senator Gordon Smith has worked in
the highest standards of cooperation and collaboration to give this
Senate an opportunity to vote on a solid, significant prescription drug
benefit.
What we are going to vote on in a few minutes is a motion to waive
the Budget Act. How ironic. We have a Budget Act, which is 18 months
old, that says the maximum amount we can spend on prescription drugs is
$300 billion over 10 years.
Both the Republican plan and the Democratic plan are above $300
billion, a clear recognition that people who have looked at what will
be required to provide a prescription drug benefit have come to the
same conclusion: we cannot provide a meaningful, responsible benefit to
senior Americans for $300 billion.
We are going to have an opportunity to vote to waive the Budget Act
so we can then consider what would be a responsible prescription drug
benefit, but unless we get 60 votes to waive the Budget Act, we will
never get to the substance of this issue.
I urge my colleagues to focus on the question that is before us:
Should we maintain a slavish commitment to an 18-month-old number that
both Republicans and Democrats have clearly indicated is inappropriate
or should we waive the Budget Act and have an opportunity to have a
full, substantive debate on prescription drugs?
There have been some who said this is not the last time; that we can
come back maybe in September or October, or some time in 2002, and act
upon this. I admire their optimism, but as a pragmatist, I question the
practical reality. In addition to the difficulty of passing legislation
through the Senate, we know that we have to go to conference with the
House, and the House is likely to have significantly different
provisions, including different priorities in terms of where to place
emphasis in a senior prescription drug plan for Medicare than the
Senate will have.
If we waste the month of August, which would be an opportunity for
serious consultation between the House and the Senate, in hopes that in
September we can arrive at a compromise that can be voted by the
Congress and then signed into law by the President, we will have missed
our greatest opportunity to achieve this long-sought goal of senior
Americans.
The real issue today is, we have a choice of saying, yes, we want to
continue, we want to have the opportunity to develop a prescription
drug benefit or we want to say no, that we are prepared to accept the
status quo--another year in which senior Americans will be denied
Medicare assistance in purchasing their prescription drugs, the fastest
rising cost element in the typical health care budget of senior
Americans.
Mr. President, I urge my colleagues today to vote yes to waive the
Budget Act and then vote yes to continue a serious, substantive debate
on the issues involved in providing our senior citizens access to a
meaningful prescription drug benefit.
I would not like this debate to end in the ashes of a vote that says
we are going to put a greater value on the homage to an archaic budget
number, which nobody today is advocating as being adequate to meet the
needs of senior Americans.
That is the issue: Do we say yes to the opportunity or do we say no
to further gridlock and denial of this critical element of a modern
health care program?
I thank the Chair.
The PRESIDING OFFICER. Who yields time?
Mr. KENNEDY. Mr. President, how much time remains on our side?
The PRESIDING OFFICER. The Senator from Massachusetts has 6 minutes
45 seconds.
Mr. KENNEDY. I yield 2 minutes to the Senator from Michigan.
The PRESIDING OFFICER. The Senator from Michigan.
Ms. STABENOW. I thank the Chair. Mr. President, this is it today. We
have a very real choice to make. I believe it boils down to this: The
drug companies of America like the system the way it is today. They
want nothing to happen. The seniors of America are counting on us to
stand up and do the right thing: Not privatizing Medicare with a
private plan that sets up insurance HMOs which, by the way, was written
in the House in part by the drug companies knowing that this is the
approach that is least likely to lower prices but, rather, protecting,
preserving, and modernizing Medicare.
This is a bipartisan effort. I commend colleagues on both sides of
the aisle who have stepped up to say we are going to make a downpayment
on modernizing Medicare to cover prescription drugs. That is what this
is. Everyone gets help. Everyone's prices go down. And for those who
need it the most, those who are the sickest, they will, in fact,
receive comprehensive coverage. No premium. No deductible. They will
get the help they need.
I am proud to stand today with my colleagues, Senator Graham, Senator
Smith, and others on both sides of the aisle who have put this together
with AARP and with the senior groups in America to say the time has
come. The time has come for us to place this downpayment on modernizing
Medicare and move forward until we completely provide comprehensive
Medicare coverage for all seniors and the disabled in this country.
I cannot imagine why we would not want to keep this process going to
get the bill in front of us. It can always be fine tuned. We can
continue to work together. But today is yes or no on whether we proceed
to help the seniors of America and stand with them. Stop talking about
it; let's act together and let the seniors know that we are willing to
provide the leadership necessary--all of us together--to get this done.
I thank the Chair.
The PRESIDING OFFICER. The Senator's time has expired.
Who yields time?
Mr. FRIST. Mr. President, I yield 2\1/2\ minutes to the Senator from
Oklahoma.
The PRESIDING OFFICER. The Senator from Oklahoma.
Mr. NICKLES. Mr. President, I urge my colleagues not to waive the
Budget Act with respect to the point of order for a lot of different
reasons. One, I wish we had a budget. Somebody said we could have
passed a budget. Maybe the Budget Committee was going to pass a higher
number.
Unfortunately, this is the first time since 1974 that we have not had
a budget pass the Senate. Maybe one of the most fiscally irresponsible
things we have not done is not pass a budget. We are still under the
constraints of last year's budget.
Last year, we overwhelmingly passed a budget and set up $200 billion,
$300 billion, and it was passed by the Finance Committee. Really what
we should do is direct the Finance Committee to pass a bipartisan bill.
I looked at the last 22 years, and the Finance Committee has dealt
with major Medicare and Medicaid reforms, every one of which passed
with bipartisan support except one. Only once did we bypass the
committee.
Unfortunately, the Democrat leadership said: We are not going to go

[[Page S7632]]

through the Finance Committee because we think it will report out
something we do not like. So they came up with a partisan bill, and we
are playing ping-pong.
I looked at the amendment we are considering right now. It is 102
pages. It was still warm off the press, and nobody on this side, with
one exception maybe, had seen this amendment before it was offered
yesterday.
This is the most important expensive expansion of Medicare in its
history, and we find out that most of the expansion is not in Medicare
but Medicaid, and the cost to States is in the billions of unfunded
mandates to the States because we did not just expand Medicare, we
expanded Medicaid, and we are telling the States they are going to have
to come up with matches to provide this brand new free benefit. Thirty-
one States are going to have to pay for half of this new benefit. There
is an increase in S-CHIP match, a 100-percent match for some, but 31
States have a 74-percent match. They have to go up to 120 percent.
All of that is on the States, or at least their matching portion. The
estimated cost of unfunded mandates is $70 billion.
We have not had a hearing. We have not had a markup. This may be a
classic example of the best way not to mark up legislation that is this
important.
Let us step back a little bit. Let us work with the Finance
Committee. Let us work in a bipartisan way. We can certainly get that
done. We have the month of August and part of September. We can report
a positive bipartisan bill that can become law. What is before us,
unfortunately, is well short of that goal.
The PRESIDING OFFICER. The Senator has used 2\1/2\ minutes.
The Senator from Massachusetts.
Mr. KENNEDY. I understand there are 4\1/2\ minutes remaining.
Mr. SCHUMER. There are 4 minutes 11 seconds.
Mr. KENNEDY. I yield 2 minutes to the Senator from North Carolina.
Mr. EDWARDS. Mr. President, I hope the Senate, given this
opportunity, will do something about providing a drug benefit for all
those Americans who desperately need it. This is obviously a
compromise, but great work has gone into this effort and it is
important we do something for all those people who need help.
I want to say a word about the underlying bill because while we are
providing the prescription drug benefit, we need to make that benefit
affordable, No. 1, and, No. 2, we need to do something about the cost
of prescription drugs in this country.
The Presiding Officer, Senator Schumer, led the way, along with
Senator McCain, in doing something about the cost of prescription drugs
in this country in getting generic drugs on to the marketplace,
providing competition, and bringing down the costs for all Americans.
In the HELP Committee, Senator Collins and I, working with Senator
Schumer and Senator McCain, built on that work that had already been
done and provided a way to deal with the problem of brand name drug
companies abusing the patent process to keep generics out of the
marketplace.
What was happening was this: Brand name companies were filing
frivolous patents. The result of filing those frivolous patents is the
generics were not able to get into the marketplace. The brand names
used the litigation process to keep generics out of the marketplace.
What this underlying legislation does is to close those loopholes. It
provides specifically for a mechanism to eliminate the use of frivolous
patents to, in fact, give brand name companies protection when they
have a real, new, creative, and innovative product, but at the same
time it eliminates the patent and litigation abuses that have been
occurring. It eliminates things such as brand name companies getting a
patent on putting their pills in a brown bottle. Those are the kinds of
abuses that have been occurring. In the past, they have kept generics
out of the marketplace.
What the underlying legislation will do is it will save $60 billion
for American consumers over the next 10 years. It is critically
important that we do this drug benefit, but it is also critically
important that we do something about the cost of prescription drugs for
all Americans.
The PRESIDING OFFICER. The Senator has used his 2 minutes.
The Senator from Massachusetts.
Mr. KENNEDY. Five years ago, the first prescription drug legislation
was introduced in the Senate. We have waited and the seniors have
waited 5 years to see whether the Senate of the United States was going
to take action. Under the leadership of Senator Daschle, we have the
opportunity to do that. That is because the Democratic leader said so.
A week ago, the Republicans said no to the comprehensive program that
was introduced by Senator Graham and Senator Miller that would have
provided the comprehensive approach about which so many have talked.
I have listened to my friends on the other side of the aisle. They
are using a favorite technique. That is to misrepresent and distort
what is before the Senate, and then differ with it.
Senator Graham has given the facts on this program. The basic issue
before the Senate now, in the next few minutes, is whether we consider
prescription drugs a priority for our senior citizens. If we vote with
Senator Graham and Senator Smith, we are saying they are a priority.
This bill is not going to solve all the problems, but it is a
downpayment. It is a downpayment on those prescription drugs. Every one
of us who is going to support that position is committed to coming back
next year and the year after to make sure we have the comprehensive
issue. That is what is before the Senate: Do we take the problems of
our senior citizens seriously or are we going to get behind some kind
of facade and say let us put it off for another day?
Seniors have listened to that every single year since the time we
passed Medicare in 1965. Now is the time to do something about it. This
is a downpayment on prescription drugs, and I think it is time the
Senate take that action, and take it today.
I understand our time is up.
The PRESIDING OFFICER (Mr. Nelson of Nebraska). The Senator from
Tennessee controls 2\1/2\ minutes.
Mr. FRIST. Mr. President, we are about to vote on an amendment that
very clearly costs more and covers fewer people than the tripartisan
bill we debated last week.
I yield the remainder of our time to one of the sponsors of that
tripartisan, more comprehensive plan that seniors deserve better than
the underlying bill on which we are about to vote.
I yield the remainder of our time to the Senator from Louisiana.
The PRESIDING OFFICER. The Senator from Louisiana.
Mr. BREAUX. I thank the Senator from Tennessee for yielding.
Mr. President, now is the time to do something about prescription
drugs, but this is not the thing to do with prescription drugs. How do
I go back to Louisiana, as in every State, and tell the Medicaid
Program in Louisiana that this bill is going to cost my State $85
million, which we do not have, through our State Medicaid Program to
have the State pick up part of the costs of this prescription drug
program? How am I going to go back to my State of Louisiana and tell
the 240,000 people in Louisiana that, yes, Congress passed a
prescription drug program but, guess what, you are not part of it. You
are going to pay 95 percent of all of your costs of prescription drugs,
and the Federal Government is going to pick up 5 percent.
Now is the time to do something about prescription drugs, but this
Congress can do much better than this. What we ought to do is combine
the best of what Government can do with the best of what the private
sector can do, and come up with a program that fits Medicare that is
universal, that is comprehensive, that covers all seniors, not just
some of the seniors, and gives them all a program of which they can be
proud. That is the concept of what Medicare was 37 years ago. We should
not now divert from that concept and say one group of seniors is going
to have one plan, the other seniors are going to get left by the
wayside.
Certainly, I think this Congress can do better than that, and we will
have the opportunity to do that, working with our colleagues over the
August recess to put together that type of plan.
I yield the floor.
The PRESIDING OFFICER. The majority leader.

[[Page S7633]]

Mr. DASCHLE. I will use a minute of my leader time. I know we are
scheduled to have a vote.
I simply remind my colleagues that almost every senior organization
has endorsed the Graham amendment. Not one senior organization has
endorsed the Republican plan. What does that tell us? The drug
companies endorse the Republican plan. The insurance companies endorse
the Republican plan. We do not find one senior organization endorsing
the Republican plan. So what is wrong with this picture? Why is it that
we cannot get bipartisan, overwhelming support for something every
senior organization endorses?
This is our opportunity to make a downpayment, a first step, and we
ought to support it. I applaud the Graham amendment. I hope our
colleagues will look at it carefully and support it. This is a critical
moment. Senior organizations agree. They endorse it. They want this to
pass.
I yield the floor.
Mr. FRIST. Mr. President, has all time expired?
The PRESIDING OFFICER. The time is 29 seconds for the minority.
Mr. FRIST. Mr. President, a point of order will be filed very
shortly.
In closing, it is important that people recognize the bill is
inadequate. Seniors deserve more. A proposal has been discussed, the
tripartisan bill, which is a more comprehensive approach for less
money. This bill promises less, gives less, fewer benefits, for more
money. I urge the defeat of the underlying bill.
I yield back the remainder of our time.
The PRESIDING OFFICER. All time has expired.
Mr. FRIST. I make a point of order that the Graham amendment No. 4345
violates section 302(f) of the Budget Act.
The PRESIDING OFFICER. The Senator from Florida.
Mr. GRAHAM. Pursuant to section 904 of the Congressional Budget Act
of 1974, I move to waive the applicable sections of that act for
purposes of the pending amendment, and I ask for the yeas and nays.
The PRESIDING OFFICER. Is there a sufficient second?
There appears to be a sufficient second.
The question is on agreeing to the motion. The clerk will call the
roll.
The assistant legislative clerk called the roll.
Mr. NICKLES. I announce that the Senator from North Carolina (Mr.
Helms) is necessarily absent.
I further announce that if present and voting the Senator from North
Carolina (Mr. Helms) would vote ``no.''
The result was announced--yeas 49, nays 50, as follows:

[Rollcall Vote No. 199 Leg.]

YEAS--49

Akaka
Baucus
Bayh
Biden
Bingaman
Boxer
Byrd
Cantwell
Carnahan
Carper
Cleland
Clinton
Collins
Conrad
Corzine
Daschle
Dayton
Dodd
Dorgan
Durbin
Edwards
Feinstein
Graham
Hutchinson
Inouye
Johnson
Kennedy
Kerry
Kohl
Landrieu
Leahy
Levin
Lieberman
Lincoln
Mikulski
Miller
Murray
Nelson (FL)
Reed
Reid
Rockefeller
Sarbanes
Schumer
Smith (OR)
Specter
Stabenow
Torricelli
Wellstone
Wyden

NAYS--50

Allard
Allen
Bennett
Bond
Breaux
Brownback
Bunning
Burns
Campbell
Chafee
Cochran
Craig
Crapo
DeWine
Domenici
Ensign
Enzi
Feingold
Fitzgerald
Frist
Gramm
Grassley
Gregg
Hagel
Harkin
Hatch
Hollings
Hutchison
Inhofe
Jeffords
Kyl
Lott
Lugar
McCain
McConnell
Murkowski
Nelson (NE)
Nickles
Roberts
Santorum
Sessions
Shelby
Smith (NH)
Snowe
Stevens
Thomas
Thompson
Thurmond
Voinovich
Warner

NOT VOTING--1

Helms

The PRESIDING OFFICER. On this vote, the yeas are 49, the nays are
50. Three-fifths of the Senators duly chosen and sworn not having voted
in affirmative, the motion is rejected. The point of order is sustained
and the amendment falls.

Amendment No. 4299, As Amended

The PRESIDING OFFICER. Under the previous order, there are 2 minutes
of debate equally divided before the vote on the Dorgan amendment.
Who yields time?
Mr. REID. Mr. President, I yield the time.
The PRESIDING OFFICER. All time is yielded. The question is on
agreeing to the Dorgan amendment, as amended, Without objection, the
amendment, as amended, is agreed to.
The amendment (No. 4299), as amended, was agreed to.
Mr. LEVIN. Mr. President, I move to reconsider the vote.
Mr. DASCHLE. I move to lay that motion on the table.
The motion to lay on the table was agreed to.

Cloture Motion

The PRESIDING OFFICER. Under the previous order, the Chair lays
before the Senate the pending cloture motion, which the clerk will
report.
The legislative clerk read as follows:

Cloture Motion

We, the undersigned Senators, in accordance with the
provisions of Rule XXII of the Standing Rules of the Senate,
do hereby move to bring to a close the debate on Calendar No.
491, S. 812, the Greater Access to Affordable Pharmaceuticals
Act of 2001.
Harry Reid, Jon S. Corzine, Byron L. Dorgan, Ron Wyden,
Maria Cantwell, Paul S. Sarbanes, Debbie Stabenow,
Richard J. Durbin, Tom Daschle, Daniel K. Akaka, Jack
Reed, Kent Conrad, Zell Miller, Charles E. Schumer,
Ernest F. Hollings, Hillary Rodham Clinton.

The PRESIDING OFFICER. There are 2 minutes of debate equally divided.
Mr. KENNEDY. Mr. President, this is an important issue, and the
Senate is not in order. We have 2 minutes of discussion on this, and
important comments will be made by our colleagues who deserve to be
heard.
The PRESIDING OFFICER. The Senate will be in order.
Who yields time?
Mr. KENNEDY. Mr. President, I yield 1 minute to the Senator from New
York.
The PRESIDING OFFICER. The Senator from New York.
Mr. SCHUMER. Mr. President, I think many of us regret that we could
not succeed on the last amendment. But there are still things we can
do, and must do, to make the cost of drugs lower for all citizens. The
Schumer-McCain generic drug bill, the underlying bill, does just that.
For people who are paying $100 per prescription, they will pay $30 or
$35 or $40. It will reduce the cost of overall drug spending by $60
billion. It will take some of the burden off our hard-pressed States as
their Medicaid rates come down.
It will also apply to everybody: the young and the old, the senior
citizen who needs these drugs, as well as the family with a child who
cannot afford a desperately needed drug to make that child better.
It is supported by a large group, not only senior citizen groups and
consumer groups and labor groups but GM and Caterpillar and Kodak and
Ford.
Please let us move forward on this amendment. We have a lot to do in
the area of making prescription drugs cheaper, and this is a very vital
first step.
I urge my colleagues to vote for cloture.
The PRESIDING OFFICER. The Senator's time has expired.
Who yields time?
The Senator from New Hampshire.
Mr. GREGG. Mr. President, the underlying bill, which is the generic
drug bill, has not really been addressed as we have moved through these
debates on the overlying issue of whether we should have a prescription
drug program for seniors.
This underlying bill still has many significant issues in it.
Probably the most significant issue is the fact that it creates a new
cause of action, a whole new set of lawsuits which have never been used
before. This cause of action has never been tried before, never been
used before, involving patent law and the FDA. It really will be a
lawyer's relief act rather than an act which is going to relieve our
citizens of the high costs of drugs.
We should have the opportunity to amend this bill. It can be
improved. The basic concepts of this bill are good,

[[Page S7634]]

but the bill can be improved. That is why we should not have cloture at
this time. We simply have not had a chance to properly address this
underlying bill because it has been sort of sidetracked as we have
addressed the prescription issue for seniors. So I would hope we would
vote against cloture.
The PRESIDING OFFICER. The Senator's time has expired.
By unanimous consent, the mandatory quorum call has been waived.
The question is, Is it the sense of the Senate that debate on S. 812,
a bill to amend the Federal Food, Drug, and Cosmetic Act to provide
greater access to affordable pharmaceuticals, shall be brought to a
close?
The yeas and nays are required under the rule.
The clerk will call the roll.
The legislative clerk called the roll.
Mr. NICKLES. I announce that the Senator from North Carolina (Mr.
Helms) is necessarily absent.
I further announce that if present and voting the Senator from North
Carolina (Mr. Helms) would vote ``No.''
The PRESIDING OFFICER (Mrs. Carnahan). Are there any other Senators
in the Chamber desiring to vote?
The yeas and nays resulted--yeas 66, nays 33, as follows:

[Rollcall Vote No. 200 Leg.]

YEAS--66

Akaka
Baucus
Bayh
Biden
Bingaman
Boxer
Breaux
Byrd
Cantwell
Carnahan
Carper
Chafee
Cleland
Clinton
Collins
Conrad
Corzine
Daschle
Dayton
DeWine
Dodd
Dorgan
Durbin
Edwards
Feingold
Feinstein
Fitzgerald
Graham
Grassley
Harkin
Hollings
Hutchinson
Inouye
Jeffords
Johnson
Kennedy
Kerry
Kohl
Landrieu
Leahy
Levin
Lieberman
Lincoln
McCain
Mikulski
Miller
Murray
Nelson (FL)
Nelson (NE)
Reed
Reid
Rockefeller
Sarbanes
Schumer
Sessions
Shelby
Smith (NH)
Smith (OR)
Snowe
Specter
Stabenow
Torricelli
Voinovich
Warner
Wellstone
Wyden

NAYS--33

Allard
Allen
Bennett
Bond
Brownback
Bunning
Burns
Campbell
Cochran
Craig
Crapo
Domenici
Ensign
Enzi
Frist
Gramm
Gregg
Hagel
Hatch
Hutchison
Inhofe
Kyl
Lott
Lugar
McConnell
Murkowski
Nickles
Roberts
Santorum
Stevens
Thomas
Thompson
Thurmond

NOT VOTING--1

Helms

The PRESIDING OFFICER. On this vote, the yeas are 66, the nays are
33. Three-fifths of the Senators duly chosen and sworn having voted in
the affirmative, the motion is agreed to.
The PRESIDING OFFICER. The question is on the engrossment and third
reading of the bill.
The bill was ordered to be engrossed for a third reading, and was
read the third time.
Mr. SCHUMER. Mr. President, before I get to discussion of the
underlying bill, I would first like to thank Senator Kennedy for his
long-time leadership in ensuring access to affordable prescription
drugs and especially for the strong fight he and Senators Graham and
Miller have led here on the Senate floor for the past two weeks to add
a meaningful prescription drug benefit to Medicare.
I would also like to thank Senator Kennedy for his leadership in the
HELP Committee in bringing Hatch-Waxman abuses to light, and for
working with our Leader to move Schumer-McCain to the floor.
I also want to thank my colleague Senator McCain, with whom I
introduced the GAAP Act--as well our colleagues who introduced the bill
in the house, Congressman Sherrod Brown and Congresswoman Jo Ann
Emerson--for all their hard work in drawing attention to this issue and
pushing to get this bill passed this year.
When this Hatch-Waxman debate began, the Senate had two choices:
First, we could choose not to act, and let loopholes in the law
continue to let drug prices skyrocket; or, second, we could pass this
bill, close the loopholes, and bring down drug prices for all
consumers.
Today, as the Senate approaches a vote on the Schumer-McCain bill,
the Greater Access to Affordable Pharmaceuticals Act, the choice is
clear.
Consumers win. PhRMA loses.
Not only was the bill passed out of committee on a strong bipartisan
vote; not only have we heard strong messages of support from our
colleagues on the floor; but the public, too, has spoken.
Major corporations have spoken. Labor has spoken. Senior groups have
spoken. Consumer groups have spoken. Governors have spoken. Insurers
have spoken. Pharmacists have spoken. Disease groups have spoken.
And they want to see action. They want to see the loopholes closed,
and they want to see competition in the pharmaceutical marketplace.
Last week we also heard from CBO. Its message: This Bill will bring
the relief the public wants. A conservative estimate shows the bill
will save consumers $60 billion on drug costs over the next 10 years.
And it will mean nearly $8 billion to the Federal Government. When we
pass a Medicare drug benefit, it will mean even more savings.
Yesterday, we heard from the FTC. The report the Commission issued
illustrates the abuses and tells Congress clear as day to plug up the
loopholes in Hatch-Waxman. Their recommendations lead to one inexorable
conclusion: pass Schumer-McCain.
The study makes clear that lawyers for the pharmaceutical industry
have picked the Hatch-Waxman law clean and that the law needs
significant and immediate reform.
The one group that doesn't want to see action is the group
representing the name brand drug industry, PhRMA.
Why is the support so widespread? It is quite simple, really. As most
things do, it comes down to cold, hard, cash. Drug expenditures have
been rising at double digit rates--at nearly 18 percent per year--
throughout the 90s.
These increases are simply unsustainable. And closing the loopholes
in the patent laws is a common sense way to do something about them.
They will mean real savings for consumers, businesses, States, and
seniors.
We looked at 15 name-brand prescription drugs whose expiring patents
will pave the way for billions of dollars in savings if blockbuster
drug companies don't block the less expensive generic versions of these
drugs from coming to market when they should.
These drugs are used to treat a variety of illnesses, including
allergies, high cholesterol, asthma, and depression. You have probably
seen commercials for some of them on TV--Claritin, Zocor, Zoloft. You
might even remember Cipro from last fall's anthrax scare.
All of the drugs are scheduled to come off patent by 2005, which in
English means that their less expensive versions can then go on sale.
The savings consumers will see on these drugs alone will be at least
$4.15 billion annually by 2008 when these less expensive generics are
fully phased in.
The biggest savings would come on the popular antidepressant Zoloft,
which would see consumer savings of over $735 million if users opt to
use the low cost generic version.
Other savings would come on the popular allergy medicine Claritin
which would see savings of $501 million and on the cholesterol medicine
Zocor, which would see savings of $577 million.
For the individual consumer, these projections are a dream come true.
If you look at what three popular pharmacy chains charge for five
commonly prescribed drugs--Claritin, Cipro, Zocor, Zoloft, and
Singulair--the individual consumer would see individual savings ranging
from $42 to $75 a month on these drugs if generic alternatives were
available.
Those filling a Singulair prescription at Walgreens, for example, to
treat asthma would save about $54 on the generic version, paying only
$34 as opposed to the current price of $87.99. Those filling a Cipro
prescription at CVS to treat a urinary tract infection would save about
$58, paying only $37 for a 20 pill supply as opposed to the current
price of $95.59.
Zocor users would save $45, paying an estimated $70 for a 30 pill
supply to control high cholesterol instead of the $115.53 they
currently pay at Rite Aid.
The good news is that these numbers show that these drugs can one day
be within reach of working Americans.
The bad news is that if we in Congress don't act, the chances of the
blockbuster drug companies ever letting that happen are about as likely
as the Yankees asking me to pitch Game 7.
We have heard time and time again from the big drug companies that
patent protection is the key to innovating

[[Page S7635]]

new drugs. And as I have said time and time again, I could not agree
more.
When drug companies innovate new drugs which benefit the patient,
they are indeed preventing disease and saving lives. And they should be
rewarded for doing so with a period of time to exclusively market the
drug.
That is how the system is supposed to work and that's how it did work
for a very long time.
But over the almost 20 years since Hatch-Waxman was passed, the drug
companies have taken advantage of this system, devising new ways to
extend the period of exclusivity they get when they patent a life-
saving drug.
Today, I want to debunk some of the myths that the drug companies are
perpetuating about the way they are using the patent laws and how the
bill Senator McCain and I have introduced will impact innovation in the
pharmaceutical industry.
PhRMA has been circulating a list of claims that it has been calling
a ``reality check.'' If a bank tried to cash that check, it would
bounce.
Today, I want to shine a light on some of the PhRMA claims and ensure
that the public knows the truth about what is going on in the drug
industry.
The reality is that the drug companies are not spending all their
time innovating new drugs, they are innovating new patents.
Instead of devising new ways to further medical science, they are
focusing on furthering company profits. And that often means keeping
the competition at bay.
But before I go on, I want to make clear that the Greater Access to
Affordable Pharmaceuticals Act is not about robbing pharmaceutical
companies of legitimate patent protection. It's not about theft of
innovation, it's not about taking steps to enact laws that are not in
the best interest of consumers.
In fact, it is about just the opposite. It is about examining
competition in today's marketplace and revisiting a compromise which
was struck nearly 18 years ago.
That compromise--the Hatch-Waxman Act--was intended to strike a
balance and help save consumers billions of dollars on pharmaceuticals
while rewarding brand name companies for their innovations.
But, in recent years, as the profits and stakes have become higher,
as I said, the drug industry lawyers have picked the Hatch-Waxman law
clean.
Companies are aggressively pursuing extended monopolies through
filing weak or invalid patents and engaging in deals which the FTC is
increasingly scrutinizing for anticompetitive motives.
We must put an end to these abuses.
The GAAP act does not intend to cut innovators off at the knees and
it isn't a freebie for the generic drug industry. It is a pro-consumer
bill that restores the balance intended by Hatch-Waxman.
The bill would limit the delay to one 30-month stay, for brand
companies who file suit against a generic challenger. And the only
patents eligible for this automatic stay would be the brand company's
original patents.
For any patents listed after the brand drug is approved, the brand
company would instead have to allow a court to decide whether their
case merits a stay against generic competition.
It would prevent abuses like those we are discussing here today by
reducing incentives to list patents that are not truly innovative, but
instead are intended solely to extend monopolies.
The GAAP act reforms the so-called ``180-day rule'' by closing the
loophole that enables a brand name company to pay a generic
manufacturer to stay off the market, effectively putting the kibosh on
competition.
Closing this loophole would prevent problems like the Hytrin case
where Abbott Laboratories allegedly paid Geneva Pharmaceuticals $4.5
million per month to keep their hypertension drug off the market.
Now PhRMA will tell you that the law is not broken.
They will tell you that generics' share of the prescription market
has increased from 18 percent in 1984 to 47 percent today.
But what they won't tell you is that generics have been stuck right
around 45 percent for at least the past 6 years.
They will also tell you the games are not causing delays. But this
chart shows that in 2000, 20 of the 30 drugs that were supposed to come
off patent were delayed. In 2001, 23 out of 26 were delayed--88 percent
of the drugs supposed to come off patent have been delayed, and most of
these delays continue today.
PhRMA will tell you that ``patents on new products never delay
generic versions of old ones.'' And if we were talking about patents on
new drugs, that would be a true statement. But that is not what we are
talking about. We are talking about new patents on old drugs.
The drug companies are coming up with different formulations or
dosage forms, or other unapproved uses for old drugs whose patents have
either expired or are about to expire in order to keep low-cost generic
competitors off the market.
Since a generic has to show that it doesn't infringe on these new
patents before it can enter a market, the drug companies buy some extra
time and can extend their market exclusivity.
The changes Senator McCain and I have proposed protect the brand
companies from having their patents infringed on. But they also prevent
the brand companies from abusing their patents and keeping generics off
the market.
Let's take a look at some of the ``innovations'' that brand companies
are listing in the FDA's Orange Book. It is these kinds of patents
which can automatically delay competition.
For Ultram, a pain medication, the brand company has come up with a
new dosing schedule--because it's a strong medication, they suggest
that you could take one-fourth of a pill at a time and slowly build up
to taking a whole pill. This is a dosing method which doctors and
pharmacists have used on many drugs, in many instances. Yet, somehow,
J&J got a patent on it. And now that patent is preventing generic
competition.
On Fosamax, a drug for osteoporosis, the brand company has come up
with a ``kit'' inside which the pills are arranged. This may be a great
little kit, but its patent shouldn't be listed in the Orange Book where
it can delay generic competition.
On Pulmicort, an asthma medication, the company has a patent on the
container the drug is in--and that patent is listed in the Orange Book,
where it cause an automatic 30-month stay against a generic.
On Thalomid, a cancer drug, the company has come up with not one--but
two--computer programs that pharmacists can use when doling out
prescriptions. Computer programs--not new drugs--computer programs.
Cyclessa, similar to Fosamax, has a patent on a kit which reminds you
how to take the medicine. Well the generics can make their own kit.
A new piece of plastic shouldn't keep an old pill off the market.
These patents are real. Sure they may be on things that are novel,
but they have nothing to do with the drug substance that is helping the
patient. They are put in the Orange Book for the sole purpose of
extending a company's monopoly.
PhRMA says the automatic 30 month stays never extend a patent. Well,
they may not extend the amount of time a company can exclusively sell
its particular container, but stacking them one after the other
certainly extends the amount of time that the brand can keep its
competition away from its customers.
And brand companies are getting better and better at timing the
filing of their patent applications so that their new patents are
issued just as their original patents are expiring. This practice
causes a delay in generic competition, which is nothing less than a de
facto extension of the original patent.
The delays caused by these additional patents are real, and they mean
real money to consumers.
Take Neurontin, a drug used to prevent partial seizures. The basic
patents expired in July of 2000. By listing patents which do not even
relate to the originally approved form of the drug, the brand company
has already succeeded in preventing generic competition for 21 months--
a delay which may have already cost consumers over $800 million.
Further, by listing an additional patent with the FDA, and
overlapping the automatic 30-month stays, the brand

[[Page S7636]]

company has effectively converted the original 30-month stay into a 54-
month stay against generic approval, and they didn't even have to prove
to a court that the new patent had any merit at all.
Or take, for example, Paxil, a drug with $2.1 billion in sales used
to treat depression.
The basic active ingredient in Paxil was discovered back in the late
1970s by a Danish company, Ferrosan. But it wasn't marketed as a drug
until Glaxo SmithKline licensed the original patents, did the clinical
trials and got it approved by the FDA.
The company deserves a reward for bringing this old chemical to
market, and under Hatch-Waxman, that reward was intended to be 5 years
of market exclusivity--5 years during which a generic can't even put in
an application on the drug.
But that wasn't enough for Glaxo. Before marketing the drug, they
made a slight--and some would argue unnecessary--change to the basic
compound in order to get a new patent, a patent which would add an
additional 8 years to their monopoly their monopoly on a drug they
didn't even discover.
Enter Apotex, the first generic challenger, which has gone to court
claiming both that they do not infringe this new patent and that the
new patent is invalid.
The case has been in court for 3\1/2\ years. Even if the companies
come to resolution on this first patent, Glaxo has, in the meantime,
applied for and been issued nine additional patents on Paxil--patents
on yet other slightly different chemical substances, as well as patents
on different formulations of the drug. The last of these patents
expires in 2019.
These new patents have already invoked multiple 30-month stays
against generic competition for Paxil. The automatic stays already
granted add up to a delay of over 60 months. To be fair, if Glaxo
prevails in court, these stays won't extend the time on their patent.
But if Apotex wins the suit, these multiple 30-month stays will still
be hanging out there preventing the generic from coming to market. And
there's nothing to stop Glaxo from getting even more patents before
these delays expire. Each year Glaxo can delay generic competition
costs Paxil users up to $500 million.
What has happened with these drugs is that the drug companies saw
their original patents about to expire and then created new ones to
maintain their control over the market.
These kinds of practices have become the norm in the drug industry.
These companies figure out a new way to keep the dollars rolling in,
stooping to new lows every day to maintain their exclusivity rights.
I have heard from the big drug companies that they are in the failure
business. Well, if it's the failure business that tops the Fortune 500
lists, sign me up.
The big pharmaceutical companies may make their claims, but we in
Congress know the reality. Insurers and State Medicaid directors know
the reality. Corporations know the reality. Our seniors know the
reality.
The reality is that prescription drug prices are skyrocketing at a
rate of 17 percent per year, generic penetration into the market has
been stagnant for the past eight years, and loopholes in our patent
laws are making the reality even worse.
They are crippling consumers and seniors who can't afford to purchase
or take the drugs they need.
I agree that patent protection is important to saving lives, but I am
sure those who dedicate their lives to finding new cures would also
agree that a drug can do no good if it is financially out of the reach
of patients who depend on it.
As Congress continues to wrestle with the complexity of crafting and
paying for a meaningful Medicare prescription drug benefit, we must not
overlook a straightforward solution to the escalating drug prices
facing seniors, businesses, insurers and consumers today.
If we can ensure fair competition in the pharmaceutical marketplace--
a level playing field for both brand and generic companies--then
everyone will win.
I ask my colleagues in the Senate to vote yes today to S. 812: to
vote yes for fair marketplace practices, vote yes for robust
competition in the pharmaceutical marketplace, vote yes for access to
affordable drugs--and vote yes for consumers.
I ask unanimous consent that further material be printed in the
Record.
There being no objection, the material was ordered to be printed in
the record, as follows:

Commonwealth of Pennsylvania,

Office of Attorney General,

Harrisburg, PA, July 24, 2002.
Hon. John McCain,
U.S. Senate,
Washington, DC.
Hon. Charles E. Schumer,
U.S. Senate
Washington, DC.
Dear Senators McCain and Schumer: As Attorney General of
the Commonwealth of Pennsylvania, my constituents make me
aware every day about how the high cost of prescription drugs
adversely affects their lives. For that reason, I endorse the
Greater Access to Affordable Pharmaceuticals Act of 2001 (S.
812) which you are sponsoring.
Pennsylvania has the second largest number of senior
citizens of any state in the country. As you are well aware,
Medicare does not provide a prescription benefit for most
drugs. Therefore, senior citizens without private insurance,
Medicaid or a special government program like Pennsylvania's
PACE program, pay for prescription drugs themselves. Even
though Pennsylvania's PACE program is a model for other state
and federal senior citizen prescription benefit plans, the
program does not cover every senior citizen. Thus, there are
many Pennsylvania citizens living on fixed incomes who find
that their income and standard of living is being eaten away
by prescription drugs that can cost more than $100 a month.
Senior citizens who are on two or three medications can face
monthly prescription costs of $500 to $1000.
One factor in the high cost of prescription drugs is
attempts by brand name drug makers to forestall entry by
generic competitions. The Hatch-Waxman Act of 1984 was
intended to spur generic competition with brand name
pharmaceuticals. Unfortunately, brand name drug makers have
been using that act in unintended ways to block or delay
rather than foster generic entry. In particular, two
provisions have been misused. One allows for an automatic 30-
month stay of a generic's drug application upon the filing of
a patent infringement suit by a brand name manufacturer. The
other grants the first generic drug applicant for a drug a
180-day period of exclusivity before other generics can enter
the market. These two provisions can be misused to delay
generic entry by years. I believe that the Greater Access to
Affordable Pharmaceuticals Act of 2001 provides a reasonable
remedy for these abuses which balances the interests of
consumers and the pharmaceutical industry.
While I believe that pharmaceutical companies should be
compensated for their discoveries and innovation with
appropriate patent protection, I object to those patents
being lengthened by misuse of the current law. Passage of
your bill will address those misuses. Thank you for your work
and consideration on this matter.
Very truly yours,
D. Michael Fisher,
Attorney General.
____

State of New York

Office of the Attorney General,

New York, NY, July 24, 2002.
Senator Edward Kennedy,
Washington, DC.
Senator Judd Gregg,
Washington, DC.
Dear Senators Kennedy and Gregg: I write to express my
support of the Greater Access to Affordable Pharmaceuticals
Act of 2001 (``GAAP''), which amends the Hatch-Waxman Act of
1984 (the ``HWA''). I attach a Policy Statement which details
the arguments made in this letter.
In the past several years, State Attorneys General have
filed five antitrust suits to remedy the harm caused by
brand-name and generic manufacturers' manipulation of
loopholes in the Hatch-Waxman Act (``HWA''), thereby delaying
generic entry. These are:
State of Ohio, et al. v. Bristol-Meyers Squibb, Co.,
concerning the anti-cancer drug Taxol127 (the ``Taxol
litigation);
State of Alabama, et al. v. Bristol-Myers Squibb Co., et
al., concerning the anti-anxiety drug Buspar127 (the ``Buspar
litigation'');
State of New York, et al. v. Aventis, S.A., et al.,
concerning the anti-hypertension drug CD127 (the ``Cardizem
litigation'');
State of Florida, et al. v. Abbott Laboratories, Inc.,
concerning the anti-hypertension drug Hytrin127 (the ``Hytrin
litigation''); and
Commonwealth of Pennyslvania v. Schering-Plough Corp. et.
al, concerning the potassium supplement K-Dur 20 (``the K-Dur
20 litigation'').
Through these cases, and other multi-state investigations,
this Office has gained substantial experience with the
shortcomings of the HWA. GAAP will be an important step in
correcting these problems, and in ensuring consumers access
to affordable medication.
GAAP specifically alleviates two critical problems caused
by the HWA, which the cases brought by the Attorneys General
illustrate:

[[Page S7637]]

The Thirty Month Stay--Under the HWA, brand-name
manufacturers list unexpired patents with the FDA in a
compendium known as the ``Orange Book.'' The FDA does not
evaluate the merits of the listing, and relies on the
manufacturer's representations as to the listing's validity.
An Orange Book listing carries a rich reward--an automatic
30-month stay against certain potential generic entrants
whome the manufacturer has sued for patent infringement,
despite the absence of any court finding that the
infringement claim has any validity whatsoever.
Problems caused by this provision are illustrated by the
facts of the Buspar litigation. In that case, Bristol-Myers
Squibb (``BMS'') sought to extend its patent monopoly for its
profitable buspirone anti-anxiety medication. As BMS's
buspirone patent was about to expire, BMS received a patent
for a metabolite that the body naturally produces--which BMS
claimed was the result of introducing buspirone into the
body. BMS then had the FDA list the patent in the Orange Book
eleven hours before the first generic alternative to
buspirone was to otain FDA approval. Although BMS explicitly
stated to the United States Patent Office that its new patent
did not cover buspirone, it Orange Book entry made precisely
the opposite claim. As a result, generic makers of buspirone
were barred from the market, and consumers paid millions more
than they would have paid, had a generic alternative been
available.
GAAP helps alleviate this problem in two essential ways.
First, a brand-name manufacturer will no longer be able to
obtain the 30-month stay for follow-on patents. Had GAAP been
in place, BMS's scheme would not have been possible. Second,
in certain instances, GAAP allows generic manufacturers to
challenge fraudulent Orange Book listings in court.
The 180-day exclusivity period--HWA gives certain generic
entrants who are the first to seek FDA approval for their
drugs a 180-day exclusivity period during which no other
generic alternative to the same brand-name drug may come to
market. While this provision was intended to provide an
incentive for generic entry, in several instances, brand-name
manufacturers have paid their generic counterparts to staff
off the market, without generic forfeiting its right to
exclusivity. This creates a perpetual bar to entry by other
generics. Thus, in both the Hytrin and Cardizem cases, no
generic version of the brand-name drug could be sold until
litigation and investigations by the Federal Trade Commission
led the parties to cancel their agreements.
GAAP would render impossible such permanent barriers to
generic entry. Under the pending bill, if generic entry does
not take place within sixty days of the generic drug's
approval, the next generic manufacturers in line may enter
the market. Conduct now being challenged in costly and time-
consuming litigation would simply not have taken place had
GAAP been in effect.
Case-by-case and after-the-fact investigations and
litigation are no substitute for fixing the problems inherent
in the HWA. For that reason, I applaud the efforts of
Senators Schumer and McCain, and those of other GAAP
sponsors, and urge the speedy passage of this important and
beneficial bill.
Sincerely,
Eliot Spitzer.
____

July 24, 2002.

Statement on S. 812, The Greater Access To Affordable Pharmaceuticals
Act of 2001

In a letter issued today, Attorney General Eliot Spitzer
has written in support of the Greater Access to Affordable
Pharmaceuticals Act of 2001 (``GAAP''), introduced by
Senators McCain and Schumer to amend the Hatch-Waxman Act of
1984 (the ``HWA''). This statement explains in greater detail
the arguments set forth in that letter, and the problems with
the HWA that led to its submission.
Protecting consumers' access to quality health care at
affordable prices is one way in which the State Attorneys
General serve the American public. To that end, State
Attorneys General have, in recent years, brought five
antitrust actions arising, in whole or in part, out of
efforts by brand-name drug manufacturers to manipulate the
HWA's procedures to keep cheaper generic drugs off the
market, and to maintain monopoly pricing long after the
brand-name drug's patent expiration date. These are:
State of Ohio, et al. v. Bristol-Myers Squibb, Co.,
concerning the anti-cancer drug Taxol<register> (the ``Taxol
litigation'');
State of Alabama, et al. v. Bristol-Myers Squibb Co., et
al., concerning the anti-anxiety drug Buspar<register> (the
``Buspar litigation'');
State of New York, et al. v. Aventis, S.A., et al.,
concerning the anti-hypertension drug Cardizem CD<register>
(the ``Cardizem litigation'');
State of Florida, et al. v. Abbott Laboratories, Inc.,
concerning the anti-hypertension drug Hytrin<register> (thee
``Hytrin litigation''); and
Commonwealth of Pennsylvania v. Schering-Plough Corp. et
al, concerning the potassium supplement K-Dur 20 (``the K-Dur
20 litigation'').

As described in more detail below, these cases starkly
illustrate the weaknesses of the HWA.
The New York Attorney General has reviewed the terms of
GAAP against the backdrop of this experience, and believes
that this bill represents a substantial step towards
correcting the HWA's flaws, and restoring the appropriate
balance that Congress initially intended between protecting
innovation and ensuring affordable drug prices. Indeed, much
of the misconduct challenged in these cases would not have
been possible had GSSP been in force.
By this statement and in his letter, the Attorney General
highlights the need for reform. After a brief summary of the
present law, the statement describes state enforcement
actions in greater detail, and show how GAAP effectively
closes loopholes that allowed for the misconduct addressed by
these actions.
By passing GAAP, Congress can protect consumers, lower drug
prices, and avoid the need for time-consuming and expensive
litigation. For those reasons, the New York Attorney General
has strongly urged that Congress enact GAAP into law.
I. Generic Drugs and the Hatch-Waxman Act
Generic drugs are bioequivalents of brand-name drugs in
dosage, form, safety strength, route of administration,
quality, performance characteristics and intended use. They
tend, however, to be priced significantly below their brand-
name equivalents. An increase in the use of generic drugs
would be an important step in controlling the rising costs of
pharmaceuticals, and of health care in general.
In 1984, Congress passed the HWA, which streamlined the
regulatory approval process for generic drugs. In particular,
the Act permits the manufacturer of a new generic drug to
submit an Abbreviated New Drug Application (``ANDA''), which
may rely on the safety assessments of the New Drug
Application (``NDA'') filed by the ``pioneerr''--i.e., brand-
name--drug's manufacturer. An ANDA entails far less expense
than an NDA, and can be approved by the FDA far more
expeditiously.
Although it is not necessary for purposes of this statement
to deve into all the intricacies of the HWA, two elements--
the 30 month stay and the 180-day exclusivity period--play an
important role in allowing pharmaceutical companies to delay
generic entry and deny consumers the benefits of competition,
despite the good intentions of the HWA's drafters. These
elements are addressed below.
II. The HWA's Loopholes
A. The 30 Month Stay
The Food and Drug Administration (``FDA'') maintains a list
of pharmaceutical patents commonly known as the ``Orange
Book.'' Upon receiving FDA approval for a brand-name drug,
the manufacturer must inform the FDA, in substance, of all
patents that would be infringed by the non-licensed sale of a
generic equivalent for that drug. The FDA then includes those
patents on its Orange Book list. Before marketing a generic
drug, an ANDA filer must certify that the listed patents will
not prevent sale of the generic version, for any of several
reasons, and notify the brand-name manufacturer of its
certification. One such certification--the so-called
``paragraph IV certification''--attests that the pioneer drug
patent ``is invalid or will not be infringed by the
manufacture, use, or sale of the new drug for which the
application is submitted.'' Once an ANDA applicant--the
generic manufacturer--submits a paragraph IV certification,
the brand-name manufacturer has 45 days within which to bring
a patent infringement action against the applicant. If the
brand-name manufacturer initiates such a suit, the FDA's
approval of the NADA is automatically delayed for 30 months.
The 30 month period is referred to as a ``stay.'' More
accurately, it is an injunction that takes effect immediately
on the brand-name manufacturer's filing of its case,
regardless of the strength or weakness of its patent
infringement claims, and without any judicial oversight
whatsoever. The statutorily-created injunction relieves the
brand-name manufacturer of the responsibility of satisfying a
court that it is entitled to a preliminary injunction against
generic entry--a threshold that the brand-name manufacturer
would have to meet in the absence of the HWA. The FDA itself
lacks the expertise or the resources to evaluate the validity
of patents identified for listing in the Orange Book and, in
consequence, lists patents solely in reliance on the brand-
name manufacturer's listing request.
Given the minimal standard for placement in the Orange
Book, and the financial rewards of such a listing--a 30-month
roadblock to generic entry--it is no surprise that drug
manufacturers go to extraordinary lengths to insure that the
FDA list any unexpired patent covering a profitable brand-
name drug. Often, as the initial patent for a drug's active
ingredient nears expiration, the brand-name manufacturer will
seek ``secondary patents'' on specific aspects of the drug,
such as mode of delivery--the validity of which may be
dubious, at best--and which the manufacturer claims apply to
previously approved uses of the drug. Armed with such new
patents, manufacturers have been able to suppress generic
alternatives, which would otherwise be available to
consumers.
The cases brought by the States illustrate the potential
for misuse inherent in the 30 month stay provision:
The Buspar litigation concerns, in part, an effort by
Bristol-Myers Squibb (``BMS'') to extend its patent monopoly
for the profitable buspirone anti-anxiety medication. As
BMS's patent for buspirone was about to expire, it received a
patent for a metabolite that the body naturally produces--BMS
claimed--as

[[Page S7638]]

the result of introducing buspirone into the body. BMS then
had the FDA list the patent in the Orange Book eleven hours
before the first generic ANDA was to be approved. Although
BMS explicitly stated to the United States Patent Office that
its new patent did not cover buspirone, its Orange Book entry
made precisely the opposite claim. As a result, generic
makers of buspirone were barred from the market, and
consumers paid hundreds of millions of dollars more than they
would have paid, had a generic alternative been available.
A federal district judge found that BMS's conduct before
the FDA was improper and ordered the patent delisted, thereby
permitting the sale of generic alternatives. On appeal, the
Federal Circuit held that, as a matter of procedure, generic
entrants could not sue to obtain delisting from the Orange
Book, and vacated the order without evaluating BMS's behavior
before the FDA. This past February, yet another federal
district judge found BMS's Orange Book filing to be
``objectively baseless,'' and an effort to ``justify taking
property that belongs to the public.''
The Taxol litigation addresses efforts by BMS to preserve
its monopoly on Taxol, an important treatment for breast
cancer and other tumors that the federal government itself
initially developed and then licensed to BMS for five years.
In their complaint, the States allege that BMS fraudulently
obtained patents for Taxol, listed them in the Orange Book,
and then filed litigation for the sole purpose of delaying
generic entry into the market via the HWA's stay provision.
It took nearly three years before a court rejected BMS's
claims, during which cancer patients were deprived of access
to less expensive generic alternatives.
In a particularly egregious manipulation of the HWA, BMS
entered into an arrangement with generic manufacturer
American Bioscience, Inc., by which BMS consented to
be subject to a court-ordered temporary restraining order,
issued upon ABI filing a lawsuit demanding that BMS list
one of ABI's Taxol patents in the Orange Book. Based on
the order, BMS had the FDA list ABI's patent in the Orange
Book--in an apparent effort to clothe the fraudulent
listing with the seeming legitimacy of a court decree.
After generic manufacturers and the Federal Trade
Commission filed papers challenging the collusively
obtained order, the Court ruled that ABI was not entitled
to sue BMS to obtain an Orange Book listing, and dismissed
the case.
GAAP takes important steps towards resolving the problems
addressed by these cases, in two ways. First, GAAP limits
drug manufacturers to a single 30 month stay per drug. As
initially drafted, GAAP eliminated the 30 month stay
altogether. While the original might better encourage
pharmaceutical competition, the compromise version passed by
the Senate Health, Education, Labor and Pensions Committee
represents a substantial improvement over the present legal
regime.
In the Buspar case, BMS was able to obtain a 30 month stay
for the third patent it claimed barred generic versions of
buspirone, after the initial patent had expired and without
the need to obtain a court ruling on infringement. GAAP
instead requires drug manufacturers that obtain such follow-
on patents to protect their intellectual property in the same
manner as other patent holders--by going to court, proving
that their case has a likelihood of success, and securing an
injunction against the alleged infringer. That option
provides recourse for genuinely aggrieved patent holders,
while prohibiting brand-name manufacturers from gaining an
advantage, to the detriment of consumers, solely on the basis
of their own assertion of a valid patent and their
willingness to file suit.
Second, GAAP would allow generic competitors to seek
declaratory relief on the validity of an Orange Book listing
at the time an NDA is approved--when, under GAAP, the brand-
name manufacturer would still be entitled to a thirty month
stay. As the Federal Circuit's Buspar ruling demonstrates,
the FDA's decision to list a patent in the Orange Book may
not be subject to any judicial review under existing law, and
frivolous or fraudulent listings can become impassable
roadblocks to generic entry. Although a previous version of
the bill would have afforded even greater opportunity for
challenging Orange Book listings, this aspect of GAAP would
still provide potential entrants with the means to challenge
such roadblocks in court, in those cases where the thirty-
month stay would still apply.
B. The 180-Day Exclusivity Period
HWA gives the first ANDA filer with a paragraph IV
certification a 180-day exclusivity period following a court
ruling permitting entry, during which no other manufacturer
of a generic version of the same drug could enter. This
provision provides an incentive for generic manufacturers to
challenge brand-name patents. But as currently structured,
the HWA provides a means for brand-name and generic
manufacturers acting in collusion to bar new generic
competitors for significantly longer periods. In effect, the
brand-name manufacturer simply ``buys'' the first ANDA
filer's agreement neither to enter the market nor to transfer
its exclusivity rights, thereby creating a perpetual bar
against other generic competitors. This can have a profound
impact on drug prices, because generic drugs are typically
not priced at their full discount until the exclusivity
period has expired and additional generic competitors are
able to enter the market.
Cases brought by the Attorneys General illustrate this
abuse of the HWA:
The Cardizem litigation arises from an agreement between
brand-name manufacturer Hoechst Marion Roussel, Inc.
(``HMRI'') and generic drug manufacturer Andrx Corporation
(``Andrx''), under which HMRI paid Andrx nearly $90 million
in exchange for Andrx's agreement to keep its cheaper
alternative to HMRI's Cardizem CD heart medication off the
market. As part of the agreement, Andrx agreed to stay off
the market while still prosecuting its ANDA--so as to
maintain its right to the 180-day exclusivity period granted
the first-filer under the HWA--and pledged not to transfer or
sell its exclusivity rights. Thus, the agreement effectively
barred any further generic entry. Only after private suits
challenged this arrangement and the FTC opened an
investigation, did Andrx enter the market, thereby removing
the block against additional generic competitors. A federal
district court has since held the HMRI/Andrx agreement to
constitute a per se violation of the antitrust laws. (That
ruling is now on appeal.) In yet another case, the Court of
Appeals for the District of Columbia Circuit reinstated a
generic manufacturer's claim challenging the HMRI/Andrx
agreement.
The Hytrin litigation challenges an arrangement under which
Abbot Laboratories (``Abbott'') paid generic manufacturer
Geneva Pharmaceuticals, Inc. (``Geneva'') over $60 million,
in exchange for Geneva's agreement not to market a generic
version of Abbot's hypertension medication, Hytrin. In that
agreement--as in Cardizem--Geneva promised not to give up the
180-day exclusivity period as the first ANDA filer. No other
generic manufacturers were able to enter the market, and
Geneva and Abbott shared the profits from the resulting
exclusion of competition. The district court held this
arrangement per se unlawful. (That ruling, too, is on
appeal.)
Under GAAP, the first ANDA filer loses its right to
exclusivity if it does not come to market within 60 days of
the date on which it is declared eligible to do so by the
FDA. Further, the 180-day exclusivity period runs from either
the date of a final court decision on the patent infringement
action, or the date on which a settlement order or consent
decree is signed by the court, whichever is earlier. These
provisions should severely limit the ability of the brand-
name manufacturer and first generic entrant to act
collusively to bar other generic alternatives from reaching
consumers.
III. Conclusion
In the examples above, antitrust suits seeking full
recompense for injured consumers helped cause the wrongdoers
to cease their misconduct, and may aid in deterring further
abuses. But antitrust enforcement on a case-by-case basis
will not solve the problems underlying the lawsuits, which
are inherent in the HWA itself. As enacted, the HWA affords
unscrupulous manufacturers with both means and incentive to
extend brand-name monopolies beyond the patent exclusivity
period set by Congress.
Not all such misconduct comes to the attention of law
enforcers or private plaintiffs; antitrust litigation is
time-consuming, expensive and risky; and pharmaceutical
companies are learning from previous legal setbacks, and are
adopting ways to exploit the present law that may be less
vulnerable to antitrust challenges--yet still deleterious to
the goal of harnessing competition to provide affordable
health care. Amending the HWA so as to remove available
avenues for anticompetitive and anticonsumer actions, rather
than relying on individual lawsuits for costly after-the-fact
remedies, is a far more effective means to protect consumers.

Whose Side Are You On?

In Favor of the Current System

Pharmaceutical Research and Manufacturers Association
(PhRMA)

In Favor of Closing the Loopholes

General Motors Corporation
Ford Motor Company
Daimler Chrysler
International Union, UAW
AFL-CIO
AFSCME
Verizon
Wal-Mart
Kodak
Motorola
Caterpillar, Inc.
K-Mart
Georgia-Pacific
Albertsons
UPS
Kellogg's
Sysco
Constellation Energy Group
Ahold USA
Woodgrain Millwork
Weyerhaeuser
National Committee to Preserve Social Security & Medicare
AARP
Consumer Federation of America
Families USA
Gray Panthers
National Consumer League
Consumers Union
Public Citizen
U.S. PIRG
Governor Howard Dean (VT)
Governor William Janklow (SD)
Governor Bob Wise (WV)

[[Page S7639]]

Governor M.J. ``Mike'' Foster, Jr. (LA)
Governor Don Siegelman (AL)
Governor Gary Locke (WA)
Governor Bob Holden (MO)
Governor Jeanne Shaheen (NH)
Governor Tony Knowles (AK)
Governor Benjamin Cayetano (HI)
Governor Ronnie Musgrove (MI)
Generic Pharmaceutical Association (GPhA)
American Association of Health Plans
Aetna
Blue Cross Blue Shield Association
Anthem Blue Cross and Blue Shield
Health Insurance Association of America
Kaiser Permanente Health Plan
HIP
Association of Community Health Plans
National Association of Health Underwriters
National Association of Chain Drug Stores
Advance-PCS
Caremark Rx
American Academy of Family Physicians
National Committee to Preserve Social Security and Medicare
Academy of Managed Care Pharmacy
Alliance of Community Health Plans
National Organization for Rare Disorders
National Hemophilia Foundation
Alpha One Foundation
Gay Men's Health Crisis
Center for Medical Consumers
Treatment Action Group
Interstitial Cystitis Association
The Narcolepsy Network
Pacific Business Group on Health
Midwest Business Group on Health
Washington Business Group on Health
Food Marketing Institute
Mr. KENNEDY. Mr. President, I am pleased today that the Senate has
passed the Schumer-McCain bill. This bill is the Senate's answer to the
public's demand for action on lower drug prices. The bill would end--
once and for all--the drug industry's abuses and close legal loopholes
the industry exploits to block competition and keep drug prices
artificially high.
The record is clear that the pharmaceutical industry uses loopholes
in the landmark Hatch-Waxman Act to drive up the cost of prescription
drugs. Each and every day, pharmaceutical companies exploit those
loopholes to maintain their monopoly over their drugs, and to keep more
affordable generic drugs off the market. America's consumers pay the
price, and today the Senate has said loud and clear--it's time to stop
the abuses.
Just yesterday, the Federal Trade Commission recommended legislative
changes that are incorporated in Schumer-McCain. And here today, the
Senate has approved the Schumer-McCain reforms on a strong bipartisan
vote. The Senate has spoken and it has said: Stop these abuses. Stop
depriving our seniors and our uninsured of safe and effective drugs
that they can afford. Stop driving up the cost of health care for
employers and health plans and consumers by delaying lower cost generic
drugs.
What is it we have done today? Schumer-McCain amends the Hatch-Waxman
Act, which provides for the approval of generic drugs. The Hatch-Waxman
Act has been a tremendous success in promoting competition and
innovation in the pharmaceutical industry. Indeed, both the brand drug
and generic drug industries have flourished under it.
Yet there are clearly weaknesses in the Hatch-Waxman Act. Today, of
the top 15 best-selling drugs potentially subject to generic
competition, the basic patents on at least five have long expired.
Their exclusive rights to market their drugs have passed. Yet there is
no generic competition. The system needs repairs.
Prescription drug costs are spiraling out of reach of the elderly and
uninsured. They are draining the health care budgets of State
governments, employers and labor unions. All because brand-name drug
companies have exploited loopholes in the law to pocket windfall
profits.
Drug prices have skyrocketed at double digit rates annually since
1996, and experts expect this trend to continue. This drug price
inflation has been far in excess of the rate of consumer price
inflation. And experts agree that spiraling drug prices have accounted
for almost two-thirds of growth in drug spending especially the higher
prices of new, aggressively promoted drugs.
Generic drugs are clearly part of the answer. Simply put, a 1 percent
increase in generic use can decrease the Nation's yearly bill for drugs
by a billion dollars. And ensuring the timely approval of generic drugs
could save consumers $60 billion over the next 10 years.
These savings are easy to understand. For patients and health plans
alike, the costs of brand-name drugs are four times higher than for
their generic equivalents. That difference is even higher for the
elderly and uninsured, who must often pay full price for their
medicines. On average, a month's supply of a generic drug costs a
patient $4 and the health plan $16; the costs for a brand drug are 4
times higher: $16 for the patient, $64 for the plan. For the uninsured,
and seniors who lack prescription drug coverage, the full costs are
either $20 for the generic or $80 for the brand drug.
The antidepressant Prozac is a clear example. Generic companies
challenged and defeated a Prozac patent. Today, you can buy 30 generic
Prozac tablets for less than $30--less than a third of what brand-name
Prozac will cost you.
But some pharmaceutical companies game the system by listing spurious
patents with the FDA--patents on unapproved uses, unapproved compounds,
or formulations that they don't even market. Then they get automatic 30
month stays delaying approval of generic drugs.
For example, Neurontin is a drug approved by FDA to treat epilepsy.
In 2001, Neurontin sales exceeded $1.1 billion. The basic patent on the
drug compound expired in 1994, and the patent on the approved method of
use expired in 2000. But the company had listed two additional patents
on the drug that the generic companies had to certify were invalid or
not infringed. These two patents were on an unapproved compound--just
the addition of a water molecule to the basic compound--and on an
unapproved use, the treatment of neurogenerative disease, patents that
never should have been listed at FDA.
The first 30-month stay needlessly delayed generic competition for
half a year. But before that stay was up, Neurontin's manufacturer
listed a third formulation patent with FDA. The generic applicant had
to certify to that patent as well and another 30 month stay will delay
generic approval until December 2002. In total, a generic version of
this drug will be delayed 30 months, at a cost to consumers of $1.4
billion.
In effect, Neurontin's manufacturer blocked generic competition by
obtaining a patent for simply adding a water molecule to its basic
drug. That patent meant months of delay in which that company enjoys
huge profits while preventing affordable generic versions from reaching
the market. This single water molecule will cost consumers at least
$1.4 billion in savings for their prescription drugs. We still do not
know when a generic will get to market, but we do know that Schumer-
McCain will make it far more likely that a generic Neurontin will be
available in 2003.
To address the abusive mis-listing of patents at FDA, the ever-
greening of patents, and the stacking of successive 30 months stays,
Schumer-McCain includes a series of provisions designed to work
together to close the loopholes and foreclose future gaming of the
system. Schumer-McCain does several things.
First, Schumer-McCain permits only one 30-month stay per generic drug
application, and only on those patents listed with the FDA within 30
days of brand drug approval.
Second, for the patents for which no 30-month stay is available,
Schumer-McCain provides an expedited process whereby a patent owner
can, within 45 days, seek a preliminary injunction to defend its patent
against a particular generic drug applicant. If a patent owner elects
not to defend its patent against that generic applicant as part of this
process, it cannot later enforce that patent against that applicant or
others for the manufacture, distribution, sale, or use of that
applicant's generic drug. This provision does not preclude the patent
owner from enforcing its patent against anyone else, including a
subsequent generic applicant that challenges the patent in its generic
application. Schumer-McCain includes related provisions that enhance
protections for patents. One requires a generic applicant who
challenges a patent to provide better information to the patent owner
for it to assess the merits of the generic applicant's patent
challenge, while the second clarifies that a preliminary injunction in
a drug patent infringement case may be granted notwithstanding the
availability of monetary damages.

[[Page S7640]]

Third, Schumer-McCain clarifies the information that must be filed
with FDA on patents that claim a drug or an approved method of using a
drug, so that it will be more difficult for drug manufacturers to list
inappropriate patents or incorrect or incomplete information with FDA.
Fourth, Schumer-McCain enforces this requirement to list patent
information at FDA by saying that failure to list a patent bars the
patent owner from enforcing the patent against a generic applicant or
others for the manufacture, distribution, sale, or use of a generic
drug. This provision does not bar enforcement of the patent against
anyone else, in particular against any brand drug company or others for
the manufacture, distribution, sale, or use of a brand drug that
infringes the patent. In addition, the provision provides that
corrections to patent information may be made after it is published by
FDA in the unusual circumstance of an inadvertent mistake or clerical
error.
Finally, Schumer-McCain allows generic applicants to sue brand drug
companies to delist patents or correct patent information on patents
that can trigger 30 month stays. This provision allows for the
correction of misinformation in and the removal of incorrectly listed
patents from FDA's Orange Book.
A second tactic used by brand drug companies is to collude with a
generic drug manufacturer to block other generic versions of the drug
from getting to consumers. Under the Hatch-Waxman Act, the first
generic drug company to challenge a patent on a brand drug has the
exclusive right to market its drug for 6 months before any other
generic can compete. In some cases, brand drug companies have paid such
a generic drug company not to exercise its 6-month right, thereby
blocking other generic versions of the drug.
For example, terazosin hydrochloride is used to treat high blood
pressure and enlarged prostate. Consumers used about $540 million of
the drug in 1998. A generic was scheduled for market in April 1999, but
Abbott Laboratories reached sweetheart deals with two generic
companies, Zenith Goldline Pharmaceuticals and Geneva Pharmaceuticals,
to keep their generic products off the market. That in turn blocked
other generics from getting to market for 16 months. Abbott paid Zenith
a lump sum of $3 million plus $6 million per quarter under their
agreement, while Geneva received $4.5 million per month. The Federal
District Court in Florida held that the agreements were illegal under
antitrust laws. The result was that consumers paid hundreds of millions
more than they should have because generic competition was delayed.
Schumer-McCain closes this loophole and ensures generic challenges to
invalid patents. How does it do this? It provides for six situations in
which a generic drug company with the 180 days of exclusivity must
forfeit the exclusivity--for example, if the generic is found by the
Federal Trade Commission to have colluded with a brand drug company, if
it withdraws its application, or otherwise delays in getting to market.
When the first generic forfeits the 180 days, the generic applicant
that is next ready to be approved and go to market can go to market,
and consumers immediately enjoy generic competition and lower costs.
If that generic applicant is the second generic to have challenged a
patent, it gets the 180 days of exclusivity and subsequent generic
applicants are delayed from getting final FDA approval for 180 days. If
the generic applicant ready to go to market is not the second generic
to have challenged a patent, but rather is the third or the fourth or
the fifth, the 180 days of exclusivity disappears and FDA may approve
subsequent generic applicants as soon as they are ready.
Either way, consumers benefit because the first generic that is ready
gets to market as soon as it can. In addition, the 180 exclusivity
remains as an incentive for the second generic applicant to challenge a
patent, an incentive that is vital to maintain especially for those
situations when a patent must be shown to be invalid. In this way,
Schumer-McCain speeds generic drugs to market while preserving the 180
day incentive--an incentive that has encouraged generic companies to
break patents on several high-priced blockbuster drugs and saved
consumers billions of dollars.
Schumer McCain also makes some other adjustments to the 180-day
exclusivity provision. First, it clarifies that the court decision that
can start the 180-day period running is the earlier of the date of a
final decision from which no appeal, other than a petition for review
by the Supreme Court, has been or can be taken or the date of a
settlement order or consent decree that includes a finding that the
patent at issue is invalid or not infringed. This provision also
clarifies that it is any such decision on the patent that will trigger
the 180-day period, not necessarily one in the case to which the
generic applicant with the exclusivity was a party. Second, the bill
clarifies that the 180-day period is available only to the first
applicant to challenge a patent on a brand drug, and that subsequent
applicants that challenge different patents on that brand drug do not
also receive a 180-day period of exclusivity, unless the first forfeits
its exclusivity, as provided for by the bill. Third, the bill clarifies
that the 180-day period is only applicable to a generic applicant that
challenges a patent if that applicant is sued for patent infringement.
Finally, Schumer-McCain includes a provision that is intended to
forestall frivolous challenges by brand companies to the legal
legitimacy of FDA's bioequivalence regulations, challenges that have
substantially delayed the approval of some generic drugs. The court
challenges by brand companies have taken several forms, including
challenges to the specifics of the FDA's regulations and the FDA's
authority to issue the regulations, and have involved drug products
such as asthma inhalers and topicals. The challenges themselves
frequently start as administrative challenges in the form of citizen
petitions and progress to legal challenges. Each challenge delays
approval or marketing of the generic, and each one consumes valuable
FDA resources in defending against these fundamentally frivolous
lawsuits. These lawsuits are also filed notwithstanding the holdings of
different circuit courts of appeal upholding the regulations.
The provision says that FDA's current regulations on bioequivalence
shall continue in effect as legitimate exercises of FDA's statutory
authority. The provision allows FDA to amend its regulations through
rulemaking, but it does not preclude judicial review of those amended
regulations, nor judicial review of an application of either the
current or amended bioequivalence regulations. Finally, the provision
makes it clear we are not changing FDA's authority under the Federal
Food, Drug, and Cosmetic Act over biological products.
The Hatch-Waxman Act has been a tremendous success in stimulating
both competition and innovation. But there are weaknesses in this law
that Schumer-McCain rightly closes. Drug companies are entitled to fair
profits on their research and innovation. But when patents expire,
those companies must innovate to succeed and help patients, not block
competition to their old drugs.
I also want to applaud the inclusion of a number of important
amendments which will help lower drug costs and ensure drug coverage
for all Americans, including Senator Stabenow's amendment to help
States negotiate lower prices and Senator Rockefeller's amendment to
provide emergency Medicaid relief to States in fiscal crisis.
Schumer-McCain restores the balance of the original Hatch-Waxman Act,
ends the abuses that block competition, and closes the gaps in the
Hatch-Waxman Act. The Senate has said: Stop the abuses. Now the House
of Representatives must act with us.
I thank my health staff for all their hard work on this legislation--
David Dorsey, David Nexon, Paul Kim and Michael Myers on S. 812. David
Dorsey made a particularly important contribution to this effort, and
deserves high praise for his work. I also want to particularly
recognize the hard work and unwavering dedication of Missy Rohrbach
with Senator Schumer. And the record would be incomplete without noting
the very important contributions of Carlos Fierro and Jeanne Bumpus
with Senator McCain, Kyle Kinner with Senator Edwards, Michael Bopp
with Senator Collins, Debra Barrett with Senator Dodd, Sean Donohue

[[Page S7641]]

with Senator Jeffords, Anne Grady with Senator Murray, Steve Irizarry
with Senator Gregg, and Dean Rosen with Senator Frist. And I am so
grateful, too, for the excellent contributions of Jane Oates, Stacey
Sachs, Brian Hickey, Scott Berkowitz, Amelia Dungan, Kent Mitchell,
Jeffrey Teitz, Melody Barnes, Marty Walsh, Jim Manley, Stephanie Cutter
and so many others who made this legislation possible.
I ask unanimous consent that letters of support for S. 812 be printed
in the Record.
There being no objection, the material was ordered to be printed in
the Record, as follows:

Coalition for a Competitive

Pharmaceutical Market,

Washington, DC, July 10, 2002.
Hon. Edward M. Kennedy,
Chairman, Senate Health, Education, Labor and Pensions
Committee,
U.S. Senate, Washington, DC.
Dear Mr. Chairman: As a broad-based coalition of large
employers, consumer groups, generic drug manufacturers,
insurers, labor unions, and others, we are writing to advise
you of our strong support for the Edwards/Collins amendment
to S. 812, the Greater Access to Affordable Pharmaceuticals
Act. We believe it is critical that Congress act this year to
pass legislation that would eliminate barriers to generic
drug entry into the marketplace. The legislation you will be
marking up today clearly would accomplish this long-overdue
need.
Prescription drug costs are increasing at double-digit
rates, and clearly are unsustainable. Current pharmaceutical
cost trends are increasing premiums, raising copayments,
pressuring reductions in benefits, and undermining the
ability of businesses to compete in the world marketplace. We
believe that a major contributor to the pharmaceutical cost
crisis is the use of the Drug Price Competition and Patent
Term Restoration Act of 1984 clearly in ways unanticipated by
Congress, which effectively block generic entry into the
marketplace. The repeated use of the 30-month generic drug
marketing prohibition provision and other legal barriers have
resulted in increasingly unpredictable and unaffordable
pharmaceutical cost increases.
Although the compromise amendment being offered today does
not totally eliminate the 30-month marketing prohibition
provision, as would be our preference, it does make important
process changes that will lead to a more predictable,
rational pharmaceutical marketplace. We recognize that
compromises have been necessary to garner the support of a
majority of the Members of the Committee and appreciate your
leadership and the hard work of your staff. However, we would
strongly oppose any additional amendments that would
undermine the intent of this legislation by further delaying
generic access or reducing competition and increasing costs
to purchasers. We also remain opposed to legislation that
would increase costs to purchasers either through extended
monopolies or unnecessary and costly litigation.
We are convinced that the legislation you are advocating
will make a major difference in increasing competition in the
marketplace and enhancing access to more affordable, high
quality prescription drugs. We look forward to working with
you and other Members of the HELP Committee to ensure that
this important legislation is enacted this year.
The Coalition for a Competition Pharmaceutical Market is an
organization of large national employers, consumer groups,
generic drug manufacturers, insurers, labor unions, and
others. CCPM is committed to improving consumer access to
high quality generic drugs and restoring a vigorous,
competitive prescription drug market. CCPM supports
legislation eliminate legal barriers to timely access to less
costly, equally effective generic drugs.

ccpm participating members

American Association of Health Plans, Aetna, Anthem Blue
Cross and Blue Shield, Blue Cross and Blue Shield
Association, Caterpillar, Inc., Consumer Federation of
America, Families USA, Food Marketing Institute, Generic
Pharmaceutical Association, General Motors Corporation, Gray
Panthers, Health Insurance Association of America, IVAX
Pharmaceuticals, National Association of Chain Drug Stores,
National Association of Health Underwriters, National
Organization for Rare Disorders, Ranbaxy Pharmaceuticals,
TEVA USA, The National Committee to Preserve Social Security
and Medicare, United Auto Workers, Watson Pharmaceuticals,
and WellPoint Health Networks.
____

General Motors,

Detroit, MI, July 15, 2002.
Hon. Edward M. Kennedy,
U.S. Senate, Russell Senate Office Building, Washington, DC.
Dear Senator Kennedy: As the largest private provider of
health care coverage in the nation, I am writing to commend
you for your leadership in supporting legislation that
removes barriers to generic competition and reduces costs to
all consumers. At General Motors, we insure over 1.2 million
workers, retirees, and their families, and on their behalf, I
want to thank you for supporting and passing out of the
Senate Health, Education, Labor and Pensions Committee S.
812, the Greater Access to Affordable Pharmaceuticals Act.
We now spend over $1.3 billion a year on prescription
drugs, and without relief, these costs are projected to
continue to grow at 15 to 20 percent a year. Such increases
are clearly unsustainable, and over time will make it
impossible for us to compete in the world market.
We are convinced that your support of S. 812 will
rationalize the currently distorted marketplace that has led
to increasing and unpredictable pharmaceutical costs. This
has resulted in increasing premiums, copayments, and
pressures to reduce benefits. We believe that this landmark
legislation will close the loopholes in the Hatch-Waxman law
that currently block generic entry into the marketplace.
Moreover, we believe your leadership in supporting bipartisan
amendments in Committee strengthen S. 812 and assure much-
needed predictability in the health care delivery system.
As a large employer and payer of health care, we are
pleased that the Committee process clarified the so-called
``de-listing'' provision. This modification makes clear that
the necessary ability for generics to challenge brand-name
companies who have inappropriately listed patents in the FDA
Orange Book does not in any way provide for civil and
monetary penalties, and solely focuses the remedy for the
abusive listing on the de-listing of the product from the
Orange Book.
Once again, I want to thank you for the work that you and
your staff have put in to this effort. We believe that your
efforts will make a major difference in increasing
prescription drug competition and choice, as well as
expanding access to more affordable medications for our
current and former employees and their families.
Sincerely,
Dick Wagoner, Jr.
President and Chief Executive Officer.
____

Generic Pharmaceutical Association,

Washington, DC, July 10, 2002.
Hon. Edward M. Kennedy,
Chairman, Senate Health, Education, Labor and Pensions
Committee, U.S. Senate, Russell Senate Office Building,
Washington, DC.
Dear Mr. Chairman: We are writing to express our strong
support of the Edwards amendment to S. 812, the Greater
Access to Affordable Pharmaceuticals Act. As the
manufacturers, suppliers, and distributers of more than 90
percent of the nations' generic medicines, the Generic
Pharmaceutical Association (GPhA) is all too familiar with
the abusive tactics name brand pharmaceutical companies
employ to delay consumers access to affordable, quality
generic pharmaceuticals and the dire need for Congress to
pass legislation to close the loopholes in the law that the
name brand industry has grown so proficient in exploiting. We
believe the Edwards amendment effectively accomplishes this
goal and has earned the tripartisan support it is now
receiving.
The high cost of prescription drugs is one of the nation's
most pressing public policy challenges today. Senior
citizens, the uninsured, major employers, governors, consumer
groups and public and private insurers are all looking to
Congress for relief from the unsustainable annual increases
in prescription drug costs. Increasing consumer access to
generic medicines by increasing competition in the
pharmaceutical market place can and must play a central role
in any legislative plan to control drug costs. The full
benefits increased competition can bring to the health care
delivery system, however, cannot be realized until Congress
closes the loopholes in the Hatch-Waxman Act that are
thwarting competition and inflating the cost of prescription
medicines.
Abuse of the 30-month stay provision of the Hatch-Waxman
act is one of the most effective and most frequently used
methods to delay generic competition. The Generic
Pharmaceutical Association believes the most efficient way to
ensure this provision is no longer used to delay generic
competition is to abolish it completely. However, GPhA
recognizes that compromises were necessary to bring support
for the legislation to its current point and commends you,
the other Members of the Senate HELP Committee, and your
staff for your unwavering commitment to knocking down the
barriers that are blocking access to generic medicines.
GPhA looks forward to working with you to secure the
Committee's approval of the Edwards amendment and would
oppose any effort to dilute or weaken it with amendments that
would maintain or exacerbate the problems in the existing
Hatch-Waxman system. As always, we appreciate your leadership
on this issue and stalwart commitment to ensuring all
Americans have access to quality, affordable health care.
Sincerely,
Kathleen D. Jaeger,
President and CEO.
____

National Organization

for Rare Disorders, Inc.,

Danbury, CT, July 17, 2002.
Hon. Edward M. Kennedy,
U.S. Senate,
Washington, DC.
Dear Senator Kennedy: For the sake of 25 million Americans
with rare ``orphan'' diseases, we want you to know that S.
812, the

[[Page S7642]]

Greater Access to Affordable Pharmaceuticals Act (GAAP), and
the Edwards-Collins Amendment that was passed by the Senate
HELP Committee on July 11, 2002, will help millions of
uninsured and underinsured Americans to gain access to
affordable medications.
GAAP will close the loopholes of the Hatch-Waxman generic
drug law that was enacted in 1984. This will ultimately lead
to availability of lower cost generic drugs in a timely
manner. When pharmaceutical patents expire, competition would
be allowed without undue delay, and competition will drive
prices down. We believe that S. 812 will make affordable
treatments accessible to uninsured and underinsured people,
particularly the elderly and younger Medicare beneficiaries
who receive Social Security Disability benefits. In the
absence of a Medicare prescription drug benefit, S. 812 is an
essential first step in the giant leap forward that Americans
desperately need for health care.
We hope that Congress will close the loopholes to the
Hatch-Waxman Act and deter the frivolous lawsuits that have
repeatedly delayed availability of affordable generic drugs.
We hope that this will be the first step in your efforts to
add a much needed prescription drug benefit to Medicare.
Very truly yours,
Abbey S. Meyers,
President.
____

Consumers Union,

Washington, DC, July 16, 2002.
Dear Senator: Consumers Union urges your support of the
``Greater Access to Affordable Pharmaceuticals Act (GAAP Act)
of 2001 (S. 812).'' This legislation would streamline and
improve the generic drug approval process, saving consumers
billions of dollars. We believe that companies trying to
bring generic drugs to market face too many unnecessary
obstacles and that the removal of these barriers will
increase competition and deliver lower-priced drugs to
consumers.
We support wider access to affordable medicines for all
Americans, especially the uninsured, the underinsured, the
elderly, and the disabled. Today, health care costs are
spiraling out of control for consumers and employers. Between
1999 and 2000 alone, prescription drug spending increased by
17.3%--the sixth year of double-digit increases. According to
a 2002 Brandeis University study, older Americans could save
$250 billion over the next ten years through the increased
use of generic drugs. The Schumer-McCain bill is a cost-
saving measure that will help rein in spiraling prescription
drug expenditures--a critical first step toward the
implementation of an affordable Medicare prescription drug
benefit.
This legislation will improve consumer access to generic
drugs by restoring the balance between innovation and
competition. We believe that the anticipated cost savings
from this measure is a necessary foundation for the Senate to
build a comprehensive prescription drug benefit into
Medicare.
Sincerely,
Janell Mayo Duncan,
Legislative Counsel.

Ms. CANTWELL. Mr. President, I rise today to express my
disappointment regarding our current situation on Medicare prescription
drug legislation. I am extremely disappointed that we have not been
able to pass a prescription drug benefit, and I believe it is
absolutely imperative that the Senate continue to work toward this end.
The fact is, when Medicare was designed in 1965, the system relied on
inpatient hospitalization and seldom on outpatient services, preventive
care, or patient drug therapies. At that time, prescription drugs only
accounted for four percent of all personal health care expenditures.
But as we enter the 21st century, the cutting edge of health care has
shifted. Every day, as new preventive and therapeutic drugs replace
outdated inpatient procedures, Medicare falls further and further
behind in providing basic care.
Medicare was written to cover the most basic health care for seniors.
When the original bill passed, the legislation's conference report
explicitly says that the intent of the program is to provide adequate
``medical aid for needy people,'' and should ``make the best of modern
medicine more readily available to the aged.''
Well, we are not making the best use of modern medicine when millions
of seniors cannot afford access to the prescription drugs they need.
Prescription drugs that had not even been developed when Medicare was
enacted are now an essential aspect of basic health care. We owe it to
our seniors to live up to Medicare's original mandate and provide them
the best medical care.
Unfortunately, today, beneficiaries' current drug coverage options
are often expensive and unreliable. And as a result, nearly seven out
of ten Medicare beneficiaries lack decent, dependable coverage for
their prescription drug needs, and more than one-third have no coverage
at all. Prescription drug expenditures for the average senior in my
home State of Washington are over $2,100 every year, over 122,000 of my
seniors spend more than $4,000 a year.
On average, one out of every five dollars of every Social Security
check to Washington State's seniors is spent on prescription drugs. And
seniors with the most serious illnesses spend nearly 40 percent of
their Social Security check on prescription drugs. How in the world are
seniors on fixed incomes supposed to do this? What happens to them in
an emergency?
Last week I visited three senior citizen centers to discuss the
current prescription drug debate. This is what my constituents told me:
they want prescription drug coverage to be comprehensive, simple to
administer, guaranteed, stable, and based on the very best medical
technology. And most importantly, they want the benefit run through
Medicare, a program they understand and upon which they depend.
I think this is the first point I want to make about HMOs versus
Medicare as we continue to debate delivery mechanisms for a new
benefit. Seniors do not want their prescription drug benefit run
through an HMO or other private insurance company.
According to a June 2002 survey by the Kaiser Family Foundation and
the Kennedy School of Government, 67 percent of American people believe
we should expand Medicare to pay for part of prescription drugs, but
only 26 percent say we should help seniors buy private insurance to pay
for prescription drugs costs.
A private delivery model gives insurers complete control over whether
to offer a benefit, how much to charge, and whether to cover drugs
regardless of whether these drugs are medically necessary. That's too
much control over a program that is supposed to guarantee help for
seniors.
The very basic issue here is that the private market will not cover
such a high-risk population--especially a population at such risk for
adverse selection. I don't want to see this benefit be a repeat of the
Medicare+Choice program. And if the private insurance model hasn't
worked for the full Medicare benefit, it certainly won't work for a
single benefit where utilization is expected to be high.
Putting HMOs in charge of prescription drug coverage would be like
putting Enron in charge of Social Security.
The second point I want to make is that seniors need a benefit that
is comprehensive, one that covers their total prescription drug needs.
Thirty percent of Washington seniors--212,000 people--will fall into
the benefit hole proposed under the Tripartisan bill. But these same
seniors will need to continue to pay their monthly premium, whatever it
is as determined by the private HMOs or insurance companies, during
that benefit gap. My constituents will not stand for this.
We need to pay very close attention to the catastrophic coverage in
all of these proposals and what it means for seniors. What we're
talking about is covering medicines for the very sickest seniors, and
we know that the very sickest seniors have the very highest drug costs.
In fact, just 14 percent of the elderly population account for nearly
half of all prescription drug expenditures.
Seniors account for 12.6 percent of the general population, but a
third of all prescription drug expenditures. And while prescriptions
are expensive, in some cases, prohibitively so, these are the very same
prescription drugs that keep people out of the hospital, out of the
nursing home, and living vibrant and happy lives. And while it is
difficult to quantify in economic terms, prescription drugs preserve
health and eliminate unnecessary hospitalization, which is by far most
expensive segment of the health care.
Americans are becoming increasingly reliant on more effective, and
more complicated, drug therapies. Total health care spending in the
United States will total more than $1.5 trillion this year, an increase
of 8.6 percent over last year, according to a March report released by
the Centers for Medicare and Medicaid Services.
The other part of this debate concerns the need to get generic
medications to the market, and to our Nation's seniors and disabled,
more quickly. Generic medicines account for 42 percent of all
prescriptions dispensed

[[Page S7643]]

in America and on average are put on the market at 75 percent of the
cost of their name-brand rivals.
But we know that the current prescription drug patent system is
broken, and I am extremely concerned that pharmaceutical companies may
be acting illegally to extend their patents and prevent less expensive
generic drugs from entering the market. To fix it, we need to eliminate
patent loopholes that drug companies use to prevent price competition
from generic alternative drugs.
We need to strengthen existing statutes, including antitrust laws. We
need to stop drug company abuses that prevent generic competition and
lower prices, stop illegitimate patent ``evergreening,'' and stop
anticompetitive sweetheart deals between brand name and generic
companies.
I am pleased that the underlying bill we are considering would get
lower-priced generics on the market faster, especially since we know
that prescription drug expenditures are the fastest growing segment of
the health care market, with spending on outpatient prescription drugs
in the U.S. increasing by 17 percent over last year. It is absolutely
incredible that outpatient drug expenditures have more than doubled in
the last five years.
Drug expenditures in the United States rose from about $5.5 billion
in 1970 to a projected $161 billion this year, and CMS predicts that
prescription drug expenditures will continue to increase faster than
any other category of health care spending throughout the next ten
years. Medicare beneficiaries alone will spend $1.5 trillion on
prescription drugs over the next ten years.
Those two factors, great dependency on drug therapies and
skyrocketing drug prices, put us on a collision course in our efforts
to provide affordable health care.
I know that many of my colleagues are concerned that the money isn't
there for this benefit, and I, too, have no doubt that a new benefit
will be extremely expensive. The Congressional Budget Office estimates
that the original Graham amendment will cost $576 billion over 10
years, and it spends about $85 billion a year by the end of the decade.
This new spending is in addition to the fact that the Medicare budget
will reach at least $498 billion by 2012, and will begin spending out
more than it brings in by 2016. Sustainable financing of the Medicare
program is a looming problem that must be addressed.
But while we discuss the potential cost of a new benefit, we also
need to discuss national priorities. I believe we can do a prescription
drug benefit while living within our budget, and we can do so by having
a clear vision for our country's priorities. One of my top priorities
is getting a new prescription drug benefit to the Medicare
beneficiaries in Washington state. But this may mean making other tough
choices.
There is no doubt that if we interject all of these issues into the
political debate surrounding the need to provide Medicare coverage of
prescription drugs for our elderly and disabled, we have a debate to be
rivaled by few others.
But the reality is that the Senate needs to move past the argument of
whether or not to include prescription drugs in the Medicare program.
We know there is a problem, and it is up to us to find a solution.
Congress is trying to take a reasoned and rational approach to
integrating a new prescription drug benefit into the Medicare program.
I strongly believe that we need to include a prescription drug
benefit in the Medicare program and I will continue to fight to ensure
that all Washingtonians have access to the prescription medications
they need.
Finally, I want to briefly address the geographic disparities in
Medicare provider payments. I am especially concerned that providers
serving a disproportionate number of Medicare and Medicaid patients are
facing unsustainable fee reductions.
Every day I hear from my constituents that they are facing increasing
difficulty in getting primary care services, and from physicians who
can no longer afford to take on new Medicare patients. In fact, 57
percent of Washington state physicians are limiting the number or
dropping all Medicare patients from their practices.
We absolutely must ensure that Medicare providers, hospitals,
physicians, home health agencies, physical therapists, nursing homes,
are paid enough to cover the cost of providing care to Medicare
beneficiaries. I certainly hope that the Finance Committee, working
with the Leadership on both sides, will pass a reimbursement package
before we adjourn the 107th Congress. It will do us little good to
provide a new Medicare benefit if there are no physicians willing or
available to write prescriptions for Medicare beneficiaries.
Mr. McCAIN. Mr. President, the Greater Access to Affordable
Pharmaceuticals Act, GAAP, provides a real opportunity to benefit all
consumers of prescription drugs. In the recently concluded study of the
abuses of the Hatch-Waxman act, the Federal Trade Commission concluded
that there is a need for Congress to act and to act quickly to end the
exploitation of loopholes in current law that has delayed the entry of
generic drugs into the market. S. 812 would allow consumers earlier
access to generic versions of drugs while protecting the intellectual
property rights of the brand name drug innovators--a protection that is
necessary for their continued investment in research and development of
new and improved pharmaceuticals.
S. 812 would accomplish five important objectives. First, the bill
would limit the ability of brand name drug companies to delay the
marketing of generic competitors. It does this by limiting brand name
drug companies to only one automatic 30-month stay. Under current law,
brand name drug companies can prevent generic substitutes from coming
to market by suing the generics for patent infringement, thus
triggering an automatic stay of up to 30 months on the FDA's approval
of the generic drug. By bringing successive patent infringement suits,
brand name drug companies have obtained sequential stays, and kept
generics off the market much longer than 30 months.
Allowing for only one automatic delay is consistent with the FTC's
recent recommendations. In its report, the FTC recommended that only
one stay be allowed, and noted that: prior to 1998, only 1 out of 9
blockbuster drugs products involved at least three patent lawsuits,
whereas after 1998, 5 of the 8 blockbuster products involved at least
three lawsuits. . . .
[C]ases involving multiple patents take longer than those involving
fewer patents [to resolve] the FTC wrote, and the Commission found that
the multiple stacking of automatic stays delayed the approval of
generic drug applications from between 4 and 40 months beyond the
initial 30-month period.
There is no doubt that these stays have cost consumers enormous sums
of money by preventing their access to cheaper generic versions of
drugs. Allowing for one 30-month stay, as S. 812 does, strikes a
balance between the rights of brand name drug companies seeking to
protect their legitimate patents, and the rights of consumers to access
generic drugs without unreasonable delay due to ``gaming'' of the
system.
Second, the GAAP Act would modify the provision in current law that
allows the first-to-file generic drug manufacturer an exclusive 180-day
period to market its drug without competition from other generic
manufacturers. The 180-exclusivity period was intended to provide a
needed incentive for challenging dubious patents. Like the automatic
30-month stay, however, this 180-day exclusivity has been abused. Brand
name and generic drug companies have colluded in deals in which the
brand name manufacturer effectively extends its own period of
exclusivity by paying the generic drug manufacturer to stay out of the
market for the six months during which the generic would otherwise be
able to compete. When this occurs, the brand name manufacturer wins,
and the generic manufacturer wins, but consumers lose. To prevent this
type of abuse, S. 812 modifies current law so that first-to-file
generic manufacturers that engage in anticompetitive conduct and do not
go to market, lose the privilege of the 6-month exclusivity in the
generic market, and, in certain circumstances, that exclusivity
``rolls'' over to the next generic competitor.
Third, the legislation would require generic drug applicants to the
FDA to provide a more detailed ``paragraph

[[Page S7644]]

IV'' filing. This means that the patent holder will not only receive a
general notice that its patent is being challenged, but the generic
drug applicant will be required to provide a more detailed legal basis
of its assertions regarding the original patent's validity. This is an
important protection for the brand name manufacturers because they will
receive more information about the nature of the patent challenge as
opposed to a simple notice that a generic application has been filed.
Fourth, S. 812 would clarify that the FDA's existing regulations as
they pertain to bioequivalence have the effect of law. Currently, bio-
equivalence is demonstrated through blood level studies, and only in
some circumstances has the FDA allowed for limited human data to be
submitted for products where blood studies are inapplicable. S. 812
would allow the FDA to amend its regulations as necessary and clarify
its authority over biological products under the Federal Food, Drug and
Cosmetic Act.
The fifth significant change to current law relates to how to clean
up abuses of the ``Orange Book'', the manual in which the FDA lists all
patents on pharmaceutical drugs. S. 812 allows generic manufacturers in
certain instances to bring a cause of action to ``de-list'' or
``rename'' a drug patent. Current law provides no means for
``delisting'' a patent, although doing so can speed the marketing of
generic drugs, particularly in cases involving patents that are
patently frivolous and for which the brand name manufacturers clearly
would not win a patent infringement suit. While purging the Orange Book
of frivolous patents is important, I understand that some Senators are
concerned that the new cause of action to ``delist'' will not speed the
availability of generic drugs, but will lead to a snarl of litigation.
I hope these concerns can be reviewed in conference.
Over twenty years ago, Hatch-Waxman established the procedures for
bringing generic drugs to consumers and set out to strike a balance
that would allow drug innovators to protect their innovations, while
allowing generic drugs easier access into the market. In large part,
Hatch-Waxman succeeded in bringing new lower-cost alternatives to
consumers, and encouraging more investment in U.S. pharmaceutical
research and development. This has been evident in the years since the
enactment of Hatch-Waxman, where research and development has increased
from $3 billion to $21 billion. Loopholes in the law, however, have
delayed benefits to consumers. It is time to close them.
The Congressional Budget Office, CBO, recently released results of
its estimate of S. 812, finding that total drug expenditures in this
country over the next ten years, 203 to 2012, will be roughly $4.7
trillion. If the delays resulting from numerous lawsuits and agreements
that arise under current law were eliminated, the CBO estimates that S.
812 would result in a savings of up to 7 percent, or $320 billion. For
consumers, particularly seniors, the uninsured, and those on Medicare,
this is a tremendous savings.
Congress will improve the lives of many Americans by passing the
underlying language of S. 812. I urge my colleagues to do this now.
Mr. GRASSLEY. Mr. President, I'd like to say a few words about the
Hatch-Waxman provisions that were contained in S. 812 that passed this
morning. Ensuring access to affordable prescription drugs is a top
priority for me. The challenge is to strike the right balance so
consumers have timely access to medicine that's affordable and so that
new, groundbreaking pharmaceuticals continue to be developed. I voted
for S. 812 because I want Iowans and all Americans to benefit as much
as possible from the competition and lower prices that generic drugs
bring about in the marketplace. This bill starts to close loopholes in
the current Hatch-Waxman law and stop abuses that may have contributed
to the delay in market entry to generic drugs and kept drug prices
high. I believe that this is a good first step toward recognizing and
addressing concerns about abuses in the current system. However, I
still have concerns about the drafting of a few of the provisions in
this legislation.
For example, I'm concerned abut the new private right of action
created by S. 812. The current Hatch-Waxman law does not allow for such
a remedy, and this could cause unnecessary and increased litigation. I
also share the concerns that Senator Frist expressed regarding the
bioequivalency provision. I think that we need to clarify that this
provision should in no way adversely impact or lessen public safety.
Further, I think that we should clarify that the provision dealing with
the 45 day paragraph IV notice does not eliminate all legal avenues
with respect to a company being able to protect it's rights with
respect to a patent. There might be a few other changes that would be
beneficial to the bill. Nevertheless, I'm hopeful that we can improve
on this legislation. We need to be able to close the loopholes, but
also ensure that we keep the proper balance between promoting timely
access to affordable generic drugs and giving brand-name companies
reasonable intellectual property protections so they will continue to
innovate and find new cures and drugs.
I was disappointed that the Senate was not able to consider an
amendment I wanted to offer with Senator Leahy which would have
required brand-name and generic companies to file with the Federal
Trade Commission and Justice Department any agreements that deal with
the 180 day exclusivity provision of the Hatch-Waxman law. The language
of our amendment is exactly the language contained in S. 754, as
reported out of the Judiciary Committee last November. So everyone
knows, this legislation is fully supported by the Federal Trade
Commission report that came out just yesterday. In fact, the Federal
Trade Commission report said ``we believe that notification of such
agreements to the Federal Trade Commission and the U.S. Department of
Justice is warranted. We support the Drug Competition Act of 2001, S.
754, introduced by Senator Leahy, as reported by the Committee on the
Judiciary.'' I'm putting my colleagues on notice that I will work to
get this legislation passed to ensure that lower price drugs get to
market as soon as possible.
I want Iowans to benefit from new scientific research and innovative
drug products. Patent protections help provide incentives for these
developments. With the practice of medicine today being so dependent on
prescription drugs and with a new, taxpayer-financed prescription drug
benefit on the horizon, I'll continue to work to make sure Congress
maintains the right balance between patent protection and access to
generic drugs.
Mr. McCain. I would like to take the opportunity to talk about the
underlying bill, S. 812, which, until now, has been largely treated in
this two week debate as little more than a vehicle for a grander, more
politically salient, but also more elusive, prescription drug benefit.
If the Senate fails to pass the underlying bill, the Greater Access
to Affordable Pharmaceuticals Act, GAAP, will lose a real opportunity
to benefit all consumers of prescription drugs. In a recently concluded
study of the abuses of the Hatch-Waxman act, the Federal Trade
Commission concluded that there is a need for Congress to act and to
act quickly to put an end to the anti-competitive abuses that have
delayed the entry of generic drugs into the market. S. 812 would allow
consumers earlier access to generic versions of drugs while protecting
the intellectual property rights of the brand name drug innovators, a
protection that's necessary for their continued investment in research
and development of new and improved pharmaceuticals.
While the brand name drug manufacturers have decried this bill, which
has been portrayed by some as a boon to generic drug makers, I assure
you that these portrayals are not accurate. The consumer is the
intended beneficiary of this legislation, plain and simple.
S. 812 would accomplish five important objectives. First, the bill
would limits the ability of brand name drug companies to delay the
marketing of generic competitors. It does this by limiting brand name
drug companies to only one automatic 30-month stay on the marketing of
generic drugs. Under current law, brand name drug companies can prevent
generic substitutes from coming to market by suing the generic for
patent infringement and in

[[Page S7645]]

so doing, stop the FDA, for up to 30 months, from approving the cheaper
substitute. By bringing successive patent infringement suits, brand
name drug companies have obtained sequential 30-month stays, and kept
generics off the market much longer than 30 months.
Allowing for only one automatic delay is consistent with the
recommendation the Federal Trade Commission made recently in its
comprehensive study of anticompetitive abuses of current law by brand
name and generic drug companies. In its report, the FTC recommended
that only one stay be allowed, and noted that ``prior to 1998, only 1
out of 9 blockbuster drug products involved at least three patent
lawsuits, whereas after 1998, 5 of the 8 blockbuster products involved
at least three lawsuits.'' ``[C]ases involving multiple patents take
longer than those involving fewer patents [to resolve]'' the FTC wrote,
and the Commission found that the multiple stacking of 30-month stays
prevented the FDA from approving generic ANDAs from 4 to 40 months
beyond the initial 30-month stay.
There is no doubt that these stays have prevented or delayed generic
drugs from entering the marketplace and increased the price of
prescription drugs. Allowing for one 30-month stay, as S. 812 does,
strikes a balance between the rights of brand name drug companies
seeking to protect their legitimate patents, and the rights of
consumers to access generic drugs without unreasonable delay due to
``gaming'' of the system. I understand that there is disagreement
regarding which patents should be afforded protection under the
automatic stay, however, I believe we can all acknowledge that allowing
for one, and only one stay, is the most effective way to prevent
frivolous lawsuits that delay consumers' access to less expensive
pharmaceuticals.

Second, the GAAP Act would modify the provision in current law that
allows the first-to-file generic drug manufacturer an exclusive 180-day
period to market its generic drug without competition from other
generic manufacturers. The 180-exclusivity period was intended to
provide a needed impetus for generic companies to challenge dubious
patents. Like the automatic 30-month stay, however, this 180-day
exclusivity has been abused. Brand name and generic drug companies have
colluded in deals in which the brand name manufacturer effectively
extends its own period of exclusivity by paying the generic drug
manufacturer to stay out of the market for the six months during which
the generic would otherwise be able to compete. When this occurs, the
brand name manufacturer wins, and the generic manufacturer wins, but
consumers lose. To prevent this type of abuse, S. 812 modifies current
law so that first-to-file generic manufacturers that engage in
anticompetitive conduct and do not go to market, lose the privilege of
6-month exclusivity in the generic market, and, in certain
circumstances, that exclusivity ``rolls'' over to the next generic
competitor.
Third, the legislation would require generic drug applicants to the
FDA to provide a more detailed ``paragraph IV'' filing. This means that
the patent holder will not only receive a general notice that its
patent is being challenged, but the generic drug applicant will be
required to provide a more detailed legal basis for its assertions
regarding the original patent's validity. This is an important
protection for the brand name manufacturers because they will receive
more information about the nature of the patent challenge as opposed to
a simple notice that a generic application has been filed.
Fourth, S. 812 would clarify that the FDA's existing regulations as
they pertain to bio-equivalence have the affect of law. Currently, bio-
equivalence is demonstrated through blood level studies, and only in
some circumstances has the FDA allowed for limited human data to be
submitted for products where blood studies are inapplicable. S. 812
would allow the FDA to amend their regulations as necessary and clarify
their authority over biological products under the Federal Food, Drug
and Cosmetic Act.
The fifth significant change to current law relates to how to clean
up abuses of the ``Orange Book'', the manual in which the FDA lists all
patents on pharmaceutical drugs. The provision in the current bill,
allows generic manufacturers in certain instances to bring a cause of
action to ``de-list'' or ``re-name'' a drug patent. Current law
provides no means for ``delisting'' a patent, although doing so can
speed the marketing of generic drugs, particularly in cases involving
patents that are patently frivolous and for which the brand name
manufacturers clearly would not win a patent infringement suit.
The cause of action for generic manufacturers to ``delist'' patents
was a provision that was added to S. 812 late in the process, and it is
controversial. Opponents argue that doing so will significantly
increase and complicate litigation without clearly making generic drugs
available to consumers more quickly. How the cause of action in S. 812
will work is yet unclear. I hope that during conference on this
legislation, we can consider not only the provision in the Senate bill,
but also the proposal mentioned in the FTC's recent report to permit a
claim for ``delisting'' to be brought, not as an original and separate
action, but as a counterclaim in the context of a patent infringement
lawsuit. Such an approach may be more appropriate in that it could
reduce the number of lawsuits, but still allow generic manufacturers a
way to ``delist'' frivolous patents through summary judgments or other
motions that can be raised in the context of patent infringement
litigation.

Over twenty years ago, Hatch-Waxman establishes the procedures for
bringing generic drugs to consumers and set out to strike a balance in
the pharmaceutical industry that would allow brand name manufacturers
to protect their innovations, while allowing generic brands easier
access into the market. In large part, Hatch-Waxman succeeded in
bringing new lower-cost alternatives to consumers, and encouraging more
investment in U.S. pharmaceutical research and development. This has
been evident in the 15 years since the enactment of Hatch-Waxman, where
research and development has increased from $3 billion to $21 billion.
Loopholes in the law, however, have delayed benefits to consumers. It
is time to correct this.
The Congressional Budget Office, CBO, recently released results of
its estimate of S. 812 finding that total drug expenditures in this
country over the next ten years (2003 to 2012) will be roughly $4.7
trillion. If the delays resulting from numerous lawsuits and agreements
were eliminated, the CBO estimates that S. 812 would result in a
savings of up to 7 percent or $320 billion. For consumers, particularly
seniors, the uninsured, and those on Medicare, this is a tremendous
savings.
Congress will improve the lives of many Americans by passing the
underlying language of S. 812. I urge my colleagues to do this now.
Mr. LEAHY. Mr. President, I am disappointed that at the very last
moment, the acceptance of the Drug Competition Act of 2001 as an
amendment to ``The Greater Access to Affordable Pharmaceuticals Act,''
S. 812 was withdrawn. This bill, which enjoys the justified support of
the administration's antitrust enforcement agencies, would have brought
lower-priced generic drugs to the marketplace. Along with Senator
Grassley, I have every confidence that this bill would have garnered
the overwhelming support of our colleagues on both sides of the aisle
and would have benefitted every American purchasing prescription drugs,
and am mystified by the reversal of the agreement to accept it. I thank
Senator Grassley and Senator Kennedy for their support.
Prescription drug prices are rapidly increasing, and are a source of
considerable concern to many Americans, especially senior citizens and
families. Generic drug prices can be as much as 80 percent lower than
the comparable brand name version. S. 812 is a tremendous effort to
improve timely introduction of generic pharmaceuticals into the
marketplace, and into our medicine cabinets, and our amendment will
provide an important tool in making that effort successful.
While the Drug Competition Act is a small bill in terms of length, it
is a large one in terms of impact. It will ensure that law enforcement
agencies can take quick and decisive action against companies that are
driven more by greed than by good sense. It gives the

[[Page S7646]]

Federal Trade Commission and the Justice Department access to
information about secret deals between drug companies that keep generic
drugs off the market. This is a practice that hurts American families,
particularly senior citizens, by denying them access to low-cost
generic drugs, and further inflating medical costs.
This had been a genuine bipartisan effort, and I must thank all my
colleagues, including Senator Hatch who has a long-standing interest in
these issues and who has praised S. 754 on the floor in recent days.
Also, sub-committee Chairman Kohl has worked with me from the start on
this effort, and I particularly want to thank our co-sponsor Senator
Grassley, who has worked hard to reach consensus on this bill that will
help protect consumers. This bill passed unanimously out of the
Judiciary Committee last October, but it has been the subject of an
anonymous hold on the floor, presumably unrelated to the merits.
Partisan politics should not further delay enactment of this sensible,
and universally applauded, bill into law.
In fact, just yesterday the FTC released its long-awaited report on
the entry of generic drugs into the pharmaceutical marketplace. The FTC
had two recommendations to improve the current situation, to close the
loopholes in the law that allow drug manufacturers to manipulate the
timing of generics' introduction to the market. One of those
recommendations was simply to enact S. 754, as the most effective
solution to the problem of ``sweetheart'' deals between brand name and
generic drug manufacturers that keep generic drugs off the market, thus
depriving consumers of the benefits of quality drugs at lower prices.
In short, this bill enjoys the unqualified endorsement of the
Republican FTC, which follows on the support by the Clinton
Administration's FTC during the initial stages of our formulation of
this bill. We can all have every confidence in the common sense
approach that S. 754 takes to ensuring that our law enforcement
agencies have the information they need to take quick action, if
necessary, to protect consumers from drug companies that abuse the law.
The issue of drug companies paying generic companies not to compete
was exposed last year by the FTC, and by articles in major newspapers,
including an editorial in the July 26, 2000, The New York Times, titled
``Driving Up Drug Prices.'' This editorial concluded that the problem
``needs help from Congress to close loopholes in federal law.'' And
while the FTC has sued pharmaceutical companies that have made such
secret and anticompetitive deals, as the then Director of the Bureau of
Competition Molly Boast testified before the Judiciary Committee in May
2001, the antitrust enforcement agencies are only finding out about
such deals by luck, or by accident.
Under current law, the first generic manufacturer that gets
permission to sell a generic drug before the patent on the brand-name
drug expires, enjoys protection from competition for 180 days, a head
start on other generic companies. That was a good idea, but the
unfortunate loophole exploited by a few is that secret deals can be
made that allow the manufacturer of the generic drug to claim the 180-
day grace period, to block other generic drugs from entering the
market, while, at the same time, getting paid by the brand-name
manufacturer to not sell the generic drug.
The bill would have closed this loophole for those who want to cheat
the public, but keeps the system the same for companies engaged in true
competition. The deals would be reviewed only by those agencies--the
agreements would not be available to the public. I think it is
important for Congress not to overreact in this case and throw out the
good with the bad. Most generic companies want to take advantage of
this 180-day provision and deliver quality generic drugs at much lower
costs for consumers. We should not eliminate the incentive for them.
Instead, we should let the FTC and Justice look at every deal that
could lead to abuse, so that only the deals that are consistent with
the intent of that law will be allowed to stand.
This bill would have accomplished precisely that goal. Moreover, it
fits neatly into S. 812's provisions requiring a generic drug company
that has been granted the exclusive, 180-day period on the market to
forfeit that privilege if it makes a deal with a brand name company, or
otherwise delays bringing its generic drug into the marketplace. Such a
generic company must relinquish that 180-day privilege to the next
generic manufacturer that can come to market. Both S. 812 and S. 754
share the goal of ensuring effective and timely access to generic
pharmaceuticals that can lower the cost of prescription drugs for
seniors, for families, and for all of us.
Mr. KERRY. Mr. President, I am disappointed that the Senate was
unable to pass the Graham-Miller-Kennedy amendment last week, as it
would have established a comprehensive prescription drug benefit for
our Nation's seniors. I strongly supported the Graham-Miller-Kennedy
plan, as I believe it offered the best solution to the problem our
senior citizens face in finding a way to afford the prescription drugs
they need to stay healthy. Given the failure of the Senate to pass the
Graham-Miller-Kennedy amendment, which I voted for, I now lend my
support to the low-income, catastrophic benefit proposal that has been
offered by my colleagues, Senators Bob Graham and Gordon Smith. While I
would rather the Senate take a stand in support of a more comprehensive
benefit, the Graham-Smith amendment marks an important first step in
making sure that our country delivers on the promise that Medicare made
to our Nation's seniors almost 30 years ago.
Medicare was enacted in 1965, under the leadership of President
Lyndon Johnson, as a promise to the American people that, in exchange
for their years of hard work and service to our country, their health
care would be protected in their golden years. But that promise has not
been fulfilled. Across our country, millions of seniors have cried out
for help in paying for their prescription medication. Too many of our
parents and grandparents confess that they are unable to afford the
drugs their doctors prescribe for them. Too many of our parents and
grandparents have to choose between paying for their rent, getting
their groceries or buying the medicine they need to stay healthy.
Prescription drug expenditures are skyrocketing--with the drug prices
facing seniors growing at four times the rate of inflation. These costs
are forcing our Nation's elders to pile into buses, and travel into
Canada and Mexico where they can purchase the medicine they need for 30
percent less of the cost in the United States. These costs are driving
Americans across our borders to obtain the prescription medications our
very own pharmaceutical companies have developed here at home.
I appreciate the biotechnology revolution being driven publicly, by
the National Institutes of Health, and privately, by the pharmaceutical
industry. The advancements in modern medicine are truly spectacular,
and many of the most inspiring discoveries are being made by
biotechnology companies in my own State of Massachusetts. I am proud of
the work being done in my state and across the country. With continued
investment in research, scientists predict that we may be 5 to 10 years
away from major breakthroughs in medical treatment for diseases like
Alzheimer's and Parkinson's. But I ask, of what consequence are medical
discoveries if they never leave the laboratory or move beyond the shelf
of a local pharmacy?
The Graham-Smith amendment will help move those medications from
pharmacy shelves into the hands of the seniors whose lives depend on
them. Graham-Smith offers all seniors protection against high drug
bills, establishing Medicare coverage of all drug costs incurred over
$3,300. In addition to catastrophic coverage, the Graham-Smith proposal
will provide every senior, regardless of income, up to a 30 percent
discount on drugs purchased before they reach the $3,300 stop-loss. For
low-income seniors, the Graham-Smith plan provides special assistance,
covering all drug costs for those beneficiaries below 200 percent of
the Federal poverty level.
The Graham-Smith amendment will provide protection to all seniors
against the high cost of prescription drugs. It is not the ideal
solution, but it targets the seniors who need help the most. The
sickest seniors will be protected from out-of-control costs, which

[[Page S7647]]

every senior needs as insurance against a serious illness. Seniors with
low incomes are guaranteed the drugs they need so they don't have to
choose between prescription drugs and other necessities. This amendment
provides a solid first step toward the goal of providing a
comprehensive, reliable Medicare prescription drug benefit for our
seniors.
I urge my colleagues to join me in support of the Graham-Smith
amendment. But let us not abandon our goal of establishing a more
complete prescription drug benefit. Graham-Smith is a good first step,
but we must continue the journey. Unless we establish a comprehensive
Medicare drug benefit, the health of an entire generation will continue
to be in jeopardy. We must act to deliver on that promise that
President Johnson made 25 years ago. Our Nation's seniors deserve no
less.
Mrs. BOXER. Mr. President, I am disappointed that after nearly three
weeks of debate, the Senate has been unable to pass a prescription drug
benefit for seniors. Millions of senior citizens across the country
desperately need this help.
In California alone there are nearly 3.8 million Medicare
beneficiaries. According to the most recent estimates, 684,000 of those
Californians have no prescription drug coverage. Unsurprisingly, low-
income California seniors make up the majority of those currently
suffering. However, this is an issue that cuts across socioeconomic
lines to affect all seniors, throughout my State and throughout the
Nation.
It is easy to listen to numbers and forget that there are faces
behind those numbers--real people with real health care problems. But
that is precisely why this debate is so important. There are seniors in
this country who are being gouged by the prices of prescription drugs,
who are choosing to skip doses to make their drugs last, and who are
holding off as long as possible before they fill their prescriptions
because they simply can't afford it. This is a travesty, and one that
we must address.
We had a tremendous opportunity to address this situation and to
provide seniors with a comprehensive prescription drug benefit under
Medicare. I supported a proposal to provide a voluntary, affordable
prescription drug benefit for all seniors under Medicare, with special
assistance to those with low incomes. This proposal would provide a
reliable benefit for the people who spend the most on drugs and who, in
many cases, can least afford it: senior citizens. Unfortunately,
because of opposition from the other side of the aisle, that effort
failed.
Fortunately, all is not lost. While we were unable to make
prescription drugs more accessible to seniors, I am pleased that we
were able to take steps to make prescription drugs more affordable for
everyone.
I supported--and we passed--a provision that will allow drug
reimportation from Canada. In Canada, the exact same drugs often cost
one-third the price. However, pharmacies in this country are not
currently allowed to buy drugs in Canada to sell in the United States,
which would pass these savings on to consumers. That should change as
long as those drugs meet strict safety standards before entering our
country. This provision will allow that to happen.
I supported--and we passed--a provision that will allow states to
negotiate lower drug prices for all of their citizens who currently
lack prescription drug benefits. States currently negotiate drug prices
for their Medicaid recipients, the poorest of our Nation's citizens.
This provision will give States an even larger market power to ensure
even deeper discounts for all residents who lack prescription drug
coverage.
Finally, I supported--and we passed--a proposal to close the
loopholes that currently allow brand-name drug companies to keep
generic drugs off the market, even after the original patent on the
drug has expired. Bringing generics to market ensures greater
competition and ultimately reduces prices. This should not be unfairly
stalled by brand-name companies that want to maintain their monopoly on
the market.
These are all important ways in which we will be able to bring the
costs of drugs down for all Americans, young and old, rich and poor. We
must provide seniors with a true Medicare prescription drug benefit, so
that they are no longer forced to choose between drugs and food or
rent. We may not have succeeded today, but I will keep fighting to see
it happen in the very near future.
Ms. COLLINS. Mr. President, I rise in strong support of the Greater
Access to Affordable Pharmaceuticals Act, which will make prescription
drugs more affordable by promoting more competition in the
pharmaceutical industry and increasing access to lower priced generic
drugs.
I was very pleased to have the opportunity to work with my colleague,
the Senator from North Carolina, in offering this compromise in the
Health, Education, Labor, and Pensions Committee, where it was approved
by a strong bipartisan vote. I also recognize the leadership and hard
work of the Senators from New York and Arizona on this critical issue.
Prescription drug spending in the United States has increased by 92
percent over the past 5 years to almost $120 billion. These soaring
costs are a particular burden for the millions of uninsured Americans,
as well as for those seniors on Medicare who lack prescription drug
coverage. Many of these individuals are simply priced out of the market
or forced to choose between paying the bills or buying the pills they
need to remain healthy.
Skyrocketing prescription drug costs are also putting the squeeze on
our Nation's employers who are struggling in the face of double-digit
increases in their insurance premiums. They are finding it increasingly
difficult to continue to provide health care coverage for their
employees.
Soaring costs are also exacerbating the Medicaid funding crisis that
all of us are hearing about from our Governors back home who are
struggling to bridge shortfalls in the States' budgets.
In 1984, the Hatch-Waxman Act made significant changes in our patent
laws that were intended to encourage pharmaceutical companies to make
the investments necessary to develop new drug products while
simultaneously enabling their competitors to bring lower cost, generic
equivalents to the market. We should acknowledge that, to a large
extent, the original Hatch-Waxman Act succeeded. The law has speeded
access to generic drugs in the market. As a consequence, consumers are
saving anywhere between $8 and $10 billion a year by purchasing lower
priced generic drugs.
Moreover, there are even greater potential savings on the horizon.
Within the next 4 years, the patents on brand name drugs with combined
sales of $20 billion are set to expire. If Hatch-Waxman were to work as
it was intended, consumers could expect to save between 50 and 60
percent on these drugs as lower-cost generic alternatives becomes
available after these patents expire.
But despite the past successes of this law, it has become
increasingly evident that the Hatch-Waxman Act has been subject to
abuse. While many pharmaceutical companies have acted in good faith,
there is mounting evidence that others have attempted to game the
system by exploiting legal loopholes in the current law. The result is,
too many pharmaceutical companies have maximized their profits at the
expense of consumers by filing frivolous lawsuits that have delayed
access to lower priced generic drugs.
Just yesterday, the Federal Trade Commission released its long-
awaited study that found that brand name drug manufacturers have,
indeed, misused the law to delay the entry of lower cost generics into
the market. The FTC found that these tactics have led to delays of
between 4 and 40 months--over and above the first 30-month stay
provided under Hatch-Waxman--for generic competitors of at least eight
drugs--eight very popular drugs--since 1992. Moreover, six of these
eight delays have occurred since 1998.
The FTC report identifies two specific provisions of the current
law--the automatic 30-month stay and the 180-day market exclusivity
provision--as being susceptible to challenges and strategies that delay
the entry of lower cost generic alternatives into the market. According
to the FTC report, these loopholes ``continue to have the potential for
abuse'' and, if left unchanged, ``may have [even] more significance
[for consumers] in the future.'' I am pleased to say that these

[[Page S7648]]

are the very loopholes that our bill would close.
The Congressional Budget Office estimates that our legislation would
cut our Nation's drug costs by an astounding $60 billion over the next
10 years. It is no wonder that our proposal is supported by coalitions
representing the Governors, employers, insurers, organized labor,
seniors groups, and individual consumers who are footing the bill for
these expensive drugs and whose costs for many popular drugs could be
cut in half if generic alternatives were more readily available.
I would like to pause for a moment to discuss some of the details of
the underlying Edwards-Collins bill. Some of my colleagues have argued
that certain provisions of the bill are unconstitutional or that the
bill will lead to more litigation. But no amendments have been offered
to change any of the provisions of the Edwards-Collins bill. Moreover,
the bill itself is the product of months of work and represents a
broad, bipartisan compromise that incorporates the views and concerns
of a wide spectrum of interests.
I worked particularly hard on carefully wording the cause of action
created by the bill, and believe that criticisms of it spurring
increased litigation are not well-founded. Our bill creates a new civil
action that offers a remedy if companies incorrectly or frivolously
listed patents in the Orange Book, so that these patents do not delay
the ability of a generic drug to come to market. The bottom line is,
the cause of action will help to reduce both the cost of prescription
drugs and the cost of prescription drug litigation. It does so by
allowing generic drug makers, for the first time, to directly challenge
a patent that has been frivolously or incorrectly listed.
I understand the concerns of some of my colleagues who are leery of
creating new causes of action. But I would reply that, in many cases,
litigating through narrowly-targeted suits can be quicker and less
expensive than aggregating a number of claims in one, massive
proceeding. Moreover, I have worked to target the new provision as
carefully as possible. In Committee, I offered a common sense amendment
to tailor the new cause of action in a way that will help minimize
unintended consequences while, at the same time, ensuring that it still
serves its intended purpose of policing frivolous or incorrectly listed
patents. My amendment made it clear that the delisting cause of action
is for injunctive relief only and cannot result in monetary damages. It
also limited the new cause of actions to patents listed in the Orange
Book up to 30 days after a New Drug Application's approval. In doing
so, my amendment harmonized the 30-month stay provision and the cause
of action, as it should be.
The original Hatch-Waxman Act was a carefully constructed compromise
that balanced an expedited FDA approval process to speed the entry of
lower cost generic drugs into the market with additional patent
protections to ensure continuing innovation that brings us these
wonderful lifesaving and life-enhancing drugs.
The bipartisan compromise bill before us restores that balance by
closing the loopholes that have reduced the original law's intent and
its effectiveness in bringing lower cost generic drugs to market more
quickly. I am very pleased we are going to pass this legislation. It
really will make a difference for millions of Americans who are
struggling to afford the high cost of prescription drugs.
Mr. President, I ask unanimous consent that letters from various
groups that are supporting this legislation and worked very closely
with us in drafting it be printed in the Record.
There being no objection, the material was ordered to be printed in
the Record, as follows:

Business for

Affordable Medicine,

Washington, DC July 23, 2002.
Hon. Susan Collins,
US Senate,
Russell Senate Office Building,
Washington, DC
Dear Senator Collins: The Business for Affordable Medicine
coalition encourages you to vote for the Hatch-Waxman reform
measures in S. 812. By closing loopholes in the Hatch-Waxman
Act, Congress will ensure that more affordable prescription
drugs reach the market without delays, which will provide
prescription drug purchasers with significant cost savings.
The Congressional Budget Office estimates that closing
Hatch-Waxman loopholes would reduce the nation's drug costs
by $60 billion over the next 10 years. Preventing delays in
the availability of generics would also reduce federal
spending for prescription drugs by $6 billion while
increasing federal revenues by $2.2 billion.
Consumers and institutional purchasers (including
employers, and federal and state governments) can no longer
afford the anti-competitive practices that are made possible
by loopholes in the Hatch-Waxman Act. Please be assured that
BAM supports strong intellectual property protections, and we
do not believe they are undermined by provisions of S. 812.
BAM corporate members include Ahold USA, Albertsons,
Constellation Energy Group, General Motors, Georgia-Pacific,
Kellogg Company, Kmart, Kodak, Motorola, Sysco Corporation,
United Parcel Service, Wal-Mart, Weyerhaeuser, and Woodgrain
Millwork. BAM also includes governors and a number of state
labor leaders.
Together, we urge you to support these limited and targeted
Hatch-Waxman reform provisions in S. 812 to make timely
access to lower-cost generics a reality.
Sincerly,

Jody Hunter,

Director, Health and Welfare,
Georgia-Pacific Corporation.
____

Coalition for a Competitive

Pharmaceutical Market,

July 17, 2002.
Dear Senator: As a broad-based coalition of large
employers, consumer groups, generic drug manufacturers,
insurers, labor unions, and others, we are writing to advise
you of our strong support for the S. 812, the Greater Access
to Affordable Pharmaceuticals Act, as reported out of the
Senate HELP Committee on July 11, 2002. We believe it is
critical that Congress act this year to pass legislation that
would eliminate barriers to generic drug entry into the
marketplace. This legislation would accomplish this long-
overdue need.
Prescription drug costs are increasing at double-digit
rates and clearly are unsustainable. Current pharmaceutical
cost trends are increasing premiums, raising copayments,
pressuring reductions in benefits, and undermining the
ability of businesses to compete. We believe that a major
contributor to the pharmaceutical cost crisis is the use of
the Drug Price Competition and Patent Term Restoration Act of
1984 in ways clearly unanticipated by Congress and which
effectively block generic entry into the marketplace. The
repeated use of the 30-month generic drug marketing
prohibition provision and other legal barriers have resulted
in increasingly unpredictable and unaffordable pharmaceutical
cost increases.
Although the legislation as reported out of the Senate HELP
Committee does not totally eliminate the 30-month marketing
prohibition provision, as would be our preference, it does
make important process changes that will lead to a more
predictable, rational pharmaceutical marketplace. We
recognize that compromises were necessary to garner the
support of a bipartisan majority of the Members of the
Committee. However, we would strongly oppose any additional
amendments that would undermine the intent of this
legislation by further delaying generic access or reducing
competition and increasing costs to purchasers. We also
remain opposed to legislation that would increase costs to
purchasers either through extended monopolies or unnecessary
and costly litigation.
We are convinced that the legislation currently pending
before the full Senate will make a major difference in
increasing competition in the marketplace and enhancing
access to more affordable, high quality prescription drugs.
We look forward to working with you and other Members of the
Senate to ensure that this important legislation is enacted
this year.
____

Coalition for a Competitive

Pharmaceutical Market,

July 30, 2002.
Dear Senator: As a broad-based coalition of large
employers, consumer groups, generic drug manufacturers,
insurers, and others, we are writing to urge you to vote for
cloture on the bipartisan Greater Access to Affordable
Pharmaceuticals Act (S. 812). We believe it is critical that
Congress act this year to pass legislation that would
eliminate barriers to generic drug entry into the
marketplace. This legislation would accomplish this key
policy objective.
Prescription drug costs continue to skyrocket--adversely
impacting consumers by increasing premiums, raising
copayments, pressuring reductions in benefits, and
undermining the ability of businesses to compete. We believe
that a major contributor to the pharmaceutical cost crisis is
the use of the Drug Price Competition and Patent Term
Restoration Act of 1984 in ways clearly unanticipated by
Congress and which effectively block entry of equivalent
generic drugs into the marketplace.
Today's report from the Federal Trade Commission (FTC)
supports the kind of reforms contained in S. 812. For
example, the report supports limiting the availability of the
automatic 30-month marketing prohibition to just one per
product, per generic drug application. It also recognizes the
value of

[[Page S7649]]

having a mechanism that would allow a generic company to
remove or correct the listing of a frivolous patent with the
FDA. According to the report, the lack of a mechanism to
delist an improperly listed patent ``may have real world
consequences'' given the FTC's knowledge of ``instances in
which a 30-month stay was generated solely by a patent that
raised legitimate listability questions.''
The Coalition believes that S. 812 makes important process
changes that will lead to a more predictable, rational
pharmaceutical marketplace. CCPM members would strongly
oppose any additional amendments that would undermine the
intent of this legislation by further delaying generic access
or reducing competition and increasing costs to purchasers.
We also remain opposed to legislation that would increase
costs to purchasers either through extended monopolies or
unnecessary and costly litigation.
We are convinced that the legislation currently pending
before the full Senate will make a major difference in
increasing competition in the marketplace and enhancing
access to more affordable, high quality prescription drugs.
We look forward to working with you and other Members of the
Senate to ensure that this important legislation is enacted
this year.
____

Mr. BIDEN. Mr. President, today is a day of profound disappointment
to me. We have completed a debate on proposals to provide prescription
drug coverage to Medicare beneficiaries, the most vulnerable sector of
our population, and we have come up empty.
I applaud my colleagues for their earnestness and conscientiousness
as this issue was discussed on the Senate floor, but earnestness and
conscientiousness do not help the senior citizen who cannot afford to
pay for needed medications. I introduced a bill, the Prescription Drug
Benefit Act of 2002, that would have provided an excellent benefit for
Medicare beneficiaries by adding prescription drug coverage to Medicare
Part B with no new premiums or deductibles, and I still believe that
should be our goal. But at this point, we don't even have a consensus
for a first step toward a Medicare prescription drug plan for seniors.
Last week, I voted for the Graham-Miller plan, a comprehensive
approach to this problem that, although not as good as my own bill, was
a worthy compromise. It was defeated. Today, I voted for the Graham-
Smith plan that would at least offer us a starting point toward a
comprehensive prescription drug plan. It was defeated. I and all of my
colleagues who are concerned about the welfare of our seniors are
regrouping with an eye toward taking another run at this critical
problem in the very near future.
The seniors and the disabled still need their life-saving
medications. They still have to pay large amounts out-of-pocket for
drugs, even though the legislation we passed today should help reduce
the overall cost of pharmaceuticals for everyone. The percentage of the
population covered by Medicare is rising. Medical advances are leading
to important new drugs for various diseases. Our nation's seniors
cannot, and should not, be left behind in the race toward longer and
healthier lives. We have moved this debate forward, but it is far from
over, and we will need to continue to be resourceful and persistent in
the future. The life and health of 40 million Americans hang in the
balance.
Mr. KOHL. Mr. President, I rise to strongly support final passage of
S. 812, the Greater Access to Affordable Pharmaceuticals Act. I
cosponsored this important legislation because I believe it will
benefit every American by ensuring that more affordable generic drugs
get to market on time and lower costs for consumers as promised. The
Congressional Budget Office estimates that this bill will save American
consumers $60 billion over the next 10 years.
Prescription drug spending represents 9 percent of all health care
costs, but drug spending grew 17 percent in 2001--and it's the fastest
growing part of health care. Generic drugs can cost one-quarter of the
price of their brand-name counterparts. In a time when health care
costs are soaring in the double-digits annually, that is no small
point.
The pharmaceutical industry enjoys the highest profit margins of any
sector in the American economy. Drug companies argue that high retail
costs reflect the high cost of investment in research and development.
I applaud the drug companies' efforts to find new lifesaving treatments
and cures for patients and I do not argue with their right to make a
healthy profit from their work.
It is important to note that many of the gains in pharmaceutical
research are made possible by the substantial, taxpayer-funded research
investments of the National Institutes of Health and other Federal
grants. All Americans should have access to the benefits of that
research, and they should expect that once a drug company has recouped
their costs, made a healthy profit, and the patents surrounding their
drug expire, at that point consumers should benefit from generic
competition that lowers drug prices.
Unfortunately, in recent years, many drug companies have used
loopholes in our patent laws to keep less expensive generic drugs off
the market. This raises health care costs for patients, employers and
States that are already struggling with rising health costs.
There are three major loopholes that this bill closes. First, it
would stop brand-name drug companies from filing endless, frivolous
patents to keep a generic competitor off the market. These patents
often border on the ridiculous, such as a patent on the color of the
pill. But ridiculous as it may seem, each of these patents triggers a
30-month stay whereby the generic drug is kept off the market while the
matter goes to court. And drug companies have every incentive to do
this, after all, the cost of litigation is virtually nothing compared
to the additional profits they can get by keeping their monopoly just a
little longer. For example, the makers of the antidepressent Wellbutrin
were able to make another $1.3 billion during the 31 months they were
in litigation with the generic company. And the makers of Prilosec
earned another $1 billion in just 7 months of delayed generic
competition.
This bill would also close another loophole by outlawing sweetheart
deals where a brand company pays a generic company to stay out of the
market. In the case of Cardizem, which treats high blood pressure, the
brand-name company paid the generic company $90 million to stay out of
the market. Because the generic had won the right to have 180 days of
market exclusivity before other generic competitors could enter the
market, this sweetheart deal allowed the brand company to earn another
$450 million before other generics could compete.
Finally, this bill puts some common sense back into the process by
which brand companies list patents with the FDA in what is called the
Orange Book. It enforces the law as it was originally intended by
ensuring that only patents that claim the drug product or the approved
method of use are listed in the Orange Book. It also gives generic
companies the ability to challenge patents that may have been listed
inappropriately just to keep generics off the market longer.
I believe that this legislation preserves the original intent of the
Hatch-Waxman Act to balance the competing interests of the rights of
innovative drug companies and the rights of consumers to affordable
medicines. It preserves the ability of drug companies to invest in
research and development to find lifesaving cures and treatments, but
it also makes prescription drugs more affordable for all Americans by
getting generic drugs to the market on time. It also makes any Medicare
prescription drug benefit we pass more affordable for seniors and
taxpayers.
This brings me to the real disappointment I have about the
legislation we are about to pass today. I am extremely disappointed
that the Senate was unable to also pass a real, comprehensive,
affordable drug benefit within the Medicare Program. I am baffled by
the unwillingness of many on the other side of the aisle to work
together to help our Nation's seniors with skyrocketing drug costs.
When Medicare was first created in 1965, prescription drugs were a
very small part of our health care system. But today, prescription
drugs are a critical part of that system, keeping people healthier and
living longer. Unfortunately, according to the Kaiser Family
Foundation, 38 percent of our Nation's elderly have absolutely no
prescription drug coverage at all. Many seniors who do have some
prescription drug coverage find their plan inadequate and face large
out-of-pocket costs. Too many seniors forgo needed medicines or are
forced to choose between buying the medicine they need and buying food
or paying rent.

[[Page S7650]]

Seniors and the disabled on Medicare need a comprehensive, universal,
voluntary, affordable drug benefit, and that benefit should be part of
the Medicare program that we've relied upon since 1965. While the
Senate considered many different plans, I voted for the Graham-Miller
approach because it was the only plan that met those important goals.
And it was the only plan before the Senate that guaranteed that all
Wisconsin senior citizens would have access to the medicines they need.
By contrast, I voted against the so-called ``tripartisan'' plan
because it relied solely on HMOs to provide prescription drugs to
seniors. This simply won't work in Wisconsin. In our State, because of
inadequate Medicare reimbursement, we've already seen Medicare HMO
plans leave every year and offer fewer benefits than in other States.
The tripartisan plan had the same Medicare reimbursement problems.
There was no guarantee that plans would participate in Wisconsin at
all, and those plans that did participate could cover fewer drugs or
charge seniors more in Wisconsin than in other States.

In fact, the HMOs themselves have said they are reluctant to offer
such plans. And even if they do, there is no guaranteed drug benefit,
from year to year, HMOs could change the premiums and copays seniors
pay and which drugs will be covered. I do not believe we should hold
Wisconsin seniors hostage to the business interests of HMOs. Seniors
need a drug benefit that they can rely on every year to be affordable
and one that ensures access to the medicines they need. The tripartisan
plan did not meet that test.
In addition, under the tripartisan plan, many seniors would still
have high drug costs and low-income seniors would not be protected. The
HMOs could charge whatever premiums they want; there would be a $250
deductible; seniors would still pay 50 percent of their drug bills; and
there is a big gap where there is no coverage at all and the senior
pays 100 percent of their drug bills. Seniors would have to pay $3,700
out of their own pockets before they even reach the catastrophic level.
And low-income seniors may not qualify for any extra help at all
because of a strict asset test that prevents them from being covered if
they own a car worth more than $4,500, clothing and furniture worth
more than $2,000, or even a burial fund worth $1500. This asset test
would automatically eliminate 40 percent of Wisconsin's low-income
seniors from being eligible for the extra help they need.
Instead of the false promise of the tripartisan plan, I and 51 other
Senators supported the Graham-Miller plan. This program provided a
guaranteed benefit through the Medicare Program that would be available
to all seniors, at the same price no matter where they live. It was
voluntary, so seniors with drug coverage today could keep their plans.
It had reasonable premiums and copays, no gaps in coverage, and low-
income seniors would get extra help with no restrictive asset test. And
it gave seniors choices. Seniors could choose an HMO plan if they
wanted to, but the Graham-Miller bill offered them a drug benefit
through the traditional Medicare program that seniors have relied on
since 1965.
Unfortunately, even though a majority of Senators supported the
Graham-Miller bill, it failed to gain the 60 votes that are necessary
for any plan to pass under Senate budget rules. At that point, the
Senate was faced the possibility of doing nothing and continuing to
leave seniors stranded with high drug costs. For me, this was not an
option. Seniors have waited too long for Congress to act, and it would
be inexcusable for Congress to leave them with nothing.
That's why I supported a bipartisan compromise that represented a
solid down payment on a real Medicare prescription drug benefit. First,
it would help all low-income seniors below 200 percent of poverty, 45
percent of Wisconsin seniors, by providing comprehensive drug coverage
through the Medicare program with nominal copays of $2 per generic
prescription and $5 per brand-name prescription. Second, it would
provide all seniors above 200 percent of poverty with discounts on
prescription drugs of up to 30 percent. The Medicare program would
utilize Pharmacy Benefit Managers, or PBMs, to negotiate these
discounts the same system that is used today to manage benefits for
nearly 200 Americans in the private sector.
Third, the Graham-Smith compromise would protect seniors with very
high drug costs of more than $3,300 in out-of-pocket costs, which
represents nearly 17 percent of Wisconsin seniors. At that point,
seniors would receive full Medicare coverage for their medicines with
copays of only $10 per prescription.
Let me be clear that I would much prefer a more comprehensive benefit
and have voted for one. The original Graham-Miller plan would have been
a comprehensive benefit for all Medicare beneficiaries, and I believe
that is the direction we need to go. But the Graham-Smith compromise
plan would have taken a real first step toward the universal benefit we
need. It would have been a down payment upon which Congress must build
so that all seniors have the coverage they need. But again, even this
compromise was blocked from passing.
I am extremely disappointed in the outcome of this debate. We missed
a tremendous opportunity to pass a comprehensive Medicare drug benefit.
And then we were blocked from the opportunity to take even one real
step toward that goal. I truly hope that this is not the end of our
journey this year. Our senior citizens made our country what it is
today, they paid their taxes and they played by the rules. They should
not be forced to choose between paying the rent or buying groceries, or
buying the life-saving medicines they need to be healthy in their
retirement years. It's time to create a reliable, affordable Medicare
prescription drug benefit for seniors. I hope the Senate will continue
to work toward that goal this year.
Mr. THURMOND. Mr. President, I rise today to speak in favor of
affordable prescription drugs. As a life-long health advocate, I
recognize that prescription drugs are an important part of improving
the health and quality of life for millions of Americans. These drugs
allow Americans of every age to live a more productive and more
enjoyable life. Our success in this area is due in large measure to our
competitive system that allows for many different approaches to meet
the many different needs of Americans.
The central features of any prescription drug bill should be
increased competition, innovation in the marketplace and increased
access to more affordable drugs. However, the current bill does not
accomplish these objectives. Instead, it seeks to bypass the excellent
consumer protection provided by the FDA, decreases the return on the
development of newer and better drugs, and may actually increase the
cost of prescription drugs in the long run.
This bill has been hastily assembled and rashly brought to the floor
before committee consideration. This bill contains provisions that have
not been analyzed for their impact upon our fine health care system. I
fear these provisions will threaten the excellent healthcare system we
currently enjoy. Indeed, the FTC released, just yesterday, a report
entitled ``Generic Drug Entry Prior to Patent Expiration'' that showed
that our system was working and that under the current Hatch-Waxman law
innovative new drugs were being brought to market even as a thriving
generic market was lowering overall drug costs. While the report does
show that some minor changes may be in order, the place to make such
important and complex changes is not the floor of the Senate after only
a few hours study, it is in the appropriate committee with the
requisite expertise.
The bill contains a provision allowing for large scale re-importation
of prescription drugs. This presents a serious safety concern of a
variety of public health officials and has been rejected in the past. I
am concerned that the opinions of many relevant agencies on this matter
have been disregarded. Agencies which oppose this provision include the
Department of Health and Human Services, the Food and Drug
Administration, the Customs Service, and the Center ;for Medicare and
Medicaid Services.
Another provision which I strongly oppose which is in the bill
relates to Medicaid recipients access to medicine. While it is
presented as a price control, it will effectively make drugs
unavailable to low-income Medicaid patients

[[Page S7651]]

by imposing restrictive ``prior authorization'' requirements on
physicians. This policy is opposed by many patient groups and should
not be part of this legislation.
Finally, I am deeply concerned that this bill does not contain a
Medicare drug benefit plan. This is a very important issue that remains
unresolved by this body. Therefore, I do not support cloture on this
bill, nor do I support final passage of the measure. It is my hope that
we will revisit this issue soon and craft a bill which will improve the
availability of affordable prescription drugs and ensure advances
continue in this industry.
Mr. HUTCHINSON. Mr. President, nearly 482,000 seniors in Arkansas
desperately need a Medicare prescription drug benefit. Per capita,
Arkansas has one of the poorest senior populations in the Nation, which
means, more often than not, Arkansas seniors must choose between
putting food on the table and buying much needed prescription
medicines. I voted in favor of the Graham-Smith-Lincoln Medicare
prescription drug compromise today, which has the full support of the
AARP, because I believe in providing prescription drug assistance to as
many people as possible and to those seniors who need it most. I
regret, however, that it leaves out nearly 40 percent of Arkansas
seniors and lacks measures to strengthen and protect Medicare. Rather,
I believe that a universal benefit, accompanied by responsible Medicare
reforms, is the most sensible approach to addressing the rising cost of
drugs for our seniors and ensuring the long-term stability of the
Medicare program. But most importantly, I am concerned about the impact
of the Graham-Smith-Lincoln compromise on local pharmacies.
Seniors need a Medicare prescription drug benefit just as much as
they need access to their local pharmacies, particularly in rural
states like Arkansas. The discount drug card established under the
Graham-Smith-Lincoln compromise is a concept I opposed last week when I
voted against the Hagel drug card amendment. Requiring pharmacies to
accept discounts while doing nothing to reduce the price at which drugs
are bought could force local pharmacies to foot the bill of a Medicare
prescription drug amendment. This is simply not right.
To help fix these problems, I filed an amendment to the Graham-Smith-
Lincoln compromise which would have struck the drug discount card
provisions in the bill as well as a provision giving special treatment
for mail order pharmacies. If the Graham-Smith-Lincoln compromise
garnered the 60 votes necessary for passage, I was prepared to offer my
amendment so the Senate could have an open debate and vote on the
impact of such legislation on local pharmacists. Since the Graham-
Smith-Lincoln compromise was rejected, this debate will have to wait
until another day. In the meantime, I will continue to work for a
bipartisan solution that provides Medicare prescription drug coverage
for all seniors, and particularly low-income seniors, while also
preserving access to local pharmacies.
The PRESIDING OFFICER. Under the previous order, there are 2 minutes
remaining equally divided.
Who yields time?
The Senator from New York is recognized.
Mr. SCHUMER. Madam President, again, I urge my colleagues to support
this legislation. Admittedly, it is incomplete legislation. We have not
extended access, but in terms of cost cutting, this legislation is
strong.
The Schumer-McCain provisions will reduce the costs of so many drugs
by 60, 65 percent for the senior citizen. For the family who has a
child who desperately needs a drug, instead of $100 a prescription, it
will only be $30, $35, or $40 a prescription. That is a godsend to many
people these days.
These drugs are wonder drugs, but their cost is so high that if you
are not very wealthy or don't have a good medical plan, you cannot
afford them, and that is an awful choice for people.
This bill achieves the goal of reducing costs and reducing it very
significantly--a $60 billion reduction over the next decade to our
citizenry. I ask for your support of this measure.
Madam President, I ask for the yeas and nays.
The PRESIDING OFFICER. Is there a sufficient second?
There is a sufficient second.
The yeas and nays were ordered.
The PRESIDING OFFICER. Who yields time?
The Senator from Pennsylvania, Mr. Santorum, is recognized.
Mr. SANTORUM. Madam President, I encourage a ``no'' vote on this
bill. The Senator from New York says these are wonder drugs. They do
not drop out of the air. They come from a tremendous amount of
investment from pharmaceutical companies which create new drugs and
save people's lives and create a better quality of life for Americans.
We are sacrificing future cures for political payout today, which is
cheaper drugs for our folks back home. The long-term consequence of
what we are doing today is that more people will die as a result of
drugs not being invented because of the reduction in the amount of
research and development that will go on because we have now tipped the
balance toward generic drug companies, which do no research and
investment and create no new drugs.
So understand what you are doing. We are sacrificing, yes, a great
vote to say we are going to provide cheaper drugs. But long-term we are
providing less cures and a lower quality of life.
The PRESIDING OFFICER. The bill having been read the third time, the
question is, Shall the bill pass?
The yeas and nays have been ordered, and the clerk will call the
roll.
The assistant legislative clerk called the roll.
Mr. NICKLES. I announce that the Senator from North Carolina (Mr.
Helms) is necessarily absent.
I further announce that if present and voting the Senator from North
Carolina (Mr. Helms) would vote ``no''.
The result was announced--yeas 78, nays 21, as follows:

[Rollcall Vote No. 201 Leg.]

YEAS--78

Akaka
Allard
Allen
Baucus
Bayh
Biden
Bingaman
Boxer
Bunning
Burns
Byrd
Campbell
Cantwell
Carnahan
Carper
Chafee
Cleland
Clinton
Cochran
Collins
Conrad
Corzine
Craig
Crapo
Daschle
Dayton
Dodd
Domenici
Dorgan
Durbin
Edwards
Ensign
Feingold
Feinstein
Fitzgerald
Graham
Grassley
Harkin
Hollings
Hutchinson
Inhofe
Inouye
Jeffords
Johnson
Kennedy
Kerry
Kohl
Landrieu
Leahy
Levin
Lieberman
Lincoln
McCain
McConnell
Mikulski
Miller
Murkowski
Murray
Nelson (FL)
Nelson (NE)
Reed
Reid
Rockefeller
Sarbanes
Schumer
Sessions
Shelby
Smith (NH)
Smith (OR)
Snowe
Specter
Stabenow
Stevens
Thomas
Torricelli
Warner
Wellstone
Wyden

NAYS--21

Bennett
Bond
Breaux
Brownback
DeWine
Enzi
Frist
Gramm
Gregg
Hagel
Hatch
Hutchison
Kyl
Lott
Lugar
Nickles
Roberts
Santorum
Thompson
Thurmond
Voinovich

NOT VOTING--1

Helms

The bill (S. 812), as amended, was passed, as follows:
Mr. KENNEDY. Madam President, I move to reconsider the vote.
Mr. DASCHLE. I move to lay that motion on the table.
The motion to lay on the table was agreed to.
______

EXECUTIVE SESSION

____________________