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Public Statements

Prescription Drug and Medicare Improvement Act of 2003

Location: Washington, DC


Mr. PRYOR. Mr. President, I rise to address the Chamber about my proposed amendment that fits very neatly with an amendment that passed last week 62 to 28. It is a fallback amendment to that Dorgan-Cochran proposal.

The way I view this amendment—I hope the way my colleagues will understand it—it is really an antiprice gouging amendment as we go through the process and hopefully add a prescription drug benefit to Medicare that so many people in the country want and deserve.

We all know the stories about drugs that are produced in this country that are made at certain plants and certain places. And when they leave the plant, one truck will go to one of our home States and the other truck will go to Canada.
Unfortunately, what happens all too often is when the drugs get to Canada, they are about one-half or one-third or one-quarter the price that people can buy those drugs in the United States. In my opinion, there is no valid reason for that.
There is no valid justification for those drugs to be priced in that way.

We also know the Senate has tried to address this problem on at least a couple occasions—in the year 2000 and in the year 2002. This very Chamber voted to allow the reimportation of pharmaceuticals from other countries. Of course, the reimportation of drugs would be FDA-approved drugs coming out of FDA-approved facilities. In fact, for the third time in 4 years, the Senate voted this past Friday to allow the same thing.

Currently, the law is reimportation can come from a list of countries. There is a designated list. That has been somewhat cumbersome. And the FDA has not seen fit and has not been able yet to approve this process because they can't certify or verify that the drugs are safe. One thing I like about the Dorgan-Cochran amendment is it limits the scope of reimportation only to Canada. That is a significant advancement because we all know that Canada has very high medical standards and that they are very concerned about their populous and the veracity of medication in their society.

My proposal also is limited just strictly to Canada. One advantage is that they have a very similar, almost identical set of standards for handling drugs to make sure that there is a chain of custody, proper testing, et cetera. They build in the safeguards just as we do. A lot of countries don't do that. But with Canada we have a certain degree of confidence—maybe not absolute; I guess you can never have an absolute degree of confidence—that drugs are going to be safe. We have a very high degree of confidence that the drugs will, in fact, be safe and they will meet U.S. standards.

Let me briefly address my amendment. It is only three pages—very simple, very straightforward. In terms of the definition of covered product, we adopt the existing law. Therefore, there is no surprises, no monkey business or games played with the definition. When it comes to the prohibition in section B, which is found on page 2 of the amendment, in summary—I will delete all the commas and the parenthetical phrases, but in summary it says: It shall be unlawful for the manufacturer of a covered product to refuse to sell to any wholesaler or retailer—and that is key—on terms that are not substantially the same as that of any purchaser in Canada.

Let me run through that very quickly, if I may. One of the keys is that it is for wholesalers and retailers. What that means is that wholesalers and retailers in this country can reimport from Canada.

We all know if our local pharmacist could somehow work out an arrangement with wholesalers and retailers in Canada, they could actually buy the products in Canada, have them shipped to the United States, and sell them cheaper here than they can buy them wholesale in this country.

One of the keys is that American wholesalers and retailers are subject to all the FDA rules and regulations and

Therefore, this amendment will only allow the reimportation of safe FDA-approved products made at FDA-approved facilities. When it comes to enforcement, this amendment would allow the Secretary of Health and Human Services, as well as any wholesaler or retailer in this country that is aggrieved by some unfairness—the thing I like about that and I hope my colleagues understand—it allows both the Government sanction, the ability to enforce this, but also the free market. We all know the free market works very well, and when a free market can regulate itself, I think we are all better off. It has the ability for the Government to enforce this if necessary.

In the last bit, on page 3 of the amendment, it deals with the timeframe. That is a 2-year provision from the enactment of this act that this will take effect. In other words, the way this works is, once we pass this legislation, the President signs it, it becomes effective 2 years after it is enacted. Then it will trigger this act if the FDA has not issued its final regulations.
Then we will be able to purchase these drugs at the same prices they get in Canada. In other words, it is an antiprice-gouging mechanism that I think is critical to this legislation and to its long-term success.

I very much applaud the leadership in this Chamber, especially coming from Chairman Grassley and Senator Baucus, Senator Frist, Senator Kennedy, Senator Daschle, Senator Graham, and, of course, Senators Dorgan and Cochran have shown leadership not just on this issue but on prescription drugs generally. I thank them for getting this to the Senate floor and allowing this very important debate and allowing these important amendments to be considered.

I do believe very strongly that when the bill came to the floor, it was a bill definitely worth our consideration. But I also think and believe very strongly that the bill has improved since it has been on the floor. I think these amendments are making the bill stronger and better for the American public.

For example, the Enzi amendment, which I like quite a bit, makes sure that people will still have access to use their local pharmacists. Not only are many pharmacists pillars of the community, not only do they do great things in their communities, but so often patients getting prescription drugs need to talk to their pharmacist about drug interactions, expiration dates, and details of how to take it. It is very important for the effectiveness of the drug that people talk to a local pharmacist and have access thereto. So I thank Senator Enzi for doing that.

The Gregg-Schumer-McCain-Kennedy amendment closes loopholes to allow name-brand drug manufacturers to unfairly extend their monopolies and overcharge American patients. This has been going on for a long time and it is something, when I was Attorney General, we worked on very hard to try to stop from the litigation standpoint. But now Congress has taken action, and I am so pleased that they are stopping this legislatively.

We have mentioned the Dorgan amendment, with the Cochran second-degree amendment, and how that has strengthened the bill and how, hopefully, that will cause prices to stabilize and, in fact, hopefully, come down over time. I think there is still some work to be done on this bill, and I think during the course of this week there will be a lot of great amendments to consider. I hope I can vote for some of those. When I believe it will make this bill better, I will support it.

Let me run through the chart very quickly. What we see is a graph with two lines. You can see that this lower line says "health." If you were to look at the consumer price index, or one of the other indexes, it would be even lower than this green line, but it would go up slightly. That is, of course, the inflation rate, and it goes up 2, 3 percent a year.

Right here, we see the health care costs. If you go back to 1994—our baseline year—the price, the cost of health care, in just these 7 or 8 years has gone up 63.6 percent. One thing we all hear from our constituents is how much health care costs are increasing. For a lot of people, they have increased 10, 15 percent—sometimes more—a year. It is strangling people.

If you look inside the numbers and you look at the No. 1 cause of health care costs going up, it is the cost of prescription drugs. That is what this red line indicates. Again, you can see the rapid growth that is outpacing the costs of health care and inflation, and it is pulling health care costs up and in a very dramatic fashion. I think pretty much everyone who has looked at this nationally agrees that it is the high cost of prescription drugs that is the primary reason—there are other factors—why health care costs are going up so dramatically.

In this proposal—not in my amendment but in the actual bill—we are talking about having a $250 deductible and a stop loss protection that kicks in, paying 90 percent of drug costs after $3,700 of out-of-pocket spending. Well, one thing the American public needs to understand, and all of us Senators need to remember, is that these are percentages and they will go up as the costs of prescription drugs go up. So one thing we need to be very mindful of is, as we watch this red line, the top numbers on this particular chart, go up—in fact, CBO says about 12 percent a year, and they are taking average numbers.
They have been going up more than 12 percent per year in the last few years. If we say more than 12 percent a year, after 5 years that deductible of $250 becomes a deductible of $485. In fact, the stop loss threshold goes from $3,700 to $6,521. Both of these adjust based on cost of prescription drugs—not based on the cost of health care or on the cost of an increase in inflation but based on the cost of prescription drugs. What that means is that in 10 years the deductible will go to $854, and the stop loss in 10 years will be $11,492.

Now, what this amendment is designed to do is to try to get ahold of these runaway costs of prescription drugs. As long as these numbers go up like this, the problems in this bill—things that we as Senators don't like about this bill, like the gap in coverage, the deductibles, and the stop losses—are going to get worse. It is going to do nothing but get worse over time.

So what this amendment and what the Dorgan-Cochran amendment are designed to do is to try to somehow keep prescription drug costs down in a very reasonable way. That is why reimportation is so critical because reimportation, in the strange world of prescription drugs, introduces competition into the marketplace. Suddenly, the drug costs here are competing with the drug costs in Canada, and what that will result in, necessarily, is lower drug costs if free market principles are allowed to apply.

While I am 100 percent convinced the administration can and should implement Senator Dorgan's and Senator Cochran's amendment, I am not 100 percent sure they will do it. Recently, we received a letter in the Senate from the FDA from one of the Commissioners, Mr. McClellan. Let me quote, if I may, from Mr. McClellan's letter. I may have to put on my reading glasses to do this because that is what happens when you get old, Mr. President. I know I am quite a bit older than the occupant of the Chair. When you get my age, you need these.

THIS is a letter to Senator THAD COCHRAN, and it is from Mark B. McClellan, FDA Commissioner, sent earlier this month, on June 19, 2003. It says:

The overall quality of drug products that consumers purchase from the United States pharmacies is very high, and the American consumer can be confident that the drugs they use are safe and effective.

That is a key point because we have a very safe marketplace for drugs. In fact, one of the things I did when I was attorney general of my State—and I left there 6 months ago—I sent out periodical consumer alerts to Arkansans about being very careful about buying drugs over the Internet, using mail order companies, and toll-free numbers because sometimes, under some circumstances, you are not sure what you are getting.

We always advise people to be very careful when they do that. I have a bias and a preference for using a local pharmacist.

Let me continue. I am skipping around:

In FDA's experience, many drugs obtained from foreign sources that either purport to be or appear to be the same as U.S.-
approved prescription drugs are, in fact, of unknown quality.

That is something we found in the attorney general's office in Arkansas when I was there.

The letter goes on to say:

These outlets may dispense expired, subpotent, contaminated, or counterfeit products, the wrong or contraindicated product in an incorrect dose or medication unaccompanied with adequate direction for use. The labeling of the drug may not be in English and important information regarding doses and side effects may not be available. In addition, the drugs may not have been packaged and stored under proper conditions to avoid degradations.

That is true. That definitely happens. We have seen that time and again around this country. But that is one of the great points about the Dorgan amendment. In fact, the Dorgan amendment that was adopted last week with 62 votes has a provision—I am not going to read it all—on page 3 that makes it very clear that we can only reimport FDA-approved drugs at FDA-approved facilities. There has to be documentation; there has to be testing. The safeguards are there.

Also what Mr. McClellan is talking about here is a very serious problem, but by the very same standards he is referring to in his letter, he cannot guarantee that American drugs are safe because we all know in the marketplace there are some problems—a very small percentage in the United States but there are some problems. He goes on to say FDA cannot guarantee the safety of Canadian drugs. As I said, really in a true sense, we cannot guarantee the safety of American drugs either, but the FDA does a very good job.

Interestingly enough, my staff, as we were preparing to be here this afternoon, went on Lexis-Nexis and did a search to find all the reported cases in recent years from Canada related to counterfeit drugs. They could not find one case, one newspaper article, one incident, anything that was reported about counterfeit drugs in Canada. That is using the Lexis-Nexis search. The truth is, we found a number of those in the United States, but we did not find any in Canada.

Lastly, Mr. McClellan's letter to Senator Cochran says:

At this time, the agency simply cannot assure the American public that drugs imported from foreign countries are the same as products approved by the FDA and that they are safe and effective.

Again, our bill fixes this problem because my amendment, along with Senator Dorgan's and Senator Cochran's amendment, says it only applies to FDA-approved drugs and it is only from Canada. We have a much more confident sense about the Canadian marketplace for prescription drugs than we do about a number of other countries.

Back when President Bush was running for office in 2000, he had the same impression as most of us when we think about this issue for the first time. He said "it made sense" to allow prescription drugs that were sold overseas to come back. I think he was right about that. It does make sense, as long as we build in the proper safeguards. Again, I think the amendment Friday and my amendment today will do that.

Some say that doing anything to make prescription drugs more affordable will reduce investment in research and development. I disagree. There are many factors that go into research and development, and two of those—and I hope people understand this—two of the major reasons drug companies come here to do their research and development are:
First, we make a huge public investment through the NIH, the National Institutes of Health. They do a lot of the basic research that the drug companies then build on and actually produce prescription drugs.

Second, this country provides a research and development tax credit, and the drug companies take advantage of that, and they should. It is there for them to take advantage. That is why we have it. It is good for the country. It is good for the economy. It is good for our health. I am supportive of those tax credits.

But those are two taxpayer-funded—I do not know if you want to call them subsidies. Call them what you want but those are two taxpayer incentives for these big drug companies to do research and development: The huge public investment we make for NIH, and the research and development tax credit.

One item I read recently that is a little disturbing to me is that the research and development dollars by the big pharmaceutical companies went up by 8 percent. That is good. It is good they are increasing their dollars for research and
development. But did you know that their lobbying budget went up by 23 percent? Right now in this country, in this city, there are more lobbyists for the pharmaceutical industry than there are Members of Congress, and they have increased it another 23 percent. I am a little bit disturbed by that. My sense is, the only groups out there, as far as I know—maybe I am wrong; I have not seen anything to the contrary. As far as I know, the only groups out there opposed to reimporting safe drugs from Canada, FDA-approved drugs and FDA-approved facilities from Canada, the only group I know opposed to that is the pharmaceutical industry.

I read a recent story in the New York Times that said somewhere between $2 million and $2.5 million the pharmaceutical industry is giving out to research and policy organizations "to build intellectual capital and generate a higher volume of messages from credible sources."

We saw this happen many years ago with the tobacco industry. I give a little bit of caution here to the pharmaceutical industry. I hope they do not repeat some of what tobacco did that got them into so much trouble. Tobacco actually went out and funded sham research. They funded research that actually said tobacco was not harmful to their health when they knew it was and they had the research to say it was. They funded research to come out and say to the contrary, even though the research could not be validated. I certainly hope that is not what the pharmaceutical industry is doing today, but it sounds as if they are drifting in that direction.

It is definitely in the interest of the American public and of patients who need medical care in this country that we allow the safe importation of drugs from Canada. I think it will help people afford drugs, and it will help make drugs more affordable in this country.

As long as I am talking about the pharmaceutical industry, let me be very clear. I am proud of the pharmaceutical industry. I am proud of what they do. It is amazing some of the accomplishments we have achieved in medicine in the last 100 years. It is even more dramatic than the aeronautics industry. One hundred years ago, the Wright brothers launched at Kitty Hawk. Now, today, you know what we have been able to accomplish in the last 100 years.

The gains have been even more dramatic in the world of prescription drugs. It is amazing. It is critical for the United States to have an industry that is high tech, such as that industry, and that is on the cutting edge, is innovative, and is the world leader.

We want to try to be the leader in anything we can. I will continue to support NIH funding for research and development of prescription drugs. I think that is critical. I think that helps everybody. It is a win/win. It is not always cheap, but it is a win/win. It helps the industry. It helps the public. It helps medicine.

I will continue to support the tax credit for research and development. In fact, I am a cosponsor of a bill that will do that because I believe very strongly American business should have the incentive to invest in research and development because it helps the economy so much in the long term.

I see the prescription drug industry as in a little bit different category than most industries because they have a patent. The fact is that the Federal Government gives them a patent—another word for that would be a "monopoly"—the Federal Government gives them a monopoly for a certain number of years to sell their drugs, but implicit in that monopoly is a public trust.

I think it is incumbent upon the people who hold those patents and the companies which hold those patents that they understand they have a special relationship with the public, because nothing less than the public's health is at stake.
Also, when I am looking at the pharmaceutical industry, I have to observe what Fortune Magazine came out with in the last I think it has been 3 or 4 years running now, that there are three different ways to measure the profitability of an industry.
All three ways it is measured, the pharmaceutical industry by any standard is the most profitable industry in America.

The other thing about these companies is we talk about them as if they are our own companies but in fact many of them—maybe the majority, the big guys—are actually foreign corporations doing business in America. Most of these big companies are huge conglomerates that have different divisions and product lines. We need to remember most of these are global companies. They are doing research all over the world and they are selling these drugs all over the world, not just to the American marketplace. I think it is important we not segment the American marketplace at the expense of everything else.

I will talk about three of my experiences as attorney general for Arkansas. I know there are 49 other attorneys general who have had similar experiences, but these were important experiences I had with the pharmaceutical industry. Again, I am proud of the industry. I am very supportive of some of the things they do, but when I was attorney general we had one case where we found out they had secured a monopoly on certain key ingredients to two or three drugs. Without these key ingredients the drugs could not be made, and even the generic companies were buying these key ingredients from this one manufacturer. They purchased that manufacturer and before long, guess what, generic drugs went up because the name-brand company was jacking up the prices to the generics. That is not fair. That is not right. That is not allowing the marketplace to work in the way it should.

We had another case where a pharmaceutical company out and out lied about research. They told the Government they had tests that showed their name-brand product was better than the generic product. Another test came in later and showed they were absolutely the same. Unfortunately, for a number of years they were able to charge more for their product, much more than the generic, because people were convinced the generic was not as good.

When I was attorney general, we found there were a few companies that were playing games with the patent laws and with the FDA regulations and through various maneuvers they were able to extend the life of their patents and monopolies.
Again, I did not come to name names and embarrass companies for some of the wrongdoings. I will be glad to visit with any Senator individually who would like to talk about these things. The pharmaceutical industry is a great industry overall. It does great things and I am very supportive of most of the things they do, but sometimes we have to call it like we see it. They do not always come into this debate with the cleanest of hands.

In my amendment, I am proposing a 2-year period of time in which to allow the Health and Human Services Department to establish their regulations in final form. I believe that is ample time. In fact, if it were up to me I would give them 30 days, but I think realistically they need time to verify and certify that the Canadian market is safe. I think they have actually been working on this since the year 2000. The fact the Dorgan amendment passed last week will really narrow their focus. Now that they only have to focus on Canada, I think that will help them quite a bit to bring veracity to these tests and to the marketplace.

Again, my proposal would not take effect if the regulations are finalized, and even if it does take effect in 2 years and then the regulations are finalized at a later time, mine immediately goes out of effect. What it would, in effect, do is make sure we are not paying more for drugs in America than they are in Canada. That is really not too much to ask, considering the U.S. Government will be far and away the largest purchaser of prescription drugs in the world.

The amendment says if the FDA has not implemented reimportation within 2 years of implementation of this law, it will become illegal for drug manufacturers to discriminate against American purchasers compared to our Canadian counterparts. Really, that is what it is all about. It is about price discrimination. I said a few moments ago it is about price gouging. If the prices are justified in Canada, then they are justified here, and we need to make sure we get a price we are comfortable with.
In closing, I say that the consequences of not protecting American patients are too high. Uninsured patients cannot afford the prescription medicines they need today. Drug prices are fueling health care costs in a way we have seen on that previous chart. One thing we see time and time again is employers dropping health care coverage because they cannot afford prescription drugs. The skyrocketing drug costs have a tremendous potential to make the Medicare coverage we are considering erode significantly over time. What I mean by that is, as these deductibles go up, as the stop losses go up, as the gap in coverage widens, this proposed prescription drug benefit is going to make less sense over time because it is going to have so many problems.

Lastly, I want to show my colleagues this chart. We have seen bits and pieces of this already in this debate from last week, but in the first column this chart lists I believe it is nine of the most popular drugs in this country. It lists what they are used for. There are a lot of folks who are looking at this list and seeing big name-brand drug names. They probably use these drugs. Probably a lot of people in this Chamber use these drugs. This column shows what they are used for and then this third column is really critical. It is the U.S. price. It is what people pay in the U.S.

We are basing this on some Web sites. We know these are prices that can be charged here. This next column shows the price in Canada, what we know they can be charged there because we looked at Web sites that sell them. We can see the big difference on every single one of these nine drugs. The drug in Canada is much cheaper—in fact, 39 percent cheaper, 33 percent cheaper, on down the line. This one is 43 percent cheaper in Canada.

Bear in mind that a lot of these drugs are made in the very same plants. They are made in the very same places. One drug goes up to Canada and the other goes to Arkansas, Texas, Georgia, or wherever it may be. These are the very same drugs coming out of the very same plants. They meet all the same standards. In Canada, they are a lot cheaper.

What we are trying to do is get these prices in this column to go down to be a lot closer to the price in the Canadian column. It is not only good for the citizens but good for the taxpayers because as we add this prescription drug benefit we want to see these lower prices because that means tax dollars will go a lot further, and we, as a Nation, will be able to provide many more drugs through Medicare than we otherwise could.

I ask the Senate very respectfully to support this amendment to simply ensure Americans are treated fairly.

I yield the floor.


Mr. PRYOR. Will the Senator yield for a question?

Mr. SANTORUM. I am happy to yield for a question.

Mr. PRYOR. Mr. President, I have a lot of respect for my colleague from Pennsylvania, but I would like to ask if he is familiar with this statement by Gerald J. Mossinghoff, president of Pharmaceutical Manufacturers Association. He says:
Canada, in a move away from the system that hindered innovation, improved the patent law for medicines in 1988. Two weeks ago, it further strengthened the law by eliminating compulsory licenses for drugs approved after December 20, 1991. Drug research in Canada has increased sharply since 1988.

This is his testimony to Congress dated February 22, 1993.

What I ask the Senator is, in view of this statement, is he still maintaining that Canada can steal drug companies' patents?

Mr. SANTORUM. Yes, I do. I say that because there has been a lot of work that has been done since then. According to many legal scholars I have talked with, they still believe Canada has that ability to continue to steal licenses and give those patents away to drug companies in Canada. I will be happy to provide that documentation, but I do not have it with me. I had it last week, but the issue did not come up. I will be happy to share that.

Mr. PRYOR. If the Senator will yield for another question, Canada does take the position, as any nation would, that under its national sovereignty, it can in extreme situations take over a patent. I am sure the United States has the same provision in its law. I have not looked at the law books recently, but I know after September 11 and the anthrax scare, Canada did make the statement that it reserved the right to produce its own vaccines using existing patents.

I am guessing without knowing all the details of your statement, the policy and their intentions—by the way they did not do this—I am guessing they would have paid the pharmaceutical industry something based on manufacturing its patent, but they were doing it in their own national interest to protect their citizens.

So my question is, you pretty much imply that they routinely have the ability to steal patents; they routinely threaten that, but as best we know there has only been one example, extreme example after September 11, where they talk about the possibility of doing this.

Mr. SANTORUM. What I said in several speeches is as follows: Where there is competition, there are like classes of drugs. They use the exclusion, they use a formulary to exclude or drive down prices. If you have 10 arthritis drugs, they pick two or three, which is what a formulary is all about, and they will pick those based on the cheapest price available and patent medicines. And they will exclude others so they do not have access to the market.

I have never said in those cases the Canadian Government would use their authority to steal a patent. In fact, I have been very clear. I have said in the cases they would use it is where this is a unique drug. And if this is a unique drug, a breakthrough drug, or something that has no other competition, if you do not go along—we used the example of, I think,
Cipro they were using as an example that is relevant to the case I made in the past—where there is a drug that does not have competition, that is, in fact, what they do. Leverage. In the other cases where there is competition, they have other leverage and they will not use the licensing of a patent or the stealing of a patent as a recourse.

There are two different competitive or anticompetitive maneuvers by the Government of Canada: One having to do with drugs of which there are a variety in that class and a separate, the patent issue having to do where there is a drug with no real competitor.

This is the case I have made repeatedly, not just last week but in years past. If I was not clear on that today, I may not have been in my explanation. I apologize but that is what I have said.

Mr. PRYOR. Mr. President, I ask one additional question. A few moments ago—I know the Senator was being facetious—you talked about the nasty pharmaceutical companies and how easy it is for some to come in and impugn them and pick on them and try to punish them in some way. I don't know if you heard my comments earlier in the day, but I talked about how proud I was of a lot of what the pharmaceutical industry does in this country and around the world. In fact, I compared the advances in medicine to the advances in aeronautics in the last 100 years. The advances in medicine have been more remarkable than those of aeronautics. It is critical to have a robust industry on the cutting edge but at the same time two of the reasons the pharmaceuticals like to do their research in this country is because of the large amounts of money we fund to NIH. They do very valuable research that the pharmaceutical companies operating here can take advantage of, and we give them a very hefty research and development tax credit. I am for that credit. I am a cosponsor to continue that credit. I think it is critical for the industry.

I hope the Senator was not implying that I am a big critic of pharmaceutical companies. Bear in mind, I don't think they always have clean hands. I have seen in my work as attorney general and reading the newspapers some business practices I wish they would change. We dealt with those at the State level when I was attorney general. The Senate is starting to deal with some of those.

Mr. SANTORUM. I was not in any way suggesting you, individually, with respect to pharmaceutical companies. I was
suggesting the amendment is very damaging to that research.

The Senator mentioned we subsidized through NIH research, as we do a variety of other fields, not just pharmaceuticals, as well as providing research and development tax credit, which, of course, we do not just for pharmaceuticals but for a variety of different industries. What we also do is have the FDA process which is the most expensive and cumbersome existing in the world. It takes months, and in most cases years, longer to get a drug to market, and that cap starts from the time you file, not from the time of FDA approval. The fact we had a year or 2 or 3 or more, when drugs are available in other countries and not available here, it makes the time to recoup the investment shorter. That is one of the reasons our prices are high, because of the shorter time drug companies have as an opportunity to recoup their investment. They have a longer period of time in places such as Canada, which does not require the testing we do and the trials we do.

The other reason is we also have a very expensive litigation system in this country. Pharmaceutical companies, not surprisingly, because they deal in the area of health care, are in court a lot for adverse reactions to their pharmaceutical products. Other countries do not have nearly the lucrative civil justice system, medical liability system, that we have in this country. Therefore, the costs associated with selling pharmaceuticals in this country because of our litigation system are disproportionately higher than they are in places such as Germany, Canada, and others that do not have the same kind of rewards we see in this country for harm done to people that ingest the drugs.

It is not just what we do to subsidize. Canada would say they probably provide a percentage of money in there to help research, and I am sure the other countries would say they do the same; that they contribute a share toward research, too.
As much as we subsidize, we probably cost them when it comes to the existing structure of the FDA and the legal system in this country. I argue that, yes, we may help, but we probably give with one hand and take with the other.

The bottom line is, this amendment delegates to the country of Canada the authority to set drug prices in this country. I don't know whether the Senator from Arkansas has considered whether drugs that are not set by formulary in Canada, whether those prices would not be set in this country, or only those on the formulary are set. In the end, if this would pass, you would have a lot of drug companies probably not selling drugs in Canada because by doing that, they give up this market.

My guess is the folks who are probably against this more than any other U.S. Senator, including myself, are probably the people in Canada who, if this were to pass, we probably would not find one pharmaceutical company willing to sell the drug in Canada if they would lose their market here. That may not be your intention, but I suspect that would be the consequence because it is a pretty small market up there compared to here. It is not profitable up there compared to here.
My guess is you would have the undesirable effect of affecting the health care of millions of Canadians when it comes to the ability to get new drugs; or conversely you would be requiring the Canadian Government, and maybe this would be good, to raise the reimbursements for their drugs. That may be the desirable impact. That is not something I would be willing to take a chance with, as to whether the Canadian Government would respond in a favorable fashion, at least to my understanding, to this amendment by actually increasing drug prices over there so they could keep some level of new pharmaceuticals within their country.

I understand we are not going to be voting on this immediately, this is going to be voted on tomorrow at some point. But I did want to come to the floor and just urge my colleagues, even if you are for reimportation, this is a fundamentally different thing. This is just completely changing the drug pricing structure of the United States of America and delegating it to a foreign entity. I strongly suggest if you want to do that, if you want to set drug prices, let's have an amendment to set drug prices. My goodness, let's not delegate it to the people of Canada to set our drug prices. Even if you are for reimportation, even if you are for cheaper drug prices, don't let the Canadian Government do it. Get the glory of setting it ourselves, if we want to do something.

I yield the floor.

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