Prescription Drug Costs

Floor Speech

BREAK IN TRANSCRIPT

Mr. GRASSLEY. Madam President, I have a couple of issues on which I want to speak. Trade and section No. 232 would be my second issue. The first one about which I want to speak is commonsense entitlement reform.

In the past year, we have seen a flurry of drug-pricing proposals. I am encouraged by the efforts of my colleagues here in the Senate, especially by Ranking Member Wyden, by my colleagues in the House of Representatives who agree with this effort to reduce drug prices, and by the President of the United States, who has already been involved for a year and a half in lowering drug prices. All have made lowering prescription drug costs one of the core principles of our efforts and particularly a core principle for this administration.

I have paid attention to each of the pieces of legislation that have been proposed and have looked at their pros and cons closely. However, so far, there is only one bipartisan proposal that cuts prescription drug prices, that protects innovation, that lowers what senior citizens will pay at the pharmacy counter, and that brings along with it entitlement reform. The Prescription Drug Pricing Reduction Act of 2019 is the bill I am talking about. It responsibly reduces Medicare Part D costs.

As with any widely encompassing piece of legislation, there has been some spirited debate surrounding the different provisions of our bill. So I am here today, hoping to clear up some of the confusion surrounding a phrase that I have heard thrown around in this debate-- ``price setting.'' Opponents of the legislation criticize the bill for price setting. The scare tactic associated with this claim is centered on one particular policy in our bill--that of matching the growth of government subsidies that drug manufacturers receive to the rate of consumer inflation.

When I set out at the beginning of this year to create a piece of bipartisan legislation that had real and meaningful change, I knew the focus had to be on individual Americans. That is why we kept out-of- pocket costs at a level at which seniors could see relief. That is why we banned spread pricing, which games the healthcare system to the detriment of the beneficiaries and the taxpayers. That is why we created a new way of paying for lifesaving but very costly Medicare drugs. That is why we kept the growth of government subsidies in Medicare Part D to the rate of inflation.

Unlike other proposals, the Senate Committee on Finance's policy does not tie the launch price to an artificially low price. The bill doesn't stop a drug company from recouping its research and development costs, which will lead to more innovation.

What the Part D inflationary rebate does is really quite simple. After launching, if a drug manufacturer chooses to raise the price above the rate of inflation, it has to return the difference for the drugs paid by Medicare. This policy limits government subsidies in order to provide predictability for the Medicare Program. At the same time, it provides protection for the American taxpayer. That is simply all it does. Any subsidies that the pharmaceutical companies would have received from an exorbitant raise in price is then returned to Americans rather than to line pharma's pockets. The inflation rebate incentivizes companies to stabilize their pricing, and the taxpayers' money is used more prudently and more efficiently.

You have all heard of CATO, the research organization and policy organization. CATO is one of the Nation's leading libertarian and free market organizations. It has praised the bill for its significant cost savings for the taxpayers. Does anyone really think a libertarian organization would endorse price controls? In its analysis of the bill, CATO wrote that this bill ``would not impose price controls'' and ``would reduce wasteful Medicare spending.'' CATO also acknowledged that these ``commonsense tweaks to a bloated entitlement program are encountering strong opposition . . . mostly from those who would not make quite as much money off the taxpayers.''

We all know that Medicare's finances are worsening. The program is projected to become insolvent within the next 6 years if we continue down this very same path. In getting back to my bipartisan bill, the Grassley-Wyden bill will ensure that the Federal Government uses Medicare's budget to pay for lifesaving treatments in a fiscally responsible manner.

This goal is not without precedent. For those who say we are acting in an unprecedented way and are setting prices, I say it isn't setting prices. They forget that throughout the American healthcare system, the government has, at one time or another, set up different ways to constrain high and rising costs.

For example, States have not been allowed to pay Medicaid providers at a rate that has been higher than Medicare's. Another example is in the Medicare Program. Medicare Part A has paid for the operating costs associated with acute inpatient care and has used the inpatient prospective payment system, or what is referred to as IPPS. Congress enacted the inpatient prospective payment system to constrain the growth of Medicare's inpatient hospital payments by providing incentives for those facilities to provide care more efficiently.

Congress also requires that the concept of budget neutrality be applied to a number of Medicare payment systems, including to provider payments. This is simple. In other words, the government says that if one provider gets an increase, another provider is reduced.

Finally, the Center for Medicare & Medicaid Innovation, within the CMS, is required by statute to enforce financial controls on total Medicare spending. The Center can only test different ways to pay for services in Medicare and Medicaid if they are expected to lower costs while they maintain quality. So this idea of using taxpayer dollars responsibly and in a targeted manner exists in many facets of the American healthcare system.

My point is, while some call the inflationary rebate in Part D a price control, I urge all of the Members to consider how Congress is using measures to contain costs currently. Isn't it the fiscally responsible thing to do when Federal taxpayer dollars are being spent by those of us in Congress? Shouldn't we do what we can to contain costs? After all, it is not what hospitals, doctors, and pharmaceutical companies may charge; it is about what the American taxpayer will pay for services. That doesn't fall into the category of price controls. At the markup for my prescription drug bill, even the Director of the independent Congressional Budget Office agreed with me.

I could continue to give examples of budgetary tools in the toolbox that Congress uses in an attempt to be fiscally responsible with regard to Medicare and Medicaid. I could also continue to provide examples of outrageous drug costs. Yet the bottom line is that the Prescription Drug Pricing Reduction Act of 2019 is a win for Americans across the board.

Seniors will pay less out of pocket; taxpayers will know their money is being used appropriately; and drug manufacturers will continue to be able to innovate.

That is why Ranking Member Wyden and I strove to achieve these things in the very beginning. I urge my colleagues to keep these considerations in mind, and hopefully my colleagues will support this legislation as a way of answering the concerns that constituents express in almost every State. At least in the 99 county meetings that I hold in Iowa every year, doing something about the pricing of prescription drugs comes up. It has to be that way all over the country. Trade

Now I want to turn to trade legislation, and I will not be as long on this point as I was on prescription drugs.

When I resumed chairmanship of the Senate Finance Committee in January, I laid out my top priorities for the committee's work.

For international trade, my agenda included reviewing section 232 of the Trade Expansion Act of 1962, which allows the President, without any input from Congress, to impose tariffs in the name of national security.

For 11 months now, I have been working with other Finance Committee members on both sides of the aisle to establish a separation of powers and checks and balances in the section 232 process. These two basic principles of our system of government are sorely lacking in section 232 as it stands today.

Two of my colleagues on the Finance Committee, Senators Toomey and Portman, each filed reform bills that are well thought out, and both happen to be bipartisan. A full quarter of the Senate has cosponsored one or more of their bills, including 10 Democrats, 14 Republicans, and 1 Independent.

Many other Senators have told me that they, too, want to see section 232 reforms reported out of the Finance Committee.

With a strong bipartisan mandate like that, I have been optimistic that Ranking Member Wyden and I can reconcile the Toomey and Portman bills and hold a markup. More than once I have spoken publicly about my intentions to do just that.

However, every time we get close to marking up a section 232 bill, Senator Wyden hears from stakeholders who are profiting from tariff production. Meanwhile, I get calls from colleagues who say something like this, and I am paraphrasing: Mr. Chairman, the President won't like us taking away his tariff law, and we don't want to make the President upset.

Well, we hear that a lot, whether we have a Republican or Democratic President, on a whole lot of other issues. But we don't have to listen to the President of the United States. We are Members of an independent branch of government, able to do our own thing--work with the President when we can and not worry about the President when we can't.

Well, allow me to set the record straight on a few things that I have just set before you so far.

First, as I have said before, reforming section 232 is not about President Trump. Reforming section 232 means acknowledging that the 87th Congress handed President Jack Kennedy enormous authority over trade in 1962 at the height of the Cold War. President Trump was merely following that 1962 law.

In the process, he alerted us to the fact that Congress has been too negligent in the past in protecting our constitutional responsibility of lawmaking. Our Founding Fathers were explicit in tasking Congress with responsibility over international trade, and it is time now to rebalance section 232 in line with the Founding Fathers' clear intentions.

Secondly, I have been clear that I am generally not a fan of tariffs, but I also want to make clear that I have agreed to Senator Wyden's request to introduce a chairman and ranking member's mark that does not unwind section 232 measures on steel and aluminum. Many problems with those tariffs and quotas have been well documented, but I have been in the Senate long enough to know that getting things done requires compromise.

Third, and to all of my colleagues and everyone listening, I don't view 232 reforms as weakening the power of the Chief Executive. I view them as enhancing the effectiveness of the Chief Executive in our country. As the Supreme Court told President Truman, the Office of President and the President himself are strongest when Congress is behind him.

We need reforms to section 232 that will make clearer where Congress stands on national security and trade. Such reforms would also make clearer to our trading partners that when section 232 is used, Congress stands with the President.

Now, with these points cleared up, I hope that Ranking Member Wyden, members of the Finance Committee, and our House colleagues will be ready to reform section 232.

We have a strong, bipartisan mandate to get to work, and this is likely just the beginning of a great deal of work that needs to be done to review our trade laws.

Senator Wyden and I have reported bipartisan bills out of the committee successfully in the past, and hopefully we can do it again for section 232.

BREAK IN TRANSCRIPT

Source