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Service Members Home Ownership Tax Act Of 2009

Floor Speech

Location: Washington, DC


Mr. McCAIN. Mr. President, I rise on behalf of the amendment which, according to the Congressional Budget Office, would provide an estimated $100 billion or more in consumer savings over 10 years. That is unique to this bill. It is unique to this legislation. It actually saves the taxpayers money.

I think it is important for us to go back and see how we got here--again, with the administration and the President reversing his previous position in favor of drug reimportation, the President's Chief of Staff, Mr. Rahm Emanuel, reversing his position on drug reimportation.

Again, a lot of it has to do with the deals that have been made. I refer, to start with, to the August 6, 2009, New York Times article.

Pressed by industry lobbyists, White House officials on Wednesday assured drug makers that the administration stood by a behind-the-scenes deal to block any Congressional effort to extract cost savings from them beyond an agreed-upon $80 billion.

Then it goes on to say:

``We were assured: We need somebody to come in first. If you come in first, you will have a rock-solid deal,' Billy Tauzin, the former Republican House member from Louisiana who now leads the pharmaceutical trade group, said Wednesday. ``Who is ever going to go into a deal with the White House again if they don't keep their word? You are just going to duke it out instead.''

The pressure from Mr. Tauzin to affirm the deal offers a window on the secretive and potentially risky game the Obama administration has played as it tries to line up support from industry groups typically hostile to government health care initiatives, even as their lobbyists pushed to influence the health measure for their benefit.

Here is the important part of the article--and I ask unanimous consent the entire article from the New York Times be printed in the Record.

There being no objection, the material was ordered to be printed in the RECORD


Mr. McCAIN. The important quote is:

Mr. Tauzin said the administration had approached him to negotiate. ``They wanted a big player to come in and set the bar for everybody else,'' he said. He said the White House had directed him to negotiate with Senator Max Baucus, the business-friendly Montana Democrat who leads the Senate Finance Committee.

Mr. Tauzin said the White House had tracked the negotiations throughout, assenting to decisions to move away from ideas like the government negotiation of prices or the importation of cheaper drugs from Canada.

My goodness.

``They blessed the deal,'' Mr. Tauzin said.

That is how we got here, with the administration coming over with a letter last night basically saying they would oppose or certainly impede the ability of Americans to import drugs from Canada. What have we seen happen in the interim? Here again is a New York Times article entitled ``Drug Makers Raise Prices in Face of Health Care Reform.''

Here is a graphic demonstration of it. This little line right here, I would say to my colleagues, is inflation in this country. If you look at it for the year 2009, inflation is actually minus 1.3 percent.

Now look at the wholesale drug prices. The annual change is 8.7 percent. While inflation has gone down 1.3 percent, actual costs of drugs have gone up 8.7 percent.

The article from the New York Times says:

Even as drug makers promise to support Washington's health care overhaul by shaving $8 billion a year off the nation's drug costs after the legislation takes effect, the industry has been raising its prices at the fastest rate in years. In the last year, the industry has raised the wholesale prices of brand-name prescription drugs by about 9 percent, according to industry analysts. That will add more than $10 billion to the nation's drug bill. .....

Let's get the math right. The drug companies have offered to save the American consumer $8 billion a year, and guess what. They have increased their prices, where it will add more than $10 billion to the drug bill of America's citizens, including our seniors.

The math is, they agreed to an $8 billion reduction. They actually already this year have seen an increase of more than $10 billion. So they are on track to make a $2 billion profit off their deal. No wonder they made a deal.

That will add more than $10 billion to the nation's drug bill, which is on track to exceed $300 billion this year. By at least one analysis, it is the highest annual rate of inflation for drug prices since 1992. .....

This is the consumer price index right here, which has fallen by 1.3 percent.

Drug makers say they have valid business reasons for the price increases. Critics say the industry is trying to establish a higher price base before Congress passes legislation that tries to curb drug spending incoming years.

That is what this is all about. They increase the prices so it reaches a certain level, and that is what they will negotiate on. They already are in line to experience $2 billion more in profits than the $8 billion they say they intend to cut. What a Ponzi scheme this is.

``When we have major legislation anticipated, we see a run-up in price increases,'' says Stephen W. Schondelmeyer, a professor of pharmaceutical economics at the University of Minnesota. He has analyzed drug pricing for AARP, the advocacy group for seniors that supports the House health care legislation that the drug industry opposes.

A Harvard health economist, Joseph P. Newhouse, said he found a similar pattern of unusual price increases after Congress added drug benefits to Medicare a few years ago, giving tens of millions of older Americans federally subsidized drug insurance. Just as the program was taking effect in 2006, the drug industry raised prices by the widest margin in a half-dozen years.

We have seen this scam before. What is the administration going to do? The administration sends a letter, I believe last night--not to the sponsor of this legislation, Senator Dorgan, but to another Member basically saying they would have to examine the health and safety.

Since when is a prescription drug imported from Canada a threat to Americans' health, since they obviously have the same standards that we do? The letter is to Senator Carper. It is signed by Margaret Hamburg, Commissioner of Food and Drugs. It is--I am not making this up. I am not making this up. ``The Dorgan importation amendment seeks to address these risks.'' It talks about our amendment.

We commend the sponsors for their efforts to include numerous protective measures in the bill that address the inherent risks of importing foreign products and other safety concerns relating to the distribution system for drugs within the U.S. However, as currently written, the resulting structure would be logistically challenging to implement and resource intensive.

Let's get this straight. According to the CBO, if we pass this, we would save consumers $10 billion--excuse me--$100 billion. According to CBO, we would provide an estimated $100 billion in consumer savings over 10 years. That is what the CBO says.

But what this obviously heavily overburdened Margaret Hamburg, the Commissioner of Food and Drug, says is:

However, as currently written, the resulting structure would be logistically challenging to implement and resource intensive.

Oh my God. I am going to have to include, for the Record, the number of employees over at the Food and Drug Administration. I am sure they are full up with their responsibilities at present.

In addition, there are significant safety concerns related to allowing the importation of non-bioequivalent products, and safety issues relating to confusion in distribution and labeling of foreign products--

When we see something come in from foreign countries, it is so confusing when you look at the labeling of it. It is remarkably challenging for the American consumer----

relating to the distribution and labeling of foreign products and the domestic product that remain to be fully addressed in the amendment.

``But''--she goes on to say, to Senator Carper, who is a fine and great Member of this body but not the sponsor of the amendment----

The ACTING PRESIDENT pro tempore. The time of the Senator has expired.

Mr. McCAIN. I ask for an additional 30 seconds to finish.

The ACTING PRESIDENT pro tempore. Without objection, it is so ordered.

Mr. McCAIN. ``We appreciate your fine leadership on this important issue and would look forward to working with you as we continue to explore policy options to develop an avenue for the importation of safe and effective prescription drugs from other countries.''

Translated: The fix is in. We will be back on the floor on this. I strongly urge the adoption of the amendment.

I yield the floor.


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

Mr. DORGAN. Yes.

Mr. McCAIN. The Senator, I know, is aware and has talked about this. How does the Senator account for the fact that there is a nearly 9-percent increase in the cost of pharmaceutical drugs, while the consumer price index this year has gone down 1.3 percent?

I understand this is the highest increase in the history, or in most recent years, in the cost of prescription drugs. What is the explanation between the divergence of those two lines?

Mr. DORGAN. The explanation, I suppose, is probably better addressed to the pharmaceutical industry of how and why do they increase these prices this way. My guess is they do it because they can.

The fact is, the cost-of-living index--the inflation rate is the yellow line. The price of prescription drugs is the red line.

Mr. McCAIN. Would that have anything to do with the anticipation of incoming reductions or reductions in the increase of costs of pharmaceuticals?

Mr. DORGAN. I say to the Senator from Arizona, my expectation is the pharmaceutical industry has said this is the time to increase these prices. The most important element is there is no restraint. No one has any capability of restraining them. The only way you would provide restraint on this is if you said to the American consumer: You know what. You don't have to buy it from these people at these prices because it is sold in virtually every other country at half the price. If we say to the American people, we will give them the freedom to access that drug elsewhere, I think quickly the pharmaceutical industry would not be able to impose those price increases because then you would have competition. Freedom equals competition, in my judgment, on this issue.

Mr. McCAIN. May I ask the Senator another question. We understand you can buy lettuce from overseas. You can buy many other products from overseas. You can buy dairy products. You can buy almost any item except perhaps prescription drugs. Yet the Canadians, in particular, as well as the countries that are included in the Senator's amendment, all adhere to the same standards or higher standards than the United States of America does.

Now I understand one of the Senators--not the Senator from North Dakota--has received a letter saying this is still a problem.

I don't get it. Maybe the Senator from North Dakota can explain it a little better.

Mr. DORGAN. I say to the Senator from Arizona, there is not a safety issue here. To the extent there is any safety issue, it is that we intend to increase the safety of both domestic supply of prescription drugs and the imported prescription drugs because the fact is, there is nothing at this point dealing with batch lots and pedigrees and tracing capability. That does not exist at this point. We will insist on it in this amendment.

For anybody to suggest that somehow we are going to end up with prescription drug products that are less safe, that is just not the fact. As I indicated before the Senator came to the floor, Europe has been doing this for 20 years in something called parallel trading. For 20 years, they have done it. If you are in Germany and want to buy a prescription drug that is approved, you can. If you are in Italy and want to buy it from France, you can. They do it successfully.

I do not believe anybody should tell us we are not capable of doing what the Europeans have done for 20 years, and that is giving people the freedom to access prescription drugs where they are sold at a better price.

Mr. McCAIN. May I ask the Senator another question. Isn't it true a letter was written to one of our colleagues from the Administrator of the FDA, the organization that would basically make sure any product that goes to American consumers along these lines, that go through that bureaucracy, said it would require a significant amount of assets and resources?

I have since been told there are 11,000 employees of that bureaucracy. I wonder what he thinks about that argument; and, again, was the Senator from North Dakota informed about this position, which, by the way, is the same position as the previous administration?

Mr. DORGAN. Madam President, the Senator from Arizona is correct. There was a letter from the Food and Drug Administration. The fact is, we have seen this over the years. They say: We don't have the resources or it will pose more risk.

The fact is, this amendment provides the resources for them because those who are going to register to ship FDA-approved drugs into this country at a better price are going to have to pay a fee. The people who are selling will pay a fee, and those pharmacies and others in our country that will be receiving them will also pay a fee.

Mr. McCAIN. So it would require no additional funding from the taxpayers.

Mr. DORGAN. No additional funding from the taxpayers at all. Those who decide they are going to offer these lower price prescription drugs would be paying a fee for the purpose of being able to do that. This is not a taxpayer-funded issue at all. It will provide the additional resources and pay for those resources without asking the taxpayers to come up with the money.

Mr. McCAIN. Do these countries that are included in the Senator's amendment--do we have absolute assurance, can we look at the American people and say: Those countries and the agreements we would have with them, you can have products that are safe, you can safely buy, and it would not pose any hazard to anyone's health?

Mr. DORGAN. The countries that are involved in this amendment--and they are limited--are countries that have nearly identical drug safety standards to our country. These are countries that are accessing the same drugs.

I just mentioned--let me do it again--two bottles of medicine. They are empty, obviously. Both of these bottles contain Lipitor. Most of my colleagues know what Lipitor is. This was made by an American company in Ireland and then shipped all over the world. This little bottle was shipped to the United States. This little bottle was shipped to Canada. Same bottle. One was blue, one has red in the label. Same bottle, same company, inspected by the FDA. What is the difference? The price.

The American consumer is told: Guess what you get to do. You get to pay almost triple. Why? And it is not just the American consumer, if I can hold up a chart that shows two drugs--one is Nexium. This is advertised substantially. Nexium is an example. I also have one on Lipitor. Here is the price for Nexium.

Do you think the pharmaceutical industry is selling Nexium at $37 for the equivalent quantity in Germany and losing money? I don't think they are losing money at that. Instead of $37, they charge the American consumer $424.

My point is my beef with the industry is their pricing policy.

Mr. McCAIN. Wouldn't the pharmaceutical companies say it costs $424 because we have to absorb the cost of all the research that went into developing Nexium?

Mr. DORGAN. I would say that is also always raised. They say: If you don't allow us to charge the American consumers the highest prices in the world, we don't get to do the research and development that produces the next new miracle drug.

Most of the recent studies have shown that the pharmaceutical industry spends more money on promotion, marketing, and advertising than they do on research. I want them to do research. But there is one other piece. The Congress gave, without my support, a proposal that said those American companies that have money overseas should bring it back and we will let them pay a lower tax rate. Guess which industry was one of the largest industries with repatriated profits from abroad? The pharmaceutical industry. If they are making big profits abroad and charging lower prices to those consumers abroad, why can't the American people have access to those prices?

It is not because they are going to lose money because they made a lot of money abroad. That is why they repatriated at a lower rate.

Mr. McCAIN. Do the seniors from his State and other citizens from his State travel to Canada and buy these prescription drugs because they know and are confident that they are getting, at a much lower price, the same product? Unfortunately, citizens in my State have to go south, and it is unfortunate when they have to do that because we do have a much larger problem there, I am sorry to say.

Mr. DORGAN. Madam President, the citizens from North

Dakota often have to go to Canada to buy a prescription drug. I have told the story about the old codger who was sitting on a hay bale in a farmyard when I had a town meeting. He was nibbling on a piece of straw. He said to me: My wife--he was about 80 years old--my wife has been fighting breast cancer for 3 years. He said: The only way we could pay for our prescription drugs was to drive to Canada once every 3 months because when you buy tamoxifen in Canada, you pay like one-tenth the price or one-fifth of the price you pay in the United States. He said: We did that every 3 months so my wife could keep fighting breast cancer.

Of course they do that. What is happening is consumers are allowed to bring back as an informal strategy about 90 days' worth of supply of prescription drugs for personal use only. Most American consumers cannot do that. They do not live anywhere close to a border.

The question is, Can the rest of the American people have access to the same prescription drugs sold at a fraction of the price?

Mr. McCAIN. May I ask the Senator, isn't it true the Congressional Budget Office has determined that this measure of the Senator from North Dakota, this modest measure of only countries that are of the highest level of quality of inspection, of all the standards that we have, would save the American consumer $100 billion; is that true?

Mr. DORGAN. Madam President, the Congressional Budget office says it will save the Federal Government about $19 billion, and then about another $80 billion will be saved by the consumers. That is about $100 billion, nearly $100 billion in savings in total, $19 billion of which will be saved by the Federal Government for its purchases, and the rest by the American consumers.

Mr. McCAIN. Finally, I wish to ask the Senator, what is the basis of the argument against the Senator's amendment? What possible reason, frankly, except for the influence of a special interest in this, our Nation's Capitol?

Mr. DORGAN. I am not a very good advocate for the other side. If one were to ask what is the best argument opposed to my amendment, I would say there are not any arguments that are the best. There is a range of poor arguments or arguments that do not hold much water.

I started by saying I do not have a beef against the pharmaceutical industry. I want them to do well. I want them to be successful. I want them to keep finding and searching for miracle drugs. By the way, much of the work they do comes from the National Institutes of Health and the massive investments we make in health. I want them all to be successful.

My beef with them is a pricing strategy that says to the American people: Here is what you pay, and you can do nothing about it because we decided that is what you pay, and we are going to offer everything around the world at lower prices. That is my beef. This is a pricing issue. They are wrong about it.

The way to correct it is to give the American people a little bit of freedom. We will save money for the government and save money for the American people.

I want to raise one additional point while the Senator is here. If the Senator from Arizona is like me, when I am brushing my teeth in the morning, I have a television blaring and I hear all these ads: Go ask the doctor if the purple pill is right for you. I haven't the foggiest idea what a purple pill will do for me. The ads are so compelling you almost feel: I have to get out of here. I have to stop brushing my teeth, go get a phone, and call my doctor to see if my life might be improved by taking a purple pill.

I read a whole series of advertisements:

Does your restless mind keep you from sleeping? Do you lie awake exhausted? Maybe it's time to ask if Lunesta is right for you. Ask your doctor how to get 7 nights of Lunesta free .....

I read a bunch of these. I will not now. Bladder problems, Flomax, Ambien--you name it and they advertise it all day and every morning. I say knock off a little of that. Give us some better prices. God bless you for doing all you do, I would say to the industry, but give us fair prices. Give fair prices to the American consumer and knock off a little of the advertising. The advertising is only for a product that only a doctor can prescribe. You cannot get this product unless a doctor thinks you need it. Stop asking me if the purple pill is right for me, asking me to ask a doctor if the purple pill is right for Senator McCain. Knock it off.

Mr. McCAIN. Mr. President, I ask unanimous consent to make an additional comment.

The PRESIDING OFFICER (Mr. Udall of New Mexico). Without objection, it is so ordered.

Mr. McCAIN. I thank the Senator from North Dakota who has been pursuing this issue for a number of years. I believe we are on the verge of success.

I appreciate his eloquence, I appreciate his passion, but most of all, on behalf of the citizens of my State who can't get up to Canada, who now are experiencing unprecedented economic difficulties, and who need these lifesaving prescription drugs--many of them senior citizens--I just wish to say thank you for your advocacy.

I think you have made an eloquent case, and I hope my colleagues have paid attention and will vote in the affirmative for the Senator's amendment today.

Mr. DORGAN. Mr. President, let me say that Senator McCain has been a part of this effort for a long time. It is interesting, with all the action on floor of the Senate in recent weeks, this is one of the few examples of a significant policy that is bipartisan. We have Republicans and Democrats--over 30 cosponsors--who have worked with us to make certain we can do this, do it safely, and give the American people the opportunity they deserve. This is very bipartisan. I appreciate that a lot.

I wish to say, the National Federation of Independent Businesses supports this; the AARP supports this. We have a long list of organizations that are strong supporters of this amendment, and so I hope, today, perhaps at last--at long last, after 8 or 10 years--we might finally achieve a breakthrough and get this through the Senate.

I have said previously that the pharmaceutical industry is a formidable opponent. I understand that. We have had difficulty getting this in a piece of legislation to get it signed and give the American people freedom and give them fair pricing. When we do this--Senator McCain, myself, and others--it is suggested that somehow we have no regard for this industry. That is not the case at all. It just is not. We have no regard for a pricing policy, however, that we believe is unfair to the American people. It has been that way for too long--a long time too long. Perhaps today--with the vote on this amendment, which I expect later this afternoon--will be the first step in getting that changed.

I yield the floor.


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