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Questionable Activites During and After Medicare Precription Drug Legislation Passed the House

Location: Washington, DC


The SPEAKER pro tempore. Under the Speaker's announced policy of January 7, 2003, the gentleman from New Jersey (Mr. Pallone) is recognized for 60 minutes as the designee of the minority leader.

Mr. PALLONE. Mr. Speaker, tonight I would like to highlight several questionable activities during and after the Medicare prescription drug legislation passed the House of Representatives last year, and there is no doubt that this legislation, which passed here in the House after the Republican majority kept the vote open more than 3 hours in order to get the results they want, and it would be one thing, Mr. Speaker, if the result were beneficial to seniors who desperately need prescription drug coverage within the Medicare system; however, that is simply not the case.
The prescription drug legislation is a perfect example of how the Republican majority has turned the people's House of Representatives over to the special interests and the wealthy elite. Seniors should not be forced or, I should say, be fooled into believing that this Medicare legislation was written for their benefit. How could it have been considering Republicans forcing seniors to actually get the prescription drug benefits out of Medicare?

The bill also provides a minuscule benefit, considering that seniors with $1,000 in annual prescription drug costs would pay $857 out of their own pockets and those seniors with prescription drug costs of $5,000 per year would be forced to pay $3,920. What kind of a benefit is that if seniors are not getting the money? Where is the more than $500 billion that now the President and the White House says that this Medicare prescription drug so-called benefit is going to cost the Federal Government? Where is the money going?

The answer, Mr. Speaker, is to the special interests. Republicans did not write this bill to help the seniors; instead, they wrote it to benefit insurance companies and the pharmaceutical companies.

Now, I could talk all night about why this bill is bad and how it is not helpful to seniors, and I think that I and my Democratic colleagues have talked many times, including last week, about the problems with this bill and why it should just be repealed. But the amazing thing about it is that now we are hearing that many of those legislators and members of the administration who benefited or who were involved in creating this bill, negotiating this bill, bringing the bill out of committee, working to put together the language of the bill, are now benefiting from leaving their jobs within the administration, or possibly within Congress, in order to join the private sector and working for those same pharmaceutical companies that they worked with when they were up on the Hill or they were in Washington working for the government to put this bill together.

In fact, many of my colleagues have been saying for months that this legislation was being written not here on Capitol Hill but instead downtown in the offices of PhRMA, which is the pharmaceutical trade association, and also written by the insurance companies. Here in the Republican-controlled House of Representatives the only true voices that matter, in my opinion, on this bill, are the special interests and the wealthy elite.

There is no better example of how the lines have been blurred between Congress writing legislation and legislation being dictated to by special interests than the latest news that the House Committee on Energy and Commerce chairman, and this is my committee, the Committee on Energy and Commerce, the Republican chairman, the gentleman from Louisiana (Mr. Tauzin), is now flirting with the possibility of leaving the House in order to lead PhRMA, that very pharmaceutical trade organization that represents those companies here in Washington. And he is one of the few House Republicans who negotiated the final prescription drug bill legislation last year.

We just heard, actually within the last few hours, that the gentleman from Louisiana (Mr. Tauzin) announced that in fact he is going to be stepping down as chairman of the House Committee on Energy and Commerce on February 16, within the next week or so, and that he is seriously mulling going to work as the head of PhRMA.

Now, I understand, Mr. Speaker, that there is nothing wrong with Chairman Tauzin deciding to retire and inquiring about future job opportunities. But one has to seriously question whether discussions between him and representatives of PhRMA just months after PhRMA received a cash windfall with the prescription drug legislation are appropriate. It certainly serves as a perfect example of what I was saying before of what interests Republicans represent: the special interests.

There has been no indication from Chairman Tauzin's office that he was negotiating a job with PhRMA last summer when he was also negotiating the prescription drug bill, and I hope that is not the case. However, the bottom line is that he was the main person in the House of Representatives responsible for this bill. And for him to now leave Congress and go seek a job with that very trade association that was benefiting from the bill, I think, is a serious ethical question and something that has to be looked into.

I see that some of my colleagues are here joining me. We are going to talk not only about this case but others, and I would yield now to the gentleman from Massachusetts.


Mr. PALLONE. Before I yield to the gentlewoman from Illinois, I just wanted to highlight two things the gentleman said that I think are so important.

One is that whole thing about how there really is no set premium, set deductible, set anything really in this bill. The Republicans go out there and they say, oh, your premium is going to be $35 a month, your deductible, I think they say, is going to be $250 a year, the government is going to pay 75 percent of the cost, you are going to pay 25 percent. There is nothing in the bill about any of that.

I have to stop using the term Medicare prescription drug benefit when I talk about this because this is not even under Medicare. The people that are in Medicare are eligible for it, but there is no guarantee that they are going to get it. And none of these things are guaranteed. They can charge $85 a month, they could have a $1,000 deductible, they could, as the gentleman says, not cover certain drugs. We do not even know if it is going to be available in most areas.
So this is why they are out there talking about advertising and trying to promote this thing, because there is nothing to it. It is like an empty suit.

The other thing the gentleman pointed out, which is very special interest-oriented, is the fact there is this specific prohibition in the bill on any kind of negotiation on the price. The Medicare administrator, the Secretary of Health and Human Services, cannot negotiate lower prices.

This is an excerpt from last Sunday's New York Times where they talk about how bad the bill is and they specifically say that "the ban on government intervention with regard to negotiated price reflects the Republicans' aversion to government price controls, but it is also a testament to the lobbying clout of the drug industry, a major patron of the Republican Party." Then of course they talk about how the Democrats have tried to introduce legislation that would allow for negotiated prices.

This is the very kind of special interest we are talking about. This is what was put in by PhRMA, and now we have the chairman of our committee that was negotiating this bill and bringing this bill on the floor and through the committee with this prohibition on any kind of price controls or negotiated prices going to work to be the chief lobbyist for PhRMA.


Mr. PALLONE. Mr. Speaker, I yield to the gentlewoman from Illinois (Ms. Schakowsky).


Mr. PALLONE. Mr. Speaker, the amazing thing to me, the fact that the White House, I guess because of the public pressure, because of people speaking out about what Scully did, are now saying that the department cannot grant the waiver, but the White House can. It seems to me the goal should be that there not be any waivers at all. Under what the Bush administration is now saying, they can still grant another waiver to somebody else to negotiate a bill, and then go work for the very company that they were negotiating with. I cannot believe that they said no more waivers by the department, but we can still grant the waiver.

Ms. SCHAKOWSKY. Mr. Speaker, the words that we want to come out of their mouths is that there will not be any more waivers, and that seeking a job in the private sector, particularly with an industry that you are now regulating in a sense or making decisions about, is not right. It is not right. It smells. People know that. They do not like it. This is why the public loses faith in government, and that is why I feel so strongly about it.

Mr. PALLONE. Mr. Speaker, that is exactly why the ethics law says you cannot do it, it is wrong. So why should any waivers be granted? And there is no basis for the waiver. I asked in the case of Scully why and if there were any special circumstances, and the answer was there was nothing of that nature, they just granted the waiver.

Ms. SCHAKOWSKY. Mr. Speaker, there are some aspects of revolving door that apply here, although I still believe that was about a locked door. These individuals were servants of the public while they are negotiating or figuring out their next move with the pharmaceutical industry. But we have got the door going the other way, too. We have a situation where an HMO lobbyist turns up as a Bush Medicare official. A woman named Julie Goon was just hired by the Bush administration. She is the former vice president of legislative affairs for an HMO trade association in Washington, and she is now the new Director of Medicare Outreach. Congress Daily reported that Goon will be in charge of "getting the word out to seniors, health care professionals, consumer groups and others about how the program works, HHS' progress in implementing it and what its impact on them will be, and for apprising the department of their reaction."

Before she got this job, Goon was named one of Washington's top lobbyists in Washington in 2002. Now she is head of explaining this Medicare bill and why it is such a great deal as Director of Medicare Outreach.

Mr. PALLONE. Mr. Speaker, the gentlewoman probably remembers within the last week or two that the President announced that he was significantly increasing the reimbursement for HMOs. The reason that was given was because so many of the HMOs dropped out of Medicare, did not want to cover seniors within the Medicare program, that they needed to provide significantly more resources to the HMOs if they wanted to get them back into the Medicare program.

It is obvious that under this bill that the HMOs are going to get significantly more money in terms of reimbursement rate than traditional Medicare. Again, that is just a function of the fact that the HMO industry was basically calling the shots at the White House, and here we go again with an example of someone within the industry now working at the White House on the very program that is increasing the amount of money that the HMOs will get.


Mr. PALLONE. If I could just throw this in a second, in that New York Times editorial that I mentioned, they specifically say, "Less well known is the likelihood that the drug coverage will actually become worse with each passing year. The premiums, deductibles and out-of-pocket expenditures will all increase rapidly, tied to increases in per capita drug expenditures under Medicare. By 2013, for example, the out-of-pocket spending required before a person qualifies for catastrophic coverage will probably be $6,400, well above the $3,000 required in the first year. That could be devastating for those struggling to survive on these benefits." It is built into the bill, but it keeps going up.

Ms. SCHAKOWSKY. It is built into the bill, but it is quite remarkable that before the ink is even dry on this bill, the price has gone up more than 25 percent, from $400 billion to $540 billion, and it has not even started yet. Not one dollar in benefits, so-called, has even gone out.

The seniors know that this is a bad deal. The seniors who pay more attention than anybody else already know. In polls that have asked them, they do not think that they are going to benefit sufficiently. But it is important that it be explained. This comes from today, from the Associated Press:

"The Bush administration launched a $9.5 million television advertising campaign Tuesday to rebut criticism of the new Medicare law. Understand, this is not a political commercial paid for by a campaign. You and I and all of our constituents are paying for a $9.5 million television advertising campaign to rebut criticism of the new Medicare law. The ad is to run on network and cable television through March, clustered around soap operas, game shows and news programs. Its theme is, 'Same Medicare, More Benefits.' "

Mr. PALLONE. Can I ask you again, you said that this is paid for by taxpayers?

Ms. SCHAKOWSKY. That is correct.

Mr. PALLONE. Explain that to me again?

Ms. SCHAKOWSKY. I am reading to you this. This is not a campaign expenditure:

"The administration is spending another $3.1 million for a newspaper, radio, and Internet effort in both English and Spanish. The 30-second ad addresses some of the major criticism of the law, including assertions that it will force seniors out of traditional Medicare and into managed care plans and that savings will be paltry from drug discount cards and prescription drug insurance starting in 2006."

Mr. PALLONE. I find that incredible. I have never heard of a situation where the government pays to rebut criticism of
the program.

Ms. SCHAKOWSKY. This is correct. Quoting from the article:

"Health and Human Services Secretary Tommy Thompson played the commercial Tuesday for reporters. Four actors who portray Medicare beneficiaries ask how the law is changing Medicare. 'Can I keep my Medicare just how it is?' one asks. The announcer replies, 'Yes, you can always keep your same Medicare coverage.' At the end of the ad, another senior says, 'So my Medicare isn't different, it's just more?' The announcer, 'Right.'

"Several Democratic Senators already have criticized as propaganda a two-page flyer that HHS plans to make the basis
of a letter to be sent later this month to the 40 million older and disabled Americans who are enrolled in Medicare. Asked whether he had consulted those Democrats about the accuracy of the ad, Thompson said, 'It's accurate.' "

Mr. PALLONE. So we now are standing here and basically pointing out why this bill does not benefit seniors, and the administration is going to spend taxpayers' money to say the opposite.

Ms. SCHAKOWSKY. Exactly.

Mr. PALLONE. That is unheard of. I have never heard of that happening.

Ms. SCHAKOWSKY. This is taxpayer advertising: $9.5 million on television; $3.1 million for newspaper, radio and Internet; and a mailing to 40 million seniors and persons with disabilities, all at taxpayers' expense to explain why this lousy bill is, in fact, good for them.

Mr. PALLONE. There has to be some way to stop that. It sounds to me like it is blatantly illegal. But we will have to look into it. I thank the gentlewoman.

Ms. SCHAKOWSKY. If I can go on for just a minute, when President Bush ran for office, he said our first priority will be to restore honor and dignity to the White House. But when you look at President Bush's top official in charge of Medicare getting issued a waiver to pursue employment in the health care industry while he continues to serve as administrator of Medicare, how can we call that honor and dignity? This confirms the worst of what people think about the way government is run.

When this first happened, I along with our colleague, the gentleman from California (Mr. Stark), wrote a letter to the Secretary of Health and Human Services, Tommy Thompson. A part of the letter says, "For 7 months Members of Congress who relied on Mr. Scully for information were kept in the dark about the fact that he was actively engaged in looking for employment with firms that have significant interests in the issues at stake. Financial conflicts of interest are designed to assure Members of Congress, entities with interests pending before CMS, and the public that Federal executive branch employees are independent and unbiased in their behavior. While we strongly believe that this waiver should never have been granted, at a bare minimum knowledge of it would have been valuable to us in weighing the advice provided by Mr. Scully."

This is just shameful. I think in order to restore the confidence that the American public should have in Members of Congress that we are operating in the public interest, in their interest, that when we come up with a bill, it is because it is going to help them get their prescription drugs, then we cannot allow this kind of behavior to continue. No waiver should be granted. An advertising campaign, paid for by the taxpayers, should not be allowed. If the gentleman from Louisiana (Mr. Tauzin) takes this job with PhRMA, for 1 year he will not be able to lobby Members of Congress and staffers, but he can still lobby the executive branch, the people that are writing all the regulations that have to do with implementing this particular piece of legislation that he crafted behind a locked door. I think that this notion of restoring honor and dignity to the White House, that is an important goal; but that goal has been undercut and betrayed by this administration and the conduct by the chairman of the Committee on Energy and Commerce.

Mr. PALLONE. I want to thank the gentlewoman for what she has presented tonight. It is incredible to me that this advertising campaign, I just assumed that it was being paid for by the Republican National Committee, that it is actually being paid for by the taxpayers. That is unheard of. What she brought out about Scully, who was the Medicare administrator, now we have an example with TAUZIN of a Member of Congress who was the chairman of the committee that dealt with the Medicare issue and then we have the head of the Medicare administration within the White House, both of them getting jobs now, purporting, in TAUZIN's case, it seems likely, to get a job working for the very pharmaceutical industry or the law firm representing the pharmaceutical industry. It is just such a blatant example of special interests.

I know that my colleague from Ohio wants to talk about another example. We mentioned before you were on the floor on the night when this vote was taken, that actually the board was left open for almost 3 hours because there was actually a majority of both Democrats and Republicans that were against the bill. Then the President started making calls and Secretary Thompson of Health and Human Services was in a back room there, I saw him, twisting arms. We got to the point where activities were taking place which, in my opinion, were bribery that I know the gentleman wants to talk about. I appreciate his being here.

I yield to the gentleman from Ohio.


Mr. PALLONE. If the gentleman would yield, I was thinking about what you said today with the meals and Halliburton. I would venture to say if this were another time, say it was World War II and something like that happened, Halliburton would be out of business the next day.


Mr. PALLONE. Reclaiming my time, I just want to add that I think my colleague from Massachusetts brought up the main point, which is that the problem is that Halliburton is doing all these things, now admitting, I guess, in two or maybe three cases they have done the wrong thing, but the penalty is not sufficient for them to stop doing it.

Mr. STRICKLAND. And they continue to get the contracts.

Mr. PALLONE. The oil contracts, they were charged a $64 million penalty, but they are making billions, almost a
trillion dollars I think in terms of the amount of money they are taking in.

As our colleague from Massachusetts said, they are not going to stop doing it, because what do they care if they pay a few million dollar penalty when they are making billions of dollars? That is the problem. As I said before, if this had been a different time, like World War II, they would have been out of business; that would have been it. Now, twice, and it is probably going to be more. It is just unbelievable.

Mr. STRICKLAND. Why do we continue to do business with a company like this that has shown such bad faith? Sixty-four million dollars or $65 million is a lot of money; $24 million is a lot of money. Yet we continue to allow this company to suck up tax dollars in contracts, and it is a shameful set of circumstances.

I think the President and the Vice President ought to disassociate themselves from this company and say they
are out of here. There are honest companies, there are honest corporate leaders that we can do business with. Why are we continuing to do business with Halliburton? I just cannot understand it.

Mr. PALLONE. We were talking before about the gentleman from Michigan (Mr. Smith) and the allegations that there were efforts to bribe him. We talked about it, but I do not know if we mentioned that he talked about this in his own words. I just want to read a couple of sentences.

This was from the column the gentleman mentioned in the newspaper, where he said after the vote, and this is his quote, "The House passed a deeply flawed Medicare prescription drug bill by a vote of 220 to 215 at 6 a.m. Votes in the House usually last 15 minutes plus a traditional 2-minute cushion. But because the leadership did not have the votes to prevail, this vote was held open for a record 2 hours and 51 minutes as bribes and special deals were offered to convince Members to vote yes."

This is Congressman Smith's quote. He continued: "I was targeted by lobbyists and the congressional leadership to change my vote. Other Members and groups made offers of extensive financial campaign support and endorsements for my son Brad who is running for my seat. They also made threats about working against Brad if I voted no."

These are his own words. Just so there is no doubt here about what the gentleman said or our colleague from Massachusetts said, he is saying this himself.


Mr. PALLONE. I want to thank my colleagues for not only raising these issues with regard to Medicare, but also with regard to Halliburton. I would certainly say to the gentleman from Massachusetts, I would be glad to join in that effort that the gentleman described tonight.

I want to thank the gentleman from Ohio and the gentleman from Massachusetts for participating in this special order tonight.

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