Don Nickles

Mr. NICKLES

Mr. NICKLES. I announce that the Senator from North Carolina (Mr. Helms) is necessarily absent.

Mr. NICKLES. I move to lay that motion on the table. The motion to lay on the table was agreed to.

Mr. NICKLES

Mr. NICKLES. I announce that the Senator from North Carolina (Mr. Helms) is necessarily absent. I further announce that if present and voting the Senator from North Carolina (Mr. Helms) would vote ``yea.''

Mr. NICKLES

Mr. NICKLES. Will the Senator yield?

Mr. NICKLES. Madam President, I rise in opposition to the Stabenow amendment. I will mention several reasons. First and foremost, it is going to increase in the price of Medicaid. I want to make sure our colleagues know that. I am going to say it about 10 times in the course of this debate. If we pass the Stabenow amendment, the price of Medicaid is going up. The price of drugs going into the Medicaid system is going up. That is just a fact that everybody should know. If we think that we are going to pass this amendment and that this is a great deal for the State--I disagree. The States have to share in the cost of Medicaid, and the cost of Medicaid is going up. I heard my good friend--he is my good friend--the Senator from Massachusetts say the Governors have united; we need to get cost controls on Medicaid. This will mean a monumental increase in the cost of Medicaid. I think I can say that very plainly and very easily. I want to make sure everybody is aware of that. Let me mention a couple of other reasons we should be opposed to this amendment. Some people say ``process.'' Did we have a hearing on this bill? No. Did we have a markup on this bill? No. Was one even requested? I don't think so. The Democrats are in control of the Senate. Senator Baucus is chairman of the Finance Committee. If he wanted to have a markup on this bill, he could have done that. I see the sponsor of the legislation. I will ask her. Have we had a hearing on this bill, and have we had a markup on this bill in the Finance Committee?

Mr. NICKLES. I will make the case that it does. I believe I will show that GAO happens to agree with me. GAO has studied this issue. They basically said it boils down to the fact that if everybody gets a discount, nobody gets a discount. That is the economics of it. Right now, you have a system where Medicaid gets the best price. Medicaid gets the best price--lowest price--in the country. But if everybody gets it, nobody gets it. If everybody gets a 15-percent discount, that is the price. This is not a discount. That is exactly what we are doing here. You are going to increase the cost of Medicaid by not giving a discount. Does that mean everybody's drug costs are going down? Actually, no. It means the discount or the best price is going up.

Mr. NICKLES. I will not yield. I want to make a lot of comments, and I will be happy to discuss it. But I only have limited time. I want to make sure I make all of these points. No. 1, this is an important issue. It hasn't had a hearing. This committee is now controlled by the Democrats. It has been for a year and we haven't had a hearing. I don't know that one has been requested. I am on the committee, and I am on the subcommittee. Some people say that is not insignificant, that we do a lot of things. When you are talking about major issues--and we are talking about prescription drugs for all of our seniors--we should have a hearing on this. We should have a markup. There happens to be, collectively, on the Finance Committee hundreds of years of experience dealing with Medicare, Medicaid, and prescription drugs. A lot of us are willing to put some input into it. That is the reason we have the committee process. I am ashamed of the way the Senate is operating today in this fashion. We are taking probably the most important and most expensive piece of legislation considered in decades and it hasn't had a hearing, it hasn't had a markup, and it hasn't had a scoring by the Congressional Budget Office--none of the above--and yet we are in the process of marking it up. We are going to have votes on Tuesday on a proposal that nobody has a clue about how much it costs. On one of these proposals, some say it will cost $500 billion. Others say it is closer to $800 billion. Although, they forgot to tell that it only lasts a few years, and it is sunset. Then we will stop paying for prescription drugs. No entitlement sunsets after a few years. If somebody thinks we are going to start paying for prescription drugs and then we are going to stop, that is more than hypothetical. That is misleading. If we are talking about trying to put corporate officers in jail for misleading financial statements, we ought it be ashamed of what we are doing in the Senate. We are taking up the biggest expansion of an entitlement program, and no one has a clue about how much it costs. And we are going to say we are fiscally responsible? Shame on us. We do it without a hearing, without a markup, and without scoring from the Congressional Budget Office. That is a really poor way to legislate. That is the way you get things started, and you later say: Wow, I had no idea it would cost this much. Let me be a little more specific about the amendment of my colleague and friends from Michigan. Very seldom do we legislate by intervening ourselves before a case goes before the Supreme Court and say this is the way we mean for it to be. We usually let the Supreme Court make the decision. This issue is before the Supreme Court. The position of the Senator from Michigan lost at the district court level. Then she won at the circuit court level, which has now brought the case before the Supreme Court. But we are going to intervene before the Court and say: Oh, here is what we mean. Rewrite the law. Basically, we are going to say: All right, under the Medicaid system, which gives a discount--the best price for Medicaid beneficiaries, low- income beneficiaries--we are going to say that is applicable to anybody the State deems eligible. Guess what. A lot of States have programs for drugs that have no limitation on income. Senator Kennedy mentioned three times that we need this program. He said the Senator from Michigan is trying to help the neediest and the poorest of the poor. I looked up in the State of Massachusetts. This drug program has no income limitation. You could be a billionaire in Massachusetts and you would be benefitting from this program. This has is no direct relationship to income. In the State of New York, it is 419 percent of the poverty level. That is about $50,000 for a couple. So this idea of saying this just applies to the neediest--no, this is hijacking. That happens to be the word used at the district court level--a program that was targeted to benefit the low-income people and say, wait a minute, we want it to apply to a lot of other people who do not need the income eligibility of Medicaid. We are going to take a discount program that was designed and targeted to help low-income people and say it applies to a lot of people, let's make it apply to everybody. Really, what you are talking about are price controls. But what you are talking about is saying, we are going to take a discount right now that is targeted towards low-income people, and we are going to spread it around to a lot of other people who aren't low-income, and who in some cases have unlimited income. Does that really make sense? Let me give you an analogy. Maybe sometimes economics arguments are hard to follow, and maybe with prescription drugs it is harder than others. Let us take an example. I see my good friend and colleague from New Hampshire. He is the former Governor of New Hampshire. As Governor, he purchased automobiles for the highway patrol and for the State police. My guess is that, as Governors, they get a good deal for the automobiles that are sold to the highway patrol and to the State police. He probably buys hundreds of them. Certainly, in a large State such as New York, or Michigan, they buy hundreds, and maybe thousands. So they get a good discounts. They get a better deal than the average consumer. But if you are going to say, wait a minute, let us not just give this to the police, and a volume discount to the State, let us just give this to basically anybody in the State. That sounds pretty good, doesn't it? We are all going to get a good deal. Guess what happens now. The price at which they were selling to the State before has just gone up. In other words, if everybody gets the discount, nobody gets a discount. You are going to find out that the savings that the highway patrol had by buying several hundred vehicles just disappeared because they are not going to get any better deal than anybody else on the street. That, in effect, is what is going to happen if we adopt the Stabenow amendment. This is a costly amendment if we are going apply this discount that Medicaid now gives on best price for Medicaid to every State program--and some State programs are quite generous. I mentioned for the State of New York it applies to individuals up to 419 percent of poverty; for a couple, incomes up to $50,000. In Massachusetts, there is no income limit. So if you make it apply--incidentally, under this amendment, a Governor could say: For any drug sold in my State, I am going to have it come under this agreement because I want to offer low-priced drugs to anybody who comes in the State of Oklahoma. So if that is the State program, then every drug would fall under this program. So the net result is, everybody gets a discount. Let's break out the champagne. This is a great deal. What you have done is, you have taken away--if that is the case--the discount for the low-income people on Medicaid and just taken it and spread it out to everybody else. Is that really what we want to do? If we adopt the Stabenow amendment, I am just telling you right now, you are eliminating the discount, you are eliminating the low-targeted subsidy that we are now giving low-income people. So if everybody gets the discount, nobody gets the discount. You have just targeted and, quite frankly, greatly increased the cost of the Medicaid Program. You have increased the cost of what is targeted towards low-income people, the people who really need the help. Keep in mind, this is not targeted to seniors. I have read the Stabenow amendment very closely, and it does not say anything about income limits. As a matter of fact, it says: Hey, you don't have to meet income limits in Medicaid. You don't have to meet eligibility. You don't have to be unemployed. You don't have to be uninsured to benefit under this amendment. It applies to almost everybody. If the Governor and the legislature write a program broad enough, anybody can apply. Anybody would. So everybody gets a discount. How great is that? It means that nobody gets a discount. This is the impact of this amendment. It is going to increase costs, as well as costs to the Federal Government. Maybe this thing will become law. Mark my words, we will just write it down. Today is July 18. Don Nickles says if this amendment passes, you are going to see Medicaid costs go up. We will find out. Some of us will be here for a while. Sometimes we do things that have results. This will result in Medicaid costs going up. So the very people we think we are trying to help--whoa, wait a minute, we are not helping Medicaid people; we are hurting Medicaid people because they will have to pay more for their drugs. They will lose their discount. This discount will be spread out amongst a lot of other people. Let me make a couple other comments. It not just me saying it. This is not my hypothetical situation: Well, Don Nickles says: Wait a minute, this may backfire. The General Accounting Office did a report. I will read part of this and then include it in the Record: In an August 2000 report, the GAO determined: The larger the group that would be newly entitled to receive a federal price, the greater the incentive for drug manufacturers to raise that price. The Medicaid rebate experience suggests how federal and nonfederal drug price discounts could change if Medicare beneficiaries had access to the same price discounts available to federal purchasers. Following the enactment of the rebate program, discounts for outpatient drugs decreased significantly because manufacturers raised the prices they charge large private purchasers. That is from the General Accounting Office. That is looking at the facts after we enacted the discount program some time ago. They are saying, if you expand that base of people eligible for a discount, costs are going to go up. It is just a fact. The other thing is, the Stabenow amendment harms Medicaid beneficiaries. It will raise drug prices in Medicaid and raise Medicaid Program costs at a time when States can least afford it. I will mention something from the administration. I have a note from them: The administration opposes any change in the Medicaid law that would increase Medicaid drug prices and reduce Medicaid coverage. This is what the Stabenow amendment would do. Medicaid law has always focused on what is best for Medicaid beneficiaries. The administration opposes changes in the Medicaid law that would harm Medicaid beneficiaries. The administration said this is what the Stabenow amendment would do. That is exactly what this amendment would do--exactly. I do not find this to be rocket science. You just tell everybody they are going to be able to get a discount, then nobody gets a discount. Medicaid? Sorry, you are going to have to pay more. They do get a discount now. They do get the best price. They do get the lowest price of anybody in the country. But if you make that applicable to everybody in the country, then nobody gets it. That is what is going to happen. I am just kind of against that people think: Oh, yeah, we will just do this, and this will save money. It is going to cost money. It is going to cost money from people who can least afford it. And it is going to greatly exacerbate the problems that many of our States right now are struggling with, and struggling with greatly. So I just wanted to mention that. I think it is important. I will mention two or three things. Let's not increase the cost of Medicaid. That is what this amendment would do. No. 2, let's not intervene in a case before the Supreme Court. That is pretty foolish. How many of us really studied this case? How many of us have studied the Maine law? How many of us have studied the idea that: Oh, yes, we are going to say that this program, that was designed for Medicaid, should really be applicable to all programs? Is that really a smart thing to do? Does it have some delusion or some negative impact on one small group if you say it applies to everybody? I think it is very shortsighted. So I urge my colleagues to vote no on this amendment. And if, for whatever reason, this amendment is adopted, I will tell my friend and colleague from Michigan, I am going to offer an amendment, and the amendment is going to have the effect to guarantee that the amendment would not have an adverse impact on Medicaid. My colleague stated, with assurances: Oh, I am sure it will not increase Medicaid costs. The administration says it would. GAO says it would. I think anybody who looks at it says it would. But if she is that confident, then I hope she will accept my amendment that says the proposal will not be effective if it is proven to have an adverse or increased cost in Medicaid drug prices. I will have that amendment later should her amendment prevail. I hope it does not prevail. I think it is a mistake. There is a reason we have a committee process. The reason we have a committee process is we have two different ideas on this and two different opinions. We could have experts come in and testify, and they could say exactly what they think the results would be of the Stabenow amendment. We have not had that opportunity. I would love to have that. I will be happy to participate in a hearing on it next week, next month, 2 months from now, and find out what the experts think, the people who are in charge of CMS, the old HCFA. Let's see what they have to say. Let's see what other experts say. Let's hear from Governors who not only have Medicaid that they are wrestling with, but other programs. Hey, there are some pluses and minuses in it for them. After all, they have to pay part of it.

Mr. NICKLES. I will be happy to yield.

Mr. NICKLES. I tell my friend and colleague, I think the committee process is being totally ignored by the present leadership in the Senate.

Mr. NICKLES. I would not go that far. But I tell my colleague, I will be happy to join her in requesting Senator Baucus to have a hearing on her proposal as soon as possible. Let's bring in the experts. Let's see what they have to say. I am a little bit chapped at the fact that I had been in the Senate for about 16-some years before I even got on the Finance Committee, and now it is not working. It has the reputation of being one of the most powerful, great committees, and it does not meet. The chairman of the committee does not call meetings on this. We have not had a markup on the prescription drug bill. I would liked to have input. I would like to be able to offer an amendment. And I would like to have testimony so we can find out what the substance of the proposal is, what the impact will be. How much will it cost States? How much will it increase Medicaid costs? I heard somebody say: Well, we think it would increase Medicaid costs by $1 billion or a couple of billion dollars. I think it may be a lot more than that. But I would like to know. Well, we don't know. We have not had estimates. It would be nice to have CMS give us an estimate. Have we had the chance to do that? No. Because we have not had a hearing. I don't believe a hearing was requested, but it should have been. And the chairman of the committee should have agreed. I will just tell my colleague, I am happy to participate in a hearing so we can get the facts out. But to change a program totally, and say, OK, we are going to have price controls and discounts for one group, and now we are going to expand it for everybody, with these great savings, assuming that everybody is going to get the savings--the net result is, nobody is going to get the savings. Instead of everybody getting a discount, nobody is going to get a discount. And that is the unfortunate result.

Mr. NICKLES. No, I will not yield. That is the unfortunate result of her amendment. It is just too bad that we bypassed the committee. I don't know why the chairman of the Finance Committee and the ranking member are not saying: Wait a minute, this might be a good proposal. Let's have a hearing on it. We will mark it up. We will consider it. We haven't done that; again, for something that involves State after State, a Supreme Court decision that will be made in probably a few months. We are going to interject ourselves with a trivial amount of debate on the floor, and we will have Senators vote on it and probably not half a dozen Senators have looked at the amendment in any detail. That is not a good way to legislate. I reserve the remainder of my time.

Mr. NICKLES

Mr. NICKLES. I announce that the Senator from North Carolina (Mr. Helms) and the Senator from Ohio (Mr. Voinovich) are necessarily absent.

Mr. NICKLES

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

Mr. NICKLES. I announce that the Senator from North Carolina (Mr. Helms) is necessarily absent. I further announce that if present and voting the Senator from North Carolina (Mr. Helms) would vote ``no.''

Mr. NICKLES. I compliment Senator Cochran for his amendment. I ask unanimous consent to be added as a cosponsor of the amendment.

Mr. NICKLES. Senator Cochran alluded to 2 years ago when we passed this amendment unanimously. He said if we are going to do it, let's make sure it does not impose significant additional risk on consumers, thereby saving money. I don't know why anyone would vote against that amendment. I hope no one will vote against this amendment. It is a very important amendment. Let me make a couple of comments. Someone will ask, didn't we already do that in the Dorgan amendment which passed by a nice vote? The Dorgan amendment is full of loopholes. It says it would be suspended upon the discovery of a pattern of importation of prescriptions by the importer that is counterfeit or in violation of any requirement in this section. If this is the case, how many people will have to die before we realize there is a pattern? How many will realize those yellow tablets that Senator Breaux was holding up are actually paint instead of maybe a lifesaving drug? How many patterns have to exist before we realize this really didn't work? We have the FDA where we spend millions and millions of dollars inspecting, trying to make sure we have quality drugs for our citizens. We are just going to open up a gigantic loophole for unscrupulous manufacturers. I wish that were not the case, but if anyone travels anywhere in the world, they know it happens often. When you talk with our State Department about counterfeit drugs or copyright violations on software, they will tell you that it happens lots of time. Unfortunately, it should not happen. But we have a pretty closed system right now where FDA goes to great lengths to ensure the drugs coming into the United States are safe. Last year, Senator Dorgan said, let's have it basically open ended coming from Canada and Mexico. Now we are just saying Canada. How safe is that? My staff did some homework. Canada has a provision under the Canadian Food and Drug Act, section 37. It reads: This Act does not apply to any packaged food, drug, cosmetic or device, not manufactured for consumption in Canada and not sold for consumption in Canada, If the package is marked in distinct overprinting with the word ``Export'' or ``Exportation'' and a certificate that the package and its contents do not contravene any known requirement of the law of the country to which it is or is about to be consigned has been issued in respect of the package and its contents in prescribed form and manner. In other words, the Canadian Food and Drug Act does not apply to drugs brought in strictly for export. Canada can import drugs from Sudan and export them to the United States and they are not covered by Canadian Food and Drug regulations. Yet Senator Dorgan's amendment says: Bring them on, bring them on. Our FDA people, our leaders, both past administrations as well as present administration, say we cannot do that safely. Here is a letter that was addressed to Senator Cochran. It is an extensive letter that is critical of Senator Dorgan's approach. I will just read one paragraph: The bill would actually create an incentive for unscrupulous individuals to find ways to sell unsafe or counterfeit drugs that, while purporting to be from Canada, may actually originate from any part of the world. Canada could become a transshipment point for legitimate or nonlegitimate manufacturing concerns throughout the world, and in many cases we would not be able to determine the true country of origin. For all these reasons we find this provision would greatly erode the ability of the FDA to ensure the safety and efficacy of the drug supply and protect public health. I could go on. If Canada says we are not going to regulate drugs that are brought into Canada for export only, and we are saying wait a minute, Canada, we want to be able to import your drugs. I listened to a lot of the debate. Almost every example that was given was of United States-manufactured drugs sent to Canada that are a lot cheaper in Canada than they are in the United States. There is nothing in Senator Dorgan's amendment that says these drugs have to be manufactured in Canada or the United States. These drugs could come from Sudan. There was a pharmaceutical plant in Sudan that was bombed a few years ago. There are pharmaceutical plants all around the world. Some of them may have great quality controls, some of them may not. Some of them may be in terrorist states. Yet we are leaving ourselves wide open. So I urge my colleagues----

Mr. NICKLES. I will be happy to, but I tell my colleagues I hope and pray the Cochran amendment will pass. If it does not pass, I will have an amendment that says the drugs that are covered should be of American or Canadian origin, manufacture, or control. American drugs are controlled. Even the drugs that we import, if they have FDA approval, we send FDA inspectors over to those plants to certify them. We have what is called a pedigree requirement to follow those drugs, to know where they are manufactured, know where they are distributed, before FDA puts their approval on them. So we try to and do protect safety. We do not have that for all drugs that would be coming from Canada. I would just mention there is a fatal flaw, in my opinion, in the Dorgan amendment we just adopted. One of those is that there has to be a pattern. If you look at the language of the amendment we just adopted, there has to be a pattern of importation from each importer. That is too late when there are people who have already died, are already sick, when there are people who did not get cured because we waited for a pattern, we waited for evidence, we waited for unfortunate results--not to mention, there is no telling how many people would have been cheated out of money, and so on. So I think the amendment we just adopted is probably not worth the paper it was written on. I also find it kind of clever to think we had the original Dorgan amendment, then they had a second degree. They left out one paragraph, and then the second-degree was reinstating that one paragraph. I am guessing it was saying we will use this as a substitute for the Cochran amendment. That is a false and faulty substitute. It is not a satisfactory substitute. The Cochran amendment--and I urge my colleagues to read it, and I cannot imagine anyone would oppose it--says: This section shall become effective only if the Secretary of Health and Human Services certifies to Congress that the implementation of this section (A) will pose no additional risk to public health and safety. How could anybody oppose that? And, second: . . . result in a significant reduction of cost of covered products to the American consumer. We are all in favor of that. I compliment the Senator from Mississippi for his leadership on it this year and 2 years ago. As a result of the amendment of the Senator from Mississippi, we have saved lives and eliminated a lot of fraud and counterfeiting and abuse that would have transpired had he not been so vigilant for the last couple of years. I compliment him and urge all my colleagues to support the Cochran amendment, and I am happy to yield.

Mr. NICKLES. I yield to the Senator for a question.

Mr. NICKLES. Under Canadian law, which I just read--this is section 37 of the Canadian Food and Drug Act--it said any item, whether it be packaged food, drug, cosmetic, or other devices--and if that item is imported and exported, not to be consumed or utilized in Canada, then it is not under their regulatory scheme.

Mr. NICKLES. That would be too late.

Mr. NICKLES. That would be under the category of the pattern of action.

Mr. NICKLES. I am reading a letter from the FDA, and they said absolutely. I ask unanimous consent to have printed in the Record a letter dated July 17, from the Department of Health and Human Services addressed to Senator Cochran.

Mr. NICKLES. This is the quote from FDA. I might say this is the position that is consistent, not only with this administration but the previous administration. They state: The bill would actually create an incentive for unscrupulous individuals to find ways to sell unsafe or counterfeit drugs that, while purporting to be from Canada, may actually originate in any part of the world. Canada could become the transshipment point for legitimate or nonlegitimate manufacturing concerns throughout the world, and in many cases we would not be able to determine the true country of origin. For all these reasons we find this provision would greatly erode the ability of FDA to ensure the safety and efficacy of the drug supply and protect the public health.

Mr. NICKLES. Current law requires FDA, for their certification--for FDA to give their certification, you have a pedigree requirement. The pedigree requirement means we have FDA inspectors go visit the plants in Canada to certify that yes, these are FDA-approved drugs. They do the sampling. They make sure the packages are safe. Inspections are done at great expense. That is already done for FDA, for drugs that are manufactured in the United States or reimported into the United States. It would not be done under any drug in Canada or under the Canadian law, which basically says if these drugs are purchased strictly for export purposes, they do not fall under Canadian regulation.

Mr. NICKLES

Mr. NICKLES. I announce that the Senator from North Carolina (Mr. Helms is necessarily absent.