Frank Pallone

Mr. PALLONE

Mr. PALLONE. Mr. Speaker, I would like to take this opportunity to raise my concerns regarding U.S. financial assistance to Pakistan. Mr. Speaker, I understand that after September 11, the U.S. needed to coordinate with President Musharraf because of Pakistan's proximity to Afghanistan. Although the U.S. worked with Musharraf in the war on terrorism, I was skeptical, and I still remain skeptical, that Musharraf could fight both global terrorism and local terrorism by Islamic fundamentalists that still takes place in Kashmir and India. It is now clear that Musharraf's promises to crack down on terrorists at the line of control in Kashmir and to crack down on terrorist camps and schools in Pakistan were just promises that went unfulfilled. When a leader says he will crack down on terrorism, but in the same breath make statements like, ``Kashmir runs in our blood,'' or will refer to terrorists as freedom fighters, that should be evidence enough that he is not truthful with regard to terrorism. Regardless of his empty promises on fighting terrorism in Kashmir, and despite his lies about holding democratic elections, the U.S. in fiscal year 2002 allocated hundreds of millions of dollars to Pakistan in both economic and military aid. The U.S. provided $600 million in economic assistance in fiscal year 2002, $73 million for border security, $75 million in FMF in the supplemental, and $50 million in military assistance. In addition, the recently passed supplemental contained $40 million for Pakistan, and an additional $250 million is being sought by the administration for economic development and assistance. I agree that Pakistan is in dire need of economic and humanitarian assistance, but I strongly objected to the military assistance provided to Pakistan by the U.S., especially considering the fact that Pakistan was not and still is not a democracy. Mr. Speaker, I think it is important for us to evaluate the situation in Pakistan before setting aside further money in fiscal year 2003 for economic aid to Pakistan, and certainly for military assistance to Pakistan. The atmosphere post-September 11 was different, and it was appropriate for the U.S. to provide aid to Pakistan since Musharraf was helpful to the U.S. in fighting the Taliban. At this point in time, however, the violence in Kashmir has escalated, and the overall situation of terrorism in Kashmir and throughout India charges Musharraf with the responsibility once and for all to stop infiltration at the border in Kashmir and to eliminate terrorist training camps and schools. With violence against civilians in Kashmir taking place on a nearly daily basis, and with nearly 1 million troops lined up along the Pakistan and Indian border, Musharraf has no choice but to keep his promise of stopping infiltration of Islamic fundamentalists who now claim ``Kashmir Jihad'' from entering Kashmir. I do not think it is appropriate for the U.S. to provide any further aid to Pakistan if this promise is not kept. In addition, Musharraf needs to go further than stopping infiltration. He must eradicate the training camps and schools operating in Pakistan. These schools breed terrorists, and in order to permanently end terrorism in Kashmir, Musharraf must go to the heart of the problem and put an end to the breeding of terrorism at these training camps. In addition, there must be some system for ensuring that Pakistan is accountable for the money that is allocated by the U.S. We should demand evidence that although economic aid may be going to schools and other social projects, that the investment is not then freeing up money that is reallocated towards weapons for Islamic militants and resources at terrorist training camps. Mr. Speaker, I am so concerned about the U.S. providing further funds to Pakistan without Musharraf holding his word that I am planning on sending a word to the foreign ops appropriators to apprise them of the current situation and to encourage them to provide economic aid to Pakistan only on the condition that Musharraf does, in fact, take concrete steps to alleviate terrorism in Kashmir and to eliminate terrorist training camps. In addition, I would like to note that I plan to encourage the appropriators to steer clear of providing any military aid to Pakistan, regardless of the progress Musharraf makes on terrorism prevention.

Mr. PALLONE

Mr. PALLONE. Mr. Speaker, this evening, and I have a couple of my colleagues on the Democratic side that will join me, I am going to be talking again about the need for a Medicare prescription drug plan. I think, as you know, we have a situation where tomorrow, hopefully, if not Wednesday, we are finally going to see an opportunity in committee for the Republican leadership in the House to present what they claim to be a prescription drug plan, and hopefully an opportunity for the Democratic proposal also to be considered, both in the Committee on Energy and Commerce as well as in the Committee on Ways and Means. I know that some of my colleagues know that for the last 2 months myself as well as some of the Members who are going to be joining me tonight have been demanding really that the Republican leadership bring up a prescription drug plan and allow us to consider prescription drugs on the floor of the House. It has been far too long since the Republican leadership has essentially stalled on a proposal. But now we hear that tomorrow, if not Wednesday, they are finally going to allow the two committees of jurisdiction to consider the prescription drug issue. I would point out, however, though, that my concern over the Republican proposal, which we still do not have, but we have been provided some sort of vague description of, is not a Medicare prescription drug plan; in other words, it is not going to cover all of the seniors who are currently under Medicare and provide them with a prescription drug guaranteed plan under Medicare. Rather, what the Republicans propose to do is to simply throw some money to private insurance companies in the hope that they will offer drug-only policies and that some seniors would be able to take advantage of those. They also do not address the issue of cost at all; they do not have any mechanism to bring costs down. Democrats have been saying all along in our proposal which we have put forward, basically, it would provide a Medicare-guaranteed drug benefit, a generous benefit; 80 percent of the cost would be paid for by the Federal Government, every senior would be guaranteed the benefit across the country, and we would bring costs down by basically saying or mandating that the Secretary of Health and Human Services negotiate lower drug prices because he now represents or has the negotiating power for 40 million American seniors. Now, I would like to yield some time, but I want to point out, Mr. Speaker, that the problems with the GOP drug plan have been pointed out many times by many experts. Over the weekend, actually in Sunday's New York Times, Sunday, June 16, there was an article called ``Experts Wary of GOP Drug Plan.'' I am not going to get into it now; I may a little later this evening. But basically they say in this article that drug- only coverage is not affordable and that insurers will not provide it. So essentially under the Republican plan, most seniors, if not every senior, will not be able to get a decent prescription drug program, if any at all. With that, I would like to yield to the gentlewoman from Texas (Ms. Jackson-Lee), who has joined me on many of these lonely evenings when we have tried to get the point across that we need to debate the prescription drug proposal; even if it is a lousy proposal on the part of the Republicans, let us debate it. Let us have an opportunity to contrast it with the Democratic proposal. I am pleased to say to the gentlewoman that it looks like, I am keeping my fingers crossed, but it looks like tomorrow or Wednesday, at least in committee, that opportunity will present itself. So I yield to the gentlewoman.

Mr. PALLONE. Mr. Speaker, I know we are just beating a dead horse here, but there was a report that was done by Families USA that came out a few weeks ago, and basically it said private health plans cannot provide prescription drug coverage; that is just not going to happen. It kind of follows up on what the gentleman said, and if I could just mention, I just want to read a little bit from the summary. It says, At the time H.R. 4680 was being considered, that is the bill we had last session that had the drug-only policies, it said, At the time H.R. 4680 was being considered, the insurance industry, acting through the Health Insurance Association of America, made clear that it had no intention, no intention, of offering drug-only policies. The health insurance industry reasoned that drug-only insurance policies would be subject to adverse risk selection; that is, they would disproportionately attract consumers who have existing health conditions, are sick or disabled, and are among the oldest of the old. As a result the policies would be very expensive and would have very few takers among healthier Medicare beneficiaries. The failure to attract beneficiaries with low drug costs would further drive up premium prices and lead to an increasingly unaffordable price spiral. Then they go on to talk about how we have the example with HMOs and that that is what is happening.

Mr. PALLONE. I yield to the gentleman from Connecticut.

Mr. PALLONE. Mr. Speaker, I want to thank my colleague from Connecticut, but he raised three points, if I can remember them now, that I would like to develop just a little bit because I thought they were very important. First, with regard to the possibility of passing something, I really cannot emphasize enough, and I know that he obviously believes the same, that what we really need here is a bill that is going to pass. It is going to pass this House; it is going to pass the other body; it is going to be signed by the President. I really do not think that is going to be possible unless there is a basic understanding that this has to be a Medicare benefit, and I think that some of my colleagues on the other side of the aisle, maybe those who really would like to get something passed, have tried to frame this in terms of what is a more generous benefit. Clearly, the Democratic benefit is much more generous. As our colleague from Texas pointed out, we are talking about a very low deductible, $100, as opposed to $250 for the Republican. We are talking about a lower premium. We are talking about an 80 percent benefit that starts from the first $100 after the deductible and goes up to $2,000 when it is 100 percent. The Republicans are talking about 80 percent for the first $1,000, then 50 percent for the next $1,000, and then I think it goes down to zero, sort of like a donut hole where a person gets no Federal money up to $4,000. What I have tried to say, if our colleagues on the Republican side were willing to sit down, we could probably work out the difference in terms of the benefit; the Democratic benefit clearly more generous, the Republican benefit clearly a lot more stingy. Maybe we could work out some compromise there in terms of the benefit, the amount that the Federal Government is going to provide. The problem that I have is that is not what the Republican leadership is doing. They are acting as if they are providing this benefit, and they want to argue the dollars, but really they are not providing any benefit because they are not putting this under Medicare, and they are back to their same drug-only policy of having this function through private insurance, which, as my colleague says, I know where he is from, in Hartford the insurance companies do not want to do. Unless everyone comes to the table with the notion that they are going to provide a Medicare benefit, I think that the Republicans, and I will be cynical, are just blowing smoke and really do not want to pass anything. They just want to talk about it.

Mr. PALLONE. Mr. Speaker, I think the gentlewoman is really contrasting what the Democrats have in mind versus what the Republicans have in mind. The most important thing I think the gentlewoman said is that we are very clear about what we are doing, and they are very unclear about what they are doing. Essentially what the gentlewoman describes in terms of the Democrat proposal is no different from what we have right now under Part B. I do not want to sound too bureaucratic, but I think seniors understand that right now, if they need their hospital bill paid, that is basically paid for under Part A. If they need their doctor bills paid, then they pay a premium which is so much a month, fairly low, a low deductible, and 80 percent of the cost of the doctor bills are paid for by the Federal Government under Medicare. What the gentlewoman described as the Democratic proposal is essentially a new part for Medicare, we call it Part D, but it is very similar to Part B with doctor bills. In other words, you pay a defined premium, $25, there is $100 deductible, and then 80 percent of the cost, up to $2,000, is paid for by the Federal Government. After that the entire thing is paid for by the Federal Government. For those people who are below a certain premium, the entire thing is paid for by the Federal Government, just like Part B with doctor bills. So it is clear what we are doing. And we are doing it under Medicare, which has been a very successful government program. The problem with the Republicans is that they do not like Medicare. They do not like government programs. So they are coming up with whatever they possibly can do to avoid Medicare. They may say they are providing a Medicare prescription drug benefit, but the only reason that they can say it is because they are addressing the over-65 population, not because they are actually expanding Medicare to provide a guaranteed benefit. I do not want to, I hate to read, but The New York Times article on Sunday was so much to the point, because if I could just read 2 paragraphs, it says, ``Under the proposal,'' the Republican proposal, ``Medicare would pay subsidies to private entities to offer insurance coverage for the cost of prescription drugs. Such drug-only insurance does not exist, and many private insurers doubt whether they could offer it at an affordable price. I am very skeptical that drug-only private plans would develop,'' said Bill Gradison, a former Congressman who is President of the Health Insurance Association of America. This is the industry, the health insurance industry. The gentleman from California (Mr. Thomas), the chairman, Republican chairman of the Committee on Ways and Means, insisted, ``We should rely on private sector innovation delivering the drug benefit. The private sector approach offers the most savings per prescription.'' But the policy director for AARP said, ``There is a risk repeating the HMO experience with any proposal that relies heavily on private entities to provide Medicare drug benefits.'' Now, what I am hearing is the Republican leadership, in this case the chairman of the Committee on Ways and Means, the gentleman from California (Mr. Thomas), just does not like the fact that Medicare is a government program. He is saying even though the insurance people are saying, we are not going to offer these policies; you can give us these subsidies, we are not going to offer these policies, seniors are not going to have this benefit, but he still insists that it has to be outside of Medicare, or private. Then, when the other person representing the HMOs points out, well, you have already done this with the HMOs, you were hoping that by throwing them some money that you would get them to offer prescription drugs, they have not done it. More and more are dropping out. Fewer and fewer policies are available. So I guess the frustration for me and for both of my colleagues is that we know that Medicare works. We know that trying this private sector giving money to insurance companies did not work with the HMOs. We know that the insurance companies say they are not going to do it. The gentlewoman started off this evening talking about 4 years. Well, the gentlewoman knows 4 years ago the Republican leadership passed the same thing on the floor, drug-only policies. And everyone said, it will not work, nobody is going to sell them. So for the life of me, I just do not understand how they can come back here again with the same old, tired stuff that does not work, proof that it does not work, and they still insist.

Mr. PALLONE. Mr. Speaker, I yield now to the gentleman from Connecticut (Mr. Larson).

Mr. PALLONE. If I could just ask the gentleman to comment a little bit on the price issue, because I think it is so important. We have not talked about it too much tonight; but the gentleman brings it up, and I think it is very important that he does so. The problem we face, or one of the major problems, maybe the most important problem, is one of price, because seniors tell us they cannot afford them. They go to the pharmacy, and they cannot afford the prices. And for the last 6 years, prices of prescription drugs have gone up, in double digits every year. Much higher than inflation in general. The one thing we have to understand, and again I understand the gentleman understands this, but my colleagues on the other side need to understand, and they, the Republicans, are determined, by at least everything we have seen, they are determined not to address the price issue. Now, we have not actually seen the Republican proposal. I am on the Committee on Energy and Commerce, and we will have opening statements tomorrow and we are going to have a markup on Wednesday; but we still have not seen the bill. But there have been statements made by Republican colleagues that say that they may actually put in the bill language that says that there can be no effort to control or deal with price in the bill. Now, whether the bill finally has that language or not, I do not know; but you can be sure that it is not going to have any language that would effectively control price. It may only have language that says we cannot.

Mr. PALLONE. Well, I am hoping, and I am trying not to be so cynical, but the gentleman does point out that there is a real possibility that the Republicans may not even allow us to bring up our proposal and have a vote on it. I hope that is not true. But the best thing, or one of the most important things about the Democratic proposal is that because we are putting this program under Medicare, now the Secretary who administers Medicare, the Health and Human Services Secretary, now will have these 30 or 40 million seniors that fall under Medicare. We have a mandate in the Democratic bill that he has to negotiate prices down, and he will have the power to do so because he has the 30 or 40 million seniors in Medicare that he now represents. I have no doubt that that will lead to a price reduction of maybe 30 percent because of his negotiating power. The Republicans have nothing like that in there. The only thing President Bush has talked about is the drug discount cards, which are essentially a farce because they are already available. The cards are available. I am not saying the cards are a farce, but for him to suggest that somehow the Federal Government would lend its name to it is meaningless. The cards are out there. You can buy them any day. Most seniors are aware of them. They do provide some discount, but the Federal Government is not doing anything. I guess the only thing President Bush is saying is just promote the cards, go out and buy one, which I think is meaningless. If we do not control price in some meaningful way, whatever plan we pass here will not work because seniors are not going to be able to afford it in the long run.

Mr. PALLONE. I want to thank the gentleman for joining me tonight. I totally agree that the whole research component is something that we have to continue. Certainly my home State has been, for many years, a leader in research amongst pharmaceuticals. But what we are seeing is that so much of the price does not come from research, but rather from advertising. The majority of it really is, and we already provide a lot of money for research at the Federal level, and we also essentially underwrite a lot of the research in terms of the kinds of tax credits or tax breaks that we give to the pharmaceuticals. And I think it is important to make sure that we are helping with the research, but not providing the money that is going towards advertising and some of the other things that are unrelated to research.

Mr. PALLONE. I thank the gentleman from Connecticut (Mr. Larson). Mr. Speaker, before we close tonight, I wanted to just basically go through the Democratic proposal in a little more detail. I know that our colleague, the gentlewoman from Texas (Ms. Jackson-Lee), went into it somewhat; but I wanted to give a little more information about it. The Democratic bill is called the Medicare Prescription Drug Benefit and Discount Act, and of course the most important thing is that it provides an affordable prescription drug and reliable benefit to all seniors; and as our colleague, the gentlewoman from Texas (Ms. Jackson- Lee) said, seniors have waited long enough. But basically the purpose of the Democratic bill is four-fold. First, it lowers the cost of drugs for all seniors. It offers an affordable guaranteed Medicare drug benefit. It insures seniors coverage of the drug their doctor prescribes, and it does not force seniors into HMOs or private insurance. In terms of the actual premium and benefit, no gaps, no gimmicks. The premium is $25 a month. The deductible is $100 a year. Co-insurance beneficiaries pay 20 percent; Medicare, meaning the Federal Government, pays 80 percent. Out-of-pocket limit is $2,000 per beneficiary per year; and if one is below a certain income, then the premium is paid for. So it is very similar to part B, the way one now pays doctor bills, maybe even a little more generous than that. To just give an example, to give some idea in terms of income for seniors, if a senior's income was up to $13,290, there would be no premium or co-insurance. So just like in part B if one falls below that income, he is not paying the $25 a month and is not paying the 20 percent. It is all being paid for by the Federal Government. So as the gentlewoman from Texas (Ms. Jackson-Lee) said, there is not going to be anybody who is not going to be able to afford this because of their income. If a person's income is between $13,290 and $15,505, the premium assistance is on a sliding scale; so he would not have to pay $25 a month. He might pay 15 or 10 or 5, depending on what his income is. But probably the most important thing is what my colleague from Connecticut (Mr. Larson) and I have already discussed, and that is lowering the drug prices. And as my colleague from Connecticut pointed out, the question of affordability of drugs is not just an issue for seniors. It is an issue for everyone. We are addressing it here in the context of seniors, but a lot of things we talk about could be applied across the board. But in any case, the Democratic Medicare benefit lowers drug prices because it uses the collective bargaining power of Medicare's 40 million beneficiaries to guarantee lower drug prices. Medicare contractors compete for enrollees by negotiating discounts, and it reduces drug prices for everyone by stopping big drug company patent abuses. I do not want to keep going through this, but I think that it is very important to understand that this is a Medicare benefit. This does not rely on private insurance companies. There is no privatization the way the Republicans have proposed. We just want to give an example of what a senior would save. A senior with drug costs of, say, $3,059 a year, which is the average senior drug spending that would be anticipated in the year when this proposal went into effect, some people might say, gee, $3,059 is a lot; but that is the average, what we estimate will be spent when this plan goes into effect. So a senior with drug costs of $3,059 per year would spend $300 in premiums, that is the $25 a month, $100 deductible, and $592 co- insurance, which is the 20 percent per prescription, for a total of $992. So for that $3,059, they would be saving $2,067, which is very comparable to what you do now with part B for your doctor bills.

Mr. PALLONE. Mr. Speaker, as the gentleman points out, and New Jersey is typical, some States have provided prescription drug programs depending on income; and in New Jersey, it is income-related, and we finance it through casino revenue funds for people below a certain income. Those programs would continue in the State. The State would then get money to pay for those programs. I do not know how Connecticut works, but most States are not as generous as New Jersey. And this applies to any Medicare beneficiary. In New Jersey it is a little over $20,000 per year income that you are able to tap into the casino-funded prescription drugs program. But remember, this is not income-based, because Medicare is not income- based. So if you are making $25,000 a year or $30,000 or even $100,000 a year, you would still be able to take advantage of this benefit by paying your $25 a month premium, and you pay 20 percent, and the Federal Government pays 80 percent. Frankly, I think that is important because most of the people that contact us are the people not getting what the States are offering. In other words, a lot of States have no benefit. Some States like New Jersey and Connecticut have some benefit, but most seniors in New Jersey are still not getting any kind of meaningful coverage through the State program because it is very expensive for the State. We are doing something now that will click in for every Medicare beneficiary. We have part A, which is the hospital bills; part B is the doctor bills; part C is HMOs; and part D would be the new prescription drug program. It is like part B, you pay a low premium, and you get the benefit, and it starts and applies to everyone across the board.

Mr. PALLONE. Mr. Speaker, I thank the gentleman for joining us. I am going to be quoting this New York Times article over the next 2 weeks or so because I think that it provides independent backup, if you will, for what I have been saying about the Republican plan. Again, I am glad and I hope the Republicans will bring this up in the Committee on Energy and Commerce and the Committee on Ways and Means on Wednesday, and that they will bring it to the floor of the House the following week for a vote. Hopefully they will allow the Democrats to bring up our proposal as a substitute so we can have a good debate. If they do that, I will be very happy that at least we have an opportunity. But we have to stress that the Republican proposal is not a Medicare benefit. It is just giving some money to insurance companies, and that is not going to work because the policies are not going to be offered, and seniors are not going to have a benefit. If I can go back to this New York Times article again, and I went through parts of it, but I would like to cover a little more of it. As I said, the headline is ``Experts Wary of GOP Drug Plan. Some Say `Drug Only' Coverage Isn't Affordable for Insurers.'' Mr. Speaker, this is an article by Robert Pear. It says, ``A Republican plan to provide prescription drug benefits to the elderly through private insurers is drawing a skeptical reaction from many health policy experts. The plan, they say, would face problems like those that have plagued Medicare's attempt to encourage the use of health maintenance organizations.'' Basically what the Republicans are doing with their proposal is doing the same thing they did with HMOs, throwing some money in the hope they will provide some coverage. They do not provide the coverage, and they have been cutting back and throwing seniors out of the plan. The article in the New York Times goes on to say, ``Private health plans were once seen as Medicare's best hope for controlling costs. In 1998, the Congressional Budget Office predicted that half of all beneficiaries would eventually be in such managed care organizations. But the market has been extremely unstable. Many HMOs have found Federal payments inadequate and pulled out of Medicare, dropping 2.2 million beneficiaries since 1998.'' Mr. Speaker, I would ask the other side of the aisle, we know that the experience with HMOs in terms of providing prescription drug benefits has not worked. Why would they want to replicate that again by going to private insurers and expecting them to come up with a drug benefit? It is not going to happen. The article in the New York Times goes on to say, ``Many companies sell insurance to fill gaps in Medicare coverage, but premiums for such Medigap policies have increased rapidly in recent years, and only 3 of the 10 standard policies include drug benefits. ``Richard Barasch, chairman of Universal American Financial Corporation of Rye Brook, New York, which sells Medigap coverage to 400,000 people, said he seriously considered offering a separate insurance product just for drug costs. But after much research, he concluded it was not feasible because most of the buyers would be people with high drug expenses.'' So if Members do not believe the HMO experience shows that private drug policies will not work, what about Medigap coverage? Medigap is supplement coverage you can buy to cover things that are not covered by Medicare. This article shows that the Medigap experience is not offering any meaningful drug coverage either through private insurers. The examples show HMOs are not providing the coverage. Medigap is not providing the coverage. Why do my Republican colleagues think that they will be providing coverage through private insurers? At the end of the article it says, ``HMOs have long boasted that they hold down costs, but their ability to do so has been challenged by hospitals and doctors demanding higher payments. Companies managing Medicare benefits would face similar pressures from drugstores. ``The National Association of Chain Drugstores recently sent a bulletin to its members opposing the Republicans' Medicare drug proposal. Crystal S. Wright, vice president of the association, said, `This could be an economic disaster for community pharmacies. Benefit managers are likely to get even more leverage than they currently have to reduce pharmacy reimbursement.' '' So the drugstores are saying, we are not going to be able to get adequate reimbursement, so we are going to go out of business. Where is it we expect this Republican plan to work? The last thing the New York Times article says, ``House Republicans said insurers could set different premiums and benefits, so long as the overall value of each drug plan was equivalent to that of the standard coverage suggested by the government. The Republican plan is part of a bill costing $350 billion over 10 years.'' Well, again, I do not understand what my Republican colleagues expect. Experience is that private insurance does not work to provide these kind of drug benefits. The insurance companies say they are not going to sell it. The pharmacies say it will not work. The only reason I can imagine that they are proposing it is they know this is a major issue that is going to face them in the election. They have promised the American public that they are going to provide a prescription drug plan, and so they come up with this sham which they hope to pass through the House, probably on a totally partisan vote, send to the other body, and never hear from it again, but they can say to the voters that they have tried. But they are not trying, they are just putting out something that is a sham. Hopefully as Democrats we will show the sham for what it is and to ask our colleagues to vote for the Democratic alternative which would provide a meaningful guaranteed benefit under Medicare for all seniors.

Mr. PALLONE

Mr. PALLONE. Mr. Speaker, I'd like to take this opportunity to congratulate Dr. Sidney Pestka who was named the 2001 National Medal of Technology Laureate for his pioneering achievements in the field of biotechnology. Dr. Pestka is from my district and joins us from the Robert Wood Johnson Medical School at the University of Medicine & Dentistry of New Jersey in Piscataway, New Jersey. Mr. Chairman, in 1969, Dr. Sidney Pestka began a project to determine what interferon was--a substance that held the possibility of curing viral diseases, diseases that defied treatments, diseases that challenged the ingenuity of medicine for centuries, diseases including hepatitis, influenza, Ebola, Dengue, Yellow Fever, West Nile, and even the common cold. The possibility that a single medicine could treat all or at least many viral diseases was alluring. After a few months evaluating the scientific basis and potential of interferon, Dr. Pestka began to translate this dream into reality. For the next seventeen years, Dr. Pestka made a remarkable series of discoveries and developments, often bucking prevailing beliefs and designing innovative solutions to problems along the way to success. His achievements carried out at the Roche Institute led to numerous medical applications including cloning of the human genes, development of immunological assays with monoclonal antibodies and medical application of interferon for viral diseases, to name only a few. In 1986, Dr. Pestka's dreams became reality when the Food and Drug Administration (FDA) approved the interferon that he developed. The approval of interferon by the FDA was significant, not only because it allowed Dr. Pestka's development to be applied to treat viral diseases but also because it prepared the pathway for many other biotherapeutic agents now used in the clinic and stimulated the creation and development of today's extensive biotechnology industry. Dr. Pestka's achievements are the basis of several U.S. and foreign patents and interferon is now a major product of several U.S. and foreign companies. The market for interferon is expected to exceed $7 billion by 2003. In addition to interferon's commercial impact, there was no general antiviral therapy available before Dr. Pestka began his work on interferon; today, interferon is the first and only general antiviral therapy. Interferon is used to treat hepatitis B and C, diseases that afflict 300 million people worldwide. Today, interferon is used for the treatment of cancers such as metastatic malignant melanoma, kidney and bladder cell carcinoma, some leukemias, AIDS-related Kaposi's sarcoma, and multiple sclerosis. Mr. Chairman, many individuals are now alive and well after treatment with interferon as a result of Dr. Pestka's achievements. Finally, Mr. Chairman, I'd like to point out that the potential of interferon has caught the imagination of the public with many newspaper, magazine and journal articles about interferon over the past twenty years. Most scientists in academia do not bring achievements in research directly into commercial products with special considerations for scale up, environmental impact, economy, efficiency and efficacy. Dr. Pestka has bridged this gap by making seminal achievements in all these avenues from concept, to basic research and to practical application. He has fostered new industries in multiple areas, developed new medicines for previously untreatable diseases, and brought new hope to those afflicted. These pioneering achievements were prefaced and followed by many other basic scientific discoveries in chemistry, biochemistry, genetic engineering and molecular biology from the genetic code and protein biosynthesis to interferons, cytokines, receptors and cell signaling. In closing, Dr. Pestka's achievements in innovation and translation provide a role model for this and future generations.

Mr. PALLONE

Mr. PALLONE. Mr. Speaker, I want to take this opportunity this evening, which I have done many times over the last couple of months, actually, to discuss the need for a Medicare prescription drug benefit. I am particularly happy to be here tonight because I know that tomorrow the Democrats in the House will be announcing our Medicare prescription drug proposal at a press conference at, I think, approximately 11 a.m. on the steps of the Capitol. I know that for a number of weeks now I have been highly critical of the Republican leadership in the House, because even though they are the majority party, they have failed to address the concern, I think the number one concern of the American people, which is for a prescription drug plan under Medicare. When I go home and I have a town meeting or I talk to my constituents, the issue that most frequently comes up is the fact that it is very difficult for all Americans, but particularly for seniors, to afford prescription drugs, to afford their prescription medicine. Prices have gone up by double-digit inflation over the last 6 years; and increasingly, most Americans, particularly seniors, find that they are not able to afford the drugs, the prescription drugs or medicine that their doctors prescribe that the doctors think are necessary for them to continue to live a quality life. The House Republican leadership, I guess about 2 months ago, announced with much fanfare that they intended to bring up and write a bill that would provide for prescription drug coverage for seniors, and then they said that the bill would be available and would go to committee sometime before the Memorial Day recess and then be passed in the final week before the Memorial Day recess. Now, we know that did not happen. They came back from Memorial Day recess, about 2 weeks ago now, and again with much fanfare said that they were going to bring up the bill the first week, which would have been last week, and then we heard this week they were going to bring it up this week; and now we hear that they may bring it up next week and that they are definitely going to bring it up before the July recess. Well, I have my doubts because I have been hearing this so many times. But more than the question of when they are going to bring it up is what they are going to bring up. Everything that we hear about the House Republican proposal is that it is not a proposal that will actually provide coverage for most seniors under Medicare. I think that most of my colleagues know that Medicare has been in existence now for over 30 years; and Medicare, which is a government program, run by the Federal Government and financed by the Federal Government, is a very successful program that provides seniors with their hospitalization and with their doctor bills. Under part B of Medicare, a senior has the option, and 99 percent of seniors exercise it, of paying a fairly low premium every month; and as a result of paying that premium, they get 80 percent of the cost of their doctor bills paid for by Medicare, by the Federal Government. They have a very low deductible, $100 a year; and basically, the program has been tremendously successful. Most seniors participate in it. Their doctor bills are paid 80 percent by the Federal Government, up to a certain amount; and we hear very few complaints. Most people seem to be satisfied with the Medicare program in terms of the coverage for hospitalization and for their doctor bills. However, Medicare does not have a benefit for prescription drugs. What the Democrats have been saying is very simple: that we should have a guaranteed benefit under Medicare for all seniors, all those who are eligible for Medicare. It is not hard to comprehend. We set up a new part, maybe call it part D, we model it after the part B program that pays for doctor bills. We again have a very low premium, say $25 a month, a very low deductible, $100 a year; we have 80 percent of the cost paid for by the Federal Government, a 20 percent copay and, after a certain level, we suggest $2,000, after you have paid out of pocket or your bills have come to more than $2,000, the Federal Government would pay for everything at a sort of catastrophic level at which the Federal Government pays for everything under Medicare. Well, the Democrats are saying that is what we should do. We will be talking about it in a lot more detail tomorrow at the press conference. Most important, we address the issue of price. We understand very strongly that we can expand Medicare to include prescription drugs and provide a guaranteed benefit for every senior and everyone eligible for Medicare, but that it would be difficult to do that if we do not control the costs in some way. When I talk to seniors or any American, any of my constituents, they talk about how the price of prescription drugs is too costly. So we have to do something at the Federal level to bring the cost down. The easy way to do that, and this is what the Democrats will propose, is to say that the Secretary of Health and Human Services has the obligation, has the mandate to negotiate prices for prescription drugs that would be significantly less than what most seniors are paying now, perhaps a reduction of as much as 30 percent or more. I think that is very possible to do, since the Secretary will have 30 or 40 million seniors, Medicare beneficiaries, that he represents; and he has the ability to go out and basically force the drug companies to lower prices because of the bargaining power that he would have with so many Americans, 30, 40 million American seniors. This is all very simple. I have talked about it before. We will be unveiling it tomorrow, but there is really no magic to it. We have been talking about this proposal and how it is modeled after part B of Medicare which pays for your doctor bills. We have been talking about that for several months now here on the floor, myself and many of my colleagues. So there is no magic to what needs to be done. But we have absolutely no indication that the Republican leadership is willing to support anything like what I have just described. First of all, it is abundantly clear that they do not want to provide a prescription drug benefit under Medicare. Oh, sure, they will say that it is a Medicare program because the people who will be eligible will be those same seniors who will be eligible for Medicare. But they are not putting the prescription drug program under Medicare in the sense that it is run by Medicare, part of the government program, and will guarantee a benefit. What they are saying is that we will give some money, the Republican leadership is saying that we will give some money, almost like a voucher, to private insurance companies; and we will ask them to provide drug policies to cover seniors, and we will estimate by the amount of money that we are going to throw the private insurance companies what kind of coverage might be provided. But what the Republicans fail to point out, what the leadership in the House fails to point out is that there is no guarantee that a senior in a particular area or any area, for that matter, will be able to buy a drug-only policy that provides the kind of benefits that they would like it to provide. The perfect example, the perfect example for this is what the Republicans did and how they continue to tout the Medicare+Choice, or the HMO program. A few years ago, they decided that a great way to provide prescription drug coverage was to give some money to HMOs in the hope that they would agree to provide prescription drugs or to cover prescription drugs. But what we have found over the last few years in this HMO program is, first of all, that in many States, I think it is up to nine or 10 now, there is no HMO available. In another 15 or so States, there may be an HMO available, but they do not provide any drug coverage, and in those States that I mentioned, 10, 25, in those 25 States where you can find an HMO program that provides prescription drug coverage, you will not find that that HMO coverage is available in every part of the State; and you will find tremendous deficiencies, if I could say, in what kind of prescription drug program they cover, they provide. Mr. Speaker, this is not something I am making up. There was a report that was put out by Families USA last month entitled ``Failing America'S Seniors: Private Health Plans Provide Inadequate Prescription Drug Coverage.'' Basically what this report says very dramatically is that if you simply rely on HMOs, or the private insurance market in this case, to provide insurance prescription drug coverage, you are going to have this very uneven situation. In a lot of States, there is not any HMO, and in other States they do not provide coverage for prescription drugs; and there is absolutely no question that we would get the same thing happening with the prescription drug program that the Republican leadership is talking about getting around to, if they ever get around to it over the next couple of weeks or the next couple of months. In fact, the trade association for the health insurance companies has testified many times before committees in the House, the Committee on Commerce, the Committee on Ways and Means, that they do not want to provide this drug-only insurance, that they are not going to sell it. So I am very fearful that what we have here is the Republican leadership basically propagating a scam. They know that the American people, particularly seniors, want a prescription drug program, and that they want a program similar to Medicare. They are very much aware of that. They are very much aware of the fact that prices are too high, and prices need to come down. But rather than provide a prescription drug program under Medicare that guarantees benefits for every senior and every Medicare-eligible constituent that we have, they are going to opt for another effort to throw money towards private insurance companies that, just like the HMOs, will not work and will not guarantee a real benefit package to the average senior. In addition to that, the Republican leadership refuses to address the cost issue, the pricing issue. They do not want to. In fact, there was something in Congress Daily today, which is a publication that is put out about what Congress does, that says that there is a push within the Republican leadership that when they bring up their prescription drug bill, that they will specifically say in language in the bill that there cannot be any price controls or any effort to control prices in any way as part of that prescription drug program. So there is absolutely no doubt in my mind that they do not intend to address the price issue at all, and try to bring prices down. That is another thing that will doom their program, because if they do not address the pricing issue, they will never be able to provide enough money to pay for a real prescription drug benefit. I see that a couple of my colleagues on the Democratic side have joined me this evening. They have been here before. I certainly would like to have them participate. I am particularly pleased that my colleague, the gentleman from Arkansas (Mr. Ross), is here tonight because he is a pharmacist, and he knows more about this issue than I do and probably any other Member of Congress. Mr. Speaker, I yield to the gentleman from Arkansas (Mr. Ross).

Mr. PALLONE. Mr. Speaker, if I could just interrupt, I wanted my colleague to reiterate that point again about how many different drugs the average senior takes in the course of the year. I think a lot of the people, particularly younger people, have no idea how things have developed, as my colleague said, over the last 20 or 30 years since Medicare started out. Probably when Medicare started out in the 1960s, it would probably be unusual for a senior to be taking any kind of prescription drug, but now the gentlewoman said the average is 18 different?

Mr. PALLONE. Mr. Speaker, I want to thank the gentleman from Arkansas. I know he said he is not a pharmacist, but because he owns a pharmacy and because he deals with the public on a regular basis, he knows about the preventive nature of prescription drugs. I always like to bring that up, and I am pleased that the gentleman did, because we always, or I tend to forget, and I think a lot of my colleagues tend to forget that because prescription drugs really are preventive in nature, they actually save a lot of money. In all these calculations that we have to deal with in trying to figure out how much a prescription drug plan would cost, nobody ever calculates the fact that concerning some of the people the gentleman mentioned who cannot get prescription drugs now because they cannot afford it, we would prevent them from going to a hospital, we would prevent them from having to go to any kind of institution, and that saves the Federal Government a lot of money. Obviously, if the Federal Government has to pay $100 or $200 for a drug, but if that means somebody does not incur a $10,000 or $20,000 hospital bill, that is a savings to the Federal Government because Medicare is paying for that hospitalization. Instead of that, they pay for a couple hundred dollars for a prescription drug. I think it is important, because we, a lot of times, forget about how preventive measures, whether it is home health care or prescription drugs or whatever, nutrition, these things save the government money. That has to be factored in in terms of what we do.

Mr. PALLONE. If I could just reclaim the time, I know that statistic is accurate. I have seen it many times, but I think a lot of times people do not realize, because of the fact that so much research has been done and all these miracle drugs have been created, and it is all great, it is true now that seniors are taking that many drugs, and that is why the costs are so high. Even 5 years ago, the costs were not as high as they are now, and that is why this is such a crisis. I did not mean to interrupt, but I think that statistic is interesting because I am not sure a lot of younger people realize that.

Mr. PALLONE. Mr. Speaker, I wanted to point out there is no crisis in terms of the profit the prescription drug industry is making. The gentlewoman knows my home State of New Jersey is the headquarters for many of these, of the major drug companies, and let me tell my colleague, they are doing very well. Their stocks have been doing well, even in the last couple of years where the stock market has not been generally doing that well. I, for the life of me, cannot understand why they do not see a financial benefit in a Medicare prescription drug program because, if we think about it, we have all seniors, millions of seniors that are not covered, not buying prescription drugs. If we add the entire senior population, if the entire senior population, most of which does not have a meaningful drug insurance program now, it is now included under Medicare, we have to be talking about an additional maybe 20 million Americans who would now be eligible and have most of their drugs paid for by the Federal Government. How is it that these drug companies would not benefit from that? I think it is the fear of the unknown. In other words, they are doing well now. Their stocks are doing well. Their CEOs are making a lot of money, and they just figure, well, things are pretty good, so let us not change it. But I think once this program is put into place the way the Democrats have proposed, I seriously doubt that there is any way that they are not going to make more money because they are going to be selling more prescription medicine. I think it is just the fear of the unknown and the realization that maybe things are going to change, we are not going to benefit in some way, but the notion that their profits are going to be diminished by expanding Medicare, to me, is nonsense. I yield back to the gentlewoman.

Mr. PALLONE. Mr. Speaker, reclaiming my time, I think the gentlewoman is pointing out a very important point. I have not stressed it so much because I know that the Republican plan does not have any kind of guaranteed benefit. In the other words, what the gentlewoman is basically referencing is when the Republicans put out their proposal, they suggest that I think for the first $1,000 they will pay 70 percent of the costs for the next thousand. Up to $2,000, they will pay 50 percent of the costs, and then from $2,000 to $4,500, they will pay none of the costs, but the reason I think that that proposal is absurd, as my colleague pointed out, is, and why they do not have any hesitancy of talking about it that way is because it really is not any benefit. In other words, what they have done essentially, from the way I understand it, they have said we are going to throw a certain amount of money out for these drug-only insurance policies, and in order to fit that in for what we would like to see for a benefit, we will structure it this way, and they have structured it with that hole because there is not enough money to pay for a real benefit that would be meaningful. The problem is that since this is just being thrown out to the private insurance sector, we do not even know what these drug-only policies will provide, and they are probably not even going to be available in large parts of the country. So I think the reason they do not have any problem suggesting what my colleague suggests is actually absurd is because they do not really have a guaranteed benefit at all. So they create this hole in order to fit it in with their budget, what they think they are going to throw out there in terms of the total amount.

Mr. PALLONE. Mr. Speaker, reclaiming my time, the Democratic proposal, which is like part B, which is the part of Medicare that pays for the doctors' bills, there is a premium, low deductible, and 80 percent of your doctors' bills are paid for under part B, and almost everyone signs up for it because it is a good deal. We are suggesting we do the same thing with prescription drugs. What I think is important, particularly for poorer people or people who do not have the money to pay for the premium, just like under part B for your doctors' bills, if you are below a certain income, we pay for that premium. If you are a little above that, we pay for part of the premium. We would be doing the same thing under the Democratic proposal for prescription drugs. That $25 premium that you would pay per month for the prescription drug benefit under Medicare, would be totally paid for by the Federal Government if you are below a certain income; and if you are just above that, it would be partially paid for by the Federal Government. So no one would not be able to get the Medicare benefit because they could not afford the premium.

Mr. PALLONE. Mr. Speaker, I thank the gentlewoman for her points. The gentlewoman's last point spoke about the fact that many seniors are forced, particularly if they are in the border States, to go to Canada where they can find the lower drug prices. That should not be the answer. I agree with the gentlewoman 100 percent, but it makes me point to one other thing which we have not really stressed that much tonight but needs to be stressed, and that is as Democrats we want a prescription drug plan. We are going to lay that plan out tomorrow at a press conference at 11 on the steps of the Capitol, but the issue of prices for drugs is not just something that seniors face. All Americans face it. This prescription drug plan under Medicare will solve the problem for seniors, but the pricing issue is still a problem for everyone else. We need to look at that as well. We need to, if the option is for some people because they are close to the border to be able to go to Canada and buy cheaper drugs, let them do it. We need to plug up these patent extensions. We should not allow companies with brand names to get patent extensions just because they have some money that they are throwing around this place because that prevents generics which are a low-cost competitor to these brand-name products from coming to market. I think we should also plug up this advertising loophole where they get these tax breaks for the advertising that they do. I can understand a tax break for research, but why a tax break to advertise brand-name drugs? There are a lot of things that need to be done in a larger sense that do not just relate to seniors to try to bring drug prices down, because this is a crisis for every American, but particularly for seniors who are so dependent on some of the drugs and the cost for them is so prohibitive. But it is a problem in general. The Republican leadership does not even want to address the price issue in the context of Medicare, let alone if we talk about it in the larger context of all Americans. We need to bring prices down for everyone.

Mr. PALLONE. Mr. Speaker, I will just say one more time as Democrats, we are determined first to address the issue of drug prices; and, secondly, to provide a Medicare benefit, a guaranteed Medicare benefit for all seniors. We are going to be unveiling our Medicare prescription drug proposal tomorrow. I know it is a good one. I hope that the Republicans will seriously take a look at it and not go down this privatization plan that they have been talking about.

Mr. PALLONE. Mr. Speaker, the other thing the gentleman said which I thought was very significant is we know that the prescription drug manufacturers spend all this money on advertising trying to promote their brand-name drugs, and it is amazing to me what goes on and why it contributes to the escalating prices of drugs. Obviously, they spend a lot of money on advertising. That causes prices to escalate. Then they try to make sure that people only buy the brand name which costs more and try to exclude or discourage the use of generics, which is one way to bring costs down. And then they come to Congress and use their lobbying power by financing campaigns and trying to get these patent extensions. The patent expires at the end of so many years and they get an extension for another 3 years or another 5 years, which makes it impossible to bring up the generic drug or use of a generic alternative. They are constantly exercising their political clout, if you will, and advertising and then they get tax breaks for advertising as well. And all of this drives up the cost. And the worst of it that we have had in the last month or so is this drug industry-funded media campaign to promote the Republican prescription drug plan. If I could give you a little flavor of it here, because I am reading a press document that says that the drug industry is funding this front group called the United Seniors Association to launch a multi-million dollar advertising campaign to promote the Republican Party's prescription drug proposal. The whole point of this thing is to try to confuse the public and try to act like what the Republicans are proposing is Medicare, it is a guaranteed benefit and it will bring down costs. They are spending something like 3, 4, $5 million to try to make that point when it is not true. I do not know how much longer the public can take it, the constant advertising for name-brand drugs, the constant effort to try to prevent generics to come to market, and, now, the effort to promote and spend money to say how the Republican bill is a good alternative. We have to get up here every night and as much as we can expose all of this. Mr. Speaker, I just want to thank my colleague, the gentleman from Arkansas (Mr. Ross), for coming down and making the point. Because since he is in the business, or at least he was, or still is with his wife, he has an understanding of what we face. So I thank the gentleman again. Mr. Speaker, my other colleague is here, the gentlewoman from Texas (Ms. Jackson-Lee), who is also a part of our health care task force who has been here many times to point out the need for a prescription drug program and Medicare prescription drug program. I yield to the gentlewoman at this time.

Mr. PALLONE. The other thing you have mentioned too, because we are now talking about the cost issue, is how the Republicans, the only thing that we are hearing from President Bush and the Republican leadership is the drug discount card, which obviously is already available and if there is a discount, you can take advantage of it now. There is certainly nothing that the Federal Government is going to do or promote that will make a difference. I maintain that the way we save money is through prevention. If we do not bring costs down for medicine, it would make it a lot more difficult for a prescription drug program on the Federal level to work. And that is why the Democrats are saying not only do we want this prescription drug program to be part of Medicare, but we want the Secretary, in this case, of Health and Human Services to have the power and mandate to go out and negotiate lower drug prices. I was just amazed to read, I mentioned before, I am actually going to read this from Congress Daily today, which as I say to my colleagues we all know what it is, but it is a publication that is put out about what Congress is doing. It says, In a briefing document prepared by staff members of the Republican Study Committee, which is a House Republican research group, suggests that Republican members would like provisions to prohibit drug price controls, cap general fund contributions to Medicare at 40 percent of the total, and require means testing for the drug benefit to be considered for inclusion in the drug bill. Now, I do not want to get into all of those, but the point is the fact that they would actually try to build something into the legislation that says they cannot deal with price is incredible to me because, again, if we are going to have this be a meaningful benefit under Medicare, there has to be some effort to bring down the prices. I will say we will specifically say what the price is and control the price, but we want the Secretary to have the ability to negotiate a good price. The gentleman knows how that works, being in the pharmacy business and how HMOs and the VA and other systems that have a lot of seniors that they negotiate for have the ability to bring down the costs. So it makes sense to do that and not suggest that we pass legislation that would prohibit it. Mr. Speaker, I yield to the gentleman.