Pete Stark

Mr. STARK

Mr. STARK. Mr. Speaker, I strongly oppose HR 2614, the bill being considered on the House floor today with the innocuous title of ``the Certified Development Company Program Improvements.'' Those provisions are far surpassed by major controversial tax, Medicare and Medicaid proposals that have been added to it by the Republican leadership without any consultation with our side of the aisle or the Administration. This bill is a stellar example of what goes wrong when the legislative process is discarded and replaced with closed-door negotiations among a few select members of the majority party. And, it clearly spotlights the wrongheaded priorities of the Republican party. On both the health front and the tax front, the bill before us today is a disgrace. The provisions of this legislation squander real opportunities to provide assistance to the families in our country who need the most help and instead lavish funds on those who need it least. It also provides gifts to industries that have thwarted our efforts to pass a Patient's Bill of Rights, a Medicare prescription drug benefit, and would prefer not to see an increase in the minimum wage. On the Medicare front, nearly 40% of the spending is directed to the HMO industry when only 16% of Medicare beneficiaries are even enrolled in Medicare HMOs. HMOs will get $11 billion in new funds over 5 years and more than $34 billion over 10 years. Yet, there are no real accountability provisions that require these HMOs to commit to serve beneficiaries for a longer period of time or to maintain a specific level of benefits in exchange for these significant new dollars. That is wrong. On top of lacking real accountability, subsidies of this level to HMOs simply defy the facts. The non-partisan General Accounting Office has shown time and time again that Medicare HMOs are overpaid for the patients they enroll. The latest data shows that Medicare spent $5.2 billion in 1998 that would not have been spent if those beneficiaries had been enrolled in fee for service Medicare rather than the Medicare+Choice program. And this is for a program that was created in 1997 under the guise that it would save money and be the long-term solution to Medicare's solvency problems. The Administration and many of us in Congress had urged that these HMO subsidies be lowered, but that request fell on deaf ears. That shouldn't surprise any of us since the HMO industry is financially backing the Republican health care agenda through a media campaign directed at issues and candidates. The efforts of this industry alone were the most significant factor that halted Congress from enacting a real, enforceable Patients' Bill of Rights this year. However, even worse than the largess of the rewards to HMOs is the first that those dollars squeeze out needed funds to other segments of Medicare--particularly beneficiaries. The most important improvement we could make for beneficiaries in Medicare would be the addition of a Medicare prescription drug benefit. The fact is this will be our only Medicare legislation this year. This bill was our last opportunity to deliver a Medicare prescription drug benefit for seniors this year. Instead, there is nothing in here that helps the millions of Medicare beneficiaries without drug coverage. Earlier versions of this legislation reported by the Ways and Means Health Subcommittee and the Commerce Committee included numerous beneficiary provisions that would have made tangible improvements in Medicare benefits for real people. Provisions that Republicans have dropped during their closed door negotiation include: Medicare coverage for victims of ALS, (Lou Gehrig's disease)--a bill sponsored by 282 members of the House, Improvements in Medicaid coverage of legal immigrants, Allowing low-income Medicare beneficiaries the dignity of being able to apply for financial assistance at Social Security Offices rather than welfare offices, and Providing states with greater flexibility to more easily enroll children in the CHIP program. In addition, there are numerous improvements for traditional Medicare providers that we have tried to get considered, but to no avail. Instead of funding HMOs, this legislation could have: Given greater relief to our nation's hospitals, home health agencies, and other traditional Medicare providers, Required nursing homes to implement programs to improve quality for our frail seniors who reside in these homes, Done more to assist hospice programs serve the needs of terminally ill beneficiaries. There are also egregious provisions included in this legislation for particular special interests. For example, the bill delays the Health Care Financing Administration's ability to pay more accurately for the few prescription drugs it now covers--a gift of at least $50 million to a drug industry that has been lying to the taxpayers about their true cost of sales. These are windfalls to the pharmaceutical industry pure and simple--and they come at the expense of patients. Several of the tax provisions included in this end-of-the-year monster of a bill include provisions that claim to provide access to health care for uninsured people in this country. Don't be fooled by the rhetoric. These tax provisions are nothing more than thinly-veiled attempts to further tax policies that benefit upper income Americans and do nothing for those in middle and lower incomes. The above the line tax deduction for people who purchase their own health insurance certainly sounds like it would expand coverage. But, because 93% of those without health insurance fall into the zero percent tax bracket or 15% tax bracket, this tax change does nothing to help them afford a health insurance policy. Those in the zero tax bracket get nothing from the change and those in the 15% bracket get only 15 cents on the dollar--not nearly enough to make a $6000 family health insurance policy suddenly affordable. In fact, 94% of this expensive program's cost goes to benefit people who already have health insurance. It barely expands ``access'' at all and it spends tens of billions of dollars not accomplishing its stated goal. Our nation faces an upcoming crisis on long term care costs. The tax changes proposed in this legislation do nothing to alter that fact. Long term care health insurance continues to be of questionable benefit at best. And, it is a product that only those with significant financial means can afford to purchase. So, like the tax deduction criticized above, this deduction will go mainly to people who could have afforded to purchase long-term care insurance with or without the tax benefit. It is nice that the Republicans are finally recognizing the very real problems facing caregivers for chronically ill family members at home. Unfortunately, they have once again chosen to deal with a very real problem for millions of American families and couples--many of them lower income--by providing a tax deduction. Of course, tax deductions provide the least help to those who pay the least taxes--the very people who need financial assistance the most. By refusing to provide a tax credit for caregivers--as the Administration and Democrats have urged--the Republicans have greatly reduced the value of this policy change for everyone outside of the upper income tax brackets. The many additional tax provisions in this bill are designed to help the CEO's who run the big companies--not the rank file Americans who work for the big companies. The school construction tax package falls $15 billion short of the necessary funding to see that our deteriorating schools are modernized and well-equipped so that our children can learn in a safe environment. The average American public school is over forty years and old and falling apart. Seventy-five percent of U.S. public schools report that they need funding in order to bring the building into good overall condition. The GOP doesn't see school construction as a dire need since they would prefer to see the public school system dismantled. The school construction funding level in this bill is unacceptable. In addition to ignoring the needs of our children, the Republican leadership has chosen to ignore the needs of the working men and women who will help to construct and modernize our schools. The Davis-Bacon Act has applied to contracts for public construction ``to which the United States or the District of Columbia is a party'' since 1931. The House Democrats insisted on providing prevailing wage protections in any school construction tax package that came to the House floor. In fact, we have already introduced a bipartisan school construction bill that includes the prevailing wage provisions, cosponsored by 228 House members--Democrats and Republicans. Once again, the GOP demonstrates that they care nothing about working Americans when they eliminated the prevailing wage protections for school construction. I was one of 25 members of the House of Representatives to vote against the pension tax bill the first time it was voted on. Not only did the bill completely neglect to provide any tax incentives to help lower-paid workers save for their retirement, but it actually eliminated non-discrimination rules designed to protect the rank and file worker. In hopes that the Senate would correct these egregious provisions, many of my colleagues voted for the bill anyway. The Senate Committee on Finance adopted provisions that would further weaken the non-discrimination rules--rules that protect against disproportionate pension benefits for higher-income workers. We should be strengthening these rules to ensure that all working Americans save for their retirement and middle-income earners have the same pension advantages as their corporate bosses. I commend my colleagues for including an increase in pension portability for workers who change jobs in the bill before us today. Workers don't remain at the same job over their careers and it is important that we not penalize workers for changing jobs. I also applaud my colleagues for seeing a need to provide relief on Section 415 benefit limits. Benefit formulas in collectively bargained plans are not related to compensation. The current limits placed on multi- employer pension plans unfairly reduce the pensions of low and middle- income workers. Unfortunately, there aren't enough provisions in this bill to help low and middle income workers to outweigh the far too many provisions that will harm these same workers. Finally, I completely oppose the repeal, and replacement, of the Foreign Sales Corporation (FSC). The esoteric tax break is nothing more than corporate welfare for some of the nation's most profitable industries. The European Union has filed a complaint with the World Trade Organization (WTO) that the FSC is an export tax subsidy and therefore illegal under international trade laws. I completely agree. Yet instead of repealing the tax subsidy and complying with our international trade obligations, this bill seeks to remedy the FSC with a near exact replacement. The Institute on Taxation and Economic Policy recently released a report that shows a rise in pretax corporate profits by a total of 23.5 percent from 1996 through 1998. At the same time, corporate income tax revenues only rose by a mere 7.7 percent. In addition to the myriad of corporate tax deductions this Congress insists on expanding, programs such as the FSC can help explain the disparity in corporate profits and corporate income tax rates. The FSC helps subsidize some of the most profitable industries such as the pharmaceutical, tobacco and weapons export industries. Why should Congress help out the pharmaceutical industry if the industry insists on charging U.S. consumers more for prescription drugs than they charge in Europe? We shouldn't! The pharmaceutical industry sells prescription drugs in the U.S. at prices that are 190-400 percent higher than what they charge in Europe. The U.S. subsidizes the pharmaceutical industry by approximately $123 million per year through the FSC. This is unfair to the American taxpayer and must not be allowed to happen. The top 20 percent of FSC beneficiaries obtained 87 percent of the FSC benefit in 1998. The two largest FSC beneficiaries, General Electric and Boeing, received almost $750 million and $686 million in FSC benefits over 8 years, respectively. RJ Reynolds' FSC benefit represents nearly six percent of its net income while Boeing's FSC benefit represents twelve percent of its earnings! We must stop pandering to corporate interests and the wealthy. This bill does not have to be so weighted to the HMOs, drug companies, other big business, and those with upper incomes. We must help low and middle-income families obtain health care coverage and pay for prescription drugs. We can do this by enacting a responsible minimum wage bill, a targeted tax bill, and a balanced Medicare/Medicaid package. H.R. 2614 is a shameful piece of legislation that I encourage my colleagues to oppose. It would take an hour for the Republicans to fix this bill. They know what provisions we don't want in the bill and they know which ones we want inserted. Those changes would redirect this bill to the people who need the help--Medicare beneficiaries, traditional Medicare providers who serve them, and the millions of people struggling to earn incomes that allow them to provide for their families. Vote against this bill today. MR. CLAY. Mr. Speaker, I oppose this bill for many reasons. This bill fails to adequately address the critical need we have to renovate and modernize our public schools. It falls way short of the bipartisan Rangle/Johnson bill that would support nearly $25 billion in bonds over the next two years to help states and districts build and modernize up to 6,000 schools. It is shameful that in the era of budget surplus we cannot make a decent investment in our public school buildings. Over one-third of all schools need extensive repairs. The average school building is 42 years old. Beyond that, a record of 52.7 million children are enrolled in elementary and secondary schools, and the number will increase by almost a half of million a year. By 2003, this will mean we need to build another 2,400 schools just to keep pace with student enrollment. This bill also drops critical Davis-Bacon wage protections contained in the bipartisan Rangle/Johnson bill. This means working families who help build the schools, and others who work in the community will be significantly shortchanged on wages and benefits. It also means that communities will be shortchanged by substandard construction of schools. This Congress should be about lifting hard-working families up in the era of prosperity, not driving wages and benefits into the ground. I also want to note that, once again, the Majority has included a minimum wage increase in a tax bill filed with poison pills. This scheme allows the Majority to claim they're for a minimum wage increase, while knowing full well they've blocked it by combining it with a special interest tax bill that can't become law. Let's be clear what this means. Democrats in Congress are for a minimum wage increase and would take action to make it happen. Republicans in Congress want to say they're for the minimum wage increase, while actively blocking its passage. I urge a no vote on this bill. MR. GOODLING. Mr. Speaker, improving retirement security has been a top priority of our Committee and of this Congress. We must expand access to private pension plans and make innovations that will maximize every American's opportunity for a safe, secure retirement. We are committed to strengthening the retirement security of workers and their families by expanding private pension coverage and protecting their pensions and retirement savings. I want to address the important pension reform provisions contained in the conference report before us. It includes 22 provisions from H.R. 1102, the Comprehensive Retirement Security and Pension Reform Act, reported out of the Education and Workforce Committee on July 14, 1999 by a bipartisan voice vote. These reforms will directly improve the retirement security of millions of American workers by expanding small business retirement plans, allowing workers to save more, making pensions more secure, and cutting the red tape that has hamstrung employers who want to establish pension plans for their employees. The ERISA reforms include: granting relief from excessive PBGC premiums for new small business plans; accelerating the vesting of workers' accounts; repealing and modifying a wide range of unnecessary and outdated rules and regulations; providing more frequent benefits statements to workers; requiring enhanced disclosure and other protections when future pension benefits are reduced (as in the case of conversion to a cash balance plan); and repealing the so-called ``full funding limit'' that arbitrarily limits defined benefit plan funding to a less than actuarially sound level. I am very pleased at the bipartisan nature of these pension provisions. The legislation reported out of our committee has a broad spectrum of support, and subcommittee chairman John Boehner has been a leader in this Congress on pension reform. He has maintained this bipartisanship during his fine stewardship of the bill through our committee. Pensions provide a needed backstop to our Social Security system for lower and middle-income workers--meaning the difference between retirement subsistence and real retirement security for millions. Fully 77% of current pension participants are middle and lower income workers. By taking action to expand pension availability this year, we will help those workers who are most in need of secure retirement savings. I urge Members support for these changes that will improve the retirement years of American workers. Strengthening our private, employer-based pension system is a critical issue for all Americans--especially the 76 million Baby Boomers who are nearing retirement age. This legislation increases retirement security for millions of Americans by strengthening that ``third leg'' of retirement security--our pension system. Today we take an important bipartisan step towards ensuring that American workers enjoy their golden years comfortable and secure. General Leave

Mr. STARK

Mr. STARK. Mr. Speaker, I rise in opposition to H.R. 4811, the Foreign Operations Appropriations bill. Although this legislation contains some important and worthwhile provisions, it unfortunately contains more provisions that I oppose. I applaud the appropriators and the administration for including Heavily Indebted Poor Countries (HIPC) debt relief funding. For decades many poor countries have been forced to spend large portions of their income to pay down debts incurred in an attempt to restructure their economies. In some cases this money was lost to fraud and abuse by leaders in these countries. For other countries this money failed to reform the economy. In other cases the money successfully transformed the economy, but they have been unable to provide health services and education because of the burdens of this debt. This initiative of debt relief is a good first step in helping the poorest in our world begin to receive the education and public health services they need by reducing their country's debt burden. This bill also includes no restrictions on international family planning activities for non-profit organizations. I'm not sure why my anti-abortion colleagues have allowed this bill to proceed, but I'm thankful that this body has begun to realize that we cannot force our own personal morality on other people. I hope that in the future this body will continue on this path and support a woman's right to choose. The funding for international HIV/AIDS programs and tuberculosis control programs will also provide much needed relief to those countries who are experiencing unprecedented outbreaks in these diseases. Most of this suffering is occurring in Africa, where these diseases threaten not only to kill millions of people, but also threaten the very stability of these countries. By providing this funding we will help alleviate the suffering of families around the world. Unfortunately, I have several objections to this bill. Primarily, the continued American taxpayer subsidy of foreign militaries and U.S. defense contractors. This bill contains over $3 billion in aid to a handful of countries to purchase missiles, tanks, guns, attack helicopters, and fighter planes. In a time of increased tension and conflict this body should be working to reduce the number of guns in this world rather than wasting taxpayer money increasing the killing potential of foreign militaries. Through this appropriation bill we also fail to protect human rights by continuing to provide anti-narcotics funding to countries with well- documented violations of human rights. It also does not include requirements that the School of Americas include human rights training in its course work. These failures will encourage human rights violators to continue their actions. Finally this bill includes an increase in the spending caps for this year's budget. While Members on the other side of the aisle, claim to be fiscally conservative, their actions continue to spend billions of dollars that fail to protect future programs. If we approve this increase my Republican colleagues will push to spend more money on irresponsible tax cuts to benefit the wealthy and push through their BBRA give-back bill which will provide billions of dollars to HMO's which continue to drop seniors from their Medicare programs. This spending will not benefit the majority of Americans while at the same time kowtowing to the wealthy and special interests. It is with these considerations that I vote against this appropriations bill.

Mr. STARK

Mr. STARK. Mr. Speaker, the record of the 106th Congress on major health care policy issues--Medicare prescription drug coverage, managed care reform, and extension of coverage to the 44 million Americans who lack it--is appalling. Our failure to enact legislation that provides baseline coverage for all of our citizens is not simply that emergency rooms are overcrowded and public health clinics are overflowing. Our lack of a guaranteed health care safety net indirectly plunges millions into bankruptcy and financial ruin who, once sick, cannot afford to pay for their high medical treatment costs out-of-pocket. This piercing fact is highlighted in a column that was published in the Philadelphia Inquirer on Oct. 8. Health care economist Uwe Reinhardt points out the fallacy of self-reliance when it comes to health insurance. I submit the following article in the Congressional Record. [From the Philadelphia Inquirer, Oct. 8, 2000] Issue No. 1: Health-Care System Wanted (By Uwe Reinhardt) Several years ago, in a fit of compassion, New York Mayor Rudy Giuliani appointed former Republican Mayor John Lindsay to two no-show municipal jobs, solely to provide the latter with city-financed insurance coverage for health care not covered by Medicare. Lindsay, after several strokes and with Parkinson's disease, was facing out-of-pocket outlays for health care that had begun to strain his finances. Millions of fellow Americans share Lindsay's predicament. The most recent estimate by the U.S. Bureau of the Census revealed that about 42 million Americans find themselves without any health insurance coverage for at least part of the year. Almost half the uninsured at any time have been uninsured for more than two years. Many millions more, including Medicare beneficiaries like John Lindsay, have shallow insurance coverage. To be sure, most of the uninsured probably are relatively healthy. When they do fall seriously ill, they usually receive critically needed care at nearby hospitals. Ultimately, the hospital tries to recover the cost of its ``charity care'' from insured patients, but only after first hounding the uninsured themselves for payment, often with the help of tough collection agencies. According to survey research by Harvard law professor Elizabeth Warren, medical bills now are the second most frequently cited reason for the bankruptcy of American families, right behind ``job loss'' and ahead of ``divorce.'' Political leaders in any other industrialized nation would think it unacceptable nation would think it unacceptable to force families, stricken by serious illness, to face the added prospect of bankruptcy. Not so with this nation's policy-making elite. To illustrate, in their first debate, neither presidential candidate addressed the problem on his own. And moderator Jim Lehreer saw no reason to accord the issue an explicit question. Perhaps all of them surmised that, in these times of economic bounty, their audience would have little interest in the acute distress of a misfortunate few. Alas, the economy may not always remain bountiful. If it doesn't, American consumers, feeling poorer, might tighten their belts, thereby triggering a consumption-led recession. With a recession would come layoffs, and with them a loss of employment-based health insurance. The middle class might then be reminded once more that it lacks what families in all other industrialized nations enjoy; universal, permanent protection against the financial consequences of illness. Universal coverage could easily be provided in this country, if only the nation's political elite were willing to do three things. First, there must be a mandate on every individual to have at least catastrophic health insurance. Second, between $60 billion and $100 billion a year would have to be appropriated to subsidize the health insurance of low-income families. Third, government regulation would have to ensure an efficient market for individually purchased health insurance. That insurance could be private or, should private insurance fail to meet social needs, public (e.g., Medicaid and Medicare). The shelves of the nation's think tanks bend under the weight of ready-to-go proposals that could achieve both objectives. Opponents of such measures are fond of reminding us of this nation's ``rugged individualism'' and its tradition of ``self-reliance.'' For the most part, it is empty talk. Most corporate executives, for example, enjoy comprehensive, tax- sheltered ``social insurance'' paid for by their corporations, literally until these executives' last day on earth. Furthermore, the plight of former Mayor Lindsay stands as a stark warning to all would-be rugged individualists who believe that self-reliance is the proper solution to this nation's health-care woes. In the end, even he could not be protected by our nation's brittle private health-insurance system. He was saved by what is otherwise decried as ``a complete government takeover'' of his health-care needs. A common lament is that the typical college student today insists on doing well by doing good. Too few of them are said to heed President John Kennedy's eloquent exhortation to self-sacrifice: ``Ask not what your country can do for you-- ask what you can do for your country.'' But why would any American youngster seek to lay out for a country that thinks nothing of letting its citizens slide into the undignified status of health-care beggars, and into financial destitution, simply because serious illness struck? America's allegedly selfish young have read their country's soul and are acting accordingly.

Mr. STARK

Mr. STARK. Mr. Speaker, sometimes a lie is repeated so often, that people forget what a falsehood it is. For years, people who want to privatize Medicare have been saying that joining a managed care plan--an HMO--will give seniors more choice. In 1997, they even renamed the whole HMO program, ``Medicare+Choice,'' pronounced Medicare Plus Choice. What a lie. In traditional, fee-for-service Medicare, you have total freedom of choice. One of my constituents in Medicare from Fremont, California can decide to go to Baltimore's Johns Hopkins, which US News consistently rates as the Nation's best hospital, and Medicare will pay. But when you join a Medicare+Choice HMO, all of a sudden you are limited in the hospitals you can go to and the doctors you can see that the HMO and Medicare will pay for. So Medicare+Choice really isn't ``more choice.'' More HMOs simply mean ``more choices of plans that limit your choice of doctors and hospitals.'' Therefore, let's be honest: to stop the lie and make it clear what managed care is all about, I am today introducing a bill that says, in its entirety, ``Strike the words `Medicare+Choice' wherever it appears in the law, and substitute the words `Medicare-No-Choice'.'' This name change may seem like a silly idea at first blush, but there is a good reason for it. The current name gives the impression that you are getting more than you would in traditional Medicare. All too often, that is not the case. The reality is that seniors are being duped by HMOs each and every day into joining plans that offer the world and then take most of those benefits away year by year--if they even remain in the program at all. ``Medicare-No-Choice''--this name change would give Medicare beneficiaries pause and might cause them to look at the details of the plan more than is currently the case. And, Mr. Speaker, that is not a silly change at all.

Mr. STARK

Mr. STARK. Mr. Speaker, I am today submitting for the Record a letter from the pharmaceutical manufacturer, Pharmacia. This letter was written in response to my October 3rd letter to the company's President & Chief Executive Officer, Fred Hassan. My recent letter, submitted to the Congressional Record on October 3rd, provided evidence that Pharmacia for many years has been reporting and publishing inflated and misleading price data and has engaged in other improper, deceptive business practices in order to manipulate and inflate the prices of certain drugs. The price manipulation scheme has been executed through Parmacia's inflated representations of average wholesale price (``AWP'') and direct price (``DP''), which are utilized by the Medicare and Medicaid programs in establishing drug reimbursements to providers. This pricing scheme by Pharmacia and other drug companies is estimated to have cost taxpayers over a billion dollars. Unfortunately, Pharmacia's recent letter provides no meaningful explanation for the company's actions which have overcharged Americans and put patient safety at grave risk. Instead, President Hassan places the blame on the Department of Health and Human Services' difficult reimbursement policies. In this letter he states: ``As you know, Medicare and Medicaid reimbursement policies are considerably complex'' and ``From my perspective, it is the designing of a system to replace the current system that to date has proven to be difficult.'' The alleged complexity of Medicare's reimbursement system is no excuse for Pharmacia deliberately publishing inflated and misleading price data and engaging in other deceptive business practices--business practices which the letter fails to mention. Contrary to Mr. Hassan's accusation, Medicare's current reimbursement method is simple. Medicare pays 95% of a covered drug's average wholesale price (AWP). Regardless of the merits of the system, Pharmacia, and other drug companies, have abused this system by reporting inflated drug prices--plain and simple. I appreciate the fact that Mr. Hassan is taking the issues I raised in my letter ``very seriously'' and is ``continuing to investigate'' the allegations made in my letter. But I firmly believe that the blame for reporting misleading--and possibly fraudulent--price data as well as engaging in other deceptive company practices must not and cannot be placed on HHS' reimbursement policies. Mr. Hassan writes that the ``current system has proven to be untenable. . . .'' It is the pricing practices of companies like his that have made it untenable. Pharmacia's behavior overcharges taxpayers--particularly patients-- and endangers the public health by influencing the practice of medicine. It is for all of these reasons that I have called on the FDA to conduct a full investigation into such drug company behavior. The letter from Pharmacia follows: Pharmacia Corporation, Peapack, NJ, October 16, 2000. Re: Your Letter of October 3, 2000 Hon. Fortney Pete Stark, Cannon House Office Building, House of Representatives, Washington, DC. Dear Representative Stark: I am the President, Chief Executive Officer, and a member of the Board of Directors of Pharmacia Corporation (``Pharmacia''). For your information, Pharmacia was created earlier this year upon the merger of Pharmacia & Upjohn, Inc., and Monsanto Company. In my capacity as Chief Executive Officer of Pharmacia, I write to acknowledge receipt of your letter of October 3, 2000, addressed to Pharmacia & Upjohn, Inc., and to address preliminarily the issues that you raise regarding the reporting and publishing of certain price data for several prescription medications sold by Pharmacia. Initially, I want to provide you with my personal assurance that Pharmacia takes the issues raised in your letter very seriously. For your information, Pharmacia has actively provided information regarding our pricing practices to a number of investigative bodies. Also, the Company is committed to continuing to work with the appropriate authorities until any differences that may exist in the understanding of this matter are resolved. As to the particulars of your letter, you should know that Pharmacia is continuing to investigate the allegations made in your letter, as well as those that have been reported recently in various news media regarding the pharmaceutical industry's practices in the area of reimbursement. As you know, Medicare and Medicaid reimbursement policies are considerably complex. Indeed, in correspondence from the administrator of the Health Care Financing Authority (``HCFA''), it was publicly noted in a letter addressed to the Honorable Tom Bliley, Chairman, Commerce Committee, U.S. House of Representatives, that HCFA has been ``actively working to address drug payment issues, both legislatively and through administrative actions, for many years.'' In fact, Ms. DeParle, the HCFA Administrator, notes that her Agency tried several alternative approaches in the early 1990's but that none were adopted. In fact, in 1997, the Administration proposed to pay physicians and suppliers their so-called ``acquisition costs'' for drugs, but the proposal was not adopted. Instead, the Balanced Budget Act of 1997 reduced Medicare payments for covered drugs from 100% to 95% of the average wholesale price or ``AWP''. From my perspective, it is the designing of a system to replace the current system that to date has proven to be difficult. Indeed, the current system has proven to be untenable and we would welcome the opportunity of working with you, Congress, HCFA, and any other interested regulatory agencies and stakeholders to develop reimbursement guidelines that are simple, transparent, and representative of the current market conditions. Finally, I want you to know that--in accordance with your request--I will share your letter and this response with the members of Pharmacia's Public Issues and Social Responsibility Committee of the Board of Directors. In addition, Pharmacia will continue to participate constructively in the public dialogue with regard to whether changes will be made in this arena either legislatively or through administrative action. Sincerely, Fred Hassan.

Mr. STARK

Mr. STARK. Mr. Speaker, in these waning days of the 106th Congress, we are considering a bill that will give back nearly $30 billion to managed care organizations, hospitals, and health care providers. These groups argue that without spending increases, quality of health care will suffer. The assumption: more money means better care. Of course adequate funding is necessary to effectively run hospitals, health plans, and clinics--but is that all it takes to ensure quality? In fact, greater spending does not always guarantee better quality. I would like to call my colleagues' attention to a recent report published in the Journal of the American Medical Association (JAMA) entitled, ``Quality of Medical Care Delivered to Medicare Beneficiaries: A Profile at State and National Levels.'' This report, compiled by researchers at the Health Care Financing Administration, ranks states according to percentage of Medicare Free-for-Service beneficiaries receiving appropriate care. The researchers looked at a range of health problems, including strokes, heart failure, diabetes, pneumonia, heart attacks, and breast cancer. There is remarkable consensus in the medical community about what constitute appropriate care for these conditions. For example, health professionals agree that conducting mammograms at least every 2 years can save countless lives in the fight against breast cancer. They also agree that heart attack victims should be given aspirin within 24 hours of being admitted to a hospital. If the claims of the managed care, hospital, and provider groups are accurate, states receiving the most Medicare spending should implement more of these scientifically validated practices. So I compared state performance rankings with Medicare payment estimates (per beneficiary). The results do not support this view. In fact, the 10 best performing states received 17 percent less in Medicare payments per enrollee than the 10 worst performers. Clearly, more money does not automatically translate into better health care nor does less money mean poor health care. Furthermore, according to this JAMA report, all states could do a better job of implementing quality care. On average, only 69 percent of patients received appropriate care in the typical state. This figure dropped as low as 11 percent for certain practices, such as immunization screenings for pneumonia patients prior to discharge. A clear trend also emerged--less populous states and those in the Northeast performed better than more populous states and those in the Southeast. What accounts for these differences in performance? JAMA authors suggested that, ``system changes are more effective than either provider or patient education in improving provision of services.'' Perhaps this is why states that have instituted health care reform, such as Vermont and Oregon, demonstrated relatively high levels of performance at lower cost. Authors of the JAMA article further suggested that it is necessary to hold all stakeholders accountable, not just health care providers and health plans. This includes, ``purchasers, whether Medicare or Medicaid, . . . because they are making continual and important decisions that potentially balance quality against expenditures.'' I call upon my colleagues to recognize that we too are accountable. Medical experts agree on best practices. So we must do more than just authorize spending, we must recognize what constitutes quality care and expect providers, hospitals, and health plans to deliver. Medicare beneficiaries across the United States deserve the best care available and this cannot be achieved through greater spending alone. We are fooling ourselves if we believe that more money will automatically translate to better care.

Mr. STARK

Mr. STARK. Mr. Speaker, I thank the ranking member for yielding me the time. I have enjoyed this collegial debate between the Chair and the ranking member of the Committee on Appropriations. I only wish the rest of the House worked as well. The gentleman from Georgia stated that the government functions. The government functions just fine. The Republican leadership is what is dysfunctional in this town. For example, there is no one in this room, there is no one in this country, particularly the seniors, who do not know that it is time to have a prescription drug benefit for the seniors. We who legislate in other committees and have the responsibility for a prescription drug benefit have not been allowed to participate in any of that discussion. For example, the gentleman from Florida (Mr. Shaw) who serves on the Committee on Ways and Means with me has voted two or three times, along with every other Republican on the Committee on Ways and Means, to deny the seniors in this country a discount on their prescription drugs. Just think, being from Florida, as the gentleman from Florida (Mr. Shaw) is with lots of seniors, how could the gentleman vote two or three times to deny even bringing to the floor for discussion a discount for seniors for their prescription drugs? Those are the kinds of things that are being held up. This House passed a Patients' Bill of Rights, a bipartisan Patients' Bill of Rights to bring under control the managed care plans, the HMOs that provide service to our citizens. That bill is tied up. It is dead in the water because the Republicans refuse to move it along. What have they done instead? In a balanced budget give-back bill, as it is called, a bill that helped our health care providers and to some extent our beneficiaries, they are rewarding the managed care plans with somewhere between $6 and $30 billion. Why do I not know why? Because no one will tell the Democrats what is in the bill. The bill is in the Speaker's office. Lobbyists are parading in and out of the Speaker's office working on the Republican bill, and not telling the rest of the Members. At any rate, as near as we can determine, there is somewhere between $6 and $30 billion going as a reward to the managed care plans, regardless of whether they provide a prescription drug benefit or maintain the effort of keeping their plans open in rural areas; no strings attached, take the money and run. They give a reward of that magnitude to the very people that we voted to regulate. What would we do if we did not give that money to the managed care plans? We would give 2 extra years of update to the hospitals, we would help home health care, and we would provide more benefits for our beneficiaries. That is what is going on under all of this as the Republicans stall the work of this Congress.

Mr. STARK

Mr. STARK. Mr. Speaker, I am outraged that the Sterling Life Insurance Company, which operates the only approved private fee-for- service Medicare+Choice (M+C) plan, has established a benefit package for 2001 that is designed to enroll healthier patients and avoid sicker patients. For 2001, Sterling will require 50 percent copayments for home health services and durable medical equipment. What Sterling is doing is an unconscionable rip-off of sicker beneficiaries and the Medicare program itself. Home health and DME are services that are associated with sicker patients, who are also more costly, so Sterling is deliberately avoiding sicker, more costly patients. Under the Medicare law, M+C plans must provide all standard Medicare benefits, but are permitted to modify the cost sharing amounts for those services as long as the total actuarial value of the cost sharing does not exceed the total actuarial amount of the cost sharing in the traditional Medicare program. The Health Care Financing Administration (HCFA) must approve the actuarial value of the cost sharing, but has no authority under the statute to prevent M+C plans from tailoring their cost sharing amounts as they choose. I will introduce legislation to require HCFA to approve all cost sharing amounts of M+C plans and prohibit M+C plans from manipulating cost sharing amounts to avoid sicker patients. Sterling is saying that they are trying to avoid fraud, but clearly, they are deliberately seeking to enroll only healthier, more profitable patients, while avoiding sicker, more costly patients. Since the Republicans have slowed the implementation of risk-adjustment of payments to M+C plans, Sterling will be overpaid for the patients that it enrolls. This practice is an obscene rip off of Medicare and the taxpayers, and I will try to stop it. When the new Congress convenes in January, I will introduce legislation to give HCFA authority to approve all cost sharing amounts to prevent such blatant risk avoidance.

Mr. STARK

Mr. STARK. Mr. Speaker, today I ask my colleagues to join me in paying recognition to a true progressive activist, Jim Forsyth. As Jim continues to fight tirelessly for labor, the environment, housing, seniors, and civil rights, he is an ever-present voice speaking out wherever there is injustice or human need. Jim was born on July 14, 1927, Bastille Day in Brooklyn, New York. After graduating from Williams College, where he joined the progressive movement, Jim came to California's Bay Area to work on the assembly line in General Motors. Jim and his late wife Fran were the dutiful parents of five children. Jim is a member of several progressive groups and organizations. He is proud to have been a part of the pro-union group, the Plant Closure Project. Jim is secretary of the South Hayward Parish and was in charge of food distribution at the Parish for ten years. He distributed food every Saturday morning and most Wednesday. He is currently secretary of the Congress for Seniors handling mailing and developing flyers--many times at his own expense. Jim also lends his expertise to the California Consumers Health Care Council and the Californians for Justice. In 1967, Jim founded the Progressive Hayward Demos Democratic Club and is the current newsletter editor. His other memberships include the Starr King Universal Unitarian Church, the Federation of Retired Union Members, and Vote Health. Jim has been a long-time opponent of war as a means of solving economic or social problems. He began by speaking out against the Korean War and continued with the Vietnam War when Jim, Fran, and their children marched in numerous protests. In all of these groups and activities for elections and social change, Jim Forsyth works tirelessly, willingly, and with enthusiasm. He is proud of his work. This is his life and his recreation. He feels responsible for attempting to make the world a better place for working people. Jim's friends and colleagues will honor his work on October 19, 2000 at a public ceremony. I join his friends and admirers in thanking him for his years of service and I am proud that he has been my friend for several years.

Mr. STARK

Mr. STARK. Mr. Speaker, I am going to miss Tom Bliley. He has been wonderful to work with--always a man of his word, always a gentleman, consistent and honorable in his philosophical approach to government. We worked together as Chairman and Ranking Member of the old House District of Columbia Committee on a bipartisan basis, reflecting the joint agreement among liberal and the conservative ideas that there should be minimal interference in the internal, local affairs of a group of U.S. citizens who do not have all the rights and privileges of the rest of the nation. This year, we have worked together to expose the outrageous behavior of some of the nation's largest pharmaceutical manufacturers in abusing Medicare, Medicaid, private insurers, and patients through falsified pricing data. The drug companies are huge contributors to both parties, but Chairman Bliley has subpoenaed and exposed internal company documents that describe a conspiracy against the American people by companies like Glaxo, Pharmacia, and others. I know there was tremendous pressure not to expose these documents, but Chairman Bliley did the right thing. The Nation will miss, I will miss Chairman Bliley's courtly, quiet presence, and I hope he will stay in contact with us in the years ahead.

Mr. STARK

Mr. STARK. Mr. Speaker, last week, I sent the following letter to the FDA, in support of an investigation concerning how some of the nation's leading drug manufacturers are using false pricing data to distort the practice of medicine in America. The letter details what I believe to be the bilking of the Medicare system by a number of large, powerful drug companies. The evidence I have been provided shows that certain drug companies are making enormous profits available to many doctors on the ``spread'' between what Medicare and other payers reimburse for a drug (the average wholesale price), and what that drug is really available for. These companies have increased their sales by abusing the public trust and exploiting America's seniors and disabled. It is my firm belief that these practices must stop and that these companies must return the money to the public that is owed because of their abusive practices. The data in the letter is an indictment of the companies' abuse of the taxpayer and of the patient. The letter follows: Congress of the United States, House of Representatives, Washington, DC, October 3, 2000. Dr. Jane E. Henney, Commissioner, Food and Drug Administration, Rockville, MD. Dear Dr. Henney: I would like to share with you concerns I have regarding the conduct of certain drug companies that are regulated by your agency. Internal drug company documents and other evidence from an industry insider, obtained through a Congressional investigation, have exposed deliberate price manipulation by some drug companies. I believe drug companies' misleading acts are exploiting the health care needs of our most seriously ill, poor, disabled and elderly citizens and taking money from the pockets of innocent Medicare beneficiaries who are required to pay 20% of Medicare's current limited drug benefit. These wrongful actions cost federal and state governments, private insurers, and others billions of dollars per year in excessive drug payments and corrupt the professional independence of medical decision makers. The compelling evidence recently amassed by Congressional investigators reveals that certain drug companies have been reporting and publishing inflated and misleading price data and have engaged in other deceptive business practices in order to manipulate and inflate the prices of certain drugs. The drug manufacturers have perpetrated this fraudulent price manipulation scheme for the express purpose of causing the Medicare and Medicaid Programs to expend excessive amounts in paying claims for certain drugs. The inflated reimbursement arranged by certain drug companies is used to aggressively market the drugs in question, to influence physician prescribing practices, and to increase sales and market share. The evidence I have seen indicates that the drug companies involved have knowingly, deliberately, and falsely inflated their representations of the average wholesale price (``AWP''), wholesaler acquisition cost (``WAC'') and direct price (``DP'') which are utilized by the Medicare and Medicaid programs in establishing drug reimbursements to providers. The evidence also clearly establishes that, contrary to previous drug company representations, the initial source of the price data is the drug companies themselves and those acting in concert with them. I have learned that the difference between the inflated AWP and WAC versus the true prices paid by providers is regularly referred to by industry insiders as ``the spread.'' The Congressional investigation establishes that this ``spread'' has not occurred accidentally but is the product of conscious and fully-informed business decisions. Bristol- Myers Squibb (BMS) documents, for example, demonstrate drug company control over the spread and knowledge that the spread acts as a financial inducement that affects medical judgments. I am told that BMS, as the innovator of the cancer drug Etoposide, repeatedly published inflated prices of approximately $138 while the true market price fell to less than $10. BMS then developed Etopophos, a newer, therapeutically superior substitute for Etoposide. As the ``The Etopophos product profile is significantly superior to that of etoposide injection . . .'' (Exhibit #1). ``Currently, physician practices can take advantage of the growing disparity between VePesid's [name brand for Etoposide] list price (and, subsequently, the Average Wholesale Price [AWP]) and the actual acquisition cost when obtaining reimbursement for etoposide purchases. If the acquisition price of Etopophos is close to the list price, the physician's financial incentive for selecting the brand is largely diminished'' (Exhibit #2). BMS' control over the AWPs published for its drugs is revealed in the following excerpt from a letter to the national publisher of drug prices relied on by the Medicaid Program: Bristol-Myers Squibb Company: ``Edward Edelstein, First Data Bank . . . ``Dear Mr. Edelstein: Effective immediately, Bristol-Myers Oncology Division products factor used in determining the AWP should be changed from 20.5% to 25%. This change should not affect any other business of Bristol-Myers Squibb Company'' (Exhibit #3). As a result of BMS' instructions, I am told First Data Bank recalculated BMS' AWPs and reported them to the State Medicaid agencies and Medicare Carriers as a BMS price increase when in truth it was nothing more than a means of creating a greater ``spread'' for BMS drugs. Additionally, the drug companies in question often falsely state that they have no control over the AWPs and other prices published for their drugs. Comparing the following excerpts from a 1996 Barron's article entitled, ``Hooked On Drugs,'' and Immunex's own internal documents reveals that drug companies do indeed have control over their prices: ``But Immunex, with a thriving generic cancer-drug business, says its average wholesale prices aren't its own. `The drug manufacturers have no control over the AWPs published . . .,' says spokeswoman Valerie Dowell'' (Exhibit #5). ``Kathleen Stamm, Immunex Corporation . . . ``Dear Kathleen: This letter is a confirmation letter that we have received and entered your latest AWP price changes in our system. The price changes that were effective January 3, 1996 were posted in our system on January 5, 1996. 1 have enclosed an updated Sincerely, Lisa Brandt, Red Book Data Analyst'' (Exhibit #6) The drug companies involved are well aware of the destructive impact their price manipulation has on prescription drug costs, as stated in the following excerpt from a Glaxo internal document: ``Is the [pharmaceutical] industry helping to moderate health care costs when it implements policies that increase the cost of pharmaceuticals to government?'' (Exhibit #4). These examples of clear deception appear to be ``only the tip of the iceberg'' as demonstrated by the evidence reflected in composite Exhibit #5. This evidence indicates that an official of the state of Florida Medicaid pharmacy program contacted Hoechst Marion Roussel directly requesting pricing information for Hoechst's new drug Anzemet. Exhibit #5 is a copy of the fax sent to the Florida Official by Hoechst containing Hoechst representations of its prices. The following chart represents a comparison of Hoescht's fraudulent price representations for its injectable form of the drug versus the actual prices paid by the industry insider. The industry insider was aware that a 100 mg vial of Anzemet could be purchased from a wholesaler/distributer for $70.00. The chart compares Hoescht's price representations for the tablet form of Anzemet and the insider's true prices. It is extremely interesting that Hoescht did not create a spread for its tablet form of Anzemet but only the injectable form. This is because Medicare reimburses doctors for the injectable form of this drug and not the tablet form. And by providing doctors a profit, Hoescht can influence prescribing. The tablet form is usually dispensed by pharmacists who accept the doctor's order. This example reflects the frustration that federal and state regulators have experienced in their attempts to estimate the truthful prices being paid by providers in the marketplace for prescription drugs. Likewise, it underscores that we cannot rely upon the drug companies to make honest and truthful representations of their prices, and that Congress may be left with no alternative other than to legislate price controls. Some drug companies have also utilized a large array of other impermissible inducements to mask true prices and stimulate sales of their drugs. These inducements, including bogus ``educational grants,'' volume discounts, and rebates or free goods are designed to result in a lower net cost to the purchaser, while concealing the actual cost beneath a high invoice price. A product invoiced at $100 for ten units of a drug item might really only cost the purchaser half that amount. Given, for instance, a subsequent shipment of an additional ten units at no charge, or a ``grant,'' ``rebate'' or ``credit memo'' in the amount of $50, the transaction would truly cost a net of only $5.00 per unit. Through all of these ``off-invoice'' means, drug purchasers are provided substantial discounts in exchange for their patronage, while maintaining the fiction of a higher invoice price--the price that corresponds to reported AWPs and inflated reimbursement from the government (Composite Exhibit #6): The above document is particularly disturbing as it indicates that at least one purpose of ``masking'' the final price with free goods is so that the Federal Supply Schedule (``FSS'') falsely appears to be less than that of the hospital price. Such misleading statements about pharmaceutical products by drug companies clearly entails deliberate price manipulation and in my opinion appears to be directly contrary to the letter and spirit of FDA law. For example, in 1997 Pharmacia & Upjohn reported an AWP of $946.94 for 200 mg. of Adriamycin PFS while it was offering to sell it to doctor groups such as American Oncology Resources for $168.00 and to Comprehensive Cancer Center for $152.00 (Composite Exhibit #7). Pharmacia & Upjohn then aggressively marketed its cancer drugs to health care providers by touting the financial inducements created by the false price representations and other types of monetary payments. It is apparent that Pharmacia & Upjohn created and marketed the financial inducements for the express purpose of influencing the professional judgment of doctors and other health care providers. Moreover, Pharmacia & Upjohn's strategy of increasing the sales of its drugs by enriching, with taxpayer dollars, the doctors and others who administer them is reprehensible and a blatant abuse of the privileges that Pharmacia & Upjohn enjoys as a major pharmaceutical manufacturer in the United States. This is perhaps best illustrated by Pharmacia & Upjohn's own internal documents which reveal that it actually abused its position as a drug innovator in an initial Phase III FDA clinical trial for a cancer drug used to treat lymphoma, as detailed in Composite Exhibit #8: The linking of doctor participation in FDA clinical drug trials to the purchase and administration of profit- generating oncology drugs is entirely inconsistent with the objective scientific testing that is vital to the integrity of the trial. I am hopeful that the FDA will take immediate action to stop such behavior. Such quid pro quo in connection with new drug trials cannot be tolerated. Doctors must be free to choose drugs based on what is medically best for their patients. It is highly unethical for drug companies to provide physicians with payments for FDA clinical trials and inflated price reports that financially induce doctors to administer their drugs to patients. In particular, Pharmacia & Upjohn's conduct, along with the conduct of other drug companies, is estimated to have cost taxpayers over a billion dollars. It also has a corrupting influence on the exercise of independent medical judgment both in the treatment of severely ill cancer patients and in the medical evaluation of new oncological drugs. My reading of the Federal Food, Drug, and Cosmetic Act and the corresponding regulations suggests that the FDA should pay particular attention to these misleading drug company actions. Accordingly, I am requesting that the FDA conduct a comprehensive investigation into drug company business practices. Notwithstanding potential prohibitions under the Food Drug and Cosmetic Act, it appears drug manufacturers purposely create confusion and make false and misleading statements about drug pricing in order to deceive the United States Government and the States' Medicaid Programs. Recently there has been much media coverage of this issue--an article entitled ``Drugmakers Accused of Price Scheme'' in the USA Today and one entitled ``How Drug Makers Influence Medicare Reimbursements to Doctors'' in the Wall Street Journal. In the larger sense, this letter and its accompanying exhibits raise questions of drug companies' wrongful influence on physician prescribing behavior, which leads to unsafe medical practice in the U.S. In light of these findings, I urge you to undertake a comprehensive review to ensure Americans are prescribed pharmaceuticals that are safe and effective. Physician prescribing should be based on need, not greed. I am extremely concerned that profit may be causing the public to be prescribed drugs that are not safe and effective for patients. I have referred this evidence to you so that you may take action against these fraudulent schemes and, if appropriate, enforce relevant law and FDA regulations. I hope that you will take any and all administrative actions to ensure the integrity of drug pricing on behalf of the safety of the American public. And I look forward to discussing with you any necessary legislative solutions. Sincerely, Pete Stark, Member of Congress.

Mr. STARK

Mr. STARK. Mr. Speaker, in the closing days of the Clinton Administration, as we reflect on our accomplishments and unfinished work, we can only look with great pride and admiration to the Head Start program and all it has become for America's children. The President and Congressional leaders may try to take credit for the increase in the numbers of children enrolled, the new expansion to serving pregnant women and families with infants and toddlers, and the increase in program quality and accountability. But the real champion of Head Start was Helen Hollingshed Taylor. Helen looked out for the nation's children, and their world is better for her efforts. Deborah and I feel fortunate to have known and worked with Helen during these past seven years and will miss her fun spirit, her gentle nudge, her wisdom, and her passion to do right by all children. Born in Fort Valley, Georgia, and raised in Cincinnati, Helen came to Washington to attend Howard University in 1964. Two years later, she received a National Institute of Mental Health fellowship to the Institute for Youth and Community Studies at Harvard. In 1973, she received a Masters degree in early childhood education from Catholic University. Helen most recently served as Associate Commissioner of the Head Start Bureau in HHS. In this position, she ran a vital program that provides educational services to needy children who otherwise start school a step behind many of their peers. Today, the Head Start program serves 865,000 pre-school children of low-income families with an annual budget exceeding $5 billion. Due almost entirely to Helen's tireless advocacy, Head Start enrollment expanded by more than 145,000 during her tenure, which began in 1994 and lasted until her death on October 3rd of this year. Helen's personal courage and unflagging commitment to the cause of helping children was remarkable. During the last several years of her life, she waged a fierce battle with cancer, yet continued to work nearly every day. One of her most prized projects was the Early Head Start Program for infants, toddlers and pregnant women, which under her leadership expanded from 68 programs in 1995 to 525 programs now serving 39,800 children. Without her energy and vitality, the Early Head Start program would be far less developed today. Helen's commitment to quality in Head Start is as much a part of her legacy as expansion of the program. As Associate Commissioner, she spearheaded an initiative on performance measures; revitalized the program's research agenda; established a new monitoring system; and revised the training and technical assistance system to strengthen ongoing efforts to improve quality. Helen also worked hard to create community partnerships by fostering linkages between Head Start programs, community colleges and other institutions of higher education. She established partnerships between Head Start and child care through expansions of full-day, full-year services for children of parents in school, training and employment. Prior to her appointment as Associate Commissioner, Helen was Executive Director of the National Child Day Care Association in Washington, D.C., where she oversaw a network of more than 20 school centers providing services to more than 1,300 children each year. Her career is studded with awards, among them the prestigious National Public Service Award, an honor bestowed only on those individuals who have made an important difference in public administration over a sustained period of time. In a tribute last week to Helen's lifetime achievements, HHS Secretary Donna Shalala said: I shall miss Helen Taylor deeply. Helen believed in the potential of every child to learn. She devoted her life to Head Start and the education and healthy development of young children. Millions of children have benefited from her vision, compassion, and inspiration. She was a remarkable, vital, courageous woman who spent every day giving with all her heart to make the lives of children better. Her immeasurable contributions to early education will endure for years to come. Secretary Shalala said it just right. I want to add my words to hers and say thank you, Helen. America's children will miss you, too.

Mr. STARK

Mr. STARK. Mr. Speaker, today, I am introducing legislation to restore a benefit in Medicare that has been destroyed. A benefit that is needed by about 100,000 Medicare beneficiaries who need outpatient mental health services to maintain their functional capacity and live lives that are as normal as possible. It is a benefit that was put into Medicare in 1990, but has now been almost completely eliminated by administrative actions of the Health Care Financing Administration (HCFA) that I believe have been and continue to be illegal. I have conveyed my concerns to HCFA several times, but without effect. The history of this benefit is truly sad. In a report issued in January 2000, the GAO concluded that ``HCFA's implementation of the partial hospitalization benefit was not adequate.'' The GAO report details the mismanagement of this benefit by HCFA from the beginning, and I believe that the mismanagement continues to this day. That is why I am introducing legislation today to stop the mismanagement and restore this benefit as the Congress intended it to be. Before 1990, Medicare covered partial hospitalization services provided by hospitals. Recognizing a broader need for outpatient mental health services, the Congress expanded the benefit in OBRA 1990 to include services provided by Community Mental Health Centers (CMHCs) as defined in Section 1913 of the Public Health Service Act. The Congress was quite clear in its intent for this benefit, and the precise language of the statute reflects that intent. Section 1861(ff)(2)(I), as amended by Section 4162 of OBRA 1990, specifies the partial hospitalization benefit as services that are: ``Reasonable and necessary for the diagnosis or active treatment of the individual's condition reasonably expected to improve or maintain the individual's condition and functional level and to prevent relapse or hospitalization, and furnished pursuant to such guidelines relating to frequency and duration of services as the Secretary shall by regulation establish (taking into account accepted norms of medical practice and the reasonable expectation of patient improvement).'' The Congress did not know the specific eligibility requirements needed for this benefit, nor did it know the specific services that should be provided for each patient, depending on the functional status of the individual. Therefore, the Congress mandated that the Secretary promulgate regulations establishing eligibility guidelines and covered services--taking into account accepted norms of medical practice. The Congress expected--and required--the Secretary to promulgate regulations so that the public would have an opportunity to comment and participate in defining and establishing the standards for this benefit. In March 1992, HCFA issued a manual instruction (IM 205.8)--not a regulation--that included the following language: ``In general, to be covered, the services must be reasonable and necessary for the diagnosis or active treatment of a patient's condition. The services must not be for the purpose of diagnostic study or they must be reasonably expected to improve or maintain the patient's condition and to prevent relapse or hospitalization. It is not necessary that a course of therapy have, as its goal, restoration of the patient to the level of functioning exhibited prior to the onset of the illness, although this may be appropriate for some patients. For many other psychiatric patients, particularly those with long term, chronic conditions, control of systems and maintenance of a functional level to avoid further deterioration or hospitalization is an acceptable expectation of improvement. ``Improvement'' in this context is measured by comparing the effect of continuing treatment versus discontinuing it. Where there is a reasonable expectation that if treatment services were withdrawn the patient's condition would deteriorate, relapse further, or require hospitalization, this criterion is met. Some patients may undergo a course of treatment which increases their level of functioning but then reach a point where further significant increase is not expected. Continued coverage may be possible even though the condition has stabilized or treatment is primarily for the purpose of maintaining the present level of functioning. Coverage is denied only where evidence shows that the criteria discussed above are not met, e.g., that stability can be maintained without further treatment or with less intensive treatment.'' Although this definition of the partial hospitalization benefit was not issued through regulations as required by the law, at least it was consistent with the intent of the law in substance, and the mental health community did not complain. On February 11, 1994, the Secretary published an Interim Final Rule implementing the partial hospitalization benefit. The language of the Interim Final Rule mirrored the language of the statute: ``(a) Partial hospitalization services are services that-- (1) Are reasonable and necessary for the diagnosis or active treatment of the individual's condition; (2) Are reasonably expected to improve or maintain the individual's condition and functional level and to prevent relapse or hospitalization; and (3) Include the following:'' (list of services). This Interim Final Rule did not do what the Congress expected--it did not provide clear eligibility and coverage guidelines, taking into account accepted norms of medical practice. However, it did at least implement the partial hospitalization benefit through regulations, as required by the statute. Following publication of this Interim Final Rule, the 1992 manual issuance continued in force providing more specific instructions and guidelines. Because HCFA did not involve the mental health community in establishing eligibility and coverage guidelines, HCFA's rules were inadequately defined and unclear. The GAO reported that: ``HCFA initially gave its contractors little guidance on, or explanation of, the program beyond the implementing language of OBRA '90. As a result, contractors struggled to understand the parameters of the partial hospitalization benefit in the first years it was in effect. Our discussions with contractors and HCFA regional offices show that contractors raised concerns over such issues as: whether partial hospitalization could cover organic conditions such as Alzheimer's, which are unlikely to improve; whether the benefit was available to only those patients with previous psychiatric treatment, or even further limited to only those who had previously been psychiatric inpatients; which specific services could be billed to Medicare as partial hospitalization services; how frequently services had to be delivered for Medicare to consider a beneficiary's treatment program as partial hospitalization; and the level of physician involvement required for services provided to the patient.'' Without clear eligibility and coverage guidelines, HCFA invited fraud and abuse into the program. Expenditures for the benefit mushroomed, and HCFA's contractors began to notice claims for large amounts. For example, GAO reported that a CMHC in Washington came to the attention of its fiscal intermediary because of claims in excess of $10,000 per beneficiary per month. That CMHC operated residential board and care facilities with live-in aides who assisted residents with everyday needs, such as cooking, cleaning, and transportation. The CMHC was billing Medicare up to $100 per hour, per patient, for these services. Another example GAO reported was in Montana, where CMHCs interpreted the partial hospitalization benefit to mean that all CMHC services were covered, and were submitting claims for day care services provided by the CMHC. Other examples reported by GAO include: Day care and geriatric care programs were being billed to Medicare as partial hospitalization. Arts and craft activities were being billed as occupational therapy or patient education. Family counseling services were being billed when there was not evidence of family member participation. Long-term psychiatric patients with controlled symptoms were being monitored in partial hospitalization programs for years. GAO reported that in 1994, one HCFA regional office expressed its concerns about lack of understanding of the partial hospitalization benefit and perhaps misrepresentation of the benefit, but HCFA did not follow up on the concern. By 1995, another HCFA regional office became alarmed about the rapid increase in applications received from new CMHCs, particularly when telephone calls and site visits to CMHCs already participating in the program reached disconnected telephone numbers, private residences, and nonmedical businesses. Still, HCFA did not issue regulations defining the requirements for the facilities and has not issued such regulations to this day. In a statement at a Congressional Town Hall meeting on CMHCs in Houston in March 1999, a representative of the CMHCs stated: ``I am not aware of any other Medicare provider that is certified and regulated in the absence of regulations, based upon shifting standards set out in internal transmittals. The provider community for some time has advocated for formal rulemaking to develop clear and measurable certification standards with industry, clinician and patient input.'' Costs of the partial hospitalizaion benefit mushroomed. In 1993, costs of the benefit were about $60 million; in 1994, about $105 million; and in 1995, $145 million. Finally, HCFA acted. In July 1996, HCFA issued another manual instruction (Transmittal A-96-2) that severely narrowed the coverage criteria for the partial hospitalization benefit as follows: ``Partial hospitalization may occur in lieu of either: Admission to an inpatient hospital; or A continued inpatient hospitalization. Treatment may continue until the patient has improved sufficiently to be maintained in the outpatient or office setting on a less intense and less frequent basis. This is an individual determination.'' In my view, neither the process nor the substance of this new mandate is consistent with the law. HCFA issued this new limitation on the benefit through a manual instruction, not a regulation, in clear violation of the law. Medicare law requires in not one, but two places that the Secretary publish regulations defining this benefit. First, as I mentioned previously, section 1861(ff) requires that the Secretary publish regulations defining the partial hospitalization benefit, and section 1871 requires the Secretary to publish regulations for all Medicare policy. Indeed, section 1871(a)(2), which was enacted in 1965 in the original Medicare statute, provides: ``(2) No rule, requirement, or other statement of policy (other than a national coverage determination) that establishes or changes a substantive legal standard governing the scope of benefits, the payment for services, or the eligibility of individuals, entities, or organizations to furnish or receive services or benefits under this title shall take effect unless it is promulgated by the Secretary by regulation under paragraph (1).'' I find it troubling that those charged with enforcing the law ignore the law and proceed as though the law does not apply to their actions, but only to the actions of others. We must change the culture in HCFA and in HHS that repeatedly issues manual instructions in violation of the law. The substance of the 1996 HCFA ruling was also inconsistent with the law. Nothing in section 1861(ff) limits the partial hospitalization benefit to services ``in lieu of either: Admission to an inpatient hospital; or A continued inpatient hospitalization.'' However, in issuing this new ruling, HCFA relied on a technical inconsistency in the statute. Although the partial hospitalization benefit is defined in section 1861(ff), section 1835(a)(2)(F) provides that a physician must certify that the individual would require inpatient psychiatric care in the absence of such services. Despite HCFA's February 11, 1994 regulation to the contrary, HCFA issued a manual instruction limiting the benefit to the level of the physician certification requirement provided in section 1835. Based on the new HCFA instruction that severely limited the benefit, HCFA and the Inspector General began intensive investigations of partial hospitalization claims, and not surprisingly, they found that high percentages of the claims did not meet the new standards. When HCFA severely restricted the benefit, programs suddenly found themselves out of compliance. HCFA and the Inspector General then proclaimed that there was widespread ``fraud and abuse'' in the partial hospitalization benefit. HCFA has been seeking repayments of substantial amounts paid to mental health programs that had been operating on the basis of the earlier published regulation and the manual instructions that were consistent with the regulation and the law. We need to refocus our attention on the beneficiaries who use the partial hospitalization benefit. In 1997, about 88,000 Medicare beneficiaries were using this benefit. About 60 percent of them were disabled beneficiaries, under the age of 65, and about 60 percent of them were dually eligible for both Medicare and Medicaid. The beneficiaries who need and use this benefit are among the poorest and most disabled beneficiaries in the entire Medicare program. They need our help and our protection, and they need these services. My record of fighting fraud and abuse in Medicare is long. I hate fraud. We must do everything we can to eliminate fraud in Medicare, including any fraud in the partial hospitalization benefit. But the way to eliminate fraud is not to eliminate the benefit itself. By that standard, it would be easy to eliminate all fraud in Medicare. We would simply eliminate the program! No, instead, we must take steps to address those areas of the benefit where fraud has been found, but we must also restore this benefit for those Medicare beneficiaries who need it. Today, I am introducing legislation, ``The Medicare Partial Hospitalization Services Restoration and Integrity Act of 2000,'' that would restore the partial hospitalization benefit as the Congress intended, while also taking steps to limit fraud in the benefit. First, the bill would require a face-to-face visit with a physician to certify the need for the services. Second, the bill would tighten the language regarding ``individual activity therapies'' ((ff)(2)(E)), using limits already in the statute for other approved services (requiring the services to be directly related to the therapy program). Third, the bill would tighten the survey and certification requirements in (ff)(3) for community mental health centers. And fourth, the bill would correct the technical flaw in the statute, which HCFA has used to limit the benefit, making the physician certification language under section 1835 the same as that defining the benefit in section 1861(ff). To address HCFA's lack of publishing regulations, the bill would require a negotiated rule making process to define the benefit, establish quality of care standards, and establish survey and certification standards for CMHCs. I am introducing this bill now so that interested parties can study it over the adjournment period and suggest improvements. I will reintroduce the bill early in the new Congress, with appropriate refinements. For the sake of some of the most vulnerable in our society, I hope we can enact this kind of legislation early in 2001.

Mr. STARK

Mr. STARK. Mr. Speaker, I today sent the following letter to the FDA, in support of an investigation of how some of the nation's leading drug manufacturers are using false pricing data to distort the practice of medicine in America. The data in the letter is an indictment of the companies' abuse of the taxpayer and of the patient. I submit the following letter into the Record: House of Representatives, Washington, DC, October 10, 2000. Dr. Jane E. Henney, Commissioner, Food and Drug Administration, Rockville, MD. Dear Dr. Henney: I am writing you to supplement my recent letter of October 3, 2000. I would request that any FDA investigation into whether certain drug companies have engaged in conduct that violates FDA rules or regulations take into account the following: 1. The findings contained in the HHS-OIG report entitled Infusion Therapy Services Provided in Skilled Nursing Facilities (December 1999 A-06-99-00058) Exhibit #1. The OIG's independent findings provide compelling evidence of the magnitude, cost and public health issues resulting from drug price manipulation of the Medicare program. The following excerpts from the above referenced OIG report are particularly noteworthy: ``Our review of three infusion suppliers, for the period 1995 through 1998, showed they provided infusion therapy services to Medicare-reimbursed SNFs that were excessively priced and unnecessary.'' (Page #1) ``At the 22 SNFs, $4.8 million out of $9 million in claims reviewed (53 percent) were not medically necessary.'' (Page #1) ``In addition to the financial effects we noted above, overutilization and overpricing were potentially harmful to the patients. Medical reviewers who were part of our audit concluded that patients receiving unnecessary infusion therapy services were placed at undue risk for complications, including increased risk of infection, fluid and electrolyte imbalance, and medical reactions. Furthermore, in addition, infusion services are invasive procedures that are painful and, when unnecessary, reduce the quality of life.'' ``Based on a survey of infusion suppliers in Texas, we found that charges for infusion drugs varied widely, from as little as Average Wholesale Price (AWP), which is generally considered a reference price for drugs by the pharmaceutical industry, to more than 20 times AWP.'' (Page #6) 2. The public health consequences of the drug pricing manipulation by certain companies for the IV antibiotic Vancomycin, the drug of last resort for many life theratening infections. Exhibit #2 features an article from Hospital Pharmacist Report entitled Under Attack Vancomycin-resistant S. Aureus Hits U.S. Shores. ``The widespread, and often unwarranted, use of antimicrobial agents, particularly vancomycin is a major contributing factor in the emergence of S. aureau with diminished susceptibility to vancomycin.'' Indeed, as stated in the article, the problem has reached the level where the CDC has called for strict limits on the use of this vital drug. ``Published in the MMWR, detailed recommendations for preventing and controlling S. aureus with diminished susceptibility to vancomycin emphasize strict adherence to contact isolation precautions and their recommended infection control practices, judicious use of vancomycin . . .'' (emphasis added). Enclosed as composite Exhibit #3 (provided by the industry insider pursuant to a congressional subpoena) is: 1. Listings from the 1995, 1996 & 1999 Red Book for Abbott's generic Vancomycin. 2. Copies of advertisements from Florida Infusion for the years '95, '96 and '99 for Abbott's genreic Vancomycin. The following chart summarizes Exhibit 3:

Mr. STARK

Mr. STARK. Mr. Speaker, I rise to address the reimportation provisions of the FY 2001 agriculture appropriations legislation that is before the House today. In recent weeks, these provisions have been the subject of considerable controversy: Some Members have asserted that allowing wholesalers to reimport FDA-approved pharmaceuticals will essentially solve the problem of overpricing, while others say the practice will expose U.S. consumers to unsafe products. Some argue that the legislation is so riddled with loopholes as to be useless, while others believe the final compromise is workable. The bill is an attempt to address obscenely high drug prices. But it is far too limited in its approach, because it assumes that wholesalers reimporting prescription drugs will do so at prices that are affordable for the 15 million seniors and disabled Americans who do not have any form of insurance to cover the cost of their medications. This is a flawed assumption. There is no guarantee that the ``middlemen'' in this bill will actually pass along substantial drug discounts to consumers who need them. And the bill's loopholes will allow pharmaceutical companies to keep drug prices inflated through restrictive contracts and control of FDA-required labels. What seniors clearly need above all else is a Medicare drug benefit. Democrats support legislation, H.R. 4770, to guarantee comprehensive drug coverage to any senior who wants to sign up. It guarantees that all prescriptions written by any qualified physician can be filled at any pharmacy of the beneficiary's choice at a price that is affordable. We can pass such a bill this year. It is a travesty that the Republican leadership refuses to do so. In fact, Republicans have gone to enormous lengths to block efforts to enact a Medicare drug benefit. Instead, they push a temporary state program that would help only the poorest, and private ``drug-only'' plans that insurers say they will never sell to seniors. Meanwhile, the pharmaceutical industry and its phony front groups are spending millions to try to ensure that no legislation providing affordable prescription drugs to seniors is seriously considered. Regrettably, these efforts have served to seriously weaken the reimportation provisions in H.R. 4461 that we are voting on today. If all we're going to accomplish is a relaxation of reimportation restrictions, there is still a better solution than the one before us today. I introduced last month, the Medicare Prescription Drug Internet Access Act of 2000 (H.R. 5142). It would allow beneficiaries to purchase safe, FDA-approved medications from U.S. and international suppliers at the lowest possible prices through an Internet site administered by Medicare. This means that Medicare beneficiaries would have guaranteed access to lower drug prices from a safe, certified- reliable source. Here's how it works: All a beneficiary, doctor, or a pharmacy serving a beneficiary would need to do is click on Medicare's home page and type in a prescription. The result would be a display of the five lowest prices for the medicine in question and its availability from domestic and international suppliers. Beneficiaries would choose one and submit their prescription to the Internet pharmacy, receiving their medicine at the price selected through the mail, by express delivery, or at their local retail pharmacy. The only medicine that Internet pharmacies contracting with Medicare would be able to sell is FDA-approved medicine manufactured in FDA- approved facilities. Internet pharmacies, under this bill, would only be able to import prescription medicine from approved companies that have been inspected by the FDA. As an added precaution, Internet pharmacies would be required to display a Medicare Seal of Approval, which serves to authenticate the website. The seal would directly link to a secure webpage operated by the Medicare contractor to verify the Internet pharmacy's legitimacy. These precautions would address problems that exist today with phony websites pawning counterfeit medicine to unsuspecting people. This bill addresses the issue of so-called ``rogue'' websites. It establishes a uniform set of criteria to which contracting Internet pharmacies must adhere or face criminal and financial consequences. Among other criteria, Internet pharmacies would have to be licensed in all 50 states as a pharmacy, fully comply with State and Federal laws, and only dispense medicine with a valid prescription through a licensed practitioner. The bill I have just described will not be enacted this year. Nor is it a full-blown solution for the problems created by eroding insurance coverage for prescription drugs and accelerating drug price increases. Again, revising reimportation rules is one way to make prescription drugs more widely available at affordable prices. But today's bill falls far short of what is necessary to attain that goal. And, it ignores the real need of America's seniors--a Medicare drug benefit that is available and affordable for all.

Mr. STARK

Mr. STARK. Mr. Speaker, in March of 1998, the President's Advisory Commission on Consumer Protection and Quality in the Health Care Industry (Quality Commission) issued its final report, raising concerns about medical errors and recommending steps to reduce the incidence of medical errors. The Quality Commission urged that measuring and improving quality of care be made a national priority. In June of 1998, the Congressional Medicare Payment Advisory Commission (MedPAC) reported on quality of care in Medicare, and in June of 1999, MedPAC made specific recommendations for improving quality of care in Medicare. MedPAC recommended: That quality of care goals for Medicare, including minimizing preventable errors and increasing participation by patients in their care should be established, reviewed and revised through a public process; that systems be established in Medicare for monitoring, improving and safeguarding quality of care; that the Secretary work with the private sector to develop and use common, core sets of quality measures for monitoring quality; and that to the extent possible, quality of care systems in the traditional Medicare fee-for-service program and Medicare+Choice be comparable. In July of last year, the Inspector General issued four reports citing major deficiencies in the accreditation of hospitals to ensure that quality of care provided in hospitals for Medicare by the Joint Commission on the Accreditation of Health Care Organizations (JCAHO). The Inspector General made a series of recommendations for improving the accreditation of hospitals to ensure that quality of care provided in hospitals met Medicare standards. Also last year, the General Accounting Office issued reports citing major deficiencies in the accreditation of nursing facilities. Then, in November of last year, the Institute of Medicine issued a report, ``To Err is Human'', which reported that almost 100,000 people may be killed each year by medical errors. The IOM recommended that improving health care safety be made a national priority and that a nationwide mandatory reporting system of medical errors by providers should be established. The IOM also called for a ``culture of safety'' in health care organizations. On February 10, 2000, the Ways and Means Health Subcommittee held hearings on the IOM report. And yesterday, October 4, 2000, the Journal of the American Medical Association (JAMA) published an article reporting on the findings of a study on quality of care furnished to Medicare fee-for-service (FFS) beneficiaries. The study examined Medicare hospital claims by State for 24 quality of care performance indicators. The study found wide variation in quality of care both among States and among performance indicators. The authors state: ``Available data suggest that providing the services measured here could each save hundreds to thousands of lives a year.'' The authors report that ``there has been no systematic program for monitoring the quality of medical care provided to FFS Today, I along with Mr. Neal and Mr. Jefferson, am introducing legislation that would address the recommendations made by these distinguished organizations. For the first time since the Medicare program was enacted, my bill would establish quality of care as a major emphasis in Medicare. The ``Medicare Comprehensive Quality of Care and Safety Act of 2000'' would for the first time in the history of Medicare establish a comprehensive quality of care and safety system in Medicare for setting quality of care goals and priorities, conducting research and setting standards for quality of care, monitoring quality, safeguarding quality, and establishing systems to improve information and education of patients and providers concerning quality of care issues. Perhaps most important of all, my legislation will create a ``culture of safety and quality'' in health care by requiring every provider to establish a ``Medicare Quality of Care and Safety Program'' (MQCSP). Based on model fraud and abuse compliance plans developed and implemented by the HHS Inspector General, every Medicare provider would be required to implement a quality monitoring and error reduction program--``Medicare Quality of Care and Safety Program''--and to report serious failures to meet quality standards and medical errors. The Secretary would be required to establish a national database of medical errors, as called for by the Institute of Medicine. This legislation would establish a Medicare Quality and Safety Advisory Committee, which would be charged with recommending annual goals and priorities on quality of care. In the Medicare comprehensive quality of care system, the Secretary would be required to establish quality standards, including performance measures. The Secretary would be required to coordinate Medicare quality of care activities with those in other Agencies of the Department. As an example, the Centers for Disease Control and Prevention have for many years established and implemented performance standards for certain aspects of care; the CDC Medical Infection Disease System (MIDS) provides performance standards for limiting the spread of infectious diseases in hospitals. My legislation would require Medicare to make use of these standards and others already developed either in government or in the private sector. The Secretary would be required to establish systems to adopt these standards in Medicare and educate providers on their use. Providers would be required to report quality of care and medical error data in a completely confidential system, and the Secretary would be required to establish data systems to monitor the performance of providers regarding quality of care and medical errors. The Secretary would be required to use standard data so that comparisons could be made across providers. My legislation does not evision a punitive system, but rather a system of working together to achieve improvements in quality and error reduction. I believe that most medical errors are the result of systems failures, and my legislation would focus on correcting these systems errors. I also believe that improvement must come from within health care organizations, rather than being imposed from outside. That is why my legislation would focus on identifying and correcting systems failures from within. However, I also believe that information on best practices and standards must be collected at the national level and shared with health care providers. This legislation would build on the organizations that are already charged with sharing information and helping to improve quality of care are the Peer Review Organizations (PROs). The Secretary would be required to develop standards and train the PROs regarding those standards. PROs, in turn, would train health care providers in implementing those standards. PROs would also be required to investigate serious failures by providers to meet quality standards, including serious medical errors, and work with providers to implement corrective action plans to modify systems or take other actions to improve quality and minimize errors. As a way of increasing the confidence of providers in the PROs, fraud and abuse activities of the PROs would be phased out, and their work would be limited to quality related activities. The legislation would change the name of the PROs to ``Quality Improvement Organizations'' in keeping with their new emphasis in Medicare. The Secretary would be required to monitor quality and safety though a national data system, as recommended by virtually all of the organizations reporting on quality of care. To help providers feel more comfortable in reporting problems with quality or medical errors, the Secretary would be required to establish a confidential reporting system so that physicians, employees of providers, and others would be able to report errors or other failures on a confidential basis. Employees would be provided whistle blower protection for reporting quality failures and errors. Providers who achieve outstanding results in meeting quality standards and minimizing errors would be rewarded with the designation of ``Medicare Provider of Excellence.''

Mr. STARK

Mr. STARK. Madam Speaker, I am pleased to speak in support of H.R. 5178, The Needlestick Safety and Prevention Act and urge all of my colleagues to join me in voting to protect nurses, doctors, and other health care workers from accidental needlestick injuries in the workplace. This legislation is long overdue. Health care workers across our country are put in danger each and every day because safe needle technologies that exist and are proven to reduce the risk of workplace needlestick injuries are still not widely used in our nation's health facilities. Through accidental needlesticks, health care workers are exposed to the spread of deadly bloodborne diseases such as AIDS and Hepatitis B and C. Estimates are that some 600,000 to one million needlesticks occur each year. While the vast majority of those injuries do not result in the spread of a bloodborne pathogen, those that do can prove debilitating and even fatal. Health care workers simply should not be forced to risk their lives while trying to save ours. Enactment of H.R. 5178 will dramatically lower the occurrence of accidental needlestick injuries by requiring the use of safer needle technology in our nation's health care system. This bill, like the legislation I co-authored with Representative Roukema (H.R. 1899), will dramatically improve needlestick protections for health care workers by: clarifying the bloodborne pathogens requirements regarding the use of safer needle devices, improving existing reporting requirements, and ensuring that health care workers are involved in the selection of appropriate safety devices. I have been working on this issue for many years. My first bill to protect health care workers from preventable needlestick injuries was introduced in 1993. In the last Congress, similar legislation gained the support of more than 100 of my colleagues. H.R. 1899, which Representative Roukema and I introduced together in this Congress, now has the bipartisan support of more than 185 of our colleagues. States have also begun focussing attention on this important issue. My home state of California was the first state to pass comprehensive legislation requiring the use of safe needle devices in 1998. Since then, more than a dozen states have followed course and passed legislation protecting health care workers their own borders. But, this is a national problem that deserves a national solution. That is why I am so pleased to join Representative Ballenger and Representative Owens in support of H.R. 5178 on the House floor today. I would also like to congratulate both of them for stepping into leadership roles on this vitally important safety issue for health care workers across the country. While I fully support the bill before us today, our work to protect health care workers from these injuries will not be complete even with passage of this important legislation. We need to go further. OSHA applies mainly to the private sector and therefore H.R. 5178 leaves health care workers in public hospitals in approximately 27 states without the same protections. We need to extend equivalent protections to these workers and I pledge to work with my colleagues to achieve this goal as well. Passage of H.R. 5178 will take us a long way toward minimizing the danger of needlestick injuries and potential infection by deadly diseases for the millions of health care workers across our country. Put simply, a yes vote for H.R. 5178 will save lives. I urge all of my colleagues to join me in voting yes.

Mr. STARK

Mr. STARK. Mr. Speaker, I have today sent the following letter to Pharmacia & Upjohn, highlighting the extent to which this company has been inflating its drug prices and engaging in other deceptive business practices. The evidence I have been provided shows that Pharmacia & Upjohn has knowingly and deliberately inflated their representations of the average wholesale price (``AWP''), wholesale acquisition cost (``WAC'') and direct price (``DP'') which are utilized by the Medicare and Medicaid programs in establishing drug reimbursements to providers. In doing so, Pharmacia & Upjohn is abusing the public trust, endangering patients by affecting physician prescribing practices, and exploiting America's seniors and disabled who are forced to pay 20% of these inflated drug costs. American taxpayers pick up the rest of the tab. These findings are particularly timely as the Ways and Means Subcommittee on Health will today markup a Medicare bill that seeks to delay any administrative action by the Department of Health and Human Services (HHS) to alleviate this problem. This is bad policy. And I strongly oppose this provision of the bill. Reform of current Medicare drug reimbursement policy is needed now to protect taxpayer funds and public health. To help bring an end to these harmful, misleading practices, I have today called on the FDA to conduct a full investigation into Pharmacia & Upjohn business practices. These practices must stop and these companies must return the money that is owed to the public because of their abusive practices. I would like to submit the following letter to Pharmacia & Upjohn into the Record. Congress of the United States, House of Representatives, Washington, DC, October 3, 2000. Mr. Fred Hassan, Chief Executive Officer, Pharmacia & Upjohn Co., Inc., Peapack, NJ. Dear Mr. Hassan: You should by now be aware of Congressional investigations suggesting that Pharmacia & Upjohn has for many years been reporting and publishing inflated and misleading price data and has engaged in other deceptive business practices in order to manipulate and inflate the prices of certain drugs. The price manipulation scheme is executed through Pharmacia & Upjohn's inflated representations of average wholesale price (``AWP'') and direct price (``DP''), which are utilized by the Medicare and Medicaid programs in establishing drug reimbursements to providers. The difference between the inflated representations of AWP and DP versus the true prices that providers pay is regularly referred to in your industry as ``the spread.'' In turn, this has caused the Medicare and Medicaid Programs to expend excessive amounts in paying claims for certain drugs. The evidence amassed by Congress clearly shows that Pharmacia & Upjohn has reported inflated prices and has engaged in other improper business practices in order to cause its customers to receive a windfall profit from Medicare and Medicaid. The manipulated disparities between your company's reported AWPs and DPs are staggering. For example, in 1997, Pharmacia & Upjohn reported an AWP of $946.94 for 200 mg. of Adriamycin PFS while offering to sell it to American Oncology Resources (AOR) for $168.00 and to Comprehensive Cancer Center for $152.00 (Composite Exhibit 1''). Your company then aggressively marketed its cancer drugs to health care providers by touting financial inducements and other types of incentives. Pharmacia & Upjohn created and marketed the financial inducements for the express purpose of influencing the professional judgment of doctors and other health care providers in order to increase the company's market share. Pharmacia & Upjohn's strategy of increasing the sales of its drugs by enriching with taxpayer dollars, the doctors and others who administer the drugs is reprehensible and a blatant abuse of the privileges that Pharmacia & Upjohn enjoys as a major pharmaceutical manufacturer in the United States. This is perhaps best illustrated by Pharmacia & Upjohn's own internal documents which reveal that the company abused its position as a drug innovator in an initial Phase III FDA clinical trial for a cancer drug used to treat lymphoma (Composite Exhibit ``2''). ``. . . Clinical Research Trials Initial Phase III Protocol trial for ``Oral Idamycin'' in lymphomas. This trial will offer AOR $1.1M [million] in additional revenues. Two hundred twenty-five (225) patients at $5,000 per patient. . . . The above . . . items are contingent on the signing of the AOR Disease Management Partner Program. AOR's exclusive compliance to the purchase of the products listed in the contract product attachment is also necessary for the above items to be in effect.'' The linking of doctor participation in FDA clinical drug trials to their purchase and administration of profit- generating oncology drugs is entirely inconsistent with the objective scientific testing that is essential to the integrity of the trial. I am hopeful that the FDA will take immediate action to stop such behavior by your company. The FDA's inability to act to ensure the validity of drug trials will necessitate legislative action. Doctors must be free to choose drugs based on what is medically best for their patients. It is highly unethical for drug companies to provide physicians with payments for FDA clinical trials and inflated price reports that financially induce doctors to administer Pharmacia & Upjohn's drugs to patients. In particular, Pharmacia & Upjohn's conduct, along with the conduct of other drug companies, is estimated to have cost taxpayers over a billion dollars. It also has a corrupting influence on the exercise of independent medical judgment both in the treatment of severely ill cancer patients and in the medical evaluation of new oncological drugs. In addition to Pharmacia & Upjohn's action in the context of the Phase III FDA clinical trial, internal Pharmacia & Upjohn documents secured through Congressional investigations clearly establish that Pharmacia & Upjohn created and then exploited misleading information about its prices. Following is one example: ``Some of the drugs on the multi-source list offer you savings of over 75% below list price of the drug. For a drug like Adriamycin, the reduced pricing offers AOR a reimbursement of over $8,000,000 profit when reimbursed at AWP. The spread from acquisition cost to reimbursement on the multi-source products offered on the contract give AOR a wide margin for profit'' (Exhibit ``3''). It is clear that Pharmacia & Upjohn targeted health care providers, who might be potential purchasers, by creating and then touting the windfall profits arising from the price manipulation. For example, Pharmacia & Upjohn routinely reported inflated average wholesale prices for its cancer drug Bleomycin, 15u, as well as direct prices. The actual prices paid by industry insiders was in many years less than half of what Pharmacia & Upjohn represented. Pharmacia & Upjohn reported that the average wholesale price for Bleomycin, 15u, rose from $292.43 to $309.98, while the price charged to industry insiders fell by $43.15 (Composite Exhibit ``4''). Congress attempted to address the issue of inflated drug reimbursement, in part, in 1997 legislation requiring Medicare to reimburse drug costs at 95% of AWP. Unfortunately, Congress was unaware that, while it intended to improve Medicare's solvency, Pharmacia & Upjohn was submitting false price reports to further inflate reimbursement amounts for both Medicare and Medicaid that would nullify the effects of Congressional action. Composite Exhibit ``5'' demonstrates that Pharmacia & Upjohn increased its price representations for its cancer drug Toposar by 5% in October 1997 while taking care to ensure customers that the change in reported prices would not have any impact on the lower, true prices being paid, but would increase government reimbursement. The following excerpt, addressing Medicaid reimbursement, is illustrative of the steps Pharmacia & Upjohn took to ensure that government health programs paid the inflated reimbursement resulting from false price reports: ``FYI-- Heads up. The following P&U price increases may create a spread between purchase price and Medicaid reimbursement that may create sales complaints if not resolved in reasonable time period by customary Medicaid updates. Therefore, your action may be required in some instances if over the next few months Medicaid does not automatically pick up the price changes'' (Exhibit ``6''). Pharmacia & Upjohn reported price increases in October 1997 with full knowledge that the true prices of the drugs were falling. For example, Composite Exhibit ``7'' reveals that Pharmacia & Upjohn voluntarily lowered its price of Adriamycin PFS 200 mg to $152.00 while reporting an AWP of $946.94: ``Dear Willie, A (VPR) Voluntary Price Reduction will become effective May 9, 1997. The wholesalers have been notified, however it may take two weeks to complete the transition. . . .'' Additionally, internal Pharmacia & Upjohn documents secured through the Congressional investigations show that Pharmacia & Upjohn also utilized a large array of other inducements to stimulate product sales. These inducements, including ``educational grants'' and free goods, were designed to result in a lower net cost to the purchaser while concealing the actual price beneath a high invoice price. Through these means, drug purchasers were provided substantial discounts that induced their patronage while maintaining the fiction of a higher invoice price--the price that corresponded to reported AWPs and inflated reimbursements from the government. Composite Exhibit ``8'' highlights these inducements: AOR/PHARMACIA & UPJOHN PARTNERSHIP PROPOSAL: Medical Education Grants. A $55,000 grant has been committed for 1997 for the AOR Partnership for excellence package including: Education/Disease Management, Research Task Force, AOR Annual Yearbook. A $40,000 grant to sponsor the AOR monthly teleconference. This sponsorship was committed and complete in February 1997. . . . PHARMACIA & UPJOHN, INC. INTEROFFICE MEMO: If needed, you have a ``free goods'' program to support your efforts against other forms of generic doxorubicin. . . . Use your ``free goods,'' wisely to compete against other generic forms of Adriamycin, not to shift the customer to direct shipments. The higher we can keep the price of Adriamycin, the easier it is for you to meet your sales goals for Adriamycin. My reading of the Federal Food, Drug, and Cosmetic Act and the corresponding regulations suggests that the FDA should pay particular attention to Pharmacia & Upjohn's misleading price reports. Accordingly, I am today requesting that the Commissioner of the FDA, Dr. Jane Henney, conduct a full investigation into Pharmacia & Upjohn's business practices. I urge Pharmacia & Upjohn to immediately cease these acts and make arrangements to compensate taxpayers for the financial injury caused to federally funded programs. Any refusal to accept responsibility will most certainly be indicative of the need for Congress to control drug prices. If we cannot rely upon drug companies to make honest and truthful representations about their prices, then Congress will be left with no alternative but to take decisive action to protect the public. Please share this letter with your Board of Directors and in particular with the Board's Corporate Integrity Committee. Sincerely, Pete Stark, Member of Congress.

Mr. STARK

Mr. STARK. Mr. Speaker, I rise today to oppose H.R. 3088, the Victims of Rape Health Protection Act. This bill places the wrong emphasis in dealing with the very important crime of rape by violating law-biding citizen's constitutional privacy rights and due process rights. This bill inappropriately focuses on the defendant rather than helping the victim of rape. If the Congress really wants to aid the health of a rape victim, then this bill should include referrals or direct assistance for health services to rape victims. These health services should include making available the rapid testing for HIV and other sexually-transmitted diseases in order to allow the rape victim to take advantage of an aggressive treatment regimen that needs to begin within 48-72 hours after infection. This legislation illegally encourages the violation of the due process rights of people who may well be innocent law-biding citizens. The bill threatens states with the partial loss of their drug control grants if they do not test individuals accused of rape for HIV. These individuals have not been convicted of a crime therefore it is not right to subject them to a mandatory health test. This action is a violation of these individuals' due process rights that are afforded to them during a search and seizure. This bill violates the privacy of United States citizens. The law requires states to provide health information of individuals' accused-- not convicted--of rape to court officials and to the prosecutor. This information is private medical documentation that this law encourages States to make public. The release of this information to the public could adversely affect innocent law biding individuals who are found not guilty. With the public misconceptions and lack of understanding surrounding the HIV virus, these individuals could experience job discrimination and social exclusion if these records become public. Moreover, this legislation unfairly targets individuals with HIV and gives the implication that having HIV as being a crime rather than a medical condition. It is time that this Congress began treating diseases such as HIV as a medical condition and not a crime. It is disgraceful that the majority has decided to put such a controversial bill on the suspension calendar. This bill has not had a hearing or a mark-up in committee and it only has eleven Republican cosponsors. This is another example of the Majority trying to score election year points rather than passing thoughtful legislation that improves the health and respects the rights of all United States citizens.

Mr. STARK

Mr. STARK. Mr. Speaker, enactment of federal legislation to protect the medical privacy of Americans has been a subject of congressional debate for years. More recently, with passage of the financial modernization legislation last year, financial privacy has been on the minds of millions, and electronic privacy concerns are becoming a major source of friction for dot.com companies and consumers. Legislative solutions in these areas are not simple. Inevitably, the rules that will do the most to protect consumers cause affected businesses to object that they would be burdensome and costly. But reasonable solutions are needed, or the fears that many harbor now-- that public and private entities they know nothing about are somehow gaining access without their knowledge to intimate (and sometimes damaging and embarrassing) information about them--will increasingly cause privacy-protective consumers to take extreme measures to avoid releasing as much personal information as possible. Or, they may simply decide to lie. Already, surveys tell us that some consumers are deciding not to seek certain medical treatments--genetic tests in particular--because they fear that the results could render them uninsurable. On the other hand, insurers insist that they have a right to seek and demand as much information as possible in order to accurately determine risk and premiums. Legislation is urgently needed to set boundaries and rules that are fair, reasonable, broad and balanced. There are many such bills that are pending in this Congress that would do much to advance the privacy agenda. Regrettably, they have been bottled up in committee. Among these bills are: H.R. 4380, a bill developed by the administration and introduced by Representative John LaFalce (D-NY). The legislation would inform and empower consumers in the area of financial privacy by giving them the choice of saying ``yes'' or ``no'' before any disclosure of their medical information that is gathered by financial institutions (which include insurers). It would also allow consumers who chose to take the initiative to stop the transfer of other personal financial information that would otherwise take place. H.R. 4585, introduced by Representative Jim Leach (R-Iowa) would also enhance financial privacy protections by giving consumers an affirmative ``opt in'' choice before their medical information could be shared by financial institutions. The bill also features a federal private right of action. It was marked up by the House Banking Committee on June 29, where it was approved 26-14. H.R. 1941, introduced by Representative Gary Condit (D-Calif.) would give consumers control over the use and disclosure of their medical records, and private health plans, physicians, insurers, employers, and others clear rules for how medical records should be handled. Consumers whose privacy was violated would have legal redress through a private right of action. H.R. 4611, introduced by Representative Edward Markey (D-Mass.) features the administration's proposals to strengthen privacy protections for use of Social Security numbers. H.R. 3321, introduced by Representative Markey and Representative Bill Luther (D-Minn.) would provide comprehensive privacy protections on the Internet. H.R. 4857, introduced by Representative Clay Shaw (R-Fla.) and Jerry Kleczka (D-Wisc.) was approved last week by the House Ways and Means Committee, and aims to curb identity theft with new rules restricting abuse of Social Security numbers. No floor action on the bill has yet been scheduled. By comparison, the bill on today's suspension calendar, the Privacy Commission Act (H.R. 4049) offers no solutions. Instead, it calls for a 17-member commission to spend 18 months and $5 million to figure out what to do. There is nothing inherently wrong with studying privacy. But the majority party, in putting only this legislation on the floor during the 106th Congress, misses the main point, which is that we need to be legislating--not sitting on our hands and waiting for input from a commission that may or may not provide additional worthwhile insights on crafting sound privacy policy in 2002. Nor do we need a commission to second-guess the medical privacy regulations that will soon be issued by the Department of Health and Human Services. There are some in the health industry who are hoping a commission will call for further delay in the date on when the HHS regulations take effect, and who will use the commission to raise hypothetical concerns about their workability and cost. Yet the regulations are already subject to a 2-year implementation timeline, giving stakeholders a long lead-time to prepare and put in place some initial necessary safeguards to protect consumers' medical records from misuse and abuse. I urge my colleagues to raise their voices in support of real privacy legislation that will provide comprehensive medical, financial, and Internet protections for all Americans.

Mr. STARK

Mr. STARK. Mr. Speaker, there is a large body of literature that shows people of color disproportionately lack access to health care, vital treatments, and preventive screening measures. Several of us on Ways and Means have called for a hearing to discuss differences in medical care due to race and ethnicity. Although ensuring a fair and equitable quality health care system for all Americans is extremely important, Congress has failed to address existing disparities. Our country is becoming increasingly diverse. Currently, people of color represent an estimated 18% of our nation's residents, and will comprise more than 25% in 2050. In a state such as California, ``minority'' populations have already become the majority. Among those of Medicare age, racial and ethnic minorities currently represent 16% of the population; however, by 2050, that percentage will increase to 36% at the same time that the number of elderly is expected to increase by 250%. The growing populations of minorities, however, have not been able to eliminate the vestiges of racism--conscious and unconscious--that still remains in our society and in our institutions. The health care system is no exception. A Century Foundation Report entitled, ``Vulnerable Populations and Medicare Services'' by Marian Gornick contributes more strong evidence that disparities continue to exist even when individuals have similar health insurance coverage. For example, Medicare covers influenza vaccines for beneficiaries on an annual basis at no cost. Coverage and financial costs are not barriers, but African Americans are only half as likely to receive flu shots even though influenza, a forerunner to pneumonia, is responsible for excess hospitalizations among elderly with heart and pulmonary disease. Among those Medicare beneficiaries with coronary artery disease, African Americans are less than half as likely to receive coronary artery bypass graft or percutaneous transluminal coronary angioplasty, two common procedures for treating the disease. The following statistics illustrate numerous additional examples of the disparities that persist in medical care and treatment. In order to truly be an inclusive society, we must continue to attack conscious and unconscious racism in all its forms and work towards an equitable and just health care system. I hope everyone in Congress can join in continuing our efforts in this area. Examples of Health Disparities [From Vulnerable Populations and Medicare Services] (By Marian E. Gornick) African Americans have 20% less physician visits, and 23% less specialist visits, despite greater rates of certain chronic diseases, limitations in activities of daily living, and reporting of health as fair or poor. But, they receive 38% more hospital inpatient visits and 40% more emergency room visits. African Americans have 11% less ophthalmology visits even though the prevalence of eye disease is greater. African Americans are half as likely to receive flu shots even though the vaccines prevent influenza, a forerunner to pneumonia responsible for excess hospitalizations among elderly with heart and pulmonary disease. There is no cost- sharing for this service so financial barriers are not a cause. African American women are 21% less likely to receive a mammography even though they are more likely to have later- stage breast cancer at diagnosis and lower survival rates. The rate of sigmoidoscopies and colonoscopies among African Americans is 39% and 12% less although the rate of late-stage colon cancer and death rate of colon cancer is greater. A sonography was performed at a 24% lower rate among African Americans than whites, possibly contributing to their higher rate of strokes. African Americans are more than half as likely to not receive a coronary artery bypass graft or percutaneous transluminal coronary angioplasty, common elective procedures for treating coronary artery disease. Thromboendarterectomy, a procedure to treat blocked carotid arteries, was performed at a rate 67% lower among African Americans than whites. African Americans are 28% less likely to receive cataract removal/lens insertion to improve vision, but they are 56% more likely to have more severe vision problems that require treatment. African Americans are more than 3 times as likely to receive amputations, partly due to diabetes being 1.7 times more prevalent, but also partly due to poor outcomes. Arteriovenostomy procedures are more than 4 times as frequent for African Americans, reflecting the greater prevalence of end stage renal disease. African Americans are 2.5 times more likely to receive excisional debridement, a procedure for infection and skin breakdown, outcomes associated with quality of care.

Mr. STARK

Mr. STARK. Mr. Speaker, I have today sent the following letter to the Pharmaceutical Research Manufacturers of America (PhRMA), the chief trade association representing U.S. pharmaceutical companies. The letter details what I believe to be the bilking of the Medicare system by a number of large, powerful drug companies. The evidence I have been provided shows that certain drug companies are making enormous profits available to many doctors on the ``spread'' between what Medicare and other payers reimburse for a drug (the average wholesale price), and what that drug is really available for. These companies have increased their sales by abusing the public trust and exploiting America's seniors and disabled. It is my firm belief that these practices must stop and that these companies must return the money to the public that is owed because of their abusive practices. The letter follows: Committee on Ways and Means, Subcommittee on Health, Washington, DC, September 28, 2000. Alan F. Holmer, President, Pharmaceutical Research and Manufacturers of America, Washington, DC. Dear Mr. Holmer. I am writing to share with you evidence and concerns I have, that certain PhRMA members, are employing false and fraudulent marketing schemes and other deceptive business practices in order to manipulate and inflate the prices of their drugs. Drug company deception costs federal and state governments, private insurers and others billions of dollars per year in excessive drug costs. This corruptive scheme is perverting the financial integrity of the Medicare program and harming beneficiaries who are required to pay 20% of Medicare's current limited drug benefit. Furthermore, these deceptive, unlawful practices have a devastating financial impact upon the states' Medicaid Program. As you may be aware, some state Medicaid administrators have been placed in the unenviable position of having to ration needed health care services to the poor due to a lack of funds. For example, major newspapers such as the Washington Post reported that the Administration abandoned its effort to extend Medicaid coverage for AIDS therapies due to the high cost of drugs needed to treat HIV patients (December 5, 1997). The national media continues to report on the staggering cost of prescription drugs in the United States. By way of example, the shared Federal/State cost of providing a California Medicaid prescription drug benefit alone is now approximately $2.4 billion dollars a year and that cost has risen by approximately 100% in the past four years. Through a Congressional subpoena, I have recently obtained internal drug company documents, together with documents from an industry insider, that explicitly expose the deliberate fraud that some of your PhRMA members are perpetrating on our nation's health care delivery system. The evidence I have obtained indicates that at least some of your members have knowingly and deliberately falsely inflated their representations of the average wholesale price (``AWP''), wholesaler acquisition cost (``WAC'') and direct price (``DP'') which are utilized by the Medicare and Medicaid programs in establishing drug reimbursements to providers. The evidence clearly establishes and exposes the drug manufacturers themselves that were the direct and sometimes indirect sources of the fraudulent misrepresentation of prices. Moreover, this unscrupulous ``cartel'' of companies has gone to extreme lengths to ``mask'' their drugs' true prices and their fraudulent conduct from federal and state authorities. I have learned that the difference between the falsely inflated representations of AWP and WAC verses the true prices providers are paying is regularly referred to in your industry as ``the spread''. The fraudulently manipulated discrepancies are staggering--for example in 1997 Pharmacia & Upjohn reported an AWP for its chemotherapy drug Vincasar of $741.50, when in truth, its list price was $593.20 (Exhibit #1 PHARMACIA 000867). Exhibit #2 is a chart provided by an industry insider that lists a number of Medicare covered drugs where the Medicare beneficiaries' 20% co-payment exceeds the entire costs of the drug. These rogue drug companies then market their drugs to physicians and pharmacies based on this windfall profit which in reality is nothing more than a government funded kick-back to the provider. The evidence is overwhelming that this ``spread'' did not occur accidentally but is the product of conscious and fully informed business decisions by certain PhRMA members. The following examples excerpted from the subpoenaed documents clearly indicate the companies' fraudulent efforts to manipulate Medicare and Medicaid reimbursements as contained in Composite Exhibit #3. Pharmacia: ``Some of the drugs on the multi-source list offer you savings of over 75% below list price of the drug. For a drug like Adriamycin, the reduced pricing offers AOR a reimbursement of over $8,000,000 profit when reimbursed at AWP. The spread from acquisition cost to reimbursement on the multisource products offered on the contract give AOR a wide margin for profit.'' (000025) Bayer: ``Chris, if Baxter has increased their AWP then we must do the same. Many of the Homecare companies are paid based on a discount from AWP. If we are lowed [sic] than Baxter then the return will be lower to the HHC. It is a very simple process to increase our AWP, and can be done overnight''. (BAY003101) Alpha: ``Pharmacy billing and management services can bill for product based on the published AWP and thereby net incremental margin with Venoglobulin S usage. Margin for the pharmacy is the difference between AWP and acquisition cost. ($76.15/g-$30.00/g=$46.15/g margin).'' (AA000529) Fujisawa: ``Many thanks to Rick and Bruce for adjusting the AWP on the five gram Vanco. This should lead to more business . . . I would have liked to see us match Abbott's AWP for our complete Vanco, and Cefazolin line. I will settle for the five gram at $1 below Abbott but that means that we will still have to compete at the other end of the equation. For example, if Abbott's AWP is $163 and their contract is $30 and if our AWP is 162 we will have to be at least $29 to have the same spread. Follow?'' (F13206 & F13207) Baxter: ``Increasing AWP's was a large part of our negotiations with the large homecare companies'' (0003153) And the implications of the fraudulent manipulation of prices were clearly recognized by your member manufacturers who participated in this false pricing scheme. A series of memos from a pricing committee concerned with Glaxo's antiemetic, Zofran, show the committee's development of an enhanced spread for Zofran through increases in AWP and decreases in net purchase price (Exhibit #4). Glaxo: ``If Glaxo chooses to increase the NWP and AWP for Zofran in order to increase the amount of Medicaid reimbursement for clinical oncology practices, we must prepare for the potential of a negative reaction from a number of quarters . . . If we choose to explain the price increase by explaining the pricing strategy, which we have not done before, then we risk further charges that we are cost shifting to government in an attempt to retain market share. Congress has paid a good deal of attention to pharmaceutical industry pricing practices and is likely to continue doing so in the next session. How do we explain to Congress an 8% increase in the NWP between January and November of 1994, if this policy is implemented this year? How do we explain a single 9% increase in the AWP? What arguments can we make to explain to congressional watchdogs that we are cost-shifting at the expense of government? How will this new pricing structure compare with costs in other countries? Is the [pharmaceutical] industry helping to moderate healthcare costs when it implements policies that increase the cost of pharmaceuticals to government?'' (GWIG/ 7:00014 & 00015) Internal documents from a contractor of SmithKline, (Glaxo's competitor) likewise reveal its recognition of the inflationary effect on government reimbursement of these pricing practices and the potential for an adverse counter- offensive (Exhibit #5): ``. . . highlighting the difference between the actual acquisition cost and the published AWP may not only increase attention to Glaxo's pricing practices, but may provide the impetus for HCFA to implement a system that could impact not only reimbursement of anti-emetics, but all pharmaceutical and biological products. The ramifications could extend well past Medicare to include Medicaid programs . . .'' (SB01915) Perhaps the most striking example of the manufacturers' recognition of the spread and the companies' fraudulent abuse it represents is found in a revealing exchange of correspondence between corporate counsel from Glaxo and SmithKline Beecham in which each accuse the other's company of Medicaid fraud and abuse (Exhibit #6). Glaxo: ``. . . In addition, a significant number of these pieces (see Exhibits F-J) contain direct statements or make references as to how institutions can increase their ``profits'' from Medicare through the use of Kytril. Some even go so far as to recommend that the medical professional use one vial of Kytril for two patients (see Exhibit F) but charge Medicaid for three vials. This raises significant fraud and abuse issues which I am sure you will want to investigate.'' (SB04075) And SmithKline's response was (Exhibit #7): SmithKline: ``In an apparent effort to increase reimbursement to physicians and clinics, effective 1/10/95, Glaxo increased AWP for Zofran by 8.5%, while simultaneously fully discounting this increase to physicians. The latter was accomplished by a 14% rebate . . . The net effect of these adjustments is to increase the amount of reimbursement available to physicians from Medicare and other third party payors whose reimbursement is based on AWP. Since the net price paid to Glaxo for the non-hospital sales of the Zofran multi-dose vial is actually lower, it does not appear that the increase in AWP was designed to increase revenue per unit to Glaxo. Absent any other tenable explanation, this adjustment appears to reflect an intent to induce physicians to purchase Zofran based on the opportunity to receive increased reimbursement from Medicare and other third party payors.'' (SB044277) (In fact, we have had numerous verbal reports from the field concerning Glaxo representatives who are now selling Zofran based on the opportunity for physicians to receive a higher reimbursement from Medicare and other third-party payors while the cost to the physician of Zofran has not changed.) Some drug companies have also utilized a large array of other impermissible inducements to stimulate sales of their drugs. These inducements, including bogus ``educational grants'', volume discounts, rebates or free goods, were designed to result in a lower net cost to the purchaser while concealing the actual cost price beneath a high invoice price. A product invoiced at $100 for ten units of a drug item might really only cost the purchaser half that amount. Given, for instance, a subsequent shipment of an additional ten units at no charge, or a ``grant'', ``rebate'' or ``credit memo'' in the amount of $50, the transaction would truly cost a net of only $5.00 per unit. Through all these ``off-invoice'' means, drug purchasers were provided the substantial discounts that induced their patronage while maintaining the fiction of a higher invoice price--the price that corresponded to reported AWP's and inflated reimbursement from the government composite Exhibit #8. Bayer: ``I have been told that our present Kogennate price, $.66, is the highest price that Quantum is paying for recombinant factor VIII. In order to sell the additional 12mm/u we will need a lower price. I suggest a price of $.60 to $.62 to secure this volume. From Quantum's stand point, a price off invoice, is the most desirable. We could calculate our offer in the form of a marketing grant, a special educational grant, payment for specific data gathering regarding Hemophilia treatment, or anything else that will produce the same dollar benefit to Quantum Health Resources.'' (BAY005241) Baxter: ``The attached notice from Quantum Headquarters was sent on April 10th to all their centers regarding the reduction of Recombinate pricing. Please note that they want to continue to be invoiced at the $.81 price. They have requested that we send them free product every quarter calculated by looking at the number of units purchased in that quarter and the $.13 reduction in price . . . free product given to achieve overall price reduction.'' (0003632) Gensia: ``Hospital--Concentrate field reps on the top 40 AIDS hospitals using a $54.00 price in conjunction with a 10% free goods program to mask the final price. Provides the account with an effective price of $48.60 per vial.'' (G00888) Gensia: ``FSS--Establish a price of $52.00/vial for Q1 and

Mr. STARK

Mr. STARK. Mr. Speaker, in the September 19th Congressional Record, I provided some documentation of how profits from prescribing drugs may be causing some doctors to over-prescribe or change their prescribing patters, not on the basis of medical need, but simply for the sake of money. The enormous profits available to many doctors on the ``spread'' between what Medicare and other payers reimburse for a drug (the average wholesale price), and what that drug is really available for `on the street' may be one of the most serious ethical issues in American medicine today. I submit into the Congressional Record a letter I've sent to the Agency for Healthcare Research and Quality on why this is a problem which must be investigated as soon as possible and a memo in reference to physician prescribing practices in Japan. The Justice Department and the HHS Inspector General have, I believe, documents which show how drug companies have manipulated the AWP to move doctors to prescribe various drugs. These documents raise the most serious questions about the integrity of health care delivery. The letters follow: Committee on Ways and Means, Subcommittee on Health, Washington, DC, August 18, 2000. Dr. John Eisenberg, Administrator, Agency for Healthcare Research and Quality, Washington, DC. Dear John: Nice Norman Rockwell exhibit at the National Gallery--and nice paintings of doctors the way we want them to be: grandfatherly figures we can totally trust our lives with. But the data in various areas of health care show that physicians are just like the rest of us mortals: they are economic animals; they respond to financial incentives. We see this economic influence in the fact that for-profit hospitals do more Caesarian sections than not-for-profit hospitals, because the fees and profits are higher for a C- section. We see this in the extensive literature that physicians who own or invest in a downstream service (such as a lab or MRI) tend to order many more tests (and more expensive tests) than doctors who do not invest in such facilities. We see this in foreign countries where physician income is much lower than it is in the United States on average, but physicians are allowed to make money on each prescription that they write. As a result in Japan (and in the past Italy) the patients get many more pills than Americans do. Doctors in those countries make money by pushing medicines on their unsuspecting patients. I fear the same thing may be happening here in the United States on certain drugs, and I would like to request AHRQ's help in determining whether Medicare's Average Wholesale Price system of paying doctors for certain medicines may have caused some distortions in prescribing practice. As you know, after years of work, the Justice Department and the HHS OIG have finally persuaded Medicare and Medicaid to use a more realistic set of data for purposes of paying doctors 95% of the AWP. The use of the more accurate AWP data will save taxpayers and patients hundreds of millions of dollars a year. Of course, the physicians the savings are coming from are lobbying furiously to block the cuts, saying that they have used the profits from the difference between 95% of the AWP and the real purchase price to run their offices. HCFA is investigating whether the practice expense (PE) payment to doctors needs to be adjusted to pay more accurately for the cost of administering the drugs. If the PE payment is inadequate, we certainly should adjust it. But we should not, I believe, pay more for the drug than the cost to the doctor of purchasing the drug. Otherwise, if these other domestic and foreign examples apply, we will see a misuse of the drug. To determine whether there has been misuse, would it be possible for AHRQ to examine the use of chemotherapy drugs in settings where there is no financial incentive to either over use or not use (e.g., Kaiser, VA, DoD, etc.) versus chemotherapy drug use in private, for profit, physician-run oncology practices? Adjusting for severity of illness, are the outcomes (remission, deaths, etc.) similar in these settings? Is more or less chemotherapy medicine used? for patients who die, is chemotherapy administered longer in one setting versus another? is chemotherapy administered beyond a point where the patient might be considered terminal? Thank you for your help in understanding whether there are different patterns of chemotherapy drug use, depending on whether one profits from the drugs' use, and if so, whether there is any better outcome and quality as a result of additional chemotherapy usage. Sincerely, Pete Stark, Ranking Member.

Mr. STARK

Mr. STARK. Mr. Speaker, there is absolutely no reason for us to be here today debating this bill. Recently the House passed the ``Debt Relief Lockbox Reconciliation Act'' which was nothing more than an attempt by my Republican colleagues to grandstand on their new conversion to a party that claims to care about reducing the national debt. Today, we are here with another version of a bill that does the same thing. In addition, this bill tack on a so-called pension reform bill that has also already passed the House. The Comprehensive Retirement Security and Pension Reform Act passed the House this summer by a vote of 401- 25. It didn't have my support then and it won't have my support today. So why are we here again debating the same measures we've already debated--and passed? The leadership believes it will help them in the upcoming elections. This debt relief bill is meaningless filler for the GOP agenda. And the pension bill is bad policy. It benefits the wealthy and does nothing to help low-income workers who are most in need of retirement incentives. Although the pension bill implies that it will help all workers, it serves to help those earning an average income of $337,800. More than forty-two percent of the pension and IRA tax breaks will go the 5% of the population with the highest incomes--those making over $134,000 annually and an average income of $337,000. In sharp contract, the bottom 60 percent of the population (those making less than $41,000) would receive less than 5% of these tax benefits. When the Democrats offered a substitute bill to give low-income workers incentives to save for their retirement, my GOP colleagues scoffed at the idea claiming that it was too expensive. In other words, it's too expensive to help rank and file workers save for their retirement, but it's completely affordable to help top executives accumulate wealth for their retirement. The Democratic substitute offered incentives to small businesses to sponsor retirement plans for their low-wage and young workers. I supported this substitute bill because it attempted to help those workers who need it most. If this Congress plans to spend $55 billion on the wealthy, then we should be able to offer the same pension opportunities to those who currently do not save for retirement. I opposed H.R. 1102 when it came to the floor in July and I oppose the bill before us today.

Mr. STARK

Mr. STARK. Mr. Speaker, I would like to congratulate San Leandro, California for being chosen as a participant in FEMA's Project Impact. San Leandro's hard work and dedication to preventing natural disasters has given this city the opportunity to participate in this important program that provides increased federal resources for further disaster mitigation projects. I would like to recognize the hard work on the part of the city of San Leandro to make their community safer in the event of a natural disaster. Located at the apex of the two segments of the Hayward Fault, San Leandro is at risk primarily from earthquakes, although the risk of flood and other natural disasters is very real. Alameda County, in which San Leandro is located, has been declared a federal disaster area several times since 1950. This has included the Loma Prieta earthquake, two fires, one freeze, and eleven floods. Following the Loma Prieta earthquake, San Leandro realized it needed to make a commitment to disaster prevention. The San Leandro City Council established a plan called the Partnership for Preparedness Program that, along with other actions San Leandro has taken, helped lead to its designation as a Project Impact community. The hard work of the local officials will provide San Leandro increased federal resources to further protect the city from natural disasters. Local officials have also established a disaster council, a formal city council committee chaired by Mayor Sheila Young. This committee meets quarterly to discuss mitigation and preparedness issues. In addition, San Leandro has published a Hazard Mitigation Master Plan, which has resulted in plans to retrofit buildings to prevent damage in the event of an earthquake. Project Impact operates on a common-sense damage-reduction approach. Project Impact encourages communities to develop disaster prevention programs by working with citizens and the private sector. Success depends on long-term efforts and investments in preventive measures. Communities benefit from their participation in the program from FEMA's expertise and technical assistance at the national and regional level. FEMA works with community officials to incorporate the latest technology and mitigation practices. I am very proud that San Leandro has been able to build the public- private partnerships necessary to be chosen a participant in Project Impact. The hard work of the local officials will prevent the future loss of life and property. I congratulate San Leandro for working with the business community and citizens to maximize all available resources to make the community safer.