Pete Stark

Mr. STARK

Mr. STARK. Mr. Chairman, I yield 2 minutes to the gentleman from Hawaii (Mr. Abercrombie). (Mr. ABERCROMBIE asked and was given permission to revise and extend his remarks.)

Mr. STARK. Mr. Chairman, I am pleased to yield 2 minutes to the gentlewoman from California (Ms. Pelosi).

Mr. STARK. Mr. Chairman, I yield 2 minutes to the gentleman from Maine (Mr. Allen).

Mr. STARK. Mr. Chairman, I yield 2 minutes to the gentleman from North Carolina (Mr. Watt) a member of the Committee on Budget.

Mr. STARK. Mr. Chairman, I yield 2\1/2\ minutes to the gentleman from Texas (Mr. Doggett).

Mr. STARK. Mr. Chairman, I yield 1\1/2\ minutes to the gentleman from Texas (Mr. Bentsen). (Mr. BENTSEN asked and was given permission to revise and extend his remarks.)

Mr. STARK. Mr. Chairman, I yield 3 minutes to the gentlewoman from Florida (Mrs. Thurman).

Mr. STARK

Mr. STARK. Mr. Speaker, I introduce the Save Money for Prescription Drug Research Act of 2000, a bill to deny tax deductions to drug companies for certain gifts and benefits, but not product samples, provided to physicians and to encourage use of such funds for pharmaceutical research and development. In its January 19, 2000 issue, the Journal of the American Medical Association (JAMA) published a critical examination of the extent to which physicians interact with the pharmaceutical industry. The study found that U.S. drug companies spend more than $11 billion per year on drug promotion and marketing that is, an estimated $8,000 to $13,000 per physician is spent on drug company gifts every year. These promotions include ``gifts'' such as free meals, travel subsidies, sponsored teachings, drug samples, and recreational benefits such as sporting event tickets and golfing fees, to name just a few. According to JAMA's analysis, physician-industry interactions appear to affect prescribing and professional behavior and should be further addressed at policy and education levels. Over the years, I have personally received numerous examples of outlandish drug company gifts to physicians. One memorable example came from a physician who sent me a sample of perks he received over the course of one week. The week started with an invitation to the horse races--including a private suite, lunch and open bar from noon to 3:00 pm. Only a day later, he was offered free dinner at a fine restaurant where meals averaged $25/plate, and on the next day he received major league baseball tickets for the entire family. As yet another example of industry-physician interaction. I would like to insert in the Record, a March 9, 2000 USA Today article. This article describes a growing trend among advertising and marketing firms to sponsor physician continuing medical education courses that doctors in 34 states need to keep their licenses. These marketing firms are paid by drug companies and often hire faculty to teach these courses and educate medical professionals about their sponsors' products. This provides drug companies with another opportunity to impact physician prescribing practice and attitudes while increasing their company profits. At my request, the Congressional Research Service (CRS) last December completed an analysis of the tax treatment of the pharmaceutical industry. The conclusion of that report is that tax credits contributed powerfully to lowering the average effective tax rate for drug companies by nearly 40% relative to other major industries from 1990 to 1996. For this reason, I introduced the Prescription Price Equity Act of 2000 to deny research tax credits to pharmaceutical companies that sell their products a significantly higher prices in the U.S. as compared to their sales in other industrialized countries. The U.S. government already provides lucrative tax credits to the pharmaceutical industry in this country, making additional tax deductions seem particularly unnecessary. The pharmaceutical industry reaps billions in profits every year and certainly does not need excessive tax breaks. Fortune magazine rates the pharmaceutical industry as the most profitable business in America. The average compensation for 12 drug company CEOs was $22 million in 1998. Likewise, CRS reported that after-tax profits for the pharmaceutical industry averaged 17%--three times higher than the 5% profit margin of other industries. Although U.S. drug companies claim their exorbitant profits are justified by the high cost of research and development, pharmaceutical companies generally spend twice as much on marketing and administration as they do on research and development. In fact, some companies are guilty of spending even more than twice as much on advertising/ administration expenses. For example, Merck & Pfizer spent only 11% of revenues on R&D in 1997, and spent more than twice that amount (28%) on administration and marketing making available an abundance of funds for generous drug company ``gifts.'' Research and development is a much more important pharmaceutical expenditure than the billions of dollars wasted on drug company gifts to physicians. Our nation has reaped great rewards as a result of pharmaceutical research; pharmaceutical and biotech research have discovered life-saving cures and treatments for ailments that afflict our society. But drug companies can do more. If the pharmaceutical industry would stop wasteful spending on promotions and spend instead on R&D, think of all the additional lives that could be saved. Currently, one third of Medicare beneficiaries have no coverage for prescription drugs and two-thirds of beneficiaries have no coverage or unreliable drug coverage. Over half of our most vulnerable are above the poverty level. That's why I've introduced H.R. 1495, Access to Prescription Medications in Medicare Act. This bill provides a universal, comprehensive Medicare drug benefit with a $200 deductible and 20% coinsurance for seniors up to $1,700 per year. Seniors with very high drug expenses get 100% of their drug costs paid by Medicare (i.e., stop-loss) after $3,000 in annual out-of-pocket spending. The need for this bill is clear. Denying the pharmaceutical industry the ability to deduct expenditures for certain gifts and benefits to physicians is a critical step in providing Americans with access to more life-saving drugs. By redirecting drug company promotional expenditures to their R&D budgets, the American public should reap the benefit of increased medical breakthroughs. To the extent the companies do not redirect these expenditures to R&D, the denial of the tax deduction will help finance a Medicare prescription drug benefit to ensure that our nation's seniors and disabled have access to the medications they need.

Mr. STARK

Mr. STARK. Mr. Chairman, I would like to enter into a colloquy with the distinguished ranking member. Somewhere in this budget there is supposedly a reserve of $40 billion that is supposed to take care of Medicare and the pharmaceutical benefit and whatever, but I cannot seem to find it. Could the gentleman explain to me where that is?

Mr. STARK. Mr. Chairman, reclaiming my time, if I could further inquire of the distinguished ranking member the chances, I would like to ask the gentleman's opinion of the chances of the Committee on Ways and Means passing a prescription drug benefit, when just recently the gentlewoman from Florida (Mrs. Thurman) offered an amendment to provide a discount on prescription drugs to seniors at no cost to the Federal Government and every Republican voted no, and every Democrat, of course, voted yes. So the Republicans voted, the gentlewoman from Connecticut (Mrs. Johnson), the gentleman from Florida (Mr. Shaw), the gentleman from Pennsylvania (Mr. English), the gentleman from Arizona (Mr. Hayworth), the gentleman from Illinois (Mr. Weller), right down the line, they voted to deny seniors a discount on prescription drugs when it would have had no budget impact at all. Now, given that kind of compassion, and this is a word that comes out of Texas, given that kind of compassion, what do you think the chances are that the Republican-led Committee on Ways and Means would vote out a prescription drug benefit that would help anybody?

Mr. STARK. Oh, no, it is a question that I hope the gentleman from Florida (Mr. Shaw) will answer to the seniors in Florida, and that the gentleman from Arizona (Mr. Hayworth) will answer to the seniors in Arizona, and the gentleman from Pennsylvania (Mr. English) will answer to the seniors in Pennsylvania, and that the gentleman from Illinois (Mr. Weller) will answer to the seniors in Illinois, because they have denied their own constituents the chance to buy these prescription drugs which they so vitally need at no cost to the Federal Government. What kind of assistance is that to your constituents, I ask the gentleman rhetorically? And the answer is they do not want any prescription drug benefit. They do not want to save Medicare as we know it. I think that should be pointed out in this debate today.

Mr. STARK

Mr. STARK. Mr. Speaker, S. 1895, the Breaux-Frist Premium Support proposal to change Medicare is a recipe for administrative disaster. Don't take my word for it. Following are quotes from two Library of Congress Congressional Research Service memos describing the many problems with S. 1895. Just ask yourself, in the history of the world, has the administration of a large program (and Medicare is spending about $220 billion a year) ever been successfully accomplished by a committee of seven? As the ultimate Founding Father, George Washington said, . . . wherever and whenever one person is found adequate to the discharge of a duty by close application thereto, it is worse executed by two persons, and scarcely done at all if three or more are employed therein. The full CRS papers are available from my office at 239 Cannon HOB, Washington, DC 20515 (202-225-5065). Following are other quotes from the studies. Describing how Medicare would be largely independent of the Secretary of HHS and the Administrator of HCFA, the CRS writes: New, untested ideas This organizational and administrative design is somewhat unusual when considered in light of traditional guidelines regarding the effective administration of government programs. These guidelines normally call for placing major elements of a program in the same agency or department, and lodging authority over the program in the head of the agency or department, while authorizing the agency head to delegate that authority. * * * * * The Secretary of HHS and the administrator of HCFA appear to be almost totally removed from any role regarding the Division of HCFA-Sponsored Plans, although they would apparently retain supervision and authority over the Division of Health Programs. To a large extent, the proposed organizational and administrative restructuring of the agencies that would be administering the proposed Medicare program appears to depart from the traditional guidelines for the administration of government programs. Divided Administration: A Recipe for Confusion? The administration of the Medicare program is divided between the board and the Division of HCFA-Sponsored Plans. The fact that the Division must submit its sponsored plans to the board for approval The CRS points out that OMB is the only independent agency ``exercising considerable authority over other independent bodies . . . as the President's surrogate . . . Even OMB, however, does not share or assume operating authority over government programs assigned to other agencies or departments. It is difficult to find an example where independent bodies share administrative responsibility over a program, and where one body may veto the plans of another, as with the board and the Division of HCFA-Sponsored Plans. CRS writes: Who's In Charge Here? Where's the Accountability? Under S. 1895 the Secretary of HHS appears to be stripped of supervisory authority over the Medicare Program and of practically all authority over the Division of HCFA-Sponsored Plans [even though that Division is within HHS and operating under Federal laws]. Apparently, the Secretary would retain supervisory authority over only the Division's budget. Since the Secretary would have no role to play in the Division's activities, there is a possibility that its budget requests might not receive much support compared to other agencies in the Department. The CRS memo notes ``two of the most independent units existing within departments appear to be the Office of Comptroller of the Currency and the Office of Thrift Supervision,'' both in Treasury. . . . such independence generally is given only to independent regulatory commissions that for convenience sake are located within departments. But note, Mr. Speaker: Medicare is not just a regulatory program: It is an insurance program for 40 million people that spends $220 billion a year and processes nearly a billion medical claims a year. CRS writes: Why 7 Members? A further issue of authority and ease of decisionmaking is raised by the seven-member composition of the proposed Medicare Board. The current trend is to establish boards of three to five members, because larger boards often experience great difficulty in reaching a decision. Most recently, the former Interstate Commerce Commission, which initially consisted of 11 members, and was later reduced to five members, was abolished and many of its functions were transferred to a three-member Surface Transportation Board. What President? The amount of independence granted the Medicare Board from the President and from congressional oversight is highly unusual and serves to limit the accountability of the board members . . . Presidential authority over one of the largest government programs would . . . be severely limited, because the Chief Executive would have virtually no authority over board activities . . . Congressional influence and direction would also be limited because the board, able to raise its own operating funds, would not be subject to the yearly appropriations process. Talk about Making HCFA More Unresponsive! It is rare for such agencies to be authorized to generate their operating funds. Only a handful of such agencies, nearly all involved with banking and financial matters, have such authority. In Conclusion, Let's be Anti-democracy Congress Sometimes departs from traditional guidelines regarding what is considered the type of organizational and administrative structure most likely to result in the effective delivery of government programs. The proposed bill restructuring the Medicare program, departing as it does from those guidelines, raises questions because it would divide program responsibility and authority between two government entities, an independent Medicare Board and the Division of HCFA-Sponsored Plans. Difficulties in administering the program are more likely to arise and produce conflicts more difficult to resolve when a program is divided between two distinct federal entities than when located within one entity. Additionally, there may be a problem when one of the entities is located within a department and the head of the department has little if any supervisory authority over that entity. That situation may serve to separate the department head from any problems that the entity may be experiencing and make it less likely that he or she would be willing or able to help resolve those problems. Finally, the amount of independence proposed for the Medicare Board would make it more difficult for the President to exercise guidance and direction over the Medicare program, and for Congress to provide guidance and direction to the board through its use of the appropriations process.

Mr. STARK

Mr. STARK. Mr. Speaker, some people are proposing legislation, such as S. 1895, that would turn Medicare over to a 7-person board and noncivil service staff. Bad idea. For the last 3 days I've entered in the Record portions of Congressional Research Service memos describing the administrative problems such a board could create. I would like to submit in full the following footnote from the CRS memo that quotes the National Academy of Public administration's warning about boards: The National Academy of Public Administration is on record as being opposed to boards of directors for most corporate bodies. We believe that this arrangement, borrowed from the private corporation model, has more drawbacks than advantages and that in most cases the governing board would be better replaced by an advisory board and the corporation managed by an administrator with fully executive powers. A governing board may cut or confuse the normal lines of authority from the President or departmental secretary to the corporation's chief executive officer. With an advisory board, the secretary's authority to give that officer policy instruction is clear, as is the officer's right to report directly to the secretary and to work out any exemptions from or qualifications of administration or departmental policies and practices which the corporation requires.--National Academy of Public Administration, NAPA Report on Government Corporations, vol. 1 (Washington: NAPA, 1981), pp. 31-32.

Mr. STARK

Mr. STARK. Mr. Speaker, S. 1895, the Premium Support Medicare reform bill being pushed by PhRMA, many HMOs and private insurers proposes a revolutionary change in the administration of the program. It proposes to set up a seven-person board to administer the program and to control the existing Medicare Program within the Department of Health and Human Services. Presumably many of the people pushing the idea expect to be on the board, as part of a plan to turn Medicare over to private interests. Guess what? A Board of seven people doing the job now done by one administrator will not be as efficient or cheap as the current program. Who says? History. Following is a portion of a memo from the Library of Congress's Congressional Research Service that describes our Nation's experience with a Social Security board between 1935 and 1937. As the memo reports, * * * The board system led to indecision, delay, and guerrilla warfare among certain of the top staff and their followers within the bureau. Those who don't learn from history are condemned to repeat the mistakes of the past. A board is a bad idea of a way to run a $220 billion government agency. Social Security Board as Case Study The Social Security program is unusual in that throughout its more than half century of existence it has been administered by a full-time, three member board and by a single administrator. It has enjoyed a status as an independent agency, as that term is used in this report, a unit within an independent agency, and finally, an agency within an executive department. It is also unusual in that there is a study available on the administrative history of its brief period being managed by a full-time board, a situation not unlike that being proposed in S. 1895. What follows briefly outlines the complex of events and decisions related to its early organization and operations. During the 73rd Congress, the first of the New Deal, various pension and unemployment bills were introduced. President Franklin Roosevelt, in response to this interest, established (by Executive Order 6757) a Committee on Economic Security (CES). The Committee consisted of federal officials and was chaired by the Secretary of Labor, Frances Perkins. The Committee was supported by a Technical Board headed by Arthur Altmeyer, and an Advisory Council consisting of 23 labor, employer, and public representatives. Both the Technical Board and the Advisory Council had subcommittees. The CES had a research staff, headed by Edwin Witte, that was used jointly by the full committee, the Technical Board, and the Advisory Council.\18\ --------------------------------------------------------------------------- \18\ For a discussion and diagram of the organization of the Committee on Economic Security, consult: Mary Trackett Reynolds, Interdepartmental Committees in the National Administration (New York: Columbia University Press, 1939), pp. 28-43. --------------------------------------------------------------------------- The CES and its support groups met for six months and submitted its report to the President.\19\ While not all the recommendations of the CES were ultimately to be included in the Social Security Act, the Act did incorporate the basic recommendations of the Committee. --------------------------------------------------------------------------- \19\ U.S. Committee on Economic Security, Report to the President (Washington: GPO, 1935). --------------------------------------------------------------------------- The bulk of CES's discussion and its report was concerned with substantive matters respecting old-age insurance and unemployment compensation. Relatively little discussion was forthcoming on administrative organization. On the administration of the Social Security program, the CES recommended the following to the President. The creation of a social insurance board within the Department of Labor, to be appointed by the President and with terms to insure continuity of administration, is recommended to administer the Federal unemployment compensation act and the system of federal contributory old age annuities. Full responsibility for the safeguarding and investment of all social insurance funds, we recommend, should be vested in the Security of the Treasury. The Federal Emergency Relief Administration is recommended as the most appropriate existing agency for the administration of non-contributory old-age pensions and grants-in-aid to dependent children. If this agency should be abolished, the President should designate the distribution of its work. It is recommended that all social welfare activities of the Federal Government be coordinated and systematized.\20\ --------------------------------------------------------------------------- \20\ Ibid., p. 7. --------------------------------------------------------------------------- The President submitted a bill to Congress in January 1935, and it was given immediate consideration. When the bill emerged from the House Ways and Means Committee, there had been major alterations. As related in Paul Douglas's extended legislative history: The administrative responsibilities were, in certain vital respects, altered. The Social Security Board was removed from the Department of Labor and was given independent powers of appointing and fixing the compensation of members of its staff. This was, of course, a defeat for the secretary of Labor. The administration of the grants for old age pensions, or old age assistance, was taken from the Federal Relief Administration, as was originally proposed, and was given instead to the Social Security Board. This board was also entrusted with the work of supervising and directing the systems of old age insurance and unemployment insurance. A relative unification of social insurance functions in an independent body was, therefore, proposed. The Board's powers were also increased by giving to it, rather than the Relief Administration, the administration of the allowances for dependent children, and the so-called mother's pensions. The Children's Bureau of the Department of Labor, however, was still kept in charge of grants for the health care of mothers and infants and of those for crippled children.\21\ --------------------------------------------------------------------------- \21\ Paul E. Douglas, Social Security in the United States: An Analysis and Appraisal of the Federal Social Security Act (New York: Whittlesey House, 1936), pp. 105-06. --------------------------------------------------------------------------- When the bill was considered by the Senate Finance Committee, the Social Security Board was again placed under the Department of Labor instead of being independent. Justification for this switch was that in most other nations the administration of old age insurance was under a labor department and because administrative costs would be less under a department. The Committee was opposed to creating new, independent agencies with functions closely related to those of an existing department. \22\ --------------------------------------------------------------------------- \22\ Ibid., p. 114. --------------------------------------------------------------------------- In conference committee, the location of the agency was shifted once again, this time to an independent status, a status that remained in the finally approved bill. The social Security Board (Board) was outlined in Title VII of the Social Security Act (49 Stat. 620). The Board consisted of three members, not more than two were to be from the same political party. They were to be full-time officers of the federal government. Their staggered terms were to be six years in duration. The chairman of the Board was to be appointed by the President. The Board was to organize its own staff and fix necessary compensation. The CES stated, in its backup papers, that: The advantages of an independent board were considered numerous and important. The membership of the board should include outstanding persons in the field of social insurance administration whose services could be procured with difficulty if they were offered positions as lesser officials in any department. In the interests of the insured population, both in the formulation of regulations and in the development of new policies and practices, the board should be a nonpolitical organization, protected as far as possible from political influence, even such as --------------------------------------------------------------------------- \23\ U.S. Social Security Board [for the Committee on Economic Security]. Social Security in America: The Factual Background of the Social Security as Summarized from Staff Reports of the Committee on Economic Security (Washington: GPO, 1937), p. 209. --------------------------------------------------------------------------- In point of fact, a reading of the major writings of the formative period of the Social Security program provides little evidence as to why the decision was made to have the agency be ``independent'' or be administered by a three- member board.\24\ The impressionistic view emerges that the Board concept was simply a way to continue the plural leadership that had led the supporting groups coalition in gaining political support for the Committee's legislation.\25\ ``The Social Security Board was in a double sense a continuation of the Committee on Economic Security,'' according to McKinley and Frase. ``Not only were its activities an application of the new functions envisaged by that investigating committee, but the staff with which the board began was carried over from the committee.'' \26\ --------------------------------------------------------------------------- \24\ ``It can be said with assurance that in the collection of information and the drafting of the suggested legislation, the Committee on Economic Security had been much less concerned with foreseeing administrative problems and devices than with the substantive content of law.'' Charles McKinley and Robert W. Frase, Launching Social Security: A Capture- and-Record Account, 1935-1937 (Madison, WI: University of Wisconsin Press, 1970), p. 17. \25\ Jerry R. Cates, Insuring Inequality: Administrative Leadership in Social Security, 1935-1954 (Ann Arbor, MI: University of Michigan Press, 1963), pp. 25-26. \26\ McKinley and Frase, Launching Social Security, p. 18. --------------------------------------------------------------------------- The Social Security Board was established more than a year after the three-member full-time Board of the TVA had been in operation. The SSB had observed and assessed the early experience of the TVA Board. According to McKinley and Frase: The three members of the SSB decided early that they would avoid the mistakes apparently being made by the directors of the TVA, who had parceled out functions among themselves. Instead they would confine their activities to policy problems, delegating administrative tasks to a chief administrator who would report to and be responsible to the board.\27\ --------------------------------------------------------------------------- \27\ Ibid., p. 382. --------------------------------------------------------------------------- From the outset, however, there was no clear demarcation of responsibility between the Board and the executive director, so that conflict ensued. ``The board consistently violated its own decision to stick to policy questions. This was particularly true in the appointment of personnel.'' \28\ Changes in Board membership did not alter this situation. McKinley and Frase assert that the early board members never seriously regarded the executive director as the administrative head of the organization with a distinct administrative authority of his own. Board members felt it was their right and duty to intervene directly in administrative matters.\29\ The intervention of the Board notwithstanding, there was a general shift of powers toward the executive director's office during the first two years.\30\ --------------------------------------------------------------------------- \28\ Ibid., p. 386. \29\ Ibid., p. 402. \30\ Ibid., pp. 389-90. --------------------------------------------------------------------------- Among the closest students of the early years of the Social Security Board were McKinley and Frase. While they were reluctant to offer conclusive statements on most elements of the Social Security programs, they were not reticent in their opinion of the Board structure: By the end of March 1937, only one major administrative conclusion appeared clearly warranted: namely, that the board structure was inadequate for operating the social security program. Winant, Miles, and Bane were emphatic in their judgment that a board was unsuited to this task, and even Altmeyer joined in a formal board conclusion to this effect. The authors had reached the same conclusion.\31\ --------------------------------------------------------------------------- \31\ Ibid., p. 474. John G. Winant, chairman of the Social Security Board; Vincent Miles, member of the Social Security Board; Arthur Altmeyer, member of the Social Security Board; and Frank Bane, Executive Director, Social Security Board. --------------------------------------------------------------------------- A detailed assessment of the Board's operations was offered by McKinely and Frase and deserves to be printed in full: As an administrative device for making policy decisions and directing operations during this period, the board system led to indecision, delay, and guerrilla warfare among certain of the top staff and their followers within the bureau. The frequent and interminable board meetings during the first eight months particularly reflect the difficulty of three men reaching conclusions that were often about small matters. A single administrator may carry within his breast many conflicting desires and vacillating impulses: but he resolves these without the necessity of revealing the full extent of his uncertainty or confusion. But a three-man board undertaking such a function cannot escape the exhibition of conflict or vacillation in long discussions which threaten to become endless if the men are, as these were, particularly sincere in their desire to launch successfully the administration of an agency charged with duties they regarded as of the highest public importance. * * * There were two other possibilities of board organization that might have avoided existing and potential difficulties. Both involved the abandonment of the distinction between policy and administration. The first would have been to parcel out the duties among the three members, making each responsible for the administration of one segment of the board's functions. Something like this had been done in the Railroad Retirement Board, and Latimer though it worked very well. It had also been followed in the case of the TVA which was, however, experiencing widely publicized difficulty on that account during 1936-1937. It is not clear what kind of tripartite division the board might have attempted with the best hope of administrative success, and this system requires a great deal of mutual trust if action is to be expedited. But if such trust is mutually accorded their arise difficulties that have dogged the path of the commission form of city government--a tacit conspiracy to refrain from scrutinizing the acts of each other resulting in no central responsibility for administrative behavior. The second possibility presented more likelihood of success. That would have been an arrangement by which the chairman became the recognized administrative head of the organization, with the other members content to play minor roles. But that plan would need a peculiar combination of personalities which the original board did not have. * * * One other observation about the board as an administrative device may be made here. During the closing weeks of this study [Chairman] Winant's resignation left the board with only two members. This gap was unfilled for some months because Latimer, whom the President had nominated, was not confirmed by the Senate. During this time, differences between the two remaining members threatened the board with stalemate on important questions. This check-and-balance system, with its concomitant delay or horse-trading agreement, was implicit in an incomplete board structure, as was the carrying of tales to the Hill by Miles when he became sufficiently vexed or disappointed to want to indulge in that form of pressure. Our account of the executive director has shown there was an accretion of power in that office not only because of his position of command over the regional office organization but also because of the gravitation of functions from various bureaus into his hands. This last development seemed to be an indication of the faulty division of duties promulgated by the board in its last organization chart of December 4, 1935. * * * \32\ --------------------------------------------------------------------------- \32\ Ibid., pp. 477-78. --------------------------------------------------------------------------- The problems associated with the Social Security Board and the TVA board as an organizational category led to something of a counterthrust in the late 1930s. As he entered his second term, Franklin Roosevelt became more interested in organizational management. ``The administrative management of the Government,'' he said, ``needs overhauling.'' The President, in his message to Congress transmitting the Report of the President's Committee on Administrative Management (Brownlow Committee), complained of the difficulties of supervising the activities of over 100 separate departments, boards, corporations, commissions, authorities, and agencies. The Brownlow Committee Report attacked not only the proliferation of independent agencies, ``a fourth branch of government,'' but the concept of boards as well. For purposes of management, boards and commissions have turned out to be failures. Their mechanism is inevitably slow, cumbersome, wasteful, and ineffective, and does not lend itself readily to cooperation with other agencies. Even strong men on boards find that their individual opinions are watered down in reaching board decisions. * * * The conspicuously well-managed units in the Government are almost always without exception headed by single administrators. \33\ --------------------------------------------------------------------------- \33\ U.S. President's Committee on Administrative Management, Report with Special Studies (Washington: GPO, 1937), p. 32. --------------------------------------------------------------------------- The Report then called for a regrouping of independent agencies under departments. A high point for the concept of departmental integration was reached in 1971 when President Richard Nixon proposed to create four new domestic departments in the place of the existing seven programmatic departments and integrate into these new departments a number of existing independent agencies and their programs. One of the new departments would have been a Department of Human Resources which would have been based on the Department of Health, Education and Welfare but would have been expanded through the transfer of several agencies and programs to the new department. The key administrative element of the new Department would have been three Administrations, one for Health, another for Human Development, and a third for Income Security. Under the Administration for Human Development would have been Education, Manpower and Social Services. No action by Congress on these presidentially initiated legislative proposals was forthcoming. Since 1971, the majority of proposals for changing the structure of the executive branch have been away from greater departmental integration. Most proposals have been to create more, and generally smaller departments, breaking up existing departments, creating new agencies, generally outside the departmental structure, new government corporations and enterprises, and relatively unaccountable entities in the quasi government. The pendulum has definitely swung away from departmental integration and toward agency dispersion.

Mr. STARK

Mr. STARK. Mr. Speaker, the March 1 issue of the Journal of the American Medical Association contains further documentation of life- saving importance: if you are going to have surgery, have it in a hospital that does a lot of it: your chances of survival and good health are much better. Put another way: avoid hospitals that can't do the procedure in their sleep. As public policy makers, we should encourage, in every way possible, our constituents and Medicare beneficiaries to seek out the high volume hospitals and avoid the low volume hospitals. The President's Medicare reform proposals move us in that direction. It really is a matter of life and death. The JAMA article follows: High-Risk Surgery--Follow the Crowd (John D. Birkmeyer, MD) Each year a large number of patients die following elective surgery. In the Medicare population alone, 17,000 patients died in 1995 after undergoing 10 types of elective procedures, such as coronary artery by-pass surgery, carotid endarterectomy, and lung resection.\1\ Quality improvement initiatives at the local and regional levels may be important for reducing mortality at individual hospitals,\2, 3\ but, for many procedures, choosing at which hospitals surgery is performed may be equally important for improving surgical quality. --------------------------------------------------------------------------- References at end of article. --------------------------------------------------------------------------- The idea of concentrating high-risk surgical procedures in high-volume hospitals is not new. Since seminal work by Luft et al \4\ 2 decades ago, large, population-based studies have consistently demonstrated better outcomes at high-volume centers for cardiovascular surgery, major cancer resections, solid organ transplantation, and other high-risk procedures.\5, 8\ Lower surgical mortality at high-volume hospitals does not simply reflect the presence of more skillful surgeons and fewer technical errors with the procedure itself. More likely, it reflects more proficiency with all aspects of care underlying successful surgery, including patient selection, anesthesia, and postoperative care. In this issue of the Journal, Dudley and colleagues \9\ are among the first to estimate how many lives could be saved by regionalization (``selective referral'') at the population level. Based on careful review of the extensive volume- outcome literature, they used explicit criteria to identify the single highest-quality study for each surgical procedure or clinical condition that could be considered for regionalization. (The volume-outcome literature is too heterogeneous for formal meta-analysis.) Statistically significant relationships between hospital volume and mortality were identified for 10 procedures and 1 medical condition (care for patients which human immunodeficiency virus infection/acquired Two cautions are necessary in interpreting the findings of this study. First, the authors' estimates of the benefits likely to be achieved by regionalization are no more reliable than the volume-outcome studies on which they are based. Much of this literature is outdated or skewed by results from a small number of national referral centers. Additional generalizable, population-based studies are needed. Second, analysis of California data may overestimate the decrease in mortality rates likely to be achieved by regionalization elsewhere. Because California has few restrictions on where surgical care may be delivered, more patients may be undergoing high-risk surgery in low-volume hospitals there. In 1 study, 65% of coronary artery bypass graft operations performed in California in 1989 occurred at low-volume hospitals (<200 procedures/year).\10\ In New York State, which has stricter Certificate of Need regulations based in part on volume criteria, only 20% of these procedures were performed at low-volume hospitals that year.\10\ More information is needed about how other high-risk procedures are being delivered in other parts of the country. Concentrating surgery in selected referral centers would facilitate the monitoring of outcomes at individual hospitals. Many high-risk procedures are performed too infrequently to achieve statistical precision with mortality rates, particularly at low-volume hospitals. For example, what inferences could be made about outcomes at a hospital performing 3 esophagectomies a year? By concentrating selected procedures in a relatively small number of high- volume hospitals, it would be more feasible to measure outcomes aside from mortality, such as nonfatal complications, patient functional status, and costs. The ability to monitor surgical outcomes systematically would make hospitals more accountable and create ideal platforms for quality improvement initiatives. How can the proportion of elective but high-risk procedures being performed in high-volume hospitals be increased? The least intrusive approach may be to focus on educating patients about the importance of hospital volume for specific procedures and to recommend that patients acquire this information from the hospital that they are considering for surgery. Although many hospitals do not have data on their own procedure-related morbidity and mortality rates, all hospitals More active strategies also could be implemented. Leaders of large, integrated health plans could designate referral centers for selected procedures and enforce their appropriate use. Professional societies also could take a role in regionalization. For example, the American College of Surgeons Committee on Trauma has established regional trauma networks, encouraging referral of the most severely injured trauma patients to designated trauma centers that meet established process and volume criteria.\11\ Through reimbursement mechanisms, large payers (both government and private) have substantial leverage to limit surgery to high- volume hospitals. For example, the Health Care Financing Administration is currently exploring the development of exclusive contracts with ``centers of excellence'' for cardiac surgery and total joint replacement for Medicare patients.\12\ In addition, through the Certificate of Need process, states can reduce the proportion of surgery being performed in low-volume hospitals by limiting the proliferation of new surgical centers.\13\ Many would argue that regionalizing high-risk surgery would have adverse effects, particularly in rural areas. For patients living far from referral centers, elective surgery could create unreasonable logistical problems for patients and their families. With excessive travel burdens, some patients may even decline surgery altogether.\14\ Regionalizing surgery also could interfere with continuity of care because many aspects of postoperative care, including dealing with the late complications or other sequelae of surgery, would be left to local physicians who were not involved with the surgery. Regionalization could reduce access to health care for rural patients by threatening the financial viability of local hospitals or their ability to recruit and retain surgeons. Even if regionalization had no effect on the availability of local clinicians, it could reduce their proficiency in delivering emergency care that must be handled locally. For example, the local general surgeon no longer allowed to perform elective repair of abdominal aortic aneurysms could be less prepared for emergency surgery involving a ruptured aneurysm. However, these problems may not be as important as they were once assumed to be. Most low-volume hospitals are not located in sparsely populated rural areas; they are more commonly located in hospital-dense metropolitan areas, often in close proximity to high-volume referral centers.\10\ In the analysis by Dudley et al,\9\ 75% of California patients undergoing surgery at low-volume centers in 1997 would have needed to travel fewer than 25 additional miles to the nearest high-volume hospital. In fact, 25% of patients traveled farther to undergo surgery at a low-volume hospital. These data suggest that a substantial degree of regionalization could occur without separating patients and surgeons or surgical centers by prohibitive distances. With any regulatory attempt to regionalize high-risk surgery, policy makers need to be ready for a political firestorm. Many low-volume hospitals, already under Although some physicians and some institutions would resist regionalization, the potential benefits for patients are too large to ignore. Given the current ad hoc approach to delivering high-risk surgery, it seems that almost any effort aimed at concentrating these procedures in high-volume hospitals would be an improvement.

Mr. STARK

Mr. STARK. Mr. Speaker, yesterday, I submitted data (page E247) showing that refundable tax credits to purchase health insurance don't work, unless we accompany the credits with insurance reform. Yesterday's data on 120 different price quotes for individual and family insurance did not include any follow-up calls to the insurers to see what would happen if there were medical underwriting. I asked my staff to call 8 insurers in the Los Angeles and Northern Virginia markets which had provided quotes through the Internet service, Quotesmith.com. My staffer confirmed the Internet quoted price and then said, ``Oh by the way, four years ago, I had a bout of skin cancer. . . .'' You would have thought my staffer had an active case of bubonic plague! the results are listed below. Again, Mr. Speaker, this small sample experiment shows that refundable tax credits without insurance reform are not worth much. I urge Members interested in this approach to consider the types of reforms included in H.R. 2185.

Mr. STARK

Mr. STARK. Mr. Speaker, submitted are portions of a letter which I have sent to the Federal Trade Commission and others. When one looks at Amgen's SEC filings, it is clear that this price increase was not necessary. It is pure profiteering, largely at taxpayer expense. It is another example of how Flo and her allies cannot be believed in the debate of a Medicare pharmaceutical benefit. The ancient Greeks knew the wisdom of moderation, and called it the Golden Mean. All these guys know is Golden Greed. Committee on Ways and Means, Subcommittee on Health, Washington, DC, March 8, 2000. Hon. Robert Pitofsky, Chairman, Federal Trade Commission, Washington, DC. Dear Mr. Chairman: I urge the Commission to conduct an immediate investigation of the recent price increase in recombinant human erythropoietin (rHuEPO) announced by the Amgen Corporation. Such an investigation would be very important in the developing debate on the rapid rise in pharmaceutical expenses (15.4% last yar) and Medicare payment policy. Briefly put, Amgen makes about $1 billion dollars a year in profit on the sale of its sole source, monopoly product EPOGEN to Medicare providers. Medicare pays $10 for a unit that, the last we know, cost about 50 cents to make. The company recovered its entire R&D costs for this product-- about $170 million--in roughly the first year of its sales to Medicare (1990). While the price/unit has been stable since 1991, the cost to Medicare has soared while the improvement in patients' hematocrits has been disappointingly flat. Part of the reason for the increase in dosage is that we have set a higher quality standard for the desired hematocrits. But I believe another, big part of the reason that the dosage has increased so dramatically is that while Medicare reimburses providers $10 per 1000 units, the company provides a volume discount, which encourages providers to use more EPO, because the more they use, the more I believe this ``volume discount'' has caused many American dialysis centers to administer the product in an inefficient and even wasteful manner. --------------------------------------------------------------------------- \1\ One physician has indicated to me that Amgen discounts EPO linked to the potential growth in use per year. ``Rumor has it that the target growth is greater than the incident growth in the ESRD program. In other words, if the ESRD program grows by 7%, the Amgen target for discount is some larger number, like 10%.'' Another expert tells me that the volume incentive is based on 5% growth per quarter. (If the FTC could determine the exact nature of the discount, it would be very helpful to understanding prescribing patterns.) --------------------------------------------------------------------------- The national Dialysis Outcomes Quality Initiative (DOQI), and most foreign nations recommend the administration of EPO subcutaneously--in an injection rather than through the dialysis process. When administered this way, there is data that, at least for a period of time, about 60-70% of patients would need about 30% less EPO. The company's volume discount, therefore, has probably caused Medicare and the taxpayer to spend $100 to $200 million more per year than would be needed if we administered the drug the way the quality experts recommend and most foreign countries practice. In addition to the waste and extra expenditure, too much EPO can be dangerous. It has side effects.\2\ --------------------------------------------------------------------------- \2\ One analyst notes that between 1989 and 1995, fifteen month survival has decreased by 20% for hemodialysis patients. This analyst asks if it is possible that inappropriate dispensing of EPO may play a contributing role? See attached. This is a question I believe needs to be investigated by public health authorities. --------------------------------------------------------------------------- The Amgen price increase takes advantage of the first increase in Medicare payment for dialysis in a decade. In the Balanced With all this as a background, Amgen's price hike is important to understand and can help shape the Congressional debate on drug reimbursement policy and Medicare payment policy to dialysis centers. First, I find Amgen's explanation to providers (copy attached) interesting: ``This change in price, the first since EPOGEN was launched eleven years ago, is being implemented as a result of continually increasing costs associated with Amgen's business.'' As I indicated there is data from a decade ago that the cost of production was about 5 percent and that all R&D costs were recovered in a year. In many industries, productivity is able to actually lower the cost of various high tech products. Can the FTC tell us what the cost of production is today, and how that compares to other increased costs of Amgen in marketing, litigation against potential competitors, overhead, and political contributions, etc.? Can the FTC give us an estimate of the current yearly profit to Amgen from sales of EPO and how much this price increase will add to those profits? The latest 10-Q for Amgen for the three months ended September 30, 1999 shows net income of $300 million, compared to $221 million in the same period, 1998. That same SEC filing shows product sales of $769.2 million and cost of sales, $98.9 million. The cost of sales as a percent of total sales actually declined between 1998 and 1999. All of this calls into question Amgen's justification for the price increase. As one security analyst is quoted as saying (attached) ``They promised Wall Street a certain level of earnings this year. . . . Maybe this is the only way they can achieve that.'' So did costs of production really go up that much, or did Amgen's other expenses go up, and this is just a way to tap the Medicare cash cow? The answer to this type of question is important for how we structure a Medicare prescription drug benefit. The coincidence of Amgen's price increase absorbing most of the Congressional dialysis payment increase should inspire us to consider ways to prevent that from happening again. If we don't, it would be easy to see Amgen doing another 3.9% increase next spring to absorb the second 1.2% dialysis payment increase scheduled for 2001. Thank you for your early review of this entire situation. Sincerely, Pete Stark, Member of Congress.

Mr. STARK

Mr. STARK. Mr. Speaker, I rise today in opposition of H.R. 3846, the GOP's feeble attempt to raise the minimum wage and H.R. 3081, the Wage and Employment Growth Act. I cannot support this half-hearted gesture that gives our lowest-paid workers a mere $1 per hour increase over three years when the Democratic alternative would have offered these workers $1 per hour increase over a two-year period and would have eliminated the top-heavy Republican tax cuts. Unfortunately, the leadership did not allow for debate and a vote on the Democratic alternative. The Wage Growth and Opportunity Act is a misleading title. This bill actually gives tax breaks to the wealthiest Americans but is disguised as offsetting the effects of a minimum wage increase on small businesses. I will not support this misleading and reckless bill. Studies have shown that increasing the minimum wage does not have a discernable impact on small businesses as some would have you believe. But given that the sponsors of the tax proposal want the American taxpayers to believe that a minimum wage increase can hurt small businesses, then we must scrutinize the bill on the floor of the House today. H.R. 3081 does little for small businesses but does much for the wealthiest one percent of Americans. While the GOP intends to prolong a minimum wage increase, and thus lower the benefit from an increase, it also wants to provide $123 billion in tax breaks to the wealthy. It does this through estate tax relief for the wealthy and pension changes that benefit those who contribute $10,000 per year to their 401(k) plans. Nearly 65 percent of H.R. 3081 is dedicated to reducing the estate tax for all estates. Only a small fraction of estate taxes are paid on small businesses included in estates. This bill has little bearing on small businesses and has nothing to do with the minimum wage. The estate tax provisions in this bill are targeted to wealthy individuals who don't even own small family businesses. I'd hardly consider Microsoft a small business, yet Bill Gates will reap a $6 billion tax break from H.R. 3081. We still don't have a Medicare prescription drug benefit for seniors, yet our legislative leadership is asking Congress to squander billions of dollars on those who don't need it. We also don't have a plan in place to shore-up Social Security for future retirees. I suggest to my colleagues that we take a close look at our legislative priorities prior to enacting such irresponsible tax cuts. The tax cuts proposed today grow over time and are permanent. The minimum wage bill is not permanent and does not grow with the rate of inflation. The Republican tax bill over ten years is nearly eleven times greater than their proposed minimum wage increase. Clearly, the tax bill before us today is a gift to the wealthy at the expense of our minimum wage workers and seniors. I urge my colleagues to defeat the GOP minimum wage and tax bill and give minimum wage workers $1 per hour increase over two year, not three.

Mr. STARK

Mr. STARK. Mr. Speaker, I would like to call attention to the unique creativity of the employees at the New United Motor Manufacturing Incorporated (NUMMI) plant in Fremont, California, and congratulate them for the assembly-line inspired innovation that brought the Toyota Tacoma Stepside pickup truck into production. In the world's auto industry, new design ideas traditionally come from the corporate headquarters and its design team, to the engineering team and sales team, and then to the actual manufacturing plant and the people who really build the cars. But the Toyota Tacoma Stepside pickup truck is different. In this rare instance the innovation for the new product came from the manufacturing plant, the company then worked in collaboration to enforce its accomplishment. United Motors broke away from a long-standing tradition and demonstrated that input and innovation from various levels of the plant, working as a team, can be influential and successful in generating new ideas. NUMMI has long been a model of innovation and creativity. It has a marriage of the GM and Toyota companies that has brought the highest quality, innovative autos to the American market. New United Motors Manufacturing Incorporated was started at a closed GM plant in 1984, and the joint bi-national effort was a major step in helping resolve the U.S.-Japan trade tensions of the 1980's. The plant has been in operation for 15 years, adding billions to the California and national economy. In addition to its economic success, United Motors has been an asset to the Fremont community since its establishment in 1984, providing jobs for well over 4700 employees and giving continual support to social programs around the community. United Motors has been particularly recognized for their community service efforts in offering grant support to non-profit organizations. United Motors also supported the school district partnership program that has helped the Fremont School District with its program of educational renewal. Other achievements also include awards for environmental achievement (1990), Company of the year (1994 and 1995) by the California Water Pollution Control Association and the J.D. Power and Associates Silver Plant Quality Award (1999). Congratulations to the team members and UAW local 2244 at NUMMI for their latest innovation, for keeping jobs in Fremont, and for once again showing real hands-on innovation and teamwork.

Mr. STARK

Mr. STARK. Mr. Speaker, a lot of Members are talking about refundable and non-refundable tax credits to help the uninsured. Their bills don't work, unless they accompany the proposals with insurance reforms and make the tax credit adequate to help the uninsured who are, overwhelmingly, the nation's poor and near-poor. On January 27th, a number of Members announced their intention to introduce a bill to provide a refundable tax credit of $1,000 per individual and $2,000 per couple for use in the purchase of health insurance. It does not appear their bills will include insurance reform. As the attached tables show, that would be nice for a 25 year old individual or couple without children, and might help some 35 year olds, but after that, these tax credits mean less and less for people who are uninsured and middle aged. The credits would also have a tremendously different impact depending on where one lived. In the Los Angeles market, they would cover most of the cost of a younger person, but a much smaller percentage in Northern Virginia. The reason most people are uninsured is that they are low-income, working poor, who have to choose between keeping the car running so they can get to work, versus health insurance which they might need, but God willing, won't absolutely need. Unless the subsidy for the insurance is very high, individuals facing the need for food, fuel, and clothes for themselves and their kids will not buy health insurance. That's why these tax credit schemes will not work unless we cover almost all of the cost of a decent policy in an area. Second, the use of health insurance rises as one ages. That's why insurance for older workers is, of course, more costly. If the credit doesn't keep pace with that fact, or unless we move to community rated insurance reforms, the credits will not help people when they are most likely to need help. The Jeffords-Breaux proposal fails to do that, except for the very youngest in the very safest types of jobs. What does private health insurance cost? I asked my staff to conduct a brief study using health insurance quotes from the Internet. The results prove why tax credits without insurance reform are a waste of time. I urge Members interested in the tax credit approach to consider the types of reforms included in H.R. 2185. Internet Sampling of Health Insurance Policy On average the American family is estimated to pay $5,700 for health insurance premiums, a large share of the income that is needed to maintain the family household. In general, a tax credit of only $2,000 will not be able to cover the costs that a poor family will need to provide affordable health care insurance. The survey conducted shows that both of the tax credits, one for individuals and one for families, falls short of eliminating the need for guaranteed health coverage for the poor. In more than 90% of the survey, we found that the tax credits would still leave each near poor individual or family with a large balance left to pay. In Fairfax County a 25 year old couple with 2 children after a $2,000 credit is still left with a $1,400 bill to pay, while in Alachua County (Gainesville) Florida the bill is almost $2,000. Even in rural Colfax, Nebraska within the same age bracket, there is still a balance that needs to be met. Couples without children face the same problem in that the range of balances run from full coverage for a 25 year old Nebraska couple to an almost $500 balance for the same 25 year old couple in Alachua County, Florida. For a single, 25 year old male living in either Rural Nebraska or Fairfax, Virginia, the $1,000 credit will cover his health coverage in full. However, for men over the age of 35 and women of all ages (in all four counties examined in this survey) the individual tax credit leaves a range of balances from $32 (25 year old female in California) to $3,570 (60 year old female in Florida). As you get older, the price of health coverage steadily increases. For example in Los Angeles, Calif. the yearly premium rates that have been quoted for a 35 year old single man have nearly doubled once the individual has reached the age of 60 ($1,284 versus $2,184 per year). In the three remaining counties, yearly rates have tripled on average from $1,300 to $3,700 from age 35 to 60, respectively. In only six out of 120 scenarios mapped out (30 quotes for each state) did this proposed tax credit eliminate the burden of health costs. That means only 5% of the time did the tax credit insure a poor individual or family. Given this data, then these proposed tax credits will only guarantee help to 2.2 million of the 44 million uninsured Americans, not the 21.9 million that is being estimated by the drafters of this bill. This survey was conducted using an Internet access program called Quotesmith.com. Quotesmith generated quotes for health insurance rates based upon the type of individual or family entered. This survey looked at how much standard health coverage would cost for individuals, couples, couples with children, and retired persons around the country. The criterion for the health insurance premium was a $250+nearest deductible and any policy that pays 80% or more after the deductible has been met. Note these are quotes off the Internet. They are not actual purchases of policies, and do not reflect any increases in rates caused by medical underwriting. In many cases we can expect that the final quote will be higher. Premiums were studied for individuals who lived in Fairfax County, Virginia; Alachua County, Florida; Los Angeles County, California; and rural Colfax County, Nebraska. The occupations were that of a pilot, architect and retired person, while the ages of the individuals ranged from 25 to 60 years of age. As stated earlier a $1000 tax credit for an older individual is simply not enough. There is no way that such a working poor individual can come close to affording private, individual health insurance, without having to decide whether to forgo basic needs. The $2,000 tax credit that this bill is proposing for families is even more unrealistic. In not one instance does this credit eliminate the problem of cost. The lowest rate for a family with two children is $205 per month, while the tax credit offers only $167 per month leaving a gap of about $38 per month. What also becomes very apparent is the fact that as one gets older the premium rates are rising. Therefore, a single 25 year old male can expect to spend about $100 a month on health insurance, whereas a 60 year old man can expect to pay about $250 a month or $3000 a year for his insurance! Once again how can a tax credit of only $1000 provide any relief for the near poor?

Mr. STARK

Mr. STARK. Mr. Speaker, I thank the gentleman for yielding me time and join in the accolades to those who have brought this bill to the floor today, which addresses a problem probably for 5 percent of the wealthiest beneficiaries under Social Security. It is a vestigial prohibition on getting retirement income. No other retirement plan denies that. I was intrigued this morning as we had all of this bipartisan self- congratulation. The fact is that while we do this, there are partisan rumblings in attacking members of the Democratic Party for sometime in the past perhaps having voted against this procedure in another bill. So I would just as soon unmask for a while, in the most partisan way I can, the Republican charade, because while we are doing this, we are still denying under the Republican leadership the chance for the Patients' Bill of Rights bill to go forward. It is a bill that was passed in a bipartisan way; yet it is being stalled by the Republicans. Last year in October in the Committee on Ways and Means, in a bipartisan attempt to pass the Balanced Budget Act, we offered an amendment that would have given a discount on pharmaceutical drugs to every senior, a substantial discount, at no cost to the Federal Government, and every Republican voted to deny the seniors this opportunity to get a discount on their pharmaceutical drugs. So as we talk later today, I hope that the gentleman from Florida (Mr. Shaw) will explain to me why that is a good bipartisan thing for the seniors in Florida to be denied a discount, and I hope the gentleman from Arizona (Mr. Hayworth) will come down and explain to us why he voted to deny seniors in Arizona a discount on their pharmaceutical drugs.

Mr. STARK

Mr. STARK. Mr. Speaker, I rise today to pay tribute to a good friend of mine, Harold Taylor. He is an advocate for all ages who provides leadership and inspiration to many in my 13th Congressional District of California. Both Harold and his wife, Marie, dedicate a great deal of time and effort helping people and organizations in their community. Harold's involvement spans a wide variety of activities. He has held leadership positions with the Boy and Girl Scouts, the American Association of Retired Persons (AARP), and the California Retired Teachers Association (CRTA). In addition, Harold has spent over twelve years advocating health insurance issues for seniors on the state level. In his work for the California Retired Teachers, Harold demonstrated true leadership in educating and lobbying Members of Congress for a correction in the Medicare Part A Hospital buy-in provision, which will help thousands of retired teachers obtain affordable health insurance. His lobbying and persuasive presentations were the key to several hundred million dollars worth of improvements in the program for teachers nationwide, and especially those in California. Educating and interacting with children has always been a priority for Harold. He spent thirty-four years teaching physical education and special education classes to elementary school children. Additionally, Harold has coached basketball and little league, taught Sunday school, acted as a youth group counselor, and has worked with the San Lorenzo Community Organizing Committee. One of Harold's most recent successes has been his involvement in planning a fundraiser for the Family Emergency Shelter Coalition (FESCO). Two years ago, the Volunteer Center announced it would not be holding the annual Human Race Walkathon, FESCO's largest fundraiser. Being his usual take-charge self, Harold announced that FESCO could do the walkathon on its own, and so was born the Shelter Shuffle. Harold's great leadership and organizational skills made the Shelter Shuffle FESCO's most successful walkathon ever. All of Harold's contributions and successes have not gone unrecognized over the years. His fame started many years ago when he was inducted into the Athletic Hall of Fame in Chico for basketball and track. His dedication to improving and expanding the Boy Scouts in the Tres Ranchos area awarded him the Silver Beaver Award, one of Scouting's highest honors. Finally, last year, Harold was nominated for an award at Hayward's Volunteer Dinner in recognition for his service. Harold's love and interest in helping and interacting with others continues to be the force behind his dedication and his actions. I ask my colleagues to join with me today in recognizing and honoring Harold Taylor as a true leader whose example inspires others to work towards a greater good in their communities.

Mr. STARK

Mr. STARK. Mr. Speaker, of all the unspeakable sadness in the world, losing one's child has to be the greatest. But in America, we often compound the pain with family bankruptcy. The following article by Dennis Rockstroh from the San Jose Mercury of February 18, 2000 describes how ``tragedy hits family doubly hard,' in the case of the death of Eleazer Gamez, Jr. What is wrong with us? Why can't we find in this time of wealth and prosperity a way to provide all our residents with health insurance and to remove at least the financial disaster of medical care. The goal of universal coverage should be the highest priority of this Congress-and every Congress until all Americans have health care that is as good as we in Congress have. I submit the aforementioned article for the Record. [From the Mercury News, Feb. 18, 2000] Tragedy Hits Family Doubly Hard--Lack of Insurance Adds to Family's Pain in Loss of Only Child (By Dennis Rockstrob) Shame on us. Forty-four million Americans, 11 million of them children, have no medical insurance. Californians list it as a top priority right behind education, but to Carolina and Eleazer Gamez of Union City, the lack of health insurance was simply piled on anguish following the tragic death of their first and only child. They haven't got the hospital bill yet, but they estimate it will be countless thousands of dollars they do not have. They paid the funeral expenses with an aunt's credit card. Twenty-month-old Eleazer Jr. was crushed between two cars about 3 p.m. on Feb. 4. Eleazer's mom was taking him to her sister's house on 11th Street. He was in the care of an aunt in the back seat. As the aunt was getting out, she put the baby on the ground and then reached back into the car to get her purse. The Gamez car was partially blocking a driveway and, in an instant, a car in the driveway zoomed out backward, striking the baby and smashing his head into the door. Eleazer died in a hospital the next day. ``Paramedics took the child to Children's Hospital in Oakland for emergency surgery,'' another of the boy's aunts, Shirley Baker, told me. ``But the trauma to the child was too great.'' Salvador Mora, Carolina's brother and the spokesman for the family, said that his sister had just moved off welfare and was applying for health insurance from her husband's work. Said Baker: ``What makes this story so sad is that my counsin and her husband are about 20 years old. They are a newlywed couple trying to start a family. They were not prepared for this tragedy and had no money to bury their son.'' From family experience I can tell you that there is no grief to compare with the loss of a child. It is a lifelong sorrow. Mora said the boy's dad is in denial and sleeps a lot, hoping he will wake from this terrible nightmare. The boy's mom speaks mostly in monosyllables, but managed to tell me, ``We can use all the help we can get.'' ``We're emotionally drained right now,'' said Mora. ``We're overwhelmed with everything. My sister and her husband are taking this very, very hard. He's never experienced a loss in his family.'' Mora said the family is expecting a bill of about $50,000, dwarfing the combined annual family income of about $30,000. This is not an isolated case. It's a national scandal. Despite the best economy in 30 years, 44 percent of California respondents in the Field Poll released this week said they have gone without health insurance or have been financially responsible for someone without insurance in the past two years. According to researchers, about one-quarter of California adults have no insurance. The politicians have known of this state and national problem for years but failed to fix it. Make no mistake, the Gamez family is a national victim of a system that excludes 44 million Americans. That's a lot of suffering. There oughta be a law. In fact, the Field Poll found that 45 percent of those surveyed, regardless of political affiliation, ranked health care as an important issue, just behind education. Meanwhile the Carolina and Eleazer Gamezes of the world will fall through the cracks, an American tragedy that can be avoided. Besides pushing for adequate medical care for all Americans, there is something you can do to help the family. A trust fund has been set up to pay the hospital and funeral bills. Donations can be sent to the memorial trust fund: Eleazer Gamez Jr., Account No. xxxxxxxxxxxx, Washington Mutual, 39995 Paso Padre Parkway, Fremont 92538. Oh, and don't forget to vote.

Mr. STARK

Mr. STARK. Mr. Speaker, I rise today to introduce the Prescription Price Equity Act of 2000, a bill to deny research tax credits to pharmaceutical companies that sell their products at significantly higher prices in the U.S. as compared to their sales in other industrialized countries. At my request, the Congressional Research Service recently completed an analysis of the tax treatment of the pharmaceutical industry. The conclusion of that report is that tax credits contributed powerfully to lowering the average effective tax rate for drug companies by nearly 40% relative to other major industries from 1990 to 1996. Specifically, it finds that while similar industries pay a tax rate of 27.3%, the pharmaceutical industry is paying a rate of only 16.2%. At the same time, after-tax profits for the drug industry averaged 17%--three times higher than the 5% profit margin of other industries. The need for this bill is clear. The U.S. Government provides lucrative tax credits to the pharmaceutical industry in this country in order to promote research and development of lifesaving new pharmaceutical products. Yet, in return for these government subsidies, the drug companies charge uninsured Americans the highest prices for drugs paid by anyone in the world. Numerous studies have shown that uninsured seniors pay exorbitant prices for pharmaceuticals. I recently asked the House Government Reform Committee to compare the prices of prescription drugs in the district I represent in Congress with the prices of prescription drugs in Canada. The report found that seniors in Alameda and Santa Clara counties who lack insurance coverage for prescription drugs pay far more than consumers in Canada for the exact same medications. The study compared the 1997 prices of the five brand name drugs with the highest '97 sales to the elderly--Zocor (a cholesterol reducing medication), Prilosec (an ulcer and heartburn medication), Procardia XL (a heart medication), Zoloft (a medication used to treat depression), and Norvasc (a blood pressure medication). On average, seniors in the 13th District are paying prices that are 100% higher than the prices Canadian consumers pay. For example, for a one-month supply of Prilosec, the average uninsured senior living in our District pays over $70 more than a consumer in Canada. This price discrimination against seniors is happening across the country. Yet, America's seniors are the least likely to be able to afford these higher costs. Nearly half of Medicare beneficiaries live on yearly incomes of less than $15,000 a year and a third live on less than $10,000. While some Medicare beneficiaries have prescription drug coverage through employer retirement packages, Medicare HMOs (which are lowering their prescription drug coverage each year), and Medigap policies, about 35% of Medicare beneficiaries have no coverage at all and must pay inflated prices for their needed medications. It is also estimated that nearly two-thirds of Medicare beneficiaries are at risk for being without prescription drug Yet, at the same time that seniors are being asked to pay these outrageous prices, the drug companies are reaping the benefit of generous governmental subsidies. There's something wrong with a system that gives drug companies huge tax breaks while allowing them to price- gouge seniors. My bill attempts to correct this glaring inequity in a very even-handed approach. So long as your company gives U.S. consumers a fair deal on drug prices as measured against their same products sold in other OECD countries, you will continue to qualify for all available research tax credits. But if your company is found to be fleecing American taxpayers with prices higher than those charged for the same product sold in Japan, Germany, Switzerland, or Canada, then you become ineligible for those tax credits. I know that the Pharmaceutical Research and Manufacturers of America will strongly oppose the Prescription Price Equity Act. PhRMA will say that this bill spells the end of pharmaceutical R&D. That is complete nonsense. As shown by CRS, drug industry profits are already threefold higher than all other major industries. This legislation doesn't change the current system of research tax credits at all unless companies refuse to fairly price their U.S. products. The intent of my bill is by no means to reduce the U.S. Government's role in promoting research and development. It is simply to say that in return for such significant government contributions to their industry, drug companies must treat American consumers fairly. Why should U.S. tax dollars be used to allow drug prices to be reduced in other highly developed countries, but not here at home as well? Again, this bill simply tells PhRMA that U.S. taxpayers will no longer subsidize low prices in the OECD countries with our tax code. Research and development is important and that is why we give these huge tax breaks, but they do consumers little good if they can't afford the product. The Prescription Price Equity Act is not the solution to the problems facing America's seniors' abilities to purchase prescription drugs. That problem will only be addressed by improving Medicare to include a prescription drug benefit. I have introduced separate legislation to achieve that goal and look forward to working with my colleagues to achieve that vital Medicare improvement this year. The Prescription Drug Equity Act is important because it would end the abuse of the U.S. tax code to subsidize an industry that has so far refused to treat American consumers fairly. I urge my colleagues to join with me in support of this legislation to end pharmaceutical companies' abilities to profit at the expense of American taxpayers.

Mr. STARK

Mr. STARK. Madam Speaker, today I join my colleague and good friend, Representative Karen Thurman, to support House Concurrent Resolution 247, in honor of National donor Day and recognition of the importance organ, tissue, bone marrow and blood donation. With approximately 70,000 Americans currently awaiting organs and more than ten people dying every day, it is clear that our nation is facing a real crisis. This resolution will help both raise awareness and increase donations nationwide--it is a meaningful step toward bringing an end to our nation's current predicament. A Health and Human Services (HHS) September 1999 Report to Congress noted a growing gap between the supply and demand for organs nationwide. HHS reports that medical technology improvements and a modest increase in donors have not kept pace with the demand for more organs. Demand for organ transplants has increased due to the success of immunosuppression therapies in preventing organ rejection and improving graft and patient survival. The lack of organs available for transplant illustrates the crucial need to focus public attention on increasing organ donation. A number of businesses, foundations, health organizations, and the Department of Health and Human Services have previously designated February 12th as National Donor Day. The first two National Donor days succeeded in raising a total of almost 17,000 units of blood, adding over 2,400 potential donors to the National Marrow Donor Program Registry, and included mass distribution of organ and tissue pledge cards. This concurrent resolution supports National Donor Day, encourages Americans to learn about and openly discuss donation, and calls on the President to issue a proclamation to demonstrate support for organ, tissue, blood and bone marrow donation. Research points to a clear need for public education and incentive programs to increase organ donation. This Congress, I also introduced legislation, H.R. 941, the ``Gift of Life Congressional Medal Act of 1999,'' to provide a commemorative Congressional medal to organ donors and their families to honor their efforts. This Act is intended to draw attention to this lifesaving issue and to spend a clear message that donating one's organs is a selfless act worth the profound respect of our Nation. I hope Members would also consider this effort to increase donations. The problem is clear--there are not enough organs to meet the needs of patients. Let's support initiatives such as H.R. 941, to create an organ donor medal, and H. Con. Res. 247, to honor National Donor Day and to recognize the importance of organ, tissue, bone marrow & blood donation. Initiatives such as these will help raise awareness, increase donations nationwide, and both are meaningful steps toward bringing an end to growing gap between the supply and demand for organs.