Older Americans, who make up 13 percent of the U.S. population, account for 34 percent of all prescriptions dispensed and 42 cents of every dollar spent on prescription drugs.  The average Medicare beneficiary fills 18 different prescriptions per year.  Obtaining prescription drugs is a clear necessity for our senior citizens.  Yet the annual spending per capita in the Medicare population for prescription drugs has jumped from $674 in 1996 to $1,539 in 2000, and it is expected to climb to $3,751 in 2010.  

Overall, drug prices rose 306 percent between 1981 and 1999, while the consumer price index rose 99 percent during the same period.  In 2000, total spending in the U.S. for prescription drugs was $116 billion – more than twice the $51 billion spent in 1993.  That amount is expected to triple to $366 billion by 2010.  These escalating prices must and can cease.

For every dollar that a consumer pays for a prescription drug at the pharmacy, 74 cents goes to the drug manufacturer, 3 cents goes to the wholesaler distributor and 23 cents to the pharmacy.  In 2000, pharmaceutical companies had after-tax median profits of 19 percent, compared with 5 percent for all other Fortune 500 companies combined.  While I recognize the importance of researching and developing technological advancements that have helped numerous Americans, I know the drug manufacturers do not need such astronomical profits to ensure continued research.  

Most core research for prescription drugs is funded through NIH.  In addition, pharmaceutical companies dedicate more than 18 percent of revenues to profits and 30 percent to marketing and administration, compared with just 12 percent to research and development.  In fact, the 12 drug companies with the highest revenues spent three times as much on marketing as on R&D in 2000.

Mr. Speaker, access to prescription drugs is critical to the survival and maintenance of an acceptable quality of life for millions of our senior citizens.  As you know, Medicare does not offer any prescription drug program, and most seniors have found that the Medicare+Choice program has not provided the kind of opportunities Congress thought it would.  As a result, today, at least one in three people in the Medicare population have no drug coverage at all in the course of a year and nearly half have no coverage for at least part of an entire year.  These Medicare beneficiaries spend on average 83 percent more for their medicines than those with drug coverage.  Moreover, almost half of Medicare beneficiaries without any form of prescription drug coverage have incomes less than 175 percent of poverty, which is $15,000 in 2001.  

That is why we need to require drug companies to give local pharmacies the best price they give their most favored customers or the average foreign price, and reinstate the requirement for reasonable pricing on products that were researched and developed using taxpayer money via NIH.  Moreover, we need to authorize the federal government to buy drugs in bulk and at a discount for Medicare beneficiaries.  And most of all, we must provide a Medicare prescription drug plan.

While the Administration’s budget includes $153 billion over 10 years to provide for prescription drug coverage and Medicare “reforms,” this plan falls far short of a comprehensive drug coverage program.  The four-year Immediate Helping Hand proposal provides block grants to the states to help low-income seniors purchase prescription drugs, and then an unspecified Medicare prescription drug benefit is to be developed along with Medicare “restructuring.”  

According to the Administration’s own cost estimates, adjusted by CBO’s projected rate of drug inflation, covering only the low-income population’s prescription drugs would cost over $200 billion – almost $50 billion more than what has been provided in the budget.  Furthermore, the Immediate Helping Hand program would deny eligibility to about 20 million Medicare beneficiaries, most of whom lack affordable, dependable prescription drug coverage. For instance, under the Administration’s plan, an 85 year old widow with an annual income of $17,000 would receive no assistance with her prescription drug costs.

Now that we have passed an irresponsible and partisan budget, providing the kind of comprehensive, effective prescription drug benefit our seniors need appears next to impossible.  I urge my colleagues to not forget our seniors and to not neglect the American public, who is counting on us to follow through on a promise that was made by Democrats and Republicans alike – to provide a quality prescription drug plan for Medicare beneficiaries.