As I came in this morning, I was warned that I was the only speaker on the program with the other point of view. So it’s not the most comfortable place to be. I certainly respect every panelist who spoke today.
I do worry, though, that other than the ideas that have been touched on by my colleague in the Senate, Steve Rauschenberger, I worry that what’s being defended here is the status quo. Do you remember the expression when you were young, “Don’t just stand there; do something”? Well, I’ve been hearing that a lot these days.
I work for 212,000 people in the Kane, Kendall, and Lasalle County area. It’s not only the title of my remarks, but the spirit behind my effort for the past two years to reduce the cost of health care in Illinois. I can’t solve the whole thing, but I’m trying to start with any component, and then do something about it.
I’ve served in the state senate for 12 years, and we all wring our hands, and we all talk a lot, and health care prices keep going up. I have served on the Appropriations Committee and the Revenue Committee, both ends of the dollars coming in and the dollars going out. And I watch how the government spends $53 billion, how we collect $53 billion and how we spend $53 billion of your money, and it makes me very sad. And I also appreciate the humor from my fellow speakers about the politicians. We are doing the best we can.
My background is Duke University with honors, a CPA in Illinois, Harvard Business School. I consider myself a pro-profit kind of guy. And the more profit, the better, as long as there’s a level playing field and there’s plenty of competition. On the way in this morning I went over some of the papers Joe Bast sent over to me, and they are just fascinating. I would encourage you to read these experts’ papers.
The Public Is Angry
What I might bring to the discussion this morning is that I face and listen to the people whose lives depend on the theories we’re talking about today. The folks who I work for, number one, hate to pay their property taxes. That’s the number one complaint I get in my office. But the other is that they don’t understand why, on average, prescription medication costs twice as much in the United States as it does in Canada. That’s the question.
I just got more of the answer this morning on why tamoxifen to treat breast cancer costs ten times more here than in Canada. I’m buying my ticket this morning to get on the train. The lady in front of me has been struggling with cancer for two years. She asked me that question, about why it costs ten times more. Now, that kind of price difference is wrong. I think every person in this room knows it’s wrong. No matter how you peel away the economic theory, you know that it’s wrong.
The horror stories are true. I field those calls everyday, from people choosing between eating and prescription medication, splitting their pills in half. I learned today—and I marked down a note because I need to think about it some more—that I guess our seniors are spending more drinking and getting entertained than they spend on their prescription medication. Some folks would be insulted by that.
But the bottom line, the message I bring today, is that the status quo is unacceptable. Don’t just stand there; you’ve got to do something about it. It’s not just older people who are talking to me about this; it’s also doctors, because they hear from their patients everyday. Doctors are telling me, “Chris, you’ve got to do something.”
Then there are the pharmacists. One of the federal bills that I read about apparently would cut out the pharmacists, and they’re placed right in the middle. While spending on prescription medication went up 100 percent, in that same period of time, according to the Illinois Merchants Association, the pharmacists’ margin is going down by 2 to 3 percent. So they’re caught in the middle, and there’s nothing they can do. They hear it everyday. They complain to me. I’m glad pharmacists were included in one of the federal bills.
Small businessowners are asking me, “What the heck are you going to do, Lauzen, about my health insurance costs going up double digits? It went up last year and then again this year.” I got a letter the other day from one of the top 40 emergency heart specialist surgeons in this country. His premiums for malpractice went from $50,000 a couple of years ago to $550,000. And now his answer is to withdraw his services either from Illinois or altogether from that field. And I think, what an enormous lost. Something has to be done.
I have a group of folks who come from all walks of life who will help me do my work on a volunteer basis. One of those people started to do research, and we found an organization called United Health Alliance in Vermont. Dr. Beth Winter was working on this same program, and we thought, well, we’ll bring that knowledge to Illinois and try to apply it for the benefit of the people here. We’ve called it IllinoisHealthAlliance.com.
One of the things I wanted to make sure I’d mention is that I have no financial stake in that operation. Frankly, I was insulted when one of my colleagues asked, “Well, Chris, why are you working so hard on this? Do you have a financial stake in that?” It was interesting. I don’t. But I note there are some folks who do have a lot of money at stake.
We do two things on the website. One is it’s an information clearinghouse. There are a lot of good programs out there, and a lot of good programs the drug manufacturers have brought forward. Whether it’s a circuit breaker, senior care, the Veterans Association, Medicare/Medicaid, or drug manufacturers’ discount cards, that’s all on one side of the page. You can click on that name, and it takes you directly to the information where you can participate.
I agree with the expert from Canada who says we have to do something about those folks who can’t afford drugs at U.S. prices, and with our website we can help them find help. If they didn’t qualify—and there are so many people who don’t qualify for that—then we expedite the ordering process through Canada. The point is to drive down the cost of prescriptions by shining a light on the disparity, pull down the barriers, encourage competition, but one way or the other, get going on that process.
Drug Manufacturers Aren’t Helping
I am not here today to pound on any drug manufacturers. The last time I was sick, I was very grateful that medication was available. But on the other hand, I’m not here to get taken advantage of by them either, and neither are the 212,000 people who I serve. Also, I regret that we have to send even one penny to Canada. No offense to anybody in that country! But if that’s the lever it takes to get treated fairly, then I’d say, Mr. Gorbachev, tear down that wall of protectionism or perhaps the manipulation of the market that’s going on right now between the United States and Canada.
Here’s my experience with the drug manufacturers’ reaction to just those who try to reduce the costs of the medications they’re now paying. First of all, they try to confuse us. They say it’s illegal. Well, I’m under the impression that if it’s for personal use, no controlled substance, prescription acceptable to my pharmacist and also the Canadian pharmacist, then it’s legal. But let’s concede that point and let’s look at the thousands of people everyday who go across the border in busloads or through the Internet.
And I say that a law that’s not enforced is not a law. If you enforce it, people would say to me, “If you enforce it, Chris, we’ll fire you. And we’ll get somebody who’s going to represent us more aggressively and solve these problems, and get about the business of the solution.”
The second step is, if they can’t confuse us, they scare us, scare the heck out of us. It’s not safe. The stories in the U.S. we’ve heard. The folks from the governor’s delegation just got back. They say the system in place in Canada is very similar, if not more thorough, than our own systems for taking care of quality. The premise of that argument is that people in Canada, human beings in Canada, are different from human beings in the United States, that somehow they’re less concerned about safety than we are. They’re not, of course, and so of course they have in place rules and regulations that are similar to our own. None of us in whatever country wants to put poisons into our body.
And then there is the fact that many of these drugs are manufactured in the United States. They go in a big box. They go over to the Canadian pharmacy. One of the sealed containers gets put in a package and then sent back into the United States. And people say, well, if there’s a problem in that originally sealed bottle, are you really saying we ought to take a harder look at how we manufacture prescription medications here in Illinois or in the United States?
The third thing I see as a reaction, after they feel they can’t confuse us or scare us, is: “Cut them off.” I went over to take a look at GlaxoSmithKline’s audited financial statement. Frankly, I called the person who runs their organization in the United States. Here is a Great Britain company that uses the free-market, global economy rules to come to the United States, derive most of its revenue and profit using those rules. But if a little old lady from Aurora, Illinois or Peoria, Illinois wants to use those same free-market, global economy rules to buy her prescription medication to keep herself alive—goes to Canada, in other words—these folks want to cut them off. Now, I have to tell you, that makes people angry.
Now, when I take a look as a CPA and a Harvard MBA at this financial statement, and I look at the research and development line on this, I find the selling, general and administrative line, is two-and-a-half to three times larger. Thirteen percent of their revenue, about $30 billion, goes into research and development. They spend two-and-a-half to three times more in selling, general and administrative expense. They also bring two, two-and-a-half as much to the bottom line. Before I ran for the Senate, I took care of 200 small businesses and reviewed each of their financial statements every month, and I never saw profit margins like that. This illustrates there’s something wrong with the market; there’s something wrong with the level of competition to have that outcome.
Let me summarize my concerns. There’s a lot of money on the table here, and I understand that. The people who we all serve, either as customers or constituents, are actually angry. The objective is not to vilify drug manufacturers; that’s not what we’re here to do. But we are here to ask them to sell their drugs to us, their fellow U.S. citizens, for what they are selling to Canadian citizens. We just don’t want to pay twice as much as our neighbors. Folks are insisting, don’t just stand there; do something!
Senator Chris Lauzen has represented the 25th district of Illinois since 1993. A CPA and a Harvard MBA, he serves as minority spokesperson on the Committee on Revenue and serves on the Appropriations I and II committees.