Managing Editor’s note: On June 23, 2003, Senator Rick Santorum (R-Pennsylvania) rose to the Senate floor in opposition to a proposal by Senator Mark Pryor (D-Arkansas), who sought to mandate that prescription drugs be sold in the United States at the same price manufacturers charge in Canada. The Pryor proposal was defeated, but similarly dangerous language remains in the Senate version of the Medicare reform bill.
Santorum’s floor speech, edited for space considerations, is reprinted below. Subheadings are inserted for the reader’s benefit. The unedited text is available through PolicyBot. Point your Web browser to http://www.heartland.org, click on the PolicyBot icon, and search for document #12503.
Mr. President, I rise in opposition to the Pryor amendment. I do so in the strongest terms.
We had a debate on the issue of reimportation of drugs from Canada. The Senate spoke and said that if the Secretary of Health and Human Services would declare such reimportation was safe, we could then bring these drugs across the border at a reimported price.
Many on this side of the aisle, and I am sure a few on the other side of the aisle, voted for that amendment, as amended by Senator Cochran for that safety measure, basically concluding the Health and Human Services Secretary would never determine these drugs would be considered safe, since the Canadian government itself said they could not guarantee they were safe. We have all sorts of problems today with counterfeit drugs, drugs getting shipped in from other countries, leading to a variety of health problems. There was a great amount of comfort.
The Pryor amendment goes one step further, according to my understanding, saying if the Secretary does not say the drugs are safe within a period of time–I believe it is two years–then prices of drugs in this country will be set by the Canadian government, which I find a startling concession of authority of this government to a foreign country; that we are going to have a foreign country and a board in a foreign country set prices for drugs in the United States of America.
It is a remarkable concession for the Senate. I know we have a great desire to control many things in the United States. We would like to set prices, I am sure, on lots of different items. We do it in the Agriculture bill all the time. Now we are going one step further. If you cannot win price controls by having the Senate pass a price control bill, delegate the Canadian government to control the prices for you.
Why Canada? Why Only Drug Prices?
Maybe we should choose different countries. Why Canada? Maybe there are other countries that set even lower prices than Canada. Why not choose them if we really want to save consumers money?
If this amendment is adopted, I would probably offer amendments that we should have chicken prices set by the Canadian government, wheat prices set by the Canadian government, and lumber and timber prices set by the Canadian government. Maybe it would just be good to have the Canadian government set all our prices in this country for those items we think are important. Obviously, they are very thoughtful in Canada, and they know what is best for us here, and we should just go ahead and let them set our prices for us.
We are not talking about the Canadian marketplace setting prices. We are talking about the Canadian government.
Drug Pricing in Canada
Want to sell your drug in Canada? First, you have to get it approved–get it on the formulary. You cannot sell drugs other than those approved by the Canadian government.
Government officials say to the drug company: OK, Pfizer, you want to sell your drug here? Great. We will pay you $1 a pill.
Pfizer responds: This costs us $1 billion to research. It is a great drug. It solves all sorts of problems. We sell it in America for $10 because of the enormous cost of the research and testing to make sure it is safe and efficacious, and it cost us a lot of money, and we have only a short patent life in which to recoup the investment dollars. We have a lot of drugs we tested along the way to find a cure for this problem, and we have to recoup those costs; otherwise, we cannot stay in business, we cannot continue to research.
The Canadian government says: That’s nice; we’ll pay you $1 a pill.
Pfizer says: No, we can’t sell it for a dollar.
The Canadian government says: Then you can’t sell your drug here.
And Pfizer loses out on a market of millions of people.
And under Canadian law, the Canadian government has the right to steal Pfizer’s patent and give the formula for that drug to a generic drug manufacturer in Canada for them to produce at the dollar price Canada is willing to pay. They can steal a patent a company in this country spent millions of dollars, perhaps billions of dollars, to come up with, and then set a price in Canada at the level they choose.
The Senator from Arkansas wants to condone that behavior and require that we charge the same price in this country.
I cannot imagine anything that would be more damaging to an industry that does more than any industry in America to solve our health problems. They spend more on research and development than any other group of companies that exists, and they bring through drug after drug and therapy after therapy to extend lives, to increase the quality of life, and to cure diseases.
And we are considering in the Senate to reward that industry by allowing a foreign government to set prices for an industry that does not exist in Canada but it does exist in the United States. The majority of new drugs in the world are researched and developed in the United States.
A Better Way
Yes, we do pay more for drugs in this country. I will concede that to the Senator from Arkansas. And the reason we pay more for drugs here is that we do not regulate prices, as most other countries around the world do.
I think the Senator from Arkansas is on to something. We need to do something about those prices around the world. But it is not to adopt them in this country; it is to get the trade administrator to start putting these issues on the table when it comes to negotiating free trade deals.
They have to put on the table the pirating of our patents, with our free trade partners such as Canada and Mexico. They have to put on the table the prices they pay for drugs that are researched in this country that our people in this country subsidize. Yes, we do. In fact, we subsidize the world’s research in pharmaceuticals.
And the Senator from Arkansas says we are going to stop doing that. We are going to do what Canada does, which is not subsidize one nickel of the cost of researching these new drugs–what Germany does, what England does, what most of the developed world does. They all piggyback on America.
What would be the consequences of the Senator’s proposal? I do not think it takes an expert in pharmaceuticals to figure out exactly what happens.
We will squeeze the research dollars out of the drug-making industry, because we will be paying them based only on their cost of manufacturing. So the dollars to spend on research and development for that next generation of drugs will be gone.
Maybe that is a good idea. Maybe it is more important to have people get their drugs inexpensively today than to find that cure for cancer, diabetes, or Parkinson’s, or to develop a new drug to ease symptoms of HIV. Maybe it is more important for someone to have their drugs a little cheaper today.
But there are millions of Americans, and even more millions of people around the world, waiting for that little pill that is yet to be discovered that will extend their life so they can see their daughter or grandchild being born, waiting for someone to cure that disease they are saddled with today, to give them just a few more months or a few more years.
And when a researcher walks into the office of someone who votes for this amendment, seeking NIH research dollars for diabetes, or for AIDS, Parkinson’s, cancer, or heart disease, I want that Senator to say to them: Yes, we can give you government research dollars, but no one is going to take your research and put it to practical use, because I voted for this amendment and now we have squeezed every research and development dollar out of the pharmaceutical industry, so it has no incentive to take your research and do something with it to put it into commercial use and make that drug available.
Even though we are passing a prescription drug benefit that is going to extend pharmaceutical benefits to make drugs less expensive, that’s apparently not good enough. We also have to take a bite out of the hide of those nasty pharmaceutical companies. They get beaten up a lot … until they are needed, until they extend your wife’s life or save your child’s life; then the rhetoric tones down quite a bit.
Not a “Free Vote”
We are shooting with real bullets here. This is a Medicare pharmaceutical package that will pass and turn into law. Anybody who thinks this is a free vote–that we can go back home and campaign and say, gee, I am going to get you cheap drugs–understand what this vote means. When that 7-year-old diabetic walks in your office, understand what you have done. It is as real as denying them the cure that is sure to come.
I know it is not popular to stand up for pharmaceutical companies. Maybe we should do to them what we have done to a lot of industries that have been successful in America: Beat them up, tax them, take their profits away, until they become dependent upon us, and then we will give them loan guarantees and bail them out. I think that is a very bad approach.
The right approach is to provide coverage for those who are in need of insurance to help them with their prescription drug bills, while at the same time allowing one of the most vibrant industries we have in this country to survive and thrive. That is the balanced approach. It is not attacking the very companies that are providing lifesaving drugs for millions of Americans and millions around the world.
Even if you are for drug reimportation, this is a fundamentally different thing. This is completely changing the drug pricing structure of the United States of America and delegating it to a foreign entity.
I strongly suggest that if you want to do that–if you want to set drug prices–let’s have an amendment to set drug prices. Let’s not delegate it to the people of Canada to set our drug prices. Even if you are for reimportation, even if you are for cheaper drug prices, don’t let the Canadian government do it. Get the glory of setting it ourselves, if we want to do something.