Tuesday, April 19, 2005

U.S. Senator Johnny Isakson (R-GA)
Hearing on Prescription Drug Importation
Health, Education, Labor, and Pensions Committee

Sen. Johnny Isakson (R-GA): Thank you, Mr. Chairman.

Senator Dorgan, in your first part of your remarks you made a comment.  I was making notes here so if I missed it, you can correct me.  But you said in the United States the pharmaceutical companies set the U.S. price.  Forgetting about -- assuming you're -- I don't want to get into what we just got out of, so, but assuming that your inspection procedure and approval procedure is identically the same as it is today, isn't all you're doing here turning over the control of the price of the U.S. pharmaceuticals to another country, in particular, Canada?  And if that's the case, why don't you just set up price controls in the United States?

If you assume your inspection, safety and security are equivalent to what they are today -- and that's not an argument, which I'm not saying is or isn't true, I just don't want to get him stirred up again. Then isn't it true -- then why not just establish price controls in the United States rather than, in effect, abdicating them to Canada?

Sen. Byron Dorgan (D-ND):   Senator Isakson, in the global economy, when you import anything, you import all of these circumstances of that production in the country from which it's imported.  If you happen to be wearing a Chinese silk tie, you may well be paying this morning for the retirement costs of Jiang Zemin and the communist government of China, but that's the way the global system works.

So if you're asking the question, if we import a prescription drug from Canada, are we importing price controls?  No, we're importing a prescription drug from Canada.

Sen. Isakson:  That has price controls.

Sen. Dorgan: Canada does have price controls, absolutely.  If we import a prescription drug from Germany or Italy or Spain or England, we will import whatever the circumstances that exist there. It is the case, I'm sure, however, that the pharmaceutical industry sells in all of these countries because they make a profit under whatever pricing scheme they develop in those countries, at least relative to the laws that exist in that country.

Sen. Isakson:  Well, my only point on that is this:  That a necktie won't kill you unless you tie it awfully tight, but a bad pharmaceutical will. And there's a lot of difference between neckties and pharmaceuticals.

And I do think the questions is a valid question, but I'm not taking a side right now, I'm trying to make a point, that if you wipe out all this other stuff we were talking about, are you abdicating price controls to another country, versus being for price controls in the United States.

My second question is to Ms. Stabenow from Michigan.

You made a statement that we're giving Americans a false choice of higher costs in return for safer and newer drugs.  Don't you believe that there is some value to recovery of R& D and incentives on that, to develop drugs, versus being in a stagnant situation where you
don't have that incentive?

Sen. Debbie Stabenow (D-MI):   Absolutely.

Sen. Isakson:  Then why is that a false choice?

Sen. Stabenow:   What I'm saying is that what we hear from the other side, is that somehow to lower price means that we won't have research.  When in  fact we know that the industry is spending much, much more on advertising and marketing today than they are on research, and that all you have to do it turn on your television set and you see it.

And in addition to that, we, as taxpayers in America, are spending close to $30 billion this last year for basic research that we then give to the companies at no charge, because it's so important that they continue to develop these breakthrough drugs. So this is just already something that American taxpayers are helping to pay for, and yet we, in return for doing that, in all the tax credits and incentives, which I support, the gift that we get back are the highest prices in the world.  It's not a good deal.

Sen. David Vitter (R-LA): Senator, could I respond very quickly to...

Sen. Isakson:  Quickly.

Sen. Vitter:   Because this goes to the heart of this issue.

I only speak for myself.  I am strongly for these proposals, not because I want to support and import price controls, but because I believe if we establish a true worldwide free market through measures like this, we will break down disparate pricing around the world, and make it extremely difficult to have these different pricing regimes, including old-fashioned price control regimes.

That's why I'm for this proposal, to break through that disparate global pricing and to make it difficult or impossible for other countries to do what they're doing now, which is to push all of their R& D costs onto us and us alone, as American consumers.

Sen. Isakson:  That is a noble goal.  Because my question's rooted in my serious concern that we've abdicated to our country the total responsibility for pharmaceutical development and breakthrough and yet putting a disincentive on the entire system, and turn around and import in whole or in part, price controls which is a double whammy.

Now, since y'all abused your time, I will abuse mine. I will have to tell you, now, your thing on advertising is right on.  I still don't understand all those ads.  I don't know if they spend more on ads than they do on R& D, but they spend more on ads than they probably ought to in my judgment.  It ought to be going into R& D.

I'm sure your goals are noble, and I hope -- and Senator Vitter said it in a very eloquent way, we have got to protect what we have in this country, in terms of a safe and innovative and a breakthrough pharmaceutical climate and do so because that's as healthy for our consumers and our constituents as is anything else that we can do.

So, I just wanted to make that comment.  I appreciate David's remark.

I yield, Mr. Chairman.

***

Sen. Isakson:  It's a pleasure for me to welcome the dean of the Emory University School of Law, Dean Thomas Arthur, to be with us today. Dean Arthur has graduated from the Yale Law School and from Duke University before coming to Emory, and he practiced law for 11 years in Washington, D.C. at Kirkland and Ellis.

Dean Arthur teaches antitrust, civil procedure, administrative law at Emory University.  He has been published in the California Law Review, the Tulane Law Review and the New York University Law Review.

His testimony today will focus on constitutional and intellectual property and international law.  And having realized we were pressing in time, I read it before the hearing, and it's awfully good.  I commend it to the chairman.