# Floor Statement of Senator Judd Gregg on the FDA Reauthorization Bill And Prescription Drug Reimportation

Delivered on 2 May 2007.
Mr. President, I join with the ranking member of the HELP Committee--the Health, Education, Labor, and Pensions Committee--in raising the concerns and agreeing with the concerns he has raised about the reimportation proposal which has come forward from the Senator from North Dakota, which has been debated on this floor a number of times.
The issue, of course, is the safety and efficacy of products which Americans buy. The FDA has been given the responsibility and has executed that responsibility extraordinarily well to make sure when an American citizen buys a pharmaceutical product or a medication, it is what it says it is and it does what the doctor prescribes.
If you start buying medications internationally, you are in the position where you have no capacity for the FDA to monitor that purchase. So the drug may be represented to be an FDA-approved drug, but it could easily not be. In fact, case after case has been discovered of adulterated and changed medication coming into this country under the representation the medication which is being purchased is medication which has been approved by the FDA. So you are basically opening up a massive loophole in the area of safety for the American citizenry.
Now, the demand for this comes from the cost of the drugs. People want to be able to go across the border to Canada, which is obviously a very sophisticated nation, and buy a pharmaceutical product there, which costs significantly less than the same pharmaceutical product may cost in the United States. That is a natural instinct of the market economy and of people. But critical to this exercise, of course, is the ability to get a safe drug.
If you go across the border, and you buy a pharmaceutical product which is alleged to be one thing, and it turns out to be another thing, the damage it causes you is going to be economically much more significant than the savings which you may have accomplished by purchasing that drug across the border.
Also, it should be noted that with the Part D pharmaceutical program which we now have relative to Medicare, the pressure--because pharmaceutical products are now insured and people receive them under the insurance plan as created under the Part D program, which has been an extraordinary success to supplying pharmaceuticals, though its cost remains extraordinarily expensive for the next generation of Americans--but pharmaceutical products are now available under an insurance program to most American seniors, and, as a result, if you are a senior, one of the people most likely to use a large number of drugs, and most often are on a fixed income and have problems purchasing drugs as a result of the fixed income situation--those issues were addressed by Part D to a large degree relative to the senior purchasing drugs; and it did create the ancillary problem of creating a huge cost which has to be borne by the next generation--but relative to the supplying of drugs, the pressure which was forcing people to take the chance of purchasing a drug internationally has been relieved to some degree, significantly in the area of senior citizens.
I proposed language which would create a safe pharmaceutical approach, where you would create an Internet pharmacy approach, where you would create a regime under the FDA where people could go on the Internet and buy pharmaceutical products knowing they have been approved by the FDA.
Today, unfortunately, that is not the case. If you go on the Internet, and you purchase something through a pharmaceutical firm off the Internet, you do not know whether that product--even though it may be represented to be FDA-approved--is FDA-approved because there is no way to certify the site you are purchasing from is an FDA-approved supplier.
So this reimportation bill is essentially going to create an atmosphere where those Internet pharmacies are going to become basically the "wild west" of supplying drugs in this country, and you are going to see people going on to these Internet pharmacy sites and purchasing drugs they think are being represented as an American-approved drug that has been reimported--and is at a lower price--but may actually be a totally adulterated drug which will do significant harm to you.
We have seen instances of that already--dramatic instances. Case after case has been reported of people being significantly harmed and in some instances dying as a result of buying pharmaceuticals off the Internet that turned out not to be what they were represented to be from international sites.
So at a minimum, this reimportation proposal, which has received significant support in the past because it has a motherhood name on it--even though it might be actually creating significant problems for children and for other people in this country as a result of the risk it puts people at--at a minimum, this proposal should be subject to creating some sort of a regime where FDA has the ability to monitor and to approve and to make available to the public the knowledge that Internet pharmaceutical sites have been approved by the FDA. That is what my amendment does. It tries to address that.
So we should not move forward precipitously in the way that is proposed by the Senator from North Dakota. We should not be supporting this simply because it has a nice name on it and because he can hold up two bottles which are the same drug but costs differently in a managed economy in Canada and a market economy here in the United States. We should, rather, set up a structure where FDA can be sure that when you buy that pharmaceutical product through an Internet site that is international or from a Canadian pharmacy, that you are getting what they claim you are getting, so when you take that drug, you benefit from it and are not harmed by it.
This all, however, gets to a bigger issue. Probably, there is not time right now to go into it in depth. But the bigger issue is, where do pharmaceutical products come from? Where do all these amazing products, the biologic products that are saving lives in this country and are creating such a much better lifestyle come from? Remember, they do not come from trees, and they are not grown in North Dakota in the sugar beet fields. They are developed through processes which involve years--years of investigation and research.
The average pharmaceutical product in this country takes 12 years and $800 million to bring to the market. Think about that: 12 years and $800 million before you can produce a product Americans can take. That is a pharmaceutical product. If you are getting in the biologics area, which is a much more complicated area, it takes even longer. It is even more complex, and in many instances it is even more expensive.
It is these products that are changing the life expectancy of people and making the quality of life of people so much better. We have basically gone from a medical regime in this Nation where invasive action was always the first call, was always the first event, where you basically went under the surgical knife, to a regime where you are given pharmaceuticals or biologics to try to address a very serious illness. It is a huge step, an exponential step in the direction of better health care and a better lifestyle for Americans and for the world.
Where are these products developed? Well, they are developed here in the United States. Why are they developed here in the United States? Why are almost all the major pharmaceutical breakthroughs and all the biologic breakthroughs coming in the United States? Because we have a market system which allows people to take the risks to develop those products.
We do not fix prices, as they do in Canada or in England, at a rate that is so low that nobody would be willing to invest in developing that product because the return on that investment is too low. We allow people who make the investment, who take the risk, who put the 12 years in, who invest $800 million, to get a reasonable return on their investment and on their effort. As a result, we have the explosion in advances in technology, in medical technology, in biologics, and in pharmaceuticals.
It is a result of the fact that people who want to take that risk, and who have the ability to pursue that type of opportunity to make life better for people by creating these pharmaceutical products and these biologic products, have the capacity to get resources to do it. It is called capital markets.
Now, capital does not flow for goodwill. People do not invest in things because it makes them feel good, in most instances. People invest where they are going to get the best return on the dollars they invest, or a reasonable return on the dollars they invest. So we have to maintain an atmosphere in this country where people are willing to put money--cash, capital resources--into the investment and research and development of pharmaceutical and biological and device products.
But if you listen to the other side of the aisle, almost every proposal they come forward with seems to be of the view that these products are grown in some wheatfield in North Dakota, that they do not take any effort, that they do not require any capital, they do not require any expertise, research, or time. All they require is to be price fixed, to be limited in their ability to be distributed relative to the price that is charged.
Time and again, the other side of the aisle has come forward with proposals which basically undermine the incentive for capital to flow into these research areas. Believe me, if capital is disincentivized from going into these areas because they do not get a reasonable return, they will go somewhere else--they will go into developing software, into gaming, into whatever it is that happens to give them a reasonable return, into investing in some other country's activities in some area.
Capital does not flow out of goodwill into pharmaceutical production, into biologic production, into device production. It flows into those accounts because they expect a reasonable return.
Now, sure, the countries of Canada, England, and the European common market, to some degree, are living off of the fact that we give people a reasonable return on our pharmaceuticals and biologics in this country. That is absolutely true, and it is reasonably disgraceful. In fact, in Canada, they threaten to take people's patents away if they don't--they basically capture American patents if they don't sell these drugs at a price which nobody would have invested in them in the first place to produce them were the price fixed at that level. But that is their policy.
Now, we could subscribe to that policy, which is what the other side of the aisle wants us to do. They proposed it in Medicare negotiations, they proposed it now and passed it here in the child drug review. They proposed it in this reimportation, and they proposed it in the negotiated language relative to Medicare, and in biologic generics. In all of these areas they are basically saying: Well, drugs must appear in the marketplace. We don't have to be concerned with the fact of getting capital into the investment exercise. We don't have to be concerned with the fact that it takes years and years to research these products and hundreds of millions of dollars to bring them to the market, they just appear. We can basically, for lack of a better term, kill the goose that is laying the drug or the biologic or the pharmaceutical or the device that is saving people and not worry about it.
Well, that is not true. If you were to follow all of the proposals from the other side of the aisle, or even a significant amount of them, we would see investment in this area start to dry up. We would see a contraction of the production of pharmaceuticals that save lives, of biologics that save lives, of devices that save lives. We would see fewer and fewer of those coming to the American people and to the world because people wouldn't invest in that activity any longer, or the investments would be significantly curtailed because money would flow in other directions.
This concept of the marketplace totally escapes the other side of the aisle. This concept that drugs have to actually have some flow of capital behind them to be produced because it takes so long to get them to the market, and it takes so much money to actually research them--and that is especially true in biologics and equally true in devices. It totally escapes the other side of the aisle. Their idea is, we have a good line, we have a motherhood statement, let's let people go buy the drugs somewhere else at a price that is fixed at which nobody would have ever produced the drug in the first place if that was the price. Let's negotiate so we have a regime of price setting at the Federal level, which basically eliminates the capacity for that drug to be competitive.
Let's create a biologic generic which basically wipes out the capacity of the true biologic to actually come to the market and be successful. Let's create an atmosphere where testing on children of the drugs will basically not have a fiscal return which will make it worthwhile to test them on children. Let's do all of those things in the name of the motherhood language of getting a better price for drugs for Americans, ignoring the fact that what you are actually going to end up doing is dramatically limiting the number of drugs coming to the market for Americans, and therefore significantly impacting the quality of life of Americans and our ability to advance the dramatic and revolutionary activity that we are seeing in bringing biologics to the marketplace, which are basically curing and have the potential to cure diseases which have been extraordinarily threatening to the American population for so long.
It makes no sense, if you look at the substance of the issue, what they are proposing. It is totally inconsistent. They are saying they are doing this to help people. What they are actually ending up doing is harming not only the people of today who won't be able to get the drugs because they won't be produced but people in the future because the drugs won't be brought to the market. There is a blindness to the fact that market forces are at work. I guess it is just a function of the fact that you want to get out a good press release, so you are going to send it out. Of course, anybody who takes the position I just outlined is immediately demagogued, and the pejorative tool of the drug industry is thrown out there.
Well, I am hardly that, since I was one of the few people in this Chamber who actually aggressively opposed and tried to stop the Medicare Part D Program, which was the biggest windfall the drug industry ever got and which was voted for by many of my colleagues on the other side of the aisle and which ended up putting an $8 trillion bill which is unpaid for onto our children's future.
More importantly, the reason I take the position I take is because I believe very strongly that America should not give up its lead in one of the industries where it is at the cutting edge and where it is producing jobs and where it is producing the intellectual capital that is going to keep us a vibrant, strong economy. In addition, we should not give up an industry or undermine an industry and geniuses and creative individuals who are producing products which are saving lives and are giving people a better livelihood. So I am not going to sign on to these various jingoistic proposals which are brought to the floor for the purposes of putting out good press releases about how I did this or that for motherhood at the expense of undermining the quality of care for future generations by basically limiting dramatically the ability of people to get capital who want to be creative, who want to invest, and who want to do research in the area of producing biologic products, pharmaceutical products, and medical devices.
That is why I take the position I take, to say nothing of the fact that if you start haphazardly importing products from the Internet and from countries such as Canada, as strong as Canada is, without any FDA oversight or approval of those products, you are going to harm a lot of people at the end of the day. A lot of people are going to be hurt, and some people are going to die as a result of buying products which have not gone through FDA approval and which are not subject to FDA oversight because they are bought from a pharmacy or a provider in Canada, and that product may have come out of India or it may have come out of Afghanistan. It may have come out of Pakistan. It may be adulterated, and it may kill. The same can be said by a factor of 10 relative to purchasing on Internet pharmacies.
So there are some big issues at play. There are big issues at play relative to the future of the health of Americans on the issue of importation, on the issue of negotiation and Medicare, on the issue of biologic generics, and on the issue of making sure that children are adequately tested relative to the application of drugs which are brought to the market. There are big issues relative to safety and big issues relative to whether this country remains on the cutting edge of producing products that help people and give them a better lifestyle with a biological, pharmaceutical, or medical device. We shouldn't just pass these proposals willy-nilly for the sake of putting out a nice press release. Mr. President, I yield the floor.