President and CEO, Barbara B. Kennelly's Statement for the Record

Senate Committee on Health, Education, Labor & Pensions Hearing On S. 334
Pharmaceutical Market Access And Drug Safety Act Of 2005
April 19, 2005

For the past year, the National Committee has been working with the bipartisan cosponsors of S. 334, including Senators McCain, Snowe, Dorgan and Kennedy. I want to thank all the cosponsors of this bill for setting aside partisan differences and working together to achieve what's best for America 's seniors. It's time we roll up our sleeves, and work together to reduce the high cost of prescription drugs for seniors and the uninsured. Prescription drugs are just too important to our seniors to deny them this relief from the very high prescription drug inflation.

As you know, American consumers are charged the highest prices in the world for some of the same medicines that are sold in other major, industrialized nations at a fraction of the cost. Drug prices in the United States continue to outpace the rate of inflation. A study published just last week found that wholesale prices for leading brand-name prescription drugs rose an average 7.1 percent in 2004, more than twice the general inflation rate. Moreover, seniors are devoting the largest share of their out-of-pocket medical spending to purchase prescription drugs.

The National Committee strongly endorses the Pharmaceutical Market Access and Drug Safety Act of 2005 which would provide significant relief from skyrocketing prescription drug costs. Under S. 334, pharmacies, drug wholesalers, and individual consumers would be allowed to import FDA-approved medicines from Canada and other developed countries with comparable regulatory regimes.

S. 334 creates a regulatory framework for the safe importation of prescription drugs into the United States in a timely fashion. This bill also contains provisions to keep drug manufacturers from restricting drug supplies to foreign nations, or otherwise manipulating Canadian and other markets. We have already seen examples of drug manufacturers attempting to limit the quantity of drugs supplied to Canada in order to choke-off sources of importation and boost prices. It is clear that without provisions to prevent such supply manipulation, importation will not work and consumers will see no relief.

Local governments have already proven that it is possible to import prescription drugs in a safe and cost-effective manner. In the absence of federal leadership, dozens of state and local governments from across our country have designed and implemented their own importation programs, which allow their employees and sometimes their residents to import certain prescription drugs from licensed pharmacies in Canada, Ireland and the United Kingdom.

Springfield , Massachusetts was the first city in the United States to allow their employees to import prescription drugs from Canada . During the first year of the program, the city saved $2.5 million on prescription drug costs for 3,200 employees. A large and growing number of states and cities are currently considering proposals that would legalize the importation of prescription drugs. The time for waiting is over. The federal government should no longer stand idly by while the prices seniors pay for prescription drugs continue to grow at rates far exceeding inflation.

Enacting S. 334 would provide immediate price relief to seniors and would represent a first step toward repairing the many shortcomings of the new Medicare law. But we urge you not to stop there. Drug importation is not a panacea for controlling prescription drug costs—it is but one of the many legislative efforts that are essential to correct the flaws in the new Medicare law. The permanent solution to high costs of prescription drugs can begin with providing the federal government the ability to harness the bulk purchasing power of Medicare's 41 million beneficiaries to negotiate truly lower drug prices.

We thank all the cosponsors of S. 334 for working to give seniors some immediate relief from escalating drug costs, and we urge Congress to pass this important legislation without delay. We hope Congress will take advantage of the bi-partisan spirit that is evidenced by this legislation to correct the remaining flaws in the new Medicare law this year, before provisions begin taking effect that further erode seniors' living standards.

Again, thank you, for giving me this opportunity to discuss prescription drug importation and to share the National Committee's views on the legislation before this Committee. As always, I look forward to working with you on the host of issues impacting America 's seniors.

The National Committee is a nonprofit, nonpartisan organization that acts in the interests of its membership through advocacy, education, services, grassroots efforts and the leadership of the board of directors and professional staff. The work of the National Committee is directed toward developing a secure retirement for all Americans.