WASHINGTON, DC – United States Senator John Sununu (R-NH) delivered the following remarks regarding the “Pharmaceutical Advertising and Prudent Purchasing Act” (S. 1128) on the floor of the United States Senate on May 26, 2005. The legislation, which he introduced with Senator Ron Wyden (D-OR), aims to reduce taxpayers’ costs for commonly advertised prescription drugs purchased by Medicaid, Medicare, and other federal programs.

“I am pleased to join Senator Wyden in the introduction of this legislation, which is a good-faith effort to try to find that fresh approach Senator Wyden talked about, a fresh approach to deal with costs in health care, specifically in those areas where the federal government is directly purchasing pharmaceuticals: in the VA, where we have a very large direct purchase program that exists today, and within Medicaid, where both the federal government and the states are directly involved in purchasing and negotiating the pricing of drugs.

“We are focusing on direct-to-consumer advertising. This is an area where activity and cost have exploded over the last 6 or 7 years. Since 1997, when the federal government changed the regulations associated with direct-to-consumer advertising, we have seen advertising outlays for pharmaceuticals go from a little bit over $1 billion to nearly $5 billion per year this year. Those costs, as any costs would be, are passed on to consumers. In the case of these programs where the federal government is purchasing the pharmaceuticals in the VA and in Medicaid, that means that the cost, the impact, is disproportionately felt by the taxpayer.

“This is an effort to try to find a way to reduce those costs, to give the federal government the power to make a distinction, as they negotiate prices – to make a distinction between those drugs that are advertised directly to consumers or marketed directly to consumers and those that are not, and to provide discounts to those companies or those drugs that avoid the additional costs of advertising.

“This advertising, as I say, is expensive. The cost is passed on to taxpayers in these particular programs. I think there are also a lot of questions about the value that a flood of advertising might provide.

“We have all been inundated by different types of advertisements, on TV or in magazines. It is costly, as I mentioned, but it also carries with it some risk of over-utilization; of, in some cases, encouraging or leading consumers to believe that they need or would benefit by a particular medicine when it is not necessarily the best approach for them.

“In some cases it is clear this advertising has been used to drive consumers away from lower priced generic drugs. I think this is one of the most problematic areas, and that has been seen and discussed at some length in the states, in their Medicaid programs.

“This legislation presents an opportunity to get our hands around the cost issue, to fund some important studies, to take a closer look at questions of over-utilization and the substitution I described. It represents a good start, I think, opening the debate with this discussion about dealing directly with health care costs in areas of the federal government as the principal purchaser.

“There may be other options. In fact, Senator Wyden and I talked about a few other approaches that are not included in this legislation. I think I can speak for the Senator from Oregon when I say we look forward to talking to our colleagues about other ideas that might be out there. We look forward to sharing ideas and information with producers themselves who, I hope, are willing to look at ways to help save the consumers money, help save taxpayers money, and help deal with direct-to-consumer advertising in a more responsible way.

“We are going to do a Medicaid bill this year in the Senate. While we also deal with some issues at HHS and the VA in this bill, certainly the costs associated with Medicaid and our recommendations with regard to Medicaid are a central part of the bill. I will work with Senator Wyden and any of my interested colleagues to try to include and capture some of these ideas in Medicaid legislation this year.

“It is a great opportunity to look at the issue of health costs and drug costs in a fresh way, in a different way. I very much appreciate the work Senator Wyden has done in helping to craft this legislation and his willingness to lend his strong support, as a longstanding and more senior Member than I, as a member of the Senate Finance Committee, and as a Member of the Senate on the other side of the aisle.”

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