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United States Department of Health & Human Services

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Mike Leavitt, Secretary of Health and Human Services


University of Colorado School of Pharmacy


Tuesday, April 19, 2005

Drug Safety, Social Security

Thank you, Dean Diamond.

Please write down two numbers for two years. For 1960, write 880. For 2003, write 5700.

Those numbers are the dollars Americans spent per capita on health care during each year, adjusted for inflation.

In 1960, 5.1% of GDP was spent to buy health care. In 2003, that number had tripled to 15%. Obviously, health care spending can grow faster than the economy for a while, but can never overtake it. Something has to give.

Just one part of health care, Medicaid, is growing faster than public education. While I was governor of Utah, Medicaid grew from single digits to 22 percent.

In order to fix this situation, we need to make some structural changes to our health care system.

We need interoperable medical records that protect privacy.

We need to deploy the latest technology in hospitals and wherever else we can. Let me tell you a story that illustrates why this is so important.

A few weeks ago I visited Montefiore Hospital in New York. It�s a wonderful hospital that has embraced health information technology and realized its potential.

At Montefiore I met a man named Caeser Baez. Caeser�s a sick man. He�s 60-something years old and has heart condition. This condition has kept him coming back again and again to the hospital�in fact, he�s spent a lot of his life there. And while everyone I met at Montefiore was absolutely wonderful, and the hospital itself was top-notch and very modern, no one wants to spend all his time in a hospital rather than at home with the family.

So last year Montefiore decided to try something new. They gave Caeser a device called a Cardiocom. Cardiocom is a special scale that transmits his weight and other health information to Montefiore. It asks him questions, makes sure he hasn�t forgotten to take his medicines, and reminds him of what he needs to do to stay healthy and out of the hospital. And if it detects that he may need some help or that his health is deteriorating, it lets tells his nurse back at the hospital whether she needs to call Caeser, have a doctor visit him, or have him come into the hospital right away.

When we spoke, Caeser couldn�t speak highly enough of Cardiocom and how it�s changed his life. He hasn�t had to go into the hospital for almost a year�and that means that everyone saves money. And more important, Caeser is happier and healthier than he was before.

Caeser�s not alone in wanting to live at home. As our population ages, we need to adjust to accommodate. Long-term care is our future, because demographics is destiny. And home- and community-based care are a major part of the solution.

We need to pay more for performance and focus on wellness and quality of care. We need to change the way health care is paid for and change the way we buy insurance. We need to address chronic diseases.

And my guess is that there will be no area that will change more in the next decade than that of prescription drugs. Hand-written prescriptions will become a thing of the past. Interoperable systems will create efficiency.

We�ll have a better system of monitoring drugs once they�re on the market. As I took office, I watched debates over post-market surveillance, particularly with Vioxx, and have concluded that our monitoring has been entirely too passive. We need to funnel adverse drug reports to one place.

We have many excellent and independent scientists conducting the work of the Center for Drug Evaluation and Research. They work hard to make wise and prudent decisions about the safety and effectiveness of drugs. But some drugs deserve approval even as they need further monitoring and study. To make sure these further issues get the attention they deserve, I recently announced that we�re creating a Drug Safety Oversight Board. This board will oversee the management of important drug safety issues on behalf of the CDER Director.

I believe that the personalization of medicine, based on genetics, will expand and disrupt the drug market just like the Internet expanded and disrupted telecommunications. Our capacity to detect small groups of adverse affects will improve.

Some Americans are buying prescription drugs from websites based in foreign countries. But they may not be getting what they think they�re getting. Boxes and packaging are easy to imitate. And if you buy drugs from overseas from an unknown pharmacy that falls outside the oversight of states and FDA, we do not assure their safety or efficacy. So don't judge a drug by its box. Judge it by where you bought it.

Let me mention one example that we have with us here. An FDA experiment purchased drugs from a company in Belize, whose website sported a prominent Canadian flag and the name Canadian Generics. The investigators bought drugs advertised as generic Viagra, generic Lipitor, and generic Ambien. These are all prescription drugs with no generic version approved in either the U.S. or Canada.

All of the pills contained some amount of active ingredient, but, among other significant problems, two-the Viagra and Lipitor-were subpotent and one-the Ambien-was superpotent. The Viagra tablet says 100mg, but contains 50mg. The Lipitor says 20mg, but contains only 10 milligrams. In the other direction, the Ambien label says 10mg, but when you analyze the pills, you find 15 milligrams of the active ingredient. These drugs are right here in this room, if you want to look at them.

Now, many of these types of products may from legal, taxpaying companies in other countries with lower quality standards than Americans are used to. Before Americans consider buying drugs from abroad, they should remember the maxim: buyer beware.

That�s just one example of imported drugs that have raised concerns about safety or quality. I think drug counterfeiting is a growing problem. Most of you are aware that we work hard in the United States to create an environment of protection that not everyone in the world enjoys. But foreign producers are bombarding our system, trying to get in.

President Bush has charged me with ensuring the safety and efficacy of the drugs Americans take. I simply cannot vouch for drugs manufactured or handled outside of the Food and Drug Administration�s purview. In fact, I have many concerns about them. So I would not recommend that anyone buy them.

Some of the greatest advances in health care are in medications. Many of them treat illnesses that were once untreatable, or provide a less invasive alternative to surgery. I�m proud of you for deciding to become pharmacists. You�re devoting your careers to helping people get healthy and stay healthy. More important, you will help them understand their prescribed therapy and use their medications properly.

Most of you are young enough to have parents and grandparents still living. You�ve learned a great deal about how drugs can improve and enhance their lives. I�d like to talk with you about a few more things that can help them.

How many of you talked to your parents about Social Security? How many have talked about Medicare?

The first thing to tell them is that you love them. The second is that they don�t need to worry about the solvency of Social Security. Americans who were born before 1950 have nothing to worry about. Social Security will pay them the benefits they are expecting, no matter what. No one is proposing to change that.

The third thing is that this fall they should enroll in the new Medicare prescription drug benefit that goes into effect on New Year�s Day. For the first time, Medicare will cover outpatient prescription drugs. This will be a great help for millions of seniors. Those seniors most in need will pay almost nothing.

Now, remember, your parents and grandparents don�t need to worry about Social Security. That�s the good news. The bad news is, you do need to worry about it.

There is a time in the life of every problem when it is big enough to see and small enough to solve. For Social Security, that time is now.

I am a trustee of the Social Security system and the Medicare system. And we had our trustee�s meeting a few weeks ago. One Social Security official opened his remarks by saying �Social Security is unsustainable.� In 2017, Social Security will start paying out more money than it takes in. We all know what happens when you start paying out more than you take in. To make the Social Security payments people are expecting 12 years from now, Congress will have to divert money that other programs are expecting.

To see why this program is unsustainable, let�s look at what Social Security is and how it came to be.

In 1935, Congress created a safety net called Social Security. It was designed to ensure that people who didn�t invest for the future, who lived much longer than expected, and whose children couldn�t afford to support them would be taken care of. In 1937, the government started collecting Social Security taxes from workers and giving the money to older Americans.

Some people think of Social Security as a savings plan. But it�s not. It�s a pay-as-you-go safety net. Money is taken from workers and given directly to seniors.

When the system began, the payroll tax was 2% of the first $3500 of each worker�s wages. The maximum any worker had to pay in Social Security taxes was $70 a year. (Of course, the dollar has lost much of its value since 1937, so that equals $949 in today�s dollars). 40 workers paid Social Security taxes for every one who took benefits.

The first American to receive monthly benefits, Ida May Fuller, paid $24.75 in Social Security taxes and received $22,888.92 in benefits.

Things changed over time. By 1950, there were only 16 workers supporting each Social Security beneficiary. Today, there are only 3.3 workers supporting every Social Security beneficiary. By the year 2030, when I retire, there will be only 2 workers for every Social Security beneficiary. That�s quite a change, from 40 workers to 2.

As the ratio of workers to beneficiaries continued to decline, Congress repeatedly raised the tax burden on each individual worker. Today, Social Security takes 12.4% of the first $90,000 of a worker�s income from the worker and the employer. ($11,160; almost twelve times as much, in real dollars, as the maximum when the system started). And the system is still unsustainable.

There�s a time in the life of every problem when it is big enough to see and small enough to solve. For Social Security, that time is now.

Can we solve the problem by raising taxes? No.

Congress has already increased payroll taxes more than 20 times since 1935. Raising taxes hasn�t fixed the problem, and continuing to raise taxes will never make Social Security a sustainable program.

Higher taxes hurt the economy. Higher taxes make it harder for you to save, harder for you to invest, harder for you to buy a house, harder for you or your children to pay for college, harder for everyone to buy health insurance, and harder for all of us to leave money to our children.

Before long, most of you will be working hard to support your family, pay off debts, and save for the future. In addition to buying food, clothing, and shelter for your family every month, you�ll also need to pay for a third to a half of a senior�s Social Security check.

Social Security as we know it is unsustainable for your generation. We owe it to you to solve the Social Security problem before it�s too late.

As you all know, we�re engaged in a great national debate about Social Security. The President is open to all kinds of suggestions. Anybody can contribute. Because everyone has a right to earn a living and save for retirement.

I look forward to your questions.

Last revised: May 23, 2005


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