tv House Ways and Means Committee Holds Markup on ACA Replacement Bill CSPAN March 11, 2017 12:28pm-1:55pm EST
in open to amendment at any point. at this point, i offer the enemy , theed in substitute nature of the substitute will be considered as read in open to the -- open to it than that at any point. chief now turn it to the of staff on the committee of taxation to provide a description of the amendment. i ask members to hold his questions until after his presentation. hisisturb are told? -- presentation. mister bartold? jcs x 10 and 11 in front of you underlying the nature of the substitute. this document describes to provisions.- two it is an allocated fee for 2017.
it is $4 billion. in 2018, $4.1 billion. it is allocated among manufacturers aced total market sales. the proposal before you would eliminate this fee for calendar years after 2017, effective in 2018. my colleagues have estimated this proposal will lose $24.8 billion over the budget period. the other provision that is part of this -- it is budget reconciliation recommendation relates to the annual fee on health insurance providers. it is
is allocated on total market share. the proposal before you would repeal the annual fee respectively, so effectively it were not apply for any period after 2016. the joint committee staff has wouldted this provision lose 144 $.7 billion over the budget period. that's the close my brief description of the two provisions and would be happy to answer any questions the members might have. >> thank you. any questions about the amendment in the nature of substitutes? >> mr. levin is recognized. information on the on the profitability of the pharmaceutical industry?
>> not at my fingertips, mr. levin. foreign dutch, pharmaceutical industry has been profitable over the recent past. showsave a chartier that -- a chart that shows is 2012tability going back to , does anybody on your staff have the material on that, do you know? >> we have a lot of detailed allrmation across industries. i could prepare some information on pharmaceuticals if you would like. i did not know the committee would want the information. i do not have that act the table here with me currently. >> and the estimate of $24.8 billion is based on what?
>> the estimates for the pharmaceutical industry, remember this is -- i would say somewhat unusual tax structure. it is an aggregate see that is collected industrywide. stated, the sea -- for 2018.1 billion and it is actually $2.8 billion for every year after 2019. the proposal would repeal the collection of those fees. terms, $4.1est billion plus $2.8 billion is repealed pretty and our economic analysis since repealing taxes in one industry affects profitability of the industry,
consumer demand across different industries, there is secondary as general equilibrium so there is some other tax effects with reporting to the committee the total effect on governmental receipts. that is the basis for the estimate of this proposal. it is a similar for the second proposal related to the fee on the health-insurance industry. handy thenot have information about profitability? >> i do not have with me that income earned -- by the industry. isbegin to distinguish, this essentially an at size tax. effectivelyx that
in a somewhat different way that most other excise taxes. >> can you repeat again that we all understand? >> an excise tax on the sales of the industry, the amount anyone company pays is based upon this total and divided across. totally determined by their sales. >> you had to look at the gross sales in order to make this estimate? >> no, it goes to the administration collection of the tax. the assessment is fixed by statute. again, as described on page 2 of see -- feeaggregate on importers and manufacturers, all the covered entity's is $4 billion for the current calendar
for would be $4.1 billion 2018. >> that is the amount said in the statute? >> said in the statute. if the total amount of sales of the industry increases, it assessment4 billion for 2017. if the amount decreases, it remains a $4 billion assessment for 2017. >> mr. chairman, i think it is another indication on why we should have a hearing on this bill. so that we could hear from the pharmaceutical industry what their role was in putting together the affordable care act. and -- it would be interesting
to hear what their role was and wasn't their position is now position-- what their is now formally in regards to this provision. hearingif we had such a , we would find out that backtially this is a gift -- give back -- >> the gentleman's time has expired. any questions about the amendment? >> thank you, mr. chairman. 10:00il now, it is after and we have been on small potatoes. $400 million for the insurance industry. 600 million dollars for the cancer causing entities and now we are into real money. the pharmaceutical industry will get about $25 billion of tax breaks, isn't that right?
reducerepeal would receipts -- >> yes, sir. this industry, you do not have the data at your fingertips per it would not surprise you, mr. barthold, the most profitable industries in the country that report profits of more to 25%? >> i cannot comment on profit rate. the industry in general has been fairly profitable -- >> they are not exactly needy when it comes to tax breaks, are they? they have some the lowest tax rates, effective tax rates, don't they? other tax comment on rates without looking at our data which i do not have available. >> i see. >> idea not know -- >> you are in your testimony
aware that this is a $25 billion with a b tax break and it only is directed to big pharma and not to generics, only to branded pharmaceuticals, isn't that right? >> that is correct. >> companies like pfizer which has almost $200 billion of profits booked offshore. 181 subsidiaries. any tax breaks in this provision for the community pharmacy over of the west aside of san antonio by plaza guadalupe a or community pharmacies around the country? >> i am not quite clear on your question. >> for this special tax provision that the republicans have provided here today, $25
billion for big pharma but there is not a penny for in the community pharmacies in the country, is there? >> as i was explaining to mr. 11, this is like an and size tax internet size tax on the manufacture -- excise tax on the manufacturer. with communitye pharmacies is they do not have one subsidiary offshore to dodge taxes. pfizer has 181. there booked over twitter me a dollars of short -- booked over $200 billion offshore. it seems, aren't these bit former companies able to take advantage of the research and development tax credit were taxpayers are justifiably not portioned a significant of the r&d expenses? >> i am sorry.
i do not catch all of your question. >> we have a host of legal ways for big pharma to dodge taxes and at the same time that air price gouge's people all over this country. pharmaceuticals that just about any other country in the world. it does not relate to this tax break and there is not a penny that a medicare recipient is going to get out of this provision. only a $25 billion right back to the hands of big pharma. this provision resulted, did it not, from negotiations before the affordable care act to begin the legislative process in congress between the obama administration and the pharmaceutical industry in lieu the form industry doing something significant like breaking the medicare price negotiations which would bring down prices and address what president trump calls literally
murder by these pharmaceutical companies. >> i do not know that firsthand. i am aware of the reports after the time that the administration negotiations with multiple industry sectors. >> you are aware of the many comments president trump estimated how our rages jura prices are and the need to work -- out to work -- out rages jura prices are and the need to bring them down. it would be good if you supporting something here. rageousrages -- out drug prices are in the need to bring them down. >> time has expired. >> i want to make sure i understand this book is my understanding is a little different than i have been hearing in the previous conversation. let's do this piece by piece pretty this is a tax on patent
reflected in the purchase price of the pharmaceutical. >> should we help our brothers and sisters understand what an at size tax -- in excise tax? it is woven into the retail? >> that's the way excise taxes work area on the value or specific dollar amount. is myt line of thought fellow members cared about on packet, branded, pharmaceutical pricing. this particular tax would be almost an immediate attachment to that pricing mechanism? thatr economic analysis is the taxes passed through to consumers in higher prices for >> thank you, mr. barthold. whoever, right or left, one of your fixations is the pricing of
pharmaceuticals, you now have an opportunity to vote to lower their prices. thank you, mr. chairman, yield back. what your rep. knight:. >> thank you, mr. chairman. mr. barthold -- so i understand this, there are two parts to this if i am correct. pharmaceutical company fee and the health insurance company fee . $25 billion for pharmaceutical and $145 billion for the insurance company section, correct? >> that's correct, mr. thompson. expenditureion tax unpaid for that comes out of the treasury, the loss dollars and will show up on the debt, the
deficit, the cost to the taxpayers? >> these two provisions lose approximately $170 billion over the 10 year period outside of the context of whatever decision the committee make with respect to the budget, with respect to the legislation. >> for anyone who is worried about our debt or deficit, they should be of concern, correct? own, it would increase the deficit. >> these came about, i recall, during the drafting of the affordable care act. pharma came to congress and said we understand what it is you are trying to do and we understand we are going to participate in this and this is how we believe this would be a fair contribution on our part to this. is we arewe're saying going to give that back and
create this big hole in our budget? >> as i responded to mr. doggett, i understand that there were negotiations with the administration, members of congress, i do not have firsthand knowledge of representations -- >> this is been pharmaceuticals, not the small drugstores. the small mom and pop. home delivery of drugs. small mom-and-pop's that stay open on saturday and sunday to make sure their customers get the services they need or in many cases, carry credit for people in the community. this is big pharma? >> as i noted, manufacturers excise tax and also applies to importers and those industries tend to be larger firms. >> now, $170 billion we do not have unpaid for.
loss ofotal revenue these provisions would be $170 billion. >> the gentleman from arizona was making to the case we were to pass this bill and big pharma was to receive this $170 billion windfall that consumers would see benefit from this because their prices would go down. is there anything in this bill that requires a dollar for dollar gift back to consumers? is no requirement. the economic analysis that i discussed based on market economics. >> so, in fact if this were to theirnd big pharma got to $170 billion, we don't know if they reduce prices by similar amount? clarify one thing so
it does not get confused as we discussed further, the 170 be a dollars -- $170 billion -- >> understand. law,ere's no guarantee in chance to pass an increase or decrease in excise taxes through to final consumers. >> we have no way of knowing if that will happen. they are getting the $50 a peel now. -- pill now. why would we think they would feel like a good fairy and deliver? >> things are not guaranteed. there is uncertainty. >> would it be appropriate to put a provision in this bill that says that if it passed and this $170 billion windfall were to materialize, it would be
reflected in price reductions? >> that is not -- >> that is not his expertise. >> is that something your expert opinion could be drafted and put in the legislature? >> if the members chosen that policy, we would help them draft the legislation. >> time has expired. you are recognize. >> your here back in 2009, right? >> yes, i have been here a while. >> you have spent time around the committee. >> i have. >> tell me what that these things have in common. 10% sales tax on indoor tanning. [laughter] >> easy for me to say.
numeration from certain , business expenses. onating a 2.3% excise tax sale of certain medical devices. -- increase of tax on health savings accounts area a repeal of tax on -- a tax on over-the-counter medications. what do those have in common? >> excuse me? >> what do they have in common? what are they part of? >> they are all part of the affordable care act. >> oh, the all portable care act! what we're doing is repealing those things as they were in the affordable care act. this is not a mystery. everything we are repealing in a it wasll, mr. barthold,
maybe part of the affordable care act or was it? >> it was clearly part of the affordable care act. anything in this legislation we are cutting taxes on like members of congress' salary that was not part of the affordable care act? >> i think there are a couple of modifications related to health savings accounts. >> what are those? >> items from the affordable care act. i think we will talk about it later. the expansion in joint spousal contributions to health savings accounts and -- >> making it better for consumers. -- highdeductible deductible plans. >> that benefit consumers. the point is the tax sections of -- thels we are
provisions of we are repealing in this code were all taken from the affordable care act. >> that is correct for you you are looking at provisions from the affordable care act. on thee went further tanning tax or medical device tax or prescription drug tax, we didn't in any of those. we took the language, all of the ones mentioned exactly as was passed in the affordable care act. >> there is no modification aside from repeal effective after 2017 and in the case of the pharmaceuticals, effective after 2016. and the health-insurance industry tax. >> the point is -- >> identical provisions. >> thank you. for every other question asked
for the reminder of this markup, same.swer is the chairman brady and this side did not come up with ways to tweak different tax cuts. we just went back and repealed all of the taxes that were put in place by the affordable care act. for my colleagues on the left side, i think we repealed and my 2010,60 times in 2012, 2014, 2016 campaigns, i said i was going to do this. it should not come to a surprise to anybody in that chairman brady and the rest of us who have talked about this for seven years are doing exactly what we said we were going to do, which i guess in washington is a best of us -- is a bit of a shock. you.ank
thank you. friend andh my dear colleague. you guys are doing exactly what you said you were going to do. there is no question about that that sprint mr. barthold, in as thef what's we expand nation in health-care costs, what percentage of our gdp does it amount to? where does it stand on among the other nations of the world? >> our health expenditures exceeded that of all of the western -- thef all the nations in world, i think switzerland is the next closest, 11%. do they have universal health coverage? do you know that? is that pretty much true? >> i don't know the swiss system. >> wasn't president obama's ,ntent as people came together until the famous document came
up from the republicans that set block everything it every expense and pull out of any negotiations, even though pharmaceuticals and insurance companies and others stayed and in fact negotiated what they thought perhaps could be fair. i know you said earlier to mr. thompson and mr. levin's inquiries that you heard stories. let's say for argument sake that that is true. points out that there is no surprise here in terms of this repeal and 63 times over six years you have said you are going to repeal it. will not sing replacement and we do not have any cbo numbers on that. we do not actually have the data even though you have struggled tremendously. just an inquiry here. we understand what they are
repealing and mr. thompson was inquiring earlier that 25 billion that we are concentrating on now and in the additional, i don't know amount of money that leaves $170 billion, who does that come from? >> the taxes in each case is in the case of the pharmaceutical industry the manufacturers or importers are the health insurance fee providers as i was explaining so clearly there has to be some guarantee that in this bill it going to be received by the consumer so i guess we can assume when we get this cbo report we will see a subsequent that they will see the consumer, the beneficiary here will receive a deduction of
that amount and they will see their cost automatically dropped down immediately by $170 billion or so. wouldn't that be correct if i'm following the train of thought? taxes, we think that the long evidence is that excise taxes are passed on to consumers. >> we can expect what president trump has said that there is a provision in the bill anywhere for direct negotiations with the pharmaceutical companies like our veterans and military, is that anywhere in the bill, do you know? you tolegislation before repeal press a lot and there are no other changes or extra provisions. as would be reasonable for people to think on our side on this side of the aisle that i
don't know, it sounds to me like on one hand we are he getting these enormous cuts admittedly no question about it and they were huge to fund the affordable care act and now we are giving them back, we are absent this money. where is the cost shifted to? is it shifted to the states? medicaid or the backs of the individuals who were the beneficiaries of these who will have to pick it up themselves? is there reasonable to assume it will happen? >> well, as many people have , the entire endeavor, the plan that you are looking at as present law and thinking, the committee is contemplating today , it is complicated, there are a lot of different moving parts and part of the reason we do not
have the full analysis from congressional budget office at the time. i guess it is too soon to say how it all shakes out. >> the time has expired. mr. rice, your recognized. >> the issue was raised about the percentage of the united states expenditures as a percentage of gdp is one of the highest in the world. has the affordable care act cost any meaningful reduction in the expenditures of health care the >> i amtates over gdp? not positive that the percentage relative to total national income still remains high but i do not have -- i do not have an
accurate answer for your question. >> thank you, sir. if you were trying to design a plan like the affordable care act that would result in insurance premiums dropping for families by $2500 a year as the president said they would, would you do that by paying for it with fees on insurance companies? you're taxing these insurance companies if you're charging them these fees that are being repealed here, aren't they going to have to pass that group to it,umers? >> as i explained the economic analysis is appropriate for the source of fees, excise taxes is like an excise tax and they end up in the price to the consumer.
>> and also the additional taxing by not letting them do. the wages between 500,000 dollars and $1 million like other companies could and that is an additional cost that will probably be passed to consumers in one form or another. >> there is some subtle differences the does raise the cost of compensation. >> so the charge to the pharmaceutical companies that tax like the excise tax that economic forces will be passed onto consumers if they have the insurance policy likely they will pick up some or all of the cost, is that not correct? >> that would include pharmaceuticals. it would include pharmaceuticals. >> i find it difficult to a
-- to imagine that any logical person would think that putting these taxes into a plan like this would result in reduced health care cost but likely they increased the health care cost. is that correct? >> as i have said our economic , analysis is as excise taxes are generally expected to be reflected in the final price of the good service. , >> repeal would offer some reduction? >> that should go in the opposite direction. >> i yield. >> your recognized. >> so let me say i appreciate your patience with us. you are a sounding board where people can work this out you have been fair and honest and balanced and you gave to my friend from south carolina and
arizona, sort of a a typical economic analysis of excise tax. with all things being equal that would be reflected in the price if it disappeared. in a normal market, it would probably be reduced. but do you think that pharmaceutical pricing behaves like typical business pricing competition? can you reflect on that for a >> your question is a good question because the most typical analysis of the excise tax assumes a fair amount of competition so in particular if it is a protected drug you have
created a monopoly. it is still the case the excise taxes on the monopolies generally are expected to be reflected in the price of the product as it goes up and down because the goal as the more competitive market'/firm -- firm's goal is try to maximize profits that is based on the net income from sales but the monopoly markets are different. >> just looking at what the pharmaceutical industry has done extortiontching practices to be undertaken these orphan drugs to jack them up 100 5000% to the point that has caused embarrassment for the people on the boards.
some of the ceos that break -- brag about how they can extort and there is no charitable word for that. it is embarrassing. even president trump thinks there should be some competition going on here. he will drive the prices down. anybody on this panel who thinks there's a normal market for pharmaceuticals and they behave like other industries to pass on those savings is in a dream world.
and you can look at the of outrageous -- outrageous actions taken with long standing medications that are lifesaving to have been on the market in when they can capture the market to drive that it is our regis so they have to structure that charitable gift back with the worst examples but extracted from private payers with elaborate schemes. it is ludicrous to think that they behave like normal this is his and they what not with this disappearance, they were not pocket as much of it as they could with a straight face. and perhaps the only reason they what it is because they think it will be the case where president trump follows through and does something good. lower pricing. happens, but i will offer an amendment to guarantee
this reduction is passed on the consumer. we don't have to guess or rely on the benevolence i think there are great people in the industry . i don't have lots of personal contact with them. but i see so many examples where consumers are abused or the caspers take advantage of an insurance is jacked around and hospitals are challenged to keep pace all because some members of this industry can get away with it. i am going to offer in amendment to make sure they cannot in the 24 point $8 billion. thank you and i yield back. -- $24.8 billion. >> after you question him i intend to strike the last word. and move toward amendments. your recognized. you, mr. chairman.
i have been sitting there quietly and this little exchange woke me up a little bit. termsrthold, so we use for the people is watching across the country, when we say and at size tax's desires to be passed on to the -- excise tax is designed to be passed on to the consumer. it will result in a consumer paying that tax. what is a consumer? >> the final purchaser of the good and service. >> it would be a person, right? the person, the american people that are paying that tax. as i listen to my colleagues on the other side talk about news articles, this great deal they negotiated with pharmaceuticals because the pharmaceutical companies stayed at the white house and cut a deal in order to be part of obamacare, the deal they were negotiating and what's
the deal my colleagues are so proud of that president obama negotiated for the american people was an excise tax that is designed to pass to people for people to pay, not form a. people. isn't that a logical interpretation? >> the excise tax in the statutory incidence is collected in this case at the pharmaceuticals at the manufacturers and it is the economics of the market that it leaves essentially being paid. >> and that is widely accepted economic press bowls -- economic principles that you are offering today? >> that is correct, sir. this great negotiation that president obama did and you deal with the pharmaceutical companies and helping insurance
or whoever you negotiated with to get this bill passed, i don't know if you want to be as proud of that. what you negotiate it was a significant tax on the american people to pay. and so to sit here and say somehow that we are supporting big pharma, what we are doing by repealing this excise tax is and taxes on the american people and with that, i yield back. >> would you like to strike the last word? >> like to ask some questions. can you take a minute and explain how pharmaceutical fees were? -- work? >> certainly. a $4 take 2017 and there's
billion assessment uncovered manufacturers and importers in the industry. the covered entity's army of fractured with the gross receipts from branded drug sales. and we look at the different covered entities and you can, you aggregate up brother sister relation, basically consolidated groups. and then, say what is the amount of your qualifying sales? sales,'s qualifying with c, and those come up percentages off 40%, 40% and 20%. you pay say, group a,
40% of the $4 billion. sobel $.6 billion. group b, 40%. -- $1.6 billion. >> how much it does repealing cost? >> repealing it is reflected in the table of the last page of jcx 10. 40 is billion dollars and roughly $2.7 billion per year. once understand the pharmaceutical industry came and negotiated their feet -- fee. do you think the industry's profits rose because of the expansions that resulted from the aca compared to health-care coverage and prescription drug before the aca? -- i don't have any good analysis on whether their profit
rate rose. their sales may well have expanded and i understand at the time it was part of the argument for the negotiations that sales would expand. >> i would be interested in specific information on that. are some of, what the other provisions that the industry take advantage of? r&d credit, expensive, advertising, repatriation holiday? >> well, 2014 reprints ration holiday is a good debt -- repatriation holiday is a good decade for personal law. pharmaceutical industry claim essentially all any tax benefit that is available to general business. you mentioned the research credit. andmed the research credit
also expands research, advertising expenditures and a general cost recovery provisions that qualified for depreciation. if they are building a factory under present law, one specific extra benefit in the pharmaceutical industry is the extra credit for the orphan drug clinical testing. and i note with respect to the branded pharmaceutical fee that warfarin drugs or not part of the sales tax base. that is one special benefit that is really only available to the pharmaceutical industry. >> so with all of these other provisions in the tax code, the effective tax rate for the industry overall is something of interest. i have heard the average effective rate on the pharmaceutical industry could be as high as 22%, which is from
the 2016 treasury study or as low as 8.85% which is from the 2017 nyu study. what is the actual effective average tax rate? is it as low as 8%? >> is a good a complicated question because what some people talk about ther measurement of industry average tax rate, and they will look at their average tax rate on worldwide income, worldwide taxes. sometimes, they will only look at you as the mexican tax -- a domestic cat -- u.s. domestic tax. sometimes a u.s. source income. not surprise me if the tax rate was that low. expired.as does anybody wish to strike the last word? recognized for the
last word. >> mr. chairman, i have sat on this committee for some time. , the a historic committee oldest committee and the united states congress. this committee is responsible for the united states constitution. when have been many times members have come together to address the needs of the american people. it is with a heavy heart, a very heavy heart, that i say to mr. chairman, today is not one of those days. built that is a betrayal of the public trust. , there's not a single family that has not been touched by seeing -- sickness or injury. insurance for every american is vital.
not care if you are rich or poor, young or old. i have said it before and i will say it again, i believe in my heart of hearts that affordable quality health care is a right. as members of congress, we have a mission and an obligation and a mandate to help those who are left out and left behind. full committee hearing, no meetings, of the american people. legislation is a reflection of our values. the rich, the wealthy, the insurance and the drug companies are the first priority. it is sick. the elderly, the working poor, the working class are not. mr. chairman, this bill texas backwards now for -- this bill
texas backwards and not forwards. there were no hearings. is that why the bill was kept in secret for so long? so you could hide and rush legislation that shows the terrible truth. the facts are clear. our seniors, our children, every working woman and man have to pay the cost further -- for the wealthy and well-connected. if there was ever any question who this republican congress would serve, this legislation should make it crystal clear. few people that have insurance ,ould have medicaid or medicare medicaid would be cut. the sick, the working poor, the elderly would be left out and left behind. if you turn a blind eye and a deaf ear to those who need a hand for chance to get a hand --
to get ahead. in my heart of hearts, i cannot and will not accept legislation that takes from the people and give stability to insurance companies. the american people expect further -- better. thishairman, what committee is doing today is wrong. just plain wrong. i yield back. >> thank you, mr. lewis. mr. levin. , let's haveold further discussion about the formal provision. i would think that most every family, if not every family on this committee has benefited from the breakthroughs on pharmaceuticals. this without any hostility, indy quite to the
opposite of what the breakthroughs in medicine has meant to this country. much of the basic research has nh -- in a age where my beloved wife wants work and we struggle to get money for research for nih. and it is also true the pharmaceutical companies have invested their own talents and resources once there is a development to bring into fruition. i want to say though that to have this provision here, i think first of all is contrary rma's positionha when the affordable care act was put forward. we believe comprehensive care, health reform will benefit the patient's and the future of america. that is why we have been involved in the important public
policy debate for more than a year and why we support the final health care reform bill thethe amendments found in reconciliation of legislation. essentially, what the majority is doing here is giving back to ,he pharmaceutical industry essentially what they agreed to some years ago. mistake.is a serious now, let me talk to you about the discussion we have had about 20 $4.8 billion. first of all, i would like to have placed in the record this , ift on the profits of the think it is an index that comprises and i would like to
have this pharmaceutical entered . >> without objection. you bartholdessed ,, mr. it was interesting because we so respect you. you were pushed, i mean you said it economists expect excise taxes to be passed on. this is not an excise tax, it is a point of purchase. it isn't it like a sales tax when you go in and buy something. as i understand it, this is on the bulk sales. and so i think many, many economists what challenges there is any automatic pass through and i think -- as indicated would put forth an amendment. as we pressed you, you said they tend to pass it on. that was your language.
i think that the more appropriate way to discuss saidmics and then you also there is uncertainty. sayso for people here to when we give back to the pharmaceutical industry, despite they wereort and apart and i can say it first hand of the discussion that led to this bill, this was their part of the agreement. or anybody to say say that we are lowering the tax on the american people, essentially automatically by the passage of this provision, i think isn't sound economic eerie. -- economic theory.
and i think essentially what it is doing is taking very abstract theory west our relationship to the reality because this money that goes back goes into a huge pot that the pharmaceutical companies have. what is passed on is far from automatic. and i just hope and i finish with this as we have further discussions that everyone in your position will be careful to credibility to the notion that this is like when customers go into a retail store to pay a sales tax. that is not the reality here. >> thank you. i do notould take -- believe i ever said that something will automatically happen. i said that economic is that
excise tax do tend to be reflected in the final -- >> tended to be. with that.ree i should note for general understanding that most of the excise taxes with very few exceptions, we impose a federal .evel, are not retail for example, our motor fuels tax is collected will upstream from the gas station where you and i feel of our vehicles. yet, the consistent evidence is that as states and the federal government have changed their excise taxes on motor fuels, that's reflected in the price that consumers pay at the pump. it is not a matter in economic where the excise tax is imposed, it is what happens in the marketplace at the end part >> thank you, mr. barthold.
are there any amendments, amendment in the nature? yes? >> thank you. colleagues, and this $25 billion tax break for the pharmaceutical industry, it is almost amusing to see that it is included under certain consumer taxes. what we have learned through these questions is that this is pharmaceutical for $10,000 and having 10% added on top of that when you get your bill. it is incorporated into the bill. so the pharmaceutical industry agreed to this fairly modest contribution knowing they would get many more customers and business under the affordable care act. they agreed to contribute a small measure to its cost not to bring down drug costs.
now they have this revenue. and anyone who thinks that when is a decade $25 billion windfall , they're going to lowered tro prices and his country by $25 billion is the same person who is going to attend salon is healthy for your skin. it just does not work that way. and we have ample evidence of it it. there's an idea that involved as fremont -- big -- there is an vogue for is back in free lunch and free everything it's called repatriation. we had repatriation in 2004. it was under the fancy title of the american jobs creation act. and so pfizer and merck, two of the companies that will benefit the most out of this $25 billion one fault, they said -- windfall, they said they will create a lot of jobs. pfizer brought back $35 billion
in foreign earnings it had put up short and a paid almost a miracle on the dollar -- a miracle on the dollar. less than the contribution on social security of payroll taxes. and after that and a great job or creator, it did not lower any prices. a deal lower the boom on the and it isd cut out part of job creation and it is at the same kind of action here. the pharmaceutical companies that divulge more earnings to taxes -- advertising inventor research and development. there's is nothing to prevent these pharmaceutical companies from taking the $25 billion and putting more ads on >> they are financing all the
net work news and sports continue tot they spend billions of dollars on advertising and spend less on the research and development that might lead us to cures of dread diseases. president trump as a candidate, and even since becoming president, has spoken out forcefully on this. downs promised to bring drug prices in his words, big-league. he has declared the pharmaceutical industry is "getting away with murder." and has described what he calls costs.mical drug we have to "get the prices way down." anything does not do to bring the price way down. in fact, it will give a $25 billion windfall to big pharma,
but our chairman has correctly told us that they plan to pay for all of these tax bonanzas for these various industries. well, who do you think is going to pay for it? the same people who are having to pay exorbitant drug prices today. they will pay more as their medicaid benefits are cut, as other forms of support for our seniors and families all over this country are cut. they are the ones who will pay for the $25 billion windfall for the pharmaceutical industry. they get it coming and going. they get charge the highest prices in the world, and it is not just one manufacturer. it does not make a difference whether it is insulin, or at the or cancer,itis c these drug regimens are often costing over $100,000 a year, and one recent one for children
come at $750,000 per year. know thatompanies people will pay a fortune in order to get well, or in many cases just to have a few more months to cling on to life. it is wrong. we have been asking this committee to address the problem of exorbitant drug price for months, and it has done nothing. so finally tonight we get their answer to the plight of american families that are victims of price gouging. is pharmaceutical industry awarded to the tune of $25 billion, which those same families will be asked to pay for. that is why it must be rejected. >> thank you. are there any amendments in the nature of a substitute? purpose does the german secret condition? the general and from florida, do
the german for organ is recognized for five minutes on his amendment. >> thank you, mr. chairman. would an amendment that strike the repeal of the pharmaceutical company fee and transfer the revenues to the federal supplemental medical insurance trust fund in order to help finance medicare part b and d. billion take the $24.8 over 10 years and be able to accelerate closure of the donut hole, so the benefits of this goey are in fact going to
beneficiaries out there that we care about, our senior citizens. my slight exception with the notion that pharmaceutical pricing follows theyraditional model that are going to transport those benefits on. i have just three articles that i would ask unanimous consent to put in the record. of a $1000r making hepatitis c pill, focus on profit, not patients. the epipen, we remember the spike done there in terms of what has happened with those wild increases in costs that had gone along for years. there was an opportunity on the part of this company, the price in 2009 was $103.50.
it was $264 50%. -- $264.50. there is no new development. there is no research. they did it because they could. we talked about -- these are the on onehat took a price drug tablet, and they abruptly increase the price to $750 a pill. i come but a few of the examples that everybody on this committee is aware of, or should be aware of, in terms of how the to beous practices here able to squeeze as much profit out, not because they are
behaving according to the traditional models that we would expect and pricing. they are behaving because they don't have to. they can get away with it. you could not do that with an auto dealership for instance. you couldn't do it selling a bike. you couldn't do it anyplace where there is a normal market, that we don't have a normal pharmaceuticals, and the federal government is the largest consumer of pharmaceuticals in the world, and i am hopeful that president trump follows up on his stated intention to try to shake this up a little bit. i think if he does, he will have a lot of support on the side of fromisle, and i would hope some of our republican friends, but in the meantime, i would respectfully request that we go $24.8and take this billion and dedicated rack to people who really need it.
we haven't yet entirely closed that donut hole. it was supposed to be closed in 2020. the sooner we allocate this resource, the sooner we can get our seniors out of this gap drugs -- they ir,e to pay it out of the they messed a 40% for branded, 50% for generic. 4950.they reach the this will enable us to move that forward. >> would you yield for a question? since we have heard from our republican colleagues, probably the pharmaceutical companies are dying to give this money back to consumers. they will help it by doing it for them.
you will use it to help seniors directly, isn't that the thrust? >> the intent is to help seniors directly. aboutt quite as sanguine some of my friends about how the free market operates in pharmaceuticals, and the three articles i have requested unanimous consent -- >> without -- >> give you examples where the public is being gouged. this is a way to avoid it. thank you. i yield back. >> does the gentleman continued to want to reserve his point of order. >> i withdraw the point of order. wish toanyone else speak? the would like for statement of may 25, 2010 to be placed in the record. >> without objection. >> i just want to say one further word.
economists who are listening to this debate, if they are at this hour, will think about what has been said back and forth. that this isotion like the federal gas tax, and that is the model in terms of how it works in the pharmaceutical industry. i think that is a serious mistake. we have bumped into traditional economics for example in the trade world and it turned out that 19th century economics was today 100% wrong. i think for anyone to say, and on qualify it, tends to pass there is uncertainty.
multibillion-dollar is, toy, what ever it assume this 24 billion plus will go to consumers, especially when pharma supported the bill, i think for anyone to say that that is anything automatic or givesto it really credibility to this bill, which it doesn't deserve. talking now about a piece of $600 billion, and i think as others did, this one exemplifies what is frightfully wrong with this bill. it is going to help the very wealthy or corporations in this case which participated in creating aca, while it will end up hurting millions of people who benefited from aca.
i yield back. wishes anyone else to speak on the amendment? mr. chairman, thank you. in september of last year, 10 of us from the committee requested that you hold a hearing on the outrageous increase in prescription drug prices, and i would ask consent to include that communication in the record. >> without objection. have. chairman, i know i been very forceful and asserting concerns about prescription drug price gouging, but i do so after having heard repeatedly from constituents in texas about this problem. i know the problems are not unique to texas, but i think specifically of seniors who would be helped by this amendment so that this money would go into a fund that would benefit them.
seniors like kathy and san antonio who cannot afford her asthma dedication. i heard from george and and send marcos who cannot afford her diabetes medication, which now costs $900 a month. in parts of texas, diabetes is at epidemic proportions, and you see people with amputated limbs because they did not get started on their medication and did not take preventative steps early enough. i think of kathleen in austin andhit the doughnut all can't pay for her medications, one of them cost $171 a month, another one is $322 a month. , whose of betty and kyle husband has parkinson's disease and has a bill of $796 per month , even though she has medicare coverage. members, andand this is a really serious problem. these individuals are the same
ones who do end up having to choose the between prescriptions and food. seniors,a survey of not just seniors, but people 50 and older, and they found that over half of those individuals found costs as a reason for not filling a prescription. medicaid program, this extremely limited in the state of texas. it does not make any difference how many prescriptions your doctor may say you need, and we know many seniors that are taking seven, eight, 9, 10 medications. in texas under medicaid, you get three. that is it. it does not make any difference what your needs are. it is that kind of program that we can even further under this legislation as the state of texas it is given more control over the medicaid program and the amount of dollars going into medicaid is reduced. what we have here is a
government approved monopoly. patentedhat brand it, from the about, and there is a reason for doing that, to encourage innovation am a but that branded monopoly gets extended through various tricks. it enjoys incredible tax benefits already, and it does not have the benefit of competition, and that is why you can charge as much as a sick or dying patient is willing to pay. to give that government monopoly another $25 billion in this bill adds insult to injury. it has been a prose done approach by which we can use those dollars in a constructive an approach by which we can use those dollars and a constructive way, and it would do that without taking benefits, reducing them, to
those who rely on medicare, people just like those that i am referring to that cannot afford to have less medicare than they do today, and less medicaid than they do today. president trump has said he wants not only to deal with the pharmaceutical problem, that that he will stand by medicare and medicaid. we need him to do so with reference to this bill. this bill is about to undermine the security and the safety of many seniors in this country, many people about to become a full-fledged senior, and many working families and children this country. i support the amendment and urged that be adopted. i yield back. >> thank you. wish toone else was t speak? thank chairman, i want to
my colleague for underscoring not only what is important, but in terms of the examples he used in the presentation of this amendment, underscoring for all of us what we have in front of us. amendment would do something that my grandfather nolan would always remind us of, trust everyone, but cut the cards. blumenthal is doing is we have great trust in the marketplace system. in fact, great trust in the genius of american manufacturers, but every now and then you need a reshuffling and a new deal so the consumer gets protected, and here in his proposal, he is making sure this money goes right back to the very people who need it the most. because otherwise, he rightfully
points out not to adopt his amendment, just underscores america's fears that this is not about their health care. it is about tax cuts. that distinction has been made over and over and over again this evening. has givenauer everyone here the opportunity to say because we know that in your hearts you care as deeply about seniors as we do and you want to see when this portion is repealed that that money goes directly back to the very people we all want to help, so with that, i yield back my time and commend mr. blumenauer for his efforts in underscoring the importance of this boat. >> this anyone else wish to speak on the amendment? -- does anyone else wish to speak on the amendment? i will recognize myself.
i was here more than seven years ago when we got that nearly 800 page amendment had midnight and began to vote and to liberate mere hours later. nobody in this room knew what was in the bill, nobody, and it i promises that day. our democratic friends said if we tax that entrance company over there and those small businesses over here, those medical device companies over there, if we will tax families that by insurance, we tax young people who can't afford the everynce, if we tax business that does not comply with the mandate, if you tax carers, your health
costs would go down to her that was a promise, and it failed. they are skyrocketing and continue to increase at remarkable prices. out of pocket costs are unbelievable. people have less choice, can't see the local doctors. it all failed. the question is did all these taxes work to lower health care costs? the answer is absolutely not. this amendment is a defend the status quo, washington business as usual, everything is great with obamacare. of the most sincere people and thoughtful people in this body, but the policy it represents is tax seniors more and pretend it would lower the costs, but all it did and does is increase their costs or medicine. that if we ask the american public, certainly my constituents, you want all
these taxes on people or do want affordable health care? do you want to continue the status quo with all these taxes on everybody, democrats love to tax, or would you prefer more affordable health care? is clear.wer i think people want more affordable health care. that is what this simple, straightforward, 53 page or so bill does. i recognize it is easy to kick the pharmaceutical companies around. that is what this bill was about coming ticking people that are politically popular, but in the ended up kicking seniors and small business people and patients in a really bad way, so i strongly urge that this amendment by my good friend, who by the way i continue to admire so much, i respectfully, strongly urge you to defeat this amendment. question on agreeing to the
minute offered by -- after all-night markup sessions in the ways and means an energy and commerce committees, the republicans health care replacement bill now heads to the budget committee. we spoke to a capitol hill reporter for a look ahead. >> joe williams is cq roll call health care reporter. joel we are him's, what is the budget committee role in the process? and what are some of the key issues they will be discussing on wednesday? >> the budget committee's job is to put together two aspects of the bill, the one within the energy and commerce jurisdiction that deals with medicaid and other provisions, and part of the legislation in the ways and means committee, which deals with the tax credits proposed under the bill. andhen those are combined put together, the house budget committee will vote on that, and after it clears that panel, it can then be taken up by the house floor.
talk about the process after it leaves the rules committee and heads to the house floor. what our house republican leaders doing and the white house to lobby members in favor of the legislation? members, morese conservative members, who have expressed trepidation if not opposition to the proposed bill? >> right now you are seeing notablynd criticism, the house freedom caucus and the house republican committee. a lot of their concern center around the medicaid provisions, end specifically when th bill proposes to in the obamacare medicaid expansion. they would like to see it end in 2018. it remains to be seen whether speaker ryan is amenable to making those changes in the bill. mixed messages coming from both the white house and congressional leaders.
some oft trump met with the house freedom caucus members, and they left the meeting indicating that trump was open to negotiation on the bill, while house leadership is sending signals that this text is pretty much final, and even leaderhe house majority kevin mccarthy said it would be difficult to change the medicaid provision specifically at this point. debate isg all that joe williams with cq roll call. you can follow his reporting on twitter. thank you for joining us. >> thank you for having me. coverage ofore live the house budget committee markup session wednesday on the c-span networks. while the president spends the weekend that the white house, vice president mike pence travel to kentucky today to talk about the republican health care replacement bill. he spoke to employees