properly balance consumer access and consumer protection. Some were troubled by FDA's alleged bias against supplements-citing, for example, FDA's delay in approving a health claim for folic acid and prevention of birth defects. However, others were troubled by FDA's lack of regulation and enforcement over products on the market that may be unsafe or labeled in a misleading or fraudulent manner. What became clear was that the Congress has failed to give consistent direction to FDA over the years on regulating dietary supplements.

b. Benefits. The subcommittee's hearing made clear that access to dietary supplements that provide promising health benefits can contribute much to public health. At the same time, consumers need to be protected from harmful products and fraudulent claims. FDA is expected to carefully weigh these concerns as it continues to develop its regulations for these substances.

c. Hearings. The hearing on "FDA's Regulation of Dietary Supplements," was held on July 20, 1993.

5. The Farm Industry's Use of Alternative Agricultural Practices and its Effect on Food Prices.

a. Summary.-In June 1993, the National Academy of Sciences and the Environmental Working Group reported that pesticide residues were widespread in the U.S. diet and were consumed regularly by most Americans, including infants and children. Environmentalists warned further that America's food supply was not safe from the dangers of pesticide residues (indeed they concluded that it is possible that Americans eat pesticide residues at every meal) and that millions of children in the United States receive up to 35 percent of their entire lifetime doses of certain carcinogenic pesticides by age 5.

The health and agricultural problems associated with pesticides have increased pressure on the farming industry to switch to alternative agricultural methods that reduce or eliminate pesticide use. The subcommittee examined several alternative methods-biotechnology, integrated pest management, no-detected-residue certification, and organic farming-and the effect widespread use of these methods would have food prices.

In July 1993, the subcommittee held a hearing with experts in the field and representatives from the food industry who indicated that if alternative agriculture was implemented on a large scale, food prices would not necessarily increase. The subcommittee also received testimony from the Departments of Agriculture and Health and Human Services regarding their programs that encourage the food and farming industry to utilize alternative agricultural methods. Subsequent to the subcommittee's hearing, the administration announced a triagency program to reduce pesticide use and promote alternative agriculture.

b. Benefits.-Congress is now engaged in ongoing legislative reform of pesticide residues in foods and developing programs at USDA to encourage alternative agricultural methods.

c. Hearings.-A hearing on food safety was conducted on July 27, 1993.

77-123 - 94 - 6

6. Medicaid Fraud-Prescription Drug Diversion.

a. Summary.-The General Accounting Office estimates that approximately 10 percent of our total health care expenditures, public and private, are lost to fraud and abuse. In fiscal year 1991, that translated into a loss of approximately $70 billion. The loss to fraud and abuse in the current fiscal year could reach as high as $90 billion.

Medicaid, permanently authorized by title XIX of the Social Security Act, is a Federal-State matching entitlement program providing medical assistance to approximately 30 million low-income recipients. Each State designs and administers its own Medicaid program, setting eligibility and coverage standards within broad Federal guidelines. Federal oversight of the Medicaid program is the responsibility of the Medicaid Bureau in the Health Care Financing Administration [HCFA] within the Department of Health and Human Services.

In a report to this subcommittee on prescription drug diversion dated August 2, 1993, the General Accounting Office found that in 1991, prescription drugs accounted for 7 percent of Medicaid spending, $5.5 billion, more than any noninstitutional program benefit. It accounts for 80 percent or more of all Federal spending on prescription drugs. By 1996, prescription drug benefits are expected to reach $10 billion, nearly double the 1991 figure. In Florida and Texas, the recent rate of increase has been even greater, with expenditures more than doubling between 1987 and 1991.

During the past decade, an unprecedented crime wave of fraud has emerged within the Medicaid program. This fraud includes organized networks of colluding doctors, pharmacists, and middlemen. These so-called pill mills have victimized major urban areas. In one variation of this scam, physicians operate out of store front offices, for the exclusive purpose of exploiting the Medicaid program. Physicians write unnecessary prescriptions, and bill Medicaid for unnecessary tests. The pharmacist bills Medicaid for the filled prescription. The patient then sells the unneeded drugs to a middleman, who will resell the prescription back to the pharmacy. While nationwide data are not available, 20 States and the District of Columbia identified significant problems involving drug diversion in the Medicaid program. New York's social services department estimated that in 1990, pill mills and related schemes cost them at least $75 million-about 10 percent of the State's total Medicaid expenditures for prescription drugs. GAO found that pills 50 cents at the pharmacy can be sold on the street for as much as $85.

The GAO found that the problem of drug diversion in Medicaid persists for several reasons: Medicaid agencies typically do not have data available that are accurate, complete, timely, and in a convenient form to highlight aberrant billing or referral patterns. Both State and Federal officials cite a lack of adequate resources as the primary reason their efforts have failed. In Florida, the Medicaid fraud control unit rejects more than 90 percent of the State agency's referrals because of its own staffing constraints. Sanctions and penalties are light.

Given the budget constraints, additional funding will be difficult to achieve. Thus, it is imperative that we make the best use of

available resources. The Health Care Financing Administration should develop an overall strategy to address prescription drug diversion. One key element of such a strategy might be the designation of a unit with HCFA responsible for evaluating the performance of State agencies, and providing guidance and technical assist

ance.

b. Benefits. If the Health Care Financing Administration creates an office with the responsibility for coordinating Federal and State efforts at preventing Medicaid fraud, we estimate that at least $10 million could be saved within the Medicaid program.

c. Hearings.-The subcommittee held a hearing on "Medicaid Fraud-Prescription Drug Diversion," on August 2, 1993.

7. Review of the National Cancer Institute's Cancer Prevention Program.

a. Summary. By the year 2000, cancer will become the leading cause of death in the United States. In 1993 alone, nearly 1.2 million Americans are expected to be diagnosed with cancer and 526,000 will die from cancer. The costs of treating cancer have doubled since 1985, from $72 billion in direct and indirect costs to $147 billion annually (over 2 percent of the GNP).

Despite the increasing rate of cancer during the last decade, the National Cancer Institute [NCI] devotes the majority of its resources to treatment and curing cancer. Prevention remains a low priority. Accordingly, out of a $2.142 billion budget request for fiscal year 1994, NCI asked for $137.9 million to be appropriated for its cancer prevention and control division-just 6.4 percent of its total budget.

NCI divides prevention into several categories; primary prevention being the only one aimed at intervening before the cancer is contracted. The subcommittee investigated two areas of NCI's primary prevention activities: Diet and environmental contamination. NCI estimates that approximately 35 percent of all cancer deaths may be preventable through a more nutritious diet. According to NCI, dietary factors may account for a greater proportion of all cancers occurring in contemporary western society than any other category of environmental exposure. The subcommittee investigated NCI's cancer diet and cancer prevention activities through a series of document requests and a congressional hearing.

The hearing was held on the first day of the national 5-A-Day week sponsored jointly by NCI and the Produce for Better Health Foundation. The project was designed to encourage Americans to eat five or more servings of fruits and vegetables every day as a way to prevent cancer and is the largest public/private enterprise ever undertaken by NCI for cancer prevention. It is also NCI's largest diet and cancer prevention outreach program.

The subcommittee also investigated NCI's cancer prevention activities with respect to environmental contaminants and industrial carcinogens through a series of document requests and a field hearing on Long Island. The subcommittee looked at NCI's role in testing the carcinogenicity of pesticides, organochlorines, and industrial carcinogens. NCI and the National Institute for Environmental Health Sciences have recently begun research on the carcinogenicity of hair dyes, exhaust fumes, pesticides, electro

magnetic fields, and cellular phone use. Because the research is so new and many tests have not been completed, there is a significant amount of incomplete data and speculation.

The subcommittee found through its own investigation that only 10 percent of the nearly 400 billion pounds of industrial carcinogens produced annually have been adequately tested for carcinogenicity. Of the 120 carcinogens identified in experimental animals over the last two decades, less than 10 percent have been subjected to epidemiological study by the NCI or by industry. The subcommittee intends to report to the full committee the results of its investigation.

b. Benefits. The subcommittee's field hearing on Long Island on environmental contaminants compelled NCI to expedite and increase funding and personnel for a study on the link between environmental contaminants and breast cancer on Long Island.

c. Hearings.-Hearings on NCI's cancer prevention activities were held on September 13, 1993, and October 30, 1993.

8. The Financial Ability of State and Local Governments to Implement Health and Welfare Reform.

a. Summary. Over the last 10 years, many State and local governments have experienced an unprecedented loss of revenue, particularly in major urban areas. Several recessions, and the exodus of businesses and middle class taxpayers, have further reduced revenue growth. Simultaneously, there has been an increasing demand for social programs, at a time when the Federal Government has reduced its level of funding to State and local governments for such programs. These conditions will make it difficult for many State and local governments, particularly many poorer jurisdictions, to implement health and welfare reform in the absence of adequate Federal funding.

In testimony before the subcommittee, the General Accounting Office found that from 1985 to 1991 State and local governments faced a dramatic decline in revenues at the very time when spending requirements particularly health care spending were increasing. For example, Medicaid now represents 17 percent of State spending. Medicaid spending now accounts for substantially more than is spent on higher education and in a few years it will approach the 21 percent States spend on elementary and secondary education.

During the 1980's counties experienced a 105 percent increase after inflation in general expenditures for health and hospitals. Spending on health and hospitals now constitutes 17 percent of an average county's budget.

On the revenue side, growth in the gross domestic product, dropped to 2.5 percent in 1989 and continued to a recessionary low of negative 1.2 percent in 1991. At the same time Federal grants for capital projects and other general operations declined, while voters in many jurisdiction showed a reluctance to increase taxes. The GAO found that these budgetary constraints have had a devastating impact on many poorer jurisdictions-that is, those with relatively high poverty levels and low incomes. These jurisdictions have less capacity to finance their police, fire, and other services at average levels because of their relatively low tax bases. The

GAO also found that over the past two decades, the poorer cities experienced a deterioration in the levels of basic services they could afford while the better-off cities improved.

The GAO concluded that unless this trend is reversed, residents of the poorer States and cities will be left further and further behind those of better-off communities in terms of receiving services at reasonable tax burdens. This means that in the short run, it will be virtually impossible for these areas to successfully implement major new investments programs such as health care and welfare reform, without significant funds from the Federal Government. However, in the long term reform of our health care system will be crucial for restoring the economic viability of State and local government.

In addressing the problems of health care reform and welfare reform, it will be critical for the administration to consult extensively with State and local governments in the design of these programs. We need an accurate projection of the cost to State and local government for implementing health care and welfare reform.

b. Benefits. Health care and welfare reform will not succeed unless the ability of each State and local government to implement these initiatives is clearly assessed, and appropriately funded. c. Hearings.-A hearing was conducted on October 6, 1993.

9. Cancer Screening and Early Detection Guidelines for Cervical and Breast Cancers.

a. Summary.-The Clinton health plan proposal has generated a fair amount of controversy in the women's health and medical communities about how often women need to undergo cancer screening to significantly decrease mortality rates from cervical and breast cancers. The current health care reform proposal limits coverage for mammogram for women over 50, despite the American Cancer Society's recommendations that periodic mammography testing should begin at the age of 40. The proposal also restricts coverage for pap tests to once every 3 years after three annual negative exams despite the National Cancer Institute's ["NCI"] recommendation of annual pap tests for all women. The subcommittee reviewed the adequacy of these screening proposals as well as NCI's recent revision of its breast cancer screening guidelines in conformity with the health care proposal.

An estimated 13,000 women develop cervical cancer each year and approximately 4,500-6,000 die from it annually. Cervical cancer is 22 times more prevalent in African-American than in white women. However, since the introduction of the pap test, which detects cervical lesions at a precancerous stage, the rate for cervical cancer has fallen 75 percent. The pap test is relatively inexpensive, easily administered, internationally recognized as the most effective screening tool available to detect cervical cancer. The Public Health Service holds the pap test as one of the greatest successes in cancer control.

Approximately 1.5 million cases of breast cancer will be diagnosed this decade and an estimated 500,000 women will die from breast cancer. In 1990 alone, 44,000 women were expected to die of breast cancer. Breast cancer is the second leading cause of can