opinion is that's an institution that's much more highly regarded for its professionalism and by the same token it's honesty than it was five years ago. if we can get to that level in the 32 state and hundreds of municipal institutions, i would suggest so all of you, ladies and gentlemen, that we've made serious progress. ..

has come over our neighbor and is now in building these wonderful people i would suggest that law enforcement basically what i'm hearing today is law enforcement is going to be the answer i will just have to suggest to you i don't think that's the case i don't think you are going to solve the problems of the law enforcement. we have been trying to bolster we have had military groups that we've bolstered and have turned against the authorities and trained the cartel's we've had for 20 years now been trying to suggest the cooperation of all

enforcement can solve the problem but it's gotten worse and worse. let me ask about something that was just brought up. did any of your agency's know about the fast and furious operation that saw thousands of military-style weapons transferred from our government into the hands of the cartel including high caliber sniper rifles? did any of your organizations know about that operation as it was going on and as it was being instituted? did you personally know about it and did someone in your operation know about it? >> i did not to the best of my knowledge no in my part of the u.s. government. >> no one from the bureau of the national narcotics and law

enforcement knew about fast and furious in your testimony today? >> i became aware of it at the same time. >> what about drug enforcement administration? >> congressmen, we are working with those committees that are investigating that matter at this time that would be the comment that i would meet. >> so your comment is that you were not going to comment on a direct question about whether or not you're agency knew about fast and furious? >> my comment would be that we are working with those subcommittees that are investigating fast and furious. >> this happens to be a member of congress interested and you are now under oath so you could answer the question for me. >> i find that to be of great

interest, but your predecessor just spoke, mr. brown's field can go on record that he didn't know anything about it and you cannot. do you know anything of fast and furious? >> i knew when it became exposed to all of you and in terms of my office i can say that no one in my office knew. >> you personally did not know anything about nor did anyone in your office as far as you know? i appreciate that. i just want to put that on the record mr. chairman. i voted for nafta years ago based on the promise that nafta would in some way help the economy of mexico and thus prevent or offer an alternative to this drugs as being a way of

earning a living down there. did nafta have a positive impact , and can we make these economic agreements and expect that they will have a better impact of elsewhere than they have on mexico and feel free could occur whoever thinks can answer that. >> we are not the right people to answer that question however my wife says there's never an issue i shouldn't talk about so i will offer simple and views i spent three years in colombia actually trying to make a case for the fda which is finally found its way to this institution, so i will make that basic genetic case. free trade agreements for the most part are good for the economies of both countries involved, good for the economies of both countries involved because they allow the commerce -- >> can you compare that to mexico? degette the end of the day i

don't want to cling to be an expert on nafta but i would say to you that the logic is by removing any of, you know, the cost of moving goods back and forth across the border you produce more trade by producing more trade, the factories and companies produce more stuff as they produce more stuff the employ more people and as the employ more people their economies grow. the logic therefore is the economy grows on both sides of the border. that's the logic behind the free trade agreement. >> it's gotten worse in mexico since we passed nafta. unfortunately. that's just the observation. it's inescapable to see that. well listen, thank you very much mr. chairman. >> i thank the gentle in from california and i would like to recognize mr. duncan for five minutes for questions. >> thank you mr. truman and i think we've done a good job of exploring this topic today and i want to thank the panelists for being here and for your service to the nation in your various capacities. i will take a different line of

approach because it is a topic that is interesting to me. i know that we've talked about many times on the committee of homeland security and that is the issue of the international terrorist organization of hezbollah and its involvement with the mexico drug cartel. many believe the international terrorist organizations of the mexican drug cartels have been working together for years and the drug cartels have cooperated in countries in western africa, south america, central america most importantly gullickson the form described the team of international terrorism or for more discipline than al qaeda best financing from the government of iran and syria and the global network of operatives who could be called on to watch an attack at any time. just last year in july of 2010 we saw the first explosion south of siskel cit thousand eight the

international network of drug traffickers and money launderers have been arrested as part of an international operation coordinated by the dea. so, i can go on and talk about the owner of a cafe in tijuana the rest in 2002 who traveled all the way to dearborn michigan and spent years in prison for conspiring to raise money for as a law. there's just a lot of cases. so i would ask how much of a prayer ready should hezbollah be to the counterterrorism policy? >> as we look at the tie between the drug trafficking and terrorism and we see that around the globe for the dea is a pretty the we look to those organizations, and we continue to look at their connection across the globe.

is to begin your activities with the dea and thank you for serving the region of south carolina where i'm from by the way i forgot to mention that comes your activities with the dea is there any conclusive evidence of hezbollah's involvement with the tunnel and activities of the cartel? >> i would say a general statement on the link between the drug trafficking and terrorism does exist. i don't necessarily see that to a great degree with the mexican cartels but other locations around the world where we see light in afghanistan or places like that. >> mr. ambassador, i know in south america in your service the border region how much of it was put on that area during your time in south america and in chile and also columbia?

>> you may have left out the third one that has the greatest focus and the would be venezuela. congressman, i believe you are absolutely dead on the right to be focused on hezbollah as a potential threat. second, if hezbollah were to develop operational capabilities of the western hemisphere that would be one major serious problem for the united states of america. third i believe as we look at hezbollah we have to break into two parts. one is the kind of fund raising possibilities that they have and i actually think that there is evidence of that in a number of countries in south america. the second part of the threat is operational capability. i get this stage do not see operational capability by hezbollah in the western hemisphere. that said, i do not focus on this issue for a living. there are others who do that and would be far better not highest

to get an opinion from them than from the guy who does organized crime and law enforcement. >> thank you for a much. would you like to china on this issue at all? >> i think it's been covered by my colleagues we are constantly looking for our intelligence analysis branch for those kind of linkages or for any indication of those kind of linkages and we will continue to do so. >> i yield back the balance. >> i would like to recognize mr. rivera for five minutes for opening questions. >> thank you very much mr. chairman and to all the witnesses for being here today. i want to try to hone in on this issue of mexico and its ability to carry out primary responsibility in protecting its

citizens and also the impact that the diversification of productivity and criminal organizations in mexico with other types of criminal insurgencies against the state may be developing and whether they are making headway. i wonder if perhaps all three of you could comment your thoughts on the drug cartels and whether they have drug cartels in mexico and whether they have indeed diversified into a variety of illicit activities and maybe we can start with secretary bromfield. >> sure, congressmen. i will give you my answer filtered through not just my experience of the past year dealing directly with the merida issue in mexico with the prior three years when i was in colombia. as i suggested in an earlier answer i believe what is happening in mexico is the

larger cartels are taking serious hits. they are breaking up to a considerable extent. there are now more organizations but smaller in nature, less national and nationwide in scope and more regionally focused, so whereas previously you would have had x number you now have maybe three times as many but each one of those organizations is smaller. >> would you agree as well as their illicit activities have moved beyond just the drug trafficking? >> first think the expanded their drug-trafficking in terms of what they are willing and able and capable of doing. it's no longer just cocaine. if the kelso make money out of methamphetamines come out of heroin koppel or other products they do. they can use the same institutions and logistics systems to move products if they are using it in a criminal enterprise to a certain extent

it doesn't matter what is in the truck the plea in the boat for the backpack if they can make money by moving at the can and they will and to that extent i suppose my answer to the question would be yes i do see some signs of diversification. >> administrator been some, your thoughts of there's been lots of illicit activities or the evolution of illicit activities? >> we have seen the same evolution as well. i mean, the transition to free period of time from marijuana traffickers to cocaine. they basically pushed their operations and the cullom begins have receded over the last decade or two decades where now you have mexican organized crime that have -- the are the wholesale distributors in the united states of the offense of abusive cocaine and marijuana and heroin but then also as we have impacted the leadership in mexico the of the diversified as

well into other revenue streams kidnapping and extortion of a number of other crimes as well. >> certainly we see the same both department titian and the diversification of across the narcotics spectrum and also we have a significant concern about the human trafficking in human smuggling engagement on the part of some of the criminal organizations and we are focusing saddam's significant energy on that as well. >> i would hope that if there is this evolution or diversification of the illicit activities with respect to the drug cartels moving beyond the drug trafficking even if the drug trafficking perhaps has moved to different forms of the trafficking or different forms of drugs i think it's important as we go forward that we also look at diversifying our strategy as well if it's not just drug trafficking and if it

includes human trafficking and smuggling and other activities that is something that would perhaps concerned many members of congress to make sure the administration has as we go through looking at the genesis of the initiative and what its primary responsibility at the beginning and with the threat was if that threat has indeed changed and if the activity has diversified we would make sure focusing on that as well and be responsive to the changing threats of the illicit activity so i will yield back my time. >> thank you very much. i would like to add to the to recognize you for five minutes for questions. >> assistant secretary good seeing you again. 175 years the u.s. and mexico have held strong relations building and sharing membership in international organizations will share the maritime border,

the land border, there's a billion dollars of trade between the u.s. and mexico would you agree the current relationship between the u.s. and mexico is at its strongest most positive point that it's ever been in the last 175 years? >> as you know, you and i come from the same state and i would use exactly those words. i believe it is a bilateral relationship right now it is unprecedented in terms of the willingness of both governments to work together in the face of a long history of complications. >> would you agree that we should be working with our mexican partners to bring in closer especially if the knicks and bulls being given or should we be pushing them away by going into what means we ought to call them or other groups that are

working there? >> i would never offer an opinion on what the director and what other members of the two distinguished committees have suggested. i would say to you as i said in my opening statement that if cannot reach a basic agreement with the government of mexico our efforts probably will not succeed. it has to become operative. we have to agree with what we are trying to do and if not we are unlikely to succeed. >> of the drug cartels were designated as terrorist organizations, and consider that they are dealing in several hundred cities in the u.s., how do we deal with u.s. citizens to purchase drugs from them if someone purchases a bag of marijuana for personal consumption would they be charged with aiding and abetting a terrorist and i assure we said what 25 or $30 billion of money

down to mexico wouldn't be a possibility? >> as i look at it from organized-crime standpoint, i believe our authorities federal narcotic are sufficient to address the trafficking problem that exists now. >> i guess that you are saying that we don't need to go into -- i'm one of those i believe in law enforcement in lagat three police officers in my family when it comes to law enforcement nada folks who do the day-to-day i would agree with your assessment on that. let me ask a specific question to the initiative for the best doubles the multinational agency intelligence and one is to establish the regional intelligence operation

coordination to read my understanding is that the u.s. government designated one agency which you might be familiar with to take the lead on this and the mexican agency to dig the lead on this. according to the mexican agency, on at fusion senator there's been about $10 million that destin spent which is good but according to the mexican agency where it is supposed to be putting in the money they are saying that they still haven't got any of that money. they haven't been trained, and again, there's two sides to every story but the mexican government was designated to help the center say they haven't gotten any of that, the $10 million has gone to a quote the u.s. agencies which again i'm okay but are we forgetting our mexican partners on this? >> i think as we look at the

exchange of intelligence, congressman, it is very robust as i mentioned earlier. >> not talking exchange of information. we are a best relationship. listen to my question. have the money that's been narrowed to million dollars, has any of that been spent to help the club the mexicans or train them at the center? >> the one that is operational now i don't know the monetary figure i really couldn't answer that. i don't know the answer to that question to the estimate let me restate this because my time is up to you know is there any reason to doubt the mexican agency that was given the lead just like the american agency is their anything that would question the statements that they meet that you know of?

>> thank you very much. thank you mr. chairman. >> thank you very much. we appreciate it. and if the witnesses don't mind, we would like to flatten ask a few more questions and take the ambassador of on his offer. i would recognize myself for five minutes for questions. ryckman this is an important hearing and it's interesting. some of the takeaways right off the bat is the activities the cartels are engaged in in need a definition by the activities that are insurgent activities

but i wanted to before i get on to that i wanted mr. brownfield, ambassador, you in answering some questions earlier you post three questions to the committee that he would suggest asking and the first one was what more can we get by using the label or terminology or designation i would say this the criminal insurgency will allow us to develop a counterinsurgency strategy that pulls all u.s. resources to other for a comprehensive and effective response to the reality on the ground and increase awareness in the u.s. of the threat we face. the second question what are the domestic legal implications of this and the answer to that is

and what impact with the designation have on progress on the ground. my suggestion is that this would simply be the utilization of the good u.s. mexican relations to a simultaneously addressed threat on all levels so i think for me and for a lot of people this isn't as much as saying it has failed there has been some successes in merida that cannot deny that are good things but as we look forward could kind of make the determination not to label what's happening in mexico is also hamstrings our ability to confront the challenges because we aren't properly

identifying what those are. mr. benson, in your written testimony, you talked about the evolution in some of the cartel's activities here in the united states wouldn't it be helpful if the department of the treasury, all of the agencies, a whole of government approach, don't you think there would be helpful in completing your task? chairman, we do that now. we leverage every department in the u.s. government as we cross a number of different agencies and target their leadership here in the united states and other countries. so as we'll get the money flow for example and the movement of the drug lords back and forth and the movement to other countries it is across and many different departments and

agencies impacting those organizations. -- you've got everything that you need. >> i think the authorities that we have for sufficient to tackle and battle the mexico organized-crime. >> how to battle insurgency? >> as i said, chairman, i believe our title 21 of 40 is that we have on the federal narcotics statutes are sufficient to target the cartel. it's in their leadership. i think this gets back to the point of the definition of why it's important to define what it is we are challenging. most people recognize the cartel's activity has gotten worse, that they are using every tool available to displace government. they are offering health care and other things to the citizens

of mexico to try to gain favor. so if you just want to go after it as a drug enforcement policy, then i would say okay, you have the support you need from some of these other departments. but if we describe what is happening as it is as an insurgency, there are a lot of other tools in the toolbox to be used and we can't continue to sit back and watch the growth of these cartels and their insurgent activities, criminal activities in mexico because it puts not only the people of the united states at risk of the freedom, security and prosperity but also, the people of mexico, their freedom, security and prosperity to get my time is expired and i would like to recognize mr. ingalls for five minutes for questions. >> thank you mr. chairman. i want to talk about merida but before i want to comment on something that mr. duncan said about hezbollah.

i think that would be good for us to perhaps get a briefing down the line about it. there is a plan that has been going from here on to syria to venezuela and back every week we don't know who's on it and we don't know what's on it, but you can believe that there is a hezbollah connection to it so i think it is a good thing that we raised it and i think that we should pursue that more. we talk about merida initially and when we announced the initiative in october of 2007, we were told would be a three-year program, and last year we had the announcement of beyond merida and continued funding to the fy 20112012 budget, so it appears that it's here to stay for the near future.

how long has the of patrician planned for the funding initiative to continue should it continue for the foreseeable future or should we phase it out and do something new? investor? >> that is a perfectly legitimate question and you have every right to grow less on this question every time we come before you. my answer once again is filtered through my experience in colombia. another example of a program where we set out saying it is a five-year program. we are now wrapping up the year 12 of the program. but, it's down to a level that is now about 25% of where we were when we started it in the year 2000. that doesn't strike me as an and coherent way of approaching the mexico challenge. the simple and simplistic answer to your question as we are going

to deal with the realities on the ground that are presented and we aren't going to ask the american people to subject their own security to an artificial time line and timetable but it should be realistic for you to say to somebody like me i expect to see a downward path, i expect you to have that program in a long-term sustainable level in a finite period of time and to force me to give you some sort of estimate as to what the fight period of time would be. if you were to twist my arm really hard i would say that you were very generous with us for three years. we are now into the fourth year you should expect and you are seeing a reduction in the amount of resources and funding it is being put into the merida initiative. you should expect that to continue for a period of time until we mutually agreed that we are at a sustainable level. that's the best answer i can

give. >> let me ask about the specifics about merida. the majority of the police in mexico at the local and state level but funding for merida goes mostly to the military and federal security units. we know there's corruption of the local and state levels in mexico it's very high, so it is understandable i think that president culbert roane has turned to the federal police in the military. on the other hand could most crime of the local and state level and the need to be professionalized. so can you tell me how would you characterize the efforts to assist local we of state institutions and how would you assess the progress in mexico's main implementing police reform at the federal level and what point do you think the government might be able to disengage the military from its present role in domestic security? >> thank you, congressman.

that's a brilliant question because it leads right into what i call the transition we are trying to do right now in the initiative. you are correct the first three years were focused on the federal institutions. our objective that we set for ourselves this year and next year is to pay for it from the federal institutions to the state and municipal the institutions. the way we would hope to do it in absolute and complete agreement with the federal government of mexico which controls and decides everything that we do in mexico by way of support and assistance is to focus initially on three northern states of mexico which just happen to comprise much of our southwestern border as well and focus on their state and municipal police, follow the mexican government's system of creating what they call model

police units which is of about 422 police officers from each of the 32 states trained to a common standard equipped to a common standard with vehicles that are of a common standard so that the federal government knows exactly what it is working with if this unit deploys the end to train enough of them to be able to address these issues when the police and law enforcement are able to do their job that i predict we would see less military involved in law enforcement which in any country in the world and putting our own is not the mission that they are trained or equipped for. >> thank you mr. sherman to the estimates before. mr. mccaul was recognized to the estimates before mr. chairman. excuse me. when the chairman and i were down in mexico city we saw exactly what you were talking about. i think president culbert own believes there is a sort of

turning point which was encouraging. i am not sure of that is the reality or not with the goal is to replace his military with the national police force which makes sense and people cracking down their own country there is also high levels of trust with the national police and their polygraph's. we dhaka that is, the ambassador, we are down in columbia called by the special forces almost just as good as our guys and assisting mexico and was very willing to assist in any way that he could commit we took that message to president kalona and is very interested in buying understand they are providing some training but can you elaborate? a lot of people say we put our military down there. you and i know with the sovereignty issues.

the colombian special forces can assimilate better from a cultural standpoint and we thought could provide some assistance. >> mr. chairman, i not only think it is an intriguing idea i think it is an excellent idea. will not surprise you to learn that i am a great fan and admire of with the colombian people and their government and their institutions have accomplished over the last 11 or 12 years. i think they are quite capable of exporting those capabilities through training and support elsewhere in the region. it is positive for the united states of america to see colombia and mexico engaged in this effort to gather. it is among other things excellent return for our investment of $8.5 billion or

more in support of columbia over the last 11 and going on 12 years. i think you're absolutely correct. the colombians have reached a level where i would argue they have capabilities that almost no other law enforcement or military institution has anywhere in the world and on some issues i would even stand them up with our own armed forces i believe in the jumble operation for example the colombians they will at this stage be the very best in the world. they can do much of the training cheaper. they can do it without shall we say the historical baggage we bring to the u.s.-mexico relationship, they can do it in a common language, they can do it where they are literally sharing time and real-world experience saying this is what we did when we were taking down the regime and the cartel's. this is not educational or academic. i'm the guy that did it and this is how we did it.

i think it is an excellent value and may i tell you that i, like you, whenever i get a conversation with either of the government side and trying to encourage this exchange. >> certainly from the colombian standpoint, very willing to partner and i think that cow verdone was interested in the idea i think we got his attention on that the great to take away we can all agree on that we can move forward with that in mind but i do want to clear up a couple of things. usually we are on the same page and are the best of friends. when you have a foreign terrorist act this occasion were you ever aware of any casual drug users prosecuted? >> no, not that i'm aware of. it could well be that they are as well as here you have a

charge 11 charges you out on a drug used just in case you lose the other even better for them that you are asking if someone was prosecuted for that purpose and obviously the answer is -- spirit that has been misrepresented by many it is not the way that it works and i like the idea they talk about that a lot and that really goes after the hand of the organization whereas they would go after the body of the organization in a far greater jurisdiction with heavier penalty so it's not from my -- i know this one is not a diplomatic issue at times with the ambassador we've had long conversations about this but i do think it would provide greater authorities had to go after these cartels. we didn't have any problems working with columbia on this this occasion did we?

>> not that i'm aware of although to be fair to the other side but could we are trying to accomplish the same thing but i would remind you in colombia we never put the regime or the cartel on the list and i assume there is a reason for that as well so i think this is worth more conversation and i will leave it at that. and it is certainly has been a provocative issue. thank you yield back. >> mr. duncan is recognized for five minutes for questions. >> thank you to read this might be the last question so i appreciate you being with us. as the special ed agent in charge of the atlanta you were reported as saying the mexican drug cartels are able to blend right in and establish the metro at leyva as that strategic shipment point so my question is how real is the threat of the cartel's of the american cities and what other cities are the mexican drug cartels operating

out of? >> congressman is very real. as you know atlanta is the hub for the business in the southeast, and the mexican cartel is recognized for a lot of the same reasons. you go from the southwest border to atlanta in about 1100 miles a 15 hour trip and then from there we would see those cartels push up loads of cocaine for example all the way up the eastern seaboard and in the bill also use the house in dallas and atlanta and other places to collect that money and then push it back down to the cartel leadership so the of strategically identified locations because it is a good business model for them. surely it is a good business models for the companies like

fedex and others where they use the hub to distribute certain things and if we know that they are using atlanta and dallas and phoenix and some of those areas would that make it easier to crack down on? >> we have to the many are we in places like a plant of or the other transshipment locations and what we have seen is as we hit the mid place like atlanta they will at just and a tactical changes in the way they do business so it's a matter of us keeping on top of the mess they make their adjustments to our enforcement efforts. >> one other question about a methamphetamine. cheaply made but is it cost-effective for mexico in a drug cartel to bring it into the

u.s. versus having it in the factor and cooked here? >> we see methamphetamine on the streets of the united states today, and most of it is produced there they do produce a is an expensive and they bring up three large amounts of for example crystallized methamphetamine and high purity that they push out into the streets, so in i still believe we will see mexican organizations supply a lion share to the u.s. market and we will also see the smaller operations that support either individual drug cabinet or those few but i believe the mexican organizations will remain the primary supplier for methamphetamine in the u.s. market. >> is it easier for them to get the sudafed and other interest to the mexican channels since we supported their efforts of the over-the-counter products?

>> the of instituted and they do have some very good chemical control in mexico now, but we have seen those lab operators of just the manufacturing techniques to use other methods to produce within to been and i believe we will continue to see that. >> thank you. i don't have any further questions. i would yield back the balance of my time. >> thank you mr. duncan. this concludes the hearing. i want to first thank the staff on both majority and minority site for both the subcommittees for your hard work in this and i want to thank the members who participated today, and most important i want to thank investor bromfield and mr. benson and ms. silver for your time and sharing your

thoughts on what i think is an important topic. with that, the subcommittee is adjourned. [inaudible conversations]

[inaudible conversations] [inaudible conversations]

filmmaker ken burns is a documentary series on u.s. prohibition airing this week on pbs. we spoke with him earlier on "washinon journal. >> host: and we are back with tim berne to talk about his latest project prohibition. i was wondering how you came to

how did you come to decide on prohibition? you wanted to talk about the lack of a civil conversation. did you come to "prohibition" first and realize there were parallels? guest: we never tried to supervise our own -- we're drawn to historical subjects. the code as director and co- producer -- the co-director. we realize that we spent a lot of time historical in the 1920's and other projects and we didn't know anything. the images of prohibition that everybody has of gangsters and floppers was about it and we just assumed why it happened and

what americans could have made such a limiting decision of creating an amendment and the only amendment has been repealed. we understood it touched dozens of elements today that had to do with single issue -- a local campaigns and immigrants, it had to do with a loss of civil discourse, as you say, and smear campaigns during presidential election cycles. the question of what is the correct role of government? warrantless wiretaps. people wanted to take the country back. we just tell the story. we're not trying to say is in it right today? we have the opportunity to remind our fellow citizens that history is still the table around which you can have a

civil discourse. as we hear, the discourse has retreated to individual camps and we identify each other as " the other" whatever it maybe -- race, politics. history permits us to go back and see the way in which human nature never changes. americans always getting into these types of things and to see the way history might offer us suggestions on how you can get out of that. that is an added bonus. we're trying to tell a good and a complicated story. host: the started airing sunday night on pbs. the second part was last night. let's go back to the first part, looking at the beginning of

prohibition, or the making of it. what was the role of alcohol? guest: we had planned to series, but we found help long and dramatic the lead up was so expensive it to three. we go to when prohibition went into effect. we were awash in alcohol. people ritually had alcohol for breakfast, lunch, and dinner. you stopped a couple times in factories for what was called grog time. we drank five or six times the amount of of all that americans per capita consumed. we were awash in liquor. the social concern comes up that we should figger out how to drink less. women find their voice and this

whole incredible century of activism is initiated. host: i was struck by the economic impact of all was happening at the time. people were drinking two or three times a day. the level of alcohol -- we start growing crops, grain, then allow the country to start manufacturing whiskey and other hard liquor and that plays into the culture. guest: we have all of poor water supplies. sometimes manufacturing and alcoholic beverage is safer, at least initially. we have been fermenting or brewing things. we have been able to distill and increasing the alcohol content that much more. it has much more devastating consequences socially as people,

a percentage of the population has trouble with alcohol. that initiates a temperance movement that gets hijacked by the moral absolutist. they want people to sign a pledge for total abstinence. it is interesting to watch the interplay of movements and the interplay of single issue groups that vie for supremacy of this issue in the 19th century. one man was able to make the senate sit up and beg. it was the most powerful lobbying organization. people began to say through propaganda and education and through decades of working on it that we think we can solve all society's problems if we give

them the drink. the husband won't squander the project and, all meant beat the wife or the kids. there'll be no crime and the slums will clear. i think they went very naively. progressives wanted it. in-a west as long as the workers -- industrialists as well as workers. we woke up with it as the law of the land. we realized it was an big uh- oh. because there were some gaps. we raised questions about should the government be telling us how to live our lives.

were we going to use the government as punishment to change the way people behave? the we celebrate marriages and when we take communion. host: was the impact that laid the groundwork for the 18th amendment? guest: we began to see the constitution as some but they could make this a more perfect union. the conservative anti saloon league alied themselves with the progressives who wanted to redistribute wealth. there were huge disparities between the rich and the poor. factory workers were at the low was wrung.

they wanted to pass an income tax amendments. they wanted the abolition of all and said it was a great idea because then we could separate uncle sam from the revenue he gets from the beer and liquor industries. 7% were coming from the beer and liquor into streets-- 70%. the liquor industry and all the related industries is untethered from its dependency on uncle sam, and uncle sam is on tethered from its dependency on them. we remained sauerkraut -- we renamed sauerkraut "liberty cabbage."

we're on a straight path to the ratification of the amendment in the 36 states necessary. host: it was repealed on december 5, 1933. guest: more than 13 years. in some ways, we talk about all the unintended consequences. we would not have organized crime without prohibition. fema also went up -- female alcoholism went up. no and then it had never been repealed -- no amendment had never been repealed. by putting it into the constitution, it would be in there forever. lots of unnecessary lives were lost. it changed everything. but we get rid of it and would

get rid of it quicker than it came in. it made us americans even more suspicious of the notion of this group or that, from the left or the right. here is the magic bullet. if the only pass the amendment -- if you only passed the amendment, everything will be all right. if we just do this, we look here all society's ill. host: good morning, edith. caller: i am a second time caller. i watched your film last night. you mentioned lots of people's names up and down the coast. i never have noticed that you say anything about the kennedy family.

i know kennedy sr. was bake in bootlegging and let's stuff -- was big in bull leg and all that stuff -- bootlegging and all that stuff. guest: the rich were allowed to stockpile their alcohol. that was one of the complaints. it was so unfairly applied. they had a year to buy up as much out all as they wanted and could comfortably drink on their own. it was a law that was most difficult of the immigrants and the poor. joe kennedy provided the alcohol for is 10-year reunion. he saw the end of prohibition coming any but a good deal of irish whiskey and brought it to new york and have it padlocked in government warehouses.

when it was repealed, some of the first out all the people drank was kennedy booze. everybody thought he had been profiting all along, which was not the case. there's not a better proof that he was a bootlegger. another family is another case. they were canadians who were in the bootlegging industry and that is well-known. you can put the kennedy smyth to rest. host: you deal with that in the first part. guest: joe kennedy's boston. -- ran some saloons in boston. host: potomac, maryland. caller: 80 years ago it seemed

necessary to draft an amendment to ban a substance. but now we can banned substances through committees. is is a cultural difference because of the substance -- is this a cultural difference? guest: that is a wonderful question. there's a difference in many cases between alcohol, which is something people have used from the beginning of time and as broad cultural and social acceptance, prohibition notwithstanding, and drugs which are more sub cultural manifestations of popping up here and there which have less of a sense of cultural familiarity to them. we think marijuana and we think this is our latest cash crop and perhaps we can all benefit from taxation and perhaps take some of the violence out of the transactions. but we realize that violence is

linked less to marijuana and then to cocaine and heroin. would you include those drugs in that mix? then i think you'd find a majority of americans on interested in that sort of thing -- uninterested in that sort of thing. it is important that we use of prohibition as lessons of unintended consequences to go carefully and slowly and to try to do what no one did back in that period. host: "prohibition" is a three as part series airing on pbs. guest: i think it is $19.95, three discs. shoppbs.org. that is above my pay grade.

we just work hard in the vineyards on these fillmms. host: how much "prohibition " -- how much did "prohibition" cost to make? guest: large corporate support from bank of america and foundation support from the park foundation. we started our own fund-raising organization. that civil discourse. we received grants from foundations. it is a wonderful thing. i met president reagan when i began working on "civil war."

we talked about private and governmental. he said, "just right." the motto is exactly that balanced approach. it is important that i assume everybody who is listening is a taxpayer. we should pay back our government support. it will be nice if that worked in all aspects of the government. we pay back our government grant. host: are other documentaries that do revenue-generating? guest: some do and some do not. we put it back again into giving better salaries the what public television pays to some of the people who have been the hardest workers and help to pay for the development of the new projects that are outside the budget.

we pay off our grand from the national endowment for the " civil wars" project. while the reagan felt the government have the role to prime the pump and allow others to, and like bank of america another foundation to help us out. host: does pbs give you a budget? guest: we go to them and we go about raising the money. some may come from pbs. some will come from the corporation for public broadcasting. bank of america is our sole corporate sponsor. we keep the budget. we work with weta, the local

washington, d.c., pbs affiliate. we use the bring it in on time and under budget and we move on to the next set of challenges. host: ralph from chicago. caller: thank you. columbus discovered america while searching for a c way for the spices including opium. the boston tea party. the tobacco war of the american revolution. the opium wars. alcohol prohibition. the civil war on drugs. where is the road map to peace on drugs? guest: interesting story. the intersection of commerce, morality, social behavior, and

the interest to alter one's consciousness. they're never going to end. i do not know the answer. this is one of the reasons that you do this. tell a good enough story so that we ask the questions that you asked. caller: ken burns. guest: good morning. caller: this is such an opportunity and an honor. guest: thank you. caller: it is outstanding. you realize the historical importance of the railroad and how they build a nation. up to world war ii, it enabled us to rise above the depression and succeed in the world war ii.

would you consider making a documentary on the historical and importance of the railroads? guest: if i live to be 1000 call would not run out of topics. people come up to me every single day and write letters will my next project should be. the winner is always railroads. we first started getting mail 20 years ago about what people thought our next project should be. we made a history of the west, a multi part series, seven, eight episodes, and we did extensive stories of the railroads in that. and in other films we have touched on that. it is an important story. in the 19th century, the

government did not do anything. teddy roosevelt came along and we started stretched the con fines of what the federal government could do. we forget that encouraging the building of railroads in the homestead act and so many other activities in the 19th century, a great deal of the prosperity that we enjoy to this very day came from the government actively priming the pump to get the juices flowing. host: next project includes the dust bowl, the roosevelts, and jackie robinson. guest: we're shooting a film and i'm doing a major series on vietnam. we did the civil war. the next most important war is a vietnam. a lot of people do not

understand it. it is not a war that has easy battles to identify. we think it is shoes important and going in -- we think it is hugely important. we're talking to generals and diplomats and helicopter p ilots. host: will that be a bigger project/ guest: roosevelt is a large series. vietnam will be a large series, at least six episodes. we're looking at the history of country music. i despise the red stakeout blue states distinction -- the red state-blue state distinction.

my work has been always about unem. "the dust bowl" will be out next year. we found more than six dozen survivors -- we found more than two doezen survivors. crime theyknown about th did not commit. everybody knows the story of the roosevelts, but they never been put together as a complicated family as well as the larger social and military history that they touch on. jackie robinson is a hero in world history. we have a lot on our plate.

hopefully we can come back and talk about the insides of those. host: ken burns is our guest talked about his latest project, "prohibition." caller: i want to say that i cherish your whole body of work. guest: thank you. caller: i used to work in public television. it was an honor to be affiliated with such fabulous work. my wife is a naturalized american citizen. i sat her down and said to watch this show. she was blown off the couch. guest: he is referring to our series on the history of the national parks. we. america's best it " idea." in an age when attendance at

the national parks have been declining, it went up 10 million to 15 million in the season after that aired. we felt that this was america's best idea because this notion that we could co-own -- this beautiful mall is all of ours. it brings us back to some of the very issues we talk about today. do we have some contact with the joe to make this a better country? if you feel the co-ownership, then you can participate and it is a good way to share with new citizens and taken to the rim of the grand canyon and say, this

is yours, too. caller: good morning. thank you for your work. especially the integrity you bring to pbs. i want to mention briefly how utrecht me by getting involved in your series. i have been moved through every emotion possible. it took me three minutes to compose myself during "the civil war" after that letter was read by the soldier who did not make it back. keep up the good work. i hope you'll live forever. guest: i carry that letter. i've been caring that letter and my that letterfin my

if we just see american history as only the series of presidential administrations, punctuated by wars, we miss the huge bottom-up story, so-called ordinary people who built those railroads that we're talking about, who fought for those national parks that we cherish, who were involved in bootlegging if that's the case who sacrificed their lives in the second world war, vietnam or the civil war. that's the history that we're telling. an emotional archeology. i'm pleased that it took you a while to get your composure. because i think history shouldn't be dry, stuffy days but something that we feel, that it's emotional archeology that we're involved in. thanks so much. host: "prohibition," a three-part documentary film series that tells the story of the rise, rule, and fall of the

18th amendment to the u.s. constitution and the entire era it encompassed. let's hear from phil next, from kansas. caller: good morning mr. burns. how are you today? guest: good morning. caller: good morning, again. like everybody else calling this morning, i really want to thank you for the work you've done. a couple of points i've heard, one, the impact you've had in our household, particularly international students that we host. but the other thing is that i really like the work you do, particularly "prohibition," that you treat your audience like adults. too much we see now adays, some doom tearian is trying -- documentarian is trying to do the thinking for you. my wife and i have some disagreements, very civil, but it makes me wonder about the unintended consequences as to the possibility of your grandson

or granddaughter some day doing a documentary on black market cheese burgers. [laughter] but at any rate -- guest: i know what your worry is. i don't think we're going to have black market cheeseburgers in part because of prohibition. it doesn't make sense it might be, you know, taxes on cigarettes, to cut down smoking in various places. but i think you won't find that wholesale government intrusion into our lives. we always worry about it, but it never quite happens in that way. you say makes me feel so happy that the subject that we've chosen touch you in that way. host: it's the lack of civility that we see today, mostly in washington, compared to prohibition that seemed to be really a national discourse outside of washington. guest: i know. a lot of people see prohibition as this thing that the government did to people. it's not true. it's the people said we want be part of a

solution. conservatives as well as progressives wanted government to be part of a solution. we weren't bifurcated the way we are now in which people say government is good or government is bad. we all assumed that government was good. it was just our version of government, if i was a republican, our version of government if i was a democrat, who's going to do a better job of government. it's only been in recent years in the last 30, 40 years in which government has itself been made to seem the enemy. it's an interesting development that i think those of us who are in the history business are going to have to deal with it at some point. where did that happen? when did we cross over that line? as you look around the world and realize the extent of our freedom, it's very real that we should be careful about government intrusion. and one of the things that happened in prohibition is that in order to enforce it, we had to add that much more bureaucracy to the enforcement of dure jobbing is i that hasn't left. an earlier caller is referring to the trillions that we're

spending, you know, in drug interdiction which leaves us with a huge super structure, an apparatus, of enforcement. and that can apply not just to drugs. we could be talking about defense, about entitlements, about any number of things that has grown as the result of that thefeeling government should be involved in, say, building roads or having a strong defense or putting a man on the moon or having an interstate system. or some things that people universally support or other things that are more controversial. so, to me, i think that sometimes taking out that fuel rod that the government is itself malevolent and evil and permitting us to look across the whole scope of our history and saying the extent to which human beings, in the case of prohibition, brought it to the government and said this is what we want. we want you to outlaw for us forever, that had been the constitution, as an amendment, alcohol. you know, stop me before i drink

again. and what we woke up to was, wait a second, this is not america. this is the only amendment that limits human freedom. let us figure out how to get out of this. and as horrible and as long it seems to be involved in prohibition, if you think about it in historical terms, it was a relatively short period of time. host: thomas, democratic caller, new york. caller: hello. mr. burns? guest: good morning. caller: yes. i want to praise you, first of all, for your wonderful body of work. guest: thank you. that's so kind. caller: it's truly a national treasure. but what i wanted to ask about was specifically the wording of the 18th amendment. and it goes through all of these parts about manufactured sale, exporting, importing, and so forth.

guest: transportation. caller: it doesn't actually say anything about buying it. i mean -- i'm not saying that people should have, you know, gone out to break the law -- i mean, gone out and bought bootleg liquor. but what i meant was, it doesn't actually say anything about buying it. so when people actually bought this illegally made alcohol -- host: they weren't breaking the law. weren't actually breaking the law according to the wording of the amendment. guest: so the amendment -- it's very interesting. it's incredibly vague, as you so correctly noticed. so what we did is we applied what was called the volstad act to try to interpret it. and even though an efficient machine of the anti-saloon couldn't get a complete ban on alcohol it wasn't actually illegal to drink alcohol. people were allowed to buy up as

much as they want and drink it for their own pleasure. americans were allowed to make 250-gallons of wine on their own if they wanted to. they could not make beer. they could not make whiskey. that was against the law. they could not sell or distribute any of that. that was also against the law. but you could also get a doctor's prescription for alcohol for medicinal purposes. and you could imagine the number of prescriptions skyrocketing during that period. there were other loopholes in which you could drive a prohibition truck through, and that's what happened. we created opportunities for entrepreneurial americans, full, organized crime. if you think about electronic it's an oxymoron. criminals were hardly organized. but what prohibition and the enormous profits -- because the demand for alcohol never went away. the thirst for it among the hard-working people who didn't necessarily have a problem with

alcohol never went away. so, you know, that organized crime supplied a need. but there's so many funny loopholes in it. you know, sacramento wine was permitted. so congregations quadrupled, 10 times the size. and jewish temples, who's to say who's a rabbi and not? so there were rabbis named o kelly, shanahan. there were black rabbis. there was an incredibly wide interpretation of all of these laws. host: gary, you're next in tampa, florida. independent caller. caller: good morning. guest: good morning, gary. caller: first of all, can we see mr. burns on "in depth" for three hours, because i can listen to you talk all day. your head is so big now after all of these calls, you're going to have a hard time. guest: you know, i live in a tiny world in new hampshire. any notoriety plus 50 cents gets you a cup of coffee.

caller: mr. burns, let me ask you this. prohibition showed me -- first of all, don't mess with americans and their beer. [laughter] it's too bad we can't get them riled up for other issues like that, like they got riled up for prohibition. but what did you learn as far as -- to me it showed the power of the american people when they really do get fired up and they -- you know, government doesn't control this country. the people control -- guest: exactly. that is a huge point. i'm so glad you bring this up. the broad coalition of folks that brought us prohibition was in place by another broad coalition of folks. in essence what we're looking at is the very messy but very real results of democracy. i mean, people really struggled over this. it was and still is a huge social problem. alcoholism. we are obligated as a people, as a society, to figure out what to

do with it. clearly prohibition had in everyone's mind -- was going do it, was going to solve all of our problems. it did not. we got rid of it. and we're sort of obligated to tinker. the founders thought that the constitution was a machine that would go of itself. that this is an experiment in democracy and would be just that an experiment. we're in pursuit of happiness. that's the key word. we're always focused on happiness. is that about material things, the marketplace of objects? or is it about ideas in a marketplace that's sort of the pursuit of life-long education? we can argue about it. i think it's the latter. what jefferson meant by capital h, happiness. we're in pursuit of it. the constitution which is a dry document except as preamble says in order to form a more perfect union, we are obligated to keep tinkering with these things, to keep experimenting. and that's the real great beauty of this thing. and we get so distracted by our

preoccupations, as i was saying earlier, with red state, blue state, black, white, male, female, north, south, east, west. whatever distinction we want to super impose object the other -- on the other. nothing so needs reforming, mark twain said, as other people's habits. it is the prohibition of anything that makes this precious. these are the growing pains and the necessary lessons of the democracy. we are at once greedy and generous. we are at once fear and hypocritical. we are puriant and puritan. we are saturday night at the sloan and sunday morning at the -- at the saloon and sunday morning at the church. are divisions within us. look at the evangelist who hail against this and that and suddenly turns out to be doing this and that. this is a complex human thing. we've got the best set of rules, however imperfect they may be. they call it sausage making over

at the capitol, you know, about legislation. want to see how it's made, but it sure tastes good. we end up with a democracy in which there's lots of sausage making going on. and prohibition is one of those great examples, trying to figure out how to do right. alcoholism is still a big problem in the united states what are we going to do? >> sarah, jacksonville, florida, democratic caller. the conversation. guest: good morning, sarah. caller: good morning. thank you so much. being an outdoors person, i loved your documentary on national parks. guest: i'm so glad. thank you. caller: here in florida we have governor scott who wants to privatize our state parks. but my question is, many years ago my husband and i were protesting against the invasion of iraq. and a couple approached us and said, we should be praying to god instead of protesting. i believe many religious people take the easy way out and do nothing with the hope that god will take care of everything, including global warming. someone once said religion is the opium of the masses. do you believe it's possible

that religion is a drug for many people? >> you know, i think your point is well taken that many of us are certain that the other, the person who feels different from us if they'd only do an act -- and act like us, we'd be all right. the great beauty of a democratic system is that we invite in all different points of view. i don't think religion or faith is an open yacht. i think sometimes it can be for some people just as an i'd log --ideologue might be equally as inflexible. what i think democracy requires us to do in order to succeed is to compromise. one said americans like to think of themselves as uncompromising people. but are great geniuses for compromise. and when that breaks down, we went to war. and that's true. speaking recently on another film to george will, the

columnist, he said that democracy is the politics of the half loaf. you never get everything. and what we see right now is we lament the breakdown in our civil discourse is the fact that everybody is so absolutely certain that it's my way or the highway. and the old dayness which they used to get together over whiskey, have a drink, and compromise is long gone. and everybody's into their own corner. they've got their talking points. they know exactly what it is. and we, the citizens of the democracy, watch our problems not being solved. and this is a problem of the and the right. it's not one group. it's the inflexibility. it's the problem that comes from not just moral but political certitude. and that our great obligation as the people is to get involved, to vote, but to urge people whatever your political perspective, whatever your religious faith or lack there of is to just be engaged and to remember the genius -- you can't stay married for very long if you don't know how to

compromise. bring your intelligence about your own marriage to your political discourse. and then the other isn't the demon that you think it is. to live that way in your personal life, you're going to be very lonely very quickly. host: we're running out of time with ken burns. one last phone call. paul, an independent in detroit, michigan. good morning. caller: good morning. guest: good morning, paul. caller: thank you very much. you mentioned earlier as far as the kennedys not having any affiliation -- i looked at "national geographic" and they said the kennedys were affiliated with -- [indiscernible] would you elaborate on that for me, please? and thanks a lot for putting together what you put together. because what you're showing is a group together can do things. guest: that's exactly what is what it is. and that is always the great

lesson of a democracy. i would refer you to the book "the last call: the rise and fall of prohibition." dan was a consultant to our film. we worked in parallel tracks. we benefited from his research. i hope he benefited to some extend from ours. he appears in our film as an on-camera commentator. i think he goes in, in that book, in great detail about the kennedys. and i think that whether someone has contact with people in the world, it's been one of the great -- part of the demonization of the kennedy family that happens periodically always to do with organized crime and bootlegging. but this scholar could not find any connection. and i think that's some of the breaking news of his extraordinary book. host: before we let you go, what is your partnership with the national constitution center? guest: early on we realized -- i think we feel as so many

americans do that we've lost that ability to talk with each other. that we talk over each other and at each other. that that sort of breakdown was partly going on in prohibition. and one of the reasons this mistake -- i think most everybody in retrospect believes -- in position in the federal amendment, that outlawed alcohol that a lot of it had to do with that loss of civil discourse. so we partnered trying to raise awareness of not only the great work of the amazing post in does, but in the way in which we are obligated as citizens to listen to one another to compromise, to figure out how to solve our problems that if we just retreat to our own corners, we're gone. one of the most encouraging things is that we've had callers who are republicans and democrats and independents who have all enjoyed our work. what this is -- what they're ratifying is support for television. there's no other place on the dial with the possible exception

of c-span where you could have the kind of productions made that we do. the deep dives into these subjects. the ability to celebrate all sides without a political agenda. the lack of sort of pandering to sponsors or to the lowest common denominator. one caller said, the viewers as intelligent. and i think that in some ways public television mirrors our larger society. i think we could do well to realize that this underfunded and much maligned network still manages to produce some of the best childrens, science, nature, art, performance, i'm told the best history on the dial. that's good i wouldn't be sitting here if it wasn't for public broadcasting. and i like the fact that the support for this work as evidenced by the calls today represents a broader array of americans. host: ken burns, codirector of

"prohibition," the last of the three-part series airing tonight which candidate, which republican candidate benefits from governor christie's decision? >> to some extent, all of them are in stability we like to get

in the race and there's been so much reading and wondering whether or not there's going to be something jumping in. we stuck out there appealing, but probably not very likely that she actually runs. so now you have act to this, people free to where they are likely and to that extent probably met romney to the extent they are pete will sitting on the sidelines kind of wondering whether there'd be somebody else besides him. >> the impending calendar piecing this decision, correct? >> i think so. the fact we are likely to be where barry last year after the new year's means that deadlines are coming quickly. within a couple weeks, florida by the end of the month. so anyone who wanted to be on

the ballots can be a serious contender, you pretty much need it to decide now. and i think it is pretty clear that press conference today, saying that is where he was for most of the year, that he really meant no, but sort of heat reconsidering the last few weeks. >> each at times answering lots of questions. what is his role now? what is the value for potential candidacy support? >> you know, he really deflected a lot of those questions coming suggesting that the theme of the solar news conferences that he wanted to focus on new jersey. i suspect, however, that there is going to be about it candidates out there for the house, the senate and presidential candidate who would be eager to have this sorted by speaking come plain speaking everyman kind of guy come out and stand next to them. you know, he was asked whether or not he was going to endorse

one of his potential with the rivals. he said no, not at this time. there will be an endorsement and it will be an important one. >> he mentioned several times to the reagan library speech a week and a half ago or so. why was that imports into governor christie? >> well, it was important for two reasons. if you can't just take what he said on face value, i think he really has delivered a series of speeches over the last year that our policy speeches, which he lays out what his vision is for the country in the governance of the country. but i think it was also a moment in his people have said this over the last seven days, that there is such an outpouring of those kind of big muckety-mucks that were there, but also people in the audience seemed we want you to run. it was a moment for him that encouraged him to take another look at the issue.

>> you can follow michael share at "the new york times".com. follow him on twitter at the caucus, michael shear, thank you for that tape. >> prescription drug abuse in the medicare program cartoonist tex here is nearly $150 million in 2008 according to a new report

>> now, you're not prescription drug abuse in the medicare part d program. according to a government report, one individual receipt prescriptions from 87 different type ursini one year. the senate governmental affairs that committee is an hour 45 minutes. senator tom carper of delaware is the chairman. >> gathering here this morning, it's good to see all of you. inks are witnesses for joining us. thanks to a ranking republican for joining us this morning. we are glad you're here. over the past several years we think each year in washington and across the country in a

conversation about our nation's deficit and debt in the cost of federal programs. conversation has been serious and at times heated. unfortunately we have yet to reach a consensus on a plan to extract the country in serious financial challenges we face. there's something however i think we can all agree upon and that is a must stop the fiscal bleeding caused by a race, fred, pay abuse. this is a small set committee, but for years we have been almost singularly focused on how the federal government can get you results for less money or better results for the same amount of money. but they're the chairman is tom carper are tom coburn, datacenter singular focus and continues to be. working together with partners such as gao, i went beek inspector general and other watchdog groups, try to maximize server site. i believe we begin to make a real impact. we chilled down on how the

federal government waste millions annually, maintaining properties and buildings we neither want nor need. we've examined the billions that agency is based on 125 billion avoid improper payments to contractors to ineligible programs to participants anything dead people. we focus like a laser and federal information technology projects that have gone billions of dollars over budget without ever delivering any real benefit. one issue we spent a lot of time taking a look at recently is the enormous amount of fraud and waste and abuse that perpetrated within medicare and medicaid. the progress to read may saving benefits to millions of the nation's most vulnerable citizens. unfortunately, too often criminals figure out how to use medicare and medicaid for their own gain. roughly two years ago we held a hearing dealing with fraud and abuse in the medicaid program. in this room is certainly gao

had found tens of thousands of medicaid beneficiaries and providers involved in fraudulent or abusive purchases of controlled substances to the program. after the here and retire to the government accountability office to see whether something similar may be going with the medicare part d prescription program. i was disappointed, but not surprised to find that gao has found evidence the number of part d beneficiaries are likely abusing the system to a teen powerful drugs can have children addictions or sell them on this read. as part of their analysis, gao auditors looked at prescriptions paid for by part d into destiny. combing through over a billion prescription records, they found that over 170,000 part d beneficiaries apparently engaged that year and a practice commonly known as dr. shopping. these beneficiaries have gone to five or more doctors to obtain prescriptions for the same drug. in one case gao fund beneficiary who receipt prescriptions from

87 different medical practices in that one year. another case the beneficiaries received three years worth of oxford dons -- is that right? pills for a 58 different prescribing that yours in just one year. we need to be honest about what these findings mean. they mean that federal dollars intended to produce the health needs of elderly and poor are instead used to feed addictions or pad the wallets of drug dealers. this is clearly unacceptable. according to gao, to control that cms has put into place to stop this sort of abuse having done the trick. under the plan, cms is put in place to combat dr. shopping. as a part d plan sponsors suspected beneficiaries dr. shopping company sent a letter to the doctor who's been

visited. the letters sent along with the self-addressed envelope in which the doctors can send a response to the sponsor's concerns. in some cases, doctors will stop giving the shopping patients prescriptions. in other cases, they won't. sometimes the letters go through. gao has made several recommendations to cms on how to tighten up controls of the program. included among these recommendations is a suggestion that beneficiaries be limited to one doctor and one pharmacy and approach many states use in their medicaid programs. i look forward to hearing more about this suggestion from our witnesses today. in addition, i understand just last week perhaps as a result of gao's work on a cms has issued new guidance to part d plan sponsors. this guidance suggests that plants begin to nine beneficiaries at the point-of-sale if they suspect abuse. this is an important change in again i want to hear more about that today as well.

i work with senator tom coburn, senator brown and others on the panel to work on bipartisan legislation that curbs waste and fraud in both medicaid and medicare. legislation one, 2512. contains a set of important steps to help rein in those kinds of prodding health care programs. has provisions that directly affect fraud in medicare part d come including strengthening prescription drug monitoring programs and requiring closer coordination between cms, oversight contractors, the dea, drug enforcement agency and state and local law enforcement. our proposal also requires that the list of.your zoo can prescribe controlled substances like pain killers be maintained up to date and accurate. as many of you know, 12 of our colleagues are currently serving on a bipartisan and bicameral joint committee as cintas said

the rest of us with coming up at the plant to begin to put our fiscal house in order. if at some point that committee in congress as a whole were to come to agreement on a meaningful plan for addressing our country's fiscal challenges, will need to address issues like to once were talking about today. as it closes opening statement, what to comment on prescription drug abuse. the dangers associated with the issues of prescription drugs have become known in the past two years as celebrities and other public figures have succumbed to the lethal effects. however, less widely publicized for the millions of americans come including children who abuse the same drugs. unfortunately children abusing prescription drugs that another may rate. one out of seven teenagers, one out of seven teenagers are reportedly has abuse stories abusing prescription drugs today. this is a drug problem that could impact any american home with the medicine cabinet

appeared as a father i find this is especially troubling. i want to make this point so that it's clear. while there is a financial custody friday and abuse of controlled substance paid for by medicare, be mindful that we cannot ignore the fact that there is a human cause as well. prescription drug abuse is the fastest-growing addiction in the united states. the difference between a street truck like and a prescription painkiller is betting many cases as this hearing of the subcommittee's previous work showed the federal government is often pained to see this addiction with taxpayer money. aside from our financial imperative, we have a moral imperative to ensure that our public health care system is accused or misuse to further intensify and subsidize a public health crisis. i don't have the full list. alternate over to senator brown. i don't have a full list of the illegal drugs whose cost if you

edit the street is, if you added up actually still less than the value of the prescription drugs to the controlled substances that are being shopped and sold. but it includes -- what else? cocaine, harry when, others combined? how big is this problem? out of heroin and cocaine sales. totally like that's involved in the sale of these controlled substances. it's a big problem. it's a problem were beginning to address that we need to learn a lot more about how we should further address it. but having said that senator brown, you are a tiered >> again, thank you for holding this hearing. this is something not sure if you are aware that i was working on a task force back in massachusetts on these types of abuses, especially just the

rampant drug problem amongst our youth than others with these types of substances. we really didn't get in the front part, but we certainly got into the issue itself. senator steve tallman and i and others try to tackle this very real problem. i know we are trying also to address these difficult decisions and we are trying to put our nation on a path of fiscal stability. folks come to you all know is going on. you know in a financial emergency and finding a way to do it better and try to tackle these issues and do it better. and i do support and have very strong support for the medicare prescription drug programs. we all know they provide essential benefits. more than ever we must protect these programs because they are looking to be changed. if we can weed out a lot of this

broad and abuse, we will have more money in the system obviously to give back to the people that need it the most. the subcommittee is releasing the gao breathe towards that i think was asked to be done by senator carper and exposes the average is packed is that taxpayer dollars are potentially funding through the medicare part d program, illicit prescription drug program deal. signings in the gao report highlights this problem. as the senator noted eyecare member who said this, but one recipient as you know visited 50 doctors to obtain 3655 oxycodone pills, equivalent to 1679 day supply and these prescriptions equate to a street value of almost $300,000. many of these highlighted addictive prescription products will find their way to defeat, hurting communities, kids,

families. it's primarily the way they get around the lawful use of these medications. in only a very small percentage of medicare part d beneficiaries, approximately 1.8% are engaging in this type of behavior, though the percentage of small, were stuck talking about 170,000 people. the system according to gao cost the taxpayers approximately $148 million annually. that's real money, folks. and when i try to do since the avengers keep an open mind and try to find ways without throwing bombs at all. it's like ways to break down. the key we need to find out is what can we try to fix? is not only wasting taxpayer dollars, the paint and native prescription drugs and doctors visits, but also takes a very high human toll that we all know

would involve this prescription drug abuse is on of the nation's fastest-growing drug problems is now categorized by the centers for disease control is an epidemic. and we must do everything we can do to create a stronger oversight abuse controlled substances. in some cases cut entitlement programs established to benefit her country's most vulnerable are instead being used to fuel addiction and abuse and it's really come with all due respect, mr. chairman, unconscionable what's happening. but i do hope several hearings. some might tank up and really just fascinating of the things i have learned through your leadership. and i commend the chairman for holding them. but this one -- i don't think there's any that are more important than this one quite frankly. i'm looking forward to beginning at the hearing of mr. chairman, and appreciate you bringing it up. thank you good >> qubit.

and thank you for your statements in for joining us today, senator brown. i asked my staff -- perfect attendance record here. i asked my staff, i said a sentence from our briefing memo about just how big a problem the abuse of prescription drugs is. this is just a sentence from a briefing memo. it was in a statement. it is estimated 27 million americans abuse prescription drugs every year. that's what the number of abusing cocaine, heroin, hallucinogens, ecstasy and inhalants combined. combined. wow, we welcome our witnesses. how many of you testified before the subcommittee before?

well, thank you for continuing to come back and we appreciate that. our first witness today, grade kutz, audits and special investigations unit. mr. kutz has spent over 20 years they gao when working to uncover government abuse in response to hurricane katrina and problems of the u.s. border security among many other issues. he has testified before the subcommittee many times and i thank him for agreeing to be with us here today. i hope you don't start charging on a per visit basis. that will be a great episode. seriously, were grateful for your help. mr. jonathan blum, deputy administrator and director for the center of medicare and medicaid services, affectionately known as cms.

mr. blum is responsible for overseeing the medicare prescription drug program and formerly worked as an adviser to one of our good friends and colleagues, senator max baucus on the finance committee. you're the finance committee staff? our final witness is louis saccoccio, there we go, louis saccoccio. very good. executive director national health care antifraud association. mr. saccoccio and his group worked to increase awareness and improve direction of health care fraud. i also understand mr. saccoccio his former navy jack dwyer and graduate of the u.s. naval academy served for eight years, including a state legal carrier of the u.s., is that correct? good for you. good old navy guy. silly we are in good company. thank you for that service and ask for being here today.

folks, you know the drill. we ask that you take five minutes for a statement. if you go but that's okay. if you go way over that's not okay. mr. kutz carmelita saskia >> ranking member of sherrod brown thank you for the opportunity to discuss medicare part d. in 2090 testified before the subcommittee and doctor shopping and medicaid. today's testimony highlights the results of our investigation into dr. shopping in medicare part d. my testimony has two parts. first, i'll discuss their findings in fact income i'll discuss their recommendations. first, we found indications of dr. shopping for 14 classes are frequently abuse prescription drugs, including vicodin, brittle and an oxycontin as examples. specifically, 170,000 beneficiaries acquired the same class of prescription drugs from five or more prescribers during thousand and eight.

this represents about 1.8% of the beneficiaries acquiring these classes of drugs and they should indications as they mentioned of dr. shopping. the cost of the drugs is about $140 million, which excluded the cost of office visits. we referred 48 of the most egregious of these cases to the medicare drug integrity contractor for further investigation. our report documents the facts related to 10 individuals that were dr. shopping. many of these individuals had prior criminal histories. this was not a random sand along the results from these 10 cases cannot be project did two while 170,000 cases. examples that you both mentioned from our work for these 10 cases include: a california man received a 1758 day supply of fentanyl patches, which is a herpetic painkiller from 21

different prescribers. a georgia grammar saved in 1679 day supply of oxycodone a pain killer and other drugs from 58 different prescribers and 45 different pharmacies. an american maryland woman received a 1451 day supply of oxycodone from 11 different prescribers. the graphic in your packet which i have in my hand looks like this, illustrates an actual case from our investigation. as you can see between september 8 in september 19, this individual received 330 day supplies of the painkiller hydrocodone. these prescriptions were obtained from three different prescribers until the different pharmacies. in cases like this, prescribers told us that they were unaware that their patients were receiving the same prescription

drugs from other prescribers. our recommendations to address dr. shopping are consistent with those used in the medicaid program as you mentioned, mr. chairman and also in the air. first to recommend that cms consider the use of a restricted recipient program. this program of the mid-note system abusers to one prescribers, one pharmacy or both. thank you ..

>> in conclusion, medicare dollars are being used to finance prescription drug abuse in our nation. gao is hopeful congress and cms uses this report to improve the integrity and safety of the medicare part d program. mr. chairman and ranking member brown, that ends my statement, and i look forward to your questions. >> thanks for the statement and the work that backs it up. mr. blum. >> senator brown, i'd like to thank you and the committee to ensure the medicare part d program is as strong as possible. today, the medicare part d program provides outpatient drug benefits to over 29 million beneficiaries. there's over 1200 plans, and medicare beneficiaries may

choose from a multitude of plans to deliver their benefits. the majority receives benefits in stand alone part d drug plans, that is, private plans that only provide outpatient drug benefits. the program has been a great success. overall, costs have risen more slowly than the original projections, and a majority of beneficiaries are satisfied with the benefit, but we know that the benefit is not perfect. while the program is stronger today than ever before, we know there's vulnerabilities that must be addressed. i want to thank the gao for highlighting the potential of the drug abuse in the program specifically related to controlled substances. we have reviewed carefully the gao's report and its recommendations, and we agree with the gao that the misuse of controlled substances is a growing problem to the medicare

part d program. it's difficult to quantify the extent of the problem, but we agree the program can do more to curve potential fraud and abuse. at a time of scarce resources and significant budget deficits, we must ensure every dollar is spent as wisely as possible. since the part d program is relatively knew to date, our focus at cms is to ensure the medicare beneficiaries receive drugs they are entitled to. the part d program pays a plans a payment and works to make sure the part d plans provide drugs consistent with the program's requirements. our compliance efforts in recent years have been focused under the underutilization of drugs. we have audit resources to ensure beneficiaries receive the drugs they need at the point of sale. we placed significant sanctions on part d plans 245 failed to deliver benefits consistent with the law and our regulations.

the part d program has reached a new state of maturity that we now need to shift our oversight focus. we cannot just focus on the under utilization of part d drugs. we have to shift to the over utilization of party drugs. we have recently taken the following steps. first, last week, cms put out new guidance to plans to ensure they are putting into place more comprehensive drug review programs to ensure they are screening for misuse of controlled substances and other drugs. if clinical reviews reveal misuse, we'll stop payment and report the fraud to law enforcement. yesterday, cms proposed new proposed rules for the part c and part d programs to ensure that 9 -- the prescriber is put on all part d drug claims to ensure we

can produce more so fist kateed -- sophisticated analysis and spot the prescribers that present vulnerabilities to the part d program. cms also shares concerns over the high use of antipsychotic medicines given in nursing homes. there's evidence that the financial relationships of long term care pharmacies and drug manufacturers can lead to the over utilization. i propose the rules put out last night that suggest possible steps we could take to avoid over prescribing. they are using data proactively. again, our analysis and data mining to-date, are focused on plans that may appropriate prescribing denying beneficiaries needed drugs. our data analysis now includes focusing on drug over utilization. the gao suggests the cms should consider a program whereby it

restricts prescribing of controlled substances to a single physician dispensed by a single pharmacy. cms does not believe such a measure, which has been employed by state medicaid programs, would work well in the part d program. part d in its current form can want restrict a beneficiary to a single physician or pharmacy. cms believes the responsibility to prevent part d drugs rests with part d sponsors. we have to be concerned that beneficiaries do not face undo restrictions to necessary medications. beneficiaries seeing many doctors may have complicated health care needs or may be victims to a dysfunctional health care delivery system. any program to our belief to curve overuse and misuse and overutilization must involve strong review and judgment to ensure that those in need do not go without or face arbitrary restrictions.

cms's response to the growing problem will continue to follow these principles. thank you for the opportunity to testify today. i look forward to your questions. >> yeah, and we look forward to your questions. thank you for the testimony and we look forward to asking you questions. >> thank you, good morning, chairman carper and ranking member brown. the amount of health care dollars spent on prescription drugs in this country comets to grow. national health expenditure data revealed in 2009, $250 million was spent on prescription drugs and by 2020, that spending is projected to more than double reaching more than $500 million. the amount 6 dollars spent on prescription drugs continues to add to that amount as it grows. the problem of drug diversion also grows as a segment of the total health care flood problem. while doctors shopping by patients is the primary focus of the report released today, and it's important to acknowledge that prescription drugs

diversion takes many forms. the most complex, perpetrators undertake a multifaceted criminal enterprise directed at reselling drugs at a high profit on the streets and the cost hurts both public and private. the money lost to drug fraud is only part of the financial impact of this problem. in the process of obtaining a prescription, a patient typically will generate claims for related medical services. insurers find they have paid not just for unnecessary drugs, but related emergency room visits, party stays, visits to physician offices, and diagnose testing all to obtain a prescription. then, there's the additional cost associated with treating the addictions and overdoses arriving from this behavior. more importantly, the financial losses due to prescription drug further compounded by

insubstantiations of patient -- instances of patient death. this is side effects of the fraud. the national official of drug policy calls for prescription drug abuse the fastest drug problem, and the classified prescription drug abuse as an epidemic. of course, prescription drug abuse itself does not indicate fraud, nevertheless, in many instances, the drugs are obtained through fraud. an example of the human toll of this problem was clear in a recent case in kansas. on october 2010, a kansas physician and his wife, a licensed practical nurse who also acted as the office manager of the clinic was sentenced to 30 and 33 years in federal prisoner respectively were redistributing pain medications to patients who overdosed. a four year investigation of the pill mill uncovered evidence of over prescribing of controlled substances. more than 100 drug overdoses

requiring visits to wichita emergency rooms and the deaths of at least 68 persons linked to this case as well as more than $4 million in medicaid and private insurance claims. after the trial, the jury convicted the couple finding they contributed to the deaths of several patients. this case demonstrates that prescription drug fraud is a dangerous crime that can yield death. private insurers acknowledged drug diversion and doctor shopping as a trend for the last several year, and their anti-fraud efforts identify dangerous fraud abuse by patients. there's two insurers, humana and well point use monitoring, letter notifications to prescribers and restricted recipient programs with success. nta also supports state prescription drug monitoring program to help identify fraud and ensure party safety. they recommend that state investments in the monitoring

programs be incentivized whenever possible. also, they recommend taking full advantage of opportunities and information sharing among prescription drug monitoring programs for state sharing borders with one another. for instance, in august 2011, kentucky governor steve bashir announced the formation of an interstate task force with the border states committed to prevents fraudulent drug activities in those states. they are encouraged by the memorandum from 2008 by part d sponsors asking for comments on how the medicare part d program can successfully exert control of a payment for inappropriate over utilization of drugs. in addition to responding to the ideas outlined in the memo, they suspect that many sponsors suggest a program be considered to curve drug seeking behavior

or diversion. thank you for the opportunity to testify this morning, and i look forward to any questions you may have. >> great. thanks very much. that was great testimony. let me start off by saying one of the things we focus most on this subcommittee is finding out -- we are interested in results, not interested in process. interested in having the ability to actually measure results. we focus on success and how do we measure success. senator brown probably remembers me mentioning a hearing not in this room, but in the finance committee hearing room a couple months ago, we're having a hearing on deficit reduction with four or five really smart witnesses. one was dr. allen blinder who teaches at princeton. he was vice chairman of the federal reserve. he was forced to testify, and in his testimony he said, you know, the 800-pound gorilla in the

room in health care cost explosion and deficit explosion is health care costs. he said unless you do something about that, everything else is sort of window dressing, and when it came around to me to ask a question, i said, you talked about how health care costs, the 800 pound gorilla in the room with respect to deficits and it's imperative to do something about it. i said do you have any advice for us today as to what to do? he said i'm not a health economist or an expert, but he said here's my advice. find out what works, do more of that. that's all he said. find out what works; do more of that. what doesn't work, do less of that? that would be true. so let's see, in the spirit of finding out what works and do more of that, let's talk about what works and what it happens to be, i think you mentioned in the testimony, i think you mentioned humana and well point, the steps they are taking and experience with medicaid where

they said one doctor one pharmacy to control it. talk to us about what it working and how we take those ideas and incorporate them with legislation or regulatory approaches. mr. kutz, lead us off. >> restricted recipient has been successful in medicaid. 30 to 40 states have a variety of the one prescriber, one pharmacy or both, some are two actually, and that's been proven to be successful in those states with medicaid. >> i want to interrupt for a moment. you said you didn't think that the success has been realized in medicaid in addressing this problem would necessarily work in medicare part d. just take a minute, and then i'll come back to you mr. kutz. >> sure. benefits work different than part d.. the state program has one

fee-for-service program where there's a complete view of the pharmacy benefit. the part d program by statute works different than than state benefits. there's 4700 plans that provide the day-to-day transactions of the pharmacy benefit. to our view, because the wide diffusion to benefits designed by statute, to our minds, we have to have the part d plans themselves provide the kind of review, the oversight to ensure that drugs are dispensed consistent with the law. >> okay. that's excellent. stop there. mr. kutz, respond to what mr. blum said if you would. >> we agree with medicare there needs to be a prevention plan in place, the chapter vii regulations state that, and to me, that includes prevention, monitoring, and some consequence at the end of the day for people who beat the system. if there's not a restricting recipient program in place, there's a hole in the thought

prevention plan in that what are the deterrents to people doing this? the thought is they will not get caught, and if they do get caught, there's no consequences. i feoff to congress on these things, you have to have consequences to people to detour them. >> what else in terms of what works? >> some things is the prescription drug monitoring plans with realtime data that doctors can access so they know before they write the prescription that their patient is seeing other doctors or prescribers for the same thing. think about the first step in the process which is the writing of the prescription, you can perhaps prevent some of the prescriptions being written by having realtime data available for the prescribers to look at for their patients. the next step is point of sale at the pharmacy. it's very important to focus on information the pharmacist has before the drug is dispensed to

see doctor shopper activity. the issue is when they get alerts at the pharmacy, what are they doing with it? are they using it it deny someone, or do they get the drug even though there's an indicator. it's called soft edits where they get the alert, but they don't have to do anything with it. to me, that's important. third thing is monitoring. once you have, and, again, cms promotes this, data mining and matching. similar things we've done here, but more comprehensive to me is another important element of a comprehensive fraud prevention plan. >> okay. good. mr. blum? >> i agree with everything mr. kutz said. we have to provide strong guidance to the part d plans to make a complete and holistic picture of the beneficiaries and pain medication needs. to date, there's system set up that are comprehensive and

there's edits in place, and we have to encourage the part d plans to take a more complete picture so they can figure out whether or not beneficiaries are prescribed medications that exceed good sound clinical judgment. i think it's important to point out that a beneficiary seeing many physicians could have very legitimate needs. they could be going to the er, a clinic setting and just being bounced around the health care system, no fault of their own. to our minds, any system in place to stop doctor shopping and stop abuse needs to be based within sound clinical judgment to stop the bad behavior, but not preventing harm to beneficiaries who have legit ma needs or are being bounced around the system to no fault of their own. >> uh-huh. all right. what is working out there? >> well, you know, i think it's a combination of several things. no single thing works by itself. first, analyze data, look at

what's happening out there. you know, cms and the fee-for-service medicare area is moving towards predictive modeling. you have to do that to see what's going on, and then you have to take action. now, the action should include notification to the physicians that are prescribing the drugs. also notification to the patients themselves, and then looking to those patients to see if they have a problem, maybe trying to get them into programs that address the problem, but i think the other big piece of it is a restrictive recipient program, a lock-in program where under certain circumstancing allows for utilization, for certain types of conditions that may, you know, need a lot of pain medication, that you lock those folks in. that doesn't mean they don't have access to those drugs. for example, humana example that we give, humana locked them into a pharmacy with multiple locations. it's not just, hey, you have the

one pharmacy down the street. you can go to different locations, but you are locked into that one pharmacy. i think that should be seriously considered. given the right circumstances with the right patients that, hey, we're not making any dent on this otherwise. we need to take that additional step. >> all right. good. senator, thank you very much. >> thank you, mr. chairman. so mr. kutz, in your report there's cases among others in 2008 alone, a beneficiary received 5923oxycodonine pills. i know your report indicates that the beneficiaries stated to the doctor that the pattern of abuse was a case of mistaken identity, but that, in fact, was not the case, and it's doubtful that person could consume that amount of narcotics in that time

frame so what was really going on here? >> well, we did not interview all the people, reason being eight of the ten have prior criminal histories, and we don't carry weapons. we don't interview potentially dangerous people. potentially drug abuse and dealing is going on in that case. >> and i agree because i hear the word "diversion" and that's drug dealing. they shop around, get the drugs, and sell them and taking advantage of tax free benefit program in receiving government funded health care, and as you can see from our chart, case one, the street value is almost $500,000, and in case two, it's almost $300,000, and obviously there's a break down. i don't know about you, mr. chairman, but i have kids, and i remember those ear infections. you have to get whatever

medication there is, and god forbid, you left it somewhere, you -- it was like getting fbi clearance to go and get another prescription for an ear infection, but there's instances like this where people go doctor shopping. i mean, aren't these people paying co-pays or i mean, isn't there a system in place where there's a record locater saying, hey, this person's been to 11 doctors for the same issue. p isn't there something in place like that? >> there is. there's prescription drug monitoring plans, and there's a letters sent. we saw 245 in the cases to the doctors, however, all the doctors do really is kick the patient out. some of them got the letters, said, well, i know the person's in pain, and i keep prescribing even though i know they are going to other doctors. it doesn't prevent it. >> that makes no sense. you send letters, and doctor

sees the letter, and yet he or she continues to prescribe the medication because the person's in pain. i mean, isn't there a realization that gosh, these people are abusing and dealing drugs? isn't there an obligation for doctors to find out what's going on and isn't there an obligation to get the letter, and then refer that to law enforcement? i mean, is it really working? >> i would say mixed results, but not really working to prevent it from happening. several of them kick people out of their programs because they violated the pain management agreement. others kept prescribing. at the end of the day, senator, some of the doctors are part of the problem in what they are doing. 23 you look at the actual quantity of drugs they were prescribing, it does raise questions, and it raises

question about the pharmacies too. get the printout of the pharmacy of how many drugs they get, it's just not medicare supplying, but they pay cash for others and get it from other places. they are looking for multiple sources, and as you said, that indicates potential dealing. >> the findings don't come as a surprise to cms. in 2009, hhsoag reported drug dealing by beneficiaries as referenced is the top type of potential fraud and abuse referredded to in the -- referred to the inspector general's office. in your investigation, what did you see as guidance to planned sponsors in response to beneficiaries who are doctor shopping 1234 >> some of the sponsors are in the recipient program, and some asked cms23 they could do it, and it's in the chapter vii of the regulations that a lock-in program like that is prohibited

at that point. whether it's illegal or a policy issue, mr. blum can answer that question. it's something i believe still is a valid part of the comprehensive plan, and i agree with the other witness that said not one thing alone does it. you have to have stuff at the beginning, the monitoring at the end, and people have to believe there's a chance they'll get caught, and if they get caught, there's consequences. >> the thing that's amazing is there's an angle. everybody's got an angle to screw the government, and, you know, out of taxpayer money, and whether it's dealing with, you know, waste, fraud, and abuse and contracting, whether it's dealing with these sorts of things, whether it's not selling government property or holding back, i mean, just doing things so inefficiently, it's just mind boggling, and so mr. blum just following up on you, knowing that according to oig and gao about the possible drug dealing as a result of the prescription drug abuse, cms's primary

response to a case where a beneficiary is found to be appropriately obtain, had planned sponsors issue an educational letter to the doctor, and since issuing the guidance to planned sponsors to send an education letter, have you seen a decline in cases of beneficiary doctor shopping or prescription drug dealing, and if so, what is the decline? what's the result been? >> i think quite honestly, senator, we are hearing about overall increase in potential over utilization misuse of controlled substances. >> so even though the letters are going out, it's been increased? >> i think that cms fully agrees our response must be stronger. >> so the letter's not working. >> and that's why -- >> is that letter not working? >> i believe that we are seeing more complaints coming in the fraud and and abuse contractor. we are having more reports -- >> so if the letter went out and

the cases are increasing, then that's not working. >> i believe that we -- >> yes or no. >> i don't know to be honest, but i do know that there are more capabilities coming into the medic of potential doctor shopping. those cases get referred to law enforcement, and we are very concerned regarding the potential overuse of controlled substances. >> let me tell you it's not working, okay? that's why we are here because it's not working. i would encourage you to do more than just send a letter. >> we are, senator. >> if you need help or guidance or additional help from us, great, let us know, but sending a letter when we talk about millions of taxpayer dollars just makes no sense to me, and, mr. kutz, as you know, the dea administer special licenses to doctors enabling them to prescribe narcotic drugs, and in

preparing for this hearing, my staff talked with dea and cms in the effort to curve this real tragic abuse and found that the dea had very little relationship with cms and does not know who the medicare drug integrity contractor was much less share information with them. how important is it for cms and the medic to be working with the dea or sharing information about potential doctor shopping with the dea? >> i would hope someone in dea knows the medic. apparently, the person you talked to did not, but there seems to be a relationship and coordination since dea looks at large cases, and dea is looking, i think, it's schedule one, the cocaine, the marijuana, and heroin, and those types of things, but certainly better coordination with them. if it's not happening, some of these could be big cases, and our individuals, we found the ten, they might be part of a bigger network, and sharing ever information would be useful

here. >> we rand into problems about ten years ago when we failed to share information. it's obviously different, but it still bears to learn the lesson that, you know, we need to provide this information. the dea and no one is putting their foot down. i encourage whoever is not communicating to do it. i'd like a second round if we could. >> maybe three. >> [inaudible] >> all right. thanks very much. i want 20 come back -- i want to come back to you if i could, mr. blum, and we talked a bit earlier about your office putting out a memo to medicare part d sponsors in an attempt to hamper doctor shopping in the program, and i think it's probably in response to the gao study that was released last week, at least in part in

response to the goo study we requested, and for the hearing we're having today. i'm told that the memo that went out last week does not actually direct the planned sponsors to make changes. the memo i'm told just asks for ideas and suggestions. i'm told that the memo left many potential experts and stake holders out of the process. for example, i don't believe it was distributed to pharmacies or to law enforcement. i want to say, mr. blum, i think it's critical that we put into place concrete steps to stop this form of abuse and waste to the extent that we can, and when do you plan to complete the guidance by establishing a change of rules or other new procedures? >> i think it's a fair statement that we put out our guidance to

plans with the opportunity to solicit comments, and i think we want to understand from the part d planned sponsors themselves how best to implement the policy goals that we have to address and to respond very quickly, more quickly than in the past, to the overuse and misuse of controlled substances and other drugs. as i said in the testimony, we have to strike the careful balance, and so in stopping the behavior that senator brown points out in his chart, that is clear fraud. that needs to be stopped, but at the same time that there are legitimate beneficiaries with legitimate pain needs. we have to find the right needs, stop the egregious behavior that makes no clinicalceps, but at the same time, some beneficiaries seeing four physicians have legitimate health care needs. we are open to all ideas, and your suggestion to share guidance with others is a good one we'll follow up on, but we

have to make sure that law enforcement best supports our work, the pharmacists, physician community, the front line of the transactions, but i think it's fair to say we are open to every idea that strikes the right balance between stopping the behavior that's clearly font and illegal -- fraudulent and illegal, but at the same time making sure beneficiaries have access to the medications they need. it's not just control. we're also concerned about antipsychotic and other drug classes. we have to focus on all drug classes that could have potential misuse. >> all right. i appreciate that response, so in this case, it sounds like cms is prepared to distribute that memo, that you put out last week to others including law enforcement and pharmacies? >> they are public documents, and so i think we have to do a better job to make sure that the

entire public can see it, but they are public documents, and we'll do our best to make sure they are shared more widely than just part d. >> include those areas, law enforcement and pharmacies. >> absolutely. >> having said that, i also want to know that centers for r from medicare and medicaid yesterday finalized some new rules that -- >> proposed rules. >> proposed rules, okay, take one important step to curve fraud in medicare prescription drugs and i think starting next year, part d has to confirm it was written by a physician, something we discussed at a similar hearing i think last year here. it's a good example of cms taking action, and i hope that it can be repeated with many of the ideas that we're talking about here today, so that's good news. question if i can for, i think

for mr. kutz and mr. blum if i could. i understand medicare part d benefit is made up of two types of beneficiaries, those eligible because they are over 65 and eligible for medicare, and those eligible for low income under the age of 65, and i'm told the gao found 70% of the part d beneficiaries suspected of doctor shopping were low income or disabled individuals; correct? >> 120,000 of the 170,000. they are just indicators, but they were disability, social security, ssi, and di participant pes on the phone: -- participants. >> what do you think the findings might mean? what are the implications of that? >> well, one of the things is it's knot typically the over 65's doing this which one looks at medicare and assumes that without digging into the numbers. >> is it true folks in the medicare part d program 65 and over, they are not there because

they are unable to work, but there because they are 65 and over, traditional medicare, they can only change their benefit plan is it annually? >> not in the low income, they can just change annually. >> the folks in the low income category or population, those in the disabled population, they can change plans monthly, can't they? >> right. >> right. that would be ripe for abuse. >> right, and that's a risk here of, you know, if you actually stop it happening on one plan, we recommend that sharing between the plans of the known abusers is something for cms to consider. >> let me ask you, mr. blum, if i could, does cms believe the ability to change plans monthly for those particular ben beneficiaries is an idea that the congress should revisit? did we do that in the law? i presume that's in the actual law we adopted five or six years ago. >> my understanding is that the ability for low income beneficiaries to change plans month-to-month was through cms

guidance, and not the legislation. the history is when cms set up the new part d program set up by the congress, there's concerns with low income beneficiaries transitioned from state medicaid programs over to restricted part d forms that mirrored commercial forms. as a beneficiary protection, the agency now allows beneficiaries, low income beneficiaries, to change plans month-to-month, gimp they have oftentimes very complicated health care needs and drug regimens that the agency's goal is not to interfere with those health care needs. that being said, this -- >> do we have an unintended consequence here? >> well, i think that's one unintended consequence poarvelly that the operational frame work that we operate under for those who might be out to game the system could change plans

month-to-month. we have to find the right balance between protecting consumer access and stopping those who are attempting to fraud the program, but the current policy the agency has is to prevent low income beneficiaries to change plans month-to-month. >> uh-huh. as you consider this, just keep in mind, the same at the same statement i gave earlier, 120,000 americans abuse prescription drugs every year, more than the number abusing cocaine, heroin, methamphetamine, ha lose -- hallucinogens and others combined. let's explore this more and see if it's something that has not worked as intended, and if we ought to make some changes. good. senator brown.

>> thank you, mr. chairman. i'll go to the floor after this, so this is my last round, i appreciate you holding this. we have to strike a careful balance. i don't think we're -- i think we're too careful to be honest with you. i think that there's 170,000 people abusing the system according to my information. could be more or less, but clearly there's an issue, and i know that cms in september 28 memod part d sponsors and admits that the contract responsible for identifying investigating medicaid part d fraud identified excessive utilization of drugs and that cms considers these patterns highly indicative of drug abuse diversion, aka drug dealing. since the contractor identified

this fraud, how many cases is referred to the inspector general for prosecution? >> my understanding, i'll have to defer to law enforcement, but my understanding is that every case that was revealed by the gao of true pat terchs of -- patterns of illegal behavior somewhere in the neighborhood of 50-60 cases referred to the medic. those cases were all investigated, some of the cases were referred to the ig, and the ig, i think, has decided to pursue a handful of those cases through law enforcement channels, but according to the data that i have from the medics that they continue to receive growing complaints regarding the use, and they continue to fill their obligation to refer the cases to law enforcement. it's important to break down the 170,000 figure you cite. there's four potential reasons for that number. one is that there is diversion

or drug dealing going on. one is that beneficiaries are feeling their own addiction. three is they have legitimate clinical need, and fourth is the victims to a dysfunctional health care system. i don't believe the gao report has broken down that 170,000 number to the four categories. >> can you repeat that? dysfunctional health care system, what do you mean? >> beneficiaries bouncing around from er to er, there's an uncoordinated health care system we are working hard to reform, but beneficiaries seeing multiple physicians might be going to the er, might be going to different physicians because they don't have a regular source of primary care, so that's not the fault to the beneficiary. >> don't you have -- when ru are you going to implement edits that are clinically necessary? when will the safeguards be put in? >> one, our strategy now is to

solicit comment, take that, and work as fast as we can. >> here's a comment for you, just fix it. i mean, just fix it. we're talking hundreds of millions of dollars of taxpayer money that need the money for other things quite frankly. >> and my understanding is the cases pointed out by the gao are true fraud and illegal behavior, and some of those cases are very legitimate health care needs, and cms has to find the right balance. >> wait a minute. fraud and illegal behavior, but you need to balance it with the health care needs. yeah, the people that need some qair and cove rages, i understand that -- coverage, i understand that, but we're talking clearly about taxpayer funded medicare prescription drugs that are probably being used to care for that individual, but the rest of its sol in the black market -- sold in the black market sold to friends or neighbors or whatever, and sop i get the fact we have --

and so i get the fact we have to treebt -- treat everybody with reasonable care, but there's a problem that supersedes the pain that they have. you have to dictate and actually come out with suggestions of your own. i mean, from as to how to fix it. it seems straight guard. have a check and balance, a top to bottom review of everything you do, a qhek and balance, and when you have any indication there's any type of abuse, you know, go right for the jugular and make sure it doesn't happen. there has to be a sharing of information, you know, i would encourage you, you know, your department and the people responsible, and i know there's good hard working people over there. i get that, but, you know, we have a real problem here. we would not be here; right? if we didn't have a problem;

right, mr. chairman? right. we're all ears. i think all the senators here, the two guys who work together the best in trying to find solutions. we're not just throwing bombs. we're trying to find out the problems, and then find a way to just get to the bottom of it to put money back into the system for people who legitimately care and respect the care and coverages they get from the american taxpayer because frankly, there's other folks who don't have those luxuries and benefits, and they are hurting and need help too, so i don't want to preif or -- preach, and i think you know where i'm at and where the chairman's at too. we just have to do it better. you know, we're in this together. we have to do it better. i appreciate you bringing this forward. mr. chairman, once again, you're right. i appreciate, and i'm going to head to the floor. >> we appreciate the work of gao, and, you know, with are

grateful for that. there's a place called funland, and i see the audience reaction, people have been there with their kids, and it's great fun for children of all ages incoming -- including our age, but there's a game called whack-a-mole, and then another one pops up -- >> [inaudible] [laughter] >> and in any event, in terms of whether the issue is abuse of prescription drugs, the drug trade and hooking people on controlled substances or whatever it is with surplussed property or waste in i.t. systems, you name, there's plenty out there. we'll stay busy for as long as i serve on it and continue to focus on these. i want to come back, if i can, to -- i believe you mentioned

humana and well point. let's come back and talk more about what are they doing there to address these particular challenges? >> well, what they do -- they do several things. first they take a look at prescription drug claims in certain category to control type substance, and humana has a three-three-three program. >> a what? >> a three-three-three program. >> that's a lot of threes. >> a lot of threes. to the extent there's three prescribers, three pharmacy, and three actual prescriptions filled over the course of a year, they take a closer look at that particular case, and if necessary, they send out notifications to the physicians involved letting them know there could be potentially abusive behavior going on here, and then after further look at the cases,

maybe putting those folks into a lock-in type program where they have -- they are restricted to one particular pharmacy in order to obtain those types of drugs, and they seem to have some success with that, talking with humana, there's been a decrease in the amount of prescription drugs for these particular patients when they do that. well point had a similar program, and they also have a program now where they look at individuals that have gotten ten prescriptions over a 90-day period, and they carve out, again, when looking at that, you know, going to mr. blum's point about, you know, cases where patients do need those particular drugs, so they do carve out things like oncology or ms, and, you know, they charve those out -- carve those out, but they look at the prescriptions over the 90 days, and, again, they notified the prescribers in those cases, and then they also put those individuals on a lock-in

type program, and, you know, the other things they do is look at geography because even with the prescription drug mop toring programs that the states have, it's important, you know, folks that are living in states where they can cross the border an avoid those programs that the states have, they'll do that. if they need to travel outside of certain geographic areas to go to other physicians to get drugs, they'll do that. one of the things they do is the patient traveling long disanszs in order to see -- distances in order to see a provider and get a prescription? they look at things like prescribers prescribing outside their area of expertise, so if you have, you know, tern types of doctor prescribing a lot of pain medication drugs that is not really working in an area where you expect that type of prescribing, they take a look at that. i'm sure cms probably has similar edits to the extent that the sponsors in part d, they

have those edits. again, it goes back to a combination of things. what we were told is that companies like humana and well point that are part d sponsors would like to use the lock-in programs, but are not allowed to in medicare part d.. >> mr. blum, react to what he just explained and what they are doing at humana and well paint. >> what's encouraging about the examples that are raised in the testimony is the notion that part d map can look more comprehensively regarding the entire cation -- case of the beneficiary. that's where we want the program to go is that our part d sponsors taking into account much more comprehensive drug reviews so they see the history of patient's care to make sure that the total drugs being dispensed over the course of a given benefit period are consistent with sound clinical

judgment. we understand that oncology parties, other parties have very legitimate care needs, and many of the beneficiaries have very unique geographic circumstances that, at this time, we did not believe that a restricted program worked well in the program. to our strategy and belief, we have to have clinical judgment, clinical review, drive those behaviors, and when our part d sponsor -- our hope is when the part d sponsors see prescribing that is not justified by clinical review and judgment, those payments are cut off. part d and cms do not carry guns w. to defer cases to law enforcement, but our responsibility number one is to make sure there is good clinical jurmt, and then, two, is to make sure that we are providing the necessary direction to our plans for cases to law enforcement for

investigation, and for follow-up. >> uh-huh. mr. kutz, would you just respond to what he's been saying? >> right, and i would agree that some of the 170,000 we mentioned are not necessarily doctor shopping. some are, and there's other people who go to four who meets the definition. that number is a soft number. you have to up vest gait all -- investigate all 170,000 to know what's happening. the sponsors told us the same thing that they would like a lock-in if the infrastructure's in place. again, i think that cms should at least consider this as a valid part of the back end of the process which really it feeds into the front in. if you can just go to one pharmacy -- we have people going to 145 pharmacies. if you are locked to one pharmacy, we are just trying to control your behavior, and, again, there has to be a safety net for legitimate people. we don't want to lock them out. we certainly agree with that. >> all right.

mr. blum, is it cms's position that restricted programs are a mechanism to minimize program misuse of medicaid, but would not regulate misuse in part d? that seemed to be what you're saying, and in response to the request for comments from the plans sponsors put out last week, do you think there's a chance that the planned sponsors would ask that a restricted recipient program be put into place? sounds like some might be, and if so, would cms's position change? >> we are certainly open to all ideas and i think based upon the conversation in the testimony today we will certainly take a second look to make sure that we're thinking about restrictive programs correctly. i mean, part d sponsors feel confident they can put the programs into place in a way

that prevents fraud but not necessary care. we will be open to the idea. i think our current judgment that we think that more comprehensive drug utilization review 1 the best strategy right now, and we agree that broader data sharing, broader data analytics give us new tools to help support law enforcement, but cms will continue to stay open to all ideas, and we are very much committed 20 make -- to making sure taxpayer dollars are spent as wisely as possible. >> all right. thank you for that. back to mr. kutz if i could. according to the report released by gao today, the cost of drugs likely obtained through doctor shopping is close to $150 million. i think that was for one year? >> 2008. >> yeah, 2008. talk further about that figure and how did gao come up with it? >> it was really using -- i

guess we have the oa claims data, information from the npis, the national identifiers for prescribers, national data, national drug code information we used for the 14 classes. it's limited to 14 classes of drugs, and we did the data mining to see who was going to five or more prescribers for the same class of drug whether it's a generic or name brand drug like oxycodone and oxycotin, and we got the five or more. there's people who used three, four, five, six, it seems there's a consensus in the three to six area. we used five. we actually used six with medicaid before, but other state audits, the pdmp's and planned spot sores, five is in the ballpark for indicator there's a potential further review necessary. >> okay.

is there any way to factor in those costs 20 arrive at the -- to arrive at the true taxpayer abuse? >> it's not all taxpayer. it affects the beneficiaries who are not using the program. it increases their share of paying for this. we did not include the offices. some of the people went to emergency rooms to get their drugs -- >> i think mr. kutz, didn't you mention that? >> right. we saw evidence of that also that in some cases they went to the -- it's just another way to doctor shop. they don't give you a full month, but enough to get you through a few days, and there's been medicare paying for the cost of the emergency room visit in that particular case. >> talking about $148 million in 2008, zuz that include doctor -- does that include office visits 1234 >> no, nor emergency room visits, no.

>> i have no idea that adds up to, but talk about several millions of dollars, maybe more than that? >> yeah, i think as a ratio, some information we had seen is for every prescription drug say that was obtained for abusive purposes. you have as many as $14 behind that in -- >> say that again. >> 14-to-1. say the drug costs $20. between the office visits, emergency room visits, it's a ratio of 14-to-1. for every abusive drug you may have seen, the cost could be that much higher. >> 14 times higher? >> well, because of the additional services that go along with obtaining that drug. go to the emergency room, and i hurt my leg, and i need the drug, i mean, there's the costs to medicare or medicaid or the commercial insurer paying for that emergency room visit to go along with the prescription you

get as you walk out the door to get that drug. >> four time higher even would be $600 million in a year. >> we didn't pick the drugs because of their coring's and as you -- cost and as you mentioned the cost is the bigger issue, but the street value is several thousand dollars for a prigs. that gets into the other factors to consider here in why we pick them. working with you and your staff, we looked at the 14 drugs we thought were the most dangerous and highly abused in the cry right now. >> all right. if i could, as you know, i work with senator brown and others, tom colburn, senator colburn, and others on the committee to write legislation aimed at curving waste and fraud in both the medicare and medicaid. we've introduced bipartisan legislation, actually s1251, i

mentioned earlier in the statement, medicare and medicaid fighting fraud and abuse to save taxpayer dollars. that's a mouthful. there's no good acronym for that one you'll be pleased to know, and the legislation contains a number of ideas that i think directly impacted drugs from medicare prescription drug program. for example, the legislation aims to help states establish and strengthen prescription drug monitoring programs, and also helps to stop identity theft of physicians who prescribe controlled substances, you know. one of the terms i learned this year is -- what is it? "master death file." people say what is that? i say, that's the list you don't want your name to appear on because it does, it means you're dead. we have doctors who have names on that list because they are dead, and they still write

prescriptions, and there's beneficiaries on the master death file, and they still receive benefits even though they are dead. doctors can't be writing prescriptions and beneficiaries cannot be receiving benefits, but one of the corner stones of the bill is to require closer coordination and better information sharing among medicare officials and their staff. medicare oversight contractors are private partners like the prichtion drug plan -- prescription drug planned sponsors as well as local, state, and federal law enforcements. i would ask, if i could, mr. blum, of you, do you think that these provisions of the legislation would help to curve at least to some extent drug diversion there -- from medicare, and secondly, are steps better in data sharing with law enforcement can prove beneficial? >> i think i 4 a chance to -- i had a chance to carefully review the legislation you

introduced, and i think there's some very good ideas that will improve both the part d program and the medicare program overall, and i think that it's fair to say that any barriers that can be taken down for data sharing and analysis will prove very beneficial to the program. the program has been built in silos. we have physician, data system, and hospital data systems, and part d data systems that his historically prevented sophisticated data analysis. we don't always have the feedback loops between law enforcement back to the program, and those are barriers we need to break down that your legislation, i think, would be helpful to continue that effort, but now we have much more sophisticated data systems. we have part a and part b, and part d claims, the common data sets. we are moving to make sure the prescriber id's number is part of the dr