Senator Chuck Grassley issued the following comment about the President's nomination today of Marilyn Tavenner to lead the Centers for Medicare and Medicaid Services.

"Mr. Berwick's nomination was derailed by the administration's unwillingness to let the nominee provide the committee with legitimate information necessary for us to serve our role in reviewing the nomination.   Rather than provide us with information, the administration recess appointed Berwick.  Hopefully, the administration has learned from its mistake and will follow the regular process with this nomination, as part of our system of checks and balances."

Senator Chuck Grassley made the following comment about the Joint Select Committee on Deficit Reduction not reaching agreement on a ten-year proposal for at least $1.2 trillion in deficit reduction by November 23.

Senator Grassley submitted specific recommendations to the committee for spending reductions totaling hundreds of millions to even billions of dollars from administrative restructuring, reduction of duplicative and overlapping programs, and unnecessary and wasteful programs under the authority and jurisdiction of the Senate Committee on the Judiciary, where he serves as Ranking Member.  He also made recommendations to the committee for the Grassley-Kohl legislation which would save $4.8 billion in federal government spending on prescription drugs, including through Medicare and Medicaid, by stopping deals between name-brand and generic drug makers that keep less expensive drugs off the market.  Senator Grassley urged the committee to adopt caps on farm payments, for a savings of $1.5 billion, and he backed a goal of saving $23 billion in spending from programs that fall under the jurisdiction of the Senate Committee on Agriculture.

Grassley comment:

"Even though I didn't vote for the bill that created the super committee, I hoped it would succeed in reducing government spending and signal that Washington is serious about getting our fiscal house in order.  During the last two years alone, federal spending has increased 22 percent, not even counting the failed $800 billion stimulus program.  Out-of-control deficit spending and a $15 trillion national debt inhibit the ability of the economy to grow and create private-sector jobs.  It's a moral issue, too, because it's wrong to leave a legacy of debt for the next generation.

"Going forward, entitlement reforms are needed not only for the federal budget, but also to sustain the programs themselves, and Congress and the President need to stay focused on reducing spending.  Tax increases aren't the solution because we know that money from tax increases isn't used to reduce the deficit.  For the last 65 years, every new dollar in tax increases has resulted in Congress' spending $1.17.

"The President should have been engaged and at least have offered a credible deficit reduction plan.  In addition, the majority leadership of the Senate continues to do nothing about the budget challenges, despite the urgency."

Reed and Grassley Seek to Increase Transparency at Accounting Watchdog

WASHINGTON, DC - In an effort to protect the investing public and improve the oversight of corporate auditing, U.S. Senators Jack Reed (D-RI) and Chuck Grassley (R-IA) are introducing the PCAOB Enforcement Transparency Act of 2011.

In the wake of a series of corporate accounting scandals, such as Enron, that cost investors billions of dollars and hurt the U.S. economy, Congress established the Public Company Accounting Oversight Board (PCAOB) as a watchdog to oversee auditors of public companies.   The 2002 Sarbanes-Oxley law creating the Board also required PCAOB's disciplinary proceedings to be kept confidential through charging, hearings, initial decision, and appeal.  Unfortunately, the secretive nature of the process enables firms that engage in misconduct to drag out the proceedings for years while the investing public is kept in the dark.

The Reed-Grassley bill will make PCAOB disciplinary proceedings public to bring auditing deficiencies at the firms or the companies they audit to light in a timely manner and help to deter violations.

"The PCAOB is responsible for ensuring that auditors of public companies meet the highest standards of quality, independence, and ethics.  Reliable financial reporting is vital to the health of our economy and we must take the legislative steps necessary to enhance transparency in the PCAOB's enforcement process.  Currently, Congress, investors, and others are being denied critical information about an auditor's disciplinary process.  Investors and companies alike should be aware when the auditors and accountants they rely on have been charged or sanctioned for violating professional auditing standards," said Reed.

"Sunshine is the best disinfectant," Grassley said.  "This legislation levels the playing field between auditors reviewed by the SEC and auditors reviewed by the PCAOB.  Currently, PCAOB proceedings are secret while SEC proceedings are not.    The secrecy provides incentives to bad actors to extend the proceedings as long as possible so they can continue to do business without notice to businesses about potential problems with a particular auditor.   This bill ends the secrecy and brings the kind of transparency that adds accountability to agency proceedings."

The PCAOB sets auditing standards for auditors of public companies, examines the quality of audit performed by public company auditors, and where necessary, imposes disciplinary sanctions on registered auditors and auditing firms.  The PCAOB oversees more than 2,400 auditing firms registered with the Board, as well as the thousands of audit partners and staff who contribute to a firm's work on each audit.

The lack of transparency surrounding disciplinary proceedings under current law can provide unscrupulous firms with an incentive to litigate cases in order to continue to shield conduct from the public.

For example, an accounting firm that was subject to a disciplinary proceeding issued no fewer than 29 additional audit reports on public companies during the course of the proceedings.  Those public companies and their investors were completely unaware there was a potential auditing problem with this accounting firm.   Before the firm was expelled from public company auditing, it issued those audit reports, knowing all the while that it was subject to disciplinary proceedings.  But investors were denied this information.

PCAOB's closed proceedings run counter to the public enforcement proceedings of other regulators, including the U.S. Securities and Exchange Commission (SEC), the U.S. Department of Labor, the Federal Deposit Insurance Corporation (FDIC), the U.S. Commodity Futures Trading Commission (CFTC), the Financial Industry Regulatory Authority (FINRA), and others.  Nearly all administrative proceedings brought by the SEC against public companies, brokers, dealers, investment advisers, and others are open, public proceedings.

This Reed-Grassley bill will make PCAOB hearings and all related notices, orders, and motions, open and available to the public unless otherwise ordered by the Board.  The PCAOB procedure would then be similar to SEC Rules of Practice for similar matters, where hearings and related notices, orders, and motions are open and available to the public.

Leahy, Grassley, Bennet, Blumenthal, Meehan, Sánchez Propose Bipartisan, Bicameral
Bill To Increase Penalties For Counterfeit Drugs

WASHINGTON - U.S. Senators Patrick Leahy (D-Vt.), Chuck Grassley (R-Iowa), Michael Bennet (D-Co.), and Richard Blumenthal (D-Conn.) and U.S. Representatives Patrick Meehan (R-Pa.) and Linda Sánchez (D-Calif.) introduced bipartisan, bicameral legislation Thursday to increase penalties for trafficking counterfeit drugs.  The legislation responds to recommendations made by the U.S. Intellectual Property Enforcement Coordinator and the administration's Counterfeit Pharmaceutical Inter-agency Working Group.

The Counterfeit Drug Penalty Enhancement Act will increase penalties for the trafficking of counterfeit drugs to reflect the severity of the crime and the harm to the public.  While it is currently illegal to introduce counterfeit drugs into interstate commerce, the penalties are no different than those for the trafficking of other products, such as electronics or clothing.  The Counterfeit Drug Penalty Enhancement Act will target violators that knowingly manufacture, sell or traffic counterfeit medicines to the United States.

"While the manufacture and sale of any counterfeit product is a serious crime, counterfeit medication poses a grave danger to public health that warrants a harsher punishment," said Leahy.  "This legislation will raise those penalties to a level that meets the severity of the offense.  Deterring this epidemic problem is a bipartisan effort."

"Counterfeit medicines are some of the most profitable commodities for criminal organizations.  Purchases of counterfeit drugs by unsuspecting customers are growing at alarming rates, especially over the internet," Grassley said.  "These drugs present a serious threat to the health and safety of people around the world.  It's important we address this threat by imposing harsher penalties on criminals who counterfeit these medicines."

"Counterfeit pharmaceutical drugs are putting Coloradans at risk. In some cases the medicine you take may not be effective, in other cases it may make you ill, or worse," Bennet said. "Right now, the penalties for producing a fake company logo on a bottle of counterfeit drugs are more severe than they are for actually making and selling a counterfeit drug. We can help prevent these drugs from reaching hospitals, pharmacies and consumers by giving law enforcement the tools they need to crack down on these crimes."

"Counterfeit drugs threaten the health of consumers and undermine American companies," said Blumenthal.  "This legislation will enhance the penalties for trafficking in these substances, helping us to crack down on the epidemic of illegal counterfeiting and ensure that our medicines remain safe and effective."

"These illegal, unregulated, uninspected drugs create a false sense of security among purchasers when in fact they can be extremely dangerous," Meehan said. "Not only are they a threat to public health and safety, but as a prosecutor, I saw the hand of sophisticated criminal enterprises behind the operations. Steeper penalties will help deter these criminals from continuing to break our laws and put people's lives at risk."

"As a mother, I want to know the medications my family is taking are authentic and, most importantly, safe.  The American people deserve to have peace of mind when they use medications," said Sánchez. "Unfortunately, massive counterfeit drug enterprises continue to exploit the Internet to jeopardize the public's safety and rob American businesses of millions of dollars in revenue.  This legislation not only holds criminals accountable, but it gives our law enforcement officers the ability to effectively go after counterfeit drug traffickers."

It has been reported that counterfeit drugs result in 100,000 fatalities globally each year, and account for an estimated $75 billion in annual revenue for criminal enterprises.