Host this week on newsmakers, former republican congressman James Greenwood from pennsylvania, served from 1993 to and currently is president 2005 and ceo of the Biotechnology Innovation Organization. We also have Peter Sullivan, reporter with the hill. And sarah carlon smith. Welcome to you all. Congressman, what is your organization, the Biotechnology Innovation Organization . James we are the National Trade association for about 1000 biotechnology companies. Most of them in the Drug Discovery business. When you think of pharma, they have the Biggest Companies in the industry merck, pfizer, Johnson Johnson. We have most of them as well, but one of the things that this distinguishes us, we have literally hundreds and hundreds of small Startup Companies on the cutting edge of biotechnology innovation of new medicines. Peter drug pricing is the hot issue. I will start with a general question. We have seen polling data that about 3 in 10 americans are basically rationing medicine because they cant afford it. Does that indicate a problem here, the drug prices are too high . How do you look at that . James it is a problem. It is not necessarily a problem of drug pricing. It is a problem of Insurance Coverage in the Way Insurance products are designed. When we talk about drug pricing affordability there are two moral principles. The first moral imperative applies to all the people for whom we have medicines we have developed. The moral principle there should be no patient should not not be able to get the medicines they need because they cannot a fford what is required to come from their pocket, their insurer or a program like medicare. The second moral imperative applies to a larger group of people. Those are people for whom we have not yet developed a develop new medicines. These are people who have or will have diabetes, parkinsons, alzheimers disease. And the moral imperative there applies to policymakers, and the imperative is, you should never make a policy that is going to drive down the incentive for people to invest in these new medicines. Because of the science is amazing right now. So if we follow those two principles, mixture no one is make sure no one is ever unable to afford the medicine they need, the industry has a role to play there as does the insurer and as does congress, and that we never do anything to drive investment away from amazing new science, than we cant go wrong and patients will benefit in both instances. Host what has Congress Done to increase drug prices . It is not what they have done to increase drug prices. If you look at medicare, when i was in congress i was a chief advocate of getting the Prescription Drug program added to medicare. And what you have now is a Rube Goldberg system, which is the only way we could get it done politically at the time, in which the medicare then if they share 45 million of them, elderly and disabled folks for the most part living on fixed incomes, 45 million of them, and about one million of those 45 million have to pay more than 3000 per year outofpocket, because the system is crazy. You have to pay a 450 dollars deductible, you pay 25 on what is called the initial coverage of area, you go into the doughnut hole nobody knows what that is. The patient pays 25 , then they get into the catastrophic zone and they pay 5 . You have one Million People having to pay because theyre in the Medicare Program more than 3000 a year outofpocket. Many pay 5,000, 7,000, 10,000 and up. The fix for that is Medicare Congress should put a cap on the outofpocket expense of those people. It shouldnt be the case that when you get cancer, you have to go bankrupt or not be able to afford your medicine. That cap should be 200 a month for the products. And we have said, the drug industry, the biopharmaceutical industry has said, we will pay for that so we are not putting the expense of that on the taxpayer nor are we putting it on the beneficiary. That solves a huge part of the problem. Just to play devils advocate, you talked about outofpocket costs for patients, but the Insurance Industry responds by saying outofpocket caps only solve one part of the problem in pricing because taxpayers are left to pay the rest of the bill for the highpriced drug on the hand the outofpocket cap only solves part of the problem. Does bio support any solutions that would deal with the other half of the drug pricing equation, not with the consumer is paying but what the Broader Health system has . James what you hear constantly is the phrase, skyrocketing drug prices. It is a complete misnomer. Dont take my word for it. This is what the white house said recently. Months, the12 average price of drugs in this country has gone down. 7 , so drug prices are not as a whole increasing, they are going down. The way the system works is, some prices go up, during a time when a drug is on its patents, and when a patent ends, it becomes a generic drug and the price drops dramatically. 90 of all prescriptions people take are generics. So it is not the case that drug prices on the whole are escalating. Some are going up, more are going down, and the net of all of that is that drug prices are down. 7 in the past 12 months. Peter we had Speaker Pelosi recently introduced her bill to lower drug prices. There has been talk President Trump could the interested in that, make some sort of deal with pelosi. Are you worried the could be some sort of pelosi deal on a drug pricing bill . James i am worried about this. In my organization we have hundreds of companies filled with amazing, brilliant scientists, that are run by really smart entrepreneurs that are trying to make a go of it, knowing that 90 of the time they will fail, and they do when they go out of business, but they are working at it. And they have investors who are willing to invest in this new medicine. Those investors know, and those entrepreneurs and Companies Know they are going to fail 90 of the time. And if they are lucky enough to succeed and get approved by the fda and get their product to market, they have to make all that money back. When you look at what the pelosi bill does, it would absolutely, this is not an exaggeration it would destroy the future of medicine. What it says is, we are going to take a set of drugs that cost some money, and we are going to have some federal bureaucracy determine what the price of those drugs is going to be. Now imagine yourself as an investor today, and you are looking at 10 companies, you might invest in one, all 10, you know youre going to lose your money on nine, but one will get a product of the fda and get approved. You are going to risk a lot of money in that endeavor, and you have to anticipate that if you are lucky enough to get one approved, some bureaucrat somewhere is going to tell you what the price is going to be. How could you ever invest under those conditions . You cant. You have to know that at the end of the day, if your product is approved, you can set a price that will allow you to recover your expenses. The pelosi bill doesnt do that. And it is so unnecessary, and so destructive of the hope patients have when they consider the new science is available to them. There is one thing in the house bill that is good, it does have an outofpocket cap for Medicare Part d Prescription Drug program of 2000 per year. We think it needs fixing, and that 2000 shouldnt hit the beneficiary in month one. You should pay that over a year. And the Senate Finance committee reported a bailout that also has a cap on Medicare Part d. If the house and senate could agree to do those two things, those 45 Million People who are the highest utilizers of drug and live on fixed incomes would never have a significant problem again with ability to a for the medicines they need. That would be worth doing. But government control of pricing has never succeeded in any place, and it certainly would be ruinous of our ability to innovate new drugs. Sarah you mentioned that with prices companies would charge under the pelosi plan, companies wouldnt be able to recoup a fair return on their investment. But overseas, the president often harps on this, consumers often pay a lot less for drugs and even under the pelosi plan, it is likely americans would still pay more then consumers pay and the rest of the world. How do you respond to the public, who is a bit confused as to why Drug Companies can charge less overseas but feel like they have to charge americans more . James here is what happens. The patient gets a prescription, they go to the drugstore and the drugstore wants hundreds of dollars out of pocket whether they are on medicare or a plan and they are upset. They look around and hear people in canada, europe, are paying less than they are for the drugs and they are angry and i dont blame them for being angry. You could solve their problem by solving their outofpocket costs, but lets talk about why drugs cost less in places like canada and europe. Those countries have singlepayer systems, socialized medicine, the thing President Trump says is the worst thing in the world. He is dead set against socialized medicine, but then he and House Democrats who have this bill want to import those prices into the usa. In those countries, their parliaments set a budget, they dont have entitlement programs like we do here, the government the budget says to the Health Ministry, here is the piece of your budget. The Health Ministry says, here is how much you have, and when american countries and European Countries sit down and negotiate a price, they say, we get 100 dollars for this in the u. S. And they are told, we dont have out this week glad you that kind guys this specifically when of money, so we are only going to you give you 20. So they enforce these tremendous discounts on the companies. Companies will take that money, because it is better than nothing, but it would never be enough of a margin to incentivize investment in these drugs. So is the rest of the world getting a free ride on us . They are. Is that wrong . It is. You fix it by trying to come down to their ridiculously low levels, if you do, that is the end of innovation. I suggested to the administration and secretary ross, the secretary of commerce, make this a trade issue. Trump is good at that. He likes to say we are getting taken advantage of. You are going to have to pay more for products we sell if think about more for products we sell if youre going to trade with us. But that is not what he is proposing and that is not what pelosi is proposing. Proposing that we go down to their levels, which sounds nice and you can get all the drugs on the market for cheap until the ago companies go out of business, but dont expect to get any new treatments for alzheimers or parkinsons or als, because it just wont happen. You cannot have that level of innovation, which is exciting and wonderful and brings hope to patients, you cant have it at dirt cheap prices the way they are required to pay in countries like in europe and canada. What was secretary rosss response to you . He asked for more information and we have given it to him. I am not suggesting it is easy to cut a deal with the United Kingdom or japan and say, you will pay more for u. S. Trucks. U. S. Drugs but that is the , way to approach it. It sounds like a good idea, lets not pay more than they do, but if you think about it, if we go down to their level, and i can tell you that at those prices, an investor would never invest in a new cure for alzheimers. They will say, i will put my money into a new app or anything else, but im never going to invest in new medicines, because i will never get my money back. Is that where we want to go . Or do we want to say to Insurance Companies and the government, if you have an Prescription Drug plan dont , have big outofpocket expenses . All that does is have patients leave the pharmacy without their medicine and it costs more money. There is no good reason to have a high outofpocket cost for drugs. It is stupid. Host if you are an investor or an inventor, if you get a drug that makes it all the way through, how big can you win and how much can you lose . James you can lose your shirt over and over. I have hundreds of companies and every month, when i look at our membership, i see a set of companies who are gone. They went out of business. You see it every day. Nobody pays attention to this. Every day you see companies that might have spent the last 10 years working to cure one of these diseases, and their scientists are serious, they go to Clinical Trials, they try out their medicine, at the end of the Clinical Trial they opened their data and they look at it and it didnt work. And those companies go out of business, those people got laid off. You look at alzheimers. We have failed 100 of the time. It is sad to say. Lily has tried it, pfizer had tried it, Johnson Johnson has tried it at the cost of billions of dollars. And alzheimers is costing us 250 billion a year right now, and by the time the baby boomer generation gets through our lifespan, its going to be up to 1 trillion a year. That is a huge cost. We have to solve that problem. And if you impose government price controls set by some bureaucrat somewhere in washington, and they are going to decide what the price is going to beat for those prices, is going to be for those drugs, it is over. We will not be able to cure alzheimers. And that would be the crime of the century, because the science is galloping right now. We have gene therapy and cell therapy and immunotherapy, we have all this amazing science and we can cure and treat every disease known to man. We create 57 of all the drugs in the world, more than the rest of the world combined. And most of the drugs innovated in europe and asia are innovated for our market, because we have the only free market where people can get their money back for the drugs that they invent. And we should be proud of that. We get access to drugs that people in other countries dont. We have 2 Million People working in this industry. We lead the world in it. We provide all of the hope for most of the sick people in the world. Why would we want to destroy that for some shortsighted political gain . Peter to return to the outofpocket cap, that largely is not reducing the amount the drug company is getting paid. So i wonder, are there any solutions you would agree to, or not be fighting against, that would reduce the amount of money your Member Companies are getting . James we are way deep into that already. If you look at the Medicaid Program that takes care of poor people, we have to give 23 discounts on our lowest prices. In some instances our companies , give to the states for their Medicaid Programs prices that are costing them, they are actually subsidizing the system. In the current Medicare Program we give 70 discounting what is called the doughnut hole. In half of the hospital beds in the country, we have to give very steep discounts in the 340 b program, and then we pay pharma tax. We are having extracted from us, 100 billion a year before we pay a penny in corporate taxes. We get no credit for that. We were already doing that. On top of that, when patients cant afford our medicine, most of the companies have patient assistance programs where they can get the medicines very inexpensively if not free. Sarah we talked about nancy pelosi and the democrats drug pricing bill. On the senate side, senator Chuck Grassley and senator ron wyden passed a bipartisan bill that would tackle drug pricing and senator grassley made a pitch to republicans that they need to get on board with his bill because it is the more conservative, freemarket approach to tackling drug pricing. What is your response to senator grassley . James i went to see senator grassley when he became chair of the finance committee. We had a good talk about this. I talked about the problem with medicare and its ridiculously high and immoral outofpocket costs required of beneficiaries. I am happy to say that bill has an outofpocket cap for medicare at 3100 dollars per year. It is bipartisan. Senator wyden and senator grassley agreed on that. We think that needs fixing, because that 3100 can hit the patient in month one and we think it should be spread out over a year. But it is the right idea. These people shouldnt be strapped with those outofpocket costs. If you look at the pelosi bill, which has an outofpocket cost cap, and you look at the senate bill, that is the piece i would love them to agree on. Take care of the elderly and disabled so that they dont face these kinds of prices again. And as i said, we stepped up to say we will pay for it. 3 billion a year and we said put it on us. We are will help even more. Above the 100 billion we are already paying to help folks in this country be able to afford their drugs, we will pay for that as well. I hope they can get past the political dynamics which are legion at the moment, and come to some reasonable agreement to take care of the problem. Sarah what about the other big aspect of senator grassleys bill, which would penalize Drug Companies that raise prices year over year above the rate of inflation. What is the bio response to that . Is it not fair for consumers to try and limit the increases . You can expect their salaries and expenses again are not going to be going up faster than inflation either. James that applies to the Medicare Program. And prices should be set based on value. When Companies Set their prices, and we dont control individual companies and tell them how to price their drugs, and we cant agree on increases because that violates antitrust laws, but companies, when they decide on their price they should decide the value. How much money is this going to save the Health Care System . How much better is the patients daily life and their longevity as a result of this product . They should price it accordingly. But again, if you just focus on the price control aspect of this, you are sliding down that slope into government price controls. And when you do that, history has shown you get less of the product you want. No one is saying, when the patent runs out and a generic comes in and your price has to go down, which is a good thing, we get a certain amount of time to recoup our costs and revenue to invest in the next product, and then the generic companies, are allowed to come in. They have almost no costs for research and development trials, the price goes down and the society has that product at a low price. That system is working beautifully, which is why we lead the world in creating new medicines. It is why there is so much fascinating new science. It would be a disaster to, for shortsighted political gain or because people writing these bills dont understand how the system works, and that goes to the second moral imperative. If policy can clearly be shown, not by us by neutral economists, and they will tell you this every time, if the policy that imposes these Short Term Solutions is going to drive investors away from innovating new medicines, that is a crime, should not happen, and there are ways to get it to help the patient to both be able to never be without a medicine because they cant afford what comes out of their pocket, and not destroy incentives for new innovation. That is where we should come together as a society and it is not hard to do. Peter have you spoken to leader mcconnell about the bill . James i have spoken with leader mcconnell and his staff. I actually dont expect you are going to see the bill that came out of the Senate Finance committee go to the floor of the senate. When you are more likely to see as regally happens in washington these days, when we get to the end of the fiscal year and it is time for congress to agree on a budget for next year and appropriations for next year, and we get to the end of the year, and there is a bill that is three feet high, i think you are going to see something in there on drug pricing, partly because theyre going to need a certain amount of money to increase spending in certain areas and they expect our industry to yield some of it and we will, as we always do, 30 billion dollars or Something Like that. And to get that money they will probably put in some legislation that goes to drug pricing. And i hope that the house and senate and president can agree that those, for starters at least, those 45 Million People who have paid into medicare all their lives, living on 26,000 per year on average, they should never face these high, outofpocket costs again. And that would be something that every member of the house and senate and president could take real pride in and 45 Million People would benefit immensely. It would not destroy innovation. Host Jim Greenwood, thank you for being this weeks newsmaker, the president and ceo of bio. We thank you for your time. Thank you. Host let me turn to the two of you and talk about the prospects of legislation, both in the house, the house bill led by the speaker and the senate, where republicans control the chamber. Sarah it is a hard bar, low likelihood that big drug pricing package can get past both in the house and senate and get signed into law this year. The big problem in terms of any legislation passing is at the house is controlled by democrats and the senate, republicans. And senator Mitch Mcconnell does not seem interested in bringing senator grassleys bill to the floor. Even if he did, it is not clear whether he could get enough republican support to get past the senate. That is a big sticking point. As the congressman mentioned, there is going to be a lot of big, end of year packages, tax extenders, may government funding bills, that sometimes little policy details get stuck onto. I think that is the place we should be watching to see can they get aspects of these bill packages that are more bipartisan and do have more support in there. Host what are those bipartisan areas . There are smaller bills such as a speeding up drugs getting to market. There has been bipartisan agreement on cracking down on things brandname Drug Companies do to delay those coming to the market. So those are things that are much smaller than what pelosi has proposed, but do have some bipartisan support that could get in there. So you hear a lot that there is momentum on drug prices, people are angry at Drug Companies, but at the same time it is still washington and still very hard to get Something Big done. So all we might end up with is smaller things around those generic drug areas and things like that, which is still something. Just a year or two ago, those were seen as even reaches. Pharma was fighting those as recently as last year and now the ground has shifted, they are starting to say, maybe we will do some of these Little Things as a compromise so we dont get this big thing we are afraid of. Host sarah, why are republicans hesitant to support the grassley bill . Sarah a couple of reasons. One is that they see some provisions as being against freemarket principles. A big thing in the bill is that it would cap the prices of drugs so companies would be penalized if they raise prices year over inflation, and a lot of republicans have said that is potentially government price control, violating freemarket principles. The other thing, thinking about the political side, would be the power of the drug industry and lobbying groups in washington. There is a lot of republicans up for reelection in the next cycle in the senate, and they have this delicate balance of a lot of consumers on both sides of the aisle frustrated with drug pricing. They also know the industry has a lot of money that they can use to help reelect these lawmakers, or use it against them. That is the tricky balance you are seeing la a lot of lawmakers struggle with. Host Jim Greenwood repeatedly said, our industry is willing to pay more on top of what we already pay. What is he referring to . And is that writing on the wall, they have agreed to it . Peter he is careful to focus it on this outofpocket cap idea, and a lot of people think it is a good idea, basically protecting the patient from having to pay too much. But i think a drug pricing advocate would say that is only part of the issue. That is not affecting the total price paid to the drug company, it only affects the share of individual patient days. Drug Companies Like that a lot because it is not affecting what they get paid, it is just protecting the patient, which is not a bad idea necessarily. But some people would say, you also need something that is going to lower the total cost for the total system, and that actually affects what the drug company makes. They are often opposed to that broader policy. Sarah the other thing we didnt hear Jim Greenwood say is if he would support the other aspect of that in both bills to pay for the out of pocket cap on patients, that they would restructure the medicare benefit so that the drug industry and Insurance Companies are paying more of seniors drug costs as they go into what is known as the catastrophic phase of the benefit, helping fund people when they have really high drug costs per year. The idea is if you put an outofpocket cap on seniors, the government would spend more money and less would be shifted to somewhere else. It wasnt clear to me whether he supports the industry paying more in the catastrophic phase in order to pay for the outofpocket cap on seniors. And without that aspect of the bill, it likely doesnt get passed because, particularly republicans in congress dont want to pass anything that increases government spending. Host viewers interested in this should follow the reporting of Peter Sullivan at the hill, and sarah at politico. Thank you both. [captions Copyright National cable satellite corp. 2019] which is responsible for its caption content and accuracy. Visit ncicap. Org] oreilly on the court ruling that the agency can repeal net neutrality. Tried to do certain things i disagree with. You will see some others jump in. Ining 50 different states different directions, some with net neutrality. Another is not with the structure should be, it is not interstate commerce. It is why we have the clause. It is not something they have expertise in. Structure,on, my there is no intrastate traffic on the internet. Next, a look into the whistleblower complaint against President Trump and the impeachment inquiry. Panelists give their input on how they think it will play out in the house and senate. This is 90 minutes