Transcripts For CSPAN2 Pharmaceutical Executives Testify On Drug Pricing Day 2 20240712

Twopart hearing with drug company leaders. It is three hours 35 minutes. Welcome to todays hybrid hearing pursuant to House Speaker rules some members will appear in person and others will appearer remotely. Some members are appearing in person, let me first remind everyone that pursuant to the latest guidance of the house attending physician, all individuals attending this hearing and person must wear a face mask, unless you are speaking. Members whono are not wearing a face mask will not be recognize recognized. Let me also make a few reminders for these members appearing in person. You will only see members and witnesses appearing remotely on the monitor in front of you. When they are speaking and what is known as web act as active speaker view. A timer is visible in theib room directly in front of you. For members appearing know youre all familiar with web ex by now, but let me remind you of a few points. Whether they are in person or remote song as they have their web ex set to active speaker view. If you have any questions about this, please Contact Committee staff. The timer that should be visible on your screen on your active speaker with thumbnail view. The house rules require we see you so please have your cameras turned on at all times. For members appearing remotely should remain muted to minimize background noise and feedback. Since i will recognize members verbally, let members retain the right to seek verbally. Regular order members be recognized in seniority order for questions. Lastly, if you want to be recognized outside of regular order, you may identify that in several ways. New music chat function resent a request for you may send the email to majority staff or unmute your mike to seek recognition. Obviously we do not want people talking over each other. So my preference is that members use the chat function or email to facilitate formal verbal recognition later. Committee staff will ensure that i amns made aware of the request and i will recognize you. Will begin the hearing in just a moment. Enwhen they tell me they are ready to begin the live stream. The committee will come to order. Without objection, the chair is authorized to declare recess of the committee at any time. I now recognize myself for an Opening Statement. Good morning and welcome to day two of our landmark series of hearings yesterday we heard from ceos from three Drug Companies bristolmyers squibb, and tivo. And what we learned was shockin shocking. Drug companies are hiking Prices Higher and higher placing an even greater burden on the very patients who rely on these drugs to survive. We learn the skyrocketing prices are unsustainable. Both for Government Programs and American Families. We also learned that claims by Drug Companies that their price increases are necessary for research and development are completely bogus. The internal Company Documents we obtained, show that Drug Companies hike prices almost entirely for selfish reasons. They do it beat Internal Revenue targets or to increase their own bonuses in some cases. Drug companies certainly spend some funds on research and development. But nowhere near the windfall profits they are bringing in as a result of their massive price increases. Finally, in the cases we examined yesterday, we learned that Drug Companies target our country for their biggest prices. And for their biggest price increases, charging the American People more than the entire rest of the world combined. They do it, simply because they can. Because federal law currently bars our government from negotiating directly with Drug Companies to lower prices for medicare. According to the nonpartisan ceo allowing federal government to negotiate directly with Drug Companies, couldlo lower spending on brand name drugsru by about 456 billion. So let that number sink in, it is nearly half a trillion dollars. Today is day two and we will hear from three more executives. Will hear from the ceo of antigen which completely raise the price of two drugs used to treat rheumatoid i try to send other inflammatory diseases. He as you said treat the effects of kidney failure in thyroid cancer. Will hear from the top u. S. Executive from novartis, about the companys massive price increases for ath drug that treats Myeloid Leukemia. A rare cancer of the blood and bone marrow. We will hear from the ceo of mala crop, about the pricing of its drug called hp. [inaudible] paid which is used to treat a rare caesar disorder and little babies. Freund hubert Opening Statement shorts because we want too hear from the testimony from our guests. But i would now like to turn to our Ranking Member for his Opening Statement. Smacked thank you madame chairwoman for holding this hearing. I like to reiterate a few points brought up at uyesterdays hearing. First, republicans have introduced legislation, hr 19, full of bipartisan provisions that the house could pass today and could be signed into law by the end of the week to decrease the cost of Prescription Drugs for all americans. Second, pharmaceutical innovation is vital to enabling americans to live longer and healthier lives. But we must ensure those Innovative Products are accessible and affordable for all americans. L third, will brand pharmaceutical manufacturers play significant role, we must look at the entirety of the pharmaceutical marketplace including pbms, health insurers, generic manufacturers and wholesalers to truly solve this problem permanently. At this time, met insurers like to yield the balance of my time to representative massie. Thank you Ranking Member and thank you madame chairwoman. I anticipate todays discussion and testimony will involve the u. S. Patent system. And sontem in this Opening Statement, id want to read the patent and copyright because that is in the constitution. N. This clause was so uncontroversial, that it was accepted by all of those who are drafting and voting on the constitution unanimously without debate. It says the United States Congress Shall have power to promote the progress, the science and useful arts by securing for limited times, to authors and inventors the exclusive right to their respective writings and discovery. To some people, who have not studied this issue too much, think that perhaps patents are the reasons drug prices are high. But the reality is, on a lot of the drugs, the patents have expired. There is no restriction from the Patent Office to keep somebody from making the generic version of the drug. But there are other impediments not involving patents to stop these genetics from coming to market. I hope we find out what those are about. And i also want to say that our Founding Fathers were really smart here. They knew that if the owner had a limited period to recoup their investment, the inventor and the owner, than they would be able to find the capital the backers to develop these ideas and discovery. So even if you have scientists who would come up with new drugs for free and they just gave thehe idea away, these new drugs require hundreds of millions in some cases of development in order to bring them to market. Without a patent which is equivalent to a deed, i could do to peace of property, no one would develop a peace of property they could not get secure title to a property. Patents work the same way they allow investors to get clear title to the idea so that they can then invest the money thats required to bring that to market, to tested and make sure it is safe for all human beings. So i look forward to a robust discussion on that. Without a yield back. I want to thank my w colleagues and with your indulgence, because of my cough i would just like to leadth up to the video we want to play before we go intoay it. But i did want to respond to my good friend and colleague mr. Comer. I agree which work on this issue it should be bipartisan. But since you mentioned yours im going to mention my hr3 which would nearly allow our country to negotiate for a lower drug prices for medicare thas we do with the veterans association. Its past the house is now the senate. I would really like to do right now is to honor and ijremember our former chairman Elijah Cummings who launched this investigation 18 months ago. His number one priority then in our number one priority now, is to help the wellbeing of the American People who are being harmed by a daily basis by these astronomical price increases. So i would like to conclude my statement by playing a clip of three individuals patients and doctors who are being directly and negatively affected by the actions of these three Drug Companies. And if we could now play that video. And move quickly q forward. Statement my name is heidi i am a proud mom from missoula, montana. Three years ago after an abnormal blood test, my doctor told me i had leukemia. One day i was healthy, the next day hadi cancer. Om it was a complete shock. He told me i am lucky though, my cancer is treatable with a drug. But i would have to take it every day for the rest of my life. Then i got a second shock, on top of my awful diagnosis, he told me the drug cost 10000 every month. I am so grateful for gleevec, keeps me live. But the price tag constantly hangs over my head. Instead of just focusing on my family and myy health, i also have to carry around the burden of what would happen if i cannot pay for. I have no choice, but you all have a choice. You can take action to lower drug prices. T because drugs dont work if people cant afford them. Civic hello my name is carteret im a pediatric neurologist, i take care of babies suffering from c a rare disease. The best to help is a gel part without this medication children are likely to face lifelong uncontrolled epilepsy have Developmental Disabilities including mental retardation. Families affected by this condition, this is the best chance for their child to live a more normal f life. It is not a new drug, in fact it was first founded 1952 prepared decades it was priced at 50 a bow. But since an drug Company Seeking more profit have madets a series of unwanted price increases. Today almost that same file from his 40000 in 1000 increase. The price of that drug. Is impacted my practice and my patients devastating ways. I must know families can afford 150,000 for a treatment course. For my patients the cost delays their care, prolonged hospitalization, increases seizure in harms intellectual developmentt. If it can mainly hide price because they have it captive Patient Population and doctors do not have a good alternative. The prices lot rely on the desperation of families with their children suffering. It should not be able to profiteer in the tragedy of these babies. Thank you for listening and i appreciate you addressing this issue. Stomach high, my namee is kip burgess and im from chicago, illinois payment of 30 is diagnosed with incurable condition called psoriatic arthritis. To treat theon constant pain for my disease, i think a weekly injection of a drug called emerald. When im on embryo, i do no have symptoms, can ride my bike or scoop up my 1yearold daughter, totally painfree, almost forget i am sick. But i also have to carry the fear of knowing all of this can be ripped away. Because embryo is priced at nearly 6000 every single month my ability to cover that cost goes away ill go back to waking up on top of that because the way this drug works, missing even one dose committed drug stops working for me. These risk crippling anxiety and top of the burden of the disease itself. In order to avoid these interruptions in my dosing, ive been forced to dip into my savings and jeopardize my financial help to preserve my physicalin health. But i have no choice. I consider myself one of the lucky ones. I urge you on behalf of patients to it acts solution to lower drug prices. Thank you. Thank you very mention of them introduce our witnesses. And we are grateful for their attendance today and for their testimony. Our firsthe witness today is mr. Robin bradley is a chairman and ceo of amgen. Amgen sells the antiinflammatory drug and a Chronic Kidney Disease drug, it will go to mr. Mark trudeau, who is the president and ceo of mellon cross pharmaceuticals. It sells the anti immune diseasean drug hp. [inaudible] finally will heal for mr. Thomas kendras whose u. S. Country president of novartis sells the cancer drug gleevec, the witnesses will be un muted so we can swear them in, please raise your right hand you swear or affirm that the testimony you are about to give us the truth, the whole truth and nothing but the truth so help you god . I do. I do pray thank you let the record show the witnesses answered in the affirmative without objection or written statements of any part of the record, that comment mr. Broadway you are now recognized for your testimony. Spinning if you could un you chore mike. Civic thank you, good morning chairwoman, Ranking Member gomer and other members of this community. Hn a leading biological Company Based in thousand oaks, california. Before begin my formal remarks i went to acknowledge the work of Elijah Cummings on drug pricing issues as chairman of this committee. He is sorely missed dedicated to improving access and affordability forab patients. We are serving patients ripped her innovative medicines and highua quality to treat the world series and costly illnesses. Were also engaged in the fight to understand, treat and prevent c covid19. We employ nearly 14000 people here in the u. S. , or we conduct the vast majority ofh our Cutting Edge Research and eco friendly manufacturing. Amgen is deeply committed to meeting the needs at every patient every time. Therefore its of great concern to us when those who might benefit from our medicines cant get them. Were committed to responsible pricing. A few examples in 2008 to be launched a new migraine prevention treatment at a price that was between 20 and 65 below market expectations. We also made a medicine proven to reduce heart attacks and strokes in patients with stubbornly high cholesterol levels available at a 60 reduced price. This helped lower outofpocket costs for ketients, especially seniors on medicare. Over the last two years, we have launched similar to the topselling medicines in the country and plan to bring more to market over time. In patients with more Affordable Treatment options. Overall, the average net price for amgen medicines across the entire portfolio the u. S. Declined in 2018 and 2019. And we are on track for further decline this year. Embryo is in amgen medicine that treats patients with autoimmune disorders, such as moderate to severe remote tort arthritis. Enbrel highlights the tension between ensuring patients access to critical innovative medicines and the outofpocket costs they are often required to pay. Physicians tell stories of how heeir waiting rooms were cluttered with canes, crutchesth and wheelchairs. But thanks to enbrel, capless patients have been giving a new release on their life. Since enbrels approval, weve invested hundreds of millions of dollars in studies for additional uses and to make it more patient friendly. As an example, we recently introduced an easy to use self injection device designed for emerald patients whose disease has sapped the strength inen their hands. But innovations like this cost money. Ththat is partially why we have increased the list price of enbrel in the past. D but what has driven up the list price for that any other factor is the pressure we face to match the price increases of the market leader. I know this sounds strange. Something virtually every other industry by offering the lowest price. Unfortunately current rebate system and the u. S. , created with good intent, now often leads to a situation in whichto not getting checked off matching a competitor hires price for these higher prices increase the already significant rebates made to the middlemen who largely dictate which medicines patients can access, regardless of which medicines their prescription agenda physician prescribes. Or still, these rebates paid on all of our medicines do not translate into lower costs for patients. And that is because they dont get passed on to patients at the pharmacy counter. There is no question that the present rebate system is dysfunctional and does little to serve the very patient it was designed to benefit. As we wrestle with the worst Public Health and Economic Crises of her lifetime, the time is now and the place is here to craft the changes that are needed. Innovative, biopharmaceuticals or part of the solution diverted serious decisionsim impose on patients and sick inside while society. It improves affordability for patients however a single manufacturer cannot make that happen alone. We stand ready to work with members of both parties, the administration and other stakeholders to develop policy solutions to help improve access and affordability for patients without stifling innovation. There are so many diseases to confront and patients to help. If we all stay focused on what is best for patients i am confident we can that been a better place. Thank you for the opportunity to speak to youen this morning. Mr. Trudeau you are now recognized respect chairwoman maloney, Ranking Member, and members of the committee thank you for the opportunity to be ofhere today. I started the pharmaceutical industry as a research and develop an engineer nearly 40 years ago. Over the course of my career i worked on pioneering treatments for several critical diseases including some of the very first for hiv. Thee leadership roles that ive had in other regions of the world have allowed me to it better understand both the strengths of the u. S. Healthcare system and its challenges. Devoted myself to this industry because, like the nearly 3300 employees i know the therapies we make the lives of their patients and their families. This is been a year of unprecedented challenges. With covid19 hit we mobilized to identify therapies to combat the disease. We consulted with the fda and nih regarding potential and inhaled therapy for covid19 related respiratory complications and supported independent Clinical Trial being coordinated by mass general. As of today, nearly two to 50 hospitals in u. S. Health systems have use this as an experimental treatment for covid19 patients. We also secured our supply chain to avoid manufacturing interruptions for the critical medications we make and he donated 54000 pieces of ppe, several ventilators and more than 16000 gallons of Hand Sanitizer manufactured on missouri plants. We also engages members of congress and federal agencies like barta to discuss leveraging our extensive experience making highquality, usmade generics that are in missouri, new york, illinois to bring home the manufacturing of active pharmaceutical ingredients. Today we are the only american manufacturer of acetaminophen, the key active pharmaceutical agreement in many medicines which would probably make in illinois and north carolina. Our results to help patients with critical conditions has never been stronger. We understand and bear the American Peoples concern about the availability and affordability of Prescription Drugs. But steadfastly committed to knocking down barriers to Patient Access for thats particularly true with exar gel. Its a complex injectable biopharmaceutical product fda approved for 19 serious conditions including infantile spasms, lupus, multiple sclerosis, and Rheumatoid Arthritis. Exars lifechanging therapy for a small group of patients for whom other Treatment Options have failed for patients whose conditions if leftft untreated may lead to physical and developmental impacts requiring lifelong care, causing great financial strain of families of the american healthcareca system. Exar is not patent protected prewe do not walk generic competitors from entering the market is our policy to provide samples that generic samples upon request for leave supported legislation to allow purpose samples. We act in, late 2014 we have more than 660 million to modernizing price including over 470 million in close to 190 million in manufacturing. Theyve initiated nine Clinical Trials with targeted combined enrollment of nearly 1100 patients. Large ever given the rare complex conditions exar typically treats. Results from one study of patients with persistently active Rheumatoid Arthritis show the treatment with exar resulted in low disease activity in astounding 62 of patients for whom standard treatments did not work. The list price has increased on average around 5 annually. Not factoring in inflation or significant discounting that we started when we acquired it. In two of the last six years we did not take any price increase. Last year the net price went down as it will again this year. Ofweve also improve the ability for patients with a prescription to obtain through the robust copay assistance programs, whicher leads to many patients paying nothing outofpocket. Like all of the employees im dedicated to bring in more breakthrough treatments to the market including one of two treatments we are developing der patients with advanced liver disease, our investigative regenerativene skin therapy which may reduce the need for auto grafting in certain burn patients. And for a high mortality rare disease affecting children and adolescents. Will not waver in our commitment to serving patients with critical conditions who need better options. Thank you again for the opportunity to be here today. Civic thank you. Mr. Kendras you are now recognized. Thank you chairwoman maloney. Chairwoman maloney, and members of the committee, thank you for the opportunity to speak with you today. My name is tom kendras i am president of nerve notice. We use science to improve and extend peoples lives. We have genericsge secondlargest Genetics Company in the United States. Our medicines reach close to 800 Million People every year globally we are over 1,100,000 people with approximately 15000 employees in the unitedth states. Our global r d headquarters in cambridge, massachusetts. If several manufacturing sites across the u. S. I have been with this company for 25 years and i still marvel at the passion of our people to tackle the most complex medical challenges. One of the most significant medical advancements in recent history, it revolutionized targeted therapy for cancer. Before gleevec was introduced in 2001, the fiveyear survival rate for a patient with chronic Myeloid Leukemia is only 30 . Now, the vast majority of cml patients have a normal life spa span. What is more, it has continued to study whether the disease could treat other diseases and is today approved for six other rare cancers saving tens of thousands of lives. Nt more recent example of the conformant treatments is the development of chain therapy to treat spinal neurological disease affects primarily babies for the treatments on the first gene therapies to proved in the u. S. With a single injection some babies who would otherwise died by the age ofng two or three, are now going to kindergarten and growing up like other children. We have the first therapies to treat a rare or for pediatric and young adult leukemia. This therapy can bring a patient from the brink of death to remission. The first patient to ever receive this therapy has been cancer free for eightch years. And is now going to high school and leading a normal life. Spending time with this young patients families are the great privileges of my career. Beyond Rare Diseases and cancers we are reimagining how innovative medicines might improve Public Health broadly. Particularly in sicklecell anemia, malaria, and cardiovascular disease. I would like to clear with the committee however, we recognize these innovations do not matter if patients cannot afford or get access to them. In the u. S. , issues of price and access present systemic challenges that mustto be addressed by industry and policymakers. We are committed to being part of the solution. While cms projects National Health spending to grow at an average rate of 5. 4 , and 2028, the average net price of our medicines is expected to decrease by 2. 5 in 2020. Fire based pricing is critical tool in addressing affordability and access. When setting prices we consider multiple factors including the improvements for medicines and clinically and in terms of their quality of life. And the benefits that the medicines offered to the Healthcare System into society. the industry should adopt a similar approach. to only 300,000 euros stations. They were facing financial thrdship or had limited or no Prescription Drug coverage. Eligible with commercial insurance often a less than 30 for 30 day prescription. And vast majority of these products. The pharmaceutical industry is to be repaired. If the trust has eroded in her industry must work to regain it. We understand that this trust is correct not just from breakthrough medicationsbr but y taking these medicines responsibility and providing broad access. While weve made infantile progress in human health, only e be successful if we made thesa reality. We are passionate and committed into doing so and novartis. Thank you for your time this morning i look forward to your questions. Thank all of you. Announced recognize myself or five minutes questions. And i think him for allowing me to go over a little over my time. It certainly grant the same to him and more. Yesterday,sl we heard the ceos claim over and over again they had to raise drug prices to help pay for researching and development and for innovations. But the internal documents we obtained showed these claims were false. Instead, they showed that these price increases are intended to generate more and more revenues from Drug Companies. Mr. Trejo, let start with you. Your written statement today, you made the statement. We believe the innovative therapy should reflect the value at mallinekrodt pharmaceuticals. And to the Healthcare System as a whole. A Mature Company did not acqui acquire, because you thought it was an innovative therapy. It was a very old drug. You acquired it to meet your financial objective i would like to go through three quick slides with you in first is exhibit 66 and it has up on the screen. This is a slide from a presentation that was prepared when you were considering acquisition which made exar reed as a preliminary matter these talks about quincy, the logistical navy you name for your code name for your company right. Mark trudeau thats correct madame chairman. Ms. Maloney is a rapidly growing Specialty Pharmaceutical Company with a premium priced product. Mr. Mark trudeau, this was exar crane in the premium priced just means really expensive. Right. Mark trudeau thats actually not true. When refers to is is priced at a premium to other competitors. Ms. Maloney lets look at exhibit 67, the next light. If you look at the fourth bullet. The slide says your acquisition will allow them to court achieve aspirational goals with a single transaction. By aspirational goals, youre talking about huge revenues. And thats exactly what you got. It there sales accounted for a third of your companys net sales from 2017 through 2019. Isnt that right. Mark trudeau the sales are roughly correct. Better aspirational goals were actually to transform the company is originally generic company. We are working to make a transformation to a company that is focused on research, investment in the opportunity to address patients with severe and critical conditions were underserved by the current therapies. Ms. Maloney lets now look at exhibit 68 unit mark trudeau i would just read the headlines free to send your modernization strategy will define the future as either a growth asset or a cash cow. Is it true that this is a really see this drug. Thought is an innovative araby but as a cash cow. Mark trudeau know that is not true. In this document is just recently made aware of, is never shown to his presentar draft documents. That applies to products and no investment is likely to be Going Forward. The fact is exactly the opposite of what we have done with him produce invested nearly 606 million since we acquired the product in 2014. Okay a cash is a profitmaking thing what is a cash cow. That is what you said. Think the document speaks for it self. Your companys talking points claim that we price our products to reflect the economic value is delivered to the patients and providers and payers the unmet medical needs. The investment and risk undertaken and will need to continue scientific innovatio. Mr. Internal documents tell a very different story. So lets look first and exhibit 36. This is a Pricing Committee presentation from december of 2016. This document your Pricing Committee is basing his decision not on innovation or research and development. But on one another company an my date with a similar drug. Isnt that right. Is madame chairwoman, that is correct and its important to note what is happening in this discussion. What this reflects is the nature of the structure of the pharmaceutical industry through which we compete for formula position. For our medicines. With the molecules in the same happy categories. When youre missing here comes a snapshot of the discussion about how we position versus other molecules and we compete against it in the secondary category. Ms. Maloney this document has three scenarios for us what they might do. And implants out what your company will do in response. Mr. Broadway these pricing executives are not discussing any of the things that you mentioned in your talking points. Theyre not discussing research and development, unmet needs and investments in risky undertaking innovation. Instead of competing with other companies to beat theiro prices, you are all increasing them in lock step. Isnt that right brain this with the document says and i think it is scandalous. What you see is a document that illustrates the competition that exists to keep the medicines and again, if i may be allowed me say a few words by the structure on the market the requires the kind of rebating thats implied in this document. They invoke competes against 20 different molecules in the antiinflammatory space. We offer rebates which secure position on the formula of the intermediaries to determine which medicines are available for patients to use. And what reflects of the areas that the committee is considering in order to make sure that this medicine will remain available to those patients who are already on it. The patients to have them to their therapy. So theyre looking at a range of scenarios. And this isa the rebate that would be associated with those scenarios abroad. Ms. Maloney lets move on to mr. Kendra sprayed and testimony you say that given a slight changing attribute with committed to making it accessible to patients who need it. But one of the documents obtained by the committee shows the executives feedback as high as possible. And they prices so high from the documents to meet revenue targets without triggering negative backlash. Lets for the slide on the screen and this is exhibit three. This is a slide of the pricing scenarios. Including the risk to the strategic financial plan, its action taken in 2013. If you look at the top right hand box, the description of the aggressive pricing model says it delivers the greatest upside while keeping single increases below the 10 percent threshold. This aggressive model recommend price increases of 9. 9 percent over the course of three years. My question is your company chose the most aggressive pricing model dented. Thomas kendris madame chairwoman, in the next sentence right after the one that you read the document which i am saying this morning recommends enhancements to our patients support programs. So madame chairwoman, what i would say is over the years since they were introduced onto the market, this value increased. Exponentially because of the five new indications that we have put with the tens of thousands of patients whose lives were saved regarding cancer. And over time it became clear that the remissions not only this email but all of those cancers were robust and longlasting. T 2001, we didnt know that. We didnt know how long patients would live and survive after they were given this drug. Over time we found out that they did. We turn them away and actually return cancer, all of the six cancers from a fatal condition to a chronic condition and then when the followon product, we turn it into a treatment free remission condition. Basically, they dont have to take it any longer. So is tremendously valuable price increases we took were well we certainly took them over the years that of chairwoman but we were always the lowest priced product in the cloud. The product is been generic now since 2015. We have not taken a price increase since 2015. And today, 55 percent of what we manufacture is given away to patients who cannot afford it and given away for free rated. Ms. Maloney where the bottom line is that the largest Pricing Strategy that would maximize net sales. And there is a price five times in three years. The point is that all the things by the Drug Companies, about why the need to increase prices to pay for research and development and innovation is simply not true. Ms. Documents show they are increasing prices simply to make more money. Plain and simple. That is what we needed to finally allow the government to negotiate directly for lower prices like all of the countries. And again these Drug Companies make more of the United States and all of the other countries in the world combined. Buying the products. There will be further questioning on the rebates and how they are really not working or getting to people. I am over my time and i want to now recognize mr. Massey for the same amount of time for his questions. And thank you very much for allowing me to go through the slides. Thank you. Thank you madame chairwoman. You mentioned that they were a manufacturer of generic drugs. His big party market in the beginning. In general, what percent in the United States are generics. Mark trudeau i believe it is approximately 90 percent. Some 90 percent of britain in the United States roughly for generic drugs. Think that is fantastic. But is the cost of the generics in the United States significantly higher than in other countries and how do we compare go into the generic level. Mark trudeau will typically the United States generic market has been amongst the most efficient. Meaning that prices dropped most rapidly in the u. S. We have a very efficient markets. And generic prices typically and relatively short amount of time, any times within a year drop to about 10 percent of the branded price. So we have a system that works from the generic perspective and certainly relative to other countries. What are some of the challenges you face and you want to make a generic drug say a brandname drug that is patented. What are some of the hurdles that you have to overcome to get it to market. At the primary thing that you have to do is generate bio equipment. Yet to demonstrate that your product in the file equipment to the branded product. It requires some kind of, sometimes other Investment Research and development investment. And then of course you need to be very efficient from a manufacturing and distribution standpoint because youre competing in a very aggressive competitive marketplace. Is there something we can do in congress to make it easier to get to a generic label from a brandname label hundred drug goes off the patent. Mark trudeau ugly the generic environment today is actually quite good. I think theres been significant improvements on the regulatory side. Improving the generic approvals and i think the statistics show that the fda is generated significantly more approval than the generic products for the last couple of years. It and it certainly will drive down prices. In order to produce it, patton has to expire but can you also licensed the patents. It was a not difficult to link drug industry. Mark trudeau certainly it could be done. With that mostly generic products into the market after the expiration time. And what is the lifetime of the patent. Mark trudeau can vary but the lifetime is going to be in the order of 20 years. I recognize that is from the actual discovery itself. Much of that timeframe is actually taken up by research and development in any times when you have a rented product, may only have a couple years in the patent because most of that time has been eroded because its taking time to develop the product. Typically, 20 years can vary a little bit afraid of it that specifically the timeframe. A. Twenty years from when the invention occurs and like you said, there sometimes your only have a few years to try to recoup the investment. How any of the drugs that you develop actually result in a profit. Mark trudeau on the generic side, typically youre likely to be reasonably successful because again, and a driving. Vote youre doing is driving down cost because youre able to bring competitive products to the market. On the branded decide, and is a little bit different. On the branded side, the likelihood of success while youre actually driving innovation is dramatically lower. Some statistics say that one in 100 or so drugs ever make the market. That is probably in the range. In the high failure and high risk environment that youre developing any kind of new innovation. Thank you. Mr. Broadway and we talk about the sort of, seems convoluted to those of us who are not into the industry, try to understand the drug pricing schemes and how it involves pharmacy benefit and rebates. Can you tell us roughly what percent of the money that my constituents spend on drugs and the government spends on drugs dfor my constituents goes to pharmacy benefit managers. I can tell you that the intermediaries in general which include the pdms have about 46 cents on every dollar and pharmaceutical industry. The 46 percent of what you see the u. S. Industry reflects revenues to go to unit injuries including the abms. So thats almost half of the drug price that the consumers pay for the government pays to intermediary so the drug company. Mr. Bradway well instead of directly, that is correct. A. In my constituents pay the copay on a drug. You mentioned that the rebates that are paid, do the rebates done of my constituents. Who do they go to our unit. Mr. Bradway thank you for raising this question prayed appreciate it. E the copay is the function of the list price the rebates also function as that price so is the list price rises, rebates rise as well. However the other consequences raising this price is that the patient and the pharmacy counter decided to pay a copay now hasl a higher list price. And the discounts that have been given to the emir intermediaries are not provided to the patient at the pharmacy counter is a rerun of the situation where where they are getting the rebates and not directly transferring that benefit to the patients. So the luminaries are sing their share of the pie increase while asking them to pay more in the form of a copay. But again the copay is not collected by industry. As collected by intermediaries in the system. Mr. Massie copay because the pharmacy benefit managers work, the copay my constituents see or the check that they have to write out or sometimes they have to borrow money for that copay, the copay is based on the actual price that goeson to the drug company on the final price of the drug Company Receives presented based on the real price of the drug was you cant the rebate brightest baseds on the higher effective prices that correct. Mr. Bradway that is correct. Thats absolutely right. New constituentsts of paying a a copay which is a fraction of isthe list price and Innovative Companies is whats known as the net price which is the list price minus the rebate returned to the intermediaries rated and trent. And as a proximally hundred 50. 46 percent is in the hands of the intermediaries. Mr. Massie time time for one more question. Okay. So can you explain to us what the intent was when they came up with does pharmacy benefit systems. With the intent was and how it was designed to make drugs more accessible or lower price and that has possibly laundered over the years. Mr. Bradway appointment two things. First the structure of the rebate system in referring to was one that was created by the legislation that enables us to interact with intermediaries in a way that includes paying rebates in order to secure formulas for medicines. But again, i dont want to just point the fingers at the pdms. It one of the useful functions in our system through the years which is helping convert aitients to generic drugs when they are available. This is one of the reasons that 90 percent of the prescriptions written for generic drug. Think the question however is whether there find the appropriate role. When it comes to innovations in the formularies that separate the positioning the patient from one another pharmacy counter with the patients cant be sure theyre going to be able to walk away from the pharmacy with the medicine that their doctor intended them to have because of the structure of the rebate system of that is in place in our industry. Mr. Massie seems to me that we need trenton pricing here. People bought cars. Wasnt what the consumer paid and the financing was based on some other price for anything we would be outraged. This may be that is something we can look into. I think you for the indulgence yield back. Ms. Maloney i now recognize rep. Norton. Thank you very much metta chair. I hope you can hear me. We can hear you. On a thank you for this very important hearing. In fact the subject hearing is so important. One after the other so we can clear this matter up. [inaudible]. I want to say to that i very much appreciate your help joining us. En your testimonies have been very helpful. We recognize though that. [inaudible]. For patients and their families. And far too any families lose access whereas each price increase and that is before we get to the generic part of this drug. Mr. Broadway. Your company with a price, 27 since 2002. [inaudible]. And the prophets have grown to 5 billion in 2003 to two more thany. 5 billion today. [inaudible]. We have to turn to the other drugs in the investigation. In 2004 and has raised the price e re than 20 times. And with the u. S. Sales prices come also rose from 26 billion in 2421. 4 billion in 2018. Since acquiring, mark trudeau, 2014, the appraised them already highpriced by more than. [inaudible]. That was a 6 percent increase. In 2014, 22019, companies generated nearly 6 million and the net sales. Since launching and 2003 company or companies have raised the price 22 times. To do these price, give from 1 billion. [inaudible]. To more than 2. 5 billion today. Nearly one in four americans taking the Prescription Drugs, against that backdrop has a difficulty of affording the medicines. We began hearing today from our hearing today, the testimonies. As around these medications for their lives. There struggling to make ends meet. And from other families, they have to make hard financial decisions. To afford these vital drugs. Will you commit to lowering the list price of these drugs in the United States. Thomas kendris well its now not patent in the United States and the prices have changed 95 percent. And as i said in my opening remarks, we have lowered our net prices. And werest on track to repeat tt again and 2020. Yes or no. And im afraid i do not get a yes or noo answer. Will you commit to lowering the risk price of this drug in the United States is no. I will commit to lowering unit 2020 down to levels of 2015. Thank you. Yes or no. We are committed to lowering the list price of this drug in the United States. Summa congresswoman, congresswoman norton, we had generic five years ago. And we have lowered the price by giving discounts on the branded products. Huge discounts. Forty or 50 percent discounts. We have given discounts on the list price post generics. We have not raise the price. So we have an effect lowered the price and we are giving away 55 percent of what we manufacture now. For a patient who cannot afford the medicines. So we are doingng everything we can congresswoman to make sure that every patient needs this drug can get it. The problem is theyre not doing everything they can. This ones hearing is so important and i yield back. Thank you. Thank you madam chair, im certainly happy i followed my good friend because he set the stage perfectly. Where a little tone deaf. The estate so shut down the businesses and are crumbling because the overreactions of covid19 at work arece talking about how certain drugs. If there are millions weree thrust into this position because of the harsh restrictions. What do they all have in common, government influence and control. Right off the bat, Health Insurance companies. Aw that means they literally do not have to compete. In my entire political career you cant even imagine a world where Health Insurance have to compete for your business instead of leaving for the options. And pharmacies and how they deal with the contract. No market force there and im sure they could go on all day. The regulations alone could keep you talking for days but i only onve so much time. My colleagues want to point to the current system. This is the free market and this is competition failing america. Its the excuse my colleagues arelk using. Those that need it will be lost so i thank you with us today. In simplifying the drug process. These are theid sides of the competition because the innovation is stifled and last i want to thank the majority for taking the first step and the competitivee insurance reform act. Thank you very much. Representative, you are now recognized for questions. Thank you so much, madam chair. Let me also thank you for mentioning our late colleague Elijah Cummings. We knew that this was one of his signature issues. Thank you for keeping his memory alive. Let me start by thanking all three witnesses for being here and let me say hello to the former constituent. Let me start with part of the concern is that its a pretty old drug with a relatively high price and yet you said its modernizing. I think you said you have invested more than 600 million. Tell us why its important to modernize this drug and are in their other more modern therapies that can take the place . We believe that its quite important to create new information and evidence and things to provide patients and prescribers as well as those responsible for the reimbursement the appropriate scientific information to make good economic and clinical decisions for their patients. They have relatively few optio options. A major focus and funding weve invested 350 million a year and research and development, which is a large number for a drug company of our size. We believe the pipeline is promising and looked at these with very critical conditions and relatively few options so we are developing two products for patients with liver disease. In my home state of missouri, covid19 has been a major concern and its my view and the Public Health crisis that we are facing today, pharmaceutical and Healthcare Companies should be focused on finding solutions. We are very active in addressing the pandemic and share your beliefs that they need to be working together to find ways to develop vaccines and help develop therapies to prevent the overreaction which we see s s for many infected wih the virus and to be finding other ways to try to diminish the burden of the disease on our society but with the speed and efforts underway in our company and across the industry and im optimistic that it will have solutions. Thank you. Madam chair, are there any other witnesses to respond where is my time expired . The time has expired, t but e witnesses may respond. We agree with the congressman that its important that we do everything we can to combat this challenging Health Crisis that we have. Weve done at least four things. Its being used in the discussions today as we experiment with over 250 hospitals. Weve donated ppe ventilators, Hand Sanitizer around the country and made available some of our Healthcare Professionals to be treating patients on the front line and we do everything we can to combat this challenge. Thank you. Mr. Palmer you are now recognized for questions. Thank you, madam chair. Id like to start by saying we are interested in lowering the drug prices but at the same time we dont want to overreach and implement policies that will teifle innovation that has literally brought us lifesaving miracle drugs. In fact we want to encourage the discovery of new drugs but at the same time it doesnt do a lot of good if the people on the drugs cant afford them. I want to follow up on the points on the patents and i brought this up yesterday. I support extending the length if it will lower the drug prices and what i would like to know from each of you if you can answer concisely so i can get a couple of other things, id appreciate it. Would it reduce the drug prices, and we will start with mr. Trudeau. Anything we can do to invest in innovation is likely to give the healthcarean system an opportuny to give drugs to patients to be more effective and potentially lower prices. If you agree, do you have anything to add and i want to ask a couple of other questions. The biopharmaceuticals are an important way to control healthcare costs. Wewe advocate for maintaining te data exclusivity in particular for biological drugs. We think thats an appropriate standard and we see innovation as a way to bring down healthcare costs all over the United States. Okay. Congressman, i would agree with what the other two witnesses testified to incentivize with highrisk research in i the sysm as it stands right now. There is also a member of drugs that never made it to market. You have to deal with that stranded cost that goes into your decisions on the pricing of ulher drugs. So my question is what would happen if the development of drugs, to the development of these lifechanging and lifesaving drugs if they could recover their cost, that should be a fairly simple question to answer. I believe and my colleagues agree with this as well, incentives are important and undertaking innovation which inherently has risks. So any additional incentives that can be provided to provide the potential to produceo that risk or increase the reward innovation and in the case of drugs more potential cures or treatments down the line. If you have ideas on incentives whether it is writeoffs or losses or other incentives id like you to provide that to me and this committee in writing. I started looking at this my first term in congress it seems theres substantial abuse in the rebates. That might be an example of something i would appreciate getting feedback from each of you on incentives that you think would help the companys bring the prices down. Now we recognize you for questions. Id like to welcome the critical importance [inaudible] [inaudible] i apologize the microphone wasnt on. Id like to welcome the critical importance of the drugs that the manufactured for the health and wellbeing of many americans. It was priced at the low 100 for 50 years however the past two decades we have seen an astronomical price increase. Now a subsidiary acquired the rights for 100,000 when the place was at or below 100 a vial. Almost immediately, the price of the drug started to increase. The price price skyrocketed from 1,600 to 23,000 per vial, literally overnight. When they acquired in 2014 for 5. 6 billion, the price already exceeded 30,000. So, today that same vial from 50 yearss ago that cost only 100 now costs 39,000, a 40000 increase. Let me repeat, 40000 increase from this to this in a matter of two decades. Its clear american taxpayers are increasingly footing the bill for this drug. While the number of beneficiaries increased by 25 from 2013 to 2018, the cost to the federal government nearly tripled over the same time. Do you know how much the company has collected. How much sales came from medicare . Do you know what percent is there . He not only is medicare the largest purchaser but it shows you also charge. Per vial right here it is more than 4,300 more than what they pay. Do you know how much the federal government would have saved if medicare had received the same discount between 2015 to 2018 . For those that could access the drug there would be similar discounts in medicare if we had a formulary position for the same access. That would be helpful and im sure the american taxpayer would like to see it since the estimate is that it would save taxpayers 150 million a year. Unfortunately, the 2013 tax aversion also burdened american taxpayers to move headquarters over there to dodge Corporate Taxes in the United States by having the lower Corporate Tax rate in ireland. I see that my time has expired so i will yield back. Thank you for the questions. You are now recognized for questions. Thank you, chairwoman. It seems to me often times in congress we go about fixing a problem before we stopped to ask what is broken about it. We talk about the drug pricing which we all agree we want to fix. Its definitely out of control, but i think that its to ask what brings the costs down in an economy and thats competition and customer accountability through price transparency. It makes it extremely hard for a customer to hold the manufacturers accountable or the system accountable. In any other industry the customer is able to look atst te pricing andma market keeps the prices low. It incentivizes new cures what is broken is they think they go to their doctors and the doctor prescribes the best medicine. The Insurance Company will try to direct them to select something else. Manufacturers basically you have to pay rebates or some would call it a kickback on the formulary, right . Right. The structure that you have created for the industry involves paying a rebates to the intermediaries in order to secure formulary placement. So that is one mechanism in which the market is being manipulated breaking that customer accountabilityan mechanism. Americans also understand the Companies Need to make a profit to exist. Then the pay for delay these are issues manufacturers do have to takesu seriously. While i wish we had pharmacies here and id like to encourage the chair and the committee to consider that if we are going to have a real discussion on pricing, we need to have all the players here because the system is complex and its broken and a number of different areas. But my understanding is that the engine has, you talked about the patent time has expired on that. Are you seeing that the generics are now available . Thats correct. Generics supply approximately 95 of theha market and less thn what was prevailing before. We had teva here yesterday and you had an agreement with them to keep them from producing generics for a couple of years. Is that correct . That is incorrect. We sued teva for infringing our intellectual property. They ended up settling with us after having launched that risk, settling with us for having, again, launched the uncertainty of the patent decision. The timing i guess is interesting that you ended up purchasing some of their properties i guess. The thing that i think is important to note is we have a couple of bills we are looking at which actually goes to address these different issues where the systems are broken. First is hr three which is a takeover of the system, and you know, as we look at this i think that its important to keep in mind lets not throughout the system thats brought the best innovation and has led to help so many people here and around the world, and i would really caution against a government takeover hr three subscribes. Thank you. Representative you are recognized for questions. Thank you very much. He said it well that these drugs are tremendous Health Benefit extending lives and alleviating pain but if we cant afford it, it does no one any good. Lethe question about the pricing practices and howio that is putting the cost of healthcaref out of reach for individuals, for taxpayers and employers who are trying to provide healthcare for their employees. I t wanted to ask about the Pricing Strategy for his drugs. What i understand, originally approved by the fda for Rheumatoid Arthritis and acquired the rights to sell in 2002. Is that correct . Thats correct. So your Company Bought a product, it didnt create a product, correct . Correct. We bought a product in short supply for which there was tens of thousands of patients on the waitlist seeking therapy. Fair and square you bought the product. You didnt invent it. And then you marketed it and produced it and raise the price of it, correct . Yes, but i was trying to explain one of the things we did is invest in the process improvements that enabled us to move tens of thousands of patients off the waiting list. The question here is in the legitimacy, it is legal to buy the product. One of the arguments is that it costs so much, but that didnt happen. What you did his sa is saul a mt and responded to it and produced it. But my understanding is you raised the price by 450 to 5,500 for a monthly supply, 70,000 a year; is that correct . Yes that sounds correct. In canada 1800 as opposed to 5500. Is that true . That sounds correct. Heres the question. Why cant people that are americans get a free 1800 bucks . A couple of things to observe. First, many of the medicines approved in the United States are not available in the markets. We are throwing this word innovative around. This product was invented in 1998. It isnt new. Its decadesold. So, my question is why cant an american get the canadian price . Is a product weve continued to invest in. Its not the product of 1998. So a canadian can buy this for 1800 but you wont give the benefit of that price to the United States of america and our citizens. [inaudible] let me ask l you this. Theres a lot of evidence in the record now that when your company and other companies are making the decisions on pricing, they have to meet revenue targets. You got shareholders to take care of and executive compensation to be mindful of, correct . I dont think of it in that way, no. Theres 100 million for the executives, and its heartbreaking for a lot of the folks who cant figure out how they are going too get the medication for a person in their family that they love. Let me ask you this, what is the problem with a product being sold in bulk to the buyer having a discussion about a bulk price discount . Obis there a philosophical objection to that . That is what happens every day in our interactions. A. Wi except for medicare. Itit is a legal. Would you be agreeable to having a discussion with able choir that happens to be medicare about a failed price when they make the purchases on behalf of the u. S. Citizens on medicare . T if i may explain, we interact yes or no, im asking if you were willing to negotiate with them about the discount. The beneficiaries are represented by the insurance plans with whom we negotiate every day for the inclusion of the products. So that is a no to negotiating directly. What im trying to explain is what is already happening today. We do think there are areas for improvement in medicare in Medicare Part b and weve been advocating for a numberos of those. Im only asking about negotiating with the medicare program. Thats it. Yes or no. Im trying to make sure you and your constituents appreciate that isat already happening tod. Why dont we change the law and make it legal to do that . Those discussions are already taking place today. Im asking about a law that makes it. Legal. You are asking about a law that makes itha illegal. Able purchaser can have a discussion and negotiate a bulk price discount. Thats the law. Do you think that its fair . I dont know that i would agree with your assumptions of the question, what i am saying is we have a highly concentrated set of intermediaries in the Healthcare System and the Healthcare Insurance Companies and pharmacy benefit manufacturers and they are negotiating for the benefit of medicare today. Are there improvements that could be made, absolutely. My time is expired, and i will yield back. Thank you. Mr. Gibbs, you are recognized for questions. They talked about wanting to make sure its enough to make your head spin. When you have more utilization its formulary it became more patients were able to benefit because we got more indications from the fda approved over the years. Is being utilized more and you can put your fixed cost over more of a customer base. In any other business or industry, that is and how it works. It drives down the cost you see what im trying to say. Does that make sense, apparently it doesnt work that way though. I understand what youre saying, but in this case, the commercial opportunity Patient Populations of the research and Development Today 55 given away for free. And i know mr. Bradley said the same thing about the discounts, so theres a lot of things going on that the Drug Companies are doing to help people. So im kind of assuming. That other area that i see. Its going to the intermediari intermediaries. They talked about the generics and making sure to get the right generics and intermediaries with the healthcare. What pharmacists and what role do they have now. Certainly the pharmacists at the drugstores are not responsible for the fact that the discounts and they are not being passed on. That is in the responsibility of the pharmacist. I think the negotiation that you are referring to doesnt include the pharmacist in that case. Do you think we should be looking to the role of the intermediaries and how it affects the patient and the doctors to get the right drug and right generic alternative . The gentlemans time is expired but the witness may answer the question. I do, congressman we should do what we can to make sure that the discounts are passed along. Ministers are being, you are now recognized. Thank you, madam chair. Can you hear me . Appreciate the hearing and the continuation of yesterday. Ive heard a lot of you say that things are off patent now et cetera. We are not looking at you with these lights and so we need to put more guardrails in place and the hearing is about that and why Elijah Cummings started this inquiryry originally and we will keep following through and theres going to have to be major restructuring of how the industry operates Going Forward. The American Public with the high prices of Prescription Drugs. You want to talk about medicare with 45 million seniors that have served by that program. And we are all contributing. Your Company Provided more than 7 billion. It is an understatement from the medicare program. Does it offer comparableco discounts to the discounts youve given to other governmenf purchasers . The prices are lower than medicare as you know and are statutorily designed. So it isnt the case. What about the Veterans Housing Administration . It includes both statutory price allowances as well as formulary restrictions which are not a part as you are aware. Its about twice what medicare is receiving but lets face it they have been allowed to negotiate and they dont get the same opportunities because we dont have the same ability to negotiate. This is common sense legislation that would allow them to negotiate just like the departmentnt of defense are able to do. Im not going to ask for your position on whether we should be negotiated. I can guess what it is but it seems going back to the broad macro picture here it figured out a way to do business with governments overseas and are aggressive on behalf of the consumers and taxpayers in dealing with the industry and they found a way to manage a relationship and conduct their affairs even though you are giving a better price to the vas because you are having to negotiate. To make profits even as we move forward and put the negotiation in place with respect to the medicarein program. Scratching our heads looking at it in disbelief and saying in that grain market economy in the United States of america you cant negotiate on behalf of 45 million beneficiaries for better drug prices. We are going to keep pushing on that because it is the only thing that makes sense and with that i will yield back. Mr. Higgins, you are now recognized. Thank you madam chair. I appreciate the continuation of the hearing from yesterday on this incredibly important subject matter. And im finding the arguments from both sides of the aisle are quite similar. Im going to address questions to you respectfully i understand businesses across the United States have costs associated with opening their doors. To stay in business you have to cover the costs. We know the costs associated with the development of new drugs [inaudible] we have a technical problem here right now. If you wouldnt mind repeating i will do my best to answer. Ou i have a couple of hard questions. We recognized it cost a lot of money to develop a new drug. We get that. We understand the basic business principles. What is the importance of maintaining that formula and what would happen to the development if there were legislative action out of congress that would restrict research and development with new pharmaceuticals and restrict Companies Invested in that research, what would happen to the development of the new pharmaceuticals . I dont think we would see new drugs being developed for diseases like alzheimers or the forms of cancer that remain today. I want you to know we all get that. We understand the development of new 21st century hightech pharmaceuticals and investments in many formulas that never make it to market because it needs to be regrouped. We get that on both sides of the aisle. But i do not understand and my constituents do not get why the same formula of drug and manufacturer can be two or three times less than it is here in the United States. My wife has ms and pharmaceuticals or a constant challenge. She receives the equivalent to chemotherapy and every six months it is the same battle with Insurance Companies doing research. It would pass and be introduced and could be law in a couple of weeks. You have one minute and five seconds. As i said previously, 46 cents of every dollar are in the hands of intermediaries in the supply chain, not in the hands of the companys. In canada they do not have a 46 cents of every dollar. Lets talk about the difference of expenses in the United States versus canada because you have a worldwide market. So the expenses are the expenses. Why does it cost so much less in canada than here the gentle mann may answer the question. Many innovative drugs are available which are not available in canada. If you look at drugs approved in the United States over the last decade that wasnt the question. The question is why does it cost two or three times up words where we produce the drug we pay more than the entire world combined. So that is his question. What is the answer . I respectfully disagree. The answer to the question is to allow medicare to negotiate directly the drug prices with the Drug Companies as they do in canada and europe and they are not allowed to do it in the United States and that is one of the things many of us would like to do to lower the price and people we worked for. Id like to go to wasserman schultz. I want to pick up where i left off and ask about another nefarious topic they usedie to maintain Market Exclusivity prices. The committees investigation shines a spotlight on the ways Drug Companies use litigation as a part of the plan i again want to focus on how the prices were inflated for the lifesaving medication used to treat cancer. Yes or no, you engaged in Patent Litigation yes, we did. Some pharmaceuticals challenge the legitimacy but rather than litigate its known as pay for delay for six months. Novartis made 1. 3 billion during that sixmonth delay. It was 30 below and reentered the market just 6. 4 below the cost. Do you think that it was good news for patients . The introduction of the product into the u. S. And that litigation could have gone through the length of the patent which would have been another three years actually two and a half years after than what you are saying other companies do and i understand that happens but in our case we didnt get paid for delay and there was no litigation that went on for years to delay the market. 700 million in excess cost per consumer. They were going to price their generic 30 below the price the patients are left holding the bag to keep the market share. Research shows 42 despite the entire two years after the diagnosis and i will tell you i know what its like to go through the 15 months of hell. They become anticompetitive with a delay to the entry both patients and u. S. Healthcare systems. So if the companies do not behave responsibly, Congress Must act. For brandname companies every single day try to delay as long as possible competition in the market who need the vital access to the market. Ther cost of your drug went as high as 123,000 a year. That is insanity and not being able to afford. I dont know how you sleep at night. Thank you to all the witnesses for being here today. Im pleased we are able to continue with the conversation because as we all know, the United States is the leading global innovator for groundbreaking medicine. However, now more than ever during the pandemic, it is extremely important that research and innovation is at the forefront of pharmaceutical development. While we work towards the future, we need to ensure that the public and private innovators are utilized toli address situations such as a pandemic and improve access to everyday lifesaving medications. How has the pandemic highlighted the need for innovation as we are raising to develop a Better Therapeutics and vaccines . We are helping other companies who do. It has agreed to manufacture vaccines to one particular vaccine maker and we are also making available the products that would be used to treat covid19 patients making them available at cost. We announced that a while ago. So we are doing all we can to find therapeutics for Research Candidates in the lab i think about 20 Research Candidates in the lab not yet in clinical development. Since it is classified as a specialty medication, could you please h discuss how this impacs the price and the market . Maybe the largest Patient Population but stomach cancer became second and five other rare cancers came after that very rare with the small Patient Population but because it is a targeted Cancer Therapy works very very well for those cancer so it is a specialty product in that it targets the specific cancers helps to turn these and with these followon product with that could be the treatment simply didnt answer how that impacted the place but i will move on because i have other questions. Many of my colleagues across the aisle advocate for singlepayer healthcare. And to become a reality what is the innovation space look like for a drug and multiple sclerosis . Can you discuss the importance of preservingos. You are asking a question about a drug with the want to directed to mr. Trudeau . More generally i want to get into how does that affect innovation . The gentle ladies time is expired. You may answer your question. The effect would be chilling in those rates for intellectual property to have a deleterious effect t. You are now recognize for questions. Yes i think i was muted. I want to focus my line of questioning concerning the embryonal drug and if you can just explain, it is an antiinflammatory drug introduced 1998 . Thats correct. And one of the best selling drugs in the world . Is that correct for arthritis . Yes. A form of arthritis known as Rheumatoid Arthritis and other autoimmune disorders spent the primary patent expired 2010 . No on the molecule itself . Know. The park mode the plant on the molecule has not expired that was a different patent. That was a use patent. That expired. So how many applications have you filed since then to try to extend the monopoly on and broke on dash. I dont know how many times. You know how many times you filed on one of your most important drugs . No. Not off the top of my head i would guess it is several dozen. Just talking to your neighbor for somebody growing up within a school and they say you come up with a new drug you follow patent do you think any person would say we should file 68 and extended through 2037 . Step back from your role as ceo do you think most americans would think that makes commonom sense . What is appropriate is the question if we are in investing in innovation that deserves to be held to those patents. I get that there is a drug. If you were talking to an ordinary person and said we file 68 different patents to on a 2037r rights do you think they would think that isgi logical . Again, it would require ase discussion how they are for andim we are fortunate to have patent rights protected. How much of the drug cost in europe compared to the United States . And the answer to that. You dont know how muchh the drug is priced what about 50 percent cheaper . It wouldnt surprise me but we dont and have never sold or marketed the drug in europe were then you face competition. No. Sorry. You have the correct in europe with similar composition causing the price to drop is that accurate . I know the answer to below. You and then to have competition there. And we make a commitment to the American People today that no american should pay more than people in europe are paying for. Yes i am that no american should pay more than someone in europe is has expired so the situation is different so the europeans and then nobody will pay a dime more than what they pay in europe. Who of this country and you love america you should be willing to tell americans this repair and they are willing to make that commitment today. The gentlemans time is expired. I take that as a now. Moving along after my five indians are enrolled in so many Prescription Drug classes and those who are sitting on the life they and then to reform the Prescription Drug standards our colleagues refuse to collaborate and fight suggest which are pretty which is is an government overreach its all some of the problems we are discussing today. This is not the case of the Trump Administration acting to improve the number and then to bring prescription places the team o percent and led were shaking the steps and we can establish some submission but then the goal to provide americans with the prices efficient right may have a decreased intensity to the ats and 2019 and 2020. In addition a significant spent that we are looking able and then with those know who to ask this in the she is who but the systems for those struggling and have insurance plans where he is there deductibles are seeking to review following to make sure those patients that need it was lower by 60 percent but you describe the estate on the situation they do not see a meaningful difference and what they had to pay outofpocket the world i was to some of the problems but it doesnt seem like that happened in that instance. Can you seem one can you say why . You are referring to draw the on a product to prevent heart attacks and strokes one of the most Innovative New medicines. After the price is make it more accountable. Remember and what we found it took more than a year for the insurance plans we see how the system is not working today for patients in one of the reasons we need to reform the rebate system and it alleging today. I understand there are certain payment programs in place to help patients avoid drugs like embrel. Can you discuss the effectiveness of any other similar initiatives you discussedd whatever programs tell pay for expensive medicines in the case of embrel Company Systems are in place so more than three quarters of the patients who use embrel today have a copy of less than 50 a month for the medicine when it comes to medicaid 93 percent of patients can receive medicine that less than ten dollars a month and when it comes to medicare we have 77 percent to receive medicine for less than 50 a month across the portfolio the ways they are benefiting from the support with those innovative lifechanging medicines. Does amgen utilize rates for the pbm and how does that impact the patient place . We do use relates they are a function of the space so if we increase the list price and the rebates you may ask why to secure competitive formulary positions for molecules we increased the list price and the rebate the effect of that is it thats why we advocate for changes that include passing through the rebate at the pharmacy c chair. He in her condition would have been chronic so we certainly appreciate that i would like to educate the public on and the loss of exclusivity. Like the staffff to slide the Committee Type that was part of a presentation that i guess provided to some of thee staff of the company and shows a dramatic increase the and of exclusivity and between 2013 and 2014 novartis price increase accelerated raising the price five times in two years. It turned out to be a 20 percent increase in net drug. They knew sales will decrease once a lost exclusivity they try to get as much profit as they code for as long as they could. This plan was stated in a journal document wanted tocu maximize value prior to loss of exclusivity isnt that the case . Can you identify that document you have in front of you . I dont have in front of me t. Ght now the staff can provide you that. They are documents you provided to the committee. In the last two years of exclusivity raise the price almost 20 percent there is a chart we can put up that showed a net revenue going from one one. 9 billion at two. 53 billion i of the Committee Staff can put that on. So the question is did you not increase the price from 20 percent in the last two years because you thought there would be loss of exclusivity . I know specifically why the increases of that. Were taken i was not there. As i said earlier it is indisputable that it was always the robust Product Price in its class. Reclaiming my time. Want to go to another line of questioning the federal government paid one third of all the money used that went to medicare for two years now basically falling off the cliff so how much money do you spend on marketing . Approximately 400 million us dollars in direct to consumer advertising. How much you spend in europe . Im not sure i know the account for that t. If you could get that to the committee. Lesson 200 million. How much to spend in europe . A fraction of that. How much you spent with you do any direct to consumer advertising. Yes that was me. In i need a yes or no answer to each of you commit to not increase the cost of air traffic moving forward beyond inflation each year . I will point out we have decrease prices. Yes or no and increase the list prices. So your answer is yes he would commit to doing that. After we have been operating the last couple of years. We are committing to reducing the net price that is the. As to net pricing, yes. I yield back y. Will need to ensure Patient Access to Affordable Drugs and those that rely on essential safety net programs contract pharmacies are central to pennsylvania the 80 percent of her hospitals and services to bring access to patient drugs for those who need that many of whom are seniors or chronic conditions. They can for being here. To ask you about your Integrity Initiative for duplicate discounts to register and upload 340 the claims originating from contract pharmacies on 20 webbased platform. The announcement from august expressing support for a sustainable 40 be program i do have concerns about this leading hospitals in pennsylvania and their ability to offer home and Vision Services and telemedicine expanding Outpatient Facilities with those scarce resources to those in need. H what kind of collaboration have you had with the 40 be hospitals about the Integrity Initiative . Thank you for the question. We support the intent and the design of the 340 be program for the uninsured and the safety net providers you were just describing in your constituency with the underserved population in those communities that have seven we support the 340 be program over many years we are trying to resolve those over the years that Many Companies have and we are committed to ensure that medicines are accessible to as many as possible but it is so much distorted. If i can just step in amemeen describing your initial and then Integrity Initiative can we talk to hospitals about this program how it might be implemented . I believe our staff is in and we will continue to work with them. If you are in consultation with the hospitals when we plan on making this in the fact that was the beginning of this month. We asked for theg data we are still evaluating the responses weve not heard from other hospitals and evaluating data we have received and continue to evaluate the data forward based on what we have seen. If it has a register by octot can they participate in the discounts. We have the 340 be discounts and see the responses and look at the data and then talk to the hospitals and move on from there there. Is is a secure platform or should we be secured about Data Security . I believe it is a secure platform i believe it is. Is there any Administrative Burden on hospitals or what would that be . Its not burden some is the same data sharing with the intermediaries from earlier. The data should be available. I think it takes five minutes every two weeks. You know the intermediaries have the data already. So have you asked them for the data. Have you looked at another way to get it . I think the relationship is between the hospital and the intermediary we have to ask the hospitals i can check but i think thats what we have. I would just like to end by saying those drug discounts are crucial and we should be thoughtful about how any changes to the program were the fact us Going Forward and assure changes are manageable and in the best interest of both providers and the patients they serve. I yield back. You are now recognize. Thank you matter chairwoman. When you acquire that lucrative drug is that correct . Actually thats the only product that they had so in the first came to the market one file cost 40 by the time you acquired it that price had gone up to 31000 is that correct. 40. The only difference is the composition of the drug but the legal status of the drug to be granted the orphan status is that correct . Thats not necessarily the only thing and with respect to the value on the drug had explain going for 40 at 31000 for the same file with the same efficacy and impact and it got me classified as the orphan drug with a sevenyear market monopoly. You did get the orphan Drug Designation thats correct and then to reflect. The skyrocketing inflation in this particular drug had nothing to do with premiums the positioning of the drug as an orphan drug and the protection that provided to have highly and enhanced value that made the acquisition for your company is that not correct . Based on the failings they did have a specific drug and looking out a going out of business. Came in and save the day. We acquire them and did the things. And then wherever they can get customers rebates and then the Payment Assistance Program and those that can benefit have good access to the drug. And with medicare what is the discount . Act and as i discussed earlier not under medicare formularies and that there was that opportunity for that position and then there might be the opportunity to provide additional discounts similar. Where the discount in this case with medicare b 1 percent . The most recent data correct. 31000 drug that once cost 40 you are giving rebates to medicare are less than 1 percent between 2015 and 2018. Ug is it also true your company is looking to use this drug for other treatments other than and the original treatment it was developed for . Developing evidence to support the fda indications. If you do that, do you do that under the auspices of the protected status of an orphan drug . Or is it no longer used. Xclusively for the purposese the orphan drug is considered inspired on expired a number of years ago. It is not patent protected it has no exclusivity of the traditional patents and it is a drug really for underserved patients who have very few few populations. So with 2,033,000 of ill thats not an alternative for patients either. And we went to think the witnesses for being here today they say its a magic bullet fighting my lorraine leukemia can you discuss while it is such a gamee changer . Yes it was a game changer the first targeted therapy you may have heard the term smart drug. We were the first smart drug turning off a particular gene to be extremely efficacious first of my lorraine leukemia and thats because it was a smart drug and very specifically in the bias mechanism of action and that efficacy was so high that as i said earlier that the six or seven cancers returned from federal conditions to where they live and then the followup asking them to go even free if they get remission for long enough time they dont have to take any drug. With the current price . It is 120,000 and that price and the generic is ier 4200. How much does the average patient pay for that . The average outofpocket cost for part d is 856 per year. How does the patient get such a discount price it depends on the Insurance Coverage the price i just gave you was Medicare Part d patients are outofpocket cost of 856 average annual cost. Is considered a magic bullet its not quite a curable puts people in remission it has gone down from 120,000 at 856 for part d. Thank you very much for that. S00 how do they decide the right place to set for a new drug that could save someones life . We try to match the value we believe that our products will bring to patients and compare those two and one is the benefit that they provide themselves typically developing drugs for devastating diseases and then looking at data to the Overall Health care system. For example it could increase the drug cost to have the impact of Overall Health care cost for a particular disease. The cbo estimates democrats hr three would result and 30 a few words here is developed over the next decade. What is the impact on patients and innovation if there were 38 fewer cures created over the next decade . That is potentially devastating. Exenen t not only for patients and families but also the economy we benefit from innovation that enables us to treat serious illnesses. We see the benefit of that every day so if it diminishes that opportunity tragic. On average how often does your Company Bring a Game Changing treatmentan or cure . Your time is expired him answer the question. Please answer mr. Bradley. We have 22 different models of Game Changing medicines we have three this year waiting for registration one year to the next is different and three more we are waiting for this year. Congresswoman i do believe it could be more but last year we had at least four i believe we already had to and more to come this year. Between three and five every year as an average. The industry perspective we are trying to get as many lifesaving medicines as we can we are hoping to have two or three in the next two or three years. You are now recognized for questions. Thank you so much madame chair to answer these questions and provide more information about drug pricing. Mr. Bradley, talking about high a drug pricing we talk about the list price and large discounts are provided off the list price and then as part of the insurance design patients are charged a percentage as coinsurance. But my understanding is this is always a percentage of the list price and not the discounted price. Is that correct . Generally of that is correct. I know the answer is simplistic but what are some of the ways to bring down where the patient pays . We have advocated for changes in the system passing the rebates negotiated between intermediaries through to those at the pharmacy counter to have the immediate effect to produce the outofpocket cost for the patients to pick up the innovative medicine. We have advocated for increasing the outofpocket cap after they paid a certain amount of their medicines a ouija cap and no longer have to have a copay. There are two examples of your advocating for and we are also taking the unusual step to lowering these prices by 60 percent in the case of the Game Changing medicinese for both parties attack and stroke. In some instances the list price may go up and there are reasons for that. Is thatnderstanding hathe net price has gone down in recent years . Yes. In 2018 and 19 and 20 those net prices decreased across our portfolio. Can you explain to us how those net prices go down with the list price may go up. That occurs when the rebates we are giving to the intermediaries exceed the increases of the list price. Can you explain how bio similars play a role to reduce healthcare cost. Amgen is a heavy investor in bio 2 similars. We makee three of those available to patients and prescribers and two of those Innovative Products are charging and then to have a reliable free supply. Thank you so much for that. I want to ask any of the witnesses if you are involved in the fight against covid19 what are the steps they are taking for diversity in Clinical Trials . Congresswoman it is tom from novartis. Before covid19 hit, our Global Drug Development group was focused on this issue for our own Clinical Trials. Its a crucial step that must be taken because the basis of your question im sure you realize if a product is studied in a limited population after its approved doctors are comfortable subscribing in a limited Patient Population. N so whatever that is doctors are more hesitant because they dont have the data. So we recognize before covid we needed to change that in her own Clinical Trial since the covid19 pandemic began will be have done the Novartis Us Foundation is to begin the process to convene other companies and some groups like the naacp to focus on Racial Equity to have a conversation about this very issue across the industry to have diversity and Clinical Trials of all types and to address the underlying problems which has to do with many things but trust for patients who are in Clinical Trials is one of those things and that will take a broader conversation we will try to convene. Your time is expired. I would love to be a part of that conversation we would love to offer any thoughts and discussions on this. Thank you madame chair for holding this hearing i want to ask the gentle man in another form how we use minute one move manufacturing back and what we can do to support to bring that infrastructure and jobs back to our country. Thank you for thee hearing. You are now recognized for questions. This is a follow up on the previous question im also concerned of the 34 as he will be program now they are Companies Like eli lilly that have refused to continue to offer the Prescription Drug discounts that the safety net hospital and Community Health centers rely upon. To my knowledge novartis requesting claims data for that duplicative discount. Are you willing to give us assurances they would be a good steward of the 340 be program . Our intent is to be against the word of the program. And to avoid paying multiple duplicate discounts. And then to use the discounts for the care that was originally intended other we dont support is allowing those intermediaries to profit. Special Team Biologics are the major Prescription Drug cost they treat a particular disease with limited Patient Population and evidence shows interjection and a bio similars reduces the cost for patients and since all of your companies have biologics how is the introduction of bio similars impacted the price of your medications and has any of you try to prevent those from coming to market in the effort to stifle competition . And how can congress incentivize companies to bring where bio similars to market . Thank you for the question. Focusing on the best interest trpatients and we also support competition and some markets have been shown to enhance competition my company does not produce bio similars so maybe that would be better directed. This is amgen we are active in another market we invested a couple Million Dollars for those capabilities sse this will provide and appropriate choice for providers and so far we have launched three medicines in the first with the cancer field with strong receptivity to Product Offerings so we are providing those the discount and we see a significant market already so as created by the legislation is working effectively in the us not the bio similars and expect this to be an important opportunity. A quick yes or no. President trump fda released a bio similar action plan which streamline the process to approve bio similars. We believe this is resulting in significantly more approvals than the Obama Administration was not as aggressive in this area do you agree the president s plan is saving patients money . I will give you a different question do you agree is that saving patients money . Is tom from novartis. I am not sure that we had santos a Generics Company and a bio similars company and that that ipo in 2015 we certainly support bio similars. I have a quick follow up question. I will be introducing a bill hr 8190 which will expand on what President Trump has done. Do you pledge not to get in the way of any expansion of bio similars . Do you agree we should be getting more bio similars to market . Generally speaking we support more bio someone is coming to market that there are those in the pipeline and actively trying to get them onto the us market and that will help patients and reduce healthcare cost in the us spirit the gentlemans time is expired. Our investigation use anti competitive tactics to prevent generic competition in order to proper profit novartis paper delay to pay off competitors to delay their entry into the market and novartis struck a deal with the first competitor to postpone the entry by six months. The generic price it 30 percent below but then only has 6 percent so these areas maneuvers employee the delay and then a duopoly to result in 700 million of excess cost to players alone in a single year 2015 and 2016. Collected your highest net revenue during that twoyear period were more than 100 novartis employees collected more than 1 million per year and the ceo and a total of 72 million that year. One strategy of anti competitive exclusion is to engage in restrictive contrast to ensure that they only cover these are called lock on generic the internal records shows with the block strategy to offer higher rebates or discounts in exchange for the generics this meant it would automatically be substituted instead of a generic version. Do you agree that those blocks are anti competitive . Congressman, no. Dont agree with that payer contracting actually helps saves the health plan and to the brand is cheaper than the generics what we do it is lower the price of the branded product with steve discounting and we competed with generics on price. Why did you need to institute a formal block to keep the generic from being in competition quick. It wasnt for generics to be in competition with those who wanted not only to be automatically substituted at the pharmacy counterntnt , those Patients Want to these payers will be contracted to get to them. You actually promoted to consumers the idea they surely deliver it so talk to us about the written campaign for prescriptions. Thats a campaign to make sure doctors and patients know that if they want the branded product and many patients who are stable in remission from cancer and to stay on the branded product and i go to a generic because then they need a doctor to write the brand will be automatically substituted at the pharmacy. That would dispense as written inns thats for thoseo those dramatically at the pharmacy. And then to influence consumers so tell them to dispense as written demand to the brand multiple generics leading to patient confusion so i actually out there campaigning against generics making them that they can get the branded pool . We have our own Generic Companies thousands and thousands of generics every year we are the second largest seller of generics in the United States way down to where do you just described by reaching out to patients and doctors who already want to stay in the brand we cannot stand the brand unless they write a prescription. And then to keep the market share is that why you went for that block strategy . That is part of the negotiation of that process. They are tremendously profitable as that is paid for the patients and medicare and all of us through increased prices thank you for your testimony i yield back. You are now recognized. My first few questions are addressed to mr. No doubt beneft from these drugs. I think you can understand they have a hard time understanding that cost benefit calculation. How could they be sure theyre getting the best price available for their medicine . Congressman. I think that is an important issue. It is very difficult in the system in place today. It is difficult because patients do not get the benefit of the rebate at the pharmacy counter. It is hard for a patient to have any idea what rebate has been negotiated between their plan to sponsor and the innovative drug company. Problem,hallenging even for the Initiative Patient trying to get the answer. We and others publish list prices on the website. Of theide an indication range of rebates. And therefore give a sense of what the net price is. Established the rebates the price that we pay to the intermediaries that is what we receive and the patient then pays a copay of the stated list price. Patients no doubt didnt want benefit but they have a hard time understanding the costbenefit calculation. How can patients be sure they are getting the best price available for the medicine . Thats an important issue of transparency. Its very difficult for what is in place today. Because patients dont get the benefit of the rebates at the pharmacy counter. Its hard to have any idea what has been negotiated between the plan sponsor and their drug company. It is a challenging problem even for the parent he wants to get the answers. But we publish our list prices on the website and we provide an indication of the ra of rebates and therefore a sense of the net price which is different for individual contracts we have negotiated individually. Yesterday in the hearing i talked about my dissatisfaction with the pbm so i will shift gears and mention that for aifinat. Secon. This is the incredibly complicated process it seems like the savings are not always passed on to thee consumer. Pass these rebates onto Medicare Part b patients. This covers only a small percentage of the population. What can we can we and congress do to ensure patients are benefiting from these discounts rather than middlemen . Thank you for the question. Questionr to your quickly would be transparency. We need to encourage Patient Access and affordability. There are three ways. You can give access to value priced products with low cost sharing. We do not restrict their access. We can cap what patients have to pay in outofpocket costs for drugs costs for drugs and Medicare Part d and require plans to share the discounts to negotiate for drugs with patients. The savings should be passed along at the pharmacy counter. I agree 100 with your statement about transparency. Who is the agency or bureaucracy in charge with overseeing, educate me on that. That is a good question but perhaps hhs perhaps should be overseeing and to some extent they probably do something that happen maybe its hhs or a different approach. Im not sure. Its something we should look into more to investigate outofcontrol costs of drugs for americans. One other thing and my time is running out, but to touch on what was mentioned with the difference between europe and the United States and ididi dont think any of us like that, but im curious how much do you spend on litigation in europe versus the United States is there a difference . I believe there probably is. If you could get that back to me. Madam chair, i yield back. The vice chair of the committee. Thank you so much. I want to follow up on something you said to the chairwoman maloney whenwh she asked about e cash slide. Lets review the slide. It refers to it as i am quoting from the title, a cash cow. When chairwoman maloney asked about this, you downplayed it and said it was never sent to the board. Do you stick with the assertion that your company doesnt act as a cash cow, yes or no . Are you familiar with the term sin in synonym that refers to one word means the same asor another. With thatmiliar concept . T i am, yes. We obtained some emails and its from the Company Executives and one of the Corporate Executives had a discussion about this exact term, and i quote, do we really want is a cash cow to the board, so then the Companies Officer responds wrote and imail he quote instead of cash cow i will replace it with prox profit maximizer were you trying to rip mislead the committee . Let me put up the next slide. S this is the slide that was set and included in the final presentation prepared by the board. Do you deny them . No i dont. That was the whole point ms. Maloney was trying to make is that your company is trying to maximize profits and then you d nied it and downplayed the document. You said you removed the word cash cow but there is no question you were trying to maximize profits. Cash cow and profit maximizer you replace one with another to make the most money. I think you owe the chairwoman of the committee and apology. How do you respond . These were options that were being considered, but the actions are what we need to focus on. Do you agree the main purpose replaced one with another lacks and it was the same intend to maximize profit. I would like to put up nearly 6 billion exhibit 76 on the screen, please. The presentation emphasizes the merger with a quote unique opportunity that should be pursued urgently because the deal would provide rapid revenue earnings growth. Soon after the acquisition, the executives boasted about how well the strategy worked highlighting to shareholders they already contributed 123 million in only six weeks and in the briefing in october, 2014, you personally explained the companys primary goal was to deliver toplevel shareholder returns by focusing on highly profitable specialty drugs. Do you recall saying that . It wouldnt surprise me that i did say that. The reason why, just changing the term from cash cow to profit maximizer doesnt change the intent. It isnt to help the bottom line of the outcomes for the American People or for the public in general. Its to maximize the profit. The company then proceeded it was already highly profitablele and then you proceeded to increase by more than 82,000 with an additional 26 increase. So i believe that you misled the committee and that you owe the chairwoman and apology. With that, i yield back. You are recognized for questions. Thank you so much, chairwoman. Lets talk about the assistance programs that we hear from Companies Like yours. I know because many of the Companies Use many of the programs in some ways to hike up the prices so they are completely unaffordable and then they offer these charitable programs so they can afford the drug you made unreasonably expensive, so the socalled programs do not get to the underlining problems as many constituents tell us they simply do not have to be expensive. Its a choice every ceo testifying today makes and its a choice thats killing people in the districts across the nation. I know you all know theres a lot of documents the committee has. They are not theories. They are all documentations that prove what we are trying to explain to you that these are hurting people, so the internal documents obtained through thecu investigation shows that the socalled sham terrible programs are moneymaking schemes. So lets start with the copay assistance program. In the response to the committee, you stated that the markets used the program to, quote, and ensure every patient has access to it is it an investment or charity . We are trying to make sure they can get access so when they cant afford it for whatever reason, we try to make it available in a variety of ways, and that is one of them. So the documents dont match up to what you are trying to say here. It shows the Program Investment and this is a scheme you all used it to drive the demand particularly after it began competing with the genericon versions of the drug. Iul would like to put up exhibit 15 on the screen. It appears to be an analysis of when the socalled enhanced copayment program anticipation of the generic competition. Can you see that . I want to direct your attention to the table. Yes, hold on one second. Im getting a paper copy because i do not see it on the screen. It i says the one you are referring to doesnt say the optimal scenario. Every dollar it put into the enhanced copayment program, it would get back return between 5. 1 and 8. 9. That means for every thousand dollars put into the program, you would expect upwards of nearly 9,000 profit. Am i reading that correctly . Im not sure. You took an oath to be specific. In the chart from your own company to the committee, you were literally making the 9,000 in profit when you insert a thousand dollars into these sham programs. Congresswoman, i am not sure i understand. According to the slide, the optimal scenario six months before your company lost exclusive rights to the drug in a generic and then the generic version would become available because launching six months prior would result in the greatest return on the investment by keeping the patients before the lower cost entered the market. Does that sound right to you . Im looking at the chart and i see what you are saying and i would like the opportunity to take this back. Lets loo at another document if i may. The executives appeared to have a literature review to consider enhancing its patient assistance program, the scam. Let me put the document on the screen on exhibit 14. I hope you can see that for patients that have higher copayments theres the risks they may not adhere to the drug but then we do reach this conclusion that because cancer drugs are a necessity for patients, they are less sensitivity to price increases. Dowhat the document is saying basically as cancerba patients will keep taking drugs no matter the price because they have no choice. Am i reading that correctly . The next sentence says something i think is a fact, Research Shows theres an upward limit of costs at which the patient adherence begins to decline. You can try to mislead the public but when it comes down the documents are basically saying it doesnt matter because these are lifesaving drugs. Youve increased the price to make more of a profit off of people suffering from cancer and all of these scams and socalled patient assistance programs that you mislead everybody, they are moneymaking schemes and again its verified over and over again and i willi yield back. Missus porter you are recognized for questions. Thank you for being here. I want to talk about innovation. As you know this is the second day of hearings with the ceos of the Big Pharma Companies and weve heard so much Important Information about the very real cost of research and development. What was the engines of total revenue in 2017 . Approximately 22 billion. So 23. 7. How about 2018 . I dont have that at hand. 23. 4 billion. 69. 9 billion. Over those three years, how much of its revenue was invested in that Important Research and Development Work . Approximately 10 billion. So, taking you at your word it was about 10 billion. Thats a big number. Investing in r d dwarfs some of the other expenses. How much did they spend on lobbying over that same three year period . Approximately 10 million a year. 32. 5 on lobbying. How much did they pay for the salaries of the top five executives over the two year period . About i would guess 6. 5 so r. 13 million would be my guess. Would you like to revise and take a look right here. Sorry, you asked a salary. I gave an answer about a salary. Let me rephrase. How much do they spend on compensation for the executives . That is the number youve written on the board. Could usewr a the number for the committee . Yes, i will assume your number is correct, 124 million. Wonderful. My question, how much did they spend on stock buybacks in that the same two year period . Im sorry, two or three year period . Three year period, i dont know the number of the top of my head but that includes where the reform was implemented so in order of 30 billion. Can you say the number for the committee. I cant testify. I need you to state the number. The number you have written is 28. 6 billion. Thank you. So, this doubles, almost triple stock buyback. Is my math correct 10 billion is roughly one third of 28. 6 billion. Whatn. You have not includeds the capital that we allocated to acquire externally. You make an antiinflammatory drug that is used to treat conditions like arthritis. Did they do the research that led to the creation . Not the original discovery. Just yes or no, did you do the research that led to the creation . Congresswoman, i stand by my answer. Did we do the Research Development Work Associated with it, absolutely, quite a bit. Did you your self run or oversee the trials or help invent this breakthrough drug . Know, i wasnt involved in the Breakthrough Development or discovery of the drug. It was invented in an Academic Medical Center and its discovery was funded by taxpayers. They didnt directly pay for the discovery, correct . That is incorrect. It was discovered by scientists at a technology company. Okay. What i would like to do now is for you to please explain to the American Public why you and for other executives deserve to pay yourself tens of millions each year. I have an empty whiteboard ready to take down your justifications. I recognize that that is a considerable and i would point out i dont have a direct input to the compensation. That is derived by the board, and its overwhelmingly supported the compensation package. Reclaiming my time, sir. Do you not know why you are getting hundreds of millions of dollars, tens of millions of dollars a year, what is the justification so i can show the American People. Our compensation is consistent with competitive positions. The other guy gets paid too much, tomac isnt a justification. I would like to hear what you do to deserve 124 million you and your top five executives over a three year period. The gentle lease time is expired. The gentleman may respond to the question. More than 90 of the compensation is based on Performance Measures that include how they perform relative to the market and the Compensation Program is aligned with that of our owners so a large part reflects the fact that we have been creating value for the shareholders by advancing innovative medicines like those that we invested in. I wish you would focus on creating value for sick patients, not just the shareholders. I yield back. The gentle lady yields back. Missus kelly, you are now recognized for questions. Missus kelly. Thank you, madam chair. I would like to take a moment to address in argument we have heard about today that the pharmacy managers are responsible for the rising drug prices. I would like to start with you first, the average Price Per Unit which is the price of the drug after subtracting all rebates and discounts has increased every single year since im not going to pronounce this right but i would like to put the price between 2015 and 2018. You can see on the chart the average price increasing by nearly 3,000 and that is after factoring in the rebate and cost. Is it fair to say that the price increased at a faster rate than any discount of the rebates provided to others in the supply chain . I dont believe that is true. Weve increased the discounting significantly to our customers. The data revealed that its paid medicare for actively nonexistent document efforts to perpetuate this misleading narrative between 2015 and 2018 that you paid averaged less than 1 and paid to try care for the averaged of more than 26 . So, turning, again the price of the drug after the rebate discount reaches 2015, the same is true even though the rebates were stable and increased the price 34 between 2015 and 2018. The data reveals that between 2011 and 2015 is increased by double digits annually. At the same time its lower than we would lead the public to believe. 2009 and 2015 the average provided by 15 of the sales. Its clear that we are pointing the finger and its a way we cannot be responsible for all of these price increases. I dont know if anyone wants to comment on that. I will yield back my time. The gentle lady yields back and recognizes mr. Gohmert for closing comments. Thank you madam chair. I will be brief. We have had two long days of hearings and hopefully in the future we can come together and identify the problems we can try to work towards some solutions to the problems. To be solved in hr 19 in our bill, the republican bill. For example, mentioning several times the pay for delay settlement i dont think anybody likes that. Its bipartisan and in our billing hr 19. So, iin think that theres an opportunity to Work Together on this issue moving forward, and i certainly hope that we can do that. With that again, appreciate the hearings we had and all the witnesses that came before us over the last few days and hopefully we can Work Together moving forward because this is an issue the American People are demanding congress addressed and i hope that moving forward we work in a bipartisan way to have solutions to the problems. I think the gentle man andem can assure you my colleagues and i are open to working with you for solutions and solving this problem. But before i close i would like to enter into the record a letter received from the mayor of rockford illinois, thomas mcnamara. The letter explains the various services the city would have funded with the 500,000 that is spent. It mentions installing 350 streetlights, planting 2,000 trees were replacing 2 miles of sidewalk. I ask unanimous consent to place this record intoon the letter without objection, so ordered. A. With that let me close by thanking all six of the ceos that agreed to participate in these two days of landmark hearings and id like to thank the staff for all the work they did in preparing the hearings. To me, the single most remarkable revelation coming out of the hearings is the claim by the direct companies that they need to raise their prices for research and development or to promote innovation. This is completely and utterly false and baseless. I think ms. Porter underscored this in her comments. The internal documents we obtained showed the pricingg discussions. It has nothing to do with research and development they show a meticulous even ruthless focus on squeezing every possible dollar out of the pockets of the American People and the american taxpayers. Whether you call it a cash cow or profit maximizer, it shows the companie companys view thes in a profitbased basis is lifechanging in many ways and we are grateful for that. Weo cannot let the drug companis continue to target the companies. The United States of america the biggest and deepest price increases. We have a law on the books in this country that bars the country from negotiating directly with Drug Companies to lower the pricesr for medicare. One of the biggest drug purchasers in the world. Of course the Companies Know this and they exploit it to the tunesf of hundreds of billionsf dollars and that is what these new documents show. These Companies Make profits in europe where they negotiate, in canada where they negotiate and all sorts of other countries that negotiate. But in america we have our arms tied behind our backs and we are not allowed to negotiate to help people, andd that is not a free market. A freemarket is when two parties come to the table and agree to a price one is willing to pay, and the other is willing to accept. Its the opposite of a freemarket. It lets the Drug Companies increase their prices over and over again thousands of dollars as we heard today and saw in the document this is absolutely unsustainable. We need to pass the legislation that Elijah Cummings championed and President Trump use to support before he broke his campaign pledges. Finally need to let the government negotiate and remove the block that doesnt allow us to be treated fairly. We are exploited in the system. Now i want to let members know that these two days of hearings will not be our last. Weve heard testimony from six ceos that we have been investigating several other companies as well. So, i will keep members appraised of the additional hearings, potentially when we return in november and december. And finally, i want to thank the members of the committee on both sides of the aisle. This is a critical issue for all of our constituents. And i believe all members demonstrated the command and material and desire and drive to help your constituents and help the American People. I sincerely hope we can take these findings and move forward on the legislative changes to help American Families together. And with these two days of hearings, i thank the staff that has worked incredibly hard on this and this hearing is adjourned. [inaudible conversations] [inaudible conversations] [inaudible conversations] on the nations Food Industry the House Small Business Committee heard from representatives of the industry on supply chain issues, loss of customers, perishable foods and facility cleaning and maintenance. This is just over 90 minutes