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

Hybrid hearing. Pursuant to house rules, some members will appear in person and others will appear remotely via webx. Some members are appearing in person. Let me first remind everyone that pursuant to the latest guidance from the attending physician, all individuals attending the hearing in person must wear a face mask unless you are speaking. Members not wearing a face mask will not be 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 in what is known as webx as active speaker view. The timer is visible in the room directly in front of you. For members appearing remotely, i know you are all familiar with webx by now, but let me remind you of a few points. First, you will be able to see each person speaking during the hearing, whether they are in person or remote, as long as you have your webx set to active speaker view. If you have any questions about this, please Contact Committee staff. Thatd, we have a timer should be visible on your screen when you are in the active speaker with thumbnail view. Third, the house rules require that we see you, so please have your cameras turned on at all times. Fourth, members appearing remotely who are not recognized should remain muted to minimize background noise and feedback. Fifth, i will recognize members verbally. Members retain the right to seek recognition verbally. Members will be recognized in seniority and regular order. Lastly, if you want to be recognized outside of regular order, you may identify that in several ways. Committee staff will ensure i made aware of the request and i will recognize you. We will begin the hearing in just a moment when they tell me they are ready to begin the livestream. 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 today 2 of our landmark series of ceosgs with drug company. Yesterday, we heard from the ceos of three Drug Companies. What we learned was shocking. Drug companies are hiking their Prices Higher and higher and placing an even greater burden on the patients who rely on these drugs to survive. We learned that the skyrocketing prices are simply 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 to meet Internal Revenue targets or 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. In the cases we examined yesterday, we learned that Drug Companies target our country for their biggest prices and for 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 cbo , allowing the government to negotiate with Drug Companies could lower the spending on brandname drugs by about 456 billion. So let that number sink in. Of 1nearly half trillion. Excuse me. Today is day 2 and we will hear from three more executives. We will hear from the ceo of amgen. Which repeatedly raised the prices of two drugs used to treat Rheumatoid Arthritis and other painful inflammatory diseases. And another drug used to treat the effects of kidney failure and parathyroid cancer. We will hear from the top u. S. Executive from novartis about the companys massive price increases for a drug that treats chronic leukemia. A rare form of cancer of the blood and bone marrow. And we will hear from the ceo of mallinckrodt about the pricing of its drug used to treat a rare sheet seizure disorder in little babies. We will keep our Opening Statements short because we want to hear from our the testimony from our guests, but i would now like to turn to our Ranking Member for his opening statement. Thank you, madam chairwoman, for holding this hearing. I would like to reiterate a few points brought up yesterday. First, republicans have introduced legislation, hr 19, full of bipartisan provisions that the house could pass today and be signed and 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 products are accessible and affordable for all americans. Third, while brand pharmaceutical manufacturers play a significant role, we must look at the entirety of the marketplace, including pbms, health insurers, generic manufacturers, and wholesalers, to truly solve this problem permanently. At this time, i would like to yield to yield the balance of my time to representative massey. Thank you, Ranking Member and thank you madam chair member madame chairwoman. The testimony today will involve the u. S. Patent system. In this opening statement, i want to read the patent and copyright clause in the constitution. This clause was so un controversial that it was accepted by all of those drafting and voting on the constitution unanimously and without debate. It says the United States Congress Shall have power to promote the progress of science by securing for limited times to authors and inventors the exclusive rights to their writings and discoveries. To some people who have not studied this issue too much, they think that perhaps patents is part of the reason drug prices are high. But the reality is on a lot of the drugs, the patents have expired and there is no restriction from the Patent Office to keep somebody from making generic versions of the drug, but there are other impediments not involved in patents that stop these generics from coming to market. I hope we find out what those are about. Then 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, then they would be able to find the capital and the backers to develop these ideas and discovery. Even if you had scientists who come up with new drugs for free, and say they just gave the idea away, the new drugs require millions, hundreds of millions in some cases of development in order to bring them to market. Without a patent, which is the equivalent of a deed, like a deed to a piece of property, no one would develop a piece of property if they could not get a secure title patents work the same way. Then invest the money required to bring that to market to test it and make sure it is safe for all human beings. I look forward to robust discussion on that and without, i yield back. I want to thank my colleagues and with your indulgence, because of my cough, i would like to just lead up to the video that we want to play before we go into it, but i did want to respond to my good friend and colleague i believe we should work on this issue. It should be bipartisan. Since you mentioned your bill, i will mention mine, hr 3, which would merely allow our country negotiate for lower drug prices for medicare, as we do with the veterans association. It has passed the house and is in the senate. What i would like to do is to honor and remember our former chairman, Elijah Cummings, who launched this investigation 18 months ago. His number one priority then and our number one priority now is the health and 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. If we could now play that video and move quickly forward. My name is heidi and im 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 i had cancer. It was a complete shock. She told me im lucky, 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, she told me the drug cost 10,000 every month. Drug, itateful for the keeps me alive, but the price tag constantly hangs over my head. Instead of just focusing on my family and my health, i often have to carry around the burden of what would happen if i could not pay for it. I have no choice, but you all have a choice. You can take action to lower drug prices because drugs dont work if people cant afford them. Carter, and name is i work at Oregon Health sciences university. I take care of babies suffering from a rare seizure disorder. By best drug is made mallinckrodt pharmaceuticals. Without this medication, children are more likely to face lifelong uncontrolled epilepsy and have developmental disabilities. This drug provides the best chance for the child to live a more normal life. It is not a new drug. It was first approved in 1952. For decades, it was priced affordably, but since then Drug Companies seeking more profits acquired the medicine and made a series of unwarranted price increases. Is vial same vile is 40,000. The price has impacted my rack to send my patients practice and my patients. The cost and delays their care, prolonged hospitalization, increases seizures, and harms intellectual development. Mallinckrodt can maintain the higher price because they know they have a captive Patient Population and doctors dont have a good alternative. Their price hikes rely on the desperation of families who want to alleviate their childrens sufferings. Mallinckrodt should not be able to profiteer on the tragedy of these babies. Thank you for listening and i appreciate you addressing the issue. Hi, im from chicago illinois. When i was 30, i was diagnosed with an incurable condition. To treat the constant pain, takei weekly injection of a drug. When im on the drug, i dont have symptoms. I can ride my bike totally painfree, or school but my daughter. I also have to carry the fear knowing that this could be ripped away. The drug is priced at nearly 6,000 every single month. My ability to cover those costs goes away and i know i will go back to waking up every morning and pain. On top of that, my doctor tells me that missing even one dose could mean the drug starts working stops working for me. These risks because crippling anxiety on top of the burden of the disease itself. In order to avoid the interruptions, i have been forced to dip into my savings and jeopardize my Financial Health and i consider myself one of the lucky ones. I urge you to enact solutions to lower drug prices. Thank you. Thank you very much and i will now introduce our witnesses. We are grateful for their attendance today and their testimony. Our first witness today is mr. Robert bradway, the chairman and ceo of amgen. Amgen sells the antiinflammatory drug and Chronic Kidney Disease drug. Mr. Markill go to trudeau, the president and ceo of mallinckrodt pharmaceuticals. The sellscells antiimmune drug. Finally, we will hear from mr. Thomas kendris, the u. S. Country president of novartis, which sells a cancer drug. The witnesses will be unmuted so we can swear them in. Please raise your right hand. Do you swear or affirm that the testimony you are about to give is the truth, the whole truth, and nothing but the truth, so help you god . I do. I do. I do. Thank you. The witnesses answered in the affirmative. Your written statements will be made part of the record. Bradway, you are recognized for your testimony. If you could unmute your microphone. Good morning. Members of this committee. My name is bob bradway and im the ceo of amgen, a leading Biotechnology Company based in thousand oaks, california. Before i begin my remarks, i want to acknowledge the work on Elijah Cummings on drug pricing issues. I know he is sorely missed by his former colleagues and i want to recognize his work dedicated to improving access and affordability for patients. Unwaverings, amgens mission has been to serve patients. We do that through innovative medicines and highquality bio similars that treat many of the worlds most serious and costly illnesses. We are also engaged in the fight to understand, treat, and prevent covid19. We employ nearly 14,000 people here in the u. S. , where we conduct the vast majority of our cuttingedge research and ecofriendly manufacturing. Amgen is deeply committed to meeting the needs of every patient, every time. Therefore, it is of great concern to us when patients who might benefit from our medicines cant get them. We are committed to responsible pricing. A few recent examples. In 2018, we launched a new migraine prevention treatment at a price that was between 20 and 60 below market expectations. Proven made a medicine to reduce heart attacks and strokes inpatients with stubbornly high cholesterol levels available at a 60 reduced price. Pocket d lower our outofpocket costs for patients, especially seniors on medicare. Over the last two years, we have launched bio similars to some of the top selling drugs in the country and plan to bring more to market over time, providing patients with more Affordable Treatment options. Overall, the average net price for amgen medicines across the entire portfolio in the u. S. Declined in 2018 and 2019 and were on track we are on track for further declines this year. An amgen medicine that treats patients with autoimmune disorders, such as moderate to severe Rheumatoid Arthritis it highlights the tension between access to critical, innovative medicines and the outofpocket costs that are also required to pay. Physicians tell stories of how their waiting rooms were cluttered with canes, crutches, and wheelchairs, but thanks to the drug, thousands of patients have been given a new lease on life. Since the approval, we have 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 patients whose disease has sapped the strength in their hands. But innovations like this cost money and that is partially why we have increased the list price in the past. But what has driven up the list price more than any other factor match pressure we face to the price increases of the market leader. I know this sounds strange, companies in virtually every other industry compete by offering the lowest price. Unfortunately, the current rebate system in the u. S. Created with good intent now often leads to a situation in which not getting off formulary requires matching a competitor upon higher price. It increases the significant rebates paid to the middlemen who largely dictate which medicines patients can access, regardless of which medicine there physician prescribes. These rebates paid on all of our medicines do not translate into lower costs for patients. 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 not serve the patients it was designed to benefit. As we wrestle with the worst Public Health and Economic Crises of our lifetime, the time is now and the place is here to craft the changes that are needed. Innovative biopharmaceuticals are part of the solution to the burden serious diseases impose on patients and society. Amgen strives to prove affordability, 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, help improve access to affordability for our patients without stifling innovation. There are so many diseases to confront and patients to help. As we stay focused on what is best fors, unconfident for patients, im confident we can end up in a better place. Thank you for the opportunity to speak to you this morning. Mr. Trudeau, you are now recognized. Trudeau charwoman, Ranking Member, members of the committee, thank you for the opportunity to be here today. I started in the pharmaceutical industry as a research and Development Engineer nearly 40 years ago. Over the course of my career, ive worked on pioneering treatments for several critical diseases, including some of the first for hiv. The leadership roles ive had another regions of the world have allowed me to understand the strengths of the u. S. Health care system and its challenges. Ive devoted myself to this industry because like the nearly 3300 employees at mallinckrodt i know that the therapies we make improve the lives of patients and their families. This has been a year of unprecedented challenges. When covid19 hit, we mobilized to identify therapies to combat the disease and consulted with the fda and nih about potential evaluation of our inhaled nitric oxide therapy for the treatment related respiratory complications and supported an of today, nearly 250s hospitals and u. S Health Systems have used inamex as an experimental treatment for covid19 patients. We also secured our supply chain to avoid manufacturing interruptions for the critical 54,000, and donated pieces of ppe, several ventilators, and more than 16 000 gallons of Hand Sanitizer manufactured in our missouri plant. We also engaged with members of congress and federal agencies like barda to discuss leveraging our extensive experience making high quality, u. S. Made generics at our plants in missouri new york, illinois, and North Carolina to bring home the manufacturing of essential medicines and active pharmaceutical ingredients. Today we are the only american manufacturer of acetaminophen a key active pharmaceutical ingredient in many medicines, which we proudly make in illinois and North Carolina. Our resolve to help patients with critical conditions has never been stronger. We understand and share the American Peoples concerns over the availability and affordability of Prescription Drugs. We are steadfastly committed to knocking down barriers to Patient Access. Thats particularly true with our jail. Axar is a complex injectable biopharmaceutical product fda approved for 19 serious conditions, including infantile spasms, lupus, multiple sclerosis, nephrotic syndrome, and Rheumatoid Arthritis eczar arthritis. It is lifechanging therapy for a small group of patients for whom other Treatment Options have failed or patients whose conditions if left untreated may lead to physical and developmental impacts regarding requiring lifelong care causing great financial strain on families and the American Health care system. Its our policy to provide reference samples to generic manufacturers upon request and weve supported legislation like the creates act to ensure appropriate access to those samples. Since we acquired actar in late 2014, we have invested more than 660 Million Dollars into modernizing the product including over 470 million in r d activities and close to 190 million in manufacturing advancements. Weve initiated nine Clinical Trials with targeted combined enrollment of nearly eleven hundred patients, a large number, given the rear and complex conditions it typically treats. Results from one study with patients with persistently active Rheumatoid Arthritis showed that treatment with actar resulted in low disease activity for an astounding 62 percent of patients for whom standard treatments did not work. The list price has increased on average around five percent annually, not factoring in inflation or significant discounting we started when we acquired it. Two of the last six years we didnt take any price increase and last year the net price of it went down, as it will again this year. We have also improved the ability of patients with a prescription to obtain it through our robust free drug and commercial copay assistance programs, which many patients pay nothing outofpocket. Like all of the employees, i dedicated to bring more breakthrough treatments to the market, including one of two treatments we are developing for patients with advanced liver disease, regenerative skin therapy, which may reduce the need for autographed in a certain burn patients, and for a high mortality rare disease affecting children and adolescents area we 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. Thank you. Mr. Kindress you are now recognized. Thank you, chairwoman maloney. Cromer, members of the committee, thank you for the opportunity to speak with you today. Dress, i amom can the u. S. Country president for novartis a leading Global Medicines company. We use innovative science to develop transformative medicines that improve and extend peoples lives. We also develop generics and biosimilars through our sandoz the second largest Generics Company in the u. S. Our medicines reach close to 800 Million People every year. Globally we are over one hundred thousand people with approximately 15,000 employees in the united dates. Our global r d headquarters is in cambridge, massachusetts. We have several manufacturing sites across the u. S. Ive been with novartis for 25 years, and i still marvel at the passion of our people to tackle the most complex medical challenges. Gleevec was one of the most significant mental advance 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 was only 30 percent. Now the vast majority of cml patients have a normal lifespan. Once more, novartis continued to study whether the drug could treat other diseases. Today it is approved for six other rare cancers, saving tens of thousands of lives. A more recent example of our transformative treatments is the development of a gene therapy to treat spinal muscular atrophy, a rare genetic neuromuscular disease that affects primarily babies. The treatment is one of the first gene therapies to be approved in the u. S. , with a single injection. Some babies who would have otherwise died by the age of two or three are now going to kindergarten and growing up like other children. In cell therapies, we developed the first car t therapy to treat a rare form of pediatric and young adult leukemia. This therapy can bring a patient from the brink of death to remission. The first patient ever to receive this therapy has been cancer free for eight years and is now going to high school and leading a normal life. Spending time with this young patients family is one of 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. Id like to be clear with the committee that at novartis we recognize that these innovations dont matter if patients cannot afford or get access to them in get access to them. In the u. S. , issues of price and access present systemic challenges that must be addressed together by industry and policymakers. And novartis is committed to being part of the solution. While cms predicts National Health spending to grow at an 5. 4 throughof 2028, the average net price of our medicines is expected to decrease by 2. 5 percent in 2020. Valuebased pricing is a critical tool in addressing affordability and access. When setting prices, we at novartis consider multiple factors, including the improvements the medicines offer patients both clinically and in terms of their quality of life. And the benefits that the medicines offer to the Health Care System and society. The industry should adopt a similar approach. And patients can have access to treatments with low cost sharing to encourage the use of the most costeffective options available. We also seek to lower costs by developing lowcost biosimilars and generics through our sandos division, which brought the biosimilar to market in the u. S first. And over the past five years novartis has provided medications at no charge to nearly 300,000 u. S. Patients experiencing financial hardship, or who have limited or no Prescription Drug coverage. Eligible patients with commercial insurance often pay less than for a 30day 30 prescription for the vast majority of novartiss products. The pharmaceutical industry used to be revered. That trust has eroded however , and our industry must work to regain it. At novartis we understand that this trust is earned not just from bringing breakthrough medicines to patients, but by pricing these medicines responsibly and ensuring broad access. While we live in an incredible era of progress and human health, we will only be successful if we can make both of these goals a reality. At novartis we are passionately committed to doing so. Thank you for your time this morning. I look forward to answering your questions. You. Ank all of i now recognize myself for five minutes for questions. And i thank mr. Cromer for allowing me to go over a little of my time. I certainly grant the same to him and more to his colleagues on your side of the aisle. Yesterday, we heard the ceos claim over and over again that they had to raise drug prices to help pay for research and development and promote innovation. But the internal documents we obtained showed that these. That these claims were false. Instead they showed that these price increases are intended to generate more and more revenues for the Drug Companies. Mr. Trudeau lets start with you. In your written Statement Today atu made this statement, malencrott we believe that pricing for an innovative therapy should reflect the value that the treatment bring to patients, providers, and the Health Care System as a whole. Acquire company didnt acthar gel because you thought it was an innovative therapy. It was a very old drug. You acquired it to meet your financial objectives. Id like to go through three quick slides with you. First is exhibit 66. It is up on the screen. This is a a slide from a presentation that was prepared when you were considering the acquisition of west core, which made acthar. As a preliminary matter, these talks about quincy, quincy was just the code name you used for your real company, quest core. Thats correct. Thank you. The title of the slide says quincy or questcor is a rapidly growing Specialty Pharmaceutical Company with a premium priced product. Mr. Trudeau, the premium price product was acthar. And premium priced just means really expensive. Right . Thats actually not true. What it refers to is it was priced at a premium to other competitive therapies. Well lets look at the next slide, exhibit 67. If you look at the fourth bullet , this slide says your acquisition would allow you to achieve aspirational goals with a single transaction. Aspirational goals, you are talking about huge revenues. Thats exactly what you got. Accounted for one third of your companys net sales from 2017 through 2019. Isnt that right . Sales are roughly correct. Our aspiration goals were actually to transform the company. Mallinckrodt was originally a generics and imaging company. We were working to make a transformation focused on research, investment, and the opportunity to address patients with severe and critical conditions who are underserved by current therapy. Lets now look at exhibit 68. I will just read the headline. It says your modernization strategy will define the future of acthar as either a growth asset, or a cash cow. Isnt it true that this is how you really see this drug . Not as an innovative therapy, but as a cash cow . Thats in fact not true. This document, which i was just recently made aware of, was a draft document never shown to our board. But that term is typically applied to products for which no investment is likely to be going forward, and in fact, thats exactly the opposite what we have done with acthar. Weve invested nearly 660 Million Dollars since we acquired the product in 2014. Ok, a cash cow is a profitmaking thing. What is a cash cow . Thats what you said. I think the document speaks for itself. Mr. Broadway, may we turn to you . Your companys talking points claim, we price our products to reflect the economic value that to patients, providers, and payers, the unmet medical need the size of the Patient Population the investment and risk undertaken and the need to fund continued scientific and innovation. But your internal documents tell a very different story. So lets look first at exhibit 36. This is a Pricing Committee presentation from december 2016. In this document, your Pricing Committee is basing its decisions not on innovation or research and development, but on what another Company Might do with a similar drug. Isnt that right . Yes, madam chairwoman. Thats correct. Its important to note what happening in this discussion. This reflects the nature of the structure of the biopharmaceutical industry through which we compete for formulary position for our medicines with other molecules in the same therapeutic category. A what you are seeing here is snapshot of the discussion about how we position enbrel versus other molecules that compete against it in this antiinflammatory category. Well this document it has three scenarios for what abv might do. And it plans out what your company will do in response. These pricing executives are not discussing any of the things that you mentioned in your talking points. They are not discussing research and development, unmet needs, investments, risk undertaken, innovation, instead of competing with other companies to beat their prices, you are all increasing them in lockstep. Isnt that right . Thats what the documents has, and i think its scandalous. What you see here is a document that illustrates the competition that exists to keep medicines like enbrel on formulary. Allowed, letay be me say a few words about the structure of the market that requires the kind of rebating thats implied in this document. Enbrel competes against 20 different molecules in the antiinflammatory space. Secure arebates, which position on the formulary of the intermediaries who determine which medicines are available for patients to use. And what the complex are the scenarios that the team is considering in order to make sure that this medicine remains available for those patients who are already on it and those patients whose physicians want to add them to the therapy. So theyre looking at a range of scenarios and implicit in this is the rebate that would be associated with those scenarios for the product. K lets move on to mr. Indress. In your written testimony, you say given its lifechanging attributes, we have committed to making gleevec accessible to patients who need it. But one of the documents obtained by the committee shows executives priced gleevac as high as possible. And they priced it so high from the documents, to meet revenue targets without triggering negative backlash. Lets put this slide on this screen and this is exhibit three. This is a slide of gleevecs pricing scenarios. Including the risk to novartiss strategic financial plan. If action not taken in 2013. If you look in the top righthand box, the description of the aggressive pricing model says delivers greatest upside while keeping single increases below the 10 percent threshold threshold. This aggressive model recommends five price increases of nine point nine percent over the course of three years. My question is your company chose the most aggressive pricing model, didnt it . Chairwoman, in the next sentence, right after the one you read, the document, which i am seeing this morning, recommends enhancements to our patient support programs. So what i would say is that over the years since gleevec was introduced onto the market, its value increased exponentially because of the five new indications that we obtained for gleevec in rare cancers and the tens of thousands of patients whose lives were saved. Over time it became clear that the remissions not only in cml but in all of those cancers were robust and long lasting. In 2001 we didnt know that we in 2001, we didnt know that. We didnt know how long patients would live and survive after uh they were given gleevec but over time we found out that they did. And we turned cancer, all of these six cancers, from a fatal condition, first to a chronic condition, and with a followon product to cigna we turned it into a treatment free remission condition. Basically a cure. They dont haveke a pill any longer. So gleevec was tremendously valuable. The price increases we took were we certainly took them over those years, madame chairwoman, but we were always the lowest priced product in the class. The product has been generic now since we havent taken a price 2015. Increase since 2015. Today, 55 of what we manufacture of gleevec is given away to patients who cant afford it and given away for free. Well the bottom line is that novartis went with the Pricing Strategy that would maximize net sales, raising gleevecs price five times in three years. The point here is that all the claims by Drug Companies about why they need to increase prices to pay for research and development and for innovation, they are simply not true. These documents show that they are increasing prices simply to make more money, plain and simple. Thats why we need to finally allow the government to negotiate directly for lower prices like all other countries. Again, these Drug Companies make more off the United States than all the other countries in the world combined buying their products. There will be further questioning on the rebates and how they are really not working or not getting to people. But i am over my time as i am and i want to now recognize mr massey for the same amount of time for his questions. Thank you very much for allowing me to go through the slides. Thank you, madame chairwoman. Mr. Trudeau you mentioned that mallinckrodt was a manufacturer of generic drugs, and it was a big part of your market in the beginning. In general, what percent of prescriptions in the u. S. Are generic . Approximatelyts a 90 at this point. 90 of the prescriptions are written and filled in the u. S. , roughly are for generic drugs . I think thats fantastic. But is the cost of generics in the United States significantly higher than in other countries . How do we compare when you go on a generic label . Typically, the United States generic market has been amongst the most efficient, meaning the prices drop most rapidly in the u. S. We have a very efficient market. Generic prices what is the lifetime of a patent . A patent can vary. But the lifetime is typically going to be on the order of 20 years. Thats from the actual discovery itself. Much of that timeframe is taken up by research and development. Many times when you launch a brand or product, you may only have a couple of years left, because most of that time has it haslegated, because taken time to develop the product. Typically its 20 years. Thats typically the timeframe. 20 years from when the invention occurs. Sometimes you are left with a few years to recruit the investment. How many of the drugs you developed actually result in a profit . On the generic side, typically you are likely to be reasonably successful, because again, you are not driving innovation, necessarily. What you are doing is driving down costs, because you are able to bring competitive products to the market. On the branded side, it is different. The likelihood of success while you are driving innovation is dramatically lower. Thatve heard statistics 100 or so drugs ever make it to market. It seems convoluted to those of us who arent in the industry and trying to understand the drug pricing schemes and how it involves pharmacy benefit managers and rebates. Can you tell us what percentage constituentsmy spend on drugs, or the government spends on drugs for my constituents goes to pharmacy benefit managers . I can tell you the 46ermediaries have about cents on every dollar in the pharmaceutical industry. So 46 percent of what you see is the u. S. Drug industry reflects revenues that go to the intermediaries including the pbms. So thats almost half of the of the drug price that the consumers pay or the government pays goes to an intermediary instead of the drug company . Or instead of directly to the patient. Thats correct. When my constituents pay their copay on a drug, you mentioned there are rebates that are paid. Do the rebates go to my constituents . Who do they go to . Thank you for raising this question. I think thats important for you and your constituents to appreciate. The copay is a function of list price. The rebates are also a function of list price. So as list price rises the rebates to the intermediaries arise, as well. The other consequence of raising list price is that the patient at the pharmacy counter is having to pay a copay off now a higher list price. And the discounts that have been given to the intermediaries are not provided at the pharmacy counter to the patient. So weve wound up with a situation where the intermediaries are getting the rebates and not directly transferring that benefit to the patients. So the intermediaries are seeing their share of the pie increase while asking the to reach into their pockets and pay more in the form of a copay. Again, the copay is not collected by the innovative industry. That copay is collected by the intermediaries in the system. So the copay, because of the way the pharmacy benefit managers work in other intermediaries, the copay that my constituents see or that check they have to write out or sometimes they have to borrow the money for that copay that copay isnt based on the actual price that goes to the drug company or the final price that the drug Company Receives for that drug, its not even based on the real price of the drug once you count the rebates its based on a higher effective price . His that correct is that correct . You are absolutely right. Aur constituents are paying copay, which is a fraction of the list price. The Innovative Company is receiving a net price, which is a list price minus the rebate returns to the intermediaries. And the rebates alone, approximately 159. Is in the hands of the intermediaries. Do i have time for one more question . Can you explain to us what the witht was when we came up the pharmacy benefit manager system . What the intent was, and how it was designed to make drugs more accessible, or a lower price, and how that mission has possibly wandered over the years . Perhaps i might point out two things. First, the structure of the rebate system im referring to is one created by legislation that enables us to interact with the intermediaries in a way that includes paying them rebates in order to secure formulary placement for our medicines but our medicines. I dont want to just point the fingers at the pbms. I think we heard in mr trudeaus testimony one of the useful functions that the pbms have played in our system through the years, which is helping convert patients to generic drugs when available. Its one of the reasons that we have 90 of the prescriptions in the country being written for a generic drug. I think the question however is uh whether theyre playing an appropriate role when it comes to innovation brand protective innovative brand protected innovations and design formularies that separate the physician and the patient from one another at the pharmacy counter where patients cant be sure that 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 thats in place in our industry. To me, it feels like we need some kind of truth in pricing. Way,ople bought cars this the actual price wasnt what the consumer paid, and financing was based on a price that wasnt the real price, i think we would be outraged. Maybe thats something we could look into. Thanks to the chairwoman for her indulgence. I yield back. I now recognize representative norton. You are now recognized. Thank you very much, madam chair. I hope you can hear me. Yes we can hear you. I want to thank you for this very important hearing. Subject matter drug pricing is so important that you have scheduled two days one after another on this subject so we can clear this matter up. I want to say thank you for joining us, your testimony has been very helpful. You produce that drugs that are crucial lifelines to patients and their families. And you heard from the witnesses who opened these hearings that far too many families lose access with each price increase. Thats before we get to the generic state of the drug. Broadway, your company has raised the price of enbrel 27 times since 2002. Fromrophets have grown 1. 25 billion in 2003, to more than 5 billion today. And there is another drug under investigation since launching the drug in 2004. Amgen has raised the price more than 20 times. The u. S. Sales price for zanzibar also rose from 36 1. 4 billion04, to in 2018. Mr. Trudeau, since acquiring , mallinckrodt raised byhars already high price more than 8,200 per vial. Thats a 26 increase. To 2019, your Company Generated nearly 6 billion in net sales of acthar. Since launching uh gleevec in 2003 your company has raised the price 22 times. Due to these price increases, your profits have grown nearly 1 billion in 2009, to from thanllion in 2009 to more 2. 5 billion today. Americans in four reportPrescription Drugs difficulty affording their medicine. Ourn hearing today hearing today with testimonies from these two patients who rely on these medications for their lives, but are struggling to make ends meet. Like many other families, they have to make heartwrenching decisions to afford these vital drugs. Yes or no will you commit to lowering the list price of enbrel and zanzibar in the u. S. . Patent in theff u. S. , and the price has fallen by some 95 . And as i said in my opening remarks, we have lowered our net prices across our portfolio in the u. S. Over the past two years. We want to try and repeat that again in 2020. Yes or no . Not get a yesdid or no answer. Will you commit to lowering the list price . Will you commit to lowering the list price of acthar in the u. S. . I will commit to lowering the net price of acthar in 2020 down to levels it was in 2015. Thank you. Will you commit to lowering the list price of gleevec in the United States . Havengresswoman norton, we it went generic five years ago, and we lowered the price by giving discounts on the branded auto, huge discounts, 40 or 50 . I mean the list price. Yes, we have given discounts on the list price. We have not raised the price. We have in effect lowered the price, and we are giving away 25 of what we manufacture now to patients who cannot afford their medications. We are doing everything we can to make sure every patient who needs it can get it. Thank you. The problem is they are not doing everything they can, thats why this hearing is so important. I yield back. Thank you. Mr. Gosar, you are now recognized for questions. Thank you. Im certainly happy that i follow my good friend thomas massey, because he set the stage for me perfectly. It seems to me that this hearing and yesterday hearings are a little tone deaf. We have countless states that have shut down with businesses crumbling do the overreactions of covid19. Yet were here talking about how certain drugs need to have government controlled prices, yet there are millions who are thrust into the unemployment because of these harsh restrictions. And this hearing isnt even focused on the drugs or therapeutics that most people have in their mind, the vaccine to covid19. But since were here i plan to get substance out of this hearing. We have ceos of some of the Biggest Pharmaceutical Companies here with us today. The way that my colleagues on the other side of the aisle view , drugs, and price tags are very topline. They see a drug that helps people but since its not cheap therefore we need the government to negotiate these prices. In typical fashion you identify the problem properly but butcher the solution with more government. Ronald reagan once said it isnt the government thats the solution, its part of the problem. As a doctor in a past life the first step when diagnosing an ailment is look to the source and keep it as simple as possible. If there something prevented that can be done to stop the problem from occurring, why not try . Lets put this theory into practice. Why are drug prices so high . Many point to pbms greedy executives, and flawed patent systems. Does anyone want to point a finger at the federal government . I know i do. In any Prescription Drug chain you have Health Insurance pbms drugmakers, pharmaceutical wholesalers, pharmacies themselves, what do they have in common . Government influence and control right off the bat Health Insurance Insurance Companies are exempt from antitrust laws. That means they literally do not have to compete. Many of my colleagues have been mentioning an infusion of competition to help lower prices but how do you suppose we do this when a link in the chain can legally monopolize . Ive been fighting my entire political career before that to repeal this 75 year old statute because you cant even imagine a world where Health Insurance has to compete for your businesses instead of leaving most americans with little to no options . As for other entities involved in the drug process, these Companies Make became a main focus of obamacare and actually fueled the creation of new rules by cms under the Obama Administration to come down on pbms. How about pharmacies and how how they must deal with the 340b contracts that set strict price controls on various drugs . No market force there. What about the drugmakers we have today . Im sure they can go all day about how government is involved in the daytoday business. Just the fda regulations alone could keep you guys talking for days but unfortunately i only have so much time. My colleagues on the other side of the aisle want to point to our Current System and say that this is the free market. Well if this is the free market and this is competition it is failing america. We have nowhere near a free market its crony capitalism at best and its just the excuse my colleagues are using to push us closer to socialized medicine where folks like these testifying today will be decimated and those creative therapeutics for those that need it will be lost. So i say to you folks here today, joined the side of simplifying the Prescription Drug process. Be for the side of free market competition, because soon, you may look like those Drug Companies in other countries where your profits are capped, your innovation is stifled, and your impact on making the world a better place will be completely evaporated. Lastly, i want to thank the majority for taking the first step in passing the congressman defazios and my bill , the Competitive Health Care Insurance reform act unanimously out of the house last week. This is the first step in which we get Creative Solutions where it is market driven. Now lets get the senate to pass it. What we see is patients doctors and the system are all benefiting. Thank you very much. I yield back. Thank you very much. Representative clay, you are 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 uh one of issues. Ature and thank you for keeping his memory alive and keeping this effort. Thanking alloff by three witnesses for being here. Let me say hello to a former constituent, mark trudeau, who has headed up mallinckrodt, which has been part of the st. Louis community for almost 150 years. And mr. Trudeau, let me start part of the concern about acthar is that it is a pretty old drug with a relatively high price, and yet you have said mallinckrodt is modernizing it. I think you said you have invested more than 600 Million Dollars in it. Tell us why it is important to modernize this drug and arent there other more modern therapies that can take the place of acthar . Thank you for the question, congressman clay. Good to see you, as well. Opportunities, there are old drugs that have been repurposed for new indications and new purposes. For example, looking at some of the antivirals being developed to treat covid19. In the case of acthar, we believe it is quite important to create new information, new evidence, things that have led to change to provide patients and prescribers, as well as those responsible for reimbursement the appropriate scientific information to make good economic and critical decisions for their patients. We are most focused on doing the best that we can for patients that are suffering from severe and critical illnesses who have relatively few options, and acthar can make a difference in the lives of those patients. And i believe in the importance of medical innovation, and you have indicated rnd is a major focus prider company, and your in funding part of that r and d. How much does mallinckrodt annually, and does your pipeline offer any promising options for patients . 350e invest approximately Million Dollars a year in research and development, which is a large number for a company of our size. We believe our pipeline is very promising. We specifically focus on underserved patients with severe and critical conditions that have relatively few options. We are developing two products for patients with severe liver disease, a product for adolescents and children with a high mortality rate called nieman picked type c. Were also developing a novel biotherapy to treat severe burns, to reduce the need for auto grafting. So our pipeline is really focused on driving innovation for these particular underserved patients. Missouri,ome state of covid19 has been a major concern. It is my view that during a national Public Health crisis like we are facing today, pharmaceutical and Healthcare Companies should be focused on finding solutions. Perhaps all three witnesses can tell us what your companies are doing in response to this pandemic. And mr. Bradway, we can start with you. Thank you. We are very active in addressing the pandemic. I share your belief that all of these innovative Biopharmaceutical Industries need to be working together to find ways to develop vaccines, therapies to prevent the therapies developing to prevent the immune overreaction which we see for many infected with the virus, and to be finding other ways to try and diminish the burden of this disease on our society. But im impressed by the speed and scale of the efforts underway. Both at our company and across the industry. Im optimistic that well have solutions. Thank you. Madam chair, can the other witnesses respond, or is my time expired . Time is expired, but the witnesses may respond. To comment on that. Congressman, the it is very important we do everything we can to combat this challenging Health Crisis we have created by covid19. Weve done at least four things. One is we have invested and partnered on Clinical Trials around one of our innovative therapies that can potentially help with patients that are ventilated as a result of covid19. It is being used at physician discretion today as an experimental therapy in over 250 hospitals. We have donated ppe, ventilators, Hand Sanitizer around the country. And weve also made available some of our Healthcare Professionals at company cost to be treating patients on the frontline. We believe its that important to do everything that we can to combat this challenge. Thank you. Mr. Palmer, you are now recognized for questions. Thank you, madam chairman. I would like to start off by saying that obviously, we are all interested in lowering drug prices, but at the same time, we dont want to overreach and implement policies that stifle research and innovation that has literally brought us lifesaving miracle drugs. In fact, we want to encourage the discovery of new drugs. At the same time, discovering these new drugs doesnt do a lot of good if people cant who need the drugs cant afford them. I want to follow up on mr. Masseys points on patents. I brought this up yesterday. I support extending the length of patents if an extension will lower drug prices. And what id like to know from each of you, and if you can answer concisely so that i can get in a couple other things id appreciate it, would extending the patent productions reduce drug prices . We will start with mr. Trudeau. I believe anything that we can do to end sent innovation and extending patent life could be one of those things, is likely to give the healthcare Healthcare System an opportunity to get drugs to patients more efficiently, more effectively, and potentially at lower prices. And mr. Kendris and mr. Bradway, do you have anything to add . I want to ask a couple of other questions. We think innovative biopharmaceuticals are an important way to control Health Care Costs. We advocate for maintaining the 12 years of data exclusivity in particular for biologic drugs. So we think thats an appropriate standard. We see innovation as a way to bring down healthcare costs overall in the United States. Congressman palmer, i would agree with what the other two witnesses just said. I would say patents are essential to incentivize Innovative Companies to invest in highrisk research, and the patent system as it stands right now does that, and we support it. , i think we are both asking these questions is it should be obvious to everyone that Drug Companies need to be able to recover their costs. My understanding of the private has Research Industry is it led the way in the development drugs, butredible theres also a number of drugs that never made it to market. And you have to deal with that stranded cost that goes into your decisions on pricing of other drugs. So my question would be what would happen if the development drugs, to the development of these lifechanging, lifesaving drugs, if companies couldnt recover their cost . That should be a fairly simple question to answer. Mr. Trudeau. Believe my colleagues have agreed with this, as well. Yountives are important if are undertaking innovation, which inherently has risk. So any additional incentives to provide provided the potential to reduce that reward,increase the certainly they are likely to lead to more innovation, more inventions. In the case of drugs, probably more potential cures and treatment. If you guys have ideas on incentives, whether it is write offs or losses, or other incentives the government could provide, i would like you to provide that to me and this committee in writing. I do want to go back to Something Else discussed earlier, the issue of rebates. Some of the information i have gathered over the years, and this is not the first time i looked at this, i looked at it my first term in congress, it seems theres some substantial abuse in the rebates. And how it is handled. That might be an example of something that the federal government thought was a good idea at the time that is not working out quite so well. Would appreciate getting feedback from each of you on incentives you think would help the Companies Bring these prices down, yet not compromise in any way the ability of companies to vet to develop these drugs that are not only lifesaving, but life improving. Madam chairman, i yield back. Thank you. I now recognize mr. Ruda. You are now recognized for questions. Thank you. First id like to recognize the critical importance of the drugs that all of your companies manufacture. [inaudible] mr. Trudeau, acthar has been proven effective. Mic was not on. First, i would like to recognize the critical importance of the drugs all of your companies manufacture to the health and wellbeing of many americans. The essential nature of the Prescription Drugs and treatments you manufacture make it all the more vital for us to ensure their continued availability and affordability for all. Hasinckrodt drug acthar proven effective and received fda approval for numerous conditions that you outlined in your opening testimony. Acthar was first approved by the fda in 1952, and was actually below at the low 100 100 for 50 years. However, over the past two decades, we have seen an astronomical price increase at the expense of american patients and taxpayers. Questcor acquired the rights to acthar for 100,000, when the price per vial was still at or below one hundred a vial just like this for one dollars. Hundred dollars, just 20 years ago. Almost immediately, the price of the drugs started to increase. Priceust 2007, the skyrocketed from 1600 a vial, vial, literally overnight. When mallinckrodt acquired questcor in 2014 for 5. 6 billion, the price of a vial already exceeded 30,000. Vial from 50t same years ago that cost only 100 39,000, a 40,000 increase. This to increase from this in a matter of two decades. It is clear, american taxpayers are increasingly footing the bill for this drug. While the number of Medicare Part b beneficiaries receiving acthar increased by around 25 ofm 2013 to 2018, the cost the federal government nearly tripled over that same time. Mr. Trudeau, do you know how much your company has collected from Medicare Part b in recent years . I dont know the exact amount. Certainly its been in the millions of dollars. It has. Approximately 2. 5 billion between 2015 and 2018. When mallinckrodt acquired acthar, how much of the sales came from medicare . Acquisition,e of the medicare sales were approximately 25 to 30 . Thats correct. That number has grown quickly. Do you know what percent is medicare sales now . Approximately 55 . Thats what the committees information shows. Weve gone from 25 to 65 of mallinckrodts net sales from acthar. Not only is medicare your largest purchaser, but data obtained by the committee shows you also charge medicare more than any other payer. Medicare average net price per than 43ht here is more hundred dollars more than commercial payers pay. Do you know how much the federal government would have saved if medicare received the same discount as commercial payers between 2015 and 2018 . I dont know the exact amount, but the number would have been significant. In fact, acthar is not on medicare formularies, which actually prevent access to medicare patients who could actually benefit from the drug. We would be very happy to consider similar discounts in medicare if we had the formulary positions and could get the same access we get with commercial payers. That would be helpful, im sure the american taxpayer would like to see it. Taxpayers 150 million a year. Unfortunately, 2013 tax inversion to ireland has also burned american taxpayers. Is it safe to say you moved your headquarters over there to dart dodge corporate taxes . No. Thats completely untrue. [inaudible] that my time has expired. I shall yield back. Thank you very much for your questions. Mr. Cloud, you are recognized for questions. Thank you. Seems to me that oftentimes in congress, we try to fix a problem before stopping to ask whats broken about it. We are talking about drug pricing which we all agree we want to fix. It is definitely out of control. Stopped to askwe what brings down cost in a economy. Chart thati had a showed how complicated the Pricing System is. That makes it extremely hard for customers to hold the manufacturers accountable or the system accountable when it comes to Price Transparency. In any other industry, thats how it works. The customer is able to get pricing. The market keeps prices low. We have a u. S. Patent system that protects research and incentivizes new cures. It led to the u. S. Being the leader in innovation. The system is working. Whats broken is the customer accountability aspect. The Price Transparency that keeps prices in check. Think about the American People, they think that they go to their doctor, the doctor prescribes the best medicine. Thats not whats happening, is it . You talked about pbms and what you are having to do. Speak to that. The physician is hopefully providing the most appropriate medicine. At that moment, the physician and the patient may not know whether they are actually going to be able to walk away from the pharmacy counter with their medicine in hand or whether their Insurance Company will try to direct them to select Something Else. Right. Manufacturers have to pay rebates or kickbacks to get a higher placing on the formulary. Correct. The structure you have created for our industry involves us paying a rebate to the intermediaries in order to secure formulary placement. Thats one mechanism in which the market is being manipulated, breaking that customer accountability mechanism. Americans also understand you know that companies do need to make a profit to exist and to create new cures. I dont think americans have a problem with that, we understand that the profits today lead to new cures tomorrow. What they do have a problem with is abuse of the patent system, namely product hopping, adding on patents to extend introduction of generics, patent evergreening, you know small changes to dosages and such that have little change but you gain an extension to your patent and then pay for delay and these are issues i think that manufacturers do have to take seriously. Now while i wish we had pbms and pharmacies here and i would encourage the chair and the committee to consider that if were going to have a real discussion on on pricing, we need to have all the players here because the system is complex and its broken in a number of different areas but my understanding is that amgen has you talked about since apart and you mentioned that the patent is, time has expired on that. Are you saying that generics are now available . Yes thats correct generics now supply approximately 95 of the market and the product transacts at about 95 less than what was prevailing before expiration. Okay now we had teva here yesterday. My understanding is that you had an agreement with them amgen did to keep sinsapar base for them from from producing generics uh for censor par for a couple years. Is that correct . No. Thats incorrect. We sued uh teva for uh infringing our intellectual property. They ended up settling with us after having launched at risk. Settling with us for having launched against the uncertainty of their patent position. Okay but the timing i guess is interesting that that lawsuit was dropped at the same time you all ended up purchasing some of their properties i guess. The thing that i think is important to note here is that we have a couple builds that we are looking at. Ones hr 19 which actually goes to address these different issues where the systems broken. Versus hr3 which is an a takeover of the system and you know as we look at this i think its important for us to keep in mind, lets not throw out the system thats brought the best innovation and has led to the new cures that have helped so many people here and around the world. And i would really caution against a government takeover that hr3 subscribes. Thank you. Representative welsh you are now recognized for questions. Thank you very much. Mr. Palmer 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 and the question here is about the pricing practices of big pharma and how that is putting the cost of health care out of reach for individuals, for taxpayers and for employers who are trying to provide health care for their employees. I want to ask mr. Bradway about the Pricing Strategy for a few of his drugs. Understand it was originally approved by the fda in 1998 for Rheumatoid Arthritis. Amgen acquired the right to sell it into thousand two. Is that correct . Thats correct. Your Company Bought a product. They did not create a product. Correct . Correct. That was inproduct short supply. A product for which there were tens of thousands of patients on the waitlist seeking therapies. I get it. Fair and square. You didnt invented. Correct . Correct. You marketed it. You produced it. You raise the price of it. Correct . I was trying to explain one of the important things we did. Invest in process improvements that allowed us to move tens of thousands of patients off of the waiting list. Im going to the price. The question here is not the legitimacy of what you did. Its legal to buy the product. You didnt invented. Pharma makes says it costs so much to invent. That didnt happen. You responded to the market and you produced it. My understanding is that you 450 toe price by 5,500 for a monthly supply. 70,000 a year. Is that correct . Yes. That sounds correct. In canada, thats 1800 as up to 5,500. Is that true . That sounds correct. Heres the question. Why cant people that are americans get eight get it for 1800 . There are a couple things to observe. Many of the medicines that are approved in the United States arent available in markets. We are throwing this word innovative around. Invented in was 1998. This is not new. This is decadesold. My question is, why cant an american get the canadian price . Yeah. This is a product we have continued to invest in. The product that patients use today is not the product that was in 1998. A canadian can buy this for 1800. You wont give the benefit of that price to the United States of america and our citizens . [inaudible] let me ask you this. Theres a lot of evidence in the record now that when your company, and other pharmaceutical companies, are making the decision on pricing, they have to meet revenue targets. You have shareholders to take care of. You have executive compensation to be mindful of. Correct . I dont think of it in that way, no. You get the benefit of it. Right . Theres payouts of 100 million to executives. Its really heartbreaking for a lot of folks who cant figure out how they will get the medication for a person in their family that they love. Let me ask you this. What is the problem of the company that is selling a product in bulk to a buyer having a discussion with that buyer about a bulk price discount . Do you have a philosophical objection to that . Thats what happens every day in our interaction. Except with medicare. Its illegal. It is illegal. Would you be agreeable to having a discussion with able buyer who happens to be medicare about a fair price when they make bulk purchases on behalf of the u. S. Citizens who are on medicare . If i may explain, we interact every day thats a yes or no. You have a big buyer. Would you be willing to negotiate them with them about bulk price discounts . The Medicare Beneficiaries are represented by the insurance plans with whom we negotiate inclusion of the our products. Thats a no to negotiating with medicare directly . What im dirt trying to explain is whats happening already today. We think there are some areas for improvement in medicare in particular. Weve been attic advocating for a number of those. Only about negotiating with the medicare program. Thats it. Yes or no. Im trying to make sure that you and your constituents appreciate that that is already happening today. Why dont we change the law and make it legal to do that . That we are having with your intermediaries. Those discussions are taking place today. Im asking about a law that makes it legal. Right now, theres a lot that makes it illegal. Right . Its bizarre that able purchaser cant have a discussion and negotiate able price discount. Thats the law. Do you think thats a fair law . I dont know that i would agree with your construction of the question. We have a highly concentrated set of intermediaries in the United States Health Care System. The health care Insurance Companies. Pharmacy benefit manufacturers. They are negotiating for the , areit of medicare today there improvements that could be made . Absolutely. My time is expired. I yelled back. Thank you. Mr. Gibbs, you are recognized for questions. [inaudible] we can hear you. Thank you. Thanks for the hearing. I want to make clear, i know they talked about wanting to that Drug Companies produce therapeutics [inaudible] the discussion here about the pricing. Its enough to make your head spin. Feedback t [inaudible] is that price come down . What is the status of that . Price over the years. Im sorry. What im trying to understand , in other sectors our economy when you have more utilization and obviously you have more utilization of the product because you say its now cleared by fda to use in six types of cancer, so so you have more utilization of the product why does the price go up . Is this because this formulary process that were having so much discussion . I mean the price should come down. I think the answer to your value went that the up over those years for a variety of reasons. Including that patients survived longer, lived longer. It became a chronic disease instead of a fatal disease. More patients were able to benefit because we got more indications from the fda approved over these years. I get that. More patients are buying it. It is being utilized more. That ought to drive the price down. Overan put your fixed cost a Larger Customer base. In any other business, any other industry, thats how it works. You get shona product. You show that to a Bigger Customer base. The drive down the cost. Your fixed costs are over the whole customer base. You see what im trying to say . Does that make sense. It apparently doesnt work that way with drugs. In this case, i understand what you are saying. For these rare cancers, the commercial opportunity is quite small. The Patient Populations are very small. The research and Development Commitment is high. That make sense. Drug is given away. Is that true . Today, 55 is given away for free. Most generic approval since 2016. Mr. Bradley said the same thing about the 62 discounts. Theres a lot of things going on there. That doesnt help people who need the drug get the drug. Does anybody go without these drugs that need it . If they cant afford to pay for it. We are doing everything we can when we receive a pacing complaint, we investigate everyone. Ways ofa variety of trying to ensure that that patient will get access to the product that they need. Area where the structure is broken, 46 of the cost is going to pdms. That seems like a problem. One of the witnesses talked about the generics. The patient goes to the drugstore, makes sure they get the right generic. The 80 Marriott Erie is doing that. Intermediary is doing that. What role does the pharmacist have now . Are they getting pushed out . How does that function . Certainly the pharmacist at the drugstore is not responsible for the fact that the discounts that the manufacturers are giving to middlemen and intermediaries are not being passed on to the patient. Thats not the responsibility of the pharmacist. I understand that. [inaudible] what does the pharmacist do in that discussion . Making sure the patient gets the right drug, the generic equivalent. Think the negotiation that you are referring to does not include the pharmacist in that case. Negotiating with the intermediary, with the middlemen , a contract. Thats how we sell it to the middlemen. Im out of time. I want to follow up on that. Should we be looking into the role of intermediaries and how that affects the patient and the doctor . Make sure they get the right drug, the generic alternative. Time is expired. The witness may answer the question. I do. I think that we should do everything we can to make sure that the discounts are passed along to patients. Thank you. You are now recognized. That doesnt excuse the price gouging. You have exclusivity and so forth. These dont buy that price declines were part of your business plan. I think its over ponce to the scrutiny you are under. Its nice to talk about that and dance around the essence of the price gouging that has been going on for years. I dont trust the industry to do the right thing when we are not looking at you with these lights. We need to put more guardrails in place. This hearing is about that. Its why Elijah Cummings started this inquiry originally. We will keep following through. There will have to be major restructuring of how the industry operates going forward. I know you are trying to duck and cover here. You better anticipate that thats coming. Tired ofcan public is the high prices of Prescription Drugs. I want to talk about metacarpal to. Medicare part d. Contributing taxpayers. Has collected more than 7 billion in gross sales dom selling to Medicare Part between 2013 2018. Is that correct . Those numbers sound right. In the same timeframe, youve 4 billion from Medicare Part d beneficiaries. Its an understatement that amgen gets a lot of business from the medical programs. Does it offer Medicare Part d comparable discounts to the discounts that you give to other government purchasers . Medicaidample, the prices that we offer are lower than medicare, as you know. It is statutorily designed to be lower than the Medicare Part d program. Its not the case that all of our government what about the Veterans Health administration . The Veterans Health program is different than Medicare Part d. Priceludes statutory allowances as well as formulary restrictions which are not part of Medicare Part d, as you are aware. Amgens discounts for the Veterans Health administration are about twice what medicare is currently receiving. Lets face it. The v. A. Is allowed to negotiate drug prices with the industry. Doesnt get that same opportunity. We dont have that ability to negotiate. Bill. Proposed a House Democrats did. This is common sense legislation that would allow medicare to negotiate directly with drug manufacturers for lower prices, just like the v. A. And the department of defense are able to do. Im not going to ask you for your position on whether we should be negotiating. I think i can guess what it is. It seems to me that if your industry, get back to the broader macro picture here. The industry has figured out a way to do business with government overseas that negotiate and are much more aggressive on behalf of their consumers and taxpayers in dealing with the industry. Your industry has found a way to be able to manage a relationship and conduct your affairs, even though you are giving a better pricing to the v. A. And dod because you are having to negotiate there. , i amll figure out a way confident, to survive as an industry, to make reasonable profits. Even as we move forward and put negotiation in place with respect to the medicare program. Thats all we are trying to do. Mitch mcconnell and Senate Republicans have stood in the way of this. They blocked the door to better opportunities for consumers and patients for years now. We are not giving up. We will keep pushing. We will do it. Every day, constituents come up to us scratching their heads, looking at us in disbelief. Why is it, in a free market economy, you cant negotiate on behalf of 45 million Medicare Beneficiaries . We will keep pushing on that. Is the only thing that makes sense. I yelled back. The gentlemans time is expired. Mr. Higgins, you are now recognized. Thank you. I appreciate the continuation of this hearing from yesterday. This is incredibly important subject matter. Finding that the arguments from both sides of the aisle are quite similar. Broadway, i will address questions for you. Businesses have costs associated with opening their doors to the public. You have to be able to cover those costs. High cost of associated associated with developing new drugs. [inaudible] what would be the result [inaudible] we have a technical problem here right now. Me try to fix that. Hes going to try to fix it. Hes back. We lost you for a while. Yes maam. I had no receiving signal. We are back on. I dont know if my question was. Eceived im afraid i didnt hear the phone question. I will do my best answer for you. Let me quantify quickly in the interest of time. I have a couple hard questions for you. We understand the basic businesscritical. What is the importance of maintaining that formula . What would happen to the development of new drugs if there were legislative action out of congress that would restrict research and development of new pharmaceuticals and restrict Companies Invested in that research from cooper recuperating their cost . What would happen to the development of new pharmaceuticals . I dont think we would see Innovative New drugs being developed for alzheimers or the many forms of cancers that remain uncured today. We all get that. We understand. We understand that there are legitimate it development of the new 21st century, hightech, very effective pharmaceuticals. We understand that there are investments in many formulas that never make it to market. That becomes part of the expense that needs to be recouped. We get that on both sides of the aisle. Im hearing the same arguments. I concur with many of my colleagues across the aisle here. , my not understand constituents do not get it, why the same formula drug, the same manufacturer across the border in canada can be three times last than it is here in the United States. My wife has ms. The pharmaceuticals are a constant challenge. Is theeives therapy that equivalent for chemotherapy for ms every six months. Every six months, the same battle with the Insurance Companies due to restrictions from the pharmaceutical companies. My constituents dont understand. I dont understand. We will fix it. Theres a bill in the senate right now that if it would be introduced in the house, it would pass in the senate. It could be law in a couple of weeks. We could really move forward and fix this. I would like the gentleman to answer one more time. Why are pharmaceuticals so much less in canada than they are in the United States . I dont get it. My constituents dont get it either. I give you the floor. You have a minute and five seconds. Explain the difference between canada and the United States. I share your frustration and emphasize empathize with those who are struggling. In theid previously, United States, . 46 of every dollar are in the hands of india and intermediaries. Not in the hands of the Innovative Companies. In canada, that is not the case. Canada does not have . 46 of every dollar do the companies not get to spend the canadian earnings . [inaudible] of course we do. Lets stop talking about the difference of expenses in the United States versus canada. You have a worldwide market. [inaudible] certainly not. Thank you. Your profits are your profits. Your expenses are your expenses. Why do the drugs cost so much less in canada than here . My time has expired. I would like the gentleman to answer the question. The gentleman may answer the question. Thank you. That in thet out United States, 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 was not the question. The question was why it costs three times or upwards in the United States, where we produce the drug. Why does it cost so much less in canada . In europe, too. Earlier, we pay more for drugs in america than the entire world combined. Thats his question. Whats the answer . Thank you. , theyntries like canada are prepared to ration and restrict access to Innovative New medicines. In exchange for offering lower prices. I respectfully disagree. The answer to that question is to allow medicare to negotiate directly for drug prices with the Drug Companies, as they do in canada and europe. They are not allowed to do it in the United States. Thats one of the things many of us would like to do to lower the price for the people that we work for. I would like now to go to congresswoman schultz. You are now recognized. Thank you. I want to pick up where i left off yesterday. I asked about another nefarious tactic the Drug Companies use to maintain Market Exclusivity and skyhigh prices. This committees investigation shines a spotlight on the way that Drug Companies use litigation as a key part of their Strategic Plan to delay generic entry. I want to focus on how prices were inflated for lifesaving medication used to treat cancer. Yes or no. Novartis engaged in Patent Litigation with the first manufacturer to apply to make a generic version, correct . We did. Ok. Some pharmaceuticals challenge lissette a missy of this tactic. Rather than let a great, novartis struck a deal known as pay for delay. Under the settlement, they agreed to delay generic entry into the u. S. For six months. Novartis made 1. 3 billion dollars in u. S. Net revenue from sales during that sixmonth delay. As the first generic manufacturer, it was entitled to 100 80 days of exclusively. They initially announced that it would prices generic 30 below the price. It entered the market just 6. 4 lower than the cost. In an internally male, novartis executives held this high price as good news. Do you think delaying generic entry was good news for patients . Settled that case, we actually accelerated the introduction of the Generic Product into the u. S. E litigated that could have gone through the length of the patent which would have been another three years. Our settlement meant that the product was on the market faster, actually, 2. 5 years faster than it wouldve been had we done what you are saying other companies do. I understand that happens. In our case, we did not get paid for delay. There was no litigation that the on for years to delay generic. It was accelerated. There was no litigation because you paid for delay. Settlement [inaudible] this is not except it will. They originally said they would price their generics when they were allowed to move forward with the normal process without being challenged by novartis. They were going to price their generic 30 below the price. After you paid for delay and after you negotiated the socalled better deal for consumers, they only priced it 6. 4 below and delayed the entry into the market by six months. Patients are left holding the bag when Companies Like novartis exploit the patent system to keep their market share. 42 of Cancer Patients deplete their entire net worth in the first two years after their diagnosis. I will tell you, im a cancer survivor. I know what its like to go through 15 months of hell that i went through. In total, novartis sued at least five companies in order to prevent generic competition, leading to a classaction lawsuit that alleged that novartis was engaging in sham litigation. You know that protection of International Property rights as import for any coming. When you have Proactive Company practices that become anticompetitive, both patients and the u. S. Health care system suffer. If companies dont behave responsibly, Congress Must act to rein in this unconscionable behavior. No one should be unable to afford the medication they need to survive. Brandname companies try to delay as long as possible competition in the market. Patients need these drugs. Drugsnual cost of your went as high as 123,000 a year. Thats insanity. Its robbery. Ofkills people as a result them not being able to afford their drug. I dont know how you sleep at night. I yelled back. You for your statement. Misses miller, you are now recognized. Thank you. Thank you to all the witnesses for being here today. Im pleased that we are able to continue with this conversation because as we know, the United States is the leading global innovator for groundbreaking medicine. However, now more than ever during the covid19 pandemic, its extremely important that research and innovation is at the forefront of pharmaceutical development. While we look towards our future, we need to ensure that the public and private innovators are utilized to address situations such as a pandemic and improve access to every day, lifesaving medications. How has the covid19 pandemic highlighted the need for innovation, as we are all racing to develop Better Therapeutics and vaccines . In so many ways. Thank you for the question. Many companies are working on therapeutics. We have two of our products in Clinical Trials now. Work for they will what covid19 patient suffer. We dont have a vaccines business. We are helping other companies who do. Has agreed to manufacture a vaccine for one particular vaccine maker. Available ourking products that would be used to treat our generics products, covid19 patients. We are making them available at cost. No profit. We are making them available. We announced that a while ago. Toward the beginning of covid19. Can to find all we therapeutics. We have Research Candidates in the lab. I think about 20 Research Candidates in the lab. Not yet in clinical development. They are being investigated for possible use against covid19. Ok. Say, i alsooing to want to know. Since it is classified as a specialty medication, could you please discuss how this impacts the pace and market price and market . Is a very specific medication. Its the first targeted drug, the first smart drug as people call it. The very first one in 2001. Its a specialty medication. As i mentioned in an earlier question, the cancers that it treats are actually Rare Diseases with small Patient Populations. Cml may be the largest Patient Population. Came second. R five other rare cancers came after that. Very rare, small Patient Populations. It is a targeted cancer therapy. Well, it is a specialty product. It targets these specific cancers. Turn these cancers from even, withronic or our following product, to a disease where treatment can be where remission can be attained treatment free. The patient can stop taking it. Ok. You didnt answer how it impacted the price. Being specialty. Ill move on. I have other questions. Many of my colleagues across the aisle continue to advocate for singlepayer health care that would discourage and stifle innovation. If it were to become a reality, what with the innovation space then look like for a drug like multiple sclerosis . Can you discuss the importance of preserving the i think you are asking a question about a drug. I dont know if you wanted to direct that to mr. Trudeau or if you have a more general question you wanted me to address. More generally. I want to get into, moving from this into how the rights would affect innovation. Thats just an example. Time is expired. Sorry. I did not hear your statement. Time is expired. You may answer her question. Thank you. I think the effect would be chilling on innovation. The rights for intellectual property would have a very delirious effect on those who commit resources to risky development. Mr. Kahana, you are now recognized for questions. Representative khanna, is he there . I think i was needed. Thank you. We hear you now. Can you hear me . Yes we can. Great. I want to focus my line of questioning concerning the amgen drug. , theu could first explain its an antiinflammatory drug, to my understanding. It was introduced in 1998. Thats correct. Its one of the bestselling drugs in the world. Is that correct . It is largely for arthritis. Yes. It is for a form of arthritis known as Rheumatoid Arthritis and other autoimmune disorders. Thise primary patent on expired in 2010, correct . No. The primary patent, what are you referring to . The patent on the molecule itself . Yes. Moleculetent on the has not expired. It was granted what expired in 2010 . A different patent. Not a patent what was that on . A use patent. So that expired, correct . How do Patent Applications how many have you filed since then to try to extend the monopoly on it . I dont know how many Patent Applications we have filed. I would guess several. Thats one of your most important drugs. I would not know that off of the top of my head. 1000 . Five . I would guess several dozen. 68. If you were talking to your neighbor or someone you were growing up with, go back to high school, they say, come up with a new drug. You file a patent. Do you think any person would say, yeah she we should file 68 patents on a certain drug and extends that until 2037 . Step back as he rolled from ceo. Do you think most americans would think that makes common sense i think whats appropriate is the question of whether we are investing in innovation that deserves to be protected by patents. I get all that. I understand we need patents. From a commonsense perspective, theres a drug. People take that drug. If you were talking to an ordinary person and you said, we will file 68 patents on this drug to protect our rights until 2037, do you think they would think that that made that was logical . I think it would require a discussion about what those patents are being issued for, what innovation we are claiming, we are fortunate to have patent rights in this country protected by how much does the drug cost in europe compared to the United States . I dont have the answer to that question. You dont know how much the drug is priced in europe . Would it surprise you if you knew it was 50 cheaper for europeans than americans . No. It would not surprise me. Weve never sold or marketed the drug in europe. But you are selling the drug in europe, where you face competition. Isnt that correct . No. We dont sell the drug in europe. We dont own the product in europe. 50 . Europe, the price is it has similar competition. That has caused the price to drop by nearly 50 since 2018. Is that not accurate . I would not know the answer to that. We dont own the rights to it in europe. I understand you dont. It is being sold in europe for 50 less. You have competition there, correct . Aboutont have the facts pricing in europe. Can you make a commitment to the American People today that no american should pay more than people in europe are paying . Its a simple thing. Are you an american, sir . Yes i am. Probably. Can you tell your fellow citizens that no american should pay more for it than someone in europe . The patent in europe has expired. The european situation is different from what we have here. The european patent has expired. You think the europeans dont want innovation for their drugs . The europeans dont think they need innovation. Yet you think you need patents until 2037. Im asking a simple question. Make a commitment to the American People that no one will pay a dime more than people pay in europe. If you love this country, if you love america, you should be willing to tell americans that they should not be paying more than the french and germans and europeans. Are you willing to make that commitment today to the American People . I would repeat that in europe , the intellectual property for that product has expired. Its a simple question. You can say no. The time has expired. Are you willing to make that commitment . We dont sell it in europe. I take that as a no. [laughter] moving along. Mr. Steube, you are now recognized for questions. Thank you madam chair. Over 3. 5 million floridians are enrolled in some form of medicare prescript and drug coverage. With so many of my constituents dependent on lifesaving prescriptions, i understand the need for affordable drug prices. Despite the efforts of republicans to make progress to reform the Prescription Drug standard, our democrat colleagues refused to collaborate. They will try to suggest that hr three, a key example of partisan government overreach, would solve some of the problems that we are discussing today. This is not the case in the drug administrations a Record Number of tenaris drugs and bring down overall prescription prices. Theres a lot of work left to do. Im glad we are taking steps to discuss the situation. I hope we can move towards establishing solutions. My first question is to you. What is amgen currently doing to assist in the goal of providing americans with lower drug prices . Thank you for the question. As i mentioned in my opening statement, our net prices in the United States have decreased in 2018 and 2019. We are on track to have further decreases in 2020. In addition, weve made a significant investment in seminars. We are making available to patients and prescribers by a similar medicine for some of the biggest selling drugs in the United States at more affordable prices than the Innovative Products that they are designed to replicate. In addition, we are working with a variety of different patient assistance programs through which we gave away free drugs to those who are uninsured and cant afford their drugs. We try to provide copay assistance for those who are struggling. We have insurance plans but are struggling with making payments with their deductibles. We are seeking to make contributions to other charitable foundations that can assist patients with their medicines as well. Acrosstheboard, we are trying to do quite a lot to help make sure that patients who need medicines can afford them. I was interested that in your testimony, you stated that amgen voluntarily lowered the list price of your medicines by 62 . You describe a situation where even after lowering the price, some patients did not see a meaningful difference in what they had to pay out of pocket at the pharmacy. Some colleagues believe forcing you to lower your prices will solve our problems. It doesnt seem like that happened in that instance. Can you explain why . You are referring to a drug called which is our product designed to lower cholesterol and prevent heart attacks. It is one of our most important new medicines. We lowered the list price for that medicine by 60 in order to try to make it more affordable to pharmacy counters. Patients pay a copay as a function of list price. By lowering the list price, we were low wearing their outofpocket expenses. It found more than a year we found that it took more than a year for the insurance plans to move patients from the high list price product to the low list price product. We ran the experiment and found that it didnt work in the way we thought it would. We see this as an example of how the system is not working today for patients. One of the reasons why we think we need to reform the rebate system that exists in the United States today. Thank you. I understand there are certain payment programs in place which can help patients afford drugs. Would you be able to discuss their effectiveness in any other similar initiatives that you are discussing . Thank you. Yes. We have a number of programs designed to help patients pay for expensive medicines. Enbrel, we have copay assistance in place so that more than three quarters of the patients who use it today have a copay of less than 25. Perxcuse me, less than 50 month. Medicaid, 93 of patients are able to receive their medicine at less than 10 a month in copay. Wen it comes to medicare, have 77 of the patients being able to receive their medicine at less than 50 a month. There are examples across our portfolio of the ways that patients are benefiting from the support provided to them in order to be able to access these medicines. Does amgen utilize rebates for pbms . How does that impact patient price . Yes we do use rebates. Again, rebates are a function of list price. If we increase the list price, we increase the rebate. Why are we increasing the rebate . The answer is to secure competitive formulary positions for molecules. We increase the list price to be able to increase the rebate to the intermediaries. The unfortunate effect of that is it increases the outofpocket cost for patients at the pharmacy counter. Thats why we advocate for changes that would include passing through the rebate at the pharmacy counter. Thank you. My time is expired. Thank you for being here. Thank you. Congress will inspire, you are recognized for questions. Thank you. Thank you all for participating today. I appreciate it. I think all of us appreciate it. Many others declined the invitation. Want to start gleevec is a miracle drug. Wifermer chief of staffs died of cml. Had she lived another couple years, it would have been discovered as this miracle drug. Her condition would have been chronic and she would be alive today. The miraclereciate that this has become for leukemia patients. I would like to educate the public on what it is. It is called loss of exclusively. Staff toike for the put up a slide that the committee got that was part of a presentation that was provided to some of the staff of the company. Increase inramatic the price towards the end of his exclusivity. Between 2013 and 2015, novartiss price increase accelerated. It turned out to be a 20 increase in that drug. Executives knew that it would decrease once they lost exclusivity. They tried to get as much profit out of the drug for as long as they could. This plan was stated in internal documents by novartis executives who wanted to maximize value of brand prior to loss of exclusivity. Is that not the case . Identify the document that you have in front of you . I dont have it in front of me right now. The staff would be able to provide you that. They are document you provided to committee. Its a fact. In the last two years of exclusivity, theres a chart we can put up that shows your net revenues going from 1. 9 billion to 2. 5 3 billion. 2. 53 billion. Im sorry. Please. Increase thet price of gleevec from 20 in the last two years because you saw that there was going to be loss of exclusivity . Specifically why the increases were taken. I was not there. We will move on. I will tell you that as i was saying earlier, its indisputable that its value increased over the time it was on the market. It was always the lowest product in its class. The lowest pricing product in its class. Im wasting my time. I want to go to another line of questioning. Medicare, the federal government, paid 5. 6 billion to your company between 2011 and 2018. One third of all the money you made in the United States came from the taxpayers through medicare. Medicare right now is two years from, basically, falling off a cliff. I want to go to each of you now and ask you this question. How much money do you spend on marketing . Our marketing spend is approximately 400 million u. S. Dollars in direct to consumer advertising. 400 million. How much do you spend in europe . Im not sure i know the answer to that off of the top right now. Thank you. Get that to the committee. 2 i will i will. Mr. Bradway, how much do you spend in direct consumer marketing . Direct to consumer tv advertising, less than 200 million. How much do you spend in europe . A fraction of that. Not on tv, but in other forms. Theres no tv allowed in europe. Is that correct . I believe thats correct. How much do you spend . We dont spend any money on direct to consumer advertising. All right. Mr. Trudeau . Yes. We dont spend any money on direct to consumer advertising. My final question is, do you costt to not increase the of your drug moving forward, beyond the inflation each year . Out that weoint have decreased our prices yes or no. We have decreased our prices over the last few years. Our increases have been below inflation. Your answer is yes . My answer is, thats how we have been operating the business the last couple of years. Mr. Trudeau . Earlier, we are committing to reducing the net price to 2015 levels by the end of 2020. Thats the first year they acquired it. As to net prices, yes. Thank you. I yield back. Keller, you are now recognized. Thank you. We all need to ensure Patient Access to affordable drugs. Particularly those in rural areas that rely on safety might programs. Contract pharmacies are essential to the rural areas of pennsylvania that i have the privilege to represent. Hospitals useural pharmacies to provide access to outpatient drugs for those who need them. Many of whom are seniors or have chronic conditions. Thank you for being here. I wanted to ask you about your new Integrity Initiative to address duplicate discounts, requiring covered entities to , dataer and upload claims originating from contact pharmacies onto a new webbased platform. Your announcement augustnouncement from expresses support for a340 b program. I have concern about this threatening hospitals in pennsylvania and their ability to offer Home Infusion services, telemedicine, and expand their outpatient facilities, stretching scarce resources to patients in need. Kenris, what kind of collaboration have you had with 340b hospitals . Mr. Kendris thank you for your question. We support the intent and design helpe 340b program to lower drug prices for the net profitnd the safety net providers you were just discussing in your constituencies. They serve underserved populations in those communities, and the 340 b helps them. Program. T 340 b however, we also believe over many years there have been abuses grown into the system, and we are trying to resolve those. We have raised the problem over the years any companies have hersa. We are committed to making sure medicines are available to as many as possible through 340 b as well, but we believe the program is distorted from its original intention. If i could just jump in, i have a letter dated august 17 explaining your Integrity Initiative. My question was prior to the letter, have you talked to hospitals about this program and how it might be implemented . I believe that our staff is in contact with hospitals. We are collecting responses to that letter, and we are going to continue to work with them. If i could just jump in ive got a limited amount of time. If you are in consultation with the hospitals, when we were you planning on making this in effect and then stopping some of the discounts at 340 b hospitals . I understand they were at the beginning of this month. Mr. Kendris we asked for the data by october 1. We have not heard from all the hospitals, and we are evaluating the data we have received and will continue to evaluate that data. As we move forward, it is going to be based on what we see in the data we receive. So i hospital has not registered that data by october 1, are they still going to be able to participate . Mr. Kendris yes, we still intend to honor valid, legitimate 340b discounts, and what we will do is see the responses, look at the data, and we will talk to the hospitals and move on from there. Mr. Kendris a question on the webbased portal, is this a secure platform, where should we be concerned about Data Security should we be concerned about Data Security . Mr. Kendris i believe it is a secure platform. I can check with my team on that. Do you expect there to be an Administrative Burden on hospitals . Mr. Kendris no. Actually, we believe it is not burdensome. It is the same claims data they have been sharing with the intermediaries that we talked about earlier in this hearing. The data should be available i think it takes about five minutes every two weeks to pull this data. Mr. Kendris so you know that so you know that the intermediaries have this data already. Have you asked them for the data . If it is already available, have you looked at another way to get it . Mr. Kendris i think that relationship is between the hospitals and the intermediary, and we have to ask the hospitals for it. I can check that, congressman, but i believe thats what we have to do. I would like to end by saying that 340b drug discounts are crucial for my constituents, and we should talk about how many changes to the program should affect us could affect us going forward. We need to make sure changes are of healtht interest providers and the patients they serve. Mr. Kendris we agree. Mr. Conley, you are now recognized. Rep. Connolly thank you, madam chairwoman. Trudeau, when you acquired was the onlythat product they had, virtually. Rep. Connolly my understanding is when it first came to the market, one file cost 40. Thehe time you acquired company, that price had gone up to almost 31,000, is that correct . Mr. Trudeau that is correct. To 31,000 for the same vial. My understanding is the only difference was not the composition of the drug, it was the legal status of the drug able to getore was it granted orphan drug status before you purchased it, is that correct . Is not the that only thing, but certainly it is something that did occur. Connolly well, should we not coordinate the two events question mark how do we explain going from 40 to 31,000 for the same vial with the same efficacy and impact on patients, get scott reclassified as an orphan drug, which gave it a monopoly for that designated use, correct . Mr. Trudeau it did get an orphan drug designation. In addition, the label was updated in 2010. Rep. Connolly right, so, the skyrocketing inflation in this particular drug had nothing to do with pbms, for example. It had to do with the positioning of the drug as an orphan drug, and the protection that provided, which allowed it to have highly enhanced value, which made it an attractive acquisition for your company, is that not correct . Mr. Trudeau based on filings we filed at the time, the company was in an existential situation. Aty were potentially looking going out of business and not being able to provide that drug anymore to the marketplace. Rep. Connolly so you kind of came in and saved the day. Mr. Trudeau when we acquired questcor, we did three things. , we invested in critical Clinical Trials and manufacturing. Two, we engage with our customers to provide rebates. Three, we provided patient assistance programs and ensure that patients that could benefit had good access to the drug. Rep. Connolly and when you provide this drug free medicare, for example, what is the discount . Mr. Trudeau we provide all allowable discounts. As i discussed before, if there were an opportunity for acthar to get a position in medicare, there might be an opportunity to provide additional discounts similar to what we doing the commercial center. Rep. Connolly with the discount in this case, say, to medicare, be about 1 . Mr. Trudeau i believe most recent data is on the order of 1 to 2 , correct. So when it costs 40, you are giving rebates to medicare of less than 1 between 2015 and 2018. Is it also true that your company is looking to use this drug for other treatments, other than the original seizure treatment it was developed for . Company has the been developing evidence to serve the 19 fda approved indications that are currently unrelated. Rep. Connolly if you do that, do you do that under the auspices of your protected status as an orphan drug, or do you redefine that because it is no longer being used exclusively for that original purpose . The orphan drug exclusivity actually expired a number of years ago. Acthar is not patent protected. It does not have any exclusivity under any of the traditional patents or other exclusivity such as orphan drugs. Drug that is designed primarily for underserved patients that have very few alternatives, a relatively very small population that is very sick. Rep. Connolly i appreciate that, although i would add when vial,arge 33,000 a todays price, that is not much of an alternative for a lot of patients either. I yield back. Misses fox, you are now recognized for questions. Rep. Foxx thank you very much, madam chairman. I want to thank our witnesses for being here today, where they are today. K first question is for mr. Endris. Ris, it has been said that gleevec is good for people fighting minor leukemia. Can you discuss why it is such a game changer . Mr. Kendris thank you for the question. Yes, it was a game changer. It was the first targeted therapy. You may have heard the term smarts drug. It was the first smart drug. It turned off a particular gene and was able to be extremely inicacious in leukemia and gastrointestinal tumors, and in five rare cancers. Thats because it was a smart drug that works very specifically on these cancers. Efficacy was so high that, as i said earlier, diseases, these six or seven cancers returned from fatal conditions, where a patient would have died before the drug, to conditions where they were able to live normal lives. We have not developed a followon product to cigna which allows patients to go treatment free. If they get remission for a long enough time, they no longer have to take any drug. Rep. Foxx what is the current list price of gleevec . Mr. Kendris the current list price is 120,000, and the net price is 85,000. The price of the generic is 4200. Ok. Foxx how much does the average patient pay for it . Averageris the outofpocket cost for a part b patient is 856 a year. Rep. Foxx ok, how does the patient it such a discount price get such a discount price . Mr. Kendris i think it depends on who the patient is and what their insurance coverages. Coverage is. The price i just gave you is for a Medicare Part b patient averageocket, 856 outofpocket cost. Rep. Foxx ok, so, a drug considered a magic bullet, and it is not quite a cure, but it puts people in remission, has 856down from 120,000 to for part d. Thank you very much for that. Trudeau,ike to ask mr. How does your company decide the right price to set for a new drug that may truly save someones life . Thank you, congresswoman. What we try to do is match the value that we believe our products are going to bring to patients, and kind of compare those two. The value is in two ways. One is the benefit it provides to the patients themselves and their families. We are typically developing drugs for very devastating diseases where there are relatively few alternatives. We are also looking at creating data, actually, to see what value they bring to the overall Health Care System. For example, using the drug might include might increase the drug cost, but it might have the impact of reducing Overall Health care cost for a particular disease. Way, brad so, the Congressional Budget Office estimates that the democrats hr3 what will be the impact on patients and innovation if there were 38 fewer tears created over cures createde over the next decade . Mr. Bradway that is potentially devastating. Not only to the patients and their families, but also to the economy. The economy benefits from innovation that enables us to treat serious illnesses. Anything that diminishes that opportunity i think would be tragic. Rep. Foxx very quick question for all three of you. On average, how much does your Company Bring to market a novel or Game Changing treatment or cure . Each one of you answer fairly quickly, please. The gentleladys time has expired. The gentlemen may answer her question. Rep. Foxx please answer. Mr. Bradway thank you for the question. We have 22 different novel Game Changing medicines throughout that have beens approved throughout our history. We have one from this year. 22 in our history, three more that we are waiting for this year. Congresswoman, for novartis, i believe it could be more, but i believe last year we had at least four. This year, i believe we have already had two, and we may have more to come this year. It is three to five almost every year as an average, i would say. Mr. Trudeau . An industry from perspective, we are trying to get as many novel lifesaving medicines as we can. Company specifically, we are hoping to have two to three in the next two to three years. Rep. Foxx thank you. I am sorry for going over, madame chairman rep. Maloney madame chairman. Maloney thank you for being with us to answer these questions. Bradway,dway mr. When we talk about high drug prices, many times we talk about the list price. Offe discounts are provided the list price, and patients are charged a percentage as a coinsurance. But my understanding is this is always a percentage of the list price and not the discounted price. Is that correct . Yes, you have that generally correct. Rep. Price get i know my answer is i know my answer is probably simplistic, but what are ways to bring down what a patient pays . Mr. Bradway we have advocated changes to the system that would include passing the rebates through to the patients at the pharmacy counter. That would have the immediate effect of reducing the outofpocket cost for the patient in picking up the innovative medicine. Second, we have advocated placing an outofpocket cap on so if they have paid a certain amount, they reach a cap can no longer have a copay. Those are two things we are advocating for. And we have also taken the unusual step of lowering the , in the case of our Game Changing medicine known epatha, for heart attack or stroke. Rep. Plaskett thank you. But in some cases, the list price may go up, and there are reasons for that, but my understanding as well, and i hope it is not too simplistic, but has a net price, what is actually made of the drug, gone down in recent years for any of the products that you make . Yes, congresswoman. In 2018, 20 19, and we expect for 2020 that the net prices in our portfolio will have decreased. Across our portfolio, and that prices have fallen. Plaskett can you explain how the net prices go down but the list prices go up . Mr. Bradway that occurs when the rebates we were giving to intermediaries exceed the increases in list price. Rep. Plaskett ok. How playsxplain a role in reducing Health Care Costs and costs for patients . Amgen has created more than 2 billion to develop a portfolio of bio similars. We make three of those available in the u. S. And have plans to add more. We provide them at a price at a innovative what the products are charging and commit to having a reliable, safe supply of that lower cost alternative available. Rep. Plaskett thanks so much for that. I want to ask any of the witnesses, how have your companys, in the involvement, if you are, in fact, involved in the fight against covid19, what are the steps any of your companies are taking to improve diversity in Clinical Trials . It is time cameras from novartis. Kendris from novartis. Thank you for the question. Weree covid19 hit, we focused on this issue for our own political trials. It is a critical step that must be taken, because i think the basis of your question, i am product realize it is a studied in a limited Patient Population. Doctors is approved, are comfortable prescribing it only in that limited Patient Population. If it is not studied in a minority population, whatever minority population that is, doctors will be more hesitant to prescribe it there because they dont have data. We recognized before covid broke that we needed to change that in our own Clinical Trials. , what weid19 began have done throughout novartis is to begin the process of convening other some groups like the naacp and other groups focused on racial equity, to have a conversation about this very issue across the industry so that we can improve the diversity in Clinical Trials in all Clinical Trials of all types, and to address the underlying problems, which have to do with many things, but trust for patients who are in Clinical Trials would be one of those things. That is going to take a broader conversation that we are going to try and convene. Rep. Maloney the gentleladys time has expired. Thank you, madam chair. On of the Congressional Black Caucus is very concerned about this, and we would love to offer any discussions on this. Thank you, madam chair, for holding the searing. I wanted to, at some point, ask the gentleman in another forum about how we improve manufacturing back to the u. S. , and what we can do to support bringing that infrastructure and those jobs back to our country. Thank you for the hearing. Mr. Grossman, you are now recognized for questions. Reppo grossman i have a question for mr. Kendris. I am also concerned about the 340b program. Right now, there are companies out there that have refused to continue offering the 340b Prescription Drug discounts. To my knowledge, novartis at this point has not refused to provide any discounts. However, you have the requesting claims in order to prevent potential replicative discounts. Are you willing to give us assurances today that novartis will be a good steward of the 340b Program Moving Forward . Mr. Kendris our intent is to be a good steward of the program. You have asked for data from the hospital that will help us avoid paying multiple discounts. Support the program and allow hospitals to use our discounts to provide the patient care that was originally intended by 340b. What we dont support is allowing intermediaries to profit from it. Po grossman mr. Trudeau, for specialty biologics are some of the major drivers of Prescription Drug costs because they offer to treat very particular diseases with a limited Patient Population. Evidence has shown that the introduction of biosimilars produce the need for patients. Since you all have these on the market, how is the introduction of biosimilars impacted the price of your medications, and have any of you tried to prevent biosimilars from coming to market in an effort to stifle competition . And a followup question, how can companies incentivize congress and senate buys more companies to bring more incentivize more companies to bring more bio similars to market . Mr. Trudeau we make sure patients have the best possible medication for their condition at the lowest possible cost. We also support competition. Biosimilars have been shown to enhance competition. Our company does not produce them, so that might be a question that are directed to one of the other individuals. Mr. Bradway we are active in the biosimilar market. We have spent a couple Million Dollars to increase our capabilities in the u. S. It will provide an alternative choice for patients and providers. So far, we have launched three medicines, the first two in the cancer field, where we have had strong receptivity to our product offerings. We are providing those at a discount to the originator products. A significant market already after a short time on the market. We think the industry is working u. S. Tively, and the doesnt biosimilars at a pact is to be an Important Committee for patients that provide rep. Grothman yes or no on this. President trump has a biosimilar action plan which streamlined the process to improve biosimilars. We believe this has resulted in improved biosimilars than under the Obama Administration, which was not as aggressive in this area. Would you agree this is saving patients money . We will give you a different question. Is getting more biosimilars to market under the president s plan saving patients money . Kendrisris this is tom from novartis. I am not sure if i am familiar with the president s plan, but we have a Generics Company and biosimilars company. We brought the first i o similar to market in 2015 biosimilar to market in 2015. We certainly support biosimilars. Rep. Grothman i have a followup question. I am introducing a bill which will expand what President Trump has done. Do you guys pledge not to get in the way of any expansion of biosimilars . Is that something you are going to fight, or would you agree that we should be getting more biosimilars to market . Mr. Kendris i think generally speaking we support more biosimilars coming to the market. Sandoz has biosimilars in their pipeline, and that will reduce Health Care Costs in the u. S. Rep. Grothman . Thank you. Gentlemans time has expired. Thatr investigation found Drug Companies use anticompetitive tactics to prevent generic competition in order to prop up profits. Novartis engaged in pay for delay, where Companies Pay off generic competitors to delay their entry into the market. Novartis struck a deal with the first generic competitor to postpone its entry by six months. This is on gleevec. The generic originally announced it would price its products 30 below gleevec, but they ultimately set the these prints resulted in 700 Million Dollars in access to payers in a single year, 2016. You collected your highest net revenue during that twoyear per iod when more than 100 novartis employees elected more than 100 Million Dollars a year. The ceo earned a total of 72 million that year. One strategy of anticompetitive exclusion is to engage in restrictive contracts with health plans and pharmacies to ensure those health plans and pharmacies only cover or dispense the printed or nongeneric form of the drug. Drugare called National Code locks on generics. Internal records show these were developed and implemented. Novartis offered higher rebates to help in exchange for their plans. Blocking generics. This meant it would be substituted instead of a generic version. Do you agree these blocks are anticompetitive . That. I do not agree with i think pair contracting actually saves the health plans and the brand is cheaper than the generics in that case. What we did is we lowered the price of the branded product with steep discounting. We competed with generics on price with our brand. Why did you need to institute a formal block to keep the new derricks from being in competition at that point . It wasnt to prevent generics to be in competition. There were physicians, patients who wanted branded gleevec. Beorder to not automatically substituted at the pharmacy counter, those patients wanted gleevec. Gete payers wanted to gleevec brand to them. Promoted to consumers the idea they should only order gleevec. Asl us about your dispense written campaign. That is a campaign to make sure doctors and patients know if they want gleevec, the branded product. Many patients who are stable or in remission want to stay in the branded product and do not want to go to a generic. They will if they want that, they need the doctor to write a prescription or they will be automatically substituted. Writtenwhat dispense as means. It is for the patient and the doctors who would like to keep the patient in gleevec as being of as opposed to being switched to a generic automatically. Dont you try to influence consumers or patients at that choice . Right. Our tell them to dispense as written. Demand the brand permit multiple generics can lead to patient confusion. If you get generic, your medication may change shape, color, size. Arent you campaigning against generics and making the patients believe they need to get the branded pill . Ownongressman, we have our Generic Company that sells thousands of generics every year. We are the second largest seller of generics in the states. We do not do what you just described. What we are doing is reaching whoto patients and doctors already want to stay in the brand. We are educating them how they have to do it. They will not be able to stay in the brand if they want to unless they write a prescription for gleevec. Did you pursue the blocks in marketo keep novartiss share up . Is that why you went for the block strategy . That is part of the negotiation with the payer and the contract process. I think these blocks were profitable. Thecost is not paid by company, it is paid by the patient. Increased us through prices. I yield back to you, madam chairwoman. You are now recognized. My first few questions will to mr. Broadway. Processes arenet not the same as list prices. You said part of the calculation includes benefits to patients. Can you explain how you are able to calculate that . Price, the rebates, are the price we pay to the intermediaries, creating a net price. It is the net price we receive. Copayient then pays a as a function of the stated list price. Patients no doubt benefit 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. Difficult different for individual payers. I spent a lot of time talking about my dissatisfaction with the pbms in that process. Im going to shift gears and mention that. Is a complicated process. Savings areme the not always being passed on to the consumer. Pbmsdent trump mandated 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 and Medicare Part d. We can require plants to share some of the discounts they negotiate for drugs with patients. Those savings should be passed along at the pharmacy counter. Those three things would encourage Patient Access and affordability. 100 with your statement about transparency. Who is the agency or bureaucracy in charge with overseeing the pbms . Pbm holds the pbms accountable . Educate me on that. That is a very good question. Perhaps hhs is the answer. Hhs should be overseeing the pbm. To some extent, they probably do. Oversight and the changes in terms of passing on discounts at is pharmacy counter something that needs to happen. I think that is something something we should certainly look into more. To continue our efforts to investigate the outofcontrol costs of drugs for americans. My time is running out. To touch on what representative keller mentioned with the price difference between europe and the u. S. Curious, how much do you spend in litigation . In europe versus the u. S. . Is there a big difference in litigation costs . I believe there probably is. I will have to get back to you with specifics. Probably difference. I would love to know, out of curiosity. I yield back. You are now recognized. Mr. This is the vice chair of this committee. I want to follow up on something you said to chairwoman maloney when she asked about the cash cow slide. Can we put up exhibit 68 again, please . To i am quoting . A cash cow. When chairwoman maloney asked you, you downplayed it. Just a draft. You were implying your company does not view this drug as a cash cow. You stick with the assertion your company does not view it as a cash cow . Yes, i do. Thank you. Termou familiar with the cinnamon . Cinnamon . Synonym. Basically, the term that refers to one word means the same thing as another word, right . Or nearly the same thing. Are you familiar with that concept. I am. We obtained some emails i want you to take a look at. It is from your company execs. One of these chains, your executives have a discussion about this exact term. And i quote, do we really want to say cash cow to the board . Chief officer response in his own email. Instead of cash cow, i will maximizer. With replacing one term with another term. Profit maximizer. It does not change the intent of your company. Which is to make as much money as possible, right . You are under oath when you answered chairwoman maloneys question. You swore to tell the truth and the whole truth. Were you trying to mislead the committee . Not at all. We dont can we put up the next slide. Sentis the slide that was and included in the final presentation prepared for the board. It includes the term profit maximizer. You didnt die that . No, i do not. Whole point. He your company is trying to maximize profits. And then you denied it. You said you removed the word cash cow but there is no question you are trying to maximize profits. Maximizer,d profit you replace one term with the other. The intent was the same, to make the most money. I think you owe the chairwoman of this committee and apology. How do you respond . Very clearly, these were options being considered. I think the actions are what you need to focus on. I am going to reclaim my time. Your team replaced one term with the other. Right . It was the same intent, to maximize profit. Inr company has brought nearly 6 billion in net sales. I would like to put up exhibit 76 on the screen. The presentation emphasizes the merger was a quote unique opportunity that should be pursued urgently. Would provide rapid revenue and earnings growth. Your executives boasted about how well the strategy worked. Highlighting to shareholders had can to put 120 million. In an investor briefing in october, you personally explained the primary goal of the company was to deliver quote top shareholder returns focusing on highly profitable specialty drugs. Do you recall saying that . I dont recall that specifically but it would not surprise me i did not say that. Just changing the term from profit maximizer does not change your intent. The intent of your company is not to help the bottom line, the Health Outcomes for the American People. Or for the public in general. It is to maximize profit. Your company you already had this drug and it was highly profitable. You proceeded to increase the drug by more than 82,000 per vial. I believe you misled this committee. I believe you owe the chairwoman and apology. I believe you owe the American People and apology. With that, i yield back. Gentlemen yields back. You are now recognized for questions. Thank, so much. Sham talk about the patient assistance programs. Companiese big pharma used many of these programs in some ways to hike up prices so they are unaffordable. They offer these charitable programs so patients can afford the drug you have made unreasonably expensive. These socalled fake assistance programs do not get to the underlying problem. Simply do not have to be expensive. It is a choice, a choice every ceo makes. It is a choice that is killing people in my district and across the nation. Know, there are a lot of documents the committee has obtained. These are not theories. They are all documentations that prove what we are trying to explain to all of you. Again are hurting people. The documents obtained show these socalled sham programs are moneymaking schemes. Lets start with the copay assistance program. One of your response letters, you stated novartis used its programs to quote ensure every patient who needs glee fact has access to it. Would you consider these programs a Financial Investment or charity . Congresswoman, we are trying to make sure patients can get access to gleevecs. When they cannot afford it for whatever reason, we try to make it available in a variety of different ways. The documents dont match up what you are trying to say. They are obtained by the committee. Say novartis viewed Copay Programs as investments. You you all used it to drive demand for gleevecs. Particularly after it began competing with generic versions of the drug. I would like to put up exhibit 15 on the screen. Ofappears to be an analysis when to launch the socalled enhanced Copay Program. Can you see that . I want to direct your attention to the table. Second, i amne getting a paper copy because i do not see it very well on the screen. It says, i think in the top, the one you are affirming to, does it say the optimal scenario is a sixmonth start . Wax novartis expected every dollar it put into the enhanced Copay Program, it would get and a return between 5. 1 8. 9 million prorated for every thousand dollars put into this program, you would expect nearly 9,000 in profit. Am i reading this correctly . I am not sure. You took an oath to be very specific. As ane seeing this investment. In your own charts from your company, you are making 9,000 in profit. When you insert 1000 into sham charitable programs. Im not sure i understand the chart would according to the slide. The optimal scenario was to launch the Copay Program six months before your company lost exclusive rights to the drug in a drug generic drug would become available. That would result in the greatest return on investment keeping patients in gleevec before lower cost of generics entered the market. Does that sound right to you . Ok. I am looking at the chart. I see what usually are saying. I would like the opportunity to take this back. Lets look at another document, if i may. Have conducted a review to enhance Patient Review programs. Let me put this on the screen. I hope you can see that. For patients with higher copays, there is a risk they may not it here to the drug. The review reached this conclusion. Drugs are aer necessity, there is less sensitivity to price increases. What this document is saying basically is Cancer Patients will keep taking drugs to matter what the price because they have no choice. Am i reading this correct . Nextngresswoman, the sentence says something i also think is a fact. Research shows there is an upper limit of cost at which patient inherence begins to decline. You can try to mislead the public read when it comes down to it saying whichs are is really sickening, it doesnt matter because these are lifesaving drugs. Lets go ahead and increase the prices. You have increased the prices to make more of a profit for people suffering from cancer. Socalledscams, patient assistance programs, they are not. They are moneymaking schemes. It is verified over and over again. I yield. The lady yields. This is porter, you are recognized for questioning. To hear today about innovation. This is our second day of hearings with the ceos. We have heard so much Important Information about the very real cost of research and development. Total revenues in 2017 . Approximately 22 billion. 23. 7 billion dollars. How about 2018 . I dont have that but it would be about 24 billion. 22. 8 billion. 2019 . 23. 4 billion. I know it is hard to do math on the fly. 69. 9 billion. Over those three years we are talking about, how much of its own revenue did amgen invest in that really Important Research and Development Work . Approximately 10 billion taking you atd, your word, was about 10 billion. That is a big number. Some ofg in r d worse your other expenses, is that right . That is correct. Spend onch did amgen lobbying over that three year time . But it is know, approximately 10 million a year. 32. 5 Million Dollars in lobbying. How much did amgen pay for the fiveies of the top executives over this time . About i would guess 6. 5 million per year. 13 million. Would you like to revise . Take a look here. Gave you anlery, i answer for the question about salary. Amgen spend on compensation . That is the number you have written on the board. Could you say it . Number is assume your correct, 124 million. My final question is, how much did amgen spend on stock buybacks in that same twoyear period . Two year or three year . I dont know the number off the top of my head. Max performance was implemented, 30 billion. Right around this number. I am not a witness so i cannot testify. I need a statement number. The number you have written is 28. 6 billion. Spent, more than double, almost triple in stock buybacks as you did in r d. Is my math correct . 10 billion is roughly one third of 28. 6 billion. Would you have not included is the capital we allocated to research and development externally. You make a drug used to treat conditions like arthritis. Did amgen do the research that led to the creation of an ball . Not the original discovery. We have been dashed in billions of dollars of work yes or no . Congressman, i stand by my answer. Research and Development Work associated with it . Quite a bit of it. Bux did you oversee the trials. Help inventutive it . No, i was not involved in Breakthrough Development of the drug. It was invented in an academic goal center and its discovery was funded largely by taxpayers. Amgen did not directly pay for the discovery of this drug. Incorrect. It was discovered by scientists at a Biotechnology Company. What i would like to do now is i would like for you to please explain to the American Public why you and four other executives deserve to pay yourselves tens of millions of dollars each year. I have an empty whiteboard to justifications. Is arecognize that considerable sum of money. I do not directly decide my compensation, that is decided by the board. Reclaiming my time. Do you not know why you are getting hundreds of millions of dollars, tens of millions of dollars a year . What is the justification. I would like to show the American People. Our compensation is consistent with competitive positions at other companies. The other guy gets paid too much too is not a justification. I would like to hear what you do to deserve 124 million and celery. In salary. Time has expired. The gentleman may respond to her question. Of mye than 90 compensation is based on Performance Measures that include how are sharers perform relative to the market. Is Compensation Program aligned with our share owners. It reflects the fact we have been creating i wish you would focus on creating value for sick patients , not just your shareholders. I yield back. The gentlelady yields back. Ms. Kelly, you are recognized for questions. Thank you madam chair. I want to take a moment to address an argument we have heard a lot that pharmacy benefit managers are responsible for rising drug prices. Unitverage net price per of the drug after subtracting rebates has increased every year. I would like to put on the screen a graph of the average net price for a vial of the drug from 20152018. This was created using data your Company Provided to the committee. You can see on the chart in 2015 the average price was around 30,000 dollars, and in 2018, 30 3000, increasing by nearly 3000 in three years after factoring in rebates and costs. Is it fair to say the price increase had a faster rate of any discount provided . Dont believe that is true. Increased discounting significantly to our customers well beyond the rate of increase shown there. In addition, your Company Provided to the committee revealed the rebate paid medicare is nonexistent in start contrast to the efforts to perpetuate this misleading narrative . Between 2015 and 2018, what you paid to medicare averaged less than 1 compared to tricare which average more than 26 . Of enbrel after subtracting rebates and discounts increased since 2014, the same is true for another amgen drug. Even though the rates were stable, you increased the price. Data provided to the committee reveals between 2011 and 2015 the net price of your cancer drug increased by double digits annually. At the same time your data remains the rebates lower than big pharma with lead the public to believe. 15 n 2009 into any 2015, rebates provided by that sale was 15 of total gross sales. Pbm play a role in our Pricing System. Based on the data we have received, it is clear pointing the finger at pbms is a convenient way for Drug Companies to deflect blame for their own action. Areannot be just that pbms responsible for these price increases. I dont know if anyone wants to comment on that. I yield back my time. The gentlelady yields back. The chair recognizes opposing comments. Thank you, madam chair. We have had two long days of hearings. Hopefully in the future we can come together instead of identifying all the problems, we can work toward solutions to those problems. I want to mention many of the problems that my friends on the others of the aisle mentioned today can be solved in h419, our republican bill. For example, representative Wasserman Schultz mentioned several times pay for delay settlements. We dont like that, i dont think anybody likes that. That is in our bill, h419. I think there is an opportunity to work on this issue moving forward, and i hope we can do that. Appreciateagain, i the hearings we have had, i appreciate the witnesses who came before us over the last two days. Hopefully we can Work Together moving forward, because this is an issue the American People are demanding congress address. I think we can do that. Moving forward, move in a bipartisan way to have solutions to the problems. I yield back. The gentleman yields back. I thank the gentleman. I assure you my colleagues and i are open to working with you for solutions to solve this problem. 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 essential services that the city would have funded with the 500,000 that it spent on thed drug. He mentions installing 350 streetlights, planting trees, or replacing two miles of sidewalk. I ask unanimous consent to place this letter into the record. Without objection, so ordered. With that, let me close by thanking all six of the ceos who agreed to participate in these two days of landmark hearings. I would like to thank the staff for all the work they did preparing these hearings. To me, the single most remarkable revelation coming out of these hearings is the claim by Drug Companies that they need to raise the prices for research and development, or to promote innovation. This is completely and utterly false. It is baseless. Porter i think ms. Porter underscored this in her comments. The internal documents we obtained show the pricing discussions going on inside these companies have nothing to do with research and development or promoting new innovation. 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 these Companies View these drugs , profitfit based basis based terms, and that was clear in the documents we saw. I want to make clear also these drugs are lifesaving and lifechanging in many many ways, and we are grateful for that. But we cannot let these Drug Companies continue to target our country, the United States of america, for the biggest and anywhererice increases in the world. But weryone knows this, have a law on the books in this country that bars our country from negotiating directly with Drug Companies to lower prices for medicare. One of the biggest drug purchasers in the world. Of course, the Companies Know the, and they exploit it to tune of hundreds of billions of dollars, and that is what these new documents showed. Profits innies make europe where they negotiate, in canada where they negotiate, in all sorts of other countries that negotiate. But we in america, we have our arms tied behind our back and we are not allowed to negotiate to help our people. And that is not a free market. Peoplemarket is when two or parties come to a table and agree to a price one is willing to pay, and the other is willing to accept. Our system is the opposite of a free market. It lets the Drug Companies increase prices over and over timeser again, dozens of by thousands and thousands of dollars. As we heard today and saw in the documents, this is absolutely unsustainable. We need to pass the legislation that Elijah Cummings championed, and President Trump used to support before he broke his campaign pledges. We finally need to let our government negotiate, just remove this block that does not allow us to be treated fairly. We are exploited in this system. I want to let members know that these two days of hearings will not be our last. We have heard testimony from six ceos, but we have been investigating several other companies as well. 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 our committee on both sides of the aisle. This is a critical issue for all of our constituents. I believe all members demonstrated your command of the material and your desire and constituents,your and help the American People. I sincerely hope we can take these findings and move forward on real legislative changes to help American Families together. Of hearings,o days i give thanks to the staff who have worked incredibly hard on this, and this hearing is adjourned. [captions Copyright National cable satellite corp. 2020] [captioning performed by the national captioning institute, which is responsible for its caption content and accuracy. Visit ncicap. Org] [indistinct conversations] [indistinct conversations]