Good morning, everyone. Not much going on in healthcare policy these days, is there . My name is tovar, im Vice President for Health Policy at the center for American Progress and i have the pleasure of introducing congressman pallone whos been a leader in protecting the integrity of the medicare guarantee and of the medicaid program. Making the nations food system saver, strengthening laws to keep our air and water clean, making health care more affordable and accessible and supporting initiatives that advance and protect public health. Mister pallone is the Ranking Member of the house energy and Commerce Committee which has jurisdiction over issues pertaining to energy, environment, commerce, telecommunication and healthcare. Theres a lot on his plate. From 2060 2014, congressman pallone served as top democrat on the Committee Subcommittee on health and is chairman during the 111th congress, Mister Pallone played a key role in authoring and passing the Affordable Care act so its a good time to have him here. Please welcome congressman pallone. [applause] thank you tovar and i want to thank the center for American Progress for this today. I have to say a few more things about the center. First of all, right now obviously we are in the Health Care Debate and the republican efforts to repeal the Affordable Care act. Has done fantastic work in my opinion educating the public about the negative impacts of the republican repeal, and of course your twitter is part of that as well. Theres so many things the center is doing that are being helpful because i often felt, im going to watch how i touch the mic. That most of the time after we passed the aca, there really wasnt a lot of information going on about the positive effects of this and in the last six months obviously thats changed dramatically to the point where very few americans, it was pulled and it was like 15 percent of americans, thats the same level of favorability of our governor, as you know. About 15 percent of the people view the republican repeal bill in a favorable light and a lot of it has to do with the center and other organizations out there pointing out the negative impact on the American Public and on their Health Insurance. And also i mentioned to tovar when i came in, i remember i think it was in fall 2015 when the center put out the report about drug pricing and high cost drugs and that played a major role i think not only in the democratic platform but also in Hillary Clintons comments and ultimately trump as well about how the high price of drugs needs to be addressed and was a priority mentioned many times during the president ial campaign on both sides of the aisle, the center had a lot to do with that as well. Im going to talk about drug pricing in my comments but i think after we sit down and topher start answering questions if we have a discussion we will talk more about the aca. Obviously i believe that what senator mcconnell is doing these last couple weeks, the changes initiated by senator crews and others in my opinion are just cosmetic. If anything, they make the bill worse than the original senate bill introduced and most notably the cruise provisions that allow Health Insurance companies if they enter the marketplace to also then offer junk plans outside the marketplace, that way the essential benefits package. It was dead enough when the senate bill says that states could waive the essential benefits package but now the cruise amendment and the latest mcconnell proposal that incorporates this is to go beyond that to even without the state waving it, the junk plans could be offered in states even more states, even those that dont waive it so i think again, we will talk a little more about it. The main thing i wanted to talk about was drug pricing so let me get to that. Some of you know that last week on the floor we did pass reauthorization of the user fee bill that was not only for drugs but also for medical devices and generic. That is now going to the senate. We expect them to take fairly quickly or at least thats my hope and obviously that bill also is going to help with generics. Generics in my opinion are still a major way to deal with drug prices effectively but the main thing i want to stress today is the problem with drug pricing is getting worse, not Getting Better even though we talked about this two years ago, even though it was part of the president ial campaign on that side of the aisle, even though president from continues to mention it from time to time, congress and the administration are not doing anything effectively about it. And we in our committee, the democrats on the energy and Commerce Committee have repeatedly asked our Republican Leadership on the committee to have hearings on the issue. And you know, they havent said absolutely no they havent done anything and we are six months into the twoyear session and there still havent been any hearings so were still hoping we will have them but to me, not only are we not addressing this legislatively, were not even having hearings on it. We did when we passed the fda user fee bill and committee, past a sense of commerce resolution which was done by voice vote, jan was the sponsor of it that said that the committee should address drug pricing. But you know, so far you know what the sense of congress are, they dont have any force of law so at least they indicated they do care on the republican side but we havent seen any action so were still going to push them. So the problem is that not only are hard drug prices, not only is the problem with hard drug prices getting worse, not only is it outpacing other increases in healthcare significantly, next year annual drug spending is expected to reach more than 500 billion in the United States. I can see the point, i dont even know if were there yet but i think at some point we will get to the point where drugs are maybe even the majority of your healthcare costs. Were not there yet but we could get there. So as a result of those high prices, Many American states, real barriers in terms of getting the medication they need which is why theres such an important issue. And it shouldnt be a partisan issue. We had a whole that the Kaiser Family foundation released this may that said that six in 10 americans said lowering the cost of prescription drugs should be a top priority and that was democrats and republicans so when you talk about republican americans, not the people that are elected or the leadership here, just republicans in general, they feel, democrats do which is probably the reason President Trump and Hillary Clinton talked about it during their campaign. So what can be done . Let me talk about what can be done and its complex. Some of these things are easy, like talking about negotiated prices, that might sound easy but a lot of these things are more complex and i want to stress there is no Silver Bullet so the reason i commencing Different Things as i dont think one thing alone is going to accomplish the goal or be a solution. So first thing i wanted to talk about is rams or risk evaluation and mitigation strategy. So that shows you the bureaucratic aspect of it here. And thats, this is the problem where brandname Companies Delay in bringing generics to market. And thats because they use the rems to block access for samples of branded drugs. In other words the generics are going to come to market, they have to have samples of the brandname drugs and the rems program is used by brand names to prevent that because they dont provide the sample. You might say is that a big problem . I think its a big problem. There was a july 2014 study conducted by matrix Global Advisors thats in the ongoing abuse of rems cost the Us Health System for . 5 billion in 2014, probably a lot more today. So we need to provide a way of reducing the ability of the brand Name Companies to block the drugs the market by providing access to the samples and theres actually a bipartisan bill called the fast generics act that was introduced by peter welch and i forget you republican response but it is bipartisan and this establishes an fda approved authorization process or american manufacturers to obtain samples of these branded products. And im not going to go into detail unless you want to, that was something that we considered during the fta markup and it wasnt passed but we talked about it and we couldnt get the votes for it but we need to get the votes for it obviously. At some point. The other thing deals with exclusivity or this is the second, that deals with exclusivity. Some of this is going to get a little in the weeds here, im sorry but thats why were at the center, they get into the week. So exclusivity of course, we have a process in various ways where companies have a period of exclusivity where theyre the only ones that can sell the product and they spend money and resources doing that. But and the exclusivity protects certain drug treatments from competition for a set period of time but today, drug manufacturers often retain that incentive even if they violated a criminal or civil laws so one simple thing is to say that if you do that, in other words if you do Something Like illegally promote the unapproved use of a drug treatment, you do something illegally either criminal or civil, i think they should lose the right to exclusivity for the related product which basically punishing bad actors if you want so thats the second thing i want to mention. The other thing, a third item is penalties for misclassification in the medicaid Drug Rebate Program. You pay, i guess you get a larger rebate, right, if you classify your product as generic. And a lot of times you have situations where Drug Companies have misclassified their product as generic and by doing that, they make a lot more money, they get a larger rebate so the best example of that was epipen. Epipen is a brand of drug, however mylan had classified the epipen as a generic drug for purposes of the Drug Rebate Program and that meant they got you know, the changes recently, they made more money. There was a settlement which you know, a lot of people think was inadequate. As a result, you know, they had to pay back i forget how many millions of dollars but actually 1. 27 billion is what we estimated the cost, i dont know what the settlement was what we like to see in legislation is stronger penalties so that you know, Companies Like mylan have a disincentive to do the wrong thing, too misclassified their product. Fourth item, i already mentioned in many ways this is probably the most significant and the one you hear about the most is the medicare price negotiation. We half price negotiation with the va, with the military, we dont have it with medicare. And we should get medicare the ability to negotiate prices with the Drug Companies, thats an easy one. Its not easy politically but its easy to explain. And President Trump during the course of the campaign and since then has said he would like to see that. The Congressional Republicans continue to oppose it. Under Medicare Part d the secretary, the hhs secretary is restricted by a noninterference clause from having any role in negotiating or setting prices so the first thing we would have to do is repeal that noninterference clause so that the secretary could do that. And then of course there are other aspects of that we can go into, i dont want to spend too much time. That was medicare, with regard to medicaid, what we really need to do there, medicaid is the state and federal match for the most part and so the federal government, the state decides they want to negotiate and in medicaid they can but there are ways for the federal government to help them do that so what were suggesting is that we create a federalstate medicaid negotiating pool for highcost drugs so under the rebate, under the medicaid Drug Rebate Program today, drug manufacturers and medicaid agencies have to enter into rebate agreements with the secretary and the safe and negotiated initial research but many states have tried to join together to let purchasing power of a higher cost drug which does not have the authority to facilitate those negotiations between the state and drug manufacturers and theres a lot of money lost as a result so what were suggesting is that we authorized cms and participating state Medicaid Programs to partner with sector contractors to negotiate elemental rebate for drug manufacturers. Again, will call it a medicaid purchasing, that is essentially with would require legislation as well. Now, i want to talk a little bit about generics in the Medicare Part d program and the way we can provide greater financial incentives for generics in Medicare Part d. In the fda user fee legislation, we did incentivize more generic competition. We did that in the fda user fee bill and if you want to talk about moreof that, we can but there are ways to provide more financial incentives for generics and theres the rems that i mentioned before. What we are suggesting here is first of all, improvements to the part d appeals process because a lot of people are turned down and then they appeal they dont know how to go about it so we have this process so that seniors or the disabled dont just you know, abandon hope. That they actually can take an appeal. But we also can offer the lowest possible copayments. Right not now under medicaidpart Medicare Part d, weve been trying to keep the generic copayments low and thats saved a lot of money but its been much more difficult to do that with the lowincome subsidy, the lower income population. A lot of them, they are the Medicare Beneficiaries that have the highest drug spending. Their copayment amounts to step by statute so that means that part d plans cant lower generic copayments on their own to to encourage the use of generics, lowcost generics as part of the program so what we would have to do is again, pass legislation so that we could lower the generic copay and that would save money for seniors particularly low income, i mentioned the appeals process as well. I want to talk about a couple medicare improvements that we can make and talk briefly about transparency and then we will go to the questions part. In terms of the medicare improvements, one of the things that we can do is close the doughnut holes, when we did the aca we basically closed apart the doughnut hole over a period of time but that hasnt ended yet and there is still part of the doughnut hole that needs to be filled so i would advocate that we do that two years sooner than the current law and obviously that would help cost for seniors. We can also reduce costs for seniors and for the Medicare Program by tying reimbursement in Medicare Part d to the most common dosage of drugs. This hasnt really related to the opioid problem but a lot of the debate when we were dealing with opiates last session was the fact that a lot of times people would get a lot of pills. They would sit on the shelf and other people would use it and that doesnt relate to this but what we do is, what we see is drug manufacturers package bottles that contain too much of the drug for most doses so that increases the cost cause youre getting more prescription drugs that you dont need. So and its billions of dollars, apparently so what we could do basically is incentivize companies to manufacturer files that more closely matched the need of the population and again, that can be done by legislation as well. The last thing i want to talk about is transparency and accountability of drugcompanies and their prices. We have some good actors, one of them is in my district, johnson and johnson, that both johnson and johnson and fantasy have agreed to disclose their drug prices increases every year. They went so far as, theyre going to put limits on how much it would increase prices annually and this is an important first half but obviously theyre doing this voluntarily, the only ones that are doing this as far as i know what for the past two years under the obama administration, the last two years of president obama, they set up a medicareand medicaid drug spending cash for that provided online tools where the public could view drug spending and utilization on certain drugs and it wasnt perfect but its obviously an effort to create transparency and what i would say is that the Trump Administration should continue this. As far as i know they had, but they should because you know, without that i think it would be more difficult to get that kind of information. But also congress could take steps in legislation to Institute Reporting requirements for manufacturers in the Rebate Program and in medicare if a manufacturer increases the price of a covered outpatient drug significantly, they basically have to report it and i would advocate that as an important step legislatively. I mean obviously, if were going to deal with drug prices, we have to have the data that is actually happening because otherwise its more difficu