[Senate Hearing 112-125]
[From the U.S. Government Publishing Office]
S. Hrg. 112-125
A PRESCRIPTION FOR SAVINGS: REDUCING DRUG COSTS TO MEDICARE
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HEARING
BEFORE THE
SPECIAL COMMITTEE ON AGING
UNITED STATES SENATE
ONE HUNDRED TWELFTH CONGRESS
FIRST SESSION
__________
WASHINGTON, DC
__________
JULY 21, 2011
__________
Serial No. 112-7
Printed for the use of the Special Committee on Aging
Available via the World Wide Web: http://www.fdsys.gov
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SPECIAL COMMITTEE ON AGING
HERB KOHL, Wisconsin, Chairman
RON WYDEN, Oregon BOB CORKER, Tennessee
BILL NELSON, Florida SUSAN COLLINS, Maine
BOB CASEY, Pennsylvania ORRIN HATCH, Utah
CLAIRE McCASKILL, Missouri MARK KIRK III, Illnois
SHELDON WHITEHOUSE, Rhode Island DEAN HELLER, Nevada
MARK UDALL, Colorado JERRY MORAN, Kansas
MICHAEL BENNET, Colorado RONALD H. JOHNSON, Wisconsin
KRISTEN GILLIBRAND, New York RICHARD SHELBY, Alabama
JOE MANCHIN III, West Virginia LINDSEY GRAHAM, South Carolina
RICHARD BLUMENTHAL, Connecticut SAXBY CHAMBLISS, Georgia
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Debra Whitman, Majority Staff Director
Michael Bassett, Ranking Member Staff Director
CONTENTS
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Page
Opening Statement of Senator Herb Kohl........................... 1
Statement of Senator Bob Corker.................................. 2
PANEL OF WITNESSES
Statement of Jonathan Blum, Deputy Administrator and Director,
Center for Medicare, Centers for Medicare and Medicaid
Services, U.S. Department of Health and Human Services,
Washington, DC................................................. 3
Statement of Philip Rosenfeld, M.D., Ph.D., Professor of
Opthamology, Bascom Palmer Eye Institute, Miami, FL............ 19
Statement of Anthony Adamis, M.D., Vice President, Global Head of
Opthamology, Genentech, Inc., South San Francisco, CA.......... 21
Statement of Sean Tunis, M.D., MSc., Founder and Director, Center
for Medical Technology Policy, Baltimore, MD................... 23
Statement of Lisa Swirsky, Senior Policy Analyst, Consumers
Union, Washington, DC.......................................... 25
Statement of Scott Gottlieb, M.D., Resident Fellow, American
Enterprise Institute, Washington, DC........................... 27
APPENDIX
Witness Statements for the Record:
Jonathan Blum, Deputy Administrator and Director, Center for
Medicare, Centers for Medicare and Medicaid Services, U.S.
Department of Health and Human Services, Washington, DC........ 42
Philip Rosenfeld, M.D., Ph.D., Professor of Ophthalmology, Bascom
Palmer Eye Institute, Miami, FL................................ 53
Anthony Adamis, M.D., Vice President, Global Head of
Ophthalmology, Genentech, Inc., South San Francisco, CA........ 61
Sean Tunis, M.D., MSc, Founder and Director, Center for Medical
Technology Policy, Baltimore, MD............................... 69
Lisa Swirsky, Senior Policy Analyst, Consumer Union, Washington,
DC............................................................. 79
Scott Gottlieb, M.D., Resident Fellow, American Enterprise
Institute, Washington, DC...................................... 83
Additional Committee Documents:
``Prescription Drug Prices: Findings from International
Comparisons and a Domestic Story,'' A Report of the Majority
Staff of the Special Committee on Aging........................ 97
Additional Statements Submitted for the Record:
Senator Robert P. Casey, Jr. (D-PA).............................. 109
Senator Jay Rockefeller (D-WV)................................... 111
Senator Mark Udall (D-CO)........................................ 114
Academy of Managed Care Pharmacy, Alexandria, VA................. 115
Alliance for Aging Research, Washington, DC...................... 118
AMD Alliance International, Woodstock, MD........................ 121
National Community Pharmacists Association, Alexandria, VA....... 124
National Venture Capital Association, Arlington, VA.............. 129
A PRESCRIPTION FOR SAVINGS: REDUCING DRUG COSTS TO MEDICARE
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THURSDAY, JULY 21, 2011
U.S. Senate,
Special Committee on Aging,
Washington, DC.
The Committee met, pursuant to notice, at 2:08 p.m. in Room
SD-106, Dirksen Senate Office Building, Hon. Herb Kohl,
Chairman of the Committee, presiding.
Present: Senators Kohl [presiding], Whitehouse, Udall,
Manchin, Blumenthal, Corker, and Kirk.
Also Present: Senator Brown.
OPENING STATEMENT OF SENATOR HERB KOHL, CHAIRMAN
The Chairman. Good afternoon. This hearing will come to
order, and we thank you all for being here.
As we all know, rising health care costs are threatening
our economy. While the health care reform bill of last year was
a start, it certainly has not done enough to address costs at
this point. We need to do more, and we need to look at every
option as we seek to provide quality care for all Americans at
a cost that we can afford.
According to testimony provided by the Special Committee on
Aging by the Organization for Economic Cooperation and
Development, OECD, in 2009 the average price of pharmaceutical
drugs in the U.S. was 30 percent higher than in the other 30
OECD countries. These are the most advanced and developed
countries.
Another study found, the McKinsey study, that the
difference in price may actually be as high as 50 percent
between what we charge for pharmaceutical drugs here in this
country versus those other 29 countries.
As I'm sure we can all agree and understand, rising health
care costs are hurting America's global competitiveness and are
a drag on family wages as potential increases have been used to
pay for the rising costs of health care and prescription drugs
instead of augmenting the wages of our working families.
In 2010, the American people spent more than $300 billion
on prescription drugs, and a third of that was paid for by
Medicare and Medicaid. Left unchecked, these costs threaten our
country, our economy, and every American family, and we all, I
think, would agree that this kind of a condition is not
acceptable.
Today's hearing will focus on one aspect of health costs,
namely prescription drugs, and provide an opportunity to talk
about possible solutions. The committee will also release an
investigative report that indicates that drug companies charge
American consumers more because we lack the negotiating power
used by other countries.
We already have prescription drug programs in place which
do cut costs through negotiation, including the Veteran's
Administration and a program in Wisconsin called Senior Care,
and we should look, I believe, to emulate those examples.
The 91,000 beneficiaries enrolled in Senior Care in my
state cost the Federal government a third of what it would cost
for them to be enrolled in Medicare Part D with the same
benefits.
By negotiating prices, Senior Care in Wisconsin did save my
constituents $80 million in 2010. The VA demands a minimum
discount of 24 percent on wholesale drug prices. If Medicare
were able to save 24 percent, taxpayers would then save more
than $350 billion over 10 years.
We also need to look at giving the government the ability
to address sizeable price differences between drugs that are
similarly effective. The National Institutes of Health recently
sponsored a lengthy comparative clinical trial between two
highly effective drugs used to treat macular degeneration, a
condition that often causes blindness among seniors. The trial
found that both drugs worked equally well in treating this
condition. However, one cost $2,000 a dose, while the other
cost $50. So we will be hearing testimony today about these two
drugs on which Medicare is spending more than a billion dollars
a year.
Today we'll be releasing a number of additional cost
savings policy options suggested by experts to hugely reduce
prescription drug costs. Some of these options would save
billions, while others would be more modest. These options
include ways to increase transparency and expand discount
programs and reduce the financial incentives for doctors to
prescribe the most unnecessary or expensive drugs.
This morning, the Judiciary Committee passed on one of
these bipartisan proposals which would limit delays in getting
generic prescription drugs to consumers. Several of our
witnesses will discuss how these and other policies result in
lower costs without sacrificing access, choice, or quality of
care. I urge my colleagues to be open to considering all of
these ideas, and I hope that together we can put additional
solutions on the table.
We thank you all again for being here today.
And now we turn to the ranking member of this committee,
Senator Bob Corker.
STATEMENT OF SENATOR BOB CORKER
Senator Corker. Mr. Chairman, thank you for having the
hearing, and I want to thank all of our witnesses who are here.
I know that we have two panels. We had expected actually
numbers of Senators on both sides of the aisle, and in order
that we not have a lot of long, drawn-out opening comments, I'd
rather hear from the witnesses. I'm not going to make an
opening statement.
I will say that I think all of us are concerned about the
cost of prescription drugs. Obviously, we may have differing
views as to how to solve those, but I think that's the purpose
of our hearing today. I look forward to hearing the witness
testimony and thank the chairman for calling the hearing.
The Chairman. I thank you very much, Senator Corker.
Senator Kirk, do you have a comment or two to make?
Senator Kirk. I do not, Mr. Chairman. I'll be brief, and
let's go.
The Chairman. Thank you very much.
So now we turn to Panel 1 and our one witness. He is
Jonathan Blum, the Deputy Administrator and Director of
Medicare at the Centers for Medicare and Medicaid Services. Mr.
Blum previously served at the Office of Management and Budget,
and for the Senate Finance Committee. Mr. Blum is also the
former vice president of Avalere Health.
We welcome you back, and we look forward to your testimony.
Go right ahead.
STATEMENT OF JONATHAN BLUM, DEPUTY ADMINISTRATOR AND DIRECTOR,
CENTER FOR MEDICARE, CENTERS FOR MEDICARE AND MEDICAID
SERVICES, U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES,
WASHINGTON, DC
Mr. Blum. Chairman Kohl, Ranking Member Corker, Senator
Kirk, thank you for the opportunity to talk about Medicare's
payments for prescription drugs.
All four parts of the Medicare program, Part A, Part B,
Part C, and Part D, pay for drugs in some form or fashion. All
use different payment systems under different statutory
authorities and frameworks.
I'd like to focus today on payments for drugs under our
Part B and Part D payment systems, the two payment streams that
receive the most policy attention.
All of our payment systems for drugs are similar in one
respect. The Medicare program does not reimburse drug
manufacturers directly for drugs provided to Medicare
beneficiaries. Instead, Medicare pays physicians, hospitals,
dialysis facilities, and insurance plans, who in turn purchase
drugs or pay a pharmacist for drugs provided to Medicare
beneficiaries. That is, we have no direct payment relationship
with drug manufacturers.
Under Medicare Part B, the most common payment for drugs is
to physicians who provide drugs to their patients. The program
also pays outpatient hospital departments for drugs provided
during outpatient procedures such as chemotherapy drugs, and
dialysis facilities for drugs provided in the context of
dialysis care.
The Congress has authorized the Part B program to pay for
only certain drugs through Part B. These drugs include drugs
administered by a physician or under the supervision of a
physician; drugs provided through durable medical equipment
such as nebulizers or IV pumps; and drugs that are directed by
statute. These include certain drugs provided to dialysis
patients, oral cancer drugs, and certain vaccines.
The Part B program covers about 800 drugs total that fall
under these three categories. In 2010, CMS spent $12.5 billion
for Part B-covered drugs, and the CMS actuaries project that
total spending for these drugs will double over the next 10
years.
Today's spending for Part B drugs is highly concentrated in
a relatively few number of drugs. Thirteen drugs account for
half of the total spending. About $6.25 billion is comprised of
13 drugs, and the top spending drug is Lucentis, that accounted
for 16 percent of total Part B drug spending.
Congress reformed the payment system for these drugs in
2005, or most of these drugs in 2005. Prior to 2005, Medicare's
payments for these drugs were based on the so-called average
wholesale price, or the sticker price. There were numerous
studies finding that payments to physicians under this pricing
system far exceeded physicians' own costs to purchase the
drugs. This created a payment spread for physicians.
Congress changed the system in 2005. CMS now uses a system
based upon the average sales price, or ASP. The ASP is the
average of each manufacturer's sales price net of most
discounts and rebates and other price concessions. The ASP
accounts for most sales from manufacturers to entities in the
U.S. who purchase the drug from the manufacturer.
CMS, for the Medicare Part B program, pays physicians who
administer these drugs a payment of ASP plus 6 percent.
The Part D prescription drug program works somewhat
differently. Private insurance plans compete to provide
outpatient drug coverage to beneficiaries who choose to
participate in the Part D drug program. CMS contracts with
hundreds of drug plans which must meet program requirements.
Virtually all Part D plans build their own drug formularies
or lists of preferred and non-preferred drugs. CMS must approve
plan formularies, and plans must cover at least two drugs in
each therapeutic class, and the formularies must be deemed by
CMS not to discriminate.
Today, Part D plans cover more than 6,000 drugs, and the
average Part D private plan formulary includes about 1,000
drugs on average. CMS pays Part D plans a fixed monthly payment
which is based upon the average premium bid of all
participating Part D plans. Medicare also provides other
payments to these Part D plans to offset the insurance risk
that these plans bear, and Part D plans that enroll low-income
beneficiaries receive greater subsidies from the Medicare
program.
According to the CMS actuaries, total Part D costs were
about $62 billion in 2010, and the CMS actuaries project that
total Part D spending will rise to $156 billion by 2020, an
average growth rate of about 10 percent per year.
The rising cost of drugs will consume a greater overall
share of Medicare spending over the next 10 years. This
spending growth will require all of us to work together to
ensure that costs remain affordable while maintaining access to
necessary treatments.
I'd be happy to answer your questions.
[The prepared statement of Jonathan Blum appears in the
Appendix on page 42.]
The Chairman. Thank you, Mr. Blum. I'm sure you are
familiar with the general fact that many of these prescription
drugs are available in other countries for much less than what
they cost here in the United States. Why do you think this is
so?
Mr. Blum. Well, I think a couple of reasons. One is that
the public programs, Medicare and Medicaid, operate our payment
systems according to very strict statutory formularies.
Different countries use other payment mechanisms. We have a
policy within CMS not to require formularies. Private Part D
plans are able to implement formularies. So we have different
statutory frameworks than I think other countries can operate
under.
The Chairman. Well, would that suggest that, in a sense,
we're shooting ourselves in the foot?
Mr. Blum. Pardon me. I don't understand the question.
The Chairman. Would that suggest that we are making
mistakes in how we operate our programs here in this country if
our goal is to provide the product at the least possible cost?
Mr. Blum. Well, I think one thing that we observe within
both the Part B and the Part D payment systems is that when
drugs have competition, meaning they have generic alternatives
or they have multiple drugs competing in the same therapeutic
class, we see much more pricing pressure. We see less pricing
pressure for drugs that don't have competition, that don't have
generic substitutes. So I think that's one observation.
And I think to CMS' observation, when we have competition
for drugs in particular classes, when we have generic
alternatives, we see greater pricing pressure through both the
Part B payment system and also the Part D payment system.
The Chairman. Mr. Blum, as you know, I sent your agency a
letter yesterday requesting that Medicare ensure that Avastin
is available to all patients who choose to use it as a
treatment for macular degeneration. As you note in your
testimony, Avastin was recently shown by an NIH trial to be
similarly safe and effective to Lucentis. I hope that CMS will
bring immediate attention to this matter and make an
affirmative national coverage decision for Avastin.
Mr. Blum. We currently cover both drugs. Both drugs are
covered through the Part B program. We note that the majority
of physicians that treat this condition choose to use Avastin.
Lucentis is an on-label drug, and the Avastin for the condition
that you're concerned about is an off-label marketed drug. CMS
currently pays for both drugs, and physicians have the option
to use both drugs.
But while the majority of physicians use Avastin, a vast
majority of the spending is for Lucentis, a higher priced drug
through our payment system.
The Chairman. Why doesn't CMS obtain discounts on the much
more expensive drug, Lucentis?
Mr. Blum. We don't have any authority to do so under our
current law. The pricing system is based upon the average sales
price, which takes into account more or less the private
purchasers of these drugs. I think what is true is that for
Lucentis, this is a condition that's particularly focused
within the Medicare program that I believe about 75 percent or
so of the drug is delivered to Medicare beneficiaries through
our fee-for-service program.
But the statutory construct is such that CMS pays based
upon the average sales price, but we also note that the
Medicare program is by far the largest part of the spending for
this particular drug.
The Chairman. Thank you very much, Mr. Blum.
And now we turn to Senator Corker.
Senator Corker. Thank you, Mr. Blum, for being here and for
your testimony.
You mentioned that Part D plans negotiate rebates, and
there's been some legislation put forth by a couple of Senators
looking at that ceiling issue and other kinds of things that
introduce Medicaid-style drug rebates into Medicare Part D. Is
that something you support or do not support?
Mr. Blum. Well, I think what the President has said is that
he is open to all ideas in the context of the debt ceiling
discussions. In April, the President put out a framework----
Senator Corker. I was asking you specifically, since this
is what you do, whether you support Medicaid-style rebates or
not. I understand what the President may or may not----
Mr. Blum. Sure. Well, as an official of CMS, I have to
support the official position of the administration.
Senator Corker. So did the President take a position on
Medicaid-style rebates?
Mr. Blum. I think what the President said is that he's open
to all ideas in the context to reduce overall costs, both in
the Medicare----
Senator Corker. Just sort of let me move away from the
talking points. Do you, as an official that deals with health
care issues on the issue of prescription drugs, which is why
we're all here, do you or do you not support Medicaid-style
rebates for Medicare Part D?
Mr. Blum. I believe that the Medicare program has proven
successful in lowering drug costs through competition. I also
believe that there are certain drugs that are provided through
the Medicare program that don't have as much competition, and
there are more opportunities for us to reduce costs.
Senator Corker. So I think what you're saying is in the
overall Medicare Part D program, you think it's worked pretty
well. There may be some isolated cases where you would
recommend a different type of approach.
Mr. Blum. I believe that the Congressional Budget Office
has scored a policy that would require Medicaid-level rebates
for certain drugs at about $120 billion savings for the next 10
years. The President has said that he's open to all ideas and
offered that as one suggestion to reduce overall Medicare
spending.
Senator Corker. Would it make any sense in those areas to
maybe have the same type of competitive structure that we have
in Medicare Part D now?
Mr. Blum. In terms of the parts of the program? We know
that when we structure competition in parts of the program,
like durable medical equipment, that we get lower costs, get
better prices for both the beneficiaries and for taxpayers. The
Part D program in general has produced much lower Part D
premiums than I think our actuaries had predicted when the
program was enacted.
But at the same time, in order to get competition, you have
to pick winners and losers. In cases where there aren't
alternatives or there isn't competition for products or
suppliers, it's very difficult to get lower prices through
competition. Where you have lots of choice and you have lots of
suppliers, like in the durable medical equipment context, or in
the Part D plan context where we have 25 or 30 stand-alone drug
plans competing in the same market, we see that competition
produces good results. In the cases where we have a single item
for a single product, it's very hard to get lower prices
through competition.
Senator Corker. Thank you. I think, again, to restate what
you're saying is Medicare Part D works really, really well as
far as the competition goes in lowering prices for seniors, but
there are some isolated cases where when only one type of drug
is available, we might look at some other ways of dealing with
that.
Mr. Blum. The total cost of Part D is certainly lower I
think than the actuaries for the Congressional Budget Office
estimate. I think part of that is that we have seen much more
rapid generic diffusion through the Part D program than I think
the actuaries would have said. I can't speak for the actuaries,
but I think what they would say is that the main reason we're
seeing lower costs than expected is that we have much more
generic competition and diffusion than they had predicted back
in 2003 when the benefit was enacted.
We also see robust premium competition for Part D plans,
and we see beneficiaries gravitate to the plans that offer the
most competitive premiums.
So I think to my observation, the number one reason why
Part D costs remain low is that we have more generic use
through the Part D program than in other payment systems, but
we also see very robust premium competition for Part D plans,
and we have a very rich market.
Senator Corker. Thank you. That's quite an endorsement.
Let me ask you, on the Medicaid programs in general where
we have a different type of situation, we've seen tremendous
cost increases on the prescription drug side of Medicaid, which
has a very different type mechanism. Is that not true?
Mr. Blum. My observation is that when you compare Medicaid
paid net prices to other purchasers, that oftentimes Medicaid
is a lower price. I don't know the reasons why Medicaid drug
spending is growing like you say, but I would guess that most
of that growth is due to the fact that we have more
beneficiaries in the program, not necessarily higher prices for
prescription drugs.
Senator Corker. I see my time is up, and I thank you again
for answering the questions the way you have. I appreciate it.
Mr. Blum. Thank you.
The Chairman. We turn now to the Senator from Ohio, Sherrod
Brown.
Senator Brown. Thank you, Mr. Chairman, and Ranking Member
Corker. I appreciate especially being here at the request of
the chairman because I'm not on this committee, and I
appreciate the opportunity to share some information and ask
you something.
I first appreciate the chairman's work on Avastin/Lucentis.
I want to bring another issue to you on a progesterone
called P17, marketed by KV Pharmaceuticals out of St. Louis as
a drug called Makena. I think you know the story, that for
several years women, at the cost of $10 to $20 a dose and 20
doses, 20 weeks once a week of a shot they get typically in a
hospital or doctor's office. So the cost overall of $200 or
$300 for the whole regimen of this P17 progesterone has
dramatically cut the rate of low birth weight babies born in
this country. Medicaid pays for about 42 percent of the
nation's more than 4 million annual births. Twelve percent of
live births involve a preterm baby.
So compounding pharmacists were making these drugs. Often
one in a community or in a major city hospital or whatever were
producing these drugs, and women's lives or babies' lives were
saved in many cases. Babies were born full course, full term
much more often.
KV Pharmaceuticals, a company I'd not heard of before this,
went to FDA, got approval for exclusivity for seven years. They
raised this $10 to $20 a dose for 20 weeks, $200 to $300, $200
to $400, to $1,500 a dose times 20. Do the math. Under pressure
from many of us, they dropped the price to $690. That's still a
significant public health problem. Call it greed, call it
gaming the system, call it what you want, it's a significant
public health problem.
It's also a significant insurance company and Medicaid/
taxpayer problem.
We have seen a similar kind of gaming the system on a drug
called Colcrys, as you know, treating gout. It used to be 4
cents a pill. After URL Pharma went to get FDA approval, the
price went from 4 cents a pill to $5 a pill. Gout is a serious
problem for a lot of people in this country.
My question is--oh, one more thing. The FDA--oh, I'm sorry.
Yes, the FDA did something that is highly unusual. FDA, when KV
Pharmaceuticals sent a cease and desist order to compounding
pharmacists all over America, the FDA stepped in and said we
will not enforce that cease and desist order, implicitly saying
carry on and keep compounding this drug.
Now, there is not a public safety issue here. There's never
been any accusation the compounding pharmacies, pharmacists and
pharmacies have contaminated this drug, have made it in a way
that's not safe for these women, never that I've read any
accusation about that.
So my question is what do you do about this? On Colcrys, on
Makena, it's such a public health issue, it's such a taxpayer
issue where even today, after CMS or--I'm sorry, after FDA
stepped in, only three states, according to the American
College of Obstetricians and Gynecologists, only three states
are solely covering 17P. Five are covering only Makena. Twenty
are covering both. So if the physician is not on her toes here,
and if the ultimate buyer of this drug or the user of this drug
or the hospital is not paying enough attention, they're paying
more like $690 a dose instead of the $10 to $20 that
compounding pharmacists are still making this for.
What is your role and what is CMS really going to do to
make sure the public health isn't at risk and taxpayers aren't
paying billions of dollars more, whether it's Colcrys, whether
it's Makena, whether it's the next drug that some
opportunistic--I won't use the word ``greedy'' but
opportunistic drug company decides to move forward on?
Mr. Blum. A couple of observations on the examples that you
raised. I think it shows that when a drug or a product that
doesn't face competition from other products or generics, that
they can exercise monopoly pricing power, and that's the
incentive to do so.
So I think one thing that CMS and every other part of the
public health infrastructure needs to do is to ensure that we
create consistent and quick pathways consistent with the law to
generics to ensure that we have competition. But outside of----
Senator Brown. That's not--sorry to interrupt. That's not
good enough here because they have seven years of exclusivity.
So that's an answer in some cases. I don't think it's an answer
to the chairman's issue, and it's certainly not an answer to
these two drugs.
Mr. Blum. I think, in complete frankness, Senator, the
authorities that you're suggesting aren't authorities that CMS
has today. If Congress would like CMS to exercise those
authorities, the law would have to be changed in order for us
to do so.
Senator Brown. You have no role in negotiating drug prices
in that narrow window?
Mr. Blum. No part of my testimony said that our payment
systems don't tie to drug manufacturers directly. CMS pays
physicians. CMS pays drug plans. CMS pays hospitals, who in
turn purchase drugs, and our payment systems are set based upon
very tight statutory constructs. So, today, CMS does not have
any negotiating authority directly with drug manufacturers.
Senator Brown. Thank you, Mr. Chairman, for your time.
Thank you.
The Chairman. Thank you very much, Senator Brown.
Now we turn to Senator Kirk.
Senator Kirk. Thank you, Mr. Chairman. Thank you for having
me on this committee.
I'd like to raise--I've got a chart here. I'd like to raise
an issue with regard to IPAB, the Independent Payment Advisory
Board, and the British equivalent, the National Health Service.
Their equivalent of IPAB is called the National Institute for
Health and Clinical Excellence, called NICE.
And what I'm worried about is NICE is not so nice,
generating clinical outcomes significantly worse for patients
who are unfortunately under its jurisdiction rather than
American seniors, who are under Medicare.
When you look at several of the indicated medicines that
are available, you see, for example, in postmenopausal women,
Herceptin is indicated and is available under Medicare for
treatment. But NICE denies this, and that would total about
46,000 women in the United Kingdom that are not allowed
Herceptin because a British bureaucrat has said to all British
doctors, under every circumstance, no matter what your clinical
judgment regarding this patient is, you may not provide this.
Luckily, we still give this freedom to U.S. physicians.
For liver cancer, the indicated treatment may be Nexavar.
And in England, the NICE bureaucrats have now denied authority
for all British physicians to provide this.
This may be one of the reasons why the United Kingdom now
ranks 16th out of 18 EU states in cancer survival in this area.
They simply are dying, and part of the reason might be that
what is indicated and especially could be provided by a
physician under Medicare is not allowed.
In colorectal cancer, we all understand Avastin, and
Avastin has been shown as being clinically indicated to cut off
the blood supply of a tumor. For Americans suffering from
kidney cancer, they may be prescribed with Affinitor. Affinitor
is indicated if the other drugs are not working, and it has
also been helpful when you have a transplant. It helps the body
accept this.
In the case of British patients, they are denied Affinitor
and its benefits.
Probably a bigger disease, leukemia, the cancer of white
blood cells, for Spyrocel, this is used if Gleevec is not seen
as effective. American physicians under Medicare are allowed to
do this. NICE under the NHS then denies all care for this.
And then for lung cancer, Tarceva, which is used for small
cell cancer if other chemotherapy fails, and also in pancreatic
cancer, denied.
Here's my question. What is going to prevent IPAB from
metastasizing--and I use that word directly--into NICE? Because
I think for many Americans, we go to England, especially on
holidays, and normally an American will not get on a plane and
leave the United States for a holiday unless they're in a good
health status. And so Americans' personal experience with the
NHS is minimal to none.
I lived and worked in Britain for three years, and I can
tell you my first experience inside a British hospital was
shocking as to its level of physical infrastructure, some
hospitals being not improved or expanded since the blitz, and
then the denial of care and lack of technical expertise, as
opposed to what I saw at Evanston Hospital near my own town.
What actions are you taking to make sure that IPAB can
never metastasize into NICE?
Mr. Blum. I think a couple of things. One is that as the
Affordable Care Act structured the IPAB, that it was structured
as an independent body from CMS. And I think that the goal, as
I understand it, of the legislation was to create mechanisms to
ensure that overall costs of the Medicare program and other
parts of the health care system remain affordable. And I think
we can all agree that the ultimate goal is to ensure that per
capita cost growth remains affordable to ensure that the
Medicare program remains strong, and for current
beneficiaries----
Senator Kirk. Wait, wait. When you lay out that mission,
NICE's view is NICE is connected to a bankrupt government. The
British government has almost as many debt loads as we do. And
so the bureaucrats then use comparative effectiveness research
to then support the kind of decisions that I just laid out that
then deny care, driving cancer survival rates in Britain to the
lowest in the EU.
Mr. Blum. Sure. Well, my understanding of the legislation
is that the IPAB provides recommendations to the Congress.
Congress has the right to choose to accept those
recommendations or not. The Congress can overrule those
recommendations.
Senator Kirk. And then this is regardless of what a
physician thinks is indicated for their patient. What if the
physician disagrees with what IPAB recommends?
Mr. Blum. Well, I think a couple of things. One is that the
IPAB legislation, consistent with the Medicare framework today,
I believe prohibits coverage decisions or any coverage decision
from factoring costs to those coverage decisions. So I think
the chart that you're suggesting suggests that NIHCE takes into
account cost considerations for particular drugs.
The current coverage authority that CMS operates under in
the Medicare program does not allow us to consider cost in
making coverage decisions, and I believe the IPAB legislation
doesn't change that framework that we currently operate under
today.
Senator Kirk. Mr. Chairman, I would just say I'm highly
worried that before the legislation we didn't even have an
IPAB. Now we have an IPAB, and I think its goal inevitably will
be to metastasize into what the British have.
Thank you, Mr. Chairman.
The Chairman. Thank you, Senator Kirk.
Now we turn to Senator Udall.
Senator Udall. Thank you, Mr. Chairman.
I listened to my colleague from Illinois with interest.
I do understand, Mr. Blum, that if the IPAB recommendations
are not acceptable to the Congress, we can simply override them
with our own ideas and our own proposals about how to contain
costs. Is that correct?
Mr. Blum. That's my understanding, Senator, yes.
Senator Udall. That's your understanding? And I also
understand that we have had a similar advisory committee
attached to CMS, MedPac some have called it, which has made a
series of insightful recommendations in retrospect about ways
in which to contain costs but also maintain quality of
treatment.
Mr. Blum. Right.
Senator Udall. Would you agree?
Mr. Blum. MedPac serves the Congress. They don't serve CMS.
So they're an independent agency that provides the Congress
recommendations about how to improve Medicare/Medicaid payment
policy. They provide recommendations to the Congress each year
that the Congress can choose to accept or not.
I think what is different about the IPAB is that, if the
Congress does not act upon the recommendations, the Secretary
of Health and Human Services would have the authority to
implement those recommendations.
But you're absolutely correct that the recommendations go
to Congress. Congress can choose to accept or to suggest other
ways. And so I see it as a body that serves the Congress to
provide recommendations to contain overall per capita spending.
Senator Udall. And that's the point of the hearing today,
and I want to thank Senator Kohl and Senator Corker for
convening this.
If I might, Mr. Chairman, I'd like to ask unanimous consent
that my initial statement be included in the----
The Chairman. Without objection.
Senator Udall [continuing]. In the record.
And if I could, I'd just like to turn to the earlier
comments you made about generic drugs. They're obviously a
focus of the Medicare Part D, and I know there's some good news
on that front.
Would you talk about your sense of how branded drug costs
have affected costs at CMS, as opposed to generics?
[The prepared statement of Senator Mark Udall appears in
the Appendix on page 114.]
Mr. Blum. Sure. Well, I think we operate under different
statutory frameworks and different competition within different
therapeutic frameworks in the Part B program and the Part D
program.
What is driving Part B drug spending? These are drugs
largely provided through physician offices. The spending is
concentrated on a handful of drugs. They're often new drugs
coming on the market that I think are in the brand category.
In the Part D program, we continue to see robust generic
competition for many of the most commonly prescribed drugs for
conditions like diabetes, heart care, et cetera. In the Part D
context we see very strong generic competition, less so in the
Part B drug context. Many of the drugs that we pay for in Part
B are drugs used to treat cancer that are new treatments that
still are in their market exclusivity. But on the Part B side,
we have a concentration of spending in a handful of drugs due
to the newness of the treatments, and due to the popularity of
the treatment.
Senator Udall. On balance, do you see a flattening out of
the costs on whatever metric is the most useful on the branded
side?
Mr. Blum. Well, I think----
Senator Udall. Again, the point of the hearing is how do we
maintain quality, how do we encourage the pharmaceutical sector
to innovate and take some risks, but how do we get a handle on
the enormous cost of providing drugs to Americans.
Mr. Blum. And I think one observation is that while we need
to have strong incentives for manufacturers to bring new
markets to market, we see that when drugs do face competition
from generics or other treatments, that the prices that are fed
through our payment system reflect that competition.
So I think the question is how do you always find the right
balance between creating strong incentives to ensure that new
markets come to market, and also that competition can happen
when it's appropriate for it to happen.
Senator Udall. Let me turn to outcomes. The Affordable Care
Act was focused in part on outcomes. What are you doing to pay
for services based on health care outcomes, and how does
evidence on health care outcomes affect CMS determinations on
what drugs they cover?
Mr. Blum. Well, a couple of things. One is the Affordable
Care Act clearly gives CMS a very strong direction for us to
develop the next generation of payment systems for hospitals or
for physicians to really focus on the overall value of care
rather than the volume of care. We have different authorities
that we're implementing, or different programs that we're
implementing with this direction.
One is accountable care organizations to ensure that
physicians working with all parts of the health care system
really focus on the long-term outcomes of the patient rather
than a single episode of the payment. We are starting to
receive stronger evidence that, when beneficiaries continue to
follow drug regimens, when beneficiaries have access to drug
benefits, that it saves the program long term. I think these
are initial studies. I'm not sure that our actuaries have given
them kind of absolute certainty, but there is stronger evidence
that, when we focus on the overall preventive care, that we
save long-term costs.
And so, hopefully with our direction, and I think the
health care system's direction of focusing payment on the
outcome of the patient, the value of the care rather than the
volume of the care, that physicians will make the best possible
choices with their patients to ensure that care is better
coordinated, better managed for the long term.
Senator Udall. Thank you, Mr. Blum.
Mr. Blum. Thank you.
The Chairman. Thank you very much, Senator Udall.
Now we turn to Senator Manchin.
Senator Manchin. Thank you, Mr. Chairman, appreciate it.
Thank you, Mr. Blum.
Basically, with rising costs, especially of Medicaid or
Medicare Part D costs, they're estimated to rise about 9.7
percent, I think, for the next nine years. And with the waste,
fraud and abuse that we see an awful lot throughout government
and throughout basically the programs that we're responsible
for, what are you all's intentions and what do you think can be
done within your confines in order to remove or eliminate or
reduce significantly the waste that's in as far as the billing,
overbilling, or wrong prescription?
And rebates, I think, as I had done a little bit of
investigation, the Inspector General's findings suggest that
the underreporting of drug rebates has led to excess rebate
payments of approximately $1.9 billion per year. And do you
all, are you looking at that? Do you have a group or a task
force to eliminate that?
Mr. Blum. Sure. I think the Part D program is administered
through private Part D plans, private insurance plans, who then
pay pharmacists and then sign up beneficiaries and operate the
benefit through pharmacy benefit managers.
Part of our strategy to address the concern that you're
raising is to ensure that we set very strong requirements for
our Part D plans, to have compliance programs in place to share
data. So when we see a fraud issue on the fee-for-service side,
we share that information with private insurance companies so
they can act accordingly.
We're doing a lot more with sophisticated data, data
analysis, to highlight and kind of bring to bear when spending
is concentrated within a particular physician or a particular
pharmacy.
So our strategy I think is twofold. One is to ensure that
we incent and require our Part D plans that are providing the
benefit on behalf of our beneficiaries to have the strongest
compliance programs in place. When we see plans have weak
compliance programs, we take action very quickly. But also our
strategy is to share information, to share data so it's not
just the fee-for-service Medicare program that's responding to
a fraud hot spot. We're sharing that information with all of
our partners to ensure they can respond as well.
But if we know that folks that are trying to commit fraud,
if one spigot gets cut off, they move to another spigot, so our
strategy is to make sure we're working in unison to ensure that
all the spigots get cut off, to the extent possible.
Senator Manchin. With the cost of drugs, prescription
versus generics, do you all play a role in your rulemaking as
far as what we are to prescribe first, or go to low cost?
Mr. Blum. We allow Part D plans, consistent with the
statutory framework, to establish formularies, to set
differential cost-sharing policies, to encourage beneficiaries
to use generic drugs or lower-cost drugs relative to higher-
cost brands. So those formularies have to run through our
checks and balances to ensure that they're fair for our
patients, but we provide the incentives, and also we provide
the framework for private Part D plans to set those cost-
sharing policies to encourage the----
Senator Manchin. So you're telling me that basically our
prescription prices for our drugs are anywhere from 30 to 50
percent higher than most other nations.
Mr. Blum [continuing]. We operate within current statutory
frameworks, and our payments are consistent with those
statutory frameworks.
Senator Manchin. Do you have any opinions on that? Do we
have the right statutory provisions in place, or do we need to
make some adjustments?
Mr. Blum. I think what----
Senator Manchin. To reduce the costs, just to lower the
costs so we're able to provide to more people in need.
Mr. Blum. What I can say, Senator, is that the President
has made it very clear that lowering Medicare costs and all
costs in the health care system is one of our highest health
care challenges, and he has said that all ideas and options are
on the table in the context of the overall debt ceiling
discussions.
Senator Manchin. Would you agree basically that if you
would use prescriptions, that you would have a reduced cost if
they were available for the same type of treatment where a
higher-cost drug is available?
Mr. Blum. I'm sorry. I don't understand the question.
Senator Manchin. Well, basically if you all had a policy or
if you want us to change the law that would require you all to
use the lowest-cost provider or the lowest-cost drugs for their
treatment, then there would be tremendous cost savings.
Mr. Blum. I think the overall framework that CMS operates
under is that the physician and the patient should make those
choices together.
Senator Manchin. We're paying for it, though.
Mr. Blum. Absolutely. And so our payment policy should
support the physician and the patient to make those best
possible choices. We also know that, due to our cost-sharing
policies, higher-priced drugs generally have higher-priced
copayments attached to them. And so we have to be very
sensitive that it's not just the taxpayers who are paying
higher prices, but it's out-of-pocket costs that are also
impacted as well.
And so our payment framework pays for drugs indirectly, but
we also have coverage policies that support physicians and
patients making the best possible choices, and hopefully part
of that discussion is taking into account the out-of-pocket
costs that are being borne by our beneficiaries.
Senator Manchin. I'd like to go into it in more depth with
you, because I think in these budgetary-constrained times that
we have, we should be looking at trying to get the best bang
for our buck, and right now it doesn't seem that we're doing
that.
Mr. Blum. I'd be happy to follow up with that, Senator.
Senator Manchin. Thank you.
The Chairman. Thanks a lot, Senator Manchin.
Now we turn to Senator Blumenthal.
Senator Blumenthal. Thank you, Senator Kohl, and thank you
for again having a very, very informative and useful hearing.
And thank you, Mr. Blum for your testimony here today.
Would you agree with me that the Veterans' Administration
has greater leeway or authority to negotiate lower drug prices?
Mr. Blum. The VA operates I think relative to the Medicare
program but with a much tighter what I would call formulary or
drug list, and that provides them more negotiating leverage
than I think what we operate within the Medicare program. And
so the way that the statutory construct for the VA payment
system has been constructed is giving the VA the freedom to
kind of manage a much tighter formulary, which gives them more
negotiating leverage to extract overall lower prices than what
the Medicare program would pay.
Senator Blumenthal. And in effect, just cutting through
what you just said and putting it in layman's terms, the VA can
negotiate lower drug prices by using the Federal Government's
bargaining power on its formulary. Is that not correct?
Mr. Blum. Sure, and I think----
Senator Blumenthal. And under Medicare, that practice, that
use of the Federal Government's bargaining power is essentially
barred; correct?
Mr. Blum. Correct.
Senator Blumenthal. And don't we have an obligation to
enable taxpayers and seniors to have lower drug prices by using
the Federal Government's bargaining power to lower those drug
prices?
Mr. Blum. I think it's fair that we have an obligation at
CMS in the Medicare program to ensure that we are managing
costs throughout the program to the best of our ability, and we
pay for drugs today within the confines of the statute that's
been given to us.
Senator Blumenthal. And it really is, in fairness to you,
Mr. Blum, the confines of the statute that, in effect,
straightjacket you. There's really no other word for it, in my
view, straightjacket you from serving the public interest by
saving taxpayers and seniors money by using the Federal
Government's bargaining power to lower drug prices.
Mr. Blum. Sure. My observation is that the payment system
that we use for Part B drugs is set very clearly by statutory
formulas. CMS operates those payment systems, but we cannot
influence those payment systems.
Senator Blumenthal. And there's no other way to view it
than as a kind of loophole, giveaway, sweetheart deal that
raises the cost of drugs at a time when the cost of drugs is
already spiraling upward; correct?
Mr. Blum. I'm sorry. I don't understand the question.
Senator Blumenthal. Well, let me put it a different way.
Wouldn't you recommend that the confines of the statute, as you
have adroitly put it, be changed so that the public interest
could be better served to lower drug prices?
Mr. Blum. I can't speak to a specific policy
recommendation, but what I can say is that if we--the Congress
believes that the pricing mechanisms or the pricing outcomes
should be different, then I believe that the statutory
construct would have to be changed.
Senator Blumenthal. Just to put it in very practical terms,
my understanding is that, in FY 2010, the VA in fact spent $3.9
billion in drugs and realized cost savings from negotiations of
$700 million. If you were to extrapolate from the current
expenditures on Medicare and prescription drugs, there would
literally be billions of dollars in savings; correct?
Mr. Blum. Well, I think you'd also have to extrapolate the
coverage that the VA programs provide relative to the Medicare
program. And it's my understanding that the VA operates a
tighter formulary, if you will, which gives them more leverage.
In order to have leverage, you have to say yes to one product
and no to another product to create that negotiating clout.
Senator Blumenthal. But even with--and I apologize for
interrupting, but my time is about to expire. Let me just make
the point, whether the formulary is tight or expansive,
negotiations enable lower prices; correct?
Mr. Blum. When there's competition, yes.
Senator Blumenthal. And the Federal Government, it seems to
me, has an obligation to taxpayers and seniors to take
advantage of competition where it exists, or enhance it where
it should be more robust in order to achieve those savings. I
recognize you operate within the confines of the statute, so I
am not asking these questions in a way that is meant to be
hostile to you personally, but I thank you very much for your
testimony today.
Mr. Blum. Thank you, Senator.
The Chairman. Just one point before we turn to Senator
Whitehouse. Senator Blumenthal, of course, you were on
legislation that would authorize Medicare to negotiate directly
with the pharmaceuticals. Is that right?
Senator Blumenthal. I am indeed, and thank you for your
leadership on that legislation, Mr. Chairman.
The Chairman. Thank you.
Senator Whitehouse.
Senator Whitehouse. Thank you, Chairman, and thank you for
holding this important committee hearing.
Why is it, Mr. Blum, that you aren't prepared to make a
policy recommendation to this committee? Is that a restriction
related to your position at CMS?
Mr. Blum. Well, I think I can speak for the
administration's position, and what the President has said is
that he is open to all ideas. He has suggested some possible
ways in April for us to reduce Medicare and Medicaid costs. One
suggestion was to think about requiring that the Medicare
program receive deeper discounts for certain drugs that are
provided through the Medicare program. But that is a statement
that I'm prepared to say here today.
Senator Whitehouse. We're often told that government should
try to run more like a business. Can you think of any business
that doesn't exercise its buying power to achieve price
advantages?
Mr. Blum. I would assume the answer is yes, that businesses
have a clear incentive to maximize revenue and lower costs, and
part of that would be through negotiations.
Senator Whitehouse. And you can't think of an example to
the contrary. I mean, that is the way business behaves;
correct?
Mr. Blum. That is my understanding.
Senator Whitehouse. So it is unusual for government to be,
at least with respect to the business model, it is a departure
from government operating more like a business to have
government be constrained by the statutory confines you talked
about and forbidden as it was in the Part D act from exercising
its negotiating leverage.
Mr. Blum. Well, the Part D legislation that was enacted in
2003 provides CMS the leverage to negotiate with Part D plans.
That authority was expanded through the Affordable Care Act.
The leverage that we have is through our contracting with Part
D private plans. But you're correct, we have no authority to
negotiate with manufacturers to receive better prices paid or
provided to our private Part D plans.
Senator Whitehouse. And does that relate back to the
Medicare Modernization Act of 2003 and its so-called
noninterference provision?
Mr. Blum. The noninterference provision prohibits Medicare
CMS from interfering with private negotiations, with private
health plans, with pharmaceutical companies, hospitals, any
other service that is being purchased by the private plan. Our
authority is to contract with the plan, but by and large we
cannot interfere with the negotiations with the plan and their
other providers or suppliers. We have authority to make sure
that the benefits are consistent with the program's
requirements, but the prices that are contracted with the plan
and the manufacturer are outside of CMS' purview.
Senator Whitehouse. Setting aside the merits or the policy
recommendations just for a moment, the National Committee to
Preserve Social Security and Medicare has estimated that nearly
$240 billion could be saved in the Medicare program over 10
years if the Secretary were authorized to negotiate drug
prices. As an estimate, do you have any comment on its
accuracy?
Mr. Blum. I've seen different estimates on such authority,
but I had not personally seen that estimate that you cite.
Senator Whitehouse. What estimate do you have or do you
credit that is out there that would reflect the potential
savings from such a change in law?
Mr. Blum. I believe the Congressional Budget Office may
have scored a similar policy. I don't recall the results, but I
believe it was lower than the numbers that you have cited.
Senator Whitehouse. One of the things that I hear from
Rhode Island seniors pretty often is that they have signed on
to a Part D plan, and once they were signed on, the formulary
then changed and the drug or drugs that they're using and
dependent on, or the reason they signed on to that Part D plan,
are suddenly either no longer available or require a different
and higher copay. In any event, they signed up for one thing,
and in midterm they got dealt another set of conditions that
they had never agreed to.
Can you tell me what role CMS can play to ensure that Part
D plans have to--can't make these midterm changes and that they
can only become effective after a period has expired that would
allow the senior to make a different set of choices, and that
you basically get what you signed up for and you're guaranteed
to get what you signed up for until you can find something
different?
Mr. Blum. Sure. What CMS requires, I believe, and this may
not be 100 percent accurate, that when that drug plan changes a
drug that's provided on the formulary midyear, the plan is
required to notify the patient, to provide a transition fill to
ensure that the beneficiary can go back to their physician to
get a new prescription.
But I--but drug prices change throughout the year, and some
manufacturers have the freedom to raise and lower prices
throughout the year. So I would be hesitant, in the interest of
ensuring that prices remain low and affordable, both for the
program and for the taxpayers, to take away Part D plans'
ability to change formularies for different circumstances,
whether the drug is deemed not effective, whether the price
goes up and the Part D plan needs to respond to keep premiums
affordable.
So our policies require that the plans provide notice and
transition, but at the same time I would be hesitant,
personally, given that we want to make sure that Part D plans
have the freedom to respond to different circumstances.
Senator Whitehouse. Thank you, Chairman.
The Chairman. Thank you very much, Senator Whitehouse.
Mr. Blum, we thank you for being here. You've been very
helpful, very informative. We're looking forward to continuing
our work with you.
Mr. Blum. Thank you very much, Senator.
Senator Corker. Mr. Chairman, could I make one comment?
The Chairman. Go ahead.
Senator Corker. I want to thank you for coming, too. And I
think in spite of the push by many of my colleagues on the
other side of the aisle to push you into direct negotiations on
Medicare Part D, I think what you said is that it has been
very, very successful at keeping prices low because of the
tremendous amount of competition that exists, and that there
may be a need in some isolated cases where only one type of
drug is available to look at a different type of arrangement.
But in Medicare Part D, generally speaking, the costs are
far lower than ever imagined, seniors have far more choices
than they ever would have, including the VA I think as you
mentioned, and from your perspective this competitive nature of
Medicare Part D has been very, very successful, and messing
with it in any way would likely lead to some unintended
negative consequences. So I thank you very much for being here
and appreciate your testimony.
The Chairman. Thank you.
We'll turn now to our second panel, if you would approach
the witness stand.
First we'll be hearing from Dr. Philip Rosenfeld, Professor
of Ophthalmology at the University of Miami. Dr. Rosenfeld has
worked on many clinical trials involving innovative treatments
for eye diseases.
Next we'll be hearing from Dr. Anthony Adamis, who serves
as a Global Head of Ophthalmology at Genentech. Dr. Adamis was
formerly a professor at Harvard Medical School and is cofounder
of Eyetech Pharmaceuticals.
Next we'll be hearing from Dr. Sean Tunis, who is founder
and director of the Center for Medical Technology Policy.
After that we'll be hearing from Lisa Swirsky. She is a
senior policy analyst for Consumers Union Health.
Finally, we'll be hearing from Dr. Scott Gottlieb. Dr.
Gottlieb is a resident fellow at the American Enterprise
Institute.
We welcome you all. We're looking forward to what you have
to say, and we'll now start with you, Dr. Rosenfeld.
STATEMENT OF PHILIP ROSENFELD, M.D., Ph.D., PROFESSOR OF
OPHTHALMOLOGY, BASCOM PALMER EYE INSTITUTE, MIAMI, FL
Dr. Rosenfeld. Chairman Kohl, Ranking Member Corker and
other distinguished members of the committee, thank you for
inviting me today to testify on this important topic. I'm Dr.
Philip Rosenfeld, Professor of Ophthalmology at the Bascom
Palmer Eye Institute of the University of Miami Miller School
of Medicine. This statement represents my own opinion and not
those of the University of Miami or the Bascom Palmer Eye
Institute.
I bring to the discussion today a real-world perspective of
the forces influencing the choice between two commonly used
drugs for the treatment of wet macular degeneration. By
studying this example, I believe we can better understand how
the current incentives in our health care system promote the
use of the most costly alternatives.
These drugs are being used to treat wet macular
degeneration, a leading cause of irreversible blindness among
the elderly worldwide. When I say wet macular degeneration, I'm
talking about the abnormal growth of blood vessels in the back
of the eye. These blood vessels leak, they bleed, and they
accelerate vision loss.
Genentech performed groundbreaking scientific research that
led to the discovery of two fabulous drugs, Avastin and
Lucentis. Both drugs block the factor that causes the blood
vessels to grow. Both drugs are derived from the same mouse
monoclonal antibody. Avastin is a full-length antibody;
Lucentis is a fragment of that antibody. Avastin is infused
through an arm vein every two weeks in cancer patients;
Lucentis is injected into the eye as often as every month.
Avastin was FDA approved for colon cancer therapy in February
of 2004; Lucentis for eye injections for wet macular
degeneration in June of 2006.
I don't have time to go into the background of why I first
injected Avastin into an eye, but it was clinically and
scientifically justified. This off-label injection was
successful and led to the international use of Avastin for a
wide range of eye diseases. The rapid spread in 2005 was fueled
by the availability of Avastin, its apparent efficacy and
safety, its low cost, and the fact that Lucentis was not yet
available, though everyone was seeking Lucentis. Even after
Lucentis was approved, though, Avastin continued to be used as
the low-cost alternative to Lucentis.
When a pharmacy follows strict USP--that's United States
Pharmacopeia--guidelines, Avastin can be prepared for $20 to
$40. Lucentis costs $2,000 a dose. Since 2005, 1,500 scientific
papers have appeared in peer-reviewed journals exploring the
safety and efficacy of Avastin. However, definitive data was
not available until the CATT trial results were published in
the New England Journal of Medicine in May of this year. Dr.
Dan Martin, chairman of the Cole Eye Institute of the Cleveland
Clinic and chairman of this National Eye Institute-sponsored
multicenter clinical trial, is here in the audience today.
In this two-year study, injections of Avastin and Lucentis
were compared in 1,200 wet AMD patients. After one year, the
Lucentis injections given monthly were comparable to the
Avastin injections given monthly. When Lucentis was given as
needed, it was comparable to Avastin given as needed. Overall,
the two treatments seemed equivalent.
There were no apparent expected adverse event differences
between the two drugs. However, Avastin was associated with an
increase in unexpected adverse events that are not thought to
be drug-related. However, these adverse events are closely
being studied in the second year of the trial.
To understand how these drugs are used in the United
States, I collaborated with Ross Brechner at Medicare, and we
found that 60 percent of physicians in 2008 used Avastin, 40
percent used Lucentis. This is looking at 100 percent database
from Part B Medicare. We saved Medicare approximately $800
million in 2008 alone by the use of Avastin.
So what determines why clinicians use one drug or the
other? We have found there are several incentives in the system
that promote Lucentis use. First, Medicare promotes the use by
the 6 percent average sales price reimbursement to physicians.
Not only does Medicare cover the cost of the drug, but they
also add 6 percent of the average sales price. That's $115
every month for a $2,000 investment. That investment is
returned every month. So overall, the physician makes a 70
percent return on that initial $2,000 on Lucentis.
In addition, CMS decreased the reimbursement for Avastin
from $50 to $7 in a hospital-based setting. This was part of a
bigger reduction that was blocked by a number of my colleagues,
specialty societies, and government officials. However, the $7
reimbursement in a hospital-based setting is still in effect.
In addition, in what's called a disproportionate share
hospital, the 340B discount program allows Lucentis to be
purchased at $1,600 and get reimbursed at $2,000. That makes a
$400 profit for each injection of Lucentis. This profit or this
rebate should go to Medicare.
Finally, Genentech has two incentive programs. One is a
rebate program reported by Andy Pollack of the New York Times,
November 2010. It's very lucrative to clinical practices. It's
based on volume use and increase in usage of Lucentis. This
rebate should not go to the clinician. It should be going to
Medicare.
And Genentech also allows the direct purchase using a
credit card, allows cash back up to 2 percent to the physician.
This rebate should go to Medicare and not the clinician. A
transaction fee should be charged by Genentech.
So while these historical details surrounding the use of
Avastin and Lucentis are unique in the annals of medicine, the
financial incentives driving the use of expensive drugs and
procedures are not. These incentives and disincentives should
be eliminated.
And finally, I inject over 4,000 eyes per year. I use about
half Lucentis, half Avastin, and as a clinician I don't want
Medicare telling me which drug to use, but I don't want my
patients worrying that my decision to inject their eyes is
being influenced by these incentives. The choice between drugs
should be based between the physician and the patient based on
efficacy, safety, and cost. It is noteworthy that, despite all
of these financial incentives, most ophthalmologists use
Avastin. This suggests that most ophthalmologists really do
care about the cost of health care.
Thank you again for this invitation, and for your
attention. Thank you.
[The prepared statement of Dr. Philip Rosenfeld appears in
the Appendix on page 53.]
The Chairman. Yes. We'll turn now to Dr. Adamis.
Before I do, did I hear you say you inject half of your
patients with one and half of your patients with the other?
Dr. Rosenfeld. When I look at my 4,000 eyes that are
injected, I use on average half Avastin in those eyes and half
Lucentis, and the decision is based between discussions with my
patient and their decision after all the options are presented
whether they want one or the other drug.
The Chairman. You let your patient make that decision?
Dr. Rosenfeld. Once they're given all that information. I
strongly believe that full disclosure is required for a patient
to understand the reasons why a needle is going to be stuck
into their eye.
The Chairman. I understand. You seem to be indicating your
independent opinion is that the drugs are similar.
Dr. Rosenfeld. That's my clinical opinion.
The Chairman. Okay. Thank you very much.
Dr. Adamis.
STATEMENT OF ANTHONY ADAMIS, M.D., VICE PRESIDENT, GLOBAL HEAD
OF OPHTHALMOLOGY, GENENTECH, INC., SOUTH SAN FRANCISCO, CA
Dr. Adamis. Chairman Kohl, Ranking Member Corker, honorable
members of the committee, thank you for inviting me here today.
I ask my full written testimony be submitted for the record.
My name is Tony Adamis. I'm the Vice President, Global Head
of Ophthalmology at Genentech. I'm an ophthalmologist and
vascular biologist by training. Prior to joining Genentech in
2009, I served in other positions in the biotech industry, as
well as 11 years at the Harvard Medical School where I treated
patients and conducted research.
Genentech is based in South San Francisco and as part of
the Roche group currently employs over 30,000 people in the
United States. Our commitment to innovation is unparalleled
within the industry, with more than 100 projects in clinical
development. In 2009 alone, Genentech Roche spent $9.1 billion
on R&D, an amount greater than any other company in the world.
Genentech's mission is to develop innovative medicines to
treat serious diseases. One of the most impactful medicines
we've ever developed is Lucentis. Before Lucentis was
available, wet AMD was the leading cause of blindness in older
Americans. The average patient lost central vision until the
ability to read, recognize faces and drive was lost.
In addition to the personal suffering and loss of
independence, the total annual cost to the U.S. GDP was
estimated to be $5.4 billion. Everything changed with the
development of Lucentis. For the first time, the average
patient with wet AMD recovered vision. When the results were
first presented at a major medical meeting, Lucentis was
publicly compared to the discovery of penicillin.
Since then, Lucentis has reduced the rate of legal
blindness by 72 percent. As a result, wet AMD may no longer be
the leading cause of blindness in older Americans. Subsequent
investments in Lucentis trials by Genentech have demonstrated
sustained gains in vision in two additional serious diseases,
retinal vein occlusion and diabetic macular edema. So to date,
Lucentis has exhibited heretofore unseen efficacy in three of
the major causes of blindness in the United States.
Drug development is lengthy, expensive, and risky. Drugs
entering clinical development have a 92 percent failure rate.
Lucentis was one of the 8 percent that succeeded. The price of
Lucentis therefore funds not only its own development but also
the 92 percent that fail and our future successes. Eleven years
and almost $1.4 billion have been spent on the development of
Lucentis, involving over 18 clinical trials and 7,100 patients
in the United States, and over 10,000 around the world.
In 1989, Napoleone Ferrara discovered vascular endothelial
growth factor, or VEGF, at Genentech. His research showed that
blocking VEGF might prove useful in the treatment of cancer, a
line of research that eventually resulted in Avastin. Around
the same time, my colleagues and I working with Dr. Ferrara
determined that VEGF was also a potential target for eye
disease. Dr. Ferrara, however, was concerned that Avastin may
not be ideal for the eye, so his team set out to create
something better. That drug became Lucentis.
For his work on Lucentis, Dr. Ferrara was awarded the
Lasker Prize in 2010. Seventy-six Lasker laureates have gone on
to win a Nobel Prize in medicine.
There are four scientific reasons why Lucentis was created.
Today I will focus on one of them, systemic safety. When drugs
are administered to the eye, they often find their way into the
bloodstream. When that happens, side effects are more likely.
Avastin was designed to last a long time in the bloodstream
so that it can have sustained activity against tumors.
Lucentis, however, was designed to exit the bloodstream very
quickly.
VEGF-blocking drugs can result in rare but serious side
effects. When an interim safety analysis in 2007 revealed a
potential stroke risk with the use of Lucentis, Genentech sent
a letter to doctors, notified the FDA, updated the package
insert, and presented the data to the medical community.
Today, there's a growing body of data that suggests off-
label Avastin may pose a greater risk than Lucentis. Two large
Medicare claim studies, one from Duke and a second from Johns
Hopkins, both identified a potentially greater risk of stroke
and death when using Avastin in wet AMD. The CATT trial also
showed a safety difference. A 29 percent increased risk of
serious side effects was seen with Avastin, with over 80
percent requiring hospitalization. Genentech's internal
analysis indicates that part of the increased risk is
consistent with VEGF blockade in the blood stream.
These data are not yet conclusive. However, it is notable
that the three largest studies to date have shown statistically
significant safety risks with the use of Avastin in wet AMD. As
the data emerge, we agree with the American Academy of
Ophthalmology and the written testimony of the American Society
of Retinal Specialists that a treatment plan must be selected
by an ophthalmologist and a patient, considering important
benefit/risk information that empowers them to make evidence-
based decisions.
Genentech is also committed to ensuring that no patient
goes without treatment due to financial barriers. Since 1985,
we have donated $2.3 billion in free medicine to uninsured
patients and more than $550 million to various independent
nonprofit organizations for copay assistance.
We're committed to working with the Congress, public health
agencies, CMS and the FDA to ensure the safety and
effectiveness of our products. Today, innovation continues at
Genentech as we seek to improve Lucentis and develop additional
breakthrough medicines. This work depends in part on the
success of Lucentis.
Thank you for the opportunity to provide my views today,
and I look forward to your questions.
[The prepared statement of Dr. Anthony Adamis appears in
the Appendix on page 61.]
The Chairman. Thank you very much, Dr. Adamis.
Now we'll hear from Dr. Tunis.
STATEMENT OF SEAN TUNIS, M.D., MSC, FOUNDER AND DIRECTOR,
CENTER FOR MEDICAL TECHNOLOGY POLICY, BALTIMORE, MD
Dr. Tunis. Mr. Chairman, Senator Corker, thanks for the
invitation to appear before the committee today. My name is
Sean Tunis. I'm the founder and CEO of the Center for Medical
Technology Policy, which is an independent nonprofit that works
to improve the quality and relevance of clinical research. I
was previously chief medical officer at the Centers for
Medicare and Medicaid Services, and I was there at the time
when some of the predecessor treatments to Avastin and Lucentis
for macular degeneration were introduced.
I just wanted to mention what hasn't been mentioned today,
that prior to Avastin or Lucentis, the treatments that were
available for macular degeneration only slowed the rate of
degradation of vision. None of them actually reversed it, and
yet Medicare was paying $2,000 to $3,000 a dose for those
drugs. So Genentech deserves some credit for having developed
the first two effective treatments for macular degeneration
that actually improve vision.
The Medicare program can almost certainly spend less on
drugs without any negative impact on health outcomes for
Medicare beneficiaries. In my view, there are at least three
important strategies that can be pursued to achieve that, at
least one of which has been discussed today.
First, Medicare should have the authority to link drug
prices more directly to health outcomes. Secondly, Medicare
should implement additional policies to promote high-priority
clinical research such as the CATT trial, which has provided
invaluable information that would support any sort of
additional clinically sensitive policies that Medicare might
introduce. And third, Medicare should develop a systematic
policy approach to promoting drug innovation. The agency is
certainly tremendously impactful on biomedical innovation, and
there's a number of potential tools that the agency could use
to promote innovation. Drug pricing is only one potential tool
and probably not the most efficient tool for promoting
innovation.
I recognize that the approaches to reducing drug spending
that we're going to talk about today are not going to save the
Medicare program from bankruptcy. These are going to require
more fundamental payment reforms and systems innovations.
However, I think it's still worth pursuing policy interventions
that can save $100 million a year or $500 million a year, et
cetera, even though by themselves, obviously, much more
significant cost savings are going to need to be pursued.
So one relatively straightforward approach to reducing
Medicare spending on drugs without negatively affecting patient
outcomes would be to restore the agency's authority to pay the
same price for drugs that produce similar benefits and harms.
Medicare's regional contractors have been adjusting prices
based on clinical effectiveness evidence for more than 15 years
through their authority called least costly alternative.
The policy rationale is that Medicare, beneficiaries, and
taxpayers should not pay more for a service or a drug when a
similar drug can be used to treat the same condition and
produce the same outcome at lower cost. There is no statutory
provision giving specific authority or prohibiting the
application of least costly alternative. CMS has considered its
reasonable and necessary statutory authority to provide the
needed legislative basis for this approach.
However, a recent court decision has constrained Medicare's
ability to use LCA determinations, and therefore restoring that
authority legislatively would restore Medicare's ability to
adjust the prices of drugs to reflect their clinical outcomes.
And as John Blum said earlier today, Medicare is moving towards
a policy approach that links payment to outcomes, and there's
no reason that that should not also apply to the outcomes for
specific technologies, not just the outcomes that providers,
hospitals, and others achieve.
The CATT trial underscores the importance for Medicare of
having the capacity to rapidly identify, design, and implement
trials on questions of substantial importance to the Medicare
program. Senator Kohl was actually instrumental in addressing
the challenges with handling copays for patients enrolled in
the CATT trial and helped to craft language addressing this
problem in the Medicare Improvements for Patients and Providers
Act of 2008. It is my understanding that that statutory
language has not been the basis for developing implementing
instructions for Medicare, and therefore it remains as
difficult as it was before to address those problems.
So one step that Medicare could take would be to develop
implementing instructions for the language that you develop,
Senator Kohl, in order to facilitate future trials like the
CATT trial, which are still quite difficult to do.
Medicare could also promote critical research by making
more systematic use of coverage with evidence development.
Coverage with evidence development is a policy tool that links
coverage of a drug or device or procedure with a requirement
that patients receiving the service are enrolled in prospective
clinical studies that would inform future decisions.
Medicare has the authority to implement coverage with
evidence development, but because it's a vague statutory
authority, the agency is reluctant to use that approach, and
therefore their ability to support the costs of new clinical
interventions in the context of clinical trials is extremely
limited, and giving them explicit statutory authority to do so
would substantially improve their ability to generate the kind
of evidence that would give not only the Medicare program but
patients and clinicians more of the kind of information they
need to make good judgments based on clinical effectiveness.
And last, I see my time has expired, but I just wanted to
make the point that Medicare does have an important influence
on biomedical innovation just by the virtue of the huge role
that it plays on the use of devices and other biomedical
services globally. So it's impossible for them to avoid having
an impact on innovation, and I think it would be extremely
valuable for the Medicare program to take a comprehensive
approach to looking at the relationship between various medical
policies and biomedical intervention, think about the range of
policy mechanisms through which innovation could be promoted,
including potentially differential drug prices. But again, it
seems that it would be useful to systematically look at ways
that this could be done rather than defaulting to a singular
approach of drug pricing.
So again, I thank you for the opportunity to share some
ideas with the committee today.
[The prepared statement of Dr. Sean Tunis appears in the
Appendix on page 69.]
The Chairman. Thank you very much, Dr. Tunis.
Ms. Swirsky.
STATEMENT OF LISA SWIRSKY, SENIOR POLICY ANALYST, CONSUMERS
UNION, WASHINGTON, DC
Ms. Swirsky. Good afternoon. Consumers Union is the
nonprofit publisher of Consumer Reports magazine. It has a long
history of advocating for improving health care and lowering
costs of drugs for consumers. So I very much appreciate the
opportunity to testify in front of the committee today.
Our popular Best Buy Drugs report reaches 100,000 readers
per month and provides rigorous evidence-based comparative
effectiveness information on a range of commonly used drugs
through our website. It's available through our website at
www.consumerreportshealth.org. We're proud to say that we make
that available free and that we do not accept any advertising.
Best Buy Drugs reports rely on credible systematic reviews
of available clinical evidence conducted by expert researchers.
We use price information from a leading health care data and
analytics company. The value added that we think we bring to
the table is that our editors and writers then translate this
very complicated clinical evidence for our readers into
consumer-friendly language and format, which is the hallmark of
our publications.
To earn a Best Buy Drug designation, a drug must generally
be at least as effective and safe as other medications in its
class and less expensive. If the data show that the brand name
drug is notably safer or works better than a lower cost
medicine, that drug gets the Best Buy designation, and I think
that's important to stress.
We have done a lot of work in the area of statins. Consumer
Reports has found that for cholesterol lowering drugs, one of
the most common medications, lower cost generics are just as
effective and safe as more expensive brands. If you are taking
this type of medicine for preventive reasons and you have not
yet had a heart attack, the generic lovastatin is as effective,
just as safe, and considerably less expensive than the brand
Lipitor. A daily dose of Lipitor will cost an individual
without insurance about $112 a month, compared to $4 a month
for lovastatin.
Diabetes medication is another area where our organization
has found low-cost alternatives to be effective and safe, and
actually in this instance even safer. An older diabetes drug,
generic metformin, is our Best Buy recommendation. It clocks in
at about $4 a month and is a bargain compared to the pricey
drug Actos, which would cost consumers $280 a month. Metformin
is also the safest. Newer medications Actos and Avandia both
carry a higher risk of increased heart failure. It's worth
noting that FDA restricted Avandia's use, proving that you
don't always get what you pay for when it comes to drugs.
We have found similar findings when it comes to pain
medications, which you can read more about in our prepared
testimony.
These real-life examples show how effective and safe
generic drugs are and how they can save consumers precious
dollars, and purchasers by the way. Our organization strongly
believes that Congress should pursue policies that improve
access to generic drugs, including passing Senator Kohl's and
Senator Grassley's bill to end collusion between brand and
generic companies to delay generic competition. CBO and the FTC
have found that these paid-for delay agreements cost Americans
billions of dollars.
In addition to promoting generics, Congress should do more
about the safety and efficacy of drugs, including reforming
Medicare and Medicaid payment processes to make use of
available evidence that lower-cost drugs are as effective as
more expensive drugs. We agree with Dr. Tunis that Congress
should consider legislation to authorize CMS to reinstate the
least costly alternative policy.
Congress may also create incentives to ensure that Part D
formularies and state Medicaid formularies carry the generic as
a preferred drug when there's strong evidence of comparability.
Of course, it goes without saying that doctors must always have
the ability to specify a brand alternative if that's in the
best interest of the patient.
Finally, Congress should act to improve the way
pharmaceutical companies convey safety and efficacy information
to consumers so that they can better understand and use
available clinical evidence to make better choices about their
treatments. Consumers Union looks forward to working with
Congress to improve the way patient safety and efficacy
information is presented to consumers so that they can make
better informed decisions about their choices. We believe in a
lot of instances when consumers are provided and armed with
good information, they will often choose the lower-cost option.
A lot of times, that's just not what they're getting from the
marketing.
In conclusion, I wanted to thank the committee for hearing
me out, and we look forward to working with the committee.
[The prepared statement of Ms. Lisa Swirsky appears in the
Appendix on page 79.]
The Chairman. Thank you very much, Ms. Swirsky.
Now Dr. Gottlieb.
STATEMENT OF SCOTT GOTTLIEB, M.D., RESIDENT FELLOW, AMERICAN
ENTERPRISE INSTITUTE, WASHINGTON, DC
Dr. Gottlieb. Thank you, Chairman Kohl, Ranking Member
Corker. Thank you for the opportunity to testify before this
committee.
Over the past decade, the drug space stands apart from
other segments of the healthcare industry in terms of how much
the underlying business model has changed. The life sciences
sector has undergone a fundamental transformation to focus on
delivering more value and more basic innovation to consumers.
Industry pipelines have also had more new compounds in
late-stage development than at any time before. More of these
new drugs are aimed at fundamentally new targets, and more
address unmet needs in medicine, including many orphan
diseases.
But despite recent progress, challenges remain. There are
still consumers priced out of health care. The cost of
developing drugs is rising sharply, and new biotech company
formation has fallen off. Too many diseases remain poorly
treated.
So we must craft policies that provide proper incentives
for new technology while making sure we are getting more value
for programs like Medicare.
Any discussion of policies that have worked to bring more
price competition to the prescription drug market and lower
overall spending has to begin with Medicare's Part D
prescription drug program. Competition between more than 1,000
drug plans has resulted in costs that are substantially less
than what was first envisioned, wider use of generic medicines
and deep discounts on branded drugs.
Now, I know there is discussion around imposing mandatory
rebates in the Part D program. These are a form of price
controls that distort commercial forces. Mandatory rebates
create a strong incentive for companies to launch drugs at
higher prices in anticipation of the payments that they will
have to provide. These rebates also discourage additional
discounting.
Moreover, as more beneficiaries come under these kinds of
tacit price control regimes, it will erode the ability of
health plans to use competitive negotiations to move their
market share and improve profit margins. This in turn will
reduce their incentive to try and drive hard bargains with drug
companies.
I know members of this committee have also considered
proposals to give the staff of Medicare least costly
alternative authority. There is nothing inherently wrong with a
payer carefully judging the clinical data supporting the use of
a particular medical product or service to determine what it
will reimburse, but Medicare is no ordinary payer. Its
decisions are widely followed. As such, Medicare has an
outsized impact on what the U.S. patients will have access to.
If Medicare were to make clinical judgments about new
technology at the time of their launch, it would also undermine
the way innovation unfolds in the life sciences. In many cases,
much of the innovation takes place post-market as new
technology is introduced and demonstrate additional benefits
from real-world use. Demanding early life cycle demonstrations
of value, however measured, skews heavily against this sort of
postmarket innovation.
We should also consider how past treatments we now view as
profound advances would have fared under an LCA policy, and we
should also consider how such a construct would affect future
investment decisions.
Policies that encourage more price competition and more
clinical competition between similar drugs can help drive more
value for beneficiaries while encouraging more opportunities
for new innovation. This gets me to the idea of merging
Medicare's drug and medical benefits, folding Part B into Part
D. There is good clinical and economic rationale for providing
drugs under a single unified program. Many private plans have
already merged their drug and medical benefits. Folding Part B
into Part D could provide substantial savings to Medicare. The
savings would be a result of greater therapeutic substitution
between oral and injectable drugs, and more price competition
between similar agents.
Now, moving Part B into Part D is enormously complex and
full of potential damaging unintended consequences. It would
need to be considered carefully. It is also worth noting that
if doing it only invites more temptation to import price
controls into the resultant drug program, that will erode
competitive forces that ultimately drive value.
Moreover, not all the savings would actually accrue to
Medicare. Some of it would need to be used to help offset the
rise in premiums and out-of-pocket costs incurred by
beneficiaries. Medicare would also have to create new codes to
compensate doctors directly at a fair and sustainable rate for
the cost of infusing drugs in their offices.
In conclusion, the drugs that are in late-stage development
and have recently been launched are more promising than at any
time in recent memory. Yet the model that has made life science
successes possible is fragile. The decisions that we make about
how we regulate these products and pay for their cost have
direct effects on whether these endeavors get undertaken in the
first place.
Thank you.
[The prepared statement of Dr. Scott Gottlieb appears in
the Appendix on page 83.]
The Chairman. Thank you very much, Dr. Gottlieb.
We'll start now by asking everybody on the panel to respond
to the question of where do we have the greatest opportunities,
in your opinion, in Medicare to help lower the costs?
We'll start with you, Dr. Rosenfeld.
Dr. Rosenfeld. Well, I think in my testimony today I've
outlined some important measures that Medicare can take.
Medicare can address the 6 percent average sales price payment
to physicians. It's really preposterous, if we think about it,
that we should be paid a percentage of the cost of the drug. It
develops a codependency between the clinician and the
pharmaceutical industry.
Moreover, we should look at this disproportionate share
hospital discount and ask why that isn't passed through to
Medicare. And we should look at these unusual decreases in
reimbursement that are still in place that incentivize the use
of Lucentis in hospital-based settings.
Moreover, if drug companies offer rebates for increased use
and the rate of increased use to physicians, it implies that
physicians are not injecting the patients they should be and
they have to be incentivized to do that. I doubt that's the
case. Those rebates are really focusing on increased
utilization by the physician, and if there is a rebate, it
should be passed on to Medicare, and there should be a limit on
how physicians purchase drugs with credit cards, and there
should be an added transaction fee or that cost should be
rebated directly to Medicare.
The Chairman. Thank you so much.
Dr. Adamis.
Dr. Adamis. It's beyond my area of expertise to make
recommendations how we could lower costs for Medicare, but
whatever is chosen by the committee and by Congress, we should
make sure that it preserves a physician's ability to choose
which medication they feel is most appropriate for a patient. I
think that's very important.
And then the second piece of it, because this is my job, is
to make sure that the incentives are still there to develop new
therapies. We're working on drugs that have to be dosed just
twice a year as opposed to injections every month, and we're
working on drugs that work better than Lucentis, hopefully. I
want to make sure those incentives stay in place so that we can
consider those programs.
The Chairman. Thank you.
Dr. Tunis.
Dr. Tunis. Yes, I think the several ideas offered in my
testimony were some of the notions that I had in terms of what
might, both in the short term and long term, lead to reductions
in prices, and that included least costly alternative, giving
the CMS, taking a more proactive role in promoting the kinds of
studies like the CATT trial, and also looking at ways in which
they could specifically incentivize high-value innovation.
The only thing I would add is you heard numerous times from
John Blum how constrained they are with their existing
statutory authority to do anything around negotiating drug
prices or responding to or setting drug prices in any way to
reflect the clinical benefits of a drug. I suspect if John was
sitting here in a few years, no longer working for the
administration, he would have told you more explicitly what
kind of authorities that they would like, but I imagine they
would be things like least costly alternative authority and
perhaps something like the ability to vary patient cost-sharing
according to the value of a drug.
So a drug that's highly cost effective would have a very
low copay so that patients would be inclined to prefer that for
economic reasons, and drugs that are extremely expensive and
produce very small incremental benefits would have higher
copays so that the patients would have to take on more of the
incremental costs, and that way the patients and clinicians are
still free to make choices. It's just not all of the financial
responsibility for the difference falls on the taxpayer; some
of it falls on the patients as well.
Currently they have no ability to vary cost-sharing based
on some judgment about the clinical effectiveness and costs of
a drug.
The Chairman. Thank you very much, Dr. Tunis.
Ms. Swirsky.
Ms. Swirsky. I just would kind of highlight some of the
same things that Dr. Tunis said about least costly alternative
policy as being a ripe avenue. I also would agree with earlier
comments about changing incentives in the Medicare program so
that physicians aren't incentivized to promote or prescribe a
higher-cost drug.
I'd also kind of reiterate or maybe go back to some of the
examples we weren't able to use in my testimony because of
time. But I think a lot of our examples of statins, proton pump
inhibitors, which are basically heartburn medications which we
can use very inexpensive generics as opposed to the expensive
version of Nexium and so forth, all of these things are used by
seniors, many seniors on a daily basis and I think are all
really ripe for policies that promote their use.
The Chairman. Thank you, Ms. Swirsky.
Dr. Gottlieb.
Dr. Gottlieb. Thank you. I think the problems with Medicare
are long-term problems, and they need long-term solutions with
respect to changes in the structure of how Medicare pays for
services. I think a lot of what we've done in recent years in
terms of just across-the-board cuts or targeting individual
products or freezing market basket rate increases doesn't
tackle the long-term underlying problems in the Medicare
program. In some cases, I think it makes true, fundamental
reform more difficult.
I think Medicare looking for ways to try to tie what it
pays for and how it reimburses to notions of value and looking
at outcomes are the kinds of payment reforms we need to pursue.
I think most of the spending, if you look at it, and most of
the waste is probably on the services side and not on the
technology side. I think it becomes much more, much easier to
target the technologies and the introduction of technologies
because you typically have one product and one sponsor, as
opposed to trying to tackle reimbursement that affects
hundreds, if not thousands of providers across the country. So
that becomes politically much more difficult, even though that
I think is what we need to ultimately address.
On the drug side, ultimately I think we need to concede the
Part D plan is working. The competitive structures in Part D
are bringing down the rate of inflation on small molecule
spending and driving higher generic drug utilization. If we
accept that, then most of the growth, if there is growth, is on
the Part B side, and Mr. Blum testified that most of that is
confined to just a handful of drugs. And quite frankly, those
are oncology products. I think as a political matter it's going
to be hard to really address some of the utilization in
oncology. I think it will be hard to tackle that.
If I put forward one competitive market-based reform that I
think could work to try to drive some higher-value utilization
of drugs, it would be moving B to D. It would address the
injectable drugs, but this would be a very hard reform,
frankly, to implement.
The Chairman. Dr. Rosenfeld, as you know now in his
prepared testimony, Dr. Adamis made reference to a study funded
by his company, Genentech, which shows safety concerns for
Avastin. I think you're in some disagreement with that, but do
you want to talk a little bit about that?
Dr. Rosenfeld. At our annual research meeting, which is
called ARVO, held in Ft. Lauderdale at the end of April,
beginning of May, Dr. Gower presented data which had been much
publicized before the presentation which has not been submitted
for publication as far as I know, and it certainly isn't peer
reviewed yet as far as I know, that there was increased risk of
hemorrhagic stroke with Avastin.
When I attended that presentation, that's not what I heard.
What I heard, and it's a common problem with Medicare
databases--and I want to thank Dr. Ross Brechner from Medicare
because he's taught me a lot about looking at Medicare
databases and all the confounding variables that one needs to
be concerned with, because the Medicare databases show you what
doctors claim happened to their patient, but you know nothing
about the patient.
So what Dr. Gower presented was that the overall stroke
rate in the United States for Medicare beneficiaries was 0.4
percent. The stroke rate among patients getting Avastin was 0.4
percent, the same, but it was lower for the Lucentis patients,
which was 0.26 percent, a difference of .15 percent.
Now, for those of us working with the Medicare databases,
and in particular knowing the distribution of how Avastin is
used and how Lucentis is used, those patients with Medicare and
full secondary insurance are more likely to get Lucentis than
Avastin. If you don't have secondary insurance and you have to
pay out of pocket, you get Avastin. These are less wealthy
patients and generally less healthy patients.
So looking at Dr. Gower's data, the Lucentis rate was lower
than the average Medicare patient, while the Avastin rate was
the same, suggesting either Lucentis protects against stroke,
which seems unlikely, or it's a different population. And that,
in fact, is what we're finding in our analysis of the Medicare
database. There are so many confounding variables. You have to
adjust particularly for wealth and concomitant diseases.
Now, the other report that was talked about was a report
out of Duke, and contrary to what we heard today--in fact, I
brought the paper along. And when these confounding variables
are addressed, the concluding paragraph is as follows: ``In
conclusion, we found no evidence of increased risks of
mortality, myocardial infarction, bleeding or stroke among
Medicare beneficiaries who received intravitreous Lucentis or
Avastin for wet AMD.''
So when authorities who deal with Medicare databases
analyze the data, they understand that you have to do this
analysis, this adjustment for confounding variables. It's an
ongoing problem and something that we're acutely aware of in
our ongoing analysis of the Medicare database.
So to answer your question, I do not believe there's any
data at this point in time to suggest an increased risk with
Avastin, though it needs to be monitored and studied further.
The Chairman. Dr. Adamis, your company has paid for a
research study that purports to show safety concerns with the
use of Avastin for macular degeneration. But the National
Institutes of Health has provided the committee with a written
statement that indicates they may not agree with these
findings. Other experts consulted by the committee also believe
that there are shortcomings in the methodology of the study
that you all conducted. Is Genentech willing to address these
criticisms?
Dr. Adamis. Of course. These were Medicare claims database
studies. The first was the one that was sponsored by us at
Johns Hopkins. It was an unrestricted grant, which means that
Dr. Gower had full control over the data and the conclusions
that she made. We had that study done because, to date, prior
to CATT, there was zero data on the safety of Avastin versus
Lucentis in large populations.
So if, for instance, the drug increases the risk of stroke
by 1 percent, you can't learn that unless you study tens of
thousands of patients. You don't have the power in the small
number of patients studied in some other trials to detect that
difference. And so the only way you can do that is with a
Medicare claims database study.
And Medicare claims database studies are not conclusive. I
agree with that. However, it was the best way to look to see if
there is a safety signal. What was surprising to us was, when
Dr. Gower completed her analysis, she in fact found the same
signal that was found in the Duke study, and that was an
increased risk of both stroke and death.
So when two studies that are very large--the Duke study
looked at the 2006 patient Medicare claims database, and the
Gower study looked at 2008 and 2009--show you the exact same
signal, although not conclusive, you don't ignore it.
And then it was surprising when the CATT data came out; and
although CATT was a 1,200 patient trial, it wasn't powered to
detect those 1 percent differences. Nonetheless it showed this
29 percent increased risk of serious side effects, with 80
percent of them landing the patient in the hospital.
So now you have three large studies showing this, none of
them definitive, but I don't think we can ignore them.
The Chairman. Okay. All right, Dr. Tunis, many people
believe that more needs to be done to give the government the
tools to address rising drug costs. In your time at CMS as
chief medical officer, Dr. Tunis, what did you find were the
biggest policy barriers to lowering drug costs and preserving
high quality?
Dr. Tunis. Again, I think this comes back to the statutory
formulas that determine what Medicare, what price Medicare has
to pay for a new drug that are completely insensitive to how
much incremental clinical benefit it provides. And one example
that's fairly well known was the example of the drug Aranesp
for anemia that was caused by cancer chemotherapy, which was a
new version of a previous and very closely related to another
drug called Procrit, which treated the same problem, anemia
from cancer chemotherapy.
Because of the pricing systems in place at the time,
Procrit would have been a substantially cheaper approach and
achieve the same clinical outcomes as patients treated with
Aranesp. But because Medicare was forced by statutory formula
to pay 95 percent of average wholesale price for Aranesp, the
Medicare program would end up spending $150 to $200 million
more per year with no additional clinical benefit, no better
treatment of anemia than if the program used only Procrit.
The agency, CMS, had no statutory authority to do anything
about that, other than pay 95 percent of average wholesale
price. What happened at the time was they used an authority in
the outpatient payment system called the equitable adjustment
authority to try to come up with a price for Aranesp that was
what was appropriate based on getting the same clinical
results. That was actually put in place. But then because of
that approach and the Medicare Modernization Act, there was
language put in that actually prohibited Medicare from ever
doing that again.
And so it seems to me that whether it's the least costly
alternative or some other version of statutory flexibility to
set prices of drugs in some way sensitive to how much
additional benefit, if any, is provided, would be a very
important way for Medicare to be able to spend less on drugs
and not harm Medicare beneficiaries in any way at all. It
wouldn't be rationing. It would just be paying the least that
the program could pay for a given level of clinical benefit.
The Chairman. All right. Before I turn it over to Senator
Corker, Ms. Swirsky, Consumers Union recently advocated to
instill a fiduciary responsibility on the pharmacy benefit
managers, the PBMs. It would require them to work for employers
and insurers rather than drug companies. So why did you take
that position, and how important do you think it is?
Ms. Swirsky. I'm not sure where that information came from.
We have not done anything on PBM since I've been there. It may
be that that was something done prior to my coming on board.
I've been at the organization for about a year. But I will be
happy to find out and to make that----
The Chairman. Are you familiar with the issue?
Ms. Swirsky. A little bit, but I don't--we have not done
anything on that recently.
The Chairman. All right.
Senator Corker.
Senator Corker. Thank you, Mr. Chairman.
It's interesting sitting up here and listening to
testimony, and Dr. Rosenfeld and Dr. Adamis seem like very good
folks who have a very strong disagreement, yet the testimony
from both of you is very credible.
The issue that Dr. Rosenfeld brought up regarding the
rebates and the fact that physicians shouldn't be paid those
rebates on some of the drugs he was mentioning that you make as
a company, what is your response to that?
Dr. Adamis. When I was practicing medicine, you would
prescribe a medicine based on what you thought was best for
your patient, and you never thought about what it meant for
your practice or your hospital, and I think that's the way it
should be done around the country.
There are these rebates, and this can't be looked at in a
vacuum because I have colleagues in South Carolina who don't
prescribe Lucentis because there's a $140 tax on it when you
use it, so it's a money loser every time you give it.
So as I said at the outset, if we could set the system up
so we're not incenting or disincenting people one way or the
other, and that really you approach the issue with equipoise
and a doctor can just be free to choose based on the evidence,
the scientific evidence, I think that would be the best of all
worlds.
Senator Corker. And so this is really--what you're leading
to is that this is something that the Federal Government has
set up regarding the rebates, not something your specific
company is doing relative to trying to drive this product.
Dr. Adamis. No. I didn't mean to convey that. So there are
rebates that the company provides, but they're----
Senator Corker. But let me just say, if it's not to--if
physicians should make decisions based on what's good for their
patient, and you say the physicians really don't make decisions
based on their own economic benefit, then why do you guys do
that?
Dr. Adamis. So the rebates actually lower the cost of the
drug to Medicare, because what happens is you're required to
report that to Federal authorities, and that goes into a
formula--and this is getting beyond my area of expertise--that
calculates that average sales price. So the average sales price
actually moves down, and the amount that Medicare reimburses
moves down. So the rebates actually lead to a lower cost of the
drug.
Senator Corker. But this is not something that you're
required to do; is that correct? By the Federal Government.
Dr. Adamis. No, but it's something that is pretty routine
in the industry. But we're not required to do it.
Senator Corker. Wouldn't it also lower the price to
Medicare if you just charged a lower price without the rebate
to the physician?
Dr. Adamis. Correct, it would.
Senator Corker. I mean, again, you sounded pretty credible
on the front end, but what you're telling me right now is not
particularly credible.
Dr. Adamis. In what sense, sir?
Senator Corker. Well, if the purpose in doing this is to
lower the cost of the drug to the end user or the end payer,
and you could get there the same way by just charging 6 percent
less or giving a rebate to the physician who, I guess, keeps
that, it seems to me that you are, in fact, paying that rebate
to drive physicians to use your drug.
Dr. Adamis. I can't say that that is the purpose behind it.
The way it's structured--and I'm getting out of my area of
expertise because I don't set these programs up, and I don't
work in the commercial area of the organization. But it's for
high-volume users of the drug. They're the ones who are
eligible for the rebate.
Senator Corker. So they make even more money by prescribing
your drug, and yet your testimony was that their compensation
isn't what drives them to use your drug.
Dr. Adamis. I think the rebate, in a vacuum, if you looked
at it that way, could be viewed as an incentive. But as I said,
there are some jurisdictions, South Carolina being one of them,
where actually even with the rebate it's a money loser. So in a
perfect world it would be great if docs had an opportunity to
prescribe what they want without any incentives.
Senator Corker. But in a perfect world, you could do that
yourself, right? I mean, in the world we live in today, which
is not perfect----
Dr. Adamis. I can't control, our company can't control
South Carolina's taxes.
Senator Corker. But let's say in Tennessee, where I live--
--
Dr. Adamis. I don't know, sir.
Senator Corker. I mean, am I missing something here? Am I--
--
Dr. Adamis. I'm just getting into an area that is not my
area of expertise. I'm the scientist in the company. I work in
development, and I came primarily to discuss CATT and the
differences between Lucentis and Avastin.
Senator Corker. And I really didn't come to chase the
rebate issue. I just heard you mention it. So am I missing
something, Dr. Rosenfeld?
Dr. Rosenfeld. Well, Dr. Adamis is correct. In South
Carolina, it's a unique situation where there's a state tax on
drug revenues, even Medicare Part B drug revenues. But in the
rest of the country, the rebate is focused on high-volume users
with the intent to increase their use even more.
Senator Corker. So that a physician like you would
prescribe that drug more than another drug because you'd make
more money?
Dr. Rosenfeld. Well, I'm not in the rebate program, but I
know several large-volume practices that make a lucrative sum
every month from the rebate program.
Senator Corker. I wasn't really planning to chase that, but
it was a comment made, and I appreciate the discussion.
So, Mr. Gottlieb, on the idea of combining Parts B and D in
Medicare and some of the difficulties you mentioned that might
come with that, you threw it out there. It's a pretty big idea.
What are some of the immediate issues you think that might be
problematic with that type of a combination?
Dr. Gottlieb. I think the discussion around rebates gets us
some of both the attraction of doing it and the complexities of
doing it. I mean, part of why the rebates exist in the market
at all, or even the spread on ASP, is to help compensate
physicians for the cost of delivering drugs.
And I think the existence of these rebates in the market,
it's hard to look at them in isolation around a particular
product because the existence of rebates market-wide, and they
exist marketwide, creates terrible distortions in the market.
If you look at what's going on in the 340B program, which
was mentioned here, that has resulted in terrible gaming where
the 340B hospitals are buying up local oncology practices for
the purposes of capturing the spread on the drugs that they're
able to acquire at a lower price and then reselling them at a
higher price. And so they're capturing that revenue. So you're
seeing oncology practices consolidating around 340B hospitals,
which is probably the last thing we want to see as a public
health matter.
So I think the existence of these things in the market
across the board is creating bad distortions.
In terms of just moving Part B into Part D, I think it
would be enormously complex but doable, and we've talked about
it in the past. I worked at Medicare and Medicaid in the 2004-
2005 timeframe, and it was something that was talked about, and
talked about even in the context of MMA. Premiums would go up,
out-of-pocket costs would go up for beneficiaries, so you'd
have to offset that. You'd have to figure out a way to pay
physicians directly for the true costs of the administration of
the drugs. Somehow you'd have to, if you still do it under a
buy and build model, where the physicians acquire the drug,
somehow you'd have to offset the cost of that acquisition for
the physician. There are probably financial arrangements that
could do that, but you'd have to also pay for the
infrastructure for the physician to be able to do that. Those
are just some of the complexities that would ensue.
You'd also have the reality that for certain products that
are truly breakthrough products for which there is no
competition, under the Part D scheme you'd probably potentially
see prices go up. I don't think that's necessarily a bad thing
because I think it would reflect the fact that they're able to
take price increases because they represent true innovation in
the marketplace. But in other cases where there might be oral
drugs that compete with injectable drugs, you might see more
utilization of the oral agents, which would invariably provide
cost savings to Medicare because it would be cheaper to
deliver.
The last thing to keep in mind is that we're also entering
an era right now where there's going to be multiple drugs on
the market to attack a particular target. So if you have a
target like VEGF or other kinds, CD20, CD30, there might be
multiple agents that all attack the same target. You want the
decision about using a particular agent to be driven by the
clinical circumstances and what's best for the patient, not
which scheme it's in. And right now you have examples where a
decision might be driven by what scheme it's in, Part B versus
Part D.
Senator Corker. So those are a lot of complications. They
seem like vague ones. As to the idea of combining B and D, it's
a real idea, or is that just a throw-out idea?
Dr. Gottlieb. I think it's a real idea, and it's an idea
we've talked about in the past. The reason I caveat it with all
the complications is----
Senator Corker. Sounds like one of these advertisements for
drugs on television.
Dr. Gottlieb. What concerns me is that once it gets into a
political context, some of these things that need to be
addressed might not be adequately addressed.
So, for example, where is going to be the assurance that
physicians are compensated for the cost of truly delivering the
drugs in their office? We've seen under the physician payment
scheme that physician costs have increased and payments have
stayed stagnant, so their effective income has been eroded.
So those are the kinds of things that worry me, that once
this kind of idea gets in the political context, the things
that will truly make it successful and competitive won't be
adequately addressed. What's the assurance that a future
Congress two years from now isn't going to want to impose price
controls in the Part D scheme to address the previously Part B
drugs? There is no assurance there. And so you would want to
see those things addressed in the legislation.
Senator Corker. Dr. Tunis, you mentioned--you may have
adequately discussed the notion of prescribing drugs based on
outcomes, or paying for them based on outcomes, and we hear
that a lot. You know, there was a lot of debate about that
during the discussions regarding health care reform, and those
of us who do what we do up here never were able to grasp a real
way of making that happen with other providers. I know that CMS
is working towards that end now, but do you want to expand any
more on that notion? It's hard for me as a layman to understand
how you really make that happen, especially as it relates to
prescribing drugs.
Dr. Tunis. So there's complicated versions of it, I guess,
but in some ways the simplest----
Senator Corker. And those probably won't work on us.
Dr. Tunis. Right. I won't give you that one.
But the simplest version again I think comes back to some
notion of reference pricing, least costly alternative, or what
we did back in Medicare with the anemia drugs, which was called
functional equivalence at the time, which is--but I'll give the
example of what led to the court case that took away Medicare's
ability to use this least costly alternative approach.
It was for two drugs to treat asthma in children and
adults. But basically there was one drug that was a generic
drug that was 10 cents to inhale it, and then there was another
drug that was developed which was very closely chemically
related that was $1.10, so 10 times the price. And when you
actually looked at the clinical studies to see how much they
opened up the lung airways, how much they freed up people's
ability to breathe, it was close to identical. There was no
clear information to suggest that there was a clinical reason
for either a patient or a physician to want to use the more
expensive one.
And so under those circumstances, after very careful
review, the Medicare contractors tried to apply the least
costly alternative approach, and basically to pay essentially
10 cents and you pick your drug. We'll pay 10 cents whether you
use the really expensive one or the cheap one based on the fact
that there's no clinical difference, and that was taken to
court. And the reason, as I understand it, that the court
decided that Medicare could not do that was because the
Medicare Modernization Act told Medicare you have to pay ASP
plus 6 percent, and ASP plus 6 percent for the more expensive
drug was 10 times the price.
So, you know, that's why in my testimony it seems that at a
minimum, in situations where there's a pretty good level of
confidence that you get the same clinical benefits for 10 cents
or for $1.10 per treatment, there's no reason that the Medicare
program should pay $1.10. The only argument that I've ever
heard about why they should is that that extra money can then
be circulated back to support innovation, or it creates an
incentive for pharmaceutical companies to invest in new
treatments, and that's why I added the last part of my
testimony, which was, well, that certainly does encourage
innovation. If you spend more money for things, people are
going to want to invest more money to create them. But if it's
not creating any more value for the Medicare beneficiaries,
that doesn't seem like the best way to incentivize innovation
necessarily.
I don't know if that cleared it up at all, but that's the--
--
Senator Corker. It seems like that a competitive market and
keeping things competitive, much as has been alluded to in
earlier testimony regarding Medicare Part D, would actually
drive towards that end anyway, would it not?
Dr. Tunis. I think because in Medicare Part D the
prescription drug plans have a lot more freedom to use pricing
tools to manage their benefits. That's exactly how they get the
costs down. When you have drugs that are paid for under Part B
and under the statutory constraints or lack of statutory
flexibility is where you get these what seem like unjustifiable
price differences, I don't think that would happen if those
were products----
Senator Corker. In Medicare Part D.
Dr. Tunis. Yes, exactly.
Senator Corker. So we had another Senator talk about some
of his concerns about IPAB and just decisions that can be made
by groups of unelected folks, if you will.
But using the same line of thinking, if you were a patient
who needed chemotherapy of some type and, to use the same
analogy, there was only a 20 percent chance that it was going
to be effective for you but it was the only thing left, the
only chance left, if you will, for some type of treatment that
might work on that type of disease, how would you employ the
kind of thing you're talking about?
Dr. Tunis. What I'm talking about wouldn't really come into
play there just because we're talking about two choices that
are clearly equivalent. In the case where you're talking about
something that's better, a drug that's better by some measure
and lots more expensive, so it comes up questions about is it
actually worth the money, for example, the recent Medicare
decision to pay for Provenge to treat prostate cancer is a good
example, where it's $90,000 or $100,000 for a treatment that
maybe on average extends life for three to four months, and
that's the kind of situation where really nobody wants to touch
it. And the fact that the National Institute of Clinical
Excellence in the U.K. might well decide that that's not a
cost-effective use of collective resources doesn't seem to me
like a place that you all want to venture into or I would
really want to venture into.
When you really look at it in terms of all of the downward
pressure that there's going to be on finding some way to
constrain spending in the Medicare program over the next 10
years, it's hard to believe we're going to be able to do all of
that without getting into some sensitive areas of not being
able to provide everything that doctors and patients might
decide is what's in their best interests. But I'm not able to
provide a lot of solutions today.
On that kind of example, the one thing I will say is, to
some degree, all of the different options that are out there
for trying to constrain spending are just a matter of who you
decide is going to take on their shoulders the weighing of
costs against benefits. And when the government does it, it's
government bureaucrats interfering with clinicians and
patients. When you put financial incentives on doctors to be
cost conscious, then essentially--there's no polite way of
saying it--doctors don't want to ration care for their
patients. And if you put more cost sharing on patients by
higher deductible plans or adjusting benefit designs, you're
just asking patients to ration their own care.
So it's not a matter of whether or not you ration. It's
just who you decide is going to be the rationer.
Senator Corker. Mr. Chairman, I want to thank you for the
hearing. It's amazing to me. I know that most of these
witnesses were chosen by the majority, which is the way things
work around here. But it's amazing to me that in every case, it
seems like they believe that competitive market forces like we
have in Medicare Part D are what drive choice and drive better
decisions, and that rebates or things that are distortive like
government getting involved in setting rebate levels and making
choices really foul the process up tremendously.
So I thank you for this very clear signal that everything
we need to do, from these witnesses anyway, that everything we
need to do needs to move us towards much, much greater
competition and innovation, and I couldn't agree with that
more, and I thank you for providing these outstanding
witnesses.
The Chairman. Well, I too think, Senator Corker, that we've
had a great hearing and shed much light on the question of
prescription drugs, their costs, and what we might do to
alleviate those costs on behalf of consumers. I think that my
conclusions might be somewhat different than Senator Corker's,
but that's why we're here and that's why we debate and
hopefully move the ball forward.
But you've all done a great job of shedding light on the
issue, and we thank you for coming.
[Whereupon, at 4:14 p.m., the hearing was adjourned.]
APPENDIX
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