[House Hearing, 114 Congress]
[From the U.S. Government Publishing Office]


                     TREATING THE OPIOID EPIDEMIC:
    THE STATE OF COMPETITION IN THE MARKETS FOR ADDICTION MEDICATION

=======================================================================

                                HEARING

                               BEFORE THE

                            SUBCOMMITTEE ON
                           REGULATORY REFORM,
                      COMMERCIAL AND ANTITRUST LAW

                                 OF THE

                       COMMITTEE ON THE JUDICIARY
                        HOUSE OF REPRESENTATIVES

                    ONE HUNDRED FOURTEENTH CONGRESS

                             SECOND SESSION

                               __________

                           SEPTEMBER 22, 2016

                               __________

                           Serial No. 114-97

                               __________

         Printed for the use of the Committee on the Judiciary
         
         
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                      COMMITTEE ON THE JUDICIARY

                   BOB GOODLATTE, Virginia, Chairman
F. JAMES SENSENBRENNER, Jr.,         JOHN CONYERS, Jr., Michigan
    Wisconsin                        JERROLD NADLER, New York
LAMAR S. SMITH, Texas                ZOE LOFGREN, California
STEVE CHABOT, Ohio                   SHEILA JACKSON LEE, Texas
DARRELL E. ISSA, California          STEVE COHEN, Tennessee
J. RANDY FORBES, Virginia            HENRY C. ``HANK'' JOHNSON, Jr.,
STEVE KING, Iowa                       Georgia
TRENT FRANKS, Arizona                PEDRO R. PIERLUISI, Puerto Rico
LOUIE GOHMERT, Texas                 JUDY CHU, California
JIM JORDAN, Ohio                     TED DEUTCH, Florida
TED POE, Texas                       LUIS V. GUTIERREZ, Illinois
JASON CHAFFETZ, Utah                 KAREN BASS, California
TOM MARINO, Pennsylvania             CEDRIC RICHMOND, Louisiana
TREY GOWDY, South Carolina           SUZAN DelBENE, Washington
RAUL LABRADOR, Idaho                 HAKEEM JEFFRIES, New York
BLAKE FARENTHOLD, Texas              DAVID N. CICILLINE, Rhode Island
DOUG COLLINS, Georgia                SCOTT PETERS, California
RON DeSANTIS, Florida
MIMI WALTERS, California
KEN BUCK, Colorado
JOHN RATCLIFFE, Texas
DAVE TROTT, Michigan
MIKE BISHOP, Michigan

           Shelley Husband, Chief of Staff & General Counsel
        Perry Apelbaum, Minority Staff Director & Chief Counsel
                                 ------                                

    Subcommittee on Regulatory Reform, Commercial and Antitrust Law

                   TOM MARINO, Pennsylvania, Chairman

                 BLAKE FARENTHOLD, Texas, Vice-Chairman

DARRELL E. ISSA, California          HENRY C. ``HANK'' JOHNSON, Jr.,
DOUG COLLINS, Georgia                  Georgia
MIMI WALTERS, California             SUZAN DelBENE, Washington
JOHN RATCLIFFE, Texas                HAKEEM JEFFRIES, New York
DAVE TROTT, Michigan                 DAVID N. CICILLINE, Rhode Island
MIKE BISHOP, Michigan                SCOTT PETERS, California

                      Daniel Flores, Chief Counsel

                      Slade Bond, Minority Counsel
                           
                           
                           C O N T E N T S

                              ----------                              

                           SEPTEMBER 22, 2016

                                                                   Page

                           OPENING STATEMENTS

The Honorable Tom Marino, a Representative in Congress from the 
  State of Pennsylvania, and Chairman, Subcommittee on Regulatory 
  Reform, Commercial and Antitrust Law...........................     1
The Honorable Henry C. ``Hank'' Johnson, Jr., a Representative in 
  Congress from the State of Georgia, and Ranking Member, 
  Subcommittee on Regulatory Reform, Commercial and Antitrust Law     2
The Honorable John Conyers, Jr., a Representative in Congress 
  from the State of Michigan, and Ranking Member, Committee on 
  the Judiciary..................................................     3
The Honorable Bob Goodlatte, a Representative in Congress from 
  the State of Virginia, and Chairman, Committee on the Judiciary    59

                               WITNESSES

Anne McDonald Pritchett, Ph.D, Vice President, Policy and 
  Research, Pharmaceutical Research and Manufacturers of America 
  (PhRMA)
  Oral Testimony.................................................     6
  Prepared Statement.............................................     9
David R. Gaugh, R.Ph., Senior Vice President for Science and 
  Regulatory Affairs, Generic Pharmaceutical Association
  Oral Testimony.................................................    20
  Prepared Statement.............................................    22
Mark Merritt, President and Chief Executive Officer, 
  Pharmaceutical Care Management Association
  Oral Testimony.................................................    31
  Prepared Statement.............................................    33
Eric Ketcham, M.D., American College of Emergency Physicians 
  (ACEP), Medical Director, Emergency Department and Urgent Care, 
  Co-Medical Director, EMS San Juan Regional Medical Center
  Oral Testimony.................................................    40
  Prepared Statement.............................................    42
Robin Feldman, Esq., Harry and Lillian Hastings Professor of Law, 
  Director of the Institute for Innovation Law, UC Hastings 
  College of the Law
  Oral Testimony.................................................    55
  Prepared Statement.............................................    57

          LETTERS, STATEMENTS, ETC., SUBMITTED FOR THE HEARING

Material submitted by the Honorable Henry C. ``Hank'' Johnson, 
  Jr., a Representative in Congress from the State of Georgia, 
  and Ranking Member, Subcommittee on Regulatory Reform, 
  Commercial and Antitrust Law...................................    64

                                APPENDIX
               Material Submitted for the Hearing Record

Response to Questions for the Record from Anne McDonald 
  Pritchett, Ph.D, Vice President, Policy and Research, 
  Pharmaceutical Research and Manufacturers of America (PhRMA)...    80
Response to Questions for the Record from David R. Gaugh, R.Ph., 
  Senior Vice President for Science and Regulatory Affairs, 
  Generic Pharmaceutical Association.............................    83
Response to Questions for the Record from Mark Merritt, President 
  and Chief Executive Officer, Pharmaceutical Care Management 
  Association....................................................    85
Response to Questions for the Record from Robin Feldman, Esq., 
  Harry and Lillian Hastings Professor of Law, Director of the 
  Institute for Innovation Law, UC Hastings College of the Law...    87
Review--``From morphine clinics to Buprenorphine: regulating 
  opiod agonist treatment of addiction in the United States''....    92
Prepared Statement of Property Casualty Insurers (PCI) 
  Association of America...................................101
                       deg.OFFICIAL HEARING RECORD
          Unprinted Material Submitted for the Hearing Record

Prepared Statement of Louis J. Milione, Deputy Assistant Administrator, 
    Office of Diversion Control, Drug Enforcement Administration. This 
    material is available at the Subcommittee and can also be accessed 
    at:

    http://docs.house.gov/Committee/Calendar/
ByEvent.aspx?EventID=105353

Memorandum from Charles O'Keeffe, Professor, School of Medicine, 
    Department of Pharmacology and Toxicology, Virginia Commonwealth 
    University. This material is available at the Subcommittee and can 
    also be accessed at:

    http://docs.house.gov/Committee/Calendar/
ByEvent.aspx?EventID=105353

 
 TREATING THE OPIOID EPIDEMIC: THE STATE OF COMPETITION IN THE MARKETS 
                        FOR ADDICTION MEDICATION

                              ----------                              


                      THURSDAY, SEPTEMBER 22, 2016

                       House of Representatives,

                  Subcommittee on Regulatory Reform, 
                      Commercial and Antitrust Law

                      Committee on the Judiciary,

                            Washington, DC.

    The Subcommittee met, pursuant to call, at 2 p.m., in room 
2237, Rayburn House Office Building, the Honorable Tom Marino, 
(Chairman of the Subcommittee) presiding.
    Present: Representatives Marino, Goodlatte, Collins, 
Ratcliffe, Bishop, Johnson, Conyers, DelBene, Cicilline, and 
Peters.
    Staff Present: (Majority) Anthony Grossi, Counsel; Andrea 
Woodard, Clerk: and (Minority) Slade Bond, Minority Counsel.
    Mr. Marino. The Subcommittee on Regulatory Reform, 
Commercial and Antitrust Law will come to order. Without 
objection, the Chair is authorized to declare recesses of the 
Committee at any time. And I would like to make clear for our 
guests that are here, votes have been moved up and another 
series has been put in.
    We have about 2 hours, maybe a little less, before they are 
going to call votes and I have asked my colleagues, and they 
agree we are going to stick to the 5-minute rule on questions. 
So, when we break, it will be the end of the hearing because I 
do not want to keep you people here for an hour and a half to 2 
hours.
    We welcome everyone to today's hearing on ``Treating the 
Opioid Epidemic: The State of Competition in the Markets for 
Addiction Medicine,'' and I now recognize myself for my opening 
statement.
    Sadly, the opioid epidemic facing our country is an issue 
that we are all too familiar with. In 2014, drug overdoses 
overtook car crashes as the leading cause of accidental death 
for the first time in history.
    In response to this growing epidemic Congress passed a 
``Comprehensive Addiction and Recovery Act of 2016'' which was 
signed into law on July 22 of this year. This legislation, 
which included several bills that originated in the Judiciary 
Committee, is an important measure that will help aid State and 
Federal authorities in fighting opioid abuse and addiction. 
However, one aspect on the opioid epidemic that has not 
received significant attention, is the market for the drugs 
that treat opioid overdoses and addiction.
    Today's hearing will focus on this issue and explore the 
state of competition in these important markets. There are a 
number of drugs that are used to treat opioid overdoses and 
addiction, but two of these drugs have become prominent and 
will be the principal focus on our hearing. The first is 
Naloxone and the second is Buprenorphine. Did I have that 
correct, doctors? Fine, because from now on it is just going to 
be BUP.
    Recently, its primary use has been to treat opioid 
overdoses in an emergency setting. The next drug that we will 
touch a little bit on in addition to BUP, as I said earlier, 
will be Naloxone. Naloxone is a drug that's been around since 
the 1970s.
    Its effect is swift and dramatic, and it can literally 
bring an overdosed person back to life. BUP has also existed 
for decades and is a drug that is used in the treatment of 
opioid addiction. BUP generally is used as part of an ``opioid 
substitution treatment plan'' where it replaces a more potent 
and harmful opioid. The goal of this type of treatment is 
tapering the patient completely off of all opioids, including 
BUP. The period that a patient is prescribed the drug can vary 
greatly, from a little as a few weeks to years. Because BUP is 
an opioid, it is a regulated and controlled substance by the 
United States Drug Enforcement Agency, otherwise known as the 
DEA. Further owning to its abuse potential, BUP oftentimes is 
combined Naloxone to mitigate the possible misuse of the drugs.
    In recent years, demand for these drugs has increased 
sharply. As a result, there have been reports that they have 
become hard to obtain, and in some instances prices for these 
drugs have risen during this period of increased demand. At the 
same time, innovative new applications of long developed drugs 
present first responders and family members with the ability to 
address overdose and addiction. As a strong support of the free 
markets, I believe that the best remedy to address scarcity and 
high prices is increased competition.
    And so, today we will explore the complex factors that 
influence competition in the market for addiction medicine. 
Specifically, we will hear details about whether prices are in 
fact increasing for these drugs, the level of competition that 
exists in these markets, how Federal regulation influences 
competition, whether the antitrust laws are equipped to address 
any anticompetitive conduct, and whether the Antitrust 
Enforcement Agencies are appropriately policing unlawful 
behavior in these markets. We have an excellent panel of 
witnesses that will provide invaluable insight to these 
important issues, and I look forward to hearing their 
testimony.
    The Chair now recognizes the Ranking Member of the 
Subcommittee on Regulatory Reform, Commercial and Antitrust 
Law, Mr. Johnson of Georgia, for his opening statement.
    Mr. Johnson. Thank you, Mr. Chairman. Today's hearing is an 
important and welcome opportunity to discuss drug price 
competition in the market for treating opioid addiction. Opioid 
addiction is a devastating public health emergency in many of 
our communities. Strongly linked to the prescription of opioid 
pain killers, the Center for Disease Control reports that 
opioids contributed to the deaths of 28,647 Americans in 2014. 
While there are many factors that have contributed to this 
crisis concerns have been raised that common treatments for 
opioid addiction have become more costly. In November 2014, the 
New York Times reported that Naloxone----
    Mr. Marino. There are several ways to say that, believe me. 
I checked it on the Internet there are multiple ways to say it.
    Mr. Johnson. Naloxone, okay. It has been reported that this 
drug, a common treatment for opioid addiction and overdoses, 
had experienced severe price spikes. Alarmingly in my home 
State of Georgia police departments report that the price of 
drug kits containing Naloxone have increased from $22 to $40. I 
am concerned that in addition to costing States millions of 
dollars, these spikes have decreased access and undermined the 
ability of law enforcement agencies and local health responders 
to combat exploding opioid crisis.
    Unfortunately, for many, these concerns extend to the 
markets for other lifesaving treatments as well. For example, I 
am personally concerned about the high cost of the new 
treatment for Hepatitis C, a virus that affects more than 4 
million Americans and which costs nearly $75,000.
    While this form of treatment is a significant advancement, 
particularly for patients with a form of the disease that is 
difficult to treat, there is little doubt that Americans should 
not have to choose between liver disease and extreme financial 
hardship when making healthcare choices. As millions of 
American struggle in the fight against this silent epidemic, 
treatments must be accessible and affordable.
    According to a study by Dr. Aaron Kesselheim and others 
recently published in the Journal of American Medical 
Association, one of the driving forces in high drug prices is 
protection from competition through market exclusivity. Our 
patent system is designed to promote innovation by conferring a 
limited monopoly on inventions that are novel, useful, and non-
obvious. It is critical that our polices continue to place a 
high value on innovation. As the Department of Health and Human 
Services found in 2012, leading research indicates that the 
economics literature generally indicates that innovation in 
medical products has produced tremendous benefits for U.S. 
consumers lead longer and healthier lives.
    But it is equally important that patent extension 
applications are carefully scrutinized to ensure competition in 
drug markets through generic drug availability. As Dr. 
Kesselheim's study noted, there is little evidence that pro-
competitive policies will hamper innovation. In fact, they may 
even drive new therapies to market. I look forward to today's 
hearing. We have a truly excellent panel of witnesses and I 
yield back the balance of my time.
    Mr. Marino. Thank you. The Chair now recognizes the Ranking 
Member of the full Judiciary Committee, Mr. Conyers of 
Michigan, for his opening statement.
    Mr. Conyers. Thank you, Mr. Chairman. Welcome to our 
distinguished panel, particularly Professor Feldman of the 
Hastings College of Law. Sudden and sharp increases in the cost 
of lifesaving prescription medications have caused much public 
outcry. Most recently regarding substantial spike in the price 
of EpiPen which is used to treat life threatening allergic 
reactions.
    Although today's hearing focuses on competition in the 
markets for a particular set of lifesaving drugs, namely those 
that treat opioid addiction, I hope that there are some broader 
lessons that we can draw from our discussion today.
    To that end, I would like our witnesses to address, if they 
can, the following issues. The witnesses should discuss the 
real life consequences of the opioid addiction epidemic and the 
impact of rising prices for medications that treat opioid 
addiction. According to the Centers for Disease Control and 
Prevention, there are more than 28,000 deaths in 2014 resulting 
from opioid overdoses. In fact, 6 out of 10 drug overdose 
deaths that year resulted from opioid overdoses.
    Medications like Naloxone revive an opioid overdose victim 
in the critical moments after he or she stops breathing as the 
result of an overdose. Yet, the price of this drug, in both its 
generic and branded forms, has skyrocketed in recent years. 
According to public health and police officials, prices for the 
drug have increased by 50 percent or more according to some 
reports.
    As a result, the ability of emergency responders and 
individuals to purchase this critical lifesaving medication is 
being jeopardized. Other generic and branded medicines that are 
designed to gradually ween addicts from their opioid use have 
also seen similar price increases. As the statistics 
demonstrate, addressing the consequences of these price 
increases is no mere academic matter. It is beyond the dispute 
that such price increases have had a devastating impact on 
patients, their families, insures, first responders, and 
healthcare providers.
    In addition, I would like the witnesses to consider the 
current law whether the current law strikes a proper balance 
between incentivizing investment in new pharmaceutical products 
and ensuring vigorous competition.
    Under both our patent and regulatory systems manufactures 
of brand name drugs are entitled to temporary exclusivity 
periods for their products, during which other firms are 
prevented from offering competing products. These exclusivity 
periods are designed to provide an economic incentive for 
manufacturers to invest in developing new products. But the 
result is that prices for brand name drugs remain high. After 
the exclusivity periods end, competition in the form of the 
introduction of generic versions of the brand name drug is 
supposed to lead to decreases in drug prices.
    Indeed, the availability of generics is the primary means 
of insuring competition in low prices in pharmaceutical 
markets. Nevertheless, there is a concern that some brand name 
manufacturers have manipulated the current patent and 
regulatory regimes to extend what our supposed to be their 
time-limited monopolies. We ought to explore whether there 
should be a better balance.
    And finally, the witnesses should, if they can, address the 
factors responsible for the skyrocketing cost of generic opioid 
addiction drugs and the actions that Congress should take in 
response. Prices for almost all opioid addiction medicines have 
risen, not just for those for brand name products. This 
situation undermines the competition based rational for 
encouraging generics to enter the market in the first place. We 
and Congress need to focus on constructive ways to respond to 
this problem.
    And so accordingly I look forward to hearing the thoughtful 
suggestions that I know will come from our witnesses today. 
Thank them for their participation and thank the Chairman.
    Mr. Marino. Thank you. The Chairman of the full Committee, 
Mr. Goodlatte, will be here shortly so we will reserve time for 
his opening statement. But without objection, other Members' 
opening statements will be made part of the record.
    I will begin by swearing in our witnesses before 
introducing them. Would you please stand and raise your right 
hand?
    Do you swear that the testimony that you are about to give 
before this Committee is the truth, the whole truth, and 
nothing but the truth, so help you God? Let the record reflect 
that the witnesses have responded in the affirmative. Please be 
seated.
    Dr. Anne McDonald Pritchett is the vice president of Policy 
and Research at the Pharmaceutical Research Manufacturers of 
America. Prior to joining PhRMA, she worked in the Office of 
National Drug Control Policy for almost 8 years.
    Dr. Pritchett earned her bachelor's degree in English and 
Graphic Design from Virginia Tech, her master's in Public 
Policy from George Mason University, and her doctorate in 
Public Policy and Public Affairs from Virginia Tech. Welcome, 
doctor.
    Mr. David Gaugh is the senior vice president of Science and 
Regulatory Affairs for the Generic Pharmaceutical Association. 
Prior to joining GPhA, Mr. Gaugh was the vice president and 
general manager of Bedford Laboratories and has otherwise been 
engaged in the pharmaceutical industry for years. Mr. Gaugh is 
a registered pharmacist and a graduate of the University of 
Wyoming School of Pharmacy. Welcome.
    Mr. Mark Merritt has served as the president and CEO of the 
Pharmaceutical Care Management Association, PCMA, since 2003, 
which is the National Association representing America's 
Pharmacy Benefit Managers, or known as PBMs, that collective 
administrative prescription drug plan for more than 266 million 
Americans.
    Prior to joining PCMA Mr. Merritt served as a senior 
strategist with America's Health Insurance Plan and PhRMA. Mr. 
Merritt received both his bachelor's degree and his master's 
degree from Georgetown University. Welcome, sir.
    Dr. Eric Ketcham, M.D., is the current president of the New 
Mexico Chapter of the American College of Emergency Physicians. 
Dr. Ketcham is also the medical director of the Emergency 
Department and Urgent Care and the Co-Medical Director of the 
EMS at the San Juan Regional Medical Center in New Mexico.
    Dr. Ketcham also served our country in the U.S. Navy as a 
second-class petty officer, aviation ordnanceman in the Strike 
Fighter Squadron 11 and later in the Naval Reserve as a first-
class petty officer.
    Dr. Ketcham earned his bachelor's degree in economics and 
Russian studies from the University of Colorado; his MBA from 
the University of Texas at Dallas; and his medical degree from 
the University of Colorado School of Medicine. He completed his 
residency at the University of Michigan Hospital and Saint 
Joseph's Mercy Hospital. Welcome, sir.
    Professor Robin Feldman holds the Harry and Lillian 
Hastings chair and is also the director of the UC Hastings 
Institute for Innovation Law. Professor Feldman is a prolific 
author on among other things, intellectual property, antitrust 
and pharmaceutical issues. She has provided testimony and 
commentary for other congressional Committees, the Federal 
Trade Commission, the Department of Justice, the Patent and 
Trademark Office, and the National Academy of Sciences.
    Professor Feldman earned her bachelor's degree from 
Stanford University and her J.D. from Stanford Law School where 
she graduated Order of the Coif. Welcome.
    Each of the witnesses' statements will be entered into the 
record in its entirety. I ask that each witness summarize his 
or her testimony in the 5 minutes or less. And to help you stay 
within that time, there is a timing light in front of you. The 
light will switch from green to yellow indicating that you have 
1 minute to conclude your testimony. When the light turns red, 
it indicates that the witness' 5 minutes have expired.
    Again, I want to thank you for being here and I 
diplomatically will pick up the gavel here if you are running 
over your 5 minutes. I will not hit anything; it is just a 
little polite indication to you, would you please wrap up 
because I do not look at the lights when I know I have 5 
minutes. I am thinking about what I am asking or saying, and I 
know you may do the same thing. So there will just be a polite 
little gesture. I have not thrown this yet. Dr. Pritchett, will 
you please make your opening statement?

  TESTIMONY OF ANNE McDONALD PRITCHETT, Ph.D, VICE PRESIDENT, 
POLICY AND RESEARCH, PHARMACEUTICAL RESEARCH AND MANUFACTURERS 
                       OF AMERICA (PhRMA)

    Ms. Pritchett. Good afternoon Chairman Marino, Ranking 
Member Johnson, and Members of the Subcommittee. As mentioned, 
my name is Anne Pritchett. I am the vice president of Policy 
and Research at the Pharmaceutical Research and Manufacturers 
of America, also known as PhRMA. We represent the Nation's 
leading biopharmaceutical research companies which are 
dedicated to making new treatment and cures for some of the 
most of our most challenging diseases. Our members have 
invested half a trillion dollars in R&D since 2000 alone, and 
about $58.8 billion in the last year alone.
    PhRMA is committed to supporting the appropriate use of 
prescription medicines and to making the R&D investments needed 
to develop new therapies including new medications to treat 
addiction and overdose reversal agents. Before speaking 
specifically to addiction treatments, I wanted to give a sense 
of what we see as the key policies necessary to address this 
overall epidemic.
    First, we feel that prescribers immediately undergo ongoing 
education and training on the appropriate prescribing of 
controlled substances and effective pain management. They need 
training on how to identify those at risk for prescription drug 
abuse, for overdose, and those in need of treatment. We need 
more prescribers to be using evidence based clinical guidelines 
to inform opioid selection dosage and duration of treatment. 
Second, we feel that State prescription drug monitoring 
programs have been demonstrated through peer review research to 
be one of the most effective tools in detecting potential 
doctor shoppers.
    But, they are only useful if their being used. We need to 
mandate training in the use of PDMPs and we need to adjust 
those barriers to their use. Third, we need to encourage the 
development of abuse to current formulations not opioid pain 
medications and medications to treat addictions and prevent 
overdose.
    Given more than 90 percent of the most abused medicines are 
generic opioids; we think it is critically important that the 
FDA finalize its guidance to assist generic manufactures in the 
development of abuse deterrent formulations products as well. 
And we need coverage and access polices that reflect the public 
health benefits of these products.
    And finally, we need to expand access to the full range of 
treatment and recovery services needed to break the cycle of 
addiction. A couple of key points. Despite the fact that a 
large body of research is documented the cost effectiveness of 
medication assisted treatments for addictions, and despite the 
fact that opioid abuse is widely recognized as a chronic 
disease, prescription drug benefit designs often include prior 
off step therapy, or as I call it, fail first.
    The consequences of which in this case can be deadly and a 
number of State Medicaid programs impose lifetime limits on the 
use of addiction treatments. These polices are in direct 
conflict with the public health goal of expanding access and 
breaking the cycle of addiction.
    Now, I wanted to take just a moment to talk about the 
nature of competition in the biopharmaceutical market, overall. 
I would say in contrast to Mr. Kesselheim, respectfully, the 
competitive market is structured to take maximum advantage of 
savings from brand competition.
    We have brand medicines facing competition before they come 
to market. About 88 percent of medicines that are deemed first 
in class had competitors in development at the time of launch. 
In Hepatitis C, we saw multiple competitors within less than a 
year with payers negotiating discounts between 40 and 65 
percent. We do to continue, though, to have challenges related 
to coverage and access to these critical medicines.
    In following generic entry, payers quickly shift 
utilization to generics. The reality is, more than 90 percent 
of all medicines prescribed in the U.S. are generics, and once 
a drug loses its exclusivity, within less than a year 93 
percent of market share is generic based. But, we have a drug 
cycle that balances the need for incentives innovation with a 
desire for increased competition.
    I would note that with the coming loss of IP protection 
between now and 2020, were going to have about 93 billion U.S. 
brand sales that will be facing generic competition. In the 
case of addiction treatments, we have a substantial number of 
generic medicines available in these well-established classes. 
But we have also seen a number of new drug applications that 
are providing significant medical advances for addressing 
opioid abuse and addiction in terms of more convenient delivery 
systems.
    In recent years, the market has signaled a need for new 
treatment options in this space that can improve patient 
adherence and quality of life by providing more convenient 
dosing and delivery methods. And companies are beginning to 
respond as we have seen from the recent approvals, and from 
what we have seen in the pipeline.
    When you look at the pipeline we have 31 abuse deterrent 
determinations in development of pain so that we avoid ever 
getting to this point. There are 35 addiction medicines in 
development and 49 opioid pain medications in development 
potentially providing important treatment alternatives to what 
is currently on the market. But the demand for treatment in the 
addiction spaces has dramatically increased. It has increased 
unfortunately because opioid overdose rates have increased the 
growing burden on communities and families around the country.
    On the positive, we have seen increased awareness in 
education removing some of the stigma related to addiction. In 
addition, we have seen State and Federal policy changes, the 
Care Act was mentioned as critical to expanding access. I would 
say that we think there is robust competition in this space one 
of the key barriers we have seen when we look at products in 
this space is the challenges related to ensuring coverage and 
access to these. When we have lifetime limits and we have Fail 
First, that creates tremendous challenges and one of our 
concerns is how the dynamics of coverage and access policies 
impact incentives to enter the market. Thank you.
    [The prepared statement of Ms. Pritchett follows:]
    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]  
    
                               __________
    Mr. Marino. Thank you. Mr. Gaugh.

 TESTIMONY OF DAVID R. GAUGH, R.Ph., SENIOR VICE PRESIDENT FOR 
    SCIENCE AND REGULATORY AFFAIRS, GENERIC PHARMACEUTICAL 
                          ASSOCIATION

    Mr. Gaugh. Thank you. Good morning, Chairman Marino--
afternoon excuse me--Ranking Member Johnson, and Members of the 
Subcommittee. I would like to first begin by commending the 
Committee for your continued focus on these important issues 
that we are going to discuss today. The Generic Pharmaceutical 
Association is the Nation's leading trade association for 
manufactures and distributors of generic medicines.
    GPhA's mission is to improve the lives of patients in the 
U.S. healthcare system through access to affordable generic 
medicines. Eighty-eight percent of all prescriptions dispensed 
in the United States are generic; however, generics account for 
only 28 percent of the totals of drugs span. GPhA is strongly 
committed to addressing the improving treatment options for 
patients suffering from addiction. This includes combating drug 
abuse by supporting community anti-drug coalitions, encouraging 
safe disposal of unused drugs, and through the development of 
abuse deterrent drug formulations.
    As part of this response, including ensuring the 
availability of high quality low cost generics. I am here to 
discuss the GPhA conviction that the best way to achieve the 
goals of patient access to use lifesaving treatments is through 
the development of policies to promote robust competitive 
markets. As GPhA represents multiple competing generic 
manufactures, we are not privileged to member company 
information about individual products or any pricing decisions 
around those projects.
    We can; however, provide some insight to what we believe is 
a proven solution to rapidly inflating drug prices. 
Competition. Competition from generic drugs savings is access 
and not cost. In fact, a variety of healthcare stakeholders 
have found a trend of overall price decreases for generics. 
Last week, the government accountability office publishes a 
report examining drugs in Medicare, part D. That report echoes 
the findings of multiple previous independent reports. That 
generic drug prices continue to decrease.
    Specifically, the GAO report that between 2010 and 2015, 
drug prices for Medicare part D declined by 59 percent. In 
January 2016, the Department of Health and Human Services 
released a comprehensive study which concluded, and I quote, 
``Our view of evidence strongly supports the conclusion that 
generic drug prices are not an important part of the drug cost 
problem facing the Nation.'' Taken with other important 
studies, these data show the competition in pharmaceutical 
markets is effective. The Drug Price Competition and Patent 
Term Restoration Act, commonly known as the Hatch-Waxman Act, 
created the abbreviated regulatory approval pathway for 
generics, while simultaneously providing lucrative incentives 
for brand manufactures to continue to bring new treatments to 
the market.
    The overwhelming success of Hatch-Waxman led to the 
approval of over 14,000 generic applications. But, that 
incredible volume brought complications in the FDA's ability to 
effectively and efficiently review them. By 2011, there where 
over 2.700 generic applications pending at the FDA and the 
average approval time for these products or these applications 
exceeded 30 months. To alleviate the burden on FDA and expedite 
generic approvals, the Generic Drug User Fee Program, or GDUFA, 
was improved and implemented in 2012.
    Unfortunately, 4 years later the number of pending generic 
applications has ballooned to over 4,000 while the median 
approval time now exceeds over 45 months. Nonetheless, FDA has, 
under GDUFA, hired and trained over a 1,000 new employees and 
increased its efficiency in reviewing applications. As these 
are important steps forward, we will continue to work with the 
FDA to ensure it meets its GDUFA goals.
    Generic manufacturers make complex and highly confidential 
analysis when selecting which products to pursue. This analysis 
can include assessing the complexity of reverse engineering, 
the state of the intellectual property, the size of the market, 
the likely number of competitors, the product development and 
manufacturing capabilities and costs.
    Once the generic manufacturers make the decision to develop 
a product, they often face significant delay tactics from brand 
manufacturers, including the Risk Evaluation Mitigation 
Strategies or REMS program. And exempting themselves from 
scrutiny or their intellectual property covered by the U.S. 
Patent and Trade Office.
    While current law forbids brand companies from using REMS 
to delay competition, they are nonetheless denying generic 
manufacturers access to samples of their products. These 
samples are required to conduct the bioequivalent studies 
necessary for FDA approval of the generic application. They 
have even begun applying restricted access programs to drugs 
for which FDA has not required a REMS program in order to delay 
generic entry.
    Presently, two pieces of legislation are pending before 
Congress that would address this situation. The Fast Generic 
Act and the CREATES Act. The GPhA has encouraged that each of 
these addresses the barriers to success.
    This Committee has also played a key role in recognizing 
The Interim Parties Review, the IPR, as a critical consumer 
protection against abusive patens. The IPR holds great promise 
in reducing anti-competitive evergreening practices that drive-
up healthcare costs.
    In conclusion, Mr. Chairman, GPhA believes that the best 
way to control drug costs, generally, whether in the drug 
addiction treatment market or otherwise is through policies 
that incentivize competition. Thank you very much.
    [The prepared statement of Mr. Gaugh follows:]
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    Mr. Marino. Thank you. Mr. Merritt.

   TESTIMONY OF MARK MERRITT, PRESIDENT AND CHIEF EXECUTIVE 
      OFFICER, PHARMACEUTICAL CARE MANAGEMENT ASSOCIATION

    Mr. Merritt. Good afternoon Chairman Marino, Ranking Member 
Johnson, other Members of the Subcommittee. My name is Mark 
Merritt, president and CEO of the Pharmaceutical Care 
Management Association. I appreciate this opportunity to appear 
before the Committee examining sudden price spikes in opioid 
antagonists.
    PCMA is a national trade association representing America's 
Pharmacy benefits managers which administer prescription drug 
plans for more than 266 million Americans with health care 
provided by Fortune 500 companies, health insurers, labor 
unions, Medicare part D, Medicaid, FEHPB, ACA, and other 
arenas. PBM's offer a wide variety of services aimed at making 
prescription drug benefit programs offered safely, efficiently, 
and affordably for their clients. PBM's are projected to save 
$654 billion on drug benefit costs over the next decade alone.
    For today's discussion, we have seen far too many 
heartbreaking stories come out of nearly every corner of 
America about the destruction of lives due to opioid addiction. 
According to the Centers for Disease Control and Prevention 
overdose deaths involving prescription opioids have quadrupled 
since 1999. Over the last 15 years, more than a 165,000 people 
have died in the U.S. from overdoses related to opioids. The 
same period has seen a quadrupling of deaths due to overdoses 
specifically of illicit heroin including over 10,500 deaths in 
2014 alone.
    Addiction treatments and recovery medications are critical, 
but an important first step is overall prevention. That is why 
we commend Congress for passing the Comprehensive Addiction and 
Recovery Act, CARA. PCMA and its member company supported this 
legislation which among other provisions created a Medicare 
part D Lock in Program to curb substance abuse at the pharmacy 
counter.
    The legislation will help stop drugstore shopping by 
allowing Medicare part D Plans to restrict known abusers to 
select pharmacies for certain medications, such as opioids. The 
law also expands the availability of Naloxone to law 
enforcement agencies and other first responders to reverse 
overdoses and save lives.
    Unfortunately, as opioid antagonists have gotten more 
widely available, there have also been unprecedented price 
spikes. We encourage policy makers to consider the following 
recommendations to stem the rising tide of abuse and reduce 
cost.
    First, we think it should be mandatory that prescribers use 
E-prescribing for controlled substances. Second, State 
governments should make their prescription drug management 
program databases more easily accessible, more user friendly, 
and better integrated across the country to make that data 
accurate and in real time. Medicare part D Plans should be 
allowed to suspend payments of suspicious claims just as is 
allowed throughout the rest of Medicare. This would effectively 
eliminate pay and chase activities which increase cost and make 
fraud detection more difficult.
    We also recommend the following policy changes to enhance 
competition and reduce drug costs. First, address the generic 
drug backlog at FDA. As has been mentioned before me, 
improvements have been made but much more needs to be done.
    Second, accelerate FDA approval of drugs with little or no 
competition. Third, limit delaying tactics and patent abuses 
that prevent competitors from coming to market. Fourth, unlock 
more innovative value based pricing arrangements by removing 
the existing barriers such as the Medicaid best price 
requirement. While this is certainly well intended, it acts as 
an artificial price war that discourages drug companies from 
steeper discounts in a commercial market. And finally, 
eliminate any or all Medicare part D protective classes which 
significantly weakens the power of PBM's to negotiate rebates 
and lower prices. Again, I appreciate this opportunity to be 
here today and look forward to answering any questions you 
might have.
    [The prepared statement of Mr. Merritt follows:]
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    Mr. Marino. Thank you. Dr. Ketcham.

TESTIMONY OF ERIC KETCHAM, M.D., AMERICAN COLLEGE OF EMERGENCY 
 PHYSICIANS (ACEP), MEDICAL DIRECTOR, EMERGENCY DEPARTMENT AND 
URGENT CARE, CO-MEDICAL DIRECTOR, EMS SAN JUAN REGIONAL MEDICAL 
                             CENTER

    Dr. Ketcham. Thank you, Mr. Chairman. My name is Dr. Eric 
Ketcham. I am an emergency department medical director and EMS 
Medical Director and a medical director for an Opioid Addiction 
Treatment Clinic. On behalf of the 37,000 members of the 
American College of Emergency Physicians, I would like to thank 
you for this opportunity to testify today about this important 
issue.
    The unnecessarily high price of these medications obstructs 
access to treatment for opioid addiction and overdose in 
America. And thus prolongs the scourge of heroin prescription 
opioid addiction and puts American lives at risk. Access to 
Buprenorphine, which should be a low cost medication, must be 
expanded so that more Americans can be successfully treated for 
the affliction of opioid dependence.
    Secondly, access to Naloxone which also should be a low 
cost medication, must be increased. This is truly a lifesaving 
drug that when used properly can reverse opioid overdoses and 
save lives. In its current, most commonly used form, 
Buprenorphine has been FDA approved for 30 years. Because of 
its unique properties it produces much less euphoria and 
respiratory depression than traditional opioids, such as 
oxycodone, heroin, and methadone.
    When properly prescribed, this medication is a very safe 
alternative to Methadone and thus can be effectively utilized 
to treat opioid abuse and addiction by a variety of physicians 
in a variety of settings, as opposed to Methadone which must be 
administered in a licensed opioid addiction treatment clinic, 
such as one that I run.
    One would think that a lifesaving and life transforming 
medication such as Buprenorphine, which has a well-established 
safety profile, would be accessible to hundreds of thousands 
more opioid dependent patients. Unfortunately, that is not the 
case. In my written testimony, I provide specific examples of 
the rising prices associated with Buprenorphine and the related 
Buprenorphine Naloxone combination medications, including their 
generic counterparts.
    For example, based on surveys I have conducted of local 
pharmacies affiliated with national chains in my region, the 
cost for a 30-day supply of Buprenorphine--that is two 8 mg 
tablets per day, the usual dose, is now $334 compared to a $142 
just 6 months ago. And a month of the Suboxone brand name 
Buprenorphine Naloxone combination filmstrips, is $532. 
Shockingly, the generic version of the combination tablets is 
even more than the brand name prescription film strips this 
week and cost $625 for a 30-day supply.
    The critical medication we use to treat acute opioid 
overdose is Naloxone. It has been utilized in hospitals and by 
fire EMS personal for decades. More recently, there has been an 
organized effort expand direct access to Naloxone and in some 
regions it can already be purchased from a pharmacy even 
without a prescription. However, these efforts to expand 
availability of Naloxone have surprisingly not caused the price 
of this medication to decrease. In fact, the price of Naloxone 
in nearly all forms of packaging has been steadily climbing.
    In my community, the cost of a one-millimeter syringe of 
0.4 milligrams of Naloxone went from about $12 in 2012 to $30 
in 2016. Without a hospital or municipal volume discount for 
fire or EMS service, the preloaded two milligram syringe used 
by many first responders is now priced at approximately $49 a 
dose. That same dose was $17 in 2014 and reportedly as low as a 
$1 in 2001.
    The consequence of these rising prices may force Naloxone 
out of the budget for the rural fire or EMS service that does 
not have the buying power of a hospital or a larger municipal 
agency. Furthermore, in my region, Naloxone products designed 
for the layperson are the most expensive of all.
    For example, the cash price for the four-milligram nasal 
spray has increased to a $150 for the package of two doses. 
This simple device does not present a form of revolutionary 
technology, and it includes a generic, and until recently, very 
inexpensive medication. What is truly astounding is the price 
for the single dose Naloxone autoinjector, which can be more 
than $2,200 and is often not a sufficient rescue dose.
    Another topic not yet addressed on this greater topic is 
the expanding Good Samaritan Laws are an important aspect of 
increasing Naloxone availability. These efforts must be paired 
with legislation that would make healthcare providers and lay 
users immune from liability for failure or misuse of the 
product by bystanders.
    Moreover, administration of Naloxone is often not as simple 
as providing a single dose for various reasons. That is why 
ASEP strongly recommends that whenever Naloxone is administered 
by a bystander, to treat an opioid overdose, EMS must be 
called, and ideally, that patient would then be transported to 
the nearest emergency department for evaluation.
    In conclusion, we urge Congress to help make Buprenorphine 
and Naloxone more readily available to those suffering from 
opioid addiction. These critical drugs cannot only save 
countless lives, but help alleviate a great burden on society 
by reducing crime, incarceration, and healthcare expenses 
including complications from intravenous drug use such as 
spreading HIV and Hepatitis C. Most important, access to 
Buprenorphine and Naloxone means potentially deadly overdose 
deaths could be avoided.
    If Congress wants to help increase access to these drugs, 
then something must be done to curtail the cost of these 
lifesaving medications. Thank you, and I look forward to 
answering any questions you may have.
    [The prepared statement of Dr. Ketcham follows:]
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    Mr. Marino. Thank you. Professor Feldman.

 TESTIMONY OF ROBIN FELDMAN, ESQ., HARRY AND LILLIAN HASTINGS 
PROFESSOR OF LAW, DIRECTOR OF THE INSTITUTE FOR INNOVATION LAW, 
                 UC HASTINGS COLLEGE OF THE LAW

    Ms. Feldman. Mr. Chairman and esteemed Subcommittee 
members, I am honored to address competition issues in the 
market for addiction medicine. Open and vigorous competition is 
the backbone of U.S. markets, but we are not seeing that in the 
market for addiction medicine. Rather, drug companies are 
engaging in regulatory games, stringing these out one after 
another while competition languishes on the sidelines.
    These games come in two baskets. One set involves 
manipulating Hatch-Waxman, which is the system for quick 
approval of generic drugs when the patents on the main drug 
expires. The other basket of games relates to the system for 
non-patent exclusivities known as regulatory exclusivities.
    Some of these games just blatantly delay entry of 
competition. With addiction medicine, for example, we have seen 
petitions asking the FDA to deny approval of any generic 
versions. Among many of the demands, one addiction medicine 
company asked the FDA to require things for generic Suboxone 
that the FDA did not have the authority to do and that we would 
not want them to do in the first place. Now, the agency denies 
80 percent of these petitions, as it denied this one, but the 
process takes time, even for silly petitions. In the case of 
the Suboxone petition, the FDA was so disturbed by the 
petitioning behavior that it referred the company's behavior to 
the Federal Trade Commission.
    In other games, companies block competitors from getting 
access to the samples they need to get approval. Generics have 
to show that their drug is the same as the branded, and some 
brand companies just flatly refuse to sell samples to generic 
companies or to cooperate with generic companies to write 
safety plans. With addiction medicine, the FDA so despaired of 
getting one brand name company to cooperate that it took the 
unprecedented step of granting a waiver so that the generic 
company could just go forward on its own. Again, competition 
languished for another stretch in the addiction medicine 
market.
    In other games, companies make slight modifications to the 
dosage or the delivery systems, and then encourage doctors to 
prescribe the new version, or even withdraw the old version 
completely. If that is successful, there is no market for the 
old version. There is just a new market for the new version 
that is protected by shiny new patents. We have seen this in 
the addiction medicine market as well where a company switched 
from tablets to meltaways just before the patents expired.
    Now these modification patents are quite weak. And in fact, 
when generics challenge these patents, they win three quarters 
of the time. But again, these challenges can take years and 
competition is thwarted, and prices stay high.
    In addition to gaming, Hatch-Waxman companies carve out 
competition free zones in ways that have nothing to do with 
patents. There are 13 forms of regulatory exclusivities that 
companies can obtain by doing things like new clinical studies 
or pediatric studies. And with these, companies can keep 
competitors out even if the patent has expired.
    Now these zones were created for very appealing reasons, 
but they are being exploited now to block competition in ways 
that were never intended. As a side note, the key drug in the 
addiction medicine market came through the most powerful of 
these, the orphan drug exclusivity.
    The spotlight today is on the market for addiction 
medicine, but the game playing is epidemic throughout the 
pharmaceutical industry. Companies pile these games on, one 
after another, exploiting the laws and regulations that are in 
place. As always, society pays the price with higher taxes to 
pay for soaring Medicare costs, higher insurance premiums, 
higher treatment costs, and more suffering for those who cannot 
afford treatment. Nowhere is this terrible combination more 
apparent than in the market for addiction medicine. Thank you 
very much.
    [The prepared statement of Ms. Feldman follows:]
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                               __________
    Mr. Marino. Thank you. Now, as I stated earlier, the Chair 
now recognizes the Chairman of the full Judiciary Committee, 
Mr. Bob Goodlatte from Virginia.
    Mr. Goodlatte. Thank you Mr. Chairman, and I apologize for 
stepping out of turn. It has been a very busy day, and I was 
held up in the last meeting; also I am going to have to leave 
for another one pretty soon. But I do want to offer some 
thoughts on this important subject. Today's preceding marks the 
fourth in our series of hearings focused on competition in the 
healthcare marketplace. Now, the Committee turns its attention 
to the pharmaceutical industry and the drugs that are used in 
the treatment of opioid overdose and addiction.
    Competition in the addiction medicine markets, like the 
pharmaceutical market as a whole, involves a delicate balance. 
On the one hand, we want to encourage pharmaceutical companies 
to invest in expensive research and development in order to 
bring innovative and life-saving drugs to market. On the other 
hand, we also want to encourage sufficient competition to 
ensure that there is an appropriate check on consumer prices. 
Today's hearing will explore what polices help to maintain this 
balance and whether it has been upset.
    Like other drugs in the market, addiction medicine has been 
the subject of media reports detailing steady and sometimes 
dramatic price increases. Oftentimes, however, these reports 
can be misleading, glossing over nuance to achieve a 
sensational headline. Today's hearing will allow us to explore 
whether prices have indeed increased material, and what 
competitive factors impact the ultimate cost to consumers.
    The issues that have been raised in connection with the 
addiction medicine market parallel the issues facing the 
pharmaceutical market at large. For example, two of the most 
predominant drugs used in the treatment of the opioid epidemic 
have existed for over 50 years. Yet, new variations of these 
old drugs and increasingly inventive applications to administer 
the drugs continue to come to market often accompanied by high 
prices tags. Persistent innovation is one of the hallmarks of a 
free market and should be celebrated.
    However, there have been allegations that some companies 
may be using this innovation as a disguise to cover-up the 
manipulation of regulations to preclude competitors from coming 
to market. Clearly, this is anti-competitive conduct that 
should be swiftly and harshly punished. I look forward to 
hearing the witnesses' views on this issue and whether our 
existing antitrust laws are equipped to address any such 
behavior.
    I also look forward to hearing what policies influence 
competition in the addiction medicine market including the 
impact on competition on regulatory oversight by the Drug 
Enforcement Agency, the Food and Drug Administration, and the 
Department of Health and Human Services. To the extent 
regulation is necessary, we should ensure that the addiction 
medicine market and the entire pharmaceutical market includes 
proper incentives that foster a competitive environment.
    No one wishes for a friend, family member, or a loved one 
to succumb to addiction. For those that are forced to face the 
opioid epidemic head on, we should strive to encourage a 
competitive market for the drugs that can help them back on the 
path toward recovery.
    I also want to mention that I think the government plays a 
role in this that needs to be examined more closely. We, I 
think, invited the Drug Enforcement Administration to 
participate in this hearing, and for various reasons they are 
not here today. But a number of issues related to their work 
need to be addressed as a part of making sure that our 
consumers, our physicians, and our first pharmaceutical 
companies, are able to operate in a manner that effectively 
brings the drugs to the right people at the right time and I 
think sometimes government regulations are interfering with 
that.
    Therefore, we should continue to expect further public 
examination of this, and have the DEA here before us in the 
future to address this and some other of their regulatory 
issues.
    So, thank you Mr. Chairman for your forbearance, and I look 
forward to hearing the questions of the other Members of the 
Committee.
    Mr. Marino. Thank you. We will now move into the 
questioning of the panel. The panel did such a good job in 
keeping within their 5 minutes, now we will see how well we 
Congress Members do.
    Dr. Pritchett, I am especially interested in innovative new 
options to treat overdose. As an 18-year prosecutor, I have 
seen hundreds if not thousands. When I think of this space, I 
look to the loved ones and first responders who are often the 
first to address addiction and potential overdose. Your 
testimony mentions that there are innovative drugs in new 
therapeutic areas.
    My two questions are, would you expand on this and explain 
how branded pharmaceuticals are investing and researching new 
ways to address increase need in recent years, as well as 
different applications that would be used by first responders, 
emergency medical personal, and family? And anytime you want me 
to repeat these, please ask me.
    Ms. Pritchett. In terms of looking at the Naloxone space, 
yes, there has been a substantial range of generic products 
available for a long period of time. As I mentioned in my 
testimony, what we have seen change in the past couple of years 
is the market has sent different signals to our industry. So 
what we have seen is a need for expanded options in terms of 
convenient delivery forms, and we have seen a substantial 
change in State laws, making Naloxone more widely available.
    One of the key dynamics here is that now most States have 
changed their laws allowing Naloxone to be available at the 
retail level via standing orders, meaning without a 
prescription. So, it is hard to say in terms of the pricing 
issues, what is occurring there in terms of whether in 
different elements as a supply chain how that is affecting 
pricing at the retail level. But, in terms of the fact that 
these products are being made more readily available to first 
responders and others, that speaks to the increased demand for 
convenient delivery systems.
    And what we have seen over the past few years, we have seen 
the introduction of an autoinjector but we have also seen most 
recently the approval of a nasal spray. At the same time, 
another nasal spray was in development that was not approved by 
the FDA. But in terms of our review of the pipeline, there are 
about 35 drugs in development to treat addiction treatment. 
Some of them are in this space, some of them are in the 
Buprenorphine space, but I think what is critically important 
though is that the market has to send signals that there is an 
incentive to enter this market.
    So, when a company is looking at entering this space, they 
are looking at is there going to be demand, are they going to 
be able to make a significant benefit to patients compared to 
existing therapies? And, in this case, that is what driving the 
introduction of new brand competition in this area.
    Mr. Marino. Thank you. Mr. Gaugh, Dr. Ketcham states in his 
written testimony that the cost of the generic version of 
Buprenorphine had doubled despite a number of competitors in 
the market. Can you explain why that is the case concerning the 
BUP market, and why prices increase generally in the market 
with a number of generic competitors?0
    Mr. Gaugh. Thank you. So, to your question, there are a 
number of different situations that a company has to look at 
and face when they are in a market, and I am assuming in this 
case these companies are already in the market. So, you have 
API sources that can change and go up in price. You have 
mergers and acquisitions that occur, as I think you well know 
throughout the supply chain.
    So, when API companies merge, a lot of times that takes one 
or two of the players out of the market and that may increase 
the price of the API. The components that the products use 
whether it is an injectable, tablet, capsule, inhalation, or 
autoinjector, those components have a price point to them as 
well. And so these many factors are taken into account into 
what causes the price to go up. Why a specific company made 
that decision, I do not know the answer to that.
    Mr. Marino. Then in 35 seconds, Dr. Ketcham, your testimony 
lays out that there are many barriers experienced by first 
responders and medical professionals in an effort to respond to 
these overdoses. Can you speak to the belief within the medical 
community as the best methods and science to approach?
    Dr. Ketcham. I want to make sure I understand your 
question. So, barriers to getting addiction treatment or 
treatment for overdose?
    Mr. Marino. Treatment for overdose.
    Dr. Ketcham. So, right now, the issue with getting a timely 
treatment for overdose is really having access to Naloxone and 
the people who are around the patient. Just remember that a 
patient never treats himself for an overdose. So, unlike an 
autoinjector such as an EpiPen, where somebody will treat 
themselves for their allergic reaction, getting treatment for 
your opioid overdose requires there is a bystander who is ready 
to administer that medication and or a prompt response from law 
enforcement who hopefully can be able to carry that medication 
which is not necessarily done by all law enforcement agencies. 
This is becoming a bigger part of law enforcement's budgets 
now, as well, of course traditional EMS and fire agencies.
    Mr. Marino. Thank you. Time is expired. The Chair now 
recognizes the Ranking Member, Mr. Johnson.
    Mr. Johnson. Thank you, Dr. Pritchett. Professor Feldman 
testified that drug companies have engaged in legal and 
regulatory games to block entry into the market for opioid 
addiction treatments, including the practice of evergreening 
and product hopping, brand products whose patents are about to 
expire. What is your response?
    Ms. Pritchett. I do not particularly care for the terms 
``product hopping'' or ``evergreening.'' I think when we are 
looking particularly at the addiction medications base and we 
look at the new delivery reforms that have been introduced, 
these are significant medical advances in this very challenging 
area. One of the most challenging aspects of successfully 
treating addiction is compliant patient compliance. And it is 
not a minimal tweak to develop a new delivery system to conduct 
a relevant clinical trials and make the case to the FDA that 
this is a significant benefit and that this should be approved 
and that it can be easily used.
    So, I think that the innovations that we have seen have 
been incredibly valuable in increasing our arsenal in the 
treatment of addiction. If you think about these two spaces 
what we have seen is, we have had standard care in Naloxone has 
been in vial form for decades. And we have had standard 
treatments in Buprenorphine in pill form for decades. But what 
we are seeing now is a great expansion in the use of the 
delivery methods.
    Mr. Johnson. Okay, all right, thank you. Mr. Gaugh, in your 
written testimony you state that Senate bill 3056, The CREATES 
Act would address abuses of patient safety programs like the 
Risk, Evaluation, and Mitigation Strategies Program. And in a 
letter opposing the CREATES Act, PhRMA president, Stephen Ubl, 
recently argued that it provides considerable incentives for 
generic manufactures to litigate, rather than arrive at 
agreements with innovators. What is your response?
    Mr. Gaugh. Under the current situation, as a company comes 
to the market dynamic and the market decision, when they come 
to market, the first thing they have to do is get samples so 
they can develop that product. The only way they can get that 
sample in a REM situation is from the company, directly. So, we 
do this all the time but in a non-REM situation you go to a 
wholesaler distributor to buy that product. Under REMs, it is 
in a strict distribution and you cannot do that.
    So you have to go to the company and once we supply a 
letter to the FDA saying that we want to develop this product, 
the FDA has to determine that we are a company in good 
standing, they will present a letter to us on that, we present 
that letter to the innovator company and they are to sale the 
products. But there is no factor today that requires them to do 
that. Other than, we can take them to court under antitrust 
laws.
    Mr. Johnson. All right, I understand. Thank you. Mr. 
Merritt, in your written testimony you state that the generic 
approval backlog is currently at 36 months, undermining 
competition in the brand drug market. What recommendations do 
you have for reducing the backlog?
    Mr. Merritt. Well, we would ask for better staffing, better 
resources there; not better staffing because of quality, but 
more staffing and so forth. It is a very serious issue and if 
there is a backlog there needs to be maybe better capacity 
there. We would also ask for the FDA to look at situations 
where for instance there is a generic that does not have 
competition or an off patent brand that does not have 
competition and accelerate approvals for drugs that can compete 
in those spaces too.
    Representing the payers for these medicines, the unions, 
lawyers, insurers, and so forth, obviously we just want lower 
costs. But, lower costs only happen when there is competition. 
And the more competition there is, the lower the costs that 
there are. And the FDA, I think, is doing a good job they have 
a lot of volume but they need to do more. And I think the 
situation in America is changing where they may need to ramp 
things up maybe than they anticipated.
    Mr. Johnson. Thank you. Dr. Ketcham, have other areas of 
treatment suffered as the result of the necessary response and 
the expense associated with that response to opioid overdoses 
and addiction treatment?
    Dr. Ketcham. I am trying to make sure I understand the 
question.
    Mr. Johnson. Yeah, because of the costs associated or the 
increased costs associated with opioid overdoses and addiction 
treatment, have other areas of treatment suffered?
    Dr. Ketcham. So, specifically, many patients that I would 
see in the emergency department who are wanting to get started 
on treatment for their addiction: Their single most common 
barrier is being able to afford the medication; the same thing 
upon release of prisoners, of those incarcerated upon reentry 
into society, which is a very important time to begin 
treatment. The cost of medication is the single biggest 
barrier.
    Therefore, it is the process, even when working with social 
workers in the emergency department, to try to help the patient 
now get onto Medicaid. There is a time delay between when they 
can get Medicaid acceptance, then to submit and get preapproval 
for Buprenorphine. I can give them a dose in the emergency 
department to get them started, but really getting a 
prescription filled and then have a place for them to follow 
up, that is the significant barrier for addiction.
    Mr. Johnson. All right, thank you. Mr. Chairman, I would 
ask that a letter dated September 22, 2016 from Consumers Union 
on this issue be admitted into the record, without objection.
    Mr. Marino. Without objection, so ordered.
    [The information referred to follows:]
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    Mr. Johnson. Thank you.
    Mr. Marino. The Chair now recognizes the Chairman, Mr. 
Goodlatte.
    Mr. Goodlatte. Thank you, Mr. Chairman. Dr. Ketcham, there 
have been allegations that threats by the Drug Enforcement 
Administration, the DEA, have resulted in pharmacies removing 
Buprenorphine products from their inventory. Are you familiar 
with these allegations, and can you comment on the alleged 
conduct?
    Dr. Ketcham. I cannot verify that that is necessarily the 
case. I do know that pharmacies in my region try to keep only a 
limited amount of Buprenorphine in stock, try to preserve that 
for when a patient shows up with a prescription in hand.
    I will say, however, that, regarding the DEA, and I think 
their general view of treating addiction with Buprenorphine and 
office-based practice; that after you have been a licensed 
Buprenorphine prescriber for 3 years, at some point you are 
supposed to have a random meeting with the DEA, in which they 
are going to interview you, go over your patient logs, your 
prescriptions, et cetera.
    When they do this, they do interrogate you and make you 
feel like you are a criminal, and this really is a significant 
factor that causes physicians not to want to participate in 
addiction treatment.
    Let me also add that there is, however, a significant 
amount of diversion of Buprenorphine, you know, in almost every 
community, and I believe that the DEA has a very founded 
interest in why there is such a tremendous amount of diversion 
of Buprenorphine in most communities.
    Mr. Goodlatte. But do you think that if that is indeed 
leading to local pharmacies carrying limited supplies, is that 
leading to the inconsistency that patients are finding? They 
will get a prescription. They will go get it filled, and then 
the next month or whenever they go back again, that pharmacy 
does not honor their prescription?
    Dr. Ketcham. I think the issue is that the cost of the 
medication is high, and in pharmacies that I have spoken to, 
when working with Medicaid, for example, they are selling the 
Buprenorphine to patients at the same cost for which they are 
paying for the medication, and usually they pay through a 
wholesaler such as McKesson, let's say.
    So, if your pharmacy is buying it at that price, that is 
exactly the price they are turning around and selling it to 
patients for, with usually a minimal fee of about a dollar or 
so for packaging. So there is no market. There is no, you know, 
profit for them anywhere in this.
    Mr. Goodlatte. I get the profit side of it.
    Dr. Ketcham. Yeah.
    Mr. Goodlatte. We definitely want to hear more about why 
these prices cannot be lowered through competition, but I also 
would suspect that if you are treating a patient for addiction, 
consistency and being able to stay on the regimen prescribed by 
the physician would be extremely important, and the 
inconsistency with which that physician can rely on local 
pharmacies to have the product available would make a big 
difference in the success of treating the patients.
    Dr. Ketcham. I completely agree, and that is definitely a 
problem that our patients face. I will also add to that that 
there appears to be varying quality amongst the generic 
product, and when the generic product changes within a 
pharmacy, patients then are often trying to look for a 
different pharmacy that carries a different generic version of 
the drug.
    Mr. Goodlatte. So the physician wants them to take a 
specific formulation, and expect that it is going to be at the 
same place where that patient is used to going. This 
consistency of carrying the same product over a period of time 
is very important, and pharmacies should work with the DEA and 
work with their suppliers to make sure that they can be more 
consistent than they are in some areas.
    Dr. Ketcham. Absolutely.
    Mr. Goodlatte. Thank you. Dr. Pritchett, your testimony 
outlines what appears to be a relatively competitive market for 
both Buprenorphine and Naloxone products. Given its competitive 
state, can you explain the media accounts and testimony today 
that suggests rising prices in each of these markets?
    Ms. Pritchett. So I would just say that I represent a trade 
association. My representative from GPhA is not privy to actual 
pricing information of any of these products. We did have IMS 
just take a look at the overall trends and, for example, for 
Buprenorphine related medications IMS data shows that pricing 
for both the generic and innovator products have similar 
pricing; that it has remained generally stable since 2011.
    Now, one of the challenges related to Naloxone, as I 
mentioned in my testimony, is that we have had a shift in that 
now many States are having standing orders where Naloxone 
products are available without a prescription at the pharmacy 
level. We do not have insight into what pricing may be 
occurring at the retail level. So, that is one of the 
challenges inherent there.
    But I would say what we have seen in terms of--not looking 
at sales, but looking at volume, is that in both of these 
spaces that you have substantial generic competition. We have 
recently had an influx of innovative products. If you look at 
Naloxone, we have had an autoinjector form that has been 
introduced, and then we have had a nasal form introduced, and I 
think now you have two brands competing on the delivery system 
method, so that is a sign of positive competition and, given 
what we are seeing in the pipeline, we expect to see more 
competition there. But, again, I cannot speak to the price 
reports that have been reported in the media.
    Mr. Goodlatte. Let me just say----
    Ms. Pritchett. IMS data just does not seem to be bearing 
that out.
    Mr. Goodlatte [continuing]. As a member of the trade 
association that many pharmaceutical companies belong to, I 
hope you will convey back to them our concern, that the 
Congress has just passed CARA legislation, designed to try to 
deal with the addiction epidemic in our country, and that one 
of the aspects of being successful--we passed about 17 bills, 
some out of this Committee, some out of the Energy and Commerce 
Committee, that are going to help, I think, a lot in this area, 
but they are not going to help as much as they could unless the 
product, for people who obviously are not, taken as a whole, 
the most likely to be able to pay whatever the market demands.
    They are going to need to be able to have an affordable 
product; that that is an important thing for your industry to 
consider, as we take on this national challenge of dealing with 
addiction.
    Ms. Pritchett. Thank you for that. One thing I would note, 
IMS just released a report this morning that found that the 
annual growth rates in the number of prescriptions for 
Buprenorphine medicines slowed from 22 percent in 2012 to about 
6.4 percent in 2016, and IMS found that the states with the 
highest rates of heroin and other opioid use had below average 
levels of Buprenorphine use and public funding, suggesting a 
disconnect between the need for treatment and access and 
coverage of treatment. And what we have seen is that a lot of 
these medications require, as mentioned by Dr. Ketcham, require 
a step therapy. So, you have to fail on multiple other options 
before you get to some of these medications.
    Some of these are not even covered. For example, Vivitrol, 
which is an innovative medication in terms of it is a once 
monthly injectable that just does not just treat withdrawal 
symptoms, but treats opioid dependence; that you have three 
State Medicaid programs that require substantial step therapy 
and prior auth before you can even have an opportunity for 
that. And the Arkansas State Medicaid program does not even 
allow access to it.
    So, agree that we need more competition, but we also need 
to ensure that, as we are introducing competition, that there 
is the potential that there is going to be uptake of these 
products. As innovators are looking at entering a market, they 
do need to know that this is going to be valued by payers and 
patients. So that is an important dynamic as well, but 
appreciate the thoughts.
    Mr. Goodlatte. Well, thank you, and if you would submit 
that study to the Committee, we would be more than anxious to 
have the benefit of it.
    Ms. Pritchett. Certainly, will do so.
    Mr. Goodlatte. Thank you. Mr. Chairman, my time has long 
since expired.
    Mr. Marino. Thank you. The Chair now recognizes Mr. 
Conyers, the Ranking Member of the full Judiciary Committee.
    Mr. Conyers. Thank you very much. I thank the witnesses. 
Professor Feldman, what are some of the ways that drug 
manufacturers manipulate the existing patent and regulatory 
schemes to extend their monopolies on brand drugs?
    Ms. Feldman. Understanding the life cycle in the 
pharmaceutical industry is a matter of understanding how the 
games get piled on one after each other. With each of them, 
they got a small amount of additional exclusivity; 5 months 
here, 6 months there, a couple of years. But you add them 
together and they add up. So, a 5-month extension in a 
blockbuster drug can be worth half a billion dollars or more. 
You add a billion here, a billion there, that adds up to real 
money, and the taxpayers are paying. So it is not the 
individual game. It is the way that games are strung out, one 
after another.
    Mr. Conyers. Is this true of generic manufacturers as well?
    Ms. Feldman. The best and most competitive market is when 
you have lots of competitors directly in that market. When 
there is only one generic competitor, the price generally drops 
by only about 15 percent. When you have multiple generics, you 
often see price drops in the 85 to 90 percent. So there are 
definitely incentives for first generics, also who wish to keep 
others out as well.
    Mr. Conyers. Thank you. Do you support S3056, the CREATES 
Act, which, as you know, among other things, allows a generic 
drug developer to sue a brand manufacturer to obtain the 
necessary samples to create a bio-equivalent product?
    Ms. Feldman. I had the honor of testifying on the Senate 
side about the CREATES Act a couple of months ago. I do support 
that type of approach, particularly taking the competition 
policing out of the FDA, and into agencies and courts that are 
better at doing that. The FDA is great at policing safety; not 
so great at policing competition.
    Mr. Conyers. Thank you. Mr. Merritt, you suggest that one 
of the factors keeping the price of the Naloxone high is the 
fact that many States require insurance coverage for it, 
hampering the ability of pharmacy benefit managers to negotiate 
discounts and rebates. Do you support that?
    Mr. Merritt. Well, insurance does cover that, just to 
clarify that, sir. Insurance and insurers generally cover these 
products. The challenge is when there is a mandate to cover one 
particular generic, if there are competitors available, or one 
particular brand, for that matter. Because when there is a 
mandate to cover that, it gives all the pricing power back to 
PhRMA because they do not need to compete on price to get on a 
formulary or to get on a formulary with a lower co-pay.
    So that was the intent of that particular statement, but 
these are broadly covered, although I will add that many, many 
times, although I do not have the percentage in front of me, 
these are not processed through insurance. They are products 
that have been given away. Different drugs have been given 
away. People come and sometimes they do not want to process it 
through insurance, sometimes they are uninsured themselves, and 
so that is just another clarifying factor.
    Mr. Conyers. Dr. Ketcham, what is the impact of the spiking 
price of opioid addiction treatments on the ability of 
healthcare providers to address addiction long term?
    Dr. Ketcham. Sir, the rising price essentially means that 
patients will not fill their prescriptions, and without filling 
the prescription, it means they discontinue getting their 
addiction treatment. What invariably often happens in this 
situation, which is very unfortunate, is that patients, when 
they cannot afford the medication, will often do their own sort 
of self-tapering.
    Many patients are self-managing with Buprenorphine; either 
that they have been prescribed for that they are running out 
of, or that they are obtaining in a secondary market, and very 
often when we see them tapering very quickly, much faster than 
we would recommend that they do, there is a very high rate of 
relapse, and then proceeding back to using heroin or other 
black-market opiates.
    Mr. Conyers. Thank you, Mr. Chairman, for permitting me to 
ask these questions.
    Mr. Marino. Mr. Ranking Member, you came under everyone 
else today. So, kudos. The Chair now recognizes the gentleman 
from Georgia, Congressman Collins.
    Mr. Collins. Thank you Mr. Chairman, and the Ranking Member 
said I could have his time, his extra. There you go. We will 
split it; that is what we will do. No, I appreciate the time, 
Mr. Chairman. We will be submitting questions for four of the 
witnesses today on different wells, but I have some other 
issues that I would like to address because I do not get the 
opportunity often to do so. Mr. Merritt, thank you for being 
here today.
    I have an opportunity to say something here that, for many 
in this room, is going to find they may fall out of their 
chairs because I am going to agree with you on some parts of 
your testimony. I agree that opioid epidemic and opioid 
addiction is heartbreaking. I have seen it tragically up close 
and personal, and agree that the Comprehensive Addiction 
Recovery Act was a good first step toward combating this 
problem. That is why I was a part of that act.
    I think we can agree there needs to be competition in the 
addiction medication market, but when we talk about general 
pricing, there are some points that I want to raise that 
concern me, and I think you know we have a different opinion on 
the value of PBMs to the healthcare marketplace. You say in 
your written testimony that PBMs help bring down prices of 
prescription drugs across the market by harnessing competition 
and among manufacturers. You go on to say that the one way the 
PBM lower prices for prescription drugs is through taking 
advantage of all the efficiency of mail service pharmacies.
    Mr. Merritt, is there not an inherent conflict of interest 
when a PBM mandates or heavily incentivizes patients to use 
their own specialty or mail order pharmacy? Can you please 
explain how steering patients to a PBM owned specialty or mail 
channel allows for greater competition in the marketplace?
    Also, help me understand how it is beneficial for a patient 
to obtain expensive, complex medications, some of which need to 
be self-injected, in the mail, where they have zero opportunity 
to show in-person how to properly use the medication for 
maximum benefit?
    Mr. Merritt. Sure, well, first of all, the Federal Trade 
Commission has looked into this, in terms of the mail and if 
there is a conflict of interest, and found that there is not. 
And I think probably the way to think about it----
    Mr. Collins. That is not a real helpful analogy, given 
their track record in some of the trade.
    Mr. Merritt. No, I have----
    Mr. Collins. We are going down a wrong road to start with 
here.
    Mr. Merritt. Okay, well, I think the FTC is a respected 
agency, but we can disagree on that. I would say this. Maybe a 
simpler way to think about it, because all this is so complex, 
with so many different layers, even for people who really know 
a lot about health care. Think about it like Amazon.com. They 
have Prime, which a lot of us use for home delivery. Amazon is 
its own deliverer.
    Would it be smart to force them to use Federal Express or 
UPS or some other higher cost carrier to deliver their goods? 
Would that be better for consumers? Would that take advantage 
of scale? No, I think it would cost more. It would not add any 
value to consumers, and the fact that we work with mail service 
pharmacies often that we partner with or own adds value because 
we can deliver those products cheaply and more effectively to 
consumers.
    Mr. Collins. Well, I think that is even under question 
because even a study was done from TRICARE says that you are 83 
percent higher than most community pharmacies serving through 
mail order. So I mean, these are the problems that I have. I 
understand the PBMs will usually pay the pharmacy one amount 
for dispensing a drug, but charge a payer a different amount, 
referring to this as the spread.
    CMS is aware of this and have changed part of the rules to 
account for this practice, which is inflating patient costs. 
Can you explain to me, and the rest, the often large 
differential in the spread between what PBMs reimburse 
pharmacies, versus what you charge health plans, and could you 
not save the system dollars, which is actually what your own 
website says that you supposedly do by lowering that spread?
    Mr. Merritt. Well, first of all, we do not work for the 
pharmacies. We work for the employers and the consumers who go 
there, right?
    Mr. Collins. Most of your members own pharmacies.
    Mr. Merritt. No, but we do not work----
    Mr. Collins. Let's at least get this straight.
    Mr. Merritt. We do not work for drugstores. Our job is 
negotiating----
    Mr. Collins. No, you own them.
    Mr. Merritt. No, that is a different story. We----
    Mr. Collins. Yeah, we do not want to talk about that story. 
It is vertical integration that is a problem here.
    Mr. Merritt. Well, if you give me just a second, I will 
talk about it and answer your question. PBMs are hired by 
employers to negotiate against and with drug companies and 
drugstores to make sure that people get access to the 
medications and drugstores they need, but that we also use the 
competition in those spaces, for instance, where there are 
numerous brands or brands and generics that treat the same 
conditions. We want to encourage people to use the least 
expensive one. The same is true with drugstores. Some local 
drugstores are more expensive than others. We want to encourage 
people to use the more affordable drugstores.
    In terms of spread pricing and so forth, that is something 
that the plan designs. That is something that the employer 
decides. They are fully aware of that, and if they want to 
provide incentives for us to get better deals with drugstores 
by doing that, they will go ahead and do that but, as you said, 
Medicare and a lot of other programs and payers do not want 
that. That is fine too. It is totally up to the payer.
    Mr. Collins. Look, TRICARE's own study said if they got rid 
of PBMs, they would save $1.3 billion in 2013. You cannot tell 
me, and sit here and tell me that your groups, which you 
represent, many of which have testified before this Committee 
and been untruthful with this Committee can say----
    Mr. Merritt. No.
    Mr. Collins [continuing]. No, I would not go there with me 
on that one. You did not testify. One of your members did.
    Mr. Merritt. Okay.
    Mr. Collins. And this is the problem we have. And do you 
want to look at it over all, not only the opioid addiction 
issues we have got here, but the pharmacy prescription. I have 
one more Mr. Chairman, because this is out of his own 
testimony. It says, ``Allow them stronger measures to remove 
disciplined or rogue pharmacies from plan networks,'' as one of 
your solutions.
    I do not think you need any more power because right now 
you are removing pharmacies that actually try to compete in 
their marketplace and serve on regular means. You do not need 
more power to go after them. You have got plenty right now, 
controlling 83 percent of the market. Your business model that 
suffers and forces customers to have problems; not the other 
way around. The last thing we need to do is give PBMs more 
power. Thank you, Mr. Chairman, I yield back.
    Mr. Marino. Mr. Merritt, you can respond if you choose to.
    Mr. Merritt. Well, I would just say that, as Dr. Ketcham 
pointed out, there is a problem with diversion. There is a 
problem with fraud in health care, in general. We see it at the 
pharmacies. We see it in other places in health care as well. 
Some drugstores are better than others, and so we want to make 
sure the highest quality, most affordable drugstores are ones 
that people are encouraged to go to. We may have a disagreement 
on this, but this is the way that we see it, and I think facts 
back that up.
    Mr. Collins. Mr. Chairman, all that is in these pharmacies 
were actually doing something----
    Mr. Marino. Gentleman----
    Mr. Collins. Are we going to get a second round, because 
that statement right there is false.
    Mr. Marino. No, we are not, because before I got here 
because of votes and not keeping this panel, you certainly can 
submit written questions too. This the business to be answered. 
The Chair now recognizes the gentlelady from the State of 
Washington, Congresswoman DelBene.
    Ms. DelBene. Thank you, Mr. Chairman, and thanks to all the 
witnesses for being with us today. Today, we are considering 
the intersection of two important policy priorities; addressing 
the cost of prescription drugs, and combatting the opioid 
crisis. As everyone knows, the epidemic of opioid abuse is 
having a devastating effect on Americans' health and safety, 
both in my home State of Washington, and across the country. 
With more than 120 deaths occurring from drug overdoses every 
day, more than half from prescription drugs, it is clearer than 
ever that Congress must take action to treat addiction and save 
lives.
    Addressing this epidemic will require a multi-pronged 
approach, and one piece of the solution must be ensuring access 
to addiction treatment medicines, and overdose reversal drugs. 
That is why the Comprehensive Addiction and Recovery Act, or 
CARA, authorized important new funding for the expansion of 
medication assisted treatment. But that support could be 
severely diminished if our constituents cannot afford the cost 
of these medications, not to mention law enforcement agencies 
and State, local, and tribal governments. And CARA cannot solve 
this crisis alone. We are also going to depend on the 
manufacturers of addiction medicines, and the regulatory 
structure that governs them.
    So, as someone who started her career in the life sciences, 
I know how important it is to strike the right balance between 
incentivizing medical innovation, and ensuring access to 
affordable medicines. But some companies have rightfully drawn 
criticism for increasing drug prices to generate profits, 
rather than support the development of life-saving therapies, 
and I have heard from hundreds of constituents who are outraged 
by what they have heard on the news.
    So, as we work together to fight the opioid crisis, it is 
appropriate to examine the state of this marketplace, and 
ensure that it is working as it was intended.
    Dr. Ketcham, in negotiations over CARA, Congress failed to 
provide the President's request for $1.1 billion in emergency 
funding to immediately fund new addiction treatment efforts. 
Instead, funding decisions were left to the annual 
appropriations process, and now we hear there might be $37 
million in a continuing resolution.
    So, do you believe that emergency funding would have helped 
Americans with the substance use disorder; help them to seek 
treatment, complete treatment, or sustain their recovery?
    Dr. Ketcham. Well, absolutely. In any way that funding 
filters down to the patient being able to obtain that 
medication, as well as in any path that funding proceeds to 
help keep open and open more addiction treatment centers or 
other mental health centers, where addiction medicine is 
handled.
    Ms. DelBene. How do you believe those funds would best be 
used to help first responders and healthcare providers fight 
the opioid epidemic. I mean, you have talked a little bit about 
keeping treatment centers open, but where do you think those 
funds are most critically needed?
    Dr. Ketcham. I do think that a multi-pronged approach is 
necessary. I am worried that, particularly as I stated earlier, 
the smaller fire departments, EMS agencies that are starting to 
really look at the price of Naloxone as a significant budget 
item in their pharmaceuticals. I think this needs to be 
addressed, and this is one area where I think funding should be 
directed.
    However, funding can be used to lower the overall price and 
evaluate the whole competition issue. That would, I think, go a 
long way as well. But also, again, we certainly need more 
access by patients, you know, to the mental health care so they 
can start getting their addiction treatment.
    Ms. DelBene. Thank you. Regarding competition, Professor 
Feldman, we talked a little bit about the competitive 
marketplace in this area. Are there other factors we have not 
talked about yet today that you think are critical that we 
should be aware of that are impacting pricing?
    Ms. Feldman. I think I would put it this way. In a well-
functioning market, if someone charges eye-popping prices, a 
bright young company will come in and compete and the price 
will come down. So if we are not seeing that--and we are not 
seeing that--then we have to ask, ``What is going on, and what 
is functioning improperly in the market?'' We have lots of 
carving out of little territories there, but we do not have the 
type of robust competition that we would like to see in this 
market.
    Ms. DelBene. Thank you. Thank you, Mr. Chair, and I yield 
back.
    Mr. Marino. Thank you. Seeing no other Members, this 
concludes today's hearing. I really want to take the time to 
thank you for being here. I am glad we did not have to hold you 
over, nor would I have held you over, but I appreciate what you 
had to tell us today. We have learned from it, and all of us in 
this room, from the family members, to the businesses, to 
Congress. We have to pay particular attention to this and 
react, because it is only going to get worse. Without 
objection, all Members will have 5 legislative days to submit 
additional written questions for the witnesses or additional 
materials for the record. This hearing is adjourned.
    [Whereupon, at 3:29 p.m., the Subcommittee adjourned 
subject to the call of the Chair.]

                            A P P E N D I X

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               Material Submitted for the Hearing Record

  Response to Questions for the Record from Anne McDonald Pritchett, 
Ph.D, Vice President, Policy and Research, Pharmaceutical Research and 
                    Manufacturers of America (PhRMA)
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Response to Questions for the Record from David R. Gaugh, R.Ph., Senior 
      Vice President for Science and Regulatory Affairs, Generic 
                       Pharmaceutical Association
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]  
                                
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 Response to Questions for the Record from Mark Merritt, President and 
  Chief Executive Officer, Pharmaceutical Care Management Association
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 Response to Questions for the Record from Robin Feldman, Esq., Harry 
 and Lillian Hastings Professor of Law, Director of the Institute for 
             Innovation Law, UC Hastings College of the Law
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