[House Hearing, 115 Congress]
[From the U.S. Government Publishing Office]
EXAMINING THE IMPACT OF VOLUNTARY RESTRICTED DISTRIBUTION SYSTEMS IN
THE PHARMACEUTICAL SUPPLY CHAIN
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HEARING
BEFORE THE
SUBCOMMITTEE ON HEALTHCARE,
BENEFITS, AND ADMINISTRATIVE RULES
OF THE
COMMITTEE ON OVERSIGHT
AND GOVERNMENT REFORM
HOUSE OF REPRESENTATIVES
ONE HUNDRED FIFTEENTH CONGRESS
FIRST SESSION
__________
MARCH 22, 2017
__________
Serial No. 115-33
__________
Printed for the use of the Committee on Oversight and Government Reform
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Available via the World Wide Web: http://www.fdsys.gov
http://oversight.house.gov
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U.S. GOVERNMENT PUBLISHING OFFICE
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Committee on Oversight and Government Reform
Jason Chaffetz, Utah, Chairman
John J. Duncan, Jr., Tennessee Elijah E. Cummings, Maryland,
Darrell E. Issa, California Ranking Minority Member
Jim Jordan, Ohio Carolyn B. Maloney, New York
Mark Sanford, South Carolina Eleanor Holmes Norton, District of
Justin Amash, Michigan Columbia
Paul A. Gosar, Arizona Wm. Lacy Clay, Missouri
Scott DesJarlais, Tennessee Stephen F. Lynch, Massachusetts
Trey Gowdy, South Carolina Jim Cooper, Tennessee
Blake Farenthold, Texas Gerald E. Connolly, Virginia
Virginia Foxx, North Carolina Robin L. Kelly, Illinois
Thomas Massie, Kentucky Brenda L. Lawrence, Michigan
Mark Meadows, North Carolina Bonnie Watson Coleman, New Jersey
Ron DeSantis, Florida Stacey E. Plaskett, Virgin Islands
Dennis A. Ross, Florida Val Butler Demings, Florida
Mark Walker, North Carolina Raja Krishnamoorthi, Illinois
Rod Blum, Iowa Jamie Raskin, Maryland
Jody B. Hice, Georgia Peter Welch, Vermont
Steve Russell, Oklahoma Matt Cartwright, Pennsylvania
Glenn Grothman, Wisconsin Mark DeSaulnier, California
Will Hurd, Texas John Sarbanes, Maryland
Gary J. Palmer, Alabama
James Comer, Kentucky
Paul Mitchell, Michigan
Jonathan Skladany, Staff Director
Rebecca Edgar, Deputy Staff Director
William McKenna, General Counsel
Natalie Turner, Counsel
Kiley Bidelman, Clerk
David Rapallo, Minority Staff Director
------
Subcommittee on HealthCare, Benefits, and Administrative Rules
Jim Jordan, Ohio, Chairman
Mark Walker, North Carolina, Vice Raja Krishnamoorthi, Illinois,
Chair Ranking Minority Member
Darrell E. Issa, California Jim Cooper, Tennessee
Mark Sanford, South Carolina Eleanor Holmes Norton, District of
Scott DesJarlais, Tennessee Columbia
Mark Meadows, North Carolina Robin L. Kelly, Illinois
Glenn Grothman, Wisconsin Bonnie Watson Coleman, New Jersey
Paul Mitchell, Michigan Stacey E. Plaskett, Virgin Islands
C O N T E N T S
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Page
Hearing held on March 22, 2017................................... 1
WITNESSES
Janet Woodcock, M.D., Director, Center for Drug Evaluation and
Research, U.S. Food and Drug Administration
Oral Statement............................................... 5
Written Statement............................................ 7
Mr. Bruce Leicher, Senior Vice President and General Counsel,
Momenta Pharmaceuticals, Testifying on Behalf of the
Association for Accessible Medicines
Oral Statement............................................... 12
Written Statement............................................ 14
Gerard Anderson, Ph.D., Director, Center for Hospital Finance and
Management, and Professor, Johns Hopkins Bloomberg School of
Public Health
Oral Statement............................................... 25
Written Statement............................................ 27
Mr. David Mitchell, President and Founder, Patients for
Affordable Drugs
Oral Statement............................................... 33
Written Statement............................................ 35
APPENDIX
Questions for the Record for Dr. Janet Woodcock, submitted by Ms.
Plaskett and Mr. Welch......................................... 52
EXAMINING THE IMPACT OF VOLUNTARY RESTRICTED DISTRIBUTION SYSTEMS IN
THE PHARMACEUTICAL SUPPLY CHAIN
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Wednesday, March 22, 2017
House of Representatives,
Subcommittee on Health Care, Benefits, and
Administrative Rules
Committee on Oversight and Government Reform,
Washington, D.C.
The subcommittee met, pursuant to call, at 2:00 p.m., in
Room 2154, Rayburn House Office Building, Hon. Jim Jordan
[chairman of the subcommittee] presiding.
Present: Representatives Jordan, Walker, Grothman,
Mitchell, Krishnamoorthi, Kelly, Watson Coleman, and Plaskett.
Also Present: Representatives Cummings and Welch.
Mr. Jordan. The Subcommittee on Health Care, Benefits, and
Administrative Rules will come to order.
And without objection, the chair is authorized to declare
recess at any time.
And I ask unanimous consent that all members of the
Committee on Oversight and Government Reform be allowed to
participate in today's hearing.
Without objection, so ordered.
I want to do a brief opening statement and then our ranking
member will do his opening comments as well, and then we'll get
right to it.
I do want to thank our witnesses for being here, especially
the FDA. I know you've testified a number of times in a very
short period of time. So we do appreciate, Doctor, you being
with us, and all of our witnesses being with us today.
The nature of this week is kind of hectic around here, so
we will try to get your testimony and maybe a few questions.
But it's an important subject and I don't want to shortchange
it, but I just want to kind of give you some context as you all
know what's going on here on Capitol Hill this week.
The subject of today's hearing affects Americans across the
country: The rising costs of all patent drugs that lack generic
competition. To facilitate competition in the pharmaceutical
market, the Hatch-Waxman Act created an accelerated pathway for
approving generics, while maintaining incentives for companies
to invest in developing new innovative products. Hatch-Waxman
continues to promote the development of low-cost generics.
According to a recent report, generics are only 27 percent
of the total drug costs in the United States, yet fill 89
percent of prescriptions. Last year, however, we saw that there
are some medicines with increasing prices, and even though
those medicines are not protected by remaining patent life or
regulatory exclusivity, they lack lower-cost generic
equivalents. The big one, of course, was Turing
Pharmaceuticals.
Turing acquired the drug Daraprim and quickly increased the
price about 5,000 percent from $13 a pill to over $750. Even
though the FDA approved Daraprim in 1953, over 60 years ago,
there remains no cheap generics for competition of this
particular pharmaceutical. What is not as well known as the
exorbitant price is the manipulation of the regulatory
framework. Not only did Turing increase the price of Daraprim,
but the company also adopted a strategy to block generic
competition, thereby frustrating the intent of the law.
Strategy is simple. Generic manufacturers are generally not
required to submit full clinical trial data to establish safety
and efficacy, they instead rely on FDA's previous finding of
safety and effectiveness for the approved medicine.
For the generic applications, generic manufacturers obtains
samples of the approved medicine and demonstrates their product
as bioequivalent to that approved product. Simple enough. But
then enter bad actors. Turing thwarted the generic competition
by blocking generic companies access to samples of Turing's
pricey product, inhibiting generic manufacturers from
conducting the bioequivalence testing for the generic
application. Indeed, Turing testified--Turing testified
admitting to this blocking strategy to try and block the
generic competitor for at least 3 years.
Companies should not be able to use the system to block
generic competition. Such abuse is leading to debilitating drug
costs. At the same time, however, distribution restrictions
oftentimes serve important purposes, such as ensuring the safe
use and distribution of medicines with heightened safety
concerns.
In 2007, Congress gave the FDA authority to order risk
evaluation and mitigation strategies, programs for medicines
with heightened safety concerns. REMS, this REMS program
ensured that the benefits of medicine with a known or potential
safety concern outweigh the risk of the medicine. FDA can
mandate that certain distribution restrictions are part of the
REMS program.
This hearing will distinguish between the good actors and
those companies like Turing that self-imposed restricted
distributions for medicines with no apparent reason other than
to block the competition.
The panelists today will help us examine the scope of the
misuse of this restricted distribution system to block generic
competition and help to identify solutions. This Congress needs
to find a way to help the FDA spur the interest of generic
competition into the market. This hearing is designed to help
us move towards that goal.
Finally, I'd like to thank our ranking member for his
interest in this issue. There's a good chance that we aren't
going to agree always on what may be the solution, but I am
pleased that our staffs have been able to work together on this
issue so well.
And with that, I would like to recognize Mr. Krishnamoorthi
for his opening statements.
Mr. Krishnamoorthi. Thank you, Mr. Chairman, for holding
this very important hearing today. And thank you to our
witnesses for taking time out of your precious schedules to be
here as well.
The topic of today's hearing is restricted distribution
systems in the prescription drug market. This is a very
important issue. When drug companies use restricted
distribution systems and other anticompetitive practices to
prevent potential generic competitors from coming onto the
market, they drive up prices and impose added costs on our
healthcare system.
Even more importantly, these anticompetitive practices harm
patients. One such patient is here to testify today. David
Mitchell has multiple myeloma, an incurable blood cancer. For
over 5 years, Mr. Mitchell took the drug Revlimid, which is
made by Celgene. Celgene has come under fire for using a
restricted distribution system to prevent generic competitors
from getting access to the drug samples they would need to
bring a generic version of Revlimid to market.
As Mr. Mitchell will testify, over the 5 years he took
Revlimid, his copays increased by 500 percent. During this
period, Celgene's revenues from Revlimid also steadily
increased, without facing any competition from generics, from
$2.5 billion in 2010 to almost $6 billion in 2015. This was an
increase of 132 percent.
Given these figures, it's no wonder that some drug
companies take extraordinary steps to prevent potential generic
competition. But it is important to acknowledge that the
challenges we face in the prescription drug market go beyond
just restricted distribution systems. For instance, we are
seeing incredible price increases for decade's old drugs. Most
recently, Kaleo pharmaceuticals increased the price of its
autoinjector version of naloxone, a lifesaving drug first
approved in 1971 to reverse opioid overdoses, from $690 in 2014
to $4,500.
The opioid epidemic is ravaging my home State of Illinois,
as it is many parts of the country. It is wrong for a drug
company to raise the price of a lifesaving overdose antidote by
more than 500 percent in a span of just 2 years. That's 500
percent in the span of 2 years. And although we absolutely rely
on new breakthrough therapies to treat the most challenging
diseases, new drugs are being introduced at higher and higher
prices that our healthcare system simply cannot support. Some
of these drugs are true clinical breakthroughs, but others add
little clinical value over drugs that are already on the
market.
Lifesaving treatments only save lives when people can
afford them. According to a 2014 survey, one in five Americans
did not fill a prescription because they could not afford it.
Prescription drug prices affect all of our constituents. This
is an issue they desperately want us to address. And I am so
thankful that Mr. Jordan, Congressman Jordan, has agreed to do
this bipartisan hearing on prescription drug pricing.
In fact, a recent Kaiser Family Foundation poll found that
60 percent of Americans, including a majority of Republicans,
think lowering prescription drug prices should be a top
priority for President Trump and for Congress. And I'm glad
President Trump has actually made this a priority for his
administration. According to this poll, more Americans want us
to deal with rising prescription drug prices than repeal the
ACA.
Of course, we do not want to stifle innovation. We want
drug companies to be able to earn a fair profit that allows
them to recoup their research and development costs and invest
in the next cure. But no company should be able to misuse
public safety regulations to stifle competition and secure a
monopoly advantage.
I hope today's hearing will allow us to begin a
constructive conversation about what we can do legislatively,
in a bipartisan way, to a handle on runaway prescription drug
prices. Discovering a lifesaving drug is complicated, but
lowering prescription drug prices is not. We know what the
tools are. Among them are promoting generic competition in the
market, increasing transparency in the pharmaceutical chain,
and letting Medicare negotiate for a better deal on drugs.
Congress has only to remove the legal hurdles to lower prices.
I look forward to today's discussion. I hope, with my
colleagues on both sides of the aisle, to address this issue on
behalf of our constituents.
Mr. Chairman, I just want to do one last thing, which is I
would like to allow Mr. Welch on my side 1 minute to talk about
a bipartisan bill that is directly relevant to today's hearing.
Mr. Jordan. Only for the gentleman from Vermont would we
make such--no, we're glad to do that. We're glad to do that.
Mr. Krishnamoorthi. Okay. Thank you, Mr. Chairman.
Mr. Welch. Well, thank you very much. And I really want to
associate myself with your statement. And, Mr. Jordan, it's
great you're doing this hearing.
If we can bring down the cost of prescription drugs, we've
got to do it. I've got a REMS bill with Steve Stivers, and I
think that's going to help in one of the areas that would allow
us to make certain that we're not abusing a review process for
the advantage of higher prices at the expense of consumers.
I also had a chance to meet with President Trump with
Elijah Cummings. And it was very clear to me that he gets it
that Americans are paying more than we should be paying. And
it's not about getting in the way of research and development.
You know, drug companies do good things. They create life-
extending and pain-relieving drugs. That is a good, good thing,
but they can't kill us with the cost.
And there are a lot of market failures, I think we get
specific on this REMS being one of them, and work together to
get the benefit of fair and accessible drug prices for all of
our constituents. That's the goal.
So thank you both for allowing me to wave on to this
hearing, and I look forward to working with you to get some
things done.
Mr. Jordan. Without objection, we'll let Mr. Welch be a
part of the hearing. And I want to thank the ranking member and
Mr. Welch for their statements.
Let's get right to our witnesses. The committee will hold
open the record for 5 legislative days for any other members
who would like to submit a written statement.
We want to recognize our witnesses. First, we have Dr.
Janet Woodcock from the FDA. We appreciate you being here. As I
said, I know you've testified several times in the last few
days.
Mr. Bruce Leicher.
Mr. Leicher. Leicher.
Mr. Jordan. I appreciate you being here. Senior vice
president and general counsel for Momenta Pharmaceuticals,
testifying on behalf of the Association for Accessible
Medicines.
And we have Dr. Anderson, director of the Center for
Hospital and Finance and Management, as well as professor at
Johns Hopkins Bloomberg School of Public Health. And Mr. David
Mitchell, president and founder of Patients for Affordable
Drugs.
Welcome again to you all. And pursuant to committee rules,
we actually swear you in. So if you stand up and raise your
right hand.
Do you solemnly swear or affirm that the testimony you're
about to give will be the truth, the whole truth, and nothing
but the truth, so help you God?
All right. Let the record show that everyone answered in
the affirmative.
And we will start with the gentlelady on my left. Dr.
Woodcock, you're recognized.
WITNESS STATEMENTS
STATEMENT OF JANET WOODCOCK, M.D.
Dr. Woodcock. Thank you very much, Mr. Chairman and
members. I'm really pleased to testify at this hearing on a
very important issue.
But first, I'd like to note for the record that appearing
on this panel does not waive the Administration's policy of not
appearing concurrent with nongovernment witness, nor the
Administration's policy of not appearing with less than 2
week's prior notice. I am appearing in the spirit of
accommodation and comity.
Mr. Jordan. Thank you.
Ms. Woodcock. Yes. So to move to the topic at hand, the
generic drug program that we operate at FDA has been highly
successful. Its estimated savings to consumers has been about
$1.5 trillion in a decade. And as you said, about 90 percent of
prescriptions in the United States now are generic, at much
lower cost obviously than the innovators. However, sometimes
the benefits to patients are delayed beyond the legal
constraints of patent or exclusivity.
Innovators may use various routes or maneuvers to delay
availability of a competitor generic. And among these, although
there are many others, but among these is the use of REMS or a
voluntary restricted program that is set up by the
manufacturer, not required by FDA, to keep competitors from
getting access to the drug.
Specifically, most generic applicants need a relatively
small quantity of brand drug to use as a comparator when they
do what's called bioequivalence testing to make sure the
generic is absorbed into the body the same way that the brand
drug is. And, of course, anyone who gets filled a generic
instead of the brand they prescribed, we're guaranteeing to
them it's going to have the same effects. So we want them
tested to make sure they're absorbed correctly. And some
innovators have been refusing to provide drug for this
bioequivalence testing.
For REMS, which certain restricted distribution
requirements set up by the FDA for safety reasons, what FDA has
done to try and mitigate this is have procedures to review the
generic drug bioequivalence protocol and notify the innovator
drug in writing that we believe it is adequate and that the
REMS restriction does not apply. So to remove that barrier and
get us out of the way. Of course, that doesn't really occur for
the voluntary restricted programs because there is no barrier
to simply providing that in the open market. In that case, no
letter is needed.
Nevertheless, sponsors do continue to withhold products.
We've had around 150 inquiries from generic firms about
difficulties that they have had obtaining product for
bioequivalence testing. And I really would be happy to answer
any questions you might have about this.
[Prepared statement of Dr. Woodcock follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Mr. Jordan. Thank you, Dr. Woodcock.
We go now to Mr. Leicher.
STATEMENT OF BRUCE LEICHER
Mr. Leicher. Good afternoon, Chairman Jordan and Ranking
Member Krishnamoorthi. Thank you for the opportunity to
participate in this important hearing. I'm Bruce Leicher,
senior vice president and general counsel of Momenta
Pharmaceuticals, and chair of the board of the Biosimilars
Council, a division of the Association for Accessible
Medicines. We commend you for holding today's hearing.
Increasingly, patient access to affordable medicines is
prevented by certain brand drug manufacturers' use of
restricted distribution programs, including FDA-mandated risk
evaluation mitigation strategies, REMS, to limit generic and
biosimilar development. Having worked in the biotechnology
industry for over 25 years and the biosimilars industry since
its inception, I'm concerned. These anticompetitive practices
are contrary to the careful balance of the Hatch-Waxman and
biosimilar laws and threaten generic competition from the
emerging biosimilars market.
For over 30 years, generic companies have safely purchased
branded drugs on the free market to conduct testing necessary
for FDA approval. But in recent years, certain brands have used
restricted distribution schemes, including REMS, to block such
purchase and testing. If brand products cannot be purchased,
then affordable generic drugs and biosimilars cannot be
developed.
Momenta and the generic and biosimilar industry are
committed to ensuring that Americans have access to safe,
effective, and affordable medicine. We do not support policies
that would endanger patients. We comply with the same rules
administered by the FDA.
Generic medicines are almost 90 percent of prescriptions
dispensed in this country, yet account for less than 30 percent
of drug spending. Generic drugs save hundreds of billions of
dollars annually, $1.46 trillion in the last decade alone. And
biosimilars present the same opportunity.
Consider that branded specialty medicines are only 1
percent of all prescriptions, but more than 30 percent of total
pharmaceutical spending. Their utilization is only expected to
increase, making the competition promised by biosimilars even
more important to patients and to taxpayers. The high price of
many new biologics will only incentivize further abuse of these
arrangements, if they continue, and create excessive spending
for the healthcare system.
The FDA recently reported that over 64 biosimilar programs
are under review for over 23 different brand biologics. Momenta
alone has seven biosimilar development programs, and that's
required us to more than double the size of our workforce.
Various studies estimate savings for American taxpayers and
patients between $42 billion to as much as $250 billion over
the first 10 years following biosimilar market formation. But
if we're not able to access the product for development, this
can't happen.
These brand restrictions take the form of self-imposed
restricted distribution schemes with wholesalers or specialty
pharmacies that mimic FDA REMS programs, hiding behind the
veneer of patient safety. For instance, when we've sought to
purchase brand products from customary wholesalers in the
supply chain, we're now asked if we're conducting generic or
biosimilar studies. On multiple occasions, they inform us that
their contract prohibits them from selling the brand product to
us for that purpose. Ironically, when we attempt to purchase
the same product for use in a comparative novel drug
development program, where far less is known about product
safety, we don't encounter these refusals.
It's clear that this has nothing to do with safety, but
everything to do with preventing competition. As a result, in
our company's development decision-making process, we're now
forced to consider how difficult it will be to obtain the brand
product. In cases where access is restricted, we have not
initiated some programs.
Uncertain litigation is often the only remedy available,
and some large companies with the necessary resources have been
suing over access for years. However, litigation is too costly
and time consuming for companies like Momenta.
The bottom line is simple: A generic or biosimilar
manufacturer is prevented from obtaining the brand drug, is
unable to perform the required FDA testing, and patients will
miss out on generic and biosimilars savings and access. These
barriers to competition need to be removed and customary access
restored.
Mr. Chairman, the House is currently considering
legislation that would study these abuses further, but I
believe there's no need for further study. My written statement
mentions law firms promoting the use of these programs as a
tool for profitability. Almost 5 years ago, the Senate passed
legislation that included language, at FDA's request, to
address REMS abuse and it was removed in conference. The House
has considered similar legislation, Mr. Welch's legislation, in
the 113th and 114th Congress; will again this year.
The FDA has testified about the problem repeatedly, most
recently just yesterday before the Senate Health Committee, and
Dr. Woodcock is here today, I can say now. Committees in both
the House and Senate have discussed these abuses on numerous
occasions. Some may tell you that this is too small of a
problem to address legislatively, but the numbers and this
hearing say otherwise.
The Congressional Budget Office has estimated various
reform proposals for saving billions of dollars for taxpayers.
Experts and patient advocates have called for fixes to these
abuses. A study will only further delay competition. It's time
to act on legislation.
And I would be pleased to answer any questions after the
statements. Thank you.
[Prepared statement of Mr. Leicher follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Mr. Walker. [presiding.] Thank you, Mr. Leicher.
Dr. Anderson.
STATEMENT OF GERARD ANDERSON
Mr. Anderson. Thank you. Members of the committee, thank
you for inviting me today. Today I'm presenting, and it's not
as a member of the Johns Hopkins University, but as a faculty
member of Johns Hopkins. So I'm not the corporate
representative for Johns Hopkins.
I'm working on the issue of drug pricing with a team of
faculty at Johns Hopkins with funding from the Arnold
Foundation from The Commonwealth Fund, and a variety of other
entities. I don't receive any funding from the pharmaceutical
industry, wholesalers, insurance companies, or any other
entities involved in the pharmaceutical supply chain.
Last December, I had the opportunity to testify at the
Senate Aging Committee about the rapid increases in off-patent
drugs. Your committee had similar hearings with Martin Shkreli
and others. I made a number of very specific suggestions on how
to deal with the issue of rapid increases and the prices of
off-patent drugs. These ideas are in my written testimony, but
they are basically expedited FDA reviews on allowing
compounding importation in very, very restricted circumstances.
At the time of our testimony, we really didn't understand
exactly how Martin Shkreli and others were able to use limited
distribution chains to stifle competition. It was only after
the investigations of several congressional committees that we
learned all the details of what they were able to do.
Now, just a little bit of background. What happens in most
cases is that the wholesaler takes the drugs from the
manufacturer and brings them to the pharmacy or the hospital
and they're given to patients. The wholesalers compete against
each other, and as a result, the cost of distributing drugs is
very low.
As Dr. Woodcock said, the FDA created the REMS programs,
which required pharmacies, wholesalers to take special
precautions in--for very specific drugs. Now, this is totally
appropriate and very good medical practice. Drugs are put into
these limited distribution networks for safety reasons. In
contrast, what we're hearing about today is companies that have
put these drugs in limited distribution networks to stifle
competition and raise drug prices. Safety is not their concern;
it's profits.
As we've already noted, a problem is that they prevent
generic drug companies from creating the bioequivalents.
Without access to the drugs, a competing drug company just
cannot submit an application to the FDA to manufacture the
drug. There are other concerns as well. The fact is that
putting it into a limited distribution chain allows the drug
company to find out very detailed information about who's
taking that specific drug. Because there's only one
distributor, it's possible to track every single patient using
that drug. So patient confidentiality is very much compromised.
There's other problems as well. Working at a hospital, what
I know is for most drugs you can get the drugs 24/7. All the
wholesalers make them available. But when there's a limited
distribution chain, that may not be true because they may not
be working 24/7.
There is the lack of Federal guidance on when drugs can be
put into one of these limited networks, if the decision is left
to the pharmaceutical company, if it's not part of REMS. And
they're doing it for financial, not safety reasons as in most
cases.
We at Johns Hopkins are assembling an inventory of drugs
that are being dispensed in these limited distribution chains
and the characteristics of them. We're looking at whether or
not the price increases when they're put into a limited
distribution network. And hopefully, in a couple of weeks,
we'll be able to provide the committee some more information.
So we have three policy recommendations for the committee
to consider: The first one is what Congressman Welch
essentially has proposed, which is to limit the drugs placed in
limited distribution networks to only the REMS drugs. If the
Congress doesn't think that this is appropriate, a second
alternative is to require drug companies to sell their products
to all competitors. And the third one is to have it announced
when they're putting it into a REM--into a limited distribution
network when they put an application into the FDA.
For me, the main problem, besides the issue of access, is
the issue of confidentiality.
We're also looking at another alternative, and that's
creating a nonprofit drug company to compete against these
activities. So they would only focus on drugs where there are
no competition, and they would only focus on where there's been
very rapid price increases. The hospitals, everybody's getting
clobbered by this, and we need an alternative.
I'm happy to answer any questions.
[Prepared statement of Mr. Anderson follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Mr. Walker. Thank you, Dr. Anderson.
Mr. Mitchell, we recognize you now for 5 minutes.
STATEMENT OF DAVID MITCHELL
Mr. Mitchell. Mr. Chairman, members of the committee, thank
you very much for inviting me here today. I'm David Mitchell.
I'm founder of Patients for Affordable Drugs. We're a national
organization focused exclusively on policies to lower
prescription drug prices. To maintain our independence, we
don't accept funding from any organizations that profit from
the development and distribution of prescription drugs. We're
about patients first, last, and always.
More importantly, for the committee, I'm a relapsed cancer
patient with multiple myeloma. It's an incurable blood disease.
Drugs are keeping me alive, and because my cancer finds its way
around drugs, I'm going to need new ones. So the importance of
innovative, affordable drugs is not theoretical for me; it's
literally life and death.
I hope to watch my youngest son graduate from high school
in 3 years, and to have one of my older kids give me a
grandchild one day. I'm very grateful for the drugs produced by
the science and research sector in our country. But lifesaving
drugs have to come at prices that'll bankrupt patients and ruin
the lives of people who are struggling to maintain their
health.
Yesterday, I sat in an infusion room for almost 5 hours and
I received a two-drug combination that costs more than $26,000
a month. Prior to this drug regime, I took Revlimid, made by
Celgene, for 5-1/5 years, and I participated in a risk
evaluation and mitigation program.
I obtain my drugs only from specific specialty pharmacies.
And each month, I received counseling on the dangers of this
drug and I participated in a survey designed to remind me of
those dangers. The counseling consisted of a nurse reading a
list of cautions to me. The survey was an automated phone call,
press 1 for yes, 2 for no, and the whole process took 5 to 10
minutes. It could easily have been duplicated by any generic
manufacturer. It wasn't rocket science.
Of course, during the same period, Celgene was doing its
best to delay generic versions of the drug by hiding behind its
restricted distribution system and REMS, refusing to give
samples to generic drugmakers. Here's what that meant for me:
My out-of-pocket cost for Revlimid went from $42 a month in
2011 to $250 a month by the time I had to stop taking it last
year because of side effects. As you can see from this invoice,
the retail price for one 4-week cycle of Revlimid is $10,691,
more than $500 per capsule. Now, I'm lucky. At the time, I had
good employer-provided insurance. I'm on Medicare now. But
Medicare beneficiaries aren't always so fortunate. They're
paying thousands of dollars out of pocket every year. It is the
most expensive out-of-pocket Medicare drug.
Members of the committee, that's the impact of REMS abuse
for real people, and it's a part of the problem with drug
prices in America. Patients are foregoing their medications,
they're spending their retirement funds and their kid's college
savings when a generic competitor sits right around the corner.
In 2016, Revlimid accounted for 62 percent of Celgene's
revenue. Revlimid is key to propping up its stock price. It's
clear to me that Celgene is gaming our system, or as the
chairman said in his opening remarks, manipulating the
regulatory framework. It's using bogus pretext of risk
evaluation mitigation to unlawfully deny samples to generic
manufacturers in order to prevent them from developing a
cheaper alternative. It's blocking market competition. We need
to reform the law and stop these abuses.
But speeding generics to market will only address a
fraction of the problem of high drug prices. The problem is
that instead of a competitive free market for prescription
drugs, we have a system of monopoly pricing by the drug
companies through government policy. We have pharmacy benefit
manager middlemen who process billions in drugs each year but
who keep all their deals secret.
As President Trump has said, and 82 percent of Americans
agree, it's time to allow Medicare to negotiate prices for
drugs on an open market instead of allowing drug companies to
act as monopolies. I also believe that requiring transparency
into PBMs and into prices set when a drug is invented using
taxpayer funding would go a long way to making drugs more
affordable. And we should set prices based on the value they
deliver to patients.
I'm extremely encouraged that members on both sides of the
aisle are focusing on drug prices. In my experience, the most
enduring legislative successes in our country have come with
bipartisan action.
Thank you for your attention.
[Prepared statement of Mr. Mitchell follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Mr. Walker. Thank you, Mr. Mitchell.
Thank you all on the panel for being here today.
I will at this time recognize myself for 5 minutes. I'd
like to start with Mr.--is it Leicher? Is it the long A?
Mr. Leicher. It's Leicher.
Mr. Walker. Leicher. Okay. All right. I missed it in two
areas then.
Mr. Leicher, in 2014, the trade association representing
generic manufacturers commissioned a study showing that the
annual cost of misuse of restricted distribution systems to
delay generic market entry was about $5.4 billion annually. The
estimated cost to the Federal Government was $1.8 billion.
In the past few years, has Momenta Pharmaceuticals
encountered more difficulty accessing samples or have they
encountered less difficulty? Could you answer that, please?
Mr. Leicher. So we've encountered more difficulty accessing
samples, because what I think has happened is companies have
found that the law is not being enforced that exists today, and
that the litigation that's been brought against them for
engaging in these activities has been able to delay access.
Mr. Walker. In your testimony, you said that at times when
you have tried to purchase samples from wholesalers, they ask
you if you are conducting generic or biosimilar studies. And
when you respond yes, they tell you their contract prohibits
them from selling samples to you. Do you then go to the
manufacturer or try to obtain samples? And if so, how do they
respond? Would you break that down, first?
Mr. Leicher. Yes, I'd be happy to. So we would go to a
wholesaler typically to buy the product. And for many products,
we're able to buy the product, because there's just certain
companies that are engaging in these practices. We have chosen
to go and develop other products in cases where we haven't been
able to purchase from the wholesaler, just because we had other
options for development available given our size.
It would be--we don't believe that we would have--we
believe we would have ended up in protracted negotiations if we
had gone to the manufacturer, based on our experience with
talking to other companies.
Mr. Walker. Just a couple more questions. Are these
expensive products that have been off patent for a while?
Mr. Leicher. These are all products that we designed in the
development program to launch when the patents expire. That's
the intent of the biosimilar law in Hatch-Waxman. You access
the product near the end of the patent life to do the
development, and then you prepare to launch at the time the
patents are over.
Mr. Walker. Okay. Well, I think it's pretty clear. I
appreciate your articulation. I guess my last question would be
how do we fix the problem?
Mr. Leicher. Well, we think the best way to fix the problem
is to--and there are proposals in terms of the FAST Generics
Act and the CREATES Act in the Senate--is to recognize more
explicitly that a condition of an FDA approval is a recognition
that products will be sold on commercially reasonable terms to
generic and biosimilar companies so that we can fulfill the
promise of Hatch-Waxman and the promise of the biosimilar law.
Mr. Walker. Thank you, Mr. Leicher.
At this time, I'm going to yield 5 minutes to Mr.
Krishnamoorthi. Are we getting closer? I know we're still
working on that.
Mr. Krishnamoorthi. Pretty close.
Mr. Walker. Okay.
Mr. Krishnamoorthi. Call me Raja.
Mr. Mitchell, thank you again for appearing before the
subcommittee and sharing your very personal experience with us.
As we heard in your testimony, you've experienced rising
prescription drug prices in a deeply personal way through your
battle with cancer. You described your experience with one drug
in particular, Revlimid, which is made by the drug company
Celgene. Celgene has been accused of improperly using its
restricted distribution systems to prevent would-be generic
competitors from getting access to samples of Revlimid which
they need to eventually get FDA approval.
In fact, the FTC warned, in a 2014 amicus brief filed in a
lawsuit against Celgene, quote, ``If a brand firm can
effectively block generic firms from accessing brand product
for bioequivalence testing, it may be able to continue to
prevent generic competition, even after its patents on these
products expire.''
So we're really talking about a time period after the
patents expire. The FTC also warned that this practice could,
quote, ``undermine the core principle of the patent system that
patents have a limited duration.''
Mr. Mitchell, what does the prospect of generic competition
mean to you as a patient?
Mr. Mitchell. It means lower prices for drugs that will
work just as well as the brand name drugs that are being given
to me and other patients.
Sticking with Revlimid, the Kaiser Family Foundation
reports that the median out-of-pocket cost for a Medicare part
D beneficiary on Revlimid is $11,500 a year. This is from a
company that runs profits in the high 20s and paid its CEO
almost $100 million over the last 3 years. So there's room
there to lower the price and continue investment in R&D,
produce a good return for investors, but lower the cost for
patients for a drug that will work equally well.
Mr. Krishnamoorthi. Well, the interesting thing about what
you said is that your out-of-pocket expenses are almost $12,000
a year. Think of what it's costing Medicare to provide these
drugs to yourself. I mean, this is why Medicare is going to go
bankrupt if we don't get control of these prescription drug
prices.
Mr. Mitchell. Well, and it's not only Medicare; it's
employers----
Mr. Krishnamoorthi. Right.
Mr. Mitchell. --who are trying to provide good health
benefits to their employees. When they're confronted with
rising costs like this, it becomes increasingly difficult to
provide the benefits that people need at prices that they can
afford.
Mr. Krishnamoorthi. Absolutely, you're right. It's going to
bankrupt, you know, our healthcare system, these prescription
drug prices rising as fast as they are.
Dr. Anderson, I know you researched restricted distribution
systems in-depth. In addition to blocking generic competition,
how are these restricted distribution systems harmful to the
drug market as a whole?
Mr. Anderson. Well, essentially what they do for a patient
perspective is that they gather all sorts of information about
you when it's on one of these restricted--so they know exactly
what Mr. Mitchell's circumstances are. So they have all the
information they want to know about him. And you might think
that is fine; I am actually very concerned about the privacy
type of issues that are involved with this.
And as a hospital, it's very difficult sometimes to access
these drugs. Most drugs are available very easily when you need
them. And, you know, Cardinal is coming to Johns Hopkins, one
of the big wholesalers, every day with truckloads of drugs. But
when you're on a limited distribution chain, you might not get
it for several days. And if you need that drug on a Saturday,
you might not get it. So there are patient safety issues in
these concerns as well.
Mr. Krishnamoorthi. Dr. Anderson, can you estimate or do
you have an idea, a ballpark estimate, of how many drugs are,
you know, in this kind of bucket of drugs that are basically
being--flowed through the restricted distribution systems in
this kind of what I believe to be an anticompetitive fashion?
Mr. Anderson. We don't know an exact number, but we think
it's somewhere in the 150 to 250 range. And what we know is
that the investment bankers know exactly who it is, and that's
where the Martin Shkrelis and other people are looking for
these kinds of things where there are no, in fact, competitors
and they're going out and buying those particular activities.
So it's a market opportunity for the investment banking
community.
Mr. Krishnamoorthi. Thank you, sir. Thank you very much.
Mr. Chairman, I yield back.
Mr. Walker. Thank you very much.
We usually would rotate back to the gentleman from
Wisconsin. Mr. Grothman, would you be okay if I yielded time to
our overall ranking member on the committee? We'll come back to
you after that and put you back into sequence.
Mr. Grothman. Well, it depends who the overall ranking
member is.
Mr. Walker. It would be Mr. Elijah Cummings.
Mr. Grothman. Well, sure.
Mr. Walker. Mr. Cummings, you're recognized for 5 minutes.
Mr. Cummings. Thank you very much, Mr. Chairman.
Mr. Chairman, the issue--and I want to thank the ranking
member and you, Mr. Chairman, for this hearing.
The issue of drug prices has been one of my top priorities
for the past several years. As a matter of fact, just last
week, Congressman Welch and I, along with the president of
Johns Hopkins Hospital met with President Trump on this issue.
And I appreciate that Chairman Chaffetz has worked with me in a
bipartisan manner at the full committee level to address this
issue, which affects all of our constituents.
We all agree that innovation is key, especially when it
comes to prescription drugs that save lives. We rely on drugs
to help us fight disease, and we want pharmaceutical companies
to develop the next cure. We also want them to make a
reasonable profit. We also expect drug companies to make a
profit. In fact, the pharmaceutical industry has been one of
the most profitable industries in America.
Mr. Mitchell, I thank you for your testimony. And I'm going
to make sure that President Trump hears your testimony, because
you're right. I mean, he gets it, he really does. And I think
your testimony is jarring, because there are a lot of people
that are going through what you're going through. And I thank
God that you take your pain, turned it into a passion to do
your purpose. To do your purpose. And I appreciate it. And I
really mean that.
But what have we seen year after year, investigation after
investigation? Are drug companies exploiting the system and
taking advantage of consumers like Mr. Mitchell, while making
obscene profits at their expense? We've seen drug companies
swoop into the market to buy old drugs and then jack up the
price.
Mr. Mitchell, Shkreli sat where you sat, where you're
sitting right now, and he basically called us imbeciles because
we wanted to make sure that the American people could afford
drugs that would keep them alive, keep them healthy. And then
he took the Fifth and then, you know, sashayed out of here.
So going back, no R&D, no commitment to patients, just a
cold, pricing strategy, designed to take advantage of a
temporary monopoly. But one of the things that, I guess,
bothers me with all of this, and when I look at you Mr.
Mitchell, I--it bothers me that our country and certain
industries, certain folks in the pharmaceutical industry don't
mind something called collateral damage. In other words, people
are unable to afford the drugs that they need. Why? Because of,
in many instances, greed.
Shkreli is a perfect example. I know everybody is not like
Shkreli. I know that. But there are a lot of Mr. Mitchells.
There are a lot of you. As a mater of fact, I just met some
ladies getting off the elevator who had been in my office who
told me that for a certain disease, they were here lobbying,
they said for a certain disease, I can't remember which one,
she said 3 years ago it cost $8,000 a year, now it's $85,000 a
year. Come on now. We are a country that is better than that.
And so we've obtained internal documents that exposes
business strategy, and we have called drug company CEOs to come
before the committee to justify their actions. But they never--
this is the thing that gets me, Mr. Mitchell. You know what?
They come, they do a song and a dance, they do the rope-a-dope,
they talk about all these drug programs that they have for
discounts, they sashay their way out of here, get on their
planes, and they never lower the prices. Collateral damage.
People left to get sicker. People left to die.
So we've seen this time and time again. And then they get
upset when the stock prices go down. Oh, the stock prices--they
make millions, while people are sitting right now, watching us,
with chemo dripping through their veins, trying to figure out
how they're going to survive--not only how they're going to
survive, but how are they going to do their daily chores. So,
again, I hope that we don't just come, have a hearing, and then
move on, because there's too much at stake.
With that, Mr. Chairman, I thank you for your indulgence,
and I yield back.
Mr. Walker. Thank you to the ranking member, Mr. Cummings.
With that, we'll yield 5 minutes to the gentleman from
Wisconsin, Mr. Glenn Grothman.
Mr. Grothman. Thank you.
I'm not sure which one I'll lead with. Maybe Mr. Leicher. I
don't know if I got that right. Just in general, you know,
there's a general perception out there, and I'm sure the
government wouldn't do a very good job if they had to come up
with these new drugs, but a general perception that, to me,
both sometimes drugs are overprescribed and sometimes you
wonder about the price.
I don't think you guys have looked at financial statements,
but, obviously, a drug company, like any company, has expenses.
Some of those expenses are the literal production of the drug.
Some of those expenses are the research and approval of the
drug. Some of those expenses are sales and promotion of the
drug.
If somebody spends 10 bucks on a drug, do one of you folks
give us a ballpark as to how much of that 10 bucks went into
research, how much went into sales and marketing, how much went
into administration, that sort of thing?
Mr. Anderson. So if you were talking about a brand company,
not a generic company, then it's about 17--$1.70 for what goes
into R&D and about $2.50 that would go into marketing, about
$2.50 would be profit. Very little would actually be
manufacturing, and the rest would be a variety of other things.
Mr. Grothman. You still have 33 percent to go. Do you want
to take a crack at the other 33 percent?
Mr. Anderson. Essentially--I'd have to come back to you on
that.
Mr. Grothman. Okay. Anybody else have a crack?
Mr. Leicher. I'm not sure I can give better numbers than
that. But what I would add to that is that from a generic and
biosimilars business perspective where marketing is not a
significant factor, and all the activities associated with
commercialization are not a factor, that's what provides the
opportunity for, in the generics business, up to an 80 percent
reduction in price when there's multiple competitors entering
the market when patents expire and, you know, estimates of, you
know, initially, a 30 percent and perhaps more reduction of
price for biosimilars.
Mr. Grothman. And maybe you guys don't know. You say 25
percent is marketing. Do you know what that is compared to,
say, the cell phone industry or the automotive industry? It
doesn't have to be this high, but is it high?
Mr. Anderson. It is higher than most other industries, but
I couldn't give you an exact number for all of those.
Mr. Grothman. Okay. We'll fire away with some of the other
more expected questions.
Dr. Anderson, what lessons have you learned from examining
drug shortages that could be used to help address egregious
situations like Turing?
Mr. Anderson. So, essentially, what you see is generally a
two-pronged approach. One is a shortage occurs and it's very
hard to get access to a drug. And then following that, what you
see is a fairly steep price increase. So they take advantage of
when there's a shortage. Often, it is when there are two
companies that are manufacturing a drug and one of them stops
manufacturing that drug, either because it's not profitable for
them to do so anymore or they run into some production problem,
and therefore they can't manufacture it. And what we're seeing
is a lot of mergers in the generic space. And those things are
cutting down the amount of competition. And so you're seeing
that as a third problem.
Mr. Grothman. Okay. What can we do to encourage more
competition among generics?
Mr. Anderson. Well, essentially, what you need to do is to
try to get them to--you've got to stop the mergers, is the
first thing. And the second thing is to make it easier for them
to--when there is no competition, to enter the market. And so
that's why I proposed the expedited review by the FDA, which
the FDA is starting to do now. So make it easier for a
competitor to enter the market.
Mr. Grothman. You said stop the mergers.
Mr. Anderson. Yep.
Mr. Grothman. It does--in all industries, compared to when
I was a child, it seems like everything is mergered into a few
industries, but how many major drug manufacturers are operating
now in the United States? Like if there should be a market for
a new pharmaceutical, how many drug companies are out there who
have the ability to develop the generic and market it?
Mr. Anderson. There are still a number, but what we saw
last year is the number one generic firm acquired the number
three generic firm in the United States. So we're seeing some
mergers of very large generic companies occurring.
Mr. Grothman. And when number one swallows number three, or
vice versa, do you notice an increase in price?
Mr. Anderson. Well, you don't notice an increase in where
there are not competitive drugs.
Mr. Grothman. I mean, what I'm saying is I assume sometimes
if one swallows three, that there now is no competition. I
guess that's what I'm trying to get at.
Mr. Anderson. That's what I'm saying. You know, the generic
industry works incredibly well when there are three, four
competitors in the market. It looks less well when there are
two, and it doesn't work at all when there's none.
Mr. Grothman. Okay. I guess I'm well past my time. So thank
you for the indulgence, Mr. Chairman.
Mr. Walker. Thank you, Mr. Grothman.
At this time the chair yields 5 minutes to Ms. Kelly.
Ms. Kelly. Thank you, Mr. Chair and ranking member.
Mr. Mitchell, thank you so much for joining us today and
for your testimony. You represent the voice of many of our
constituents on both sides of the aisle, that they are the
financial burden that is the consequence of companies'
anticompetitive behavior. And in your testimony, you stated
that your prescription went up nearly 600 percent, in essence,
doubled since 2011 when you stopped taking it due to side
effects. And the company that manufactures Revlimid, Celgene,
reported $1.6 billion in 2015, which accounted for 62 percent
of that revenue Revlimid did.
Mr., and I'm going to say, is it Leicher?
Mr. Leicher. Leicher.
Ms. Kelly. Leicher. Okay. Are you aware of any companies
that have benefited in such a great manner from anticompetitive
behavior, and how common is the practice?
Mr. Leicher. I'm not sure we're experts on how common that
practice is because it's not something we seek to engage in,
certainly at my company. But we're aware of the scenarios that
you've described, the Daraprim scenario, and the fact that they
were using restricted access programs as a way to prevent
competition. Those are largely what was just described, efforts
by companies to purchase what may even be an old generic drug
in a shortage situation rebranded and launched it as a branded
product with a very high price often when the patents have
expired.
And what we see as the real solution here is to reduce the
barriers to entry. And one of the big barriers to entry is what
this hearing is all about, is if we can't obtain reference
product from a brand company to test and develop a generic, we
won't have generic or biosimilars to compete and actually use
the most effective tool available, which is competitive
competition to bring the prices down.
Ms. Kelly. It's just amazing to me. Do they think that, you
know, people aren't going to notice or not say anything? I know
you're not a psychiatrist, I don't think you are, but I don't
get it.
Mr. Leicher. You know, it's amazing to me too, because what
they're doing is they're waiting to see if they're going to
lose the litigation. The larger companies--you know, that's
what I mean by a barrier entry. We can't afford to litigate for
3 years to purchase some samples at a fair market value from a
company and then start development 3 years from now. So they're
using that delay of litigation to prevent us from entering that
business.
And, you know, it answers the question that was asked
earlier, you know, what about all the mergers? Well, Momenta is
an example. We're not the only one. We're an example of a
company that's a new entrant into this business in the last 10
years. We're providing very significant competition. We
developed generic enoxaparin, which was a very significant cost
reduction in the country. We developed a generic version of
Copaxone. We're working on seven biosimilar programs. But if we
can't access the referenced product, none of that can happen.
Ms. Kelly. So you see that as the main----
Mr. Leicher. We see that as--I've put that as number one on
our list of barriers.
Ms. Kelly. And what's two and three? And if anybody wants
to join in.
Mr. Leicher. Two and three?
Ms. Kelly. If you have a two and three.
Mr. Mitchell. Barriers to generic drugs or barriers to
lowering prices?
Ms. Kelly. Well, barriers to assess, and what are the
barriers to lowering the prices? What can we do? What are best
practices we can implement? What can we do to change this?
Mr. Anderson. So, I mean, I guess we need a little more
help from you in terms of we can do it in brand space, we can
do it in the generic space. Those are very different spaces
so----
Ms. Kelly. Well, I guess what can Congress do to help you?
Mr. Anderson. Right. So one of the things about Revlimid
and others is the whole issue of negotiation. What you heard
was $11,000 in out-of-pocket expenditures for a Medicare
beneficiary. If you're making $22,000 on Social Security,
$11,000 is just prohibitive.
What you've got to recognize is who's paying most of that
cost. Eighty percent of the cost is paid for by the Medicare
program. Medicare cannot negotiate those prices one little bit
when it's paying 80 percent of the cost in the Medicare
catastrophic amount.
I helped design the Medicare Catastrophic bill. We did not
anticipate drugs that cost $75,000 on it. It was designed to
help the person who had multiple chronic conditions that was
taking a lot of very inexpensive drugs, but a lot of them, and
they would enter the catastrophic amount. The drug companies
looked at this and said, oh, if I charge $80,000 for a drug
that a Medicare beneficiary might take, Medicare is going to
pay $64,000 of that. And the beneficiary will end up paying a
fair amount too, and the PDP, the Medicare drug plan only pays
15 percent.
So it wasn't designed for what's happening today. And this
is something, you know, now 14 years later, we need to revise.
Ms. Kelly. Thank you. I know my time has run out.
Mr. Walker. Thank you, Ms. Kelly.
At this time, we'll recognize Mr. Mitchell for 5 minutes.
Mr. Mitchell of Michigan. Thank you, Mr. Chair.
Dr. Woodcock, can you please help me understand a few
things here. Can you explain the role that the FDA currently
plays in ensuring timely and full access to generic
medications?
Dr. Woodcock. FDA--what FDA does is approve--try to approve
those generics at the time all patents expire and exclusivity
expires. So as is already explained, the way the system is set
up, people can file before that----
Mr. Mitchell of Michigan. Right.
Dr. Woodcock. --or do their development--not file an
application, but do their development process, and then they
can file and then they can get approved right at the time or
even tentatively approved prior to, a little bit prior to, so
they know they have a path to market.
Mr. Mitchell of Michigan. In the last year or two, can you
share with the committee how many complaints you've received
from generic manufacturers that they aren't able to access
approved medications in order to proceed with research and
production?
Dr. Woodcock. Well, overall, we've received over 150
inquiries. And we don't--about their inability to access the
reference listed drug, and that's in the generic space. We have
not--we don't have it nailed down in the biosimilar space,
which is a new program where----
Mr. Mitchell of Michigan. What's your distinction between
an inquiry and a complaint?
Dr. Woodcock. Oh, okay.
Mr. Mitchell of Michigan. I come from a very simple world
here.
Dr. Woodcock. Well, we wouldn't call--we hear about them,
all right. And obviously, they're complaining. They inquire if
we can get the drug somehow or something like that, and I've
explained what we do. If there is a real FDA-imposed REMS
program that actually restricts the drug, we have a way we go.
We send a letter--after reviewing the protocol, we send a
letter to the reference listed drug holder saying that it's
safe to provide that drug and that the REMS doesn't apply. But
that doesn't mean they're going to go and give the drug.
Mr. Mitchell of Michigan. Why does it not mean they're
going to give the drug?
Dr. Woodcock. Because we don't have the authority to order
them to do that. We simply are telling them that the REMS
restrictions, which means they can't just give the drug out to
anyone because of safety----
Mr. Mitchell of Michigan. I understood that.
Dr. Woodcock. --doesn't apply in this situation, and that
we have actually reviewed the generic protocol to make sure
that it doesn't make any safety risks.
Mr. Mitchell of Michigan. So the FDA's position currently
is, well, we'll waive REMS or--but if you--if the manufacturer
of the brand name drug doesn't want to provide access, they're
left to litigate. Is that the best answer that they have?
Dr. Woodcock. We also have referred all these circumstances
to the FTC.
Mr. Mitchell of Michigan. And what's happened at the FTC,
for entertainment purposes?
Dr. Woodcock. I do not know the answer to that. We can get
back to you.
Mr. Mitchell of Michigan. I think the committee would be
interested in that.
Mr. Chair, can we request that information? Is that
feasible?
Anybody else want to weigh in on this question? It seems to
me that we send them a letter, say, gee, it would be nice if
you sent the medication. If they choose not to, you can, you
know, gain yourself--bring on some attorneys and sue.
Mr. Mitchell. I do know from preparing for the hearing, Mr.
Mitchell, that the FTC has filed amicus briefs in cases,
including the case involving Celgene and Revlimid, saying that
Revlimid--Celgene's behavior is anticompetitive and arguing
that the REMS' excuse is just that, a pretext.
Mr. Mitchell of Michigan. And how long has that--as an
example, how long has that case been going on?
Mr. Mitchell. I believe that case has been going on since
2014.
Mr. Mitchell of Michigan. Any solutions side on that that
you've seen, or we're still in appeals process?
Mr. Mitchell. No, sir. I'm not a lawyer.
Mr. Mitchell of Michigan. Well, neither am I, sir.
Mr. Leicher. What I could add to that is the FDA has done
an effective job in documenting that generic and biosimilar
companies have the safety capability to handle these products
when asked. But the FDA does not have authority to regulate
competition among competitors, and that's really where the
issue is.
And that's where some of the statutes, you know, Mr.
Welch's bill is directed, which is--goes to the core of what
Hatch-Waxman said and what the biosimilars law said, which was
that you need to have access to the reference product
commercially. They don't give us samples. It's described as
samples. We purchase them at full price.
Mr. Mitchell of Michigan. Well, see, I don't see it as
regulating the competitions. It's, in effect, allowing the sale
of the drug that they would to any other party.
Mr. Leicher. Exactly.
Mr. Mitchell of Michigan. It's not like they're trying to
just provide the drug at the same retail price anybody else
pays.
Mr. Leicher. I stated it backwards. It's regulating the
anticompetitive prevention.
Mr. Mitchell of Michigan. Okay. Maybe that--okay.
I'll yield back. Thank you very much, Mr. Chair.
Mr. Walker. Thank you, Mr. Mitchell.
Mr. Welch, looks like they have called votes, but I believe
we have time, not normally on the subcommittee, but we yield
you 5 minutes for your questions. Thank you.
Mr. Welch. Thank you very much.
First of all, I want to thank Mr. Mitchell for his
questions, because I think they really do go to the heart of
the issue. It's not a safety issue; it's an anticompetitive
issue. And ideally, we would have the drug made available for
research and then the patent holder of the drug has the full
benefit of that legal patent for the period of time of
protection.
So the patent holder here--and tell me if you disagree--is
basically trying to extend the life of the patent, i.e., the
monopoly beyond the legally protected timeframe. Is that
correct?
Mr. Mitchell. Yes.
Mr. Anderson. Yes.
Mr. Leicher. Yes.
Mr. Welch. Well, that doesn't sound right. So, I mean, this
is where there's some, I think, reason why there's some
bipartisan support here, because I think most of us up here
support competition, and we also oppose gaming the system. I
mean, it's a very significant legal benefit to an owner of
intellectual property, whether it's a patent--whether it's a
pharmaceutical drug or something else, to get something that
can only be given by law, and that is a period of exclusivity
where, essentially, they have market dominance and are able to
then profit on that company. And none of us here in this
legislation are suggesting an attack on that scheme. But I
think all of us in support of this legislation are opposed to
gaming that.
Mr. Mitchell, I want to just say, I agree with Elijah
Cummings. And I want to say to all the witnesses, you don't
know what a breath of fresh air it is to have folks coming in
here that aren't asking for some special advantage and are
trying to help us on a bipartisan basis understand what we can
do public policywise to help a lot of Americans who just want
to live their lives, but do need medication along the way. So
this is like unusual for us, okay. And thank you.
Dr. Anderson, could you just go through just the specifics
again, because I think it's helpful for all of us to hear about
it, about how the obstacles are put in the way of the generic
companies to get the sample that they need in order to do the
research required to then have Momenta put a generic drug on
the market.
Mr. Anderson. So it's pretty simple. You basically create,
and most of these companies are creating their own specially
distribution networks or they're working with some existing
thing to do it, and then they're very much restricting access
to these drugs.
It's true both in the brand side, which Mr. Leicher has
been talking about mostly, but it also turns in the off-patent
activities as well, where this drug has been around for 50
years. But only in the case of Turing Pharmaceuticals, there's
only about 5,000 of those drugs that are being distributed
every year.
So the company knows exactly who's buying it and can say,
you know, Mr. Welch, you don't have that disease, you're not
entitled to that drug, because then you can't give it to Mr.
Leicher for him to make it. So, essentially, what they're doing
is keeping that access to that drug and then they can't apply
to Janet Woodcock.
Mr. Welch. Okay. You mentioned the legislation. I'm a
cosponsor with Mr. Stivers on the Republican side. Would that
address, in your view, the issue that you're speaking about?
Mr. Anderson. No, I think it very much would. I mean, it's
a great piece of legislation, and I totally--I can't endorse it
as a faculty member, but I think it makes complete sense.
Mr. Welch. And I'll just ask you this: Congressman Cummings
was talking to his new best friend, President Trump--I can't
say that. But I was sitting there when President Trump was very
enthusiastic about price negotiation. And the concern that I've
heard from some opponents of negotiation authority for Medicare
is that that would be the equivalent of price setting. And can
you give me your reaction to that.
Mr. Anderson. Well, essentially what you have, and
especially in the Medicare program for these very expensive
drugs, is Medicare is a silent partner paying 80 percent of the
cost. So that makes absolutely no sense to me.
So if I were to start in the price negotiation activity, it
would be where Medicare is paying 80 percent of the cost and
has no negotiating ability at all. You know, I think you could
do broader than that, but I think if I had to start somewhere
where I think there should be some level of bipartisan
agreement on it, it should be where Medicare is paying 80
percent of the cost.
Mr. Welch. Okay. I thank you, all.
And I yield back.
Mr. Walker. Thank you very much.
With that, I'd like to thank certainly the FDA for showing
up today, some last minute things, but we're grateful. In fact,
Dr. Woodcock, Mr. Leicher, Dr. Anderson, especially you, Mr.
Mitchell, for having the courage today to come and share your
story. That's an honor for us to be part of listening to you
and hearing you out, really the importance of why this is so
much--important, really for all of us. So thank you all.
I would ask unanimous consent that members have 5
legislative days to submit questions for the record.
Without objection, so ordered.
If there is no further business, without objection, the
subcommittee stands adjourned.
[Whereupon, at 3:13 p.m., the subcommittee was adjourned.]
APPENDIX
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