[House Hearing, 116 Congress]
[From the U.S. Government Publishing Office]


                  MAKING HEALTH CARE MORE AFFORDABLE:
                        LOWERING DRUG PRICES AND
                        INCREASING TRANSPARENCY

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

                                HEARING

                              BEFORE THE

        SUBCOMMITTEE ON HEALTH, EMPLOYMENT, LABOR, AND PENSIONS


                         COMMITTEE ON EDUCATION
                               AND LABOR
                     U.S. HOUSE OF REPRESENTATIVES

                     ONE HUNDRED SIXTEENTH CONGRESS

                             FIRST SESSION

                               __________

           HEARING HELD IN WASHINGTON, DC, SEPTEMBER 26, 2019

                               __________

                           Serial No. 116-42

                               __________

      Printed for the use of the Committee on Education and Labor
      
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           Available via the World Wide Web: www.govinfo.gov
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              Committee address: https://edlabor.house.gov
              
                               __________
                               

                    U.S. GOVERNMENT PUBLISHING OFFICE                    
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                    COMMITTEE ON EDUCATION AND LABOR

             ROBERT C. ``BOBBY'' SCOTT, Virginia, Chairman

Susan A. Davis, California           Virginia Foxx, North Carolina,
Raul M. Grijalva, Arizona            Ranking Member
Joe Courtney, Connecticut            David P. Roe, Tennessee
Marcia L. Fudge, Ohio                Glenn Thompson, Pennsylvania
Gregorio Kilili Camacho Sablan,      Tim Walberg, Michigan
  Northern Mariana Islands           Brett Guthrie, Kentucky
Frederica S. Wilson, Florida         Bradley Byrne, Alabama
Suzanne Bonamici, Oregon             Glenn Grothman, Wisconsin
Mark Takano, California              Elise M. Stefanik, New York
Alma S. Adams, North Carolina        Rick W. Allen, Georgia
Mark DeSaulnier, California          Lloyd Smucker, Pennsylvania
Donald Norcross, New Jersey          Jim Banks, Indiana
Pramila Jayapal, Washington          Mark Walker, North Carolina
Joseph D. Morelle, New York          James Comer, Kentucky
Susan Wild, Pennsylvania             Ben Cline, Virginia
Josh Harder, California              Russ Fulcher, Idaho
Lucy McBath, Georgia                 Van Taylor, Texas
Kim Schrier, Washington              Steve Watkins, Kansas
Lauren Underwood, Illinois           Ron Wright, Texas
Jahana Hayes, Connecticut            Daniel Meuser, Pennsylvania
Donna E. Shalala, Florida            William R. Timmons, IV, South 
Andy Levin, Michigan*                    Carolina
Ilhan Omar, Minnesota                Dusty Johnson, South Dakota
David J. Trone, Maryland             Fred Keller, Pennsylvania
Haley M. Stevens, Michigan
Susie Lee, Nevada
Lori Trahan, Massachusetts
Joaquin Castro, Texas
* Vice-Chair

                   Veronique Pluviose, Staff Director
                 Brandon Renz, Minority Staff Director
                                 ------                                

        SUBCOMMITTEE ON HEALTH, EMPLOYMENT, LABOR, AND PENSIONS

                FREDERICA S. WILSON, Florida, Chairwoman


Donald Norcross, New Jersey          Tim Walberg, Michigan
Joseph D. Morelle, New York            Ranking Member
Susan Wild, Pennsylvania             David P. Roe, Tennessee
Lucy McBath, Georgia                 Rick W. Allen, Georgia
Lauren Underwood, Illinois           Jim Banks, Indiana
Haley M. Stevens, Michigan           Russ Fulcher, Idaho
Joe Courtney, Connecticut            Van Taylor, Texas
Marcia L. Fudge, Ohio                Steve C. Watkins, Jr., Kansas
Josh Harder, California              Ron Wright, Texas
Donna E. Shalala, Florida            Dan Meuser, Pennsylvania
Andy Levin, Michigan                 Dusty Johnson, South Dakota
Lori Trahan, Massachusetts           Fred Keller, Pennsylvania
(VACANT)
                            
                            
                            C O N T E N T S

                              ----------                              
                                                                   Page

Hearing held on September 26, 2019...............................     1

Statement of Members:
    Walberg, Hon. Tim, Ranking Member, Subcommittee on Health, 
      Employment, Labor, and Pensions............................     4
        Prepared statement of....................................     5
    Wilson, Hon. Frederica S., Chairwoman, Subcommittee on 
      Health, Employment, Labor, and Pensions....................     1
        Prepared statement of....................................     3

Statement of Witnesses:
    Garthwaite, Mr. Craig, Ph.D, Associate Professor of Strategy 
      Northwestern University Kellogg School of Management.......    62
        Prepared statement of....................................    64
    Holt, Mr. Christopher, Director of Health Care Policy 
      American Action Forum......................................    51
        Prepared statement of....................................    53
    Isasi, Mr. Frederick, J.D., MPH Executive Director Families 
      USA........................................................     7
        Prepared statement of....................................     9
    Mitchell, Mr. David, Founder, Patients for Affordable Drugs..    91
        Prepared statement of....................................    93
    Socal, Dr. Mariana P., MD, MS, MPP, Ph.D, Assistant 
      Scientist, Johns Hopkins Bloomberg School of Public Health, 
      Department of Health Policy and Management.................    28
        Prepared statement of....................................    30
    Talente, Ms. Bari, J.D., Executive Vice President, Advocacy, 
      National Multiple Sclerosis Society........................    17
        Prepared statement of....................................    19

Additional Submissions:
    Levin, Hon. Andy, a Representative in Congress from the State 
      of Michigan:
        Letter dated September 25, 2019 from the International 
          Union, United Automobile, Aerospace and Agricultural 
          Implement Workers of America (UAW).....................   135
    Ms. Wilson:
        Letter dated September 19, 2019 from AARP................   137
        Prepared statement from the Alliance for Retired 
          Americans..............................................   140
        Prepared statement from the California Medical 
          Association............................................   141
        Letter dated September 24, 2019 from the American Medical 
          Association (AMA)......................................   142
        Letter dated September 26, 2019 from the American 
          Federation of Teachers (AFT)...........................   143
        Press Release: Lower Drug Costs Now Act Promises to Bring 
          Down Prescription Drug Prices..........................   145
        Press Release: Working People Deserve Affordable 
          Prescription Medicines.................................   149
    Questions submitted for the record by:
        Mr. Levin................................................   153
        Schrier, Hon. Kim, a Representative in Congress from the 
          State of Washington....................................   155
        Stevens, Hon. Haley M., a Representative in Congress from 
          the State of Michigan 

        Underwood, Hon. Lauren, a Representative in Congress from 
          the State of Illinois 


        Levin, Hon. Andy, a Representative in Congress from the 
          State of Michigan......................................   153
    Responses to questions submitted for the record by:
        Mr. Isasi................................................   161
        Mr. Mitchell.............................................   165
        Dr. Socal................................................   168
        Ms. Talente..............................................   170

 
        MAKING HEALTH CARE MORE AFFORDABLE: LOWERING DRUG PRICES
                      AND INCREASING TRANSPARENCY

                              ----------                              


                      Thursday, September 26, 2019

                       House of Representatives,

         Subcommittee on Health, Education, Labor, and Pensions

                    Committee on Education and Labor

                            Washington, D.C.

                              ----------                              

    The subcommittee met, pursuant to call, at 2:01 p.m., in 
Room 2175, Rayburn House Office Building. Hon. Frederica S. 
Wilson [chairwoman of the subcommittee] presiding.
    Present: Representatives Wilson, Norcross, Morelle, Wild, 
McBath, Underwood, Stevens, Courtney, Fudge, Harder, Shalala, 
Levin, Trahan, Scott, Walberg, Roe, Allen, Banks, Taylor, 
Watkins, Wright, Meuser, Johnson, and Keller.
    Also Present: Representatives, Davis and Foxx.
    Staff Present: Ilana Brunner, General Counsel; Emma Eatman, 
Press Assistant; Daniel Foster, Health and Labor Counsel; 
Carrie Hughes, Director of Health and Human Services; Ariel 
Jona, Staff Assistant; Stephanie Lalle, Deputy Communications 
Director; Jaria Martin, Clerk/Assistant to the Staff Director; 
Max Moore, Office Aide; Merrick Nelson, Digital Manager; 
Veronique Pluviose, Staff Director; Banyon Vassar, Deputy 
Director of Information Technology; Joshua Weisz, 
Communications Director; Cyrus Artz, Minority Parliamentarian; 
Courtney Butcher, Minority Director of Member Services and 
Coalitions; Cate Dillon, Minority Staff Assistant; Rob Green, 
Minority Director of Workforce Policy; Jeanne Kuehl, Minority 
Legislative Assistant; John Martin, Minority Workforce Policy 
Counsel; Hannah Matesic, Minority Director of Operations; 
Alexis Murray, Minority Professional Staff Member.
    Chairwoman WILSON. I note that a quorum is present. The 
subcommittee on Health Employment Labor and Pensions will now 
come to order. Welcome to everyone.
    I note that the subcommittee--for the subcommittee: Mr. 
Grijalva, Ms. Davis of California, Mr. Castro of Texas, and Ms. 
Jayapal of Washington and Ms. Schrier of Washington are 
permitted to participate in today's hearing with the 
understanding that their questions will come only after all 
members of the subcommittee on Health, Employment, Labor, and 
Pensions, on both sides of the aisle who are present and have 
had an opportunity to question the witnesses.
    The subcommittee is meeting today in a hearing to receive 
testimony on making health care more affordable, lowering drug 
prices and increasing transparency.
    Pursuant to rule 7(c), opening statements are limited to 
the Chair and the Ranking Member. This allows us to hear from 
our witnesses sooner and provides all members with adequate 
time to ask questions.
    I recognize myself now for the purpose of making an opening 
statement.
    Today, we are gathered to discuss policy solutions to 
reduce prescription drug prices for consumers, businesses and 
taxpayers. Prescription drug prices are out of control. More 
than $450 billion or about $1,100 per person is spent across 
the healthcare system every single year.
    Pharmaceutical companies are charging American prices that 
are three, four, or in some cases, dozens of times higher than 
what they charge for the exact same drugs they sell in other 
countries.
    As a result, Americans across the nation are struggling to 
afford the medication they need to maintain their health. In 
fact, in the past three years, in ten adults decided--in the 
past year, three in ten adults decided to forego taking their 
prescribed medications because of the cost.
    We must act on behalf of people like Azima, a social worker 
in my home state of Florida who struggles to make monthly co-
payments for her prescription drugs which cost more than her 
rent, electricity, cell phone bill and car payment combined, 
and Jesimya David Scherer-Radcliff who tragically died from 
rationing the lifesaving insulin he needed to treat his 
diabetes.
    As our witnesses will share, exorbitant drug prices place a 
significant burden on workers and their families. Employer 
health plans spend nearly $84 billion annually on drugs alone. 
As drug companies continue to raise prices with no end in 
sight, seniors, taxpayers, workers and our economy are all 
footing the bill. That is why we must take bold action by 
passing the Lowering Drug Cost Now Act, an ambitious plan to 
lower drug prices and increase transparency in five key ways. 
First, the bill ends the ban on Medicare negotiating directly 
with drug companies to get a fair deal for American consumers. 
Second, the bill makes the lower drug prices negotiated by 
Medicare available to all Americans, which will cut costs for 
both employers that provide their workers healthcare and 
workers covered by employer provided healthcare. Third, the 
legislation caps negotiated drug prices at prices charged in 
similar countries so that drug companies stop ripping off 
Americans while charging other countries less for the same 
drugs. Fourth, the bill creates a new out-of-pocket limit, on 
drugs for Medicare beneficiaries and ends unfair annual price 
hikes by prescription drug companies for 8,000 drugs.
    Finally, the Lowering Drug Cost Now Act reinvests the 
savings from negotiated drug prices in research and innovation 
to make new medical breakthroughs.
    My Republican colleagues have responded to this proposal 
with the same tired rhetoric, labeling it a socialist takeover 
of our healthcare system but the central provisions in this 
proposal have been endorsed by President Trump himself.
    We even put together a few video clips of the President 
promising to negotiate prices and align the prices Americans 
pay with what consumers in other countries pay. Play the video.
    [Video plays]
    Chairwoman WILSON. On the day the Lowering Drug Cost Now 
Act was introduced, the President tweeted: ``It is great to see 
Speaker Pelosi's bill today.'' My Republican colleagues claim 
cutting the cost of drugs will stifle research and innovation, 
but nine out of ten big pharmaceutical companies spend more on 
marketing, sales, and overhead than on research.
    Each of us has a responsibility to serve our constituents 
and address the unsustainable cost of prescription drugs.
    Today's hearing is an important step towards that goal, and 
I want to thank each of our witnesses for being with us to 
discuss this comprehensive solution to one of our nation's most 
pressing crises.
    I now recognize the distinguished Ranking Member for the 
purpose of making an opening statement. Mr. Walberg.
    [The statement of Ms. Wilson follows:]

      Prepared Statement of Hon. Frederica S. Wilson, Chairwoman, 
        Subcommittee on Health, Employment, Labor, and Pensions

    Today we are gathered to discuss policy solutions to reduce 
prescription drug prices for consumers, businesses, and taxpayers.
    Prescription drug prices are out of control. More than $450 billion 
across the health care system or about $1,100 per person is spent every 
year.
    Pharmaceutical companies are charging Americans prices that are 
three, four, or in some cases dozens of times higher than what they 
charge for the exact same drugs they sell in other countries.
    As a result, Americans across the nation are struggling to afford 
the medication they need to maintain their health. In fact, three in 
ten adults decided to forgo taking their prescribed medications in the 
past year because of the cost.
    We must act on behalf of people like Azima, a social worker in my 
home state of Florida who struggles to make monthly copayments for her 
prescription drugs, which cost more than her rent, electricity, cell 
phone bill, and car payment combined.
    And Jesimya David Scherer-Radcliff, who tragically died from 
rationing the life-saving insulin he needed to treat his diabetes.
    As our witnesses will share, exorbitant drug prices place a 
significant burden on workers and their families. Employer health plans 
spend nearly $84 billion annually on drugs, alone.
    As drug companies continue to raise prices with no end in sight, 
seniors, taxpayers, workers, and our economy are all footing the bill.
    That is why we must take bold action by passing the Lower Drug 
Costs Now Act, an ambitious plan to lower drug prices and increase 
transparency in five keyways.
    First, the bill ends the ban on Medicare negotiating directly with 
drug companies to get a fair deal for American consumers.
    Second, the bill makes the lower drug prices negotiated by Medicare 
available to all Americans, which will cut costs for both employers 
that provide their workers health care and workers covered by employer-
provided health care.
    Third, the legislation caps negotiated drug prices with prices 
charged in similar countries so that drug companies stop ripping off 
Americans while charging other countries less for the same drugs.
    Fourth, the bill creates a new out-of-pocket limit on drugs costs 
for Medicare beneficiaries and ends unfair annual prices hikes by 
prescription drug companies for 8,000 drugs.
    Finally, the Lower Drug Costs Now Act reinvests the savings from 
negotiated drug prices in research and innovation to find new medical 
breakthroughs.
    My Republican colleagues have responded to this proposal with the 
same tired rhetoric, labeling it a socialist takeover of our health 
care system. But the central provisions in this proposal have been 
endorsed by President Trump himself.
    We even put together a few video clips of the President promising 
to negotiate prices and align the prices Americans pay to what 
consumers in other countries pay. On the day Lower Drug Costs Now Act 
was introduced, the president tweeted, `` . . . it's great to see 
Speaker Pelosi's bill today.''
    My Republican colleagues claim cutting the cost of drugs will 
stifle research and innovation, but nine out of ten big pharmaceutical 
companies spend more on marketing, sales, and overhead than on 
research.
    Each of us has a responsibility to serve our constituents and 
address the unsustainable cost of prescription drugs. Today's hearing 
is an important step toward that goal.
    I want to thank each of our witnesses for being with us to discuss 
this comprehensive solution to one of our nation's most pressing 
crises. I now recognize Ranking Member Walberg, for an opening 
statement.
                                 ______
                                 
    Mr. WALBERG. I thank you, Chairwoman and I appreciate the 
opportunity today to have a hearing on this bill. Also to make 
it very clear that the President hasn't yet called upon us to 
support it and his statements were that he was glad to see a 
bill talking about doing things we all want to do. He did not 
say that he supports this bill as written and I would think 
that he, as he said, in one of the videos up there, together we 
will stop it. Together--there has been no togetherness in 
putting this bill together, even from my Democrat colleagues in 
working with the speaker who put it together. I just wanted to 
make that notation as well. There is no question that 
healthcare costs are at the top of the minds for many 
Americans--most Americans and the cost of prescription drugs 
are a concern for workers and families.
    According to a recent report on medicine use and spending 
in the U.S., patients paid 61 billion dollars in out of pocket 
drug costs in 2018. So it is not surprising that a recent poll 
found 1 in 4 Americans worry about affording their medication. 
Sadly, individuals and families are being let down by Democrat 
leadership. Instead of working on this serious issue in a 
bipartisan manner, Speaker Pelosi's radical, partisan bill was 
drafted in secret, I think for a purpose, without member input 
or the regular committee process.
    The public leader McCarthy accurately described H.R. 3 as a 
``Step towards nationalizing the drug industry and opening the 
door to a one size fits all government-controlled rationing of 
prescription drugs.''
    This bill is a political ploy that will not be considered 
in the Senate or become law. When asked about the bill, Senate 
Majority Leader Mitch McConnell said, and I quote: ``Socialist 
price controls will do a lot of left-wing damage to the 
healthcare system and of course we are not going to be calling 
up a bill like that.''
    We shouldn't be surprised that once again, Democrat 
leadership is pushing far left politics over policy. From 
taking over all student lending to mandating wage hikes, 
Democrats are pushing an agenda that strips hardworking 
taxpayers of their rights. H.R. 3 is just the latest in this 
string of aggressive socialist policies introduced by 
Congressional Democrat leadership. Over half of the Democrat 
Conference supports Medicare for all. A government-run single 
payer healthcare system that would eliminate private health 
insurance, including employer sponsored coverage, something 
that is admired by most everyone who has that opportunity and 
ought to be expanded. This is a jurisdiction of our committee. 
Congressional efforts to bring down drug prices for American 
people have been and should continue to be a collaborative and 
bipartisan effort.
    In 2016, a Republican Congress passed the 21st Century 
Cures Act. Bipartisan legislation, I might add, that was signed 
into law by President Obama, which accelerated discovery and 
development of new cures and treatments. Additionally, we 
reauthorized a generic drug user fee program and last year, the 
FDA approved a record number of generic drugs, driving up 
competition and giving consumers more affordable choices. And 
this year, and I know this for a fact as I sit on the House 
Energy and Commerce Committee. This year's House and Senate 
Committees have worked together on bipartisan bills to address 
the cost and transparency of prescription drugs.
    Two of these bills, bipartisan bills have become law and 
others are awaiting further action in both chambers. There is a 
common thread there in bipartisan efforts.
    Governments don't negotiate, they dictate. The radical 
approach taken by H.R. 3 includes troubling and unprecedented 
government interference in private market negotiations which 
will eliminate choice and competition and jeopardize innovation 
investment and access to future cures. Countries that have 
adopted drug pricing systems like those included in H.R. 3 face 
decreased access to innovative new medicines, increased wait 
times for treatment and supply shortage for in demand drugs. 
H.R. 3 will negatively impact investment and research and 
development of future treatments putting breakthrough cures for 
diseases like Alzheimer's, cancer, sickle cell anemia, and 
others at risk.
    Instead of holding a hearing on this socialistic agenda 
drug pricing scheme that will hurt the development of money 
saving treatments and more importantly, people's lives. The 
committee's time would be better spent finding bipartisan 
solutions to our Nation's problems.
    Republicans stand ready to work with Democrats to push for 
legislation that promotes competition, lowers out of pocket 
cost for consumers, and establishes transparency and 
accountability in drug pricing and might I add, that has a 
chance for a two-chamber solution that would get to the 
President's desk. With that, I yield back.
    [The statement of Mr. Walberg follows:]

Prepared Statement of Hon. Tim Walberg, Ranking Member, Subcommittee on 
                Health, Employment, Labor, and Pensions

    ``There's no question that health care costs are at the top of the 
minds for many Americans, and the cost of prescription drugs are a 
concern for workers and families. According to a recent report on 
medicine use and spending in the U.S., patients paid $61 billion in 
out-of-pocket drug costs in 2018. So, it's not surprising that a recent 
poll found one in four Americans worry about affording their 
medication.
    Sadly, individuals and families are being let down by Democrats. 
Instead of working on this serious issue in a bipartisan manner, 
Speaker Pelosi's radical, partisan bill was drafted in secret, without 
Member input or the regular Committee process. Republican Leader 
McCarthy accurately described H.R. 3 as `a step toward nationalizing 
the drug industry and opening the door to a one-size- fits-all, 
government-controlled rationing of prescription drugs.'
    This bill is a political ploy that will not be considered in the 
Senate or become law. When asked about the bill, Senate Majority Leader 
Mitch McConnell said, `Socialist price controls will do a lot of left-
wing damage to the healthcare system. And of course, we're not going to 
be calling up a bill like that.'
    We shouldn't be surprised that once again Democrats are pushing 
far-left politics over policy. From taking over all student lending to 
mandating wage hikes, Democrats are pushing an agenda that strips 
hardworking taxpayers of their rights. H.R. 3 is just the latest in 
this string of aggressive socialist policies introduced by 
Congressional Democrats. Over half of the Democrat Conference supports 
Medicare-for-All, a government-run, single-payer health care system 
that would eliminate private insurance, including employer-sponsored 
coverage, which is in the jurisdiction of this Committee.
    Congressional efforts to bring down drug prices for the American 
people have been, and should continue to be, a collaborative and 
bipartisan effort.
    In 2016, a Republican Congress passed the 21st Century Cures Act, 
bipartisan legislation signed into law by President Obama which 
accelerated discovery and development of new cures and treatments. 
Additionally, we reauthorized the generic drug user fee program - and 
last year the FDA approved a record number of generic drugs, driving up 
competition and giving consumers more affordable choices.
    And this year, House and Senate Committees have worked together on 
bipartisan bills to address the cost and transparency of prescription 
drugs. Two of these bills have become law, and others are awaiting 
further action in both chambers.
    Governments don't negotiate, they dictate. The radical approach 
taken by H.R. 3 includes troubling and unprecedented government 
interference in private, market negotiations, which will eliminate 
choice and competition, and jeopardize innovation, investment, and 
access to future cures.
    Countries that have adopted drug-pricing systems like those 
included in H.R. 3 face decreased access to innovative new medicines, 
increased wait times for treatment, and supply shortages for in-demand 
drugs.
    H.R. 3 will negatively impact investment in research and 
development of future treatments, putting breakthrough cures for 
diseases like Alzheimer's, cancer, sickle cell disease, and others at 
risk.
    Instead of holding a hearing on this socialist agenda drug-pricing 
scheme that will hurt the development of money-saving treatments and--
more importantly----people's lives, the Committee's time would be 
better spent finding bipartisan solutions to our nation's problems. 
Republicans stand ready to work with Democrats to push for legislation 
that promotes competition, lowers out-of- pocket costs for consumers, 
and establishes transparency and accountability in drug pricing.''
                                 ______
                                 
    Chairwoman WILSON. Without objection all other members who 
wish to insert written statements into the record may do so by 
submitting them electronically to the committee clerk in 
Microsoft Word format by 5:00 pm on Wednesday, October 9th, 
2019. I will now introduce our witnesses: Frederick Isasi is 
Executive Director of Families USA. Welcome. Bari Talente is 
Executive Vice President of the National MS Society. Welcome. 
Dr. Mariana Socal is Assistant Scientist at Johns Hopkins 
University, Bloomberg School of Public Health. Welcome. Dr. 
Craig Garthwaite is Associate Professor of Strategy at 
Northwestern University's Kellogg School of Management. 
Welcome. Christopher Holt is Director of Health Care Policy at 
the American Action Forum. Welcome, Mr. Holt. David Mitchell is 
Founder and President of Patients for Affordable Drugs. 
Welcome.
    We appreciate all of you coming today and look forward to 
your testimony. Let me remind you that the witnesses--let me 
remind the witnesses that we have read your written statements 
and they will appear in full in the hearing record, pursuant to 
Committee Rule 17 and committee practice, each of you is asked 
to limit your oral presentation to a five minute summary of 
your written statement.
    Let me remind the witnesses that pursuant to Title 18 of 
the U.S. Code, section 1001, it is illegal to knowingly and 
willfully falsify any statement, representation, writing, 
document or material fact presented to Congress or otherwise 
conceal or cover up a material fact.
    Before you begin your testimony, please remember to press 
the button on the microphone in front of you so that it will 
turn on and the members can hear you. As you begin to speak, 
the light in front of you will turn green. After four minutes, 
the light will turn yellow to signal that you have one minute 
remaining. When the light turns red, your five minutes have 
expired, and we ask that you please wrap it up or I will have 
to wrap it up for you.
    We will let the entire panel make their presentations 
before we move to member questions. When answering a question, 
please remember to once again turn on your microphone. I will 
first recognize Mr. Isasi.

TESTIMONY OF FREDERICK ISASI, J.D., EXECUTIVE DIRECTOR FAMILIES 
                              USA

    Mr. ISASI. Chairwoman Wilson, Congressman Walberg, Members 
of the subcommittee, thank you for the opportunity to testify 
today. I am Frederick Isasi, the Executive Director of Families 
USA, a non-partisan, non-profit that for nearly 40 years has 
served as one of the leading national voices for the health 
care movement in Washington D.C. and on the state level. Thank 
you very much for holding this hearing on lowering drug costs. 
We are meeting at an extraordinary time for our Nation's 
family.
    Do you realize that about 1/3rd of Americans report not 
taking their prescription drugs because they are too expensive? 
Of these, more than 2/3rds are engaging in the terrible gamble 
of either skipping doses or cutting their pills in half.
    Think of the life these Americans are living. In last 
fall's Congressional elections, the American people sent a 
strong signal to all of you. An astounding 82 percent of 
Republicans and 90 percent of Democrats said taking action to 
lower the price of prescription drugs should be a top priority 
for this Congress.
    Despite all the conflicts, legal and economic discussions 
and the alarmist and false arguments of the drug industry, at 
its core, the problem of out of control drug costs is very 
simple. Congress created a system that provides a government-
granted monopoly to drug makers, and many within the industry 
are abusing Federal law.
    Let me explain what I mean. Over time, so much of the 
industry's focus has shifted from creating innovative drugs 
that can save lives to doubling down on high-powered lawyers to 
help find loopholes, sue competitors and generally abuse the 
spirit in which Federal prescription drug laws were created. It 
is time for Congress to reexamine and rewrite patent 
exclusivity laws to stamp out these abuses and actually 
incentivize innovation.
    In the absence of this wholesale reform, we at Families USA 
are strongly supportive of the committee acting to mark up and 
move forward H.R. 3 the Lowering Drug Cost Now Act. It 
represents bold Congressional action that would require the 
government to defend our families and negotiate directly with 
drug manufacturers to curb abusive practices and price 
increases. These are policies supported by more than 2/3rds of 
Americans. The bill uses savings and reduced drug costs to 
invest in research and development for new cures as well as 
capping out of pockets costs for Medicare beneficiaries. It 
also could support much needed improvements in Medicare, such 
as dental, hearing and vision benefits and support for low-
income Medicare beneficiaries.
    We also recommended several critical improvements to 
strengthen the bill, such as expanding the selection of drugs 
that are subject to negotiations, expanding mandatory price 
hike protections to private payers and allowing uninsured 
patients to get negotiated prices. So what will the fate of 
this legislation be? You are all up against one of the most 
profitable industries in the world with revenues in access of 
$1 trillion and half of its profits are generated in the U.S. 
and Canada alone.
    And industry spending, at least $133 million to lobby 
Congress, all of you, with over 800 lobbyists in D.C. Members 
of the committee, I ask you, does our democracy work? Will this 
committee, will Congress, will the President act to support our 
Nation's families or will the drug companies win yet again?
    Let me tell you about one person, perhaps, who can steady 
your resolve to get this legislation enacted. Her name is 
Katherine from Wheeling, Illinois. Her story tells her own 
struggle but also the struggle of millions of other Americans. 
Katherine worked very hard. She had a career as a secretary and 
then in her late 50s, she developed a cough. It wasn't going 
away. Within three months of going to the doctor for a cough, 
however, she was told she had a rare lung disorder and that 
without a lung transplant, she wouldn't live to see the end of 
the year and then her condition worsened.
    Her doctors prepared her to die and Katherine prepared 
herself to die, and then she got the call. A new lung had been 
found and she was going to live. This all happened about five 
years ago. This incredible gift and a new chance at life, but 
unfortunately her experience has turned into something else.
    Katherine takes 36 pills every day, including anti-
rejection and pain medications. Each year, the cost of her 
medication overwhelms her. Katherine has to ration her 
medications to make them last. She spends an astounding $1,000 
each month on her medications, despite being a Medicare 
beneficiary, which is exactly half of her monthly income. Think 
about what this means.
    Katherine, after living through the experience of almost 
dying, receiving a lung transplant, fighting for her life is 
left to spend half of her income to pay for medications. You 
won't be surprised to know that Katherine sold her home, moved 
in with her parents, her mom is 86 and her dad died this year 
at 89.
    She lives an extremely frugal life but as her drug costs 
escalate year over year, she moves closer and closer to 
financial ruin and deep poverty. At the end of each year, she 
finds herself thousands of dollars short. She lives each day 
with the anxiety of wondering how will she find the money to 
pay for her drugs.
    Despite being one of the wealthiest nations in the world, 
despite spending two or three times more than the rest of the 
world, this is the life we give to Americans. Thank you for 
holding this hearing, thank you for considering this 
legislation.
    [The statement of Mr. Isasi follows:]
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    Chairwoman WILSON. And thank you. We will now recognize Ms. 
Talente.

  TESTIMONY OF BARI TALENTE, J.D., EXECUTIVE VICE PRESIDENT, 
         ADVOCACY, NATIONAL MULTIPLE SCLEROSIS SOCIETY

    Ms. TALENTE. Thank you. Good afternoon, Chairwoman Wilson 
and Ranking Member Walberg. Thank you for the opportunity to 
participate in this hearing on lowering drug prices and 
increasing transparency. My name is Bari Talente and I am the 
Executive Vice President of advocacy with the National Multiple 
Sclerosis Society. The Society works to ensure that the nearly 
1 million people with MS in the United States have what they 
need to live their best lives.
    People with MS are typically diagnosed between the ages of 
20 and 50, making MS a disease that hits people during their 
prime employment years. In fact, nearly 60 percent of people 
living with MS have employer-sponsored health insurance. We 
hear from people with MS who are reluctant to disclose their 
diagnosis publicly because they feel their job may be in 
jeopardy or they don't want to be that person with their 
coworkers, the one who is responsible for driving up health 
insurance costs.
    There are now more than 15 FDA-approved disease modifying 
treatments, referred to as DMTs, that help manage disease 
progression for relapsing forms of MS. No single DMT is best 
for all people living with MS so these treatments are not 
interchangeable.
    The first--unfortunately, the price of these DMTs has 
dramatically increased since the first treatment was approved 
in 1993. That DMT came to the market at approximately $11,500 
and now has a list price of more than $98,000. Imagine how this 
has felt for someone who has been on this treatment since it 
first came out.
    In 2013, the annual median price for the MS DMTs was less 
than $60,000 dollars. Today, in 2019, that median price for 
brand MS DMTs is over $88,000 dollars.
    We have seen escalating prices for products already on the 
market, some for a considerable amount of time.
    In fact, a recent study by Health Affairs shows that price 
increases of brand name drugs are largely driven by year over 
year price increases of drugs already on the market and not by 
new products.
    We have recently asked people with MS about the impact of 
the cost of these DMTs on them. 40 percent of those who took 
our survey shared that they have altered their use of their DMT 
because of costs. They are stopping treatment, skipping or 
delaying filling a prescription or not taking the medication as 
prescribed to try and make it last longer.
    Due to the price, people with MS often face prior 
authorization and step therapy in their health insurance, which 
can delay care. Each time a person with MS experiences a gap in 
care or fails on a medication, they are at risk for a relapse, 
disease progression, and worsening of symptoms from which they 
may not fully recover.
    Here are just two of the direct experiences people with MS 
have shared with us. Jenna from Massachusetts is worried about 
affording her DMT. Her husband's insurance currently covers it, 
but not all insurances will. Jenna says, ``we are terrified for 
him to change jobs because we cannot afford my medication if it 
is not covered. He has had to turn down a better paying job 
with better hours in order to keep our insurance.''
    Over the last decade, Keysha from Pennsylvania has tried 
many DMTs. She has commercial insurance through her employer 
and receives financial assistance through a manufacturer 
sponsored program, but she notes ``If I am on super-expensive 
meds, I am hurting my company's bottom line in the end. I would 
choose a different medicine if there was one that was 
significantly lower in price.''
    Medications cannot change lives if people cannot access 
them. We must look at solutions across the entire prescription 
drug supply chain. Additional information about legislation we 
support is in our written testimony. We do support the goals 
and many provisions of the Lowering Drug Cost Now Act of 2019 
and applaud this effort to lower drug costs. We appreciate this 
legislation does not establish a formulary and includes an out-
of-pocket cap in Medicare part D.
    We believe the bill could be strengthened by beginning the 
out-of-pocket cap earlier and expanding competition to be more 
than one single generic. I would like to conclude with a 
message from Keysha to all of you and your colleagues: ``Do 
something to help with the cost. It is not a selfish thing to 
want to be well. To want to contribute. All people deserve a 
chance to be contributing members of society.'' Thank you, and 
I look forward to your questions.
    [The statement of Ms. Talente follows:]
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    Chairwoman WILSON. Thank you, Ms. Talente. We will now 
recognize Dr. Socal.

 TESTIMONY OF MARIANA P. SOCAL, MD, MS, MPP, PH.D., ASSISTANT 
  SCIENTIST, JOHNS HOPKINS BLOOMBERG SCHOOL OF PUBLIC HEALTH, 
           DEPARTMENT OF HEALTH POLICY AND MANAGEMENT

    Dr. SOCAL. Good afternoon. Thank you, Chairwoman Wilson, 
Ranking Member Walberg and Members of the Committee. It is a 
great honor and It is a great pleasure to be talking to you 
today.
    For over a year, I have been researching America's largest 
employers and trying to help them improve the drug benefit that 
they offer to their workers. In one of these initiatives and 
partnering with the Pacific Business Group on Health, a 
coalition of more than 50 large public and private employers to 
identify and remove wasteful spending from their drug 
formularies.
    I am also leading a research project in which I partnered 
with ERIC, the ERISA committee. This committee represents 
nationwide self-insured companies with more than 10,000 
employees. In this project, I am examining the prices that some 
of the largest U.S. corporations are paying for their drugs.
    The first thing I learned in my research is that employers 
want to provide their workers with the best benefits that they 
can. Companies want to attract and retain the best workers in 
offering good benefits is key for that.
    The second thing that I have learned is that companies are 
spending a lot of money hiring specialists to help them manage 
their drug benefit, but they are not always getting the best 
deals that they can. Typically, employers hire pharmaceutical 
benefit managers, a PBM, to negotiate drug prices on their 
behalf. The PBM also designs the drug formulary that goes to 
the employer's plan.
    So here is how the negotiation works. The PBM offers to 
cover a drug on the formulary in exchange for lower prices. 
When the PBM has a choice and can pick between a few drugs, 
which one will go into the formulary, then the market can work. 
The problem occurs when a drug has no competition. If the PBM 
cannot say no to a certain drug and then choose a different 
one, then the PBM cannot negotiate a lower price, and there is 
no incentive for manufacturers to lower the price.
    As a result, for certain drugs without competition, the 
U.S. pays three to four times more higher prices than in other 
countries.
    For these cases, a different type of negotiation is needed. 
In the absence of product to product competition in the U.S. 
market, the price comparison between the U.S. and other 
countries can offer an alternative pathway for this 
negotiation. My colleagues and I examined the 79 top spending 
drugs in the Medicare part D program, and we found that if the 
U.S. paid the average price of the countries that we studied, 
Medicare part D alone could have saved $73 billion in 2018.
    If employers adopted the same approach, the savings would 
be similar. H.R. 3's proposal of having the secretary negotiate 
on behalf of all Medicare beneficiaries and those covered by 
private insurance is likely to succeed in lowering drug prices 
because of two main reasons: first, because it includes 
everyone in the negotiation. The more people included in the 
negotiation, the greater the negotiating power and the greater 
ability to lower prices.
    Second, because it incorporates a transparent benchmark 
into the negotiation, the prices paid in other countries. U.S. 
companies, especially the very large employers, they like to 
think that they are getting the best possible deals in drug 
pricing, but we found that sometimes, the employers don't even 
have the information that they need to understand if they are 
getting the good deal or not.
    It is very hard, for example, for an employer to know how 
much they are paying for a drug. The net price, after the 
rebates and discounts can be only known sometimes weeks or 
months after the drug bill was paid and there is very little 
transparency in this process.
    The negotiation proposed in H.R. 3 would benefit employers 
by providing them with a transparent maximum price. It will 
also allow employers to opt out of the price so that they can 
choose what's the best deal for them. For patients, lower and 
transparent prices will help reduce cost-sharing. Patient's 
cost-sharing is typically calculated over a drug's list price. 
Having a transparent and lower drug price available to all 
patients will allow them to benefit directly from the 
negotiations. This is also very important for the 30 percent of 
American workers who are currently enrolled in high-deductible 
health plans. These patients pay the drug's full cost. Today, 
over half of all Americans obtain health coverage through their 
employer, most of them through self-insured employers which the 
employer will pay the drug's bill.
    In response to rising drug costs, many companies are 
pushing more of the cost of prescription drugs onto the 
employees, either in the form of high deductibles or by 
charging a percentage cost-share, especially for high-cost 
drugs. This is one of the reasons why many Americans are not 
able to afford the drugs they need, even if they have health 
insurance.
    Thank you so much for your time, and I look forward to your 
questions.
    [The statement of Dr. Socal follows:]
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    Chairwoman WILSON. Thank you, Dr. Socal. And we will now 
recognize Mr. Holt.

 TESTIMONY OF CHRISTOPHER HOLT, DIRECTOR OF HEALTH CARE POLICY 
                     AMERICAN ACTION FORUM

    Mr. HOLT. Thank you, Chairwoman Wilson, thank you Ranking 
Member Walberg, Members of the Committee. I very much 
appreciate the opportunity to speak with you about this issue 
of complex drug prices. The legislation before you, H.R. 3 aims 
to bring down drug costs across the U.S. Healthcare system 
without harming innovation or creating barriers to access for 
patients. These goals are laudable. I do not believe however, 
that the policies in H.R. 3 can achieve the lower drug costs 
sought without negatively impacting the development of future 
cures, as well as patient access to existing medications. In 
the face of rising demand and increasing prices for drugs, the 
way to reduce prices without harming innovation and access is 
to increase supply and heighten competition.
    Unfortunately, the policies proposed in H.R. 3 are likely 
to have the opposite effect. Title I of H.R. 3 proposes to 
create a process whereby the Secretary of Health and Human 
Services will negotiate directly with drug manufacturers over 
the price of specific pharmaceuticals and then make that price 
available to all third-party payers in the United States.
    This in and of itself is an extraordinary market 
intervention by the Federal government. The proposal of direct 
government negotiation is predicated on the notion that the 
prices that the Federal government currently pays for 
medications are completely at the whim of manufacturers and 
that market forces or negotiation have no impact. In reality, 
however, prices for the drugs and the Medicare part D program 
right now are already determined through a vigorous negotiation 
process that involves plans, sponsors, PBMs and manufacturers. 
In the Medicare part B program, which covers physician 
administered drugs, we do not have the same benefit from the 
competitive nature and structure of part D but even here, 
market forces do play a role.
    While the formula for determining what Medicare pays for 
part B drugs can and I think should be reformed, it does 
include most if not all privately negotiated rebates and price 
concessions in the group market. In other words, private 
competition and negotiation are driving down the government's 
price in part B as well.
    Still, there are increasing calls for the Secretary to 
negotiate drug prices directly. The process that H.R. 3 would 
establish, however, cannot accurately be described as a 
negotiation. Instead, this bill would import foreign 
governments price controls through an average international 
market price based on the average volume weighted sales of the 
price of the drug in six foreign markets. This price, which 
U.S. policy makers would have no role in determining beyond 
selecting the countries to be referenced would serve as a 
target price in the negotiations and would be used to set both 
the maximum price that could be charged and a de facto floor as 
well.
    The negotiation would be limited to a range of not more 
than 120 percent of the average international market price and 
in effect, not less than 99 percent as the Secretary would be 
required to accept any offer below the average international 
market price.
    Within that limited range, the manufacturer would have no 
leverage in the negotiation process. The secretary would have 
carte blanche to require any proprietary data, details of the 
company's business practices with civil monetary penalties for 
non-compliance.
    Most important, the manufacturer would be required to reach 
an agreement and if they do not, would face a tax on the gross 
receipts of their drug of up to 95 percent.
    There is no requirement on the secretary to reach an 
agreement. Offering the choice between a lower price or an 
excessive tax cannot be described as a negotiation. Rather, it 
is government dictated price controls; but because of the 
centrality of the average international market price to the 
process, the resulting price will not consider the full 
therapeutic needs of U.S. patients or their views on value.
    Policymakers in the U.S. will ultimately have little 
control over the prices of drugs or the determination of value. 
The bill includes these heavy-handed provisions because the 
government has very limited leverage in a true negotiation. As 
detailed in my written testimony, the Congressional budget 
office has consistently found that the Secretary could not 
obtain lower prices in part D through negotiation without 
eliminating planned choice for beneficiaries or impeding their 
access. The process outlined appears likely to eventually 
encompass nearly all branded drugs and biologics sold in the 
U.S. and will certainly restrict the flow of capital to 
pharmaceutical companies leading to a decreased capacity for 
future research and development.
    I appreciate this opportunity and I look forward to your 
questions.
    [The statement of Mr. Holt follows:]
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    WILSON. Thank you. We will now recognize Dr. Garthwaite.

TESTIMONY OF CRAIG GARTHWAITE, ASSOCIATE PROFESSOR OF STRATEGY 
      NORTHWESTERN UNIVERSITY KELLOGG SCHOOL OF MANAGEMENT

    Mr. GARTHWAITE. Thank you, Chairwoman Wilson and Ranking 
Member Walberg and Members of the Committee for inviting me to 
testify today about H.R. 3, the Lower Drug Cost Now Act. While 
this bill has a number of features, in my testimony today, I 
will primarily address the proposed pharmaceutical price 
controls in the legislation. While supporters of legislation 
hope to characterize it as introducing Medicare drug price 
negotiations, that is not accurate.
    Instead, the bill gives the HHS Secretary unprecedented 
power to set market prices for the entire healthcare economy. 
Under the bill, the prices for the most expensive drugs that 
lack competition would be limited to 1.2 times the price in a 
set of six developed markets.
    Firms that don't comply will be fined up to 95 percent of 
the drug's revenue. Economics is a simple term for this 
proposal. It is a price control. This is particularly true in 
the case where the mandated price will then be passed along to 
the commercial market, which already has a robust system of 
negotiations.
    While I understand that calling these price controls a 
negotiation might be more politically palatable, that doesn't 
make it accurate. Now those in favor of price controls argue 
they're necessary because the higher prices decrease access to 
potentially lifesaving products. They often characterize those 
high prices as serving no other purpose than satisfying the 
greed and unending pharmaceutical profits.
    The reality is far more complicated than this simple 
caricature. High prices are part of a necessary tradeoff to 
provide the incentives for firms to invest the capital required 
to develop lifesaving drugs in the first place. At its heart, 
drug development involves a difficult tradeoff of reduced 
access today for increased innovation tomorrow.
    I don't say this lightly. I understand that high prices can 
decrease access to potentially lifesaving medications but 
frankly, there are no easy answers here.
    The economic evidence is clear, if we institute price 
controls of the nature discussed in this bill, we will see 
fewer investments in the development of new drugs for 
conditions that don't currently have treatments.
    Such decreases in innovation create their own access 
problems. While It is clear that patients today paying high 
prices can suffer decreased access for medication, and this is 
not an optimal outcome, those patients have a significant 
benefit that shouldn't be overlooked. They, through their PBMs 
have the luxury of negotiating the price of their drug.
    If you are sick with a condition today for which there are 
no treatments, a drug is not available at any price. This is 
the access problem that is so often missed in these 
discussions. Those who claim innovation won't be affected by 
price controls, simply misunderstand or deliberately ignore the 
economic evidence. In a modern market, a large share of biotech 
products result from venture capital firms, making substantial 
and risky investments to commercialize basic science into 
products that improve people's lives. The incentive for those 
investments come from the high prices and profits earned by 
today's successful firms. The venture capital firms at the 
heart of this process are not beholden to the pharmaceutical 
industry. They can invest in any sector of the economy. If you 
lower returns, capital will follow out of this sector into 
other more profitable sector, therefore it doesn't matter how 
much pharmaceutical firms spend on marketing, and it doesn't 
matter if someone believes a pharmaceutical company earns too 
much money and therefore can withstand the lost profits.
    While people like to mention these facts, the claim that 
innovation won't be affected, the basic economics and a number 
of empirical studies demonstrate that firms invest in products 
based on the expected return. The question then becomes how 
much do we value the innovation that would disappear because of 
these price controls?
    After all, an optimal innovation policy is one where the 
benefits of innovation outweigh the costs of reduced access 
today. It is possible we are currently getting this balance 
wrong. It might be that we provided too strong of an incentive 
in favor of new products at the cost of people not being able 
to access products today.
    We must remember that everything about the existing 
parameters of our tradeoff is ultimately a policy decision. 
There is nothing magical about a 20-year patent life. The very 
fact that it is constant, across both products and markets 
suggests that It is not the result of some finely-tuned 
calibration that weighs these costs and benefits. That said, 
while there is nothing magical about this parameter in our 
current policy, it is clear that moving away from this existing 
policy will decrease investments and innovation and the 
important thing to realize is that might be okay. The extra 
innovation we are getting may not be worth it, but that is the 
debate that Congress should be having. Instead, legislation 
such as H.R. 3 and the Trump administration's international 
pricing index effectively outsource this debate to foreign 
governments. This is not a profile encouraged by our 
policymakers. Why should access to new innovation for Americans 
be determined by policy decisions in London, Paris and Berlin? 
Simply because It is too hard for us to have the conversation 
about what products we want to say no to today in order to have 
a true price negotiation? In contrast to other developed 
economies who may have lower prices for the same drug, the 
United States relies far more heavily on markets because we are 
a large and diverse economy and market forces are better for 
allocating goods and services than central planning but we must 
recognize that markets can fail and when they fail, there is a 
role for the government to step in. There are many features of 
H.R. 3 that do that.
    [The statement of Mr. Garthwaite follows:]
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    Chairwoman WILSON. Thank you. Thank you, Mr. Garthwaite. I 
will now recognize Mr. Mitchell.

 TESTIMONY OF DAVID MITCHELL, FOUNDER, PATIENTS FOR AFFORDABLE 
                             DRUGS

    Mr. MITCHELL. Chairwoman Wilson, Ranking Member Walberg, 
Members of the Committee, I am honored to be here. I am David 
Mitchell, I am founder of Patients for Affordable Drugs. More 
importantly, I have an incurable blood cancer and prescription 
drugs are keeping me alive. Every two weeks I spend half a day 
at a clinic getting infused drugs, which unfortunately are 
slowly failing, so last week, my doctors added an oral chemo 
drug. I am now taking four drugs. Now that my drugs carry an 
annual list price of $875,000, I have relapsed twice. 
Eventually I am going to run out of options so the importance 
of innovation is not theoretical for me; it is literally life 
and death. But my experience as a patient taught me one 
irrefutable fact and that is drugs don't work if people can't 
afford them.
    To address out of control prices, however, we really must 
come to grips with some larger facts. Despite what drug 
companies tell us, and the general point that was made just now 
by Professor Garthwaite, sky high prices are not all about 
innovation. Multiple studies show there is no correlation 
between the cost of R&D and the price that is assigned to a 
drug.
    Taxpayers front a huge portion of the bill for the basic 
science that leads to new drugs. Every single drug approved by 
the FDA from 2010 to 2016 was based on funding from taxpayers, 
science brought forward through the NIH. Meanwhile, independent 
analyses show that 9 of 10 drug companies spend more on 
advertising and marketing than on R&D. Why do drug companies 
charge so much? Because they can. Yes, drug companies should 
make a profit when they develop innovative drugs, but our 
current system is broken. And it is costing us all and our 
family finances, our health outcomes and lives.
    H.R. 3 would ensure drug companies charge a fair price to 
patients while protecting access to lifesaving drugs and 
innovation.
    I want to run through some highlights of H.R. 3 that I 
believe enjoy bipartisan support. First, it brings our prices 
more in line with what other wealthy nations pay using an 
international price index, very much like the Trump 
administration proposal. Second, it stops drug companies from 
increasing prices faster than the rate of inflation, just like 
the bipartisan Grassley-Wyden bill. Finally, it caps seniors' 
out of pocket costs for prescription drugs at $2,000 a year. 
Grassley-Wyden has a slightly higher cap.
    Now I want to mention three other provisions important to 
patients. H.R. 3 ensures that Americans with public and private 
insurance have access to lower price drugs.
    As an employer myself for 30 years, it is important that 
this bill gives 150 million Americans and their employers 
access to lower drug prices. Second, savings can go to new drug 
research and innovation at NIH.
    Finally, it protects access to all drugs unlike in the 
private sector, H.R. 3 does not rely on a formulary and drugs 
are covered by Medicare just as they are today.
    Now we all know the bill is under attack. Here is what 
people are saying. I heard some of it today. It is socialism. 
Well, competition and negotiation are cornerstones of 
capitalism. The truth is taxpayers negotiate on everything from 
aircraft carriers to printer paper. The only reason we don't 
negotiate for drugs today is because pharma inserted the 
prohibition into law in 2003, otherwise we'd be negotiating. 
It'll kill innovation; Dr. Garthwaite just made that point. 
Well, nobody cares more about innovation than me. As a patient, 
however, I find this to be a scare tactic and I find it 
offensive. HHS Secretary Azar refutes it best. He says: ``It is 
a tired talking point. The idea that if one penny disappears 
from pharma profit margins, American innovation is going to 
grind to a halt.''
    And finally, it is going to lead to rationing. Well, my 
Lord, we already have drug rationing in this country. People 
are skipping doses, cutting pills in half, choosing between 
food and paying for their drugs. People are dying because they 
can't afford their insulin. H.R. 3 will stop rationing by 
lowering drug prices. Now right now, there's a fundamental 
question drug companies want us to ask about drug prices: what 
are we willing to pay to save a life? And I can tell you, that 
is easy. When It is your child's ability to breathe, when It is 
your cancer, the answer is anything, but that is the wrong 
question.
    We should be asking what is the right amount of money the 
drug companies should make on these drugs? With hundreds of 
clinical trials underway right now for new gene therapies that 
are currently priced at a half a million dollars or more, we 
cannot pay just any price the drug companies demand. Neither 
American families, nor our system can afford that. I feel 
incredibly grateful to be here today speaking on behalf of 
patients. I do believe the moment is at hand to address this 
problem, and with bipartisan support, we will. Thank you.
    [The statement of Mr. Mitchell follows:]
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    Chairwoman WILSON. Thank you, Mr. Mitchell. Under Committee 
Rule 8(a), we will now question witnesses under the five-minute 
rule. I will now yield myself five minutes.
    I want to thank all of you for your testimonies, thank you 
so much. Mr. Mitchell, you mentioned that you started a new 
oral chemotherapy drug last week. Can you repeat the list price 
for that drug and tell us what your out-of-pocket expenses are? 
Because we have five Members of Congress that I know of that 
take oral chemotherapy today.
    Mr. MITCHELL. So, this is the drug I started taking last 
Wednesday night. It is called Pomalist. It is 21 capsules. It 
carries a list price of $17,200. I have to take it this way 
every four weeks. The first fill was $2,758. My out of pocket, 
under part D, and I will be paying $850 dollars every four 
weeks out of pocket for this drug.
    Chairwoman WILSON. Ms. Talente, in your testimony, you 
share the stories of several of the patients whom you worked 
with at the National MS Society. You point out that the 
patients always struggle with the fear that they are 
contributing to overall health care in their workplace, health 
plans, and they don't want to be perceived as that person who 
is responsible for making everyone else pay. This is very 
troubling to me. Can you talk a bit more about the stigma that 
MS patients face and how does it present barriers to 
employment, to access, and to care?
    Ms. TALENTE. That is probably more than we have time for 
today, but I will touch on some of it. Health care cost is 
certainly a big part of that. So, the MS disease modifying 
treatments are about 75 percent of the cost of treating someone 
with MS.
    And as I highlighted, the median price of those brand 
treatments is more than $88,000 today, and so that is 
definitely a drain on employers' health care cost and health 
care burdens, and I have talked with people with MS who are the 
employee. I have talked with people with MS whose spouses are 
the employee and many of them are guilt-ridden about the cost 
that they are bringing to bear on their employer and their 
coworkers, and many of them are afraid and when people do lose 
their job for whatever reason, many of them, rightly or 
wrongly, attribute that loss of employment to being that health 
care burden.
    Chairwoman WILSON. Thank you. Many on the other side of the 
aisle and in the insurance industry often say that patients 
need to have more skin in the game to keep costs under control. 
To me this seems like an excuse for plans to raise deductibles 
and increase cost-sharing for patients. And we are talking 
about medications, this notion of skin in the game can have 
troubling consequences for patients.
    Mr. Isasi, what effect does requiring patients to pay more 
out-of-pocket have on their ability to access care, including 
prescription drugs?
    Mr. ISASI. Well what we know right now is a third of 
Americans who are trying to access prescription drugs to stay 
healthy or to get healthy are not taking that medication as 
directed because they can't afford it. And some of those 
people, the majority of them are actually cutting their pills 
in half, or skipping doses, some are just not taking them at 
all. We hear stories all the time about patients who end up 
becoming seriously ill or dying because they can't take the 
prescription so as we heard earlier, these very high costs 
don't actually allow people access to the innovation that the 
pharmaceutical company is promising. It is actually rationing.
    Chairwoman WILSON. Okay. Now we expect this bill to have--
to greatly reduce cost for patients and tax payers and I 
believe it is important that we use savings to improve crucial 
health programs for American people, so I am going to ask the 
witnesses. Perhaps Mr. Isasi and Ms. Talente. Are there any 
programs such as the NIH or Medicare in which you believe 
Congress should invest these savings? We will start with you, 
Mr. Isasi.
    Mr. ISASI. Absolutely, I think that what we know for sure 
is right now it is seniors and Medicare beneficiaries across 
the country have spoken--they are desperately in need of an 
oral health care benefit. In Medicare there is none. They are 
desperately in need of a hearing benefit in Medicare. There is 
none. They are desperately in need of a vision benefit. There 
is none. So there is a lot of need right now to make the 
Medicare benefit comprehensive so that we are giving folks who 
are receiving it the best chance at living their best self-
actualized life and in addition, we also know that all of these 
innovations that the drug industry is profiting from, almost 
all of them--all of the ones that are currently being approved 
in the last five years started with NIH research, so let's 
invest in the place where the innovation actually occurs which 
is our public and private institutions that receive NIH 
funding.
    Chairwoman WILSON. Thank you. Ms. Talente, you have a 
couple of seconds.
    Ms. TALENTE. We know that for every MS treatment on the 
market today, you can tie back some critical understanding of 
the biological function of the mechanism of action of the 
understanding of MS back to research that was done at the 
National Institutes of Health so investments there, at NIH is 
probably one of the best ways to spur the future innovation and 
bring cures in the future.
    Chairwoman WILSON. Thank you so much. I remind my 
colleagues that pursuant to committee practice, materials for 
submission for the hearing record must be submitted to the 
committee clerk within 14 days and now we will have questions 
from Mr. Walberg, Ranking Member.
    Mr. WALBERG. Thank you, Madam Chairwoman and thanks to the 
panel for being here. Mr. Holt, when Medicare's prescription 
drug program was implemented, it included a non-interference 
clause that prohibited the Secretary of HHS from intervening in 
negotiations between private firms or private plans.
    Has this model been successful in driving down costs and 
increasing competition with Medicare beneficiaries and second, 
would the direct negotiation provision in H.R. 3 destabilize 
these efforts?
    Mr. HOLT. Yeah, so when part D was first developed, the 
idea was to get as many plans competing as possible but there 
was concern that the negotiation wouldn't work so there was a 
Federal fallback plan that would have had a premium of, I 
think, 35 dollars at the time. Today it would be at about 44 
dollars. In reality, the negotiations between the manufacturers 
and the plans and PBMs have led to a situation where the 
premium, I think next year is expected to be about 30 dollars 
on average per beneficiary, so we've definitely seen that the 
negotiation in part D has been very effective. That is not to 
say that there aren't reforms that could be made to part D and 
I think this bill at least starts to address some of that but 
yeah, we've seen very effective negotiation in part D.
    Mr. WALBERG. Would we see destabilization of these efforts 
by direct negotiation as proposed in H.R. 3?
    Mr. HOLT. Yeah, and particularly early on where some drugs 
would be having their price set by the Secretary and the others 
would still be part of this negotiation would be really 
difficult to predict how that would affect the overall benefit.
    Mr. WALBERG. Mr. Holt, when talking about the high cost of 
prescription drugs, Sivaldi, the cure for Hepatitis C is the 
poster child. Although the drug cost 84,000 dollars for a full 
course of treatment at the time of its launch, within two 
years, competitors introduced rival treatments and the price 
came down by 46 percent, which I hasten to say is still too 
high for many people. In your opinion, was this an example of 
market failure?
    Mr. HOLT. No, I mean this is an example of how markets 
should work. Competitors come in and we see concessions as a 
result.
    Mr. WALBERG. Would it be considered a market failure under 
H.R. 3?
    Mr. HOLT. Under H.R. 3, Sivaldi would be considered to be a 
drug that does not have competition.
    Mr. WALBERG. Thank you. Mr. Garthwaite, Dr. Garthwaite, you 
explained in your written testimony that development of 
pharmaceuticals is a long and risky process and that firms rely 
on some degree of regulatory and market predictability when 
deciding to invest. How would H.R. 3 undermine the 
predictability and the willingness of firms to take chances for 
the sake of innovation?
    Mr. GARTHWAITE. On the predictability side, you'd be a bit 
at the whim of the Secretary of HHS as to whether you're going 
to be one of the drugs that is picked to have your price 
negotiated.
    In addition, we would be targeting our negotiation on those 
drugs that generate the most unique value in the market, those 
that don't have competition and therefore are the only choice. 
Now that might seem positive to some people but I would note 
that is the very nature of drugs that we would want to see 
people invest in so we would be sending a signal to the private 
market that drugs that meet unmet demand, that provide truly 
new treatment options are going to have their price severely 
capped and while Mr. Mitchell mentioned the Secretary Azar's 
comment about one penny of profit, that is not what we are 
talking about here. We are not talking about marginal changes 
to profitability and I am sorry that Mr. Mitchell thinks it is 
a tired talking point but the trouble with the truth is it 
doesn't change.
    The truth is if you decrease the return to innovation, you 
will get less innovation and I am happy to have a debate about 
whether we want less innovation. I am not happy to sit here and 
say that won't be the response. It is personal to me as well. I 
have lost very close family members to cancer because they 
didn't have the drugs that you have the ability to pay for. 
That is an access problem that we have to take very seriously.
    There are a lot of conditions for which we don't have 
access today because there is no drug and we have to keep those 
people in the debate as well because sadly they can't be 
sitting at the table testifying because they are no longer 
here.
    Mr. WALBERG. Thank you. Let's go to some case history, Dr. 
Garthwaite in countries that have enacted price control similar 
to the ones included in H.R. 3. Do their patients have the same 
access to new therapies as patients in the United States, and 
second, do patients in those countries face increased wait 
times, drug shortages or denial of coverage for lifesaving 
drugs?
    Mr. GARTHWAITE. This varies a bit by countries. We often 
talk about the idea of European healthcare or developed country 
healthcare. There is no one system that we want to talk about 
or that we can point to and say they are all the same.
    In the UK, for example, where NICE is the committee that 
negotiates this. Yeah, patients have reduced access to drugs. 
Patients with cystic fibrosis don't get access to Vertex' 
products there and that is a choice that they've made. In 
Germany, they pay higher prices, they get more access, but they 
don't get access to some drugs that we get here because they 
deem that they are not worth the money that is being paid and 
that is all fine. There is no secret to how Europeans get lower 
prices. They are not better negotiators than us. They'll just 
walk away. They are willing to walk away from drugs. We don't 
want to do that here. We don't want to face the hard choice in 
that H.R. 3 so what do we say? You're going to give us the 
price we want, or we are going to take all of your money as a 
drug company. That is not a negotiation.
    Chairwoman WILSON. Thank you.
    Mr. WALBERG. Thank you, I yield back.
    Chairwoman WILSON. Mr. Norcross of New Jersey.
    Mr. NORCROSS. Thank you, Madam Chairwoman for having this 
hearing and it certainly is long overdue to have some real 
conversations that lead to both the continuation of innovation 
but at a reasonable price. I can tell you the folks in my 
district, nothing twerks them up more as to find out their 
great country spent somewhere close to $40 billion a year in 
NIH funding which means we had skin in the game. That money 
does not magically appear from somewhere. It is those taxpayers 
we represent and yet the stories that I hear from a young man 
who goes for his insulin and what he pays a year and if they 
can go right across the border into Canada, 1/10th the price.
    So, Ms. Talente, I'd like to ask you a couple of questions. 
When we talk about negotiations going beyond where we have 
historically been to where this bill puts us, we spent $40 
billion on NIH and it is not all for one particular area. 
There's a lot of research there and you say they bring this 
great intervention. Do you see that America gets a discount on 
some of the pricing from those innovative drugs that come from 
NIH? Are we getting that special break?
    Ms. TALENTE. No, not that I have seen.
    Mr. NORCROSS. So, we pay for it and under many cases we pay 
substantially more than other countries?
    Ms. TALENTE. Yes, that is true.
    Mr. NORCROSS. This is the thank you we get for putting that 
research. I really appreciate that. But can you walk me through 
the negotiations that Medicare has? Can you directly say 
because we pay this much more for our pharmaceuticals in this 
country, that we are getting more breakthroughs across the 
board but particularly in MS?
    Ms. TALENTE. Generally, what we see is that the 
breakthroughs in innovation hop in and then those products go 
through the drug approval process in other countries as well, 
so they are not just coming to the U.S., they are going to 
other countries around the world.
    Mr. NORCROSS. You find it somewhat distressing that we make 
the greatest investment and pay the greatest prices?
    Ms. TALENTE. I find it disturbing that people are going 
without their medication because they can't afford it.
    Mr. NORCROSS. Thank you. I want to talk about some of the 
issues with the PBMs. Having spent the better part of my 
private career dealing with health plans, pharma plans, the 
PBMs that came into existence some time ago were the greatest 
thing since sliced bread. They were out there fighting for us, 
but now they are part of the problem. So when we see 
negotiations, we the end users, even though we buy a large 
plan, don't see the direct negotiations that take place. In 
other words they are being done behind closed doors.
    So, Dr. Socal, how can we ensure those PBMs are pricing, 
those price savings are passed on to the end consumers?
    Dr. SOCAL. There are two ways that we could do it. We could 
try to capture every single change in the negotiation process 
and make that known, which I don't think is feasible and I 
don't think it helps to the negotiation process or we can have 
a benchmark and we can show this is the benchmark that other 
countries are paying and you as an insurance plan, you have 
something that you can compare your price to. So you don't 
really know all the working mechanisms that are happening 
behind the curtain but you have a very clear benchmark that you 
can take a look at to know if you are getting a good deal or 
not.
    Mr. NORCROSS. The rebates, that is part of the area that we 
don't see anymore, and you might get the savings but you might 
not. What do you think the most effective way, other than to 
open up that process, and to some degree I agree with you that 
it is very difficult to follow everything, that is why they are 
doing so well. The confusion that the average person doesn't 
have the time to go but rebates see to be a real issue that 
they are not making to the end user.
    Dr. SOCAL. And I would add it is not only the fact that 
there is a rebate, it is the fact that the rebate is 
intertwined with the revenue source for the PBM. So, if PBMs 
were to pass on fully all rebates, all fees, everything to the 
payers, that possibly would generate less distortions to the 
market. But PBMs' revenue depends by in large on rebates and 
that generates a series of distortions and oftentimes higher 
prices for the payers as well.
    Mr. NORCROSS. I am out of time. Thank you, I yield back.
    Chairwoman WILSON. Thank you, Mr. Norcross. Dr. Foxx?
    Mrs. FOXX. Thank you, Madam Chairwoman. I want to thank our 
witnesses for being here today. Mr. Holt, what current 
regulatory guardrails exist in the pharmaceutical industry to 
give incentives to companies to undertake financial risk 
associated with developing new drugs? Would H.R. 3 impact the 
current patent system and exclusivity periods that attract 
investment?
    Mr. HOLT. I don't know that H.R. 3 would directly impact 
the patent system. I think clearly H.R. 3 has serious 
implications for capital to continue coming to drug 
development.
    Mrs. FOXX. Mr. Holt, H.R. 3 would allow the Secretary of 
HHS to negotiate the prices for up to 250 drugs per year. In 
your opinion, does HHS have the necessary access to data and 
regulatory review capacity to undertake this process and what 
are the consequences of granting HHS this information?
    Mr. HOLT. So currently no. the legislation does grant HHS 
really unlimited power to demand any and all information from 
manufacturers in order to in theory facilitate the negotiation 
although it is not clear to me that HHS needs any of that 
information since the Secretary can basically just wait out the 
manufacturer during the discussion; but I have real concerns 
about the proprietary data being handed over to the government.
    Mrs. FOXX. Thank you. Dr. Garthwaite, you note in your 
testimony the important role of the National Institutes of 
Health and other government entities in funding scientific 
research that contributes to product development. You explain 
further, however, that NIH is focused on basic scientific 
research and not the start to finish pipeline of pharmaceutical 
trials and production. What role does private investment play 
in bringing innovations to the market and how would H.R. 3 
undermine this process?
    Mr. GARTHWAITE. So private market basically commercializes 
the basic science that the NIH does and so it helps to think a 
bit why we have the NIH in the first place. The NIH solves what 
economists call is a public goods problems. So you generate a 
bunch of basic science, anyone can use it. You can't protect 
it, and because you can't protect it, you can't appropriate the 
value. No private firm is going to ever do that research 
because they can't get their money back, so that is where the 
very valuable role of the NIH comes in. In fact, as tax payers, 
we should be happy that the NIH is being used in all drugs 
because we are getting the most bang for our buck on the share 
of the 30 billion dollars that goes to drug development.
    So if you want to use savings from this bill to then get 
new drugs to market, you are going to have to really change the 
function of the NIH in some way to really start to focus more 
on commercialization, which is not something they've done 
before, and it is not clear it is going to be something that 
they are very good at.
    I would note that this is in many ways a centralization of 
the research process with NIH, but they are going to act like 
they are their own little venture capital company. At the same 
that the private market is choosing to decentralize research to 
a large number of small biotech companies and so you would 
really have to change the nature of what the NIH is to get that 
to work and it is going to be sort of a competition between 
taking away the incentive for the private market to invest 
commercialization dollars, how much innovation will you lose 
there compared to how much you think you could get by having 
the NIH serve this new and untested role. That is the--you have 
to think about that. I don't know if we have a good answer as 
to which of those would dominate.
    Mrs. FOXX. Thank you. Dr. Garthwaite, proponents of H.R. 3 
argue that implementing an ``international price index'' would 
force foreign countries to pay their fair share of the 
pharmaceutical research and development cost that are largely 
borne by the United States. Would this proposal result in other 
countries paying more for research and development or everyone 
paying for less research and development?
    Mr. GARTHWAITE. The answer is kind of both, I guess. 
Foreign countries are going to pay a little bit more. We are 
going to pay a lot less, a net will meet somewhere in the 
middle from that so we will get a little bit more money out of 
the foreign countries and I share Mr. Norcross' frustration. I 
would like it if the other countries paid more of this than we 
currently do. That would be the first best, right? Every 
country sort of pays its fair share. Unfortunately, what's 
probably going to happen is they'll pay a little bit more, we 
will pay a lot less and we will get less innovation and that is 
unfortunately where we are going to be.
    Mrs. FOXX. Well we've always been the leaders in many, 
many, many things and to me this is a small price to pay for 
the access that our citizens have to the drugs that are 
developed. Thank you very much. I yield back.
    Chairwoman WILSON. Now, Mr. Morelle, New York.
    Mr. MORELLE. Thank you, Madam Chair for holding this 
important hearing today. I will start out by saying I am a 
capitalist. I believe in investment and innovation, new 
products, new development cycle. I think it has benefitted 
Americans tremendously over the years but I am struck by the 
issue of innovation in pharmaceuticals because I have met with 
pharmaceutical companies, I know the talking points, but I find 
it interesting and I will just use an example which is probably 
not entirely analogous but if you think about what's happened 
in the development of personal computing over the last 30 or 40 
years, there's been massive innovation, massive investment, and 
yet the price of these devices has continued to drop despite 
the fact that there is more and more investment in innovation. 
I think back to my old social studies books about Henry Ford 
who priced the Model Ts when they were coming off the assembly 
line so that individual workers could afford them so he would 
help build a market.
    The difference in pharmaceuticals, I understand is you 
didn't have to buy a car if you didn't want to. You could find 
other ways to exist. Mr. Mitchell and people like him don't 
really have an option of not buying the car in the analogy. 
They have to buy the drug because it is lifesaving, so I 
struggle to understand exactly why the innovation cycle works 
in just about every other industry, but it doesn't seem to work 
very well in the pharmaceutical industry.
    Particularly in the advent of supercomputers, mapping of 
the genome and more and more information available to 
pharmaceutical companies but let me--so I will just use that as 
sort of a sense of where I come from on this and I am happy to 
talk to others and by the way, Dr. Garthwaite, I thought you 
said at one point, and I don't have time unfortunately but I'd 
like to get into it with you, perhaps offline. You mentioned 
something about the advertising costs and salaries don't affect 
return on investment for investors but actually all costs go 
into it unless I misunderstood--did I misunderstand you? Okay, 
I apologize. I only have three more minutes but I will look at 
the testimony, but I do apologize if I mischaracterized that so 
thank you for clearing it up.
    I did want to talk about insulin. In my district, insulin 
prices have skyrocketed as I assume it is everywhere else but 
in Rochester alone, where I represent, the 50 most popular 
diabetes medications cost the Medicare program and 
beneficiaries approximately $24.7 million in 2016 dollars. The 
monthly cost of a widely used insulin would be 74 percent lower 
Australian prices, 70 percent lower UK prices and 52 percent 
lower Canadian prices. We talked about cost setting in those 
countries as a reason for that, but it is important to know.
    Studies show manufacturers could charge as little as $7 to 
$11 per month for insulin and still make a profit. The average 
monthly--I'm sorry yearly price--annual price of insulin 
nationwide is $450 which is a considerable multiple of that 
number so Dr. Socal, if you might, in your testimony you talked 
about the role competition plays in controlling health care 
costs and when there is no competition, prices tend to rise and 
I would just be curious about what barriers there are. Insulin, 
in particular does not have--first of all it has been on the 
market for a long time so could you talk to me about how--is 
there innovation? Is that what is driving the price of insulin 
because it doesn't seem for something that is been around so 
long that is the issue.
    Dr. SOCAL. Well it is a combination of multiple factors but 
I would first start by highlighting yes, it is an older drug, 
it has incurred changes and innovation over time, especially in 
the sense of new application mechanisms, new tweaks to the 
length of the effect, faster effect, longer effect and things 
like that but most importantly, the prices for insulin, it is a 
quite good example of what I mentioned before.
    PBMs cannot say no to insulin. You cannot say no. It is a 
drug that you really need, and you need right now. It is 
similar to a situation where you have a very serious infection 
and you need an antibiotic. You cannot wait a week or a month 
to get your antibiotic. It is the same way with insulin, but 
people with diabetes, they need the same urgency of access 
every single day, every single time.
    Mr. MORELLE. And is the innovation that you talked about, 
is that what is driving the price of insulin?
    Dr. SOCAL. No, that is not driving the price of insulin. It 
is really distorting a little bit the competition between the 
insulins that do exist in the market so before when it was 
brought up, the fact that well there are some therapeutic 
classes where you do see branded drugs available in the market 
and they compete against each other, yes but we have to think 
about the clinical aspects of that and I am a physician, I am 
very familiar with what patients feel and they feel I am used 
to my insulin, to my application mechanisms. If I was going to 
change, it is not going to control my disease as effectively so 
those clinical aspects also play a lot in terms of being able 
to say no and negotiate effectively for that.
    Mr. MORELLE. Thank you so much. Thank you, Madam Chair.
    Chairwoman WILSON. Thank you. Thank you so much. Dr. Roe?
    Dr. ROE. Thank you, Madam Chair for having this and I hope 
we will continue to have these hearings. I am going to go on a 
little history tour.
    I graduated from medical school this December 49 years ago 
and I graduated from medical school there was one cephalous 
borne antibiotic and now there are--I call them self-
acknowledging. There are so many of them. There were five anti-
hypertensive. Three of them made you sicker than the 
hypertension did, and we didn't use them much. Now there are 50 
at least.
    My first pediatric rotation in medical school was at St. 
Jude's children's hospital. I can still remember seeing some of 
those kids. 20 percent of them lived, 20. Now It is 83 percent 
I believe is the last number I saw from St. Jude's and Mr. 
Mitchell, you are getting the benefit of some incredible 
research that is been going on and I hope it continues to go 
on. I have struggled with this for 40 years, seeing patients as 
a private practice doctor and a teacher in medical school. The 
innovation that we have, these new medications and then 
patients being able to afford them. If you can't take it, as 
Mr. Mitchell said, it doesn't do you any good and Mr. Morelle, 
I could not agree with you more, insulin was discovered in 1921 
by Benning and Best in Toronto, Canada. There is no reason for 
it to be 10 times as high in Canada as it is here in this 
country and you look at these countries that--that this 
international pricing is going to be and of the 270 new global 
medicines lost in the United States since 2011 to 2018, 100 
percent of them are available in the United States. 41 percent 
of them are available in Australia, so one of the ways you do 
is no question, the CBO is correct. You limit--when you limit 
how much somebody would pay, you are going to limit what's 
available for people to take and that is the dilemma I have and 
I think Ms. Talente, I think one of the things that we can do 
and Mr. Mitchell, there is no question that there are diseases 
out there and new innovations that are going to come along that 
are going to be expensive and I think we have to take those 
patients that are in these very high risk situations and put 
them in a high risk pool where their costs are no greater than 
anybody else and we are going to continue to find cures. I will 
run through very quickly. Dr. Lemial Diggs was my hematology 
professor in medical school. He lived his entire life trying to 
cure sickle cell disease for African Americans. His entire 
life.
    I can remember sitting by bedsides of pregnant women and 
taking out the sickle blood and transfusing normal hemoglobin 
into that woman for 35 weeks so she could get through her 
pregnancy and we could deliver her baby safely. Now, at NIH, 
some of the basic science research. It looks like we are going 
to be able to take an intenuated HIV virus, put the right 
genetic code and cure sickle cell disease. That is remarkable, 
but it is not going to be inexpensive and we as a society have 
to decide are we going to have the innovation and we're going 
to help the people that have MS--numbers of patients, a million 
patients in the United States have MS and these treatments are 
incredibly expensive, so what we have to do is I want the 
innovation but I don't want, as a doctor, 41 percent of the new 
drugs that I have access to and especially, I have said this 
all along. I don't care if your case is one in a million. If it 
occurs in you, it is 100 percent. Just like Mr. Mitchell's is 
100 percent for him, in that patient, so I am going to ask Dr. 
Garthwaite just a couple of questions.
    In 2018, the FDA approved 58 novel drugs. In 2017, the 
pharmaceutical industry spent 97 billion on research, 
development and so forth and a typical R&D, we know It is 
somewhere between 800 million and 2.7 billion to bring molecule 
to market so that I can write a prescription for it. Do you 
think that the elimination, effectively the elimination of the 
private industry and R&D by 2023 under this bill will adversely 
impact patients 10 years from now and do you think the NIH will 
be able to offset that loss through their budget, even though 
It is only a third of private spending?
    Mr. GARTHWAITE. So I have doubts on whether the NIH will be 
able to offset it, even if we gave them a lot more money. As I 
said, it is not just about giving the NIH more money, It is 
about them doing an entirely different set of activities than 
they currently do and we know that private firms partner with 
the NIH based on their ability to get returns. We know that in 
1995, we used to say that the NIH would have a fair pricing 
clause attached to their partnership with private firms. We 
took that away. We said there are no more pricing constraints 
on the partnerships, the number of these partnerships 
skyrocketed in the years after that, so we need to have a 
respect for the fact that the private market are the people who 
commercialize drugs. We could try to make the NIH that entity, 
but it would be vastly different than they currently do.
    Dr. ROE. That is not what's going on in Switzerland or 
other places--or France. They have a robust market. The private 
companies do that research there and It is not done by the 
government of France or the government of Switzerland.
    Mr. GARTHWAITE. But they do it to sell it to the United 
States. Global firms do research and sell to us.
    Dr. ROE. Well I do want to continue. Madam Chair, I really 
do appreciate this hearing and I hope we continue this 
discussion.
    Chairwoman WILSON. We will.
    Dr. ROE. We don't have enough time.
    Chairwoman WILSON. Thank you, Dr. Roe. Mr. Courtney of 
Connecticut.
    Mr. COURTNEY. Thank you, madam chairwoman and thank you for 
hosting this hearing. Last November, this country experienced a 
historic moment. It was the largest voter turnout in a midterm 
election since 1914. We elected a new majority with a plurality 
of 10 million votes which shattered all records in history of 
this country and if you looked at the exit poling, health care 
cost was the number one concern of voters and more particularly 
the cost of prescription drugs so holding this hearing on this 
bill is in my opinion keeping faith with the loud strong 
message that came out less than a year ago through our 
democracy.
    Yesterday, we got more validation about this issue. Kaiser 
Family Foundation released its annual health benefits survey of 
employer-sponsored health insurance. The study found that the 
average premium for family plans has increased 22 percent since 
2014 which has been a very low inflation environment and last 
year to this year, it was a 5 percent increase, again, far 
surpassing the rate of inflation. According to the Americas 
Health Insurance Plans, 23 percent of private health insurance 
premiums go towards prescription drugs. The largest share of 
healthcare costs, larger than doctor services, office visits 
and hospital stays. In addition, we have seen the trend toward 
high deductible coverage as a way, a desperate way of trying to 
moderate the increase of a premiums so again, there's an 
additional layer of cost which patients and workers have been 
experiencing.
    So Dr. Socal, when we talk about the brave new world of 
high-deductible health insurance, lowering the list price of 
drugs, which as you pointed out in your testimony is really 
where the rebates are worked off, but they are not shared with 
workers so could you kind of talk a little bit more about the 
way that all transpires.
    Dr. SOCAL. Absolutely. First of all, let me just mention 
that from an employer perspective, you want to offer the best 
benefit you can to your workers so an employer, if possible, 
they would choose to offer the best plan they can and the 
offering of these high-deductible health plans, more and more--
the more frequent offering for those plans, it already reflects 
how companies are struggling to pay for their bills and they 
are sharing these agreements with patients. The real problem is 
that once you are enrolled in a high-deductible health plan, 
automatically, there is some sort of parallel mechanism to save 
money like a savings account, for example.
    Patients believe they are going to be protected like an 
insurance agreement, however the price that they are going to 
be faced with is going to be the list price so you cannot save 
your way to pay for the list prices that the insurers are 
negotiating down.
    Mr. COURTNEY. That was on page 7 of your testimony, which 
again, basically says list prices before rebates determine 
America's cost-sharing amounts so again, the patient and the 
worker again is really sort of excluded from all the--
    Dr. SOCAL. Absolutely, they are always faced during the 
initial deductible, even for somebody who is fully insured, 
doing the cost-share and cost-sharing--percentage cost sharing 
is more frequent for the highest cost drugs, so patients are 
always paying over the list price, never over the negotiated 
price.
    Mr. COURTNEY. Thank you. And Mr. Isasi, again, AHIP, which, 
you know, maybe hasn't always been aligned with your 
organization in the past but I mean do you see any--do you 
disagree at all with their analysis that prescription drugs now 
are sort of consuming the highest percentage of premium 
dollars?
    Mr. ISASI. Prescription drugs are 25 percent of premium 
dollars at this point. They have gone up exponentially which 
means if any of us aren't on prescription drugs, we are still 
paying for them.
    Mr. COURTNEY. So again, if we are looking at a strategy 
both public sector and private in terms of just how we moderate 
and hopefully reduce premiums. I mean that sort of trend just 
sort of screams out for Congress to act, is that right?
    Mr. ISASI. That is exactly right and just on this 
innovation question that keeps coming up. A couple of points: 
Sovaldi, which was raised before. Gilead bought the drug from 
the researcher at the VA and then their analyst said enter the 
market at this price and we will make a ton of money and then 
they quadrupled it. And then the patients in the VA couldn't 
afford to get the drug. That is innovation. MS, we have talked 
a lot about MS. In the last five years, the drug went from 
$60,000 to $90,000. In five years, same drug, that is not 
innovation. That is not about innovation. In fact, what we know 
right now is 75 percent of the drugs that are coming to market 
are coming to market because they are especially drugs that can 
get the Medicare beneficiaries in a catastrophic coverage where 
they only pay 5 percent. The government pays 80 percent, the 
plan pays 15 percent. Think about what it would mean if we had 
iPhones where 80 percent of the cost was government subsidized, 
15 percent was paid by the iPhone retailer and then 5 percent 
was paid by us. That is what we are living with right now. That 
is not innovation; that is why we don't have low cost drugs.
    Mr. COURTNEY. And that is why we need to move on H.R. 3--
    Mr. ISASI. Absolutely.
    Chairwoman WILSON. Thank you. Mr. Johnson from South 
Dakota.
    Mr. JOHNSON. Thank you, Madam Chair, I appreciate it. So 
Mr. Garthwaite, I understood your comments. They made sense to 
me that venture capitalists and for that matter other capital 
contributors, they could invest in any industry and so that 
doesn't offend me that the pharmaceutical companies would need 
to have a certain return on investment that need to earn that 
return on investment to attract that capital.
    It seems like from the data we have looked at and from the 
testimony we've heard today, the pharmaceutical companies are 
not earning anywhere close to that necessary return on 
investment and the European markets, so where do the 
pharmaceutical companies make up that shortfall and the target 
return on investment?
    Mr. GARTHWAITE. The United States.
    Mr. JOHNSON. I mean obviously that is the answer. I mean I 
do find myself more and more affiliating myself with the 
comments of the President that in that environment it looks 
like Europeans are really taking advantage of us. That may not 
be their intention but that is certainly the effect.
    Dr. Foxx, I thought had some good questions about and also 
kind of where do we go from here.
    Your response that yeah maybe we would come down a bunch 
and they might come up a little bit but that means that yes, we 
are paying less but we are getting a lot less innovation. I get 
that is logical; it seems fatalistic, it seems like we are 
putting ourselves and the rest of the world in a box. Is there 
any other way? Is there any way to better balance this European 
versus American contribution to the return on investment?
    Mr. GARTHWAITE. I think if you are looking for optimism, 
you shouldn't have invited an economist here to testify. That 
is not really what we do. I mean listen, It is unfair. What's 
happening is that the Europeans are free riding off of American 
dollars and I think that is bad. I think the only thing worse 
is that no one is providing this innovative money. I mean 
sometimes if we want to get so caught up in the idea of 
fairness, we are going to cut our nose to spite our face.
    We are going to stick it to the Europeans, right? They are 
going to have to spend more and we are going to win in that 
sense, but what are we going to win? We are going to win lower 
prices, okay? And fewer drugs in the future. This is all 
dictated by returns and while I understand Mr. Isasi's example 
that Gilead didn't make the drug itself, a company named 
Pharmasset made Sivaldi. Why did they do it? So they could sell 
it to Gilead. In the end, the venture capitalists are looking 
for an attractive exit from their innovation and Pharmasset. 
They sold it and then Gilead priced it and took it to market 
and that is what people are looking for in this. The return is 
what dictates this.
    Mr. JOHNSON. So I do understand the value of paying more 
for a drug so that a country, like America, can get a preferred 
access to that drug but I found myself being struck by Ms. 
Talente's comment, her testimony that in most years, most of 
the increase in drugs, the price that Americans pay for drugs 
come from year over year increases of drugs that are already on 
the market rather than new market entrance. Does that comport 
with the knowledge you have got about what drives 
pharmaceutical inflation?
    Mr. GARTHWAITE. Unfortunately, I am well aware of the 
health--the article she is citing. It is a tragically flawed 
article. It uses bad data. It doesn't understand how drugs are 
priced. It uses non-rebate data, and older drugs have bigger 
rebates, so by construction, if you don't take rebates into 
account, it will look like the price increases are coming from 
older drugs, not newer drugs, and so I mean I don't know what 
else to say other than the article is wrong.
    Mr. JOHNSON. So what suggestions, Mr. Garthwaite, if H.R. 3 
is not the right approach, because I do find myself believing 
wholeheartedly that the system--that this balance that you very 
articulately and logically laid out for us--I believe in that 
balance. Cost and innovation, there's a tension between those 
two.
    I do get the sense that maybe we haven't balanced that 
properly so if H.R. 3 isn't the right solution, give us some 
thoughts about where we should go from here.
    Mr. GARTHWAITE. Absolutely. First, let's do things that 
make the market work. Some of the reasons it doesn't work is 
because of decisions that Congress has made. We have the 
catastrophic program that Mr. Isasi is talking about where the 
government pays 80 percent of the cost of high-priced drugs. 
That is ludicrous. That doesn't provide insurers the strong 
incentive to negotiate, so let's flip that, let's put 80 
percent on the back of the insurer. All of a sudden, they are 
going to get a lot more interested in negotiating the high 
price of the drug.
    We have protected classes that say you have to cover every 
drug in the category. You don't have to come to Kellog and take 
our wonderful negotiations classes to know that if they have to 
pay your price, you can just sit there and wait. We have 
generics that have very small markets and therefore can't 
attract multiple competitors. There, we've already paid for the 
innovation. We might want to think about regulation for those 
products, things like the Daraprim product that Martin Shkreli 
raised the price on that sort of got everyone upset. Maybe that 
is where we need regulation. It is not that I am opposed to 
regulation in any setting, I want to be clear. We want 
regulations when markets failed but a high price is not a 
market failure if that price is generating the incentive for 
the innovation we want and so targeting the places where the 
market isn't working, provide insurers with the incentive to 
negotiate and vigilantly monitor the competition. Don't allow 
people to gain patents, don't allow people to exclude their 
competitors. Have robust anti-trust authority for people who 
are breaking the rules and then if all that happens and we are 
still at this position, then let's talk about a failed market 
but we haven't even given the chance for the market to work 
yet.
    Mr. JOHNSON. Thank you very much. Madam Chair.
    Chairwoman WILSON. Thank you. Ms. Shalala of Florida.
    Ms. SHALALA. Thank you very much. I am interested--
obviously you have described the cost-shifting that is going on 
from the Europeans to us. It is been going on for a long time 
and it is not so easy to get at that and during the time that I 
was the HHS Secretary, I begged for an opportunity to negotiate 
because I was opposed to the importation, which I thought was 
unsafe and I still believe it is unsafe. But explain to me and 
all of you can comment on this, how the Europeans can negotiate 
directly, have a more limited list of drugs and get better 
outcomes than we get in whatever you want to describe the 
market for because I don't see analysis that tells me that 
large numbers of Europeans are dying from certain diseases 
because their health administrators are negotiating are tough 
negotiators on the price of drugs.
    Mr. GARTHWAITE. So I mean what we can do is we can do what 
the Europeans do and start saying no to some drugs on our own. 
So we talked about insulin. Why is one reason insulin is 
expensive? Yes, it is an old drug but it has evolved a lot over 
time and there are two categories you might want to think 
about. We have human and analog insulin, analog insulin being a 
newer insulin. Caramore, which is a Medicare Advantage provider 
in California, they put a bunch of their type II diabetics, a 
large fraction on them on human insulin, the older kind and 
then they monitored for any adverse events. They had no 
increase in hypoglycemic events and they had a big decrease in 
savings.
    Ms. SHALALA. So basically what you're saying to us is that 
where there are more than one drug that will treat the patient, 
we have not seen different outcomes necessarily for most 
patients but we are not prepared to do that?
    Mr. GARTHWAITE. The gentleman left, Mr. Morelle but in tech 
what happens is we take slightly worse products that have 
meaningfully lower costs. In the U.S., healthcare we are 
unwilling to do that. Right?
    We want--we will never take a slightly worse product, even 
if It is thousands of dollars less. We will, however, take a 
slightly better product and pay thousands of dollars more and 
until we are willing to say we won't do that, that you have got 
to give us the return for our money, we are not going to get 
any savings.
    Ms. SHALALA. Madam Chair, this is a very important point 
because what we are describing is--we have not focused on 
outcomes. I am interested in outcomes. I am interested in 
whether we can make Americans healthier, and if we can use a 
negotiated process to do that, are there any circumstances or 
will any of you--would you propose any different ways of 
organizing the negotiation other than using an international 
price index?
    For example, the VA negotiates now, the prices are online. 
You can actually see the contracts online. I mean we do have 
American government officials that now have experience in 
negotiating prices, whether it is on Medicaid or whether it is 
VA or whether it is for Tricare, we have had a lot of 
experience.
    Mr. ISASI. Well I was going to say absolutely and we know 
that, for example, what Mr. Garthwaite is talking about in so 
much of his testimony is this hypothetical world in which if 
only we could do this and if only we could do that but the 
truth is we live in a world where there is a Medicare benefit, 
cash off of coverage that pharmaceutical companies are pricing 
to that coverage, there has been a 96 percent increase in price 
only in that coverage. They are playing a game with us, but he 
is in this hypothetical world. To your point, in particular 
with launch prices, we should be able to understand what is the 
real value of this drug? Does it really provide a benefit? How 
does it compare to what is on the market currently? We are not 
doing that as a country. You are describing that occurring in 
other countries, Mr. Garthwaite is as well.
    We are not doing that as a country so we just put it on the 
market, they market it to doctors, doctors bring it to their 
patients and now we are spending $6,000 for something that 
should probably cost 5 cents.
    Ms. SHALALA. The head of Eli Lilly came in to see me before 
they dropped their price for insulin and they actually had the 
nerve to say to me he could have dropped the price lower. I 
mean--
    Mr. ISASI. They tripled--insulin tripled between 2003 and 
2012 and it went up 10 times faster than all the drugs since 
then. Ten times faster, meanwhile they are suing other 
competitors to make sure they can't come to market with a 
biologic similar.
    Ms. SHALALA. Mr. Holt, just one small point. I am an 
academic and normally when we testify or publish articles, we 
identify if our organization takes money from--in your case 
from pharma. I didn't see that acknowledgement on your 
testimony. I would hope that you would disclose whether your 
organization does take any money from pharma or has in the past 
taken money from pharma. I yield back.
    Chairwoman WILSON. Mr. Holt?
    Mr. HOLT. Our organization is a 501C3 and we don't disclose 
our donors. I am not allowed contractually to do that, and I 
also don't have anywhere near the knowledge of our donor 
situation to do so.
    Ms. SHALALA. It is actually online, the IRS reports.
    Mr. HOLT. Not ours. Maybe people who give money to us but 
ours are not.
    Chairwoman WILSON. Thank you. Mr. Allen of Georgia.
    Mr. ALLEN. Thank you, Madam Chairwoman and thank you for 
this expert testimony today. Obviously, I think every district 
in the country, when we go home, healthcare is number one. No 
question about it.
    What I have been able to observe is nobody in healthcare is 
happy. Patients, Mr. Mitchell, are not happy, providers aren't 
happy, and the government has thrown trillions of dollars at 
this. The cost is skyrocketing and yes, we've got--we are 
developing great drugs. We are--I think, again, in a free 
market environment. There is no question that free markets 
drive innovation. The government doesn't innovate anything. 
Yes, we can do studies, we can pay people to do studies but 
still to be able to raise the capital to invest, to be able to 
come up with these things that save lives is critical to this 
whole process so here is the question. And again, we do believe 
that this thing needs to be fair throughout the world. In other 
words, we should be able to sell your technology.
    I mean we have this problem in China. Why is the President 
negotiating with China? Because they are stealing all our 
intellectual capital and then turning around and competing 
against us and dumping those products in here. In fact, how 
much of our drugs today are made in China? Because they have 
stolen our capital and they are selling the elements to develop 
these drugs back to us.
    Mr. GARTHWAITE. A lot are made in China. I don't want to 
sign on to the second part that they are made in China because 
they are stealing our intellectual property. They are made 
there because we outsource manufacturing to China and India for 
lots of products so--
    Mr. ALLEN. They aren't proprietary.
    Mr. GARTHWAITE. We outsource to them to make the drug. It 
is a contractual arrangement between us and them. It is a 
perfectly legal arrangement.
    Mr. ALLEN. I see. And they are using our technology to do 
that?
    Mr. GARTHWAITE. Our technology on how to manufacture drugs?
    Mr. ALLEN. Yeah.
    Mr. GARTHWAITE. That is--India has been the drug store to 
the world for decades.
    Mr. ALLEN. Okay.
    Mr. GARTHWAITE. It is not--that technology on how to make a 
small molecule product isn't proprietary technology unless 
you--you have a lot more access to information than I do so you 
might know something about them taking technology, but I am not 
sure what you are getting at.
    Mr. ALLEN. Well, I just--again, this is a worldwide 
problem, I guess what I am trying to say as far as whether it 
is Europe or anybody else and the fact that in Canada you can 
buy insulin for much less than you can buy it here in this 
country, we've got to fix that, and in other words, we've got 
to fix it to the extent that whatever we are able to develop 
here and sell here, if somebody else is going to use the same--
use our intellectual capital, they need to pay for that and 
again, I still don't understand why is it that they can sell 
their insulin for less than we can do it. I mean--
    Mr. ISASI. Because their government negotiates price. That 
is why. That is literally the reason.
    Mr. GARTHWAITE. It is also--I'm sorry. It is because they 
are willing to walk away. I know you want to talk about me 
living in a fantasy world, but it is not hard. They are willing 
to walk away, and we are unwilling to tell our seniors, in 
particular, that lower prices might mean less access to drugs.
    Mr. ISASI. And that is why H.R. 3 is so brilliant because 
it actually doesn't walk away; it forces a manufacturer to 
either give it a reasonable price or they end up paying an 
excise tax.
    Mr. ALLEN. I'd like to reclaim my time.
    Mr. ISASI. So, they don't walk away. They make sure the 
drug is available. That is what we care about.
    Mr. ALLEN. I'd like to reclaim a little bit of my time, 
Madam Chair. Well listen, I got a little something going here, 
right?
    Now, so the last questions. So if a--the drug Mr. Mitchell 
is taking and I don't know how that is being paid for but say 
it is Medicare, okay?
    Mr. GARTHWAITE. I mean I guess, yeah.
    Mr. ALLEN. And so Medicare is going to negotiate the price 
of this drug and they are saying we are going to pay this much 
for this drug for Mr. Mitchell and that is all we are going to 
pay. The company says we are not going to sell it to you for 
that and they walk away from the deal, what do we do then?
    Mr. GARTHWAITE. So the hard part is that we have required--
so that is an oral chemotherapy drug so I believe it is in the 
Medicare part D. we've required that the oncology products in 
Medicare part D, the insurer must cover every single one so it 
is the decision--that is a government decision because we 
didn't want seniors to not have access to every oral oncology 
product and that is a decision that we've made and that is 
why--It is not about the government negotiating it. The 
government negotiating it under those rules, it is the same 
thing that is going to happen and so--
    Mr. ISASI. That isn't what would happen under the bill.
    Mr. ALLEN. I am not addressing you, sir.
    Chairwoman WILSON. Great discussion.
    Mr. ALLEN. Can he finish his answer?
    Chairwoman WILSON. Finish your answer if it is a minute.
    Mr. GARTHWAITE. A whole minute? We have to decide whether 
we are willing to walk away. There is no secret to the drug 
pricing. It is not about the government negotiating, it is 
about the government saying they'll walk away. Creating that 
outside option. What we are going to do under the H.R. 3 is 
just under H.R. 3, you will still get access to the drug 
because we have said we will take all the company's money away 
if they don't give it to us so where is the access problem 
going to come? It is not going to come today. It is going to 
come in 10 years. There are no easy answers here.
    Chairwoman WILSON. Okay, thank you so much. And now our 
esteemed Chair, Mr. Scott.
    Mr. SCOTT. Thank you. Mr. Mitchell, you know what portion 
of R&D is done by the private sector and what portion is done 
by the Federal government?
    Mr. MITCHELL. The budget for NIH this year is $39 billion. 
Pharma claims to be spending about $90 billion, but a 
tremendous amount of the spending by taxpayers through the NIH 
is on early high-risk, basic science that is the platform that 
leads to these new drugs. In addition, increasingly, NIH is 
doing drug development right now, is running clinical trials on 
the sickle cell drug inside its walls and in fact the NIH paid 
for most of the clinical trials for this expensive CAR-T drug 
which was brought to market by Novartis, so NIH is doing a 
tremendous amount of research not just basic science but 
increasingly drug development.
    Mr. SCOTT. And is there any potential in revisiting the 
decision that was made in 1995 to limit the prices for drugs 
that are partially developed with Federal spending?
    Mr. MITCHELL. Yeah and with all due respect to Dr. 
Garthwaite and he can look at this document too, the fact is 
that the number of cooperative research and development 
agreements did not skyrocket in the wake of the elimination of 
the reasonable pricing clause in 1995.
    NIH had a standard CRADA and then it created something 
called materials CRADAs which did not exist in 1995. Subsequent 
to 1995 and the elimination of the reasonable pricing clause, 
the increase in the number of comparables, standard CRADAs was 
14 percent over the ensuing 15 years and today the number of 
cooperative research and development agreements has gone up by 
only 45 percent, while the budget of NIH has gone up 400 
percent so you need to understand what actually happened in 
1995 when they created a different category of CRADA and you 
have to compare the original CRADA and see what happened in 
those ensuing years. Those are the numbers.
    Mr. GARTHWAITE. What is NIH's position on doing this?
    Mr. MITCHELL. The NIH made their decision back in 1995 when 
drug companies used to have much bigger R&D departments and 
today, the drug companies are increasingly reliant on the NIH 
for the basic science that leads to these incredible 
breakthrough drugs, kind of like the ones that I am taking.
    Mr. GARTHWAITE. But the NIH has said they don't want to do 
any pricing clauses.
    Mr. MITCHELL. The NIH are scientists and they want to pay 
attention to science. We need to look after taxpayers. So, I am 
with them on that.
    Mr. SCOTT. Mr. Mitchell, the question was should we revisit 
that proposal?
    Mr. MITCHELL. Absolutely.
    Mr. SCOTT. Dr. Socal, is there any evidence that if we 
reduced our prices to what other countries are paying, that 
prices would go up in those other countries?
    Dr. SOCAL. Not necessarily, no. So the big difference is 
that our country, with our market-based system, we are paying 
the price especially for drugs that have been in the market for 
a long period of time. These prices are going up where 
everywhere else they are going down and they go down everywhere 
else because of two reasons, one is because the research and 
development costs, they are sunk costs, they are not involved 
in the cost of producing every new pill. It is minimal change 
for every new production cost so other countries, they have 
recognized and they have mechanisms, after the drug is on the 
market to control and prevent these cost increases over time so 
it is unlikely that costs would increase everywhere else just 
because we changed the price here.
    Mr. SCOTT. Okay, Mr. Isasi, did you want to say something 
about the last discussion?
    Mr. ISASI. Absolutely. Thank you. Really quickly just to 
say that what was being described as what the legislation does 
is incorrect. The legislation would not have the government 
walk away from drugs that our seniors need. We at Families 
would not support that; that is not what the bill does. What 
the bill says is let's negotiate. Let's negotiate and come with 
a fair price and if we can't reach agreement, the upper limit 
is 120 percent of what the rest of the world is paying so we 
are still going to pay more and if we still can't agree, then 
you go sell your drug and we are going to take the money back 
from you because you are trying to rip off America's families 
and American taxpayers. That is what the bill does, it does not 
do what he says it does which is walk away from the drug and 
take the drug away from seniors. That is not what the bill 
does. It protects access and also protects the taxpayer from 
this extortion that is happening from drug companies.
    Mr. MITCHELL. And Mr. Chairman, could I just add that one 
of the key reasons that drugs are available first here in the 
U.S. is because we are the largest market and we pay the 
highest prices and at 120 percent of those referenced 
countries, we will still be the largest market paying the 
highest prices. It is very difficult to see how a CEO is going 
to walk into his ward, as Secretary Azar said to me, and tell 
his board I am walking away from the biggest market with the 
highest prices in the world.
    Chairwoman WILSON. Thank you.
    Mr. SCOTT. Thank you, Madam Chair.
    Chairwoman WILSON. Mr. Taylor of Texas.
    Mr. TAYLOR. Thank you, Madam Chair. If I remember my 
economics correctly, if you want to lower prices, you increase 
supply. I mean dirt cheap is cheap because there's a lot of 
dirt, right? So if you make more of something, prices will go 
down.
    Government price controls, tempting as they may be to try 
to deal with the problem, I generally haven't seen that work 
out very well. Generally. they have to be undone at some point 
because they just didn't pan out but just going to this 
particular government price fixing system, do you have any 
comments with regard to how this particular government pricing 
system works in your mind or how it wouldn't work in your mind. 
Where would it ultimately end up being a problem? I think you 
have alluded to this a bit in terms of research.
    Mr. GARTHWAITE. Yeah, I mean I was pretty clear before, I 
thought, that this is not about the government walking away 
from drugs despite being mischaracterized by another witness. 
The government isn't going to walk away from the drugs today 
because the government could just effectively take the drugs 
today, it doesn't have to. Where it is going to show up is an 
investment to innovation for new drugs 5, 10, 15 years for now 
which responds to the return on it. And again, as I have tried 
to be very clear, we might as a society want to have fewer 
drugs in the future in order to get more access today.
    There is no purely economic sort of platonic idea about 
what that is. That is a decision we should be debating. Do we 
want to slow the pace of innovation in order to get lower 
prices today?
    And let's have that conversation. Let's not let the 
officials in London and Berlin and Paris and Sydney have that 
conversation.
    Mr. TAYLOR. Sure. And I think what I will say is a common 
bind here--what binds us together is a common point as I think 
everybody in this room wants to see lower drug prices, right? 
That is something we can all agree on. I hope we can agree that 
the best way to go do that is again to increase supply through 
a series of bills that came out of energy and commerce 
committee unanimously that were then amended in such a way that 
made it unacceptable to Republicans that basically were sent to 
the senate to go die so those are not affected bills. I would 
hope that we would revitalize those bills, take them up as 
separate bills, send them back over to the Senate so that they 
can actually pass them and actually help our constituents lower 
drug prices so there are opportunities in front of us.
    They are here in this chamber, in the House of 
Representatives. We know what to do, we know some of the 
actions we need to take. We just need to be legislatively inept 
at getting them through in such a way that is actually go on to 
the President's desk.
    Just speaking about research and development, which we have 
talked about a little bit. I see there's an estimate that R&D 
will be cut by 200 billion dollars over the next 10 years if we 
were to go into this government price fixing mechanism that is 
in H.R. 3. Does that strike you as broadly correct, is that--
can you speak to that estimate?
    Mr. GARTHWAITE. I'd say It is the first one. I don't think 
our goal should be about lowering prices. Our goal should be 
about increasing welfare or making people better off now and in 
the future, and figuring out what the price of an access 
tradeoff is there.
    If our goal is simply to lower prices, we can do that. That 
is actually not hard. The government is a very powerful force. 
It can come in and say let's not make it 120 percent. Let's 
make it 80 percent of the foreign price so we are trying to 
improve welfare. Where that welfare comes in is this effect on 
research and development, how much would it be.
    I haven't run the number of whether it is 200 billion that 
would go down, partly because it is a pretty complicated 
question because it is about how is the venture capital company 
going to respond and so I don't--is that in order of magnitude 
correct? Maybe?
    Mr. TAYLOR. So then also going staying on this topic of 
research and how important it is for the future of creating the 
next innovation, I think you correctly pointed out that it is 
not about the present prices where your real worry is. Your 
real worry is about future innovations including the United 
States which has been a tremendous leader on that. It comes at 
a price. So we are--NIH is conducting research and you are 
looking at the private industries estimating they are doing 97 
billion dollars of R&D every year, which is a tremendous sum of 
money to find the next generation of drugs. If we were to go on 
a price fixing scheme, it seems to me that you're saying that 
97 billion would go down.
    Mr. GARTHWAITE. I mean economic logic would dictate that if 
you are going to earn less money from your investment, you'll 
find the next best use for that dollar, particularly true for 
venture capital companies where literally that is what they are 
supposed to do. They are supposed to get a return for their 
investors.
    Mr. TAYLOR. Well I appreciate what you are saying here 
today. I will just say that I am certainly here to try to lower 
drug costs. As I go across my district, one of the top 3 
complaints I hear is the cost of healthcare and we know that 
drug cost is a natural component of the cost of healthcare. And 
again, I am focused on trying to increase the supply. To me, 
price fixing is a lazy legislator's answer to fixing a 
particular economic problem and I would challenge anybody here 
to tell me hey, price fixing worked great here. This is the 
best because I think when they are borne out over several 
decades, they generally just fall apart completely and are 
completely undone. I don't know that this Congress has done 
price fixing in the past, but it has not panned out. With that, 
Madam Chair, I yield back.
    Chairwoman WILSON. Okay. Ms. Wild of Pennsylvania, welcome 
back.
    Ms. WILD. Thank you, Madam Chair. I apologize for stepping 
out. I had to attend an Ethics Committee meeting, which is an 
internal committee governing ethics, but I think It is an 
appropriate subject to sort of lead off this discussion because 
to me, this is an ethical issue. This is a problem that our 
country is having. We have people dying because they cannot 
afford their prescription drug prices and that to me is 
unethical for the richest country in the world.
    It seems to me that we are just consistently putting 
profits over people and Mr. Taylor, I have the utmost respect 
for my colleague across the aisle. He and I have worked on a 
bipartisan basis on other matters, but I will tell you, I don't 
think we are legislatively inept as I think you have termed it. 
We are, as a body, the government is far too influenced by the 
pharmaceutical lobby. That is at the heart of this problem. So 
with that said, let me just say that Dr. Garthwaite, you said a 
couple of minutes ago, venture capitalists' job is to make 
money for their investors. Well we know that in 2016, Turing 
Pharmaceuticals CEO raised the price of a newly acquired drug 
from $13.50 to $750.
    In response to this, J. Michael Pearson, the CEO of Valeant 
said his company's responsibility was to its shareholders, not 
the customers who rely on the drugs to live. In fact, we know 
that shareholders can bring suit for an officer's breach of 
fiduciary obligation owed to shareholders through shareholder 
derivative lawsuits so Mr. Pearson, the CEO, was right. His 
first duty is and was to make as much money as he can for his 
company.
    I would respectfully submit to you that should not be our 
priority in saving lives, in making people healthy again. We 
cannot continue to have profits over people as the most 
important thing governing this discussion. So, I know that you, 
Mr. Holt and Dr. Garthwaite--first of all, do either one of you 
have any formal medical background or training? Formal.
    Mr. HOLT. I don't.
    Mr. GARTHWAITE. No, as my wife says, I am not that kind of 
doctor.
    Ms. WILD. I didn't think so. I know you both have serious 
reservations about government negotiation of drug prices or 
tying drug prices to those of other countries, but I want to 
talk about something else. I want to talk about something that 
matters to my constituents that I hear about almost every 
single day. I want to talk about diabetes and the price of 
insulin, and you said, Dr. Garthwaite, market competition will 
drive down costs.
    Well guess what, we have a whole lot of competition for 
insulin. We have a whole lot of demand for it. It is been 
around forever. There have been no new formularies in decades 
and yet the price of insulin continues to go up, so there's no 
market force that is influencing that other than the fact that 
a whole lot of people need insulin and the manufacturers know 
that and so what they do is they keep raising the price on it. 
It is unconscionable and I can't believe we're even sitting 
here having this discussion. I have constituents who are dying 
because they don't take their insulin, or they can't afford to 
get it, or they are rationing it.
    I don't even--I can't even believe we are having this 
conversation. Do either one of you, just the two of you that I 
am talking to know what happens physically within a diabetic 
patient's body when she doesn't have access to insulin or has 
to ration her insulin? Do you know what ketoacidosis is? Do you 
know what the symptoms are? I will tell you: confusion, 
excessive vomiting, dehydration, shortness of breath, loss of 
consciousness, organ failure and death and I have constituents 
who themselves are rationing their insulin, whose family 
members have died because they rationed or didn't have their 
insulin available to them because of the price and I am not 
about to go back to them and say let's leave it up to the 
market to determine what the price of your insulin should be 
because you know what, the market has completely failed them 
and that is why we are here now. That is why this bill is 
coming before the House because we, as a country, and 
pharmaceuticals as an industry have completely failed the 
American people and we can't let it continue. I yield back.
    Chairwoman WILSON. Thank you very much, Ms. Wild. And now, 
Mr. Watkins of Kansas.
    Mr. WATKINS. Thank you, Madam Chair. Dr. Garthwaite, we 
hear heartbreaking stories of patients in other countries who 
are denied access to new treatments that could improve their 
lives. Earlier this month, news outlets cover the story of two 
sisters battling cystic fibrosis in Scotland. A breakthrough 
drug that treats the disease isn't currently covered by the 
United Nations' National Health Service because the government 
determined that the drug is too expensive. While one of the 
sisters was able to receive treatment for free from the 
manufacturer's compassionate care program, the other was told 
that she was not sick enough to qualify.
    Under H.R. 3 with access to these potentially lifesaving 
drugs be threatened for America patients?
    Mr. GARTHWAITE. I think It is unlikely that access to 
existing drugs would be threatened for Americans because as Dr. 
Socol said, the cost is sunk, so there is profit to be made 
selling it. Where the access restriction is going to come and 
we can't avoid an access restriction, it is going to come on 
drugs in the future. That is where It is going to come, less 
innovation so while Ms. Wild is right, not having access to 
diabetes drugs today causes that to happen, causes 
ketoacidosis, I would submit to ask her, do you know what 
happens to a cancer patient who doesn't have access to oncology 
that treats their cancer. You sit next to their bed and you 
watch them die like it happened to my family members. So that 
access mode happens no matter what. It is a question of whether 
we are going to pay attention to it, or we are going to pretend 
it doesn't exist.
    Mr. WATKINS. Mr. Holt, your testimony denotes that ``the 
cost of successfully bringing a drug to market has been 
estimated at approximately 2.87 billion dollars.'' And that 
establishing an international price index similar to the one 
included in H.R. 3 would lead to 9 billion dollars in lost 
revenue for drug manufacturers per year.
    If this index is expanded to the entire United States 
market, how many fewer drugs could we see approved by the FDA 
per year?
    Mr. HOLT. So the 9 billion figure was looking at the 
President's IPI proposal specifically limited to part B. Part B 
is about 10 percent of the U.S. market so you would see that 
increase by that--so roughly about 30 drugs per year, the 
amount that it cost to produce roughly 30 drugs per year would 
be lost.
    Mr. WATKINS. How does this impact the pipeline and the 
development of new medicines?
    Mr. HOLT. So on average, FDA approves about 33 new drugs a 
year so that is a big chunk of the pipeline.
    Mr. WATKINS. Thank you. Madam Chair, I yield the balance of 
my time.
    Chairwoman WILSON. Thank you very much. And now--oh, Mr. 
Keller, Pennsylvania.
    Mr. KELLER. Thank you, Madam Chair and I'd like to thank 
all the members of the panel for being here today. Prescription 
drug pricing is an issue. We've been hearing it from everybody. 
I have been in my district and there are a lot of things I 
think go into it and a question, I guess I just want to have 
for Dr. Garthwaite, I know you talked a lot about the return on 
investment and all those kinds of things and when we look at 
who this impacts and who the pharmaceutical companies are, they 
are basically owned by shareholders, is that correct?
    Mr. GARTHWAITE. It is a variety of organizational 
structures.
    Mr. KELLER. And it would be public pensions and all that 
kind of stuff.
    Mr. GARTHWAITE. Probably yes.
    Mr. KELLER. So a lot of the times, the motivation is to 
make sure they get a return on investment and then we as public 
sector employers invest in those drug companies too so if we 
want to point the finger at people making money, I think we 
need to look at all of us and I think we need to look at all 
things that we can do to help this and instead of pointing the 
finger at one person or another, look for actual solutions 
which I think would be in some kind of patent reform, things 
that would make drugs accessible rather than trying to point 
the finger of blame. I guess the one thing I'd like to ask you 
about and I know you mentioned it, you talked about drugs or 
people walking away--or making certain drugs because of the 
innovation and so forth, that would be that the company would 
just stop manufacturing or might not invest money in the 
future. In other words, if we weren't going to let them develop 
drugs, somebody said the government would walk away. It 
wouldn't necessarily be the government, it would be that the 
companies wouldn't invest in R&D?
    Mr. GARTHWAITE. Yeah, I mean we talk about the innovation 
tradeoff, it is not getting new drugs in the future. Drugs that 
have already developed, that we have already developed, people 
will make and sell at that price.
    Mr. KELLER. Right, but that might not get innovation for 
future drugs and treatments.
    Mr. GARTHWAITE. You would see a--it is not that you would 
get none--
    Mr. KELLER. You wouldn't get as much because when you look 
at some of the other countries where that is happened, there's 
not as much R&D in Germany or other countries as there are in 
the United States, would that be--
    Mr. GARTHWAITE. No, I wouldn't think of it that way. It 
doesn't matter where the R&D happens. We get lots of good drugs 
from Germany, we get drugs from Israel, we get an emergent 
Chinese biotech market. It is about where the profits can be 
earned, that is what dictates the investment.
    Mr. KELLER. Okay. Another question I guess I would have. 
Part of the consideration, would that also be any kind of tort 
reform? Would that be helpful in this discussion?
    Mr. GARTHWAITE. I mean if I started making a list, I am not 
sure that would get to the top 10.
    Mr. KELLER. Not the top 10 but probably a portion of it. I 
mean--
    Mr. GARTHWAITE. Honestly, I have never thought about tort 
reform in this context right now. There certainly are liability 
issues.
    Mr. KELLER. There was a Columbia science and technology 
article in the law review between December of 2009 and June of 
2010, just one company paid 3.36 billion in claims for cases, 
class action suits so I think there's some room--I guess my 
point is if you could make a list of things to do, it is just 
more than one thing other than just having the government 
negotiate prices.
    Mr. GARTHWAITE. I would just say that if a company does 
something wrong, they might have to--I don't know the case of 
the 3.6 billion but just because it is a big fine, doesn't mean 
that it is a wrong fine.
    Mr. KELLER. Right. I get that.
    Mr. GARTHWAITE. Yeah, I mean we want a tort system.
    Mr. KELLER. Right, I get that, but again, some kind of 
reform might be helpful in order to keep things in check.
    Mr. GARTHWAITE. You have to point to me where the tort 
system is failing, I guess. I can understand the medical 
malpractice side--
    Mr. KELLER. I get that too. I get that too.
    Mr. GARTHWAITE. I just don't know what the reform you are 
looking for is, I guess.
    Mr. KELLER. I guess we need to just look at all avenues I 
guess is my point. We shouldn't look at just one thing.
    Mr. GARTHWAITE. I would agree that we should be 
comprehensive at everything we do.
    Mr. KELLER. Yes, absolutely. I guess that is my point. I 
just don't know that this bill gets us there. This is just one 
of negotiating government prices rather than looking at all the 
solutions.
    Mr. GARTHWAITE. Yeah, but we should be clear. This bill has 
a lot of good parts. The stuff they want to do for Medicare at 
part D, the stuff that the other witnesses talked about. I mean 
that is good. Creating an out of pocket cap, if we expanded it 
to think about getting rid of coinsurance, which doesn't really 
make a ton of sense, fixing the catastrophic but let's focus on 
the things that we can do that are going to make the market 
work more efficiently. I'd love to be comprehensive in that, 
but I wouldn't say that this bill is not just about the price 
control. There are a lot of things in there that are analogous 
to what Republicans in the finance community are talking about 
as well.
    Mr. KELLER. And again, I think those are things to look at 
but having the government just be the sole negotiator of price 
I think is--in this bill, one person, the Secretary would be 
the person that would select the drugs that we are going to 
talk about and look at negotiating the prices on that group of 
drugs, which I think is controlled by one person.
    Mr. GARTHWAITE. That feature of the bill causes me pause, 
yes.
    Mr. KELLER. There are some things that I think would be 
pretty dangerous and limit choices and so forth for people that 
need to help. Thank you, I yield back.
    Mr. GARTHWAITE. Thank you, Ms. Davis?
    Ms. DAVIS. Thank you, Madam Chair, thank you to all of you 
for being here. We have just very few minutes, but I wanted to 
give Mr. Holt, Mr. Garthwaite that chance, if you'd like to 
respond to my colleague because we are very passionate about 
this, and I have to tell you that this is not a partisan issue. 
Everybody is passionate and I will have a question for Mr. 
Mitchell as well so if you could just quickly respond if you'd 
like.
    Mr. GARTHWAITE. I would say, Ms. Wild, I understand you're 
passionate. You brought up Turing Pharmaceuticals and Valiant. 
I was pretty specific in my testimony about those two 
companies, that those are examples of behavior that I believe 
there's a role for the government to regulate their prices. In 
fact, a big chunk of my testimony refers specifically to that 
instance and why I think for small market generics, that is 
something that we should regulate. We've already paid the 
innovation tradeoff. This idea about profits versus life. I 
mean there are economic realities in life.
    Ms. DAVIS. Thank you I am going to--is that enough of a 
response? I am sorry. We are just in such a hurry. Mr. Holt?
    Mr. HOLT. I also referenced the Turing Pharmaceuticals 
situation in my testimony. I do think that is an egregious 
breach and I think the single search generics are a real 
problem. I also am concerned about patients. My mother has 
diabetes. I have seen her off her insulin, so I am very 
sensitive to that.
    I think the reality is that we see the pipeline that is 
coming. We are seeing biologics, gene therapy, we can negotiate 
90 percent discounts and individuals aren't going to be able to 
pay for these so what we have to talk about is how the system 
is going to pay for drugs so that patients do have access.
    Ms. DAVIS. Right, and that issue of access--and so I wanted 
to turn to Mr. Mitchell and Mr. Mitchell, I wanted to thank you 
for being here. I am very familiar with multiple-myeloma, it is 
very personal to me and I understand what you are going through 
so one of the questions that I have often have, I come from San 
Diego and so we work with pharmaceutical companies all the time 
but for a long period of time, patients weren't really spoken 
to, frankly. They weren't engaged, they weren't at the table. 
They weren't really encouraged to participate and provide the 
kind of input that I think is important to our researchers, to 
the companies as a whole. Mr. Mitchell, do you feel that 
situation has changed? Do you feel that people feel as if there 
is something that they are being able to offer in this 
discussion?
    Mr. MITCHELL. I think there is not enough of an opportunity 
for policymakers to hear from independent patient groups. Most 
of them are funded by the drug companies and that is okay. They 
use that money for good purpose, patient education, patient 
support but on drug prices they are constrained. I do want to 
make a couple of quick points. I agree with Professor 
Garthwaite that we should be maximizing welfare and the way to 
do that is we are going to have to lower drug prices so people 
can get access to the drugs they need. There is enough spending 
in the system to reduce crises and not impact R&D, in fact the 
money U.S. based drug companies made in 2015 by charging 
American side prices was nearly double what was needed to fund 
their total global R&D and so if we are going to be making 
decisions about where to invest based on returns for venture 
capitalists, instead of the needs of people like me and 
everybody along this table who knows someone they love, then we 
are making a big mistake because we are not putting the public 
welfare first. We are saying we are going to provide for the 
needs of VCs in order that we get the investment we need and 
the final thing is, when drug companies say we are not going 
to--what they are saying to me is we want to be able to set any 
price we demand and you pay it or you won't get the drugs you 
need. We can't do that. We do have to strike the balance that 
folks are talking about here.
    Ms. DAVIS. Yeah, well thank you. I appreciate your 
comments. I mean one of the areas in H.R. 3 that we haven't 
focused too much on is how we get to that. If there is a sweet 
spot, I am not sure we'd call it that in negotiating with drug 
companies and we talked about the average international market 
price but in that, and I don't want to go into more detail of 
it, there also is this question, this concern about access. 
Access in other countries. Again, whether people feel like they 
are able to get multi-myeloma drugs elsewhere, obviously have--
it doesn't mean that we have more patients of any one cancer 
here in the United States than anywhere else in the world so 
obviously they are getting some of that, I think. The other 
issue is patents and we haven't talked a lot about them, but 
you focused a lot on the fact that we should have more 
competition, yes, but you can't have competition if you have 
one company that has the monopoly on multiple, multiple drugs 
in any one country.
    Mr. ISASI. That is the exact point that has not been said 
in this entire discussion about competition and worrying about 
squelching innovation. These companies are operating with a 
government-granted monopoly. This isn't a free market, it is 
non-efficient, it is distorted, and they are abusing the 
government-granted monopoly and what we should do is negotiate 
price in that environment.
    Ms. DAVIS. Thank you very much. I know my time is up. I 
hope that at some point we are going to be tasking drug 
companies to find the cures that we need upfront.
    Chairwoman WILSON. Thank you very much, Ms. Davis. I remind 
my colleagues that pursuant to committee practice, materials 
for submission for the hearing record must be submitted to the 
committee clerk within 14 days following the last day of the 
hearing, preferably in Microsoft Word format. The materials 
submitted must address the subject matter of the hearing.
    Only a member of the committee or an invited witness may 
submit materials for inclusion in the hearing record. Documents 
are limited to 50 pages each. A document longer than 50 pages 
will be incorporated into the record by way of internet link 
that you must provide to the committee clerk within the 
required timeframe but please recognize that years from now, 
that link may no longer work.
    Again, I want to thank the witnesses for their 
participation today. What we have heard is very valuable. 
Members of the Committee may have some additional questions for 
you, and we ask the witnesses to please respond to those 
questions in writing.
    The hearing record will be held open for 14 days in order 
to receive those responses. I remind my colleagues that 
pursuant to committee practice, witness questions for the 
hearing record must be submitted to the majority committee 
staff or committee clerk within 7 days.
    The questions submitted must address the subject matter of 
the hearing. Before recognizing the Ranking Member for his 
closing statement, I ask unanimous consent to enter the 
following materials into the record.
    These are letters in support of prescription drug pricing 
legislation from AARP, Alliance for Retired Americans, AFSCME, 
AFL-CIO, American Federation of Teachers, American Medical 
Association, and the California Medical Association. I now 
recognize the distinguished Ranking Member for his closing 
statement, Mr. Walberg.
    Mr. WALBERG. I thank you, Madam Chairwoman and appreciate 
the hearing today. Thank you to each of the panelists for being 
here. Dr. Garthwaite, I'd be wrong to forget the fact that I 
have my oldest grandson turn 13 last week. He was born at 24 
weeks at Northwestern Hospital. The result of all sorts of 
wonderful, wonderful care in that neonatal ICU unit as well as 
medications, et cetera. He's 13 strong, healthy and smarter 
than me. At least he would believe that so thank you, 
Northwestern.
    Madam Chairwoman, this was a good discussion. I think in my 
opening comments, I tried to make it clear that this is a type 
of discussion that we should have. We don't disagree about 
everything in this legislation but there are some major glaring 
problems in this legislation that had we had discussions like 
this as opposed to a very closed, closed operation of the 
speaker of putting together a piece of legislation without 
consultation with appropriate committees, ours included, I 
think we might have had the opportunity for a better outcome. 
As I have said, I have seen that take place in Energy and 
Commerce Committee.
    I have seen it take place in some major piece of 
legislation. I think we could do it. Instead of holding a 
hearing on this socialized drug pricing scheme, the committee's 
time would be better spent on finding bipartisan solutions to 
our nation's problems.
    Governments don't negotiate, they dictate. We want 
negotiation. How is that done? I think there are means to do 
that and I would hope that this committee's leadership, as well 
as other committees that are involved with this would put a 
slowdown on it to bring together something that indeed can pass 
out of this House and chart the course even for the Senate for 
something they could vote on and pass as well and the President 
could sign, so again, thank you for the time and with that, I 
yield back.
    Chairwoman WILSON. Thank you to our witnesses for joining 
us today and today we heard compelling testimony on the urgent 
need for the Federal government to reduce the cost of 
prescription drugs for consumers, businesses, and taxpayers.
    Americans across this country are struggling to access the 
prescription drugs they need to be healthy. They are forced to 
pay inflated prices that are far higher than those charged for 
the same drugs sold by the same pharmaceutical companies in 
other countries and they are hit with annual price hikes that 
far exceed the rate of inflation. But our witnesses shared 
prescription drug companies are not charging these exorbitantly 
high prices because of natural market forces, and the evidence 
is clear that they are not inflating prices because they are 
investing in research and development as some of my Republican 
colleagues may argue. By contrast, prescription drug companies 
are artificially inflating prices so that they can pay for 
marketing and sales, executive bonuses and stock buybacks. We 
cannot allow this to happen in the pharmaceutical industry. We 
cannot allow them to get richer while Americans across this 
country risk their health under the weight of unaffordable drug 
prices.
    They are truly drug dealers, and this is criminal. Simply 
put, medicines are of no use if those who need them cannot 
afford them. That is why it is imperative that we pass the 
Lower Drug Cost Now Act. As our witnesses made clear, this 
legislation would lower drug prices, increase transparency at 
pharmaceutical companies, and align our drug pricing system 
with the rest of the developed world.
    By adopting the Lower Drug Cost Now Act, Congress can take 
a long overdue step toward empowering all Americans, whether 
you get your healthcare through Medicare or your employer, to 
access fairly-negotiated drug prices. I look forward to working 
with each of my colleagues to pass this legislation and improve 
the health and lives of Americans for generations to come. If 
there is no further business, without objection, the committee 
stands adjourned and thank you.
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    [Whereupon, at 4:21 p.m., the subcommittee was adjourned.]

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