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


                    PRICED OUT OF A LIFESAVING DRUG: THE 
                    HUMAN IMPACT OF RISING INSULIN COSTS

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

                                HEARING

                               BEFORE THE

              SUBCOMMITTEE ON OVERSIGHT AND INVESTIGATIONS

                                 OF THE

                    COMMITTEE ON ENERGY AND COMMERCE
                        HOUSE OF REPRESENTATIVES

                     ONE HUNDRED SIXTEENTH CONGRESS

                             FIRST SESSION

                               __________

                             APRIL 2, 2019

                               __________

                           Serial No. 116-21
                           
                           
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]                           


      Printed for the use of the Committee on Energy and Commerce

                   govinfo.gov/committee/house-energy
                        energycommerce.house.gov                        
                        
                               __________
                               

                    U.S. GOVERNMENT PUBLISHING OFFICE                    
39-474 PDF                  WASHINGTON : 2020                     
          
--------------------------------------------------------------------------------------                      
                        

                    COMMITTEE ON ENERGY AND COMMERCE

                     FRANK PALLONE, Jr., New Jersey
                                 Chairman
BOBBY L. RUSH, Illinois              GREG WALDEN, Oregon
ANNA G. ESHOO, California              Ranking Member
ELIOT L. ENGEL, New York             FRED UPTON, Michigan
DIANA DeGETTE, Colorado              JOHN SHIMKUS, Illinois
MIKE DOYLE, Pennsylvania             MICHAEL C. BURGESS, Texas
JAN SCHAKOWSKY, Illinois             STEVE SCALISE, Louisiana
G. K. BUTTERFIELD, North Carolina    ROBERT E. LATTA, Ohio
DORIS O. MATSUI, California          CATHY McMORRIS RODGERS, Washington
KATHY CASTOR, Florida                BRETT GUTHRIE, Kentucky
JOHN P. SARBANES, Maryland           PETE OLSON, Texas
JERRY McNERNEY, California           DAVID B. McKINLEY, West Virginia
PETER WELCH, Vermont                 ADAM KINZINGER, Illinois
BEN RAY LUJAN, New Mexico            H. MORGAN GRIFFITH, Virginia
PAUL TONKO, New York                 GUS M. BILIRAKIS, Florida
YVETTE D. CLARKE, New York, Vice     BILL JOHNSON, Ohio
    Chair                            BILLY LONG, Missouri
DAVID LOEBSACK, Iowa                 LARRY BUCSHON, Indiana
KURT SCHRADER, Oregon                BILL FLORES, Texas
JOSEPH P. KENNEDY III,               SUSAN W. BROOKS, Indiana
    Massachusetts                    MARKWAYNE MULLIN, Oklahoma
TONY CARDENAS, California            RICHARD HUDSON, North Carolina
RAUL RUIZ, California                TIM WALBERG, Michigan
SCOTT H. PETERS, California          EARL L. ``BUDDY'' CARTER, Georgia
DEBBIE DINGELL, Michigan             JEFF DUNCAN, South Carolina
MARC A. VEASEY, Texas                GREG GIANFORTE, Montana
ANN M. KUSTER, New Hampshire
ROBIN L. KELLY, Illinois
NANETTE DIAZ BARRAGAN, California
A. DONALD McEACHIN, Virginia
LISA BLUNT ROCHESTER, Delaware
DARREN SOTO, Florida
TOM O'HALLERAN, Arizona
                                 ------                                

                           Professional Staff

                   JEFFREY C. CARROLL, Staff Director
                TIFFANY GUARASCIO, Deputy Staff Director
                MIKE BLOOMQUIST, Minority Staff Director
              Subcommittee on Oversight and Investigations

                        DIANA DeGETTE, Colorado
                                  Chair
JAN SCHAKOWSKY, Illinois             BRETT GUTHRIE, Kentucky
JOSEPH P. KENNEDY III,                 Ranking Member
    Massachusetts, Vice Chair        MICHAEL C. BURGESS, Texas
RAUL RUIZ, California                DAVID B. McKINLEY, West Virginia
ANN M. KUSTER, New Hampshire         H. MORGAN GRIFFITH, Virginia
KATHY CASTOR, Florida                SUSAN W. BROOKS, Indiana
JOHN P. SARBANES, Maryland           MARKWAYNE MULLIN, Oklahoma
PAUL TONKO, New York                 JEFF DUNCAN, South Carolina
YVETTE D. CLARKE, New York           GREG WALDEN, Oregon (ex officio)
SCOTT H. PETERS, California
FRANK PALLONE, Jr., New Jersey (ex 
    officio)
                            
                            
                            C O N T E N T S

                              ----------                              
                                                                   Page
Hon. Diana DeGette, a Representative in Congress from the State 
  of Colorado, opening statement.................................     1
    Prepared statement...........................................     3
Hon. Brett Guthrie, a Representative in Congress from the 
  Commonwealth of Kentucky, opening statement....................     4
    Prepared statement...........................................     6
Hon. Frank Pallone, Jr., a Representative in Congress from the 
  State of New Jersey, opening statement.........................     7
    Prepared statement...........................................     8
Hon. Greg Walden, a Representative in Congress from the State of 
  Oregon, opening statement......................................     9
    Prepared statement...........................................    10

                               Witnesses

Gail deVore, Patient Advocate....................................    12
    Prepared statement...........................................    15
William T. Cefalu, M.D., Chief Scientific, Medical and Mission 
  Officer, The American Diabetes Association.....................    17
    Prepared statement...........................................    19
    Answers to submitted questions...............................    96
Alvin C. Powers, M.D., Director of Vanderbilt Diabetes Center, 
  Director of Division of Diabetes, Endocrinology, and 
  Metabolism, Vanderbilt University Medical Center...............    31
    Prepared statement...........................................    33
Kasia J. Lipska, M.D., Assistant Professor of Medicine, Yale 
  University School of Medicine..................................    38
    Prepared statement...........................................    40
Christel Marchand Aprigliano, Chief Executive Officer, Diabetes 
  Patient Advocacy Coalition.....................................    45
    Prepared statement...........................................    47
Aaron J. Kowalski, Ph.D., Chief Mission Officer, JDRF............    57
    Prepared statement...........................................    59

                           Submitted Material

Article on Insulin: ``A lifesaving drug too often out of reach,'' 
    by Ms. DeGette and Mr. Tom Reed submitted Ms. DeGette\1\
Article of November 16, 2018, ``Protesters at Sanofi in Cambridge 
  decry high price of insulin'' The Boston Globe, by Allison 
  Hagan, submitted by Mr. Kennedy................................    92

----------
\1\ Article on Insulin has been retained in committee files and 
  also is available at https://docs.house.gov/meetings/IF/IF02/
  20190402/109502/HHRG-116-IF02-20190402-SD001.pdf.

 
  PRICED OUT OF A LIFESAVING DRUG: THE HUMAN IMPACT OF RISING INSULIN 
                                 COSTS

                              ----------                              


                         TUESDAY, APRIL 2, 2019

                  House of Representatives,
      Subcommittee on Oversight and Investigations,
                          Committee on Energy and Commerce,
                                                    Washington, DC.
    The subcommittee met, pursuant to call, at 10:30 a.m., in 
room 2322 Rayburn House Office Building, Hon. Diana DeGette 
(chair of the subcommittee) presiding.
    Members present: Representatives DeGette, Schakowsky, 
Kennedy, Ruiz, Kuster, Castor, Sarbanes, Peters, Pallone (ex 
officio), Guthrie (subcommittee ranking member), Burgess, 
Griffith, Brooks, and Walden (ex officio).
    Also present: Representatives Barragan, Soto, Bucshon, and 
Carter.
    Staff present: Kevin Barstow, Chief Oversight Counsel; 
Jesseca Boyer, Professional Staff Member; Jeffrey C. Carroll, 
Staff Director; Tiffany Guarascio, Deputy Staff Director; Judy 
Harvey, Counsel; Chris Knauer, Oversight Staff Director; 
Jourdan Lewis, Policy Analyst; Perry Lusk, GAO Detailee; Kevin 
McAloon, Professional Staff Member; Kaitlyn Peel, Digital 
Director; Tim Robinson, Chief Counsel; C. J. Young, Press 
Secretary; Jennifer Barblan, Minority Chief Counsel, Oversight 
and Investigations; Margaret Tucker Fogarty, Minority Staff 
Assistant; Brittany Havens, Minority Professional Staff, 
Oversight and Investigations; Ryan Long, Minority Deputy Staff 
Director; Zach Roday, Minority Communications Director; and 
Natalie Sohn, Minority Counsel, Oversight and Investigations.
    Ms. DeGette. The Subcommittee on Oversight and 
Investigations will now come to order. Today, the Subcommittee 
on Oversight and Investigations is holding a hearing entitled, 
``Priced out of a Lifesaving Drug: The Human Impact of Rising 
Insulin Costs.'' The purpose of today's hearing is to examine 
insulin affordability challenges and the financial and health 
consequences on patients' lives.
    The Chair now recognizes herself for the purposes of an 
opening statement.

 OPENING STATEMENT OF HON. DIANA DeGETTE, A REPRESENTATIVE IN 
              CONGRESS FROM THE STATE OF COLORADO

    Today, the subcommittee holds its first hearing in this 
Congress on the rising costs of prescription drugs which have 
devastating real-life consequences for families around the 
country. We are here this morning to examine the impacts of 
climbing insulin costs on the seven and a half million people 
in the United States who rely on insulin every day to manage 
their blood sugar levels and prevent debilitating 
complications.
    Insulin insures the health and well-being for millions of 
people and for the 1.25 million people with type 1 diabetes it 
is a life-sustaining drug for which there is no substitute. The 
scientists who made the discovery of insulin knew of its 
lifesaving importance. Even nearly a hundred years ago, they 
were concerned that the discovery would be commercialized to 
the point of being put out of financial reach for those who 
needed it. To avoid this, they sold the insulin patent to the 
University of Toronto for one single dollar. Yet, today, 
skyrocketing prices are making it unaffordable for millions of 
people in this country.
    The price of insulin has doubled since 2012, after nearly 
tripling in the previous 10 years. We have been hearing stories 
and reading disturbing news reports for too long. People are 
skipping doses, failing to pay rent or buy groceries, and even 
resorting to an insulin black market to afford their insulin.
    Just this past Friday, at home in Denver I had a listening 
session and I heard from some of my constituents as to just how 
real this crisis is. One of the people who came was a woman 
named Sierra. Sierra does not have insurance and she make too 
much money to qualify for Medicaid. She has been struggling for 
the past year and a half to pay for her insulin. She took three 
jobs. She made other adjustments in her life in order to cut 
costs in her personal life, selling her car and living with 
relatives.
    Even rationing her insulin, for example, not changing the 
reservoirs in her pump like she is supposed to, she is still 
paying out-of-pocket over $700 a month for her insulin. She is 
living day-to-day, bottle-to-bottle. She told me she was in the 
hospital. She went to the emergency room four times in past 
months, and, good news, they brought her blood sugar under 
control. And for her, better news, they gave her one bottle of 
insulin. She said, ``And that lasted me 2 weeks.''
    Now parents with children with diabetes are also living 
with this constant stress and worry. For example: last year, I 
heard from a parent in New York whose 23-year-old son was 
diagnosed as a type 1 diabetic at age 7 and needs insulin to 
survive. They said, quote, ``they worry that he won't be able 
to afford it once he is off our insurance.''
    Something must be done. Insulin doesn't make him better, it 
keeps him, literally, alive. No one should be forced to live 
under this strain or make incredibly difficult choices to 
afford insulin. But according to available data that we will 
learn more about this morning, about one in four people with 
diabetes are rationing their insulin due to costs. Not 
surprisingly, these patients were three times more likely than 
patients who weren't rationing their insulin to struggle, to 
maintain healthy glycemic control and experience adverse health 
effects.
    These stories and findings show just how urgent this issue 
is. Lives really are at stake, which is why last year 
Congressman Tom Reed and I, as co-chairs of the Congressional 
Diabetes Caucus, conducted an enquiry into the rising costs of 
insulin. The report ultimately depicts a system of perverse 
payment incentives and methodologies, a lack of transparency 
and pricing, and outdated patient regulations.
    These market failures have allowed a handful of players 
along the insulin distribution pipeline, from manufacturers to 
health insurers, to capitalize on their strategic positions, 
driving up the price of insulin and minimizing competition. Now 
it is not my intention to blame these players, but to further 
examine where the pressure points are throughout the supply 
chain that are driving the increased costs of insulin to the 
patient.
    And this discussion is critical in advance of next week's 
hearing when we will have several of the key players in front 
of this committee to discuss the drivers directly. I look 
forward to hearing from all of our witnesses today who 
collectively represent a range of key stakeholder associations 
and networks, clinicians, and research perspectives, and also 
people with firsthand experiences with price challenges.
    I want to thank each one of you for coming today and 
sharing your stories with us. Bringing this conversation to 
light is essential. Better understanding these factors will 
help us inform the policy decisions and actions. Millions of 
people who rely on insulin each day and sometimes many times a 
day are counting on that. Thank you.
    [The prepared statement of Ms. DeGette follows:]

                Prepared Statement of Hon. Diana DeGette

    Today, the Subcommittee holds its first hearing this 
Congress on the rising costs of prescription drugs, which have 
devastating real-life consequences for families around the 
country.
    We are here this morning to explore the impacts of climbing 
insulin costs on the seven and a half million people in the 
United States who rely on insulin to manage their blood sugar 
levels and prevent debilitating complications every day.
    Insulin ensures the health and well-being for millions of 
people, and for the 1.25 million people with Type 1 diabetes, 
it is a life-sustaining drug for which there is no substitute.
    The scientists who made the discovery of insulin knew of 
its life-saving importance. Even nearly 100 years ago, they 
were concerned that the discovery would be commercialized to 
the point of being put out of financial reach for those who 
needed it. To avoid this, they sold the insulin patent to the 
University of Toronto for a single dollar.
    Yet today, skyrocketing prices are making it unaffordable 
for millions of people in this country: the price of insulin 
has doubled since 2012, after nearly tripling in the previous 
10 years.
    We have been hearing stories and reading disturbing news 
reports for too long. People are skipping doses, failing to pay 
rent or buy groceries, and even resorting to an insulin `black 
market' in order to afford their insulin.
    Just this past Friday at home, I heard from more of my 
constituents as to just how real this cost crisis is for them 
every day.
    I heard from Sierra, who does not have insurance and makes 
too much to qualify for Medicaid, who has been struggling over 
the past year and a half to pay for her insulin. She has made 
significant adjustments in her life in order to cut other costs 
in her personal life-selling her car and living with relatives.
    Even in rationing her insulin-not changing her pump 
reservoirs as directed-she's paying over $700 a month. Sierra 
shared that she's currently living day-to-day; bottle-to-
bottle.
    Parents of children with diabetes are also living with this 
constant stress and worry.
    For instance, last year, I heard from a parent in New York 
whose 23-year-old-son was diagnosed as a type 1 diabetic at age 
7 and needs insulin to survive. They said, [quote] ``worry that 
he won't be able to afford it once he's off our insurance. . . 
. Something must be done. Insulin doesn't make him better, it 
keeps him literally alive."
    No one should be forced to live under this strain or be 
forced to make incredibly difficult choices to be able to 
afford insulin.
    But according to available data that we'll learn more about 
this morning, roughly 1 in 4 people with diabetes are rationing 
their insulin due to cost.
    Not surprisingly, those patients were three times more 
likely than patients who weren't rationing their insulin to 
struggle to maintain healthy glycemic control and experience 
adverse health effects.
    These stories and findings show just how urgent the matter 
of skyrocketing costs of insulin is.
    Lives are at stake.
    Which is why last year, Congressman Tom Reed and I, as co-
chairs of the Congressional Diabetes Caucus, conducted an 
inquiry into the rising prices of insulin.
    Our report ultimately depicts a system of perverse payment 
incentives and methodologies, a lack of transparency in 
pricing, and outdated patent regulations.
    These market failures have allowed a handful of players 
along the insulin distribution pipeline--from manufacturers to 
health insurers--to capitalize on their strategic positions, 
driving up the price of insulin and minimizing competition.
    Today's hearing is not intended to assign blame to these 
players, but instead further examine where the pressure points 
are throughout the supply chain that are driving the increased 
cost of insulin to the patient.
    This discussion is critical in advance of next week's 
hearing when we will have several of these key players in front 
of the Committee to discuss these drivers directly.
    I look forward to hearing from our witnesses today, who 
collectively represent a range of key stakeholder associations 
and networks, clinician and research perspectives, and personal 
first-hand experiences related to insulin price challenges.
    Thank you for joining us to share not only the real-life 
consequences of this broken system, but potential solutions 
several of your organizations have proposed.
    Bringing this conversation to light is an essential step 
toward transparency and accountability.
    Better understanding these factors will help inform the 
policy decisions and actions that will be necessary to help 
bring down insulin prices.
    Millions of people who rely on insulin each day, and 
sometimes several times a day, are counting on that.

    Ms. DeGette. And now I recognize the ranking member for 5 
minutes.

 OPENING STATEMENT OF HON. BRETT GUTHRIE, A REPRESENTATIVE IN 
           CONGRESS FROM THE COMMONWEATH OF KENTUCKY

    Mr. Guthrie. Thank you, Chair DeGette, for bringing this 
important hearing together. And we are working together to try 
to get to the bottom of what is happening in the insulin prices 
and hopefully use that as a case study for looking at others. 
The rebates are not only in the insulin space, but the Centers 
for Disease Control and Prevention estimates that more than 30 
million individuals or 9.4 percent of the population in the 
United States have diabetes.
    A 2018 American Diabetes Association report found that 
diabetes is the most expensive chronic disease in the United 
States. According to this analysis, the economic cost of a 
diagnose of diabetes in the United States in 2017 was $327 
billion. The CDC estimates in 2016 about 6.7 million Americans 
aged 18 and older used insulin.
    The insulin prescribed in diabetics today is different than 
insulin discovered over a hundred years ago. Changes to this 
lifesaving drug over the years meant that according to the 
American Diabetes Association, almost everything has changed 
over the past 50 years for Americans with diabetes including 
how long a diabetic can expect to live. However, the list price 
of insulin has increased substantially over the past decade, 
putting this lifesaving drug out of reach for too many 
Americans.
    According to a 2016 study, the average list price of 
insulin nearly tripled between 2002 and 2013. Many argue that 
while list prices have been increasing, net prices have not 
grown as rapidly having stayed relatively the same or even gone 
down. For example, one popular insulin product had its list 
price increase from $391 in 2014 to $594 in 2018, a 51.9 
percent increase. During the same time, however, the product's 
net price decreased by 8.1 percent, going from $147 to $135.
    While no one is supposed to pay the list price for insulin, 
some patients end up paying the list price or close to it 
especially if they are uninsured or underinsured. An uninsured 
patient that purchases insulin at the pharmacy is likely to pay 
the list price for the medicine unless they have access to a 
Patient Assistance Program. Further, even if a patient has 
insurance, increasing list prices oftentimes directly harm 
patients by increasing their out-of-pocket costs. If they have 
a high deductible health plan as many Americans do today, they 
are likely to go pay the list price or close to it until they 
reach their deductible.
    While Patient Assistance Programs can be a helpful resource 
to patients, we have heard from patients and patient advocacy 
groups that it can be difficult to qualify for a Patient 
Assistance Program. Patient Assistance Programs are viewed as a 
helpful resource, but only as a Band-Aid and short-term 
solution until we can find a permanent solution that improves 
access to and affordability of medicine such as insulin. In 
addition, we have heard the formulary exclusions are helpful to 
drive down costs to the plans. We have also heard that they are 
having an impact on patients in the diabetic community.
    We have heard stories that some patients have had their 
insurers change the insulin products covered by their plan year 
to year, or even in some cases in the middle of the year 
causing them to have to switch to a different insulin product 
or pay a higher price for the insulin that has been working 
best for them. Doctors and patients have shared that it can 
take days or weeks for someone to adjust to a new insulin if 
they adjust at all.
    The prescription drug supply chain is complex, and it lacks 
transparency. There is limited public information regarding 
changes in net prices due to a lack of transparency surrounding 
rebates and other price concessions. This makes it difficult to 
fully understand why prescription drug prices like insulin have 
continued to rise for patients, especially uninsured and 
underinsured patients. This lack of transparency makes it hard 
to determine who benefits from increases in list prices, but we 
know who loses: the patient.
    Prescription drug prices affects every American and that is 
why today's discussion using insulin as a case study is an 
important step to better understand the rising costs of 
prescription drugs in our country and how we can work to make 
lifesaving prescription drugs more affordable for all patients 
again. I thank all of our witnesses for being here today and 
sharing your testimony and I look forward to this important 
discussion and I yield back.
    [The prepared statement of Mr. Guthrie follows:]

                Prepared Statement of Hon. Brett Guthrie

    Thank you, Chair DeGette, for holding this very important 
hearing. The Centers for Disease Control and Prevention (CDC) 
estimates that more than 30 million individuals--or 9.4 percent 
of the population--in the United States have diabetes. A 2018 
American Diabetes Association report found that diabetes is the 
most expensive chronic disease in the United States. According 
to this analysis, the economic cost of diagnosed diabetes in 
the United States in 2017 was about $327 billion.
    The CDC estimates that, in 2016, about 6.7 million 
Americans aged 18 and older used insulin. The insulin 
prescribed to diabetics today is different than the insulin 
discovered over 100 years ago. Changes to this life-saving drug 
over the years have meant that, according to the American 
Diabetes Association, ``almost everything has changed over the 
past 50 years for Americans with diabetes'' including how long 
a diabetic can expect to live.
    However, the list price of insulin has increased 
substantially over the past decade, putting this life saving 
drug out of reach for too many Americans. According to a 2016 
study, the average list price of insulin nearly tripled between 
2002 and 2013. Many argue that while list prices have been 
increasing, net prices have not grown as rapidly, have stayed 
relatively the same, or have even gone down. For example, one 
popular insulin product had its list price increase from $391 
in 2014 to $594 in 2018--a 51.9 percent increase. During the 
same time, however, the product's net price decreased by 8.1 
percent, going from $147 to $135.
    While no one is supposed to pay the list price for insulin, 
some patients end up paying the list price, or close to it--
especially if they are uninsured or underinsured. An uninsured 
patient that purchases insulin at the pharmacy is likely to pay 
the list price of the medicine unless they have access to a 
patient assistance program. Further, even if a patient has 
insurance, increasing list prices oftentimes directly harms 
patients by increasing their out-of-pocket costs. If they have 
a high deductible health plan, as many Americans do today, they 
are likely going to pay the list price, or close to it, until 
they reach their deductible.
    While patient assistance programs can be a helpful resource 
to patients, we have heard from patients and patient advocacy 
groups that it can be difficult to qualify for a patient 
assistance program. Patient assistance programs are viewed as a 
helpful resource, but only a band-aid and short-term solution 
until we can find a permanent solution that improves access to 
and affordability of medicines such as insulin.
    In addition, we have heard that formulary exclusions are 
helpful to drive down costs to the plans, but we've also heard 
that they are having an impact on patients in the diabetic 
community. We have heard stories that some patients have had 
their insurers change the insulin products covered by their 
plan year to year or even in some cases in the middle of the 
year, causing them to have to switch to a different insulin 
product or pay a much higher price for the insulin that has 
been working best for them. Doctors and patients have shared 
that it can take days or weeks for someone to adjust to a new 
insulin, if they adjust at all.
    The prescription drug supply chain is complex and lacks 
transparency. There is limited public information regarding 
changes to net prices due to a lack of transparency surrounding 
rebates and other price concessions. This makes it difficult to 
fully understand why prescription drug prices, like insulin, 
have continued to rise for patients, especially uninsured and 
underinsured patients. This lack of transparency makes it hard 
to determine who benefits from increases in list prices. But we 
know who loses--the patient.
    Prescription drug pricing effects every American and that's 
why today's discussion using insulin as a case study is an 
important step to better understand the rising cost of 
prescription drugs in our country and how we can work to make 
lifesaving prescription drugs more affordable for all patients 
again.
    I thank our witnesses for being here today and being part 
of this important discussion. I yield back.

    Ms. DeGette. The Chair thanks the gentleman and now 
recognizes the chairman of the full committee, Mr. Pallone, for 
5 minutes for purposes of an opening statement.

OPENING STATEMENT OF HON. FRANK PALLONE, Jr., A REPRESENTATIVE 
            IN CONGRESS FROM THE STATE OF NEW JERSEY

    Mr. Pallone. Thank you, Madam Chair. Today's hearing 
continues our important effort to examine the high cost of 
prescription drugs. It is the first of a two-part hearing the 
subcommittee will hold on the urgent matter of skyrocketing 
insulin costs in the U.S.
    American families are suffering from the ongoing and 
staggering price hikes of insulin. We have all heard the 
stories of people with diabetes who have gone to extreme 
measures to obtain the insulin they need as well as those who 
have died because they could not afford the lifesaving drug. Of 
the 30 million Americans living with diabetes, over seven 
million of them rely on one or more formulations of insulin and 
no one should suffer because the high price of insulin puts it 
out of reach. Yet that is exactly what is happening.
    Over the last 20 years, prices for the most commonly 
prescribed insulins have increased by more than 700 percent 
accounting for inflation. For instance, a vial that once cost 
$20, two decades ago, now costs over $250, and there are 
reports of patients paying more than $400 per month for their 
insulin. And this is particularly devastating for the 
uninsured, people who have high deductible insurance plans, and 
Medicare Part D prescription drug beneficiaries who may be in 
the coverage gap.
    We must find workable solutions to support the development 
of high-quality drugs and insulin innovations while also 
ensuring that no one living with diabetes is ever forced to put 
their life at risk by rationing their insulin because they 
can't afford it. As the committee continues to explore this 
issue, it is important to hear today about the drivers of these 
steep prices and their consequences on the lives of people 
living with diabetes.
    Multiple factors influence the price the patient pays for 
insulin at the pharmacy. The lack of transparency and financial 
agreements between stakeholders in the supply chain makes an 
already convoluted system even more complex, but at least some 
of the pressure points are clear. For instance, we know that 
insulin manufacturers set the list price of their drugs and may 
engage in practices that prevent the introduction of generics.
    We also know that Pharmacy Benefit Managers--PBMs--
influence these prices within and throughout the supply chain 
through negotiated rebates. And we are going to have 
representatives of these companies before the committee next 
week and I look forward to asking them about the examples and 
issues we will hear about this morning.
    Finally, as with other drugs, insulin pricing is a complex 
issue that will require multiple policy solutions. However, I 
have concerns with the recent proposed rule that would 
eliminate rebates in Medicare Part D and Medicaid. There is 
nothing in this proposed rule that would actually require drug 
manufacturers to reduce their list prices and Health and Human 
Services' own actuary estimates that the proposal would 
increase government spending by nearly $200 billion while 
premiums and out-of-pocket costs would go up for the majority 
of Medicare beneficiaries.
    So I strongly believe that the cost of prescription drugs 
including insulin must be addressed, but I am concerned that 
this is not the right approach what has been put in place by 
the Trump administration. So, finally, if I could just say, the 
health of millions of people living with diabetes depends on 
thoughtful policy solutions to address the high cost of 
insulin.
    I thank our witnesses for joining us today. Your firsthand 
accounts, research, and recommendations will be invaluable 
contributions as we continue to examine this issue. I don't 
know if anybody wanted my time. And, if not, I will yield back. 
Thank you, Madam Chair.
    [The prepared statement of Mr. Pallone follows:]

             Prepared Statement of Hon. Frank Pallone, Jr.

    Today's hearing continues our efforts to examine the high 
costs of prescription drugs. It is the first of a two-part 
hearing this subcommittee will hold on the urgent matter of 
skyrocketing insulin costs in this country.
    American families are suffering from the ongoing and 
staggering price hikes of insulin.
    We have all heard the stories of people with diabetes who 
have gone to extreme measures to obtain the insulin they need, 
as well as those who have died because they could not afford 
the lifesaving drug.
    Of the 30 million Americans living with diabetes, over 7 
million of them rely on one or more formulations of insulin.
    No one should suffer because the high price of insulin puts 
it out of reach.
    Yet, that is exactly what is happening. Over the last 20 
years, prices for the most commonly prescribed insulins have 
increased by more than 700 percent, accounting for inflation. 
For instance, a vial that once cost $20 two decades ago now 
costs over $250. There are reports of patients paying more than 
$400 per month for their insulin.
    This is particularly devastating for the uninsured, people 
who have high-deductible insurance plans, and Medicare Part D 
prescription drug beneficiaries who may be in the coverage gap.
    We must find workable solutions to support the development 
of high-quality drugs and insulin innovations while also 
ensuring that no one living with diabetes is ever forced to put 
their life at risk by rationing their insulin because they 
cannot afford it.
    As the Committee continues to explore this issue, it is 
important to hear today about the drivers of these steep prices 
and their consequences on the lives of people living with 
diabetes.
    Multiple factors influence the price the patient pays for 
insulin at the pharmacy. The lack of transparency in financial 
agreements between stakeholders in the supply chain makes an 
already convoluted system even more complex. But at least some 
of the pressure points are clear.
    For instance, we know that insulin manufacturers set the 
list prices of their drugs and may engage in practices that 
prevent the introduction of generics.
    We also know that Pharmacy Benefit Managers--PBMs--
influence these prices within and throughout the supply chain 
through negotiated rebates.
    We are going to have representatives of these companies 
before the Committee next week and I look forward to asking 
them about the examples and issues we will hear about this 
morning.
    Finally, as with other drugs, insulin pricing is a complex 
issue that will require multiple policy solutions. However, I 
have concerns with the recent proposed rule that would 
eliminate rebates in Medicare Part D and Medicaid. There is 
nothing in this proposed rule that would actually require drug 
manufacturers to reduce their list prices. HHS's own actuary 
estimates that the proposal would increase government spending 
by nearly $200 billion, while premiums and out-of-pocket costs 
would go up for the majority of Medicare beneficiaries. I 
strongly believe that the cost of prescription drugs, including 
insulin, must be addressed, but I am concerned that this is not 
the right approach.
    The health of millions of people living with diabetes 
depends on thoughtful policy solutions to address the high cost 
of insulin.
    Thank you to all our witnesses for joining us today. Your 
first-hand accounts, research, and recommendations will be 
invaluable contributions as we continue to examine this issue.
    Thank you, and I yield back.

    Ms. DeGette. The Chair thanks the gentleman and now 
recognizes the ranking member of the full committee, Mr. 
Walden, for 5 minutes for purposes of an opening statement.

  OPENING STATEMENT OF HON. GREG WALDEN, A REPRESENTATIVE IN 
               CONGRESS FROM THE STATE OF OREGON

    Mr. Walden. Thank you, Madam Chair, and I deeply appreciate 
you having this hearing. It is really important. My grandfather 
suffered from diabetes a long time ago and I can remember as a 
little kid he lost both legs to gangrene. And that was, you 
know, you just don't understand that stuff as a kid. My cousin 
has dealt with diabetes her entire life. So this is really 
important stuff. And I know your family has issues.
    And we have to get to the bottom of this because this is a 
lifelong disease and it affects millions of Americans including 
more than 300,000 Oregonians. And due to the significant 
research and development efforts of biopharmaceutical 
companies, there are over 30 types of innovative insulin 
available in the U.S. and come in a variety of different 
formulations and different delivery mechanisms, and there are 
also obviously numerous oral medications available for type 2 
diabetes to help manage the disease.
    I am proud our committee has championed efforts to 
accelerate the discovery, development, and delivery of 
innovative drugs over the last two years under the bipartisan 
leadership of former chairman Fred Upton and of course 
Congresswoman DeGette. Congress enacted the 21st century Cures 
Initiative and our work is not done. We need to continue to 
promote innovation, but we have got to balance it with 
affordability and that means competition. As we heard last 
Congress during our hearing examining the complexity of the 
prescription drug supply chain, that supply chain has evolved 
in a way that has ended up, in part, harming some patients at 
the pharmacy counter.
    At that hearing I specifically asked the witnesses about 
the price of insulin and learned that the net price has not 
changed much over the last few years--the net price. But the 
list price or sticker price has increased, and pharmaceutical 
manufacturers are providing larger rebates, and discounts to 
their supply chain partners to lower that net price of the 
medicine.
    While no one is supposed to pay the list price for insulin, 
some patients do. They do pay that list price, or they pay 
something close to it when they go to get their drugs at the 
counter. One study found the average price of an insulin 
prescription in Oregon went from $322 in 2012 to $662 in 2016. 
That is a hundred percent increase, period.
    While these prices do not reflect all the discounts, 
rebates or coupons offered for a product, an insured individual 
who has not met their deductible, or an uninsured person may be 
asked to pay this amount at the pharmacy counter. Moreover, the 
co-insurance paid by many with insurance for their 
prescriptions is typically a percentage of that list price, not 
the negotiated net price. The higher the list price, the more 
these patients pay.
    The three major manufacturers of insulin in the United 
States each offer Patient Assistance Programs and we are glad 
for that and other forms of assistance to help patients access 
their medicines. These programs are not a long-term solution 
though to the affordability and access issues, but they are an 
important effort in the interim to help patients access their 
lifesaving medicines.
    I hope to learn more from the witnesses today about how 
these programs are working, and I appreciate your testimony. 
Some providers also have certain patients pay for their 
medicines. For example, when we examined a 340B drug pricing 
program last Congress, we heard that some 340B-covered entities 
passed along all or part of their discounts to provide certain 
patients with reduced-price medicines including insulin. Since 
340B entities can purchase some insulin products at a 
significant discount, diabetic patients could really benefit 
from having these savings pass through directly to them.
    I also want to ask that we continue our work from last 
Congress with investigating these cost drivers, Madam Chair, in 
our healthcare system and that is from top to bottom. As I have 
said on many occasions, healthcare costs continue to rise in 
the United States, and whether it is hospital care, or 
physician, and clinical services, or prescription drugs, these 
expenditures are all interrelated as a consumer. So we need a 
holistic approach to examine the cost drivers in our healthcare 
system to identify long-term solutions to this complex problem.
    I want to thank the Chair for putting together this 
important hearing, this excellent panel. We will benefit from 
your views and your testimony today. And with that I would 
yield the balance of my time to Dr. Burgess.
    [The prepared statement of Mr. Walden follows:]

                 Prepared Statement of Hon. Greg Walden

    I am glad we are having this important hearing today. Thank 
you, Chair DeGette, for holding it.
    Diabetes is a life-long disease that impacts the lives of 
millions of Americans, including more than 300,000 Oregonians. 
Due to the significant research and development efforts of 
biopharmaceutical companies, there are over 30 types of 
innovative insulin available in the United States that come in 
a variety of different formulations and in different delivery 
mechanisms. There are also numerous oral medications available 
for type 2 diabetics to help manage their disease.
    I am proud that our committee has championed efforts to 
accelerate the discovery, development, and delivery of 
innovative drugs. Over two years ago, under the bipartisan 
leadership of former Chairman Fred Upton and Congresswoman 
Diana DeGette, Congress enacted the 21st Century Cures 
initiative. Our work is not done, however. We need to continue 
to promote innovation while balancing it with affordability and 
competition.
    As we heard last Congress during our hearing examining the 
complexity of the prescription drug supply chain, the supply 
chain has evolved in a way that has ended up harming some 
patients at the pharmacy counter. At that hearing, I 
specifically asked the witnesses about the price of insulin and 
learned that the net price has not changed much over the past 
few years. But, the list price or ``sticker price'' has 
increased and pharmaceutical manufacturers are providing larger 
rebates and discounts to their supply chain partners to lower 
the net price of the medicine.
    While no one is supposed to pay the list price for insulin, 
some patients do pay the list price, or close to it, at the 
pharmacy counter. One study found that the average price of an 
insulin prescription in Oregon went from $322 in 2012 to $662 
in 2016--an increase of over 100 percent. While these prices do 
not reflect all the discounts, rebates, or coupons offered for 
a product, an insured individual who has not met their 
deductible, or an uninsured person, may be asked to pay this 
amount at the pharmacy counter. Moreover, the coinsurance paid 
by many with insurance for their prescriptions is typically a 
percentage of the list price, not the negotiated net price. The 
higher the list price, the more these patients pay.
    The three major manufacturers of insulin in the United 
States each offer patient assistance programs and other forms 
of assistance to help patients access their medicines. These 
programs are not a long-term solution to affordability and 
access issues, but they are an important effort in the interim 
to help patients access their life-saving medicines. I hope to 
learn more from the witnesses today about how these programs 
are working.
    Some providers also help certain patients pay for their 
medicines. For example, when we examined the 340B Drug Pricing 
Program last Congress, we heard that some 340B covered entities 
passed along all or part of their discounts to provide certain 
patients with reduced price medicines, including insulin. Since 
340B entities can purchase some insulin products at a 
significant discount, diabetic patients could really benefit 
from having these savings passed through directly to them.
    I also want to ask that we continue our work from last 
Congress investigating the cost drivers in our healthcare 
system from top to bottom. As I've said on many occasions, 
healthcare costs continue to rise in the United States and 
whether it's hospital care, physician and clinical services, or 
prescription drugs, these expenditures are all interrelated. A 
holistic approach to examining the cost drivers in our 
healthcare system is needed to identify long-term solutions to 
this complex problem.
    I want to thank the Chair for putting together such an 
excellent panel that is reflective of so many different voices 
in the diabetic community, and I thank our witnesses for being 
here as well.

    Ms. DeGette. The gentleman is recognized.
    Mr. Burgess. Thank you, Ms. Chairman.
    And just to point out, over the last two decades there have 
really been no major changes in the chemical makeup of insulin, 
no changes in the importance of insulin for insulin-dependent 
diabetics. So under normal circumstances, in the laws of 
economics you would expect these trends to decrease, not 
increase prices.
    So certainly, I look forward to hearing what our panel 
today has to say about the massive price increases and perhaps 
some ideas of what Congress can do to ensure that nobody is 
forced to choose between insulin and the other necessities of 
life. And I yield back.
    Ms. DeGette. The gentleman yields back. I ask unanimous 
consent that the Members' written opening statements be made 
part of the record. Without objection, they will be entered 
into the record.
    I ask unanimous consent for Mr. Rush, Mr. Welch, Ms. 
Barragan, Mr. Soto, Mr. Carter, and Mr. Bucshon to participate 
in today's subcommittee hearing, including the opportunity to 
ask questions of witnesses and submit a written opening 
statement into the record.
    Without objection, so ordered.
    I now want to introduce our panel of witnesses for today's 
hearing. First, we have Ms. Gail deVore who is a patient 
advocate and Coloradoan living with type 1 diabetes for 47 
years.
    Gail, it is great having you here today.
    Dr. William T. Cefalu who is the chief scientific medical 
and mission officer of the American Diabetes Association, 
welcome.
    Dr. Alvin C. Powers, who is here representing the Endocrine 
Society and the director of both the Vanderbilt Diabetes Center 
and the Division of Diabetes, Endocrinology, and Metabolism at 
the Vanderbilt University Medical Center, welcome.
    Dr. Kasia Lipska, Clinical Investigator at the Yale-New 
Haven Hospital Center for Outcomes Research and Evaluation, 
Yale University School of Medicine; Ms. Christel Marchand 
Aprigliano, Chief Executive Officer, Diabetes Patient Advocacy 
Coalition, welcome to you.
    And Dr. Aaron J. Kowalski who is the Chief Mission Officer 
of the Juvenile Diabetes Research Foundation, welcome. Welcome 
to all of you and thank you for appearing before the 
subcommittee today.
    You are aware, I know, that the committee is holding an 
investigative hearing and so when doing so we have the practice 
of taking testimony under oath. Does anyone have an objection 
to testifying today under oath?
    Let the record reflect that the witnesses have responded 
no.
    The Chair then advises that under the rules of the House 
and under the rules of the committee, you are entitled to be 
accompanied by counsel. Do you desire to be accompanied by 
counsel during your testimony today?
    Let the record reflect that the witnesses have responded 
no.
    So if you would, please rise and raise your right hand so 
you may be sworn in.
    [Witnesses sworn.]
    Ms. DeGette. Let the record reflect that the witnesses have 
responded affirmatively, and you now may be seated. Thank you. 
You are now under oath and subject to the penalties set forth 
in Title 18 Section 1001 of the U.S. Code.
    The Chair will now recognize our witnesses for a 5-minute 
summary of their written statements. In front of each of you 
there is a microphone and a series of lights. The light will 
turn yellow when you have a minute left and it turns red to 
indicate your time is coming to an end, and we appreciate you 
giving us your opinions in that 5-minute period.
    So, Ms. deVore, I would like to recognize you first. You 
are recognized for 5 minutes.

STATEMENTS OF GAIL deVORE, PATIENT ADVOCATE, COLORADOAN, LIVING 
  WITH TYPE 1 DIABETES FOR 47 YEARS; WILLIAM T. CEFALU, M.D., 
   CHIEF SCIENTIFIC, MEDICAL & MISSION OFFICER, THE AMERICAN 
DIABETES ASSOCIATION; ALVIN C. POWERS, M.D., ENDOCRINE SOCIETY 
    REPRESENTATIVE, DIRECTOR OF VANDERBILT DIABETES CENTER, 
     DIRECTOR OF DIVISION OF DIABETES, ENDOCRINOLOGY, AND 
  METABOLISM, VANDERBILT UNIVERSITY MEDICAL CENTER; KASIA J. 
 LIPSKA, M.D., CLINICAL INVESTIGATOR, YALE-NEW HAVEN HOSPITAL 
 CENTER FOR OUTCOMES RESEARCH AND EVALUATION, YALE UNIVERSITY 
 SCHOOL OF MEDICINE; CHRISTEL MARCHAND APRIGLIANO, M.S., CHIEF 
  EXECUTIVE OFFICER, DIABETES PATIENT ADVOCACY COALITION; AND 
     AARON J. KOWALSKI, PH.D., CHIEF MISSION OFFICER, JDRF

                    STATEMENT OF GAIL deVORE

    Ms. deVore. Thank you, Madam Chair. Thank you, members of 
the committee, for allowing me to speak today. My name is Gail 
deVore. I've lived in Denver for 36 years. My husband is a 
third-generation Denverite. I'm 58 years old and have had type 
1 diabetes since Valentine's Day of 1972. That's 47 years, 1 
month, and 19 days. My husband and I are members of the middle 
class. We do not live extravagantly. We are very careful with 
our budget. We have decent insurance, yet the cost of taking 
care of myself as a diabetic eats a significant hole in our 
budget every month. I drive a 17-year-old car that's needed new 
struts for a few years. It's been a few years since we've had a 
real vacation, and it's seriously doubtful that either of us 
will ever have the opportunity to retire.
    Just as we all need air to breathe, every person on this 
earth requires insulin to stay alive. Most people's bodies make 
their own insulin. However, in a type 1 diabetic, our 
autoimmune system has malfunctioned and killed off those cells 
that make insulin. We require injections of insulin to stay 
alive. Without insulin our blood glucose levels rise, our blood 
turns acidic, we fall into a horrible coma, and we will die 
without insulin.
    A little more than a year after I was diagnosed, there came 
a time that I went without insulin for about 12 hours. Toward 
the end of that 12 hours I was in a coma. My parents drove me 
to the hospital an hour away from our home. I spent 2 days in a 
coma in the ICU and many more days recovering in the hospital. 
My parents were convinced I was not going to live. I will 
always need exogenous insulin. Every hour of every day of every 
week of every month of every year for the rest of my life I 
need insulin.
    These four bottles are one months' prescription worth 
$1,400. In 1972, four bottles of insulin cost my family about 
five dollars. With an adjustment for cost of living, that would 
be no more than a hundred dollars today. Every bottle, each 
bottle is about $350 in a cash price at my pharmacy at the full 
price. For diabetics without insurance coverage or diabetics 
who have a high deductible plan or when insurance doesn't cover 
the kind of insulin our doctor wants us to take, that's what we 
pay out of our own pockets and out of our own budgets to 
survive. My current insurance actually covers this kind of 
insulin at a reasonable copay.
    I also have a prescription for a newer insulin called 
Fiasp. This is a faster acting insulin with no other 
alternatives on the market currently that compete with this 
formula. It's not on the formulary of my insurance. It's 
$346.99 at the Kroger Pharmacy near me. There is no way I can 
afford to use the prescription as it's written every month. To 
make it last longer, I ration it by diluting with Novolog, 
which is against the advice of both Novo Nordisk and my doctor.
    I am personal friends with many other diabetics who must 
come up with 800, 1,200 and more at the pharmacy window before 
they meet their deductibles, or an insurance does not cover 
their type of insulin. We all find creative ways to afford 
insulin. Some insurance plans require us to purchase 60 and 90 
days of insulin at one time. That makes the immediate price tag 
double or triple. It has to be paid in full upon delivery.
    Even though I've had type 1 diabetes for most of 5 decades, 
I'm healthy. Medical research shows that it's highly unlikely 
that I will ever suffer from complications from diabetes as 
long as I maintain the current level of control that I have 
now. But the price of insulin directly impacts how well I can 
take care of myself. I'm not your typical diabetic. I know my 
way around the Government. I know who to call and I have access 
to some high-level administrators.
    I sit on the board of directors or committees of the 
Nightscout Foundation, the JDRF, and the Colorado Consumer 
Health Initiative. I recently helped get a piece of legislation 
passed in Colorado that assists all people with chronic 
illness. It passed unanimously through both Houses and signed 
by our Governor just 10 days ago. I'm an advocate and I am a 
problem solver.
    However, the reality is there are no solutions for 
affording insulin. There are coupons and there are assistance 
programs, but they are not available, nor do they work for 
every diabetic. My friend, Clayton McCook, who lives in 
Oklahoma City has a coupon that knocks $50 off of every bottle 
of insulin for his 10-year-old daughter Lily. Last week that 
brought the cost down to $1,398 for the month.
    The relief we need is right now. Not next week. Not next 
year. Before the discovery of insulin, every child that had 
diabetes died. There are no alternatives to insulin. It's been 
almost 100 years since my heroes, Dr. Banting and Dr. Best, 
figured out that insulin would save our lives. When they sold 
their patents for $1 each to the Eli Lilly Corporation, they 
intended it would always be affordable and accessible. Children 
and adults are still dying and suffering from disabling 
complications only because insulin is no longer affordable.
     Thank you, Committee, for allowing me to testify today.
    [The prepared statement of Ms. deVore follows:]
    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT] 
    
    Ms. DeGette. Thank you so much, Ms. deVore.
    The Chair now recognizes Dr. Cefalu for 5 minutes.
    Doctor?

                 STATEMENT OF WILLIAM T. CEFALU

    Dr. Cefalu. Thank you, Chair DeGette, Ranking Member 
Guthrie, and all members of this subcommittee for the 
opportunity to discuss insulin affordability. Over 30 million 
Americans have diabetes and about 7.4 million of them rely on 
insulin. For millions of people with diabetes, including all 
those with type 2 diabetes, access to insulin is literally a 
matter of life and death. There is no medication that can be 
substituted for insulin.
    As the leading organization whose mission is to prevent and 
cure diabetes and improve the lives of all people affected by 
diabetes, the American Diabetes Association believes that no 
individual in need of insulin should go without it due to 
prohibitive costs. In 1921, Canadian scientists, Frederick 
Banting and Charles Best, discovered insulin, revolutionizing 
diabetes care and making it possible for patients to live with 
the disease.
    Banting and Best sold the patent to the University of 
Toronto for $3 to ensure affordable insulin for all who need 
it. Since that discovery, further innovations have resulted in 
new formulations of insulin, from the animal insulin to the 
human insulin to the 1990s, the analog insulins. In recent 
years, there have been fewer advancements, yet prices continue 
to rise. Between 2002 and 2013, the average price of insulin 
nearly tripled, causing patients' out-of-pocket costs to rise 
and creating a tremendous financial burden for many who need 
insulin to survive.
    Dangerously, more than a quarter of individuals report 
making changes to their purchase of insulin due to cost. When 
people cannot afford their insulin, they skip doses, or they 
take less than they need. This is called rationing. This puts 
them at risk for the devastating and sometimes deadly 
complications. If a person has type 1 diabetes and goes without 
insulin for as little as a day, they can develop diabetic 
ketoacidosis which can lead to death. Increasingly, ADA has 
heard stories of individuals forced to ration their insulin or 
forced to go without other important necessities so they can 
purchase the amount of insulin they need.
    We needed to act on behalf of all those who struggle. In 
November of 2016, the ADA board of directors unanimously passed 
a resolution on all entities in the insulin supply chain to 
substantially increase transparency and pricing and to ensure 
that no person with diabetes is denied affordable access to 
insulin. ADA's resolution also called upon Congress to hold 
hearings with all entities in the insulin supply chain to 
identify the reasons for the dramatic increases and to take 
action to ensure that all people who use insulin have 
affordable access to the insulin they need. In concert with the 
board resolution, ADA initiated a grassroots petition calling 
for the same actions.
    Since launching this in 2016, over 480,000 people have 
signed this petition. We continue to hear from individuals who 
are impacted by the high cost of insulin. For example, Chair 
DeGette, we heard from Ann in Colorado. Ann has two young 
children who require insulin every day for life. At the 
beginning of the year, their monthly costs for insulin were 
$875. When the pharmacist asked Ann for this sum of money, she 
was shocked. She asked the pharmacy to run it through 
insurance. Unfortunately, he already had. Ann had to leave the 
medication at the pharmacy, go home and comb through her 
monthly budget to make sure they had enough money to pay for 
the medicine that would keep her two children alive.
    As a physician, I've witnessed firsthand how the incredible 
research advances from biomedical research have dramatically 
improved the lives of those with diabetes. However, this 
incredible innovation does not benefit those who can't afford 
their treatments. The ADA established an Insulin Access and 
Affordability Working Group to ascertain the full scope of the 
problem and advised the ADA on strategies to lower the cost of 
insulin. The Working Group held discussions with more than 20 
stakeholders representing entities throughout the supply chain. 
The Working Group published a white paper in Diabetes Care in 
May of last year outlining what we learned. In follow up, the 
ADA published a set of public policy recommendations that we 
believe will help reduce the cost of insulin.
    I look forward to working with you, and others in Congress 
to develop strategies to lower the rising cost of insulin. And 
thank you, Chair Degette, Ranking Member Guthrie, and all 
members of this subcommittee for holding this very important 
hearing.
    [The prepared statement of Dr. Cefalu follows:]
    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT] 
    
    Ms. DeGette. Thank you so much, Doctor.
    The Chair now recognizes Dr. Powers for 5 minutes for an 
opening statement.

                  STATEMENT OF ALVIN C. POWERS

    Dr. Powers. Good morning. Thank you, Chair DeGette, Ranking 
Member Guthrie, and members of the subcommittee for the 
opportunity to provide a physician's perspective on the scope 
of the problem of insulin affordability. I'm Alvin Powers and 
I'm a physician scientist and I'm here representing the 
Endocrine Society. With over 18,000 members, the Endocrine 
Society is the world's oldest and largest organization of 
scientists and physicians devoted to hormone research and 
caring for patients who have hormone related conditions like 
diabetes.
    One of the most frequent concerns we hear from our members 
is the rising cost of insulin. As the director of the 
Vanderbilt Diabetes Center, our healthcare providers and I have 
many patients who struggle to afford their insulin.
    The need to address this growing problem is urgent. People 
are rationing their insulin and foregoing other necessities. 
This leads to serious health problems and hospitalizations. 
While I live in the diabetes belt in Tennessee, the story is no 
different in Colorado, Kentucky, or elsewhere in the U.S. In 
this broad context of drug pricing debate, the problem of 
insulin affordability, I believe, is unique and merits special 
attention.
    Here's a few reasons why I think it's unique. We've already 
heard that more than seven million people use insulin each day 
to manage their diabetes and that people who have type 1 
diabetes must have insulin to survive. There is no other 
lifesaving drug used by so many people who would die in a 
matter of days if they didn't take it. We've also heard about 
the rising price of insulin over the past 15 years and it's 
difficult to understand how a drug that has not changed has 
skyrocketed in price. In 2017, expenditures for insulin in the 
United States reached $15 billion and three of the top ten 
medication costs were for a type of insulin.
    We've also heard about how insulin has been around a long 
time. After scientists discovered it in 1921 and saw its 
miraculous effect on people with diabetes, Frederick Banting, 
one of the co-discoverers says, ``Insulin belongs to the world, 
not to me.'' The discoverers as we've mentioned have sold the 
patent so that all patients would have access. However, it 
seems that exactly the opposite has happened, especially in the 
United States.
    Let me illustrate the challenges that our patients face. 
For example, if I'm at my office seeing a patient who has type 
1 diabetes who requires injections of both the long-acting and 
a short-acting insulin each day, I prescribe both types of 
insulin. But while I'm sitting with the patient, I have no idea 
how much my patient will pay of that because the electronic 
health systems don't communicate patients' specific benefits.
    When she goes to the pharmacy, she learns that she owes 
$1,200 for her four bottles of insulin that month, and why, 
it's because she has a high-deductible plan and it's January. 
This scenario could be true for many working Americans and many 
in this room who have high-deductible health plans. Our insulin 
supply chain is broken, unfair, and dangerous. Our patients 
deserve better.
    Here are some observations and suggestions about the 
insulin supply chain. No one understands why insulin cost is 
rising. There's a lack of transparency and how drug prices are 
negotiated. Rebates between manufacturers, PBM, and health 
plans are not passed along to consumers. Patients have 
increasingly high-deductible health plans dramatically 
increasing their out-of-pocket costs for lifesaving medications 
like insulin.
    Patient Assistance Programs are complicated, difficult to 
navigate, and overly restrictive. Because of lack of 
information, it's difficult for patients and their physicians 
to have informed decisions about the cost of a patient's 
insulin. And finally, regulatory systems and patent extensions 
restrict the introduction of more generic or biosimilar 
insulins. Now there's plenty of blame to go around, but that 
doesn't solve the problem or help our patients.
    Addressing the insulin cost problem is a priority for the 
Endocrine Society. We recently released a position statement 
outlining ways that stakeholders can improve insulin's 
affordability and we've submitted this for the record. I 
believe that we can make progress on insulin pricing and 
affordability. This can be a road map and can be extrapolated 
to other medications. I look forward to working with the 
subcommittee as it moves forward in addressing this important 
issue. Thank you very much.
    [The prepared statement of Dr. Powers follows:]
    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT] 
    
    Ms. DeGette. Thank you so much, Dr. Powers.
    The Chair now recognizes Dr. Lipska for her opening 
statement.
    Doctor?

                  STATEMENT OF KASIA J. LIPSKA

    Dr. Lipska. Thank you, Chair DeGette, Ranking Member 
Guthrie, and distinguished members of the Energy and Commerce 
Subcommittee on Oversight and Investigations. Good morning. My 
name is Kasia Lipska and I am an adult endocrinologist and a 
research scientist on the faculty at the Yale School of 
Medicine. I am really grateful for the opportunity to share 
with you my experiences as a clinician and scientist. And I'd 
like to state for the record I don't have any financial ties 
whatsoever to drug manufacturers and my views are my own.
    First, I would like to tell you about a patient of mine. 
I'm going to call her Maria to protect her privacy. Maria is a 
78-year-old woman who has type 2 diabetes but relies on insulin 
injections several times a day to keep her blood sugars in 
check. When she saw me, Maria's blood sugars were running too 
high and this put her at risk for the complications of diabetes 
including blindness, amputations, and kidney failure leading to 
dialysis. So I turned to Maria and I said, ``Maria, it's time 
to increase the dose of your insulin.'' But she turned back to 
me and she said, ``Doc, I really can't afford to.''
    Seeing patients like Maria led me to wonder just how common 
this was, so in the summer of 2017 we conducted a survey of 
patients at our Yale Diabetes Center to get a better picture. 
We found that one in four patients who are prescribed insulin 
reported using less than prescribed over the past year, 
specifically because of cost. And not surprisingly, these same 
patients had poor control over their blood sugar, so almost 
threefold higher chances of having poor blood sugars.
    These findings were published in JAMA Internal Medicine and 
they have national implications. That's because our Center's 
diabetes patients are similar to diabetes patients in the U.S. 
and New Haven's demographics happen to be almost a perfect 
mirror of our nation. So the takeaway here is that one-quarter 
of our patients are rationing insulin and putting their health 
at serious risk.
    Insulin is a lifesaving drug. It keeps patients with 
diabetes alive and out of the hospital. When patients use less 
insulin than is necessary, they risk the devastating 
complications we've already heard about. So let me give you a 
sense of why so many patients ration insulin. One vial of 
Lantus insulin--that's the long-acting insulin--costs over $200 
at a Connecticut pharmacy. That's the best price available when 
you go online and search. This can last for a week or a month 
depending on the dose needed. If a patient wants to take this 
insulin as a prefilled pen which is more convenient that will 
run them almost $300. And this price has skyrocketed over the 
past years.
    Now Gail showed this to you earlier. What I'm holding here 
in this glass vial is insulin. This is Humalog insulin. It's 
quite small, right? This vial of insulin cost just $21 when it 
first came on the market in 1996. It now costs $275. There is 
nothing different about this Humalog. There is no innovation in 
this Humalog. It's the same, exact insulin hormone. The only 
thing that's changed is its price. Now Eli Lilly has made a big 
deal about its launch of an authorized generic for half the 
cost. But let's keep this in perspective: $137 is still seven 
times the original price.
    So what accounts for this? Drug makers and many 
organizations who are beholding to them make excuses for why 
prices have gone up. They say it's the fault of PBMs or the 
wholesalers, but the bottom line is that drug prices are set by 
drug makers. The list price of insulin has gone up and that's 
the price that many patients pay. This is what needs to come 
down, it's as simple as that.
    I'm here today because as a clinician I have very little to 
provide to my patients in the way of a solution. The Patient 
Assistance Programs offered by many drug makers are not helping 
much. It's hard to find a patient who actually qualifies for 
their assistance. I can help my patients shop for the best 
price of insulin, connect them with a discount pharmacy, but 
these as was said before are Band-Aid solutions.
    I think we have a moral obligation to address this problem. 
My patients like Maria are counting on you. Thank you.
    [The prepared statement of Dr. Lipska follows:]
    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT] 
    
    Ms. DeGette. Thanks so much, Doctor.
    Now I am very pleased to recognize Ms. Aprigliano for 5 
minutes.

           STATEMENT OF CHRISTEL MARCHAND APRIGLIANO

    Ms. Marchand Aprigliano. Thank you, Chairwoman DeGette and 
Ranking Member Guthrie and members of the Oversight and 
Investigations Subcommittee. My name is Christel Marchand 
Aprigliano and I serve as the CEO of the Diabetes Patient 
Advocacy Coalition. DPAC is a nonpartisan nonprofit dedicated 
to promoting safety, quality, and access to diabetes 
medications, devices, and services.
    I was diagnosed with type 1 diabetes in 1983 and like 
others here today have been personally impacted by the rising 
list prices of insulin analogs. My testimony I hope will 
provide a frank look at how our community is attempting to 
obtain insulin and potential solutions. People with diabetes 
who can least afford this life-essential drug are paying the 
most and some are paying with their lives. And it wasn't always 
this way, so let's take a look quickly about how we got here.
    List prices are set by manufacturers and include rebates to 
entice pharmacy benefit managers to place a drug on its 
formulary, and it's a vicious circle. To get preferred status 
on a formulary, manufacturers give higher rebates. The higher 
the rebate, the higher the list price. And more people are 
being subjected to list price than ever before as traditional 
insurance plans have been replaced by plans that include high 
deductibles and increased patient cost sharing based on a 
percentage of the list price rather than a flat copayment, and 
nobody has said before should ever pay list price.
    In December of 2011, I paid $40 for a copay for insulin. 
One month later, in January of 2012 that same prescription cost 
me $1,269. My husband's employer had switched to a high-
deductible health plan which placed the burden of full list 
price on us until we reached a $13,500 deductible. We had a new 
baby and one source of income and we had put money aside and it 
was meant for emergencies. Our emergency became insulin. For 
many of my friends, this emergency happens every single month 
and there is no more money to put aside.
    Now we can discuss what options are currently available to 
patients and even the financial help offered through copay 
cards and Patient Assistance Programs are not enough to make 
access affordable. For those with a commercial insurance, copay 
cards may help offset the high cost of insulin. Those who 
believe that copay cards push away from generic options, please 
understand that for insulin analogs there are no generic 
substitutes. This is why policies that seek to address Patient 
Assistance Programs must be carefully nuanced to address 
potential abuses of the system and not punish the patients who 
depend upon them.
    To circumvent the broken rebate system, nonprofit 
foundations created Patient Assistance Programs to help those 
who are uninsured, underinsured, or facing a financial crisis. 
However, these can fail. I can personally attest to this. DPAC 
and other patient organizations recently conducted a survey to 
learn how people with diabetes were using Patient Assistance 
Programs. We discovered that patients only had a 50 percent 
chance of being helped by these assistance programs, and 
approximately 44 percent of those who did receive help reported 
a delay in receiving medications.
    With insulin, you cannot afford a delay. I have to note 
that 2.3 million Medicare Part D beneficiaries are often 
ineligible for help for these Patient Assistance Programs and 
copay cards. They have nowhere to turn. When these stop-gap 
measures fail, my community goes to desperate measures and 
desperate extremes to stay alive: online fundraisers, grey 
market sales, or trades, and even shopping abroad. All of these 
avenues are a last-ditch response to our current broken insulin 
system and all of them come with risks and none of them are 
permanent solutions. Our community is crying out for relief and 
the solution, we believe, involves dismantling the current 
system that promotes high prices in favor of discounts or true 
list pricing at the point of purchase where patients and not 
PBMs or any other portion of the supply chain profit.
    DPAC supports the rebate proposal for Medicare Part D 
because of the two safe harbor protections that will transform 
the current system. One is to remove the rebates and instead 
create discounts at the point of sale directly to the patient, 
and the second is the creation of a fixed fee arrangement for 
PBMs rather than a percentage of the list price of the drug. We 
call on Congress to expand HHS's proposed rule to all insurance 
plans offered to Americans. This would help to destroy the 
perverse system of increasing list prices in order to increase 
the rebate amount given to PBMs.
    If enacted in conjunction with an expansion of Patient 
Assistance Programs to help uninsured patients, all patients 
will benefit, and we need solutions now. For medical 
professionals who feel helpless when their patients suffer, for 
family members who worry about us, and for patients like me who 
need insulin to live, every single person who takes insulin 
must be given the opportunity to raise their voice to help 
solve this issue.
    And thank you for bringing DPAC to bring this patient's 
voice into this life or death conversation. I appreciate your 
time.
    [The prepared statement of Ms. Aprigliano follows:]
    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT] 
    
    Ms. DeGette. Thank you so much.
    The Chair now recognizes Dr. Kowalski for 5 minutes.

                 STATEMENT OF AARON J. KOWALSKI

    Mr. Kowalski. Thank you. Chairwoman DeGette, Ranking Member 
Guthrie, thank you and members of the subcommittee for inviting 
me to speak today. What you're seeing is a united community 
here. We need to fix this problem. In 1977, my younger brother 
Stephen was diagnosed with type 1 diabetes, or T1D, at the 
little age of 3, and then it was a bolt out of the blue for our 
family. Then in 1984, I too was diagnosed with T1D. My career 
has been focused on the fight to cure this terrible disease and 
importantly help people stay healthy until that day.
    As Chief Mission Officer at JDRF, the leading organization 
funding type 1 diabetes research, I'm very grateful for the 
opportunity to share our perspective and experiences of the 
many who are grappling day-to-day with--and you've heard this 
term many times--skyrocketing insulin costs. Type 1 diabetes is 
a fatal disease without insulin. Millions of Americans must 
take insulin many times a day, every day, just to survive. Yet 
as you know, the cost of insulin has soared. You've heard of 
Dr. Lipska of the price. It's doubling, it's tripling, 
depending on the years--2012, 2016--it's out of control. Beyond 
the data are the lives of real people, your constituents.
    As I travel the country the number one question I get 
asked, how can we make insulin more affordable? Even my own 
family's been affected. My brother has benefited tremendously 
from advances in modern insulins. They've significantly reduced 
life-threatening and costly, severe hypoglycemic episodes. But 
even as an owner of a small business in New Jersey, Steve was 
spending over $8,000 out-of-pocket for his insulin. His wife 
switched jobs just to obtain better insurance that would cover 
this cost.
    When people with diabetes can't afford insulin, they resort 
to drastic and life-threatening measures to stay alive. Again, 
you heard Dr. Lipska talk about the number, 25 percent, of 
people taking less insulin than they need just to save on cost. 
At a time when new innovations can enable people with type 1 
diabetes to live longer and healthier lives than ever before, 
the dramatic rise in the cost of insulin is undercutting this 
progress.
    To get the best outcomes people with diabetes need access 
to affordable insulin and diabetes management tools year 
around. Without them people are not able to manage their blood 
sugar, threatening their health, driving up costs including 
doctors' visits, hospitalizations, and ultimately terrible 
complications such as diabetic eye and kidney disease. At 
times, tragically, the results can be fatal.
    No one should suffer or die because they can't afford 
insulin. No one should suffer or die because they can't afford 
insulin.
    The time for action is now. We need systemic change, change 
that you all can make happen. On behalf of JDRF, I want to 
thank Congress for your commitment to solving this problem. 
Through our Coverage2Control campaign we've been rallying our 
community to call on companies to lower the price of insulin, 
and for health plans, employers, and the Government to take 
steps to lower out-of-pocket costs.
    First, manufacturers need to lower the list price of 
insulin. To do this, rebates must be eliminated from the drug 
reimbursement system. We support the administration's proposed 
anti-rebate rule and urge Congress to end rebates in the 
commercial sector as well.
    Second, insurers and employers must provide affordable 
coverage that reflects insulin's role as a lifesaving and 
sustaining drug. We support the policies that remove insulin 
from the deductible and provide it with a flat dollar 
copayment. At the same time, the public and private sector need 
to do more to help those who are uninsured obtain insulin they 
need to stay alive and to thrive.
    Third, we need to continue to invest in research. At JDRF 
we believe affordability and innovation go hand-in-hand to 
improve outcomes. Thanks to Congress's strong bipartisan 
commitment to the Special Diabetes Program and private 
investment from groups like JDRF, we are making progress on 
even better insulins, ones that are maybe glucose-responsive or 
faster-acting. On artificial pancreas systems, beta cell 
therapies and immunotherapies that will ultimately cure this 
disease.
     While we work towards a brighter tomorrow, we need to 
ensure that today all who need insulin to stay alive can obtain 
it. Thank you, members, for your outstanding leadership on this 
issue. I ask you to continue the fight alongside us.
    [The prepared statement of Mr. Kowalski follows:]
    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT] 
    
    Ms. DeGette. Thank you so much, Doctor. And thank you to 
the entire panel for, really, what was compelling testimony and 
very informative for the committee.
    It is now time for Members to have the opportunity to ask 
questions and the Chair recognizes herself for 5 minutes. We 
have heard unconscionable stories this morning about patients 
being forced to make sacrifices in their daily lives because 
they can't pay for insulin or even going without this 
lifesaving drug.
    Ms. deVore, I want to start with you. You are a patient 
advocate, but you also live with type 1 diabetes, yourself, and 
so you are familiar with these types of tough choices due to 
insulin prices. I want to ask you, given your advocacy roles 
would you agree that there are still far too many diabetic 
patients or parents of diabetic children who are unable to 
access affordable insulin and then they are making these 
difficult choices?
    Ms. deVore. Am I on now?
    Ms. DeGette. Yes.
    Ms. deVore. Every day I get emails from people asking how 
do I afford insulin? Every day. And every day I have to help 
them find a way to find insulin. These are families. These are 
adults. They're from every economic sector of our society. No 
one's exempt. Diabetes does not discriminate, and the price 
certainly doesn't. The price isn't dependent on your income.
    Ms. DeGette. That is right.
    Ms. deVore. It's always the expensive price that each of us 
has to pay if our insurance, or we do not have insurance, if it 
doesn't cover it.
    Ms. DeGette. So, Dr. Lipska, we heard from the drug 
companies that the current--what they say is the current 
pricing system generally works for most people living with 
diabetes, but your study found 1 in 4 of your patients rationed 
their insulin at some point in the last year. So, I would like 
you to comment about this and tell us what you think about the 
drug companies' argument that it is working for most people.
    Dr. Lipska. Thank you for that question. It is clear that 
the system is broken. It is clear that this is not working for 
many people. So we've heard stories, some of them highly 
publicized, people have died because they were rationing 
insulin. But we know now with this research that we've done at 
the Yale Diabetes Center, but also the survey done by the 
American Diabetes Association and other surveys conducted by 
advocacy groups that this is widespread.
    Ms. DeGette. It is not just a few people, it is like 1 in 4 
people, right?
    Dr. Lipska. It is not just--it is 1 in 4.
    Ms. DeGette. Right.
    Dr. Lipska. A quarter of people. This is a huge proportion.
    Ms. DeGette. Thank you.
    Dr. Cefalu, similar question, you testified that the ADA 
insulin affordability survey found in the last year over a 
quarter of those who responded had to make changes to their 
purchase of insulin due to cost. Based on these findings, what 
do you think the size of the population that the system is 
failing? How many people do you think this is?
    Dr. Cefalu. Well, Chair DeGette, I'm not sure of the 
absolute numbers, but it's interesting that our survey at the 
American Diabetes Association actually agreed with the report 
from Dr. Lipska that 1 out of 4 reported that the cost of 
insulin either affected their--the cost either affected their 
purchase or use of insulin. What's disturbing is that of 1 out 
4 either skipped doses, rationed doses, or more importantly 
they had a discussion with their physician and went to an 
insulin that may not have worked as well.
    So this is more than an inconvenience for the patient. And 
the concern is that if you make it more difficult for the 
patient to get the care they need, they're not going to be 
adherent to medication strategy. And if you're not adherent to 
medication strategy, that's going to relate to worse outcomes 
over time.
    Ms. DeGette. Right. People could get the side effects that 
we are so--that Ms. deVore said if you take--if you go by your 
regimen with the correct insulins then you don't get the side 
effects now, but if you are rationing, if you are not under 
control then you do.
    Dr. Cefalu. Well, we actually found that if people actually 
had to make a choice with their insulin and because of the cost 
of insulin they either skip dose or rationed it, the outcomes 
are worse.
    Ms. DeGette. Right.
    Dr. Cefalu. And, actually, in the survey if you'll allow 
me----
    Ms. DeGette. You know, we don't have a lot of time.
    Dr. Cefalu. No, it's just that there were more emergency 
room visits, there are more hypoglycemia. There was worse 
control because of the costs in these patients, so it's clear 
that this is a problem to our patients and cost is indeed 
affecting outcome.
    Ms. DeGette. Right, thank you.
    Dr. Lipska, very briefly I wanted to ask you, so the 
manufacturers and the pharmaceutical companies say that if we 
lower price it is going to stifle innovation. Do you believe 
that is true?
    Dr. Lipska. So I'll just go back to this vial of insulin. 
This is the same stuff, right. This is the same insulin that's 
been around since 1996. Nothing has changed except the price. I 
think drug makers can charge what they do because we continue 
to pay, and this has to stop. I think that you, as Congress, 
have an opportunity and we have an obligation to fix this.
    Ms. DeGette. Thank you.
    So I would just ask, as I mentioned in my opening statement 
Congressman Reed and I, as chairs of the Diabetes Caucus, did 
our own investigation last year and we issued a report in 
November of last year called ``Insulin: A lifesaving drug too 
often out of reach.'' I would like to ask unanimous consent to 
put this in the record, so ordered.
    [The information appears at the conclusion of the hearing.]
    Ms. DeGette. And I also am going to give a copy of this to 
every member on the panel, because we researched. We talked to 
all of your organizations and we researched this over a year 
and we made policy recommendations in this report. I think it 
would be really useful for the members of this committee to 
read this report and to listen to your testimony before we come 
back next week for our hearing with some of the actors in the 
market.
    And with that, thank you very much for your comity to the 
ranking member and I am now pleased to recognize Mr. Guthrie 
for 5 minutes.
    Mr. Guthrie. Thank you very much.
    And it is important to note there is a lot of innovation 
going on in the artificial pancreas, the trying to regenerate 
pancreatic function within diabetes, so that is stuff we don't 
want to stifle. Dr. Lipska hit it perfectly. We are looking at 
specifically at insulin, not all the other innovations going on 
because of little change, but little change in product, but big 
change in price. On the Republican side, we sent letters to 
both drug manufacturers and to the PBMs and we got a lot of 
different explanations on why the list price was going up while 
the net price stayed low. We posed similar questions to both 
sides and got a lot of different answers.
    So I want to go to Dr. Cefalu. The Working Group convened 
by the American Diabetes Association held discussions with more 
than 20 stakeholders representing entities throughout the 
insulin supply chain. After having these conversations, the 
Working Group concluded that current pricing and rebate system 
encourages high list prices.
    Can you please elaborate on how we got to a pricing and 
rebate system that encourages high list prices and, in your 
opinion, why did the pricing and rebate system evolve this way?
    Dr. Cefalu. Well, again, thank you. The question as far as 
the Working Group, we recognize that first and foremost the 
increase in transparency is the first step toward viable long-
term solutions. The current rebate system as arranged in the 
list price, as the list price increases that our current drug 
price and rebate system encourages a high list price. So as the 
list price is increasing, intermediaries within the supply 
chain benefit.
    The way this system is currently based fees, rebates, and 
discounts may be based on a percentage of that particular list 
price, so there are incentives throughout the supply chain that 
keep that list price high.
    Mr. Guthrie. OK. One thing we have heard from stakeholders 
is that the manufacturers set the list prices and they should 
just lower their list price. Manufacturers, however, we learn 
there is always, this is very difficult in trying to find how 
it works. Manufacturers have told us that it is not as simple 
as that. They say if they lowered their list price, a PBM would 
be less likely to give them good formulary placement and 
therefore give patients more affordable access to their drugs 
because they couldn't offer as big of a rebate on the product.
    What do you think would happen if a manufacturer just 
lowered the list price given how the current price system and 
rebate system works? I don't know if you want to say they just 
lower it and change the system, but under the current system 
can they just lower their price?
    Dr. Cefalu. Well, based on what we found in the Working 
Group, there are issues at every level of the supply chain and 
it's a complex chain and there's no question that the 
manufacturers set the list price. But there's also no guarantee 
if that list price drops that there's going to be subsequent 
changes throughout the supply chain. We need to move away from 
a system that's based less on high list prices and rebates and 
make sure that discounts and rebates negotiated throughout the 
supply chain make it to the patient at the pharmacy counter. 
That's what's not happening now.
    So to your question, Congressman, simply lowering the list 
price unless you can control what happens downstream in the 
intermediaries and what happens to the patient, there's no 
guarantee that just dropping the list price, in my opinion, and 
from the Working Group is going to get the job done. We need 
systematic change to make sure these discounts and rebates flow 
to the patient at the point of sale.
    Mr. Guthrie. Thank you.
    Ms. Marchand Aprigliano, in your testimony you highlight 
how we need systematic changes. The current complex pricing and 
rebate system, similar question, is harming many patients 
through the increased out-of-pocket costs. Given all the work 
you have done examining the insulin supply chain, what do you 
think would happen if a manufacturer just lowered their list 
price given how the current pricing and rebate system works?
    Ms. Marchand Aprigliano. So the current contracts that are 
currently in place with the pharmacy benefit managers and the 
manufacturers are secret. We have no idea how much we're 
actually receiving in terms of that rebate, and we've been told 
that the rebates are then spread throughout those who have 
insurance and are used to lower premiums or to help in the 
possible cost sharing.
    I don't know about anybody sitting here at the table, but 
my premium has never gone down. The cost of insulin keeps going 
up and I'm paying more and more in cost sharing. I'm not quite 
sure if magically the list price would suddenly drop down, I 
don't believe that it would immediately. I believe that entire 
disruption of the rebating system needs to happen, and it needs 
to happen now.
    I do want to bring up one of the things that we talk about 
when we talk about rationing in 1 in 4. Part of that is, is 
it's a psychological torture that we all go through every month 
because we don't know if something is going to happen, and we 
are going to lose access to our insurance, or we are going to 
have to pay list price at that counter. And so every year when 
we see list prices rise and we wonder where exactly all that 
money is going to, we have no idea if it's going to rebates, or 
to help lower the cost of an entire system in an insurance plan 
to help everybody else.
    Are we subsidizing people who are healthy with the cost of 
insulin? And I think that that's the case right now.
    Mr. Guthrie. Thank you for your testimony and I am out of 
time so I will yield back.
    Ms. DeGette. The Chair now recognizes the chairman of the 
full committee, Mr. Pallone, for 5 minutes for questioning.
    Mr. Pallone. Thank you, Madam Chair. We have heard today 
that the amount people ultimately pay for insulin can be 
significantly influenced by the manufacturers' list price even 
if they have insurance, and that price forces people to make 
incredibly difficult decisions between the medicine that 
literally keeps them alive and all other aspects of their 
lives. So I will try to get a bunch of questions in here as 
quickly as possible.
    Dr. Cefalu--I don't know if I am pronouncing it right. Your 
testimony stated and I quote, ``when people cannot afford the 
insulin they need, they may skip doses or take less than they 
need.'' This puts them at risk for devastating and sometimes 
deadly complications. So, Doctor, what do you know about the 
people who are burdened the most by rising list prices and 
therefore most at risk for these complications that you 
mention?
    Dr. Cefalu. So the question is what is the most vulnerable 
population?
    Mr. Pallone. Well, I mean what--tell us, you know, a little 
more about, you know, the person who is impacted by this and, 
you know.
    Dr. Cefalu. Sure, OK. So you've heard every--panelists have 
talked about cases where individuals cannot afford their 
insulin. And when you begin to ration insulin, two things 
happen. First and foremost, if you control the blood glucose, 
if between the provider and the patient that amount of insulin 
you give control the glucose and then you ration insulin and 
glucoses begin to rise, over the short term, uncontrolled 
dehydration. And again, if there's less insulin in a type 1 
will lead to the acute complication of diabetic ketoacidosis, 
which if not effectively treated does lead to death.
    Over the long term, we've had studies for 20 years that 
show that adequate glucose control does prevent the blindness, 
the kidney disease, and the nerve disease. So the concern is 
now if someone takes less insulin to get by throughout the day 
and this is chronic uncontrolled glucoses, then over the long 
period they're going to give rise to more blindness and kidney 
disease and nerve disease. And we've spent 20 years as a 
medical community reversing these changes, and now if we can't 
afford the insulin to control glucose that will be a long-term 
control----
    Mr. Pallone. OK. Well, that is very helpful. Thank you.
    And, Dr. Kowalski, you are aware of individuals forced to 
take these risks, being forced to choose between filling their 
prescription and paying for essential household expenses. How 
common of a problem is this where people have to make those 
choices?
    Mr. Kowalski. Yes, I think it's really interesting we're 
talking about insulin rationing and a quarter of people are 
insulin rationing, but we aren't talking about this other part 
where people who aren't rationing are making decisions that is 
either paying a mortgage, paying a car payment, college 
tuition, debt. And this is very common as we've seen an 
increase, a significant increase in people moving from 
traditional fixed copays to high-deductible plans. And people 
with diabetes who have high-deductible plans are hurt terribly 
by these rising costs.
    Mr. Pallone. All right, thank you.
    Let me ask Dr. Lipska. Thanks for your research into 
insulin affordability and bringing to light the effects that 
high costs have on your patients' treatment. Just if you could, 
what additional research is needed in this regard, if you will?
    Dr. Lipska. I've been asking myself that question. Thank 
you for this. I think that we already know. We already know 
everything we need to know about the impact on patients. We 
know it's a widespread problem. We've done research for many 
decades now showing that high blood sugars cause complications. 
We don't need to reinvent the wheel. I think we know this.
    Mr. Pallone. All right.
    Dr. Lipska. I think we need to fix the problem which is why 
I'm here and not in my research lab.
    Mr. Pallone. All right, thank you so much.
    Ms. deVore, you said in your testimony you continue to 
drive a 17-year-old car and believe that your husband will 
never be able to retire due to the cost of managing your 
condition. You said that you are one of the relatively lucky 
ones who has good insurance to pay for your insulin.
    So I wanted to ask Dr. Cefalu, now, the question, what 
parts of the system do you believe are responsible for driving 
up insulin prices?
    Dr. Cefalu. So getting back to our Working Group, this was 
again by interviewing all stakeholders in the insulin supply 
chain. We don't think that there's one entity in which there's 
not accountability. It's clear that the manufacturers set the 
list price, but it's also clear that this list price 
incentivizes, the system encourages high list price. And a high 
list price, the intermediaries in the supply chain benefit from 
high list price.
    So we feel that at every level of the supply chain, each 
entity has to hold some accountability in the pricing of 
insulin. And when we talk about solutions, when we talk about 
discounts and rebates flowing down, that happens at each level 
to get to the patient. So the system is dysfunctional, and we 
need to ensure that we have a system that's not based on high 
list prices and rebates, and that if there are discounts and 
rebates, they are seen at the pharmacy counter to lower the 
cost of insulin.
    Mr. Pallone. All right, thank you. And thank you to the 
panel. I appreciate it.
    Thank you, Madam Chair.
    Ms. DeGette. Thank you so much, Mr. Pallone.
    And the Chair now recognizes Mr. Burgess for 5 minutes for 
purposes of questioning.
    Mr. Burgess. Thank you and thanks to our panel for being 
here to a very informative discussion, a very thought-provoking 
discussion. Just to be clear, because this committee has done a 
lot of work on drug shortages over the years, at the present 
time there is no concern about any shortage of insulin; is that 
correct?
    All witnesses said yes, no?
    No concern, OK. I asked the question poorly. I asked for an 
affirmative to a negative, or a negative to an affirmative.
    But as you all discussed, this, I mean this committee has 
done a lot of work on the opiate problem, but I mean insulin is 
something you don't have to worry about it being diverted. You 
don't really have to worry about someone overusing it because 
there is actually a biologic penalty for overusing it; is that 
not correct?
    So I have had some questions about the rebate rule that the 
administration has proposed, but I promised Secretary Azar I 
would keep an open mind about that and I have. And several of 
you have brought up about the rebate rule this morning and I 
hope that perhaps at some point in the future we can involve 
the Agency either in this committee or the Health Subcommittee 
on their--to have them discuss the pros and cons of the rebate 
rule because rebates seem to be a recurring theme.
    Now one of the things that strikes me when I look at the 
timeline for insulin increases, and I think, Dr. Cefalu, you 
have mentioned since 2002 there has been an increase and really 
it is dramatic after 2009-2010, and that is of course the point 
at which the Medicaid rebate was increased from 15 to 23 
percent, but then a cap was placed on the rebate. And I don't 
know if that has had an effect, but you wonder because just 
again you superimpose the timeline of when that Medicaid rebate 
increase went into effect, which was in March of 2010.
    So I am also struck--and I would never aspire to be a 
third-party payer, I have never wished that on anyone, 
actually. However, if I were a third-party payer or perhaps 
since we have Medicare and Medicaid under our jurisdiction 
perhaps something to be considered, why do we even charge for 
insulin? I mean if someone has got a diagnosis of diabetes, why 
not just treat it? So has there been any effort within, say, 
within Medicare?
    And, Dr. Lipska, I think you mentioned the two patient 
studies that you outlined both of whom were in their 70s, which 
is young I would hasten to add, but still in an age that is 
covered by Medicare, why would the Center for Medicare and 
Medicaid Services not just cover that?
    Dr. Lipska. I'll try to answer that question. Life with 
diabetes is very hard to begin with. I think charging people, 
you know, exorbitant prices for insulin is backwards and 
unhelpful. And I think as was mentioned before, I think in the 
end it's going to cost us more, right?
    Mr. Burgess. I don't disagree. The whole premise of copays 
several years ago, when someone is sick don't you want them to 
take their medicine? Why would you put a barrier there?
    Dr. Lipska. It makes it harder for me to treat them. It 
makes it much harder for me as a clinician to help them.
    Mr. Burgess. So have any of you as you interact with 
policymakers, have any of you had discussions along this line 
with the Center for Medicare and Medicaid Services?
    Dr. Cefalu. The reduction in rebate, the ADA has been at 
the Secretary Azar when he discussed this, and this is line 
with our Working Group's recommendation, and our public policy. 
To your point as far as reducing the cost of insulin, that's in 
line with our recommendations to lower or remove cost sharing 
and to make sure any cost sharing is based on the lowest price 
that account for the negotiations throughout the supply chain. 
And the amount of money a person pays for insulin is going to 
have a direct effect on their adherence of that strategy.
    Mr. Burgess. Sure. I don't disagree.
    Dr. Cefalu. And that is incredibly important. And again, we 
cannot go back to where we have more complications because of 
the cost of insulin.
    Mr. Burgess. And again I don't disagree at all.
    Dr. Cefalu. So to your point, lowering the cost of insulin, 
either cost sharing or rebates coming back to the point of 
sale, whatever we can do to lower the cost of insulin, I think, 
is going to increase adherence.
    Mr. Burgess. But in a Federal program why don't we just 
cover it? Why should there be any cost at all?
    Dr. Cefalu. That's a question that I think this committee 
and Congress needs to ask.
    Mr. Burgess. And my next question to Seema Verma next time 
I see her.
    Thank you very much. I will yield back.
    Ms. DeGette. Thank you, Dr. Burgess.
    The Chair now recognizes the vice chairman of the Oversight 
and Investigations Subcommittee, Mr. Kennedy, for 5 minutes.
    Mr. Kennedy. Thank you, Madam Chair. I want to thank all my 
colleagues on the committee for being here for this important 
hearing. Thank you to all the witnesses and your testimony. It 
is extremely compelling. I would also like to submit for the 
record a Boston Globe article that was published last November 
16th that detailed the story of two moms that were protesting 
outside of a facility in Cambridge, Massachusetts with the 
ashes of their children who died because they did not get 
access to insulin. And we will pass that out for the committee. 
I would like to submit for the record again.
    Ms. DeGette. Without objection.
    [The information appears at the conclusion of the hearing.]
    Mr. Kennedy. Thank you.
    Drug companies are taking a lot of well-deserved criticism 
for the astronomical prices we are seeing and in response we 
have heard today about the free and reduced insulin, cost of 
insulin through Patient Assistance Programs or drug discount 
cards to provide some relief. These programs sound promising, 
but I am not sure it is quite that simple.
    Ms. Marchand Aprigliano--did I come close?
    Ms. Marchand Aprigliano. Close enough.
    Mr. Kennedy. I am sorry. One more time for me?
    Ms. Marchand Aprigliano. Marchand Aprigliano.
    Mr. Kennedy. Marchand Aprigliano.
    Ms. Marchand Aprigliano. The G is silent.
    Mr. Kennedy. Thank you. I will do my best.
    Ms. Marchand Aprigliano. No offend.
    Mr. Kennedy. There you go, thank you.
    You testified about our recent survey on Patient Assistance 
Programs and noted that only about half of people who apply 
actually receive them. So, generally speaking, what can you 
tell me about the populations that use these programs to help 
pay for medication?
    Ms. Marchand Aprigliano. So I will tell you that they come 
from all walks of life just like everybody who uses insulin. 
Now that being said, part of the issue is that sometimes we 
don't meet the qualifications. The current qualifications can 
range from 250 percent to 400 percent of Federal poverty level. 
So for a family of four that may be depending upon the type of 
insulin you take, you may be eligible for one program and not 
eligible for another one.
    One of the important things to note is that we said that 42 
percent of the patients found that the qualifications to apply 
were difficult to find and understand. And out of that the 44 
percent don't receive their medications in a timely manner.
    Mr. Kennedy. So that is what I wanted to build on, Dr. 
Kowalski. So if you are in need of insulin in a timely manner 
how do these programs, how do they work?
    Mr. Kowalski. Well, I think they're a barrier. I mean JDRF, 
we certainly are trying to do our best to disseminate that 
there are options out there for people. But as anybody who's 
sat on a phone, sat in front of the pharmacy, waited and 
struggled to figure these programs out, when you have a drug 
that your blood sugar is going up as you're sitting there, I 
mean these are barriers that we feel should not be in place. I 
mean relying upon Band-Aids when there's an overarching problem 
is something that JDRF, and I think we're all aligned at this 
table, needed to address.
    Mr. Kennedy. So when drug manufacturers come in next week 
to testify, I expect that they are going to tell us about the 
benefits that these programs are having.
    But, Dr. Lipska, you say in your testimony and I quote, 
``the Patient Assistance Programs do little more than provide a 
public relations benefit. It is hard to find a patient that 
meets the criteria.'' Doctor, from your experience, why are 
these programs failing to actually provide sufficient benefit 
to those looking for help and are there certain things drug 
companies should be doing that they are not?
    Dr. Lipska. Right, great question. A lot of patients don't 
meet the criteria for, you know, because of income, or they 
have commercial coverage, or there are some other specific 
criteria that, you know, don't quite help them in those 
situations. That's one thing, so it is hard to find somebody 
who exactly qualifies.
    But I also say that I don't think Patient Assistance 
Programs are a way to fix this. As was said, one, they cause 
delay, but two, they just, they require money--money. They 
require a time spent sort of, you know, applying and running 
through these hoops. People should not have to do this, it is 
just not right. Life with diabetes is hard enough as it is. I 
don't think we should be putting patients through this 
application process to get a drug they need.
    Mr. Kennedy. And, Ms. Marchand Aprigliano, hopefully 
better, do you, building off of that do you have suggestions 
for how they can, the programs can be improved, or do you think 
they should be essentially scrapped?
    Ms. Marchand Aprigliano. Well, I think that they could 
definitely be improved by reducing the list price of insulin so 
that these Patient Assistance Programs don't need to exist at 
all. However, that being said, to be able to raise the 
eligibility requirements to 500 percent of FPL, we've discussed 
that in the paper that we published today, to make it easy for 
individuals to actually apply and then to educate individuals 
such as pharmacists as well as other healthcare professionals 
about these programs.
    Only seven percent of individuals found out about these 
programs at the pharmacy counter, which is usually the first 
time that somebody who is obtaining the first notion that, oh 
my gosh, I can't pay for my prescription actually happens. That 
should be the first line of defense there.
    And also, and I will say this, there needs to be help 
especially for those who are in crisis. I actually applied for 
a Patient Assistance Program when my husband unexpectedly was 
laid off from his job and I knew the system, I knew exactly 
what was supposed to be able to help me, and instead I was told 
that I didn't qualify because the paperwork that I had to show 
only showed past income and that's all they would base their 
decision off of, not from the fact that we had zero income.
    And I wasn't concerned about my husband, helping to find 
him find a new job, or concerned about how to put food on our 
table. I was concerned about how I was going to get insulin. 
And then to find out it would take 4 to 6 weeks before they 
made a decision about my application, that is unconscionable, 
unacceptable, and for Patient Assistance Programs we need to do 
better.
    Mr. Kennedy. Thank you, yield back.
    Ms. DeGette. Thank you.
    The Chair now recognizes Mr. Griffith for the purposes of 
questioning the witnesses.
    Mr. Griffith. Madam Chair, thank you so much for holding 
this hearing.
    You know, I really always learn things from these hearings 
and particularly today I have learned. And I just have to say 
that I hadn't thought about it, but Dr. Burgess's point is very 
appropriate and that is, is that with the high cost of the 
consequences of not providing the insulin or not being able to 
get the insulin, amputations are expensive, the physical 
therapy that follows an amputation is expensive. Loss of vision 
or even a diminution in your ability to see is expensive and 
all of the third-party payers are going to pay a lot more. It 
is fascinating.
    Anyway, I have concerns about PBMs, pharmacy benefit 
managers, and the consolidation in that industry with three 
major PBMs controlling most of the market. Dr. Cefalu, in your 
testimony you discuss PBMs and how they have substantial market 
power and how the PBM's primary customers are health plans and 
employers and not patients. How has the substantial market 
power of PBMs changed, if at all, the list price and the net 
prices of insulin? And I know we have already touched on some 
of this, but let's get it on the record.
    Dr. Cefalu. Well, the PBMs play a role in the insulin 
supply chain through their negotiations through manufacturers 
for the rebates, but their primary customers are the health 
plan and the insurers where they negotiate to lower total drug 
costs and they design formularies. What is not clear is whether 
those negotiations that take place, and I think some of the 
comments today were that they are opaque transactions, we don't 
know whether those transactions are actually benefiting the 
patient at the point of sale. There's information that we would 
need before we say how you would improve that system and that 
gets back to the transparency.
    Mr. Griffith. And so, you know, when we have questions, Ms. 
Marchand Aprigliano said earlier she had speculations as to 
where the money was going and so forth. We just don't know when 
we are dealing with the manufacturers, and the PBMs, and the 
insurance companies, it is really hard to follow the bouncing 
ball, and we had a hearing on that last year that dealt with 
how do we figure that all out. So I assume that everybody would 
be in favor of transparency so we can see what is going on and 
whether or not the rebates that are being offered to the PBMs 
are actually increased by a request by the PBMs to the 
manufacturers to increase their list price; is that correct?
    Dr. Cefalu. One of the key things identified was the 
Working Group that increased transparency is key to 
understanding and designing long-term solutions. It's key. We 
do not understand the negotiations that occur with each entity 
in the supply chain and until we do we won't have the long-term 
solutions. And that was a key determination, a key finding from 
the Working Group. We just do not understand the flow of money 
through the supply chain.
    Mr. Griffith. So at this point you don't know whether the 
PBM's use of their market power has benefited or hurt patients, 
because you don't know what they are doing because it is all 
behind closed doors, so to speak?
    Dr. Cefalu. The Working Group observation is that it was 
not clear that these negotiations actually benefit the patient 
at the point of sale.
    Mr. Griffith. Ms. Marchand Aprigliano, in your opinion, why 
do you think the PBMs have so much power in the insulin supply 
chain?
    Ms. Marchand Aprigliano. Well, I think that PBMs have power 
over the entire prescription drug supply chain. And PBMs 
started with the best of intentions just like much of anything 
else. This was supposed to help patients save on the cost of 
their prescription drugs. But over the course of several years 
this has changed to how much profit a PBM can make. And through 
the rebating system and a way to not share with the patient at 
the point of sale, we are subsidizing, those of with chronic 
illnesses are subsidizing the entire healthcare system.
    Mr. Griffith. Including the net profits of the insurance 
companies, the PBMs, and the manufacturers?
    Ms. Marchand Aprigliano. Everyone in the insulin supply 
chain. We realize that nobody's out to get us----
    Mr. Griffith. Right.
    Ms. Marchand Aprigliano [continuing]. And that no one, 
wants to kill us, but there's no profit if no one can purchase 
a vial of insulin and broke patients can't buy insulin. So 
somebody is making a profit and it's not the patients.
    Mr. Griffith. Yes, ma'am.
    Madam Chair, I appreciate you continuing our work into this 
and we will do this over the next year, I know, and I look 
forward to participating in that and thank you very much and 
yield back.
    Ms. DeGette. Thank you so much. We are going to do it over 
the next week but, however, it is not going to take us a year 
to legislate.
    Mr. Griffith. Well, that is good news.
    Ms. DeGette. OK, yes.
    Mr. Griffith. Thank you, Madam Chair.
    Ms. DeGette. The Chair is now pleased to recognize Ms. 
Kuster for 5 minutes.
    Ms. Kuster. Thank you, Madam Chair. And thank you for 
coming together and for the bipartisan approach here today.
    So I just want to emphasize the scope, you all have been 
very helpful. In New Hampshire, where I am from, approximately 
ten percent of the population, 1 in 10, is type 1 or type 2 
diabetes, approximately 121,000. And physicians estimate that 
34,000 people in my State have diabetes but do not yet know it. 
So it is a serious, serious health threat as you have laid out.
    Thirty-six percent of our population, 370,000 Granite 
Staters have pre-diabetic symptoms including high blood glucose 
levels. And just to give you a sense of the scope and we are a 
small State, the diagnosed diabetes costs in New Hampshire are 
an estimated $1.3 billion every single year including the 
direct medical expenses, 940 million, and then an additional 
320 million spent on indirect costs including loss of 
productivity, so 2017 figures.
    I want to try to get at the root causes of the rising 
insulin prices that we are here to discuss. Just to give an 
example, so the list price of Novolog, commonly used analog 
insulin, increased by 353 percent per vial and that was just 
from 2001 to 2016. During the same period, the list price of 
Humalog, another commonly used insulin, increased by 585 
percent per vial. So it is little wonder that people can't keep 
up, as you have discussed.
    I want to ask Dr. Lipska, you testified the cost of insulin 
today is now seven times more for the exact same product as two 
decades ago, and to quote you, ``recent research suggests that 
high prices primarily benefit the drug makers'' Do you believe 
that the drug companies are the ones benefiting the most from 
the exorbitant price increases?
    Dr. Lipska. Thank you for that question. Yes, I do. And 
this is based on research not performed by my group, by Dr. 
Peter Bach at the Sloan Kettering Memorial Hospital. They 
looked at U.S. expenditures on prescription drugs in 2016 and 
estimated that those expenditures totaled 400 and billion 
dollars. Two-third----
    Ms. Kuster. Four hundred billion, billion with a B?
    Dr. Lipska. Four hundred and eighty billion dollars. Two-
thirds of this total was captured by drug manufacturers in the 
form of net revenues. The remaining third was retained as gross 
profits in the supply chain. PBMs and wholesalers captured 
approximately 8.5 percent of that. So I think that helps keep 
this in perspective in terms of where the money is going. Now 
this is not insulin-specific data, these are prescription 
drugs-specific data. But I think it gives us a little bit of a 
perspective and a pause to pawn all of this just on PBMs and 
the inflating list price.
    Ms. Kuster. Thank you. That is very helpful.
    Dr. Cefalu, you discuss in your testimony the American 
Diabetes Association took a thorough look at the causes of 
rising insulin prices. And in summarizing the Working Group 
conclusion you stated, quote, ``as prices increase the profits 
of the intermediaries in the insulin supply chain--wholesalers, 
PBM, pharmacies--increase since they may each receive a rebate 
discount or fee calculated as a percentage of that list fee''
    So it sounds like everyone in the supply chain except the 
person living with diabetes benefits from high list prices. 
What parts of the system do you believe are responsible for 
driving up insulin prices?
    Dr. Cefalu. So, Congresswoman, again the Working Group 
looked at and talked to every stakeholder in the supply chain. 
It's clear that the price is set by the manufacturers, but as 
you stated a high list price benefits intermediaries. To Dr. 
Lipska's point, there are other studies that have looked at the 
flow of money through the supply chain. I can actually provide 
you information from the Schaeffer study from the University of 
Southern California that looked at the profit taken at each 
level.
    But again, as the list price goes up, the intermediaries' 
profit because of the percentage based on the list price. And 
this is where if we understood the negotiations, understood 
what is occurring between the manufacturer and PBM, the PBM and 
the health plan, the PBM and the pharmacy, understanding what 
is going on as far as negotiations, will we have a better idea 
as to your point as where the profits are taken. For now, it's 
based on data in the public domain and we'd be more than happy 
to give you information from the U.S.C. study which shed some 
light on where the profits are taken.
    Ms. Kuster. That would be very helpful, and we can get that 
into the record.
    Dr. Powers, similar question, you stated in your testimony, 
quote, ``it is difficult to understand how a drug that has 
remained unchanged for almost two decades continues to 
skyrocket in price'' We all share your frustration with that. 
What do you believe are the fundamental causes of skyrocketing 
prices for these well-established drugs?
    Dr. Powers. Yes, thank you for that question. I think that 
if this committee had members of each of the supply chain on a 
panel and you asked them who was the fault, they would do this.
    Ms. Kuster. Well, we will get that opportunity next week.
    Dr. Powers. Absolutely, right. They will do that, right. 
And so I think that we have--that each member of the supply 
chain has a responsibility to help solve this problem. That 
means the manufacturers, the PBM, the plans, the patients, the 
providers, and Congress all have a role in creating a new 
system for this. And I think that trying to single out one 
person or one entity, while satisfying, is not going to solve 
the global problem.
    Ms. Kuster. I apologize for going over and I yield back.
    Ms. DeGette. The Chair now recognizes Congresswoman Brooks 
from Indiana for 5 minutes.
    Mrs. Brooks. Thank you, Madam Chair, and thank you for 
holding this very important hearing. I am vice chair, one of 
the vice chairs of the Diabetes Caucus. I want to thank the 
chairman of this subcommittee for her leadership, and 
Congressman Reed.
    We know that CDC has issued a report, and part of the 
reason I am so involved is that over 586,000 adult Hoosiers 
suffer from diabetes and so it is a tremendous problem in our 
State. I think our State is one of the higher per capita, and 
so critically important problem.
    I want to talk about a couple of things that I haven't 
really heard us talk about yet. I am going to start with you, 
Dr. Kowalski. I want to talk about the concept of non-medical 
switching and can you describe what that means and whether or 
not insulins are interchangeable? Can you just talk with me a 
little bit about non-medical switching?
    Mr. Kowalski. Yes, this is another issue that I think is 
very important here that we have multiple--it was mentioned on 
the committee, the panel here, that there are multiple forms of 
insulin and different people with diabetes benefit with 
different forms with different characteristics. For example, I 
use an insulin pump, so I only use fast-acting insulin. Some 
people do shots and use fast and long-acting.
    What we're seeing in the community is people being switched 
by their insurance companies, not by the choice of their 
physician and the patient, which is just not the right way to 
practice medicine.
    Mrs. Brooks. Has that ever happened to you?
    Mr. Kowalski. Oh, absolutely. And we work at JDRF--has a, 
I'm very happy to say, good coverage for diabetes of course.
    Mrs. Brooks. I would hope so.
    Mr. Kowalski. And we've been switched, and this is very 
frustrating because then you take a step back. For some people 
that's OK, but insurance companies shouldn't be making those 
decisions. The physician and the person with diabetes should 
be.
    Mrs. Brooks. And did anything happen, so you were forced to 
switch insulins and were you required then to pay more or less 
for the insulin that you were instructed to switch to?
    Mr. Kowalski. Fortunately I did not, but I can tell you 
just anecdotally a good friend, who again works in the diabetes 
business, his daughter and his foundation switched insulins and 
she had three incidents of severe hyper, high blood sugar 
glycemia. It took him 8 hours, and he is a professional who 
works in this field, on the phone plus the time of the 
physicians, so the physician calling a physician at the 
insurance company, to make a decision that his physician had 
ordered. So I mean this is a broken part of the system that 
JDRF is also committed to fixing.
    Mrs. Brooks. Does anyone know, is there any data being kept 
about this switching issue and whether or not people are 
keeping track of these incidents or any organizations, just out 
of curiosity, keeping track of when the switches are being 
required to take place? Dr. Cefalu?
    Dr. Cefalu. That is data--first of all, I agree with Dr. 
Kowalski. This is an issue in our survey that again 25 percent 
had problems with the cost of insulin and the use of insulin 
and one of those uses was being switched to another brand of 
insulin. And someone may be able to afford their insulin but 
then go to the pharmacy and find out that insulin is no longer 
available. So that is more, again it's more than an 
inconvenience. We need data, we need research, and really what 
the medical cost of the non-medical switching because once 
again making it more difficult for a patient who has controlled 
blood sugars is only going to result in poor outcomes over 
time.
    Mrs. Brooks. Thank you.
    Ms. Marchand----
    Ms. Marchand Aprigliano. Aprigliano.
    Mrs. Brooks [continuing]. Aprigliano, can you please share 
with us information that you are familiar with when doctors of 
patients must go through what is called ``fail first'' or step 
therapy and what the process what that means and what the 
implications of that might be and that where a health insurance 
requires a patient to try other insulins first and prove they 
fail, which can you please explain how that works?
    Ms. Marchand Aprigliano. So as insulins have become 
different we have insurers deciding that they want to pay for 
one type of drug, one type of insulin over another. I have a 
very good friend who works in the diabetes space, also is type 
1, and he has been on a long-acting insulin for the last two 
years. He's great, no problem, A1Cs are terrific.
    Insurance decided that they wanted him on a different drug 
and in order for him--he could not even go through the prior 
authorization to get an override. He had to try one drug for 3 
months. And then if he failed on that drug----
    Mrs. Brooks. What does failure mean?
    Ms. Marchand Aprigliano. Failure means a severe low----
    Mrs. Brooks. And I have 13 seconds.
    Ms. Marchand Aprigliano [continuing]. Sorry--severe low or 
severe high. He failed, but yet had to go through another 3-
month period of failure again. Meanwhile, he's having severe 
lows while he travels. I worry about him. I know his family 
worries about him. And this is through his insurance, it wasn't 
a choice. His medical provider has been fighting for him to 
change that.
    Mrs. Brooks. And so it would be up to the patient to get 
the insurance to change that coverage, or his physician.
    Ms. Marchand Aprigliano. The insurance has denied twice 
because they believe that insulins are interchangeable, which 
they aren't.
    Mrs. Brooks. OK.
    Ms. DeGette. And thank you.
    Mrs. Brooks. I yield back.
    Ms. DeGette. We have heard situations of patients who said 
you have to have a severe incident, so they actually tried to 
manufacture their own severe incident so they could get the 
insulin they need, which is crazy.
    Dr. Ruiz is now recognized for 5 minutes.
    Mr. Ruiz.Congressman Brooks, I have a bipartisan bill with 
Dr. Wenstrup that is the solution to this step therapy issue; 
that gives it more of a patient and doctor voice in that 
decision-making process. So I look forward to sharing that with 
you and working with you on that.
    I would like to thank the Chair DeGette for holding this 
important hearing and for her tireless work as chair of the 
Diabetes Caucus where I am honored to serve as a vice chair to 
work on policies that address issues like the affordability and 
access to diabetes medications and care.
    I saw patients in the trailer parks in the Coachella Valley 
where I grew up. I saw patients in the emergency department 
where I practice, and I see patients in the streets, mostly 
homeless, in street medicine who over and over have the signs 
and symptoms of the devastating health effects of not taking 
their insulin or rationing their insulin.
    And as the prices of insulin have gone up, many patients 
have taken to cutting back on the amount of insulin that they 
take or even skipping doses entirely to stretch their insulin 
as long as possible. When I was leading a healthcare 
initiative, we had a community forum in the town of Mecca in my 
district, and afterwards I saw an elderly woman dig through the 
trash. And I went over and I was curious. I asked her what she 
was doing, and she told me she was collecting aluminum cans 
because she can't afford her insulin, and she was trying to 
collect cans for the rebates so she can pay for insulin. But 
she said, ``But don't worry, Doctor.'' She told me, ``Don't 
worry, I only take half a dose so it can last.'' OK. So while 
this is a common reaction, rationing insulin carries enormous 
medical risks.
    I have seen the patients, OK, I have treated the patients 
in diabetic ketoacidosis and hyperglycemic comas. I have seen 
the patients in pain because of their neuropathy. I have seen 
the patients who were rushing to the dialysis center because of 
nuance and renal failure and hyperkalemia.
    I have seen the patients who come in with cardiac arrest 
because of that hyperkalemia and having to resuscitate them and 
send them to the ICU. So I have seen the emergencies that not 
taking insulin and not managing their glucose effectively can 
cause.
    Dr. Lipska, you found that 1 in 4 patients who participated 
in your study said that they had used less insulin than was 
prescribed by their doctor which led to poor control of their 
blood sugar. Dr. Lipska, I want you to talk more about your 
experiences about the people in your study who underused or 
rationed their insulin and why did they do that.
    Dr. Lipska. Right. So we've heard a lot of stories and I 
appreciate you sharing yours as well. I think that there are 
dramatic stories of people who underuse insulin such as 
diabetic ketoacidosis admissions, emergency room 
hospitalizations, but there are also a lot of stories of people 
using less than prescribed for prolonged periods of time and it 
takes a long time for some of these diabetic complications to 
then arise.
    And so we're seeing this problem of rationing now. We're 
going to be seeing the complications down the road, some of 
these long-term complications that you mentioned, neuropathy, 
blindness, and, you know, more dialysis. These patients are 
suffering. So my Diabetes Center sees lots of patients with 
type 1 and type 2 diabetes. My niche is more people with type 2 
diabetes who have had it for a long time, so that's why I 
presented my patient Maria to you. These patients have had 
diabetes. They've lived with the diabetes, they've lived with 
the diabetes for a long time. They have multiple other chronic 
conditions. They have other expenses. They have big 
expenditures and they're really suffering.
    Mr. Ruiz. And so many times the patient feels that if they 
don't feel anything then they are not sick, so why do they have 
to take insulin. I have done talks about how this is this is 
the silent killer, right. You don't feel anything.
    I have an uncle who says, ``Ah,'' in Spanish, ``Ah,'' you 
know, ``it costs too much money. I would rather like put food 
on the table and use my car to go to work and pay the car 
bills, et cetera, than paying for insulin. I don't feel sick. I 
don't feel sick, so I am not sick.'' So there is a lot of 
miscommunications in that.
    Dr. Cefalu, in your opinion, what can you inform patients 
about the adverse effects of not taking insulin appropriately 
given what Dr. Lipska just said?
    Dr. Cefalu. Well, number one, if a patient can't afford the 
insulin the first thing we suggest is actually talk to their 
provider. Again, it may be that patient can take a least 
expensive form of insulin that may be appropriate. In the 
majority of cases perhaps it's not, but you need to inform the 
patient what to expect.
    Again, over the short term, a poor control of sugars, 
particularly in an elderly person, will lead to some mental 
status changes, dehydration, and that could lead to an 
emergency room visit in which there is tremendously high blood 
glucose, a hyperosmolar state, so this is not specifically just 
in type 1. But for type 1, poor control again may lead to 
increased urination, dehydration, nausea, vomiting, and again 
leading to ketoacidosis.
    So educating the patient on what to expect so that if they 
are heading down this road that you can mitigate it is 
incredibly important, but the main issue, the bottom line is 
that insulin is a matter of life and death and nobody who needs 
insulin should ever go without it because of prohibitive costs 
and that's the issue we're trying to address here. We can put 
in mitigating circumstances to talk about patients and what 
they can do if they don't have the right insulin, but if they 
can't afford it that's the main problem we're here today to try 
to address.
    Ms. DeGette. Thank you.
    Mr. Ruiz. Thank you.
    Ms. DeGette. Thank you very much.
    The Chair now recognizes Dr. Bucshon for 5 minutes.
    Mr. Bucshon. Thank you, Madam Chairwoman. I was a 
cardiovascular surgeon before I was in Congress, so I changed 
professions a little bit. This is a very important topic. As a 
heart surgeon, a lot of my patients had diabetes, pretty 
substantial percentage. As you know, cardiovascular disease is 
one of the big things that happens.
    I am going to ask something related to the 340B program. To 
remain eligible for participation in the Medicaid program, drug 
manufacturers must provide certain outpatient drugs to cover 
entities in the 340B program at significant discounts. And in 
certain circumstances, these manufacturers must sell their 
products to 340B-covered entities for a penny. Some, but not 
all, 340B-covered entities pass these savings on to patients. 
For example, during the committee's investigation of the 340B 
program during the 115th Congress, one 340B entity told the 
committee they offered insulin at $10 a vial to certain 
qualifying patients. So $10 costs them a penny.
    So, Ms. deVore, as a patient, do you have any experience 
with 340B drug pricing?
    Ms. deVore. My husband actually works at a healthcare 
facility that has a 340B pharmacy and I have the availability 
of utilizing that pharmacy. But it doesn't, the cost 
difference----
    Mr. Bucshon. Doesn't really make any difference?
    Ms. deVore. No, it does not make any difference.
    Mr. Bucshon. You haven't seen anything. So it hasn't 
affected you directly?
    Ms. deVore. As far as the price is the same.
    Mr. Bucshon. Yes.
    Ms. deVore. Whether or not I use a 340B pharmacy or 
outside, under our insurance plan.
    Mr. Bucshon. OK.
    Ms. deVore. Because the way our insurance is structured 
that even with Fiasp that's not on the formulary because it's 
non-formulary I still pay the full retail price.
    Mr. Bucshon. OK. Does anyone else want to comment on 340B? 
Anybody have a comments on the 340B program?
    Oh, too bad. I thought you were going to have a lot of 
comments on that.
    And I won't take too much more time, Madam Chairwoman, 
because some of the concern that I have about 340B in a larger 
context is that because of the companies have to sell some of 
their products at such a low discounted price to 340B-covered 
entities, that on the backside of that to make up for that it 
is putting upward pressure on drug prices otherwise for non-
340B-covered entities.
    And so I think that I would encourage the subcommittee to--
this subcommittee to also as part of our investigative look at 
pricing on insulin, also consider the ramifications of the 
dramatic exponential growth in the 340B program as a whole. And 
based on our previous subcommittee hearings in the last 
Congress, try to address some of the abuses that are occurring 
in 340B that may very well be putting an upward pressure on 
drug prices as a whole.
    And with that I yield back.
    Ms. DeGette. The gentleman yields back.
    The Chair now recognizes Ms. Schakowsky for 5 minutes.
    Ms. Schakowsky. Thank you. Approximately 1,325,000 or 12.5 
percent of the adult population in my home State of Illinois 
have diabetes. In 2017, Illinoisans diagnosed with diabetes 
were forced to spend $8.7 billion for direct medical expenses. 
I am talking about hospital inpatient days, emergency visits, 
ambulatory visits, but these costs don't even include the price 
of insulin itself.
    The three pharmaceutical companies who dominate the global 
insulin market have raised their prices in lockstep over the 
past several years. When Eli Lilly introduced its Humalog brand 
of insulin in 1996, the list price of a 10-millimeter vial was 
$21 and it is $275 per vial, and diabetes patients as we heard 
can use four a month, sometimes even six a month for some 
individuals. And when Sanofi insulin brand debuted in 2001 it 
was $35 a vial, now it is 250. And when Nova Nordisk insulin, 
Novolog, was introduced in 2001 it was $45, and now it is $289.
    And I just want to note that these current prices are 
curiously similar how they have raised those prices. And though 
there is zero transparency into the business practices of these 
companies, I know none of them can logically attribute these 
price hikes to increases in manufacturing costs, for example, 
which we have heard, and not when insulin has been around since 
1921 and improved human analog of insulin has been around since 
1996.
    So Ms.--I am going to try and get it right--Ms. Marchand 
Aprigliano, it seems to me that these pharmaceutical companies 
raise the price of insulin because they can. And am I wrong? Is 
there a better or more justifiable explanation for this?
    Ms. Marchand Aprigliano. I don't work for the insulin 
manufacturers, so I can't say that----
    Ms. Schakowsky. OK, does anybody there want to give--yes, 
go ahead, Dr. Powers.
    Dr. Powers. So I would just say that the price of the same 
drugs, those same insulins in Canada, Germany, France, England, 
very different. I have the story of one patient who paid $300 
for her insulin in the country. She lost it when she was in 
London, had to purchase a replacement, $30.
    Ms. Schakowsky. So this a decision that we don't have any 
transparency into how they do that, but I think this example 
tells us it doesn't need to be that expensive.
    Dr. Cefalu, the American Diabetes Association white paper 
details the role of drug companies in this system. How do you 
account for an over 1,000 percent in the price of insulin since 
the 1990s?
    Dr. Cefalu. Well, Congressman, as you've stated, the 
innovations since the 1990s, the price has tripled since 2002 
as far as list price. And this is one of the concerns is that 
we don't know the factors behind how they set the list price. 
It's not in the public domain and this gets back to increase an 
in transparency, I can't speculate as to what those factors 
are.
    In the Working Group, again getting back to the 
recommendations and conclusion of the Working Group, it's 
increased transparency that will get to the bottom of these 
price increases throughout the supply chain. So I don't know 
those factors that increase the list prices.
    Ms. Schakowsky. I actually have legislation on a 
transparency bill. Let me just say that I want to associate 
myself with what Dr. Burgess said and I feel that this is 
considered a national, international health, lifesaving issue, 
the issue of insulin and diabetes.
    I think that we--and my time is up, but I would love to 
hear and maybe I will submit it for the record why you might 
think that we could save money, actually, if we would address 
diabetes and provide insulin to the people who need it. And I 
yield back.
    Ms. DeGette. The Chair now recognizes the ever-patient Mr. 
Sarbanes for 5 minutes.
    Mr. Sarbanes. Thank you.
    I just wanted you to speak to your confidence or lack of 
confidence on whether you think we can actually achieve some of 
these transparency measures that we have been talking about 
today. You have been around a long time, you know how the PBMs 
operate. And the manufacturers, you know that there is this 
kind of hocus-pocus exercise that has been going on for decades 
and the patients are left holding the bag on that.
    So, you know, we are talking in a bipartisan way about the 
problem you all are pretty unified in your views that there is 
a problem, a structural problem that transparency would be a 
very good first step. So are we just going through an exercise 
here? What is your--I don't mean that you all are. But you are 
looking at us and you know that it is hard to break the 
stranglehold that the PBMs and the manufacturers have on how 
the system works and they have kind of reached--I mean in 
theory they are supposed to be at arm's length, but they have 
managed to figure out a way to structure the system so they can 
be negotiating at a level that always protects, it appears to 
me, their profits at the expense of the patient.
     So I just, I invite any of you to tell me maybe on a scale 
of 1 to 10 how optimistic you are that within the next 5 years 
we can achieve the transparency that would actually make a 
difference in terms of the impact on insulin pricing, but any 
other kind of pricing out there.
    Dr. Cefalu. So there are a number of things that we can do, 
and I think you've heard a lot of those recommendations today. 
Based on what we understand, I think it's clear the cost 
sharing for the patients is too much and whatever we can do to 
remove or lower the cost sharing would be important, removing 
insulin from the deductible, minimizing co-insurance, those are 
some things that we need to move forward, making sure that 
patients with diabetes continue to have the affordable health 
insurance so they can take care of their disease.
    We haven't talked much about biosimilars, but there are 
steps moving to make more biosimilars available on the market. 
If biosimilars were more like traditional generics, we would 
have the lower price. And I know the FDA has taken some steps 
to increase efficiency in the biosimilar process, so those are 
some of the things that were pointed out from the Working 
Group.
    Mr. Sarbanes. By the way you just revealed yourself almost 
to be a plant on my part because I, and you are not, but I 
happened to introduce a biosimilars bill and have been working 
very hard to respond to these pay-for-delay schemes in that 
environment as well as with respect to prescription drugs. So 
you are absolutely right that is something that can be done.
    Dr. Cefalu. And the fourth thing that you've heard today is 
that the patient with these negotiations are not benefiting and 
just ensuring that the results of these negotiations, the 
rebate and discounts, make it to the patient at the point of 
sale to reduce the costs. So those are, I think, some general 
principles that we should move toward to reduce the cost of 
insulin.
    Mr. Sarbanes. So I agree with all of that. But just coming 
back to the question of how confident you are, what your level 
of optimism is, particularly now that we are hearing bipartisan 
criticism of the system, that we can actually get some of these 
basic transparency measures in place. But before you answer, I 
will just say that as far as I can tell there isn't any 
consumer in America who needs medicine at one time or another 
that is not impacted in that by the PBMs and how they operate.
    And I am sitting here, every comment that you all have made 
alludes to the profits that the PBMs are making and how they 
are looking to maximize their profits. They could probably do 
their job just as well if they were a nonprofit, I assume, 
right, and the fact that they touch every American certainly 
raises questions about whether they ought to be regulated more 
like a utility than to operate as a for-profit industry. There 
has got to be people in the room who just shuddered when I said 
that. So I would, frankly, start from that perspective given 
the impact that they have.
    Any other comments? Yes, Ms. Marchand Aprigliano?
    Ms. Marchand Aprigliano. See, you got it right.
    I think the biggest issue is it's not just transparency. 
Transparency is one thing. If we find out what the cost of each 
section of the supply chain takes away from the patient it's 
the actual action that Congress will help us as protectors of 
the patients and citizens in the United States, whether it's 
fixed fee per transaction, whether it's designing to mandate 
that insulin is capped at a certain percentage, all of this has 
to be done.
    We all know exactly what needs to be done. The end result 
is we need to have reasonable access and affordable access to 
insulin. Transparency is the first step, but we have got 
several other steps to go along with it. I am absolutely 
resolute that we will find an answer and that Congress will 
help us with that.
    Mr. Sarbanes. Thank you and I yield.
    Ms. DeGette. Thank you.
    The Chair now recognizes Ms. Barragan for 5 minutes to 
question.
    Ms. Barragan. Thank you.
    I want to thank the panelists for being here today and for 
sharing your story. It is really heartbreaking when you hear 
about people who have to choose between medication like insulin 
and rent and other expenses.
    Not long ago I was at the hospital with my mom who has 
diabetes and her blood sugar was pretty high. And I remember 
having a conversation about her needing insulin and the rising, 
really, the skyrocketing cost of insulin. And I thought to 
myself for a moment what would happen if we couldn't afford 
this, because we hear these stories day in and day out. We hear 
stories of people who ration, as you mention, the insulin and 
then die. And when that is happening in America, something is 
broken, and people look to Congress. And so today when I see 
you, I thank you, and I speak on behalf of my mother and my 
sister-in-law and the millions of Americans that are living 
with diabetes.
    I happen to represent a congressional district in 
California that has the highest rate of diabetes than any other 
congressional district in the State of California. It happens 
to be a district that is about 88 percent Latino/African 
American, communities of color, communities that are suffering, 
and those who in my district have a very low household median 
income. One of my colleagues handed a list of about all the 
members and I think I was 350 of the household incomes.
    Just to kind of show, I mean I represent areas like Compton 
and Watts in south Los Angeles, and it is just unconscionable 
that the price of insulin is unaffordable, and it really breaks 
my heart. And one of the things I hear in my district, 
certainly when I have town halls, is what is Congress doing? 
What kind of oversight are we doing? I think this is a step.
    But, frankly, I will tell you what I want to see, I want to 
see the drug manufacturers brought in. I want to see the PBMs 
brought in and I want us to ask the tough questions, because we 
have got to get down to why this is happening. Why is it that 
insulin has skyrocketed? What has happened? And let's hear from 
them to get to a solution. Frankly, the American people think 
that because they have a big lobby Congress is doing nothing, 
and there may be instances where that is happening. And we have 
to come together to show that we don't care about the lobby. We 
don't care about private industry in the sense that we are 
colluding with them, because sometimes the American people 
think that. So I hope that we are going to have the oversight 
hearing.
    Ms. DeGette. Would the gentlelady yield?
    Ms. Barragan. Sure.
    Ms. DeGette. We are bringing them in next week.
    Ms. Barragan. Fantastic.
    Ms. DeGette. You are welcome.
    Ms. Barragan. And that is why I said this was a great start 
and I am really looking forward to having that conversation 
because this is what the feedback that I am hearing in my 
congressional district. And, frankly, we have been working for 
the people in trying to fix healthcare in this country. It 
hasn't been easy, and it has been very frustrating.
    I want to ask Dr. Kowalski, can you outline how the rising 
cost of insulin affects our minority communities and provide me 
with an estimate, if you have any idea, how many people of 
color die each year because they are unable to afford things 
like insulin, lifesaving medication?
    Mr. Kowalski. I don't know that we have the best data on 
deaths due to lack of insulin, but we certainly know if you're 
socioeconomically disadvantaged this is a huge burden. And we 
heard across the income spectrum, but as you push lower it's 
worse. And JDRF funds research across the country including 
areas that are socioeconomically disadvantaged and often the 
choice that are made are food on the table versus drugs. And 
again, I think this is--it's so, I would call it penny unwise-
pound foolish, because we're cutting back and actually paying 
heavily on the back end whether it's diabetic ketoacidosis, 
diabetes complications, or, tragically, deaths. So this is a 
gross injustice that needs to be fixed.
    Ms. Barragan. Thank you.
    Ms. Marchand Aprigliano, the current Secretary of Health 
and Human Services, Alex Azar, was a former drug company 
executive. While president of Eli Lilly, Secretary Azar oversaw 
huge increases in the price of the company's insulin 
medications. The U.S. list price of Humalog insulin has more 
than doubled. How can we believe the current administration is 
serious about reducing the price of insulin when President 
Trump appoints the man who has contributed to the current drug 
pricing crisis?
    Ms. Marchand Aprigliano. I don't have an answer for that. 
If anybody does have an answer for that I'm happy to listen. 
All I know is that the system that we are currently living in 
is unsustainable for individuals living with diabetes today. 
Solutions come from all different sources and I'm hoping that 
bipartisan support for individuals with diabetes to ensure that 
access to affordable insulin is available for everybody 
regardless of socioeconomic status, regardless of age, every 
single person should not die or ration because of lack of 
access. This is just one step.
    Ms. Barragan. Great, thank you. I yield back.
    Ms. DeGette. Thank you.
    The Chair now recognizes Mr. Carter for 5 minutes.
    Mr. Carter. Thank you very much, Madam Chair, for allowing 
me to sit in on this meeting, and thank all of you for being 
here. This is a very important hearing, I can attest. I 
practiced pharmacy for over 30 years and I have dispensed a lot 
of insulin over those years and I have seen what has happened 
with the price of that and it is concerning.
    But before I begin just a couple of questions, let me say 
that I am proud to have Alex Azar as Secretary of Health and 
Human Services. I think he has done an excellent job. He is 
addressing a situation that the President has made one of his 
primary initiatives, that is, prescription drug pricing and 
specifically insulin drug pricing. Yes, Dr. Azar did serve as, 
or Secretary Azar served as CEO of Eli Lilly, and in many ways, 
I want someone, I want to know what is going on and I want 
someone helping me who does know and has the inside track.
    So having said that I would like to start with Dr. Cefalu? 
I am sorry. I hope I got that right.
    Dr. Cefalu. Cefalu.
    Mr. Carter. Cefalu?
    Dr. Cefalu. Cefalu.
    Mr. Carter. Cefalu, excuse me. Well, thank you for being 
here. I wanted to ask you, what about transparency? Do you 
believe that transparency could help in the price of insulin or 
could play a role in the price of insulin?
    One thing that has always concerned me has been the very 
opaque drug supply chain. I have dealt with this for many 
years. In fact, before I became a member of the Energy and 
Commerce Committee, I served on the Oversight Committee and we 
had a situation where Mylan Pharmaceuticals, it was about the 
price of the EpiPens.
    And I had a chance to talk to the--or ask questions of the 
CEO of Mylan at that time about when it left the manufacturer, 
that is the beginning. I am the end. I am the pharmacist, I am 
dispensing it. When it left the manufacturer, it was $150 and 
that is what she told me and I believe her, and that is what 
she told me, OK. But when I dispensed it at $600, well, what 
happened in between? I am just trying to figure out can 
transparency help us in this situation?
    Dr. Cefalu. Well, transparency in and of itself is not the 
answer. What transparency will do will help us understand the 
factors that go into the flow of dollars. Some of the things 
that you mentioned is trying to understand what happens between 
each entity, and again we have to address this as a systemic 
problem. Going after one entity in the supply chain is not 
going to be the answer.
    So understanding the negotiations between the manufacturer 
and the wholesaler, understanding the fees, the discounts, the 
rebates that occur between the manufacturer, and the pharmacy 
benefit manager. The pharmacy benefit manager, how much rebate 
goes to the health plan, how much is----
    Mr. Carter. But that is transparency. What you are 
describing is transparency.
    Dr. Cefalu. That's transparency. Transparency----
    Mr. Carter. So what you are saying is yes, we do need 
transparency to understand the drug supply chain.
    Dr. Cefalu. Transparency's needed to understand the drug 
supply chain as to a long-term, coming up with a long-term, 
viable solution.
    Mr. Carter. Great. Are you familiar, Doctor, or are any of 
you familiar with CMS's proposed rule changes as it goes to 
discounts being offered at the point of sale, as opposed to the 
way they are now where we don't even know where the discounts 
are going or who they are being applied to? Any of you familiar 
with that? I see you shaking your head. Any thoughts on that?
    Dr. Cefalu. This aligns with some of the conclusions from 
our Working Group, again to make sure the rebate makes it to 
the patient at the point of sale.
    Mr. Carter. Right. And do you believe that is happening 
now?
    Dr. Cefalu. I can't say that's happening now.
    Mr. Carter. Neither can I and neither can anyone. I mean if 
we don't have transparency we don't know. Anyone else care to 
comment on that?
    I am sorry, I can't----
    Mr. Kowalski. JDRF is supportive of this. It's one 
mechanism to remove rebates from the system and pass them along 
to consumers. We need to see this in the commercial sector as 
well. It's a step and I think we've heard there are systemic 
issues, but we see this is an important step.
    Mr. Carter. Good. And yes, ma'am?
    Ms. Marchand Aprigliano. So the fact is that the safe 
harbor protections, the two that have been recommended as part 
of the proposal, the second step in this is a fixed fee per 
transaction. And that is incredibly important when we're 
talking about transparency, because all of a sudden that is 
taken away, the rebates are taken away and what happens is that 
this goes to the patient, not lost in the system.
    Mr. Carter. Good. Well, thank you for pointing that out 
because I would agree with you.
    And, Dr. Cefalu, you are correct, we need transparency but 
that is not the only thing we need. But I would submit to you 
that that is an important part of what we are seeing right now. 
If you look at the mission of the pharmacy benefit managers, 
the PBMs, it will tell you their mission is to keep 
prescription drug prices low. Well, I would ask you, how is 
that working out? Obviously, it is not working out very well at 
all.
    And when you have three PBMs that control almost 80 percent 
of the market, I don't think we have enough competition in that 
area. I want transparency and we need transparency. It is the 
only way we are ever going to see exactly how we can attack 
this problem that impacts everyone. It is a nonpartisan 
problem.
    Thank you, Madam Chair, and I yield back.
    Ms. DeGette. Thank you so much, Mr. Carter. The gentleman 
yields back.
    The ranking member and I have a few more questions that I 
am going to ask and then he might have a few to follow up. But 
I do want to say, you know, Mr.Sarbanes was asking all of you 
how likely you felt it was that Congress would do anything, and 
I don't blame you for not wanting to answer. I will say this. I 
will say this though, you can see that the urgency that we all 
feel about insulin pricing is bipartisan.
    I mean, Mr. Guthrie and I have worked hand-in-hand 
throughout this process. Usually the minority gets a witness 
and we agreed all the witnesses are the majority and the 
minority witnesses today. Ms. Brooks and Dr. Ruiz are both vice 
chairs of the Diabetes Caucus of which I am the chair. We are 
committed to fixing this. So I want to let all of you know this 
and everybody else who is listening, we are committed to a 
bipartisan solution and these questions I am asking are in that 
vein.
    The first one is, Dr. Powers, this is something that I 
don't think has come out. People are asking about the list 
price and some people think it is the manufacturer, some people 
think it is the PBMs. But, in fact, virtually everybody in the 
system ties their pricing to the list price; isn't that 
correct?
    Dr. Powers. That's my understanding.
    Ms. DeGette. And so the higher the list price, everybody in 
the whole system gets a higher reimbursement; isn't that also 
correct?
    Dr. Powers. Dr. Cefalu referred to the Working Group that 
the ADA had and that was their conclusion. I remember that 
Working Group and that was the conclusion of the Working Group.
    Ms. DeGette. Right. So it is not just the manufacturers and 
the PBMs, it is endemic to the whole system which is why we 
need to adopt a lot of these changes; is that right, Dr. 
Cefalu?
    Dr. Cefalu. That is correct. Again, this is a systemic 
problem and it's a dysfunctional system and every level of the 
supply chain needs to have some accountability.
    Ms. DeGette. That is right. And we are starting next week 
with the PBMs and the manufacturers, but as chair I am saying 
that I am not sure that we will be done with that after next 
week.
    Dr. Lipska, I want to ask you. Mr. Sarbanes alluded to this 
issue of the biosimilars, but you held up your vial of insulin. 
That insulin has not changed in a number of years; is that 
right?
    Dr. Lipska. That's correct.
    Ms. DeGette. The only thing that's changed is the price.
    Dr. Lipska. That's correct.
    Ms. DeGette. But yet maybe, Dr. Cefalu, you can talk about 
this too, but yet because of patent evergreening we have had an 
inability to develop a range of generics; is that also correct?
    Dr. Lipska. That's correct. And I think that was alluded to 
in the fact that these companies have increased their prices 
at, you know, at about the same time by the same amount 
suggesting there is very limited competition among them.
    Ms. DeGette. Dr. Cefalu, do you have anything to add about 
that?
    Dr. Cefalu. The newer formulations particularly in type 1, 
and I know that Dr. Kowalski can talk about this, have some 
added advantage over the old human insulins. I think that's 
clear. What I don't want to see is that actually, and there are 
a number of individuals on this panel that can talk to this 
point, I don't think we're there yet as far as innovation for 
the person with diabetes. We can say we have these wonderful 
analog insulins now, but we still have unacceptable rates of 
hypoglycemia which needs to be addressed.
    So to Dr. Kowalski's point, we need to address the issue of 
affordability, but we need to continue the innovation, because 
from our perspective, we still need to advance newer and better 
insulins to address this issue.
    Ms. DeGette. Dr. Cefalu, I totally agree with you. But we 
also need to find ways to get cheaper versions of the insulins 
that we have, right?
    Dr. Kowalski, maybe you can comment on this.
    Mr. Kowalski. Yes, I think at JDRF we often say that we 
believe in competition. That competition drives innovation and 
affordability. And here we have a system where you have three 
similar insulins going up instead of down in price, which is 
confounding, and obviously we've heard that there are a lot of 
reasons that's happening. We aren't saying that the insulin 
companies shouldn't be profitable and invest in next generation 
insulins.
    Ms. DeGette. Right.
    Mr. Kowalski. You heard from Dr. Powers that they're 
selling insulin abroad at a much lower price. So the question 
is, how can we make that happen in the United States of America 
and make sure insulins are affordable? That good insulins--my 
brother as I mentioned in my testimony has benefited from these 
advances in these insulins, but they need to be affordable. You 
do not achieve better outcomes. So having biosimilars or 
generics come to the market is another mechanism to drive 
affordability.
    Ms. DeGette. Thank you.
    OK, I have one last question. I want everybody on the panel 
to briefly answer this question. Next week we are going to be 
having much of the supply chain here. We are going to have all 
three manufacturers and we are going to have the three largest 
PBMs. So I want to ask each of you to tell me and Mr. Guthrie, 
what is the one question next week you would ask of this panel?
    Mr. Guthrie. That was my question. I was going to ask that.
    Ms. DeGette. That was his--see, this is how bipartisan this 
is.
    Mr. Guthrie. Don't make it shorter. Yes, that was actually 
my--asked that question.
    Ms. DeGette. Ms. deVore?
    Ms. deVore. I would ask them why in their FDA filings and 
common talk amongst themselves at the time when they all, when 
Nova Nordisk and Eli Lilly both filed for Humalog and for 
Novolog that their statements included that insulin would 
become cheaper to manufacture and how has that--why has that 
turned out to not be the case.
    Ms. DeGette. Thank you.
    Dr. Cefalu?
    Dr. Cefalu. I would ask them what is the hurdle from 
preventing the negotiations of the supply chain from making it 
down to the patient now.
    Ms. DeGette. OK.
    Dr. Powers?
    Dr. Powers. I'd ask them what is the best plan to get to 
affordable insulin, and why aren't we arriving at that, and 
what are you doing to help with that process.
    Ms. DeGette. Thank you.
    Dr. Lipska?
    Dr. Lipska. I would ask how many more Americans will it 
take to die before prices come down.
    Ms. DeGette. Thank you.
    Ms. Marchand Aprigliano? We will have your name right by 
the end, I think.
    Ms. Marchand Aprigliano. Hopefully.
    My question would be is what are you willing to give up in 
order to make sure that every single person with diabetes has 
access to affordable insulin.
    Ms. DeGette. Thank you.
    Dr. Kowalski?
    Mr. Kowalski. I would ask how can we ensure that people 
with diabetes are paying the net price and why aren't we seeing 
that passed on to the consumer with diabetes.
    Ms. DeGette. Thank you.
    Mr. Guthrie?
    Mr. Guthrie. That was my exact question. I was going to say 
give me your elevator question that you would ask in 30 seconds 
from--but so we have put a lot of research into this. We really 
want to get this right because we have innovation coming, and 
we want to make sure we have innovation in other areas of 
diabetes delivery.
    And so when we met with--I know I have met with at least--
specific manufacturers said that they don't believe anybody is 
paying more than $99. And so you guys are with all the pay, all 
the movement forward, you are saying that is just absolutely 
not--because I want to get to it next week. So you are saying 
that because we may hear that, that through all the programs, 
whatever, people really aren't paying $1,400 a month. You are 
saying there are clear examples of people paying $1,400 a month 
that you know of. Not just anecdotal, people that you know of 
that are paying those full prices, all of you? That will be 
good to know.
    Well, thank you--you wanted to----
    Dr. Lipska. I can answer that question more specifically 
because we asked people in the survey, how much do you pay 
monthly or, sorry, annually for your insulin? And as you can 
expect it was difficult for people to estimate exactly, but the 
ranges, you know, were from zero to 5 to $600, on average, 
throughout the year.
    Mr. Guthrie. OK.
    Mr. Kowalski. Ranking Member Guthrie, in my role at JDRF I 
travel to almost every State in our great country and it is, as 
I stated, the number one question I get with specific examples 
of paying exorbitant out-of-pocket costs. So it's absolutely 
still a prevalent problem.
    Mr. Guthrie. Ms. deVore?
    Ms. deVore. And I can leave this receipt for you. It is a 
copy from January 19th of 2019 for $728.49 from a friend of 
mine.
    Mr. Guthrie. Thank you.
    All right, I appreciate that. I just want to get that on 
the record as we go forward.
    Ms. DeGette. Thank you so much.
    I want to thank all the witnesses for coming today. And--
let me get to my conclusion here. And I want to thank all of 
the--this way? There we go. I want to thank everybody for 
coming.
    Pursuant to committee rules, Members have 10 business days 
to submit additional questions for the record to be answered by 
witnesses who have appeared before the subcommittee. And I 
would ask all of you to respond promptly to any such questions 
that you should receive, in particular if they are relevant to 
next week's hearing that would help us in the hearing.
    And with that--and we also may invite some of you back at 
some point to brief us as to whether the companies are making 
any progress. We are serious about this. And my staff says that 
we might invite them back in September, but I think we might 
invite them back sooner because we are really committed to 
doing this. And with that the subcommittee is adjourned.
    [Whereupon, at 12:52 p.m., the subcommittee was adjourned.]
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