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


                    IMPROVING DRUG PRICING TRANSPARENCY AND 
                      LOWERING PRICES FOR AMERICAN CONSUMERS

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

                                HEARING

                               BEFORE THE

                         SUBCOMMITTEE ON HEALTH

                                 OF THE

                    COMMITTEE ON ENERGY AND COMMERCE
                        HOUSE OF REPRESENTATIVES

                     ONE HUNDRED SIXTEENTH CONGRESS

                             FIRST SESSION

                               __________

                              MAY 21, 2019

                               __________

                           Serial No. 116-37
                           
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]                           


      Printed for the use of the Committee on Energy and Commerce

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                        energycommerce.house.gov
                        
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                    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 Health

                       ANNA G. ESHOO, California
                                Chairwoman
ELIOT L. ENGEL, New York             MICHAEL C. BURGESS, Texas
G. K. BUTTERFIELD, North Carolina,     Ranking Member
    Vice Chair                       FRED UPTON, Michigan
DORIS O. MATSUI, California          JOHN SHIMKUS, Illinois
KATHY CASTOR, Florida                BRETT GUTHRIE, Kentucky
JOHN P. SARBANES, Maryland           H. MORGAN GRIFFITH, Virginia
BEN RAY LUJAN, New Mexico            GUS M. BILIRAKIS, Florida
KURT SCHRADER, Oregon                BILLY LONG, Missouri
JOSEPH P. KENNEDY III,               LARRY BUCSHON, Indiana
    Massachusetts                    SUSAN W. BROOKS, Indiana
TONY CARDENAS, California            MARKWAYNE MULLIN, Oklahoma
PETER WELCH, Vermont                 RICHARD HUDSON, North Carolina
RAUL RUIZ, California                EARL L. ``BUDDY'' CARTER, Georgia
DEBBIE DINGELL, Michigan             GREG GIANFORTE, Montana
ANN M. KUSTER, New Hampshire         GREG WALDEN, Oregon (ex officio)
ROBIN L. KELLY, Illinois
NANETTE DIAZ BARRAGAN, California
LISA BLUNT ROCHESTER, Delaware
BOBBY L. RUSH, Illinois
FRANK PALLONE, Jr., New Jersey (ex 
    officio)
                             
                             C O N T E N T S

                              ----------                              
                                                                   Page
Hon. Anna G. Eshoo, a Representative in Congress from the State 
  of California, opening statement...............................     1
    Prepared statement...........................................     3
Hon. Michael C. Burgess, a Representative in Congress from the 
  State of Texas, opening statement..............................     3
    Prepared statement...........................................     5
Hon. Frank Pallone, Jr., a Representative in Congress from the 
  State of New Jersey, opening statement \1\.....................     6
    Prepared statement...........................................     7
Hon. Jan Schakowsky, a Representative in Congress from the State 
  of Illinois, opening statement.................................     7
    Prepared statement...........................................     8
Hon. Greg Walden, a Representative in Congress from the State of 
  Oregon, opening statement......................................     9
    Prepared statement...........................................    11
Hon. Eliot L. Engel, a Representative in Congress from the State 
  of New York, prepared statement................................   121

                               Witnesses

Lisa Meengs Joldersma, Senior Vice President, Pharmaceutical 
  Research and Manufacturers of America..........................    12
    Prepared statement...........................................    15
Kristin Bass, Chief Policy and External Affairs Officer, 
  Pharmaceutical Care Management Association.....................    24
    Prepared statement...........................................    26
Madelaine Feldman, M.D., Coalition of State Rheumatology 
  Organizations, Alliance of Specialty Medicine, President.......    33
    Prepared statement...........................................    35
Frederick Isasi, JD, MPH, Executive Director, Families USA.......    43
    Prepared statement...........................................    45
Mark Miller, Ph.D., Executive Vice President of Healthcare, 
  Arnold Ventures................................................    53
    Prepared statement...........................................    55
Douglas Holtz-Eakin, Ph.D., President, American Action Forum.....    70
    Prepared statement...........................................    72

                           Submitted Material

H.R. 2064, to amend title XI of the Social Security Act to 
  require manufacturers of certain drugs, devices, biologicals, 
  and medical supplies, submitted by Ms. Eshoo...................   122
H.R. 2069, Stopping the Pharmaceutical Industry from Keeping 
  drugs Expensive Act............................................   127
H.R. 2087, the Drug Price Transparency Act, submitted by Ms. 
  Eshoo..........................................................   138
H.R. 2115, the Public Disclosure of Drug Discounts Act, submitted 
  by Ms. Eshoo...................................................   145
H.R. 2296, the FAIR Drug Pricing Act of 2019, submitted by Ms. 
  Eshoo..........................................................   148
H.R. 2376, the Prescription Pricing for the People Act of 2019, 
  submitted by Ms. Eshoo.........................................   157
H.R. 2757, the CLAY Act, submitted by Ms. Eshoo..................   162

----------
\1\ Mr. Butterfield presented Mr. Pallone's statement orally.
Letter of May 21, 2019, from Monica M. Bertagnolli, M.D., 
  President, FACS, Fellow American Society of Clinical Oncology, 
  to Mr. Pallone and Mr. Walden, submitted by Eshoo..............   168
Letter of May 21, 2019, from Lauren Aronson, Executive Director, 
  The Campaign for Sustainable Rx Pricing, to Ms. Eshoo, 
  submitted by Ms. Eshoo.........................................   170
Letter of May 21, 2019, from Nancy A. LeaMond, Executive Vice 
  President and Chief Advocacy and Engagement Officer, AARP, to 
  Mr. Pallone, et al., submitted by Ms. Eshoo....................   173
Letter of May 21, 2019, from Bari Talente, Esq., Executive Vice 
  President, Advocacy, National Multiple Sclerosis Society, to 
  Ms. Schakowsky, submitted by Ms. Eshoo.........................   175
Letter of May 1, 2019, from Alliance of Specialty Medicine, et 
  al, submitted by Ms. Eshoo.....................................   186

 
 IMPROVING DRUG PRICING TRANSPARENCY AND LOWERING PRICES FOR AMERICAN 
                               CONSUMERS

                              ----------                              


                         TUESDAY, MAY 21, 2019

                  House of Representatives,
                            Subcommittee on Health,
                          Committee on Energy and Commerce,
                                                    Washington, DC.
    The subcommittee met, pursuant to call, at 10:34 a.m., in 
the John D. Dingell Room 2123, Rayburn House Office Building, 
Hon. Anna G. Eshoo (chairwoman of the subcommittee) presiding.
    Members present: Representatives Eshoo, Engel, Butterfield, 
Matsui, Sarbanes, Lujan, Schrader, Kennedy, Cardenas, Welch, 
Ruiz, Dingell, Kuster, Kelly, Barragan Blunt Rochester, Burgess 
(subcommittee ranking member), Upton, Shimkus, Guthrie, 
Griffith, Bilirakis, Long, Bucshon, Brooks, Mullin, Hudson, 
Carter, Gianforte, and Walden (ex officio).
    Also present: Representative Schakowsky.
    Staff present: Jacquelyn Bolen, Professional Staff; Waverly 
Gordon, Deputy Chief Counsel; Tiffany Guarascio, Deputy Staff 
Director; Josh Krantz, Policy Analyst; Una Lee, Senior Health 
Counsel; Aisling McDonough, Policy Coordinator; Joe Orlando, 
Staff Assistant; Alivia Roberts, Press Assistant; Tim Robinson, 
Chief Counsel; Samantha Satchell, Professional Staff Member; C. 
J. Young, Press Secretary; Mike Bloomquist, Minority Staff 
Director; S. K. Bowen, Minority Press Assistant; Margaret 
Tucker Fogarty, Minority Staff Assistant; Peter Kielty, 
Minority General Counsel; Ryan Long, Minority Deputy Staff 
Director; James Paluskiewicz, Minority Chief Counsel, Health; 
and Brannon Rains, Minority Staff Assistant.
    Ms. Eshoo. Good morning, everyone. The Subcommittee on 
Health will now come to order. The Chair now recognizes herself 
for five minutes for an opening statement.

 OPENING STATEMENT OF HON. ANNA G. ESHOO, A REPRESENTATIVE IN 
             CONGRESS FROM THE STATE OF CALIFORNIA

    Last week, our subcommittee held a hearing to essentially 
follow the money in the drug supply chain. We came away with 
much valuable information, but we also found there are many 
secrets, secret decisions about how drugs are priced, secret 
deals between drug companies and the PBMs, and secret 
agreements between PBMs and insurers.
    Today, we're considering seven bipartisan bills that 
essentially unmask the secrets, that secret process, and ensure 
that low-income seniors can afford their medications and build 
on the drug-pricing package passed by the House last week.
    The first and very important bill ensures that seniors can 
afford their drugs. Representatives Cunningham and Bilirakis 
introduced the Creating Lower Cost Alternatives for your 
Prescription Drugs Act. The bill eliminates cost-sharing for 
generic drugs for low-income Medicare enrollees and caps their 
out-of-pocket costs for other drugs. Nearly 25 percent of 
seniors who take drugs report it is difficult for them to 
afford their medications. This bill will not only save seniors 
money, it will also help save their lives in many instances.
    The second group of bills exposes how drug prices are set. 
The SPIKE Act, proposed by Representatives Horsford and Reed, 
and the Fair Drug Pricing Act, proposed by Representatives 
Schakowsky and Francis Rooney, require drug manufacturers to 
justify large spikes in drug prices.
    The Reporting Accurate Drug Prices Act, proposed by 
Representatives Doggett and Buchanan, requires manufacturers to 
report the average sales price of Medicare Part B, ``B'' as in 
boy, drugs. This bill makes sure Medicare is paying the right 
price for Part B drugs.
    The Sunshine for Samples Act, proposed by Representatives 
Chu and Nunes--all kinds of partners in this--directs companies 
to report the price and quantity of the free samples of drugs, 
devices, and medical supplies they give to healthcare 
providers. The bill does not prohibit free samples. Instead, it 
will help us to see how free samples influence drug pricing and 
distribution.
    The third group of bills exposes the deals between PBMs and 
the other stakeholders in the drug supply chain. The Public 
Disclosure Act of Drug Discounts Act, authored by 
Representatives Spanberger and Holding, requires PBMs to report 
the discounts they negotiate with drug manufacturers. This 
transparency will help to ensure the discount is passed down 
through the chain to patients. To patients--I want to 
underscore that.
    The Prescription Pricing for the People Act, authored by 
Representatives Nadler and Collins, directs the FTC to review 
PBMs' behavior and whether it is anticompetitive or not. At our 
hearing last week, we learned that three PBMs control the 
majority of the market, and those PBMs own large pharmacy 
chains and specialty pharmacies, and we believe that has 
potential conflicts of interest. With this bill, the FTC will 
scrutinize PBMs to ensure there are not any distortions of the 
market.
    Last week, I said we needed to examine the system from 
beginning to end because, in order to fix it, we have to 
understand all the parts of it first, and then act. With these 
seven bills today, I think we are taking important action. Each 
bill is directed to reform the drug supply chain, and 
transparency is only as good as the accountability and 
enforcement that has to follow.
    So, I want to welcome our witnesses, thank them for being 
here today with us. We look forward to your important 
testimony.
    [The prepared statement of Ms. Eshoo follows:]

                Prepared Statement of Hon. Anna G. Eshoo

    Last week, our Subcommittee held a hearing to follow the 
money in the drug supply chain. Instead of answers, we found 
secrets.
    Secret decisions about how drugs are priced. Secret deals 
between drug companies and the PBMs, and secret agreements 
between PBMs and insurers.
    Today, we consider seven bipartisan bills that unmask the 
secrets and ensure that low-income seniors can afford their 
medications. The bills build on the drug pricing package passed 
by the House last week.
    The first and most important bill makes sure seniors can 
afford their drugs. Representatives Cunningham and Bilirakis 
introduced the Creating Lower Cost Alternatives for Your 
Prescription Drugs Act. The bill eliminates cost-sharing for 
generic drugs for low-income Medicare enrollees and caps their 
out-of-pocket costs for other drugs. Nearly 25 percent of 
seniors who take drugs report it is difficult for them to 
afford their medications. This bill will not only save seniors 
money, it can also save lives.
    The second group of bills expose how drug prices are set.
    The SPIKE Act, proposed by Representatives Horsford and 
Reed, and the FAIR Drug Pricing Act, proposed by 
Representatives Jan Schakowsky and Francis Rooney require drug 
manufacturers to justify large spikes in drug prices.
    The Reporting Accurate Drug Prices Act, proposed by 
Representatives Doggett and Buchanan require manufacturers to 
report the average sales price of Medicare Part B drugs. This 
bill makes sure Medicare is paying the right price for Part B 
drugs.
    The Sunshine for Samples Act, proposed by Representatives 
Chu and Nunes, directs companies to report the price and 
quantity of the free samples of drugs, devices, and medical 
supplies they give to healthcare providers. The bill does not 
prohibit free samples. Instead, it will help us see how free 
samples influence product pricing and distribution.
    The third group of bills expose the secret deals between 
PBMs and the other stakeholders in the drug supply chain.
    The Public Disclosure of Drug Discounts Act authored by 
Representatives Spanberger and Holding requires PBMs to report 
the discounts they negotiate with drug manufacturers. This 
transparency will help to ensure the discount is passed down 
through the chain to patients.
    The Prescription Pricing for the People Act authored by 
Representatives Nadler and Collins directs the Federal Trade 
Commission to review PBMs' anticompetitive behaviors. At our 
hearing last week, we learned that three PBMs control the 
majority of the market and those PBMs own large pharmacy chains 
and specialty pharmacies, a potential conflict of interest. 
With this bill, the FTC will scrutinize PBMs to ensure there 
are not any distortions of the market.
    Last week I said we needed to examine the system from 
beginning to end because in order to fix it, we have to 
understand it, and then we will act. With these seven bills 
today, we're taking important action. Each bill is directed to 
reform the drug supply chain, but transparency is only as good 
as the accountability and enforcement that must follow.
    Welcome to our witnesses and we look forward to your 
testimony.

    Ms. Eshoo. And now I recognizes the ranking member of the 
Subcommittee on Health, Mr. Burgess, for five minutes for his 
opening statement.

OPENING STATEMENT OF HON. MICHAEL C. BURGESS, A REPRESENTATIVE 
              IN CONGRESS FROM THE STATE OF TEXAS

    Mr. Burgess. I thank the chairwoman for the recognition.
    We have convened this morning once again to address an 
issue that affects and complicates the lives of many of our 
constituents, that of drug pricing. When I return home to north 
Texas and conduct meetings in my district office, I frequently 
hear the very personal stories of individuals and families who 
are struggling to afford their medications.
    Unfortunately, solving this problem is not as 
straightforward as you might hope. As exemplified by our recent 
drug supply chain hearing, there are a number of stakeholders 
and they are interwoven throughout the supply chain, making up 
the existing convoluted system.
    Our counterparts on the Ways and Means Committee have taken 
a first pass at addressing transparency in H.R. 2113, the STAR 
Act. On its face, transparency sounds like a useful and good 
thing. In other markets in the United States, people can shop 
around for goods and seek the best price or value. In 
healthcare, that is more easily said than done because of the 
intricate nature of the system, especially the drug supply 
chain. It is especially important that, as we evaluate this 
legislation, we consider the possibility of unintended 
consequences for both the patient and for the market.
    This committee laid the groundwork in 21st Century Cures 
for the development and treatments and cures that really--until 
the passage of that bill, some of those things were science 
fiction and now they are becoming reality. Two and a half years 
after Cures was signed into law, I am receiving meeting 
requests from stakeholders who bring good news about how this 
law is producing real results for patients.
    We must strike this delicate balance with the policies that 
we pass through this committee to ensure that they do not 
dampen the success or deter future investment in biomedical 
research and innovation. No surprise, I do have some thoughts 
about Section 2 of H.R. 2113, which requires a notification and 
public posting of companies that launch a drug at a price of 
$26,000 or more. So, there are some newer therapies, and these 
may be a single dose or a single shot, that can cure an 
individual of a rare disease. The cost of research and 
development and clinical trials that goes into these treatments 
is immense. We must consider the potential impact that this 
requirement could have on the industry. The incentives for drug 
development in this space are working, but scaring companies 
away from investing in such drugs does not serve patients who 
might benefit from this innovation.
    I am reminded of the comments of a former colleague who 
served before I got here, J. C. Watts of Oklahoma, who said, 
``you can attribute a lot of things to capitalism and capital, 
but it's not necessarily courageous.'' So, if we make it 
difficult, capital will go elsewhere. And yet, we want the 
innovations in this space. So, the FAIR Act does not include 
this launch-price trigger, and I think that is a good place to 
start.
    I would also like to take a minute and express some 
concerns about Section 3 of H.R. 2113. This policy would 
require manufacturers of drugs, devices, biologics, and medical 
supplies to report on the samples they give to healthcare 
providers each year, and this information would be publicly 
posted. I fear that this policy could lead to a sort of public 
shaming of companies that are trying to benefit patients. 
Should such a policy deter manufacturers from providing samples 
to physicians, I promise you, patients will be harmed.
    As a physician, I can say that I have seen the benefits of 
samples for patients firsthand. Sometimes a patient's insurer 
requires a prior authorization process that delays the 
patient's access to medication. A sample of the medication 
allows the patient to begin receiving timely treatment. 
Additionally, physicians may use samples in clinical decision 
making. For example, if a new drug has come to market that may 
work better for a patient, the doctor can use the sample to 
establish whether or not the patient responds in an improved 
way to the new drug without subjecting the patient to financial 
burden or, if side effects develop, to an unnecessary purchase.
    Again, I appreciate the bipartisan work that the Ways and 
Means Committee has done. However, we are the Energy and 
Commerce Committee. We should be in the vanguard. We should be 
in the lead. And I believe there are some areas in this policy 
that we need to think through a little more thoroughly.
    I want to thank all of our witnesses in advance for their 
thoughts on this legislation, and I look forward to working in 
a bipartisan fashion.
    I yield back my time.
    [The prepared statement of Mr. Burgess follows:]

             Prepared Statement of Hon. Michael C. Burgess

    Thank you, Madam Chair. We have convened this morning once 
again to address an issue that affects and complicates the 
lives of many of our constituents--drug pricing. When I return 
home to North Texas and conduct meetings in my district office, 
I frequently hear the personal stories of individuals and 
families who are struggling to afford their medications.
    Unfortunately, solving this problem is not as 
straightforward as we all would hope. As exemplified by our 
recent drug supply chain hearing, there are various 
stakeholders interwoven throughout the supply chain, making up 
the existing convoluted system. Our counterparts on the Ways 
and Means Committee have taken a first pass at addressing 
transparency in H.R. 2113, the STAR Act.
    On its face, transparency sounds like a useful and good 
thing. In other markets in the United States, individuals can 
shop around for goods and seek the best price or value. In 
healthcare, that is more easily said than done because of the 
intricate nature of the system, especially the drug supply 
chain. It is especially important that as we evaluate this 
legislation we consider the unintended consequences for both 
the patient and the market.
    This Committee laid the groundwork in 21st Century Cures 
for the development of treatments and cures that Americans 
have, until now, only dreamed were possible. Nearly two and a 
half years after Cures was signed into law, I am receiving 
countless meeting requests from stakeholders who bring good 
news about how this law is producing real results for patients. 
We must strike a delicate balance with the policies we pass 
through this Committee to ensure they do not put a damper on 
this success or deter investment in biomedical research and 
innovation.
    I do have some thoughts about Section 2 of H.R. 2113, which 
requires a notification and public posting of companies that 
launch a drug at a price of $26,000 or more. There are one-shot 
therapies that can cure individuals of rare diseases, and the 
cost of research and development that goes into these 
treatments is immense. We must consider the potential impact 
that this requirement could have on the industry. The 
incentives for drug development in this space are working and 
scaring companies away from investing in such drugs does not 
serve patients who might benefit from this innovation. I am 
pleased that Ms. Schakowsky's FAIR Act does not include this 
launch price trigger.
    I would also like to take a minute to express some concerns 
about Section 3 of the H.R. 2113. This policy would require 
manufacturers of drugs, devices, biologics, and medical 
supplies to report on the samples they give to healthcare 
providers each year, and this information would be publicly 
posted. I fear that this policy too could lead to a sort of 
public shaming of companies that are trying to benefit 
patients. Should such a policy deter manufacturers from 
providing samples to physicians, patients will be harmed.
    As a physician, I can say that I have seen the benefit of 
samples for patients first-hand. Sometimes a patient's insurer 
requires a burdensome prior authorization process that delays a 
patient's access to medication. A sample of the medication 
allows the patient to receive more timely treatment. 
Additionally, physicians may use samples in clinical decision 
making. For example, if a new drug has come to market that may 
work better for a patient, a physician can use a sample to 
establish whether or not the patient responds better to the new 
drug without subjecting the patient to whatever the financial 
burden of the drug may be.
    Again, I appreciate the bipartisan work that the Ways and 
Means Committee has done, but I do believe that there are some 
areas of this policy that we need to think through thoroughly. 
Thank you to our witnesses for offering their thoughts on this 
legislation, and I look forward to working on this in a 
bipartisan manner.

    Ms. Eshoo. The gentleman yields, and I thank him for his 
opening statement.
    I now would like to recognize the gentleman from South 
Carolina, who is going to offer the chairman of the full 
committee's opening statement.
    Mr. Butterfield. Thank you, Ms. Eshoo.
    Let me correct the record. I am from North Carolina.
    Ms. Eshoo. I am sorry.
    Mr. Butterfield. I know you Californians, whenever you hear 
the word ``Carolina,'' you think of the South.
    Ms. Eshoo. Well, we have north and south in California, 
too. So, I should have been--I am sorry for not being accurate.
    Mr. Butterfield. Thank you for your friendship.
    Ms. Eshoo. A great State.
    Mr. Butterfield. Thank you.
    Ms. Eshoo. The great State of, right?
    [Whereupon Mr. Butterfield read Mr. Pallone's statement.]

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

    Mr. Butterfield. Thank you, Ms. Eshoo, for holding this 
latest hearing in our series on prescription drug pricing. I 
say ``latest hearing'' because this is not the first and 
certainly will not be the last.
    Democrats are serious about the problem of rising drug 
prices. It is a complicated problem, I acknowledge that. Its 
consequences are very far-reaching.
    I represent the 1st District of North Carolina, where many 
hard-working families are struggling every day to afford the 
basic necessities of life. Steep price hikes have the potential 
to force these communities into decisions between paying their 
bills and purchasing medications that are vital to their 
health. All too often, these circumstances result in rationing 
prescription drugs or the abandonment of treatment altogether.
    And so, Madam Chair, I have long held that quality and 
affordable healthcare is a basic necessity, a right that every 
American must have equal access. Consumers should be able to 
anticipate the price of their prescriptions and must be able to 
rely on those prices to remain stable from year to year.
    All of us understand that corporations exist to make a 
profit. I have acknowledged that in many hearings and I 
understand that dynamic. Pharmaceutical investment and 
innovation have led to unprecedented breakthroughs in 
treatments that have improved health outcomes and patient 
quality of life.
    However, unlike most consumer products, for many a 
prescription is the literal difference between life and death. 
Therefore, the need to fund new innovations must be balanced. 
It must be balanced with the obligation to make medications 
widely available and affordable to the public.
    And so, we find ourselves here today, hopefully in a 
bipartisan way, in pursuit of that goal; as Congress continues 
to work with every entity along the pharmaceutical supply chain 
to find practical solutions to the pricing issue that both 
support innovation and reduce costs for consumers.
    I look forward to today's discussion. I thank those who 
have authored these amendments. And, in particular, I thank the 
gentlelady from Illinois for her passion and her leadership on 
this issue.
    [The prepared statement of Mr. Pallone follows:]

             Prepared Statement of Hon. Frank Pallone, Jr.

    Thank you, Chairwoman Eshoo, for holding this latest 
hearing in our series on prescription drug pricing.
    The problem of rising drug prices is a complicated one and 
its consequences are far reaching. I represent the First 
District of North Carolina, where many hard-working families 
are struggling to afford basic necessities like housing, 
childcare, and more than ever, their prescription drugs.
    Steep price hikes have the potential to force these 
communities into decisions between paying their bills and 
purchasing medications that are vital to their health. All too 
often these circumstances result in rationing prescriptions or 
the abandonment of treatment altogether.
    I have long held that quality and affordable healthcare is 
a basic necessity, a right that every person in the United 
States must have equal access to. Consumers should be able to 
anticipate the price of their prescriptions and must be able to 
rely on those prices to remain stable from year to year.
    All of us understand that corporations exist to make a 
profit. Pharmaceutical investment and innovation have led to 
unprecedented breakthroughs in treatment that have improved 
health outcomes and patient quality of life. However, unlike 
most consumer products, for many, a prescription is the literal 
difference between life and death. Therefore, the need to fund 
new innovations must be balanced with the obligation to make 
medications widely available and affordable to the public.
    We find ourselves here today in pursuit of that goal as 
Congress continues to work with every entity along the 
pharmaceutical supply chain to find practical solutions to the 
pricing issue that both support innovation and reduce costs for 
consumers. I look forward to today's discussion.

    Ms. Eshoo. I yield at this time to the gentlelady from 
Illinois, Ms. Schakowsky.

 OPENING STATEMENT OF HON. JAN SCHAKOWSKY, A REPRESENTATIVE IN 
              CONGRESS FROM THE STATE OF ILLINOIS

    Ms. Schakowsky. I thank the gentleman for yielding. And I 
thank the chairwoman of this subcommittee for allowing me to 
wave on to this hearing on a topic so important to all of us.
    The pharmaceutical industry is worth almost $1 trillion, 
and I believe they are holding American consumers hostage. Our 
constituents are suffering and some are dying--we actually have 
the names of the dead, some of them--because they can't afford 
life-saving and life-enhancing drugs that they need.
    And why have drug prices skyrocketed, sometimes a thousand 
percent? Well, that is a really good question. And because drug 
companies have hidden the price policies, consumers have no 
choice but to pay the price, if they can--until now. My 
legislation, the Fair Drug Pricing Act, H.R. 2296, is a 
bipartisan, bicameral bill that will force the drug companies 
to be transparent, which is the very least that we can expect 
from them.
    The bill does two things. Pharmaceutical manufacturers must 
notify HHS and submit a transparency and justification report 
30 days before they raise the price of certain drugs by more 
than 10 percent or by more than 25 percent over three years. 
The report will require manufacturers to provide the 
manufacturing, research, and development costs for the drug, 
net profits attributed to the drug, marketing and advertising 
spending on drugs, and others.
    Unlike H.R. 2069, the SPIKE Act, which is also being 
considered today, my bill does not allow manufacturers to pick 
and choose what information that they would like to disclose. 
And unlike the SPIKE Act, my bill requires HHS to make all of 
the nonproprietary information from these reports' public and 
available to everyone online for everyone to see.
    For the first time ever, this bill will offer taxpayers 
nationwide notice of price increases and bring basic 
transparency to the market for prescription drugs. The bills 
being considered today are only a start, and transparency is 
only a piece of the puzzle in bringing down the cost of 
prescription drugs.
    These bills are all bipartisan, and I am proud that 
Representative Rooney joined me in reintroducing this. Senator 
Baldwin and Senator Braun in the Senate are also doing this 
bill. So, I hope that we will have positive consideration of 
it.
    And let me also enter into the record a very important 
letter from the National Multiple Sclerosis Society, 
representing people who are having trouble paying for the 
spiked prices in their drugs.
    I yield back.
    [The prepared statement of Ms. Schakowsky follows:]

               Prepared Statement of Hon. Jan Schakowsky

    And thank you to both the Chairman and Subcommittee Chair 
for allowing me to waive on to this hearing on a topic that is 
deeply important to me.
    PhRMA is opposed to any legislation that would require 
pharmaceutical manufacturers to provide basic transparency to 
the American people.
    The pharmaceutical industry is worth almost ONE TRILLION 
dollars and they are holding American consumers hostage.
    Our constituents are suffering, and some are dying.
    We have their names.
    Because they can't afford the live-saving, life enhancing 
drugs they need.
    Why have drug prices skyrocketed?
    Sometimes by 1000 percent?
    That's a really good question.
    And because drug companies hide their pricing policies, 
consumers have no choice but to pay the price.
    Until now.
    My legislation, the FAIR Drug Pricing Act, H.R. 2296, is a 
bipartisan, bicameral bill that will force the drug companies 
to be transparent-which is the least we can expect from them.
    The bill does two things.
    Pharmaceutical manufacturers must notify HHS and submit a 
transparency and justification report 30 days before they 
increase the price of certain drugs by more than 10 percent-or 
by more than 25 percent over three years.
    The report will require manufacturers to provide:

     the manufacturing, research and development costs 
for the drug;
     net profits attributable to the drug;
     marketing and advertising spending on the drug;
     and other information that the Secretary decides 
is necessary.

    Unlike H.R. 2069, the SPIKE Act, which is also being 
considered today, my bill does not allow manufacturers to pick 
and choose what information they would like to disclose.
    And unlike the SPIKE Act, my bill requires HHS to make ALL 
of the non-proprietary information from these reports publicly 
available online for anyone to access.
    For the first time ever, this bill will offer taxpayers 
nationwide notice of price increases and bring basic 
transparency to the market for prescription drugs.
    The bills being considered today are only a start, and 
transparency is only one piece of the puzzle in bringing down 
the cost of prescription drugs.
    These bills are all bipartisan, and I am proud that 
Representative Rooney joined me to reintroduce my bill this 
Congress.
    Senator Baldwin reintroduced the FAIR Drug Pricing Act in 
the Senate earlier this month and was also joined by Senator 
Braun.
    The American people are crying out.
    Prescription drug prices are literally killing them.
    We must act, and we are being given the opportunity to do 
so right now.
    When the FAIR Drug Pricing Act passes, PhRMA will finally 
have to answer to the American people.
    I believe that we have a responsibility to protect and 
serve the best interests of the American people.
    Not the interests of extraordinarily wealthy pharma 
executives and Wall Street investors.

    Ms. Eshoo. The gentlewoman yields back. And now, I would 
like to recognize the ranking member of the full committee and 
offer my condolences to him on your Trailblazers. They played 
well, but not good enough.
    [Laughter.]
    Mr. Walden. Really? This is how we are going to start?
    [Laughter.]
    Yes. Boy, and I was going to say nice things about you this 
morning.
    [Laughter.]
    Ms. Eshoo. The gentleman is recognized for five minutes for 
his opening statement.

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

    Mr. Walden. It was tough in overtime last night.
    Ms. Eshoo. It was. It was.
    Mr. Walden. And it was close.
    Ms. Eshoo. It was a great game.
    Mr. Walden. ``Close'' only counts in horseshoes, not 
basketball, but we appreciate that, Madam Chair. Yes, thanks 
for that reminder this morning.
    [Laughter.]
    Now let's get on about our serious business.
    Patients need our help. They need our help to force down 
the price of their medical care, especially when it comes to 
the cost of drugs. And what good is a prescription if a patient 
cannot afford to pay for their medicine? I mean, that is how it 
kind of comes down. Drug pricing is, obviously, of great 
concern to all Americans and to our President. It has come up 
at nearly every one of the 20 town halls I have done so far 
this year in my district. Blockbuster drugs come with budget-
busting prices.
    Too often, prices continue to rise, and while there are 
numerous reasons given, patients rely on these medications. 
When market forces weaken or fail, then we need to step in with 
Federal common-sense legislation.
    And we have taken steps recently by passing into law a 
requirement that companies pay the proper rebate under the 
Medicaid program. We have passed the Orange and Purple Book 
reforms on the House Floor. And while I remain dismayed by the 
unnecessarily partisan approach, when the bill came to the 
floor, we did reach agreement here through bipartisan 
negotiations on several other provisions that will increase the 
availability of generic drugs.
    This subcommittee has also built off the foundation we laid 
last Congress by examining how the Medicare program pays for 
drugs and peeling back the layers of pharmaceutical pricing and 
supply chain. And I thank the Chair for her leadership in that 
regard.
    I am glad we are examining legislation I hope we can find 
bipartisan agreement on, but we must also ensure that in these 
efforts we are actually pursuing policies that will provide a 
benefit for patients. We have got to put the patient first. We 
need to ensure that, as we work to shine a light on how drugs 
come to market and are priced, that we realize that the market 
must also be sustainable to produce the next generation of 
cures and treatments.
    We are living in an amazing time of innovation. It is 
producing cures for conditions we didn't even have a name for 
30 years ago. The promise of what lies ahead is truly 
staggering in their ability to relieve human suffering from 
conditions from hemophilia, to sickle cell, to muscular 
dystrophy. We are on the cutting edge of solving all of those.
    So, in our efforts to bring more transparency to the 
system, which I support, we must inherently first do no harm. 
For example, I am concerned that provisions of some of the 
bills before us could actually allow manufacturers to back in 
the rebates paid by their competitors or allow wholesaler 
stockpiling that could lead to shortages in an attempt to 
provide notification of price increases.
    As I mentioned, this committee has been a leader, a leader 
in encouraging the innovation that patients are benefitting 
from today through our work on the FDA user fees and from the 
work to pass the 21st Century Cures, led by my friend and 
colleague, Fred Upton. While the results of those efforts are 
truly remarkable, we also know that the cost of bringing a drug 
to market, especially one that targets an orphan or neglected 
disease, is high. We cannot ignore that. We should not randomly 
categorize as bad actors those who have done what this 
committee has, frankly, encouraged them to do, investing in 
cutting-edge therapies like gene editing and regenerative 
medicine, because their list price is over an arbitrary amount. 
Because I can tell you, these new drugs improve or save lives, 
and that is better than investing in just another me-too drug.
    In that light, I believe any policies pursued by this 
committee must put the patient front and center. That is why, 
as currently drafted, I am concerned about some of the policies 
that could have the risk of decreasing the ability of 
physicians to provide patients samples of drugs, to help those 
who cannot afford their medication, those who have prior-
authorization or coverage issues, from starting treatment, to 
inform medical judgment, or help patients manage side effects 
related to their current medication. Now I think working in a 
bipartisan spirit, as we have done before, with the help of our 
witnesses today, I am hopeful we can address these concerns.
    And on a final note, thanks to Chairman Eshoo and thanks to 
Chairman Pallone for exercising our committee's jurisdiction on 
these bills. That is important, too. While most have been 
marked up by other committees, we are, after all, the committee 
of primary jurisdiction.
    So, with that, Madam Chair, thanks for the hearing. Thanks 
for your condolences on the Blazers. And I will yield back the 
balance of my time.
    [The prepared statement of Mr. Walden follows:]

                 Prepared Statement of Hon. Greg Walden

    Patients need our help to force down the price of their 
medical care, especially when it comes to the cost of drugs. 
What good is a prescription if a patient cannot afford to pay 
for their medicine?
    Drug pricing is of great concern to all Americans. It's 
come up at nearly every one of the 20 town halls I've held this 
year in my district. Blockbuster drugs come with budget-busting 
prices. Too often prices continue to rise, and while there are 
numerous reasons given, patients rely on these medications. 
When market forces weaken or fail, then we need to step in with 
federal, commonsense legislation.
    We have taken steps recently, by passing into law a 
requirement that companies pay the proper rebate under the 
Medicaid program. We have passed the orange and purple book 
reforms on the House Floor. And while I remain dismayed by the 
unnecessarily partisan approach when the bill came to the 
Floor, we did reach agreement through bipartisan negotiation on 
several other provisions that will increase the availability of 
generic drugs.
    This subcommittee has also built off the foundation we laid 
last Congress by examining how the Medicare program pays for 
drugs and peeling back the layers of the pharmaceutical pricing 
and supply chain, and I thank the Chair for her leadership in 
that regard.
    I am glad we are examining legislation that I hope we can 
find bipartisan agreement on, but we must also ensure that in 
these efforts we are actually pursuing policies that will 
provide a benefit for patients. We need to ensure that as we 
work to shine a light on how drugs come to market and are 
priced that we realize that the market must also be sustainable 
to produce the next generation of cures and treatments. We are 
living in a time of innovation that is producing cures for 
conditions we didn't even have a name for 30 years ago. The 
promise of what lies ahead is truly staggering in their ability 
to relieve human suffering from conditions from hemophilia to 
sickle cell to muscular dystrophy.
    So, in our efforts to bring more transparency to the 
system, which I support, we must inherently first, do no harm. 
For example, I am concerned that provisions of some of the 
bills before us could allow manufacturers to "back in" the 
rebates paid by their competitors or allow wholesaler 
stockpiling that could lead to shortages in an attempt to 
provide notification of price increases.
    As I mentioned, this committee has been a leader is 
encouraging the innovation that patients are benefiting from 
today through our work on FDA user fees and 21st Century Cures. 
While the results of those efforts are truly remarkable we also 
know that the cost of bringing a drug to market, especially one 
that targets an orphan or neglected disease, is high. We should 
not randomly categorize as bad actors those who have done what 
this committee has encouraged them to do: invest in cutting-
edge therapies like gene editing and regenerative medicine 
because their list price is over an arbitrary amount. Because I 
can tell you, these new drugs improve or save lives. That's 
better than investing in just another "me too drug."
    In that light I believe any policies pursued by this 
committee must put the patient front and center. That is why as 
currently drafted I am concerned about policies that could have 
the risk of decreasing the ability of physicians to provide 
patients samples of drugs to help those who cannot afford their 
medication, those who may have prior authorization or coverage 
issues from starting treatment, to inform medical judgement or 
help patient's mange side effects related to their current 
medication.
    Working in a bipartisan spirit, with the help of our 
witnesses today, I'm hopeful we can address my concerns.
    On a final note, thanks to you, Chairwoman Eshoo and 
Chairman Pallone for exercising our Committee's jurisdiction on 
these bills. While most have been marked up by other 
committees, we are the committee of primary jurisdiction.

    Ms. Eshoo. I thank the gentleman and he yields back.
    I would like to remind all Members that, pursuant to 
committee rules, all Members' written opening statements shall 
be made part of the record.
    I now would like to introduce our witnesses that have 
willingly come forward today, and we appreciate each one of you 
being here.
    Ms. Lisa Joldersma--did I pronounce your name correctly? Is 
here. She is the senior vice president, insurance and State 
issues, for the Pharmaceutical Research and Manufacturers of 
America.
    And her son Garrett is here with us, too. So, I hope you 
find this interesting, Garrett. If nothing else, you will know 
the complicated business your mother is in. So, welcome to both 
of you.
    Ms. Kristin Bass, the chief policy and external affairs 
officer with the Pharmaceutical Care Management Association, 
welcome to you.
    Dr. Madelaine Feldman, she is the president of the 
Coalition of State Rheumatology Organizations, the Alliance of 
Specialty Medicine. Thank you to you.
    Mr. Frederick Isasi, executive director of Families USA, 
welcome to you.
    Dr. Mark Miller, the executive vice president of 
healthcare, Arnold Ventures, welcome to you, sir.
    And Dr. Douglas Holtz-Eakin, president of the American 
Action Forum, welcome to you.
    And our thanks to each one of you again for joining us 
today.
    At this time, the Chair will recognize each witness for 
five minutes. So, the light that means the most is the red 
light. That means, like when you are driving, you stop.
    I think several of you have already testified. So, you know 
what the system is.
    Now I would like to call on Ms. Joldersma. You are 
recognized for five minutes for your testimony, and we thank 
you again for being here with us today. You may begin.

STATEMENTS OF LISA JOLDERSMA, SENIOR VICE PRESIDENT, INSURANCE 
AND STATE ISSUES, PHARMACEUTICAL RESEARCH AND MANUFACTURERS OF 
   AMERICA; KRISTIN BASS, CHIEF POLICY AND EXTERNAL AFFAIRS 
OFFICER, PHARMACEUTICAL CARE MANAGEMENT ASSOCIATION; MADELAINE 
   FELDMAN, M.D., PRESIDENT, COALITION OF STATE RHEUMATOLOGY 
ORGANIZATIONS, ALLIANCE OF SPECIALTY MEDICINE; FREDERICK ISASI, 
JD, MPH, EXECUTIVE DIRECTOR, FAMILIES USA; MARK MILLER, Ph.D., 
 EXECUTIVE VICE PRESIDENT OF HEALTHCARE, ARNOLD VENTURES; AND 
  DOUGLAS HOLTZ-EAKIN, Ph.D., PRESIDENT, AMERICAN ACTION FORUM

                  STATEMENT OF LISA JOLDERSMA

    Ms. Joldersma. OK. Thank you very much and good morning, 
distinguished members of the subcommittee. And thank you, 
Chairman Pallone, Chairwoman Eshoo, Ranking Member Walden, and 
Ranking Member Burgess, for the invitation to testify today.
    I am Lisa Joldersma, and I am senior vice president at the 
Pharmaceutical Research and Manufacturers of America, or PhRMA. 
As many of you know, PhRMA represents the leading research-
based biopharmaceutical companies.
    Since the year 2000, our companies have collectively 
invested half a trillion dollars in the search for new 
treatments and cures, including more than $70 billion in 2017, 
which I would note is an amount twice the entire operating 
budget of the NIH. These investments yield breakthroughs and 
continuous progress against both chronic and acute conditions.
    Creating, discovering, and developing a new therapy is a 
challenging, high-risk endeavor, with just 12 percent of those 
molecules that enter clinical trials ultimately securing FDA 
approval. In other words, of those molecules entering the 
clinical trial phase, 9 times out of 10 we fail, and it is not 
for lack of trying. The average cost to develop a new medicine 
is $2.6 billion, and the entire process takes an average of 10 
to 15 years from start through FDA approval. Despite these 
difficult odds and increasingly challenging science, PhRMA 
members persist, supported by private investment, and in 
collaboration with others, including the NIH.
    While medicine's importance to healthcare has grown 
considerably over the years, the share of U.S. healthcare 
spending attributed to drugs has been largely stable. 
Prescription drugs consume roughly 14 percent of national 
health expenditures today. That includes both drugs dispensed 
at retail and administered in the hospital, and these are CMS 
numbers from the National Health Expenditures data.
    Growing reliance on generic medicines, which currently 
represent 90 percent of all prescriptions filled in this 
country, is a key element to keeping our prescription drugs 
system affordable overall. And I would note that growth in 
biosimilars, thanks to the leadership of many on this 
committee, is expected to further help constrain costs moving 
forward.
    And yet, patients are really, really struggling to afford 
their medicines. And I want to be really clear today that, for 
our part, PhRMA accepts that a product's list price does 
influence what patients pay. In today's world of multi-tiered 
formularies, drug exclusion lists, and rising cost-sharing, 
however, there are other entities that play a significant role 
in what patients pay as well.
    PhRMA is focused on changing the status quo and bringing 
forward solutions that will sustain innovation, ensure safety, 
and help patients. For too many patients today, even those with 
insurance, they are struggling to afford their medicines, as 
you all know well. This is the most pressing issue that we need 
to work collectively to solve.
    With regard to specific measures before the subcommittee 
today, I will say that PhRMA supports greater transparency 
across the healthcare system. We believe our industry already 
makes a fair amount of information publicly available, but we 
do understand that policymakers and purchasers are looking for 
more from us. We will come to the table to help shape 
meaningful transparency across the drug supply chain.
    When evaluating alternative proposals, we really have three 
questions in mind that help shape specific feedback that we 
provide. First, is the measure likely to yield information that 
will be helpful or meaningful to patients? Always patients 
first. Second, does the measure give companies a reasonable 
opportunity to comply? Is it prospective in nature? And 
finally, are there appropriate protections for confidential and 
proprietary information, so we can prevent harmful interference 
in the market?
    In closing, I would like to say that we do believe greater 
transparency is an important part of the solution to the 
problems we are discussing today, but they will not be enough 
on their own. We also need to take steps to promote 
competition, to address misaligned incentives in our current 
system, and to explore ways to make insurance work better for 
sick patients who need today's medicines and those who are 
waiting for tomorrow's.
    Thank you very much.
    [The prepared statement of Ms. Joldersma follows:]
    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
    
    Ms. Eshoo. We thank you, Ms. Joldersma.
    And now, I would like to recognize Ms. Kristin Bass for 
five minutes of her testimony.
    Welcome again and thank you.

                   STATEMENT OF KRISTIN BASS

    Ms. Bass. Thank you, Chairwoman Eshoo, Ranking Member 
Burgess, and members of the subcommittee.
    I am Kristin Bass, the chief policy and external affairs 
officer for PCMA, which is the trade association for the PBM 
industry. I am pleased to be here today to talk about the 
important transparency bills before the subcommittee and to 
discuss how PBMs lower prescription drug costs for 200 million 
Americans with health coverage through employers, labor unions, 
health plans, Medicare, and Medicaid.
    Every day in this country, people go to the pharmacy to get 
needed drugs to make their lives better. PBMs' only mission is 
to increase affordability and access to those drugs for 
consumers and our clients. PBMs are an important link in a 
chain that includes manufacturers, wholesalers, physicians, 
pharmacies, and pharmacy service administrative organizations, 
all working to get needed therapies to patients.
    Within that chain, our companies are the only ones whose 
mission is to help control costs. PBMs can only help lower 
prescription drug costs for patients when there is sufficient 
competition among drug companies. Where there are competing 
clinically-equivalent brand drugs that will work equally well 
for patients, PBMs negotiate rebates or discounts off the 
manufacturer's list price to arrive at the lowest net-cost 
drug. The rebates are, then, used by health plan sponsors to 
reduce patient premiums, out-of-pocket costs, or both.
    We are proud that our industry has delivered results. 
According to Federal data, in 2018, overall U.S. spending on 
drugs increased only 3.3 percent and, in 2017, four percent. 
One large PBM reported a decline in costs for its clients in 
2017. That is our industry's mission.
    Yet, we know that today too many individuals still find 
their drugs unaffordable. Driving more competition among drug 
companies is the key to providing relief for patients. I want 
to commend the subcommittee for your work on the CREATES Act 
and legislation limiting pay-for-delay agreements.
    Greater transparency can also be part of the solution, and 
the PBM industry is supportive. We support transparency to 
empower patients and their physicians. Our industry provides 
real-time benefits tools, so physicians and patients know 
immediately in the doctor's office what drugs are on formulary 
and what the patient's cost-sharing will be.
    PBMs are transparent to our clients, including how the PBM 
is paid for its services and the negotiated rebates. And we 
support transparency to policymakers. PBMs already report on 
all price concessions, costs and fees in Medicare to CMS, and 
we support legislation that would provide that data to 
congressional advisors at MedPAC and MACPAC. And that is just 
for our industry.
    We would support additional transparency for others in the 
supply chain, manufacturers, wholesalers, and the PSAOs. And 
this gets us to the bills under consideration today. With 
respect to H.R. 2115, we support aggregate reporting of 
rebates. We urge the subcommittee to make sure manufacturers 
cannot use public reports to calculate competitor's discounts 
and avoid competition, and, thus, keep drug costs high, a risk 
that has been validated by the FTC. We want to empower 
patients, not drug companies. We have some ideas for how to 
ensure maximum transparency without risking higher drug costs, 
premiums, and cost-sharing, and are happy to work with 
subcommittee staff on those.
    With respect to H.R. 2376 and its provisions to direct FTC 
to scrutinize our industry's business practices and level of 
competitiveness, we welcome and support this review. While the 
FTC has previously examined PBMs extensively and concluded that 
we operate in a competitive market, to the benefit of consumers 
and our clients, we are confident that additional FTC study of 
our industry will further validate previous conclusions.
    We strongly encourage the subcommittee to expand FTC's 
review to all others in the prescription drug supply chain to 
ensure a complete and transparent picture of all those who play 
a role. In addition, increased manufacturing reporting can help 
bring sunshine into their pricing and marketing practices, as 
addressed in the bills that are the subject of today's hearing.
    I will conclude by again commending the subcommittee for 
considering ways to reduce prescription drug costs. We 
appreciate the opportunity to testify, and I look forward to 
answering your questions.
    [The prepared statement of Ms. Bass follows:]
    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
    
    Ms. Eshoo. Thank you, Ms. Bass.
    I now would like to recognize Dr. Feldman. You have five 
minutes for your testimony, and thank you again for being here 
today with us. You can proceed.

              STATEMENT OF MADELAINE FELDMAN, M.D.

    Dr. Feldman. Chairman Eshoo, Ranking Member Burgess, and 
distinguished members of the subcommittee, thank you for 
inviting me to testify on behalf of the Alliance for Specialty 
Medicine, a nonpartisan coalition of national medical societies 
representing more than 100,000 specialty physicians.
    My name is Madelaine Torregano Feldman. I am president of 
the Coalition of State Rheumatology Organizations and have been 
a rheumatologist for 30 years. I practice full-time in New 
Orleans.
    I treat a variety of autoimmune diseases, but perhaps the 
one I see the most often is rheumatoid arthritis, or RA. 
Treatment for RA has changed dramatically since I graduated 
from medical school. We used to be able only to provide 
symptomatic relief, but now there are therapies that actually 
help us halt the disease activity, stop joint destruction, and 
even reduce the cardiovascular risks associated with rheumatoid 
arthritis.
    Lower-priced generics are always used first before the 
specialty drugs. Now the list prices of these specialty drugs 
have risen to the point where many patients can no longer 
afford even their co-insurance, based on that list price. I 
hope you will find it helpful my feedback as a practicing 
physician.
    I would like to first talk about the samples provision in 
the prescription drug STAR Act. Section 3 would broaden the 
scope of the Sunshine Act to include the total quantity and 
value of samples in manufacturers' reporting. We are concerned 
that this provision might have serious unintended consequences 
for patient care. Let me tell you how we use these samples in 
rheumatology.
    It is important to stress the physicians; we derive no 
financial benefit from the samples and, in fact, it costs us 
resources in staffing and managing this very complex inventory. 
Because patients can wait weeks to over a month before getting 
final approval and, then, actually getting the prescribed 
medicine, it is extremely important to have on hand these 
samples to start the patients right away. I mean, it can make 
the difference between saving a joint or not. We are also able 
to see if the drug causes any tolerability issues, and all of 
this at no cost to the patient or the payor.
    In its June 2017 report, MedPAC recommended reporting on 
samples to oversight agencies, researchers, payers, and health 
plans under confidential data use agreement. They did not 
recommend publishing it publicly online. I fear that broadening 
MedPAC's recommendation to public online publishing will have a 
chilling effect on manufacturers' willingness to provide us 
with these samples because of the potential of false shame 
campaigns on Twitter and the like. This can be harmful to the 
doctor-patient relationship and undermines patients' trust in 
their physicians. And I can tell you, sometimes that trust is 
more important than the medication itself. In light of these 
concerns, we urge Congress to more closely follow MedPAC's 
recommendations to accomplish the important goals of H.R. 2113 
without the bill's unintended consequences.
    Next, I would like to briefly discuss Section 5 that would 
increase transparency of PBMs. The current rebate system 
creates perverse incentives to increase list prices that 
everyone in the drug delivery system profits on except for the 
patients. I would be happy to explain why competition actually 
increases prices as opposed to decreasing them. I have seen 
where some drugs with lower list prices are not allowed to be 
on the preferred formulary.
    Full transparency of price concessions to PBMs would shed 
light on how the preferred formularies are designed and why 
they can change every 6 to 12 months for no clinical reason and 
actually stop payment for drugs that have stabilized my 
patients.
    Less egregious than that behavior is something that 
happened a week and a half ago to one of my patients who it 
took us nearly two years to find the right drug for his 
rheumatoid arthritis. We had given him the generics and even 
other specialty drugs. He was sent a notification from his PBM 
asking him to switch to a completely different specialty drug, 
one that had a completely different mechanism of action, like 
asking a cancer patient in the middle of successful treatment 
to change their drug.
    In order to help us fully understand the financial 
considerations that are overriding the clinical ones, we 
support transparency, not only for the formulary rebates, but 
all of the price concessions, admin fees, price-protection 
fees, even if disclosures are only to regulatory agencies.
    I have provided comments on two additional policies and 
would be happy to answer any questions on those.
    The Alliance for Specialty Medicine is truly encouraged by 
Congress' bipartisan attention to drug pricing. While we 
believe some policies under consideration may need changes to 
avoid unintended consequences, we are supportive of increased 
transparency in the drug supply chain.
    Thank you so much for your consideration of our viewpoints.
    [The prepared statement of Dr. Feldman follows:]
    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
    
    Ms. Eshoo. Thank you, Dr. Feldman.
    I now would like to recognize Mr. Frederick Isasi for five 
minutes for your testimony. Welcome and thank you.

                  STATEMENT OF FREDERICK ISASI

    Mr. Isasi. Thank you so much, Chairman Eshoo and Ranking 
Member Burgess. And members of the Subcommittee on Health, 
thank you for this opportunity to speak with you today.
    I am Frederick Isasi, executive director of Families USA. 
For nearly 40 years, we have served as one of the leading 
national voices for healthcare consumers, both in D.C. and on a 
State level.
    We are here today because American people are hurting. 
Families across this nation are being put in terrible 
positions, choosing between securing prescription drugs for 
themselves, and their children, and their financial security. 
The problem is growing worse every year. And what is most 
important to say is that this problem was created by Congress 
in our Federal patent and exclusivity laws, and only Congress 
can solve it.
    Our families needed you to act. Today's bills are a step in 
the right direction, and we need much bolder action as well. 
Let me give you a sense of what the suffering of our families 
looks like.
    Approximately one in three families, 80 million people, 
have not taken prescription drugs as prescribed because they 
simply cannot afford them. Some skip a dose, cut their pills in 
half, and others simply get sicker.
    We are one of the wealthiest nations in the world. We are 
spending two or three times more than other wealthy nations on 
healthcare. And yet, this is the life to which we subject our 
nation's families.
    So, what does it look like to be a family struggling with 
drug costs? Let me tell you about Catherine from Wheeling, 
Illinois. She worked hard. She had a career as a secretary. And 
then, in her late fifties, she developed a cough and it wasn't 
going away. How many of us have had similar problems? But, 
then, within three months of going to the doctor for the cough, 
she was told she had a rare lung disorder and that, without a 
lung transplant, she wouldn't live to see the end of the year. 
Her condition worsened.
    Her doctors prepared her to die and Catherine prepared 
herself to die. And then, she got the call; a new lung had been 
found. She was going to live. This all happened about five 
years ago, this incredible gift and a new chance at life.
    But, unfortunately, her experience has turned into 
something else. Catherine takes 36 pills a day, including anti-
rejection and pain medication. Catherine, a Medicare 
beneficiary, has to ration her medications to make them last. 
She spends an astounding $1,000 each month on her medications, 
which is exactly half of her income. Think about what this 
means. Catherine, after living through the experience of almost 
dying, receiving a lung transplant, fighting for her life, is 
left to spend half of her income to pay for medications.
    You won't be surprised to know that Catherine sold her 
home. She moved in with her parents. Her mom is 86 and her dad 
just passed away at 89. She lives an extremely frugal life. 
But, as her drug costs escalate year over year, she moves 
closer and closer to financial ruin and deep poverty. At the 
end of each year, she finds herself thousands of dollars short. 
She lives each day with the anxiety of wondering how she will 
find the money to pay for the drugs keeping her alive. That is 
the life that Catherine lives with amazing grace and courage, 
as do so many other Americans.
    As Catherine struggles each day, the drug industry 
continues to enjoy some of the highest margins in the nation, 
making billions upon billions of dollars. And remember, the 
reason their profits are so astronomically high is not that 
they are inventing the best drugs for our families. It is 
because Congress, all of you, continue to grant them the 
ability to charge whatever they possibly can get. They abuse 
Federal laws to extract higher prices. They can only do this 
because of Congress' inaction.
    And despite the astounding amounts of money they are 
making, you will hear industry say that, if Government Acts to 
stop these abuses, innovation will dry up. It is not true. Do 
not be fooled.
    How much are they spending on so-called innovation right 
now? Of their trillion dollars--a trillion dollars in worldwide 
revenue--are they spending 3-quarters on innovation? No. Are 
they spending half? No. Are they spending at least a third? No. 
Are they spending a fourth? No. Industry is spending less than 
a fourth of their revenue on innovation, much more on marketing 
and on profit. And, of course, all of their innovation is on 
the backs of taxpayers who funded the underlying research.
    Instead of innovating in drug development, they innovate in 
their legal strategies to extend exclusivity. In fact, more 
than 3-quarters of new patents are for existing drugs. Think 
about that. From an industry glutted with money, where, indeed, 
is the innovation?
    Thank you for your work on the bills being considered 
today. I am pleased to say that Families USA supports all the 
bills under consideration. We believe that price transparency 
can help families and policymakers better understand how prices 
are set. However, these bills alone will not meaningfully 
affect the price of drugs.
    We strongly support the Doggett bill and other proposals 
aimed at bringing down price. In the midterms a few months ago, 
the American people sent a strong signal to Capitol Hill. An 
astounding 82 percent of Republicans and 90 percent of 
Democrats said taking action to lower prescription drug prices 
should be a top priority for this Congress. Now is the time for 
Congress to act boldly on behalf of their constituents.
    Thank you for this opportunity to testify.
    [The prepared statement of Mr. Isasi follows:]
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    Ms. Eshoo. Thank you, Mr. Isasi.
    I now would like to recognize Dr. Mark Miller for five 
minutes of his testimony, and thank you for being here. You may 
proceed.

                STATEMENT OF MARK MILLER, Ph.D.

    Dr. Miller. Chairman Eshoo, Ranking Member Burgess, and 
distinguished members of the committee, I appreciate you asking 
Arnold Ventures to testify today.
    Arnold Ventures is a philanthropy dedicated to reforming 
dysfunctional markets and programs to assure a better return on 
investment. We work to develop evidence and ideas to improve 
public policy. We believe strongly in markets, but we also 
believe in evidence-based intervention when markets fail.
    With respect to drugs, our objective is to protect 
innovation, but to explicitly lower the cost for the employer, 
the taxpayer, and, most importantly, the patient. We believe 
that there are strong reasons for the Congress to act. We spent 
$470 billion on drugs in 2016. That number is expected to grow 
24 percent by 2020. In Medicare Part D, we spend $100 billion 
after rebates. That number is projected to double in the next 
10 years. In Medicare Part B, we spend $30 billion. That number 
has doubled since 2010. In Medicaid, we spend $30 billion net. 
That number has increased 50 percent since 2011.
    Meanwhile, at the Federal level, this is deficit-financed. 
Three in 10 Americans can't afford their prescriptions, and 40 
percent of U.S. families can't produce $400 in an emergency.
    To that end, we urge the Congress to act comprehensively on 
the drug issue.
    No. 1, to curb patent abuses and other anticompetitive 
behaviors, so that when a drug is available as a competitor, it 
can actually get to market.
    No. 2, remove market distortions through greater 
transparency and reforming price inflationary actions, such as 
the misuse of rebates and fees and the misuse of coupons.
    No. 3, directly address high launch prices and price 
increases for those drugs that do not have competitors through 
such actions as reference pricing, negotiation, or inflation 
rebates.
    More precisely, with respect to Medicare Part D, consistent 
with MedPAC recommendations, the committee should consider a 
series of reforms to change the payment structure to increase 
pressure on the PBMs to more aggressively negotiate for lower-
cost drugs; for example, by requiring the PBMs and the 
manufacturers to pick up substantially all of the Part D 
catastrophic cost. Concurrently, that policy should offer 
greater protections to the beneficiary when they hit the 
catastrophic cap.
    Those proposed reforms also include modifications to the 
copayment for the LIS, for the low-income subsidy population, 
in order to encourage them to use lower-cost drugs when they 
are available. That is the right policy direction, but those 
policies need to be designed very carefully to assure that they 
result in taxpayer savings and don't cut off access to 
important drugs.
    Where there is no competition and PBMs have no leverage 
over prices, we would suggest that you consider such tools as 
an inflation rebate, pricing to the clinical value of the drug, 
or a negotiation strategy. These tools would allow the Medicare 
program to address situations where the manufacturer has set 
excessive prices in the absence of competition.
    With respect to Part B, we would suggest moving from a 
percentage-based payment to a flat fee, empowering physicians 
to form their own purchasing groups to negotiate prices, and 
consider lowering the overall payment using the average sales 
price blended with an international price index.
    Turning to the public justification of price increases, 
there is value in that information as a policy source and as a 
motivation for policy action. But, without additional action, 
that in and of itself will not curb drug prices.
    That said, a well-designed policy should set a minimum drug 
price, trigger reporting on both a percentage and an absolute 
dollar basis, require legal attestation of a ranking company 
official, and avoid disclosing proprietary information.
    With respect to the Sunshine Act, we recommend reporting 
payments made to patient groups who often act as a proxy for 
the manufacturers, and we would report the economic value of 
the samples provided to physicians. However, if public 
reporting can't be reached, at a minimum, the sample value 
should be made available to oversight organizations and 
researchers.
    In closing, any policy that you undertake will involve a 
number of difficult tradeoffs across stakeholders, and we know 
that there will be stiff resistance from the status quo. But we 
also know that the status quo has produced noncompetitive 
behaviors, higher taxpayer spending, and higher prices for the 
patients.
    Arnold Ventures and its grantees stand ready to work with 
you on these difficult issues. I would like to thank you for 
your attention. I will look forward to your questions.
    [The prepared statement of Dr. Miller follows:]
    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
    
    Ms. Eshoo. Thank you, Dr. Miller.
    I was just sent a nice, handwritten note from my colleague, 
Mr. Long. And I should have done this at the outset of our 
hearing this morning. People are wondering what these yellow 
roses are all about. Well, today is the 100th anniversary of 
women's suffrage. And the suffragettes distinguished themselves 
as the vote was being taken, I think the final vote in the 
State of Tennessee. The suffragettes and their supporters wore 
yellow roses. Those that opposed them wore red. So, we are 
celebrating today, with the yellow roses, women gaining the 
right to vote in our country, the 100th anniversary. So, that 
is what the yellow roses are all about. We didn't attend an 
early-morning wedding.
    [Laughter.]
    But, nonetheless, this is a great celebration.
    So now, I would like to recognize Dr. Holtz-Eakin. Welcome 
to you. You are an accomplished testifier.
    [Laughter.]
    And we look forward to your five minutes of testimony.

            STATEMENT OF DOUGLAS HOLTZ-EAKIN, Ph.D.

    Dr. Holtz-Eakin. Thank you, Chairwoman Eshoo, Ranking 
Member Burgess, and members of the committee, for the privilege 
of being at this important hearing.
    Drug prices are a very important topic in the United 
States. And I want to say a couple of things about the debate 
in general, and then, a few remarks on the pieces of 
legislation under consideration today.
    The first thing I would emphasize is that, at least to my 
eye, there is not a broad, general, widespread drug-pricing 
problem. Instead, it is important to recognize that we have 
some targeted areas with extreme drug-pricing issues, notably 
in specialty drugs, largely in oncology drugs right now, and in 
sole-source drugs that are off-patent. In thinking about 
solutions, it is often best to identify the problems first, and 
I would focus on those.
    The second is that there is often relatively little clarity 
about which price people are trying to effect, and there are 
very different measures of price bandied about. There is the 
list price of manufacturers, probably the most important price. 
There is the net price post-rebate at which the drug is 
acquired. And then, there is also the price a beneficiary 
actually pays at the counter, including all the out-of-pockets, 
the one that is probably the most important to the American 
public. Thinking clearly about price allows you to avoid 
situations where you simply shift costs, but don't change the 
fundamental problem or address the issue itself.
    And then, lastly, I think it is important to recognize that 
this is a difficult world of tradeoffs. There are no simple 
solutions because, in the end, there is a tradeoff between 
financial incentives like prices and the innovation that has 
made the United States the premier place for medical science on 
the globe. And being cognizant of that as you go forward is 
very important.
    And secondly, for this hearing, the notion of transparency 
is not an unambiguously good thing. There are moments where 
transparency becomes quite costly and perhaps not worth it, and 
also situations where it interferes with the incentives to 
compete vigorously and to have fierce negotiation, which we 
should want in our health markets, particularly our 
pharmaceutical markets.
    So, in looking at the bills under consideration today, I 
think some concerns do arise. For example, the SPIKE Act, which 
looks at backward-looking triggers for price increases or an 
absolute value of $26,000 for a drug, that is not independently 
the value of that drug, as Ranking Member Burgess mentioned in 
his remarks. It does trigger a set of disclosures and 
documentation that is quite intrusive and costly to produce. 
And when combined with the potential for the Secretary to offer 
a variety of different triggers backward-looking in launch 
prices, it could be a quite costly measure or transparency, 
with no particular accountability measure included that would 
guarantee any effort on drug prices. And so, I would be 
concerned about that.
    The FAIR Act is similar in character. It has some, in my 
view, virtues of targeting. It is forward-looking as opposed to 
backward-looking, and I think that is an advantage in this 
setting. It excludes rare disease and vaccines, focuses on 
those drugs by physicians and hospitals, but has the same sort 
of potentially costly structure. And so, I worry about the 
transparency that generates no end result in those situations.
    With regard to the samples, which has come up a couple of 
times already, samples are very important to beneficiaries. I 
think that has been documented. And so, you don't want to 
damage this valuable source of drugs. I think it makes sense to 
build on the existing reporting, rather than inventing new 
reporting; provide the information to the FDA, and provide this 
information to oversight and to professional researchers, so 
that the information about the influence of samples on the 
competition in the market is learned, but the damaging public 
disclosure is avoided. And I think that is something that the 
committee should think a little bit about.
    Finally, with regard to providing public documentation of 
drug rebates negotiated by PBMs, I really have two sets of 
concerns. I understand why this committee should care deeply 
about how well the Part D program is functioning. I am a long-
time fan of the Part D program, having been present at its 
birth, and I think it is our best entitlement program. I 
occasionally say I like it more than my children. I won't 
repeat that today. Oops, it is too late.
    But I don't think the same sort of information should be 
provided for commercial transactions. These are in the end 
private contracts, and I don't think they should be publicly 
disclosed. So, collecting the information on Part D, making 
sure that for Part D there is vigorous competition that is 
effective is appropriate and should be done. Again, that means 
proprietary information provided to oversight and to 
researchers, not necessarily disclosed into the public domain.
    So, I really do appreciate the chance to be here today. 
These are in the end difficult issues on one of the most 
important topics facing the American public. And I look forward 
to the chance to answer your questions.
    [The prepared statement of Dr. Holtz-Eakin follows:]
    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
    
    Ms. Eshoo. Thank you very much, Dr. Holtz-Eakin.
    And again, we all want to thank our witnesses for being 
here today and the testimony that you have given.
    We have now concluded those opening statements and we are 
going to move to members' questions. Every member I think knows 
that they have five minutes to ask questions of our witnesses. 
And I will start by recognizing myself for five minutes.
    Dr. Feldman, you said that PBMs have pushed you to 
prescribe higher-priced drugs, is that right?
    Dr. Feldman. Thank you.
    What I have found is there are some drugs that have come to 
market with lower list prices that have been unable to get onto 
the formulary because their list price was too low. And what I 
mean by that is, the price concession, for example, the rebate 
would be the list price times the discount times the market 
share.
    Ms. Eshoo. So, the one on the list----
    Dr. Feldman. Yes. So, yes, the lower list price----
    Ms. Eshoo. You put on the table that PBMs pushed you to 
prescribe a higher-cost prescription drug.
    So, I want to go to Ms. Bass and say to you, what is the 
answer to that?
    Ms. Bass. Our companies always negotiate to the lowest net 
cost.
    Ms. Eshoo. So, why was she pushed to a higher-priced drug?
    Ms. Bass. Because the lowest net cost of that drug was 
lower than the drug with the lower list price.
    Ms. Eshoo. So, the higher was lower, and the lower is 
higher? I mean, I don't quite get this.
    Ms. Bass. But, yes, it----
    Ms. Eshoo. Maybe you can rephrase it?
    Dr. Feldman. Yes. So, competition can raise prices or lower 
prices. Because the price concession is the highest price 
concession, which ultimately, they are calling the lowest cost, 
sometimes to get at the highest price concession you need the 
highest list price. And therefore, a drug with a lower list 
price can't offer as big of a percent rebate. But I think that 
shouldn't be how it is. I think the lowest list price should 
get preferred status.
    Ms. Bass. So, the way the math works on that, let me just 
quickly say----
    Ms. Eshoo. Quickly.
    Ms. Bass [continuing]. If both drugs had different pricing, 
but they came in at the same low net cost, that would be great, 
but----
    Ms. Eshoo. If they came in or you negotiated lower?
    Ms. Bass. Our companies negotiate to the lowest net cost. 
And if it is a lower list price drug that has the lowest net 
cost, that is the preferred drug.
    Ms. Eshoo. Well, there doesn't seem to be an agreement 
here. Dr. Feldman is shaking her head in the negative.
    Dr. Feldman, why do you think that drug manufacturers will 
not give samples to doctors if there is a public reporting 
requirement? I wasn't so clear on why you----
    Dr. Feldman. Why I feel that way?
    Ms. Eshoo. Yes.
    Dr. Feldman. So, for example, it goes back to the list 
price of the drug.
    Ms. Eshoo. Well, I mean, because the FDA already requires 
drug samples to be reporting. So, the reporting burden, at 
least on the surface to me, I don't think would be a deterrent.
    Dr. Feldman. I can tell you, if it actually worked to the 
opposite--I mean, some of the samples that are given, the list 
prices of those are $6,000 a month. And you usually get three 
months at a time.
    Ms. Eshoo. So, you are saying that it is better that people 
don't know what it is and that , in turn, motivates samples 
being contributed?
    Dr. Feldman. What I fear is that, when it looks like the 
pharmaceutical manufacturers are giving this much money to the 
doctor, that it may make them not do that. However, if it had 
just the opposite effect where everyone thought, oh, look how 
generous pharma is, and it actually didn't affect the ability--
I just want to do whatever will keep the samples coming for our 
patients.
    Ms. Eshoo. I understand. I understand. I don't think that 
the case has been definitely made on the point that you raise. 
Maybe it will be, but I am not so----
    Dr. Feldman. I understand.
    Ms. Eshoo. I am not convinced.
    We are looking for money. We are looking for savings across 
the entire system, so that at the end of this chain, this 
pipeline--and you heard members on both sides of the aisle say 
this--so that the patient captures the savings, so that the 
price at the counter goes down.
    Now there are some things that are real market influencers, 
and I want to examine this. I have thought for many years that 
research and development is the top cost. But, as it turns out, 
the marketing of drugs exceeds that; it outstrips it. And we 
only, I think, actively study and market drugs that are on 
patent. Is there any major drug company that advertises 
generics? Anyone know the answer to that? I think I know the 
answer. I stay up late at night. I haven't seen one, but I am 
missing them; I don't know have the TV on at the right time.
    I think that that kind of stands the system on its head 
because it is a huge cost. And I understand costs. There are 
many costs to bring a drug to market. But you know what? When 
it exceeds research and development, which is absolutely 
essential, I think that we have an issue here.
    There is marketing to physicians and other healthcare 
professionals. Is there anyone here that can put a price tag on 
that? Do you know, Dr. Holtz-Eakin or Dr. Miller? No? Mr. 
Isasi?
    Mr. Isasi. What we know, this is very hard information to 
get at, in part, because the pricing and the payments in 
industry are so obfuscated. But we know that they are spending 
maybe 20 to 25 percent of their revenue on----
    Ms. Eshoo. Well, we know that marketing to physicians and 
other healthcare professionals by companies increased from 
$15.5 billion in 1997 to $20.3 billion in 2016. That is about a 
30 percent increase.
    Mr. Isasi. And it is much more than they are spending on 
R&D on innovating.
    Ms. Eshoo. Does PhRMA want to weigh-in on this--wish to 
weigh-in on it?
    Ms. Joldersma. Yes, I do. Thank you, Chairwoman.
    I would say at the outset that I think it is important to 
check our facts. We do hear regularly that the pharmaceutical 
industry spends more on advertising and marketing than we do on 
R&D. And at least speaking for my membership, that is patently 
false. Frequently, comparisons over State marketing 
expenditures, because those expenditures are pulled from the 
sales and general administration figures which includes a whole 
host of things other than marketing----
    Ms. Eshoo. Why don't you get us some definitive information 
from your viewpoint?
    Ms. Joldersma. Sure. I would be happy to do that, 
absolutely.
    Ms. Eshoo. That would be helpful to make part of the mix.
    I have gone over my time. I now would like to recognize the 
ranking member of the subcommittee, Dr. Burgess from Texas, for 
five minutes for his questioning.
    Mr. Burgess. Thank you.
    And, Dr. Feldman, as I look online, you reference that you 
have been practicing rheumatology for 35 years. I am a little 
older than you are. So, I actually remember not only that there 
wasn't much with which to treat rheumatoid arthritis, some of 
the treatments we had were probably as hazardous as having the 
disease itself. I mean, colloidal gold shots? Does anybody do 
that anymore?
    Dr. Feldman. Very rarely.
    Mr. Burgess. And, of course, aspirin to toxicity, you raise 
the dose until the ear-ringing became so loud that people 
couldn't hear.
    So, I, for one, am grateful that, as I look online, there 
are--what?--eight or nine biologics that are available? I mean, 
these are relatively-new medicines that really are game-
changers as far as providing not just relief for your patients, 
but preservation of function, which previously wasn't 
available. I mean, that is a good thing, right? We have got 
nine agents that now are available to you.
    I will confess, when I watch some of the ads on TV--and I 
play a little game. I have one of the pharmacy pricing apps on 
my phone. So, I type in the name of the drug. I, for one, would 
like to see--I think Secretary Azar is onto something when he 
says we ought to disclose what the cost to the patient would 
be. I mean, look, when I see all those ads, and if I were 
having to make a decision which drug to start, do I want the 
one that Phil Mickelson is on or do I want the one Cyndi Lauper 
likes to take? I don't know, I mean, as a patient, I don't know 
how to judge that.
    But I think that information could be helpful. It might 
even be helpful to a physician to know that as well. Just going 
down this list of medicines, they are all fairly expensive, but 
some are more expensive than others. And if it is something you 
are going to be on over the long term--but you correctly said 
it would be wrong for a formulary or an insurance company, 
anyone else, to change your patient's medication. That is the 
practice of medicine, and we should not let that happen other 
than by a physician.
    Now, on the issue of advertising generics, look at my 
State, and I assume most states are the same. I write a 
prescription, and the pharmacist can actually substitute a 
generic. Even if I write, ``Dispense as written,'' I don't know 
whether they always agree with that. So, no, generics may not 
be advertised, but at the same time the pharmacist has the 
ability to substitute the generic equivalent for the patient at 
the pharmacy counter, is that not correct?
    Dr. Feldman. Yes.
    Mr. Burgess. So, I mean, if I am in the business of selling 
a generic, why would I advertise? I have got the good people at 
Crestor already doing the ads for me. I don't need to spend my 
money doing that.
    I think that the thing is that you have got eight or nine 
medicines that are now advanced treatments for rheumatoid 
arthritis. And in your professional lifetime, certainly my 
professional lifetime, at the beginning of our professional 
careers those things were not available. So, it is a great 
thing that they are available now.
    I do not know how many trials there were that didn't work 
out. I suspect there were. I don't know how you go back and 
price that in. I suspect that that is difficult to do. You gave 
a figure of what, 12 percent success rate? I mean, that is a 
lot of dry holes that you are drilling in order to get the home 
run. I want you to drill those dry holes. I think that is 
important. I want you to have eight or nine medicines that not 
just treat a patient's symptoms now, but preservation of 
function.
    And that was the whole purpose in doing cures. We are 
getting to a place where things that were just unthinkable a 
few years ago are now within our grasp. A single-shot therapy 
to cure a disease that otherwise not just would bankrupt an 
individual, but a family; perhaps even a health plan, and now a 
single shot that can cure it. I don't know how you price that 
in. We are going to have to figure that out, and that is why 
these discussions are so important; because we do have to 
figure that out for the future.
    Sickle cell disease, which was featured on ``CBS 60 
Minutes'' a couple of months ago, the cost for this therapy 
that Dr. Collins referenced as a cure for sickle cell - I mean, 
that is a big deal.
    We heard in this very room at this very table in 2016 the 
witness for the Sickle Cell Disease Association said there has 
been no new sickle cell FDA-approved treatment in 40 years. So, 
when we look at the cost of this new sickle cell therapy, when 
we look at that cost, I think we have to look at it in light of 
the fact that for 40 years we didn't improve at all. And what 
was the cost over those 40 years where we didn't improve? And 
we have got to somehow find a way to amortize that going 40 
years into the future.
    It is a good time to be in the business that you all are 
in.
    Ms. Eshoo. The gentleman yields back.
    Mr. Burgess. And we appreciate so much you being here 
today. We have got some tough decisions to make and we are 
anxious to get on about making them, apparently.
    Ms. Eshoo. Thank you, Dr. Burgess.
    Mr. Burgess. I will yield back.
    Ms. Eshoo. And the gentleman yields back. It is a pleasure 
to recognize the gentleman from North Carolina, Mr. 
Butterfield, for his five minutes of questioning.
    Mr. Butterfield. Thank you very much, Madam Chair.
    Let me just begin with Ms. Joldersma. I am sure I got that 
wrong. I have a little trouble with names.
    Ms. Joldersma. Joldersma.
    Mr. Butterfield. OK.
    Ms. Joldersma. Yes, not to worry.
    Mr. Butterfield. I will just call you Lisa. How about that?
    Ms. Joldersma. You can call me Lisa. I prefer it.
    Mr. Butterfield. Yes.
    Ms. Joldersma. Lisa J., if you will.
    Mr. Butterfield. Yes. Thank you.
    I am very pleased to hear that your member companies 
support the whole notion of transparency. That is a very 
important word now. It means sunlight. And thank you so much 
for making that acknowledgment today, especially with respect 
to prescription drug pricing.
    I guess my question is sort of a reversed-type question. 
What information would you consider to be inappropriate for 
transparency?
    Ms. Joldersma. That is a very good question.
    Mr. Butterfield. Yes.
    Ms. Joldersma. I think as many on the committee and other 
witnesses have noticed, we do need to be concerned about very 
commercially-sensitive information, proprietary information; 
that if released publicly, could cause conduct distortions in 
the market that we may not love. That is why I think both of 
the transparency approaches on the table today do attempt to 
protect proprietary and confidential information; and that is a 
very, very good thing.
    Mr. Butterfield. And I suppose you are struggling every day 
to try to find a balance between those two interests?
    Ms. Joldersma. Absolutely.
    Mr. Butterfield. Would that be correct?
    Ms. Joldersma. Absolutely.
    Mr. Butterfield. What circumstances would require you to 
significantly raise drug prices? I mean, what would be the 
circumstances that would precipitate an increase in drug 
prices, other than corporate profit?
    Ms. Joldersma. Well, sure, there are many, many 
circumstances.
    Mr. Butterfield. Just give me two or three examples, yes.
    Ms. Joldersma. Two or three examples? Increased costs, 
increased supply chain, expanded indications, expanded value. 
Maybe we learn that a drug is more effective than we previously 
thought it was.
    Mr. Butterfield. Wouldn't that be corporate profit?
    Ms. Joldersma. No.
    Mr. Butterfield. Yes, that would be separate from corporate 
profit?
    Ms. Joldersma. Yes. And I do want to talk about corporate 
profit briefly. A lot of people say that this industry's 
profits are far out of whack with other industries. And the 
truth is, that is because traditional accounting measures are 
not recognizing the high level of risk that this industry takes 
on.
    And when you are talking about a 90 percent failure rate, 
the fact of the matter is, that 10 percent of the time when we 
don't fail, yes, it is true that the investors, the private 
entities that invest and that help us fund this very difficult 
scientific search for cures----
    Mr. Butterfield. Let me switch over to Ms. Bass. My time is 
clicking away. Ms. Bass, in your testimony you discuss the need 
to increase transparency in order to lower cost and improve the 
overall quality of care. Do you acknowledge that rebate 
practices are driving increased drug costs or do you dispute 
that?
    Ms. Bass. We would dispute that.
    Mr. Butterfield. Are you suggesting that the PBMs are 
sufficiently transparent or is there room for improvement?
    Ms. Bass. As I testified, we are happy to report aggregate 
rebates. We have the same concerns that others on the panel 
have with respect to putting out information publicly that 
would allow for tacit collusion. Often, when one competitor 
learns that he or she has discounted more deeply than another 
competitor, what happens is that competitor doesn't discount as 
deeply the next time. And that is our big concern.
    Mr. Butterfield. You are a nonprofit entity, if I am not 
mistaken, a 501(c)(6)?
    Ms. Bass. We are the trade association for the industry, 
yes.
    Mr. Butterfield. Which means that you are not in the 
business to make a profit. You are in the business to, 
according your 990 submission, you are in the business to lower 
prescription drug cost and increase access.
    Ms. Bass. Our trade association represents the companies 
who are in the business to lower prescription drug costs and 
increase access, yes.
    Mr. Butterfield. But you have told the Internal Revenue 
Service that your mission is to lower prescription drug costs. 
That is on your Form 990 that you submitted.
    Ms. Bass. It sounds like we need to amend our form to say 
we represent the companies whose mission it is to lower 
prescription drug costs and increase access.
    Mr. Butterfield. Take a look at that, if you would, please.
    Ms. Bass. I will. Thank you.
    Mr. Butterfield. Dr. Miller let me switch over to you, if I 
can. In your testimony, you discuss the importance of 
transparency and the consequence of Congress' inability to act 
to increase it. Why is transparency so important to 
implementing effective reforms? And you will have 15 seconds. I 
am sorry.
    Dr. Miller. What I would say is I think transparency can 
compel the issue forward. It may produce useful information for 
the Congress and other policy actors to act. I don't think 
transparency, in and of itself, will be enough to affect the 
drug price issues that you are facing now.
    Mr. Butterfield. Thank you.
    I yield back. Thank you.
    Ms. Eshoo. I thank the gentleman and he yields back. I now 
have the pleasure of recognizing the ranking member of the full 
committee, the gentleman from Oregon, Mr. Walden, for five 
minutes.
    Mr. Walden. Thank you, Madam Chair.
    And I have got a question to Ms. Joldersma and Dr. Holtz-
Eakin and Dr. Feldman.
    H.R. 2064 is an attempt to provide transparency, but I am 
worried that the bill will have unintended consequences for 
patients. Manufacturers of drugs and devices often provide 
samples to providers that help low-income patients who may have 
trouble accessing a therapy, either because they lack insurance 
or an insurer does not provide robust coverage for a drug or a 
device. Yet, this bill places new reporting requirements on 
manufacturers. And my question is, doesn't this bill create a 
perverse incentive for manufacturers to simply not provide 
samples to physician offices? And can you describe how low-
income patients benefit from samples provided by drug and 
device manufacturers, and any other unintended consequences? 
And I would just throw that out to the three of you.
    Ms. Joldersma. Thank you for that question.
    Very briefly, I think there is a real question as to 
whether this could cause the lessening of provision of samples. 
I would also note that a significant amount of information is 
already reported to the FDA with regard to samples. So, in some 
respects, this is kind of creating a duplicate bureaucracy, if 
you will, and a duplicate reporting. So, our preference would 
be to work with what FDA already has.
    Mr. Walden. To me, it also seems like a real convenience 
when you're with your physician, and they say, ``Here, why 
don't you take these, and then, go get this?'', and whatever. 
Dr. Feldman, what is your view?
    Dr. Feldman. Yes. You know, we agree with MedPAC's 
recommendation under drug use confidential agreements. I mean, 
it can be something as simple as mandated mail orders for 
patients will deliver refrigerated drugs on the front porch in 
New Orleans in the middle of the summer.
    Mr. Walden. That would seem to be a problem.
    Dr. Feldman. And the medication is destroyed. So, then, of 
course, we can offer them samples.
    Mr. Walden. OK. Dr. Holtz-Eakin?
    Dr. Holtz-Eakin. Yes, I don't know that it would eliminate 
the samples, but I think that is a risk you don't have to take. 
I mean, there are ways to collect the data you are interested 
in, have them available to researchers and oversight without 
the public disclosure the people are worried about. I would 
recommend that.
    I guess the other thing I would mention is, there is 
existing reporting for drugs, but this expands that to include 
the devices. And I would think it would be worth the committee 
asking itself whether it is worth doing that. That is a costly 
new set of reporting, and I am not sure samples are all that 
typical in the device world.
    Mr. Walden. OK. That is a good point. And I think I don't 
have too many people rushing me at town halls saying, ``Please 
add more reporting requirements, more regulations, more 
rules.'' Yet, we know there is a place for that, but I think we 
have to be really judicious when we go down that path because 
we don't want to create more bureaucracy, more time away from 
caring for patients, and, also, I want to put the patient 
first.
    I know a lot of States have been passing legislation to get 
to the bottom of why drug prices are increasing through price 
increase disclosure legislation. But the bills we are talking 
about today go beyond any State law currently on the books, I 
believe.
    So, my question would be, do you worry about the burden of 
companies complying with a patchwork of 50 different State laws 
plus a Federal law? And should Congress, if we go down this 
path, consider preemption language? Ms. Joldersma, would you 
like to comment on that?
    Ms. Joldersma. Absolutely. I think we have seen 
transparency legislation enacted now in seven or eight states.
    Mr. Walden. Right.
    Ms. Joldersma. Obviously, today we have two different 
approaches before us.
    Mr. Walden. Right.
    Ms. Joldersma. There were competing approaches in the 
Senate as well. So, certainly, harmonization of these reporting 
requirements is a high priority, and preemption would be one 
way to achieve that.
    Mr. Walden. All right. Dr. Holtz-Eakin, do you want to 
comment on this?
    Dr. Holtz-Eakin. Drugs are nationally-traded commodities. 
There should be a single set of rules that prevail across all 
50 States. I think preemption makes a lot of sense.
    Mr. Walden. OK. And on transparency and PBM reporting, my 
question is, can you detail concerns of where too much 
disclosure could be anticompetitive? I have heard this from 
people. I am into disclosure. I am into public right to know. I 
think the more out there, the better. But I also recognize 
there comes a point where too much disclosure could actually 
have an unintended and reverse consequence; if a consolidated 
market was able to back in competitors' rebates, for example. 
So, Dr. Holtz-Eakin, can you comment on that?
    Dr. Holtz-Eakin. I think that is a real concern. If you can 
identify the deal that your competitor is getting, that is 
information that allows you the ability to perhaps negotiate 
less vigorously and get a higher price. We never want to let 
that happen. And so, all of these desirable attempts to ensure 
that these markets are competitive and work on behalf of 
beneficiaries, especially in Part D, I applaud. But disclosing 
those individual contracts and deals is a step in the wrong 
direction.
    Mr. Walden. All right. Ms. Bass, could you comment on that 
as well?
    Ms. Bass. Sure. It sounded like you wanted specifics. And 
what we would recommend would be making sure--the bill calls 
for reporting by class--you would need to make sure that every 
class had at least three drugs; otherwise, there wouldn't be 
reporting because you could back into rebates.
    We would want to make sure that the reporting was lagged, 
preferably three years, again, to give a little bit of time 
between contracts. And we would want to make sure it wasn't 
PBM-specific, but across PBMs, for the same reason.
    Mr. Walden. All right. I thank you all.
    And I know the Chair has been quite generous with giving me 
extra time, I guess in recognition of the Blazers' defeat. So, 
we appreciate that generosity this morning.
    Ms. Eshoo. All around nice man. All around good guy.
    Mr. Walden. I yield back.
    Ms. Eshoo. The gentleman yields back.
    I just want to add something here. I believe that this 
particular legislation, that it is referencing a class of 
drugs. So, it is not one at a time. It is a class of drugs. And 
I think that we have to, all Members are going to have to do a 
deep dive on the actual wording and that is our job to do. But 
I thought I would throw that in the mix.
    Now it is a pleasure to recognize a real gentlewoman from 
California, Ms. Matsui, for her five minutes of questioning.
    Ms. Matsui. Thank you very much, Madam Chair.
    And I want to thank all the witnesses for appearing before 
us today.
    We have been discussing in this committee that there is a 
need for greater transparency--that is really a word that we 
keep throwing around--but an entire drug supply chain that 
really gives us clear insight into the formulary and 
negotiations, price concessions, and market dynamics, that 
ultimately drive up the price consumers pay for the medications 
at the pharmacy counter.
    Now drug price list increases have outpaced general 
inflation, medical inflation, and overall wage growth for many 
years. Lacking transparency, these price increases often seem 
arbitrary, indiscriminate, and very confusing. I am 
particularly interested today in discussing the trend of list 
price increases for drugs that are already on the market. A 
recent analysis found that prescription drug costs are 
primarily attributable to year-over-year price increases for 
drugs already on the market, not the introduction of new, 
innovative therapies or improvements to existing medications. 
And MedPAC has determined that, for high-cost Part D enrollees, 
the growth in drug spending was largely due to increases in 
average price per prescription filled.
    Ms. Isasi, you mentioned in your testimony that increases 
in invoice prices for current drugs under exclusivity have 
generated $108 billion in revenues, and that without these 
price increases, revenues would have been flat over the last 
decade for brand pharmaceutical companies, and overall spending 
on drugs would have fallen due to increased utilization of 
generic drugs. That is a staggering statistic and speaks to the 
motivations some manufacturers may have to raise prices for 
drugs already on the market. Mr. Isasi, from your perspective, 
what are the reasons that prices are increasing for drugs 
already on the market?
    Mr. Isasi. Thank you very much for the terrific question.
    I think it is really important. You know, we, all of us, 
want what is best for America's family, and we want to 
incentive innovation in the development of new drugs. That is a 
really important goal. But what we know is the current system 
is not doing that. As you point out, what has happened is so 
much of the pharmaceutical market share has migrated from 
patented, name-brand drugs to generics. And the drug companies 
are not developing the innovations that we need. So, instead, 
they are just raising the prices on the remaining patented 
drugs as fast and as quickly as they can.
    And there are terrible examples of this. I mean, I will 
give you one example. Just last year, Catalyst Pharma acquired 
rights to Firdapse. It is a 20-year-old drug used to treat 
neuromuscular disease. And the price increased to $375,000. The 
drug was previously available from Jacob's Pharmaceutical and 
could be purchased for free through an FDA program, right? 
Those are the kind of abuses we are talking about.
    Ms. Matsui. OK. Dr. Miller, do you agree?
    Dr. Miller. Yes, I agree. I agree with the direction of 
your conversation. The attention or where I would direct your 
attention is, both in Part B and in Part D, you could consider 
inflation rebates which would penalize back part of the revenue 
that a manufacturer gets through its price increase. And you 
could devote that money to giving greater patient protections.
    Ms. Matsui. OK. So, Dr. Miller, it seems the rising prices 
for a product that has been long on the market kind of 
represents a market failure. Is this a typical market response 
for products outside the pharmaceutical marketplace?
    Dr. Miller. Well, as a general proposition, and what I 
understand about how broad your question is, no, it is not a 
typical. And insulin is, in particular----
    Ms. Matsui. Right.
    Dr. Miller [continuing]. A poster child for the problem.
    Ms. Matsui. So, both Mr. Isasi and Dr. Miller, from your 
perspectives, do you believe that research and development cost 
significantly account for the drug price increases? And I think 
I know the answer to that.
    Dr. Miller. No.
    Ms. Matsui. OK. What about high launch prices?
    Mr. Isasi. No. And let me give you the example. Sovaldi is 
a great example.
    Ms. Matsui. Yes.
    Mr. Isasi. Sovaldi was purchased by Gilead. They did not 
develop the drug. Their Wall Street analyst said, charge ``X'' 
amount, and then, they almost quadrupled it. Right?
    Ms. Matsui. Right. OK.
    I have a PBM question. As I understand it, one way of PBM 
to keep costs down for plans is by keeping patients' out-of-
pocket costs high. Simply put, what the plan pays as a net cost 
for a drug is calculated as a list price minus the rebate, 
minus the patient out-of-pocket share.
    Dr. Miller, you mentioned some of the embedded incentives 
in your testimony. From your perspective, how are drug supply 
chain rebates preventing patients' cost-sharing from coming 
down?
    Dr. Miller. So, I mean, I want to be clear when I answer. I 
do think there is a role for negotiation and there is a role 
for a net price analysis and thinking through it, because those 
savings can be spread more generally through the benefit. But, 
given the current State of play, in particular, in Part D, 
there are drugs being placed on preferred formularies because 
of the rebate, and that is driving the out-of-pocket for the 
beneficiary and making it hard for the patient to afford it at 
the counter.
    Ms. Matsui. OK.
    Mr. Isasi. Yes, and to the chairwoman's earlier question, 
when you were told, Chairwoman Eshoo, that the net cost was 
lower, the question is, to whom? The net cost to whom?
    Ms. Matsui. OK.
    Mr. Isasi. Right? Not the beneficiary sitting in the 
pharmacy.
    Ms. Matsui. Right. OK.
    I think I ran out of time. I yield back. Thank you.
    Ms. Eshoo. Excellent.
    The gentlewoman yields back. It is a pleasure to recognize 
the gentleman from Michigan, Mr. Upton, the former chairman of 
the full committee. Your time, five minutes.
    Mr. Upton. Thank you, Madam Chair. It is a delight to be 
here.
    And I just have got a couple of questions. When we worked 
on 21st Century Cures, we spent a whole lot of time about 
thinking about policies that advanced new treatments for 
patients who had no therapies available, sort of like what 
former Chairman Walden said about sickle cell. But one of our 
main goals was to reduce the burden of discovery and 
development for small companies to ensure that new therapies 
got to patients who literally had no hope.
    So, I am a little bit worried about the SPIKE Act, which is 
one of the bills that we are looking at today, looking at 
perhaps an opposite approach. The bill sets an arbitrary launch 
price level that triggers burdensome price reporting for 
companies. Many of the drugs produced for the orphan diseases 
are often developed by small companies. So, the price threshold 
doesn't always account for rebates and discounts provided by 
the manufacturers. If we are going to consider Federal price 
reporting, shouldn't we keep the focus on price increases, what 
was said a little bit earlier, rather than launch prices of 
orphan drugs produced by smaller companies advancing cures? Dr. 
Holtz-Eakin, what is your reaction to that?
    Dr. Holtz-Eakin. A couple of thoughts. I mean, in the end, 
I think it is important to focus on what the beneficiary ends 
up paying, and often, there is a big gap between list and what 
they pay. Often, they pay the list, and that is through the 
rebate structure. So, I think thinking through that carefully 
is important.
    I do think that the kind of documentation that is 
envisioned by the SPIKE Act is unprecedented. I have never seen 
any kind of a request anywhere else in the economy; and for 
smaller manufacturers, it is going to be quite burdensome. I 
would be concerned about that.
    And I don't see that this produces any particular pressure 
on pricing. And so, it is a pretty expensive piece of 
transparency that may or may not be effective.
    Mr. Upton. So, my next question is concerned about the H.R. 
2064, the Sunshine for Samples Act of 2019. It impacts both 
drugs as well as devices. So, in 2017, MedPAC recommended that 
Congress expand the Physician Sunshine Act and require drug 
companies only. It didn't include medical device companies. So, 
as you look at device companies, they often provide, I guess, 
some free devices that are used, like prosthetics and others, 
to measure, but really a device is a one-time deal. And what 
are your reactions to including devices as well onto this bill 
versus just pharmaceuticals?
    Dr. Holtz-Eakin. I think it would make sense to not include 
the devices, see how effective the bill would be, if it goes 
forward on the drug front. And then, you could always revisit 
that issue going forward. But devices are very different than 
the drugs in terms of the one-time aspect. And there is no 
existing reporting. So, that is the most costly part of what 
would be envisioned on this.
    And I would just again say, I think building on what is in 
place as opposed to creating a new reporting channel makes a 
lot of sense; and that you can have oversight and you can have 
the FDA be required to provide the data to professional 
researchers to make sure that samples are used for the 
therapeutically-appropriate functions, and not to distort 
physician decisions. That is really what you want to know. All 
that can be done without putting this on a public website.
    Mr. Upton. Thank you. I yield back.
    Ms. Eshoo. The gentleman yields back. I now recognize the 
gentleman from New Mexico, Mr. Lujan, for five minutes of 
questioning.
    Mr. Lujan. Thank you, Madam Chair.
    Dr. Miller, you noted in your testimony that more and more 
drugs are saving people's lives or vastly improving their 
health outcomes and quality of life, are launching 
unsustainable prices that are simply unaffordable. What tools 
are currently available to control launch prices for the first-
in-class, sole-source, novel therapies, and are there any 
mechanisms currently in place that constrain the price for 
these drugs?
    Dr. Miller. As a general proposition. I would say, no, that 
the mechanisms are not in place. I think it goes back to some 
comments earlier. When you grant a patent, you are granting a 
monopoly and the company can come first to class and charge any 
price.
    I think the tools that I am trying to direct your attention 
to in the testimony and some of my comments is, in Part D, you 
might think of additional tools in the instances where you 
don't have a competitor. Part D was created to exploit 
competition and have the PBMs negotiate, but you are still 
going to have drugs that don't have competition. And you might 
want to think about things like pricing to the clinical value 
of the drug or some kind of negotiations strategy.
    Mr. Lujan. How should we better ensure manufacturers are 
accountable to the public when setting prices for newly-
launched drug products?
    Dr. Miller. Well, I think if you were to pursue the 
mechanisms that I just mentioned to you, that would bring a 
greater accountability at least a better price, to the Medicare 
beneficiary and to the taxpayer, if that is what you meant.
    Mr. Lujan. The question that we had last week at hearings 
as well was the notion that there is a system that has been 
established such that you post your launch price, which I 
regard it as the highest price. And then, you have a lot of 
negotiations. There are discounts. There are rebates. There are 
other pieces that get to different lowest prices, if you will, 
that you have for each partner. And I just have a hard time 
understanding why we just don't get to that lowest price to 
begin with. They know how low they are willing to go. They know 
where they are going to be. So, if this is truly going to take 
into consideration the impacts to the patient and lowering 
costs, then that is where we should start.
    Mr. Isasi. Is it Isasi?
    Mr. Isasi. Isasi.
    Mr. Lujan. Isasi.
    Mr. Isasi. Yes.
    Mr. Lujan. You noted in your testimony that the threshold 
to trigger reporting requirements for newly-launched products 
should be reduced from the current amount included in H.R. 2069 
of $26,000, the median income of average Medicare 
beneficiaries. Can you explain why Families USA would like to 
see this threshold price reduced for reporting purposes?
    Mr. Isasi. Yes, absolutely. Thank you for the question.
    It is critically important that we understand that, as 
these changes take place, industry is going to adapt, right? 
And so, what we will find is all the launch prices will come in 
just under whatever threshold is set. So, we have got to lower 
the threshold to a threshold that is based on the actual 
realities of the families who are in the benefit.
    And to your earlier question, I also want to mention that a 
lot of folks don't realize this, but from the industry's 
perspective, even companies that aren't American, they start 
here in the U.S. launching first here, because we are willing 
to pay the highest price, twice, three times, four times more 
than the rest of the world, right? They start here. They set an 
incredibly high price. Then, they go out in the rest of the 
world and negotiate because we don't negotiate.
    Mr. Lujan. I still want to talk a little bit more about the 
average Medicare beneficiary. One, I agree with your response 
to the first question. That is a concern that I have as well. 
How do we address that? And how do we set up a better 
environment when it comes to fairness?
    To the question that I asked Dr. Miller, the number of 
people that are going to go without these therapies because 
they can't afford them----
    Mr. Isasi. That is right.
    Mr. Lujan [continuing]. Which is growing in the United 
States.
    The advocacy that you are bringing forward in your 
testimony about lowering the amount that is listed in H.R. 
2069, the $26,000--and in your case, it would be a lower 
number--but $26,000 is how much a family would make, would earn 
in a year. And all that this is saying is, if you are going to 
list your drug price higher than a Medicare beneficiary makes 
in an entire year, you should say why. Does that sound fair?
    Mr. Isasi. Very fair.
    Mr. T4Lujan. Madam Chair, I think that, as we talk about 
pricing care and the notion that, if you just leave it alone, 
and if Congress walks away and no one wants to be a part of 
this, that it will fix itself, it has not worked yet. And too 
many people out there are suffering and they are getting hit 
every day. And we should be reminded that we made a commitment, 
when we went to the American people over the last two years, 
that we would pass legislation to lower the cost of 
prescription drug prices for the American people, and we had 
better deliver on it.
    And with that, I yield back.
    Ms. Eshoo. Amen.
    The gentleman yields back. I now would like to recognize 
the gentleman from Virginia, Mr. Griffith, five minutes for 
questioning, sir.
    Mr. Griffith. Thank you very much, Madam Chair.
    Let me say, so that everybody is clear, my Democratic 
colleague just said that, you know, taking no action isn't 
working. He is right. And we are going to have to take action. 
And so, we will have to sort out what is the best action that 
we can take. But I think both sides of the aisle are dedicated 
to figuring out how we fix this. And there are all kinds of 
different ways to do it and all kinds of issues.
    Dr. Feldman, in your oral testimony, I was very taken with 
what you were saying. You indicated you had a patient who had 
gotten a call to change their drug. I believe it was for 
rheumatoid arthritis, is that correct? And I want to know who 
called them, not the individual's name, but was it the PBM? Was 
it the insurance company? Who called them and said, ``Hey, 
let's switch you over to this new drug''?
    Dr. Feldman. It was the PBM, and they received a 
notification in the mail.
    Mr. Griffith. So, they received a notification in the mail 
from the PBM. And were you ever consulted about that?
    Dr. Feldman. No. In fact, the patient brought it to me and 
said, ``I've been asked to switch to this drug, a lower-cost 
alternative.'' And it is not necessarily a lower list price. 
This happens all the time when you have midyear formulary 
changes. Patients just get dropped. They won't even pay for it 
anymore. So, this at least was slightly less egregious than the 
complete exclusion of a drug from preferred formulary.
    Mr. Griffith. But you also indicated that this drug was not 
similar. It was not really an alternative for that patient. Can 
you explain that to me?
    Dr. Feldman. It treats rheumatoid arthritis, but it was not 
a therapeutic equivalent drug. You know, there are different 
mechanisms of action in the immune system. And the drug that 
this patient finally ended up on affected T cells in a certain 
way. This one was something, a different drug entirely that did 
not affect the same part of the immune system. So, it would be 
ridiculous for me to change it.
    Mr. Griffith. So, let me try to break this down into more 
simple terms that I can understand, and hopefully, the folks 
back home who will be watching this later or watching it now 
will be able to understand. So, antacids, I take Zantac because 
I have lots of food allergies, and a lot of times a stomach 
upset is caused by my allergies. That being said, Tums doesn't 
do much for me, as a result of that, and Zantac has an 
antihistamine in it. Are you saying that what they did was they 
took him off the Zantac that had something that could help him 
and moved him onto something like the Tums, which might be a 
very good product for some people, but doesn't work for me? Is 
that what you are trying to say?
    Dr. Feldman. Scientifically, it is not the same----
    Mr. Griffith. OK.
    Dr. Feldman [continuing]. But, conceptually, yes.
    Mr. Griffith. Conceptually? OK.
    [Laughter.]
    At least I got the concept.
    Ms. Bass, all right, shouldn't PBMs at least be trying to 
contact doctors? Look, my stomach upset is not a big deal. But 
somebody that has got rheumatoid arthritis, that is a big deal. 
Shouldn't the PBMs be contacting the doctor to say, for this 
patient, does this switch make sense because we are trying to 
save some money? Now I don't mind anybody trying to save some 
money, but let's make sure it works for the patient.
    Ms. Bass. So, in those kinds of situations, there are 
definitely appeals rights for everybody in Medicare and every 
private sector plan. And PBMs absolutely work with doctors to 
figure out in that instance what the right thing is.
    Mr. Griffith. But most patients don't understand the 
appeals rights. They don't understand the appeals process. They 
just know they have gotten this. And what about the cases like 
Dr. Feldman said? In some cases, they don't even give you a 
choice; it is a matter of ``We are no longer paying for the 
drug that you have been on for the last four years or five 
years that has been effective for you, and we are switching you 
over to this drug. And you can pay for that other drug, if you 
want to, but we are not paying for it.'' That really can be 
disruptive, wouldn't you agree?
    Ms. Bass. It sounds terribly disruptive, I agree.
    Mr. Griffith. So, what can we do about that?
    Ms. Bass. Again, there are exceptions in Medicare Part D, 
and there are processes to go through. And in that instance, 
the patient would have to go through that with his or her 
physician.
    Mr. Griffith. So, the physician and the patient are going 
to have to have a lawyer to help them figure out the process, 
is that what you are saying?
    Dr. Feldman. And that is why we need the samples to 
continue the patient on the correct medication because it can 
take six to eight weeks to go through an appeals process.
    Mr. Griffith. Thank you. So, that way, you have more time 
to go through the appeals process. Well, that makes sense. 
Thank you, Dr. Feldman.
    How many different PBMs are members of your association?
    Ms. Bass. Right now, there are about 15.
    Mr. Griffith. About 15? So, across the country we have 
about 15? Or how many PBMs do we have? Some of them probably 
aren't members, I guess.
    Ms. Bass. There are 66 full-service PBMs in the U.S., and 
there are more organizations that provide PBM services.
    Mr. Griffith. Does that seem like maybe we have got a 
little monopoly going in the PBM industry?
    Dr. Feldman. Three PBMs control nearly 80 percent of the 
population.
    Mr. Griffith. Yes, that is why I was asking the question. 
And I understand you can't answer that because you have got an 
association to represent. But the point is that, when we hear 
testimony that the PBMs are asking our drug manufacturers to 
raise the list price, and then, many of them get a percentage 
of the cost of the drug for handling it, it looks like to me,We 
have got, the fox is in the henhouse and we are going to have 
to take some action.
    I yield back, Madam Chair.
    Ms. Eshoo. I thank the gentleman and he yields back. And 
now, I would like to recognize the gentleman from Oregon, Mr. 
Schrader, for five minutes of questioning.
    Mr. Schrader. Thank you, Madam Chairman. I appreciate it 
very much.
    Yes, I would associate myself with the remarks of the last 
two Members that talked because industry is, unfortunately, in 
a situation where there are a lot of changes. The pricing 
structure is completely opaque and very complex. I don't blame 
anyone in any of the industry sectors for that. It has just 
grown up that way. But, as a result, it calls for, 
unfortunately, our work here to make it a little more 
transparent. And everyone, apparently, loves transparency, but 
what that means is in the eye of the beholder; is what we are 
hearing now. So, that would be, unfortunately or fortunately, 
our judgment call, hopefully based on hearings we have had. We 
have had a number of hearings, and hopefully, will give the 
American people some assurance that we are on their side and 
trying to help, not stifle innovation, but at the same time 
make sure they get the best deal possible out there.
    Ms. Joldersma, I appreciate you being here. I appreciate 
your discussion on the role that rebates may play and having a 
higher list price drug get a preferable placement on the 
formulary. Could you give any examples of medicines where you 
think that might be the case?
    Ms. Joldersma. Well, it is challenging for me, as a trade 
association, to speak to what would really be a very 
proprietary arrangement. But I can say that I noticed last week 
one of our member companies did testify here and talk about the 
difficulties it has had with formulary uptake after it did 
lower the list price of one of its blockbuster medicines 
really. So, there is that in the record.
    I believe that other statements have been made on the 
record in the diabetes space, where we have seen companies who 
have launched authorized generics with the hope of being able 
to lower that list price, and they, too, have faced some 
challenges. So, there certainly are examples.
    Mr. Schrader. All right. So, then, do you think public 
disclosure of the discounts, including administrative fees, 
would be helpful in preventing this?
    Ms. Joldersma. So, yes, we do agree that more disclosure is 
required in that, including administrative fees would be 
important. We have seen the fees that manufacturers paid to 
manufacturers increase enormously; really in the last several 
years. And at least my read of the current statute is that a 
whole swath of administrative fees are excluded from reporting 
under Section 1150(a) that was enacted by the ACA.
    Mr. Schrader. It seems a little bit like PBMs almost 
double-dip. You have the rebate situation. The price 
negotiating goes on. Then, there is also this administrative 
fee, which seems a little inappropriate.
    Ms. Bass, I appreciate the explanation of the role, at 
least in your testimony, of the P&T committees and evaluating 
all the clinical and medical evidence that is out there before 
making coverage recommendations. Does cost and rebate amount 
play at all in these determinations?
    Ms. Bass. The P&T committees work solely on the clinical 
efficacy of the drugs. And then, they give their 
recommendations to the PBMs, and the PBMs then go and negotiate 
to the lowest----
    Mr. Schrader. So, if that is the case, then, how would you 
explain the higher list price drug with a greater drug rebate 
receiving a more favorable formulary placement oftentimes?
    Ms. Bass. If the lower list cost drug came down as low on 
the net cost basis, it would be on the formulary.
    Mr. Schrader. So, it does have an impact, apparently? Do 
you support increase in transparency in the fees, including 
administrative fees I just talked about that you'll receive 
from the pharmaceutical companies; and also, DIR payments that 
go on with the pharmacies?
    Ms. Bass. All of the fees and pharmacy DIR are reported in 
Medicare Part D to CMS.
    Mr. Schrader. So, you wouldn't object to them being public?
    Ms. Bass. So, again, we have issues around public reporting 
when it is very clear and would get at, would allow for tacit 
collusion. But, in the aggregate, no.
    Mr. Schrader. OK. A question for Dr. Feldman on the 
samples. I listened to Dr. Burgess talk about his lack of 
attention to the samples from the standpoint of what he is 
going to prescribe. He knows what he thinks that patient needs 
best. I would assume Dr. Bucshon would feel much the same way. 
The samples, to your testimony--I was a veterinarian for many, 
many years--do provide an opportunity for a patient to get 
much-needed care they couldn't get otherwise in the interim. So 
to me, the sample issue seems much to do about nothing. Is 
there really a reason to collect all of this data and go down 
that road, in your opinion?
    Dr. Feldman. As long as it keeps the samples coming for the 
patients that need them, I am happy. And I do have specific 
examples of the question about a lower-price drug not getting 
on the formulary, if anyone wants to know.
    Mr. Schrader. Well, maybe we could get that to my office 
after the hearing is finished.
    Following up a little bit, would utilizing existing 
frameworks for evaluating the quality of a physician and their 
conduct, how they do things, be a suitable metric for lifting 
prior authorization? You have testified about how that really 
makes it difficult; ergo, these samples become important. We 
are trying to find ways to lessen the requirements for prior 
authorization. Are there some policies, either that a 
physician's office, a hospital, whatever, follows that might 
give us some guidance to help us help you?
    Dr. Feldman. Yes. With specific guidelines and pathways 
developed by certain physician groups, we can bypass PAs on 
things from MRIs to certain drugs. And I think that is a 
valuable way to make it easier for the patient to get the 
proper medication.
    Mr. Schrader. If we could get some of that, that would be 
outstanding.
    And I yield back. I am sorry.
    Ms. Eshoo. The gentleman yields back. I now recognize the 
gentleman from Indiana, Mr. Bucshon.
    Mr. Bucshon. Thank you, Madam Chairwoman.
    I was a surgeon before I was in Congress.
    Ms. Eshoo. Dr. Bucshon, I am sorry.
    Mr. Bucshon. Yes, thank you.
    I would agree, Mr. Schrader, that the sample issue is a red 
herring. I mean, I will just say, as a physician, the basic 
premise that we practice medicine based on this type of thing 
as a group is false. I would decide what type of medication 
that a patient is on and, then, ask my staff, ``Hey, do we have 
any samples of this?'', not the other way around.
    The other thing is, from a PBM perspective, I don't like 
restricted formularies, and I particularly don't like it when 
non-medical people don't allow access to medications for 
patients based on profit. And we have heard a lot of testimony, 
and that may not be pervasive across the industry, but there 
clearly is substantial evidence that that is happening.
    And I don't believe it when people say that drug companies 
aren't being called literally daily and talking about their 
list prices and the margins and other things like that. That is 
happening, and the incentives are just not aligned.
    The last thing I will say, and then, I have a couple of 
questions, is we have been going after providers now since the 
last 1980s, cutting reimbursement to the people that actually 
are in the arena taking care of patients. And it has solved all 
our problems, right? It is the providers' fault. They make too 
much money. They are doing too many procedures. They are 
prescribing too many drugs. Well, the reason we haven't been 
able to make a dent in medical prices--in fact, it is worse not 
only in this, but other areas of medicine--is because that is 
not the problem. And now, we have got shortages of physicians 
nationwide as a result, including particularly in primary care.
    Ms. Joldersma, as part of H.R. 2087, the Drug Price 
Transparency Act, all drug manufacturers will be required to 
submit information to the Secretary on the average sales price, 
ASP, for physician-administered drugs coming under Medicare 
Part B. However, it is my understanding that certain medical 
devices that are reimbursed under the drug benefit could be 
excluded from this requirement. In keeping with the spirit of 
transparency and market-based pricing, is there opposition to 
including a policy change to ensure all such devices reimbursed 
as drug products also would be subject to ASP reporting?
    Ms. Joldersma. From the perspective of PhRMA, no, there is 
no opposition.
    Mr. Bucshon. OK. Well, Chairwoman Eshoo, I hope we can work 
together to address this issue and the legislation as it moves 
forward.
    And so, I just want to again, on the samples, Dr. Feldman, 
you raised the issue, and again, is there any evidence in your 
view anywhere that samples that are given to physician offices 
have any effect on overall practice of medicine? And also, 
doing this type of reporting, do you feel like it would do 
anything to lower drug prices?
    Dr. Feldman. I don't think it will do anything to lower 
drug prices. And, no, they have absolutely no bearing on my 
prescribing habits whatsoever.
    Mr. Bucshon. Mr. Holtz-Eakin, do you think particularly 
that the sample issue is a big enough issue that it would have 
any substantial impact on lowering drug prices? As you pointed 
out, the key here is out-of-pocket costs. That is what we are 
trying to get down.
    Dr. Holtz-Eakin. I don't think the sample issue drives 
much.
    Mr. Bucshon. Yes. So, there is just really, really no 
evidence that that would be the case.
    And I guess, Ms. Bass, what do you think of the 
administration's proposed rule on rebates?
    Ms. Bass. We don't think that the administration's proposed 
rule on rebates will do anything to lower list prices.
    Mr. Bucshon. How come?
    Ms. Bass. Because the manufacturers set the list prices, 
and the PBMs negotiate lower net costs, but PBMs are not 
involved in list prices.
    Mr. Bucshon. Don't get me wrong, I know that PBMs have a 
value-added role in this whole thing. My personal view is that 
the proposed rule, although the devil is in the details, is 
something that is going to lower, going to take away the upper 
pressure on list price. I mean, I know the PBMs all say that it 
won't make any difference at all, but I would argue that it 
does. I mean, what is your view on that?
    Ms. Bass. We would respectfully have to agree to disagree. 
We do think that there is a conversation to be had around the 
use of the price concessions PBMs negotiate.
    Mr. Bucshon. OK. Fair enough.
    Ms. Bass. But, right now, they are used for premium in Part 
D. And what the Secretary is trying to get at, I believe, in 
part, aside from lower list, is to help people at the pharmacy 
counter.
    Mr. Bucshon. OK. With your indulgence, Madam Chairwoman, 
Mr. Holtz-Eakin, you had a little comment on that?
    Dr. Holtz-Eakin. Just from the economics of it, if you have 
the ability to negotiate rebates, you ought to have the ability 
to negotiate prices, and it is the same negotiation. It will be 
more effective if the rule covered not just Part D, but the 
commercial market as well. I mean, that would make a 
difference.
    Mr. Bucshon. I agree with that. Thank you.
    I yield back.
    Ms. Eshoo. The gentleman yields back.
    Did you want to add something to that, Dr. Miller? You 
looked like you were just ready to turn your microphone on.
    Mr. Bucshon. Excuse me. I didn't recognize him to respond 
to my question.
    Ms. Eshoo. I am recognizing him. I am recognizing him.
    Mr. Bucshon. OK. Fair enough.
    Dr. Miller. I mean, we think the most credible analysis is 
that it ends up in the Part D program, adding to the cost of 
the taxpayer, and that it doesn't have a significant effect on 
list prices.
    Ms. Eshoo. Thank you.
    I recognize the gentleman from California, Mr. Cardenas.
    Mr. Cardenas. Thank you very much, Madam Chair, and thank 
you for recognizing as the chair, as you have the right to do 
so.
    Also, I would like to thank the ranking member for having 
this committee as well, to both of you.
    I am very proud to serve on the Energy and Commerce 
Committee and proud to say that we take the time to consider 
many perspectives, so that we can move forward with meaningful 
legislation. And the bottom line is that, right now, Americans 
across the country are hurting. It is our job to tackle these 
big problems like drug pricing to help all Americans, to give 
them real choices that don't involve choosing between keeping 
their families fed and keeping them healthy.
    With that in mind, we have had several hearings now on 
prescription drug pricing. One thing we have been hearing about 
it is how efforts to cut costs are just not making it to the 
everyday American citizen.
    Ms. Bass, thank you for being here today.
    I am interested in discussing how price concessions and 
rebates directly impact consumers and whether insurance plans 
or their beneficiaries are more likely to benefit from these 
negotiated prices. You mentioned that plan sponsors can 
determine how PBM-negotiated price concessions are used. Can 
you explain some ways that health plans, and specifically 
prescription drug plans, will use the rebates and other price 
concessions that PBMs acquire?
    Ms. Bass. Sure. Thank you for the question.
    In Part D, the rebates are used, essentially, to buy down 
the premium or to lower the premium and to keep it affordable 
across all beneficiaries. In the commercial market, plan 
sponsors use rebates across their health plan sometimes to help 
offset hospital costs. In other instances, they think about the 
rebates when they are setting their enrollees' cost-sharing. 
So, your $10 generic copay and your, say, $30 preferred brand 
copay, your health plan is probably taking into account the 
rebates it gets when it determines that level of cost-sharing. 
So, it goes sometimes toward premium, sometimes toward cost-
sharing. It depends on the plan. In Part D, it is almost always 
for premium.
    Mr. Cardenas. So, what you just described is, it could be 
that, the biggest beneficiary of the system that we have today 
might actually be favoring the decision making of an insurance 
provider, not necessarily directly to the end-user, the 
citizen?
    Ms. Bass. I guess the way I would characterize it is, if 
whoever the plan sponsor is decides to use it for premium, it 
benefits all enrollees with a lower premium. If the plan 
sponsor decides to put it toward cost-sharing, then it helps 
the people who are using drugs that have rebates, and 61 
percent of brand drugs do.
    Mr. Cardenas. OK. All right. Are plan sponsors required to 
disclose how they utilize price concessions?
    Ms. Bass. In Medicare, every plan sponsor reports its 
rebates, its fees, which we talked about earlier, to CMS; and 
CMS is aware of how those are used. In the commercial market, 
the PBM discloses to the plan sponsor what its rebates are; but 
plan sponsors are not required to publicly disclose, or even 
really--to the Secretary how they use the rebates.
    Mr. Cardenas. OK. I would like to point out that, on H.R. 
2376, the Prescription Pricing for the People Act would require 
the Federal Trade Commission to study the role of PBMs in the 
supply chain and report to Congress on recommendations. Do you 
have any recommendations on how we can best ensure consumers 
are directly benefitting from the cost savings generated by 
price concessions and rebates negotiated by PBMs? Ms. Bass?
    Ms. Bass. So, first of all, we welcome the FTC review. And 
our recommendations are that, in Part D, you, as policymakers--
and, in fact, you are overseeing the plan sponsors--have a 
conversation about should that money be used for reducing 
premium, holding down the premium, or should it be used for 
reducing cost-sharing? And that is a conversation you, as 
policymakers, should have, and we welcome that conversation as 
well.
    Mr. Cardenas. Again, Madam Chair, I really appreciate the 
opportunity for us to cover this very important issue. And 
healthcare is complicated.
    Earlier today I was able to meet with a young woman in my 
office who actually grew up in my ZIP code. Very few people in 
my ZIP code actually make it to four-year institutions. She 
went beyond that and she is currently studying to be a doctor. 
She is in her third year. And I asked her what motivated her. 
And what motivated her was her little brother who passed away 
from a non-diagnosed illness that he had since he was born. He 
was a little boy when he died. And then, when her father got 
very ill, she urged him to go to the doctor and he said, ``I 
never want to see another medical bill again.'' And shortly 
thereafter, he died from a heart attack.
    My point is, here we have a young person as an example of 
an American citizen who decided that is how I am going to try 
to make the world a better place, by becoming a doctor. I hope 
that we have that same urgency, as Members of Congress, to try 
to get down to the bottom of these issues and to make the world 
a better place for American citizens, and for everybody in this 
country, by doing what we can in the way that we have been 
appointed to do so or elected to do so.
    So, again, thank you to the witnesses.
    And thank you, Madam Chair. I yield back.
    Ms. Eshoo. The gentleman yields back. Thank you for your 
beautiful words.
    I now have the pleasure of recognizing the gentleman from 
Florida, Mr. Bilirakis, who has an important bill with Mr. 
Cunningham, the Creating Lower Cost Alternatives for Your 
Prescription Drugs Act. The gentleman is recognized for five 
minutes of questioning.
    Mr. Bilirakis. Thank you. Thank you, Madam Chair. I 
appreciate it. Thank you for holding this very important 
hearing.
    We have had a couple of hearings on this issue, and we 
should be focusing on this issue because this is what a lot of 
our constituents care about. I have a lot of seniors in my 
district and a large veterans population; and lowering 
prescription drug prices is an utmost priority for me.
    To that end, I want to ask a question of Dr. Holtz-Eakin. 
To that end, the bill that I recently introduced, as Madam 
Chair pointed to, alluded to, with Congressman Cunningham, the 
Creating Lower Cost Alternatives for Your Prescription Drugs, 
or CLAY, the CLAY Act, is a great first step, in my opinion, 
modernizing Part D to lower prescription drug costs. However, 
it is a first step, and I believe that modern Part D has been 
an outstanding program, one of the greatest programs we have 
had. And it has been below budget, like 40 percent below 
budget, and it has helped out our seniors. But we must upgrade 
it and modernize it.
    I understand that AAF has a comprehensive proposal for 
modernizing Part D. Would you please share your input with the 
committee, Doctor, please?
    Dr. Holtz-Eakin. Well, certainly we would be happy to 
provide a copy of the paper that Tara O'Neill Hayes wrote, who 
is here with me today.
    It is similar in spirit to what Dr. Miller discussed in his 
remarks, which is what we see in Part D is the most rapidly-
growing Government cost, taxpayer cost, is in the reinsurance 
area. So, it is above the catastrophic maximum. And so, the 
proposal, in essence, says: ``Why don't we have the 
prescription drug plans and the pharmaceutical industry be 
responsible for their share of the costs above that 
catastrophic maximum, so that the incentives to have high-
priced drugs are diminished? Why don't we fully protect 
taxpayers against their out-of-pocket by having a catastrophic 
maximum where they don't owe any more past that? And then, have 
a sort of typical 80/20 split for the remainder of the drugs, 
so that PDPs have a real strong incentive to get PBMs to 
negotiate on their behalf for the remainder of the drugs.''
    Where typically they are not sole-sourced there is more 
competition, and the possibility of vigorous competition is 
much more likely. So, it is a good program. It is not broken. 
It has been very successful. But we can sharpen the basic 
negotiating incentives that were built into the program, make 
it better going forward.
    Mr. Bilirakis. Very good.
    Again, Doctor, Congress developed incentives to encourage 
development of rare disease therapies--and I work on that 
issue--where innovation was previously almost nonexistent. How 
might the SPIKE Act in its current form have an outsized impact 
on future innovation for rare disease drug development? And how 
can we best address this concern?
    Dr. Holtz-Eakin. I guess I would say a couple of things. 
You know I have my reservations about the SPIKE Act. I 
mentioned them in my written testimony and in my opening 
remarks. There is nothing about it, I think, that guarantees 
lower drug prices. It is most likely to impact those startups 
specializing in those kinds of drugs and where launch prices 
are typically very high. And so, you will be above this 
arbitrary threshold with that very high-value drug. And I worry 
about diminishing those incentives.
    Having said that, I just want to echo something Dr. Miller 
said, which is I don't think transparency in the end is going 
to deal with the places where we have high drug costs in the 
United States. And the things under consideration today have 
merit, but they are not ultimately the solution. It is 
fundamental reforms of the type you talked about in Part D. I 
think those are important in Part B, where there is no 
particular reason to give 6 percent of the ASP to delivery of a 
drug. That is uncorrelated with the cost of actually treating a 
patient. So, reimburse for that instead. Those are the reforms 
that I think will be more effective than just transparency.
    Mr. Bilirakis. Thank you.
    One other question. Often when discussing high drug prices, 
we tend to focus on what is wrong without mentioning what is 
going right to ensure we achieve the desired result in a way 
that does not undermine the progress that has already been made 
or produce other negative, unintended consequences. Can you 
share with us what is currently working and how we might 
double-down on these efforts?
    Dr. Holtz-Eakin. As I noted at the outset, there is a 
tradeoff between financial incentives like prices and 
innovation. We are literally in an era with unprecedented 
innovation in the capacity to treat illnesses that were not 
previously deemed to be treatable. And all that is evidence of 
the power of that incentive, and I think it is important to 
hold onto that.
    I also think it is very important to think ``price for 
who?'' That has come up several times. And keep focusing on the 
fact that in some cases--so, for example, with the rebate rule, 
if, in fact, list prices don't go down, then there is a chance 
that premiums will go up for everybody. But the people who are 
going to be protected are those who have the biggest drug costs 
and the most severe conditions. That is exactly what an 
insurance program should do. And so, let's keep track of whose 
price is being affected as much as prices in general.
    Mr. Bilirakis. All right. Thank you very much.
    I yield back, Madam Chair.
    Ms. Eshoo. The gentleman yields back. I now would like to 
recognize the gentleman from Vermont, Mr. Welch, five minutes.
    Mr. Welch. Thank you.
    Just starting to acknowledge something that Dr. Holtz-Eakin 
said, we have made a lot of progress in pharma. Unfortunately, 
the price is starting to kill us.
    And I want to go to you, Ms. Joldersma. You mentioned that 
R&D is a big deal; there are 9 failures for every one success. 
And you said you spend a lot on R&D. My question is this: would 
you, on behalf of your member organizations and companies, 
provide to the committee specific and concrete information as 
to how much each company claims it has spent on R&D, how much 
it has spent on advertising, how much it has spent on stock 
buybacks, and how much it has spent on the top five paid 
compensation executives? Would you do that?
    Ms. Joldersma. I would have to consult with my counsel to 
know if----
    Mr. Welch. This is not a mystery here. I mean, what is the 
big deal? Pharma is claiming that it spends all its money on 
R&D, but it won't show us the books. So, at a certain point, 
count me as skeptical.
    Now, Dr. Miller, I think your research shows that what 
pharma claims it needs to spend is about 176 percent higher 
than what actually is required in order for them to get the 
return.
    Dr. Miller. I just want to be clear that the research I am 
citing is by other people. It was summarized in my testimony. 
There were a couple of things that were said. The amount of 
revenue that comes out of the United States alone exceeds 
worldwide R&D investments by something like 70 percent. And 
there have been studies that Arnold Ventures supported that 
show that the costs of producing the drugs are less than being 
claimed by the industry.
    Mr. Welch. Suggesting it is an inflated claim by pharma?
    Dr. Miller. Suggesting that.
    Mr. Welch. I mean, Madam Chair, all of us, R's and D's, 
whatever side we are on, we want to know what the facts are.
    So, you won't answer me now. You have to go back to your, 
quote, ``counsel''. Go back to your counsel and, then, answer 
me, and tell us whether we are going to get that information. 
But, while I am at it----
    Ms. Joldersma. Sir, I would be happy to provide the wealth 
of information that is already filed by our companies annually.
    Mr. Welch. I do not want a ``wealth of information''. I 
want four issues. One, R&D spending; 2, stock buybacks; 3, 
advertising; 4, executive compensation. That is all I want, not 
a ``wealth of information''.
    Ms. Joldersma. I believe that is all available, and I would 
be happy to provide it.
    Mr. Welch. All right. While I am at it, I want to ask this 
question: there is the justification of R&D. Sanofi increased 
the price of its drug Lantus by 171 percent from $99 in 2010 to 
$270 in 2018. That drug had been on the market since 2001. 
Presumably, the R&D that was done to put that drug on the 
market was done before 2001. How much R&D was part of the 
justification for that explosion in the price between 2010 and 
2018?
    Ms. Joldersma. I am not sure of the answer, but I suspect 
that it would be R&D for treatments and cures that we are still 
waiting for, not for that product.
    Mr. Welch. Give us the facts, all right?
    Now, Dr. Holtz-Eakin, you have made some criticisms that I 
actually think have merit about nibbling on the edges with 
transparency. I want transparency when there is a claim that it 
justifies the price increases. In some of the reporting, that 
is a big hassle. In the heart of this, you have nibbled around 
the edges, but what it reflects is the frustration that states 
and payers are having to try to get some grip on how they are 
getting hammered every year.
    And my question is whether some of the suggestions Dr. 
Miller makes you agree with, where we have to really bite the 
bullet and have the Government play a role. Our Government is 
the only one in the Western industrialized democracies where we 
stand aside and let the consumer get hammered. Price 
negotiation, would you be supportive of some of the price 
negotiation suggestions that Dr. Miller is making to apply to 
commercial as well as the PBMs and the rebates?
    Dr. Holtz-Eakin. Let me disappoint you. I mean, when I was 
CBO Director, we wrote any number of studies that said that 
negotiation wouldn't lower spending. CBO just recently issued a 
response to, I believe it was Senator----
    Mr. Welch. Without a formulary. It is with or without a 
formulary.
    Dr. Miller, why don't you----
    Dr. Holtz-Eakin. That is a key part of it, yes.
    Mr. Welch. That is right.
    Dr. Holtz-Eakin. It is a key part of it.
    Mr. Welch. And you get savings with a formulary. The 
formularies we have now are not done on behalf of the public. 
They are done for the benefit of the PBMs.
    Dr. Miller, give me your top three steps we have to take in 
order to start bringing to heal these outrageous drug prices.
    Dr. Miller. The first thing is, in Medicare Part D, adopt 
the changes that have been recommended that bring more pressure 
on the PBMs and change the risk structure, which both of us 
agree on. There is a whole set of patent, anticompetitive 
behaviors, legislation, that you are moving on; you need to 
move on; you need to move further.
    The last one-this is where we disagree potentially-on the 
drugs where there is not competition, that is where we are 
recommending that you think about things like negotiation and/
or reference pricing. And we think it can be done without 
formulary exclusion; and I am happy to talk to you and your 
staff about that.
    Mr. Welch. Thank you.
    I yield back. I thank the witnesses. I thank the Chair.
    Ms. Eshoo. The gentleman yields back. I now recognize the 
gentleman from Oklahoma, Mr. Mullin, for five minutes of 
questioning.
    Mr. Mullin. Thank you, Madam Chair.
    And thank you for the witnesses to be here.
    I am going to focus on the FAIR Act, and there is going to 
be a little bit of a difference of approach. This is the 
difference between the gentleman from Vermont and myself. We 
both agree that drug pricing is too high, 100 percent. We 100 
percent agree with that. We do agree there has to be something 
done. The approach is what is different.
    See, I believe in private industry. I believe that, when 
the Government gets in things, the entry to the industry only 
gets more difficult and the less competition is there at that 
point. The more regulation that you put on the industry, the 
less people are going to enter into that industry. It is just 
matter of fact.
    When you start looking at the FAIR Act, you start looking 
at what it is wanting the companies to do. What that is, it is 
just one step closer to what I think the ultimate goal is to 
some Members in Congress, and that is to take over the industry 
and be Government-run. That is the quickest way you can 
possibly kill an industry.
    I mean, when you look at the FAIR Act and it says they want 
the total revenue and net profit generated from the qualifying 
drug for each calendar year since the FDA approved it, the 
total cost associated with marketing and advertising for the 
drug, the total revenue and net profit of the manufacturer, not 
the drug, for the manufacturer for 12 to 36 months, what does 
that have to do with anything? The compensation for the 
executives, what does that have to do with the Federal 
Government? Since when does the Federal Government get into the 
fact that they can limit the compensation for a non-Federal 
employee? But that is exactly what the FAIR Act is going to.
    What we want to do is figure out how Congress can make it 
more competitive. See, Congress is not in the business of 
creating businesses. We should not be in the business of 
creating jobs. What we should be in the business of is creating 
an environment for entrepreneurs to create jobs. When you allow 
competition in the market, then you are going to start seeing 
the competitive prices move downward.
    Now, Dr. Miller, what you said a while ago, I think there 
might be something that we can work on there. When you said 
where Congress should maybe look at is when there is no one 
else in the market, when it is a specialty drug. I could see 
that. I could see where there could be a way for us to possibly 
find an area to where we could help come up with a rebate or 
come up where you kind of look at it with the insurance, with 
someone with preexisting conditions, where we can help offset 
maybe some of that cost. There could be some areas for us to 
work on there.
    And I agree there is plenty of bad actors here. I think 
everybody has some stake to blame in this. And what I don't 
want to happen is that Congress overreacts. And I believe that 
is where we are moving, especially when you start looking at 
the FAIR Act.
    So, I am going to ask, ma'am, and I am going to do my best 
with your name--Joldersma?
    Ms. Joldersma. That will work.
    Mr. Mullin. That will work? How do you actually pronounce 
it?
    Ms. Joldersma. Well, ``Yeldersma'' is how they would say it 
in the homeland. So, you are exactly right. But we say 
``Joldersma'' here in the U.S.
    Mr. Mullin. Joldersma?
    Ms. Joldersma. Yes.
    Mr. Mullin. I am going to say ``ma'am.''
    [Laughter.]
    So, let me get into some questions, first of all, for you. 
Is PhRMA opposed to reporting price increasing to the 
Secretary?
    Ms. Joldersma. No, in fact, it is already publicly 
disclosed.
    Mr. Mullin. OK. What kind of problems do you see with the 
Fairness Act then?
    Ms. Joldersma. With the FAIR Act?
    Mr. Mullin. FAIR Act. Sorry. Yes, it is not Fairness Act. 
That is another bill I am working on.
    Ms. Joldersma. One leading concern is it is somewhat 
ambiguous, but it appears that it could be applying 
retroactively. Because one of the triggers is a 3-year trigger, 
you know, you think about that. Taking, in fact, in 2019, we 
are concerned that that is effectively imposing the requirement 
going back to price increases that were taken three years ago. 
That retroactivity seems not ideal and not a great precedent, 
and it is certainly challenging to comply with the law in good 
faith when the law was not even on the books at the time the 
conduct occurred. So, that is probably our top issue.
    Mr. Mullin. The FAIR Act requires, I believe, a 30-day 
notice.
    Ms. Joldersma. Yes, sir.
    Mr. Mullin. Is that time acceptable or is there a better 
timeframe for you?
    Ms. Joldersma. So, it does require a notification of price 
increases 30 days in advance. It goes to the Secretary. We are 
concerned that that could lead to some negative behavior in the 
market, including potentially opportunistic buying at the lower 
price, stockpiling. That could lead to drug shortages, et 
cetera. So, in general, we are very concerned with advanced 
notice.
    Mr. Mullin. Thank you.
    With that, I will yield back. Thank you, Madam Chair.
    Ms. Eshoo. The gentleman yields back. And now, I have the 
pleasure of recognizing the gentlewoman from New Hampshire, Ms. 
Kuster.
    Ms. Kuster. Thank you, Madam Chair.
    And thank you to all of you for your patience, bearing with 
us.
    So far, we have had multiple hearings on the critical issue 
of our bipartisan efforts to lower prescription drug prices. 
And the bottom line is simple: drug spending is placing an 
undue burden on our constituents, patients across this country, 
and taxpayers who are footing the bill for our public programs.
    Mr. Miller, you mentioned in your testimony, `` whether we 
like to admit it or not, we are actually rationing drugs in our 
country. And in our current system, patients and payors are 
forced to make difficult tradeoffs and choices.''
    I want to step into, I understand there is no silver bullet 
on bringing down the rising cost of drugs, but I do want to 
focus in on your testimony, if I could, Mr. Miller. You 
mentioned how transparency efforts under consideration would 
not necessarily lead to lower drug prices, though they might 
help us understand more clearly why drug prices are increasing 
at the rates that they are. Do you believe that requiring 
justification for launch prices and price increases will at 
least slow the rate of growth in drug prices or that 
pharmaceutical companies might reconsider price increases with 
transparency?
    Dr. Miller. I think you could have some small Sentinel 
Effect. I think, ultimately, it doesn't stop the wave.
    Ms. Kuster. So, your advice seems to be to go further than 
that and go toward the negotiation of volume discounts. And in 
particular, I am looking at the Medicare negotiation based on 
leveraging volume discounts. And you mention Part D 
negotiation. Can you elaborate on how Part D negotiation might 
look? Especially taking into consideration the high cost of 
drugs now with limited competition, it seems to me both the 
patient and the taxpayer are paying more than they should.
    Dr. Miller. OK. Yes, I will. But, very quickly, I just want 
to remind you part of our recommendations are start to rebuild 
the competition in the market. I don't want to forget that.
    Ms. Kuster. OK.
    Dr. Miller. That is a very important----
    Ms. Kuster. And that is important.
    Dr. Miller. Absolutely important.
    Ms. Kuster. I concur.
    Dr. Miller. We also think, in Part D, once again, bringing 
the pressure to the PBMs and the manufacturers in the 
catastrophic cap, to kind of force negotiations where, in fact, 
you do have competitors, is very important. And then, I am 
stepping into your question. OK?
    Ms. Kuster. OK.
    Dr. Miller. Sorry about that.
    Ms. Kuster. Got it.
    Dr. Miller. But, you know, you will still always be faced 
with very expensive drugs that don't have competition. And so, 
there are a few ways we would suggest that you might think 
about that. One is you think about a reference price. So, we 
look at the clinical value of the drug and say that the 
Medicare program will cover this drug, but the price it will 
pay and the beneficiary's copayment will be tied to the 
clinical value.
    Ms. Kuster. And let me just stop you there. Clinical value 
maybe as compared to hospitalization or as compared to future 
surgery? How do you determine clinical value?
    Dr. Miller. Usually, what you are doing is talking about 
the performance of the drug in and of itself on the value it 
adds to the life of the patient. That is usually how that is 
done.
    Ms. Kuster. OK. Longevity or quality of life.
    Dr. Miller. You could engage in other studies like 
hospitalization watchful waiting, WAW, but mostly what we are 
talking about here are clinical and cost-effectiveness analysis 
that talk about extending the patient's life, that type of 
thing.
    Let me just give you one other to your question. You could 
think of a negotiation process in which you set lanes for the 
bids, so that you are saying there is some range of negotiation 
between the manufacturer and the Government, but it is not 
completely wide open. And you might use some of the clinical 
effectiveness to set those ranges or international prices, some 
set of considerations.
     Why I am making this point is it is a way to try and get a 
more rigorous process that CBO might give credit for.
    Ms. Kuster. So, let me ask you this: do you think that the 
Federal Government is taking maximum advantage of their volume 
purchasing power, if you will, in the negotiations? I am just 
wondering, for example, if we were to consolidate, say, for 
Medicare and Medicaid, veterans, Federal employees, DOD, all of 
these together, do you think that we could do better in the 
price negotiation for the drugs where there is an equivalent, 
where we are talking about competition?
    Dr. Miller. I see. So, in this instance, you are moving the 
conversation. You are not talking about the drugs that don't 
have competition? You are talking about the drugs that do have 
competition?
    Ms. Kuster. Right.
    Dr. Miller I haven't thought about it, and I just want to 
say one thing. There are certain tradeoffs you would have to 
contemplate in how you do that. For example, in Medicaid, there 
are very large discounts. And so, if you move to a different 
system, you have to ask yourself, do you lose those discounts?
    Ms. Kuster. Right. Can you do better than that discount?
    Dr. Miller. Yes, can you do better? And then, VA, which I 
am very uninformed on, the same question. But a very----
    Ms. Kuster. Just as a theoretical concept, would you agree 
that the larger the volume share----
    Dr. Miller. Yes, and that is exactly where I was going. 
Just a straight economics, bigger volume, bigger ability to 
extract discounts because it is harder to walk away.
    Ms. Kuster. Thank you. I yield back.
    Ms. Eshoo. The gentlewoman yields back. I now would like to 
recognize the gentleman from North Carolina, Mr. Hudson, for 
five minutes of questioning.
    Mr. Hudson. Thank you to the Chair.
    And thank you to our panel for being here today. This is 
very informative.
    Every time I go home, I hear from my constituents about 
high drug prices. I will never forget the constituent I met 
years ago who told me that she literally some months had to 
choose between picking up her prescription and paying for 
groceries. This is a problem.
    And in this committee, we have a long history of bipartisan 
work to address the most serious problems facing Americans. I 
believe we should continue that work, but I am having a tough 
time seeing what some of the policies that were proposed here 
will accomplish for American patients.
    Doing some rough, back-of-the-envelope math, I took one of 
the most recent examples of a drug failure, Biogen's Alzheimer 
drug, and looked at what it would take to recoup their 
investment. Biogen spent $950 billion seeking a cure for 
Alzheimer's that ultimately failed. It was disheartening for me 
and many others, particularly those who have relatives with 
Alzheimer's, but also illuminated what it takes to bring a drug 
to market.
    So, back-of-the-envelope math, let's say Biogen was 
successful with the latest attempt. There are 5.8 million 
people in the United States with Alzheimer's. So, assuming 
every single one of them was able to access this drug, Biogen 
would have to charge, roughly, $164,000 to break even on all 
their research. This is, arguably, a bargain compared to not 
only the roughly $350,000 of cost to care for an Alzheimer's 
patient over a lifetime of the illness, but also the emotional 
cost that families endure watching a loved one deteriorate 
right before their eyes, as my family has experienced.
    Under the SPIKE Act, this price or anything higher would 
have triggered a naming-and-shaming exercise. What benefit does 
this have for patients? Ideally, patients would be taken out of 
the middle of this conversation.
    And this brings me to my questions, which the first one I 
will open to the entire panel. The FAIR Act includes high 
penalties for noncompliance. Where should those penalties, 
where should that revenue go to? As it is currently written, do 
you see them going to benefit patients or is it going back to 
the Treasury to be spent by politicians? Shouldn't they be 
explicitly designated to help those who need it most and not 
just go to the Treasury for Congress to spend? I would just 
open it up to the panel, if anyone would like to talk on that.
    Ms. Joldersma. We would agree. We would note that the fees 
are quite high. And, yes, it would be ideal to have those fees 
going to help patients.
    Mr. Hudson. Anybody else? I see some nods. OK.
    Dr. Feldman. It is kind of a no-brainer, back to the 
patients.
    Mr. Hudson. OK. I will assume everybody agrees.
    Ms. Bass, in your testimony, you mentioned the real-time 
benefit tools to help physicians and patients know what drugs 
are on formulary and what the cost-sharing would be. How could 
your industry, the PBM industry, facilitate making this a 
reality?
    Ms. Bass. So, those tools are already in use. And I think 
one of the issues, everybody understands that it needs to be as 
streamlined as possible for physician workflow. And so, 
hopefully, the interoperability exercise that the 
administration is currently undergoing will help make sure that 
every physician has access and it works really quickly. But all 
of our PBMs, most of our PBMs are making that product available 
already in the marketplace.
    Mr. Hudson. Great.
    And, Ms. Joldersma. I hope I am not butchering your name. I 
know lots of states have been passing legislation to get to the 
bottom of why drug prices are increasing. But the bills we are 
talking about today go beyond any State law currently on the 
books. Do you worry about the burden of companies complying 
with a patchwork of 50 State laws plus this Federal law? 
Because if there ever was a time for preemption, it seems to me 
like this would be it. What are your feelings?
    Ms. Joldersma. Absolutely. There are, I think, seven or 
eight different approaches already on the books in states. 
There are additional states who are probably today considering 
different approaches. We have different approaches that are 
coming to light here in the Congress as well. And all of that 
is just added cost that is not going to research and it is not 
going to help patients. So, absolutely, harmonization/
preemption are high priorities.
    Mr. Hudson. Great. Well, I appreciate that.
    And, Madam Chair, I look forward to continuing to work with 
you to focus on patients, and we have a long track record of 
working together in a bipartisan way on this committee. I think 
as long as we continue to focus on the patients and use common 
sense, I think we can get there.
    So, with that, I will yield back.
    Ms. Eshoo. The gentleman yields back. And now, the 
gentlewoman from California, Ms. Barragan, is recognized for 
five minutes for her questioning.
    Ms. Barragan. Thank you.
    I want to follow up on that. You know, while we are here in 
Congress drafting legislation and debating what to do, we have 
seen States taking up legislation that shines light on 
manufacturers' drug pricing. Part of that is attributed to the 
fact that Congress isn't moving and Congress isn't doing 
anything; that States are acting to help consumers and to help 
people who are rationing their drugs.
    In my own State of California, they passed a drug 
transparency law in 2017. It requires drug companies to notify 
health insurers and Government plans at least 60 days in 
advance if they plan to increase a drug price by more than 16 
percent in a 2-year period. Now the law also requires the 
companies to explain the reason behind the increase in price, 
with all of the information provided to the State made public 
online for citizens to review.
    Now PhRMA sued to block the California law. This may be 
because the law was effective in shining a light on upcoming 
price increases. For example, it showed that Valeant was going 
to raise the price of a generic glaucoma medication by 63 
percent and that Teva Pharmaceuticals planned a 49 percent 
price increase for an inhaled solution to prevent asthma 
attacks.
    Ms. Joldersma, you testified that PhRMA supports 
transparency. In this case, PhRMA sued to block this California 
law that would have transparency. Did PhRMA sue to block the 
California law because you are concerned about the unfair drug-
pricing policies of drug manufacturers?
    Ms. Joldersma. No, we sued to block the California law 
because we believe it is unconstitutional in at least two ways, 
the Dormant Commerce Clause and, also, First Amendment 
compelled speech. And we are also concerned about the impact 
that that 60-day advance notification could have on the market; 
given the opportunity it creates for bulk purchasing, 
stockpiling, and----
    Ms. Barragan. OK. Let me ask you another question. So, if 
Congress passed that same law, you would have the same 
concerns, is that correct?
    Ms. Joldersma. Well, the Federal Government, obviously, has 
different authority to regulate interstate commerce.
    Ms. Barragan. I am just asking, if Congress passed the same 
law, would you have the same concerns?
    Ms. Joldersma. First Amendment compelled speech remains a 
concern.
    Ms. Barragan. OK. I am just going to take that as a yes, 
because it is just a yes or no.
    Ms. Joldersma. Yes.
    Ms. Barragan. I have other questions I want to get to.
    Ms. Joldersma. The answer to that is yes.
    Ms. Barragan. Thank you very much.
    Ms. Joldersma. Yes.
    Ms. Barragan. So, during the drug supply chain hearing a 
week ago, Amgen raised the issue of lowering the list price of 
their cholesterol drug by 60 percent. However, PBMs have not 
shifted this drug from high-cost formulary tiers to lower-cost 
tiers which carry lower copayments.
    Ms. Bass, you testified that the mission of the association 
you represent, the PBMs, is to help control cost. So, do you 
support patients having access to these lower-price drugs? It 
seems that when you have a specific instance like in this one, 
we are not seeing the movement.
    Ms. Bass. So, I testified that the mission of our companies 
is to provide access to lower-cost drugs. I can't speak to 
specific company decisions with respect to these drugs, but our 
companies negotiate to the lowest net cost and make their 
decisions accordingly.
    Ms. Barragan. OK. Well, thank you.
    So, Mr. Isasi, I am dead-focused on trying to find 
meaningful solutions to the drug-pricing problem. My 
constituents continue to demand that we find a way to 
significantly lower the price of medications. In your 
testimony, you discuss that, while you are supportive of these 
transparency bills, that transparency legislation alone will 
not significantly affect the price of prescription drugs. You 
go on to state that Medicare Part D negotiation should be 
enacted as a meaningful step to lower prices. While you discuss 
one specific negotiation bill in your testimony, I would like 
you to focus on the policy generally. Do you have any 
projections on the impact on drug pricing if we enact Medicare 
Part D negotiation? And then, beyond Medicare negotiation, what 
other policies should Congress pass to meaningfully lower 
prices?
    Mr. Isasi. Sure. Thank you very much for the question.
    So, this question of the projected savings is very 
difficult, in large part because industry has done a very good 
job of veiling what the actual price is that we are paying, how 
the monies are flowing; and so, it is a very, very difficult 
thing to model.
    But what we know for sure is that, in order for it to work, 
something as simple as just saying ``the Government can 
negotiate'' won't work. We need to have a serious way to put 
teeth in negotiations to make sure that industry shows up and 
in good faith negotiates. So, there are lots of policies. One 
of them would be something like allowing others to produce a 
drug if the pharmaceutical industry isn't willing to negotiate 
a fair price. Another one is imposing a tax on excess profits, 
things like that. So, there is a lot of different methods; but 
you have to real teeth in negotiations or it won't work.
    But what we do know is, just common sense, as I mentioned 
earlier, the pharmaceutical industry starts in the U.S. when 
they launch prices most often because they know we don't 
negotiate. So, they get a very, very high price in the United 
States, and then, they go around the rest of the world and they 
start negotiating.
    And so, for example, we know that we spend maybe 50 percent 
or 100 times more than other countries on drugs, not all drugs, 
but many drugs. For example, in Norway, Humira is almost twice 
as much as what we are paying; Crestor is four times more in 
Australia and in France. So, we know in those cases, Government 
negotiation results in fourfold decrease in price.
    And then, another thing we know is that, as I mentioned, 
manufacturers start in the U.S. The last thing to say is, I 
think there are three really important policies to think about 
beyond negotiation. The first is to think carefully about those 
increases in price year over year, because it is not just the 
launch prices. We have heard that industry has had a really 
hard time because so many of the drugs go to generic. So, they 
just increase prices far above inflation year over year. So, 
the idea of thinking about how price should be tied to 
inflation year over year is really important.
    Two, as Dr. Miller mentioned, we need to understand the 
value of the benefit.
    Ms. Eshoo. Excuse me to interrupt because it is over the 
time, but there is also a 1:30 classified briefing for all 
Members of the House. And I think that it is important that 
everyone be able to get there.
    So, the gentlewoman yields back. And I now would like to 
recognize the gentleman from Georgia, Mr. Carter.
    Mr. Carter. Thank you, Madam Chair, and thank you for 
having this hearing. This is extremely important.
    Thank you to each and every one of you for being here.
    Dr. Feldman, earlier you had a conversation about list 
price. And my colleague before me just mentioned about list 
price, and we were taking about it.
    Ms. Bass, you mentioned that your concern was net price. 
Let me ask you, a copayment to a patient, is it based on list 
price or net price?
    Ms. Bass. Copayments are a set price.
    Mr. Carter. Copayments are a set price? They could be a 
percentage. Is that percentage based on a list----
    Ms. Bass. Oh, sure.
    Mr. Carter. Is that percentage based on the list price or 
the net price?
    Ms. Bass. Co-insurance is typically based--it depends on 
the plan, but in Medicare, say, co-insurance is based on the 
list price.
    Mr. Carter. On the list price. So, if the list price is 
higher, then the copay to the patient could be higher? Yes?
    Ms. Bass. That math works.
    Mr. Carter. That math works. Good. That is new math, but it 
still works. Great.
    Let me ask you, in Medicare Part D, also, patients go from 
deductible to the donut hole, and then, into the catastrophic. 
Is that based on list price or is that based on net price? It 
is based on list price.
    Ms. Bass. The deductible, yes.
    Mr. Carter. So, the higher the list price, the quicker they 
get into the donut hole; the quicker they get into 
catastrophic. And if they get into catastrophic, then the 
taxpayer is the one who is on the hook because they are paying 
the majority of it, not the plan sponsor, not the insurance 
company, correct? That is correct.
    Let me ask you, Dr. Feldman, you mentioned, correctly, that 
when Ms. Bass was asked about how many members or how many PBMs 
there were in the nation, there were 66, I believe you said. 
However, you mentioned that there were three PBMs that control 
80 percent of the market, and that is correct. Not only that, 
but also those three PBMs that control 80 percent of the market 
also have an insurance company that they own and also have 
pharmacies they own. In fact, that vertical integration carries 
over into that.
    You mentioned that you had some patients who came in and 
had a letter that said that they had to change a particular 
drug to something else that was on the formulary. Just out of 
curiosity, any of those, the insurance or the pharmacy is owned 
by that PBM, or would you know that?
    Dr. Feldman. This was a particular PBM that is now owned by 
an insurance company.
    Mr. Carter. Exactly. So, in other words, the PBM is 
directing that patient to use a drug on the formulary through 
their mail order pharmacy or through their pharmacy. It may not 
be a mail order. Because we know that Aetna owns Caremark, owns 
CVS. We know that Express Scripts owns Cigna, owns Express 
Scripts mail order. We know that Optum is owned by United and 
has their own mail order as well.
    So, what we are essentially talking about here is taking 
money out of one pocket and putting it in the other pocket. 
Because if you ask the PBMs where are these discounts, as the 
chairlady likes to say, or rebates going, they say, ``well, 
they are going to the plan sponsor to decrease the premium.'' 
Well, who is setting that premium? The insurance company that 
they own in many cases. So, that vertical integration is 
something that is very concerning.
    Let me change gears here for just a second and ask Dr. 
Miller and Dr. Holtz-Eakin: Earlier Ms. Joldersma was asked 
about one of the parts of this bill that says that drug 
companies would have to give notification before they went up 
on a price. And there was concern about stockpiling. Are you 
familiar with spread pricing and how that works, either one of 
you?
    Dr. Miller. Yes.
    Mr. Carter. OK. And do you agree in her assessment that, 
you know, if we know that if a pharmacy or a wholesaler knows 
that a price is going to be going up, that there is a 
possibility that they would stockpile those drugs in order to 
buy them at a lower cost and, then, also to be able to keep 
them, so that they can sell them at the higher price?
    Dr. Miller. My own comments are--and I just want to preface 
by saying I still don't think that the transparency has a huge 
effect, but----
    Mr. Carter. Did I ask you that? What I asked you about was 
this fair pricing.
    Dr. Miller. To the question that you are asking----
    Mr. Carter. Thank you very much.
    Dr. Miller [continuing]. I think I would say that I would 
not do a prior notice.
    Mr. Carter. You would not do a prior notice?
    Dr. Miller. For the reasons that you are raising.
    Mr. Carter. Thank you.
    Dr. Holtz-Eakin. I would be concerned about that as well.
    Mr. Carter. Absolutely. And I can tell you from firsthand 
experience, and from having been in business and owning a 
pharmacy for 30 years before I became a Member of Congress, 
that was something we did all the time. If we knew the price 
was going up, of course, we are going to buy it at the lower 
price and stockpile it. So, there is a danger there, and I 
would warn you very carefully in this legislation to be careful 
of that. That is something that could happen.
    Madam Chair, I want to thank you again for holding this 
hearing.
    And also, the Prescription Pricing for the People Act that 
has the FTC, an investigation into potential anticompetitive 
business practices and the PBM-pharmacy relationship, that is 
an issue that our committee has asked the FTC to investigate. 
And I hope, Madam Chair, that will come to us and that we will 
have access to that report, so that this committee can look at 
it.
    Thank you, Madam Chair, and I yield back.
    Ms. Eshoo. I thank the gentleman. He yields back. Recognize 
the gentleman from Maryland, Mr. Sarbanes, for five minutes of 
questioning.
    Mr. Sarbanes. Thank you. Thank you, Madam Chair.
    Thanks to the panel.
    Mr. Isasi, I assume you are familiar generally with how, 
for example, state-level insurance commissioners regulate the 
premium hikes that health insurance companies bring on an 
annual basis, where they ask for information to justify those 
proposed increases. And then, as well, we see the example of, 
say, electric utilities--sorry, I have a cold--who have to 
justify any rate increases that they propose and provide a good 
deal of information.
    Do you have a sense of how the kind of information that we 
have available to us from the pharmaceutical companies or the 
PBMs compares to the kind of information that is available to 
the public or to the commissions that operate in those other 
arenas that I mentioned?
    Mr. Isasi. It is a much poorer quality, because it is not 
being collected to understand how the rates are being built. It 
is just being collected.
    Mr. Sarbanes. Yes. And I am increasingly intrigued by using 
that example as a kind of reference point for the kind of 
insight that we should be getting into the drug pricing. 
Because, frankly, I think if you look at the impact on the 
public of drug prices, it is hard to argue that it isn't as 
extensive and permeating as those other things are, where we 
bring a different kind of approach.
    I wanted to ask Ms.--I can't see your name all the way down 
there at the end----
    Ms. Joldersma. Lisa.
    Mr. Sarbanes [continuing]. Ms. Joldersma----
    Ms. Joldersma. Call me Lisa.
    Mr. Sarbanes [continuing]. And Ms. Bass, talk to me a 
little bit about the excuse/explanation for resisting some of 
the transparency measures that we have suggested, based on the 
concern about proprietary information. What is the argument 
there exactly?
    Ms. Bass. I will start. So, I will cite OACT, the Office of 
the Actuary, and CBO as well, in suggesting that if pricing 
becomes public, which it would under the Secretary's rebate 
rule, prices go up, OACT and CBO think, by about 15 percent. In 
other words, competitors are not willing to discount as deeply 
when they know the competition's less deep discount. And so, 
prices, the net cost, the way we talk about it, float upward. 
And probably there would be about, according to OACT and CBO--
and we think that is about right--a 15 percent loss, in effect, 
of savings, or a 15 percent increase.
    Mr. Sarbanes. Do you buy that, Mr. Isasi? And if you do buy 
it, do you think the approach I was just discussing a moment 
ago could be an antidote to the result that was just being 
described; i.e., if that kind of transparency creates some 
pressures in the direction Ms. Bass just suggested, then the 
counter-pressure could be authority residing within some 
Governmental entity to come in and push back on that? So, maybe 
you could speak to that.
    Mr. Isasi. That is right. So, that is the fundamental 
question here: is it just transparency or is it transparency 
with teeth? And I think it is really important to note that we 
need to have transparency with teeth. We have to have an 
ability for the Government to come in and say--and this is 
what, again, 80 percent of Republicans, 90 percent of 
Democrats, are asking for, right?--the Government to come in 
and say, ``That's not a fair price. We will not pay it.'' You 
have to combine both things together.
    Mr. Sarbanes. Yes. Well, I am for transparency with teeth, 
just for the record.
    And maybe, Dr. Holtz-Eakin is for transparency with teeth. 
He did wonder or worry about, or at least observe, that 
transparency alone might not achieve the goals that we seek. 
And I share some of that, those misgivings. But I think 
transparency in combination with other measures we could take 
would get us to a place that we want to get to on behalf of 
Americans who are paying too much for their drugs.
    With that, I yield back my time. Thank you.
    Ms. Eshoo. The gentleman yields back. Now I would like to 
recognize the gentleman from Montana, Mr. Gianforte.
    Mr. Gianforte. Thank you, Madam Chair.
    And thank you for the panel for being with us today.
    I continue to hear from Montanans about the cost of their 
prescription drug medications and the difficulties they face in 
trying to pay for their drugs. During our first hearing on drug 
prices this Congress, I spoke about a constituent in Great 
Falls whose lupus medication had increased by hundreds of 
dollars in recent years. The price increase put her and her 
family, made them financially unstable. Unfortunately, her 
story is not uncommon.
    We need to find common-sense solutions, and I look forward 
to finding those with my colleagues across the aisle, to make 
drugs less expensive, increase transparency where it is needed, 
and put patients first.
    Although I appreciate the FAIR Act and understand what it 
is trying to accomplish, as a business owner, when I look at 
the list of reporting requirements in the bill, I do have some 
concerns. It seems that there are requirements that 
manufacturers might not be able to provide answers for.
    Dr. Holtz-Eakin, can you speak to the challenges of 
gathering the required information regarding research and 
development and manufacturing costs?
     Dr. Holtz-Eakin. Well, certainly I think the reporting 
requirements are extraordinarily extensive. I have never seen 
anything like it. And if you started today and had to go back, 
you might not have the records in place to do it, especially 
the smaller firms. Going forward, you would have to put in 
place the sort of mechanisms to collect that on a regular 
basis.
    Mr. Gianforte. So, do you believe, based on the complexity, 
that it might be the situation that certain firms would not be 
able to comply with these new rules?
    Dr. Holtz-Eakin. I would suspect that at the outset, yes.
    Mr. Gianforte. OK. I am also concerned that the FAIR Act 
gives the Secretary very broad authority to include other 
information that the Secretary considers appropriate. 
Typically, I would say, I am all in favor of flexibility for 
the Secretary, but the list of regulations in the bill is 
already incredibly robust. To me, it seems that if something 
was left out or needs to be added, it should be done 
legislatively as opposed to through the Secretary.
    So, I just want to follow on, if I could, Dr. Holtz-Eakin. 
Can you speak briefly to the estimated cost to consumers of 
these regulations?
    Dr. Holtz-Eakin. I don't have an estimate of the cost. But 
I just want to echo something you just said. You can imagine 
putting in place systems to collect the data because you want 
to comply with the law, assuming it was passed. And then, the 
Secretary changes the nature of the information that you have 
to provide. You now are back at the starting situation where 
you haven't collected it and you have to go back. So, it could 
get progressively more costly if that is how it transpired.
    Mr. Gianforte. OK. So, if you can't comment specifically on 
cost, if all these new reporting requirements were signed into 
law, and the Secretary decided there was more information that 
he needed, how do you think that would affect new drugs coming 
to market?
    Dr. Holtz-Eakin. I think they would be more costly to 
provide and they would be more expensive.
    Mr. Gianforte. OK. Which is not the objective that we are 
shooting for.
    Dr. Holtz-Eakin. Yes.
    Mr. Gianforte. A question, if I could, for the whole panel. 
I support transparency across healthcare. I think that 
consumers need to know exactly what they are paying for. It is 
my understanding that the rationale behind these bills is that 
the Federal Government is a large payor in the system today; 
therefore, we need to know about price increases. That makes 
sense.
    I support the idea of flagging large increases in price, 
but looking at the whole picture, pharmaceutical spending 
accounts for less than 20 percent of what the Government spends 
on healthcare. Are there other aspects of healthcare in the 80 
percent that need to report price or fee increases as well to 
the Federal Government? For example, do hospitals have to 
report increases in surgical supplies or procedures that 
Medicare is going to cover?
    Dr. Miller. One thing to keep in mind is that hospitals on 
the Medicare side do report a cost report and they do lay out 
what their cost structures are. However, you have a very 
similar situation in the hospital industry where you have high 
degrees of consolidation and high prices escalating. So, there 
is certainly a question that could be brought to bear in there.
    Mr. Gianforte. OK. Other comments?
    Dr. Feldman. From the physician's point of view, we are 
told every year how much we are paid. So, that information is 
already out there.
    Mr. Gianforte. So, we should be arguing for, we should be 
working for transparency in all areas? Anybody else who would 
like to add anything?
    Mr. Isasi. We strongly agree with that. And the problem of 
price in healthcare is not just a pharmaceutical issue, but it 
is a big pharmaceutical issue.
    Mr. Gianforte. And I think our constituents expect us to 
look at all of healthcare costs, certainly drugs-that is the 
topic today-but more broadly.
    Comments?
    Ms. Joldersma. I would like to just follow up quickly on 
something that Representative Sarbanes raised. He did mention 
the rate review framework put into place for health insurers 
and the fact that they have to give advance notice of 
increases----
    Mr. Gianforte. Unfortunately, my time is up, and I yield 
back, Madam Chair.
    Ms. Joldersma. It is only one year, not three.
    Ms. Eshoo. The gentleman yields back. I now would like to 
recognize the gentleman from Kentucky, Mr. Guthrie, for five 
minutes.
    Mr. Guthrie. Thank you very much. Sorry, I was in another 
hearing on a committee that I am the ranking member of the 
subcommittee. So, I wasn't here for a lot of discussion. So, I 
will just ask a couple of questions. I know we are pushing 
against a deadline here.
    So, for Dr. Feldman and Dr. Holtz-Eakin, MedPAC recommended 
that the information provided to the Secretary regarding 
samples be shared with specific other entities. How might this 
information be helpful to oversight agencies, researchers, 
payers, and health plans? And how is selectively sharing this 
information different from publicly posting it?
    Dr. Feldman. Public posting it leaves it open to anyone 
with any opinion to create a campaign on Twitter and various 
social media, which can lead to really false impressions of 
what the samples really do accomplish for patients.
    Mr. Guthrie. OK.
    Dr. Holtz-Eakin. I think that is the chief concern. And 
professional analysis of the data should be welcomed.
    Mr. Guthrie. OK. Thank you.
    And everybody here wants transparency and lower drug 
prices, but we have to get this right. So, if you are looking 
at the SPIKE and the FAIR Act, the SPIKE and the FAIR Act use 
different definitions for a manufacturer. While the FAIR Act 
uses the proper Food, Drug, and Cosmetic Act definition, the 
SPIKE Act uses a definition for a manufacturer that is 
improper.
    And, Ms. Joldersma, drafting concerns have been raised 
that, while the intent of the drafters was to provide 
discretion to the manufacturer on which materials would justify 
their SPIKE disclosure, the language is not clear or 
prohibitive that the Secretary cannot reject such a 
justification or ask for additional disclosures from the 
manufacturer. The question is, do you agree that this is an 
issue, and if we pursue this bill, the language needs to be 
clarified?
    Ms. Joldersma. I do.
    Mr. Guthrie. What are the issues that would happen if you 
didn't clarify it?
    Ms. Joldersma. I am sorry?
    Mr. Guthrie. So, the issues, if it wasn't clarified, then 
it would open up to----
    Ms. Joldersma. If it wasn't clarified, I think that, given 
the certification requirement in that bill, I think 
manufacturers would believe they have to provide every single 
thing listed as illustrative in the bill, regardless of whether 
it was applicable to the actual increase or not.
    Mr. Guthrie. So, as our colleague here defined, 
manufacturer in the FAIR Act is the better route?
    Ms. Joldersma. They both have issues that we would like to 
work with the committee on.
    Mr. Guthrie. OK. Thanks. Fair.
    And one final question, Dr. Holtz-Eakin. You note in your 
testimony that there are elements of transparency that can have 
inverse market impacts. Can you explain this issue more and how 
Congress can ensure helpful transparency is done while not 
driving unwanted behavior?
    Dr. Holtz-Eakin. You simply don't want to disclose the 
outcome of other people's negotiations, so that competitors can 
take advantage of it. So, that kind of transparency is actually 
counterproductive.
    Mr. Guthrie. What would be an example of that?
    Dr. Holtz-Eakin. Well, if, for example, Mark cut a deal on 
a big rebate for his drug and I found out about it, I would be 
like, well, geez, I didn't get that rebate. And that would lead 
that negotiation to have less vigor the next time around; they 
may not give such a big rebate.
    Mr. Guthrie. Well, thank you. I appreciate that.
    And I will yield back.
    Ms. Eshoo. The gentleman yields back. I will recognize the 
gentlewoman from Illinois, who is the sponsor of the FAIR Drug 
Pricing Act, Ms. Schakowsky, for five minutes. And I think 
because Ms. Schakowsky is waved onto the subcommittee, that she 
will be the last Member that is questioning. So, hold on, 
testifiers; you are just about through.
    Ms. Schakowsky. I thank the chairwoman for allowing me. I 
will be as quick as possible.
    This is what people with multiple sclerosis are facing, for 
example, showing the increases over just three years in the 
cost of their drugs. Betaseron went from $65,000 to $92,000 in 
those three months. Avonex went from $62,000 to $88,000 in 
these two months--in those three years. I am sorry.
    You know, the whining that is going on about having to talk 
about some transparency is really irritating to me. The drug 
companies tell us all the time that it is about research and 
development; it costs so much. How much? That is the question 
in the FAIR Act, which is my bill. How much? If you are going 
to use that as the excuse for raising the prices, then I think 
we have an absolute right to know how much is being spent.
    The ten top drugs that are advertised on television - and 
we are going to see, because of the cooperation with the 
President of the United States, those list prices next to the 
drug on television - the ten top ones, every month it is either 
between $500 per drug up to $17,000 per drug per month. And so, 
we want to know how much are you really spending on marketing 
and advertising.
    Believe me, these are not extraneous questions. These are 
what consumers want to know. They want to know the 
manufacturing cost. They want to know how much money are you 
making. ``I can't afford your medication,'' they say. And so, I 
am going to get sick. And so, I want to know, how much are you 
making off of me when I can actually pay for this?
    So, really, the idea that transparency is going to cause 
all these problems, and problems for consumers, I wonder if my 
friend Mr. Isasi, whatever, could answer that.
    Mr. Isasi. Isasi. No problem.
    Ms. Schakowsky. Isasi? No Isis, OK.
    Mr. Isasi. No, not Isis; Isasi.
    I would say that we share your skepticism about this 
concern, very much share this skepticism. And it is the very 
least, as you say, when people's lives are hanging in the 
balance and they are making decisions that in some cases end up 
in their death because they can't afford their drugs. At the 
very least, there could be more transparency about the way 
these funds are flowing.
    And I want to point out that the makers of the top 12 best-
selling drugs in the United States have filed, on average, 125 
patents per drug; for an industry filing, 125 patents per drug. 
It seems like a little transparency about how they are spending 
their money isn't much of a burden.
    Ms. Schakowsky. I really appreciate that.
    We do have to go to a classified briefing.
    I just want to say I think, at the very least, consumers 
deserve transparency. But I also want to agree with you, it has 
to be with teeth. We are going to do more than this getting 
transparency. We are going to have to lower the cost of 
prescription drugs. People are dying. They can't afford it. So, 
this is just the beginning.
    Thank you very much, and I yield back.
    Ms. Eshoo. The gentlewoman yields back.
    Pursuant to committee rules, Members have 10 business days 
to submit additional questions for the record, to be answered 
by the witnesses who have appeared. And I ask each witness to 
respond as promptly and as fully to the questions that you 
receive.
    I ask unanimous consent to enter into the record the 
following documents:
    A letter from the American Society of Clinical Oncology 
regarding H.R. 2296, 2087, and 2064.
    A letter from the Campaign for Sustainable Prescription 
Pricing in support of H.R. 2296, 2069, 2087, 2064, 2757.
    A letter from the AARP in support of H.R. 2296, 2069, 2087, 
2115, and 2064.
    A letter from the National Multiple Sclerosis Society.
    And a letter from the Alliance of Specialty Medicine 
regarding H.R. 2113.
    There aren't any objections. So, without objections, these 
documents will be placed into the record.
    Ms. Eshoo. I want to thank all of the witnesses once again. 
You have been here for three hours. You have worked hard, and I 
think that the hearing has been more than worthwhile, 
recognizing that we have a great deal to do.
    I also think that we need to really scrub your written 
testimony because many of you really put forward worthwhile 
ideas that we didn't get to ask questions, and they are 
worthwhile and deserve the full attention of committee members.
    So, with that, the House subcommittee will now adjourn.
    [Whereupon, at 1:36 p.m., the subcommittee was adjourned.]
    [Material submitted for inclusion in the record follows:]

               Prepared Statement of Hon. Eliot L. Engel

    Madame Chairwoman Eshoo, thank you for holding today's 
important hearing on drug supply chain transparency.
    U.S. prescription drug spending rose by 41 percent between 
2007 and 2017. While some of this growth was due to 
innovation--such as CAR--T therapies and hepatitis C cures-much 
of it can be attributed to price spikes. The price of insulin, 
a century old drug, for instance, has doubled since 2012 
without much change to the underlying formula.
    Due to the lack of transparency, my constituents often get 
a pricing surprise when they arrive at their pharmacy. This can 
blindside consumers, putting them in situations where they have 
to choose between filling a life-saving prescription or 
purchasing other necessities.
    The shroud of secrecy that veils the drug supply chain can 
make it challenging even for experienced health care 
professionals to determine the cost of a medication, let alone 
average-day Americans. As with buying groceries, my 
constituents deserve to know the cost of their prescription 
drugs ahead of time.
    I look forward to working with my colleagues on efforts to 
shine light on this murky segment of our healthcare system.
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