[Senate Hearing 116-546]
[From the U.S. Government Publishing Office]


                                                        S. Hrg. 116-546

                    THE COMPLEX WEB OF PRESCRIPTION
                         DRUG PRICES, PART III:
                  EXAMINING AGENCY EFFORTS TO FURTHER
                 COMPETITION AND INCREASE AFFORDABILITY

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

                                HEARING

                               BEFORE THE

                       SPECIAL COMMITTEE ON AGING

                          UNITED STATES SENATE

                     ONE HUNDRED SIXTEENTH CONGRESS


                             FIRST SESSION

                               __________

                             WASHINGTON, DC

                               __________

                             JUNE 19, 2019

                               __________

                           Serial No. 116-08

         Printed for the use of the Special Committee on Aging
         
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]         


        Available via the World Wide Web: http://www.govinfo.gov
        
                              __________

                    U.S. GOVERNMENT PUBLISHING OFFICE                    
47-411 PDF                 WASHINGTON : 2022                     
          
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                       SPECIAL COMMITTEE ON AGING

                   SUSAN M. COLLINS, Maine, Chairman

TIM SCOTT, South Carolina            ROBERT P. CASEY, JR., Pennsylvania
RICHARD BURR, North Carolina         KIRSTEN E. GILLIBRAND, New York
MARTHA McSALLY, Arizona              RICHARD BLUMENTHAL, Connecticut
MARCO RUBIO, Florida                 ELIZABETH WARREN, Massachusetts
JOSH HAWLEY, Missouri                DOUG JONES, Alabama
MIKE BRAUN, Indiana                  KYRSTEN SINEMA, Arizona
RICK SCOTT, Florida                  JACKY ROSEN, Nevada
                              ----------                              
            Sarah Khasawinah, Majority Acting Staff Director
                 Kathryn Mevis, Minority Staff Director
                        
                        
                        C  O  N  T  E  N  T  S

                              ----------                              

                                                                   Page

Opening Statement of Senator Susan M. Collins, Chairman..........     1
Opening Statement of Senator Robert P. Casey, Jr., Ranking Member     3

                           PANEL OF WITNESSES

Demetrios Kouzoukas, Principal Deputy Administrator and Director 
  of the Center for Medicare, Center for Medicare and Medicaid 
  Services, Washington, D.C......................................     4
Janet Woodcock, M.D., Director of the Center for Drug Evaluation 
  and Research, Food and Drug Administration, Silver Spring, 
  Maryland.......................................................     6
Vicki L. Robinson, Senior Counselor for Policy, U.S. Department 
  of Health and Human Services, Office of Inspector General, 
  Washington, D.C................................................     8

                                APPENDIX
                      Prepared Witness Statements

Demetrios Kouzoukas, Principal Deputy Administrator and Director 
  of the Center for Medicare, Center for Medicare and Medicaid 
  Services, Washington, D.C......................................    35
Janet Woodcock, M.D., Director of the Center for Drug Evaluation 
  and Research, Food and Drug Administration, Silver Spring, 
  Maryland.......................................................    46
Vicki L. Robinson, Senior Counselor for Policy, U.S. Department 
  of Health and Human Services, Office of Inspector General, 
  Washington, D.C................................................    55

                       Statements for the Record

Letter to President Donald J. Trump, dated June 11, 2019.........    65
Letter to President Donald J. Trump, dated June 19, 2019.........    69

 
                    THE COMPLEX WEB OF PRESCRIPTION
                         DRUG PRICES, PART III:
                      EXAMINING AGENCY EFFORTS TO
                        FURTHER COMPETITION AND
                         INCREASE AFFORDABILITY

                              ----------                              


                        WEDNESDAY, JUNE 19, 2019

                                       U.S. Senate,
                                Special Committee on Aging,
                                                    Washington, DC.
    The Committee met, pursuant to notice, at 9 a.m., in Room 
562, Dirksen Senate Office Building, Hon. Susan M. Collins, 
Chairman of the Committee, presiding.
    Present: Senators Collins, Tim Scott, McSally, Braun, Rick 
Scott, Casey, Blumenthal, and Jones.
    Also present: Senator Shaheen.

                 OPENING STATEMENT OF SENATOR 
                   SUSAN M. COLLINS, CHAIRMAN

    The Chairman. The Committee will come to order.
    Good morning. Today we are holding the third in our current 
series of hearings on the complex web of prescription drug 
prices. We will feature witnesses from the Food and Drug 
Administration, better known as the FDA, the Centers for 
Medicare and Medicaid Services, CMS, and the Office of the 
Inspector General at the Department of Health and Human 
Services.
    Since 2015, our Committee has held eight hearings on drug 
pricing and the issue that I believe bridges the partisan 
divide. According to the Kaiser Family Foundation, nearly 7 in 
10 Americans say that lowering prescription drug prices should 
be a top priority for Congress. As those who have followed our 
Committee's work on drug pricing know, we have highlighted 
example after example of patients who feel powerless when 
confronted with sky-high drug costs, and go to extraordinary 
lengths to cover the costs of their medications.
    In the interest of time this morning, I am only going to 
list one of those examples, but I will be putting others into 
the record as part of my full opening statement.
    At last year's hearing on the spike in insulin costs, we 
learned how rebates and the complicated supply chain create 
pricing distortions, particularly for those with high-
deductible health plans.
    We heard from Paul Grant, a father of four, who lives in 
New Gloucester, Maine, who discovered 1 day that the cost of a 
90-day supply of insulin for his 13-year-old son with type 1 
diabetes had tripled overnight to more than $900. He had to 
resort to importing much lower-cost insulin from Canada, with 
no help from his insurance company.
    This is typical of stories that we have heard from across 
the country, and the American people are clamoring for action.
    While much more needs to be done, we have met with some 
successes. Following this Committee's year-long investigation 
into dramatic price spikes, in decades-old prescription drugs, 
I co-authorized a bipartisan bill with former Senator Claire 
McCaskill, to promote more competition from lower-priced but 
equally effective generic drugs. This bill was signed into law 
in 2017 and it appears to be showing results. To date, FDA has 
granted more than 100 application requests under this new 
pathway, with five approvals.
    In 2018, I authored another bipartisan bill banning 
pharmacy gag clauses, contract provisions that prevent 
pharmacists from informing consumers how to get the lowest 
price for their prescriptions. It became law, and a recent 
study published by the Journal of American Medical Association 
suggests that banning gag clauses could help Americans save 
money in nearly 1 out of 4 prescription transactions.
    Throughout our deliberations, I have emphasized that we 
want to keep strong incentives for innovation, so that 
companies continue to invest in research and development and 
take the risks necessary to develop innovative drugs, but we 
must do more to ensure that these essential medicines are more 
affordable, that their prices are more transparent, and that 
their competitors are not blocked once their patents have 
expired by gaining of the patent system.
    While past hearings have focused on the root causes behind 
escalating prices, today we will focus on some potential 
solutions. The timing is fortuitous, as House and Senate 
Committees are acting on a variety of proposals, including our 
bill to prevent patent gaming strategies and other approaches 
that delay generic or biosimilar competition, legislation to 
establish more price transparency, and measures to address out-
of-pocket costs under Medicare Part D.
    Members of this Committee have been working hard on a 
number of promising ideas. I have introduced, along with 
Senator Tim Kaine, the Biological Transparency Act that would 
require companies to publicly disclose the web of patents that 
protect their biologics, making it easier for competitors to 
evaluate and plan for the development of generic versions, as 
well as to discourage late-filed patents.
    I am pleased that on this Committee, Senators Braun and 
Hawley are co-sponsors, as well as Senators Kaine, Portman, 
Shaheen, Stabenow, Paul, and Murkowski, who serve on other 
committee. Ranking Member Casey and I have partnered on 
legislation that he has introduced to codify the CMS drug 
pricing dashboards, to provide consumers with more information 
about out-of-pocket costs. Senator Rick Scott and I are working 
on legislation that creates a data base of drug prices and 
aggregate manufacturer rebates, as well as justifications for 
any price increases.
    One thing is certain: our drug pricing system is opaque and 
rife with misaligned incentives. In order to untangle patients 
from this complex web and bring them the relief they need 
without dampening R&D that produces life-saving new drugs, we 
need to work together, and that has been the spirit of this 
Committee.
    I am now pleased to turn to the Ranking Member, Senator 
Casey, for his opening remarks.

                 OPENING STATEMENT OF SENATOR 
              ROBERT P. CASEY, JR., RANKING MEMBER

    Senator Casey. Chairman Collins, thank you very much for 
holding this hearing on the rising cost of prescription drugs. 
We hear about it all the time, all across the country.
    With current prices, Americans are being asked to pay for 
their prescription drugs. Many find themselves asking, how can 
I make ends meet? Over and over again they ask themselves that 
question. That is because the rising cost of prescription drugs 
is not in isolation. It is part of a larger challenge many 
Americans face.
    With flat wages over many years, and high costs, the cost 
of prescription drugs is like a bag of rocks on the shoulders 
of most families. The other heavy bags of rocks on those same 
shoulders are the cost of child care, the cost of health care, 
the cost of college, and that is just to name a few.
    People are paying more for child care costs, and that is 
crushing for many families. Just as they are starting a family, 
that bag of rocks is dropped on their back. Then, as someone 
who is trying to make life better for the next generation 
through higher education, the cost of college increases. That 
is another bag of rocks. Third, just as someone is about to 
enter their golden years and have a secure retirement, or they 
hope for a secure retirement, the cost of prescription drugs 
skyrockets.
    These costs, to say the least, can be crushing. That is 
what we heard from Barbara Cisek from Rural Ridge, 
Pennsylvania, and other witnesses from across the country who 
testified before this Committee earlier this year. The need to 
make prescription drugs more affordable has never been more 
urgent.
    We will have a chance to highlight proposals under 
consideration in Congress, including one that Chairman Collins 
and I are working on, to bring greater transparency to drug 
pricing through the Medicare and Medicaid prescription drug 
dashboards.
    I hope we will have a chance to discuss one of my key 
priorities, a policy supported by 95 percent of the American 
people, which is to finally--finally--allow Medicare to 
directly negotiate the price of prescription drugs. While we 
hear a litany of Medicare proposals made by the Administration 
today, I note that not a single one of those proposals, so far, 
permit Medicare to use its full purchasing power to bring down 
the cost of prescription drugs.
    Indeed, it's our sacred responsibility to our aging loved 
ones, as well as our children and their children, that they are 
not forced to shoulder the crushing bag of rocks that 
prescription drug costs have become.
    I want to thank the Chairman again for scheduling this 
hearing about the rising cost of prescription drugs, and I look 
forward, as I know we all do, to getting some solutions signed 
into law. Thank you.
    The Chairman. Thank you very much, Senator Casey. I want to 
welcome Senator Jones and Senator Scott to the hearing as well.
    Our first witness today will be Demetrios Kouzoukas, the 
Principal Deputy Administrator and Director of the Center for 
Medicare, at the Center for Medicare and Medicaid Services. He 
will discuss the proposals within the Administration drug 
pricing blueprint.
    Next we will hear from a familiar witness to our Committee 
deliberations over the years, Dr. Janet Woodcock, Director of 
the Center for Drug Evaluation and Research at the FDA. Dr. 
Woodcock first joined the Center in 1994, and in 2015 was 
appointed to be Acting Director of its Office on Pharmaceutical 
Quality. Her testimony today will focus on actions the FDA has 
taken to improve competition in the biosimilar and generic drug 
marketplaces.
    Finally, we will hear from Vicki Robinson, the Senior 
Counselor for Policy at the Department of Health and Human 
Services, Office of the Inspector General. She will discuss the 
Administration's proposed rebate rule and specifically the 
anti-kickback statute.
    I want to thank you for joining us and I also want to 
welcome Senator Shaheen, who while not officially a member of 
this Committee, is the co-chair of the Diabetes Caucus with me, 
and has been extremely active in this area, and we have worked 
together, particularly on the insulin pricing issue, so we are 
delighted to have her as an honorary member of the Aging 
Committee today.
    Mr. Kouzoukas, we will start with you.

               STATEMENT OF DEMETRIOS KOUZOUKAS,

          PRINCIPAL DEPUTY ADMINISTRATOR AND DIRECTOR

        OF THE CENTER FOR MEDICARE, CENTER FOR MEDICARE

            AND MEDICAID SERVICES, WASHINGTON, D.C.

    Mr. Kouzoukas. Thank you, Chairman Collins.
    The Chairman. I am going to ask you to turn your mic on.
    Mr. Kouzoukas. There we go. Thank you very much, Chairman 
Collins, Ranking Member Casey, and other honorable members of 
this Committee. Thank you very much for the invitation to talk 
with you today about the critical issue of lowering 
prescription drug prices in the United States.
    I am honored to be here on behalf of the Centers for 
Medicare and Medicaid Services, where I serve as Principal 
Deputy Administrator and Director of the Center for Medicare. 
Thank you, as well, to my esteemed colleagues from the 
Department. It is an honor to be here alongside them as well.
    Prescription drugs are an important part of health care, as 
we all know. Patients with diseases that scarcely a decade ago 
had any treatment options now have access to cures that allow 
them to lead their best lives. However, patients opportunities 
to access these drugs are ultimately undermined by numerous 
distortions which can drive the price of these drugs beyond the 
reach of patients who need them most. This Administration has 
been diligently working to root out these distortions and 
correct disincentives to ensure that true competition allows 
patients to access the drugs at competitive prices.
    Earlier this year, the President's Fiscal Year 2020 budget 
laid out a range of proposals for lowering prescription drug 
prices, including through reforms to Medicare. Many of the 
proposals buildupon the President's blueprint, as you called 
it, that is, the ``American Patients First Blueprint to Lower 
Drug Prices and Reduce Out-of-Pocket Costs,'' released in May 
2018. This blueprint constitutes the most aggressive and 
comprehensive plan of action for decreasing drug prices 
released by any administration ever. It lays out dozens of 
possible ways that HHS, including Congress and CMS, can 
together address this vital issue.
    We are already seeing results from the Administration's 
efforts to lower drug prices. In 2018, drug prices experienced 
their single largest decline in 46 years. We also know there is 
more work to be done, and CMS is committed to doing our part to 
lower prescription drug prices.
    Medicare policies can have a wide-reaching impact on health 
care spending, including prescription drug costs. That is why 
we are taking steps to unleash innovation, empower patients, 
and increase transparency across the program.
    I would like to take a moment to draw your attention some 
of the proposals in the President's Fiscal Year 202020 budget 
request. These are of particularly interest, I hope, to the 
Committee. There is an opportunity for us to work together.
    The President's proposed budget request for Fiscal Year 
2020 includes a comprehensive Medicare Part D structural reform 
package that would lower prescription drug prices in several 
ways, including by maximizing the incentives for plans to 
manage benefits and provide beneficiaries with better 
protection against catastrophic costs through a maximum out-of-
pocket cost.
    I also want to highlight a few things CMS has already done. 
Just last month, for example, CMS finalized improvements to 
Medicare Advantage and Part D, which provides seniors with 
medical and prescription drug coverage through competing 
private plans. The policies we finalized will enhance 
transparency by giving patients greater information on the cost 
of prescription drugs.
    The final rule includes a requirement that Part D plans 
implement one or more real-time benefit tools, so prescribers 
can discuss out-of-pocket costs for prescription drugs with 
patients at the time a prescription is written, in the 
physician office. By empowering patients with more information 
on the cost of their prescription drugs, our rule will help 
ensure that pharmaceutical companies have to compete on the 
basis of prices for patients.
    We are also pleased with the increased transparency that 
has come about as a result of CMS' drug spending dashboards. 
These dashboards reflect CMS' efforts to support innovative, 
data-driven insights to improve the quality, accessibility, and 
affordability of prescription drugs. The dashboards focus on 
average spending and change in average spending per dosage unit 
to allow the public to understand trends in drug spending.
    Additionally, CMS is undertaking a comprehensive redesign 
of the Medicare Plan Finder. We are working to improve the 
usability of the Plan Finder based on feedback we have been 
collecting from stakeholders, and we look forward to continuing 
our collaborations as we move forward with our efforts to 
modernize this important tool.
    Some of the other efforts we have already undertaken and 
are working on to bring down drug prices include giving 
patients the opportunity to select from competing plans with a 
selection of physician-administered drugs more tailored to 
them, so as to drive better deals; putting patients in the 
driver's seat by helping them engage with plans on the 
medications they are taking, and what can be done to ensure 
that the combinations of drugs they are taking are low cost and 
do not produce negative effects; encouraging biosimilar 
innovations, by giving each biosimilar its own billing code and 
lowering biosimilar copays for low-income beneficiaries in Part 
D; increasing price transparency by presenting data on CMS' 
average spending per drug dose, and other data insights, and 
otherwise ensuring that patients know the cost of their drug 
before they see the doctor or visit the pharmacy; allowing 
patients to communicate freely with their doctor or pharmacy 
about the cost of their drug.
    While CMS has taken these and many other actions to 
implement the President's American Patient First Blueprint to 
combat dramatically rising prescription drug prices, we know we 
have more to do. As we continue our important work in this 
area, and hopefully our collaborations with Congress, we remain 
committed to finding ways to promote innovation and patient 
empowerment in our programs by facilitating transparency and 
competition.
    We look forward to working with this Committee, our Federal 
partners, and most of all, with patients, as we continue to 
evaluate and implement the most effective ways to approach 
these issues.
    Again, thank you for the invitation to speak with you 
today. I look forward to answering your questions.
    The Chairman. Thank you very much.
    Dr. Woodcock, welcome.

               STATEMENT OF JANET WOODCOCK, M.D.,

           DIRECTOR OF THE CENTER FOR DRUG EVALUATION

          AND RESEARCH, FOOD AND DRUG ADMINISTRATION,

                    SILVER SPRING, MARYLAND

    Dr. Woodcock. Thank you, Madam Chairman, Ranking Member, 
and members of the Committee. I am very happy to be able to 
talk to you about this important issue today.
    As you know, FDA does not have a direct role in drug 
pricing, but we play a major role by driving down prices 
through competition, and the best example of that is our 
generic drug program, which has really been empowered since 
Congress passed the Generic Drug User Fee Program, which is now 
in its second iteration.
    Last year, 2018, FDA approved over 1,000 generic drugs. 
That is a lot of competition, and each year previous had been a 
record. That was a record and each year previous had been a 
record, so we are really getting generic drugs out there.
    Of these last year, 10 percent were first generic approval, 
so that is the first time competition had been introduced for 
this molecules, and 12 percent were for complex generics, where 
there has been a lot of trouble getting competition for complex 
products. Perhaps they have an auto-injector, they have a 
device associated with them, or they have some other 
complexity, so we are making a lot of progress there.
    We can do more. In 2017, we launched the Drug Competition 
Action Plan for Generics, and that had a whole menu of 
activities that we were going to do to try and streamline the 
process, reducing gaming, and get as many generic products that 
would be legally appropriate out onto the market.
    We are taking many steps to promote more competition for 
complex generics, including helping the companies with 
developing their drugs. In February alone, we issued 74 
product-specific draft guidances, and these guidances were like 
a cookbook of what you need to do to get a particular generic 
onto the market, and they explain our expectations of what 
needs to be done.
    We also posted the inaugural list of off-patent, off-
exclusivity drugs without an approved generic in June 2017, so 
that gives industry sight into what is available for 
competition, where there is no competition at the moment.
    In February, we issued draft guidance on the Competitive 
Generic Therapies Program, that Senator Collins mentioned. My 
understanding is by now we have designated almost 200, and we 
are up to around 10 that we have approved. The new guidance on 
the Complex Generics Program provides robust information on how 
drug developers can apply for this designation and when they 
might be eligible for exclusivity based on it.
    We are also identifying abuses of the system that can 
impede competition and doing our part to fix them. We really 
applaud congressional efforts to remove barriers to drug 
development and appreciate the work on the CREATES Act, that is 
looking at access to samples, because generic competitors need 
access to sample from the innovators in order to make the 
copies and demonstrate that they are equivalent.
    There are several proposals in the 2020 budget from the 
President that also target possible gaming, including statutory 
improvements to our citizen petitions process, amending the 
existing 180-day forfeiture provisions to limit gaming in that 
space, and prevention of 180-day exclusivity parking, we call 
it, where companies can get exclusivity and then never launch 
it.
    The way the statute works now--remember, I am not a 
lawyer--is that you have to market to make that clock start 
running, and if you make an agreement or something and you do 
not market then that can go on. You have never launched and the 
clock never runs.
    We look forward to working with your staff on these 
measures, and we are continuing to coordinate with the Federal 
Trade Commission, who is a vital partner, in working on anti-
competitive issues.
    Also, we are building a strong framework for biosimilar 
competition, which is something that has not been present until 
Congress passed a statute allowing the pathway. That is really 
key to facilitating greater innovation and competition in the 
biologics marketplace.
    Biologics are costly. They account for almost 40 percent of 
the total prescription drug spend and about 70 percent of the 
growth in spending between 2010 to 2015, and so since 2010, 
when Congress enacted the Biologics Price Competition and 
Innovation Act, creating a pathway, we have approved 20 
biosimilars, and we hope more are on the way, and there is a 
robust pathway for more biosimilars to come.
    The President's budget recommends a legislative proposal to 
encourage biosimilar development and innovation and reduced 
gaming in that space.
    In closing, there are a lot of efforts that can be done to 
reduce gaming, to streamline processes, and to get as much 
competition on the market as possible, and we believe all these 
efforts will help to reduce the cost of drugs overall.
    Thank you.
    The Chairman. Thank you very much, Doctor.
    Ms. Robinson.

                STATEMENT OF VICKI L. ROBINSON,

               SENIOR COUNSELOR FOR POLICY, U.S.

            DEPARTMENT OF HEALTH AND HUMAN SERVICES,

         OFFICE OF INSPECTOR GENERAL, WASHINGTON, D.C.

    Ms. Robinson. Good morning, Chairman Collins, Ranking 
Member Casey, and other distinguished members of this 
Committee. Thank you for the invitation to testify about the 
Department's recent proposed rule, which is one part of the 
Department's strategy to lower prices and reduce prescription 
costs for beneficiaries.
    We are in active rulemaking, my testimony today is limited 
to what is in the proposed rule. It is not intended to predict 
what might be in the final rule.
    This morning I want to cover three areas. First, the 
proposed goals for the rule; second, how the proposed rule 
meets those goals; and third, the public comments on the 
proposed rule.
    Let me begin with the goals. The Department intends for the 
proposed rule to help lower drug prices and reduce prescription 
drug costs for beneficiaries. The proposed rule also aims to 
improve transparency for beneficiaries about the prices they 
pay. In addition, the proposed rule aims to address the problem 
that rebates may be skewing decisions about the placement of 
drugs on formularies, that is, on the list of drugs covered by 
the beneficiary's plan.
    Today, under the rebate system, manufacturers typically 
negotiate rebates with insurance companies and pharmacy benefit 
managers. The rebates reduce the net cost of drugs for the 
insurance companies, but the rebate does not necessarily help 
the beneficiary, because it does not reduce what he or she pays 
at the pharmacy counter.
    The proposed rule is intended to shift this dynamic and 
help move from a system of rebates to one of up-front discounts 
that lower costs to beneficiaries when they fill their 
prescription.
    Second, let me explain what the proposed rule would do to 
meet these goals. Currently, the safe harbor regulations under 
the Federal anti-kickback statute, protect discounts and other 
reductions in price, including rebates that meet specified 
conditions.
    The proposed rule would make the following changes. It 
would remove existing discount safe harbor protection for 
rebates and reductions in price of prescription drugs given by 
manufacturers to Part D plans and Medicaid managed care 
organizations. Next, it would add new safe harbor protections 
for point-of-sale discounts that are completely applied to the 
price of the prescription drug at the time the pharmacy 
dispenses it to the beneficiary. Further, the proposal would 
add new safe harbor protection for manufacturers to pay 
pharmacy benefit managers fixed fair market value fees for 
services they provide to the manufacturer.
    My written testimony and the proposed rule spell out 
additional details about these changes.
    I will close with observations about the public comments. 
The proposed rule contains analyses of the potential impact on 
beneficiaries, plans, and others, by CMS' Office of the Actuary 
and to independent actuarial firms. We received a range of 
comments about these analyses.
    In addition, we solicited public comments about many other 
aspects of the proposed rule. In total, we have received and 
reviewed about 26,000 public comments from a broad spectrum of 
stakeholders. We received many thoughtful comments and 
appreciate the engagement of the public in this rulemaking. 
Comments addressed a range of important topics, from legal 
issues to policy goals to practical implementation concerns, 
and comments expressed strong support for lowering drug costs 
for beneficiaries.
    OIG is working with the Department on this rulemaking and a 
final rule is currently pending review at the Office of 
Management and Budget.
    Thank you again for the opportunity to appear today, and I 
would be happy to take questions.
    The Chairman. Thank you very much for your work in this 
area and your testimony.
    Dr. Woodcock, I am going to start with you. You mentioned 
in your testimony that biologics account for about 40 percent 
of all prescription drug spending, so obviously this category 
is one that we need to take a close look at, and biologics are 
very important drugs to an awful lot of people.
    Former Commissioner Gottlieb has said that if all the 
biosimilars that have been already approved by the FDA were 
successfully marketed in the United States in a timely fashion, 
based on the information on the experiences of European 
countries, Americans would have saved more than $4.5 billion in 
2017.
    Humira is my poster child for what has happened in this 
area, and it shows what is wrong with the current system. 
Humira is an extremely valuable drug for rheumatoid arthritis, 
psoriasis, and other ailments, and it has been on the market in 
the European Union since October, while the American people, 
incredibly, must wait until 2023 before the less-expensive 
biosimilar is available, as a result of AbbVie's anti-
competitive patent strategy, so that is 20 years after the drug 
was first introduced, and that is why I have introduced 
legislation, and we have worked very closely with the FDA aimed 
at curbing patent abuses. Everybody wants a period of 
exclusivity, but it seems to me when that expires the 
biosimilars should be able to go forward.
    First of all, does the FDA support the provision of 
listing, in the Purple Book, all of the patents that a company 
has to make it easier for the biosimilar to figure out a path 
forward when the patent has expired?
    Dr. Woodcock. We are very happy to work with you. The 
listing would be somewhat burdensome for the FDA, although we 
would presumably simply play a ministerial role in allowing the 
companies to list.
    I think the root cause problem, though, is the adjudication 
of whether the patents are legal and whether they block the 
biosimilar product, and for what amount of time, and that 
really pertains to our patent system and protection of 
intellectual property, so how far should that go?
    We have had discussions with the Patent Office about this, 
because if these are valid patents and they are felt to pertain 
to the biosimilar then they will block availability for 
potentially many years after exclusivity has expired and a 
tentative approval has been granted by the FDA.
    I think this is a complicated issue, and we are really 
eager to work with your staff on this issue, because it is 
blocking availability, and the question is what is the root 
cause here and how can we untangle this?
    The Chairman. You have previously testified that the FDA 
has done 150 referrals to the Federal Trade Commission to take 
a look at anti-competitive processes without much success. Last 
May, FDA began publishing a list of inquiries received from 
generic drug developers who report having trouble accessing 
testing samples they need. The CREATES Act would help with 
that, which I have co-sponsored and you mentioned in your 
testimony.
    The question for me is, the FTC ought to be taking action 
when it sees anticompetitive practices preventing generics from 
getting to the market--paper delay is another outrageous 
example. Now that the FDA has had a year of experience with 
this new initiative, is the FTC becoming more aggressive in 
handling these complaints?
    Dr. Woodcock. We are really not privy to the FTC actions, 
so we have referred all of these on our list to the FTC for 
their evaluation, but the further steps I would refer you to 
the FTC to, you know, get more complete information. We don't 
have that.
    The Chairman. Well, my time has expired so I am going to 
yield to the Ranking Member, but I would say there is something 
wrong with the process if there is not feedback from the FTC to 
the FDA on whether or not they have taken action on a referral 
from the FDA, so it seems to me maybe that is another area for 
legislation.
    Senator Casey. I want to thank the Chairman. I want to 
thank our panel for being here. I want to focus my first round 
of questions on Mr. Kouzoukas. I appreciate you being here. You 
represent the Administration, and I have got a couple of things 
I want to say about why we are here and how this relates to 
some larger debates we are having.
    We are having a debate about how to get the cost of 
prescription drug prices down, especially out-of-pocket costs. 
In the midst of all that, this Administration on health care, 
when you consider the actions taken against the Affordable Care 
Act and against Medicaid, it can only be described as sabotage/
decimate, to both programs, both the ACA and Medicaid. Over and 
over again, attempts to undermine both programs, in terms of 
supporting a lawsuit, in terms of the budget proposals, in 
terms of efforts to repeal, in terms of giving states waivers, 
which will undermine these efforts even further, so my point on 
raising this is simply that these actions are undermining what 
I think are actually bipartisan efforts to get prescription 
drug prices down, number one, and number two is, it is having 
an effect. We were told, as of January--this is a story from 
Vox dated January 23, ``Under Trump, the number of uninsured 
Americans has gone up by 7 million.'' It refers to Gallup 
data--7 million people. Other sources say it is in the 
millions, at least.
    While we are doing all this, we are undermining any effort 
to lower the cost of prescription drugs, because of actions 
taken against both the Affordable Care Act and Medicaid.
    We have sent a letter to President Trump where we say, in 
the opening of the letter, ``The coverage individuals receive 
through Medicaid and the Affordable Care Act provides 
protection against extreme out-of-pocket costs on the 
medications they need in order to remain healthy.'' All these 
efforts we have undertaken, whether it is filling the donut 
hole for seniors so their prescription drug costs go down, 
whether it is coverage for others who are not seniors but they 
have the protection of health care or the protection of 
Medicaid or the Affordable Care Act, all of that is undermined, 
so even if we take steps that are constructive on prescription 
drugs, all of that is undermined.
    Madam Chairman, I would ask that both a letter dated June 
19th, to the President, on this issue of the connection between 
actions on health care and prescription drugs be made part of 
the record. That is number one, and number two, I would ask 
that a June 11th letter that we sent to the president on the 
official poverty measure, another effort which, over time, 
which we say in the letter, will undermine several programs. 
The official poverty measure is used by Department of Health 
and Human Services to annually issue poverty guidelines and 
thresholds.
    I would ask that both letters be made part of the record.
    The Chairman. Without objection.
    Senator Casey. I would ask, and I am almost out of time and 
I will get back to it, but I would ask this question. What have 
you done when you and your team are developing and then 
proposing ways to get prescription drug costs down? What have 
you done, what has the Administration done to assess the impact 
that their efforts on Medicaid and the Affordable Care Act, 
what have you done to make an assessment of how one impacts the 
other? How can we get prescription drug prices down when we 
have the Affordable Care Act being attacked morning, noon, and 
night, and the Medicaid program being the subject of what I 
would call decimation, because of what the Administration is 
doing?
    I give you the rest of the time that I have.
    Mr. Kouzoukas. Thank you, Senator, and I appreciate the 
opportunity to hear you out today in person as well as in the 
correspondence and the dialog I know with which you regularly 
engage the agency in.
    I would like to focus a bit on some of the shared--areas of 
agreement that I think I heard in your question, and I see an 
area of shared goals here, about access to care and high-
quality care, and using competition, really, as the way to get 
there. I also heard a focus on out-of-pocket costs, and that is 
very much at the centerpiece--at the center of many of our 
proposals.
    I also heard some reference to bipartisan efforts and 
constructive discussions, and I am heartened, despite--I 
understand you have a number of other areas with which you 
disagree with some of our actions, but I also hear you 
acknowledging, and perhaps it is an opening and an opportunity 
for us to work together on these bipartisan efforts and 
constructive discussions.
    I assure you that as we work on these efforts, internally 
and externally, we are collaborating, both within the agency 
and across the Department, to address not only prescription 
drug prices but access to care, more generally, and that we are 
also looking forward to engaging in continuing that 
constructive dialog with you, other members of this Committee, 
and the Congress.
    Senator Casey. Well, I would ask again. Did you assess the 
actions taken by the Administration with regard to ACA and 
Medicaid, the larger actions that have been ongoing since the 
beginning? Did you make an assessment of the impact of those 
actions on your efforts to reduce the cost of prescription 
drugs? Yes or no.
    Mr. Kouzoukas. We believe that our efforts to reduce the 
cost of prescription drugs rely on a variety of authorities 
that we have, and we are confident and excited about the 
opportunity to continue to take action that has brought down 
prices, as they have, and I will----
    Senator Casey. That is great. That is great, but I want to 
know, did you make that assessment?
    Mr. Kouzoukas. We are working together every day, both 
within the agency and with Congress to assess the best path 
forward, and the opportunity, I think, here is for us to work 
together to ensure that to the extent we do not have 
authorities----
    Senator Casey. Okay. I am over time, but until I hear 
otherwise I am assuming the answer to my question is no.
    Thank you, Madam Chair.
    The Chairman. Senator McSally.
    Senator McSally. Thank you, Madam Chair. I appreciate your 
continued leadership on this really important issue. I 
apologize I missed your verbal testimony. I was meeting with a 
number of my constituents from Arizona.
    I have done a 15-county tour in my first 90 days in the 
Senate, and the cost of prescription drugs has been a top issue 
for my constituents, regardless of their age, of their 
situation, economically, as seniors, young people, small 
business owners, you name it. This is a top-of-mind issue for 
Arizona families.
    For example, my office recently heard from a woman from 
Lake Havasu who suffers from rheumatoid arthritis, so some days 
she cannot even use her hands or walk. Her prescription costs 
are approximately $5,000 a month, which is obviously too much 
for most people to afford or for her to afford. She has decided 
she can no longer fill these prescriptions and continues to go 
without the medicine that she needs. She says she carries on 
with a good attitude but this is really unacceptable that we 
are leaving patients with no choice but to stop taking the 
medications.
    We have seen reports, earlier this year, that 3 out of 10 
adults report not filling their prescriptions, that they are 
left at the pharmacy, even when they show up and see what the 
out-of-pocket cost is going to be, and again, throughout my 
State I hear stories like this over and over and over again.
    Mr. Kouzoukas--is that how you pronounce your name? No. 
Come on. Tell me. Kouzoukas. Okay. In your testimony you State 
that under Medicare's Part D new rule would be a requirement 
that real-time benefit tools that are capable of providing 
patients with real-time information for their out-of-pocket 
costs for prescription drugs would be available at the time the 
prescription is written.
    I mean, this is, again, the vision, right, that when the 
doctor says, ``Where should I send the prescription?''--that 
you are able to pull out an app and you are able to kind of 
look through it and go, ``I want to go here,'' and it is based 
on you understanding what your costs are going to be and where 
you are going to get it filled.
    I know these are complex issues, but this is where we need 
to be going. Can you get into further detail on some of the 
tools and how they would be implemented for that real-time 
information, and will the rule ensure pharmacies have the right 
to also disclose lower cash costs?
    Mr. Kouzoukas. I am so delighted, Senator, that you asked 
me about that. This is one of those kind of unnoticed items, 
perhaps, at times, that is a subtle action, but it is part of a 
bigger picture, part of a comprehensive strategy, of course, as 
I have mentioned, but it also is a real part, and that is 
because it goes to that very conversation that the doctor and 
the patient are having, at the very point where the patient is 
deciding what it is that they need, and working with their 
doctor, and at that moment--and I think we have all been in 
that moment--where you get handed a prescription by the doctor, 
and I guess----
    Senator McSally. Or they say, ``Where should I send it?''
    Mr. Kouzoukas. Indeed. Now it is electronic.
    Senator McSally. Yes.
    Mr. Kouzoukas. You kind of wonder, in the back of your 
head, well, how much is this going to cost me? Is it even 
covered? It feels--like you will sometimes as your doctor and 
the doctor doesn't know, and what this requirement is, in Part 
D, is that the plans have a system whereby the doctor can 
access it through their EHR--at least one EHR has to be 
compatible with this kind of tool--and identify at that point, 
what are the formulary alternatives?
    It is even really critical that it is happening with the 
doctor's consultation, because then they can clinically discern 
what kind of medicine is really a kind of alternative, and that 
is going to really, I feel, change the dialog at that most 
basic interaction, and it has great promise.
    Senator McSally. I totally agree. I mean, this is where we 
need to go. In everything else in our life you are able to have 
information and then you can make choices and you can do what 
is best for you, and so, you know, this is America. Why can't 
we have this tool available now? Like how do you see this being 
implemented? The data is out there. The information is out 
there. What is it going to take to make this happen?
    Mr. Kouzoukas. Well, first of all, I think the support of 
the Congress as we move forward here, has been important, and I 
appreciate the opportunity to hear from you and others who 
recognize the importance of this kind of change, so that is 
particularly helpful.
    I will also say that having put it forward, the regulation 
as we have, we did it in a way that recognized that this is not 
something that can easily happen overnight, but we pushed very 
hard to put an aggressive timeline on this.
    What we would like to see is this kind of technology 
develop in a way that is truly interaction, and so it does not 
exist in a silo for only one kind of EHR or one particular 
plan.
    Senator McSally. Right.
    Mr. Kouzoukas. What we are hoping and expecting is that 
there will be standard that is developed by the industry, and 
there is a process by which these standards are developed, and 
we expect our actions are going to really precipitate the 
development and issuance of that standard so that it is not 
just--so that the tool is available in all of the EHRs for all 
of the doctors, in all of the patient rooms, and then it 
spreads even beyond Medicare, obviously.
    Senator McSally. Exactly, and that is the vision, again. 
Again, this should not be that difficult, even though this is a 
complex issue. The information is out there. We have smart 
people who can develop these tools, and it should not just be 
for Medicare. People should be able to have that conversation 
with their doctor, know what their costs are going to be, to 
include their cash costs, and then be able to make those 
decisions as to where to send a prescription and know what it 
is going to cost them and their family.
    I look forward to continuing to work with you on this, 
because we really need to make this happen.
    Mr. Kouzoukas. Thank you very much.
    Senator McSally. All right. Thanks. I am out of time.
    The Chairman. Senator Jones.
    Senator Jones. Thank you, Madam Chairman and thanks to all 
the witnesses for being here today.
    Dr. Kouzoukas, I would like to talk just a minute. One of 
the biggest things I think that we have seen with the 
Administration right now is the new rebate rule that is out 
there, which would change the way discounts are spread, across 
the board.
    How would you anticipate that this rule is going to affect 
the overall price of premiums, and is there going to be a 
tradeoff for folks with lower drug costs but higher premiums? 
How will you anticipate the long-term benefit being?
    Mr. Kouzoukas. Thank you, Senator, for the opportunity to 
address that particular question. It is an important one with 
respect to the rebate rule. I know that Ms. Robinson may be 
able to provide some additional details regarding the mechanics 
of how the rule works, in terms of its connection to premiums.
    I will say this, in terms of how it impacts the program and 
the Part D plans, and when they set their premiums, that what 
we expect and hope for here is the same kind of dynamic that 
you get when you go in to buy a car, and if you have had this 
experience lately--and I have had perhaps the fortunate or 
unfortunate experience of doing this recently--the salesman is 
talking about buying some mats, getting the rustproofing, the 
financing from the dealer, and so on, and imagine if they gave 
you the price for the package deal but they never can tell you 
how much the car is going to cost, if you just buy the car.
    Ultimately, what we are talking about here is changing the 
dynamic through the mechanics of the rebate rule, that Ms. 
Robinson summarized for us, to a situation where when you go 
into the car dealership, when those plans and the manufacturers 
negotiate against each other and create the kinds of 
competition we think is fundamentally necessary to lowering 
drug prices, that they are going to be negotiating over the 
price of the car, not over the rustproofing, and not over the 
finance deal, and not over these other things, and the mats, 
and that is the kind of dynamic we are looking to create, and 
we think that is going to result in lower cost-sharing, 
ultimately result in better negotiations, and also result in 
lower premiums. That is precisely what we are looking for.
    Senator Jones. Right, but you believe that the lower 
premiums, it will result in enough lower premiums to--you know, 
that we are not just going to, you know, lower the cost of the 
drugs but raise the cost of premiums to where the consumer does 
not have an effect. You think it is going to affect both?
    Mr. Kouzoukas. Our view is that ultimately these better 
negotiations are going to result in all of these positive 
effects, and that is the spirit with which we undertook this. 
Obviously, it is a rulemaking so we have a lot of comments to 
consider, from the OIG perspective, but in terms of the impact 
on Part D and its program, that is what we are expecting and 
hoping for as this plays out.
    Senator Jones. Okay. Well, I may come back to Ms. Robinson 
on that in a minute.
    The other thing, I would like to go back to something that 
Senator Casey said in his opening statement. It does seem--and 
it does not seem to me that the Administration has any real 
interest in allowing Medicare, which is the biggest purchaser, 
I think, of drugs these days, to be able to negotiate these 
prices, and I am curious as to why there seems to be that 
resistance. As Senator Casey said, we do not see anything 
coming out.
    There are a lot of things, and I want to commend the 
Administration for their work on this, and I think there are a 
lot of good things that are coming out, but with Medicare, it 
would seem like that that is the biggest player in the market, 
that they could really have a huge effect by negotiating drug 
prices, and I would like for you to address that.
    Mr. Kouzoukas. Senator, I think that what I hear in your 
question is really a focus on negotiation, and the question you 
are raising, obviously, is who should have those negotiations, 
but there is clearly an agreement that negotiation and 
competition are the best path forward, and I am delighted to 
hear that.
    Our concern, really, is that as we engage in looking at all 
the various options for how we can lower drug prices, that we 
do so in a way that promotes access to innovation as well as 
negotiation, and that the negotiations are ones that are 
conducted in the most vigorous possible way.
    What we have seen is that the negotiations that are 
conducted by PBMs, the people who do this for a living, have 
resulted in tremendous amounts of competition. We think that 
there are opportunities to improve that, obviously, given the 
nature of the other activities we have been doing, but those 
kinds of negotiations have been quite intense and are likely to 
produce the right outcomes.
    I will also say that also present in our minds, as we 
consider this situation, is the conclusions drawn by Congress' 
own budget office, that in order for some kinds of negotiations 
to play out and achieve--even have the hope of achieving a 
lower drug price, what ultimately would be required is for the 
leverage in that negotiation to be driven by the government 
making a decision about what kinds of drugs people will have 
access to, and we think that as we look at that current 
landscape and evaluate the range of alternatives, that giving 
patients the opportunity to select amongst competing plans in 
order to achieve the best--who, themselves, are negotiating 
deals with the manufacturers, is a way to preserve access and 
get those lower prices through negotiation.
    Senator Jones. Thank you. Thank you, Madam Chairman.
    The Chairman. Thank you very much. Senator Shaheen.
    Senator Shaheen. Thank you, Madam Chairman. I very much 
appreciate your willingness and Senator Casey's willingness to 
let me participate in this hearing. As Senator Collins 
mentioned, she and I co-chair the Diabetes Caucus and we have 
heard dramatic concerns from people with type 1 and type 2 
diabetes across this country about the rising costs of insulin 
prices.
    In Medicare patients alone, annual out-of-pocket costs for 
insulin have more than quadrupled since 2007, and it is not 
just seniors, as we all know. The skyrocketing cost of insulin 
is a matter of life and death for diabetic patients of all 
agents. Many of those patients have tried to ration their 
insulin because they cannot afford its high cost.
    In New Hampshire, and I am true it is true in Maine and 
probably Pennsylvania, we have many of our citizens who are 
going to Canada to buy insulin because they can buy it cheaper 
in Canada.
    Mr. Kouzoukas, what is CMS doing to reduce the sky-high 
costs of insulin, not just by holding insulin manufacturers 
accountable but also pharmacy benefit managers accountable for 
how these costs have risen?
    Mr. Kouzoukas. Senator, I am glad you gave me an 
opportunity to talk about this. I will say that diabetes, in 
particular--and it is great to see you here and have an 
opportunity to talk about this, to recognize your interest in 
it, because diabetes is a disaster that affects so many 
Americans and so many Medicare beneficiaries, and while it 
affects so many people, I can tell you that it also seems to 
affect every person in a different way. Every person finds a 
way to their own treatment journey.
    Senator Shaheen. I am sorry to interrupt, but I would just 
point out that for those people who have type 1, they must have 
insulin or they die, so the idea that there is an alternative 
treatment to having insulin is just not accurate.
    Mr. Kouzoukas. Senator, I hope that is not what you got, 
the impression I was saying. What I was hoping to, perhaps 
inarticulately, suggest is that the type of insulin, the method 
of delivery, the way that they handle their dosing, their own 
management is really something that is an individualized 
journey for many diabetes patients, and I know that from family 
members that have diabetes and suffer from it, but I have seen 
that up close.
    I think our work in the diabetes space has really been 
focused on recognizing exactly that, and certainly drug pricing 
is a big part of it. It is the most key part because of the 
role insulin plays. I will also point out that we have also 
undertaken a number of efforts to ensure access to a broad 
variety of different kinds of insulin delivery devices and 
other mechanisms by which people can access and make sure that 
they have the insulin they need or monitor their daily levels 
and the like, and that is also a critical piece of this.
    Our work--and I think that this is a good opportunity 
perhaps to highlight, in diabetes, the opportunity that the 
rebate offers, for example, because it is a competitive space 
with a lot of rebates, so that is one area where we would 
expect to see, you know, a significant change or impact in 
terms of benefits to beneficiaries, paying the cost share.
    Senator Shaheen. Do you have any data that shows any 
changes as the result of what you are proposing on the rebate 
rule?
    Mr. Kouzoukas. I think that we can certainly try to work 
with you to identify what kinds of data you are interested in. 
We have a lot of data, and a lot of it is out in the proposed 
rule, but we can also identify what else your data interests 
are, for sure.
    Senator Shaheen. Well, I guess it would be--I assume the 
Committee--I certainly would be interested in how it is going 
to reduce the costs of insulin and make it more accessible for 
those people who need it.
    Mr. Kouzoukas. Indeed, and we share your interest in that. 
I think that--and that is really just one part of a 
comprehensive strategy, so we will be delighted to work with 
you on that.
    Senator Shaheen. Thank you.
    Dr. Woodcock, I am going to go back to the point that 
Senator Collins made and that you were confirming when you 
talked about the importance of approving biosimilars to provide 
competition for biologics, because that has been where the real 
increases in costs have been in recent years, and my 
recollection is that the legislation that set up a method for 
approving biosimilars was part of the Affordable Care Act when 
it was passed. Can you tell me if the effort to strike down the 
Affordable Care Act will also strike down that pathway for 
biosimilars?
    Dr. Woodcock. Well, I am not a lawyer, but my understanding 
of the law is that there are many ifs in this. It would depend 
on all sorts of things about the ruling, what the ruling was, 
so I can't predict.
    Senator Shaheen. We do not know what the impact would be.
    Dr. Woodcock. Yes, I do not know. I cannot predict.
    Senator Shaheen. It is possible that like many of the other 
aspects of the Affordable Care Act it will strike that down as 
well.
    Dr. Woodcock. I do not know.
    Senator Shaheen. Thank you, Madam Chair.
    The Chairman. Thank you, Senator.
    Before I call on Senator Braun I just want to add a comment 
to what Senator Shaheen said to Mr. Kouzoukas, and that is 
insulin has been around since 1921, and when we hear from 
constituents who are now seeing the price having increased by, 
on average, 240 percent over the past decade, I realize there 
are different kinds of insulin but that is just an outrage, and 
I am going to followup on the suggestion that the Senator from 
New Hampshire made on asking you, in writing, to give to us 
more of an explanation of how the rebate rule would have a 
positive effect on that. I personally believe it would, but I 
want to get that from you, so perhaps we can followup on that.
    Senator Braun. Thank you, Madam Chair and Ranking Member 
Casey. I am on the Health Committee as well and had basically 
this same discussion yesterday. Every time I get involved in 
one of these discussions I want to make sure that the industry 
is aware, and that is from health insurance to pharma to 
hospitals and even the people that make their living in the 
business, doctors and nurses, with the exception of the latter, 
where I think they are caught in a swirl just like in big 
agriculture, we increasingly have huge corporations that 
dominate, you know, the landscape. At least in agriculture 
there is transparency and farmers know what they are buying and 
paying for.
    In health care, when I tackled this issue as a CEO of a 
company 10 years ago, and I look at this, efforts to further 
competition and increase affordability, there is no other 
industry that I am aware of, especially one has large as health 
care, that needs the nudging that we are trying to give here on 
aging and in the Health Committee. I would like to put all the 
CEOs on notice that now control the dynamic in health care, 
that have delivered the product that we are all grappling with, 
that we know has excellent features to it, where we do things 
really well in this country when it comes to health care but it 
just costs too much, and hidden behind, universally, 
opaqueness, not embracing competition, like all the rest of us 
do in running our businesses in other sectors of the economy. 
Thank goodness we are taking this on as a real issue.
    Until, I do not know that we here will accomplish what 
needs to happen quickly enough to stave off, you know, what may 
be solved through some type of crisis down the road, but I am 
at least glad we are taking about it.
    Focusing in on PBM rebates, Senator Romney and I have got a 
bill that does something similar to what Alex Azar is putting 
out as a ruling, you know, for Medicare and Medicaid. My 
analysis of PBM rebates is why do you have a middleman 
involved, number one. I do not know of one other supply chain, 
in any other industry, that has a middle man that is hired to 
determine how margin gets divvied up to get it through the 
supply chain. That is archaic. It is not needs. That should 
ideally be done by the people that make the product, big 
pharma, and the distributors, and the dealers, the pharmacists.
    The only part of that network that looks to me like it is 
functioning would be at the pharmacy level, where, in most 
domains, you have still got lots of choices. It gets murky and 
confusing when you look at the distributors, and especially the 
people that make it.
    I size up PBM rebates as around $150 billion a year, of 
which $85 billion of it, most of the rebate, gets eaten up by 
the costs and the profits of a middleman that is unneeded.
    Whoever would like to respond to it, do we need PBMs? Do 
you think if we shed light and transparency on it that this can 
get solved, and drugs can get priced at a reasonable level 
without the need of an artificial middleman that exists in no 
other supply chain? Anybody that wants to tackle it.
    Mr. Kouzoukas. I can start sir.
    Senator Braun. Thank you.
    Mr. Kouzoukas. Thank you, Senator, for that. The question 
about PBMs and their role, I think the answer, from my 
perspective, really is that we need to ensure that there is 
competition in a market, and that may or may not include PBMs. 
It does not necessarily have to. The ultimate question should 
be, though--the answer should really lie and be driven--we 
should get to the answer by looking to consumers and 
competition to lead us to the right path, and I think you have 
identified, in your question, very much some of the concerns we 
have about how the system that has grown up around prescription 
drugs and Part D, perhaps unintentionally in many ways, as 
creating its own kind of perverse incentives. It is not an 
example we think, necessarily, of the market driving to a 
conclusion and ordering itself in a way that your business is 
accustomed to, before you got here.
    What we seek to do, within the confines of the government 
program--it is obviously a government program that we are 
administering here and the Congress has given us the task to 
run--how do we make sure that there is as much market 
competition so that that gets us to the right answer, and that 
is what we are looking for, and as to your legislation, we are 
always interested and willing to work with you and others on 
potential legislative approaches as well.
    Senator Braun. Thank you. I am out of time. If there is 
another round of questions I would have one, in especially 
addressing the consumer component, where I think it has been an 
atrophied health care user that has been, you know, not 
participating in his or her own well-being as part of what 
drives most other markets as well. I will save that for a 
second round, if we have it.
    Thank you.
    The Chairman. Thank you, Senator.
    Senator Blumenthal. Thanks, Madam Chair, and thanks for 
holding this hearing. Thank you all for being here.
    There is no disagreement that drug prices are too high. 
There is no shortage of proposals to deal with it. I have 
offered a number of them myself, the CURE High Drug Prices Act 
that would compel pharmaceutical drug companies to lower their 
prices if they are found to be engaging in price gouging.
    Another is the Affordable Prescriptions for Patients Act, 
which I introduced along with Senator Cornyn, that would take 
action against egregious patent abuses like product hopping and 
patent thickening. These terms have probably little meaning to 
most Americans but they raise the prices of prescription drug 
prices, as probably you know, and other tactics are similar 
anti-competitive.
    But I want to come back to the price of insulin, because 
here is a very simple drug. As Senator Collins observes, it has 
been around for decades, almost a century. There is nothing 
novel about it. It is not a wonder drug, and the prices 
continue to increase. We are not talking about a plateau. The 
prices are continuing to rise astronomically.
    Mr. Kouzoukas, what are you going to do about it? Tell me 
in simple English what you think the causes are and what the 
remedies are that you would undertake?
    Mr. Kouzoukas. Senator, I recognize, really, your long 
history and passion for consumers, and I think that the kinds 
of approaches that we are taking today I hope are ones that we 
have common ground on and share appeal--you have some shared 
appeal for, because they are really focused on consumers and 
the bottom-line impact on them.
    I will say that a big part of that strategy is the proposed 
rule that is around rebates that ultimately----
    Senator Blumenthal. Will that solve it?
    Mr. Kouzoukas. That is part of a multilayered----
    Senator Blumenthal. What else is necessary?
    Mr. Kouzoukas. We also are working very hard to implement a 
number of changes in how the Part D program is administered, 
and have proposed a number of them to Congress.
    I will give you a few examples. One is the model that we 
recently put out that provides an incentive or removes a 
disincentive, in some ways, for plans to maximize their 
negotiation in the catastrophic phase of the Part D program. 
That is one that we believe has promise to change the dynamic 
when it comes to a patient who has come to the very end of 
their very high-cost drug spending over the course of a year, 
and diabetics often have a lot of comorbid conditions so they 
are often going to be people who are going to be affected by 
the catastrophic phase of the Part D program.
    We also have implemented the legislation that this 
Congress, and I know this Committee and many of you have been 
helpful in getting this legislation passed around gag clauses, 
to make sure that patients know that they can pay cash prices 
if they need to in a way that is lower than what they would 
have otherwise been charged as a result of some of the 
distortions in the pricing system.
    Then I would also--I really, most of all, though, would 
really be remiss not to highlight that the entire package of 
the President's budget, it represents a multilayered approach 
to prescription drug prices. It is going to have, we think, the 
most promising opportunities to address the situation you 
described, and that it is one that, I think, that there are 
many elements of it that I know have a lot of bipartisan 
support, and so we are quite hopeful that we will have the 
opportunity to work with you and others to get to exactly that 
place.
    I know Dr. Woodcock may have something to add there as 
well.
    Senator Blumenthal. Before you pass the microphone, so to 
speak, can you assure us that a year from now, when we are 
sitting here, and if you come back, that the prices of insulin 
will be lower?
    Mr. Kouzoukas. We are working to assure that every day, and 
we are really delighted about changes that we have already 
seen, a corner start to turn, and we are working every day to 
make sure that exactly that happens--a year from now, a month 
from now, every day, and any day.
    Senator Blumenthal. Would you favor Medicare negotiation of 
drug prices?
    Mr. Kouzoukas. We think Medicare, Senator, does negotiate 
for drug prices. It does it in a way that brings about really 
effective negotiations. It drives down prices and it also 
ensures access to broad types of drugs.
    Senator Blumenthal. You think it is doing enough now to 
negotiate?
    Mr. Kouzoukas. We think that there are opportunities to 
improve the negotiation and that we have definitely worked to 
create new levers and new opportunities for negotiation to 
maximize that, and we are also----
    Senator Blumenthal. Do you support legislation to increase 
the authority to negotiate?
    Mr. Kouzoukas. We would be certainly interested to 
understand a little bit more about what you have in mind, but 
we are always interested in ways to maximize negotiations.
    Senator Blumenthal. I am out of time. I know Dr. Woodcock 
may have had another response.
    The Chairman. Dr. Woodcock, why don't you respond and then 
we will move on.
    Dr. Woodcock. Certainly. Insulin has been regulated as a 
drug, not a biologic, although it is a protein hormone, and 
Congress put in place deeming next March. They will be deemed--
insulins will be deemed to biologics that will open them up to 
biosimilar competition. We have, again, a robust pipeline of 
interests in biosimilars for various insulins, because although 
they are--it is an old molecule, there are many delivery 
systems and modifications to insulin that have made them easier 
for diabetics to manage their blood sugar effectively, so there 
are a variety of products out there and they will be eligible 
for biosimilar competition come March, after they are 
transferred as biologics.
    Senator Blumenthal. Thanks, Dr. Woodcock. Thank you, Madam 
Chair.
    The Chairman. You are welcome, Senator.
    Ms. Robinson, in your written testimony you mentioned that 
the President's proposed budget request includes a provision 
that would increase competition by reducing average sales price 
base payments when a drug manufacturer takes anti-competitive 
action.
    An example of that is pay-for-delay. What exactly would the 
rule do to prevent pay-for-delay agreements?
    Ms. Robinson. Senator, I think that may be from one of my 
colleagues' actual written testimony. I will say that this rule 
really focuses on the rebate stream of payments and the 
discounts. It does not address the pay-for-delay issue that you 
are mentioning, and I apologize.
    The Chairman. If was not your testimony, then I have a 
feeling it was Mr. Kouzoukas' testimony, so could you answer 
that question for me? What specifically does the President's 
proposal do to prevent these kinds of anti-competitive 
behaviors like pay-for-delay?
    Mr. Kouzoukas. Chairman Collins, the President's proposal--
and I will say as with all the things in the budget, it is part 
of a comprehensive package, so it is one part among many that 
we think need to be considered in concert. It would essentially 
reduce payment for innovator drugs when the ASP--from ASP plus 
6 to ASP minus 33 percent, when a manufacturer files a pay-for-
delay agreement or takes another anti-competitive action.
    Now the details, as with many budget proposals, are ones 
that we believe that we would be delighted to have an 
opportunity to work with Congress on to fill in, but the basic 
notion and the gist is that we think that the ASP mechanism is 
one that provides an opportunity to address this kind of anti-
competitive behavior that you and others have identified as a 
concern.
    The Chairman. You would use the reimbursement system, 
essentially, that is available under the Medicare system to 
penalize a company that pays a generic not to come to market. 
Is that correct?
    Mr. Kouzoukas. Chairman Collins, I do not know if I would 
use the word ``penalize.'' It is perhaps to--
    The Chairman. Well I hope if we are going to average sales 
price plus 6 to average sales price minus 30 percent, or 
whatever it was that you said, I think most companies would 
view that as a penalty.
    Mr. Kouzoukas. I understand, Chairman Collins.
    The Chairman. I am not against it. Believe me. I think pay-
for-delay is outrageous.
    Mr. Kouzoukas. I think our view might be that we are 
pricing appropriate to what we think is a dynamic that is great 
in the marketplace, and that if it is going to be a situation 
where the ASP is essentially undermined by the anti-competitive 
action that we should recognize that in our pricing, but 
certainly I imagine some might view that differently.
    The Chairman. Let me move on to another issue. At our 
previous hearings we heard from patients who have monthly drug 
costs that are completely unpredictable and can range 
significantly, depending on their benefit design, where they 
are in reaching their deductible, or where their spending 
places them in the Part D stages. Others who take 
extraordinarily expensive drugs go through the benefit stages 
very quickly.
    One witness who was diagnosed with multiple melanoma 3 
years ago testified that she went in and out of the donut hole 
in January, paying $4,950 for the first month and then $640 
every 28 days for the rest of the year for the drug that she 
needed. She had refinance her home to afford the cost of her 
medication.
    My question to you is this. What is the best way to reform 
the catastrophic benefit so that it helps patients without 
creating any perverse incentives in our drug pricing system?
    Mr. Kouzoukas. Chairman Collins, first I would like to note 
that I empathize with the letters and the testimony that you 
have heard. Really, these are the kinds of stories that we get 
every day as well, and it is very much a big part of why we do 
what we do and are working so hard to address this prescription 
drug dynamic.
    The catastrophic phase is an important piece of this 
because the people who are most affected, sort of the worst 
situations are the ones who have the high drug costs, and that 
puts them into the catastrophic phase.
    I will say that we are testing, in our Part D modernization 
model right now, a change whereby prescription drug plans have 
an opportunity to come in and offer a--give an incentive, if 
you will, in order to get even bigger discounts in the 
catastrophic phase, and to do that in a way that will drive 
better negotiation.
    I will also say that in our budget proposal, as one part 
among several, we have a protection for maximum out-of-pocket 
costs as well, and we think that what is important----
    The Chairman. That is lower than current law?
    Mr. Kouzoukas. Indeed. In Part D there is not currently an 
out-of-pocket maximum.
    The Chairman. Well, there is a matching system that comes 
into play.
    Mr. Kouzoukas. Of course, Chairman Collins, and so it is 
broader than current law in terms of the proposal, and I will 
say in terms of the incentives it creates--which I think is an 
important part of this, and I recognize that you are pointing 
out some of these tradeoffs. Every policy that we make here, in 
this kind of program, there are going to be these tradeoffs, 
and that is why the budget proposal is part of a package. There 
are other things in that package that will essentially work in 
concert to ensure that we have both negotiation and access, and 
that we address any distortions or misincentives.
    The Chairman. Senator Casey.
    Senator Casey. Thanks. Ms. Robinson, I will start with you. 
I wanted to refer to a Pennsylvania report. This is from 2018, 
and the auditor general of the State uncovered a troubling 
practice of spread pricing by our state's pharmacy benefit 
managers in allowing private companies to profit at the expense 
of State Medicaid programs and taxpayers. This report found 
that in 2017, three such middlemen got millions in profits from 
Pennsylvania's Medicaid program by using spread pricing 
tactics. Medicaid, as I think you would agree, we all agree, is 
not a program for which private companies should be permitted 
to skim off the top in order to pad company profits or the 
wallets of CEOs.
    The Office of Inspector General received a letter from the 
Finance Committee leadership, written by Chairman Grassley and 
Ranking Member Wyden, in April of this year, urging additional, 
``transparency and oversight,'' into these spread pricing 
practices that were cited in Pennsylvania.
    Can you comment on the status of this request at the HHS 
OIG?
    Ms. Robinson. Yes, I can, Senator Casey, and I appreciate 
the interest in our work. We have that inquiry and we are in 
the process of thinking about what new work we would do in this 
area to look at spread pricing in Medicaid, you describe. We 
have a team of experts actually doing some research, including 
they have reviewed the Pennsylvania State auditor's report that 
you mentioned and a variety of other things, so we are in the 
early stages of looking at what work we would do there. We 
would be happy, first off, to meet with you or your staff to 
hear more about your interests, and certainly happy to keep you 
apprised as that work develops.
    Senator Casey. Thanks. Any sense of the timing on this?
    Ms. Robinson. I am sorry. I do not have any sense of timing 
right now.
    Senator Casey. I was hoping I could report back to the 
committee.
    Ms. Robinson. I would be happy to followup after, if I can, 
on that.
    Senator Casey. We will, and thank you very much.
    Mr. Kouzoukas, I have one fact check but also, I think, an 
area of agreement. You mentioned in your opening about the cost 
reduction of prescription drug prices, and I think what you are 
referencing is something the President said in the State of the 
Union. The Associated Press quoted the President as saying, 
``As a result of my Administration's efforts in 2018, drug 
prices experienced their single largest decline in 46 years.'' 
You made reference to that in your opening.
    I just wanted to point out what the Associated Press found. 
They found, ``The Consumer Price Index for prescription drugs 
shows a 0.6 percent reduction in prices in December 2018 when 
compared with December 2017,'' and that I think that is the 
reference the President is making.
    However, the same index showed a 1.6 percent increase when 
comparing the full 12 months of 2018 compared with the entire 
previous year, so I hope the Administration will clarify that 
that reference he makes and that you have made is a December-
to-December comparison as opposed to a year-to-year.
    I think there is an area of agreement here when it comes to 
drug spending dashboards. As you know, Chairman Collins and I 
have introduced a bill to codify and strengthen the Medicare/
Medicaid prescription drug spending dashboards. This was 
started by the Obama administration to shine a light on how 
much the Federal Government spends on prescription drugs. The 
Trump administration expanded the tool to show what thousands 
of prescription drug costs taxpayers, and the need for 
transparency is obvious, I think, and this is one area where we 
can make some progress and do it in a bipartisan way.
    I just wanted to ask you about your sense of the value of 
these dashboards, and tell us, if anything, what the 
administration hopes to do about it--to strengthen it, I should 
say.
    Mr. Kouzoukas. Thank you, Senator. As you noted, we have 
been hard at work to expand the dashboards and we view it as 
really an opportunity, one part of many, to build a bipartisan 
approach, and all of these efforts are ones that we expect will 
sort of accumulate and will buildupon themselves. It is 
something that has been a priority for the Administration, is 
to make sure that we provide an expanded opportunity for people 
to get access to this kind of information, and it certainly is 
potentially useful to beneficiaries and patients as well, but 
it is also really important for some of the other stakeholders 
and other parts of the industry where, if we are not going to 
get the kind of transparency through a market, as Senator Braun 
had indicated earlier, then bringing this transparency through 
the data that we have access to, and so we are always working 
to identify ways to even further enhance what we are already 
doing. We are interested in hearing from you and others on the 
Committee on how we can do that even more intensely, but we are 
excited about the opportunity that the dashboards present and 
are grateful for the support.
    Senator Casey. Thanks very much, Madam Chair.
    The Chairman. Thank you.
    Senator McSally. Thank you, Madam Chair, and my next 
question is for Dr. Woodcock. You talked about the importance 
of biosimilars in your testimony. We know that it is a crucial 
tool for so many patients, but earlier this year it was 
released that those specialty drugs are taken by a relatively 
small share of Part D enrollees. Spending on the drugs has 
increased and accounts for more than 20 percent of Part D 
spending.
    The FDA is continually approving biosimilars but fewer than 
half are actually showing up on the market, so I share your 
concern about a large portion of these being approved and never 
making it to patients, so I was wondering if you could 
elaborate on what you think is holding that up and what else we 
could do to get these approved biosimilars to patients so that 
they can use them.
    Dr. Woodcock. We are not totally sure because we do not 
have total visibility into what companies do after we would 
approve a biosimilar. We are aware that some of these are 
caught up in patent disputes, though, and as was discussed 
earlier, patents can run much longer than any exclusivity and 
fights over those can delay availability for a long time, but 
we are not fully clear on the different reasons that these 
drugs do not reach the market. In fact, when we approve generic 
drugs, often they are not launched in the United States, even 
after we have approved them, and the reasons are business 
reasons and they are not shared with us.
    Senator McSally. Is there anything else that we can do, or 
you can do, in order to better understand, other than the very 
significant patent discussions that we have had about, you 
know, really allowing competition to truly be there once the 
patent has expired and to stop the abuses of patents? Is there 
anything else that can be done?
    Dr. Woodcock. We hold meetings with the industry to try 
elicit an understanding of these things, and we will continue 
to do that. My impression, though, is that the patent issues 
are the most pressing right now, and probably the most 
responsible for the failure to launch these. It is very 
expensive to develop a biosimilar, unlike, say, a generic, and 
that is a lot of investment and then not to seek the market. 
There have to be substantive reasons.
    Senator McSally. Great. Thank you. Mr. Kouzoukas, any other 
perspectives on that issue?
    Mr. Kouzoukas. Of course. Thank you, Senator. The question 
of how we can encourage greater biosimilar innovation and 
adoption is one that we work collaboratively with the FDA on. 
Clearly it starts with what the FDA's work is, in terms of 
getting an approval process, and the tremendous work they have 
done to create a new biosimilars pathway has been a big part of 
this, and it would not be even possible to have this 
conversation without it.
    In terms of what happens once that drug gets to market, 
that is where the Medicare program often can play a big 
influence. We are pleased that we have taken a few really 
important steps already to encourage greater biosimilar 
innovation adoption.
    One is that we changed the way that we assign separate 
codes for biosimilar payment. It sounds like a rather obscure 
change, I suppose, but really it is quite important, because 
the way that biosimilars had been previously paid for and 
priced in Part B of Medicare is that they essentially were all 
lumped in together, and that did not encourage additional 
innovators to come into the market, so we think that was an 
important step and we are really excited about seeing it play 
out over the long term. It will not be an overnight kind of 
thing because investors have to line up behind putting that 
kind of infrastructure in place, as Dr. Woodcock pointed out.
    We also made some changes to the way that we--cost-share, 
that we oversee cost-sharing for low-income beneficiaries when 
they take a biosimilar. We essentially changed the rule so that 
a biosimilar is treated as a generic for those low-income 
beneficiaries. That is a good part of the market and so it is 
important there that that kind of change continue to play 
itself out, and then we also have, with respect to biosimilars, 
a budget proposal that would eliminate cost-sharing for 
generics and biosimilars. It is part, again, of a larger 
package that needs to be viewed in concert, but we would be 
delighted to have the opportunity to work with Congress on 
passing that, and that is just really a thumbnail sketch.
    Senator McSally. Great. Thank you. I appreciate it.
    Thank you, Madam Chair.
    The Chairman. Thank you.
    Senator Jones. Thank you, Madam Chairman. Ms. Robinson, I 
would like to give you an opportunity to talk about the rebate 
rule a little bit and followup on the question I asked Mr. 
Kouzoukas about kind of the tradeoffs between potential rising 
premiums and a lower cost. Can you just--I know you are limited 
on somewhat of what you can say, but do you have any thoughts 
about that?
    Ms. Robinson. Thank you, Senator, for the question. I think 
what I can draw from is what is in the proposed rule, some of 
the modeling that was done by the actuaries, looking at this 
rule. It is difficult to know and to quantify accurately what 
the effects are going to be. There is a lot of uncertainty. It 
is a very complex industry and a complex rule, but what some of 
that modeling shows is that overall, on average, beneficiaries 
would have net reduction in out-of-pocket costs, the 
combination of premiums and what you pay at the counter, as a 
result of this rule, but the results would very much be 
different for different beneficiaries, so they did model 
increases in premiums but also decreases in out-of-pocket 
spending, particularly for sicker beneficiaries, beneficiaries 
that take high-cost drugs that are currently subject to 
rebates, and when you netted out the savings at the counter, 
net it out against the premiums, the modeling shows an overall 
savings, in general. There are actually multiple scenarios 
modeled here so it is a bit complicated. The premium estimate 
increases for 2020, for example, range from about $3.20 a month 
to $5.64 a month, per bene, per month, so it is a fairly 
complex scenario. We have solicited public comments on all of 
this modeling, and have all of those comments in front of us.
    Senator Jones. Would you anticipate some kind of monitoring 
over the course--and let's assume this rule goes into effect--
some type of monitoring to make sure that PBMs just do not, you 
know, say, well, you know, this is going to cost us profits so 
we are just going to artificially boost the premiums, you know, 
to keep our profits, you know, the PBM profits. Is there going 
to be a monitoring in place to monitor that?
    Ms. Robinson. I think it is going to be incredibly 
important that the Department monitor what happens here. We 
want to be sure that these rules, if they are finalized, work 
the way they are intended to work, and if things go differently 
than intended, corrective actions and things can be done.
    I think it is going to be incredibly important for the 
Department to monitor what happens if this rule is finalized.
    Senator Jones. All right. Thank you.
    Dr. Woodcock, we seem to still be seeing rising costs in 
even generic drugs over the last couple of years, so what do 
you see we can do to incentivize manufacturers to enter the 
generic market, encourage the competition, and will that drive 
down the prices by doing that or do we need to do something 
more?
    Dr. Woodcock. The generic drug price rises often relate 
when there is a sole source, where there is no competition, and 
this is related to shortages. Why do we have markets where 
there is not really a market? There is one market entrant. Our 
Drug Shortage Task Force is really looking at this, to try and 
figure out the root causes of this distortion in the market, or 
market failure.
    Obviously areas where robust competition, where we have 
four or five competitors offering the same drug, the prices of 
those drugs are very low, but where there is a single 
manufacturer making that drug, and it may be going in and out 
of shortage, that is where we see the prices going up.
    Senator Jones. Okay. All right. That is all I have. Thank 
you, Madam Chairman.
    The Chairman. Thank you.
    Senator Braun. Thank you, Madam Chair. Ending on that point 
there, that is, again, very simple. When there is one supplier 
the price is going to go up. You know, we are nudging the 
industry with this conversation, and I am hopeful, like I said 
earlier, that they are going to get the message and help us 
out.
    Let's assume we get the industry to be transparent and 
competitive. It's a big assumption. I want to turn where we 
ended up a while ago, the consumer. In my own plan, when I took 
this on 11 years ago, it was an atrophied health care consumer 
that would have described my average employee. You know, they, 
of course, were concerned about their premium contribution 
staying low. That is the really only thing out-of-pocket if you 
take care of yourself, but what I tried to tell them, and I 
need you to help me do some of the heavy lifting, there is no 
market that works well, even when it is transparent and 
competitive on the supply provider side, if you do not have an 
engaged consumer. Look how often you see people at the grocery 
store looking at their phone to save 20 cents on a $2 item. We 
do not have that currently in health care.
    I created an atmosphere to where I told them I would hold 
their costs down in the future, which was an idea. I could not 
guarantee it but I did it. I had to change a behavior to get my 
employees, health care customers, eventually, engaged.
    Do you think that is possible when health care has been so 
paternalistic, whether it is through Medicare, Medicaid, or 
employer-provided plans, where most individuals are only 
interested in how low their co-pay is, to avoid any skin in the 
game? I fixed it and it has worked. Do you think we can get the 
other side of the equation involved, that is the individual 
that uses health care, to help transparency out if, in fact, we 
get it?
    Anyone that wants to comment on it.
    Mr. Kouzoukas. Senator, I can start, for sure. You know, I 
am really excited to hear about your personal story of 
leadership within the commercial enterprise or business in 
terms of how to approach this together with employees, and I 
lament, really, that we put you in a situation where you had to 
find your way to that, and so many employers, I think, we hear 
from, feel like they are struggling, swimming upstream against 
a system that is designed to make it harder and harder for them 
to get a better deal for their employees, and yet the employees 
rely on them for that health care.
    To answer your question, I think just very directly, not 
only is it possible, it is necessary, and I believe, 
ultimately, inevitable, that ultimately what we are talking 
about here--and this is why our strategy just fundamentally 
relies on consumers and patients, what we are talking about are 
people making decisions for their own health care. They are the 
ones that are ultimately going to end up in the hospital, or 
not be in the hospital, or shorten their life, or being able to 
spend time with their loved ones or not, and so as we empower 
them, I have absolute faith that people want to live healthier 
lives. They want to live better lives. They want to live longer 
lives, and even sometimes if they are going to make some 
tradeoffs, they need to be in control, and when we give people 
that information, when we give them a taste and an ability to 
make those decisions for themselves, I think we are all going 
to have to run to get out of the way, because they are going to 
be checking their phones and doing everything else in health 
care, and demanding, really, the kinds of accountability and 
choice that they are accustomed to in the rest of the economy. 
All we need to do is really start getting out of their way.
    Senator Braun. That is what we did in my company. Dr. 
Woodcock.
    Dr. Woodcock. Well, we have proposed reform in our self-
care part of drugs, which is the over-the-counter. We regulate 
maybe 100,000 different drugs that are offered to consumers for 
self-care, but that whole system is stuck in the 1970's, and we 
cannot have any innovation within that monograph system.
    As a physician, I would say I think there is a generational 
issue here. My older patients often wanted ``Doctor Knows 
Best,'' okay, but the rising generations really want to be 
active participants, and there is no better way for more minor 
conditions or certain conditions than to actually have safe and 
effective drugs available to you over the counter. You do not 
have to take off work, you do not have to make a doctor's 
appointment, you do not have to pay for parking, and you can 
select amongst options, but that has to be done so that it is 
safe and effective for the person to use that product, so we 
are very dedicated to self-care and the rising self-care 
industry, and we believe that the OTC reform--and, Senator 
Casey, thank you for your leadership--we believe that will help 
bring that about.
    Senator Braun. Ms. Robinson, would you want to comment 
quickly?
    Ms. Robinson. Yes. I do not know that we have a view on 
your exact question but I will say that in the Inspector 
General's Office we know we need to be prepared to oversee a 
health care system that is going to be more technologically 
driven, more consumer driven. It is going to be much more in 
that vein, and so we are preparing to be ready oversee that 
kind of health care system.
    Senator Braun. In fact, I know from my own experiment, when 
you own your own well-being, and when you have skin in the 
game, and you make tools available, that are like pulling teeth 
to get available, it can work. You know, we have done it now 10 
years running, so thank you for your comments.
    The Chairman. Thank you, Senator.
    I want to thank all of our witnesses today for your work in 
developing and advancing policies to lower the cost of 
prescription drugs for all Americans. Today we have examined 
Federal efforts to foster more competition, transparency, and 
increase affordability. I salute all of you for your efforts 
and it is important that they continue as the Senate and the 
House act in this area.
    Committee members are going to have until Friday, June 
28th, to submit questions for the record. I know that I have 
got a couple I want to submit.
    Again, I want to thank our witnesses, Ranking Member, all 
the Committee members who participated, as well as our very 
hard-working staff.
    I have to go to Appropriations for a mark-up on the 
supplemental appropriations bill, so if the Senator will excuse 
me for not being here for his final comments, I am going to 
turn the gavel over to you.
    Senator Casey. Wow.
    The Chairman. I am little nervous about this, but I trust 
you. Thank you all for being here today.
    Senator Casey. Madam Chair, thank you very much for the 
hearing, and as you leave I will make sure the gavel goes back. 
I do want to thank the Chairman for calling this hearing and 
for giving us a chance to talk about this important issue. I 
want to thank our witnesses for being here, for your testimony, 
for the work you are doing on these important issues.
    I will say, for the record, that I did not have a chance 
to--or I did not take the opportunity, I guess, to ask Dr. 
Woodcock a question, and I feel really badly about that, not 
only because she is so capable but she has an extra qualifier 
for today. She is a native of Blair County, Pennsylvania. She 
has got a Bucknell degree and a Penn State degree, or teaching?
    Dr. Woodcock. Post-medical school, so teaching.
    Senator Casey. Teaching. I owe you one. Next time we will 
ask you every single question, but thanks for the testimony.
    I think we can all agree, in a country as prosperous as 
ours, we must do better on this issue of lowering prescription 
drug costs. No family should be forced to carry what I called 
earlier the heavy bag of rocks of child care costs, the cost of 
college, and then, on top of all that, the heavy back of rocks 
called prescription drug costs, on their back. No family should 
have to endure that many costs, just to name a few.
    We heard what the Administration is proposing to do about 
it and we are grateful the Administration is focused on this. 
We have discussed solutions that Members of Congress in both 
houses are working on. We have got to get those enacted into 
law. That is a whole other challenge.
    We must do what 95 percent of Americans demand of us and 
pass a law that allows Medicare to negotiate drug prices. We 
must not lose sight of the continued threats to the very 
programs like Medicaid and the Affordable Care Act, that I 
mentioned earlier in my question, that ensure families 
affordable access to needed medicines, and more, and I think 
that is a critical part of this debate. We cannot be focusing 
on lowering drug prices only and then forgetting about the 
supports for keeping those prices down that come through the 
Affordable Care Act and Medicaid.
    We want to thank our witnesses, and with that, with my left 
hand, I will gavel us out. Thank you.
    [Whereupon, at 10:39 a.m., the Committee was adjourned.]
     
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                               APPENDIX
  
      
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                      Prepared Witness Statements

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                       Statements for the Record

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