[Senate Hearing 116-550]
[From the U.S. Government Publishing Office]





                                                        S. Hrg. 116-550
 
                    THE COMPLEX WEB OF PRESCRIPTION
                    DRUG PRICES, PART II: UNTANGLING
                       THE WEB AND PATHS FORWARD

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

                                HEARING

                               BEFORE THE

                       SPECIAL COMMITTEE ON AGING

                          UNITED STATES SENATE

                     ONE HUNDRED SIXTEENTH CONGRESS


                             FIRST SESSION

                               __________

                             WASHINGTON, DC

                               __________

                             MARCH 7, 2019

                               __________

                           Serial No. 116-04

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


        Available via the World Wide Web: http://www.govinfo.gov      
        
        
        
        
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             U.S. GOVERNMENT PUBLISHING OFFICE 
 47-533 PDF           WASHINGTON : 2022        
        
        
        
        
                       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

Lisa Gill, Deputy Editor, Special Projects, Consumer Reports, 
  Yonkers, New York..............................................     5
Pooja Babbrah, Practice Lead, Point-of-Care Partners, Phoenix, 
  Arizona........................................................    11
Stacie B. Dusetzina, Ph.D, Associate Professor, Health Policy, 
  Vanderbilt University Medical Center, Nashville, Tennessee.....    12
Jane Horvath, Principal, Horvath Health Policy, Washington, D.C..    14

                                APPENDIX
                      Prepared Witness Statements

Lisa Gill, Deputy Editor, Special Projects, Consumer Reports, 
  Yonkers, New York..............................................    35
Pooja Babbrah, Practice Lead, Point-of-Care Partners, Phoenix, 
  Arizona........................................................    43
Stacie B. Dusetzina, Ph.D, Associate Professor, Health Policy, 
  Vanderbilt University Medical Center, Nashville, Tennessee.....    54
Jane Horvath, Principal, Horvath Health Policy, Washington, D.C..    66

                       Statements for the Record

American's Health Insurance Plans (AHIP).........................    73
American Society of Health-System Pharmacists (ASHP).............    82
Healthcare Leadership Council (HLC)..............................    88
Pharmaceutical Care Management Association (PCMA)................    90


                    THE COMPLEX WEB OF PRESCRIPTION

                    DRUG PRICES, PART II: UNTANGLING

                       THE WEB AND PATHS FORWARD

                              ----------                              


                        THURSDAY, MARCH 7, 2019

                                       U.S. Senate,
                                Special Committee on Aging,
                                                    Washington, DC.
    The Committee met, pursuant to notice, at 10:03 a.m., in 
Room 138, Dirksen Senate Office Building, Hon. Susan M. 
Collins, Chairman of the Committee, presiding.
    Present: Senators Collins, Tim Scott, McSally, Braun, Rick 
Scott, Casey, Blumenthal, Warren, and Sinema.

                 OPENING STATEMENT OF SENATOR 
                   SUSAN M. COLLINS, CHAIRMAN

    The Chairman. The hearing will come to order.
    Good morning. Yesterday, this Committee heard the painful, 
personal stories of five people who struggle to obtain the 
medications they need at the prices they can afford. Their 
stories are familiar to far too many Americans who walk into 
the pharmacy to pick up a routine refill, only to walk out 
empty-handed, unable to pay the rising cost.
    Some are tapping into their retirement funds or refinancing 
their homes, working multiple jobs, or living in endless 
uncertainty and anxiety about what the next month might bring. 
This should not be the experience of buying prescribed 
medications in our Nation.
    The problems consumers have in affording prescription drugs 
add to the stress that they already feel as they cope with 
their illnesses.
    We have a chart, which I am displaying, that I will defy 
anyone to figure out. It illustrates just how opaque and 
complex the drug pricing system is.
    In this Committee's continuing effort to untangle this 
complicated web of prescription drug prices and to identify 
realistic, workable solutions, today we will consult with a 
panel of experts to look behind the scenes.
    Each of the stakeholders in the health care supply chain 
plays a role, and we all must work together to bring down 
costs.
    Combating high prescription drug prices has long been a 
priority for our Committee. Four years ago, we led a year-long 
investigation into the causes, impacts, and solutions to the 
egregious price spikes for certain drugs that had gone off-
patent.
    We released an extensive report, and I am pleased that 
several of our recommendations are now law. Today, these laws 
are helping to increase generic competition and improve 
transparency, but we still have so much more to do to produce 
lower drug prices.
    In addition, last fall I developed bipartisan legislation 
with then Senator Claire McCaskill that prohibits gag clauses, 
an egregious practice that concealed lower prescription drug 
prices from patients at the pharmacy counter.
    This legislation banning gag clauses is now law, so that 
pharmacists can help ensure that consumers are not paying more 
than they have to for the drug they require. Whoever would have 
guessed that in some cases it is cheaper to use your debit card 
than your insurance card to purchase a prescription drug? That 
is so counterintuitive that consumers would never think to ask 
that question of their pharmacists. Now the pharmacists can 
volunteer that important information.
    Last Congress, this Committee also held a hearing to 
uncover the causes of soaring insulin prices, despite the fact 
that insulin has been available for nearly 100 years.
    Through that hearing and a series of inquiries to drug 
manufacturers, pharmacy benefit managers, and insurance 
companies, I found that while manufacturers set the list 
prices, there are also other supply chain factors, such as the 
rebates paid by drug companies to PBMs and insurers, which play 
a significant role in driving up costs to the consumer.
    The system appears to be characterized by perverse 
incentives and conflicts of interest that encourage higher 
prices.
    The administration recently released a proposed regulation 
on rebates, and I am working with colleagues on both sides of 
the aisle to see what action Congress can take to ensure that 
any discounts actually translate to reduced costs for consumers 
at the pharmacy counter. That is not now the case.
    Our Committee has also held a hearing to examine the opaque 
patent system that protects many of these high-priced drugs. We 
uncovered the use of patent thickets and so-called 
``evergreening'' strategies that extend monopolies on 
blockbuster drugs for far longer than Congress ever intended 
when it gave the patent protection in order to encourage 
investment in groundbreaking drugs.
    For example, Humira, the world's best-selling drug, is 
protected by more than 130 patents, some of which have terms 
that extend to 2034. These patents block generic competition 
that could bring down the price for biologics.
    This week, I introduced the bipartisan Biologic Patent 
Transparency Act, a bill that would help make patents work as 
Congress intended. The bill would shine a light on disturbing 
patent strategies and deter companies from introducing patents 
late in the game in an attempt to prevent lower-priced 
alternatives from coming to market.
    By addressing patent strategies that hinder true 
innovation, this legislation, I hope, will pave the path for 
new lower-cost alternatives.
    High drug prices and cost increases that dominate our 
headlines and devastate our bottom lines are unsustainable for 
America's consumers.
    In 2017, brand-name prescription drug prices increased four 
times faster than the rate of inflation. The time to act is 
now.
    Today, we will examine ways to empower consumers, improve 
transparency, and fundamentally change the incentives in our 
broken system.
    Navigating the prescription drug landscape is difficult, 
even for an individual with a graduate degree in the field. It 
should not take a Ph.D and an infinite amount of time and 
patience to figure out how much a prescribed medication will 
even cost the consumer.
    I want to thank all of our witnesses for being here and for 
sharing their expertise on this problem with the Committee. I 
look forward to our discussion, and I turn now to Ranking 
Member Senator Casey for his opening statement.

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

    Senator Casey. Thank you, Chairman Collins. Thanks for 
having this hearing and yesterday's as well.
    We want to thank our witnesses and everyone who is here.
    We are grateful that for the second day in a row. we can 
focus on a critically important issue that so many Americans 
are not just concerned about, but are indeed burdened by.
    As Chairman Collins mentioned, yesterday we heard very 
compelling testimony about the prices families must pay to 
purchase life-saving and life-sustaining medications.
    Unfortunately, these experiences are all too common. There 
are policies that we can enact into law that will allow people 
to focus on getting well instead of worrying about their pocket 
books. Today, we will discuss some of those solutions. 
Yesterday, we heard about many of the challenges. Today, we 
want to focus on solutions.
    We are long past time, though, for discussion. Individuals 
and families are both demanding and deserving of action by the 
U.S. Congress.
    Today, for example, I am introducing two common-sense 
pieces of legislation to address the cost of prescription 
drugs. The first, of course, is with Chairman Collins, a bill 
to ensure that the cost of prescription drugs, especially the 
highest-priced drugs, are posted publicly for everyone to see.
    The Obama administration started this practice in 2015 with 
the creation of Drug Dashboards. The Trump administration took 
action last year to update and expand on this information.
    This bill that we are introducing would guarantee that 
information about drug costs in Medicare and Medicaid are 
posted every single year. Shining a light on the cost of these 
drugs is a critical first step in order to spot trends, to 
identify problems, and to find solutions.
    The second bill that I am introducing would help seniors 
and people with disabilities living on less than about $25,000 
afford their prescription drugs. One in four people on Medicare 
live on incomes below $15,250 dollars--one in four on Medicare.
    My bill would help more people qualify for assistance, 
building on important policies passed in the Affordable Care 
Act. It would also give more help to seniors who still struggle 
to afford high coinsurance rates and out-of-pocket costs.
    This bill is modeled after an innovative Pennsylvania 
program known by the acronym P-A-C-E, PACE. This is a 
bipartisan program supported literally decades by both parties 
in Pennsylvania and Governors in both parties.
    Yesterday, our witness, Barbara Cisek, spoke about how much 
it helped her mother when she was taking care of her mother 
when her mom had ovarian cancer.
    By helping more people afford the cost of their drugs, it 
is my hope that we will hear fewer stories about seniors 
splitting their pills and more stories about, in fact, the way 
they live, and their grandchildren, and the like.
    This is not all that must happen, though. We must do more. 
Congress, I believe, should also pass--in addition to the bills 
that I have mentioned and the work that Senator Collins has 
joined--pass legislation that would allow the safe importation 
of prescription drugs. I have introduced legislation with 
Senator Sanders to do just that.
    Also, in addition to that, we must finally allow Medicare 
to directly negotiate, negotiate for the price of drugs, a 
policy that I have been supportive of since my first year in 
the Senate.
    We must also seriously examine all of the proposals by the 
Trump administration aimed at reducing prescription drug costs. 
That does not mean we will all agree, but we should closely 
examine those ideas.
    The Aging Committee has historically been an incubator of 
thoughtful policy, and I think that is true today as well. Drug 
pricing policy is one of the most complicated, as the chart 
indicates, that we will examine.
    I am pleased that we are holding this hearing today and 
look forward to moving our policy discussion into action during 
this Congress.
    Thank you Madam Chair.
    The Chairman. Thank you very much, Senator Casey.
    I also want to welcome and acknowledge that Senator Rick 
Scott of Florida is here today. He has a wealth of knowledge 
and information about health care, and I am very pleased that 
he could join us this morning.
    I also know that Senator Warren intends to come back, if 
she can, and I expect others will be joining us as well.
    I would now like to turn to our panel of witnesses. We are 
first going to hear from Lisa Gill who is the deputy editor of 
Special Projects at Consumer Reports. I am a longtime fan of 
Consumer Reports. I never buy a vehicle without checking with 
Consumer Reports. It now appears that I should never purchase a 
prescription drug without checking with Consumer Reports.
    Ms. Gill led the Secret Shopper investigation and is also 
part of the organization Choosing Wisely and Preventing Over-
Diagnosis Campaigns.
    Our second witness, Pooja Babbrah, is the Practice Lead at 
Point-of-Care Partners. She will testify about technologies and 
tools that assist patients in securing the prescription drugs 
they need at the lowest possible cost.
    Next, we will hear from Dr. Stacie Dusetzina--did I do it 
right?--who is an associate professor of Health Policy at 
Vanderbilt University Medical Center. She is also an author of 
the 2017 National Academy of Sciences Engineering and Medicine 
Report entitled ``Making Medicines Affordable'' and a brand-new 
article on the prescription drug pricing challenges that was 
just published in the Journal of the American Medical 
Association, so that literally is hot off the presses, and we 
are very delighted to be the first Committee to spotlight your 
research in that area.
    Our final witness on the panel today is Jane Horvath, the 
principal at Horvath Health Policy. She, too, is an expert in 
this area and will discuss State efforts to advance 
transparency for prescription drugs.
    I thank you all for being here today, and we will start 
with Ms. Gill. Thank you.

         STATEMENT OF LISA GILL, DEPUTY EDITOR, SPECIAL
         PROJECTS, CONSUMER REPORTS, YONKERS, NEW YORK

    Ms. Gill. Good morning. Thank you so much for having me 
here today.
    Chairman Collins, Ranking Member Casey, and Committee 
members, we appreciate the opportunity to be here today to 
discuss the findings of our recent special investigation on the 
costs of drugs for seniors covered by Medicare Part D plans.
    I speak to you today as a journalist who has had the honor 
and actually truly a dream of working for a decade on behalf of 
consumers at Consumer Reports. My work has focused on health 
care and specifically looking at consumer drug costs.
    Consumer Reports is an 80-year organization. It is an 80-
year-old, independent, nonprofit member organization. As you 
point out, we test cars and refrigerators and microwaves, and 
we rely on evidence-based testing and ratings, rigorous 
research, hard-hitting investigative journalism, public 
education, steadfast policy action on behalf of consumers' 
interests, and that is exactly why last summer when we noticed 
a small study coming out from researchers at Yale School of 
Medicine that suggested some medications might be less 
expensive if a senior decided to not use their prescription---
their Part D plan, and so we decided to take a closer look.
    We wanted to replicate what a consumer would experience 
when they sign up for a Medicare Part D plan for the plan year 
2019. We often use Secret Shoppers as part of our 
investigation, and it actually really is an approach to 
gathering retail prices of medications.
    We gathered a list of five common generic drugs, and that 
included generic Lipitor, generic Celebrex, generic Cymbalta, 
generic Actos, and generic Plavix. These are typically fairly 
low-cost drugs.
    Then we selected six mid-sized cities in the United States 
to run this test: Seattle, Denver, Des Moines, Dallas, 
Pittsburgh, and Raleigh.
    Then we chose a ZIP code in each of those that was close to 
the city's center.
    We logged onto the Medicare.gov website, and we used the 
Medicare Plan Finder Tool, just like any other consumer would, 
and we entered the five drugs in each of the ZIP codes, and 
then we selected the three least expensive plans that we wanted 
to really look at.
    Then we compared what a consumer would pay with the three 
low-cost plans with two different pharmacies in that ZIP code, 
and this is important because there is a lot of pharmacies in 
ZIP codes, but you can only compare two at a time.
    Needless to say--and one of the reasons I am here--is 
because we did not expect to find what we did. Instead of 
identifying medications that might be less expensive if you 
skipped using your Part D plan, we found that what consumers 
could pay for their medications could vary by hundreds of 
dollars, and worse, if you made a small mistake while signing 
up, it could cost a consumer thousands of dollars.
    Here are three quick examples. I will draw your attention 
to Slide 1, please.
    If you accidentally forgot to enter one of the drugs into 
the Plan Finder Tool, it could be extremely expensive. We 
deliberately left off one drug. We signed up with a plan with 
four drugs, and the most egregious example was coming out of 
Des Moines. The annual drug cost for four drugs came to $407, 
which is actually a pretty good price, and that was with a plan 
called Cigna-HealthSpring Rx Secure-Essential, which sounds 
very promising until you add the fifth drug, which is, in our 
case, we left off generic Celebrex.
    When you add that drug, the plan price, as you can see, 
jumped to $2,948, which is an astonishing amount. What we 
learned is that that drug was actually not covered by the plan, 
and not only that, they would charge a consumer $212 a month 
for that drug.
    Just even before I came to this hearing, I wanted to 
double-check, just to see how much it would cost. I went to 
GoodRx.com, which is a very common discount website that we 
suggest consumers try. I found that drug for $16 at Costco---
$16, not $212--or $6 at Kroger, so if you think about that, 
that is crazy.
    The second thing that we found--this is Slide 2--if a 
consumer picked a pharmacy that is simply convenient, they 
could wind up spending a lot more money.
    Our example comes out of Denver. The total cost of the five 
drugs that we tested at a Walgreens was $1,687, not a great 
price, but it was okay, but 4 miles away in the same ZIP code, 
same plan, same drugs, at Cherry Creek Pharmacy, which is an 
independent pharmacy, the total cost for the year was a mere 
$688, nearly three times less expensive.
    The third thing that we found--and this is for Slide 3. 
This is a general slide just showing the price variation in the 
six cities, but we learned too that if a person focused only on 
the deductible amount, they could overlook much cheaper plans.
    Our example comes out of Dallas, one plan with a low $100 
deductible, and I will remind the Committee that a deductible 
is the amount that a consumer must pay before the insurance 
kicks in. That $100 deductible plan would actually cost a 
consumer $1,592 for the entire year for those five drugs, but 
another plan in the same area with a $415 deductible would 
actually cost a person just $574, which turns out to be a 
pretty good price.
    These results helped us formulate some consumer tips, but 
there were three quick specific problems I would like to point 
out to the Committee.
    First off, it was very difficult to untangle how well any 
drug was covered by the Part D plan.
    The second thing is that these preferred pharmacy 
agreements between a store and a plan meant that--this is what 
generates these insane price differences within the same ZIP 
code, and by the way, it was extremely difficult to tell when 
you were signing up for a plan which is actually the preferred 
pharmacy. It disappears as you go through the tool.
    Then the third and final thing is that having a preferred 
pharmacy could mean that your favorite pharmacy in your ZIP 
code, where you have had a relationship with those pharmacists 
for many years, could charge for the same five drugs two wildly 
different rates with two plans, and our example again comes out 
of Denver, five drugs, same pharmacy, one plan, $524; another 
plan, $1,686.
    It is clear that it is essential for consumers to have 
clear, comparative, easy-to-understand information, and we are 
pleased this Committee is looking at the topic.
    Thank you again for the opportunity to testify on this 
important issue for consumers.
    [See slides 1-3]

 
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT] 

    The Chairman. Thank you so much for a truly fascinating 
presentation.
    We will now go to our next witness, Ms. Babbrah.

          STATEMENT OF POOJA BABBRAH, PRACTICE LEAD, 
            POINT-OF-CARE PARTNERS, PHOENIX, ARIZONA

    Ms. Babbrah. Thank you so much. Ms. Chairman, Ranking 
Member Casey, and distinguished members of the Committee. Thank 
you for inviting me to testify today.
    My name is Pooja Babbrah, and for over two decades, I have 
worked in the health care technology industry, primarily 
focused on ePrescribing and eMedication management. I am 
currently a senior consultant with Point-of-Care Partners, the 
leading management consultancy focused in this space, and we 
have been working on real-time pharmacy benefit checks since 
2014.
    We are here today to talk about prescription price 
transparency, and I will focus my comments specifically on the 
real-time pharmacy benefit check transaction. For your 
reference, I have included historical context and technical 
details in my written testimony.
    Now, I have been around long enough to remember the early 
days of ePrescribing, back in the late 1990's, and we have 
certainly come a long way since then, with availability of 
electronic tools and the information to help prescribers choose 
the most effective, appropriate, and cost-effective medication, 
but there is still key missing information at the point-of-
care.
    The real-time pharmacy benefit check transaction is really 
in response to prescriber challenges of the benefit information 
that is being provided in the electronic health record today. 
Real-time pharmacy benefit check helps fill an information gap 
around transparency, but its value goes far beyond that.
    The transaction, its standards being developed by NCPDP, 
the preeminent ANSI-accredited standards development 
organization for prescription transactions in the ambulatory, 
long-term care, and post-acute care settings. The transaction 
can actually provide crucial information to facilitate 
conversations between the physicians and their patients around 
their medications.
    Now, this can include patient out-of-pocket cost, any 
alternative medications that may be more affordable for the 
patient, the best place to fill their prescription, and also 
insights into additional requirements that may be required, 
such as prior authorizations.
    The goal around this is to provide more accurate 
information about the patient's prescription coverage and the 
cost of their medication in the physician office as opposed to 
having the sticker shock at the pharmacy counter.
    Studies have shown that cost is the No. 1 reason that 
patients are abandoning their prescriptions and not adhering to 
their medication treatments. In other words, the provider 
prescribes the medication, but the patient does not fill the 
prescription, or the patient fills the medication and then only 
takes a partial dose because it is too expensive to get a 
refill, and we heard some of those stories yesterday from the 
patient testimoneys.
    Now, both of these scenarios will likely lead to greater 
health care cost down the road, leading to additional office 
visits, unwanted ER visits, and potential hospitalization, but 
by providing insights into the cost of the medication to the 
prescriber, we believe that real-time pharmacy benefit check 
will enable prescribers to ensure that the prescriptions that 
are written actually get filled and the patients are taking 
them as prescribed, which will in turn lead to greater public 
health.
    Now, there are a few shortfalls with the real-time pharmacy 
benefit check as it is being employed today, including the lack 
of information about potential cost savings, discount programs, 
and other financial support programs.
    It is also important to note that the transaction only 
provides the pricing on a patient's pharmacy benefit, not their 
medical benefit, and often expensive specialty medications are 
actually covered under the medical benefit, and the real-time 
pharmacy benefit transaction will not show that pricing.
    Use of the real-time pharmacy benefit check is also 
somewhat limited in scope today. It is primarily used by 
prescribers through their electronic health records, and we 
believe that it is important to expand the reach of this 
transaction to the patient and the patient care givers.
    Finally, we believe the real-time pharmacy benefit check 
should be expanded to incorporate additional information 
related to patient out-of-pocket cost for the drug. 
Specifically, patients and their caregivers should have 
information that will help them determine whether they should 
obtain their medication under their prescription benefit or pay 
cash at the pharmacy.
    Tremendous progress has been made with the development and 
utilization of the real-time pharmacy benefit check, but to 
date, the business cases have been focused on payers, PBMs, and 
the providers, and we are confident that widespread use of the 
transaction will yield a public health gain, while at the same 
time enabling patients to receive their medications at the 
lowest possible cost.
    I thank you for the opportunity to testify today, and I 
would be happy to answer your questions.
    The Chairman. Thank you very much, Ms. Babbrah. We very 
much appreciate your being here today.
    Next, we are going to go to Dr. Dusetzina.

       STATEMENT OF STACIE B. DUSETZINA, PH.D, ASSOCIATE

        PROFESSOR, HEALTH POLICY, VANDERBILT UNIVERSITY

              MEDICAL CENTER, NASHVILLE, TENNESSEE

    Dr. Dusetzina. Thank you so much.
    Chairman Collins, Ranking Member Casey, and distinguished 
members of the Committee, it is my pleasure to be here today to 
testify on this important topic.
    My name is Stacie Dusetzina. I am an Associate Professor of 
Health Policy and Ingram Associate Professor of Cancer Research 
at Vanderbilt University School of Medicine.
    My research focuses on prescription drug policies that 
facilitate and impede the use of these important products for 
patients.
    I also had the honor of serving on the National Academy of 
Medicine's committee on ensuring patient access to affordable 
drug therapies, and that report was published last year.
    My research includes findings related to the role of drug 
rebates for increasing patient and taxpayer spending in the 
Medicare Part D program, how having higher out-of-pocket costs 
for patients is associated with lower use of needed 
medications, and how prescription drug list prices and price 
increases have made many drugs unaffordable for Americans.
    In the United States, many patients are facing the reality 
that prescription drugs are no longer affordable for them. Our 
work, for example, has shown that in the Medicare Part D 
benefit that it requires patients to pay a percentage of the 
drug's high list price for virtually all anti-cancer drugs. 
This means that patients will spend thousands of dollars out of 
pocket when they fill their first prescription.
    Like Ms. Holt, who was here yesterday talking to the 
Committee, filling Revlimid, this drug costs the Medicare 
program $21,000 for a 28-day supply today, and it would cost a 
patient filling the drug for the course of a year over $15,000 
out-of-pocket, and that is for only that one drug.
    This high level of spending has also been shown across 
other disease areas for patients needing complex treatments.
    Commercially insured patients are also exposed to high out-
of-pocket spending, so this is not only a Medicare Part D 
problem. Deductibles and coinsurance, where patients pay the 
full price of a drug when they fill it or when the pay a 
percentage of the drug's list price, have become much more 
common in both commercial health plans and under the Medicare 
Part D benefit as well.
    Under these arrangements, patients are being asked to pay 
based on a drug's list price, which can be much higher than the 
price that is paid by the PBM or the health plan itself.
    As an example, a patient filling an 84-day course of 
hepatitis C treatment, a very important curative therapy, would 
have their out-of-pocket cost under Part D calculated based on 
a list price of $93,000. Instead, their health plan and PBM are 
likely to be paying closer to $35,000 for that same product.
    Now, it would be beneficial to share that lower price with 
patients and have their cost calculated on the lower post-
rebate price, but I argue that this would also result in a 
significant financial burden. Best-case scenario, patients 
paying on the $35,000 price would still have to pay out-of-
pocket over $4,000 to fill that drug. I think that is very much 
unaffordable for many people.
    Insurance should be designed in a way that protects people 
from financial catastrophe when they are sick, and today's 
Medicare Part D program does not do that. Instead, patients who 
need expensive drugs or who need a lot of drugs are exposed to 
unlimited out-of-pocket spending on the program.
    Congress and the American public have heard and will 
continue to hear from stakeholders within the supply chain, and 
they all will point to one another as the key problems, but in 
fact, they are all part of the problem, and they all need to be 
part of the solutions. This is a complex area, so solutions are 
also going to be complex.
    When considering solutions, I would recommend the Committee 
focus on three key goals. The first would be that we should 
ensure that patients have access to high-value drugs at a 
reasonable out-of-pocket cost for them. The second is to 
consider ways to remove incentives that are in the system for 
high list prices and price increases, and the third is to 
reward innovation, true innovation by pharmaceutical companies, 
by paying for value.
    I thank the Committee for the opportunity to be here today, 
and I look forward to working with all of you on solutions and 
look forward to your questions.
    The Chairman. Thank you so much for your testimony.
    Ms. Horvath.

             STATEMENT OF JANE HORVATH, PRINCIPAL,
            HORVATH HEALTH POLICY, WASHINGTON, D.C.

    Ms. Horvath. Thank you, Madam Chairwoman and Ranking Member 
Casey and members of the Committee. I really appreciate the 
opportunity to be able to talk about this complicated but very 
important topic today.
    My name is Jane Horvath. I am currently a consultant, and I 
work pretty much exclusively with States, State legislatures, 
State agencies, and State national associations on describing 
the drug financing and supply system, so people can understand 
it, but then also on cost containment policies.
    Specifically, I have worked with California, Nevada, and 
Oregon on their transparency implementation and/or--their 
legislation and/or their implementation.
    Transparency is a really important first step in managing 
drug costs. Transparency has improved the policymakers' 
understanding of how things work and understanding what they 
still do not know how it works, but it is an opportunity to 
figure out how things should work.
    States and the Federal Government have taken really 
important first steps, in my view. On the Federal side, CMS has 
the dashboards that Senator Casey referenced a minute ago for 
Medicare and Medicaid and even rebate information on Medicare, 
which I think is really important. CMS also has the National 
Acquisition Cost Data base, which is a great research tool for 
policymakers and researchers. There is nothing else like it 
that I know of.
    For States, they have done transparency and are doing 
transparency on drug prices and drug price increases, 
transparency on insurer drug spending, net gross as a 
percentage of premium. It is all very interesting data, and 
more recently, transparency on the PBM business model and how 
that impacts the whole financing chain.
    I tend to think of things as the supply chain and the 
financing chain, and it does untangle the web a bit and makes 
things a little clearer, so that is how I will discuss it 
today.
    These have created really important discussions everywhere, 
but today, I advise States, if they ask me, not to pursue any 
further transparency legislation. We have eight States now with 
very good transparency legislation. Maine is implementing 
transparency legislation. Vermont has excellent legislation. 
Oregon and Nevada have good--and California. Almost everything 
that the States are collecting is going to be public.
    I think States do not need to spend a lot of resources 
inventing these really complex data bases to capture and 
release this data, and I think that Feds can help States do 
more. I think it would be really interesting to ask the Office 
of Personnel Management for their plans to produce very similar 
data to what the States are producing--insurer, PBM, 
manufacturer.
    I also think it would be really important in Medicaid to 
understand which drugs in the Medicaid program are rebating at 
just the Federal minimum. I mean, it is not a minimum, but the 
Federal floor, the rebate. I think that will tell us about 
drugs, where there might be deep discounting or not among some 
high-cost drugs. It will show us some consumer behavior without 
releasing any proprietary data, per se.
    Then I think looking in Medicaid again, there is a cap in 
what a manufacturer's rebate liability is at 100 percent of 
really the market price, and they get to that cap basically 
after they have had a whole bunch of price increases, so even 
if you follow the formula to the end, the rebate might be 140 
percent of the market price of the product. It is kept at 100, 
and I think it would be really interesting to know how many 
drugs and which drugs have reached that 100 percent cap in 
liability. That will tell us something about price increases I 
think industrywide.
    I would like to very briefly move beyond transparency 
because I think transparency is the first step.
    Federal law and Federal case law really do hamstring States 
in their ability to really affect consumer cost of prescription 
drugs, but there are a couple things that I think the Federal 
Government can do to really open up State financing innovation 
here, and one would be to expand the list of countries from 
which State programs can import drugs. This would certainly 
help Florida, since Florida's population is almost the size of 
Canada's. Clarify that patent law does not limit the State 
ability to regulate patented prescription drugs, and exempt 
from Medicaid best price, State programs, sort of large State 
cost control programs, innovative programs. In Q&A, I can 
explain why that would be important. Then, finally, just to 
uncap that Medicaid rebate liability that I described a few 
minutes ago.
    That is it, so thank you.
    The Chairman. Thank you so much for your excellent 
testimony.
    Ms. Gill, I want to start with you. I thought it was so 
interesting as you went through your charts that not only is 
the choice of plan important, but also the choice of pharmacy, 
and I do not think most of us think about that the differences 
in price may occur at the pharmacy level as well, so that was 
really very illuminating.
    I remember how shocked I was when a group of pharmacists in 
Maine came to meet with me and told me that in some cases, 
prescription drugs would be less expensive if the consumer did 
not use insurance. That just never would have occurred to me.
    Based on your investigations of prescription drugs that 
seniors commonly take, could you give us some idea of how often 
you found that the price would actually be less paid out-of-
pocket rather than using insurance?
    Ms. Gill. Sure, so out of the 18 plans that we looked at 
across the United States, in total about 18 percent of the 
time, it would have been less expensive if someone went outside 
of their plan.
    Now, what is important to note is that we actually do not 
typically recommend that because you really want that amount of 
money that you are paying to go toward your deductible, but it 
depends on where you are as you are reaching the doughnut hole.
    The Chairman. That is amazing, but you are right. The 
downside is that it does not count toward your deductible.
    Doctor, I want to talk to you about a comment you made 
about our need to remove the incentives for high list price. I 
am very intrigued by this because, as I look at the system, 
part of the problem is how pharmacy benefit managers are 
compensated, and if they are compensated through the rebate and 
as a percentage of the list price and the pharmaceutical 
company knows that the pharmacy benefit manager is going to 
make the decision of whether or not their drug is included in 
the formulary of the insurer, isn't that an incentive for the 
pharmaceutical manufacturer to keep the list price high?
    Dr. Dusetzina. Absolutely, so right now, there are 
incentives in that whole web that you projected earlier for 
everyone to have the list price be high.
    So we have shown in our work that as the list price 
increases that it benefits the drug manufacturers. It benefits 
the pharmacy benefits managers and in some cases benefits the 
health plans because of the way that Part D is designed. It 
does not benefit the consumer, and it also does not benefit the 
taxpayers because most of the spending, once people have hit 
the catastrophic phase of the Part D benefit, is going to be 
paid by taxpayers through the reinsurance part of the benefit.
    The Chairman. If you change the compensation for pharmacy 
benefit managers so it was fee-based rather than a percentage, 
would that help?
    Dr. Dusetzina. I think we need to move away from 
percentage-based payments for pretty much everyone in the 
supply chain, not just PBMs, physicians as well, but, yes, I 
think that that could help in some ways to just pay a flat fee 
for those services rather than paying based on the spread 
pricing or paying by percentage of list price. I think that 
would absolutely be a step in the right direction.
    The Chairman. Ms.--I am sorry that I keep having trouble 
with your name--Babbrah.
    Ms. Babbrah. Yes.
    The Chairman. I saw you nodding. Is that correct? Do you 
agree with that assessment as well?
    Ms. Babbrah. Yes. Well, I just think that the fee-based 
is--we need to start really looking at outcomes as opposed to 
actual fee-based pricing in my opinion.
    I am here to talk about the technology, but I do agree with 
that statement as well.
    The Chairman. Thank you.
    Senator Casey. Thank you very much.
    I want to start with Ms. Horvath on the question of 
transparency. As I indicated earlier, at least implicitly, 
there is one thing, maybe only one thing, that the Obama and 
Trump administrations agree upon, and that is that the cost of 
prescription medication should be available of the public. That 
is the dashboard issue in legislation that I mentioned.
    This started with that administration maintaining an online 
drug dashboard, including a snapshot of average spending for 
any given year and over time for hundreds of prescription 
drugs.
    Obviously, we need to keep that updated every year. The 
legislation that Senator Collins and I are working on would 
ensure that no matter who is in the White House, we all have 
access to this information.
    Just a basic question on this. Do you think that drug price 
transparency has and can impact the cost of prescription 
medication?
    Ms. Horvath. I do not think it does. I think what it does 
is inform conversations and discussions and policymaking about 
how then to constrain the cost of prescription drugs.
    California had this--and Oregon and Nevada--they have very 
substantial bills on reporting price increases over a threshold 
and stuff, but manufacturers are reporting those price 
increases over those thresholds. They are not constraining 
themselves so they do not have to report.
    Senator Casey. Do you think the key is what to combine 
transparency with what?
    Ms. Horvath. Actually, I think there is only really a few 
ways to make sure that on the financial side, the transactions, 
the benefits of rebates and everything else get to the consumer 
at the point of service is a controlled importation program 
or--like I am working on with several States now setting all-
payer upper payment limits, so, once you do that, you are able 
to watch and monitor for competitiveness in the system, watch 
and monitor for price increase, people taking margin, 
basically, on the price of the drug, and I think when you do 
that, then you can move more to fee-based, you know, paying 
people for their services by fees instead of percentage basis 
on the cost of the drug.
    I wanted to just say one thing about eliminating PBM 
rebates. To the extent that the PBMs pass through those rebates 
to the health plan, that goes basically to offset the cost of 
the premium, so they do serve an important function, and to 
just shut that off means that premiums will rise because we do 
not necessarily know that the drug cost is going to go down, so 
I just throw that one caveat out there about eliminating 
rebates.
    Senator Casey. My next question, Doctor, our testimony 
yesterday on the cost as it pertains to individuals, we know 
that--and I focused a little bit in my opening about the one 
category of folks who are both seniors and low income. They are 
the most likely to face these difficult choices that we have 
talked about.
    Some of the lowest-income seniors who have both--are both 
low income and have no savings can qualify for a Federal 
assistance program, which has been called--the vernacular is 
``Extra HELP'' to cover some of those costs, but even with 
Extra HELP, high coinsurance costs or high coinsurance rates 
can put needed prescription drugs out of reach.
    Can you tell us what your research shows about seniors who 
qualify for this so-called ``Extra HELP program,'' but still 
struggle to afford their medications?
    Dr. Dusetzina. Absolutely. Thank you for the question.
    One of my trainees has actually done some work on this 
area, and it is the first study that I am aware of in this 
space looking at individuals who qualify for the partial 
subsidy or Extra HELP, and what we found were that for people 
who were taking certain cancer treatments, that those who were 
in the Extra HELP program actually did worse than people with 
no help or who had Medicaid.
    When you look at the benefit, you can see why. Right now, 
the Extra HELP benefit asked people to pay 15 percent 
coinsurance for their drugs. Now, we were studying drugs that 
cost upwards of $10,000 per month, so you can imagine if you 
have very little savings, you almost qualify for Medicaid, but 
you do not, that you could find yourself being completely 
priced out of those important drugs.
    Senator Casey. Thanks very much. I know I am over time. 
Thank you.
    The Chairman. Senator McSally.
    Senator McSally. Thank you, Madam Chairwoman. I appreciate 
you holding this hearing on this important topic. There are so 
many people in Arizona, seniors and others, that are really 
struggling to afford the prescriptions that are life-saving 
prescriptions, so I appreciate all the testimony today as we 
try and solve this issue.
    There is one, for example, my team informed me of a lady 
named Jean who is a senior resident currently taking seven 
prescription drugs for various conditions, lives on $899 a 
month for Social Security, her only source of income. She has 
to cut back on food, cannot make repairs to her home, has no 
income left for anything else. She says the only way she can 
exist, if she runs up large debt on her credit cards. She has 
expressed she needs these drugs to live and cannot go without 
them. Increasingly, more and more seniors we see are having to 
choose between prescription drugs and their other payments for 
just surviving.
    In Arizona, many people are then going to Mexico in order 
to get access to medication they need, and we have other 
reports. It has been reported in Arizona, 100 different medical 
practices have been implicated for black market supply chains 
with counterfeits that people are turning to because they 
cannot afford the drugs at the pharmacies.
    There was a citizen of Arizona named Betty Hunter who had 
lung cancer, received a counterfeit infusion of a cancer-
fighting drug, and in the end, the FDA found the medication 
contained water and mold. Ms. Hunter died a few weeks later.
    This is what is happening to people because they cannot 
afford the medicines they need to stay alive. They either have 
to choose between food or their medicine or they have got to go 
to Mexico to get it or they are relying on counterfeit drugs. I 
mean, this is not acceptable, and I appreciate all of the 
discussion about what we need to do to bring down the cost of 
drugs, but then also make it transparent.
    I know this is a complex issue, but why can't we have an 
expedia.com of prescription drugs? Even if you are trying to 
get it from a pharmacy, you can at least look at, when your 
doctor says which one should I send it to, and the answer is 
``I do not know. This one, this one, or this one,'' that you 
can actually look and see which one is going to be the cheapest 
for me and then send it there. What barriers do we need to just 
provide that basic transparency so people can shop around?
    Anybody want to jump in on that?
    Ms. Babbrah. I will take that. The real-time pharmacy 
benefit check that we now can offer to physicians is currently 
available between the PBM and the physician in their electronic 
health record, but part of the issue with that is it is only 
giving you the cost under insurance.
    Senator McSally. Right.
    Ms. Babbrah. It is great information, and the work flow 
today is you do usually have a favorite pharmacy that you are 
going to, so when the physician checks that price, it is going 
to show you the price at that specific pharmacy under the 
insurance coverage, but we are actually working--there is an 
organization called the CARIN Alliance, which is a bipartisan 
organization that is looking to bring this real-time pharmacy 
benefit check to the patients.
    Senator McSally. Exactly.
    Ms. Babbrah. As we heard, the cash price may actually be 
better than what is covered under your insurance.
    Senator McSally. Exactly.
    Ms. Babbrah. You would be able to basically shop around, 
figure out that cash price, but then the other piece is if you 
pay cash at the pharmacy today, the insurance company may not 
know that, so we really need to be looking to close that loop 
because they may not know that you have actually picked up that 
medication.
    Senator McSally. We should be able to type in your ZIP 
code, just everything else we do, search within 10 miles, and 
then figure out what the cost is going to be, and let the 
patient choose whether they want to pay cash or have it go 
toward their deductible. This is all about patient choice, 
patient transparency, and competition so that they are able to 
afford their basic medicines.
    Ms. Gill. I would underscore that by saying that based on 
the research that we have done as well as multiple other 
stories besides this investigation on Medicaid Part D plans, I 
would sum it up by saying that it is a game for consumers, and 
it is a terrible game.
    Senator McSally. Yes.
    Ms. Gill. While I appreciate the concept of transparency, 
we have to have it. It is a function of being able to make a 
clear choice. At the same time, we are asking consumers to run 
around, check apps, look at websites, call pharmacies. The 
amount of administrative burden required to figure out what is 
the least expensive price--I mean, I make a career off trying 
to tell people----
    Senator McSally. Right.
    Ms. Gill [continuing]. where to find it and how to do it, 
but, at the same time, the mechanisms in place to allow that 
are just that is what has run rampant. Whether it takes rules, 
laws, regulations to stop it is probably what will be needed.
    Senator McSally. What barriers do we need to remove? We do 
this for literally nearly everything else in our life? Type in 
your ZIP code, pull up the numbers, click on the one you want. 
What am I missing?
    Dr. Dusetzina. It is complicated because the consumer is 
not necessarily the one paying the largest part of the bill.
    Senator McSally. I know.
    Dr. Dusetzina. The insurance company has a role, and I 
think that is one thing that makes the technology so different 
is because you are trying to take into account all of these 
factors.
    I think that the point of Consumer Reports, whose job it is 
to investigate these things, found it to be incredibly 
difficult to be able to find the drugs at the lowest price. I 
think it really highlights that we should have policies in 
place that make it pretty straightforward for people----
    Senator McSally. Exactly.
    Dr. Dusetzina [continuing]. make the drug that is preferred 
and cheapest for the plan, the lowest cost for the patient, and 
make it a low cost and predictable cost.
    Patients are sick when they are searching out these drugs--
--
    Senator McSally. Right.
    Dr. Dusetzina [continuing]. and they do not probably want 
to spend all of their time trying to find the best deal. They 
want to just be treated and get well.
    Senator McSally. I agree. Thanks. I am over my time. Thank 
you.
    The Chairman. Thank you.
    Senator Warren. Thank you, Madam Chair, and again, thank 
you for having this hearing.
    According to a recent Kaiser Family Foundation poll, one in 
four Americans have difficulty paying the cost of prescription 
drugs, and 30 percent have skipped some of their prescription 
medications over the past year because of cost. Meanwhile, the 
drug companies that make the drugs, the insurance companies 
that are supposed to help pay for them keep raking in record 
profits. Families are the ones who are paying skyrocketing 
cost.
    Now, as Senator Casey discussed, we need to tackle out-of-
pocket Medicare--cost for out-of-pocket Medicare beneficiaries, 
but out-of-pocket costs were also a problem for patients with 
private insurance, and I hear all the time from constituents 
who have private insurance, but who are still struggling to pay 
for their prescriptions.
    Ms. Gill, if a patient is taking a drug and wants to shop 
around for an insurance plan to make sure that she picks the 
one with the lowest out-of-pocket cost for that particular 
drug, is it easier for her to get accurate information?
    Ms. Gill. I am going to make this answer really short. If 
she has an employer, she is not able to shop, typically, so she 
has given a--she may have an option between health insurance 
plans, but typically, they roll up into a single pharmacy 
benefit.
    Senator Warren. Oh, interesting. Okay.
    Let us say she is in a private market, so she is looking in 
the marketplace. She is in an ACA marketplace, whatever it is. 
She is in a marketplace, and she has picked a plan that looks 
like it is the lowest copay on a drug she needs. Is the 
insurance company prohibited from changing that drug's copay 
after she has enrolled in the plan?
    Ms. Gill. In 46 States, they can do whatever they want.
    Senator Warren. Okay.
    Ms. Gill. A consumer is at the mercy of those plans.
    Senator Warren. The shopping is hard to begin with, and in 
some places, you cannot even shop. Even if she can shop, they 
can change it after she has purchased.
    Ms. Gill. Absolutely.
    Senator Warren. We know that the insurance company might 
jack up the cost of the drug, maybe because the drug company 
increased the price or maybe just because the insurance company 
felt like it, but at least, will the insurance company have to 
keep covering the drug?
    Ms. Gill. In Texas, yes, which is----
    Senator Warren. We have a lot of States.
    Ms. Gill. Right, but that is really the--there are a 
couple--and anyone else who is an expert here, Jane maybe, on 
State law, it varies by State, but typically no. A consumer 
truly is at the mercy of what a pharmacy benefit manager is 
going to do.
    When we use the term ``jack up the price,'' what we really 
mean is they can decide to drop coverage of the drug 
altogether. They could decide to move it on a tier. Most 
consumers do not really even understand what ``tier'' means. I 
think that is one of the problems, so the consumer is also not 
able typically to shop around afterwards looking for another 
plan, so they are locked in for the year.
    Senator Warren. Even this highly motivated patient who 
really puts a lot of energy into shopping----
    Ms. Gill. Right.
    Senator Warren [continuing]. the answer is she has multiple 
ways she could get stuck at the end of the day----
    Ms. Gill. Absolutely.
    Senator Warren [continuing]. with very high copays.
    Dr. Dusetzina, let me just ask. How does it impact patients 
when the copay on a drug rises midyear or a drug gets dropped 
from coverage?
    Dr. Dusetzina. We know from a lot of research that when 
patients face a price shock, so when their price goes up 
suddenly, that a lot of them will walk away without filling 
their prescription drug, or they may take less than they 
should, so we know that this happens. In fact, this has been 
studied quite rigorously under the old version of Medicare Part 
D where we had the doughnut hole, where you would see patients 
hitting this high out-of-pocket spending at one point in the 
year, and they would just quit taking their drugs until the 
beginning of the next calendar year.
    Senator Warren. All right.
    Dr. Dusetzina. It is very bad for patients.
    Senator Warren. The drug companies keep jacking up the 
prices. The insurance companies keep shifting the coverage so 
that more of the cost goes over to the patients. System works 
great for everyone except families who either go without 
appropriate care or sink into debt.
    We got to tackle these problems head on. Now, I am going to 
be reintroducing my Consumer Health Insurance Protection Act, 
which cracks down on a whole list of shady insurance company 
practices that they use to avoid covering prescription drugs.
    Two of the provisions in the bill I am reintroducing are 
capping out-of-pocket drug costs at $250 a month for 
individuals and $500 for families and banning insurance 
companies from dropping a drug in the middle of the year, not 
just in one State, but nationwide.
    This just seems to me this is the moment we have got to be 
putting patients first, and that means putting an end to the 
greedy practices of insurance companies that are leaving 
patients without the coverage that they thought they were 
getting.
    Thank you. Thank you, Madam Chair.
    The Chairman. Thank you.
    Senator Blumenthal. Thank you, Madam Chairwoman. I want to 
begin by thanking you and Ranking Member Casey for bringing the 
issue of prescription drug cost before the Aging Committee 
again. It is a subject that we discussed before and rightly 
deserves our attention again.
    This issue is of paramount importance, particularly to 
seniors in Connecticut and across the country. Drug prices are 
far too high and rising even higher, and what strikes me is how 
little we have succeeded in doing about it.
    Last week, I reintroduced the CURE--C-U-R-E--High Drug 
Prices Act, which would hold pharmaceutical drug companies 
accountable for price increases that are unjustified by any 
cost increases and would provide a mechanism to oversee those 
prices, so that the Department of Health and Human Services 
could limit them to 10 percent a year, 20 percent over 3 years, 
30 percent over 5 years, unless there were some fact-based 
justification for them.
    I know that kind of price restraint mechanism sounds 
draconian, particularly to people who believe in the free 
market. I believe in the free market, but I think we have 
reached the point where we need to send that kind of message.
    I know that Senator Casey asked a little bit earlier 
whether transparency alone could bring down prices, and I 
understand that and thank him for raising that issue very 
directly.
    I would like to ask Ms. Horvath whether--and the other 
members of the panel whether you agree that this kind of action 
may be necessary to bring down drug prices, more than just 
transparency.
    Ms. Horvath. Your bill that you have dropped in, yes, I 
think it will. Almost by definition, it will.
    The one thing, then, it has always seemed to me that if you 
are going to focus on price increases, you also then have to 
focus on launch prices because a company who understands that 
their capacity over the patent life of the product to increase 
the cost over that patent life is going to be limited is going 
to front-load and produce a higher launch price, so that is the 
tradeoff.
    Senator Blumenthal. That is a really, very good, and 
important point, and I see you are nodding, Ms. Dusetzina.
    Dr. Dusetzina. Yes, that is right. I think that is exactly 
right.
    I do also applaud the idea of being able to use 
transparency efforts to understand real drug price increases 
and thinking about how to try to limit those price increases, 
but completely agree that if you put a signal out that you are 
going to start clamping down on drug price increases then and 
not doing something about launch prices, you will end up in 
probably a same or worse position.
    Senator Blumenthal. Any other members of the panel have 
thoughts about that issue?
    Ms. Gill. I will say Consumer Reports, I believe, is on the 
record. The advocacy arm of Consumer Reports is supporting the 
CURE bill.
    Senator Blumenthal. Right.
    Ms. Gill. I think that would be important. Transparency 
goes a long way for everybody and certainly for consumers.
    Senator Blumenthal. Let me just ask in the minute I have 
left. Do you have any thoughts about the launch price issue, 
how best to achieve transparency and some constraint on the 
levels of pricing?
    Ms. Horvath. Manufacturers properly, to some degree, focus 
on the value of their drugs, and most drugs are really 
invaluable to the quality of a person's life or even their life 
writ total, but they are not affordable, and I think we need to 
start making a distinction between affordability and value, and 
I think we need to move the discussion to affordability and 
away from value because there is lots of things in life that 
are invaluable to--like clean water, but it is affordable for 
people to be able to pay their water bill in most cases. We 
need to start thinking more in those terms.
    Senator Blumenthal. Yes. I might, just in conclusion, say 
what concerns me is not only the launch but, in a sense, the 
relaunch, where the patent process may be abused, and an old 
drug may be put in a pill of a different color and a new patent 
obtained and thereby generics kept off the market and prices 
increased. I know this is a vast oversimplification, but I 
think it is a real problem.
    I want to thank the witnesses and thank you, Senator 
Collins, Senator Casey.
    The Chairman. Thank you.
    Senator Braun. Thank you, Madam Chair.
    Transparency is one thing. Actually, the people that use 
the system embracing that transparency is another thing.
    Ten years ago, when I took on the whole gamut, not just 
prescription drug prices, but basically health insurance being 
so paternalistic and giving us so few tools to use, I can tell 
you it took a radical system change within my own company, with 
a little bit of wishful thinking to make sure it was all going 
to work.
    We set the stage for using the meager transparency tools 
that were available, but trying to create a culture where we 
emphasized prevention, not remediation, and just engagement 
among my employees and their own well-being.
    We basically, in the process of trying to find that 
transparency, which was so opaque 10 years ago--we actually 
were able to, but it took a little bit of coaching and 
encouraging through some skin in the game among our employees 
before they really looked hard because, with low copays--and 
any of the panel, I would love to hear your thoughts on this--
which keep skin out of the game, how do you get--make that big 
jump to where if you do have transparency, that you can even 
get the people using the system with copays to use it? We could 
not really get much traction on lowering health care costs 
until we crossed that big divide, and when we did, things 
started cascading to where we started saving a lot of money.
    How do we get a paternalistic system to the people that 
have been using it to embrace transparency when you have got 
things like copays? Any of the panel that would feel 
comfortable answering that.
    Ms. Babbrah. I think the first step in that is just helping 
the patients understand and the caregivers understand even what 
they are going to pay.
    I think we heard yesterday just a lot of confusion about 
how I get to the pharmacy and I do not even know what I am 
going to pay that month.
    I think part of it is just giving the tools to the patients 
and the caregivers to even understand what they are going to be 
paying out-of-pocket, and once you do that, then you can start 
maybe putting in some of those incentives or things that will 
actually get them more skin in the game.
    I think at this point, there is just so much confusion out 
there that you are not even going to get to that point that you 
want to get to yet.
    Senator Braun. Most plans do have copays. If a copay is 
only $10 or $20, do you think they will even make the effort of 
trying to shop around?
    Ms. Babbrah. I think at that price, maybe it is not worth 
it, but I think we are hearing enough, and with more of the 
specialty medications that are coming into the market, you are 
seeing more and more of those copays. You are also with the 
high-deductible plans. I mean, even when you have a low copay, 
it is not necessarily--to me, I think the plans have changed 
enough that you are not even seeing those low copays anymore, 
just because of so many of the high-deductible plans that are 
out there.
    Senator Braun. Okay.
    Dr. Dusetzina. You know, one of the things that you could 
do as an employer are things like reference pricing, which is a 
strategy that is being used in some cases to say you as the 
employer or insurance company have picked a low-priced product 
for you as the preferred drug. You set that cost really low for 
the patient, and then the other choices are much more 
expensive, so it really helps to align what patients are doing 
with what is the lowest cost for the health plan and hopefully 
the highest value overall, so that is something that has been 
tested and is being shown to work in some employer-sponsored 
benefits, for example.
    Ms. Gill. I would love to say, too, shopping around it not 
necessarily the actual goal. It is indicative of a problem. It 
is a symptom of an illness in our system.
    We, as reporters, try to help people find ways to shop, but 
it is only a workaround to a really terrible problem.
    The issue, you are asking about copays, and to the point of 
the skin-in-the-game concept, when I hear that, what I hear is 
an insurance company or a PBM pointing a finger at you telling, 
``You guys are using us too often.'' My advice actually to any 
employer would be to turn around and go back and say there are 
three, four, or five provisions that we want to see you be 
better for. We want you to be a fiduciary for us. We want you 
to help us, not just simply put it back onto an employee's--
truly, they are a burden, an administrative burden and also a 
shopping burden, to try to figure out what is the best deal 
that this insurance plan has offered.
    Senator Braun. That is a great point. I am out of time 
here, but during that whole journey, I have been talking about 
the industry itself. If they want to save themselves from one 
business partner, the Federal Government, they better get with 
it.
    I would admonish anybody in the health care business to 
start being proactive, do these things, so it is not so 
difficult for all of us, whether you are through Government-
paid health care and especially the private arena. Get with it.
    Thank you.
    The Chairman. Thank you very much, Senator.
    Ms. Horvath, at yesterday's hearing, we heard from 
witnesses who were having trouble affording the best treatment 
for their individual health care needs. One witness was 
prescribed a PCSK9 inhibitor, and similar to 75 percent of 
Medicare beneficiaries who are prescribed that, she could not 
fill it because of the high out-of-pocket cost.
    Another witness with type 1 diabetes from my home State of 
Maine could not afford the continuous glucose monitor and pump 
that she needed to keep her diabetes under control.
    Now, the irony and tragedy here is the woman from Maine was 
ending up with costly monthly emergencies. She was going into--
she was literally falling unconscious while driving because of 
low blood sugar. She had repeated hospitalizations, all of 
which cost the insurer more than if they had paid for her 
continuous glucose monitor and pump, which would have prevented 
these terrible incidents.
    I know that some insurers are experimenting with value or 
outcomes-based contracting. Can you give us any assessment of 
what those arrangements have produced so far? How can we solve 
this problem of insurers being unable or unwilling to pay for 
essential treatments, and yet they will end up paying more for 
hospitalization to have results?
    Ms. Horvath. The question of value-based contracting, I 
think the jury is still out on that. I personally--and I do not 
think I have a widely shared view here, but again, I personally 
think that when you start talking about value, you are really--
you are in the manufacturer's ball game because their drugs are 
highly valuable or invaluable, so I worry about that.
    In terms of how these value-based contracts have worked out 
so far, I do not think we know. Most of the contracting is 
pretty proprietary between the manufacturer and the State. I am 
looking at State Medicaid agencies that are doing this.
    The only thing I would say is that years ago--and not that 
many years ago, like 15 years ago, there were no drug 
deductibles. Drugs got first dollar coverage under your 
insurance benefit. Like we did not have any of the zooey-ness. 
It is because prices--It is insurers trying to manage the 
prices, and, you know, insurers know that that is dumb, what 
you just described, and almost nonsensical, except for the fact 
that that just then gives the manufacturer free rein to 
increase the price of their stuff twice a year, three times a 
year. It is limitless.
    Again, insurers know that this is a crazy system and that 
beneficiaries suffer, and pharmaceutical manufacturers do and 
device manufacturers do. They built their model on price 
instead of units sold. It has been a whole shift in the 
industry in the last 15 years.
    Their profit structure is built on the price of the 
product, now how many bits of the product they have sold, and 
if we got back to affordability and selling more at a lower 
price, we would not have this tug-of-war between insurers and 
manufacturers, and we would not have poor consumers in the 
middle, but it gets back to price.
    The Chairman. Thank you.
    Dr. Dusetzina, I want to get back to the price issue with 
you and the role that our patent system plays.
    The National Academy's report highlighted anti-competitive 
tactics that extend patent protections for approved drugs. The 
Hatch-Waxman landmark law provided a pathway for the approval 
of generic small-molecule products, and today, generics account 
for 90 percent of prescriptions of that area, but uptake of 
biosimilar drugs has been much slower, with patent litigation 
and settlement agreements blocking market entry for many FDA-
approved biosimilar products, so that is what I want to focus 
on.
    This, we had a hearing on it. We looked at Humira, what 
happened with that drug. This week, Senator Kaine and I 
introduced a bipartisan bill, the Biologic Patent Transparency 
Act, and what it does is require the makers of biologics to 
publicly disclose all the patents that protect their products.
    The idea there is it would give the prospective biosimilar 
manufacturer the information they need to know what they are 
getting into and also to challenge weak or invalid patents 
earlier in the process.
    Perhaps a more important provision would prevent or deter 
the brand-name companies from filing patents late in the 
process with the sole intent of delaying market entry, and that 
is what has happened, it appears, with Humira.
    Tell us what you think of that idea. Do you think that if 
we had changes in our patent law that it would help get the 
market--the products to market sooner without discouraging the 
innovation that we all want to pursue, for drug companies to 
pursue and manufacturer drugs that are really going to make a 
difference?
    Dr. Dusetzina. That is a great question, and I appreciate 
that.
    For biosimilars, they are just going to be more expensive 
to develop than small-molecule drugs. The approval pathway is 
more complex, so it is just more expensive to get those drugs 
onto the market.
    That means that they have not quite as large of a price 
reduction as we would typically expect with traditional 
generics, so that is why I think we are seeing slower uptake 
and less formulary coverage for biosimilars than what we would 
hope.
    I think any steps that you take that would make the path to 
developing those products easier, clearer, less risky will 
probably help to make that pathway smoother for those companies 
and potentially could lower their prices ultimately.
    The Chairman. Thank you very much.
    Senator Casey. I just have one question for Ms. Gill. I 
have been thinking about your testimony and the work that you 
had done on the Medicare Path Finder Tool.
    We know now that CMS has recently announced they are making 
some improvements. If you were designing or itemizing 
recommendations this Committee could make to CMS as they 
consider those improvements, what would you recommend or 
suggest to us?
    Ms. Gill. Well, I appreciate that question. Thank you.
    I would say based on our investigation, just being able to 
see what is a preferred pharmacy in your area would be really 
helpful to a consumer.
    The other thing that we saw from the investigation is that 
being able to compare more than two pharmacies at a time would 
also be extremely helpful.
    Perhaps even looking at different ZIP codes. Many people do 
not just shop in the area in which they live. There can be 
quite dense ZIP codes.
    At the same time, being able to very clearly show how well 
the drug is covered and not simply by things like tier 1, tier 
2, or a preferred generic versus generic. These things have no 
real meaning to a consumer. You really need to see the total 
price and highlighting what that is.
    In my testimony packet, just by looking up a single 
pharmacy, a single plan generates over nine pages of 
documentation trying to really untangle how difficult, almost 
really, honestly almost impossible it is to try and pick a 
plan.
    I would love to mention, you know, we ask seniors to do 
this every year because the plans change so often.
    Senator Casey. That is very helpful. Thanks very much.
    Thank you, Madam Chair.
    The Chairman. Anyone else want to comment on that excellent 
question?
    Ms. Babbrah. I would just add--and, again, I know you are 
focused on the dashboard for Medicare, but there is the problem 
that we are facing with on the real-time pharmacy benefit check 
is, at least on the commercial payers, the patient out-of-
pocket cost is not standardized, and so that is one thing I 
think that you would want to make sure, depending on which plan 
you are looking at, the standard--that you standardize the 
patient out-of-pocket cost information.
    Also I want to point out the specialty meds. Again, I am 
not quite sure exactly how that is covered with Medicare, but 
if it is covered under the medical benefit, you want to make 
sure that that information is available as well.
    Senator Casey. Thanks.
    The Chairman. Anybody else?
    [No response.]
    The Chairman. Thank you very much.
    I want to thank all of our witnesses today. This has been 
extraordinarily helpful as we tackle this very vexing and 
important problem.
    This is the second of our three hearings this round. We 
have done a lot of work in this area in previous Congresses, 
but your expertise is invaluable. You have given us a lot to 
think about, about how to empower consumers to access the best 
prices for their medications, and ideas on how to fix what is 
clearly a broken system of misaligned incentives that encourage 
higher pharmaceutical prices.
    One of the issues that makes this so difficult is when I 
heard the testimony yesterday, one of the witnesses who said 
that she has gone $10,000 in debt to afford her prescription 
drugs and she is on the Medicare program. She is a retiree. She 
has good insurance. She has a supplement, yet she is $10,000 in 
debt. I just think that is wrong, and it is interfering with 
the quality of her life in the years that, as she points out, 
she has left.
    My first thought was why is there not a cap on the out-of-
pocket cost in the Medicare prescription Part D program, and I 
was surprised that there was not. When you get to the 
catastrophic level, obviously the Federal Government is paying 
a far greater percentage, but there is no dollar cap, at least 
that I can find. That was a real surprise to me when I heard 
her testimony.
    First, I thought, well, we should put in a cap, and 
perhaps, indeed, we should. Then I started thinking about it, 
and even if a cap is a good idea because it helps consumers, it 
does not address price. All it does is shift who is paying, at 
least that is my initial analysis, so I think that is an 
example of just how difficult untangling the web is for these 
prescription prices.
    Our next hearing on the topic is going to be a deeper dive 
into the efforts of the administration to tackle this problem, 
and I commend the administration for focusing on it, for coming 
up with a proposed rule, for looking at the rebate issue, and 
we are very eager to hear from the administration.
    I am very disappointed that Dr. Gottlieb from the FDA is 
leaving because I believe he is very committed on this issue, 
and he has implemented the law to try to expedite the approvals 
of generics and has done so with great passion. He was supposed 
to be one of our witnesses. Unfortunately, he will be gone by 
then.
    I am hopeful that we can keep looking at all the steps, 
small and large, that we might be able to take, and that there 
will be--and I think you heard it today--a bipartisan consensus 
that this issue must be tackled, and that we can at least take 
some initial steps that will make a difference. To me, it is a 
good sign that the patent bill that I introduced this week has 
bipartisan support from Senator Kane, Senator Portman, Senator 
Shaheen, Senator Braun, and Senator Stabenow, and I am very 
glad to join with Senator Casey on his dashboard bill as well 
and increasing transparency.
    I would ask that you keep your ideas coming forward to us 
because I think this hearing is very helpful and helps to 
educate people on the challenges that we face, and I am 
grateful for Consumer Reports doing the kind of analysis 
because let us be realistic. The average consumer just sees 
this bewildering array of plans. When you look at the ACA plans 
and try to figure out which one you are better off in or--and 
then you have got the pharmacy issue on top of that.
    I agree with Ms. Gill when she said that these terms 
``preferred generic,'' ``preferred pharmacy'' really do not 
mean a lot. We need clear pricing data that is not so hard to 
access, and I am pleased that the State of Maine is helping to 
lead the way in that area.
    Senator Casey, any closing thoughts from you?
    Senator Casey. Just briefly. Thank you, Chairman Collins, 
because we have had 2 days now of a more intensive focus on 
this issue, both from the perspective of individuals impacted, 
unfortunately adversely, adversely impacted, and today, we are 
able to get to a good discussion of a lot of solutions, so we 
are grateful that there is no shortage of ideas out there. We 
obviously have more work to do.
    I am grateful for your willingness to not only lead on 
this, but to have these hearings.
    One of the things that I think this hearing further affirms 
is the value of in-person counseling programs like the Medicare 
State Health Insurance Assistance Programs, or so-called 
``SHIPs.'' In Pennsylvania, we have a different acronym by the 
name of APPRISE to help folks navigate some of these issues.
    We cannot be expected to navigate this complex web of 
Medicare coverage and prescription drug prices without help, 
and we all need help to understand this challenge.
    I am pleased that we have put forward today and will 
continue to put forward in a bipartisan fashion, common-sense, 
thoughtful policy solutions that will help bring down the cost 
of medications, and we have to followup the hearings with 
actual solutions by way of taking action.
    I think, Chairman Collins, you are right. This is a 
bipartisan concern, and I think it is a concern that people in 
both parties, both houses, are realizing they ignore at their 
peril. That is motivating the focus, and we hope will motivate 
the solutions and ultimately the actions.
    Thanks very much.
    The Chairman. Thank you.
    Committee members will have until Friday, March 15th, to 
submit additional questions for the record, so there may be 
some coming your way.
    Again, I want to thank each and every one of you for your 
work in this area and your participation in this hearing. 
Together, I truly believe we can come up with some solutions 
that will make a real difference to the patients we heard from 
yesterday who are representing literally millions of Americans 
who are struggling with the unaffordable cost of prescription 
drugs at the expense of their health.
    Thank you, and this concludes the hearing.
    [Whereupon, at 11:31 a.m., the Committee was adjourned.]



      
      
      
      
      
      
      
      
      
      
      
      
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                      Prepared Witness Statements

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                       Statements for the Record

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