    [Senate Hearing 118-584]
    [From the U.S. Government Publishing Office]

                                                            S. Hrg. 118-584

                        ENSURING AFFORDABLE & ACCESSIBLE
                       MEDICATIONS: EXAMINING COMPETITION
                        IN THE PRESCRIPTION DRUG MARKET

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

                                    HEARING

                                   BEFORE THE

                           COMMITTEE ON THE JUDICIARY
                              UNITED STATES SENATE

                        ONE HUNDRED EIGHTEENTH CONGRESS

                                 SECOND SESSION

                                   __________

                                  MAY 21, 2024

                                   __________

                              Serial No. J-118-66

                                   __________

             Printed for the use of the Committee on the Judiciary

    [GRAPHIC NOT AVAILABLE IN TIFF FORMAT]

                            www.judiciary.senate.gov
                                www.govinfo.gov

                                    __________

                       U.S. GOVERNMENT PUBLISHING OFFICE
    59-430                  WASHINGTON : 2025

    -----------------------------------------------------------------------------------

                           COMMITTEE ON THE JUDICIARY

                       RICHARD J. DURBIN, Illinois, Chair
    SHELDON WHITEHOUSE, Rhode Island     LINDSEY O. GRAHAM, South Carolina,
    AMY KLOBUCHAR, Minnesota                 Ranking Member
    CHRISTOPHER A. COONS, Delaware       CHARLES E. GRASSLEY, Iowa
    RICHARD BLUMENTHAL, Connecticut      JOHN CORNYN, Texas
    MAZIE K. HIRONO, Hawaii              MICHAEL S. LEE, Utah
    CORY A. BOOKER, New Jersey           TED CRUZ, Texas
    ALEX PADILLA, California             JOSH HAWLEY, Missouri
    JON OSSOFF, Georgia                  TOM COTTON, Arkansas
    PETER WELCH, Vermont                 JOHN KENNEDY, Louisiana
    LAPHONZA BUTLER, California          THOM TILLIS, North Carolina
                                         MARSHA BLACKBURN, Tennessee
                 Joseph Zogby, Chief Counsel and Staff Director
          Katherine Nikas, Republican Chief Counsel and Staff Director

                               C O N T E N T S

                                  ----------

                               OPENING STATEMENTS

                                                                       Page

    Durbin, Hon. Richard J...........................................     1
    Graham, Hon. Lindsey O...........................................     3

                                   WITNESSES

    Feldman, William.................................................     7
        Prepared statement...........................................    42
        Responses to written questions...............................   128
    Mitchell, David..................................................    11
        Prepared statement...........................................    54
        Responses to written questions...............................   132
    Mossoff, Adam....................................................     6
        Prepared statement...........................................    72
        Responses to written questions...............................   135
    Rai, Arti........................................................     4
        Prepared statement...........................................    94
        Responses to written questions...............................   151
    Ulrich, Jocelyn..................................................     9
        Prepared statement...........................................   100
        Responses to written questions...............................   153

                                    APPENDIX

    Items submitted for the record...................................    41

                        ENSURING AFFORDABLE & ACCESSIBLE
                       MEDICATIONS: EXAMINING COMPETITION
                       IN THE PRESCRIPTION DRUG MARKET

                                  ----------

                             TUESDAY, MAY 21, 2024

                                  United States Senate,
                                    Committee on the Judiciary,
                                                        Washington, DC.
        The Committee met, pursuant to notice, at 10 a.m., in Room
    226, Dirksen Senate Office Building, Hon. Richard J. Durbin,
    Chair of the Committee, presiding.
        Present: Senators Durbin [presiding], Whitehouse,
    Klobuchar, Coons, Hirono, Booker, Ossoff, Welch, Butler,
    Graham, Grassley, Cornyn, Kennedy, and Tillis.

             OPENING STATEMENT OF HON. RICHARD J. DURBIN,
               A U.S. SENATOR FROM THE STATE OF ILLINOIS

        Chair Durbin. This hearing of the Senate Judiciary
    Committee will come to order. Today the Committee will hear
    from a range of experts about the cost of prescription drugs in
    America. Americans pay the highest prescription drug prices in
    the world, nearly three times what people in other developed
    countries pay for common medications. Take the cancer drug
    Keytruda, which has helped extend former President Jimmy
    Carter's life. It has an annual list price of more than
    $190,000 in the United States. In Germany, the exact same drug,
    made by the same company, costs $89,000. Jardiance--we can all
    visualize--excuse me.
        Senator Graham. He's on a roll.
        Chair Durbin. Senator Grassley.
        Voice. Give 'em hell, Grassley.
        [Laughter.]
        Senator Graham. I've had it, too--whatever he's saying.
        Chair Durbin. I'm with Grassley. Sorry. Jardiance--you can
    all visualize the dancing lady in the yellow dress ad--a
    medicine used to treat type 2 diabetes--retails for more than
    $700 in the United States; $150 in Canada. The exact same drug.
    Prices just keep going up. In 2022, drug manufacturers raised
    the prices of more than 1,200 medications by an average--
    average--of 32 percent, 4 times the rate of inflation.
        The poster child for high drug prices is insulin. It was
    discovered 100 years ago by Canadian researchers who
    surrendered their patent rights for the sum total of $1 because
    they believed nobody should profit from this lifesaving drug.
    The same thing is true of Jonas Salk and the vaccine that we
    use for polio. I remember that as a kid. He surrendered his
    patent rights to that drug, too, because it was so important.
    When Eli Lilly launched its insulin product, Humalog, in 1999,
    a vial cost a modest $21. Over the next 20 years, Eli Lilly
    raised the price of Humalog more than 2 dozen times, with the
    cost ultimately reaching $330 for that same $21 vial. While the
    historic Inflation Reduction Act capped the price of insulin at
    $35 a month for Medicare, many patients are still paying
    inflated prices for a century-old drug.
        The pharmaceutical industry is going to tell you that high
    prescription drug prices are the cost of innovation and point
    to billions of dollars in research and development. In fact, a
    government agency financed by American taxpayers, the National
    Institutes of Health, plays an important role in innovation and
    research. NIH funding contributed to 99 percent of all new
    drugs approved by FDA between 2010-2019, with $187 billion in
    taxpayer-funded research benefiting 354 of 356 new drugs. NIH
    is part of the solution. And too often, the prices charged by
    Big Pharma do not reflect a scientific advancement. Rather,
    they're the result of skilled lawyers manipulating the patent
    system and skirting our Nation's competition laws.
        Take the blockbuster drug Humira, which AbbVie introduced
    in 2002. For more than 20 years, the company exploited
    intellectual property laws to build a thicket of 165 patents
    that allowed Humira to avoid competition. The result: $20.7
    billion in revenue to AbbVie in 2021 alone and over 200 billion
    in revenue over Humira's 20-plus years of exclusivity. These
    are massive profitable drugs. I asked Blue Cross Blue Shield in
    Chicago, why are premiums going up so fast? The number one
    cause: these high-priced prescription drugs. Humira is not
    unique. A recent study found that the top 10 bestselling drugs
    in 2021 had a combined 1,429 patent applications filed, 72
    percent of which were filed after the FDA approved the drug for
    sale.
        You know what's going on if you even have a beginner course
    in this business. The patent system is being manipulated and
    used by their attorneys to extend the patents' life to avoid
    competition, generics, and bringing down the cost. These
    blockbuster drugs were covered by an average of 42 active
    patents. The FTC recently highlighted another page in Big
    Pharma's anticompetitive playbook when it challenged more than
    400 patents as improperly listed in the FDA Orange Book. By
    listing these patents on inhalers, EpiPens, weight loss drugs,
    and more, their manufacturers delayed generic competition and
    padded profits.
        The Committee has taken leadership in addressing Big
    Pharma's abuses. Last year, we unanimously reported five
    bipartisan bills that address issues ranging from
    anticompetitive pay-for-delay agreements and sham citizen
    petitions to patent thickets and product problems. This
    includes my bill with Senators Tillis, Coons, and Grassley to
    improve information sharing between the FDA and the U.S. Patent
    Office. This hearing will try to make it clear that our work is
    not done. We have things to do. Ask the American people what
    they think about this issue. You know what you're going to
    hear.
        We see an average of nine ads a day for drugs on
    television. You cannot escape them. God only knows where else
    the advertising's going. How many countries in the world allow
    direct-to-consumer advertising for drugs? Two: the United
    States and New Zealand. New Zealand, for God's sake. The only
    two countries in the world that allow this kind of advertising.
    Why do we do it? So that we can spell Xarelto and go to a
    doctor's office and say, I think I need a Xarelto to get well
    again and to skip through fields of flowers. Many doctors,
    instead of taking the time to argue a reason for a generic drug
    or no drug, instead prescribe these drugs, and as a
    consequence, the cost of medicine and health care goes up and
    up and up, and the hard-to-justify profits continue.
        Before I turn to my Ranking Member, here, I want to
    acknowledge Senator Welch's interest in this hearing and this
    issue. When he first came to the Committee, we sat down and
    talked about his Subcommittee assignments, and he told me that
    this is one issue he wanted to focus on. So, at some point in
    the hearing this morning, I'll be surrendering the gavel to
    him, to continue this hearing. Thank you for being here,
    Senator. Senator Graham.

             OPENING STATEMENT OF HON. LINDSEY O. GRAHAM,
            A U.S. SENATOR FROM THE STATE OF SOUTH CAROLINA

        Senator Graham. Thank you, Mr. Chairman. So, we've acted in
    the past unanimously to--there seems to be two lanes here:
    patent abuse, changing the patent in a small way, to extend it,
    delaying generic entry into the market. Every day they can keep
    the patent going and keep the generic out of the drugstore is a
    good day for them. The other is countries like Canada, same
    drug, a lot lower in cost. There's two ways to deal with it, I
    guess. What I'd like to do is let countries know that most of
    these drugs are developed in the United States, and the drug
    company has a right to get its money back. If a foreign country
    is basically subsidizing a drug, putting a burden on the
    American consumer to have to pay a higher price, I think that's
    an unfair trade practice. So, I'd like to go down that road.
        The bottom line: This is social media all over again. We
    pass all these bills, we have a common view of the problem, and
    nothing ever happens. So, Wednesday, we're going to challenge
    the Senate to take up some of the social media reforms that we
    have reported out of this Committee unanimously. I'd like to
    put this in that same bucket. I mean, we're about as diverse a
    collected group of people you could find in the Senate, and
    count me in. Count me in for, like, challenging the patent
    system. Count me in for trying to find ways to help the
    American consumer versus people in other countries.
        I'm very open minded about stopping abuse. What I don't
    want to do is kill the goose that laid the golden egg. I don't
    want to create a system where we stop developing new drugs that
    enrich our lives. I think everybody who spends money like--you
    know, it's like drilling for oil. Sometimes you have a dry
    hole, and you just--you know, you write that off. The goal is
    to enhance medical science and deal with sheer greed, for lack
    of a better word. This has to stop. I don't mind you getting
    your money back. I want you to make a profit. But the idea of
    playing games with patents needs to stop.
        And I'm more open minded about the advertising than I've
    ever been, and, I mean, I see these ads; I don't know. Why do I
    need to know that? I mean, why can't I trust my doctor to--if a
    generic works, it works. So, let's work together, and when we
    pass something out of the Committee, let's go to the floor and
    challenge the Senate to let it go. So, this is a good hearing.
    I'm glad you're doing it.
        Chair Durbin. Thanks. Today we're going to welcome a
    consensus panel of five witnesses, who I'll introduce. Arti Rai
    is the Elvin Latty Distinguished Professor of Law and Co-
    Director of Center for Innovation at Duke. She is an
    internationally recognized expert in intellectual property law,
    innovation policy, administrative law, and health law. Adam
    Mossoff is a professor of law at Antonin Scalia Law School,
    where his research focuses on the theoretical justification for
    and historical protection of patents and other intellectual
    property rights as private property rights secured to inventors
    and creators.
        Dr. Will Feldman is a pulmonologist, intensivist, and
    health services researcher at Harvard Medical School and
    Brigham and Women's Hospital. His research focuses on drug
    pricing, FDA regulation, pharmaceutical policy, and COPD
    outcomes. Joceyln Ulrich is the vice president of policy and
    research at PhRMA, Pharmaceutical Research and Manufacturers of
    America. At PhRMA, she leads the team responsible for policy
    analysis and research. David Mitchell, president and founder of
    Patients for Affordable Drugs--a patient advocacy organization
    focused on making prescription drug prices affordable for every
    person. He is a patient with incurable but treatable blood
    cancer. He depends on drugs costing hundreds of thousands of
    dollars a year.
        So, I'd ask all the witnesses to please stand first for the
    administration of the oath. Please raise your right hand.
        [Witnesses are sworn in.]
        Chair Durbin. Let the record reflect that the witnesses did
    better than the administrator of the oath and answered in the
    affirmative. So, we'll start with Professor Rai.

     STATEMENT OF ARTI RAI, ELVIN R. LATTY DISTINGUISHED PROFESSOR
                OF LAW, DUKE LAW, DURHAM, NORTH CAROLINA

        Professor Rai. Thank you, Chair Durbin, Ranking Member
    Graham, and Members of the Senate Judiciary Committee for the
    invitation to testify. I've worked on drug competition issues
    for many decades. My research is funded by nonprofit
    foundations and government agencies only. Today, I will discuss
    three aspects of the challenge, all of which relate to patents
    of dubious validity. Fortunately, dubious validity can be
    addressed through surgical responses. We need, first, greater
    coordination between the PTO and the FDA; second, limits on
    patent assertion when the patent is an obvious variant of a
    patent that has already been found obvious; and, third, to
    ensure the continued vitality of the Patent Trial and Appeals
    Board.
        Let's begin with greater interagency coordination. Many of
    you have rightly been concerned about applicant statements to
    the FDA that are highly relevant to patent validity but that
    are nonetheless never brought to the attention of the PTO.
    These submissions can take the form of comments made or
    statements made to the FDA that are flatly inconsistent with
    those made to the PTO. That was the scenario in Belcher v.
    Hospira, a 2021 case in which the behavior was so egregious
    that the Federal Circuit found a Federal--excuse me, found a
    Belcher executive guilty of inequitable conduct.
        But my research has shown that the problem of incomplete
    information flow to the PTO is much more systemic. For example,
    manufacturing process patents represent by far the largest
    category of patents asserted against would-be-biosimilar
    competitors. Nicholson Price and I have shown that over 70
    percent of these assertions involves patents with a priority
    filing date of more than 1 year after the originator product
    was marketed. For such late-filed patents, longstanding Supreme
    Court case law makes it clear that patent applicants should
    inform the PTO of commercial use that is related to or
    identical to the process that they seek to patent.
        That is true even if--or perhaps especially if--the use is
    secret. The reason is straightforward. A firm that relies on
    secrecy for commercial advantage should not subsequently be
    able to extend its exclusivity further by securing a patent.
    The patent system is supposed to be about information that is
    disclosed, not kept secret. Unfortunately, applicants do not
    routinely disclose prior commercial use to the PTO; however,
    the information is known to the FDA, and therefore it is part
    of the executive branch's set of information. It is simply
    siloed. We all know about agency siloing.
        One reason may be agencies' legitimate awareness of the
    need to maintain trade secrecy. This is very legitimate, but I
    think that the congressional push led by Senator Durbin is
    exactly what is needed to overcome agency reluctance. The
    Senate's Patent Agency--Interagency Coordination and
    Improvement Act--excuse me--sponsored by Chair Durbin
    recognizes that information flow from the FDA to the PTO is
    perfectly consistent with trade secrecy. The PTO can also help
    the FDA. Recently, the FTC has been active in calling out
    patents that are improperly listed on the Orange Book. But the
    FTC has to do its work very late in the day. Jorge Contreras
    and I have argued that the PTO could nip the problem in the bud
    by helping FDA ensure that irrelevant patents are never listed.
        Another problem relates to terminal disclaimers filed by
    patent applicants to overcome examination rejections for
    obviousness over a prior patent they hold. Simply put, a
    disclaimer filing shows that the patent applicant lacks
    confidence that its application is nonobvious relative to its
    prior patent. Disclaimer patent--terminal disclaimers, excuse
    me, are a big deal. A recent study by Dr. William Feldman and
    his co-authors found that 48 percent of patents asserted
    against biosimilar competitors contain terminal disclosures.
    The PTO has recently proposed a carefully crafted rule to
    address this issue; however, the agency's rulemaking authority
    in this area might be overly narrow, and I believe a very
    useful revision to the patent statute would calibrate PTO's
    rulemaking authority in this area and harmonize it with that
    given to the PTO over the PTAB.
        Speaking of the PTAB, there the answer is simple. Keep up
    the good work. My data show that the PTAB is doing an excellent
    job and it does not need to be interfered with. Thank you, and
    I look forward to your questions.
        [The prepared statement of Professor Rai appears as a
    submission for the record.]
        Chair Durbin. Thanks, Professor Rai. Professor Mossoff.

              STATEMENT OF ADAM MOSSOFF, PROFESSOR OF LAW,

    ANTONIN SCALIA LAW SCHOOL, GEORGE MASON UNIVERSITY, ARLINGTON,
                                VIRGINIA

        Professor Mossoff. Thank you. Chair Durbin, Ranking Member
    Graham, and Members of the Committee, thank you for this
    opportunity to speak with you today about how policy-driven
    arguments concerning patents have sown confusion and impeded
    evidence-based policymaking on drug prices. The causes of drug
    prices are complex and multidimensional, if only because the
    U.S. health care system is incredibly complex, itself. Yet,
    despite this, professors and policy activists have reduced this
    legal, institutional, and scientific complexity to a single
    cause: patents. They blame patents as the primary, if not the
    sole, cause of drug prices today. This is profoundly mistaken.
        It's impossible to comment on the incredible number of
    legal and policy activities in all three branches of government
    today affecting drug patents, and so for the sake of brevity, I
    will focus on the misinterpretation and misuse of two Federal
    laws by those seeking to impose price controls on innovative
    drugs and other health care inventions, in a misguided effort
    to lower drug prices. The first law is the Bayh-Dole Act, and
    the second is a law known as Section 1498. Now, neither the
    Bayh-Dole Act nor Section 1498 are price control laws. This is
    clear in their text, function, and in their past interpretation
    by courts and agencies.
        Congress enacted the Bayh-Dole Act in 1980 to promote
    commercialization of inventions that result from some upstream
    Federal funding. The law reaffirmed the fundamental principle
    in American patent law: All inventors should be secured in the
    fruits of their productive labors with a property right, a
    patent. Now, before the Bayh-Dole Act, the Federal Government
    actually ignored this fundamental principle and instead claimed
    ownership in inventions resulting from Federal funding. It
    offered nonexclusive licenses to any and all comers. As a
    result, there was no commercial development of these
    inventions.
        The Bayh-Dole Act, importantly, changed that policy. It
    reaffirmed that inventors can obtain patents and then assign or
    license them to marketplace actors regardless of who funds and
    how much funding is received in the initial research. The
    result has been an explosion in new products and services, from
    new cancer drugs to the Google search algorithm to the honey
    crisp apple and so many others. Today, the Biden administration
    proposes to turn the Bayh-Dole Act on its head. A proposed new
    regulatory guideline twists the Bayh-Dole Act into a price
    control law in which funding agencies can license any resulting
    patent to a private company simply to drive down prices. This
    returns the U.S. back to the pre-Bayh-Dole era of de facto
    government ownership and nonexclusive licensing.
        But the Bayh-Dole Act is not a price control law. It never
    states that price is a precondition for an inventor who obtains
    and then licenses or assigns a patented invention. In fact, the
    goal of the Bayh-Dole Act is commercialization, as such, not
    low prices. Now, this is really important, because Congress
    knows how to enact price control laws when it wishes to do so,
    and it has done so many times. One of my favorite examples. The
    Emergency Price Control Act of 1942. Very clear in what that
    law does. That is not the Bayh-Dole Act. In a shortsighted
    effort to drive down drug prices, these new regulatory
    guidelines will kill this golden goose of innovation and
    economic growth.
        The second law that is misconstrued today by those seeking
    to impose price controls on drug patents is Section 1498. Now,
    this doesn't have a name, because it's a century-old law that
    secures to patent owners the protections of the Takings Clause
    of the Fifth Amendment. It ensures a court can hear a claim for
    compensation when an official or government contractor uses a
    patent without authorization for a government use, such as the
    military or the Post Office. Today, price control advocates
    seek to turn this law on its head, as well. Now, in its text
    and function, Section 1498 secures the rights of patent owners
    against unauthorized uses of their property by the government,
    guaranteeing the same compensation as all other property
    owners. Now, some seek to turn Section 1498 into an
    unprecedented compulsory licensing regime in which the
    government promotes private companies to violate patent rights.
    Again, a law is being twisted to achieve shortsighted policy
    goals of lowering drug prices.
        Today, the U.S. is a global leader in health care
    innovation. The biotech revolution began in the United States
    in the 1980's. More than 50 percent of all new drugs are
    invented in the United States, to this very day. Diseases like
    cancer, diabetes, hepatitis are no longer death sentences but
    are now curable or at least manageable conditions. This was all
    made possible by the U.S. securing reliable and effective
    property rights in the fruits of the labors of the innovators
    working in the biopharmaceutical sector: securing patents.
    Countless lives have been saved, lifespans increased, and
    quality of daily life enhanced for everyone in the world. The
    patent system and laws like the Bayh-Dole Act and Section 1498
    made this possible. Thank you, and I look forward to your
    questions.
        [The prepared statement of Professor Mossoff appears as a
    submission for the record.]
        Chair Durbin. Thank you, Professor Mossoff. Dr. Feldman,
    please.

             STATEMENT OF WILLIAM FELDMAN, MD, DPhil, MPH,

             ASSOCIATE PHYSICIAN, DIVISION OF PULMONARY AND

     CRITICAL CARE MEDICINE, BRIGHAM AND WOMEN'S HOSPITAL, BOSTON,
                             MASSACHUSETTS

        Dr. Feldman. Chair Durbin, Ranking Member Graham, and
    Members of the Committee, thank you for the opportunity to
    testify today. I became interested in pharmaceutical pricing
    during my medical training when I observed firsthand how
    patients were often unable to afford their medications, leading
    to decreased adherence and worse health outcomes. Much of my
    research today focuses on how pharmaceutical firms use patent
    thickets and product hops to delay generic competition and keep
    prices high. The U.S. Federal Government rewards pharmaceutical
    innovation by granting time-limited monopolies to sell
    prescription drugs free from generic competition. And the key
    here is time-limited. Once patent protection ends, generic
    firms can enter the market. Such competition is by far the most
    important tool for lowering prescription drug prices in the
    U.S.
        Unfortunately, many brand name firms now engage in
    strategies designed to game the system and extend periods of
    market exclusivity, to the detriment of patients and payers.
    Consider inhalers for asthma and COPD. Millions of Americans
    rely on these products to help them breathe. Last year,
    AstraZeneca brought a product to the market called Airsupra.
    This product contains albuterol, first approved in 1981, and
    budesonide, first approved in 1994. Airsupra has patents
    lasting into the 2030's, and the current list price is over
    $500. Even with substantial rebates, we're still talking about
    a couple of hundred dollars for a product with active
    ingredients that were approved 30 to 40 years ago, and there is
    no hard clinical evidence to suggest that this product is any
    better than another AstraZeneca inhaler that has been on the
    market for two decades.
        By no means is this criticism intended to single out one
    company. All of the other three major brand name inhaler
    manufacturers--GSK, Boehringer Ingelheim, and Teva--engage in
    similarly problematic strategies. For example, we have found in
    our research that more than half of all patents on inhalers are
    on the delivery devices of these products, and these patents
    have extended market exclusivity--these device patents--by a
    median of 5 years. Seventy-seven percent of these device
    patents fail to even mention, much less claim, the active
    pharmaceutical compounds in the products.
        According to recent FTC action, these patents should never
    have been listed in the Orange Book in the first place, yet
    these tactics have been lucrative for inhaler manufacturers. Of
    the $178 billion that inhaler manufacturers earned on these
    products just in the U.S. from 2000-2021, more than 110 billion
    accrued after patents on the active ingredients had expired.
    That's 68 percent of revenue after patents on the active
    ingredients had expired. I applaud the FTC's efforts to crack
    down on improperly listed patents and also those of the Senate
    Health Committee, which launched an investigation into inhaler
    manufacturers earlier this year. This work is extremely
    important.
        But inhalers are just one example of abusive patenting
    practices that have become rampant across the pharmaceutical
    system, and we need comprehensive reform. The Senate Judiciary
    Committee has recently moved four bipartisan bills out of
    Committee that, if enacted into law, could facilitate more
    timely generic competition. These bills focus on establishing
    better communication between the U.S. PTO and FDA, limiting
    product hops, punishing brand name firms for baseless citizens
    petitions, and preventing pay-for-delay settlements. I strongly
    support these bipartisan efforts.
        I would also urge you to consider five additional measures
    to further advance the important work you all are doing, to
    facilitate more timely generic competition. First, grant the
    FDA the authority and resources to evaluate all patents
    submitted for listing in the Orange Book, to determine
    eligibility for inclusion. Second, require that all patents
    submitted to the FDA for listing in the Orange Book are also
    concurrently submitted to the U.S. PTO for re-examination.
    Third, limit the number of patents that brand name
    manufacturers can assert to one patent per family when suing
    for infringement.
        Fourth, grant the FDA more authority to approve generic
    drug device combinations that differ slightly from brand name
    reference products while still containing the same active
    ingredients and require the FDA to ensure that post-marketing
    surveillance studies are conducted to confirm similar outcomes
    between those receiving generic and brand name versions. And,
    finally, I would encourage Congress to increase the 180-day
    exclusivity periods for the first generic firms to file
    paragraph IV certifications on complex products like drug
    device combinations and decrease the automatic 30-month stays
    awarded to brand name firms that sue for infringement.
        We should strive for a pharmaceutical system that rewards
    meaningful therapeutic breakthroughs--cures for hepatitis C,
    new MRNA vaccines--not small modifications to the plastic
    components of delivery devices or new tweaks to molecules that
    perform no better than existing therapies. Thank you for your
    time.
        [The prepared statement of Dr. Feldman appears as a
    submission for the record.]
        Chair Durbin. Thanks, Doctor. Ms. Ulrich.

             STATEMENT OF JOCELYN ULRICH, VICE PRESIDENT,
                POLICY & RESEARCH, PhRMA, WASHINGTON, DC

        Ms. Ulrich. Chairman Durbin, Ranking Member Graham, and
    Members of the Committee, thank you for inviting me to
    participate in today's hearing. PhRMA appreciates the
    opportunity to discuss ways to improve the affordability and
    accessibility of lifesaving medicines for patients. It is no
    accident that the United States leads the world in the
    development of treatments and cures for patients. This is the
    direct result of our carefully designed ecosystem, built over
    many years through smart public policies that encourage risk-
    taking and collaboration.
        At the core of this ecosystem are strong and reliable
    intellectual property protections that give companies the
    certainty they need to make the long-term investments required
    to bring new medicines to patients, as well as to improve them
    for additional patient benefit. In fact, the biopharmaceutical
    sector is one of the most research-intensive industries in the
    United States, spending more than 100 billion every year
    researching and developing new medicines for patients. This
    spending far outpaces the NIH's budget for drug R&D year over
    year.
        Our members are committed to tackling the hardest, most
    difficult-to-treat diseases, and they make significant
    investments, knowing that fewer than 12 percent of potential
    medicines that make it into clinical trials will eventually be
    FDA-approved medicines. By any measure, America's IP framework
    has been a resounding success. Despite the long odds,
    biopharmaceutical companies have launched more than 750 drugs
    since 2000, resulting in significant progress against some of
    the most costly and challenging diseases.
        For example, new CAR T therapies are curing children with
    advanced leukemia by training cells to fight the cancer, and as
    a result, since peaking in the early 1990's, cancer death rates
    have declined by 33 percent. Due to highly effective
    antiretroviral therapy, the HIV/AIDS death rate has declined by
    91 percent, allowing HIV patients to live close-to-normal
    lifespans, and patients with sickle cell disease can be treated
    with a genome-edited cell therapy that has the potential of a
    functional cure for their disease. These advances not only
    improve patient lives but they help avoid other, more expensive
    health care costs. For example, between 1999 and 2012, there
    was a significant reduction in Medicare spending growth for
    cardiovascular disease, one-quarter of which was due to the
    greater use of cardiovascular medicines.
        Importantly, our IP system not only incentivizes the
    development of new medicines, but it spurs competition that
    lowers health care costs. First, there is robust competition
    from other brand manufacturers. No company has a monopoly on
    treating a disease. Companies compete to develop the most
    effective treatment options for patients. For example, within a
    year of the first breakthrough treatment for hepatitis C, the
    availability of multiple competitors reduced the average price
    or the net cost of these medicines by nearly 80 percent.
        Data also show discounts and rebates are already lowering
    the net costs of treatment with GLP-1s by as much as 79
    percent, with more competition on the way, and eventually
    medicines face competition from generics and biosimilars, which
    drives down costs even more. On average, a drug is on the
    market only 13 years before facing competition from generic
    versions, much shorter than the patent life of 20 years, and
    typically drive down costs as much as 80 percent. This is what
    makes the marketplace for medicines unique. Similar cost
    containment mechanisms do not exist for any other part of the
    health care system.
        But there are real challenges for getting more affordable
    options to patients. Insurance companies and their pharmacy
    benefit managers determine what medicines are covered, what
    patients pay out of pocket, and what hoops they have to jump
    through to access the medicines their doctor prescribes. Today,
    three large PBMs now comprise nearly 80 percent of the market,
    and each is vertically integrated with health insurers,
    specialty and mail-order pharmacies, and provider groups to
    form large health care conglomerates. And they are
    significantly impacting whether patients are able to benefit
    from biopharmaceutical innovation.
        PBMs often stand in the way of patient access to lower-
    priced versions of medicines, routinely denying or limiting
    coverage. And with growing scrutiny over rebates, PBMs have
    leveraged their vertical integration to create new sources of
    revenue. PBMs are also choosing to tie patient cost-sharing to
    the list prices rather than the discounted prices that they
    themselves pay.
        You'll likely hear today that the market is competitive and
    that abuses of the IP system and patents are the real problem.
    Instead, Congress should be focused on advancing policies where
    competition could be advanced without undermining the very
    foundation of the industry's ability to innovate. This includes
    addressing the misaligned incentives in the PBM market. Thank
    you for the opportunity to testify, and we look forward to
    working in a constructive way to ensure patient access to the
    medicines they need. Thank you.
        [The prepared statement of Ms. Ulrich appears as a
    submission for the record.]
        Chair Durbin. Thanks, Ms. Ulrich. Mr. Mitchell.

     STATEMENT OF DAVID MITCHELL, PRESIDENT AND FOUNDER, PATIENTS
                  FOR AFFORDABLE DRUGS, WASHINGTON, DC

        Mr. Mitchell. Chairman Durbin, Ranking Member Graham,
    Committee Members, thank you for inviting me. I'm David
    Mitchell. I'm the founder of Patients for Affordable Drugs.
    More importantly, I have an incurable blood cancer called
    multiple myeloma. Most patients with my diagnosis will die of
    it, but right now prescription drugs are keeping me alive. My
    doctors have me on a four-drug combination with a list price of
    more than $1 million a year. Just one of my oral drugs, a drug
    called Pomalyst, is priced at more than $22,000 for 21 capsules
    in this little bottle that I have to buy 13 times a year. And
    because Medicare beneficiaries like me pay our costs based on
    list price, I spent more than $16,500 out of pocket last year,
    just for Pomalyst.
        The Inflation Reduction Act changed that. This year, an
    out-of-pocket spending limit began to take effect, and my cost
    is $3,326. Next year, the limit will drop to $2,000, and no one
    on Part D will pay more than that. For me and other patients
    like me who have to take very expensive drugs to stay alive, it
    is life changing. The drugs are keeping my cancer at bay, but
    their efficacy is waning, and eventually I will need a new
    treatment--and one after that.
        So I care deeply about innovation and new drug development.
    Without it, I'm going to die sooner than I hope to. That's why
    this hearing is so important. Our patent system was put in
    place to incentivize and reward risk in investment in new
    treatments that can save my life and the lives of others. But
    too often, drug companies are instead investing in a legal
    strategy, using patents not to reward innovation but to block
    competition. In one recent 10-year period, 74 percent of new
    drug patents were issued for drugs already on the market. Of
    the roughly 100 bestselling drugs, nearly 80 percent obtained
    an additional patent to extend their monopoly. Partly as a
    result, we pay more than four times what other wealthy nations
    pay for the exact same brand name drugs. Thirty percent of
    Americans say they struggle to afford their medications.
        Let's look at another drug I take to prevent blood clots
    and stroke, Eliquis. In 2023, it was the most expensive drug
    for Medicare, at $12.6 billion. Its maker, Bristol Myers
    Squibb, has applied for 48 patents and been granted 27,
    blocking competition in this country. The list price for a 30-
    day supply in the U.S. is about 600 bucks. In Canada, where
    there is a generic on the market, the price is about $75. We
    need to restore balance to our broken drug patent system so it
    does incentivize and reward true innovation instead of being
    used to block competition. The FTC is moving on this problem,
    as the chairman pointed out, challenging more than 300 junk
    patents, as many as 400, that are listed in the Orange Book.
    And Congress can act to help now. Bipartisan bills to address
    the principal abuses of our patent system by drug companies
    have cleared Committee and are ready for passage in the Senate.
    They deal with pay-for-delay, patent thicketing, and product
    hopping. There are two more bills to improve FDA practices that
    will speed generics to market. They stop the abusive citizen
    petitions and allow the FDA to share important information with
    generic manufacturers to help them get to market more quickly.
        Now, while the headwaters of our drug price problems are
    the list prices set by drug companies, as Ms. Ulrich pointed
    out, there are other reforms needed downstream in the supply
    chain. Pharmacy benefit managers are black boxes that cut
    secret, often mutually beneficial, deals with drug companies,
    and none of it is transparent. We need to increase transparency
    and curb anticompetitive practices by PBMs. There are
    bipartisan bills in both the House and Senate to accomplish
    these goals.
        I am here today to ask you all to pass all of these bills,
    which will allow competition and market forces to lower drug
    prices for millions of Americans, regardless of how they pay
    for their drugs. These bills also save money for taxpayers, and
    we're pushing, along with dozens of allies, for inclusion in
    any year-end health care package that may be negotiated. And in
    a city riven by political division, these bills are thoroughly
    and completely bipartisan. Together, you can pass them. Please
    don't let this opportunity to help millions of Americans slip
    away. I look forward to answering your question. Thank you.
        [The prepared statement of Mr. Mitchell appears as a
    submission for the record.]
        Chair Durbin. Mr. Mitchell, thank you very much. There'll
    be rounds of questions from the Members, 5 minutes each. I'll
    start and then turn the gavel over to Senator Welch.
        Dr. Feldman, since you're the only medical doctor on the
    panel, I'm going to ask you an obvious question. The legal
    system in America basically says that in order to have a
    prescription drug, you need a doctor to write a prescription.
    So, a doctor's judgment is involved in that administration of
    that very basic principle. So, my question to you is this. We
    know the pharmaceutical industry spends $6 billion a year, the
    size of the entire FDA budget, to fill the airwaves with brand
    name drug ads. That way, patients cannot only pronounce
    Xarelto--maybe even spell it--but they can also tell their
    doctors that's the blood thinner they want.
        So, the pharmaceutical industry must believe that that's
    good enough, to inform the consumer of the benefits of this
    drug and some of the dangers of the drug, at one time, but to
    basically get them to the point where they go to the doctor and
    say, I want Xarelto. Then the doctor, in our system, has to
    make a professional judgment: Is that the right drug for this
    patient? Is there a better drug? Clearly, Pharma believes that
    the consumer suggestion is going to be pretty powerful in this
    equation. So, I don't want to say this in a negative fashion,
    but I'm going to. Are doctors complicit with Pharma in
    prescribing overpriced drugs because they don't have enough
    time or inclination to debate the issue?
        Dr. Feldman. Thank you. You know, I think doctors--you
    know, clearly, as you said, pharmaceutical companies are
    spending this money on advertising because they think it works
    and because, to some extent, it does work. I do think that some
    doctors--I know some doctors receive money from pharmaceutical
    companies for prescribing certain types of medications. And so
    I do worry that some physicians are complicit in this, to an
    extent.
        Chair Durbin. Well, they're gatekeepers in this process,
    and if they aren't there, I don't know who would police the
    ranks in terms of that. Ms. Ulrich, when you hear over and over
    and over and over again the fact that a basic drug being sold
    to Americans is at a price that is dramatically higher than
    you're selling the same drug in your industry in other
    countries, do you just shrug it off and say, that's just the
    luck of the draw? Or is it the fact that Americans are being
    asked to pay for the innovation and the costs and the profits,
    whereas other countries basically put their foot down and say,
    this is greed, and we're going to stop you?
        Ms. Ulrich. Thank you, Senator Durbin, for that question. I
    first would point out that, when we're looking at comparisons
    of U.S. funding, medicines are about the same share of overall
    health care spending as European countries. So, when you're
    looking at the actual relative contribution of spending on
    medicines, it's similar. In addition, I would point out that
    comparisons are often looking at list prices. And as I spoke
    about in my testimony, we know that there are significant
    amounts of rebates being paid to PBMs and others in the supply
    chain that are not accounted for when we're doing those cross-
    country comparisons.
        Chair Durbin. Well, let me say this about your suggestion.
    If I put one hand over a flame on the stove and the other hand
    in a freezer, on the average I should be just fine. But life
    doesn't work that way. And say on the average other countries
    are just about as expensive as the United States; the list
    prices are dramatically different. One hundred percent
    different. Why would you do that to the American consumers,
    when you're American companies?
        Ms. Ulrich. Well, I would also point out that Americans get
    access to those medicines much faster than those countries, as
    well. Eighty-five percent of globally approved new medicines
    are available to patients in the U.S. versus about 40 percent
    in the EU countries. In cancer medications, European patients
    are getting access 2 years later, on average. So, patients are
    benefiting from that innovation, as well.
        Chair Durbin. Mr. Mitchell, what do you think?
        Mr. Mitchell. Oh, I think that drug companies file first
    here because we are the largest market in the world, with the
    highest prices in the world. And they come here because the FDA
    is pretty easy to work with, and it's a high quality drug
    approval agency. And so they come here. They apply first, to
    get access to the market, but also they can take a lot of their
    filing work and take it abroad. It's interesting to note--
    because the IRA was raised earlier--that even after the IRA is
    fully implemented, we will still be the largest market in the
    world, with the highest prices in the world, and they are still
    going to file first here. And it's because it's in their
    business interest to do so.
        Chair Durbin. Senator Graham.
        Senator Graham. Thank you, Mr. Chairman. So, Mr. Mossoff,
    you said 50 percent of all the new drugs are made in America;
    is that right? Or developed here?
        Professor Mossoff. Yes. It's actually more than 50 percent.
        Senator Graham. Do you agree with that, Ms. Ulrich?
        Ms. Ulrich.
        [Nods in the affirmative.]
        Senator Graham. Okay. Why is that?
        Professor Mossoff. So, and very much--it's a great
    question, and thank----
        Senator Graham. Are we smarter, or what's the deal?
        Professor Mossoff. And very much I believe it has to do
    with the patent system, in the sense that the United States
    innovatively took the position, starting from the very
    beginning of the country, that they would secure next-
    generation technologies and they would protect them as property
    rights.
        Senator Graham. So, patents are a good thing?
        Professor Mossoff. Patents are a driver of economic growth,
    of new----
        Senator Graham. Okay.
        Professor Mossoff [continuing]. Innovation. Yes.
        Senator Graham. Okay. I agree with that. Now, is patent
    abuse a problem when it comes to drugs?
        Professor Mossoff. So, there's a lot of rhetoric about, you
    know, whether their abuse exists.
        Senator Graham. I'm not talking about the words; the
    actions.
        Professor Mossoff. Yes. Yes. So, it's very difficult to
    sometimes find actual evidence. So, for instance, you see
    evidence of abuse. Are there some cases? Yes, because in every
    legal system and every area of life, there's going to be some
    bad actors.
        Senator Graham. So, Dr. Feldman, do you believe there's
    gaming of the patent system by pharmaceutical companies?
        Dr. Feldman. I think there's no question. You know----
        Senator Graham. See, I'm with you on this one.
        Dr. Feldman. You look at--I don't think it's sort of
    finding a needle in a haystack. Everywhere we----
        Senator Graham. Yes.
        Dr. Feldman [continuing]. Look; every study we do----
        Senator Graham. Yes.
        Dr. Feldman [continuing]. We find gaming. We look at----
        Senator Graham. Yes.
        Dr. Feldman [continuing]. Drug device combinations. I
    talked about inhalers. We see the same thing on GLP-1 receptor
    agonists like Ozempic and----
        Senator Graham. Yes. So, I'm with you on that. So, I want
    to keep, like, the patent system in place, because it's good. I
    just think the problem is real, in terms of patent abuse, the
    games that people play. Senator Grassley's, you know, pay-to-
    delay, that kind of stuff. So, count me in on trying to fix
    that without killing the golden--the egg laid by the goose. Ms.
    Ulrich, you talked about PBMs. What percentage of costs do you
    think could be attributed to them?
        Ms. Ulrich. I'm sorry, I don't have a number, but I can
    tell you that, you know, with 80 percent being controlled by 3
    in the vertically integrated entities, that there's extreme
    market pressure being controlled by those 3 entities.
        Senator Graham. Okay. So, that'd be a good place for us to
    look, to create some competition, right?
        Ms. Ulrich. I agree.
        Senator Graham. Do you agree that there is patent abuse in
    your industry?
        Ms. Ulrich. You know, PhRMA is not in support of
    anticompetitive behaviors, and----
        Senator Graham. Well, that's not the question. Do you agree
    there's patent abuse in your industry?
        Ms. Ulrich. Well, I believe that there are controls in
    place to handle that, when there is----
        Senator Graham. So, you don't think there's a problem?
        Ms. Ulrich. I think that the courts and FTC has----
        Senator Graham. So, wait----
        Ms. Ulrich [continuing]. The authority to deal with it.
        Senator Graham [continuing]. A minute. Wait a minute. You
    don't think there's a problem with pharmaceutical companies
    playing games with patents to keep generics out of the market?
        Ms. Ulrich. I think that the system has the correct checks
    and balances in place to deal with it.
        Senator Graham. So, you think it's working?
        Ms. Ulrich. I think it's working.
        Senator Graham. Yes. Well, I don't. Mr. Mitchell, you're on
    the receiving end of all this. One, I hope the next drug comes
    along quickly----
        Mr. Mitchell. Thank you.
        Senator Graham [continuing]. Because there're a lot of
    people like you, in different areas of our society, depending
    on Ms. Ulrich--I mean, I'm not saying--I'm trying to say new
    drugs are good; gaming the system, bad. PBMs need to be better
    controlled. Is that a good summary?
        Mr. Mitchell. I'd say so.
        Senator Graham. Okay. Now, let's go to foreign countries.
    If a drug is a lot cheaper in a foreign country because of
    government action in that country to subsidize the drug, would
    you consider that an unfair trade practice, Professor Mossoff?
        Professor Mossoff. Potentially, yes. I mean, one of the
    problems with the cost of high drugs in this country is that
    other--all--this is the last country in the world, as far as
    I'm aware, that drug manufacturers and drug innovators can set
    the price in the marketplace at a price that they would seek to
    sell it at. All----
        Senator Graham. Yes. I think----
        Professor Mossoff [continuing]. Other systems have single-
    payer systems.
        Senator Graham. Professor, do you consider that a potential
    unfair trade practice?
        Professor Rai. Thank you for the question. It could be,
    yes. I mean, I do think that it is the case--I'm not an
    international trade expert, but it is the case that----
        Senator Graham. So--Okay, so----
        Professor Rai. Yes.
        Senator Graham [continuing]. Here's what I'd like to do, as
    a Committee, here. Focus on the fact that some countries
    actually do lower the prices through government action that we
    prohibit here. For all the reasons you said, that makes our
    consumers have to absorb more of the R&D. That, to me, needs to
    be part of the conversation. To me, that is an unfair trade
    practice. Does that make sense to you, Mr. Mitchell?
        Mr. Mitchell. Respectfully, Senator, I disagree. I don't
    think their prices are too low. I think our prices are too
    high. And the reason their prices----
        Senator Graham. Well, but----
        Mr. Mitchell [continuing]. Are low--one reason is that
    we're the only nation in the world that permits drug companies
    to dictate prices to its citizens; the only nation on the
    planet. Every other country negotiates. We only began----
        Senator Graham. Yes.
        Mr. Mitchell [continuing]. To negotiate this year, and we
    will negotiate over a total of 60 drugs out of about 4,000.
    But----
        Senator Graham. I don't----
        Mr. Mitchell [continuing]. We should do more negotiating.
        Senator Graham. Yes. I understand, to a point. The question
    is, what role of the government here? And I'll let you go. I
    wish you well. What role should the government play in this is
    a very important decision to make. And when a country is having
    governmental policies that make our consumers pay more for the
    R&D we all need, I'm going to go after those countries. Thank
    you.
        Senator Welch, [presiding.] Senator Whitehouse.
        Senator Whitehouse. Thank you, Chairman Welch. Good to be
    with all of you. I know we've talked a fair amount about drug
    ads. Obviously, like everybody else, I see a lot of them on my
    television. As best I can tell, they provide the public no
    health care value whatsoever. They provide sales and marketing
    value for the companies that are paying for the ads. And as
    best I can tell, what the marketing strategy is, is to convince
    everybody that all these drugs are a cure for loneliness.
        [Laughter.]
        Senator Whitehouse. I don't know if you've noticed, but the
    person always starts off alone, and then they tell you about
    the drug, and then they're with friends or they're, instead of
    alone on the dock, out on the lake with their family in the
    canoe. And the mental communication, the message, is, this drug
    will make you less alone and lonely. And then, of course, you
    don't even listen to all the horrible things that the drug is
    going to do to you, in the rapid, fast-paced, legally driven
    script at the end. It's a very peculiar piece of propaganda
    art, and I would love to understand more about how it's made to
    work.
        But the ads that I really want to talk about are other ads,
    and that has to do with Big Pharma's role funding dark money
    political pressure and ads. Pharmaceutical and health product
    companies put over $372 million into lobbying Congress and
    Federal agencies in 2022--a third of a billion. They deployed
    over 1,600 lobbyists, 3 times the number of Members of
    Congress. Now, it's hard to keep track of dark money spending
    compared to lobbying, because that's the whole purpose of using
    dark money funding channels, but an investigation by Issue One
    showed Pharma contributed more than $34.5 million to the House
    GOP-aligned dark money group, American Action Network, since
    2010. Thirty-five million dollars is enough to get the
    attention of House Republican leadership, I think.
        In 2022 alone, Pharma gave a record 7.5 million to American
    Action Network, which spent millions on advertising in 2022
    opposing our drug pricing reform efforts and specifically the
    ones that made it into the IRA. Pharma donates to the Koch-and
    Trump-affiliated dark money organizations Americans for
    Prosperity, Americans for Tax Reform, and America First
    policies. A summary by The Washington Post in 2021 was pretty
    good: Congress Members who supported legislation to curb the
    cost of prescription drugs faced ``massive months-long
    advertising, lobbying, and political donation blitz undertaken
    by the pharmaceutical industry and its allies, to kill a
    Democratic proposal to lower the cost of prescription drugs by
    empowering the Federal Government to negotiate their prices.''
        And, obviously, particularly the political donation blitz
    and the advertising blitz have a lot to do with putting those
    political ads up on TV, which I think are disconcerting to
    folks in America, because when it's your TV, and there's a
    message coming in to you across your TV, and it's paid for by a
    group with a name like Americans for Peace and Puppies and
    Prosperity, and you know perfectly well that there is no such
    group that provides any real service or any real product--
    they're just there to mask who's really trying to communication
    with you--it's creepy as hell.
        And I think we need to fix that, and I would like to
    encourage all of you to do whatever you can to encourage the
    pharmaceutical industry to at least be transparent in its
    spending. Don't use Americans for Prosperity or some of these
    other front groups as intermediaries. If you really think this
    opinion that you're offering into people's living rooms is
    worth it, own it. And I'll leave it at that. Actually, let me
    ask Mr. Mitchell, what do you think are the sort of red flags
    that we should be looking at, where anticompetitive use of the
    patent system is signaled as opposed to pro-innovation use of
    the patent system?
        Mr. Mitchell. Well, anytime you have a drug like Humira
    that, as the Chairman pointed out in his opening remarks, had
    165 patents on it--and I remember the day Senator Cornyn spoke
    to the chairman of Humira in a hearing and couldn't get a
    straight answer from him on how many patents there were on
    Humira--those patents, which began to expire in Europe in 2018,
    led to prices in Europe that were 15 percent of the prices that
    we paid in this country until the Humira competition finally
    hit the market last year. So, look for the number of patents.
    Look at what's happening abroad. Did they give away a little
    bit of the market in Europe in order to protect their market
    here from competitors? There are signs to look for.
        Senator Whitehouse. Thank you very much.
        Senator Welch. Senator Grassley.
        Senator Grassley. If you heard what Mr. Mitchell said,
    you're going to hear it again. So, I have this question about
    some bills that we've already passed out of this Committee that
    I think lead to anticompetitive practices in prescription
    drugs, as well as the availability of lower-priced generic
    alternatives. We focus on pay-for-delay deals, citizen
    petitions abuse, product hopping and evergreening and unfair
    PBM practices. And so these bills kind of come out with these
    names in this Committee: Prescription Pricing for the People
    Act, the Preserve Access to Affordable Generics and Biosimilars
    Act, Stop STALLING Act, the Affordable Prescriptions for
    Patients Act, and the Interagency Patent Coordination and
    Improvement Act.
        And it's frustrating that these bills move and become law--
    why they have not, I don't know. I hope that we can break the
    logjam for the benefits. And, Mr. Mitchell, you made that very
    clear. So, I was going to ask you, as one of three people
    here--so I'm going to focus on Professor Rai and Dr. Feldman.
    Do you believe that these bills that I've mentioned will help
    promote competition and lower drug costs?
        Professor Rai. Thank you for the question. Yes, I do
    believe they will. I don't know that I would agree with the
    particulars of every single bill, but I've already endorsed
    heartily the Interagency Coordination Act, and I believe that
    the bills for product hopping, in particular, could be very
    useful, as well. There's also a bill on patent thickets that I
    think could prove very useful. So, yes, overall, absolutely.
        Dr. Feldman. I agree. I think every bill that we are
    talking about today--all these bipartisan bills--would help
    address the problem. To me, there is no silver bullet. I wish
    there was one solution that could solve all of our problems,
    but I really think the work this Committee is doing around all
    of these issues--around better communication with the U.S. PTO
    and FDA, around citizen petitions, pay-for-delay settlement--we
    really have to be going after every single issue, to make
    incremental progress on what think is a real problem for our
    health care system.
        Senator Grassley. Yes. Ms. Ulrich, you made very clear in
    your answer to a question that the 3 biggest PBMs have 80
    percent of the market, so I don't need to ask you to explain
    that further, but I'd like to zero in on a bill that Senator
    Cantwell and I have focused, called the Pharmacy Benefit
    Manager Transparency Act, to prevent unfair anticompetitive
    practices by PBMs and bring about greater transparency.
    Specifically, our bill would prohibit deceptive pricing schemes
    and arbitrary clawbacks of payments made to pharmacies. The
    bill would also require PBMs to report to the FTC how much
    money that they make through spread pricing and pharmacy fees.
    Do you believe that this bill would help address competition
    concerns and lower the price of drugs for patients?
        Ms. Ulrich. Yes, thank you, Senator Grassley. We believe
    in--we support the principles of that bill, but I would defer
    to my other colleagues who are more engaged on PBM policy more
    directly, to answer you fully. And we would be happy to engage
    with you further on that.
        Senator Grassley. Okay. Thank you very much. I would go to
    Ms. Ulrich and Professor Mossoff. I'd like you to answer
    questions about the Federal Government investing $50 billion in
    health care research in this Fiscal Year alone. On top of that,
    we know the pharmaceutical industry invests 80 to 90 annually
    on research and development. Universities, pharmaceutical
    entities, biotech startups, small inventors, and other
    stakeholders are all engaged in innovation to find cures and
    produce lifesaving drugs. So, Professor Mossoff, how do we
    build on this work so that we can find the next miracle drug
    without breaking patients' pocketbooks? What kind of incentives
    spur investment in R&D?
        Professor Mossoff. I think that, as a general principle, we
    should continue to retain the system that has made possible the
    biotech revolution and all of these incredible new drug
    treatments, which is reliable and effective patent rights that
    are secured to the innovators, that they can deploy in the
    marketplace. The data that I have on the funding shows that, at
    least as of 2018, you had private R&D funding of around 129
    billion, which, as Ms. Ulrich said, dwarfs, you know, the 40
    billion or so by NIH. So, it's not true, what many people
    believe, that the government funds all drug development or all
    drug discoveries.
        In fact, one study done in 2021 of just the grants by the
    NIH in the year 2000--there were 23,230 NIH grants in the year
    2000, and those were linked to only 18 FDA-approved medicines
    by 2020. So, what, you know, you have is a continuing process
    in which the NIH funds very far upstream initial research,
    right, the basic research, and then once the university
    researchers figure out that this is something that might be
    important, they get a patent; the university licenses it to a
    biotech company or they create a startup and get venture
    capital financing.
        And that's what accounts for the $2.6 billion, on average,
    that goes into drug development ultimately that leads to an
    FDA-approved therapeutic treatment in the marketplace. And we
    should continue to ensure that that can happen by ensuring that
    the Bayh-Dole Act is not changed and that it continues to
    function in the way that it has functioned very successfully in
    the past 30 or 40 years in this incredible R&D pipeline that's
    been developed--as I said, rooted in this system of property
    rights to innovators that we have had in this country for 200
    years.
        Senator Grassley. I'll submit questions for answer in
    writing. Thank you.
        Senator Welch. Thank you. Senator Hirono.
        Senator Hirono. Thank you, Mr. Chairman. Thank you all for
    testifying. I know that every time we compare pharmaceutical
    prices, we are told that Europeans pay far, far, less, but I do
    acknowledge, as you said, Professor Mossoff, that our health
    care system is very complicated. You're the only person on the
    panel who happened to mention that other nations have single-
    payer systems. In our country, adding to the cost of health
    care is depending on how you get injured and what system is
    kicking in to take care of you. We have the VA, the largest
    health care program in the country; we have private insurance;
    we have Medicare; we have Medicaid. In Hawaii, depending on if
    you get hurt in an auto injury, then that's another system.
        So, I think that, you know, there is no single bullet, and
    for us to just--I realize that the patent system abuses is part
    of the problem, but for us to sit here and just point our
    fingers at the patent system is not going to resolve in the
    kind of non-silver bullet that we also acknowledge. And, in
    fact, Professor Mossoff, would you like to just very briefly go
    over why the payer system we have in our country--if you have
    any information on how much that adds to the cost of health
    care in our country, I would appreciate your thoughts.
        Professor Mossoff. Thank you for the question, Senator. I
    don't have any specific data on the total cost of all of the
    different complex institutions, public and private, that exist
    in our health care system, except for the fact that I know
    generally, as a scholar, it is incredibly complex, and it makes
    other systems look very simple and basic.
        Senator Hirono. Yes. And I think that if we really wanted
    to get control over the United States having the highest health
    care costs in the country, we should look at the payer systems
    that we have in place, but that's not what our focus is right
    now. It is clear that we do have abuses in the patent system,
    and I think it is important for us to very carefully target the
    abuses, as opposed to passing legislation that is going to be
    overbroad. Would you say that some of the bills that we have
    passed out of this Committee precisely target the abuses in the
    patent system? Anybody--wants to weigh in on this? I think
    you're familiar with some of the bills that have emerged from
    this Committee.
        Voice. So----
        Dr. Feldman. I think the bills are targeted effectively.
    The bills target citizen petitions. They target pay-for-delay
    settlements. There are very specific things that these bills go
    after, that I think would undoubtedly improve some of the
    patent gamesmanship that we've seen, but I don't think these
    bills go far enough. I think there are numerous other targeted
    solutions that are simple and would help improve things. For--
    --
        Senator Hirono. Such as?
        Dr. Feldman. Such as, have the FDA review every patent that
    gets submitted to the Orange Book. The FDA currently serves in
    a purely ministerial role. It doesn't look at the patents. The
    companies can submit whatever they want. So, give the FDA the
    authority and the resources to review those patents. Force
    manufacturers, when they submit patents for listing in the
    Orange Book--submit them for re-examination to the U.S. PTO.
    Very simple, but making sure that these patents that are listed
    in the Orange Book aren't----
        Senator Hirono. Would the----
        Dr. Feldman [continuing]. Being listed----
        Senator Hirono. Excuse me.
        Dr. Feldman [continuing]. Improperly.
        Senator Hirono. Would the rest of you agree that those are
    some so-called simple changes, where there's more collaboration
    as well as the information sharing between PTO and FTC, for
    example?
        Professor Rai. FDA and----
        Senator Hirono. Oh, FDA.
        Professor Rai [continuing]. PTO. Yes. Absolutely. I think
    that--and also, Professor--Dr. Feldman's point about the FDA's
    ministerial--so-called ministerial role could be fixed really
    readily and inexpensively if the FDA and PTO collaborated on
    every patent that was listed on the Orange Book, to ensure that
    it's properly listed. This is a gap in the system that has
    existed for decades, and it's really unclear, to me, at least,
    why this gap has not been filled.
        Senator Hirono. Thank you for that suggestion. I have a
    question for Dr. Feldman. Last year, insulin prices were cut
    dramatically after surpassing the rate of inflation year after
    year. In a paper last year, you catalog ``The Rise and Fall of
    the Insulin Pricing Bubble.'' I'm not talking about the
    situation where the legislation capped the insulin costs for
    Medicare. This has to do with insulin's cost for everybody
    else. Can you give us some insight into why prices rose so
    high, why they fell so dramatically, and whether that
    experience points the way toward possible policy solutions we
    can use for other high or overpriced pharmaceuticals?
        Dr. Feldman. Thank you for the question, Senator. The
    reason why the prices of insulin rose so dramatically is
    because the three large insulin manufacturers obtained numerous
    patents to limit competition. They raised prices year after
    year, many, many, many times the original prices of these
    products. And the reason why prices came down so suddenly is
    that a rule in Medicaid lifted the cap on rebates, on penalties
    that these companies were going to have to pay. So, previously
    it was capped at 100 percent, where, if a patient used one of
    these old insulin products in Medicaid, because they had raised
    prices faster than the rate of inflation, year after year, they
    had to pay these very large penalties that were capped at 100
    percent. They are no longer capped at 100 percent, and so
    insulin manufacturers responded by dropping their list prices.
        Senator Hirono. So, there are other ways that we can lower
    drug prices by, for example, impacting what PBMs are getting.
    Is that part of the approach that we should consider?
        Dr. Feldman. I think we absolutely should consider
    legislation that addresses PBMs. I think some of the things
    we've talked about here today, like spread pricing, the lack of
    transparency--all of these contribute to higher prices in the
    system. But I would say just on this question about insulin
    prices and why they came down so dramatically, it's a rule that
    forced manufacturers to pay penalties for raising list prices
    greater than the rate of inflation. And so I think with the IRA
    we will see similar types of penalties, moving forward. And,
    you know, I think, again, we need action on--with the
    pharmaceutical companies, and we also need action with PBMs.
        Senator Hirono. Thank you. Thank you, Mr. Chairman.
        Senator Welch. Senator Kennedy.
        Senator Kennedy. Thank you, Mr. Chairman. With me today,
    Mr. Chairman, are two interns in my office, Ms. Anna Kate Luke
    and Quinn Eisenfeld, and I wanted to recognize them today.
    They're sitting behind me.
        Mr. Mitchell, I'm sorry about your health challenges. You
    made a very impassioned plea for us to consider the various
    bills that have come out of this Committee. Why do you think
    the full Senate hasn't taken them up?
        Mr. Mitchell. I think you've been busy with some other
    things.
        Senator Kennedy. You really think that's the reason?
        Mr. Mitchell. Part of the reason, I think, yes, is that the
    Senate has been busy with many other things. I do think that
    there is an appetite on both sides of the aisle to----
        Senator Kennedy. Well----
        Mr. Mitchell [continuing]. Advance these bills, maybe in
    the lame duck session.
        Senator Kennedy. Respectfully, I think you're wrong.
        Mr. Mitchell. Tell me.
        Senator Kennedy. Okay. The majority leader controls the
    floor of the U.S. Senate. Whether that majority leader is a
    Republican or a Democrat, one person controls what the entire
    United States Senate can consider. And I don't mean to pick on
    Senator Schumer. He's my friend. He is exercising the power
    that we have ceded to him. If Republicans were in the majority,
    I feel pretty confident in saying that our majority leader,
    Senator McConnell, would exercise the same power.
        Do you think the Senate ought to establish a new rule that
    all Senators are equal, and some aren't more equal than others,
    and that if a Senator can demonstrate that he or she has 60
    votes to pass a bill--perhaps through the number of co-
    sponsors, though that wouldn't be the only way--that that
    Senator should have the right to bring the bill to the floor of
    the United States Senate and allow Senators, in front of God
    and country and their constituents, to vote on it?
        Mr. Mitchell. Senator, you're way over my pay grade.
        Senator Kennedy. Okay. You don't have an opinion on that?
        Mr. Mitchell. No.
        Senator Kennedy. Professor, you're an attorney. Do you have
    an opinion? You don't want to make Senator Schumer mad. Does
    that concern you?
        Professor Rai. That's an excellent question. It does seem
    to me that that level of control could be not optimal, the
    level of control exercised by one person as----
        Senator Kennedy. You're a professor, right?
        Professor Rai. I am a professor.
        Senator Kennedy. Not optimal?
        Professor Rai. Correct.
        Senator Kennedy. Yes. In the real world, we say it sucks.
        [Laughter.]
        Senator Kennedy. I came here today to learn, and I have
    learned a lot. But here's what I'm trying to understand.
    Professor, is your contention that, because of the patent
    abuse--your words, not mine--that pharmaceutical drug companies
    are making obscene profits in the United States?
        Professor Rai. Thank you for the question, sir. I don't
    think it's obscene. I think that, as many people have pointed
    out, in the United States we do fund research and development
    for the whole world, and that's a very, very knotty problem, so
    that's a challenge that I think we all need to take on. I do
    think that patent abuse contributes to lack of innovation,
    which might seem counterintuitive, but I'll tell you why.
        Senator Kennedy. Okay.
        Professor Rai. Because if you----
        Senator Kennedy. Let me stop you for a second, because I'm
    going to run out of time. You use the term, patent abuse.
    You're obviously using it in a pejorative sense. Is this patent
    abuse illegal?
        Professor Rai. It is not currently illegal, but there are
    mechanisms that we could readily employ to curtail it.
        Senator Kennedy. If we passed a bill?
        Professor Rai. If we passed bills. There's also a lot that
    agencies can do right now, using their current powers.
        Senator Kennedy. So, why don't they?
        Professor Rai. They don't because I think that Congress
    doesn't adequately push them to do it. So, you need to hold
    oversight hearings, hauling up the FDA and the PTO, asking them
    why they don't cooperate more, including on the sort of thing
    that they can already do, which is exchange information,
    including trade secret information----
        Senator Kennedy. So, you think the problem----
        Professor Rai [continuing]. Protected by trade secrecy law.
        Senator Kennedy. You think the problem is in part within
    our administrative agencies, like the FTC or----
        Professor Rai. The FTC is, I think, doing a cleanup job on
    the back end, but the FTC can only work on the back end. Recall
    that the FTC's jurisdiction is antitrust. That's after all the
    bad stuff has already happened. They try to clean up on the
    back end. We need to nip the problem in the bud, on the----
        Senator Kennedy. What about----
        Professor Rai [continuing]. Front end.
        Senator Kennedy [continuing]. The FDA?
        Professor Rai. FDA can help, and the PTO can help.
        Senator Kennedy. Is the FDA doing a bad job with
    controlling patent abuse?
        Professor Rai. The FDA considers its role ministerial. I
    think----
        Senator Kennedy. But are they doing a bad job, in your
    opinion? Come on----
        Professor Rai. I think they could----
        Senator Kennedy [continuing]. Professor, we're trying to
    find solutions here. Don't dance around on me. Tell me what you
    think.
        Professor Rai. I think they could do more.
        Senator Kennedy. Okay. I'm gone way over. Thanks for your
    indulgence, Mr. Chairman.
        Senator Welch. Thank you. I want to thank my colleagues for
    the work that you've done, and I do hope, Senator Kennedy, that
    we get those bills on the floor and have a chance to vote on
    them. You've done a lot of work on that, Senator Cornyn, and
    I'm very supportive of what you've done.
        Senator Kennedy. Well, I've suggested a way, Mr. Chairman,
    that we can get them on the floor, that--I'm not trying to step
    on----
        Senator Welch. Talk to your friend, the majority leader.
        Senator Kennedy. I'm not trying to step on Senator
    Schumer's toes, by any stretch. The door----
        Senator Welch. Let's go back to the issue here.
        Senator Kennedy [continuing]. Swings both ways.
        Senator Welch. Thank you. You know, the bottom line here is
    the cost of health care in this country is killing folks. It is
    such a brutal, punitive burden on everyone, and that's for
    citizens in all of our States, folks who are having trouble
    paying the rent or they're having trouble paying for groceries.
    They can't afford--they can't even dream about owning a house.
    And when I was visiting with some employers in Vermont this
    week, they told me that the cost of a family plan for an
    employee is $40,000. That's 20 bucks an hour. All right? And
    the biggest driver in health care costs are Pharma costs,
    prescription drugs. And whether you want to call it abuse or
    gaming, the fact is, people can't afford it, and it is not
    sustainable.
        And the reality, too, is that Pharma's got a pretty sweet
    deal. It's got a guaranteed market, with Medicare, with
    Medicaid, with the VA. It's got employer-sponsored health care,
    and our employers in Vermont and around the country--they
    really care about having good health care for their employees.
    That's important to them. And then they've got the taxpayer-
    funded research, which is often the hardest, most risky
    research, that the NIH does, that elemental research, as
    opposed to the--about marketing and what devices and how to
    package it. And then, of course, you've got the patent system
    that we're talking about today, where there needs to be reform.
    And there's been a lot of bipartisan effort here on this
    Committee to do it.
        Let me just ask a few questions. Dr. Feldman, let's talk
    about Ozempic--yes. Am I pronouncing that right?
        Dr. Feldman. Yes.
        Senator Welch. Yes. What I understand is that you have done
    research, a lot, on this particular drug, and that you--as we
    know, it costs 936 bucks a month in the U.S., only 147 in
    Canada, and $83 in France. That's a huge expense for our
    employers and for our taxpayers. And last year Novo Nordisk
    made 13.9 billion in sales from Ozempic, 60 percent coming from
    the U.S. So, we're just paying an enormous amount. But on the
    patents--and you have researched this, I understand--there's 25
    patents, and only 4 are for an active ingredient. Can you just
    explain what that means?
        Dr. Feldman. Yes. That's exactly right. So, over the years,
    Novo Nordisk has obtained and listed in the Orange Book 25
    patents on this drug.
        Senator Welch. And how many for the active ingredients?
        Dr. Feldman. And so 21 are on the delivery device. On the
    delivery device: the injector pen technology that is used for
    patients to self-administer the medication. The other four
    patents are non-device patents: two on the active ingredients
    and then two on methods of use or formulations. And so I think
    it's a perfect illustration of the problem. You have 25
    patents; 21 on these delivery devices. The FTC has said, these
    patents should never have been listed in the Orange Book in the
    first place, and, you know, the brand name firms already are
    suing for infringement. They're litigating these brands.
        Senator Welch. Okay. So, I have a bill that I introduced
    with Senator Klobuchar and Senator Braun to streamline the drug
    patent litigation by limiting the number of terminally
    disclaimed patents a drug company can assert. And the U.S.
    Patent Office, as you mentioned, Professor Rai, instituted a
    rule. But that legislation that would essentially limit that
    thicket--can you comment on your view on that legislation and
    how it would be helpful or not?
        Dr. Feldman. Yes. I think it's a great piece of
    legislation. The idea is that currently the Patent Office is
    required to reject patents that are obvious follow-ons from
    other patents, but companies can use these terminal
    disclaimers, which say, okay, the patent will expire at the
    same time as other patents.
        Senator Welch. Right. Thank you.
        Dr. Feldman. And I think by limiting litigation on these
    patents to one per family, I think it could promote----
        Senator Welch. Thank you.
        Dr. Feldman [continuing]. Timely competition.
        Senator Welch. And, Professor Ulrich, you know, I listened
    carefully to your testimony, and it's the same testimony I've
    been listening to for over a decade, and that is, the sky is
    falling if we do anything that will interfere with the magic of
    Pharma. But do you know how much the top 15 biggest drug
    companies reported in revenue in the first quarter of 2024?
    There's 173 billion? Does that sound about right?
        Ms. Ulrich. I'm sorry, I don't have that figure in front of
    me.
        Senator Welch. Well, it's 173 billion. And of that, about
    14 percent--25 billion--was spent on research. By the way, that
    isn't specified as to whether it's for a new molecule or a
    combination of an active ingredient or marketing. Novo brought
    in 9.5 billion in the first quarter and spent only 1.2 billion
    on R&D. Do you know how much Novo spent on shareholder
    dividends and buybacks? Yes. Four and a half billion dollars.
    So, there is a question here, with the advertising
    expenditures, with the shareholder buybacks and the dividends.
    Is there room for companies to consider maybe giving the
    consumers and the taxpayers a fairer price?
        Professor Rai, a recent study at the University of Texas
    focused on improving the patent approval process found that if
    the patent examiners were given more time to examine the
    secondary patent applications, it could save consumers up to $5
    billion. Could you comment on that?
        Professor Rai. Absolutely. That study was conducted by a
    PhD scientist and a PhD economist, one of whom is at Duke. And
    it is an impeccable study. I think that it's bulletproof, and
    examiners need to be given more time. What that means, however,
    is that the Patent Office will have to raise fees, because it
    is entirely fee funded. I think that's a very wise use of the
    patent agency's fee-setting authority.
        Senator Welch. Thank you. Senator Cornyn.
        Senator Cornyn. Thank you, Mr. Chairman. Listening to the
    testimony today reminded me of a quote from H.L. Mencken, who
    said that for every complex problem, there's a solution that's
    simple, neat, and wrong. So, that may be why I find myself
    agreeing with all of you, bits and pieces of what you say, but
    also disagree with all of you in other respects. But let me see
    if I can find some common ground here.
        So, I'm a big believer in our patent system, and I believe
    the exclusivity that is provided to people who discover new
    lifesaving drugs ought to be protected. But at the same time,
    I'm angry when I look at the abuse of the patent system by
    filing as many as 165 patents for something like Humira. And,
    Dr. Feldman, when you mentioned that some of these patents have
    nothing to do with the active ingredients in the drug but
    rather the delivery devices--in other words, you take a pill as
    opposed to some aerosol you inhale or whatever--that this then
    prevents these incredible lifesaving drugs from being more
    readily available and affordable to Americans.
        But at the same time, I recognize that if there wasn't the
    promise of a big financial payoff for the people that do this
    research--and I think somebody mentioned 12 percent--Ms.
    Ulrich, maybe that was you--actual success rate--so, that means
    that 78 or--excuse me, 88 percent of the drugs investigated
    actually fail, which is one reason why Pharma spends so much
    money on R&D, hoping to hit gold, I guess, for that 12 percent.
    So, I find myself sort of torn, back and forth, and maybe
    that's the reason why we are where we are.
        But I do agree with Senator Kennedy. Senator Schumer could
    put these bills on the floor today, if he wanted to. And, Mr.
    Mitchell, you're being way too kind in terms of how busy you
    think we are here. We're working about two and a half days a
    week and hardly breaking a sweat, so we have a lot more room to
    grow and capacity to deal with important problems like this.
    And taking up and passing bipartisan bills would be pretty
    remarkable. And in addition to the ones we've talked about
    here, the Finance Committee has done a lot of work, Ms. Ulrich,
    on the pharmacy benefit managers that you addressed.
        The 20-year patent system does not--there's a problem, I
    think--and you tell me if it's a problem, Ms. Ulrich. So, you
    get 20 years' exclusivity, but you may not have a full 20 years
    of exclusivity because you can't actually sell the drug until
    the FDA approves it. So, there's a lag time, frequently. And I
    think you said effectively the 20 years is 13 years; is that
    correct?
        Ms. Ulrich. Yes, for small molecule drugs it's around 13
    years on average.
        Senator Cornyn. I know that Hatch-Waxman, many years ago,
    tried to sort of figure out how to deal with that, but it
    strikes me as that may be some area where we ought to be able
    to give patentholders the effective use of their patents
    longer, by making sure that the period of the exclusivity ran
    from the time that it actually was available to be sold, as
    opposed to when it's patented. But that maybe is another
    discussion for another day.
        Mr. Mitchell, do you--let me just say I, too, wish you
    well. I'm glad we live in a country where you can get access to
    lifesaving drugs. What I've always been told, though, is that
    the way that some of these countries, like in Europe, for
    example, that have national health care systems, deal with this
    is they restrict the formulary--that is, the drugs that are
    actually available. Do you know whether the drugs that you
    take, that are saving your life, would be available to you if
    you lived, for example, in Europe? My understanding is----
        Mr. Mitchell. Most----
        Senator Cornyn [continuing]. The EU only has about 40
    percent----
        Mr. Mitchell. I'd have to check country by country, but for
    the most part, the principal medications for myeloma are
    available abroad. I do think there's an important issue that
    you're touching on, and Professor Rai started to talk about it,
    and that is very important to me, as someone who needs
    innovation. Patent abuse inhibits innovation. If drug companies
    can raise prices on old drugs that should have competition but
    don't, and they can raise them at will, then they have much
    less incentive to invest in the risky innovative work that can
    produce new drugs that can extend life.
        Senator Cornyn. You and I are of one mind on that.
        Mr. Mitchell. And so I don't want to just----
        Senator Cornyn. The Chairman's going to cut me off because
    my time is up. Let me ask one last question. Does the fact
    that, according to the most recent figures I've seen, that 40
    percent of the active ingredients in the drugs that Americans
    consume in this country come from China--does that concern you?
    After COVID, we became very concerned about supply chain
    vulnerability, and it strikes me that's a vulnerability. Is
    that not a problem, or is that a problem? Anybody have a view
    on that?
        Professor Rai. It is a problem. Yes.
        Senator Cornyn. It seems like it.
        Professor Rai. Yes.
        Senator Cornyn. I would think so. And----
        Professor Rai. Indeed, it is.
        Senator Cornyn [continuing]. Maybe there'd be a way for us
    to do more of that producing----
        Professor Rai. Well, the FDA needs more resources.
        Senator Cornyn [continuing]. More of those active
    ingredients here in America. I'm sure it's a financial
    decision.
        Professor Rai. The FDA needs more resources.
        Senator Cornyn. Okay. Thank you.
        Senator Welch. Senator Coons.
        Senator Coons. Thank you, Chairman Welch. And I am sorry
    that I had two other Committee hearings at the same moment. I
    know this has been an important and robust conversation about a
    matter of great significance to all of us. I agree with my
    colleagues that we have to do more to reduce the very high
    price of prescription drugs in the United States. They remain
    too high for my own constituents. In fact, it's often the first
    thing I hear from in town halls, and I do think the Inflation
    Reduction Act has made dramatic process in this direction.
    There's more yet to be done, and I'm hoping we can still get
    more done in this Congress.
        I do believe that there are other factors than patents at
    work, in terms of high prescription drug prices, and as we've
    discussed, my core concern is that the patent system applies to
    a very wide range of products and goods, not just
    pharmaceuticals. And so what reforms or changes are made in
    order to pursue reduction in drug prices I hope do not harm the
    foundation of the patent system, that protects everything from
    roof shingles to batteries to electric vehicles to paint
    coatings--I mean, thousands and thousands of innovative
    products and services.
        So, let me, if I might, first just ask a question.
    Professor Mossoff, as I was leaving to the other hearing, you
    were talking about Bayh-Dole march-in rights, and I don't get
    the sense that you've come back to that at all. The core issue
    I had with the direction that NIST went in allowing pricing for
    Bayh-Dole march-in rights is it doesn't just apply to
    prescription drugs. It applies to everything. So, any company
    who invents or any researcher who invents anything is now
    potentially open to the Federal Government saying, I want that,
    and I don't agree with the price you're setting for it. Is that
    accurate?
        Professor Mossoff. Yes. It's entirely accurate.
        Senator Coons. And are there breakthroughs in other sectors
    unrelated to pharmaceutical or therapeutics or vaccines where
    you think having a price-based march-in right regime would put
    innovation at risk?
        Professor Mossoff. Oh, certainly. I think, you know, every
    sector of the innovation economy, from high tech to even areas
    of the manufacturing base, are threatened by this. It
    completely destabilizes patents as property rights, when you
    cannot rely on this with certainty, going forward, that the
    government won't step in at any particular point in time,
    decide arbitrarily you're charging too high of a price, and
    therefore interfere with your ability to contract in the
    market----
        Senator Coons. Is there----
        Professor Mossoff [continuing]. Your product.
        Senator Coons [continuing]. Compelling evidence that the
    highest priced prescription drugs or majority prescription
    drugs would actually have their prices brought down by having
    march-in rights available to the Federal Government?
        Professor Mossoff. Thank you for that question, because
    that's an excellent question. And the actual studies show that
    actually very few percentage of prescription drugs are actually
    covered by the Bayh-Dole Act. It's around approximately 1
    percent is the last number that I saw. And so you would not see
    any effect in prescription drug prices with the adoption of
    this radical systemic change to the patent system, where you
    would have the ability of any government agency to march in and
    to dictate prices in the private market on any product or
    service.
        Senator Coons. One of the five bipartisan bills I think
    that is ready for action is one related to PBMs, Senator
    Grassley's Prescription Pricing for the People Act, which would
    provide transparency about anticompetitive practices by PBMs.
    I'd be interested in whether I missed a compelling conversation
    about PBMs and their role in the marketplace. Dr. Feldman, if
    you would, do the existing PBM structures make any sense, in
    your view? And what role, if any, do they play in keeping
    prices unnaturally high for U.S. consumers?
        Dr. Feldman. Thank you for the question, Senator. The short
    answer to your question is, they make no sense. I think that
    the current PBM structures make no sense. We have a system that
    rewards these high rebates--so, high list prices, high rebates
    that ultimately affect out-of-pocket costs for patients, that--
    for folks who don't have insurance, they don't have access to
    these rebates. You have spread pricing, where PBMs are
    collecting more than they're actually charging the pharmacies;
    keeping the difference. So, I think there are a lot of problems
    with PBMs.
        There's fundamentally a lack of transparency that makes it
    very hard for researchers, like several of us up here, to do
    our work, because we don't know what the actual prices of these
    drugs cost. So, I think the bill out of your Committee--there
    are several bills that address bad behavior from PBMs; are
    important. I will say PBMs are negotiating discounts, and so
    whatever legislation you all pursue, you don't want it to
    undermine the ability to get discounts, but I'm in full
    agreement--to go back to--the very simple answer is, it is not
    a functioning system.
        Senator Coons. It's a very complex, multistep system, where
    the numbers of steps between innovation and manufacturing and
    price at the prescription counter has a whole series of steps.
    Last, I'm a co-sponsor of Senator Durbin's Interagency Patent
    Coordination and Improvement Act and could not agree more that
    better communication between FDA and PTO can help improve a
    patent examiner's finding of prior art.
        I agree with you, Professor. PTO needs to raise its fees in
    order to give examiners more time to do a more thorough job.
    Patent quality is something I would hope we all agree on. I'd
    just be interested in whether you think there's either other
    agencies the PTO director ought to be coordinating with or
    there's more we could do to improve collaboration between the
    PTO and the FDA. And I recognize I'm over my time.
        Professor Rai. So, yes to everything you're saying, and
    there's a laundry list of other agencies that the PTO could
    collaborate with, but since we're focused on drug pricing, I
    think FDA is the most important one.
        Senator Coons. Thank you. Thank you for this hearing.
        Senator Welch. Thank you.
        Senator Coons. I look forward to following up with you.
        Senator Welch. Thank you very much. Senator Ossoff.
        Senator Ossoff. Thank you, Mr. Chairman, and thank you to
    our panelists for joining us today. And, Professor Mossoff, we
    should perhaps determine whether we're distant cousins.
        [Laughter.]
        Senator Ossoff. I am grateful to you all for your
    expertise. Dr. Feldman, I want to discuss with you the prices
    that Georgians are paying for inhalers: children on Medicaid,
    seniors on Medicare, and everybody in between. First, I just
    want to note generally the prices that Georgians are paying for
    prescriptions are outrageous.
        The stories that come to me in my office are shocking, from
    a constituent who, right now, is having difficulty making ends
    meet and affording cancer treatment, who watched their own
    friend die from being unable to afford cancer treatment; a
    veteran in Georgia who right now is having to scrape together
    thousands of dollars per month in order to afford leukemia
    treatment; kids and seniors with asthma or COPD who are having
    to pay exorbitant prices for inhalers; medical devices across
    the board. And the tremendous lobbying power of the
    pharmaceutical industry is a major driver of the outrageous
    prices that Americans pay. And of course there's a balance that
    we have to strike between making sure that research and
    development and innovation are rewarded and the interests of
    patients and consumers, but this country is not getting the
    balance right.
        We made big progress, capping the cost of insulin for
    seniors on Medicare Part D at $35 a month, finally empowering
    Medicare to undertake some negotiation with Pharma over prices,
    but we have a long way to go. And let's talk for a moment, Dr.
    Feldman, about inhalers. And I know that some voluntary caps
    are now in place, but Medicare, Medicaid--still not
    participating in that. You've seen countless patients--you're a
    pulmonologist, correct?
        Dr. Feldman. That's right.
        Senator Ossoff. And so you've seen countless patients
    dealing with serious life-threatening asthma and COPD. Is that
    right?
        Dr. Feldman. That's correct.
        Senator Ossoff. How long have inhalers been on the market?
        Dr. Feldman. The first metered-dose inhaler was approved by
    the FDA in 1956.
        Senator Ossoff. 1956. In the last few decades, have the
    active ingredients in these devices substantially changed?
        Dr. Feldman. No. Since 1986, there have been no inhalers
    for asthma or COPD with a new mechanism of action. That means,
    of the dozens upon dozens of brand name inhalers that've been
    approved, not a single one has an active ingredient that is
    fundamentally different from other active ingredients in the
    same class.
        Senator Ossoff. For three and a half decades, you're
    saying, the active ingredients have been basically the same?
        Dr. Feldman. That's right. Some tweaks to the molecules
    where you get new active ingredients in--but in the same class,
    and so fundamentally no major breakthroughs in terms of
    managing these diseases, from inhalers.
        Senator Ossoff. So, why are so many Georgians and so many
    Americans still paying hundreds of dollars for these devices?
        Dr. Feldman. I think it comes back to really what we're
    focused on in this hearing today, which is these problematic
    patenting practices, product hops, where companies are taking
    decades-old active ingredients, getting patent protection for
    the delivery devices, for other aspects of the products, and it
    allows them to keep prices high by limiting generic
    competition.
        Senator Ossoff. So, product hopping or device hopping--just
    for the folks tuned in from Georgia, define that in a nutshell.
        Dr. Feldman. That's where you take the same ingredient or
    set of ingredients and put them from an old delivery device
    into a new delivery device that may be no better than the
    earlier one, but it does have new patents. So, it allows you to
    move people from an old device to a new device, if you're a
    brand name company, earn a lot more revenue by doing so but to
    no benefit for patients.
        Senator Ossoff. And so that patent, based upon no
    innovation of the underlying medicine, some nominal innovation
    of a device, then boxes out competitors, generics, and helps
    keep prices high, right?
        Dr. Feldman. That's exactly right.
        Senator Ossoff. Now, I do want to note some manufacturers
    have agreed to cap out-of-pocket costs for inhalers. Does that
    apply to Medicaid or Medicare?
        Dr. Feldman. It does not. Those caps do not apply to
    Medicare and Medicaid.
        Senator Ossoff. So, for a kid on PeachCare in Georgia; for
    a senior--and I think, according to my notes here, one in nine
    Medicare beneficiaries have COPD--those caps don't apply?
        Dr. Feldman. That's correct.
        Senator Ossoff. Where else do we see this practice of
    device hopping or product hopping?
        Dr. Feldman. We see it, really, for all drug device
    combinations. What are drug device combinations? Those include
    products like insulin pens, inhalers, EpiPens, GLP-1 receptor
    agonists, that Senator Welch was asking about. So, it seems
    like kind of a niche set of products, but in fact, if you look
    at the top 50 drugs by Medicare spending in 2022, by gross
    spending, 40 percent are actually drug device combinations.
        Senator Ossoff. Yes. Just about every family in Georgia has
    had to think, at some point, about--do I need to carry around
    an EpiPen for my child who has an allergy? Do I need to
    purchase an inhaler for my child with asthma or for a
    grandparent suffering from COPD? And yet these abusive
    practices, where there's not innovation on the underlying drug
    but there's some nominal change in the product, is boxing out
    competition and keeping prices high. And this is, Mr. Chairman,
    a place where I hope we can achieve some bipartisan consensus,
    to make progress for Georgians who are struggling for these
    basic medical products. Thank you, Dr. Feldman.
        Dr. Feldman. Thank you.
        Senator Welch. Senator Butler.
        Senator Butler. Thank you so much, Chairman, and thank you
    to all of you for coming. It's an incredibly important issue
    for Americans all over the country, particularly for folks
    living in my State, and so I appreciate all the work that you
    all are doing here. Couple questions, just really quickly.
        I think I want to direct this question, if it's okay, to
    you, Dr. Feldman. Across our country, many families are
    choosing now between putting food on the table and purchasing
    those lifesaving health care drugs and medication--all the
    things that we have been talking about throughout today's
    hearing--paying nearly three times as much on prescription
    drugs compared to families in peer countries. Dr. Feldman, as a
    physician, how have you seen high prescription drug costs not
    only impact patients but affect the livelihood and financial
    stability of the full family?
        Dr. Feldman. Thank you for that question. I have. You know,
    we often think about, as physicians, how these high out-of-
    pocket costs affect that patient. Are they going to take the
    medication? You know, I spend a lot of my time--when I'm
    practicing, I work in the medical intensive care unit. We
    admitted a patient recently who had diabetes and was there with
    DKA, diabetic ketoacidosis, which can be a fatal complication
    of not taking your insulin. I asked her what happened, and she
    said, I just couldn't afford my insulin. And I think as
    physicians we're laser focused on the problems for the patient,
    but there is no question that every dollar that is spent on
    those high out-of-pocket costs for patients mean a dollar less
    that they can spend on getting food, clothing for their kids,
    for their loved ones. So, I think it's an important point that
    we probably don't think enough about.
        Senator Butler. I appreciate you acknowledging it. You're
    right; there's lots of conversation among practitioners about
    the patient complying with the medication orders and managing
    their health. And the unintended consequences that making those
    choices have across the full family then also potential lead to
    the, you know, young person not being able to sort of have the
    resources to meet their sort of full impact in life. So, I
    appreciate you talking about it. Are there particular
    populations that you think that are disproportionately touched
    by these kinds of financial burdens, just in the patient
    population that you've seen or experienced that we need to be
    thinking about specifically?
        Dr. Feldman. All of the issues that we're talking about
    today have disproportionate effects on the most disadvantaged
    members of our society. Where do we see the highest rates of
    asthma, of COPD, of diabetes? It's in already disadvantaged
    groups of patients. And I think a big motivation for my work is
    trying to address these problems, to resolve some of these
    disparities. You know, we've talked a lot about different
    proposals. It can feel very lofty, a lot of these conversations
    we're having about the patent system. At the end of the day,
    we're talking about expensive medications for people who can't
    afford them and it disproportionately hurting certain members
    of our society in ways that I think are problematic.
        Senator Butler. And this is a line of questioning that I
    wanted to get to, because I do think that there are a lot of--
    there's a lot of complexity, as was noted in the first
    witness's offerings. There's a lot of complexity to the systems
    and the laws, as we're--and consequences, intentional and
    unintentional, around the bureaucracy, and so often we can lose
    sight of the people, as we try to navigate the morass of the
    process. And so I wanted to make sure that, for those who are
    taking, you know, an hour to watch C-SPAN, whose issue--but
    whose lives are very much impacted by the cost of medication--
    that we give them an opportunity to remind ourselves that, at
    the end of the day, this is about the American people as
    opposed to the complexity of the process. And so if there was
    one patient that you could offer their story for consideration,
    I'd love to give you my last 10 seconds to talk about and offer
    that one story.
        Dr. Feldman. Yes. You know, I'm thinking about a patient
    that I saw when I was a fellow in pulmonary medicine. And, you
    know, it's hard to talk about costs with patients. A lot of
    patients are embarrassed. People don't want to talk about the
    fact that they can't afford their medications. But I remember
    talking with her, and rather than using inhalers, which are
    more convenient, which she could not afford, she was using--
    cobbling together therapies via a nebulizer, which is not
    something we've talked about, but it's basically where the
    ingredients are sold separately. And they can work, but it
    just--her story sticks out in my mind because, Number one, it
    was hard for her to talk about; Number two, she couldn't use
    the medications that we prescribed. She had to use a medication
    that takes longer to administer; you have to do it at home.
        And, you know, it's exactly like I was saying before. The
    most disadvantaged members of society are the ones who are
    affected by these patent games. I think if we want to address
    racial disparities, socioeconomic disparities, we have a lot to
    do in this country, but everything we're talking about here
    today is a way of doing that.
        Senator Butler. Thank you, Mr. Chairman.
        Senator Welch. Senator Klobuchar.
        Senator Klobuchar. Thank you very much, Mr. Chair, and
    thank you for the work that we've done together on the
    negotiation--Medicare prices. We're so pleased. I was hearing
    you talk, Mr. Mitchell, about Eliquis, one of the drugs, as you
    know, that's now being negotiated, of the ten blockbusters,
    with many more to come.
        I want to start, though, with one of the issues--a bill
    that still hasn't passed, that Senator Grassley and I have been
    working on for a really long time, which I know he mentioned,
    pay-for-delay. And as you know, Mr. Mitchell, anticompetitive
    pay-for-delay settlement, where a branded Pharma company pays
    off a generic or biosimilar company to delay the introduction
    of the competing drug product, is, sadly, a common practice.
    Our bill--it's called Preserve Access to Affordable Generics
    and Biosimilars Act--strikes a balance between targeting
    anticompetitive settlements while allowing procompetitive
    patent settlements to proceed and saving an estimated 1.6
    billion--1.6 billion--over 10 years. Mr. Mitchell, you
    mentioned the drug that you depend on, Revlimid, that was
    caught up in a pay-for-delay settlement, as I understand. How
    did that affect the cost of the drug for you personally? How do
    pay-for-delay deals keep the cost of prescription drugs high
    for patients, generally?
        Mr. Mitchell. I took Revlimid for five and a half years,
    and during the time I took the drug, both the price--underlying
    price--and my out-of-pocket rose dramatically. By the way,
    Revlimid was the second-most expensive drug for Medicare, until
    it began to have competition in the last year--to treat only
    39,000 patients: the second-most expensive drug for Medicare,
    at $5.4 billion.
        When the drug company that owns the patent decided to let
    competition come on the market, it limited the generics to a
    lower market share, 10 percent each for the first two
    competitors. If you have a limited market share as part of the
    deal, you will not lower your price because you cannot gain
    market share. What happens then is the brand drug company and
    the two generics, in the case of Revlimid, shared the monopoly,
    and the price didn't come down. This is a pay-for-delay deal.
    This is making an arrangement to say, we won't fight you in
    court; instead, we'll give you a market share limited deal, and
    you will make a whole lot of money for a few years while we
    delay real competition.
        Senator Klobuchar. Very good description. Thank you.
    Turning to another issue that has been discussed today--that's
    sham FDA petitions. Dr. Feldman, this practice risks delaying
    the approval of generic drugs and biosimilars and poses
    unnecessary burdens on FDA resources, to add to everything
    else, when they have so much to do. Senator Grassley, again,
    and I introduced a bill, the Stop STALLING Act, to give the FTC
    enhanced authority to crack down on abuses of this process,
    while allowing petitions submitted in good faith to raise
    legitimate health and safety concerns. CBO estimates that the
    bill would save taxpayers 400 million over 10 years. As you
    know, both of these bills have gone through this Committee on a
    voice vote. Which types of entities file the majority of
    citizen petitions challenging FDA approval of generic or
    biosimilars, Dr. Feldman?
        Dr. Feldman. Brand name drug companies.
        Senator Klobuchar. Okay. And can you elaborate on the harms
    to patients and competition caused when Pharma companies use a
    citizen petition process to delay entry of competing drugs?
        Dr. Feldman. Yes.
        Senator Klobuchar. I just find it ironic, indeed, when it's
    a citizen petition process, and the citizens are getting
    screwed by it, but continue on.
        Dr. Feldman. I have felt that same irony, myself. So, first
    of all, we should say that companies are doing this because
    every day of delay for some of these blockbuster drugs can be
    worth millions or tens of millions of dollars for the company.
    So, there's a strong incentive to do this. And basically what
    happens is the brand name pharmas will wait until the right
    moment to put a question to the FDA to request that they not
    approve a generic medication. And it slows things down. And
    every day that we slow things down is more revenue for the
    brand name manufacturers, but it's one less day that patients
    get access to generic drugs. And we know that generic drugs are
    the number one way to lower prices in this country. It is a way
    to bring down costs for patients. So, I think it's a good bill,
    and as you said, these are not citizen petitions. They are put
    out there by the companies for economic gain.
        Senator Klobuchar. Last, Professor Rai, the price of 25
    brand name medications that Medicare spends the most on--some
    of which are negotiated, of course, right now or in
    negotiations--have, on average, tripled in price since they hit
    the market. You have written that Medicare price negotiations
    will promote the entry of new drugs by reducing the incentives
    for brand drug companies to engage in anticompetitive patent
    strategies that can allow for these price increases.
        So, this is kind of where our Medicare negotiations, that
    is almost an outcome of all of this bad activity, sort of hits
    the road and combines with this patent problem. How will
    requiring drug companies to negotiate prices with Medicare--as
    I said, with more on the road--despite lawsuits going on right
    now all over the country to try to stop us, which seems
    unbelievable to me, given that Congress is the one that made
    the deal, and Congress can change a deal--how will requiring
    drug companies to negotiate prices with Medicare deter Pharma
    companies from playing patent life-cycle games to preserve high
    prices and facilitate entry of competitors and further reduce
    prices?
        Professor Rai. So, I think the Inflation Reduction Act is
    one of the most important patent reforms of the 21st Century,
    and the reason is this. It finally places a time limit, at
    least for Medicare, on how long you can extend an old drug,
    which means that you have to come up with new drugs, truly new
    drugs. And that is a game changer, it seems to me, and I wish
    it was only--more than ten drugs, and it is increasing,
    fortunately, but I think that's how it spurs innovation. And
    Dr. Feldman noted this, as well, or Mr. Mitchell noted this
    point, as well--that it spurs innovation, to prevent patent
    abuse.
        Senator Klobuchar. Very good. Thank you. I'll turn it back
    to the Chair.
        Senator Welch. Thank you. Thank you very much, Senator
    Klobuchar. Senator Tillis.
        Senator Tillis. Thank you, Mr. Chairman. And I apologize
    for not being here sooner. I am under the weather. I have
    tested; I do not have COVID. But I wanted to make sure the room
    was cleared before I came in to speak, but this is clearly a
    hearing I needed to come to, based on the work that we do on
    the Intellectual Property Subcommittee. I have been watching
    the hearing. I want to associate myself with the comments from
    my Chair and colleague on the Intellectual Property
    Subcommittee, Senator Coons. I am a really boring person,
    because I really try to do my best to not be sensational, to be
    fact based, to drive my decisions. It's one of the reasons why
    I'm shocked that I've actually won the elections that I've run,
    because I tend to want to get into the nitty, gritty details.
        So, I'm only going to spend a few minutes, and then
    hopefully--do you need to get that? Kidding. He's my staff. I
    want to talk--Number one, the Inflation Reduction Act was
    heralded as a great thing. There're actually some good things
    in the Inflation Reduction Act. I don't necessarily hear a lot
    of people lauding the fact that we've had a double-digit
    reduction in small molecule research, and we've actually even
    had board meetings where investors have been told, we're de-
    emphasizing this. Does anybody disagree that the Inflation
    Reduction Act--the decisions in there around drug pricing--does
    anybody think that there isn't a nexus between that and the
    reduction in small molecule research? And of course I'm going
    to first go to the person who's from North Carolina here.
    Professor?
        Professor Rai. So, thank you for that question. I'm so glad
    you followed-on from Senator Klobuchar on that question. I
    believe that small molecules need greater incentives, and the
    way to do that is to establish parity between small molecules--
    --
        Senator Tillis. Okay. I understand that, but----
        Professor Rai [continuing]. And biologics.
        Senator Tillis [continuing]. I'm getting to the fundamental
    question: Do you agree or disagree that there appears to be a
    nexus between the well intentioned drug pricing policies in the
    Inflation Reduction Act and a reduction in investment in small
    molecule research?
        Professor Rai. So, I have no idea why the IRA----
        Senator Tillis. Yes.
        Professor Rai [continuing]. Limited small molecule----
        Senator Tillis. Mr. Mossoff, could----
        Professor Rai [continuing]. To 9 years----
        Senator Tillis [continuing]. You opine on that?
        Professor Rai [continuing]. Versus 13 years for biologics.
        Professor Mossoff. I think it makes complete sense that if
    you impose what is essentially effectively a price control
    system----
        Senator Tillis. Yes.
        Professor Mossoff [continuing]. On the sale of drugs, that
    price controls destroy and undermine----
        Senator Tillis. Yes.
        Professor Mossoff [continuing]. Markets. This is well
    established in economics.
        Senator Tillis. Could I ask a more--Ms. Ulrich, can--we saw
    drug prices listed here, and they're unacceptably high, but is
    that a drug price that was set by the pharmaceutical company,
    or is that what happens through the sausage meal value chain
    that starts with an investigational--a promising compound, an
    investigational new drug, clinical trial monitoring,
    manufacturing, pharmacy benefit managers, insurance companies,
    doctors, and a patient? Which one of those is true? A big, bad
    pharmaceutical company sets their price, or that whole sausage
    factory occurs before you know what the price is?
        Ms. Ulrich. Well, thank you, Senator Tillis. We would agree
    that there is a large sausage-making process, but largely----
        Senator Tillis. So, if you want----
        Ms. Ulrich [continuing]. It's composed by PBMs.
        Senator Tillis [continuing]. The sausage to taste
    differently, you've got to have all the components in the----
        Ms. Ulrich. That's right.
        Senator Tillis [continuing]. Value chain at the table,
    right?
        Ms. Ulrich. That's right.
        Senator Tillis. Right. So, how on earth can we give a pass
    to the pharmacy benefit managers, when we're taking a look at
    the end price of a drug and try to figure out why it costs what
    it costs? Right? Now, the other thing--and Mr. Mitchell, I wish
    you the very best. You've got a more aggressive disease, but I
    too have an incurable, potentially fatal disease that I don't
    have to manage with drugs now, but I understand a modicum of
    what you're going through, and I'm sure it must be challenging
    for you and your family.
        But I do believe that there was a point made here that's
    very important: The price of that drug, through your health
    care system, that's not available in a formulary in other
    countries, is zero, and the reason for that is because you
    can't get the drug. Now, I know your answer to that question--
    that there are certain jurisdictions where you do have access
    to it, but there are some where you don't. Again, trying to get
    back to the facts, folks--we can't say we want to be just like
    fill-in-the-blank country, if fill-in-the-blank country doesn't
    give you that option through their single-payer health system.
        Mr. Mitchell. I think----
        Senator Tillis. Then you come here.
        Mr. Mitchell [continuing]. Senator Tillis--to remember that
    we use formularies in this country.
        Senator Tillis. Yes.
        Mr. Mitchell. Most employer-provided plans use formularies.
    The VA uses a formulary.
        Senator Tillis. I agree.
        Mr. Mitchell. And so it's----
        Senator Tillis. I'm getting more to the--I think we're
    being simplistic when we say we want to be just like fill-in-
    the-blank. If we want to be just like fill-in-the-blank, then
    let's have our litigation systems just like other countries;
    let's have medical malpractice policies very similar. There are
    so many things that make us dissimilar that we've just got to
    be realistic about how far we're willing to go.
        But more importantly--I've been here for 10 years. The
    substance of this hearing is not materially different than the
    substance of hearings that I had in my first Congress here. So,
    why is it--you all make great points, and I agree with a lot of
    what you say. I agree, with qualifications, on other ones. I
    wanted to talk about the I-MAK, for example, Professor Mossoff.
    I'm not going to go too far over my time; I know I'm extending
    the hearing. But just getting data from the I-MAK, to a point--
    I'm trying to get the U.S. PTO and the FDA just to take that
    information, distill it into something meaningful, because I
    believe today--and, Professor, I think we may disagree--that
    people are using it conveniently to build their case.
        But look, folks, I've been here for 10 years, now. We're
    not making progress. If anything, we've taken steps back
    because of well-intentioned provisions in the Inflation
    Reduction Act. We at least know that we are reducing incentives
    to invest and take risk. The majority of these projects, like--
    I was in the tech space, so we knew that when we made a--well,
    I was in research and development. So, we knew that the
    majority of the ones that we're going forward with were going
    to be successful. It was just a technological change for, you
    know, products that we were going to make commercially
    available. Some of these things are billion-dollar investments
    that get put on ice after a while. I'm thinking about the much
    publicized Alzheimer's drug.
        I don't want to reduce innovation in this country, because
    people's lives are in the balance. Potentially a cure for the
    disease that you're going through; a cure for the disease that
    I'm challenged with--and so I feel very, very strongly that we
    need to stop talking past each other, finding one link in the
    value chain that we naively think is the way you solve this
    problem, and all agree that there are ways to increase
    availability and decrease the cost of prescription drugs--but
    it's not the simplistic approach to take in only one link in
    the chain at a time. And I would love, Mr. Chair, to find a
    damned drug that I could put up there that everybody is
    demonizing and start from the beginning, the entire investment,
    the whole history of the patent protection for that drug, the
    end user price, so that we could really start getting past
    these lovely discussions we have, once a Congress, maybe twice
    a Congress, and into something meaningful that helps the
    patient, who is the only person I care about: how we can save
    more of you, how we can do it on a more affordable basis.
        And we've got to start getting people to stop talking past
    each other, to get it done, or, Mr. Chair, I look forward to
    the next Congress having a hearing that's substantially the
    same information with substantially no progress. We've only
    taken steps back in the 10-years that I've been here. We
    haven't really made major leaps forward. Thank you, Mr. Chair.
        Senator Welch. Thank you. Senator Booker.
        Senator Booker. I want to thank the panelists for being
    here today. I really appreciated your testimony and the common-
    sense input that you had. Mr. Mitchell, I was really moved by
    your testimony, frankly, because it's testimony I hear all the
    time, everywhere I go. About half of Americans take at least
    one prescription drug. For seniors, it's upwards of 80 percent
    of seniors are taking a prescription drug. And it is outrageous
    that about a quarter of Americans really have a difficult time
    affording those drugs, often for critical, lifesaving needs.
        I am stunned that we live in a world where the same drug
    can be sold, you know, two to four times higher. That means
    Americans are often paying four times as much. And it is
    stunning, when I hear people telling me what they do to cope.
    They delay refills. They ration their drugs. They are just
    forgoing taking the drugs. And what's fascinating to me is most
    people don't understand this often creates higher costs within
    our system.
        When a diabetic goes into diabetic shock, I know what
    that's like, because being a mayor, having a lot of my people
    end up in hospital emergency rooms because they were reducing
    their drug--they were rationing their insulin drug costs and
    ending up in a hospital emergency room, driving up the costs of
    our health care system. It is so outrageous to live in a nation
    that is the wealthiest nation on the planet Earth and have so
    many Americans suffering daily, making the most difficult
    decisions between paying rent, kids' tuition, food on the
    table, or taking their prescription drug.
        Now, I disagree with my colleague, because we've actually
    done some good things. The Biden administration has allowed
    Medicare to be able to negotiate prices for the first time.
    Insulin--I was just down in South Carolina, getting wild
    applause when we reminded people that the President and this
    Congress have capped insulin costs at $35 for people on
    Medicare. And for me, I was talking to a predominantly African-
    American audience. Blacks are twice as likely than white
    Americans to forgo taking a prescription drug that they need.
    And next year, out-of-pocket costs for Medicare Part D will be
    capped at $2,000.
        So, I don't think we're wasting our time here, but I'm very
    frustrated to see how much lobbying money comes down here to
    try to stop us from doing things that are common sense. We can
    balance being the innovation capital of the world and having
    affordable prescription drugs for Americans. These are not
    counter. But right now I see games being played, gross profits
    being made because people are working the system. This is why
    I've introduced legislation that I've written, co-written; I've
    joined colleagues.
        We're about to reintroduce the Prescription Drug
    Affordability and Access Act in the coming months. Last
    Congress, I joined Senator Sanders and Senator Casey to
    introduce the Affordable and Safe Prescription Drug Importation
    Act. I'm proud to have joined my colleagues on this Committee,
    Senators Grassley and Klobuchar, on their Preserve Access to
    Affordable Generics and Biosimilars Act and the Stop STALLING
    Act. These are common-sense pieces of legislation that can make
    an extraordinarily big difference.
        I cannot tell you, Mr. Mitchell, how frustratingly common
    it is for me to be grabbed by somebody, when I'm out and about
    in multiple States, for them to tell me their stories. When I
    ran for President, I had people bring to me their bills, to
    show me what they were paying out of pocket. And then I'll
    never forget, in New Hampshire, the same person showing me
    their salary and explaining to me why they're putting their
    health in danger every single month because it does not add up.
        And so, Mr. Chairman, I know I'm spending more of my time
    speaking now, but when I read the testimonies and listened to
    some of the testimoneys today, there are just common-sense
    things that we could do to relieve this pressure, to save
    lives, to keep people out of emergency rooms, to keep families
    together and healthy. I just want to say, for the conclusion,
    the question Ms. Rai--and, Professor, I'm pronouncing that
    right? Rai?
        Professor Rai. No, Rai.
        Senator Booker. Rai. I thought I had it right.
        Professor Rai. You got it right. Yes.
        Senator Booker. Thank you. Ms. Rai. Like, I really think
    that President Biden is being an extraordinary actor in this
    space, and they're in the process, the Biden administration, of
    finalizing a proposed framework for exercising march-in rights
    on government-funded inventions, including prescription drugs
    that are priced out of reach for patients, despite having been
    invented at public universities, with public money, Federal
    grants, taxpayer dollars.
        And that's the thing that often frustrates me the most,
    because taxpayers are investing in these inventions, and then
    they're paying--they get no discount. They get no big--because
    of our country, but then they look at other nations, and these
    drugs that we invented, with our taxpayer dollars, are so much
    lower. So, I just want to hear your thoughts on this framework
    and on the prospect of the Biden administration using these
    rights to license generic competition on drugs that are priced
    two or three times, or more, than prices drug corporations
    charge in our peer nations.
        Professor Rai. So, I'm glad you asked that question. Thank
    you, Senator Booker. I think the NIST guidance is actually much
    more careful and modest than some of the critics would have it
    be. It's very carefully designed to target situations of price
    gouging, essentially, not the situations that have been
    discussed earlier, where, you know, for example, you need
    recoupment of your R&D costs for something legitimate, but
    rather situations of the sort where there is price gouging
    going on. And the NIST guidance is very careful to say price is
    a factor to consider. And agencies, just to be clear, have
    never used march-in rights. They've had march-in rights from
    the beginning. NIST has had march-in rights from the beginning;
    never been used. This is just a gentle nudge to suggest that
    sometimes, just sometimes, price could be a factor.
        Senator Booker. Thank you. And I'm just going to say,
    because there's an elephant in this room that we have not
    talked about, politicians--Senators and Congresspeople--should
    not be taking campaign contributions from industries that we
    regulate. It just shouldn't.
        I think I was the fourth Senator to say, no corporate PAC
    dollars; no Pharma C-suite money; no oil company money. I
    really think there's a problem in this institution with
    corporations coming here and throwing millions, if not hundreds
    of millions, of dollars into campaign war chests; and Citizens
    United, which allows dark money to be spent without any
    accountability or transparency--to not think that this is a
    major part of this problem and that we should pass laws to
    prevent that, or everyone should take a similar pledge--I
    really think that is an inhibitor to solving problems that have
    so frustrated Americans for so long and that seem to have
    such--as some of the commentary here--such obvious solutions,
    to drive down prices. Mr. Chairman, thank you for the latitude.
        Senator Welch. Thank you, Senator Booker. I want to thank
    the witnesses. You know, one of the extraordinary opportunities
    you have in this job is to hear from people like you, who have
    spent your careers studying things that are hard to learn
    about, and you shared that information with us, and hopefully
    it'll result in some action. But I just want to express my
    gratitude to each of you for the commitment you've made in your
    lives to, really, public service research and work.
        The hearing record will remain open for 1 week, for
    statements to be submitted to the record, and questions for the
    record may be submitted by Senators by 5 p.m. on Tuesday, May
    28.
        Senator Welch. Thank you all very much, and the hearing is
    adjourned.
        [Whereupon, at 12:11 p.m., the hearing was adjourned.]
        [Additional material submitted for the record follows.]

                                A P P E N D I X

    Submitted by Chair Durbin:

     Association for Accessible Medicines (AAM), Skinny Labeling,
        statement.....................................................   165

     Bayh-Dole Coalition, Examining Competition in the Prescription
        Drug Market...................................................   167

     Campaign for Sustainable Rx Pricing (CSRxP), statement...........   170

     Carrier, Michael A., Rutgers Law School, statement...............   176

     Conservatives for Property Rights (CPR), statement...............   179

     Council for Innovation Promotion (C4IP), Drug Prices.............   182

     Families USA, statement..........................................   186

     Generation Patient, statement....................................   191

     Incubate, statement..............................................   193

     National Association of Manufacturers (NAM), statement...........   195

     Tax Payer Protection Alliance (TPA), Prescription Drugs,
        statement.....................................................   198

     Tu, S. Sean, West Virginia University College, statement.........   200

    Submitted by Senator Coons:

     National Association of Manufacturers (NAM), statement...........   195

    Submitted by Senator Tillis:

     Conservatives for Property Rights (CPR), statement...............   179

     Eagle Forum Education & Legal Defense Fund, statement............   202

     U.S. Startups and Inventors for Jobs (USIJ), Drug Pricing,
        statement.....................................................   204

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

                                     [all]