[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
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HEARING
BEFORE THE
COMMITTEE ON THE JUDICIARY
UNITED STATES SENATE
ONE HUNDRED EIGHTEENTH CONGRESS
SECOND SESSION
__________
MAY 21, 2024
__________
Serial No. J-118-66
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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
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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
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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
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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
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