    [Senate Hearing 118-702]
    [From the U.S. Government Publishing Office]

                                                            S. Hrg. 118-702

                       REDUCING PRESCRIPTION DRUG PRICES:
                            HOW COMPETITION CAN MAKE
                      MEDICATIONS AFFORDABLE FOR PATIENTS

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

                                    HEARING

                                   before the

                           COMMITTEE ON THE JUDICIARY
                              UNITED STATES SENATE

                        ONE HUNDRED EIGHTEENTH CONGRESS

                                 SECOND SESSION

                                   __________

                                OCTOBER 29, 2024

                                   __________

                               CHICAGO, ILLINOIS

                                   __________

                              Serial No. J-118-82

                                   __________

             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

    61-373                    WASHINGTON : 2026

                           COMMITTEE ON THE JUDICIARY

                       RICHARD J. DURBIN, Illinois, Chair

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

                 Joseph Zogby, Chief Counsel and Staff Director
          Katherine Nikas, Republican Chief Counsel and Staff Director

                                C O N T E N T S

                                  ----------

                               OPENING STATEMENTS

                                                                       Page

    Durbin, Hon. Richard J...........................................     1

                                   WITNESSES

    Davis, Hon. Danny K., U.S. Representative from Illinois..........     3
    Schakowsky, Hon. Jan, U.S. Representative from Illinois..........     4
    Foster, Hon. Bill, U.S. Representative from Illinois.............     6
    Krishnamoorthi, Hon. Raja, U.S. Representative from Illinois.....     8
    Casten, Hon. Sean, U.S. Representative from Illinois.............     9
    Garcia, Hon. Jesus G. ``Chuy,'' U.S. Representative from Illinois    11
    Ramirez, Hon. Delia C., U.S. Representative from Illinois........    12
    Brandt, Deanna...................................................    23
        Prepared statement...........................................    35
    Douglas, Anthony D., II..........................................    19
        Prepared statement...........................................    37
    Raoul, Kwame.....................................................    15
        Prepared statement...........................................    39
    Sachs, Rachel E..................................................    17
        Prepared statement...........................................    43
    Sandsmark, Michael A.............................................    21
        Prepared statement...........................................    60

                                    APPENDIX

    Items submitted for the record...................................    63

                       REDUCING PRESCRIPTION DRUG PRICES:
                            HOW COMPETITION CAN MAKE
                      MEDICATIONS AFFORDABLE FOR PATIENTS

                                  ----------

                           TUESDAY, OCTOBER 29, 2024

                                  United States Senate,
                                    Committee on the Judiciary,
                                                           Chicago, IL.
        The Committee met, pursuant to notice at 10 a.m., in
    Everett McKinley Dirksen United States Courthouse in Chicago,
    Illinois, Hon. Richard J. Durbin, Chair of the Committee,
    presiding.
        Present: Senators Durbin [presiding].
        Also present: Representatives Davis, Schakowsky, Foster,
    Krishnamoorthi, Casten, Garcia, and Ramirez.

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

        Chair Durbin. I just want to thank the judges, the clerks
    of the court martial service, and all the staff and personnel
    for today's hearing at the Dirksen Federal Courthouse.
        Today, the Committee will examine an issue on lives of many
    people in Illinois and across the country; the high price of
    prescription drugs. It is a scandalous situation in America.
    People in the United States pay the highest prescription drug
    prices in the world. On average, four times more than people in
    similar countries pay for brand name medications.
        For example, a well-known blood thinner, Eliquis, entered
    the market in 2013, 11 years ago, and it cost $3,100 annually
    in the United States. Same drug made by the same company for
    sale in Japan was not $3,100, it was $1,000. And over the past
    decade, the price in the United States has more than doubled
    from $3,100 to $7,100. Meanwhile, in Japan, the price has
    dropped. Same drug, same company.
        Why? For years, Big Pharma has abused our patent system to
    obtain monopolies and medications so they can charge these sky-
    high prices. At the same time, they spend billions of dollars
    to fill the airwaves with ads. So, patients tell their doctors
    they need drugs like Eliquis, so they can go skiing, fishing,
    white water rafting. By fueling demand for expensive
    medications that are walled off from competition by clever
    patent schemes, Big Pharma has made American patients their
    profit engine.
        Thankfully, this administration and Democrats in Congress
    decided to do something about it. In 2022, Congress passed and
    President signed the Inflation Reduction Act. Not one single
    Republican voted for it. Under this law, we have capped the
    price of insulin at $35 a month, saving 50,000 seniors in
    Illinois about $500 a year. We have made vaccines under
    Medicare free.
        When shingles or RSV vaccines can cost up to $300 a dose,
    this change creates real savings for 1.4 million seniors in
    Illinois. Starting in January, there'll be a $2,000 annual cap
    on out-of-pocket costs for seniors. Meaning, no matter how
    expensive your medications are, you will not pay more than
    $2,000 in copay.
        I want to show you a chart. In August, the Biden/Harris
    Administration started negotiating with Big Pharma, to lower
    prices for 10 of the most expensive drugs under Medicare,
    resulting in price savings of up to 79 percent. I know it's
    impossible to read, trust me, that's what it says.
        [Poster is displayed.]
        [Laughter.]
        As a result of this negotiation, 9 million seniors will
    save a total of $1.5 billion in annual out-of-pocket costs,
    including nearly 300,000 seniors in Illinois who take one of
    these 10 drugs. Remember Eliquis, the one I talked about
    earlier? Thanks to this new law, Medicare was able to
    permanently cut its price in half, taking nearly $300 off the
    monthly price tag for more than 100,000 seniors in our State.
    This is just the beginning. Next year, Medicare will negotiate
    to lower prices for another 15 drugs, and 20 in the year after
    that.
        But just as these historic savings are starting to take
    effect, there are great threats to their progress. Eight
    pharmaceutical companies raced to Federal courthouses to stop
    the price negotiation. And former President Trump and his
    Republican allies want to repeal this provision altogether.
        In this Committee, we often hear cries that these reforms
    will freeze innovation because the high cost of research and
    development for new drugs justifies these astronomical prices.
    That's the former argument. But these critics failed to mention
    that taxpayer-funded new research at the National Institutes of
    Health benefited 99 percent of all drugs approved by the FDA in
    the last decade. In other words, our tax dollars being spent by
    the National Institutes of Health are establishing the research
    necessary to develop these drugs.
        They also fail to mention that many pharmaceutical
    companies spend more on sales and marketing than they do on
    research and development. Too often, the prices Big Pharma
    charges do not reflect scientific breakthroughs, but rather
    manipulation by lawyers and marketers. In fact, the top 10
    bestselling drugs in 2021 were covered by an average of 42
    active patents that block competition and create windfall
    profits.
        The Judiciary Committee has taken a leading role in
    addressing Big Pharma schemes. Last year, the Committee
    unanimously reported five bipartisan bills that address these
    anti-competitive tactics. This includes my bill with Senator
    Tillis, Republican, of North Carolina, to improve information
    sharing between the FDA and the patent office to prevent
    gamesmanship. Congress needs to pass these bills into law.
        Drugs are not effective in treating disease if a patient
    can't afford to buy them. Our hearing today will explore how
    legislation like IRA and the Judiciary Committee bills will
    help ensure patient access to lifesaving medications.
        Let me lay out the mechanics for today's hearings. I'm
    joined today by seven members of the Illinois congressional
    delegation. Some arriving a little late with early morning
    appointments in other places, but I'm glad you're here. I have
    first recognized them to give brief statements. After we hear
    from our House colleagues, we will turn to our outside witness
    panel. After I introduce and swear in the witnesses, each
    witness has a 5-minute opening statement, and then we'll have
    questions and answers.
        I'll now turn to our first panel. I will call my colleagues
    from Congress in order of seniority unless they are late in
    arriving due to scheduling conflicts. But the first was here
    early, and I will welcome him. Congressman Danny K. Davis, you
    may make an opening statement if you wish.

                   STATEMENT OF HON. DANNY K. DAVIS,
          UNITED STATES REPRESENTATIVE (IL-07), WASHINGTON, DC

        Representative Davis. Thank you, Mr. Chairman, Senator
    Durbin, and Ranking Member, Senator Graham, and Members of the
    Judiciary Committee. Let me, first of all, thank you for
    holding this field hearing to discuss an important issue to my
    constituents and the Nation about prescription drug prices.
        Back in 2010 when our Nation did not have affordable
    insurance plans for the poor and the needy, my colleagues and I
    on the Committee of Ways and Means, Energy and Commerce,
    Education and Workforce, and others in the House, helped
    produce legislation for President Barack Obama to sign into law
    on March 23, the Affordable Care Act that overhauled the U.S.
    healthcare system.
        Healthcare reform is not health insurance, but a law that
    made changes to the insurance system to allow many uninsured,
    underinsured, and employer-based insured individuals to receive
    at least 10 essential health benefits in their planned
    coverages. The historic ACA reduced the number of uninsured
    Americans by more than 20 million, extended critical consumer
    protections to more than 100 million individuals strengthened
    our health system by lowering the cost and requiring all
    marketplace insurance plans to cover treatment for preexisting
    medical conditions that affects up to 129 million Americans.
        The ACA is a good first step and framework to strengthen
    and improve our healthcare system that we can build upon
    through future policy initiatives to provide greater access,
    quality services, and lower cost drugs to underserved and needy
    Americans throughout our country.
        This law staged our reform efforts to alter and change
    prescription drug accessibility and affordability, especially
    when we are confronted with drug manufacturers and pharmacy
    benefit managers who are producing certain medications and
    managing prescription drug benefits on behalf of insurers that
    cost too much money.
        One of those policy initiatives I'm talking about is the
    Build Back Better Act, where my colleagues and I developed a
    legislative language with respect to high priced drugs that are
    included in the Inflation Reduction Act that President Biden
    and Vice-President Harris managed and signed into law on August
    16, 2022.
        Through the IRA, we legislated brought changes to Medicare
    prescription drugs coverage and specific changes to Medicaid,
    the State Children's Health Insurance Coverage Program, CHIP,
    and private health insurance. It requires Secretary Becerra of
    Health and Human Services to negotiate prices for certain
    prescription drugs covered under Medicare, Part B, physician-
    administered drugs, and part D, retail prescription drugs.
        By law, he is required to negotiate maximum fair prices
    with 10 different drug producers for 2026 and increase to 15
    drugs for 2027 and 2028, and 20 drugs for 2029 and each
    following year. It is important that Medicare continue to
    negotiate low prices on behalf of the American people.
        Historically, negotiating prices will not limit companies'
    innovation and development of better medications and cures for
    the American people. The Inflation Reduction Act through the
    leadership of President Biden, Vice-President Harris, and
    Democrats in Congress took on Big Pharma and won a decade long
    battle to lower the cost for millions of seniors with new
    benefits that cap a $35 monthly out-of-pocket cost for insulin
    for 4 million Americans on Medicare who use it, three singles
    and other essential vaccinations, $2,000 out-of-pocket caps on
    prescriptions drugs to get it in 2025. That would save 19
    million Americans an average of $400 each year in protections
    from drug company price hikes.
        Additionally, the IRA companies now must pay Medicare or
    rebate if their prices rise faster than inflation. From 2019 to
    2020, half of all drugs covered by Medicare had prices rise
    faster. In the State of Illinois, 59,718 Illinoisans on
    Medicare who use insulin are now saving on average $519
    annually, thanks to the $35 per month insulin cap. 275,956
    Illinoisans are saving an average of $542 on monthly insurance
    premiums. For the State of Illinois, 597,880 Illinoisans are
    saving an average of $432.70 thanks to the inflation reduction
    tax, $2,000 annual out of pocket cost cap effective in 2025.
        I thank you, Mr. Chairman, for this hearing, and yield back
    the balance of my time.
        Chair Durbin. Thanks, Congressman Davis. Appreciate your
    attendance and your testimony. I know you all been wondering,
    I've just put on the record, I had a bowl of cereal this
    morning for breakfast. Before I poured the milk on the cereal.
    I checked the expiration date on the product and it was okay.
        Why is there an expiration date on dairy products? The next
    witness is responsible for it. She led the consumer effort to
    put expiration dates on dairy products as a mom and as an
    activist, and led her to a career in government. She is the
    ultimate voice in our delegation when it comes to consumer
    protection, and it's my honor to recognize my colleague,
    Congresswoman Schakowsky.

                   STATEMENT OF HON. JAN SCHAKOWSKY,
          UNITED STATES REPRESENTATIVE (IL-09), WASHINGTON, DC

        Representative Schakowsky. Well, thank you so much, Senator
    Durbin, and for having this hearing today. It's so incredibly
    important.
        I agree with everything that you said and what my colleague
    has said, but it's never said enough. And I want to say that in
    2020, 5 of the largest pharmaceutical companies made in
    profits, $80 billion. This is larger than any other company in
    the United States of America, Big Tech, or any other
    organization. They made more money.
        And yet, Americans are paying twice to three times as much
    for pharmaceuticals, the exact same pharmaceuticals that are
    available around the world. I mean, I think that the American
    consumer is really viewed as kind of a chump by the
    pharmaceutical industry. I am very, very concerned about the
    kinds of activities that Big Pharma has done to make sure that
    they protect their own profits.
        We saw during the pandemic that Big Pharma refused to let
    countries around the world develop their own pharmaceuticals
    for the Covid vaccine. They said, no, we want to make sure that
    you can't get any of the information in order to be able to
    produce your own. So, I think that the fact that many people
    died around the world, that the pharmaceutical companies have
    been responsible for that.
        We also know that when it comes to what--that we are seeing
    that the pharmaceutical companies have gone to the a number of
    the hospitals and changed the rules around 340B and made it
    harder for the hospitals to be able to make sure when there are
    low income patients and they're trying to provide to them, the
    pharmaceutical companies had changed some of the rules. And
    maybe we'll hear from some of our experts about that.
        I've also been very concerned about the role that the
    pharmaceutical companies have played to help to raise the
    prices. And you heard and you mentioned about the Affordable--
    not the Affordable Care Act, but about the what the Biden
    Administration has done, what Kamala Harris has done to make
    sure that we were able to provide in the Inflation Reduction
    Act to lower the cost, to negotiate the cost of prescription
    drugs to lower them that had been done on 10 drugs. And we want
    to see those prices go down.
        And I assure you that the pharmaceutical companies have not
    been happy about doing that. That we have made insulin so
    available to Americans at $35 a month. You know, that insulin
    costs about a buck to make. And yet, we have seen in the past
    hundreds of dollars being charged by the pharmaceutical
    companies.
        Unfortunately, these benefits have only gone to people that
    are getting Medicare right now. And I know that the
    administration, our Democratic administration has said they
    want it applied to all Americans. So we can make serious
    progress, and we should, and we need to, and we need to hold
    accountable Big Pharma.
        I want to say also that I have offered legislation that I
    hope will pass in the in the next session that will allow
    people to import from certain countries like Canada to be able
    to have lower cost drugs, and to import them into the United
    States of America. And I also am introducing legislation that
    would allow the Department of Health and Human Services to be
    able to create more affordable drugs by manufacturing those
    drugs.
        So, we should be not just handing over patents to the Big
    Pharma companies to do what they want with us as Americans. And
    I am looking forward in the next session of Congress, being the
    optimist that I am, that we are going to be changing some of
    those rules and practices by Big Pharma, and that we are going
    to be able to get all Americans to be able to afford the drugs
    that they need for their lives and deserve.
        Let me just say one more thing. I was at a drugstore where
    a woman before me was told by the pharmacist how much she had
    to pay. And very quickly she said, ``Well, I simply can't.''
    And she walked away without the drugs that she needed. This is
    happening all across the country. It needs to stop.
        And with that, I yield back.
        Chairman Durbin. Thank you, Congresswoman, for all your
    work in this area. We believe in Illinois that every
    congressional delegation should have a physicist, and our
    delegation has one of those.
        And Congressman Bill Foster, you're next.

                    STATEMENT OF HON. BILL FOSTER,
          UNITED STATES REPRESENTATIVE (IL-11), WASHINGTON, DC

        Representative Foster. Well, good morning, and thank you
    Chair Durbin for inviting me to speak today.
        Over the past several years, I've heard from countless
    constituents who are struggling to afford the ever-rising cost
    of prescription drugs. And all too often this means choosing
    between purchasing a critical medication, or paying for rent,
    or groceries. As one of the richest nations in the world, no
    American family should have to make a choice like that. And I
    was proud that the House and Senate worked together and make
    real progress on this problem with the Inflation Reduction Act
    in 2022.
        Starting in 2025, just a few weeks away, the Medicare Part
    D will not have to pay more than $2,000 annually toward their
    prescription drugs. Seniors with diabetes are already getting
    much needed insulin for just $35 a month, and Medicare will
    soon begin using negotiated drug prices with pharmaceutical
    companies to help bring those costs down further. However,
    there is still a lot of work to be done here, especially for
    Americans who are too young for Medicare.
        You know, insulin was discovered at a university laboratory
    more than a century ago, and the scientists who made that
    discovery refused to put their names on the patent, remarking
    that, ``Insulin belongs to the world.'' And now, we find people
    still unable to afford it despite the low production cost. So
    more than a century later, there's a lot of work to be done
    here.
        But as we think about prescription drug pricing, there's an
    important balance that we must strike. New innovative drugs
    must be affordable for patients who need them, but we also need
    sufficient financial incentives for pharmaceutical companies to
    invest in developing new drugs. Research that, you know, often
    fails to produce anything marketable.
        Now, with taxpayer-funded NIH paying much of the earliest
    stage and riskiest research in recent years, some of this
    burden has been lifted. But we still must be careful not to go
    too far in the other direction and potentially halt the
    scientific progress toward a variety of illnesses.
        As we all know, the presence of competition, especially
    from off-patent, generic versions of a given drug, are one of
    the most reliable ways to keep drug prices reasonable. An
    important example of this is the worldwide race to develop
    inexpensive oral versions of GLP-1 receptor agonists, known to
    the public as Ozempic and Wegovy.
        You know, if you're pre-diabetic and you take these drugs,
    you will pretty much never become diabetic. You will lose a lot
    of weight, your blood pressure will go down, and when
    competition drives down the price anywhere near the production
    cost of under $100 a day though, then the world will be a
    better place. And the healthcare cost structure in this country
    will be transformed because one-third of all our healthcare
    costs are diabetes now. But for now, millions of Americans are
    unable to access these life-altering medications because of
    cost. But despite that, the cost in other countries is 10 times
    lower than it is in our country.
        I also appreciate the Biden Administration that they're
    taking a close look at some of these, and in some cases,
    cracking down on potential anti-competitive abuses within the
    patent system that prevent or delay generic entry. Practices
    such as evergreening, where a pharmaceutical company makes a
    slight tweak through a drug to extend its patent. Or pay for
    delay, where a company pays a generic brand to delay their
    entry into the market.
        That puts a risk at that careful balance within our patent
    system, and Congress must support efforts to ensure our patent
    system is operating as intended
        And finally, hand in hand with affordability, prescription
    drugs must also be accessible to American families. Earlier
    this month, there were troubling reports from the New York
    Times that the pharmacy benefit managers, or PBMs, were
    systematically underpaying small independent pharmacies for
    patient's prescriptions.
        The goal, the Times alleged, was to run these pharmacies,
    which compete with the PBMs in-house pharmacies out of business
    with techniques like cherry-picking the most profitable drugs
    for their in-house pharmacies, and leaving the unprofitable
    drugs for struggling local pharmacies. In many cases, these
    alleged efforts were successful, leaving many Americans,
    especially those in rural areas, without a local pharmacy. But
    I have heard exactly the same thing from local pharmacies in
    Aurora and in Naperville.
        Congress must study this issue closely and to ensure that
    PBMs are not engaging in anti-competitive behavior, which could
    impact both the accessibility of pharmacies and the prices of
    drugs themselves. So, I thank the Senate Judiciary Committee
    for its hard work on preventing anti-competitive behavior in
    the healthcare space, and I hope the Committee will consider
    the two issues I've laid out today. Thank you, and I yield
    back.
        Chair Durbin. Thanks, Congressman Foster. As I mentioned at
    the outset, we're recognizing Members in order of seniority,
    and now recognize Representative Krishnamoorthi.

                STATEMENT OF HON. RAJA KRISHNAMOORTHI,
          UNITED STATES REPRESENTATIVE (IL-08), WASHINGTON, DC

        Representative Krishnamoorthi. Good morning, and thank you
    Senator Durbin for hosting this hearing focus on rising
    prescription drug prices.
        Prescription drugs exist in one of the few industries that
    do not operate along the normal rules of supply and demand. The
    blunt truth is that if you or a loved one needs medicine,
    you'll pay almost any price to obtain it. This ability to
    squeeze every dime from those who need medicine, not only
    fatten corporations' bottom lines, but also leads to the
    creation of exploitive middlemen as surely as sharks are drawn
    to blood.
        One of these middlemen are pharmacy benefit managers, or
    PBMs, for short. PBMs harm Americans in two ways. One, PBMs are
    helping to fuel ever rising drug prices, and then two, PBMs are
    killing independent pharmacies, as Congressman Foster alluded
    to just a second ago.
        First, I want to get into drug prices. On behalf of
    healthcare payers like employers and insurers, PBMs negotiate
    with drug companies, acting as middlemen to create formulary
    lists that determine which medicines patients can be
    prescribed. To maximize their own profits, PBMs have
    implemented a so-called rebate system that requires drug
    companies to provide rebates based on their drugs list prices.
    In exchange, PBMs include these drugs on their formularies. The
    higher the prices, the higher the rebates, and the more likely
    that a company's drug gets on the PBMs formulary.
        The glaring problem, however, is that PBMs do not appear to
    be passing along the rebates to their clients, namely the
    payers, and ultimately, the consumers. Meanwhile, PBMs pursuit
    of ever higher rebates drives up what they're linked to, namely
    drug prices. This is not some conspiracy theory. Congress,
    numerous States, investigative journalists, and even the FTC,
    as you can see from these various headlines, from even Attorney
    General Raul, who's been asking the supreme court and other
    agencies to look into this issue, have now illustrated that
    this is a commonly understood problem.
        [Poster is displayed.]
        The second way in which PBMs undermine healthcare is by
    killing off independent pharmacies. How? Not only do PBMs act
    as the middlemen between payers and drug companies, they also
    act as the middlemen between payers and the pharmacies. And
    they do it in the following way. First, pharmacies buy drugs
    from wholesalers in anticipation of reasonable reimbursements
    from the PBM after the drugs are dispensed. However, the PBMs
    then set these artificially low reimbursement rates.
        PBMs have engaged in complex schemes to either grossly
    underpay pharmacies for the drugs they dispense, or by
    instituting clawbacks and what are called DIR fees, direct and
    indirect remuneration fees. These DIR fees mean that PBMs
    retroactively clawback money from pharmacies for drugs they
    have already dispensed in the past.
        CMS found that DIR fees exploded by, and this is not a
    typo, 107,400 percent over the last decade. PBMs appear to be
    using any and every trick in the book to continue to make
    enormous profits and kill off independent pharmacies. The
    result of these clawbacks and underpayments has been stark. The
    National Association of Community Pharmacists report that
    almost every day a pharmacy is permanently closing its doors.
    At this point, 73 percent of counties in Illinois are now a
    pharmacy desert, meaning there is not a pharmacy located in
    that county.
        [Poster is displayed.]
        CMS acted earlier this year to block the most egregious DIR
    abuses, but PBMs are still putting relentless pressure on
    independent pharmacies. Why? Well, surprise, surprise, the
    largest PBMs parent companies run their own competing
    pharmacies, which now dispense a whopping 80 percent of all
    prescriptions in the country. PBMs have the power to kill off
    their competition, and they are doing just that.
        The result of PBM control and manipulation is that drug
    prices are going up, pharmacy closures are going up. And guess
    what? PBM profits are going way up. PBMs, I would suggest,
    stand for pretty big markups. That's what PBMs are at this
    point.
        However, there's some cause for hope. Elected officials on
    the State and Federal level from both parties, including in
    Illinois, agree that PBMs need to be reined in. For instance,
    we should pass as soon as possible much needed PBM reform
    legislation like the bipartisan Pharmacist Fight Back Act. This
    bill is the most comprehensive approach to PBM reform yet, and
    I believe meaningful reform of the PBM industry is within our
    grasp, even within this Congress.
        Senator Durbin, thank you again for your yeoman's work to
    lower prescription drug costs and for holding this hearing. I'm
    honored to have been included. Thank you.
        Chair Durbin. Thank you very much, Congressman. I'll just
    emphatically add, if you've been to a Walgreens drug store
    lately to fill a prescription; you know what you're going to
    find? A line of 12 people in front of you. I see some heads
    nodding in the audience.
        And you think to yourself, they're closing drug stores,
    they're want to close some drug stores. And yet, the demand is
    so high, they can't fill the request to customers who walk into
    their stores. Something's wrong with this picture, and I think
    it's PBMs. They're stepping in and complicating this market
    relationship. And the consumer will pay the ultimate price. So,
    I thank you for raising that issue.
        Mr. Krishnamoorthi. Yes, sir.
        Chairman Durbin. Next, is Congressman Sean Casten.

                    STATEMENT OF HON. SEAN CASTEN,
          UNITED STATES REPRESENTATIVE (IL-06), WASHINGTON, DC

        Representative Casten. Thank you, Chair Durbin for doing
    this, and I'm honored to be invited.
        So, a couple years ago, I had the opportunity to meet with
    some of the doctors and administrators at the Mayo Clinic, and
    was chatting with them about how they measure success as one of
    the more successful health clinics in our country. And they
    said their metric is this mortality amenable to healthcare. How
    many people die every year, but for their access to healthcare?
        Now, maybe that's because there was an oversight in the
    part of the hospital. Maybe there weren't beds available. Maybe
    they couldn't get the right specialist. Maybe they didn't have
    insurance. All of these people are people who should have
    lived. And they measure that success for their hospital. They
    measure it for their State, they compare to others.
        You can look at it countrywide. And in the United States,
    last year, a little over a million people died, should have
    lived but for shortcomings in our healthcare system. That's 336
    per 100,000, if you want to normalize it on a per capita basis.
    And to put that in perspective, that is more than twice the
    rate of the Swiss, the Japanese, the Australians, the Swedish,
    the Netherlands, the French.
        I could go on and on down that list. We have worse health
    outcomes than virtually every other industrialized country in
    the world. And on top of that, we pay more for healthcare than
    any other country in the world. About $13,000 per capita per
    year. $4 trillion. So, if we were paying a lot in getting great
    outcomes, okay, that's a tradeoff. As it is, we're paying a lot
    and not getting robust outcomes.
        If we step that back, the fastest growing cost in the
    healthcare system is pharmaceuticals in 2004, 1 percent
    expenses were pharmaceuticals. Last year was 14 percent. It's
    growing faster than anything else in the system. I think
    several folks have talked about why it is that we have said
    that Medicare shouldn't negotiate pharmaceutical prices, and
    that's a rich conversation. But we should point out that it is
    insane. If you were to tell the American people when you go buy
    a car, you can't negotiate with the dealer. When you buy a
    house, you can't negotiate. None of us would call that a
    competitive market. And somehow, we've got this idea in our
    head that, well, competitive markets will fix this problem.
    They haven't. They failed.
        In 2019, the House passed H.R. 3 to fix that problem; to
    not only give Medicare the right to negotiate, but compel them
    to negotiate. And I don't want to be partisan, but if we're
    talking about epidemiology, we need to use all the statistics.
    Every single Democrat voted for that bill, and only two
    Republicans in the House voted for it. That bill would've given
    Medicare the ability to negotiate prices, would've capped out-
    of-pocket costs, would've added dental, vision, hearing to
    Medicare, and a number of other reforms as well. As you know
    well, Chair Durbin, the Senate was led by Republicans at that
    time and chose not even to bring it up for a vote.
        Fast forward 2 years later, and as you mentioned in the
    Inflation Reduction Act, we then passed several of those
    provisions in the bill, all of them. But now, we've got 10
    drugs that are available for Medicare to negotiate, which will
    expand next year, out-of-pocket costs are capped to $2,000, $35
    price on insulin, expansions on ACA subsidies.
        Not a single Republican voted for any of those. I don't
    want that to be partisan, but it is the reality that we would
    not have made that progress but for who was in power in 2022.
    The result of that just in my district in Illinois, 6, is that
    there are now 23,000 more people who have health insurance, who
    are saving an average of $1,000 a year. Just in one
    congressional district, 4,300 people who are saving $490 a year
    on average on insulin. 24,000 people who are saving on average
    $533 on prescription drugs. And that's going to go to 34,000
    next year.
        Illinois wide, I think as Congressman Davis pointed out,
    the numbers I've seen is that folks are going to save over $120
    million, almost 500,000 people in Illinois. And oh, by the way,
    that's a $600 a year savings in Medicare, which means that our
    fiscal health as a nation is better, and people are healthier,
    and people are saving out-of-pocket costs.
        Now, having watched the Bears game this weekend, the last
    thing I want to do is to celebrate before the game is over. And
    make no mistake, this game is not over. We have made terrific
    progress, and maybe it's appropriate to do a shimmy in the end
    zone after the referee puts his hands up. But we haven't won
    the game yet. And I hope that as we move forward in this
    Congress, we can simply recognize that there is not a business
    in the world that comes to Washington and says, ``I wish my
    industry was more competitive.''
        [Laugher.]
        It is crazy that we had to give Medicare the right to
    negotiate. We've gotten that to 10 drugs, we'll expand it next
    year. They should have the right to negotiate all drugs. As
    Congressman Krishnamoorthi has pointed out, pharmacy benefit
    managers are not designed to create competition. Quite to the
    contrary, it appears that they're getting in the way of
    competition.
        We need to expand the number of covered drugs. We need to
    make sure that these benefits cover the whole system. And I
    hope someday, everybody who has the privilege to serve and to
    have public service recognizes that you either are or someday,
    God willing, will be a senior citizen. Your constituents
    include large numbers of senior citizens. One hundred percent
    of Americans I've polled this would like to be healthier, would
    like to spend less on drugs, and would like to see our deficits
    fall. And I hope that that leads us all to make this a
    robustly, bipartisan commitment to competition markets and a
    healthier population in the very near future. Thank you, and I
    yield back.
        Chair Durbin. Thank you very much. And if I'm not mistaken,
    the report in the Heritage Foundation Project 2025 would've
    eliminated the power that we have given to our Government to
    negotiate lower drug prices. So, in fact, this issue is on the
    ballot next Tuesday for voters to decide whether to move
    forward with this or not.
        Congressman Garcia.

              STATEMENT OF HON. JESUS G. ``CHUY'' GARCIA,
          UNITED STATES REPRESENTATIVE (IL-04), WASHINGTON, DC

        Representative Garcia. Thank you, Chairman Durbin, for
    convening this most important hearing on this critical topic.
    There's no reason that the wealthiest country in the history of
    the world at a time when we're confronting the consequences of
    health disparities that were laid bare by the Covid pandemic,
    that patients still cannot afford the everyday medications that
    they need to live a healthy, dignified life.
        Under the Biden Administration, Congress has taken
    unprecedented steps in the right direction to lower the sky-
    high cost of prescription drugs. I'm proud to have participated
    in a progressive push to ensure that prescription drug costs
    were addressed in the Inflation Reduction Act. The bill, of
    course, has capped, as we've discussed, a $35 per month for
    seniors, and finally allowed Medicare to begin negotiating for
    other lower drug prices.
        Prices for the first 10 drugs negotiated were released this
    summer. When they go into effect in 2026, they will start
    saving customers up to 76 percent, hundreds in cases, thousands
    of dollars per month. The new prices are expected to save 1.5
    billion in 2026 alone. But despite remarkable progress, these
    gains only address a fraction of the enormous need for lower
    drug prices for patients not covered by these programs.
        For example, I represent a congressional district that is
    over 65 percent Latinos, and Latinos are nearly twice as likely
    to have diabetes than non-Hispanic whites. So, while the
    insulin cap is a lifesaver for people who are covered, everyone
    else, even those with private insurance does not cover the
    insulin. And they're still paying hundreds.
        That's a policy issue, and one created when Republicans
    blocked a broader insulin cap from the final version of the
    Inflation Reduction Act. That comes on top of the fact that
    many of my neighbors already confronting health inequities like
    under insurance, food deserts, and a lack of nearby health
    facilities that contribute to the overall well-being.
        So, for the tens of thousands of individuals in my
    district, approximately 94,000 people are without insurance
    because they're immigrants, or undocumented, or otherwise
    ineligible. We've got to find a new approach. And while the
    impacts of the targeted drug pricing legislation we've passed
    demonstrates how far we've come, the remaining gaps show us
    where we need to go toward comprehensive legislation that
    addresses anti-competitive behavior by pharmaceutical companies
    at its root.
        That's why I'm proud to be here at this Senate Judiciary
    hearing. And as a new Member of the House Judiciary Committee,
    it's an important issue that we've got to tackle together. We
    must confront practices that corporations use to prolong market
    exclusivity for profitable drugs. We must call out the billion
    spent on lobbying, campaign contributions and stock buybacks by
    Big Pharma companies that simultaneously claim they cannot
    afford to lower drug prices. It's price gouging, plain and
    simple, and it's got to stop.
        So, again, I deeply appreciate the opportunity to be here
    today with my colleagues, and I look forward to working
    together with everyone here, panelists, and my colleagues in
    the House and Senate to work toward a common goal of affordable
    healthcare for all. Thank you.
        Chair Durbin. Thank you, Congressman. Congresswoman
    Ramirez.

                  STATEMENT OF HON. DELIA C. RAMIREZ,
          UNITED STATES REPRESENTATIVE (IL-03), WASHINGTON, DC

        Representative Ramirez. Thank you, Chair Durbin for holding
    this important hearing. I'm really honored to join my
    colleagues here in the House and listen to expert testimony
    around an issue that deeply affects my constituents and the
    words of my father, Luis Ramirez, ``la medicina esta muy
    cara,'' The cost of prescription drugs in America is too darn,
    we'll say, high.
        Too often, I hear from my constituents talk about the
    impossible choices they have to make between paying rent,
    paying for groceries, or affording their inhalers. And in our
    Nation, a person with asthma pays about $1,830 for year, just
    for lifesaving emergency. And I'm grateful to have been part of
    the movement in Illinois to cap the prices of prescription
    drugs. I was in the Illinois State legislature when SB 667 came
    to the floor to cap the price of insulin. And I had the honor
    to be a co-sponsor and vote yes on that bill.
        And of course, I'm grateful for the historic legislation
    passed by Democrats to cap the price of insulin and allow
    Medicare to negotiate the price of prescription drugs. The
    folks we're here because we know we have to do so much more.
    Too many lives are on the line. You've heard it from my
    colleagues today, our family, our friends, our neighbors, our
    constituents, they depend on us to continue to advance efforts
    that reduce the cost of and increase access to medication.
        You see, in Illinois, my District 3, is comprised of
    working people who depend on these efforts. Twelve percent of
    my residents have income below the poverty line. Over 82,000
    people have no healthcare insurance coverage whatsoever. Two
    hundred and thirty three thousand of them, rely on public
    programs for coverage, and multiple communities qualify as
    medically underserved. But when the unchecked corporate greed
    of pharmaceutical companies meets the lack of proper regulation
    of prescription drug prices, families in my district and all of
    our districts suffer.
        In my district, families have found relief in community
    health centers like Erie Humboldt Park Health Center, that
    provide essential comprehensive healthcare and regulatory
    programs created by Congress like the 340B drug discount
    program where healthcare providers that serve low income and
    uninsured communities are able to purchase drugs at a lower
    cost and help patients afford their medication, their insulin,
    their inhalers, their blood pressure medication, their Narcan,
    their Prep, and more.
        In addition to helping patients afford their medicine, we
    know that community health centers provide the high-quality
    comprehensive care patients with chronic conditions needs to
    thrive. Programs like the 340B Drug Discount Program and high
    rates of utilization of community health centers across
    Illinois, show us how critical it is for Congress to take
    action to address how unregulated, greed-driven drug pricing
    holds our families back from realizing a better healthcare
    outcome, and fuller and more vibrant lives.
        And look, the truth is that the prescription drug pricing
    system is intentionally complicated and confusing. That's why
    we need all those charts, Raja. It's a predatory practice, and
    everyday Americans struggle to understand what is covered and
    how much it's going to cost them. It's clear we have both the
    opportunity and the responsibility to address this broken
    system that regularly puts profits over people's well-being.
        And for the last 2 years, I've had the privilege to serve
    on the Veteran Affairs Committee, where I've seen firsthand the
    potential of models that prioritize coverage and lifesaving
    medications for our communities. And as I work with my
    colleagues in the Committee to ensure the proper implementation
    of the historic PACT Act, it is clear that we have the models,
    we have the tools, and we have the capacities to ensure that
    every family has access to care and the assistance they need.
        But we have to continue to advocate for Medicare for all,
    to provide comprehensive benefits to every person in the United
    States, including primary care, including vision, dental,
    prescription drugs, and more. We have to bring the full power
    of the Federal Government regulation, legislation, and the word
    you've heard here for my colleagues over and over, negotiation,
    to fight for our constituents so they never have to forego
    necessary prescriptions.
        Today, I look forward to listening to experts about the
    crucial steps we can take together to ensure that everyone,
    regardless of ZIP Code, regardless of migration status, have
    access to the medicine they need, and the care that they
    deserve, and the help that we know our Nation can provide.
        Thank you, Senator Durbin, for this opportunity and for
    this hearing.
        Chair Durbin. Thank you, Congresswoman.
        Each morning in the Senate, the Republican leader and
    Democratic leader make statements, and I am usually there to
    hear them. One recent statement made by the Republican leader,
    Mitch McConnell, was in reference to the negotiation of drug
    prices. He referred to it as, ``Pharmaceutical socialism,''
    pharmaceutical socialism.
        I'm glad you brought up the fact that the Veterans
    Administration has been negotiating drug prices for decades,
    saving the taxpayers a lot of money in the process, and making
    sure that the men and women who served our country still
    receive the very best when it comes to medical assistance. I
    don't think that's socialism. I think that's basic to America
    and our democracy. I thank you for raising that issue.
        I want to thank my colleagues for joining me this morning.
    All of your contributions were very positive and will be part
    of the record. And in the process of changing out the panel to
    the second panel, I want to thank healthcare leaders from
    around our State who had joined us here at this hearing,
    including Illinois Public Health Director, Dr. Sameer Vohra,
    State Senator Mike Simmons, a former intern in Durbin's Office,
    and representatives from hospitals and health centers; Lawndale
    Christian Access, PCC, ATT, AHS, Family, Rush, Sinai, and Lurie
    Children's, along with the Illinois pharmacists who've joined
    us as well.
        So, I thank my colleagues for joining me this morning, and
    you are now officially dismissed. If the five members of the
    second panel would approach the table, I'd appreciate it very
    much, and remain standing for a moment. If you would please
    raise your right hand. Do you affirm the testimony you're about
    to give before the Committee will be the truth, the whole
    truth, and nothing but the truth, so help you God?
        [Witnesses are sworn in.]
        Chair Durbin. Let the record indicate that the five
    witnesses, luckily, all answered in the affirmative. I'd like
    to introduce them. Our first witness is Kwame Raoul, the 42d
    Attorney General of the State of Illinois. He served as
    Illinois Chief Legal and Law Enforcement Officer since 2019.
    Assumed this role after serving for 14 years as an Illinois
    State Senator. Previously served as a prosecutor in Cook County
    and staff attorney for City Colleges of Chicago.
        We're also joined by Professor Rachel Sachs, a professor of
    law at Washington University in St. Louis, where she also
    serves as a faculty scholar with the Institute for Public
    Health, and Faculty Fellow with Cordell Institute for Policy in
    Medicine & Law, and much more, I know from earlier
    conversation.
        Our next witness is Dr. Anthony Douglas, general surgery
    and resident physician at the University of Chicago Medicine,
    where he focuses on trauma and acute care surgery. Also, the
    founder and first fellow of the University of Chicago Surgical
    Advocacy Fellowship. Thank you for being here.
        Next, joined by Michael Sandsmark. Mr. Sandsmark is the
    Director of Pharmacy at Iroquois Memorial Hospital, and
    resident home in Watseka. In 2023, Iroquois Memorial Hospital
    was designated as a critical access hospital by the Centers for
    Medicare and Medicaid Services, recognizing the key role that
    this facility plays in providing healthcare in that part of the
    State.
        Our final witness is Deanna Brant, a retired executive
    assistant from Countryside, Illinois. She's a Medicare
    beneficiary, and I look forward to hearing her perspective on
    what it's like to cope with these high cost of prescription
    drugs. Thank you for joining us.
        I'm going to let the Attorney General kick it off. Take it
    away.

                    STATEMENT OF HON. KWAME RAOUL,
            ATTORNEY GENERAL, STATE OF ILLINOIS, CHICAGO, IL

        Mr. Raoul. Good morning, and thank you Mr. Chairman. Thank
    you for inviting me to speak on this important issue. As
    attorney general, I take seriously my office's fundamental
    function to protect the health and wellness of Illinois
    citizens. High prescription drug prices harm Illinois patients
    by obstructing access to treatments needed to sustain their
    health and well-being. Without access to affordable
    medications, medical conditions worsen, patients' overall
    health, outcomes decline in some patient, and for some patients
    it can be fatal.
        According to U.S. Department of Health and Human Services,
    from January, 2022 to January 2023, more than 4,200 drug
    products had price increases, of which 46 percent were larger
    than the rate of inflation. With these ever increasing costs,
    patients may stop taking their medications as prescribed or
    eventually abandoned treatment all altogether.
        In addition to the direct burden on Illinois consumers,
    high prescription costs also impact the State at large because
    they are significant payers of healthcare services. State
    dollars pay for prescription drug use by State employees and
    their dependents, the use by people housed by the Department of
    Corrections, and Medicaid beneficiaries. In Illinois, about 3.9
    million people are enrolled in Medicaid.
        Pharmaceutical companies and pharmacy benefit managers,
    known as PBMs, must be more transparent about their pricing and
    business practices. They should also be held accountable for
    unnecessary and overly burdensome increases in prices for
    prescription drugs. As mentioned earlier by several speakers,
    the original purpose of PBMs was to negotiate on behalf of
    employers, government payers, and consumers, to minimize
    overpricing by manufacturers. Instead, PBMs have made the
    pharmaceutical market more opaque, and have driven up
    prescription drug pricing.
        My office and those of other state attorneys general have
    worked to hold PBMs accountable. However, before expounding on
    the actions my office has taken, I do have to mention that the
    scope of what I can share and the answer is limited. Due to
    ongoing litigation and investigations that are subject to
    confidentiality agreements, I'm restricted from commenting on
    certain pending matters.
        I want to emphasize that I have used multiple tools
    available to go after bad actors in the industry. We have used
    our authority under the Illinois Consumer Fraud and Deceptive
    Business Practices Act, the Illinois Voice False Claims Act,
    and antitrust laws to target the prescription affordability
    crisis from every possible angle.
        PBMs profit from fees charged to market participants and by
    reimbursing pharmacies less than PBMs are paid for dispersing
    medications. We believe PBMs have engaged in practices that
    drive up their own profits at the expense of patients and the
    State actors who have contracted with them.
        My office has uncovered practices that have allowed PBMs to
    largely overcharge State agencies through their contracts with
    the State, and I've been successful in bringing money back to
    Illinois through these investigations. For example, as a PBM
    for Illinois Medicaid program, Centene subsidiaries delivered
    pharmacy benefits to Illinois State agencies such as the
    Illinois Department of Healthcare and Family Services.
        We initiated an investigation that determined that
    Centene's subsidiaries allegedly submitted inaccurate
    pharmaceutical reimbursement requests that failed to accurately
    disclose the cost of pharmacy services. In addition, requests
    for reimbursement did not disclose available pharmaceutical
    discounts in the improperly inflated dispensing fees. On
    September 27, 2021, my office on behalf of the State executed a
    settlement agreement that required Centene to pay the State
    over $56 million.
        As recently as June 24, this year, my office recovered $45
    million to the State through a settlement agreement with CVS
    after an investigation under the False Claims Act, showed that
    CVS as a PBM contracted with the State improperly failed to
    pass rebates back to the State from April 1, 2020 through
    September 30, 2023.
        PBMs have largely been unregulated, and as recently as
    earlier this year, I joined a bipartisan group of AGs calling
    on Congress to reform the way PBMs do business. Federal
    legislation is needed to curb undue price increases, and to
    increase transparency around the way PBMs operate and set
    prices. In the absence of Federal regulations, States have
    passed their own regulations, which have been met with pushback
    from the industry. There's a petition pending in front of the
    U.S. Supreme Court to determine whether Federal laws preempt
    State laws that regulate PBMs.
        This past summer, my office joined a bipartisan coalition
    States urging the court to review a decision from the 10th
    Circuit holding that Federal laws preempt Oklahoma laws
    regulating PBMs. The coalition seeks to protect consumers by
    assuring that States can regulate PBMs as part of our efforts
    to address access and affordability to prescription drugs.
        In December 2022, my office originally filed a complaint in
    Cook County against PBMs and manufacturers alleging violations
    of our Consumer Fraud And Deceptive Practices Act for engaging
    in an insulin pricing scheme. Our case is now in a MDL pending
    before the District Court in New Jersey. The complaint alleges
    that insulin pricing scheme has caused the cost of insulin to
    skyrocket. To be clear, insulin costs these manufacturers less
    than $2 per unit to produce, yet prices can range from $300 to
    $700 per unit.
        Our antitrust bureau investigates the conduct of brand drug
    manufacturers who engage in illegal activities to delay entry
    of generic competitors, which drives up prices for consumers.
    Such activities could include agreements with generic companies
    to delay entry into market, product hopping schemes, and
    exclusive contracting schemes, which prevent drug companies
    from accessing the components needed to manufacture these
    drugs.
        Our bureau is working with nearly all other States on
    litigation against the generic drug in industry for engaging in
    price fixing conspiracies involving hundreds of generic drugs.
    The State coalition has already settled with several
    individuals and two corporations who have agreed to provide
    monetary relief and substantial cooperation.
        In 2023, my bureau in partnership with the FDC, and several
    other State AGs, was able to secure a settlement agreement with
    Amgen, one of the world's largest biopharmaceutical drug
    companies to address the potential competitive harm that would
    result from Amgen's purchase of Horizon Therapeutics. The
    settlement resolved the potential anti-competitive acquisition
    and prevents Amgen from engaging in anti-competitive actions to
    disadvantage any product that would compete with these drugs.
    The agreement requires Amgen to submit annual compliance
    reports and monitors in place to oversee compliance.
        Mr. Chairman, these are examples of how my office has
    worked to reign in the ongoing problem of prescription drug
    overpricing. They're not exhaustive, for examples. We will
    continue to do so. I'm thankful to the Committee for shining a
    light on these challenges, and I hope that we can collectively
    work on behalf of Illinois patients, employers, and the
    government payers to reduce the price of prescription drugs.
        [The prepared statement of Mr. Raoul appears as a
    submission for the record.]
        Chair Durbin. Thanks, Attorney General. Professor Sachs.

       STATEMENT OF RACHEL E. SACHS, JD, MPH, PROFESSOR OF LAW,
           WASHINGTON UNIVERSITY IN ST. LOUIS, ST. LOUIS, MO

        Professor Sachs. Chair Durbin, my name is Rachel Sachs, and
    I'm a professor of law at Washington University in St. Louis,
    where my research focuses on innovation and access to new
    pharmaceuticals. Thank you for the opportunity to testify about
    the role of competition in making prescription drugs more
    affordable for patients, and how this Committee might address
    these issues. All views I offer today are my own.
        Over the last 40 years, Congress has focused on competition
    from lower cost, generic, and biosimilar versions of branded
    prescription drugs as the primary tool to bring down prices and
    promote access to affordable medications. 1984 saw the passage
    of the Hatch-Waxman Act, which created a path to FDA approval
    for generic versions of small molecule drugs. When combined
    with State laws allowing pharmacists to substitute generics for
    branded drugs, Hatch-Waxman has been largely successful.
        Today, generic drugs quickly take over 80 percent of the
    branded drugs market share and multiple generics can drive down
    prices by over 90 percent. Of course, ongoing focus on branded
    drug manufacturers attempts to delay generic competition
    matters. And I'll return to that.
        The Biologics Price Competition and Innovation Act as
    enacted in the Affordable Care Act in 2010, created a path to
    approval for biosimilar versions of biological products. To
    date, this law has been less successful at creating competition
    than has Hatch-Waxman. Just 61 biosimilars for 17 biologics
    have been approved to date, and many have not yet been
    marketed. Even marketed biosimilars struggle to gain market
    share, and have driven down prices by a smaller amount.
        The relative weakness of biosimilar competition is
    traceable to several factors. In my written testimony, for
    example, I refer to patent listing distinctions between the
    Orange and Purple Books, the interchangeable designation, and
    comparatively weak State substitution laws as legal drivers.
        The Inflation Reduction Act, or IRA, and its Medicare drug
    price negotiation program also looks to generic and biosimilar
    competition as the primary tool to drive down drug prices.
    Recognizing that Hatch-Waxman and the Biosimilars Act have not
    always succeeded in enabling generic and biosimilar entry only
    if such competition has not emerged, does the IRA envision a
    role from Medicare to negotiate the prices for drugs it
    purchases as a market participant.
        The IRA only permits a drug to qualify for negotiation
    after it has been FDA approved for many years, and a drug with
    an approved and marketed generic or biosimilar is not eligible
    for selection for negotiation. Hatch-Waxman and the Biosimilars
    Act aim to support approval of generics and biosimilars. This
    approval is necessary for competition, but is not sufficient to
    enable it.
        Take the biosimilars example. Even where a biosimilar is
    approved and marketed, it must be covered by insurers,
    physicians must prescribe it, and pharmacists must substitute
    it. Patents matter for creating competition at the approval
    stage, but legal changes must go beyond patent law to include
    insurance coverage, physician prescribing, and pharmacy
    substitution.
        This Committee ought to consider legislation to improve
    competition, but a full response will require support from
    other Committees with distinct jurisdictions. First, this
    Committee should continue to focus on the approval of generics
    and biosimilars where the PTO and patent law play key roles.
    This Committee has already taken up several bills responding to
    branded manufacturers efforts to discourage generic or
    biometry. The Federal Trade Commission's recent challenges to
    over 400 patents allegedly and properly listed in the Orange
    Book also fall into this category.
        Second; coverage. Many insurance coverage decisions are
    mediated through pharmacy benefit managers, or PBMs, about
    which we've heard already. PBMs have been criticized, including
    for the ways in which they sometimes appear to limit access to
    lower cost products. Both the Federal Trade Commission and
    several State attorneys general have sued the Nation's largest
    PBMs over their conduct, in the market for insulin in
    particular. This Committee should consider its role in PBM
    reform, including potentially supporting the commission's
    complaint.
        Third; prescription. This Committee might work
    collaboratively with others to encourage the prescribing of
    lower cost products. For example, experts have argued for
    reforming the Medicare Part B payment system, arguing that it
    encourages clinicians to choose higher priced products over
    lower priced ones.
        Fourth; substitution. State biosimilar substitution laws
    typically only permit substitution where the biosimilar is
    deemed interchangeable by FDA. Most approved biosimilars lack
    that designation. This Committee might support efforts to alter
    State biosimilar substitution laws, plus efforts by other
    Committees regarding the interchangeable designation as FDA has
    requested. This Committee should support competition to make
    prescription drugs more affordable for patients.
        Chair Durbin, I appreciate your focus on this important
    issue, and I look forward to answering your questions.
        [The prepared statement of Professor Sachs appears as a
    submission for the record.]
        Chair Durbin. Thank you very much. Dr. Douglas.

        STATEMENT OF ANTHONY D. DOUGLAS II, MD, GENERAL SURGERY
       RESIDENT, UNIVERSITY OF CHICAGO, CITIZEN ACTION ILLINOIS,
                              CHICAGO, IL

        Dr. Douglas. Good morning. Thank you, Senator Durbin, and
    the Members of your Judiciary Committee for the opportunity to
    testify today. Also, for your investment in this important
    issue. My name is Dr. Anthony Douglas II, I'm a general surgery
    resident physician at the University of Chicago. I'm here on
    behalf of my patients, as well as Citizens Actions, Illinois,
    and my thoughts are my own.
        As physicians on the front lines, we have a pulse on how
    everyday Americans are affected by high out-of-pocket
    prescription costs. We make and carry out the plans for
    patients in the inpatient and outpatient settings. We perform
    the operations, and we guide Americans across this country to
    recovery. For physicians like myself, one of the most difficult
    conversations to have are those with patients over the phone
    when they are at the pharmaceutical counter.
        As I sit before you, I can hear the worry, the desperation
    and embarrassment of my patients from the CVS and Walgreens
    counter saying, ``Dr. Douglas, I cannot afford this
    medication.'' I remember the face of the woman with type 1
    diabetes who came to our emergency department with appendicitis
    who was not taking the insulin she was prescribed. When I asked
    her why, her answer was simple, ``I cannot afford it.'' Her
    surgery was delayed. I sat and watched her dangerously high
    blood sugars improve each day with angst, hoping she didn't
    have a complication as we waited.
        Senator Durbin, I have story after story of people
    balancing the cost of medications to sustain their livelihood,
    and the cost of their mortgages, utilities, childcare, and
    groceries. And they almost always choose the more pressing
    immediate needs over their medications.
        My father, who is in the audience today, was prescribed
    Jardiance for his type 2 diabetes. It cost him $660 a month to
    refill. He has since been switched to a more affordable but
    less effective medication after free samples from his physician
    ran out.
        In an Uber ride, Carol, a middle-aged woman, drove me to
    the airport after asking me what I did for a living. She
    divulged that she had a kidney transplant a week ago. I scolded
    her for not being at home recovering, and her response made me
    feel ashamed. She said she had no choice but to drive Uber
    because the cost of the drugs to keep her body from rejecting
    her brand-new kidney were too great.
        And I'd be remiss if I didn't share this story. I spoke at
    a retirees' meeting about a week ago. And a member of the
    audience came to tell me about his friend who was a former
    police officer, who developed a blood cancer and was depleting
    his family's financial reserves to pay for the medication to
    treat his blood cancer, and stopped taking the medication to
    let his disease run it's course in order for his family to have
    finances to survive.
        In our State of Illinois, a survey of adults revealed that
    one in four people split ration, or take sips of their
    medications to prolong needing a refill. That means
    approximately 20 Americans in this room right now are not
    taking their medications as they are prescribed because they
    must delay paying to refill the prescription. As a physician, I
    can tell you drugs do not work like that. Medication non-
    adherence accounts for 25 percent of hospitalizations, and
    125,000 deaths a year.
        One of the significant drivers of how much our country
    spends on healthcare is inefficiency. The lack of prescription
    affordability leads Americans to visit the emergency
    department, or be admitted to the hospital for conditions that
    could be effectively controlled at home if they simply had
    access to the appropriate medications that is inefficient.
        In 2023, according to the U.S. Department of Health and
    Human Services, 4,200 drug prices had price increases, and 46
    percent of those increases were larger than the rate of
    inflation, as alluded to earlier. The average price increase
    was 15 percent, or about $590 per drug. The Inflation Reduction
    Act was a pivotal step toward addressing the rising cost of
    prescription drugs for Medicare Part D patients. The Act helped
    to reduce the price of a drug like Xarelto, a blood thinner
    that I prescribe almost daily from $517 to $197, a 62 percent
    cut.
        Other drug prices were cut between 38 to 79 percent. This
    and the annual drug spending cap for senior Americans will make
    medications more affordable and save lives. But in my
    experience, Medicare Part D enrollees are merely a fraction of
    the population that is suffering from the rising costs of
    prescription drugs. We cannot forget about the number of other
    vulnerable groups as well; the young and uninsured who
    unexpectedly develop an illness, the middle working class who
    develop chronic diseases, and whose employer-based or private
    insurance doesn't quite relieve the cost, ethnic minorities who
    are disproportionately uninsured, unemployed, living in
    poverty, and victims of health inequities. All of these
    populations are suffering.
        We spend hours as physicians filling out prior
    authorizations just to find out that even after insurance kicks
    in, the cost of a medication is still out of reach for some
    patients. We need additional intervention at the Federal level
    related to patent abuse, vice transparency, and PBM practices.
    The pharmaceutical industry threatens that regulation of drug
    pricing would would force them to remove drugs from the market,
    attempting to incite fear among Americans who are desperately
    in need of their medications.
        In reality, the pharmaceutical industry spends more on
    advertising in America than research and development. As a
    result, the citizens of these United States pay more on drug
    costs than any other developed country. Why should a State like
    Florida have to import prescription drugs made and manufactured
    here in the United States from Canada to lower the cost of
    medications for their citizens?
        This price gouging must end and it must end through Federal
    regulation. Drugs do not work if people cannot afford them, and
    I cannot fulfill my duty as a physician if my patients cannot
    follow their doctor's orders. Thank you.
        [The prepared statement of Dr. Douglas appears as a
    submission for the record.]
        Chair Durbin. Thank you, Dr. Douglas. Dr. Sandsmark.

        STATEMENT OF MICHAEL A. SANDSMARK, PHARMD, DIRECTOR OF
        PHARMACY, IROQUOIS MEMORIAL HOSPITAL AND RESIDENT HOME,
                              WATSEKA, IL

        Dr. Sandsmark. First of all, thank you, Chairman Durbin,
    for inviting me here today to discuss prescription drug prices
    and their effects on my patients.
        As a pharmacist, I've had countless discussions with
    patients at the pharmacy counter about their prescription drug
    costs. It is never an easy task to explain to a retired
    teacher, a grandma, or a neighbor, that their prescription
    copay will be over $600 simply because it is a new year, but
    that the prescription that was $47 last month is now $260
    because they're now in the Medicare coverage gap.
        For the last 5 to 10 years, I have been having these
    conversations with my patients all too frequently as the cost
    of prescription drugs have far outpaced inflation. These
    conversations often led to patients leaving prescriptions
    behind or rationing previously filled prescriptions solely due
    to the accessibly high cost.
        At the beginning of the year, I see patients delaying
    medication refills because of the high Medicare Part D
    deductible. As the year progresses and patients begin to enter
    the Medicare Part D coverage gap, we often see patients stop
    filling their most expensive medications for the remainder of
    the year. These conversations just became disheartening to our
    patients and who are burning out myself and my dedicated
    pharmacy staff.
        So, we set out to try and avoid these conversations
    altogether. Even before the patient arrives at the pharmacy
    counter, my staff and I explore all ways to reduce our
    patient's costs and bridge these coverage gaps. We want to
    ensure that the patient leaves the pharmacy with the prescribed
    medication or a therapeutically equivalent medication in their
    hands.
        Being a part of a critical access hospital affords my staff
    the time to advocate for our patients and more closely work
    with providers, nurses, social workers, and medical assistants
    to overcome these financial barriers. It often takes the entire
    healthcare team across multiple departments to connect patients
    with manufacturer samples, find a free trial coupon, enroll
    patients in a prescription assistance program, explore
    opportunities to the 340B drug savings program, and if all else
    fails, paying for the patient's copay out of our own pockets.
        Since the passage of the Inflation Reduction Act, our
    patients have certainly benefited directly at the pharmacy
    counter. This legislation has drastically improved the
    financial stability of many of my elderly patients who are
    almost all living on a fixed income. I'm reminded of a type 1
    diabetic farmer that was spending nearly $7,500 a year solely
    on insulin copays prior to turning 65 in 2022. He now spends
    less than $900 annually because of the $35 month cap on copays
    for his NovoLog and Lantus that he has prescribed.
        Another way that we have helped reduce our patient's
    prescription expenses is by counseling them, selecting the
    right Medicare Part D plan each year. Unfortunately, the open
    enrollment period has typically led me to explaining ever
    increasing prices, and patients becoming increasingly worried
    about their household budgets.
        However, this open enrollment period has led to entirely
    different feelings for my patients. I'm looking forward to
    showing them their 2025 plan comparisons because more out-of-
    pocket savings will be rolled out to all patients, not just
    those dependent on insulin.
        Last week, I counseled an 84-year-old retired home
    healthcare aide, suffering from heart disease and type 2
    diabetes. She takes 13 medications, including Entresto,
    Xarelto, Victoza, Praluent, and Jardiance. She will see her
    out-of-pocket costs fall from over $7,000 in 2024 to only
    $2,000 in 2025. These are life-changing savings for many of my
    patients, and now my staff and I can focus more on clinical
    aspects of our profession instead of chasing them coupons and
    dealing with manufacturer samples.
        The Inflation Reduction Act not only has helped reduce
    prescription drug expenses, but has also had a dramatic effect
    on one of the most important medications we have in our toolkit
    today; vaccines. At Iroquois Memorial Hospital, the pharmacy
    staff helps lead a vaccination program across many care areas,
    including long-term care residents, patients in our rural
    health clinics, and acute care patients.
        The expansion of coverage for many recommended adult
    vaccinations, including shingles, RSV, and COVID-19, has
    undoubtedly led to increased vaccination rates among our
    patients. Two years ago, nearly all patients interested in
    receiving the two dose shingles series first inquired about the
    cost before we ever discussed effectiveness or potential side
    effects. Unfortunately, a large percent of these patients would
    decline receiving the vaccine when they discover their out-of-
    pocket cost for nearly $400 for the series.
        Today, these vaccines are fully covered for Medicare
    beneficiaries, and the conversations I have with patients are
    censored around the importance of receiving the vaccines
    instead of the cost.
        Although current legislation has led to significant
    reductions in the price of prescription medications to a large
    segment of the U.S. population, there is still more work to be
    done. I've seen every increasing need to legislate meaningful
    cost reductions for all patients in the United States,
    especially those working-class Americans with employer-
    sponsored health insurance.
        As we see type 2 diabetes and heart disease diagnosed in
    patients in their 20's and in their 30's, it is increasingly
    important to ensure these patients and their families can
    afford to treat these diseases effectively for decades during
    their most productive years.
        Thank you, again, Senator Durbin for the opportunity to
    share my experience and those of many of my patients here
    today.
        [The prepared statement of Dr. Sandsmark appears as a
    submission for the record.]
        Chair Durbin. Thank you, Dr. Sandsmark. Ms. Deanna Brandt.

                      STATEMENT OF DEANNA BRANDT,
                 MEDICARE BENEFICIARY, COUNTRYSIDE, IL

        Ms. Brandt. Thank you, Chairman Durbin, and Members of the
    Committee. My name is Deanna Brandt. I live in Countryside,
    Illinois. I'd like to tell you a little bit about my experience
    in using the Part D section of Medicare. I've been on Medicare
    for since 2002, where about 19 of those years, I was on very
    few prescriptions. And for the most part, they were generic and
    considered tier 1 drugs, and very inexpensive. I was very
    healthy. So, very few problems.
        In 2021, I developed Covid, although I was unaware, with no
    symptoms. However, I developed atrial fibrillation, or AFib,
    maybe from Covid. It was detected when I was sent to the
    hospital to be treated for the AFib. From 2021 to the present,
    I have had RSV, two back surgeries, a bladder tumor, and stones
    in my bile ducts. Needless to say, it has required more
    prescriptions, but happy to say I now feel very well.
        Three of the medications I take are quite expensive and put
    me in the coverage gap. Pretty early in the year, in 2021, I
    was able to stay in the initial coverage section until I had to
    deal with AFib, and then I was pushed very quickly into the
    coverage gab in October. In 2022, it was May, 2023, April, and
    this year I got all the way to June.
        My out-of-pocket costs in 2021 were $4,533. In 22, they
    were $7,019, just $31 from the catastrophic stage. In 2023, it
    was $7,528, and I did reach the catastrophic stage. To date,
    this year, I've spent $5,634, but I will have at least another
    $1,200 through the end of the year.
        Although I have Social Security and a pension, and
    therefore on a fixed income, I do have to watch my spending. I
    live in a moderately priced condo, have a mid-price car, and I
    don't go on vacations. The amount I spend on drugs was more
    than I received from required distribution from my 401K.
    Instead of saving that money, I paid for drugs. I do like to
    assist my grandchildren with their school loan debt, but the
    last 3 years I was unable to assist.
        For others, that $7,000 would mean their basic needs like
    food, housing, or transportation. They're greatly affected. The
    average person spends about $3,000 in groceries a year, and
    about $1,500 a month in rent. For many, the cost of their drugs
    is a decision of whether they do or do not pay for their basic
    needs.
        I also was at a pharmacy one day when a lady came to pick
    up her prescriptions, one prescription. They told her the
    price. I don't remember exactly what it was, but it was well
    over $100. She stood there for a minute and then said, ``I
    don't have that kind of money,'' and she walked away from the
    counter without her medication. My regret was that I didn't
    react and offer her some help.
        I have a friend that's in a study for cancer. The drug she
    is taking would cost her $4,000 a month if she wasn't in the
    study. That is more money than most people receive from Social
    Security. She would not have been able to afford to pay that
    amount. She's, thankfully, in remission at the moment. I have
    another friend that pays $1,000 a month for a cream for a
    dermatology problem.
        There's assistance for low-income people, and there is a
    group of people with enough disposable income to afford
    medications. It's the group in the middle that seemingly bear
    the heaviest burden in this matter. Prescriptions that are
    necessary for quality of life should not be beyond any senior,
    let alone any other age group's ability to afford it. Being
    healthy should not just be for people with discretionary
    income.
        Food for thought. I sometimes question how the incessant
    advertising of prescription drugs on all forms of media affect
    the overall drug cost. Could that money spent be repurposed
    into lowering drug cost? I cannot decide which drugs I take.
    Only my doctor can.
        My friends and I are very grateful for Medicare and the
    drug program. We certainly don't want to go backward. It just
    seems for the cost for drugs that are considered tiers 3, 4,
    and 5 are very excessive. We're all grateful that next year
    there'll be a cap on our medications at $2,000. It could be the
    difference for many of eating or taking their medications.
        Thank you for your time and your efforts to lower
    prescription drugs. Keep working on this to make it better for
    me and others.
        [The prepared statement of Ms. Brandt appears as a
    submission for the record.]
        Chair Durbin. Thank you for being here. Sincerely, thank
    you very much. I'm sorry you don't consider this trip a
    vacation since you----
        [Laughter.]
        Ms. Brandt [continuing]. It is kind of.
        Chair Durbin. It's kind of a vacation, a little ways, but
    you're telling your personal story. Thank you. Makes a
    difference. Really does make a difference. I'm going to ask you
    a few things about it in a minute. What a panel. What a great
    panel. Thank you all for being here.
        Dr. Douglas, thanks for telling your personal story as your
    perspective as a physician. It really is meaningful. You
    mentioned that to manage his diabetes, your father was
    prescribed Jardiance, which he was unable to afford.
        I think we have a chart on Jardiance. As you can see from
    the chart, Jardiance manufacturers steadily raised the drugs
    price over the last 5 years from around $450 to nearly $600 for
    a 30-day supply. Your father lived through this under the
    Inflation Reduction Act. Medicare is finally able to negotiate
    the price it pays for certain drugs, including Jardiance, and
    the Biden/Harris Administration was able to negotiate the price
    for Jardiance down to $197 a month. A 66 percent discount over
    the high price your dad faced.
        Tell me what that price reduction, you think, will mean to
    your patients.
        [Poster is displayed.]
        Dr. Douglas. Well, in short, Senator, it means saving
    lives. I mean, people who have access to the medications that
    they need because they are affordable and within reach means
    that their conditions such as Jardiance, which is utilized to
    manage diabetes as well as some other comorbids as well means
    that they have their blood sugars in control. They stay out of
    the hospital. They don't have complications associated with
    diabetes like strokes, heart attacks, peripheral vascular
    disease. Ultimately it means that we keep people out of the
    hospital. We keep people from the morbidity and the mortality
    associated with diseases like diabetes.
        Chair Durbin. So, I'm going to ask you a question about the
    medical profession and vis-a-vis this issue, and maybe you'll
    feel comfortable answering, if you don't just say so. But it
    strikes me that there are a handful of drugs which we are
    bombarded with when it comes to advertising. You just can't
    watch a football game, or frankly, anything on your television
    without getting an ad for a new drug, or many times, a drug you
    know pretty well.
        Dr. Douglas. Yes.
        Chair Durbin. The fact that we can pronounce and even spell
    Xarelto at this point is proof positive that we've certainly
    been trained with all these ads. I'm assuming, and you tell me
    if I'm wrong, that the pharmaceutical companies have basically
    decided if we can convince the ultimate consumer to go into the
    doctor's office and say, I need Xarelto, I need Wegovy, or
    whatever it happens to be. That the doctor is going to
    prescribe that as opposed to questioning whether or not it's
    necessary, or whether there's an affordable generic. Is that
    true?
        Dr. Douglas. Yes. I mean, I certainly, I think that is the
    strategy. Not only do they advertise directly to physicians to
    encourage us to prescribe these medications, but they also
    encourage patients to go in the clinics and the hospitals to
    ask for these medications.
        For example, the drug that we've all been talking about
    today, Ozempic. We're constantly, as physicians, being
    bombarded with questions about their ability to get on the
    Ozempic, just to find out that the patients can't afford
    Ozempic. That I think the list price for Ozempic is around
    almost $1,000. And so, they certainly--this is certainly a
    strategy, I believe, from the pharmaceutical industry to
    encourage patients to ask for the medications that they see on
    the television screen.
        Oftentimes, patients aren't even aware that these
    medications are applicable to their situations, and we as
    physicians have to educate them and tell them why, you know,
    this medication is not appropriate for your condition.
        Chair Durbin. Let's take Ozempic, and look at some numbers.
    Novo Nordisk sells it for $71 in France, $59 in Germany. The
    United States, they charge patients $969, and the price is only
    going up. And I can understand the demand are coming from the
    consumer side, anything that is reduction in weight which
    doesn't involve strict adherence to diet or exercise. People
    have been looking for that miracle care for a long, long time,
    and it's going to create an ethical issue for us, too, unless
    we bring the price down to an affordable level in terms of the
    fact that weight reduction in and of itself, I think, is
    beneficial in almost every circumstance. And so, how do you
    react to that?
        Dr. Douglas. Well, my concern is, again, for those patients
    who Ozempic is not appropriate for. There's certainly
    conditions and situations where medication is not the right
    answer to address weight reduction. In some cases, surgery is
    more appropriate for patients with high BMI scores.
        And so, my concern is that those patients who come in
    asking for the medication, often for some of them, that
    medication is not applicable to them. And then for the patients
    who it is applicable to, most of them can't afford to even take
    the medication for us to prescribe it to them. So, I think that
    there's certainly--I think it's issues on both sides.
        Chair Durbin. Dr. Sandsmark, let me ask you a question that
    I raised earlier with the first panel. What's going on with
    Walgreens? Why is it when you go in there, you have to wait in
    line to get a prescription filled? I had to return a third day
    to get a prescription filled at Walgreens, smack-dab in the
    middle of Chicago. And you better pick the time of day when
    you're coming. If it's anytime near the end of a workday, the
    lines are just unbearable. And here we have a situation where
    they're saying, well, the answer to this from Walgreens
    corporate perspective is we're going to have to start closing
    drug stores. Closing drug stores? How does that solve a
    corporate financial problem? But it certainly doesn't address
    the basic problem of people waiting in line forever and ever to
    have a prescription filled. What's your take on that?
        Dr. Sandsmark. Yes, it's certainly not going to lead to
    better health healthcare outcomes by closing pharmacies. I
    think a lot of it has to do with how a lot of retail
    pharmacists are treated. There's a lot of burnouts with staff.
    Not only the pharmacists, but technicians. They're forced to
    administer vaccines, counsel patients, you know, fill hundreds
    and hundreds of drugs each day. And so, there is a lot of
    burnouts in there.
        You know, these corporations are having trouble finding
    staffs, like aren't able to keep their stores open. And then,
    going along with the reimbursement rates from these PBMs that,
    yes, some of them are controlled by big pharmacy chains, but
    some of them are not. So, you see the pharmacies as an
    individual getting squeezed by the low reimbursement rates on
    these ever-increasing prices on these drugs.
        Chair Durbin. I'd like to invite Professor Sachs and the
    Attorney General, to comment on the PBM experience that I've
    just described and any aspect of it.
        Professor Sachs. Oh, sure. So, in terms of the prices of
    prescription drugs, I'll defer on the question of independent
    pharmacies. In terms of the prices, there's clearly a role for
    some type of actor to negotiate for lower prices for drugs. But
    we've heard already about the ways in which PBMs don't seem
    like in many cases, they're passing on the discounts that
    they're getting to insurers or to patients. And so, in my view,
    we should think broadly about opportunities at the Federal
    level and even at the State level for PBM reform.
        So, you might have, for example, a regulatory reform or
    statutory reform that acts on the PBMs themselves, but you
    could think about a reform that would affect another actor in
    the healthcare system to push back on the problems that we're
    seeing. And so, the Inflation Reduction Act, I think is one
    example of this.
        So, if you look at, for example, the Federal Trade
    Commission regarding PBMs and their conduct in the insulin
    market, one of the concerns is about patients' exposure to
    these really high out-of-pocket costs. You could respond to
    that, and maybe we should respond to that by looking at the
    conduct of the PBMs themselves. But another way to respond to
    it is, as the IRA does, it caps Medicare beneficiaries' out-of-
    pocket costs for insulin at $35 per month, and it has this
    additional out-of-pocket cap and the Medicare Part D program as
    a whole.
        So, one option is to look at reforms that address the PBM
    itself, but another is to say, insurers are working with the
    PBMs in this way, and that relationship is subject to some of
    these concerns that might be harming patients. Let's look at
    the harm to patients more directly. So, that's maybe just one
    point I would make.
        Chair Durbin. Attorney General.
        Mr. Raoul. Yes, Mr. Chairman. The transparency is
    desperately needed. As we initiated our first investigation
    into a PBM that I mentioned earlier, getting the resolution was
    rather quick because they knew what they were doing was in
    inappropriate.
        Chair Durbin. Inappropriate. From an Attorney General's
    point of view, I might use a different word, but go ahead.
        Mr. Raoul. Yes. The stronger language that could be used
    on--it's unconscionable. Because as mentioned by several
    speakers today, the role of the PBM is the opposite of what the
    effect has been. It's to be able to negotiate, to drive down
    the costs. And the impact on end users, the patients, is that
    they're not using their medication or they're not using their
    medication appropriately, and the consequence can be fatal in
    some instances.
        The question that we're faced with State actions to
    regulate PBMs is whether we're preempted by the feds. And
    that's why we've been trying to use both efforts to encourage
    and protect State efforts to control the pricing as well as to
    encourage Congress to be able to get some transparency, get
    these PBMs to furnish their pricing data to the feds as well as
    State payers.
        Chair Durbin. Ms. Brandt, as you described it, I'm
    impressed by the fact that you've been able to juggle all these
    numbers and how they apply to you personally. And you seem to
    have made it through this thicket, but you describe people who
    have not been able to do so. Do you think this notion of $2,000
    a year maximum out-of-pocket expense, also define maybe $40 a
    week, is the most that you can have to pay out-of-pocket? Do
    you think that this is a cleanup of a system that is too
    complicated?
        Ms. Brandt. It might be. I'm a person that charts
    everything. So, every year, I compare the medication programs,
    and I write everything to how much every one will cost me. Not
    everybody does that.
        Chair Durbin. I think you could be an influencer.
        [Laughter.]
        Ms. Brandt. I'm yelling at people all the time. People have
    told me, oh, I don't look at it. I just pay the same, do the
    same. So, I'm kind of yelling at them. But I think it's such a
    wonderful addition, the $2,000. I'm very, very happy.
        Chair Durbin. It does make a big difference.
        Ms. Brandt. Big difference.
        Chair Durbin. Dr. Sandsmark, when it comes to the role of
    the pharmacist, I think we ought to put a couple things on the
    record. What does it take to become a licensed pharmacist in
    the State of Illinois?
        Dr. Sandsmark. Usually, about 6 to 8 years of schooling.
    And then----
        Chair Durbin. Beyond college?
        Dr. Sandsmark [continuing]. That'd be total.
        Chair Durbin. Pardon me?
        Dr. Sandsmark. Yes. Beyond high school, that'd be total.
        Chair Durbin. So, it's 8 years.
        Dr. Sandsmark. Yes. Depending on which school you go to.
    Yes. It'd be up to it.
        Chair Durbin. Is it an expensive education?
        Dr. Sandsmark. Probably about quarter to a half a million
    dollars, depending on which school you choose.
        Chair Durbin. And ultimately, these pharmacists are still
    in high demand, right?
        Dr. Sandsmark. Very, very much so.
        Chair Durbin. And how many pharmacy schools do we have in
    our State, or nearby?
        Dr. Sandsmark. I think we're up to like five or six now.
    Used to be only a couple.
        Chair Durbin. And you work out of the hospital, the
    Iroquois County Hospital?
        Dr. Sandsmark. Yes.
        Chair Durbin. But you do retail?
        Dr. Sandsmark. We do everything. We might go from mixing
    $100,000 chemo in the morning to filling a $4 antibiotic from a
    patient in our urgent care. So, it's really all over the board.
        Chair Durbin. Professor Sachs, I can't tell you how many
    times I've heard on the floor about the freeze on innovation
    and preventing new drugs from coming to market. You teach a
    course on that, don't you?
        Professor Sachs. I do teach classes on innovation in the
    pharmaceutical industry, but also on access to new medications.
        Chair Durbin. The cancer drug, Keytruda, had $25 billion in
    sales last year. $25 billion. The revenue for this single
    medication is on par with what MasterCard or McDonald's
    Corporation earns in a year. How is it possible? How can it
    possibly be that a penny less in profit to Big Pharma will
    stifle innovation?
        Professor Sachs. One of my favorite quotes on this topic is
    from former Health and Human Services Secretary Azar, who
    himself was a former pharmaceutical company executive, and he
    referred to this as a tired talking point, right? He said,
    ``it's not the case that if one penny disappears from pharma
    profit margins, American innovation will grind to a halt.'' And
    yet, over time, we certainly have seen the pharmaceutical
    industry oppose all kinds of measures of drug pricing reform
    from the larger scale drug price negotiation programs to much
    smaller scale bills that would focus on particular patent or
    FDA abuses.
        And so, in my view, what we really care about is the value
    of innovation to patients. It's about delivering real, new
    clinical value for patients, and reforms that preserve and
    protect that value, rather than just the amount of innovation
    are really what matters. And here, one thing about the
    Inflation Reduction Act, the IRA's drug price negotiation
    program, is it really centers that concept of innovation that
    delivers value for patients.
        So, Congress specifically directed Medicare to consider as
    part of the negotiation process factors like; whether a drug is
    a therapeutic advance as compared to existing therapeutic
    alternatives, the drug's comparative effectiveness, and whether
    the drug addresses unmet medical needs.
        Those are the kinds of things where Medicare is directed to
    consider. Whether this drug delivers more value for patients.
    If so, maybe we should pay more for it, rather than if there's
    a drug that's one of these, you might use the term ``me too
    drugs'', but doesn't provide a new mechanism of action or a new
    option for patients.
        Chair Durbin. We also know that pharmaceutical companies
    spend more in sales and marketing than they do on research and
    development. In 2020, Johnson & Johnson, one of the leaders,
    spent nearly twice as much on sales and marketing, $22 billion
    than it spent on R&D. GlaxoSmithKline was even worse. It spent
    $7 billion on research and development. Less than half of the
    $15 billion it spent on sales and marketing.
        Dr. Douglas, you seem like you're aware of this. Have you
    discussed this with people in the pharmaceutical industry?
        Dr. Douglas. Yes, certainly. The uneven spending in terms
    of on advertising and marketing versus the actual research and
    development, I think that a common conversation amongst my own
    colleagues and around the hospital is the fact that, you know,
    in America, we prioritize capitalism, right?
        And there's nothing wrong with turning a profit, but when
    that profit takes priority over people, especially in the
    healthcare industry, that's when it becomes a problem. And it's
    not an over exaggeration that people are dying because they
    can't afford the medications that they need, and they're
    spending much more time in the hospital in the emergency
    department.
        When we look at the--you quoted the Johnson & Johnson
    numbers. Novartis spent $14.6 billion in advertising and $9.9
    billion in research and development. Pfizer spent $11.4 billion
    advertising and $6.6 billion in research and development. I
    have a hard time grappling why these numbers. Well, one, why
    would your advertising cost be significantly higher than
    research and development, but why they would even be close in
    terms of numbers. And so, I think that it is a moral hazard on
    the behalf of the pharmaceutical industry in order to turn over
    large profits.
        And, you know, another point I want to make is that we
    talked about the evasiveness of the pharmaceutical industry and
    avoiding legislation to regulate these prices and industries.
    Like, the hospitals and some of our clinics, our larger scale
    clinics that get a lot of bad rep about care and affordability
    of care are being gouged by the pharmaceutical industry as
    well.
        We talk about the 340B Program, which is currently under
    attack by the pharmaceutical industry and some other opponents
    of the 340B Program. But that those type of programs that make
    prescription drugs more affordable for hospitals and patients
    allow us to provide resources in strapped environments like at
    the University of Chicago, where we care for a large percentage
    of Medicaid and Medicare patients.
        So, these programs that they've--the legislation that
    they've evaded and the regulation that they have evaded from
    making prescriptions more affordable, is harmful to patients,
    and it leads to less, and less, and poorer and poorer outcomes
    in terms of healthcare outcomes in our country.
        Chair Durbin. Now, the pharmaceutical industry is going to
    counter that they put these ads in the air for consumer
    education so that they can learn more about these drugs. I'm
    going to ask you about one of the drugs, and one of the
    statements that's made over and over again. The Xarelto, the
    warning is this, ``Don't take Xarelto if you're allergic to
    Xarelto''
        [Laughter.]
        Chair Durbin. Tell me as a doctor what you make of that.
        Dr. Douglas. Well, I think, oftentimes, in a lot of these
    advertising, you--I mean, we all see that the ads and on the
    television about all the warning signs and how quickly they
    rattle off ?
        Chair Durbin. Oh, yes.
        Dr. Douglas [continuing]. All the potential side effects or
    potential hazards to taking these medications, which is
    important for people to know and to be aware of. But there's
    evidently not a priority for people to know that otherwise they
    wouldn't be the last 3 seconds of the commercial in these
    advertisements. Right? So, I think it is important, the
    transparency about the harm and the risk of taking these
    medications is important, but it's not a priority for the
    pharmaceutical industry.
        And it's a marketing tactic. There's a science to
    marketing. It's like there's a science to medicine. I think in
    one of the previous hearings you had, one of your colleagues on
    the Judiciary Committee talked about that the ads are a cure
    for loneliness, right, and how we look at these ads and the
    people start off as depressed and sad because they are dealing
    with the disease. And then at the end, they're surrounded by
    family and loved ones
        Chair Durbin. Marching down the street.
        [Laughter.]
        Dr. Douglas. Marching, yes. And that's not reality, right?
    It's a marketing scheme by the pharmaceutical industry to
    encourage and inspire patients to go and purchase or lobby
    their physicians to prescribe those medications.
        Chair Durbin. Well, I kind of challenged the industry on
    consumer education when Senator Grassley and I introduced a
    bill, which said that every one of these ads had to contain a
    disclosure of the actual list price of the pharmaceutical drug.
    So, that the people who are watching this ad and thinking about
    maybe I can march down the street, too, having lost 35 pounds,
    maybe that's in my future as well.
        Well, we introduced this and it turned out the
    pharmaceutical industry did not want to educate any American
    consumers on the actual list price they set for the drug
    itself. Do you have any idea what the number one advertised
    drug is on television now?
        Mr. Raoul. I'm not aware.
        Chair Durbin. Well, when you hear the name, you will be;
    Rinvoq. Rinvoq. Any idea, perhaps Dr. Sandsmark, you might know
    this. Do you know what a monthly prescription of Rinvoq cost?
        Dr. Sandsmark. I don't think I've dispensed that one
    before, which is probably fortunate for my patients because I'm
    sure the prices can be rather high.
        Chair Durbin. Six thousand one hundred dollars. Six
    thousand one hundred dollars. Now, if you knew, if it were
    flashed on the screen while you're watching this ad, you might
    have second thoughts about whether or not I want to recommend
    that to the doctor next time I go in. Now, I don't want to stop
    anybody from a legitimate conversation and exchange with a
    medical professional. I'm not suggesting that at all. But this
    is not designed for legitimate information to be given to
    consumers. It is designed to market a product, and it's very
    successful in that effort in what they're achieving.
        I want to ask the Attorney General a question. When you
    join these other attorneys general on an amicus to the Ninth
    Circuit Court of Appeals supporting an Oregon law that requires
    pharmaceutical manufacturers to annually report information for
    certain types of prescription drugs, why is it important for
    the States to be able to provide more transparency?
        Mr. Raoul. Yes. As I mentioned with regards to the PBM,
    having everything, certain information--allows for inflated
    pricing, and more transparency does, you know allows for State
    and Federal regulators to rein in on some of these practices.
        Chair Durbin. It certainly does. And, I think, we've made
    that point today. Dr. Sandsmark, let me ask you about specific
    pharmacy near my home in Springfield. I've heard concerns from
    independent rural pharmacy owners like Dave Bagot, Petersburg
    Pharmacy in Menard County. He's highlighted the systemic
    underpayment by PBMs to small pharmacies, and how these
    middlemen steer patients to their preferred networks.
        The Federal Trades Commission has also found the same thing
    in enforcement against the three big PBMs; CVS Caremark,
    Express Scripts, and Optum, for anti-competitive and unfair
    rebating practices. This is a complicated subject that I'd like
    to ask you and Dr. Professor Sachs. We need more transparency
    around PBMs, as the Attorney General just said. Can you help us
    unpack these issues?
        Dr. Sandsmark. So, first of all, you know, preferred
    pharmacies is a loaded term, right? So, preferred doesn't mean
    more affordable. It just means that they, the PBM wants you to
    go there. It doesn't mean you're going to save money there. So,
    even on the Medicare Part D website, patients can go and see
    that one insurer might say that a chain pharmacy is preferred,
    but if they were to select a small independent pharmacy, like
    the one you talked about, that pharmacy might not be preferred,
    but more affordable for the patient at the bottom line
    annually.
        So, you have to see who's calling it preferred, right? Is
    it the PBM calling it preferred? That's, you know, steering you
    toward that. And we see the low underpayments all the time on
    these, you know, brand name drugs that we've been talking about
    all morning. You know, those are the drugs that a lot of times
    we're losing the most money on, right? The independents are 20
    percent of our prescriptions each month, we're usually losing
    some amount of money to the PBMs because they're not paying us
    enough for what we're paying it from the wholesaler.
        Chair Durbin. So, they make the drugs available, but they
    charge prices which you can't recover at the counter?
        Dr. Sandsmark. Yes, exactly.
        Chair Durbin. Dr. Sachs?
        Professor Sachs. So, one, I think, of the real challenges
    here, and we've heard a little bit about this, is the role of
    vertical integration, and the ways in which these PBMs are
    incorporated into pharmacy chains, or insurers, or other parts
    of the drug pricing supply chain and ecosystem, which makes
    transparency particularly important, but also even more
    complicated.
        So, we heard already, for example, reference to this New
    York Times series about the role of PBMs. Something that comes
    up in that series is about the role that PBMs are now creating
    these GPOs, these group purchasing organizations, that they're
    separating out from their core PBM functions. And whether
    through those GPOs, they might be siphoning off additional fees
    or other services. And it's very difficult to know. And so,
    transparency or sort of other oversight in general might be
    helpful in getting at that information.
        Another point that comes up in that news series and also in
    the interim staff report from the FTC from earlier this summer
    is this question of PBMs now introducing their own co-branded
    biosimilars, and in some cases, referencing them over
    biosimilars from other manufacturers. That's something where
    there also has yet to be, I think, a real sustained look at
    whether that's pro-competitive or anti-competitive. And so,
    there's a whole range of practices that have been raised in
    these reports that it'd be helpful to know much more about.
        Chair Durbin. It appears there's another process underway.
    Some of the largest pharmaceutical companies have gone further.
    They have launched new telehealth platforms. Now, patients
    seeing a drug ad on social media can, ``Click here,'' to talk
    to a doctor about a company's advertised medication. These
    platforms link patients with hand-selected healthcare
    providers. The ensuing visits are often briefed with little
    review of health records or histories. It makes a healthcare
    appointment more like an Amazon shopping experience, and the
    financial relationship between the drug company and the doctor
    raises concerns about inappropriate inducement of prescribing.
        What concerns would you have about pharmaceutical
    companies' handpicked doctors writing prescriptions for
    patients who are connected via their own ads? Dr. Douglas?
        Dr. Douglas. Yes, I would have significant concerns.
    There's financial incentive for these physicians to prescribe
    medications that may not be the most appropriate for that
    patient situation. So, I'm not personally aware of any
    physicians who are employed or work through telehealth and are
    supported through prescription drug industries, but I certainly
    would be concerned that there's incentive for the physician to
    prescribe medications that won't necessarily benefit the
    patient or be appropriate for their situation.
        Chair Durbin. Professor Sachs?
        Professor Sachs. Well, as a health law professor, something
    we talk about often is the independence of the medical
    profession, and the importance of physicians being able to make
    independent medical judgments based on clinical evidence about
    what might be best for their patients. And so, there's a whole
    series of different laws that are designed to make sure that
    physicians are exercising that independent judgment, maybe that
    they're not being financially induced, right, by other actors.
        And so, I'd have to look more at that case study in
    particular, but that certainly would be something that would be
    potentially concerning in thinking about the role of the
    physician and the relationship with their patient.
        Chair Durbin. I want to thank this panel for their
    contributions to this hearing. This hearing is really laid out
    in real terms how the market failure is caused by Big Pharma's
    exploitation of the patent system and bombardment of TV ads
    have made medications unaffordable for many people.
        The perspectives we heard from patients, pharmacists,
    providers, and legislators, are a call to action, from my point
    of view. We need to build upon the Inflation Reduction Act. For
    Ms. Brandt's observation, we've got to have affordable drugs.
    Your money or your life is not an acceptable outcome from this
    hearing. The perspectives we heard today will help us to build
    upon bringing down the high cost of prescription drugs.
        I'm not against pharmaceutical companies making a profit,
    I'm for it. I wanted to incentivize them to find new cures, new
    approaches in medicine. What we have now in this country is
    just almost indescribable. Try to get somebody to describe the
    role of a PBM. Attorney General, there was a full-page ad in
    the New York Times not that long ago from the PBM industry
    saying, ``We are not middlemen.'' But they were middlemen,
    completely lost the role that they play. We need to continue to
    incentivize pharmaceutical companies to develop these drugs
    while ensuring that they're accessible to Americans who need
    them at a price they can afford.
        The hearing record will remain open for a week for
    statements to be submitted. Questions for the record may be
    submitted by Senators by 5 p.m. on Tuesday, November 5, a day
    you should remember.
        Chair Durbin. I want to thank the witnesses again for
    coming. This hearing stands adjourned. And this is the end of
    your vacation Ms. Brandt.
        [Laughter.]
        [Whereupon, at 11:59 a.m., the hearging was adjourned.]
        [Additional material submitted for the record follows.]

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                                A P P E N D I X

    The following submissions are available at:

      https://www.govinfo.gov/content/pkg/CHRG-118shrg61373/pdf/CHRG-118shrg
        61373-add1.pdf

    Submitted by Chair Durbin:

     Patients For Affordable Drugs NOW, letter........................     2

     Transparency-Rx, letter..........................................     5

                                     [all]