[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
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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.]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
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]