[House Hearing, 116 Congress]
[From the U.S. Government Publishing Office]
UNSUSTAINABLE DRUG PRICES:
TESTIMONY FROM THE CEOs
(PART II)
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HEARING
BEFORE THE
COMMITTEE ON
OVERSIGHT AND REFORM
HOUSE OF REPRESENTATIVES
ONE HUNDRED SIXTEENTH CONGRESS
SECOND SESSION
__________
OCTOBER 1, 2020
__________
Serial No. 116-123
__________
Printed for the use of the Committee on Oversight and Reform
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]
Available on: govinfo.gov,
oversight.house.gov or
docs.house.gov
__________
U.S. GOVERNMENT PUBLISHING OFFICE
41-983 PDF WASHINGTON : 2020
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COMMITTEE ON OVERSIGHT AND REFORM
CAROLYN B. MALONEY, New York, Chairwoman
Eleanor Holmes Norton, District of James Comer, Kentucky, Ranking
Columbia Minority Member
Wm. Lacy Clay, Missouri Jim Jordan, Ohio
Stephen F. Lynch, Massachusetts Paul A. Gosar, Arizona
Jim Cooper, Tennessee Virginia Foxx, North Carolina
Gerald E. Connolly, Virginia Thomas Massie, Kentucky
Raja Krishnamoorthi, Illinois Jody B. Hice, Georgia
Jamie Raskin, Maryland Glenn Grothman, Wisconsin
Harley Rouda, California Gary Palmer, Alabama
Ro Khanna, California Michael Cloud, Texas
Kweisi Mfume, Maryland Bob Gibbs, Ohio
Debbie Wasserman Schultz, Florida Clay Higgins, Louisiana
John P. Sarbanes, Maryland Ralph Norman, South Carolina
Peter Welch, Vermont Chip Roy, Texas
Jackie Speier, California Carol D. Miller, West Virginia
Robin L. Kelly, Illinois Mark E. Green, Tennessee
Mark DeSaulnier, California Kelly Armstrong, North Dakota
Brenda L. Lawrence, Michigan W. Gregory Steube, Florida
Stacey E. Plaskett, Virgin Islands Fred Keller, Pennsylvania
Jimmy Gomez, California
Alexandria Ocasio-Cortez, New York
Ayanna Pressley, Massachusetts
Rashida Tlaib, Michigan
Katie Porter, California
David Rapallo, Staff Director
Alexandra Golden, Chief Counsel
Taylor Jones, Clerk
Contact Number: 202-225-5051
Christopher Hixon, Minority Staff Director
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C O N T E N T S
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Page
Hearing held on October 1, 2020.................................. 1
Witnesses
Mr. Robert Bradway, Chairman and Chief Executive Officer, Amgen
Inc.
Oral Statement............................................... 4
Mr. Mark Trudeau, President and Chief Executive Officer,
Mallinckrodt Pharmaceuticals
Oral Statement............................................... 5
Mr. Thomas Kendris, U.S. Country President, Novartis AG
Oral Statement............................................... 7
* Opening statements and the prepared statements for the
witnesses are available at: docs.house.gov.
INDEX OF DOCUMENTS
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The documents listed below are available at: docs.house.gov.
* Letter from the Mayor of Rockford, Illinois, Thomas McNamara;
submitted by Rep. Maloney.
* Questions for the Record: to Mr. Bradway at Amgen Inc.;
submitted by Rep. Porter.
UNSUSTAINABLE DRUG PRICES:.
TESTIMONY FROM THE CEOs
(PART II)
----------
Thursday, October 1, 2020
House of Representatives,
Committee on Oversight and Reform,
Washington, D.C.
The committee met, pursuant to notice, at 10:04 a.m., in
room 2154, Rayburn House Office Building, Hon. Carolyn Maloney,
Chairman of the Committee, presiding.
Present: Representatives Maloney, Norton, Clay, Lynch,
Connolly, Raskin, Rouda, Wasserman Schultz, Sarbanes, Welch,
Speier, Kelly, DeSaulnier, Plaskett, Gomez, Tlaib, Porter,
Comer, Jordan, Gosar, Foxx, Massie, Grothman, Palmer, Cloud,
Gibbs, Higgins, Miller, Steube, and Keller.
Chairwoman Maloney. The committee will come to order.
Without objection, the chair is authorized to declare a
recess of the committee at any time.
I now recognize myself for an opening statement.
Good morning, and welcome to Day Two of our landmark series
of hearings with drug company CEOs. Yesterday we heard from the
CEOs of three drug companies: Celgene, Bristol Meyers Squibb,
and Teva. And what we learned was shocking. Drug companies are
hiking their prices higher and higher, and placing an even
greater burden on the very patients who rely on these drugs to
survive. We learned that these skyrocketing prices are simply
unsustainable, both for government programs and American
families.
We also learned that claims by drug companies that their
price increases are necessary for research and development are
completely bogus. The internal company documents we obtained
show that drug companies hike prices almost entirely for
selfish reasons. They do it to meet internal revenue targets,
or to increase their own bonuses, in some cases. Drug companies
certainly spend some funds on research and development, but
nowhere near the windfall profits they are bringing in as a
result of their massive price increases.
Finally, in the cases we examined yesterday we learned that
drug companies target our country for their biggest price and
for their biggest price increases, charging the American people
more than the entire rest of the world combined.
They do it simply because they can, because Federal law
currently bars our government from negotiating directly with
drug companies to lower prices for Medicare. According to the
non-partisan CBO, allowing the Federal Government to negotiate
directly with drug companies could lower spending on brand name
drugs by about $456 billion. So, let that number sink in. It is
nearly half a trillion dollars.
Today is Day Two, and we will hear from three more
executives. We will hear from the CEO of Amgen, which
repeatedly raised the prices of two drugs: Enbrel, which is
used to treat rheumatoid arthritis and other painful
inflammatory diseases, and Sensipar, which is used to treat the
effects of kidney failure and parathyroid cancer.
We will hear from the top U.S. executive from Novartis
about the company's massive price increases for Gleevec, a drug
that treats chronic myeloid leukemia, a rare form of cancer of
the blood and bone marrow.
And we will hear from the CEO of Mallinckrodt about the
pricing of its drug called H.P. Acthar Gel, which is used to
treat a rare seizure disorder in little babies.
We are going to keep our opening statements short because
we want to hear the testimony from our guests. But I would now
like to turn to our ranking member for his opening statement.
Mr. Comer. Thank you, Madam Chairwoman, for holding this
hearing. I would like to reiterate a few points brought up at
yesterday's hearing.
First, Republicans have introduced legislation, H.R. 19,
full of bipartisan provisions that the House could pass today
and could be signed into law by the end of the week, to
decrease the cost of prescription drugs for all Americans.
Second, pharmaceutical innovation is vital to enabling
Americans to live longer and healthier lives, but we must
ensure those innovative products are accessible and affordable
for all Americans.
Third, while brand pharmaceutical manufacturers play a
significant role, we must look at the entirety of the
pharmaceutical marketplace, including PBMs, health insurers,
generic manufacturers, and wholesalers, to truly solve this
problem permanently.
At this time, Madam Chair, I would like to yield the
balance of my time to Representative Massie.
Mr. Massie. Thank you, Ranking Member Comer, and thank you,
Madam Chairwoman. I anticipate today's discussion and testimony
will involve the U.S. patent system, and so in this opening
statement I want to read the patent and copyright clause that
is in the Constitution. This clause was so uncontroversial that
it was accepted by all of those who were drafting and voting on
the Constitution, unanimously and without debate.
It says, ``The U.S. Congress shall have power to promote
the progress of science and useful arts by securing, for
limited times, to authors and inventors the exclusive right to
their respective writings and discoveries.''
So, some people who haven't studied this issue too much
think that perhaps patents are the reason that drug prices are
high, but the reality is on a lot of the drugs the patents have
expired and there is no restriction from the Patent Office to
keep somebody from making the generic versions of the drugs.
But there are other impediments not involving patents that stop
these generics from coming to market. So, I hope we find out
what those are about.
Then I also want to say that our Founding Fathers were
really smart here. They knew that if the owner had a limited
period to recoup their investment, the inventor and the owner,
then they would be able to find the capital and the backers to
develop these ideas and discoveries. So, even if you had
scientists who would come up with new drugs, for free--let's
say they just gave the idea away--these new drugs require
millions, hundreds of millions in some cases, of development in
order to bring them to market, and without a patent, which is
the equivalent of a deed, like a deed to a piece of property--
nobody would develop a piece of property if they couldn't get a
secure title to the property--patents work the same way. They
allow the investors to get secure title to the idea so that
they can then invest the money that is required to bring that
to market and to test it and make sure it is safe for all human
beings.
So, I look forward to a robust discussion on that, and with
that I yield back.
Chairwoman Maloney. I want to thank my colleagues, and with
your indulgence, because of my cough, I would like to just lead
up to the video that we want to play before we go into it. But
I did want to respond to my good friend and colleague, Mr.
Comer. I agree we should work on this issue. It is important to
the American people. It should be bipartisan. But since you
mentioned your bill, I am going to mention mine, H.R. 3, which
would merely allow our country to negotiate for lower drug
prices for Medicare, as we do with the Veterans Association. It
has passed the House. It is now in the Senate.
But what I would really like to do right now is to honor
and remember our former chairman, Elijah Cummings, who launched
this investigation 18 months ago. His No. 1 priority then, and
our No. 1 priority now, is the health and the well-being of the
American people, who are being harmed on a daily basis by these
astronomical price increases.
So, I would like to conclude my statement by playing a clip
of three individuals, patients and doctors, who are being
directly and negatively affected by the actions of these three
drug companies. And if could now play that video and move
quickly forward.
[Video shown.]
Chairwoman Maloney. Thank you. Thank you very much. I will
now introduce our witnesses, and we are grateful for their
attendance today and for their testimony.
Our first witness today is Mr. Robert Bradway, who is the
Chairman and CEO of Amgen. Amgen sells the anti-inflammatory
drug, Enbrel, and the chronic kidney disease drug, Sensipar.
Then we will go to Mr. Mark Trudeau, who is the President and
CEO of Mallinckrodt Pharmaceuticals. Mallinckrodt sells the
autoimmune and inflammatory disease drug, H.P. Acthar Gel.
Finally, we will hear from Mr. Thomas Kendris, who is the U.S.
Country President of Novartis. Novartis sells the cancer drug,
Gleevec.
The witnesses will be unmuted so we can swear them in.
Please raise your right hands.
Do you swear or affirm that the testimony you are about to
give is the truth, the whole truth, and nothing but the truth,
so help you God?
[Response.]
Chairwoman Maloney. Thank you. Let the record show that the
witnesses answered in the affirmative.
Without objection, your written statements will be made
part of the record.
With that, Mr. Bradway, you are now recognized for your
testimony. If you could unmute your mic.
STATEMENT OF ROBERT BRADWAY, CHAIRMAN AND CHIEF EXECUTIVE
OFFICER, AMGEN INC.
Mr. Bradway. OK. Thank you. Good morning, Chairwoman
Maloney, Ranking Member Comer, and other members of this
committee. My name is Bob Bradway and I am the CEO of Amgen, a
leading biotechnology company based in Thousand Oaks,
California.
Before I begin my formal remarks, I want to acknowledge the
work of Elijah Cummings on drug pricing issues as chairman of
this committee. I know he is sorely missed by his former
colleagues and I wanted to recognize his work dedicated to
improving access and affordability for patients.
For 40 years, Amgen's unwavering mission has been to serve
patients. We do that through innovative medicines and high-
quality biosimilars that treat many of the world's most serious
and costly illnesses. We are also engaged in the fight to
understand, treat, and prevent COVID-19.
We employ nearly 14,000 people here in the U.S., where we
conduct a vast majority of our cutting-edge research and eco-
friendly manufacturing.
Amgen is deeply committed to meeting the needs of every
patient, every time. Therefore, it is of great concern to us
when patients who might benefit from our medicines can't get
them.
We are committed to responsible pricing. A few recent
examples: In 2018, we launched a new migraine prevention
treatment called Aimovig, at a price that was between 20 and 65
percent below market expectations. We also made Repatha, a
medicine proven to reduce heart attacks and strokes in patients
with stubbornly high cholesterol levels, available at a 60
percent reduced price. This helped lower out-of-pocket costs
for patients, especially seniors on Medicare.
Over the last two years we have launched biosimilars to
some of the top-selling medicines in the country, and plan to
bring more to market over time, providing patients with more
affordable treatment options.
Overall, the average net price for Amgen medicines across
our entire portfolio in the U.S. declined in 2018 and 2019, and
we are on track for further declines this year.
Enbrel is an Amgen medicine that treats patients with
autoimmune disorders such as moderate to severe rheumatoid
arthritis. Enbrel highlights the tension between ensuring
patients have access to critical, innovative medicines and the
out-of-pocket costs they are also required to pay. Physicians
tell stories of how their waiting rooms were cluttered with
canes, crutches, and wheelchairs. Thanks to Enbrel, countless
patients have been given a new lease on their lives.
Since Enbrel's approval, we have invested hundreds of
millions of dollars in studies for additional uses and to make
it more patient friendly. As an example, we recently introduced
an easy-to-use self-injection device designed for Enbrel
patients whose disease has sapped the strength in their hands.
But innovations like this cost money, and that is partially
why we have increased the list price of Enbrel in the past. But
what has driven up the list price more than any other factor is
the pressure we face to match the price increases of the market
leader. I know this sounds strange. Companies in virtually
every other industry compete by offering the lowest price.
Unfortunately, the current rebate system in the U.S., created
with good intent, now often leads to a situation in which not
getting kicked off formulary requires matching a competitor's
higher price. These higher prices increase the already
significant rebates paid to the middlemen, who largely dictate
which medicines patients can access, regardless of which
medicines their physician prescribes.
Worst still, these rebates, paid on all our medicines, do
not translate into lower costs for patients, and that is
because they don't get passed on to patients at the pharmacy
counter. There is no question that the present rebate system is
dysfunctional and does little to serve the very patients it was
designed to benefit.
As we wrestle with the worst public health and economic
crises of our lifetime the time is now and the place is here to
craft the changes that are needed. Innovative
biopharmaceuticals are part of the solution to the burden
serious diseases impose on patients and society. Amgen can
strive for reforms to improve affordability for patients.
However, a single manufacturer cannot make that happen alone.
We stand ready to work with members of both parties, the
administration, and other stakeholders to develop policy
solutions, help improve access and affordability for our
patients without stifling innovation. There are so many
diseases to confront and patients to help. If we all stay
focused on what is best for patients, I am confident we can end
up in a better place.
Thank you for the opportunity to speak to you this morning.
Chairwoman Maloney. Mr. Trudeau, you are now recognized.
STATEMENT OF MARK TRUDEAU, PRESIDENT AND CHIEF EXECUTIVE
OFFICER, MALLINCKRODT PHARMACEUTICALS
Mr. Trudeau. Chairwoman Maloney, Ranking Member Comer, and
members of the committee, thank you for the opportunity to be
here today.
I started in the pharmaceutical industry as a research and
development engineer nearly 40 years ago. Over the course of my
career I have worked on pioneering treatments for several
critical diseases, including some of the very first for HIV.
The leadership roles that I have had in other regions of the
world have allowed me to better understand both the strengths
of the U.S. health care system and its challenges. I have
devoted myself to this industry because, like the nearly 3,300
employees of Mallinckrodt I know that the therapies that we
make improve the lives of patients and their families.
This has been a year of unprecedented challenges. When
COVID-19 hit we mobilized to identify therapies to combat the
diseases. We consulted with the FDA and NIH regarding potential
evaluation of INOmax, our inhaled nitric oxide therapy for the
treatment of COVID-19-related respiratory complications, and
supported an independent clinical trial being coordinated by
Mass General. As of today, nearly 250 hospitals and U.S. health
systems have used INOmax as an experimental treatment for
COVID-19 patients.
We also secured our supply chain to avoid manufacturing
interruption for the critical medications we make and donated
54,000 pieces of PPE, several ventilators, and more than 16,000
gallons of hand sanitizer manufactured in our Missouri plant.
We also engaged with Members of Congress and Federal agencies
like BARDA to discuss leveraging our extensive experience
making high-quality, U.S.-made generics at our plants in
Missouri, New York, Illinois, and North Carolina, to bring home
the manufacturing of essential medicines and active
pharmaceutical ingredients.
Today we are the only American manufacturer of
acetaminophen, a key active pharmaceutical ingredient in many
medicines, which we proudly make in Illinois and North
Carolina.
Our resolve to help patients with critical conditions has
never been stronger, and we understand and share the American
people's concerns over the availability and affordability of
prescription drugs. Mallinckrodt is steadfastly committed to
knocking down barriers to patient access. That is particularly
true with Acthar Gel.
Acthar is a complex injectable biopharmaceutical product,
FDA approved for 19 serious conditions, including infantile
spasms, lupus, multiple sclerosis, nephrotic syndrome, and
rheumatoid arthritis. Acthar is life-changing therapy for a
small group of patients for whom other treatment options have
failed, or patients whose conditions, if left untreated, may
lead to physical and developmental impacts requiring life-long
care, causing great financial strain on families and the
American health care system.
Acthar is not patent protected. We do not block generic
competitors from entering the market. It is our policy to
provide reference samples to generic manufacturers upon
request, and we have supported legislation like the CREATES Act
to ensure appropriate access to those samples.
Since we acquired Acthar in late 2014, we have invested
more than $660 million into modernizing the product, including
over $470 million in R&D activities and close to $190 million
in manufacturing advancements. We have initiated nine clinical
trials with targeted combined enrollment of nearly 1,100
patients, a large number given the rare or complex conditions
Acthar typically treats. Results from one study of patients
with persistently active rheumatoid arthritis showed that
treatment with Acthar resulted in low disease activity for an
astounding 62 percent of patients for whom standard treatments
did not work.
Since we have owned Acthar, the list price has increased,
on average, around five percent annually, not factoring in
inflation or significant discounting that we started when we
acquired it. In two of the last six years we didn't take any
price increase, and last year the net price of Acthar went
down, as it will again this year. We have also improved the
ability of patients with a prescription to obtain Acthar
through our robust free drug and commercial copay assistance
programs, which lead to many patients paying nothing out of
pocket.
Like all of Mallinckrodt's employees, I am dedicated to
bringing more breakthrough treatments to the market, including
Terlipressin, one of two treatments we are developing for
patients with advanced liver disease; StrataGraft, our
investigative regenerative skin therapy, which may reduce the
need for autografting in certain burn patients; and Adrabetadex
for Niemann-Pick Type C disease, a high mortality rare disease
affecting children and adolescents.
We will not waver in our commitment to serving patients
with critical conditions who need better options. Thank you
again for the opportunity to be here today.
Chairwoman Maloney. Thank you. Mr. Kendris, you are now
recognized.
STATEMENT OF THOMAS KENDRIS, U.S. COUNTRY PRESIDENT, NOVARTIS
AG
Mr. Kendris. Thank you, Chairwoman Maloney. Chairwoman
Maloney, Ranking Member Comer, members of the committee, thank
you for the opportunity to speak with you today.
My name is Tom Kendris and I am the U.S. Country President
for Novartis, a leading global medicines company. We use
innovative science to develop transformative medicines that
improve and extend people's lives. We also develop generics and
biosimilars through our Sandoz division, the second-largest
generics company in the United States. Our medicines reach
close to 800 million people every year. Globally, we are over
100,000 people, with approximately 15,000 employees in the
United States. Our global R&D headquarters is in Cambridge,
Massachusetts, and we have several manufacturing sites across
the U.S.
I have been with Novartis for 25 years, and I still marvel
at the passion of our people to tackle the most complex medical
challenges. Gleevec was one of the most significant medical
advancements in recent history. It revolutionized targeted
therapy for cancer. Before Gleevec was introduced in 2001, the
five-year survival rate for a patient with chronic myeloid
leukemia was only 30 percent. Now the vast majority of CML
patients have a normal lifespan. What's more, Novartis
continued to study whether the drug could treat other diseases,
and today it is approved for six other rare cancers, saving
tens of thousands of lives.
A more recent example of our transformative treatments is
the development of a gene therapy to treat spinal muscular
atrophy, a rare genetic neuromuscular disease that affects
primarily babies. The treatment is one of the first gene
therapies to be approved in the U.S., with a single injection.
Some babies who would otherwise have died by the age of two or
three are now going to kindergarten and growing up like other
children.
In cell therapies we developed the first CAR-T therapy to
treat a rare form of pediatric and young adult leukemia. This
therapy can bring a patient from the brink of death to
remission. The first patient ever to receive this therapy has
been cancer-free for eight years and is now going to high
school and leading a normal life. Spending time with this young
patient's family is one of the great privileges of my career.
Beyond rare diseases and cancers, we are reimagining how
innovative medicines might improve public health broadly,
particularly in sickle cell anemia, malaria, and cardiovascular
disease.
I would like to be clear with the committee, however, that
at Novartis we recognize that these innovations don't matter if
patients cannot afford or get access to them. In the U.S.,
issues of price and access present systemic challenges that
must be addressed together by industry and policymakers, and
Novartis is committed to being part of the solution. While CMS
predicts national health spending to grow at an average rate of
5.4 percent through 2028, the average net price of our
medicines is expected to decrease by 2.5 percent in 2020.
Value-based pricing is a critical tool in addressing
affordability and access. When setting prices, we at Novartis
consider multiple factors, including the improvements the
medicines offer patients, both clinically and in terms of their
quality of life, and the benefits that the medicines offer to
the health care system and to society.
The industry should adopt a similar approach, and patients
should have access to treatments with low cost-sharing, to
encourage the use of the most cost-effective options available.
We also seek to lower costs by developing low-cost biosimilars
and generics through our Sandoz division, which brought the
first biosimilar to market in the U.S.
Over the past five years, Novartis has provided medications
at no charge to nearly 300,000 U.S. patients experiencing
financial hardship or who have limited or no prescription drug
coverage. Eligible patients with commercial insurance often pay
less than $30 for a 30-day prescription for the vast majority
of Novartis' products.
The pharmaceutical industry used to be revered. That trust
has eroded, however, and our industry must work to regain it.
At Novartis we understand that this trust is earned, not just
from bringing breakthrough medicines to patients but by pricing
these medicines responsibly and ensuring broad access. While we
live in an incredible era of progress in human health, we will
only be successful if we can make both of these goals a
reality. At Novartis we are passionately committed to doing so.
Thank you for your time this morning and I look forward to
answering your questions.
Chairwoman Maloney. Thank you. I thank all of you.
I now recognize myself for five minutes for questions, and
I thank Mr. Comer for allowing me to go over a little of my
time. I certainly grant the same to him, and more, to his
colleagues on your side of the aisle.
Yesterday we heard the CEOs claim over and over again that
they had to raise drug prices to help pay for research and
development and promote innovation. But the internal documents
we obtained showed that these claims were false. Instead, they
showed that these price increases are intended to generate more
and more revenues for the drug companies.
Mr. Trudeau, let's start with you. In your written
statement today you made the statement, and I quote, ``At
Mallinckrodt we believe that pricing for an innovative therapy
should reflect the value that the treatment brings to patients,
providers, and the health care system as a whole,'' end quote.
But your company didn't acquire Acthar Gel because you
thought it was an innovative therapy. It was a very old drug.
You acquired it to meet your financial objectives.
I would like to go through three quick slides with you.
First is Exhibit 66, and it is up on the screen.
[Slide.]
Chairwoman Maloney. This is a slide from a presentation
that was prepared when you were considering the acquisition of
Questcor, which made Acthar. As a preliminary matter, these
talks about Quincy, Quincy was just the code name you used for
your real company, Questcor, right?
Mr. Trudeau. That is correct, Madam Chairwoman.
Chairwoman Maloney. Thank you. The title of the slide says,
and I quote, ``Questcor is a rapidly growing specialty
pharmaceutical company with a premium-priced product.''
Mr. Trudeau, the premium-priced product was Acthar, and
premium-priced just means really expensive. Right?
Mr. Trudeau. That is actually not true. What it refers to
is that it was priced at a premium to other competitive
therapies.
Chairwoman Maloney. Well let's look at the next slide,
Exhibit 67.
[Slide.]
Chairwoman Maloney. If you look at the fourth bullet, this
slide says your acquisition would allow Mallinckrodt to, quote,
``achieve aspirational goals with a single transaction,'' end
quote. By ``aspirational goals'' you are talking about huge
revenues, and that is exactly what you got. Acthar sales
accounted for a third of your company's net sales from 2017
through 2019. Isn't that right?
Mr. Trudeau. The sales are roughly correct, but our
aspirational goals were actually to transform the company.
Mallinckrodt was originally a generics and imaging company and
we were looking to make a transformation to a company that was
focused on research, investment, and the opportunity to address
patients with severe and critical conditions who are
underserved by current therapies.
Chairwoman Maloney. Well, let's now look at Exhibit 68.
[Slide.]
Chairwoman Maloney. Mr. Trudeau, I will just read the
headline. It says that your modernization strategy will define
the future of Acthar as either a growth asset or a, and I
quote, ``cash cow,'' end quote. Isn't it true that this is how
you really see this drug, not as an innovative therapy but as a
``cash cow''?
Mr. Trudeau. No, that is not true, and this document, which
I was just recently made aware of, actually was a draft
document that was never shown to our board.
But that term is typically applied to products for which no
investment is likely to be going forward, and, in fact, that is
exactly the opposite with what we have done with Acthar. We
have invested nearly $660 million since we acquired the product
in 2014.
Chairwoman Maloney. OK. A cash cow is a profit-making
thing. What is a cash cow? That is what you said. I think the
document speaks for itself.
Mr. Bradway, may we turn to you? Your company's talking
points claim, and I quote, ``At Amgen we price our products to
reflect the economic value that is delivered to patients, to
providers, and payers, the unmet medical need, the size of the
patient population, the investment and risk undertaken, and the
need to fund continued scientific innovation,'' end quote.
But your internal documents tell a very different story.
So, let's look first at Exhibit 36.
[Slide.]
Chairwoman Maloney. This is a pricing committee
presentation from December 2016. In this document your pricing
committee is basing its decision not on innovation or research
and development but on what another company, AbbVie, might do
with a similar drug. Isn't that right?
Mr. Bradway. Yes, Madam Chairwoman. That is correct, and it
is important to note what is happening in this discussion. What
this reflects is the nature of the--the structure of the
biopharmaceutical industry through which we compete for
formulary position for our medicines with other molecules in
the same therapeutic category. So, what you are seeing here is
a snapshot of a discussion about how we position Enbrel versus
other molecules that we compete against in this anti-
inflammatory category.
Chairwoman Maloney. Well, this document, it has three
scenarios for what AbbVie might do, and it plans out what your
company will do in response. Mr. Bradway, these pricing
executives are not discussing any of the things that you
mentioned in your talking points. They are not discussing
research and development, unmet needs, investments, risk
undertaken, innovation. Instead of competing with other
companies to beat their prices you are all increasing them in
lockstep. Isn't that right? That is what the document says, and
I think it is scandalous.
Mr. Bradway. What you see here is a document that
illustrates the competition that exists to keep medicines like
Enbrel on formulary. Again, if I may be allowed, Madam
Chairwoman, let me say a few words about the structure of the
market that requires the kind of rebating that is implied in
this document.
As I said, Enbrel competes against 20 different molecules
in the anti-inflammatory space. We offer rebates which secure
our position on the formulary of the intermediaries who
determine which medicines are available for patients to use,
and what the effects are of the scenarios that the team is
considering in order to make sure that this medicine remains
available for those patients who are already on it and those
patients whose physicians want to add them to their therapy.
So, they are looking at a range of scenarios, and implicit in
this is the rebate that would be associated with those
scenarios for the product.
Chairwoman Maloney. Well, let's move on to Mr. Kendris. In
your written testimony you say, and I quote, ``Given its life-
changing attributes we have committed to making Gleevec
accessible to patients who need it,'' end quote. But one of the
documents obtained by the committee shows that executives
priced Gleevec as high as possible, and they priced it so high,
from the documents, to meet revenue targets without triggering
negative backlash.
Let's put the slide on the screen, and this is Exhibit 3.
[Slide.]
Chairwoman Maloney. This is a slide of Gleevec's pricing
scenarios, including the risk to Novartis' strategic financial
plan, quote, ``if action not taken in 2013,'' end quote. If you
look in the top right-hand box, the description of the
aggressive pricing model says, quote, ``delivers greatest
upside while keeping single increases below the 10 percent
threshold,'' end quote. This aggressive model recommends five
price increases of 9.9 percent over the course of three years.
Mr. Kendris, my question is, your company chose the most
aggressive pricing model, didn't it?
Mr. Kendris. Madam Chairwoman, in the next sentence, right
after the one you read, the document which I am seeing this
morning recommends enhancements to our patient support
programs. So, Madam Chairwoman, what I would say is that over
the years since Gleevec was introduced onto the market its
value increased exponentially, because of the five new
indications that we obtained for Gleevec in rare cancers and
the tens of thousands of patients whose lives were saved. Over
time it became clear that the remissions, not only in CML but
in all of those cancers, were robust and long-lasting.
In 2001, we didn't know that. We didn't know how long
patients would live and survive after they were given Gleevec.
But over time we found out that they did. And we turned cancer,
all of these six cancers, from a fatal condition first to a
chronic condition and then, with a follow-on product, Tasigna,
we turned it into a treatment-free remission condition,
basically a cure. They don't have to take a pill any longer.
So, Gleevec was tremendously valuable, and the price
increases we took were--we certainly took them over those
years, Madam Chairwoman, but we were always the lowest-priced
product in the class. The product has been generic now since
2015. We haven't taken a price increase since 2015, and today
55 percent of what we manufacture of Gleevec is given away to
patients who can't afford it and given away for free.
Chairwoman Maloney. Well, the bottom line is that Novartis
went with the pricing strategy that would maximize net sales,
raising Gleevec's price five times in three years.
The point here is that all the claims by drug companies
about why they need to increase prices to pay for research and
development and for innovation, they are simply not true. These
documents show that they are increasing prices simply to make
more money, plain and simple. That is why we need to finally
allow the government to negotiate directly for lower prices,
like all other countries.
Again, these drug companies make more off the United States
than all the other countries in the world combined, buying
their products.
There will be further questioning on the rebates and how
they are really not working, or not getting to people, but I am
over my time as I am, and I want to now recognize Mr. Massie
for the same amount of time, for his questions. And thank you
very much for allowing me to go through the slides. Thank you.
Mr. Massie. Thank you, Madam Chairwoman. Mr. Trudeau, you
mentioned that Mallinckrodt was a manufacturer of generic
drugs, and that was a big part of your market in the beginning.
In general, what percent of prescriptions in the United States
are generics?
Mr. Trudeau. I believe it is approximately 90 percent at
this point.
Mr. Massie. So, 90 percent of the prescriptions that are
written and filled in the United States, roughly, are for
generic drugs. I think that is fantastic. But is the cost of
generics in the United States significantly higher than in
other countries? How do we compare when you go on a generic
label?
Mr. Trudeau. Well, typically the United States generic
market has been amongst the most efficient, meaning that prices
drop most rapidly in the U.S. We have a very efficient market.
And generic prices typically, in a relatively short amount of
time, many times within a year, drop to about 10 percent of the
branded price. So, we have a system that works from a generic
perspective, certainly relative to other countries.
Mr. Massie. And what are some of the challenges you face
when you want to make a generic drug, say after a brand name
drug goes off patent? What are some of the hurdles that you
have to overcome to get a generic drug to market?
Mr. Trudeau. Well, the primary thing that you have to do is
generate bioequivalent status. You have to demonstrate that
your product is bioequivalent to the branded product. That
requires some clinical work. Sometimes it requires other
investment, research and development investment. Then, of
course, you need to be very efficient, from a manufacturing and
distribution standpoint, because you are competing in a very
aggressive, competitive marketplace.
Mr. Massie. Is there something that we can do in Congress
to make it easier to get to a generic label from a brand name
label after a drug goes off the patent?
Mr. Trudeau. I believe the generic environment today is
actually quite good. I think there has been significant
improvements on the regulatory side in improving the throughput
of generic approvals. I think the statistics show that the FDA
has generated significantly more approvals of generic products
over the last couple of years. That certainly adds to
competition, and that is certainly likely to drive down prices.
Mr. Massie. In order to produce a generic without
infringing on a patent, the patent has to expire, I suppose,
but can you also license the patent or is that not typical in
the drug industry?
Mr. Trudeau. Certainly, it could be done but that is not
typical. Mostly generic products enter the market after the
expiration of patents.
Mr. Massie. And what is the lifetime of a patent?
Mr. Trudeau. Well, a patent can vary, but the lifetime is
typically going to be on the order of 20 years. But recognize
that is from the actual discovery itself, and much of that
timeframe is actually taken up by research and development.
Many times, when you launch a branded product you may only have
a couple of years left on the patent, because most of that time
has been eroded because it has taken time to develop the
product.
So, you know, typically it is 20 years. It can vary a
little bit. But that is typically the timeframe.
Mr. Massie. That is 20 years from when the invention
occurs, and like you said sometimes you are only left with a
few years to try and recoup the investment. How many of the
drugs that you develop actually result in a profit?
Mr. Trudeau. Well, on the generic side, typically you are
likely to be reasonably successful because again you are not
driving innovation necessary. But what you are doing is you are
driving down cost because you are able to bring competitive
products to the market.
On the branded side it is a little bit different. On the
branded side I think, you know, the likelihood of success while
you are actually driving innovation is dramatically lower. We
have heard some statistics that 1 in 100 or so drugs ever makes
it to market. That is probably in the range. It is a high-
failure, high-risk environment when you are developing any kind
of new innovation, as we all know.
Mr. Massie. Thank you. I have got a few questions for Mr.
Bradway. Mr. Bradway, you talked about the sort of, I don't
know if you used the word ``convoluted'' but it seems
convoluted to those of us who aren't in the industry and trying
to understand the drug pricing schemes and how it involves
pharmacy benefit managers and rebates.
Can you tell us roughly what percent of the money that my
constituents spend on drugs, or the government spends on drugs
for my constituents, goes to pharmacy benefit managers, Mr.
Bradway?
Mr. Bradway. Yes, I can tell you that the intermediaries,
in general, which include the PBMs, have about 46 cents on
every dollar in the pharmaceutical industry. So, 46 percent of
what you see in the U.S. drug industry reflects revenues that
go to the intermediaries, including the PBMs.
Mr. Massie. So, that is almost half of the drug price that
the consumers pay or the government pays goes to an
intermediary instead of the drug company?
Mr. Bradway. Or instead of directly to the patient. That is
correct.
Mr. Massie. And when my constituents pay their copay on a
drug, you mentioned that there are rebates that are paid. Do
the rebates go to my constituents? Who do they go to?
Mr. Bradway. Thank you for raising this question,
Congressman. I think this is important for you and your
constituents to appreciate.
The copay is a function of list price and the rebates are
also a function of list price. So, as list price rises, the
rebates to the intermediaries rise as well. However, the other
consequence of raising list price is that the patient at the
pharmacy counter is having to pay a copay of now a higher list
price, and the discounts that have been given to the
intermediaries are not provided at the pharmacy counter to the
patient.
So, we have wound up with a situation where the
intermediaries are getting the rebates and not directly
transferring that benefit to the patients. So, the
intermediaries are seeing their share of the pie increase while
asking the patients to reach into their pocket and pay more in
the form of copay.
Again, that copay is not collected by the innovative
industry. That copay is collected by the intermediaries in the
system.
Mr. Massie. So the copay, because of the way the pharmacy
benefit managers work and the other intermediaries, the copay
that my constituents see, or the check that they have to write
out, or sometimes they have to borrow the money for that copay,
that copay isn't based on the actual price that goes to the
drug company or the final price that the drug company receives
for that drug. It is not even based on the real price of the
drug once you count the rebates. It is based on a higher
effective price. Is that correct?
Mr. Bradway. That is correct. You are absolutely right.
Your constituents are paying a copay, again, which is a
fraction of the list price, and the innovative company is
receiving what is known as the net price, which is the list
price minus the rebate returned to the intermediaries. And in
the United States, the estimate of the rebates is approximately
$150 million, but as I said earlier, 46 percent is in the hands
of the intermediaries.
Mr. Massie. Madam Chairwoman, do I have time for one more
question? OK.
So, can you explain to us, Mr. Bradway, what the intent was
when we came up the pharmacy benefit manager system, what the
intent was and how it was designed to make drugs more
accessible or a lower price, and how that mission has possible
wandered over the years?
Mr. Bradway. Sure, Congressman. I perhaps might point out
two things. First, the structure of the rebate system that I am
referring to is one that was created by legislation that
enables us to interact with the intermediaries in a way that
includes paying them rebates in order to secure formulary
placement for our medicines.
But, you know, again, I don't want to just point the
fingers at the PBMs. I think we heard in Mr. Trudeau's
testimony one of the useful functions that the PBMs have played
in our system through the years, which is helping convert
patients to generic drugs when they are available. It is one of
the reasons that we have 90 percent of the prescriptions
actually being written for generic drugs.
I think the question, however, is whether they are playing
an appropriate role when it comes to innovative, brand-
protected innovations and design formularies that separate
physician and the patient from one another at the pharmacy
counter, where patients can't be sure that they are going to be
able to walk away from the pharmacy with the medicine that
their doctor intended them to have because of the structure of
the rebate system that is in place in our industry.
Mr. Massie. It feels like to me, just in closing, we need
some kind of truth in pricing here. If people bought cars this
way and the actual price of the car wasn't what the consumer
paid, and financing was based on a price that wasn't the real
price, I think we would be outraged. So, maybe that is
something we could look into.
I thank the chairwoman for her indulgence, and I yield
back.
Chairwoman Maloney. Thank you. I now recognize
Representative Norton. Representative Norton, you are now
recognized.
Ms. Norton. Thank you very much, Madam Chair. I hope you
can hear me.
Chairwoman Maloney. Yes, we can hear you.
Ms. Norton. I want to thank you for this very important
hearing. In fact, the subject matter, drug pricing, is so
important that you have scheduled two days, one after the
other, on this subject, so we can clear this matter up.
I want to say to Mr. Bradway, Mr. Trudeau, and Mr. Kendris
that we very much appreciate your joining us. Your testimony
has been very helpful. We recognize, though, that you produce
drugs that are crucial lifelines to patients and to their
families. And you heard from the two witnesses who opened these
hearings that far too many families lose access with each price
increase, and that is before we get to the generic state of a
drug.
Mr. Bradway, your company has raised the price of Enbrel 27
times since 2002. Amgen's profits from Enbrel has grown from
$1.25 billion in 2003 to more than $5 billion today.
Now to turn to the other Amgen drug under investigation,
Sensipar. Since launching the drug in 2004, Amgen has raised
the price more than 20 times. Amgen's U.S. sales price for
Sensipar also rose from $36 million in 2004 to $1.4 billion in
2018.
Mr. Trudeau, since acquiring Questcor, and, by extension,
Acthar, in 2014, Mallinckrodt has raised Acthar's already high
price by more than $8,200 per vial. That is a 26 percent
increase. From 2014 to 2019, your company generated nearly $6
billion in net sales of Acthar.
Mr. Kendris, since launching Gleevec in 2003, your company
has raised the price 22 times. Due to these price increases,
your profits have grown from $1 billion in 2009 to more than
$2.5 billion today.
Now nearly one in four Americans taking prescription drugs,
against this backdrop, report difficulty affording their
medicine. We began the hearing today with testimoneys from
these two patients, who are on these medications for their
lives but are struggling to make ends meet. Like many other
families, they have to make heart-wrenching decisions to afford
these vital drugs.
Mr. Bradway, yes or no. Will you commit to lowering the
list price of Enbrel and Sensipar in the United States?
Mr. Bradway. Sensipar is now off patent in the United
States and the price of Sensipar has fallen by some 95 percent.
And as I said in my opening remarks, we have lowered our net
prices across our portfolio in the U.S. over the past two
years, and we are on track to repeat that again in 2020.
Ms. Norton. Mr. Trudeau, yes or no, and I am afraid Mr.
Bradway did not give me a yes-or-no answer. Will you commit to
lowering the list price--and the reason I asked for a yes or no
because my time up--will you commit to lowering the list price
of Acthar in the United States? Yes or no.
Mr. Trudeau. I will commit to lowering the net price of
Acthar in 2020 down to levels that it was in 2015.
Ms. Norton. Thank you. Mr. Kendris, yes or no. Will you
commit to lowering the list price of Gleevec in the United
States?
Mr. Kendris. Congresswoman Norton, we have--the product
went generic five years ago and we have lowered the price by
giving discounts on the branded product, huge discounts, 40 or
50 percent discounts.
Ms. Norton. But I mean the list price. I mean the list
price, sir.
Mr. Kendris. Yes, we have given discounts on the list price
post-generics, and we haven't raised the price. So we have, in
effect, lowered the price and we are giving away 55 percent of
what we manufacture now for free to patients who cannot afford
their medicine. So, we are doing everything we can,
Congresswoman, to make sure that every patient who needs
Gleevec can get Gleevec.
Ms. Norton. Thank you. Madam Chair, the problem is that
they are not doing everything they can, and that is why this
hearing is so important. I yield back.
Chairwoman Maloney. Thank you.
Mr. Gosar, you are now recognized for questions. Mr. Gosar.
Mr. Gosar. Thank you, Madam Chairwoman, and I am certainly
happy that I follow my good friend, Thomas Massie, because he
set the stage for me perfectly.
It seems to me that this hearing and yesterday's hearing
are a little tone-deaf. We have countless states that have shut
down with businesses crumbling due to the overreactions to
COVID-19, yet we are here talking about how certain drugs need
to have government-controlled prices. Yet there are millions
who are thrust into unemployment because of these harsh
restrictions. And this hearing isn't even focused on the drugs
or therapeutics that most people have on their mind--a vaccine
to COVID-19. But since we are here, I plan to get a little
substance out of this hearing.
Today we have CEOs of some of the biggest pharmaceutical
companies here with us. The way my colleagues on the other side
of the aisle view prescription drugs and price tags are very
top line. They see a drug that helps people but since it is not
cheap, therefore we need the government to negotiate these
prices. In typical fashion, you identify the problem properly
but butcher the solution with more government. Ronald Reagan
once said, ``It isn't the government that is the solution. It
is part of the problem.''
As a doctor in a past life, the first step when diagnosing
an ailment is look to the source and keep it as simple as
possible. If there is something preventative that can be done
to stop the problem from reoccurring, why not try?
Let's put this theory into practice. Why are drug prices so
high? Many point to PBMs, greedy executives, a flawed patent
system. Does anyone want to point a finger at the Federal
Government? I know I do. In any prescription drug chain you
have health insurers, PBMs, drug makers, pharmaceutical
wholesalers, pharmacies themselves. What do they all have in
common? Government influence and control. Right off the bat,
health insurance companies are exempt from antitrust laws. That
means they literally do not have to compete.
Many of my colleagues have been mentioning an infusion of
competition to help lower prices, but how do you suppose we do
this when a link in the chain can legally monopolize? I have
been fighting my entire political career and before that to
repeal this 75-year-old statute, because you can't even imagine
a world where health insurers have to compete for your
businesses instead of leaving most Americans with little to no
options.
As for other entities involved in the drug process like
PBMs, these companies became a main focus of Obamacare and
actually fueled the creation of new rules by CMS under the
Obama Administration to come down on PBMs. And how about
pharmacies and how they must deal with 340B contracts that set
strict price controls on various drugs? No market force there.
And what about the drug makers we have here today? I am
sure they could go on all day about how the government is
involved in their day-to-day business. Just the FDA regulations
alone could keep you guys talking for days, but unfortunately I
only have so much time.
My colleagues on the other side of the aisle want to point
to our current system and say that this is the free market.
Well, if this is the free market and this is competition, it is
failing America. What we now have is nowhere near a free
market. It is crony capitalism at best, and it is just the
excuse my colleague are using to push us closer to socialized
medicine, where folks like these testifying today will be
decimated and those created therapeutics for those who need it
will be lost.
So, I say to you folks here today with us, join the side
that is simplifying the prescription drug process. Be for the
side of free market competition, because soon you may look like
those drug companies in other countries where your profits are
kept, your innovation is stifled, and your impact on making
this world a better place will be completely evaporated.
Now last--hold your breath--I want to thank the majority
for taking the first step in passing Congressman DeFazio's and
my bill, the Competitive Health Care Insurance Reform Act,
unanimously out of the House last week. This is the first step
in which we create a solution where it is market driven. Now
let's get the Senate to pass it, and what we see is patients,
doctors, and the system all benefiting.
Thank you very much, Madam Chairwoman, and I yield back.
Chairwoman Maloney. Thank you very much.
Representative Clay, you are now recognized for questions.
Mr. Clay. Thank you so much, Madam Chair. Let me also thank
you for mentioning our late colleague, Elijah Cummings. We knew
that this was one of his signature issues and thank you for
keeping his memory alive and keeping this effort.
Let me start off by thanking all three witnesses for being
here, and let me say hello to a former constituent, Mark
Trudeau, who has headed up Mallinckrodt, which has been a part
of the St. Louis community for almost 150 years.
And, Mr. Trudeau, let me start with you. You know, part of
the concern about Acthar is that it is a pretty old drug with a
relatively high price and yet you have said Mallinckrodt is
modernizing it. I think you said you have invested more than
$600 million in it. Tell us why it is important to modernize
this drug, and aren't there other, more modern therapies that
can take the place of Acthar?
Mr. Trudeau. Thank you for the question, Congressman Clay,
and good to see you as well.
So, like many opportunities, there are old drugs that have
been repurposed for new indications and new purposes, for
example, looking at some of the antivirals that are being
developed to treat COVID-19, for example. In the case of
Acthar, we believe that it is quite important to create new
information, new evidence, things that have led actually to
changing our label to provide patients and prescribers, as well
as those responsible for reimbursement, the appropriate
scientific-based information to make good economic and clinical
decisions for their patients.
We are most focused on doing the best that we can for
patients that are suffering from severe and critical illnesses
who have relatively few options, and Acthar can make a
difference in the lives of those patients.
Mr. Clay. And, you know, I believe in the importance of
medical innovation, and you have indicated that R&D is a major
focus of your company and imply that Acthar is funding part of
that R&D. How much does Mallinckrodt invest in R&D annually,
and does your pipeline offer any promising options for
patients?
Mr. Trudeau. We invest approximately $350 million a year in
research and development, which is a large number for a company
of our size. We believe that our pipeline is very promising and
we have specifically focused on these underserved patients with
severe and critical conditions that have relatively few
options. So, we are developing two products for patients with
severe liver disease, a product for adolescents and children
that have a high mortality rate, called Niemann-Pick Type C. We
are also developing a novel biotherapy to treat burns, severe
burns, to reduce the need for autografting. So, our pipeline is
really focused on driving innovation for these particular
underserved patients.
Mr. Clay. So, in my home state of Missouri COVID-19 has
been a major concern. It is my view that during a national
public health crisis like we are facing today pharmaceutical
and health care companies should be focused on finding
solutions.
Perhaps all three witnesses can tell us what your companies
are doing in response to this national pandemic. Mr. Bradway,
we can start with you.
Mr. Bradway. Thank you. We are very active in addressing
the pandemic. I share your belief that all of the innovative
biopharmaceutical industry needs to be working together, to
find ways to develop vaccines, to develop therapies that can
help prevent the infection from becoming serious, can help
develop therapies to prevent the immune overreaction, which we
see for many who are infected with the virus, and to be finding
other ways to try to diminish the burden of this disease on our
society.
But I am impressed by the speed and scale of the efforts
underway, both at our company and across the industry, and I am
optimistic that we will have solutions.
Mr. Clay. Thank you. Madam Chair, can the other witnesses
respond, or has my time expired?
Chairwoman Maloney. Time has expired but the witnesses may
respond.
Mr. Clay. Thank you.
Mr. Trudeau. Madam Chairwoman, I am happy to comment on
that. We agree with the Congressman that it is very important
that we do everything that we can to combat this challenging
health crisis that we have created by COVID-19. We have done at
least four things. One is that we have invested and partnered
on clinical trials around one of our innovative therapies
called INOmax, that can potentially help with patients that are
ventilated as a result of COVID-19. It is being used at
physician discretion today as an experimental therapy in over
250 hospitals.
We have donated PPE, ventilators, hand sanitizer around the
country, and we have also made available some of our health
care professionals, at company cost, to be treating patients on
the front line. We believe it is that important to do
everything that we can to combat this challenge.
Chairwoman Maloney. Thank you. Mr. Palmer, you are now
recognized for questions.
Mr. Palmer. Thank you, Madam Chairman. I would like to
start off by saying that obviously we are all interested in
lowering drug prices, but at the same time we don't want to
overreach and implement policies that stifle research and
innovation that has literally brought us lifesaving miracle
drugs. In fact, we want to encourage the discovery of new
drugs, but at the same time, you know, discovering these new
drugs doesn't do a lot of good if people who need the drugs
can't afford them.
So, I want to followup on Mr. Massie's points on patents,
and I brought this up yesterday. I support extending the length
of patents if an extension will lower drug prices. And what I
would like to know from each of you, and if you can answer
concisely so that I can get in a couple of other things I would
appreciate it, would extending the patent protections reduce
drug prices? And we will start with Mr. Trudeau.
Mr. Trudeau. I believe that anything that we can do to
incent innovation, and extending patent life could be one of
those things, is likely to give the health care system an
opportunity to get drugs to patients more efficiently and more
effectively and potentially at lower prices.
Mr. Palmer. And Mr. Kendris and Mr. Bradway, if you agree
with that, or do you have anything to add to that? I want to
ask a couple of other questions.
Mr. Bradway. I think innovative biopharmaceuticals are an
important way to control health care costs. We advocate for
maintaining the 12 years of data exclusivity, in particular,
for biologic drugs. So, we think that is an appropriate
standard, and we see innovation as a way to bring down health
care costs overall in the United States.
Mr. Palmer. OK.
Mr. Kendris. Congressman Palmer, I would agree with what
the other two witnesses just said and would say that patents
are essential to incentivize innovative companies to invest in
high-risk research. And the patent system as it stands right
now does that, and we support it.
Mr. Palmer. See, the reason, I think Mr. Massie and I both
are asking these questions is because it should be obvious to
everyone that a drug company needs to be able to recover their
cost. My understanding of the private drug research industry is
that it has led the way in the development of some incredible
drugs, but there are also a number of drugs that never made it
to market. And you have to deal with that stranded cost that
goes into your decisions on pricing of other drugs.
So, my question would be what would happen if the
development of drugs--to the development of these life-
changing, lifesaving drugs, if companies couldn't recover their
cost? That should be a fairly simple question to answer. Mr.
Trudeau?
Mr. Trudeau. Again, I believe my colleagues have agreed
with this as well. Incentives are important if you are
undertaking innovation, which inherently has risk. So, any
additional incentives that can be provided to, you know,
provide the potential to reduce that risk or increase the
reward certainly are likely to lead to even more innovation,
more inventions, and in the case of drugs, probably more
potential cures or treatments down the line.
Mr. Palmer. If you guys have some ideas on incentives,
whether it is write-offs for losses or other incentives that
the government could provide, I would like for you to provide
that to me and to this committee in writing.
But I do want to go back to something else that was
discussed earlier, and that is the issue of rebates. Some of
the information that I have gathered over the years--and this
is not the first time I have looked at this; I started looking
at this my first term in Congress--seems that there is some
substantial abuse in the rebates and how this is handled. That
might be an example of something that the Federal Government
thought was a good idea at the time that is not working out
quite so well.
That said, I would appreciate getting some feedback from
each of you on incentives that you think would help the
companies bring these prices down yet not compromise, in any
way, the ability of companies to develop these drugs that, like
I say, are not only lifesaving but life-improving.
Madam Chairman, I yield back.
Chairwoman Maloney. Thank you. I now recognize Mr. Rouda.
You are now recognized for questions.
Mr. Rouda. Thank you, Madam Chairwoman. First, I would like
to recognize the critical importance of the drugs that all of
your companies manufacture----
[Pause.]
Mr. Rouda. I apologize. The mic was not on.
Thank you, Madam Chairwoman. First, I would like to
recognize the critical importance of the drugs that all of your
companies manufacture to the health and well-being of many
Americans. The essential nature of the prescription drugs and
treatments you manufacture make it all the more vital for us to
ensure their continued availability and affordability for all.
Mr. Trudeau, Mallinckrodt drug Acthar has proven effective
and received FDA approval for numerous conditions that you
outlined in your opening testimony. Acthar was first approved
by the FDA in 1952, and it was actually priced at below $100
for 50 years. However, over the past two decades we have seen
an astronomical price increase at the expense of American
patients and taxpayers.
In 2001, Questcor, now a subsidiary of Mallinckrodt,
acquired the rights to Acthar for $100,000, when the price per
vial was still at or below $100--a vial, just like this, for
$100, just 20 years ago. Almost immediately, the price of the
drug started to increase, and then, in August 2007, the price
skyrocketed from $1,600 a vial to $23,000 per vial, literally
overnight. When Mallinckrodt acquired Questcor in 2014 for $5.6
billion, the price of a vial already exceed $30,000.
So, today that same vial, from 50 years ago, that cost only
$100, now costs $39,000, a 40,000 percent increase. Let me
repeat, a 40,000 percent increase from this to this, in a
matter of two decades. It is clear, American taxpayers are
increasingly footing the bill for this drug.
While the number of Medicare Part D beneficiaries receiving
Acthar increased by around 25 percent from 2013 to 2018, the
cost to the Federal Government nearly tripled over that same
time.
Mr. Trudeau, do you know how much your company has
collected from Medicare Part D in recent years?
Mr. Trudeau. I don't know the exact amount. Certainly, it
has been many millions of dollars.
Mr. Rouda. It has. It has actually been approximately $2.5
billion between 2015 and 2018.
Mr. Trudeau, when Mallinckrodt acquired Acthar, how much of
Acthar sales came from Medicare?
Mr. Trudeau. At the time of acquisition, the Medicare sales
were approximately 25 to 30 percent.
Mr. Rouda. That is correct, and that number has grown
quickly. Do you know what percent is Medicare sales now?
Mr. Trudeau. I do. It is approximately 55 percent.
Mr. Rouda. That is what the committee's information shows
as well. We have gone from 25 percent to actually more than 60
percent of Mallinckrodt's net sales are from Acthar.
So, not only is Medicare your largest purchaser but
internal data obtained by the committee shows that you also
charge Medicare more than any other payer. Medicare's average
net price, per vial, right here, is more than $4,300 more than
what commercial payers pay. Do you know how much the Federal
Government would have saved if Medicare had received the same
discount--the same discount--as commercial payers between 2015
and 2018?
Mr. Trudeau. I don't know the exact amount, but the number
would have been significant. In fact, Acthar is not on Medicare
formularies, which actually prevents access to Medicare
patients who could actually benefit from the drug. We would be
very happy to consider similar discounts in Medicare if we had
formulary positions and could get the same access that we get
with commercial payers.
Mr. Rouda. That would be helpful, and I am sure the
American taxpayer would like to see it since the committee's
estimate is that it would save American taxpayers $150 million
a year.
Unfortunately, Mallinckrodt's 2013 tax inversion to Ireland
has also burned American taxpayers. Is it safe to say you moved
your headquarters over there to dodge corporate taxes here in
the United States by having a lower corporate tax rate in
Ireland?
Mr. Trudeau. No. That is, in fact, completely untrue. We
spun out from a parent company that was Irish, and so this spun
company, Mallinckrodt, became Irish as well.
Mr. Rouda. Madam Speaker, I see that my time has expired so
I shall yield back.
Chairwoman Maloney. Thank you very, very much for your
questions.
Mr. Cloud, you are now recognized for questions. Mr. Cloud.
Mr. Cloud. Thank you, Chairwoman. It seems to me that
oftentimes in Congress we go about trying to fix a problem
before really stopping to ask what is broken about it. And, you
know, we are talking about drug pricing, which we all agree we
want to fix. It is definitely out of control. But I think it is
important we stop to ask what brings costs down in an economy,
and that is competition and customer accountability through
price transparency.
Yesterday I had a chart up here that showed just how
complicated that pricing system is, which makes it extremely
hard for a customer to hold the manufacturers accountable or
the system accountable when it comes to price transparency. In
any other industry that is really how it work. You have a
manufacturer that produces a product, the customer is able to
look at pricing and market keeps prices low.
Now to foster innovation we have a U.S. patent system, of
course, that protects research, incentivizes new cures. It has
led to the U.S. being the undisputed leader in innovation, and
to that extent the system is working. But what is broken is the
customer accountability aspect and the price transparency that
keeps prices in check.
Even if you think about the American people, they think
that they go to their doctor, the doctor prescribes the best
medicine, but that is not really what is happening, Mr.
Bradway, is it? You talked about PBMs and what you are having
to do to compete. Can you speak to that?
Mr. Bradway. Well, yes, so the physician hopefully is
prescribing the most appropriate medicine for the patient. The
challenge is, at that moment the physician and the patient may
not know whether they are actually going to be able to walk
away from the pharmacy counter with their medicine in hand or
whether their insurance company is going to try to direct them
to select something else.
Mr. Cloud. Right. Manufacturers, basically, you have to pay
rebates, or some would call it kickbacks even, to get a higher
placing on the formulary, right?
Mr. Bradway. Correct. The structure that you have created
for our industry involves us paying a rebate to the
intermediaries in order to secure, amongst other things,
formulary placement.
Mr. Cloud. So, that is one mechanism in which the market is
being manipulated, in a sense, breaking that customer
accountability mechanism.
Americans also understand, you know, that companies do need
to make a profit to exist and to create new cures. I don't
think Americans have a problem with that. We understand that
the profits today lead to new cures tomorrow. What they do have
a problem with is abuse of the patent system, namely product
hopping, adding on patents to extend introduction of generics,
patent evergreening, you know, small changes to dosages and
such that have little change but you gain an extension to your
patent, and then pay for delay. And these are issues, I think,
that manufacturers do have to take seriously.
Now while I wish we had PBMs and pharmacies here--and I
would encourage the chair and the committee to consider that if
we are going to have a real discussion on pricing--we need to
have all the players here, because the system is complex and it
is broken in a number of different areas.
But my understanding is that Amgen has--you talked about
Sensipar and you mentioned that the patent is--time has expired
on that. Are you saying that generics are now available?
Mr. Bradway. Yes. That is correct. Generics now supply
approximately 95 percent of the market, and the product
transacts at about 95 percent less than what was prevailing
before patent expiration.
Mr. Cloud. OK. Now we had Teva here yesterday, and my
understanding is that you had an agreement with them, Amgen
did, to keep Sensipar--them from producing generics for
Sensipar for a couple of years. Is that correct?
Mr. Bradway. No, that is incorrect. We sued Teva for
infringing on our intellectual property, and they ended up
settling with us after having launched at risk, settling with
us for having, again, launched against the uncertainty of their
patent position.
Mr. Cloud. OK. But the timing, I guess, is interesting,
that that lawsuit was dropped at the same time you all ended up
purchasing some of their properties, I guess.
The thing that I think is important to note here is that we
have a couple of bills that we are looking at. One is H.R. 19,
which actually goes to address these different issues, where
the system is broken, versus H.R. 3, which is a takeover of the
system. And, you know, as we look at this I think it is
important for us to keep in mind, let's not throw out the
system that has brought the best innovation and has led to new
cures that have helped so many people here and around the
world. And I would really caution against a government takeover
that H.R. 3 subscribes. Thank you.
Chairwoman Maloney. Representative Welch, you are now
recognized for questions.
Mr. Welch. Thank you very much. Mr. Palmer said it well,
that these drugs are a tremendous health benefit, extending
lives and alleviating pain, but if we can't afford it, it does
no one any good. And the question here is about the pricing
practices of big pharma and how that is putting the cost of
health care out of reach for individuals, for taxpayers, and
for employers who are trying to provide health care for their
employees.
I want to ask Mr. Bradway about the pricing strategy for a
few of his drugs. What I understand, Mr. Bradway, Enbrel was
originally approved by the FDA in 1998 for rheumatoid
arthritis, and Amgen acquired the rights to sell Enbrel in
2002. Is that correct?
Mr. Bradway. That is correct.
Mr. Welch. So, you bought a product--your company bought a
product. It didn't create a product. Correct?
Mr. Bradway. Correct. We bought a product that was in short
supply, a product for which there were tens of thousands of
patients on a wait list, seeking therapy, and then----
Mr. Welch. I get it. Fair and square, you bought the
product. You didn't invent it. Correct?
Mr. Bradway. That is correct.
Mr. Welch. And then you marketed it, and you produced it,
and you raised the price of it. Correct?
Mr. Bradway. Yes, but I was trying to explain one of the
important things that we did was invest in process improvements
that enabled us to move literally tens of thousands of patients
off the waiting list and be able----
Mr. Welch. Well, I am going to the price, because the
question here is not the legitimacy of what you did. It is
legal to buy the product. You didn't invent it. One of the
arguments that pharma makes is it costs so much to ``invent.''
Well that didn't happen. What you did is you saw a market and
you responded to it and you produced it.
But my understanding is that you have raised the price by
450 percent, to $5,500 for a monthly supply. It is about
$70,000 a year. Is that correct?
Mr. Bradway. Yes, that sounds correct.
Mr. Welch. All right. And in Canada that is $1,800 as
opposed to $5,500. Is that true?
Mr. Bradway. That sounds correct.
Mr. Welch. OK. Here is the question. Why can't people that
are Americans get it for $1,800?
Mr. Bradway. There are a couple of things to observe.
First, many of the medicines that are approved, the innovative
medicines like Enbrel that are approved in the United States
are not available in markets like Canada.
Mr. Welch. Let's--let's--you know, we are throwing this
word ``innovative'' around. This product was invented in 1998.
I mean, this is not new. This is decades old. So, my question
is why can't an American get the Canadian price?
Mr. Bradway. Yes. This is a product that we have continued
to invest in. The product that patients use today is not the
product that it was in 1998.
Mr. Welch. So, a Canadian can buy this for $1,800, but you
won't give the benefit of that price to the United States of
America and our citizens.
Mr. Bradway. The product that you see today is not the
product that it was in 1998.
Mr. Welch. Let me ask you this. There is a lot of evidence
in the record now that when your company, and other
pharmaceutical companies, are making the decision on pricing,
they have to meet revenue targets. You have got shareholders to
take care of and you have got executive compensation to be
mindful of. Correct?
Mr. Bradway. I don't think of it in that way, no.
Mr. Welch. You don't think of it but you get the benefit of
it.
Mr. Bradway. When we look at the pricing of----
Mr. Welch. I mean, there are payouts of $100 million to
executives, and it is really heartbreaking for a lot of folks
who can't figure out how in the world they are going to get the
medication for a person in their family that they love.
Let me ask you this. What is the problem of a company that
is selling a product in bulk to a buyer, having a discussion
with that buyer about a bulk price discount? Do you have some
philosophical objection to that?
Mr. Bradway. Congressman, that is what happens every day in
our interaction----
Mr. Welch. Except with Medicare. It is illegal. It is
illegal.
Mr. Bradway. No, it is not----
Mr. Welch. All right. Would you be agreeable to having a
discussion with a bulk buyer, who happens to be Medicare, about
a fair price when they make bulk purchases on behalf of U.S.
citizens who are on Medicare?
Mr. Bradway. Congressman, if I may explain, we interact
every day with----
Mr. Welch. Well, that is a yes or no. No, that is a yes or
no. You have got a big buyer, Medicare, and I am asking if you
are willing to negotiate with them about a bulk price discount.
Mr. Bradway. The Medicare beneficiaries are represented by
the insurance plans and the PBMs, with whom we negotiate every
day for the inclusion of our products on the----
Mr. Welch. So, that is a no to negotiating with Medicare
directly.
Mr. Bradway. Well, Congressman, what I am trying to explain
is what is happening already today. We do think there are some
areas for improvement in Medicare, in particular, in Medicare
Part D, and we have been advocating for a number of those----
Mr. Welch. I am only asking about negotiating with the
Medicare program. That is it. Yes or no?
Mr. Bradway. Yes, I am just trying to make sure,
Congressman, that you and your constituents appreciate that
that is already happening today. It is happening through the
negotiations----
Mr. Welch. So, why don't we change the law and make it
legal to do that?
Mr. Bradway [continuing]. That we are having with your
intermediaries. So, those discussions are already taking place
today.
Mr. Welch. I am asking about a law that makes it legal.
Right now there is a law that makes it illegal, right? It is
bizarre that a bulk purchase can't have a discussion and
negotiate a bulk price discount. That is the law. Do you think
that is a fair law?
Mr. Bradway. I don't know that I would agree with your
construction of the question, Congressman. What I am saying is
that we have a highly concentrated set of intermediaries in the
United States health care system, the health care insurance
companies and the pharmacy benefit manufacturers, and they are
negotiating for the benefit of Medicare today, or across the
landscape. Are there improvements that could be made?
Absolutely. Do we advocate----
Mr. Welch. Madam Chair, my time has expired, and I yield
back.
Chairwoman Maloney. Thank you. Mr. Gibbs, you are now
recognized for questions.
OK, we can hear you.
Mr. Gibbs. Thank you, Madam Chair. First of all, I want to
thank you for this hearing. I also want to make clear, I know
Mr. Palmer and others talked about, you know, we want to make
sure, we want to thank the drug companies for what they do,
producing these therapeutics and everything, curing cancer and
making quality of life better, so we should never forget that.
But I do--you know, listening to all the discussion here
about the pricing, it is enough to make your head spin. I
guess, Mr. Kendris, you said that Gleevec is also used for six
new cancers, OK. Now, has that price come down? I think it
hasn't come down, has it? What is the status of that, Mr.
Kendris?
Mr. Kendris. No, Congressman. We did raise the price over
the years.
Mr. Gibbs. Yes, OK. Well, what I am trying to understand,
in other sectors of our economy, when you have more
utilization, and obviously you have more utilization of the
product because you say it is now cleared by FDA to use in six
types of cancer, so you have more utilization of the product,
why does the product go up? Is it because it is the formulary
process that we are having so much discussion and all the
intermediaries and the complexity of this drug pricing and how
it is broken? I mean, the price should come down.
Mr. Kendris. I think the answer to your question,
Congressman, is that the value of Gleevec went up over those
years, for a variety of reasons, including the patients
survived longer, lived longer, it became a chronic disease
instead of a fatal disease, and more patients were able to
benefit because we got more indications from the FDA approved
over those years.
Mr. Gibbs. I get that. So, more patients are buying it. You
know, it is being utilized more. But that ought to drive the
price down, because you can put your fixed costs over more
customer base. In any other business, in any other industry
that is how that works. If you are selling a product and you
can sell more of that product to a bigger customer base, that
drives down the cost because your fixed costs are more over the
customer base. Do you see what I am trying to say? Does that
make sense? But apparently it doesn't work that way with drugs.
Mr. Kendris. Congressman, in this case--I understand what
you are saying, but in this case, for these rare cancers, the
commercial opportunity is actually quite small. The patient
populations are very small----
Mr. Gibbs. Let me ask the question----
Mr. Kendris [continuing]. But the research and development
commitment is high.
Mr. Gibbs. That makes sense. That is the first comment I
have heard today that makes some sense. You did say 65 percent
of that drug, you give it away. Is that true?
Mr. Kendris. Today, 55 percent is given away for free, post
generic approval, since 2016.
Mr. Gibbs. And I know Mr. Bradway said the same thing about
Repatha, 60 percent discounts. So, there are a lot of things
going on there. The drug companies are doing their best to help
people that need the drug to get the drugs. So, I am kind of
assuming--does anybody go without these drugs that need it,
that they are getting it even if they can't afford to pay for
it?
Mr. Kendris. We are doing everything we can. When we
receive a patient complaint, we investigate each and every one,
and we have a variety of ways of trying to ensure that that
patient will get access to the product that they need.
Mr. Gibbs. And then, you know, the other area I think I see
where the structure is broken is when you talk about 46 percent
of a cost is going to the intermediaries, PBMs, and that seems
like a problem. And I think it was you who made the comment, or
one of the witnesses talked about the generics, and you go to
the drugstore, the patient, to make sure they get the right
generic, and the intermediary is doing that with the health
insurer and everything. I always thought that is where the
pharmacist fits in. The pharmacist, what role do they have now?
Are they getting kind of pushed out by the intermediaries, or
how does that function?
Mr. Kendris. Well, certainly the pharmacist at the
drugstore is not responsible for the fact that the discounts
that the manufacturers are giving to middlemen and
intermediaries are not being passed on to the patient. That is
not the responsibility of the pharmacist.
Mr. Gibbs. No, I understand that. But the pharmacist, if
they say you can get another drug, a generic alternative, you
know, and you are negotiating with the intermediaries, the
PBMs, where does the pharmacist fit into that discussion, that
the patient does get to make sure that the patient does get the
right drug if there is a generic equivalent?
Mr. Kendris. I think the negotiation that you are referring
to does not include the pharmacist in that case. Negotiating
with the intermediary, with the middlemen, a contract, and that
is how we sell it to the middlemen.
Mr. Gibbs. I am out of time, but I just want to followup on
that. Do you think we should be looking into the role of the
intermediaries and how it affects the patient and the doctor
and the pharmacist, making sure they get the right drug, the
right generic drug, a generic alternative, and----
Chairwoman Maloney. The gentleman's time has expired, but
the witness may answer the question.
Mr. Kendris. I do, Congressman. I think that we should do
everything we can to make sure that the discounts are passed
along to the patient.
Mr. Gibbs. Thank you. Thank you, Madam Chair.
Chairwoman Maloney. Mr. Sarbanes, you are now recognized.
Mr. Sarbanes. Thank you, Madam Chair. Can you hear me OK?
Chairwoman Maloney. Yes, we can.
Mr. Sarbanes. I appreciate the hearing, as a continuation
of yesterday, and I want to thank the witnesses for being here.
I have heard a lot of you say that, you know, things are
off patent now, the pricing over the last two years has gone
down, et cetera. That doesn't excuse the price gouging that
happens when things are still under patent, you have the
exclusivity, and so forth. And I just don't buy that these
price declines were part of your business plan. I think it is a
response to the scrutiny that you are under, so it is nice to
talk about that and kind of dance around the essence of the
price gouging that has been going on for years and years.
But I don't trust the industry to do the right thing when
we are not looking at you with these klieg lights, and so we
need to put more guardrails in place, and this hearing is about
that. This is why Elijah Cummings started this inquiry
originally, and we are going to keep following through. And
there is going to have to be major restricting of how the
industry operates going forward. I know you are trying to duck
and cover here, but you better anticipate that that is coming,
because the American public is fit to be tied about the high
prices of prescription drugs.
Mr. Bradway, I want to talk about Medicare Part D. That is
45 million seniors that are served by that program, and we are
all contributing as taxpayers to the strength of the Medicare
program. Your company has collected more than $7 billion in
gross sales from selling Enbrel to Medicare Part D between 2013
and 2018. Is that correct?
Mr. Bradway. Those numbers sound right.
Mr. Sarbanes. OK. And in the same timeframe you collected,
or Amgen collected about $4 billion from selling Sensipar to
Medicare Part D beneficiaries. So, it is an understatement that
Amgen gets a lot of business from the Medicare program.
Does Amgen offer Medicare Part D comparable discounts to
other--to the discounts that you give to other government
purchasers?
Mr. Bradway. For example, the Medicaid prices that we offer
are lower than Medicare, as you know, because it is statutorily
designed to be lower than the Medicare Part D program. So, it
is not the case that all of our government----
Mr. Sarbanes. What about the veterans? What about Veterans
Health Administration?
Mr. Bradway. The veterans' health program is also different
from the Medicare Part D program. It includes both statutory
price allowances as well as formulary restrictions, which are
not part of Medicare Part D, as you are aware.
Mr. Sarbanes. Well, I think Amgen's discounts to the
Veterans Health Administration are about twice what Medicare is
currently receiving. But let's face it, that is because the VA
is allowed to negotiate drug prices with the industry and
Medicare Part D doesn't get those same opportunities, because
we don't have that ability to negotiate. We proposed a bill
last December, House Democrats did. This is common-sense
legislation that would allow Medicare to negotiate directly
with drug manufacturers for lower prices, just like the VA and
the Department of Defense are able to do.
I am not going to ask you for your position on whether we
should be negotiating. I think I can guess what it is. But it
seems to me that if your industry--again, to get back to the
broader sort of macro picture here--your industry has figured
out a way to do business with governments overseas that
negotiate and are much more aggressive on behalf of their
consumers and their taxpayers in dealing with the industry, and
your industry has found a way to be able to manage a
relationship and conduct your affairs even though you are
giving a better pricing to the VA and DoD because you are
having to negotiate there.
So, you will figure out a way, I am confident, to survive
as an industry, to make reasonable profits, even if we move
forward and put negotiation in place with respect to the
Medicare program, which is all we are trying to do. And Mitch
McConnell and the Senate Republicans have stood in the way of
this. They have blocked the door to better opportunity for
consumers and patients for years now, but we are not giving up.
We are going to keep the heat on, we are going to keep pushing,
and we are going to do it because every day we have
constituents coming up to us, scratching their head, looking at
us in disbelief, and saying, ``Why is it, in a free market
economy, in the United States of America, you can't negotiate
on behalf of 45 million Medicare beneficiaries for better drug
prices?'' We are going to keep pushing on that because it is
the only thing that makes sense.
And with that I will yield back, Madam Chair.
Chairwoman Maloney. Thank you. The gentleman's time has
expired.
Mr. Higgins, you are now recognized.
Mr. Higgins. Thank you, Madam Chair, and I appreciate the
continuation of this hearing from yesterday. This is incredibly
important subject matter. And I am finding that the arguments
from both sides of the aisle are quite similar.
Mr. Bradway, I am going to address my questions to you,
sir. Respectfully, I understand businesses across the United
States have costs associated with opening their doors to the
public, and in order to stay in business you have be able to
cover those costs. We know that high costs associated with
developing new drugs and
[Inaudible.] Please clarify for us...
[Inaudible.] ...Recoup development costs, and what would be
the result of...
[Inaudible.]
[Pause.]
Chairwoman Maloney. We have a technical problem here right
now. We are going to try to fix it.
[Pause.]
Mr. Higgins [continuing]. This time.
Chairwoman Maloney. There. He is back. Mr. Higgins. We lost
you for a while. OK.
Mr. Higgins. Yes, ma'am. I have no receiving signal at this
time. If we are back on, I don't know if my question was
received by Mr. Bradway.
Mr. Bradway. I am afraid I didn't hear the full question,
so if you wouldn't mind repeating it then I will do my best to
answer it for you.
Mr. Higgins. Yes. Basically, sir, let me just quantify
quickly, in the interest of time. I have a couple of hard
questions for you, so I am going to begin with a soft one. We
recognize it costs a lot of money to develop a new drug. We get
that. We understand the basic business principles are recouping
initial investment cost. What is the importance of maintaining
that formula, and what would happen to the development of new
drugs if there were legislative action out of Congress that
would restrict research and development of new pharmaceuticals
and restrict companies investing in that research from
recouping their initial costs? What would happen to the
development of new pharmaceuticals?
Mr. Bradway. I don't think we would see innovative new
drugs being developed for diseases like Alzheimer's or the many
forms of cancers that remain not cured today, or autoimmune
disorders.
Mr. Higgins. OK.
Mr. Bradway. And if I may, Congressman----
Mr. Higgins. I want you to know, we all get that. We
understand. We understand that there are legitimate expenses
for the development of new 21st century, high-tech, very
effective pharmaceuticals. We understand that there are
investments in many formulas that never make it to market, and
that becomes part of the expense that needs to be recouped. We
get that. On both sides of the aisle I am hearing the same
argument.
But I must say that I concur with many of my colleagues
across the aisle here. I do not understand, my constituents do
not get it, why the same formula drugs, from the same
manufacturer, across the border in Canada, can be two, three
times less than it is here in the United States.
My wife has M.S. The pharmaceuticals are a constant
challenge. She receives a therapy that is equivalent to like
chemotherapy for M.S. every six months, and every six months we
have the same battle with the insurance companies due to
restrictions from the pharmaceutical companies.
My constituents don't understand. I don't understand. We
expect to fix it, and we are going to fix it out of Congress.
There is a bill in the Senate right now, Madam Chair, that if
it would be introduced in the House, if it passed in the
Senate, it would pass in the Senate, it would be introduced in
the House, it could be law in a couple of weeks. We could
really move forward to fix this thing.
But I would like the gentleman to answer, just one more
time, why are pharmaceuticals so much less in Canada than they
are in the United States? Because I don't get it, and my
constituents don't get it either. I give you the floor, good
sir. You have a minute and five seconds. Explain the variance
of prices between Canada and the United States.
Mr. Bradway. I share your frustration and empathize with
those who are struggling to understand the difference between
the two systems.
As I said previously, in the United States 46 cents of
every dollar are in the hands of intermediaries in the
pharmaceutical supply chain, not in the hands of the innovative
companies. In Canada that is not the case. Canada does not have
46 cents of every dollar----
Mr. Higgins. But does your company not get to spend the
Canadian earnings?
Mr. Bradway. I am trying to----
Mr. Higgins. You don't get to keep that money?
Mr. Bradway. No, of course we do. I am just trying to----
Mr. Higgins. OK. So, let's stop talking about the
difference of expenses in the United States versus Canada,
because you have a worldwide market. Do you have a board of
directors for the United States and then one for Canada, two
different companies?
Mr. Bradway. No. Certainly not.
Mr. Higgins. Thank you. So, your profits are your profits.
Your expenses are your expenses. Why do the drugs cost so much
less in Canada than here?
Madam Chair, my time has expired but I would like the
gentleman to answer the question.
Mr. Bradway. Again, I would point out----
Chairwoman Maloney. The gentleman may answer the question.
Mr. Bradway. Thank you, Madam Chairwoman. I would point out
that in the United States many innovative drugs are available
which are not available in Canada. If you look at drugs
approved in the United States over the last decade----
Chairwoman Maloney. Excuse me. That was not the question.
The question from the gentleman was why does it cost two or
three times, or upwards, four or five or six times more in the
United States, where we produce the drug, why does it cost so
much less in Canada, and I would say in Europe too? As I said
earlier, we pay more for drugs in America than the entire
world, combined.
So, that is his question. What is the answer?
Mr. Bradway. Thank you, Madam Chairwoman. The answer is
that countries like Canada are prepared to ration and restrict
the access to innovative new medicines in exchange for offering
lower prices to the ones that they choose to grant access to.
Chairwoman Maloney. Well, I respectfully disagree. The
answer to that question is to allow Medicare to negotiate
directly for drug prices with the drug companies, as they do in
Canada and in Europe, and they are not allowed to do it in the
United States. And that is one of the things many of us would
like to do, to lower the price for the people that we work for.
I would like now to go to Wasserman Schultz. Congresswoman
Schultz, you are now recognized.
Ms. Wasserman Schultz. Thank you, Madam Chair. I want to
pick up where I left off yesterday and ask about another
nefarious tactic that drug companies use to maintain market
exclusivity and sky-high prices.
This committee's investigation shines a spotlight on the
ways that drug companies use litigation as a key part of their
strategic plans to delay generic entry. Like yesterday, I again
want to focus on how prices were inflated for lifesaving
medication used to treat cancer.
Mr. Kendris, yes or no. Novartis engaged in patent
litigation with the first manufacturer to apply to make a
generic version of Gleevec. Correct?
Mr. Kendris. Yes, we did.
Ms. Wasserman Schultz. OK. Some pharmaceuticals challenge
the legitimacy of Novartis' patents, but rather than litigate,
Novartis struck a deal with Sun, known as ``pay for delay.''
Under the settlement, Sun agreed to delay generic entry into
the U.S. for six months. Novartis made $1.3 billion in U.S. net
revenue from Gleevec sales during that six-month delay.
As the first generic manufacturer, Sun Pharma was entitled
to 180 days of exclusivity, meaning no other generics could
enter the market during that period. Although Sun Pharma
initially announced it would price its generic 30 percent below
the price of Gleevec, it ultimately entered the market just 6.4
percent lower than the cost of Gleevec. In an internal email,
Novartis executives hailed this high price as, quote, ``good
news.''
Mr. Kendris, do you think delaying generic entry was indeed
good news for patients?
Mr. Kendris. Congresswoman, when we settled that case we
actually accelerated the introduction of a generic Sun product
into the U.S. If we had litigated and further litigated, that
litigation could have gone through the length of the patent,
which would have been another three years. So, our settlement
actually meant that the Sun product was on the market faster,
actually two and a half years, I believe, faster than it would
have been had we done what you are saying other companies do,
and I understand that happens. But in our case, we did not get
paid for delay and there was no litigation that went on for
years to delay the generic onto the market. It was actually
accelerated.
Ms. Wasserman Schultz. You are right. There was no
litigation because you paid for delay. Published estimates
suggest that this pay-for-delay settlement with Sun
Pharmaceuticals created $700 million in excess costs for
consumers. This is unacceptable.
Sun Pharma originally said they would price their generic,
were they allowed to move forward through the normal process
without being challenged by Novartis to do so, that they were
going to price their generic 30 percent below Gleevec's price.
After you paid for delay and after you negotiated the so-called
better deal sooner for consumers, they only priced it 6.4
percent below, and delayed their entry into the market by six
months.
It is patients that are left holding the bag when companies
like Novartis exploit the patent system to keep their market
share. Research shows that 42 percent of cancer patients
deplete their entire net worth in the first two years after
their diagnosis. And I will tell you, I am a cancer survivor. I
know what it is like to go through the 15 months of hell that I
went through, and the countless stories I have heard from
constituents who battle cancer every day.
In total, Novartis sued at least five companies in order to
prevent generic competition for Gleevec, leading to a class
action lawsuit that alleged that Novartis was engaging in sham
litigation.
And now you know that protection of intellectual property
rights is important for any company. But when you have
proactive prices that become anti-competitive, used to delay
generic entry and drive sales, both patients and the U.S.
health care system suffer.
So, if companies don't behave responsibly, Congress must
act to rein in this unconscionable behavior. No one should be
unable to afford the medication they need to survive, and
brand-name companies, every single day try to delay as long as
possible competition in the market, which drives up costs for
patients who need this vital access to drugs.
The annual cost of your drug went as high as $123,000 a
year for cancer patients. That is insanity. It is robbery, and
it kills people, as a result of them not being able to afford
your drug. I don't know how you sleep at night.
Thank you. I yield back the balance of my time.
Chairwoman Maloney. Thank you. Thank you for your
statement.
Mr. Kendris. Chairwoman?
Chairwoman Maloney. Mrs. Miller, you are now recognized.
Mrs. Miller. Thank you, Chairwoman Maloney and Ranking
Member Comer, and thank you to all the witnesses for being here
today. I am pleased that we are able to continue with this
conversation, because as we all know, the United States is the
leading global innovator for groundbreaking medicine.
However, now more than ever, during the COVID-19 pandemic,
it is extremely important that research and innovation is at
the forefront of pharmaceutical development. While we look
toward our future we need to ensure that the public and private
innovators are utilized to address situations such as a
pandemic and improve access to everyday lifesaving medications.
Mr. Kendris, how has the COVID-19 pandemic--there you are,
good--how has the COVID-19 pandemic highlighted the need for
innovation as we are all racing to develop better therapeutics
and vaccines?
Mr. Kendris. In so many ways, Congresswoman. Thank you for
the question. Many companies, including Novartis, are working
on therapeutics. We have two of our products in clinical trials
now to see if they will work for the cytokine storm that COVID-
19 patients suffer. We do not have a vaccines business, but we
are helping other companies who do. Our company, AveXis,
formerly AveXis, has agreed to manufacture a vaccine for one
particular vaccine maker, and we are also making available our
Sandoz products that would be used to treat--our generics
products, that would be used to treat COVID-19 patients. We are
making them available at cost, no profit, or for free. We are
making them available. We announced that a while ago, toward
the beginning of COVID-19 pandemic.
So, we are doing all we can to find therapeutics. We have
research candidates in the lab, I think about 20 research
candidates in the lab, so not yet in clinical development, that
are being investigated for possible use against COVID-19.
Mrs. Miller. OK.
Mr. Kendris. We have also--yes, please.
Mrs. Miller. OK. Well, I was just going to say, I also want
to know, since Gleevec is classified as a specialty medication
could you please discuss how this impacts the price and the
market?
Mr. Kendris. Gleevec is a very specific medication. It is
the first targeted drug, the first smart drug, as people call
it, the very first one, in 2001. As a specialty medication, as
I mentioned in some earlier questions, the cancers that it
treats are actually rare diseases with small patient
populations. CML may be the largest patient population but
GIST, stomach cancer, that came second, and then five other
rare cancers that came after that, very rare, small patient
populations. But Gleevec, because it is a targeted cancer
therapy, works very, very well, very efficaciously, for those
cancers. So, it is a specialty product in that it targets these
specific cancers and helps turn these cancers from fatal to
chronic, or even, with our follow-on product, to a disease
where treatment can be--or remission can be obtained treatment-
free. The patient can stop taking Tasigna.
Mrs. Miller. But that----
Mr. Kendris. They can't stop taking Gleevec.
Mrs. Miller. OK.
Mr. Kendris. So, yes, please. I am sorry.
Mrs. Miller. Well, I was going to, but you didn't answer
how it impacted the price, being specialty.
Mr. Kendris. That is something----
Mrs. Miller. I will move on, because I do have other
questions.
Mr. Kendris. Thank you.
Mrs. Miller. Many of my colleagues across the aisle
continue to advocate for single-payer health care that would
discourage and stifle innovation. If it were to become a
reality, what would the innovation space then look like for a
drug like H.P. Acthar Gel and multiple sclerosis?
Mr. Bradway, could you discuss the importance of preserving
the Bayh-Dole?
Mr. Bradway. Well, I think you were asking a question about
a Mallinckrodt drug, so I don't know whether you wanted to
direct it to Mr. Trudeau or whether you had a more general
question that you wanted me to address.
Mrs. Miller. Well, more generally, because I do want to get
into moving from this into how would the march-in rights affect
innovation. So, that is just an example.
Chairwoman Maloney. The gentlelady's time has expired. The
gentleman----
Mr. Bradway. Sorry, Madam Chairwoman. I didn't hear your
statement.
Chairwoman Maloney. Her time has expired but you may answer
her question.
Mr. Bradway. Thank you. Thank you, Congresswoman. I think
the effect would be chilling on innovation. I think the size of
the so-called march-in rights for intellectual property would
have a very deleterious effect on those who commit resources to
risky research and development.
Chairwoman Maloney.--yields back. Mr. Khanna, you are now
recognized for questions.
Mr. Khanna? Representative Khanna? Is he there?
Mr. Khanna. Yes, I think I was muted.
Chairwoman Maloney. OK.
Mr. Khanna. Thank you, Madam Chair.
Chairwoman Maloney. We hear you now.
Mr. Khanna. Can you hear me?
Chairwoman Maloney. Yes, we can.
Mr. Khanna. Great. I want to focus my line of questioning
concerning the Amgen Enbrel drug, and if you could first
explain, sir, the Enbrel drug--and this is for Mr. Bradway--it
is an anti-inflammatory drug? Am I understanding that it was
introduced in 1998?
Mr. Bradway. That is correct.
Mr. Khanna. And it is one of the best-selling drugs in the
world. Is that correct? It is largely for arthritis?
Mr. Bradway. Yes. It is for a form of arthritis known as
rheumatoid arthritis and other autoimmune disorders.
Mr. Khanna. And the primary patent on this expired in 2010.
Correct?
Mr. Bradway. No. When you say the primary patent what are
you referring to? Are you referring to the patent on the
molecule itself that is Enbrel?
Mr. Khanna. Yes.
Mr. Bradway. No, the patent on the molecule that is Enbrel
has not expired. It was granted in----
Mr. Khanna. What expired in 2010?
Mr. Bradway. A different patent but not a patent on the
molecule.
Mr. Khanna. What was that patent on?
Mr. Bradway. That was a use patent.
Mr. Khanna. So, that expired. Correct?
Mr. Bradway. Correct.
Mr. Khanna. How many patent applications have you filed
since then to try to extend the monopoly on Enbrel?
Mr. Bradway. I don't know how many patent applications we
have filed but I would guess several----
Mr. Khanna. You don't know how many patent applications you
have filed on one of your most important drugs?
Mr. Bradway. I wouldn't know that off the top of my head.
Mr. Khanna. A thousand?
Mr. Bradway. No. I would guess it's----
Mr. Khanna. Is it five?
Mr. Bradway. Excuse me, Congressman. I would guess that it
is several dozen patents.
Mr. Khanna. Sixty-eight patents. Doesn't that strike you--I
mean if you were just talking to your neighbor or some person
you were growing up with, you know, go back to when you were in
high school, and they say, OK, you come up with a new drug.
Let's say, OK, you file a patent. Do you think any person would
say, yes, we should file 68 patents on a certain drug and
extend that patent protection until 2037? I mean, just step
back from your role as CEO. Do you think most Americans would
think that makes common sense?
Mr. Bradway. Congressman, I think what is appropriate is
the question of whether we are investing in innovation that
deserves to be protected by patents, and fortunately----
Mr. Khanna. No, I get all that. I get the debate,
innovation. I understand we need patents. But just from a
common-sense perspective, there is a drug, people take that
drug. If you were talking to an ordinary person and you said,
``We are going to file 68 different patents on this drug to
protect our rights on it until 2037,'' do you think they would
think that that was logical?
Mr. Bradway. Well again, Congressman, I think it would
require a discussion about what those patents are being issued
for, what innovation we are claiming in the patents, and we are
fortunate to have the patent rights in this country protected
by----
Mr. Khanna. How much does the drug cost in Europe compared
to in the United States?
Mr. Bradway. I don't have the answer to that question,
Congressman.
Mr. Khanna. You don't know how much the drug is priced in
Europe? Would it surprise you if you know that the drug was 50
percent cheaper for Europeans than Americans?
Mr. Bradway. No, it wouldn't surprise me, but I remind you,
Congressman, that we don't and have never sold or marketed the
drug in Europe.
Mr. Khanna. But you are selling the drug in Europe where
you face actually competition. Isn't that correct?
Mr. Bradway. No, sorry, Congressman. We don't sell the drug
in Europe. We don't own the product in Europe.
Mr. Khanna. But my understanding is in Europe the price is
50 percent--it has similar bio, similar competition, and that
has caused the price to drop by nearly 50 percent since 2018.
Is that not accurate?
Mr. Bradway. Congressman, I wouldn't know the answer to
that. We don't own the rights to Enbrel in Europe, so you would
need----
Mr. Khanna. No, I understand you don't, but Enbrel is being
sold in Europe for 50 percent less, and you have competition
there. Correct?
Mr. Bradway. Again, Congressman, I don't have the facts
about Enbrel pricing in Europe. We have----
Mr. Khanna. Can you make a commitment to the American
people today that no American should pay more than people in
Europe are paying for Enbrel? I mean, it is a simple thing. Are
you an American, sir?
Mr. Bradway. Yes, I am. Proudly.
Mr. Khanna. OK. So, can you tell your fellow citizens that
no American should pay more for Enbrel than someone in Europe?
Mr. Bradway. Well, Congressman, the patent in Europe has
expired, so the European situation is different from what we
have in the United States.
Mr. Khanna. So, the European patent has expired, so you
think the Europeans don't want innovation for their drugs? I
mean, so the Europeans don't think they need innovation, yet
you think you need patents until 2037. I am asking you a very
simple question. Make a commitment today, to the American
people, that no one will pay a dime more for Enbrel than people
pay in Europe. If you love this country, if you love America,
you should be willing to tell Americans that they shouldn't be
paying more than the French and the Germans and Europeans. Are
you willing to make that commitment today, to the American
people?
Mr. Bradway. Congressman, I would just repeat that in
Europe the intellectual property for that product has expired.
Mr. Khanna. I am just asking you a simple question. You can
say no. If it were me and someone said will you make a
commitment----
Chairwoman Maloney. The gentleman's time has expired----
Mr. Khanna [continuing]. Paying more than Europeans, I
would say absolutely. Are you willing to make that commitment?
Mr. Bradway. We don't sell Enbrel in Europe, Congressman.
Chairwoman Maloney. I take that as a no.
Moving along, Mr. Steube, you are now recognized for
questions.
Mr. Steube. Thank you, Madam Chair.
Over 3.5 million Floridians are enrolled in some form of
Medicare prescription drug coverage. With so many of my fellow
Floridians and constituents dependent on lifesaving
prescriptions, I understand the need for affordable drug
prices.
Despite the efforts of Republicans to make bipartisan
progress to reform the prescription drug standards, our
Democratic colleagues refuse to collaborate. They will try to
suggest that H.R. 3, which is a key example of partisan
government overreach, would solve some of the problems that we
are discussing today. This is not the case, and the Trump
administration decisively acted to approve a record number of
generic drugs and bring down overall prescription prices down
13 percent. Obviously, there is still a lot of work left to do
and I am glad we are taking steps to discuss this situation and
hope we can move toward establishing solutions.
Mr. Bradway, my first question is to you. What is Amgen
currently doing to assist in this mutual goal of providing
Americans with lower drug prices?
Mr. Bradway. Congressman, thank you for the question. As I
mentioned in my opening statement, our net prices in the United
States have decreased in 2018 and 2019, and we are on track to
have further decreases in 2020.
In addition, Congressman, we have made a significant
investment in biosimilars and we are making available to
patients and prescribers biosimilar medicines for some of the
biggest-selling drugs in the United States, at more affordable
prices than the innovator products that they are designed to
replicate.
In addition, Congressman, we are working with a variety of
different patient assistance programs through which we give
away free drugs to those who are uninsured and can't afford
their drugs or underinsured. We try to provide copay assistance
for those who are struggling, who have insurance plans but are
struggling with making payments for their deductibles and
seeking to make contributions to other charitable foundations
that can assist patients with their medicines as well.
So, across the board, sir, we are trying to do quite a lot
to help make sure that patients who need medicines can afford
them.
Mr. Steube. I was interested that in your testimony you
stated that Amgen voluntarily lowered the list price of one of
your medicines by 60 percent. However, you described a
situation where even after lowering the list price some
patients did not see a meaningful difference in what they had
to pay out of pocket at the pharmacy. Some of my colleagues
believe that forcing you to lower your prices will solve all of
our problems, but it doesn't seem like that happened in that
instance. Can you explain why?
Mr. Bradway. Thank you, Congressman. Yes. You are referring
to a drug called Repatha, which is our product designed to
lower cholesterol and prevent heart attacks and strokes. It is
one of our most important innovative new medicines. We lowered
the list price for that medicine by 60 percent in order to try
to make it more affordable at the pharmacy counter. Remember,
that patients pay a copay as a function of list price, so by
lowering the list price we were lowering their out-of-pocket
expenses.
However, we found that it took more than a year for the
insurance plans to move patients, to direct patients from the
high list price product to the low list price product. So, we
ran the experiment and found that it didn't work in the way
that we thought it would. We see this as an example of how the
system is not working today for patients, and that is one of
the reasons why we think we need to reform the rebate system
that exists in the United States today.
Mr. Steube. Thank you. I understand there are certain
payment programs in place which can help patients afford drugs
like Enbrel and Sensipar. Would you be able to discuss their
effectiveness in any other similar initiatives that you are
discussing?
Mr. Bradway. Thank you. Yes, we have a number of programs
designed to help patients pay for expensive medicines. So, for
example, in the case of Enbrel we have copay assistance in
place so that more than three-quarters of the patients who use
Enbrel today have a copay of less than $50 a month for their
medicine.
When it comes to Medicaid, 93 percent of patients are able
to receive their medicine at less than $10 a month in copay.
And when it comes to Medicare, we have 77 percent of the
patients being able to receive their medicine at less than $50
a month.
So, there are examples across our portfolio of the ways
that patients are benefiting from the support provided to them
in order to be able to access these innovative, life-changing
medicines.
Mr. Steube. Does Amgen utilize rebates for PBMs and how
does that impact patient price?
Mr. Bradway. Yes, we do use rebates. Again, rebates are a
function of list price, so if we increase the list price we
increase the rebate. You might ask why are we increasing the
rebates? Why do we feel pressured to increase the rebate, and
the answer is to secure competitive formulary position for our
molecules. So, we increase the list price to be able to
increase the rebate to the intermediaries. The unfortunate
effect of that is it also increases the out-of-pocket cost for
patients at the pharmacy counter. And again, that is why we
advocate for changes that would include passing through the
rebate at the pharmacy counter.
Mr. Steube. Thank you. My time has expired. Thank you for
being here.
Mr. Bradway. Thank you.
Chairwoman Maloney. Thank you.
Congresswoman Speier, you are now recognized for questions.
Ms. Speier. Thank you, Madam Chair, and thank you all for
participating today. I appreciate it. I think all of us
appreciate it. Many others declined the invitation.
I want to start with Mr. Kendris and Gleevec. Gleevec is a
miracle drug. My former chief of staff's wife died of CML. Had
she lived another couple of years Gleevec would have been
discovered as this miracle drug and her condition would have
been chronic and she would be alive today. So, we truly
appreciate the miracle that Gleevec has become for leukemia
patients.
I would like to educate the public on what LOE is. It is
called loss of exclusivity. And I would like for the staff, if
they would, to put a slide that the committee got that was part
of a presentation that was, I guess, provided to some of the
staff of the company, and shows a dramatic increase in the
price of Gleevec toward the end of its exclusivity.
[Slide.]
Ms. Speier. In fact, between 2013 and 2015, Novartis' price
increase accelerated. It raised the price of Gleevec five times
in two years. It turned out to be a 20 percent increase in that
drug.
Now company executives knew that Gleevec sales would
decrease once it lost its exclusivity so they tried to get as
much profit out of the drug for as long as they could. This
plan was explicitly stated in internal documents by Novartis
executives who wanted to, quote, ``maximize value of brand
prior to loss of exclusivity.'' Is that not the case, Mr.
Kendris?
Mr. Kendris. Congresswoman, can you identify the document
that you have in front of you? I don't have it in front of me
right now.
Ms. Speier. Well, the staff would be able to provide you
that, but they are evidently documents you provided to the
committee.
Mr. Kendris. Yes.
Ms. Speier. So, it is a fact. In the last two years of
exclusivity you raised the price almost 20 percent. There is a
chart we can put up that shows your net revenues going from
$1.9 billion to $2.53 billion, and I don't know if the
committee staff can put that on.
Mr. Kendris. Congresswoman--I am sorry. Please.
Ms. Speier. So, I mean, the question is, did you not
increase the price of Gleevec some 20 percent in the last two
years because you saw that there was going to be loss of
exclusivity?
Mr. Kendris. Congresswoman, I don't know specifically why
the increases in that period were taken. I was not there in the
oncology----
Ms. Speier. All right. We will move on.
Mr. Kendris. But I can tell you that, as I was saying
earlier, it is indisputable that Gleevec, that its value
increased over the time it was on the market, and it was always
the lowest product in its class, the lowest-priced product in
his class.
Ms. Speier. OK. Mr. Kendris, I am reclaiming my time----
Mr. Kendris. Yes, please.
Ms. Speier [continuing]. Because I want to go to another
line of questioning. I just want to point out that Medicare--
this is the Federal Government--paid $5.6 billion to your
company between 2011 and 2018, and that one-third of all the
money you made in the United States came from the taxpayers
through Medicare. And Medicare right now is two years from
basically falling off a cliff.
I want to go to each of you now and ask you this question.
How much money do you spend on marketing? Mr. Kendris?
Mr. Kendris. Our marketing spend, Congresswoman, is
approximately 400 million U.S. dollars in direct-to-consumer
advertising.
Ms. Speier. OK. $400 million. How much do you spend in
Europe?
Mr. Kendris. I am not sure I know the answer to that off
the top right now but I can get you that.
Ms. Speier. All right. Thank you. If you would get that to
the committee.
Mr. Kendris. Thank you. I will.
Ms. Speier. Mr. Bradway, how much do you spend in direct-
to-consumer marketing?
Mr. Bradway. Direct-to-consumer TV advertisement in the
U.S., less than $200 million.
Ms. Speier. $200 million. How much do you spend in Europe?
Mr. Bradway. A fraction of that. Not on TV but in other
forms of----
Ms. Speier. In fact, there is no TV allowed in Europe. Is
that correct?
Mr. Bradway. I believe that is correct. Maybe
[Inaudible.]
Ms. Speier. And then, Mr. Mallinckrodt, how much do you
spend?
Mr. Trudeau. We don't spend any money on direct-to-consumer
advertising, Congresswoman.
Ms. Speier. All right. Mr. Trudeau?
Mr. Trudeau. Yes, that was me, Mr. Trudeau. We don't spend
any money on direct-to-consumer advertising.
Ms. Speier. All right. My final question is this. Do you
all commit--and I just need a yes-or-no answer--do each of you
commit to not increase the cost of your drug, moving forward,
beyond the inflation each year?
Mr. Bradway?
Mr. Bradway. I would point out that we have decreased our
prices----
Ms. Speier. So, yes or no, sir.
Mr. Bradway [continuing]. We have decreased our prices over
the last three years and increase of list prices have been
below inflation. So, you know----
Ms. Speier. Your answer is yes, you would commit to doing
that.
Mr. Bradway. My answer is that is how we have been
operating the business the last couple of years.
Ms. Speier. OK. Mr. Trudeau?
Mr. Trudeau. As I said earlier, we are committing to
reducing the net price of Acthar to 2015 levels by the end of
2020, which is the first year--2015 was the first year,
actually full year, we acquired Acthar.
Ms. Speier. And Mr. Kendris?
Mr. Kendris. As to net prices, Congresswoman, yes.
Ms. Speier. All right. Thank you. I yield back.
Chairwoman Maloney. Mr. Keller, you are now recognized. Mr.
Keller.
Mr. Keller. Thank you, Madam Chair. We all need to ensure
patients access to affordable drugs, particularly those in
rural areas that rely on essential safety net programs.
Contract pharmacies are essential to the rural areas of
Pennsylvania that I have the privilege to represent. About 80
percent of rural hospitals are 340B. They use pharmacies to
provide access to outpatient drugs for those who need them,
many of whom are seniors and/or have chronic conditions.
Mr. Kendris, thank you for being here. I wanted to ask you
about your new, quote, ``integrity initiative to address
duplicate discounts requiring covered entities to register and
upload 340B claims data originating from contract pharmacies
onto a new web-based platform.''
Your announcement from August expresses support for a
sustainable 340B program. I do have concerns about this
threatening hospitals in Pennsylvania, and their ability to
offer home infusion services, telemedicine, and expand their
outpatient facilities, stretching scarce resources to patients
in need.
So, Mr. Kendris, what kind of collaboration have you had
with 340B hospitals about his integrity initiative?
Mr. Kendris. Thank you, Congressman Keller, for the
question. I appreciate it.
So, Congressman Keller, we support the intent and the
design of the 340B program to help lower outpatient drug prices
for the uninsured and the net profit safety net providers that
you were just describing to your constituencies. They serve
underserved populations in those communities and the 340B
program helps them. We support the 340B program.
However, we also believe that over many years there have
been some abuses that have grown into the system, and we are
trying to resolve those abuses. We have raised the problem over
the years--many companies have--with HRSA, and we are committed
to ensure that our medicines are accessible to as many patients
as possible, and through 340B as well. But we believe that the
current state of the program is somewhat distorted from its
original intent----
Mr. Keller. I understand that. If I could just jump in.
Mr. Kendris. Thank you.
Mr. Keller. I have a letter dated August 17, explaining
your integrity initiative. My question was, prior to the letter
have you talked to hospitals about this program and how it
might be implemented?
Mr. Kendris. I believe that our staff is in contact with
hospitals. We are collecting responses to that letter, and we
are going to continue to work with them.
Mr. Keller. So, if I can just jump in, I have got a limited
amount of time. So, if you are in consultation with the
hospitals, when were you planning on making this in effect and
stopping some of the discounts to the 340B hospitals? It is my
understanding that were to begin at the beginning of this
month.
Mr. Kendris. We had asked for the data by October 1st. We
are still evaluating the responses. We have not heard from all
the hospitals, and we are evaluating the data that we have
received, and we are going to continue to evaluate that data.
And as we move forward, it is going to be based on what we see
in the data we receive.
Mr. Keller. So, if a hospital hasn't registered that data
by October 1st, are they still going to be able to participate
in the discounts?
Mr. Kendris. Yes. We still intend to honor valid,
legitimate 340B discounts, and what we will do is we will see
the responses, we will look at the data, and then we will talk
to the hospitals and move on from there.
Mr. Keller. OK. And a question on the web-based portal. Is
this a secure platform or should we be concerned about data
security?
Mr. Kendris. I believe it is a secure platform. I can check
with our team on that, but I believe it is.
Mr. Keller. OK. Do you expect there to be any
administrative burden on hospitals, or what would that be?
Mr. Kendris. No. Actually, we believe that it is easy to
pull this data. It is not burdensome. It is actually the same
claims data that they have been sharing with the intermediaries
that we talked about earlier in the hearing. So, the data
should be available--I think it takes about five minutes every
two weeks to pull this data.
Mr. Keller. So, you know that the intermediaries have this
data already. So, have you asked them for the data, rather than
make the hospitals do it if it is already available? Have you
looked at another way to get it?
Mr. Kendris. I think that relationship is between the
hospitals and the intermediary, and I think we have to ask the
hospitals for it. I can check into that, Congressman, but I
believe that is what we have.
Mr. Keller. OK. I just would like to end by saying that
340B discounts are crucial for my constituents, and we should
be thoughtful about how any changes to the program would affect
this going forward. We need to ensure that the changes to the
program are manageable and in the best interest of health
providers and the patients they serve.
Thank you, and I yield back.
Mr. Kendris. We agree, Congressman. Thank you.
Chairwoman Maloney. Thank you.
Mr. Connolly, you are now recognized.
Mr. Connolly. Thank you, Madam Chairwoman.
Mr. Trudeau, when you acquired Questcor, one of the very
lucrative drugs in their command was Acthar. Is that correct?
Mr. Trudeau. That was virtually the only product that they
had.
Mr. Connolly. And it is my understanding that when Acthar
first came on the market a vial, one vial, cost $40. By the
time you acquired Questcor that price had gone up to almost
$31,000. Is that correct?
Mr. Trudeau. That is correct.
Mr. Connolly. Forty dollars to $31,000 for the same vial.
And my understanding is the only difference wasn't the
composition of the drug. It was the status, the legal status of
the drug, that Questcor was able to get Acthar granted orphan
drug status before you purchased it. Is that correct?
Mr. Trudeau. That is not necessarily the only thing but
certainly that was something that did occur, that Acthar was
granted orphan drug status.
Mr. Connolly. Well, should we not correlate the two events,
with respect to the value put on a vial of the drug? I mean,
how do we explain going from $40 to $31,000 for the same vial,
with the same efficacy and impact on a patient, other than it
got reclassified as an orphan drug, which gave it a seven-year
market monopoly for that designated use. Isn't that correct?
Mr. Trudeau. It did get an orphan drug designation. That is
correct. In addition, the label was actually updated in 2010 to
reflect the current set of 19 indications.
Mr. Connolly. Right. So, the skyrocketing inflation in this
particular drug had nothing to do with PBMs, for example. It
had to do with the positioning of the drug as an orphan drug
and the protection that provided, which allowed it to have
highly enhanced value, which made it an attractive acquisition
for your company. Is that not correct?
Mr. Trudeau. Based on FCC filings that Questcor filed at
the time, the company was actually in an existential situation.
They had a very essential drug for infantile spasms, and they
were potentially looking at going out of business and not being
able to provide that drug anymore to the marketplace.
Mr. Connolly. So, you kind of came in and saved the day.
Mr. Trudeau. When we acquired Questcor and we acquired
Acthar we did three things: one, we invested in clinical trials
and manufacturing; two, we started engaging with our customers
to provide discounts and rebates; and three, we provided
extensive patient assistance programs to minimize patient out-
of-pocket expense and ensure that patients that could benefit
from Acthar had good access to the drug.
Mr. Connolly. And when you provide this drug through
Medicare, for example, what is the discount?
Mr. Trudeau. We provide all allowable discounts under
statute, and as I discussed earlier, Acthar is not on any
Medicare formularies, and certainly if there were an
opportunity for Acthar to get a formulary position in Medicare
there might be the opportunity to provide additional discount,
similar to what we do in the commercial sector.
Mr. Connolly. Would the discount in this case, with respect
to, say, Medicare, be about one percent?
Mr. Trudeau. I believe most recent data is on the order of
one to two percent. That is correct.
Mr. Connolly. Yes. So, a $31,000 drug that once cost $40,
you are giving rebates to Medicare of less than one percent
between 2015 and 2018.
Is it also true that your company is looking to use this
drug for other treatments, other than the original infant
seizure treatment it was developed for?
Mr. Trudeau. The company has been developing evidence to
support the 19 FDA-approved indications that are currently on
the label.
Mr. Connolly. And if you do that, do you do that under the
auspices of your protective status as an orphan drug or do you
have to redefine that, because it is no longer being used
exclusively for that original purpose?
Mr. Trudeau. The orphan drug exclusivity actually expired a
number of years ago. Acthar is not affected. It does not have
any exclusivity under any of the traditional patents or other
exclusivities such as orphan drug. It is a drug that is
designed primarily for underserved patients that have very few
alternatives, a relatively very small population that is very
sick.
Mr. Connolly. I appreciate that, although I would add when
you charge $31,000, or now $33,000 a vial, in today's price, I
think that is not much of an alternative for a lot of patients
either.
I yield back, Madam Chairwoman.
Chairwoman Maloney. Thank you.
Ms. Foxx, you are now recognized for questions.
Ms. Foxx. Thank you very much, Madam Chairman. I want to
thank our witnesses for being here today, for being where you
are today.
My first question is for Mr. Kendris. Mr. Kendris, it has
been said that Gleevec is a magic bullet for people fighting
chronic myeloid leukemia. Can you discuss why this drug was
such a game-changer?
Mr. Kendris. Thank you, Congresswoman, for the question.
Yes, it was a game-changer. It was the first targeted therapy.
So, you may have heard the term ``smart drug.'' It was the
first smart drug. It turned off a particular gene and it was
able to be extremely efficacious, first in chronic myeloid
leukemia and then in gastrointestinal stomal tumors, and then
in five rare cancers, and that is because it was a smart drug.
It worked very specifically on these very specific cancers, and
by its mechanism of action the efficacy was so high that, as I
said earlier, diseases, these six cancers, or seven cancers,
were turned from fatal conditions for a patient who had died
before Gleevec, into conditions where they lived and they were
able to lead normal lives. And now we have developed a follow-
in product, Tasigna, which allows patients to go treatment-
free. If they get remission for a long enough time they no
longer have to take any drug.
Ms. Foxx. OK. So, what is the current list price of
Gleevec?
Mr. Kendris. The current list price of Gleevec is $120,000,
and the net price is $85,000.
Ms. Foxx. OK.
Mr. Kendris. The price of a generic is $4,200.
Ms. Foxx. OK. So, how much does the average patient pay for
it?
Mr. Kendris. Well, the average out-of-pocket cost for a
Part D patient, Congresswoman, is $856 a year.
Ms. Foxx. OK. So, how does the patient get such a discount
price?
Mr. Kendris. I think it depends on who the patient is and
what their insurance coverage is.
Ms. Foxx. OK.
Mr. Kendris. The price I just gave you was for a Medicare
Part D patient, for out-of-pocket cost, $856 average annual
out-of-pocket cost.
Ms. Foxx. OK. So, a drug considered a magic bullet, and
basically it is not quite a cure but it puts people in
remission, has gone down from $120,000 to $856 for Part D.
Thank you very much for that.
So, I would like to ask Mr. Trudeau, how does your company
decide the right price to set for a new drug that may truly
save someone's life?
Mr. Trudeau. Thank you, Congresswoman. What we try to do is
we try to match the value that we believe that our products are
going to bring to patients and kind of compare those two. And
the value is in two ways. One is the benefit that it provides
to patients themselves and their families, and again, we are
typically developing drugs for some very devastating diseases
where there are relatively few alternatives. And then we are
also looking and creating data, actually, to see what value it
may bring to the overall health care system.
So, for example, using the drug might increase the drug
cost but it might have the impact of reducing overall health
care costs for a particular disease.
Ms. Foxx. So, Mr. Bradway, the Congressional Budget Office
estimates that Democrats' H.R. 3 would result in 38 fewer cures
being developed over the next decade. What would be the impact
on patients and innovation if there were 38 fewer cures created
over the next decade?
Mr. Bradway. Well, I think that is potentially devastating.
So, not only devastating to the patients and their families but
I think also to the economy. I think our economy benefits from
innovation that enables us to treat serious illnesses. We are
seeing the benefit of that every day now. So, anything that
diminishes that opportunity I think would be tragic.
Ms. Foxx. OK. Very quick question for all three of you. On
average, how often does your company, or even the whole
pharmaceutical industry, bring to market a novel or game-
changing treatment or cure? Each one of you answer fairly
quickly, please.
Chairwoman Maloney. The gentlelady's time has expired. The
gentlemen may answer her question.
Ms. Foxx. Please answer. Mr. Bradway?
Mr. Bradway. Thank you for the question. We have 22
different novel, game-changing medicines that have been
approved throughout our history. We have three, for example,
this year. We are waiting for registration-worthy data. So,
from one year to the next is different but 22 through our
history, three more that we are waiting for this year.
Mr. Kendris. Congresswoman, it is Tom Kendris. For
Novartis, I believe it could be more, but I believe last year
we had at least four. This year I believe we have already had
two, and we may have more to come this year. So, it is three to
five almost every year, as an average, I would say.
Ms. Foxx. Mr. Trudeau?
Mr. Trudeau. Congresswoman, I think from an industry
perspective we are trying to get as many novel, lifesaving
medicines to the market as we can. For our company
specifically, we are hoping to have two or three in the next
two to three years.
Ms. Foxx. Thank you. I am sorry for going over, Madam
Chairman.
Chairwoman Maloney. Mrs. Plaskett, you are now recognized
for questions.
Ms. Plaskett. Thank you so much, Madam Chair, and thank you
to the witnesses for being with us this day to answer these
questions and to provide more information about drug pricing.
Mr. Bradway, when we talk about high drug prices, many
times we talk about the list price. And large discounts are
provided off the list price and then, as part of the insurance
design patients are charged a percentage as a co-insurance. But
my understanding is that this is always a percentage of the
list price and not the discounted price. Is that correct? Do I
have that correct?
Mr. Bradway. Yes, you have that generally correct.
Ms. Plaskett. OK. I know my answer is probably simplistic.
So, what are some of the ways in which to bring down what a
patient pays? Your thoughts on that.
Mr. Bradway. Well, we have advocated for changes to the
system that would include, for example, passing the rebates
that have been negotiated between the intermediaries and the
innovatives comes through to the patients at the pharmacy
counter. That would have the immediate effect of reducing the
out-of-pocket costs for the patient in the picking up the
innovative medicine.
Second, we have advocated for placing an out-of-pocket cap
on patients so that after they have paid a certain amount for
their medicines during the course of the year they reach a cap
and no longer have to have a copay.
So, those are two examples of things that we are advocating
for. And as you may be aware, we have also taken the unusual
step of even lowering list prices for our medicines by 60
percent in the case of our game-changing medicine known as
Repatha, which lower the risk of heart attack and stroke.
Ms. Plaskett. Great. Thank you. But in some instances the
list price, they may go up, and there are reasons for that. But
my understanding, as well, and I hope this is not too
simplistic, but has the net price, what is actually made off
the drug, gone down in recent years for any of the products
that you make?
Mr. Bradway. Yes, Congresswoman. In 2018 and 2019, and
again we expect in 2020, that the net prices for our portfolio
in the United States will have decreased. So, across our
portfolio net prices have fallen.
Ms. Plaskett. And then can you explain to us how the net
prices go down but yet the list price may go up, in many
instances?
Mr. Bradway. Yes, Congresswoman. That occurs when the
rebates that we are giving to the intermediaries exceed the
increases in list price.
Ms. Plaskett. Mm-hmm. OK. And can you explain how can
biosimilars play a role in reducing health care costs and costs
for patients?
Mr. Bradway. Yes, Congresswoman. Again, Amgen is a heavy
investor in biosimilars. We have committed more than $2 billion
to develop a portfolio of biosimilars. We make three of those
available today in the U.S., with a plan to add more, to
patients and prescribers. We provide them at a price that is a
discount to what the innovative products are charging, and
commit to having a reliable, safe supply of that lower-cost
alternative available to patients.
Ms. Plaskett. Thank you. Thanks so much for that.
I want to ask any of the witnesses, how have your
companies, if you are, in fact, involved in the fight against
COVID-19, what are the steps any of your companies are taking
to improve diversity in clinical trials?
Mr. Kendris. Congresswoman, it is Tom Kendris from
Novartis.
Ms. Plaskett. Thank you.
Mr. Kendris. Thank you for the question. So, before COVID-
19 hit our global drug development group was focused on this
issue for our own clinical trials. It is a crucial step that
must be taken, because I think the basis of your question, I am
sure you realize, if a product is studied in a limited patient
population, after it is approved doctors are comfortable
prescribing it only in that limited patient population. So, if
it is not studied in a minority population, whatever minority
population that is, doctors will be more hesitant to prescribe
it there because they don't have data.
So, we recognized before COVID broke that we needed to
change that in our own clinical trials. Since the COVID-19
pandemic began, what we have done through our Novartis U.S.
Foundation is to begin the process of convening other
companies, and some groups like the NAACP and other groups
focused on racial equity, to have a conversation about this
very issue across the industry, so that we can improve
diversity in clinical trials, in all clinical trials of all
types, and to address the underlying problems, which have to do
with many things, but trust for patients who are in clinical
trials would be one of those things. And that is going to take
a broader conversation that we are going to try and convene.
Ms. Plaskett. Yes. Thank you.
Chairwoman Maloney. The gentlelady's time has expired.
Ms. Plaskett. Thank you, Madam Chair. I would love to be
part of that conversation, and I know the congressional Black
Caucus is very concerned about this, and we would love to offer
any thoughts and discussions on this.
And thank you, Madam Chair, for holding this hearing. I
wanted to, at some point, ask these gentlemen, in another form,
about how do we move manufacturing back to U.S. flags and what
we can do to support bringing that infrastructure and those
jobs back to our country.
But thank you for the hearing.
Chairwoman Maloney. Mr. Grothman, you are now recognized
for questions.
Mr. Grothman. First I have a question for Mr. Kendris, and
this is kind of a followup on a previous question. I also am
concerned about the 340B program. Right now there are companies
out there like Eli Lilly--I am aware they are not here today.
They have refused to continue to offer the 340B prescription
drug discounts to contract pharmacies that our kind of safety
net hospitals, critical access hospitals, and community health
centers rely upon.
To my knowledge, Novartis, at this point, has not refused
to provide new discounts. However, you have been requesting
claims data in order to prevent potential duplicative
discounts.
Are you willing to give us assurances today that Novartis
will be a good steward of the 340B program moving forward and
will not do what Eli Lilly has done?
Mr. Kendris. Our intent, Congressman, is to be a good
steward of the program. As you said, we have asked for data
from the hospitals that will help us to avoid paying multiple
duplicate discounts. So, we support the program, and allowing
hospitals to use our discounts to provide the patient care that
was originally intended by 340B. But what we don't support is
allowing intermediaries, middlemen, to profit from the program.
Mr. Grothman. OK. The next question, I guess, is really for
any one of you. I guess maybe I should pick somebody else.
Maybe we will pick Mr. Trudeau.
Specialty biologics are some of the major drivers of
prescription drug costs because they often treat very
particular diseases with limited patient populations. Evidence
has shown that introduction of biosimilars in the market
reduces that cost for patients. Since all your companies do
have biologics on the market, how has the introduction of
biosimilars impacted the price of your medications, and have
any of you tried to prevent biosimilars from coming to market
in an effort to stifle competition? And a followup question,
how can Congress incentivize companies to break more
biosimilars to market?
Mr. Trudeau. Congressman, thank you for the question. We
are focused on what is in the best interest of patients,
meaning that patients have access to the best possible
medications they have for their condition at the lowest
possible cost. We also support competition. Biosimilars, in
some markets, have been shown to enhance competition. Our
company does not produce biosimilars, so that might be a
question better directed to one of the other individuals.
Mr. Grothman. OK.
Mr. Bradway. Congressman, this is Bob Bradway from Amgen.
We are active in the biosimilar market. We have invested a
couple billion dollars to develop our capabilities here in the
U.S. We think this will provide an appropriate alternative
choice for patients and providers.
So, far we have launched three medicines, the first two in
the cancer field, where we have had very strong receptivity to
our product offerings. So, we are providing those at a discount
to the originator products and see a significant market
already, after a short time being on the market. So, we think
that the industry as created by the legislation known as BPCIA
is working effectively, and the U.S. is nearly----
Mr. Grothman. OK.
Mr. Bradway [continuing]. Biosimilars, and expect us,
again, to be an important opportunity for patients and
providers.
Mr. Grothman. Let me just give you a quick yes-or-no
question on this. President Trump's FDA released a biosimilar
action plan which streamlined the process to approve
biosimilars. We believe this is resulting in significantly more
approvals of biosimilars than under the Obama Administration,
which was not as aggressive in this area.
Would you agree the President's plan is saving patients
money?
[No response.]
Mr. Grothman. OK. I will give you a different question. Do
you agree, you know, in trying to get more biosimilars to
market under the President's plan, is that saving patients
money?
Mr. Kendris. Congressman, it is Tom Kendris from Novartis.
I am not sure that I am familiar with the President's plan, but
we have Sandoz, as I mentioned earlier, a generics company and
a biosimilars company. We brought the first biosimilar to
market, Zarxio, in 2015. So, we certainly support biosimilars,
and Zarxio itself----
Mr. Grothman. Let me give you a quick followup question
because I am on my final minute here.
Mr. Kendris. Sorry.
Mr. Grothman. I am going to be introducing a bill, or have
introduced, H.R. 8190, a Biosimilar Insulin Access Act, which
will expand on what President Trump has done. Will you guys
pledge not to get in the way of any expansion of biosimilars?
Is that something you are going to fight, or do you--will you
agree that we should be getting more biosimilars to market?
Mr. Kendris. Congressman, it is Tom Kendris. I think
generally speaking we support more biosimilars coming to the
market. Sandoz has biosimilars in its pipeline and is actively
trying to get them onto the U.S. market, and that will help
patients and reduce health care costs in the U.S.
Mr. Grothman. Thank you.
Chairwoman Maloney. The gentleman's time has expired.
Representative Raskin, you are now recognized.
Mr. Raskin. Thank you, Madam Chair.
Mr. Kendris, our investigation found that drug companies
use anticompetitive tactics to prevent generic competition in
order to prop up profits. Novartis engaged in pay for delay,
where companies pay off generic competitors to delay their
entry into the market. Novartis struck a deal with the first
generic competitor to postpone its entry by six months. This is
on Gleevec. The generic originally announced it would price its
product 30 percent below Gleevec, but then they ultimately set
the price at only six percent below Gleevec.
Experts say that these various maneuvers employing a six-
month delay and then a six-month duopoly, resulted in $700
million in excess costs to payers alone, in a single year, in
1915-'16. And you collected your highest net revenue from
Gleevec during that two-year period when more than 100 Novartis
employees collected more than $1 million a year, and the CEO, I
understand, earned a total of $72 million that year.
One strategy of anticompetitive exclusion is to engage in
restrictive contracts with health plans and pharmacies to
ensure that those health plans and pharmacies only cover or
dispense the branded, or non-generic, form of the drug. These
contracts are called National Drug Code locks on generics, or
NDC blocks, for National Drug Code.
Internal records showed that Novartis developed and
implemented an NDC block strategy. Novartis offered higher
Gleevec rebates or discounts to health plans in exchange for
their plans blocking generics from the covered drug list. This
meant that Gleevec would automatically be substituted instead
of a generic version.
Mr. Kendris, do you agree that NDC blocks are fundamentally
anticompetitive?
Mr. Kendris. Congressman Raskin, no, I don't agree with
that. I think payer contracting actually saves the health plans
and the brand is cheaper than the generics in that case. What
we did was we lowered the price of the branded product with
steep discounting, and we competed with generics on price with
our brand.
Mr. Raskin. Well, but why did you need to institute a
formal block to keep the generics from being in competition at
that point?
Mr. Kendris. It wasn't to prevent generics to be in
competition. There were physicians and patients who wanted
branded Gleevec, and in order not to be automatically
substituted at the pharmacy counter those patients wanted
Gleevec, and these payers, who we contracted, wanted to get
Gleevec brand to them.
Mr. Raskin. Well, you actually promoted to consumers the
idea that they should only order Gleevec. Tell us about your
dispense-as-written campaign for doctors to write ``dispense as
written'' or ``DAW'' on prescriptions.
Mr. Kendris. That is a campaign to make sure that doctors
and patients know that if they want Gleevec, the branded
product, and many patients who are stable, in remission from
cancer, want to stay on the branded product and not go to a
generic, if they want that they need to write--they need the
doctor to write the prescription for Gleevec, the brand, or
they will be automatically substituted at the pharmacy. So,
that is what ``dispense as written'' means, and it is for the
patients and the doctors who would like to keep the patient on
Gleevec as opposed to being switched to a generic automatically
at the pharmacy.
Mr. Raskin. But don't you actually try to influence
consumers or patients in that choice? You say, ``It is your
right to ask your pharmacist for branded Gleevec. Tell them to
dispense as written. The power is in your hands. Demand the
brand. Multiple generics can lead to patient confusion. If you
get generic your medication may change shape, color, size, from
month to month.'' Aren't you actually out there campaigning
against generics and making the patient believe that they need
to get the branded pill?
Mr. Kendris. Look, Congressman, we have our own generic
company that sells thousands and thousands of generics every
year. In fact, they are the second-largest seller of generics
in the United States. So, we don't do what you just described.
What we are doing is we are reaching out to patients and
doctors who already want to stay on the brand, and we are
educating them how they have to do it. They will not be able to
stay on the brand if they want to unless they write a
prescription for Gleevec.
Mr. Raskin. Did you pursue the NDC blocks in order to try
to keep Novartis' market share up, even with generics in the
market? Is that why you went for the NDC block strategy?
Mr. Kendris. No. That is part of the negotiation with the
payer in the contracting process.
Mr. Raskin. OK. Well, Madam Chair, I just think that these
NDC blocks were tremendously profitable for Novartis, as they
have been for other companies, and the cost is not paid by the
company. It is paid by the patients, it is paid by Medicare,
and all of us through increased prices.
But thank you for your testimony. I yield back to you,
Madam Chair.
Chairwoman Maloney. Thank you.
Mr. Comer, you are now recognized.
Mr. Comer. Thank you, Madam Chair. My first few questions
will be addressed to Mr. Bradway with Amgen.
Sir, you explained in your opener that net prices are not
the same as list prices. You said that part of the list price
calculation includes benefits to patients. Can you quickly
explain how you are able to calculate that?
Mr. Bradway. Yes. The list price is the price that we
establish. The rebates are the price that we pay to the
intermediaries, creating a net price. It is the net price that
we receive. And the patient then pays a copay as a function of
the stated list price.
Mr. Comer. While patients no doubt benefit from these
lifesaving drugs, I think you can understand that patients have
a hard time understanding that cost benefit calculation. How
can patients be sure they are getting the best price available
for their medicine?
Mr. Bradway. Thank you, Congressman. I think that is an
important issue, the issue of transparency, and it is very
difficult in the system that is in place today. It is
difficult, for example, because patients don't get the benefit
of the rebate at the pharmacy counter. In fact, it is very hard
for a patient to have any idea what rebate has been negotiated
between their plan sponsor, their PBM, and the innovative drug
company. So, it is a challenging problem, even for the
initiated patient who wants to try to get the answer to your
question.
But we and others publish our list prices, for example, on
the website, for our individual medicines. We provide an
indication of the range of rebates and, therefore, give a sense
for what the net price is. But our net price is different for
individual payers, based on the contracts that we have
negotiated with each of them individually.
Mr. Comer. I spent a lot of time in the hearing yesterday
talking about my dissatisfaction with the PBMs and that
process, so I am going to shift gears and mention that for a
second.
Mr. Kendris with Novartis, this is an incredibly
complicated process. It seems to me that the savings are not
always being passed on to the consumer. President Trump, in one
of his recent Executive orders, mandated that PBMs pass these
rebates onto Medicare Part D patients, but this covers only a
small percentage of the patient population.
Mr. Kendris, what can we, in Congress, do to ensure
patients are benefiting from these discounts rather than
middlemen like PBMs?
Mr. Kendris. Ranking Member Comer, thank you for the
question. I think one answer to your question, quickly, would
be transparency, and I think that we need to encourage patient
access and affordability. And I think there are three ways.
We can give access to value-based products, value-priced
products with low cost-sharing so we encourage their use and we
don't restrict their access to formularies. We can cap what
patients have to pay in out-of-pocket costs for drugs in
Medicare Part D. And we can require plans to share some of the
discounts they negotiate for drugs with patients. Those savings
should be passed along to patients at the pharmacy counter.
Those three things would encourage patient access and
affordability.
Mr. Comer. And I agree 100 percent with your statement
about transparency. Who is the agency or bureaucracy in charge
with overseeing the PBMs and their transparency? Who holds the
PBMs accountable? Educate me on that.
Mr. Kendris. That is a very good question, Ranking Member
Comer, and I think perhaps HHS is the answer. Perhaps HHS
should be overseeing the PBMs, and to some extent they probably
do. But I think the oversight and the changes in terms of
passing on discounts at the pharmacy counter is something that
needs to happen. Maybe it is HHS. Maybe it is a different
approach. I am not sure.
Mr. Comer. And I think that is something, Madam Chair, I
mentioned to you after the hearing yesterday, that is something
that we should certainly look into more when we are going to
continue our efforts to investigate the out-of-control costs of
drugs for Americans.
One other thing, and my time is running out, but just to
touch on what Representative Keller mentioned with the price
difference between Europe and the United States, I don't think
any of like that but I am curious, how much do you spend on
litigation in Europe versus the United States? Is there a big
difference in your litigation costs?
Mr. Kendris. I believe there probably is. I would have to
get back to you with specifics, Ranking Member Comer, but there
is a probably a difference.
Mr. Comer. If both of you all could get that back to me I
would just love to know, out of curiosity.
Madam Chair, I yield back.
Chairwoman Maloney. Mr. Gomez, you are now recognized, and
Mr. Gomez is the vice chair of this committee.
Mr. Gomez. Thank you so much. Mr. Trudeau, I want to
followup on something you said to Chairwoman Maloney when she
asked you about the cash cow slide. Can we put up Exhibit 68
again, please?
[Slide.]
Mr. Gomez. So, now let's just review this slide. It refers
to Acthar as, and I am quoting from the title here, ``a cash
cow.'' Now Mr. Trudeau when Chairwoman Maloney asked you about
this you downplayed it. You said, ``Oh, it is just a draft and
it was never sent to the board.'' You were pretty much implying
that your companies doesn't view this drug as a cash cow. Do
you still stick with the assertion that your company does not
view Acthar as a cash cow? Yes or no.
Mr. Trudeau. Yes, I do.
Mr. Gomez. OK. Thank you. Are you familiar with the term
``synonym.'' Synonym?
Mr. Trudeau. Cinnamon?
Mr. Gomez. Syn-o-nym. Yes, the term that basically refers
to one word means the same thing as another word, right, or
nearly the same thing. Are you familiar with that concept?
Mr. Trudeau. I am, sir, yes.
Mr. Gomez. OK. So, we obtained some emails that I want you
to take a look at, and it is from your company's execs.
In fact, one of these email chains, your corporate
executives have a discussion about this exact term, and I
quote, ``Do we really want to say 'cash cow' to the board?'' He
obviously recognized how bad this sounds. So, then your
company's chief commercial officer responds. In his own email
he wrote, and I quote, ``Instead of 'cash cow' I will replace
it with 'profit maximizer'.'' So, replacing one term with
another term, ``cash cow'' with ``profit maximizer,'' doesn't
change the intent of your company, which is to make as much
money as possible, right?
So, Mr. Trudeau, you were under oath when you answered
Chairwoman Maloney's question. You swore to tell the truth and
the whole truth. Were you trying to mislead the committee?
Mr. Trudeau. Not at all. We don't think about Acthar in
any----
Mr. Gomez. OK. So, let me reclaim my time. Can we put up
the next slide?
[Slide.]
Mr. Gomez. This is the actual slide that was sent and was
included in the final presentation that was prepared for the
board, and it includes the term ``profit maximizer.'' Do you
deny that, Mr. Trudeau?
Mr. Trudeau. No, I don't.
Mr. Gomez. OK. So, that was the whole point that Ms.
Maloney was trying to make, that your company is trying to
maximize profits. Then you denied it, and then you downplayed
this document. You said you removed the word ``cash cow,'' but
there was no question that you were trying to maximize profits,
right? ``Cash cow'' and ``profit maximizer,'' you just replaced
one term with another, but the intent was the same, to make the
most money.
I think you owe the chairwoman and this committee an
apology. How do you respond?
Mr. Trudeau. Very clearly, sir, these were options that
were being considered, but I think the actions are what you
need to focus on----
Mr. Gomez. No. I am going to reclaim my time.
Mr. Trudeau [continuing]. And that is that we----
Mr. Gomez. Do you--what--do you agree that the main
purpose--your team replaced one term with another, right, one
term with another, and it was the same intent, to maximize
profit, right?
I would like to put up--and your team, your company, has
brought in nearly $6 billion in net sales from Acthar. I would
like to put up Exhibit 76 on the screen, please.
[Slide.]
Mr. Gomez. The presentation emphasizes that the merge was
a, quote, ``unique opportunity that should be pursued
urgently'' because this deal would, quote, ``provide rapid
revenue and earnings growth.'' In fact, soon after the
acquisition your executives boasted about how well this
strategy worked, highlighting to shareholders that Acthar had
already contributed $123 million toward net sales in only six
weeks. In an investor briefing in October 2014, Mr. Trudeau,
you personally explained that your company's primary goal was
to deliver, quote, ``top-level shareholder returns by focusing
on highly profitable specialty drugs like Acthar.'' Do you
recall saying that?
Mr. Trudeau. I don't recall that specifically but it
wouldn't surprise me that I did say that.
Ms. Scanlon. Yes. And the reason why is that, you know,
just changing the term from ``cash cow'' to ``profit
maximizer'' doesn't change your intent. The intent of your
company is not to help the bottom line of the health outcomes
for the American people or for the public in general. It is to
maximize your profits.
Your company then proceeded--you already had this drug and
it was already highly profitable, and then you proceeded to
increase the drug by more than $82,000 per vial, an additional
26 percent increase. So, I believe that you misled this
committee, I believe that you owe the chairwoman an apology,
and I believe that you owe the American people an apology as
well.
With that, Madam Chair, I yield back.
Chairwoman Maloney. The gentleman yields back.
Mrs. Tlaib, you are now recognized for questions.
Ms. Tlaib. Thank you so much, Chairwoman. Let's talk about
the sham patient assistance programs, which we hear a lot from
companies like yours. I know because, you know, many of the big
pharma companies use many of these programs in some ways to
hike up prices so that they are completely unaffordable, and
then they offer these charitable programs so that patients can
afford the very drug you have made unreasonably expensive.
So, these so-called fake assistance programs do not get
into the underlying problem, and as many constituents tell us,
which is that these drugs simply do not have to be expensive,
that it is a choice, a choice that every CEO testifying today
makes. And it is really a choice that is killing people, in my
district and across the Nation.
So, I know you all there are a lot of documents this
committee has obtained. These are not things that are coming
and falling out and these are not theories. They are all
documentation that proves what we are trying to explain to all
of you, is that these schemes, again, are hurting people. So,
the internal documents obtained by this committee through the
investigation show that these so-called sham--you know, they
are sham charitable programs--are really just money-making
schemes.
So, let's start with Novartis' copay assistance program. In
one of your response letters to the committee you stated that
Novartis used its copay programs to, quote, ``ensure that every
patient who needs Gleevec has access to it.'' Mr. Kendris,
would you consider Novartis' copay and other patients
assistance programs a financial investment or charity?
Mr. Kendris. Congresswoman Tlaib, we are trying to make
sure that patients can get access to Gleevec, so when they
can't afford it, for whatever reason, we try and make it
available----
Ms. Tlaib. Sure. Sure.
Mr. Kendris [continuing]. In a variety of different ways,
and that is one of them.
Ms. Tlaib. Yes. Well, let me--so the documents don't kind
of match up what you are trying to say here. So, documents
again obtained by the committee also show that Novartis viewed
its copay programs as investment, and strategically--this is a
scheme here--you all used it, the copay program, to drive
demand for Gleevec, particularly after it began competing with
generic versions of the drug.
I would like to put up Exhibit 15 upon on the screen.
[Slide.]
Ms. Tlaib. So, it appears to be an analysis of when to
launch the so-called enhanced copay program in anticipation of
the generic competition. Can you see that, Mr. Kendris? I want
to direct your attention to the table.
Mr. Kendris. Yes. Hold on one second, Congresswoman. I am
getting a paper copy of it because I don't see it very well on
the screen. But I have it now. So, it says, I think on the top,
I don't see it on the screen but is the one that you are
referring to, does it say ``the optimal scenario is a six-month
pre-LOE start''?
Ms. Tlaib. That is right.
Mr. Kendris. OK.
Ms. Tlaib. So, Novartis expected that every dollar it put
into the enhanced copay program--you know, the scheme--that it
would get back a return or investment of between 5.1 and 8.9
dollars. That means for every $1,000 put into this copay
program, you would expect upwards of nearly $9,000 in profit.
Am I reading that correct?
Mr. Kendris. I am not sure, Congresswoman.
Ms. Tlaib. Mr. Kendris, you are under--listen, you took an
oath----
Mr. Kendris. I am sorry.
Ms. Tlaib [continuing]. To be very specific, you are seeing
this as investment. In your own charts, from your own company,
to this committee you are literally making $9,000 in profit
when you insert $1,000 into these sham charitable programs.
Mr. Kendris. Congresswoman, I am not sure I understand this
chart the way you are describing it.
Ms. Tlaib. OK. So, according to the slide----
Mr. Kendris. Sorry.
Ms. Tlaib [continuing]. According to the slide----
Mr. Kendris. Yes.
Ms. Tlaib [continuing]. The optimal scenario was to launch
the copay programs six months before your company lost
exclusive rights to the drug, and then a generic version would
become available. That is because launching six months prior
would result in the greatest return on investment by keeping
patients on Gleevec before lower-cost generics entered the
market. Does that sound right to you?
Mr. Kendris. Congresswoman, I am looking at the chart, and
I see what you are saying----
Ms. Tlaib. OK.
Mr. Kendris [continuing]. And I would like the opportunity
to take this back and talk to----
Ms. Tlaib. OK. Well, let's look at another document.
Mr. Kendris [continuing]. At my oncology business unit.
Yes. Sure. Thank you.
Ms. Tlaib. In 2013, Novartis executives appeared to have
conducted a literature review to consider enhancing its patient
assistance programs, the scam. Let me put this document on the
screen. It is Exhibit 14.
[Slide.]
Ms. Tlaib. I hope you can see that. As you can see,
executives noted--it is highlighted there--that for patients
that have higher copays there is a risk that they may not
adhere to the drugs. But then the review reached this
conclusion, quote, ``Because cancer drugs are a necessity for
patients, there is less sensitivity to price increases.'' What
this document is saying, basically, is that cancer patients
will keep taking drugs, no matter the price, because they
simply have no choice. Am I reading that correct, Mr. Kendris?
Mr. Kendris. Congresswoman, the next sentence says
something that I also think is a fact----
Ms. Tlaib. Mm-hmm.
Mr. Kendris [continuing]. That research shows that there is
an upper limit of OOP costs at which patient adherence begins
to decline. So----
Ms. Tlaib. Well, you can try to mislead the public, but
when it comes down to----
Mr. Kendris. I am not trying to mislead. It is----
Ms. Tlaib. Mr. Kendris, your own documents are basically
saying, which is really sickening, that it doesn't matter
because these are lifesaving drugs. Let's go ahead and increase
the prices, even though you don't have to. You have increased
the prices to make more of a profit off of people that are
suffering from cancer. And all these scams and these, you know,
so-called patient assistance programs that you mislead
everybody into trying to look like good citizens, they are not.
They are money-making schemes. And it is, again, verified over
and over again in documentation provided to this committee.
I yield.
Chairwoman Maloney. The gentlelady yields. Thank you.
Mrs. Porter, you are now recognized for questions.
Ms. Porter. Thank you for being here. I want to hear today
about innovation. As you know, this is our second day of
hearings with the CEOs of big pharma companies, and we have
heard so much important information about the very real costs
of research and development, R&D.
Mr. Bradway, what was Amgen's total revenue in 2017?
Mr. Bradway. Oh gosh. Approximately $22 billion.
Ms. Porter. OK. So, it was $23.7 billion. How about 2018?
Mr. Bradway. I don't have that at hand but it again it
would be 24----
Ms. Porter. That is OK. I have it handy. $22.8 billion.
2019, $23.4 billion. This totals up, because I know it is hard
to do math on the fly, to $69.9 billion.
Mr. Bradway. Thank you.
Ms. Porter. Mr. Bradway, over those three years that we are
talking about, 2017 to 2018, how much of its own revenue did
Amgen invest in that really important research and development
work?
Mr. Bradway. Approximately $10 billion.
Ms. Porter. OK. So R&D, taking you at your word here, was
about $10 billion. Great. That is a big number. Investing in
R&D dwarfs some of your other expenses. Is that right? It is
one of your largest expenses.
Mr. Bradway. That is correct.
Ms. Porter. How much did Amgen spend on lobbying over that
same three-year period?
Mr. Bradway. I don't have the exact number but it is
approximately $10 million a year.
Ms. Porter. That is correct, $32.52 million on lobbying.
How much did Amgen pay for the salaries of the top five, the
top five executives over this two-year period?
Mr. Bradway. Oh goodness. It is about, I would guess, $6.5
million per year, so $13 million would be my guess.
Ms. Porter. Thirteen million? Would you like to revise?
Take a look right here, sir.
Mr. Bradway. Sorry. You asked salary. I gave you an answer
to the question about salary.
Ms. Porter. Oh, I am sorry. Let me rephrase. How much did
Amgen spend on compensation for the top five executives?
Mr. Bradway. That is the number you have written on the
board. Thank you.
Ms. Porter. Could you say that number please, for the
committee?
Mr. Bradway. Yes. I will assume that your number is
correct. It is $124 million.
Ms. Porter. OK. Wonderful. And then my final question is
how much did Amgen spend on stock buybacks in that same two-
year period?
Mr. Bradway. Sorry. Two-year or three-year period?
Ms. Porter. Right here. Three-year period. Sorry.
Mr. Bradway. Three-year period. I don't know the number off
the top of my head, but that includes the period where tax
reform was implemented, so I would guess it on the order of $30
billion.
Ms. Porter. Right around this number. Can you say it for
the committee? I am not a witness, sir, so I can't testify as
to your profits. I need you to state the number.
Mr. Bradway. The number that you have written is $28.6
billion.
Ms. Porter. Thank you. So, you spent double, more than
double, almost triple on stock buybacks over the three-years as
you did on R&D. Is my math correct? $10 billion is roughly one-
third of $28.6 billion.
Mr. Bradway. Yes, but what you haven't included there is
the capital that we allocated to acquire research and
development externally, which would be about $19 billion in
that period.
Ms. Porter. OK. You make an anti-inflammatory drug called
Enbrel, which is used to treat conditions like arthritis. Mr.
Bradway, did Amgen do the research that led to the creation of
Enbrel?
Mr. Bradway. No, not the originally discovery, but we have
done millions of dollars of work on----
Ms. Porter. It is just a yes or no. Did you do the research
that led to the creation of Enbrel?
Mr. Bradway. Congressman, I stand by my answer. The Enbrel
that you use, that patients use today, did we do the research
and development work associated with it? Absolutely. Quite a
bit of it.
Ms. Porter. Did you yourself oversee the trials of the
drug? Did any executive at Amgen help invent this breakthrough
drug?
Mr. Bradway. No, I did not. I was not involved in
breakthrough development of the drug or the discovery of the
drug.
Ms. Porter. In fact, Enbrel was invented in an academic
medical center, and its discovery was funded largely by
taxpayers. Amgen later acquired the biotech company who
manufactured Enbrel. Amgen did not directly pay for the
discovery of Enbrel. Correct?
Mr. Bradway. No, that is incorrect. Your statement is
wrong. Enbrel was discovered by scientists at a biotechnology
company called Genentech.
Ms. Porter. OK. What I would like to do now, Mr. Bradway,
is I would like for you to please explain to the American
public why you and four other executives deserve to pay
yourselves tens of millions of dollars each year. I have got an
empty whiteboard ready to take down your justifications.
Mr. Bradway. I recognize that that is a considerable sum of
money. I would, of course, point out that I don't have any
direct input to my compensation. That is derived by the board
and it is forwarded to a vote of the shareholders, who
overwhelmingly supported the compensation package for me and
the other main executive officers.
Ms. Porter. Reclaiming my time, sir. Do you not know why
you are getting hundreds of millions of dollars, tens of
millions of dollars a year? What is the justification? I would
like to show the American people.
Mr. Bradway. Our compensation is consistent with
competitive positions at other companies like ours.
Ms. Porter. Mr. Bradway, reclaiming my time. The other guy
gets paid too much too isn't a justification. I would like to
hear what you do to deserve $124 million in salary, you and
your top five executives, over a three-year period.
Mr. Bradway. Well, more than----
Chairwoman Maloney. The gentlelady's time has expired. The
gentleman may respond to her question.
Mr. Bradway. OK. More than 90 percent of my compensation is
based on performance measures that include how our shares
perform relative to the market, and our compensation program is
aligned with that of our owners, our share owners. So, a large
part of my compensation reflects the fact that we have been
creating value for our share owners by advancing innovative
medicines like those that we have in the marketplace today.
Ms. Porter. I wish you would focus on creating value for
sick patients, Mr. Bradway, not just your shareholders. I yield
back.
Chairwoman Maloney. The gentlelady yields back.
Mrs. Kelly, you are now recognized for questions. Mrs.
Kelly?
Ms. Kelly. Thank you, Madam Chair. I want to take a moment
to address an argument we have heard a lot about today, that
pharmacy benefit managers are responsible for rising drug
prices. Mr. Trudeau, I would like to start with you first.
The average net price per unit of Acthar, which is the
price of the drug after subtracting all rebates and discounts
has increased every single year since--I am not going to
pronounce this right, but Mallinckrodt purchased Acthar. I
would like to put on the screen a graph of the average net
price per vial of Acthar between 2015 and 2018.
[Slide.]
Ms. Kelly. This graph was created using data your company
provided to the committee. You can see on the chart that in
2015, the average price was around $30,000, and in 2018 it was
around $33,000, basically increasing by nearly $3,000 in three
years, and that is after factoring in rebates and cost.
Is it fair to say that Acthar's price increased at a faster
rate than any discounts or rebates provided to PBMs or others
in the supply chain?
Mr. Trudeau. I don't believe that is true. We have actually
increased discounting significantly to our customers well
beyond the rate of increase that is shown there.
Ms. Kelly. OK. In addition, data your company provided to
the committee revealed that the rebates that paid Medicare for
Acthar are practically nonexistent, in stark contrast to
Mallinckrodt's documented efforts to perpetuate this misleading
narrative. Excuse me. Between 2015 and 2018, the rebates that
you paid to Medicare averaged less than one percent. By
comparison, rebates paid to TRICARE for Acthar averaged more
than 26 percent.
So, turning to you, Mr. Bradway, U.S. net price of Enbrel,
again, the price of the drug after subtracting all rebates and
discounts, has also increased since 2014. The same is true for
Amgen's drug, Sensipar. Even though rebates were stable, Amgen
increased the price of Sensipar by 34 percent between 2015 and
2018.
And finally to you, Mr. Kendris, data provided to the
committee reveals that between 2011 and 2015, the net price of
your cancer drug, Gleevec, increased by double digits annually.
At the same time, your data suggests that the rebates Novartis
paid for Gleevec remained lower than big pharma would lead the
public to believe. Between 2009 and 2015, before Gleevec lost
exclusivity, the average of all discounts and rebates provided
by Novartis related to Gleevec sale was just 15 percent of
total gross sales.
Let's be clear. PBMs certainly play a role in our current
pricing system. We won't deny that. But based on the data we
have received it is equally clear that pointing the finger at
PBMs is a convenient way for drug companies to deflect blame
for their own actions. So, it simply cannot be that it is just
PBMs are responsible for all of these price increases.
I don't know if anyone wants to comment on that.
[No response.]
Ms. Kelly. If not I will yield back my time.
Chairwoman Maloney. The gentlelady yields back, and the
chair now recognizes Mr. Comer for his closing comments.
Mr. Comer. Thank you, Madam Chair, and I will be very
brief. We have had two long days of hearings. Hopefully in the
future we can come together, instead of identifying all the
problems we can try to work toward some solutions to those
problems.
I want to mention that many of the problems that my friends
on the other side of the aisle mentioned today can be solved in
H.R. 19, our bill, the Republican bill. For example,
Representative Wasserman Schultz mentioned several times the
pay-for-delay settlement. You know, we don't like that. I don't
think anybody likes that. That is bipartisan, and that is in
our bill, H.R. 19. So, I think that there is an opportunity to
work together on this issue moving forward, and I certainly
hope that we can do that.
With that, again, I appreciate the hearings that we had. I
appreciate all the witnesses that came before us over the last
two days, and hopefully we can work together moving forward,
because this is an issue the American people are demanding
Congress address. And I think that we can do that and I hope
that moving forward we work in a bipartisan way to have
solutions to the problems.
I yield back.
Chairwoman Maloney. The gentleman yields back, and I thank
the gentleman, and I can assure you that my colleagues and I
are open to working with you for solutions and solving this
problem.
But before I close I would like to enter into the record a
letter to the committee received from the mayor of Rockford,
Illinois, Thomas McNamara. The mayor's letter explains the
various essential services that the city would have funded with
the $500,000 that it spent on Acthar. He mentions installing
350 streetlights, planting 2,000 trees, or replacing two miles
of sidewalk.
I ask unanimous consent to place this letter into the
record. Without objection, so ordered.
Chairwoman Maloney. With that let me close by thanking the
six, all six of the CEOs who agreed to participate in these two
days of landmark hearings. And I would like to thank the staff
for all the work that they did in preparing these hearings.
To me, the single most remarkable revelation coming out of
these hearings is the claim by drug companies that they need to
raise their prices for research and development or to promote
innovation. This is completely and utterly false, it is
baseless, and I think Ms. Porter underscored this is in her
comments.
The internal documents that we obtained show that the
pricing discussions going on inside these companies have
nothing to do with research and development or promoting new
innovation. They show a meticulous, even ruthless focus on
squeezing every possible dollar out of the pockets of the
American people and the American taxpayers. Whether you call it
a ``cash cow'' or a ``profit maximizer,'' it shows that these
companies view these drugs as a profit basis, in profit-based
terms, and that was clear in the documents we saw.
I want to make clear also that these drugs are lifesaving
and life-changing in many, many ways, and we are grateful for
that. But we cannot let these drug companies continue to target
our country, the United States of America, for the biggest and
deepest price increases anywhere in the world.
Not everyone knows this but we have a law on the books in
this country that bars our country from negotiating directly
with drug companies to lower prices for Medicare, one of the
biggest drug purchasers in the world. Of course, the companies
know this and they exploit it to the tune of hundreds of
billions of dollars, and that is what these new documents
showed.
These companies make profits in Europe where they
negotiate, in Canada, where they negotiate, and in all sorts of
other countries that negotiate. But we, in America, we have our
arms tied behind our back and we are not allowed to negotiate,
to help our people, and that is not a free market. A free
market is when two people or two parties come to a table and
agree to a price one is willing to pay and the other is willing
to accept. Our system is the opposite of a free market. It lets
the drug companies increase their prices over and over and over
again, dozens of times, by thousands and thousands of dollars,
as we heard today and saw in the documents.
This is absolutely unsustainable. We need to pass the
legislation that Elijah Cummings championed and that President
Trump used to support before he broke his campaign pledges. We
finally need to let our government negotiate, just remove this
block that does not allow us to be treated fairly. We are
exploited in this system.
Now I want to let members know that these two days of
hearings will not be our last. We have heard testimony from six
CEOs, but we have been investigating several other companies as
well. So, I will keep members appraised of the additional
hearings, potentially when we return in November and in
December.
And finally, I want to thank the members of our committee
on both sides of the aisle. This is a critical issue for all of
our constituents, and I believe all members demonstrated your
command of the material and your desire and drive to help your
constituents and to help the American people.
I sincerely hope we can take these findings and move
forward on real legislative changes to help American families
together. And with these two days of hearings I again thank the
staff that has worked incredibly hard on this, and this hearing
is adjourned.
[Whereupon, at 1:36 p.m., the committee was adjourned.]
[all]