Let me also make a few reminders for these members appearing in person. You will only say members and witnesses appearing remotely on the monitor in front of you when they are speaking and active speaker view. A timer is visible in the room directly in front of you. For members appearing remotely i know you are all familiar with the webex by now but let me remind you of a few points. First you will be able to see each person speaking during the hearing. Whether they are in person or remote. As long as you have your webex set the active speaker view. If you have any questions about this please Contact Committee staff. Second, we have timer that should be visible on your screen when youre in the active thumbnail view. The house rules require we see you so please have your cameras turned on at all times. Fourth, members appearing remotely who are not recognized should remain muted to minimize background noise and feedback. Since i will recognize members verbally and let members retain the right to retain bracketing verbally. Members will be recognized in seniority order for questions. Lastly, if you want to be recognized outside of regular order you may identify that in several ways. You may use the chat function to send a request. You may send an email to the majority staff or you may unusual mic to seek recognition. Obviously we do not want people talking over each other, so my preference is members use the chat function or email to focus facilitate formal verbal recognition. Committee staff will ensure i am made aware of the requests and i will recognize you. We will begin the hearing in just a moment when they tell me they are ready to begin the live stream. The committee will come to order. Without objection, the chair is authorized to declare a recessf the committee adding time. I now recognize my soul 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, and what we learn was shocking. Drug companies are hiking the price is higher and higher and placing an even greater burden on the very patients who rely on these drugs to survive. We learned these skyrocketing prices are simply unsustainable. Both for Government Programs and american families. We also learned claims by Drug Companies that their price increases are necessary for research and development are completely bogus. The internal Company Documents we obtained show Drug Companies hike prices almost entirely for selfish reasons. They do to meet Internal Revenue targets or to increase their own bonuses in some cases. Drug companies spend some funds in 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 prices, and for the 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 nonpartisan cbo, allowing federal government to negotiate directly with Drug Companies could lower spending on brand name drugs by about 456 billion. So let that number of sink in. Its nearly half a trillion dollars. Excuse me. Today is day two and we will hear from three more executives. Well 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 the top u. S. Executive from novartis about the companies massive price increases for gleevec, a drug that treats chronic Myeloid Leukemia, a rare form of cancer of the blood and bone marrow. And well hear from the ceo of trend night about the pricing of its drug called h. P. Acthar gel which is used to treat a seizure disorder in little babies. Record to keep our Opening Statement short because we want to hear from the testimony from our guests but now i would like to turn to our Ranking Member for his Opening Statement. Thank you, madam chairwoman for holding this hearing. I would like to reiterate a few points brought up in yesterdays hearing. First, republicans have introduced legislation, h. R. , 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 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 i would like to yield the balance of my time to mr. Massie. Thank thank you, ranking memr comer and thank you, madam chairwoman. I anticipate todays discussion and testimony will involve the u. S. Patent system, and so in this Opening Statement i want to read that patent and copyright clause thats 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 United StatesCongress 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. Some people who havent 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 had expired and theres no restriction from the Patent Office to keep somebody for making the generic versions of the drug but there are other impediments not involved with patterns that stop these generic some coming to market some i hope you find out what those are about and then i also want to say that our Founding Fathers were really smart here. They knew that if the owner at a limited time to recoup their investment, the inventor and the other, then they would be able to find the capital and the backers to develop these ideas and discoveries. So even if she had scientists who would come up with new drugs for free, lets 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 equivalent of a deed that could deed to a piece of property, nobody would develop a piece of property if they couldnt get secure title to the property. Patents work the same way. They allow the investor to get secure title to the idea so that they can then invest the money that required to bring that to market and to test it to make sure it is safe for all human beings. I look forward to robust discussion on that and with that i yield back. I want to thank my colleagues and with your indulgence because of my call i would like to just leave 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. I agree we should work on this issue. Its important to the American People, should be bipartisan but since you mention your bill im image in mind, h. R. Three which would merely allow our country and to negotiate for a lower drug prices for medicare as we do with the veterans association. Its passed the house and 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 number one priority than an hour number one priority now is the health and wellbeing of the American People who are being harmed by 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 we could now play that video and move quickly forward. I a proud mom from missoula, montana. Three years ago after an abnormal blood test my doctor told me i had leukemia. One day i was healthy, the next day i had cancer. It was a complete shock. He told me im lucky. My cancer is treatable with a drug but i would have to take it every day for the rest of my life. Then i got a second shock, on top of my awful diagnosis he told me that drug costs 10,000 every month. Im so grateful for gleevec. It keeps me alive, but the price tag constantly hangs over my head. Instead of just focusing on my family and my health, i also have to carry around the burden of what would happen if i couldnt pay for it. I have no choice, but you all have a choice. You can take action to lower drug prices hit because of drugs dont work if people cant afford them. Hello. My name is carter and on the gastroenterologist. I take your babies suffering suffering from a seizure disorder. The best treatment is h. P. Acthar gel. Without this medication children are more likely to be lifelong uncontrolled epilepsy thank you. Thank you very much and i will now introduce our witnesses and we are grateful for the attendance today and for the testimony. Our first witness today is mr. Roberts bradway was at the chairman and ceo of amgen. Amgens hills antiinflammatory drug enbrel and the Chronic Kidney Disease drug sensipar. Then we will go to mr. Mark trudeau who is the president and ceo of aliquot pharmaceuticals. Mallinckrodt sells the antiimmune inflammatory disease drug h. P. Acthar gel. Finally well 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 that in. Please raise your right hand. [witnesses were sworn in] 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. Thank you. Good morning, chairwoman maloney, Ranking Member comer and of the members of this committee. My name is bob bradley and the and ceo of amgen, a leading Biotechnology Company based in Thousand Oaks california. Before i begin my formal remarks want to does 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 want to recognize his work dedicated to improving access and affordability for patients. For 40 years amgens unwavering mission has been to serve patients. We do that through innovative medicines and highquality biosimilars the treatment of the worlds most serious illnesses. We are also engaged in the fight understand, treat and prevent covid19. We employ nearly 14,000 people here in the u. S. When we conduct the vast majority of our Cutting Edge Research and ecofriendly manufacturing. Amgen is deeply committed to meeting the needs of every patient every time. Therefore, its of great concern to us when patients who might benefit from our medicines cant get them. We are committed to responsible pricing. A few recent examples, in 2018 we launched a new migraine prevention treatment at a price that was between 2065 below market expectations. We also made a medicine proven to reduce heart attacks and strokes in patients with stubbornly high cholesterol levels available at 60 reduced price. This helped lower outofpocket costs of patients especially seniors on medicare. Over the last two years we launched biosimilars to some of the top selling medicines in the country and plan to bring more to market over time surviving patients with more Affordable Treatment options. Over all the average in that price for medicines across our entire portfolio in the u. S. Declined in 2018 and 2019, and were on track track for further declined this year. Enbrel is a a medicine treats patients with autoimmune disorders such as moderate to severe Rheumatoid Arthritis. Enbrel highlights the tension between ensuring entering patie access to critical innovative medicines and outofpocket costs they are often required to pay. The physicians tell stories of how the waiting were cluttered with canes, crutches in wheelchairs. Thanks to enbrel, patients have been given a new lease on the life. Since the approval we have invested hundreds of millions of dollars instead of traditional uses and to make it more patient friendly. As an example we recently introduced an easytouse self injected device design for invocations whose disease has sapped the strength in their hands. But the innovations like this cost money and that is partially why we have increased the list price of enbrel in the past. 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 and 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 and competitors high price. These higher prices increase the already significant rebates by the middlemen who largely dictate which medicines patients can access, regardless of which medicines their physician prescribes. Or still these rebates paid on all our medicines do not translate into lower costs for patients. Thats because they dont get passed on the patients at the pharmacy counter. Theres no question 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 in the place is here to craft the changes that are needed. Innovative biopharmaceuticals are part of the solution to the burdened serious diseases imposed on patient and society. Amgen can strive for reforms to improve affordability for patients. However, the 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 to help improve access and affordability to our patients without stifling innovation. There are so many diseases to confront inpatients and patience till. If we all stay focused on whats best for patients, im confident we can independent better place. Thank you for the opportunity to speak with you this morning. Mr. Trudeau, you are now recognized. Chairwoman maloney, Ranking Member comer, members of the committee anchor 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 crew i worked on pioneering treatments for several clinical disease including some of the very first for hiv. The leadership role that ive had and other regions of the would have led me to better understand both the strength of the u. S. Healthcare system and its challenges. Ive devoted myself to this industry because like the nearly 3300 employees of mallinckrodt under the therapies we make and group the lives of patients and families. This has been here at unprecedented challenges. When covid19 hit we mobilized to identify therapies to combat the disease. We consulted with the fda and nih regarding potential evaluation of our inhaled nitric oxide turkey for the treatment of covid19 related respiratory complications and supported and independent Clinical Trial being coordinated by mass general. As of today nearly 250 hospitals and u. S. Health systems have used this as an experimental treatment for covid19 patients. We also secured our supply chain to avoid manufacturing and direction for the critical medications we make and donated 54,000 pieces of ppe, several ventilators and more than 16,00r manufactured in our missouri play. We also engage with members of congress and federal agencies like barton to discuss leveraging our extensive experience making high quality u. S. Made generics at our plates in missouri, new york, illinois and North Carolina to bring home the manufacturing of essential medicines and active pharmaceutical ingredients. To date we are the only american manufacture of acetaminophen a key active pharmaceutical ingredient in many medicines which would probably make in illinois and North Carolina. Our result of patients has never been stronger and would understand and share the American Peoples concerned over the availability and affordability of Prescription Drugs. Mallinckrodt is steadfastly committed to knocking down barriers to patient access. Thats particularly to with acthar jill, a complex pharmaceutical product fda approved for 19 serious conditions including infantile spasms, lupus, multiple sclerosis, necrotic syndrome and Rheumatoid Arthritis. Acthar is like changing therapy for small group of patients from other Treatment Options has failed for patients whose conditions if left untreated may lead to physical and developmental impacts requiring lifelong care causing great financial strain on families and the American Healthcare system. Ask our is not packed in protected. The acthar is not patent protected or its a policy provide reference samples to generic manufacturers upon request and we have supported legislation like to sample script since we acquired acthar in late 2014 2014 with investee than 660 million into modernizing the project including 470 million r d activities and close to 119 billion in manufacturing advancements. Weve initiated nine Clinical Trials with targeted combinable but of nearly 110000 patients, a large number given the rare or complex conditions acthar typically treat. Results from one study of patients with persistently active Rheumatoid Arthritis showed that treatment that acthar result with low disease activity for an astounding 62 of patients for whom standard treatment did not work. Since weve owned acthar list price has increased an average of around 5 angeli, not acting in inflation or significant discounting that we started when we acquired it. It two of the last six years we did not take any price increase and last year at the net price went down as it will again this year. Weve also improve the ability of patients with a prescription to obtain acthar who are robust commercial copay assistance programs which lead to many patients paying nothing out of pocket. Like all of the United States of lisbon dedicated to bring more breakthrough treatment to the market including one of two treatments for developing for patients with advanced liver disease, stratigraphic, originated skin to be which may reduce the need for autographing in certain burn patients, 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. They too can for the opportunity to be here today. Thank you. Mr. Kendris, you are now recognized. Thank you, chairwoman maloney. Chairwoman maloney, Ranking Member comer, members of the committee, take you for the opportunity to speak with you today. My name is Thomas Kendris and i am the u. S. Country president for novartis a leading global medicine company. We use innovative science to develop transformative medicines that improve and extend peoples lives. We also develop generics and biosimilars through our second largest Generic Company and the trigger i medicines reach close to 800 Million People every year, globally we are over 1000 100,000 people with approximately 15,000 employees in the United States. Our global r d headquarters is in english massachusetts and with several manufacturing sites across the u. S. Ive been with novartis since for 25 years and i still marvel at the passion of our people to tackle the most complex medical challenges. Gleevec which is when the most significant medical advancements in recent history, it revolutionized targeted therapy for cancer. Before gleevec was introduced in 2001, the fiveyear survival rate for a patient with chronic Myeloid Leukemia was only 30 . Now the vast majority of cml patients have a normal lifespan. Whats more, novartis continued to study whether the drug could treat other diseases and today it has approved for six other rare cancers saving tens of thousands of lives. More recent example of our transformative treatment 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 die 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 leaving after leading a normal life. Spending time with his young patients them 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 these innovations dont matter if patients cannot afford or get access to them. In the u. S. Issues of price and access presents systemic challenges that must be addressed together the industry and policymakers. I novartis is committed to being part of the solution. While cms predicts National Health spending to grow at an average rate of 5. 4 through 2028, the average net price of our medicines is expected to decrease by 2. 5 in 2020. Valuebased 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 the quality of life. And the benefit the medicines offer to the Healthcare System and to society. The industry should adopt a similar approach, and patients should have access to treatment with low cost sharing to encourage the use of the most costeffective options available. We also seek to lower costs by developing lowcost biosimilars in generics to our Sandoz Division which bought the first by similar 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 for commercial insurance often pay less than 30 for a 30 day prescription with the vast majority of our products. The pharmaceutical industry used to be revered. That trust has eroded, howeve, and are industry must work to regain it. At novartis we understand that this trust is earned not just bringing breakthrough medicines to patients but by pricing these medicines responsibly at ensuring broad access. While with it an incredible era, progress in human health, we will only be successful if we can make both of these goals are 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. Thank you. Thank all of you. I now recognize myself 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 that 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, lets start with you. In your written Statement Today you made this 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 Healthcare System as a whole, end quote. Let your company didnt acquire acthar joe 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 your first is exhibit 66 and it it is up on the screen. This is a slight from a presentation that was prepared when you are considering the acquisition of qwest core which made acthar, as a limited amount of these talks about quincy,. 2 is just the code name you used for your real company, qwest core, right . Thats correct, madam chairwoman. The title of the slide says, adequate, quincy r qwest core is rapidly growing Specialty Pharmaceutical Company with a premium priced product. Mr. Trudeau, the premium price product was acthar and remain priced just means really expensive, right . Thats actually not true. What it refers to is this was priced at a premium to other competitive therapies. Lets look at the next slide, exhibit 67. 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. My aspirational goals youre talking about huge revenues and thats exactly what you got. Acthar sales accounted for onethird of your Companies Net sales from 20172019, isnt that right . The sales are roughly correct letter aspirational goals were actually to transform the company, mallinckrodt was originally a Generic Company and were looking to make a transformation to accompany that was focused on research, investment, and the opportunity to address patients with severe and critical conditions who are under certain therapies. Lets to look at exhibit 68. Mr. Trudeau, i will just read the headline. It says that your modernization strategy will define the future of acthar as either a room asset or, ethical, a cash cow, end quote. Isnt it true that this is how you really see this drug, not as an innovative therapy, but as a cash cow . No, thats in fact, not true in this document which i was just recently made aware of action was a draft document that was never shown to our board it but that term is typically applied to products for which no investment is likely to be going forward. And, in fact, thats exactly the opposite with what weve done with acthar. Weve invested nearly 660 million since we dollars since we acquired the product in 2014. Okay. A cash cow is a profitmaking thing. What is a cash cow . Thats what you said. I think the document speaks for itself. Mr. Bradway, may return to yo. Your companies talking points claim at and engine with pricef product reflect the economic value that is delivered to patients, providers and payers. The unmet medical need, the size of the patient population, investment and risk undertaken and the need to find continued scientific and innovation, end quote. But your internal documents tell a very different story pixel lets look first at exhibit 36. This this is a Pricing Committee presentation from december 2016. 2016. In this document your Pricing Committee is basing its decision not on innovation or research and development, but on what end of the Company Might deal with a similar drug. Isnt that right . Yes madam chairwoman thats correct and its important to note whats happening in this discussion. What this reflects is the nature of the structure of the biopharmaceutical industry through which we compete for formulary position for our medicines with other molecules in the same therapeutic category. What youre seeing here is a snapshot of a discussion about how we position enbrel versus other molecules in this category. This document, it has three scenarios for what the drug might do. 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 that they are not discussing research and development, unmet needs, investment, risk undertaken, innovation. Instead of competing with other companies to beat their prices, you are all increasing them in lockstep, isnt that right . Thats what the document says. And i think it is scandalous. 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 chair, 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 the city enbrel competes against 20 different molecules in the antiinflammatory space. We offer rebates which secure position on the formulary of the intermediaries to determine which medicines are available for patients to use, and what the scenarios in order to make sure that this medicine remains available for the stations were already on it and the stations whose physicians want to add them to their 30. Theyre looking at a range of scenarios and implicit in this is the rebate that would be associated with those scenarios to the product. Well, lets move on to mr. Kendris. In your written testimony you say, and i quote, given its lifechanging 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. Lets put this slide on the screen, and this is exhibit three. This is a slide of the pricing scenarios, including the risk to novartis strategic Financial Plan quote, if action not taken in 2013, end quote. If you look at the top righthand box the description of the aggressive pricing model says quote, delivers greatest upside while keeping single increases below the 10 threshold, end quote. This aggressive model recommends five ice increases of 9. 9 over the course of three years price increases. My question is, your company chose the most aggressive pricing model, didnt it . Madam chairwoman, in the next sentence right after the one you read, the document which i in seeing this morning recommends enhancements to our patients 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 remission is not only in cml but all of those cancers for robust and longlasting. In 2001 we didnt know that. We didnt 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 gleevec we turned cancer all of these six cancers, from a fatal condition, first to a chronic condition, and then with a fall the one product we turned it into a treatment free, treatment free remission condition. Basically a cure. They dont have to take appeal any longer. So gleevec was tremendously valuable, and the price increases we took were, we sorely taken over those years, madam chairwoman, but we were always lowestpriced product in the class. Product has been generic canalis sent 2015. We havent taken a price increase since 2015. And today the 5 what we manufacture of the gleevec is given away to patients who cant afford it and given away for free 55 . The bottom line is novartis went with a Pricing Strategy that would maximize net sales, raising the price five times in three years. The point here is that all the claims by Drug Companies about why the 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. And thats 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 im over my time as i am and what you 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. 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 prescription in the United States are generics . I believe is approximately 90 at this point back. To 90 of the prescriptions that are written and filled in the United States, roughly our for generic drugs. I think thats 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 . 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. Generic prices typically, relatively short amount of time, many times within a year drop to about 10 of the branded price. We have a system system that works from a generic perspective, certainly relative to other countries. And what are some of the challenges you face when you want to make the generic drug, say after a a brandname drug s off patent, what are some of the hurdles you have to overcome to get it generic drug to market . The primary thing you have to do is generate bioequivalence data. You have to demonstrate that your product is bioequivalent to the branded product. That requires some clinical work come sometimes it requires other investment in research and Development Investment and then of course you need to be very sufficient from in manufacturing and distribution standpoint because youre competing in a very aggressive competitive marketplace. Is or something we can do in congress to make it easier to get to a generic label from a brandname label after a drug goes off the patent . I believe a generic confinement today is actually quite good. I think theres been significant improvements on the regulatory side and improving the throughput of generic approvals. I think statistics show the fda has generate significantly more approvals and Generic Products over the last couple of years. That adds to competition and that is likely to drive down prices. In order to produce a generic without infringing on a pound, one has to expire i suppose mckinney also license the patent or is that not typical in the drug industry . Certainly it could be done but thats not typical. Mostly Generic Products enter the market after the expiration of the patent. What is the lifetime of a patent . A patent can vary but the lifetime is typical going to be on the order of 20 years but recognize that some actual discovery itself and much of that time frame 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 its taken time to develop the project. Typically, its 20 years, it can vary a little bit but thats typically the typewritten. Thats 20 years from when the invention occurs and like you said sometimes youre only left with the figures to try and recoup the investment. How many of the drugs that you develop actually result in a profit . Well, thats on the generic side, typically you are likely to be reasonably successful because again you are not driving innovation necessarily but what you are doing is you are driving down costs because you are able to bring competitive products to the market. On the branded side its a little bit different. On the branded side, the likelihood of success while you are actually driving innovation is dramatically lower. Weve heard some statistics that one in a hundred or so drugs ever make it to market. That is probably in the range. It a high failure high risk environment when youre developing any kind of new innovation as a. I have a few questions for mr. Bradway. You talked about the sort of i dont know if you use the word convoluted but it seems convoluted to those of us who are not in industry in trying to understand the drug pricing schemes and that it involves pharmacy benefit managers in rebates. Can you tell us roughly what percent of the money that my constituents spent on drugs or the government spends on drugs for my constituents goes to pharmacy benefit managers, mr. Bradway . I guess. 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 of what you see in the u. S. Drug industry reflects ravages they go to the intermediaries, including the pbms. Thats almost half of the drug price that the consumers pay for the government pays goes to an intermediary instead of the drug company . Or instead of directly to the patient, thats correct. When my constituents pay their copay on a drug you mentioned there are rebates that are paid. Did the rebates go to my constituents . Who do they go to . Thank you for raising this question, congressman here 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 these intermediaries rise as well. However, the of the consequences 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 are then 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 the benefits to the patients. So the intermediaries are seeing their share increase while asking the patience to reach into the pockets to 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. So the copay, because of e way the pharmaceutically active pharmacy the copay my constituents see our the check they have to write out or sometimes have to borrow the money for that copay, that copay isnt based on the actual price that goes to the drug company or the final price of the drug company for the drug. Its nothing based on the real price of the drug when shootout the rebate. Its based on a higher effective price, is that correct . Thats correct. Thats absolutely right. Your constituents are paying a copay again which is a fraction of the list price, and the Innovative Companies receiving whats known as of the net price which is the list price minus the rebate returns to the intermediaries. In the United States, yes, the rebates approximately 100 as a said earlier 46 is in the hand of the intermediaries. Madam chairwoman, do i have time for one more question . Okay. So can you explain to us, mr. Bradway, what the intent was when we came up with the pharmacy benefit managers system, what the intent was and how it was designed to make drugs more accessible or a lower price, and how that mission has possibly wandered over the years . Sure, congressman, i might perhaps point out two things. First, the structure of the rebate system 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 again i dont want to just point the fingers thinkers at e pbms. I think we heard in testimony whatever useful functions that the pbms that played in our system through the years, which is helping convert nations to generic drugs when theyre available. Its 11 of the reasons we have 90 of the prescriptions written for generic drugs. I think the question is whether they are playing an appropriate role what comes to innovative brand protected innovations and designed formularies that separate the physician and the patient from one another at the pharmacy counter where patients cant be sure they will be able to walk away from the pharmacy with a medicine that the doctor intended for them to have because of the structure of the rebate system thats in place in our industry. It feels like to meet come just in closing, we need some type of truth in pricing. If people bought cars this way and actual price of the car wasnt what the consumer paid and the financing was based on a price that wasnt the real price, i think we would be outraged. Maybe thats something we could look into and i think the trouble for her intelligence and i yield back. Thank you. I now recognize ms. Norton. You are now recognize. Thank you very much, madam chair. I hope you can hear me. Yes, we can hear you. I want to thank you for this very important hearing. In fact, subject matter, drug pricing is so important, that you are scheduled two days, one after the other on this subject so we conclude this matter up. I want to say to mr. Bradway, mr. Trudeau, mr. Kendris, that we are very much appreciate your joining us. Your testimony has been very helpful. We recognize though that you produced drugs that are crucial lifelines to patients and to the families, and you heard from the too many families lose access with each price increase and thats before we get to the generic state of the drug. Mr. Bradway, your company has raised the price of enbrel 27 times since 2002. Amgens profits from enbrel has grown from 1. 25 billion in 2003, to more than 5 billion today. Now to turn to the other engine drug and investigation, sensipar. Since launching the drug in 2004, and eunice raised the price more than 20 times. Amgens u. S. Sales price of sensipar also rose from 36 million in 2004, the 1. 4 billion in 2018. Mr. Trudeau, since acquiring sensipar and by extension acthar in 2014, mallinckrodt has raised the already high price by more than 8200 per bio, thats a 26 increase. From 20142019 your company has generated nearly 6 billion in 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 nearly 1 billion in 2009 from 1 billion in 2009 to more than 2. 5 billion today. Now, nearly one in four american patients taking these drugs report difficulty affording their medicine. We began hearing today, from a hearing today with testimony from these two patients who are on rely on these medications or the lives but are struggling to make ends meet. Like many of the families they have to make heart wrenching decisions to afford these vital drugs. Mr. Bradway, yes or no, we commit to lowering the best price of enbrel and sensipar in the United States . Well, sensipar pesto off patent in the United States, and the price of sensipar has fallen by a full 95 . 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 were on track to repeat that again in 2020. The United States, yes or no . In 2020 down to levels it was in 2015. Will you commit to lowering the list price in the United States . Congresswoman norton, the product, went generic five years ago and we lowered the price by giving discounts on the branded product, huge discounts. I mean the list. Weve given discounts on the list price post generics and havent raised the price or in effect lowered the price and giving away 55 of what we manufacture who cannot afford their medicine. We are doing everything we can to make sure every patient can get that. They are not doing everything they can. I yield back. You are recognized for questions mister gosar. I am happy i followed my good friend who set the stage. It seems to me this hearing, yesterdays hearing are tone deaf, the overreaction to covid19, talking how certain need government controls prices but there are millions because of these harsh restrictions. This hearing is not focused on the drugs but therapeutics people have on their minds. A lot of folks out of this hearing. We had ceos at the Biggest Pharmaceutical Companies with us. My colleagues have new prescriptions for price tags that are very tough. They see growth that helps people, we need the government to negotiate these. In typical fashion, to butcher the solution. Ronald reagan said it is the solution, part of the problem. When diagnosing an ailment look to the source. And stop the problems we are occurring, why not try . Why are drug prices so high . The patent system. To point the finger at the federal government, any Prescription Drug change, Health Insurance, pharmacy themselves. What do they have in common . Right off the bat Insurance Companies are exempt, they do not have to compete. My colleagues, how do you suppose they do this when a link in the chain can legally monopolize, in my political career and before that to repeal the statute, you cant imagine a world where Health Insurance has to pay for your businesses, leaving americans with little to no logic. Those involving drug processes, creation of new for the obama administration. How about pharmacy use and how they feel, strict press control. And what about the drugmakers we have here today, the government involved in the daytoday business. The fda regulations for days. I only have so much time. My colleagues on the other side of the aisle say this is the free market. If this is the free market, it is failing america. Crony capitalism at best and it is just the excuse colleagues are using, folks like these testifying today, the most creative therapeutics for those that need it. Join the side that is simplifying the Prescription Drug problem. You may look like those Drug Companies in other countries where your profits are kept. Your impact making a better place evaporated. Hold your breath. I want to thank you for taking the first step, the competitive healthcare insurance reform act to stay out of the house last week, this is the first step we created solutions get the senate to pass it and what we see is patients, doctors in the system. Thank you very much, i yield back. Representative clay recognized for questions. Thank you so much. Let me also thank you for mentioning Elijah Cummings, we knew this was one of his signature issues, thank you for keeping his memory alive. Let me start out by thanking all three witnesses for being here. Let me say hello to a former constituent. Has been part of the st. Louis almost 150 years and let me start, part of the concern is it is a pretty old drug with relatively high price and yet you said it was modernizing. I think you invested 600 million, how it is important to monetize this drug and arent there other more modern therapies that can take the place of that . Thank you for the question is good to see you as well. Many opportunities, old drugs and new indications for the antivirals being developed, in the case of askar, it is important to create new information and new evidence, things that led to labels that 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 doing what we can for patients that are suffering from severe critical illnesses who have relatively few options and we can make a difference in the lives of those patients. I believe in the importance of medical innovation, you have indicated a major focus of the company and applied that part of that r d, how much to invest in the r d, does your pipeline hold any privacy options for patients . We invest 350 million a year in research and development which is a large number for company of our size. The pipeline is very promising and we specifically focus on underserved patients incredible conditions with relatively few options, developing products for those with severe liver disease, a product for adolescents and children with high mortality rate, also developing a novel biotherapy to treat burns, reduce the need for autograft so our pipeline is focused on driving innovation to underserved patients. In my home state of missouri, covid19 has been a major concern. It is my view that during a national Public Health crisis like we are facing today, pharmaceutical and Healthcare Companies should be focused on solutions. All three witnesses could tell us what the companies are doing in response to the National Pandemic and we can start with you. We are very active in addressing the pandemic. I share your beliefs, the biopharmaceutical Industry Needs to Work Together to find ways to develop vaccines, develop therapies, prevent the infection, help develop therapies, the overreaction, so many are infected with the virus and to be finding other ways to diminish the burden of this disease on our society. The speed and scale of the efforts underway across the industry and optimistic that we will have solutions. Madam chair, other witnesses respond . My time expired. Time is expired but witnesses may respond. I am happy to comment, we do everything we can to combat this challenging Health Crisis created by covid19, we have invested and partnered on the Clinical Trials around innovative therapies, patients that were ventilated, being used as an experimental therapy, 250 hospitals, we donated ppe ventilators, hand sanitizer, and made available healthcare professionals, treating patients on the front lines, to combat this challenge. Thank you. Mister palmer, you are recognized for questions. Thank you, madam chairman. I would like to start off saying we are all interested in drug prices but at the same time we dont want to overreach and implement policies for innovation that literally brought us lifesaving miracle drugs. We want to encourage, at the same time, discovering these drugs doesnt do a lot of good if people cant afford them. I want to follow up on mister massys points. I brought this up yesterday. I support extending that, for lowering drug prices. For each of you, appreciate it. We start with mister trudeau. Anything to and send innovation, is likely to give the Health Care System and opportunity to get drugs to patients more effectively and lower prices. If you agree with that or have anything to add to that . I will ask a couple other questions. Innovative biopharmaceuticals are an important way to control healthcare costs. We advocate for maintaining the 12 years of data exclusivity, in particular for biologic drugs, we suggest an appropriate standard, and innovation in the United States. I would agree with what the other two witnesses said, patents are essential to invest in high risk research, does that, resupported. It should be obvious to everyone the drug Company Needs to recover their costs. My understanding of the private Drug Research industry led the way, the development of incredible drugs but also a number of drugs that never made it to market. You have to deal with that stranded cost that goes to your pricing on other drugs. What would happen if the development of drugs or these lifechanging lifesaving drugs, companies recover their costs. That should be a simple question to answer. Mister trudeau . I believe my colleagues agree with this as well. Incentives are important, taking innovation which has risk. Any additional incentives provided to the potential to reduce that risk or increase the reward, will lead to more innovation or inventions. In the case of more drugs or q wars or treatments. If you guys have some ideas on incentives whether it is losses or other incentives the government can provide, i would like you to provide it to me and the committee in writing. I want to go back to something that was discussed earlier, some of the information i gathered over the years, this is not the first time i have looked at this. My first term in congress, seems there is substantial abuse in the rebates how this is handled, everyone at the time, not working out quite so well. I would appreciate getting some feedback 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 are not only lifesaving but life improving. I yield back. I now recognize mister trudeau. You are recognized for questions. Thank you. The critical importance of the manufacturer. The essential danger, continues the ability for all. And in numerous conditions or testimony. I apologize, the mic was not on. I would like to recognize the critical importance of the Drugs Companies manufacture for the health and wellbeing of many americans, the essential nature of Prescription Drugs and treatments you manufacture make it vital to ensure their continued availability and affordability for all. Mister trudeau, the drug that has proven effective and received fda approval for numerous conditions you outline in the opening testimony. Akhtar was approved in 1952 and was priced below 100 for 50 years. For the past two decades weve seen an astronomical price increase at the expense of american patients and taxpayers. Quest core, now a subsidiary of mallon crop acquired rights to akhtar for 100, 000, what it was at or below 100. A buyer just like this for 100 just 20 years ago. The price of the drug started to increase and in august of 2007 the price guy rocketed from 1,600 a bottle, to 23, 000 per vial Little League overnight. In 2014, 5. 6 billion, the price of a vial already exceeded 30, 000 so today the same file from 50 years ago the cost 100 now costs 39, 000. Of 40,000 increase. Let me repeat, a 40,000 increase from this to this in a matter of two decades. It is clear american taxpayers are increasingly footing the bill for this drug. The number of Medicare Part d beneficiaries receiving akhtar increased by 25 from 2013 to 2018, cost to the federal government nearly tripled over the same time. Mister trudeau, do you know how much your company has collected for Medicare Part d in recent years . I dont know the exact amount. It has been many millions of dollars. It has been 2. 5 billion between 20152018. When that was acquired how much akhtar sales came from medicare. At the time of acquisition the medicare sales were approximately 25 percent30 . That is correct and the number has grown quickly. Do you know what percentage is medicare sales now. That is the committees information shows as well. And net sales from akhtar. Not only is medicare the largest purchaser but the data obtained by the committee shows you charge medicare more than any other pair, medicares average net price per vial right here, more than 4,300 more than what commercial payers pay. You know what the federal government would have saved if medicare had received the same discount, the same discount as commercial payers between 2015 and 2018 . The number would have been significant. Akhtar is not medicare formularies which prevents access to medicare patients who can benefit from the drug. We would be happy to consider similar discounts if we had positions to get the same access in players. The american taxpayer would like to see it since the committees estimate through 150 million a year. Across 2013 tax a version has burdened american taxpayers. Is it safe to say you moved your headquarters to dodge taxes in the United States by having lower Corporate Tax rate . We spun out from a company that was irish as well. Madam speaker, i see my time has expired. Thank you for your questions. You are recognized for questions, mister cloud. It seems oftentimes in congress we try to fix the problem before stopping to ask what is broken about it, we want to fix, it is definitely out of control but it is important to ask what brings costs down and that is competition and customer accountability through Price Transparency. I have a chart that shows how the Pricing System is which makes it hard for customers to hold manufacturers accountable for the system accountable when it comes to Price Transparency. In any other industry that is how it works, the market keeps practice low. The cost for innovation protects research and incentivizes new cures led to the us 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 it keeps in check. If you think about the American People they go to their doctor and the doctor prescribes the best medicine but that is not what is happening, is it . You talk about what you are having to do. That can be a physician hopefully is describing the most important medicines, the challenge at that moment, the physician and the patient may not know if they will be able to walk away from the pharmacy counter with medicine in hand or whether their Insurance Company will direct them to select something else. Manufacturers, you have to pay rebates to get a higher placing on the formulary. The structure you have created for our industry involves rebates to the intermediaries to secure formulary placement. That is one mechanism in which the market is being manipulated, in a sense breaking the customer accountability mechanism. Americans understand Companies Need to make a profit to exist and create new cures. Americans have a problem with that, it leads to new cures tomorrow. What they have a problem with his abuse of the patent system, adding on patents to introduction of generics, patent evergreening, small changes to doses and such that have little change but you gain an extension to your patent and paper delay, these are issues manufacturers take seriously. Pharmacies here, i was encouraged to consider that if we have a real discussion on pricing and all the players here, the system is complex, in a number of different areas. My understanding is amgen, you talk about the patent, has expired on that, i using generics are now available . Generics supply 95 of the market the product transaction 95 from what was prevailing before patent expiration. You had an agreement with them, to keep senseapar to keep from producing generics, is that correct . That is incorrect. We sued for infringing our intellectual property as they launched settling with us for having launched against the uncertainty of the patent position. The timing is interesting, the lawsuit was dropped at the same time, purchasing some of their properties. The thing that is important to note is a couple bills we are looking at, hr 19 which goes to address these different issues where the system is broken versus hr 3 which is a takeover of the system and as we look at this it is important to keep in mind lets not throw out the system that brought the best innovations that led to new yours that helps so many people around the world, that hr 3 subscribes. You are recognized for questions. Mister palmer said it, tremendous health benefits, the question is the pricing practices of big pharma and putting healthcare out of reach for individuals for taxpayers and employers to provide healthcare for their employees, ask mister bradway, the Pricing Strategy for a few of his drugs, it was originally improved by the fda for Rheumatoid Arthritis and amgen acquired that in 2002. You bought a product, didnt create a product. In short supply, thousands of patients on a waitlist keeping therapy. They didnt invent it and market it and produced it and raised the price of it, correct . Yes but i was trying to explain, invest in process improvements that enabled us to move tens of thousands of patients operating list. It is not legitimacy, it is legal one of the arguments pharma makes is it costs so much, you saw market and responded to it and produced it but my understanding is you raised the price by 450 , to 5,500 for monthly supply of 70,000 a year. Is that correct . That sounds correct. 5,500, is that true . That sounds correct. Why cant people that are americans, 1,500. Many medicines that were improved, arent available in markets. Innovative around this product invented in 1998, this is not new. This is decades old. Why cant an american get the canadian price . It is not the product in 1998. For 1,800, you wont get the benefit to the United States for citizens. Let me ask you, theres a lot of evidence in the record that when your company and other pharmaceutical Companies Make the decision on pricing they have to meet revenue targets, shareholders take care of and executive conversations to be mindful of. I dont think of it in that way. You get the benefit of it, 100 million, it is heartbreaking for a lot of folks who cant figure out how to get the medication, the families that they love. What is the problem of a Company Selling a product in bulk to a buyer, having a discussion with that buyer about a bulk price discount. Do you have a philosophical objection . That is what happens every day in our interaction. Except with medicare. It is illegal. It is illegal. Would you be agreeable to having a discussion about medicare, a fair price where they make purchases on behalf of us citizens on medicare. If i may explain yes or no. You have a big buyer, medicare, are you willing to negotiate with them . The Medicare Beneficiaries are represented by the insurance plans, we negotiate every day for the inclusion of our products. That is a no for negotiating with medicare directly . What i am trying to explain is what is happening already today. We think there are areas for improvement in medicare in particular, Medicare Part d and advocating for a number of those. Negotiating with the Medicare Program, yes or no. You and your constituents appreciate that is already happening, happening through to make it legal to do that. What you are having with those discussions taking place. Im asking about a law, a law that makes it illegal. It is bizarre that a bulk purchaser cant have a discussion and negotiate a bulk price discount, is that a fair law. The construction of the question what i am saying is we have highly concentrated set of intermediaries in the Healthcare System, the healthcare Insurance Companies, pharmacy benefit manufacturers, they are negotiating for the benefit of medicare today or across are there improvements that can be made absolutely. Madam chair, my time is expired and i yield back. Mister gibbs, you are recognized for questions. Take care, yes. Thank you, madam chair. I want to make clear, talk about, therapeutics, and never forget that. Listening to the discussion about the pricing, you said 6 new cancers. Does that price come down . What is the status of that . Know, congressman, we did raise the price over the years. What i am trying to understand with mobilization and you say, there are 6 types of cancer. And the process comes from the discussion in other areas, the complexity of drug pricing, the price will come down. The answer to your question, the value went up over those years, 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 fda over those years. It was utilized more and priced down, fixed costs over more customer base, any other industry that is how that works. It drives down the cost, fixed costs over the customer base. You see what i am trying to say, doesnt look that way with drugs. I understand what you are saying but these rare cancers these commercial opportunities are quite small, patient populations are very small but research and development commitment. 55 of that drug should go away, is that true . 55 is given away for free post generic approval since 2016. Mister bradley said the same thing, to help people, does anybody go without these drugs even if they cant do that . We are doing everything we can. When we receive a patient complaint we investigate each and every one. We have a variety of ways of trying to insure that patient will get access to the products they need. The other area, structures about 46 cost, going to the pbms, you made the comments about the generics, the drugstore, the patient, the intermediaries and everything, that is where the pharmacist gets in, the pharmacist, what role they have, pushing out the intermediaries or that function. Certainly the pharmacist at the drugstore is not responsible for the fact that discounts manufacturers give to middle men and intermediaries are not being passed on to the patient. It is not the responsibly of the pharmacist. The pharmacist, a generic alternative, you negotiate, where is the pharmacist in that discussion . Make sure the patient gets the right drug or equivalent. I think the negotiation you are referring to does not include the pharmacist connections. Negotiating with the intermediary middle men contract is how we sell it to the middle. Looking at the role of the intermediaries and how it affects the patient and the doctor and pharmacist and make sure the right drug and generic alternative the gentlemans time is expired, the witness may answer that question. We should do what we can to make sure the discounts are passed along to patients. You are now recognized. Can you hear me okay . If we can. Appreciate the hearing and continuation of yesterday. I think the witnesses for being here. I heard a lot of you say that things are patented now, the pricing of the last two years of gone down etc. That doesnt excuse the price gouging that happens when these things are under patent, the exclusivity and so forth. I dont buy that these price declines were part of your business plan. It is a response to the scrutiny you are under, to dance around the absence of the price gouging that has been going on for years but dont trust the industry to do the right thing when we are not looking at you with these clean plates so we have to put more guardrails and this hearing is about that. This is why Elijah Cummings started this inquiry originally and we are going to keep following through and we have to have major restructuring of how the industry operates going forward. I know you are trying to duck and cover here but you better anticipate that coming because the American Public is fit to be tied about the high prices of Prescription Drugs. We want to talk about medicare. The served by that program. We were contributing to the strength of the Medicare Program, collecting 7 billion in sales for Medicare Part d, 201318, is that correct . Those numbers sound right. In the same timeframe you collected 4 billion for Medicare Part d beneficiaries. It is an understatement that amgen gets a lot of business from the Medicare Program. Does it offer comparable discounts to the discounts you give other government purchasers. The medicaid prices lower than medicare, statutorily designed to be lower than the Medicare Part d program. It is not the case what about Veterans Health administration . It is different from the Medicare Part d Program Including statutory price balances and formulary restrictions which are not part of the Medicare Part d as you are aware. Amgen discounts for the Veterans Health administration are twice what medicare is receiving but lets face it, the va is allowed to negotiate drug prices with the industry and Medicare Part d doesnt get the same opportunities because we dont have the ability to negotiate. We proposed a bill last december. House democrats did. This is common sense legislation that will allow it to negotiate directly with drug manufacturers for lower prices like the va and the department of defense are able to do. I wont ask your position on whether we should be negotiating, i can guess what it is but to get the macro picture, your industry figured out a way to do business with government overseas negotiate and are much more aggressive on behalf of their consumers and taxpayers in dealing with the industry and your industry found a way to manage the relationship and conduct your affairs even though they are Getting Better pricing to the va and dot because you negotiate there. So you will figure out a way. I am confident, to survive as an industry, 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 Senate Republicans stood in the way of this, block the door to better opportunity for consumers and patients for years now and we are going to keep the heat off, keep pushing and do it because every day we have constituents coming up scratching their head looking at us in disbelief saying why is it in a free market economy the United States of america you cant negotiate 45 million Medicare Beneficiaries for better drug prices. Keep pushing on that and it only makes sense and with that i yield back. The gentlemans time is expired, you are recognized. I appreciate the continuation of this hearing from yesterday. And incredibly important subject and the arguments from both sides of the aisle are quite similar. Mister broadway, i will address questions to you. I understand across the United States, opening the doors, to stay in business you cover those costs, developing new drugs. Please clarify, we have a technical problem right now. We are going to try to fix it. At this time. Mister higgins, we lost you for a while. I have no receiving signal at this time. Mister broadway. I am afraid i didnt hear the question. If you wouldnt mind repeating it that would be my best answer for you. Let me quantify, a couple hard questions, we recognize it cost a lot of money to develop a new drug. We understand basic business principles recouping initial investment costs. What is the importance of maintaining that formula and what is 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 for initial costs. What would happen to the development of new pharmaceuticals . We were not Innovative New drugs being developed like alzheimers or many forms of cancer. If i may i want you to note we all get that, we understand, the development of 21stcentury, very effective pharmaceuticals, that becomes part of the expense, we get that on both sides. I hear the same argument and i concur with many colleagues across the island i do not understand why constituents, the same formula, the same manufacturer across the board in canada could be 2 or 3 times less than it is in the United States. The pharmaceutical is a constant challenge equivalent to chemotherapy for ms, every six months, the Insurance Companies due to restrictions for the pharmaceutical companies. My constituents dont understand, we are going to fix it. There is a bill that if it would be introduced through the senate, in a couple weeks to fix this thing. One more time, in canada more than the United States, my constituents dont get it. I give you the floor, you have one minute and 5 seconds. Explain between canada and the United States. 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, 0. 46 of every dollar are in the sand of intermediaries in the pharmaceutical supply chain, not two handed renovated companies. In canada that is not the case. That your company not get to spend the Canadian Dollars . Do you repeat that money . Of course we do. Im just trying lets stop talking about different of expenses in the United States versus canada because you have a worldwide market, a board of directors for the United States. Certainly not. So your profits are your profits, my time is expired but i would like the gentleman to answer the question. The gentleman may answer the question. Thank you. In the United States many innovative drugs are available which are not available in canada. If you look at drugs in the United States over the past decade. That was not the question. The question from the gentleman was why does it cost 2 or 3 times or upwards, 4, 5, 6 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 . We pay more for drugs in america than the entire world combined. That is the question. What is the answer . Countries like canada are prepared to ration and restrict access to innovative medicines in exchange for offering lower prices to the ones they choose to grant access to. I respectfully disagree. The answer to the question is to allow medicare to negotiate directly drug prices with Drug Companies as they do in canada and europe, not allowed to do it in the United States. To lower the price for the people they work for. I would like to go to wasserman schultz, you are now recognized. Thank you, madam chair. I want to pick up where i left off and ask about another in a very tactic Drug Companies use to maintain markets exclusivity and sky prices. This shine the spotlight on the ways Drug Companies use litigation as a key part of strategic plans to delay generic entities. I want to focus on how prices were inflated, lifesaving medication used to treat cancer. Novartis engaged in Patent Litigation with first manufacturer to make a generic version, correct . Yes we did. Some pharmaceuticals challenge the legitimacy of novartis rather than litigate novartis struck a deal known as pay for delay. Under the settlement, they agreed to delay generic entry into the us for 6 months. Novartis made 1. 3 billion in revenue during that 6month. Pharma was entitled to 180 days of exclusivity meaning no other generics could enter the market during that period although son pharma announced it would price generics 30 below the price and enter the market just 6. 4 lower. In an internal email novartis executive hail this price as, quote, good news. Do you think it is good news for patients . When we sold that case we accelerated the introduction of a Generic Product into the us. We litigated and further litigated. That litigation could cause the length the patent to be three years. Our settlement meant that the sun product was on the market faster, 2 and a half years faster than it would have been had i done what you are saying other companies do. 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 to the market. There was no litigation because you pay for delay. 700 million in excess cost to consumers. Son pharma originally said they price their generics, without being challenged by novartis. They were going to price their generics 30 below leaving the price after you pay for delay after you negotiated a better deal sooner, we had 6. 5 below and delayed entry into the market by six months. Patients are left holding the bag on Companies Like novartis, Research Shows they deplete their entire network in the first two years after the diagnosis. I am a cancer survivor, i know what it is like to go through 16 months of help and those who battle cancer every day. In total novartis sued 5 companies to prevent generic composition leading to a classaction lawsuit engaging in sham litigation. You know protecting individual property is important for any country, and anticompetitive, delay generic entry, dry sales, the system suffers. If companies dont delay responsibly, Companies Must act on this unconscionable behavior. No one should be and able to afford the medication they need to provide, tried to delay as long as possible competition in the Market Driving up costs, needed vital access to these drugs. The annual cost of your drug went as high as 123, 000 a year, that is insanity. It is robbery, it kills people. We are leaving this hearing to fulfill our longtime commitment to gavel to gavel congressional coverage. The hearing continues live on our website, cspan. Org. U. S. Senate is continuing debate on us district judge confirmation, a voters