Academic group in the country focusing on this matter. Its my pleasure to be here and i want to thank American University for putting together such Great Program and the American Society of law medicine and ethics and other sponsors of this conference which have been a fantastic conversation. We spent a lot of time talking about the future of healthcare policymaking. Industry plays an Important Role in bringing these products forward, but in recent years, drug crisis has continued to rise which has made some of these breakthroughs unaffordable for patients and leading directly to bad consequences when patients are unable to afford the medication as well as driving healthcare spending with spending on pharmaceutical by some estimates making up 20 of healthcare spending overall. We are extremely fortunate during this lunchtime to have one of the key players in helping, who helped establish this pharmaceutical marketplace in representative henry waxman who served as a member of the u. S. House of representatives for 40 years from 1975 to 2015, overseeing a number of important legislations, not only, but also the orphan drug act, Prescription Drug user act, the fda amendments act, and other pieces of legislation that helped establish the environment today. He currently serves as chairman at waxman strategy as well as an advisor at Johns HopkinsUniversity Bloomberg school of Public Health we are hoping he can talk with us today about his reputation as one of the main drivers in these important pieces of legislation. Id like to let him give a few comments and i will get down to some discussion and hopefully have some time for audience q a. Please start thinking about your question. Thank you. Mac. I am delighted to be with all of you today. Ive looked over the schedule for the conference, and it looks like a fantastic conference. I know cspan is filming this, perhaps i can get a copy of the record of what has been said in the last and half. I think aau for hosting this conference and i think aaron for inviting me to join you today to talk about Prescription Drugs. I was in the house of representatives for 40 years, and in the 1980s, we were focusing on the farms and pharmaceutical issues at the time. The issues we were looking at were that we needed more of an incentive for development of new drugs. We needed new incentive for drugs to be manufactured for the broad population, and we also needed to address the problems of people with Rare Diseases. In 1983, we passed a law called the orphan drug act. These were called orphan drugs is the number of people who were affected by a disease were very small in number and it wasnt in the interest of the manufacturer to even produce a drug that was known about let alone develop new drugs for people with these Rare Diseases. We tackle that problem from the point of view of giving an incentive for developing drugs for Rare Diseases that did not look like they would be profitable because so few people would be using those drugs and they adopted the orphan drug act which gave incentive to the tax system an incentive through an exclusivity. Of seven years. The next year, we looked at the problem of incentives for development of new drugs and the pharmaceutical industry complained they had lost time while there drug applications were being reviewed by the fda , and they had only, within the last decade before, had to come up with not just proof of safety, but proof of efficacy, which required many trials to accomplish that goal, and of course the drug cannot be marketed until the approval was accomplished and finalized. They said they are to have more time restored to their patents for the time lost at the fda. On the other hand, generic drugs were very, very small in number because generic manufacturers who were making the same drug as the brand name drug had to go through all the test to show it was the same drug in terms of effectiveness and safety. They had to go through the whole procedure to help these generic drugs by saying they could have an abbreviated drug. They just had a show its the same drug on the market and that had already been established. We thought we got a balance. Consensus for development of new drugs and also being available to lower the drugs on the market. That balance is completely out of whack. It has been affected dramatically by a lot of changes from the 1980s. Insurance is now paying for pharmaceuticals, there have been through pharmaceuticals and we are grateful for that, but the drugs are exceedingly highpriced when they are first being rolled out and theres no competition permitted or sometimes when they are being rolled out and theyve been on the market for a while, but the prices go up and theres no reason to explain the prices going up except for the fact that the manufacture has either a patent and or an exclusivity which means no competition. Weve seen drug prices are rising faster than wages in the past several years drug costs are an ever increasing problem for people to pay for their drugs, even if theyre only making the copay. I think it has helped increase the prices. As we look at these ever increasing frustrating problem. There is no Silver Bullet to the prescription of drug pricing. All we have to do is negotiate prices. If you negotiate prices with the patent holder, negotiations are not going to go very far because you cant substitute an alternative drug. There are other problems in the negotiation, but negotiating prices for drugs is no magic solution. Some people say what we need to do is import drugs. After all, we manufacture drugs, exporting them to canada or europe, and its a lower price and those places. While we import those drugs from these other countries and we will get the prices that are being paid for in those countries. Importing drugs can work in a very narrow way, but its not an answer because by importing drugs, there is no way we can ask the drug manufacturers or expect the drug manufacturers to manufacture drugs for the use in canada or in europe and to supply the United States through that mechanism. So, what we have done, we are with you, bill corr who used to be deputy secretary of hhs, Kristi Martin who also worked on Health Reform at hhs, and sofia who had worked at hhs as well, we tried to figure out is there something we could do to approach this issue. There is no one answer, but in an incremental way, that would lead to bipartisan support that would lead to legislation that would require to get legislation passed. Most of the bills that i was associated with in my decades in congress were not passed on bipartisan basis. Whether it was the drug act or expansion of medicaid, or dealing with medicare or any of the other laws. It was very bipartisan. The truth of the matter is, we do better when bills are bipartisan. I always thought i was wellinformed when i introduced a bill, but when you hear the comments of those who are critiquing it, you learn more about your legislation and often make a much better product. I wish some of the laws that we are having such difficulty dealing with right now, especially the Affordable Care act, had been bipartisan. Its the only law i ever had a role in drafting that was only partisan, but it was based on a political decision that republicans didnt want to participate and they did not want to be part of it. Didnt want to be part of it and president obama had proposed so they were against the stimulus bill, they were against the regulation of wall street, there against trying to do something about Climate Change which they deny even existed, they didnt want to deal with the Affordable Care act, even though the Affordable Care act was based on many of the principles that the republicans had supported, especially in their alternatives to what president clinton and his wife were trying to do during that administration to address the problem of pharmaceutical pricing. There is no Silver Bullet, but we think even in a divided congress, progress can be made but we have to start with a discussion, not a bunch of solutions, but what are the drivers of healthcare cost. Look at those drivers and see what members are willing to take on. You cant answer all of the drivers, but you can start making some progress by addressing those issues. We looked at the following kinds of drivers of healthcare. High launch prices, high annual increases for patented brandname drugs and orphan drugs. What can be done about it . What are some of the possible approaches . Secondly, some manufacturers create or take advantage of natural monopolies, the drugs that enable them to significantly increase prices, and we saw this with manufacturers such as turing and retrofit and valiant, they had limited any opportunity for competition. Not because they had the patent or exclusivity, they didnt have anybody competing against them. Sometimes it was a natural monopoly and sometimes it was a contrived monopoly. Third, lack of robust Competition Among manufacturers including generic and bio similars, and that resulted in less competition for there is a real problem with the bio similars from the fact that when we adopted the law dealing with bio similars as part of the Affordable Care act, we gave an enormously long exclusivity. I think it was 12 years. It was so long in comparison to what we had done on the waxman act, it made it difficult from the start to provide competitio competition, but there are some aspects of competition but the fda needs to take action to establish the pathway forward for bio similars and bio generics to be approved. The system is difficult to analyze because it does not make a central pricing Information Available to the patients, the providers, or the payers at the point of care when the decisions are being made, and we have a lack of information about competitive effectiveness of drugs at this very important time. Another thing i want to touch on is the federal law limits what the states can do under their authority to negotiate prices for medicaid and implement other price related measures to reduce high drug prices. We might want to look at some things the states can do and some of the things the states are already doing on their own. The state of california adopted a new transparency law. Other states are following along. I think that is all to the good, and we could have more state experimentation if we permitted it in the medicaid drug formulas. There are things we can do shortterm and things we can do longterm. Our approach is to talk to the key senators and the house and get them to Start Talking to each other. If we could get members from across the out to talk with each other, we could get them to Start Talking about things they could agree on. That is a real problem now and its been a problem for some years, that even in the most difficult times, when i was in congress, we were able to get things done just by working on a problem. It might not have been the Big Solutions or problems, but weve gotten bills through for a long time. The only bills that have gone through, especially in the last eight years are so were those that were bipartisan. Now the republicans inc. They can pass bills on a bipartisan basis. Period [applause] all right. So let us start with since the passage of the act, generic drugs made up about 20 of prescription back when you passed the bill and today they make up 8890 of prescription. of prescription. Gao has estimated the availability of generic drugs has saved u. S. Consumers 1 trillion over the last ten years. Is this the source success you envisioned when you created the statute . When we passed these laws we didnt have a model to know what to envision for the future. The drug act is an enormous success. Very few orphan drugs had been approved. Manufacturers without even looking to see if some of the drugs they knew about my help people with Rare Diseases. Didnt want to be bothered, no profit potential sufficient for them to have an incentive. The generic drug market we knew would provide competition and that was all to the good, but we never expected that it would be as great a a success as that hs been. 1 trillion, very few members of congress can have anything to say that they did that helped save 1 trillion. Thats the good part. I want to get back to the orphan drug act, but what you notice also and what you touched on in your opening remarks is over the last decade brandname manufacturers have figured out a way to game theres aspects of the hatchwaxman act even by obtaining socalled secondary patents on peripheral aspects of the drugs like the coding of the pill or metabolite of the pill or metabolite of the bill, listing those with the fda in the orange book, pay for delay settlement theyve engaged in with generic manufacturers, refusing to supply samples so generic manufacturers can get the basic testing that you envisioned. If you were rewriting the hatchwaxman act today, would you do anything differently . There are things you can cant predict and think you cant predict. What sorts of things might you change . We might have predicted the brandname companies were trying to discourage people from buying generics thats always been the case. They would talk about generics not being the same, not being as good as the brandname drug. Their Public Relation campaigns from the very beginning, try to make that point. But i think the public has come to accept the idea that if you can get a generic you usually get a better price. Thats led to the success of the law. The manufacturers have looked for lots of different ways to keep out competition, and you mention several of them. Pay for delay . We envisioned generic drug to compete, and to give a generic drug manufacturer an incentive to in effect come out and say they can break the patent because the patent was no longer valid and they could now manufacture a generic drug. Weve was said we would get a 30 month will give an advantage of the first generic on the market. That was to encourage generics to stand up and do the work and get approved. And be rewarded. Well, then if you get a pay for delay, reduction of a generic, you are not only blocking the generic youre paying sums of money to not to compete but you are delaying the other generics that were lined up that would also like to get on the market. We never envisioned these things, and i think what congress has got to look at all these issues very carefully and see what they can do to address these issues. Theres some things that are already on the agenda with bipartisan support, and i would Hope Congress would move forward, theres the creative act. Senator grassley has introduced the bill on a bipartisan basis to be sure that, generic compared to could find out whas in the brandname drug. Theres a bill to stop pay for delay. Even if the Supreme Court has nailed it greatly, but theres a reason to have pay for delay. Theres reasons i i suppose ine legal sense if there is a dispute if you want to stop fighting legally with all the suits and countersuits. The court said it should be looked at very much askance and some were just completely outlawed. So somethings i think are being considered now and other things need to be looked at very carefully to see if we can have a consensus to start addressing some of these problems. There is no solution again. Theres no magic bullet, but if you start addressing some of these problems, narrowing the difficulties, the next up is easier. Great. Talking about the generic markets you mention a couple examples of off patent drugs that have increased in price and i guess i would add to the also concerns about consolidation into generic drug market. Weve heard about shortages of generic drugs that are present ticked with the ongoing tragedy in puerto rico. These episodes reveal maybe the generic market isnt as stable as we might help. How might we update the hatchwaxman act to address these sorts of concerns . Well, the world has changed since the 80s in this area. At one time you had a brandname drug manufacturers on one side, and the generic drug manufacturers on the other side. And there was a lot of hostility. Now you brandname drug manufacturers, also generic drug manufacturers. Theres a crossover. Sometimes they have their own conflicts, but they rise above them by saying if they have a monopoly, and want to continue it and if they want to compete, we think they should be able to compete which is of course the position of not just one side of the industry or the other but the fact that they represent both sides of the industry. We need to look at these problems, break them down and see what congress can agree to do in the various aspects of the generic market. There was some good suggestions that came out of senator collins committee, aging committee. The stop sole sourcing of drugs and restoring the monopoly that. There are ways we get asked the fda to do more. I think dr. Gottlieb casella suggestions about things he can do to other more robust generic drug industry by getting these drugs approved more quickly, trying to see if theres some way if theres a solesource manufacture we can get a competitor, or to at least know in advance if theres going to be a solesource situation around the corner. I think importing drugs, in a narrow issue, i think it helped. It ought to be on the list of things that might be done. So i think we need to look at it, break it down and get something that the fda can move, somethings the congress can do. One thing the fda needs to do is to establish a pathway for generic drugs to be approved, especially for the biotech drugs. Have them approved, and they have a lot of other issues related to that, such as the naming questions and when they can designate a generic drug as a drug that could be substitutable. I have Legal Authority to do it pick fda needs to figure out the very difficult criteria so that we can get drugs that will be substitutable. The big gain that we had in lower prices from generic, traditional generic drugs, is that when they were the same drug as the original one, that was an immediate co