Committee. This first portion is just under three hours. [inaudible conversations] the Senate Committee on health, education, labor and pensions will come to order. Today is a busy day. As we all know very important both will be taking place, republicans of knickers will be meeting in their caucuses so people are going to be coming in and out. I also think that this hearing is important enough that we extend the time for questioning from the usual five minutes to seven minutes, if thats okay with folks. Let me begin by welcoming the ceos of Bristol Myers squibb, chris berner, we thank you for being here. Ceo merck robert davis, we thank you for being here. And the Seahawks Johnson johnson Joaquin Duato for being with us this morning. Thanks very much. There is a lot of discussion in our nation about how divided our people are on many issues. And that is absolutely true, but on one of the most important issues facing our country, the American People whether democrats, republicans come in the pesco conservatives, progresses could not be more united. And that is the need to substantially lower the outrageous price of Prescription Drugs in this country. According to a recent poll, 82 of americans say the cost of Prescription Drugs is too high, and 73 say that the government is not doing enough to regulate drug prices. As a nation we spent almost twice as much per capita on health care as to the people of any other country. 13,000 for every man, woman and child. And one of the reasons that we spend so much is the high cost of Prescription Drugs in our country. The outrageous cost of Prescription Drugs in america means that one out of four of our people go to the doctor, get a prescription, and they cannot afford to fill that prescription. How many die as result of that, how many suffer unnecessarily, nobody knows. But my guess is it is in the millions and i talked to many of them in vermont and around the country. Meanwhile, our insurance premiums are much higher than they should be, and hospital costs are soaring because of the high cost of Prescription Drugs. Further, the cost of Prescription Drugs in this country is putting an enormous burden on taxpayers and seniors by raising the cost of medicare and medicaid. Medicare alone spends at least 135 billion a year on Prescription Drugs. This is not only a personal issue, it is an issue of the federal budget. Meanwhile, as we pay by far the highest prices in the world for Prescription Drugs, ten of the Top Pharmaceutical Companies in america made over 110 billion in profits in 2022. They are doing phenomenally well while americans cannot afford the cost of the medicine they need, and the ceos in general receive exorbitant compensation packages. This morning we are going to hear a lot from our ceo panelists about how high prices are not their fault, and that the pbms are forcing americans to pay much higher prices than they should be paying. But let us be clear. In 2022 Johnson Johnson made nearly 18 billion in profit, painted cdao over 27 million in compensation, and spent over 17 billion on stock buybacks and dividends. That same year, merck made 14. 5 billion in profits, handed out over 7 billion and dividends to their stockholders, and paid its ceo over 52 million in compensation. Bristol myers squibb made 8 billion in profits last year recently spending over 12 billion on stock buybacks and dividends, and giving it ceo over 41 million in compensation. Now, why did the majority of members of this committee invite these three pharmaceutical ceos to testify today . And the answer is Pretty Simple. Mr. Bernard, we want you to explain to the American People why Bristol Myers squibb charges patients in our country 700 a year for eloquence, when that same exact product can be purchased for just 900 in canada, 650 in france. Mr. Duato, where going to ask you why Johnson Johnson charges americans with arthritis 79,000 for stone barrel when that same example can be purchased for just 20,000 in canada and just 12,000 in france. Mr. Davis, please tell us later why merck charges americans with cancer 191,000 a year for keytruda in the same product can be purchased for 112,000 in canada and 91,000 in france. Lets be clear, Johnson Johnson, merck and Bristol Myers squibb are not just charging higher prices in the United States compared to other countries. They are also charging americans much higher prices today than they did in the past, even accounting for inflation. From 2004282 the eighth the median price of new innovative drugs sold by these three copies was just 14,000. Inflation accounts come from 2019 to 2023 where we are today, the median price of new drugs sold by these three companies was 238,000. In other words, americans are forced to pay higher and higher prices for the drugs they need to survive. And lets be clear, the overwhelming beneficiary of the high drug prices is the pharmaceutical industry. How do we know that . Well, that is precisely what they tell their investors. According to their own shareholder reports, Bristol Myers squibb made 34 billion selling the blood thinner eliquis in the United States compared to just 22 billion in the rest of the world combined. Make their money in the United States. In other words, the u. S. Accounts for nearly 2 3 of all global sales of eliquis, not a single single dollar of this revenue is going to pbms. An hundred just going to Bristol Myers squibb. Johnson johnson has a port to its shareholders that made over 30 billion in revenues selling the arthritis drug stellaris in the United States since 2016 carmarthen twice as much as rest of the world combined. Nothing to do with pbms. Merck has reported to its shareholders that it made 43. 4 billion selling the cancer drug keytruda and the United States compared to 30 billion in the rest of the world combined. Now our ceo panelists from Drug Companies will tell us this morning how much it costs to develop new drugs. And often the research that they undertake for new jersey is not successful, and they are righ. We appreciate that. But what they have not told us in the written testimony is that 40 major pharmaceutical companies, including Johnson Johnson and mark, spent 87 billion more on stock buybacks and dividends over recent tenure period than what they spent on research and development, more on stock buybacks and dividends than in research and development. In fact, Bristol Myers squibb spent 3. 2 billion more on stock buybacks and dividends in 2022 bandits spent on research and development. Johnson johnson spent 46 46 billion more on stock buybacks and dividends than is spent on research and Development Since 2012. In other words, these companies are spending more to enrich their own stockholders and ceos and are in finding new cures and new treatments. Now, the average american who hears all of this is asking a very simple question. How does all of this happen . Whats going on . How could Drug Companies charges in some cases ten times more than they charge canadians are people around the world for the same drug . How did he get away with this when so many of our people cannot afford the high price of the drugs that they need . How can it be uniquely among industrialized countries that these companies, not just these companies but the pharmaceutical industry in general, can raise prices anytime they want to any level they want, want to double the price is, do it want. How do they get away with all of that . And here in my view is the answer. The United States government does not regulate Drug Companies with very few exceptions. The Drug Companies regulate the United States government. That is the sad state of affairs in a corrupt political system. Over the past 25 years the pharmaceutical interest, not just these companies, the entire industry, spent over 8. 5 billion on lobbying and more than 745 million on campaign contributions. And let me be fair. I do what to misspeak. They are bipartisan. They give to republicans. They give the democrats. And i am especially impressed by the pfizer drug company, pfizers letter this morning, contributing 1 million to the kentucky to expand its headquarters named after republican leader mitch mcconnell. But again, its not just republicans. Its democrats as well. Unbelievable, this is an astounding fact, last year Drug Companies had over 1800 wellpaid lobbyists here in d. C. To make sure that congress did their bidding. There are 535 members of congress, and 1800 wellpaid lobbyists, over three for every member of congress so if you want to know why youre paying the highest prices in the world, america, thats why. Now, here is some goodies in the midst of all that. We are beginning, beginning to take on the greed of the pharmaceutical industry. As result of Inflation Reduction Act has several years ago, medicare for the First Time Ever is beginning to do what every major country on earth does and what the Veterans Administration has been doing for over 30 years, and that is to negotiate for lower prices of drugs, including stelara and eliquis. Let me conclude by saying this. I am proud of what this committee up to this point has accomplished last year as you all remember the ceo of moderna committed during a h. E. L. P. Committee hearing that his company would make certain that no one in america with have to pay for the vaccine out of pocket. We appreciated that. In a separate h. E. L. P. Committee hearing last may that ceo of eli lilly committed that his company would not raise prices on existing Insulin Products after having in fact, lowered them. But lets be clear. Much more needs to be done. I look forward to hearing from our ceo panelists this morning as to how they are going to go forward to substantially lower the cost of Prescription Drugs in this country. Senator cassidy, or no recognized for an opening statement. Thank you. A. Q. Khan chair sanders. Lets just be clear. Everybody on this panel cares about the high cost of Prescription Drugs and wants to work on Real Solutions to address this. But its also clear that this hearing is not about finding legislative solutions. Its kind of following a formula. We publicly attack i dont but others come public attack private citizens from being successful under capitalism. We grossly oversimplified a problem and blame corporations. We demand ceos come before the committee for public verbal stoning. We reject the offer to send top executives with subject matter expertise and responsibility regarding the issues at hand and threaten a subpoena when ceos are suspicious that they will get a fair shake. Hold the hearing, get soundbites, then pick another set of ceos for a show trial, we dont pass meaningful legislation. If that sounds familiar thats been hearing with starbucks founder howard schultz, moderna ceo stephan benzo, and now this hearing with the same formula. I wouldve gladly join the chair and exploring Solutions Address i cost of Prescription Drugs. Im a doc. Ive worked in a Public Hospital for the uninsured for 25 years. I did my best to get care to those who otherwise would not have received. I am aware of this. Im also aware of the perverse incentives, they kind of like, my gosh, it shouldnt be high but it is high. Bad actors gain the system and we need solutions that benefit patients and improve access. But the majority was not interested in working with the site of the dais to hold a series hearing to inform serious legislation. They didnt seek republican input. The goal was to hold you guys in to cry capitalism and blame these corporations to the high cost of drug prices. Now by the way, of course. Companies play a role and hopefully will get answers today to legitimate questions about how high drug surprise but the problem is far greater and more complex than individual companies or even a a set of companies within an ecosystem is incredibly complex. Why do americans pay more for certain drugs in patients in other countries . To understand when we needa serious effort to navigate the network of diverse incentives throughout the Health Care System. I lived in it for 25 years. I am very kind of aware of it. Taking a substantial look at insurance benefit design, price transferred to come regulatory, intellectual property barriers, the perverse effect government discount programs have upon prices charged to commercial patients, et cetera. One example, just to see get a little bit of complexity here. The 340b drug program resulted in in a 54 gilligan introduced us in 2022 but we actually dont know if those discounts lowered isis for the patient who bought the drug. There are reports that patients pay cash when the intermediary took the full price, even though 340b shouldve lowered it. That is a Serious Investigation being conducted by the side of the dais that the other side of the dais was not interested in participating in. That is an understanding of an ecosystem. I understand theres no one more eloquent than chair sanders for medicare for all we can cherry pick examples of how other countries are doing something better. I could cherry pick the opposite. Candidate is struggling just to show those complexity, let me take an example. Candidate the struggle with specialty care. In may of last you the canadian government began to send 4800 canadians from British Columbia to Washington State to quote insure people have faster access to lifesaving radiation treatment, end quote. They can afford their system because we are right next door. Relatedly, to this string after that, allison, canadian woman paid for own treatment in the United States after the provincial Health Authority in British Columbia denied access to lifesaving chemotherapy. Canada had a lower cost drug council of the didnt carry the chemotherapy so she paid for out of pocket in the so she could have lifesaving chemotherapy. The United States is not perfect, but if we cherry pick from other countries, we have to do a more thorough investigation to see if there is a balance there. Now lets return to prescriptions. Canadians pay less than we do. Lets figure out why. But lets also point out the Public Health insurance in canada only covers 24 of newly developed drugs. Now, maybe thats a tradeoff but i can tell you, you tell an american they can have access to lifesaving drug, theyre going to see you in court. Theyre going to sue and theyre going to say i i want that ac. The uk only covers 38 of newly available drugs. Americans just would not tolerate that. Its fair to say that alice, those radiation treatment patients or those not getting the new develop lifesaving drugs more quickly mai tai in those countries that dont have access to the same treatments as do we in the u. S. These are serious questions. One more time, i may doc. I aware of this but we need to fully consider all these issues and then maybe bring in at the end, but we will bring in with the context which is complete as opposed to isolated. As i sit at the start, it would be best if this were a genuine exercise. I am so willing to do the work on this as are my colleagues. Weve shown that willingness on work on pbm reforms in generic drugs. And even though the chair and i got off to a rocky start, we did some pretty good work on that, mr. Chair. I think we got some good bipartisan legislation, so this committee i agree with you can accomplish that. I dont want the committee to devolved into ceo whackamole, ends up with no serious legislation as a result. Further proof of what i consider the n series and cynical nature of the street is that the minority as the church other witness on the panel that could actually explore some of these issues sidebyside the ceos. That was turned down. We wanted and academic experts in drug price the could provide unbiased and substandard and input to the issues at hand. Our what this was not allowed. He will be on the next the way this works is this gets all the publicity in the nixon gets crickets. And so weve not had the opportunity. And ill also point out we didnt split the majority and minority witnesses into different panels during several hearings which promoted kind of labor union issues. I can think of no reason to not allow our witnesses to be a now, except perhaps ruining the optics. As i said at our last markup, what ends up being hollow messaging gives d. C. A bad reputation. Folks want real answers. A want relief from high prices. It is in part what were going to hear today, but it would be separated from a context that would have made it a lot more productive. If youre telling voters youre going to do something when you know at the get go you will have no legislation solution which emerges, and