▶ 0:14:54Order. The chair recognizes himself for five minute opening statement. First, I want to recognize the bipartisan bill that we were able to pass last week that included many important healthcare provisions and lowered health care costs for all americans. Today, we will discuss health care costs and patient access challenges by examining affordability across the entire pharmaceutical supply chain. I am proud of this subcommittee's work, but there is still more to be done, which is why I'm eager to continue building on our affordability series with today's hearing.
▶ 0:15:23That comes after we heard from insurance executives last month. We now will hear from stakeholders who are a part of the complex pharmaceutical drug supply chain to regular people. This system may seem simple, but disease is researched in, a treatment is developed, then that treatment is manufactured and distributed to a hospital, pharmacy or other health care entity before it is dispensed to the patient.
▶ 0:15:47However, there are many more layers that are involved in this process that affect how a drug gets to a patient and how the drug is priced. One of the most frustrating aspects of the supply chain is that it operates as if in a black box. Luckily, we have witnesses here to provide their perspectives and shine a light on the process. Do each of these entities in front of us today play a role in getting the drug to a patient? Yes.
▶ 0:16:16Are there too many cooks in the kitchen at times? Probably. So. Today is a great opportunity for congress to get a glimpse and see what is happening, and look for ways to help make prescription drugs more affordable. 2017. This same subcommittee held a similar hearing to the one we're doing today, but a lot has changed since then.
▶ 0:16:39I'm glad we are reexamining what we learned from that hearing to continue working towards what we all want, lowering costs for patients while ensuring that america remains a leader in pharmaceutical innovation. We have pharma and bio in front of us who can speak to the intricacies that go into researching, developing, and pricing a drug on the market. We will also get the perspective of generic drugs from the association for accessible medicines, who can speak on the issues in that arena.
▶ 0:17:08We also have the pharmaceutical care management association. Here is the trade association that represents pharmaceutical benefit managers, commonly known as the pbms. What we heard in our hearing last month is that insurance companies own many of these pbms. In fact, the largest three insurance company or the largest three pbms are owned by insurance companies, and they control over 80% of the market.
▶ 0:17:33How they managed these benefits is a mystery at times, and can lead in some cases to higher prices. However, just last week, led by representative buddy carter from georgia, congress passed and the president signed into law the biggest pbm reform package in history. These bills will bring more transparency into this system, lower costs and allow for more access to medicines.
▶ 0:17:55The healthcare supply chain association is here on behalf of group purchasing organizations, or gpos, which act as intermediaries between manufacturers and providers. In front of us is also the healthcare distribution alliance, who is involved in the distribution of prescription drugs along the supply chain. I am looking forward to hearing from the national community pharmacists association, who is also with us today, since they represent the community pharmacists, that so many of us use.
▶ 0:18:24These community pharmacies serve a critical role in bringing care to patients, especially in rural areas. Yet many have had to sadly close their doors in recent years due to some of the factors that we will discuss today. The erisa industry committee is also here to discuss their point of view for employers, when it comes to high costs as well as decisions they make, they make based on those costs. Each of these different entities play a unique role in how a drug finally gets to a patient.
▶ 0:18:52In this meeting, we will hear from these witnesses on how to navigate this complex web on behalf of the american people. I look forward to the discussion. And with that, as I said, I look forward to it. I yield back and now recognize the ranking member of the subcommittee, Mrs. degette, for her five minute opening statement. >> thank you so much, Mr. chairman.
▶ 0:19:14Um, this panel is going to testify today about how complex the drug supply chain and drug pricing have become. And it's true, we have a convoluted system that does too much to reward pricing games and too little to reward effectiveness and true innovation. And the high prices are systemic. That's why this diverse panel will, I hope, provide some information that may begin to help us untangle this issue.
▶ 0:19:44Um, I'm proud of the work that the house democrats have done to begin to make drugs more affordable, and inflation reduction act. Democrats made it so that drug companies could not raise their prices faster than inflation. Gone are the days of double digit price increases on life saving drugs year after year.
▶ 0:20:06Democrats also fought for medicare drug price negotiations, and these negotiations have already lowered the cost of the ten most expensive drugs in medicare. Starting this year, for example, 4 million seniors take eliquis for blood clots, and thanks to the ira, medicare secured a 56% discount off list price. Next, our up next up are certain popular glp one drugs, which will be counted discounted 71% in 2027.
▶ 0:20:35Other high cost therapies will be discounted as much as 85%, all thanks to congressional democrats. And we're just getting started. But meanwhile, the biggest drug companies are making backroom deals with the trump administration in response to extortionate and, frankly, illegal tariff threats.
▶ 0:20:59Unlike the inflation reduction act, which created clear and predictable mechanisms for negotiating drug prices and capping out of pocket costs, the public has no idea what backroom agreements are between drug makers and the white house. I think that we would all be very interested in learning more about the president's deals with the drug companies. Frankly, if they're worth the paper they're written on, they need to be made public. But we're here today to talk about affordability.
▶ 0:21:28So if the majority were being honest with himself about affordability, we would do two things right away. And it would help, number one, bring back the aca, enhance premium tax credits. That would be the easiest way to lower health care costs for millions of americans on a short term basis, including ethan allen, who or I'm sorry, ellen allen, who this committee heard from in our last hearing. Number two, here it comes. Repeal h.r.
▶ 0:21:58One, what I call the republicans big bad bill. H.r. One included a provision to exclude certain high cost drugs from medicare drug drug price negotiations, which will cost the american public $8.8 billion. That means persistently high prices for the american people of drugs that have been on the market for years. This bill also set up 15 million people to lose their health insurance.
▶ 0:22:26Now, obviously, that will make healthcare unaffordable for those 15 million people, but it also impacts everybody else. Why? Because some. Just because someone is uninsured doesn't mean they don't get sick. Uninsured people end up going to the emergency rooms, which is one of the most, probably the most expensive settings of care.
▶ 0:22:49And when they can't pay, since the majority took away their health insurance, the costs increase for everybody and are passed down to people with private insurance. And also h.r. One will add $443 billion to hospitals, uncompensated care costs through 2034. That's a huge cost that's going to be borne out by people in every single one of our congressional districts.
▶ 0:23:15I think we can all agree that it's cheaper to prevent and treat and treat early rather than treat late. So why did we pass legislation that doctors, hospitals, policy experts, and most importantly patients all agree is going to make health care more expensive?
▶ 0:23:32Meanwhile, the majority has turned a blind eye to grant cancellations, political interference and instability at the agencies that are the backbone of america's biomedicine ecosystem, which has become the envy of this world. As we talk about the pharmaceutical supply chain today, let's remember where every treatment and cure starts as a research project seeking to understand biology. The glp one drugs that I talked about earlier started out that way.
▶ 0:24:01They wouldn't have been discovered without our basic research infrastructure. They came out of research. It might sound ridiculous. A study of the healer monster. Gila monster venom. That's what helps lead to drugs that cure millions of people. We need to embrace that type of research. We can't allow it to be stifled. There's a lot to unpack here, and I'm looking forward to the hearing I yield back. >> gentleman yields back.
▶ 0:24:27I now recognize the chair of the full committee, chairman guthrie of kentucky, for his five minute opening statement. >> thank you, chairman griffith, for holding this hearing. And to ranking member degette, this is similar to our hearing we held when you chaired odni. And I was of the supply chain hearing. So hopefully we'll get some of the good answers that we got then today and hopefully some improvements. But we're here to talk about the us drug subscription drug supply chain.
▶ 0:24:52And from the discovery of a molecule due to the dispensing of a drug, the prescription drug supply chain is complicated. Web of financial and logistical transactions. In 2017, the committee held a very similar drug supply chain hearing, which led to congress passing and president trump signing into law the most consequential and comprehensive pbm reform legislation in history just last week. Those policies will improve prescription drug affordability for all americans.
▶ 0:25:20Historic pbm reform is just the beginning, and more needs to be done throughout the drug supply chain to improve affordability for all americans. Since our hearing in 2017, the prescription drug supply chain has evolved in many ways. We have seen significant vertical integration, not just among the largest pbms, but also on part of the wholesalers who now own and operate provider groups, pharmacy services, administrative organizations, gpos pharmacies, and white label manufacturers.
▶ 0:25:50We've also seen shifts in pharmaceutical contracting and revenue generation from pbms, accruing a major portion of their profits in fees charged to payers and manufacturers, to payers working with broker consultants and often demanding rebate guarantees as part of their pharmaceutical benefit management contracts, which may impact behavior incentives up and down the supply chain. We have also seen major changes in federal policy.
▶ 0:26:16The democrats inflation reduction act has destabilized the market part d marketplace to a degree that the biden administration had to divert billions of taxpayer dollars just to temporarily keep the market afloat. On the other hand, just last week, trump launched president trump launched trump rx, a new platform designed to help patients find the lowest possible direct to consumer cash price for some of the most common medicines americans shop for outside of their insurance.
▶ 0:26:47I look forward to examining all of these issues across each of the prescription supply chain, and learning more about what more we can do to make health care system more affordable for patients across the country. Thank you for all of our witnesses for being here. We look forward to a discussion and hopefully getting to some answers in the next few hours. And I thank you for being here. And I will yield back. >> gentleman yields back. Now recognize the ranking member of the full committee, the gentleman from new jersey, Mr.
▶ 0:27:16Pallone, for his five minutes for an opening statement. >> thank you, chairman griffith. Once again, the health subcommittee is meeting today to examine health care affordability while republicans sit by and refuse to address one key way to lower health care costs. And that's extending the affordable care act. It's enhanced premium tax credit to lower monthly health insurance premiums for millions of americans. The truth is, republicans are holding this hearing because they have no real plan to lower health costs or improve quality of care.
▶ 0:27:45They spent the last year creating a health crisis, taking health care coverage away from 15 million people, raising costs for millions more, and slashing $1 trillion in health funding in their big ugly bill. Their signature bill will not only result in massive benefit cuts, higher prices for patients and hospitals closing their doors, but it will also increase drug prices for seniors.
▶ 0:28:07Hidden in the fine print of the big ugly bill was a new loophole to allow massive block blockbuster drugs such as keytruda to avoid medicare price negotiations. This was a $9 billion republican handout to the pharmaceutical industry tucked away in the big ugly bill. Make no mistake, republicans knew what they were doing when they prioritized big pharma's profits over patients. Patients who will be forced to pay higher prices for life saving drugs for years to come.
▶ 0:28:35And instead of working together to lower costs, it appears that republicans goal for today's hearing is to allow different players in the pharmaceutical drug supply chain to point blame at each other. While this committee does nothing to actually help lower health care costs for everyday americans, it's also worth noting that republicans deny democrats request to include a witness who could represent a patient's perspective, ignoring the 1 in 7 americans who have been forced to cut their pills in half or skipped doses of their medication due to the costs in the last year.
▶ 0:29:04And that's a shame. Certainly, republicans have also stood by and allowed the trump administration to undermine our nation's health agencies charged with protecting americans. Time and again, republicans have done nothing to stop trump and robert f kennedy jr's attacks on life saving medical research and innovation, putting new cures and treatments out of reach for millions of people. They've sat back and watched as billions of dollars in scientific research funding has been cut, frozen or terminated.
▶ 0:29:31And they've allowed rfk jr's quack science to run rampant, decimating people's trust in vaccines. So now we're facing the worst measles epidemic in three decades on president trump's watch. This committee should be doing important bipartisan oversight of the growing measles crisis and the federal government's response that, shockingly, the new head of cdc says that rising cases are, quote, just the cost of doing business, kids getting sick from preventable diseases, hospitalized, and even dying is
▶ 0:30:02Just, quote, the cost of doing business under the trump administration. Undoubtedly, these devastating actions will negatively impact healthcare access affordability in our nation's public health for decades to come, long after the trump administration has gone. So if we want to address prescription drug affordability, we should build on the successes of the inflation reduction act. It took democrats more than 20 years to finally beat back big pharma and republicans to empower medicare to negotiate lower prices for america's seniors.
▶ 0:30:31As of january 1st, seniors have access to these lower negotiated prices. This year alone, seniors are expected to save about $1.5 billion in out-of-pocket expenses, and not one republican supported this law. And if republicans are really interested in making prescription drugs more affordable, they would support my legislation to extend negotiated prices to everyone with private health care coverage.
▶ 0:30:55The lowering drug costs for american families act also caps out-of-pocket costs for prescription drugs for more americans, and further prevents unfair price hikes for drugs already on the market. And these are real solutions and stand in sharp contrast to the secret deals that the trump administration is making with the pharmaceutical industry that do nothing to lower costs. Democrats stand ready to continue our efforts to lower drug prices and deliver savings to the american people, and I would urge my republican colleagues to join us with that.
▶ 0:31:26Mr. chairman, I yield back. Thank you. >> gentleman yields back. We now conclude with member opening statements. The chair would like to remind members that pursuant to committee rules, all members opening statements will be made a part of the record. We want to thank our witnesses for taking their time to testify before our subcommittee today.
▶ 0:31:41Although it is not the practice of this subcommittee to swear in witnesses, I would remind our witnesses that knowingly and willfully making material false statements to the legislative branch is against the law under title 18, section 1001 of the united states code, you will have an opportunity to give an opening statement followed by questions from members. Our witnesses today are lori riley, chief operating officer with phrma. John crowley, president and ceo of biotechnology innovation organization.
▶ 0:32:08John murphy, president and ceo of association for accessible medicines. David maron, president and ceo of pharmaceutical care management association. Chip davis jr, president and ceo of healthcare distribution alliance angie boulevard, president and ceo of healthcare supply chain association james gelfand, president and ceo of the erisa industry committee james hoy, chief executive officer, national community pharmacists association.
▶ 0:32:35And rachel sachs, professor of law, washington university in saint louis. Per the committee custom, each witness will have the opportunity, and I underscore that today for a five minute opening statement followed by a round of questions from members, you may have noticed that several of us in our opening statements did not use our whole five minutes. So if you've already said what you need to say because we have nine witnesses, which is the most I think I've ever seen since I've been on the committee, but it was necessary to try to get the full picture.
▶ 0:33:07Um, so if you don't use your whole five minutes, nobody's going to be upset with you. Just saying. The light on the the light on the timer in front of you will turn from green to yellow when you have one minute left. I now recognize miss lori riley for five minutes to give her opening statement. Are you live? >> doesn't seem to want. >> it's hard to see the light. There you go. Nope. You had we we had you for a second. >> okay. >> there you go.
▶ 0:33:38>> okay. Thank you. Chairman griffith, ranking member degette and members of the subcommittee. Thank you for having me here today. I want to highlight three important points from my written testimony. First, the us has a unique ecosystem that provides patients and workers many benefits. We lead the world in medical discovery in the united states, and as a result, american patients get access to our medicines first before anyone else in the world.
▶ 0:34:01While other countries wait often three years on average to get medicines, patients in the us get them months after fda approval. Over the last ten years, our members invested $850 billion in research and development, supporting our economy and over 5 million jobs in the united states. I would say one of the most underappreciated aspects of our system in the united states is our unique intellectual property system that balances innovation and lower costs.
▶ 0:34:32Just think about the last time you were in a hospital or a doctor's office. It probably looked the same as it did ten years ago, but our industry looks radically different today than it did ten years ago, because we've brought over 500 new medicines to market in that time. But the share of health care spending devoted to prescription drugs remains at 14% today, the same as it was ten years ago and the same as it is projected to be in the next ten years.
▶ 0:34:57And the reason for that is that we have this unique system that balances innovation with lower costs, a first in class medicine that gets approved today for market can expect to face competition from another branded medicine in less than two years. That same medicine will face generic competition on average in 13 years.
▶ 0:35:17In the us today, 90% of all prescriptions written are for generic medicines at an average cost of under $7 per prescription. We use more generic medicines than anywhere else in the world, and they happen to be cheaper here too, as a result of our high use of generic medicines, our medicare and medicaid programs pay 18% less for all medicines relative to our oecd peers.
▶ 0:35:42However, the unique challenges we face in our system are in part because we have a convoluted supply chain that exists in our system that does not lower costs oftentimes for patients, and actually puts hurdles in the way of patients being able to access their medicine. America is the only country in the world where half of every dollar goes to someone other than the company that invented or manufactured the medicine.
▶ 0:36:10Pbms get one out of every $4 of a brand medicine that's sold today. That's $170 billion a year going to a fortune ten company that did not invent the medicine. I commend lawmakers for taking the important first steps that you did in passing pbm reform, but more remains to be done. We need to address the perverse incentives in the system that are caused by vertical integration and consolidation.
▶ 0:36:32Today, just three companies control 80% of all prescriptions, and today they're steadily acquiring pharmacies and providers and paying those entities more than the ones they're not affiliated with. As a result, independent pharmacies and providers are going out of business. It's hard to know the true size of this problem because, candidly, they've invented yet another way to stay out of of sight.
▶ 0:36:56They've added another level of complexity by offshore gpos that are out of sight of employers and taxpayers, and are driving up costs and making it harder for patients to get the medicines they need. The burden of this system, unfortunately, falls squarely on patients. Today, over 1400 medicines are excluded from the top three pbm formularies. A patient in medicare part d who is prescribed a new brand medicine can expect expect to have that medicine's coverage denied half of the time.
▶ 0:37:24In the case of the commercial insured patient, they can expect to have it denied 70% of the time. I would be remiss to to not mention the 340 program, which is the fastest growing federal drug program that exists. Oftentimes, I hear this program being described as a complicated one, but it's really not all that complicated. Half of all hospitals in this country get access to the 340 b program, which entitles them to buy medicines at a significant discount, on average, 57%.
▶ 0:37:54They're then allowed to mark up those medicines as high as 1,000% or more, and charge taxpayers and employers whatever they want for those medicines. This program has grown considerably and is now an $81 billion profit center for pbms, private equity and not for profit hospitals. And I would encourage this committee to look further into this program. We have challenges that need to be solved in our system.
▶ 0:38:20But I would I would ask the committee to do so in a way that doesn't sacrifice medical innovation. Today, china is nipping at our heels. They want to be the next center for medical innovation and progress in our country. Today, phase one trials are done 50% faster and 40% cheaper. In china, they are 30% of global clinical trials, and in the next few years could surpass the us. If we do not do things to ensure that we remain the global leader in medical innovation.
▶ 0:38:46The way to win this race, though, is to ensure that the us is the best place to invest in and manufacture new medicines, and to protect what's working in the system and reform the parts of the system that are adding costs and not adding value to patients, and to reject items like price controls, which will harm innovation and put us further behind. Thank you very much. >> thank the gentlelady. Now recognize Mr. crowley for his time of great.
▶ 0:39:11>> thank you, chairman griffith, ranking member degette, distinguished members of the subcommittee. And thanks for the opportunity to appear on behalf of the biotechnology innovation organization. Bio is our nation's leading advocacy organization for biotechnology companies. We represent more than 1000 biotech companies in america in all 50 states. These are the men and women whose expertise and entrepreneurship are at the heart and soul of creating newer and better medicines.
▶ 0:39:40The modern miracles that extend, enhance and save human life. Developing cutting edge biotechnologies only a generation ago seemed impossible. My family and I know what it was like back then for our family. More than 25 years ago, our two youngest children, megan and patrick, were diagnosed with a rare form of muscular dystrophy known as pompe disease. That's what led me more than a quarter of a century ago to become a biotech entrepreneur.
▶ 0:40:09The medicine that we eventually did develop was born from the genius of american scientists business people, and it was approved here in the united states, first by the us fda. It gave my children and many others a chance at life, groundbreaking medical innovation can save lives, but more and more, we keep getting in our own way with a system that is inefficient, overly complex, and fraught with middlemen.
▶ 0:40:37It's complicated at times also by government policies that harm rather than advance new and better medicines for the american people at the heart of america's innovation ecosystem are our small and mid-sized biotech companies, which together originate more than 70% of all new medicines and which continue to lead the world. But maintaining and advancing america's lead in biotech is not a foregone conclusion.
▶ 0:41:04We must continue to find ways to reform and modernize the usfda, to reduce the complexity and redundancies of our clinical trial system, to embrace actions that will reduce costs and improve both affordability and the health of all americans. And we must remember that the united states already is the most favored nation when it comes to developing groundbreaking new medicines that transform the standard of care for patients.
▶ 0:41:33The codification of mfn policies risks importing socialized medicine and harming much of what makes american biotech innovation exceptional, while failing to address the real drivers of the affordability crisis in our country. The most sensible and patient centered approach to lowering health care costs starts with simplifying our system.
▶ 0:41:56The united states is the only country in the world where 50% of every dollar spent on medicines goes to middlemen, mostly toward the pbms. Wealthy hospital systems regularly mark up the price of medicines. Health insurers limit patient access to medicine. Today, it's as if a physician writes a prescription for their patient, and it's simply a recommendation to an insurance company.
▶ 0:42:23More and more, the insurance company model is to delay and to deny. For too many americans, though, delay and denial equals suffering and death, something must be done. Originating out of this committee more than a decade ago was the legislation that became law, known as the 21st century cures act.
▶ 0:42:45We believe that now is the time for a 21st century access and affordability, making great americans alone. Making great medicines alone is simply not enough. We need to ensure that every american has access to these biotech miracles and that no one, no one, ever goes a day without the medicines they need. The time is now. We are no longer living on the cusp of a golden age of medicine.
▶ 0:43:12We are living in the golden age of medicine. We have now the biotechnologies and the abilities to alleviate an enormous amount of human suffering. Let's together work to simplify the system and allow american biotechnology innovation to deliver medical miracles to the world. Thank you. >> gentleman yields back now recognize Mr. murphy, Mr. john murphy for his five minute opening. >> uh, chairman griffith.
▶ 0:43:41Ranking member degette, members of the subcommittee, thank you for the opportunity to testify today about this critical issue. The association for accessible medicines represents the generic and biosimilar medicines industry that americans rely on every day. Generics and biosimilars are the single largest driver of prescription drug affordability in the united states. In 2024 alone, they generated $467 billion in savings for patients in the health care system.
▶ 0:44:06Those savings flow across medicare, medicaid, private insurance and directly to patients managing chronic and complex conditions. Yet despite that success, the full affordability potential of generics and biosimilars is being suppressed by market distortions and outdated policies. Congress has a real opportunity to unlock even greater savings simply by allowing these markets to function as intended.
▶ 0:44:30For instance, generic medicines, while accounting for almost 90% of prescriptions filled in the united states, unfortunately only represent 12% of total drug spending. This is down from 27% just a decade ago. In fact, generics right now are the only sector of the prescription drug market where total spending has declined over the past decade, even as volume has increased.
▶ 0:44:55Meanwhile, overall drug spending continues to rise because costs are increasingly concentrated in a small number of high priced brand and specialty medicines. In 2023, spending on just two brand medicines, ozempic and humira, exceeded total spending of more than 1000 generic medicines combined in the united states. That imbalance should concern anyone focused on affordability for manufacturers.
▶ 0:45:23This relentless price compression has real consequences. Generic drugs launch at lower prices than ever before and continue falling well below historic norms. At the same time, fixed costs, regulatory burdens and supply chain risks continue to rise. When margins collapse, manufacturers exit, redundancy disappears, and shortages become likely. Biosimilars face an additional challenge.
▶ 0:45:48Despite clear evidence of safety and effectiveness, the united states continues to lag europe and canada in biosimilar uptake and patient access. In too many cases, patients cannot reach lower cost alternatives for many reasons. Branded patent games. Formulary decision, rebate structures, and reimbursement policies that favor high priced medicines over lower priced biosimilars. This is not a failure of science or manufacturing. It is a failure of policy.
▶ 0:46:15There are four areas where congress can act first, with regulatory barriers, fda should be clearly empowered by congress to streamline outdated requirements that delay competition, including eliminating unnecessarily unnecessary clinical studies for biosimilars and aligning U.S. policy with global standards by deeming biosimilars interchangeable upon approval.
▶ 0:46:37Second, patent abuse brand manufacturers increasingly deploy patent thickets to block competition long, long after true innovation has been rewarded. Congress can curb these tactics by strengthening patent review processes, streamlining patent litigation, and protecting legitimate tools like skinny labeling that were built into the congressional legislation establishing these markets years ago. Third, we have misaligned incentives in the medicare, medicaid, and pbm practices.
▶ 0:47:04Today, higher priced drugs often win preferred placement because rebates and fees reward list price, not the lowest net cost to plans or to patients. That hurts patients and taxpayers and keeps lower cost generics and biosimilars off of pharmacy shelves. And fourth, supply chain sustainability and adequate reimbursement, especially in medicare part b and medicaid, is pushing some generics towards chronic shortages without predictable and adequate payment. Manufacturers cannot sustain reliable supply if these issues go unaddressed.
▶ 0:47:36The result will be fewer competitors, more shortages, higher costs, and reduced access for patients. Generic and biosimilar medicines are not a theoretical solution. They are already doing the work. Protecting the future requires deliberate policy choices that restore competition, reward affordability, and keep patients first. Thank you and I look forward to your questions. >> thank you. Gentleman yields back. Now. Recognize Mr. maron for his five minutes. >> good morning. >> chairman griffith.
▶ 0:48:05Ranking member degette, members of the subcommittee. Thank you for having me here today. My name is dave moran. I'm president and ceo of pcma. It's a role I've been in for all of three weeks now. I appreciate you wasting no time having me come in.
▶ 0:48:20I actually am pleased to be here today to have the chance to talk about the critical role pbms play to make health care more affordable, accessible and safe, and the ways our companies are evolving to respond to the market, to patients and to policymakers. I'm also pleased that we have the full drug supply chain here today. Each of us has a job to do, getting people the medications they need to ensure affordability.
▶ 0:48:49Before going any further, though, Mr. chairman, I'd like to acknowledge that as an association, we have failed you. We have not done a good enough job articulating pbms value to you. We have not been the partner you need. We're going to change that.
▶ 0:49:07But I also have to say, in just a few short days, it's become clear to me we have allowed other sectors, including some here today, to misrepresent us, often wildly so, and cloud the facts for policymakers and the public. Some have spent millions and millions of dollars to convince you that the ones who make drugs cheaper pbms are the problem. It's a remarkable achievement, really.
▶ 0:49:37And I tip my cap to my farmer friends, a master class in persuasion that should be taught in lobbyist school. But there's also, pardon me, Mr. chairman, a lot of bunk out there, and it's my job to clear that up. My commitment to you today is that we will work with this committee to answer your questions, be a better partner, and help advance solutions that will make it easier and more affordable for your constituents to get the medications they need. Our companies are already doing so.
▶ 0:50:08They've increased transparency, increased reimbursement for independent pharmacies, created new models that align incentives and maximize savings for employers and for patients. The revolution continues. The pbm industry today is not the one of ten, five or even a couple years ago. Remember, no one has to hire a pbm.
▶ 0:50:29They do so because medicines can be extraordinarily expensive, often breathtakingly so, and they need someone to help hold down those costs. Pbms do a lot. They use their leverage to drive discounts. They administer the drug benefit for patients. They promote patient safety, guarding against potentially harmful drug interactions and supporting drug adherence. This stuff is hard. Here are some facts.
▶ 0:51:01Prescription drugs are more affordable for patients because of the work pbms do. We saved more than $300 billion for the 289 million people we serve last year. Generic drugs are more often filled because of the pbm. Do taxpayers save money because of the work pbms do? Independent. Independent pharmacies are reimbursed at a higher rate than the big chain ones. Employers have transparency because we are accountable to them.
▶ 0:51:29Yes, drug prices are still too high. Without pbms, they would be much, much higher. Congress just approved far reaching legislation that impacts our industry transparency requirements. Full rebate pass through delinking. It won't surprise the committee that we believe these mandates were both unnecessary and potentially harmful to our shared goal of affordability.
▶ 0:51:58But now, we hope to move forward with you to focus on the issues at the core of our affordability challenges, to demonstrate the value of the improvements pbms are already making, and yes, to address the root causes of high drug prices.
▶ 0:52:15Not only do drug companies enjoy extraordinary government protections from competition, they then gamed the system over and over and over again to further prevent competition and block generics from reaching patients. And the massive drug wholesalers and ceos really one and the same. They wield enormous power over the prices of generic drugs and what pharmacies pay for medicines with essentially no oversight.
▶ 0:52:44We hope the committee can broaden its inquiry into these and other parts of the supply chain. Competition has to be at the core of our affordability mission. When there's competition, prices come down and the promise of pharmaceutical innovation can actually be enjoyed by the people who need it. Mr. chairman, thank you for having me. I look forward to working with the committee. >> thank you so much. Now, recognize Mr. davis for his five minute opening. >> chairman. Griffith, ranking member to get and distinguished members of the subcommittee.
▶ 0:53:15>> and if you could pull the mic a little closer to you. >> is that better now? Yes. Okay. Chairman griffith, ranking member to get and distinguished members of the subcommittee. Good morning. My name is chip davis. I am the president and ceo of the healthcare distribution alliance. And on behalf of our members, I want to thank you for the opportunity to share the pharmaceutical distribution sector's perspective in this important hearing.
▶ 0:53:35Distributors are the backbone of the pharmaceutical supply chain, handling approximately 96% of all medicines that move through the supply chain and are dispensed to the united states. Our members are in a very unique position.
▶ 0:53:51They work each day to connect approximately 1400 manufacturers with over 450,000 distinct sites of care delivery, making distributors unique and unlike anyone else in this supply chain.
▶ 0:54:06Our members use their logistics expertise to take physical possession of medicine, to take legal title of medicine, and the liability and the security risks that come with it, to deliver 10.5 million products daily across the united states. They do this all while maintaining the lowest margins within the supply chain.
▶ 0:54:28All of our members, 36 distributors total, are headquartered here in the united states, and all operate here in the united states. And they support more than 300,000 american jobs and contribute almost $32 billion annually to the us economy. Distributors, while arguably not as visible at times as front end manufacturers or frontline providers, are critical to our nation's health care system.
▶ 0:54:54Their operating model creates efficiencies by streamlining the functions to move product from manufacturer to providers, and ultimately, and most importantly, to the patients. As this committee seeks to further examine the prescription drug supply chain, it is important to note that while distributors do not decide what a medicine a physician prescribes, or a pharmacist dispenses, or what a manufacturer charges list price known as whack, or what a patient pays for at the pharmacy counter.
▶ 0:55:23Our members do work diligently every day to ensure that the right medicine at the right dose is available at the point of care, at the right time. Over time, distributors have eliminated the need for manufacturers to build and maintain their own internal capacity for distribution to each of those hundreds of thousands of points of care I referenced on a daily basis.
▶ 0:55:47In fact, the efficiencies that distributors bring to the supply chain and the health care system save approximately $70 billion annually here in the united states. Our members take very seriously their role to maintain a safe, secure and highly regulated pharmaceutical supply chain. This end to end system, again partnering upstream and downstream, is designed with patient protections in mind and to avoid the risk of counterfeit, stolen, or contaminated drugs.
▶ 0:56:16For many years, there has been a policy focus on increasing affordability for patients. Congress has enacted numerous proposals intended to lower patient costs, but to the credit of this committee, there is still more work to be done. As we engage here today, we agree that there is an opportunity for reform and improvements designed to benefit patients and ease provider burdens while simultaneously hopefully not having the unintentional impact of disrupting the efficiency, the security and the reliability of medicines as they move their way through the
▶ 0:56:48Pharmaceutical supply chain to the point of care, and again, most importantly, to the patient. In the end, the healthcare distribution system is designed to deliver products to the providers that rely on them so that they can importantly treat their patients. Hda in the distribution sector. Stand ready to continue to meet this challenge. Recognizing the importance to millions of americans who depend on medicines for their well-being every day. Thank you for your time. I look forward to your questions. >> thank you very much. And now recognize miss boulevard.
▶ 0:57:21>> all right. Is that on? Okay, excellent. Uh, chairman guthrie. Ranking member. Pallone, chairman. Griffith, ranking member. Degette. And distinguished members of the subcommittee, thank you for the opportunity to discuss the important role of traditional healthcare group purchasing organizations in lowering costs in the pharmaceutical supply chain, the healthcare supply chain association, and our member gpos appreciate your focus on improving healthcare affordability, and we look forward to continuing to work with congress and all stakeholders on this important
▶ 0:57:51Issue. Today, I would like to highlight two points. First, the significant cost savings that traditional healthcare gpos deliver for providers and patients, and second, the distinct role that gpos play compared to other entities in the healthcare supply chain. The traditional healthcare gpos that I represent serve as the sourcing and contracting partners to american hospitals, long term care facilities, surgery centers, clinics, and other healthcare providers.
▶ 0:58:17Initially formed in the early 1900s, traditional healthcare gpos are kind of co-op, combining purchasing volume on behalf of providers, driving competition among suppliers, and reducing healthcare costs. Gpos help secure access to medical products for their provider members under fair and affordable terms, driving billions in savings for patients, providers, medicare, medicaid and taxpayers. One analysis found that gpos deliver annual provider savings of 12 to 18% of their total supply purchases.
▶ 0:58:45Gpo services enable providers and physicians to focus on their core mission, providing first class patient care. Gpos contract for a broad range of healthcare products and services, including drugs, but also medical devices, surgical equipment, cybersecurity, hospital food and ppe. Hospitals and other providers also rely on gpos for services well beyond supply, contracting and procurement, including supply chain analytics, emergency preparedness and disaster response, risk management and compliance, among others.
▶ 0:59:14Gpos are particularly important for small and rural providers. These facilities face persistent financial pressures that threaten their ability to stay open. Small and rural providers often lack purchasing power, transactional experience, and personnel. To counter this, gpos help them access affordable prices and favorable terms on essential supplies, on par with their larger healthcare counterparts. Traditional healthcare gpo contracts are completely voluntary for both providers and suppliers.
▶ 0:59:43No provider is required to join a gpo. Providers have flexibility to purchase outside of the gpo contract, and most providers belong to multiple gpos. Similarly, no supplier is required to contract with the gpo, and many choose to sell their products directly to providers. Gpos take a comprehensive approach to sourcing and contracting that not only considers the competitive price offered by suppliers, but also the quality, reliability and stability of supply.
▶ 1:00:10Gpos recognize and reward quality while encouraging a healthy market which generally includes multiple manufacturers. Gpos also work to expand the overall number of manufacturers, including encouraging new suppliers to enter the market. Now, I've spoken to who gpos are, I would now like to take an opportunity to touch on who we are. Not as many in the room have noted traditional healthcare gpos are not pbm owned.
▶ 1:00:35Rebate aggregator gpos, also known as rebate gpos traditional healthcare gpos have a different role, a different business model, and we serve different settings in the healthcare supply chain. Pbm owned rebate gpos work primarily in the retail prescription market, with health insurance companies and plan sponsors, aggregating rebates earned on purchases by pbms themselves.
▶ 1:00:56The ftc recently acknowledged the distinction between traditional healthcare gpos that I represent and pbm rebate aggregators, noting that, quote, pbms refer to these entities as group purchasing organizations, though they do not perform traditional gpo functions. In contrast, the traditional healthcare gpos that I represent are us based and serve american hospitals and providers, not retail pharmacies and pharmacy chains. Thus, we do not participate as part of the medicare part d program.
▶ 1:01:24Traditional healthcare gpos are fully transparent with their provider members, do not take possession of product, and are focused on getting an appropriate and fair net price. Gpos predominantly source medications used in site of care settings and negotiate point of sale price reductions. Any post-sale rebates earned on member purchases are passed through entirely to the providers that earn them. Flexibility for providers and suppliers is integral to the gpo business model, and actual pharmaceutical purchases are made by the providers, not by gpos.
▶ 1:01:53In all these ways, the interest of gpos are entirely aligned with their health care provider members. Thank you again for the opportunity to provide our perspective to the subcommittee. We look forward to working with you to ensure that patients and providers have affordable access to medications, and I'm happy to answer any questions you may have. >> thank you very much. Now, recognize, Mr. gelfand. >> thank you. Are we on great. Chairman griffith, ranking member degette and members of the subcommittee, thank you for the opportunity to testify today.
▶ 1:02:21I'm james gelfand, president and ceo of the erisa industry committee. Eric is the only national association that advocates exclusively on behalf of large employers regarding health, retirement and compensation policies. Our member companies provide coverage through self-insured health benefit plans to tens of millions of workers and families. When an employee fills a prescription, the employer and the patient pay the bill. On average, eric member companies pay 80% of health care costs.
▶ 1:02:50Unfortunately, health care and prescription drug costs continue to rise much faster than the economy grows. Should this trend continue, the costs will simply be unsustainable. Employers are serious about providing affordable access to health care and being good fiduciaries. But when plan sponsors attempt to hold vendors accountable, they're met with opaqueness. They're told to go fly a kite. The data is not theirs to access.
▶ 1:03:14According to a 2025 survey, one third of employers cannot get complete claims data for their own plan. 4 in 10 employers said their vendors simply refused to provide access at all. Employers are burdened by the costs of fraud, waste and abuse, and yet the system often hides or even encourages it. Despite our concerns with high launch prices and patent gamesmanship, I'm here primarily to talk about middlemen.
▶ 1:03:39According to a recent report, 59% of drug expenditures were retained by manufacturers in 2022, and the balance 26% for pbms, 10% for wholesalers, and 5% for pharmacies. The report found that drug margins were 31% for pbms, 6% for wholesalers, and 3% for pharmacies. Wholesaler pricing practices and limited transparency add to higher costs.
▶ 1:04:05Congress recently took action to delink pbm compensation from the list price of drugs, but wholesalers appear to make the majority of their profit from the small percentage of branded drugs that they distribute. Gpos, and I mean pbm owned gpos have diverted billions of rebate dollars from employers by renaming those rebates as fees.
▶ 1:04:28We are thankful that congress has said that this must end, but policymakers must not overlook the pbms and gpos new overseas drug branding entities that add a massive secret spread price to the cost of medications, consultants and brokers. Compensation may also be tied to drug spend or vendor selection. It is imperative that this is disclosed to employers.
▶ 1:04:51Can you imagine a greater conflict of interest than getting paid to steer clients to a specific vendor, or getting paid by that vendor for every prescription that is filled? More transparency is also needed for the drug purchasing collaboratives operated by those very entities. The bottom line is that our current system seems designed to promote self-dealing, double dealing, arbitrage, and maximizing revenue for middlemen and not deliver the most cost effective drugs for patients.
▶ 1:05:21But there are solutions. We deeply appreciate what congress has done on pbm reform and the administration's recent regulatory action, but more can be done. Pbms should be erisa fiduciaries, just like employers are, and pbms should disclose a clear bottom line number to employers during the rfp process. My written testimony includes a series of policy recommendations to advance prescription drug affordability.
▶ 1:05:47It includes some great bipartisan legislation led by members of this committee. We look forward to collaborating with you to advance reforms that bring transparency, fairness and accountability to the prescription drug supply chain. Thank you, and I welcome any questions. >> thank you very much. Now I recognize Mr. hoy. Good morning, chairman griffith, ranking member degette and members of the subcommittee, thank you for conducting this hearing and invitation to testify.
▶ 1:06:13My name is douglas hoy, and I'm the ceo of the national community pharmacists association. Ncpa represents the family owners of nearly 19,000 independent community pharmacists and long term care pharmacies providing vital health care services, more than any industry segment. Community pharmacists are the front line of health care in america. Local pharmacists are medication experts in the most accessible healthcare professionals, according to a jama study.
▶ 1:06:40People visit their pharmacies more than once a month, which is twice as much as they see their primary care provider. And when those communities have need that go beyond the everyday, local pharmacies are there. It's my members who are often the last to close and the first to open before a snowstorm, a hurricane or a wildfire to make sure their patients are taken care of.
▶ 1:07:05Despite the value our members provide, vertically integrated health insurers and their pbm subsidiaries are systematically eradicating community pharmacies. Pharmacy deserts are growing. One out of eight neighborhoods now lack adequate pharmacy access. In 2017, I had the privilege to talk to this committee and shared concerns about large pbms and their impact on patients.
▶ 1:07:31Ncpa is grateful and applauds congress for just last week, passing the first ever federal pbm reform legislation, and ncpa will be working with cms to accelerate its implementation. These are steps in the right direction to lower costs for patients and employers, and provide much needed transparency in the prescription drug supply chain. However, the supply chain has only grown more vertically and horizontally consolidated since 2007. Since 2017.
▶ 1:07:58Since that time, cvs health acquired aetna. Cigna acquired express scripts and unitedhealth's optumrx acquired change healthcare. Meanwhile, in just the last four years, pharmacy closures have led to over 5200 fewer pharmacy options for consumers. Horizontal and vertical consolidation in healthcare has not produced the efficiencies and price reductions americans were promised.
▶ 1:08:26Instead, it's worsened outcomes, raised costs and led to rationing of access to care. It's lessened competition and has directly harmed access to independent pharmacies. The complexity of the pharmacy payment system is dizzying. Independent pharmacies are probably the only small businesses in the whole economy where their biggest competitor owns their data, decided, decides which products they can sell and how much they'll be paid for those services.
▶ 1:08:54Anti-competitive practices such as patient steering, opaque pricing games, formulary manipulation and punitive pharmacy audits are just some of the ways pbms abuse their market power. The big health insurers and pbms are truly the judge, the jury and executioner when it comes to community pharmacies. On that note, nearly nine out of ten of all prescriptions filled in america are for relatively inexpensive generic drugs.
▶ 1:09:23Common generic medications like atorvastatin, metformin, and lisinopril are not what's stressing health care budgets. It's prescriptions for specialty medications that are breaking the bank. But specialty medications have no uniform definition. The pbm insurers define specialty drugs, however, it best suits their profits. And guess who controls where patients can access so-called specialty drugs? Guess who conveniently owns and operates their very own mail order specialty pharmacies?
▶ 1:09:52And guess who steers 70% of all specialty drug dollars through their specialty pharmacies to the tune of over $180 billion. No surprise, cvs-aetna cigna, express scripts unitedhealth optumrx to help foster affordability in our health care system, nppa recommends that congress prioritize ways to halt and dissolve the horizontal and vertical consolidation that has overtaken health care, and
▶ 1:10:22Specifically the prescription drug supply chain, to ban sped spread pricing. Instead, state medicaid managed care programs and required fair and transparent pharmacy reimbursement and prohibit steering to pbm affiliated pharmacies and stop pbms from misclassifying specialty drugs.
▶ 1:10:42In conclusion, just as at&t was busted up 40 years ago, the vertically integrated big health insurers must be dismantled and rebuilt to create competition, not oppress it. Thank you, and I look forward to answering your questions. >> thank the gentleman. Now. Recognize miss sachs for her five minutes. I have the same problems when I'm using those machines.
▶ 1:11:11You'd think the technology subcommittee could get this fixed for us. >> chairman griffith. >> there you go. >> thank you. Wonderful. Chairman griffith, ranking member degette and other distinguished members of the health subcommittee of the house committee on energy and commerce. My name is rachel sachs, and I'm a professor of law at washington university in saint louis, where my research focuses on innovation and access to new pharmaceuticals.
▶ 1:11:40Thank you for the opportunity to testify before you today about the role. Actors from across the entire prescription drug supply chain can play in addressing the drivers of high drug costs, and how this committee might take steps toward solving these problems. Today, too many americans cannot afford important medications, and many patients report that they have not taken medication as prescribed due to its cost. Costs are high not only for patients, but also for payers, both public and private.
▶ 1:12:09Ultimately, these systemic costs are borne by american households. And my testimony today I will first explain how different actors within the prescription drug supply chain contribute to the problem of high drug costs. Key issues include horizontal consolidation, vertical integration, and supply chain opacity. Second, I will identify potential solutions that act on each entity within the supply chain, offering both broader principles and specific suggestions.
▶ 1:12:35Many actors within the prescription drug supply chain play crucial roles in keeping drug prices high. Pharmaceutical manufacturers benefit from a combination of government, provided exclusive rights and legally guaranteed insurance reimbursement. This combination limits competition and ties payers hands, allowing manufacturers to set and maintain high prices over time.
▶ 1:12:59Intermediaries are horizontally consolidated and vertically integrated with other supply chain entities, from insurers to medical practices. This consolidation limits competition and raises barriers to entry for potential competitors. In 2020, for the three leading pbms processed nearly 80% of prescriptions, and all three pbms are vertically integrated, including with large insurers.
▶ 1:13:23Pbms have been criticized for limiting access to lower cost products, marking up specialty generics and steering patients to private label products from which they profit. Three wholesalers control 98% of the market and are also vertically integrated, including with specialty medical practices. Wholesalers whose revenue is often based on a drug's list price, have been criticized for practices including steering patients to higher priced drugs and limiting practices. Choice of wholesalers.
▶ 1:13:49Reported concerns regarding gpos include contracting practices, preventing uptake of new lower cost products. In developing a package of reforms, this committee should keep in mind three common themes. First, for decades, our system has relied on competition to drive down drug prices. This committee should focus on reforms that make competition more effective, particularly for biosimilars.
▶ 1:14:14This committee should support fda's request to eliminate the distinction for interchangeable biosimilars, conduct oversight of pbms use of private label biosimilars, and adopt reimbursement strategies that encourage price competition between biologics and biosimilars.
▶ 1:14:29Second, where the market is already highly concentrated both horizontally and vertically, solutions beyond encouraging competition may be needed, this committee should use oversight to bring transparency to supply chain intermediary business practices and develop data about the impacts consolidation has on companies business practices. Depending on the results of this oversight, the committee may decide to support structural separation or other related bills.
▶ 1:14:55Third, given both the complexity of the supply chain and companies motivations to alter their business practices to avoid enacted legislation, it may not be ideal to tie proposals too closely to particular business practices or market structures. It will be important to consider approaches that address reimbursement prices directly. As one example, this committee should consider strengthening the medicare drug price negotiation program.
▶ 1:15:20In closing, it is important to consider how this committee can support not only affordable access to medications, but also innovation in the next generation of therapies. Recent actions threaten the stability of the nih and fda and undermine future innovation. This committee can and should shore up federal funding for biomedical research at nih and stabilize fda.
▶ 1:15:44Every actor in the supply chain plays a role in keeping prices high, and every actor has a role to play in ensuring affordability for both patients and our health care system. Chairman griffith. Ranking member degette. Members of the subcommittee, I appreciate your focus on this important issue, and I look forward to answering your questions. >> thank you very much. We now begin questioning. I'd ask members not to begin a new question to our witnesses as their five minutes expire, and would encourage members to submit written questions.
▶ 1:16:12For the record, I now recognize myself for five minutes, and I will tell you that I have a lot of written questions. For the record, Mr. maron, starting with you, uh, you indicated affirmatively, or at least it seemed like warm and going, uh, comment about competition that immediately triggered my thoughts, which then were picked up by, uh, Mr. hoy and and miss sachs.
▶ 1:16:33So I ask you if you like competition, do you think the federal trade commission should break up the three largest pbms that control 80% of the market? Thank you. >> thank you. Chairman. >> yes or no? >> the answer is simply no. >> no, look. >> you're not on and. Well, I could hear you. The people back home can't. Okay. Go ahead. Yes. >> ours is, uh, ours is a highly competitive market. Chairman.
▶ 1:17:01There are 73 full service pbms, all different shapes and sizes, different geographic footprints, different service offerings, different focus. >> but you don't deny that 80% is controlled by three companies. >> we see this small players taking business from the big players all the time. And importantly. >> I gotta move on because I got lots of questions to ask and I'm not going to get to all of them. Okay, let me go to the next one. That's that's vexed me for some time. And we started fixing it last week. What we learned previously and what I've heard.
▶ 1:17:31And you said you wanted to debunk myths and and go after the, the bunk. So here you go. This is your chance. What we've heard is, is that there have been situations in the past where because the pbm gets paid and that when we change some of that last week, but because the pbm gets paid on the list price, they've gone to company a with the manufacturer and said we have company a producing this. But there's also company b if company a doesn't raise their price, we're going to stick with company b and we're going to take you off of our formulary.
▶ 1:18:00And then once the company a agrees to that, they can then go do the same thing to company b, causing a price, the list price to go up. And I know there's all kinds of rebates and so forth, but if but if the list price goes up, not everybody's getting that rebate. True or false. Has that happened. >> that would be an outlier case, Mr. griffin. And Mr. chairman I'd like to. >> so it has happened but not all the time. >> you know here's the bottom line is we negotiate lower prices and provide significant value. We saved $333 billion.
▶ 1:18:29>> so how do you explain when when west virginia decides to set up their own pbm, get out of the big the big ones that they save 6% right off the top? >> I think I think more competition is better. >> I think more competition is better too. We'll see what we can work on that. Now let me switch gears and and go in a different direction because time is running fast. We'll start with crowley, but I invite, uh, Mr. gelfand to get into this discussion, too. Mr.
▶ 1:18:56Crowley, you said something that struck a chord with me, and it's not directly related to prescription drugs, but it is because sometimes people are denied their drugs. And you said when there's the policy today of some insurance companies is to deny and delay, which then can cause harm and suffering. So I submit to you, what if we started looking at because I think this is the way it should be? We started looking at insurance companies as fiduciaries. That's where you come back in looking at them as fiduciaries.
▶ 1:19:21And if they intentionally and willfully delay and and refuse to provide treatment or coverage for a particular medication and it causes suffering and harm, have them be liable with certain parameters on return on attorney's fees, but have them be liable for that damage. What do you think of that? >> yeah, Mr. chairman, I believe that anything that advances patient protection and anything that advances medicines to patients is a good idea and should be reviewed. >> all right, Mr.
▶ 1:19:50Gelfand, you said you thought that the pbm should be looked at as fiduciaries, which I don't disagree with you on. Explain. >> so fiduciary has a responsibility both to do the right thing for the patients and to try to control costs. They're still going to be tough choices that are going to have to be made. But you would have more confidence that those choices are based on doing the right thing, as opposed to making the most profit. >> Mr. crowley is an attorney and miss sachs an attorney. Both the ranking member and I are attorneys. We are all fiduciaries for our clients.
▶ 1:20:17We lived with that our entire professional careers, and it didn't harm our clients. It helped our clients and we still made money. I believe the insurance companies and the pbms could still make money, even if they were viewed as a fiduciary. Would you agree with that, Mr. crowley? >> I would. >> he would, yes. All right. Mr. gelfand, specialty drugs have skyrocketed in recent years. Can you explain exactly what a specialty drug is? Because we've talked about it some, but I'm not sure the public back home knows about it. And you have 40s.
▶ 1:20:45>> it's not actually possible to explain what a specialty drug is because it's a made up definition. You look across the big three pbms. There's variants of up to 50% on what they consider to be a specialty drug, or not a specialty drug. The definition that I use is an expensive drug. >> all right, fair enough. With that, I'm going to yield back. Uh, but I will have lots of questions for the record. And I now turn it over to the ranking member, miss degette, for her five minutes. >> thank you, Mr. chairman. Um, so.
▶ 1:21:10So last fall, president trump threatened major drug manufacturers with ruinous tariffs if they didn't accede to his policy demands, which would allegedly reduce the cost of drugs. And now 16 different companies have made secret deals with the white house. Miss riley, I want to ask you for your members what have what promises have been made by the white house to your member companies as part of those agreements? And what will the member companies have to provide in return?
▶ 1:21:40>> I appreciate your question, but as a trade association, we don't have knowledge about individual. >> you don't have knowledge about that because the details of these agreements have not been made public. Is that correct? >> we don't have knowledge because we're a trade association. And for antitrust purposes. >> do your company can your companies provide that information to us? >> you would have to talk to those companies. >> so what? So so, Mr. chairman, I have to ask you, I don't understand what this witness is doing here.
▶ 1:22:06If she can't give me any details about what her members are doing to try to reduce the cost of drugs. So I would hope that we can get the members in here to talk about that. >> is that a rhetorical question? Do you want to answer? >> no, I really I really would like to do it. >> you would like to do it in the future? I don't want you to. >> go ahead. They say they're reducing prices will then they send somebody over here who can't even answer the question. >> unfortunately. >> members. >> unfortunately, the problem is, is that all of these agreements have secrecy deals.
▶ 1:22:37Each one of them is. >> how do we know if they're going to reduce. >> the cost? Not even some of the representatives of the I don't know the answer to that. >> okay. Well, let's figure it out that moving along, moving along. Because you're tough. Mr. crowley, I want to thank you for sharing the story about your family and children and what american science and ingenuity have done for them. And I want to thank you for your shout out about 21st century cures. And to let you know, I'm still continuing to work on cures 2.1.
▶ 1:23:01How is how important is it not just to your member companies, but to families like yours, that the united states fosters a vibrant and science driven research ecosystem? >> it's vitally important when you think about what it takes to make new and better medicines. It's an entire virtuous circle. So it begins most often with great academic research, oftentimes at or funded by the nih. That's part of the foundation of the great science in america.
▶ 1:23:30It's what's brought us to the lead in biotechnology and something we need to advance in. >> the lead in the world. Yes, ma'am. >> now, professor sachs, you study pharm, pharmaceutical innovation and research and development. How many fewer grants did the nih make last year compared to the previous average? >> about 24% fewer grants, 24%. >> do you think that funding fewer grants is likely to lead to fewer treatments and cures down the road?
▶ 1:24:00>> I think it is likely to lead to fewer treatments. Almost 100% of newly approved drugs have nih funding underpinning them at some point. >> now, in this administration, the ranks of political appointees at the nih have greatly expanded. Scientific research. Grants now need to go through political appointees before approval, and the agency directed the termination of thousands of awards on ideological, not scientific, grounds over the last year.
▶ 1:24:28Professor sachs, I want to ask you, how has the research community reacted to these developments? >> we've certainly seen public reporting that scientists are self-censoring, that they're avoiding using certain words or even avoiding areas of research that are seen as politically disfavored. We've also seen reports that other countries are allocating funding to try to recruit away american scientists, promising greater academic freedom and stable funding. >> that's not going to lead to any better treatments. It's just going to lead to silos.
▶ 1:24:58>> I don't think so. >> um, now let's talk about the fda, which some can argue is even worse and even worse shape. The fda has seen a significant brain drain in the last year. Is that correct? >> yes. The drug center lost over 1100 employees, about 19%, and the biologic center lost almost 300 employees, about 20%. One report suggested that about 90% of senior leadership who had been at the agency a year before are no longer there. >> that's stunning. Now, Mr.
▶ 1:25:29Crowley, I want to ask you, is it fair to say that this type of staff turnover harms industry confidence and thus investment in new treatments? >> rob bresnahan congresswoman, we need a modernized and reformed and bold changes at the fda, and the core of that has to be the leadership and the staff at fda. So when you look at the changes that have been made, they've been very difficult and you've seen reductions in force.
▶ 1:25:52And I'm hopeful, confident that we'll start to see more and more people coming to the fda, particularly scientific reviewers, medical reviewers, inspectors. That is the core, the gold standard of fda for our industry in america and around the world. >> thank you. I have more questions. I'll submit it for the record. >> and lady yields back. Now recognize the gentleman from kentucky, the chairman of the full committee. Mr. >> thank you very much. Last week, we just approved almost a half $1 billion increase in nih. Um, so Mr. uh, Mr.
▶ 1:26:20Gelfand, uh, we wanted you here today because in the commercial space, uh, employers were covered 168 million lives. So it's a big player in the commercial space. And and most of the people here will argue insurance, pbms, whatever their job is, to get the best price for their customers, your customers, the employer that you're the one paying the bill. And yet you're here saying that you're not getting a fair deal. So the marketplace should work.
▶ 1:26:48What what is preventing the employers from sitting down with? No, we're paying you too much pbm, uh, insurance company. You're supposed to negotiate with us. The best price we think you're keeping too much money is what your testimony is. What's preventing your employers from making those kind of deals? >> well, for a free. >> market information, access information. That's what I want to hear. >> there has. For a free market to work, there has to be access to information, and there have to be rules of the road to ensure that people are playing fairly.
▶ 1:27:16And those did not exist, at least until last week, perhaps in parts of the prescription drug supply chain. >> so so I mean, what what are there not people not competing? I mean, they are why are they why aren't these groups competing against each other? >> one of the challenges that we've had, and I think the legislation that congress passed last week is meant to address, is that intermediaries who are supposed to be representing the purchaser, representing the patients, are actually getting paid by both sides of the negotiation.
▶ 1:27:41So if you're getting paid by both, imagine if your attorney was also getting paid by the prosecution. Do you think you would end up getting the best plea bargain, or would you probably end up going to jail? >> right? I agree so so, but but I know you got small employers, but you have big employers and they should be able to to affect the marketplace. They're big enough to do that. And yet I think jamie dimon from bank of america said he couldn't even get the information he needed to reform what. And that's a major employer.
▶ 1:28:08And so I guess the question is, uh, why is it this group and this group saying, well, if they're going to say to you for 100, I can say if they're making that much money, why, why isn't that that dynamic happening? >> so eric has multiple member companies that have more than 1 million employees in the us and twice as many covered lives on their health insurance. >> and even those people can't get. >> one of those employers actually went to one of their big three pbms and said, we'd like to try things a different way. Why don't we try?
▶ 1:28:33We'll have a disinterested third party will design the formulary, and we will pay you to service that formulary and run our plan. And the big three pbms said no. And not only will we not do that, but we're confident that the other two won't do it either. So go pound sand. >> there's no competition. >> if those guys can't negotiate. Trust me. The, you know, 1000 employers or employees, 500 employees, they don't have a chance. >> well thank you. Thank you for that. So. So, Mr.
▶ 1:28:59Davis, the big three wholesalers or fortune 15 companies we just talked about industry around 90% of the prescription drugs. So we're talking about the vertical integration and the process. Why why did you you guys argue that that's better for the system to be vertically integrated? >> Mr. chairman, thank you for the question. Um, the, uh, and I actually think it's important to distinguish the degree of diversification within the leading wholesalers.
▶ 1:29:27And to be clear, that's the top three wholesalers within our membership, out of a total of 36 have expanded their business model in certain ways. I know that there was a chart associated with the majority memorandum for this meeting that identified that that came from drug channels. That is a build off of the vertical integration that was previously seen and discussed with respect to insurers and pbms and others. But let me be very, very clear about what wholesalers are doing and diversifying their business.
▶ 1:29:52The majority of our leading members that are doing so on the manufacturing side, on the retail pharmacy side and on the provider side, they are creating working relationships or networks. They do not own medical practices, as has been alleged by some witnesses on this panel, and they are building out these, uh, diversified, diversified business practices, in large part because they are hearing from their pharmacy customers or other health system customers about their inability to access affordable medication
▶ 1:30:22Through other sources. >> thank you. And, Mr. hoy, uh, your organization represents independent pharmacies. We hear a lot from independent pharmacy. I would say they're the people whose names are on the little league uniforms back home. The people that that are really contribute to the community. Uh, how can you just take the. I have 38 seconds. Take what we passed last week. How does that benefit independent pharmacies? Pbm reform? >> there's multiple multiple facets to it.
▶ 1:30:45But in just 30s or less the reasonable and relevant contracts, because we had to get an act of congress for pbms to give us reasonable and relevant contracts in medicare part d, medicare part d is the worst payer. It's a taxpayer funded program. It's putting pharmacies out of business. So we believe that this legislation can give us a shot at just reasonable and relevant contracts. >> so, Mr. mayor, in 10s, you got to respond to that or until he gavels me down. >> I'm sorry I missed the question, congressman. >> okay, I'm out of time.
▶ 1:31:14We'll submit it for the record. I'll yield back. >> gentleman yields back. I now recognize the ranking member of the full committee, Mr. pallone, for his five minutes. >> thank you, Mr. chairman. I want to follow up on the the gentlewoman from colorado, our ranking member on the secret agreements with, uh, with president trump. But I have to say, I'm listening to so many of you talk about, um, you know, how great the state of medicine is. I mean, we've got this quack secretary, rfk, at the top.
▶ 1:31:44And, you know, some of you talked about how people are going to go work for the fda gold standard. Nobody's going to go work for fda as long as he's there in charge. You know, the decisions are being made by quack science. He got the gold standard is gone as far as I'm concerned with this fda because of, uh, robert f kennedy jr. And then some of you talked about how, you know, you want to make investments, which, thank god, over the years you've made so many investments.
▶ 1:32:10But why would you make an investment today with, you know, with a with a drug or any vaccine or anything with this fda? I mean, there's an article today in the new york times about how the fda refuses to review moderna's flu vaccine because doctor prasad says that rejected the company's application. I mean, you could spend billions of dollars developing a drug, and then the fda is going to not even consider it because of the quacks, right?
▶ 1:32:36I mean, I wouldn't be surprised if they, you know, if if rfk said, oh, rather than do moderna vaccine, you know, I'll watch a harry potter film and, you know, use some potion that's created by harry potter after you've invested billions of dollars in, in drugs that are legitimate. I mean, there's no gold standard anymore. The fda is broken. I mean, that's the bottom line. But let me just get back to nancy mace riley. Just yes or no?
▶ 1:33:04Um, do you have copies of the so-called most favored nations agreements that your member companies have entered into with the administration? Just yes or no? Okay, now, how are congress and the american people supposed to understand the benefit of these agreements without knowing what's in them? I mean, am I supposed to just trust and, you know, the claims of drug manufacturers that this is a good deal for the american people based on the press releases they put out?
▶ 1:33:28How could I possibly know what's in this program or whether it benefits anybody or lowers prices? Miss riley briefly. >> well, I think you will have to take their word for it that they. >> it's. >> absurd for me. >> to take their word for it. I mean, that's not what we do. We don't take the word for anybody. We question, we do oversight, we look into it. Uh, is is, uh, Mr. chairman. >> will the gentleman yield? >> well, I just wanted to let me just do this, and then I, I was going to ask Mr.
▶ 1:33:56Chairman guthrie, but let me ask you, because I don't see him. I mean, I just think it's unacceptable. The federal government can cut secret deals with these companies, and and we don't know anything about it. So if would you be willing to work with us to try to, you know, get more information about these companies, Mr. chairman? I mean, that's all I'm asking. >> about the deals, not the companies. Yeah, yeah, I'm happy to work with you, Mr. chairman or Mr.
▶ 1:34:22Ranking member, in order to try to get as much information as we can without, uh, busting up the deals. But at the same time, I think we do need to know more about what's going on. I'm a big believer in transparency, and the more we know, the better job we can do. As congressman. >> I appreciate that. I'll yield to Mr. >> I just wanted to ask have have we actually seen tangible results? Have we seen drug prices go down because of these secret agreements? >> well, I think it's too soon to tell that data wouldn't have been available back.
▶ 1:34:53>> Mr. >> all right. Let me just ask, uh, Mr. I mean, professor sachs, in order to determine whether these agreements save money, don't the public and congress and experts like you need additional details about how these agreements are going to operate? >> there's agreement among the members, and I agree that almost nothing has been made public about these deals.
▶ 1:35:12We don't know basic things like which drugs are included, what are the agreed upon prices, to whom will they be available, and how does the government have any ability to detect and enforce violations of these agreements? Those are all some of the things that you would want to know before determining. >> based on the the limited information we have, do you think these agreements are going to meaningfully lower prices for consumers? >> I don't think we have evidence of that.
▶ 1:35:41If you look at something like trump or about half of the drugs listed on the site are already available as generics, and sometimes the price of the branded drug on trump rx is hundreds of dollars more than the generic price that you could get through goodrx or cost plus drugs. So. So if that's representative of the types of products in this agreement, I'd be nervous about whether there's any benefits for patients. >> well, I thank you, and I yield back. Mr. chairman.
▶ 1:36:11>> yields back. And now recognize the vice chairman of the committee, the gentlelady from tennessee, miss harshbarger. >> thank you, Mr. chairman, and thank the witnesses for being here today. Mr. moran, you'll be happy to know. Bless your heart. I'm not going to ask you one question, because the panel's taken care of that, um, prescription drug affordability remains one of the top concerns. And we have a lot to unpack about how the prescription drug supply chain actually works and where costs are truly being driven.
▶ 1:36:38You know, too many prescription drugs carry high price tags that are simply unaffordable for many americans, especially seniors who live on a fixed income. And, you know, as Mr. he knows when a patient walks up to my pharmacy and they have to decide whether they're going to buy their medication or buy groceries, that's a problem. That's not a statistic. That's real life.
▶ 1:37:00Uh, so we're going to start out by talking about, uh, we've had a lot of conversation around rising health care costs, and affordability tends to focus only on prescription drug prices. Yet when we look at the data, including the us bureau of labor statistics figures, and I have a chart behind me, overall prescription drug price growth between 2015 and 2025 has remained below general inflation and below price increases in other major health care sectors.
▶ 1:37:29So I think it's important that we ground the discussion in facts. So, Mrs. riley, how have pharmaceutical prices actually grown over time and what share do they represent? A total health care spending. And since many parts of the health care system seem to point to finger only at drug prices, can you help explain what the real cost drivers are that have resulted in hospital costs and other sectors of health care skyrocketing? >> absolutely.
▶ 1:37:56Um, as I mentioned in my testimony, we really are the only part of the system where our costs do go down over time, and that is because we face competition from branded products. And under two years after first medicine gets launched, and then within 13 years, we face competition from generic medicines where the price drops 90 to 95% virtually overnight. We remain 14% of the health care dollar as we have for the last ten years.
▶ 1:38:21The next ten years, going forward, we're projected to remain the same, in part because we have a system that both balances cost containment, because we do face competition and very rigorous competition, and allows us to continue to innovate, to bring the next generation of medicines to market. Um, as your chart points out, in my eyes, are are testing me. But, uh, at the top of the list, you know, hospital spending has continued to to go up. It is the largest part of our health care system in terms of spending.
▶ 1:38:51We spend almost half of every dollar, um, in health care on hospitals. I think a lot of that is driven by things like consolidation in the hospital marketplace, which has allowed costs to go up. And here is a place where I do have some sympathy for payers, because in some markets, uh, there is only one hospital group that that owns a certain area and it can be difficult to lower costs. And there are no generic hospitals or generic doctors, there are only generic medicines. And that does serve as a cost containment. >> thank you. Ma'am.
▶ 1:39:20Um, you know, I think the unaffordability of a lot of specific drugs is a real problem. And some of that has to do with how our current patent system works. So, Mr. gelfand, you know, a large employer, health plans see first hand how patent thickets delay competition and keep drug prices high for workers and retirees.
▶ 1:39:41From eric's view, how would requiring drug manufacturers to make consistent disclosures to both the fda and the patent office would, uh, help curb abuse of patient practices and lower costs without undermining legitimate innovation? >> congressman harshbarger, thank you for your leadership on this issue. You know, the fda pto legislation would cut down on litigation time and allow biosimilars to enter the market in a quicker and more competitive fashion.
▶ 1:40:09Um, but right now, inconsistent filings allow branded drugs to dry out litigation and keep biosimilars off the market much longer than congress intended. Um, improving those disclosures would preserve the 20 years of past life that those innovators get, but it would also ensure that the inherent features are not inappropriately sort of staggered in order to make longer patent life.
▶ 1:40:33So as an innovator, under the legislation, you get to choose, you know, it's trade secrets or it's patents, but you can no longer jump back and forth between both in order to maximize how long you got exclusivity. >> okay. Thank you sir. Mr. hui, when a small town pharmacy joins a gpo, it's to lower acquisition costs and keep serving patients. But you testified that pbm owned even offshore gpos collect fees from manufacturers before that money ever reaches the health plan. In plain terms, what's the difference?
▶ 1:41:02And who's really benefiting. >> with the offshore gpos? What the pbms have done is they've been able to they the the they were sniffed out as far as the rebates. People said, hey, these rebates aren't all going back to the employer. And so they got shifty and it's a shell game. So they opened these offshore different kind of gpos, um, to basically launder fees. And so the two now employ or manufacturers and employers are basically extorted for fees.
▶ 1:41:32Some of those fees are rebates. Some of those fees are offshore in switzerland or ireland or who knows where in the world they have their places. >> well, I'll talk to you later. I'm out of time, but I yield back. Mr. chairman. >> I appreciate that. Just to set the record straight, apparently some of the, uh, ira negotiated prices are still somewhat secret as well. So we'll work on trying to get transparency across the board.
▶ 1:41:58And I now recognize the gentlelady, uh, miss dingell for her five minutes. >> thank you, Mr. chairman. And the ranking member, to get to both of you for holding this important hearing on prescription drugs. And as you can tell, members on all sides are in agreement that we've got a real problem in the wealthiest nation on the earth. No one should have to choose between buying groceries and affording the medications they need to survive.
▶ 1:42:23As my colleague just talked about, and while I'm not a pharmacist, I spend a lot of time in my community, uh, pharmacies, talking to people and talking to the pharmacist, talking to the people that are getting their prescriptions. And drug prices are continuing to increase, along with the health care premiums and out-of-pocket costs. It undermines the ability of our healthcare system to ensure patients can get the drugs that they need.
▶ 1:42:47I know there's no one size fits all solution, and we got to work across, uh, all the different portions of this, but in particular, pharmacy benefit managers are a major player in the supply chain that have been allowed to operate unchecked for far too long. We did some common sense reforms to the pbm industry in the recently passed fiscal year 2026, uh, labor, health and human services and education funding bill.
▶ 1:43:14But there's a lot more work that needs to be done. We've got to continue to fight to strengthen pbm accountability and ensure that americans can get their medications closer to home and at the pharmacies that they trust. This means meaningful reforms, not half baked plans like those that we've heard about this week that claim to lower health care costs, with few substantive details that explain how they will tangibly benefit patients.
▶ 1:43:42So, for example, why it's directing people to more expensive brand name drugs that won't count for their out-of-pocket costs or their deductibles. That's not a meaningful solution to lower drug costs. We need to be focusing on improving americans health coverage instead of giving gimmicks to manufacturers. So, Mr. hui, I'm going to start with you.
▶ 1:44:05To the extent it's true for some medicines, why is it cheaper to buy them without insurance, as trump is claiming to? And why do pbms tell pharmacies that they cannot give that option or they will be dropped? And it's true. >> yes. So pbms, when they process the prescriptions or when they the the prescription goes through them, they put spread pricing on it.
▶ 1:44:30So spread pricing is the difference between what they charge the employer and what they pay the pharmacy. So if they can route that prescription through the pbm, they inflate the cost to the consumer. So the consumer pays more, the pharmacy gets less, the employer pays more, and the pbm makes more money. So that's one reason why using your insurance can actually be more expensive than paying cash.
▶ 1:44:53Um, as far as your second question related to pbms, um, they do not want pharmacists talking to patients about lower costs because they want to route those prescriptions through them where they make more money. Uh, there is a bill was signed to eliminate gag clauses, which was very has been very helpful. But still, pbms use punitive audits and other techniques to threaten pharmacies and to kick them out of the network if they do things that pbms don't like.
▶ 1:45:21So just talking about transparency. >> look, I'm sitting in those pharmacies and they're telling me the truth, and I can give you ten pills right now that that individual, a patient can save a significant amount of money, not $0.50, but a significant amount of money. And it's wrong and the patient is the one getting screwed. >> you're right, congresswoman. >> how can congress meaningfully address the perverse incentives for pbms to steer patients toward more expensive drugs? >> I'm sorry, I didn't.
▶ 1:45:52>> how can congress, what can we do so that there are incentives for pbms to also steer patients towards more expensive drugs? What do we do to cut that off? >> one of the things that can be done is for pharmacies and patients to have access to the net price. So what happens? There's a list price, which is the high price and then a net price. And pbms frankly extort or draw fees from. >> a good word. >> yes ma'am. They do.
▶ 1:46:17And getting that net price, allowing that net price, allowing pharmacies to buy at that net price and to be able to sell it to consumers at that net price is one, um, change policy change that would be would help lower drug costs for, for our patients. >> unfortunately, I'm out of time, so I'll be submitting a lot more questions for the record. Thank you Mr. chair. >> yields gentlelady yields back. Now recognize the gentleman from florida, Mr. bilirakis? >> thank you, Mr. chairman. I appreciate it. Uh, Mr.
▶ 1:46:46Crowley, uh, your personal story on rare disease is an incredibly powerful. As you're well aware, our committee has prioritized policies to help create meaningful drug development, like the therapies that impacted your family.
▶ 1:47:05Recognizing the challenges to produce medicines for small patient populations, congress created, uh, new incentives, uh, in the fda process to spur orphan drug development. But reimbursement uncertainty still makes this environment, uh, particularly difficult, particularly in cell and gene therapy.
▶ 1:47:28How can we continue to encourage investments in these potentially curative therapies without breaking the wallets of the rest of the patient population? >> congressman, congressman, thank you for your question. And you highlight a very important issue. There are more than 10,000 known rare diseases that collectively affect about 10% of americans, most of them children, often fatal diseases. Only several hundred of them have cures.
▶ 1:47:58So we need to focus on two areas. One is innovation. How do we bring more science, more technology for more biotech companies? Allow our largest biotech and pharmaceutical companies to work in these rare diseases. So we need to reduce the complexity of our clinical trial system. We need to modernize the fda so that they look again at each of these rare diseases and each proposed technology individually and imply more sophisticated regulatory tools and technologies that they have.
▶ 1:48:27If we do that, you'll see more capital flowing into rare diseases. We need to reduce the cost of what it takes. You know, when I developed rare disease medicines for very small patient populations, we would we invested almost $1 billion in each rare disease, important medicines for my children and others, but only thousands of children. That's too much. That's not sustainable.
▶ 1:48:49So what can we do to bring down the costs of development, bring certainty and predictability to the regulatory process, enhance again the regulatory tools and technologies and on the other side, ensure access to these medicines which you highlight. Congressman, the cell and gene therapy area that has the potential to finally cure so many of these rare diseases. And what we need to do is make sure we're not only simply making these medicines, but everybody has access to them.
▶ 1:49:18So novel payment methods, looking at the effectiveness and affordability of these medicines will be vital to ensure that when there is a cure, an effective treatment, that everybody has access. So I would encourage this committee and this congress to continue to work toward that goal. >> you have my commitment. Thank you. Uh, while promoting the development of innovative therapies is key, we also must ensure that patients can have access and affordability. So very important, Mr. murphy.
▶ 1:49:46Uh, I understand that current pbm incentives could lead to pbms prioritizing drugs with higher rebates and fees, uh, tied to higher list prices, rather than prioritizing the lowest total cost to the patient.
▶ 1:50:04So the question is, can you elaborate further on how these incentives affect formulary coverage for low cost generics and biosimilars, as well as how this ultimately impacts patient access and cost sharing? Please. This is for Mr. murphy. Again. >> thank you for the question. Um, so it's it's true.
▶ 1:50:27We see a significant drop off in formulary coverage of generic medicines as a result of a number of practices. You know, I would note note that in 2025, the medicare part d formularies, uh, 57% of coverage generic drugs were not even on generic formulary tiers. Uh, and that was just this current formulary year.
▶ 1:50:49So, you know, in answer to your question, I think one of the most important things we would advocate for is that we start to really recognize that, um, as that time limited period of monopoly pricing comes to an end and generic generic products are approved by the fda, they'd be prioritized for coverage because of their cost savings, and then patients actually pay from an out of cost standpoint on the actual net cost of those generic medicines that are offered to them, because ultimately, at the plan level or the employer level, we talk a lot about
▶ 1:51:19Discounts and rebates, but ultimately what we want to get to is the point where the patient is actually paying less money when he or she picks up the prescription at the pharmacy counter. >> exactly. Thank you. Uh, yeah. I guess better yield back. Mr. chairman, I don't have much time left. I'll submit. Thank you. >> thank you. Gentlemen. Yields back, and now I yield, um, to my friend, representative aragon from california for her five minutes. >> uh, thank you, madam chairwoman. >> um, Mr. Mr.
▶ 1:51:47Marin, I'm going to just ask you a very easy question. I didn't hear an answer. Uh, the first time it was asked, um, the three largest pbms, which are owned by cvs health, cigna and unitedhealth group, controlled nearly 80% of the pbm market. Correct? >> that's correct. >> okay. >> that's correct.
▶ 1:52:12>> all right, then, when that that's why I think it's hard to believe when you say, um, when there's competition, prices come down. Because if there's three that own 80%, um, then there's not a lot of competition. I know what you're saying. You're saying there's others and there's a lot of little, little others. That seems like, um. >> congresswoman, it's. >> more than hard to. It makes it hard to believe a statement, you say, because you got to dig in further. Um, it's not a good it's not a good start.
▶ 1:52:41My, I also understand from the federal trade commission that, um, the top three pbms process, 79%, approximately 6.6 billion prescriptions dispensed by the us pharmacies in 2023, while the top six processed more than 90%. Um, we've heard Mr. gelfand, um, mention pbm margins. Um, are 31%. Is that right, Mr. gelfand? Yeah. So tell me, what does that do for for prices for consumers.
▶ 1:53:12>> so for every supply chain entity that adds fees and margins, that just means higher price for consumers. In the end of the day, consumers are paying about 25% of the cost, and the employers are paying the other 75%. That 75% comes out of your wages, it comes out of your take home pay. So you're paying all of it in one way or another, and that adds up big time. >> thank you.
▶ 1:53:31Um, I'm looking at a report that shows the three biggest pharmacy benefit managers made more than $7.3 billion over five years, marking up the prices of specialty generic drugs for cancer, hiv and other conditions. Mr.
▶ 1:53:46Maron, you know, when people are sick with cancer, when people are suffering and their families see a loved one and they're trying to get a specialty drug, that's hard enough to then have to worry about the price of them getting their drug. Is serious business. I mean, I think about my own sister and how hard it was for her to get specialty drugs. And then you look at the price tag.
▶ 1:54:15This is why there's a focus on pbms. This is why there's a focus on your industry. You come in here and you say, oh, there's dismissed facts. There's misconceptions. You are part of the reason why people suffer on white's making it harder for people with cancer and hiv to get their drugs. >> congresswoman. >> that is there is no question pending for you to say anything, sir. Um, Mr.
▶ 1:54:43Hoey, I want to thank you for the work that pharmacists do. Um, when I think about my father, who died when I was 23, it was always going into a local pharmacy pharmacist and who knew our family by name, who dispensed a drug temporarily if the insurance company hadn't filled it. And so I want to thank you for the work. You have also mentioned, um, some of the the problems and some of the concerns.
▶ 1:55:11Um, one of them you talked about was horizontal and vertical, um, consolidation. Most people watching today don't know what that means. Um, I have a chart. And, um, if you can see it from there, um, this is a chart. If we can pan out here where those at the top own both the insurance company, the pbm, the pharmacy and the provider.
▶ 1:55:37Um, so can you explain to the american public, um, what this means for them in pricing? >> yes. And, congresswoman, I'm sorry for your loss. And our members are are that is the type of work our members do is is have those relationships with patients.
▶ 1:55:54To your question about the vertical vertical integration and consolidation, what it means to patients is that that patient, uh, frankly, is controlled their healthcare journey from the time they get, uh, they see the doctor get a prescription, get that prescription filled, maybe have to go to, um, decide which health system, which hospital. There are three entities that control that journey because they're all the same.
▶ 1:56:20So for example cvs, aetna, cvs, people think about the brick and mortar pharmacies. That's probably the smallest part of their business. They own aetna which is the health insurer. And they own caremark which is the pbm. So if a patient is prescribed a prescription, the doctor or the pharmacist is sometimes overruled by the pbm because the pbm makes more money off of a different drug. So the pbms are actually practicing medicine. That's one stage.
▶ 1:56:49Then the patient, uh, is trying to get their drug and the, um, the pbm can either block it or require a prior authorization, or they can say patient, you cannot go to that pharmacy. You can only go to my specialty pharmacy. So every step of the way through the vertical integration, the patient choices are compromised. And when those patient choices are compromised there's less competition and higher prices. >> thank you. I yield back. >> the gentlelady yields back.
▶ 1:57:17And I'll now recognize my friend and other pharmacists in congress, representative buddy carter from georgia, the oldest pharmacist. >> in congress, by the way. >> thank you all for being here. >> uh, Mr. >> moore, in your organization, pcma often claims, with caveats, of course, that your industry saves consumers and patients billions of dollars. As you heard, I'm a pharmacist, so I know that that's not true. I know what's going on.
▶ 1:57:42In fact, pcma says that pbms make healthcare more affordable and accessible for all americans. I would also refute that. Yet the federal trade commission has found that the three pbms, the big three pbms are charging enormous markups on dozens of life saving drugs and reimbursing their affiliated pharmacies at a higher rate than they paid their unaffiliated pharmacies. I know because I had an unaffiliated pharmacy, I had three of them, and I know what the reimbursement was.
▶ 1:58:12In 2022, for example, a large share of the drugs marked up by more than 1,000%, 1,000% were taken with patients with cancer, with pulmonary disease, with multiple sclerosis, a number of different things that they had to have these medications for. And and in fact, the pulmonary hypertension drug tadalafil pharmacies purchased the drug at an average, um, the pharmacies purchased a drug at an average of about $27 in 2022.
▶ 1:58:45But the three big pbms marked up the drug by $2,079. They were paying their affiliated pharmacies $2,106 on average, for a 30 day supply of the medication. That's an average markup of over 77,000 77,000%. In light of these findings, Mr. moreland, can you still stand by pcma claim that pbms made health care more affordable and accessible?
▶ 1:59:15>> yes, congressman, I appreciate your passion on these issues and I look forward to working with you as well. Yes, we saved 333 billion. >> how can you explain when you marked it up 77,000%? >> I'd have to look at that case specifically, congressman. But let me tell you, I understand the concern about independent pharmacies across the country. They're critically important to the work we do. We can't do it without them. I think there is some good news from pbms writ large, reimbursing them at higher rates.
▶ 1:59:43For example, moving a cost plus contracts reimbursing for the clinical services that they provide. But there's still a lot more work to do, and I look forward to doing that with you. >> well, good. I hope that you're sincere in that. And I have no reason to believe that you're not, and I I'm going to hold you to it, you know that. Let me ask you something. The federal trade commission recently reached a settlement with express scripts to lower drug costs and improve transparency. Chairman ferguson, who I think personally is doing a great job.
▶ 2:00:09The settlement requires express scripts to make fundamental changes to its business practices that increase transparency and are projected to reduce patients out-of-pocket costs for drugs like insulin by up to $7 billion over ten years. This is important, Mr. mayor, as the national trade association representing pbms, will pcma commit to adopting the key terms of that settlement as a standard operating practices across all of its member companies. >> thank you. Congressman. Uh, look, I mean, there's a lot of good stuff in there.
▶ 2:00:38There's also a lot of good stuff that the industry was already moving toward. Right. Um, moving to cost plus contracts, for example, higher reimbursement rates for independent pharmacies, $0 drug lists for patients with no cost sharing, enhanced transparency, passing through all rebates. >> understood. >> the legislation that you passed also just two weeks ago includes tremendous transparency requirements. >> well thank you. We're very proud of that. I'm very proud of it personally. So I think let me ask you something. What about gpos? They're based in foreign countries.
▶ 2:01:08Are you going to try to bring them back to america? >> those are strategic business decisions that I would want to ask the individual companies to answer. But overall, look, you know, we use our purchasing. >> wouldn't you encourage him to come back to america, though? I mean, that's the focus of of this administration is to try to get more, more manufacturing and more business back here in america. >> I don't disagree. >> good.
▶ 2:01:32So I hope that we can count on you to, to to help us with that and, and count, count on your companies to help us with that. >> and I think we, we, you know, we we can we can help get you the facts around those situations. >> okay. Alright, Mr. hooey, thank you for being here, I appreciate it. We both know that pbm reform has been a long time coming, and the aforementioned wins that we had last week in the consolidated appropriations act were significant. Perhaps some of the most significant reforms in pbms that we've had ever.
▶ 2:01:58And I'm very proud and very thankful to the members of nepa for their help and their advocacy on this. Because after all, folks, we all want the same thing. We want affordable, accessible, quality health care. Pharmacists are the most accessible healthcare professionals in america. 90% of all pharmacists of all citizens in america live within five miles of a pharmacy. They are the most accessible healthcare professionals.
▶ 2:02:28And as they begin to close, we impact accessibility to healthcare. I hope, Mr. mayor, that you will keep that in mind and that your organization will keep that in mind. >> you have my pleasure. Thank you. >> thank you. And I yield back. >> gentleman yields back. Now recognize the gentlelady from washington, doctor schrier. >> thank you, Mr. chairman. And thank you to our witnesses.
▶ 2:02:52Uh, two things can be true at the same time, innovation is important to the american economy, and every american should be able to afford their medications. Uh, as a pediatrician, I just have to start with epipens. They've been around for decades. People with severe allergies carry them around in case they have a life threatening allergic reaction. Epipens can cost over $600 out of pocket.
▶ 2:03:17And I just want to say that that is outrageous, especially for kids who have to have one at home when at school every single year. And I want to call on viatris and all manufacturers of epipens to drop the price, or we will take congressional action. Uh, turning to vaccines, also, a pediatrician and this administration's war specifically on mrna vaccines. Just yesterday, as Mr.
▶ 2:03:41Pallone said, we learned that the fda refused to even review moderna's breakthrough mrna flu vaccine, even though the fda had previously helped guide the company's study design. Um, many of you have talked about the importance of american innovation. Um, Mr. crowley, moderna is a member of bio.
▶ 2:04:05What impact does this inexplicable decision that radically deviates from fda practice have on american innovation? >> we share your belief in the importance of vaccines. How in the world are measles coming back? We have an entire task force at bio advancing the interest of vaccines for the american people, ultimately for the entire world.
▶ 2:04:28And while I can't comment on any specific company or decision, I think we're in agreement, though very broadly, we are concerned about shifting standards. We need consistency. We need predictability from our regulatory bodies, and we need acceptance of vaccines. You know, perhaps no biotechnology has done more to change and improve human health globally than vaccines. >> thank you for acknowledging that. Um, yes. So just to emphasize that, double click on it.
▶ 2:04:57If you have an unpredictable fda and there's no guarantee your medicine will even be reviewed. Uh, depends on the whim of whoever's in charge. Uh, you may not decide to innovate. Um, next, I want to turn to the vaccine injury compensation program. Secretary kennedy continues to dismantle vaccine confidence and infrastructure in this country.
▶ 2:05:21He spent decades, uh, elevating fringe conspiracy theories by continuing, as just one example, to falsely claim that vaccines cause autism and all. Note that his own nih health director, a physician, said last week that he has, quote, not seen a study that suggests any single vaccine causes autism. Um, now rfk jr is threatening the national vaccine injury compensation program. This is a really important program.
▶ 2:05:48It protects patients and manufacturers, patients with compelling evidence of serious vaccine injury, receive financial compensation. And I want to be really clear, this is extraordinarily rare, but it can happen, uh, impacted patients. They deserve an accessible, affordable pathway to get payment. And the data show that patients are more likely to succeed in getting compensation through visp than they would in a lawsuit.
▶ 2:06:16Um, and I just also have to mention, secretary kennedy has made nearly $2.5 million recruiting people to sue vaccine manufacturers, and if visp goes away, he benefits from lawsuits. Uh, Mr. crowley and miss riley, both of you, if you have time, why is it important to have a strong, uh, visp? And are you concerned by the trump administration's threats to add autism to visp?
▶ 2:06:46>> the visp program has worked, as you indicate, congresswoman, for decades, and it compensates people in those rare instances who are harmed, anything that threatens that system we're very concerned about. We too, have seen no study that shows that autism is linked to any vaccine, and any change needs to be based on strong science. Uh, that's well vetted. And and that's a great concern of ours. >> miss riley. >> I would echo what Mr.
▶ 2:07:12Crowley said and note as well, as you mentioned, the reason the visp was put in place in the first place was bipartisan, and it was done because we saw vaccine manufacturers fleeing the market. And the last thing we want in this day and age is to have vaccine manufacturers leaving the market. It is vital, and I would agree also with what john said. I think the one thing that has been studied significantly is any connection between vaccines and autism, and there is no study that suggests that vaccines cause autism.
▶ 2:07:40As a mom of four, I can empathize with parents who are searching for what may be causing their child's autism, but I can affirmatively say it is not due to vaccines. >> thank you for your answers. Just to emphasize, we need visp. It protects patients. If it goes away, rfk jr will profit heavily and patients will be harmed and we will lose innovation. Thank you. I yield back. >> gentlelady yields back. Now recognize the gentleman from pennsylvania. Doctor joyce. Thank you for yielding. Mr. chairman.
▶ 2:08:09One of the worst examples that we have seen showing the incentives in our drug supply chain are broken and don't respond to market forces. Was the launch of the humira biosimilars. It was particularly alarming to me to hear from manufacturers that despite the dramatic decrease in list price, they were having problems getting any sort of traction with formulary placement because pbms preferred the higher cost branded medication because it
▶ 2:08:39Meant a bigger rebate. We even saw one company in particular launch two products, one at higher cost and one at a lower cost. And within the same company, they saw that the higher cost drug received more volume. Honestly, it seems insane that given the pbm mission of lowering drug costs, your company's Mr. maron would seemingly prefer to keep prices high.
▶ 2:09:04Now, to be fair here, I've heard from employers and the broker consultant companies that they work with to design their pbm rfps that they often build in rebate guarantees as part of their pharmaceutical contracts.
▶ 2:09:18I am concerned that these rebate guarantees, especially considering the aforementioned humira example, shift drug pricing behavior and incentivize manufacturers to launch at higher list prices, and pbms to prefer that higher list price, higher rebate drugs, even in situations when lower list, lower rebate alternatives might be available? Mr. maron, can you explain what a rebate guarantee is?
▶ 2:09:50>> I think it's important. Congressman. Doctor, something's not working. Hello? Yeah. >> there we go. So pbms obviously use rebates to help drive down the cost of drugs. Rebates now be must be passed through fully to the employer.
▶ 2:10:12>> do you feel that the guarantees that the rebates have play a role in pbms placing preferential treatment of high list prices over lower list price drugs? >> to the extent that occurs, it's because we were able to negotiate a lower price. >> does that generate a rebate then? >> well, the the issue is what employers choose as the design of their program. >> but a higher list price would generate a higher rebate. Correct? Of course. Mr.
▶ 2:10:39Gelfand, do your member companies include rebate guarantees and as a part of their pbm rfp process? And do you feel that these guarantees lead to overall lower costs within the system? >> so prior to the legislation that congress recently passed, a rebate guarantee was one of the few metrics that an employer could judge apples to apples between the different pbms that they would be choosing for, for, um, to to contract with.
▶ 2:11:09But as you, I think are pointing out, choosing the highest rebate guarantee is kind of like going to one of these stores where everything's always 60 or 70% off. You have no context, so you don't actually know if the net price is a good price. We think that that's going to go away thanks to the legislation. >> without that legislation, that impact was being felt by businesses, by patients and by america at large. Mr.
▶ 2:11:31Marin, would you say that the report that I will mention, which addresses affordability and insurers and pbms have an incentive to manufacture and own generic and biosimilar medicines? Do you feel that that incentivizes companies to form their own companies to manufacture their own drugs? >> no, congressman, I think look, I think pbms in general believe that biosimilar competition drives down costs.
▶ 2:12:01That's what we do. The more biosimilars. >> 2025 analysis performed by the four six brooklyn found that on a product level basis, cigna's pharmaceuticals offered products that were 30 times 33 times higher and more expensive than the average wholesale price, based on the cheapest average wholesale price. Do you think this report is accurate? >> I'm not familiar with the report. >> doctor.
▶ 2:12:25Allow me to enter into the record how pbms can use private label drug products from july's four six brooklyn publication. Turning to another objection, vertical integration across our entire health care system has become a major concern for this committee. Many members have mentioned this today. Mr. gelfand, major wholesalers, have made acquisitions of oncology and specialty physician practices over the recent decade and are operating specialty group at higher costs, oncology and other specialty drugs.
▶ 2:12:55How do these acquisitions potentially increase the demand for high cost drugs? >> I know that we're always told that vertical integration is going to lead to efficiencies, but it never actually seems to work out that way. >> in this case, does that vertical integration lead to efficiency? >> we believe that it leads. >> does that lead to higher costs? >> we believe it leads to higher. >> does that impact the patient. >> that means the patient will be paying a higher out of pocket, have higher deductible higher coinsurance and higher out of pocket max. >> thank you, Mr. chairman.
▶ 2:13:24My time has expired. I would submit additional questions for review. Thank you all for being here. >> gentleman yields back now recognize gentlelady from massachusetts, Mr. trahan. >> thank you. Thank you. The chair and the witnesses for being here today. Access to affordable, innovative and life saving therapies helps patients manage acute and chronic disease and live healthier, fuller lives. And when patients can access the medicines that they need, it can also lower long term healthcare costs by preventing avoidable complications and hospitalizations.
▶ 2:13:54But we also need to be honest about what americans are experiencing right now. Accessing and affording the care that they need is one of the defining issues for families across the country. The anxiety that high prices create is real. It's not a hoax. Prescription drug costs are a major part of that burden for so many americans. And affordability is not just required at the pharmacy counter.
▶ 2:14:16It's also about whether we're building a system that can deliver the next generation of cures in a way that is competitive, resilient and accessible to patients. Other countries, including china, are moving aggressively to attract clinical trials and accelerate biomedical innovation. At the same time, we're seeing real uncertainty and cuts in federal health research dollars here at home, which risks weakening the very ecosystem that has made the united states the global leader in biomedical breakthroughs.
▶ 2:14:45If america falls behind, we risk weaker supply chains, less domestic capacity, higher prices, and a reliance on other countries for our life saving medicines and treatments. That's why today's hearing really matters. If we want patients to access the medicines that they need, we have to understand why prices are high, where the dollars go and how the system can work better for the people it's supposed to serve.
▶ 2:15:11China has a clear strategy to lead the future of medicine development, and their role in the global clinical trial pipeline has grown dramatically over the last decade. Today, china based companies account for a significant share of global trial starts and are running phase one trials faster and at a lower cost than in the us.
▶ 2:15:30Miss riley, in light of this global competition, what concrete steps should congress take to strengthen america's clinical trial and biomedical innovation ecosystem, including ensuring stable federal research investments so that we remain the world leader in developing new cures without compromising safety or patient protections? Thank you. >> thank you for the. >> question. And I could not agree more.
▶ 2:15:55The importance of having the us maintain its lead in biomedical innovation and research. I think there are a number of steps that we should be taking to ensure that we remain that leader. China had a multi-decade plan to overtake the us. They have streamlined regulations. They have added to their their workforce. They are graduating 100,000 more stem grads in the us on on a regular basis. They're doing everything they can to overtake us and to all the points you made.
▶ 2:16:24They're having success in doing that. We still remain the global leader. And to to keep that in check, we do need to do some of the things that Mr. kelly mentioned before in terms of improving the process at the fda. We need to make our clinical trials more efficient. We need to lean on technology like ai. We need to centralize irbs, other things that would bring costs down and increase speed in the process. At the same time, we need to keep what does work in our system. Strong intellectual property protection is important.
▶ 2:16:53Our companies make big bets. They spend over $2 billion to bring a medicine to market. So having certainty in intellectual property is key, but also having a predictable, transparent regulatory system is crucial.
▶ 2:17:06And as you mentioned, the ecosystem that exists in the united states, that cooperative research between academia, government and industry has been part of the reason why the us overtook europe 40 years ago in terms of bringing new medicines to market, and we cannot let that go away. >> thank you. Um, appreciate that answer. Thoughtful. As we think about innovation and competition, I think we also have to think about preparedness.
▶ 2:17:30This committee has often been able to work together on health preparedness, and I hope we can continue that tradition as we look ahead to reauthorizing important preparedness programs, because at the end of the day, being ready for the next public health emergency is something that we all share a responsibility for. We have seen in recent years that having flexible platforms already in place, whether for vaccines, diagnostics or therapeutics, can make a difference between responding in months instead of years. Mr.
▶ 2:17:58Crowley, how important is it that we invest in platform technologies and strong health data infrastructure that can help accelerate clinical trials, support faster development of new treatments, and strengthen our ability to respond quickly when new threats emerge. >> congresswoman. >> thank you, congresswoman. Thank you for your leadership on this issue. Preparedness is what it's all about when it comes to the next natural covid that we may see the flu, whatever it may be, or a bad actor in bioterrorism.
▶ 2:18:25And as a former intelligence officer, I have a uniquely vivid perspective of the threats that we face and when we use platform technologies. And I'll give you the example of the mrna technologies and what we were able to do with that technology that didn't just magically appear when covid appeared.
▶ 2:18:42It represented decades of academic work, work in our smallest companies, our biggest companies, to take that platform, technology to utilize the entire ecosystem to come together to tackle that problem was essential for public health and essential for our national security. So platform technologies are vitally important. >> thank you. Thank you, Mr. chair, I yield back. >> gentleman yields back. I recognize the gentleman from ohio, Mr. balderson, for his five minutes. And then we'll do at least one more after that. So we'll get Mr.
▶ 2:19:10Vessey before we break for the votes. Mr. balderson, you have five minutes. >> thank you, Mr. chairman. And thank you all for being here today. My first question is going to go to Mr. crowley. Thank you for your story this morning that you shared your testimony highlights the importance of reducing unnecessary regulatory barriers at the fda as a means of lowering cost. A significant driver of these costs is the clinical trial process itself.
▶ 2:19:36How can the fda accelerate and modernize the trials to expedite early stage drug development, especially as competitors like china streamline their regulatory pathways and seek to undercut U.S. leadership in biotechnology? >> congressman, I. >> think. >> congressman, I think we could look to what's directly under the fda control.
▶ 2:19:58So, for instance, the requirements to get into clinical studies, they become overly bureaucratic, arcane, for example, what it takes the the animal preclinical testing, I think we need to step back and even begin with the question of why do we test our medicines in animals first here we did see, I think, important improvements, new guidance from the fda last year that reduced the requirement without at all threatening patient safety.
▶ 2:20:23So that's what the fda one example of what they can do to shorten the timeline, reduce the cost and complexity of getting into the clinic, some another area that's I think the fda can influence, but doesn't directly control is the clinical trials. When we developed medicines for rare disease in my biotechnology company, I knew exactly what we needed to do to get into clinical studies. It wasn't easy, but we knew what we needed to do. Once the fda cleared us into the clinic.
▶ 2:20:49It was another year of working with academic centers, hospitals, going through their institutional review boards, and most of them have their own their ethics committees, separate contracting, separate, informed consent. That's part of the system that we could make much more efficient. So, for instance, if hospitals and major academic centers would use centralized irbs, could significantly cut the time and cost of getting into clinical studies. >> all right. Thank you very much. Well done. Um, my next question is for Mr. hoy.
▶ 2:21:18Um, I represent a very rural district, and not only is access to healthcare a problem, but access to pharmacy services is growing more challenging as well. 2025 ftc report. I think it's been talked about here this morning, examined pbm pharmacy contracting practices and found that internal pbm documents suggested rural pharmacies are often forced to accept, take it or leave it reimbursement rates.
▶ 2:21:46Could you elaborate on the specific challenges rural pharmacies face when negotiating contracts with pbms, and how these practices may affect access to care in rural communities? >> thank you. Congressman. Yes, take it or leave it. Contracts are part and parcel to the so-called negotiations between pharmacies and pbms. Pbms hold all the leverage. They hold the patient lives.
▶ 2:22:10So if the pharmacy does not sign, basically whatever's put in front of them with very little negotiation, um, I'm sure our friends at pcma will say there's lots there's robust negotiation, but in reality it's a take it or leave it contract. So these pharmacies are forced to sign contracts that oftentimes will pay them below their cost to even acquire the drug.
▶ 2:22:29And yes, rural pharmacies as well as pharmacies in underserved areas and urban areas, suburbia, they're all taking these contracts that in which they are paid below their cost to acquire the drug. And as a result, 5000 pharmacies have gone out of business in the last four years alone. There's 5000 fewer pharmacy choices in the last four years alone. It's a systemic process or it's a systemic problem.
▶ 2:22:54And in fact, pharmacy deserts, especially those in your district in ohio and across the country, are growing because of these. Take it or leave it contracts. >> thank you. My last question is for Mr. murphy. Mr. murphy, the us generics market has historically driven price reductions of up to 95% and expand patient access through increased competition.
▶ 2:23:17Some stakeholders have raised concerns that provisions of the inflation reduction act may affect the long term viability of the generic market. Can you explain how the ira could alter incentives for generic drug development and market entry, and what implications that may for the future, what may have for the future? Competition and patient access? >> certainly. >> um. >> thank you for that question.
▶ 2:23:46So certainly, you know, our view is that a free market and pro-competitive opportunity for generics and biosimilars to compete, uh, to bring prices down is the most surefire way for us to save money on medicines over the course of the us, um, health care system and obviously parts of the ira, um, were very well intentioned and, um, certainly make a lot of sense.
▶ 2:24:07But, you know, aspects of implementation like cms implementing the biosimilar, uh, launch delay provisions were done in a way that actually reduced the predictability of the ability of, of biosimilar manufacturers to get on the market. And so they, you know, have a thumb on the scale against development in those cases. Now that we would really look to cms to fix or congress to intervene. >> thank you. I need to yield back so we can keep moving. Thank you for your answer, Mr. chairman I yield back. >> gentleman yields back. Now, recognize the gentleman from texas, Mr.
▶ 2:24:36Veasey, for five minutes. Thank you, Mr. chairman. >> um. >> as a. >> reminder. >> americans pay far more for medications than any other country in the world. Uh, and that is a real problem. And it's going to require real solutions. And I just want to take a second, to be honest, with the american people. Uh, and I don't know if anyone else has noticed this pattern. Uh, but the president loves to take existing programs and institutions or ideas and slap his name on them. Uh, first it was us institute of peace, then the kennedy center.
▶ 2:25:05And now it's this trump and trump rx is being marketed as a drug pricing breakthrough. For those of you that don't know, I want you to take a closer look at what trump actually is and what it is not. Uh, trump rx list 43 brand name drugs. And that's it. Uh, you cannot get these drugs directly through trump rx, but you can print a coupon that may work at the pharmacy counter to buy your medications and cash.
▶ 2:25:37Uh, that means patients cannot use insurance and they have to pay entirely out of pocket. In many cases, when you try to use trump rx, uh, patients are redirected to pharmaceutical companies existing direct to customer sales or discount programs. And these patient assistance programs offered directly by manufacturers, they can be helpful. Uh, but they existed long before trump. Uh, and yet he has taken credit for them.
▶ 2:26:03Uh, also, existing platforms have long offered cash pay discount options for patients, including good rx and cost plus drugs. In fact, when you look at trump rx coupon, it is not only identical, uh, to one from goodrx, they both have the same identifiers. And last week president trump rolled out trump rx and claimed, and I quote, this launch represents the largest reduction in prescription drug prices in history by many, many times. And it's not even close.
▶ 2:26:31Uh, secretary kennedy then claimed trump rx would deliver, quote, the lowest prices in the developed world. And so I wanted to ask miss riley, uh, yes or no? Are these claims accurate? Please answer yes or no. >> which claim? I just want to be clear. >> the this launch represents the largest reduction in prescription drug prices in history. Many, many, many times. And it's not even close. >> I have not verified that. >> okay.
▶ 2:27:01Uh, thank you, professor sachs. Do you agree? >> I don't have any information to verify that. >> thank you very much. Uh, there's also a key difference between trump rx and other discount sites. Goodrx allows patients to compare prices across multiple pharmacies and across both brand name and generic drugs. That comparison function is critical because generic drugs account for nearly 90% of prescriptions filled in the us. They are often dramatically cheaper than their brand name equivalents.
▶ 2:27:31Trump rx does not offer that comparison. Uh, and in fact it does not include generics at all, despite the fact that half of the drugs listed have cheaper generics available elsewhere. Let me give you an example. Jim costa a drug that is used to treat irregular heartbeats. Its listed price is $672. Trump listed at $336. That's half price. So that sounds good, right? Well, the generic equivalent is actually available through cost plus drugs. For $10.
▶ 2:28:00You can likely get it through your insurer for cheaper, too. Professor sachs, is it your understanding that paying out of pocket for a brand name prescription drug through trump rx for a drug that has a cheaper generic alternative, may in fact cost consumers more money? Yes or no? >> I agree with that. >> and and I fear consumers will not understand that when they're using the platform. >> thank you very much, Mr. murphy. Do you agree? >> we certainly.
▶ 2:28:31>> hope that. >> we certainly hope that there's more information out there to. Can you hear me now? >> there we go. There you go. >> um, yes. Mr. we certainly hope that patients, uh, have a full complement of information available to them about where they can get cheaper medicines. >> thank you very much. And many of you may be asking ourselves, why are there only 43 drugs listed on trump rx?
▶ 2:28:52And I can tell you that these drugs are limited to those made by manufacturers that enter into a so-called most favored nation, or mfn pricing agreements with the trump administration. And as we have already gone over today, uh, these are backdoor deals that have zero insight, uh, into the information. And so, Mr.
▶ 2:29:11Crowley, uh, in your february 9th letter to congress, you warned that mfm agreements could eviscerate the innovation pipeline that caused the engine of american biotech innovation to grind to a halt. Uh, and that's on top of the trillions of dollars republicans have stolen from americans while inducing chaos at hhs. Uh, and so there are a lot of concepts, uh, of this plan. Uh, but I think america is still there's a lot of answers when it comes to these drug prices.
▶ 2:29:41Thank you, Mr. chairman. I yield back. >> gentleman yields back. I'm now going to recognize miss miller meeks for her five minutes before she goes. I'm going to say that we will, uh, recess after that for votes. And then as soon as, uh, miss degette and I can get back here and somebody is here to ask questions, we'll start again, miss miller. Meeks. >> thank you, Mr. chairman. And I thank all of the witnesses for testifying before the subcommittee today.
▶ 2:30:05As both a physician, a military veteran and a member of congress, I approach this issue from two perspectives, one clinical and one policy driven from my clinical experience, I've sat across from patients who have skipped doses, split pills, or simply went without the medications they needed. After searching through every data data set I could couldn't find a less expensive medication to substitute. So they went without medications because they simply could not afford them.
▶ 2:30:33This should never happen in the united states of america. From a policy standpoint, I believe that for too long, the conversation around drug pricing has been overly simplistic, often pointing fingers at just one part of the system. Manufacturers blame pbms. Pbms, blame manufacturers, insurance blames both, but the patients are paying the price. The underlying fact is patients don't particularly care which part of the supply chain is to blame. They just know they're paying too much, all the while seeing their premiums rise.
▶ 2:31:04Every year. Mr. gelfand, from the erisa employer plan perspective, you represent the businesses that directly bear the cost of rising premiums for millions of workers, about 130 million in the united states. My bill, the lower health care premiums for all americans act, is designed to increase transparency, strengthen competition, and reduce the hidden cost drivers in the system.
▶ 2:31:26From your vantage point, would these reforms translate into lower costs for employer sponsored plans and ultimately lower premiums for american workers and their families? >> thank you. Congressman. We absolutely believe that more competition and more transparency are key to getting health care costs under control. >> thank you very much. As I noted in our last subcommittee hearing, the largest pbms have created pbm gpos, two of which are based overseas.
▶ 2:31:51Miss bolivar, to the best of your knowledge, can you help this committee understand if medical gpos are based in the united states? If medical gpos are based in the united states, why are several pbm gpos based overseas? >> um, the yes, I can confirm that the gpos that belong to my association are all us based. Um, I'm afraid I cannot speak to business practices of other associations.
▶ 2:32:18>> um, our medical gpos retaining fees in the commercial market, like pbm gpos do. >> no, we work solely in the provider market in part b space. >> Mr. miron, as I've said since my time as iowa's public health director and even in congress, sunlight is the best disinfectant.
▶ 2:32:35So I'll ask you directly, why do several of your affiliate companies, cvs health and optumrx, operate pbm, gpos based overseas, and our medical gpos retaining fees in the commercial market, like pbms gpos appear to do? And as we've heard, no they're not. >> well, importantly, congresswoman, and again, thank you for your passion on these issues. I know it goes back to your time in iowa.
▶ 2:32:59Um, all gpos, all rebates, whether it's, uh, it's pbm rebates or gpo rebates now must be passed through thanks to the law that you passed to two weeks ago. >> uh. Thank you. Um, miss riley and or Mr. crowley, should there be, um, the nih provides research support to academic institutions to advance basic biomedical research. And I've seen this in real time, as in academic medicine when I was on faculty.
▶ 2:33:29If patented inventions arise from that research, the bayh-dole act allows the private industry to negotiate licensing agreements to further research and develop the invention into new medicine to benefit patients. To take that into t private, should there be a reasonable mechanism, such as royalty or revenue sharing arrangements, such as there are with venture capital, investing in a new, innovative company to ensure that the public sees a return on its investment once a product is commercially
▶ 2:33:59Successful, and if not, what alternative approach would you propose to balance strong private sector incentives with responsible stewardship of taxpayer dollars that are used to initiate research? >> thank you for the question. And, um, there actually are requirements that if a university license, a invention that they have patented to a pharmaceutical company and that pharmaceutical company is able to produce a tangible asset, a medicine from it, that that company would then owe royalties back to the
▶ 2:34:30University, and that the university retains the royalties for that which there are requirements in terms of how those royalty dollars get spent. They have to share some with the inventors and use the rest of it to reinvest back into research and development. >> could it not be reinvested back in the nih, potentially? >> I think, you know, there are other ideas in terms of how that money could be used.
▶ 2:34:49But I think the system I would say today, bayh-dole, was transformational when it was passed in 1980 because it created a system that does not exist and had not existed anywhere else in the world, which is cooperative research between academia, industry and government. And I would say we should hold that system and ensure that we keep it. >> my time is over. If I can, I would like to submit a letter from representative french hill so that submitted for the record date. >> what's the date on the letter?
▶ 2:35:18What's the date on the letter date of february 11th? Letter from french hill. Without objection. So ordered. All right. With that, the committee will stand in recess until miss degette and I return. And somebody else, whoever it might be. >> yeah.
▶ 3:04:23Once again begin questioning, and I now recognize the gentlelady from texas, miss fletcher. >> thank you, Mr. chairman. And thank you to the witnesses here today. This has been an informative and helpful hearing, and I'm sorry I won't have time to ask follow up questions to each of you, but I do think, like everyone else, I'll wind up submitting some for the record. But we have covered a lot of ground in the hearing today.
▶ 3:04:48Um, miss sachs and miss riley, um, you both touched on the importance of research and the research ecosystem between the government, academia and the private sector. In your testimony this morning, um, and, Mr. crowley, you raised in your written testimony the importance of protecting scientific research and integrity in general and at the fda in particular. Um, this cannot be understated.
▶ 3:05:12I represent a lot of people who work in this space, and it is critical that we do not undermine and destroy this ecosystem, whether with unchecked, cavalier decisions made by un or under-informed um, actors in the administration like we saw last year, um, or with bad policy decisions coming out of this body.
▶ 3:05:32Um, miss riley, you also testified that there are some perverse incentives in the system today, and I want to touch on some incentives of concern at this moment. Um, understanding your role as a representative of a trade association here, I'll ask my questions with that in mind. But, Mr. chairman, I want to support ranking member daggett's request to have the member companies appear before this committee as well. Um, because these are issues of real concern.
▶ 3:06:00Miss riley, have any of your members expressed concerns that fda approvals or meetings about approvals or review or milestones have been conditioned upon holding those meetings at properties owned by president trump or his family members? You have not heard that. >> or that? No. >> have.
▶ 3:06:22And so none of your members have notified you of any such requests for meetings with the fda to be held at trump properties? >> no. >> or for representatives of pharmaceutical companies to stay at trump properties when meeting with the fda? >> no. >> okay. Um, same thing for requests that member companies participate in private events at mar a lago. >> not to my knowledge, no. >> um, so you're not aware of those requests being made at all? >> no. >> um, okay.
▶ 3:06:52So making sure that I understand you correctly, none of your members have expressed concern to your association, that to get meetings with the fda or information about approvals, it is being suggested to them or instructed that they stay at trump hotels, hold review meetings at trump hotels, or attend events at mar a lago or elsewhere. Um, or even discuss whether those proposals are being made to them. >> no, not to my knowledge at all. >> are your members prohibited from raising those kinds of concerns with the association?
▶ 3:07:22>> I don't know whether they would be prohibited from it, but they haven't. So. >> um, it is not your understanding that the antitrust laws would prohibit the companies that are members of your association from having those conversations in your meetings. >> no, I mean, I'm a lawyer. I'm not an antitrust lawyer. Um, but I don't know that that would be an antitrust concern. Usually it's about the conduct of how they do business. >> well, and I think this is an important question.
▶ 3:07:46Um, but you would agree with me, would you not, that the fda or any government agency conditioning participation in the provision of information relating to the regulatory approvals of any kind on staying at properties or meeting at properties owned by the president of the united states and his family members, and that even the suggestion of doing so would be illegal, unethical and unacceptable. >> certainly. Probably unethical. Yes. I don't know if it's illegal, but unethical? Yes. >> okay. Mr.
▶ 3:08:16Crowley, I have the same questions for you about your members. Um, I can go through them all again. Or are you aware of any of those conversations for your member companies? >> no, congressman. >> no, congresswoman. I've never heard that before. >> okay. Uh. Thank you. I will submit some additional questions for you. For the record, I do want to follow up on, uh, with the little time I have left, follow up on some of the questions, um, from Mr. vc, uh, when he was discussing trump, uh, before our break.
▶ 3:08:46And, um, and I think that, uh, we've covered a lot about what trump is. So I have just a minute to ask a question about it. I will say I am confused as to why the pharmaceutical companies that fought against the medicare drug negotiation program and were actively, um, objecting to efforts that congress was undertaking to negotiate drug prices, are now willing to negotiate drug prices with the trump administration. Um, but, Mr.
▶ 3:09:14Sachs, I just want to ask you, with the 30s or so we have left, which program will provide more cost savings to consumers? Trump or the medicare drug negotiation program? >> this this administration. >> has said that.
▶ 3:09:35>> in the most recent round of drug price negotiations, they've saved about $12 billion net for consumers as compared to previous cycles or what would have otherwise been paid. Uh, excuse me, $12 million. And so I'm happy to get additional citations and share them.
▶ 3:09:53The short version of this is that the drug price negotiation program is saving costs for americans out of pocket, and a much broader range of americans than the small number of products we're seeing on trump rx so far. >> okay. Thank you. I've gone over my time, Mr. chairman, I yield back. >> gentlelady yields back. Now, recognize the gentleman from oregon, Mr. betts, for his five minutes. >> thank you, Mr. chair. And thank all of you for being here. Um, miss sachs, I'm.
▶ 3:10:18I've read your incredibly impressive bio, and I note that it says her work analyzes problems of innovation and access to new health care technologies. I'm primarily pharmaceuticals. Uh, I'm extremely interested in what part artificial intelligence might help us play in analyzing situations just like the one we're engaged in today.
▶ 3:10:40And I've been on my phone going through questions that I might ask using the systems that we now have available for that purpose. But you're an expert in this space. Do you anticipate that artificial intelligence is going to provide us, or maybe already does provide us with ways of looking at this entire space, this pharmaceutical space, and determining where best to focus our attention? >> so it's my understanding that companies all across the supply chain are using various ai tools already.
▶ 3:11:10Um, but there's many different ways in which it can appear. So we know that fda has approved at least the last time I looked well over a thousand ai enabled medical devices, thinking about the potential benefits they might have for patients. I've certainly read that companies are using ai to think about streamlining clinical trial enrollment and things like that. So there's certainly a wide range of applications that it could have. I'm not an ai scientist. I'm not sure what is the the best place to focus that investment.
▶ 3:11:39>> so we were described in congress as a bunch of people on horseback trying to catch up with a moving lamborghini to install a seat belt. That's how they described our efforts to understand artificial intelligence. So that's why I'm asking you, uh, do you anticipate that we in congress can use these tools to better refine and understand that which is going on in this space? Because to me, a lawyer representing a small hospital years ago, I don't know anything about this.
▶ 3:12:04And I have to rely upon experts like you now to tell us the best tools available to determine the best thing to do. So I'm asking, uh, what would you recommend we do when it comes to using these new ai tools as congress to sort this out? >> well, one important thing for this committee to consider is oversight and transparency. And so getting some of these contracts between the various entities in the supply chain, sometimes these are voluminous, right? There's lots of different provisions in them.
▶ 3:12:32And it is possible I certainly can't speak to specific technologies, but it is very possible that advanced technologies like the ones you suggest could be helpful in having this committee look at the vast amounts of data and contracts that you are hoping to get from some of these companies. >> I had a physician call me about four weeks ago.
▶ 3:12:49We spent two hours a day for four days going over his analysis, using new ai tools to determine how many how much money could be saved in a hospital, uh, to protect the innocent or not so innocent. I won't mention which one, but I'll just say that at the end of the four days, he had determined that he thought he could reduce the number of tests being given in the hospital by half.
▶ 3:13:12Uh, just because of analytical assistance provided by ai in the $50 billion that's been given in the big, beautiful bill to small rural areas, to try to use innovation to transform, which I think is another word for innovation. What would you recommend we focus upon that? We can I can look at the w.h.o. Uh, six pillars of health care. But tell me, what should we focus on? >> well, I appreciate that this, uh, congress instructed cms certain factors to consider in issuing those awards.
▶ 3:13:42And cms issued a very detailed funding notice and took applications. And lots of states have proposed lots of different things that are tailored to their rural health populations. One concern I have, and maybe one thing to keep an eye on, is the potential for an ai arms race between providers and insurers. How is ai being used to, as you said, streamline care, avoid unnecessary tests, but also maybe deny care or in the prior authorization process.
▶ 3:14:12>> I'm aware of that and thank you for calling it out. I'm going to shift over to Mr. hui for just a moment. I was speaking to the murray, uh, pharmacy out in little condon, oregon, where one of the small areas I represent in my rather large district. Um, and they were they they were hoping we would do something. I mean, they're third generation working. I couldn't believe the amount of work that they were doing as they were talking to me. I couldn't believe it.
▶ 3:14:37They were moving as fast as they could possibly go, and it was apparent that they were in deep trouble. What would you recommend that we do here to try to help these small pharmacies? I know the whole day we've been focusing on this. What's the best thing we could do? >> yes, the murray's are members of our organization and in her family. And it's a vital question how can we better, um, support these pharmacies that are in rural deserts? One, um, provision could be a fair cost. Plus, right now, uh, pharmacies are paid in the medicare program 80% of the time.
▶ 3:15:07They the prescriptions they dispense are paid below their cost, plus a minimal dispensing fee. 80% of the time, the medicare program is putting pharmacies out of business. The legislation that was passed last week, it will help. It doesn't go into effect until 2029, though. We need cms to implement it much faster. We also need to take away the perverse incentives of pbms with the patient steering. Um. >> and I understand that. Thank you. We're out of time. Yield back, Mr. chair. >> thank you.
▶ 3:15:36The gentleman yields back. Now, recognize the gentleman from massachusetts, Mr. jake auchincloss, for his five words. >> thank you. Chair. Uh, I'd invite my my friend from oregon to join the pharmacist fight back act, which I've introduced. Bipartisan bill that would do cost plus reimbursement for our small pharmacies, as well as cracking down on specialty steering and other pbm abuses. So we'll send it over to the gentleman's office. Um, it's 60 co-sponsors last congress. Uh, I appreciate the thoughtful and substantive testimony from all of you here today.
▶ 3:16:05However, I don't think right now the moment calls for us to have nine witnesses. We need one witness, and that individual needs to be commissioner mccary of the fda, whose incompetence and whose poor stewardship of the food and drug administration is undermining the world's gold standard biomedical regulator.
▶ 3:16:25Just today, sieber's rejection of the mrna vaccine, which overruled career scientists at the agency, uh, builds upon a pattern of replacing safety and efficacy with fear and favor. The commissioner's national priority voucher is unethical, unwise and illegal, and they have refused.
▶ 3:16:48Now, after three letters from me to respond to any of the questions or assertions I've put forward, one former fda commissioner told me that fda has hemorrhaged 20 years of competence and credibility in just the last one, and yet we don't have a hearing. When is this committee going to do its constitutional job and bring commissioner macri here and ask him, under oath, what he is doing to one of the agencies that keeps americans safe?
▶ 3:17:12In my district, I represent a lot of people who invent medicines, as well as a lot of people who consume medicines, and they are consistently frustrated by a false choice that has put forward between innovation and access. Uh, we can have both with strong intellectual property laws, with insurance design that lowers or limits copays, and with negotiations that prioritize, uh, value as opposed to rebates.
▶ 3:17:41We can have both world leading biomedical innovation and we can have, uh, virtually no cost exposure at the pharmacy counter. To that end, I'll be putting forward a request for proposal from from all nine of you, um, that seeks to establish two pillars for drug pricing legislation, one pillar being access and affordability, and the other pillar being innovation and manufacturing.
▶ 3:18:05And I would request that rather than pack into five minutes questions from all of you, that you would all respond in writing within 14 days to the request for proposal. Would you all be willing to do that? Thank you. Um, I'll give you a flavor of some of the things I'll be putting forward under access.
▶ 3:18:21For example, um, prior authorization reform that prioritizes transparency, timeliness, and an appeals process with electronic based prior authorization under an affordability agenda, extending the $2,000 out of pocket caps into the commercial markets, the $2,000 out of pocket caps under part d have been an important way, uh, to ensure that patients don't face high out of pocket caps.
▶ 3:18:44Um, I understand that in the commercial markets, that $2,000 co-pay cap may need to be paired with, um, a ban on pharma funded coupons so that they cannot undercut negotiations that the pbms do do, um, uh, for leverage, uh, under innovation.
▶ 3:19:01I will note that a a july 2025 meta analysis of peer reviewed studies found that, quote, uh, after the iras implementation of the pill penalty, larger manufacturers prioritize incremental innovation or lower risk therapies, while smaller firms face challenges in their r&d pipelines. Um, the president's misguided globe and guard models would further distort and add rebates into a value chain that already has too many of them.
▶ 3:19:27And I welcome thoughts from all nine of you about how we can induce more r&d, uh, in this country and deliver more cures faster, because we know that the chinese have not just caught up, but may actually be outpacing us at this point. And I think american patients want access to new medicines first. Um, also welcome thoughts on clinical trial reform. Mr. crowley, you spoke, I think, very cogently about institutional review boards.
▶ 3:19:53We're also interested in ways that we can better integrate electronic health records, um, at more sites of care so that people can enroll faster, faster, better, cheaper clinical trials is a win across the board. Um, and then finally on manufacturing would welcome proposals about how to improve, uh, recently introduced bipartisan legislation, the drug shortage prevention and mitigation act, uh, which basically envisions a cms pay for performance model for quality and reliability to also incentivize more made in america manufacturing.
▶ 3:20:22Um, I think we need to reindustrialize much of our biomedical backbone. And, uh, cms has a role to play in its pay for performance program. Um, I would I appreciate your willingness to engage on this with written responses. And I look forward to, um, releasing the rfp. Thank you. >> and the gentleman yields back. And now recognize the gentleman from texas, Mr. crenshaw, for his five minutes of questioning. >> thank you, Mr. chairman. Thank you all for for being here.
▶ 3:20:51I want to talk about something pretty specific. The biosimilar interchangeability, uh, that's in statute. And it's a statutory distinction. And it does seem to a lot of us that it's an extra hurdle for biosimilars to to come to market and of course, be, you know, the generic version of, of biologics and cheaper for the patient. Um, but this, this distinction requires that extra statutory hurdle or extra extra regulatory hurdle.
▶ 3:21:19Um, and I want to see if you have conflicting views on this. Uh, Mr. murphy, in your view, does updating these somewhat outdated distinctions, like biosimilar interchangeability, strengthen competition without undermining safety? And what would eliminating that extra statutory distinction do for uptake, affordability and investment and biosimilars? >> yeah. Thank you, Mr. crenshaw, for that question.
▶ 3:21:40Um, we are we have long supported, uh, removing the statutory distinction, as has the food and drug administration publicly called for the same, uh, earlier last year. Uh, I think, uh, what we hear from our manufacturing partners is that anything to reduce the cost and regulatory complexity of biosimilar development is going to be a net benefit for patients. Um, and I think that ultimately we will see more investment across the biosimilar pipeline.
▶ 3:22:06I would note, just for the record, that, you know, we looked at 118 biologics that lose exclusivity over the next ten years in the united states. Only 12 of them are currently being developed for biosimilar competition. And that transcends just the the the regulatory barriers. But this would be a huge step forward. And and as you noted, uh, the biosimilar red tape elimination act, which is cosponsored, uh, in this committee by Mr. landsman and Mr. pfluger would be the step in the right direction. I'm sorry. I looked over there for you.
▶ 3:22:37>> um. >> and. >> Mr. crowley, what do you think about that? What would what would eliminating that extra distinction do for uptake, affordability and investment in biosimilars? >> yeah. Congressman, we I agree with Mr. murphy. We need more biosimilars. And we need to see where the barriers are to getting these biosimilars to market and to patients. Interchangeability is an important concept. There are many biologics where you can simply do laboratory testing or some basic bridging studies in animals and approve them without lengthy, expensive clinical studies.
▶ 3:23:05There are some medicines, though, including the one I developed for the rare disease pompeii, where you can make a biosimilar same amino acid sequence, same protein, same number of carbohydrates that are essential to get into the muscles of these sick kids. But if one of those carbohydrates is slightly off, you lose 90% of the effectiveness of getting into muscle. Ultimately, that needs to be a science driven decision of where do you need more extensive clinical studies?
▶ 3:23:34But whatever we can do to break down barriers, I support. >> yeah. You're specific in your wording. Um, you said you agree with breaking down the barriers, but, you know, we're talking specifically about removing this particular hurdle. So, Mr. murphy, you heard those those that particular concern. So how did how does congress design a system where we can meet in the middle there? >> so, uh, Mr. crenshaw, the current legislation that's being considered by this committee actually has the authority for fda to order additional studies.
▶ 3:23:58Should it should it determine, in consultation with the manufacturer and the reference listed drug product, uh, that that additional step is necessary? Uh, but as a predicate matter, it, it aligns the us regulatory system with all of our peer countries to have a base level of, uh, singular approval. >> yeah.
▶ 3:24:16Um, you know, sticking with this theme, uh, miss riley, for advanced therapies, whether it's biologics, uh, cell gene therapies, talking about regulatory modernization, what role does that play in ensuring that innovation really translates to patient access?
▶ 3:24:33>> well, I think, you know, the important pillars that exist in our country, you know, absolutely need to remain if we're going to continue the kind of innovation that we have been responsible for since, you know, over the last many decades, I worry a bit that some of the new therapies that are coming to market or that are being studied, cell and gene, some of the more expensive therapies, if there's not a market to be able to sell into, if we don't have a transparent regulatory body that we can rely on for predictable advice, uh, then we risk candidly, um, this science,
▶ 3:25:05Much of which is in its infancy stages. So I think continuing to have strong intellectual property protections so that when companies do make the big bets to bring a therapy to market, that there is a reward at the end and that companies can rely on that. And then having a regulatory body that has the capability, the scientific capability to evaluate those products, and then a market to sell those products into where patients can get access to them at an affordable price. >> I appreciate that.
▶ 3:25:32And and agree, you know, we big pharma companies, they're going to be fine. Uh, when when these kind of extra stringent, whether it's regulations or price controls get put on them, they're just going to invest in things that aren't risky. That's a problem. Uh, and it, it leaves behind, uh, you know, these small portions of patients that need that need cures, uh, I yield back. >> thank you. Gentleman yields back. Now, recognize the gentleman from ohio, Mr. landsman, for his five minutes of questioning.
▶ 3:26:03>> thank you, Mr. chair. And the ranking member to all of you for being here. It's been a long day. So appreciate, uh, the patience as we had to go vote. Um, I want to get into the goal I think we collectively have, which is or at least our assignment is to increase care and and reduce costs. And, uh, we have to make policy decisions. We do as lawmakers. You all do.
▶ 3:26:32Or your companies, uh, that you represent, have to make these policy decisions. So I want to take on two. One has to do with on the profit side where you invest those profits. So, um, miss riley, uh, the number I have in terms of big pharma and how much they have, they pulled down in profits last year around $130 billion. Is that sound accurate to you? >> I don't.
▶ 3:27:02>> have the number off the top of my head. >> fair enough. I wasn't trying to get you on that one. I just, um, of that you can. So when you you know that after expenses, you got 100, you got $130 billion across across these pharmaceutical companies, you can invest those dollars in innovation, r&d, uh, employees, uh, you know, lowering costs, investing in pricing, which is a strategy or the, you know, it goes up to the investors and the the stock buybacks and
▶ 3:27:33Dividends. Our understanding is that of the 130 billion made last year, 84 billion, or the majority, the vast majority of the profits went up, not down. Right. So it went to the shareholders and to pay out dividends. That's a decision in terms of how to invest these additional resources.
▶ 3:27:56And I'm curious now that more and more americans are struggling to pay their bills in general, in particular, uh, their health care bills, are there discussions around changing that percentage so that the vast majority or a greater majority of of the profits are investing in pricing? >> I would say this our our industry is the most r&d intensive industry in the world.
▶ 3:28:24We reinvest 30% of our profits back into research and development. That's by far and away more than anyone else. >> yeah, but the challenge is, is that pharma gets this sort of reputation. Well, we have to invest in innovation. And I agree so that you can, uh, move more and more of these drugs to generics and it can be cheaper, and we're saving lives 100%. But that means 70%, even at 30%, 70% of those profits are going elsewhere. Not in r&d, not in.
▶ 3:28:54So, you know, how do we get the the investments in lowering prices in r&d to be the vast majority, 80, 90%? >> well, you know, when when individuals decide to invest with our companies, there is an expectation for a return on investment, just as there is for any for profit company. But our companies are different in the sense that 90% of what we do and what we put into the fda clinical trial process fails.
▶ 3:29:19So they are investing with an acknowledgment that more than likely, we are going to fail 90% of the time. So when we do succeed. >> it's been a it's been a great return on investment. I mean, every you know. >> 5% of biotech companies make no profit, 90%. >> but the investors always get paid. You know, I don't know how many investors have walked away empty handed. Uh, most of the folks are, you know, who are investing, are walking away with enormous amounts of money.
▶ 3:29:48Uh, and I agree there's risk, but it does. It is challenging when you're seeing 85 of the $130 billion go up, not, uh, to patients or to lower prices. >> well, you know, 77% of our investors are institutional investors that represent firefighters, policemen, teachers and the like. So I think they do expect a return on their investment for their retirement and lots of other things. Uh, you know, as I said, we're a risk intensive industry.
▶ 3:30:18It's almost like playing the lottery when people are betting money on our success. There is an. >> expectation, I. Wish I it's a good line. I wish that the firefighters and folks in pensions were reaping the benefits of what wall street is, you know, pursuing in terms of profit. But it's. >> just they do and. >> they're for. It's for sure. It's just they're not the big winners. Um, uh, miss sachs or professor sachs, pharmaceutical companies set prices.
▶ 3:30:45I mean, they they can lower prices by investing more and more with profits and prices. >> they set the list price. Yes. >> yeah. Um, I'm not allowed to ask another question, even though I had a question about biosimilars, which is on our end, because there's a ton that we have to do to reduce the costs and bringing biosimilars to the market faster is one of those things. So hopefully everyone jumps on board. This one thing that you all agree on, I think is the biosimilars work. So thank you. And I yield back. >> gentleman yields back.
▶ 3:31:13And remind everybody that you have questions. For the record you can always ask. And I'll recognize the gentlelady of florida miss cammack for her five minutes. >> I appreciate it. Thank you Mr. chairman. And thank you to our witnesses. I know it has been a long day. Our apologies for votes getting stuck in the middle, but I want to start with the folks back home. So families and employers keep asking us the same question. Why does health care cost so much? And why is the system so stinking hard to navigate? Now, if you can't explain the bill, you can't defend the system.
▶ 3:31:42And if you look at the facts, it really presents as this. Between 2021 and 2024, median launch prices for new drugs more than doubled, and in a single year, over a thousand existing drugs saw price increases, averaging more than 30%. That is far above inflation now. Patients didn't see their paychecks double, workers did not see their premiums fall.
▶ 3:32:06And so what we have right now looks a lot less like health care and a lot more like sick care, a system that is waiting for people to be in crisis before it acts. This is a maintenance rather than prevention system. And as we all know, particularly you all before us today know that crisis is more expensive than prevention. When a patient is handed a bill that they don't understand, they don't care which entity in the supply chain is responsible. They just know that they're paying more.
▶ 3:32:33And so cost being layered across manufacturing, distribution and contracts are something that patients never see. When prices rise and revenues grow, families still struggle and people begin to question whether the system is prioritizing patients or profits. So we should be able to do two things at once. We should give companies the certainty that they need to invest and innovate here in the united states. But we also need to be delivering real, tangible, visible savings and affordability and accessibility to patients.
▶ 3:33:03So I think that this discussion is very timely. I'm going to start with you, Mr. davis. Three companies control the majority of drug distribution, excuse me, in the united states, and many are vertically integrated to control each phase in the prescription drug chain, supply supply chain from manufacturer to pharmacy. Does consolidating the prescription drug industry lower prices for patients? Yes or no? >> I'm sorry.
▶ 3:33:31Does the consolidation lower the prices? >> correct. >> um, it has the potential to. Yes. >> okay. So respectfully, your own industry report projects that the big three will generate $871 billion with a b in revenue just this year. And that's after four straight years of double digit growth.
▶ 3:33:54So if this is potentially saving patients money, why are your revenues growing so fast and where patients seeing the savings. >> so, um, thank you for the question. I would say there were a couple aspects to your question. One, um, were the only sector in distribution that I'm aware of where our actually our cost of goods sold, the amount that we actually sell downstream for is more money than the revenue that we the more revenue that we get. Right?
▶ 3:34:20So it's an unusual one where we're actually in a position that we are actually selling a product for less than we're purchasing it for from a wholesaler. Excuse me, from a manufacturer. Manufacturers set the list price. >> okay. But let's get back to the patients because this is ultimately about patients. Right. So if your industry has spent $16 billion acquiring physician management companies, basically buying doctors, right. Where is the savings for the patients? >> so in the ability to have the doctor treat we're not buying physician practices with respect.
▶ 3:34:49What we're doing is we're purchasing organizations that are providing the business support to physician practices in places like oncology and gastroenterology and in eye in eye care as well. And these are, again, three of our 36 members that are in this diversified business area. But one of the things that we hear from those provider groups when they're actually partnering, in certain instances, they are being purchased by the wholesaler and others. The wholesaler is either a majority or minority investor.
▶ 3:35:17They're not the complete owner of the of the of the vertically integrated mso, as they're called management services organizations. Um, but to be clear, they are not purchasing the physician practice. >> well, and my time is running short. So I have a whole litany of questions that I'm going to submit in writing for the record for you. Um, right now I want to jump to Mr. gelfand. Did I say that right? My apologies if I botched that.
▶ 3:35:43You represent the employers who sponsor the health coverage for millions of workers, the lion's share of those that are covered and insured. So when distribution gets more concentrated, in your opinion, do premiums go up or down for workers? >> and we've we've heard the story before. It took place when private equity started to buy up physician groups. >> and what Mr. davis was just talking. >> about, it led to the surprise billing crisis that congress had to ultimately intervene.
▶ 3:36:07>> so who in the end, with my remaining 15 seconds, who captures the quote unquote savings from all of this consolidation. >> does not appear to be working families. >> thank you for driving that point home. I know my time has expired. I have a number of questions I'll submit for the record. Thank you, Mr. chairman, I yield back. >> gentleman yields back. Now. Recognize Mr. rowley for his five minutes. >> thank you chairman. My question is for Mr. marron.
▶ 3:36:35President trump recently launched trump rx, a revolutionary platform bringing price transparency and competition back to the drug market. My constituents tell me every day how often they dread going to the pharmacy, because they never know what kind of price they're going to pay at the counter. It always changes. And then you have the, you know, brand name versus the brand name.
▶ 3:36:57So I guess my first question to you, sir, would be how have your members reacted to the transparent pricing of brand names on the trump rx? Thanks for the question. Uh, look, the pbm industry is all about transparency. We're enhancing it for our customers every day for employers. The bill that congress just passed a couple of weeks ago takes it to a whole nother level. We're happy with that.
▶ 3:37:25We support and applaud the mission of the of the administration's goal with trump rx. Obviously, the details will matter. Well, and that's what we're looking forward to. You know, working out all those raffles and those bumps in the roads, um, how letting patients and employers see the compare prices affect a wider pharmaceutical industry. Is it going to be a big impact or what is your opinion on that from trump? Rex I think that's yet to be seen. Congressman. But you know obviously we we applaud new entrants.
▶ 3:37:54More choices, more competition. Do you have any final words that you would like to as far as the trump rx program goes that you would like to see happen, or maybe pulled back a little bit? What is your opinion on that? No, we, uh, we look forward to being a partner with the administration as it as it, as it unfolds, the, the the initiative. And we know that at least a couple of our, our members are participating. Well, hey, we look forward to any kind of emails that you want to send to our office on suggestions to make it a better product.
▶ 3:38:23Uh, and with that, chairman, I will yield my time. Thank you. >> gentleman yields back. Now. Recognize the gentlelady from indiana, miss houchen, for her five minutes of questioning. >> thank you, Mr. chairman. Thank you to the witnesses for coming before the committee today. This is our second hearing in a series examining the overall affordability of healthcare.
▶ 3:38:41Um, a huge part of that conversation is the cost of prescription drugs for patients, for millions of americans, especially seniors and those living in rural communities like my hometown in southern indiana, the price of medications can determine whether people stay healthy, uh, or go without care altogether. Today, americans are paying more out of pocket for their medications than ever before.
▶ 3:39:06At the same time, we're seeing growing concerns about drug shortages that threaten patients, patient access and provider stability. A central part of that solution, as I have advocated for since coming to congress, is transparency. We've heard consistently from independent pharmacies about the challenges they face navigating complex reimbursement and contracting structures, particularly when they're not always negotiating directly.
▶ 3:39:32Many independent pharmacies rely on pharmacy services administrative organizations to collectively negotiate pbm contracts, manage administrative requirements, and secure network participation on their behalf. While that aggregation can create efficiencies and bargaining leverage, it can also create distance between a pharmacy and the contract terms that ultimately govern the reimbursement and performance obligations. Um, my first question is for Mr. hoy.
▶ 3:39:59Since saos negotiate pbm contracts on behalf of many of of the members that you represent, do your members always have a line of sight into the terms that they are agreeing to? On behalf of your members? >> thank you for the question. Uh, no. Not always. The saos represent several thousand pharmacies, and they don't always know what those terms are. Those terms are sometimes limited to their site.
▶ 3:40:24They don't have a site into them because of restrictions in that contracting process where pbm may say you cannot reveal these, these terms. One important thing with those contracts to add is that when you get a group of independently owned businesses together, while it does create some efficiencies in the administration, it doesn't create much leverage in the negotiation of those contracts. The contracts are still basically take it or leave it.
▶ 3:40:50If you leave it, I'm going to take a third of your business away from your pharmacy. If you take it, you're going to take my terms, says the pbm, not your terms. >> well, I come from a line of pharmacists. Some of them are community pharmacists, some work for, uh, national chains. I have worked for.
▶ 3:41:06Um, but when I'm in my district, I do hear from community pharmacists and independent pharmacists that are concerned about, um, the way that these, um, the drugs that they're being required to, to dispense often cost them money out of pocket. When they can get a reduced price, a patient could get a reduced price at the cvs across the street. How how is that?
▶ 3:41:30Um, I still haven't been able to have anybody really explain the math to me about how if I go to one of your pharmacists, uh, it might cost the pharmacist $7 out of pocket to to dispense that drug to me. But yet the pharmacy, the independent or the chain pharmacy across the street makes a profit. How does that work? >> well, you specifically mentioned cvs as the example.
▶ 3:41:56Cvs is one of the vertically owned pharmacies that's part of the aetna caremark vertical integration of families or family of businesses so they can manipulate things by putting money from one pocket into the other. They also set the terms, the reimbursement terms for that independent pharmacy. So the competitor is setting the reimbursement terms for the small business. And so they can say competitor, you're going to lose money on that. And I'm going to make money on that. I'm also going to set the terms for the patient too, so it can appear the patient is paying less.
▶ 3:42:25But in reality, that employer may be paying even more for that drug at the chain pharmacy. >> one of the things that we hear is that because of their their larger size, they can often negotiate cheaper prices. And that's why, um, I want to turn to, to Mr. marin just to ask a question about, um, how does the pbm, who's negotiating the rates between these entities, how do they make a profit? >> moving forward?
▶ 3:42:55Now it's a bona fide fee. >> and it went. >> from because all rebates have to be passed through now. So so it's going to be up to the employers who receive the pass through to determine how best to use those dollars. >> I'd like to turn to miss riley, uh, about the differences and how it's changed from a rebate structure to a fee structure and what that has done to to cost. >> yes. I think increasingly, as employers and others have gotten wise about the fact that rebates were increasing, they demanded access to those rebates.
▶ 3:43:24So pbm shifted to a new strategy. They set up offshore pbm gpos and started collecting more and more money from fees that were not transparent to the employer, not transparent to the taxpayer. Today, about two thirds of the revenue and profit that pbms get are from their specialty pharmacy and from the fees that they collect, um, in part because, again, like the laws that were just passed, they're requiring rebates to be passed through. So they've shapeshifted and moved on to a new path.
▶ 3:43:52>> I appreciate the the conversation. I'm sure we'll talk more. Um, thank you to the witnesses. Um, and I definitely want to engage on this issue further. Thank you, Mr. chairman. >> thank you very much. Gentlelady yields back. Now, recognize the gentleman from new york, Mr. langworthy, for his five minutes. Questions? >> thank you very much, Mr. chairman. >> uh, a consistent theme across the prescription drug supply chain is that every major actor blames another major actor for high prices, opaque practices and rising patient cost sharing.
▶ 3:44:21Uh, manufacturers point to pbms and rebate structures. Pbms point to manufacturer list prices, pharmacy site reimbursement practices, wholesalers reference contracting dynamics, and plan sponsors often claim they lack visibility into any of it.
▶ 3:44:39Uh, while there may be some truth somewhere in the middle of all this that does not change this reality is that congress employers in patients still do not have access to transactional level price data needed to determine where excess costs are accruing, who benefits, and who ultimately bears the burden of that.
▶ 3:44:59And if we do not understand the accounting of our health care system, we cannot answer a basic question why is health care so much more expensive than it was 10 or 15 years ago? And that's what I think many of us here in congress struggle with, with that opaqueness across the entirety. Uh, but with that, Mr.
▶ 3:45:21Gelfand, given the competing claims that we've heard across the prescription drug supply chain, how does the lack of transaction level pricing data limit congress's ability to determine where the costs are truly occurring? And without that level of visibility, how can we distinguish between reforms that would meaningfully lower costs for patients and those that merely shift the costs around the board among stakeholders here today? >> thank you. Congressman.
▶ 3:45:50You know, we strongly believe we've got to open the books in no other part of the economy is it considered acceptable that all of the prices for for goods are essentially kept secret. Employers can only solve the problems that we can clearly see and identify. So that's why we so strongly supported the reforms that passed last week, and why we hope for more transparency throughout the health care system, and especially throughout the opaque parts of the drug supply chain. >> well, thank you.
▶ 3:46:18And I think that's exactly why better data has to come. First. It's time for all the stakeholders across the health care system to flip their cards over and be honest, so we can have an honest discussion as to why the costs of health care in this country have exploded the way they have. Uh, Mr. gelfand would, requiring clear price disclosures for patients in giving plan sponsors full visibility into what they are actually paying for. Prescription drugs help address the lack of transparency that we have now. >> absolutely.
▶ 3:46:47That's why we strongly support the patients deserve price tags act. Um, not only would that bill, for the first time shine a light on the black box of drug prices, but it also guarantee that employers could actually see their own claims data, which today they oftentimes cannot. And it would even require that patients get real timely bills, which today you can go to the hospital and you may not get a bill for ages years. You'll get a bill later. Um, price tags we think would lower drug costs.
▶ 3:47:14It would certainly enable us to lower drug costs for the people who work for us and their families. >> no. Thank you. I think price transparency is an absolute prerequisite to identifying which policy reforms will actually reduce costs, rather than simply just shuffle them across the entire system. Uh, in continue on this endless cycle, um, pivoting here to prescription drug data. Mr. marin, under the transparency and coverage rule, health plans and pbms are already required to disclose machine readable prescription drug pricing data.
▶ 3:47:45However, those prescription drug reporting requirements were never meaningfully enforced under the biden administration. From your perspective, how would access to this level of transaction level pricing data change congress's ability to conduct meaningful oversight of the prescription drug supply chain and determine where those excess costs are actually accruing?
▶ 3:48:07>> I think it would be significant, congressman, and I think, you know, uh, the only thing I'll say about transparency, given the law that was passed just two weeks ago and the reams of of information that that will be now providing to, to clients and to and to the government is that it should be it should be applied across the supply chain. Right. But um, yeah, to your question, I think that would be a massive improvement. And we'd love to help you think it through. >> uh, price transparency must come and it should come across a prescription drug supply chain.
▶ 3:48:35It needs to come into our hospitals, into all of our providers, so that the american people can exactly see where these dollars are going. >> the information that we have to provide, congressman, now is, is to the clients and the government. It's drug by drug, claim by claim, pharmacy by pharmacy. Its robust. >> here, here. Thank you. It's clear that if we want to lower prescription drug costs for patients, we must ensure the real transparency exists across the supply chain and enforce these rules that are on the books now. And I appreciate all the witnesses for their time and being with us here today.
▶ 3:49:05And with that I yield back. >> gentleman yields back. And now recognize Mr. mullin of california for his five minutes. >> thank you, Mr. chair. Thank you to our witnesses for being here today. As we turn our attention to the prescription drug supply chain, congress has taken important steps in recent years to address high drug prices such as medicare, drug price negotiation and language. Recently signed into law increasing pbm transparency and cracking down on unfair practices.
▶ 3:49:31But it is vital that we find a balance to enable patient access to affordable drugs, while ensuring the us continues to lead the world in developing innovative therapies and cures. I'm very proud to represent california's 15th congressional district, the birthplace of biotechnology in my hometown of south san francisco.
▶ 3:49:49From well established companies to scrappy startups and everything in between, my constituents are pushing scientific boundaries in the hope of developing the next drug that could change your patient's life your mother, your uncle, your sister, your child. For this life saving work, both in my district and across the country to translate into real outcomes for patients, each step in the supply chain must function effectively and reliably, reliably.
▶ 3:50:13One area that I'm concerned about is the current staffing cuts and leadership and turnover at the fda. Without a dependable and science based drug review process, there could be dire consequences for the future of us. R&d and innovation and delays in this process can quite literally spell the difference between life and death for some patients. So, uh, Mr. crowley, uh, our timely interactions with the fda important for your member companies to get products to patients.
▶ 3:50:41I think I know the answer to this question, but yes. >> the answer, congressman, the answer, congressman, is yes. >> well, that's the that's the, uh, the speediest answer I've gotten in my three years here. Uh, Mr. murphy, uh, thank you, sir. Thank you for being here. Since the staffing cuts, have you heard of the potential for these cuts to undermine upcoming review capacity and timelines for drug reviews? Give us kind of the lay of the land there. >> yeah. So?
▶ 3:51:09So there's obviously been a lot of historical, um, support that is no longer with the agency. And that's created a lot of concern amongst the members we have. We have been surveying our members. We have not yet seen delays, but we understand from the members a lot of angst because they realize it could take time to matriculate through the system. Given how the fda practices work. >> so thank you for affirming what I suspected. Appreciate the answers.
▶ 3:51:33It's important that the federal government meet the needs of patients by ensuring the fda is a reliable partner for drug review and approval. Another area I want to touch on is rare diseases. Despite nearly 1 in 10 americans having a rare disease, only about 5% of the thousands of rare diseases have an fda approved treatment. Given how small some of the patient populations are for these diseases, developing therapies requires innovative thinking and policies to ensure patients have solutions that they can turn to. Uh, so, Mr.
▶ 3:52:03Crowley, if you could just break down the factors that companies must consider when developing a rare disease therapy, uh, so my colleagues can understand that the complexity with that. >> thank you, thank you. That's rob bresnahan. You hear me? Hello. >> there we go. So it is very complex, congressman.
▶ 3:52:25So when I ran a biotechnology company, when we looked at any one of the 10,000 plus rare diseases, obviously enormous unmet need, suffering death. So you certainly had the need out there. We look at the patient population size. We look at what is the natural history of the disease. Are there ways to do clinical studies faster and better? Are there biomarkers that could accelerate the research process as well? So that's all on the science innovation side. We look at the manufacturing.
▶ 3:52:54How complex is it. Biotech, small emerging biotech companies where 70% of our medicines originate. Our business model is not to build manufacturing plants. We rely on our partners, large companies, or we rely on contract manufacturers. We don't have enough capacity in the united states. That's a huge limitation on making medicine. So that's an important factor. And of course we look at the regulatory environment. What is the pathway. Is it certain. Is it predictable. Are there known endpoints.
▶ 3:53:23Do the regulators have experienced do you have regulators enough regulators scientific medical reviewers at the fda. So it's an incredibly complex problem set to go through all of that. And at the end of the day, we also need to make sure that our patents are protected for our inventions. And we need to make sure that we're paid for our innovations and inventions as well. That's the lifeblood that continues to provide capital so we can research the next disease. >> appreciate that very much. Thank you all for being here. Thank you for the answers.
▶ 3:53:52The biotech industry is a prime example of america's indispensable role in advancing science and healthcare. Breakthroughs that once sounded like science fiction are becoming reality. But to sustain this momentum, we must continue to incentivize domestic research and development while ensuring that patients can afford the life changing therapies developed here in the united states. And with that, thank you all I yield back. >> gentleman yields back. Now recognize the gentleman from georgia, Mr. allen.
▶ 3:54:19Thank you, chair griffin, for letting me wave on to this important hearing. I want to thank all the witnesses, and I want to thank for what you do for the american people. And, uh, it's amazing, uh, the, uh, progress we've made in research and development, uh, uh, the rising cost of prescription drugs has been causing significant burdens for millions of american patients and seniors.
▶ 3:54:49Far too long, americans have had to choose between much needed prescriptions and household expenses. That's what I'm glad we're having this hearing today to explore solutions to lower the cost of care for americans. Now, I had a really great experience with my pharmacist on monday before I left to come. Usually he is there to complain to me. Uh, but he came and he says, well, can I speak to you a minute and I want to give you some good news.
▶ 3:55:18He said, eliquis, which is a drug that's used. He said the price is substantially down. And he said, furthermore, we're making a little better than a dollar when we sell it. And, uh, before we were losing, uh, a lot of money selling it. The only problem is my accountant says revenues are down because drug prices are going down. But I said, you know, profits up. He said, yeah, profits are up. So that's something that corporate america can learn, I guess. But uh, but that was good to get that good news.
▶ 3:55:47And, uh, I told him I would spread that, uh, Mr. gilbert, insurers and pbms often go against doctor's orders by requiring patients to step through multiple medications before they can receive the originally prescribed medicine.
▶ 3:56:00This happens in the part d market, the commercial market, and now the medicare advantage market for part d drugs with the, uh, with the safe step act, which I introduced earlier, this congress, uh, helped hold insurers accountable for increasing the use of step therapy, leading to non-adherence and access issues. Mr. galvin. >> oh, thank you, Mr. congressman. We believe that reform to step therapy does make sense. And for instance, it should all be electronic.
▶ 3:56:30It should not be faxed on old fax machines. And it should be timely when patients need an answer. But we also believe that medical management is important. >> okay. Thank you. Miss riley. And other countries patients have access to fewer innovative medicines. In the us, 85% of new medicines are reimbursed versus only 24% in australia and 21% in canada. In the uk, uptake of new cancer medicines is only about 8% of what it is in the us.
▶ 3:56:59Patients in other countries also wait longer for their medicines. On average, oecd countries have access to 18% of new medicines launched within one year of global first launch. Us patients have access to 78% of new medicines within one year. But I still hear from my constituents that they have all kinds of hoops to jump through before they can access these groundbreaking therapies.
▶ 3:57:25It is critical that patients are able to access the medicines they need to treat their health conditions. Could you please explain what the biggest barriers to patient access in the us are, and what can be done to address those barriers? >> yes. Thank you for the question. I think the first step is today, there are 1453 medicines that last year got excluded from the big three pbm formularies.
▶ 3:57:50If you look back 10 or 15 years ago when a medicine was approved, it typically was available to patients. That's no longer the case. Large numbers of medicines get excluded. Once you've actually gotten on the formulary, it doesn't necessarily mean you're going to get access to the medicine. If you're in medicare part d and you're prescribed a brand new medicine, half the time that medicine is going to get denied originally, you're going to have to jump through a hoop. Prior authorization, some form of utilization management. And in the commercial market, it's 70%.
▶ 3:58:20So yes, your patients or your constituents are experiencing a lot of what we are seeing, which is the hurdles continue to go up. We also now have high deductible health plans. 80 million americans are in a high deductible health plan, which means when they go to the pharmacy before they've met their deductible, their insurance company and pbm are charging them the full list price of the medicine, not the negotiated price.
▶ 3:58:44As a result, the pbms and insurance companies are making money every time that prescription is written. In fact, a gao looked at this in part d and found of the seven of the 100 most rebated medicines in 79 cases, 79 out of 100, the pbm and insurance company made 400% more than what the patient was paying for the medicine. So this is not a system that is sustainable. We have a great system in america.
▶ 3:59:13Patients do have availability of medicines, but the hurdles that get put in place are significant. >> well, I thank you. My time is up. But I will say this I'm going to do everything I can in my time here to correct this problem. This is it should not be going on in our country. The gentleman yields back. I now recognize the gentlelady from virginia, miss mcclellan, for five minutes. >> thank you, chairman griffith and ranking member degette for holding this very timely hearing.
▶ 3:59:41For many americans, approaching the pharmacy counter today feels like falling into a financial sinkhole. Within the past year, approximately 1 in 5 adults opted not to fill their prescriptions because they were just too expensive. In virginia, that burden is even heavier, with 1 in 4 adults skipping essential medicines.
▶ 4:00:00Seniors, parents, and individuals with chronic illnesses or disabilities have to make impossible choices between paying for household necessities and the medications that grow more expensive with every refill, women in particular shoulder a heavier burden for prescription drugs. In 2024, women spent nearly 30% more out of pocket on prescription drugs than men.
▶ 4:00:25Whether it's recurrent costs for birth control, menopause treatments or medications for conditions like endometriosis and postpartum depression, women pay a prescription pink tax simply to maintain our health. At the same time, rather than working to reduce the drug prices women and families are facing. Congressional republicans have driven up health care costs and undermined efforts to lower prescription drug spending.
▶ 4:00:48The big ugly law included provisions to weaken medicare's ability to negotiate the price of essential drugs like keytruda, which is often used to treat cervical cancer, endometrial, and breast cancers, according to the congressional budget office. This change leaves pharmaceutical companies with almost 9 billion in additional revenue over the next decade. Congressional republicans have put profits ahead of the health and financial security of women and families.
▶ 4:01:17Meanwhile, congressional democrats inflation reduction act, which empowered medicare to negotiate for lower drug prices, has already saved taxpayers and seniors on medicare billions. Democrats will continue to fight to advance policies that actually lower prescription drug prices, to bring relief to americans. Prescription costs and pocketbooks.
▶ 4:01:38Miss sachs, following the congressional republicans weakening of medicare drug price negotiation program, which expanded the program's orphan drug exemption and delayed the selection of blockbuster drugs like keytruda. What avenues exist to strengthen the program and continue to bring savings to the american people? >> there are already bills introduced.
▶ 4:02:00>> in this committee that would do things like extend the benefits of the drug price negotiation program to the commercial market, extend the inflation rebates from the ira to the commercial market. And there's a number of proposals that would do things like consider the selection of drugs.
▶ 4:02:17So as you noted, whether some of these products are orphan drugs and should truly be exempted, as keytruda made $31.7 billion last year alone, whether that's the type of drug the drafters really had in mind when trying to expand this orphan drug exemption, there's a whole range of ways the program could be expanded to more patients or strengthened, even within the medicare program.
▶ 4:02:41>> and your testimony discussed incorporating international reference pricing into the medicare drug price negotiation program. Can you expand on how this approach would work alongside the existing negotiating framework and the potential benefits and challenges? >> so international reference pricing seems to have bipartisan interest. It was included in h.r. Three, which was a previous drug price negotiation bill. And then it's obviously a topic of interest for the presidential administration as well.
▶ 4:03:09There's a lot of ways to think about including international reference, pricing elements within negotiation, if that's desired. So, for example, it could be one of the factors that congress instructs cms to consider as part of the negotiation. It could be a tool to think about selecting drugs in the first place. Where's the price disparity? The largest it could feature into the setting of the, uh, some of the initial offers. What is the ceiling as defined under the law?
▶ 4:03:38So there's no one way to do it and to incorporate it, but lots of choices. >> okay. And miss riley, less than a minute. Uh, what actions can pharmaceutical companies take to ensure critical medications, including those for birth control and menopause, remain affordable for women and families? >> thank you for the question. Um, you're right.
▶ 4:04:01Our companies, many of whom are in the women's health space and pride themselves on ensuring that we have access to women, whether it's looking for contraceptives, ivf care, postmenopausal in the new menopause, drugs that have come to market. You know, our companies operate in a system where we do face competition. And that's a good thing because it does help to drive down costs in the system and make those medicines more affordable. As you know, in the affordable care act, contraception is available for patients at zero cost, which I think has expanded access in that space.
▶ 4:04:34And we would love to work with you to ensure that all women's health care products are available and affordable for patients. >> thank you. I look forward to that. And I yield back. >> gentleman yields back. Now recognize the gentlelady from california, miss matsui, for five minutes of questioning. >> thank you very much, Mr. chairman. And I want to thank the witnesses for being here today. I know it's been a long day. I'll be quick. Um, we are one of the richest countries in the history of the world.
▶ 4:04:58But today, 1 in 5 adults say they haven't filled a prescription from their doctor because they can't afford it. 1 in 5. It's unconscionable, really. And I'm glad we're here to discuss solutions. I'd like to share a story from one of my constituents. She's a small business owner in my district, and after struggling with an opioid addiction, she's 11 years sober now.
▶ 4:05:22For 11 years, she's relied on buprenorphine to help her stay in recovery. But recently, her insurer, aetna and pbm cvs caremark tried to cut her off from her typical medication and switch her to suboxone. That's not only an entirely different medication, it's one that this constituent had already tried and failed.
▶ 4:05:50And despite her doctor explaining she needed buprenorphine, not suboxone, the appeal was denied. She was forced to pay $700 at the pharmacy counter to get her prescribed medication. Mr. marin, how can the pbms you represent possibly justify keeping someone from their life saving medication, given the very real possibility of relapse?
▶ 4:06:21>> congresswoman, thanks for the question. That's a it's a terrible story, and I'd like to follow up with you and your staff to better understand the details of what happened and see what we can do about it. But look, pbms mission is to keep drug prices lower. They do that. The market is very competitive and employers choose the right fit for them. >> okay. That's your answer. Is that right? >> yes. >> okay. But this is just common sense.
▶ 4:06:42I don't think we need all the facts to agree that people need to stay on their medication assisted treatment to avoid a life altering, even life destroying relapse into substance use disorder. And unfortunately, this is a pattern too many patients are familiar with being blocked from their life saving medications because their insurer or pbm thinks they know better than the doctor itself.
▶ 4:07:09And I'm really sorry, and I welcome your comments, and I hope that you will answer them. And that's it. Thank you very much. >> thank you. Gentlelady yields back. Seeing no other congress people showing up to ask questions. Uh, we will move forward. And I would ask unanimous consent to insert in the record the documents included on the staff hearing documents list. Without objection. It is so ordered. I would like to thank all of our witnesses. It's been a long day for being here today. And thank you for giving us your time.
▶ 4:07:39As we have said repeatedly, many members will have additional written questions for you. I'll remind members that that they have ten business days to submit questions for the record, and I would ask the witnesses to respond to those questions promptly. Excuse me. Members should submit their questions by the close of business on thursday, february 26th and without objection, subcommittee hearing is adjourned.