senate committee on health, education, labor and pensions will please come to order. senator murray and i will each have an opening statement and then we'll a introduce the witnesses. after the witnesses' testimony senators will each have five minutes of questions. there is a vote scheduled for 10:30. i think what we'll do is continue right on through until about 10:45. and then we'll alternate going back and forth to vote. i think we'll have time for all of us to hear the witnesses' testimony before we have to leave for the vote. today we're holding a hearing which is the second in a series

on prescription drug costs and response to a bipartisan request led by senators cassidy, senator franken, along with senators collins, baldwin, murkowski, whitehouse, cap tow, sanders, enzi and warren as well as other senators interested in the subject. not only was the request for these hearings bipartisan, but both this hearing and the first hearing on drug prices were bipartisan, which means senator murray and i agreed on the witnesses. despite this, our first hearing in june went so far off track that i delayed this hearing because senators, instead of talking about drug prices, wanted to use the opportunity to talk about other issues specifically the affordable care act. i acknowledge their deep feelings and differences of opinions on the aca, but the senate has been stuck in a partisan stalemate for seven years over what is a relatively small part of health care, the individual health insurance market where 6% of americans

purchase health insurance. senator murray and i have been working for several weeks to see if we can find within the senate a limited consensus, bipartisan agreement, to stabilize the individual market in the interim. but there are many other issues that have cost health care spending in this country to grow from consuming 9% of the gross domestic product in 1980 to nearly 18% in 2015 and predicted 20% in 2025. the 5% or so we spend on prescription includings, including retail drugs administered in hospitals and the other 85% including doctors' visits, surgeries, medical twices and ways to get the costs under control. we are having a hearing on thursday to discuss wellness, healthy life-style changes and

how they could decrease serious illnesses and bring down health care costs, while senators are free to say and do whatever they would wish to do, i would hope today that we could focus on the cost of prescription drugs while we have these excellent witnesses before us. next month the committee will hold a third hearing and consider a report norm augustine is leading from the national academy of sciences as a result of a study called ensuring patient access to affordable drug therapies. we set a good example of bipartisan success in the user fee agreements for 18 months. we worked with the counterparts in the house to update and pass user fee agreements, they included provisions from many senators on both sides of the aisle, including measures to provide additional staff and resources to provide more biosimilars and generic drugs. last year the committee worked

together on 21st century cures. to spur the development of new drugs and treatments. my goal for these hearings is to continue these in a bipartisan way and learn the facts about what goes into the price patient's pay when picking up their prescriptions and what, if any, steps we can agree on to lower those prices. we are in the middle of a remarkable time in science. it's producing amazing discoveries for patients. we have drugs that can cure hepatitis c, keep cancer at bay and stop a stroke. with this innovation comes new challenges. we need to make sure all patients can benefit. we've all heard from patients that the cost of new drugs are often too much for them to afford. we also need to make sure that any action we take doesn't jeopardize the innovation and the breakthroughs. the prescription drug delivery system, how a drug gets from the manufacturer to the patient, is complicated. more than 4.4 billion prescriptions are written for drugs each year for americans

who then pick up the prescriptions at 60,000 drug stores or receive them from doctors or hospitals or online pharmacies. and those 4.4 billion prescriptions estimated to cost $450 billion are paid for in a similarly complicated way which you're going to hear about today. in addition to private insurance, many different government programs subsidize or pay for drugs. medicaid. 340 b. medicare b and b. tricare. indian health service. patients often pay a set amount called a copay or percentage called coinsurance, when picking up their prescription as well, or sometimes patients have to cover the whole cost. if they haven't met their deductible. what amount of the cost of the prescription drug they pay is determined by what health insurance they may have. i hope our witnesses today will help us understand the drug delivery system and how their role in the system affects the price patients pay.

our witnesses represent the brand manufacturers who take enormous risk, generic drug manufacturers who over the last 30 years have grown to make 89% of all prescriptions, lowering costs. drug wholesalers who purchase drugs from manufacturers and deliver them all over the country daily. pharmacy benefit managers who use their buying power to leverage lower prices on all drugs, but also make difficult decisions about drugs to offer patients at what cost and with what copays or what insurance, and then, of course, pharmacists who are on the front lines of helping patients that find out the cost of their medicines when picking it up at the drug store and having to make that fit within their budgets. as we look at and hope to address the fundamental costs of health care, i hope we can continue to do this in a bipartisan way. senator murray. >> thank you, chairman alexander, for your leadership and holding these hearings and to all of our colleagues on both sides of the aisle for their

commitment to address the critical challenge before us today, the increasing burden and soaring prices of prescription drugs. much like the last hearing on the devastation caused by the opioid crisis this is truly an urgent discussion. like everyone here i have heard from many families forced to choose between high priced medication and paying bills, between filling a prescription or putting food on the table and between getting the care they need or paying their mortgage or putting gas in the tank. this is clearly a challenge we need to meet quickly. i am pleased this committee worked to increase transparency and foster more competition in the generic drug market in the fda reauthorization act. in these agreements, taking suggestions from both sides, we were able to accelerate the review of generics to alleviate anti-competitive markets, improve the process for bringing a generic to market by

increasing communication and transparency, between the fda and manufacturers. and encourage new generics to compete and prevent gaming of the orphan drug act which has brought hope t t t t t so many patients. as we know, generic competition alone will not address the high prices paid by so many patients and families in out-of-pocket costs and high premiums. we have to make more progress to get at the root of the problem facing patients, which is the high prices set by drug manufacturers. that is why i am glad democrats have put forward a number of ideas and legislation to demand more transparency from pharmaceutical companies about what's behind drug prices, allow medicare to negotiate fair prices for prescription drugs, prevent manufacturers from engaging in price gouging, and crack down on the various anti-competitive practices that keep prices high. these measures would make a real difference when it comes to bringing down prices. now, all this requires, and i

have said many times, this administration has to be our partner not a hindrance to our efforts. as we all saw last week, president trump continued to take unilateral steps to increase premiums and undermine protections for people with preexisting conditions and cause chaos in our health care system. that pattern of governing by sabotage is reckless and appalling. and only makes it, i believe, more critical that congress shows patients and families we can work together to undo the damage being caused. and move on to actually doing some good when it comes to families' health care. on drug prices, like so many other issues, president trump talks a big game on twitter but has not taken any action to actually lower drug prices. and the little we have seen from this administration, a leaked executive order back in july, barely scratches the surface. instead, many of the plans that have come out would do very little to actually target drug

prices and, in fact, some have targeted vital programs like 340-b that support hospitals and clinics and serving the very communities who cannot afford the drugs they need to stay healthy. so i hope the administration chooses a different path. i would note, by the way, that president trump could start by nominating a secretary of health and human services who will put families first when it comes to prescription drug prices and any issues. i expect a thorough and rigorous nomination process when that comes before us. they have a very important role to play. so we have a lot to cover today, and i want to thank all of our witnesses for joining us. we are very much looking forward to your testimony. i just want to, again, thank chairman alexander, all of our colleagues, for their efforts to tackle this pressing challenge, to make sure prescription medication and life-saving treatments are not just available but accessible and affordable. i am hopeful that our bipartisan work on insurance market stabilization can lay the

groundwork for serious actions on drug prices given we all agree this is a priority. as we know, patients and families we serve cannot wait much longer. thank you and i turn it back over to you, chairman. >> thank you, senator murray and thank you for creating a bipartisan environment where we can work ahead, as you indicated, on trying to stabilize the individual health insurance market and begin to move away from health insurance to the larger issues affecting health care such as drug prices. we thank the witnesses for coming. i would ask you each to summarize your comments in about five minutes. and that will leave senators more time to ask questions. first witness is laurie riley, the executive vice president of policy research and mentorship at pharma. she leads policy and research department there. trade association and brand drug manufacturers. chip davis is the president and chief executive of the trade

association representing generic drug manufacturers. distributors and suppliers. elizabeth galina, senior vice president for government affairs and general counsel representing prescription drug wholesalers. welcome to you. mark merit, president and chief executive officer of the group that represents pharmacy management. and the executive of the largest association of pharmacists in the united states. ms. riley, let's go with you, then we'll hear from each witness. >> thank you, chairman alexander, ranking member murray and members of the committee for having me here today. in the past 20 years the food and drug administration has

moved many drugs to market. through innovation, the hiv/aids death rate has dropped 86% from the mid 9 '90s. progress in the space of oncology have been heralded as game changers for patients facing serious conditions such as cancer. today, because of scientific advances many other conditions are now manageable and sometimes even curable. in the midst of the incredible scientific progress that we have seen, drug spending growth is actually declining from its peak in 2014. in fact, last year prescription drug spending cost growth was 3% to 5% according to public and private experts. that was in line with all other forms of spending growth. and spending on retail as well as physician administered drugs continues to remain about 14% of what we spend in terms of total health care dollars in this country. now, oftentimes when people talk about that 14% there is a

presumption that all of that comes back to the brand-name manufacturer. in fact, less than half of the 14%, about 6.8%, comes back to the brand-name industry. the rest goes to the generic industry and others in the supply chain. one important part of the supply chain that is not with us here today is the hospital sector. just this morning we released a paper that looked at the -- 20 of the most commonly prescribed expensive medicines in hospital outpatient settings and found that on average they increase and are reimbursed 2.5 times the acquisition costs in which they purchase medicines in this country. they are an important part of the supply chain. i hope we talk more about that later today. going forward, medicines are projected to remain at around 14% in health care spending. many say how can that be the case. we know what's in the pipeline. we know that we're likely to

have 40 to 45 new medicines approved every year. the reality is we have for pharmaceuticals some of the most stringent cost containment across the entire health care sector. pharmacy benefit managers use the fact that there is a great deal of competition within therapeutic areas to limit formula formularyies and to use a host of utilization management techniques to keep costs under control. over the next five years, over $100 billion worth of medicines will be coming off patent, and those medicines will become generics and cheaper for americans to afford. importantly, in the pharmaceutical benefit manager space, about three pharmacy benefit managers today buy on behalf of 75% of all prescriptions in this country. because of the leverage that they can exert, in 2015 they were able to secure over $100 billion in rebates and discounts. now, unfortunately, what's happening today is those rebates

and discounts are often not making their way back to patients at point of sale. compounding this problem is today an increasing number of patients have high cost sharing for their medicines, either because they have a deductible, today 50% of commercially insured patients have a deductible for their medicine. then they're asked to pay a list price, in other words, a non-negotiated price for their medicine. there are solutions that we think could be put forth to address some of the cost challenges we face. the first is the fact that $100 billion of discounts and rebates should find their way back to patients at the retail pharmacy level. the discounts should be passed back to patients to lower their health care costs. we need to do more to reform government rules around how companies can contract today. there is a desire to move towards contracting towards value but today because of government rules and regulations it makes it harder to have sensible contracting.

third, we need to look at programs like the 340-b program which, yes, do provide a very important benefit to many but, as i mentioned before, we know in the hospital sector oftentimes hospitals are increasing the price of their medicine 2.5 to 3.5 times and are getting reimbursed oftentimes, again, three times, again, as muches as the manufacturer is getting reambersed. we need to speed the approval of new medicines and jen generics. we need to continue to modernize the food and drug administration. future progress is needed, and patients are waiting for the kind of innovation our sector can deliver. thank you very much. >> thank you, ms. riley. mr. davis, welcome. >> thank you, chairman alexander, ranking member murray and members of the committee. i very much appreciate the invitation to testify here

today. the association for accessible medicines is the nation's leading trade association for manufacturers of fda approved generic prescription drugs. our manufacturers -- our members actual actually manufacture more than 90% of all the generics dispensed in the u.s., providing tens of thousands of jobs in over 150 facilities throughout the country and manufacture more than 61 billion doses of medication every year here in the united states. am's core mission is to improve the lives of patients by advancing timely access to affordable generic and biosimilar medications. on behalf of our members let me thank the committee for convening this hearing to examine the critical challenge of rising drug prices and for your leadership in reauthorizing all the user fee programs earlier this year. most particularly the generic and biosimilar user fee programs. generics currently represent actually 89% of all prescriptions dispensed in the

u.s. we account for only 26% of all expenditures on prescription drugs, saving patients and payers nearly $5 billion every week. last year use of generic medicine saved $253 billion to the u.s. health care system. that translates into meaningful patient access. generics operate currently in a deflationary market, not an inflationary market. that's an important context. consider that in the past 12 months prescriptions of brands have gone down by 7% while the revenue has increased slightly, by contrast, generic prescriptions have gone up 2% year over year while revenue has declined by 13%. it is easy to recognize the significant difference between generic and brand name prescription drugs when it comes to prices that we often see at the pharmacy counter. the dramatic difference in how brand and generic markets operate is not as widely underfood. when generics enter to provide

competition to a brand monopoly payers typically shift away from the reimbursement model and rely on distribution channels to lower the price of medicine. generics compete for sales and commonly the only leverage that the manufacturers have is their ability to lower price and guarantee volume. this creates fierce competition in the marketplace amongst our members which in turn causes prices to decline. so the reality is that the markets for brands and generics are very different. monopolized versus commoditized and the differences create vastly different incentives for all of the stoleders in the supply chain. this reality was affirmed through a report issued by the university of southern california center for health policy in economics entitled the throw of money through the pharmaceutical distribution system. among the findings, supply chain stakeholders capture

significantly more revenue. for every $100 spent to generics 65% goes to the distribution and reimbursement of the products by members of the supply chain. in today's market consolidation in the wholesaler and distributor market and arrangements between pharmacy chains and distributors left generic manufacturers with a small number of large purchasers. three purchasers today account for 90% of all sales from all generic manufacturers, ultimately a market with three large-scale purchasers will see significant compression and consolidation on the supply side, our side. fewer generic manufacturers, running the risk of marketing smaller portfolios can translate into less competition, not more, while simultaneously increasing the risk of drug shortages, a scenario none of us want to see happen. as the committee has identified and reflected in the title of this hearing. how do these realities affect what patients pay and what does

it mean moving forward. we know 30 years ago a remarkably strong system was designed to balance innovation and access. that system can only function with robust competition. the system can only work if generic companies can get the drug samples they need to start the fda application and approval process which this committee has spear-headed efforts to accelerate and reform. in that system only works when generics have the ability to enter the market when patents and other ip protections are actually supposed to expire and ultimately the system works when public policy doesn't favor one side of the access and innovation equation at the expense of the other. in closing, we all know something must be done about tree description drug prices. given the fact that the new fda commissioner characterized drug costs as a public health concern we submit congress has the opportunity to consider policies to enhance generic and biosimilar competition.

we've provided those in our written testimony and i look forward to answering your questions moving forward. thank you. >> thank you, mr. davis. missgallineau, welcome. >> good morning, chairman alexander, ranking member and members of the committee. thank you for the opportunity to participate today. i am senior vice president and general counsel for the health care distribution alliance. hda is the national trade association representing primary pharmaceutical wholesale distributors. our members include national, regional and specialty companies. their expertise stream lines the supply chain and serves over 200,000 pharmacies while achieving cost savings for the health care system, about $40 billion annually. the u.s. health care supply chain is a complex one. each day our 35 primary distributor members who purchase directly from authorized manufacturers ship 15 million products daly from about 176

warehouses across the country, a relatively small but highly efficient and effective network. most pharmaceutical sales in the u.s. flow through our members. distributors are not like any other supply chain participants. the core business is not manufacturing and they do not prescribe medicines or dispense to patients. they focus significant resources on the safety and security of the supply chain. these efforts may be the most important service distributors provide. with this committee's support several years ago hda advocated for the enactment of the drug supply chain security act which sets the framework for unit level traceability of medicines by 2023. on a daily basis pharmacies and other providers place orders with our distributors for the medicines they need to serve thur patients. without distributors customers would have to carry weeks of inventory and place daily orders with each and every manufacturer. this way providers can maintain

just in time inventory saving them staff necessary to carry extensive visitors or have large storage facility. in addition they often provide financial credit terms, pharmacy management systems and in-store resale support. with regard to the upstream supply chain, the work of hda members enables manufacturers to concentrate on developing and producing medicines without the added expense and challenge of getting the medicines to every single dispensing site across the country. while hda members are primarily supply chain logistics and operations experts, this is no longer an industry focused solely on moving products from point a to point b. today they provide a wide array of supportive services delivering value to both ends of the supply chain and to patients. some examples of core services to manufacturers include receiving and accurately processing orders. shipping pharmaceutical products safely. inventory management, providing manufacturers with ordering and utilization data and processing returns and charge-backs.

in exchange for these services provided to manufacturers, distributors charge bona fide service fees which are not passed on to the customer and represent a fair market value for a service actually performed on behalf of the manufacturer that the manufacturer would have to otherwise perform themselves. the distribution industry is a high volume yet low profit industry. moreover, a recent berkeley research group study noted that the distributor profit on overall branded drug cost was just under 1%. distributors have little impact on overall drug pricing and generally traditional pharmaceutical distributors purchase from manufacturers based on wholesale acquisition costs and charge manufacturers service fees. this represents the manufacturer's list price and doesn't include adjustments in price resulting from proprietary negotiations between the manufacturers and distributors, payer groups or other customers. distributors are not privy to how such pricing decisions are made. on the other side of the

equation, distributors typically sell branded drugs to downstream customers based on wacs established by manufacturers. they sell based on wacs, other list prices or they may price drugs sold to customers in response to the market. for example, when there are more than one generic drugs. wholesale distributors do not control the prices but rather price is dictated by wac and market forces. primary distributors' goal is a simple one. add efficiency, security and timely delivery so providers can concentrate on patient care and ensure patients have access to the medicines they need. historically, hda distributor members have had a positive effect on supply chain, helping to make the u.s. supply chain one of the most safest and most efficient in the world.

thank you. i would be happy to answer any questions you may have. >> thank you. mr. merit, welcome. thank you, mr. chairman, members of the committee, for inviting me to discuss drug pricing and the delivery system drug makers use to bring products to market. i would like to start by providing a top-line overview of a complicated subject. no wonder there is such anger about drug pricing the role supply chains play and reducing overall costs. there are several reasons why drug pricing has become a concern in recent years. first, drug makers' shift from producing block buster drugs like lipitor which may have cost $3 a day to drugs like sivadli. not everybody is prepared to pay $1,000 a day for a great new drug. on the heels of a decade seeing very little innovation. the second reason for concern

were the recent high-profile scandals involving three drug makers specifically myelin's price hack and other that built business models around buying low priced drugs to resell them at higher prices. third, many health plans have tried to restrain premium increases by raising deductibles in the face of higher costs not just of drugs but overall major medical costs. higher deductibles meant some grew accustomed to paying higher copays thinking that might be the cost of the drugs. the actual prices of drugs can run hundreds or thousands of dollars. this has converged to raise the visibility of this issue. i would like to offer thoughts on the drug supply chain.

first, supply chains are a routine part of how consumers access not just drugs but almost any product in the marketplace. they're a normal part of american business. they are not something unique to prescription drugs or health care. they are used across america. it should be noted that supply chains have nothing to do with why manufacturers raise prices. mile lynn didn't raise prices because of supply chain costs. the laws of supply and demand, not supply chains determine how drug makers and manufacturers set prices. in the simple terms, it's a market of sellers and buyers. drug makers are the sellers and like all sellers set prices according to whatever the market will bear. likewise, the buyers want to pay as little as possible. employers, unions, health plans and other pbms. they do a number of things to reduce costs. they design benefits encouraging patients to use generics, they create networks of affordable

pharmacies to reduce costs for consumers, negotiate rebates and other concessions. it should be noted that rebates are discount paid after sales were made. while they've stated publicly they welcome alternatives to rebates, rebates remain a key way to deliver savings to clients. 90% of rebates are passed through to plan sponsors and almost half of large employers require 100% of rebates to be passed through. once they're passed through plans can decide what to do with them. typically they're used to reduce premiums. the marketplace is revolving on the issue. it should be noted that drug makers set and raise prices regardless of prices they negotiate with pbms.

we were able to bring lower than a lot of other price country in europes. pbms play a help restrain drug spending to 3% to 4% per year. there are market-based policy solutions that can reduce costs. i thank the expediting of generic approvals and guarding of second price hikes of decades old drugs. we urge congress to approve brand drugs facing limited competition and bring biosimilars to market faster to foster competition, the key to reducing overall drug prices. i look forward to answering any questions you might have. >> thank you, mr. merritt. mr. monegan. >> thank you, chairman. alexander and ranking member

murray for the opportunity to discuss a very important topic for our nation's patients, families and pharmacists. it's an honor to be here. i am tom menigan american pharmacists association ceo. apa is america's largest, oldest and most diverse organization. we promote coverage for quality patient care services. or members contribute to health care in physician offices, specialty, community offices, senior care, ambulatory care and health systems. for years as a practicing community pharmacist and speshlty pharmacy owner i have shared challenges with patients facing financial choices between food and medicine. today's topic is of concern to pharmacists, the professional on the front line informing patients about medication costs and explain complex policies. as the organization representing

pharmacists in all practice settings we support policies to increase patients' access to affordable and cost-effective medicines. decisions among the entire supply chain impact patient medication costs including arrangements among manufacturers, wholesalers, insurers and pbms. pharmacy are for patients are confronted with changes in coverage, formularyies, deductibles, copayments. upstream decisions limit pharmacists option to impact patients' final drug costs. instead of helping address the nearly 300 billion the u.s. spends annually on medication used problems, fixing the problems of medication use. pharmacists spend much of the day on the phone pursuing appropriate, covered, affordable treatment. to address this challenge we support a transparent pricing framework to eliminate or identify mechanisms like rebates and post-point of sale price

fees imposed on pharmacies. these policies generally result in higher point of sale prices to consumers and, consequently, higher beneficiary copayments. we also encourage policies that allow any willing pharmacy to enter into contracts with insurers or pbms to increase patient access and choice which can improve adherence and health outcomes. we request the committee to look beyond the drug price spend in isolation. policy should consider the relationship between effective medication use and lower medical costs rather than scoring them in silos. full value in health care will come from integrating these silos and their related costs and outcomes. as drugs become more expensive, complex and personalized the need to optimize their impact and value should increase to get the greatest benefit from medications, patients must understand how to use medications safely and effectively.

empowered pharmacists can assist patients in optimizing the medication used and decreasing patient costs by providing services focused on safe and appropriate use. for example, pharmacists provide medication management services, especially important for patients who take multiple drugs or have chronic conditions. we address hospital readmissions by helping patients transition between care settings. unfortunately, medicare does not cover our services. many of our nation's seniors are medically underserved, despite 91% of americans living within five miles of a community pharmacy. pharmacists are well trained and underutilized health care resource which can positively affect beneficiaries' care and the entire program. we ask your support for s 109 the pharmacy and medically underserved areas enhancement act. not only will access increase but the act will help to improve

beneficiary kwout com beneficiary outcomes particularly those impacted by medications. but we have to be on the team. finally we support a safe and secure supply chain. america's pharmacists and patients shbt have to worry about diversion and counterfits. importantly, we have great concern regarding importation's impact on patient safety and continuity of care. we believe it's in direct conflict with recent efforts by congress to secure the u.s. supply chain and secure and improve patient safety. in summary, thank you for including pharmacists today. the medication experts on the patient's health care team in this discussion. ultimately the most expensive medicine is the one not purchased, not taken, abandoned or not used correctly by patients. pharmacists stand ready to help. i look forward to answering any questions on the positive role

we can and do play in reducing patients' prescription drug costs, thank you. >> thank you very much to all the witnesses. we will now begin a five-minute round of questions. i'll begin. then we'll go to senator murray beings then we'll leave, go vote and come back, but we'll continue the hearing so that the senators can ask questions. ms. riley, i think you said that three of the pharmacy benefit managers which mr. merritt represents negotiate rebates for 75% of prescriptions sold? >> that's correct. >> that's about $100 billion of money? >> in 2015, over $100 billion was negotiated on behalf of commercial health plans as well as government mandated -- >> a rebate is simply that money means the pharmacy benefit managers then -- the manufacturers get less money. >> correct. >> pharmacy benefit managers

then decide in their negotiations where that 100 billion goes. >> right. it lowers the net price to the manufacturer. that money either gets sent back to the insurance company, some of which is kept -- a portion of which is kept by the pharmacy benefit manager. >> sir, you said i believe that we don't need rebates. is that what you said? >> what i said was -- >> ought to get rid of them? >> we need more transparency in the system so that we know where they are coming from. you know, at the end of the day, when a patient walks up to a pharmacy and the pharmacy presents them with the cost of the medicine to them, the impact of rebates is not really felt until after. >> ms. riley was saying people who go into your pharmacies don't really see the direct -- or don't necessarily see the direct benefit of the rebate negotiated by the pharmacy. >> that's fair. they don't. >> senator murray and i and others of us, we have been

working on health insurance, which we find to be very complicated. where the money goes in prescription drugs is more complicated. i have yet to figure out exactly where it goes. why do we need rebates at all? i mean, wouldn't it increase transparency if the drug manufacturers just established a list price and then they negotiated with the pharmacy benefit managers or whomever else they sold to a reduction in that price if they wanted to, and then we wouldn't have some mystery about who is getting the benefit of a rebate. >> without commenting on the need for rebates, they're clearly used to drive market share. >> why wouldn't you comment on it? >> they're used to drive market share. oftentimes, in our view, that's not necessarily to the benefit of the patient. when pharmacists are trying to manage medication use -- >> my question is why do we need

rebates? >> mr. merritt, why don't we just get rid of rebates and let you negotiate directly with the manufacturers, take that $100 billion a year and just reduce the list price and then wouldn't that make it simpler for us to understand where the money goes? >> we would be open to that. rebates were around before pbms came on the scene. they're used by manufacturers of drugs and other products because they want to keep one high price because their lower volume clients pay that price but the bigger volume clients, they'll offer a bigger discount. which is all a rebate is. >> i would argue, though, that high rebates are things that both the pharmacy benefit managers and insurance companies like because they get a big check at the end of the day for those rebates. they then can use the rebate dollars to do what they want to do with them. >> would you like to eliminate rebates? >> we'd like to see them get passed back to the patient at point of sale. >> why worry about a big, complicated chart that shows how

they are being passed back. why not just eliminate rebates? >> that's one option, obviously, to have a lower list price. i will tell you, today, plans and pbms tend to favor products in terms of the formularies. they prefer a product with a high list price and high rebate because then the money flows back to them to decide what to do with. >> miss gallum, do we need rebates at all? >> wholesale distributors don't have any role in this rebate. >> you have a nice view of the prescription drug business. do you think it would be more transparent and easier to follow and consumers may get a more direct benefit of lower costs if rebates were eliminated? >> i think it's something to be explored. >> that's what we're doing. we're exploring it. mr. davis, what about you? >> mr. chairman, just -- this is a good example of a difference between the branded and generic

market. historically the rebate model is not applied across the entire generic sector. our work is generally directly to the wholesalers, we have 20 or 25 manufacturers competing for the business of three wholesalers leading usually to an up-front negotiation on price which forces the deflationary aspect of the industry. we're seeing an increased involvement between pbms and brands as banded products come close to patent expiry. ultimately the recent model is not as commonly used on the generic side as it is on the brand side. >> senator murray. >> miss riley, do you agree that our current system of brand and generic drugs is designed to strike a careful balance between proerk protecting the market share of drugs to recoup costs and driving competition to bring

prices down after that point in time? >> i believe that's the intent of the system. >> i do too. here is my concern. your member companies are taking actions now to deliberately disrupt that balance to get the longest market monopoly possible in order to benefit their bottom line. i will give you examples. abve settled in court to extend the market for humira for years. and another 15 years by getting additional patents that only cover the drug's dosage amount. allergan sold theirs to the indian tribe to protect it from a monopoly and settled with a generic challenger to keep it off the market for seven years. are those isolated incidents or part of a larger trend in which companies use the patent system to block competition that could

bring down prices. >> let me try to address each of those examples. in patent settlements companies are given patents by the patent and trademark office and they believe they have the right to defend them in the court of law. in the case of the ones you mentioned there was no exchange of money for that patent settlement. the patents on that product, according to public records, exceeded actually to 2033. so this product will be coming on the market ten years prior to when the patents truly expire for that product. i understand other companies are also trying to get on the market to challenge that particular product. so, yes, we have a system and the system was in part designed by the act to encourage generic manufacturers to get on the market before our patents actually expire. i think it's a system that's worked incredibly well. in 1984 there were 19% of prescriptions that are generic. today nearly 90% of prescriptions are generic. patent settlements is one way,

oftentimes, to get products to market well before the patent would actually have expired. so, you know, oftentimes there are anecdotes pointed out. i would argue that by and large sooner than they would have been otherwise. >> i would like you to comment on that. there also seems that as well as other tactics pray to keep prices high. congress actually passed biologics, innovation act as part of aca, it cleared the path for products to compete with biologics. cbo estimated that increased competition could save patients and families $7 billion just through 2019. but even though fda now approved several of those we aren't seeing any great savings. why is that?

>> thank you for the question. three things on the pharmaceutical system that are quite frankly threatening its continued viability and suss tapability moving forward. one is the market imbalance. it's going to take time for the market to work that out, sessionally three buyers in control of 90% of the generic drug supply. the to others directly related to policy and your question. the second is -- inflationary market 20% of the total dost but not focusing on increasing cost of branded drugs year over year. rebate on generics passed as part of 2015 budget is part of that, places like maryland and california state legislative side. directly to your question, the

third area, absolutely unequivocally seeing increased effort on part of certain branded manufacturers with respect to anti-competitive behavior to keep generics and biosimilars off the market. you mentioned a number of them. the reality overall, the reason we're seeing this, companies doing business and political math and hoping they can get away with it. to your question on biosimilars, interestingly enough when passed as part of the affordable care act, estimated savings as early as fiscal 2014. to your point first biosimilar did not get to market until september of 2015. seven approved, the others tied up in litigation. >> it's real order for competition to bring down cost. we have to make sure the market is working.

>> in the absence of other senators i'll ask a question. when they come back i'll defer to them. with the exception of drugs compounded in pharmacies, each drug sold -- pharmaceutical drug sold in the united states requires a careful review by the food and drug administration before that drug can be sold in the united states. we call that fda gold standard. there are 4.4 billion prescriptions a year. most of us when we go into our local pharmacy or doctorsafety because we rely on fda gold standard. sometimes the cost of drugs come up, import drugs from other companies and side step the

careful review, each drug sold in the united states. i'd like to ask each of you starting with mr. menagan and going across whether you agree we should allow drugs approved by other companies to be sold in the united states. without review. >> short answer, absolutely not. efforts to address medication cost, complex issue of drug pricing. importation of nonfda meds threatens safety directly conflicts with congressional efforts to increase integrity and security of the supply chain and drug supply chain security act. drupts continuity of care and value-based payments and delivery. we're concerned savings, if any, will be short-term.

>> short answer we oppose that. >> we would absolutely oppose importation as it would threaten patient safety in this country. we've done alet of work on drug supply security act currently in faiths one of that law. one of the things it requires serialized products by manufacture manufacturers. no standard for serialization. each transaction that happens from manufacturer by 2023 at the unit level. also no global standard for that data exchange. >> supply chain, make it as safe as possible and we don't think allowing foreign imports will do anything to keep that level of

securi security. >> i'd like mr. davis and miss riley to answer my question about drug importation. >> briefly we share the concern we've heard from the other witnesses today relative to safety, secretary of health and human services has the opportunity tot's republican or democratic health official safe and cost effective. no one has been willing to do that. additional related to generics from practical perspective far and away market basket, less expensive u.s. market than they are in markets across the world. beg the question why would you want to be importing something more expensive to begin with. >> miss riley. >> add onto what my panelists said, opening our borders to potentially counterfeit risk health and safety of americans. counterfeiting is low penalty, lowe risk enterprise. if we open borers we're subjecting americans to unsafe

medicine. so we adamantly oppose. >> thank you for your response. first let me say i love having the gavel in my hand if it's only temporarily and for other members to vote. i went and voted early so i could relieve senator alexander so the chairman could go vote. last year the senate aging committee did an extensive investigation into the spiraling cost increases of certain prescription drugs. it's been mentioned this morning. we look at valeant. what we found was a pattern of certain what i call hedge fund

rights to a drug. pharma companies buying the then overnight increasing the cost as much as 5,000% in the case of daraprim. these were companies that played a role. there wasn't investment that would justify that kind of increase. i am particularly pleased that the chairman is holding this hearing today, because a lot of work to do. one of the issues that troubles me is the lack of transparency in the system.

the mack price is not what people pay. prices on what pharmaceutical benefit manager negotiated the cost. prices vary according to whether a generic can be substituted? there's just a lack of transparency in the entire system. i'd like to do across the panel and have each of you comment on how we can increase transparency into the pricing, because until we do that it is going to be very difficult for us to get a handle on whether these cost increases are justified. miss riley. >> thank you for the question and thank you for the work that you've done on issues that you raised such as the ones with

daraprim. we, too, share the concerns you raised about the fact that companies can buy and essentially engage in regulatory arbitrage knowing that the approval through the fda may take years. there are a number of solutions that we have talked about as well that we think merit some consideration, whether the fda can fasttrack reviews of medicines to compete with these products, list on their website suppliers and names of companies that may be able to help in producing competing products. so we are thankful for leadership on that issue and would welcome working with you on that. the issue of transparency is a very important one. oftentimes when we hear the word transparency it means different things to different people. transparency is important but important if it applies holistically. oftentimes transparency legislation we've seen wants to focus on one industry, brand name pharmaceutical industry and leave out the rest of the supply chain. as i mentioned in my testimony,

brand name pharmaceuticals represent about half of what we spend on total drugs in this country. the rest is subsumed. the rest is supply chain, distributors, pharmacy benefit managers and payers in hospitals. if we're going to have a discussion on transparency, which we would welcome, holistically involves entire supply chain because there are cost, as i mentioned before, in the hospital sector alone where they are increasing reimbursement 2 1/2 times over what they require a pharmaceutical product for. we definitely need to have more transparency into areas like that. >> i see two of my members of the committee have returned. so rather than going down t lhe line, i'm going to switch to another question i want to get in. i want to direct it to you.

last night "nbc nightly news" ran a story about an investigation which found that a wide variety of prescription drugs on certain insurance plans are actually cheaper when the consumer pays out of pocket. that makes no sense to me. we also learned at least in some negotiations, some contracts, there is a gag order that prevents pharmacists from telling patients they would be better off paying out of pocket than using their health insurance. so i would like both of you to answer the question of how common is this break and how can this occur? how can it occur that a prescription benefit manager whose very job is to negotiate

prices is negotiating a price that's actually higher than the consumer would pay out of pocket. mr. merrill. >> it's a good question. to answer your question, it's not something that should be going on in the marketplace. outlier behavior, i'm not sure, but not something we support. we think the pharmacy should pay lesser amount cost sharing or cost of drugs. if it's a generic that costs $5 and there's a $20 co-pay, they should pay $5. they shouldn't pay that. i agree it's a practice we don't support. outlier practice and a practice we hope goes away. >> mr. monahan. >> thank you, senator collins. first i should say i didn't handle an earlier question about rebates. we oppose rebates in all their forms. men han. >> pharmacists are incredibly

frustrated with inability patients. providing patient care shouldn't be this difficult. they have no negotiating power, take it or leave it, be in a network or not. typically not. if they are not -- if they are in the network, they are told hu to perform. >> so is it an outlier? >> no, it's not an outlier. it's common. >> thank you. senator kane. >> thank you, madam chair, and thank you to the colleagues and witnesses for their good testimony. i want to ask a couple of questions. mr. menighan, if i can start with you at the frontline with pharmacies and dealing with patients, commonly i hear as i travel around virginia about how

high prices affect financial decisions. your last line was great, the most expensive drug is the one somebody doesn't get, often for a financial reason, or if they don't get it. one in four that use prescription drugs report they have difficulty affording them. these high costs lead to lack of access and that disproportionately affects the most vulnerable people in my population. talk a little about your customer customers. how do you see this high-price challenge affecting your customers? >> on the front end, oftentimes patients have to make tough choices. pharmacists are in a great position to help with those choices if given latitude to do so. oftentimes we spend time hayesing trivia when we should spend time copying patients on effective use of the medicines which they so desperately need.

patients won't make lifestyle choices, be better nourished, increased activity without long-term coaching and support. when they face major barriers on the front end they throw up their hands and say i can't do it. it's too hard and go back to their old ways and don't manage their chronic disease. the decisions they have to make, limited resources and lack of transparency that affects pharmacists ability to understand the reasons why pbms say this is available, this is not, and the conflict that occurs there when a physician says this is a drug i want for my patient. i think it's best for the patient. the pharmacist says i'd like to give that to you but it's going to cost you $500. the patient says i can't handle that, i give up. pharmacists are challenge with that. to the degree we know the reason

behind those formulary choices, the degree we insert lower cost options in collaboration with our physician colleagues, we can help our patients. but we need the time to do that and transparency and better understanding of information behind those decisions often made far above us and without any transparency. >> the phrase adminitrivia should be added to the dictionary. i'm going to use it and say i thought of it. >> it's yours, senators. >> my next question, mr. davis. your written testimony has something i love, congress must act generic and biosimilars, you give us three things. i want to make sure i get -- two i want to make sure i understand and i wonder if you can explain. first repealing misguided

medicaid penalty on generic drugs. describe what that penalty is and why it's misguided. >> thank you for the question. 2015 part of the budget agreement reached in october of that year, a rebate penalty that has long been associated with the branded industry. in medicaid base level rebate if you're a branded product. if your price increases exceed medical inflation, there's an additional penalty over and above. that was instituted in the early 1990s, overprocess, in an effort to constrain a monopolist company price increases above and beyond the rate of inflation. through weekend deliberations around that budget agreement, there was a decision made, a bill introduced in the house and senate that quite frankly had languished for several years that ultimately decided -- that was ultimately included in an effort because it was allegedly scored at saving a billion dollars over 10 years. the net effect of that provision, senator, is that it

actually applies in the commoditized market, can impact ben aircraft manufacturer when they don't take a price increase. that penalty has gone into effect earlier this year. we have heard from our members that in certain instances some 40% of their generic portfolio is impacted by this additional penalty in instances when they did not take a price increase. >> a penalty that affects generics in a different way than branded. >> yes. >> we have an added additional expense back to the government that is not tied to when companies actually take a price increase. that's the net effect. >> second you want to ensure biosimilar medicines have a level and competitive playing field in medicare. could you describe that. >> sure. there's two components to that. one actually is that our members would actually like for biosimilars to be included in the 50% discount to the medicare part d coverage gap. to make sure there's not sort of an inverse incentive to make

sure a patient stays on the higher cost, biosimilar, biologic, if it's important to be on the biosimilar but we have to be exposed to the same 50% discount in the coverage gap. that's something we have supported and urge congress to consider that at the appropriate option. the last area with respect to that, and actually cms to their credit is now looking at several of the reimbursement policies that originally came out relative to how they were going to treat biosimilars. we think there's more opportunity to encourage the marketplace, not distinguish the originator biologic and biosimilars, never compared to each other in a j code and we're optimistic cms will come up with a different decision. that's critical to making sure we have a more conducive environment for biosimilars going forward. >> senator cassidy. >> i think a lot about drugs. i have to admit it turns my

head. i'm going to focus on insulin and come back to something else in a little bit. i'm going to focus on two different areas. mr. riley if we speak about insulin products they are increasing at 20% per year. "wall street journal" had an article in 2016 about 2015. at that point they actually refer to the role of pbms if i look prior to 2015, no rebates for pbms, going up anywhere 10 to 20% per year. this is toward the end of the monopoly. increased drug development but costs going up 20% per year. so from 2015 to 2016 goes up. patients can't afford this. you make a good choice we're

investing in development, when going up 20% a year on the tail end of a monopoly presumably those have been recouped, americans with diabetes and all americans are upset. what do you say about that? >> thank you for asking that question. i think the diabetes marketplace is off confusing. it is one if not the most competitive marketplace on argentina. >> can we go back to the specific period from 2010 to 2015 or 2011 where people were basically price taking, getting 20% increase a year even though they recouped their cost. >> i would argue, senator cassidy, rebates were occurring before 2010. today the average -- >> 2013 to 2014, quarter four, year over year, price list 22% with rebate of 1.2% increase. for sanofi, 22% with rebate of 5.4%, net price increase 20.8 and 20.4%. i'm not sure i'm

seeing that. at least in that period to troch2014. >> i'm not sure what you're looking at, today they average between -- >> i'm not speaking of today, i'm speaking of that period in the early part of this decade. >> right. >> now, those drugs have now had a new competitor. frankly when there's new competitors pbms draw bigger rebates. i have a question about that in just a second. if you're an american looking at your insulin price, believe me there's a guy from lafayette, louisiana, that texts me about tee times a week talking about how his daughter cannot afford insulin and the price increase it's had coupled with her high-deductible premium. he's a rock river republican but talking about his daughter's diabetes. what can we say? >> i would say a couple of things are important that happened. prior to 2012 most patients that had medicine, that took medicine

did not have a deductible for their medicine. when they showed up at the pharmacy counter, the price was a co-pay and modest ones. for diabetes medicines, $20. from 2012 to 2015 there's been a dramatic increase in the number of patients that today have a deductible. >> if i may, i have limited time. you're addressing the fact the individual may not have seen the price. somebody is paying. either indirectly through a premium or directly through a co-pay so somebody is paying. >> i would argue too, when companies price their product, they are not just looking to get reimbursed for the prices they spent on getting that individual prices to market. companies are investing in the next generation of cures and treatments, those costs also have to be recouped. there's been many advancements in insulin since to years ago. some newer insulins are longer acting. >> if i may say just to counter,

more emphasis raising prices on established drugs than new an innovative drugs. i don't have the statistic in front of me but i've read that in the past. >> last year price increases on all drugs 2 1/2%. price increases moderated over the past few years. while that may have been the case several years ago we are not seeing the kind of price increases. >> i didn't mean to be rude, i apologize. mr. mare, i've learned to say what i'm told, not what i know. "wall street journal" article i refer in my questions to mrs. riley point out in 2015 actually insulin prices did moderate. prior to that it was like oh, my gosh, i wish my stocks were doing as well. in 2015 it actually flattened but the price increased dramatically because they had to pay higher rebates to pbms, a competitor entered, pbm could choose. to pay the rebate they jacked up

their price in order to pay for the rebate. the ceo of mylan came in to speak to me. she said actually their price is relatively flat. then competitor cain, pbms said now there's a competitor we'll only carry you if you give usa big rebate. they had to increase their price in order to pay the rebate. she said it's paradoxical in the world of pbms when this is no competitor your prices are lower and competition increases the price. now, i've heard that from ceo of mylan and "wall street journal." your thoughts regarding that? >> i would disagree with that. mylan raised the price of epipen 400% because they felt like it. >> they would say a competitor on the market albeit for a short period of time. would not carry epipen, rebate, they increased it. >> lower it, all we want is lowest net cost.

>> wait a second on insulin, again, looking at this "wall street journal" article dated 2016. they say at that point the net price going back to the manufacturer remained flat even though the price increased dramatically and they were paying the pbm for this with a delta between this net price and list price. are you disagreeing with that, too? >> the simplest thing is to lower their prices. typically the rebate goes up because the price goes up. if the price goes up our clients are going to demand we get more discount. that's hu it works. what we want is lower net cost. that can be done several ways. to chairman alexander's point, rebates, there are ways to work but prices simply to go down. >> i'll do it for the record and ask you to direct the response directly to the article of "wall street journal" which disagrees with that a little bit. i'm sorry for being way over. i apologize to my colleagues. >> senator hess.

>> thank you, senator collins and i wan to at to add my thank the senator for holding this hearing and thank you to the witnesses for being here today. miss riley, i hear from igranit staters who struggle to buy their medications, choosing medicines or heating their homes. choices they have to make too often because of the brazenly anti-competitive behavior that bad actors in the drug industry engage in. most recently allergen who makes restasis. restasis brought in sales of $1.5 billion last year alone, which is on average $4 million per day. allergan has had a market monopoly on this multi-million dollar drug since approval in 2002 and boy is it working to keep it that way. on september 8th of this year, just one week before its patents were set to be the subject of a

hearing at u.s. patent and trade office it announced it cut a deal with native american tribe in order to shield restasis from review by exploiting tribal immunity a federal district court judge court called a ploy, it signed it over to the tribe and basically licenses back the patents from the tribe and continues to sell the blockbuster drug. so allergan using tribal sovereign immunity to shield restasis from review, maintainingist market monopoly, preventing generic competition and keeping prices and profits high. meanwhile patients who need restasis are struggling to afford it. the behavior here is unacceptable. if other companies follow its lead it's only going to get worse. i'm very concerned about the potentially devastating

implications about the deal for our entire patent system, for the delicate balance struck in the hacks waxman act. access to affordable drugs. miss riley, your organization has a role to play. in may 2017 pharma approved new criteria to, quote, tackle the biggest challenges facing patients. pharma expelled 22 member companies which was seen as a response to public concern over the rising cost of prescription drugs and to remove bad actors. so miss riley, you are head of membership for pharma. what i want to know, yes or no, is whether you believe allergan is consistent with your organization. >> thank you very much for the question. i want to make clear a few things. today member companies are asked to defend their patents. >> miss riley, i have very limited time and another question to ask. yes or no is it consistent. >> i believe ipr process which

is in play here is a process that needs significant reform. our company -- >> that's fine. to exploit tribal sovereign immunity to avoid competition as opposed to dealing with the patent system in my view is unacceptable. i'm sorry but because i have limited time i'd like to move onto my next question. i want to discuss with you my serious concerns about the "washington post" "60 minutes" report this weekend on a bill last year your organization lobbied for aggressively. the dea had the power to immediately stop distributors from suppliers opioids and other prescription drugs to pill mills and other corrupt sources. but according to dea chief administrative law judge, makes it much harder for dea to use that power. unthe new law the agency must provide substantial evidence that a distributor's actions makes death or serious bodily harm considerably more likely. and the dea needs to do so before any witnesses are

produced or any evidence admitted at a hearing. as a result, the judge writes that the law appears to -- and this is his quote -- completely eliminate dea's ability to ever impose an immediate suspension. yet your organization spokesperson told "washington post," quote, to be clear, this law does not decrease dea's enforcement against distribute irs. that's a direct contradiction from what the judge is saying and it's his job to interpret the law. doesn't that make your organization's statement pretty misleading? >> thank you for the question, senator. the opioid epidemic in general is a very serious concern and complex issue that we are also very concerned about as distributors. we work with supply chain partners daily to try and find solutions to that.

>> miss gallengagh, i understand that. your organization which lobbied aggressively for this law last year claimed that it does not decrease the dea's enforcement against distributors. the dea law judge says you're wrong. law eliminates the ability to take certain enforcement actions. it's his job to interpret the law. so is the judge wrong, or was your organization statement misleading? >> in that sensible the judge's statement was misleading, and i stand behind our organization -- >> i suggest you read the judge's article which has now been published. what he points out, among other things, all this time when there wasn't a statutory definition of immediate harm that constrained the dea the way the bill was passed last year does, over many, many years the industry

didn't challenge the dea's actions because very often there's almost no case law on it. i suggest you go read it. there's a lot of us extraordinarily concerned. >> a minute over. >> i thank you for your time and thank you chairman alexander. >> thank you, senator haas and senator young. >> thank you. miss riley, congressional research service tells us u.s. spends more for drugs than other wealthy companies. in europe drug prices set by governments not by pharmaceutical companies. there's a recent study by mckenzie which indicated on average the price -- difference between the price of one drug in the united states and the same drug in france, uk, germany, italy, and spain was 50%. so u.s. consumers, by my reading, are subsidizing the world's research and development. i'm not the first one to divine this insight. research and development

magazine said u.s. accounted for 46% of global life and sciences r&d, the vast majority of that going to biopharma. the challenge is even if europeans or wealthy countries were to raise their prices and reduce the extent to which they are freeriding, that wouldn't automatically lead to a decrease in prices here in the u.s. for our consumers. instead a company would be punished by their investors and by their stockholders for lightening the burden on rank and file americans who are trying to obtain pharmaceuticals. so i guess my question is two-fold. the first part is an easy yes or no, as i would see it. am i correct foreign countries pricing and reimbursement systems actually affect our prescription drug costs? >> i would definitely say the u.s. does bear the burden for the world in terms of supporting research and development. i think the numbers you gave are

much higher than i've seen in terms of price differential between u.s. and other companies. they often rely on list prices and not prices paid. >> go back and look at the study and see where you disagree with the prices and findings. maybe we can engage offline in a dialogue about that. second part of the question since you've acknowledged there is an impact on foreign reimbursement systems and foreign pricing on the price to u.s. consumers, how might we mitigate the extent to which americans are innovators, are consumers are shouldering the burden of financing the world's medical innovation. >> one thing to make clear, we do have a different system in the united states. we reward innovation, companies that bring their products to market. we pay more up front and significantly less on the back end. >> you're giving me a lot of back end. are there strategies we might use as policymakers to change

this dynamic or mitigate the extent to which we're shouldering the burden like through free trade agreements. >> absolutely. stronger trade agreements could go a long way to ensure other countries are paying more of their fair share. i would note a comment mark said with regards to recent help c medicines pbms here on record said patients here paying less than what was being paid abroad in part because of considerable market consolidation in pbm market, many on behalf of more people than entire foreign countries in the eu. >> are there other strategies we might ploy to reduce the price to consumers in the state of indiana? >> again, we have to look at what our insurance system looks like today. oftentimes we treat pharmaceuticals differently than other aspects of the health system. if you need a medicine you're being asked to pay significantly more out of pocket as opposed to if you needed to go into a hospital setting. i think we do need to examine if

it's fair to say to a patient with rheumatoid arthritis you need to pay 40% and if i go into the hospital i pay 4% of the cost. >> one possibility to lower prices and increase value, as i understand it, is the use of outcome based contracts increasingly piloted by pharmaceutical companies. can you skpan how these work in summary fashion and their potential to lower drug costs for patients and then perhaps elaborate on any policy initiatives we here might engage in that might be standing in the way of moving these pilots to sca scale. >> shu. a lot of innovative arrange mention produced. the goal instead of historic, volume basis, we'll pay for what we buy. a movement toward saying we will pay for these medicines at differential rates depending if they need the outcome the payer

and pharmaceutical company can mutually agree to. there's lots of potential benefits moving in this direction. first of all, our companies are putting money where their mouth is. we might be paid less or nothing if our medicine produces as we believe it should. it's helpful for the health care system for the ability to lower cost and helpful for patients, too, because the goal again is also if patients aren't being helped by them, then their cost sharing should also be lowered. they are in their infancy stage in part because there are government rules like anti-kickback statute, price reporting that need to be addressed to make these become much bigger than they are today. >> follow up with you and your organizations to see if there's specific ways we might be helpful to empower our companies to make use of these contracts. thank you so much. >> appreciate it. >> thank you, senator young. senator warren. >> thank you, mr. chairman. so the high cost of prescription drugs is a huge problem.

let's talk about the best way to tackle this public health crisis. miss riley, your association, which is called pharma, represents brand name drug companies. you said in your testimony that, quote, the competitive market is the engine that drives the drug industry. so i take it you think that market solutions are the most effective way to deal with the rising price of drugs. >> i do believe that markets lower costs, yes. >> good. i love markets and i also believe in marked-based solutions. let's talk about one of the best market-based solutions and that's competition. if the restrictions that prevent purchasers from importing the impact same drugs at lower prices from places like canada were removed, we'd see some real competition and we'd see some lower prices. another market solution is negotiation. if the federal government were allowed to negotiate competitive

drug prices for medicare beneficiaries, then prices would come down. so miss riley, you've already said that pharma opposes importation of drugs from canada. let me ask about letting the federal government negotiate with drug companies over medicare prices. these two market-paced solutions. >> i would argue price controls are not market-based solution. >> i didn't ask about market controls. i asked about bringing in drugs with prices here. >> bringing in drugs with other countries is not a market based way to get drug prices. >> you would be in favor of drug importation from any place that's not doing what you call price control? >> i would argue almost every country outside of the u.s. artificially limits prices -- >> that satisfies your requirements. how about the federal government competing and actually having some competition and saying we're going to negotiate prices? >> i think there's often a

fallacy because the federal government is not setting prices in medicare there's not negotiation, and that couldn't be further from the truth. as we've seen in medicare part d there's been robust negotiation. rebates over 35% on average in part d. >> let me stop you there. i want to make sure i understand the point of the group that you represent here and lobby for. that is, is it that the federal government ought to be table to negotiate all drug prices? >> no, we don't believe the federal government is in the best position. we have rapid consolidation in the pharmacy manager space that excerpts significant pressure in $100 billion in rebates last year. >> i understand you have other concerns. but you know, drug competition from canada, price negotiation are market solutions, they are not government mandates. i would have thought if you believe in market solutions you would have embraced them. >> i don't believe that price controls are market-based solutions. i also think you need to look at

the down sides that happen in those countries, which is patients don't get the kind of access they get to therapies they get in the united states. >> i realize you can call it price controls but this is a real question of whether or not there's any place else for consumers to go to purchase drugs or whether or not the federal government can negotiate on a drug by drug basis every time taxpayers are picking up the ticket. >> congressional budget office -- >> -- testifying here today, spent a combined total of $30 million lobbying congress last year. pharma, your organization, is responsible for almost three-quarters of that total. a lot of that money that is spent lobbying congress is to keep drug prices high. that's what improves profitability for your industries and the company you represent. here is what i think is really wrong about this. you talk about wanting market solutions but your industry isn't based on competitive

markets. it's based on totally artificial taxpayer granted monopolies. companies invent new drugs, and then the government hands the companies the exclusive right to manufacture and sell those drugs at whatever prices they want for decades. so i just have a little bit of time left but i want to ask, do you know the average length of a government granted monopoly for top selling drugs in this country? >> ten to twelve years. >> ten to twelve years. the law says five, five years of exclusivity but drug companies game the system, according to a 2015 analysis by researchers at harvard, companies end up with a monopoly that last as medium length of 12 1/2 years. >> senator, a patent 20 years long, that is how long a pharmaceutical patent is. we have -- >> i'm sorry. the law says five years of exclusivity on basic drugs.

you think the harvard study they don't know,000 to do it, study how much money you're making off these things or how long you have exclusivity. >> companies have five years of data exclusivivity. immediately after that a generic company can get to market. let me tell you they try very hard to get to market as fast as they can. >> expand exclusivivity to 12 years. >> exclusivity -- try the story on someone else willing to listen to it. >> you can finish your -- >> no. i just wanted to say taxpayers watch when we've granted exclusivity to these companies and then they watch as the prices go up and there's not a darn thing for taxpayers to do about it. this is just fundamentally wrong. >> thank you, senator warren. senat senator.

>> thank you. i want to follow up quickly with the discussion you were having with senator hassen regarding this latest news with the weakening of the dea enforcement authorization. big expose "60 minutes," "washington post." you have a drug czar that's withdrawn from this position. the president himself is saying need to look into this and investigate it. a colleague on the other side of the aisle introduced legislation that would repeal it. some suggested it needs to be modified. you've indicated to the senat senator -- you disagreed with the judge's interpretation, i believe. do you think what was passed in 2016 is actually good and sound,

or do you believe that, in fact, given what we know today that it might need to be modified or amend in some way? >> thank you, senator. first let me say, senators who author that bill in the senate worked closely with the dea to make sure the bill did not inhibit to take action against and dea did not oppose the bill. regarding alj's article, which was a draft, i understand, aljs are not involved issuing immediate suspension orders. they are recommended by dea staff. they are issued by an administer -- administrator or deputy administrator. >> do you think something needs to be done to address what clearly has come out to be limitations within dea's

authority we might need to address through legislation. >> i think it should be explored as to what dea's limited actions were and their limited involvement collaborating with industry and talking about defining the terms that registrants operate under. we have pages of questions we have sometimed over the years that have gone unanswered. this bill, from our understanding, is sound and we supported it but we are open to talking through those issues more closely with you and other offices. >> i do think that it is an issue that has risen to perhaps a higher level given what we are seeing around this country with regards to just the ease, availability of these opioids that are just ravishing parts of our country. this is something that needs to be continued and addressed. i've listened to the testimony

from each of you, read through your written comments, and i just have to express the frustration the general public feels in just being so limited in their ability to understand why. all they know is that the most expensive part of their health care that they can see is what is going on with the cost of their prescription drugs. then when we talk about all we need is transparency, but if you look to try to understand it, you've got a manufacturer that sets a list price but almost nobody pays that. you've got pbms that negotiate different prices, cbos that negotiate different prices, one hospital might charge something different than the hospital across the street. there may be rebates, may be discounts, may be other pricing things. there is no way that anyone can

follow this. and for the average consumer, if you all are talking transparency, it doesn't mean anything to them. so i look to ways that we might be more transparent, that actually could translate to something. we put on the back of any product what the ingredients are and how that's allocated out. when alaskans get a permanent fund dividend, it actually lists on that voucher, if you will, where all of the associated costs are attributed to. are we crazy to think that we could be doing more with actually accounting for the cost so that the consumer could better understand and make it legible? because right now it's impossible to understand. even those of us that are

listening to you as supposed experts, it's all greek. we're not doing anything to help the consumer. so maybe it's a rhetorical question here but i challenge you all to translate how the pricing mechanisms, who gets discounts, who doesn't, why it's fair for one hospital to charge something the other one doesn't. in no other industry that i can think of do you have this latitude for it a discrepancy in pricing and the ability to just set it and be done with it. i'm over my time. so perhaps if you can respond to me with some concrete examples of the ways that we can be more transparent, because i think ultimately that can help us push down the cost. right now it's impossible to

discern. >> i'd like to ask the witnesses are welcome to respond to the senator in writing with concrete examples. i think that would be helpful to her and all of us. senator murphy. >> just to senator murkowski's point, i get to be general of the health committee when i was 21 years old because i was the only one that took time to figure out how a drug was priced, what awp and amp meant, what the dispensing fee meant. it was the most opaque market that existed in our stated health care system. to this day i think there are only a couple of state legislators in connecticut who understand how a drug is priced either in the private market or through medicaid. it does behoove us when we talk about transparency to understand that if you just layer transparency on a pricing system today that has 1,000 different prices, it's really, really difficult. i just have one question because i know we've got to sneak in senator baldwin and myself before the bell here.

it's for miss riley, so i'll just prepare you for it of the trump administration recently announced it wants to expand association health plans and something called limited duration insurance plans. that was part of last week's executive order. the risk is you're going to set up one system of care for healthy people who can get into those plans, which don't require you to price without respect to medical acuity and one for sick people who will stay in the marketplace under affordable care act where insurance plans can't discriminate. your ceo said on television last week that the executive order was a good idea because we need to be trying everything that can lower costs for patients. but the fact of the matter is, when you review these short-term limited duration plans by and large they do not cover prescription drugs. if you look at the best selling plans that are sold on ehealth,

they exclude pre-existing conditions, mental health, exclude substance abuse, exclude prescription drugs and maternity expenses. i looked up the best selling plan in my home state offered by national general accident and health and it doesn't cover prescription drugs either. so why is pharma taking a position to support the executive order when to the extent that these short-term duration plans become available to more and more americans, it will exclude the very product you sell in addition to all sorts of other coverages that people desperately need? >> thank you for the question. let me offer two points, first of which is our ceo was asked that question before the executive order was actually released, so i would note that. the second, i think some of the words reheard coming out prior to the release of it had to do with how do we increase competition, how do we address some of the consolidation that's happening in the marketplace. i think those are principles that many people espouse.

i think the details in terms of how this ultimately gets worked out, the devil is certainly in the details and we will be looking anxiously as various agencies look to implement that. again, our goal is to ensure patients have access to care. that is our primary goal. >> let me ask that more specifically. if the result of -- i understand what the rhetoric is when the president talks about his executive actions, they are often very different than the words in the eos. if the result of this executive order is to dramatically expand access to limited duration plans, is that something that pharma would support? >> our goal, as i said before, is to ensure patients have access to therapies including innovative medicines because so many patients rely on them. we will be looking in earnest as agencies work on this to ensure patients do have access to medicines. >> i would argue now would be the time to weigh in and make your feelings known on this. thank you, mr. chairman. >> thank you, senator murphy. senator appalled win. >> thank you, mr. chairman.

today we're heard many competing reasons and even how it's very complex to know why drug prices are high and are increasing. so i continue to believe we should start from the beginning of the story. i have a bipartisan bill with senator mccain and it's pretty sichl. it would give us more information as policymakers basic transparency for drug companies when they increase the price of a drug. that's it. california just enacted with bipartisan support a new law similarly requiring transparency for drug price increases. while many changing factors contribute to a price that a patient pays, one factor has remained constant. we now see drug companies systematically increasing list prices of existing drugs every year. according to reports in just the first quarter of 2017, there

were 40 increases of drug prices, which is more than the first quarter of 2016. if as we have heard today the list price provides an inaccurate picture, then i'm not sure why we shouldn't just ask drug companies for information to help paint an accurate picture and to explain why we are seeing these prices increase as my bipartisan bill would do. mr. david, you noticed that -- you noted that in the last year revenues for branded drugs have increased as a direct result of price increases. can you please briefly elaborate on this and describe what your industry is seeing when it comes to list price increases. i do want to ask another question, so please be brief, concise. >> sure. thank you, senator, for the question. just to clarify, you asked a question relative to the brands or generics? what we're seeing in brands. >> branded drugs, you noted in

your testimony. >> so what we've actually seen and this an example of how different the markets operate wheel we're experiencing unprecedented generics, year over year the prescriptions are going up, revenue is going down in our industry, that's opposite of what we're seeing on the branded side where prescriptions are going down an revenue is continuing to go up. so there can be a whole host of economic reasons for that. one of them that we submitted in our testimony is we are seeing an increasing level despite some of the communications about supporting generic and biosimilar activity increased activity, senator hassen and her comments around outsourcing ip to native american tribes lately of these types of behaviors making it more challenging for generics to get to the market. >> miss riley, like my colleagues have reflected in their comments and questions, i way too often hear concerns, stories from my constituents

about the impact on drug price increases on their lives. often these are tearful discussions because health and your ability to treat health conditions is deeply personal. i hear about the insulin list prices that have continued to increase since 2002, about top selling drugs like humira that have increased almost every year for 10 years, and about the more than 14 drugs for multiple sclerosis that have increased since 2004 to an annual average of about $83,000. a woman named diane from webster, wisconsin, talked about a heartbreaking conversation she had with her husband earlier this year where they decided to stop -- that she would stop taking her ms medication after 23 years because of it reaching $90,000 a year. at the same time reports have

indicated that most of the big drug companies spend more on marketing than on research and development. a recent health affairs study of the selling drugs found that earnings from charging high drug prices in the u.s. exceeded global spending in r & d. ms. riley, last year, your trade association updated it membership criteria to stipulate that branded companies invest in certain amounts of global r & d spending per year to be eligible to join. given this renewed commitment to r & d, do you support drug companies making their r & d spending and investments more transparent for the public as my bipartisan bill would do, including when they increase the list price of an existing drug? yes or no? >> absolutely. research and development costs, and i think our companies by and large make that information public. it is an important part of what we do. i would take issue, our

companies spend significantly more on research and development than on marketing costed. >> did you disagree with the conclusions of the health study? >> i do. with regards to transparency, again, i think a couple of things are important. one, it needs to be holistic and apply to the entire supply chain. as we talked about today, we're half or slightly less than half of what we spend on brand name drugs. lots of folks in the supply chain have a piece of the equation. >> i understand the argument you made, however, let's start alt the beginning. let's get transparency throughout, but let's start at the beginning and the fair drug pricing act would be a good start in that direction. >> i would just say list prices, too, as we talked about here today are not indicative of net prices and what are paid in the marketplace. >> thank you. senator baldwin. i'm going to need to go vote, so i'm going to thank each of you for coming today. you have been excellent in

helping us put a spotlight on drug prices. we have two senators who, one or two, who have questions to ask. i'm going to ask senator franken to chair in my absence, and he'll ask his questions and then if other senators come back who have not asked their questions, he'll call on them and then he'll adjourn the hearing. thank you for coming. senator franken, thank you for chairing. >> thank you. as you're leaving, i would like to thank you and senator murray for calling this hearing and also for the negotiations that you're -- the important negotiations that you're involved in. so thank you. wanted to do that. sorry. i haven't been here for the whole thing. i had some other stuff to do and ran back so i could do this, so you'll excuse me. it's actually, i didn't run back. this is just such an exciting hearing.

it seems like from your testimony and some mainly from your testimony, that like every one of you in some way or another is responsible for getting prices down. that's what it seemed like from your testimony. and i think senator young touched on this, but i want to try to go over it again for myself. the u.s. spends more on prescription drugs than any industrialized country. in part because drug prices are higher in the u.s. than in any other country. the drug industry pushed back and says that these price comparisons don't take into account the discounts that manufacturers give to insurers and other actors in the system. so to cut through that, i would like to ask you some questions. let's use the drug advair, which

is an asthma inhaler example. where is that produced? it's produced in north carolina. so it's a drug that's produced in the united states. ms. reilly, what is the list for advair in the united states? and how does it compare to the cost in canada, france, and germany? >> i honestly do not know the list price of advair off the top of my head, senator. i would have to get back to you on that. >> sure. very understandable. i want to ask you the price of every drug. see how you do. no. a bloomberg news report from 2015 found that the list price, this is the list price, for advair was $309.60 in the united states. accounting for, say, a 50% discount, then the price would be $154.80.

which is still higher than the price in canada. which in 2015 was $74.12. the price in germany, which was $37.71. and the price in france was just $34.52. ms. reilly, why are prices so much higher in the united states for a drug produced in the united states? and this is true for drugs that are produced in the united states and not produced in the united states. why are they so much higher? i think americans really want to know this. and i think they want to know this because you guys talked about research. americans pay for a lot of the basic research, right? >> yes. >> yeah.

through nih. >> and our industry, yes. >> but much of it through the taxpayer pays directly to the ni hi, and into basic research. most of the research you do is not in your industry, it's not basic research. >> we do a fair amount of basic research. >> a fair amount? >> yes. >> most of it is not basic research. and i'll give you the figures on that. we'll call that up in a second. these higher prices in the united states support high-level profits and some research and development costs, but we also pay these high prices because of the way our system is structured. the laws we set and the clout of the drug industry, for example, congress passed a law that prohibits the federal government from negotiating with drug manufacturers for lower prices for medicare.

which is the single largest payer for prescription drugs. in those other countries, you have the government able to bargain with the pharmaceutical companies. all of you presented yourselves as part of the piece that keeps the prices down. why are the prices so much higher in this case, given -- assuming a 50% discount from the list price, in a number of cases, twice as high, four times as high. canada, france, respectively, and more than four times as high in germany. why? americans want to know why. >> i think -- i'm happy to start. we do have a different system in

the u.s. relative to other european countries. we actually compensate companies for the innovation and the value of the medicines they bring. i would argue in many european countries the prices are artificially depressed. they tend to also pay more when a medicine goes generic and they use fewer generics. in total, our systems are spending if you compared on average how much they spend, yes, they probably spend a little less. i would argue, though, that our country incentivized new therapies and innovation to come to market and then when that period of time, when a patent expires, an exclusivity is gone, 90 prs of the market, 95% of the market shifts overnight to low-cost generics. in that system we have, we're able to support a broader innovation ecosystem. the fact that we have 90% generics here and in most european countries it's 50% to 60 bers in part because they don't incentivize their entry, they don't incentivize the dropping of price here.

we do so in a way that additional resources are able to fuel the next generation of therapies for patients. >> i would suggest it's very small comfort for the minnesotans that i visit around my state who can't pay for their pharmaceuticals. and i would suggest to you that this is a longer discussion. but why -- americans have to ask, why do we -- why do americans pay more, two times as much, four times as much, for our pharmaceuticals, many of which we produce, many of which we have done the basic research for through the nih. why do we have to pay, why does the american consumer have to

pay more than the canadian consumer for the same drug? more than the german consumer, more than the french consumer? >> senator, i would also argue -- >> okay, go ahead. >> i was going to say, there is a case for the need for stronger trade agreements to insure that other countries, particularly european countries, are paying more of their fair share. >> so the answer is just to make them pay more? >> no, i think them paying more would permit, you know, prices here to potentially fall. it would also permit more money to go back into research and development, which over time lowers the cost of therapies, innovative therapies as well as generics. >> anybody else on the panel? >> senator, if i could add, iust to re-enforce a comment previously made. to say that all drugs are more expensive in the united states fails to recognize the distinction ms. reilly talked about between brands and generics. it historically has been a carefully balanced ecosystem created by hatch/waxman where we made a decision in the '80s to

make the investment for the ability to bring novel therapeutics to market sooner rather than later and ultimately get a utilization rate and lower cost generic costs than the rest of the world. to the question that was asked earlier, why shouldn't we consider importing generics from canada, they're more expensive in canada. >> i bet the idea, and i approve of being able to import. i bet you the idea would be to import the drugs that are cheaper. that's just my guess about what consumers would do. and i almost -- i don't know, i used to be in comedy. i almost think that your answer there was a tad absurd, which is of course, we're not saying we need the right to import the same drug that's more expensive in the other country. do you understand kind of the absurdity of saying that? >> senator, my intention in

saying that -- >> i mean -- >> to look at policy and understand that the markets operate fundamentally differently. the comaudatized market in the united states is what drives generic prices lower than other developed markets. that was my only point. >> i do want to say if you look at the whole universe of drug prices, we pay more. we pay a lot more. and you're acknowledging that. that's what i'm talking about. i'll go to senator whitehouse. >> let me ask the panel to focus on a very specific issue which is the question of monopoly. okay. and let's set aside for a second the licensed monopoly that people get when their intellectual property is protected by a patent or a trademark. okay. let's just set that aside. we're not talking about that

particularly approved monopoly. we're talking about other kinds. does everybody agree that we have seen circumstances recently in which a drug manufacturer has an effective monopoly with respect to one or more of their products? does anybody dispute that phenomenon? everybody agrees with that phenomenon? we have seen it, right? that's not complicated. yes, everybody agrees. so let's say that you are a patient, and you have taken a particular drug for many, many years, and it's not under any kind of trademark or patent protection, but somebody who is not even in the pharmaceutical industry, an investor, comes in and sees a monopoly, buys it,

and jacks the price up by 500%, just because they can. we know that that has happened also, don't we? yes. from everybody. no dissent with that. okay. so here's the problem that i have, which is that in that circumstance, the question then is where do you go? how do people respond to that particular problem? and the thesis that i have is that in those circumstances, which we all admit are true, that there is a clear monopoly, and further, we see price manipulation consistent, not with any market, but with monopoly power, my thesis is

that there's no place for anybody to go. there is no entity in the united states government that has the authority to say, hold it. that's a monopoly. you are extracting monopoly rents, to use the economic term, and you gotta knock it off. you may be able to get a lawsuit out of the department of justice for an anti-trust or price fixing type violation, but we haven't seen a lot of that. the fda nibbles around the edges of this problem but it doesn't have the authority to step in at that point. shouldn't there be some place in government where it is clear once a monopoly exists and there's no doubt about that, and it's clear that monopoly rent extraction is being done, nothing related to market pricing, in that narrow

circumstance, shouldn't there be somebody able to act? let's go right down the line here starting here. >> thank you, senator. we share your frustration. we often serve as uncompensated insurance agents for those with cover who have to navigate complex insurance regs and coverage issues and co-payments and insurance. we want desperately to be part of the team that helps people navigate this system. >> you concur right now there's no place to go? >> we have relatively few places other than perhaps compassionate use programs that some companies provide but not all companies provide that. >> mr. merritt. >> yeah, it's frustrating. it is part of the marketplace. what we have seen -- >> not part of a legitimate marketplace, right? extrapolating rent is not viewed as legitimate economic behavior, is it? >> we didn't like it when mr. shkreli bought up a drug and

sold it for thousands of times more. i testified on the same panel as him a year or two ago. >> other than scolding him here in congressional committees, nobody said you can't do that. >> i'll tell you one thing we did and let laurie talk about the legality of it. when the price was jacked up, he bought the drug for 1350 and jacked it up several hundred dollars. if you look at that from a price control perspective, maybe it would be great if he cut that in half to a few hundred dollars or if you looked at, maybe he shouldn't charge more than it was originally, $13. we found a compound pharmacy out in san diego that would do it for $1. then we cut his drug off the formulary and said, here, everybody can have this drug for $1 but you can't have that one. it's overpriced. there are some things we can do in the marketplace. that's not to say or imply it's not a challenge. it just takes time to overcome. >> my time is already out. if you have quick responses. >> sure, thank you, senator. as you know, members are unique

in the supply team, but we support anything that supports increased competition in the marketplace. >> mr. davis. >> senator, i think what you have been characterizing is the equivalent of a de facto monopoly, not one that government lice jss, but it requires a lot of analysis before individuals like mr. shkreli go in there. moving forward, there's a need to focus here. i think some of the new things the new fda commissioner in legislation that this committee insured was part of fudaura, which was a listing of drugs so there's more visibility and increasing -- in an effort to try to minimize the risk associated with more of those types of circumstances. >> you agree with me, nobody presently has authority over the monopoly prices? >> to the credit of the fda commissioner, he's doing what he can. does he have all the authorities to dress that in and of himself, no. >> i would say companies like in

the instance of daraprim, took advantage of regulatory arbitrage to increase the price. >> because there was no direct regulator on the beat whose responsibility was to look at a clear de facto monopoly and address the excess price extraction. >> to chip's point, i think there's -- >> right? i just want to make sure i heard you. your answer. >> i would say in the case, in that particular case, and we have seen a handful of others that mimic the same pattern, is exactly right. i think the fda is trying to do, but more could be done. we have lots of ideas on how you could address that. >> thanks for letting me go over, chairman franken. >> i went way over. and i'm even going to ask one more question just to mr. merritt real quick. pay for delay. because we're talking about monopolies. pay for delay. drug company has a patent, and then a generic comes up, the

patent runs out. generic has it. company has it. and they pay the generic not to bring it to market. what do you think of that practice? >> well, we oppose that practice. it is an interesting economic question because i have heard both sides on it. and i think chip can address this better than me, but what generics would say is, well, gosh, it's so hard to break thou a patent that at least if i get a settlement, we'll try to get a generic to market. but overall, our industry is on the other side of that issue. >> thank you. the hearing will -- the hearing record will remain open for ten days. members may submit additional information for the record within that time if they would like. the health committee will meet again tomorrow, october 18th, at 9:30 a.m. for an executive session. thank you all for being here today. the committee will stand adjourned.

if you missed any of today's senate health committee hearing on drug prices, it will be available to view online shortly. at c-span.org.

just type drug prices in the search bar. >> and be with us later today when christopher sharply testifies before the senate intelligence committee on his nomination to be inspector general of the cia. live coverage starts at 2:30 eastern on c-span. also available online at c-span.org. you can listen with the free c-span radio app. >> later today, president trump expected to highlight his tax reform policy at the heritage foundation's annual presidents club meeting. live coverage of that starting at 7:30 eastern, also on c-span. coming up tomorrow, attorney general jeff sessions will testify in an oversight hearing. the senate judiciary committee is hosting the event. live coverage begins at 10:00 a.m. eastern on our companion network c-span also online at c-span.org and you can listen with the free c-span radio app. >> sunday night, on after words. >> over 90% of sexual huh

racement cases end up in settlements. what does that mean? that means that the woman pretty much never works in her chosen career ever again. and she can never talk about it. she's gagged. now, how else do we solve sexual harassment suits? we put in arbitration clauss unemployment contracts which make it a secret proceeding. so again, nobody ever finds out about it if you file a complaint. you can never talk about it ever. nobody ever knows what happened to you, and in most cases, you're also terminated from the company, and the predator in many cases is left to still work in the same position in which he was harassing you. so this is the way our society has decided to resolve sexual harassment cases, to gag women so that we can fool everyone else out there that we have come so far in 2017. >> former fox news host gretchen carlson talks about sexual harassment in his new book "be

fierce, stop harassment and take your power back." she's interviewed by sally quinn. watch after words sunday night on book tv. >> c-span, where history unfolds daily. in 1979, c-span was created as a public service by america's cable television companies and is brought to you today by your cable or satellite provider. >> late last month, veterans affairs secretary dr. david shulkin testified about preventing veteran suicide, saying suicide prevejz is his top priority and he outlined efforts to tackle mental illness. he was speaking before the senate veterans affairs committee. it's about two hours 20 minutes.