[inaudible conversations]

[inaudible conversations] >> welcome everyone to prescription drug affordability hearing. and to have i would like to welcome everyone here. i know members on both sides of the aisle are waiting to hear

from him. there is a plan to lower prescription jugs. i was in the rose garden with the president announced his plan to put patients first by lowering prescription drugs and out of cost pocket -- out-of- pocket costs. i recommend the president for releasing this blueprint. i also appreciate they are seeking feedback from the public on the policy ideas. they have proven to work through problems and those affected. as we continue these options, it is imperative to learn the impact of affordability and innovation before taking any specific action. to that end today, in my opinion, this is a golden opportunity for members to

discuss ideas and blueprints. these are issues that could change the way we do things. on that note, i want to speak to those who have criticized this as insufficient are here for political gain. i bring to the table decades of experience of working on drug pricing. that is why we have titled today's hearing that explains these issues. prescription, drug affordability. it references a concept that has been very important to me throughout my time in the senate. after all the goal is to help consumers in the best way to do that is balanced affordability and innovation. over three decades ago i champion this act. it has since become known as

its own name. i noted yesterday the law saps a system for regulating drugs and new products while encouraging generic competitors. around that same time i sponsored a drug addict. i am proud to say that that has resulted in new treatment options that has increased the quality of life for many people that live with rare diseases. at the time we thought we were just taking care of some rare diseases. it has become a very important law. this is just the tip of the iceberg. i have since spearheaded other initiatives to address the shortcomings of the system and capitalize on opportunities for improvement. i brokered an agreement that allowed them to flourish provided they had effective treatments for cancers and

other conditions. i have successfully advocated policies that promote similar beings as a way to foster competition and lower cost. i don't bring up this to boast but to point out the personal of affordability have served us well. nearly 90% of prescription drugs given to patients are generics. yet we also have for life life altering breakthroughs in treatments. maintaining this balance must be part of the conversation today. as we move forward, i want to keep it that way. any lasting solution must be market-driven. the drug program is built on a system of private entities competing on price and service. this private sector is ingrained in the design of the program that widely forbids the government from interfering

with negotiations between these private entities. the drugs and biologics, medicaid pays on the average price for strike price. this represents a rate negotiated in the private sector. don't take this to mean the way medicare pays for prescription drugs is perfect, there is room for improvement. the fact that the united states continues to be a pharmaceutical resource powerhouse, is because we have long preserved the market-based approach. it is better than the alternative of direct government involvement in price setting. after all, the price secretary has proven they are better suited at identifying challenges and turning them into opportunities. one challenge is the certain key drugs and items that are in

short supply. things they can't purchase insufficient quantities. these drug shortages which include generic medications, threatens patient care and demonstrates a weakness in our system. i am pleased to say that utah is taking a leadership role by creating a market based response. utah healthcare has joined with other systems across the country to form a generic drug company. this new venture will fill a market need by fulfilling drugs that are in shortage. this new company will provide more competition that will improve prices and opportunities for consumers. there are others too that have responded to market demand by offering prescription drugs coverage options that pass on

discounts and rebates to their enrollees at the point-of-sale, rather than on the premiums. turning back to this blueprint, it contains policy ideas related to medicare and medicaid. take for example the act via -- the idea of paying for drug based on benefits. we should explore how these value-based arrangements can work within our federal health programs. we should also excess how we can modernize the program because it is now more than 10 years old. in a review of the park district program should involve action to mitigate the budget deal indicated best rack that decrease the discount that manufacturers are supposed to

provide. this change has only dampened some of the competitive forces. we will soon hear from the secretary on the policy ideas in the blueprint. it will be important to understand how this will impact not only the list price, but premiums and other cost-sharing as well as innovation. the vast majority of this blueprint is in the jurisdiction of the finance committee. this engagement with the secretary will implore how we move forward. before i conclude my opening remarks, i suspect some of my colleagues may want to talk about other pressing issues. to talk about one issue, what about the issue at the southern border. we must keep families together.

we must work to avoid illegal border crossings. we also need to ensure that the children are reunited with their parents. i know the secretary is working aggressively to do so. my experience tells me the time will be best spent talking about issues that we are prepared to talk about. after all the cost of prescription drugs is a deeply important and often life and death issue for many constituents each day. my hope is that we can all take advantage of this opportunity and stay focused on the agreed- upon subject matter of this hearing. with that i will turn to my good friend and ranking member for his opening statement. >> thank you. thank you for holding this

hearing. i will get to rescuing americans who are getting mugged by their prescription drug bills as well as the administration cutting safeguards for those with pre- existing conditions. first the american people are old an answer about what is going to be done to protect the thousands of children the trump administration separated from their mothers and fathers and put in the custody of today's witness. as of this morning, health and human services and the justice department seems to be doing more to add to the bedlam and deflect blame than they are doing to tell parents where there kids are. according to new reports, they are ransoming these children by telling the parents they can have their kids back if they agree to leave the country. the president tweeted they should forget about due process

clause for immigrants. it is an endorsement of judging people by the color of their skin. the white house chief of staff floated this family shredding policy more than a year ago. it wasn't conjured out of thin air this spring. but with news reports that they are scrambling to collect resumes of individuals with experience in childcare, it is clear the department was unprepared. this committee has oversight of the child welfare system. members here have worked hard on bipartisan policies that keep families together. that is because they don't want to rip children from their families. this is harmful to children. it is harmful to their help. it is garnering to their

emotional well-being. that is a fact and the department of health and human services know this. you are certainly going to get questions about this today. an administration that has traumatized thousands of child refugees. dehumanized the kids and their parents. they have tried to normalize this behavior through deception and it has a lot to answer for. now i will discuss americans getting hit with the bills when they go to the pharmacy window. the president said in early 2017 that the companies were getting away with murder. he offered his diagnosis of the problem. one year later it sure looks like he has decided not to treat the problem. the president made drug costs to keep his pitch to the

american people in healthcare. the party in power hasn't done any legislating on it. they put out a blueprint and collection of the same questions that have been asked for over a decade. to me, this so-called administration blueprint, looks less like a blueprint than it does like smoke and mirrors. a lot of what they have said, is just head scratching. for example, they said that european countries are freeloaders. the city of drugs got more expensive overseas, it fattens the wallets of the pharmaceutical companies. that is just fantasyland. i don't know what magic wand they plan on using to hike drug prices and other countries.

i don't know if having the power today exist. even if drug companies did come into a windfall, it is laughable to expect they take that as the reason to slash prices in america. look at the tax laws. huge amounts of cash was showered on the truck companies. what did they do with it, they put it in stock buybacks that benefit shareholders not consumers. one other trip to pharmaceutical fantasyland. in may he said in two weeks drugs -- drug companies would announce mandatory drop in prices. time went by, it's been one month, no massive drop in prescription drugs. as long as americans were getting mugs at the pharmacy counters, this issue demands serious bipartisan action. to begin that effort, i am

releasing a report that looks exactly what makes this industry complicated and wide those policies do so much to make sure the price goes up and up. it is not just a look at the drug manufacturers. there's a lot of pieces to the puzzle. they have broken policies and a lot of other things. this will give a comprehensive look under the hood under the entire pharmaceutical industry for the first time. otherwise when americans get this, when you look at the record, it is wrong. their blueprints have raised issues. the administration needs to stop pretending that asking the same questions is equivalent to

getting results. the fact is there is a big gap between the child and headlines they tried to grab on prescription drugs and the lack of serious proposals put forward. today, i hope we will see that getting close. one last issue, the trump administration said they would get out of the business of defending protections for americans who have pre-existing health conditions. these projections have let more americans sleep more soundly at night. it isn't a narrow policy that applies to a handful of people. there are more than 150 million americans who get insurance through their employer. they will be surprised to learn that this decision can hurt them too.

if you don't have a pre- existing condition, i guess you know someone who does. they decided it isn't interested in protecting the peer we have a lot to do this morning and as always, i look forward to working with you. >> thank you. >> once again, i would like to thank the secretary for coming here today. we appreciate you sir. he was sworn in on january 29. because there's a lot of ground to cover, we all have to come to know him quite well. opening statement. >> thank you mr. chairman and members of the committee. i appreciate the opportunity to hear before you today. why american prescription drug prices are too high. drug pricing was one of the

first truck topics i mentioned during the confirmation process earlier this year. i know members of this committee are serious about taking on the challenge. i appreciate your efforts. from day one of the administration president trump has directed hhs to make drug pricing a top priority. earlier the 2019 budget laid out proposals on the issue including reforms to medicare medicaid, topics i testified about when presenting the budget earlier this year. in may, building on the budget the president released a blueprint. it is a plan for bringing down drug prices will keeping our country the world's leader in innovation and access. delays out dozens of ways hhs in congress can address the vital issue. we faced for significant problems in the market.

high list prices set by manufacturers, seniors and government programs overpaying for drugs, rising out-of-pocket costs and foreign governments writing off of american investments. the blueprint lays out for strategies. we begun acting on each already. first, we need to create the right incentives for list prices. everybody makes money as a percentage of list prices including benefit managers who are supposed to keep prices down. everybody wins and list prices rise except for the patient whose cost is typically calculated based on that price. an initial action is to include the list price an advertisement. americans deserve to know the price of a new drug they hear about on tv before going task their dr. about a product they

may find unaffordable. fundamentally, we may need to move to a system without rebates, where drug companies negotiate fixed-price contracts. such a system incentive detached from artificial list prices could serve patients far better. second, we need better negotiation for drugs within medicare. that's what president trump has promised and what we will deliver. in medicare part t, hhs will work to give private plans the tools they need to negotiate better deals with drug companies. part d is a successful program but it has not cap pace with innovation in the private marketplace. well intended patient protections may prevent plans for managing utilization. while everybody agrees on the importance of the drugs manufacturers often use that

list as a protection from pain rebates. we want to bring this to part d drugs, right now hhs just gets the bill and we pay it. the system could prescribe doctors more per expensive drugs while those who fit into part d. look at ways to merge the drugs and leverage existing private-sector tour options. we need a more competitive pharmaceutical marketplace. thanks reforms passed in the 80s america has the strongest generic drug market in the world. there are ways to unfairly block competition. fda has publicized the names of companies that might be abusing 15 companies and issued new guidance to lessen the effect.

we need to bring down out-of-pocket costs. since the rollout cms has reminded part d plans that it's unacceptable to have gay causes from working with patients to identify lower cost options. more broadly, will work to ensure patients know how much a drug cost, how much it will cost them, and if there are cheaper options. these are some of the elements of an aggressive long-term plan to solve the problem we care deeply about. thank you for having me here. i look forward to questions and discussing how together we can help american patients. >> thank you mr. secretary. one of the ideas both mentioned in the blueprint that you have discussed publicly, is doing away with rebates in medicare part t to antikickback statutes

and safe harbors. you have stated the rebates could be replaced with something called a fixed price discount. the term fix and price in the same phrase makes me nervous. i'm sure it doesn't mean setting a price, but can you explain what that means and how it would be different from a rebate and how it would limit list price increases from year-to-year or over longer times? >> the problem is the pharmacy benefit managers make their money often at the high list price of negotiating a big list price off of that and keeping a part of that that they pass to the insurance companies they work for. that's just the business model. what we are thinking of proposing and have been asking

for comments is moving to a system where instead of encouraging a high list price with a rebate that gets administered after the fact, what if the contracts the pbm's have say here's the price, here's what we will pay. you have market power you control the formulary and will get this discount. and that gets administered at the point-of-sale. you take list price out of the equation. the benefit manager has no incentives for a list price. the money flows within we take list price off the table. >> states continue to evaluate the concept of this in medicaid with the recent examples of massachusetts and arizona and other states with a bipartisan mix of governors considering the

idea, there's growing interest of imposing a close -- it through a demonstration project. how would the medicaid drug rebate program interact and do you envision the protections for certain classes of drugs by required coverage of the medically necessary treatments for which there's no treatment. >> the president's 2019 budget proposes having five states to have the opportunity to see if they can do better than the rebate program and negotiating. the system we have is all system are available in medicaid. but there's a statutory rebate they have to pay. some suggested they could run their formulated the way medicare part d runs the formulary, and they could get a

better deal. we would like to give them that chance and see if they could do so. there's still patient protections a medical appeals, clinical necessity. everything would be there for our insurance to protect you for unreasonable utilization. >> thank you. i'm pleased the administration reversed on obama era policy that sent the wrong signal to the program. it could cost 20 or 40% less then the biologics of which they can compete is not the recipe of a new -- what else can be done

to increase the use as a way to increase competition and lower spending? >> mr. chairman, we want to do what you did for the generics market. create a very robust, highly competitive sector that competes against the branded products. that's why the change was made to ensure there is adequate -- we've seen this enter the market below the market of what without the pricing would be we think in part because of the rule change. we believe that the fda we can get rid of the abuses by drug companies that are preventing access to their product or for them to do the clinical trials needed. we'll keep building the scientific and evidence base that would allow the development of that generic market. >> thank you.

>> mr. secretary, your agency plays a crucial role in child safety. i have questions that are brief and i went to see if you can give me specific answers. how many kids were in your custody because of the zero-tolerance policy have been reunified with a parent or relative? >> had we have had a high of over 2300 children separated from the parents as a result of the enforcement policy. pgh so, have been reunified? >> they were reunified with parents or other relatives under our policy. if the parent remains in detention, unfortunately under rules set by congress and the court they cannot be reunified weather and detention. >> so is the answer zero? >> we've had hundreds of children who have been separated who are now with -- >> i want to know about the

children in your department's custody. how many have been reunified? . . . >> is we want to ensure that that --. >> that's 800. >> well, that's not -- that's actually -- the 800 number would be the back up on that. but that should be the fail safe. every parent should know we're there. we've actually deployed -- >> but how many -- how many -- >> let him answer the question. >> mr. chairman, the time is short. >> i'll give you more time. >> the american people have been getting lots of deception, lots of rosy answers. not many facts. so how many parents not have access -- how many parents have been told where their kids are? >> well, they all -- that

information is available for every parent. and we've actually deployed public health service officers to work with the ice case managers to meet with all of those parents. we're progressing through them to help them fill out the reunification paperwork they need stwels to make sure they make contact. they know where their child is. they get them on phone. get them on skype if that's available. we want to have every child and every parent connected and in regular communication. >> i asked twice how many parents were actually told where their kids are. you said they have access and -- this is just in my view part of the rosy responses the american people have been getting. and it sure doesn't line up with the firsthand accounts of parents that i hear from who desperately want to know where their kids are. >> there is no reason why any parent would not know where their child is located. i could at the stroke of -- at

key strokes i sat on the orr portal with just basic key strokes within seconds could find any child in our care for any parent available. >> and, mr. secretary, suffice it to say portals are not part of the daily existence -- >> that's why we have o case -- >> i'd like the whole record open so you can tell me specifically as of today how many parents are told where their kids are. now on drug prices. not less than 14 days after the president's speech on prescription drugs bayer announced the price of two cancer drugs going up $1,000 per month. that's the second price hike in six months. so it sure doesn't look like the drug makers are taking your blueprint particularly seriously. we've got 42 million americans who get their drugs through part d of medicare. they're getting price hikes every day.

after a year and a half in office, i don't see any evidence of this administration taking real action until possibly january 1, 2020, a thousand days after the president said drug companies were getting away with murder. so are there any policies in your so-called blueprint that have actually taken affect and will hold drug prices down? >> so patients have already saved $8.8 billion from added generics. they've saved $320 million a year from the change to part b medicaid reimbursement. we've already -- we've already listed the 150 branded companies that are hiding behind the rems program to provide access to their product for generic or biosem cal testing. we put a dashboard out to show the price increases. we've already told the part d plan plans that we find the gag clauses to be unacceptable. and i'm disappointed bit price

increases. and i want to put the drug companies on notice. we're hitting july 1st. that's a traditional time for drug price increases. and i hope they will exercise restraint as we come across this period. we've seen fewer increases than we historically do. lower increases as we historically do -- >> my time is up. you didn't answer the question. i asked about part d changes. and we haven't seen for those 42 million americans who get their drugs through part d, we haven't seen any change. i'll hold the record open for this as well as the other matters that you didn't ask -- didn't respond to. and tell us specifically what medicare part d changes are being made and when they're going to be made. they're going to help the 42 million people. >> senator. >> thank you, mr. chairman. let me first speak to the issue of the children who have been separated at the border.

and as i talked to you privately about this, this is obviously appalling what has happened. it is an american tragedy. it's a tragedy for these parents and these children. and i want to start by calling you to make sure the over 2,000 children in your custody at hhs are able to get back to their parents as quickly as possible and that you make this a priority. as i indicated to you, we have over 60 children in michigan right now. they are in loving, safe foster homes. but that is not the point. as of my last contact with the agencies, they did not know. they were not given any information up to this point about where the parents are. and there was not communication going on in terms of what's happening for these children. so every single day in a child's life -- you know, the kids keep growing up no matter what we do, how long we take, how burkt --

bureaucratic we are, however you long you take, every day these children are growing and changing and experiencing trauma and pain. and so i just want to go on record as saying this needs to get fixed and needs to be the top priority for what you are focused on in terms of children and families right now. this is on your watch. and we will hold you accountable. so let me go on to the question and the topic of the day and speak specifically about what's happening the outrageous prices of naloxone. we have an opioid overdose crisis. we've talked about this before. and let me just speak, again, about the history of pricing on naloxone, which is an overdose reversal drug that has saved countless lives, as you know. the drug was first approved by the fda in 1971.

long off patent. generic versions have been available since 1985. as of 2005, a generic vial of naloxone was available for about $1. about $1 in 2005. but by 2013, now that we have a crisis, the generic companies are selling the drug for 15 times as much. and th and th and th and na -- naloxone injector sells for about $150 for a two pack. so at the confirmation hearing, i raised this issue and raised the fact that the president's commission on the crisis, opioid crisis, recommended negotiating

the best price. and at the time you said "i want to look at that and learn more about the situation. if the government is the purchaser, so let's say if we're going to be buying that as part of the opioid crisis program and we're directing buying that and supplying it to states and first responders, which is what we are doing, there's absolutely nothing wrong with the government negotiating that. i followed up with a letter with colleagues. you sent response that didn't even include the word negotiation. so is thnaloxone drug negotiati in the blueprint? >> it doesn't have any specific drug price. narcan intends to be for first responders. that's actually available -- i looked into this. that is available under the federal supply schedule for acquisition at $78 a package. and our other first responders state and locals have through group purchasing access to that

same kind of pricing there. we're also working at fda to bring over-the-counter na lax own to the market and also ways to increase more generic competition. there are different formulations to the administration devices. >> in the interest of time, mr. secretary, so the answer is, no, negotiation is not part -- >> that's $78. >> $78. it was $1. now $78. such a deal. >> it wasn't nasal. i don't know if it was nasal at a dollar. >> okay. all right. so it was something different. it's naloxone. it was administered in a different way. now it's $78. i just want to share with you that southwest michigan behavioral health is planning to spend $366,100 next year on this particular discounted price that you're talking about. $366,100. if they could be spending on

treatment for people in michigan who have an opioid addiction. and instead they are paying, even after discounted rate, 78% -- 78 times more than what was available in 2005. i just have to thank mr. chairman. if we want to talk about rigged systems, there's not a more rigged system than the way prescription drugs are priced. >> thank you, senator. >> thank you, mr. chairman. mr. azar i appreciate your service. i can't think of anybody better qualified to serve in the position you're serving in. so i appreciate the expertise and experience you bring to this role. i wanted to just raise the issue. because in addition to the blueprint that you rolled out to try to control prescription drug costs, there are other cost drivers that we see in the health care system that the administration has tried to address.

one is the department of labor is now issued regulations to make possible for more people to get access to association health care plans so they can take advantage not of the individual market but of the employer provided insurance market and find their premiums substantially lower. i would note that people in the individual market, the 9 million people in the individual market do not have any subsidies, and they've seen their costs rise by 105% since 2013, which is unaffordable by any measure. the second thing i just wanted to raise with you, i'm sure you're aware of, is the good work being done by senator collins and senator alexander, representative waldon and representative costello to try to make people 250% and below get access to lower premiums for their health care coverage. again, the problem is the

unaffordable obama care model which has all of the mandates and provides spotty subsidies particular to people below 250% of poverty. that would result if embraced by congress, the alexander collins walden costello bill would lower premiums for people in the individual market by 40% and make it much more affordable. the tragedy is unfortunately the resistance, the never trump approach to -- for the work here in congress and in washington has resulted in what used to be a bipartisan bill. basically being abandoned by our democratic colleagues who refuse to even work with senator alexander and senator collins to come up with a solution for this skyrocketing premiums under obama care. so in addition to the good work that you're doing on

prescription drugs, which i applause and ask and encourage you to continue, these are two other areas i just wanted to highlight. one an initiative by the administration to the department of labor. and the other legislative but which has been rejected pending the outcome of the midterm elections by our democratic colleagues. but sense i was in brownsville on friday and our colleagues across the aisle want to talk about this issue and not prescription drug costs so much, i had the chance to visit two facilities in brownsville and was enormously impressed with the quality of care being provided to these young people who have been brought across the border without their parents and some with their parents. isn't it true that 83% of the individual children in care were brought -- sent over without a parent? does that figure sound about right to you?

>> it is true, senator, yes. most of the kids in our care came here unaccompanied sent by their parents and came here in our own and then they find themselves in our custody. >> and i haven't heard a word about the 83% of the children who were sent here by their parents, voluntarily separated by their parents, because of the conditions in the country in which they live in the hope for a better life here in the united states. which certainly we all understand. but it seems to me that what is being advocated here is not zero tolerance when it comes to vitalivita violating immigration laws but zero enforcement. senator feinstein who i've worked with in a number occasions have persuaded all of the democrats in the congress in the senate, i should say, to sign on a bill that basically provides a no enforcement zone for violation of immigration laws within 100 miles of the

border. and, indeed, you probably have seen where some democrats in the house have introduced bills that would literally abolish immigration customs enforcement. if you go on twitter or any of the social media sites, you'll find a hashtag # abolish ice, which essentially wants to do with any enforcement of our immigration laws. we can all agree that our -- that these children ought to be treated humanely and compassionately and joined together with their parents where possible. and, indeed, there's legislation that can do that. i hope we can pass that this week. >> senator, your time is up. we'll go to senator nelson. >> thank you, mr. chairman. mr. secretary, i would like to seek some answers respectfully to have a civil discourse. you are a friend of a -- a close friend of mine, and i respect

that. on saturday, i was not allowed in the detention facility in homestead, florida, to speak with the 70 children that i was told that were there that had been separated from their parents. do you know what has changed since saturday with those 70? >> senator, when we -- and we are very happy to arrange visits for senators and members of congress to these facilities. we do need to do so in a way that's orderly because they are trying -- the first and foremost priority is the safety and well-being of these children that we and our grantees care deeply about. and you should have been and would have been able to interact with them. but not, of course, interview them. these are minor children. they're not there to be did he posed or interviewed. so i do want to be careful about that. that's just simply not

acceptable. we have to protect these children. they're in care. they're in shelter. it's a difficult situation for all of them. and we just -- we all -- i'm sure you share that desire that we are doing our best and our utmost to be respectful of those children. >> mr. secretary, i didn't ask that. i asked what has happened since saturday to those 70 children. >> well, i don't know which 70 children you met with. i can tell -- >> no, no. no, no. i didn't meet with any of them. i was not allowed to, as you just stated. >> you're allowed to be in their presence. but you can't depose them. >> i understand. >> i want to make that clear. >> so my question, please, i'm trying to be respectful. >> yes. >> my question is the 70 children that i was told were in that facility that had been separated from their parents, what has happened to them? >> so they would either continue to be in our care.

or if they have reached a point where a sponsor who is in the united states who is a parent or a relative has been vetted and has been approved for sponsorship. they would have been released as expeditiously as possible to those sponsors. >> how many of those children have been able to be in contact by telephone with their parents from whom they were separated? >> so for any of them who have been separated from their parents at the time of the parents detention by the customs and border patrol, within 24 hours of arriving at an orr shelter, we endeavor to put them in touch, get on the phone with their parents. sometimes that can't happen if, for instance, if the parent has been located for criminal prosecution and placed by the bureau of prisons, say, with the county jail. it may be harder to arrange that communication. we're actually sending deploying public health service officers out there to facilitate that. we want every child and every parent to be in communication at

least twice a week so that they're talking by skype or by phone available. we want this to happen. and so i can't say for those 70. but all should have been within 24 hours of arriving made in touch if at all possible with the parent if the parent was accessible where the parent was being kept. >> okay. now, i asked that question. the lady who is overseeing the facility of getting the children in touch. and she said that a handful of the children had not been able to be on the telephone. so i said, well, what is your plan for reuniting these children? and she said there is a lady named barbara flotus who since i was there on saturday, she doesn't work except on the weekdays. and i said, well, i will try to

reach barbara flotus to tell me what is the plan. i was prevented from speaking with barbara flotus yesterday, monday. can you help arrange that so that i can know what the plan is to reunite the children? >> so we will be happy to work with you to arrange through the grantee. it would be their decision if they want to make her available to you. we will continue to work with your staff to facilitate if you wish to speak with her. >> you will not hinder me talking to her? >> yes. >> well, yesterday that occurred. so what is the plan to reunite 2300 children? >> absolutely. so the first thing we need to do is for any of the parents, we have to confirm parentage. that's part of the process with any child in our care. there are traffickers.

there are smugglers. there's frankly bad people. we have to ensure that the parentage is confirmed. we have to vet those parents to ensure there's no criminality or violent history on them. that's part of the regular process for any placement with an individual. at that point, they'll be ready to be reconnected to their parents. this is where our very broken immigration laws come into play. we're not allowed to have a child be with the parent who is in custody of the department of homeland security for more than 20 days. and so until we can get congress to change that law to the forceable separation there of the parent or the family unit, we'll hold them or place them with another family relative in the united states. but we are working to get all of these kids ready to be placed back with their parents. get that all cleared up as soon as the congress passes a change. or if those parents complete their immigration proceedings, we can then reunify. so we want to be ready. the president shares we do not want any children separated from their parents any longer than absolutely necessary under the

law. and we want to effectuate that and make that happen. >> senator, your time is up. senator menendez. >> i guess senator menendez. >> thank you, mr. chairman. mr. secretary, back to the subject at hand. you've talked at length about the goal of list prices, drug prices as part of the administration's plan. if manufacturers were to announce a reduction of list prices, has the administration considered what that would mean throughout the supply chain and the part d program, and particularly if an announcement came mid year, how would such a change impact plans and pbms. and then i would like -- if you can hold that thought. but then what would the beneficiary experience be in the

change of premiums and co-pays at the pharmacy counter. >> i'm answer the second first. if list prices go down, the patient benefits. they pay less at the pharmacy. that's why list prices matter. in part d, part b play less at the pharmacy when the list price is lower. now to the first question. we have had many major drug companies with major products who want to make substantial and material price decreases. this has shown just how broken our system of drug pricing and drug distribution is in the united states. because the pharmacy benefit managers and the wholesalers are all dependent on getting a percent of list price, and the reaction to some has been if you were to decrease your price, you will actually be harmed in terms of formulary status and patient access versus your competitor who has a higher price. i would encourage the senate and congress to inquire of pharmacy

benefit managers as to whether they have received suggestions or approaches from drug companies for lower list prices. and what has the reaction been. i believe still that this will be solved. these are adults. this is so absurd. it has to be -- it will be fixed. but this is what is keeping the individual companies so far from moving. i don't want to excuse them. the prices are their prices. they set their prices. they're accountable for that. but the channel is definitely not making it easier. >> okay. and i just think that the concern in all of this is how is this -- does it get passed on in the form of savings to the ultimate consumer, to the beneficiary. and then a follow-up question would be how could that reduction in list prices be sustained over time? >> so there -- so we're, of course, not counting on just voluntary reductions in price. it would be nice if that happens based on them seeing this is the northbound train, this is where it's going. we are going to lower list prices. better negotiations. lower net prices in this

country. get on the train. get a competitive advantage by moving there first. that's the idea. but our plan will be reversing the incentives to ever increasing list prices. i mentioned to chairman hatch. that means getting after the whole rebate system based on list prices. it means asking congress to overturn the obama care gift to the pharma companies of capping rebates in the medicaid program at 100% as they increase their list price. it used to be your rebate would keep going up. obama care capped that at 100%. that would bring in billions of dollars and create a major financial disincentive to higher list prices and sustain any lower prices that we would see. >> okay. let me ask you something -- just switching gears for just a minute. you know because i shared with you how important the 340 b program is in my state or hospitals, and i think it's probably a view shared by a number of folks on this panel and all across the congress. but could you talk a little bit

about what you foresee happening in terms of proposed changes to the drug rebate program and how it might impact 340 b program and perhaps even more probroadl what you see happening in terms of the 340 b program realizing there is litigation and regulatory action under way at the moment. >> so as we've seen the 340 b program expand, it has in some respects perhaps gotten untethered from its purpose from helping the hospitals and those uninsured individuals who have trouble affording the ac. i think we want to keep working to ensure they're delivering on that promise and is not being used for abuse and expanded beyond anything resembling its actual intent. as it expands, as more and more drugs go through that and as the flow of money comes out of that, it can lead to a cross subsization problem. if it's abused, more money might get paid elsewhere in the system

for people in medicare, medicaid. it also might be an incentive. we want to work with you to ensure 340 b is there and healthy. it has integrity and it's tied to its purpose of helping these hospitals and these patients. >> and we want to make sure its integrity in the program too. but most of the players in the field that i work with up north in my state are folks who operate those programs with great integrity. and it's important to their bottom lines, which is why i think you hear us raise this issue to you so often and other members of your team. we'll continue to do that, and i hope you'll continue to work with us and be responsive and try to work with the effective hospital to come up with a good pass forward. thank you, mr. secretary. >> your time is up. senator menendez. >> thank you, mr. chairman. secretary, thank you for coming today. before i start my question, i want to urge your staff at cms to carefully consider the request of the entire bipartisan new jersey delegation to extend the impeded rule. this is critical to new jersey

hospitals. both democratic and republican administrations have extended it. and i hope that you will have your staff pay some critical attention to it. cms predicts prescription drug price growth in 2018 will be double what it was in 2017 contrary to the president's pronouncement that there would be a "voluntary massive drop in prices in early june". one of the reasons we're not seeing reduced prescription drug prices is because some bad actors continue to gain the system to keep cheaper drugs coming to the market. they shamed some of the actors deliberately blocking generic drugs. congress is working to create the act that is a bipartisan bill that would go after the abuse of some companies that are preventing cheaper drugs from coming to market. does the administration support the create act? >> senator, we don't have a formal administration support on it. but obviously what's in the

creates act resonates completely with what we have been saying and what fda has been doing to prevent the abuses that you have correctly laid out there. >> well, i hope that the administration can come to a formal position. >> thank you. >> and bipartisan legislation. >> thank you. >> it does exactly what the president's blueprint said he thought to do by ending bad access in the pharma world. and so let me ask you after the fda named change may 17th, have there been any behavioral changes by the company? >> i don't know if there has been any change. let me check with commissioner gottlieb on that. we put out two guidances as a follow-up to that so making clear that they should not be able to hide behind our regulatory processes to protect safety. that was part of the follow on to that. but if i could get back to you to see if -- >> okay. i would appreciate that. would you commit to working with me and my colleagues in a bipartisan way to ensure

customers see generics come quickly and safely to the market as possible? >> absolutely. in fact, i would love to hear from you, as you learn of abuses in the system or entities that are manipulating patent processes, please consider an open door for any input or pointing us to those. >> i appreciate that. are you familiar with the reducing drug waste act of 2017, also bipartisan legislation? >> i am not, senator. >> okay. i would like to call it to your attention. this is a -- including members of this committee who have joined together because the hhs office of inspector general found millions of packages of waste. >> yes, i'm sorry. you did mention this to me. i'm sorry. i have not learned enough of the detail on that. i'm sorry. >> okay. well, this is a bipartisan legislation of the senator from iowa and many others on a bipartisan basis. looking at this as a way to stop

the basically waste of drugs as a result of drug packaging. so i look -- i ask you to look at that as well. >> uh-huh. >> let me just turn to the question of the children who are being stripped away from their parents at the border. i have to differ with you. the reason we have a crisis is that the administration has decided that even those who come to a border crossing present themselves ask for a filing are turned away at a legitimate border crossing. they come back the second day. they're turned away again. they come back a third day. they're turned away again. and after traveling thousands of miles, obviously fleeing horrific violence, they are not about to not have an opportunity to asylum. and so the administration criminally prosecutes them. and in doing so, separates children. now, which have been sent thousands of miles. it was looking at a map of where these children are primarily seems to be in blue states, which we're happy to house them.

but we don't want to really have them stripped away from their parents. so i heard your response to senator nelson. let me ask you this, will those parents that have been deported and whose children are here, are they going to be reunified? and if so how. and secondly, my understanding is there are still 2,000 minors that are separated from their parents and have not been reunited. what is the time frame? i heard what you said is going to take place. what is the time frame you estimated that would take place. >> so as to any parent that's deported, the course the child has independent right. we often find when a parent is deported that they ask the child to remain separate and remain in this country. that happens in normal proceedings. i don't know in the last couple of months -- >> the child as a minor can't make that case for themselves. >> they have counsel and sometimes they actually decide to remain or they -- or they -- or the parents ask that we have them remain in the country. we keep them in touch, though, as long as the child is in our care. we keep them in touch even if

the parent is outside of the country. in terms of timing, again, we're working rapidly to confirm parentage and do the vetting and proper criminal background checks, et cetera, on any parents who are in custody so that we're ready to go as soon as either the parent -- the immigration proceedings are complete and we can reunify at the time of immigration. or if asylum was granted, they entered the country, we connect them then. or we have alternatives if there are other relatives, a parent who is already in the country, we would put them with that parent or with other relatives here in the country. we have to expeditiously get children out of our care and custody. >> but you don't have a time frame? >> well, it's very much dependent -- right now i would gladly put those children back with the custody of parents with ice but i legally can't. they have to be sent back. we need congress to change this 20 day limit. >> or we need to stop criminally prosecuting them -- >> senator, your time is up.

senator portland. >> thank you, mr. chairman. i look forward to talking about drug pricing in a second. but let me just comment briefly on this. as you know, we spent a couple of years studying the issue of unaccompanied kids, uacs. and hhs has, in my view, a very difficult job to do, which is to help with regard to kids who come without their parents. these are unaccompanied kids. now we have added to that with the separation of kids and families, which i think was a bad idea. and i commend the president for the executive order which changes that approach. we've now got to deal with the kids who are already in the system. but even though you have a very tough job to do, as you may know, in the obama administration and in the trump administration, i have not felt as though ohs has done a very good job in a very tough situation. because they have not come up with this agreement between the department of homeland security and hhs. there is a memorandum of

understanding and a commitment to come up with an operating agreement so we can understand how to hand off and who is in charge. but as recently as april this year, we had a hearing on this. and hhs said that they're willing to take a fresh look at the question of who has responsibility for these kids once they leave hhs detention facility or place with a sponsor. my concern is that nobody is responsible. and, you know, i got involved in this initially because there were children coming from guatemala ended up at a egg farm in ohio because they were given to a family that was going to take care of them. so my question to you today is -- and, again, i'll get to drug pricing in a second. but, one, you are taking a fresh look at this, as i understand it. you have a july deadline to come up with this operations agreement. i don't know if you follow this closely. but are you on track on the operations agreement with dhs?

and who is going to be accountable or responsible for these children once they leave a federal government agency's custody and go off with the sponsor? >> so we do enhance -- we have a memorandum of agreement with the department of homeland security to ensure adequate and full vetting of any potential sponsor. these are relatives. they're either parents or aunts, uncles, adult relatives. >> so, again, of the egg farm they were trafficked to. >> and that was -- obviously there was a mistake and something happened. >> right, right. >> so we have better screening. >> screening. exactly. once they -- once they're placed with a sponsor, they're no longer subject to our jurisdiction. we cannot -- we cannot sort of pull a child back from a relative. we don't have the legal authority. they're then under the state and local child welfare laws as well as, of course, their subject to any immigration proceedings that they may have. but we don't -- we don't have any authority to go out and pull

a child back from a sponsor once they're in that sponsor. that would be local child welfare -- welfare authorities that would at that point -- because we learn about it. >> and, again, i want to get on to the drug for a second here. one of the concerns obviously is that we weren't even -- and this goes back to the obama administration and the first part of the trump administration not even telling the states that the kid was in their jurisdiction. so kind of hard for child welfare to step in. and, again, there is an issue of getting these kids to their hearing. that is the idea. more than half of them are not showing up to the hearing which is to get with the family pending their hearing on the immigration status. so we have some work to do still. i know you're aware of that. i just want to make sure you know we're going back and forth with your team and we expect to have this operations agreement in place by july as was committed to during our april hearing. for a second, i know senator

talked about one of the issues that's a big deal to me which is how you deal with the crisis and the people who need naloxone which reverses the affects of an overdose and specifically the cost increases. 575 bucks for naloxone auto injector just four years ago over $4,000 for one of these things. and so you go on your dashboard which i applaud you for. you have a dashboard where you can see drug pricing information more transparently. but it is very confusing. because it shows spending per unit. this is for medicare obviously. increase from 739 bucks to $4,500 at a list price actually below both of these. and when we push on this, we're told it doesn't include some other information like the manufacturer's rebate or other price concessions, which seems to run the other way. but anyway, we've been pushing on this and trying to get hhs to give us an answer. why can't all that information

be on the dashboard? if consumers are really going to have the transparency that you want and we want, why can't we also include what's going on with regard to the rebates or other price concessions? >> well, taking it beyond the naloxo naloxone, disclosing publicly negotiated rebate rates is disclosing highly confidential information. let's say we took any other regularly given drug, there could be very serious anti-competitive issues with that, as there would be if wal-mart were forced to disclose their tide discounts. their competitors would love to have that information more than anything. so we have to be careful here. we're happy to get you whatever information we have. but that's just an initial reaction on that issue of disclosing whatever the discounted rate would be on a particular product. >> i would think -- >> senator, your time is up. >> well, the taxpayer not tide.

tide is bought by some taxpayers but it's a different issue. so one with regard to us getting transparency on consumers on medicaid and medicare, i think we have to figure out a way to provide that information. >> thank you, mr. chairman. thank you, mr. secretary, for coming back to the hearing. and thank you for your service. i just along the lines of -- along the lines of senator portman's original question, did hhs have a role in participating in the design of the administration zero tolerance policy at the border? >> we're -- we deal with the children once they're given to us. if they're unaccompanied. so we are not the experts on immigration. >> you weren't involved in planning meetings -- >> it wouldn't be appropriate for me to discuss interactions within the administration. our role is on receiving children. not in -- >> to that end, mr. secretary, is the process you described today a special process for

reuniting the 2,300 kids with their family, or is this the existing process that orr uses for unaccompanied minors? >> this would be the process we use for any child in our care to ensure safe placement. because, again, unfortunately it may seem like, oh, their parents came across the border with them. they were separated. oh, just reunite them automatically. unfortunately these children are often going -- they're being captured by traffickers, gangs, cartels. that journey through mexico is a horrific journey of rape and violence and deprivation. and often -- not often, but we do see traffickers and very evil people sometimes claiming to be the parent of children. so the same protections we have for any unaccompanied children are vitally important here in terms of determining parenting and vetting. >> i can appreciate why you can't answer precisely when every single child will be reunited with their parents. but could you give the committee a sense of whether you're

talking about days or weeks or months? what is your -- what direction have you given hhs employees or contractors to do the work that i'm sure you feel is urgently about as we do. >> yes, i share the -- i and the president share the goals of doing the work getting the children reunited. i cannot reunite them, though, while the parents are in custody because of the court order that doesn't allow the kids to be with their parents for more than 20 days. i find it hard to imagine. but we need congress to fix that. what i've ordered our team to do, i want the kids ready. i want the parents confirmed and vetted so that we can place them as soon as it would be either congress changes the law or the parents through their immigration proceedings and ready to be deported or released so that we're ready to reconnect them. now, in the interim, i have a separate legal obligation to keep working to expedite their other sponsors in the country. and a different parent or other

relative that i can place them with because i can't have them with us any longer than necessary. >> so do you imagine that this will be -- that we'll be having this conversation weeks from now, or do you think this will be resolved weeks from now? >> if congress doesn't change the 20 day limit on family unification, then it depends on -- the process for any individual parent going through the immigration proceedings, as long as they're in detention, they can't be together for more than 20 days. but it is the case. >> what is the -- what is the age of the youngest child that is in hhs's care? >> we have infants in our care. senator, as shocking as it sounds, we have always had infants in our care. even just straight unaccompanied children left on the border. >> what's the age? >> infants. >> what's the age. >> zero. infants. we have parents or smugglers or traffickers who leave or have lost a child at the border and they're placed in our care.

so we have always -- the program has always had -- as devastately strajic as that sounds. >> and what happens if the child's parent has already completed expedited removal proceedings and has been deported? how is the child notified and how long does the child have to wait to be reunified under those circumstances? >> so if the -- if the parent wishes to have the child reunified, we will work to -- of course, we have to confirm the pair advantage and the vetting -- parentage and the vetting to ensure -- even in a foreign country to ensure that the parent doesn't have any information -- we don't have any information suggesting that we're placing the child in jeopardy. we work with the home country for the transfer of the child there, if that's the parent's wish for the child to be reunified. there is times where a child has independent of their parents and may seek to remain in the country and remain of our care because of their assertion. >> and the children,

mr. secretary, from certain countries treated differently from children from other countries or is everybody treated the same? >> everybody is treated the same within our care. immigration laws, as you know, are different, especially with regard to contiguous countries. mexico and canada, there are provisions that others would be experts in and immigration laws and the process there around deportation that i'm not the expert in. but children in our care we treat all of these children the same and attempt to reconnect them and get them to sponsorship as quickly as possible. and, of course, it might be dependent on cooperation with home countries getting birth certificates or other confirmation information. >> thank you, mr. secretary. >> thank you. senator carper. >> thanks. welcome. it's good to see you. thank you for your being here today and responding to our questions. i want to just follow up just briefly on the issue of our children at our borders and families on our borders.

we're paying a lot of attention to the problems and we should. it's serious and needs to be dealt with. i spent part of yesterday in the city and i was with jay johnson who was a previous secretary of health of homeland security and talked about these very same issues from his perspective as the secretary of homeland security. and one of the things that we discussed was as important to get right what's going on in the border and to -- and when i was a stranger in your land, did you welcome me. i think it's important for us to focus on that and treating these kids the way we would want our kids to be treated. the other thing is it's important for us to focus on the root cause for why these kids and these families are coming to our border. i would remind my colleagues that about 20 years ago in columbia, a bunch of gunman rounded up the columbian supreme

court members, took them into the room and shot them to death. shot them to death. and you have the drug lords. you have them working in concert to bring down -- we can bring down the government of columbia. and in desperate times leaders said up and said we're not going to let this happen to columbia. and those leaders were supported by bill clinton president. joe biden. chairman of the formulation committee. to come up with something called plan columbia. plan columbia. which is why we can do it, you can help in terms of securing your country. economic opportunity in your country. we helped. we have a similar approach. it's not called plan columbia. for el salvador. those are -- i call it plan

columbia for those countries. and it does many of the same things that plan columbia has done. we're on the third year on this program. and we need to continue to fund it. we need to continue to oversite on that. and the reason why these people are come to our country is because they live horrific lives. they are lives of desperation, dangerous, high homicide rates, lack of economic opportunity. we are complicit in their misery. that's why we have the moral obligation to help them and we're trying to do that. so i will just leave that at your feet. and my colleagues feet really. i want to talk a little bit about value-based pricing. we talked about this before. i would like to say everything i do, i know i can do better. and i think that's true of all of this and in the deliberate health care and a big piece of that is pharmaceuticals. and as we've discussed before transitioning to value, we have drugs top priority to not just reduce the drug prices for

seniors and it might be medicare, but also for our government for our taxpayers and just regular, ordinary people. what are stakeholders in your policy experts telling you about value-based contracting prescription drugs and how this policy could improve afford ability for consumers and taxpayers. >> senator, thank you for your leadership in the area of value-based payment. we are already moving forward on that. commissioner gottlieb has just recently put guidance out to create a better pathway of sharing of information and discussion between pharmaceutical manufacturers and ensurers around economic information and to plan a new product launches so they can actually collaborate and build those value-based arrangements as quickly as possible. we're working on guidance around government price reporting and kickback statute rules that can, again, create a greater pathway around how private actors and how we can set up these

value-based arrangements there. we all believe, as you said, it's the future of how we need to pay for drugs. pay for outcomes. pay for health care. frankly i would love to see it if they can be more incorporated into the overall holistic health of the patient. more of a bundled notion. i think that's probably long-term in the future of value based. more than just the payment on the drug itself. >> what actions do you need from us on this side of the dice to enable you to implement value-based pricing and to ensure that spending for health care services and products are aligned to align overall health care costs. what do we need to do? >> i believe we have pathways around reimbursement models directly with the anti-kickback statute. if i find that our regulatory authority is limit, i will come back to you and ask you for that authority because it is so critical. >> senator, your time is up. >> mr. chairman, i just want to commend you and your ranking member for holding this hearing. i think this is terrific.

do you have a proposal for the administration. i don't know that there are any homeruns in the proposals. but there are singles and doubles. i think we can score some points. i think it's grade we're here doing this and i appreciate the secretary being here. >> that sounds like a triple to me, senator. [ laughing ] >> senator cassidy. >> thank you for being here. let me start off with the specific drug and then we'll build from that into a line of questioning. in the past you spoke of a drug released in 2001 which used to be probably a couple thousand dollars a year. now i'm told that it costs $8,800 a year in canada. and it costs $144,000 here in the united states. now, as you and i both know, the

way that the catastrophic coverage works is that when somebody moves into the catastrophic portion, the beneficiary is responsible for 5% of the list price, not the net price. and so i had a former patient, and only former because i'm no longer practicing. she is paying 5% of $144,000 for a drug which has been released since 2001. now, my staff tells me that the company that has glevik has extended the ability -- the patent protection, if you will, with an agreement with the generic competition. now, the senator asked what do we do about this. and you responded we need competition. i would say what do we do about gleevic -- glevic. available since 2001. canadians expense less than 10,000. we spend 100,000.

and our list price patient cannot afford. what do we do about that? >> senator, i may be misinformed here, and i want to get back to you on this. but i do believe that generic glevic is actually available. >> so then let's say we're back in 2015 or '16 in which this would apply. and, again, a drug 15 years after released is 144,000 here. because there will be another glevic is now there is a generic. how do we address that? >> so one of the -- one of the items in terms of fooshlt -- affordability that we have is in the president's budget which i would love the chance to work with this congress and committee on is to reform the part d and create several changes, one of which would be a genuine for the first time ever, and i think ranking member wyden has a separate piece of legislation, a genuine out of pocket catastrophic -- >> let me pause on that. so one of the -- as we both know

but just for context, one of the pernicious effects of the rebate system which we have is it moves people more quickly into the catastroph catastrophic. but even if the patient is protected, the taxpayer is on the hook. so i'm looking here at a cms report that says that the federal taxpayer out lays to pbms has increased from 11 billion in 2010 to 33 billion in 2015. and so the taxpayer is getting hosed because of this -- so even it if we protect the patient with the 5%, how do we protect the taxpayer? >> are you absolutely correct and i'm really glad you raised that. because that is one of the five point changes to part d is to actually reverse that and the catastrophic benefit to ensure that the pharmacy benefit manager is bearing 80% of the cost. taxpayers only 20%. so that the pbm has more skin in

the game to get that list price controlled so they're off the hook for that. >> so would we change so that the net price moves the patient into the catastrophic as opposed to the list price? >> it would be total expenditure. but that would be because the list would do that. they would have more incentive to get that list price control, not just the net. they're going to be bearing 80% of that in the catastrophic. >> okay. and i also see proposals currently. another proposal is that a third -- at least a third of the rebate would be returned to the patient at point of sale. why not 100%? why should the patient be forfeiting two-thirds of the rebate amount? >> i think as we get to the issue of whether rebates should be allowed at all, that where we will end up at the point of sale completely in the budget proposal we proposed a third. there obviously is significant debate about the issue of pulling forward rebates.

we think it's the right thing that patients should get the benefit -- >> so let me --. >> it's not set in stone. >> one more thing. if d does not come -- excuse me, if part b does not come into d, let's imagine another glevic within the part b space in which we're paying that, the u.s. taxpayer is aipaying this, we'ra tax taker in overseas they're playing less. why not price referencing. why not take the five biggest developed countries, germany, japan, china, france, you name them. pick up five or six of them. it might be 1.6. it might be 1.2. but it won't be 14 times such as the case with glevic. so just imagining within the part b space, why not reference pricing? >> it's something we can look at. i'd rather use the tools of the competitive marketplace than price fixing at the national level. >> i'll point out that did not

work with glevic. >> senator, your time is up. senator cantwell. >> thank you, mr. chair. i'm sorry i had to step out for a while but i did hear your opening statement. i wanted four things, list price, negotiating tools, cost share and the foreign outlook. on plans for negotiating, one of the best negotiating tools i think that's out there is the provision of the basic health plan or essential plan that is now operating in a few states where families can have affordable -- basically the state ends up negotiating. the state negotiates on behalf of a large group of individuals. those who may not belong to a large employer or employer who doesn't have insurance. so those can see as little as a $6 for generic drugs, $15 for

brand drugs. so in my mind, that's a great model. why? because it's a negotiating tool by creating market leverage by a large group of individuals who wouldn't have market power. you know, i call it the costco model. if you buy them both, you should get a discount. so that state in this case new york or minnesota buying in bulk is getting a discount. why shouldn't we continue to look at that as a model? >> so i want to learn more about how the basic health plans are doing that. and as long as it's done in a competitive framework of competitive insurance as opposed to with any preferential thumb on the scale that hinders other private act -- private insurance actors and choice in the system. i mean, any kind of -- those kind is exactly what we do in part d with the negotiating. that's why we get such good deals in part d through our private plans. >> well, i think you'll find in

new york i think there's 13 different insurers that are bidding into that market. what they like is they know they're bidding on 630,000 people so they're willing to give a discount. >> sure. >> so i'm looking for markets for individuals who aren't finding it in other ways. >> i'm happy to look at that with you. >> great. >> yes. >> great. i'm sure a more thorny question, i have in our state a woman, miss guzman calendres who is being held in washington state. she was from hon dur rduras and seeking asylum and now is separated from her child. so i want to know -- i know you've had a bunch of questions here already. but what beyond confirming the relationship between child and parent and the criminal check background, what else needs to happen for her to be processed? >> okay. so in terms of reunifying her

with her child? >> yes. >> okay. first off, i want to ensure that she knows where her child is. i want to know she's in touch and they're able to communicate. if that's not happening, please off line let me know as we are with all of the children and parents make sure that's happening. >> she has not been able to talk wa her child -- >> we want to make sure that happens. we want to -- we are working with every parent and child. we want them in a regular touch, regular communication. so please let me know off line. we'll get on that and make sure that's happening. in terms of reunification, once she's cleared, you know, from a back frowned check perspective, at that point it's really -- if she completes her immigration proceedings, if she's granted asylum into the united states, she can be reunified. if she ends up having a deportation order, reunify at that point. the only thing i can't do send the child back to be with her while she's in a detention facility because of a court order allowing a max of 20 days. congress can change that. we hope they will so we can get these kids reunified.

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. >> plenty of access to coverage guaranteed. because that's what the law provides today. why not say we're just going to uphold existing law. you can have your debates with us about a lot of other issues. but, my god, why is there any uncertainty at all? >> of course, we are upholding existing law and the position of the attorney general is the position as to what the existing law is in the statute and before the court. but the policy position of the administration is that in whatever framework we have on the individual markets, we support to prevent and ensure people with preexisting condition have access to affordable insurance. and we'll work with congress. if the affordable care act, if those provisions are found to be invalid, we will work with congress to continue the effort to find alternative ways to provide affordable insurance for people, including for those -- >> mr. secretary, that sounds like a lot of legal mumbo-jumbo

to people. why not make it clear -- >> we are a country of law. we follow the laws. >> this isn't law. >> my policy preference doesn't become law. >> you can get to the same policy outcome by saying we will ensure that people have this protection. >> senator. >> thank you. i'm going to follow-up with the same topic senator casey was on. on saturday the president of the united states said at a very public rally, he was being critical of senator mccain who voted no on the republican plan to replace, repeal and replace the aca. and then he said, i'm quoting, "it's all right because we've essentially gutted it anyway". do you agree with the president's statement? >> the -- what the president -- >> is it yes or no? either you agree with the president. >> without the individual -- without the individual mandate,

individuals now are free. they're liberated from having to pay a tax insurance. i believe that's what the president is referring to. >> isn't that other steps that have also been taken. that are much better premiums. >> no. the steps we're taking are to try to provide affordable options. the 28 million ma have been locked out we continue to try to find affordable options for them in the system. we tried to work on a bipartisan basis to stabilize that market there for this year. >> so do you support psrs. >> we did support what was at the time bipartisan legislation to fund csrs and create reinsurance. there was not at the end of the day bipartisan support on the alexander collins act and nelson package. >> i think there is bipartisan support. and i think --. >> if there were, it would have

passed. it didn't. >> no, it hasn't -- >> the president personally pushed for the passage. >> secretary, that bill hasn't even been brought to the floor. mitch mcconnell decided we're not allowed to vote on that bill. you are in charge of health care. you control the white house. you control congress. and this bipartisan bill you speak of, first of all, the president went back and forth as to whether csrs would ever be paid. you know that. so, yes, we got together in a bipartisan way. and i think the chairman will not argue with me about this. those bills are sitting there and i think they have 60 votes. in ex plikably to me. the republican party -- i'm not seeing the president at a rally saying let's pass the csr. i'm not hearing him let's stabilize. i heard him say we gutted it. so to net -- so to sit there. >> if i can interrupt for a second. i have to say mcconnell, the leader, would have included this in the omni but the democrats objected to that.

>> mr. chairman, i will guarantee you this. if mitch mcconnell will put on the floor the bipartisan pieces of legislation that have been negotiated to stabilize the market, you will pass that by -- i can't imagine there's any democratic that would vote against that. i don't know what the negotiations are on these magic rooms that none of us get to see. the same place the tax bill was done. the same place appropriations bills were done. we don't get to see what is going on. i don't know what is going on. >> that's what happens. >> well, i'm not sure what happened, mr. chairman, because we're not allowed to be told or we don't see. with y but i know this, that the president is proud that they have gutted this. and i want to offer into the record a very important document, which is a document that was received and it's not been made public before. back in 2010 when the house was investigating the way preexisting conditions were handled before the aca protection. mr. chairman, i would ask unanimous consent to enter into the record the humana agent

under writing guide. >> without objection. >> this document goes through -- and by the way, all these companies have this. i want people to remember what it was like. because the administration has gone to court to do away with preexing conditions. the -- preexisting conditions. the attorney general of my state has gone to court to do away with preexisting -- the attorney general in my state has gone to court to do away with preexisting conditions protections in the united states. there were 400 things listed, including high blood pressure, and what it says in this document below conditions are permanent declines unless otherwise indicated. everything from autism to diabetes to pregnancy to high blood pressure. denying air traffic controllers and minors and steel workers the ability to get insurance. they were told they're not supposed to write insurance for

them. it is stunning to me that we find ourselves in this place. that this administration. and what they do is more important than what they say and what they're doing right now is going to court and saying do away with all of the consumer protections that it will put in the aca to prevent the people in -- millions of people that have the 400 different conditions that said don't write insurance for these people. we don't want them. so i -- i -- i understand that you can say that somehow it's our fault that this legislation is not getting passed. but i think the american people are going to make an independent judgment on that. thank you, mr. chairman. >> thank you, senator. senator brown. >> thanks, mr. chairman. chairman hatch mentioned during the opening remarks that over a month ago president trump hosted many of my colleagues in the rose garden to tout his drug

pricing blueprint this is the chairman quoting our president promising massive cuts to drug prices. weeks later as the ranking member pointed out. i would like to point out that now a month later we're still waiting for these "massive cuts" that the president promised. my guess is we'll see dozens more prices increase before we see any massive cuts. so, secretary, do you agree if you would answer this yes or no, do you agree there are scenarios where pharmaceutical companies increase the list price of their product and price gouge consumers for no reason other than to increase their profit margin? >> of course. we've seen examples of that. yes. >> okay. thank you. the fact that there's absolutely no repercussion for a company that engages in this type of predatory issue helps with the drug pricing system.

we read from a letter i receive from an ohioan whose husband has parkinson's disease. my husband takes hundreds of medication but one in particular gets my attention. i noticed last year when i was preparing our tax return retail price fluctuated between 1,000 and $3,000 for a 9d 0 day period. 90 day supply. she said i thought this was exorbitant. started asking why the price was so high. though i didn't get a satisfactory answer. so i was doubly stocked when we last refilled our prescription again for a 90 day prescription. price over $6,000. it's getting so generic brands are getting more. they can't negotiate drug prices. it seems some companies see that as an open door -- the incentive in the blueprint to lower prices

or shift cost along the supply chain are not enough to fix the broken system. there's nothing in your proposal that would prohibit or penalize the actions that are gouging ohioans. the government needs tools to prevent these companies from jacking up the price of life saving drugs like epipen or naloxone to jack them up over night and make millions off the backs of hard working americans whose lives depend on these medicines. the price stop gouging act would give the tools they need to hold them accountable by imposing penalties to the severity of their price gouging. it would hold them accountable. something we rarely do around here. my question, mr. secretary, is would you commit to reviewing this legislation which i introduced last year and will you commit to working with me on finding a way to prevent pharmaceutical companies from price gouging consumers as you

acknowledge they sometimes do? >> absolutely happy to work with you on that. and there are elements -- we agree that price gouging by soul source generics and our plan actually does address that. we want to give part d plans the ability even mid year. if there's any price increase on a sole source generic to allow it to be reopened immediately rather than waiting until the end of the year. we also want to open up medicaid rebates for those drugs so that there will be uncapped liability. if there's a part b drug, we have as part of our budget an inflation for any drug increased above the rate of medical inflation as you have suggested also. >> okay. i mean, that's just part d. not everyone -- that's not everyone we need to protect. so work with us on that. last thing, mr. chairman, my last minute or so. i know that many of my colleagues have already raised our collective concern over the administration's actions to separate children from their

parents. something that our government -- something that is shameful and embarrasses all of us as members of this government. while i understand policies of dhs and orr influx the situation continues, of course, to be extremely troubling to anyone paying attention. last week in response to reports at facilities under your view were preventing children from comforting one another. i send a letter to you and secretary nielson concerning the care provided for traumatized children at hhs facilities. regardless of the topic i've had trouble getting written answers to my letters in this administration so that the interest of getting a timely response, i would like to ask you to police commit by getting me -- please commit by getting a response to the letter at the end of the week. >> i haven't seen that letter. i just responded to in this morning it may have been including your questions in the letter. i can tell you in terms of comforting, there were no orr restrictions on comforting tender age children's or any

other provision. there was the media story. i have no idea. i've asked about this. there's no basis for what that individual reported. these are normal child care facilities subject to state law. we -- these grantees, these charities i cannot tell you how seriously they take their mission to take care of the children. >> i wish the administration of which you're a part took equal care caring for our children. >> senator, your time is up. senator whitehouse. >> thank you, chairman. secretary, welcome. i want to begin by echoing senator menendez's comments about the imputed rural floor problem. unless that is correct ted, you will be creating a market shifting reimbursement cliff around rhode island difrnting it from massachusetts and from connecticut. we are not a very big state. so it really does not make any

sense to undo what has been the status quo for years and will continue to work to try to make sure that we don't create that anomaly. i think we've had this conversation before. but as you know, i think one can generally divide the pharmaceutical market into three categories. one category is there a competitive marketplace. and the third is where a company enjoys a de facto monopoly. there's real competition and it's in that sector of the pharmaceutical industry that i think we have seen the worst misbehavior. and my concern is that you get these companies that come in

that buy out the drug manufacturer, add no value, invest in no research but simply crank up the price for speculative purpose. first of all, do you agree these do exist in the drug market? >> i do. we have seen that in these -- with some of these generic -- these full source generics that senator brown and i were just talking about. >> or even not a generic. just a pharmaceutical outside of the patent. >> you could if you see a branded company of using the patent system. the rem program or other things we want to get to. >> or the desperation of their patent. >> exactly. >> it continues to have an affect on the monopoly. so the concern that i have is that we are not seemingly addressing that problem.

i know that you've proposed reopening a formulary. but if you have a situation in which a drug manufacturer has a de facto monopoly, they were able to succeed at the original low price that the speck lart -- speculator then came in, bought the company and bid up, it is always going to be within their capability should a competitor emerge to drop back to their original price and price out the competitor. so you can play the market in that way and the threat that somebody might reopen a formulary isn't very helpful in that case because a wise speculator will happily bet that nobody will come into that marketplace because they can drop their price back again and price them back out. it seems to me that we have

tools that go back to the age of grain silos and railroads and mob bell for dealing with monopolistic behavior. why not just use those tools once a particular entity has been determined to be a de facto monopoly and in many cases not even a member of the pharmaceutical industry. just a speculator in trying to squeeze money out of the system? >> i think that's a fair question to look at antitrust policies and competition law there in those circumstances to see if monopoly power is being abused. i think that's a fair question. i will follow up on that. i think that's a fair thing to look into. we do need to increase competition, though. i do think -- >> i think we all agree on that. >> we are -- one of the things we asked about in the blueprint is whether we're actually in this country underpaying for

underreimbursing for generics. we need a strong, robust generic market. we may be driving those prices so long that we're creating manufacturing anomalies that lead to sole source product. we need to look at that and be open minded about whether we've actually made it too loud. >> i think in the area of de facto monopoly, it would be hard to identify an agency of government that actually has responsibility in that area. and i don't see doj showing any signs of life. so i think that's part of the problem right there. i will ask you a question for the record related to what i'm hearing are very significant problems getting drugs in emergency rooms. and so just to flag that between us now so that when you see the qfr, you know this was a question i was concerned about. mr. chairman, thank you. >> senator warner. >> thank you, mr. chairman. mr. secretary, good to see you again. and i know this is a question

about drug pricing today and it will come of that. but i, like a number of my colleagues, have a question about the ongoing crisis of the children at the border. the department of health and human services has contracted facilities to house thousands of unaccompanied minors, including one in my state. there have been very disturbing reports of abuse and lawsuits filed as a result of those accusations. i sent the administration multiple letters on the need for us to get information back. senator cane and i have. and my hope would be that we can get those responses and be anxious to know if you would be able or willing to comment on any of the stat ent. >> so without regard to the individual people involved, it's

important to know when we get these children into our care, they're immediately evaluated with the mental health evaluation as there are with any children. with 12,000 children in our care. there's going to be some children who need extra care. some of which is mental health or may present a risk to themselves or others. we have contracted with some including the one you mentioned that specialize in juvenile care of a special need for those that may be at risk to themselves or others. our children are kept separate from the rest of the juvenile population. these are the separate grant provision. they're fully complied to -- oversee that. obviously we take any allegations very seriously here. we want proper and appropriate care for these children. so any allegations are quite disturbing. i have seen nothing to confirm the nature of those allegations. but we will certainly respond and work with you on that. >> i hope we'd be -- the reports

have come up with minors being kept in solitary confinement for 23 to 24 hours to being strapped to a chair to being strapped in a chair without any clothing and strapped in the head. all practices that seem inhumane and worthy of a great deal of review. now, i just wonder without understanding you may not be able to speak to specifics of what happened in statten, what level of training does the orr put for guards in these type of facilities as it shows that these actions took place, i would hope that we would put training regimes in place that would not sanction such behavior. >> so, again, without in anyway knowing to be able to confirm the validity of any of those types of allegations, this would be subject to state requirements

and licensure and any kind of custodial arrangements. so there would be whatever the commonwealth of virginia in addition to orr oversite, i don't know that we have separate training in addition to requirements around the care in those juvenile detention facilities. i'll be happy to get back to you on that because i do not know the answer. >> we have sent a couple of letters. the sooner you can get me the response on those, the better. >> thank you. >> let me move to a moment that senator whitehouse is talking about. as you've indicated with them trying to price below the price point or sometimes margins were so thin that companies would not

produce other drugs and in some areas we may only have one generic. what tools has the administration proposed or can you or your cmm use to create more competition and actually build enough of a market here where there might be in addition to the brand 3 or 4 generics to provide to bring drug prices down. >> i agree with you. certainly if you have any suggestions, i would welcome you. but we're working -- the fda commissioner is working to ensure that as we have any product approaching full status generic that we're making clear to the other manufacturers that that's a market opportunity make expedited pathways for generic approval. streamlining any processes we have to get products to market there to compete and bring them in. we need to look on the reimbursement side. that's where the request for information is asked for there. again, any help you can provide ideas open book.

>> i would love to stay with you on that because i think pricing transparency and, again, more knowledge within the marketplace of possible opportunities we can actually see whether the market will perform or not or whether we need in the white house and i tend to agree other things to try to spur this type of competition. thank you. >> thank you, senator. my partner would like to ask a question. >> thanks, chairman. i got one last pharmaceutical question and then a matter that we have to clear up. and i'll do that as part of my closing remarks. now, mr. secretary, earlier i asked you what you were doing to help the 42 million seniors on medicare part d with their skyrocketing prescription drug bill. you deflected the question by talking about other matters. and after asking you again what you were going to do to help the

seniors on part d, and i've got your exact quote here, you said this morning you hoped that the big drug companies will exercise pricing restraint. as we begin to wrap this up, mr. secretary, i just have to tell you to get real pricing relief for those millions of seniors i've been asking about on part d, it's going to take a whole lot more than your hopes that your former ceo pharmacy colleagues are just going to step in and help those seniors. so my last pharmaceutical question is going to deal with another matter that will determine whether we're actually going to get some results here or just continue to make these vague promises. press reports indicate you and your office are negotiating

directly with drug makers to lower the price of drugs like insulin for patients who pay cash for their drugs. is that correct? >> that story was a mystery to everybody that i've spoken to at my department. we have no idea what that was in reference to. >> so it's not correct? >> i am not aware of negotiating that cms is doing around cash pay on any product. that was -- we were having discussions, of course, with drug companies that are thinking about decreasing their list prices to see if we can help clear barriers, do anything in the channel. as i mentioned to you privately, working to see how that can be facilitated to drive prices down. but that story was a mystery to everyone i asked about that. >> then let's make sure we understand what these conversations are all about. you don't see them as negotiating about anything? >> no, no. this is -- if companies are

seeking to lower their prices and they're facing barriers from wholesalers or pharmacy benefit managers, we're attempting to seek and can we clear any barriers that we have regulatory, political or otherwise around that to help facilitate that. i also -- you know, anything that we do, senator, you made a statement about my previous answer. and i think you sort of cabined it as if it didn't relate to part d. anything that we do to lower list prices will help our patients in part d because of their cost sharing. our 5-point plan in our president's budget would decrease patient out of pocket cost sharing by tens of billions of dollars if only congress will pass the 5 point plan we have. we want to fix the star system and protected class system to allow genuine negotiation against the drug companies in part d where now they're not paying commercial level rebates in part d. we'll empower greater -- >> mr. secretary, you are a smart fella and good at this. but that's not what you said.

you said -- >> i said it now. >> well, great. but you earlier said you hope -- i'm just reading it to you. you hope they will exercise restraint. >> that's one we can -- listen, i would love it if drug companies cut their drug prices just on their own. it would be great also if there were no price increases. that is not our plan. our plan is that we create the regulatory and financial incentives, competition, negotiation, out of pocket payment, in s -- incentives to list price. that is our plan. our plan is to get that to happen by our actions. that's what i meant. >> well, mr. secretary, i just want to wrap up with one other very disturbing aspect of the hearing. you told me a little bit about that the department of 2047 kids in its custody -- >> that are separated. we've got about 12,000 unaccompanied minors in our

program. >> so a little bit after you made that statement, you said the department has 2,053 kids. and that was the same number that was reported six days ago. >> that was the number in the press release yesterday. by the evening it was down to 2,047. it's obviously a fluid situation. but by evening. it's just the press release shows the 2,053. as of last night, the last information is 2,047. we have them there in the system. it's not like there's a mystery. as we outplace these kids to parents or to their relatives, that number fluctuates -- that number will change. >> mr. secretary, the point is in both of these areas that we have talked about today, and with respect to prescription drugs, i don't think you're going to fix the problem of skyrocketing prescription drug bills if your former industry colleagues get off the hook by your signaling at a hearing like this that you hope that

something might happen. and i don't think we're going to solve this calamity of kids being separated from their parents at this kind of pace. i mean, no matter whether we're talking about 2,053 or 2,047, it's going to take you months and months and months to bring these kids back to their parents and back to safety. so on both counts -- >> i understand. >> i sure hope -- you're a smart guy. there's no question about that. i sure hope we're going to see action rather than this continued effort to offer us rosy projections and happy thoughts that for seniors aren't going to help them when they get mugged at the pharmacy window. and for the kids it's not going to help them get to safety any time soon. thank you, mr. chairman. >> okay. >> mr. chairman, can i ask

unanimous consent before we conclude? >> you want to ask unanimous consent? >> i would like to relating to the imputed floor issue. >> sure. >> i have a letter from the hospital association of rhode island expressing its concern about the boundary effects that this will create. also a letter from our governor, governor romundo expressing her concern. and also a delegation letter from the entire rhode island delegation to administrator verma. mr. chairman, this is important to us. it's not -- >> i'll make that part of the record fr record. >> thank you. >> okay. thank you. >> mr. chairman, i know we went to a second round. >> no, we're not going to a second round. i think we've got to respect -- >> what? >> can i ask one question? >> sure, you can ask one

question. but i'm not going to a second round. i think the secretary has been more than gracious. he's answered every question. and he's answered them well as far as i'm concerned. >> mr. chairman, thank you. i know the secretary has been here awhile. just very briefly, the issue of children at the border and the separation policy. i've said the policy straight from the pit of hell. i think most people agree with that. i know the executive order is in place. the problem, though, is zero tolerance led to the problem of separation. zero tolerance will continue to separate children. and unless you change and have alternatives to that policy. but here is my question. you've read, i know mr. secretary, all of the statements made by medical professionals all across the country. one from the washington post dr. charles nelson pediatric professor harvard medical school, the affect on children would be catastrophic. you heard from the academy of pediatrics, we've all read those statements about the add rers and long-term -- adverse and

long-term permanent damage it does to children. some of those damages being inflicted as well, even if they're with the parent in detention. so the one question i have for you is what, if any, of these organizations that live their lives to give us information about the effect of a policy like this on children, whether it's the academy of pediatrics, the american psychiatric association for children with disabilities, the center for disabilities. as hhs or did hhs in the leadup to this policy or once the attorney general announced zero tolerance, did you or anyone at hhs, and if you're aware, did anyone at the justice department ever consult with the american academy of pediatrics? >> so first i want to share your concern. none of us -- none of us want

impacts on these children. none of us want the separation. we do everything we can to mitigate any impact on these children with mental health care, medical care, dental, vision, education, activities, athletics, we try to ensure as happy as safe, as good an environment for these children. i'm not aware of engagement for any of these particular groups. i believe the administrator for samsa has been working with orr with her expertise, her psychiatric expertise. i believe that's the case. certainly our gran tease are trained in and are experts and have clinician care. every child goes through mental health evaluation and mental health care when it's there. but it's not desirable to have children separated from their parents. if the parents didn't bring them across, this will never happen.

congress will get rid of the family unification. they'll get back together with their parents. but as long as i got a court order not allowing that, we want them to order that now. >> i know we have to go. but mr. secretary, i'll submit you some questions in writing for you to answer as part of the record in regard to kids with a disability, kids with down syndrome, how they're being cared for, how many kids you have under your care. i'll be submitting those for the record. mr. chairman, thank you for the extra time. >> thank you, senator. i just want to say, you know, i've only been here 42 years. i've seen a lot of witnesses in my time. and certainly a lot of them on health care. and a lot of witnesses who have been in your position. i've never seen a better witness

than you. you're clearly very competent. you're clearly doing a really good job. you've clearly been saddled with some really, really tough problems. and i have confidence that you'll handle them expeditiously and well. so i'm really proud of you to be honest with you. and i think everybody in america ought to be proud with you and ought to be glad that you're in this position. finally to add further clarity to what occurred on the alexander collins stability package, i want to note that when senator collins asked for a unanimous consent agreement to call up and pass the amendment, senator murray objected. democrats seem to have no interest in working with us to stabilize the individual market. so it's nice to pretend otherwise. but that's really what happened. and it was pretty disturbing to me. mr. azar, i've been around a lot

of secretaries in my day. and have chaired through major committees. you've had some of the worst problems i've seen in the history of my 42 years. and i want to personally extend my congratulations for and complement you for the efforts that you've put forth. for the work that you've done. for the care that you've exhibited. for the kindness that i've seen. keep it up. these are tough times. these are tough issues. these families are all suffering. these kids are in danger. and i'm just glad you're there. and i think people ought to be thanking you rather than criticizing you. i'd like to thank everybody for their attendance here at this -- and participation today in this particular hearing. and, again, thank you again, secretary azar, for your

excellent testimony. i ask that any member who wishes to submit questions for the record do so by the close of business on tuesday, july 10th. and with that then, this hearing is adjourned. [ inaudible conversations ] [ inaudible conversations ]

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we invite your comments via twitter. next a hearing on u.s. relations with europe. after that health and human services secretary alex azar at a senate hearing on the cost of prescription drugs. next a senate foreign relations subcommittee on foreign relations in europe including the nato alliance. this is an hour and 20 minutes.