tv Axios Discussion on Prescription Drug Pricing CSPAN June 5, 2019 8:00am-9:06am EDT
with so much experience and thank you to the witnesses, you are all very moving and educated me quite a bit today. i want to thank you. you said you felt betrayed by us and that is understandable. i can appreciate that especially with what is happening today. .. they don't understand the human rights abuses that are so widespread throughout china. they don't know that many chinese don't know about kinnaman square. that's hard to imagine. if you're living in an american
culture, the idea of seeing the man in front of the tank, many of us have all seen that, at least if your speedy we believe this hearing to go live to discussion from axios on prescription drug prices. we'll hear from senate finance amity church are progressing but first former fda commissioner scott gottlieb and later senator debbie stabenow of michigan. this is live coverage on c-span2. >> and real quick, it could have been to one of our events before, we try to keep things short and sweet, four segments of interviews. we want you leaving here feeling smarter about what we talked about, and this particular is what drug pricing in america which obviously will continue to be an issue going into 2020. so with that in mind i like to welcome our first guest, senator chuck grassley. [applause] >> good to be here with you, bob. >> thanks for coming.
all right. i think it's only, it's a good place to start by talking about your constituents. what are they still telling you about their own drug prices in drug costs? what are you hearing from them? >> i'm hearing that there's some prices that are ridiculous, but most often hear about how drug prices are contributing to the high cost of healthcare insurance. and i think they see that there's too much secrecy in healthcare pricing, not enough information about pricing. and i think that they feel that congress can do something about it. what i read that democrats want to do isn't all that different than what republicans want to do. i have a good working relationship with senator wyden, ranking democrat on the
committee i chair, the finance committee. and i've had conversations with house members and i believe we have a real opportunity this time with senator wyden and i working together. and what i've heard from the house wants to do, that we can put together a bicameral bipartisan legislation to drive down drug prices. in addition to what i do on the finance committee we've had both leaders of the h.e.l.p. committee which as health in there. they have some jurisdiction over it, and we've been communicating very close together. hopefully get products out of both senator alexander's committee working very closely with patty murray, the democrat ranking member there, and to put together a package from that two my committee second brought up yet this year in the united
states senate floor. >> why haven't some of -- one of issues that's been around for a while, one of the piece of legislation the crates, basically law where he to prevent brand-name manufacturers from stop giving their samples to generic. there's things like low hanging fruit. seems like something, why is it still exists? it something like that still hasn't been able to pass, why should we be optimistic of bigger package could be passed? i guess why -- >> well, obviously a game out of committee that i chaired last time on a vote of 16-5 16-fivef leak. it's already out of the commerce energy committee in the house of representatives, berryville, very much a bill similar to what we get through the united states senate and i would expect that has enough going for it. we've even had pharmaceutical companies before our committee for hearing and some of them
said they would support it. i don't think they said that here though, but i think they feel the heat now to support it. another one that comes out of the judiciary committee as well that's got a lot of movement on it in the house of representatives is this a four delay scheme where a pharmaceutical company will, the brand-name runs out, the patent runs out and to make a deal wih the generic company. if you keep her generic off the market we will pay you x number of dollars for ex-temperatures to do it. so you're basically keeping up the brand patent price for a longer time. we have several things we want to accomplish. get some of these schemes they keep generics off the market to get generics on the market faster. another one would be to have greater transparency and pricing with transparency and pricing yet to get more accountability.
the marketplace ought to work. the consumer with more knowledge ought to be able to make a better choice. and those are the things that are a combination. now, if you say why legislation can't be passed, whether it's low hanging fruit, i'm not so sure that's as lying as some of his other stuff we are dealing with. the schemes of pbms, for instance, here you have a list price up here. what goes into the list price? shouldn't the public know what goes into the list price? and you have the rebates. i think last year $170 billion of rebates. where do. where do the rebates go? to the benefit the consumer, the interns company or do they benefit the pbms? and we ought to know that, shouldn't we? and the president way last june made a speech on prescription drug pricing. is going to get prices down. so already we have some
regulations out by secretary azar to make sure that the rebate goes to the consumer. now, he's got the authority to do that for medicare, but doesn't have the authority to do it throughout the pricing system. system. and it seems to me that's our job to make it more encompassing. >> some of the things you talk about like a four delay, there's a very smart law professor,, reducing first floater in january, it's one of those things where it's okay, but she said, do not mistake them for serious reforms to the underlying drivers of the drug pricing problem. again it goes through both things might be helpful, but how do you actually get at the items were it will bring drug spending down? that might be addressing the schemes that involve funny business on the side, but will they really addressed what we as a nation spent on drugs?
it seems like there some healthy skepticism. let me give you an example, infusion drugs as an example. some of them now are very, very expensive and it probably work. but when there is an incentive because the people that deliver the drug to the consumer, the healthcare professionals, if it's 6% of $100,000 drug versus 6% of a billion-dollar drug, you can understand there's a perverse incentive to use the million-dollar drug. maybe the $100,000 drug would do the job. so you take away those perverse incentives as one way of doing it. now, in another area, what i want to say to you, with medicaid it's kind of the opposite. we ought to be looking towards, indicates that medicaid, mostly for people that are low income and there's a lot of life-saving things through gene therapy and
other life-saving drugs that are very, very expensive. so we need to set up a medicaid program so people on medicaid and take advantage of that and maybe it would be as simple as spreading out that paying for over a long period of time instead of billion dollars today instead of maybe spread out over five years as an example -- million dollars -- need to make those drugs available for people that are low income. >> you mentioned rebate, and rebates are the dollars between, that, when a drug manufacturer and pharmacy benefit manager appreciate a price. drug manufacture pays a rebate to gain formulary access to be higher a higher preferred list. you alluded to a rule that spending out there that drug rebate will from the trump administration hasn't been solidified yet. you had a hearing earlier this
year with seven pharmaceutical ceos and executives, and a member you asked, your last question, will you lower your drug prices if this thing comes to fruition? and a lot of them said oh, yeah, sure. some of them had quite a bit yeah, but only if it also occurs in commercial. do you believe them? >> no. [laughing] so let me, let's go back. at this point there's kind of finger-pointing. you know, the pbms when the pharmaceutical companies. a month before we had the pharmaceutical companies for hearing and he blames the pbms. you've got to stop the finger-pointing, and that's why, take the secrecy out of all this pricing. and make sure that we know exactly how the process works. if you would want to see how complicated the pbm role is in all this between making of the
drug and research on the drug and getting it to the consumer, last week i believe "wall street journal" had something online that showed how complicated this process is your people ought to take a look at that. you can't understand it and we ought to be able to understand it. and for instance, the federal government is one of the, may be the biggest purchaser of drugs in the entire country, and we are spending a lot of taxpayers money and we ought to be responsible for spending and you ought to know what gets into the price. >> i do want to get into another issue you alluded to an earlier, just the federal government being an large purchaser. one of the programs is medicare part d. >> yes. >> what substantial changes could be made to part d, other than the rebate rule, that would actually -- i think a lot of people who read part d has a lot
of wild incentives and weird setups and the benefits are designed now. what substantial reforms could be made there and actually put into law because a lot of people are missed about this? >> to save the consumer money and to save the taxpayers money. right now there's a big push to get to the donut hole and get into catastrophic coverage. because that's what the taxpayers comes in. >> taxpayers cover 80% of catastrophic. the federal government pays for a large portion of it. >> and the more you get in, a higher price is, the more the taxpayer will be paying. there's an incentive for the entrance companies and for the pharmaceutical companies to get people in the catastrophic very soon, and so get them through the donut hole. so we want to take away that incentive by having the insurance companies and the
pharmaceuticals pay a greater part of the cost, , put a cap on what out-of-pocket expenses would be, and say the taxpayers money in the process. but the whole idea is to do away with the incentive to quickly getting people into the catastrophic. >> just to be clear, you're basically talking about introducing pharmaceutical manufacturers having to pay some of that percentage in the catastrophic. currently pharmaceutical companies pay nothing and you're suggesting why don't we propose something what they pay a percentage now. i'm sure there would be critical about. >> of course, but then is just the opposite today. they are incentivized to getting people quickly into catastrophic by the more expensive drugs, as an example. >> we will have to leave it there. i appreciate you coming on, senator chuck grassley. thank you.
>> absolutely. >> all right. >> i see a lot of heads but it's awfully dark out there. >> i started this out with senator grassley with this question. i'll start the same with you. drug prices i'm sure you're all the time from your constituents about what are they saying and if you can name names about drugs, especially angered about, feel free to name those names. >> well, and let me first start i saying that senator grassley who's a good friend of my deserves a lot of credit for holding hearings. he is very sincere wanting to address this issue, and it is the time we've had the drug companies ceos or pbms in before the finance committee. i think since i've been on the committee which was since 2007. 2007. i appreciate that very much. the fastest growing art of healthcare costs i hear about from individuals, from people
come from hospitals, , from doctors is the cost of prescription drugs, bar none. and then the drug and i can probably tell you some it has to me about it. certainly we seen the cost of insulin, you know, triple in the last 15 years. we've seen -- there so many examples of this. by the way, , insulin was first created in 1921 by two canadian doctors who in the first patient was treated in 1922. i think it's off patent. i'm not sure at this point, and they believe because it was something so important to people that they should not be paid for it. so they sold their patented university of toronto for three canadian dollars. now since that time we've seen a tripling in the last 15 years, folks paying as much as $50,000 a year for something that two
canadian doctors thought they shouldn't be reimbursed for. i'll just mention one other example, that is we now have an opioid epidemic. in 2005 the generic version of naloxone was sold for one dollar a mile. one dollar. we have an epidemic. and now we seek cost as hot as $4000 while you're the public sector as taxpayers were paying for law-enforcement, hospitals and so on to pay for $150 basically okay to backpack or send five dollars to something the cost one dollar. why? because they can at this point. that's why. there's an pickets need more and costs a lot. count me in category been pretty upset about the pricing system in our country and the fact that this is medicine. this is lifesaving. this is folks trying to on a
daily basis be able to take care of themselves and their families. this is not okay. >> senator grassley right before he left mention out-of-pocket cap even for something like medicare. some commercial drug plans do that. would you want to see something like that for the federal programs where seniors and low income folks don't have to pay more than x dollars a month for the drugs? that seems like something that has -- the 20 cost something, there would be an offset but what's your perspective on it out-of-pocket cap? >> it depends. i supported inflation accounts in part d. we can look at part d. the question of does it raise premiums, costs, who's paying? it depends on how it's designed, but i think we should back up because instead of just this conficker sisson, everybody agrees with that and i agree with senator grassley, transparency is critical. it is come called akita.
everybody points like this. but there's a simple to do this. medicare part b should be negotiating best price, period. take out all this other stuff. the v.a. pays 40% less, 40% less for the same medicines, and there is no reason other than benefiting the pharmaceutical industry that we are not using the purchasing power of medicare. that is the number one, anything we do short of that is not truly addressing this. and on naloxone that i mentioned a moment ago, this presidents own commission on the opioid epidemic, given the epidemic the government should negotiate most price on naloxone or narcan as we call it, which hasn't happened yet and i've been calling on that since it was recommended. it was a good recommendation but why in the world we wouldn't use a negotiating power works we can with rebates and this and that,
it's a great little system here, but the bottom line is when you get done, we have the highest prices in the world. the folks are not negotiating very well. >> image and medicare price negotiation. that's not an option right now and i know you introduce legislation to try to get that done but it seems like such an anathema to certain legislatures or legislator to even consider it. so how do you persuade people that medicare negotiation is a good idea? if we think about, we do price for certain things already. we do it for hospitals and doctors services. >> we do for everything. >> how do you convince people that it's something that is a worthy idea and something that could get across to the president's desk? >> citizens have to rise that the aarp has says this is the number one priority. people who pay, businesses, hospitals, doctors, families, seniors have to stand up and be
louder than the pharmaceutical lobby which is a largest lobby here. it's the largest lobby in washington, d.c. >> how big are they? >> oh, my goodness. i counted up -- >> especially now. >> fifteen lobbyist% under. >> you tallied -- >> those that were registered. it goes up during part d. d. that number went up when we writing the part d bill. it's about 15 or senator, and so citizens, and i think citizens are getting to the point because this come on that exaggerating. this is life or death for people. and the greatest country in the world where we as taxpayers pay the bulk of the research, basic research which i support. i think it's not fair to say to a business you take all the risk on basic research when you have no idea if there will be an outcome for that. so i think we should be doing that, but i think it was
between, something between like 2008-2016 we as taxpayers paid about $200 billion to develop drugs. during the time there were 210 drugs developed, and taxpayers helped pay for developing all of that. the companies take it, go to commercialization. that's fine. they can write the research off their taxes. we subsidize again if to make o the end and they have 70 patent. in some case with so many patterns they may be covered for three years or something. but at the end of that subsidization and support, i think american taxpayers just need to bill due by the medicine. we deserve that, and we pay more than can we pay the highest prices in the world and what i ask the drug companies to make a profit, and every other country they said yes if they just make more here. why? because they can. and on top of it every other
country benefits from the research american taxpayers are paying for, which i support research, but we at the end of it should be able to afford the medicine for our families. that's all. >> at what point would you consider looking at the drug company devotes a product they get a government grant for certain amount of time. is that peer to time too long? is it is that the conversation e should be having a so? >> i think we need a definite look at the patent system. because seven years is one thing, but you can get multiple patents so you change something a little bit. you take naloxone, you put it into an inhaler, you get a new patent, call it narcan. there's all kinds of ways to keep things going on patents. as i mentioned the number one drug is humira and they have i think it's over 130 patents.
when asked at the hearing. you can just keep this going and going and going, and that's my concern. i believe that we should, i support getting these to the market but at the end of it, this is just wrong. it's what's happening right now and the trend for people, it's just wrong. >> i want to go back to the hearings that you and your fellow senators had, in particular the one with pharmacy benefit managers. i thought it was really interesting, you are basically more or less told him you are not great negotiators. so then there's this rebate rule that's floating around and it is basically saying okay, we will move those discounts you negotiate, moved into the patients. what are your thoughts on that? senator grassley talked about it a little bit. and what's your take that there's also some concerns that it won't lead to as much savings as maybe people think. i know independent actuaries at
medicare said this might raise costs because we're not going to get all -- bills will be made up somehow on the back end. medpac has said that your what are your thoughts on the rebate rule and whether it's beneficial as some might believe it is? >> i am a skeptic, because every time we try to do something, hopes have been able to gain it. i think there are people since early in the kind of work within the current system, but i also just know in the end come to me is all about bottom line come in the end, do we pay more, you would pay less? i with the highest in the world, most in the world, some in between? we have the highest prices in the world. the just from a cost-benefit standpoint, value standpoint, he's got to step akin gump doesn't matter how we change the chairs on the titanic. the ship is going down. so we need to be focusing on the
big picture which is why i go back to medicare negotiation. you can cut out a lot of the stuff if you -- if you believe in competition, we are a country based on competition, private sector competition, you know, the negotiating power, medicare, should be just like any other large business. general motors negotiates, for negotiates and we have a lot of wonderful big businesses in michigan they use their collective purchasing power. medicare is responsible for millions and millions of seniors and people with disabilities, and they are offering right now with both hands tied behind her back and there's no reason for that. >> last question, ten seconds. so with medicare negotiates that also needs medicare has to say no, when the going to cover certain drug because it's not that great. is that something you are okay with? in really kind of happens already anyway and a private sector. are you cool with offering the same with if we would you say
no, we are not coming that? >> let me first every insurance company does that come at a plant asset the v.a. does that. obviously we want to make sure that medicines that people need are available but i don't buy this as an argument when it's a done to save costs in the private sector with insurance companies all the time. we've got to decide this is medicine, and it's a life-saving, this is healthcare. and the first every needs to be on people in our country. people who need life-saving medicine. and if we start their and then develop results that make their prices go down, we were doing what we should be doing. >> great. we believe it there. i would like to thank senator debbie stabenow. >> iq. [applause] >> and now i'd like to introduce julie reid, vice president at pfizer. julie.
[applause] >> good morning. good morning, everybody. thanks for being here this early in the morning. i'm julie reid, vice president of corporate affairs pfizer. every day for the last ten years pfizer has been working to develop and manufacture biosimilars and bring those to patients around the world, especially here in the u.s. now, he may ask what's of biosimilar? biosimilars are fda approved health care and lower alternative for biologic. why does this matter? brand biologics are the highest cost driver for medicare drug cost. think about biosimilars as a second-generation a generic drugs in this country. pfizer believes that biosimilars come weekly and lower-cost alternatives and competition.
recent studies have shown that biosimilars will drive and lower drug costs in this country by $54 billion over the next ten years. but yet of the 19 fda approved biosimilars in the u.s., only seven are accessible to patients. think about that. only seven while similars are accessible. last year commissioner gottlieb reported that the fda figured out that americans would have saved $4.5 billion if americans had access to the biosimilars in the marketplace today. our system is broken. we need to advance new policies in this country that will provide patients with access to lower-cost alternatives, create competition, and lower taxpayer dollars. one policy at pfizer supports of
several to increase the uptake of biosimilars is to lower the out-of-pocket costs for seniors. we know that by lowering the out-of-pocket cost for seniors we would save seniors, medicare seniors, $3.3 billion over ten years. think about that. lower cost drug, lower out-of-pocket cost for seniors, $3.3 billion back into the pocket of senior citizens. but that savings doesn't stop with the pockets of seniors. it also works for taxpayers. that one policy with a taxpayers $5.2 billion over ten years. and that's only one policy that would help create the second-generation of generic drugs. the times now at pfizer we believe in biosimilars do we believe in robust competition to drive down costs. we would like your help and we
would like you to join us to drive the uptake of biosimilars and bring truck cost down in this country. and you. [applause] >> real question reminded #axios360. let's inundate twitter with this. and to the c-span viewers out there, i see you, i recognize you. tuning in. our next guest is chip davis, ceo of the association of accessible medicine. takes a coming. >> thinks are having me. >> tell me how you can tell the c-span viewers that would be helpful. >> all right. use the trade organization for generics, and biosimilars.
generics represent about 90% of descriptions already. have we reached a plateau of how much generics can lower-cost already? because 90%, that's an a- on a test, pretty good. like how much further can we go? without getting into -- its threat question to ask and it may surprise some of you do this answer. i'm not a fan of increasing the percentage of utilization for generics above 90% because as i said said since i've gotten to the association we believe in innovation, too. usually further downstream than the brand of the originators. the challenge we have is in the four years i've been there, almost four years, every year the percentage of generic description is going up and the total percentage of generic span as part of the prescription drug healthcare dollars going down. we are currently 90% of generic prescriptions. with providing that meaning 90% market event folie 22% of
prescription drug costs in this country which is a great thing. provided it's gotten to a point where where actually facing some sustainability issues in the industry to be able to continue to meet the level of demand for such a small minority of the total prescription drug dollars. >> what sustainability issues are talked about? there's a lot of generics in the market. >> they're sort of three large buckets of issues that we've been working on an effort to stabilize the generic market. the first is we're a commoditized market. very simple from an economic perspective, when you consider regulation whether it that fda, whether the federal level in congress or state level, i have not found an economist left-leaning right-leaning for centers that believe you should take an approach of regulating a monopolized industry the same as a commoditized industry. recent increase in that. when this letter drug pricing legislation, you heard some of
the from the senators, or the state level increasingly come generics will get lumped into generic costs have been going down for the last 35 of the last 37 months, month-to-month year-over-year we've had priced deflation. as big an issue is prescription drug prices are in the united states, generics have been going down for an overwhelming majority of the last 36 months. there's a policy angle to this. the reality is you need a lot of sellers and a lot of buyers. there's been so much consolidation in the buyer community, there's been a lot of talk you heard earlier from senator grassley, the chairman talked about the pbms and the brands going back and forth at each other which i agree with, sort of a game of thrones there. on the genetics and without consolidation with what's called the wholesalers, there there'sw three bankruptcy control 92% of the retail generics spent in this country. one of the things which i do think there is how do you maintain a commoditized market when there's only three buyers and you still have a vast majority of sellers but their
only son into an increasingly small chain? that's an issue we're looking at. >> related to all the biosimilars in terms of uptick that just hasn't been there, my colleague wrote the piece not too long ago the basically said these cheaper versions of biologics, the mark of events almost nonexistent these years. it's kind of pathetic. and a recent example that has been put out for my colleague, caitlin toland wrote about this week, get the newsletter, coheres makes a biosimilar through neulasta and united basically said we are going to prefer the more expensive biologic as opposed to the biosimilar. that seems crazy. that's just the most recent instance of that. i guess apple isn't answer that kind of hated be allowed?
>> last question first, the answer is no. it should not be allowed. >> what should be a penalty. >> was one of the things you to look at, whether you're talking that the biosimilars space or complex generics which are increasingly high of imports because if you look branded specialty medicines are two to 3% of total prescription the fast approaching 50% total cost. they are highly innovative but highly expensive. downstream what we want to make sure of is we have competition to these biologics which of what you reference which is biosimilars. the problem is right now the perverse incense we've all heard a lot about, incentivize the originator to take a vast increase in the list price to compensate for increased rebate that the pbm demands, and then you push a the follow-on competition, in this instance the biosimilars downstream toward out-of-pocket costs for patients quite often actually higher for the follow-on product that it is designed to reduce overall cost. it is absolutely unequivocally insane and should not be
allowed. we filed, swift hhs and cms as a look into things like for lillard design in part be that they can take steps to address this. the rebate role will go in part towards addressing that but what we have to make sure of is if the discounts in the marketplace go from sort of backend rebates to find in discounts that the same type of what's called rebate trap doesn't apply to the front in which is out due to higher discount on the front in project promise me a follow-on competition isn't going to get access to your formulary. there's litigation on this not between one of our members but between two branded company sponsor issue anything that's going to be seminal to see how that plays out. >> when he generic comes out, when several generics, , out there, especially with molecules the price drops precipitously. i'm skeptical that the same old trooper biosimilars. if you have bio summer comes out it will be cheaper, less prices such as it will be cheaper but
this is not the drop off you see with generics, multiple generic. do you foresee the biosimilars industry creating the same kind of savings that you see an small molecule in terms of steep drop off or is this kind of a brand minus kind of -- >> julie referenced their seven on the market of the 19 that are approved. if we look at that other than baseball that's a lousy batting average. we've got our work to do to make sure they get update. to answer questions specifically, you'll never get and i would submit you should not get a commoditized pricing for biosimilars because there won't be any. these products, to bring a bio summer to mark jeff to reverse-engineer or do the pharmaceutical diligence. the cost of development program for biosimilars can exceed $400 billion. i don't anybody should have an expectation that a a company is going to invest that amount of money in r&d to gavel to bring
the follow-on competition out unless they can actually get a price that will sustain their operation. once on the market currently by 47% off on average list price of the brand biologic. from my perspective is give $100,000 logic of the question, is $53,000 $52,000 an example l high? yes, but is still a lot less than $100,000. science is moving at the direction with targeted therapy, gene therapy and the like. went to pick up a new paradigm on how to finance all of these medicines from the originators to the follow-on competitors ultimately but make no mistake we got it right with hatch-waxman as a country and with the -- the grid the pathway. the problem is we are not willing to address or fix some of the market anomalies are keeping biosimilars from getting the uptick they need right now. >> when generics come out, small price, there's a price and bloomberg has done some good
reporting on this lately that there's been, if you're going to have cheap generics sometimes it comes with quality. its pension with overseas manufacturer, china, india and a circuit is a such a thing as a price to vote for a generic, and what do you take or what's your take on some of the cold issues that are cut into generic drugs? there have been recalls of some. what's your take on all that? >> just your last comment about recalls, if you look at fda's own data, when generics are 90% of prescriptions in the country, their percentage of total recalls of late has been just north of 50%. so proportional to the brands generics have pretty good track record in terms of recalls. that said, historically, there were challenges in certain areas outside the u.s. with manufacturing and i think one of the reasons and this has got enough attention in what was written in bloomberg or a book that's being pushed around right now. the reality is the generic industry in 2011 and 2012 went
to congress and the administration and said, we want to normalize and create equity in manufacturing to generic industry whether it's done all u.s. are within the u.s. we could use fee program in his first ten years is given to the fda in the form of user fees $4 billion to build up the office of generic drugs in office of pharmaceutical quality. with due respect to reporters and turtles and others i'm going to put my faith in the fda which says in the wake of this that drugs made overseas are every bit at safe, effective and contain the same active ingredient question as drugs manufactured here in the u.s. >> but do you think this is in some way more companies cut corners? it seems that is been the case in some -- >> i think the examples that have been profiled come most of which are vast majority of which predated the creation of the use of the program back in 2012 that was reauthorized in 2017.
i will tell you where it has an impact, is that generic manufacturers right now if you look at the administrations blueprint, the key the first other four strategy is to enhance competition. when companies are facing sustainability problems, they're not cutting corners what you're doing and if energy watch the industry grinches look at sort of a stock performance of some leading companies, they're companies, their cutting their portfolios. last year one may have carried 800 generic drugs, for large company and issue the only caring 600 why we should all be worried about that is because those trendlines might counter -- run counter to what we support which is more competition not less. when hit terms like optimizing our portfolio, white fight with the means is you are rationalizing your portfolio. less competition is antithetical to -- your cutting our portfolio, bringing to market fewer drugs. the drugs that are going to get cut are the ones you can't manufacture. for the price the market is
offering you currently. >> last topic and this is been a big one lately, states attorney generals have started to investigation of generic drug companies, basically long story short, you know, companies have been colluding to fix the prices on generic drugs leading to question of we really getting good price on generics to begin with. what has been your impression of this lawsuit? it's not like, presumably the allegations they hold onto some pretty damning things are in there. what's your take on this investigation? >> just a couple things briefly. i think one is important to inject facts and included what is an effort to try this case in court of public opinion that we sing since refund refunding ofe clinic of weeks ago. most notably, the main time under investigation was back in the 2011-2015 timeframe. i think it's a board to
juxtapose that the timeframe vs what we've seen. i join the side of the industry, the association back in the fall of 2015 as a said earlier for the last three years we've seen month-to-month year-over-year price deflation. i think it's really important to separate out particularly for an industry for three and half decades that is been predicated on robust ethical almost buber levels of competition that you don't get to 90% of scripts and 22% of the cost if the entire industry is colluding a some of the attorneys general have sort of makeup. i would go even further at a leave you with this. if, in fact, and you've seen some probably some press conferences tv interviews, if there try to paint the entire industry with this broad a brush of criminality summit said, then i would suggest those attorneys general go back to the state employee health plans with the mandatory generic competition because it states than billions of dollars in the state budget and on high moral ground so you should all be using brands and see how they settle the budget deficit. >> we will have to leave it there.
chip davis, thank you so much for joining us. >> thanks. [applause] >> our last guest today is dr. scott gottlieb, , the former commissioner of the fda. [applause] >> thanks for coming, scott. >> pleasure. thanks for having me. >> you're not too far removed from fda, and i'm just wondering how things are going in the not scott gottlieb arrow? >> look, i think a lot of the stuff that we did there was taken with going to be -- i think a lot of policies we set in motion hopefully before the base of the policymaking for some time and that's because the way we make policy which, i didn't hire a whole bunch of people in my foot office, can people come start writing policies and put out. i worked very closely with the
directors did felt all the policies we are implementing. i think that's going to form the basis of what the senators do for some time going for because they were very bought in to what we are putting forward. >> i want to go back to some us talk to chip about involving biosimilars. again, there's -- that biosimilars market is broken. the example of united blocking a biosimilars in favor of neulasta. should that kind of behavior the allowed? i know it's kind of viewed within the realm of this is how negotiations work, but it is undermining how biosimilars are supposed to work. so i'm wondering what your take on -- >> i think a lot of the -- the commercial impediments, the rebates unencumbered products and behaviors of some of the income of players i think we're at a point in time now, and inflection point where if this market doesn't sort of form in a
robust fashion juicy competitors get out of the market and a less competition down the road, less similar manufactured in the space. we need to get this right. you're talking about united behavior. i'm looking at and jens behavior. >> but i the question of whether or not they contract with some of the other products to try to keep the price of the price artificially high. i was asking questions about how that contracting with ford and whether or not there was some gaming done to try to preserve the asp around the new product because that might encroach in areas where congress would have an interest as well. and so with the regulars. clearly the incompetent product has a lot of tools in its toolbox to try to block the new entrant if this is one. they're going to contract the portfolio product with some of his health insurers. >> this has been exhibited i think most notable example is humira, , they've extended or they've had certain contracts allegedly blocking out
biosimilars. >> look, monopolist will behave like monopolist. that doesn't mean we need to tolerate it and that doesn't mean we need to direct rules to allow this kind of practice to take place in the marketplace. medicare is a a pretty big purchaser. they have a big interest to make sure the competition interest the market. one of the problems is we don't competitively bid. even though there's a biosimilars in the market we don't subject income of product to bidding for therapeutical interchangeable products suck think we should think long and hard about moving that entire scheme into a competitively bid scheme like part d. >> staying on biosimilars, there was an article in health affairs not too long ago from peter bach and other authors that there's a two-part series and the gist of the second part was basically pay for delay market is so rogue -- biosimilars market so broken,
let's move to price relation for these types of trucks because what we have now is insane. do you agree with that? >> peter is a good friend. what peter said in the article was the biologics marquis is nash monopoly and i get nervous every time hospital talks about natural monopolies because they cannot know what a natural monopoly is. setting that aside, this is a competitive market. he is sort of throwing in the towel and away. i do want to inject words into his thesis but he sang this can never be a competitive market because the biologics have natural barriers to entry. i don't like that's the case. you can have robust competition in these categories. you can basically genaro size these categories. you will never achieve generic type pricing, never going to have four entrance and see the pricing go down 10% of the branded pricing. these are going to be specialty type of markets but you could get 40, 50, 60% reductions off
of the cost of the incumbent product. you're going to see robust competition. there's no reason we should be throwing and the talents and we will have competition in the biologics. let's should try to regular the branded companies. >> to your point as well, monopolist will act like monopolist wheezing that played out in some years biosimilars has been approved. if something is not working right now should we just moved to a policy where if biosimilar comes other in. [inaudible] pesco on an approved one military, or have you get around the angle of monopolists acting like monopolist? a a drugmakers going to fight. >> you have to ask whether or not to take advantage of rules in the marketplace that shouldn't exist and what not they're doing things in the workplace or we've adopted rules and to take advantage of them in ways to prevent the competition from entering the market. this goes back to what i mentioned before, which is if we had a structure at least in medicare, medicaid is a big purchaser. look at some of the companies, i
seen analyst reports, so there are a big purchaser of the biologics. if we have a scheme in part d when we get preferential treatment to the generics if you will, the biosimilars you contrive utilization if you allow formulas to exist in part d, if you love substitution and part b, you allow them to create formularies whether drive the market, back in the a lot of market share and that can create a very robust point of entry for biosimilar manufacture. we don't do that never medicare is a a price take on all this biologics. when we created part d and part b, i was old enough to have been there when we did it speedy a 6% -- >> 6% 6% can we create in the modernization act and i was there at the time working at
cms. we figured that medicare would be a price taker for these drugs in perpetuity. we never envisioned to be such robust competition. we figured there would be one inhibitor or couple in the marketplace do we never thought of the a dozen different competitors for inhibitors and interchangeable products you can only use. we never ever thought to be that much competition. we thought these would be natural monopolies. they are not. they are robust competition but we're still a at taking advante of that because we are basically stuck in a system that was conceived at the time when we didn't think there would be any competition. >> i i theme of today's event is thinking about drugs being affordable in the future and we cannot ignore a recent gene to be approved recently from novartis, treats a rare sinus disorder in infants and
children. it came up with a list price of $2.1 billion or so, most expensive drug now on the market. when were thinking about the future and now we have a gene therapy that is more than $2 million and a list price, how can we as a society afford that kind of thing when more gene therapies are on the horizon for presumably bigger -- without wrecking our financials in summary. >> the cost of goods for these products contain starters of thousands of dollars -- >> but 2.1 million speedy right, not to think it but they are not our mystical tight margins. one question, derailed is it's it's going to cost a lot of money to develop a cure, one-time administration that is a cure for disease that treat a very small population. you have to recoup all the cost of development at all incentives to innovate in one-time
administration, the old pharmaceutical model was an annuity. people would be undercut their entire life. you have situations or companies are trying to recoup all that investment and the risk-taking in one-time administration. there is a reasonable question here whether or not these markets, these gene turkey markets consisting of multiple compares and that we competition because once you come to market with the product you basically cure the population can the people who have the disease, the infant population, mike not be a big enough market to sustain two or three competitors in these markets. these might be natural monopolies. that said we have to look at what we're doing. we're curing the disease. these are insurable risk in the private market. if you think sma, for example, large employable might have one patient with it, might. they will have one heart transplant a you is going to
cost $1.4 million the problem becomes and the challenge becomes when your differential access to marquis, when private insurance patients get early access to these technology and medicare patients don't i think that's a problem we have to solve because in and of private with the wasn't this transformative, if medicaid late access to technology two or three years, that was bad. it was led to bad public health outcomes. but when technology assistance fund and the destiny of a child, if medicaid can't get on for late and i is accessed by a year or two and we seen that with car t which they have put under formulary, that can alter the destiny of a child who has an inherited disorder that has chronic disability. at the time of launch to the nature the secure access to all composed in the market and not just the private market.
>> i don't think anyone will wod argue what comes to the gene therapy there pretty remarkable. i go back to the $2.1 million price tag and i was reading something to the day and i'm wondering if anchoring comes in here were summonses okay, this drug very well could be $4 billion and there like no, we less than that, less than 2 billion and it comes out to million. i'm making up numbers just for exaggerations sake. but it is a 20 cost a lot less and it comes out higher, it looks like a discount when is still way more than what people thought it was going to be. >> there's certainly an element to that. i never was involved in drug pricing. i worked for companies but i never was involved in thinking the stupor it wasn't all that occupy space of what the prevailing price is to think what's made this industry from an investment standpoint is you are able to reprice treatment of disease. if you came up with something fundamentally better than what
the treatment was, you could take a disease they used to be treated poorly or $10,000 a year are not treated really well in one of thousand a year. the market was willing to tolerate that and so was society. i do think we started upward limit on some these categories but there is an element of trying to move up what is perceived as accessible price for product within some of these categories as part of what is seen as acceptable as also push back. that's having a big influence on decisions companies make mountains out of price products. the politics of pricing as a. >> i do people tend to come up with giveaways to pay for this. a popular one in this case in particular was how about we pay for over five years instead of one lump sum payment? then i also went how may people stay on the same engine plant for five years? if you start getting this treatment of one in transplant and you switch, is the insurer still on the hook for all that payment? it seems a lot more complicated
than -- >> it gets back to come again these are insurable risks of private market insurance pool. to me the bigger challenge is the medicaid market. medicaid does have some capacity depending on what we do federally if we allow some ability to contract this way, contact these more like a licensing model or service agreement where a company agreed to buy a product to stay for a number of years and maybe gives them an option on future technology. if a look at lot of the companies developing these products they are developing multi generational iterations of these gene therapies and they will pull through innovation down the road that might be an improvement upon what the first launched. you can think of contracting where you give an option on future technology as some preferential rate, if you contract with three or four years. that allows the state to smooth out the cost of treating that population. they can to win a true type of who has the disease and basically amortize the cost of that one-time administration for ivan with the disease over the three or four years.
those newly diagnosed is a small number. it's trying to cure the people with the disease now or at least delivered the treatment. we do know is this a cure yet. we think it could be a cure. we don't know how durable it is. >> i'm going to try to squeeze in one more question before let's pretend that is not there. .. eli lilly got a drug approved and found out wasn't that great and basically said we're done
with it. and accelerated approval and they got about 500 million dollars. and so in that instances. under accelerated approval which has been a part of your administration-- or while you were at fda, should they have to return at that money? >> first of all, we didn't beef up accelerated approval. more drugs are approved under accelerat accelerated-- and the overwhelming response rates and unmet medical and people now testing drugs in people with recurrent cancers that previously weren't treatable. as far as the eli lilly drugs, it works, the small number of drugs that hasn't proved a clinical benefit. >> could be a money back
guarantee? >> we've-- we could litigate the system, but we've created incentives to bring it to the market earth when you're targeting an unmet medical need and a lot of investments into those students. i can old enough to remember from 2004 and 2005 all i heard about the drug companies are developing drugs, do you need ten statins? you're not seeing this. i'm seeing adventure capitalists talk about the fact that we're overinvested in cancer because all of the enno evaluation and capital is pouring into the opportunities because of the incentives. i'm reluctant to bemoan that they've had the effect. i'm not apologizing for lilly. i bet you they lost money on the drug. you talk about $500 million of development that they recouped. between the cost of development and cost of pulling it off the market, which is not a trivial
cost and the reputational hit they'll take, bet you they'll write down more than $500 million of the drug over the lifetime of the product. i'm very reluctant to, you know, make a conscious decision from policies, put in place policies that drive behavior in a certain area, get the result we wanted and then say, well, we should relitigate that because we didn't get the result. and this is precisely what people wanted ten years ago for companies targeting unmet medical leaves. >> we'll leave it there. dr. scott gottlieb. >> thank you. >> for all who came, c-span viewers, thanks for coming and enjoy the rest of your day. [inaudible conversations]
>> the complete guide to congress is now available. it last lots of details about the house and senate for the current session of congress. contact and bio information about every senator and representative, plus, information about congressional committees, state governors and the cabinet. the 2019 congressional directory is a handy, spiral-bound guide. order your copy from the c-span on-line store for $18.95. sunday night on after words, in his latest book, the conservative sensibility, george will offers thoughts on american conservativism, he's interviewed by senator editor jonah goldberg. >> i happen believe our country
is superior, in that sense i'm a nationalist. superiorness as margaret thatcher said by a philosophy that's right. it's know the suitable for all people at all times, but everyone ought to aspire to it. so a nationalist, i don't want to export it at the point, i want to make it available to people and help them where we can and we have a lot of experience with the civil society of the democratic socie society, so i'm a mild nationalist. >> watch after words, on book tv on c-span2. >> the head of the defense intelligence agency, general robert ashley spoke at the hudson institute recently about russian and chinese nuclear weapons and the state of u.s. missile defense systems.