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tv   Pharmaceutical Executives Testify on Rising Insulin Costs  CSPAN  April 16, 2019 8:01am-10:54am EDT

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the subcommittee on oversight and investigations. >> the subcommittee on oversight and investigations hearing will now come to order. today the subcommittee is holding a hearing entitled, "
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price of life-saving drug getting answers on the rising cost of insulin." this is the second part of the hearing examining insulin affordability and ensuing financial and health challenges and effects on patient lives. the chair now recognizes herself for the purposes of an opening statement. with 7.5 million americans relying on insulin, this problem we are addressing today has affected countless lives. that is why this committee is determined to find answers and to find solutions. as the committee is well aware, despite the fact that insulin has been around now for almost 100 years, it has become outrageously expensive. for instance, the price of insulin has doubled since 2012. after nearly tripling in the past 10 years. we have all heard stories of what happens when patients can't afford insulin. people have to forgo paying their bills. or ration their doses or skip
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doses altogether. i had a listening session in my district a couple of weeks ago and there was a woman who came named sierra. sierra has been struggling for over one year to pay for her insulin. even after rationing her insulin, she is still paying over $700 per month. it is simply unacceptable. that anyone in this country cannot access the very drug their lives depend on. all because of the price of insulin has gotten out of control. as the cochair of the congressional diabetes caucus, this issue is personal with me. along with cochair congressman tom reed we examine these issues last year and we issued a report exposing some of the underlying problems in the insulin market. put that report into the record at last week's hearing. what we found during the investigation was the system with perverse payment incentives, and a complete lack of transparency in pricing.
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last week, as i said, the subcommittee held its first hearing on this issue in the new congress. her testimony from expert witnesses and patients in the diabetes states. their message was clear. insulin is unequivocally a life- saving drug. because of a convoluted system, it has become more and more expensive. to the point where far too many can no longer afford it. even though their lives depend on it. we have heard from gail who is a native of my hometown of denver, colorado lives with type i diabetes. she described to the committee how the price of her insulin has shot up. she has to ration her doses against the advice of her doctor. we also heard from a doctor on behalf of the endocrine society who testified "it is difficult to understand how a drug that has remained unchanged for almost two decades continues to skyrocket in price." the subcommittee also received
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testimony last week from another doctor on behalf of the american diabetes association. the doctor spoke about the national survey the ada conducted which found that over a quarter of the people they contacted had to make changes to their insulin due to cost and those people had higher rates of adverse health effects. the witnesses last week had many different stories about the effects of rising insulin prices. but one consistent thing that emerged was the system is convoluted, opaque, and no longer serves the patient's best interest. the witnesses were some of the leading experts on diabetes care and yet, they couldn't point to a reasonable explanation for why these prices have gotten so high. that is what leads us here today. we have representatives from the three drug companies that manufacture insulin as well as three of the largest pharmacy benefit managers, together
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these companies are the ones that produce this drug, negotiate its price and make decisions that have consequences for the availability and affordability of insulin for millions of americans. i want to thank all of the representatives for coming today. i know for some of you you had to change schedules, you had to make adjustments. i appreciate it because all of your companies play a large role in the supply chain of a critical drug. and all the companies as you know have received a lot of criticism. but we are not interested in finger-pointing or passing the buck. we are interested in finding a solution to this problem. that is why we put everybody here together on one panel, so you can help us identify what the problem is and how we can fix it. again, it is not my intent, and i think he agrees, it's not our intent to assign blame to a player, in ted -- instead i
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think many entities share the blame for system that has grown up. we need a frank discussion about ways causing the increases in what we can do to bring it under control. as testified last week, "the relief we need is right now. not next week, not next year. we need answers today because the price of insulin has risen to four. and too many people are suffering and even risking death. thank you for being here today. i urge you to be candid and forthcoming and i am now very pleased to recognize the ranking member, mr. guthrie. >> thank you for bringing this hearing together. thank you for being here. i echo the remarks you made. last week we held a hearing on the rising cost of insulin and heard from patient groups about the rising cost of how it is affected americans with diabetes , more than 30 million individuals, i have two nieces,
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9.4% of the population, have diabetes. 2016 about 6.7 americans 18 and older use insulin. the insulin prescribed today is different than that discovered 100 years ago in the life expectancy of diabetics has improved dramatically. these innovations should not be underestimated. a lot of exciting research is on the horizon. someday soon i hope we will have a cure for diabetes. as we discussed last week however, the average list price of insulin nearly tripled between 2002 and 2013 making this drug affordable for many americans. many argue that well prices have been increasing, net prices have stayed relatively the same have gone down. this sounds great because in theory, no one is supposed to pay the list price for insulin. however as a patient, if a patient is uninsured or underinsured they may end up paying the list price or close to it. we have heard that more
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americans are paying the list price at the pharmacy counter part of the year because of enrollment in high deductible health plans have increased. we have struggled to fully understand, i emphasize this, to understand well list prices for medicine like insulin have continued to rise, the prescription drug supply chain lacks transparency. we've had a lot of conversations over the last two years to better understand how the pricing and rebate system works. we've been told manufactures that the list price and therefore lowering the cost is as simple as manufacturers longer list prices. on the other hand, we have heard manufacturers can't simply lower the prices because the pharmacy benefit benefit managers are getting larger rebates and if they are provided with the rebates they will put the drugs on the formularies for health insurance plans. although they are not on the panel today we have concerns about other entities in the supply chain such as health
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insurance companies. we are not here to point fingers, that is what we want to get to the solution. while some may think one party in the supply chain is so responsible for the rising price of drugs, the incentives to increase list prices are throughout the chain. beyond the potential for manufacturers to make more money by raising prices, a higher list price allows manufacturers to provide higher rebates, most have contracts to keep a percentage of the list price or receive fees based on the list price. additionally health insurance companies decide to pass the rebate along to the patient at the point-of-sale or keep it for all beneficiaries. the current system contains many incentives for list prices to increase rather than decrease. unfortunately while we keep hearing assurances that prices are staying flat or decreasing, almost all rebates are passed on to the health plan, many patients are being disadvantaged by the system and
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are paying more for their insulin at the pharmacy counter. your companies have taken steps to try to reduce out-of-pocket expenses for insulin to the patients who need them. that is a good thing. i worry however that these are only short-term solutions. it is important that we collectively find a permanent solution that improves access and affordability of medicine such as insulin. i think our witnesses, i thank you for being here today and i will remain and yield my time. >> thank you. thank you to the subcommittee chairwoman for hosting this hearing, holding this hearing, continuing the important work that was started last congress examining the rising impacts. merely 700,000 hoosiers have diabetes or prediabetes which is why i serve as the vice chair of the congressional diabetes caucus founded by diana to get. degette. we continue to find solutions. one company here today, eli
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lilly has been headquartered in indianapolis for more than 100 years. they employ thousands of hard- working hoosiers many of whom are my constituents. while i know that eli lilly has put in place rims to subsidize the cost of insulin, and i have read all of your written testimony, everyone has ideas and everyone has recommendations and that is what we need to get to today. i look forward to hearing from our witnesses on the recommendations for change so no american has to do without insulin or take less than what they must have to stay alive and remain healthy. i thank you all for being here. i yield back. >> we are just waiting for the chair of the full committee in the ranking member for their opening statements. we will wait one moment.
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as soon as he is ready the chair will recognize the ranking member for purposes of opening statement, five minutes. >> thank you madam chair. i know we are coming back, i'm glad you're having this hearing. it's really important. last week we heard a lot of different opinions on why the list price of insulin has increased significantly over the last decade. one of the doctors on that panel she believes that the high list price is primarily benefit from cynical companies. another doctor argued the current rebating system encourages high list prices and as the increase intermediaries benefit. he argues the solution is not as easy as manufacturers lowering the list price. it requires a moderate reform.
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all of the witnesses last week agreed the current pricing system for insulin is harming many patients as they make healthcare decisions. we heard stories of individuals rationing insulin to make ends meet. this can lead to serious short and long-term problems and hospitalizations jim sure you understand. it is critical we work toward ensuring that all diabetics have access to insulin. to do so we need to identify and break through barriers and that makes it challenging to bring down the cost of insulin for patients. for more than two years we have been examining the various drivers that increase healthcare cost and i'm grad glad that is increasing. earlier this year myself and we sent a letter about the cost of insulin and the barriers to competition in the insulin market. we wanted to learn more about what's going on. i want to thank each of you for
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your thorough response to our question. while the discussion today is centered around the cost and barriers that exist to reducing costs, it's important we do not forget the critical role that both of you, the drug manufacturers and pharmacy and if it manufacturers have in making sure patients have access to insulin. the insulin today not exist without significant investment of eli lilly, and you have made to develop and improve these medicines. these investments have saved the lives of many diabetics. insulin manufacturers have created patient assistance programs to help them get access. while there are questions today about whether the changes over the past few decades justified how much the price, the list prices increased over the same period, we know manufacturers rarely receive the list price for medicine. likewise they provide many
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important services to patients and use different tools to help control costs. in addition to other programs cbs health treated a transfer diabetes care program the used cynical strategies just last week express scripts announced a program that will give eligible people participating pay no more than $25 for 30 day supply. these programs, pbm are important . we have to work on the long-term encumbrance of solutions. many of the concerns we heard very similar to the issues discussed over a year ago. i appreciate hearing directly
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from the manufacturers and the pbms on your perspective of white insulin costs arising. but just like 2017, understanding whites increasing for patients, we will need to hear from the other participants in the supply chain including the distributors, health insurance plans, and pharmacists. at the end of the day, we have to put the patient, the consumer first in everything we do. i want to think our witnesses for responding to our questions and thank you for being here today. you will contribute to our work and that is most valuable and unless someone else wants the remainder of my time i will yield back. >> the chair recognizes the chairman for five minutes of opening statement. >> today the committee is holding the second of the two part hearing on increasing price for insulin. many rely on this life-saving
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drug and are affected by the increasing price. people have to make sacrifices to pay for insulin and some are forced to go without. sometimes tragic consequences. last week the subcommittee heard from expert witnesses in diabetes care. they provided testimonies about the rising price and the effect it's having on patients living with diabetes. we heard from a into doctor all just who said it makes it difficult if not impossible for him to determine how much patients will have to pay for the insulin. and we heard from patient advocates to describe the hardship patients endure when they can no longer afford the medication or are forced to switch. these witnesses described a broken system where there is not enough transparency surrounding prices and not enough incentive to keep prices down. today we have before us the companies that make these drugs, negotiate their prices, and make them available through health plans.
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their actions and decisions have a profound impact on the lives of everyday americans and we need to hear these companies response to the criticism we heard last week and their actions and what their actions are doing to contribute to rising prices or hopefully reduced prices. we know companies need to make money in order to succeed and in a normal market prices would reflect what the market can bear. the problem is the market for insulin is made up of people who can't survive without the product. i'm concerned the market is broken as i said. it appears there is limited competition and little incentive to keep prices at a level patients can afford and perhaps their incentives in place to raise prices. as a result we are left with a drug that has been available for nearly 100 years and yet the price tripled and doubled in the last decade. clearly something is not right. three companies currently manufacture insulin and there were presented here today. they not only make the drug but
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they set the list price. while most people do not pay the list price, uninsured patients do and even insured patients can be affected in the list price rises. that is what has been happening as the list price has skyrocketed in recent years and it ripples through the system. we also have the pharmacy benefit managers, pbms here whose role is to benefit negotiate. there's not much transparency in these negotiations. questions as to whether discounts are being passed to the patient. when manufacturers are criticized for raising prices they have often pointed the finger at the pbms. and when they are questioned they often pointed finger back at the manufacturer. we are left with no accountability for the millions of people who are suffering in the system, the back-and-forth humans are frustrating and unacceptable. everyone seems to be coming out ahead except the patient. no one should suffer because of the high price of insulin is
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out of reach. i hope we can learn today about why the cost of insulin is skyrocketing in the role of manufacturers and pbms and figure out how to deal with it so we can make insulin more affordable. unless someone wants my time, madam chair i will yield back. >> i think the gentleman. the chair asks unanimous consent that the opening statements be made part of the record. i would now like to introduce our first panel of witnesses for today's hearing. mr. mike mason the senior vice president insulin global business units. executive vice president north america operations and president of novo nordisk. executive vice president for internal affairs sanofi. mr. thomas moriarty chief policy and external affairs
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officer and general counsel. miss bricker, senior vice president for chain of express scripts and sumit dutta, chief medical rx. welcome. i know you are aware the subcommittee is holding an investigative hearing and when doing so has the practice of taking testimony under oath. to any of you have objections to testifying under oath today? let the record reflect the witnesses have responded no. chair advises you under the rules of the house and the rules of the committee, you are entitled to be accompanied by counsel. do any of you desire to be accompanied by counsel? let the record reflect the witnesses have responded no. please raise your right hand so you may sworn in. do you swear that the testimony you are about to give is the
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truth, the whole truth and nothing but the truth. you may be seated. let the record reflect the witnesses have responded affirmatively. we are now under oath and subject to the penalties set forth in title 18 section 1001 of the united states code. and now the chair will recognize our witnesses for a five minute summary of the written statement. in front of each of you is a microphone and a series of lights. the light will turn yellow when you have a minute left and read to indicate the time has come to an end. i would appreciate it if you would try to keep your opening statements within the timeframe because we want to make sure that all of the members have the opportunity to ask the questions today. we will start with you mr. mason, you are recognized for five minutes for purposes of an opening statement. thank you. my name is mike mason, and the senior vice president for
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connected care at eli lilly and company. thank you for the opportunity to participate. thank you to your staff who met with us. i am pleased to be here today to continue the conversation. eli lilly was founded in 1876 and today employs over 16,000 people. in the u.s. we are headquartered in indianapolis. we are proud to have introduced the first commercially available insulin product in 1923. brearley one century we have committed to helping people with diabetes live better and longer lives. we have invested billions in the discovery of new treatments. occluding biotech insulin. in 2018 we announced our commitment to a partnership that could eliminate the need for insulin. we are actively developing devices we hope will help people prove that improve outcomes. like many people who work at
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lily i have a personal connection to the issues we discussed. four of my immediate family members live with diabetes. i have seen them cope with the daily burdens of the disease. including injections before each meal. i have seen the devastating complications of diabetes in their lives. and i know firsthand that they benefit from new innovative treatments. often our phone calls and visits to turn to their diabetes. over the years if you focus on these conversations, how they are managing their diabetes. within the last two or three years the conversations have changed. we now spend more and more time talking about how much they pay out-of-pocket. as a leader at lily it's difficult for me to hear anyone in the community worry about the cost. too many people today don't have affordable access to chronic medications. colleagues and i have reflected on how we got here and what we can do to solve this problem in the short-term and long-term.
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for starters we have not increased the list price of insulin since 2017. but we recognize the issue is more complex. list price, it's important to focus on what people actually pay out-of-pocket for insulin. most people who need insulin have either private or insurance. it requires them to pay a low affordable co-pay. that some people don't benefit from these low co-pays because the out-of-pocket costs are based on so-called retail or list prices. not negotiated prices. the people most exposed in our current system are those in the high deductible health plans, those medicare part d coverage gap phase in individuals without insurance. we know long-term solutions are necessary but we are not waiting to address the gaps in the short-term. lily diabetes solution center connects individuals to affordable solutions including
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savings offers for the uninsured and privately insured with no paperwork or applications. we provide automatic discounts at the pharmacy counter the cap the cost of prescriptions at $95 for those in the high deductible plans. we recently announced the upcoming launch of a half-price version called insulin lice pro. with these and other meaningful solutions we tried to build a safety net to prevent anyone from having to pay retail price. our solution is working to reduce out-of-pocket costs. today 85% of monthly prescriptions are less than $95 at the pharmacy. 90% or less than $50 per month and 43% or zero. even more people will pay less. while these actions ease the burdens for most people in the coverage gap areas, they are
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still stopgap measures. long-term systematic solutions are still needed. a good place to start is the policy idea suggested by cvs, to foster the widespread adoption of zero dollar co-pays on medications like insulin. we agree this would save lives and money while cutting straight to the heart of the issue. we think this community for its bipartisan action last week including the create act and a bill eliminating pay for delay tactics. systematic change in our healthcare system requires action by all relevant stakeholders. you're ready to play our role and we are confident solution is possible. >> thank you. >> members of the subcommittee, i am the executive vice president of north america and president of novo nordisk. for over 90 years novo nordisk
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has been dedicated to improving the lives of people with diabetes. we care deeply about the people who need our medicine. and we are troubled knowing that for some our products are unaffordable. for a company committed to helping people with diabetes, patient's rationing insulin is simply unacceptable. even one patient is one too many. we need to do more. we all need to do more. this is why i appreciate the opportunity to take part in the dialogue here today. on the issue of affordability we hear about list price. i will tell you that at novo nordisk we are accountable for the list prices of our medicines. we also know that list price matters to many, particularly those in high deductible health plans and those uninsured. so why can't we just lower the list price and be done? in the current system, lowering list price won't be meaningful relief to all patients. and it may jeopardize access to the majority of patients who
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have insurance and who are able to get medicines through affordable co-pays. that is because list price is only part of the story. once we set the list price, the current system demands we negotiate with insurance plans and pbms to secure a place on their formularies. formulary access is critical because it allows many patients to get our medicines and co- pays at reasonable cost. the demand for rebates has increased every year. in 2018 rebates, discounts and other fees accounted for $.68 of every one dollar novo nordisk sales in the u.s. as a result net prices of the insulin products have declined year-over-year since 2015. despite the investment we make in rebates, some patients including those with insurance, and a paying list price or close to it at the pharmacy counter. as a manufacturer, novo nordisk has no control over what
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insured patients pay at the pharmacy counter. this is dictated by benefit design. in the last few years we have seen more patients with fit designs require them to pay high out-of-pocket costs. despite this ever-increasing rebate in formularies patients don't get the full benefit of those rebates at the pharmacy counter. this needs to change. it is time for people with diabetes to benefit directly in the rebates we pay. i take the mission of this company to help people with diabetes very seriously and personally. i lost my own father-in-law to this disease, so i know firsthand what it does and how it affects patients and their families. when the healthcare market began to shift toward high deductible health plans and we saw more people were struggling to afford medication, we took action. back in 2016 we pledged to limit list price increases to
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single-digit annually. you are one of the first companies to make that commitment we have honored ever since. our pricing pledge complement it other programs we've had in place for years. with the goal of reducing patients out-of-pocket cost. through our nearly two decade old palmer partnership with walmart it's available at all market pharmacies for less than $25. in 2017 we partnered with cvs health and express scripts to expand the $25 offerings to tens of thousands of pharmacies nationwide. our human insulin is an fda approved safe and effective treatment for both type i and type ii diabetes. is used by about 775,000 patients today. since 2003 we have also provided free insulin through our patient's assistance program. nearly 50,000 americans receive free insulin through this
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effort in 2018 alone. today a family of four making up to $103,000 per year could qualify for a patient assistance program. we also offer co-pay assistance on a wide variety of medicines which helped hundreds of thousands of patients last year or what they pay at the pharmacy counter. although these programs help many people today we can't stop there. patients are telling us we need to do more and we hear them. the challenge is that the current system is broken. ringing relief to patients is going to require bigger and more comprehensive solutions built on cooperation between all stakeholders in the insulin supply chain. we want to be part of that solution. we look forward to working with all stakeholders to ensure this medicine remains available to everyone who needs it. thank you and i look forward to answering your questions. >> thank you for the
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opportunity to appear before you today to discuss issues related to pricing, affordability and patient access to insulin in the u.s. i am executive vice president internal affairs at sanofi. my goal is to have an open transparent discussion about how the system works, sanofi's role in hundred how it can be approved. patients are rightfully angry about rising out-of-pocket costs for medicines. we all have a responsibility to address the system that is clearly failing to many people. as a mom i was heartbroken hearing the testimony before the subcommittee of other parents have not only endured the terrible challenges facing the illness but also struggled to afford the medications that they or their children desperately need. my own family is a beneficiary of a breakthrough in medicine. my husband, john, has a genetic disorder that makes the body unable to remove ldl or bad
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cholesterol from the blood. he inherited this condition from his father who passed away from a heart attack at 40 years of age when john was 12 years old. despite taking statin, watching his diet and exercising, john himself had a double bypass at the age of 36. and still couldn't get his cholesterol under control. then came a class of drugs, and innovative treatment to help people like my husband lower their bad cholesterol. i cannot overstate what this breakthrough means for him, our family, and our future. including for our seven-year- old son who has inherited the same condition as his father and grandfather. i fully appreciate how important it is for science to continue to solve the medical challenges that impact so many families. and i recognize that those breakthroughs are meaningless if patients are not able to access or afford them. over the last 20 years sanofi
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has been a leader in the advancement of new treatments to help people manage diabetes. at the same time we recognize the need to address the very real challenges of affordability. two years ago sanofi announced the industry leading pricing principle. we made a pledge to keep list price increases at or below the national health expenditure projected growth rate and we stand by this commitment. in 2018 our average aggregate list price increase in the u.s. was 4.6%, while the average aggregate net price, the price paid to sanofi, declined by 8%. the third consecutive year in which the amount we received across all of our medicines went down. insulin is a clear example of a growing gap between list and that pricing. take our most prescribed insulin, the net price has fallen over 30% in 2012.
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in today, it is lower than it was in 2006. yet since 2012, average out-of- pocket cost has risen approximately 60% for patients with commercial insurance and medicare. every actor in the system has a role to play and sanofi takes our responsibility seriously. in addition to our pricing policy, we have developed assistance programs to help patients afford their sanofi insulin including co-pay assistance for commercially insured patients, including those in high deductible health plans, and free insulin are uninsured low income patients. sanofi is commitment to patient affordability means today approximately 75% of all patients taking sanofi insulin pay less than $35 a month. recognize more needed to be done. last year sanofi launched a
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program that allowed individuals exposed to high retail prices to access sanofi insulin for $99 per vial, the lowest available cash price in the u.s. based on feedback from patients, providers and the advocacy community, today we announced we are expanding this program. beginning in june, uninsured patients a list of income level, will be able to access any combination of the sanofi insulin they need for $99 per month at the pharmacy counter. this transformative and first of its kind program is the latest in a series of progressive important steps sanofi has taken to help patients afford the insulin they need. it does not eliminate the need for broader system reform. i agree with the witnesses that reform systems are needed and overdue. sanofi supports a number of recommendations outlined in my written testimony including many of the policies included in chair degette's caucus
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report. i look forward to answering your questions. >> thank you so much. the chair recognizes thomas moriarty for five minutes. >> thank you. my name is thomas moriarty and i serve as the chief policy and external affairs officer and general counsel for cbs health. thank you for the opportunity to discuss ways to make healthcare more affordable, particularly the americans with diabetes and those were prediabetic. a real barrier in our country key to good health is cost. including the price of insulin products which are too expensive between americans. over the last several years list prices have increased 50%. over the last 10 years list price of one product rose by 184%. the primary challenge we face is that unlike most other drug classes, there have been no generic alternatives available even though it's been on the market for more than 30 years.
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despite this, cvs health has taken a number of steps to address the impact of insulin price increases. we negotiate the best possible discounts, the manufacturers price, on behalf of the employers, unions, government programs and beneficiaries reserve. our latest 2018 data indicates that we've been able to reduce the total cost of diabetes drugs, including insulin, i 1.7% despite brand inflation that year of 5.6%. importantly patient inherence has increased. specifically we have replaced two high cost insulins. with an effective lower cost formula. by making it preferred, member out-of-pocket costs climbed by over 9%. among patients who switched, they were -- their blood sugar levels were improved by .43. to put this in perspective,
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every one point improvement among patients with uncontrolled diabetes is correlated with approximately $1400 savings per year in medical costs for each patient. this is a real life example of how competition works. despite these efforts, we know this is not enough. let me share a story about a company and their experience with diabetes. this company saw the human toll on their colleagues and continue to see us cleaning costs. in response, the company began offering employees and the families zero dollar co-pays for insulin. providing coverage for diabetes medication even before the deductibles are met. that means there are no out-of- pocket costs, so employees are more likely to take your medications, improve their health, and achieve lower costs. that company is cvs health. when something works for us, we offer these solutions to our clients.
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we also offer a number of tools for patients to help reduce out- of-pocket costs and provide transparency at the doctor's office. at the pharmacy counter. and directly to the patient. for members in the doctor's office getting a prescription, we provide your doctors with real-time information about what is covered under the insurance and if there are effective lower cost therapeutic alternatives available. we also provide this information to patients online or on their phone. for cvs pharmacy customers, regardless of their health plan, the rx savings finder tool enables pharmacists to work with patients to find the most affordable indications they need. beyond these tools, a cord needed care approach to diabetes is essential. we have taken the lead with programs we call transform diabetes care. it furthers our focus on providing patient care that eases the complexity of self- management, improves health, and reduces overall costs.
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using a high touch engagement model, and local points of care, clinicians are better able to support specific number needs as care requirements evolve. finally, despite we have published, we know more needs to be done. let's bring more effective lower cost alternatives to market faster ending pay for delay fees. let's foster the widespread adoption of zero dollar co-pays on preventative medication like insulin recognizing if we treat the diseases effectively can save lives and money. let's pass your proposal to reform medicare to provide additional support services for patients with diabetes to manage their own care. we look forward to working with you and the committee to help accomplish our shared goals. thank you and i can answer any questions you may have. >> thank you so much. >> thank you for inviting me to
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testify at this hearing. i am the senior vice president of supply chain for express scripts. is a registered pharmacist i began my career in the community pharmacy setting. as senior vice president of supply chain i am responsible for key relationships and initiatives across the pharmaceutical supply chain working directly with drug manufacturers and retail pharmacies with the objective of keeping medicine within reach for patients including those with diabetes. diabetes is of particular interest to me as i have witnessed the impact of this disease personally. the younger brother was diagnosed with type i diabetes as a child. diabetes is a life-changing diagnosis can have devastating effects if not managed properly. i am passionate about ensuring patients have access to the medications they need. today i will provide an overview of our innovative approach to reduce the cost and raise the quality of care for people with diabetes in the more than 80
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million americans we serve. we negotiate lower drug prices with drug companies on behalf of clients. generating savings returned to patients in the form of lower limbs and out-of-pocket costs. additional savings are provided through her clinical support services which enable vigils to lead healthier and more productive lives. when it comes to prescription drugs our goal is the best clinical outcome at the lowest possible cost. we offer innovative programs to help achieve that goal including several programs that address the cost of insulin for patients. when example, our diabetes care value program manages the disease through a holistic approach that combines the highest level of clinical care, advanced analytics, and patient engagement supported by technology. the program offers remote monitoring so our specialist team can intervene and patient blood sugars are dangerously high or low. this program resulted in a 19% reduction in drug spending for
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diabetes. we launched inside rx, a cash discount program for patients uninsured are facing high coinsurance. partnering with drug manufacturers to provide the negotiated rates at the point of sale, resulting in average discounts of 47% for brand drugs including $150 in savings per insulin prescription. test test test test.tion. test test test test. test test test. s to the formula drug manufacturer chooses to offer a lower-priced version of a drug. recently eli lilly announced it is reducing the list price of its particular insulin by 50%. we are excited about their position to lower the list price and encourage other manufacturers to do the same. most recently we announce the patient assurance program which caps the out-of-pocket cost at
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$25 for a 30 day supply. we did this in collaboration with the manufacturers presented here today. express scripts remains committed to delivering personalized care to patients with diabetes and creating affordable access to their medication. is expressed in several public statements, express scripts welcomes lower list prices. however list prices are exclusively controlled by manufacturers. in the absence of lower list prices the role of negotiated rebates have become increasingly important as a drug pricing strategy. in today's system rebates are used to reduce healthcare costs for consumers. employers use the value of the discounts to keep premiums affordable and offer workplace wellness programs unknown among other initiatives. half of our clients receive 100% of rebates negotiated on their present behalf. in total 95% of rebates, discounts and price reductions received by us returned to
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employers, plan sponsors and consumers. 2018 drug trend report showed eight 4.3% increase in spending for diabetes medication. for insulin the same plan saw a 1.5% decline in unit cost. express scripts achieve the result by driving competition among manufacturers while also leveraging pharmacy discounts to drive savings. looking to the future we continue to support efforts by congress and the administration to use market-based solutions that put downward pressure on prescription drug prices. through competition, consumer choice, and open and responsible drug pricing. in closing, we are proud of what we have done today and we look forward to working with the committee to improve the portability of insulin products. thank you for your consideration of this testimony. >> thank you. >> good morning.
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i am chief medical officer of a pharmacy care services company is dedicating to employees to ensure the people we serve have affordable access to the drugs they need. i am honored to be here to discuss steps we can all take to reduce the cost of insulin. the team includes 5000 pharmacists and pharmacy technicians who help patients learn how to take their medications, avoid full drug interactions, manage the chronic conditions. our nurses infuse life phasing saving drugs, our effort to lower overprescribing and our program offers services to high risk members to help them manage their diabetes.
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optimum rx negotiated discounts and clinical tools are reducing annual drug costs on average by $1600 per person for customers. our efforts start with the clinical assessment by our pharmacy and therapeutics committee comprised of independent physicians and pharmacists. to evaluate our formularies based on scientific evidence, not cost. these meetings are open and transparent to our customers. cost only becomes a factor after the independent committee has identified drugs in a therapeutic class. because we promote the use of true generics to drive costs lower, through competition, about 90% of the claims we administer for generics.
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discount off of lift prices on behalf of our customers. already, 76 % of the people we serve who need insolence pay either nothing to the pharmacy, or have a fixed co-pay most commonly $35. for insulin ewers on high deductibles or coinsurance plans, we have taken action to help them directly benefit from the savings are negotiating with manufacturers. last year, we do radically increase the discounts for millions of eligible consumers who are now seeing an average savings of $130 per eligible prescription. and the savings are even higher on insulin. last month, we announced the decision to expand this point- of-sale discount solution to
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all new employees sponsored plans beginning january 2020. nevertheless, the price of insulin remains too high. a lack of meaningful competition allows manufacturers to set highest prices and continually increase them, which is odd for drug which is nearly 100 years old and which has seen no significant innovation in decades. these price increases have a real impact on consumers in the form of higher out-of-pocket costs. the most impactful way to reduce insulin prices is by opening the market to true generics and bio similars. this is why we support efforts to reform the patent system and reform true generic competition. for years, insulin manufacturers have used loopholes in the patent system to stifle competition. one manufacturer has filed 74 patents on one brand to prevent
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competition, others have engaged in multiyear patent competition. congress can increase competition and lower prices by passing the creates act, prohibiting pay for delay deals and ever greeting patents. at similar patents and changing the exclusivity. as for drugs. we're committed to doing our part to make insulin more affordable. i would be pleased to answer any questions you have. >> thank you, dr. is now time for the members to ask question and the chair recognizes herself for five minutes. i appreciate all of your testimony. what strikes all of us on this panel, which we have heard from all of the actors in the system is how, the list price is really high but then there's all these workarounds that some people can get to get a lower
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price of insulin. and, let me just give you an example. eli lilly increase the price of humalog insulin in 2001 to to hundred $75 today. norval noticed increased the price and on january eighth of this year, the insulin products of no more nordisk went up by five %. so the increased the price of a praetor from $86 and 2009 to $270 last year. and so since january first, the three main brands work for pointfour-five pointto % gone up this year. and most everybody here now knows, my daughter francesca
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who is 25, she is a pipelined diabetic. i'm not going to put anybody on the spot, but she is on a newer kind of insulin, and she has insurance. she is still in my insurance for eight more months, who is counting. and, she renewed her prescription at the beginning of the year, and for this insulin it says on the receipt, the retail price, 1739 point79 for your insurance saved you 3099 point79. but for her type of insulin she is on, the list price is 347 dollars and $.80 per bottle. now, she didn't pay that because she is on insurance, but she still pay quite a bit because i have a pretty high deductible. so here's the thing. as everybody is saying sure, the list price is high, but there is all these workarounds. but not everybody gets the work around the question is, why is the list price so high?
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so i am going to ask each one of you, and i have really limited time so mr. mason, i wonder if you can tell me in 30 seconds how does eli lilly justify these huge increases and lift prices in the past 10 or so years? >> thank you for that question, i hope your daughters doing well. >> forget about that, just tell me. >> our list price is paid for rebates and discounts, and access. >> so that's what's making the price go up and up? >> $210 of hours in discounts. >> okay esther langa, thing question. >> social heard last year from dr. separate from 88, there's this incentive and misaligned incentives to keep list price is real high. and we have been participating in this program because the higher the rebate -- >> so you also think it's because of the rebates? >> -- there's a significant
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demand for rebates. >> i'm sorry, mr. koenig? >> part of how we set list prices we have to look at the to my dynamics of the rebates we have limited ourselves to list pricing of no greater than health expenditures across every one of our products. >> all right mr. moriarty i bet you have a different perspective on why the price of insulin is so high? >> chairwoman, rebates are discounts and as we disclose more than 90 % of those discounts go back to our clients. >> i understand but why do you think the list prices are so high? >> i can't answer that. >> but you don't think it's because of discounts? >> i do not. >> miss bricker? >> i concur, i have no idea why those prices are so high. >> dr. dutta? >> we see list prices rising, double digits in non-rebated drugs and in genetics were monopoly is lost or where manufacturers by and create a
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monopoly. so we can't see a correlation just when rebates raise list prices. >> okay, so of course my time is almost up, but i think this is a good example of the problem that the members of congress are dealing with and trying to figure out how to solve this problem, because it seems to me what is happening is that every component of the drug system is contributing to an upward pressure on the list prices. i know the members are going to have a lot of questions around that and we will do some follow- up at the end. so i would like to recognize the ranking member for his input for five minutes. >> inks are being here and i want to use a quick example to try to make it simple. i've been wrestling this for about a month and trying to figure out what's happening. chair degette was making this get . but i will sell it to you for to hundred give me 300
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back? or chair degette said take $100 i would say to her i'm willing to pay 100 but charge me 300 and i'll give you 200 back. the new idea is that britney is the purchase and i'm giving that to her for $100 because she is the plan, she is saving money and passing it on to her consumers. what we are trying to figure out is where that new deltas going. it's hard to figure out. so on february sixth the three manufacturers, i've got two questions i'll try to go faster you said that your list price has gone up but your net price has gone down? what would happen if you said hey, i want to make my list price my net price and put it out on the market place? i'm talking to you three. >> first of all we are dropping our list price of humalog insulin , for us, there is many people who have access for insulin at affordable cost through their that's not tied to list price.
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so we don't want to disrupt those by lowering the price. we think the best way is to provide, in the short-term, is to keep our list price the way it is so we don't disrupt those individuals, we don't harm the access that they have. >> if you're willing to take, i think you said you had, i don't know, whatever the net price s i know the net prices are different with different plans. i know there's not one net price. if you're willing to take net price, why wobt that be out there for everyone to pay? >> it's more difficult to disrupt that for a product on the marketplace today because people have affordable access. >> but you've had your net price and according to your testimony, go up, according to the letter of february 6th. you're all similar. i don't want to do eli lilly. we see the net price going up. maybe there's a market reason
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for that and it's benefiting consumers. we want to know. >> in the current system today, the most important thing for us is for the most number of patients to get our brands at the most affordable prices. in the system today, that is the current formulary positions. the three pvns today represent over 220 million covered lives. that's 80% of the lives. for us to lose one of the positions, that would be a dramatic impact to patients in terms of medicine they're on, physicians in terms of your choice. >> you would lose your position on the formulary if you lowered your price? >> in the current system, if we eliminated the rebates. >> you said there were perverse incentives. what are those? >> we're spending $18 billion a year in rebates, dits counts and fees. we have people with debates that don't get the benefit of that. >> what are the perverse incentives?
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>> they're going into the system and they're misaligned. we believe they should go back to the diabetic patient. >> the issue is not one of negotiation. the pvms are effective negotiators. what happens with the results of those negotiations. the rebates are not going to patients. they're used for other parts of the system. we don't have visibility to have the rebates get used. the rebates are part of how we preserve formulary placement for the patients covered by the plans. >> i'm willing to take -- for me to get on the fornl larry, i have to raise my list price because they don't want rebates, is that what you're arguing? >> the rebates are part of the negotiation to secure formulary placement and associate -- >> i went too long on that. i had other questions. i'd rather hear your response. >> as said by my colleague to the left, i know you want to get to the economics, the way we
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make formulary decisions is based on net price. if every manufacturer to my right wanted to reduce their list price, there would be no implication to the rebate status so long as the net price remained the same. >> if she's willing to sell for a hundred dollar and i sell to brittany for a hundred and rebates keep the price down, but in the end you're selling to her at the net price. wa we're trying to figure out, it seems like there's a price marked that seems to be based on something but there seems to be an inflation and a higher price that seems to be caught up in the system. what really affects people as we've talked about when they're going to the point of sale, when they haven't hit nair deducti e deductible. we need to figure out the economics behind it. if we need to do something to help people out, we need to understand that. wish we had more than five minutes. >> chair recognizes mr. kennedy for five minutes.
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>> i want to thank the witnesses here. i want to thank the chairman ranking member for holding this hearing. i want to follow-up on some of the questions asked. i want to submit a globe piece from november. i've done this before in other hearings about two mothers that brought ashes of their children in front of sanofi in boston in cambridge trying to protest these prices. you all have -- you know why we're here and what the challenges are. i can tell you even from being here for a couple minutes how frustrating it is to watch every one of you do this. i also -- i hope and i expect that you'll also understand if that's the result of this hearing, we're not -- you're hearing bipartisan frustration on this. the status quo is not going to continue. it can't. we heard testimony last week from patients rationing, putting their lives on hold or taking
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serious risk for themselves and their children to get access to medicine that was patented and sold for a dollar. mr. mason, you began by saying about the 75% of that increase over the course of -- increase in list price goes to pbms. the data that i have indicates that over the past -- since 2002 to 2013 estimated the average price from $231 to 736 in 2013, inflation adjusted. 75% of that is $375, that means 127, 50% of that baseline price is not pbms. so where does the other 50 perz -- what justifies the other increase? >> you know, our net prices have gone down since 2019. since 2009. we haven't taken a price increase since 2017. >> sir, have you ever lowered a price off of your formulary?
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>> we are launching a lower price huma log that's 50% off. >> it took 15 years and global outcry to do it? what factors -- have you ever lowered the price of your formulary? >> we have lowered our net price over the last ten years snimt what factors -- what evaluation do you take to lower the price? >> what evaluation. a decade ago we were on formularies, all formularies. now we're on formularies about half the formularies, patients in america have are insulins because we're moving to strictly formularies. we have to provide rebates to compete for that so people can use our insulin. >> mr. langa have you ever lowered a list price? >> we have not. >> why not? >> for two reasons. as i said, the biggest vehicle today for the most majority of patients in this country -- it's formulary position. that's the best way for us today to reach the most amount of
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patients in an affordable way. anything that risks that is something that we have to strongly consider. >> everything is on the table right now for novo nordisk. >> i understand part of this comes back on us. a lack of regulation, a lack of oversight to allow this to happen. trying to figure out what leverage to push and pull, what goes into the factors to set that list price, we don't get an answer. lower a list price, it hasn't happened. you place the blame on the pbms and pbms putting it back on you. if you're in my position, what do you do to make sure that patients get access to life-saving medication that was found initially discovered for a buck and sold to ensure every person could get access to it? what do you suggest? >> i suggest that we all come
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together to come up with solutions, get together with congress to make sure that rationing never happens again. as i mentioned in my opening statement, one patient is too many. as an organization 90 years committed to patients with diabetes, it's tragic. >> mr. -- >> congressman, no one should be rationing insulin. >> and they do every day. >> we need to make the patients for aware of the programs available. >> there were people said the programs take weeks to get into. there's not transparency on it. they can't wait six weeks for an insulin shot. >> they can be accessed in a matter of minutes online. a patient -- >> do you have any patients with no access to internet? >> we have phone numbers where patients can call. >> how long does it take to access those programs? what percentage do you deny? >> for co-pay assistance, it's literally a matter of moments for the value savings that we announced today, the expansion. >> that you announced today in front of congress? >> it's the expansion of a
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program we sarted last year. $99 for the insulin that they need in any combination at the pharmacy counter. people can get it for uninsured patients. they can access co-pay assistance. >> i'm over time. for those paying the uninsured paying full list price. >> they have access as of june, $99 at the pharmacy counter for the insulin they need. mr. walden? >> thanks for having the hearing and thanks to to the witnesses being here. >> in 2018, sanofi announced it's -- according to press articles, sanofi launched add mow log at a list price at 15% less than the list price for huma log. is that pretty close? >> yes. it's the lowest rapid acting
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insulin. >> typically, when a generic medicine enters the market, we expect it to be less than the brand. many patients switch to the generic medicine. you've told us, however, that it's not on the formulary for any commercial plans. i believe that's correct. >> it's correct. it's only available through manage medicaid. >> given that add mow log was launched at a lower risk price, what barriers are preventing patients from the alternative and are there issues gaining formulary access for add ma log? >> congressman, we were unable to secure formulary access through rebating with add ma log. as to why the decisions were made, i have to defer to my colleagues on the other side of the panel. >> has sanofi -- from launching other products? >> yes they've brought a number of products to patients at lower prices, including keb zahra, a rheumatoid arthritis medicine.
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we similarly face challenges. do you think biologics -- will reduce the list price of insulin or does the biologic market function differently than the generic of a small molecule drug. biologic market function differently with the introduction of a generic small molecule drug? >> there's already competition in the insulin market as one of the colleagues reference, eli lilly launched a different version of lantus so there is competition and they were able to leverage greater rebates and negotiate through that. >> now i will switch to mr. mason and thanks for being here. we have heard that sometimes that a manufacturer may tell the pharmacy benefit managers that they will no longer provide rebates for the branded product if the pbm or health insurance plan puts a follow-on biologic or bio similar on the formulary. have you told any health
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insurance plan that it will no longer provide rebates for humalog if the pbm or health insurance plan puts at the log on its formulary? >> know we haven't. >> ms. ogoni, similarly did sanofi tell any insurance plans that it would stop providing rebates for lantus of the pbm or health insurance plan vasagar on its formulary? >> no. >> mr. moriarty has the manufacture ever said they would stop providing with rebates for product if you put a competing product on your formulary? >> not that i'm aware of, sir. >> okay so that is never happened. and then for ms. moriarty, why is it included on your formulary? >> the challenge that we have with analog is one of net cost.
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and so, due to mechanisms that we use which are rebates or discounts, it was more expensive than the competing products. manufacturers do give exclusive position for competing products. >> if each of you could answer that. >> so the extent we have recognized one product as exclusive, other manufacturers, that exclusive product will see the discount if additional products are introduced. >> why not introduce those? >> in the event that we do that , we will introduce discounts. >> what about the others, . mr. dutta and mr. moriarty. you speak to this. >> the lowest cost product gets
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pr -- >> we drive to lowest cost product. with the -- we moved the biologic to preferred status and actually have most, if not all patients -- >> we keep hearing the manufacturers should lower list prices but a lower list price doesn't guarantee that a manufacturer will have access to patients or the patient pays a lower price at the counter. do you take the list price into consideration when making formulary decisions? >> we do not. we focus on the lowest available cost, lowest net cost. >> ms. bricker? >> same. >> mr. dutta? >> lowest net cost and for the member, we consider their cost by using point of sale discounts in order to lower their cost. >> so i just want to follow-up on the ranking member's
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questions. for mr. moriarty and dr. dutta, why then if you look at generics in the lowest cost, why are either of your pbms putting admelog on these plans? >> madam chair, we've gone with vas claire with the preferred status. >> it would cost the pair more money to do that. >> why? >> because the list price is not what the payer is paying. they're paying the net price. >> chair now recognizes dr. ruiz. >> the rising -- thank you, chairwoman. >> it's a problem that it's reached kitchen table, family conversations across america. those families are struggling. worried about deciding to pay for insulin or their bills. there's been a lot of rhetoric today and finger pointing in the
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drug pricing debate and oftentimes, the conversation is based on theoretical arguments on what will work for manufacturers or pbms or insurance companies with little regard to what works for patients. as a doctor, i put my patients' need above all else. our solutions should do the same and reduce out of pocket costs for patients. in my district, according to the health assessment and research for communities 2016 survey, one out of four adults diagnosed with diabetes in the coachella valley are living below the federal poverty line and over 10% adults diagnosed with diabetes don't have health insurance that covers some or all of the costs of prescription drugs. this is not just a problem for uninsured and underinsured either. i heard from tamara smith and david richard, two constituents who went on a specialized form of insulin that isn't covered by their insurance. that means hundreds of dollars
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more out of pocket every month. so reducing the list prices of drugs or increasing the number of generics does not solve the problem if these savings are not lowering out of pocket costs for people like tamara and david. the ceo of diabetes patient advocacy coalition drove this point home in stating quote, somebody is making a profit and it's not the patients. mr. mason, from eli lilly, who is making a profit from the increases in insulin prices? >> you know, i think -- first of all, we don't want anybody not to be able to -- >> who is making a profit with increases in insulin products that patients have to pay for? >> the net prices are going down -- >> are you? >> are you making a profit? are the ceos of your companies making profits? >> our net prices, the prices we received has gone down since 2009. >> somebody is making a profit. somebody is getting richer on the backs of our patients.
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mr. langa, from novo nordisk, who entity is prioritizing afford ablgt and access of insulin for patients? >> we'd like to think we are. we participate in as many formulary as we can. that's critically most important. we have patient assistance programs -- >> who is making a profit then? >> our -- >> your nets but overall profit for the company and ceos have been going up, haven't they? >> no. our profit -- >> take-home pay from ceos? >> relatively stable. >> from ceo pay hasn't gone up in the -- >> his pay has increased, yes. >> last week, dr. self-lieu from the american diabetes association noted that pbms primary customers are the health plans and insurers, not the patients. he testified we don't know whether the transactions are
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benefiting the patient at the point of sale. ms. bricker from express scripts, do they pass any savings on to beneficiaries and how do we know what the difference is if there's not that transparency? >> so yes, thank you for the yes. for over 20 years, express scripts have point of sale rebates. we have clients and plan sponsors -- >> how do we know what the percentage of cost savings to patients if we don't have transparency of what the savings are? are they going to your clients, profit or are they going to reduce out of pocket costs? how do we know? >> we support transparency for our plan sponsors, those that hire us. they absolutely have the ability to look at rebate negotiated contracts as well as our retail contracts. we believe in transparency for patients. >> so we need to look into what you say and what's being done with implementation. that's what the purpose of this is for. mr. moriarty, from cvs health, are these barriers at the point
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of sale and if so, what are they? >> sir, we have over 10 million lives covered in a point of sale rebate program today. as you heard my written and oral testimony, we advocate for a zero co-pay for insulin and other preventive medications. >> i got 20 seconds. >> let me ask this question directly. what are each one of you willing to give up to make sure that every patient who needs insulin will get insulin? mr. mason? >> we are willing to provide solutions. we are providing solutions that close the gap to anyone paying. >> what are you willing to give up? >> we're willing to give up -- we gave up $108 million last year. >> mr. langa, what are you willing to give up? >> last year we invested in almost $18 billion in rebates, discounts and fees and we spent -- >> yet the prices are still going up. the status quo isn't working. mr. tregoning. >> we're willing to contribute to solutions to allow patients
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to access and that's why the program that we have that allows $99 at the pharmacy for the insulin. >> those solutions aren't working if we're seeing doubling, tripling cost of insulation and patients having to ration and not afford their insulin. >> time has expired. >> chair recognizes the gentleman from virginia, mr. griffith. >> ms. tregoning and mr. langa, there are numerous fees and discounts in the prescription drug supply chain that are calculated based on insulin prices. according to i have read, you all have fees with your supply chain partners that are based on a percentage of the list price of insulin. why are they structured this way? >> you're up first, mr. mason. let's go. time is running. >> we don't -- the pbms on the paper of the contracts and
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that's what we have to work under. >> mr. langa. >> it's the current system. >> agreed. the current system. >> have any of your companies tried to negotiate flat fees with your supply chain partners? >> yes, we have. >> weave tried a variety of different avenues. >> you have not been successful. why? >> no, our efforts were pushed away. >> i think it's because the current system and the demand for rebates today. >> ms. tregoning? >> yes, it's the system we operate. >> what reasons did the other participants in the supply chain provide to justify a fee based on the list price of the medicine rather than a flat fee? >> it's the current system. >> everybody agree with that? >> move on. mr. moriarty, in the february 6th letter that we sent to cvs health, we specific live asked
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cvs health to list the contractual terms in your existing contracts impacted by the list price of a medicine. they did not directly answer if there were any fees charged by cvs calculated as a percentage of a list price. while reviewing the standard contract template commonly utilized between care mark and a health plan client for several lines of business that the committee received in response to a letter that we sent to cvs health last august, we saw that there was a section in the template on disclosure of manufacturer fees that are disclosed that care mark part d services may also receive administrative fees from fa pharmaceutical companies based on a percentage of the list price of the medicine. it, therefore, appears as though cvs health may used administrative fees that are based on a percentage of the
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list price of a medicine. this is correct, isn't it? >> congressman, over 98% of all the fees, rebates that we obtain across our services and 100% in medicare go back to the plan sponsors. >> that's not what your contract says. it says you all can charge a 1% fee, administrative fee based on the price of the medicine. the question that i have is, it doesn't cost your company any more to process a $4 drug than it does a $40,000 drug. isn't that correct? >> it represents the cost of associated with that processing, sir. >> wouldn't it make more sense from a consumer standpoint that you came out and be more transparent, but came out with a flat fee and worked with these folks over here to come up with a flat fee? i understand in part d on medicare, you just charging the 1%. but across the board, according to your information you sent us,
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you're charging 2% as a part of the rebates. you're getting 2% of that. i don't know whether you're charging those folks an administrative fee or not. wouldn't it make more sense to have a flat fee for doing what you all do? >> if the flat fee represents what the current net pricing, the lowest net pricing in the market, yes, we will do that. >> you're willing to do a net -- you're willing to do a flat fee? >> here's the issue. what's proposed before results in not lower cost, actually a higher cost. if it results in lower kooss, we will implement that. >> one of the problems we had, if you're not in a magic company, you're paying the list price and you're not able to afford it or paying the higher deductible because you haven't reached that yet. lots of people opted for the plans, so consumers having to pay the higher list price, they're not getting the rebates all the time. as a result of that, their net price has gone up substantially
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and that's what we're hearing from constituents who have to pay that. it seems to be something we can look at, the system needs to be more transparent and you ought to be paid for processing that prescription. whether it's a $4 drug or a $40,000 drug, you ought to be a charged set, standard fee that doesn't have the drug companies coming in here and saying we're raising our list price so they can get more. how many billions of dollars or hundreds of millions of dollars is represented by that 1 or 2%? >> we pass back, as i said, over 90%. we disclosed what -- >> what's the dollar number? >> the total number across is $300 million. >> i yield back. mr. kennedy offered an article for the record. without objection, it shall be entered. the chair now recognizes the chairman of the full committee, mr. pallone for five minutes. >> thank you, madam chair.
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i missed a lot of the hearing because we had other hearings that we were on the floor today with net neutrality. i just want to say this. all i hear from constituents, they're totally disgusted, right? particularly forev insulin. it's been around a long time. they don't believe in a market-based system. i believe in a competitive system. i think that, you know, that's what the country is all about. what they tell me is just set the price. they'll literally say to me, you in congress or some government agency should just set the price and that's it. they just don't believe in a competitive model anymore. you say the system doesn't work. i guess part of what i'd like to know is why this marketplace competitive model doesn't work anymore. what has happened? last week the committee heard from dr. lip ska, a clinician and researcher. drug makers make excuses for why prices have gone up. they say it's the fault of pbm.
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s or other things. the bottom line is the drug prices is set by drug makers. the list price has gone up dramatically. it needs to come down. simple as that. many of my constituents say, very simple. set the price. have the government set the price. not have the company set the price. i mean, that's not the competitive model, obviously. let me start, mr. mason. you set the list price for your insuli insulins, not the pbms or anyone else in the supply chain. why are we talking about high drug prices when it's within your power to bring the price down. >> why don't you bring it down or do you want us to set it. don't have mr. mason set it. let the government set it. why not? >> if you're not going to do anything. >> we actually buy down everyone in a high deductible plan down to $95. so we're doing that today. everyone on a lily insulin at
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the pharmacy, we buy every prescription down to $95. we're paying rebates in order to get access and -- >> are you willing to reduce it more? >> we right now reduce, no matter how much -- they could use multiple vials, multiple pen packs. >> what would be the problem in the government lists the price and says that's what you got to charge? >> right now, we have -- the competition is furious. our net prices -- >> you think competition is working, the marketplace is working. >> i don't hear that from my constituents. >> mr. langa, it's unconscionable, the price increases. why isn't novo nordisk reducing its list price. my constituents say force them do it. >> we do believe in a market-based system. we would put the formulary positions in jeopardy. these three pbms represent 220
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million lives. >> let's get rid of the pbms and the government will set the price. you don't have to worry about that. what do you think? >> that's not what we believe in. >> nobody thinks it's competitive anymore. >> if you look at rebates, the average rebate for novo nordisk in 2014 was 48%. the average rebate just four years later in 2018 was 68%. 40% increase. we spent up to $18 billion in rebates, discounts and fees to provide formulary -- >> i think you're passing it on to the pbms. ms. tregoning, people being forced to ration insulin because they can't afford it. what's stopping sanofi from lowering the list price? >> congressman, under the current system, simply lowering list rice as were attested to
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could cause some patients on the formularies, where we've secured position with rebates to lose access. >> if we set the price, there would be no pbms anymore. >> congressman, the market-based system is important for continued innovation. >> i agree. you have to convince that it's working. the problem that we have is we end up having to interfere with the market when it becomes monopolistic, when it's not working. my constituents say it's not working. what are you doing, pallone, it's not working. >> competition is working. the net prices are coming down. the issue we have is the results of that negotiation are not finding their way to patients. that's the issue at hand. we sanofi is working where patients are exposed to the high list cost, we're de facto having a lower list price and covering through co-pay assistance or value savings programs. but we don't control the out of pocket costs.
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>> everybody just blames the pbms -- the companies blame them. our constituents say they're all no good. just get rid of the system. i'm reluctant to do that because i believe in the market-based system. but this is what i hear. >> thank you. chair recognizes mrs. brooks from indiana for five minutes. >> thank you, madam chairwoman. i think everyone is focused and the answers all seem to be focused on the system which i they're acknowledging and are very frustrated, it seems to be broken. in the february 6th letter that we sent to the manufacturers, it's increasingly common for them to offer one insulin manufacturers line on their formularies. i want to ask questions about formularies. because it sounds like everyone in this finger pointing is having to do with formularies, so i'm curious, why are -- being
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involved in -- but we're learning a lot more about this system. why is it that we -- you might have one insulin on a formulary? why wouldn't you want all of them to be on your formularies and then also the question because if you are -- if you're used to one insulin, then the company switches their insurance program and then they have that child has to go to a different insulin, why would we not offer as many options as possible? i'll start with you dr. dutta. why do we make this change? and then the rebates get in the middle of it and the discounts and -- can you just help us. the system seems really broken. it sound like that's part of it. >> thank you for the question. the first assessment is purely
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clinical. it is about whether a product is unique or if there are therapeutic alternatives. when you have a unique product, price is high. it's put on our formulary. there's no competition. then, as manufacturers produce more products that are therapeutically equivalent in the case of insulins, long acting insulins, rapid acting, then there's an opportunity when their equivalent to negotiate price down off of list price. however, to your specific question, if there's a patient that requires a medication that is not our preferred product or not formulary, we offer a process for the patient and their doctor to request and provide rationale for their product and if there's a good
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reason, like an allergy or something like that, they would be allowed to have that product. >> thank you. miss bricker, what would happen in the market for you, not just your company, but all of the pbms here, what would have if you stopped excluding certain insulin products from the formularies? if you allowed all of them in the different categories of insulins, if you allowed them to compete and be on each of your formularies? >> thank you for the question. we don't have one formulary. we have many, many formularies. the one that provides the most savings for our clients actually limits through exclusivity or exclusive placement insulin options. we do that because we're able to secure the deepest discount from the manufacturer once we award that placement. so they're offering discount in exchange for market share and exchange for access. to your point, we have other options. we believe that choice to our plans is critical.
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they absolutely can select formularies that have all insulin on the formulary. >> what if we removed exclusivity from formularies? >> prices would go up. >> why do you believe prices would go up? >> mr. moriarty. why would prices go up if all of the companies were able to be a part of your formulary? mr. moriarty? >> because the drug companies would not offer the discounts that currently exist in the system. >> and i would -- if we were to remove all exclusivity from formularies, mr. mason? >> our rebates went up during the period when we moved from dual access to exclusive formularies. that what caused the prices to go up. >> mr. langa. our rebates have been competitive. we believe in choice. choice for the physician and choice for the patient. a physician should be able to use their clinical experience to
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make decisions. not a formulary. >> what if we gave up rebates and discounts, ms. tregoning? >> we would support a system with fixed fees for pbms and removed rebates as long as patient access and affordability could be guaranteed. we would be more than happy to move to that system. >> do you think you would lower your insulin prices that would be offered if we had systems like that? >> if we could be ensured that patient access and affordability would be maintained, we would be -- >> mr. langa? >> we support the rebate rule, we also support that as long as there's access and affordability, we are open to that option. >> mr. mason? >> same answer. >> thank you. i yield back. chair recognizes ms. kuster for five minutes. >> thank you very much for your testimony today. as we unravel this process of rebates and volume discounts and the high cost that patients and
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families are facing for insulin, in new hampshire, we have 121,000 granite staters. just give or take 10% of our population actually. have either type 1 or type 2 diabetes. these are the people that i have in mind, the families that we've been hearing from. but i want to understand. the frustration that diabetic americans come not just from the dramatic increases in the out of pocket costs but the mind numbing complexity of how the drugs are priced and i believe that insulin manufacturers and pharmacy benefit managers may have lost focus on who they're truly meant to be working for, the patient. so that's where we're coming from. to try to understand as we unravel this. you've heard the ideas here. i would imagine, it would be a dramatic change in the way you do business. certainly from the conversations i've had with the pbms but also
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from the manufacturers' point of view. i don't think anyone really comes to this with totally clean hands because you're chasing the profits of the quarterly earnings as well as anyone else. i think part of what's difficult for us to understand is these are medicines that have been around for a long, long time without a great deal of innovation. without a change in the chemistry and the medication itself. maybe there's been a change, i understand, in the delivery mechanism. maybe there's a medical device change in having a longer lasting impact on patients and certainly for patient convenience and patient health, that's important. but we're trying to get to the bottom of why this has gone up so much. it's one thing for us to consider that in a field of medicine that has dramatic new
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innovations in the r&d costs. but it's all the more complex for us to sort that out with something like insulin. i want to get at two areas if i could. mr. mason, what efforts would you recommend to congress to improve price transparency for patients? you have taken a stand on getting rid of rebates or those types of things. what is it that should be happening in terms of the patient understanding the pricing? >> we're open for transparency to help patients. we think the biggest issue we're hearing right now, we want the same thing. we're not -- we're explain the system up here. we want reform. we want anything that provides better access to patients. the heart of what we're hearing from patients is those in high deductible plans. about half of those high
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deductible plans will take the rebates that are given to them and they use those to afford a chronic affordable care for those with chronic disease. about half of them decide actually to put that back and actually lower premiums for the general population. so what we hear and what you're probably hearing is from those individuals who are in those high deductible plans where that employer has decided to say i'm going to pick the plan design that gives me lower premiums. they're prioritizing that, making that conscious plan decision. chronic, pain, price. that is a gap in the system right now that's leading to what we're hearing the most with patients. we're providing now a stopgap measure to buy all those people down to $95. but that's a short-term fix. long-term fixes should be focused on what can we do for the high deduductible plans so they have affordable coverage from day one and that decision
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is universal. >> so there is -- you would agree that there is a discount for volume purchasing. are you saying they fall outside -- i can ask ms. bricker to explain this. let me go to you, ms. bricker. what he's saying, how do we get to transparency for the patient and how do we get all the patients to benefit from a mechanism that makes sense to me that you've described which is a volume discount essentially. that's what the rebates are. >> a couple things if i may. we believe strongly and having real-time benefit check at the time of prescribing that the physician has at his or her fingertips, what product is covered under the formulary and what it will cost the patient. absolutely critical to ensuring there isn't friction at the counter. transparency to planned sponsor. so they fully understand the
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value we've negotiated by way of rebates and discounts. of course, we've got to continue to do more. as mentioned previously, announced a program for $25 insulin for all of our commercial patients. but clearly, we're -- we're still faced with challenges in the part d benefit and we're absolutely in support of continuing to modernize that benefit such that patients have caps and aren't exposed to these high list prices essentially. >> thank you. gentleman from west virginia is now recognized for five minutes. >> thank you madam chairman. i apologize. i've been at two other committee meetings going on. if i missed some of your -- i heard enough of it. mr. langa, i focus most of my remarks towards you. i was here -- from my records, we have information that we were -- a vial of insulin in '67
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cost a dollar. if the cpi went up $17, but yet your nova log with with a list price of $237. not $17. so many times when we have meetings in the district and our roundtable discussions, they talk about how people in west virginia, no different than around the country, having $300, $400 a month. a gentleman just wrote a check for a thousand dollars for his insulin. in excess of his insurance. what i was hearing not only similar dollar increases like this, but i was hearing all of you say it was caused by innovati innovation, in part by innovation. i'm curious, what kind of innovation have we implemented over the last few years that would cause such a drastic increase in the price of insulin? >> innovation part of it.
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let me just -- i'm a strong, strong supporter of innovation. so help me out a little bit. why is it causing the increase in price? >> sure. so innovation is very important to us as an organization. we're an innovative company. what's most important i think was mentioned earlier, we keep the patient in mind. even that word, incremental, it's not incremental to patients. when you think going from four to six injections a day to one, if you think about taking a meal-time insulin at or right after you eat versus an hour to hour and a half before. you think about basal insulin, the long acting products that give you support of hypoglycemia. the -- we have patients that want to work for novo nordisk because of the mission we're on to defeat diabetes. we had these patients sometimes speak at company meetings. >> just trying to understand the innovation -- >> i don't need someone to filibuster on me. >> what he lives with his night
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terror. that's called low hypoglycemia at night and makes him do things out of what he normally does. because he got on a product that reduces hype glycemia. >> he has not had a night tremor since. >> prior to having the innovation, the prices were lower. now they're skyrocketing up to $237. is there -- can we just stop the innovation. if it worked before, why in the last five years through innovation we've gone from $17 and $20 and up. as an engineer, i believe in oin ovation. innovation is supposed to drive the price down and not up. i'm troubled with it. >> innovation is for today and
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tomorrow. i think it's -- we're innovating for the future. it's partnerships with m.i.t. and california. >> until the last few years, i'm sure innovating in the '60s, '70s and '80s. it wasn't skyrocketing like it is now. it's counterintuitive, why invasi innovation is driving the price up in the last few years. let me go back sot list prices. we're going to run out of time. i don't understand that -- i come from the construction industry. but in life, i need to see example ms of why we have list prices set up for discounts i've heard you talk about. if we don't have -- we don't have rising list prices for cars and appliances and construction material. why is it that pharmaceuticals are jazzing up the list price to offer discounts?
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why is that unique to the pharmaceutical field? >> dperngs i know you've heard a lot about this today. it's about misaligned incentives in the system. the higher the list price, the higher the rebates. those are used within the system. in those rebates, they don't get passed through to the people living with diabetes. that is their -- that lies the challenge. >> should we eliminate, discourage the rebates? >> certainly, we're supportive of the rebate rule and we're supportive of the pass-through of the rebates to benefit patients. we any that would be something that would be healthy for patients. >> i'm run out of time. i'm sorry. yield back. >> chair now recognizes gentle lady from florida for five daisy. >> thank you, chair degette for holding this hearing. >> i recently met with a family in tampa.
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9-year-old brook and her father todd. explained to me how she was diagnosed when she was three days old in the hospital. how they've struggled with her diabetes since then. the big struggle isn't on the health side. it's affording insulin and drugs. they had to change their lifestyle a little bit. todd told me at one point they had run out of insulin two weeks before the end of the month and had to borrow a vial from an adult friend of ours using huma log and had numerous vials stockpiled. that's how we do it now. we tell your endocrinologists that we more insulin we need in a month. she writes prescriptions for slightly more than we use. since the vials are good for two years, we have extra in case anything happens. at the end of the day, we count ourselves blessed that both my wife and i work and our insurance helps to sufficiently
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pay for all of brook's type 1 diabetes supplies. but the beginning of the year is still very difficult until we pay our deductibles and choose to pay more for insurance to make those. our deductibles, he says i cannot fathom how people can choose to limit or ration insulin for their children. she says why do we have laws that protect kids' safety like bike helmets, seat belts and indoor smoking bans, but not laws that would allow them to get the medicine they need to stay alive? let's start with manufacturers' list prices and how we get them under control. if rebates and fees tied to list price were to be restricted or
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eliminated, do we have any guarantee from eli lilly that prices would go down. >> what's important to us is that the majority of patients can have access at affordable pricing. as long as that's in place, yes, we would consider that. >> as long as we can ensure patient access we would certainly lower list prices with the elimination of rebates. >> it's been reported that some manufacturers use the patient asi assistance programs to deduct the value of donated drugs from its taxes. in 2015 i understand lilly donated 408 million worth of
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drugs to the lilly cares foundation. that's a big 408 million. i would think we would see some commensurate reduction of the list price that would be tied to that. >> our net prices are going down. what you're not seeing is we spent 1$108 million last year o savings. i think there's an issue with these kind of charitable contributions. you seem to be benefitting on both sides and patients aren't. if fees paid to pbms and wholesalers are standardized, what impact would it have on
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what the patient ultimately pays. >> over 50% of our clients receivecollected by manufacturers and 90% of all fees are passed onto our plan sponsors. when you delink the fee from the list price there is nothing to stop the manufacturer from continuing to increase the price. >> how can we change the system to better align out-of-pocket patient costs to the net costs instead of the list prices? >> 70% of our members today either pay zero dollar co-pay or a flat co-pay of $35. we advocate four point of sale rebates as well as preventive drug lists such that insulins would not apply to the
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deductible. >> i yield back my time. >> thank you. the chair now recognizes mr. mullen for five minutes. >> thank you for holding this meeting. we're all scratching our head try to figure out how we got to this point. real quick i want to go back about what was asked about your tax advantage for taking the rebates. is there a tax advantage for your companies for those rebates, yes or no? >> no. >> no. >> no? >> no. >> what about the charitable contributions, is that not a tax advantage? >> we only give insulin. >> if it's at $300, you put your rebates in, you get it all the way down to 100.
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who absorbs those rebates? >> that's not why we're doing it. >> who absorbs those rebates? do you guys absorb those rebates? if you're giving the rebates and the list is at $300 you're giving it to 100. who absorbs those rebates. >> to the pbms. >> do you write that off as a charitable contribution? >> that's different than a charitable contribution. the free drug program that's different. that's providing free drugs to patients below an income threshold. >> the -- about the innovation, when you're talking about the innovation side of things, are
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you using insulin today to help pay for future drugs? does the price of insulin help offset the cost of research for future drugs? >> revenues from all of our business in part go back to fund research and development. for diabetes in the united states i would point out -- >> a lot of you guys come out and talk to me and my office and you say, look, the price of the drug is so we can recoup our costs to develop it. we're trying to recoup the cost of it. i get that. you've got to recoup the cost. but the cost is already recouped in this. so you are using insulin today to pay for future drugs that are outside of insulin, is that
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correct? >> we continue to invest -- >> that's why you're seeing it go up so much. >> our net prices are going down. >> but you don't have any costs associated with it because it's already been developed. >> the revenues have gone down by half over the last four years because net prices have gone down. >> if a patient qualifies for your programs, how much does their insulin cost at that point? >> patient assistance, it's free. >> for co-pay assistance they'll pay no more than a $10 co-pay. if they qualify for assistance, it's free. >> with the express scripts you guys came up with a no more than $25 charge to customers. how long did it take you to develop that? >> been working on it for a few
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months. >> have the companies on the panel agreed to participate in that with you? >> yes. >> how are you able to offer that? >> in collaboration with the manufacturers as well as in collaboration with the plan sponsors. >> when a patient qualifies for your programs, how long do they typically stay on those patient assistance programs? >> it varies by patient and program. so they have renewal periods, but it could be one year, three years. >> do you know the average? >> i'd have to get back to you on the average. >> our separate foundation does that so we don't have that data. >> i-year-ol yield back. >> thank you.
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>> i'd like to begin by asking our panel a number of simple yes or no questions. during our hearing last week patient advocate gale testified against her doctor's orders she had rationed a bottle of insulin because she couldn't afford to pay the $396 it cost her per month. are you aware? >> yes. >> yes, we are. >> yes. >> yes. >> yes. >> have any of you personal l l ever had to ration a vile of insulin? >> i have not. >> no and no one should. >> similarly i hear stories from my constituents about the struggle to afford life-saving medications. have any of you ever had to personally choose between feeding your family or buying a
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life sustaining medication. >> no and no american should. >> no i have not. >> i have not. >> no i have not and agree no one should. >> i have no and no one should. >> i have not and no one should. >> in a broader sense, have any of you ever struggled to afford a medication recommended to you by your doctor. >> i have not. >> there once was a time when one of my children had to be on a growth hormone product and we were not able to get reimbursement. at that time it was going to be several thousand dollars and it was a challenge. >> i'm fortunate to not have faced this situation. >> no i have not and no one should. >> i want to be clear that i'm not asking these questions as a gotcha moment but as a reminder
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we need to approach this issue with empathy and compassion. we never know what the person next to us might be going through. these stories are from real people. modern medicines like insulin save lives. when we dangle these medications just out of reach, we are engaging in a most cruel form of torture. 1 in 4 individuals reported using less insulin than prescribed over the past year specifically because of cost. let's put ourselves in their shoes for the day. we can get bogged down here in washington with the blame game and talk about rebates and list prices and patient assistance programs. the reality is when i go this weekend back to my hometown, there will be people in my community that are in the hospital putting their lives at risk because they are so desperate for this medication
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that they are priced out of that they let their blood sugar crash just so they can get free insulin on their way out the door. the system is horrendously broken and the companies at the witness table are benefitting while patients across the country are losing. that is unacceptable and we need answers. last week in testimony before the committee we heard from the three of the top ten medication costs were for a type of insulin. where is all this money going? >> our net prices are going down. why we hear so much of why people can't afford their insulin today are those high deductible plans that don't benefit from the rebates and have high deductible cost.
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>> do those rebates need to go down further in order for people -- we hear about ceos getting an increase in their salary and they tell us well our net prices are going down. do they need to go down further or do we need to take from the ceo? >> our net prices are going down. the plans that payers pay to get insulin is going down but those costs are not being used to help people who have diabetes. those rebates are used in order to pay down premiums for the general population, leaving those with chronic medications like insulin exposed. that's the point that we need to focus on solutions. that's the gap in the current system. the current system is not working. we agree 100%. that's the heart of the issue. >> i see my time is up. i'll yield back. again, a crisis that we need to
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resolve as soon as possible quickly here. thank you and i yield back. >> the chair recognizes the gentle lady from new york ms. character for five minutes. >> thank you very much, madam chair. this is a very important hearing today. i wanted to ask a couple of questions. we've heard a number of examples of the dramatic rise of insulin prices this afternoon. i'm still not cheer on the flowchart. we've heard a whole lot of different things about net pricing, list pricing and that net pricing is going down. is that what you're saying, mr. mason? is that subject to ebbs and flows? in other words, if you're saying that prices going down as we sit here, is there a point where that price gets settled at a
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lower price or is there the possibility that it rises again. is it like oil? >> no, it's not like oil. this has been pretty that the over the last ten years. i think we provided the data as part of our written testimony. >> how is it then if they're going down over the past ten years that it's still unaffordable? that's the flowchart i'm talking about. first of all, it spiked for some strange reason, i guess the change in the system or the modernization of the system that included this rebate shenanigan. that's what it is at the end of the day. if you have 100-year-old product that increased in value because all of these other dynamics got involved, it's the same product. so can you give me a sense of
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what happens when you produce this product, what the cost is and then how it gets to the point where the afternoon american who needs it can't afford to access it. that's the crux of this for i think the listening public, because we've talked about a lot of terms of art here, but americans need to know how you got to where you are given what we know. can you explain or is there anyone on the panel that can explain it in layperson's terms? >> congresswoman, the insulins of today are very different than the insulins of the past. that's very important to keep in mind. >> we understand that.
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>> in terms of the list versus net prices, the net prices have been going down steadily. we talked about our insulins our list has gone down 25% since 2012 and that is expected to continue. >> what precipitated that? >> additional competition and rebates. >> you sure it wasn't the outcry of the public that could no longer afford it? >> unfortunately, congresswoman, the lower net prices are not finding their way to patients. the rebates that exist in the system, that gap between the list and the net prices is being used to subsidize other parts of the system. >> so the system became far more complex over time. >> i think the system became complex and rebates generated through negotiations with pbms are being used to finance other
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parts of the health care system. >> if we extract rebates from the system, what happens? >> if we move to a system of six fee, we support the rebate role, then we'd be able to lower our list prices. >> no no. i just want to know. >> there's no one that's advocating for the patients and the man sponsor to drive discounts and afford blgt. the rebates are discounts. it sounds mysterious. it's just a discount and a volume discount. are there people that slip through the cracks? absolutely. we're committed to serving each and every patient. doing away with rebates will only increase costs. >> we support having rebates pass through to the patients who use the drugs upon which the
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rebates have been negotiated. >> this is a circular issue because you want that passed onto the patient so you could continue to push up the price. >> we don't receive list price. we receive the net price. we don't receive the list price. >> you don't receive the list price? >> no. the price that's paid to manufacturers is ultimately the net price. so the rebates now are being used to offset other costs in the system. what we would advocate for is ensuring those rebates are provided to patients who are using the drugs to lower their out-of-pocket costs. >> are you saying that the pbm's demand for increased rebates was the reason you were forced to keep raising your list prices. >> it is one component. we have limited our list price increases but one component of that decision making is the
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dynamics of the supply chain. the other components include the need to continue to invest in r&d. >> i think it's more p and g, profit and greed. i yield back. >> thank you. is the rebate system transparent right now? >> the rebate system is 100% transparent to the plan sponsors and customers that we service. to the people that hire us, what we negotiate for them is transparent to them. >> so we can track the list price, then we can see the rebate, then we can see the net price, then we can see the savings that you pass along to the consumer.
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that's all completely transparent to the public. >> it's not transparent to the public unless they are our patient. >> should it be? >> we don't believe so. >> should it be trade secret, like proprietary? >> the reason i'm able to get the discounts that i can from the manufacturer is because it's confidential. >> yeah, it's a secret. what about if we made it completely transparent? who would be for that? >> we would support transparency along the entire chain. that's the important thing, is if we have transparency all along from the list price all the way through to patients. >> do you all support that? >> absolutely not. >> you can't because it will hurt the consumer to have transparency. >> it will hurt the consumer --
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>> i don't buy it. i'm not buying it. i think a system has been built that allows for gaming to go on and you've all got your talking points. you have said you want to guarantee patient access and affordability at least ten times, which is great, but there's a collaboration going on here. i know there's this going on too, but the system is working for both of you at the expense of the patient. now, i reserve most of my frustration for the moment in this setting for the pbms because i think the lack of transparency is allowing for a
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lot of manmanipulation. i think the rebate system is totally screwed up, that without transparency there's opportunity for a lot of hokus pokus going on. the rebate is negotiated, but we don't know exactly what happens when the rebate is exchanged in terms of who ultimately benefits from that. i think we need more transparency and i do not buy the argument that patient is going to be worse off, the consumer is going to be worse
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off if we have absolute transparency. i think just to get the lobbyists in the room to shudder a little bit, i think the pbms should be utilities. or converted to nonprofits or something. i know when you started out, i understand what the mission was originally of the pbms. it's a complicated industry. you need an intermediary to assemble the information on both sides to weigh in to assemble the bargaining position so you can get the best price president in the early days that was a good argument. but now things have gotten out of control. you're too big. and the lack of transparency
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allows you to manipulate the system at the expense of the patient. i don't buy the argument that the patient is going to get hurt if we have absolute transparency. if we can't get it from the pbm then we ought to look at other ways of doing it including getting the government involved. >> thank you, madam chair for holding this hearing. i don't know if i have any questions at all but i want to tell you something. in the 2018 election the number one concern of americans, the high cost of prescription drugs. we have the names of people who have died because they couldn't get their insulin. a young man who was trying to control it himself after going
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off his parents' policy, dead. we know that a huge number of people are not taking the insulin that they need because they can't afford it. so then they get sick, get sicker and maybe they die because of it. i don't know how you people sleep at night. between 1996 and now when you've got i eli lilly from $21 a vileo 275, you heard mr. mckinly who went through all that, interesting by the way. so for eli lilly it's now 275. for sunofi it's 270.
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curiously close in price and way too high. i want to tell you something. that will not stand in this congress. i heard ms. brooks say the system is broken and i think on both sides of the aisle there is a commitment and we've even heard the president of the united states talk about price gouging. yes, we need transparency. i have a strong transparency bill that is going to hold you guys accountable and make you notify how you justify raising those prices. you talked about another drug that you're developing and that somehow that's an excuse because it helps diabetics and that's the research and development that you do.
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you're in trouble. and the lobbyists out here or maybe that's you need to understand that this is a commitment on the part of the congress to get drug prices, particularly life saving life necessities to get those prices under control. and if you think you can, you know, just outtalk us without any transparency, without any accountability, i just want you to know your days are numbered. you know, when mr. azar became the secretary of health and human services, i wanted to remind him that he came from eli lilly at the very time those insulin prices went through the roof. and we are seeing that on drugs
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that have been like yours on the market for decades. if you want to try and explain -- i totally agree, isn't that a good thing that now people may be able to take one vi vial and not have to shoot up all the time and the delivery system. but we have no clue if that means that you can raise prices 1000%. and you think you can get away with that kind of secrecy or just blaming the pbms. but don't excuse yourselves from us and don't tell us about the wonderful charity prices that you give and then you do get tax breaks, i'm assuming. contradict me if i'm wrong when you give charity care to people. i believe that is a tax
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deductible kind of item for you. i'm not hearing anybody contradict that. i resent that very much, because then everybody else is still paying those very, very high prices. so just know something is going to happen here if you don't decide in your own interest to lower those prices so people don't have to die. and i yield back. >> gentleman from california, mr. peters. >> thanks. i've heard a lot of this discussion. it's been very ed fifieing for . i don't want to blame you for a system that we've set up here that encouraging bizarre incentives. the fact is that it's a system that incentivizes people to charge higher questions for bths
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and the companies.
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i understand that represe representatives -- i'd like to follow up on those. can you talk about has your company ever proposed in contract or otherwise demanded that manufacturers give advance notice of list price decrease? i remind everybody we're all under oath here and we have access to information potentially that could countera counteract an answer that isn't accurate. >> yes. >> and manufacture evers pay a higher fee if list prices do not increase above a certain percentage in a contract year?
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if you have a list price here and the company says we're going to go down to here and the rebate was based on the higher list price does that amount stay the same. >> i'm not aware of that.
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we are all about net price. >> understood. i'm going to focus on the 340 b program. i have been an advocate for that program. information provided to the committee indicate that many of nova products are at penny pricing. the number of packages provided to 340 b entities increased in 2014 to over 735,000 packages in 2018. that's more than 170% increase. other products also see increases in the number of packages sold in the program during this period. can you explain the impact the
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340 b program has had? >> we have over 18,000 facilities i believe at this point roughly and it is at penny pricing. is the question its influence on the commercial market? >> yeah because of its penny pricing and the volume has gone up dramatically. >> i think the challenge has been the 340 b entities and who actually gets the designation and not. i think that's more the complexity and the challenge than it has been the spillover. >> mr. mason? 340 has dramatically expanded. >> obviously it does take away our net sales. if those are legitimately helping individuals that need that help, we're fine with that. >> i understand that.
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>> i think the issue is products that go into the 340 b system but are those making their way to patients? >> the 340 b program, i firmly believe based on this subcommittee's report that was released last congress that we need to seriously look at and reform the 340 b program so that it continues to exist for the hospitals and patients that need it but at a degree of transparency because it's spiraling. thank you, i yield back. >> chair recognizes the very patient woman from california. >> the way i think i would summarize this is it sounds like
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we're playing a middleman for prescription drugs to be on a preferred list. that's not just to put all the blame here but then these list prices have just been skyrocketing. when we ask about pricing, what we're hearing back from the drug companies is, well, the net price is actually declining. last time i checked i think lilly was doing pretty good. count you say so, mr. mason? why won't you tell me the revenue for this coming year? >> $21 billion. >> your ceo in 2014 was making $14.5 million and a pay package. that was in 2014. the new ceo in 2018 is making $17.2 million in a pay package.
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you guys are doing okay. the american people see that and say why can't we get pricing for a life saving drug that we need. and they say congress has to do something. when you hear what's happening here today, that's exactly what's going to have to happen. i don't see anything happening here. i represent a congressional district that's a majority minority. people of color are disproportionately affected by diabet diabetes. my report says there's over 80,000 uninsured there, a lot of people who probably can't afford to pay for insulin. do you all recognize that your pricing policies and yothis sysm is causing people to die every
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day? do you all recognize that? mr. mason, do you recognize that? let me go down the list here. yes or no do you all recognize this? >> we don't want anyone not to be able to afford their insulin. >> do you recognize this pricing system and model is causing people to die? >> we need to do something about it collectively. >> okay. that's a yes. >> we recognize the model is certainly a challenge, yes. >> and you're playing a role in that model. these companies and the pbms are playing a role in this model. that's why we're having this hearing, is we're trying to get to the bottom of it. >> yes, we recognize that's happening and that's why we put in place the program to address the inadequacies of the current system so that doesn't happen so people aren't forced into rationing their insulin. >> there's no question there's a portion of the population where this needs to be addressed very
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directly. no question. >> absolutely there are patients falling through the cracks. we exist only to make medication more affordable. >> i'm obviously not going to get you two to tell me you're part. i wish that you all would just come together and collaborate. a moment ago ms. bricker i believe you said the way you were able to get the $25 plan and the deal you were able to get for the insulin was that you collaborated together, that you worked together. if you could do it there, how come you all can't do it for others. this is where congress has to step in and do something. it's because of profits. it's because of greed. the american people are tired. and when people die, when people die and that is what is happening, make no mistake about
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it. we hear about it, the country hears about it and it's outrageous. it's completely outrageous. i want to end on just a quick medicare part d. more than 40 million seniors enrolled in part d plans. the government is prohibited from negotiating directly with drug manufacturers on behalf of enro enrollees. yes or no do you spoeupport medicare being able to negotiate drug prices under part d? >> prices are getting better in part d. >> yes or no? >> i don't think they're needed. >> okay. >> i think everything we will consider if it helps the patient. >> so that's a yes? >> the free market that's playing right now is working
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because we have some of the heaviest discounts in part d. >> it's not working. next. >> pbms are very effective negotiators. >> so you don't have an answer on whether you support medicare being able to negotiate. >> i don't support direct negotiation. >> we do not. >> i do not support. >> we do not. >> i can understand why that might be the case. it's unfortunate but my time is up. i yield back. >> now the gentleman from georgia, mr. carter. >> thank you for being here today. full disclosure currently i'm the only pharmacist serving in congress. i practiced community pharmacy for over 30 years.
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i can remember when pbms involved. i can remember when psc was nothing more than a processor. i can remember ordering directly from drug companies and not going through a wholesaler or anyone, just getting a delivery every week from any of the number of companies that we ordered from. may colleague mentioned about patients having to make choices about eating and paying for their medications. i've seen it firsthand. i have witnessed it firsthand. ms. bricker you said you were a pharmacist. i don't know what your experiences are. you're obviously a lot younger than me but i have seen patients at the counter having to make a decision between buying medicine and buying groceries. i've seen mothers in tears
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because they couldn't afford their medications. i witnessed it firsthand. i was the boots on the ground there. i want to start with you mr. lynnga. during a briefing with committee staff, i don't know if it was you or a representative of your company but they said list prices started to increase more rapidly at the same time there started to be more consolidation throughout the drug pricing supply chain. has consolidation impacted the list price of medications. >> i think it was a factor. the pbm's represent almost 220 covered -- >> mr. mason, would you agree with that? in fact, i believe that you responded to a letter and said the same thing. >> yes. >> i'd like to ask you, you're
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with cvs. that's a drugstore, right? >> yes. >> and care more is owned by cvs and edna insurance is the same company. >> that is correct. >> we've got the company, the drugstore all the same company. i believe you're here today representing the pbm. >> yes. >> you just bought out cigna insurance. you also have your own mail order pharmacy. >> we do. >> doctor, same thing with you. united health care is the insurance company and you also have your own mail order pharmacy, is that correct. >> so optum and united health care are sister companies, yes. >> and you have a mail order
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pharmacy. >> yes. >> when you're been saying that you're returning money to the plan sponsors, can you define plan sponsors, is that the insurance companies? >> it is the employers state and federal. >> are you sending the money back to the insurance companies. >> yes, sir. >> you're sending it back to the insurance companies. >> we sent back to the clients that hire us. >> do you send it back to the insurance companies? please remember you're under oath. do you send it back to the insurance companies? >> in the event that the plan sponsor is an insurance company, yes. >> doctor, same thing with you. >> in the event that the plan sponsor. >> same thing. so you're the pbm managing money and you're sending the company back to another company that you own in some cases. isn't that right? >> so we have many health plans. >> i understand that but you could be sending it back owned
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by the same company. so this vertical integration that we're talking about here, that's something that certainly we need to be aware of. will ev i want to congratulate all of you because you've done something here today that we've been trying to do in congress the four years and three months we've been here and that's to create bipartisan. i've seen what you've done. let me tell you what the cms is proposing in the way of having discounts at the point of sale, that's going to happen. we're going to make sure that happens and that's going to bring more transparency to the system and we're not going to stop there. >> thank you. i would just say i never thought
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i'd see the day when buddy carter was channelling january shacowski. congratulations. i want to recognize mr. guthrie for closing questions and statements. >> when the chair and i were discussing having the hearing, we thought insulin was a proper one to have. i know it's different than a hundred years ago but we had a physician before from yale that held up insulin and said it's the same from the '90s as today and the price has moved forward. we wanted to look at the entire system but we wanted to look at one that affected almost every family and look at what's going on and extrapolate it. she also talked about president trump saying this is important to him and my experience in meeting with him is that drug pricing is important to him.
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it's uniting everyone. and i'm going to be quick. innovation is important. i saw a film yesterday of a father talking about his daughter not having any symptoms from sickle cell. you can talk about medical devices, the artificial pancreas is here. so innovation and a market based free enterprise system is important but what we're trying to get at with this -- and hopefully you can see our frustration -- is that we see pharmaceutical companies say our net price is going down, we see the list price going up and we have friends here that are in the buddy carter situation that are community pharmacists and they describe situations he just described. and they have to pay the list
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price. what we're trying to figure out is if the net price is the net price, then why isn't that what's paid to -- if the idea is we're going to get the lowest price for our insurance companies, then why isn't it selling something for $135 that costs $135 better than selling something $300 and getting $300 back. i'm trying to figure out where the money's going. this has been informative. so is it better for a high list price with a lower net or that's better for the insurance company but it's not as good if it's just a lower net price but just a lower list price. it's actually lower for the consumer going to the counter at the pharmacy. this is hopefully the beginning of a series of hearings and it's been informative.
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we do appreciate your testimony in trying to inform us because we do have to make some decisions and we don't want unintended consequences because you get into price control and rationing and shortages. we want people to have a fair price if they can pay and if they can't pay to have the assistance to have that because it's life saving. >> i thank the ranking member. i do want to thank the witnesses. i know people asked you hard questions. it was important to us to get everybody in here. i think we can all agree that the system is broken. it's grown up in a way over time that people didn't anticipate. here's the thing. the people who are suffering are the patients. in the case of insulin, the people suffering are people who need insulin every second of every minute of every day or they will die. and that's the issue that we
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have here. i now having done this investigation last year with my colleague from new york tom reed and now doing this investigation, i think i've got a pretty good grip and i think the members of this committee are getting a better and better grip of what's going on. what's going on is the system has grown new this country where we are continually -- it's a smoke and mirror system where we're continually increasing the list price of insulin in order to try to do negotiations to somehow get the price of insulin down. but let's look at the reality of the situation. the members of this panel kept saying over and over again, net prices of insulin have gone down. and one person even said nobody pays list price. they all pay net price. but that's not exactly true.
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i just want to give you the example of humlog that's over 20 years old. in 2001 humlog cost $35 a vile. today, no change to humlog, it's still the same formula. it's $275 today for a bottle of the same insulin that i bought for francesca when she was 6 years old. and the generic humlog that lilly has come up with, good news it's only $137 a bottle. so it's still way beyond where
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it was in 2001. well, now there's a new generic alternative addlog. it costs over $200 a bottle. let's not kid ourselves that the generic equivalent of this is really any cheaper for that young woman in my district who doesn't have insurance who's desperately trying to find two bottles of insulin every month. that's $400 for her. so when you say nobody's paying list price, there are people paying list price and the people who are paying list price are the people who have high deductible plans, who have to pay for the list price when they go into the pharmacy and they're under deductible. the people who are in the donut hole of medicare part d and the
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people who are uninsured. i know everybody here, the pbms and the pharmaceutical companies all have these efforts to give cheaper insulin to people like this, but i'm going to tell you the lady i talked to in denver didn't know how to get that insulin. the witnesses said last week many people in that situation don't. it's not a solution to the problem. it's just temporary bandaid. it's one that we have to stop with a wholesale innovation. let me just say finally this. it's not like the pharmaceutical companies or anybody else in the system is doing this for a
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public interest reason. the pbms had $23 billion in profits last year. everybody's making a profit. and the people who are really suffering here are the people who either have to pay list price or even after their deductible have to pay an unacceptable price and nobody here in this room wants that. so what we're going to do, we're going to get together in a bipartisan way and work with all of you, plus everybody else in the distribution center to figure out how we can provide insulin to diabetics at a cost they can afford and we are going to do that as quickly as we can. we're having an ongoing investigation here. we're prepared to talk to you now and we're prepared to bring it all back in july or in september to talk about the progress that we've made,
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because this is not optional and it is going to happen. so i want to thank you all again for coming today and we're not going to have any more testimony but i really want to thank you for coming and being part of the solution and not a continuing part of the problem. in closing, i will remind members that pursuant to committee rules they have ten business days to submit additional questions for the record. i ask that the witnesses agree to respond promptly to any such question should you receive any. with that, the subcommittee is adjourned. ask that the witnesses respond promptly if you should receive any questions and without the subcommittee is adjourned. and with that the subcommittee is adjourned. in
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[ inaudible ]. on march 24th, 1989, the exxon valdez oil tanker struck a reef in alaska's prince william sound and spilled nearly 11 million gallons of crude oil. tonight on c-span 3's american history tv we will go into the c-span video archive to look back at the disaster and we'll hear from a former anchorage daily news investigative reporter talking about his book "the spill." and then a senate hearing with exxon's then chairman and also the white house briefing by president george h.w. bush on the government's response. american history tv, looks backs at the exxon valdez tonight on
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c-span 3 starting at 8:00 p.m. i think it is important on this day that we continue to offer the people of colorado, the people of littleton, the families involved the sheer knowledge that all of america cares for them and is praying for them. >> 20 years ago, the columbine high school shooting was one of the deadliest in american history. on friday at 8:00 p.m. eastern, we'll look back on the shooting and provide some reflection on the tragedy. >> at that time, columbine had never happened, and neither the parents nor the school counselor looked at the issue of a violent paper as something that was indicative of the possibility of some real deterioration in thinking. >> watch our special on the 19998 columbine high school shooting friday at 8:00 p.m. eastern on c-span.
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congress is in a two-week recess returning to capitol hill on monday, april 29th. the house of representatives plans to work on federal spending for the next budget year when members return and the house is also expected to interest bills dealing with immigration. the senate will continue the confirmation process for judicial and executive nominees. when the house returns to session live coverage on our companion coverage c-span and when the senate reconvenes you'll be able to watch the senate live on c-span 2. once tv was simply three giant networks and a government-supported service called pbs. then in 1979, a small network with an unusual name rolled out a big idea. let viewers decide all on their own what was important to them. c-span opened the doors to washington policy making for all to see. bringing you unfiltered content from congress and beyond. in the age of power to the
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people, this was true people power. in the 40 years since the landscape has clearly changed. there's no monolithic media. broadcasting has given way to narrow casting. youtube stars are a thing. c-span's big idea is more relevant today than ever. no government money supports c-span its nonpartisan coverage of washington is funded as a public service by your cable or satellite provider. on television and on-line, c-span, is your unfiltered view of government. so you can make up your own mind. the house financial services committee recently held a hearing on housing discrimination, access and affordability. the committee heard from the national fair housing alliance, the national lbgtq task force, and the omb on-line real estate database company zillow. zm

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