U.S. GOVERNMENT PUBLISHING OFFICE

36–509 PDF WASHINGTON : 2019

EXAMINING THE ACTIONS OF DRUG COMPANIES 

IN RAISING PRESCRIPTION DRUG PRICES 

HEARING 

BEFORE THE

COMMITTEE ON 

OVERSIGHT AND REFORM 

HOUSE OF REPRESENTATIVES 

ONE HUNDRED SIXTEENTH CONGRESS 

FIRST SESSION 

JANUARY 29, 2019 

Serial No. 116–01 

Printed for the use of the Committee on Oversight and Reform 

( 

Available on: http://www.govinfo.gov 

http://www.oversight.house.gov or 

http://www.docs.house.gov 
(II) 

COMMITTEE ON OVERSIGHT AND REFORM 

ELIJAH E. CUMMINGS, Maryland, Chairman 

CAROLYN B. MALONEY, New York 

ELEANOR HOLMES NORTON, District of 

Columbia 

WM. LACY CLAY, Missouri 

STEPHEN F. LYNCH, Massachusetts 

JIM COOPER, Tennessee 

GERALD E. CONNOLLY, Virginia 

RAJA KRISHNAMOORTHI, Illinois 

JAMIE RASKIN, Maryland 

HARLEY ROUDA, California 

KATIE HILL, California 

DEBBIE WASSERMAN SCHULTZ, Florida 

JOHN P. SARBANES, Maryland 

PETER WELCH, VERMONT

JACKIE SPEIER, California 

ROBIN L. KELLY, Illinois 

MARK DESAULNIER, California 

BRENDA L. LAWRENCE, Michigan 

STACEY E. PLASKETT, Virgin Islands 

RO KHANNA, California 

JIMMY GOMEZ, California 

ALEXANDRIA OCASIO-CORTEZ, New York 

AYANNA PRESSLEY, Massachusetts 

RASHIDA TLAIB, Michigan 

JIM JORDAN, Ohio, Ranking Minority Member 

JUSTIN AMASH, Michigan 

PAUL A. GOSAR, Arizona 

VIRGINIA FOXX, North Carolina 

THOMAS MASSIE, Kentucky 

MARK MEADOWS, North Carolina 

JODY B. HICE, Georgia 

GLENN GROTHMAN, Wisconsin 

JAMES COMER, Kentucky 

MICHAEL CLOUD, Texas 

BOB GIBBS, Ohio 

RALPH NORMAN, South Carolina 

CLAY HIGGINS, Louisiana 

CHIP ROY, Texas 

CAROL D. MILLER, West Virginia 

MARK E. GREEN, Tennessee 

KELLY ARMSTRONG, North Dakota 

W. GREGORY STEUBE, Florida 

DAVID RAPALLO, Staff Director 

SUSANNE SACHSMAN GROOMS, Deputy Staff Director and Chief Counsel 

ELISA LANIER, Chief Clerk and Director of Operations 

AMISH SHAH, Counsel 

MILES LICHTMAN, Professional Staff Member 

LAURA RUSH, Deputy Chief Clerk 

CHRISTOPHER HIXON, Minority Staff Director 

CONTACT NUMBER: 202-225-5051 
(III) 

C O N T E N T S 

Page 

Hearing held on JANUARY 29, 2019 ..................................................................... 1 

WITNESSES

Dr. Catherine Alicia Georges, National Volunteer President, AARP 

Oral Statement ................................................................................................. 7 

Dr. Aaron Kesselheim, Associate Professor of Medicine, Harvard Medical 

School 

Oral Statement ................................................................................................. 8 

Ms. Antroinette Worsham, Mother of Two Insulin-Dependent Daughters 

Oral Statement ................................................................................................. 9 

Dr. Gerard Anderson, Professor of Health Policy and Management, Johns 

Hopkins University 

Oral Statement ................................................................................................. 10 

Mr. Avik S.A. Roy, President, The Foundation for Research on Equal Opportunity 

Oral Statement ................................................................................................. 12 

The written statements for witnesses are available at the U.S. House of Representatives Repository: https://docs.house.gov. 

Index of Documents 

The documents entered into the record throughout this hearing are listed 

below, and available at: https://docs.house.gov. 

* Association for Accessible Medicines Statement for the Record, submitted 

by Rep. Cummings 

* American Medical Association Statement for the Record, submitted by Rep. 

Cummings 

* American Society of Health-System Pharmacists Letter to Chairman Cummings and Mr. Jordan, submitted by Rep. Cummings 

* Statement from the Campaign for Sustainable Rx Pricing, submitted by 

Rep. Cummings 

* Statement from Patients for Affordable Drugs Now, submitted by Rep. 

Cummings 

* Letter from the Pharmaceutical Care Management Association, submitted 

by Rep. Cummings 

* Statement from Public Citizen, submitted by Rep. Cummings 

* Support Letter from the American College of Physicians, submitted by 

Rep. Cummings 

* Questions for the Record (QFRs): Responses from Dr. Catherine Alicia 

Georges, Mr. Avik Roy, Dr. Aaron Kesselheim, and Dr. Gerard F. Anderson 

(1) 

EXAMINING THE ACTIONS OF DRUG COMPANIES 

IN RAISING PRESCRIPTION DRUG PRICES 

Tuesday, January 29, 2019 

HOUSE OF REPRESENTATIVES

COMMITTEE ON OVERSIGHT AND REFORM

Washington, D.C. 

The committee met, pursuant to notice, at 11:49 a.m., in room 

2154, Rayburn House Office Building, Hon. Elijah Cummings 

(chairman of the committee) presiding. 

Present: Representatives Cummings, Maloney, Norton, Clay, 

Lynch, Connolly, Krishnamoorthi, Raskin, Rouda, Hill, Wasserman 

Schultz, Sarbanes, Welch, Speier, Kelly, DeSaulnier, Khanna, 

Ocasio-Cortez, Pressley, Tlaib, Jordan, Amash, Massie, Meadows, 

Hice, Grothman, Comer, Cloud, Gibbs, Higgins, Norman, Roy, Miller, Green, and Armstrong. 

Chairman CUMMINGS. Without objection, the chair is authorized 

to declare a recess at any time. Welcome to the first hearing of the 

Committee on Oversight and Reform for the 116th Congress. Before I begin, I want to thank Ranking Member Jordan and his staff 

for agreeing to accommodate this hearing. I know that we are taking a lot of time today, but I truly believe this is one of the most 

important issues facing our constituents, and it is one that demands immediate, immediate attention. I will now recognize myself 

for an opening statement. 

Today we will examine the actions of drug companies in raising 

prescription drug prices in the United States, as well as the effects 

of these actions on the Federal and state budgets, and on American 

families. 

Before we begin, I acknowledge that there is a lot going on right 

now here on Capitol Hill and across the country. Until last Friday, 

the Federal Government was in the midst of the longest shutdown 

in United States history. Hundreds of immigrant children and possibly many more are still separated from their families. The latest 

of President Trump’s long-time advisors has been indicted on criminal charges. 

But today, for our first hearing, I wanted to focus on one of the 

biggest problems facing American families across the country. The 

actions of drug companies that have been aggressively increasing 

prices on existing drugs and setting higher launch prices for new 

drugs, all while recording windfall profits. 

Two weeks ago, the committee launched an investigation into the 

prescription drug prices to determine why drug companies are increasing prices so dramatically, how drug companies are using the 

proceeds, and what steps can be taken to reduce drug prices. 

Our first witness today is not President Trump’s personal lawyer, 

Michael Cohen. No, it is not Michael Cohen. It is not someone from 
2 

the White House or even someone from the Trump administration. 

Contrary to what some have claimed, that never was planned. 

The first witness to testify before the Oversight Committee is 

Antroinette Worsham. Ms. Worsham is a working mother—listen 

up—whose daughter died, 22-year-old daughter died, tragically, 

when she could not afford to pay for the insulin she needed to treat 

her diabetes, and instead began to ration her medicine. It would 

have cost $1,000 for three months of insulin. She died. And I know 

Ms. Worsham will share her story, and it is not easy to testify, but 

as I said to her, I thank her for taking her pain, turning it into 

her passion to do her purpose. 

I also want to thank you for being here to share your family’s 

story with us. You are not alone. Researchers at Yale University 

recently found that one in four patients with type 1 or type 2 diabetes, and I quote, ‘‘have reported using less insulin than prescribed,’’ end of quote. So when you testify here today, you are representing thousands upon thousands of your fellow Americans who 

are suffering from the same worsening problem. 

I also want to thank our other witnesses for being here with us 

today. We are grateful to have Dr. Catherine Georges of AARP to 

speak on behalf of America’s seniors. And I want to thank all the 

members of—I asked my staff who were all those people in the red, 

and I am glad to see you all. 

We also value the expert testimony of Dr. Gerry Anderson and 

Dr. Aaron Kesselheim, and Dr. Avik Roy, for being with us today. 

I have been waiting a very long time to hold this hearing. For 

the past decade, I have been trying to investigate the actions of 

drug companies for all sorts of drugs, old and new, generic and 

brand name. We have seen time after time that drug companies 

make money hand over fist by raising the prices of their drugs, 

often without justification, and sometimes overnight, while patients 

are left holding the bill. 

The pharmaceutical industry is one of the most profitable in the 

world, and one of the most powerful. Fourteen drug companies each 

made more than $1 billion in profits just in the third quarter of 

2018, and they have the best lobbyists money can buy. 

Let me be clear: There are powerful interests here that do not 

want us to interfere with those massive profits, but there is a 

strong bipartisan consensus that we must do something, something 

meaningful, to rein in the out-of-control price increases. Even 

President Trump has said that drug companies are, quote, ‘‘getting 

away with murder,’’ end of quote. But tweets are not enough; we 

need real action and meaningful reforms. 

We all recognize that research and development efforts on 

groundbreaking medications have made immeasurable contributions to the health of Americans, including new treatments and 

cures for diseases that have affected people for centuries. But the 

bottom line is that the ongoing escalation of prices by drug companies is simply unsustainable. 

This is a matter literally of life and death, and we have a duty 

to act now. Our constituents are demanding it, and I am grateful 

that we are finally starting down the road with this hearing. 

Before I go on, I would like to enter in the record—yield to the— 

before I yield to Mr. Jordan, I would like to enter into the record 
3 

letters the committee has received in recent days from a variety of 

organizations, including the American Medical Association, the 

American Society of Health-System Pharmacists, and the Association for Accessible Medicines. 

All of these groups have written to express their concerns about 

the impact of high prescription drug prices on their members and 

the American healthcare system. I ask unanimous consent that 

these letters be entered into the record. So ordered. 

Chairman CUMMINGS. I now recognize—I am about to recognize 

the gentleman, Mr. Welch, but let me just say this. I talked about 

when I was in the hospital, Mr. Ranking Member, but when I was 

in the—I will never forget. On my third week, when I was about— 

when a lady that had been in the hospital with me, and she was 

an elderly lady, and she was about to get out of the hospital. And 

I said, ‘‘You leaving today?’’ She said, ‘‘Yes, I am leaving today. I 

said, Oh, Miss Mary, you should be happy that you are leaving 

today.’’ And then she started crying. This is at Johns Hopkins. I 

said, ‘‘Why are you crying?’’ She said, ‘‘I am crying because they 

had to treat me at Hopkins, but now when I am leaving, I can’t 

afford the cure. I can’t afford the medicine.’’ And so, I will never 

forget her, and we will fight for her. 

Mr. Welch, I yield to you for two minutes. 

Mr. WELCH. Thank you, Mr. Chairman. Mr. Chairman, Pharma 

justifies its highest prices in the world by perpetuating two myths: 

First, they warn in very solemn tones that if we negotiate prices, 

it will result in price fixing. Mr. Chairman, we already have price 

fixing. Pharma fixes the prices whenever they want, as high as 

they want, and as often as they want. 

Second, Pharma claims that the high prices are essential to innovation. If that is so, Mr. Chairman, why is it, why is it that 

Pharma spends more on advertising than research? Why is it that 

Pharma spends more on stock buybacks than it does on research? 

And why is it that Pharma spends more on mergers and acquisitions than they do on research? And the sad truth is that Pharma, 

for all the good it does with life-extending and pain-relieving 

drugs—and my family has benefited from that—is holding all of 

our good constituents hostage to the universal desire each of us has 

to help a loved one through an illness or to cope with a chronic condition. 

Mr. Chairman, consider some of the disgraceful tactics that 

Pharma has employed to fix high prices. Renting a patented drug 

to a Native American Tribe to assert sovereign immunity to block 

generic competition, imposing a gag rule on our local pharmacists 

so they can’t tell a customer that it is cheaper to pay cash than to 

pay the deductible. Evergreen, the practice of making the ever 

smallest cosmetic change to extend the patent monopoly. Paying 

generic manufacturers to keep their lower cost product off the market so they can extend their monopoly. 

The maneuvers are endless, they are relentless, and they are unconscionable. And our mission, Mr. Chairman, both sides of the 

aisle, restore competition, restore transparency, and lower prices. 

I yield back. 

Chairman CUMMINGS. I want to thank the gentleman for his 

statement. 
4 

I yield to the distinguished ranking member of our committee, 

Mr. Jordan. 

Mr. JORDAN. I thank you, Mr. Chairman. And I want to welcome 

our witnesses as well. I have had numerous conversations with Dr. 

Roy. Dr. Anderson has been in front of, in the previous Congress, 

the Subcommittee on Healthcare, has been in front of our committee. We appreciate you being here today with us. 

And then, of course, Ms. Worsham, we appreciate you coming 

from the Buckeye state and what your family has been through. 

And we look forward to hearing from all of you here in just a few 

minutes. 

There are few issues more in need of the committee’s attention 

than this one. One thing that the chairman, President Trump, and 

I all have in common is that we are committed to finding reforms 

that will improve access and affordability with respect to prescription drugs. I hope that Chairman Cummings will view us as partners in this endeavor. 

But I am concerned. I am concerned. Earlier this month, the majority launched an investigation into pharmaceutical companies’ 

pricing models without minority consultation, and without any indication of their scope or plans other than saying that they would 

be dragging in pharmaceutical CEOs in the coming months for testimony. I feel this does not signal a willingness to find answers, but 

an attempt to score political points. 

Democrats wrote to 12 pharmaceutical companies asking for detailed information about their pricing structures and supply chain 

management. Once again, it seems the Democrats are eager to 

blame the private sector when the answer, I think, is far more complicated. The greatest healthcare innovations in the last 100 years 

happened in America, and they happened not because of government dictates, but as a result of tireless individuals having the 

freedom to experiment and compete and improve all of our lives. 

The problem is not that the free market has failed us; it is that 

government interventions in the market have distorted incentives, 

created barriers to competition, and left things in a mess. The 

Democrats’ last grand idea for fixing healthcare, ObamaCare, was 

a colossal failure that we will be trying to repair for the foreseeable 

future. 

We were told all kinds of things about ObamaCare. I call them 

the eight lies of ObamaCare. Like your plan, keep your plan. Remember that one? Like your doctor, keep your doctor. We were told 

premiums were going to decline. The President of the United 

States at the time told us premiums would decline, on average, 

$2,500. We were told deductibles would decline. Remember this 

one? We were told the website was going to work. We were told the 

website was secure. We were told that these co-ops that were created, 22 of them, were going to be the grand all, be all, and yet 

every single one of them, with the exception of one, went bankrupt. 

Rather than trying to pretend that more bureaucracy is the answer, we need to take a hard look at government’s role in rising 

prices. We must rethink regulations distorting prices and ensure 

that adequate competition happens in the marketplace. We also 

need to reevaluate the manner and scope of the monopolies the 
5 

government grants to pharmaceutical companies in the form of patents and FDA exclusivities. 

What was envisioned by our Founders as a limited guarantee to 

profit from your invention has been distorted into an evergreen 

right to broadly exclude others from selling similar drugs. 

For the past two Congresses, I chaired the subcommittee with jurisdiction over healthcare. This is an important subject, and I look 

forward to digging into it. At the subcommittee, we did important 

work on waste, fraud, and abuse in public health programs like 

Medicaid and Medicare. This work should and must continue. And 

I hope, I hope that it can proceed on a bipartisan basis. We will 

never succeed in delivering reforms to the American people if all 

possible solutions are not on the table. 

Mr. Chairman, I look forward to this hearing, and I hope that, 

going forward, we can work together to make progress on this important issue. I yield back. 

Chairman CUMMINGS. I want to thank the ranking member for 

his statement. I guarantee you that we will act in a bipartisan 

way, because we have made a commitment to our constituents to 

address this problem. We don’t want to see anybody else die needlessly. We don’t want to see anybody else suffer. So I promise you, 

you have got my word on that. 

All members will have 10 legislative days in which to submit 

opening statements for the record. 

Today we welcome five witnesses to the committee. Ms. 

Antroinette Worsham is the mother of two insulin-dependent 

daughters who has traveled from Cincinnati, Ohio, to share her 

story with us. 

Dr. Catherine Alicia Georges is the national volunteer president 

of the AARP, and a registered nurse who is the chair of the Nursing Department at Lehman College, the City University of New 

York. And Dr. Georges, I must tell you that having spent some 

time in the hospital, I have gained a new appreciation for nurses, 

and I am serious about that. 

Dr. Aaron Kesselheim, an Associate Professor of Medicine at 

Harvard Medical School and a primary care physician at Brigham 

and Women’s Hospital. 

Dr. Gerard Anderson is a Professor of Health Policy and Management at Johns Hopkins University. Johns Hopkins is located 

smack-dab in the middle of my district. I am glad to have you here. 

And Dr. Avik Roy is the president of the Foundation for Research 

on Equal Opportunity, a think tank that focuses on expanding opportunities for those with incomes below the U.S. median. 

And pursuant to committee rules, all witnesses who appear before us today must be done under oath. I now ask each of you to 

stand and raise your right hand to take the oath. 

Do you solemnly swear that the testimony you are about to give 

will be the truth, the whole truth, and nothing but the truth? 

Thank you very much. You may be seated. 

Let the record reflect that each witness answered in the affirmative. I will now recognize each witness to present oral testimony. 

I remind you that your entire written testimony will be included 

in the hearing record. We, therefore, ask that you limit your testimony to approximately five minutes. You will each notice a clock 
6 

in front of you. After four minutes have elapsed, the green light 

will turn yellow, indicating that you have one minute. When the 

light turns red, five minutes have expired, and we ask that you 

conclude your statement. 

I now recognize Ms. Worsham to begin oral testimony, and I 

thank you. 

STATEMENT OF ANTROINETTE WORSHAM, MOTHER OF TWO 

INSULIN-DEPENDENT DAUGHTERS 

Ms. WORSHAM. Good morning, everyone. Thank you for having 

me today. Again, my name is Antroinette Worsham, and I am the 

mother of two type 1 diabetics. My older daughter, Antavia, was diagnosed at the age of 16 and only lived six years with this disease, 

due to the high cost of insulin. She started rationing her insulin 

in 2016 when she was kicked off of BCMH, Bureau for Children of 

Medical Handicaps. It’s an Ohio program. She was kicked off due 

to her age. My son found her deceased in her bed one morning. She 

wasn’t answering her phone. He went over to where she was living, 

and he found her. How detrimental is that to happen to anyone, 

especially a sibling, to find their sister passed away. 

My youngest daughter, Antanique, she was diagnosed at the age 

of 12. She is now 18 years old. She attends the University of Toledo. She is studying law right now while battling type 1 diabetes. 

I fear the same is going to happen to her in two years. She’ll be 

21, and she’ll get kicked off of BCMH as well. 

I am wondering how pharmaceuticals think that college students 

are supposed to afford high drug costs on top of high tuition, room, 

and board. Healthcare is an essential right for U.S. Americans. We 

are asking for a change now. Type 1 diabetics need—they need insulin to live, or they will die like my daughter and other Americans 

have. We have seen it. Insulin is not a cure. It is definitely a life 

support. 

High drug prices are forcing patients to be noncompliant. When 

type 1 diabetics ration their insulin or stop taking it, it causes 

them to go into DKA, which is diabetes ketoacidosis, and that is 

what happened to my daughter. I feel type 1 diabetics do not get 

the attention they deserve. 

Many Americans are forced to purchase their insulin out of the 

country and are forced to buy from the black market, all so they 

can live a longer life. The rise of drug costs has impacted so many 

Americans, and again, we are demanding a change now. The 

copays, deductibles, and coinsurances are so high, that too has a 

huge impact on affordable insulin. 

In 2018, in November, I protested outside of Sanofi, held in Boston, Mass, alongside Right Care Alliance Institute, demanding to 

lower their drug costs. Just this year, insulin manufacturers are 

still raising the cost. I have received so many calls and emails from 

type 1 diabetics needing help paying for their insulin. The insulin 

manufacturers are telling us that they have programs to offset the 

cost. One type 1 diabetic recently told me it could take two weeks 

for approval. Another one was told that he was over income restrictions. We, as consumers, are the reason businesses are successful, 

and we need to see affordable healthcare for all now, not just for 
7 

those living below or above poverty. What about the middle class 

as myself and as my daughter when she graduates school? 

In conclusion, I am not an expert but a mother of two diabetics, 

two type 1 diabetics who is affected by the rising cost of insulin. 

Again, in two years, my daughter will be 21 and no longer be eligible for BCMH. I am crying out and asking Congress to review the 

pharmaceutical drug price gouging and make affordable healthcare 

for all. Antanique is a very smart young lady who is trying to be 

successful in the U.S., and feels it is hard dealing with chronic illness, on top of wondering if she can afford insulin as she ages into 

adulthood. Thank you very much. 

Chairman CUMMINGS. Ms. Worsham, thank you very much. 

You’ve set a wonderful example. You were able to get yours in in 

less than five minutes. 

Ms. WORSHAM. Thank you. 

Chairman CUMMINGS. Thank you very much. 

Ms. WORSHAM. You are welcome. 

Chairman CUMMINGS. Dr. Georges. 

STATEMENT OF CATHERINE ALICIA GEORGES, ED.D., RN, 

FAAN, NATIONAL VOLUNTEER PRESIDENT, AARP 

Ms. GEORGES. Good afternoon, Chairman Cummings, Ranking 

Member Jordan, and members of the committee. My name is Dr. 

Catherine Alicia Georges, and I am the national volunteer president for AARP, a nonpartisan, nonprofit, nationwide organization 

with nearly 38 million members in all 50 states, District of Columbia, and the U.S. territories. 

For more than 40 years, I have been a nurse involved in academic nursing, both teaching, practicing, and developing courses. 

Thank you for the opportunity to talk about rising prescription 

drug prices and their impact on older Americans. Prescription drug 

prices are high priority for AARP and its members. Last year in 

AARP’s 2018 voter issue survey, 92 percent of voters, age 50 and 

older, told us that candidates’ positions on lowering drug costs was 

important to them with 74 percent saying very important. That is 

because older Americans struggle to afford needed and life-saving 

medications. 

Most Medicare beneficiaries live on modest incomes with an annual median income of just over $26,000, and one quarter of them 

have less than $15,000 in savings. This is not a population that has 

the resources to absorb rapidly escalating drug prices. It is hardly 

surprising that our members consistently tell us that they cannot 

afford the medications they need, and are forced to make difficult 

choices as a result. 

Take the story of Joyce Domintano, an AARP member from Florida, diagnosed with gastrointestinal cancer. Joan was prescribed 

Gleevec, one of the drugs this committee is investigating, hoping to 

prevent her cancer from returning. After spending approximately 

$60,000 on this drug, Joan made the wrenching decision to stop 

taking it and risk her cancer returning rather than go bankrupt. 

Joan lives on a fixed income and simply cannot afford to drain her 

retirement savings to pay for medication. 

No one should be asked to make that kind of choice. AARP has 

been tracking the prices of widely used prescription drugs since 
8 

2004. Our most recent prescription drug price watch report focused 

on brand name drugs and found that their retail price increased by 

an average of 8.4 percent in 2017, four times the rate of inflation. 

We also examined how drug company price increases add up over 

time, and found that annual costs of one brand name drug therapy, 

now around $6,800, would have been just under $2200 in 2017 if 

retail price changes had been limited to general inflation between 

2006 and 2017. 

The average annual price increases for these drugs has exceeded 

the corresponding rate of inflation every year. This problem goes 

beyond a few bad actors. Virtually all of the manufacturers we 

tracked have consistently raised their prices over the past 12 years. 

Our adults, older adults, are particularly vulnerable to these 

strains. Medicare part D enrollees take an average of 4.5 prescription drugs per month, and over two-thirds have two or more chronic conditions. High-end growing prices are affecting all Americans 

in some way. Their cost is passed along to everyone with health 

coverage through increased healthcare premiums, deductibles, and 

other forms of cost sharing. We have recently seen massive increases in Medicare spending on drugs. 

In conclusion, current prescription drug prices trends are simply 

not sustainable. Drug companies are still working very hard to try 

to shift the blame to others in the healthcare system, leaving them 

free to set incredibly high prices and increase them with little restraint. As a result, we Americans continue to pay the highest 

brand name drug prices in the world. It is long past time for Congress to take action to rein in high drug prices. Thoughtful efforts 

to help reduce prescription drug prices could save tens of billions 

of dollars for patients, taxpayers, and other healthcare systems. We 

will help ensure that all Americans have affordable access to the 

drugs they need to get and stay healthy. Thank you, and I look forward to your questions. 

Chairman CUMMINGS. Dr. Kesselheim, you are recognized. 

STATEMENT OF DR. AARON S. KESSELHEIM, M.D., J.D., M.P.H., 

ASSOCIATE PROFESSOR OF MEDICINE, PROGRAM ON REGULATION, THERAPEUTICS, AND LAW, HARVARD MEDICAL 

SCHOOL 

Dr. KESSELHEIM. Okay. Thank you, Chairman Cummings, Ranking Member Jordan, and members of the committee. My name is 

Aaron Kesselheim, and I run the program on Regulation, Therapeutics, and Law at Brigham and Women’s Hospital, one of the 

largest independent research groups in the country focused on 

pharmaceutical policy topics. And as you are aware, U.S. drug 

prices have risen rapidly over the last decade, and now exceed 

prices in comparable countries. The key policy dilemma is that although the drugs cost a lot to develop, increasing drugs prices can 

make important breakthroughs unaffordable to patients leading to 

bad consequences because you can’t get benefits from a drug you 

can’t afford. The main driver are brand name drugs which make 

up about 10 percent of descriptions, but over three-quarters of 

spending. 

High prices arise from three complementary forces: First, the 

government gives patents and other market exclusivities to brand 
9 

name manufacturers, and lets them charge whatever the market 

will bear. Second, the purchasing market that is expected to provide a counterweight is extremely inefficient, since various laws 

and other factors prevent payers from effectively negotiating. And 

third, manufacturers often extend their exclusivity rights through 

value strategies and use their substantial lobbying power to block 

sensible political reforms. 

I am going to try to address these three problems and talk about 

some solutions. During the drug’s branding market exclusivity period, which lasts 12 to 14 years on average, 15 for first-in-class 

drugs, and even longer for biologic drugs, limits on public and private payers, prevent them from pushing back against the prices set 

by manufacturers. For example, Medicaid must cover all FDA approved drugs while part D plans have to cover all approved drugs 

in six protected drug classes. And it is hard to negotiate an effective price if an insurer must cover the drug. 

Doctors and patients also suffer badly because many drugs are 

used for years without information about how well they work compared to other drugs or non-drug treatments. 

The only type of competition that consistently and substantially 

lowers drug prices comes from interchangeable generic drugs that 

emerge after this market exclusivity period. However, this transition can be delayed and prolonged because manufacturers get dozens of additional patents on the use or formulations of their products. And this is part of the reason why older pharmaceutical products can suddenly become expensive if packaged in a new delivery 

device, such as with EpiPen for which the manufacturer raised the 

price from $50 to $600, even though epinephrine was isolated over 

100 years ago. 

Generic manufacturers can try to sue to cut through this thicket 

of patents, but the litigation can lead to settlements in which the 

generic manufacturer agrees to drop the lawsuit for some valuable 

consideration. These issues are addressable with rational policymaking that can get us back to a more optimal competitive marketplace, while still allowing drug manufacturers to earn reasonable 

profits on true innovation. 

To improve competitive price negotiation during the market exclusivity period, we could authorize Medicare to create a programwide formulary and negotiate drug prices. The process could be designed in way to maximize the chance that the final price falls 

within a particularly, widely accepted range of value for the money 

that approximates the benefit that the drugs provide to patients 

rather than whatever the manufacturer wants to charge, irrespective of the drug’s actual value. 

Other incremental steps that may not require legislation could 

also lead to some prices savings, and I have a memo listing some 

of them here, and also in my written statement. 

Another major policy that should be enacted to help cut through 

are those that should help cut through the patent thickets that 

block timely or efficient entry to generic drugs. For example, whenever a new patent is listed with the FDA, it could be subject to 

automatic review by the Patent Trial and Appeals Board, an administrative body created by Congress in 2011. Many of those patents would be overturned. 
10 

We could also provide specific guidance to help the FTC exclude 

problematic brand generic legal settlements. The goal should be to 

ensure that manufacturers are not able to indefinitely extend their 

exclusivity periods beyond what the patent laws intended. 

Changes made to rationalize U.S. drug prices along these lines 

will not substantially reduce drug innovation. First, studies show 

that most of the most important drug innovation occurs from publicly funded research paid for by the NIH and occurring in government or academic laboratories or startups spun out of these institutions before investments from manufacturers at a later stage. As 

long as the U.S. Government continues its decades-long commitment to investing in drug development through the NIH, there will 

be a consistent supply of potentially transformative approaches, 

targets, or even compounds. 

Second, the recommendations will address the fact that the current system actually encourages the wrong kind of innovation because in the existing marketplace, the incentives are misaligned 

with patient or public health goals where even marginally effective 

drugs or incremental improvements can lead to outsized revenues. 

Substantial drug spending in the U.S. goes to many cost-effective 

products, and bringing U.S. drug prices closer in line to their actual clinical value means that in many cases, prices will be higher 

for drugs that offer substantial gains in clinical outcomes over existing treatments, and that is appropriate. But Medicare and Medicaid and other U.S. payers will be able to afford to cover such 

products for patients who need them if they aren’t wasting vast 

sums of money on drugs that do not offer such advantages as they 

currently do. 

I am glad that this hearing has been pulled together and is a 

great sign that Congress is moving in the direction of trying to engage these kinds of changes, and I’m happy to be here to share my 

thoughts and continue working with the legislators here to try to 

craft sensible solutions. Thank you very much. 

Chairman CUMMINGS. Thank you. 

Dr. Anderson. 

STATEMENT OF GERARD F. ANDERSON, PH.D., PROFESSOR OF 

HEALTH POLICY AND MANAGEMENT, BLOOMBERG SCHOOL 

OF PUBLIC HEALTH, JOHNS HOPKINS UNIVERSITY 

Mr. ANDERSON. Thank you, Chairman Cummings, Mr. Jordan, 

and members of the committee. When I testify, I try to—— 

Chairman CUMMINGS. Can’t hear you. 

Mr. ANDERSON. When I testify, I try to wear a tie that is related 

to my testimony. Today, it is Leonardo da Vinci’s left-handed backward writing in Latin. I think that is pretty much appropriate for 

this hearing. It’s a discussion of drug pricing to try and keep everything secret. I am a professor testifying on behalf of myself as a 

professor, not on behalf of Johns Hopkins University. At Johns 

Hopkins, I lead a team of about 20 faculty members from the Johns 

Hopkins Medical School, Public Health School, Business School and 

Hospital, studying a variety of drug pricing issues. 

The reason why I’m so excited to testify today is that research 

that we try to do on many drug products requires confidential data. 

In my testimony, I will try to explain what we’ve learned from ex-
11 

isting data, and then try to tell you where I think the oversight investigations are particularly important. 

In my written testimony, I outline seven areas where I think the 

committee should pay attention. First of all, why do branded drug 

companies justify, and how do they justify their recent price increases? Why does it cost so much to develop a new drug? Why do 

PBMs, PBPs place the most expensive drug in preferred positions 

on formularies? Why do some blockbuster drugs also have an orphan designation? How do PDPs manipulate direct and indirect remuneration to increase cost in the Medicare program and to Medicare beneficiaries? How do drug companies attempt to influence the 

patient assistance programs that they finance financially? How do 

drug companies attempt to influence the patient advocacy groups 

that they support financially? Because I only have five minutes, 

however, I just want to focus on the first two. 

In the U.S., branded drug companies are much more likely to increase prices than lower prices. According to a recent Associated 

Press analysis, drug companies announced 96 price increases for 

every price decline in 2018. In other countries, the prices of branded drugs tend to go down. According to economic theory, research 

is a fixed or sum cost and cannot be used to justify subsequent 

price increases. Once the drug company has spent the money to develop the drug, there are no additional research costs that can justify price increases. 

The production costs of most drugs are relatively small, often 

pennies per pill. Inflation is still low, so most drug prices cannot 

be justified by higher production costs. The House Oversight Committee should ask the branded drug companies to explain why they 

have increased their prices. 

The second question that I want to talk about is why does it cost 

so much to develop a new drug, and what’s included in those research costs? Drug companies, as everybody said, justify their high 

prices based upon the amount of clinical research that they do. The 

problem is that we just don’t know why it costs drug companies so 

much to conduct clinical research. A drug company says they spent 

X billion dollars on clinical research. It is important to know how 

much of that research cost is used to pay salaries of clinicians and 

researchers, purchasing equipment to conduct the research. Maybe 

some of that money that they call research is really not spent on 

things that you and I might call research. 

Perhaps it’s even more important to understand how other drug 

company research is actually financed. I think the model most of 

us would have in our heads is that there’s a team of researchers 

working in the lab, developing new products, conducting experiments, doing clinical trials. While this is true for many drugs, it’s 

also increasingly common for the initial drug research to be done 

in academic medical centers, places like Johns Hopkins or the 

Mayo Clinic, with funding from the National Institutes for Health. 

Drugs to treat hepatitis C are one of the major breakthroughs in 

recent years. Researchers at Emory University started working on 

that drug to treat hepatitis C with considerable funding from the 

National Institutes for Health. 

Gilead, the company that bought the drug to the market, purchased the research from the academic medical centers, and then 
12 

Gilead immediately doubled the price the researchers were going to 

charge for the drug. The only reason why we have these facts is 

that the Senate Finance Committee conducted an investigation of 

the development of Gilead’s drugs. Drug companies have teams 

that look for promising research. Often the drug companies are not 

doing that initial research themselves. The drug companies—the 

House Oversight Committee should examine what drug companies 

define as research costs, where the research was initially conducted, and who financed it. Thank you very much. 

Chairman CUMMINGS. Thank you very much. 

Dr. ROY. 

STATEMENT OF AVIK S.A. ROY, PRESIDENT, THE FOUNDATION 

FOR RESEARCH ON EQUAL OPPORTUNITY 

Mr. ROY. Chairman Cummings, Ranking Member Jordan, and 

members of the House Oversight and Reform Committee, thanks 

for inviting me to speak with you today. I’m Avik Roy, and I’m the 

president of The Foundation for Research on Equal Opportunity, a 

nonpartisan, nonprofit think tank focused on expanding economic 

opportunity to those who least have it. 

When we launched in 2016, our first white paper showed how 

universal coverage, done the right way, can advance both progressive and conservative values at the same time, expanding access 

while reducing Federal spending and burdensome regulations. As 

you know, reducing the cost of prescription drugs is critical to ensuring that healthcare is affordable for every American. In my following remarks, I am going to focus on two excuses we often hear 

about extremely high drug prices. 

The first is that high prices aren’t set by manufacturers, but 

rather by middlemen like pharmacy benefit managers; second, that 

rising prices are necessary to fund medical innovation; and finally, 

I will describe market-based principles that can help restore affordability to prescription drugs. Manufacturers have been advancing 

the theory that high drug prices aren’t their fault. Instead, they 

argue, they’re forced, quote unquote, ‘‘to charge higher prices to 

make up for rebates to PBMs.’’ To use the technical term, that’s 

balderdash. Nobody forces drug companies to charge high prices. 

Seventy-five years of Federal policy has made patients insensitive 

to the price of the drugs they consume. Patients don’t always understand how their premiums keep rising on account of rising drug 

prices, especially in the employer-sponsored market. As a result, in 

the absence of competition, manufacturers often charge the highest 

prices they can. 

Let me explain why drug makers voluntarily offer rebates to 

PBMs. Private insurers enlist PBMs because PBMs have shown 

themselves to be good at what’s called formulary management. 

Let’s say you’re a type 2 diabetic, and you have the option of treating your condition with high cost brand drugs, or clinically equivalent low cost generic drugs. PBMs will structure the insurer’s formulary such that if you choose the low cost generic drug, you’ll 

have a 0 or $5 copay. If you use the high cost drug, you might have 

a $30 copay. In this way, PBMs help reduce the cost of prescription 

drugs. 
13 

Indeed, America leads the world in the use of low cost generics. 

Nearly 90 percent of all prescriptions written in the United States 

are for unbranded generic drugs. Drug makers get around the system by offering rebates to PBMs. Sometimes in exchange for the 

rebates, the PBMs put a high cost drug on the zero copay tier 

alongside the generics. This may sound good on the surface, but by 

needlessly increasing the use of high cost drugs, rebates drive up 

the cost of health insurance for everyone. 

Drug makers also use rebates to suppress competition. Last October, Merck and Samsung announced that they would be abandoning Lusduna, their competitor to Sanofi’s Lantus, even though 

they invested hundreds of millions of dollars in gaining FDA approval. A common practice in such situations is for the incumbent 

brand to offer deep rebates to the PBMs, effectively dumping their 

drug onto the market to wipe out new competitors. 

PBMs genuinely add value in the way they manage drug 

formularies, but Congress should eliminate rebates to restore 

transparency and accountability to high drug prices. 

An oft-repeated cliche is that high drug prices are necessary to 

fund medical innovation. One test of this cliche is to apply it to 

other sectors of the economy. You would never hear Sony or Vizio 

say that high television prices are necessary to fund innovation in 

the TV market. They know that if their TVs are too expensive, no 

one will buy them. In 1996, Biogen launched Avonex, a multiple 

sclerosis drug, for $8700 a year. Twenty years later, they were 

charging $81,000 a year, nearly 10 times more. Imagine if Sony 

charged you $81,000 for a 20-year-old TV claiming that the high 

price was necessary for innovation. You would laugh them out of 

the room. 

There are two giant holes in the high price for innovation theory. 

The first is that increasingly, the business model of drug makers 

is to focus on ultra rare orphan diseases where R&D costs are low 

due to the limited supply of patients for clinical trials, while still 

charging extreme prices edging toward $1 million per patient per 

year. 

The second is that virtually all of the increase in prescription 

drug spending comes from price hikes on older drugs like Avonex. 

If a patient with multiple sclerosis is well-controlled on Avonex, it’s 

considered bad clinical practice to switch that patient to a different 

drug, even if that other drug is cheaper. Companies take advantage 

of patients with chronic disease dependence on their drugs to drastically increase the price of all their drugs year over year. 

So what’s the solution? I delve into this topic in my written testimony. The core idea is this: In areas where there is robust competition, especially with generic drugs, prices are extremely affordable, 

even in America. Where there are monopolies, legitimate or artificial, prices are high. In the past, Congress and the FDA have sometimes worsened the problem of artificial drug monopolies. This 

Congress has the opportunity to enact bipartisan reforms. I look 

forward to discussing these ideas with you in more detail. Thank 

you. 

Chairman CUMMINGS. Thank you very much for your opening 

statements. Each member will now have five minutes to ask ques-
14 

tions. I yield to the gentlelady from the District of Columbia, Ms. 

Norton. 

Ms. NORTON. Thank you, Mr. Chairman. I take Dr. Roy’s suggestions at heart, but what we have heard here today and some of 

them could have been—could be—would need Congress in order to 

go into effect, and none of us, all of us believe that competition is 

part and parcel of the problem. 

I want to focus on patients. As you’ve heard so much about the 

industry, the excesses of the industry are legendary. One wonders 

why those excesses are given the profits that this industry makes 

continue. Now, the Federal Government spends almost $100 billion 

on Medicare part D. That’s a lot of money. You would think that 

would do it, unfortunately, and yet, we continue to hear that patients are hurt by the pharmaceutical sector. 

Dr. Georges, to focus on patients for the moment, in light of all 

the money that’s been spent by the Federal Government on Medicare part D, how does the price of a drug impact or affect seniors 

for their out-of-pocket for medications? Why so many complaints 

coming from seniors for what they pay out of pocket? 

Ms. GEORGES. Congresswoman Norton, in 2015, seniors spent 

over $27 billion in their out-of-pocket costs for their drugs. In my 

oral testimony, I referred to the fact that the average income of a 

Medicare beneficiary is only $26,000. That’s why the increase in 

drug prices have become unsustainable for this group of people. 

Ms. NORTON. Well, breaking down your number that seniors spend, I have been given a number of at least $2,000 out of pocket 

for drugs doubled in just four years from 2011 to 2015, that those 

who paid $2,000 now, that number has been compared to what the 

average Medicare beneficiary earns as a median income at $26,200, 

so you can imagine that much coming out of your—out of not your 

salary, out of your income. 

Dr. Georges, you, perhaps, have a valuable perspective because 

you are a registered nurse, so what has been your experience of 

how these prices have affected seniors at this income level? Do they 

buy their drugs? How do they accommodate these drugs? 

Ms. GEORGES. I’ll give you a perfect example. One of my faculty 

members was on the line in a pharmacy this past week. One of her 

neighbors—they live in Harlem in New York City. One of her 

neighbors who is on a fixed income was talking to the pharmacist 

and saying I can’t—this drug I won’t have this month. It costs too 

much. I will only be able to take these drugs. As we said, what the 

effect is on our members and older Americans, they’re making 

choices over should they ration, should they not adhere to treatment because they can no longer afford it? 

Ms. NORTON. Dr. Georges, this is a problem that I see we have, 

the notion that people who worked all their lives have to perhaps 

decide whether they are going to live on an ongoing—based on the 

drug that they have taken. And I’m very concerned that the older 

we get, the worse it gets, that a quarter of older Americans, 65 to 

69, need at least five prescription drugs, and half of those, 70 to 

79. So when we talk about the cost of these drugs, they multiply 

as people get older. So we’re pricing people out as they grow older, 

and we’ve got to understand this and make some accommodation 

to that. And I thank you, Mr. Chairman. 
15 

Chairman CUMMINGS. I yield to the ranking member. 

Mr. JORDAN. I’m sorry. I yield the balance of my time to Congressman, Mr. Green. 

Chairman CUMMINGS. I yield to Congressman Green. 

Mr. GREEN. Thank you, Mr. Chairman and Ranking Member Jordan. Thank you for addressing this very important issue. First, I 

would like to take a second of my time and just share my credentials to speak on the subject. As an Army physician, I’ve been a 

medical provider in a 100 percent government system, and as a patient in the VA, I am in universal healthcare. As a civilian physician, I’ve seen patients in both for-profit and not-for-profit hospital 

systems. I even ran two free healthcare clinics in our state in Tennessee. I founded a healthcare company and served as its CEO, operating in 11 states and 52 hospitals, emergency medicine, the 

front lines of healthcare. And Mr. Chairman, I’m a cancer survivor. 

Like you, I’ve had to contemplate both my life and my death. I remember going from chemotherapy back to the Tennessee State 

Senate right from a treatment to cast a vote in the Tennessee State 

Senate. Very interesting times. I’ve been on both sides of the stethoscope. 

The cost of pharmaceuticals are concerning, and certainly we 

need to look at some of the practices that are out there, but the 

concerns that we—that I have are really concerns that are more 

broad, that impact our entire healthcare system. 

Let me put this into perspective. All of our pharmaceutical costs are around $333 billion a year in a healthcare system that’s $3.5 

trillion. That means pharmaceuticals are about nine percent of the 

total cost of healthcare. That doesn’t mean just because it’s nine 

percent, we shouldn’t look into this issue. But the forces that are 

driving increased costs of pharmaceuticals are also the forces that 

are driving significant cost problems throughout healthcare. I’d say 

they are wreaking havoc on our healthcare system, and these problems are structural. The very infrastructure of our healthcare system is the problem. 

For example, if you look at 100 percent government payer system, the demand will always exceed the supply. It’s simple economics, and that’s why in Canada, it takes six months to get an MRI. 

However, when government fixes the price below the market price, 

what happens is cost shifting. We cost shift to the third-party payers, and for non-paying patients, that cost shifting is even greater. 

And what then happens is the price for the payer increases, the 

cost for the payer increases so they have to increase their prices, 

which means fewer people can afford it, which means they have to 

raise their prices which means fewer people. It’s the death spiral 

in healthcare in America right now. It’s what’s killing our system. 

What happens is a huge gap between price and the actual charge 

to the patient or the payer. And if cost shifting produces—it produces this negotiation between the provider and the payer, and it 

winds up with a price that’s different than what the cost and it 

makes for a significant complex problem that can’t be fixed without 

structurally changing what we are doing in our healthcare system, 

and other structural issues, not just cost shifting, but things like 

reversed incentives, masked prices, governmental restrictions that 

prevent competition, no free market. 
16 

You ask, would a free market work in healthcare? Absolutely. 

Look at Lasik eye surgery. When it came out, it was thousands of 

dollars an eye. Now, I saw an ad the other day, Mr. Chairman, for 

250 bucks for a Lasik eye procedure. That is because there’s no— 

that cost shifting scenario with third-party payers doesn’t exist. 

The ophthalmologists are competing for the dollar. Technology has 

gone up, and price has plummeted. 

Those are the structural issues that are affecting all of 

healthcare, and they are clearly impacting the price of pharmaceuticals. If we don’t—and there’s lots of little issues that we can 

drill down on in pharmaceuticals, but if we don’t fix those structural problems in our healthcare system, we can’t fix this issue, either. 

I do have a question for Mr. Roy, though. You mentioned monopolies that are created out there and that that’s driving, the big 

driver in this cost issue. How is government creating those monopolies? 

Mr. ANDERSON. So in my written testimony, I elaborate on this 

quite a bit. There are a lot of different policies that both Congress 

and the FDA and in the case of drug pricing instituted that established monopolies. One example is that the Biologics Price Competition Innovation Act of 2009, which was part of the Affordable 

Care Act, mandated that biologic drugs that have no intellectual 

property, be given 12 years of market exclusivity after FDA approval, despite the fact that they have no actual patents. For a 

small molecule drug, that’s five years. There is an arbitrary difference that makes no sense, and that’s a government-created monopoly, not one that private industry created, though private industry certainly advocated for it. 

Mr. GREEN. I have some other questions, but I think I’m out of 

time, Mr. Chairman. 

Chairman CUMMINGS. Thank you very much. 

Mr. Lynch. 

Mr. LYNCH. Thank you, Mr. Chairman. I want to thank all the 

witnesses for your willingness to come here and testify, especially 

you, Ms. Worsham. I really do appreciate your powerful testimony 

and really putting a human face and a human family behind this 

problem. 

Mr. Chairman, as you know, we’ve been working on this issue for 

a long time, and the two systems that we deal with more often on 

this committee are the Federal Employees Health Benefit Plan, 

which I know, Mr. Anderson, you’re familiar with, and the VA 

health plan. And the difference between the FEHBP, the Federal 

Employee Health Plan, is that they negotiate their drug prices 

through a pharmacy benefit manager. Theirs is CVS Caremark. 

But we just did—we just had a study done by the Teamsters Union 

and the SEIU, and one of the things that they discovered was unbelievable, in my estimation. They found that when a Federal employee goes in to buy their pharmaceuticals, they pay more than a 

person just walking off the street and—and signing up for a discount program with CVS that has no insurance, and that troubles 

me greatly. 

So here you have a member of a—a healthcare plan that has 9 

million participants, and they walk in with their insurance card, 
17 

and they pay more than the person who walks in off the street, 

God bless them, with no insurance and just signs up for the discount card. All right. That’s a plan that’s negotiated through a 

PBM, a pharmacist benefit manager. 

Now, let me give you another example. I have three big VA hospitals in my district. We have a huge number of veterans in my 

district, and my veterans, when they go to the VA pharmacy program, they pay either $8 or $9, and they argue about what they 

should be paying, and they’re not happy—they used to pay $7.50, 

so they’re not happy with me right now. Even if the drug cost 800 

bucks, they pay $9. They pay $9 or $8. They get to negotiate directly. The VA gets to negotiate directly with the drug manufacturers. Those are the two types of systems that we deal with here, so 

Mr. Anderson—Dr. Anderson, I’m sorry, and Dr. Kesselheim, help 

me with this. Would it not be better, you know, rather than getting 

very complicated and deep in the weeds, why don’t we just let 

Medicare do for our senior citizens what the VA is doing for our 

veterans? Let the Medicare program negotiate directly, directly 

with the pharmaceutical companies. Would that—would that help? 

Help me out. 

Mr. ANDERSON. So—it’s a great question. So when you look at 

the VA, there is two things to notice. The first one is they have access to most every drug in America, whereas if you’re a Medicare 

beneficiary or you’re an FEHBP, you probably have access to about 

half the number of drugs on the formulary that the typical VA person has. So you have much better access as a Medicare—as a VA 

person. 

Mr. LYNCH. Why is that, though? 

Mr. ANDERSON. Because they essentially have put a lot more 

drugs on the formularies. They negotiate prices. 

Mr. LYNCH. We can do the same thing, though, for—for Medicare. 

Mr. ANDERSON. Yes, you could do that, absolutely, but—but we 

have—the programs that are the PBMs want to negotiate a much 

more restrictive set of—— 

Mr. LYNCH. Right, but what I’m saying is clear them out—— 

Mr. ANDERSON. Okay. 

Mr. LYNCH [continuing]. and just allow Medicare to negotiate directly. It’s simple. It’s clear. Maybe it won’t be $8 or $9. Maybe it 

will be 15 or 20, I don’t know, but—but it just seems to me that 

the lack of—of transparency here. We can’t even figure out what 

the insurance company—what the drug companies, what their costs 

are. We went to court with them. They would not tell us what it 

cost them to make their drugs because we wanted to give them a 

fair profit but not—not gouge senior citizens, and we—the judge 

ruled against us. We couldn’t—we couldn’t get that information as 

astounding as that seems, but please. 

Mr. ANDERSON. So the other thing that you mentioned is that 

you can get a lower price when you actually pay cash than when 

you do it through your—through your plans, and the Congress last 

year passed allocation called the Gag Rule which essentially meant 

that the pharmacist could say to you as a patient, you pay—if you 

pay cash, you would pay less. So Congress actually did something 
18 

very important last year in passing the Gag Rule to make that a 

much better thing for the patient. 

Mr. LYNCH. Thank you. 

Chairman CUMMINGS. We’re going to recess until 1:30. We have 

a vote. 1:30. All right. Thank you. 

Chairman CUMMINGS. We are calling the committee back to 

order now. 

Mr. Massie is recognized for five minutes. 

Mr. MASSIE. Mr. Chairman, I want to thank you for having this 

meeting. 

The drug pricing system is sick and it is failing. The prices are 

unnecessarily too high. But all doctors take an oath to first do no 

harm, and I think we have the same oath here in Congress. We 

should take it, if we don’t. And I’m worried that we may have come 

up with a misdiagnosis or part of the situation is diagnosed improperly. 

I want to read from the Constitution: The Congress shall have 

power to promote the progress of science and useful arts, by securing for limited times to authors and inventors the exclusive right 

to their respective writings and discoveries. 

So, you know, I challenge anybody to walk into a hospital and 

say, I only want the drugs and the medical devices and the procedures that were developed at the NIH and public institutions. Your 

lifespan would be cut by 10 years at least by just uttering those 

words. It’s the patent system that incentivizes inventors, scientists, 

engineers, and doctors to come up with these life-extending, life-improving, life-saving drugs and medical devices. 

So with that in mind, Avik Roy, Dr. Roy, I believe you and I 

overlapped at MIT, we just discovered. You were course seven and 

I was course six, molecular biology and electrical engineering. But 

I noticed in your written testimony, you talk about four—at least 

four different problems that we have trying to get generics to market after the patents have expired. A lot of people think patents are 

to blame for this, the high drug prices, but the patents are the incentive that cause people to develop new drugs and new medical 

devices. 

So could you talk about the morass that companies encounter or 

some of the problems that we run into when they try to develop 

the generics after the patents have expired? Which by the way, our 

Founding Fathers never wanted a patent to go on forever. The 

charge to us in that phrase in the Constitution is for a limited period of time to promote, develop it, not forever and not for one 

minute, but for a period of time that’s optimal. So can you talk 

about how they get bogged down after the patents expire? 

Dr. ROY. Well, since we have three minutes and 45 seconds, 

I’ll—— 

Mr. MASSIE. That’s very generous. 

Mr. ROY [continuing]. this very complex problem. And, again, I 

would encourage everyone to look at the written testimony which 

explores this question in a lot of detail. 

One example that I will give that I think is of—that should be 

of urgent attention not just to this committee, but to Congress as 

a whole is the problem of so-called biosimilars. So there is a new 

wave of drugs that have been developed through recombinant DNA 
19 

and molecular biology technology that are not simple pills or simple 

molecules. They’re protein therapeutics, often monoclonal antibodies, there are other drugs that have very complex molecular 

structures. And because they have complex molecular structures, 

the FDA and Congress have decided to regulate those drugs in a 

different way than traditional drugs. They’re regulated through the 

Public Health Service Act and through the Biologics Competition 

Price and Innovation Act of 2009. 

The bottom line is that this different set of regulations has 

meant that when those biologic drugs go off patent, the earliest 

biotech drugs now are starting to go off patent because they were 

developed 20, even 30 years ago. We’re not seeing the same flood 

of generic competition that comes in and lowers the prices down to 

commodity prices, the way we saw, for example, when Lipitor, a 

best selling cholesterol lowering drug, went off patent a few years 

ago. We are not seeing that with biosimilars. 

In fact, in Europe, there are about 50 biosimilars that have been 

approved by the European equivalent of FDA, but only about nine 

or 10 by the FDA. And, again, part of that is because the way Congress has authorized the FDA to regulate these drugs is very different. The FDA also historically has been slow in getting its act 

together in the way it regulates biosimilars. 

But the end result is it is extremely expensive and extremely 

risky for competitors to develop these so-called biosimilar drugs. 

And when they even get approval from the FDA, as I noted in my 

opening testimony, sometimes they’re withdrawn because the price 

they have to charge to justify their cost is too high. So this is a 

huge problem because, as a share of overall drug spending, biologic 

spending is rising. It’s basically doubled in the last eight years and 

it’s going to continue to rise as these biotech drugs become a bigger, bigger portion of the pie, and so addressing that problem is of 

urgent importance. 

Mr. MASSIE. Can you talk about another one of the ways that 

these products don’t come to market after the patent is expired? I 

noticed in your testimony, you mentioned off-patent drugs with 

specialized delivery devices. 

Mr. ROY. Yes. 

Mr. MASSIE. The EpiPen has about 25 cents of epinephrine in it, 

if you were a veterinarian and bought epinephrine. 

Mr. ROY. Yes. 

Mr. MASSIE. So why is it $600? The EpiPen, the patent expired 

on it. And I think people have a misunderstanding that somehow 

that original EpiPen patent got extended. That’s not the case. 

There’s a new patent and then the regulatory morass, but can you 

talk about some of the other drugs or delivery devices? 

Mr. ROY. Yes. As one of my colleagues noted, epinephrine was 

discovered over 100 years ago. And the key issue here is that the 

delivery device that Mylan developed has patents around it. And 

the FDA has required that any potential generic competitor exactly 

replicate Mylan’s device. Well, if you exactly replicate Mylan’s device, you’re violating Mylan’s patents around its device. When in 

fact what the FDA should do is say any other device which has the 

same clinical effect in a patient, with the same dosage and the 

same, you know, treatment of the disease, that should be allowed. 
20 

And the FDA, under Scott Gottlieb, I will say, has begun to do 

that, but, again, Congress could help the FDA by creating a statutory pathway for complex generics to be approved more rapidly. 

Mr. MASSIE. Thank you for shedding light on that. 

I yield back, Mr. Chairman. 

Chairman CUMMINGS. Thank you very much. 

Mr. CONNOLLY. 

Mr. CONNOLLY. First of all, Ms. Worsham—I’m sorry. You think 

I’d know that by now. 

Ms. Worsham, I want to join the chairman in expressing our 

deep condolences. I can’t imagine, and like many of us in this room, 

I have close—people close to me who are diabetic and are insulin 

dependent. And the thought that they have to make that kind of 

terrible choice is just unacceptable, and I think highlights why 

we’re here. At any rate, our hearts go out to you and your family. 

Ms. WORSHAM. Thank you. 

Mr. CONNOLLY. And hopefully—and I want to thank the chairman for having this hearing and the ranking member for joining 

with us. 

This is an issue that touches every family. And in some ways, it’s 

getting only worse. You know, we raise prices on drugs that have 

been around for a long time just because we can, and we maximize 

profit. And there’s nothing wrong with profit, unless the choice is 

human health and safety versus and exorbitant profit I don’t really 

need. And at some point, the ethics of that do come into play in 

terms of public policy, and thus this hearing. And I am so proud 

of the chairman for making this the first hearing of his chairmanship in the new majority. I think it really underscores the importance we put on this issue. 

I’ll put this question to the middle part of the panel. Why is 

there such a difference in drug pricing, same drug, between the 

United States and most other industrialized countries? What accounts for that price differential? 

Dr. KESSELHEIM. Well, I think that there are a couple of different 

factors at play. In many other countries, there is a negotiation on 

behalf of the country to where the country is able to use its power 

as a monopsony buyer to try to, you know, whether—about whether or not the drug gets into the—is allowed to be on the country’s 

formulary and allowed to be given to patients there. 

I think that also a lot of other countries use evidence related to 

the comparative effectiveness and cost effectiveness of the drugs to 

determine—you know, to help negotiate, and through that negotiating process, determine a fair price for the drug depending on 

what it’s value is. And so a lot of other countries use these valuebased determinations to try to assess a fair price and to use that 

as a basis for the negotiating process. I think that both of those 

things contribute to the differences. 

Mr. ANDERSON. Well, I think the most important thing to recognize is that, in the United States, once a drug is launched, the 

prices go up, and in other countries the prices go down. So what 

we now see is, for established drugs, there’s a three to four to one 

difference between the price in the United States and the prices in 

other countries. 
21 

Mr. CONNOLLY. An example of what you’re saying, Dr. Anderson, 

Humira. 

Mr. ANDERSON. Correct. No. 1 seller in America. 

Mr. CONNOLLY. No. 1 seller in America costs $2,669 in this country, costs $822 in Switzerland. 

Mr. ANDERSON. Correct. And it might actually cost less than that 

in Switzerland. You don’t always get all of the discounts reported. 

Mr. CONNOLLY. We’re talking about insulin. Insulin’s been 

around since 1921. Can you think of any reason why the prices of 

insulin, a commonly used drug for 100 years, has skyrocketed so 

much? 

Mr. ANDERSON. Well, I mean, it is—you know, the insulin that 

we use today is a little bit different than the insulin we used then. 

There have been some changes to the molecule over the time. But 

in general, a lot of the issue has to do with patents on—at least 

right now, patents on the delivery devices as opposed to the product itself. So, you know, if the pen clicks this way or clicks that 

way, then companies are able to get new patents on them that give 

them another 20 years and another 20 years. And because there’s 

not good effective competition between drugs that have those 

kinds—when they have those kinds of patents, that it can make it 

difficult to try to bring in competitive products and to get true competition that leads to lower prices. 

Mr. CONNOLLY. If Medicare were allowed to have that true competition, would it drive down prices significantly? 

Dr. KESSELHEIM. I think it would drive down prices closer, again, 

to what the values of the drug really are and closer to what, you 

know, in other countries are able to negotiate, you know, to try to 

evaluate the utility of the drug for the patient. I think that we 

could use those kinds of strategies to try to get a fairer price that 

still provides sufficient profits for the manufacturer but is a fairer 

reflection of the drug’s value. 

Mr. CONNOLLY. Thank you, Mr. Chairman. 

Chairman CUMMINGS. Thank you very much. 

Mr. Meadows. 

Mr. MEADOWS. Thank you, Mr. Chairman, for calling this hearing. And I have a personal note that I wanted to convey to you 

from the President of the United States. He wanted to make sure 

that you knew that on this particular subject, not only is he serious, but he’s serious about working in a bipartisan way to lower 

prescription drug prices. And when I spoke to him last night, he 

wanted to make sure that I conveyed that to you. 

Chairman CUMMINGS. Would the gentleman yield just for 30 seconds? 

Mr. MEADOWS. Sure. 

Chairman CUMMINGS. I just want you to convey back to the 

President that we are willing, ready, and able to work with him to 

get it done. And thank you. 

Mr. MEADOWS. I thank you, Mr. Chairman. 

Dr. Roy, let me come to you. Obviously, the Trump administration has made some recommendations in terms of whether it be the 

percent of commission paid to physicians on prescriptions or a comparable amount that can be charged based on either the EU or 
22 

other areas. What kind of effect do you think that those two Trump 

administration proposals would have on drug prices? 

Mr. ROY. So you’re referring, just for everyone else’s interest and 

knowledge, to some of the reforms that the President and Secretary 

Azar have proposed for the Medicare part B program—— 

Mr. MEADOWS. Part B, that’s correct. 

Mr. ROY [continuing]. which is physician administered drugs and 

drugs that are usually delivered through intravenous infusions and 

injectables. 

Mr. MEADOWS. Right. 

Mr. ROY. The one big distortion that was introduced by the Medicare Modernization Act was the so-called ASP plus 6 where doctors 

get a 6 percent commission. That incentivized the use of higher 

priced drugs and not low cost generics. And so that’s an example 

of where a reform system that the administration has proposed and 

is modeling and demonstrating through CMMI would be very helpful in aligning doctors’ economic interests with giving patients the 

lowest cost drug, which is not the case today, an important area 

of market distortion as you imply. 

The second piece, in terms of having an international benchmark 

to compare Medicare part B prices and align Medicare part B 

prices to that, we just published a paper at my think tank, at 

freopp.org, that argues that the 15 countries that are in the international benchmark that the Trump administration proposed are 

the wrong countries to compare to the United States, because they 

don’t necessarily have market-based approaches to either health insurance or prescription drug prices. 

Mr. MEADOWS. Which countries would best be in that pool of—— 

Mr. ROY. So we suggested—I’ll emphasize, the countries that we 

think are the most worth benchmarking Medicare part B to are 

Switzerland, the Netherlands, Singapore, and Denmark. Those are 

the countries that either have more market-based health insurance 

systems, like Switzerland and Netherlands, or in the case of, for 

example, Denmark, they have unregulated drug prices. Companies 

can charge whatever they want, just like they can in the United 

States, but the difference is, in Denmark, the insurers or the insurer offers a specific price that’s aligned to the lowest cost drug 

in a particular category, that if you choose that lowest cost drug 

as a patient, the drug is free, you are subsidized by the government. If you choose a higher cost drug, you have to pay that difference out of pocket. And what that has done is created a marketbased incentive for drug companies to charge a low price. 

Mr. MEADOWS. Sure. 

Mr. ROY. In fact, Denmark has the lowest prices for prescription 

drug spending in all of Europe using that model. 

Mr. MEADOWS. It’s amazing how the free market will put pressure on profits and corporations. 

So, Dr. Anderson, let me come to you, because one of the areas 

that I’m concerned about is the difference and everybody saying, 

well, if we just get the government involved, everything will work 

out. But I went to my local pharmacist and I looked at one particular drug, and there’s four different prices. There’s a cash price, 

there’s a Medicaid price, there’s a Medicare price, and there’s a private insurer price. And they’re not anywhere close. In fact, the 
23 

Medicaid price was higher than the other prices when we looked 

at that. 

And so that would not necessarily suggest that government intervention is going to lower prescription drug prices. So how do we 

reconcile that, Dr. Anderson? 

Mr. ANDERSON. You do have a whole variety of different prices 

out there. 

Mr. MEADOWS. And why? I mean, I would assume that the risk 

associated with getting a patent, manufacturing, it does not normally look at the end consumer on—it doesn’t cost more to produce 

a drug for a Medicaid patient, does it? 

Mr. ANDERSON. No. It is the exact same cost of production and 

exact same research, but it’s different market powers. And some 

places have more market power than others to negotiate prices. 

Mr. MEADOWS. Yes, I thought that was the case, but I started 

looking at that and that’s not actually necessarily always the case. 

And, quite frankly, when you look at—we’re talking about negotiating—some of the big private companies that provide insurance 

have a whole lot more market power in terms of the number of people that they protect than some of the other programs. And so 

there’s not a linear correlation that I can find. 

Mr. ANDERSON. No, there isn’t, but essentially—and I think a lot 

of it is because the PBMs and the PDPs are keeping a lot of those 

profits into the system, so that’s why you see these large differentials. 

Mr. MEADOWS. So you would recommend getting rid of PBMs and 

PDMs? 

Mr. ANDERSON. I think either getting rid of them or, more importantly, changing the incentives that they have so that they don’t 

have incentives to fight over the rebates that lead to higher list 

prices. 

Mr. MEADOWS. I yield back. 

Mr. CUMMINGS. Thank you, very much. 

Mr. Krishnamoorthi. 

Mr. KRISHNAMOORTHI. Thank you, Mr. Chairman, and thank you 

for your leadership on this very important issue. This is like the 

first time we’ve had kind of a rather informed free-wheeling discussion on both sides of the aisle on this issue. And thank you for your 

leadership. 

I think that most of us would agree that patents and other intellectual property protections can play an important role in 

incentivizing innovation and helping companies recoup the sizable 

investments they make in developing new drugs. However, when 

these protections are too generous, they can restrict competition 

and ultimately harm consumers. One area of particular concern is 

biologics, which are pharmaceutical products made from living organisms. Biologics currently represent only two percent of all prescriptions, but they account for 26 percent of total consumer spending. By 2025, over 70 percent of drug approvals are expected to be 

biologics. 

Since a living organism cannot be patented, manufacturers of 

these biologics are granted an exclusivity period which currently 

lasts for 12 years. Now that Democrats and Republicans alike are 

making drug prices a priority, shortening this exclusivity period is 
24 

one of several options under consideration. However, the recently 

signed U.S.-Mexico-Canada Agreement, the USMCA, the renegotiated version of NAFTA, includes a provision that would sync up exclusivity periods across all three countries. This would mean that 

no single country could shorten this period, this exclusivity period, 

without the approval of the other two countries. We should not 

allow this treaty or any other treaty to prevent us in Congress from 

taking action to lower drug prices and making it easier for affordable biosimilars to come to market. 

So I have a question for Dr. Georges of the AARP. Ma’am, you 

wrote a letter to the U.S. Trade Representative Lighthizer expressing concern over any provision in the renegotiated NAFTA, that is 

the USMCA, that could limit the market or lower the exclusivity 

period. And so can you talk a little bit about why you wrote that 

letter? 

Ms. GEORGES. Well, I—I don’t have in front of me all the details 

of the letter. But I will say to you that one of things that we in 

AARP are concerned about is the length of exclusivity, you know, 

for these high priced biologics. And in that one of the things that 

we’re now looking at and will be able to spend more time is looking 

at this whole NAFTA–2 agreement. We are going through an analysis now through AARP and taking a look at that. 

Mr. KRISHNAMOORTHI. Thank you. 

Dr. Kesselheim, what would be the impact of locking the U.S. 

into a certain exclusivity period for biologics? And how would it 

limit our ability to address the issue of high prices in these—in this 

class of pharmaceuticals? 

Dr. KESSELHEIM. Well, I mean, I think it would be a problem because one of the—the reason that that 12-year exclusivity period 

was set originally is because there was some thought about how 

long it might take manufacturers to recoup the cost of development 

for their biologic products. And if it turns out that over time we 

had miscalculated on that and it should actually be shorter than 

that, then doing that kind of locking in the United States policy in 

that way would be a bad idea in—without allowing us to have the 

flexibility to make changes. 

Although I do want to point out that there are dozens and dozens 

of patents covering biologic products in addition to that exclusivity 

period that the BPCIA provides and, in fact, some of those patents 

have gotten in the way of getting lower cost—potentially lower cost 

biosimilar products on the market. I still think it would be a bad 

idea to lock the United States in in that way to be unable to adjust 

that number in the future. 

Mr. KRISHNAMOORTHI. Dr. Anderson, can you comment on that? 

Mr. ANDERSON. So I think the key thing is one is the international, but more importantly is domestic. And domestically, we 

essentially have allowed them to have a whole series of patents 

that we can’t even find if you wanted to. For small molecule drugs, 

you can go on the FDA site and you can find it. For biologics, you 

can’t go on the FDA site and find all the patents. And so if I’m a 

drug company that wants to develop a biologic, I can’t find all the 

patents, I’m probably going to go up against one of those drugs— 

those patents and I’m going to run into a problem. So I’m not even 

going to start the activity. 
25 

On a reimbursement side, the biologics have a different set of 

codes than the biosimilars do. So you can’t interchange them, 

whereas for generic drugs you can. So we’ve made it much harder 

to, essentially, copy the biologics and maybe biosimilars. 

Mr. KRISHNAMOORTHI. Got it. Thank you so much. 

Thank you, Chairman. 

Chairman CUMMINGS. Thank you very much. 

Mr. HICE. 

Mr. HICE. I thank the chairman. 

You know, it seems like we’re hearing a lot these days, probably 

more than we have in quite a while, from many on the other side 

of the aisle that the answer to rising drug costs is more government involvement. I strongly disagree with that. Case in point 

would just simply be the so-called Affordable Care Act was signed 

into law about 10 years. And since that time, we’ve seen drug costs 

skyrocket in excess of 40 percent, despite the fact that President 

Obama over and over, as has already been cited today, said if you 

like your plan, you can keep your plan, all this kind of stuff. We’re 

still seeing the out-of-pocket costs skyrocket, as well as the cost of 

drugs themselves. 

So, Dr. Roy, let me begin with you. Can you please explain the 

connection between higher drug costs and ObamaCare in particular? 

Mr. ROY. There are two particular policies—well, there’s three 

particular policies, I’d say, in the Affordable Care Act that have 

driven up, in my view, prescription drug pricing and spending. The 

first is what we mentioned before, the BPCI Act, which regulates 

biosimilars, and how, as a result, biosimilars have not been getting 

out of the market. 

The second is the changes to Medicare part D, which reduced the 

amount of cost sharing in the Medicare part D program, the socalled coverage gap or donut hole. While there are meritorious reasons to want to reduce out-of-pocket spending for seniors, the end 

result of that left lower price sensitivity was massive price increases by manufacturers because they knew that seniors wouldn’t 

care whether the prices were high or low, the taxpayer was on the 

hook for those extra prices. So we’ve seen Medicare part D spending skyrocket as a result. 

The third area is in the Affordable Care Act exchanges where 

there are mandates that have been—that were issued by the 

Obama Administration to require that plans participating in those 

changes cover a bunch of drugs, branded drugs, even if those 

branded drugs had no economic value, that is to say they were generic drugs that could do the job just fine. That’s resulted in a 

higher than necessary pharmacy cost in Affordable Care Act based 

plans. 

Mr. HICE. So based on what you’re saying, let me just throw out 

a somewhat loaded but sound like a simple question. Would the repeal of ObamaCare lower drug costs for Americans? 

Mr. ROY. It would lower overall prescription drug spending. It 

may, in certain cases, raise out-of-pocket spending for some individuals who are buying Affordable Care Act subsidized insurance 

plans, but overall spending would go down. 
26 

Mr. HICE. Again, it just seems to me there’s a whole lot more involved to this whole thing of rising drug costs than what meets the 

eye. It is a complicated issue and there’s a lot of factors involved. 

It’s certainly more than just greed of the pharmaceutical companies; there are a lot of factors. 

Dr. Anderson, let me go to you. Can you provide a basic brief 

overview of the drug supply chain? And specifically what I want to 

know is who pays what price at what point in the chain. Is there 

any way to do that briefly? 

Mr. ANDERSON. I will do my best. 

Mr. HICE. Okay. 

Mr. ANDERSON. So it essentially starts with the drug company 

announcing a price, called the list price, and then they negotiate 

with the PBM over the price that they actually—the PBM will pay 

for the drug. And it could be all of that price or most commonly 

a significant reduction of that price. Then the PBM keeps some of 

that money, but not all of it. And we don’t know how much of that 

money they in fact keep, because that’s all confidential. Then it 

goes to the pharmacy, and they buy the drug essentially from the 

PBM and they get a price for it. Again, we don’t know what that 

price is. And then the consumer goes to the pharmacy and buys the 

drug. 

They pay the price based upon the list price, the price that the 

drug company originally set, and that’s why the major reason why 

the prices for consumers have gone up, because those list prices 

keep going up. The reason why the list price is going up is because 

the PBMs are saying if you give us a higher list price, we will more 

likely put your drug on a formulary. 

Mr. HICE. And then you add into that, as I understand it, the 

rebates. So the rebates have—when you factor the rebates in, the 

cost of the drugs have somewhat been kept under control to the 

consumer. Is that an accurate statement? 

Mr. ANDERSON. Well, they could be, but we don’t know exactly 

how much because we don’t know how much the PBMs are keeping 

and how much the drug companies are getting and how much the 

consumer is paying. So we just don’t know that information. So we 

think that’s true, but we don’t know. 

Mr. HICE. Thank you. 

Thank you, Mr. Chairman. I yield back. 

Chairman CUMMINGS. Thank you very much. 

Mr. ROUDA. 

Mr. ROUDA. Thank you, Mr. Chairman. And thanks to all of you 

for providing testimony here today. 

Drug pricing is the largest driver of healthcare costs in our country. We spent over $333 billion last year on drugs, of which the 

Federal Government, through Medicare, Medicaid, and VA spent 

approximately $150 billion. And while I recognize that it often 

takes years of research and development to bring new drugs to 

market, we cannot have Americans rationing or abandoning lifesaving medication due to the bureaucracy, inefficiencies, and greed. 

Patients can’t reap the benefits of pharmaceutical innovation if 

they’re forced to choose between their drugs or rent. A hardworking 

American shouldn’t pay the highest price for healthcare in the 

world and receive, for some, inadequate care at best. Like most 
27 

things in life, the reality of drug prices is always more complicated 

than the sound bites we hear. List prices get all the attention, but 

they don’t really tell the full story. The real cost to patients is 

opaque to even the most seasoned health policy expert such as 

yourselves. It might as well be a foreign language to patients. 

We deserve and we ought to demand transparency through the 

entire drug supply chain, the manufacturing process, the R&D, and 

the rest of the entire healthcare system. That includes the true 

prices other stakeholders pay and charge for the healthcare they 

provide. The rebates thrown around the system to hide the truth 

need to be presented as well. Hospitals, device companies, doctors, 

pharmacy, benefit managers, insurers, transportation providers, 

billing managers, everyone needs to provide transparency and accountability. 

And, yes, drug companies need to be held accountable too for 

their role in our increasing costs and the massive spikes in drug 

prices. We shouldn’t allow companies to abruptly raise the price of 

a drug when that drug has been on the market for years, especially 

when there’s been no innovation, no R&D to justify a new price for 

an existing medicine. 

Bad actors that hinder competition shouldn’t be able to delay patient access to generic and biosimilar medicines by slowing down 

the generic approval process. And it’s, of course, understandable 

that these companies want to reap a profit from their innovation. 

However, it’s unjustifiable to cutoff patients from the care they so 

much deserve. 

I believe we can find a balance between protecting IP and access 

to care. We can start by maintaining rational IP standards, ending 

market abuses, and providing more innovation and competition. 

And with that, I’d like to focus my time on how certain pharmaceutical companies are gaming our patent system to prevent competition and maintain high prices. 

Dr. Kesselheim, I know you have a lot of experience in this area, 

and I’m hopeful that we can get from you testimony on specific 

companies, specific examples where we have seen a specific drug or 

a specific company gaming the patent process to extend their control and opportunity to really gouge the public to make these types 

of profits that we’re so concerned about. 

Dr. KESSELHEIM. Sure. And I provided some of those examples in 

my written testimony, but, you know, there are a number of examples where companies are able to use, you know, the patent system 

and weak or inappropriately granted patents to extend the market 

exclusivity of their products. They can—for example, there were— 

there’s examples of companies that have patented single isomer 

versions of their product and then sold those single isomer versions 

as new brand-name products, even though they’re not, you know, 

clinically any different from the original product. But in shifting 

their promotion to the new product as the older product’s going generic, have shifted the market in a way that they’re using that 

product, et cetera, even pulled the old product off the market. 

As we talked about before, there are ways that companies can 

patent aspects of new formulations of their product or uses of their 

product, and in doing that try to prevent generic manufacturers 

from coming on the market. And, ultimately, if the generic manu-
28 

facturers then sue to try to get those patents thrown out of court, 

then the brand-name company can offer consideration to the manufacturer to settle those claims and to keep—to prop up those weak 

patents. 

Mr. ROUDA. So what are the two or three things you would 

change if you could to address this issue? 

Dr. KESSELHEIM. Sure. I mean, I think that there are a couple 

of things that you can do. I mean, we can reexamine, you know, 

how the U.S. Patent and Trademark Office grants patents in these 

cases, what the rules are about how one obtains, you know, a patent on a pharmaceutical product and what is novel and nonobvious 

and how the rules are applied to pharmaceutical products. I think 

that we can do a more—we can have more systemic reexamination 

of those patents by administrative bodies like the Patent Trial and 

Appeals Board, and we can make it harder for companies to list 

certain noninnovative, you know, slightly incrementally changed 

patents with the FDA in order to put a block on generic entry. 

So I think that we can act at the level of the patent office, we 

can act at the level of reexamination, or we can act at the level of 

the FDA listing process. 

Mr. ROUDA. Thank you very much. I yield back. 

Mr. CUMMINGS. Thank you. 

Mr. COMER. Mr. COMER. Thank you, Mr. Chairman. 

Mr. Meadows and Mr. Hice touched on the subject of more government intervention in all of this. I want to add to the conversation and talk a little bit about the consequences of more government involvement in healthcare. 

A recent proposal of Medicare for All is likely to devolve into 

complete government control of our healthcare. What effect would 

a government-run system like Medicare for All have on prescription 

drug prices? 

Mr. ROY. Well, we have some example—I assume this question 

is directed at me? 

Mr. COMER. Yes, Dr. Roy. 

Mr. ROY. We have some examples actually within the Medicare 

program itself, which is the irony. When people talk about Medicare for All, they generally mean fee for service, public option, 

quote/unquote, government part A, part B Medicare. They don’t 

mean Medicare Advantage, the part of Medicare that’s administered by private plans. And the reason I bring that up is because 

Medicare part C, the Medicare Advantage program, actually does 

a much better job of delivering the Medicare benefit at a lower cost 

to both seniors and the government, and with additional benefits 

at times, relative to Medicare part A and part B combined. 

So that’s one example of many I could offer of how private insurers are delivering coverage more efficiently than the Federal Government does in the Medicare program. That’s why I’ve advocated 

for universal coverage on a private basis where private insurers are 

shopping their plans to individuals purchasing health insurance as 

we do for any other form of insurance. If we had that kind of a system, we’d have less spending, more choice, and higher quality. 

Mr. COMER. Okay. Let’s stay on part D, but let me ask this question of Dr. Anderson. You know, politically in this environment, ev-
29 

eryone is frustrated with the rising cost of drug prices, myself included. I can assure you that. But the proposal for the HHS Secretary to negotiate prices for part D drugs is—you know, it’s very 

popular, but practically speaking, how would HHS manage that 

task? 

Mr. ANDERSON. So that would be a challenge, in my opinion, to 

negotiate the prices for every single drug. So what you would have 

to do is at least start out negotiating the prices for a limited set 

of drugs. And the ones that I would start on are the drugs where 

Medicare pays 80 percent of the cost, which are the most expensive 

drugs, because the way the Medicare part D program was set up, 

once you enter the catastrophic phase of Medicare, Medicare pays 

80 percent of the cost and can’t negotiate anything. And so that’s 

where I would start the negotiation and then move in—and if that 

works, expand it beyond that amount. 

Mr. COMER. Dr. Roy, and this is a proposal that a lot of people 

on the left keep talking about that it sounds great. Again, there are 

consequences. One of the good things the drug companies do is research and development. If the government continues to go on the 

path of taking over medicine and specifically prescription drugs, 

what effect will that have on research and development? I mean, 

is the government going to successfully invest in research and development? And how efficient is that? And what will the drug companies do from this point on with respect to research and development? 

Mr. ROY. Let me just answer quickly in terms of your last question, because the Centers for Medicare and Medicaid innovation actually rolled out a demonstration project just last week to allow for 

private insurers to negotiate that 80 percent catastrophic part D 

benefit on behalf of Medicare is something I suspect would be very 

impactful. CBO has scored, by the way, the government taking over 

part D is not saving any money relative to what PBMs negotiate 

on behalf of Medicare. 

To your question about R&D and how that could be affected if 

the government took over R&D, we actually have experience with 

that. So academic medical centers, the National Institutes for 

Health do conduct clinical trials using NIH money appropriated by 

Congress, and those clinical trials almost always fail to have the 

rigor and technical standards necessary to get a drug over the finish line in terms of FDA approval, because the FDA standards are 

so specific and the data that they need is so specific in order to ensure that a drug is efficacious and safe. 

So I have zero confidence that government-run clinical trials or 

government-sponsored clinical trials will have those technical 

standards that private companies have delivered up to this point. 

Mr. COMER. Thank you, Mr. Chairman. I yield back. 

Chairman CUMMINGS. Thank you very much. 

We’re going to go to Ms. Hill, but before we go there, as I’m listening to all of this, I just want to remind all of our witnesses and 

to all of us, I want to know some solutions. I have a fear that we 

will talk and talk and talk and talk, and people will die while we’re 

talking and it will only get worse. So I just want to just keep that, 

I mean, as you’re answering questions, help us to figure out where 

do we go from here. Because I don’t—I just think the urgency—we 
30 

can debate and debate and debate and nothing happens, and I 

think that’s what America is kind of upset about right now. Okay? 

All right. Ms. Hill. 

Ms. HILL. Thank you, Mr. Chairman. And I want to thank you 

for focusing the committee’s first hearing this Congress, the first 

hearing of my congressional career, on the escalating cost of prescription drugs. I’m also very excited about how much common 

ground we have with our Republican colleagues on this issue. It 

makes me very hopeful that we might be able to make some real 

progress on this issue that affects every single American. And I 

completely agree with your desire to focus on real solutions. 

I’d like to talk about one issue in particular, one area in particular. As the gentleman from Kentucky mentioned, the argument 

that we always hear when we talk about lowering drug prices is 

that drug companies need high prices in order to recoup their investments and develop the next breakthrough cure. But the fact is 

drug companies spend a lot more on other expenses, like marketing 

and payments to shareholders, than they do on research and development. 

First, we know that drug companies spend billions of dollars to 

advertise their drugs to consumers. We’ve all seen the fun commercials on television. And we are one of only two countries that allow 

this. I was shocked to learn that drug companies spend $5.6 billion 

on direct-to-consumer advertising in 2016. That’s a number, 5.6 billion, that’s hard to forget, given the recent conversations. 

Pfizer alone spent $1.19 billion. What’s more, drug companies are 

allowed to take a tax deduction for the money they spend on this 

type of advertising, which is particularly horrifying to me. 

So, Dr. Kesselheim, as a practicing physician, has it been your 

experience that direct-to-consumer advertising improves health 

outcomes? 

Dr. KESSELHEIM. Well, I mean, I think that it is the case often 

that people will come in to my office and say, oh, you know, I saw 

this drug on television, I saw that drug on television. And I think 

it is the case that direct-to-consumer advertising drives prescribing 

of higher cost products, because generic drugs generally don’t advertise. And so all we see on television are advertisements for the 

highest cost brand-name products. Usually drugs that are really 

good also don’t need to be advertised, so it also potentially can be 

for drugs that don’t offer, you know, substantial improvement over 

what’s already available. 

So the existence and the prevalence of direct-to-consumer advertising definitely increases pharmaceutical spending by driving patients and physicians toward higher—— 

Ms. HILL. Thank you. I appreciate it. 

And, Dr. Georges, let me turn to you now. In response to a request for information issued by HHS, AARP said the following, and 

I quote, given that the effects of DTC advertising, direct-to-consumer advertising, are still subject to debate, we strongly encourage HHS to also consider studying the effects of DTC on consumer 

choice, cost, and clinical outcomes in order to determine whether 

the potential benefits of DTC advertising outweigh its potential 

harms. 
31 

What does AARP view as the potential harms of direct-to-consumer advertising? 

Ms. GEORGES. Well, AARP is concerned that the price of the drug 

is never advertised. So that alone gives our members, the older 

American is not sure of what it is that may be a cost to them, 

again because the drugs that—the information that comes through 

to DTC may not be clear enough for our consumers to really understand what may be the potential effects or side effects of the drug. 

And so we think transparency, transparency is the key in the DTC. 

Ms. HILL. Thank you. I appreciate that. 

Another area where drug companies spend a lot of money is that 

they spend hundreds of millions of dollars in payments to physicians and hospitals. From 2013 to 2016, drug companies made a 

total of $9.1 billion in disclosed payments to doctors and hospitals. 

AstraZeneca alone spent $189 million. 

Dr. Kesselheim, in your view, what is the objective of these payments? 

Dr. KESSELHEIM. Well, there is a lot of different reasons why 

drug companies might have financial relationships with physicians. 

You know, there is a lot of research that physicians can conduct in 

partnership with pharmaceutical manufacturers, but it is also the 

case that pharmaceutical manufacturers spend billions and billions 

of dollars advertising their drugs to physicians, you know, through 

speakers bureaus and providing food and providing, you know, 

money for attending CME courses. And there is, you know, decades 

and decades of research showing that those kinds of promotional 

relationships also drive prescribing of high cost drugs and increased spending—— 

Ms. HILL. Thank you. 

And just because we’re almost out of time, I just want to close 

this out by asking Dr. Anderson, in your opinion, is this any relationship between the price of a drug and the amount a company 

spent on research and development? 

Dr. KESSELHEIM. We can find no evidence that that is true. 

Ms. HILL. Thank you so much. I yield back. 

Chairman CUMMINGS. Thank you very much. 

Ladies and gentlemen, we have four votes on the floor. I hate to 

tell you this, witnesses, but we’re going to be gone for about close 

to an hour because we have four votes. It may be a little less than 

that. 

But to the committee, 15 minutes after the last vote, in other 

words the last minute of the vote, we’ll be back here and we’ll finish up this hearing. And I don’t expect any more interruptions after 

that. Just hang with us. This is a very important hearing. We’re 

here to save lives and make people’s lives better. 

With that, we recess. 

[Recess.] 

Chairman CUMMINGS. Mr. Gibbs. 

Mr. GIBBS. Thank you. Thank you, Mr. Chairman, and thank you 

for the witnesses for sticking around. 

I think we can all agree that we have lots of challenges overall, 

and I think Representative Green earlier today talked about the 

structural changes in his comments and questions, and he’s absolutely right. 
32 

And I’ve got a couple tracks I want to go down. One is I’m really 

concerned about research and development. You know, there’s no 

doubt that the pharmaceutical drugs are extending people’s lives, 

quality of life. I think we’re all in agreement. The United States, 

of all the total dollars spent on R&D for pharmaceuticals, 2–1/2 

years, about 52 percent. I was surprised the next country is Japan 

at 16 percent, and then everybody else is down below 10 percent. 

Canada is only at one percent. 

And I asked Dr. Roy at the break, because he had to leave, and 

he agreed with those numbers because we’re a big country, you 

know, blah, blah, blah. And I said, the next question is how about, 

are we over 50 percent of developing these drugs, and he said the 

biologics, we are at the beginning, but then it takes—they’re usually smaller companies and they end up having to get venture capital, a lot of Switzerland and Japanese companies, but we’re still 

the innovators. 

So I guess my comment I just want to make on this, and you can 

tell me if you disagree or agree, but we’ve got to make sure we 

don’t go down the path where we disincentivize R&D, because we 

will see life expectancies, quality of life, because we’re doing so 

much stuff with drugs now, preventing surgeries and everything 

else. And that’s my big concern. You see these countries that have 

a centralized governing system. They’re not really doing much 

R&D. And so I don’t know if you—Dr. Anderson, if you want to 

comment on that, my synopsis of that. 

Mr. ANDERSON. I think—in terms of the data, I think you’re absolutely correct. And I would agree with Dr. Roy and you that 

those numbers are pretty much correct, most of it. Now, a lot of 

that is because the research and development starts with the NIH 

in the United States. I mean, we probably also spend 50 percent 

or more of the R&D funded by the government, and so—and also, 

the best scientists tend to be in the United States. So that’s where 

the research is going to be developed, because that’s where the infrastructure is. 

Mr. GIBBS. I think you said—I think it was you that said in your 

earlier testimony that it takes the private capital money to get 

more across the board, to move it on, right? 

Mr. ANDERSON. Correct. So, essentially, what often happens now 

is it starts at a place like Johns Hopkins or Harvard or something. 

They develop the thing mostly funded by NIH, and then venture 

capital jumps in when they see an opportunity, when something 

pretty cool happens. And they put in another $200 million or something like that. And then if it really turns out to be a drug that 

they think—the big drug companies think makes sense, then they 

come in and they pay a lot of money for that. 

So the researcher does very well who develops that, but the question is, is it the research that the drug company is doing or are 

they essentially buying the research? 

Mr. GIBBS. I just want to be careful. You concur with me that 

we need to be careful whatever we do in the regulatory aspect that 

we don’t disincentivize the incentive to develop drugs? 

Mr. ANDERSON. As a researcher, we definitely want that. I think 

what we’re concerned about is, once you develop the drug and 

you’ve gotten your patent time, that should be enough. 
33 

Mr. GIBBS. Yes. 

Mr. ANDERSON. And what we’re seeing is all these games to keep 

that patent alive. 

Mr. GIBBS. I want to get into the games a little bit. Orphan 

drugs. You know, I’ve had constituents come in and they’ve got 

some disease, a problem that’s not common, and they’re orphan 

drugs. And then my understanding is we have a provision and policy to help the pharmaceutical companies with that, as long as it’s 

under 200,000 people. And then my understanding, over 200,000, 

some of these drugs can used for both, and they go back to orphan 

waiver or whatever you want to call it, so that’s one issue, right. 

Another issue I have is the risk evaluation mitigation strategy, 

REMS, can act to restrict getting genetics—generic drugs on the 

market. Is that correct? 

Mr. ANDERSON. So let me do the orphans and then the REMS. 

Mr. GIBBS. Okay. 

Mr. ANDERSON. So the orphans—if I look at the top 10 best-selling drugs in America, six of them have orphan status, including 

the top three. In no way would you consider any of those to be orphans. They have, through a loophole or through something that 

was unintended in the Orphan Drug Act, have now developed an 

orphan on the side, and that gives them a lot of power with pharmacies and with PBMs. And so that’s the problem. 

With respect to REMS, REMS is to make sure that the drug is 

safe, and that’s very important. The FDA does a reasonably nice 

job of doing that. What’s happened with respect to research and development is they’ve taken the REMS idea, and what they have 

done is say, I’m not going to sell that product to a generic drug 

company, and therefore, you can’t get it because of this REMS rule. 

Mr. GIBBS. Okay. And I’m just about out of time, but the PBMs. 

In Ohio, we’ve got CVS is buying—they just bought a local family 

of pharmacies, about 20 stores. They’ve finally given up. I worked 

with them for 20 years, and articles about what’s happening in 

Ohio with the Medicaid program, so I think there’s lots of problems 

with how the PBMs are operating. So if we address the orphan 

issue, the REMS, and the PBMs, we’d make a lot of progress, I 

think, without overregulating and not disincentivizing and let the 

market function. 

Mr. ANDERSON. That would be a huge undertaking, and it would 

be great. 

Mr. GIBBS. Okay. I yield back. 

Chairman CUMMINGS. Ms. Wasserman Schultz. 

Ms. WASSERMAN SCHULTZ. Thank you, Mr. Chairman. 

Ms. Worsham, I really want to thank you for your courage and 

your leadership that you displayed today in being here on behalf 

of your daughters and on behalf of, really, all patients everywhere. 

Type 1 diabetes is a devastating disease, and it’s one that has 

an astonishing, really dizzying number of complications that individuals deal with throughout their lives, and it is their medication, 

their insulin, that keeps them alive. And what the travesty is that 

we’re dealing with here is that just like not having health insurance, the very fact of someone not having health insurance is a 

cause of death. Not having health insurance can kill you. Having 

your prescription drugs be too costly by itself can kill you. And I’m 
34 

so sorry for your loss, and it just makes it that much more important that you’re here today to illustrate and put a human face on 

the impact of these high cost drugs. 

Another human face that I can put on is the number of times 

that—you know, obviously I represent the state of Florida. We have 

a disproportionate number, the highest percentage per capita population of elderly in the country, and I have stood behind seniors in 

my district who I watched have five prescriptions come to the 

counter and they can only take three home, or they ask the pharmacist to—I’ve witnessed this. This is not second-and third-hand 

stories. Or they ask the pharmacist to score their pills, because 

they want to break them in half so they can double the length of 

time that the prescription lasts because it’s unaffordable. 

And as Ms. Worsham has pointed out, previously, the cost of in- sulin could be $1,000 per month when you’re considering all the 

supplies that it takes for a diabetic patient to survive. My daughter’s best friend since she was four years old has Type 1 diabetes. 

Her younger brother, four years later, was diagnosed with Type 1 

diabetes. Imagine a family dealing with two children with Type 1 

diabetes. 

These price increases continue despite little evidence that the 

products themselves are changing. For example, insulin has not 

changed much since its development in 1921, yet in a five-year period, the cost of insulin has almost doubled. We don’t see the same 

price hikes for an iPad from one year to the next, for a pen from 

one year to the next, for this bottle of iced tea from one year to the 

next, because it’s just not that many changes, like there hasn’t 

been that many changes for insulin. So why the astronomical price 

increases? 

And even more alarming is that you have just three firms—Eli 

Lilly, Novo Nordisk, and Sanofi-Aventis—account for the entire diabetes market in the U.S., and 90 percent of the market around 

the club—around the globe. I want to know, how can drug companies justify price increases for products like insulin with minimal 

modifications to the medications themselves? 

Dr. Anderson, isn’t that just that they are padding their price to 

pad their bottom line? 

Mr. ANDERSON. So as I said in my opening statement, you know, 

it’s not the prices of the products that they’re buying are going up. 

It’s not—once you’ve developed the research, there is no additional 

cost, because you’re not doing any additional research. So there is 

no real justification that I can see for raising your price repeatedly 

over time. It just—you know, but that’s something that this committee should take a look at and ask the drug companies, why have 

you done this? I can’t do that. You have that ability. 

Ms. WASSERMAN SCHULTZ. That’s right. I’ve just not heard any 

practical, legitimate, detailed explanation today about what the 

possibility is that would be justifiable for these kinds of price increases. 

Another question I wanted to ask you, Dr. Anderson, is drug 

companies are also setting higher and higher launch prices for 

their new drugs. One study looked at a launch price for 58 cancer 

drugs approved between 1995 and 2013. I’m a breast cancer survivor, so it’s a little personal for me. And they found that drug com-
35 

panies increased launch prices by 10 percent annually or an average of $8,500 per year, even after taking into account inflation and 

the estimated survival benefits of the drugs. 

So in your opinion, why are drug companies setting astronomical 

launch prices for new prescription drugs? 

Mr. ANDERSON. Well, now you get into the issue of Medicare part 

B, and Medicare part B, as we heard, pays the physician an initial 

6 percent of the cost of the drug. So if you have two drugs, one 

which costs $10,000 and one which costs $100,000, and you get 6 

percent of that difference, you’d rather have the $6,000 than the 

$600. And so we have a system set up to encourage the drug companies to raise their prices so that the physicians who prescribe the 

drug make more money. 

Ms. WASSERMAN SCHULTZ. Revolting. 

I yield back. Thank you, Mr. Chairman. 

Chairman CUMMINGS. Doctor, how do you deal with that? Dr. 

Roy, I mean, is that your answer? 

Mr. ANDERSON. So, essentially, it’s better than it was before. Before, the drug company would set a very high price and the doctor 

would essentially make the difference between the high price and 

the price that they could get it. So they limited that profit to 6 percent. And now I think it’s time to go down and say no profit, because there’s no other doctor that gets paid additional money when 

they prescribe something. 

Chairman CUMMINGS. Thank you. 

Questions, Mr. Grothman? 

Mr. GROTHMAN. Okay. A couple of questions. I noticed recently 

that the number of generics that are being approved by the FDA 

each year has gone up. I think in the first—in the most recent calendar year, it jumped up to 791. Just a few years ago, were going 

up about 500 a year. I know a lot of that—I don’t know if a lot of 

it’s coincidence, but I know President Trump promised to stand for 

the pharmaceuticals and get more of these generics approved. 

Could you comment on the increase in the number of generics 

that have been approved recently by the FDA, and does that have 

an effect on the overall cost approach in this country? 

We’ll take you, Dr. Anderson. We’ll start with you, either one of 

you. 

Mr. ANDERSON. So the answer, it’s great that we have more and 

more generics because generics are absolutely much less expensive 

than the brands. What we now have to do, and I don’t want to bash 

the PBMs all day, but essentially the brands are now paying the 

PBMs to keep the brand on the formulary and to give it a very favorable placement. So we have to take that into account now, so 

we—it’s great that we have the generics available; we just need to 

have them on the formularies in a very good placement. 

Mr. GROTHMAN. It’s important, though, that we keep the turnout 

of new generics up. That overall helps society, right? 

Mr. ANDERSON. That absolutely does, and there’s a whole set of 

things that are making it hard to do so the way the drug companies operate. So we—the key thing—— 

Mr. GROTHMAN. It’s gone up, though, significantly. And like I 

said, under this administration’s first year, it was 970, I think, and 
36 

the recent background was only 500 a year. So something good is 

going on over there. 

Mr. ANDERSON. Something great is going on there. And one of 

the things I testified about three years ago is to do expedited review of these drugs, because where there’s no competition, this was 

sort of the anti-Martin Shkreli thing that we talked about in this 

committee about three years ago, and that was to make sure that 

generics could be into the market when there was no competition, 

and the FDA has followed up on that. 

Mr. GROTHMAN. Okay. I’ll give you kind of a related thing. We 

have these biosimilars. Okay. I want to talk about them a little bit. 

I know some states have passed legislation kind of restricting the 

degree to which biosimilars can be used. I know my own state of 

Wisconsin passed legislation last year signed by former Governor 

Walker to facilitate dispensing and substitution of biosimilar products at the pharmacy. 

First of all, I’d like to know, do you know about how many 

biosimilars we have in the United States approved, and could you 

comment, is this a good trend as we make it easier to prescribe the 

biosimilars? 

Mr. ANDERSON. So I think, unfortunately, we only have three or 

four biosimilars that are active on the market right now, and in 

Europe, they have almost 50. So I think we have a serious problem 

with getting the biosimilars, first of all, out in the market, and 

then when we get them out in the market, for the drug—for the 

PBMs to put them in favorable placement. So I think you’ve got 

two problems here. 

Mr. GROTHMAN. Do you agree with that, Dr. Kesselheim? 

Dr. KESSELHEIM. So the FDA has approved about 12 or 13 

biosimilars, but only, as Dr. Anderson said, only about three or 

four are out on the market, and that’s because a lot of the other 

biosimilars are being backed up as a result of litigation over the 

patents on them and settlements between the brand name and the 

biosimilar manufacturer that are keeping the biosimilars on the 

market. But I do think that getting biosimilars out on the market 

will help reduce prices a little bit. 

Again, there’s evidence that they are able to reduce prices in Europe. I don’t think you’re going to see biosimilars reduce prices as 

much as we see generic drugs reduce prices because they’re not 

interchangeable in the same way, at least not yet. 

Mr. GROTHMAN. Just like I said, in Wisconsin, they’re pushing to 

allow pharmacists to sell more biosimilars, and I understand in 

other countries—in other states around the country they’re going 

the opposite way, you know, making it more difficult for pharmacists to prescribe them. I wonder if you would comment on the 

political pressures, you know, why some politicians like in Wisconsin are pushing more, why some would be lobbying against allowing pharmacists to sell more biosimilars. 

Dr. KESSELHEIM. Well, I mean, I think that part of what’s going 

on in other states is there is concern about automatically substituting biosimilars in the same way that we automatically substitute small molecule generic drugs, because there are concerns 

about whether or not that’s safe for patients to go in that direction. 
37 

Mr. GROTHMAN. Okay. You’re being very kind. Just one other 

comment. Somebody said we all agree that more—more pharmaceuticals are—are good for our health. I’m not sure that our—our 

life expectancy compared to Europe is that high. I’m not sure that 

necessarily spending all this money is causing us to live longer. So 

that’s not an automatic assumption, but thanks much. 

Chairman CUMMINGS. Thank you very much. 

Mr. Sarbanes. 

Mr. SARBANES. Thank you, Mr. Chairman. And I want to thank 

the witnesses for being here today and staying as long as you have. 

Ms. Worsham, first of all, thank you for being here. You’ve taken 

the pain you’ve experienced, and as many have said, channeled it 

to a crusade on behalf of others, and we thank you for that. I’m 

curious. Do you feel like the pharmaceutical companies, the industry has too much influence up here in Washington over how the 

policy gets made because of the money and special interests peddling, and all the rest of it that they get to do? I want to get your 

perspective on that. 

Ms. WORSHAM. Again, just being a T1D mom, I’m not an expert 

in that area, but again, I’m just asking for a change. 

Mr. SARBANES. Yes. 

Ms. WORSHAM. Help, help Americans live, you know, a healthy, 

longer life by reducing the cost of prescription drugs, by price 

transparency. Let us see what’s going on behind—behind closed 

doors. Why are the drugs so expensive? Knowing one does not 

bring in that annual salary of how much a drug cost. I personally 

don’t myself, even though I have a degree, I still don’t make that 

much money. Just again, help us, you know. 

Mr. SARBANES. And we’re going to try to do that. One of the reasons it is difficult to do that is because these industries have a lot 

of influence on how policy gets made, and when they see these 

changes coming down the road, they—they rev up that influence 

machine, and it has an impact. 

And I want to just give some statistics to the committee and to 

you that I think reflect this. According to the Center for Responsive 

Politics, the pharmaceutical industry spent more on lobbying than 

anyone else, any other industry last year, $280 million. In the 2018 

election cycle, the industry donated over $41 million to Federal 

candidates and committees. Big Pharma had over 1,400, 1,400 lobbyists last year, according to the Center for Responsive Politics. So 

that’s three lobbyists for each Member of the House. And they’re 

doing their best to protect the interest of their clients. I mean, I 

don’t blame them. That’s what they do, but that’s not helping the 

public interest out at all. 

And so I don’t think it’s any surprise that it’s taken so long for 

us to get this right, because when we go to try to fix the law, that 

influence gets in the way and the money gets in the way. And I 

think many of our constituents would say that, too often, Congress 

is leaning in the direction of the big money and the special interests and away from the interests of the broad public. So we need 

to do something about it. 

And it’s not because people are bad people. People serve here, 

want to do the right thing. But if you develop as an institution certain dependencies on money and influence, then it’s just human na-
38 

ture that you’ll start leaning in that direction. So we need to try 

to address that and break those dependencies. And you may know, 

the Democrats are leading an effort here in the House to try to 

strengthen our democratic institutions and make them more resilient to the money and the special interests so that we can carry 

out the will of the public. And I’m just curious. Do you think we’re 

on the right track with that? Do you think that’s a good approach, 

to try and reduce the influence that comes from that money that 

the special interests have, the pharmaceutical industry has, and 

try to lift up the influence and the voice of everyday Americans like 

yourself? 

Ms. WORSHAM. I do agree. I believe that bringing this to the forefront is the start. At least it’s on the table and we’re able to see 

what’s going on. Now it’s time to—to go another step and to enforce 

price transparency. It’s time to see, you know, who’s getting paid, 

who can be cut out, the middleman, so that we can save more lives. 

Mr. SARBANES. Thank you for your testimony today. Rest assured 

we’re going to keep doing our best—— 

Ms. WORSHAM. Thank you. 

Mr. SARBANES [continuing]. to try to deliver the right results and 

solutions for people like yourself. 

Thank you, and I yield back. 

Chairman CUMMINGS. Mr. Roy. 

Mr. Roy of Texas. Thank you, Mr. Chairman. 

I want to say thank you to Ms. Worsham. Thank you for coming 

here and telling us that personal story and putting a face on something I know is very close and personal to you, so thank you for 

taking the time to do that. 

To all the witnesses, I’m sorry I don’t get to question Dr. Roy. 

We live a couple miles apart in Austin, Texas. He might, you know, 

could be my twin brother except, you know, he’s not. But he’s a 

good friend, and so I wish we could have gone back and forth. 

This is an issue that’s important to me. It’s very personal. I, like 

my colleague who just explained is a breast cancer survivor, I’m a 

survivor of Hodgkin’s lymphoma. Seven years ago last week I was 

finishing chemotherapy at M.D. Anderson, and I’ve been cancer 

free for seven years. I was the beneficiary of a great trial drug at 

the time that, brentuximab, which goes in and targets the cancer 

cells and injects antibodies and the poison—rather than carpetbombing your body with poison. 

I say that only to say that—and I think, I assume everybody here 

agrees—you know, we want to make sure that we have an environment where pharmaceutical companies are able to still go out and 

engage and do what they do to create the drugs that are making 

our lives a heck of a lot better, whether it’s the Neulasta shots that 

were helping my white blood cell counts or any of the improvements in drugs that are helping people’s lives. 

I’ve got a few questions, if you don’t mind, for Dr. Georges. Can 

I ask you how many members AARP has? I have 38 million. Is that 

a rough estimate? 

Ms. GEORGES. Yes, it is, sir. 

Mr. ROY OF TEXAS. Thank you, ma’am. And am I correct that 

AARP as an organization was—opposed the passage of the AHCA 

a couple years ago, the proposal to replace ObamaCare, arguing 
39 

that it would make older Americans have higher premiums and 

smaller tax credits. Is that fair, did you all oppose that? 

Ms. GEORGES. Sir, what we were very clear on is that it included 

an age tax, and we were concerned that older Americans should 

not be taxed because of their age. And so, of course, that is why 

we did not support it. 

Mr. ROY OF TEXAS. Thank you for that. Just a question. Can you 

confirm that AARP has made approximately $4.5 billion in revenue 

since 2009, the rough time since ObamaCare was passed? 

Ms. GEORGES. I can’t confirm it. I don’t have anything in front 

of me, but it is public information, anything that you would like to 

see on the 990’s that are filed with the IRS. 

Mr. ROY OF TEXAS. Okay. Thank you. And would you be aware 

that—if you go back to 2011, the information I have is that AARP 

made $458 million in health insurance revenue and it would rank 

its organization as the sixth most profitable health insurer. Do you 

know what that would look like in 2018 data? 

Ms. GEORGES. Well, first of all, AARP is not a health insurer. 

Mr. ROY OF TEXAS. Right. But if you compared it to it in terms 

of the amount of revenue it provides, and I’ll get to that here in 

a second, but if that $458 million number—I’d like to see the updated 2018 number, if we can. 

According to reports, AARP makes a large royalty percentage 

from United Healthcare, which sells AARP-branded Medigap plans. 

In a 2011 House Ways and Means report, AARP received 4.95 percent of revenue off Medigap coverage. So essentially we’re looking 

at a 4.95 percent royalty for every Medigap policy they sold to seniors. Is that accurate, and is that still the case? 

Ms. GEORGES. I do not have those figures in front of me, Mr. Roy, 

but again, our information about our relationship with 

UnitedHealth is public information. 

Mr. ROY OF TEXAS. Okay. And then are you aware that 

ObamaCare exempted Medigap insurance plans from its reforms, 

including preexisting conditions, leaving about 8 million people in 

that gap? Is that an accurate statement? 

Ms. GEORGES. I cannot comment on that. 

Mr. ROY OF TEXAS. Okay. And then is it accurate to say that— 

that the AARP in 2016 lobbied, I believe the number was somewhere around 77 bills it lobbied, and not one of those is in favor 

of Medigap reform? 

Ms. GEORGES. I don’t have that exact number—— 

Mr. ROY OF TEXAS. Okay. 

Ms. GEORGES [continuing]. about the Medigap. 

Mr. ROY OF TEXAS. Okay. Well, I think one of the reasons I’m 

raising these questions, and we can look at it, is just a concern 

about the extent to which we have a lot of conversations in this 

body about preexisting conditions, and what we’re talking about 

here is a significant gap, and with respect to the Medigap coverage. 

And if you look at it and you say, well, what has AARP been doing 

with the amount of money it’s made over the last decade and how 

that might have been used, I believe AARP was said to have said 

it would like to send every dime it has in order to make sure people 

are covered. There’s a pretty big hole there with a significant num-
40 

ber of people who are left in that gap in the preexisting existing 

conditions coverage. 

So if we’re talking about that, I’d just like to have a little bit 

more understanding about the profits that AARP is making in its 

engagement in the healthcare arena and what that means for that 

particular population. 

That’s all I have, Mr. Chairman. Thank you. 

Chairman CUMMINGS. Thank you very much. 

Before I go to Mr. Welch, I understand, Ms. Worsham, that you 

have to catch a plane. Let me take a moment to—I know every 

member of this committee would repeat the very words I’m about 

to say to you. Are you listening? 

I thank you so much for taking your pain and turning it into a 

passion to do your purpose. Pain, passion, purpose. As I said to you 

a little bit earlier, the idea that $333 a month could have saved the 

life of your 22-year-old is incredible. And I can’t imagine as a father, my kids, to imagine one of them leaving this earth because 

of $333 a month. 

And some people could just go out and, after mourning and after 

going through difficult moments of grief, could just stand on the 

sidelines and do nothing. But you’ve taken your pain and you 

brought it here, and I promise you we will do everything in our 

power. You hear a lot of people talking up here about a lot of 

things. Some of you—I know—I’m sure you spent a moment asking, 

what does this have to do with my daughter? My daughter’s not 

here. She’s not here anymore. She was 22 years old. And I know 

that every birthday that comes along you mourn. Every Christmas 

you mourn. Every time you hear about somebody having a baby, 

you say, oh, my daughter might have been having my grandchild 

by now. 

We understand, and we feel your pain, and so I just want to 

thank you for coming. And the thing, you know, that really gets 

me, Ms. Worsham, is when you told me that you’ve got another 

daughter that could face the very same thing. But I’m going to do 

everything in my power, and we will do everything in our power 

to make sure that we save her life. We do not know what gifts your 

daughter who passed would have brought. She had gifts to bring, 

but those gifts got snuffed out. And so now we must concentrate 

on the living, and I promise you, I promise you, we’ll give it everything we’ve got, okay? 

Ms. WORSHAM. Thank you. 

Chairman CUMMINGS. You may leave if you need to. I don’t want 

you to miss your plane. No, I don’t want you to do that. And I know 

that the chairman who was from Ohio, he had to leave for a 

minute, would agree with me. We want you to get back to Ohio, 

all right? 

Ms. WORSHAM. Thank you. 

Chairman CUMMINGS. May God bless you. 

Ms. WORSHAM. Thank you. Likewise. 

Chairman CUMMINGS. Mr. Welch. 

Mr. WELCH. Thank you. Mr. Chairman, you did speak for all of 

us. And, Ms. Worsham, thank you. 

Ms. WORSHAM. Thank you. 
41 

Mr. WELCH. We’ll let you get a minute to gather yourself and 

make that plane. 

Ms. WORSHAM. Thank you. I just want to say thank you to everyone. I just want to say thank you to everyone. I know there’s rules 

and there’s regulations and there’s policies, but we want to save 

more lives. It can be done, and you are the people to make it happen. I’m just a voice for people, as well as having another daughter 

who is enduring the same thing, and she’s scared. And me speaking is making her scared. But just figure out how we as American 

people can live longer and healthier lives. That’s all we need to figure out. 

Mr. WELCH. Thank you. 

Ms. WORSHAM. God bless you all. 

Chairman CUMMINGS. God bless you. 

Mr. Welch? 

Mr. WELCH. Thank you. First of all, Mr. Chairman, thank you 

very much for this hearing. And, Ranking Member Jordan, thank 

you as well. 

I just want to make a quick observation. There’s two issues that 

we’ve been talking about. One is about trying to bring down the 

cost of prescription drugs that are high because of a broken down 

market. A subtext here has been relitigating some of the disputes 

we’ve had about ObamaCare, and that will continue, but my hope 

is that we’ll be able to work together, Mr. Chairman and Mr. Ranking Member, on these broken market elements that have been 

brought up by both people on both sides of the aisle, because what’s 

happening with Pharma is that, you’ve explained very well and Dr. 

Roy explained, the market is broken and is being exploited by those 

who are in a position to raise prices without any restraint. 

Just a couple of things. I want to just reiterate—it’s late—on 

some of the things we can do to bring down prices that don’t in any 

way affect innovation. One, stop evergreening. Any disagreement 

there? No. 2, stop pay-for delay. Any dispute there? No. 3, stop this 

bogus transfer of a patent to a Native American tribe so they can 

assert sovereign immunity. Any problem there? No. 4, stop this 

abuse of the redistribution network so that generics don’t get access to the product in order to come up with a generic alternative, 

something that Mr. Gibbs talked about. Any disagreement there? 

Next, getting rid of this exploitation of the orphan designation 

that results in the congressional grant and incentive for orphan 

drugs to be used for non-orphan drugs. Any reservation about us 

acting on that? And then finally, what about price negotiation, letting the purchaser who buys wholesale not have to continue to pay 

retail? Any problem with that? 

All right. Now, transparency. I want to go to the PBM. The PBM 

creates a formulary, and that’s a list of drugs that are preferred, 

correct? Is there any transparency about what drugs are in that 

formulary? I’ll start with you, Dr. Anderson. 

Mr. ANDERSON. No, there is not. I mean, well, we know after the 

fact which drugs are in the formulary. So if you go on the Medicare 

website and you look at a PDP, you can see what they are. You 

don’t have any idea why those were chosen. 

Mr. WELCH. Let me interrupt here, because one of the concerns 

people have raised, Pharma companies have raised about price ne-
42 

gotiation, including a formulary, is that that would limit access. 

But isn’t it the case that if you have a formulary that is determined by a PBM and their interest is maximizing their profits, the 

prospect of their formulary limiting access far exceeds the public 

interest formulary? 

Mr. ANDERSON. Well, I think what you’ve got to look at is the VA 

formulary which negotiates prices. And you compare it to the typical Medicare formulary which has the PBM or PDP involved, and 

they’re about half as large as the VA formularies. So the VA 

formularies has more options, twice as many options, as the typical 

Medicare beneficiary has. 

Mr. WELCH. That’s great. 

Dr. Kesselheim, how about you? 

Mr. KESSELHEIM. Yes. I think that more—I mean, I think that 

getting on the right page about what the formulary should be and 

which drugs should be on the formulary and which drugs, you 

know, perform the best and why drugs should be on there and not 

be on there, I think that that’s—that is the kinds—those are the 

kinds of decisions and issues that PBMs look at, and I think that 

that’s also something that government payers when they set the 

formularies like the VA also look at. 

Mr. WELCH. All right. Then the final question. Is there any other 

government that you’re aware of that doesn’t play a role in protecting consumers, taxpayers, and employers from the pricing practices of the pharmaceutical industry? 

Dr. KESSELHEIM. I know in other countries the government is involved in determining what is a—what is a reasonable price, and 

actually, throughout Medicare too, I mean, without—throughout all 

of Medicare, Medicare sets a reasonable price or negotiates a reasonable price for all services, physician services, x-rays, all services, 

colonoscopies. Drugs is the only part that they don’t actually do 

that. 

So even within our government, our government is involved in 

setting prices for everything. Nobody talks about like, you know, 

R&D deficits in colonoscopies or whatever, right. So I think that 

it’s both not only in other countries, but actually in ours too. 

Mr. WELCH. Well, I thank you. My time is up, but I want to compliment the panel on an excellent presentation. 

Chairman CUMMINGS. Mr. DeSaulnier. 

Mr. DESAULNIER. Thank you, Mr. Chairman. Thank you, Mr. 

Ranking Member, for this hearing. Sorry. I think for all of us, we 

wanted to be here for this hearing and this amazing panel. 

So Mr. Welch did the really detailed stuff. I’d like to talk about 

three areas that are much broader but have historical context. So 

it all is based on how the culture has changed. There’s a wonderful 

book from 2008 by Melody Petersen, I think, Our Daily Meds. And 

in that book she describes how the culture of the pharmaceutical 

industry changed from the fifties and sixties where it used to be 

a researcher became the CEO. A physician was—physicians were 

on the board of directors if they were publicly traded. 

And then her history shows that, like a lot of investments in our 

country, when venture capitalists came in, and I’m not against venture capitalists, but the rate of return was expected to be higher, 

and it’s changed, and then we went into the marketing. So we 
43 

haven’t always allowed this level of marketing. It used to be illegal 

to do television ads. I think New Zealand and we are the only two 

countries, and Canada has it, so we know that they spend billions 

of dollars on that. 

If that was redirected back into a portion of research and development, it would still attract a return on investment, and it seems 

like this is just marketing. I had a bill when I was in the legislature that was copied on a successful bill in Washington state, 

where in Washington they had the state health officer and the 

Washington—University of Washington post on a website what 

their interpretation of the accuracy of TV ads for pharmaceuticals 

were. I couldn’t get that passed even in a democratically controlled 

statehouse in California because of the influence of the pharmaceutical industry. 

So transparency, strikes me, would be helpful here both for the 

physicians but for the customers. Dr. Kesselheim, could you talk 

about transparency both from a physician standpoint, but also from 

a client standpoint? 

And the other part of my comments here is personal. I have a 

form of noncurable leukemia. Fortunately, 15 years ago, medical 

researchers in the Department of Defense and at NIH came up 

with treatments, so I take a pill every day and it keeps me alive, 

and it costs about $10,000 a month, and I have good health insurance. It’s not because I’m a Member of Congress, I should add. So 

it’s both personal—and trying to negotiate with my physician and 

my oncologist understanding why these things were happening was 

a challenge for me. 

So how do we help the client and the physician and still attract 

a reasonable rate of investment that I think is exaggerated right 

at this point? 

Dr. KESSELHEIM. Well, I mean, I think that certainly the pharmaceutical industry has been among the most profitable industries 

in the United States, you know, throughout the last few decades. 

And so the rate of return they’re getting is quite—has been quite 

sufficient. 

But I mean, I think your point on transparency is well taken. I 

think that the most important thing that patients and physicians 

need is transparency about how their drug works and what they 

expect to see with their drug, what side effects they expect to see 

with their drug. Why their drug costs so much is another aspect 

of transparency. And I think that that’s what this committee is 

doing by trying to get information from the pharmaceutical industry and try to answer these questions as to why drugs are priced 

the way they are and why drugs increase in price, and, you know, 

how these decisions are made, and then that can help us figure out 

how to, you know, try to, you know, ensure that there is appropriate—you know, the appropriate competition and appropriate 

markets and that the decisions are made in the appropriate way, 

and where they aren’t, then there are ways maybe that Congress 

can get involved. 

Mr. DESAULNIER. So what’s the rate of return, you think, in the 

sweet spot if you were—if you were a market enthusiast like Dr. 

Roe? I want private sector investment, but I don’t want it so extreme, especially when I know, for instance, my medication, the 
44 

most of that work was done with public taxpayer dollars. So I have 

asked this and have worked with the National Academy of Science 

and others to try to figure out what’s a reasonable rate of return 

to get investors to invest, because we want them to do that but not 

so much that they obscure the efficiency of a marketplace, a mixed 

marketplace. 

And then last, it strikes me that we didn’t always like—we didn’t 

always allow stock buybacks. We could at least in this field, say, 

restrict it so that at least a portion of it goes back to research and 

development. 

Dr. KESSELHEIM. Right. I mean, I think, you know, so the large 

pharmaceutical companies make about, you know, a 20, 22 percent 

profit margin as opposed to the average Fortune 500 company 

makes more like a 7 percent profit margin. So again, I think it is 

an open question as to what exactly the right rate of return should 

be. I think that ultimately what we should be doing is asking about 

where the return should go. And right now, the pharmaceutical 

market is set up such that, you know, small changes, not valuable 

products can get out in the market and can—and pharmaceutical 

manufacturers can make more money in selling those products because there’s less risk in the development of them. And we want 

to try to incentivize the pharmaceutical manufacturers and venture 

capitalists and whoever is investing to invest in the products that 

we need the most for patients in the public health. 

Currently in our system, in our broken system, we don’t really 

do that because it’s so—it can be so easy to just make a small 

tweak to an already existing molecule and make outsize profits on 

that. 

Mr. DESAULNIER. And just to conclude—thanks for the indulgence, Mr. Chairman—in my case, I’m told that my disease, which 

is the most common blood cancer, they have field trials right now 

that can cure it, but the market, it sort of seems to be counterintuitive. If somebody’s making $10,000 a month off of keeping me alive 

but not curing it, why would be the incentive to cure it? So anyways, thank you. 

Thank you, Mr. Chairman. 

Mr. ANDERSON. Hopefully it’s a different company that will come 

up with that. 

Mr. DESAULNIER. I’m hoping for that. 

Chairman CUMMINGS. Mr. Khanna. 

Mr. KHANNA. Yes. Thank you, Mr. Chairman. Thank you for your 

moral leadership and having this panel. I’m pleased to follow Representative DeSaulnier and his powerful personal story and sharing that. 

My colleague, Representative Comer, said earlier today that he’s 

concerned that government would have more of a role in medicine, 

and his concern is that if government has more of a role in medicine, it may hurt, as he put it, our innovation. I’m hoping, Dr. 

Kesselheim, that you can put him at ease with facts, because as 

I understand it, my colleague, if he cares about innovation, should 

actually be cheering for government to have a bigger role. 

I know you’re familiar with the study that shows that between 

2010 and 2016, of every drug, all 210 drugs that were approved by 

the FDA were funded by the NIH or public money. Dr. Kesselheim, 
45 

can you speak, because you’re such an expert in this area, about 

the role of public dollars in innovation and your judgment about 

whether the public investment is more responsible for innovation 

or the private pharmaceutical companies? 

Dr. KESSELHEIM. Well, I mean, so the study that you’re referring 

to is an important one, and it showed that all drugs that come out 

of the market in some way can be linked to NIH-funded research 

that helped, you know, understand the enzymatic pathway or understand the mechanism of action of the drug, you know, and do 

some of this basic research and this translational research that occurs in the laboratories. And I think that that’s an incredibly important role that the U.S. Government plays in funding that research, and that helps float all boats. All drugs come out of those. 

There are some drugs in which the U.S. Government investment 

even goes further, and there’s development and isolation of the 

compound by NIH-funded research. Usually, though, at some point 

in this translational process, the pharmaceutical manufacturers get 

involved as well at a later stage and then a lot of—there’s a lot of 

investment in the pharmaceutical manufacturers as well for a 

number of products at the later—at a later stage as well. I think 

the most important thing is both to make sure—to understand that 

the—that the public investment, you know, expands throughout 

the entire pharmaceutical space, but also that the—that private industry plays an important role as well, and we need to make sure 

that there is appropriate balance between the two and recognition 

of the public role, particularly as it relates—and we did the study 

showing particularly as it relates to transformative drugs and the 

most important new drugs that it tends to be public funding that 

takes those products, you know, all or sort of much of the way 

through the development. 

Mr. KHANNA. Would it be fair to say that most of the 

foundational research is being done with public dollars and that— 

I mean, this is just sort of common sense. If you know the people 

who go do their M.D., Ph.D.s and want to win Nobel prizes, they 

tend to go to universities, not becoming general counsels or vice 

presidents at pharmaceutical companies. I mean, is that not your 

experience? 

Dr. KESSELHEIM. Yes. And actually, I think that’s happening 

more and more. It used to be the case that a lot of large pharmaceutical companies had really big research arms. But in recent 

years, a lot of those companies have divested from those research 

arms and instead are looking for the research that’s coming out of 

the academic settings. 

And I want also to bring back to what other people have said 

earlier in this hearing about the need for a financial incentive. And 

actually, a lot of these people at Harvard and at Johns Hopkins, 

you know, a lot of these scientists go to work every day, and their 

incentive is to try to cure disease and to make people better and 

to progress—and to, you know, develop the progress of science and, 

you know, they’re not thinking about whether or not they can become a billionaire or whatever. That’s the incentive. 

Mr. KHANNA. What an odd concept, right? I mean, like Members 

of Congress, I mean, don’t you think here most people would think 

they don’t want to make just a billion dollars, they’re in it for the 
46 

public good? What an odd concept that someone else may have a 

similar view. 

Let me just digress one comment that Dr. Roy made and then 

have the panel address it. I was a little perplexed because Dr. Roy 

said that the FDA comes up with these difficult standards and that 

government then is unable to meet those standards. It’s like saying 

a high school calculus teacher is capable of making a high school 

exam but wouldn’t be capable of passing that exam. How can government be competent enough to come up with the standards and 

then you’re arguing that government isn’t competent to meet those 

standards? Was it something I was missing in that argument or is 

it just defies common sense? 

Dr. KESSELHEIM. I mean, you know, the FDA is doing its best to 

try to make sure that when drugs are approved, they’re as safe and 

as reliable as possible. And, in fact, the FDA is the fastest drug 

regulatory agency in the world. So to—you know, I think that—I 

don’t think that it’s right to blame the FDA. The FDA is there to 

help and is actually helping drugs get to the market but want to 

make sure that when those drugs get to the market, that patients 

and physicians can rely on them being interchangeable and can 

rely—you know, to rely on them to help the conditions that they 

need. 

Mr. KHANNA. Thank you. I see my time has expired. 

Chairman CUMMINGS. Thank you. 

Ms. Ocasio-Cortez. 

Ms. OCASIO-CORTEZ. Thank you, Mr. Chairman, and thank you 

all as our panelists here for lending your expertise and your insight 

to help us better legislate, and especially thank you to Dr. Georges 

as a professor at Lehman College for representing the Bronx so 

well here in this body. 

I have a question I wanted to continue a little bit on my colleague from California’s line of questioning about public investments in research and development. You know, I guess you would 

say that this is—would it be correct, Dr. Kesselheim, to characterize the NIH money that is being used in development and research as an early investment? 

Mr. KESSELHEIM. Yes. 

Ms. OCASIO-CORTEZ. So the public is acting as an early investor 

in the production of these—in the production of these drugs. Is the 

public receiving any sort of direct return on that investment from 

the highly profitable drugs that are developed from that research? 

Mr. KESSELHEIM. No. In most cases, there is—when those products are eventually handed off to a for-profit company, there aren’t 

licensing deals that bring money back into the coffers of the NIH. 

That usually doesn’t happen. 

Ms. OCASIO-CORTEZ. So the public is acting as early investor, 

putting tons of money into the development of drugs that then become privatized, and then they receive no return on the investment 

that they have made? 

Mr. KESSELHEIM. Right. 

Ms. OCASIO-CORTEZ. Dr. Anderson, I have a question. Since you 

studied comparative insurance systems, are there models where 

the public—where the public does receive returns on investments 

in other insurance—in other insurance models across the world? 
47 

Mr. ANDERSON. There are a few, but they’re relatively uncommon. 

Ms. OCASIO-CORTEZ. And how does that tend to work? 

Mr. ANDERSON. So, essentially, if the places at the U.K. or some 

place like that have invested money in it, they will get some rate 

of return on those investments, but that, again, is relatively uncommon. 

Ms. OCASIO-CORTEZ. I also have one question for Dr. Georges, 

and please stop me if my—if I’m going out of the scope of your expertise. As a nurse, in your experience as a nurse, do you have 

knowledge of the VA, general knowledge of the VA and how the VA 

works? 

Ms. GEORGES. I have some knowledge. 

Ms. OCASIO-CORTEZ. And in your experience, is the VA as a public owned and operated—operation, rather, are the drug prices in 

the VA lower or higher or the same as what we see—— 

Ms. GEORGES. Well, that I can’t speak to. I don’t have that kind 

of knowledge. 

Dr. KESSELHEIM. They tend to be much lower than in other 

places in the country. 

Mr. ANDERSON. About 31 percent lower than what Medicare 

pays. 

Ms. OCASIO-CORTEZ. So the VA tends to be lower. And can you 

explain why, anyone on the panel, why that is? 

Dr. KESSELHEIM. Well, in part because the VA gets some automatic statutory rebates based on the drugs that it buys, but also 

because the VA negotiates on behalf of all of the members of the 

VA and is able to use its marketing power to try to negotiate that. 

And also because it takes a very thoughtful approach to developing 

its formulary and can use inclusion on its formulary as another 

way of trying to negotiate a fair price for the product. 

Ms. OCASIO-CORTEZ. So you would—so you would say, and am I 

correct in saying, that the VA is using collective bargaining power 

in the market to lower the price of drugs as a counter to some of 

the for-profit or profit motive pressures, upward pressures from the 

cost of pharmaceuticals? 

Dr. KESSELHEIM. Right. Yes. 

Ms. OCASIO-CORTEZ. Okay. Great. And I guess one last question 

in my remaining time. If you all could ask us, you know, to act, 

as Members of Congress, and do one thing, one action, what would 

that action be? 

Mr. ANDERSON. So I think, for me, it’s external reference prices, 

and that’s something that President Trump has proposed in Medicare part B, to pay 126 percent of what the other countries do. I’m 

not sure I would agree with the countries that he chose, but essentially to pay 123 percent. If right now, you know, in the Medicare 

part D, which is most of the money, we pay about three to four 

times what other countries pay for the same drugs. I don’t think 

we can bring it down to what they pay or 126 percent of it, but 

we can bring it down a lot. 

Dr. KESSELHEIM. I tend to think external reference pricing is not 

a good idea, and I think that what we should do is actually get our 

own house in order and negotiate and try to evaluate the value and 

comparative and cost effectiveness of drugs better in the U.S. and 
48 

try to determine what the right prices for U.S. patients, rather 

than relying on what the prices are in other countries. But so if I 

could say one thing that we could do, I think it would be to, again, 

try to develop a system where the government could try to identify 

what the fair price is for a drug and what are reasonable prices for 

the drug based on the value that the drug provides to patients and 

then use that to negotiate with the pharmaceutical manufacturer 

to try to get a more effective price that we provide. 

Ms. GEORGES. We in AARP would like you to have HHS be allowed to negotiate lower drug prices on behalf of Medicare beneficiaries. 

Ms. OCASIO-CORTEZ. Thank you. Thank you all so much. 

Mr. Chair, I yield my time. 

Chairman CUMMINGS. Thank you very much. Thank you. 

Ms. Pressley. 

Ms. PRESSLEY. All right. Thank you, Mr. Chairman. It is a testament to you, Mr. Chairman, that the first matter on our docket, 

the priority of this committee was to lift up lived experiences, the 

struggles, the perspectives, or the expertise of real people. Although Ms. Worsham had to leave for her flight, I do very much 

appreciate your centering our first hearing squarely on her lived 

experiences and struggles. 

Yesterday, a number of my colleagues, in fact, Rep. Tlaib and 

some others, we had a conference convening on the state of mamas, 

and based on Ms. Worsham’s testimony, it is a reminder that there 

are many mamas that are worried about their babies. And we 

mourn the loss of Antavia. And there are millions more like her 

whose health is threatened and whose lives hang in the balance because of a tiered for-profit healthcare system because of greed. We 

have the right to healthcare, to afford life-saving medications. To 

remain alive, it seems, is up for debate. 

This is the Oversight and Reform Committee. Our chairman reminds us that we are here to seek the truth. Today we have heard 

it. And one of the most common hardships that we’ve heard 

throughout the recent shutdown of the Federal Government is that 

so many people are already living in the margins and on the precipice because of the fight for a living wage, because of stagnant 

wages and rising rental costs. They’re already struggling to meet 

basic needs. And on top of that, cannot afford insulin, EpiPens, 

blood pressure medication. 

What we need is a complete reframe of our infrastructure, and 

we need to commit to more than just health insurance but true 

healthcare, and that includes access to affordable life-saving medications. But until that day, I look to this panel for your continued 

expertise and your insight and observations. The gentlelady of New 

York asked my question, which was to seek your prescription other 

than our brewing transparency and rooting out the pervasive greed 

which is in abundance in this industry. There’s no denying that. 

So if, indeed, the role of this committee is to root out the truth, 

soon enough, we’ll know whether or not we are willing to do the 

bold work necessary to realize—to live out our truths, our ideals as 

a Nation. 

Ms. PRESSLEY. So my question, since we heard from patients, 

and we talked about the companies, the drug companies, is I want 
49 

to talk about the impact on providers. And in turn, what is that 

impact on patient care? I represent the Massachusetts 7th. There 

are 15 community health centers in my state. There are 52 community health centers. And so they serve the most vulnerable, low-income, communities of color. And so, I was wondering if you could 

speak about what that impact is. And we will start with Dr. 

Kesselheim, who is in my district. I thank you very much for your 

incredible issues. And so could you speak to the impact on providers? 

Dr. KESSELHEIM. Sure. I mean, I think that it is a really important issue. I think, unfortunately, providers don’t know enough 

about the costs of the drugs that they prescribe. But in many cases, 

you know, the drugs that they might prescribe, and they set a 

treatment plan for a patient, and then the patient goes to formulary and the drugs are unexpectedly high, the prices of the 

drugs are unexpectedly high, and the patient is not able to fill the 

prescription, and then as a provider, you’re stuck, and you need to 

then work again with the patient on a different mechanism to try 

to treat their condition. And that can make things very difficult for 

the patients who you’re trying to take care of. 

Ms. PRESSLEY. And since they are serving our most vulnerable 

is this exacerbating and contributing to existing health disparities? 

And also, is it resulting in reduced staffing levels, which is also impacting patient care? 

Dr. KESSELHEIM. Absolutely it does. I mean, it takes time, it 

takes additional nurses, it takes additional pharmacists onsite at 

these places to try to deal with all these issues, and to try to understand, why this drug costs this much? And how are we going to 

get this patient the drugs that they need? What systems are there 

that we can rely on? What backups to those backup systems? And 

it is a very complicated and very challenging process for patients 

and then providers are doing the best they can to help patients 

through that. 

Mr. ANDERSON. Let me tell you a story about Maryland hospitals, 

we have a rate-setting commission. We can’t grow more than three 

percent per year in Maryland in terms of hospital spending. And 

as a result of that, when the drug companies increase their prices 

by eight or 10 percent, we have to find some other way to live within that three percent. So we have to let off nurses, or we have to 

do something else in Maryland in places like Johns Hopkins in 

order to combat the higher prices for pharmaceuticals. 

Ms. PRESSLEY. Thank you. I now have a question for you, Dr. 

Georges. Could you just speak to any—sort of antidotally, to any 

other, what you’ve seen on the front lines in terms of tough choices 

that older Americans are making? 

Ms. GEORGES. Yes. What older Americans are doing are making 

choices between food and drugs. And that’s a shame. They’ve lived 

long, they’ve worked hard and that’s—the price is unsustainable, 

the drug prices. As Dr. Kesselheim also said, one of the issues that 

we find then, add nonadherence to the medical regime setup, 

which, in turn, slows down any recovery, any restoration or any 

maintenance of their health. So what we’re doing is we’re looking 

at choices: Do I live in a more healthy life? Do I need to eat? Who’s 
50 

going to pay my rent? And those are unacceptable for us in America today. We cannot continue these unsustainable prices. 

Ms. PRESSLEY. Something I heard, I’m sure you’ve experienced 

this, but in my district, that not only were people scoring medications, but they were also sharing medications, which is incredibly 

dangerous. Is that something that you’re hearing as well? 

Ms. GEORGES. Right. And what people are doing not knowing, because they are not the physician, they are not the primary care 

provider, so they don’t know for sure that the medication they are 

going to share is really—has the efficacy that the physician is expecting for that patient. But people are desperate. 

Chairman CUMMINGS. Thank you very much. 

Ms. PRESSLEY. Thank you. 

Chairman CUMMINGS. Ms. Tlaib. 

Ms. TLAIB. Thank you so much, Mr. Chairman. I would like to 

thank you so much for your leadership, leadership with compassion. And to repeat what my colleague from California said, your 

moral leadership. This is so critically important. As you know, I 

think all of us, as we were hearing rumors about the possibility of 

Mr. Cohen testifying before us, I’ve got to tell you, it was incredible 

that our first person to speak before this, my first official committee hearing, is to have a mother like myself, Ms. Worsham, who 

is facing such a crisis right now in regards to access to insulin for 

her only living child. 

According to the report from the Centers for Disease Control and 

Prevention as of 2015, more than 100 million Americans had diabetes or prediabetes. And the American Diabetes Association says 

that about 1.25 million people have type 1 diabetes. And there are 

over 400,000 adults, Mr. Chairman, 21 years old and older that live 

in Wayne County, Michigan in my district, that are high risk for 

diabetes. And in Detroit, the number is over 150,000. 

People with type 1 diabetes, therefore, depend on insulin to live. 

I’m so sorry to see Ms. Worsham leave and I wanted to talk to her 

more, but for those that are here, thank you. I just wanted you to 

know that when I read that three companies, Norvo Nordisk, Eli 

Lilly, and Sanofi-Aventis, hold 99 percent of the global market for 

insulin, and there is no generic version. We’ve seen insulin prices 

nearly triple from 2002 to 2013 and drug companies have continued to raise prices since then. 

Dr. Anderson, I know that you work with your colleague at Hopkins, Dr. Jeremy Greene, who has done a lot of work in this area. 

In your opinion, why have drug companies taken this dramatic 

price increase for insulin? I know my colleague from Boston pretty 

much called it corporate greed. That would be my answer. But I’m 

here to learn, and possibly maybe you have a different answer, but 

I’d enjoy to know what that is. 

Mr. ANDERSON. So you have a market of 112.5 million people, 

and you want to continue that market. And, you know, if the drug 

becomes a generic, you lose that market. So you’re going to do everything you can in your power as a drug company to continue that 

market, and they do patent things, they do orphan drug activities. 

They do a whole variety of things that the Congress could stop 

them from doing, if they took appropriate action. So there’s a number of things that you could choose to do, if you did, and make 
51 

those drugs for diabetes available much—in the generic form and 

much quicker. 

Ms. TLAIB. One of the things—I have the 13th congressional district in Michigan, third poorest congressional district, very diverse. 

The majority of my residents being Black Americans in this country, and which we know research shows over and over again that 

almost twice as likely to be diagnosed with diabetes. Dr. 

Kesselheim, you’re a primary care physician, I believe, correct? 

How are the high insulin prices affecting the patients that you 

treat, in particular, patients that come from communities of color? 

Dr. KESSELHEIM. Yes, it’s a really important issue. More and 

more people are struggling with the prices. And I think the story 

you heard from Ms. Worsham is terrible and heartbreaking, but it’s 

repeated in many different practices where people are noticing that 

patients are struggling with the prices of insulin. 

I would point out that we actually have a study out this week 

in JAMA where we looked at a health system that substituted 

older human insulins for the newer versions, and found that patients did just as well and spent a lot less money. And it just kind 

of shows you that substituting older products that maybe aren’t in 

vogue because they don’t have all the bells and whistles of the new 

products, but they work just as well clinically, could be a really 

good alternative. 

And I know that there was a bill in Congress last year about setting up a government system to produce insulin for patients who 

need them and then to sell it at cost. And if there was a system 

in place, to try to fill that market niche of these potentially older 

products, that might work just as well, but could be available at 

a cheaper price, I think a lot of patients would benefit from it and 

a lot of physicians would use it because they are observing what 

you’re saying, which is this, you know, issue where a lot of people 

are struggling with the cost of the product. 

Ms. TLAIB. Thank you so much. This is a question that’s a little 

different, but, you know, this is the first time that I’m hearing that 

there’s tax deductions for ads run on TV for drugs. I’m a little 

taken aback by that. Do you know what the rate there is? How 

much can we save by taking away that tax deduction? 

Mr. ANDERSON. I do not know, but we can find that out for you. 

Dr. KESSELHEIM. Absolutely. 

Ms. TLAIB. Thank you, Chairman. I yield my time. 

Chairman CUMMINGS. Thank you very much. 

As we go to Ms. Maloney, I want to thank our freshmen for embracing Ms. Worsham. I thank you. I—if my knee wasn’t bad, I 

would have been down there. But thank you, because so often, people see government as distant from them, and when they feel that 

you have the humility to touch them, and that they can touch you, 

it makes a big difference. 

With that, Mrs. Maloney. 

Mrs. MALONEY. Thank you so much, and I share your same sentiment. It was really wonderful to see the enthusiasm, and the 

warmth, and the caring of our new freshmen, and for staying and 

participating and being so supportive to Ms. Worsham. And I want 

to thank you, Mr. Chairman, for calling this incredibly important 

hearing, and all of our panelists, especially Dr. Georges, who is 
52 

from the great city of New York, which I have the honor of representing a portion of it. And we’re very proud of your professional 

career and your testimony today. 

I found Mrs. Worsham’s testimony really a national scandal that 

a child could die because they could not afford the insulin, or they 

did not get the insulin they needed, particularly since it’s been 

around for 100 years. And the creator, Dr. Frederick Banting, he 

sold it for $1, because he wanted it to be affordable. And I want 

to go to your point that you made, Dr. Kesselheim, that we should 

go back to the original products, they work. Maybe they are not as 

good as the new brand names, but if you can’t afford the brand 

names, then it could save lives. 

This past weekend, I was at a conference at Mount Sinai with 

doctors in my district, and they told me that insulin is not available, the generic insulin. And they say it works, they want it, they 

want access to it. It’s not available in New York City. The only 

place they can find nearby selling it is Walmart. They are selling 

insulin. But all of the pharmacies are not selling it. And the doctors aren’t prescribing it. Now you could argue the new brand is 

better, but if you can’t afford the new brand, the old brand works, 

just the point that you said. So how can we get the insulin that 

works and is affordable, the generic brand, out there to the people 

in the pharmacies? And Dr. Kesselheim or Dr. Anderson, if you 

could both answer that. 

To me, I find it scandalous that the generic is available, but people can’t get access to it. And the doctors in New York are saying, 

Can you tell us how we can get it? Is it affordable? We want the 

generic, but the drugstores are not selling it. Can we require them 

to sell it? How can we get this lifesaving insulin out in an affordable way to people that need it? 

Dr. KESSELHEIM. So I would say not only that, the study that I 

was just talking about that came out in JAMA today shows that 

the older insulin actually does work just as well. 

Mrs. MALONEY. That’s what the doctors were saying, so why isn’t 

it available? 

Dr. KESSELHEIM. It’s not. So one of the reasons it’s not available 

is that people aren’t producing it and making it as available. And 

so as I just had said a few minutes ago, one of the things that the 

government could do is try to step in and produce the product 

itself, given the fact that this is such a widespread problem and a 

major public health crisis, this market failure where there isn’t 

enough product of this—of this sort of older—— 

Mrs. MALONEY. Dr. Anderson. 

Dr. KESSELHEIM [continuing]. off patent being available, maybe 

that’s one mechanism to try to address the issue. 

Mr. ANDERSON. Another mechanism we have is really a private 

sector response, and that’s something that we are doing with a 

number of hospitals, and it’s called Civica Rx, and what it is is a 

nonprofit drug company that’s being established, started at Intermountain Healthcare, but about 10—1,000 hospitals who have 

joined up, and they are going to start making things like the insulin out there to compete against it. Because the problem that you 

have right now is that if you competed against it, somebody will 

lower the price and your initial investment doesn’t make sense. But 
53 

if you can get a guaranteed market by these hospitals, they will 

make the drug. 

Mrs. MALONEY. Well, according to this article in The New York 

Times on the insulin wars, it says the three drug companies are 

now under a lawsuit because of price fixing, running the prices up, 

not making affordable drugs available. This is outrageous that this 

is allowed to happen in this country. And I hope the chairman will 

call all three of them in for a hearing to testify on why they are 

not making insulin available at an affordable price. And this goes 

on. What is going on, it sounds like the wild west. There are no 

rules, no regulations. They can raise prices higher than the hospitals can. They can do whatever they want, these drug companies. 

And I haven’t heard any type of responsibility. Can you give me 

some understanding on why three drug companies can fix prices, 

take off affordable items that can save lives? Doctors, all three doctors? Does anyone have any answer to that? 

Chairman CUMMINGS. This is her last question to you. Does anyone have an answer to that? 

Dr. KESSELHEIM. It shouldn’t be—I mean, again, this is something the FTC should look into if there is evidence of—you know, 

you can see actually if you look at the historical insulin prices from 

the three companies, that they do kind of go up in lockstep over 

time. And so, you know, I think that’s something for the committee 

to look into. 

Mrs. MALONEY. Now another question, when you were testifying 

that PBM that they came out with their formulas, and they’re formulating things that they put out there, why can’t you require that 

insulin be part of those formulating things that they put out, doctors? 

Mr. ANDERSON. Well, they are part of it, but—— 

Mrs. MALONEY. But not the generic. 

Mr. ANDERSON. Not the generic. So—— 

Mrs. MALONEY. But can’t we require them that the generics be 

part of it? 

Mr. ANDERSON. You could. 

Chairman CUMMINGS. Thank you very much. 

Mrs. MALONEY. Thank you. I yield back. 

Chairman CUMMINGS. Ranking Member Jordan. 

Mr. JORDAN. Dr. Anderson, are prescription drug costs are too 

high? 

Mr. ANDERSON. I think from affordability point of view, yes. The 

fact that Ms. Worsham and others can’t afford those drugs—— 

Mr. JORDAN. How about healthcare costs in general? Are they too 

high? 

Mr. ANDERSON. Yes, they are. 

Mr. JORDAN. And have they trended—like, if you look at the last 

decade, is the trend up on both prescription drug costs and overall 

healthcare costs, insurance costs, hospital costs? Are they all turning up? 

Mr. ANDERSON. Unfortunately, they are all going up. 

Mr. JORDAN. All trending up. 

What was the single biggest change to the American healthcare 

system over the last decade? 

Mr. ANDERSON. Probably the Affordable Care Act. 
54 

Mr. JORDAN. Probably the Affordable—I would probably get rid 

of the word ‘‘probably.’’ I would say the Affordable Care Act, right? 

And yet, every single thing in healthcare continues to go up? 

Mr. ANDERSON. Correct. And it was going up before. We were 

number 1 in terms of—— 

Mr. JORDAN. I’m asking about before. I am asking in the last 

day—how long ago was the Affordable Care Act passed? 

Mr. ANDERSON. It was passed in 2010. 

Mr. JORDAN. I believe it was March 2010. Is that right? 

Mr. ANDERSON. Yes. 

Mr. JORDAN. March 2010. So nine years ago, and everything continues to go up. How can that be? 

Mr. ANDERSON. Well, what I look at and I wrote a paper that 

just came out in the Journal of Health Affairs and looked at what’s 

the trend over last 10 years. 

Mr. JORDAN. No. I mean, how can that be in light of what we 

were—— 

Mr. ANDERSON. Let me explain. 

Mr. JORDAN [continuing]. in light of what we were told, Dr. Anderson, because we were told this was the cat’s meow, this was the 

end-all, be-all, greatest thing in history. How can they all—everything in healthcare continued—the price continued to go up. When 

we were told they were all going to go down. Premiums were going 

to decline, Dr. Anderson. 

Mr. ANDERSON. I hear you. 

Mr. JORDAN. You liked your plan, you were going to get to keep 

your plan, Dr. Anderson. 

Mr. ANDERSON. And I have. 

Mr. JORDAN. If you liked your doctor, a doctor like Mr. 

Kesselheim—Dr. Kesselheim, excuse me, you were going to get to 

keep your doctor. 

Mr. ANDERSON. So let me explain what I see is the major trend 

over the last 10 years, and that is, the private sector prices have 

increased about twice as fast as the public sector prices. So in 

2010, the Medicare program and what the private sector paid for 

hospitals, and physicians, and drugs was about the same. Now, the 

private sector is paying 50 percent more on average than what 

the—— 

Mr. JORDAN. Because the market’s all messed up, right? 

Mr. ANDERSON. But it’s the private sector market where the 

prices are going up. 

Mr. JORDAN. So Dr. Anderson, do you know the name Jonathan 

Gruber? 

Mr. ANDERSON. Sure. 

Mr. JORDAN. And do you remember Mr. Gruber, what he was 

called when it came to the Affordable Care Act, the ObamaCare? 

Do you know what Mr. Gruber’s title was? 

Mr. ANDERSON. He was an independent consultant. He—— 

Mr. JORDAN. I’m talking about what The New York Times called 

him. The New York Times called him the architect of ObamaCare. 

And why is Dr. Gruber somewhat famous, particularly around the 

Halls of Congress? Any recollection? 

Mr. ANDERSON. I think you’d have to answer that question. 
55 

Mr. JORDAN. Well, because he was caught on tape lying to us. Actually he was caught on tape telling the truth about the fact that 

he lied to us, right? He is the one who said, Oh, you can pull it 

over on the American people. We can’t tell the American people the 

truth about ObamaCare. So might that have something to do with 

the high cost of medicine today? The high cost of insurance? And 

as we are talking about this hearing today, the high cost of prescription drugs? 

Mr. ANDERSON. Well, except that in 2009, we were also the most 

expensive country in the world. So it’s no different. So I wrote this 

paper back in 2003, we were the most expensive. I rewrote the 

paper—— 

Mr. JORDAN. Are you advocating, Doctor, a bigger role for government in all of healthcare? Mr. Khanna talked about the role that 

government plays in development of drugs at the NIH just a few 

minutes ago. Do you advocate a bigger role for government in all 

aspects of healthcare? 

Mr. ANDERSON. I think there is certain places where the private 

sector works well, and there are certain prices where the public 

sector works well. And I think we just have to take a look at where 

we are getting the best value for our dollar. 

Mr. JORDAN. And so you would say—well, I don’t want to put 

words in your mouth, but you would say maybe when it comes to 

quality of the research done, it’s—that’s where government involvement is good, but maybe not in access, maybe not in affordability, 

maybe not in other areas. Where would you draw the line? 

Mr. ANDERSON. Well, I think affordability. As I said, the private 

sector is paying 50 percent more for the same services the public 

sector is. So in terms of affordability, I would give the points to the 

public sector, not—— 

Mr. JORDAN. Doctor, do you support single payer? 

Mr. ANDERSON. No. 

Mr. JORDAN. Dr. Kesselheim, do you support single payer? 

Dr. KESSELHEIM. I think—I mean, yes, I think that there’s—— 

Mr. JORDAN. Do you want the government to run it all? 

Dr. KESSELHEIM. Well, no. As Dr. Anderson was saying, I think 

that there is some role for private sector in different parts of it, but 

I do think that in the case of pharmaceuticals, we could be getting—we could be using government negotiation to get better prices 

for the part that the government pays for right now. 

Mr. JORDAN. Yes, but that’s not—but you said you support single 

payer, but then you just limited it to prescription drug and buying 

negotiations—— 

Dr. KESSELHEIM. So the question today is about prescription 

drugs, and are we getting the best value for our money for prescription drugs? And I think that clearly the government is not, because the government doesn’t use its power to pay the appropriate 

price for the drugs that it’s buying. So in that sense, I think that 

we should be using the power of Medicare to try to evaluate what 

the right price is for the products that the government is buying. 

So I do think that that—in terms of other parts of the healthcare 

sector, that’s not my area of expertise, but I think that there is a 

role for a government option that people can use. 
56 

Mr. ANDERSON. In terms of—public option makes way more 

sense to me than single payer, allowing people to buy into Medicare if they so choose. 

Mr. JORDAN. Dr. Georges, I’m sorry I didn’t get to you, but my 

time is out, but thank you for coming and to all our witnesses. 

Chairman CUMMINGS. I want to thank all of our witnesses for 

being here today. As I said a little bit earlier, my major concern 

is that we will debate, and debate, and debate and end up doing 

nothing. One of my colleagues, Mr. Delaney, has a saying that I 

wish I had invented it. He says, ‘‘the cost of doing nothing is never 

nothing.’’ The fact is that people are dying. 

The story that Ms. Worsham told is being repeated over, and 

over, and over, and over, and over again, but still we debate. I 

think Mr. Welch laid out a number of things that we need to be 

doing, and you all have laid them out. The question is will we do 

them? We have to do them. You know, when I think about listening 

to things about Affordable Care Act, you know, today’s hearing offered the committee a meaningful opportunity to examine issues 

that are affecting millions of American families each and every day. 

It’s unfortunate that my Republican colleagues are using this time 

to instead continue their extreme partisan attacks against the Affordable Care Act. 

The ACA expanded coverage for nearly 20 million Americans 

through Medicaid expansion in exchanges. To that extent, the 

greatest spending on healthcare can be attributed to the healthcare 

law. It is because more Americans have been able to access high 

quality affordable healthcare than ever before. 

But I take you back to the story that I told from the beginning, 

the lady who said I can get the operation at Hopkins, but I can’t 

afford the cure. That makes absolutely no sense, none. Can get the 

operation, the surgery, but can’t afford the medicine, you know, you 

have to have followup, am I right, Docs? You have to have followup, Madam, Dr. Georges, you know that. No followup, what 

good is the operation? As a matter of fact, you might be worse off. 

So we have—you’ve heard the questions, you’ve given your best. 

And now we’ve got to move forward with it. We want to try to pull 

the curtains back on Dr. Georges why these—the costs are going 

up. Trying to pull the curtains back on, is it really R&D that these 

profits are being used for, is it buybacks? And then we went to 

know how we get to the bottom line to reducing the price of this 

medicine. 

I’ll never forget Shkreli, Shkreli—yes, he came in here, and after 

jacking up prices sky high, and he basically as he’s walking out the 

room after he refused, he took the Fifth, if I recall correctly, and 

called us imbeciles. That’s what he said. He called us imbeciles. 

And yet, and still, he was responsible because of what he did or 

failed to do for a lot of people dying. And I guess that’s what I want 

us to keep in mind, the bottom line, that people are suffering. 

I mean, think about what Ms. Worsham said, for $333 a month, 

$333 a month, if her daughter had $333 a month to pay for that 

insulin, she’d still be alive. That’s a 22-year old. I mean, just think 

about that. This is America, this is United States of America, and 

I am convinced that we are better than that. And what we have 

to do now is synchronize our conscience with our conduct. We have 
57 

got to have synchronization. One side talking about, Oh, I don’t 

like this, I don’t like that. Okay, if you don’t like it, work out something that does work, and we do it in a bipartisan way, but we’ve 

got to do something. And this is bigger than us. This is bigger than 

us. And it’s not about us. It’s about generations yet unborn. 

You heard DeSaulnier talk about he had a situation, a cancer situation where I assume at one point it may have been a fatal situation, but now apparently, it’s chronic. Why? Because of research, 

because of medicine. And he said—you hear what he said? Was it 

$10,000 a month, was it a month? He can afford the $10,000 a 

month, I guess. $10,000 a month, just to stay alive. There’s something wrong with that. Part B, when we talk about the President’s 

proposal, I’m hoping that we can get that done, I’m hoping we can 

do a Medicare negotiation. We need it do probably a combination 

of things. But the American people are watching this right now, 

they are watching us right now trying to figure out how I’m going 

to make it? How am I going to be there for my daughter’s wedding? 

How am I going to celebrate my next birthday? Am I going to be 

here for two more Christmases because they cannot get the medicine, cannot afford it? And so, I am determined and I’m going to 

paint Ms. Worsham’s face in the DNA of every cell in my brain to 

try to make sure that her other daughter who’s facing the same 

thing does not die. 

And with that, we call this hearing to an end. Thank you. 

[Whereupon, at 5:09 p.m., the committee was adjourned.] 

Æ