```

[House Hearing, 116 Congress]
[From the U.S. Government Publishing Office]

                          HIV PREVENTION DRUG:
                     BILLIONS IN CORPORATE PROFITS
                       AFTER MILLIONS IN TAXPAYER
                              INVESTMENTS

=======================================================================

                                HEARING

                               BEFORE THE

                              COMMITTEE ON
                          OVERSIGHT AND REFORM
                        HOUSE OF REPRESENTATIVES

                     ONE HUNDRED SIXTEENTH CONGRESS

                             FIRST SESSION

                               __________

                              MAY 16, 2019

                               __________

                           Serial No. 116-24

                               __________

      Printed for the use of the Committee on Oversight and Reform
      
      
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                   COMMITTEE ON OVERSIGHT AND REFORM

                 ELIJAH E. CUMMINGS, Maryland, Chairman

Carolyn B. Maloney, New York         Jim Jordan, Ohio, Ranking Minority 
Eleanor Holmes Norton, District of       Member
    Columbia                         Justin Amash, Michigan
Wm. Lacy Clay, Missouri              Paul A. Gosar, Arizona
Stephen F. Lynch, Massachusetts      Virginia Foxx, North Carolina
Jim Cooper, Tennessee                Thomas Massie, Kentucky
Gerald E. Connolly, Virginia         Mark Meadows, North Carolina
Raja Krishnamoorthi, Illinois        Jody B. Hice, Georgia
Jamie Raskin, Maryland               Glenn Grothman, Wisconsin
Harley Rouda, California             James Comer, Kentucky
Katie Hill, California               Michael Cloud, Texas
Debbie Wasserman Schultz, Florida    Bob Gibbs, Ohio
John P. Sarbanes, Maryland           Ralph Norman, South Carolina
Peter Welch, Vermont                 Clay Higgins, Louisiana
Jackie Speier, California            Chip Roy, Texas
Robin L. Kelly, Illinois             Carol D. Miller, West Virginia
Mark DeSaulnier, California          Mark E. Green, Tennessee
Brenda L. Lawrence, Michigan         Kelly Armstrong, North Dakota
Stacey E. Plaskett, Virgin Islands   W. Gregory Steube, Florida
Ro Khanna, California
Jimmy Gomez, California
Alexandria Ocasio-Cortez, New York
Ayanna Pressley, Massachusetts
Rashida Tlaib, Michigan

                     David Rapallo, Staff Director
                    Ali Golden, Chief Health Counsel
          Elisa LaNier, Director of Operations and Chief Clerk
               Christopher Hixon, Minority Chief of Staff

                      Contact Number: 202-225-5051
                         
                         
                         C  O  N  T  E  N  T  S

                              ----------                              
                                                                   Page
Hearing held on May 16, 2019.....................................     1

                               Witnesses

Dr. Robert M. Grant, Professor of Medicine, University of 
  California, San Francisco
    Oral Statement...............................................     4
Dr. Rochelle Walensky, Professor of Medicine, Harvard Medical 
  School, and Chief of Division of Infectious Diseases, 
  Massachusetts General Hospital
    Oral Statement...............................................     6
Mr. Tim Horn, Director, Medication Access and Pricing, NASTAD
    Oral Statement...............................................     8
Mr. Stephen Ezell, Vice President, Global Innovation Policy, 
  Information Technology and Innovation Foundation
    Oral Statement...............................................     9
Dr. Aaron Lord, PrEP Patient and Advocate
    Oral Statement...............................................    11
Daniel O'Day, Chairman and CEO, Gilead Sciences, Inc.
    Oral Statement...............................................    13

The written statements of the witnesses are available at: https:/
  /docs.house.gov.

                           INDEX OF DOCUMENTS

                              ----------                              

The documents entered into the record during this hearing are 
  listed below, and are available at: https://docs.house.gov.

  * Statement from New York City Council Speaker Corey Johnson; 
  submitted by Ms. Ocasio-Cortez.

  * Yale Global Health Justice Partnership Statement dated 3-12-
  19; submitted by Ms. Ocasio-Cortez.

  * Peer Review Article from the New England Journal of Medicine 
  dated 12-30-10; submitted by Mr. Jordan.

  * Washington Post Article from July 13, 2016, "The Drug Company 
  that shocked the world with its prices dodged $10 billion in 
  taxes, report says;" submitted by Ms. Hill.

  * Letter from the Treatment Action Group; submitted by Mr. 
  Cummings.

  * Letter from the AIDS Vaccine Advocacy Coalition; submitted by 
  Mr. Cummings.

  * Letter from the HIV Medicine Association; submitted by Mr. 
  Cummings.

  * Questions for the Record; submitted to Mr. O'Day.

  * Statement for the Record; submitted by Mr. Connolly.

 
                          HIV PREVENTION DRUG:
                     BILLIONS IN CORPORATE PROFITS.
                 AFTER MILLIONS IN TAXPAYER INVESTMENTS

                              ----------                              

                     Thursday, May 16, 2019
                           House of Representatives
                          Committee on Oversight and Reform
                                                   Washington, D.C.

    The committee met, pursuant to notice, at 10:06 a.m., in 
room 2154, Rayburn House Office Building, Hon. Elijah Cummings 
(chairman of the committee) presiding.
    Present: Representatives Cummings, Maloney, Norton, 
Connolly, Krishnamoorthi, Raskin, Rouda, Hill, Sarbanes, Welch, 
Speier, Kelly, DeSaulnier, Khanna, Gomez, Ocasio-Cortez, 
Pressley, Tlaib, Jordan, Amash, Foxx, Meadows, Hice, Grothman, 
Comer, Higgins, Norman, Roy, Miller, Armstrong, and Steube.
    Chairman Cummings. The committee will come to order. 
Without objection, the chair is authorized to declare recess of 
the committee at any time.
    I now recognize myself for five minutes to give an opening 
statement.
    Today is our committee's second hearing on the skyrocketing 
prices of prescription drugs. At our first hearing in January, 
the committee's very first witness, Ms. Antoinette Worsham, she 
was a compelling witness. Her 22-year-old daughter died because 
she could not afford the insulin she needed to control her 
diabetes. By the way, the insulin cost $333 a month. Let that 
sink in. For $333 a month, a 22-year-old college graduate died. 
Ms. Worsham's testimony was gut-wrenching, but unfortunately, 
she is not alone. We've heard other stories just like hers from 
our constituents, our friends, and our loved ones.
    Today, we are examining the price of a drug called Truvada. 
Truvada is a phenomenal drug that prevents the transmission of 
HIV through a treatment called preexposure prophylaxis or PrEP 
for short.
    At the outset, I want to recognize the efforts of our 
distinguished colleague, Congresswoman Ocasio-Cortez. She has 
been leading the charge on this issue, and it is because of her 
efforts that we are holding this hearing today. I want to thank 
her for her phenomenal leadership.
    Think about this: We now have a drug that has the potential 
to end the HIV epidemic. This would have been unfathomable at 
the height of the HIV/AIDS crisis. This is an issue that I have 
been dealing with and working with communities on for more than 
20-some years. I have seen many people die. I have seen people 
who used to be on the choir at my church die. I have seen 
neighbors die. And we have made these phenomenal strides.
    But this treatment was developed as a result of investments 
made by the American taxpayers through the National Institutes 
of Health and the Centers for Disease Control and Prevention. 
The problem is that Gilead, the company that now sells this 
drug, charges astronomical prices. When Truvada was first 
approved in 2004, Gilead charged about $800 per month, again, 
for this lifesaving drug. Since then, Gilead raised the price 
of this drug over and over and over and over and over again. It 
now charges about $2,000 for just one month or about $70 per 
pill. Think about that, lifesaving drug.
    In the same period, Gilead has made massive windfalls on 
this treatment, more than $36 billion in revenues. Let me say 
that one more time. They made more than $36 billion on this 
drug alone. How can Gilead do this? How can our system allow a 
company to take a drug treatment that was developed with 
taxpayer funds and abuse this monopoly to charge such 
astronomical prices? This lifesaving treatment would not exist 
but for the research funded by the CDC and NIH. So how can our 
system let a company charge prices that are so outrageous, 
making $36 billion while there are literally hundreds of 
thousands of people who need this drug? We are better than 
that.
    These are some of the hard questions we will ask Gilead's 
CEO Daniel O'Day, who is here today. And I am praying that you 
do not come and give us the normal rope-a-dope stuff that we 
usually hear about the various low programs you have got, the 
coupons you have got. We want the prices to come down. We want 
truth. We want to know why it is that the prices are going up 
astronomically. We want to know what this R&D is all about. We 
want to know if it is all about vacation, giving doctors 
vacations and encouraging them to prescribe certain things or 
not. We need to know all about that.
    We appreciate that Mr. O'Day accepted our invitation to 
participate, and we anxiously look forward to his testimony.
    The reason this is so critical is because the CDC estimates 
that there are 1.1 million people at high risk of contracting 
HIV who could benefit from this drug but that only a fraction, 
a fraction are getting it. Use is shockingly low among groups 
that are at particularly high risk, including communities of 
color that have been disproportionately impacted by this 
epidemic.
    This treatment is available in other countries for much, 
much less. In Australia, patients pay less than $7 a pill. 
Hello? Here, we are paying well over $70. In other countries, 
patients pay even less. This is because Gilead charges less for 
its treatment overseas than it does in the United States. It is 
also because Gilead has generic competitors there but not here.
    Finally, let me note that this is a bipartisan issue. HIV 
has no boundaries. It affects blacks and whites, rural, urban. 
It is a tough disease. President Trump recently announced an 
initiative to end the HIV epidemic within 10 years. This is a 
laudable goal. However, it relies on this particular drug 
treatment getting to everyone who needs it. Gilead recently 
agreed to donate millions of bottles of its drugs but far short 
of what we need to save lives. Without addressing the 
fundamental problem of pricing, I am afraid that we simply may 
not get there.
    And so we want to work with the President in addressing 
HIV, but we need to start right here, and we need to start 
right now.
    Chairman Cummings. So without further do, I want to 
recognize the distinguished ranking member Mr. Jordan for his 
comments.
    Mr. Jordan. Mr. Chairman, welcome back, and thank you for 
that and for this important hearing.
    At the beginning of the HIV outbreak in the early 1980's, 
the outlook was just not good. In fact, it was pretty darn 
bleak. Early treatments were expensive and frankly not very 
effective, but advancements in medicine in the 38 years since 
the first reported incidence of AIDS in the United States have 
yielded hope for those afflicted with this virus. The most 
important development was Gilead creating and bringing Truvada 
to market in 2004.
    Because of the invention of this, life expectancy for 
people with HIV is now effectively the same as life expectancy 
for people without it. I think we can all agree that Truvada is 
something of a miracle drug. It is the gold standard for 
preventing and treating HIV. Gilead's invention has been 
literally lifesaving.
    Gilead of course made money based on its invention. My 
colleagues on the other side of the aisle and some of the 
witnesses they have invited seem to believe this is some sort 
of conspiracy. Rather than applaud Gilead for manufacturing 
this miracle drug, they wish to demonize a company for making a 
profit. The right to reap the rewards of your invention is so 
vital that our Framers included it in the Constitution. Our 
intellectual property protections are the crown jewel of the 
American economy and what makes our Nation the most innovative 
in human history. Article 1, section 8, clause 8, the Congress 
shall have power, quote ``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.'' The Framers knew that individuals would take 
risk and endeavor to make great things if they knew they would 
be rewarded.
    Some would have you believe that Gilead did not invent this 
drug or discover its uses and that the Federal Government has 
equities here for which the company is not accounting. The 
evidence does not bear this out, and I hope we can use today to 
set the record straight. I fear that my colleagues are using 
today's hearing as a platform to strongarm private companies 
making breakthrough discoveries all because they are upset at 
how markets work.
    The reality is that, while Gilead has made money on this 
drug, there do not seem to be genuine issues of access, and 
that is largely due, as the chairman talked about, to progress 
made by efforts of the Trump administration. The State of the 
Union address this year, President Trump announced his 
administration's initiative to eliminate new HIV infections in 
the U.S. within 10 years. This would be a remarkable 
breakthrough for public health. And to that end, just last 
week, HHS announced that, as a result of discussions between 
the Trump administration and Gilead, the company agreed to 
donate 2.4 million vials of its PrEP medication annually to the 
CDC for distribution to treat individuals who are at risk and 
uninsured. The company has also agreed but was under no 
obligation to do so to allow generics to enter the market a 
year earlier to further help provide access.
    Of course the cost of pharmaceuticals is a problem driven 
many factors that our committee and the Trump administration 
hope to tackle in a bipartisan fashion, as the chairman 
indicated. But we will never make real advancements in public 
health if the plan is to use false pretenses to attack and 
vilify those that are making game-changing scientific 
breakthroughs.
    Thank you, Mr. Chairman. I look forward to the discussion 
from all our witnesses this morning, and I yield back.
    Chairman Cummings. Thank you very much.
    I now want to welcome our witnesses. Dr. Robert Grant, 
professor of medicine at the University of California San 
Francisco, Dr. Grant led one of the clinical trials 
demonstrating that Truvada could be used to prevent the 
transmission of HIV; Dr. Rochelle Walensky, the chief of 
infectious diseases at Massachusetts General Hospital and 
professor of medicine at Harvard Medical School, who is an 
expert on cost-effectiveness in HIV treatment; Mr. Tim Horn, 
the director of medication access for the National Alliance of 
State and Territorial AIDS Directors, who has also worked in 
HIV treatment and advocacy; Stephen Ezell from the Information 
Technology and Innovation Foundation; Mr. Aaron Lord, a PrEP 
user and cofounder of PrEP4All. Dr. Lord's personal experience 
led him to advocate on behalf of others, and we are glad to 
have him with us today. And finally, Mr. Daniel O'Day, chairman 
and chief executive officer of Gilead Sciences Inc.
    Now, if you all could please rise and raise your right 
hands, and I will now swear in the witnesses.
    [Witnesses sworn.]
    Chairman Cummings. Thank you very much. Let the record show 
that the witnesses answered in the affirmative.
    You may be seated. The microphones are quite sensitive, so 
please speak directly into them.
    And without objection, your written statements will be made 
part of the record.
    With that, Mr. Grant, you are now recognized to give an 
oral presentation of your testimony. Please note that I would 
ask that all of you stay within the five-minute limit.
    And before you get started, Ms. Ocasio-Cortez, I mentioned 
before you got here that you were a main driver in making sure 
that this hearing happened today. I want to thank you for your 
leadership.
    All right. Dr. Grant.

STATEMENT OF ROBERT M. GRANT, PROFESSOR OF MEDICINE, UNIVERSITY 
                         OF CALIFORNIA

    Dr. Grant. Chairman Cummings----
    Chairman Cummings. Good morning.
    Dr. Grant [continuing]. Ranking Member Jordan, and members 
of the House Committee on Oversight and Reform, I'm pleased to 
testify today on how the promise of PrEP remains unfulfilled. I 
devoted the last 20 years of my career to the development of 
PrEP. I am here today at my own expense because I promised that 
PrEP would become available if proven. We have not kept that 
promise. I come today to ask for your help.
    My PrEP research was funded by grants from the NIH starting 
in 2002. I later received supplemental funding from the Bill 
and Linda Gates Foundation. Our research was funded--other 
research was funded by NIH, CDC, and Gates. The U.S. Government 
provided the majority of funds for PrEP research, investing 
hundreds of millions of taxpayer dollars.
    Furthermore, CDC scientists discovered that adding a drug 
called FTC to tenofovir increased protection, and it's the 
combination of those two medications which is FDA-approved 
today. The CDC scientists also demonstrated that preexposure 
dosing added substantially to the protective events, and it's 
these inventions that led to the CDC government patents that 
were awarded several years ago.
    Gilead did not provide leadership, innovation, or funding 
for PrEP research. Gilead's role was limited to donating study 
drug and placebos. In my experience, Gilead proved to be a 
hesitant partner in PrEP research. For example, Gilead made 
public in 2005 that it would not seek FDA approval for PrEP no 
matter what the data showed.
    Although not supporting the research with funding or 
innovation, Gilead took steps to limit research on alternative 
and competing PrEP agents. In particular, there was interest in 
3TC, a competing drug because it was about to go off patent. 
Interest in 3TC PrEP dissipated with assurances that Gilead's 
Truvada would be generically available by the time efficacy 
trials were completed. Eight years after the completion of U.S. 
Government-funded efficacy trials, generic Truvada is still not 
available in the United States.
    PrEP scale-up has failed. The PrEP demand in the U.S. hit a 
tipping point in 2013 and then plateaued in 2016. Currently, 
only 1 in 10 people who could benefit from PrEP are receiving 
it. What little access has occurred is not fairly distributed. 
For example, black people suffer 44 percent of new HIV 
infections while only 10 percent of PrEP users are black. 
Gilead has had seven years to get PrEP marketing right. It's 
time we try something else.
    Our struggle against HIV is stuck. HIV is not stuck. HIV 
infects nearly 40,000 Americans every year, and there's been no 
decline since 2016. In my experience, the root cause of low 
PrEP access is the high price. Other barriers to PrEP access 
arise as consequences of the exorbitant drug prices. These 
factors may include fragmented insurance coverage, lack of 
awareness by providers and potential users, and stigma. At a 
competitive price, people would feel at ease to provide and use 
PrEP.
    PrEP can be manufactured and distributed for $6 per person 
per month, $6 per person per month in manufacturing and 
distribution costs. Gilead charges more than $2,100 per person 
per month, a 35,000 percent markup. Gilead's prices continue to 
increase every single year. The price of Truvada increased 76 
percent since I published evidence of PrEP efficacy in 2010 
using U.S. Government funding.
    You might hear that no one pays list price. This is not 
true. The University of California Student Health Services pays 
full price for PrEP, and it is their largest drug expense. All 
populations have multiple competing needs related to heart 
health, cancer prevention, mental health, substance use, 
productive health, and so much more. Should any public-health 
jurisdiction pay a 35,000 percent markup for a drug that 
addresses only one of these concerns? Hard choices have to be 
made in public health, and they are made.
    However, PrEP becomes an easy choice if it is available at 
a competitive market price. For example, three states and 
Australia purchased generic PrEP for $8 per person per month 
after a competitive process. That--what followed was the 
largest and fastest PrEP scale-up the world has ever seen.
    I believe that there are actions that you could take, that 
this committee could take at this time that would make PrEP 
available. PrEP continues to be underutilized despite seven 
years of drug donations, community grants, and assistance 
programs. A market price would change the game. I ask you to 
consider three actions. This committee could insist that 
taxpayers benefit from U.S. Government intellectual property. 
Second, you could scrutinize agreements between originator and 
generic manufacturers for anticompetitive practices such as pay 
for delay. I believe that these actions would take PrEP off the 
shelf and stop HIV at a price that we all can afford.
    Thank you.
    Chairman Cummings. Dr. Walensky.

   T2STATEMENT OF ROCHELLE WALENSKY, PROFESSOR OF MEDICINE, 
     HARVARD UNIVERSITY, ON BEHALF OF CHIEF OF DIVISION OF 
      INFECTIOUS DISEASES, MASSACHUSETTS GENERAL HOSPITAL

    Dr. Walensky. Good morning. Chairman Cummings, Ranking 
Member Jordan, and members of the committee, my name is Dr. 
Rochelle Walensky. I'm a professor of medicine at Harvard 
Medical School, chief of the Division of Infectious Diseases at 
Massachusetts General Hospital, a practicing clinician, and a 
researcher on the cost-effectiveness of HIV care both in the 
U.S. and internationally.
    In 1995, we told patients with AIDS they would, with 
certainty, die. AIDS plagued my internship. By the end of that 
year, we had an FDA-approved HIV cocktail, three drugs, up to 
14 pills a day, which, if taken without fail, allowed AIDS 
patients to live. At the time, the three drugs of the cocktail 
cost a total of $15,000 per person per year, and our research 
team reported its cost-effectiveness. We demonstrated it was 
good value for money.
    Today, we definitively have the tools to end this epidemic. 
The HIV three-drug cocktail termed antiretroviral therapy is 
frequently formulated into a single daily pill. The regiments 
have high resistance barriers; that's good. They have low 
toxicity profiles; that's also good. And projections suggest a 
normal life expectancy for adherent patients with HIV. We also 
know that people who take these drugs and effectively suppress 
their virus cannot transmit it to anyone else, but the cost of 
these drug regimens today is $40-50,000 per person per year, a 
300 percent increase in 25 years.
    Truvada is a code formulation of two of these three drugs 
used for treatment, scientifically known as the combination of 
tenofovir disoproxil fumarate and emtricitabine. It was FDA-
approved for HIV treatment in August 2004 and has since then 
been a mainstay of HIV care.
    In 2012 following remarkable scientific work, much of which 
was led by Dr. Grant, the FDA approved the expanded indication 
of Truvada for preexposure prophylaxis or PrEP for HIV 
prevention. The cost of Truvada, when FDA approved in 2004, was 
$7,800 per year. Today, it costs $20,000 per year. A similar 
drug combination is available internationally at a cost of $60 
per year. Please understand I'm not proposing that this is what 
the price should be in the United States. I simply provide that 
benchmark for our national pricing to put it into global 
context.
    In his February State of the Union address, the President 
announced his initiative to end the HIV epidemic. This will not 
be easy. The benchmarks for the end-the-epidemic initiative are 
a decrease in the number of new HIV infections by 75 percent in 
five years and by 90 percent by 2030. Our research group has 
published work highlighting that even if we get 90 percent of 
people with HIV diagnosed, treated, and virologically 
suppressed, we can only decrease the number of new infections 
by 40 percent. In short, to end this epidemic, we need both 
treatment and prevention.
    Aside from treatment, PrEP offers the most efficacious 
prevention intervention known. Make no mistake, even if it was 
free, PrEP is difficult. In addition to drug adherence, it 
requires quarterly doctor visits for HIV testing, sexually 
transmitted infection screening, and laboratory monitoring.
    But right now, the biggest problem with PrEP is access. The 
CDC estimates that more than 1.1 million people in the United 
States are at high enough HIV risk to warrant PrEP. Fewer than 
150,000 have ever received it. Over 75 percent of those are 
white gay men in the Northeast and the West Coast, but today's 
uncontrolled HIV epidemic is rampant among black gay men and 
continues to disproportionately affect women of color, 
especially in the South.
    In 2016 it was estimated that one in two black gay men will 
be diagnosed with HIV in their lifetime. We need prevention 
tools like PrEP to reach these marginalized populations if we 
are ever even going to make a dent in this epidemic, never mind 
to reach the auspicious end-the-epidemic goals.
    The sale of Truvada has resulted in profits of $36 billion, 
and Truvada, unchanged, has seen a price increase of 150 
percent since 2004. That price tag is simply too high. We have 
the scientific tools to end this HIV epidemic, and we are 
fortunate that pharma has developed these drugs to get us 
there. They have already profited enormously.
    Now, in the spirit of saving lives, of preventing new 
infections, of realizing a public health--of putting forth a 
cohesive public health response and realizing a Presidential 
call to action, I simply ask that these drugs be reasonably 
priced so that those most marginalized and at risk can reap 
their benefit.
    And finally, I would like to applaud Congress for holding 
this hearing and bringing this issue to the forefront in the 
public dialog. I hope that some of these companies, including 
Gilead, will begin to do the right thing. It's never too late 
for that. Thank you.
    Chairman Cummings. Thank you very much. Mr. Horn?

STATEMENT OF TIM HORN, DIRECTOR, MEDICATION ACCESS AND PRICING, 
   NATIONAL ALLIANCE OF STATE AND TERRITORIAL AIDS DIRECTORS

    Mr. Horn. Thank you, and good morning. Chairman Cummings, 
Ranking Member Jordan, and members of the committee, my name is 
Tim Horn, and I am director of medication access and pricing at 
NASTAD, which is the National Alliance of State and Territorial 
AIDS Directors. I am very pleased to be here today to offer 
testimony on PrEP access and pricing in the United States.
    NASTAD is a nonpartisan, nonprofit association that 
represents public health officials who administer HIV and 
hepatitis programs in the U.S. and around the world. We 
represent public health officials in all 50 U.S. states, the 
District of Columbia, the U.S. territories, and several local 
jurisdictions. I'd like to focus my comments today on the 
intersection of the high cost of Truvada as PrEP and the need 
for effective, comprehensive, affordable, and, importantly, 
sustainable public health approaches to HIV prevention in the 
United States.
    Now, our ability to respond to the needs of people who have 
been diagnosed with HIV is one of the greatest examples of 
effective public health in the United States. The Ryan White 
HIV/AIDS program ensures access to not only comprehensive 
state-of-the-art care but, importantly, low-or no-cost 
treatment made possible with significant discounting provided 
to AIDS drug assistance programs, or ADAPs. ADAPs insure 
treatment for nearly a quarter of all people living with HIV in 
the United States, the vast majority of whom are living at, 
below, or near the Federal poverty level.
    Now, one thing I want to emphasize here is that there is no 
such comprehensive Federal medication program for people at 
risk for HIV. And I just want to be clear. The only difference 
between someone living with HIV and someone at risk for HIV is 
a diagnosis. Those vulnerable to HIV infection face the exact 
same barriers to affordable medication in the United States.
    We are failing populations at high risk for HIV infection, 
including young black and Latino gay men, women, and 
transgender individuals. We are failing them because we have 
not built a payment and culturally appropriate delivery systems 
that are best able to reach them. There are many reasons for 
the low uptake of PrEP in this country, but financing and 
pricing, the subject of today's hearing, are undoubtedly among 
them. In order to end the HIV epidemic, we must build systems 
that provide access to PrEP for all populations.
    Now, our current PrEP system particularly for uninsured and 
underinsured people vulnerable to HIV infection is essentially 
built on the back of Gilead's medication assistance program for 
those who are uninsured and meet strict financial eligibility 
criteria, along with the company's co-pay assistance program 
for individuals who are commercially insured. Now, while these 
programs have undoubtedly helped expand access to the 
medication component of comprehensive PrEP services, they have 
also succeeded in largely masking the impact of the high price 
of Truvada.
    To be clear, these programs are not a substitute for 
functioning public health and healthcare systems. Partnerships 
with pharmaceutical manufacturers will always be important, but 
outsized dependency on their generosity, which in turn is 
dependent on their bottom line, is by no means an equitable and 
sustainable solution.
    Now, the 340B drug pricing program has also played an 
important role in allowing public health programs and their 
community partners, including federally qualified health 
centers, to afford PrEP while extending Federal resources as 
far as possible. But it doesn't go far enough. Even if we 
assume that the price available to 340B entities in the U.S. is 
75 percent to 80 percent below the list price, this still 
translates into approximately, you know, $400 per month per 
person, a price that is at least four times higher than what we 
can reasonably expect with robust generic competition.
    Additionally, 340B pricing of Truvada as PrEP is only 
available to some health departments and family planning 
clinics and is not available to other institutions where PrEP 
may be of significant benefit.
    Gilead's assistance programs, the 340B program and 
discounting, and the recent announcement of donated PrEP will 
continue to expand access to PrEP. However, a long-term, 
sustainable approach to PrEP access requires a competitive 
generic market. To this end, we believe Federal, state, and 
community partners should be cautious not only to--not to allow 
the present and future of existing patchwork measures to build 
an artificial market for Gilead's Descovy, which is expected to 
be approved for PrEP by the end of this year. Doing so will 
undercut the ability of the generic market for generic versions 
of Truvada to bring down costs for our public payers, our 
commercial payers, and, most importantly, people vulnerable to 
HIV infection.
    Importantly, a lower-cost form of PrEP would allow for more 
affordable procurement and expanded access across a variety of 
settings, including state and local health departments, family 
planning clinics, and STD clinics. And I want to underscore Dr. 
Grant's point. The list price of Truvada is the price of some 
of our most import programs do in fact pay.
    Not only has the high cost of Truvada been a barrier in 
scaling up affordable access to PrEP by these programs, they 
have required some programs to reallocate funding from other 
public health initiatives to meet HIV prevention priorities.
    So I do want to conclude by thanking the committee for the 
opportunity to testify today and for initiating a dialog that 
hopefully will be to the betterment of people vulnerable to HIV 
infection and to other intersecting conditions. Thank you.
    Chairman Cummings. Mr. Ezell?

 STATEMENT OF STEPHEN EZELL, VICE PRESIDENT, GLOBAL INNOVATION 
    POLICY, INFORMATION TECHNOLOGY AND INNOVATION FOUNDATION

    Mr. Ezell. Good morning, Chairman Cummings, Ranking Member 
Jordan, and members of the committee. I'm Stephen Ezell, vice 
president of Global Innovation Policy at the Information 
Technology and Innovation Foundation. We're a nonprofit, 
nonpartisan Washington, DC.-based science, technology, and 
economic policy think tank, and I appreciate the opportunity to 
testify in the panel this morning about the U.S. life sciences 
innovation system.
    The United States clearly leads the world in life sciences 
innovation. For instance, in the 2000's, U.S.-headquartered 
enterprises generated more new-to-the-world drugs than 
enterprises from the next five nations combined. And over the 
past two decades, U.S. companies have accounted for almost half 
of the world's new drugs, including treatments such as for 
leukemia, skin cancer, inherited blindness, and a set of 
treatments for HIV/AIDS that have made a disease that was once 
a death sentence now treatable and hopefully will have a full 
cure in the years to come.
    However, it was not always that way. In fact, in the 
1970's, the United States was a global in life sciences 
innovation as European-headquartered companies invented twice 
as many new-to-the-world drugs as ours did in the 1970's.
    What's changed over the past four decades has been a 
concerted and intentional set of policy choices designed to 
make America the world's leader in life sciences innovation. 
Those policies are anchored in three key tenants. First, robust 
and complementary public and private investment in life 
sciences R&D, effective mechanisms to facilitate the transfer 
of technology from universities and Federal laboratories to the 
private sector for commercialization, underpinned by strong 
intellectual property rights such as embodied in Bayh-Dole 
agreement, and a drug pricing system that allows companies to 
earn revenues that can be reinvested into future generations of 
biomedical innovation.
    The U.S. invests by far more than any other nation in life 
sciences R&D. In fact, analysts estimate that the United States 
has invested 70 to 80 percent of global biomedical R&D 
investment over the past two decades. It's anchored by Federal 
Government investment of about $39 billion a year into basic 
life sciences research that focuses on understanding 
fundamental processes by which diseases develop and transmit or 
identifying novel biomarkers indicating the presence of 
disease. This basic research creates a platform for innovation 
potentially leading to the discovery of new medicines, tests, 
or procedures.
    The private sector complements this public-sector 
investment with, in some years, close to $95 billion in annual 
R&D focused on the applied research and clinical trials 
necessary to bring safe and effective breakthrough drugs to 
market. The fact is this drug development process is lengthy, 
risky, and expensive. Studies vary, and I'm happy to share 
result of several with the committee. But research finds that, 
on average, developing a new pharmaceutical compound takes an 
average of 11.5 to 15 years at a cost of $1.7-3.2 billion.
    It's absolutely vital to recognize that public and private 
investments are complementary. A recent journal of Nature 
article estimates that, on average, biotechnology companies 
invest $100 in development for every $1 the government invests 
in research leading to a specific innovative drug.
    If you take the case of the breakthrough anticancer 
prostate drug--or prostate cancer drug Xtandi developed 
primarily by Astellas and its partners, it's estimated that 
about $2 million in federally funded research conducted at UCLA 
was complemented by over $900 million of private-sector 
investment required to bring Xtandi to market. That's a nice 
example of the almost 300 new drugs, vaccines, and devices that 
have been developed as a result of public-private partnerships 
facilitated in part by the Bayh-Dole Act since its enactment in 
1980.
    Just like semiconductors, movies, or music, life sciences 
is an innovation-based industry, meaning that companies incur 
extremely high upfront fixed cost of initial design and 
development that must be recouped and admits to failure rates 
that approach 95 percent. Moreover, these companies 
fundamentally depend upon the profits earned from one 
generation of innovation to finance investment in the next. 
Hopefully, Gilead's investment in HIV/AIDS drugs will generate 
profits that enable its ongoing efforts in areas like 
hemophilia and oncology to generate breakthrough treatments 
tomorrow.
    This dynamic is why America's life sciences sector is the 
world's most R&D-intensive, investing 44 percent of its value 
added into subsequent R&D. The reality is that there's a direct 
link between pharmaceutical company revenues and their ability 
to reinvest in future generations of innovation. They are 
intimately and causally linked.
    In conclusion, a key reason why the U.S. life sciences 
innovation system has been so successful is that we've created 
the framework for effective public-private partnerships where 
each party contributes what it does best. Public research to 
bring a stock of knowledge that can be innovated upon by the 
private sector and investing the hundreds of millions required 
to bring an innovative new drug to the market.
    Thank you for your time today, and I look forward to 
answering your questions.
    Chairman Cummings. Thank you very much. Dr. Lord.

       STATEMENT OF AARON LORD, PREP PATIENT AND ADVOCATE

    Dr. Lord. Chairman Cummings, Ranking Member Jordan, and 
members of the committee, I thank you for inviting me here 
today to testify. My name is Aaron Lord. I am here today as a 
physician, as an HIV activist, and a cofounder of the PrEP4All 
collaboration, as well as a proud gay man.
    I was born and raised in West Virginia. I attended 
Georgetown University on Federal scholarship. I then attended 
medical school at Columbia and am currently an assistant 
professor at NYU, but I am not here in my official capacity.
    Since realizing I was a gay man in my early teens, like so 
many in my community, I lived in fear of acquiring HIV. The 
reality hit all too close to home when early on in our 
relationship my future husband, who I cherish and love dearly, 
was diagnosed with HIV.
    In July 2012, the FDA announced the approval of Truvada as 
PrEP. It's the first drug approved to prevent rather than treat 
HIV. It is highly effective, reducing risk by over 99 percent 
when taken as prescribed. Since 2012, I have taken Truvada 
every day to protect my health and the health of my community. 
With this medication, I no longer have to live in fear.
    Despite PrEP's remarkable efficacy, the number of new HIV 
infections in the U.S. remains the same today as when PrEP was 
approved in 2012 with one person becoming newly diagnosed every 
15 minutes. We know it doesn't have to be this way. We know 
that when PrEP is made universally accessible at no cost, new 
HIV infections dramatically decrease. In Sydney, Australia, new 
HIV infections decreased by 25 percent statewide in one year 
when public health officials used low-or no-cost PrEP to reach 
all those at risk.
    In the U.S., however, we are failing to reach those most 
vulnerable. With mere fractions of at-risk women and black and 
Latino men getting PrEP and rates and use in the South remain 
stubbornly low. Too many of us are still living in fear. A root 
cause of this problem is the price. Gilead Sciences, who makes 
the only PrEP available in this country, charges us over $2,000 
a month or over 400 times what FDA-approved generics cost 
internationally.
    And while Mr. O'Day will certainly state that his company 
has earned the right to charge such exorbitant sums, Truvada as 
PrEP is not Gilead's invention. Truvada as PrEP is an invention 
of the U.S. Government whose research and development was 
funded exclusively by U.S. taxpayers and the Gates Foundation 
and is protected by multiple robust patents issued to the CDC. 
Even the very patents that Mr. O'Day currently uses to prevent 
the American people from accessing generic Truvada are 
themselves based on research funded by the U.S. taxpayer.
    Price is not the only barrier preventing people from using 
PrEP. Stigma, racism, homophobia, transphobia, sexism, poverty, 
they all play a role. These barriers can and must be mitigated, 
but we cannot do it if our healthcare system spends over 
$20,000 a year on Mr. O'Day's drug instead of spending it on 
precious programming to fight these barriers. Mr. O'Day, we are 
suffocating under the weight of your company's pricing.
    Mr. O'Day, for a figure far less than $2.6 billion, which 
is what we spend on your egregiously overpriced medication 
every year, we could have a national, far-reaching PrEP program 
that guarantees every person who needs PrEP can get it, 
including free medicine, clinical care, lab testing, and 
transportation. And we could still have half-a-billion left 
over for community organizations to fight these barriers. Mr. 
O'Day, you have given the American people a very bad deal for 
our money.
    We have learned all too well from Gilead's past misdeeds 
what happens when they are left to their own devices. As the 
Wyden-Grassley's report so vividly showed, Gilead's pricing of 
their cure for hepatitis C at $1,000 a pill was aimed to do one 
thing: maximize their profit. The consequences of that 
unmitigated greed resulted in a public health disaster. Despite 
spending $50 billion of our hard-earned dollars buying 
overpriced medication, the number of new hepatitis C infections 
more than tripled.
    I'm here today to say that HIV activists will not stand by 
and allow this to happen ever again. So ladies and gentlemen of 
the committee, I ask you as a representative of my community, 
as a proud American, as a scientist, and as a patient, to join 
me in asking Mr. O'Day what justification do you have for 
charging $2,000 a month for Truvada as PrEP when the American 
people funded the innovation of the molecule, invented its use 
as PrEP, and funded four clinical trials to prove its efficacy?
    Mr. O'Day, we do not ask for your company's charity or for 
tax-deductible donations that meet your company's needs but 
fail to meet the needs of our communities. Rather, we ask Mr. 
O'Day, why not lower the price of Truvada to $15 a month right 
here today at this hearing?
    Members of Congress, the American people have invented a 
way to end the HIV epidemic, and that we should be very proud 
of. And we look to you today to ensure that every single person 
in this country can protect themselves from this plague. Thank 
you very much.
    Chairman Cummings. Thank you very much. Mr. O'Day?

 STATEMENT OF DANIEL O'DAY, CHAIRMAN AND CEO, GILEAD SCIENCES, 
                              INC.

    Mr. O'Day. Good morning, Chairman Cummings, Ranking Member 
Jordan, and members of the committee. My name is Daniel O'Day. 
I recently joined Gilead as its new chief executive officer. 
Thank you for the opportunity to be here today.
    Gilead is an American biotech company, but for the past 
three decades has been focused on creating therapies that 
prevent, treat, and cure some of the world's worst diseases. To 
name just a few examples, Gilead invented the first once-daily 
pill to cure hepatitis C, Tamiflu for influenza, and the first 
and currently only FDA-approved HIV prevention medication, 
Truvada, along with 10 other drugs used in the treatment of 
HIV.
    When I decided to become CEO, I had long admired Gilead's 
remarkable contribution to health care and the high level of 
innovation behind their medicines. Importantly, I knew I was 
joining a company that was committed to the interest of 
patients and dedicated to pursuing scientific excellence to 
prevent and cure diseases. All of this is evident in Gilead's 
approach to HIV, the commitment to developing HIV medications 
that are safer, more patient-friendly, and more effective. 
Gilead researchers have made contributions that fundamentally 
changed the course of the HIV/AIDS epidemic, transforming the 
disease from a death sentence to a manageable chronic 
condition.
    Gilead was founded in the midst of the AIDS crisis. At that 
time people living with HIV were required to take a cocktail of 
20-plus pills each day to treat the disease. Many of these 
drugs lead to serious, often debilitating side effects. And 
even when taken as directed, the therapies offered an average 
life expectancy of less than 40 years of age with most people 
dying within just a few years of contracting the disease.
    In the early 1990's, Gilead began working to invent a 
single-pill HIV treatment. Following nearly a decade of work 
and about $6 billion invested in research, $1.1 billion of 
which was devoted specifically to Truvada, Gilead launched 
Truvada as one of the first fixed-dose combination pills for 
HIV treatment in 2004. Today, Truvada and other Gilead 
medicines have contributed to nearly doubling the average life 
expectancy of people with the disease.
    Although Truvada was initially approved to treat HIV, 
researchers and public health officials knew for years that 
antiretroviral drugs like Truvada could also be used to prevent 
HIV infection, a technique referred to as PrEP. With this in 
mind, Gilead supported clinical trials that ultimately led to 
the approval of Truvada, the first and currently only 
medication approved for PrEP.
    To be clear, despite some media suggestions otherwise, 
Gilead invented Truvada, no one else. Gilead developed the two 
drugs that are combined in Truvada, invented the combination 
that allowed these drugs to be taken as a single pill, and 
invented the drugs used to treat HIV in combination with other 
antiviral drugs.
    I want to address the use patents on PrEP granted to the 
CDC. Using Truvada for PrEP was well-known in the scientific 
community long before CDC claimed it as an invention. We 
believe the CDC patents are invalid, but we've chosen not to 
challenge those patents because we value our collaborative 
relationship with the agency.
    Finally, I want to address access to Truvada. Gilead is 
committed to ensuring that every American who needs Truvada can 
obtain it. We offer a wide range of programs to help ensure 
that people have access to Truvada when they need it. For 
example, 98 percent of people who use our co-pay assistance 
program have no out-of-pocket costs. In fact, according to the 
CDC's own estimates, when taking our programs into account, 
less than 1 percent of Americans who would benefit from PrEP 
are in need of a financial assistance to obtain Truvada.
    Moreover, we continue to work with advocates, providers, 
and governments to remove the societal and other barriers to 
broader PrEP usage. Last week, we took another important step 
for expanding access by donating Truvada for up to 200,000 
uninsured Americans each year.
    We are committed to ending the HIV epidemic. We will work 
with Congress and others to further expand access to PrEP, and 
we will continue our scientific research in pursuit of a cure.
    In representing Gilead, I can assure you that we take our 
responsibility in HIV extremely seriously and will ensure you 
that this is always evident in our actions.
    Thank you for the opportunity to provide this testimony 
today, and I'd be pleased to answer your questions.
    Chairman Cummings. Thank you very much.
    I now recognize Ms. Ocasio-Cortez, five minutes.
    Ms. Ocasio-Cortez. Thank you. Thank you, Chair. Thank you 
for agreeing told this hearing. And while I appreciate your 
generosity in acknowledging the role our office played in this 
hearing, I also have to give credit to the countless advocates 
and activists that have been uplifting the issue of the price 
of Truvada and PrEP.
    And I have to say that is not because of me we are having 
this hearing even in our office. It is because of a 23-year-old 
staffer Ms. Claudia Pagon Marchena, who first dug into--who 
first noticed this and first listened to the actual activists 
that raised this issue. She took the opportunity to pursue it, 
and if it wasn't for the openness and willingness of your 
leadership and committee staff to take her concerns seriously, 
we wouldn't be here today.
    And so I just think it is an incredible testimony to--
despite the powerlessness we often feel in this political 
moment, it shows that everyday people, no matter your age or 
your identity, can make changes. And that is the reason why we 
are having this hearing today, so thank you.
    I also, before I begin, would like to submit to the 
congressional record New York City Council Speaker Corey 
Johnson, who himself is HIV-positive, his testimony to the 
congressional record, so I seek unanimous consent to do so.
    Chairman Cummings. Without objection, so ordered.
    Ms. Ocasio-Cortez. Thank you so much.
    So let's get down to, you know, the core of this hearing. 
Dr. Grant, Truvada for PrEP is the only known drug that can 
prevent the transmission of HIV, correct?
    Dr. Grant. It's the only medication that's been approved by 
the FDA. It's also known that tenofovir alone is prophylactic--
--
    Ms. Ocasio-Cortez. Okay.
    Dr. Grant [continuing]. for HIV----
    Ms. Ocasio-Cortez. Thank you. And, Dr. Grant, it was your 
NIH-funded research on PrEP that built on the earlier research 
were patented by CDC researchers, is that correct?
    Dr. Grant. Yes. My clinical trial was informed by CDC 
research in two ways. One, the CDC demonstrated that the 
preexposure dose was--added to the efficacy of PrEP and--yes.
    Ms. Ocasio-Cortez. Thank you. Thank you, Dr. Grant. And I 
would also like to seek unanimous consent to submit this Yale 
School of Law study into the congressional record, which 
concludes that the CDC's patents for PrEP were both valid and 
enforceable against Gilead.
    Chairman Cummings. Without objection, so ordered.
    Ms. Ocasio-Cortez. Thank you very much.
    Dr. Lord, thank you for your advocacy here today. Is it 
true that the public invested $50 million to develop PrEP?
    Dr. Lord. That is correct.
    Ms. Ocasio-Cortez. Is it also true that Gilead relied on 
publicly funded trials to obtain FDA approval?
    Dr. Lord. Yes. If you look at their supplementary new drug 
application, you'll see that every sponsor of Truvada as PrEP 
was a non-Gilead sponsor.
    Ms. Ocasio-Cortez. So the public invested to develop the 
drug. The public invested and funded the trials for FDA 
approval. Is it true that the pharmaceutical companies force 
the public to pay twice first when investing in drug discovery, 
but then it looks like these patient assistance programs that 
they tout very often also have a public investment piece as 
well, right? How are these public assistance programs funded?
    Dr. Lord. Yes, so, you know, I think as far as like the co-
pay assistance program goes, it's important to also note that 
it's--it only exists in its current state due to the work of 
activists. We have worked for years to get them to increase 
from initially a $300 a month co-pay assistance, which left 
people with hundreds if not thousands of dollars of co-pay per 
month. And then they really only increased it to $4,800 after 
additional years of activist pressure, and that still left 
thousands of dollars of donut hole potential for some patients. 
And then it only took a New York Times op-ed that we published, 
you know, to threaten march-in rights on this drug in order to 
get them to raise it to the $7,200----
    Ms. Ocasio-Cortez. Thank you.
    Dr. Lord [continuing]. which is still not enough.
    Ms. Ocasio-Cortez. Thank you. And even when it comes to 
when folks can't access PrEP because it is so expensive and, 
you know, the HIV epidemic continues, that also comes at a 
public cost, right? So the public is paying--we pay to develop 
PrEP, we paid to finance the publicly funded trials to develop 
this drug, we also pay and foot the bill with patient 
assistance programs. Also, as you noted, the existence of these 
programs happen because of the public, and also we pay when the 
HIV epidemic gets spread as well.
    Very quickly, Mr. O'Day, you are the CEO of Gilead. Is it 
true that Gilead made $3 billion in profits from the sales of 
Truvada in 2018?
    Mr. O'Day. Three billion in revenue.
    Ms. Ocasio-Cortez. Oh, yes, in revenue, thank you. And, 
very quickly, the current list price is $2,000 a month in the 
United States, correct?
    Mr. O'Day. The current list price is $1,780 in the United 
States.
    Ms. Ocasio-Cortez. Okay.
    Mr. O'Day. And just to correct, the $3 billion was a global 
figure----
    Ms. Ocasio-Cortez. Okay. I see.
    Mr. O'Day.--for Truvada for PrEP----
    Ms. Ocasio-Cortez. So the list price is almost $2,000 in 
the United States. Why is it $8 in Australia?
    Mr. O'Day. Truvada still has patent protection in the 
United States, and in the rest of the world it is generic. I 
can't comment on the price in Australia of the generic 
medicines, but it is generically available in other parts of 
the world and will be generically available in the United 
States as of September in 2020 based upon Gilead agreeing to 
support----
    Ms. Ocasio-Cortez. Thank you.
    Mr. O'Day.--generic entries one year earlier.
    Ms. Ocasio-Cortez. So I think it is important that we 
notice here that we the public, we the people developed this 
drug, we paid for this drug, we led and developed all of the 
grounding patents to create PrEP, and then that patent has been 
privatized. Despite the fact that the patent is owned by the 
public, we refuse to enforce it. There is no reason this should 
be $2,000 a month. People are dying because of it. And there is 
no enforceable reason for it. We own the core intellectual 
property for it. And, as a result, people are dying for no 
reason, for no reason----
    Chairman Cummings. The gentlelady's time is----
    Ms. Ocasio-Cortez [continuing]. to develop this drug. Thank 
you very much.
    Chairman Cummings. The gentlelady's time is expired. Mr. 
Armstrong?
    Mr. Armstrong. Thank you, Mr. Chairman. And I agree. I 
believe that prescription drug pricing, it is a conversation 
that I get, it is one of the biggest ones we get in our office 
both in D.C. and back in our offices in North Dakota, and it 
should be a bipartisan endeavor. And in fact, we have had a 
package of prescription drug bills that have come through two 
committees here, and I know in at least one they passed 
unanimously.
    But unfortunately, we are in D.C. and, never allowing a 
political opportunity to go to waste, they are going to get 
marked up in Rules Committee, and we are going to vote on bills 
this week that just quite frankly have no chance of becoming 
law. So when we talk about bipartisanship, we had two sets of 
packages that could come to the floor clean this week that 
would pass, they pass the Senate, the President could sign them 
by the end of the month, but that is not going to happen.
    So, Mr. O'Day, it has been said that NIH spent $51 million 
on clinical trials for PrEP, is that correct?
    Mr. O'Day. Thank you, Congressman. Yes, it's important to 
point out that Gilead has spent $1.1 billion developing this 
medicine. Gilead has the patents on this medicine. And in the 
course of the PrEP indication, it's also important to take us 
back to that period of time of history with the HIV/AIDS 
epidemic. It was a time when prevention of AIDS was actually 
something that was highly controversial both from a scientific 
standpoint, resistance, but also from public advocacy because 
there were questions around the morality of providing a 
preventive medicine that could take away from safe-sex 
practices in others. So this was a public-health question that 
needed to be answered.
    And we partnered with several members of the community. 
It's a very complex topic. For the PrEP indications, we 
supported it with medicines. We have two of our Gilead 
scientists that are co-authors on the fundamental--one of the 
fundamental trials, the iPrEx trial that Dr. Grant has spoken 
to before and to be an author on these trials in a highly 
regarded 30-party publication--medication--publication, you 
need to have sufficient involvement in those trials. So Gilead 
had sufficient involvement in those trials. The NIH provided 
$50 million in grant. The Gates Foundation supplied $17 million 
in grants. And the Gates Foundation also independently funded 
the second trial that was used for this indication with $70 
million as well. So it was a partnership amongst public and 
private institutions to get this indication.
    Mr. Armstrong. And you said in your opening statement you 
provide financial assistance to uninsured patients. How does 
that work?
    Mr. O'Day. So we have two basic programs to help with 
patients. One is the co-pay assistance program. So patients 
that have commercial insurance that have a high deductible cost 
for their medicines, we have a program that supports them. In 
fact, patients that access our co-pay programs during the life 
of the patent that we have on the product, 98 percent of people 
take nothing out of their pocket when they go to the pharmacy, 
zero.
    The other end of the spectrum we have deep discounts to 
government programs that allow patients in Medicaid, Medicare, 
ADAP programs to access our medicines at 70 to 80 percent 
discounts for the list prices that we've discussed here today.
    Finally, for the uninsured patient population that is truly 
not met by these needs, we've been working with CDC and 
announced the--one of the largest-ever donations of medicine 
last week in conjunction with HHS and CDC for--by the CDC's own 
estimates, they've estimated that out of the 1.1 million 
patients that are susceptible to HIV, 200,000 are uninsured. We 
have donated as a result of the announcement last week for all 
200,000 of those patients to receive free Truvada for the next 
10 years.
    Mr. Armstrong. And I grew up in the early 1980's, and we 
have come a long way since then and we have a long way to go. 
But, I mean, particularly when we are talking about the 
uninsured population as it relates to HIV and access to drugs, 
I mean, it is a debilitating, crippling disease. We are working 
toward prevention, we are working toward cure, but those 
factors to that uninsured population are unique to this 
healthcare crisis, are they?
    Mr. O'Day. Well, yes, this is quite a unique circumstance 
because of the fact that, at the end of the day, there are so 
many things that are getting in the way of people that require 
PrEP getting PrEP. There's access to the healthcare system for 
sure, but there's also education, education for physicians, 
education for patients, and there's a tremendous amount of 
stigma associated with this disease, what comes into play for 
the underserved communities. And this is something that Gilead 
has been focused on, provided hundreds of millions of dollars 
and supporting community associations to try to get at these 
other root causes of PrEP, and it's absolutely what's required 
to help eliminate the disease. I completely agree that we have 
to attack it from both a prevention as well as a treatment 
standpoint to eliminate this disease, and we're a big part of 
that.
    Mr. Armstrong. Thank you, sir.
    Chairman Cummings. Thank you very much. I recognize myself 
now.
    Mr. O'Day, other drug companies sat in the very seat, that 
very seat that you are sitting in like Martin Shkreli, and all 
offer the same excuses and justifications, same thing. They 
claim they have patient assistance programs to help those who 
cannot access the drug, but the truth is that someone, somebody 
is paying for these exorbitant prices. And that impacts 
everybody in the system. That is one reason health care now is 
so expensive. At the end of the day, it is the taxpayers who 
bear the cost of these skyrocketing prices through government 
programs like Medicaid.
    Dr. Lord, isn't it true that in some countries the generic 
version of this treatment is sold for a fraction of the U.S. 
price? Is that right?
    Dr. Lord. That is correct.
    Chairman Cummings. And how much is it sold for overseas?
    Dr. Lord. According to the Global Fund, you can purchase 
this medication for under $5 a month.
    Chairman Cummings. That is astonishing. Yet Gilead is 
charging around 17, close to $1,800 a month?
    Dr. Lord. Yes.
    Chairman Cummings. Mr. O'Day, in your written statement, 
you claim that your company spent $1.1 billion on research and 
development related to Truvada. But you made $36 billion in 
revenue on Truvada since it was approved in 2004. That is 
according to your own company's SEC filings. Mr. O'Day, do you 
believe that that is appropriate, and do you believe it is 
moral?
    You know, somebody said over here I guess it is a thing of 
choices. One of my first employees died from AIDS, and I will 
never forget it. And I described it, his dying on installment. 
It is a mother. It is rough to watch somebody die from AIDS. 
But anyway, you can answer my question.
    Mr. O'Day. Mr. Chairman--and, you know, I'm very sorry to 
hear about your----
    Chairman Cummings. Employee.
    Mr. O'Day. Employee.
    Chairman Cummings. It was a person.
    Mr. O'Day. Yes.
    Chairman Cummings. An African-American young male about 25 
years old, dead.
    Mr. O'Day. I'm very sorry to hear that. The answer to the 
question is that we have spent more than $6 billion over the 
past--since 2020 on HIV research in general. And in fact, we've 
taken the disease from a death sentence to a manageable chronic 
condition with one pill once a day, but we're not done yet. We 
still have medicines--because of the fact that we now have the 
average life expectancy out to 78 years from 40 years, we never 
anticipated that people would be taking these medicines for 
decades. And some of the current generations of medicines have 
kidney and bone effects that now our next generations that 
we're launching will be able to have less of those effects and 
allow people to live longer healthier lives.
    And yet we're not done because we have to get to a stance 
where people aren't taking a daily pill, where they're taking 
it once a month, once every two months, or we hope we can get 
to a cure where people can take a limited course of therapy 
like in HCV, 12 weeks, and never have to worry about medicines 
again. In order to do that, we have to continue to invest in 
research for the patent life of our medicines. And, of course, 
when a patent ends, generics come on like they are in other 
parts of the world.
    But during that patent period time, we also have a 
responsibility to make sure that Americans get our medicines 
when they're priced at a level that allows us to reinvest in 
research. And that's where our access programs, co-pay 
assistance, the donation to the CDC come in to allow us to make 
sure the price doesn't get in the way during this period of 
time of patent exclusivity.
    Chairman Cummings. Can you tell me quickly about the timing 
of the donation that you all are making of medication? I think 
you said 200,000.
    Mr. O'Day. Yes, Mr. Chairman. So it's 2.4 million bottles a 
year, which equates to around--the PrEP treatments for around 
200,000 patients for up to 10 years.
    Chairman Cummings. All right.
    Mr. O'Day. And this includes both our current generation 
product Truvada, as well as our advancement, which may come to 
market as early as later this year, which allows that better 
safety profile if you like for patients.
    Chairman Cummings. And how did you all come up with this 
200,000? That is what I was trying to get to.
    Mr. O'Day. Oh, that was a number that was requested and 
discussed with the CDC. They acknowledged that in the 48 
hotspot communities, District of Columbia; San Juan, Puerto 
Rico; and the seven rural states, that that would be where--the 
number of patients that would not qualify for Federal programs 
or be involved in commercial insurance. So that number came 
from the CDC, and we were happy to support them with that.
    Chairman Cummings. And so if they had come up with a higher 
number, it is quite possible you would have given more. Is that 
a reasonable assumption?
    Mr. O'Day. That's a reasonable assumption, yes.
    Chairman Cummings. All right.
    Mr. O'Day. We were trying to solve a gap that isn't 
currently covered by our current access programs.
    Chairman Cummings. You know, Mr. O'Day, something was said 
here earlier, and I want you to be real clear. I have said this 
to many of the witnesses in the pharmaceutical industry. I have 
no problem with you all making a profit. I want you to make a 
profit. I want you to make a profit because I have seen what 
research can do. I have relatives that went, say, for example, 
from a chronic condition with cancer--I mean, from a terminal 
condition to chronic. I have seen it in a few years. And I also 
serve with Dr. Gallo on the Human Virology Board in Maryland, 
so we have been dealing with this a long time.
    But, at the same time, I am talking about the people who 
cannot get it, you know, the one who is getting ready to die 
and will not be able to attend his daughter's wedding, that 
one, or the mother who won't be there to see her children grow 
up, that lady. And what I am saying to you is that, you know, I 
want to work, we all want to work with the industry, but it is 
kind of hard.
    I mean, you can imagine when we hear about the $36 billion 
or the $3 billion--and I know it is global, I got that--$3 
billion, and then we go back to our districts and we see 
people, and they see the cure. They know the cure is out there. 
They know there is something out there called Truvada. They 
don't know you, they don't know who makes it. All they know is 
that it is something that could save their life. And they are 
reaching, trying to get it. And then they hear about these 
figures and they say--they just can't get there. They cannot 
reach it. And I don't know whether those kind of things are 
taken into consideration in the board rooms. Are they?
    Mr. O'Day. Absolutely. I can assure you that if there is a 
patient out there that cannot access Truvada because of 
financial means, our programs are designed to capture them. I 
mean, again, we have the co-pay assistance for people with 
insurance. People without insurance that, you know, make less 
than five times the poverty level, are provided with medicine 
for free through our medication assistance program.
    Chairman Cummings. And who pays for that?
    Mr. O'Day. Gilead pays for that.
    Chairman Cummings. So that cuts into your profit. Is that 
what you are saying?
    Mr. O'Day. It's important to us to make sure that every 
patient can have access to the medicines, and it's absolutely 
part of our responsibility.
    Chairman Cummings. All right. I now recognize Mr. Jordan.
    Mr. Jordan. Thank you, Mr. Chairman.
    Mr. O'Day, what is the difference between Truvada and PrEP?
    Mr. O'Day. Truvada is a medicine that's used for HIV 
treatments and for prevention. It was discovered many years 
ago.
    Mr. Jordan. I guess my question is is it the exact same 
drug; it is just used at a different time and in a different 
way?
    Mr. O'Day. No, PrEP is an indication--one of the 
indications that Truvada is approved for.
    Mr. Jordan. Right, but--so the drug is Truvada. It is 
used--and when we say--because Dr. Lord talked about Truvada as 
PrEP.
    Mr. O'Day. Oh----
    Mr. Jordan. It is the same drug?
    Mr. O'Day. Yes, it's the same drug, is the same mechanism, 
the same dose, it's the same----
    Mr. Jordan. It is a different use?
    Mr. O'Day.--frequency.
    Mr. Jordan. Different use, different timing----
    Mr. O'Day. What Truvada does is it reduces viral 
replication of HIV, and that can be effective for----
    Mr. Jordan. I just want to be clear for everyone, though, 
that----
    Mr. O'Day. Yes.
    Mr. Jordan [continuing]. I think there can be some 
confusion that Truvada and PrEP are somehow some different 
drug. It is the same drug?
    Mr. O'Day. Truvada is the drug. PrEP is one of the 
indications----
    Mr. Jordan. Right.
    Mr. O'Day.--that the drug is used for.
    Mr. Jordan. Got it. Got it. Okay. And, earlier, Dr. Grant 
said Gilead did not provide leadership or funding for PrEP in 
the studies at CDC. Is that true?
    Mr. O'Day. No, that's not true. I mean, we have nine 
scientists that were involved in the iPrEx trial itself, was 
one of the two trials that went to the FDA to seek approval. 
And of those, we have two scientists. Both are still with the 
company actually that were authors in the primary New England 
Journal article that is the iPrEx study.
    Mr. Jordan. Okay.
    Mr. O'Day. And to be an author on the New England Journal 
of Medicine, you must have----
    Mr. Jordan. So----
    Mr. O'Day.--involvement in the trial----
    Mr. Jordan. So----
    Mr. O'Day.--in addition to the free medicine we provided 
and the----
    Mr. Jordan. So, Mr. O'Day, Gilead developed Truvada?
    Mr. O'Day. Correct.
    Mr. Jordan. You guys did that all on your own. Gilead 
participated with CDC on Truvada as PrEP, right?
    Mr. O'Day. Correct.
    Mr. Jordan. And your drug has made a difference for 
millions of people all over the world, right?
    Mr. O'Day. That's correct.
    Mr. Jordan. How many folks do you think have been 
impacted--I would say people are alive today because of your 
drug. Is that true?
    Mr. O'Day. Oh, absolutely. And with 10 other medicines that 
Gilead makes, absolutely millions of people living with AIDS 
and preventing AIDS.
    Mr. Jordan. And how long did it take to develop Truvada?
    Mr. O'Day. Truvada was a long story. It goes back to the 
early 1990's with--Truvada is a combination of two different 
medicines. One is called, for the sake of simplicity, TDF, and 
the other one is FTC. So this goes back to the early 1990's and 
then into the early 2000's when FTC was evaluated by our 
scientists, and it's the combination of these two medicines 
that led to the first approval for Truvada in 2004 after a good 
decade to 15 years of research and lots of failures, by the 
way. I mean, 90----
    Mr. Jordan. So over a decade of research and trials and all 
kinds of effort to develop this miracle drug that has saved 
millions of people all over the planet, my guess is that costs 
a few dollars. What did it cost you to develop the drug?
    Mr. O'Day. Well, in this case it cost $1.1 billion.
    Mr. Jordan. So billions of dollars to develop this amazing 
drug----
    Mr. O'Day. Yes.
    Mr. Jordan [continuing]. that saved all kinds of folks. And 
no what are you doing with those profits? I think you said you 
are trying to find a cure, right?
    Mr. O'Day. We're--absolutely. We're investing them back 
into research. We--our scientists and the colleagues--I'm so 
inspired by Gilead. They will not rest. They will not rest. 
Good enough was never good enough for them when we had this 
generation of medicines that had these kidney and bone 
toxicities, and we're now launching medicines that are much 
more tolerable for patients today. But they're not stopping. So 
we're looking at long-acting medicines that----
    Mr. Jordan. Just last week you said for folks who can't 
afford it, folks who don't have insurance, you are going to 
give it to them free?
    Mr. O'Day. Absolutely.
    Mr. Jordan. Okay. So just let me get this straight. Over a 
decade of research, over $1 billion into that research, you 
develop a drug that saved millions of people, now can be used 
as PrEP prior to, not just as something after the fact that 
when people have been diagnosed with HIV. The profits you have 
made from that you are now working on developing a cure and, 
just last week, you announced folks who can't get the access to 
the medication right now, you are going to give it to them 
free?
    Mr. O'Day. Yes, Congressman.
    Mr. Jordan. But you are a bad guy. You are a bad guy. I 
mean, that is what we heard from the other side.
    Mr. Ezell, isn't that exactly how it is supposed to work 
under the Constitution? People come up with a great idea, they 
go to the Patent and Trade Office, they get a patent for it, 
they get that patent for certain length of time to recoup the 
billions of dollars it cost to make the product or the idea or 
whatever they did that has helped millions of people, that has 
been great for our--this is one of the things that makes 
America the greatest place ever. Isn't that supposed to be how 
it is supposed to work
    Mr. Ezell. That's exactly right, Representative Jordan. 
And, you know, it's interesting to hear the questions about, 
well, how much cheaper is this drug in other countries of the 
world. Well, part of the problem is that other countries of the 
world are not as effective in innovating drugs because they did 
not----
    Mr. Jordan. They didn't make it. These guys made it.
    Mr. Ezell. That's exactly right. We've put in place systems 
to----
    Mr. Jordan. Oh, I forgot to add one thing. I forgot another 
thing. They are going to go off patent year early. Isn't that 
right, Mr. O'Day?
    Mr. O'Day. Yes, and generics will enter one year early.
    Mr. Jordan. I mean, so one year early is going to go to a 
lower cost. They don't have to do that, but somehow, they are 
the bad guy, right? I just fail to--I appreciate what you have 
done and the thousands of people that are being impacted as we 
speak, the millions of people whose lives have been impacted, 
the folks who are alive today because of the work you have 
done. And we are going to beat you up.
    So, Mr. Chairman, I appreciate this hearing, and I yield 
back my time.
    Chairman Cummings. I appreciate you, but let me say 
something. Let me make this clear, and listen up. Nobody is 
coming here to beat you up. I want to make that clear. I 
applaud Gilead. But it is nothing like holding the hand of 
somebody who is dying from AIDS. I am sorry. And all we are 
trying to do is represent our constituents and help them stay 
alive. When you are dead, you are dead. And when I think about 
the fact that Truvada for PrEP is only getting to 10 percent of 
the people that need it, what about the other 90 percent? What 
about their families? I am not knocking you. I am just trying 
to figure out how we can help you get to the people who are 
dying as we speak, as we speak.
    And we can holler, we can play all these games, but let me 
be clear. Let me be clear. I speak for the dead and the living, 
we are simply trying to get, again--I don't know who he is 
talking about, but I applaud Gilead. I have been dealing with 
this issue for 20-something years, so I know about it, and I 
know the problems, and I know the pain. And I know about the 
death by installments. So I want to be clear. Who is next?
    Mr. Jordan. Well, can I respond, Mr. Chairman?
    Chairman Cummings. No.
    Mr. Jordan. You got like nine minutes and you just went 
after me----
    Chairman Cummings. Mrs. Maloney. Mrs. Maloney.
    Mr. Jordan. Oh, that is wonderful. Thank you.
    Mrs. Maloney. Thank you, Mr. Chairman.
    Mr. Jordan. You had seven, eight minutes. I had----
    Mrs. Maloney. Thank you, Mr. Chairman. I deeply appreciate 
the passion----
    Mr. Jordan. Would the gentlelady yield just for 1 second?
    Mrs. Maloney. No, I will not.
    Mr. Jordan. I wasn't playing games----
    Mrs. Maloney. I appreciate the leadership and passion of 
the chairman of this committee, Mr. Cummings, and I want to 
thank the advocates who advocated for it and my colleague from 
New York who----
    Mr. Jordan. Get the----
    Mrs. Maloney [continuing]. negotiated this hearing. And I 
want to ask a question about the 90 percent that the chairman 
talked about, the 90 percent of Americans that want to get 
access to this drug. And I want to ask Mr. Horn because how 
they get access is through the local healthcare system in our 
cities and in our states that are dealing with people hands-on 
every day.
    But first I have to say that I find it a national scandal 
that we are paying in this country $70 a pill while Australia 
pays $7 a pill. How fair is that? And, Mr. O'Day, you say that 
is because Australia negotiated a lower price. Well, we in 
America are going to pass a law that allows our government to 
negotiate a better price going forward.
    And today, we have two bills on the floor that will strike 
at this problem. It will end the abusive practice of drug 
companies where they pay to delay the development of generic 
drugs, a terrible abusive practice, keeping affordable drugs 
from our people. And the other will stop the practice where 
drug companies pay to block, they literally pay to block the 
development of lifesaving drugs here in America where it was 
pointed out it is the American taxpayer that puts the money in 
on the ground and starts the research that then moves forward. 
And then our people don't have access to it.
    So, Mr. Horn, I want to ask you, how does this high cost of 
PrEP limit the ability of states and local health departments 
and clinics from scaling up and providing the drugs and support 
to the 90 percent of people who need it that the chairman 
mentioned?
    Mr. Horn. Thank you, Representative Maloney. I--first, I 
just want to sort of piggyback on one of your points and just--
something that's really important to recognize is when we 
consider where we have the highest number of new infections in 
the United States, if you overlap that map with another map of 
like where we have not expanded Medicaid, for example, we 
definitely see where there is a tremendous disparity.
    So when we're thinking about those jurisdictions in 
particular, this is where we find a number of people who are 
vulnerable to HIV infection really do become increasingly 
dependent on this incredibly complex patchwork in order to 
access not just PrEP but all of the services that are required 
to support PrEP, lab testing, supported services, counseling, 
you know, engagement in care, access to a care provider, so on, 
and so forth.
    So--and I also just do want to reference that just with 
respect to, you know, that cost certainly isn't our own issue. 
We do have issues of stigma, discrimination, so on, and so 
forth. But when we do take a look at what's happening with 
health departments, I would just reiterate that for many of our 
health departments--and we do have a number of states have 
actually implemented state, you know, PrEP, your drug 
assistance programs.
    The one thing I will point out about that is that these are 
state-funded programs, but they're not federally funded 
programs. Therefore, they do not have access to 340B 
discounting. Therefore, they are reliant on leveraging the very 
complex system in order to guarantee access to PrEP and the 
various services that are required.
    Mrs. Maloney. I want to say that I have the privilege of 
resenting New York, which has been at the forefront in 
combating the AIDS epidemic. And, according to the city of New 
York, we have been making some progress. New AIDS/HIV 
infections in the city decreased by 36 percent between 2013 and 
2017, but by increasing access to PrEP and making it 
affordable, they believe that they can bring new infections to 
lesson 700 cases a year. This would be a dramatic, dramatic 
improvement. And I am afraid that by basing our public health 
response largely on the generosity of a private company that 
says they are going to make it affordable, it should be 
affordable to everyone. It should be affordable to everyone. 
They shouldn't have to negotiate having access to this drug. It 
is just putting the whole program in quicksand. It is not there 
to serve the people.
    So I want to ask what do we need to do to make this 
affordable to people in our public health system, in our 
cities, in our states, in our clinics, in our local areas, Mr. 
Horn?
    Chairman Cummings. The gentlelady's time is expired. You 
may answer the question.
    Mr. Horn. Okay. We just need to be conscious of cost at all 
point--I mean, we just need to make sure that we are able to 
procure both PrEP and the services that are required for PrEP 
at an equitable price and that we are moving in that direction. 
We're moving toward generics. And we just need to keep an eye 
on that. That really is the great unifier in terms of ensuring 
access to everyone who requires preexposure prophylaxis. Thank 
you.
    Mrs. Maloney. Thank you for your service.
    Chairman Cummings. Mr. Meadows.
    Mr. Meadows. Thank you, Mr. Chairman. Thank each of you for 
your testimony.
    I would want to point out since my colleague from New York 
talked about voting on bills today, candidly, those bills today 
are nothing more than a political statement. There are both 
Republicans and Democrats----
    Mrs. Maloney. Will the gentleman yield?
    Mr. Meadows. No, I will not. You didn't offer the same 
courtesy to my friend from Ohio, so--I will say this. I am dead 
serious on actually lowering prescription drug prices and 
making sure that availability is here. I am willing and have 
worked with my Democratic colleagues for us to put bills on the 
floor that actually are not a product of bipartisanship. It is 
not going to solve this problem. And so it is critically 
important that we allow for the R&D that happens that has 
groundbreaking drugs that come to market, that they continue, 
and that we make sure that availability for all Americans and 
indeed globally are there.
    But with that, I am going to yield the balance of my time 
to the gentleman from Ohio, Mr. Jordan.
    Mr. Jordan. I thank the gentleman for yielding.
    The chairman talked about playing games. I am not playing 
games. I just want to thank a company who has developed a drug 
that has saved millions of people and not beat them up for that 
fact. I mean, you can look at--on one hand, you go after them, 
and then you say, oh, but I am not really going after them. 
Look at the title of the hearing, ``billions in corporate 
profits after millions in''--you are going after them right in 
the title of today's hearing.
    Dr. Grant in his opening testimony said that Gilead had 
nothing to do with it. I have gotten article, a peer-reviewed 
article from the New England--in fact, I would ask unanimous 
consent, Mr. Chairman----
    Chairman Cummings. Without objection, so ordered.
    Mr. Jordan [continuing]. Gilead signed this, participated 
in this. I don't remember any member thanking them for what 
they have done.
    Chairman Cummings. I did.
    Mr. Jordan. Not till after I did, that is for darn sure.
    So, look, as my colleague said, we want prescription drug--
we want all drug prices to come down. We want that to happen, 
so let's figure out a way to do it. But I don't know that you 
do it by going after a company who has developed an amazing 
drug that has helped so many people, and they are taking the 
profits from that now, working on a cure. I don't see where 
that helps us.
    So, anyway, Mr. Chairman, I would--or, excuse me, I will 
yield back to the gentleman from North Carolina.
    Mr. Meadows. I thank the gentlemen.
    So, Mr. Ezell, let me come to you. Really at this 
particular point what we have got is one of the greatest R&D 
abilities in terms of pharmaceuticals on the globe. In fact, 
most of the world looks to the United States for those 
groundbreaking drugs. Is that correct?
    Mr. Ezell. That is correct. The U.S. truly leads the world 
in both investment in life sciences R&D and commercializing 
drugs that come out of that R&D.
    Mr. Meadows. And why do we lead the world in that? Is it 
just that we have the greatest brainpower or why would we lead 
the world and be able to do that? Why does that come from here 
and not from some other country?
    Mr. Ezell. It's a combination of factors, as I tried to 
indicate. First, a really strong complementarity between 
private and public investment. A lot of cases of public-private 
partnerships bring innovative new drugs to market.
    Mr. Meadows. So it is our coordination between the 
pharmaceutical industry, NIH, other areas where we have this to 
come up and have groundbreaking pharmaceuticals that actually 
meet the needs of not just the United States but certainly the 
world at large. Is that correct?
    Mr. Ezell. That's a large part of it, also a wonderful STEM 
talent and pipeline, some of the best scientists in the world, 
and a system broadly that enables innovators to undertake the 
risky process of investing hundreds of millions if not billions 
into a drug and earned for a temporary period of time revenues 
from those innovations that can then be reinvested into future 
generations----
    Mr. Meadows. So strong patents that actually help the 
proprietary investment that many companies make, is that 
correct?
    Mr. Ezell. That's correct.
    Mr. Meadows. So if we look at that, one of the number-one 
complaints I get, though, is with the rise of prescription drug 
prices and why can I get it cheaper, you know, in the E.U. and 
other areas? Is it our delivery system at times, the way that 
we have done this, and for me, a lot of this has come on in the 
last five decades as we have had a number of competing things 
that have happened with regards to the delivery system. Is 
there a way that we can still protect the patents, allow for 
research and development, and yet make sure that what both the 
ranking member and the chairman are talking about is that 
availability to underserved populations? Is there a way to do 
that without having it a government-owned entity?
    Mr. Ezell. I think there--yes, there is certainly a way to 
do that without having a government-owned entity. The private 
sector remains the best engine of innovation in the life 
sciences.
    I think there are interesting things we should do. One 
thing, for instance, is we can think more thoughtfully about 
how to increase R&D efficiency. The biggest problem in the 
broader drug development system is so many drugs get to like 
phase three clinical trials and then fail, and that's a massive 
cost for both the companies and the system. If we could focus 
on public-private partnerships like around translational 
research that would focus on how we can bring more efficiency 
to the R&D drug discovery process, that would be a very 
important way that we could broadly illuminate some of the cost 
in the drug discovery system.
    Mr. Meadows. All right. I look forward to working with my 
colleagues opposite, and I yield back. I thank the gentleman.
    Chairman Cummings. Ms. Norton.
    Ms. Norton. Yes, thank you very much, Mr. Chairman. This is 
a very important hearing, particularly for people who represent 
districts like mine, the District of Columbia. I am interested 
in PrEP because it is of course the cornerstone of the 
administration's HIV plan, so it plans to increase the use of 
PrEP from a paltry 10 percent today to 50 percent within the 
next 10 years, so everything is riding on PrEP.
    I can't resist asking you a question, Mr. O'Day. It is kind 
of a John Q. Public question. Instead of the donations you are 
offering, even some of the reductions, why not simply lower the 
price of PrEP?
    Mr. O'Day. Thank you, Congresswoman. And obviously, your 
district is extraordinarily important in terms of HIV 
elimination and a part of the CDC program that we just agreed 
for the donation of medicine.
    So the answer to the question is that if we had lowered the 
price of our medicines even a decade ago, we wouldn't be 
sitting here today with the innovations that are changing the 
face of HIV/AIDS.
    Ms. Norton. Mr. O'Day, I think you testified that your 
company earned $36 billion in revenue, and you are telling me 
that at that rate of revenue, we just wouldn't have PrEP at 
all?
    Mr. O'Day. Without the investment back in research, we 
wouldn't have PrEP today, and we wouldn't also have the 
advances that we have with the talented scientists at Gilead 
looking at long-term----
    Ms. Norton. And so that price is justified?
    Mr. O'Day. That price----
    Ms. Norton. In order to get back any return on what you 
have invested in order to develop PrEP. Otherwise, you would be 
at a loss?
    Mr. O'Day. Yes. The revenues are invested to a large 
percent back into R&D, and I just point out that everything 
that we start in early phase R&D trial has a 97 percent chance 
of failing. So exactly to Mr. Ezell's point, this is a very 
complex iterative process that requires a lot of investment, 
but, more importantly, requires no----
    Ms. Norton. But this one didn't fail--just reclaiming my 
time. So I would like to go on and find out the feasibility of 
the use of PrEP by asking Ms. Walensky how feasible is this 
goal I mentioned to get from 10 percent to 50 percent within 10 
years, after which you have heard Mr. O'Day testify, how 
feasible that we will get there?
    Dr. Walensky. Thank you. We aspire to laudable goals. This 
one's going to be hard, and I will tell you----
    Ms. Norton. Will reducing the price be necessary?
    Dr. Walensky. I think we need to put PrEP in the water is 
what I think we need to do in order to get this epidemic under 
control and the places that don't have access to PrEP. I think, 
you know, the data from South Wales that said that they were 
able to decrease incidence by 25 percent, they essentially give 
it to almost everybody. They did everything that they could to 
get PrEP to a lot of people, and so we need to do everything 
that we can.
    We know that since PrEP has been available, there has been 
no dent in incidents. It's been unchanged, and so if that's 
going to be the case, we need to sort of figure out--that 10 
percent access hasn't done anything to the incidents.
    Ms. Norton. No effect. Mr. Horn, does it trouble you that 
the administration's plan relies so heavily on the donation of 
free drugs from Gilead? We are going to get there with these 
kinds of donations?
    Mr. Horn. Donations help. They don't solve anything. I'll 
give you the example. When we have looked at the U.S. response 
and I think the response globally, when we took a look at what 
happened when we had our major innovator manufacturers who were 
donating drug to low-income countries, that only got us so far. 
What was really required there was a reduction in price. Really 
that was spurred by robust generic competition to ensure 
equitable access and affordability to our programs.
    And so let me be clear. I think the donation will help, but 
it is not the panacea that we require.
    Ms. Norton. I just want Mr. O'Day to know that everybody 
affords your donations and charity, but I think we would 
actually prefer you to go back to old-fashioned capitalism and 
reduce the price.
    Thank you, Mr. Chairman.
    Chairman Cummings. Mr. Norman?
    Mr. Norman. Thank you, Mr. Chairman.
    Mr. O'Day, I appreciate you justifying and coming up here. 
You know, you are being put in a position of being a bad guy, I 
mean, by the questions you are asked. Your company competes 
with other drug companies. You are not the only company that 
took the innovation and the time and the effort to go after a 
treatment, which, as Congressman Jordan said, you are having 
the people that ordinarily would not have a chance to live, 
they are living now.
    Now, I am all for lowering prices. You do that through 
competition, through capitalism, so I want to thank you for 
doing that and really for taking some of these questions, which 
is really amazing to me.
    You know, Australia, the drug that has been quoted for $8, 
where were they when the innovation--where were they--why 
didn't they invent the drug? Why didn't they go through the 
trials and the studies that you did over time?
    But, Mr. Ezell, you are in a good position to I guess 
answer questions as far as the many times that this country has 
led an innovation and putting drugs on the market that other 
countries either couldn't or wouldn't or didn't do. What effect 
if--go through the trials that failed and who foots the bill 
for that with different companies, yours particularly?
    Mr. Ezell. I'm sorry, could you restate the question? I 
didn't--could you restate the question? I didn't entirely 
understand what you are asking.
    Mr. Norman. Could you--well, my question is, you know, part 
of the reason--you are in a unique perspective on the 
innovation that is occurring in this country. The U.S. is a 
leader in innovation, as I have said. You succeed in bringing 
lifesaving drugs to the market. And you improve the lives of 
Americans who desperately need them, as has been said today. I 
think part of the reason is because when a drug fails in the 
pipeline, it is the company primarily who suffers the financial 
loss. Could you elaborate on this point?
    Mr. Ezell. Well, essentially--and that's exactly right. The 
simple reality is that the process of bringing an innovative 
new drug to market is risky and extremely expensive. I could 
quote studies, the most recent one from Deloitte estimating 
that--that study shows that over six of the past eight years 
the cost to bring an innovative new drug to market has risen. 
Now the average in 2018 was about $2.1 billion.
    It really is the private sector of the United States. 
That's the only entity at a large scale in the world who's 
willing to undertake these incredibly risky and expensive 
investments and be willing to accept failure rates that, as Mr. 
O'Day has said, can exceed 95 percent. We have a system in 
place to bring talent and capital to the world's most 
innovative companies, to bring breakthrough solutions to 
market.
    And I would also ask the committee to understand that their 
deliberations today importantly about the price of Truvada will 
also have implications for a number of other drugs because we 
care not only--although we care deeply about those patients who 
suffer from HIV/AIDS, we care about those who are affected by 
maladies that we currently do not have solutions to. And the 
genius of America's life science innovation system is that 
we're able to put in place a system that enables us to invest 
to try to solve challenges that are currently unsolved by the 
frontiers of medical science, and we're the best country in the 
world doing that.
    Mr. Norman. You are planning for the future and you are 
reinvesting to help the lives that you are saving already, 
making it better.
    Dr. Walensky, some of my colleagues are advocating for 
breaking the patent system in the United States as a way to 
address drugs. Would this work?
    Dr. Walensky. Well, you know, one of the things I want to 
get to is the fact that several people have described that with 
an earlier patent--an earlier-going generic, a year earlier, I 
want to just emphasize that the only way drugs prices come down 
in the generic market is if there's generic competition. So the 
fact that this is going to be--the patent is going to be broken 
a year earlier and there will be one company making a generic 
drug is not going to decrease the price of Truvada. Maybe it'll 
decrease it by five or 10 percent, but we're not going to get 
the discounts that we need such that the patients who need to 
access it will be able to access it.
    I do think that--you know, it's not that I don't believe 
that the companies need to profit. I do believe that companies 
need to profit. I do believe we need new drugs. We certainly 
need them in HIV, we need them in antimicrobials, we need them 
in a lot of different places. But I do believe that Gilead has 
already profited enough, especially in the context of a 
Presidential call to end the epidemic here. So I think that 
that would work here.
    Mr. Norman. You think they have profited enough, and that 
is your opinion.
    Dr. Walensky. Certainly on this drug for this indication, I 
do. I do. I think this is a public health mandate. Not all----
    Mr. Norman. Thank you. Thank you so much. I yield back.
    Chairman Cummings. Mr. Connolly.
    Mr. Connolly. Thank you, Mr. Chairman.
    My friend from Ohio, the ranking member, has attempted to 
discredit the purpose of this hearing and in the process 
discredit those of us who raise questions, legitimate questions 
about the pricing of a lifesaving drug.
    I am here because of one of my best friends. His name was 
Rick. He developed AIDS in the late 1980's when there was no 
cure. He died when my daughter was just a few months old in 
1991. I spent a lot of time with him during the illness. I saw 
its progression. I saw his suffering, terrible symptoms. It 
ultimately went to his brain, and he started hallucinating. 
Maybe there was a blessing there because he was not any longer 
aware of his suffering.
    He lost his job because of the illness and was uninsured, 
and he didn't have access to health care. He went to a 
homeopathic clinic because he was hopeful maybe that would 
work. It seemed to only make his suffering worse.
    So, Mr. Jordan, I am not here to discredit an American 
company or Mr. O'Day. I am here for my friend Rick. I am here 
to make sure no American has to go through what Rick went 
through and that drugs are available to people who are 
suffering. And I would say to you, Mr. Jordan, that is a 
legitimate source of inquiry.
    I am not going to yield because I am going to run out of 
time unless the chairman grants me more time.
    So I just want to make that really clear. Most of us 
absolutely subscribe to the thought that a drug company has to 
recover profits because it recovers cost and legitimate R&D 
that can produce more lifesaving drugs. But the question in 
front of us is how much is enough? How high do you go to the 
point where it becomes a barrier to access? It may help your 
bottom line, but it doesn't help people like Rick.
    And I think that is a legitimate form of inquiry. And given 
that, one notes that, right now, the cost of Truvada is about 
$70 per day if you are paying full freight. Is that correct, 
Mr. O'Day?
    Mr. O'Day. That's correct.
    Mr. Connolly. In Canada, it is $5 a day. In Australia, it 
is $7 a day. And, to be fair, in Canada, that is generic. For 
the branded product, it is $20 a day, not $70. Now, they have 
different systems, but it is the same drug.
    Mr. O'Day, when Truvada was first approved as a treatment 
in 2004, you had a list price of $800 per month. By 2012 when 
you were approved for preventing HIV transmission, that price 
had almost doubled to $1,400 a month. In your statement today 
you claim you did not increase the price of Truvada when it was 
approved in July 2012, correct? That is in your statement.
    Mr. O'Day. The--there was no--there was an increase in 
2012----
    Mr. Connolly. Yes.
    Mr. O'Day.--so it was--over the past--since 2004, the 
average increase has been around----
    Mr. Connolly. But in your statement you said today you did 
not increase the price of Truvada when it was approved. And I 
would suggest respectfully that is a little misleading because 
you had just raised the price six months earlier, and you 
raised it again six months later.
    Mr. O'Day. So, Congressman, I understand your point. What I 
was trying to assert was there was no additional increase to 
the price as a result of the additional indication.
    Mr. Connolly. So let me ask a question in terms of 
corporate deliberations. I worked in the corporate world for 20 
years. When you look at pricing and when you looked at pricing, 
did you have a discussion about, okay, corporate profit, we 
want to maximize our profit, but on the other hand, we also 
understand our, you know, community obligation to suffering 
people and so we have to strike a balance here? Does that 
factor into the pricing of the drug?
    Mr. O'Day. Absolutely, Congressman. And there are four 
things that we look at critically when we price a medicine. 
First of all, what's the value of the medicine to the patient 
and society? The most recent figure associated with the disease 
HIV/AIDS that it can cost on average $880,000 per patient to 
treat that disease, so that's given into context.
    The second thing is what the comparable treatments that are 
on the market today?
    The third and potentially most important is exactly to your 
point. What are the access limitations that might be created by 
setting that price, and we anticipate that in advance.
    And then the fourth one is our commitment to reinvest back 
in research not just for this medicine and not just for this 
disease but for other terribly devastating diseases that 
inflict Americans and the globe.
    Mr. Connolly. Well, Mr. O'Day, I appreciate that, and I 
just want to say I hope today's hearing is something that will 
give you thought and is something that maybe you will take back 
to the corporate boardroom to reevaluate the pricing of a drug 
that so many people need access to.
    And I want to thank the chairman for having this hearing on 
behalf of my deceased friend Rick, your deceased employee, and 
the millions of Americans who have succumbed to this terrible 
virus. Thank you.
    Chairman Cummings. Mr. Hice?
    Mr. Hice. Thank you, Mr. Chairman.
    Mr. Ezell, could you explain in basic terms the law that 
addresses intellectual property that comes from federally 
funded research?
    Mr. Ezell. Yes, Congressman. It's called the Bayh-Dole Act. 
It was introduced on a bipartisan basis in 1980, but what it 
does is it gives universities and public research institutions 
the rights to innovations that stem from federally funded 
research at their institutions.
    Mr. Hice. And before 1980, before that law, do you have any 
idea how many patents the U.S. Government owned?
    Mr. Ezell. Yes, so in 1978 the Federal Government had 
licensed less than five percent of the 30,000 patents owned at 
the time. There was a massive underutilization and a lack of 
commercialization of intellectual property and knowledge that 
was sitting in laboratories across the United States.
    Mr. Hice. So before the law, then, there were approximately 
30,000 patents that the U.S. Government owned, only about five 
percent of which, however, had commercial licensing. Is that 
correct?
    Mr. Ezell. That is correct.
    Mr. Hice. All right. And why is that? It is a lot of 
patents, a lot of potential great benefits out there, only five 
percent in the commercial market to go out to the public.
    Mr. Ezell. Well, that's right because, well, first, 
government institutions and universities were not equipped or 
expected or it wasn't their intent to incur the risk that would 
be required to, you know, take those technologies or inventions 
and bring them to the market as commercializable----
    Mr. Hice. And neither is the government?
    Mr. Ezell. In fact, an interesting story was from the year 
1968 when President Johnson asked Elmer Staats, who was then 
the comptroller general of the United States, to analyze how 
many drugs had been developed from NIH-funded research, and 
Johnson was stunned when Staats' investigation came back and 
said that not a single drug had been developed when patents 
were taken from universities for commercialization by the 
Federal Government. Staats' report from 1969 found that--we 
found hundreds of new compounds developed at university 
laboratories that had not been tested and screened by the 
pharmaceutical industry because the manufacturers were 
unwilling to undertake the expense without some possibility of 
obtaining exclusive rights for further development. It was not 
until they put in place the Bayh-Dole Act of 1980 that we--led 
to an explosive growth of innovations stemming from federally 
funded research.
    Mr. Hice. That is my point exactly where I want to go with 
this. And so you had the Federal Government pretty much in 
charge of all the patents until Bayh-Dole. Then things started 
changing and actually patents were able to get into the hands 
of commercial licensing and thereby get to the needs of the 
population.
    Can you briefly explain what the march-in provision is in 
Bayh-Dole?
    Mr. Ezell. Yes, so the march-in provision is language that 
would in very specific limited cases give a government agency 
the ability to, quote, ``march in'' and compel the divulsion of 
the intellectual property or force additional licenses on an 
innovation that was a result in part from some degree of 
Federal----
    Mr. Hice. And, real briefly, what would be--I am assuming 
that would be like an emergency?
    Mr. Ezell. Yes, so when the architects of the Bayh-Dole 
Act, Bob Dole and Birch Bayh, designed the legislation in the 
early 1980's, the reason they conceived of putting in the 
march-in rights was primarily to ensure that a licensee took 
the steps to commercialize the----
    Mr. Hice. The whole point was to get it to the public when 
there was a need?
    Mr. Ezell. That's correct.
    Mr. Hice. So has the march-in provision ever been used by 
the Federal Government?
    Mr. Ezell. No, not--no, it has not.
    Mr. Hice. All right. So what kind of impact would using the 
march-in impact have on research and development?
    Mr. Ezell. I think there's a real risk that, if you ever 
used march-in rights, it would substantially stifle the 
potential of research and development. If the government ever 
had the capacity to march in decades later and compulsory 
license the IP on a pending pharmaceutical drug on the grounds 
that some of it was contributed by federally funded research 
and now some number of decades later the government declares 
that that price is unreasonable, that will give enterprises 
serious pause about investing the enormous sums required to 
bring innovative new drugs to the marketplace.
    Mr. Hice. So----
    Mr. Ezell. It would stifle innovation.
    Mr. Hice. So, in other words, there would be a great 
disincentive for research and development in various companies 
if they spent the billions of dollars, if they assumed the risk 
to develop drugs, and then all the while knowing that the 
Federal Government could march in and take that patent away 
from them, you are saying that would massively disincentivize 
R&D?
    Mr. Ezell. That's correct, Congressman. There was a great 
case from 1995, something called CRADAs, cooperative research 
and development agreements, in 1989 the NIH inserted a 
reasonable-pricing clause into those CRADAs. The amount of 
collaboration between industry and government subsequently 
cratered. And when that requirement for original pricing of a 
subsequent innovation was repealed, the number of CRADAs 
instantaneously rebounded in 1995 and we again stimulated 
effective public-private partnerships toward developing new 
drugs.
    Mr. Hice. Thank you. Thank you, Mr. Chairman.
    Chairman Cummings. Mr. DeSaulnier?
    Mr. DeSaulnier. Thank you, Mr. Chairman. Thank you for 
having this hearing. Thank you to everybody who has been behind 
this.
    As somebody who has a pill in my pocket that I will take at 
three o'clock that keeps me alive that in Australia costs $6, 
here in the United States it costs $400, Johnson & Johnson 
distributes it. I am told it is going to $500, but it keeps me 
alive, so I am happy that I have health insurance that pays for 
it.
    So I have spent a good deal of time in the last four years 
since I was diagnosed with chronic lymphocytic leukemia trying 
to figure this out. And what is a good reasonable rate of 
return to get people from private sector to invest and what do 
we get as taxpayers? NIH has a figure that shows since 1974 the 
NIH's research has contributed $77 trillion to the U.S. GDP.
    So having gone out there now multiple times and Dr. Grant 
having--Mr. O'Day, as somebody who is a resident of the bay 
area I take it now, as somebody who lives in the bay area, 
moved to San Francisco in the 1970's, went into the restaurant 
business, I sit here and think of the friends, the coworkers, 
the people who worked for me when I owned restaurants who 
passed away and what that did to the culture in San Francisco 
having moved there from the west end of Boston--not a bad 
facility, by the way, but it is no UCSF--and having one of my 
oncologists be one of your colleagues, Dr. Kaplan at UCSF, who 
put some work into this as well.
    The numbers that I have from the Washington Post article is 
the research that you got or the grants you received was $50 
million, as has been said, $50 million from NIH and then about 
$17 million from the Gates Foundation. Were there other 
significant contributions from this company or others to your 
research?
    Dr. Grant. Gilead did not provide funding. They did donate 
medications, and it was that donation that justified their 
listing as authors on the publication cited before. 
Importantly, my study was not the only study done in PrEP. The 
CDC funded and performed its own study in Botswana and in 
Thailand, and the NIH also funded a study in--called VOICE in 
Africa. The total U.S. Government investment in PrEP is much 
more than the $50 million from my project. It's in the hundreds 
of millions of dollars paid by the U.S. Government for the 
development of PrEP.
    Mr. DeSaulnier. So, Dr. Grant--and actually, Mr. O'Day, I 
think your career is a similar--I remember reading a book Our 
Daily Meds years ago, and that reporter from the New York Times 
did a wonderful job of doing an investigation of the influx of 
venture capital into this pharmaceutical industry that 
traditionally, 40, 50 years ago, the CEO of pharmaceutical 
companies were researchers like yourself who went to work for 
the private sector and moved up the chain of command. And they 
weren't driven by the market forces that are currently driven.
    So my question is--and I have an amendment on the floor 
today that I would like to get bipartisan support, and it goes 
to a little bit of the history that Mr. Ezell was talking 
about. In her investigation, she says that investors looked at 
professions that people trusted, and people with white smocks 
people trusted. And that changed the culture. It brought a lot 
of pressure to get return on investment.
    Mr. O'Day is somewhat legendary, as I read your history, 
about managing pharmaceutical industries. You are on the board 
of Genentech. You are on the board of California Life Sciences, 
which I have great respect for.
    So my question is--my amendment is actually to get the 
Academy of Sciences to do a study that does the history but 
helps us understand what is the best investment and what is the 
base that we get from NIH, which I believe is underestimated. 
And then, to my Republican colleagues, what is a reasonable 
rate of return that will bring investors in to do what they do?
    So when you look back on your career, how much better would 
it be now if we had that information and you could do the base? 
And maybe it would be more efficient when we argue about patent 
controls in the CDC and this company. Maybe there is a more 
efficient way to do this for the consumer, for the shareholder, 
but mostly, importantly, for the person whose life is being 
extended, as they do in Australia, as I understand.
    They have a discussion about, for instance, this drug or my 
drug in Australia is $6 when it is subsidized when they go 
through the process, and the risk to the client. If it is fully 
loaded, it is like $35 a day, so I don't understand why it is 
$500 a day here.
    Dr. Grant. I don't understand that either, sir.
    Mr. DeSaulnier. But we need to find that out to have a 
rational conversation. And I invite my colleagues on the 
Republican side for a more efficient look at how do you attract 
these investments and get what we want, longer and higher-
quality lives for American citizens?
    Dr. Grant. You know, I think you're raising all the right 
points. And it's important to realize that both components of 
Truvada, tenofovir and emtricitabine, were developed in 
academic centers using public funding.
    Mr. DeSaulnier. Right.
    Dr. Grant. And then those property rights were purchased by 
Gilead. And, you know, people at Gilead will say that they 
invented those products, but in fact they were invented in 
academic centers using public funds and then purchased by 
Gilead, who then co-formulated, meaning mixed it into a single 
tablet. And the mixture in the single tablet is what allowed 
them to extend their patent rights beyond 2017.
    And so when we look at innovations, the CDC brought us 
preexposure dosing, they brought us information that the 
mixture of two drugs was much more important than one drug and, 
you know, Gilead's invention was really buying products 
developed with public funding in the academic sector. So this 
synergy between academics and private industry is important, 
but I think that we need to be more honest, as you've proposed, 
about who is doing what in all of this and how much should be 
charged later.
    Mr. DeSaulnier. Thank you, Mr. Chairman. I really hope we 
continue to pursue this question because it clearly is a life-
determining question that needs to be answered by the American 
people. Thank you, Mr. Chairman.
    Chairman Cummings. Mr. Grothman.
    Mr. Grothman. Thank you. Mr. Ezell, I kind of want to talk 
to just in general an overview because I think the hearing 
today touches not just on a particular drug but things across 
the board. And we talk about the interaction between the 
private drug companies and NIH funding. And really not till we 
have this hearing that, you know, it occurred to me that we are 
putting billions and billions of dollars a year into the NIH, 
and I don't know whether we are getting bang for the buck or we 
should be, you know, getting some other way to get cures for 
these diseases.
    Of the $37 billion we put into NIH, how much of that do you 
think goes into pharmaceutical development if you had to guess? 
We are not going to fact-check you.
    Mr. Ezell. I'm not an expert on the share of the allocation 
of the NIH's budget across its 27 research institutes. Their 
funding of the NIH goes to a number of activities from training 
future scientists to looking into very basic research trying to 
understand the basic molecular processes of how diseases work, 
trying to identify biomarkers that can single future targets 
for innovation opportunities. But certainly the majority of 
NIH's research is going into this basic science trying to 
understand fundamental molecular activities, and a much smaller 
portion of their research is going toward development-oriented 
activities.
    Mr. Grothman. Okay. As far as drug development, not just 
what we are talking about today but collectively, do you feel--
or could you describe the different--well, do you know how much 
is spent every year on what we will call drug development by 
the private pharmaceutical industry? If you can't give me an 
answer, we will ask Mr. O'Day.
    Mr. Ezell. In the year 2013 there was $96.5 billion, as I 
understand. The average over the past three years has been 
about $80 billion per year.
    Mr. Grothman. How many?
    Mr. Ezell. Eighty billion dollars.
    Mr. Grothman. Eighty, so we are going about 80 billion. So, 
in other words, far and away most of the research in this 
country done on drug development is done by private industry, 
and what we get out of NIH is a small fraction?
    Mr. Ezell. That's exactly right.
    Mr. Grothman. Okay. Could you give me an example of other 
success stories coming out of NIH?
    Mr. Ezell. Well, there are a number. We can look at the 
invention of Gleevec, treatments for chronic myelogenous 
leukemia. That was a nice set of case studies that the original 
research was conducted by Dr. James Allison I believe at the 
University of UCLA I believe, and then some of his basic 
discoveries into how genes work gave rise to a new form of 
treating cancers called checkpoint blocking that we were able 
to identify specific antigen growth factors in the body, and 
then that set of basic research was ultimately licensed to the 
private sector, and Bristol-Myers Squibb invested the hundreds 
of millions required to now turn that into a first-in-the-
world----
    Mr. Grothman. Do you feel overwhelming--and I don't mean to 
put words in your mouth--overwhelming the number of 
pharmaceuticals that are having an effect on our lives or 
extending lives with people with various diseases? I suppose 
there is a difference in the type of things that are financed 
by NIH and the private industry. Could you comment on the 
differences between which type of drugs each sector goal was 
after or any reasons why you would feel one does a better or 
worse job than the other?
    Mr. Ezell. Well, it is the private sector that is primarily 
incurring the risk of doing the applied research and in 
conducting the grueling set of three stages of clinical trials 
that are proving the safety and efficacy of that drug. And the 
private sector is the one who is assuring that the formulation 
is effective and works in the human body, and then of course 
the FDA is working with the private sector to validate that 
fact.
    But the system we've put in place is now responsible for 
the fact that there are 7,000 new-to-the-world drugs under 
development globally, and it's estimated that at least 3,600 of 
those are being led primarily by U.S.-headquartered 
enterprises.
    There's a lot to do. I'm not satisfied, as wonderful as Mr. 
O'Day's drug is. We need a cure for HIV/AIDS. We need a cure 
for various forms of cancer. It's wonderful that there's 
competition in the workplace Mr. O'Day's--O'Day's company faces 
the loss of competitiveness. It faces existential threats 
hopefully from the innovators out there who are trying to build 
a better solution, and I think it's important that we broadly 
focus on the system we have in place in America that enables 
competition and enables innovation so that we can try and come 
up with some of these cures.
    Mr. Grothman. Can I give you just one broad question? Does 
the chairman mind?
    Chairman Cummings. The gentleman's time is expired, but you 
may answer this question.
    Mr. Grothman. Okay. My disease of interest is Alzheimer's. 
Do you feel, as far as we look for a cure there, that will more 
likely come from the private sector or from NIH, or could you 
comment on that?
    Mr. Ezell. My organization actually did a study looking at 
the economic impact if we were able to come up with a cure for 
mental diseases. We estimated that the value to society would 
be as much is $1.5 trillion. I would support an all-of-the-
above solution to innovate for cures like Alzheimer's. It's 
estimated that the real-time net present value of curing 
Alzheimer's alone would be about $50 trillion for the U.S. 
economy. So these are massive numbers we're talking about over 
a period of time, so I applaud research that's being supported 
by nonprofit and foundational actors like the Gates Foundation 
toward that end. That may be a pathway to innovating such a 
drug.
    But I note that there are hundreds of clinical trials 
ongoing even now to solve various forms of mental diseases 
being led by the private sector, and that's, I think, probably 
a--I mean, historically, that--historically across a broader 
set of disease states that's been a more likely pathway to 
getting toward a solution toward a breakthrough cure.
    Chairman Cummings. Mr. Rouda.
    Mr. Rouda. Thank you, Mr. Chairman.
    I would like to talk about two different issues. One is 
just the government's commitment under the President's stated 
objectives to addressing HIV infections and then also talk 
after that a little bit about the balance between innovation 
and drug pricing.
    So, Mr. Horn, I will start with you. The President has 
stated that he wants to reduce infections by 75 percent in the 
next five years and 90 percent in the next decade, yet we have 
seen systematic attacks on the ACA and funding for community 
institutions and Medicare and so on. What kind of impact is 
that going to have in our ability to address HIV infections?
    Mr. Horn. It has a profound effect. We rely on these 
systems, and we fight very hard for these systems. And I will 
say that we actually fight very hard against these systems 
sometimes just to ensure that.
    But in order to do this--and I think that we realize this. 
When we're just beginning to think about, you know, just 
getting--just maximizing the number of people who are living 
with HIV to getting them biologically suppressed. What is 
making that possible, what is getting us there is the 
Affordable Care Act, as all of the systems under the Affordable 
Care Act. And I think when we do think about this in the 
context of primary prevention or PrEP or just the prevention 
for those who are vulnerable to HIV infection, the same holds 
true. We absolutely need the ACA and, frankly, we need Medicaid 
expansion to make that happen.
    Mr. Rouda. And actually, if we had universal healthcare, 
much of the issues that we are having when talking with Gilead 
about and any other drug manufacturer about those costs, many 
of those disagreements would go away because we would have 
properly funded, systemwide care for all Americans.
    Mr. Horn. That is correct.
    Mr. Rouda. And, Mr. Ezell--and hopefully I pronounced that 
correctly--you made the comment earlier that the NIH plays such 
an important role in the development of new drugs, yet the 
President has three straight years tried to make massive cuts 
to the NIH. Wouldn't that diminish our opportunity to continue 
to have innovation in the development of drugs through that 
public-private partnership?
    Mr. Ezell. Absolutely, Congressmember. In fact, this is 
perhaps the most fundamental threat to the U.S. innovation 
economy. If the United States--essentially, today, the U.S. 
invests the least it has in federally funded R&D as a share of 
GDP since 1995--1955. To match our investment on average in the 
1990's----
    Mr. Rouda. Sixty-five years roughly, 64 to be exact.
    Mr. Ezell. Correct. On average, to match the Federal 
Government's investment in R&D that we averaged in the 1990's, 
we would have to invest 80 percent more per year today. And 
we're seeing that manifest itself within NIH even. The average 
age of first NIH ROI grant has increased from 34 to 42 years, 
eight years later in life. The average success rate has 
declined from close to 60 percent in 1962 under 20 percent 
today. And if we don't make that right, we risk losing our----
    Mr. Rouda. I understand.
    Mr. Ezell [continuing]. international competitiveness.
    Mr. Rouda. Thank you. And, Dr. Walensky, I am not sure if 
this is the appropriate question for you, but I am just 
curious. When we look at the societal cost of not doing 
anything to making sure that we have proper medication and 
putting a number on that versus the cost of providing these 
drugs to all those, has that analysis been done, and if so, is 
there any indication as to what it would do?
    Dr. Walensky. I think--we haven't done what the status quo 
is. We know that if we invest in this, it will be a cost-
effective investment. I want to just comment on something Mr. 
Ezell said, and that is that, currently--and I've screened 
every infectious disease fellow who comes in the door at 
Massachusetts General Hospital. Nationally, we have .7 
applicants for every infectious disease position in the 
country. That is--the Indiana HIV outbreak that occurred, there 
was no infectious disease doctor in that county. And if we 
don't invest in the NIH to do----
    Mr. Rouda. Right.
    Dr. Walensky [continuing]. these things, we will not have 
those physicians.
    Mr. Rouda. Mr. O'Day, I heard testimony that the list price 
is $1,780 to approximately $2,000. That list price, let's just 
assume for simple math, $2,000. If you sell a monthly 
prescription for $2,000, does that go to your revenue line?
    Mr. O'Day. The $2,000 would go to the revenue line, that's 
correct.
    Mr. Rouda. And then the pharmacy benefit managers, PBMs, 
about roughly what percentage of that $2,000 would be paid to 
them?
    Mr. O'Day. Well, actually, the discounting in the 
commercial sector is actually quite small because the cost-
effectiveness of this medicine has not required that 
discounting. When you look into the public sector, however, we 
have very deep discounts, so 70 to 80 percent discounts, for 
instance, for Medicaid, for ADAP, and for all the government 
programs.
    Mr. Rouda. And, one last question, the billion dollars of 
investment that you noted earlier, is that an ordinary or a 
capital expense on your income statement?
    Mr. O'Day. That's ordinary, yes. I mean, there could be 
capital components to that, but the vast majority is recurring 
expenses, year-on-year invested in R&D, into people, and into 
costs that support our research and development.
    Mr. Rouda. Thank you, Mr. Chairman.
    Chairman Cummings. Before we go to Mr. Comer, Dr. Walensky, 
you said something about .7 percent. Can you say that again? I 
think I misheard you.
    Dr. Walensky. Unfortunately, you probably didn't.
    Chairman Cummings. I hope I did.
    Dr. Walensky. For every infectious disease fellowship slot 
that we have in this country, we have 0.7 applicants. There has 
been a New York Times editorial in the last week that--or in 
the last month by Matt McCarthy that demonstrates that we are 
going to have a shortage of infectious disease doctors. We know 
we are anticipated a shortage of infectious disease doctors. 
Some of the counties that have had HIV outbreaks, there have 
been no infectious disease doctors in them. And so, yes, I 
think we have a public health problem. Part of that is related 
to NIH funding and seeing--because we are what we call a 
cerebral field, we rely on NIH dollars to recruit applicants 
into the field.
    Chairman Cummings. Mr. Comer?
    Mr. Comer. Thank you, Mr. Chairman. And we have already hit 
on the important roles of private-sector versus public sector 
in the R&D process and also the role of having strong patents 
and the consequences if the government breaks patents on drugs 
like Truvada. We have also hit on the major scientific and 
regulatory risks and hurdles you have had to take in to market 
Truvada.
    Overall, though, I just want to reiterate the great role 
that Gilead has played in innovations in antivirals, and I hope 
we can continue to save lives because that is something that we 
agree on in a bipartisan way.
    Switching gears, I want to talk about the President's 
initiative to eradicate HIV. From what I understand, the bulk 
of the Trump administration's plan to eradicate HIV is the 
ability to locate every American susceptible to HIV and provide 
a drug and provide help adhering to the daily regime for the 
rest of their lives. That is no easy task. The cost of doing 
that will be daunting. About 1.1 million Americans have the 
virus, and about 1 million are at risk of contracting it. 
Finding, treating, and keeping them all on treatment experts 
estimate would be more than the administration currently is 
devoting, even in addition to the $20 billion the Federal 
Government already spends on HIV prevention and treatment. 
There are criticisms that if the patent on Truvada remains, the 
Trump administration's plan to eradicate HIV would cost over 
$20 million.
    So, Mr. O'Day, let me start with a few questions. How many 
bottles of Truvada has your company Gilead donated to the U.S. 
Government?
    Mr. O'Day. So our commitment is to donate 2.4 million 
bottles per year for up to 10 years.
    Mr. Comer. Okay. I think Mr. Jordan asked this question. 
When is a generic version coming onto the market? Do we know?
    Mr. O'Day. A generic version of this medicine Truvada comes 
out into the market in September of next year, 2020, and other 
generics will come on six months later.
    Mr. Comer. And you did, as I understand, voluntarily 
release the patent early?
    Mr. O'Day. That's correct. In discussions with--and it was 
a legal decision at the end of the day and an important 
decision to avoid the cost of litigation and to bring this 
medicine sooner to patients. It's important to note that when 
the patent expires for Truvada, the next most safe, most 
effective medicine will take its place in the donation----
    Mr. Comer. Right.
    Mr. O'Day.--for 2.4 million bottles for the next 10 years. 
We want to make sure that the uninsured patient population in 
America has access to state-of-the-art care at all times over 
this decade.
    Mr. Comer. With those developments, how much closer are we 
to eradicating HIV?
    Mr. O'Day. Well, I think, as has been mentioned, the--you 
know, it's--I think it's within our grasp. It's clearly 
challenging. It's, as I've tried to articulate, based upon the 
Gilead programs. You know, it's really not about drug pricing. 
It's about--in this particular case is about the wraparound 
care. I think the administration and CDC and HHS' efforts to, 
you know, reduce by 70 percent in five years and 90 percent in 
10 years is within our grasp, but it does require a holistic 
approach to the wraparound care.
    Many people have talked about Australia here, which I think 
is interesting to look at in some regards. In Europe, generics 
have been available for three years, and even with the lower 
cost of medicines in Europe, we've seen very little increase in 
HIV PrEP, which goes to show you that there are many, many 
elements of this system----
    Mr. Comer. Right.
    Mr. O'Day.--that have to be invested in.
    Mr. Comer. Right. What proposals currently would hinder the 
progress of eradicating HIV or any prospect of a cure or 
vaccine to HIV? What proposals have you heard out there that 
would hinder that?
    Mr. O'Day. Well, I think that's--I mean, the current 
initiative is focused on the available antiretrovirals, which 
are very effective but have drawbacks in terms of getting them 
into the hands of the patients at the right time. So what our 
scientists are doing is they're working on longer-term 
medicines. Those could be delivered once a month, once every 
three months, long-acting, which I think could help us 
desperately with this solution of HIV elimination and 
eventually the cure. And the cure is still--it's I wouldn't say 
within our grasp today. There'll need to be a lot of failures 
to get there, but we're firmly committed at Gilead to investing 
in that research, to keep having the 90 percent failure rates 
and finding eventually that 3 percent cure, which we're firmly 
committed to. We won't rest until we get there.
    Mr. Comer. Right. Thank you. Mr. Chairman, I yield back.
    Chairman Cummings. Ms. Hill?
    Ms. Hill. Thank you, Mr. Chairman. I ask unanimous consent 
to enter into the record a Washington Post article from 2016 
entitled ``The drug company that shocked the world with its 
prices dodged $10 billion in taxes,'' report says.
    Chairman Cummings. Without objection, so ordered.
    Ms. Hill. Thank you. We have talked about saving lives, 
but, as a corporate executive, Mr. O'Day, let's talk about 
money. Just as you are responsible for your budget, I am 
responsible for our taxpayers' money, and in this case our 
worlds collide. Mr. O'Day, how much does Gilead spend per year 
in direct costs for patient care for people with HIV and AIDS?
    Mr. O'Day. I don't have the exact figure, Congresswoman, 
but it's in the tens of millions of dollars.
    Ms. Hill. You pay for direct care?
    Mr. O'Day. We pay--we fund community support groups that 
support patients in a variety of different ways. We're the 
largest corporate donor to community funding----
    Ms. Hill. That's great. Is it true that you get a tax break 
for those corporate donations?
    Mr. O'Day. Yes.
    Ms. Hill. Okay.
    Mr. O'Day. Yes, it is.
    Ms. Hill. Okay. So, effectively, you don't spend money on 
direct patient care. But do you know how much the U.S. 
Government does?
    Mr. O'Day. No, we do spend money on patient care. We may 
get some tax benefits of that, just to correct----
    Ms. Hill. Okay. Okay, but----
    Mr. O'Day.--but absolutely spend, and we have an outflow in 
our P&L that's----
    Ms. Hill. Okay.
    Mr. O'Day.--associated with those costs----
    Ms. Hill. Do you know how much the U.S. Government spends 
on that treatment for patients with HIV or AIDS?
    Mr. O'Day. I--what I know is that the current plan for HHS 
and CDC has earmarked for the 2020 budget somewhere around $290 
million for the HIV elimination program. Now, the fact that 
Gilead will donate all of----
    Ms. Hill. Well, hold up. Hold up. So what the U.S. 
Government pays in direct care--this is through Medicaid and 
Medicare--is $21.5 billion, so it is a much higher number than 
what we are adding to the budget for research and elimination.
    But, anyway, it is estimated that $470,000 in lifetime 
costs is what it takes to treat someone with HIV infection, and 
now we have 40,000 people with new HIV diagnoses in the country 
each year, and so that cost to our taxpayers is going to 
continue to rise.
    So, as you heard from the title of the article I submitted, 
Gilead is notorious for not even paying its fair share in taxes 
that go toward HIV treatment. Gilead reported its 2018 
financial performance to the SEC on February 26. It showed that 
the company had revenue of about $22 billion--that number 
sounds familiar--in 2018 with about $31 billion in cash 
available. So I want to take a look at how Gilead is using some 
of its profits.
    Mr. O'Day, you just joined Gilead Sciences earlier this 
year. Is that right?
    Mr. O'Day. That's correct.
    Ms. Hill. Your initial compensation package was reportedly 
worth about $30 million, including both cash and stock options. 
So the company agreed to pay you $30 million just for taking 
the job. Is that right?
    Mr. O'Day. That's correct. I mean, I should articulate that 
half of that was for compensation that I gave up from my 
previous assignment and have----
    Ms. Hill. Okay. But it is $30 million for taking the job. 
So, just out of curiosity, do you know what the median income 
is for a U.S. worker according to the BLS?
    Mr. O'Day. I do not offhand.
    Ms. Hill. It's $46,800 or one-sixth of 1 percent of what 
your signing bonus was, just thought you would want to know 
that.
    And Gilead has a long history of paying windfall amounts to 
its corporate executives. In 2013 Gilead's former CEO John 
Martin earned almost $180 million. His salary for the year was 
$15.4 million, but he cashed out almost $160 million in stock 
options that year. Mr. Martin appears to have timed his pay 
well. According to Gilead's 2013 annual report to shareholders, 
Gilead had, quote, ``record total revenues'' in 2013 of $11.2 
billion. Twenty 13 was the year that Gilead's blockbuster drug 
Sovaldi received FDA approval, correct?
    Mr. O'Day. I believe so.
    Ms. Hill. Sovaldi is a hep C drug that also made headlines 
for costing $1,000 per pill.
    I want to turn to another Gilead executive, your direct 
predecessor John Milligan. He made a little less than you, just 
$15 million. I understand Mr. Milligan resigned in 2018, but he 
didn't lose his salary. In fact, he received what is called a 
golden parachute, meaning that the company paid him extra just 
for resigning. Mr. Milligan had previously received stock 
options that were not worth anything because the company's 
stock had gone down, but thanks to a separation agreement 
between Mr. Milligan and the company, he was paid an additional 
severance that earned him a total of $26 million just for 
resigning from the company. That is true, right, Mr. O'Day?
    Mr. O'Day. As far as I understand. Those decisions are made 
by the board of directors.
    Ms. Hill. Of course. Gilead is a private company and it can 
pay its corporate executives whatever it likes, but Gilead also 
makes a lifesaving drug that it has kept a U.S. monopoly on. We 
have heard today about people who are not accessing this drug 
because they cannot afford it. We have heard about local public 
health officials that are straining under the financial burden 
of providing this drug to everyone else that needs it to stay 
healthy, and this drug, which has generated billions of dollars 
for Gilead, was developed using tens of millions of dollars of 
Federal funds.
    So what Gilead chooses to do with its profits really does 
matter to all of us. And I will say that the millions and 
millions of dollars to corporate executives I take some issue 
with. Thank you.
    Chairman Cummings. Mr. Roy.
    Mr. Roy. Thank you, Mr. Chairman.
    You know, I came to this hearing hoping that we might have 
a hearing where we spent some time diving into some of the 
tough questions instead of preening and posturing for cameras, 
attacking people for making profit in a capitalist society, but 
that is what I just heard in rants for the last five minutes.
    Now, Mr. O'Day, do you make Brentuximab? Do you know what 
Brentuximab is?
    Mr. O'Day. I do not. I'm sorry, Congressman. Brentuximab 
vedotin is the drug that I took when I was suffering from 
Hodgkin's lymphoma, a drug that was created, built, 
manufactured, developed, designed, created by a private company 
that made a lot of money. And I am really glad they did. I hope 
they make a lot more, and I hope they make a lot more drugs to 
save a lot more people and distribute a lot more drugs around 
the world to save a lot more people.
    Now, it is a reasonable question when patents expire, when 
they should expire, when they shouldn't expire. It is a 
reasonable question, how much money that NIH has and is 
investing and how much we should factor that into the patent 
life. But to sit here and attack the capitalistic system that 
produces and distributes medicine to saving lives around the 
world, I mean, it is just offensive.
    I mean, I just cannot possibly understand why we are 
spending time sitting here while I listen to people lecturing 
companies about making money. I hope you make a lot of money. 
It is a reasonable question what patent length should be. I 
would like to have that conversation and dialog. I don't know 
whether it should be one year, five years, 17 years. I don't 
know. Let's have that debate. I don't know how much we should 
factor in that NIH puts in $400 million, $50 million, I don't 
know what it is, whatever the number is that has gone into the 
production of this drug. I don't know how much went into 
merging these two putting them together and then you guys 
distribute it versus how much NIH has done. Fine. Let's have 
this conversation.
    But this absurd attack on profit being evil is undermining 
the entire ability for us to have a rational conversation about 
the serious questions that are actually before us here. We 
don't go down--how much cash on hand does Apple have? Two 
hundred and forty-five billion dollars. How much has Apple done 
to go cure health? Is Apple in the business of providing direct 
health care, Mr. O'Day?
    Mr. O'Day. Not to my knowledge, no.
    Mr. Roy. Right. Are you in that business?
    Mr. O'Day. Yes, we are.
    Mr. Roy. Do you provide medicine or do you run hospitals?
    Mr. O'Day. Our role is to bring breakthrough medicines to 
patients with devastating diseases.
    Mr. Roy. Right. Do you hire doctors to go out and provide 
care, or do you, for the most part, design, develop, and 
manufacture medicine?
    Mr. O'Day. My colleagues and I at Gilead are exclusively 
focused on the design and development of medicines and getting 
them in the hands of patients.
    Mr. Ezell. And, if I may, Mr. O'Day, you employ 10,000 
people at Gilead. There are some of the 1.2 million individuals 
in America's--who are employed by America's pharmaceutical 
companies who earn an average salary of $122,000. This is an 
industry that supports over 5.5 million workers across the U.S. 
economy considering direct and indirect effects, and it's an 
industry that supports a high-value-added sector of the 
economy, high-value exports----
    Mr. Roy. Yes, but whatever, profit is evil, right? Making 
money is apparently evil because never mind all those people 
you just talked about who are making money and able to pay for 
their jobs, their salaries, and be able to send their kids to 
school and be able to buy their houses in our system. This is 
somehow the wrong thing for us to do?
    I mean, again, can we have a roundtable discussion? I am 
happy to sit down with my colleagues on the other side of the 
aisle and this side of the aisle and let's have two hours, 
three hours. Let's get whiteboards up and let's go through all 
of this stuff and come to a reasonable consensus on some of 
these tough questions about patents. It is a real concern.
    But can we dispense with the ridiculousness of hostility 
toward profit. It is a good thing that Apple makes a crap-ton 
of money making these things so that we can have them and 
distribute them and use them and use them for great additions 
and benefits to the world. And it is the same thing in 
medicine.
    Chairman Cummings. Before we go on to--Mr. Raskin, just a 
moment.
    Mr. Roy, I have been here--oh, he is gone.
    Mr. Roy, I have been here since quarter of 10. I have heard 
every syllable that has been stated here, and I am sorry you 
had to leave, but I think the committee on both sides have 
asked reasonable questions. And I am not beating up on anybody 
for profit. We are just trying to make sure we understand what 
the American tax dollars are paying for. We want to understand 
why the price is so high, and we are trying to understand how 
we can get the 90 percent of people who need this lifesaving 
medication, how we can get it to them.
    And, as a matter fact, I have applauded Gilead for their 
research and what they have been able to accomplish. Now, we 
are just trying to expand it. And Mr. O'Day has made it clear 
that they are trying to figure out how to expand treatment and 
the number of people also who will have access to this 
medication. So in fairness to the committee, I just wanted to 
make that clear to my colleague.
    Now, we will hear from Mr. Raskin.
    Mr. Raskin. Mr. Chairman, thank you for that thoughtful 
comment. And I want to followup on Mr. Roy's very interesting 
and provocative statement there because I think what we are 
trying to figure out is precisely what are the various public 
and private ingredients that go into our pharmaceutical system. 
My friend Mr. Roy doesn't have to look across the aisle to find 
people who are upset with big pharma. President Trump himself 
has said that the pharmaceutical industry is getting away with 
murder. Pharma has a lot of lobbies, a lot of lobbyists, and a 
lot of power, and there is very little bidding on drugs. So I 
think that it is not just members of this side of the aisle 
that have noted some problems in the current system.
    But, Mr. O'Day, let me come to you because we know that the 
taxpayers, through the NIH, which is proudly in my district, in 
the Eighth congressional District in Maryland, put in $49 
million, and the Gates Foundation put in tens of millions of 
dollars more into funding the development of Truvada as a 
method for preventing HIV. And I think a lot of the discussion 
here is about the fact that tens of billions of dollars have 
been earned by your company. But how much did Gilead spend on 
researching and developing Truvada as PrEP specifically as a 
prevention drug?
    Mr. O'Day. Thank you, Congressman. So it's hard to tease 
out some of the PrEP activities with the other activities 
because, at the end of the day, this medicine reduces the viral 
replication. It's the same mechanism if you like for treatment 
as it is for PrEP.
    Mr. Raskin. Okay. So how much did you guys put into that 
part of the process then?
    Mr. O'Day. One point one billion over the course of 
Truvada's development, which was really for all indications 
associated.
    Mr. Raskin. Okay. And then the infusion of money that came 
from the taxpayers and the NIH was essential for the 
development, I think you would agree, of Truvada for the 
purpose of preventing HIV?
    Mr. O'Day. Yes. The know-how and knowledge that Gilead put 
in, the investment from the NIH and the $50 million, the 
greater than $80 million donation from the Gates Foundation, 
all of this was important to provide the body of evidence----
    Mr. Raskin. Terrific. Okay. So while we can't imagine this 
is some kind of Ayn Rand fantasy where the private sector did 
it all on its own, right? Would you agree with me about that?
    Mr. O'Day. I would agree, absolutely.
    Mr. Raskin. Okay. But what has been the total revenue from 
Truvada as PrEP?
    Mr. O'Day. The total revenue for Truvada as PrEP is 
difficult to kind of tease out. Again, we've talked about the 
number of $36 billion globally for the entire medicine, but 
it's very hard because the medicine is prescribed by 
physicians----
    Mr. Raskin. Got you.
    Mr. O'Day.--who often don't know whether it's PrEP or 
treatment.
    Mr. Raskin. When you set the price for it for U.S. payers, 
did you take into account the role of taxpayer funding in the 
development of the drug?
    Mr. O'Day. When we set the price for Truvada originally, we 
took into account a variety of things, including the impact 
upon the healthcare system, the ability to make sure we get 
access to----
    Mr. Raskin. All right. But you didn't take into account the 
fact that the public was one of the investors in the research?
    Mr. O'Day. Well, at the time we priced the medicine, the 
public had very little to do with the invention of this 
medicine.
    Mr. Raskin. Okay. And you are choosing now to donate some 
drugs rather than reduce drug prices. Will you claim the 
donation as a tax deduction, as you testified that you did 
habitually? There is nothing wrong with it, but it will be 
claimed as a tax deduction presumably?
    Mr. O'Day. I would--that's been my understanding is that at 
a cost-of-goods level.
    Mr. Raskin. Okay. But one of the shocking revelations from 
the Senate Finance Committee's investigation into the pricing 
of your hepatitis C product was that the $1,000-a-day price you 
settled on was based on seemingly extraneous or arbitrary 
factors like the likelihood of a public outcry at a certain 
price point or the likelihood of receiving a letter from a 
Member of Congress or the likelihood of facing a congressional 
committee and a hearing like this. Did you use those same 
political factors in setting the price for Truvada?
    Mr. O'Day. So, Congressman, again, I was not at the company 
at the time, but I've looked into those details. I think the 
overriding factors for the setting of the price for the HCV 
medicine were based upon both the cost of current treatment at 
the time and the innovation of bringing this together in a 
curative setting for 12 weeks of therapy to cure the disease, a 
huge step up from what was done in the past. Those were the--
those are the prevailing means that go into account when we 
priced----
    Mr. Raskin. Okay. And then finally, last question, just to 
follow through on the point Mr. Roy raised--and I am sorry he 
is not here for it--but do you think it is inappropriate in a 
constitutional democracy where the public invests in scientific 
and medical research and helps to produce pharmaceutical drugs 
that the public relies on, for that factor to be taken into 
account in the pricing and distribution of pharmaceutical 
drugs?
    Mr. O'Day. Well, I think it's very important that you 
consider the access question. Will the medicine get to the 
patients that need it, including in the government sector and 
the government-funded healthcare sector, as well as the private 
sector. So absolutely I think you need to take a variety of 
things into account in pricing.
    Mr. Raskin. Okay. Thank you. And I wish I could ask you 
about that access, maybe if we get another round, but I yield 
back to you, Mr. Chairman.
    Chairman Cummings. Thank you very much. Ms. Miller?
    Mrs. Miller. Thank you, Chairman Cummings and Ranking 
Member Jordan, and thank all of you all for being here today.
    In my home county of Cabell County, there has been an 
increase in HIV cases. In March there were 28 confirmed cases, 
and in April that number has risen to 44. This number is a 
sharp uptick from the case where we only had the eight cases 
annually over the last five years.
    Unfortunately, those most impacted are intravenous drug 
users, which is a terrible result of the opioid crisis that has 
devastated so many communities across the United States. I am 
very glad that President Trump is taking the issue of HIV 
seriously and has secured the donation of the 2.4 million from 
Truvada for the Centers of Disease Control, and thank you for 
doing that.
    Mr. O'Day, if a patient cannot afford Truvada, are there 
precautions in place to ensure access?
    Mr. O'Day. Yes, absolutely. So we--if there are--if they 
have private insurance and they can't afford their co-pay, they 
can apply to our co-pay assistance programs, and 98 percent of 
patients that have done that pay nothing out of pocket. And 
then if they're uninsured or struggle with their medicine, we 
have a medicine assistance program, which essentially evaluates 
their financial needs and provides it for free.
    Mrs. Miller. Thank you. Can you explain how the new version 
of tenofovir if that is how you pronounce it----
    Mr. O'Day. Tenofovir, right.
    Mrs. Miller [continuing]. was--tenofovir was an improvement 
to patients, and what new benefits does it provide?
    Mr. O'Day. Well, thank you, Congresswoman. So what you are 
referring to is actually a completely separate medicine from 
tenofovir. It's a medicine that's called--or abbreviated as 
TAF. And this is now to--you know, the advancement that we've 
seen in both treating and preventing HIV/AIDS is that people 
living with AIDS or people subject to AIDS have the ability to 
take these medicines now for decades. Tenofovir, when taken 
that long, a certain subset of patients have issues with their 
kidney or with bone disease on such a chronic basis because 
we've essentially transformed the disease to such a long-term 
illness.
    So the new medicine, so-called TAF, which will be combined 
again with FTC and other agents, has a much lower incidence of 
these side effects and is really designed for, if you like, the 
new generation of medicines that will allow patients to be on 
this longer-term without having to worry about other 
debilitating side effects that they could get from their 
medicines. We've launched this now into the treatment of HIV 
setting with a medicine called Biktarvy, and we'll be bringing 
this innovation--it's right now filed with the FDA, and we 
will--hope to have a positive approval by the end of this year 
for patients that are eligible for PrEP. So this innovation, 
this new medicine that was completely discovered and developed 
by Gilead scientists, is now kind of the next evolution of care 
for HIV patients.
    Mrs. Miller. How long did it take you to do that?
    Mr. O'Day. Oh, my gosh, well, this was back in the 1990's 
that we started this, so it's been more than two decades and 
part of that $6 billion investment that we've had so far in 
HIV.
    Mrs. Miller. Wonderful. Would any new patents prevent 
generics from being created against the original version?
    Mr. O'Day. No, it's a completely separate medicine. It has 
nothing to do with the patents of Truvada. It's patent-
protected from this new innovation that took decades to 
produce.
    Mrs. Miller. Thank you. Mr. Ezell, do you foresee a future 
where the NIH could take on the entire of the drug development 
process from start to finish?
    Mr. Ezell. I simply do not think that would be the case. 
First, the capacities are not there. The NIH focuses on basic 
scientific research. What industries really bringing to the 
table is the development aspect of it, doing the applied 
research, conducting the clinical trials.
    Now, this has been proposed. Dean Baker, for instance, has 
written that, quote, ``We could expand the public funding going 
to NIH or other public institutions to extend their charge 
beyond basic research to include developing and testing drugs 
and medical equipment.'' But Baker estimates that, were we to 
try to do that, we would likely--quote, ``It would be necessary 
to increase the amount going to NIH by at least $60 billion a 
year'' in order to, quote, ``replace the funding currently 
supported through patent monopolies. So no, I don't think 
that's tenable. I don't think we're going to increase NIH 
funding by $60 billion a year, especially if we can't increase 
the--we pass a gas tax.
    And more beyond that point, I think there is very little 
reason to make that dramatic of a change to a system that, as 
I've tried to say today, is in fact the world's most effective 
and productive at generating new-to-the-world cures.
    Mrs. Miller. Thank you.
    Chairman Cummings. Mr. Khanna.
    Mr. Khanna. Thank you, Mr. Chairman, and thank you to 
Representative Alexandria Ocasio-Cortez for working to have 
this hearing.
    Mr. O'Day, I want to try to be constructive and not score 
political points or embarrass you but just get some facts and 
see if we can make some progress of your commitment. The New 
York Times wrote that Truvada was developed significantly by 
taxpayers. Is that a true statement?
    Mr. O'Day. I think that's really inadequate--inaccurate I 
should say.
    Mr. Khanna. So you disagree with The New York Times 
editorial board?
    Mr. O'Day. Yes.
    Mr. Khanna. And why is it not a true statement?
    Mr. O'Day. Because the medicine was developed and 
discovered within Gilead. Some of my colleagues have mentioned 
that we licensed some initial compounds on this. That's 
important. Those were very early stage ideas on the product. In 
the case of TDF, which is one of the components of Truvada, it 
was not a drug that--at the time, and it went through many 
iterations before it got there.
    Mr. Khanna. Did you benefit at all from the study that was 
funded, $49 million by NIH and the Gates Foundation in terms of 
understanding the drug could be used for preventing HIV?
    Mr. O'Day. Absolutely. Of the $1.1 billion we invested, I 
think that was an important contribution to supporting the 
HIV----
    Mr. Khanna. And did you----
    Mr. O'Day.--story at the time, and I'm grateful for Dr. 
Grant's----
    Mr. Khanna. And----
    Mr. O'Day.--leadership.
    Mr. Khanna [continuing]. grateful is good. Have you paid 
them anything?
    Mr. O'Day. Well, I think there's different ways to look at 
contribution to society. I mean, we have----
    Mr. Khanna. Right. I mean, I am sure they appreciate the 
compliments, but, you know, usually if I get something, I pay 
something for it. I am just curious. It is a simple answer, yes 
or--usually I don't like yes or no questions, but this one is 
pretty yes or no. Did you pay them money or not?
    Mr. O'Day. The donations that were provided by NIH and the 
Gates Foundation did not come with terms suggesting that----
    Mr. Khanna. No, I am not saying that they required it. I'm 
just asking--so you didn't pay them anything for that?
    Mr. O'Day. No, I think it's in the interest of public 
health to advance a foundational medicine for additional----
    Mr. Khanna. And it absolutely is. The difference is 99.9 
percent of us don't get to profit when it is in the interest of 
public health. You know, you have acknowledged that this is 
something that you used to profit, and you haven't paid them 
back. I mean, that is your decision. I just want to get the 
facts.
    One thing I want to get, are you--I appreciate that you are 
going to donate these 200,000 drugs. Can you assure us that you 
are not going to claim a tax write-off for those?
    Mr. O'Day. You know, those will show up on our P&L balance 
sheet----
    Mr. Khanna. So you will claim a tax write-off. Can you 
assure us that you will only deduct the manufacturing cost----
    Mr. O'Day. Yes, I can assure you of that.
    Mr. Khanna. So you are going to deduct $6. You are not 
going to deduct----
    Mr. O'Day. The $6 figure is not accurate.
    Mr. Khanna. Okay. But you aren't going to deduct the 
$2,000? You are going to deduct something closer to----
    Mr. O'Day. That's correct.
    Mr. Khanna [continuing]. $6?
    Mr. O'Day. That's correct.
    Mr. Khanna. So it is inaccurate that you would try to get a 
billion-dollar tax deduction?
    Mr. O'Day. Absolutely not.
    Mr. Khanna. Okay. So let me ask you this. One thing that I 
think you could commit to that would go a long way, there is 
some misunderstanding on the 200,000 that you have pledged to 
the President, and they are saying that that also includes 
people who are already on your financial aid programs. Can you 
commit that those 200,000 drugs are going to be in addition to 
the ones of people who are already part of your financial aid 
programs?
    Mr. O'Day. Yes, absolutely. I mean, I think it's important 
to note----
    Mr. Khanna. So you are making that commitment. So in 
addition to the people you have on financial aid, you are going 
to do 200,000 new ones, and you are committing today that you 
are not going to deduct anything beyond the cost on your 
deductions?
    Mr. O'Day. That's correct. We'll continue to serve patients 
through our medical assistance program. Today, we have 20 to 
30,000 a year. This is an additional 200,000, plus we continue 
to support all the co-pays. So back to, you know, do we give 
back, you know, to, you know, inventions that are supported in 
us? I mean, the answer is yes, in different forms----
    Mr. Khanna. Well, I am glad you have made a commitment 
because in The New York Times editorial, you know, they will be 
happy to know. I mean, there was legitimate concern about what 
tax deduction you are going to take. It seems you are not going 
to take that. You are going to do 200,000 in addition. Now, if 
you would just commit to paying back something to the CDC, I 
think it would go a long way.
    Any final thoughts?
    Mr. O'Day. Well, I think, you know, we are collaborating 
with the CDC on the entirety of the program, so I think this is 
a partnership. It's one where we provide resources, 
intellectual know-how, medicine. The government provides 
funding to support--we're all in this together to get to the 
HIV elimination, so I think there's give-and-take on a variety 
of sides, Congressman. Thank you.
    Chairman Cummings. Mr. Higgins.
    Mr. Higgins. Thank you, Mr. Chairman. Madam and gentlemen, 
thank you for being here today.
    Mr. Horn, has Gilead invested approximately $1.1 billion in 
developing Truvada? Is that an accurate number?
    Mr. Horn. I'm sorry?
    Mr. Higgins. Approximately did Gilead spend $1.1 billion 
developing Truvada?
    Mr. Horn. I can't confirm or deny that.
    Mr. Higgins. Can you answer that, Mr. Ezell?
    Mr. Ezell. I would defer to Mr. O'Day, who's from the 
company. I do not know myself how much----
    Mr. Higgins. Okay. I was wondering if this was common 
knowledge. Mr. O'Day, can you clarify?
    Mr. O'Day. I can----
    Mr. Higgins. According to our research, it costs $1.1 
billion----
    Mr. O'Day. Yes, I can----
    Mr. Higgins [continuing]. to develop Truvada?
    Mr. O'Day. I can confirm that, yes.
    Mr. Higgins. And that drug has been quite successful at 
treating HIV and AIDS, correct?
    Mr. O'Day. It's been a cornerstone of HIV treatment, yes.
    Mr. Higgins. Thank you. The drug Descovy, are you currently 
investing a great deal of money perhaps on a similar level to 
develop Descovy? Is that at phase three right now?
    Mr. O'Day. The phase three trials ran out. They represented 
at the AIDS meeting in March. It's now been submitted to the 
FDA for the----
    Mr. Higgins. How much money are you making on Descovy right 
now?
    Mr. O'Day. I don't have that number on the top of my head. 
I apologize, but I can get back to you.
    Mr. Higgins. Is it being sold?
    Mr. O'Day. It is being sold for the treatment indication, 
but the prevention indication will be new later this year.
    Mr. Higgins. Very well. And that is because it is in phase 
three right now----
    Mr. O'Day. Yes, it finished phase three.
    Mr. Higgins. And GS-9131, is that an HIV/AIDS drug?
    Mr. O'Day. I believe so. I'm still getting the numbers 
down.
    Mr. Higgins. It is in phase two. Is money being spent to 
develop that drug for HIV and AIDS?
    Mr. O'Day. I'm just not familiar with this particular 
number, Congressman, so I apologize. But we have a variety of 
medicines in phase two right now.
    Mr. Higgins. According to my research, you have four--
including Descovy, you have five HIV/AIDS drugs being 
developed, three in phase one, one in phase two----
    Mr. O'Day. Yes.
    Mr. Higgins [continuing]. one in phase three.
    Mr. O'Day. Yes, that sounds right.
    Mr. Higgins. Is that reflective of--so the drugs that are 
in phase one, these three drugs that are in phase one and treat 
HIV and AIDS, is there money, tremendous amounts of money being 
invested in the development of those drugs?
    Mr. O'Day. Well, we spent about $3.5 billion U.S. a year on 
R&D and around 40 percent of that goes into HIV/AIDS at this 
stage. So yes, there's significant----
    Mr. Higgins. And----
    Mr. O'Day.--investment in----
    Mr. Higgins. And prior to these drugs that are in 
development right now being sold and marketed including levels 
that are being questioned by this oversight committee, I think 
appropriately so--we must protect the American people. We 
wouldn't want to gouging, would we? And yet this clearly 
indicates--our research indicates that you are investing a 
tremendous amount of money right now into drugs being developed 
to treat HIV and AIDS, which are not being sold, so you are not 
making money on these drugs, you are spending money----
    Mr. O'Day. Yes.
    Mr. Higgins [continuing]. on these drugs?
    Mr. O'Day.--Congressman, and many of those will fail 
unfortunately.
    Mr. Higgins. Thank you.
    Mr. O'Day. But it's the nature of innovative research.
    Mr. Higgins. The ones that succeed and they go to market 
and they help Americans, perhaps millions of Americans, as 
Truvada has, is that the corporation's only window to recoup 
and retain moneys to invest in further research and 
development? Is that not----
    Mr. O'Day. Yes.
    Mr. Higgins [continuing]. a logical formula to----
    Mr. O'Day. Absolutely. That's basically our contract with 
society. We invest a tremendous amount in R&D at a high failure 
rate. Those that succeed we have a limited patent life to 
recoup the investment back into investing it and finding cures 
for devastating diseases. And then it becomes generic and 
broadly available to society.
    Mr. Higgins. In the interest of time--thank you for 
clarifying, but I have limited time. According to our research, 
besides the five HIV/AIDS drugs that are in development and 
which you referred to as in the pipeline, you have 28 other 
drugs that are in the pipeline at various phases of 
development. Of those 28 additional drugs, would it be fair to 
say that scores of millions of Americans could be helped with 
diseases that currently suffer?
    Mr. O'Day. Well, we're certainly hoping, yes. We're working 
on some of the most devastating diseases----
    Mr. Higgins. And when a drug is under development, is there 
any guarantee that it will become a profitable drug for the 
company?
    Mr. O'Day. Quite the contrary. In phase one, 95 percent 
failure rates; phase two, 85 percent failure rates; phase 
three, 50 percent failure rates are the average. In fact, we 
just had a phase three trial for a devastating disease called 
NASH that failed.
    Mr. Higgins. Thank you for clarifying, sir. I think it is 
clear that this is a worthwhile hearing that should be 
reflected upon in a balanced measure.
    Thank you, Mr. Chairman.
    Chairman Cummings. You mentioned African Americans not 
getting the medication at a far disproportionate rate. Did you 
mention that?
    Dr. Walensky. I did.
    Chairman Cummings. Can you tell me about that?
    Dr. Walensky. Well----
    Chairman Cummings. Because I am listening to you, Mr. 
O'Day, and I am wondering--when I first got to Congress 20-some 
years ago, one of the first issues that we addressed with 
Maxine Waters was AIDS. And back then the treatment went to gay 
white males. The African-American community was pretty much 
left out. And so I am trying to figure out--when I heard those 
numbers, I am just trying to figure out who is going to cover 
the African-American communities and whether when you all make 
those decisions, you know, about distribution, where does that 
go? I mean, in other words, where do the drugs go and what role 
do you all play in making sure that there is some equitable 
distribution?
    And I want you to understand I have heard a lot of talk 
here this morning about how people are beaten up--it is not 
about beating up. It is about being thankful that we have a 
medication that can do just about everything but finally cure 
it, AIDS, and wanting it to get to everybody that it can get 
to. I mean, it is as simple as that.
    So Ms.--Dr. Walensky. I am sorry.
    Dr. Walensky. Great. Yes, so a couple of comments on that. 
We know there are about 39,000 new HIV infections in the United 
States per year. This past--the most recent data that we have 
we know 80 percent of those new infections were on persons of 
color. We know that----
    Chairman Cummings. Eighty percent?
    Dr. Walensky. Eighty percent were in persons of color. We 
know that, of the new infections in 2017, 43 percent were in 
African Americans. African Americans make up 13 percent of this 
population. We know that African Americans suffered over 53 
percent of the deaths of HIV and AIDS. And we know that PrEP is 
getting to largely gay white men, which it needs to get to, and 
about 75 percent, but only about 10 percent of its consumers 
are people of color.
    Chairman Cummings. Now, Mr. O'Day, what can we do about 
that?
    Mr. O'Day. This is a dire need. We completely agree. And 
part of the program we've just agreed to with the CDC is 
focused on 48 hotspot counties, seven rural states, you know, 
District of Columbia and San Juan, Puerto Rico. These are areas 
predominantly in the southern United States where the African-
American incidence is--we're not reaching and getting to. So 
we've had programs that are continually focused on supporting 
the communities, support services that are underway. Now--but 
we have much more we have to do to get to these communities.
    It's make sure that the medicine is not the barrier in 
these communities, but beyond that, it's making sure we provide 
the services to both address the issues relative to 
inequalities in the healthcare system, lack of education, 
stigma associated with the minority and African-American 
communities. We need to do more. We're fully committed to 
rolling up our sleeves to be a part of that.
    In fact, I just received an email overnight from an 
incredible organization in Jackson, Mississippi, that supported 
400 patients to get PrEP over the past six years. It's a small 
start. There's so much more to do. And when they started, they 
were the only organization in Mississippi that did this. And, 
fortunately, they have a system there where, once they identify 
patients--and they're now using telemedicine to try to identify 
patients--built into their protocols are the ability to access 
the Gilead support services. And I'm pleased to say that they 
said, of the 400 patients, none of the 400 had a financial 
problem with getting the medicine.
    But we need to do this in so many other communities, and 
that's why we're rolling up our sleeves and hoping--and not 
just hoping but committing to the CDC initiative and others to 
get to this community.
    Chairman Cummings. Ms. Pressley. Ms. Pressley.
    Ms. Pressley. Thank you, Mr. Chairman, and thank you, 
Representative Ocasio-Cortez and all the advocates who made 
this hearing possible.
    And, Mr. Chairman, just picking up on some of your 
commentary and the comments of our colleague across the aisle 
who is very impassioned, and I have an equitable amount of 
outrage about the fact that people are dying. This is not about 
the vilifying of profit. This is about the vilifying of 
choosing profit over people. And if we know that a new person 
is infected every 15 minutes and we have been here two and a 
half hours, that is 10 more people who have been infected.
    And so we have an administration, the occupant of this 
White House, who sets an aspirational and achievable goal to 
end this epidemic, and yet we don't have enough infectious 
disease doctors. We have a cost-prohibitive lifesaving drug, 
and it is not equitably being accessed. So that sounds like an 
unfunded mandate. And we have been here before.
    And this is the Oversight and Reform Committee, and so it 
is our job to hold everyone from--you know, I served on the 
city council before, but any time profit over people, whether 
it is developers or pharmaceutical companies are engaging in 
those practices, we are here to shine a light on that and to 
keep us all accountable. So that is the role of this committee.
    So, you know, we should be furious about what we have heard 
here today. This is the world's wealthiest Nation. There are 
40,000 new HIV diagnoses each year. In my home state of 
Massachusetts, there have been over 140 new HIV cases since 
2015, eight new cases in Boston over the last six months.
    Now, we have heard a lot of sobering and damning statistics 
here, but I don't want us to get lost in the numbers and allow 
that to dominate the conversation because this is about people, 
our family members, our neighbors, our friends, our 
constituents like my constituent Matthew. He lives in 
Somerville. He is a gay man. And Matthew knows he is at higher 
risk of getting HIV, and for three years, he has been fortunate 
enough to be on PrEP. His insurance coverage gives him access 
to the drug at an affordable rate. However, he lives in 
constant fear that a job change will push it out of reach for 
him.
    There are millions of Matthews in our country for whom PrEP 
allows them to stand in their truth, safety, and unencumbered 
by the fear of contracting HIV, but unlike Matthew, there are 
millions more who need it and still cannot afford it.
    It has been 40 years since the first HIV case in the U.S., 
and this disease still remains a global public health challenge 
and, as reminded to all of us by our chair in your earlier 
commentary, particularly for women and queer people of color.
    It is my opinion that, Gilead, you have used your power to 
manipulate our patent systems, monopolized the marketplace to 
line your shareholders' pockets, and I think that is shameful.
    Dr. Walensky, you have studied HIV transmission closely, 
and, as a physician at Mass General Hospital, you are on the 
frontlines of this epidemic. Since we are short on time, yes or 
no, do you agree that by failing to get PrEP in the hands of 
those most at risk, including people who inject drugs, we 
undercut our ability to eradicate this disease?
    Dr. Walensky. Yes.
    Ms. Pressley. Thank you. Can you speak to how substance 
abuse disorders specifically for those who inject drugs with 
needles, have heightened the need for greater access to PrEP?
    Dr. Walensky. Our hospital is full of injection drug users 
right now. We have double our consult volume in the last decade 
much due to injection drug use. And there's been an outbreak in 
Lawrence and Lowell, as you know, in Massachusetts that was 
reported in the MMWR by the CDC. So yes--an HIV outbreak I 
should say. So yes, we need PrEP for all people at risk.
    Ms. Pressley. Mr. O'Day, Gilead plans to donate millions of 
bottles of PrEP and bring a generic product to the market in 
the next few years. At face value, this seems like a good idea, 
although, you know, two years is two years too long. But the 
CDC estimates only a fraction of the 1.1 million people who 
need PrEP have access to it. The donation your company 
announced would reach even less people.
    Now, I recognize your company's efforts to provide 
financial assistance for people without insurance who can't 
afford it, but given the uptick in HIV infection, these efforts 
simply don't keep pace. They don't go far enough. Mr. O'Day, 
can you guarantee that the donated medications will go to 
people who do not already have access to the drug?
    Mr. O'Day. Yes.
    Ms. Pressley. Thank you. In Canada and Australia Truvada is 
sold for less than $10 a pill. It seems to me if your company 
wanted to, you can make the drug affordable for everyone. What 
has stopped your company from lowering the price to a 
comparable rate in the U.S.?
    Mr. O'Day. The patent exclusivity ends, as you know, in 
September of next year, and we will, you know--the pricing 
between the countries is very different. It's a very 
heterogenous systems between the United States and in other 
countries, and the pricing, as set in the United States, takes 
into account the innovation it brings, the cost of the health 
care of treating an HIV patient, the ability to invest back in 
research and development, and then also to make sure our access 
programs are effective and that patients in America do not go 
without receiving this lifesaving medicine.
    Ms. Pressley. Well, it's----
    Dr. Lord. It's greed.
    Ms. Pressley. Yes. Okay. So I was going to say just, you 
know, respectfully, in that every 15 minutes a new person is 
infected, the more time we waste, the more lives that we are 
losing. And again, this is an aspirational and achievable goal, 
and so it is really infuriating. There are clearly many 
barriers people are facing in accessing this lifesaving 
medication, and price should not be one of them. Gilead could 
make PrEP more affordable in the U.S. and therefore more 
accessible if you want to, if there is the moral courage and 
the fortitude and the commitment to do so. Your failure to do 
so is indefensible. Your company brings in record-level profits 
while holding hostage a drug that could end this epidemic. 
There isn't a country in this world where this type of greed 
and conduct will be tolerated, so I am not sure why we tolerate 
it in this one.
    Thank you, Mr. Chairman, and I yield back.
    Chairman Cummings. Thank you very much. Ms. Tlaib.
    Ms. Tlaib. Thank you, Mr. Chairman. And, Mr. Chairman, 
thank you so much for always supporting us, especially us new 
class of women that have come in to this U.S. Congress. It 
speaks volumes to your character.
    I also want to thank my sister from New York, Congresswoman 
Alexandria Ocasio-Cortez, and the incredible advocates that are 
behind her and making sure that we always speak truth to power.
    What is evil, Mr. Chairman? And I talked with you about 
this. What is evil is that people are dying a painful death all 
because of corporate greed. How much profit is enough, Mr. 
O'Day? When does it become immoral? And in my district I have 
the third-largest population of those infected in the state of 
Michigan. And as I think about you saying you are helping 
folks, I look at numbers because it is important. And when you 
say you are going to provide assistance, 200,000 people when 
1.1 million people need your assistance, it is baffling.
    And I agree with Dr. Lord. I agree that Truvada belongs to 
all of us. And it is our responsibility in this chamber to make 
sure that we are putting people before profit. And it is really 
absurd that, as I hear my colleagues defending this practice 
over the American people that brought us here, it is 
disheartening because in the last five months, I don't care 
which committee I go to, corporate greed is the issue always. 
It is always about the money and about profit. And as Mr. 
Chairman has constantly always said, there is no problem with 
that, but when does it become immoral? When does it become so 
unjust that we are seeing our neighbors die, die because drugs 
are just not accessible to them, drugs that we created, the 
Federal Government on behalf of the people?
    And so I just want to urge Mr. O'Day to please take Dr. 
Lord's recommendations. This is your time to do what is right 
for the people and do what is right for our country.
    And with that, I want to yield to my sister from New York, 
who is, again, such a shed of light in this time of darkness in 
our country, that is constantly always putting people before 
profit, and that is Alexandria Ocasio-Cortez.
    Ms. Ocasio-Cortez. Thank you. That is incredibly too 
generous. Thank you.
    And I would like to thank my sister and colleague from 
Michigan because, you know, I see you go home every weekend and 
connecting with your community and really bringing yourself to 
hold that space and feel what your constituents feel.
    Mr. O'Day, I just want to clarify and let you know that 
this isn't about you, and I am not here to vilify the work that 
you have done because you are responding to a set of 
incentives. And you could, you know, resign today, there would 
still be someone that would come up and occupy this seat, 
responding to those same incentives, making the same decisions 
that you make. So this isn't about you as an individual or who 
you are or your character. This is about the system of 
incentives that we have set up.
    And when it comes to who to blame for this, I don't blame 
you. I blame us. I blame this body because every single 
developed country in the world guarantees health care as a 
right except us, except the United States because we can't get 
it together, because we don't have the fortitude to kick 
pharmaceutical lobbyists outside of our congressional offices.
    We have a leader here, Mr. Sarbanes, who has led in the 
role of money and politics. We can't even reform our own 
political system to make sure that we are more responsive to 
the people and the electorate that we seek to lead and whose 
votes we ask for.
    And so this isn't your fault. This is our fault because for 
some reason, for some reason the conclusion that every single 
other Western or rather developed country in the world has come 
to, we haven't been able to come to. In Australia, PrEP is $8 a 
month. In the United States, it is almost $2,000 a month 
because we have legislated a set of incentives, and we have 
legislated a system that allows that to happen.
    Out of every 10 people that need PrEP, nine of them cannot 
access it, and that is largely due to the price. We heard 
earlier today an impassioned plea about profits and about how a 
corporation like Apple should be able to enjoy that. Well, I 
know a woman, her name is Amy Vilela and her daughter died 
because she went to a hospital and told them that she wasn't 
insured and they said come again in a month when you do have 
insurance. Well, her blood clot didn't wait a month. Her 
daughter died at 22 years old. And the rub of it was that her 
daughter, I believe, might have actually been ensured and just 
didn't know it because she was in between jobs.
    And so what Amy says, what Ms. Vilela says is this is a 
commodity. Her daughter's life was not. People's lives are not 
commodities. When we talk about economics, there is something 
known as a demand curve with elasticity. And with every other 
commodity, you can say how much is this phone worth to you and 
you can say $100, $200. You can buy a Nokia phone. You cannot 
have a phone at all, but you cannot ask the question how much 
will you pay to be alive? How much will you pay to live? 
Because the answer is everything. The answer is you will pay 
$10, you will pay $1,000, you will go into debt, you will do 
anything to live. And that is what makes the price of medicine 
different than the price of an iPhone.
    Thank you very much.
    Chairman Cummings. The gentlelady's time is expired.
    Mr. Sarbanes.
    Mr. Sarbanes. Thank you, Mr. Chairman. I am tempted to just 
say amen and stop talking, but I do have a couple of questions 
I would like to----
    Chairman Cummings. Me, too.
    Mr. Sarbanes. Yes, I would like to get on the record. Mr. 
O'Day, this new drug that is going through the process, 
Descovy, is that how you say it?
    Mr. O'Day. That's correct, Congressman.
    Mr. Sarbanes. Yes, that is based on this component that has 
TAF as opposed to TDF.
    Mr. O'Day. Correct.
    Mr. Sarbanes. Is that something you are going to pursue 
exclusivity on in terms of the patent around that? What is----
    Mr. O'Day. It's a brand-new medicine.
    Mr. Sarbanes. Yes, brand-new----
    Mr. O'Day. It has a patent life, as granted to it under the 
patent statutes.
    Mr. Sarbanes. I know there are some questions being raised 
out there. I think it has found its way into litigation as to 
whether Gilead knew back when it was developing TDF that the 
TAF opportunity might be a safer one. And I am curious as to 
whether you were aware of the safety benefits associated with 
TAF at the time when TDF was being developed.
    Mr. O'Day. Absolutely not. I mean, TAF was still in the 
very early stages.
    Mr. Sarbanes. Okay.
    Mr. O'Day. We pursued the development of that for treatment 
and for prevention in line with the natural course of 
development.
    Mr. Sarbanes. Dr. Lord, did you want to say something?
    Dr. Lord. We know that Gilead in 2011, the ex-CEO actually 
said that they stopped the development of the safer TAF drug 
because they knew--they knew it was not as safe, and when they 
were trying to launch Truvada versus another drug Epzicom at 
the time--and this is a quote, they said ``and to have our own 
studies suggesting that Viread''--which is part of Truvada--
``wasn't the safest thing on the market, which it certainly was 
at the time, it didn't seem like the best.'' So we have 
evidence from their CEO that they purposely delayed----
    Mr. Sarbanes. Well, that----
    Dr. Lord [continuing]. development of the safer drug.
    Mr. Sarbanes. I appreciate that. And it is obviously going 
to play itself out. I mean, we will----
    Dr. Lord. See you in court.
    Mr. Sarbanes [continuing]. the courts will decide, I guess, 
whether these allegations are well-founded or not. But it is 
interesting that the effect of this is that with the new 
Descovy TAF-based drug that is coming, you are going to get 
another period of exclusivity. So am I right that essentially 
what is being achieved there is that by first pursuing the TDF-
based Truvada with apparently the safety risk and now pursuing 
the safer TAF-based drug of Descovy, basically Gilead is going 
to reap the benefit of two periods of exclusivity rather than 
one, correct? I mean, that is just factual.
    Mr. O'Day. Well, these are two completely different 
medicines.
    Mr. Sarbanes. Right, but----
    Mr. O'Day. This is a step----
    Mr. Sarbanes. I got you----
    Mr. O'Day. This is a step change in innovation----
    Mr. Sarbanes. That is going to be subject to debate and 
whatever, but you are going to get a period of exclusivity, 
which you are still in for the TDF-based Truvada, and then you 
are going to get another period if this all works out for you 
of exclusivity for the TAF-based Descovy. That is how it looks 
to me.
    I have got to move on real quick to one other series of 
questions I wanted to ask you. I understand that Teva 
Pharmaceutical got FDA approval for a generic equivalent for 
its Truvada back in June 2017. And so it raises the question if 
that generic drug was approved in 1917, why did it not enter 
the market in 1917? And apparently, the answer is that three 
years previously in 1914 Gilead had entered into a settlement 
agreement with Teva under the terms of which Teva agreed not to 
challenge Gilead's patents in court. And so in exchange, Gilead 
allowed Teva to come to the market in 2020, which is a year 
earlier.
    So you made this deal with them that basically said we will 
let you come in a year earlier if you, I gather, don't sue us 
on the patent. And maybe you saw some weakness there, and this 
was a good deal to make, but is that true that there is some 
agreement that was made there with Teva where they are going to 
be able to come in a year earlier in return for something that 
was done? Is that true?
    Mr. O'Day. So this is a fairly normal process of generics 
coming in, challenging patents----
    Mr. Sarbanes. Yes.
    Mr. O'Day.--and then a determination is eventually made on 
the cost of litigation, the potential litigation. We believe 
strongly in the Truvada patents. At the end of the day----
    Mr. Sarbanes. It is pretty typical. You are right about 
that. And you have done it in I think nine other instances, the 
effect of which--there are all these ways to extend your patent 
control. One is pay for delay. This is a little bit different. 
This is making a deal basically so people won't challenge the 
patent, which to me signals maybe some concerns about the 
weakness of the patent, but you have figured out a way to push 
that off. So it just makes me concerned about how you are 
conducting the business because the bottom line is these 
generics don't get to the market as quickly as they could. And 
I understand from Dr. Walensky that the benefits of that in 
terms of the pricing may not be as much as we fantasize about. 
But nevertheless, it is important that the generics be able to 
get to market quickly or as quickly as they can. And we are 
seeing some maneuvers on your part I believe that keeps that 
from happening.
    With that, I would yield back my time, Mr. Chairman.
    Chairman Cummings. Ms. Speier.
    Ms. Speier. Thank you, Mr. Chairman. Thank you all for 
being here.
    At the outset, it is important for me to disclose that 
Gilead is a company in my district with 9,000 employees around 
the world, many of them in my district.
    Having said that, Mr. O'Day, I am glad that you are here. I 
am glad that you have participated in the manner that you have. 
I think you do have a responsibility to your shareholders. I 
also think you have a responsibility to our country. And you 
are doing what you are doing in large part--and I agree with 
Ms. Ocasio-Cortez--because the system allows you to do it. And 
we have got to take responsibility for the fact that when 
Medicare part D was created, we tied our hands behind our backs 
and did not allow Congress or the government to negotiate 
prescription drug discounts.
    Now, I am deeply concerned about the 1.1 million people 
that Dr. Walensky talked about who warrant PrEP right now. They 
are those most susceptible to potentially getting HIV. But only 
150,000 of those 1.1 million people actually do, and of those, 
they are 75 percent white. So the people that desperately need 
this drug are African-American gay men. One in two black gay 
men will be diagnosed with HIV in their lifetime.
    So knowing all this, I want to know--and here I am 
negotiating with you in public over something frankly the 
government should have been doing a long time ago. Are you 
willing to provide P.R. ads--you put lots of ads on TV, I see 
them all the time for your drugs. Will you put ads on TV that 
are targeted at the African-American gay men who should be 
getting this drug and who are not and make them also aware of 
the fact that you are making available this drug for free to 
those who need it?
    Mr. O'Day. Thank you, Congresswoman. Just to clarify, the 
numbers that we have are around 200,000 people are on--of the 
1.1 million are on the Truvada today. There's clearly a huge 
unmet medical need to your point, and again, the CDC's own 
studies suggest that, with the Gilead support programs, there's 
only 1 percent that aren't on it for financial means.
    We are firmly committed to working in a number of ways to 
outreach----
    Ms. Speier. Okay. Mr. O'Day, I don't have a lot of time.
    Mr. O'Day. Right.
    Ms. Speier. Will you commit to developing a P.R. campaign 
for TV to target the African-American population that is most 
susceptible to getting HIV and making them aware that the drug 
is available and it will be made available to them for free?
    Mr. O'Day. We do do television advertising today for this 
community. We do digital advertising. We commit to----
    Ms. Speier. That is not working.
    Mr. O'Day. We commit to a variety of programs that are 
getting at this community today. And it is increasing, but 
there is much, much more to do, which is why the CDC 
initiative, which it is their numbers that suggest that 200,000 
people are uninsured of those 1.1 million, and we are providing 
the total amount to make sure that we get that to patients, and 
we'll continue to work----
    Ms. Speier. But if people don't know about it, it doesn't 
matter that you are making 200,000 doses or enough for 200,000 
people. If they don't know about it, they are not going to 
access it. So----
    Mr. O'Day. Right.
    Ms. Speier [continuing]. I feel that you have a moral 
obligation to inform that population. We have to save these 
lives. We do know that HIV is increasing because young gays, 
particularly in my district, are feeling immortal now, and 
since this disease is becoming chronic, that they can engage in 
unprotected sex, and so HIV is on the increase. So, as the 
biggest provider of the drug that protects these individuals, I 
believe you have to do more, and I am asking you to do more.
    Mr. O'Day. Yes, and we will continue to do more. We spend 
more than $100 million over a 10-year period on a compass 
program that specifically targets the southern states in the 
United States that focuses on education, that focuses on access 
to health care, and we'll continue to roll up our sleeves and 
work with the community and work with other organizations to be 
able to increase this presence. Absolutely we commit to that.
    Dr. Lord. It's obviously not working, though, and this 
donation really is not anything meaningfully different than 
their medication access program, which they already have, 
which, as you say, is not working. It's only reaching, as Mr. 
O'Day said, 20,000 people----
    Ms. Speier. Okay. So, Dr. Lord, what would you recommend?
    Dr. Lord. I would recommend that they lower the price--that 
they lower the price so that Mr. Horn's organizations can get 
drugs to the people that need them. Instead of spending $2.6 
billion, which is the domestic spend on Truvada, I say we spend 
that money to develop programs for Mr. Horn's agencies to get 
drugs to these people that need it. They don't just need a free 
drug. They need programs, and we're not going to do that with a 
donation. We're going to do that when we spend serious money, 
instead of sending it to Gilead, to giving it to the states, to 
the counties and municipalities that need it.
    Mr. O'Day. And Gilead is spending hundreds of millions of 
dollars on these programs.
    Dr. Lord. We're spending $2.6 billion, so, yes, you give us 
a few hundred million back, but we're giving you the vast 
majority of that to begin with.
    Ms. Speier. All right. My time is expired, but, Mr. O'Day, 
I hope that you will take my request seriously and come back to 
us with a campaign that will engage the whole community that is 
not aware that your program exists. I yield back.
    Chairman Cummings. We want to be effective and efficient. 
Is there any agency that can identify who these people are that 
need this treatment, Dr. Walensky? In other words, can we 
pinpoint them, I mean, who they are? Do you follow me?
    Dr. Walensky. Yes, I do.
    Chairman Cummings. And that way you can go straight to 
them.
    Dr. Walensky. Yes, thank you for that question. I want to 
go back to a number that keeps getting cited that is 98 percent 
of people get access and 1 percent of people don't have--
don't--cite cost as the issue. Less than 1 percent of people 
don't cite cost as the issue. That was a study that was funded 
by the CDC, it was conducted by the CDC. It was a household 
survey. So we know that--so we know that adults who are 
surveyed in the household don't think that they have a problem 
accessing PrEP. Well, I can tell you what, those are not the 
people who actually need access to PrEP.
    We know that of our youth that are--that about 10 percent 
of our youth are gay. We know that of our homeless youth, 40 
percent of them are gay. And you know what, they're not filling 
out household surveys. So I think part of the challenge with 
access to PrEP is that these folks are not easily coming 
forward.
    When we talk about gay black men, they don't have a good 
reason to come forward. And I can promise you that teenagers 
and 20-year-old gay men are not accessing health care. They 
just don't come to the doctor. So----
    Chairman Cummings. And how can we reach them? How do you--
--
    Dr. Walensky. I think we needed to decrease stigma. I think 
we need to have advertising. I think we need to open our doors 
to these people so that they will come, welcomed and loved, and 
access these drugs and come quarterly. So I know the other 
statistics that's been thrown out is 200,000 people are 
currently on PrEP. Two hundred thousand people have ever been 
on PrEP. We learned at the HIV meetings in March 34 percent of 
people don't take it for longer than a year.
    Chairman Cummings. And, Mr. Horn?
    Mr. Horn. Thank you. So we've been really discussing cost 
as a considerable factor here, and cost does remain, you know, 
a key issue here. But I think when we sort of open it up a 
little bit, we really have to talk about really sort of 
financing sustainable healthcare systems, you know, for the 
individuals that we're trying to reach here.
    And I just do want to circle back on one thing here. I 
think that, you know--I think the--you know, the hearings, it's 
sort of just centers around acrimony around like, you know, 
that--we're against profit, that Gilead is the enemy. Neither 
is true. Neither is true in that. And I am surrounded by 
activists, by clinicians, by academics, by policymakers who 
have all fought tooth and nail with health insurance companies, 
with Medicaid to make sure that Truvada was covered.
    However, what that comes back to is the issue of cost. And 
even with the co-pay assistance program, again, that has been--
that has really been elementary in just ensuring access there, 
but it really does come down to an issue of cost as to why 
those programs are even necessary in the first place.
    So we're all in this together. We're all looking for 
solutions here. We're just not--we don't have one good guy, we 
don't have one enemy. We really have to think about our entire 
system and how costs manifest across that entire system and 
what are we going to do about that going forward? Thank you.
    Chairman Cummings. Mr. O'Day, do you all--your board--I 
know it may be out of the ordinary, but does your board ever 
hear from people like Dr. Walensky and Mr. Horn?
    Mr. O'Day. Well, as you know, I just joined a couple of 
months ago----
    Chairman Cummings. Right.
    Mr. O'Day.--so I don't know the past practices of the 
board, but----
    Chairman Cummings. No, I was just wondering.
    Mr. O'Day. But I think the voice of the patient and voice 
of the community is represented in the company in very, very 
meaningful and serious ways. There's many, many community 
leaders that have joined Gilead, many HIV top physicians that 
are now part of Gilead. It is a part of the fabric of Gilead in 
my--if you'll allow me--in my two and a half months, Mr. 
Chairman, that you feel very connected with all aspects of the 
continuum of care here. And people take it very seriously. I 
mean, our role is to develop the next transformational 
medicine, but it's also to work as a member of this community 
in a very responsible way, and we take that seriously.
    Chairman Cummings. Finally, where are the negotiations with 
the CDC? Where are they right now? I mean, you did the 200,000. 
Is that ongoing? Do you follow me?
    Mr. O'Day. Well, yes, I mean, the details of the program, 
how to implement it, those are all now ongoing. The commitment 
is clear. And, as you said before, I mean, I think we would 
respond to other requests for the commitment. But now we're 
working through the details and trying to get it implemented as 
quickly as we can.
    Chairman Cummings. Mr. Jordan?
    Mr. Jordan. I would just thank our panel and again thank 
Gilead for the amazing drug they developed and the difference 
it has made for, as I said earlier, millions of people around 
the world.
    Chairman Cummings. Without objection, letters the committee 
has received about this issue are entered into the hearing 
record from a number of organizations, including the Treatment 
Action Group, the AIDS Vaccine Advocacy Coalition, and the HIV 
Medicine Association. All of these groups have written to 
express their concerns about the impact that the high price of 
Truvada is having on their members, their communities, and the 
American healthcare system.
    Chairman Cummings. I would also like to thank our witnesses 
for testifying today.
    And without objection, all members will have five 
legislative days within which to submit additional written 
questions for the witnesses, and they should be submitted to 
the chair, which will be forwarded to the witnesses for their 
response. I ask our witnesses to please respond as promptly as 
you possibly can when you receive those written questions.
    With that, the hearing is adjourned.
    [Whereupon, at 1:30 p.m., the committee was adjourned.]

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