tv Senate Hearing on Lowering Prescription Drug Prices CSPAN March 23, 2021 10:01am-11:01am EDT
morning's program. we are back tomorrow morning. our live coverage continuing. we will take you to a health care advocate -- a hearing with health care advocate who will be talking about prescription drug prices with a committee from the sent. desk from the senate -- a committee from the senate. >> -- they can raise their prices any day they want. pharmacists are turning them -- are telling them prices for medicine have gone up. drug companies are an industry which make huge profits and they pay their ceos large packages. it is an industry which is significantly responsible for
the fact that in the u.s. we pay the highest esses -- highest prices for health care. it is an industry which has an opaque pricing system which pays one branch of government -- which charges one branch of government a different price than the other or the same drug. medicare will pay a price, medicaid will pay a price, community health will pay a different price for the same drug. that is true for hospitals, nursing homes, and individuals. it is hard to know what they are charging anybody else. this is an industry that has paid $32 billion in fines for a variety of illegal actions, including price-fixing,
overcharging state and local governments, bribery, collusion, and deception. this is an industry that keeps going on its merry way year after year. how do they get away with that? it is not hard to understand. during the last 23 years, drug companies have spent $7.6 billion on lobbyists, including the former leadership of the democratic and republican parties. there are more than 1500 lobbyists in washington, d.c. they have 1500 lobbyists as well as lobbyists in every state capital in this country. since 1990 have spent nearly $730 million on campaign
contributions which have gone to many hundreds members of congress. let's be clear, the pharmaceutical industry is not sympathetic to the republican party or the democratic party. they try to buy both parties. it is fair to say it is not congress which regulates the drug companies but the drug companies which regulate congress. that has got to change. congress, finally after years of talk, has got to summon the courage to take on the drug companies and lower prescription drug prices. that is what the american people want and that is what we need to do. one out of five americans could not afford to buy the medicine prescribed by their doctor. how crazy is that?
going to the doctor, getting a prescription, but not affording to fulfill it. americans are dying they cannot afford medications they need. nine large drug companies made over $58 billion in profit last year. just six pharmaceutical industry ceos made $564 million in total compensation over the past three years. not too shabby. every day in my office and i'm sure every office we hear stories of americans not able to afford prescription drugs they need. today we will hear from eliana spates who will tell us how the high price of insulin has impacted her life. she is not alone. in 2018, one out of every four
americans with type one diabetes were forced to ration diabetes -- to ration insulin because they could not afford it. insulin was invented almost 100 years ago by scientists who sold the patent rights for just three dollars because they believed it should be accessible to everyone. the price has gone up over 300%. 50 miles from my home in vermont you can purchase insulin in canada at about 1/10 of the price in this country. prescription drug prices in canada are also high compared to other countries around the world. according to a study, a standard unit of insulin cost $98 in the u.s., $12 in canada, $11 in
germany, six dollars in austria. it is not just insulin. a drug to treat crohn's disease cost $81 in canada. one inhaler cost $242 in the u.s., $27 in canada. two epipens cost $278 in canada. on and on it goes. the same medicines manufactured by the same companies all available around the country at a lower price than here in the u.s.. we can no longer tolerate the system that allows the former ceo of gilead to become a billionaire by charging $1000 for hepatitis c drug that costs
us a dollar to manufacture and can be purchased in india for four dollars. we cannot tolerate a system for a chairman to receive a millions of dollars package after his company jacked up the price of epipen's by 550%. all over this country, the american people are asking a simple question, how many people need to die, how many people need to get unnecessarily sicker because congress is not prepared to take on the pharmaceutical industry? the people are demanding congress listen to their concerns and not cower before the pharmaceutical companies. i've introduced three bills with many of my colleagues in the senate and the house that would reduce prescription drug prices in this country and save the federal government money.
the first bill is the prescription drug early fact which would cut prices in half by pegging the price of medicine in the u.s. to the median price of five countries. the second bill is the medicare drug rights negotiation act which would direct the secretary of health and human services to negotiate lower prices for pop -- for scription drugs. -- for prescription drugs. every country on earth negotiates job prices and it is overdue for medicare to do the same. if this bill became law, the u.s. government could save more than $345 over the next decade. the third bill, the importation act would allow patients, pharmacist, and wholesalers to purchase safe, low-cost medicine from canada and other major countries.
we import all sorts of stuff, no reason why we cannot safely import prescription drugs. with that, the bottom line is we have been talking about this issue for decades. it is time to act. senator collins. sen. burr: thank you for holding a senate hearing on an issue -- sen. collins: thank you for holding a senate hearing on an issue on which i believe both republicans and conservatives can -- more than half of americans, an overwhelming majority of seniors take at least one prescription drug each month. for many, access to these
medicine not only is critical to their well-being but also can literally be a matter of life or death. during my recent tenure as chairman of the senate aging committee, one of my priorities was to uncover the reasons pop spikes in pharmaceutical drug prices and to help make medicines more affordable or pop more americans -- affordable for more americans. i led an investigation with senator mccaskill on price spikes on drugs and the manipulation of the market. i also worked with senator bob casey to investigate entities in the opaque market for pricing of scription drugs such as pharmacy benefit managers.
our committee also held hearings on the price of insulin into drugs to treat rheumatoid arthritis, listening closely to patients and other witnesses. the answer the agency answered resulted in several bills signed into law. for example, the making pharmaceutical -- it expedite the timeline to fda to review and approve applications. since the enactment of this law, not only are we seeing more application, but approvals are up considerably with 28 priority generics into 25 competitive kinetic therapies approved in
2020 alone. the patients'right to know act band gag clauses. they prevented pharmacists from telling their customers if there prescription would cost less if they pay for it out of get rather than using their insurance plans. this legislation required the disclosure of settlements reached between biologic and bio similar developers to the federal trade commission. this has been required of generic drug developers since 2000. -- 2003. congress passed legislation that will improve and streamline the fda approval process for new forms of insulin which should usher in more competition into a category that has seen huge and unwarranted price increases.
at a hearing of the cost of insulin, a father testified that insulin for his son had tripled in price, forcing him to purchase from canada, similar to it the chairman has described. the cost of insulin is one of the most prominent examples and i am grateful a constituent of the chairman is here to share the story. as cochair of the diabetes caucus which i founded in 1998, senator shaheen and i introduced legislation to create a new pricing model for insulin which was first started a century ago in canada and has soared in price.
recently we have seen nascent steps on insulin availability. more than 1700 medicare advantage plans have agreed to cap monthly co-pays for insulin at $35. manufacturers are adding more affordable options such as eli lilly's $35 co-pay program which has been available during the pandemic. these are good first steps but i hope we can do much more. another focus area is biosimilar composition. later this spring, along with my colleague tim kaine, i will reintroduce the biologic transparency act to prevent drug manufacturers from gaining the system -- gaming this is the.
-- gaming the system. there are reports that the manufacturer of humira filed many patents for this drug and what could have protected the medicine for up to 39 years from any competition. the price of humira increased by an additional 6.2% in january of 2019 to price -- to offset price reductions from biosimilar drugs overseas. several committees advanced reports and bills to reform our broken drug pricing system. i was a cosponsor of a bill in the last congress as were several members of the subcommittee. hhs secretary and i spoke about
drug prices at length during his nomination process. let's bring this ill to the senate floor as separate legislation so we can have full and open debate and amendments to come up with the best solutions. we once knew medicines to reach consumers. for pharmaceutical companies that invest in the research and take the risk necessary to develop these drugs and see a fair return on their investment. we must do more to ensure these essential medicines are more affordable and their prices transparent. i hope today's hearing will help us draft policies to strike that balance. thank you, mr. chairman. sen. sanders: thank you, senator collins. we have an outstanding group of panelists. let me welcome our first
panelist, dr. aaron kesselheim. he was in the department of medicine at -- hospital. he created a program on regulation of therapeutics and law and a research program focusing on prescription drugs and medical devices. he is authored over 450 publications in peer-reviewed literature. thank you very much for being with us. >> thank you, senator sanders, ranking member collins, and members of the committee. we are here because the u.s. spends more on drugs and any other industrialized nation.
hi u.s. prices driven by spending on brand-name drugs, most of which have been on the market for several years. they are subject to price increases. drugs have accounted for medicaid part b spending and found price is lower in places like germany and the u.k.. how is this possible? the u.s. allows drugmakers to set prices after fda level at any level they want and they require medicare to pay. they allow manufacturers to raise those prices beyond inflation. manufacturers extend expressivity by building patents to delay generic entry. other industrialized nations have strategies that address these issues. the first is to address drug prices and evaluate and
negotiate. the defense department is not forced to buy every weapon the manufacture conceives of -- at a price the manufacture conceives of -- the manufacturer conceives of. there should be a fair price based on how the drug performs. only if the drug provides more benefits should we consider other options. the u.s. needs to establish a body -- in germany, drug evaluation occurred ring the drug's first year when a nongovernment organization addresses its benefits. in a review of outcomes, we found no drugs fighting important benefits left determine market. states like new york and massachusetts have initiated a review process for their programs.
my second recommendation is to limit drug price increases. -- a drug increased -- many brand-name drugs provide rebates, but those only offset some rice increases. in other countries, agreements between the government or manufacturers restrict price increases. we found the cost of a cancer drug increased to $700 a unit while the same truck in france decreased to $200 unit. one model would be to extend the rebate penalty for medicaid. bills introduced in prior congress had bipartisan support. another component would be to arrange for more of a
competitive market. genetic entry is often delayed. lessons on how to improve experience in the u.s. can come from other countries. results from foreign offices such as the u.s. patent office could reduce the number of patents by allocating greater resources to ensure patent quality. we could leverage the appeals order setup by the american -- set up to reevaluate patents by reviewing patents listed by the fda. there is my prescription informed by successful policy initiatives, other countries, and u.s. states. evaluation leading to price negotiation, limits on price increases, and efficient generic entry. the industry may contend that ice decrease will reduce innovation -- price decrease
will reduce an efficient. we must augment support of the nih since transformative drug innovation emerges from publicly funded research and development as it did for covid-19 treatment and vaccines. these policies are likely to improve meaningful innovation. in the last decade, only one third of new drugs in the u.s. were rated by international organizations as having even moderate they predict benefits. if drug prices more adequately reflected the clinical benefits they offered patients, this would incentivize more meaningful innovation and there would be less investment in making trivial changes to existing products. generous rewards would be provided for medicines. policymakers can rest assured more patients will be able to
access these vital products at an affordable price. thank you very much. sen. sanders: thank you very much. our next witness is the canada research chair and health justice and associate professor at the university of toronto. he is a staff position scientist at the university of toronto where he provides care to patients and leads studies. dr. -- docotr -- doctor, thank you for being with us. >> in canada, per capita drug spending is lower than the u.s.
prices for patented medicines are three times lower in canada. the review sport is slated in july to drop the u.s. from its list of countries used to set prices because prices are shockingly high in the u.s. compared to other countries including the u.k.. the marketing in the 1990's -- per capita is proportionate in the u.s. pharmaceutical companies continue to it from the opioid crisis that killed 80,000 americans in a 12 month period ending may 2020. pressure and lobbying by pharmaceutical companies has undermined reforms in canada and the u.s.. most government reports over decades have recommended including medicines in canada's
single-payer system to improve for access and save the lien's. this has not happened. we continue to pay high prices compared to other countries. america is a superpower that has not shown its strength in standing up to pharmaceutical companies that rip off americans. my colleagues and i have conducted a controlled trial by distributing medicines for international guidance from the who. we found improvements in the control of luck pressure and diabetes and total health care savings more than $1000 per patient per year. the biggest benefit -- 29% in the access group could make ends meet but 86% that did not have to pay out-of-pocket
could afford necessities. a farmer was better able to grow food when he had his asthma buffers. -- puffers. it is working in the veterans administration. eva has led the v.a. -- the v.a. has led to price reduction. they have a list of medicines and negotiate prices in accordance with national guidance. it is a model that could be adapted to a larger scale in the u.s. there are three key elements of government action to reduce drug spending while promoting equitable care. number one, punish abusive pricing. create a bureau to create price hearings. empower that bureau to issue licenses when companies price medicines unreasonably. they should cut spending by at
least $100 billion. number two, use processes to secure low prices on medicines per international guidance. negotiating power can ensure equitable access to medicines. number three, use existing legislation and political will to discipline companies bloated by high medicine prices that illegally market products. americans are getting ripped off by more than $100 billion per year and this money in the wrong hands is used to illegally market medicine that kill americans. thank you. sen. sanders: thank you very much, dr. persaud. next we have ms. spates who lives in vermont who was diagnosed with diabetes when she was 18.
her struggles to manage the disease and the costs have transformed her into an advocate for lower drug prices and better health care. thank you for being with us. >> thank you. i was diagnosed with type one diabetes three your sicko and my parents and i got a crash course in insurance and the expense of diabetes. the insulin i take now costs over $2000 out of pocket per month. the rise in this price i have seen is astronomical. from 2002 to 2013, the cost tripled. when you pay over $800 per month for any individual in insurance unions and pay an additional 2000 per month until your deductible is met, your family feels financially pinched. the other way to cut back is to cut back on insulin. before you know it, your diabetes is out of control,
seizures happen, and you are found unresponsive. it is time to treat the disease seriously. the financial side of diabetes is as much or more of a burden as the disease itself. i'm not the only diabetic who has rationed insulin to fend off accumulating debt. 45% of diabetics at one time or another will compromise care to cut their costs. those who are not as fortunate as i lend themselves in the hospital in traumatic circumstances and may even die. 7.5 million americans lie on insulin. 1.5 million are type one diabetics. my doctor suggested going to canada. i live four miles from the border so this was logical. i pay over $10,000 a year in insurance premiums so i can buy my insulin in another country and it doesn't count towards my
deductible. it is asinine to think i would go to another country to buy inexpensive medication and yet pay for a health care plan in my country that is compounding my diabetic problem. twice i have arrived at the pharmacy to pick up the medication and both times i was told my insurance company was no longer going to cover that sprint. they were glad to cover another grant that was similar but not bioequivalent. it took me over a year to get it approved by the insurance company and now it was being disallowed. it is infuriating no that your perfect combination can be undone by companies that produce the medication and did not give it preferred status on their -- six months later, an insulin i was on became no longer an
option. it needed prior authorization. there was a similar medication i could have. if this had been a change from brand name to generic, i could have understood. this was from one brand name to another. it was five dollars more out-of-pocket. this is happening because of how money passes between the producers of the insulin, the pdm's, and the insurance companies. i appreciate being part of a good business deal and i understand supply and demand. i was raised in the supposed of achieving success, doing things ethically, and making a bottom line. it is unethical and completely wrong to gouge people, particularly at the expense of their health. to think we are out pricing our own citizens and holding out of reach scientific marvels to needed is an investment.
we have seen a 300% rise in the cost of insulin in a matter of years. in the same time, canada has seen virtually no rise in cost. three major producers have all had the same price hikes over that time. it is interesting pharmaceutical companies provide rebates on these products yet people are cashed in by the pdm and not consumers. this provide preferred status on insurance companies' for mary's -- rebates have risen from 2% in 2013 to 56% in 2018. 100 years after the invention of insulin, there are generics out there. my understanding is they sit on a dusty shelf in the back of the room titled "pay for delay." big pharma companies pay off generic companies to delay for next to delay the release of
their -- to delay the release of their products. i continue to pay the top dollar. any middle school student working their vocabulary list can tell you that is a description to collusion. there are days it is almost impossible to contemplate the immoral american health care and pharmaceutical system created out of greed. i have to believe those who perpetuated have not been burned by it. it is likely they don't feel the pressure of the extreme premium because they don't have to pay them. those participating probably don't drop thousands in deductibles. i'm certain they are not showing up at the pharmacy to find out the medication that has put them in good health is not allowed because their insurance company has a different option for them, one not discussed with their doctor or them. when we ask the question, why does the u.s. paid the highest
price in the world or prescription drugs? the answer should be given by our middle school children because it is that simple. it is simply because of greed. we are fooling ourselves when we act like we don't know why we pay more. we know. the question becomes who is going to fix it. who will put themselves out there? who will take the high road? who will say that lies are at stake and put themselves in others shoes and do what you would want done for you, your wife, your brother, your brother. do it right, do it quickly, and sleep well at night knowing you have chosen to help the people who, by voting, entrusted you with their well-being. sen. sanders: thank you very much for your remarks. our last panelist is mr. alex
brill. previously he served as chief economist and policy director to the house committee of ways and demeaned and on staff -- ways and means. yes and ama from mathematical finance and abl -- and apa from tufts -- and a ba from tufts university. mr. brill: i appreciate the opportunity to appear before the committee to testify on this topic. i am a fellow at the american enterprise institute. my testimony has been submitted for the record. it offers three observations in policy recommendations. first, the importance of
innovation. pharmaceutical innovation plays a critical role in improving well-being and never has that been more important than today as multiple coronavirus vaccines have been brought to the market in short order. these vaccines are the result not only of work that began after march 2020 but after decades of research funded by public and private investment in support from the fda. policies to curb drug costs must ensure adequate reward for future innovation. this is not an endorsement of the status quo but the recognition of the importance of new medicine. second, with respect to drug spending, u.s. prescription drug spending was $358 billion in 2019, nearly 10% of national health expenditures. it is important to note the
drivers of this cost. biologics are driving much of the increase in drug spending. in per capita terms, biologic spending increased from $300 to over $400 per capita from 2014 to 2018. notably, out-of-pocket spending, the patients' cost as a share of total drug spending has declined over the last two decades from 28% to 14%. out-of-pocket costs for those with highest expenses who are low in moderate income fell and out-of-pocket costs for those patients with the highest costs rose for higher income individuals. these broad trends are important
to recognize but they can mask high financial burdens experienced by some patients, as we have heard already this morning. third, the importance of balance. the success of the u.s. pharmaceutical market is result of a mandate embodied in a legislation known as --. the legislation sought to bring rewards for new innovative drugs and encourage a robust generic drug industry. today, we have the innovation in a generic industry that fills 90% of prescriptions yet represents 20% of all drug spending. the average co-pays for generics is just seven dollars. across the oecd, half of prescriptions are filled with generic medicines. there are important
opportunities to further foster competition and realize additional drug savings in the u.s. or mystical markets. my testimony marks six areas where i ensure more timely entry of generics without discouraging innovation of medicines. let me highlight just three. first, biosimilars have yielded $37 billion in savings but more can be done. one approach would be to align the incentives of prescribers with payers and patients. this can be amended by ash -- second, the importance of complex generic medicines and their approval. congress should ensure the fda has the resources to review and approve complex generic applications. i have estimated seven products
which are not available here but available in canada or europe, bringing them to the u.s. could save $1.3 billion a year. finally, innovative drug companies are building tickets around -- building tickets around products by a myriad of patents. to deter generic challengers is the intent of these efforts. without policy reform, these will become the playbook for all innovator companies. thank you for the opportunity to testify. i look forward to your questions. sen. sanders: thank you, very much -- thank you very much, mr. brill. let me ask a very simple question. about a year and a half ago i took a trip from detroit,
michigan into ontario with a number of folks from the midwest who were diabetic. we purchased insulin, the same product made by the same company for 1/10 of the price -- 10% of the price. somebody jump in, why is it that in canada you can purchase the same widely used product for 10% of the price that it cost in the u.s.? >> patent medicines have their prices regulated in canada. because there will not be
competition, if you want to pay a reasonable price, you have to regulate the prices. sen. sanders: i apologize, is there any other major country that one way or another regulates the price of the drugs or allows the company to charge any price they want? is there any other country besides the u.s.? dr. persaud: no. sen. sanders: okay. dr. kessel heim -- dr. kess elheim, did you want to jump in? dr. kesselheim: we are unique in allowing the pharmaceutical company to charge any price they want. the only intervention in the market that lowers prices and allows the interchangeability of generics -- there is no pressure
, no government pressure on the pharmaceutical companies to the extent that there is in canada. sen. sanders: let me ask the doctors another question. it is estimated one out of four americans cannot afford the prescription drugs doctors prescribed. what does this mean for the health of the american people? if i am sick and i go to the doctor and he writes a prescription i cannot fill, what impact does that half -- does that have on the u.s.? dr. kesselheim: there are numerous studies showing the high price of drugs can lead to nonadherence which is when patients don't fill their prescription or use less of the medicine in ways that are ultimately harmful. studies led by people in our group show that when people are
prescribed higher cost medicines instead of equally effective lower cost medicines, that can lead to worse patient outcomes. it is truly something that is problematic for patients and something we can fix. sen. sanders: let me ask you this, dr. pesaud, you may have done a study on this. if i cannot afford my medicine and i get more sick than i should be and maybe i end up in the hospital, is it possible we end up spending more on health care because people cannot afford the medicine they need? dr. persaud: that is what we found in our study when we provided medicines to people who could not afford them. that avoided hospitalization and
-- when people are able to take their medications, they are healthier. we found people find it easier to make ends to afford rent and food and other things. healthy housing, healthy food, and other things people need to be healthy. sen. sanders: what you are saying is that the high cost of prescription drugs result in people getting more sick than they should and ending up costing health care systems more money than we should be expending? dr. persaud: yes, you are paying at least twice. once the higher price for medicine and second when people end up in hospitals. sen. sanders: which could have been prevented? dr. persaud: absolutely. sen. sanders: senator collins. sen. collins: before i begin my
questions, i would ask unanimous consent that a statement from senator burr be submitted to the record. sen. sanders: without objection. sen. collins: thank you. mr. brill, you mentioned the role of patent tickets in blocking access to more affordable biosimilars. you talked about how biologics are more expensive and increasing the amount of costs for prescription drugs in this country. even though there are several biosimilars for the best selling drug in the world, humira, and they have an in the market in the european union since 2018, american patients must wait two years for them to be available here due to the manufacturer's
aggressive strategy of overlapping patents. another method of fending off biosimilars is to find -- using this strategy for a cancer drug. how should congress ensure we are recognizing the innovative science versus rewarding a legal strategy that is designed to block more affordable competitors by gm -- gaminig
the patent system? mr. brill: the strategies employed by some companies should be very concerning to policymakers. i think we are in the early innings of what will become an evolving set of tools that many innovator drug companies may engage with to protect their assets. it runs completely counter to the objective of competition for biosimilars. we have these pathways to create and foster generic competition in -- and the patent system is getting in the way. i know you have introduced past legislation focused on addressing these issues and finding ways to protect patents and appropriate patents but to
block innovators from stacking patents on top of each other and create undue, excessive monopolies for their products. sen. collins: thank you, i think this is an area that cries out for reform. dr. kesselheim, the veterans administration has authority to negotiate favorable pricing and deeper discounts. we also hear complaints that they have a national formulary. we get complaints in my state offices from veterans who need drugs that are not available on that formulary. how to become up, if we move to a use of negotiation by the federal government while still
ensuring there is patient choice of medications? that their physicians can still prescribe and they can still get reimbursed under their insurance for the medications best suited for them? dr. kesselheim: that is a great question. the principles i was outlining are about negotiating on that basis and not about restricting access to the products but providing coverage to buttocks that rx -- coverage to products that are extremely effective and not to products that don't offer additional benefits. that is the model some states have started to employ to negotiate prices better for their medicaid programs. it involves evaluating -- the
utility of a drug is compared to standard of care. paying for the drug -- not paying for the drug if it does not offer additional benefits. those organizations have found success in that model. sen. collins: thank you. sen. sanders: thank you, senator collins. senator casey? sen. casey: mr. chairman, thank you for having this hearing. when many of us go home and talk to constituents, one of the big bags of rocks on the shoulders of american families is the cost of prescription drugs. the other bags of rocks are the cost of childcare or higher
education or health care generally. we have an obligation to act. i have heard from folks all across pennsylvania -- by way of one example, a constituent of my from rural ridge, pennsylvania testified before a committee hearing that senator collins shared in 2019. she pays as much as $500 a month for medication to manage bleeding ulcers and more. so many like her expect us to take action. i have supported a number of senators'legislation to take steps in the right direction. whether it is legislation to allow medicare to negotiate drug prices for legislation to allow
for the importation of prescription drugs from countries like canada that have similar regulations in place to ensure drugs are safe and effective. i have legislation to expand low income protections for seniors and people with disabilities to make sure they can afford medicare premiums. with regard -- i will direct my questions to dr. persaud -- in regard to senator sanders's legislation, allowing america to purchase drugs from a place like canada, can you tell us -- do you believe prescription drugs sold in canada are safe and effective? dr. persaud: yes, they are safe and effective.
they are the type of medicines america should be able to negotiate reasonable prices for. canada is a small country, a population around 37 million. the u.s. can implement measures to regulate prices for other medicines. between canada and the u.s., there is only one superpower and it should be canada hiding behind the u.s. when it comes to taking on pharmaceutical companies. sen. casey: in terms of the type of controls in place, the policies in place to make sure prescription drugs are safe and effective, if you could walk through that. dr. persaud: health canada regulates every product here and they have the power to inspect facilities, including overseas
facilities where many medications are produced. the standards would be similar to countries like the u.s. in which other high income countries like the u.k. and countries in europe. sen. casey: thank you very much. thank you, mr. chairman. sen. sanders: senator michalski -- senator murkowski. sen. murkowski: thank you, mr. chairman. a constituent claims the price of her inhaler increased in january for the third year in a row. so many don't get it. why do we keep seeing these price increases?
dr. kesselheim, with your experience on these hikes come up in your view what is prompting it? do they result from changes or improvements to the drug's efficacy? if it was going to improve the drug, we can understand why that might be. or is it because they are resulting from increased manufacturing costs or r&d? what do you tell somebody like this constituent? dr. kesselheim: it is a challenging issue and no it does not arise because of any of those things. it arises because manufacturers have investors they need to maintain their profit margins for. one way they can do that is by raising the price on that product year after year. unfortunately, in the case of inhalers, we have the same
issues we have with insulin where manufacturers are able to get new patents patents not on the underlying medicine, but on the inhaler device, and those patents prevent the fda from approving the interchangeable versions of the product that might lower the prices and we also just don't do any negotiation with manufacturers over the prices that they charge for their products. as a result of all of those things that gives manufacturers substantial freedom to raise prices far beyond inflation on a year-over-year basis and leads to problems like you are describing for your constituents. sen. murkoswki: do we have any way to determine whether these price hikes are justified, what you just outlined it to me, i don't think that will be satisfactory. how can we know whether or not, when you have reformatted the
device for the inhaler, that that somehow or another increases the efficacy? is there a way to determine whether these price hikes are justified dr. kesselheim: you might conduct a clinical trial to test the new version against the old version and show that one was superior. most pharmaceutical companies don't fund that kind of comparative effectiveness research. they rely on marketing to promote the new, improved product. if we did have a publicly funded independent organization that evaluated the effectiveness of products and could help negotiate prices, if in fact a product was substantially improved by virtue of a change in manufacturing practice, then theoretically the pharmaceutical manufacturer could submit that information to an organization, it could be reviewed, and the price could be increased if it was fair to do so. sen. murkoswki: mr. chairman, --
[captioning made possible by the national captioning institute, inc., in cooperation with the united states house of representatives. any use of the closed-captioned coverage of the house proceedings for political or commercial purposes is expressly prohibited by the u.s. house of representatives.] the speaker pro tempore: the house will be in order. the chair lays before the house a communication from the speaker. ms. chu: the speaker's rooms, washington, d.c. march 23, 2021. i here appoint the honorable john p. sarbanes to act as speaker pro tempore on this day. signed, nancy pelosi, speaker of the house of representatives.
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