thank you your senate committee on health education labor and pensions will come to order and let me begin by thanking the CEOs of Eli Lilly sanofi and Novo noresk are the three major manufacturers of insulin uh for being with us today as well as the heads of CVS camock Express Scripts and Optum RX the three major Pharmacy benefit managers uh they had to juggle their schedules and we very much appreciate all of them all for being here uh I also want to take this opportunity uh to thank Eli Lilly
sanofi and over notice for in recent months as I think you all know announcing a substantial reduction in their list prices for some of their insulin products and this is an important step forward uh for me the bottom line of this hearing is not complicated I don't care whether you're a Democrat or Republican independent or whatever you are all over this country people are saying enough is enough they are sick and tired of paying outrageously high prices not only for insulin but for other produ
cts as well they want action in this committee is going to do what we can to respond to their needs and we need the help of the people on the panel to do that um and As We Gather today and I know we have some advocates in the audience who have spent a great deal of time fighting to lower insulin because we thank them for what they do I think it's important that we acknowledge too many Americans who died because they rationed their insulin is 1.3 million Americans do that and some of them died Al
ex Smith was 24 years old and he dreamed of opening a sports bar he is dead because he could not afford insulin antavia Lee Worsham was 22 years old and worked two jobs to support herself she is dead because she couldn't support she couldn't afford insulin Alan Rivas was 20 years old and already lost his home because of insulin cost this young man is also dead and these are just a few of many Americans who have needlessly lost their lives because of the outrageous of the high cost of insulin fur
ther we must acknowledge the thousands of Americans who ended up in emergency rooms or hospital beds suffering from diabetic ketoacidosis a very serious medical condition as a result of rationing their insulin 1.3 million Americans in the richest country on Earth cannot afford insulin the committee today is convening for two major reasons in my view and one of them is a little bit personal a couple of years ago I took a trip from Detroit Michigan to Windsor Ontario with a busload of people you k
now why I went Windsor is a beautiful Town that's not why I went I went with those people in order to purchase insulin in Canada which they were able to do for one tenth of the price that they were paying in the United States of America one tenth of the price for the exact same product and I'll never forget as long as I live the tears coming out of a mother's eyes because she could suddenly afford insulin and what I promised them is that they're not going to have to go to Canada or other countri
es to buy a life-saving product that in America we can make sure they get it here as well and secondly this committee is not only going to be dealing with the crisis in insulin we're going to do everything we can to end the outrage in which the Americans our people pay by far the highest prices in the world for virtually every brand name prescription drug on the market whether it is a drug for cancer for heart disease for asthma whatever the illness we end up paying the highest prices in the wor
ld and we want to know why there are Americans who are dying or becoming much sicker than they should because they can't afford the medicine they need those are the questions that the members of our panel are going to have to answer today and in the future today one out of four Americans cannot afford the medicine that the doctors prescribe that is beyond comprehension and let's be clear the high cost of prescription drugs not only impacts the health of individual Americans but the budget of the
United States of America if we paid the same prices for prescription drugs as major countries around the world we're paying we could save over a trillion dollars in 10 years I know many of my Republican friends concerned about the deficit I share that concern pay the same price as people around the world you save a trillion dollars over 10 years that's real money and let's be clear while Americans pay outrageously high prices for prescription drugs the pharmaceutical industry and the pbm's make
enormous profits every year in 2021 10 major pharmaceutical companies in America made over a hundred billion dollars in profits and their CEOs get very high compensation packages last the other three major pbms in America made over 27 billion in profits in other words people in this country get sick they can't afford the medicine and yet the drug companies the pbms make huge profits in terms of insulin let us not forget that a vial of insulin and this is a vial of Humalog right here costs less
than ten dollars to manufacture as I understand it somebody will correct me if we're wrong I think it's less than 10 bucks meanwhile Eli Lilly increased the price of Humalog 34 times since 1996 from 21 to 275 dollars the same exact product no changes at all why did they do it because they could because nobody here has stopped them they could charge any price they want and they did it but it's not just Eli Lilly now if an artist increased the price of NovoLog 28 times from from uh 40. 2001 to 800
289 and sanofi a company that increased the price of Lantos 28 times from 35 in 2001 to 292 dollars in every instance it's the exact same product that Rose Crossroads astronomically and let's be clear this is a problem that is unique to the United States and France 20 years ago the cost of Lantos was forty dollars today it is twenty four dollars went down this country this price is soared meanwhile as insulin manufacturers continue to increase prices pbms signed secret deals to increase their p
rofits by putting insulin products on their formularies not with the lowest list price but the ones that gave pbms the most generous rebates the good news is that as a result of a lot of public pressure we have recently seen the major drug companies substantially uh reduce their prices and that is good news Eli Lilly announced that we reduce the price of um log by 70 percent now the notice announced that it reduced the price of NovoLog by 75 percent sanofi announced that it reduced the price of
Lantos by 78 percent it seems to me our job on this committee is twofold first we must make sure that these price reductions announced by the drug companies go into effect in a way that every American with diabetes gets the insulin that you need at an affordable price and this committee intends to all the hearing next year to make sure that that is in fact happening in other words we just don't want words we want actions but lowering the cost of insulin is only part of what we must accomplish th
is committee must do everything possible to make sure that the American people no longer get ripped off by drug companies and pbms and we've got to ask some hard questions if Eli Lilly can lower the price of Humalog by 70 percent why is it still charging the American people about two hundred thousand dollars a drug that treats stomach cancer two hundred thousand dollars but that same drug is sold in Germany for just fifty four thousand dollars why is that if Nova notice can lower the price of no
log by 75 percent why is it still charging Americans with diabetes 12 000 for ozympic when the exact same drug can be purchased for Just Two thousand dollars in Canada if sanofi can reduce the price of lentos by 78 why is it still charging cancer patients in America over 200 000 for capralsa a drug that could be purchased in Japan for just 37 thousand dollars these are the questions that the American people are asking they want to know why nearly half of all new drugs in America now cost over a
hundred and fifty thousand dollars who can afford a hundred and fifty thousand dollars what world are you living in how does it happen to cancer drugs which in some cases cost just a few dollars to manufacture few bucks to manufacture you guys are selling for a hundred thousand dollars really really do we not have any consciences any moral values so we got a lot of work to do in this committee and the bottom line is we want to get we appreciate the work being done on insulin we thank all of The
Advocates out there for fighting but we got to make sure that Americans can afford the price of prescription drugs with that let me introduce Senator Cassidy thank you chair Sanders you know in a census is a culmination of a portion of my life I went to medical school in New Orleans to my residency in Los Angeles and then treated patients in Baton Rouge each time in a hospital for the poorly insurter for the uninsured and diabetes was a constant but also the ability to afford the drug was a con
stant as well and it's been interesting for me because I've seen the work that you've done the technology that you the drug companies have put together that have made these medicines more convenient to take and have made it easier for the diabetic to manage her diabetes so one the tip of a hat to you but on the other hand the ability as we all know the ability to afford the insulin is equally important as to the Innovation that may have occurred because of obviously if you cannot afford the Inno
vation it is as if the innovation has never occurred now a hundred years ago diabetes was a death sentence in 1983 when I graduated from medical school a lot more difficult to control than now so so um not only have we had the medical breakthrough but we've had you come up with products that have made it easier for the diabetic to manage I thank you for that um goes without saying in that time period we've had a remarkable increase in the quality of life that the teenager going to high school um
is much better much more managed and therefore she's more more likely to take her drug and we all thank you for that um but one more time you've got to be able to afford the innovation so now we have to look I think Senator Sanders framed it the issue is is the pharmaceutical manufacturers is the pharmacy benefit manufacturers that's the kind of discussion here and that's why I'm glad you're here when I go to church and people are pulling on my jacket they want to know about drug prices and if
they're diabetic they want to know about what about the price of prescription drugs and if it's a parent of a diabetic they're really pulling on my charger on my on my jacket so the pbms vertically integrated with the largest insurance companies in the world managing about 80 percent of the prescription drug claims and um I've learned to say what I've been told not what I know but what I'm told is that in recent years the net price of insulin has actually decreased even as the list price has inc
reased the money is going someplace but the patient particularly the patient who is in her deductible is painless price and somehow the money is going from her pocket to folks who are far richer than she now I appreciate the roles that Pharmacy benefit managers play we have some Zoom hearings with academics come in and the academics all will state that at their best pbm's drive down net price for patients so I'll stipulate that but it's clear that the savings are not always reaching the patient
and that at times particularly when choosing her deductible she's really paying a lot and that's when we hear the horror stories of folks that cannot that cannot afford so to have the manufacturers that have the pbms here is just really wonderful the goal of today's hearing is to find answers and Define Solutions not to point fingers though there'll be some finger point it is Washington DC but on the other hand to figure out what is going on uh and to address why are prescription drug costs so h
ighs particularly for the issue of insulin and what is the respective role of each of the players I suspect that if we realign incentives we can actually find a way to benefit patients I've learned in my since graduating from med school way back in 83 that oftentimes bad behavior is driven more by bad incentives than by Bad actors so what can we do about those incentives tomorrow we'll continue our markup on bills addressing pbms and generic drugs the goal making sure try is to try and make sure
that everybody has access to these drugs and that they can afford it but today is our opportunity to inform our legislation so I'm committed to working with my colleagues to find common ground on solutions that fulfill our objectives and by the way the president will sign into law and that the House Representatives will pass this should be our goal once more thank you for being here I look forward to your testimony as to how you propose we can lower costs for American families with that I yield
Senator custody thank you very much our first witness is Mr David Ricks he's the chair and the Chief Executive Officer of Eli Lilly of uh Senator Braun as I understand it uh wanted to introduce Mr X because he is from Indiana where Eli Lilly is located Senator Braun thank you Mr chairman um ranking member Cassidy uh yes I'd like to introduce uh Mr David Ricks uh fellow Hoosier CEO of uh Eli Lilly and Company Indiana is a place of a lot of companies that have loomed large not only in Pharmaceuti
cals we're the biggest manufacturing State per capita in the nation uh with experience ranging from sales to drug development to Mr Rick's has served in a variety of domestic and Global Leadership roles with Lily most recently becoming its CEO in 2017. Eli Lilly was the first pharmaceutical manufacturer to commercially produce insulin and currently Market several forms of insulin thank you so much for agreeing to be here in person to not only discuss your products but you and I have had many dis
cussions on what ails the industry in general from hospitals to insurance companies to Pharmacy pbms within it even practitioners a big lack of transparency inherent competition that drives most other Industries so thank you for being willing here today to answer some of those questions thank you chairman Sanders thank you Senator Braun for that introduction ranking member Cassidy and distinguished members of today's committee I'm pleased to be here to participate in this hearing my name is Dave
Ricks I'm the chairman and CEO could you hold up Mike a little bit closer to your mouth please I'm the chairman and cob leveling company I joined Lily an American company headquartered in Indiana 26 years ago because I believed in our mission Innovation is at the heart of what we do particularly for people with diabetes as has been said in 1920 type 1 diabetes was essentially a death sentence the first animal derived insulins which Lily introduced extended life expectancy to a person's thirties
today after a century of innovation life expectancy is now well into a person's 60s but we're not done diabetes still significantly reduces people's life expectancies and even with modern insulins and devices two-thirds of people struggle to keep their disease under control so there's more work to do not only on Diabetes but on cancer and on Alzheimer's and other serious conditions that's why Lily invests 25 percent of our total revenue this year 8.5 billion dollars into r d that enables us to
introduce new medicines 19 in the last decade alone including the world's first monoclonal antibody for covid and many more medicines coming in the pipeline in fact just last week we shared exciting results from a new study a studying near one of our medicines in Alzheimer's disease which followed billions of dollars in investment literally Decades of work and several failures that preceded it of course medicines do no good if people can't afford them and access them that's why I'm proud that we
've led the industry in making insulin more affordable our efforts have driven what people pay for a month's supply of Lily's insulin down to 20.48 cents per month about 75 cents a day and that was before our recent announcements which will drive those averages even lower we began these efforts years ago Lily hasn't raised the list price of any Lillian's lens since 2017 the year I became CEO we've only cut them in 2016 we launched basiglar the first follow-on biologic insulin in the United State
s at a discount to the original brand in 2019 we launched lice Pro brought a box of it here with me today a non-branded copy of our leading selling Humalog at a 50 discount we cut that price to 70 percent and then May 1st it's now 25 a vial and when the insurance system was not working for some people who need insulin we were the first company to cap their out-of-pocket costs at 35 dollars per month now automatic wherever technologically possible and I believe we're still the only company that w
ill Cap all of our insolence at 35 per month these efforts have saved people with diabetes last year 185 million dollars and you're to date about a hundred thousand people per month uh saving about 20 million dollars for those hundred thousand people we've led the way on affordability against the headwinds of a Health Care system that unfortunately can incentivize others to prefer higher list price medicines higher list prices allow for higher fees and rebates which can increase patients out-of-
pocket costs while benefiting employers insurance companies and people who don't use medicines Lily's lifepro is just one of many examples even though it's identical to Humalog and costs 70 percent less brought boxes of both here only one in three people today in the United States have access to the lower price license Pro and a preference for higher prices over a lower priced product that's identical should never happen the list prices for insulin over time gets a lot of attention but even befo
re a recently announced price decreases our net price of Humalog what we take home after rebates and discounts was about the same as when we launched in 1996 accounting for inflation last year about 80 percent of our list prices went to pay ever increasing fees and rebates to companies who don't invent didn't develop nor manufacture the medicine with the remaining 20 percent we cover the cost of making and distributing the product which also supports about 4 000 high-paying manufacturing jobs he
re in America with full benefits and pensions we Finance our patient affordability commitments and also contribute 25 percent of that net revenue back into r d for newer and better medicines including insulin so reforms are needed we need a system that supports both World leading Innovation and lower out-of-pockets for out-of-pocket costs for Americans those reforms must help patients at the pharmacy counter while also incentivizing U.S companies to continue investing in World leading amounts of
r d which results in Americans having access to more and newer medications than any other country in the world we're ready to continue to do our part at Lilly and we're confident policy and solutions are both simple and achievable thanks for having me today Mr rich thank you very much our next witness is Mr Paul Hudson who's the chief executive officer of sanofi thoughts and thanks for being with us chairman Sanders Frankie member Cassidy members of the committee thank you for the opportunity t
o be here today I'm here to talk about what I hope is our shared goal to deepen our understanding about how the healthcare system works and what can be done to improve it for patients it's also an opportunity to dispel some misconceptions for example insulin is sometimes described as a hundred-year-old drug but much like the cars bear little resemblance to the Model T today's insulins are the result of years of research that have delivered significant improvements to Patient outcomes and quality
of life at sanofi delivering transformative medicines for patients is our strategic imperative and it's a role that we in the Innovative biopharmaceutical industry uniquely play for society shortly after I arrived at sanofi I committed to refocus our research and development on medicines with the potential to deliver first in class and best-in-class treatments across areas of unmet need today I'm very proud of the progress we made in support of these goals earlier this year we announced positiv
e results from a phase three study in COPD the third leading cause of death worldwide if approved this medicine will be the first innovate Innovation for patients suffering from this disease in over a decade this fall we anticipate the approval for the first immunization against RSV disease for all infants with this immunization the burden of RSV on providers and its toll on families may never happen again finally we also recently launched tzil the first medicine proven to delay the onset of typ
e 1 diabetes over the next 15 months we will learn the results of another 36 clinical studies each with the potential to become a first or Best in Class medicine or vaccine but these advances mean nothing if patients can't get the medicines they need this is why I'm equally proud of sunopi's long-standing commitment to affordability we are trans we are transparent about our approach to pricing including limiting our price increases making medicines affordable through our patient Assistance progr
ams such as capping out-of-pocket costs and Insulin at 35 dollars for the uninsured and low and launching low price versions of our insolins we recently announced our decision to reduce the list price of Lantus by 78 percent this was not the first time we've offered a low price medicine to the system unfortunately each time these medicines are received very limited coverage resulting in limited benefits to patients because the system is largely driven by the financial structure that links rebate
s and fees to the list price for all the focus on the price of insulin the list price is not the amount the system pays in 2022 84 percent of our gross insulin sales were returned to the system as rebates and fees 84 cents on the dollar in fact since 2012 the average price of Lantus for commercial insurance and Medicare Part D plans has dropped by over 50 percent yet out of pocket costs for people in these plans has increased by 45 percent today the average amount the system pays for Lantus is l
ower than it was when it launched in 2001. simply stated while competition is working to drive down insulin prices for the system those savings aren't reaching many patients why aren't patients benefiting from the lower prices at the pharmacy counter well today there are just three players in the system that cover 80 percent of American lives these Consolidated entities Encompass Pharmacy Benefit Management health insurance specialty pharmacies and group purchasing organizations this vertical in
tegration gives these corporations near total control over the products that patients can access and the price they have to pay and each of these integrated entities benefits from the selection of high priced products on formeries because the rebates and fees they receive are calculated as a percentage of the list price I know the committee is actively looking at Solutions we welcome changes that will make the system work better for patients while protecting The Innovation ecosystem that allows
new miracles to be developed and delivered to patients we've contributed in the past and we're willing to do so again it starts with a holistic approach that fixes the misaligned incentives that drive the system's preference for high list prices specifically de-linking fees from the list price and requiring rebates to be used to lower prescription drug costs for patients at the pharmacy otherwise I simply worry that policy reforms will do little to help patients thank you again I look forward to
answering your questions Mr Hudson thank you very much our next witness is Mr Lars jorenson who is the president and CEO of Novo Nordisk uh he is uh going to be speaking to us virtually from not sure Denmark is that where you are now yes all right thank you very much Mr Jordan for being with us chairman Sanders ranking member Cassidy and members of the committee thank you for the opportunity to speak today on behalf of Noah Nordic um Pioneer scientific breakthroughs and ultimately cure the dise
ases we research we share the committee's concern that too many people fall through the cracks of the U.S Healthcare System we hope today's conversation will lead to meaningful action myself I grew up in a small world town in Denmark my sister and I helped our parents around the family farm experience to take responsibility and to work hard not only for myself but also for others in 2004. but then my father had been diagnosed with diabetes so I know that this is both professionally and personall
y I am able to serve the CEO of a company that always keeps the patient at the center of everything we do our company was born our love story between two dating scientists August and Maria Crow diabetes began today's colleagues worldwide it is just last year the foundation awarded almost one billion dollars worldwide some of these projects support research Partnerships between industry and Academia here in the United States While others focused on calling its Innovations around Quantum Computing
and rock resistant by bacteria work as we have worked to treat and cure our beads for our Century our life address and often this of repeat misconception is to the same as it was back in 1921. nothing could be further from the truth 100 years ago patients were supplied with a large reusable needle glass Shooters and a West don't keep the needle Sharp repeatedly throughout the day and night there is to save lives but it was difficult to use and came with serious risks by advancements may seem mi
nor and significant to those of us who do not have diabetes patient tell us how organization have meaningfully improved their lives we also know that no matter how pioneering a drug might be it can only help patients when it is accessible and affordable foreign the newly created subsidiaries so-called group purchasing organizations and the pbms but not to patients we now pay on average 75 cents of every dollar of medicine we sell and this money goes back to the middlemen to ensure that our medic
ines remain available to patients every day we ask ourselves what more can we do for patients what we can do is to try to fill the gaps for those the system has left behind for example we provide an immediate one-time supply of free insulin to any patient who face rationing we provide a long-term Supply at no cost for Americans in need whose household make less than 400 of the poverty line that's 150 000 foreign as possible we would like to do more and work with you today now is the time for all
participants in healthcare system to work for Solutions first I look forward to questions thank you for listening to me Mr orenson thank you very much we've heard from representatives of the three three major drug companies now we're going to hear from representatives of the three major pbms and our next witness is Mr David Joyner uh he is the Executive Vice President and president of Pharmacy services for CVS health I'm Mr Joiner thanks very much for being with us all right thank you chairman
Sanders ranking member Cassidy and members of the committee thank you for the opportunity to discuss our work okay thank you for the opportunity to discuss the work we make health care more affordable accessible and ultimately to improve the health outcomes in this country our goal is to PBM is to remove as many drug pricing challenges as possible for our clients and their members when people can afford their medications like insulin they are more likely to adhere to the prescribed therapies adh
erence means better outcomes better outcomes means the Health Care system will spend far less on complications and hospitalizations in order to make medications more affordable our job at CBS Caremark is to go head to head with the drug manufacturer to negotiate the lowest possible prices the last two years have been challenging for millions of Americans as inflation surged and strained household budgets a recent 2023 study by The yakubia Institute examining drug costs found over the last five y
ears list prices have increased at a rate of 7.4 percent over the same time period the PBM industry has helped clients hold increased spending to just four and a half percent and kept member cost growth to just 1.4 percent specifically for CBS Caremark clients and for the sixth consecutive year we have reduced patient costs at the pharmacy counter with an average member out-of-pocket costs below nine dollars for a 30-day Supply today it's important to note that more than 90 percent of all prescr
iptions dispense are generic and they represent just a little bit more than 18 percent of the total spend by using competition in the generic categories generic prices have been deflationary over the last decade so now we are securing affordability for the final 10 percent of the name brand name brand drugs and that is our Focus competition in the Branded Marketplace is critical and we use this competition to deliver discounts to our customers by negotiating rebates and discounts we lower costs
for our clients and their members where competition exists not surprisingly many drugs without competition are the high list price medications without discounts and account for much of our clients spending today we encourage the committee to focus its efforts here and support and we support the three bills addressing competition that the committee will consider in its markup so drug manufacturers claim rebates are the reason for price increases but the facts show otherwise government study after
government study has concluded that price increases are not the result of rebates or discounts now we also understand there are questions about the level of transparency we provide to our clients the trust of our clients is critically important to us and the trust is built on this transparency transparency starts at the beginning of our client Contracting process and is a Cornerstone of our approach throughout using sophisticated third-party Consultants clients negotiate transparent contracts i
n granular detail and understand how their health care dollars are spent we have always prioritized being TR bringing transparent offerings to the marketplace and today we pass more than 98 percent of all the rebates back to our clients we also provide them with regular detailed updates on drug spending and utilization prescription claims process cost savings achieved and also the manufacturer rebates that we receive our clients choose how to use those discounts or rebates by either reducing the
out-of-pocket cost and or delivering lower overall premiums at the point of sale for uh for for the medications I begin by highlighting the importance of adherence in reducing complications and hospitalizations that is why we create and maintain preventative drug lists this allows our clients to offer members zero dollar co-pays including for insulin to treat diabetes and many other medications that are actually treating chronic conditions outside of the deductible at CVS Health we use this pro
gram to help our 200 000 employees stay healthy we've made tremendous progress on insulin affordability through negotiations by inducing competition and encouraging clients to adopt plan designs that lower the out-of-pocket costs for their members we have reduced the insulin cost on average seven percent per year for the last five years and our clients and plan members paid one-third Less on average for a 30-day supply of insulin in 2022 than they did in 2017. at CVS Caremark the average member
costs for a 30-day supply of insulin was less than 25 dollars and and for those using the preventative drug list again is zero we also launched reduced RX a program for the uninsured and underinsured patients with high out-of-pocket costs providing insulin at just 25 dollars per vial we proudly provide Pharmacy benefits to over 110 million people and improving their health every day and we will continue to improve and innovate on our model and help clients provide affordable coverage for the med
ications their members need to stay healthy I look forward to answering your questions trying to thank you very much our next witness is Dr Adam kautzner president of Express Scripts Dr counselor thanks for being with us chairman Sanders ranking member Cassidy and members of the committee thank you for inviting me to testify today my name is Adam kotzner I grew up in rural Missouri outside of St Louis and began my career as a pharmacist in a regional hospital after working in Nuclear Pharmacy I
began my career at Express Scripts just over 15 years ago I'm proud of our work to deliver affordable access to life-saving medications this cause is personal to me I was diagnosed with stage four melanoma in my early 30s that experience strongly shaped how I approach our work to advance Pharmacy care and lower prescription drug costs for patients and employers as a business leader I am Guided by my experiences as a father cancer survivor rural American and a pharmacist Express Scripts believes
all patients should have access to the medications they need at affordable prices for decades we've taken on one of the toughest challenges negotiating with pharmaceutical manufacturers to lower costs for employers Health Plans federal and state governments and most importantly patients we exist to help solve the challenges you are exploring here today our company has been at the Forefront of introducing solutions to address the insulin crisis in 2019 we launched a program capping patient costs
for insulin to 25 or less and these life-savings medications also have been extended for additional savings for cardiovascular diseases as well we are constantly evolving and improving our services this includes working to Shield patients from exposure to high list prices at the pharmacy counter to Shield our clients from exposure to crippling drug costs and to provide multiple transparent Contracting options ensuring our clients have complete control and flexibility to choose their benefit Desi
gn Network and pricing structure and are provided robust Financial disclosures our solutions for driving lower drug spending for patients and the broader Health Care system are working each year Express group saves more than 30 billion dollars for employers the public sector and the patients we serve this is driven by effective drug negotiation to medical management and a targeted clinical support programs the savings are passed on to our clients at their Direction which benefits Americans in th
e form of lower premiums reduced out-of-pocket costs and expanded coverage in 2022 savings negotiated by Express Scripts help keep out of pocket average cost to less than fifteen dollars in the commercial Market less than eighteen dollars for patients using High deductible Health Plans less than nine dollars in Medicare and less than one dollar in Medicaid none of this means the system cannot be improved drug manufacturers seek the highest price point possible and exploit the patent system and m
arketing practices to maintain Monopoly status for their brands for employers sponsoring High deductible Health Plans restrictions prevent lowering costs for patients before meeting their deductible rebates have been characterized by some as the mechanism for increasing list prices and thus increasing costs for patients this claim is false rebates are discounts we negotiate to lower prices more than 95 percent of our rebates are passed to Express Scripts clients which benefits Americans in the f
orm of lower premiums reduced out-of-pocket costs and expanded coverage without the ability to use this negotiating tool to achieve lower drug costs Health Care spending would be much higher drug competition is ultimately what drives rebates lower list prices and lower net costs we applaud recent efforts in Congress to speed the availability of generics and biosimilars and address abuses of the patent system that work to delay competition and maintain High drug prices we recognize there are ques
tions regarding the transparency and availability of Pharmacy Benefit Services Express Scripts is committed to being transparent to our clients and our beneficiaries we provide robust disclosures which include principal Revenue sources and information on rebate Arrangements fees and Pharmacy claims we strongly caution against prohibiting Contracting options entirely these are options not mandates Within contracts that are serving many of our clients today overall our beliefs our business model a
nd our orientation is geared toward one providing innovative solutions that enable access to medications at affordable costs with improved Health outcomes two providing clients with choices to enable them to deliver accessible affordable Pharmacy benefits and three by providing additional levels of transparency about the value we create Express Scripts will continue innovating to address drug pricing challenges and to respond to the needs of patients I appreciate this opportunity to address the
important questions raised about our role and how the value we create reaches patients I look forward to your questions thank you Dr counselor thank you very much our Final witness is Miss Heather C and fracco who is the Chief Executive Officer of Optum RX Ms CN Franco thanks very much for being with us chairman Sanders ranking member Cassidy and members of the committee good afternoon OptumRx a part of United Health Group provides essential services to our customers which include employers unio
ns health plans and governments our team works every day to make prescription drugs more affordable and to improve health outcomes for people we do this by conducting evidence-based clinical review of medications negotiating with manufacturers and pharmacies to bring down the cost of drugs providing tools to help consumers and their providers use their benefits and find the lowest cost options supporting patients with medication adherence and disease management programs and serving patients in o
ur pharmacies our customers pay for the medical and Pharmacy care for their employees and their members they count on us to be a counterweight to the substantial Market power of Manufacturers which have the sole discretion in setting and raising prices for their products we are held accountable for consistently delivering savings on prescription drugs for lowering overall health care costs and ensuring people have access to the medications they need overall we deliver on average sixteen hundred
dollars in annual drug savings per person to our customers 98 of our negotiated discounts passed directly to our customers and they use these discounts to help reduce premiums to provide point of sale savings and to invest in health and wellness programs without our negotiations with manufacturers the cost of drugs would be even higher PBM saved the system 145 billion dollars annually people need consistent affordable access to insulin in the century since insulin was discovered it has saved and
improved countless lives but over the last decade manufacturers list prices for insulin have nearly doubled along with leadership from Congress and others our company has been at the Forefront of efforts to make insulin more affordable we began offering point of sale discounts on insulin and Other rebated Drugs to fully insured group customers in 2018. since 2019 the number of consumers we serve who pay 35 or less for INS per month for insulin has increased by 34 percent millions of people now
have access to insulins that reduce costs through our preventive drug list the 8 million people in United Healthcare standard fully insured group plans now pay nothing out of pocket for preferred short and long-acting insulins and Other life-saving Drugs which includes epipens and albuterol and working with sanofi we offer a monthly supply of insulin for 35 dollars for uninsured individuals the standing the standard offering we recommend to our customers caps insulin out of pocket at 35 and supp
orts affordability for patients in high deductible health plans and as a result our 1.7 million consumers who take insulin now pay an average of 22 dollars per month and our efforts are ongoing we also welcome the recent Announcement by the three largest insulin manufacturers to lower their list prices on some insulin products and let me be clear we support and encourage lower list prices across the board despite the recent progress on insulin more can be done cost sharing on a month's supply of
insulin is now capped to 35 dollars in Medicare a similar approach in the commercial Market would close the gap for Americans who still cannot consistently afford an insulin but importantly such a cap must preserve the ability of pbms to negotiate for lowest costs of insulin for their customers because even with the welcomed list price reductions by some manufacturers on some insulins the list price of insulin is still above 35 dollars per prescription Beyond insulin broader reforms are needed
to Foster competition among manufacturers and to make prescription drugs more affordable for Americans and sustainable for our country reforms are needed to promote access to generics and biosimilars including closing loopholes that enable pay for delay product topping and other delay tactics a 10-year cap on a product's exclusivity should be established regardless of the number of follow-on patents and public policy should also support more value-based arrangements to ensure that resources are
focused on the treatments that deliver the best outcome for patients we appreciate this opportunity to share our perspective with the committee our company will continue to do our part to make insulin in all prescription drugs more affordable and to improve the health for all Americans I welcome any questions you may have thank you thank you very much um we're not going to begin questionings and I'll begin it let me start off by saying if somebody in the real world is watching this hearing they'
ve heard every single person from the drug companies and from the PBM say we are working tirelessly the lower the cost of prescription drugs just knocking out brain Zone and yet at the end of the day 1.3 Amer million Americans are rationing their insulin people have died people end up in the hospital and you all work a night and day to lower the cost and all over the world people paying a fraction of the price not only for insulin but for other products drugs then we have pains so I'm gonna and
I would appreciate very brief answers because we don't have a whole lot of time up here so let me start off with Eli Lillian I'm gonna go down the line here uh Mr Rick since uh 1996 Eli Lilly increased the price of umalog 34 times from 21 to 275 bucks same exact product I am told that it cost five dollars to manufacture this product and the story is not different for the products uh produced by uh Novo and sanofi so my question to you and to the other drug companies will you commit to this commi
ttee today that you will not increase the price of any insulin product again Mr Rick's thank you chairman for the question as I mentioned in my comments always done Bree Breeze reduce the prices since I've been CEO so I'm comfortable saying we'll we'll leave our prices as they are for the insulins on the market today all of your products yeah in fact we've been cutting them is the point you're not going to write Mr Hudson we've said before we have a responsible and sustainable pricing approach w
e've had it since 2017. net prices continue to fall and the net price for insulin today volantis is lower than it was in 20 in when it was launched in 2001. so I'm hearing from you that you will not increase the price of any insulin product again to repeat myself we have a responsible pricing policy the standard in there yesterday would be the better answer we have a responsible pricing policy we've said that since 2017. all right uh Mr jorenson yes thank you Senator we are committed to limit uh
potentially this price increases to a single digit we are not taking any uh for the past many years in fact we see double data decline in the price ticket for instance for the past six years and uh our price our net price today is lower than when we launched our products so we see a dramatic dramatic falling price falling students in the US market okay let me ask the drug companies another question before I get to the pbms and that is there are a number of Nua insulin products that all three of
you uh have brought forth to the market are all of these insulin products still cost more than three hundred dollars will you commit to doing to those products what you've done to your other insulin products and substantially reduce the price of all insulin products will you make that commitment to us Senator we've we've capped the cost to the consumer at 35 for every Lilly insulin so that means I may be mispronouncing it Liam Jeff how do you pronounce that Loom Jeff Zoom job wasn't close all r
ight that's going to be sold for 35 the patient will pay no more than 35 dollars in the United States for that product okay uh Mr Hudson your product is to jail is hundred is yeah and it's equal for us that it would be less than 35 if I could just add one quick thing on most recent launch was Atlantis at 60 lower list price that was not accepted by the system okay and the fias is sold by Novo Nordisk Mr orenson yes and I can also confirm that we have uh availability of interest that is below 35
for for all about instance for patients if they wanted that support from us all right let me ask thank you let me ask the pbm's uh a question um it's a simple question and I would appreciate a yes or no answer will you commit today that your companies will put insulin products on your formularies with the lowest list price Joyner now we will commit to put the lowest cost product on our formulary net of discounts and rebates so whether it be the lowest price or the high list price our job is to d
eliver the lowest net cost post discounts discounts off of high and or low list price Dr counselor thank you for the question Senator Sanders we will commit to putting the lowest net cost product on formularies however we also have other formularies that are other choices for our employers to choose from which do have low list price products also available so we offer multiple different choices to our employers we commit to always providing the lowest cost option to our clients to the lowest cos
t and and other products are available to other clients through other formulas thank you all right let me go back to Mr Rick's um sir Rick's Eli Lilly charges 196 000 in the United States uh for suramsa a stomach cancer drug that same drug can be purchased in Germany for just fifty four thousand dollars will you commit to this committee to lower the price of saranza in the United States to the same price that you're selling it in Germany fifty four thousand yes no respectfully Senator um the tha
t product has been on the market for a while we do expect biosimilar entry that's the primary mechanism in the US where the price will fall when that occurs I'm sure there'll be competition in the price so what you're telling me is that the American people will have to pay four times more than Germans do for the same product they do manufacture okay Mr Hudson sanofi is a French company and France solofi sells the thyroid cancer treatment uh compulsa for thirty thousand dollars a year uh sanofi s
ells the same drug in the United States for two hundred and three thousand dollars a year uh it's nine times as much uh will you commit to lowering the price of grappella in the United States to thirty thousand dollars same price as it sold in France over time with the introduction of competition and other biosimilars Etc you'll see the price full yeah so the answer is no uh Mr eurenson Mr chairman yeah I hate interrupt but we are now you're at seven minutes you'll have the same amount of time d
oes every member have that absolutely thank you uh miss the orenson uh in Denmark sells a diabetes treatment ozempic for two thousand dollars per year that's six times more uh uh you tried six times more to Americans will you reduce the cost of Olympic in the United States to what it is in Denmark you were mentioned for the U.S is before rebates so on average we pay 75 Century base in the US and for Olympic we actually see a price going down audit price going down a year over year so we we get a
lower price already the answer is no foreign senator Paul the great thing about capitalism is that supply and demand intersect and you get the largest Supply at the least cost when you allow capitalism to function now capitalism doesn't function very well in the drug markets because the government's been involved for a long time but prices uh need to be based on supply and demand a publicly traded company to promise to base their prices on bullying from a politician would actually be in breach
of their fiduciary duty I mean it's actually illegal to say I'm going to make all the prices go down in my company but it would also be irrational because if you did and there were no profit margin the companies would be gone and they would no longer exist Mr Riggs if a patient has a co-pay of fifty dollars would the rational decision be then to choose lice Pro over Humalog in the case where they were buying one unit yes they paid 25 not 50. right so if the patient had a copay of 25 and lice Pro
is 25 and humalog's 100 but I'm only going to pay 25. is there any rational reason why I would uh want to buy uh the the least expensive why not buy the more expensive drug at that point well they're identical in that case they'd be indifferent because they're paying 25 out of pocket either way so here's the interesting thing the lower the copay the less the consumer cares about the price so you can mandate lower and lower co-pays but you might actually get the opposite you might actually drive
consumers towards something that's actually more expensive so for example under Obamacare we made birth control have no co-pay so there's no copay for birth control but if you look at the price of birth control as it became free um the demand became enormous or greatly enhanced and so the prices went up from 2013 to 2019 you had a threefold increase in the price of birth control so the most important thing is we think things through we all want lower prices but if you want to mandate lower Co p
rices for things you may well get the opposite because you're taking away the consumer from the equation now the consumers only involved in drug prices through the co-payer the deductible and so much of Health Care 80 90 percent of it's beyond that and so how do we lower Co prices are we lower prices for drugs people hire an intermediary uh Dr kautzner does anybody hire you who what businesses labor unions because they want higher prices absolutely not Senator if you didn't provide lower prices
would they hire either another pabm or do it on their own so we we exist in a highly competitive market so if we didn't deliver the value that we commit to to our clients they would certainly go elsewhere so it's quite confusing we want to blame ppms for everything but why do people hire them no one's forcing anybody to hire them so as I understand the company's represented here represent tens of thousands of businesses who voluntarily come to you and hire you and they pay you and you make a pro
fit so your profit is it exorbitant is your profit uh Miss uh Cien Franco is your profit greater than the drug company somehow Senator our Prophet is our margin is four percent roughly four percent for the services we provide to all of our clients so it's about like Walmart I mean I'm surprised we don't have Walmart here today to beat up on Walmart we're all unhappy but we have to be rational about what we're doing so spread pricing everybody's like oh this terrible spread pricing uh Dr kautzner
do you offer spread pricing and also pass-through pricing yes Senator we offer both options to our clients today roughly one-third choose spread pricing two-thirds choose a pass-through type of model they choose spread pricing in order to have predictability on their Pharmacy benefits so we Shield them from incremental costs because we effectively provide them with a guarantee or a lock in on price which is more expensive spread pricing or pass-through pricing when you offer it so we're agnosti
c to the type of pricing that we offer it's more for the client to make that decision is there is one is Fred pricing cheaper or more expensive than pass-through pricing if I'm a customer uh generally they're going to be roughly equal in in price or cost either maybe same question you're referring to spread pricing is the mechanism where a client pays one price for all the pharmacy claims adjudicated it offers predictability and often cases it it offers controlled pricing and can be less expensi
ve than if they pay every claim in a pass-through model but both are offered to our clients this needs to be pretty clear and people need to think through we have a bill before us to ban spread pricing so at least one of the companies I think others have said this red pricing is less expensive than pass-through pricing so we're going to ban the cheaper form of uh buying your your drug Insurance why would we ban the cheaper form it sounds like if you ban the cheaper form you might get the opposit
e result of what you're intending you might actually get higher prices not to mention why we should be banning any of this but is there a possibility to ban spread pricing and then they people decide to add more of a fee on the pass-through pricing because see their obligation is to their stockholders and they're legally bound to make a profit so if you tell me can't make a profit here wouldn't they have to try to make a profit somewhere else if they're going to please their stockholders but the
thing is is we haven't thought this through we're angry everybody's angry I'm angry I've I've gone to the drugstore before and seen something for sixteen hundred dollars in acne cream so we're angry but why is it so obscure why is it different than Electronics why is it different than buying a car why is it different than a lot of expensive things because we've made it opaque through all of these different things that we've mandated in the 1930s we passed antitrust law the Robinson Patman act a
nd we made it illegal to pass through discounts based on volume and then we had a court case in the united says you have to move market share and all these complicated things to get these rebates but the bottom line is in a free Society rational thinking labor unions and businesses and health organizations are choosing a PBM why are they choosing a PBM do you think they want higher prices and if a PBM is gouging then why don't they go to another PPM there's like 70 some odd pbms and yet we've go
t it in our heads somehow we're going to forbid this so in the license Pro example Dr calstrom so so what happens to that if we have a 25 copay and you got hundred dollar Humalog and you got a bigger rebate and you're going to make more profit on the rebate are you keeping license Pro off of your list or can I get license Pro if I'm a business and I have people who are diabetic in my business thanks for the question Senator so our focus is on lowest net cost of the product and so that's where we
're focused the most and as we all know all insulins are not created created equal we actually separate insulins into three different categories as well but focus is the same it's the same thing and license 100 bucks and you get a 75 dollar rebate to make it 25 so now we're equal price to the business you're selling your plan to but there is more rebate is that mean you're excluding license Pro from a list that I if I'm a business is it somehow working that way to exclude cheaper generics is my
question our focus is on where lowest net cost is available I think there is a possibility and I think that might be one complaint there is a possibility of this however here's the rub they are still giving you the lowest net price and so if you say well gosh the generic I'd rather the generic it's underneath the copay so it's outside of what the negotiation is and so that's the only way it's going to make a difference to the consumer but actually I think that in the in the long run as we look a
t it the net cost is still what we're looking at and so when everybody shakes their heads out the net costs the list price the list price means absolutely nothing the same way they mean nothing in medicine but the thing is we got this complicated thing this isn't capitalism we got this because of Anti-Trust laws in the 30s we got this from a court case based on the Anti-Trust law in the 90s and we have this complicated system but instead of trying to unravel the complications we put on the marke
t what we're asking is to ban certain contracts so I think what you're going to have in the end is you're going to have the unintended consequences of doing something trying to do to make things better and actually make the situation worse senator Paul thank you Senator Baldwin thank you Mr chairman thank you to our Witnesses today in preparation for this hearing I was reflecting back a few years when this very committee had held uh several hearings on drug prices and we had panels not totally u
nlike the one we have today with representatives from pbms and representatives from drug companies and a lot of finger-pointing and I remember a few weeks after those hearings having then Secretary of HHS Alex Azar in front of us who was formally associated with a pharmaceutical company as an executive and I was reading a a letter that I got from a constituent it was a father two sons both with juvenile diabetes and he was talking about just how much the family had to spend each month to keep hi
s sons healthy and at the end of sharing that letter I said to secretary Azar or asked um what should I tell my constituent about why these costs are so high and he said it's complicated that's what he said it's complicated that's not an answer I can provide to my constituents who struggle with this and there's just a discussion by one of my colleagues about opaqueness and lack of transparency I find that uh basically an issue of the industry not being transparent when I ask questions like help
me follow the dollars if you double the price of a drug help me figure out who's pocketing that extra price and I get it's complicated as an answer if we're going to make good policy we have to have more transparency and it's why I'm glad this committee is working on measures to achieve that but one thing I can say when we look at people versus profits is greed is not complicated prescription drug manufacturers tell us they invest significant resources in research and development pbms tell us th
ey invest significant resources in making drugs more affordable and accessible to patients but both Industries are also working overtime for profits and self-enrichment um Mr Rick's yes or no did Eli Lilly conduct 1.5 billion dollars in stock Buybacks in the year 2022. I believe that's approximately the number Mr Joyner uh yes or no did CVS health conduct 3.5 billion dollars in stock Buybacks in 2022. yeah I'm not sure if I had the Consolidated statement or Consolidated financial statements in f
ront of me that indicated such would you agree that that's the figure I would uh Dr kotzner uh kotzner uh yes or no did Express Scripps parent company Cigna conduct 7.6 billion dollars in stock Buybacks in 2022. I believe that that's accurate Senator yes um Miss Sian Franco yes or no did United Healthcare which owns Optum RX conduct seven billion dollars in stock Buybacks in the year 2022. yes that's about correct for United Health Group Mr Jorgensen yes or no did Novo Nordisk conduct 24 billion
in Danish krona uh worth uh roughly 6. or 3.6 billion dollars worth of uh uh stock Buybacks in in 2022. purposes um and Mr Hudson uh yes or no did sanofi conduct uh 497 million euro of stock Buybacks in 2022 or roughly equivalent to 544 million US Dollars that's correct senator thank you um we are taking Mr chair some steps in the right direction Mr ranking member in the legislation that we will be working on tomorrow in this committee and I am hopeful that we are able to specifically tackle in
sulin prices later this year but we can't ignore the business practices of the companies that have come before us today part of how we tackle drug prices relates to that need to get transparency and that need to take on the aspect of greed thank you very much Senator Baldwin Senator Cassidy uh yeah I'll go ahead and take my questions now um I agree with some of my colleagues senator Paul said regarding the adverse the kind of paradoxical effect of decreasing rebates but I differ with them on spr
ead pricing now uh Mr Costner um looking at your testimony I noticed that you were not as strong you know kind of hesitated when you asked if it's cheaper to do spread pricing versus a fee looking in your testimony on page 20 you speak about your pass-through pricing models and you say clients pay exactly what Express Scripts pays Pharmacy for a prescription in this particular model clients receive a hundred percent of the drug rebates that the Express Script gets and clients pay one simple fee
and in this the pilot program from 500 000 people was a negative 3.5 percent drug Trend a 12 total medical cost reduction 193 dollars in savings from closing in clinical care Gap and I really like this as a doctor used to take care of uninsured patients and 86 percent of patients that were previously non-adherent to their medications improved adherence through your coaching intervention that's a good thing so a negative 3.5 percent drug spent so it's pretty clear from your testimony that Banning
s are not using spread pricing actually decrease cost by 3.5 percent um so um but I think it raises the issue of what is actually the spread Mr Joyner can you tell us what on on those contracts with which you have spread pricing what is a typical spread um I do not know the average spread per client because it varies based off the performance of the network okay Mr Costner Senator I don't have the exact amount of where the profitability is yeah Senator I can't speak to the specific Proclaim uh s
ome on some claims uh you know there's a there's a difference by a claim I can tell you we passed through again 98 of the discounts not just the rebate but from the spring I have limited time I'm sorry I don't mean to be rude thank you by the way I appreciate everything you're doing I have an article that was sent to me today from uh first author is Mattingly um understanding spread pricing now doctors flow through the pharmaceutical company for high utilization generic drugs and Medicare Part D
this is part D now um the spread here Medicare Part D paid an average of 22.50 went to the pharmacy 2.71 went to the wholesaler six dollars and sixty seventy three cents went for the manufacturer and 41 percent are nine dollars and eighteen cents went to the PBM uh that was their spread now this is generic drugs and Medicare Part D it's a pretty good spread 41 of the medicare payment for generics is going for spread pricing uh now I spoke to someone in the I don't have this in an academic artic
le but I spoke to someone who has looked at the commercial market and they have found the average spread is 11.50 now I agree with senator Paul it should be transparent that someone says wait a second here we got a 3.5 percent decrease if we have full pass-through 3.5 percent decrease if we just pay a fee why don't they just do it one thing we've been hearing from manufacturers is they have a really hard excuse me from the employee sponsor they have a really hard time getting this now in y'all's
testimony you say that a third party auditor can look at this but that is a third party auditor for Fortune 500 company for the local kind of 200 people employee they don't have those assets so I'm told they're more likely to be fully insured and the fully insured product is where it's more likely to ask spread pricing um I talked to Southern scripts and Batman issue in Natchitoches Louisiana and they they charge a fee based claim with 100 pass-through of everything and it's eight dollars and f
ifty cents per paid claim now Medicare Part D it is a nine dollar something spread and with some retention of some percent of the rebates and here when it's purely a per fee claim it's eight dollars and fifty cents so it strikes me both from your data and from this and from anecdotal data that the employer is doing better it's just difficult to figure it out of your smaller employer um uh now uh Mr Joyner or one of you I apologize in your testimony you speak about how uh the average person in a
high deductible Health Plan only pays 18.60 for her prescription but we know that the high deductible Health Plan you've got an initial deductible of three thousand dollars let's just pick that number and then through the course of the year you got continued drug spend so what's unclear to me is that when you are paying list price for a drug not insulin because apparently you guys have done a good job of some of these drugs trying to lower it for the person and I think I spoke to you Mr Costner
and you ma'am about how you lower it hats off just thank you but for other drugs they're paying the full list price when they are in their deductible it may be 1860 on the average because through the remainder of the year they pay a lower price have you looked at and I think I know that 34 of employees Nationwide are in high deductible Health Plans what is the average cost of a drug when someone a list price of a drug when someone is in her deductible do you all have that data because it's 1860
on the average through the year but when she's in her deductible that's where I have a concern um and that's where if the insurance company knows what a deductible is and that's what's been negotiated with the plan sponsor and now she's going to have to pay full Freight for that list price because the rebate does not pass to her the spread pricing is fully is fully operative she's just paying full Freight do we have a sense of what that average drug cost is during that period Mr Joyner I don't h
ave the exact average but I will say that most of our clients with high deductible plans understand that the first dollar coverage and the fact that they want to provide an affordable benefit so in categories that are attached to the preventative drug list in many of the cases the members are paying zero and then there are many of our customers who choose to pass the discounts through the point of sale meaning that at the counter they're getting the discounts do you have a percentage of the cust
omers that would do that relative the number of patients we have over 10 million of our lives in the high deductible plans that are doing that today so it's a meaningful number so so 10 million of the 10 million employees who have high deductible plans would get a point of say a point of sale rebate exactly okay and so on average we you know our average insulin cost per month no but not insulin I'm sorry that's insulin I was just talking about drugs in general so on average um the average out of
pocket expense for members are less than nine dollars a month um again I'm talking about specifically I understand um Rocco let me ask you on something different you mentioned the margins being four percent does that is that net of expenses I assume it is yes Senator final margin for roughly four percent now what I've learned is there's a lot of vertical integration where there's a GPO or rebate aggregator um others providing data analytics Etc but they're all vertically integrated within the s
ame insurance company the same um uh Pharmacy benefit manager so if you pay the GPO a and a fee for whatever they do and the rebate aggregator of fee Etc one they may retain a little bit of it but on the other hand is are you subtracting is that a business expense and you do not include that in the margin senator for Optum our Affiliated group purchasing organization does not cost the client anything and it's it's but is that but is your margin net of that or include that our margin is straight
margin it's net of everything Senator Kane thank you to my colleagues I have some I have some good news for you um in Virginia there's a company called civica it's a non-profit pharmaceutical company that has taken over a closed pharmaceutical manufacturing company and reopened it as a non-profit to bring both low prices but also transparency to prescription drugs last year's civica announced that they'll manufacture and distribute affordable insulin products that are interchangeable with the mo
st popular brand names currently on the market Lantus umalog novolog Civic as insulins will be available to Consumers at no more than thirty dollars per vial or fifty five dollars for five pins no rebates no opaque discounts a price everyone can count on I'm grateful that this Innovative non-profit has stepped in to increase competition in the market ensure people have access bring more transparency and I'd like to ask to my PBM Representatives Mr Joyner Mr kautzner and Miss sanfraco will you co
mmit to offering such low-cost biosimilar insulin says tier one products with zero dollar or low-cost co-pays we will certainly we're certainly open to adding any any drug that comes with a low net cost and a low drug price what I can't commit to is the benefit design because that's the decision that our plan sponsors employers unions Etc decide Dr katzner Senator we actually in 2020 already capped the cost of insulin in partnering with the manufacturers that are here today at no more than 25 do
llars we saved patients last year over 18 million dollars with that solution and uh now are offering a new flat dollar copay plan design for our plants which also will cap preferred brands of 25 and Specialty generics at just five dollars so it sounds like a no but I'll go to Ms Cien froco senator in addition to all the things we've talked about to lower the cost of insulin I want to be very clear that any insulin offering that's clinically effective can be delivered with support to our patients
at scale and is available list price or net price as long as it's the lowest cost and it's competitive it's offered and it will be offered let me move um to my Pharmacy execs and I had a question I've heard so often from Pharmacy Pharma companies that you try to develop a low-cost product that you offer to patients but the pbms turn you down they don't let you have access to the system and I've heard many in your industry say because they would prefer products with high list prices because they
gather fees and the fees are a percentage of the list price not of the net price and that if I'm right about that in that sense to Dr Paul the senator Paul said the list price is meaningless it's meaningless maybe to a patient I don't think it's meaningless in the industry because I think the pbms collect a percentage of list price even when the negotiated price is much lower Mr Hudson you said something a few minutes ago that parked my era you talked about trying to offer a low-cost insulin pr
oduct that was quote not accepted by the system that's too opaque for us slow Senators to understand exactly what you mean by that can you go into more detail what it means that Santa Fe had a low-cost insulin that you wanted to provide to more patients but it was quote not accepted by the system of course Senator um you know Lantus has been around over 20 years and we've tried to bring lower cost Alternatives biosimilars have been available not used in any great d uh details since 2016 last yea
r in August we launched Atlantis an unbranded Lantus made in the same Factory by the same excellent people with a 60 discount to the list price it was just not listed on the health plans and what what was the reason for that well it's you know uh it's complicated for me to try and be precise because the the conversation will I'm sure be between the PBM and the health plan not between me and the PBM so we tried to bring a much lower cost um Lantus a lot much lower price Lantus to the table of cou
rse there'll be less rebate associated with that but but when you say it wasn't accepted by the system well we've heard there's all kinds of competition among pbms you couldn't find any of the major pbms that would accept this this insulin product that had a dramatically lower list price that's correct um can I ask that Mr Ricks and um Mr Jorgensen have your companies had similar experiences whether it's an insulin or something else of bringing a pharmaceutical at a dramatically lower list price
that had capacity to really help people and to be told that no these would not be available on formularies and if if I go to Mr Rick's first and then Mr Jordan yeah thanks for the question Senator we have as I mentioned and I brought two boxes of the Humalog product we make them both one's called Lies per one it's called human log they're made in the same Factory by the same hard-working people and after four years the lysborough product which is the copy and now costs 25 is available on about
one out of three formularies in America so I think it's clear that the lower price is not preferred so the the pbms who make the decisions if it's a higher list price they they they like the higher list price better than the lower list price that's what the data tells us based on the market share of the poor performing Mr Jordan how about your company have you had a similar experience yes Senator we have a similar experience we have also launched an unbranded version which is exactly the same pr
oduct uh manufactured the same factories and it has around one third of the access as a higher just by foreign um and and are you told why the the lower list price offering is not being accepted on formularies by pbms you deal with Mr Jorgensen uh no I I'm not aware of that specifically I can say that in general we keep increasing our rebates um and they go into the pbms and obviously I understand they they do not decide on the plan the signs but this is uh you know Bermuda Triangle where things
get lost so patients are paying more uh we are paying more rebates and somehow in the middle that's something that's not really working so so all three of our pharmaceutical from a Pharma company uh who are here today have had the experience of trying to put drugs with lower list prices out available for patients but been told they would not be offered on formularies even so that someone could make a choice I mean if if something's on a formula it doesn't have to be the product that's chosen bu
t it's not even getting to the formulary to our PBM Witnesses do you collect fees based on a percentage of the list price of the drug or a percentage of the negotiated actual price of the drug every client contract is different but we generally either have a fixed fee and or PM PM meaning that we've kind of collectively manage the expenses across the population if I could go back to the uh let me just though so you do not have any fee structure in your company where you collect a fee based on a
percentage of the list price we certainly may have a few in our um and our client Dr katzner how about you do you do you collect fees based on a percentage of the list prices of drugs that are on the formulary that you manage so Senator we we have a mix of both where some are percentage fees some are a flat fee but as we've been on the record before we welcome manufacturers to continue to lower their list prices on all their products not just on some new products that they're they're bringing ou
t that are copies of other products we've been asking for them to do that for years yield back Mr chair Senator Collins thank you Mr chairman in 2018 I chaired a hearing of the Senate aging committee on why the costs of insulin was so high and Mr chairman one of the witnesses was a father from Maine who was going to Canada to get insulin for his 10 year old son what we found was a system of getting insulin from the manufacturer to the customer that was Rife with perverse incentives convoluted an
d opaque so opaque that the witness that we had who had done the study on the system could not fully explain the charge showing all the links so I want to put up a chart that shows insulin list price which is the top line versus Net prices from 2012 to 2021. and starting with you Mr Rex I want to find out where the money is going in that gap between the list price and the net price over nine years time and as you can see that Gap has gotten bigger you've testified that I think it was 80 cents pe
r dollar doesn't go back to the manufacturer Mr Hudson said 84 cents so similar so explain to us who gets that money because I can tell you it's not for the most part going to this consumer at the pharmacy counter Mr Ricks it's a good question I I can explain much better what are the costs that make up the bottom line because from that that's our Revenue we pay our workers we make the product we pay to distribute it and we invest 25 of that line in research and development the difference there a
re concessions made in price negotiations with large payers like the pbms here today I think you'll have to ask them how that gets redistributed in the system Mr Hudson that's already a very complete answer it's the same person and Mr Hudson you would agree that this money does not find its way in most cases to the consumer at the pharmacy counter I would agree I mean over the last decade the grow the list prices increased over 50 percent but the other pocket expense what somebody's paying at th
e counter has increased 45 percent so it's on average not making its way to the counter for the person who's trying to make a choice between groceries and medicines so I think we have a very strange system here because just say the least because most of us would think that the rebate the discount that is negotiated by the pbms would largely benefit the consumer at the pharmacy counter but in fact it goes to the pbms themselves and it goes to the plant sponsors that could be an insurer that could
be a large employer with an erisa plan but it's not making its way down so the insurers will tell you that well we use it to moderate rates to keep rates lower for everyone the problem with that explanation is insurance is based on the principle that the healthy are subsidizing the sick what we're doing is turning this on its head so in order to lower the premiums for the healthy we are not passing on the savings to the sick Mr Rex would you agree with that I agree that happens frequently and I
think particularly where Senator Cassie was going with the high deductible phase in particular where patients are exposed to full list pricing there's an enormous difference between what the system pays and what they've paid and that creates a surplus that's supporting premiums or other things so I want to ask our three PBM Representatives Mr Joyner who owns your PBM company CBS health and isn't there a connection also to Aetna the large insurer that's correct and Dr kosner Who owns Express Scr
ipts Senator the Cigna group owns Express Scripts another large I'm sure correct Cigna Healthcare yes and Ms chamfranco and I apologize I've misspelled if I mispronounced your name who owns Optum optums owned by United Health Group and again another large employer another large insurer so to me this is an example of the system's incentives if you are in fact negotiating for your clients you are you're negotiating for your owners who are all large insurers for other plan sponsors that are insuran
ce insurance companies for large self-insured employers but you're not negotiating for the customer because it's not to be fair it's not up to you what the people who hire you or for whom you work decide to do with that discount they could pass it all on but the evidence is overwhelming that they do not I want to go back to an issue that Senator Cain raised and that is the difficulty that biosimilars have in getting onto the market at getting chosen by a PBM for a formulary this makes no sense w
hatsoever to me if you care about lowering prices so Mr Hudson Senator Kane talked about the fact that when you come up with biosimilars that are cheaper than your branded product you can't get chosen but it's not just you even when a competitor comes up with a brand with a biosimilar that is way cheaper and I would use the address as an example which came up with insulin Garden which was 65 cheaper than Lantus it couldn't get on the formulary so it takes the same product relaunches it at only f
ive percent lower and guess what it gets chosen [Music] uh thank you Senator Collins senator it's one of the most amazing hearings I've heard it reminds me of a long time ago when I used to be in the restaurant business I knew guys probably 30 years ago had an Italian restaurant worked very very very hard and you know some months he just could barely make things balanced he could ballot could not balance the budget at the end if there was a snow snowstorm or something he'd have to go through inc
redible contortions to stay in business and he gets frustrated and he went and he doubled the prices of everything it was an Italian restaurant pizza spaghetti whatever he doubled the prices within three weeks the number of people coming into his restaurant almost doubled same food he just doubled the prices that shouldn't be the case I I say that because that's that that's an aberration of capitalism a senator Paul would say if he was here for sure and but that's what we're seeing here we're se
eing a case where the higher the price the more likely the a pharmaceutical company can sell their product uh through the through the PBM system so I've got a couple questions and the 84 cents so that means that 16 cents stays with with your with the farmers that you're roughly 80 somewhere between 16 20 cents your 16th Century 20 cents roughly in that in that range and I guess we should go down the list of the of the pbms and just say how much of that all the rest of that stays with the PBM rig
ht and then how much goes on is rebates to the plans or to hopefully eventually some of the consumers uh Mr Jordan why don't we start with you so today we passed through more than 98 of all the rebates and discounts to our customers and and 100 in Medicare so so it goes right straight to the customers it goes straight to the customers which are the employers unions governments Etc okay I should I should have gotten Senator Collins to keep her her poster up because that's a big space up there for
98 sounds like a big number there that's an awful lot of of it going doesn't seem like it's going to the the consumer who's purchasing it which is that bottom line right yeah I think I think that's a perfect example of PBM competition you know when they're when you saw when you saw the price separation it was at the point in time when we selected one insulin product and so the result was declining costs for our customers the payers while the manufacturer was increasing pricing so we are passing
through 98 plus percent of that of that value so clients are using that to invest obviously and they're out of pocket expense zero dollar co-pays in many respects and or trying to deliver the discounts at the point of sale got it got it all right uh Dr Kastner so senator for our commercial employers labor groups health plans and public sector entities we passed back over 95 percent of rebates I'd also comment on Senator Collins list price component that list price continued to go up in the heig
ht of extreme competition manufacturers are on the record of saying they control list prices we've been asking them for years to lower their list prices no one made them increase their list prices they made that decision on their own seems to me the more they raised their price just like the Italian restaurant in Boulder Colorado their sales go up which is you know anybody put in that position would have a very difficult Choice yes Miss San Franco 98 of the value of the amount of savings that we
negotiate gets passed directly to our customer they do use that for programs like the zero dollar out of pocket that we saw on the life-saving drugs they do use it and we always recommend that those dollars are used to protect the patient through things like the high deductible preventive drug list which would protect patients for preventive for drug prescription drugs for preventive disease for life-saving drugs and chronic disease right okay um I'm just going to throw out a fact because I'm w
as puzzled when I went home last night just because of as I looked into this it became more puzzling but at the same time somehow uh almost symbolic of the Whole Health Care System the truck the troubles we have so uh and this is just Googling so this might be a little bit out of date but you look at the The Fortune 500 The Fortune 100 the fortune 25 uh CVS is number four in the country uh uh let's see United Healthcare is number five and uh Express Scripts uh you guys Cigna is is number 12. so
three out of the 15 largest corporations in America are all significantly in this integrated vertical Spectrum which somehow finds very puzzling if you go back and look at the top 20 they're really eight companies in there that are that are Health Care related not or seven for sure I'm not sure whether you would say Walgreens is more of a retailer or a Healthcare company but the the weight there the preponderance of of of Market Mass it seems inconceivable to that these companies could be could
be that large if they're pushing 98 through to their to their customers that they would be able to do six billion dollar seven billion dollar stock BuyBacks it doesn't sound like they're losing profitability um Mr Hudson at one point you said that or somewhere had said that that you felt that you guys were almost like the canaries in the mine shaft is that is that some reflection of of the situation well I what a I have said publicly before is that when we use the the same insulin as unbranded a
nd reduced the price 60 percent we wanted to see whether the system in all its form would pass that on the lower price to patients and we recently reduced the price again as you know 78 and we have some anxiety that it won't make its way to patients in fact patients may be taken off so you get the lower you the more you lower the price the less patience you achieve so that is the canary at a certain point that that's you know chairman Sanders said that we you know this committee may look again i
n a year to see whether it had impacted access affordability I think that's the key question uh you know when you bring the price down remember our net price is 21 which is often less than the copay across all channels 21 of aisle for Lantus you know that should change what is available and What patients pay and so if you come back in here and nothing's changed if that less Lantus is being huge you have to say system's not working that's that's for sure um Mr Rex let's let's ask all three of the
uh of the pharmaceutical companies the same question if you and you all lowered your prices do you think you will have gotten your products your insulin to more customers a year from now Mr Ricks well I think it was a risk to lower our prices but one we thought was worth taking uh we were happy that competitors independently followed that but we need to make sure that we can have our insulin stay on formulas and available hopefully it would increase availability but those decisions are in front
of us well in front of them what's your prediction a year from now when when we all have a reunion well I hope that they'll we'll have better access to low priced insulin okay great Mr Hudson what's your your sense of that yeah look I agree I I think you know we we spend a lot of time talking about incident pricing it's really a net price conversation it's really what money makes it to make it more affordable for patients if in a year's time more patients can get access to more affordable insul
in then it's it was worth doing I really hope that's the case right and Mr yogurtson I'm just going to assume you're of the same mind yes I share the same concern we don't know yet whether we will have access to the patients we have access to today and I can add that our our net price after rebates uh fees and discounts today is lower than when we launched the products so getting patients are paying more and the price has gone down something has not worked thank you okay thank you I'm I'm out of
time but I do I think we can we can challenge the the pbms that are here represented that if you're the if you guys are part of the fourth largest the fifth largest and the 12th largest companies in this country Senator Braun you can help resolve this resolve this issue instead of run thank you Mr chairman I've been wrestling with this issue across the board for at least 15 years prior to coming here actually did something about it in my own company across the board too to make things work for
my own employees that occurred in about 2008 and I was sick and tired of hearing how lucky we were through our insurance companies that it's only going up five to ten percent per year and senator Paul earlier talked about free markets he and I are going to be in agreement on that mostly but let me tell you what free markets have in common unless it's entangled with government like this business is even more so than most Industries no barriers to entry robust competition full transparency and her
e's probably the most important one that the consumer senator Paul mentioned this the consumer has no skin in the game the way it's currently constructed they either want when they need remediation which is a very inelastic demand when you get critically ill or have a bad accident they want it done immediately they don't want to shop around and they either want their employer to pay for most of it or the government it's a system by its nature that is about as far from free enterprise it's more l
ike an unregulated utility and you're a part of it the good news is when I first started looking at it hospitals were about 30 percent of the health care dollar practitioners were about 30 to 35 percent Pharma was 15 insurance 15. insurance and Pharma have not changed a lot even though insurance has become this disproportionately more impactful in terms of keeping the whole system glued together the way it is sadly hospitals have grown to almost 45 percent of the health care dollar simply becaus
e so many practitioners it'd be like losing farmers in agriculture aren't even wanting to get into the business like they used to used to be not only the Hippocratic Oath but they wanted to have their own business to boot they are increasingly being employed by large corporate hospitals that all play into this lack of what most markets have so you pile all that up you're to where Senator Sanders is people are getting fed up with it I got fed up with it 15 years ago the rest of the world can buy
drugs for one-fourth the price they have health care as being 10 to 12 percent of their GDP with every developed country having outcomes as good as if not better and here we are at 18 percent of our GDP and it's going up as as opposed to going the other way nothing works like that in a true market context maybe we'll not get there let's look at Pharma itself you've got a proprietary product it takes a long time to investment in r d uh pointed out that a lot of these drugs have a five dollar mayb
e material cost yet sell for hundreds of dollars so it means you've got very low variable costs very high fixed costs that's the classic case for how you can charge things and you don't have it related to your actual cost of doing business sounds like maybe on pbms if that is accurate that you're working on a four percent profit margin I assume that's on sales I'm assuming you're getting a lot better return on Equity than that of course you probably wouldn't be growing your businesses something'
s got to give you're either going to get what Senator Sanders is proposing where all other countries have done it because they've never found a way to address the broad issues I've mentioned and probably the easiest place that you could fix it would be maybe in Primary Health Care which never did was Insurance intended to cover scratches and dents never should consumers be in any Market where they want someone else to pay a hundred percent of it those that can afford it shouldn't even be under i
nsurance for their Primary Health Care those that can't should have that support otherwise you never have a real Market I'm going to go to the thing that struck me most kind of significantly was when I heard Senator Sanders ask why are you selling especially I'm not I'm sure it's simple uh molecule drugs as well as the biologics why is this stuff selling minimally for one quarter of the price in most other markets that you sell to and sometimes one tenth obviously you're covering your variable c
osts why are we as Americans paying the bill even though it is only 15 percent of our GDP if it's not working here how are we going to get the rest of the system to work why is that I never was clear and I didn't hear a clear answer other than you're going to continue to do it you want to start Mr Ricks I can yeah thanks for the question uh first one one um problem with the data that is often cited is list prices in the us where we we get paid on net pricing after negotiation those numbers versu
s Europe are typically about 35 percent higher in the US than Europe not double or some other number so I'll admit they are higher on a net average basis um what do we get for that we get the earliest access to new medicines of any country in the world and in in in general we have the industry here as well which I think supports jobs and Manufacturing roles Etc so if you're breaking the bank the thing you got to realize is all the things that you say are attributes of our system they shouldn't c
ost us 50 percent more than what health care does across the world and in your case since most people have a prescription as maybe their first entry into the Health Care System here you're showing us where you're charging minimally four times as much here if not ten times I don't think politically that is going to get you into the next Generations of where you will be like a regulated utility and it'll be the same format that all other countries have had to go to with all due respect that you kn
ow I I think we get one other thing which I wanted to mention which is which is the possibility of new cures and treatments you know that is funded by the more or less the premium we get in develop the developed World they fund that for the world and I think we have to strike a balance between having low-cost medicines today and so what does that have to do with charging uh US 10 times to at least four times I mean why can't they carry they're the ones not even doing the work they should be payi
ng more I mean you raise a good point Lily will spend about what the entire country of Germany does on pharmaceutical research this year so why are they not funding that I don't know I think that's something you need to ask yourselves or else I think the structure of what you're used to is not going to persist into the future because we simply can't afford it um the other you're in a business that has the peculiarity of Uncertain outcomes uh R D um that is bona fide but I think where you've defa
ulted maybe somewhere down the line you say you don't need pbms we've had that conversation um why wouldn't it then why would you not need pbms when they are making a smaller margin in such a complicated system and you're the producer of the product in all other Industries you have a wholesaler that buys it distributes it across the marketplace and was that seven minutes Mr Sanders that's eight minutes very good I will yield the floor we'll have the con the discussion further thank you thank you
Senator Smith thank you chair Sanders and ranking member Cassidy and thanks to all of you for being with us here today um I'd like to start with um going at how this system affects folks with who don't have health insurance and um so my first work in the Senate focused on this when I met my fellow Minnesotan Nicole um Smith Holt who had heard about her son Alec who I believe chair Sanders uh race at the beginning who died of ketoacidosis when his he went off his parents insurance and couldn't a
fford his insulin he rationed and he died now HHS analysis tells us that uninsured patients typically pay the most for insulin and that of course leads to rationing and so we've heard about your patient Assistance programs and you've argued today that insulin is different and better than it was a hundred years ago diabetic patients need different drugs need different insulin based on their body and what works best for them so my first question to the drug companies can uninsured patients current
ly access each of your insulin products through all of your patient assistance programs at somewhere between 25 and 35 dollars which I think is the range of prices you start yes is the answer if you're insured it's capped at 35 for every little insulin if you're uninsured and your income is below 57 000 a year it's free for all free it doesn't whatever it doesn't matter what insulin you're on it's all of them okay Mr Hudson the same for us and in fact the data is um that uh uninsured patients us
e that facility over a hundred thousand times last year for zero uh copay for all of the insulin products that you offer not just some of them it's just okay and Mr Mr Jorgensen yes Senator we also offer a program where uh can get access to free internet and any instrument if they are in in a situation where they have to go to Russian so we we are there for all patients with all instruments it's okay okay so what I don't understand is because I hear about patients being charged list price if the
y don't have insurance so I'm having cognitive dissonance trying to understand how this all works why don't you just lower the list price for all of those medications and just make it simple yeah we would like to get there honestly I I I think Senator Braun mentioned uh we'd be happy if there weren't rebates in the system they don't do anything for us um we're so you'd be willing to lower the list price and we have been as I mentioned in my comments so and so let me just turn to the pdms because
um the the drug companies are saying they would lower list prices you've been asking for them to lower list prices can we just like have an agreement today that we're going to lower those prices you won't charge rebates they won't they'll lower list prices and we'd be all done I used who wants to I can answer that Senator so we we've been asking for years for them to lower list prices unfortunately uh the the lower list prices are coming far too late compared to when they could have occurred ye
ars ago and now they're coming because of the Medicaid cap that's going away and so they're going to be exposed and it would have to pay more so they're actually doing this because of government intervention not because they just want to lower the prices but we welcome them to lower the list prices and um and we'll be excited to do so for the value it's going to provide to our patients Mr Joyner similar to um to Express Scripts we also would uh would applaud and um and enjoy the lowering of list
of drug prices and then this this Gap that Senator Collins showed on her chart which appears to be the rebates and discounts that then then you would get rid of those um yeah I think there's two things because one is that that's what the p-beam has done to date so the the prices that have been announced uh on that chart is actually below the cost that the that they've listed um for uh for coverage Mr Hudson Hudson yeah just just to be clear that it was 2018 we brought a lower price admalog now
nothing to do with recent policies or announcements and reduce the price of that three times to no effect and then it was last August that we brought made in the same Factory as I said earlier at unbrand Atlantis it's 60 percent off long before this year's debate so I'm a bit perplexed because they're there they have been there we've stepped up too yeah right um to the PBM Executives um what do you say to this critique that your profitability is enhanced or higher when list prices are higher so
I'll give the Lantus example um because I think it's an important Point that's being made that a lower list price being brought to the market has not been accepted by the PBM and back in 2017 a biosimilar came to Market by the name of basilar which was generic competition in that category we adopted that product as our Preferred Product so we lowered the list price and we lower the overall net costs for the customers and we converted 97 percent of all the patients on Lantus onto basagar so it wa
s a significant savings for our customers and we actually embraced a much lower list price than uh than what Lantus was was on was promising at the time so list prices are higher does anybody I mean is that an unfair critique or how do you see that so Senator our Focus continues to be for our employer clients and patients that we drive to the lowest net cost regardless of where the list price is Lantus is an interesting example so Lantus when it didn't have competition between 2010 and 2014 actu
ally doubled in price the price didn't moderate until 2015 and Beyond when competition actually entered the Market discounts were about three percent they increased to about 20 percent in the 2015 Range and then certainly have more than tripled since that point so just to the the questions earlier on products other products in other countries and how expensive they are unless there's competition in the market and for us to drive that competition you're going to continue to see Sky High list pric
es by drug manufacturers we're going to do everything we can to bring those prices down and that may be in the form of rebates so we can provide discounts back to our employers and our patients so let me ask follow up on that a little bit with you if I could actually Senator Braun and I will be Mark tomorrow we'll be marking up legislation that Senator Braun and I've introduced that would basically be a bill that would help bring lower cost generics to the market more quickly but of course that
only benefits patients if they have access to them this is another place where I'm having cognitive dissonance because this brings me to the formularies that you know that that basically determine what medicines patients can get at what cost and a recent study showed that in Medicare Part D a greater proportion of generic drugs are being placed on higher tiers on formularies which leads to increased patient cost sharing and another report showed similar Trends forcing patients that actually so t
hey end up paying more for generics because of where you know what what tier they are placed in on the formulary so can you explain you know how you see that what's going on there why is that happening why are why does it appear that lower cost gen generic benefits are not getting passed on to patients like we would have expected and hoped so Senator we are absolutely supportive of legislation that could help to improve the accessibility to generic drugs that will remove patent thickets remove p
ay for delay and will provide faster accessibility to more competition in the market and we welcome anything that can help to do that on the biosimilar front we also welcome reducing the patent expiration down from 12 Years to seven years to create more competition and interchangeability rules as well on biosimilar products so that it's easier for biosimilar manufacturers to come to Market and actually be competitive okay um thank you Senator Smith Senator Marshall thank you Mr chairman Miss Sea
ttle Franco what percentage of Optimus rebates go back to United Healthcare similarly we pass along the majority of those rebates 98 go to all clients my question is to United Healthcare what percentage of all these rebates go back to you your parent company United Healthcare yeah just like the other five thousand we pass along the 98 percent so United Healthcare is one of five thousand we pass along 98 of the discounts to the clients so of all the re we were talking so Dr christianner maybe you
can answer the question better what percentage of your rebates are kicked back to uh to Cigna Senator the so we passed back over 95 of rebates to our clients I don't know the exact number that's passed to Cigna Health Care okay if that's the question I think that's exactly what I said Mr Joyner any idea what type present your Kickbacks go back to Aetna yeah we don't we don't pass Kickbacks back to um to uh to our our company we do actually pass through 98 plus percent of our rebates to our cust
omers retaining a little bit more than one but you won't tell me how much is going to Aetna at this point it goes back to our parent company CBS Health it doesn't go to doesn't go to Aetna okay all right Mr chairman sir I think we agree everyone on most everybody at peer agrees America is spending too much on prescription drugs America's spending 600 billion dollars a year on prescription drugs that's almost what we're spending on the military and I don't have to tell anybody here but want to ma
ke sure we understand that Americans spend per capita almost twice of what comparable Nations spend almost almost twice what comparable Nations spend show my next one um I think it's important to separate brand name versus generics that brand names represent only eight percent of prescription drugs dispense but 80 percent of the cost so eight percent of the drugs accounting for eighty percent of the dollars generics count for 92 percent to prescription drugs dispense but only fourteen percent of
the cost So eventually we need to have a conversation about what games are going on with those two types of drugs next I want to talk a little bit about the history of insulin when I think about insulin today compared to what it was a hundred years ago I think of comparing the single prop airplane that Amelia Earhart flew across the Atlantic to today's F-35 and I think it's important again that we make sure that Americans realize the Innovation that's occurred uh you know in the industry certai
nly in insulin discovered in 1921 it was launched in 1923 slow acting insulins were added in the 30s and 40s we took insulin and added proteamine and zinc and made them last longer insulin was the first protein to be synthesized in 1963. so figured out the amino acid chain there's some Innovations going on with with the gadgets the insulin pumps but I want to point out that synthetic insulin was not produced until 1978 that it took the industry 15 years to TZ E coli into making insulin it was no
t a simple task but then I took your industry some of the players here another four years to bring it to Market in 1982 and have to highlight that FDA approved this in only five months time we go on through the history of this there's more to more advancement in technology pumps and eventually um we're able to to manipulate the amino acid sequence and we come up with even new and better insulins able to more match what we're doing um with our own pancreas so it's been quite a quite a development
and we think we should share the the value of what that what has happened if you think back to 1921 insulin dependent diabetes and that's what I'm talking about today type 1 and slip into diabetes was a death sentence life expectancy one or two years but once we started squeezing insulin out of the pancreas of animals people maybe lived five or ten years but they still were 25 years below the life expectancy of of other people in this general population we continued in 1950 and their 15 years m
ortality rate there's is 15 years below the general population in 1978 it's 12 years below the general population and and then today we're setting it about seven years below the general population it's not perfect but because of these improvements we've gained a lot of progress and I just want to stop Mr Hudson what what does the future look like for you just very briefly as far as Innovation opportunities well I think and thank you for for sharing the journey I I think it's important to realize
the contribution the continued Improvement in Innovation insulin is has made um the next barrier is really to to help patients protect the insulin making function that they have treat them earlier you know we launched tzuilder um a few months ago which is to try and stop the progression of the disease try and halt the disease try and give young adults a chance to live in slim free for a number of years and maybe indefinitely if the trials support that we don't know but a a life free from needin
g insulin a life free from medicines in general is the ultimate goal I think we'd all agree with that a normal life well well thanks um I guess I just want to be careful today we don't throw the baby out with the bath water we certainly think that the prescription drugs are too expensive but we don't want to get rid of the Innovation if at all possible want to turn back to the pbms for a second again 600 billion dollars prescription spent in this country pbm's gross revenue last year was 500 bil
lion dollars 84 cents on the dollar goes to the middlemen I think just I want to America to see what's happened in this industry I think that this picture paints a thousand words that we see the vertical integration that's occurring within this industry Mr Hudson of the dollar being spent on prescription drugs what what met amount of that money is going to go to the middle man you've testified early I just want to get this on record again so it's it's 84 cents of all insulin on the dollar goes u
h to the system or the middlemen on land to specifically it's 93 across all channels 93 Mr Ricks would you somewhere in that same range similar uh insulin it's 80 cents on the dollar for us for our whole portfolio which includes newer medicines it's about two-thirds of all gross pricing goes to the the pbms and insurance companies okay I think it's been pointed out earlier that these are top 500 companies CVS is number four United Health number five Cigna is number 12. turn to my my Executives f
rom the the the uh the pbms you all are recently forming some gpos uh Dr Kushner where is the location of your GPO what country Senator uh it's located in Switzerland and Miss San Franco where's yours it is domestic it's a Delaware company okay and Mr Johnny where's yours is here in the states as well as a Delaware company okay what what is the purpose of the gposition what's the purpose of the GPO and I hope you don't tell me it's increased purchasing power well it is a group purchasing organiz
ation so it's it's designed to allow other uh companies companies that negotiate with pharmaceutical manufacturers to increase the counterweight against those high list prices and negotiate additional savings to lower the cost of drugs okay you know it feels like it's a shell game to me it's what it feels like to me is that we're hiding money here and there Mr Joyner why don't you put some of these lesser expensive insulins on on your um your list of drugs that you can sell your formulary I thin
k as I mentioned earlier we uh we have so and the Lantus example which is a very high priced insulin we when the a bio somewhere so you're telling me that the that the pharmaceutical managers are the pharmaceutical makers don't get the story right they all three said that there's certainly drugs that they've that they have for sale that you won't put on your formulary um if it's not on the formulas because it's not the lowest net cost in the um in the therapeutic class Dr Christian why won't you
put some of these on sorry thank you uh Senator hessen thank you Mr chair and ranking member Cassidy uh for the hearing and I want to thank all of the witnesses for being here today um I want to start by following up on Senator Smith's line of questioning because I think all of us here would like a world in which your doctor writes you a prescription and you go to your Pharmacy and the pharmacy produces the prescription at a predictable price that the drug companies tell us is there price I mea
n that's that's what I would like and I would like it to be a low price and I think every one of us has experience going to the pharmacy counter and being told by a pharmacist standing in front of a computer um this won't go through or you're going to need to pay 300 I know your copay for medications is supposed to be ten dollars but for this one it's 300 and they can't really tell you why and we all know you all know everybody in this room knows when you've got a child who's sick or a loved one
who's sick and you've just been through a process of getting a diagnosis and getting a prescription that you hope is going to help this is the last complication you need so Senator Smith was asking about why not just offer to the pharmaceutical reps here why not just offer insulin at the price at the pharmacy counter um Eli Lilly you recently announced Mr Rick's you'd have insulin for 35 or less Mr Hudson and Mr Jorgensen your companies have said you've made similar commitments um my question i
s in your um in your patient assistance plans um how does a patient go about getting this assistance if one of you said it's a fifty seven thousand dollar uh income threshold what happens uh to people who aren't on one of these plans or are uninsured in terms of getting the actual assistance that you say is available to make sure that people don't pay too much for insulin let's say yeah I can start thanks for the question Senator it's important I think we've all experienced the frustration you j
ust described it's why we've worked hard to eliminate it wherever we can the 35 buy down we have for anyone with a valid insurance card that covers um uh Lily insulin is automatic in 85 percent of the cases the only reason we have 15 that aren't are the pharmacy computer networks aren't plugged in yet but we're working to close that Gap if someone has no insurance they have two options they can go to lily.com and in literally a few clicks qualify for the coupon and show that at sale or they can
call our phone number and we'll help them okay um Mr Hudson it's exactly the same um if you go to value.com you can do that if you go to many of the patient associations websites you can get a connection if you're uninsured you go you print it off you'll get your insulin for free so and when you say you print it off you print off some sort of coupon or application how lengthy is the application process I mean what what kind of information do people have to provide you can start Mr Hudson yeah I
mean it's really not that complicated and that's and it's done as I said it was over a hundred thousand times uh it was done for the uninsured over 600 000 times for people to reduce their co-pay it's very straightforward I think it's very straightforward for you I'm not sure it always is for patients Mr Ricks and then I'll get to you Mr Jorgensen yeah in the case of an emergency which we've heard about and those are terrible situations that should never occur we I think we all agree on that if
you contact Lily today we will ship you A month's Supply at no cost with one question what's your address you then need to enroll in an annual program if you're below the the low income subsidy level the 57 000 but that's for the next year but in an emergency it's absolutely simple and what happens if you're at fifty eight thousand dollars yeah so then you're eligible for the buy down to 35 at the point of sale and in many cases people are between insurance plans and it's a short-term uh need an
d 35 is reasonable or they can buy our 25 uh license Pro which is often purchased without insurance now okay and Mr Jorgensen what what's the process like for patients uh for your company so it is for a patient without insurance it is really going to our website and it's a fuel click and then you you can get access to our instance at you know these prices at some some thirty dollars or you can go to Walmart and buy a buyer Winston for 25 dollars that takes no paperwork whatsoever okay thank you
um I want to turn to our representatives from the pbms now um and this is really following up on a point Senator Kane was trying to make or did make as we've heard today manufacturers are taking steps to lower list prices and over-the-counter prices of insulin however patients with insurance only benefit from these reduced prices if pbms also step up to make sure these lower cost options are covered so Mr Joyner and Ms San Franco and Mr Costner Dr Costner how are each of your companies ensuring
that lower cost insulins including generics are available to patients with Commercial Insurance yeah this is a very good question and I would say we start with using competition to negotiate to the lowest net net cost so once we do that that passes on to our our employers and government entities Etc in order to manage the the benefit we encourage them on what the savings are generated through the rebase and discounts to actually offer a more affordable benefit either on a preventative drug list
and or encouraging them to use the discounts at the point of sale and so 10 million lives as I mentioned is already doing the preventative drug list we have a large number of customers doing the preventative drug list which is zero so on average the actual average cost of insulin is 25 dollars or less and CVS Health specifically on our own 200 000 employees which we want to make the model plan does pass through the discounts at the point of sale we also have a preventative drug list so that our
our employees actually pay zero so we're very much in alignment so Dr Kessler I'm going to ask you to address the same thing I'm going to follow up on I I think it was uh Sarah Marshall um to just say we're hearing something different from our pharmaceutical manufacturers here about the their ability to list the lowest price drug insulin on your formulary so why don't you go ahead and address the question thank you Senator so back in 2020 we capped the cost of insulin across all the different ty
pes of insulins and working with these manufacturers at 25 last year it saved our patients 18 million dollars in utilizing that program we also just recently announced another copay Assurance plan this plan caps not just insulin but for all employers that adopt it all other branded products at just 25 dollars that are not specialty drugs so it keeps it very very affordable we also are expanding our preventative drug list as well for those employers that do have high deductible health plans or HS
A accounts I would say having additional options where Today medical and Pharmacy are combined in the deductible separating those since Pharmacy is the most utilized component of the benefit 11 times a year and having a separate Pharmacy deductible would be another benefit for patients thank you and I'm sorry we're not going to get to our last my time is up I do want to follow up with you Dr Costner on the relationships you all have with independent pharmacies especially in rural parts of the co
untry thank you thank you Senator Hassan Senator bud thank you chairman again thank the panel for being here Miss San Franco in your testimony you said that pbm's developed formularies for the placement of prescription drugs using clinical foundations I'd like to understand this a little bit better as you know this committee is going to vote on a bill tomorrow that asks pbms about their rationale for formulary placement so what do you mean by a clinical foundation for formulary placement and how
does this influence a patient's ability to fill the prescription from their doctor sure thank you senator for the question first to be clear our formularies have some of the drugs we've talked about today which are rebated but also you know hundreds of drugs generic they're meant to be the lowest cost options for our customers on behalf of their consumers but it all starts with to your point clinical evaluation by an independent committee that evaluates the efficacy of those out and outcomes of
those Therapeutics before they can be offered on our formularies okay thank you uh in North Carolina about 40 percent of our 10 million residents live in rural areas of the state um and access to farmers are for pharmacies is critical especially for those rural patients I've heard from North Carolinians about rural Pharmacy closures and they're concerned about them so Mr counsner Miss cianfraco and Mr Joyner what steps are your company's taking to make sure that rural Americans have access to p
harmacies to fill their prescriptions we'll start with you Mr Joyner um it's a good question and I'm just as a reminder The Independent Pharmacies especially in the rural markets are an essential part of our Pharmacy Network in many cases in fact they represent close to 40 percent of all the pharmacies in the um in the in our Network today um we we do negotiate generally with what I would call A psao or a group purchasing organizations over the independent pharmacies have come together with larg
e wholesalers to actually contract specifically for them so our contracts with the psaos or what their group purchasing organization is actually higher than it is for other chain and in grocery store pharmacies so we've actually reimburse them more trying to they've actually aligned with large purchasing organizations to improve their purchasing and again it's what we believe is an essential part of our Pharmacy Network thank you for that Dr kelsner thank you for the question Senator as a as a p
harmacist and a rural American myself from Missouri it's extremely important for our organization to ensure that patients do have access regardless of where they live in this country Unfortunately today uh less than 10 percent of Physicians live in Rural America even though over 20 percent of the population does so we're working with independent pharmacies one in improving overall reimbursement rates for Rural pharmacies on average of 10 percent secondly we're working with them to do things Beyo
nd Pharmacy to provide improved access to care of other services whether those be for diabetes testing vaccines doing components around Behavioral Health testing opioids and so those are additional Services where they can provide quality of care and be accessible where you don't have to go to your doctor where they may not be so we're working to enable Rural and independent pharmacies so that they can be much more of a health center so patients have access to Quality Care regardless of what ZIP
code they live in America thank you for that museum frago The Independent Pharmacies make up over a third of the OptumRx Network so they are a critical part in their service is unique the focus that I'd point to for our our community pharmacies is number one um increased sort of reporting predictability of reimbursement and out and reimbursement that you know that addresses their unique business model together with Revenue enhancement opportunities in areas where they're uniquely qualified such
as you know medication adherence coaching disease management diabetes and most importantly identifying barriers to things like rationing and inability to get insulin because in many cases they are the source of trust and access and sometimes the only source of trust and access in a rural community thank you thank all the witnesses Jerry yield back thank you Senator Bud uh Senator Casey thank you Mr chairman I want to thank you and the ranking member for the hearing I want to thank all the witnes
ses for being here I'm going to be rather brief in light of the the time and the vote that's going on um I don't think I have to explain to anyone in this room I think there's a consensus when we go back home we hear from people about the cost of prescription drugs it's for a lot of families like a a heavy bag of rocks on their backs every single day and we've got to do a lot more I think both sides of this table have to do a lot more to lower those costs we're happy the inflation reduction act
got those costs down for Medicare Part D beneficiaries we're happy the companies took actions after that but my question is why stop at insulin so I'm going to ask first on the left side of my left side of the table starting with you Mr Rick's I want to just in in just in one minute you're you're being the first one in one minute it's itemized for me specific steps uh that your company's taking right now or will take to lower the cost of prescription drugs more broadly well beyond insulin thank
you Senator Casey for the question and and I totally agree with the sentiment we need to do more we're working on a number of things first of all we've capped out of pocket costs for basically all of Lily's branded medications on patent medications typically it's around 25 to 35 dollars in the United States so people with insurance should have a limit at what they pay no matter how much they use that's the first step we've already taken increasingly we've talked today about some of the dysfuncti
on in the system whereby lower list price products may not be on someone's formulary so it's not presented as an option but I do think I see a future where there'll be more uh products introduced with two forms both a high price and a low price so that those that are in high deductible plans will have a choice that's actually cheaper for them that's something we can do the third thing I'd say is we support policies that have a system where there's a beginning and an end to patents and to intelle
ctual property periods and at the end competition should flourish we do support that system and ultimately I think a chart was shown earlier about the low-cost generics in America that's a real success story for American Healthcare we have the cheapest generics in the world and we support that world we also support a world where we can afford to invent the product that became generic to begin with that requires a premium for new products Mr Hudson if you can just itemize for me that's sure um st
arting with the out-of-pocket commitment as well um in 2022 our co-paid card was used two million times it'll cost to us of 850 million dollars so we're all in on trying to make sure we help you know we bookended a a rather challenging Healthcare System investing in r d at one end and trying to help patients make sure they get on drugs at the other end and a black box in the middle um I I accept as well that it may be that we have to have high and low price equivalents of the same medicine in fa
ct we do now for Lantus I think it's so much disappointing that that has to be the case I think there has to be a better way where lower prices lower out of pocket and a reasonable fee by the way for a service is provided along the chain I think it needs some effort to buy a similars I think you know by a similar penetration in the US lags the rest of the world and I think you know it really should be 60 70 percent you know mirroring what's happening in Europe and other places and it isn't and w
e have to look to why that is we bring them forward but it is not us to choose what goes on a plan and that's you know a broader conversation about how to reduce healthcare costs in the United States Mr Jurgensen foreign Mr Joyner it's a similar question about what additional steps can you and the other pbms take to ensure that patients can afford prescription drug costs well I'll go back to the uh to the original premise that competition works and so we will continue to look for competition in
the therapeutic categories lowering the cost for um for the plan sponsors or the employers and unions Etc that actually pay and fund the uh the benefit and then encouraging them to adopt benefit designs that actually allow it to be more affordable for uh for the members similar to what we do at CVS which is a zero dollar copay for insulin doctor thank you for the question Senator we're absolutely focused on continuing to lower costs for our employer plans our clients but also for patients we jus
t introduced a new co-pay Assurance plan which is flat dollar co-pays five dollars for generics and Specialty generics 25 for preferred Brands 45 for specialty brands that we are bringing out to our constituents we are also through competition continuing to beat the drum on biosimilar accessibility interchangeability and having more access and reducing the patent life for biologics down from 12 Years to seven years to enhance that competition which will flow through to have additional options in
the biologic space I'd also say there's been a lot of focus here on just price care is also a key component of what we do and what we must continue to do so when patients are on the drugs they're on the right drugs and we're able to help them with Specialized Care models that we have based on specific disease States like multiple sclerosis and diabetes so you have nurses Physicians and pharmacists that are trained and can help those patients through our program over 80 percent of the patients t
hat have specialty conditions are adherent on their medications and can have better health outcomes to live better and healthier lives thank you for the question Senator I'll point to three things the first is a continuing commitment to work for lower drug costs and that is through a a negotiated savings or a list price we're looking for lowest list prices we embrace the lower list price we are welcome the lowest the lower list prices from the insulin manufacturers and we request more of it I'll
give you one example biosimilar for the most uh for a highly utilized drug Humira new biosimilars have and are coming to Market we're offering up to three of those biosellers at parity with the original product so that patients their prescribers and the health plans and clients can select the best option for them and where the biosimilar uh manufacturer offered a low list price we are offering the low list price second thing I'll point to is we will continue to recommend and push for benefit de
signs for our clients that would use the savings that we negotiate and put those to Consumer out-of-pocket costs particularly in the high deductible plans and the third thing is to send our Hudson and Senator Smith's comments that no one should be confused at the pharmacy so additional tools that help consumers navigate their benefit understand the best options in generic and brand drugs so that they can find the best affordable option for them that's our commitment thank you Mr chairman thank y
ou Senator Casey Senator Malone thank you chairman um I'm just going to make an open comment here I I kind of feel like hell's freezing over because um chairman Sanders and I actually agree on something and is that something needs to be done with pbms so I do appreciate you having this hearing and the order that we're having it chairman uh it's that's actually a compliment coming from my side if you can believe that uh I I wanna I wanna point out uh this chart behind me this is the integration c
hart uh where it starts showing um how pbms have integrated themselves and they've become their own customer which is kind of like the fox guarding the hen house and uh and it's difficult when you start thinking about that Congress was actually wanted to help stand up the pbms to help bring down costs you've seen costs do nothing but Skyrocket on prescription drugs at the same time you've seen that pbms have become literally a billion dollar industry in the last five years alone you've seen pres
cription drugs increase by 16 percent at the same time you've seen the net income of pbms and their integrated companies grow substantially start thinking why I mean if a billion dollars industry has grown up it's not because of taxpayer dollars because it's got to be going to the drug costs it's going to the drug cost who's ultimately paying that price well it's a consumer obviously the money's got to be passed on to some place it's just retail politics and it's retail consumers the price has t
o be made up because every one of you guys are in business for profit and I think that's great that's called America we're able to do that but I want to kind of bring down on some things that maybe need to be clarified for instance when Senator Marshall was asking the question of why is it that some drugs aren't able to make it to the market and I I believe it was said that they are if they're the lowest cost but Mr Hudson when that comment was being made you were shaking her head saying because
what Senator Marshall was asking is what's prohibits drugs from coming to the market especially competitive drugs because everybody says competitiveness is what brings down the price and I agree with that but I don't think you actually agreed with is it Joyner with Mr joyner's answer when he said it's based on formula whichever is the cheapest for the consumer and as I was noticing just reading your body language he was going like this can you explain uh more for your perspective what prohibits
drugs from coming to the market yeah I think I think what I was perhaps reflecting was a a lack of unknown because you know as I said in 2018 we launched a lower price uh admalog you know in the insular market last year a lower price direct equivalent made in the same Factory and you know you would expect if price was the answer and perhaps we took slightly different terms you know the use of cost versus price I'm not quite sure what it means on both sides but I'm I'm reflecting on the fact tha
t if the intent of the chair and everybody here is to lower the price of medicines and we do and it doesn't change for patients I don't know so you brought it you brought a generic to the market and uh that was significantly cheaper than you know than the other one but it it didn't reflect the patients it just didn't get listed in anywhere if price is really the motivated it was interesting and who prevented that from being listed I'm I'm you know I was not part of that conversation but I mean b
ut the pbms are the ones that help bring that to market right well my assumption is your assumption the PBM I think you're being very politically polite here and I appreciate that uh but I think we can all read between the lines on this one Mr Ricks uh when you're talking about rebate checks because the comments were made earlier because the question was asked about rebates and our PBM officials over here they were saying that the pbms go to their customers which I'm curious of who the customers
are because I think the public would assume that it goes to the public to the individuals to the person buying the drugs but I know I have six kids that seem to always be in the emergency room that always seems to be getting prescription drugs of something um and I've never got a rebate check so who's the customers where do you send your rebate checks to yeah thanks for the question we send them to the ppms but where does the check actually get mailed to does it get mailed to some place yeah we
were instructed to send them to the GPO where's the GPO at I think it was asked earlier the various organizations you have up there but most your checks what country are they mailed to well inside the United States or there are some that go outside the United States and in tune of how many how much would you give me again our total rebates in the United States for commercial that was paid to the major three last year was eight billion dollars okay it's not a third or third a third but it's roug
hly that and a big chunk of that goes outside the United billion several billion goes outside the United States but yet these are customers for inside the United States yes there's a rebates for U.S access to U.S formularies yes but yet your rebate checks aren't actually staying inside the United States the biggest chunk of them correct or a big chunk that's interesting that's interesting too I wonder why that is um and so when we start talking about customers for the pbms who are your customers
that you're referring to the rebates go to because you say the pbm's only keep 90 97 98 or you guys send out 97 98 of your rebates right and the customers is the insurance companies right so Senator the our customers so Express Scripts has over 2500 customers many of them are employers small Middle Market employers some large employers labor unions are are our clients and health plans and health plans right yes but also your insurance companies right so then the whole reason is to supposedly br
ing down premiums but yet if you look at this top line here where it says Ensure the pbm's only insurance companies that they're re that their rebates are going to it's self-integrated so you're rebating yourself that that is just wow great business model and we wonder why prices are high to our consumers and this is why the chairman and I actually agree on something this isn't working for America it's working for you all great you guys are killing it but if we're talking about bringing down pri
ces what have you all done to bring down prices that was the whole reason why you guys were created to bring down prices and we see nothing but them in Greece it's not going to the pharmaceutical companies that are making it it's not going to the pharmacist unless you own them but if you own them we really don't care if it makes it because upstream or Downstream depending on where they are in the integration chart that's where you're getting your money back and there it you wonder why you're her
e are you actually serving your purpose heck no you're not and as I said before it's like the fox guard in the hen house you've literally forced us to make the changes and in my private company if I have an entity that's not being effective for what their intended purpose is I would shut them down and that's what I think the solution here is that I yield back thank you Senator Mullen Senator Lujan thank you Mr chairman thank you Senator Mullen I appreciate that line of questioning as well sir um
one thing I wanted to share with everyone as we open up today is one thing I'm very proud of is that New Mexico as you all may know recently moved to cap insulin at 25 dollars for a 30-day Supply I think we're seeing more and more attention state to state clearly here I appreciate agreements to make insulin more affordable at 35 dollars as well and I'm hoping that we can find some common ground here too to expand upon that and you know especially when you talk about folks where this is Make It
or Break It and for me that has new meaning I as some of you may know I survived a stroke about a year ago if folks don't get their insulin it'd be like if I didn't have a neurologist or a neurosurgeon um it's a false choice to think you can live without and there's too many families back home that have shared with me decisions they're making on trying to make that insulin last longer than it should making decisions about what they're going to buy and I join my colleagues in saying whether it's
this or in other areas not in our country that's just I don't want to get in the way of innovation I don't want a stifle research but when we have something that can transform someone's life and save someone's life there's got to be a better way for for us to make this affordable so that families aren't having to worry about other stuff and and then they have the stress on top of whatever that insulin is going to help with and I can tell you that stuff doesn't help um because you can land up in
the same situation that I was in now while I'm proud of what we did in New Mexico as you all know also that the policy left out uh public plans like um like Arisa and others so there's still almost 200 000 people in New Mexico that need insulin that don't get the cap and and that's one of the reasons why I wanted to be here today and so Mr Joyner what percent of appeals for coverage are denied for the insulin prescribed and preferred by a patient's doctor I do not have that stat sir Mr counsner
do you have that information we can pull that for you Senator and get it to you I appreciate that doctor uh is it Miss sien frocco did I pronounce that correctly yes thank you senator similarly I'll have to we can follow up with your office without exact with the exact number I appreciate that because in the end here being able to work with Physicians as well and trying to better understand what happens when there's a denial and I'm hoping we're not going to see high rates here I won't be surpri
sed if we do but that's another area where we can do some work and make sure that people are getting what it is that their doctors think that they should get as well um and uh that's a that's another conversation I've been having with people back home now Mr Riggs Mr Hudson and Mr Jorgensen your companies have made recent announcements about reducing list prices to some of your insulin products and I very much appreciate that now what my team tells me is that according to CDC about 16 and a half
percent of people in the U.S who use insulin report rationing it because of cost something I was saying earlier Mr Jorgensen yes or no can you commit to keeping the price of your current and future insulin prices affordable yes we have a free option so people who are in a situation whether that's Russian they can get free internet from their own mortgage and last year more than 60 000 Americans got a free agent from our company well I appreciate that I heard you say yes that's important to me a
s we talk about future insulin prices Mr Hudson um yes or no can you commit to keeping the price of your current future insulin prices affordable we can commit to that Mr Ricks I want to ask you the same question and specifically should when jarrow be approved to treat weight loss Will you commit to keeping that drug affordable yes we will commit to that and Manjaro for diabetes today is already a 25 pocket cap for everyone I appreciate that and lastly I just want to point out that we know that
these reforms work when there was an effort to cap Medicare Part D we saw about 9 000 New Mexicans that are going to benefit from saving 443 dollars um right off the top um 35 cap here I I'm hoping because of actions that were taken and everyone involved that we can find a way to get there but Congress is probably gonna have to take some action here and I'm hoping that Congress is willing to do so um so that when we're talking to families at least that's something that we can all agree on with t
he work the research the Investments that are made in these spaces that we're going to say yes we can we can save people's lives and when we have these incredible scientists and doctors that are developing these life-saving Technologies that we're doing it in a way that says you're going to get help regardless of how much money you make you're not going to have to worry about getting that insulin to stay alive and so I'm certainly hopeful we can get there Mr chairman I I just wanted to come in t
o just share a few of those stories that we heard from people back home as well and again understanding access to care and uh um like I said this this mattered to me a lot um before this last year it's but there's been a bit of a revelation to me that when you get sick when you need help when you need prescriptions they should be there for you otherwise you might not get another data to fight for other people and uh someone decided that I was going to get another date so I'm going to be here I'm
going to smile on them to be nice but I know how to fight too and I'm certainly hopeful that we can find a way to get this done together thank you Mr thank you Senator Lujan Senator Markey thank you Mr chairman uh very much um obviously representing Massachusetts I'm very proud of our biomedical research and development uh but the challenge remains that much Innovation is locked behind walls of research institutions drug manufacturers and Mazes of Pharmacy benefit managers and insurers and inno
vation without access is and hallucination for patients across the country they need access to these life-saving drugs one in five Americans with diabetes is forced to ration their insulin and when patients don't get the insulin they need they show up in emergency rooms in acute crisis patients receiving care from community health centers shouldn't show up in emergency departments and that's in Massachusetts and we pride ourselves as the number one state you know we're the brain state but even w
e have problems with this issue in in March both Eli Lilly and sanofi announce Cuts in insulin prices some of these uh forms of insulin have been available since 1996 and prices have only been going up now the price cuts that did occur followed intense public pressure and Drug price reform in the inflation reduction act and if I'm right it seems that Congress acting was key to actually seeing a reduction in insulin prices that had not occurred uh in a generation Mr Ricks do you agree with that t
hat Congress has a role here to play Senator murkey thanks for the question I agree everyone here has a role to play in the case of Lily we started reducing capping our prices in 2017 and implementing programs including half-price versions of our own best-selling products in 2019 so it's been going on for a while but I agree everyone can play a role do you agree with that um as well um Mr Hudson I I think that everybody does have a role to play of course we introduced responsible pricing in 2017
um lower cost versions of our most popular influence 2018 as recently as August last year an unbranded land test made in the same manufacturing center by the same highly qualified people at a much lower price so I think we're all trying to do our best I would add importantly that we're yet to see whether it makes a difference for patients whether their out-of-pockets go down whether their access goes up whether the lower list price actually has an impact on the choices and their and and the uh
what they pay themselves right and again that's just another reason why Congress should act you know we to put together some formula that ensures that the benefits flow down to those most in need and I think that what we're seeing in the last couple of years is that once Congress decided to act it got everyone's attention in the industry and some of it was voluntary some of it was coerced but from my perspective it uh it did demonstrate the need finally for the Congress to be playing a role uh b
ecause the system is broken fundamentally and uh we have to find ways of ensuring that that all of these benefits ultimately flow down to those who are most vulnerable so Mr Jefferson do you agree that Congress acting uh has helped to control um the um the drug prices out in the marketplace so we so just this week Eli Lilly announced positive results from phase three trials on its own Alzheimer's treatment and just as insulin for people with diabetes these drugs could be a Lifeline for people di
agnosed with Alzheimer's but comparable drugs on the market costs over twenty five thousand dollars per year this is completely out of reach for most Americans and if the medication is covered by Insurance it will weigh heavily ultimately on taxpayers Eli Lilly has demonstrated that they can reduce their prices compared with their competitors they've done it uh obviously this is a good example that we're talking about here today Mr Ricks will you commit today to offering your Alzheimer's drug at
prices lower than your competitors thanks for the question we're really proud of those results so I appreciate you highlighting and we've been working in Alzheimer's for three decades and spent over eight billion dollars on Research to get to that point today unfortunately there's a blockade on Medicare access for Alzheimer's drugs the first step we need to talk about is how to remove that because as you would imagine most people rely on Medicare rather who have the condition I think when you h
ave Medicare coverage the out-of-pocket costs for patients will naturally be low and I think the primary issue we want to talk about is how to lift that prohibition for Medicare right no I appreciate that what you're saying on the one hand is would like to help patients but we have to have the federal taxpayer covered and that would ensure that obviously you would get paid uh but the question then comes back to you what can you do to lower the price that then makes it more affordable separate fr
om a Medicare reimbursement and I think that's that's the that's the central issue that we're dealing with here today it's a is the excess of you know profit taking from a corporate perspective uh that just leads to catastrophic pricing and then the off-ramp is well we'll just have to have the federal government uh pick up the tab and and I think that's something that this hearing is intended to finally put a spotlight on uh in terms of Corporations reducing their pricing and maybe having a more
reasonable discussion with the federal government with regard to then what is the cost to the federal taxpayer if I could Senator we'll be we will be reasonable our pricing in the sense that we'll produce value to the Health Care system by delaying the effects of Alzheimer's but unique to alzheimer's Medicare beneficiaries paid into that program their entire life and they have access to every other type of pharmaceutical for every other condition but not Alzheimer's right now I'm just pointing
out that flaw in the in the current system that needs to change and what I'm saying is twenty five thousand dollars a year is too high and uh and it's the ass that then goes to the system then then people are then afraid would have um and excessively impossible burden for the system to be able to carry so it then comes back the ball comes back to you and yakut in terms of what you can do to lower that price as you're looking out at this vast number we have 15 million baby boomers who are going t
o have Alzheimer's uh and that's just for our country this is a global uh issue obviously and so your Market is going to be massive and twenty five thousand dollars per year is just too extraordinarily high thank you uh Senator Cassidy wanted to say a few words two quick questions I thought my first round I must address spread pricing but Mr Joyner Dr Costner both of y'all spoke of things that your organizations are doing to address some of the market distortions I want to acknowledge that but f
or the rule pharmacies as well as for those people within their deductible um it is a question of how do we get wider spread adoption of some of the things that y'all are doing uh that would actually address the things that we are frustrated about that I hear about at church that you know let me go let me go let me go uh and I don't know if you have a real quick comment on that I'll call on you Dr kotzmer because again I appreciated our conversations uh all the things that you've done is there a
way we can get better faster uptake in the market for that thank you for the question Senator so uh absolutely we are are leading the way on patients having uh accessibility and affordability with our new co-pay Assurance plan that we've developed uh Cigna actually as an employer is going to implement it on 9-1 and lead the way for that we're also asking employers or pharmaceutical manufacturers to help us offset the cost to employers as we bring down the cost of getting to five dollar generics
five dollar specialty generics and twenty five dollar brands in terms of our uh initiative around helping Independent Pharmacies uh we're we're absolutely working with them in Partnership we've actually created a committee with other Independent Pharmacies from across America so owners of pharmacies that will help to inform us so that we can very quickly Implement some of the things that I spoke of with Senator bud so we're excited to get to work on that and to make some real improvements espec
ially for for Rural Americans thank you Messina Franco um I don't know this I know what I'm told not what I know I am told that the that the rebate aggregator is where a lot of money hangs up and is not included in that 98 pass-through that you described and your answer suggested no that in the vertical integration of the company 98 is passed along I don't know the answer to that uh so is the money that hangs up does money hang up in the in the rebate aggregator are no no matter where it is in t
he vertical integration of the company 98 of a rebate and a fee goes back to the uh plan sponsor Senator 98 of total discounts go back to the plan sponsor for our GPL it does not cost the client anything so it's for the benefit of the client with no additional cost thank you very much thank you Senator Cassidy let me Begin by thanking all of you for being here I know you have to juggle your schedules and thank Mr Jorgensen uh who's in Denmark for being here as well uh I think anybody who has lis
tened to this hearing uh has concluded um that the system is broken uh it is enormously complicated there is virtually no transparency I know that the price that Medicare will pay for drug is different than what Medicaid will pay is it from the way the VA pays that hospitals pay a different price than doctors pay a different price and all of that opaqueness lack of transparency works for both the drug companies and I think the pbms as well so the end result is we have got to conclude that there
is an enormous amount of greed going on different members have touched on this let's not uh be naive or the drug companies major drug companies last year made a hundred billion dollars in profit pbms made 27 billion dollars in profit drug companies tell us what we need that money it goes into research and development well guess what more money went into stock BuyBacks significantly more than wanted to research and development so Wall Street and your investors are making huge amounts of money whi
le ordinary Americans are going bankrupt trying to afford the drugs that you sell and I got a real concern and that many of the new drugs that are coming out are outrageously expensive in fact nearly half of all new drugs coming to the market are over a hundred and fifty thousand dollars I don't know how somebody got cancer pays a hundred and fifty thousand dollars for a drug and by the way I talked to a leading oncologist who told me that in some cases it cost a few bucks to manufacture those d
rugs all right let me just conclude by saying this committee is going to stay on this issue we need profound change in the industry and in pbms tomorrow we're having a mock-up on a very modest set of bills we are going to come back and when you go to sleep tonight I hope you ask yourselves think about the people who died because they can't afford medicine think about the millions of people even not in the United States who cannot afford the products that you make that cost you a few bucks I for
the life of me just don't understand how when you have something that saves a life and it cost you a few bucks to manufacture and you're already making huge amounts of profits why we can't make that product available to all at a price that they can afford that is a moral issue so we got a lot of work to do but we clearly need revolutionary changes in the way we do prescription drugs in this country and that is tied into the fact that some of the Republican Senators have made were spending twice
as much per capita on Health Care in this country drug prices are an important part of that people can't afford health care as well so once again we look forward to continue uh to work with you I thank you all very much for being here and this is the end of our hearing today for any Senators who wish to ask additional questions questions would reck will be doing 10 business days on May 24th at 5 PM finally I ask unanimous consent Dental to record one statement from stakeholder groups outlining t
heir views about insulin access to the prescription drug affordable crisis the committee stands adjourning thank you all very much
Comments
I'm so glad this entire meeting was filmed so we can have these CEO's and their BS on public display.
God bless Bernie Sanders, one of the few Senators who seem to actually care about us. Mr. Whitehouse is also a wonderful man.
Thank you for this conversation of profit over lives specially American lives. Frustration over patents being bought for pennies and discovery paid for by taxpayers.
Thank You Bernie. You are The Best.
Bernie Sanders 👍💪👏
That's it. I'm running for office! This man.
👋🙏thank you for being "the Voice of the People". The Truth will always Persevere and the (Unjust) will always Pay the Consequences.
Bernie is awesome.
God bless Bernie Sanders, one of the few Senators who seem to actually care about us. Senator Whitehouse is also a wonderful man.
Thank you
We love you, Bernie! I think he's the reason most of the viewers on here clicked on this video...
Bernje Sanders is an American hero. He should have been POTUS. He's getting on in years and it's scary to think no one may be able to fill those shoes.
Thank you Sanders your the best and caring for America. The rich don’t care.
I see everyone thanking this Man for actually accomplishing nothing in the end .
❤
Factual and clear.
Greetings and gratitude Sir Sen. Sanders. When will the price of insulin decrease be in effect. CVS Caremark is still charging the same high price and the test strips are ridiculously expensive as well. LILLY was the first i heard to announ e reduction by April yet it did not happen. I appreciate you in respect. BLESSINGS
loving the thumbnail! Get those criminals..... And keep shaming them to act better even though congress, and the courts are deeply corurpted.
Precisely, that’s the talk we need to have! Please Bernie insurance corps are the problem! A new concept, Universal Healthcare!!!!
My son and daughter-in-law are in a high deductible plan , $3000(all the employer offered ).They have to pay $ 350 for their asthma inhalers. The pharmacist said he can only offer a "coupon" discount for every other prescription fill, not every time, because they have insurance. Pharmacy prices are crazy