S. HRG. 113–859 WHY ARE SOME GENERIC DRUGS SKYROCKETING IN PRICE? HEARING BEFORE THE SUBCOMMITTEE ON PRIMARY HEALTH AND AGING OF THE COMMITTEE ON HEALTH, EDUCATION, LABOR, AND PENSIONS UNITED STATES SENATE ONE HUNDRED THIRTEENTH CONGRESS SECOND SESSION ON EXAMINING THE PRICING OF GENERIC DRUGS NOVEMBER 20, 2014 Printed for the use of the Committee on Health, Education, Labor, and Pensions ( Available via the World Wide Web: http://www.gpo.gov/fdsys/ U.S. GOVERNMENT PUBLISHING OFFICE 24–459 PDF WASHINGTON : 2017 For sale by the Superintendent of Documents, U.S. Government Publishing Office Internet: bookstore.gpo.gov Phone: toll free (866) 512–1800; DC area (202) 512–1800 Fax: (202) 512–2104 Mail: Stop IDCC, Washington, DC 20402–0001 VerDate Nov 24 2008 13:32 May 19, 2017 Jkt 000000 PO 00000 Frm 00001 Fmt 5011 Sfmt 5011 S:\DOCS\24459.TXT DENISE HELPN-003 with DISTILLER COMMITTEE ON HEALTH, EDUCATION, LABOR, AND PENSIONS TOM HARKIN, Iowa, Chairman BARBARA A. MIKULSKI, Maryland LAMAR ALEXANDER, Tennessee PATTY MURRAY, Washington MICHAEL B. ENZI, Wyoming BERNARD SANDERS (I), Vermont RICHARD BURR, North Carolina ROBERT P. CASEY, JR., Pennsylvania JOHNNY ISAKSON, Georgia KAY R. HAGAN, North Carolina RAND PAUL, Kentucky AL FRANKEN, Minnesota ORRIN G. HATCH, Utah MICHAEL F. BENNET, Colorado PAT ROBERTS, Kansas SHELDON WHITEHOUSE, Rhode Island LISA MURKOWSKI, Alaska TAMMY BALDWIN, Wisconsin MARK KIRK, Illinois CHRISTOPHER S. MURPHY, Connecticut TIM SCOTT, South Carolina ELIZABETH WARREN, Massachusetts DEREK MILLER, Staff Director LAUREN MCFERRAN, Deputy Staff Director and Chief Counsel DAVID P. CLEARY, Republican Staff Director SUBCOMMITTEE ON PRIMARY HEALTH AND AGING BERNARD SANDERS, Vermont, Chairman BARBARA A. MIKULSKI, Maryland RICHARD BURR, North Carolina KAY R. HAGAN, North Carolina PAT ROBERTS, Kansas SHELDON WHITEHOUSE, Rhode Island LISA MURKOWSKI, Alaska TAMMY BALDWIN, Wisconsin MICHAEL B. ENZI, Wyoming CHRISTOPHER S. MURPHY, Connecticut MARK KIRK, Illinois ELIZABETH WARREN, Massachusetts LAMAR ALEXANDER, Tennessee (ex officio) TOM HARKIN, Iowa (ex officio) SOPHIE KASIMOW, Staff Director KRISTEN CHAPMAN, Minority Staff Director (II) VerDate Nov 24 2008 13:32 May 19, 2017 Jkt 000000 PO 00000 Frm 00002 Fmt 0486 Sfmt 0486 S:\DOCS\24459.TXT DENISE HELPN-003 with DISTILLER CONTENTS STATEMENTS THURSDAY, NOVEMBER 20, 2014 Page COMMITTEE MEMBERS Sanders, Hon. Bernard, Chairman, Subcommittee on Primary Health and Aging, opening statement .................................................................................... 1 Burr, Hon. Richard, a U.S. Senator from the State of North Carolina ............... 3 Warren, Hon. Elizabeth, a U.S. Senator from the State of Massachusetts ........ 60 GUEST CONGRESSMAN—PANEL I Cummings, Hon. Elijah E., Ranking Member, House Committee on Oversight and Government Reform, Washington, DC ........................................................ 5 Prepared statement .......................................................................................... 7 WITNESSES—PANEL II Schondelmeyer, Stephen W., BS Pharm, MA Pub Adm, Pharm.D., Ph.D., FAPhA, Professor and Director, Prime Institute, University of Minnesota College of Pharmacy, Minneapolis, MN ............................................................. 9 Prepared statement .......................................................................................... 11 Frankil, Robert, RPh, President, Sellersville Pharmacy, Inc., Sellersville, PA .. 36 Prepared statement .......................................................................................... 37 Riha, Carol Ann, West Des Moines, IA .................................................................. 40 Prepared statement .......................................................................................... 41 Gottlieb, Scott, M.D., Resident Fellow, American Enterprise Institute, Wash- ington, DC ............................................................................................................. 43 Prepared statement .......................................................................................... 44 Kesselheim, Aaron S., M.D., J.D., M.P.H., Associate Professor of Medicine, Brigham and Women’s Hospital and Harvard Medical School, Boston, MA .. 50 Prepared statement .......................................................................................... 52 ADDITIONAL MATERIAL Statements, articles, publications, letters, etc.: Senator Burr ..................................................................................................... 63 Senator Mikulski .............................................................................................. 64 (III) VerDate Nov 24 2008 13:32 May 19, 2017 Jkt 000000 PO 00000 Frm 00003 Fmt 0486 Sfmt 0486 S:\DOCS\24459.TXT DENISE HELPN-003 with DISTILLER VerDate Nov 24 2008 13:32 May 19, 2017 Jkt 000000 PO 00000 Frm 00004 Fmt 0486 Sfmt 0486 S:\DOCS\24459.TXT DENISE HELPN-003 with DISTILLER WHY ARE SOME GENERIC DRUGS SKYROCKETING IN PRICE? THURSDAY, NOVEMBER 20, 2014 U.S. SENATE, COMMITTEE ON HEALTH, EDUCATION, LABOR, AND PENSIONS, Washington, DC. The subcommittee met, pursuant to notice, at 1 p.m., in room SD–430, Dirksen Senate Office Building, Hon. Bernard Sanders, chairman of the subcommittee, presiding. Present: Senators Sanders, Burr, and Warren. OPENING STATEMENT OF SENATOR SANDERS Senator SANDERS. Thank you all very much for being with us today on a hearing that I consider to be very important. And we especially want to thank our panel of expert witnesses. And a special thanks goes to Congressman Elijah Cummings. Congressman Cummings and I have been working on this issue to- gether for quite a while now, and I very much appreciate all the efforts that he has made in the House. And we’re going to turn to the Congressman in a few minutes. The issue that we are discussing today is of huge consequence to the American people. When we talk about healthcare, we are talk- ing about the need of the American people to be able to afford the medicine that their doctors prescribe. That’s pretty commonsensical. Unfortunately, however, drug prices in this coun- try are, by far, the highest in the world. Because the United States lacks a national healthcare program which is able to negotiate with the pharmaceutical industry, drug companies are able, in many cases, to charge any price they want for their product. And people see, time and time again—they walk into their pharmacy, and the price of their medicine has gone way up—no particular explanation for that. Today, according to the most recent reports, more than one out of four Americans do not fill their prescriptions because they can- not afford the cost. Think about that for a second. People walk into the doctor’s office because they are sick, they or their insurance company pays for that visit, doctor spends time with them, the doc- tor diagnoses the illness, the doctor writes out a prescription, and one out of four people are unable to afford to fill that prescription. What happens to those people? They go home, their illness con- tinues, maybe they end up in the hospital. Totally absurd situation. All of us understand that one of the important breakthroughs in medicine in recent years is the advent of generic drugs. And what (1) VerDate Nov 24 2008 13:32 May 19, 2017 Jkt 000000 PO 00000 Frm 00005 Fmt 6633 Sfmt 6633 S:\DOCS\24459.TXT DENISE HELPN-003 with DISTILLER 2 that means is that, while protecting the intellectual rights of the company that developed a drug, the patent expires at a certain point, and that drug can then be manufactured by other companies. And that’s what generics are about. The result of that has been that millions of people are pur- chasing generic drugs at far lower prices than the same drug sold under a brand name. And more and more people use generic drugs. And that is, to my mind, a good thing. And this has been an enor- mously helpful development in alleviating illness and suffering. The purpose of this hearing is to take a hard look at the generic drug industry and to make certain that generics remain affordable to the patients who need them; because if that does not happen, if generic drug prices continue to rise, then we are going to have people all over this country who are sick, who need medicine, and who simply will not be able to afford to buy the medicine that they need. On October 2d, Representative Cummings and I launched an in- vestigation into the price increases of 10 generic drugs. Now, as it happens, the manufacturers, the companies who manufacture these drugs, have complained that we just cherry-picked a handful of drugs that have seen the largest price increases. And they said, ‘‘It’s not really fair. You know, you only picked on a few drugs.’’ But, in my view, that criticism is not valid. While we are focusing on 10 individual drugs that have seen extraordinary price in- creases, what we are also seeing in the industry is that many other generic drug prices are rising, as well. I should mention here that, according to a November 10th article in the Wall Street Journal, some of the price increases that we are looking at, at this hearing, and the companies involved, are being investigated by the U.S. Department of Justice for possible viola- tions of antitrust laws. According to Medicare and Medicaid data, between July 2013 and July 2014, half of all generic drugs went up in price. During this same time period, over 1,200 generic drugs, nearly 10 percent of all generic drugs, more than doubled in price. More than doubled in