Speeches & Floor Statements

Opening Statement: Alexander: Health Committee Explores Practical Solutions to Make Biomedical Miracles More Affordable

Posted on December 12, 2017

The Senate Committee on Health, Education, Labor and Pensions will please come to order.

Today we are holding our third hearing on drug pricing to look at the new National Academies Report “Making Medicines Affordable: A National Imperative.”

Senator Murray and I will each have an opening statement, then we will introduce the witnesses. After the witnesses' testimony, senators will each have 5 minutes of questions.

I recently received a letter from Joseph in Cordova, Tennessee. He wrote, “Senator Alexander, I just got back from a trip to my local pharmacy. Unfortunately, I was unable to purchase some of the medicine my family needs because one of the medications was $150...I want to know how you plan to get this problem under control. In the meantime, I guess my family will just have to suffer since we cannot afford the medications that they need.”

I know that every member of this committee has heard similar stories from their constituents.

Today’s hearing is the third in a series this committee has held on the cost of prescription drugs, based on a bipartisan request led by Senators Cassidy and Franken, along with Senators Collins, Baldwin, Murkowski, Whitehouse, Capito, Sanders, Enzi, and Warren. The fourth, if you consider how many questions on drug pricing Alex Azar, the nominee for HHS Secretary, had to answer at his confirmation hearing two weeks ago.

At our first two hearings, we heard from prescription drug manufacturers, pharmacists, doctors, health policy experts, and others, to try to understand what goes into the price patients pay when picking up their prescriptions.

The cost Americans pay for their prescription drugs is an important topic – more than 4.4 billion prescriptions are written for drugs each year for Americans who then pick up those prescriptions at 60,000 pharmacies, or receive them from doctors or hospitals, and from online pharmacies.

While we are living in a time of remarkable biomedical research that is leading to new drugs that can stop a stroke and cure Hepatitis C, it is critical that patients can afford to pay for these miracle drugs.

According to the Centers for Medicare and Medicaid Services, national health expenditures in the United States were nearly 18 percent of Gross Domestic Product in 2016, or $3.3 trillion, and are projected to be 20 percent in 2025.

Our reason for concern is how this compares to other industrialized countries: In 2014, the World Bank shows the United Kingdom was spending 9.8 percent of its gross domestic product on health care; Germany was spending 11.1 percent, and Finland 9.6 percent.

To give what we are talking about some context, CMS says hospital stays and doctor visits account for about half of national health expenditures.

The other half includes home health care, nursing care, medical equipment such as wheelchairs and eyeglasses, and our subject for today – prescription drugs.

According to the National Academies report, about 10 percent of health care expenditures is on prescription drugs – 17 percent, if you include prescription drugs received in hospitals and at the doctor’s office.

Like most elements in our health care system, spending on prescription drugs increases every year, sometimes by as little as 1.3 percent, as in 2016, and other years by as much as 12.4 percent, as in 2014. Big increases in spending may be driven by the introduction of a new and lifesaving drug, such as the Hepatitis C treatment introduced in 2014.

But there can be differences between what the overall increase on spending on prescription drugs is in any given year and what a patient spends on his prescription when he goes to fill it.

The system is extremely complex and there are many factors that could have caused Joseph, who wrote the constituent letter I mentioned, to be charged $150 for his prescription – for example, what type of insurance plan did his family have? Is it a prescription drug where there is only one manufacturer? Is it a new drug with no generic substitute available? What is the list price of the drug established by the manufacturer and what is actual net price of that drug after all of the negotiations and rebates?

What we learned at our first two hearings is that all of these factors affect what patients pay when they pick up a prescription from the pharmacy or receive it in the hospital.

I think we all recognize it is a complex system to get a prescription drug from the manufacturer to the patient and that the complexity affects what and how much of his or her own money a patient pays for their prescription drugs.

That is why I think it is important we have Norm Augustine testifying here today, to hear about the National Academies work on prescription drug prices and to discuss the thoughtful recommendations published in their new report, “Making Medicines Affordable: A National Imperative.”

The National Academies noted in their report: “There is not enough accessible information to determine with certainty which segments of the biopharmaceutical sector are principally accountable for the rising cost of many pharmaceuticals.”

I think many of us here today would agree that more information is needed to find reasonable solutions for people like Joseph.

I believe most ideas in Washington fail for the lack of the idea, so it is important for us to hear concrete recommendations from independent and knowledgeable experts.

These are thoughtful recommendations from the National Academies that deserve careful analysis and I am sure there will be a vigorous debate before Congress comes to any conclusions.

My understanding is the research for this report was concluded in May, so it does not take into account any policy changes since then.

And since May, Congress has taken significant steps to address some of the concerns in the report.

In August, Congress passed and the president signed updated user fee agreements – which pay for a quarter of the Food and Drug Administration’s work and that we hope will take steps to help FDA approve new drugs more quickly.

For example, this new law includes a provision from Senators Collins, McCaskill, Cotton, and Franken to encourage the development of new generic drugs to increase competition and bring down prices.

In addition, through a provision in the new law offered by Senators Hatch and Menendez and action taken by Dr. Gottlieb at the Food and Drug Administration, two loopholes have been closed to prevent drug manufacturers from taking advantage of incentives for the development of prescription drugs for rare diseases.

Mr. Augustine, I am looking forward to hearing more about these recommendations from you today.

We will also hear from David Mitchell, who is a cancer patient who has become an advocate for policies to make drugs more affordable.

We were sorry that our former colleague, Dr. Coburn could not make it today. We wish him a speedy recovery.

We instead welcome Mr. Doug Holtz-Eakin and thank him for accommodating our request. He is a well-respected economist and former head of the Congressional Budget Office and we look forward to his testimony today.