tv Abb Vie Pharmaceutical Co. CEO Testifies on Drug Prices CSPAN July 29, 2021 10:48pm-2:29am EDT
the committee. humira is used to treat arthritis, and imbruvica is a chemotherapy drove for cancer treatment. lawmakers criticize the pharmaceutical company for the price increase through the years and it's lower cost. this hearing is a little more than three hours and 30 minutes. >> the committee will come to order, without objection the chairs authorized to declare races of the committee at anytime. i now recognize myself for an opening statement. for more than two years this committee has engaged in one of the most comprehensive investigations of pharmaceutical pricing practices ever conducted by congress. this investigation was launched
by my predecessor, the late chairman elijah cummings. i'm proud to carry forward this critical work. last fall the committee held two hearings with the trump company ceos and released five staff reports detailing our findings. this morning we released a staff report describing our finding for abbvie, which sells to blockbuster drugs, humira and imbruvica. our work has continued and confirmed, but patients in this country have known for a long time, drug prices in the united states are unfair, unsustainable and just plain wrong. this investigation also reveals something even more distressing. drug companies are actively targeting u.s. for price increases while cutting prices in the rest of the world.
they are doing this by taking advantage of flaws and loopholes in our system. most importantly, the law that prevents medicare from negotiating directly with drug companies for lower prices. finally, our investigation has revealed that the justification's the pharmaceutical industry offers, for why they need to raise prices, simply do not hold water. today we will hear from richard gonzalez, the ceo of abbvie. we appreciate his attendance at today's hearing. unfortunately, this hearing was delayed because it took more than a year, and the threat of a subpoena before abbvie agreed to voluntary comply with this committees investigation. abbvie has repeatedly raised the prices of humira, which is used to treat rheumatoid arthritis, and other auto immune diseases. and imbruvica, a drug approved
to treat different forms of cancer. abbvie charges approximately 77,000 dollars a year for a year's supply of humira, that is 470% more when the drug was launched in 2003. humira is the highest grossing drug in the united states. due in large part to these horrendous price increases. you see where it started out with 500 dollars for a syringe is now 2984 dollars just for a syringe. bob abbvie and its partner jensen biotech charged even more. over 181,000 dollars for a year supply of imbruvica, that is 74% more than when the drug was launched in 2013. experts estimate that by 2026
imbruvica will be the fourth best selling drug in the united states. these prices are outrageous, and unfair. even more outrageous is that americans are the only ones paying them. in 2015, a single syringe of humira, was priced over 1000 dollars higher in the united states and in countries like canada, japan, korea and the united kingdom. even as abbvie hikes its prices in the united states, it has actually been dropping its prices and other countries. in one internal presentation from 2016, abbvie executives described this disparity as and i quote, a positive price in the u.s. and negative price overseas. end quote. abbvie's price increases have
paid off for the company's bottom line. last year alone, abbvie collected 16 billion dollars in u.s. net revenue for humira, and abbvie and janssen collected 4.3 billion dollars for imbruvica. that is more than 20 billion dollars from american patients and taxpayers for just two drugs. and you see the massive price increase, up to 16 billion. our investigation also uncovered evidence that advice has exploited the u.s. patent system and engaged in anticompetitive practices to extend its monopoly pricing. the committee has obtained internal documents showing that abbvie's own executives
projected stop selling drug humira would face competition from lower priced versions of the drug, known as by or similar's beginning in 2017. but abbvie used legally questionable tactics to block lower buyer similar's for reaching american consumers until at least 2023. those tactics made abbvie a fortune, but cost americans dearly. based on these findings, i sent a letter. i sent a letter to the ftc today, along with committee chairman of the judiciary chairman and antitrust subcommittee chairmen, cicilline, asking for a formal inquiry into whether abbvie's anticompetitive practices violated the law. finally, i want to emphasize that the companies make essential lifesaving products.
if the last year has taught us anything, it is that we are all indebted to the scientists who pioneered knew cures, they're apiece and vaccines. so we want drug companies to be successful, but abusive, unfair pricing, and anticompetitive practices, mean these medications are out of reach for too many americans. and, instead of investing in new innovations, drug companies like abbvie are dedicating significant portions of their research budgets to coming up with new ways to suppress competitive products. that means americans are paying more, but we are getting less innovation. if we want to make a difference, we need structural reforms like hr three, which would finally allow medication --
medicare to negotiate for lower drug prices like the rest of the world. does congress must pass this common sense reform, and others, so that patients and families can afford these prescriptions. i want to close by plane statements from patients who want to share their experiences with us about these two drugs. please watch. >> hi, my name is catherine and i'm from washington. i'm a former computer consultant, but more importantly i am a proud mother of three and grandmother of five. unfortunately, my ability to enjoy my grandkids have been diminished because of my health. i suffer from debilitating pain and reduced mobility caused by sorry attic arthritis. to treat my condition, my
doctors prescribed me humira injections weekly. the price of humira is 5900 dollars for a pack of two pins. even as a medicare beneficiary on a fixed income i still have to pay nearly 1200 dollars out of pocket every single month. i cannot afford this. i don't know any average person who can. the excessive humira prices forces me to choose every month whether to eat or fill my prescriptions. many times i must skip my humira doses. the impact is unbelievable pain in my joints, especially in my hands and feet. i should not have to play russian roulette with my health. this is why i am sharing my story with you today. this drug companies price gouging needs to stop. we need change. i urge you to consider patients like myself as you take action
to lower the drug prices. thank you. >> my name is jacqueline. i'm a 19 year old college student from austin texas. last year i was diagnosed with an auto immune disorder that affects my spine and has spread to most of my major joints. without expensive biological medications, my spine could fuse and leave me unable to walk by the time i'm out of school. after my diagnosis i was prescribed humira, which is priced at almost 6000 dollars per month supply. even with the coupon for my doctor, my first prescription cost me 350 dollars out of pocket. that is money i do not have as a college student. right now, i'm sitting political science and i want to go to law school, but my dreams and independents are threatened by having to constantly worry about 14 my medication, because i'm going to have to take an extensive biological -- for the rest of my life. committee members, as you
pursue solutions for drug prices, i hope you will remember the millions of young people with chronic conditions who are facing a lifetime of daunting and ever increasing prices at the hands of companies like abbvie. thank you. u. >> my name is lynn. i live in new york. i am a retired nurse. i've worked with cancer patients as a nurse navigator for the last decade of my career. in 2012 i became a cancer patient myself. i was diagnosed with leukemia, and later with lung cancer. my journey has not been easy. it has required surgery and expensive treatments. for my leukemia, my oncologist prescribed the oral chemotherapy imbruvica, although, i have medicare, the monthly cost of imbruvica is over 13,000 dollars. i don't have the financial resources to pay for it.
and not many do. i have secured short-term assistance to cover these prohibitive costs. sadly, my help runs out at the end of the year. my inability to afford imbruvica's astronomical price, when my systems runs, that was certainly expedite my death. i spent the last years of my nursing career working to ensure my cancer patients have the best treatment possible. now i'm terrified i will not be able to obtain the same resources for myself. instead of enjoying my retirement i'm focusing on my health. i carry around the overwhelming burden of imbruvica's price tag. you have the power to change that by bringing in the greed of the drug companies. thank you for listening to my story. >> he's patient stories show why we need immediate reform. we need to pass hr three this
year to allow medicare to negotiate, lower drug prices for americans like other foreign countries do. i now recognize these patients for these testimonies, they're very moving testimonies and i now recognize mr. calmer for an opening statement. >> thank you, madam chair. over the past year we've seen the importance of research and development in vaccines and treatment. operation warp speed, one of the greatest public private partnerships in american history resulted in the federal government partnering with private companies to invest hundreds of millions of dollars to develop and manufacture covid-19 vaccines and the result is constant vilification by the democrats. the fastest vaccine development in history with the first
vaccine approved in less than 12 months from the first discovery of covid-19. since then, two more vaccines that have been approved with two more awaiting approval by the fda. in addition, there's been numerous pharmaceutical treatments and medical devices innovated to treat covid-19. as a result of these vaccines and therapies, cases and fatalities have plummeted and our nation is on the road to recovery. the catalyst behind these innovations have been intellectual property protections here in the united states. americas robust patent system in or enables enormous investments in the research development and cases. more generic drug competition and new technologies to promote patient appearance. the research funded by these investments results and treatment and cures for countless diseases enabling americans to live longer and healthier lives. yet today, the democrats on
this committee decry or countries intellectual property protections as a route of -- this is simply not true. there are companies that have abused our patent system, seeking hundreds of patents to prolong the ability to control the market for a particular treatment. but many patents is to protect intellectual property so they could recruit their investments, while seeking hundreds of patents on medication or vaccine is not illegal under our existing system, it can be anticompetitive and alton cost for patients. republicans in the house and senate have sought to write this wrong through legislation that would stop pharmaceutical companies that seek to abuse the patent system and extend their control of the market and prevent the use of settlement agreements to pay generics to delay entry into the market. democrats have instead proposed
hr three, a massive government takeover of the pharmaceutical market that would result in significantly fewer treatments and vaccines from markets. we should not -- system that is made the united states a world leader in medical innovation. like our democrat colleagues proposed. republicans want to protect innovation and consumers, and this congress republicans introduced hr 19, a collection of bipartisan reforms to prevent a anticompetitive behavior-ing pharmaceutical markets bringing more generics to market since incentivize innovation and research, and require our pharmaceutical rebates to be included at the point of sale so patients could receive benefits instead of pharmacy benefit managers or pbm's. while democrats were impeaching this president, republicans were working to decrease the cost of prescription drugs for
all americans. now, nearly two years later, democrats have nothing to show for it, and our attempted to attack yet again another from a cynical company rather than help americans across the country. we must address rising prescription costs, because the cost is hurting families everywhere. republicans presented a real plan to lower out of pocket cost and protect innovation for new treatments and cures. the american people need relief. but speaker pelosi has instead sought to pass a partisan plan and destroy intellectual property protection that our founding fathers -- we must put people, not partisanship first. i yield back for the remainder of my time. >> the gentleman yields back. i would like to introduce our first witness today, dr. castle,
highness so should professor, aaron s. kesselheim, he testified at our committees very first hearing on prescription drug prices back in january of 2019. and we will hear from mr. garth white, the research professor in hospital and health services at the kellogg school of management at northwestern university. next we will hear from tahir amin, the cofounder and co-executive director of the initiative for medicines access and knowledge. finally, we will hear from richard gonzalez, the chairman and ceo of abbvie. the witnesses will be unmuted, so we can swear them in. please, raise your right hand. do you swear that the testimony you are about to give is the truth, the whole truth and nothing but the truth, so help you god? >> i do. i do. >> let the record show that the
witnesses have answered in the affirmative. thank you, and without objection your statements will be made part of the record. with that, doctor aaron kesselheim, you are now recognized for your testimony. >> chairman, ranking member, members of the committee, i'm honored to talk with you about curbing abuses by drugmaker static advantage of our market exclusivity system for prescription drugs. raising the prices for these products and jeopardizing patient outcomes. the idea behind our patent system is that a period of exclusivity enables innovators to profit from their creation, and then allows others to compete once that period is over to prevent a permanent monopoly. in the drug market, this dynamic isn't important since medications are constantly creating -- for advocacy and safety. in the u.s. drugs are covered by patents on their active ingredient and other federal laws like the orphan drug act providing special edition exclusivity. for rare -- for biologics for 12 years after approval. with all of these exclusivity's
drugs routinely get an average of 14 and a half years of market exclusivity while biologics receive one and a half years. during this time drug many captured charge high prices. alone in the industrialized world, the u.s. let's drugmakers said any price they choose for patented products. u.s. law then allows manufacturers to raise prices each year during market exclusivity will be on inflation. i prices lead patients to skip noses and worse health outcomes. when market exclusivity ends, competition is supposed to begin. generics can quickly become the default prescription, because they could be automatically interchange, lowering prices, 70%. bio similar's have been slow to enter the u.s. and an of them are fda certified. we found each bio similar reduce -- the system has become subject to many abuses such as branding manufacturers try to delay effective competition. a common strategy is obtaining a thicket of those it's or hundreds of patents, so-called secondary patents like
intermediate compounds, or methods of treatment. tertiary patents cover the delivery mechanism, such as an injection pen or inhaler. the proportion of patents listed with the fda tripled from 3% in 20,000 to 9% in 2016. some firms use this time to introduce new versions of their product with a little or no clinical benefit for their patients. for example, of her might switch from a capsule to a tablet that is not interchangeable. many secondary tertiary patents are actually bad patents that lack novelty or cover only minor obvious changes to the drug. one analysis revealed that legal challenges seeking to overturn the primary patent succeeded only 8% of the time, while challenges to secondary patents were successful 67%. but litigation to overturn a properly granted patent can take years and millions of dollars to complete, and in recent years, many generic and bio similar manufactured have settled litigation agreeing to keep that patents in place and not introduce their fda
approved competitors in exchange for financial benefits. all of these issues can be observe -- added from a german company in 2000 before it reached the u.s. market in 2003. as the primary patent was set to expire in 2016, litigation -- settlements blocking u.s. market entry until 2023, although these products enter most u.s. countries in 2018, leading to billions of dollars in excess spending. so what can you do? we need to protect and reward innovation, yet and short timely competition after a reasonable period of market exclusively. first, bad patents must be limited. other patent offices around the world issued fewer bad patents by spending more time on review. in addition to granting more resources to the u.s. patent office, congress should instructed to develop new guidance on patent standards so that trivial modifications would not be patented while patents are novel innovations would remain. another step would be to
provide greater opportunity for administrative review prior to litigation, view -- should be required to review drug patents when they're lifted by the fda are determined relevant by similar approval. it can also take steps to ensure that manufacturers cannot use other market excuse the video -- for example the seven year orphan drug exclusivity should be curtail frigid argues in much larger populations after approval bringing in substantial revenue. the 12 year regulatory exclusivity provided for biologic drugs should be shortened -- because biologic drugs have four -- finally desperately need to pass the chore to give the government the power to value it the benefits of new drugs so that we can make clear which modifications could help patients and which are useless product copying intended to -- exclusivity. the government should negotiate prices so we do not pay exorbitant prices for so called new drugs with minor changes, but only pay for clinically
meaningful innovation. in conclusion, that shrug exclusivity system was intended to provide a reasonable limited -- after fda approval during which branding manufacturers could earn fair revenues from their product. strategies and other cases upset this balance and make it more lucrative for a drug company to invest in fending off competitors for a decade old products rather than coming up with important new discoveries. ensuring that the generic -- can occur in a timely fashion, we'll have little detrimental effect on meaningful drug innovation, but would reduce overall health care spending, make medications more for double, and promote improved patient outcomes. thank you very much. >> thank you. mr. garth right, you are now recognized for your testimony. >> thank, you chairwoman and members of the committee. in your opening statement, it's one of the process of the developing non pharmaceutical products is expensive and risky. innovative firms must make
large fixed and some investments to create the knowledge necessary to develop new drugs. the knowledge that results in this process is largely a public good. absent government intervention, it would be harder for firms to protect the intellectual property and stop competitors and copying the renovations and competing away in any potential products. rational firms understand this eventuality that the absence of such government intervention -- this would cause an economic conditions during its holdup, were valuable investments are simply not. made to avoid holdup, governments provide various types of intellectual property protection that allows innovative firms time-limited period of market exclusivity in which they couldn't joy enhanced market value. in this way innovation policy regarding prescription drugs is a difficult trade-off. where we accept some of our reduced access today in order to provide the incentive for firms that innovate undeveloped upstarts moral. i don't say this lightly, i fully understand the higher prices candy increase access to
potentially lifesaving medication, we can consider my testimony that limit that harm. frankly, there are no easy or simple answers here. weakening existing intellectual properties and predict are using government property to set -- well decrease intervention and lead to its own access problems. it's clearly true, patience today hang high prices and can somebody crease access to medication. you must also acknowledge, that those patients do enjoy a significant benefit that cannot be overlooked. there is an existing drug that can treat their condition. for those price. and we only focus on access probl suffering from conditions where there are no treatments, there's no drug available at any price. and we only focus on access problems related to prices, we ignore this other fundamental lack of access. simply because these missing innovations are harder to identify and not available for
photo opportunities doesn't make them any less real. we must remember that everything about the existing parameters of this trade-off is simply a policy choice. there's nothing magical about our current 20-year patent length and the very fact that this patent is constant across products and markets suggest it's not the result of some finely tuned calibration or economic model. as the market changes, they were revisiting our policies related to both access and innovation. in doing so, i would argue that we should focus on two broad areas as our goals. we should be focusing as a government on limiting welfare losses where possible while drugs are covered by patents and ensuring that periods of market exclusivity are expressly time limited and followed by competition from generic entrants. while losses can be limited by promoting competition between branded products and ensuring the continued operation of
well-functioning insurance markets. i outline several policies in my testimony to accomplish these goals, it includes reforms, the system for part b, improving information disclosure and most interesting given the videos is decreasing -- the conversation there is as much about the price of the drug as it is about the insurance accurate that we have. in part d, for many people buying expensive medications. once they've reached market exclusivetivity, they should support the entry of vigorous competition. there's a clear role for regulation to create competitors or restrict pricing. when thinking about policies in periods of high prices being time limited, it's easy to recognize giving the witnesses here today that the committee is obviously concerned with the use and potential open use of patents. often critics have existing property -- the existing protection system will cite the sheer number of patents of
[interpreter] evidence of nefarious behavior. the number of patents is an incomplete metric. modern products involve meaningful intellectual property related to the production and additional uses in other medical conditions and we should examine that -- we should examine that up to can and including more resources for the patent and trademark office. they've called for it in the form of limits patents to one per product. that -- those reforms are overbroad and i -- while i understand it's tempting to cave to sort of the calculus that we can increase access to and allow for more innovation going forward, that is not true. we will suffer less innovation if we lower the returns on drugs and we should debate the nature of that reduced innovation in our policies. thank you very much for your time today. thank you. you're now recognized for your testimony. members of the committee, it's my honor to
testify before you today. i spent the first decade of my legal career working as an attorney in the private sector securing and protecting ip. many of my clients were american companies. i learned both the legal and business side of ip and it's importance. i also learned how to use loopholes to game the system. these loopholes enabled me to invent ip rights so companies could maintain a monopoly in the market. i speak to you today as someone who is seeing both sides of the issue. i want to state up front, this conversation is not about the death nail of innovation, it's about bringing equity to a system and how well the system incentivizes intervention. 34 million american adults know one friend or family member who died in the past five years because they could not afford treatment. that is double for people of color. sadly, that's
not surprising. u.s. prescription drug spending has increased by 76% from 2000 to 2017. these price hikes correspond with an increase in patenting activity. they not only have a drug price crisis, they have a drug patenting problem. last week, they issued its 11 millionth patent. it has taken less than one-fifth of that time to issue the next 6 million. have we really become more inventive in the last 30 years or got better at inventing patents because our patent system no longer is stringent enough. the number of
patents granted in the u.s., more than doubled between 2005 and 2015. my organization has been analyzing the top drugs in the u.s. and it found a total of 1310 have been filed, 692 patents had been grapted. on average, that's 70 granted patents per drug. 63% of these patents are filed after the first approval for marketing. and that gives an average protection of 38 years. between 2014 and 2019, we have seen a 71% price increase on these drugs. two of the best-selling drugs belong to abbvie, humira and imbruvica. abbvie has filed 422 patent election applications on these drugs alone. 90% of the patent applications filed for humira were filed after the drug was first approved in 2002 and it
has amassed 130 granted patents for humira and a staggering 39 years of protection. despite litigation by nine different companies, agreements have allowed abbvie to keep competitors out of the u.s. market until 2023. it means the u.s. will have spent an estimated 77 billion before competition enters. a similar story with imbruvica. 165 patent applications have been -- and 88 have been granted so far. that's about one patent filed every month for the last 13 years. granted patents give abbvie a monopoly protection for nine years more than the usual period. during that extended period, americans will spend an extra $41 billion on
branded imbruvica. again, jaone of the arguments you'll here today, abbvie uses it because the drug treats several different drug innovations. the patents on these drugs protect my of the indications setting out a strategic road maps for getting future patents. they made minor changes a decade later by combining them with existing drugs. they've been able to do so because the system allows it. how do we solve this problem? before we get to the solutions, i want to raise the issue that humira is about to be trumped and the additional years that the other years, it's going to cost americans 137 billions. we're
talking about humira and imbruvica, but if congress fails to act, tomorrow we'll be talking about other drugs. the solutions to the problem lie in raising the bar for what gets patented. too many patents are granted that are too weak. we also need to change the incentives and the culture that is there basically patents are granted to earn revenue and we need to create financial incentives that works outside of that. also, we need to reduce the cost of challenges patents. american ingenuity is a source of pride. today's system has become less an engine for real invention. just because you invest in money
mean you've invented something. congress has the ability to return the patent system to not a vehicle for unprecedented profits, but an engine for discoveries that are truly unprecedented. thank you. thank you. mr. gonzalez, you're now recognized for your testimony. mr. gonzalez. 'i'm richard gonzalez. i'm the chief executive officer of abbvie, a company with approximately 48,000 employees dedicated to developing new innovative medicines for some of health care's most challenging diseases. the global pandemic of the last year highlights the critical role that the bio pharmaceutical industry plays american history tv on c-span3. exploring the people and events that tell the american story every weekend. saturday at 2:00 p. m. eastern, a discussion about ruth bader ginsburg and the supreme court case that challenged virginia in driving science and innovation to tackle the most significant diseases facing our society. our industry invests over $80 billion per year in research and development to meet those challenges and our company alone has invested approximately $50 billion since 2013 and has produced cures for diseases like hpv and therapies that are changing andhpv and
prolong in the lives of patients suffering from cancer, rheumatoid oath races, and other serious diseases. as we tackle the issues of drug pricing and access, it's important that we focus on what's working, and what needs to change to make sure that patients get the medicines they need. the united states has the most advanced health care system in the world. it doesn't ration care, or restrict access to therapies, and it is a leader in advancing science to provide cures to deadly diseases like cancer. the united states is also [inaudible] developed in this country when it comes to the use of generic drugs, with over -- low out of pocket cost. most americans have access to affordable men dozens and pharmaceutical companies such as abbvie provide a number of forms of assistance for those who can afford their medicines,
through copay support, or free drugs. the single largest patient group that lacks access to affordable medicines, our standard medicare patients. are standard medicare part “d” patients where the program design has put a significant cost burden part "d" patients where the program design has put a significant cost burden on them. for these patients, reducing drug prices alone will not alleviate the challenge of access and affordability. last fall the house committee on oversight and reform held two days of hearings to examine the prices of prescription drugs and certainly drug pricing is important and the industry has taken steps to reduce drug pricing in recent years. in fact, since 2017, the overall contribution of price to abbvie's business has been negative. in the category of what's working well here in the u.s., the medicare part "d" program has been highly cost effective. the market-based structure encourages aggressive price discounts and yielded significant savings to the government since the part "d" program was published. despite
a 70% increase in enrollment, the compounded annual growth rate in drug spending adjusted for the increase in enrollees is 1. 8% or roughly in line with inflation. and it's been basically flat since 2015. the aggressive price rebates negotiated by plans have also kept patient monthly premiums flat at roughly $33 since the program began in 2006. this $33 data clearly demonstrates the overall cost effectiveness of the part d. program. what's not working in party? is it some patients must bear too much of the out of pocket costs, and there's no cap on drug spending. unlike other commercial forms of insurance, party enrollees cannot access copay support.
they cannot purchase insurance to defray these costs, they must pay open-ended drug expenses. the average out of pocket cost is almost 100 times higher for medicine like humira, than any other u.s. patient group. no other prescription drug and -- insurance program put so much cost burden on the patient. we see the impact clearly in these programs. it's almost 40% of all medicare part of the patients on humira, or one of three, are seeking assistance in receiving free medicine. this stands in stark contrast to commercially insured humira patients, where one out of 100 sought assistance from the abbvie patience -- abby patients assistant program. it's the single biggest issue when it comes to drug
affordability, out of pocket costs. while the overall cost in party is well controlled, government expanding is increasing more rapidly than overall spending. it's another area that needs to be addressed. industry, government, and health care plans should come together, to significantly reduce out of cost confirmations and reapportionment costs that abbvie pays, so that spending will be well controlled. thank you. >> i now recognize myself for five minutes for questions. ivy has raised the price of humor 27 times since launching the drug. at the same time, abbvie has actually lowered the price of this drug in the rest of the world. mr. gonzales, has abbvie been raising humor prices in the united states while lowering them internationally? >> madam chairwoman, the system that you described is how it
actually does work. certainly outside the u.s., there is always pressure on price, and prices do come down somewhat. outside the u.s., once the project is launched. in the u.s., we have the ability to raise prices. the key point will be, what is the net price that companies like ours actually achieve, and what is done with the difference between gross and net pricing? that's an important debate that we should have. >> play me my time. advise internal draw commence prove that you did raise prices in the u.s., even while you are allowing them internationally. i want to put up exhibit 23, this is an abbvie board of directors presentation from 2016. mr. gonzales, please turn to page three in the exhibit, the heading up this says and i
quote, a mere -- whom or is negative price overseas and quote in other words, abbvie raise the price in the u.s., while lowering it in the rest of the world. this document also shows that the company had a plan to continue hiking the price of humira in the u.s., for several more years. mr. gonzales, please turn to page ten. this page shows that add the plan to raise the price of humor for americans in 2016, 2017, 2018, 2019 and 2020. while cutting international prices each year. mr. gonzales, did abbvie actually go through with price increases on americans during each of those years? >> madam chairwoman, we would have price increases on those years, that's a forward-looking
long wait -- range planning document. i can't confirm for you whether it was those prices increases. >> replay me my time, the answer is yes. heavy raised the price and humor in the u.s. even more than it originally planned. instead of 9.9 price increase for 2016, abbvie actually raised the price by 18% that year alone. let me turn to the second drug, imbruvica. mr. gonzales, is it true that abby charges more for imbruvica in the u.s. then in any other countries? >> actually, imbruvica is marketed to our partner outside of the u.s.. i'm not familiar with the pricing associated with imbruvica outside the u.s.. >> well, we looked at the data. i want to show you another graph comparing the list price of imbruvica around the world in 2018.
as you can see, in this chart, americans pay far more for this drug than people in other countries. this is unfair. in 2018, the price of a tablet of imbruvica in the u.s. was roughly double the price charged in france, germany and the uk. medicare important d provides prescription drug coverage for more than 45 million americans. yet it is prohibited by law, from negotiating lower prices on behalf of the patients it covers. mr. gonzales, do you know how much abbvie made for medicare in net sales of humira and imbruvica between 2014 and 2018? >> it would've been approximately 2.3 billion dollars for humira, and approximately 2.9 billion for imbruvica.
>> well, the documents we have -- advised internal data shows, that the company collected nearly 12.5 billion dollars, as in be for this five year period just for these two drugs alone. this number accounts for any rebates that abbvie paid to medicare. no wonder abbvie, and the other drug makers, target the u.s. for price increases. they know that unlike the rest of the world, our medicare program is prohibited from negotiating directly for lower prices. this data demonstrates clearly why congress must pass hr three, to grant medicare the power to negotiate lower drug prices for patients, we must pass this bill this year. i now yield to the distinguished ranking member
mr. comer. no, this fox. okay. mrs. foxx, the distinguish gentleman from north carolina is now recognized. >> thank you madam chairman. my question is for mr. gardens away. i wanna raise a question. scientists at -- put out a request for a, private company to work with them to develop a vaccine for the zika virus. they were the only company to reach an agreement in june 2016. upon learning of the agreement, bernie sanders requested that the government get reasonable pricing language, also known as price controls, in the. deal in the response, -- noted we can't undermine the price of vaccine and haven't made it yet so it's premature to consider predicts zika
vaccine pricing at this stage in the air, and quote. also noted the proposed license would require it to make royalty payments to the government and its exclusive license would not prevent other companies from developing competing vaccines. following the relentless media attacks, they announced it would not continue development of or seek a license to develop a vaccine.d there is still no vaccine for the zika virus. the taxpayers funded the research that identified the vaccine candidate, a private company agreed to take the risk of testing and manufacturing, it but this whole effort failed due to these progressive attacks. thanks to these attacks, we may never know how many lives could've been spared by this vaccine. mr. garth way, if the threat of price controls on one potential product killed that innovation, what could happen if we threaten the entire industry with this type of socialist pricing like the one democrats are proposing with hr three? >> economic evidence is clear
that if we will decrease the potential revenues of a product, we will see fewer investments in research and development. and so, very large pricing creases were rewarded with clients in innovation. your question to get to another point, how do we think about u.s. government research into drugs and how that should affect pricing. i know there is a lot of concern at the time expressed by other members of the panel today, that the and i h research shows up in the development and many. drugs that's true because, in the example you, gave the nih does a lot of basic science research, and that's where we want the government to do. given that we spend the money to do, that we then want -- to take the research up and be willing to develop new products. if you put price controls or restrictions on it, about specific returns or fair prices, clauses, anything like, that you will decrease the take up of government research and societies that no better. off when i think about government investments here as complements to the research that is done by private risk capital.
because they are compliments, we want people to use the nih research as much as possible, unaware that price regulations of the nature and hr three, it would more broadly are still conversations and are-y -- and i age going to decrease the returns we get an armed face minutes in the nih. >> thank you very much. mr. gonzales, in your opening statement, you described the convective nature of the medicare party program, and how improvements would help seniors district lowered their out of puckett cost. now democrats are telling us that the only way forward party is that the government can takeover and determine what medicines are worthwhile. can you please help educate us on how the current part of the program is already a competitive market, and then how we need to improve it so that seniors are not facing higher costs? >> i would tell you that in my experience -- and i have a tremendous amount in this business, the medicare
part of the program is negotiated aggressively by the plans. for example, medicare, or humira, it gets a discount that is 3% higher or, or rebate that's 3% higher than the commercial side of the business. it gets that rebate despite the fact that it's roughly one sixth of the volume. normally, when you think about discounting, a product that -- consumer has six times the volume would get the lower price. but in this, case is the opposite of. that the government is getting the lower price. i would also tell, you if you look at the medicare and part of the plan, it is the structure of the plan that ultimately dictates the affordability issue for patients. you can take any other patient in the united states, on average they will pay for humor around 120 dollars a year. a medicare patient has to pay 5800 dollars a year for him era.
based on the structure of out of call -- pocket costs. an excessive amount. these patients, on average, make 28,000 dollars a year. there's no ability to support or subsidize the out of pocket costs because of the anti kickback laws. the only thing we're left to do, for a company like abbvie, where we want patients to be able to get their drug, is we have a patient assistance program where we provide drug for free, a full year of drug for free, for those patients who can't afford it. and we subsidized essentially the medicare system. think of it this way, for every ten medicare humor patients, we're providing free of charge humira to four of those patients. >> thank you very much. doctor fauci is saying -- >> your time has expired. >> thank you madam chair. >> your time has expired. the gentleman from the district
of columbia, the snow when you are now recognized for five minutes. >> thank you madam for this important hearing. in 2003, avid laboratories launched humira at a price of 522 dollars per 400 milligram syringe, or just over 6200 dollars annually. over the course of the next decade, abbott raised the price of humira 13 times by 2013, remember we started in 2003, a single 40 milligrams syringe of the drug was priced at 1024 dollars, starting at 522. that's nearly double what it
was ten years earlier. how the spun off its own company in 2013, taking you marrow with it. mr. gonzales, that's when you became ceo, is that correct? >> yes, that is correct. >> since that time, the increases in humira have only accelerated. i would like to show a graph, and i hope that that graph can be put up now, madam chair. it's showing the price of a 40 milligrams syringe of humira and how it has grown from 2003 two today. they're the graph is up for everyone to see. you will notice that price increase has really ramped up after 2013, the year abbvie
spun off, and the year you became ceo. abbvie has raised the price of humira 14 times in just eight years. and those price increases were not small. in just the ten months between march 2015, and january 2016, add the increased the price of humira by a total of 30%. that's in about a year. today, the list price of a single 40 milligram syringe of humira, it's 2984 dollars and 404 -- 70 470% more than its price at launch. that means, that a year supply of humor now now costs over --
and get this number -- 77,000 dollars. internal data shows that humorous net price, or the list price of rebates, discounts, and fees they have also increased overtime. that price includes buying 110% to more than doubling between 2009 and 2018. doctor aaron s. kesselheim, what does this drastic increase in net price say to you about the role, if any, in rebates in driving up humorous price overtime? >> it says to me that the drug price increases have increased
both and a gross scale, in terms of list prices, and in terms of net prices. that rebates, while they have maybe increased over that time, they definitely have not increased enough to offset that substantial price increases that abbvie has been allowed to get away with. >> thank you madam chair, the data are clear. after these repeated price increases of humor have had costs over -- have had costs over to our health system with millions of dollars, and are simply unsustainable going forward. madam chair, i believe we need structural reforms like hr three, if we are going to bring any relief to parents -- to patients, sorry. about the price increases i've just offered in my questioning. i thank you and i yield back. >> thank you. the gentlelady yields back, and i agree with her. the gentleman from georgia mr.
hice is recognized for five minutes. >> thank you madam chair. we just saw one of the greatest public private partnerships in the history of our country, and it was led by president trump's administration. despite the villas asian of operation warp speed by democrats, the federal government and private companies invested literally hundreds of millions of dollars to develop and manufacture covid-19 vaccines and candidates there of, not knowing whether or not those attempts would be approved. the result was that the first vaccine was approved in less than 12 months from the discovery of covid-19, and three vaccines were ultimately improved with others still waiting in line. many are now actually praising operation warp speed and frankly, there incorrectly giving the biden administration
accolades for the brevity of the program when in fact, this current administration is absolutely not responsible for spearheading this whatsoever. this past summer, the housecoat -- select subcommittee on coronavirus exhibited skepticism of operation warp speed. in fact, the democratic member who chairs that particular subcommittee sent a letter to hhs secretary alex azar, regarding operation warp speed and made this quote, a lack of trucks barren sea and the development of the coronavirus vaccine, especially on an accelerated timeline, could contribute to the growth of anti-vaccination settlement, -- sentiment, and quote. this type of regiment -- rhetoric frankly, it certainly could have, and i think it did, undermined one of the greatest achievements medically in our country's history.
fortunately, the trump administration did not doubted that kind of outrageous posturing by the democrats but, once again, our country demonstrated how incredible our people are as our greatest minds come together in one of the darkest times in recent history, but now the united states may again, not -- now i should -- let me put it this way. we might never again be a leader in pharmaceutical innovation like we were with operation warp speed, if the biden ministration continues to pander to some of its most progressive numbers and like he did in endorsing an intellectual property waiver to the world trade organization. listen to that -- he supported and endorsed an intellectual property waiver.
that's dangerous. that's thinking that -- it's incomprehensible thinking. waving intellectual property for covid vaccines for any other type of medicine, will make the united states and the world, more reliant on countries like china and india for pharmaceuticals. that is frightening when you look at and consider that their vaccines right now for covid are far less effective than ours. frankly, this puts the future of drugs and vaccines that were created under a program like operation warp speed, at tremendous risk. then you have countries like south africa and india. they would like a resolution that would force pharmaceutical companies to share their covid vaccines and therapy ip, with developing countries so they
fall right in line with this type waiver endorsement. and, look, this is supported not only by our current administration, it's supported by other low income countries, progressive groups, and more than 100 congressional democrats right here serving today. a lot of these countries want to end patent protection and why is that? they say they want to expand access to vaccines that access for lower income countries and it's already available. there was an article in the wall street journal in april, where merck and announced such a thing. fortunately, we have european countries and friends who are smart enough to realize the importance of intellectual property. chancellor angela merkel rejected this whole idea of waving covid vaccine patents, and she said in the first place,
it would not make more vaccines available, and it would weaken innovation in the future. madam chair, i just think it's very important that we protect those who are innovative, inventors of medications. certainly those that abuse the rights we should deal with, but we got to protect the ability for these -- >> the gentleman's time is expired. >> i yield back. >> the gentleman from tennessee mr. cooper is recognized for five minutes. >> madam chair, i pass at this time. >> the gentleman pastors. -- i -- hang johnson, he is now recognized. and johnson. >> thank you madam chair.
i want to thank you for holding this very important committee meeting. mr. aaron s. kesselheim, i want to address the misconceptions of rebates and that they are the cause of skyrocketing drug prices. can you briefly explain what a rebate is? >> sure. the system we have in the u.s. drug companies are free to set whatever price they want, and the negotiating tool that pairs use in our system is negotiating and rebates that are provided us and exchange for formulary or utilization management ultimately reduce
the price for different drugs by different amounts. >> testimony for the senate in march, you know that rebates did not keep pace with less price increasing -- increases, and quote. what does that mean to the everyday person who is just trying to afford their lifesaving medication? >> sure. well, first of all, over the last decade, drug prices have increased over 160% at the list level, they've increased at a net level by about 60%. both of those are much greater than the change in inflation over that same period of time. what that generally means to the individual person, a lot of people pay out of pocket costs that are based on the list prices that they experience, that could mean a much higher out of pocket cost for individual patients, increased net prices though also mean increased premiums that people
pay for insurance overall. those prices are reflected as well in the premiums that pay as well as the individual out of pocket costs. >> okay, so i want to ask you about net price or the amount a drug company collects after subtracting the rebates and discounts. if a drugs list price increases, and if those increases had in fact outpaced rebates, would you expect the net price of a drug to also increase overtime? yes or no. >> yes. >> thank you. mr. gonzales, i would like to turn to you. your company provided data on the average net price of humira between 2009 and 2018. i would like to display a graph created using this data. this data, this graph, it shows the annual net price for a
weekly dose of humira. can we have that exhibit, please? i guess we are having some technical difficulties. >> mr. johnson's off. we can all see the humor annual net price biweekly dosing. >> okay. mr. gonzales, as you can see, the net price of humor increased every single year between 2009 and 2018. in fact, the net price of humor increased by 110%. it increased in the medical chair -- an increased even more by 151%. doctor aaron s. kesselheim, want to these trends depicts on this graph, or what do these trends depicted on these --
this graph talk about abbvie on pbms at this time? >> the rebates increases were far beyond and increasing far beyond the list increases. the net prices overall coming creasing. >> mr. gonzales, the committee also received rebate data for your cancer drug imbruvica. in the medicare and commercial channels, the rebates you gave to pbms, and insurance plans, average between four and 11%. in contrast, you've raised the price of imbruvica by 82%. that was since it came to market. the data is clear, pbms are not the primary driver of the dramatic price increases of abbvie jogs.
abbvie a is the primary driver of dramatic price increases. would you agree with that doctor aaron s. kesselheim? >> yes. i would agree with that. the drug prices are set by the pharmaceutical manufacturer, and you know, pd ems and other -- pbms use it as a negotiating tool, that helps to reduce prices somewhat, but drug prices have been generally step by the manufacturer. >> we should not allow then pharmaceutical companies to distract us with the argument that pbms are responsible for the explosive increases and drug price and drug prices? it's actually the pharmaceutical industry itself? >> the gentleman's time has expired. the gentleman from wisconsin is now recognized, now mr. grumbling.
>> i will start off with mr. gonzales, thank you. i will ask you a little bit about insulin and bio similar's. i have a bill that would cause and transition from mobile a and require the fda to approve insulin products bio similar's rather than biologics which would give more of these products to save people all the money with insulin. there are rumors out there, that your company would be opposed to that sort of thing. could you comment on that? >> congressman, we are now in the insulin business. i would tell, you it is not a market thing they know about. so, i don't really have a point of view on it. >> okay i will ask mr. garth way.
do you have an opinion as to why it would be difficult to get bile similar to market for some competition with insulin in that arena? >> i think that -- i don't know the specifics of your bill so i will be careful while i answer. i want to be careful how i answer this. if we're worried about getting bio similars to market, i think we want to think -- and i detail this in my testimony -- a bit more about the relationship between rebates and market entry for buy logic products and the idea that we might think of those -- the rules about rebating need to be different. and this is primarily related to the fact that it's very hard for a new entrant to compete for the existing stock of patients that are medically stable on their product. given that and given the way that exclusivity works, it might be harder for them to come in and compete their way on. i think contracts -- rebate contracts for biologics that say
they can't be on the same tier of the formulary of us, should be looking at antitrust authorities as away to increase entry. >> can you comment on getting them to market to lower the price of insulin. >> it's important to get bio similars onto the market. what we really need for insulin is competition from more manufacturers and manufacturers -- >> i don't mean to cut you off. can you tell me why we don't do it? why do you believe we don't do it if it seems like an obvious thing? >> until recently insulin had been regulated as a small molecule product, although i think the fda has switched that over in the last year so that now you can actually get insulin
on the market through an abbreviated bla. hopefully we will see insulin, bio similars on the markets and hopefully some of them will be interchangeable so we can get competition to lower the prices of insulin biologic products. to this point, there have been problems with sort of getting -- there's been litigation over insulin patents and a lot of patents have been issued on insulin pens and other pa riff ral aspects of the product which made it possible for entrants to get into the market and require litigation. now we have a regulatory pathway to make that happen. hopefully we'll see that soon. the fact that we haven't seen it until now is a major flaw. >> i'll ask you, why do you think that is? >> i think it's -- again, i
think, first of all, a lot of the insulin manufacturers have obtained patents on aspects of their products even though insulin itself hasn't changed much in the last couple decades. there have been patents on the pens and delivery devices that have blocked entry of new products and led to litigation. that's one aspect of it. >> okay. we'll ask one other question, a general question. it doeswt■ alarm me that people other countries pay so much less for drugs than this country. just flat-out, that should be wrong. could you give me a quick summary as to how you feel we can get around that problem? i have a lot of sympathy with hr-3, it's an extreme bill. it seems ridiculous on its face that americans have to pay so much more for drugs than other countries. can you kind of respond? >> i agree, also.
i find as an american citizen, some combination of annoying and offensive that we pay so much for drugs and european countries don't. why would we think that the european price is the correct price that we should be thinking about? they're choosing to free ride on the innovation caused by american profits. i think attempting to adopt european prices in the united states would be anirresponsible of lawmakers. i certainly don't think that i would like us to see us adopt the policies of paris, london and berlin in the united states. i think we also have to be honest that if we want to negotiate prices in that way, we've got to be willing to say no to both existing and future innovation. i want to be clear, i'm not saying, we should have no conversation about -- >> the time has expired. >> we should be honest about the
trade-offs. thank you, chairman. >> thank you. the gentleman from maryland, mr. raskin, is now recognized for five minutes. mr. raskin. >> thank you. congress passed the drug act in 1983 to promote the development of treatments for rare diseases which were defined as conditions that affect 200,000 people or fewer than that. and congress understood that certain diseases could effect a population so small in the country that big pharma would not see a financial incentive to invest in the research for developing therapies and cures for them. it provided an incentive for companies to get into this research by granting seven additional years of market exclusivity for drugs that have received the orphan designation. dr. kesselheim, is humira the type of drug that congress was envisioning when it passed the act? >> no. humira is a blockbuster product
that makes tens of billions of dollars a year and is extremely profitable. the orphan drug act was designed to provide an incentive for companies to take up unprofitable products for extremely small patient populations. >> in fact, it's the best-selling drug in the world. mr. gonzalez, humira is approved to treat a painful skin condition, hs, your company has obtained a drug designation to use humira as a treatment for that. >> that is correct. >> would you have researched humira as a treatment for hs if it were not for the orphan drug act? >> certainly the orphan designation, we qualified for it, and normally there's a faster regulatory path if you --
>> let me just short circuit to get to the right answer here. according to an internal memo from your company, from october 2008 obtained by the committee, you determined that the hs patient market would be profitable even without orphan drug act incentives, isn't that right? >> that is correct. >> yeah. so despite internal evaluations and expanding into the market would already prove profitable, corporate executives still pursue the additional market exclusivity through the orphan drug designation. mr. gonzalez, your company applied for and received two separate drug approvals for hs, one for moderate to severe and another for patients 12 years and older. did you apply for both of these orphan approvals at the same time? >> i don't know the answer to that. >> well, as i understand it, no, you didn't. the first of these applications
was approved in september 2015. the second approved in october of 2018. dr. kesselheim, why might abbvie have delayed seeking the approval to treat hs in pediatric patients? >> what this seems like a common practice in the pharmaceutical industry called salami slicing, where they try to get as many different of these additional exclusivesivity protections as possible. >> they enjoyed a ten-year period of exclusivetivity and by spacing them out this way, they got three years longer under the act. due to the three-year delay. pediatric patients were denied access to treatment due to insurance companies being less likely to reimburse the drug
without formal approval. so the company claims the commitment to bringing the best science and therapies to patients, but here we have a clear case in which they were actively choosing to delay patients access to treatments and to block competitors simply for the sake of increasing their profits. congress must act immediately to put a stop to these anticompetitive behaviors, including abuses of the orphan drug act. do you agree with that, mr. kesselheim? >> i do. >> is this a question of one or two bad apple companies or are these structural problems that we're seeing throughout the sector? >> as i said, i think the behavior and tactics and strategies that you're seeing in the humira and imbruvica cases around orphan drug act, those are common practices and we've heard about them with respect to the orphan drug act and
obtaining the oregon fin drug act for drugs that don't deserve it. one of the treatments for the pandemic got protection at the beginning of the pandemic situation last year. we see this all across the industry and i think it's time to reconsider the -- trying to make the act apply to the drugs that it was originally intended to. >> thank you very much. we need structural change here and i yield back to you. >> thank you. the gentleman from ohio is recognized for five minutes. >> thank you, madam chair. first of all, i want to mention, i have a bipartisan bill cosponsored with the representative from new york, hr-4629 which is the bio similars act. it would help amend -- it would require hhs to evaluate medicare
advantage plan based on whether bio similars are available to medicare enrollees. so i just wanted to bring that to your attention. the other side of the aisle is talking about hr-3 that needs to be passed. one of my concerns i have is, is how they price the drugs and if they didn't like what the drug companies priced the drugs, there would be severe penalties. do you think hr-3 would stifle innovation in research and development in this country if it were to pass? >> i think given the projections of what we see that result from hr-3 which is the intended goal of the legislation, the evidence is clear we would see reduced investments in innovation and clinical trials by firms and that's something we saw the reverse off when we founded medicare part “d” and we saw an
increase in innovation and research activities. >> mr. gonzalez, would you concur that hr-3 -- let me say, madam chair, last congress, former chairman from oregon introduced hr-19 that was the lower cost act. i would like -- i think it's going to be reduced again. i think we need to take a serious look at that. on hr-3, do you think it would stifle innovation and research and development in this country? >> i think if you depress forward revenues, it will depress the ability to be able to do innovation. i think the cvo report that recently came out reinforced that point. >> also, you talk about 4 out of 10 at your company subsidies or makes drugs available free to patients that can't afford them, is that in this country or overall?
>> that's 4 out of 10 in the medicare part “d” plan. >> okay. so -- okay, so what's happening in -- say, in europe, in the eu, is there -- the prices are lower, but is there subsidies not going on? what's happening in the foreign countries, then? >> we donate some product. it's relatively limited in socialized medicine systems. we donate -- >> i'm going to stop you right there. is it safe to assume that a lot of our pricing is quite -- we're paying the whole cost for r&d and the rest of the world isn't? >> that is absolutely true. >> i'm going to yield my two minutes to you, mr. gonzalez, to answer any questions that maybe you didn't have a chance to answer from previous questions. i yield my time to you. go ahead. >> i think i would like to highlight a couple of the points that were made earlier with some specific information. there was a lot of discussion about what impact would the rebates really have on list
price and net price. i'll use humira as an example because it's the one that i think keeps coming up here. if i look at humira from 2017 and 2020, the gross price went up 7.9%. the net in the u.s. went up 2.6%. the difference between that was the increase in the running back. managed care anzd pbms aggressively negotiate for increased rebates. those rebates are returned to the government in the form of lower costs or lower premiums back to the patient, the insurance premiums. i saw a report recently that said 99.6% of the rebate is returned to the government. so it's a different way of getting a discount. when you negotiate for a position as a company like ours, you're obviously trying to get that formulary position, you're negotiating what rebate you have to give in order to be able to get that, you're trying to
capture a little bit of net, positive impact, to offset inflationary costs and increases in r&d and the other statistic that i will give the committee which i think is relevant, if you look at abbvie since 2013 when we were formed, our net price impact was about 0.3% on a compounded basis or roughly $62 million a year in net price. to give you a flavor for where does that go, we've increased r&d on average $652 million per year. so the short answer is, yes, we invest more than that in increases in r&d. >> thank you, i yield back. >> thank you. the gentleman from virginia is now recognized for five minutes. >> i thank the chairwoman and thank you for this hearing. mr. gonzalez, there are six companies with fda approval to
sell bio similar versions of humira, is that correct? >> i believe so. >> are there any of those bio similars decides yours on the market here in the united states currently? >> congressman, we're not bio similar, but i don't believe any of -- >> right. none. that's a little surprising because in your own internal documents obtained by the committee, your company anticipated lower price bio similars to enter the u.s. market no later than 2017 four years ago as is demonstrated in page 9, exhibit 14 in your materials. according to the slide, abbvie expected 3 to 5 bio similar competitors by 2017. the bottom of the slide identifies a few of those competitors by name. the bio similar received fda approval in 2016, five years ago. rather than allowing the bio similar to enter the market,
however, abbvie sued them for patent infringement. on september 28th, 2017, abbvie entered into a settlement. mr. gonzalez, abbvie's own assessment of the strength of its patent portfolio determined 2023. the patent said they could only hold off amgen until 2017. so why would amgen agree to wait until 2023? >> i don't agree with the point of view. -- that our patent assessment said it would end in 2017. in 2014 the estimate was 2017. we updated that as we continued to move forward. obviously our patent portfolio played an important role in
that. >> thank you, mr. gonzalez, i have limited time. and reminding you that you're under oath. was there any discussion of transferring any item of value, monetary or otherwise, to amgen in exchange for staying off the market through 2023? >> there was none and they paid us royalties for our patent when they come to market. >> but you had other settlement agreements with other competitors. abbvie now entered into a total of nine agreements with biosimilar manufacturers to stay off the market until 2023, six years after the entry date abbvie projected, although you call that an internal planning document. let me ask you again, during any of these settlement agreements, was there any discussion of abbvie transferring any item of
value, including monetary value, to competitors in exchange of staying off the u.s. market? >> there does not. all of those competitors agreed to pay royalties to access that patent portfolio. >> during that same period, however, six biosimilars entered the european market in 2018 when reduced the price of humera in europe by as much as 80%. why would the european market be so radically different with respect to reported patent infringement and royalty payments compared to that of the united states where there is only you? >> because they're in different patent portfolios around the world. the u.s. market has a set of patents that the u.s. patents issues, and in the european system, there are different patents. >> according to your own internal projections, the u.s.
market would have saved $19 billion, and instead the u.s. patients will not have access to lower-priced biosimilars until 2023. why would you account for the 80% difference in the price of humera between europe and the united states, other than lack of competition? by the way, unlike what ms. fox suggested, it's about competition in the market. >> we wanted to recoup our investment. the u.s. patent system is designed to give you time to recover that investment. important thing to remember is, like many industries but certainly in this industry, the products that are on the market today pay for the products of the future. we invest roughly $7 billion a
year in research and development. it is the humeras and these other products -- >> the gentleman's time has expired. please wrap up. thank you. >> may i add something to this conversation, please? >> with the indulgence of the chair. >> yes, absolutely. >> yeah, i think it's important to recognize, i mean, mr. gonzalez talks about a patent document being in 2014. by our findings, a number of patents were filed after 2014, so obviously the planning was to try to prevent the competition from coming in in 2017. it's also worth noting that a number of the eu patents were actually revoked or withdrawn because they weren't up to strength in order to get a patent in europe. so despite what mr. gonzalez is saying about the u.s. patent getting a time of exclusivity, the patent was over exclusivity
and you can keep filing patents over a drug's life. that is why we have settlement agreements, and by some litigations, some 75 patents were thrown at investors and they couldn't litigate through it. it just wasn't possible. >> i thank you for your consideration. i yield back. >> the gentleman yields back. the gentleman from louisiana, mr. higgins, is now recognized for five minutes. mr. higgins. >> thank you, madam chair. let me jump into hr-3 and get it out of the way. my opinion is massive federal overreach. professor cartwaite, regarding federal ability and access to new treatments and cures, as someone who looks at this from the medical and business perspective in your work at northwestern, what concerns do you see in government overreach without private sector
consideration or input as it impacts pharmaceutical prices in america? >> i worry that using the power of government to set prices and push them down, and we should be clear that hr-3 often described as a negotiation is not a negotiation. this is a pricing of drugs, and we should call it what it is and debate the validity of that. i worry it's going to decrease innovation. i worry about people getting access to drugs today and in the future. i think a lot of the conversation we are seeing today in the hearing and about drugs is about the cost sharing that insurance is putting on people much more than it is just about the price of the drug. in particular, medicare part d which has extremely onerous cost sharing on patients. >> agreed. agreed. and thank you for your clarification. in the interests of time, i'm going to move on. mr. gonzalez, i find myself very much aligned with my colleagues
across the aisle, which i'm hoping that my friends will mark the calendar. you've been under tremendous pressure today, and, sir, it's about to get worse. how can you defend american prices of pharmaceuticals overseas versus prices on drugs in the nation that you love? you enjoy the protections and the benefits of america. you benefit from the tax cuts and jobs that i worked very hard on and that my party pushed through. but your answers to the chair were evasive at best and appeared to be obviously written by attorneys. please just explain to america, how the hell can you explain the prices overseas of the drugs you manufacture in america, develop
in america, that are so much higher for american citizens and patients than they are overseas? as briefly as you can. >> congressman, it's an excellent point. the short answer is outside the united states, they have socialized health care systems. >> let's talk about europe. 30 years ago europe was a center of the global pharmaceutical industry. in 1986, europe led the united states on pharmaceutical research and development by 24%. after the imposition of socialist health care policies, they fell behind. by 2015, they were lagging in the united states about 40%. you're right, socialist policies don't work. but you're an american company making american money and your market is global. american citizens should benefit from your love and commitment to
the country wherein you live ask -- and work in, sir. i'm going to move on because i'm going to give you the opportunity to explain the patent modifications. the gentleman referred to them as trivial modifications in your country. you've been accused of patent litigation. the claim basically is that your patent portfolio and a threat of patent litigation to seek favorable settlements with biosimilar manufacturers to delay their entry into the market. explain to america how you can prove the legitimacy of your patents, please. >> our patents go through a rigorous process at the u.s. patent office that looks at prior art, obviousness. the patent office narrows claims to make sure they're not really broad. and to the point the other gentleman raised a few moments ago, what i would tell you, if
you thought they were frivolous patents. we do patents all the time. >> they're frivolous. making minute changes to your product and to expand your protection periods, we don't appreciate -- look, no enemy of big business. you support your freedoms. you make new pharmaceuticals, most of which never come to market. one in ten come to market. so you have the right to earn an honest profit, but it's the question of whether it's an honest profit, and madam chair, my time has expired, but bless you for holding these continued hearings. >> thank you, thank you. the gentleman yield back. mr. rocona, you're recognized for five minutes. >> thank you, madam chair.
i appreciate mr. higgins' questions in a bipartisan way and want to pick up there. mr. gonzalez, can you tell us who invented the fully human anticlonal antibodies? >> you know what he had to say about humera? he said, i must not be a very good businessperson because i didn't make the billions. all the other people made the billions. you stand there saying you're for all this innovation, you believe in innovation, and you don't even know who the nobel laureate was that invented the drug you're profiting from. isn't there some disconnect there? >> what we focus our attention
on is trying to create new innovation that helps patients. >> how can you say you create new innovation when you don't even know the nobel laureate who came up with the innovation? does that say you're just doing business? that's be honest and not say you're doing an innovation when you don't know the person who made the drug you're profiting on. let me say this. the patent that expired in 2017, you're talking about an extensive patent line and you seem to understand whaet needed. can you explain two concepts and how you understand them in terms of a new patent, and that is of novelty and nonobvious? what does it mean for something to be novel, what does it mean
to be nonobvious, as you understand it? >> the patent office looks at the invention you have, and they ask the question, someone skilled in the art, would they have used this? >> what about novelty? >> novel he willty i can't speak had in such detail. it's a novel theory. it's a novel approach. >> you can't define the term with a term but basically something new sgchlt people didn't think of. the new patent, you filed it. congressman higgins feels it's frivolous, though i'm not going to characterize it. one of the ideas was that you had humera, and on your own marketing material you said, here's the dose you should prescribe it at, and then you
filed a patent to say the dose that's on our marketing material that we should have a patent on doctors prescribing that dose. but by your own definition, what is non-obvious. you said if a skilled person in the arts and craft knows it, then it's obviously it doesn't qualify as non-obvious. how would say between the three, this is your opportunity to explain to the country how saying a dos for hue marry frl noul noh ilse tooilgt you said let stuff out of the pack
arnl -- we want to get a patent of what we're putting on the market material. >> what are you thinking is the case? you wouldn't say let's get a patent on brochures and that type of thing. you thought, what a great idea. let's get the patent. i just want to understand the thinking. >> we pack elevation that we think is meaningful and -- >> what did you think was so meaningful and administrative that a dose a doctor is already prescribing, anyway, what would be the inno legislation. >> well, i don't know that i would agree with the premise of
what you said. i'm certainly not ah habit of findingly rkts it's stag gring. mr.ly. but then you sit here dlaming that innovation. you don't even know who the person is who invented your drug, and you're unable to explain whaet so novel about where you're getting understand that. >> the gentleman's texas is inspired. >> madam chair, woman, thank you
very much. . further, this line of questioning -- >> it needs a molecule of its type to be able to go through that? >> did you have to go through an fda remodeling of doing trials to get there. zpds hundreds of trilds, including dosing trimd. i heard it took time, but did it take moechb? prltly many. $16,000. and went through the idea of this. did you have to purchase anything from the, quote,
discount on anything at a certain price. did they set the discount or did you? >> it is negotiated aggressively by the plans on behalf of the federal government. >> so it was negotiated and you said, okay, we'll get you a 64% reduction. >> on average. >> on average. okay. if you had not done this, what
would be the medical things that might be -- i'd like to call it a cost benefit analysis, but what would the other answer in the marketplace be for people who would use this product if you were not there, and what is that general cost and outcome? >> there is a class of drugs that treats these types of diseases so there are some alternatives available. one of the important things to remember in this class is patients are required through their formulary to fail lower class therapies before they get access to these therapies. >> so, really, you are -- whoever the -- the way the thing works is they start one, they go to the next, they go to the
next. presuaby it would work for a certain percent. you get down to the percent that it doesn't work so well. you're the last chance. you're the alternative when there is no b option. you become the "a" option. >> when alternative lower class drugs have failed, my therapy is the one those patients end up on. >> we saw in the very beginning, the chairwoman very thoughtfully put several people up who indicated they did need products that seemingly made their life better. were they in reference to you? >> those patients were referring to our products. one of the things we are very committed to at abbvie is ensuring there is a safety net in place to cover all patients who need our drug whether they can afford it or not.
and we have a very extensive safety net in place for uninsured, for medicare part d patients, for underinsured patients. and i would say, as an example, an uninsured patient, we approve 99% of the applications we get, and an uninsured patient, you can get humera for free up to an income of $388,000. so it's quite generous. >> i appreciate your time. madam chairwoman, i yield back my time. >> congressman daifr davis is recognized for five minutes. >> thank you, chairwoman, and thank you for holding this very important hearing. mr. gonzalez, let me appreciate the fact that abbvie has such a strong presence in the state of
illinois where i live and where i come from. i also want to appreciate the tremendous scientific achievement as well as the efforts toward diversification and the work that you've done to assist in making sure that we're able to fight the coronavirus. but let me ask, a moment ago i heard you talk about possibility of negotiating discounts. of course, i understand that the pharmacy benefit manages entities that negotiate the price of medication for insurance companies.
did i understand you to suggest that negotiation could be beneficial to insurance companies in terms of the prices that they would ultimately pay? >> the way the system works is we compete for a formula position, formulary position. as part of that negotiation, we negotiate with the managed care organization, or the pbm, what discount or rebate we will provide to get on that formulary. so yes, there is a negotiation that occurs. >> would it be advantageous to the beneficiaries to whom payments are made by governmental entities if negotiations took place for those groups of individuals?
>> i think that occurs to a great extent already, if i understand the question correctly. >> it's my understanding that the government, the united states government, cms, they were pretty much prohibited from negotiating drug prices? that's been my understanding. but let me just ask you, i understand that abbvie applied for four more patents with countries outside the united states than inside or with the patent office in the u.s. is there a reason for that differential?
>> there are countries all around the world that you can apply for patents. they have different approaches. i would say the u.s. is the most rigorous and thorough area of patents and tends to be the area where much of the innovation is originally created. >> dr. garthwaite, the case has been made to me that we're paying way too much for pharmaceutical drugs. i say we. that means me, lots of other people, you. but we're also paying more than our counterparts in other countries, and not to suggest that any other country has reached a level of perfection. why do you think we're paying so
much more than they are? >> i think they're paying less because we're paying more. a lot of european countries have more freedom to not have to think about how it influences their country. pharmaceutical companies are thinking about how much they can earn in england, but they think very carefully about how much they can earn in the united states. one of the downsides of being the largest global economy is we have an outside presence -- or in profit to the sector. or they have different patent rules, and we should think about how we want them reforming our patent roles in the united states. there is a role for government to do that. patents, after all, are a grant from the government to try to balance drug innovation.
we should include reforms and the incentives of the patent examiner themselves. we should be focusing on the patent office sometimes more than the private firms. >> may i add a comment to this point? >> very briefly. >> i would say working with different countries on the patent systems, i would disagree that the u.s. is the most rigorous. i think it's the easiest system to getting a patent. in fact, by some studies, one can never get a patent rejects, so you can. to greg gold hwaite, i kind of
disagree that the u.s. as. >> the gentleman in pennsylvania is recognized for five minutes. >> the u.s. is a global leader for prescriptions. professor garthwaite, american companies have greatly contributed to the $182 million invested globally by the private industrypharmaceutical development initiatives. can you explain the relationship between investment and incentives in the pharmaceutical
space. >> to do. later twroept main. so firmds are acutely aware of the potential market size, but that's. -- we have novel products coming out of hong kong and shanghai. but all of it is driven by the same incentive, which is getting that by assessment, but most of that product is done here in the united states. >> how would price controls affect the price and
availability of prescription drugs. >> i think the goal of hr-3, and if you look at the models, it would greatly reduce prices. a result of that would be a reduction in innovation. we should have that debate as to what we think is going to be the acceptable hourds of inno sdm -- innovation. i would ask the company to not look just at the price of the drug, but they do not match the market. >> another question, mr. garthwaite, patents are critical for safeguarding electric property. how wouldly they fight
competition that would otherwise drive down drug prices? do you have a possible reform to the price. >> i think we should look a. it could be what we want to do. many it just get lost in the question here, though, but we very much do want firmds remember. these are seblgd dear packets. they've been much aligned in this testimony. i am happy to see that a drug called hue measure a, that we have seen the unindication. i don't think he should go to
some that's a naive view of modern drug development, but we should have a rigorous review at the patent trademark office as to whether things truly represent obvious and non-obvious innovations. >> as we once again have discussions about speaker pelosi's drug reform bill, the pharmaceutical market will only make specific drugs to access. i also look forward to discussing bipartisan pharmaceutical pro poechlz such as and p. get them to market fast, employee competition, and make sure -- >> the gentlewoman from florida,
debbie wasserman schultz, is recognized for five minutes. >> the company's shared decision making and profits does commercialization include special papers? >> it does. as a breast cancer survivor, the policy is personal to me. i want to put a drug on the screen on how to list price. astrazeneca was listed at $9:a talent. she has raised the price of the kroifrds pandemic.
>> the current is around oornd. it's price uchld ld. dr. did he say sell heim, i'd like your taechbttle first that no one pays the direct price of a dind bug. doctor, is that sflu. >> that is not true and we just led a boom smoegly high deduct you believes or oy much. >>ly pausht out of pocket cost are tied to the list price.
my familiarity, the whole notion of cost shipping is that when you go to the hospital and you are a patient that doesn't have coverage, you are charged the full list price. that cost shifting occurs because uninsured patients are not able to afford the price and then the price goes up for all of us. does that make sense? >> yes. >> they're forced to change prices because they argue while the prices rise, their profit don't. abbvie provides commercial plans from 2014 to 2018 that it raised 4% to 20%. but they also said the price of the drug, after discounting all fees, rose by about 6%.
>> abbvie's price increases for embrovuca are being set by abbvie itself, and the reason prices are so low in this market is because we don't let the government value prices and set them however they want. if the drug company is trying to meet the expectations of a chairholders, they're going to do what they can by increasing prices available on drugs wherever they can. >> so despite what they want you to believe, there is a current crisis of cancer drug affordability. no one should be able to have life-saving medication. i talked with counsel, countless of them, within the first two years of treatment in part due to high drug prices. we can have both innovative treatments and affordable prices and we all deserve both.
we shouldn't have to make the false choice. congress should reject that false choice and act now to rein in the era of the greed of pharmaceutical companies. we have to make sure that if you are facing a life or death condition that you are not faced with having to bankrupt yourself in order to be able to afford to stay alive. thank you, madam chair, for the privilege of participating in this hearing and i really commend your leadership. i yield back. >> the gentlelady yields back. the gentleman from arizona, mr. biggs, i recognize for five minutes. >> i thank the chair for having this hearing today. many folks have observed this around the world, but other nations are freeriding particularly in the pharmaceutical era. but if we jump from the frying
pan to the fire -- i'm quoting. we would be jumping from the frying pan to the fire if we had innovations by other pharmaceutical companies. we would save on prices in the short run in the future. operation warp speed allowed the american people to receive three covid-19 vaccines in less than a year. thi achievement could not have been accomplished without leading drug companies. >> i think we should be careful not to overgeneralize from the success of operation warp speed, which was really trying to address a very specific problem. we have an exact type of problem we want to develop and we're going to amass government capitol to do that. i think if we are going to give people public dollars all the
way up through clinical trials like we did with moderna, we should probably think more about some type of pricing clause, because this firm should not be -- but to tend away from one specific problem to the drug market. the capital markets are good at the most success scientifically. most modern drug companies are using those small firms to do that early stage research. nih took up that drug development which would really change the fundamental nature of that agency. >> i agree with everything you just said with regard to capital formation, et cetera. anything regarding the regulatory side of things that we should learn? >> one thing that's very nice
about the fda during this process is they did stand up for rigorous review. there was a lot of worry at the start of operation warp speed that there would be some type of political manipulation or some pressure to not take science seriously to speed things up. i really think the fda has tried to balance regulatory review. we need to believe in the products and the fda solves an important metric problem where they validate the success of these products. i know we can quibble about how long reviews took and people wound up seeing them shorter. it's good to see the fda maintaining a place for regulatory review. >> mr. gonzalez, can you explain how price controls might prevent companies like abbvie from providing more life-saving medications? >> i think with price controls or revenue pricing, you're going to drive down the amount of revenue going forward and that's going to reduce the investment
you have in r&d. i think it's accurate in the way it described it. i think you would be trading off a short-term benefit for a long-term problem. >> and, so, mr. gonzalez, abbvie has been able to grow into one of the most successful drugs since 1993. can you explain to us how the money has been invested at abbvie in the development of additional medications? >> absolutely. i mean, i think if you look at product like humera, the on-market products pay for our r&d of the future. we've invested $40 million in r&d since 2013. out of that investment, we've created a higher survival rates of blood cancers significantly
and now we've created two immuneology assets that have demonstrated superiority to humera. all of those things help patients tremendously. it is that on-market product revenue that pays for r&d going forward. the system can't work without that. >> thank you both. i appreciate the time. madam chair, i yield back. >> the chair now recognizes one of the authors of hr-3. the gentleman from vermont, mr. welch, is now recognized for five minutes. >> thank you, madam chair. mr. gonzalez, you have a business model, as does all of pharma, that starts with patent protection provided by the federal government, is that correct? >> that is correct. >> that is supposed to be a limited time and you do everything in your power to
extend it beyond the original grant. is that correct? >> we develop innoinnovation, i believe that innovation is worthy enough -- >> the answer to that is yes, right? you did a memo as executive vice president about ten years ago or less talking about product enhancements, and that included things like changing the size of the needle, correct? >> that is correct. >> and you do constant analysis internally within the company to anticipate competition that may result in lower prices or price competition, correct? >> we constantly look for ways that we can innovate a product that we can protect and grow its position by making a better product for patients. >> what that means is extending patent protection and a pricing
policy that product concurs, correct? >> it can result in that, yes. >> when a biosimilar product was introduced in europe, the price of your product, humera, went down about 80%, is that correct? >> the average reduction in revenue is about 50%. 48, i believe, is the last number. >> so the conclusion here is competition works, correct? >> that is correct. >> your executive pay is related and has been for a period of time to increasing revenues and hitting revenue targets. is that correct? >> we will set a plan for what we believe our revenue will be for the following year, and that is one of the effects, yes. >> and revenue is set at the price you sell it, correct? >> and the costs you incur in the business, such as increases
in r&d. >> let's just go through this. immediately when that incentive plan came into effect, there were three major price increases, about 30% in one year for humera. is that correct? that's according to documents you provided to this committee. >> if i look at abbvie's price from 2017 forward, our net price was negative. >> 2013 is when this went into effect. the records you provided to this committee indicate that the compensation of the top executives increased. by the way, your income last year, or your compensation was about $24 million? >> that is correct. >> and between 2013 and 2020 it wasmillion?
>> i would have to add it. >> well, it's a big number, and compensation for all the top executives was about, what, $480 million? is that correct? >> it would average about $60 million a year for the top executives. >> the bottom line here is you had a system within abbvie where executive compensation was tied to hitting revenue targets, revenue targets were enhanced by increasing prices in sales, correct? >> congressman, i don't agree with that. if you want to talk about a time period of 2013 forward, a price for abbvie 2013 forward -- >> i'm going to run out of time. one way you did that was reaching agreements with competitors that they didn't bring their product out, number two, shadow pricing with amgen with respect to their product
embrel, number three, patent tickets. filing for hundreds of patents here when you only did six in europe, and so-called enhancements which were things that made virtually no difference to the patient other than that they had to pay more to get a smaller needle. so the business model here starts with the government providing a patent, the government providing payers through medicare and medicaid, and then what i can see, rampant abuse on the part of your company to essentially extend that monopoly pricing power and abuse it at the expense of patients. it's got to end. it's got to end. i yield back. >> the gentleman yields back. the gentleman from georgia, mr. clyde, is now recognized for five minutes. mr. clyde. >> thank you, madam chairwoman,
for holding this important hearing today. in the four-plus months that i've held office, one of the top issues to repeatedly arise in one of my meetings with the ninth judicial district is the high cost of prescription drugs, many of which are lifesaving medicines. this is an issue that many of us on the committee have the desire to address. i think patients should have more choices when it comes to accessing lifesaving medications. however, to achieve this goal we must be very wary for stifling innovation. it would be detrimental to lower costs. not only would the woes of hr-3 be felt by the big manufacturers, but i believe they would be felt by the small businesses and start-ups as well. i'm extremely confident that
would be the end result. because as a small businessman by trade, i fully understand how stifling it is to be strongarmed by federal bureaucrats. i'm determined to look for solutions that work, not only to bring convolutedness, but the price for patients. my first question is for mr. gonzalez. is abbvie engaged in any early stage partnerships with smaller biotech companies, and i'm not looking for names or anything like that of the companies, and if you are, can you please elaborate a bit on how government price setting like what we see in hr-3, how government price setting might impact your investments in those companies and those partnerships, sir. >> well, we invest significantly in small biotech companies in partnership arrangements or other types of co-licensing
arrangement. i think the fundamental issue with something like price controls is it would take the riskiest areas and it would make you much more hesitant to invest in those areas, but yet those are the areas that have the greatest opportunity for -- to improve society. areas like new treatments for alzheimer's or treatments for parkinson's disease or treatments -- better treatments for some of the solid turmds and -- tumors and cancer that we haven't made significant improvements. so you're going to take the risk in higher areas and you don't invest so much in there. i think that's what we have to deal with if we were to implement that kind of approach. >> okay. thank you very much. i appreciate that. my next question is for mr. garthwaite. in your testimony you describe the importance of inefficient
value-destroying policies. would you think they push aside covid-19 vaccines, and if yes, could you elaborate a little bit, please? >> i have really strong concerns about waiving ip and waiving ip where we believe the product has so much value that we need to access it to the world. i think we need to find ways to give vaccines to the rest of the world. and right now moderna and pfizer, their ability to sell this vaccine to the world, is in line with the vaccine capacity. i worry about the next pandemic, and in particular, i worry about one that's going to require perhaps a small molecule treatment oz, if what will
ultimately happen is whatever they create will be transferred to other parties. i really believe instead of waving or to bring back in the rest of the world either the transient vaccines we have in storage or continue to pay the high prices. coming from our page, it would be in our self-interest to pay for those vaccines. >> thank you for that response. i think it's dangerous that we would allow china to steal investments that these companies have made in rnr technologies and capability. but then to turn around and let them profit from it, too. to add to what my good friend congressman hisis said, i have
added my name to a list that discusses how waiving that keeps drugs from being delivered in a timely letter. i think focusing on the proprietary chain, we can take advantage of the proprietary products. ms. chairwoman, i yield back. >> congresswoman porter for five minutes. >> do you know what the standard was of taking 20 pills a day in 2013? >> $130,000. >> we ever $90,266. what about today for those same three pills?
>> i think it's 169,000. >> we have 181, but we can agree there was a significant increase. roughly, in the amount of eight years, abbvie more than doubled the price. mr. gonzalez, how much money did abbvie put directly into the research and development costs of abruvica before it hit the market in 2014? >> we acquired abruvica before then, so it would be the company we acquired. >> abbvie itself didn't make the drug. you bought it, correct? >> we paid for it, yes. >> abbvie then doubled the price, presumably justified by its $2.4 billion investment in r&d.
are there fewer side effects now for patients than there were in 2013? >> we developed significant indications -- >> are there fewer side effects, sir? >> no, it has the same side effect profile. >> mr. gonzalez, do people need less of this message, imbrovuca, to treat lymphoma now? >> no. >> you bought it knowing it would be profitable. you hiked the price to pay for r&d, but you haven't made the drug any better even as you doubled the cost. i wrote an entire report on what is essentially the embruvica story. big pharma gobbles up small, innovative company. does nothing to improve the drug but jacks up the price. you told us you spent $2.54 billion for rmb, embruvica.
really, it was for all these innovations. you filed 160 patents for abruvica to keep others off the market. how much did you pay in settlements between 2014 and 2018? >> let me correct one thing i think you just said. it is not true we did not invest in other development. we received approval of grafter host disease -- >> reclaiming my time. mr. gonzalez, how much did abbvie spend between 2013 and 2018? >> we don't have that number
offhand. >> 1.6 billion in litigation settlements. what about marketing and advertising? how much does abbvie spend on that? >> marketing and advertising, we spend about 4.7. >> so about 1 billion. what was it between 2014 and 2018? >> it's probably about 3 billion a year. >> try 4 billion for size. how much did they sell stock buybacks in 2013 to 2018. >> if you looked at stop-buy banks and dividend. i would have to come back with a
number. you're spending all this money to make sure you make money rather than spending money to invest in, develop drugs and help patients with affordable life-saving drugs. you charge twice as much for an energy-approved doug, then you lie to those justice of fairy tale ring is that the farmer's and the fact that you're not honest about this, with patients, with policymakers, that you're feeding us lies. we must pay astronomical prices is lost. i yield back. >> the gentlelady's time is
expired. the. madam chairwoman, i want to thank you for holding this hearing which helps the american leader understand why that leadership position saved countless looifld. what vans. ly. speemd generic ds to market and reduce out of pocket costs. democrats have been unwilling to work with part sachb soettles while plaintiffs mr innovation. the big des of which to work
across the board while maintaining and not spending r and v which is a breakthrough for covid-19. the only safe place is first place when it comes to our nation's health care. especially as it pertains to the creation of vaccines and medical therapies. and this has never been trueer than during this pandemic. in 2018 it's estimated that pharmaceutical companies spent estimated 228. auto plark ds have increased yust as it had for 259th as a hole.
across all industries are less 23457b% for the farm suital. which in turn led to u.s. worldwide leadership and the development of innovative life treatment, including three covid-19 vaccines, with more on the way. according to the economic advisers report, under the dem -- democratic lifesaving methods. unlike developing nations in europe such as the u.k. where citizens had access to only 60%
of new medicines, this isn't by accident. while i believe there is more that can and must be done in our effort to lower drug prices, i am confident that my constituents back home in kansas are not interested in giving up life-saving drugs especially for cancer and hepatitis c. i urge congress to focus on legislation that is both doable and helpful to the american people, and not jeopardize ensuring access to the world's largest choice of affordable medications. now to questions. mr. gonzalez. i can't think of a time when the general drugs have not been able to the public. i can't think of one that was
brought to the goal line with private industry. yet it would substantially. is it wise to send in -- >> no, it's not. it's very important to our industry. >> i appreciate that very much. some of our industries believe congress should take over drug industries. can you speak to the drug innovations just more broadly? >> obviously we put a tremendous amount of capital at risk, and that's built around the premise that you'll have the opportunity to recoup that investment, and
reach further in r&d as time goes on. that's a for row benefit and we have made tremendous progress in curing cancer, curing hiv, in covid-19s the. i think wp a fuel. that will damage this industry. >> thank you. i appreciate it, mr. davis. i yield back, mr. gentlewoman. >> the ranking member miss spear is recognized for five minutes. >> let me make noelt that our colleagues on the republican side have talked about this phenomenon of getting three vaccines in less than a year. it is a phenomenon, but it has everything to do with the fact that the federal government negotiated the price of these
drugs. let's not forget that in the course of this discussion. abbvie is my subject, but i also feel responsible for their practices and i want to make sure we continue to have innovation and medical advancement, but i also want to protect the consumers. humera has been on the market for 18 years but it's still under patent protection. first i'd like to put exhibit 19, a presentation you delivered to investors in october 2015. as you look there, it shows that the actual ingredient for humera expired in 2016. did i read that right?
>> i believe you did. >> as sh slide shows, however, abbvie filed for scores of additional patents on hue measure a, 22 patents on treatment, 24 patents, up quote, created what this decide projects. i understand your obligation is to your shareholders and not to the skurmds, mr. gonzalez, but tell me, how much did you pay this taxes last year? >> we paid about a billion dollars, or $6.4 billion since tax reform. >> so a billion dollars. and your revenue was how much? >> taxable refr new over that
same period. we had about $21 billion of taxable revenues over that period of time. >> so 21 billion ugdly your patent situation, you have now 256 patent for. my question so mr. amin. you're the patent expert. did abbvie really need 256 separate and new patents? do they have 256 inventions. >> it's 256 but a little more
than half. look at the initial patent. that sets out the stress she'd for the -- we're already highlighted and protected in the initial pack anyone that was expiring in 2016. so what we see is the system that the u.s. pratt he not system encourages, and this is not just what every company if. >> i have my. so they don't need all these patents, but it's a great strategy to keep the too many at sam zchlt just focus narrowly on patent abuse rpgs can you give
me feel. >> i would raise the ball for real discoveries and treatment. they're already getting water for that. my main call is that we should and yesterday -- >> i guess what abbvie paid was 5% in taxes last year when most of us were paying 35%. i yelled back. on the. >> miss harris is now recognized
for five minutes. >> thank you for our hearing as well and thank you for a clir. i just wanted to ask you, in the price sitting for your prescription drugs. >> the plans are made on behalf of the government and then the government votes directly in areas like dod, would that have a direct impact on what the patrolman. >> would that have a direct fof. >> negotiation is your question? would it.
-- i saw drug manufacturers like abbvie line their pockets with cash while they are suffering -- we can't let big pharma get rich on lifesaving medicines that people need to survive. we are talking about survival. humira is currently the top selling drug in the united states and the world. -- roughly doubled that of the second highest selling drug in the united states, which is it true to. mr. gonzalez, what's share of your company's overall sales rise new comes from humira? >> about 40% >> 40% now. okay. according to an article published this year in the journal nature, numeric counts for nearly 60% of abbvie sales. -- over 170 billion in revenue
since launching in 2003. two thirds of that revenue, or 107 billion, has come to the u.s. market alone, even though humor is the top selling drug in the world. due in large part to abbvie's price increases for humorous. 30 of prices from 2017 found that in the u.s., humira is three times more expensive than the drug in germany, and four times more expensive then in switzerland. mr. gonzalez, is there any difference between the brand drug here between other countries? >> there's not a significant difference. they are manufactured in different kinds of facilities, the u.s. drug would be manufactured in an fda regulated facility, and the european drug could be manufactured and different facility, it was not at the a regulated, but the general drug is the same. >> the general drug is the same. so the difference is the matter
of the facility manufacturing it, which changes the price three, four times -- >> no, i'm sorry. i didn't mean to you to conclude that. what causes the differences in price is essentially socialized health care systems mandating what price you are allowed to sell the drug at. and as a manufacturer, you only have two choices, you either accept that price, or you deny the population of that country the benefits of your medicine. and that's an impossible choice. you can imagine a cancer drug not -- that drug because you don't like the price? but that's the fundamental challenge with socialism ellison systems. and that does force the u.s. to pay far more the costs of the industry. that is a reality. >> so that's what it is, that's what's picking up the slack. if you can sell the same drug
elsewhere for a fraction of the price, there is no reason that people should be forced to pay high prices here, such high prices. but let me put up a graph on the screen, using data from abbvie's filing. this is the annual net revenue of humans from 2003 today. as the graph shows, each year, as we set a new record. each year, a new record, for humor or revenue in the united states. the profits are staggering! on my own, staff we have someone who uses humira, and has done so for six years. the medication would cost nearly 1 million dollars, for six years, if not for the insurance plan and his family have repeatedly gone bankrupt trying to keep him stable because of the predatory prices, had he not been -- the other block busting drug, that imbruvica -- i'd like to show another graph,
-- since 2013, abbvie have generated 60 million in net revenue from imbruvica, more than a quarter of this amount, or 4.3 billion, came from sales in 2020 alone. during that period, abby raise the prices of the price 19, that's nine times. mr. gonzalez, has the drug efficacy dramatically improve nine times -- >> the drug is basically the same. >> thank you. we all want to incentivize the development of new medicines, we do. but there's a difference between starting a profit and profiteering off of patients and families all over the world. mr. gonzalez, last question, will you commit to lowering the prices to humor and imbruvica in the united states? this is just a yes or no. >> no, i can't commit to that. if you allow me one more minute, i think we are aligned in that we want to be part of the solution to lower out of pocket
costs for patients. and when i look at medicare -- i use imbruvica as example. to make -- its literally 50 times -- than any other insurance vehicle and make it affordable, we would have to lower the price of imbruvica by 90%. 98% to make the out of pocket affordable for a patient. what that tells you is the structure of these out of pocket is not built for these kinds of medicines. >> the gentlelady's time is expired. the gentleman from south carolina, mr. norment, is now recognized for five minutes. >> thank you, madam chairman. mr. garth wait, pharmaceutical companies have paid based on a percentage of the list price,
which means your middleman, your distributors, all of them, make more money -- at the patients expense. the insurance is supposed to help existing patients to buy drug such as insulin, which has been around since the fifties. what's common sense solutions should we as members of congress do to try to bring down this cost? >> i would encourage you to look at regulations around cautionary that require that it's based more on the net or the post rebate price as opposed to just a list price. i do think that we have individual purchasing expensive medicines, and it appears part of the motivation of the plan is to generate high cost sharing payments that don't necessarily capture profits themselves, but they use to lower premiums for the rest of the market. that's effectively -- from six to healthy patients. and really, on winding some of
the benefit of insurance. it certainly on winding the idea of community reading that was very popular among policymaking people and consumers, where you don't pay more for a pre-existing condition. we have to look at things around not having -- i also think you should look at improving the flow of information between planned sponsors and pbm. i think the senate finance committee report on insulin pricing is very interesting to read through, and issues were led to administer of these another non rebate bonds that are floating between manufacturers and pbm. -- they have a bit more information about the flow of funds, so they can negotiate an effective set of prices, rebates, and formulate replacements. >> would you agree that the first half of getting the actual contracts, getting the actual language that you can delve into, would you agree with that? >> i am concerned about the fact that there are such strong
auditing requirements for planned sponsors. if they want to be able to look at the revenues that they are generating, for the pm, while there are obviously concerns about conventional -- regulations around who can be an audit, or who -- defied the contracts are often only allowed to be reviewed -- at the pbm personality, these are all things that congress could look into in the spirit of improving information, because the market respects with information is common among negotiating parties. well i would like any solutions that you could get to help us do this all of us democrat and republican. the price of drugs particularly those that have been around for seven years, that haven't changed as far as improvements, we need to know and take action. i'm tired of just talking about it. government is good at forming a committee to get another committee to talk about it, but anybody that has any kind of empathy really needs some direct things that we can do. anything that you can do i
appreciate it. mr. gonzalez, to exclude certain drugs from the formularies to favor others drugs that may be inferior at best. what kind of actions like this have driven up drug prices i guess in the market as a whole but you could cite? >> congressman, i mean generally speaking my experience with pbms and managing formularies is that they tried to design them in a way the formulary in a way to be able to cover a broad set of patients. so he mira is an example. with the formularies the average number of competitive products on that formulary is nine or ten. and that gives enough flexibility to physicians to be able to alternate between different drugs to find the right drug for the patient. in some cases maybe a different
delivery vehicle. some are injectable, some are you know there's typically a fairly broad set of products that are available. >> but would you agree is trying to get a pbm and their formulary for pricing we nate we need action or seeing contracts that they're going by to make the companies abide by do you agree? >> yes i would agree with that. >> okay madam chairman i yield back. >> the gentleman yields back. the gentlewoman from illinois, miss kelly you are now recognized for five minutes. >> thank you madam chair. one of humorous primary competitors is embroil, and it's an expensive brand name so in a functional competitive market you would expect companies to price their products below their competitors to in order to gain market share. so in the case of abbvie and
anjem, they would be basically comparing prices with embroil. so is that what we see in the pharmaceutical sector? >> the u.s. pharmaceutical sector especially for brand name drugs and the idea behind patents is to avoid a competitive market and not to provide or to allowed these companies to price drugs at very high levels so what we see particularly with branding competition there, is not substantial price lowering when new products of the market in the u.s.. >> thank you. >> on the screen i would like to put a graph, that shows at the end and gyms pricing. that's from 2003 to 2021 and the lines are so close together it's difficult to tell which is which and that is what channel pricing looks like.
for almost two decades abbvie and amgen have followed each other's price increases. at that time the price of humira has increased 470%, according to internal company documents obtained by the committee. abbvie viewed amgen price increases as cover for its own price increases. mr. gonzalez in 2012 you received an email from another company saying that it was a quote unquote great weekend. this email is exhibit nine in your package. i hope everyone can see. mr. gonzalez did you view it as a positive development that amgen raise the price of enbrel? just out of curiosity? >> just give me one moment to read it. >> okay.
>> essentially view this as somebody sending an email and alerted me to the enbrel price increase and then saying have a great weekend. i don't tie those two together. >> okay. >> do you believe that amgen price increase gives abbvie to increase the price of humira? >> no but i think congresswoman, one of the things that does happen in this industry, which is somewhat unique because of the way of rebate pools work is when a competitor raises their price you don't know what the rebate is that the competitor has but what you do know is that you will be at a disadvantage if you don't raise your price. you will be at a disadvantage of how the handle many rebate dollars you'll be able to contribute. so you have seen if there has been some correlation between companies but i think it's driven more by this phenomena
of how rebate pulls work. you don't want to put yourself at a competitive disadvantage because we still. >> well it does seem like increasing the price of human era is exactly what happened. in july you raise he mirrors price -- and listen three weeks later amgen raise the price of enbrel again. and abbvie says they price their drugs based on the value that those products bring to patients. but emails like this one, it talks about the committee's investigation and it seems to demonstrate that that's not true. and i want to go back to my colleague, i am not trying to do got shoes or things like that, but we need to come to some type of solution. this is ridiculous as you've heard over and over, people have to choose sometime life and death. if they can eat or not eat, and
we all care about making sure that our citizens and people in the united states can't afford drugs. and we do have a problem and i would think you think we have a problem too. despite the innovation and research and development, i mean you have to believe there is >> a problem. congresswoman, i absolutely believe, especially in medicare part, be if there is a significant-y problem -- i would tell you, we have tried to set up a broad safety net, that ensures that any patient who needs our drug, regardless of their ability to pay, regardless of their ability to have insurance, can get our drug. and that doesn't mean we don't miss people. but i can tell you, we cover the vast majority. we give away 4.3 billion dollars worth of drugs every year. we improve, as i mentioned moments ago, 99% of uninsured
people who come to us, we approve and give them free drugs. and in the case of human era, you can have income as high as 380,000 dollars and still qualify for free humira. we are subsidized -- >> with all the things that you guys are doing, there's still a problem. so we are still not doing something right, which other people ask about, because i'm half a tally, and thank you. to >> the gentleman from kentucky, you are recognized for five minutes. >> thank you. my question, my first questions are for professor garthwaite. it's about the villas a shun of operation warp speed by -- the federal government and private companies invested hundreds of millions of dollars to develop manufacture covid-19 vaccine candidates with no guarantee those vaccines would be approved. the result was the first vaccine -- approved less than 12 months
after the discovery of covid-19, and pre-vaccines approved today -- with this have been done without private company investment and expertise? >> i think it's quite simple to say that we would not have gotten the vaccine as fast as we did with a private company expertise, but i also think it is important and fair to know that we wouldn't have gotten it without a strong involvement of the government, money, in terms of direct financing in terms of the clinical trials, in terms of moderna, but also the advanced market commitments the federal government had that they would buy any product that they get approved. that will limit the market risk of development of drugs, and subsidizing the clinical trials that eliminated some of the scientific risk of developing the drug. >> what could congress do to build on the momentum of operation warp speed to continue investing in treatments and vaccines for other diseases? >> this is a great question, actually. i think that we -- a lot of us want to put the pandemic behind us. we have the vaccine, we are trying to move forward, and the
people in the united states and globally, they want to come to a solution for this. i think it would be a real shame if you squandered the momentum and information that we have about the importance of investment in vaccines, but all other therapeutics. i think in particular, if congress wants to really work in this area, we need to come up with a solution for developing next generation antibiotics, how we want to funded element of them in paper the marketability. we knew that prior to the pandemic, but we also want to note that the next global disease burden might not be a virus, it might be antibiotic resistant. we need to focus on really developing treatments for the next pandemic and realize that the next pandemic might look very different from covid. >> in today's innovation tech, i believe less than 10%, of drugs get approved. how much investment goes into each drug prior to seeking fda approval? >> there's a wide range of estimates.
i think the important thing to think about here is how we get drugs in a lot of the pharmaceutical markets -- i disagree vehemently with porter in terms of how to think about innovation. we want, and i think there's lots of, you if we were at the kellogg school, we read a strategy, as i would teach you, the companies, to pay attention to where they are doing and do that. early stage companies are good at developing innovative drugs. later stage companies are good at clinical trials, dealing with the fda, sales and marketing. they all occupy a very valuable place in the supply chain along with the early stage research investment of the nih. you need all of them to bring to market, and we have seen an increasing specialization in the pharmaceutical market, not because of some worry about anticompetitive practices, but because we want those early stage companies to invest. that said, those early stage companies are often going to fail. they will go out of business. so you try to add up what we spend on r&d, and you only look at the winners, the people whose drugs work, you are doing
a disservice to this conversation. you ought to look at the losers. >> thank you. my last question is for mr. gonzalez. abbvie has received -- patents on camera, and idiot patents on imbruvica. these patents include intellectual property related to the discovery, usage, improvements, and manufacture of these medications. can you explain why so many patents are necessary for these drugs? >> if you look at you mayors example, we were approved for the first indication -- 2013. over the course of the next 14 years, we developed additional disease -- and indications along the way. all of that took research and development, clinical trial, working out dozing and all kinds of technical challenges, and we learned to invest in
innovation along the way. we applied for pens where we had meaningful innovation to apply for pans, and i think everyone gets somewhat hung up on the number of patents and i say that's partially of function of the patent officers in the u.s. trying to narrow patents so that they are not overly broad, so sometimes you will have an innovation and they will say to you, that's five different things. go back and break them up into five different patents. so that's one of the things that pledges the larger number of that. but the most important thing is this. i can have one patent and if no one can work around that patent, that's all it will take to extend the exclusivity of the product. real innovation is what ultimately gives you the ability to have value in a patent. if you have meaningless patents, frivolous patents, i can file an ipo are at the patent offense and have them re-review the patent, and they take down
a large number of patents, it's not expensive, it's not hard to do. and also, ultimately, competitors did that with our portfolio. and we prevailed the vast majority of the time. you can litigate, we work around patent sound time. if they are not foundational patents, we try to work around them. if you believe they are invalid, you invalidate them. you only pay royalties and license pens that you believe are fundamental to your ability to create the product. and what is evident here is we have a highly sophisticated companies like amgen and pfizer, they're just like abbvie. they made a decision that it was worth licensing our patent and paying as a royalty. i can tell you, companies don't do that unless they believe those patents are valid and meaningful. we do it. and so i think that's the best validation to the level of
innovation and the importance of the portfolio. in the u.s. system, if you create something that is inventive, you deserve the right to get protection. and remember one other thing, you license -- 11 years before the last patent expired. the gentleman is time's expired he is recognized next because recognized for five minutes. >> thank you madam chair i appreciate the opportunity. i want to take a moment to address an argument that we keep hearing from the other side each are three and these other structural reforms that we are seeking with future innovation. but we all know the drug companies produce lifesaving therapies and vital medications. that is critical. but we also know that the current situation is untenable. and that is what some much of
the testimony that we've received and the stories we hear from our constituents and families across the country that's what they indicate. nearly one in three americans say they are unable to take their medications as prescribed because of the cost. one out of three. innovative medications are worthless if people cannot afford them. we have to keep that in mind. and drug manufacturers like abbvie that current prices are necessary to drive innovation and discover new treatments, but that is not true. as the committee investigation reveal, much research the these companies are investing in is not innovative, it just meant to preserve their pricing. according to a 2017 a report, saying novel drugs, those recognized by the fda, have a previous unmet need they are advancing patient care to public health, they only counted for 18% of all drug
approvals between 2005 and 2016. it is important to note that after hr three passes, and it will pass, drug companies will still make a healthy profit. so doctor will help me out here to drug companies still make money on their drugs abroad? even though these countries negotiate for lower prices? >> they absolutely do, and i agree with you. i think this is one of the big misperceptions i've heard of the day around age are three. hr three is about trying to negotiate prices with respect to branding drugs better and sort of make the market in united states work. and try to ensure that if a drug is is not a new or important drug, then we will pay a high price for it. right now they set the prices the drug companies that prices at whatever they want, and medicare and medicaid is
required to pay those prices and they don't have a good way of pushing back and negotiating prices. for a really important and useful new drugs, for treating alzheimer's disease, i think that under hr three we would still expect to pay very high price that would make those drugs very profitable to the companies that bring them forward. i think what each are three will do, is it will give the u.s. just like other countries do, the ability to negotiate upfront and say while this drug is worth us paying a high price, and this one is not worth as paying a high price. that's what other countries do and that's how they are able to lower prices on the drugs of a pay for and that is not what we do. >> that is excellent. you basically are describing a value proposition here. the value of that drug is worth paying for, then the market will reflect that. when medicare goes into the market, the almighty market to negotiate. that is all we are trying to
accomplish here. what's been done in other places around the world. the other thing i will just mention, and you know this for sure, is the government research that plays a huge role in drug development. so taxpayers are investors here. so taxpayers are investing on the front and a lot of the time when it comes to the trajectory of these medications and drugs. but then having to pay again on the back end exorbitant lee because of all these maneuvers that the industries managed to embrace, so i will just close with this madam chair, i don't really expect mr. gonzalez or other pharmaceutical executives to behave any differently than they are. there is a profit making incentive here that is guiding them, sadly the executive compensation is i think is laid
bare by the congresswoman reporter, and congress congressman welch and others is operating to drive a lot of this behavior and conduct and there's not a whole lot we can do about that. so mr. gonzales and others are going to behave the way they are. what we can do is what we are trying to do. which is to allow the medicare program to negotiate on the price of drugs. it's the american thing to do, we ought to do it we ought to pass this bill. thank you for the opportunity and for this hearing and i yield back my time. >> the gentleman yields back. the gentleman from california, is recognized for five minutes. >> thank you madam chairwoman, thank you so much for this forum and i feel their predecessor mr. cummings spirit in the room today. so mr. gonzales, i am a
survivor of seattle. i have some of your product here. this product cost about 15,000 dollars. and my treatment for one pillow day, was about 500 dollars and in australia it cost 30 dollars. when i asked my oncology team why that was, they said it's because they can. it's upsetting to know in your business model, that american subsidized people in other countries. i'm grateful for the development that kept me alive with this drug. but i would like to know how it came about, and how sustainable it is? and the number one increase in bankruptcy for american citizens, are because of medical bills. so in addition to have to struggle with the issues around this product, people are going bankrupt because of it. and if the trade-off is for you
and your executives to make more money, i think that's a question that the american public should be aware of. in addition to the fact of where the subsidizing australians. but i want to ask you a few questions. in 2018, abby became they started selling a formulation a new formulation citric free of human era. so is that correct internal police? >> that is correct. mr. gonzalez i want to put up a 211 strategy presentation, this is exhibit eight in your materials. if you turn to page 11 you will see it. this chart identifies the benefits of various research products that heavy was engaged in in the left collagen column, and for humira high concentration formulation, the presentation identifies bile similar defense as one of the benefits. by a similar defense, mr.
gonzales is another way of saying you are protected from competition of bio similar's getting into the market is that a correct a characterization? >> i'm actually trying to read the page, you said page eight? correct page eight? >> no page 11 is what i said. and i will continue >> i have it now. >> so that was the question of bile similar defense? that means and i understand you have to be you have an obligation to your shareholders and your investors, you're trying to defend against bio simulators getting into the market sooner correct? >> i don't believe that is what that means. what it means is we are working on a formulation which would reduce pain upon injection. there were multiple aspects of that, a smaller needle, high
concentration and removing the sit trait buffer. >> okay. >> it was a differentiated product for patients. >> i'm sorry for interrupting i would love to take more time. let's put up another slide, this time from the board of directors in 2015. this is exhibit 17. it is the first slide. and if that is up. the presentation states, our defense strategy remains the same. and the second bullet below, a mutual property it says quote, gain approval eu, u.s. of him era high concentration and quote. and both of the slides there is no designation for reducing patients pain. earlier you said that abbvie introduced high concentration formulation in 2018 correct? >> correct. >> fda approved it in 2015.
why did you wait three years to bring the product out? >> it had the fda approval? >> we had to build up the manufacturing capacity, it requires different manufacturing capacity. so we introduced it first in just pediatric patients, because that's where the need was the greatest. then we move forward from that to offer it on a more broad scale market. >> some skeptics would say, the reason for the delay was to wait until the vile similar manufacturers had already put developed significant amount into the original formulation. so we shifted patience to high concentration formulation. this anticompetitive strategy is commonly preferred to as product upping. this is an unfair of description is that a fair description of what's happening? >> to your point a moment ago,
congressman, when we launched in europe the majority of bile similar's head situate free high concentration products. it's not like this did anything to inhibit their ability to do that. the second thing i can say is, both products are still on the market in the united states so that won't change the ability for a bile similar to come to the market. ultimately we licensed our settlement agreements all the ip that we have. whether it's high concentration or situate free. so there would be no difficulty for bile similar to come forward in the marketplace. >> again munch air before i yield back. i know we spent a lot of time -- this is a cancer survivor caucus. we would like to see your books. to see how much money goes into research and development, and how much of it goes to financial innovation.
i yield back. >> the gentlelady from massachusetts. miss pressley is recognized for five minutes. >> thank you madam chair, the patients taking abbvie number one drug humira has joint fatigue and rheumatoid us right this. veronica thing here is this medication is help meant to help people, to alleviate the hurt and pain. but due to the study, price increases abby is causing more physical pain. mental hurt, and financial hardship as well. this cost of prescription drugs is causing strife and pain for families across the nation, and you may be hearing these sobering and that ridging accounts, people are more fatigued by living them and experience them daily. i heard from people a well in my district who are forced to cut pills in half to make them last. people who are paying
medication costs that are the equivalent of a college tuition. state college. at times even exceeding that. heart wrenching and unjust choices. people are making simply to survive. and these individuals are not outliers. according to a 2013 research study from the university of north carolina, 22% of individuals with arthritis were forced to spend less on basic necessities as a result of high drug costs. and drug prices. and one five reported, taking fewer medications then prescribed due to cost. madam chair i would like to enter that 2013 research study from university of north carolina for the record. >> without objection. >> from your experience serving families in my district, how can trade-offs like these impact the patients overall health? >> very substantially. a lot of patients struggle with high drug prices and come
looking for ways of trying to address those. people will be coming to my office and sometimes i can send them to patient support groups, but a lot of times unfortunately they may not qualify or there may be a lot of hoops and they have to jump through. as and sometimes there is that charity you know it only lasted a certain amount of time the ends, so this is a major issue and it makes people stop taking their medications, and have to make difficult decisions about other spending in their lives as well. >> thank you. mr. gonzales you know your pricing has very real impacts on patients lives, but can we review the 400 complaints from patients and caregivers begging you to lower the price of human era, yet your company repeatedly does the opposite,
and takes away relief that these patients should have. according to your patent of 2016, there is still no competition in the u.s. market. according to documents that the committee received is part of our investigation, on page nine, an exhibit 14, at the executives predicted human error would have three to five bile similar competitors in the u.s. by the first quarter of 2017. mr. gonzales did that prediction come to pass yes or no? >> no. >> it did not that's right. using a variety of anticompetitive practices, at the has come suppressed marketing comparative products until 2023. mr. gonzalez, would you admit the lack of competition with the government where the government has to pay more, and patients have to make greater sacrifices is that a yes or no?
>> i would like to address. >> yes or no mr. gonzales. >> we our patients having to pay more make greater sacrifices. as these own prices estimate this will cost the u.s. health care system 19 billion dollars an estimated amount for patients it will cost them their physical and psychological and financial health. we live in the richest country on the planet, yet drug prices are so high that people cannot afford to live happy, healthy and longer lives. people demand deserve and require better from abbvie and all other price gouging drug companies. thank you and i yield back. >> the gentlelady yields back. the gentleman from california, vice chair gomez is recognized for five minutes. >> thank you madam chair. i wanted to focus in on part of
mr. gonzalez his testimony, he mentions abbvie use of a patient system or program. which we look at last fall. but before i go on to mr. gonzales, dr. kassl are, is it fair to say that companies like abbvie benefit from third-party patients assistance? >> yes they do. >> thank you and one of those third-party foundations, it's the patient access network. and mr. gonzalez your company gives donations to this company? >> correct. >> i would like to show a 2017 email, to add these director of patient access program. this is exhibit 27 in your package. >> in this email mr. cline is seeking a donation from your company, to help offset the cost of the drug he mira. he wrote quote, we also know
these patients would be much more likely to start and state on treatment if they were not stymied by high out of pocket costs. mr. cline is essentially saying, by making a donation to his foundation at the will be able to attract and retain more humane era patience. our donations mr. gonzales, our donations to patient assistant foundations is a part of your strategy to increase sales? >> no they are not. we do it as a donation because we feel it's appropriate, we do it by disease state and the foundation is not required to use our drug. >> thank you thank you so much. >> mr. gonzales i would like to switch gears. i understand that abbvie co-promotes your cancer drug imbruvica with jansen pharmaceuticals. so that means your company market the sales and marketing strategy for the struck correct? >> that is correct. >> but abbvie subsidiary,
pharma cyclic's, leaves leads the sales correct? >> that is correct. >> in 2017 abbvie and janssen executives, went to look at improved sales growth in existing and new indications. this is exhibit 24 in your package. a church on page 22, of the presentation breaks down to proposed spending for the next fiscal year. the chart includes a line item, for foundations. with a proposed quote collaboration spent and 55 million in 2017. this is the largest single proposed increase in any single item. elaboration spend is the amount to companies we spent together
correct? >> i'm not familiar with this document. i would seem so yes. >> let me ask you again, or donations to patients assistance foundation part of your strategy to maximize sales yesterday? >> no. >> mr. gonzalez, you also said that you provide your patience assistant program provides one year free drug cost correct? >> that is correct. >> what happens to the patient after that one year? >> they reapply, and refunded. >> the reason i'm asking this is because we understand that a lot of the investment, everything from research to marketing also the donations to these foundations is all taken
in into the price taken into consideration of the price of drug. it might appear it is a it is something that is altruistic, but you also get tax write offs, and other benefits. i am one of the few members of this committee who also serves on the ways and means committee. which is the tax committee. a lot of the programs that you're talking about, is just a way to get people hooked on these drugs that are high costs, in the long term. and that they also are not meant to really, you know subsidize the patient but that's really not what you're going after. really these drug companies are going after the spend from the insurance companies. increasing the number of people that are on the drug, but also increasing the amount of money that you are receiving. one of the things that we need to do is we understand that the system is broken. everything from the drug companies to the insurance
companies to now the patient assistant programs that all jack up the price of pharmaceutical drug prices in this country. with that i yield back. >> he yields back i think and for a statement. before we close, i would like to offer the ranking member an opportunity for any closing remarks. ranking member you are now recognized. >> thank you madam chair, i just want to be very clear what the republican position is. we strongly support a patent system that encourages innovation. however we certainly don't want to see a patent system that is abused. and there are always going to be bad actors. those bad actors need to be held accountable. but to be completely candid about this conversation, and the democrat proposal that has been mentioned several times today. the biden administration and the house democrats have lost a lot of credibility. when we talk about the patent
system. and when the biden administration announced its effort to give our pharmaceutical intellectual property with respect to the covid vaccine to china. a country that still has a lot of questions to answer about the origin nation of the covid-19 vaccine. so we have some credibility issues on the other side of the aisle with respect to that system. nobody wants to see price gouging, nobody wants to see excessive ceo pay on the backs of hardworking americans that have to make a decision on whether to pay for their medicine or put food on the table. we all know the horror stories, we all know people that have had terrible experiences in trying to buy medication. i think there is a way that we can come to terms and protect our patent system, because it takes investment. private sector investment to
come up with the cures for all the diseases that we want cured in america. at the same time, we have to make sure that the patent system is not abused. so i look forward to working with members of congress that feel this way, and that will respect our patent system, but hold those accountable who choose to abuse the patent system. with that madam chair i yield back. >> thank you the gentleman yields back. and before i close i would like to enter into the records several letters and statements for the record. the committee received a leading up to today's hearing, these statements include, professor robin feldman at uc hastings law. protect our care. families usa. the american economic liberties project. the health and advocacy summit.
the marilyn citizens health initiative. treatment action group and many more. i ask unanimous consent, that these the materials that are entered into the record the official hearing record. >> so ordered. >> at the beginning of today's hearing, we heard from patients. their stories people who have struggled to afford add these products. including humira and imbruvica. abbvie ceo mr. richard gonzalez set to cast blame on others for abbvie high prices. but the facts show that abbvie raised prices on americans for one simple reason, greed. this morning we released a staff report based on our video of over 170,000 pages of abbvie
own documents and data. these documents show that abbvie intentionally targeted the u.s. for higher prices, as it cut prices in the rest of the world. and mr. gonzales had admitted today, that his company charges higher drug prices in the united states because other countries are doing such a good job of negotiating lower prices for their citizens. every american, should be outraged. abbvie internal data shows that medicare would've saved billions of dollars had been able to negotiate directly with the company. the documents also show that the financial assistance for patients that abbvie provides are not charity they make abbvie more money by having more patients use their
products. abbvie has also claimed it needs to charge high prices to stimulate innovation. but the company's own internal documents show, that much of its research bred budget is dedicated to suppressing competition. abbvie also employed possibly illegal anti competitive tactics to delay lower prices of bile similar's coming to market. those tactics lead to higher prices and less innovation for americans. but more profits for the executives at abbvie. enough is enough, congress has an opportunity and i would say a responsibility to ensure that americans no longer have to choose between taking the lifesaving medication or paying their rent and putting food on their table. we must pass hr three, which
would finally empower medicare to negotiate lower prices just like the defense department, and the va had already done, and that foreign countries do. and we must pass legislation to crack down on abbvie's abuses so the market competition can drive down prices. i urge my colleagues on both sides of the aisle. especially those on the other side of the aisle, who have acknowledged the whole the cost the high cost, by skyrocketing drug prices to join me and pushing for these reforms. this should be a bipartisan issue. i hope we can all agree, that no person should go without potentially lifesaving treatment in this country. now let's act together and let's do something about it. let's help the american people. i thank everyone who participated, and i
particularly want to thank our panelists for their remarks, and i want to commend my colleagues for their important contributions, their questions for participating in this important conversation. with that and without objection, all members have five days in which to submit extraneous materials, and to submit additional questions for the witnesses through their chair. that will be forwarded to the witnesses for their response. i ask our witnesses, to please respond as promptly as they are able to. ior up to ten minutes
each. the presiding officer: without objection. mrs. gillibrand: mr. president. the presiding officer: the senator from new york. mrs. gillibrand: i rise once again to call for every senator to have the chance to vote on the military justice improvement increasing prevention act. it's time for us to move serious crimes like sexual assault and murder out of the chain of command and put them in the hands of the most capable people in the military to do this, independent, impartial, highly trained uniformed prosecutors. i want to first acknowledge and express my gratitude to my colleagues in the armed services subcommittee on personnel who