committee. this first portion is just under three hours. [inaudible conversations] >> the senate committee on health, education, labor and pensions will come to order. today is a busy day. as we all know very important both will be taking place, republicans of knickers will be meeting in their caucuses so people are going to be coming in and out. i also think that this hearing is important enough that we extend the time for questioning from the usual five minutes to seven minutes, if that's okay with folks. let me begin by welcoming the ceos of bristol myers squibb, chris berner, we thank you for being here. ceo merck robert davis, we thank you for being here. and the seahawks johnson &

johnson joaquin duato for being with us this morning. thanks very much. there is a lot of discussion in our nation about how divided our people are on many issues. and that is absolutely true, but on one of the most important issues facing our country, the american people whether democrats, republicans come in the pesco conservatives, progresses could not be more united. and that is the need to substantially lower the outrageous price of prescription drugs in this country. according to a recent poll, 82% of americans say the cost of prescription drugs is too high, and 73% say that the government is not doing enough to regulate drug prices. as a nation we spent almost

twice as much per capita on health care as to the people of any other country. $13,000 for every man, woman and child. and one of the reasons that we spend so much is the high cost of prescription drugs in our country. the outrageous cost of prescription drugs in america means that one out of four of our people go to the doctor, get a prescription, and they cannot afford to fill that prescription. how many die as result of that, how many suffer unnecessarily, nobody knows. but my guess is it is in the millions and i talked to many of them in vermont and around the country. meanwhile, our insurance premiums are much higher than they should be, and hospital costs are soaring because of the high cost of prescription drugs. further, the cost of prescription drugs in this country is putting an enormous burden on taxpayers and seniors by raising the cost of medicare

and medicaid. medicare alone spends at least $135 billion a year on prescription drugs. this is not only a personal issue, it is an issue of the federal budget. meanwhile, as we pay by far the highest prices in the world for prescription drugs, ten of the top pharmaceutical companies in america made over $110 billion in profits in 2022. they are doing phenomenally well while americans cannot afford the cost of the medicine they need, and the ceos in general receive exorbitant compensation packages. this morning we are going to hear a lot from our ceo panelists about how high prices are not their fault, and that the pbms are forcing americans to pay much higher prices than they should be paying. use clea.

opportunity tongthrough. it is our commitment to continue to bring down the price of medicines in the u.s. and i would love the opportunity to bring down the price in the u.s. our net prices, what we are compensated have actually the last five years declined. at that same time, the list prices have increased. why is that? because the complexity of the system and the billions of dollars in rebates that we have provided to inter immediate arearies that unfortunately do not go to lowering the price of medicines like the patient you just described. >> again, i apologize. i want to get briefly to

johnson & johnson. mr. duato, is it true that the list price of solara is $79,000 a year in the u.s.? >> it's roughly right, but also true that the discount of-- 70%. >> we've dealt with pbm's, and i'm sure we get to it this morning. and is it true when charging $79,000 in the united states the exact product is sold in spain for $18,000? >> i don't know the price in spain. i can tell you that the discount in the u.s. is 70%, so the price that you quote is 30% of that. >> okay. mr. duato, is it true that it costs less than $15 a year to manufacture so solaro.

>> the manufacturing price, we're looking at the value the medicine brings to the health care system and we continue to invest in research, $15 billion last year and also we look at affordability. the co-pay if they use our co-pay assistance programs in the u.s. for patients using is 10 to $15 per month. i apologize, i'm over my time and going to give senator cassidy the same time that i had. >> thank you all. mr. duato, in 2021, janzen constructed a contract for a blockbuster drug, changed the outcome for people with uc. but this deal protected remicade from competition by a new biosimilar, that was

launched at a lower cost than remicade. i understand that this is confidential in terms of the settlement with the courts, but -- and by the way, let me just say this involves a rebate wall so for the sake of those watching, a rebate wall is an anti-competitive tool which can be used to restrict a competitor's entry into a formulary. a manufacturer would offer more significant rebates to a health plan through a pbm potentially the pbm blocking the biosimilar. we have been looking at biosimilars to lower the cost in a market-oriented competitive way. if we are re not going to have government regulation, we need a market, but this blocks it from entering. so, in the full support of a market oriented approach, do any of your current contracts employ rebate walls to prevent

lower cost biosimilars from formulary access? >> we welcome biosimilars and generics, and a part of the system, as a matter of fact in the u.s., 90% of the prescriptions are biosimilars and that's one of the reasons that pharmaceutical expenses have remained flat or increasing during the last years. we believe that biosimilars force the patient access and we care deeply about it. >> but let me ask, because my specific question, do any of your current contracts employ rebate walls? >> our current contracts do not contain any techniques, biosimilars in the market. >> thank you. i think two of you, maybe three of you have been working on gene therapy. i've been really concerned we don't know how we're going to price those. one of the concerns, there will not be a market for us to lower the cost of initial gene

therapy which are incredible. it's amazing the lifetime of benefit that gene therapy can create, but i was speaking to a medical director of medicaid cmo, and he was telling me that the pharmaceutical cost related to medicaid is now 35% where formerly it was like 25 or 30% and he says it's being driven by gene therapy. and when sickle cell comes widely spread, i don't know how it's priced, but my state has a lot of sicklers, i don't know how my state is going to afford giving it to everybody that should have access. very concisely, how are we going to show restraint on the price of some of these new gene therapies which already is driving up medicaid so again, 35% of medicaid is now pharmaceutical costs? i'll start with you. >> senator, we don't work in gene therapy.

>> mr. davis. >> we don't work in gene therapy. >> i thought i saw press, where you did a vector or-- >>. >> mr. duato. >> we have a -- we support legislation for based gene therapy and we welcome legislation in order to have value-based contracts. >> that's good. value-based contracts will be important, but still doesn't address the opening cost because the opening cost is sky high, you still, you see where i'm going with that. what would you give to us who believe in market solution to an opening price that would be so much that it would be difficult for society to afford the gene therapy? and i could put in any other drug. let's start with gene therapy. >> we have to look at the value of these therapies and the fact that gene therapy for diseases may affect only less than a

thousand people in the world so we have to understand that and you can rest assured that if we are fortunate enough to bring the solution to people that has this, that can lead to blindness and we sit down and evaluate very thoroughly our pricing in order to make sure that patients, all patients that need this therapy are able to afford it. >> i think i recall a couple of years ago, a study shown, respected, you probably know it better than i that $2 million for gene therapy was a reasonable sort of-- it would cover the cost and create the incentive to do more and that would be where you wouldn't have the ability to produce more. obviously the more you produce, the more you get extra profit. you know where i'm going with that. so, but that shows restraint, if you will, on behalf of the manufacturer. now, i want to create incentive, but we want to be able to provide access. and without access, it's as if

the drug is never invented. so, is there any other thoughts you have on how society, if that's ultra rare, $2 million or not ultra rare, less? how could we have a market oriented approach to this? because i'm truly concerned about the medicaid program to be able to afford some of these gene therapies. >> we care deeply, but our nations getting to the patients, and ultra rare diseases that, therapy can have life changing consequences. so we will always sit down and make sure that the way we price is reflective of the value of the medicine, but also important, it enables affordability and it makes it possible that every patient that is in-- >> the affordability, we're defining it for the patient. if medicaid covers it, it's affordable for the patients or insurance does, but that

doesn't necessarily make it affordable for society and society's got to pay for it and obviously, medicaid is taking more and more of the state's budget and frankly, more of the federal budget. we want market oriented solutions and incentives so that good companies like the three of you and others are making new things. if my state goes bankrupt paying for a new gene therapy, then my state, the taxpayers, we're all in tough shape. let me go to one more thing. there's evidence that pharmaceutical companies do, the longevity of the drug, and some argue it defeats innovation, because if there's profit from innovation you could make profit from life cycle management. any thoughts about that? >> senator, i think that life

cycle management if you think about the new product is incredibly important to really being able to deliver additional benefits to patient. obviously, the patents associated with any product will dictate when a generic enters. we have been in favor of a robust generic entry primarily because our locust-- our focus is on innovative products. in cancer, start with the disease, learn more how it works and ultimately bring it know early stage cancer where you have the potential to potentially cure patients. that takes quite a bit of time, but that's an example of life cycle management where you're showing the true potential of a medicine. i would hate for us to cut off the opportunity to show those benefits. at the same time, we should be as an industry welcoming of generic competition because ultimately, our focus as a company is to take resources as we get close to generic entry

and focus on the next wave of new product innovation which is ultimately where we want to go for patients. >> mr. davis, 20 seconds. what would you do? >> well, the short answer, as i look at it, one, we very much support generic drugs, biosimilar drugs, that's the core of how our system works. we have a period where we're protected and able to recoup our objective and society benefits in perpetuity. >> and we ask, are we benefitting the patient. keytruda, 39 indications across 17 tumor types, it's revolutionizing the care of patients facing cancer. the reality only 30% of people show overall response. as great as it is, patients are still suffering. we're investing in combination therapies to go beyond that 30% which means much better benefit and value to the patients that will ultimately use those drugs.

>> thank you. >> senator murphy. >> thank you very much, mr. chairman. thank you for holding this really important hearing. mr. duato, looking at your arthritis drug and we've talked already a little in this hearing about the difference in price between the united states and other countries annual costs around $80,000 in the united states, $20,000 in canada, $12,000 in france, are the prices that you receive from a country like canada or france, which look to me to be about one quarter of the price that you get from the united states, are those prices covering your costs? >> yes, they do. to clarify, senator, the price in the u.s. is discounted by 70% so the comparison would be 25,000 in the case of solara if you're considering that price. >> are the prices you're

receiving from these other countries, so let's say france, i'll give you the benefit of your argument, france is still 50% of the u.s. cost that you're claiming. are those are those countries' prices cover your cost? >> they do. the difference is that the first country you quoted musto lara not for arthritis. canadian patients come in they cannot do it in the public system because eight years later is not yet reimbursed there. >> so you don't identify any syndrome today in which the united states is paying higher prices allowing other nations to receive lower prices? >> i agree with you that the prices in the u.s. are generally higher for medicines.

more aligned with what you are describing. the rest of the healthcare prices are. the percentage of pharmaceutical costs lower than most of the advanced economies. the real difference is that in the u.s. come up patient get access to their become a life- saving therapy years before they do in the context that you mentioned. >> if the united states were to restrict the prices we paid come up with that create a different negotiating dynamic in countries that right now, for instance are paying 50% of what the united states pays. would it allow you in your negotiations to get higher prices from other nations that right now are paying far less than the united states? >> we left that price cap coming out the way that innovation is going to foster.

we have work with the united states department and u.s. ambassador to try to predict the price caps that some countries, the ones you mentioned. we welcome the support and avoiding -- not benefiting their patients neither. >> would you say to americans to look at the way you allocate revenue and wonder why, in your case for instance, you are spending $6 billion on stock buybacks, $11 billion on dividends, and $14 million on research and development. you spend all of your advertising time talking about the research and development. i think most americans would be pretty surprised given how much the industry talks about research and development, that you are actually spending more money shelling out money to investors and buying back stock.

then you are on research and development. what you say to folks who look at that and come to the conclusion that you care much more keeping your investors happy and keeping executives happy then you do in researching and development, the next class of drugs is going to help regulate? >> we care deeply about being able to discover the next medicines. >> but explained to me how you justify that division of dividends and stock buybacks? you can just choose instead of using $6 million to buy back stock to put into research and development but you don't. >> in the two years that refer to the program by back which

was 2022. it six times higher. in that period we invested $30 million and $6 million in the stock buyback. we spent six times more in developing than we did in the stock buyback. >> i'm looking at 2022 by johnson & johnson. it shows me $11 billion in dividends, $6 billion in stock buybacks, $45 million in executive compensation and $14 billion in research and development. let me ask you a different question. do you understand one of my constituents would look at those numbers and think that you care more about adding to the pockets of the folks that work for you and invest in you that in research and development? >> we have sent $77 billion since 2016. we have to pay dividends because it's the only way that the company can remain

operational and sustainable. we are not able to fulfill and making them affordable. >> you talking her testimony about the united states has a healthcare system that prioritizes. i want to ask you about the choices that she faces. i have a constituent who needs a blood thinner that is critical to her survival. she has the medicare pan that gets her the best possible price. that price is $350 a month. the average social security benefit is about 7000 dollars a month. and of course somebody who is on eliquis is likely on other drugs as well.

here is her choice. her choices to pay the $350 and go without food or pay her rent, or not take the drug and risk heart attack or stroke. is that the choice you are talking about when you refer to a healthcare system that prioritizes the important role of choice? >> senator, absolutely not. in fact, i would say on behalf of all of our employees at bristol-myers, that is a choice no patient has to make. >> she makes it because you have choice and to price a drug at a point that is not affordable. >> senator, we have priced eliquis in the u.s. in our estimation like we try to do for all of her medicines, consistent with the value it brings. we are very happy with the fact

that eliquis is the leading anti-stroke drug. >> you put eight alien dollars in the stock buybacks. why not 24 billion and take the rest of the money? >> i'm going to keep people to seven. >> thanks, mr. chairman. as for being here today. it's pretty well known where our pyramid stands on this. it's pretty clear that you guys are setting drug prices and it's all about corporate greed. i'm a true believer of capitalism. i believe that we have the best healthcare system in the world. the problem is, we have federal government involved in it and it's not implemented the way it probably should be. with that being said, i just got a few questions on a couple things. mr. davis, can you explain to be something? the biden administration has two huge priorities.

they take prices of prescription drugs specifically small molecule drugs. can you walk me through how those priorities might be in direct contradiction of each other? >> senator, i think what you are referring to is what is called -- >> that's right. >> what that does is effectively says that at nine years post your first approval, your price or your drug will be negotiated. if it's a small molecule comments 13. the issue that that raises is that it disfavors small molecule development. the reality of it is if you look across the majority of cancer treatments, they are still small molecules. as chris pointed out earlier, the development of cancer drugs usually starts in a phase

starting at the sickest patient, the last stage of disease. and then you work forward into other stages where in fact, you can start talking about a cure. to do those studies, we have nine approved in that space. those can take 7 to 9 years to do. obviously come at that nine years, have to significantly reduce the price of that drug to a point that it is potentially, basically, no profit. my incentive to do those studies is not there. that is our worry that if you look at cancer care, you are going to see patients suffer. i'd also point out, you didn't ask about alzheimer's and neuroscience diseases. but most deeds visas also require small molecules because large molecules come up by logic, you can't penetrate the

blood-brain area. >> thank you. we hear a lot about how healthcare costs are ridiculous. i think all of us would agree to that to some degree. i want to peel back the onion here a little bit. let's say we are being led to believe that these cost are due to corporate greed. i want to talk about some additional drivers of healthcare costs. we drove prices through the roof. when i talked to healthcare folks back in alabama, later costs is one huge problem. but there are other cost including supplies and raw materials. what impact are these coming on the drug development and drug costs? >> certainly come a senator. we look at the cost basis which

is to bring forward new medicines for patients, we have to fokker and all of those costs. and cellular therapy which is really transforming hematologic diseases, these are very complex medicines. manufacturing them and re- engineering them to really target and hone in on cancer cells, and then you reinject them into patients. this is really a first generation technology. unfortunately, it has a very high labor costs because this is one that is very manual. it's a multistep process to manufacture these products. their transportation costs, raw material costs, all of those factors go into for the first generation medicines. it now, we are very focused on trying to innovate to try to get to a second and third generation quickly so we can bring those costs down.

and not only because it's important for us to be able to funnel additional research into development. but also so we can bring the cost down for patients. they are absolutely a factor, senator. >> thank you. i'm going to ask you this with your accent and mine, we will probably have a tough time. i know you were probably aware in 2021 that the biden administration announced a mandate that personnel must take the covid vaccine in order to serve in the military. are you familiar with that? >> i'm familiar with that. >> are you aware that troops were kicked out for declining to take the covid vaccine? these were mostly young, healthy americans where covid risk was low. are you aware that? >> i was not aware that. >> thank you. did you or anyone at johnson & johnson encouraged the biden administration to mandate that this covid vaccine for the military? >> we did not. >> how much did johnson & johnson benefit from the

administration's military covid vaccine mandate? you have any kind of gas to that? >> it was a time of global emergency so we thought the healthcare company that cares for patients, we need to collaborate with that. entirely not for profit. >> do you think the soldiers who were expelled from the military was the right thing to do? should they be reinstated? >> i was not aware of the situation, sir. i am not aware of the circumstances could go i cannot comment on that. >> thank you. thank you, mr. chairman. >> thank you, senator murphy. >> inks, very much. thank you all for being here. we really appreciate it. i think you know we hear from our constituents constantly. this is really an important hearing. i continue to hear, as many

have said, that skyhigh drug costs are forcing many people come including in my home state of washington, to choose between filling the prescription and paying for other things they need. essentials like groceries or rents. and i often talk to people who are skipping their prescriptions altogether because they can't afford it and it puts their life at risk. i really believe that congress does need to do more here. i have for a long time. i also think that pharmaceutical companies need to do much more to put patients first. that doesn't mean that private companies can't make a profit. i think we all have a really sincere appreciation for the cutting-edge research that happened in each of your companies. but when you say you are in the business of saving lives and curing disease, you have to think about putting patients over profit. we all know life-saving drugs don't to do anyone any good if people can't afford them. i want to ask you about affordability. i've heard the numbers. i was looking in my office, mr.

duato . your company makes a product to treat arthritis. it cost 79,000 annually here in the u.s. the 12,000 in france. mr. davis, your drug to treat cancer. annually the cost here is 191,000, 44,000 in japan. your company makes a drug, eliquis that cost $7100. either you think it's the same prescription drug so the works better here in america or we are getting more for it. i don't think that is the case. but i wanted to ask each one of you, explained to us why it cost more in terms that we can tell our constituents and they understand. and mr. duato, let me talk to you. >> we share your concerns of what patients have to pay for

medicines. in the case of, at 70% lower that the price that you prefer. you would be $24,000. it's more aligned. the difference is that patients with inflammatory bowel disease, were able to afford the stelara years earlier than they did in other countries. in canada, after eight years that stelara was approved, stelara is not. what are we doing for that? we have programs. the patient pays $10-$15 a month for stelara. if they are not insured, we have free medicine programs. we distributed $2.9 billion in

free drugs in 2022. >> mr. davis. >> if you look at the example you bring up between the u.s. and japan, first of all, like all of us, we are trying to focus on making sure the patients everywhere in the world get access to our medicines. each market operates differently. japan is a unique market and that the way they price their drugs. we have been working hard to get this to change. i think maybe we have successfully gotten some of it to change. after you initially launch her drug, for every indication that comes afterwards, they treated as a different drug. and in addition, the competitor launches a drug, you also still take a price decrease because of the competitor's drug we are in a strange situation and one that is a very concerning situation to me in japan where in reality come out we have the

most innovative, we were driving the market fastest. we have by far the lowest discounted price and japan. the levels in japan would not be sustainable to support $46 billion, $40 billion that we spend. we are working hard to help those markets to understand that we need to, across the globe making sure we can invest. >> what would congress do that would make a difference to lower prices here? >> on one hand, it's a different question. that a question i'm assuming we are going to get to. how do we focus on what is the really large discrepancy which i believe, we need to focus on is the out of cost for the patient. we need to continue to work together on trying to drive innovation and trade agreements. we've had some success to that.

to also help us in those markets outside of the united states as well. >> there's no doubt that patients are going to pay less for eliquis or most of our drugs . that, unfortunately, comes in a very significant cost for those patients outside of the u.s. in canada, patients will wait for an have to four years to get access to a medicine that is available in the u.s. you see similar stats in virtually every european country and in japan. what we can do more in the u.s. to do is try to bring out of pockets down. for eliquis, the average out- of-pocket is relatively $55. most patients will pay less than $40. however, there are a paid for this drug is not affordable and that not acceptable. medicare in particular is a space where we cannot provide those types of co-pays that we

do in a commercial setting. we would love to work with congress on that. probably the most thing and eliquis is a great example, try to bring down the list cost of eliquis. >> do you set the list price? >> we set the list price but for eliquis, driven up by the incentive of inter-mediators. over the last five years, we have paid almost $100 billion in rebates and discounts to intermediaries. the majority of those were on eliquis. that eventually what patients pay. we would love to work with congress to bring that down. >> senator marshall. >> thank you, mr. chairman. mr. boerner, i will start with you. bristol-myers makes this new drug eliquis. when i was in residency treating patients, i was using

heparin or coumadin. they might be in the hospital for 10 or 14 days. eliquis saves money. it prevents hospitalization as well. i want to point that out. as we talk about rationing care, we talk about how we are rationing care in foreign countries. but i want you to speak about rationing care in this country. when they take an drug like eliquis and don't allow it on their formulary. it does that ever happen? >> senator, i'm glad you raised that point. we have had that case happened on multiple drugs. we've had it happen on eliquis. we've had it happen when we have not been able to reach an agreement with an intermediary on a rebate that they have taken eliquis of the formulary. when that happens, those patients no longer have access to eliquis and they have to go onto another brand.

eliquis is the number one product in the oral anticoagulant space. >> so they have to go back to the heparin and coumadin the drug that i was using in the 1980s. a drug with significant complications. the patient has to go get the testing done maybe twice a week. with your drug, one of the miracle parts of it is that they don't bleed into their brains anymore. and two, they don't have to get their blood testing done once a week as well. it's a huge amount of innovation. let's go to mr. davis next. i want to talk about the linking. you have a miracle drug of your own to treat diabetes with. there is a list price. what percentage of that list price at the end of the day?

>> if you look at the drug you were speaking to, the list price is $690,000. per year. we recognize $690 on the drug per year. >> you are only getting 10%? >> a 90% discount. where does the rest of that money go? >> into the system as a whole. >> if we have the time and the energy and a chalkboard, would you be able to explain to me and show me all the little places that goes? >> i could but i think you appreciate, it is highly complex and so complex that in times, even learned people who plan the space can understand. >> that my point. it is so nontransparent. we don't know where this money is going. but certainly, we know that pharmacy benefit managers are

taking $.50-$.75 of that dollar and you're only getting 10% of it. i would like to know where the rest of it goes. and i will go back to mr. berner. with your drug, what percent of that list price do you think you all are taking home? >> senator, it's a relatively smaller percentage as i mentioned over the last five years, about $100 billion in rebates and discounts. the majority of that goes to one did not eliquis. >> how many drugs did you go down -- would go with it, how many have made it across the finish line? what did you spend on r&d if you look at it altogether? >> when the covid situation hit, we drove four key programs. two in vaccines, two and antivirals. only one of those succeeded which is the drug.

a little over 2 1/2 billion dollars. >> you got one across the finish line. >> very little. it never got to full approval. we are seeing it being used much more outside of the u.s. >> i'll talk to you for second. in my 25 years taking care of patients, we were always trying to find a solution for the drugs that they needed. programs, rebates, there's always an exception to the rules. what type of efforts did j&j make to help some of these people that need help.

>> we care deeply about patient affordability but also we care about the sustainability of the rural hospitals and the small hospitals that take care of patients that are underserved. we believe that the 340-be program, it's an important program and we are fully looking for to collaborate with them. in any way we can to support patient access. >> i want to point out once again, it's our community health centers. taking great advantage of the 340-b program as well try to make sure every patient has access, true affordable access to primary care . plus having access to affordable drugs as well. i might make a couple quick points. the people of kansas said to be here to save medicare. to save medicare, i need a miracle drug that can treat alzheimer's. it seems to me that americans bear the burden of most of the

r&d in this world. and other countries benefit from it. and that impacts the price in many ways as well. mr. davis, am i wrong? why does it feel like americans are feeling most of the brunt of the r&d costs? is that not accurate? i don't know. >> i think, senators, as you look across the globe, different markets. i appreciate what the u.s. does. i think the u.s. favors innovation that values access, fast access, most access. in many markets around the world don't do that with a focus on is their budget and how do they meet those budget needs. we appreciate the budget constraints that everybody faces. patients aren't getting access to meds, they don't get them as fast as we have commented on today. it's hard to see how we can support the innovation we need to do in that situation. >> senator boerner.

senator casey. >> thank you so much, senator boerner for allowing me to jump ahead. i want to start with the sense that i have back home, when i talk to people in pennsylvania, a lot of your companies have a lot of interest in pennsylvania. i hear over and over again. this problem, the cost of prescription drugs, it's like a bag of heavy rocks that people have been carrying around every day, year after year. and they are tired of it. and they don't believe that any player in this is doing enough. most pennsylvanians are happy that i can vote for a bill in 2022 that allowed medicare to negotiate for lower prescription drug costs. and that we can cap the cost of insulin, 35 bucks a month.

i'm very happy that we can tap the out-of-pocket costs. i will go into effect about a year from now. but they are certainly not happy with the level of work that you put into this. look, i hear all this talk about rebates and cost reductions you are trying to put into place. but it is not cutting back home. and when i talk people to see what pbms are doing, they know that they are meeting the obligation that they would expect them to. so there is no question that your companies and pharmaceutical companies are playing a role in this. you bear a measure of responsibility in this. i want to ask you a couple of questions about that.

first and foremost, tell me what concrete steps, very specific steps, that each of you are taking in your companies are taking to make sure that we can get these cost down. even by way of repetition. you may have already said it. we need to know specifically what you are doing to lower costs so that no one, especially someone who needs life-saving treatment, is going to be denied that solely because of cost? i will start on the left, mr. duato going left to right. >> we absolutely want to be part of the solution. we understand that co-pay obligations for u.s. patients are burdensome. it does create health inequities. what are we doing for that? we have a very extensive patients program for commercial patients enables them to be able to pay low co-pays.

$50 per month we support more than 1 million patients in 2022 with our co-pay assistance programs. if a patients is insured or not insured, we provide free drug. we gave $3.9 billion in free drugs in 2022. i think we can do more. we can work together in order to lower out-of-pocket cost. even medicare, as you mentioned, because that a real need, we are committed in order to make sure that our medicines get to the patients that they deserve. >> senator, very much like a j&j, we have tiered levels of patient assistance programs because we want to make sure that patients need are drugs can access them. if you have insurance but you

fall below certain means where you are not able to handle your co-pay, we will give co-pay assistance to those patients through a program rerun. if you're someone who doesn't have insurance, is unable to qualify for government programs, we have a patient assistance program that basically provides the drugs for free. we are very much focused on this and making sure we can do everything we can. we are invest a lot of money in it. something i'd like to add because i think it's important to the discussion, we are focusing on prices today but we also need to think about innovation as a way to fix the problem. something we are focused on is a new tech knowledge he that allows us large molecules, difficult to make him expensive drugs, difficult to deliver. we are starting to show the capability to convert those into cheaper, small molecule forms or forms. if we are able to do that, wishes for heart disease, we are looking to do that for

others. we are investing millions, billions behind that effort. i think we also need to think about how could innovation solve the problem? we need to address the price challenges today. innovation ultimately is what is going to help us fix this. >> i would highlight three things. first, we obviously have a very robust on the commercial side co-pay assistance program that brings out-of-pocket costs down. in many cases for our oral onto logics almost to zero. they are complex at times so we are working very hard to make those more universally available. that step one. step two, we would like to find ways in which we could up by the same sort of programs and medicare. is there some complexities, we want to make sure we are not diverting from the use of generics, for example. but we think there are potential ways we could do that and we would love to explore those opportunities with congress to bring out-of-pocket

costs down. the second thing i would say is we are looking to do more innovative work where we can, for example, if our drug works, we get paid, ever doesn't work, we get paid less. in some cases we may not get paid at all. there are technicalities in the u.s. to that prohibit us from doing that more. we want to work to get that removed. the third thing just building on what rob was saying, we do believe innovation plays a role. cellular therapy, those are expensive therapies. we've got to bring those costs down. the way that we will do that is we will innovate to the next generation which hopefully is way less complex than what i described previously. >> i will be submitting more follow-up actions for the record. >> senator paul. >> i'm not an apologist for big pharma. in fact, when corporations manipulate government, i am a

critic. if you want to create a shortage of tomatoes, just pass them all. infinitely, you will have a tomato sorted. i might also add that that true of prescription drugs. virtually every shortage of drugs that was seen in the last three years involves price controls the drive out production of the drug. one reason the united states leads in innovation is because while the u.s. adhere to a more market-based pricing and rewarded innovators, we have adopted stringent protocols. it's not surprising that we lead the world in innovation and europe does not. unfortunately, this committee and this hearing is not here to celebrate american success. instead the majority drives us to harangue companies, challenging the inflation reduction act in court.

they simply brought for people who question their legislation. 10 years ago, the five-year survival rate for patients diagnosed with lung cancer was 5%. terrible. the survival rate has grown nearly 5% to 20%. we should be celebrating that. why are you buying your stock back? i have a friend who has a predisposition. he is alive today because of keytruda. we should be celebrating that. since its approval made remission a reality for patients with debilitating conditions and paved the way for development of other autoimmune treatments. when i became in madison, you can see from a distance had

crippling disfiguring arthritis in their hands. now today it is rarely seen because advances of american companies that allow profit to occur. in 1987, merck pledged to donate to those suffering river blindness. nearly 37 years later, donation program treats 300 million people annually with over 11 billion treatments ship to endemic countries. this is charity from capitalism. you don't get this under socialism because there is no profit under socialism. they have no money to give. they make extraordinary profits. that what they are supposed to do. but they also have some left over for charity and you don't get that under socialism. because america's donation, seven countries eradicated transmission of the number one cause of whiteness of the world. pharmaceutical innovation has improved cancer rates, cured hepatitis c, double the life

span of patients living with cystic fibrosis. it goes on and on. we tried price controls in general. we did in the 1970s under a republican president. it was a disaster. it was an ultimate disaster. a study at the university of chicago found that 254 fewer drug approvals over the course of 18 years would happen under price controls. under communism, they knew this. socialism, communism, and economic system of socialism. it became a running joke. the guy went to the store, he was looking for exit he asked the clerk, is a sister with no eggs. they said no. this is a store with no toilet paper. the store with no eggs is across the street. that the story of price control. secure, scarcity and empty shelves are the inevitable

result of price controls. those who understand and appreciate capitalism do not need. let's get back to profitability. i don't think you guys did a very good job of answering this. did you added your estimate of whether it's profitable in canada, whether or not it cost you $2.6 billion to develop it? you are talking about how much it cost to make key true to. do you believe it would still be a prophet if you added in all the r&d to get it through the system and you divided all of that out for profitability? would it still be profitable in these other countries? >> i've not done that analysis that i would say that the probability would be marginal as best. >> did you think you would have r&d as much is canada? >> know, i don't. >> this is what we are arguing

against. you could make it for pennies now but it didn't start that way. that capitalism. that the way it works in capitalism. joseph talked about this and he said, this is an old anecdote where he said the miracle of capitalism is not that queens have silk stockings but the fact three girls ultimately do. always the queen has silk stockings. rich people get things in the beginning. the first calculators that come out, $300 for adding, subtracting and dividing. now they are like pennies or free. but you have to allow the price to be higher in the getting in the market brings it down. that capitalism. we don't know what the correct prices. there is no moral amount of profit. their job is to make a profit. it's actually get the law for them not to maximize their profit. for you to sit in judgment of how much profit they should

make, you know nothing of running companies. nobody appear, maybe some, that almost nobody appear has run big companies and you presume somehow to say you're going to tell these people how to run their company. list price versus net price. this price these absolutely nothing. i charge $1800 for cataract surgery. the government paid me 600. two thirds of it, nobody stole that. it disappeared because it never existed. if i build $1 million in charges, i really was only building 300 thousand because that what i was getting paid. because of the confusing nature of the system, the list price is much different than the net. to quote less price and then compared to net price is completely and profoundly unfair. the list price means absolutely nothing. all these fallacies need to be addressed before we begin haranguing american ceos. thank you. >> i'm next. thank you, mr. chair.

>> i'm sorry. senator baldwin. >> i yielded to senator casey. >> is that right? okay. >> thank you. so, i just wanted to say at the outset that the last time i checked when a buyer and seller negotiate for a price, that capitalism. and i wanted to talk with all three of our distinguished witnesses today because one of the things that strikes me that we are struggling with is i think various times in each one your products. the thing is, human health and life is priceless. if that the metric here, you will always have an excuse for

charging increasing prices for these life-saving drugs. what we are trying to do here is figure out how you can continue the innovation that senator paul just so eloquently spoke about. i would expect that every member appear as a family member whose life has been saved by innovative medications. or greatly improved. but at the end of the day, we have to find a way to allow you all to innovate but also to make sure that the market here in the system here works for the very people whose lives you are helping to save. i want to start with a question to you, mr. davis. while families in new hampshire and a rustic country struggle to afford these life-saving medications, pharmaceutical companies are doing everything they can to keep their prices and their profit skyhigh. i know you of all talked about that not being the case. let's just look at one thing here. one way that companies do this

is by filing dozens, even hundreds of frivolous patents that lock in their excessive right to sell their drugs for decades. by playing games like this with the patent system, companies block low-cost alternatives like generics from coming to market. mr. davis, the list price for america's cancer medication, keytruda, $100,000 per year. can you tell us how the patents have been filed on this medication? >> i don't have the exact number. i would focus you on probably the most important patents which on the composition of matter patents. in addition to that formulation, there is one composition of matter patents that we have. those are what allow us to continue to have exclusivity. >> i don't think it would surprise you that i do know about the patents. this is what this looks like.

sheet after sheet after sheet. patent office records show that not only show but half of them not the way that the drug is used. merck is using loopholes to delay other companies from selling lower-cost versions of this medication all well raising the price of keytruda in the u.s. year after year. it would be good if america would just stop blocking patient access to low-cost medications might using the patenting system this way. at square that american other pharmaceutical companies won't stop abusing the patent system to keep their prices high. is there we also need to take action on that. that something we can do. which would help break up these patent roles. i would urge my colleagues on both side of the aisle to

support that. now mr. duato, you mentioned johnson & johnson provide financial assistance to uninsured patients in the united states. however, the barriers to access these programs are unreasonably high. for an expensive medication like your companies stelara, what does a patient have to do to get assistance from the johnson & johnson program? >> we cared deeply about this access. we put a lot of work in developing programs. we have mechanisms for patients to connect with us like a website called johnson care in which patients can access patient assistance. we supported one point 1 million people last year. >> let me just talk a little bit about that. the initial application which i have here is six pages long and it requires pages of additional

verification. in the fine print, this document even requires the patient to consent to a credit report check and other financial disclosures. mr. duato, everyone on this dais want you to charge a fair price for your companies medications. if someone does need assistance paying for their medication, this process has to be streamlined and easily available to anyone who qualifies. i would urge you to look personally at this application. when someone is dealing with a series elvis, the last thing they need to do is read the fine print. the relevance of what escapes me. mr. boerner and mr. duato, we could also increase competition by making it easier for generic drugs to get approved. let's turn to eliquis. the list price is 7100 dollars per year. how many generics of this drug

can a patient get a pharmacy today? >> senator in the u.s., there not yet generics available. >> there are zero genetic of versions available. your company has sued to block two approved generics from the u.s. market until 2028 at the earliest. isn't that right? >> senator lee, we have allowed for generic entry in 2028. that correct. >> we have two generics ready to go. your original patent is well past expired but you still are actively trying to prevent generics from coming to market. mr. duato, the list price of johnson & johnson medications tulare is nearly $80,000 annually. similar to eliquis, there are currently zero versions of still are available to u.s.

patients. there are zero similar available in the united states today because johnson & johnson has also sued to delay the launch of a low cast similar drug. you have all talked about the need to have speed of access. i'm wrapping right up. getting drugs to market but then you are actively working to block the less expensive similar generics to come to market. that something we should address. >> thank you, mr. chairman. i appreciate these executives taking time away from your responsibilities at your respective companies to be here and inform us. in some cases to get rated by us and give us an opportunity to pontificate on our various topics which i'm about to do. one is that i fully concur with mr. paul, or senator paul.

that is that a free enterprise system works marvelously. i know we keep asking you, what are you doing to try and reduce the prices of your products. the answer is, that not what happens in capitalism. i hope it doesn't come as a shock to my colleagues, and capitalism, if you are running an enterprise, we have a fiduciary responsibility, you try to get as high as a price you can. that what you try and do. you try and make as much profit as you can. that how free enterprise works. do you think chevrolet sits back and says, how can we get the price of the chevrolet down? how high of a price can i get. what price does mcdonald charge for a sandwich. as high as a prices they can get. the amazing thing about free enterprise is that someone figured out that if everybody does that and you have

competition among all the players, somehow the prices come down. he and the quality goes up. in the access to the product is broader. it doesn't seem to make a lot of sense but it's the marble of capitalism. obviously, wise companies say, you don't just raise prices through the roof and do things that are going to harm your credibility. in the trust of the marketplace and have your employees don't want to work there. they figure they are working for bad people. wise enterprises don't do all the things i just mentioned. they also say they are going to do other things and care for people who want to work for our company. recognize free enterprise is about enterprises battle each other. with higher prices in many cases and then they get pushed out by people that tell them new products and put them out of business. it's how it works. as senator paul indicated,

there are some who would like socialized medicine. have you seen what that produces? it doesn't produce new drugs. it doesn't produce cures. it sounds great. but price control is just another name for capitalism, socialism light. our system works. but there are ways to improve it. i'm very concerned that this disparity between list price and what you actually get paid is a problem. i don't know why it's a problem or what we can do about it. but you have p bms and getting prices and discounts like this that you compete in? >> yes. senator, this is an element. >> is that true for you? >> that true for us as well. >> visit unique. >> i hope we focus on this.

we may not have the right bad guys here. these are the guys developing cures and helping people solve diseases. but we have something here they don't have the rest of the world. they would hire tireless prices because they get paid based on how high the list prices because they get a percent of the list price. he goes back to patients, some goes to companies if they are self-insured. i don't know where it all goes but i think that the issue. let me ask each of you. if you were in our shoes knowing what you know, what should we be doing to try to get the cost of products down to the people in the country at large. to the government that buys a lot of goods, a lot of drugs. what should we be focused on? i know that you sell the pbms because they might punish you. what advice would you give us?

what should you be looking at? where is the problem in this? we will start here, mr. boerner. >> three things i would offer. first to the complexity that you just described, dealing profits from intermediaries from the list price of the drug and the rebates that are provided. and alternatively, require that those rebates be passed on to lower out-of-pocket costs for patients. number two, i firmly believe we have the ability to help lower out of patient costs if we could provide the same sort of co-pay support that we do on the commercial side, that would be a second thing. the third thing, we do innovative contracting outside of the u.s. where we get paid if our product works. the constraints on our ability to do that, i would like to see those removed. that would be helpful. >> in queue.

mr. davis. >> chris basically covered all of the things we would also look to do. >> thank you. >> mr. boerner would make sure go back to patients. i will make sure that as we are trying to do would be linked of the pbm on the list price. i would sit down to see what we can do to provide a patient assistant program but also look to further lower the out-of- pocket costs. >> thank you. >> you did mention the fact largely owned by insurance companies. sometimes we think they are going to be lower, you hire a pbm to lower your costs. is that a problem? the fact that the p bms are owned by the companies?

is that something we need to look at as well? >> together, they control about 80% of the market. >> i'm a big believer in free enterprise as you can tell by my opening comments. i'm concerned that we have some structures here that are anti- competitive and make markets less effective. we should focus on some of those. thank you for your testimony. >> thank you. it's been very interesting to listen to the back-and-forth. senator romney, your points about support of the free markets but understanding that there are times when those market failures and we also have an obligation i think to oversee because our committee along with the finance committee need to have good

stewardship of medicare dollars. the point that senator romney just made, i can't follow the dollars and it is complex. i want to start just by sharing some of my constituent's struggles. i have a constituent who literally turns down the heat in the winter because that how she is able to afford the prescription drug she needs for her wellness. there are choices that people are making, people are rationing their medication, forgoing their medication because of affordability. i think we need more transparency. i think we need more transparency to inform the

policy that we adopt. i was pleased this last may that this committee. it our bill would require basic transparency. >> you can watch the rest of this at c-span.org. we leave this to take you live to capitol hill where will be testifying for the house financial services committee. you are watching live coverage on c-span3.

in 2022 johnson & johnson made nearly $18 billion in profit, painted cdao over 27 million in compensation, and spent over 17 billion on stock buybacks and dividends. that same year, merck made 14.5 billion in profits, , handed out over 7 billion and dividends to their stockholders, and paid its ceo over $52 million in compensation. bristol myers squibb made 8 billion in profits last year

recently spending over 12 billion on stock buybacks and dividends, and giving it ceo over $41 million in compensation. now, why did the majority of members of this committee invite these three pharmaceutical ceos to testify today? and the answer is pretty simple. mr. bernard, we want you to explain to the american people why bristol myers squibb charges patients in our country $700 a year for eloquence, when that same exact product can be purchased for just $900 in canada, $650 in france. mr. duato, , where going to ask you why johnson & johnson charges americans with arthritis $79,000 for stone barrel when that same example can be purchased for just 20,000 in

canada and just 12,000 in france. mr. davis, please tell us later why merck charges americans with cancer $191,000 a year for keytruda in the same product can be purchased for 112,000 in canada and $91,000 in france. let's be clear, johnson & johnson, merck and bristol myers squibb are not just charging higher prices in the united states compared to other countries. they are also charging americans much higher prices today than they did in the past, even accounting for inflation. from 2004-282 the eighth the median price of new innovative drugs sold by these three copies was just $14,000. inflation accounts come from 2019 to 2023 where we are today,

the median price of new drugs sold by these three companies was $238,000. in other words, americans are forced to pay higher and higher prices for the drugs they need to survive. and let's be clear, the overwhelming beneficiary of the high drug prices is the pharmaceutical industry. how do we know that? well, that is precisely what they tell their investors. according to their own shareholder reports, bristol myers squibb made $34 billion selling the blood thinner eliquis in the united states compared to just 22 billion in the rest of the world combined. make their money in the united states. in other words, the u.s. accounts for nearly 2/3 of all global sales of eliquis, not a single single dollar of this revenue is going to pbms. an hundred% just going to bristol myers squibb.

johnson & johnson has a port to its shareholders that made over 30 billion in revenues selling the arthritis drug stellaris in the united states since 2016 carmarthen twice as much as rest of the world combined. nothing to do with pbms. merck has reported to its shareholders that it made 43.4 billion selling the cancer drug keytruda and the united states compared to 30 billion in the rest of the world combined. now our ceo panelists from drug companies will tell us this morning how much it costs to develop new drugs. and often the research that they undertake for new jersey is not successful, , and they are righ. we appreciate that. but what they have not told us in the written testimony is that 40 major pharmaceutical companies, including johnson & johnson and mark, spent $87 billion more on stock

buybacks and dividends over recent tenure period than what they spent on research and development, more on stock buybacks and dividends than in research and development. in fact, bristol myers squibb spent 3.2 billion more on stock buybacks and dividends in 2022 bandits spent on research and development. johnson & johnson spent $46 $46 billion more on stock buybacks and dividends than is spent on research and development since 2012. in other words, these companies are spending more to enrich their own stockholders and ceos and are in finding new cures and new treatments. now, the average american who hears all of this is asking a very simple question. how does all of this happen? what's going on? how could drug companies charges in some cases ten times more than they charge canadians are people around the world for the

same drug? how did he get away with this when so many of our people cannot afford the high price of the drugs that they need? how can it be uniquely among industrialized countries that these companies, not just these companies but the pharmaceutical industry in general, can raise prices anytime they want to any level they want, want to double the price is, do it want. how do they get away with all of that? and here in my view is the answer. the united states government does not regulate drug companies with very few exceptions. the drug companies regulate the united states government. that is the sad state of affairs in a corrupt political system. over the past 25 years the pharmaceutical interest, not just these companies, the entire industry, spent over $8.5 billion on lobbying and more than 745 million on

campaign contributions. and let me be fair. i do what to misspeak. they are bipartisan. they give to republicans. they give the democrats. and i am especially impressed by the pfizer drug company, pfizer's letter this morning, contributing $1 million to the republican party in kentucky to expand its headquarters named after republican leader mitch mcconnell. but again, it's not just republicans. it's democrats as well. unbelievable, this is an astounding fact, last year drug companies had over 1800 well-paid lobbyists here in d.c. to make sure that congress did their bidding. there are 535 members of congress, and 1800 well-paid lobbyists, over three for every member of congress so if you want to know why you're paying the highest prices in the world, america, that's why. now, here is some goodies in the

midst of all that. we are beginning, beginning to take on the greed of the pharmaceutical industry. as result of inflation reduction act has several years ago, medicare for the first time ever is beginning to do what every major country on earth does and what the veterans administration has been doing for over 30 years, and that is to negotiate for lower prices of drugs, including stelara and eliquis. let me conclude by saying this. i am proud of what this committee up to this point has accomplished last year as you all remember the ceo of moderna committed during a h.e.l.p. committee hearing that his company would make certain that no one in america with have to pay for the vaccine out of pocket. we appreciated that. in a separate h.e.l.p. committee hearing last may that ceo of eli lilly committed that his company would not raise prices on existing insulin products after having in fact, lowered them. but let's be clear. much more needs to be done. i look forward to hearing from

our ceo panelists this morning as to how they are going to go forward to substantially lower the cost of prescription drugs in this country. senator cassidy, or no recognized for an opening statement. >> thank you. a. q. khan chair sanders. let's just be clear. everybody on this panel cares about the high cost of prescription drugs and wants to work on real solutions to address this. but it's also clear that this hearing is not about finding legislative solutions. it's kind of following a formula. we publicly attack -- i don't but others come public attack private citizens from being successful under capitalism. we grossly oversimplified a problem and blame corporations. we demand ceos come before the committee for public verbal stoning. we reject the offer to send top executives with subject matter expertise and responsibility regarding the issues at hand and

threaten a subpoena when ceos are suspicious that they will get a fair shake. hold the hearing, get soundbites, then pick another set of ceos for a show trial, we don't pass meaningful legislation. if that sounds familiar that's been hearing with starbucks founder howard schultz, moderna ceo stephan benzo, and now this hearing with the same formula. i would've gladly join the chair and exploring solutions address i cost of prescription drugs. i'm a doc. i've worked in a public hospital for the uninsured for 25 years. i did my best to get care to those who otherwise would not have received. i am aware of this. i'm also aware of the perverse incentives, they kind of like, my gosh, it shouldn't be high but it is high. bad actors gain the system and we need solutions that benefit patients and improve access. but the majority was not interested in working with the site of the dais to hold a series hearing to inform serious

legislation. they didn't seek republican input. the goal was to hold you guys in to cry capitalism and blame these corporations to the high cost of drug prices. now by the way, of course. >> companies play a role and hopefully will get answers today to legitimate questions about how high drug surprise but the problem is far greater and more complex than individual companies or even a a set of companies within an ecosystem is incredibly complex. why do americans pay more for certain drugs in patients in other countries? to understand when we needa serious effort to navigate the network of diverse incentives throughout the health care system. i lived in it for 25 years. i am very kind of aware of it. taking a substantial look at insurance benefit design, price transferred to come regulatory, intellectual property barriers, the perverse effect government discount programs have upon prices charged to commercial patients, et cetera. one example, just to see get a little bit of complexity here. the 340b drug program resulted

in in a 54 gilligan introduced us in 2022 but we actually don't know if those discounts lowered isis for the patient who bought the drug. there are reports that patients pay cash when the intermediary took the full price, even though 340b should've lowered it. that is a serious investigation being conducted by the side of the dais that the other side of the dais was not interested in participating in. that is an understanding of an ecosystem. i understand there's no one more eloquent than chair sanders for medicare for all we can cherry pick examples of how other countries are doing something better. i could cherry pick the opposite. candidate is struggling just to show those complexity, let me take an example. candidate the struggle with specialty care. in may of last you the canadian government began to send 4800 canadians from british columbia to washington state to quote insure people have faster access to life-saving radiation treatment, end quote.

they can afford their system because we are right next door. relatedly, to this string after that, allison, canadian woman paid for own treatment in the united states after the provincial health authority in british columbia denied access to life-saving chemotherapy. canada had a lower cost drug council of the didn't carry the chemotherapy so she paid for out of pocket in the so she could have life-saving chemotherapy. the united states is not perfect, but if we cherry pick from other countries, we have to do a more thorough investigation to see if there is a balance there. now let's return to prescriptions. canadians pay less than we do. let's figure out why. but let's also point out the public health insurance in canada only covers 24% of newly developed drugs. now, maybe that's a trade-off but i can tell you, you tell an american they can have access to life-saving drug, they're going

to see you in court. they're going to sue and they're going to say i i want that ac. the uk only covers 38% of newly available drugs. americans just would not tolerate that. it's fair to say that alice, those radiation treatment patients or those not getting the new develop life-saving drugs more quickly mai tai in those countries that don't have access to the same treatments as do we in the u.s. these are serious questions. one more time, i may doc. i aware of this but we need to fully consider all these issues and then maybe bring in at the end, but we will bring in with the context which is complete as opposed to isolated. as i sit at the start, it would be best if this were a genuine exercise. i am so willing to do the work on this as are my colleagues. we've shown that willingness on work on pbm reforms in generic drugs. and even though the chair and i

got off to a rocky start, we did some pretty good work on that, mr. chair. i think we got some good bipartisan legislation, so this committee i agree with you can accomplish that. i don't want the committee to devolved into ceo whack-a-mole, ends up with no serious legislation as a result. further proof of what i consider the n series and cynical nature of the street is that the minority as the church other witness on the panel that could actually explore some of these issues side-by-side the ceos. that was turned down. we wanted and academic experts in drug price the could provide unbiased and substandard and input to the issues at hand. our what this was not allowed. he will be on the next the way this works is this gets all the publicity in the nixon gets crickets. and so we've not had the opportunity. and i'll also point out we didn't split the majority and minority witnesses into different panels during several hearings which promoted kind of labor union issues. i can think of no reason to not

allow our witnesses to be a now, except perhaps ruining the optics. as i said at our last markup, what ends up being hollow messaging gives d.c. a bad reputation. folks want real answers. a want relief from high prices. it is in part what were going to hear today, , but it would be separated from a context that would have made it a lot more productive. if you're telling voters you're going to do something when you know at the get go you will have no legislation solution which emerges, and that's why folks don't trust. so if we're just looking for a social media clip, then i suppose we've accomplished something. let's make a difference for the people whom we represent. for this patient and hospitals where i once traitor who otherwise would not have access to care. we have the ability to craft meaningful legislation. let's do it. with that i give. >> to senator cassidy. our first witness will be

joaquin duato, chairman and ceo of johnson & johnson. mr. duato has served as johnson & johnson's chairman since 20 23 a chief executive officer since 2022. mr. duato, thanks for much for being with us. >> chairman sanders, ranking member cassidy and members of the committee, thank you for the opportunity to be of today johnson & johnson has collaborated with this committee over several decades to advance healthcare solutions for patients, including on diversity and clinical trials, nursing and healthcare workforce, pandemic preparation, mental health, and regulatory pathways for novel cell and gene therapies. i applaud this committee for your commitment to such critical priorities. i have been with j&j for more than 75 years and have held roles in europe and in the u.s. i understand the global challenges and complexities of healthcare innovation and delivery. and today i look forward to discussing our approach to pricing and the work we do to

advance healthcare for all americans. fundamentally, our decision-making is guided by the values set forth in our credo which states that our first responsibility is to the patients. our drug pricing decisions reflect our commitment to bringing forward innovative measures for patients to the effort patients tomorrow. first, our prices are based on the value our medicines bring to patients, the healthcare system, and society. we take into consideration that our medicines improve patient's quality of life and survival rates, while often reducing healthcare costs. and for context, in 2022 the average net price of our medicines declined for the six year in a row by 3.5 percentage 3.5 percentage points. over those six years prices have declined by almost 20%, and the real inflation adjusted price decline was more than 40%. second, we price our medicines

to support patient access. in 2022 although we paid $39 billion in rebate discounts and fees, almost 60% of the average lease price of her drug. with the intent the patients benefit from the substantial cost savings. we also support patient affordability and access by funding patient assistance programs. in 2022 these programs help more than 1 billion, 1 million underinsured patients, and we donated $3.8 billion in free medicines and other support to help patients with no insurance. finally, we price a medicines to meet our commitment to innovate and develop differentiated and novel medicines for patients. the investment required to do so is massive. the average cost of bringing in drug through clinical trials in our industry is more than $2 billion. however, more than 90% of the drugs that entered clinical

trials do not make it to patients. consequently, our r&d investment is enormous and totals near $78 billion since 2016. despite the tremendous investment required to bring drugs to patients, drug costs in the u.s. have not increase significantly as as a percenf total overall healthcare costs. in fact, drug spending in the u.s. is about 14% of healthcare spending, slightly below the average for the rest of the world. while total u.s. health care spending is higher than other developed nations, is spending allows american patients to receive cutting edge healthcare earlier than any other country in the world. however, the burdensome obligations imposed in u.s. are hard for patients to meet and undermine access and health equity. remarkably, the gao found that patient co-pay obligations often

exceed payor costs for the drugs. this means that patients sometimes pay more for their medicines and their insurers. clearly, this part of the system is not working as intended. we support proposals to reconcile this inequity and torture patient access. as outlined in my testimony, congress should stop middlemen from taking for themselves, the assistance that pharmaceutical companies intend for patients. and finally, it is essential that we reject the price caps and controls that exist in other countries, which stand innovation. our nation's robust biopharmaceutical industry was created by policy choices that prioritize earlier patient access to breakthrough medicines and incentivize investment in medical innovation. thank you for the bipartisan efforts of this committee and for the opportunity to engage in today's discussion. i look forward to your question

questions. >> thank you very much, mr. duato. our next what this will be robert davis, chairman and ceo of merck. mr. davis has served as chairman since december 2020 ceo since 2021. thank you very much, mr. davis, for mr. davis, for being here. .. >> based in new jersey, our company is one of the world's most advanced research intensive biopharmaceutical companies, an organization at the forefront of providing innovative health solutions in advanced diseases in people and animals. i joined merck 10 years ago

they were on the precipice for an oncology treatment. at the time people close to me were battling cancer and unfortunately were not able to benefit from this amazing discovery. following that first approval, merck has demonstrated the efficacy of katruda and reached many americans. the impact is difficult to overstate. with the recent american cancer society report finding cancer mortality in the united states has fallen 33%, representing an estimated four million americans whose deaths have been averted and our work continues as we advance into more tumor types and earlier stages of cancer. remarkable progress like this does not come cheaply. for katruda, invested 46

billion in development and we expect to invest another 18 billion into the 2030's and oncology is just one of merck's many areas of discovery. right now nearly 20,000 researchers seeking break thieu treatments for immune disorders, infectious diseases, alzheimer's and other ailments threatening the health of many people. to advance this critical work, we've invested more than $159 billion in r and n since 2010, including 30 billion in 2023 alone and have invested more than 10 billion in capital in the form of both investments in manufacturing and r and d, over the last five years, in the united states, creating more jobs for americans. we do not hesitate to make these investments because they are necessary. at the same time many americans are struggling to afford health care, including prescription medicines and we're eager to find solutions to these access

and affordability challenges. that's why we supported changes to medicare part d that allow beneficiaries to pay their costs over time and publicly disclosed our u.s. pricing data, including the average rebates and discounts we provide. in addition we offer coupons and support a patient assistant program for patients who cannot afford the medications that they need. in the past five years, this program has helped nearly 800,000 patients to obtain merck products free of charge with an estimated value of 7.8 billion dollars. but the reality is that merck's efforts are alone are far from sufficient. they could not and cannot address the underlying structural issues pending our system. as more power and control has been concentrated into the ever smaller number of vertically consolidated players and it's increased dramatically and contracting with them, merck continues to experience increasing pressure to provide even larger discounts and the

gap between list and net price continues to grow. and patients are not benefitting from the steep discounts we provide. these problems could be addressed if other actor's revenue streams, removing incentives to favor high list prices and ensure that less flows to the middle men who do not discover, develop or manufacture them. in addition the substantial savings provided by merck and other manufacturers should be required to pass through to patients, to lower their out of pocket costs. we firmly believe that reforms like these will create a drug pricing system that incentivize incentivizes the new medicines as they see that patients have the life saving innovations. and we must hold onto a market that's free, independent one

that encourages, and drives the american economy and creates jobs and continues to deliver innovation and new treatment discoveries. i'm here today to pledge our support and cooperation in these efforts. thank you for your time and your consideration of these important perspectives. >> thank you very much. our third witness will be chris burnham, ceo bristol myers squibb and served since november, 2023. thank you for being here, mr. burnham. >> thank you for having me here today. i'm proud to be representing bristol myers squibb an american company that's committed to transforming patients' lives through science. i've spent more than 20 years in this industry, the majority in smaller, science-driven biotechnology companies. i joined bms because we have a similar focus on leading dridge

driving innovation to bring more medicine to patients faster. to help illustrate the type of work we've been doing more than 150 years at bms let me provide two illustrations of how our innovative medicines have helped patients and provided tangible benefits to society. our work in hiv/aids transformed this disease from a death sentence into a correspond being condition. similarly, our pioneering i am nuno oncology treatments harnessed the body's immune system to fight cancer and have contributed significantly to improved outcomes across a number of tumors, including metastatic melanoma, where the combination of these two medicines has changed the median life expectancy from less than nine months to over six years. i'm proud that our record of innovation continues today. we've invested more than 65

billion dollars in research and development over the past decade. this has resulted in truly novel and transformational medicines, in cardiovascular disease and work in cancer and working to bringing to patients the first treatment for schizophrenia in 30 years. these medicines are, but a few examples of the innovation that results from an american health care system that not only accounts for the majority of new medicines launched each year, but also, one that delivers those medicines to u.s. patients faster than anywhere else in the world. this isn't by chance. the united states has built a health care system that prioritizes patient and physician choice, as well as the broad and rapid availability of cutting edge medicine. this is in stark contrast to many systems outside of the united states which while they

may deliver lower prices, carry an often overlooked trade-off that patients often wait longer for new medicines, sometimes never approved or reimbursed. for example, canadian patients have access to approximately half of the medicines available in the united states and patients in other countries face a similar reality. despite its benefits, we know our american system is far from perfect. patients bear the brunt of a complex u.s. system that results in increased health care course and lack of affordability. we have to make the system work better for them. after all, innovation that does not make it to patients is no innovation at all. while prescription medicines account for a relatively small portion of overall health care spending, we believe we have an important role to play in prioritizing the development of

medicines that will bring savings to the health care system and as an industry, we should set a higher bar for doing just that. similarly, we have a role to play in addressing affordability and stand ready to partner with congress and others to address this issue for patients in a holistic manner. but in developing those solutions, we should not abandon our system for one that denies u.s. patients the broad and rapid access to vital medicines that they appreciate today. we support policies that lower patient out of pocket costs without ultimately harming innovation. the need to strike this balance should not be abstract. i expect many of us in this room have lost a loved one to cancer or another devastating disease. in my case, it was one of my best friends and it happened as he awaited a medicine that i believe could have saved his life. this is an almost daily

reminder to me that making patients wait for weeks, months, or years can be the difference between life and death. thank you again for having me here today on behalf of bms and the more than 30,000 employees who share my passion for delivering new medicines for patients, i look forward to answering your questions. >> thank you very much. before i begin the first round of questions let me remind our witnesses that while the health committee does not swear in witnesses as a general rule, federal law at 18 u.s. code section 1001 prohibits no one willingly making any false statements to the senate regardless of being underoath and in response to many of your testimonies, we are aware of

the many important, life-saving drugs that your companies have produced and that's extraordinarily important, but i think as all you know, those drugs mean nothing to anybody who cannot afford it and that's what we're dealing with today, that millions and millions of our people cannot afford the outrageously high costs of prescription drugs in this country. now, my time and the time of all of the members is limited so we're going to just-- i'm going to ask -- so my time is limited so i'm going to start by asking all of you a number of questions and i would appreciate it if you could respond with yes or no answer. it turns out that in our dysfunctional and extraordinarily expensive health care system hundreds of thousands of americans have gone to go-fund-me in order to

raise money to pay for their health care needs and for their prescription drugs. let me ask mr. davis, if i might. have you ever severaled on go-fund-me for your can drug. keytruda? >> no, i have not. >> we have, i and my staff have and we've found over 500 stories of people trying to raise funds to pay for their cancer treatments. one of those stories is a woman named rebecca, a school lunch lady from nebraska with two kids who died of cancer after setting up a go-fund-me page because she could not afford to pay for keytruda. rebecca had raised $4,000 on her go-fund-me page, but said the cost of keytruda and the cancer treatment was $25,000 for an infusion every three weeks. mr. davis, and please, yes or

no, is it true that the list price of keytruda 191,000 a year in the united states? >> that's close to being true, yes. >> thank you. >> is it true that that same exact drug can be purchased in canada for $112,000 a year and $44,000 a year in japan? >> generally, yes. >> mr. davis, even though the price of keytruda is one quarter of the price in japan, compared to the united states, does your company, does merck make a profit selling keytruda in japan? >> we do. >> so what i understand is you make a profit selling keytruda in japan for one quarter of the price that you sell it for in the united states. my question to you is a pretty simple one, will you commit to lowering the price in keytruda in the united states for the price of japan? >> well, senator, i think first

i acknowledge the prices in the united states are higher than they are in many of the countries you said and not for all drugs, but for many drugs and that's the reality we face. but i think it's also important to point out that you get access in the united states faster and more than anywhere in the world. we have 39 indications for keytruda across 17 tumor types in the united states. you look across europe, it's in the 20's, if you look across japan, it's in that number, a little bit less. so there is a reason why the prices are different, and we need to be careful because we are also seeing in those markets that they are unwilling to support the innovation and we are very hardly -- working hard to get them to understand the need for helping to fund. >> i apologize you for cutting you off. but i did want to make this point. again, we all appreciate the breakthrough in important drugs that you and other companies have to save lives. no debate about that.

i do want to point out after all is said and done and after all the money we spend on prescription drugs and health care in general, the life expectancy in japan is nine years longer than it is in the united states. senator cassidy talked about canada, the life expectancy in canada is six years longer than in the united states. life expectancy in portugal is six years longer, life expectancy in the u.k. is four years longer. let me ask the last question to mr. davis. as i understand it, you made $52 million in total compensation in 2022. will you commit to not accepting a single dollar more in compensation until there is not a single go-fund-me page for keytruda. >> well, i can tell you at merck, we are very much sensitive to what's happening with patients and that's why we have very important patient

assistance programs. we commented on the fact we have over 800,000 patients benefitting where we provide free drugs for those who can't afford it as well as other assistance programs that help with co-pay and others, so we're very committed as a company to doing what we need to do to try to help alleviate the challenges patients face that you're focusing on and that's my focus as the ceo. >> thank you. >> mr. burnham, bristol myers squibb. caroline from florida says she cannot afford eloquis, can't afford it so she'll stop taking it the risk of stroke. 7100 a year in the united states. dr. melissa barber, an expert at yale university estimated that it costs just $18 to manufacture a year's supply of eloquis.

$7100 and we pay $1800 to manufacture. is it true, the same drug, it can be purchased in canada for $900 a year? >> senator, that's roughly correct. >> let me ask you th is, test test test test test test test test test eloquis for $900 a year in canada? >> senator, we do make a profit. >> so you're selling the product for 13% of what -- in test test test test test test test test test test test test canada where you make a profit? >> senator, we can't make that commitment primarily because the prices in these two countries have very different

systems t test test fferent things. in canada medicines are generally made less available and it takes oftentimes considerably longer for those medicines to be available on average. >> i apologize, i do apologize. life expectancy in canada is six years longer in canada than in the united states. mr. burnham, your company spent over $12 billion on stock buybacks in 2022. given that reality, can you tell caroline why you can't lower the price of eloquis? >> first, senator. let me say no patient should have to go through the types of choices that the patient you just described go through. it is our commitment to continue to bring down the price of medicines in the u.s. and i would love the