Senate Judiciary Committee Issues Testimony From PhRMA VP Ulrich (Part 2 of 2)

WASHINGTON, June 5 -- The Senate Judiciary Committee released the following testimony by Jocelyn Ulrich, vice president of policy and research at PhRMA, from a hearing dated May 21, 2024, entitled "Ensuring Affordable & Accessible Medications: Examining Competition in the Prescription Drug Market":

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According to Harvard researchers, "the most insidious effect of 340B...is the incentive it gives clinics to prescribe high-cost medications, even when effective and far cheaper options exist."156 To this point, there is also evidence demonstrating the 340B program incentivizes use of more expensive medicines in the Medicare program when a lower-cost biosimilar may be available.157

As a result of these trends, several reports and studies have found higher drug spending at 340B facilities for Medicare and commercially insured patients compared to non-340B sites of care.158,159 Additionally, MedPAC has noted that, although 340B hospitals are able to purchase outpatient medicines at a steep discount, beneficiary cost sharing in Medicare Part B is based off the default payment rate (typically, average sales price plus 6%), which leaves seniors paying higher out-of-pocket costs than they would face if Medicare paid less for 340B-discounted medicines.160For-profit pharmacies, often affiliated with large PBMs, also profit from the 340B program. However, evidence shows the 340B discounts received by these pharmacies are rarely shared with patients.161 At this point, it seems patients are the only ones not benefiting from the billions of dollars in discounts manufacturers provide each year to fund the 340B program.

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Policy Proposals to Enhance Competition

PhRMA strongly supports policies that foster a robust, competitive market for generic and biosimilar medicines while providing needed incentives for continued biopharmaceutical innovation. Robust, competitive markets for generic drugs and biosimilars are critical for supporting affordable care. Prior to the passage of the IRA, the natural evolution of medicines was that, after an innovator undertook the time-consuming, uncertain, and expensive development process and obtained FDA approval, it would enjoy an appropriate period of IP protections, including both data protection and patent protections, following which generic or biosimilar versions, as appropriate, could be approved. Indeed, this is the very cycle that Hatch-Waxman and BPCIA were intended to encourage. The IRA is already significantly disrupting this cycle, reducing the incentives for the introduction of innovative therapies and disrupting the competition that results when there are multiple alternatives in a given therapeutic class. Furthermore, the increasing impact of vertical integration is hindering the ability of patients to access lower cost alternatives to brand medicines once they are available.

There are several areas where competition could be enhanced without reducing incentives for innovation, which are described below:

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Address Certain Types of Patent Settlements

Congress enacted as part of the Hatch-Waxman Act a complex framework governing the timing of generic applications that respects IP and specifically contemplates patent litigation. Under the process, innovator companies are required to submit information on patents claiming the drug substance, drug product, and methods of using the drug to FDA (known as "listing") for publication in FDA's Orange Book. A generic applicant needs to certify with respect to listed patents whether it seeks to market its proposed generic product prior to expiration of the patent or after expiration. If it seeks to market its product prior to patent expiration, it generally must file a "Paragraph IV certification" with FDA in which it certifies its belief that the patent is invalid or would not be infringed by the generic product, and it must notify the innovator company of that certification. The innovator company can then bring a lawsuit under a special cause of action for patent infringement that allows for litigation prior to the generic marketing its product. If the suit is brought within 45 days of the innovator receiving notice of the Paragraph IV certification, FDA cannot approve the generic application for 30 months (or sooner if the generic is successful in the litigation) so that the court can address the patent issues prior to marketing of the generic product. Hatch-Waxman also provided an incentive to generics to challenge patents under the Hatch-Waxman process in the form of 180-day generic exclusivity for the first generic to file a paragraph IV certification against later filed generic applicants.

In general, if the generic applicant wins in litigation, FDA can approve the generic product; but if the innovator wins, FDA cannot approve the generic product for marketing until patent expiration. There can be many generic challengers for individual products, so Hatch-Waxman can lead to a substantial amount of litigation. Like other patent infringement litigation, the parties may choose to settle the case, with such settlements generally leading to generic companies entering the market prior to patent expiration, and potentially prior to when they could have entered if the litigation had continued. Settling such litigation is not surprising given the burden of litigation and the uncertainty for both innovators and generics.

The FTC and some other stakeholders have asserted that there are anticompetitive settlements in which innovator companies have provided cash payments and generic companies have delayed marketing their products. Under the 2013 Supreme Court decision in FTC v. Actavis, the FTC can seek to enforce the existing law against patent settlements with cash payments under the "rule of reason" standard, which is a legal standard involving a fact-based inquiry. The FTC has asserted a broader view, and there is legislation pending that would create a presumption that certain agreements are anticompetitive. There have also been bills introduced in several states, and California has passed restrictive legislation.

PhRMA supports addressing patent settlements with federal legislation to ensure generic, biosimilar and innovator companies can resolve patent litigation and allow generic and biosimilar medicines to enter the market prior to expiration of innovators' patents, without applying new policies retroactively to previous agreements or restricting companies' ability to enter into pro-competitive agreements in the future. We are committed to working with the Committee to address concerns in this area and promote competition.

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Advance a Balanced Approach to Addressing Product Hopping

There have been situations in which companies have been held liable after taking steps in conjunction with the introduction of new versions of products that were found to be anticompetitive. Legislation is pending that would create a presumption of anticompetitive effect in situations defined as "hard switches" or "soft switches." A "soft switch" as defined in the legislation, for instance, can include situations in which a company develops a new product and takes actions that may "unfairly disadvantage" the earlier version of the product, even though that earlier version is still marketed. The legislation, however, gives little guidance on what activities could constitute "unfairly disadvantaging" the earlier product. This could put a cloud over many types of innovations after an original FDA approval that render a medicine safer or more effective or improve patient care or quality of life. If Congress acts, it should do so in a balanced way that supports continued improvement to medicines that bring new benefits for patients, while addressing potential anticompetitive behavior.

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Ensure the Patent System Continues to Provide Certainty to Investors and Innovators

As noted above, the IP system is a fundamental incentive to innovate. When making long-term decisions about investments in R&D, companies look for certainty, including with respect to the availability of IP protections that would protect the investments. PhRMA is pleased to see the Committee engaging on ways to ensure that the U.S. patent system continues to incentivize innovation and provide certainty to investors and innovators across sectors including with respect to providing clarity for patent owners on patent subject matter eligibility and Patent Trial and Appeal Board proceedings.

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Ensure That Agencies Treat Information Shared Amongst Them with Proper Confidentiality Considerations

There have been discussions and legislation proposed about requiring enhanced collaboration between the USPTO and FDA. Data have not been presented suggesting there is a systemic issue warranting such legislation. There are also fundamental differences in how the agencies treat information provided to them, as the USPTO generally publishes information it receives after a period of time and FDA protects the highly sensitive trade secret information it requires about products. Any requirement to share such information with the USPTO would need to address fully confidentiality considerations.

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Break the Link Between PBM Compensation and the Price of Medicines

To the extent that PBMs provide services to stakeholders in the pharmaceutical supply chain, they should be entitled to compensation based on the value of those services. However, PBM compensation should not be tied to the price of a medicine. PhRMA supports efforts in the both the House and the Senate to "delink" PBM compensation from the price of a medicine in both the commercial and Part D markets and instead limit PBM compensation to bona fide service fees based on the fair market value of services appropriately rendered for a manufacturer.162 Multiple bills that would accomplish this goal are currently under consideration by Congress, including the Modernizing and Ensuring PBM Accountability Act (S.2973) and the Delinking Revenue from Unfair Gouging Act (DRUG) Act (H.R. 6283).163,164,165,166 The Congressional Budget Office (CBO) has projected that delinking in both the Part D and commercial market would reduce federal spending.167,168

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Rebate Pass Through at the Point-of-Sale

Requiring PBMs and health plans to share the savings they receive on medicines directly with patients at the pharmacy counter in the commercial market and Medicare Part D would lower patient out-of-pocket costs and help realign payer incentives. Patients who take brand medicines with large rebates could see sizable reductions in out-of-pocket costs if the rebates were passed on to them at the pharmacy counter.169 Actuaries estimate that sharing negotiated rebates directly with patients at the point-of-sale would have a negligible impact on premiums.170 The substantial savings for patients at the pharmacy counter would outweigh those premium increases and provide patients with increased access and affordability for often lifesaving medicines.

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PBM Transparency

Lack of transparency and the complexity of PBM arrangements can make it difficult for plan sponsors to assess PBM performance on their behalf. Requiring PBMs (and their affiliates) to report aggregate information on prescription drug utilization, costs, rebates, and fees, as well as conflicts of interest would provide information necessary for employers and plan sponsors to properly evaluate whether PBMs are effectively managing the pharmaceutical benefit and would help ensure accountability to PBM customers.171 According to CBO, proposed federal legislation that would require PBMs to disclose detailed aggregate information on prescription medicine spending and utilization to plan sponsors could enable employers and plan sponsors to better evaluate PBM contract provisions and obtain more favorable contracting terms, as well as increase competition among PBMs.172,173,174 Improved transparency into PBMs' business model, including existing conflicts of interest, would provide valuable information to federal and state policymakers, employers, and patients.

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Protect Patient Assistance

Policymakers should ensure that patient assistance benefits patients by closing policy loopholes that allow PBMs, their affiliates, and other vendors to utilize accumulator adjustment programs (AAPs), copay maximizers, and alternative funding programs to capture money intended for patients. The bipartisan Help Ensure Lower Patient (HELP) Copays Act would require commercial health plans to count patient assistance towards deductibles, coinsurance, copayments and out-of-pocket limits. This patient-centered reform would protect patients' choices about how they pay their cost-sharing obligations, effectively prohibiting the use of AAPs in all non-grandfathered commercial health plans and mitigating copay maximizers. The bill builds on action taken by 19 states, DC, and Puerto Rico that have already passed AAP bans in their state-regulated markets.175

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Address the "Pill Penalty"

Rectify the disparate treatment of small molecule medicines under the IRA by aligning the price stetting timeline for small molecule medicines with those applicable to other drugs under the IRA's Medicare Drug Price Negotiation Program.

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Fix the "Special Rule" for Biosimilars in the IRA

Ensure that biosimilar products that are seeking to come to market have adequate certainty and predictability under the "Special Rule" process to allow the necessary time to launch. Improvements should include making the pause automatic in certain circumstances, making the pause two years long, and providing a more appropriate timeframe for product launch.

As the Committee considers policy solutions, we urge the Committee to avoid broad policies that would chill innovation, destabilize important incentives for research and development of new medicines, and negatively impact patient access to innovative therapies and cures. Instead of focusing on proposals that undermine the competitive marketplace for medicines and incentives for innovation, we encourage a focus on addressing market distortions and pragmatic solutions. PhRMA appreciates the opportunity to testify and looks forward to continuing to engage with the Committee on these critically important issues.

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Footnotes:

1 PhRMA, 2023 PhRMA Annual Membership Survey, 2023, https://phrma.org/-/media/Project/PhRMA/PhRMA-Org/PhRMA-Refresh/Report-PDFs/A-C/PhRMAmembership-surveysingle-page70523esdigital.pdf.

2 PhRMA analysis of NIH grant data.

3 Research!America, U.S. Investments in Medical and Health Research and Development 2016 - 2020. January 2022.

4 Schlander, M., Hernandez-Villafuerte, K., Cheng, CY. et al. How Much Does It Cost to Research and Develop a New Drug? A Systematic Review and Assessment. PharmacoEconomics 39, 1243-1269, 2021. https://doi.org/10.1007/s40273-021-01065-y

5 JA DiMasi, Grabowski, RW Hansen. Innovation in the pharmaceutical industry: New estimates of R&D costs. J Health Econ. 2016;47:20-33. https://www.sciencedirect.com/science/article/abs/pii/S0167629616000291?via%3Dihub.

6 US Food and Drug Administration. Summary of NDA Approvals & Receipts, 1938 to the Present. https://www.fda.gov/about-fda/histories-fda-regulated-products/summary-nda-approvals-receipts-1938-present.

7 US Food and Drug Administration. New Drugs at FDA: CDER's New Molecular Entities and New Therapeutic Biological Products 2012 - 2014. http://wayback.archive-it.org/7993/20161022052126/http://www.fda.gov/Drugs/DevelopmentApprovalProcess/DrugInnovation/default.htm.

8 US Food and Drug Administration: Novel Drug Approvals for 2022. https://www.fda.gov/drugs/new-drugs-fda-cders-new-molecular-entities-and-new-therapeutic-biological-products/novel-drug-approvals-2022.

9 US Food and Drug Administration. New Drugs at FDA: CDER's New Molecular Entities and New Therapeutic Biological Products 2015 - 2021. https://www.fda.gov/drugs/development-approval-process-drugs/new-drugs-fda-cders-new-molecular-entities-and-new-therapeutic-biological-products.

10 Congressional Budget Office. Prescription Drugs: Spending, Use, and Prices. January 2022. https://www.cbo.gov/publication/57772.

11 IQVIA. The Use of Medicines in the U.S. 2024: Spending and Usage Trends and Outlook to 2028. April 2024. https://www.iqvia.com/-/media/iqvia/pdfs/institute-reports/the-use-of-medicines-in-the-us-2024/the-use-of-medicines-in-the-us-2024-usage-and-spending-trends-and-outlook-to-2028.pdf.

12 Association for Accessible Medicines, The U.S. Generic & Biosimilar Medicines Savings Report, September 2023.

13 Altarum Institute. Projections of the Non-Retail Prescription Drug Share of National Health Expenditures. July 2022. https://drugchannelsinstitute.com/files/Projections-of-Non-Retail-Drug-Share-of-NHE-2022.pdf.

14 For example, the price of a medicine commonly used to prevent cardiovascular disease dropped 95% between 2007 and 2017, while the average charge for a surgical procedure to treat it increased 94% over the same period. PhRMA analysis of Healthcare Cost and Utilization Project (HCUP). National (Nationwide) Inpatient Sample (NIS) database. 2007, 2017. Accessed July 2020. https://www.ahrq.gov/research/data/hcup/index.html.

15 Percher E. Trends in Profitability and Compensation of PBMs and PBM Contracting Entities. Nephron Research. September 2023.

16 84 Fed. Reg. at 2341.

17 Association for Accessible Medicines. The U.S. Generic & Biosimilar Medicines Savings Report. September 2023. https://accessiblemeds.org/sites/default/files/2023-09/AAM-2023-Generic-Biosimilar-Medicines-Savings-Report-web.pdf .

18 Biosimilars Council, Humira Biosimilar Landscape: Still Waiting, January 2024. https://biosimilarscouncil.org/resource/humira-biosimilar-landscape-still-waiting.

19 TEConomy Partners, LLC. The Economic Impact of the U.S. Biopharmaceutical Industry: 2022 National and State Estimates. May 2024. Report prepared for PhRMA. https://www.teconomypartners.com/wp-content/uploads/2024/05/The-Econ-Impact-of-U.S.-Biopharma-Industry-2024-Report.pdf

20 Adis R&D Insight Database.

21 Battelle Technology Partnership Practice, The Economic Impact of the Biopharmaceutical Industry, July 2013.

22 TEConomy Partners, LLC. The Economic Impact of the U.S. Biopharmaceutical Industry: 2022 National and State Estimates. May 2024. Report prepared for PhRMA. https://www.teconomypartners.com/wp-content/uploads/2024/05/The-Econ-Impact-of-U.S.-Biopharma-Industry-2024-Report.pdf23 Ibid.

24 von Krogh, G, et al., "The Changing Face of Corporate Venturing in Biotechnology," Nature Biotechnology 30, no. 10 (2012): 911-15.

25 TEConomy Partners, LLC. The Economic Impact of the U.S. Biopharmaceutical Industry: 2022 National and State Estimates. May 2024. Report prepared for PhRMA. https://www.teconomypartners.com/wp-content/uploads/2024/05/The-Econ-Impact-of-U.S.-Biopharma-Industry-2024-Report.pdf

26 Patent and Trademark Office Director Andrei Iancu, 2018, Public Remarks, "The State of Care: Innovation and Access," July 2018.

27 See 35 U.S.C. 271(e)(1).

28 Roche Prods., Inc. v. Bolar Pharm. Co., 733 F.2d 858 (Fed. Cir. 1984)

29 Grabowski H et al. Continuing trends in U.S. brand-name and generic drug competition. J Med Economics 2021;24(1):908-917.

30 Ibid.

31 Cencora. US Biosimilars Landscape, Updated as of March 2024. https://www.amerisourcebergen.com/-/media/assets/cencora-biosimilars-usmarketlandscape-11mar24.pdf.

32 Association for Accessible Medicines. 2023 U.S. Generic and Biosimilar Medicines Savings Report, September 2023. https://accessiblemeds.org/resources/reports/2023-savings-report

33 35 U.S.C. Sec. 156(c)(3). See H.R. Rep. No. 98-857, at 17 (1984); 130 Cong. Rec. 23,058 (1984) (statement of Rep. Synar) ("The average effective patent life of a pioneer drug is reduced by 7 years because of FDA review"); id. at 23,059 (statement of Rep. Kastenmeier) (noting that "the effective market life of [innovators'] patented inventions was being eroded by excessively long periods of regulatory review").

34 H.R. Rep. No. 98-857, at 41 (1984).

35 130 Cong. Rec. 23,060 (statement of Rep. Kastenmeier).

36 Association for Accessible Medicines, The U.S. Generic & Biosimilar Medicines Savings Report, September 2023.

37 Zachary S. Predmore, et al., Improving Antipsychotic Adherence Among Patients With Schizophrenia: Savings for States, 66 Psychiatric Services in Advance 343 (2015).

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39 Government Accountability Office (GAO). Information on the Government's Right to Assert Ownership Control Over Federally Funded Inventions, 2009. Available at: www.gao.gov/products/GAO-09-742.

40 Wendy H. Schacht, Federal R&D, Drug Discovery, and Pricing: Insights From the NIH-University-Industry Relationship, Report RL32324 (Congressional Research Service), November 30, 2012.

41 PhRMA. 2023 PhRMA Annual Membership Survey, July 2023. https://phrma.org/resource-center/Topics/Research-and-Development/2023-PhRMA-Annual-Membership-Survey.

42 See Pierre Azoulay and others, "Public R&D Investments and Private-Sector Patenting: Evidence From NIH Funding Rules," Review of Economic Studies, vol. 86, no. 1 (January 2019), pp. 117-15. Available at: https://academic.oup.com/restud/article/86/1/117/5038510?login=true.

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44 The Congressional Budget Office, Research and Development in the Pharmaceutical Industry, April 2021. https://www.cbo.gov/publication/57126.

45 Department of Health and Human Services (DHHS), NIH. (2001). Report to the United States Congress, NIH Response to the Conference Report Request for a Plan to Ensure Taxpayers' Interests are Protected. July 2001.

46 Kneller, R., The Importance of New Companies for Drug Discovery: Origins of a Decade of New Drugs. Nature Reviews/Drug Discovery, 9, 867-82, 2010.

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49 D. Schulthess et al, The Relative Contributions of NIH and Private Sector Funding to the Approval of New Biopharmaceuticals, September 2023, https://vitaltransformation.com/2022/09/the-relative-contributions-of-nih-and-private-sector-funding-to-the-approval-of-new-biopharmaceuticals/.

50 NIH, Licensing Overview, https://www.techtransfer.nih.gov/licensing.

51 JA DiMasi, Grabowski, RW Hansen. Innovation in the pharmaceutical industry: New estimates of R&D costs. J Health Econ. 2016;47:20-33.

52 Thomas, J. March-In Rights Under the Bayh-Dole Act. CRS, 2016. Available at: https://fas.org/sgp/crs/misc/R44597.pdf.

53 NIH. NIH Office of the Director: Determination in the Case of Fabrazyme Manufactured by Genzyme Corporation, 2010. Available at: https://www.ott.nih.gov/sites/default/files/documents/policy/March-In-Fabrazyme.pdf.

54 NIH. Reports of the NIH Panels on Cooperative Research and Development Agreements: Perspectives, Outlook, and Policy Development, December 1994. Available from: https://www.ott.nih.gov/sites/default/files/documents/pdfs/NIH%20CRADAReportonReasonable-PricingClause1994.pdf

55 Press Release, NIH News, April 11, 1995. Available from: https://www.ott.nih.gov/sites/default/files/documents/pdfs/NIH-Notice-Rescinding-Reasonable-Pricing-Clause.pdf.

56 https://www.techtransfer.nih.gov/sites/default/files/CRADA%20Q%26A%20Nov%202021%20FINAL.pdf

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89 TJ Philipson, Y Ling, R Chang, The Impact of Price Setting at 9 Years on Small Molecule Innovation Under the Inflation Reduction Act, October 2023, https://ecchc.economics.uchicago.edu/files/2023/10/Small-Molecule-Paper-Final-Oct-5-2023.pdf.

90 PhRMA, Emerging Value in Oncology, How Ongoing Research Expands the Benefits of Oncology Medicines, July 2023. https://phrma.org/-/media/Project/PhRMA/PhRMA-Org/PhRMA-Org/PDF/PhRMAEmerging-Value-Report/PhRMAEmerging-Value-ReportFIN-webJuly2023v2.pdf.

91 Partnership for Health Analytic Research, Implications of the Inflation Reduction Act Price Setting Provisions on Post-approval Indications for Small Molecule Medicines, June 2023. https://www.pharllc.com/publication/implications-of-the-ira-price-setting-provisions-on-post-approval-indications-for-small-molecule-medicines.

92 PhRMA, Small Molecule Medicines: Why They're Vital for Patients, 2023. https://phrma.org/-/media/Project/PhRMA/PhRMA-Org/PhRMA-Refresh/Report-PDFs/S-U/PharmaSmall-MoleculeWhitePaperfactsheet042623v5.pdf.

93 PhRMA, Small Molecule Medicines: Why They're Vital for Patients, 2023. https://phrma.org/-/media/Project/PhRMA/PhRMA-Org/PhRMA-Refresh/Report-PDFs/S-U/PharmaSmall-MoleculeWhitePaperfactsheet042623v5.pdf.

94 Grabowski H, Long G, Mortimer R, Bilginsoy M. Continuing trends in U.S. brand-name and generic drug competition. J Med Econ. 2021 Jan-Dec;24(1):908-917.

95 AAM, The U.S. Generic & Biosimilar Medicines Savings Report, September 2023. https://accessiblemeds.org/sites/default/files/2023-09/AAM-2023-Generic-Biosimilar-Medicines-Savings-Report-web.pdf

96 Blackstone EA, Joseph PF. The economics of biosimilars. Am Health Drug Benefits. 2013 Sep;6(8):469-78.

97 HHS, HHS Selects the First Drugs for Medicare Drug Price Negotiation, September 2023. https://www.hhs.gov/about/news/2023/08/29/hhs-selects-the-first-drugs-for-medicare-drug-price-negotiation.html.

98 Analysis based on publicly available information at FDA Orange Book and Purple Book and press sources. Additional generic applications may be pending with FDA beyond the 3 noted.

99 AAM, The U.S. Generic & Biosimilar Medicines Savings Report, September 2023. https://accessiblemeds.org/sites/default/files/2023-09/AAM-2023-Generic-Biosimilar-Medicines-Savings-Report-web.pdf.

100 Herman B. FTC may probe pharmacy benefit managers. Axios, February 2022. https://www.axios.com/ftc-study-pharmacy-benefit-managers-drug-prices-3078116f-382a-4b05-ac62-da5bc1d1b892.html.

101 Top 50 PBM Companies and Market Share by Annual Prescription Volume (Second Quarter 2010). Drug Benefit News, April 2010.

102 Fein A. The 2024 Economic Report on U.S. Pharmacies and Pharmacy Benefit Managers. Drug Channels Institute, March 2024.

103 Ibid.

104 Guardado J. Competition in Commercial PBM Markets and Vertical Integration of Health Insurers with PBMs: 2023 Update. American Medical Association, 2023. https://www.ama-assn.org/system/files/prp-pbm-shares-hhi.pdf.

105 Fein A. The 2024 Economic Report on U.S. Pharmacies and Pharmacy Benefit Managers. Drug Channels Institute, March 2024.

106 Levitt JE, Lee DY. Cautionary tale: Plan sponsors losing manufacturer rebate dollars to PBMs through rebate aggregators. BenefitsPRO. April 2021. https://www.benefitspro.com/2021/04/15/cautionary-tale-plan-sponsors-losing-manufacturer-rebate-dollars-to-pbms-through-rebate-aggregators.

107 PBM Accountability Project. Understanding the Evolving Business Models and Revenues of Pharmacy Benefit Managers, December 2021. https://www.pbmaccountability.org/files/ugd/b11210264612f6b98e47b3a8502054f66bb2a1.pdf?index=true.

108 Potter W. Big Insurance Earnings Report Analysis 2023, April 2024. https://wendellpotter.substack.com/p/big-insurance-2023-revenues-reached.

109 Ibid.

110 84 Fed. Reg. at 2341.; Medicare Payment Advisory Commission. Report to the Congress: Medicare Payment Policy. Chapter 13: The Medicare Prescription Drug Program (Part D): Status Report, March 2021. https://www.medpac.gov/document/chapter-13-the-medicare-prescription-drug-program-part-d-status-report-march-2021-report.

111 Sood N, Ribero R, Van Nuys K. The Association Between Drug Rebates and List Prices. USC Schaeffer White Paper, February 2020. https://healthpolicy.usc.edu/research/the-association-between-drug-rebates-and-list-prices.

112 Senate Finance Committee. Insulin: Examining the Factors Driving the Rising Cost of a Century Old Drug. 2021. https://www.finance.senate.gov/imo/media/doc/Insulin%20Exhibit%20List.pdf .

113 Kansteiner F. Viatris launched 2 version of its interchangeable insulin biosimilar. Why? Fierce Pharma, November 2021. https://www.fiercepharma.com/pharma/viatris-launches-two-versions-its-interchangeable-biosimilar-semglee-bid-to-tackle-pricing.

114 Fein AJ. Four Crucial Questions About the Humira Biosimilar Price War. Drug Channels Institute, July 2023. https://www.drugchannels.net/2023/07/four-crucial-questions-about-humira.html.

115 Fein AJ. The Big Three PBMs' 2023 Formulary Exclusions: Observations on Insulin, Humira, and Biosimilars. Drug Channels Institute, January 2023. https://www.drugchannels.net/2023/01/the-big-three-pbms-2023-formulary.html.

116 Health and Human Services Office of Inspector General. Removal of Safe Harbor Protection for Rebates Involving Prescription Pharmaceuticals and Creation of New Safe Harbor Protection for Certain Point-of-Sale Reductions in Price on Prescription Pharmaceuticals and Certain Pharmacy Benefit Manager Service Fees. 84 Fed. Reg. 2340 (November 20, 2020). https://www.federalregister.gov/documents/2020/11/30/2020-25841/fraud-and-abuse-removal-of-safe-harbor-protection-for-rebates-involving-prescription-pharmaceuticals.

117 Percher E. Trends in Profitability and Compensation of PBMs and PBM Contracting Entities. Nephron Research. September 2023. https://nephronresearch.com/trends-in-profitability-and-compensation-of-pbms-and-pbm-contracting-entities.

118 Hayes T, Schmidt R, Suzuki S. Assessing Postsale Rebates for Prescription Drugs in Medicare Part D. MedPAC, 2023. https://www.medpac.gov/wp-content/uploads/2022/07/Tab-F-DIR-data-April-2023-SEC.pdf.

119 Government Accountability Office. Medicare Part D: CMS Should Monitor Effects of Rebates on Plan Formularies and Beneficiary Spending, September 2023. https://www.gao.gov/products/gao-23-105270.

120 IQVIA. Adalimumab Biosimilar Tracking. Biosimilar Council, April 2024. https://biosimilarscouncil.org/wp-content/uploads/2024/04/04022024IQVIA-Humira-Tracking-Executive-Summary.pdf.

121 Ibid.

122 Ibid.

123 David Wainer. "Coming to a CVS Near You: A Store Brand Monoclonal Antibody," Wall Street Journal. April 29, 2024. https://www.wsj.com/health/pharma/cvs-biosimilar-drugs-production-08227182.

124 Fein AJ. "What's Behind CVS Health's Novel Vertical Integration Strategy for Humira Biosimilars." Drug Channels. September 6, 2023. https://www.drugchannels.net/2023/09/whats-behind-cvs-healths-novel-vertical.html.

125 Fein AJ. "What's Behind CVS Health's Novel Vertical Integration Strategy for Humira Biosimilars." Drug Channels. September 6, 2023. https://www.drugchannels.net/2023/09/whats-behind-cvs-healths-novel-vertical.html.

126 David Wainer. "Coming to a CVS Near You: A Store Brand Monoclonal Antibody," Wall Street Journal. April 29, 2024. https://www.wsj.com/health/pharma/cvs-biosimilar-drugs-production-08227182.

127 Fein AJ. "What's Behind CVS Health's Novel Vertical Integration Strategy for Humira Biosimilars." Drug Channels. September 6, 2023. https://www.drugchannels.net/2023/09/whats-behind-cvs-healths-novel-vertical.html.

128 Xcenda. Skyrocketing Growth in PBM Formulary Exclusions Raises Concerns About Patient Access. September 2020. https://www.xcenda.com/insights/skyrocketing-growth-in-pbm-formulary-exclusions-raises-concerns-about-patient-access.

129 Ibid.

130 Wong WB, Seetasith A, Hung A, Zullig LL. Impact of list price changes on out-of-pocket costs and adherence in four high-rebate specialty drugs. PLoS One. 2023 Jan 19;18(1):e0280570. doi: 10.1371/journal.pone.0280570.

131 GAO. Drug Shortages: Public Health Threat Continues, Despite Efforts to Help Ensure Product Availability, February 2014. https://www.gao.gov/assets/d14194.pdf.

132 FDA. Drug Shortages: Root Causes and Potential Solutions, February 2020. https://www.fda.gov/media/131130/download.

133 Walker J. Generic Drugs Should Be Cheap, but Insurers Are Charging Thousands of Dollars for Them. Wall Street Journal, September 2023. https://www.wsj.com/health/healthcare/generic-drugs-should-be-cheap-but-insurers-are-charging-thousands-of-dollars-for-them-ef13d055.

134 Conrad R, Lutter R. Generic Competition and Drug Prices: New Evidence Linking Greater Generic Competition and Lower Generic Drug Prices. US Food and Drug Administration, December 2019. https://www.fda.gov/media/133509/download.

135 Walker J. Generic Drugs Should Be Cheap, but Insurers Are Charging Thousands of Dollars for Them. Wall Street Journal, September 2023. https://www.wsj.com/health/healthcare/generic-drugs-should-be-cheap-but-insurers-are-charging-thousands-of-dollars-for-them-ef13d055.

136 Trish E, Van Nuys K, Popovian R. U.S. Consumers Overpay for Generic Drugs. USC Schaeffer, May 2022. https://healthpolicy.usc.edu/research/u-s-consumers-overpay-for-generic-drugs/.

137 Mattingly TJ 2nd, Ben-Umeh KC, Bai G, Anderson GF. Pharmacy Benefit Manager Pricing and Spread Pricing for High-Utilization Generic Drugs. JAMA Health Forum. 2023 Oct 6;4(10):e233660. doi: 10.1001/jamahealthforum.2023.3660.

138 GAO. Drug Shortages: Public Health Threat Continues, Despite Efforts to Help Ensure Product Availability, February 2014. https://www.gao.gov/assets/d14194.pdf.

139 FDA. Drug Shortages: Root Causes and Potential Solutions, February 2020. https://www.fda.gov/media/131130/download.

140 Highly concentrated as defined by the Department of Justice and Federal Trade Commission Horizontal Merger Guidelines. https://www.justice.gov/atr/horizontal-merger-guidelines-08192010; https://www.finance.senate.gov/imo/media/doc/20230605sfctestimony.pdf.

141 Moran, Hospital Charges and Reimbursement for Medicines: 2023 Update Analysis of Markups Relative to Acquisition Costs. August 2023. https://themorancompany.com/wp-content/uploads/2023/08/PhRMA-Hospital-Charges-Report-August-2023.pdf.

142 Xiao R, Ross JS, Gross CP, et al. Hospital-Administered Cancer Therapy Prices for Patients With Private Health Insurance. JAMA Intern Med. 2022;182(6):603-611. doi:10.1001/jamainternmed.2022.1022. https://jamanetwork.com/journals/jamainternalmedicine/article-abstract/2791386.

143 EBRI, Cost Differences for Physician-Administered Outpatient Drugs by Site of Treatment: State and Metropolitan Statistical Areas Variation, May 25, 2023. https://www.ebri.org/docs/default-source/fast-facts-(public)/ff-469-costdifferences-25may23.pdf?sfvrsn=3ff8392f2.

144 CMS. National Health Expenditure Historical Data. Released Dec 2022.

145 Altarum. "Projections of the Non-retail Prescription Drug Share of National Health Expenditures." July 2022

146 CMS. National Health Expenditure Historical Data. Released Dec 2022.

147 CMS. National Health Expenditures Projections 2022 - 2031. Released Jun 2023. https://www.cms.gov/files/document/nhe-projections-forecast-summary.pdf.

148 See 42 U.S.C. Sec. 256b (the "340B statute").

149 Brownlee A, Watson J. "The Pharmaceutical Supply Chain, 2013-2020." Berkeley Research Group, January 2022. https://ecommunications.thinkbrg.com/44/2328/uploads/brg-pharmaceutical-supply-chain-2022.pdf?intIaContactId=lXKabwLWBtOm%2fz%2fpgW%2btPQ%3d%3d&intExternalSystemId=1.

150 A Fein, The 340B Program Climbed to $44 Billion in 2021--With Hospitals Grabbing Most of the Money, August 2022

151 K Thomas, J Silver-Greenberg, How a Hospital Chain Used a Poor Neighborhood to Turn Huge Profits, New York Times, September 2022.

152 S. Desai and J.M. McWilliams, "Consequences of the 340B Drug Pricing Program," N Engl J Med 2018.

153 Gaynor, M "Antitrust Applied: Hospital Consolidation Concerns and Solutions Statement before the Committee on the Judiciary Subcommittee on Competition Policy, Antitrust, and Consumer Rights U.S. Senate" May 2021.

154 Conti, Rena M., and Peter B. Bach., Cost Consequences of the 340B Drug Discount Program, Journal of the American Medical Association, May 15, 2013, https://jamanetwork.com/journals/jama/article-abstract/1680369.

155 Desai, Sunita, and J. Michael McWilliams, Consequences of the 340B Drug Pricing Program, New England Journal of Medicine, Feb. 8, 2018,

156 Marcus JL, et al., Perverse Incentives -- HIV Prevention and the 340B Drug Pricing Program, New England Journal of Medicine, Jun 2, 2022, https://www.nejm.org/doi/full/10.1056/NEJMp2200601.

157 Bond, Amelia M., Emma B. Dean, and Sunita M. Desai, The Role Of Financial Incentives In Biosimilar Uptake In Medicare: Evidence From The 340B Program, Health Affairs May 1, 2023, https://www.healthaffairs.org/doi/10.1377/hlthaff.2022.00812.

158 GAO, Medicare Part B Drugs: Action Needed to Reduce Financial Incentives to Prescribe 340B Drugs at Participating Hospitals, Jun. 2015, https://www.gao.gov/products/gao-15-442.

159 Hunter MT, et al., Analysis of 2020 Commercial Outpatient Drug Spend at 340B Participating Hospitals, Milliman, Sept. 2022, https://www.milliman.com/-/media/milliman/pdfs/2022-articles/9-13-22phrma-340b-commercial-analysis.ashx.

160 MedPAC, Report to Congress: Medicare and the Health Care Delivery System, Jun. 2015, https://www.medpac.gov/document/http-www-medpac-gov-docs-default-source-reports-chapter-3-part-b-drug-payment-policy-issues-june-2015-report-pdf.

161 IQVIA White Paper. Are Discounts in the 340B Drug Discount Program Being Shared with Patients at Contract Pharmacies? October 2022

162 United States, Congress, Senate Finance. Business meeting to consider an original bill entitled, "Modernizing and Ensuring PBM Accountability (MEPA) Act". Congress.gov, https://www.congress.gov/event/118th-congress/senate-event/334680?s=1&r=29. 118th Congress, Senate Committee Meeting, 26 Jul. 2023.

163 United States, Congress, House. Protecting Patients Against PBM Abuses Act. Congress.gov, https://www.congress.gov/bill/118th-congress/house-bill/2880. 118th Congress, House Resolution 2880, Introduced 26 April 2023.

164 United States, Congress, Senate. Modernizing and Ensuring PBM Accountability Act. Congress.gov, https://www.congress.gov/bill/118th-congress/senate-bill/2973. 118th Congress, Senate Bill 2973, Introduced 28 Sep. 2023.

165 United States, Congress, Senate. DRUG Act. Congress.gov, https://www.congress.gov/bill/118th-congress/senate-bill/1542. 118th Congress, Senate Bill 1542, Introduced 10 May 2023.

166 United States, Congress, House. DRUG Act. Congress.gov, https://www.congress.gov/bill/118th-congress/house-bill/6283. 118th Congress, House Resolution 6283, Introduced 08 Nov. 2023.

167 Congressional Budget Office. Health Care Legislation As ordered reported by the House Committee on Energy and Commerce on December 6, 2023. March 2024. https://www.cbo.gov/system/files/2024-03/hr4881.pdf.

168 Wanneh G. Senate Finance Passes Extra Policies To Build On MEPA PBM Bill. Inside Health Policy, November 2023. https://insidehealthpolicy.com/daily-news/senate-finance-passes-extra-policies-build-mepa-pbm-bill.

169 Department of Health and Human Services Office of Inspector General. Fraud and Abuse; Removal of Safe Harbor Protection for Rebates Involving Prescription Pharmaceuticals and Creation of New Safe Harbor Protection for Certain Point-of-Sale Reductions in Price on Prescription Pharmaceuticals and Certain Pharmacy Benefit Manager Service Fees. Final Rule. November 30, 2020. https://www.federalregister.gov/documents/2020/11/30/2020-25841/fraud-and-abuse-removal-of-safe-harbor-protection-for-rebates-involving-prescription-pharmaceuticals.

170 Milliman. Measuring the Impact of Point of Sale Rebates on the Commercial Health Insurance Market, July 2021. https://www.milliman.com/en/insight/measuring-the-impact-of-point-of-sale-rebates-on-the-commercial-health-insurance-market.

171 Advisory Council on Employee Welfare and Pension Plan Benefits. Report to the Honorable Thomas E. Perez, United States Secretary of Labor: PBM Compensation And Fee Disclosure. 2014. https://www.dol.gov/sites/dolgov/files/EBSA/about-ebsa/about-us/erisa-advisory-council/2014-pbm-compensation-and-fee-disclosure.pdf.

172 Congressional Budget Office. Cost Estimate: Estimated Direct Spending and Revenue Effects of H.R. 5378, the Lower Costs, More Transparency Act. December 8, 2023. https://www.cbo.gov/system/files/2023-12/hr5378-DS-and-Revs12-2023.pdf.

173 Congressional Budget Office. Cost Estimate: S.1895, Lower Health Care Costs Act. July 16, 2019. https://www.cbo.gov/system/files/2019-07/s18950.pdf.

174 CBO has continued to recognize savings from PBM transparency proposals. For example, see: https://www.cbo.gov/system/files/2022-06/hr7666.pdf.

175 Avalere. Cort Ruling Will Limit Accumulators. October 2023. https://avalere.com/insights/court-ruling-will-limit-accumulators.

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Original text here: https://www.judiciary.senate.gov/imo/media/doc/2024-05-21_-_testimony_-_ulrich.pdf

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(Continued from Part 1 of 2)