Prescription Drug Affordability & Innovation: Policy Options & Stakeholder Views

July 28, 2017

The Alliance for Health Policy hosted a briefing on current issues in prescription drug affordability and innovation, focusing on potential policy and private-sector approaches to this complex issue. The panel included:

  • Henry Waxman, Waxman Strategies
  • Joel White, Council for Affordable Health Coverage
  • Steve Miller, Express Scripts
  • David Mitchell, Patients for Affordable Drugs
  • Robert Zirkelbach, PhRMA
  • Larry Kocot of KPMG moderated the discussion.

The discussion included specific proposals for steps that can be taken by the private sector, the public sector, and policy makers to better provide affordable access while also providing incentives for the development of innovative new drugs. Those policy options included the following:

Value-Based Pricing

All of the panelists discussed the potential of value-based pricing to align incentives and thereby help control costs. Mr. Miller discussed an example of how value-based pricing can work: Express Scripts took responsibility for patient adherence in return for better pricing on hepatitis C drugs. The lower prices permitted the company to offer treatment to more people, even those with less advanced cases of the disease.

One concern raised about value-based pricing is how value-based contracts for private coverage affect the pricing formulas for drugs under Medicare and Medicaid. Mr. Miller and Mr. White both raised this concern. Mr. White explained, “If every time a manufacturer is asked to give a money back guarantee on a drug, and that implicates best price, that means if I give you a zero price, then I’ve got to cut a rebate check to a Medicaid office, they are not going to do it.”

Fostering More Competition

Mr. White stressed the importance of competition in controlling costs. He cited the example of hepatitis C medications: “By the time the third product came on the market, we had 46 percent discounts on that product. … These are the kinds of things that we want to encourage from an innovation standpoint.”

Several panelists cited the backlog of drug approvals at the Food & Drug Administration as one important obstacle to greater competition, an issue that FDA Commissioner Scott Gottlieb has said the agency will prioritize.

Improving Access to Generics and Biosimilars

Rep. Waxman suggested looking at anti-competitive behaviors such as “pay for delay,” in which a drugmaker is permitted to pay a generic manufacturer to delay introducing generic competition to the market. He noted, “Even the Supreme Court said that pay for delay ought to be looked at with a great deal of scrutiny.” Rep. Waxman and Mr. Mitchell both cited Risk Evaluation and Mitigation Strategy (REMS) as a policy that should be updated to prevent abuse that keeps generic drugs off the market.

Rep. Waxman also suggested that the FDA can help generate competition by, for example, reaching out to encourage manufacturers to bring generic competitors to the market.

Several panelists also raised the issue of biosimilar drugs requiring a much higher standard for approval than small-molecule generic drugs, and that new guidance from the FDA on biosimilar drug approvals could encourage more competition among biologic drugs.

Price Transparency

One area of disagreement on the panel was the role of price transparency. Mr. Mitchell raised concerns about patients not knowing the true cost of drugs and cited the lack of transparency as a cost driver. Mr. Miller disagreed, warning that complete transparency would enable anti-competitive price signaling: “We would have never gotten the price of hepatitis C down like we did, if each company knew exactly what the other company was willing to put on the table.”

Price Negotiation by Government Payers

There was also a range of views on whether Medicare could save costs if it were permitted to negotiate drug prices. While some panelists recommended more latitude for Medicare in negotiating prices, Mr. Zirkelbach argued that in countries where the government sets formularies and prices for drugs, there is less access to new, innovative medications. Rep. Waxman disagreed that the tradeoff is that clear-cut, and while he did not advocate that the government should negotiate prices, he also did not rule it out.

Under Medicaid, one option Rep. Waxman mentioned was permitting states to operate pharmacy benefit managers.

Health Information Technology

Mr. Miller said that compelling doctors to electronically prescribe would help to reduce costs and to reduce fraud. He also recommended electronic prior authorization for expensive drugs: “It is patient friendly, it is doctor friendly, and it actually saves money.”

Comparative Effectiveness

Rep. Waxman noted that “patients, providers and payers lack that information about comparative effectiveness of drugs … when critical health care decisions are being made,” and he said that increased investment in comparative effectiveness research could provide useful information for these decisions.

The Importance of Bipartisanship

Rep. Waxman noted that historically, “all the legislation dealing with pharmaceutical issues have passed with bipartisan support,” and he stressed that bipartisanship will be necessary to move forward with new policies to address drug affordability. Mr. Mitchell also called for bipartisan action, adding that “the most enduring legislative achievements have come with bipartisan support.”

Learn More

You can watch a video of the full conversation (above) or read a transcript of the event.



12:00 – 12:05 p.m.      Welcome and Introductions

  • Larry Kocot

12:05 – 12:45 p.m.      Presentations

  • Henry Waxman
    Waxman Strategies
  • Joel White
    Council for Affordable Health Coverage
  • Steve Miller
    Express Scripts
  • David Mitchell
    Patients for Affordable Drugs
  • Robert Zirkelbach

12:45 – 1:30 p.m.        Question and Answer Session

Event Resources


Printed Materials

“Getting to the Root of Prescription Drug Prices: Issue Brief.” Waxman, H., Corr, B., Martin, K., and Duong, S. The Commonwealth Fund. July 2017. Available at

“Commercially-Insured Patients Pay Undiscounted List Prices for One In Five Brand Prescriptions, Accounting for Half of Out-of-Pocket Spending on Brand Medicines.” PhRMA Foundation. March 29, 2017. Available at

“Prescriptions for Competition, Value, and Innovation: Positive Reforms to Increase Access and Affordability for Prescription Drugs.” Council for Affordable Health Coverage. May 2017. Available at

“Ten Challenges in the Prescription Drug Market—and Ten Solutions”. The Brookings Institution. May 2, 2017. Available at

“The High Cost of Prescription Drugs in the United States: Origins and Prospects for Reform,” A. S. Kesselheim, J. Avorn, and A. Sarpatwari. JAMA. August 2016. Available at

“Value-Based Pricing for Pharmaceuticals in the Trump Administration.” Sachs, R., Bagley, M., and Lakdawalla, D. Health Affairs Blog. April 27, 2017. Available at

Additional Materials

“A Data Book: Health Care Spending and the Medicare Program. Section 10: Prescription Drugs” MedPAC. June 2017. Available at

“Exclusive: White House Task Force Echoes Pharma Proposals.” Kopp, E. Kaiser Health News. June 16, 2017. Available at

“Gottlieb: FDA to Issue New Policies to Streamline Generic Reviews in 2017.” Mezher, M. Regulatory Affairs Professionals Society. July 18, 2017. Available at

“Health Policy Brief: Biosimilars.” McCaughan, M., Kesselheim, A., Coukell, A., and Tollen, L. Health Affairs. July 21, 2017. Available at

“Health Policy Brief: Expedited Approval Pathways.” McCaughan, M., Kesselheim, A., Coukell, A., and Tollen, L. Health Affairs. July 21, 2017. Available at

“Health Policy Brief: Pricing Orphan Drugs.” McCaughan, M., Kesselheim, A., Coukell, A., and Tollen, L. Health Affairs. July 21, 2017. Available at

“How Congress Can Make Drug Pricing More Rational.” Gottlieb, S. Forbes. September 12, 2016. Available at

“In Drug Price Hearing, Congress Tries to Answer Some Basic Questions.” Tirrell, M. CNBC. June 13, 2017. Available at

“PCMA Policy Recommendations.” Merritt, M. Pharmaceutical Care Management Association. July 13, 2017. Available at

“Policy Proposal: Banning or Limiting Reverse Payment Agreements.” Coukell, A. and Shih, C. The Pew Charitable Trusts. June 19, 2017. Available at

“Policy Proposal: Importation of Prescription Drugs.” Coukell, A. and Shih, C. The Pew Charitable Trusts. April 11, 2017. Available at

“Policy Proposal: Improving Generic and Biosimilar Developer Access to Brand Pharmaceutical Samples.” Coukell, A. and Shih, C. The Pew Charitable Trusts. May 30, 2017. Available at

“Prescription Drug Pricing is Not Just an Election Issue.” Wilensky, G. The Milbank Quarterly. December 2016. Available at

“The Hutchins Center Explains: Prescription Drug Spending.” Olsen, P. and Sheiner, L. The Brookings Institution. April 26, 2017. Available at

“The Trump Administration Says a New Plan Will Cut Drug Prices. It’s Not That Simple.” Mershon, E. STAT. July 14, 2017. Available at

“Trump Administration Signals Initial Steps to Deal with Drug Prices.” Johnson, C. The Washington Post. June 21, 2017. Available at


PLEASE NOTE: This is an unedited transcript. Please refer to the video to confirm exact quotes. SARAH DASH: Good afternoon. Thank you all so much for being here today with us, especially if you were up in the wee hours of the morning. You are all gluttons for punishment, aren’t you? Thank you. Thank you for being here. I am Sarah Dash, I am President and CEO of the Alliance for Health Policy and we are really delighted to be hosting this briefing today on prescription drug innovation and affordability, policy options and stakeholder views. For those of you who many not know, the Alliance for Health Policy, it is our mission to serve as a non-partisan educator and convener on really important health policy issues, and this is no exception. With today’s briefing, we are a little bit out of the frying pan, into the fire, very important events of last night, and prescription drug affordability and innovation is an incredibly, incredibly important topic. Many, many people rely on prescription medications to stay well or to treat any range of illnesses. There are amazing therapies in the pipeline, and at the same time, concerns about affordability have been at the forefront. Today’s panel is going to talk about what some of the facts are, what some of the balance and the tradeoff is between these important considerations. We are really lucky today to have a guest moderator with us, Larry Kocot, who is a principle and national leader of KPMG Center for Healthcare Regulatory Insight. As our guest moderator, thank you, Larry for being here. He is going to introduce our phenomenal panel that is going to help us understand these issues, and we hope that you are going to walk away today with a better understanding of where the discussion stands. A couple of quick housekeeping items: If you want to join us at Twitter, you can tweet at All Health Live, using the hashtag #allhealthlive. I don’t normally make any announcement about phones, but some people are getting flashflood warnings on their phones. Hopefully we will stay dry in here, but if you could just silence your phone, that would be fantastic. Then of course, as we know, it’s a very busy day in healthcare. If you do need to leave early, fill out your blue evaluation before you leave and put it on the table. There will be an opportunity for question and answer period following the discussion format. As one final note, today’s discussion is a little bit of a different format that you might be used to for the Alliance. We are doing this more of a discussion, and with no slides. So, if you have thoughts on the format, or any other formats you would like to see from us, please also note that on your evaluation. So, with that, I’m going to turn it over to Larry Kocot. Thank you. LARRY KOCOT: Thank you, Sarah, and thanks to all of you for being here to participate in this very timely discussion on prescription drug affordability and innovation. Drugs play an important role in medicine as the first line of therapy for most medical conditions that are diagnosed today. Biopharmaceutical innovation has been a critical success factor and progress that we have made over the past 50 years in treating a wide variety of diseases and reducing mortality for many medical conditions. Just over the horizon, we can see breakthroughs in science that will transform healthcare in a growing number of therapeutic areas. In addition to what’s already on the market, new treatment approaches in cell therapies and genetic targeting, along with exciting progress and crisper gene editing and the most recent announcements about new breakthroughs in immunotherapies such as CAR T-cell therapies for certain cancers, all hold exciting promise for new treatments that will save and extend lives and improve the quality of life for millions of Americans. However, as innovation continues to thrive, drug costs are expected to rise along with overall health spending, and consumers are finding it hard even today to pay for their share of drug costs. As we are going to discuss here today, there are a variety of reasons for increasing drugs costs in the shifting burden of those drug costs. As you are going to hear today, there are a number of policy solutions to address various facets of this problem. Most of us will agree here that the policy solutions that promote access and affordability, must also balance the impact that these solutions may have on incentives and behavioral changes in pharmaceutical marketplaces. For this reason, the solutions the target biopharmaceutical costs and prices should be carefully considered to be sure that they don’t have unintended consequences that harm innovation and competition among pharmaceutical manufacturers. The goal of today’s discussion is to understand current issues and prescription drug affordability, and innovation and to focus on some specific proposals that the private sector, as well as the public sector and policy makers can consider in addressing the issue of rising drug costs. With that brief background statement, I would really like to just get into the program here and introduce our distinguished panel. Please note that you have their full bios in your packets. This will allow me to be brief in the introductions and not do an injustice to the extensive backgrounds and experience that these panelists bring to this conversation. To my left, and Henry, please forgive me, that is not a value judgement at all, is Henry Waxman. He currently serves as Chairman of Waxman Strategies, a public affairs and strategic communications firm. Henry spent 40 years serving with distinction in the House of Representatives. Joel White is President of the Council for Affordable Health Coverage. Joel Spent 12 years on Capitol Hill as a professional staffer working on health and drug issues in the House of Representatives. And over to my right is Steve Miller. He’s Chief Medical Officer for Express Scripts, a leading pharmaceutical benefit manager. Dr. Miller’s expertise stands numerous healthcare subjects including pharmaceutical pricing and clinical optimization. David Mitchell is President and Founder of Patients for Affordable Drugs, a non-profit organization focused on achieving policy changes to lower the price of prescription drugs. Finally, last but not least, to my right here is Robbie Zirkelbach, is Executive Vice President of Public Affairs for the Pharmaceutical Research and Manufactures of America. Robbie serves as Pharma’s lead spokesman on pharmaceutical value, pricing and access. We are going to start by asking each of our panelists to provide some opening comments on prescription drug access, affordability and innovation, to get their perspectives respectively. I’m going to ask that each of you provide — keep your statements brief so that we can provide plenty of time for the discussion. Also, to the extent that you reference a policy solution today, and I want to be clear and try to do this in a way that everybody stays with us. I know people have varying levels on these complex issues. To the extent that you do reference a policy solution, please be specific about the problem that you think the policy solution is going to solve. Also, if you are using technical terms, just pause briefly and try to explain them a little bit — the same with acronyms, if you will. With that, Henry, why don’t we turn to you to start? HENRY WAXMAN: Thank you very much. I assume the mic is on. I’m delighted to be with all of you, and to talk about this issue. I go back further than most of the panelists in looking at the history of it, because in the 1980s when I was Chairman of the Health and Environment Sub-Committee of Energy and Commerce Committee, we looked at these problems in a different way. We wanted to give a greater incentive for the development of new pharmaceutical products. We wanted to do that not just for regular drugs, which at that time did not include biotech drugs, but small chemical drugs. We wanted to do it for orphan drugs, which were drugs for people with rare diseases. We passed two separate bills: One the Orphan Drug Act, and then after that, the Hatch Waxman Act. The Hatch Waxman Act not only gave incentives for pharmaceutical developers and manufacturers to produce new drugs, but we wanted, after a patent, plus an exclusivity period ended, to have competition. We had adopted an abbreviated process for generic drugs to be approved by the FDA. At that time, as amazing as it sounds, in order to get a generic drug on the market, the generic drug manufacturer had to go through all the same studies to show that the drug that they were copying was no longer patented or at that point, patented, no exclusivity involved, to make sure the drug was the same. You can imagine going through all the tests to show that your drug was the same as the original drug, which was probably unethical to do those clinical studies, but we said, let’s get an abbreviated process for new drug applications for generics. It broke upon the opportunity for generics to compete. So, we had incentives on the one side, and competition on the other, to provide the balance that we hope to achieve. That balance worked for many years, but things have changed since that law was adopted. One of the changes is that we’ve had several breakthrough therapies and cures have been introduced. But we greatly expanded access to prescription drug coverage. There was not prescription drug coverage for the most part. Medicare did not cover it until much, much later. Medicaid covered some of it, but that was also later. And private insurance by and large covered it, but with the full coverage under Medicare, Medicaid and private insurance, there was a greater access to prescription drugs. Well, a lot of reasons can explain the high price of drugs, and we issued a report recently through the Commonwealth Foundation, which I think has been available to everybody here, and that report goes through a number of instances where the prices of drugs are dramatically high. We know that the American public is outraged at the high price of drugs. We know that people are being outpriced, so they can’t even afford the drugs. They are splitting them up, or they are taking them irregularly, and we know that this is a very high priority for the American people. Polling shows it, and you are going to hear more about that in our discussion. What do we do about it? The first point I want to make is there is no silver bullet to address the issues of prescription drug pricing, but I believe that if we start tackling this issue, we should start with figuring out what are the drivers of high cost. And we have to approach this on a bipartisan basis. All the legislation dealing with pharmaceutical issues have passed with bipartisan support, and we must absolutely have bipartisan support. Over the last several months, we tried to identify the problems leading to the current prescription drug pricing and the drivers of those problems. The complexity of the issue lends itself to starting with an understanding and agreement of the various problems and what these drivers are, rather than starting with solutions, we think we have to start with the issues and the problems involved. If we are going to have an understanding of the problems and then try to reach a bipartisan solution to some of those problems. Let me talk about some of the current drivers and examples of policy options. There is a high launch price when a new drug comes on the market, and not only that, there are high annual increases for patented brand name drugs and orphan drugs. After patent protections and market exclusivities, we have government purchasing these drugs and they might want to use a value-based or outcome-based purchasing or require additional information for manufacturers seeking orphan drug status, but never the less, we give a monopoly to the producer of a new drug. We don’t have competition at that point. Some manufacturers create or take advantage of natural monopolies and a natural monopoly would enable them to significantly increase prices. An example of that would be that there is no other manufacturer of that same drug. So we said, well, maybe we can look at policies that might provide targeted or narrow incentives that FDA can implement to generate competition. FDA can reach out and try to get a generic to come in and compete if the generic is a possibility at that point, or provide proactive government monitoring and oversight of the pharmaceutical markets to be aware of the fact that we are getting into a one single source drug that will drive up the price. Another problem is the lack of robust competition among manufacturers, including generic and biosimilars, resulting in less price competition and higher prices. Here, we can look at some of the examples of policy actions. We can provide targeted or narrow incentives that FDA can implement to generate competition. We can alter provisions in the Hatch Waxman Act that has a 30-month delay, 180-day exclusivity, and we can take a look at that. I’m not recommending it, but that would be one way to get more competition. We could have FDA at least establish the biosimilar guidance, which they have not yet done. Another problem is the anti-competitive behavior and use of current patent protection policies by manufactures that undermine competition. Of course, a good example of that is pay for delay, where the manufacturer of a drug that is about to have generic competition, could say to the generic manufacturer, we will pay you money not to compete with us, and pay for that delay and get a good generic competitor We can also deal with the problem of product hopping. We can reform the patent office policies on patent review and approval. Another issue is the pharmaceutical distribution system. It does not make essential pricing information available to patients or providers and payers at the point of care, so that patients can make the best decision related to their care. Furthermore, patients, providers and payers lack that information about comparative effectiveness of drugs at the point of time when critical healthcare decisions are being made. So, perhaps we can look at greater transparency policies in drug pricing information, or invest in comparative effectiveness research. We thought we were doing that in the ACA. The ability for that research was very much curtailed. We could have federal changes in the federal law, which imposes limitations on state authority to negotiate prices for Medicaid. We could have implementing other price related measures to reduce high drug prices. An example of a policy option here would be: Let the states operate PBMs to broaden their purchasing and negotiating power. These are some ideas. We are not recommending them, but we are putting them out there for consideration. What do we do now versus what we can in the long term? These problems and the range of actions can be considered through short term, versus long term strategies and actions. There are some immediate items that can be dealt with, I think, that will have an impact. For example, we ought to address some of the issues to the barriers for generic competition, such as REMs or pay for delay. I don’t think there is a reason not to address those issues. Even Supreme Court said that pay for delay ought to be looked at with a great deal of scrutiny. Well, there is no reason to have pay for delay. I know that they can avoid litigation between the original manufacturer and the competitor, but I don’t see a value in allowing pay for delay. We could look to eliminate loop holes that allow some manufacturers to create sole source markets with a goal of driving up prices. Senator Collins and McCaskill released their report at the end of the last year with several ideas. We ought to look at those ideas and see if we can move them forward, and we could push FDA to finalize regulation that encourages biosimilar competition. I’m pleased the FDA is looking at a very affirmative action in a lot of these areas. FDA in the past just said, this is not our business, we are not going to look at those matters. But under the new commissioner, Dr. Gottlieb, he is trying to recognize that there is a role for FDA in trying to deal with the high price of drugs. Let me stop there and we will get to questions and answer later. JOEL WHITE: Thank you for having me here today, and thank you to Sarah for producing such a wonderful program. My name is Joel White, I’m the President of the Council for Affordable Health Coverage. We run a campaign called Prescriptions for Affordability. It’s a multi-stakeholder effort to unite different groups around a common set of reforms that will actually lower healthcare costs, and I think you’ve got a copy of our proposal that we released in May for your review in your packets. But I think it’s important to start out with the fact that we see a lot of politics on this issue. We hear a lot of hyperbole and that’s not helpful, because this is a real problem that impacts real people, that needs to be addressed in real ways. The challenge that we are interested in addressing is, how do we lower costs while simultaneously not impeding access or harming safety or innovation? That is hard to do. All of that. Bringing together stakeholders and not negatively impacting those things. Just a level set real quick: I think we all know that premiums and cost sharings are probably too high and are rising too fast. That’s driven by increased health spending, and it’s spending on products and services, but I think it’s also important to keep things in perspective when we look at the healthcare dollar, the pie or share of spending, prescription drugs represent just 10 cents of that dollar. And it’s stable over time. Over the next ten years, it’s about 11 cents over ten years. So above that are hospital costs, their physician costs, their post-acute care costs, and we are interested in addressing all of those various areas, but obviously today we are looking at specifically prescription drugs. I think it’s also important, if you think about your own experience, to recognize the prescription drugs are the most frequently accessed part of our healthcare system, right? We go to the pharmacy once a month, hopefully we don’t go to the hospital once a month. If we do, we’ve either got serious problems, or something else is going on. So, we access the pharmacy benefit most frequently, and we see change in price and cost more frequently, particularly when costs go up or when coverage, particularly deductibles, increase. It is something that people feel personally and in a real way. I think we can all think about our personal experience in that regard. This is an important issue and it’s a real issue, and so our organization took a look at the issue two years ago, and it took us two years to bring different interests together around what should we do about this? Now, we have insurers, we have PBMs, we have drug makers, we have patients and consumers, we have employers and we have healthcare providers, all who have agreed to the set of solutions that you have in your packet. That was hard to do. It’s hard to get people together on this issue, because there is so much politics going on. But I think it’s important what Congressman Waxman talked about, in terms of level setting on the cost issues and understanding what is actually going on here, so that you can address the challenge and the problem. What we found as we looked at the landscape in developing in the reforms, was that there is a lot of outdated laws and regulations that could use a facelift. And probably some wholescale reform. What we came up with was basically four buckets of changes to address the challenges that I outlined at the beginning. The first is competition, and as has already been mentioned, we have some big challenges in the marketplace right now. What we see is that when we have more products on the market, be it a brand or generic, we have more opportunities for price negotiation and lower cost. And I think here of the Sovaldi example. When Solvaldi first came out for hepatitis C treatment, there were statements like: This is going to bankrupt the U.S. This is going to bankrupt Medicaid. This will get us underwater. None of those statements were true. What was true was over time, as more products came on the market, by the time the third product came on the market, we had 46% discounts on that product. We were paying $100,000 less than baseline therapy previous to introduction of the product. So, it was saving the health system money, it was resulting in a better outcome for patients, and it was producing fewer side effects and actually cured the disease. These are the kinds of things that we want to encourage from an innovation standpoint. How do we increase competition? How do we get that virtuous cycle going? I would also point out, we’ve got a backlog of about 4,000 generic products at the FDA. So, we need to do a better job at the FDA of getting those products on the market quicker. The House passed the FDARA bill, which would reauthorize FDA programs. That is a good first step, and Commissioner Gottleib has indicated that he is going to aggressively work to eliminate that backlog. We need that backlog eliminated, because we need that price negotiation. I think it’s also important to note that we see some examples of bad actors in the marketplace. We see these price spikes on some generic products. You can all think through those examples. And what the FDARA bill does, is it creates incentives in those instances to get a generic competitor on the market quickly through two policies. The first is extended exclusivity for the generic product, and an abbreviated approval pathway. So, that’s important. The second bucket is rewarding value and what we see is pay for value. You want to pay more for value, not volume. There are laws that we need to change, like best price, the anti-kickback statute, and the Stark Law, to get more value out of the system. Then, in order to make those arrangements more fruitful, we need infrastructure and data investment. Then finally, we do need transparency for consumers. They need to know what drug is on the formulary and how much is their out-of-pocket spending. Or, if they are uninsured, they need a rough estimation of a retail price. All told, these reforms, we estimate, will save $71 billion annually, when fully implemented. That’s real money and real savings for consumers. We look forward to working with everyone here: Congress, the administration, stakeholders, to make sure that happens. LARRY KOCOT: Thanks, Joel. I want to remind everyone, we are going to get into a Q&A, and you are going to have a lot of opportunity to make your points over and over again. Dr. Miller, will you go next? STEVE MILLER: Thanks, Larry, and thanks to the Alliance for inviting me. I’m Steve Miller, I’m the Chief Medical Officer for Express Scripts. I’m a transplant kidney doctor by training, and actually a basic scientist and hold a bunch of patents with Drug Discovery. If any of my drugs had ever worked, I wouldn’t be here today. I don’t want to be redundant to what you have already heard, but I want to highlight a few things, and that is this: America is 4.6% of the world’s population, with 33% of world drug spend, but we are somewhere between 50 and 70% of world drug profitability. So, Americans have been funding the development of drugs for the whole world for many years, and that has got to change. We have to concentrate on a couple of things: We want America to be the most innovative world-leading place for drug development, but we also have to have access and affordability. If my patients can’t afford the drug, it doesn’t matter about the new developments, if they can’t access it. So, we have to put the patient at the center of this. And so, for treating patients for 35 years, I have been watching drugs become more and more out of reach for too many of my patients, and this has got to change. I would like to concentrate on two things that have already been mentioned and then throw a couple of other policies out there that people haven’t talked about. We are shifting from a blame and shame game to really coming up with solutions, and one of the solutions that is working really well for our company, is value-based pricing. So, having these value-based contracts. Let me give you an example: We started the price war on hepatitis C, we were able to get the products down, as you already heard, to an incredible extent. The old treatment for hepatitis C used to be Ribavirin and Interferon, and it cost about $35,000. We now have the price of the current new crop of Hepatitis treatments at $35,000. In fact, they are cheaper in the United States than they are in Europe, which is unprecedented for any specialty drug that we have ever seen. But we did value based contracting above and beyond that. We guaranteed that the patients would be adherent to the drug, or we would refund anything that the plan sponsor had paid towards the drug. That is value above and beyond the lowest price. Because of that, we had to innovate. We had to develop predictive models, know exactly which patients would take the drugs. We had to develop cell phone apps, call campaigns, letter campaigns. To be very frank, I got the price down so low, I could send a nurse out to your house, and shove the pills down your throat, if I had to. But we were able to achieve adherence levels of 92%, which was actually better than what was in the clinical trial. On top of that, because we got the price so low, instead of being like most plans where they only treated those with advanced disease, F3-F4, we were able to treat patients regardless of their level of disease. So, any patient with hepatitis C was eligible for treatment. So, value-based pricing really works. We now have value-based programs in multiple sclerosis, cancer, cardiovascular disease, respiratory disease, and we need laws that actually allow us to do this even in Medicare and Medicaid. So, making value based pricing be priority is really crucial. The other thing is that, what Henry Waxman did for generics, we need to have happen for biosimilars. If you think about generics over the last decade, they are the thing that have allowed us to keep pharmacy spend flat. For every one patient that needed a new expensive specialist drug, there were ten patients I could move to a generic and I could offset that cost. We did a study where we looked at 11 drugs that could go biosimilar within the next decade, and if there was just a 30% discount, which is about the lowest discount you see in Europe. If you only gave patients with new starts, you didn’t switch a single existing patient to these drugs, you could save the country over $250 billion over the next decade. That buys an incredible amount of cancer care, Hepatitis treatment, and others. Policies that incent and make the biosimilar marketplace actually happen in vigorous in the United States is crucial. The final things you need to think about, which we haven’t talked about so far, but we touched on a little bit by Joel, is infrastructure, and that is electronic systems. We need to be compelling doctors to electronic prescribe. If they electronically prescribe, they often can see the benefit design, they can see what is on formulary; what’s not on formulary. Second is, we need to make sure that all controlled substances are electronically prescribed. Electronic banking drove fraud, waste, and abuse out of the banking industry. Electronic prescribing controlled substances can do the same, and we spend an enormous amount of money in that, in the United States. The final thing is, if we had electronic prior authorization for all of these expensive drugs, it is patient friendly, it is doctor friendly, and it actually saves money. So, those are additional policies that you can compel through the government or through regulatory bodies to actually make the system better. I’m going to stop there, hopefully we will have more time for questioning, but thank you all for having me. LARRY KOCOT: We certainly will, Steve, thank you. David, do you want to –? DAVID MITCHELL: Yes, good afternoon. I’m really glad to see so many people here. Especially after the events of last night. I’m sure many of you didn’t sleep. There is a visual presentation in your folder if you want to follow along. I won’t stick to it exactly, but it may be helpful. I’m David Mitchell, and prescription drugs are keeping me alive. Seven and a half years ago, I was diagnosed with an incurable blood cancer. Incurable, but treatable with very expensive drugs. Several days ago, I spent five hours getting infusion with a two-drug combination that every time they give it to me, the retail price is $20,000. I will get it 22 times over the course of a year, so sitting before you, $440,000 worth of drugs that are sustaining my life. Now, I’m very grateful to our science and research community for these drugs, as importantly, because my disease is smart and it mutates to find its way around drugs, I need new ones. So, I am completely dependent on innovation and new drugs for my survival. It’s not theoretical for me. It’s life and death. Literally. The drugs don’t work if people can’t afford them. That is a fundamental fact. My experience as a patient, brought me face-to-face with this fact. So, my wife, who is a breast cancer survivor herself, and I, decided to launch Patients for Affordable Drugs, to raise the patient voice for reform of our system. We are the only national patient organization focused exclusively on policies to lower drug prices, and to maintain our independence, we don’t accept many from any organizations that profit from the development and distribution of prescription drugs. We can speak without fear or favor, and I intend to do that here today. We are about patients first, last and always. In five months, we have collected 7500 patient stories and 15000 email addresses. These are stories of patients who are skipping doses. They are cutting their pills in half. There are people with type 1 diabetes who are trying to control their blood sugar with diet and exercise and waiting until their blood sugar spikes before they take their insulin. These are people with rheumatoid arthritis who are living with pain because they can’t afford to take the whole dose required to manage their disease. These stories know no regions, they know no gender, no age, or political affiliation. People in this country, patients in this country are hurting, and they are angry and they don’t understand how this could be happening to them in the United States of America. So, I have three points I would like to make to you this morning. First: Patients really are crying out for relief. It’s a real problem. People are hurting, they need help now. Ten percent of patients with my disease stop taking their drugs because they are too expensive. Two: Support for action is bipartisan among voters and in this Congress. Three: There is bipartisan legislation that could move now and in preventing abuses by drug companies that delay generics from coming to market. Chairman Waxman referenced REMS, this is Risk Evaluation and Management Strategies the companies use. It’s a safety program, they hide behind it to say they won’t make samples available, the generic manufacturers, in order for the generic company to develop a bioequivalent. The act is called the Creates Act, I’m happy to get into more details about that bill and how it would help patients like me and thousands of others. There were hearings on the Creates Act yesterday in the House Judiciary Committee. It’s sponsored by Representatives Marino and Cicilline and by Senators Grassley, Lee, Lahey, Klobuchar, among others. This is viable legislation, it’s not a complete solution to the problem of high drug prices. Far from it. But it is an important step in a good direction. In the end, we are going to need more comprehensive systemic reform like Chairman Waxman was referring to, and we have a complete set of policy solutions and proposals on our website that you are welcome to go look at if you care too. There is a lot of finger pointing about this issue. We are hearing some of it today; we are about to hear more. I want to point out that all of the big p