At Senate Hearing, Senator Collins Questions Johns Hopkins Professor on Ways to Lower Prescription Drug Costs

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Washington, D.C. - U.S. Senator Susan Collins questioned Dr. Gerard Anderson, a Professor of Medicine at the Johns Hopkins University School of Medicine, at a bipartisan Senate Health, Education, Labor and Pensions Committee hearing on prescription drug costs.

A transcript follows of Senator Collins’ Q&A with Dr. Anderson on ways to stop the misuse and abuse of closed distribution systems that block generic competition:

COLLINS: Dr. Anderson, let me start by saying it’s great to see you here again. You were extremely helpful last year when the Senate Aging Committee conducted a yearlong investigation into the four drug companies that had acquired decades-old off-patent drugs and then dramatically increased the prices, in one case by literally 5,000 percent overnight.

What we found in that investigation is that companies were able to ward off competition by putting their drugs in closed distribution systems or specialty pharmacies that made it very difficult for generic companies to get sufficient quantities of the drugs to do the bio-equivalency studies that are required by the FDA. And we particularly found that there were problems with abuses of the Risk Evaluation and Mitigation Strategies—that’s what’s known as REMS—and it’s used for drugs with increased risk factors. But instead, it was being misused to prevent potential competitors from getting the drugs that they needed for the bio-equivalency studies, and indeed, Janet Woodcock from the FDA testified that this was a real problem.

Could you elaborate on that issue and what we can do to ensure that companies do not block access to the quantities of drugs that are needed for the bio-equivalency studies, and second—since this is going to be the only question I’m going to get—another idea would be to amend the Medicare Part D contracts that outline the participation in the formularies that are covered by Medicare Part D to require companies participating in Part D to make available sufficient quantities of their medications for these bio-equivalency exams conducted by potential competitors. Could you comment on those two issues?

ANDERSON: I will do my best. Thank you for those kind words, it’s been great to work with you and your staff over the last year and a half helping to put together your report and then the legislation I know that you’ve been able to get through this committee. So it’s been a great effort and I appreciate my little part in that activity.

So what’s happening right now is you have this REMS program, which is established by the Congress and it’s to make sure that the drugs are safe. However, what’s happening is that companies are using this idea to block other companies from actually getting access to the drug. So people like Martin Shkreli, which your report showed, he essentially created this entity called the “limited distribution chain” to keep everyone from getting access to his drug who was a competitor to him. So no one could actually get access to the drug. So there’s a number of ways that you and others could deal with this problem, one of which is to essentially say to every drug company, “you have to make that drug available to anybody who wants to manufacture it.” And I was on a panel with Janet Woodcock, over in government oversight, a little while ago, and she said, I can’t do anything about it. I can say that you can make it available if it’s on REMS, but I can’t force you to make it available. I think only the Congress can essentially say that. There is about a $3 billion savings that the Congressional Budget Office has estimated could happen if essentially Congress were simply to say to the company, “you got to make that available.” There are a number of bills, and you have one of them, that are about that particular area. So you could amend the Part D activity, you could do a whole variety of different activities, but essentially the idea here is to make sure that there is in fact competition in the marketplace.

COLLINS: Thank you so much, those are clearly areas that we need to pursue.

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The Senate Committee on Health, Education, Labor and Pensions recently approved of Senator Collins’ Making Pharmaceutical Markets More Competitive Act as part of the Food and Drug Reauthorization Act.

The bipartisan legislation, co-sponsored by Senator Claire McCaskill, takes a number of steps to enhance regulatory certainty for generic drug companies by setting forth a priority review timeline for generic applications, providing enhanced communications with eligible sponsors, improving transparency, and setting clear expectations about facility inspections.

Senator Collins, as Chairman of the Senate Aging Committee, led the only bipartisan investigation last Congress into the causes, impacts, and potential solutions to the egregious price spikes for certain drugs. From the beginning, the investigation strived to understand why companies can make these large price increases and to identify which policies should be considered to counter these disturbing practices.