House Drug Pricing Hearing Goes Off Script

By Joseph Allen
May 21, 2019

“We want prescription drug prices, in fact, all drug prices, to come down. But I don’t know that you do it by going after a company that’s developed an amazing drug that has helped so many people. I just don’t see where that helps us.” –  Rep. Jim Jordan (R-OH)

Rep. Jim Jordan (R-OH)

Most Congressional hearings are morality plays designed to reach a predetermined outcome. It wasn’t hard to predict how the second hearing on drug pricing by the House Committee on Oversight and Reform was supposed to go. If the title, “HIV Prevention Drug: Billions in Corporate Profits after Millions in Taxpayer Investments” wasn’t enough of a clue,  when Chairman  Elijah Cummings (D-MD) said it was because of the “phenomenal leadership” of freshman Rep. Alexandria Ocasio-Cortez (D-NY)  that the hearing was being held, any doubts evaporated. In an extraordinary gesture of deference for a new Member of Congress, Rep. Ocasio-Cortez was recognized for an opening statement before senior members of the committee.

However, because of two differences in this hearing from its predecessor things didn’t quite go as planned. This time, the Committee invited both sides to appear, not just the critics; and one member dared to challenge its underlying premise, leading to an electrifying exchange with the Chairman. We’ll examine that shortly.

Truvada Under Fire

The hearing focused on Truvada, a drug developed by Gilead Sciences, Inc. in the fight against HIV. Through a partnership with the Center for Disease Control (part of the Department of Health and Human Services), the Gates Foundation, and Gilead, Truvada was found to be highly efficient in preventing the transmission of HIV, an application termed “PrEP.” Its effectiveness for disease prevention as well as treatment greatly expanded the use of the drug. Truvada is a significant breakthrough, extending the lives of HIV patients to a normal span while fighting transmission of the disease. At dispute was how much Gilead contributed to the partnership, whether it’s infringing on two CDC patents, and why Truvada costs more here than abroad.

According to the Committee, Truvada’s list price is $2,100 per month, or $70 a pill, but it’s available in other countries for less than $8 a pill. Gilead made $3 billion in revenue in 2018. On May 9, 2018, Health and Human Services Secretary Alex Azar announced Gilead was donating 2.4 million vials of the drug for up to 11 years to help meet the needs of 200,000 uninsured patients. According to later testimony, that should be enough for virtually all the patients seeking help. However, other barriers prevent Truvada from being used by all of those in need, since many do not go to doctors, don’t think they are at risk of getting HIV, or don’t seek help because of social stigmas.

Chairman Cummings opened with an emotional statement on the human cost of HIV. He spoke powerfully of friends and even a member of his staff who lost their lives. He then wondered how an invention developed at taxpayer expense could see its price rise from $800 per month when introduced in 2004 to $2,000 a month today. He contrasted this with generic versions available in Australia for far less. He concluded saying he would ask Gilead’s Chairman and CEO, Daniel O’Day, hard questions, adding: “I don’t want to hear the same old rope a dope about the costs of R&D,” which he suggested might include vacations for doctors willing to prescribe the drug.

Ranking Republican Jim Jordan (R-OH) countered that Truvada is a true miracle drug and Gilead deserves to be lauded, not demonized, for its development. He added that the record shows it was made by the company, not the government, and is a good example of patent-spurred innovation, which made America great.

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A Heated Exchange

All of the witnesses effectively stated their positions, and the presence of O’Day, who remained poised under hours of grilling, and Stephen Ezell, Vice President of the Information Technology and Innovation Foundation, who spoke about the risks and costs of developing new drugs and the critical role of public/private partnerships, balanced the discussion.

Still, the hearing was proceeding down a predictable path until Rep. Jordan spoke after the debate had gone on for two hours. Under his questioning, O’Day said that Gilead developed Truvada over 10 to 15 years after many failures, at a cost of $1.1 billion. As a result, millions of lives have been saved around the world. The company is plowing the profits into research seeking a cure for HIV.

Here’s my transcription of what happened next:

Rep Jordan:

Let me get this straight, over a decade of research, over a billion of dollars into that research, you developed a drug that saved millions of people, that now can be used to help people after the fact that have been diagnosed with HIV, the profit that you’ve made from that you’re now using to work on a cure and just last week you announced that folks who can’t get the medication right now, you’re going to give it to them for free.

But you’re a bad guy. That’s what we hear from the other side….

Mr. Ezell, isn’t this how our system is supposed to work? People get a great idea and go to the Patent Office for protection for the length of time it takes to recoup the billions of dollars it takes to make the product … that’s helped millions of people, that’s helped make America the greatest place ever, isn’t that how it’s supposed to work?

Ezell agreed.

Rep Jordan continued with O’Day:

Oh, I forgot to add one thing, you’re taking the drug off patent one year early aren’t you Mr. O’Day, so it can go to a lower cost? You didn’t have to do that. But somehow you’re the bad guy. Well, I appreciate what you’ve done. After all of that, we’re going to beat you up.

At this point, Rep Jordan’s time was up and Chairman Cummings made a loud rebuttal:

Let me say something to make myself clear. Listen up, NOBODY has come in here to beat you up! I want to make that clear. I applaud Gilead, but it’s nothing like holding the hand of somebody who is dying from AIDS. I’m sorry, all we are trying to do is represent our constituents and help them stay alive. When you’re dead, you’re dead. And when I think about the fact that Truvada for PrEP is only getting to 10% of the people that need it, what about the other 90%?  What about their families? I’m not knocking you. I’m just trying to figure out how we can help you get to the people who are dying as we speak. We can holler and play all these games but let me be clear. I speak for the dead and the living…

I don’t know who he’s talking about, but I applaud Gilead. I’ve been dealing with this issue for 20 some years, so I know about it. I know the problem and I know the pain and I know about the death by installment.

Jordan: Can I respond, Mr. Chairman?

Cummings:  NO! (bangs the gavel)

But it wasn’t over yet. During his round of questioning, Rep. Mark Meadows (R-NC) gave Jordan time to reply.

Jordan:

The Chairman talked about playing games, I’m not playing games. I just want to thank a company who developed a drug that saved millions of people. Not beat them up for that.

On one hand you go after them and then you say that we’re not really going after them. Look at the title of the hearing: “Billions in corporate profits after millions in public funding.”

Dr. Grant in his opening testimony said Gilead had nothing to do with PrEP. I have a peer reviewed article from the New England Journal of Medicine showing that Gilead scientists participated in this. I don’t remember any Member (of the Committee) thanking them for what they’ve done.

Cummings: I did

Jordan: Not until after I did, that’s for darn sure.

So, look, as my colleagues said, we want prescription drug prices, in fact, all drug prices, to come down. We want that to happen, so let’s figure out a way to do it. But I don’t know that you do it by going after a company that’s developed an amazing drug that has helped so many people and taking the profits from that now and working on a cure. I just don’t see where that helps us.

That was the pivot point, though the hearing continued for two more hours. At the end, Rep. Rashida Tlaib (D-MI) spoke about the need to put people ahead of profits and of the evils of corporate greed. Rep. Ocasio-Cortez made another appearance, but by the time they spoke the energy had largely left the room.

According to reports, after the hearing Chairman Cummings and Rep. Ocasio-Cortez wrote to the Department of Health and Human Services for additional information on the CDC’s patents, which allegedly Gilead is infringing for PrEP.

By the end of the day (and it was a really long day) not much light was shed on finding a solution to the problem of encouraging the development of innovative medicines at affordable prices. While political morality plays have some entertainment value as a means of advancing public policy, they can leave a lot to be desired. But at least this time, both sides got to speak.

That’s a start.

Image Source: Deposit Photos
Photo by marcbruxelle
ID: 96212446 

The Author

Joseph Allen

Joseph Allen is a Featured Contributor on IPWatchdog.com, and a 30-year veteran of national efforts to foster public/private sector commercialization partnerships, and author of numerous articles on technology management for national publications.

Joe served as a Professional Staff Member on the U.S. Senate Judiciary Committee with former Senator Birch Bayh (D-IN), and was instrumental in working behind the scenes to ensure passage of the historic Bayh-Dole Act. He is our resident Bayh-Dole expert, and will write frequently about Bayh-Dole and issues surrounding the commercialization of university research.

In 2008, Joe founded Allen & Associates, through which he offers consulting services assisting clients in technology transfer issues, including developing effective communication strategies with national policy makers.

Warning & Disclaimer: The pages, articles and comments on IPWatchdog.com do not constitute legal advice, nor do they create any attorney-client relationship. The articles published express the personal opinion and views of the author and should not be attributed to the author’s employer, clients or the sponsors of IPWatchdog.com. Read more.

Discuss this

There are currently 5 Comments comments. Join the discussion.

  1. Alan Heimlich May 21, 2019 1:11 pm

    I would much rather be in the situation of arguing about the price of a medicine than not having the medicine at all.

  2. Ternary May 21, 2019 2:12 pm

    “He then wondered how an invention developed at taxpayer expense could see its price rise from $800 per month when introduced in 2004 to $2,000 a month today.”

    That really is the issue. Why does a drug (be it developed with or without taxpayer support), which was priced in 2004 at $800, and then included presumably recovery of sunk R&D cost and a healthy profit margin, have to cost $2000 now? My suspicion: to squeeze the last possible dollar out of the American consumer. Insurance companies are complicit in this.

    Donating vials for uninsured patients is laudable. But charity is not a healthcare policy.

  3. Anon May 21, 2019 3:02 pm

    Ternary,

    See my earlier comments vis a vis clarity.

    (not even the generics really want that avenue)

  4. Anon May 21, 2019 6:10 pm

    Ohio…

    Flyover country – I wonder how much that aspect leads to its disassociation with the anti-patent extremists.

  5. Jaime May 28, 2019 11:06 am

    Thank you very much for this post–I had been wondering exactly how those hearings went and how it came about that a generic version of Truvada would be available a year before expected. I do think there is an important distinction that pharma companies should be making that might appeal to advocates of single-payer healthcare that it is desirable under any healthcare system to incentivize R&D of useful pharmaceuticals. Whether the entire healthcare system is for-profit or not, or is single-payer or not, is a separable issue from incentivizing drug development. For example, there are a number of pharma companies that operate for-profit in countries that have single-payer health care. Pharma should not be blamed for all the ills of US healthcare, or lumped together with the system as a whole, even if it is easier to attack as a group at this point and is drawing attention because of some disappointing outlier cases.

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