WEBVTT 00:02.033 --> 00:04.733 align:left position:10% line:77% size:80% JUDY WOODRUFF: The costs of health care are a pocketbook issue for most Americans, and 00:04.733 --> 00:07.800 align:left position:20% line:83% size:70% rising drug prices, a key part of that. 00:07.800 --> 00:12.800 align:left position:10% line:77% size:80% People in the U.S. spend more on prescription drugs than in any other country, about $1,200 00:13.533 --> 00:14.966 align:left position:20% line:89% size:70% a year per person. 00:14.966 --> 00:18.133 align:left position:10% line:83% size:80% Insurers and the government pay the largest share. 00:18.133 --> 00:22.433 align:left position:10% line:77% size:80% But it's costing consumers more money in premiums and out of pocket. 00:22.433 --> 00:27.433 align:left position:20% line:71% size:70% Anger has been building over affordability and specialty drugs that cost tens of thousands 00:28.100 --> 00:30.166 align:left position:30% line:89% size:60% of dollars. 00:30.166 --> 00:34.233 align:left position:10% line:77% size:80% That was the backdrop for a much-anticipated Senate hearing today involving the drug makers. 00:35.133 --> 00:37.166 align:left position:10% line:89% size:80% John Yang has that report. 00:37.166 --> 00:41.100 align:left position:10% line:77% size:80% JOHN YANG: It has been decades since this many leaders of the top drug manufacturers 00:42.000 --> 00:45.433 align:left position:10% line:89% size:80% have faced lawmakers under oath. 00:45.433 --> 00:49.633 align:left position:10% line:77% size:80% Senators in both parties lashed out at their profit margins and pressed them to explain 00:49.633 --> 00:51.500 align:left position:10% line:89% size:80% why drug prices keep rising. 00:51.500 --> 00:53.633 align:left position:40% line:89% size:50% SEN. 00:53.633 --> 00:57.466 align:left position:10% line:77% size:80% RON WYDEN (D), Oregon: All of you that are here today are here because the way you have 00:58.633 --> 01:01.100 align:left position:20% line:83% size:70% been doing business is unacceptable. 01:01.100 --> 01:04.466 align:left position:10% line:71% size:80% JOHN YANG: Finance Committee Chairman Chuck Grassley set the tone, tearing into the executives 01:05.900 --> 01:08.366 align:left position:10% line:83% size:80% of seven pharmaceutical giants for shirking responsibility. 01:08.366 --> 01:10.433 align:left position:40% line:89% size:50% SEN. 01:10.433 --> 01:12.966 align:left position:10% line:77% size:80% CHARLES GRASSLEY (R), Iowa: Another yes-or-no question: When you're company prices its drugs, 01:12.966 --> 01:17.633 align:left position:10% line:77% size:80% do you take into account the fact that a key player is the federal government? 01:17.633 --> 01:19.700 align:left position:20% line:89% size:70% Let's start with AbbVie. 01:19.700 --> 01:21.833 align:left position:10% line:77% size:80% RICHARD GONZALEZ, CEO, AbbVie Laboratories: We evaluate all the channels when we make 01:21.833 --> 01:23.866 align:left position:20% line:83% size:70% determinations on price and affordability. 01:23.866 --> 01:25.933 align:left position:40% line:89% size:50% SEN. 01:25.933 --> 01:26.600 align:left position:10% line:77% size:80% CHARLES GRASSLEY: So, that obviously would include the federal government? 01:26.600 --> 01:27.800 align:left position:30% line:89% size:60% AstraZeneca. 01:27.800 --> 01:28.433 align:left position:20% line:83% size:70% PASCAL SORIOT, CEO, AstraZeneca: Yes, we do. 01:28.433 --> 01:29.700 align:left position:40% line:89% size:50% SEN. 01:29.700 --> 01:30.500 align:left position:20% line:83% size:70% CHARLES GRASSLEY: OK, Bristol-Myers. 01:30.500 --> 01:31.433 align:left position:20% line:89% size:70% MAN: Yes, Senator. 01:31.433 --> 01:32.700 align:left position:40% line:89% size:50% SEN. 01:32.700 --> 01:33.433 align:left position:20% line:83% size:70% CHARLES GRASSLEY: Johnson & Johnson. 01:33.433 --> 01:34.433 align:left position:30% line:89% size:60% WOMAN: Yes. 01:34.433 --> 01:35.433 align:left position:40% line:89% size:50% SEN. 01:35.433 --> 01:36.633 align:left position:20% line:89% size:70% CHARLES GRASSLEY: Merck. 01:36.633 --> 01:37.433 align:left position:20% line:83% size:70% KENNETH C. FRAZIER, CEO, Merck: Yes. 01:37.433 --> 01:38.433 align:left position:40% line:89% size:50% SEN. 01:38.433 --> 01:39.433 align:left position:10% line:89% size:80% CHARLES GRASSLEY: Pfizer. 01:39.433 --> 01:40.466 align:left position:30% line:89% size:60% MAN: Absolutely. 01:40.466 --> 01:41.466 align:left position:40% line:89% size:50% SEN. 01:41.466 --> 01:42.466 align:left position:10% line:89% size:80% CHARLES GRASSLEY: And Sanofi. 01:42.466 --> 01:44.600 align:left position:30% line:89% size:60% MAN: Yes. 01:44.600 --> 01:46.100 align:left position:10% line:77% size:80% JOHN YANG: The executives all said they were willing to do more to make sure people could 01:46.100 --> 01:48.200 align:left position:10% line:83% size:80% afford the drugs they need, but offered few details. 01:48.200 --> 01:49.900 align:left position:10% line:77% size:80% They said middlemen were to blame, and that developing new medicines requires billions 01:49.900 --> 01:51.566 align:left position:20% line:89% size:70% of dollars in research. 01:51.566 --> 01:55.100 align:left position:20% line:77% size:70% PASCAL SORIOT: Our company is dedicated to science and innovation. 01:55.100 --> 02:00.133 align:left position:10% line:77% size:80% And in 2018, we invested nearly $6 billion in research and development. 02:02.166 --> 02:05.433 align:left position:10% line:77% size:80% KENNETH C. FRAZIER: We're proud to have deployed 70,000 doses of our experimental Ebola vaccine 02:06.033 --> 02:08.066 align:left position:30% line:89% size:60% in the Congo. 02:08.066 --> 02:10.033 align:left position:10% line:77% size:80% JENNIFER TAUBERT, Executive Vice President, Janssen: We focus on discovering and developing 02:10.033 --> 02:13.766 align:left position:10% line:77% size:80% transformational medicines for some of the world's most challenging diseases, including 02:13.766 --> 02:18.766 align:left position:10% line:77% size:80% multiple myeloma, prostate cancer, HIV, schizophrenia, and Crohn's disease, among others. 02:21.233 --> 02:25.866 align:left position:10% line:77% size:80% Janssen invested $8.4 billion in research and development last year in the search for 02:25.866 --> 02:28.400 align:left position:20% line:89% size:70% medical breakthroughs. 02:28.400 --> 02:31.833 align:left position:10% line:71% size:80% JOHN YANG: Democrat Maria Cantwell of Washington state pressed the executives to acknowledge 02:31.833 --> 02:34.100 align:left position:10% line:83% size:80% that the government could help bring prices down. 02:34.100 --> 02:36.133 align:left position:40% line:89% size:50% SEN. 02:36.133 --> 02:38.566 align:left position:10% line:77% size:80% MARIA CANTWELL (D), Washington: I'm asking a really basic question, like the VA's ability 02:38.566 --> 02:40.566 align:left position:10% line:89% size:80% to negotiate on drug prices. 02:40.566 --> 02:44.666 align:left position:20% line:77% size:70% Do you think that states having that same ability drives down price? 02:44.666 --> 02:49.466 align:left position:10% line:77% size:80% KENNETH C. FRAZIER: I would say that the VA would get a lower price and the states would 02:49.466 --> 02:53.400 align:left position:10% line:71% size:80% get a lower price if you're willing to go into an environment where that could be imposed 02:53.400 --> 02:54.400 align:left position:30% line:89% size:60% by the states. 02:54.400 --> 02:55.666 align:left position:40% line:89% size:50% SEN. 02:55.666 --> 02:57.333 align:left position:20% line:83% size:70% MARIA CANTWELL: Or the federal government? 02:57.333 --> 02:59.833 align:left position:20% line:77% size:70% JOHN YANG: The hearing comes as President Trump targets drug costs. 02:59.833 --> 03:04.666 align:left position:10% line:77% size:80% He's proposed ending Medicare and Medicaid rebates to middlemen and cutting the price 03:04.666 --> 03:06.766 align:left position:10% line:89% size:80% Medicare pays for some drugs. 03:06.766 --> 03:09.300 align:left position:10% line:77% size:80% DONALD TRUMP, President of the United States: At long last the drug companies in foreign 03:09.300 --> 03:14.233 align:left position:10% line:71% size:80% countries will be held accountable for how they rigged the system against American consumers. 03:15.600 --> 03:19.066 align:left position:10% line:83% size:80% JOHN YANG: Today, senators threatened congressional action. 03:19.066 --> 03:24.066 align:left position:10% line:77% size:80% Several zeroed in on Richard Gonzalez, CEO of AbbVie, the maker of Humira. 03:26.100 --> 03:29.233 align:left position:10% line:77% size:80% It's the bestselling drug in the world used for rheumatoid arthritis and other diseases, 03:30.100 --> 03:33.700 align:left position:10% line:89% size:80% yearly sales nearly $20 billion. 03:33.700 --> 03:38.700 align:left position:10% line:77% size:80% Over the last six years, the drug's price has doubled to $38,000 a year. 03:41.066 --> 03:44.633 align:left position:10% line:71% size:80% More than 100 AbbVie patents and deals with other drug makers mean that lower-price competitors 03:45.800 --> 03:47.600 align:left position:20% line:83% size:70% will not hit the U.S. market before 2023. 03:47.600 --> 03:48.766 align:left position:40% line:89% size:50% SEN. 03:48.766 --> 03:49.600 align:left position:20% line:83% size:70% JOHN CORNYN (R), Texas: How many patents? 03:49.600 --> 03:50.833 align:left position:30% line:89% size:60% I'm sorry. 03:50.833 --> 03:51.600 align:left position:20% line:83% size:70% RICHARD GONZALEZ: One hundred and thirty-six. 03:51.600 --> 03:53.066 align:left position:40% line:89% size:50% SEN. 03:53.066 --> 03:55.133 align:left position:10% line:83% size:80% JOHN CORNYN: One hundred and thirty-six patents on one drug? 03:55.133 --> 03:59.000 align:left position:10% line:77% size:80% RICHARD GONZALEZ: But, well, remember, Humira is like nine different drugs or 10 different 03:59.000 --> 04:00.000 align:left position:40% line:89% size:50% drugs. 04:00.000 --> 04:02.166 align:left position:40% line:89% size:50% SEN. 04:02.166 --> 04:04.300 align:left position:10% line:77% size:80% JOHN CORNYN: I thought you said to Senator Stabenow it was the same molecule. 04:04.300 --> 04:06.666 align:left position:10% line:77% size:80% RICHARD GONZALEZ: It is the same molecule, but it treats different condition, and if 04:06.666 --> 04:08.433 align:left position:20% line:83% size:70% you look at that patent portfolio... 04:08.433 --> 04:09.433 align:left position:30% line:89% size:60% (CROSSTALK) 04:09.433 --> 04:11.366 align:left position:40% line:89% size:50% SEN. 04:11.366 --> 04:12.300 align:left position:10% line:77% size:80% JOHN CORNYN: So, you use the same molecule to treat different conditions, you can get 04:12.300 --> 04:13.233 align:left position:10% line:89% size:80% a patent on that treatment? 04:13.233 --> 04:14.200 align:left position:10% line:89% size:80% RICHARD GONZALEZ: Certainly. 04:14.200 --> 04:16.233 align:left position:40% line:89% size:50% SEN. 04:16.233 --> 04:20.200 align:left position:10% line:77% size:80% JOHN CORNYN: Mr. Chairman, I know this topic is the subject of -- or within the jurisdiction 04:22.233 --> 04:24.866 align:left position:10% line:77% size:80% of the Finance Committee, but those of us like you and me who are also on the Judiciary 04:24.866 --> 04:29.866 align:left position:10% line:77% size:80% Committee that has jurisdiction over the patent system, I think this is an area that we need 04:31.200 --> 04:33.466 align:left position:10% line:83% size:80% to look in through our Judiciary Committee authority. 04:33.466 --> 04:38.466 align:left position:10% line:77% size:80% JOHN YANG: Senator Ron Wyden of Oregon, the panel's top Democrat, asked Gonzalez if his 04:40.100 --> 04:44.266 align:left position:20% line:77% size:70% compensation, which was $22 million in 2017, is tied to Humira sales. 04:45.133 --> 04:47.133 align:left position:40% line:89% size:50% SEN. 04:47.133 --> 04:49.633 align:left position:10% line:77% size:80% RON WYDEN: Would you make a smaller bonus if you dropped the price of Humira? 04:49.633 --> 04:54.633 align:left position:10% line:77% size:80% RICHARD GONZALEZ: Humira was one element of a set of financial factors that were evaluated 04:55.500 --> 04:57.866 align:left position:10% line:89% size:80% as part of my compensation. 04:57.866 --> 05:01.900 align:left position:20% line:71% size:70% It's obviously a very significant product for us, so it's clear that it would be part 05:01.900 --> 05:02.900 align:left position:20% line:89% size:70% of that evaluation. 05:02.900 --> 05:04.400 align:left position:40% line:89% size:50% SEN. 05:04.400 --> 05:07.066 align:left position:10% line:83% size:80% RON WYDEN: I would like that in writing within 10 days. 05:07.066 --> 05:10.333 align:left position:10% line:71% size:80% JOHN YANG: Some CEOs, like Merck's Ken Frazier, said they were willing to do things like eliminating 05:12.766 --> 05:15.500 align:left position:10% line:71% size:80% discounts that help protect their market share, but, overall, companies defended their practices. 05:18.066 --> 05:21.000 align:left position:10% line:71% size:80% KENNETH C. FRAZIER: No one company can unilaterally lower list prices without running into financial 05:22.033 --> 05:24.100 align:left position:10% line:89% size:80% and operating disadvantages. 05:24.100 --> 05:28.366 align:left position:10% line:77% size:80% JOHN YANG: By the hearing's end, Wyden and other lawmakers said they were far from satisfied. 05:29.200 --> 05:30.700 align:left position:40% line:89% size:50% SEN. 05:30.700 --> 05:33.233 align:left position:10% line:83% size:80% RON WYDEN: I have heard a lot of happy talk this morning. 05:33.233 --> 05:37.600 align:left position:10% line:71% size:80% JOHN YANG: Today's hearing featured more bipartisan criticism than in the past, but it is far 05:39.566 --> 05:43.133 align:left position:10% line:77% size:80% from clear what action Congress will take as drug prices continue to rise. 05:44.166 --> 05:45.333 align:left position:20% line:83% size:70% For the "PBS NewsHour," I'm John Yang.