[House Hearing, 116 Congress]
[From the U.S. Government Publishing Office]
HIV PREVENTION DRUG:
BILLIONS IN CORPORATE PROFITS
AFTER MILLIONS IN TAXPAYER
INVESTMENTS
=======================================================================
HEARING
BEFORE THE
COMMITTEE ON
OVERSIGHT AND REFORM
HOUSE OF REPRESENTATIVES
ONE HUNDRED SIXTEENTH CONGRESS
FIRST SESSION
__________
MAY 16, 2019
__________
Serial No. 116-24
__________
Printed for the use of the Committee on Oversight and Reform
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COMMITTEE ON OVERSIGHT AND REFORM
ELIJAH E. CUMMINGS, Maryland, Chairman
Carolyn B. Maloney, New York Jim Jordan, Ohio, Ranking Minority
Eleanor Holmes Norton, District of Member
Columbia Justin Amash, Michigan
Wm. Lacy Clay, Missouri Paul A. Gosar, Arizona
Stephen F. Lynch, Massachusetts Virginia Foxx, North Carolina
Jim Cooper, Tennessee Thomas Massie, Kentucky
Gerald E. Connolly, Virginia Mark Meadows, North Carolina
Raja Krishnamoorthi, Illinois Jody B. Hice, Georgia
Jamie Raskin, Maryland Glenn Grothman, Wisconsin
Harley Rouda, California James Comer, Kentucky
Katie Hill, California Michael Cloud, Texas
Debbie Wasserman Schultz, Florida Bob Gibbs, Ohio
John P. Sarbanes, Maryland Ralph Norman, South Carolina
Peter Welch, Vermont Clay Higgins, Louisiana
Jackie Speier, California Chip Roy, Texas
Robin L. Kelly, Illinois Carol D. Miller, West Virginia
Mark DeSaulnier, California Mark E. Green, Tennessee
Brenda L. Lawrence, Michigan Kelly Armstrong, North Dakota
Stacey E. Plaskett, Virgin Islands W. Gregory Steube, Florida
Ro Khanna, California
Jimmy Gomez, California
Alexandria Ocasio-Cortez, New York
Ayanna Pressley, Massachusetts
Rashida Tlaib, Michigan
David Rapallo, Staff Director
Ali Golden, Chief Health Counsel
Elisa LaNier, Director of Operations and Chief Clerk
Christopher Hixon, Minority Chief of Staff
Contact Number: 202-225-5051
C O N T E N T S
----------
Page
Hearing held on May 16, 2019..................................... 1
Witnesses
Dr. Robert M. Grant, Professor of Medicine, University of
California, San Francisco
Oral Statement............................................... 4
Dr. Rochelle Walensky, Professor of Medicine, Harvard Medical
School, and Chief of Division of Infectious Diseases,
Massachusetts General Hospital
Oral Statement............................................... 6
Mr. Tim Horn, Director, Medication Access and Pricing, NASTAD
Oral Statement............................................... 8
Mr. Stephen Ezell, Vice President, Global Innovation Policy,
Information Technology and Innovation Foundation
Oral Statement............................................... 9
Dr. Aaron Lord, PrEP Patient and Advocate
Oral Statement............................................... 11
Daniel O'Day, Chairman and CEO, Gilead Sciences, Inc.
Oral Statement............................................... 13
The written statements of the witnesses are available at: https:/
/docs.house.gov.
INDEX OF DOCUMENTS
----------
The documents entered into the record during this hearing are
listed below, and are available at: https://docs.house.gov.
* Statement from New York City Council Speaker Corey Johnson;
submitted by Ms. Ocasio-Cortez.
* Yale Global Health Justice Partnership Statement dated 3-12-
19; submitted by Ms. Ocasio-Cortez.
* Peer Review Article from the New England Journal of Medicine
dated 12-30-10; submitted by Mr. Jordan.
* Washington Post Article from July 13, 2016, "The Drug Company
that shocked the world with its prices dodged $10 billion in
taxes, report says;" submitted by Ms. Hill.
* Letter from the Treatment Action Group; submitted by Mr.
Cummings.
* Letter from the AIDS Vaccine Advocacy Coalition; submitted by
Mr. Cummings.
* Letter from the HIV Medicine Association; submitted by Mr.
Cummings.
* Questions for the Record; submitted to Mr. O'Day.
* Statement for the Record; submitted by Mr. Connolly.
HIV PREVENTION DRUG:
BILLIONS IN CORPORATE PROFITS.
AFTER MILLIONS IN TAXPAYER INVESTMENTS
----------
Thursday, May 16, 2019
House of Representatives
Committee on Oversight and Reform
Washington, D.C.
The committee met, pursuant to notice, at 10:06 a.m., in
room 2154, Rayburn House Office Building, Hon. Elijah Cummings
(chairman of the committee) presiding.
Present: Representatives Cummings, Maloney, Norton,
Connolly, Krishnamoorthi, Raskin, Rouda, Hill, Sarbanes, Welch,
Speier, Kelly, DeSaulnier, Khanna, Gomez, Ocasio-Cortez,
Pressley, Tlaib, Jordan, Amash, Foxx, Meadows, Hice, Grothman,
Comer, Higgins, Norman, Roy, Miller, Armstrong, and Steube.
Chairman Cummings. The committee will come to order.
Without objection, the chair is authorized to declare recess of
the committee at any time.
I now recognize myself for five minutes to give an opening
statement.
Today is our committee's second hearing on the skyrocketing
prices of prescription drugs. At our first hearing in January,
the committee's very first witness, Ms. Antoinette Worsham, she
was a compelling witness. Her 22-year-old daughter died because
she could not afford the insulin she needed to control her
diabetes. By the way, the insulin cost $333 a month. Let that
sink in. For $333 a month, a 22-year-old college graduate died.
Ms. Worsham's testimony was gut-wrenching, but unfortunately,
she is not alone. We've heard other stories just like hers from
our constituents, our friends, and our loved ones.
Today, we are examining the price of a drug called Truvada.
Truvada is a phenomenal drug that prevents the transmission of
HIV through a treatment called preexposure prophylaxis or PrEP
for short.
At the outset, I want to recognize the efforts of our
distinguished colleague, Congresswoman Ocasio-Cortez. She has
been leading the charge on this issue, and it is because of her
efforts that we are holding this hearing today. I want to thank
her for her phenomenal leadership.
Think about this: We now have a drug that has the potential
to end the HIV epidemic. This would have been unfathomable at
the height of the HIV/AIDS crisis. This is an issue that I have
been dealing with and working with communities on for more than
20-some years. I have seen many people die. I have seen people
who used to be on the choir at my church die. I have seen
neighbors die. And we have made these phenomenal strides.
But this treatment was developed as a result of investments
made by the American taxpayers through the National Institutes
of Health and the Centers for Disease Control and Prevention.
The problem is that Gilead, the company that now sells this
drug, charges astronomical prices. When Truvada was first
approved in 2004, Gilead charged about $800 per month, again,
for this lifesaving drug. Since then, Gilead raised the price
of this drug over and over and over and over and over again. It
now charges about $2,000 for just one month or about $70 per
pill. Think about that, lifesaving drug.
In the same period, Gilead has made massive windfalls on
this treatment, more than $36 billion in revenues. Let me say
that one more time. They made more than $36 billion on this
drug alone. How can Gilead do this? How can our system allow a
company to take a drug treatment that was developed with
taxpayer funds and abuse this monopoly to charge such
astronomical prices? This lifesaving treatment would not exist
but for the research funded by the CDC and NIH. So how can our
system let a company charge prices that are so outrageous,
making $36 billion while there are literally hundreds of
thousands of people who need this drug? We are better than
that.
These are some of the hard questions we will ask Gilead's
CEO Daniel O'Day, who is here today. And I am praying that you
do not come and give us the normal rope-a-dope stuff that we
usually hear about the various low programs you have got, the
coupons you have got. We want the prices to come down. We want
truth. We want to know why it is that the prices are going up
astronomically. We want to know what this R&D is all about. We
want to know if it is all about vacation, giving doctors
vacations and encouraging them to prescribe certain things or
not. We need to know all about that.
We appreciate that Mr. O'Day accepted our invitation to
participate, and we anxiously look forward to his testimony.
The reason this is so critical is because the CDC estimates
that there are 1.1 million people at high risk of contracting
HIV who could benefit from this drug but that only a fraction,
a fraction are getting it. Use is shockingly low among groups
that are at particularly high risk, including communities of
color that have been disproportionately impacted by this
epidemic.
This treatment is available in other countries for much,
much less. In Australia, patients pay less than $7 a pill.
Hello? Here, we are paying well over $70. In other countries,
patients pay even less. This is because Gilead charges less for
its treatment overseas than it does in the United States. It is
also because Gilead has generic competitors there but not here.
Finally, let me note that this is a bipartisan issue. HIV
has no boundaries. It affects blacks and whites, rural, urban.
It is a tough disease. President Trump recently announced an
initiative to end the HIV epidemic within 10 years. This is a
laudable goal. However, it relies on this particular drug
treatment getting to everyone who needs it. Gilead recently
agreed to donate millions of bottles of its drugs but far short
of what we need to save lives. Without addressing the
fundamental problem of pricing, I am afraid that we simply may
not get there.
And so we want to work with the President in addressing
HIV, but we need to start right here, and we need to start
right now.
Chairman Cummings. So without further do, I want to
recognize the distinguished ranking member Mr. Jordan for his
comments.
Mr. Jordan. Mr. Chairman, welcome back, and thank you for
that and for this important hearing.
At the beginning of the HIV outbreak in the early 1980's,
the outlook was just not good. In fact, it was pretty darn
bleak. Early treatments were expensive and frankly not very
effective, but advancements in medicine in the 38 years since
the first reported incidence of AIDS in the United States have
yielded hope for those afflicted with this virus. The most
important development was Gilead creating and bringing Truvada
to market in 2004.
Because of the invention of this, life expectancy for
people with HIV is now effectively the same as life expectancy
for people without it. I think we can all agree that Truvada is
something of a miracle drug. It is the gold standard for
preventing and treating HIV. Gilead's invention has been
literally lifesaving.
Gilead of course made money based on its invention. My
colleagues on the other side of the aisle and some of the
witnesses they have invited seem to believe this is some sort
of conspiracy. Rather than applaud Gilead for manufacturing
this miracle drug, they wish to demonize a company for making a
profit. The right to reap the rewards of your invention is so
vital that our Framers included it in the Constitution. Our
intellectual property protections are the crown jewel of the
American economy and what makes our Nation the most innovative
in human history. Article 1, section 8, clause 8, the Congress
shall have power, quote ``to promote the progress of science
and useful arts by securing, for limited times, to authors and
inventors the exclusive right to their respective writings and
discoveries.'' The Framers knew that individuals would take
risk and endeavor to make great things if they knew they would
be rewarded.
Some would have you believe that Gilead did not invent this
drug or discover its uses and that the Federal Government has
equities here for which the company is not accounting. The
evidence does not bear this out, and I hope we can use today to
set the record straight. I fear that my colleagues are using
today's hearing as a platform to strongarm private companies
making breakthrough discoveries all because they are upset at
how markets work.
The reality is that, while Gilead has made money on this
drug, there do not seem to be genuine issues of access, and
that is largely due, as the chairman talked about, to progress
made by efforts of the Trump administration. The State of the
Union address this year, President Trump announced his
administration's initiative to eliminate new HIV infections in
the U.S. within 10 years. This would be a remarkable
breakthrough for public health. And to that end, just last
week, HHS announced that, as a result of discussions between
the Trump administration and Gilead, the company agreed to
donate 2.4 million vials of its PrEP medication annually to the
CDC for distribution to treat individuals who are at risk and
uninsured. The company has also agreed but was under no
obligation to do so to allow generics to enter the market a
year earlier to further help provide access.
Of course the cost of pharmaceuticals is a problem driven
many factors that our committee and the Trump administration
hope to tackle in a bipartisan fashion, as the chairman
indicated. But we will never make real advancements in public
health if the plan is to use false pretenses to attack and
vilify those that are making game-changing scientific
breakthroughs.
Thank you, Mr. Chairman. I look forward to the discussion
from all our witnesses this morning, and I yield back.
Chairman Cummings. Thank you very much.
I now want to welcome our witnesses. Dr. Robert Grant,
professor of medicine at the University of California San
Francisco, Dr. Grant led one of the clinical trials
demonstrating that Truvada could be used to prevent the
transmission of HIV; Dr. Rochelle Walensky, the chief of
infectious diseases at Massachusetts General Hospital and
professor of medicine at Harvard Medical School, who is an
expert on cost-effectiveness in HIV treatment; Mr. Tim Horn,
the director of medication access for the National Alliance of
State and Territorial AIDS Directors, who has also worked in
HIV treatment and advocacy; Stephen Ezell from the Information
Technology and Innovation Foundation; Mr. Aaron Lord, a PrEP
user and cofounder of PrEP4All. Dr. Lord's personal experience
led him to advocate on behalf of others, and we are glad to
have him with us today. And finally, Mr. Daniel O'Day, chairman
and chief executive officer of Gilead Sciences Inc.
Now, if you all could please rise and raise your right
hands, and I will now swear in the witnesses.
[Witnesses sworn.]
Chairman Cummings. Thank you very much. Let the record show
that the witnesses answered in the affirmative.
You may be seated. The microphones are quite sensitive, so
please speak directly into them.
And without objection, your written statements will be made
part of the record.
With that, Mr. Grant, you are now recognized to give an
oral presentation of your testimony. Please note that I would
ask that all of you stay within the five-minute limit.
And before you get started, Ms. Ocasio-Cortez, I mentioned
before you got here that you were a main driver in making sure
that this hearing happened today. I want to thank you for your
leadership.
All right. Dr. Grant.
STATEMENT OF ROBERT M. GRANT, PROFESSOR OF MEDICINE, UNIVERSITY
OF CALIFORNIA
Dr. Grant. Chairman Cummings----
Chairman Cummings. Good morning.
Dr. Grant [continuing]. Ranking Member Jordan, and members
of the House Committee on Oversight and Reform, I'm pleased to
testify today on how the promise of PrEP remains unfulfilled. I
devoted the last 20 years of my career to the development of
PrEP. I am here today at my own expense because I promised that
PrEP would become available if proven. We have not kept that
promise. I come today to ask for your help.
My PrEP research was funded by grants from the NIH starting
in 2002. I later received supplemental funding from the Bill
and Linda Gates Foundation. Our research was funded--other
research was funded by NIH, CDC, and Gates. The U.S. Government
provided the majority of funds for PrEP research, investing
hundreds of millions of taxpayer dollars.
Furthermore, CDC scientists discovered that adding a drug
called FTC to tenofovir increased protection, and it's the
combination of those two medications which is FDA-approved
today. The CDC scientists also demonstrated that preexposure
dosing added substantially to the protective events, and it's
these inventions that led to the CDC government patents that
were awarded several years ago.
Gilead did not provide leadership, innovation, or funding
for PrEP research. Gilead's role was limited to donating study
drug and placebos. In my experience, Gilead proved to be a
hesitant partner in PrEP research. For example, Gilead made
public in 2005 that it would not seek FDA approval for PrEP no
matter what the data showed.
Although not supporting the research with funding or
innovation, Gilead took steps to limit research on alternative
and competing PrEP agents. In particular, there was interest in
3TC, a competing drug because it was about to go off patent.
Interest in 3TC PrEP dissipated with assurances that Gilead's
Truvada would be generically available by the time efficacy
trials were completed. Eight years after the completion of U.S.
Government-funded efficacy trials, generic Truvada is still not
available in the United States.
PrEP scale-up has failed. The PrEP demand in the U.S. hit a
tipping point in 2013 and then plateaued in 2016. Currently,
only 1 in 10 people who could benefit from PrEP are receiving
it. What little access has occurred is not fairly distributed.
For example, black people suffer 44 percent of new HIV
infections while only 10 percent of PrEP users are black.
Gilead has had seven years to get PrEP marketing right. It's
time we try something else.
Our struggle against HIV is stuck. HIV is not stuck. HIV
infects nearly 40,000 Americans every year, and there's been no
decline since 2016. In my experience, the root cause of low
PrEP access is the high price. Other barriers to PrEP access
arise as consequences of the exorbitant drug prices. These
factors may include fragmented insurance coverage, lack of
awareness by providers and potential users, and stigma. At a
competitive price, people would feel at ease to provide and use
PrEP.
PrEP can be manufactured and distributed for $6 per person
per month, $6 per person per month in manufacturing and
distribution costs. Gilead charges more than $2,100 per person
per month, a 35,000 percent markup. Gilead's prices continue to
increase every single year. The price of Truvada increased 76
percent since I published evidence of PrEP efficacy in 2010
using U.S. Government funding.
You might hear that no one pays list price. This is not
true. The University of California Student Health Services pays
full price for PrEP, and it is their largest drug expense. All
populations have multiple competing needs related to heart
health, cancer prevention, mental health, substance use,
productive health, and so much more. Should any public-health
jurisdiction pay a 35,000 percent markup for a drug that
addresses only one of these concerns? Hard choices have to be
made in public health, and they are made.
However, PrEP becomes an easy choice if it is available at
a competitive market price. For example, three states and
Australia purchased generic PrEP for $8 per person per month
after a competitive process. That--what followed was the
largest and fastest PrEP scale-up the world has ever seen.
I believe that there are actions that you could take, that
this committee could take at this time that would make PrEP
available. PrEP continues to be underutilized despite seven
years of drug donations, community grants, and assistance
programs. A market price would change the game. I ask you to
consider three actions. This committee could insist that
taxpayers benefit from U.S. Government intellectual property.
Second, you could scrutinize agreements between originator and
generic manufacturers for anticompetitive practices such as pay
for delay. I believe that these actions would take PrEP off the
shelf and stop HIV at a price that we all can afford.
Thank you.
Chairman Cummings. Dr. Walensky.
T2STATEMENT OF ROCHELLE WALENSKY, PROFESSOR OF MEDICINE,
HARVARD UNIVERSITY, ON BEHALF OF CHIEF OF DIVISION OF
INFECTIOUS DISEASES, MASSACHUSETTS GENERAL HOSPITAL
Dr. Walensky. Good morning. Chairman Cummings, Ranking
Member Jordan, and members of the committee, my name is Dr.
Rochelle Walensky. I'm a professor of medicine at Harvard
Medical School, chief of the Division of Infectious Diseases at
Massachusetts General Hospital, a practicing clinician, and a
researcher on the cost-effectiveness of HIV care both in the
U.S. and internationally.
In 1995, we told patients with AIDS they would, with
certainty, die. AIDS plagued my internship. By the end of that
year, we had an FDA-approved HIV cocktail, three drugs, up to
14 pills a day, which, if taken without fail, allowed AIDS
patients to live. At the time, the three drugs of the cocktail
cost a total of $15,000 per person per year, and our research
team reported its cost-effectiveness. We demonstrated it was
good value for money.
Today, we definitively have the tools to end this epidemic.
The HIV three-drug cocktail termed antiretroviral therapy is
frequently formulated into a single daily pill. The regiments
have high resistance barriers; that's good. They have low
toxicity profiles; that's also good. And projections suggest a
normal life expectancy for adherent patients with HIV. We also
know that people who take these drugs and effectively suppress
their virus cannot transmit it to anyone else, but the cost of
these drug regimens today is $40-50,000 per person per year, a
300 percent increase in 25 years.
Truvada is a code formulation of two of these three drugs
used for treatment, scientifically known as the combination of
tenofovir disoproxil fumarate and emtricitabine. It was FDA-
approved for HIV treatment in August 2004 and has since then
been a mainstay of HIV care.
In 2012 following remarkable scientific work, much of which
was led by Dr. Grant, the FDA approved the expanded indication
of Truvada for preexposure prophylaxis or PrEP for HIV
prevention. The cost of Truvada, when FDA approved in 2004, was
$7,800 per year. Today, it costs $20,000 per year. A similar
drug combination is available internationally at a cost of $60
per year. Please understand I'm not proposing that this is what
the price should be in the United States. I simply provide that
benchmark for our national pricing to put it into global
context.
In his February State of the Union address, the President
announced his initiative to end the HIV epidemic. This will not
be easy. The benchmarks for the end-the-epidemic initiative are
a decrease in the number of new HIV infections by 75 percent in
five years and by 90 percent by 2030. Our research group has
published work highlighting that even if we get 90 percent of
people with HIV diagnosed, treated, and virologically
suppressed, we can only decrease the number of new infections
by 40 percent. In short, to end this epidemic, we need both
treatment and prevention.
Aside from treatment, PrEP offers the most efficacious
prevention intervention known. Make no mistake, even if it was
free, PrEP is difficult. In addition to drug adherence, it
requires quarterly doctor visits for HIV testing, sexually
transmitted infection screening, and laboratory monitoring.
But right now, the biggest problem with PrEP is access. The
CDC estimates that more than 1.1 million people in the United
States are at high enough HIV risk to warrant PrEP. Fewer than
150,000 have ever received it. Over 75 percent of those are
white gay men in the Northeast and the West Coast, but today's
uncontrolled HIV epidemic is rampant among black gay men and
continues to disproportionately affect women of color,
especially in the South.
In 2016 it was estimated that one in two black gay men will
be diagnosed with HIV in their lifetime. We need prevention
tools like PrEP to reach these marginalized populations if we
are ever even going to make a dent in this epidemic, never mind
to reach the auspicious end-the-epidemic goals.
The sale of Truvada has resulted in profits of $36 billion,
and Truvada, unchanged, has seen a price increase of 150
percent since 2004. That price tag is simply too high. We have
the scientific tools to end this HIV epidemic, and we are
fortunate that pharma has developed these drugs to get us
there. They have already profited enormously.
Now, in the spirit of saving lives, of preventing new
infections, of realizing a public health--of putting forth a
cohesive public health response and realizing a Presidential
call to action, I simply ask that these drugs be reasonably
priced so that those most marginalized and at risk can reap
their benefit.
And finally, I would like to applaud Congress for holding
this hearing and bringing this issue to the forefront in the
public dialog. I hope that some of these companies, including
Gilead, will begin to do the right thing. It's never too late
for that. Thank you.
Chairman Cummings. Thank you very much. Mr. Horn?
STATEMENT OF TIM HORN, DIRECTOR, MEDICATION ACCESS AND PRICING,
NATIONAL ALLIANCE OF STATE AND TERRITORIAL AIDS DIRECTORS
Mr. Horn. Thank you, and good morning. Chairman Cummings,
Ranking Member Jordan, and members of the committee, my name is
Tim Horn, and I am director of medication access and pricing at
NASTAD, which is the National Alliance of State and Territorial
AIDS Directors. I am very pleased to be here today to offer
testimony on PrEP access and pricing in the United States.
NASTAD is a nonpartisan, nonprofit association that
represents public health officials who administer HIV and
hepatitis programs in the U.S. and around the world. We
represent public health officials in all 50 U.S. states, the
District of Columbia, the U.S. territories, and several local
jurisdictions. I'd like to focus my comments today on the
intersection of the high cost of Truvada as PrEP and the need
for effective, comprehensive, affordable, and, importantly,
sustainable public health approaches to HIV prevention in the
United States.
Now, our ability to respond to the needs of people who have
been diagnosed with HIV is one of the greatest examples of
effective public health in the United States. The Ryan White
HIV/AIDS program ensures access to not only comprehensive
state-of-the-art care but, importantly, low-or no-cost
treatment made possible with significant discounting provided
to AIDS drug assistance programs, or ADAPs. ADAPs insure
treatment for nearly a quarter of all people living with HIV in
the United States, the vast majority of whom are living at,
below, or near the Federal poverty level.
Now, one thing I want to emphasize here is that there is no
such comprehensive Federal medication program for people at
risk for HIV. And I just want to be clear. The only difference
between someone living with HIV and someone at risk for HIV is
a diagnosis. Those vulnerable to HIV infection face the exact
same barriers to affordable medication in the United States.
We are failing populations at high risk for HIV infection,
including young black and Latino gay men, women, and
transgender individuals. We are failing them because we have
not built a payment and culturally appropriate delivery systems
that are best able to reach them. There are many reasons for
the low uptake of PrEP in this country, but financing and
pricing, the subject of today's hearing, are undoubtedly among
them. In order to end the HIV epidemic, we must build systems
that provide access to PrEP for all populations.
Now, our current PrEP system particularly for uninsured and
underinsured people vulnerable to HIV infection is essentially
built on the back of Gilead's medication assistance program for
those who are uninsured and meet strict financial eligibility
criteria, along with the company's co-pay assistance program
for individuals who are commercially insured. Now, while these
programs have undoubtedly helped expand access to the
medication component of comprehensive PrEP services, they have
also succeeded in largely masking the impact of the high price
of Truvada.
To be clear, these programs are not a substitute for
functioning public health and healthcare systems. Partnerships
with pharmaceutical manufacturers will always be important, but
outsized dependency on their generosity, which in turn is
dependent on their bottom line, is by no means an equitable and
sustainable solution.
Now, the 340B drug pricing program has also played an
important role in allowing public health programs and their
community partners, including federally qualified health
centers, to afford PrEP while extending Federal resources as
far as possible. But it doesn't go far enough. Even if we
assume that the price available to 340B entities in the U.S. is
75 percent to 80 percent below the list price, this still
translates into approximately, you know, $400 per month per
person, a price that is at least four times higher than what we
can reasonably expect with robust generic competition.
Additionally, 340B pricing of Truvada as PrEP is only
available to some health departments and family planning
clinics and is not available to other institutions where PrEP
may be of significant benefit.
Gilead's assistance programs, the 340B program and
discounting, and the recent announcement of donated PrEP will
continue to expand access to PrEP. However, a long-term,
sustainable approach to PrEP access requires a competitive
generic market. To this end, we believe Federal, state, and
community partners should be cautious not only to--not to allow
the present and future of existing patchwork measures to build
an artificial market for Gilead's Descovy, which is expected to
be approved for PrEP by the end of this year. Doing so will
undercut the ability of the generic market for generic versions
of Truvada to bring down costs for our public payers, our
commercial payers, and, most importantly, people vulnerable to
HIV infection.
Importantly, a lower-cost form of PrEP would allow for more
affordable procurement and expanded access across a variety of
settings, including state and local health departments, family
planning clinics, and STD clinics. And I want to underscore Dr.
Grant's point. The list price of Truvada is the price of some
of our most import programs do in fact pay.
Not only has the high cost of Truvada been a barrier in
scaling up affordable access to PrEP by these programs, they
have required some programs to reallocate funding from other
public health initiatives to meet HIV prevention priorities.
So I do want to conclude by thanking the committee for the
opportunity to testify today and for initiating a dialog that
hopefully will be to the betterment of people vulnerable to HIV
infection and to other intersecting conditions. Thank you.
Chairman Cummings. Mr. Ezell?
STATEMENT OF STEPHEN EZELL, VICE PRESIDENT, GLOBAL INNOVATION
POLICY, INFORMATION TECHNOLOGY AND INNOVATION FOUNDATION
Mr. Ezell. Good morning, Chairman Cummings, Ranking Member
Jordan, and members of the committee. I'm Stephen Ezell, vice
president of Global Innovation Policy at the Information
Technology and Innovation Foundation. We're a nonprofit,
nonpartisan Washington, DC.-based science, technology, and
economic policy think tank, and I appreciate the opportunity to
testify in the panel this morning about the U.S. life sciences
innovation system.
The United States clearly leads the world in life sciences
innovation. For instance, in the 2000's, U.S.-headquartered
enterprises generated more new-to-the-world drugs than
enterprises from the next five nations combined. And over the
past two decades, U.S. companies have accounted for almost half
of the world's new drugs, including treatments such as for
leukemia, skin cancer, inherited blindness, and a set of
treatments for HIV/AIDS that have made a disease that was once
a death sentence now treatable and hopefully will have a full
cure in the years to come.
However, it was not always that way. In fact, in the
1970's, the United States was a global in life sciences
innovation as European-headquartered companies invented twice
as many new-to-the-world drugs as ours did in the 1970's.
What's changed over the past four decades has been a
concerted and intentional set of policy choices designed to
make America the world's leader in life sciences innovation.
Those policies are anchored in three key tenants. First, robust
and complementary public and private investment in life
sciences R&D, effective mechanisms to facilitate the transfer
of technology from universities and Federal laboratories to the
private sector for commercialization, underpinned by strong
intellectual property rights such as embodied in Bayh-Dole
agreement, and a drug pricing system that allows companies to
earn revenues that can be reinvested into future generations of
biomedical innovation.
The U.S. invests by far more than any other nation in life
sciences R&D. In fact, analysts estimate that the United States
has invested 70 to 80 percent of global biomedical R&D
investment over the past two decades. It's anchored by Federal
Government investment of about $39 billion a year into basic
life sciences research that focuses on understanding
fundamental processes by which diseases develop and transmit or
identifying novel biomarkers indicating the presence of
disease. This basic research creates a platform for innovation
potentially leading to the discovery of new medicines, tests,
or procedures.
The private sector complements this public-sector
investment with, in some years, close to $95 billion in annual
R&D focused on the applied research and clinical trials
necessary to bring safe and effective breakthrough drugs to
market. The fact is this drug development process is lengthy,
risky, and expensive. Studies vary, and I'm happy to share
result of several with the committee. But research finds that,
on average, developing a new pharmaceutical compound takes an
average of 11.5 to 15 years at a cost of $1.7-3.2 billion.
It's absolutely vital to recognize that public and private
investments are complementary. A recent journal of Nature
article estimates that, on average, biotechnology companies
invest $100 in development for every $1 the government invests
in research leading to a specific innovative drug.
If you take the case of the breakthrough anticancer
prostate drug--or prostate cancer drug Xtandi developed
primarily by Astellas and its partners, it's estimated that
about $2 million in federally funded research conducted at UCLA
was complemented by over $900 million of private-sector
investment required to bring Xtandi to market. That's a nice
example of the almost 300 new drugs, vaccines, and devices that
have been developed as a result of public-private partnerships
facilitated in part by the Bayh-Dole Act since its enactment in
1980.
Just like semiconductors, movies, or music, life sciences
is an innovation-based industry, meaning that companies incur
extremely high upfront fixed cost of initial design and
development that must be recouped and admits to failure rates
that approach 95 percent. Moreover, these companies
fundamentally depend upon the profits earned from one
generation of innovation to finance investment in the next.
Hopefully, Gilead's investment in HIV/AIDS drugs will generate
profits that enable its ongoing efforts in areas like
hemophilia and oncology to generate breakthrough treatments
tomorrow.
This dynamic is why America's life sciences sector is the
world's most R&D-intensive, investing 44 percent of its value
added into subsequent R&D. The reality is that there's a direct
link between pharmaceutical company revenues and their ability
to reinvest in future generations of innovation. They are
intimately and causally linked.
In conclusion, a key reason why the U.S. life sciences
innovation system has been so successful is that we've created
the framework for effective public-private partnerships where
each party contributes what it does best. Public research to
bring a stock of knowledge that can be innovated upon by the
private sector and investing the hundreds of millions required
to bring an innovative new drug to the market.
Thank you for your time today, and I look forward to
answering your questions.
Chairman Cummings. Thank you very much. Dr. Lord.
STATEMENT OF AARON LORD, PREP PATIENT AND ADVOCATE
Dr. Lord. Chairman Cummings, Ranking Member Jordan, and
members of the committee, I thank you for inviting me here
today to testify. My name is Aaron Lord. I am here today as a
physician, as an HIV activist, and a cofounder of the PrEP4All
collaboration, as well as a proud gay man.
I was born and raised in West Virginia. I attended
Georgetown University on Federal scholarship. I then attended
medical school at Columbia and am currently an assistant
professor at NYU, but I am not here in my official capacity.
Since realizing I was a gay man in my early teens, like so
many in my community, I lived in fear of acquiring HIV. The
reality hit all too close to home when early on in our
relationship my future husband, who I cherish and love dearly,
was diagnosed with HIV.
In July 2012, the FDA announced the approval of Truvada as
PrEP. It's the first drug approved to prevent rather than treat
HIV. It is highly effective, reducing risk by over 99 percent
when taken as prescribed. Since 2012, I have taken Truvada
every day to protect my health and the health of my community.
With this medication, I no longer have to live in fear.
Despite PrEP's remarkable efficacy, the number of new HIV
infections in the U.S. remains the same today as when PrEP was
approved in 2012 with one person becoming newly diagnosed every
15 minutes. We know it doesn't have to be this way. We know
that when PrEP is made universally accessible at no cost, new
HIV infections dramatically decrease. In Sydney, Australia, new
HIV infections decreased by 25 percent statewide in one year
when public health officials used low-or no-cost PrEP to reach
all those at risk.
In the U.S., however, we are failing to reach those most
vulnerable. With mere fractions of at-risk women and black and
Latino men getting PrEP and rates and use in the South remain
stubbornly low. Too many of us are still living in fear. A root
cause of this problem is the price. Gilead Sciences, who makes
the only PrEP available in this country, charges us over $2,000
a month or over 400 times what FDA-approved generics cost
internationally.
And while Mr. O'Day will certainly state that his company
has earned the right to charge such exorbitant sums, Truvada as
PrEP is not Gilead's invention. Truvada as PrEP is an invention
of the U.S. Government whose research and development was
funded exclusively by U.S. taxpayers and the Gates Foundation
and is protected by multiple robust patents issued to the CDC.
Even the very patents that Mr. O'Day currently uses to prevent
the American people from accessing generic Truvada are
themselves based on research funded by the U.S. taxpayer.
Price is not the only barrier preventing people from using
PrEP. Stigma, racism, homophobia, transphobia, sexism, poverty,
they all play a role. These barriers can and must be mitigated,
but we cannot do it if our healthcare system spends over
$20,000 a year on Mr. O'Day's drug instead of spending it on
precious programming to fight these barriers. Mr. O'Day, we are
suffocating under the weight of your company's pricing.
Mr. O'Day, for a figure far less than $2.6 billion, which
is what we spend on your egregiously overpriced medication
every year, we could have a national, far-reaching PrEP program
that guarantees every person who needs PrEP can get it,
including free medicine, clinical care, lab testing, and
transportation. And we could still have half-a-billion left
over for community organizations to fight these barriers. Mr.
O'Day, you have given the American people a very bad deal for
our money.
We have learned all too well from Gilead's past misdeeds
what happens when they are left to their own devices. As the
Wyden-Grassley's report so vividly showed, Gilead's pricing of
their cure for hepatitis C at $1,000 a pill was aimed to do one
thing: maximize their profit. The consequences of that
unmitigated greed resulted in a public health disaster. Despite
spending $50 billion of our hard-earned dollars buying
overpriced medication, the number of new hepatitis C infections
more than tripled.
I'm here today to say that HIV activists will not stand by
and allow this to happen ever again. So ladies and gentlemen of
the committee, I ask you as a representative of my community,
as a proud American, as a scientist, and as a patient, to join
me in asking Mr. O'Day what justification do you have for
charging $2,000 a month for Truvada as PrEP when the American
people funded the innovation of the molecule, invented its use
as PrEP, and funded four clinical trials to prove its efficacy?
Mr. O'Day, we do not ask for your company's charity or for
tax-deductible donations that meet your company's needs but
fail to meet the needs of our communities. Rather, we ask Mr.
O'Day, why not lower the price of Truvada to $15 a month right
here today at this hearing?
Members of Congress, the American people have invented a
way to end the HIV epidemic, and that we should be very proud
of. And we look to you today to ensure that every single person
in this country can protect themselves from this plague. Thank
you very much.
Chairman Cummings. Thank you very much. Mr. O'Day?
STATEMENT OF DANIEL O'DAY, CHAIRMAN AND CEO, GILEAD SCIENCES,
INC.
Mr. O'Day. Good morning, Chairman Cummings, Ranking Member
Jordan, and members of the committee. My name is Daniel O'Day.
I recently joined Gilead as its new chief executive officer.
Thank you for the opportunity to be here today.
Gilead is an American biotech company, but for the past
three decades has been focused on creating therapies that
prevent, treat, and cure some of the world's worst diseases. To
name just a few examples, Gilead invented the first once-daily
pill to cure hepatitis C, Tamiflu for influenza, and the first
and currently only FDA-approved HIV prevention medication,
Truvada, along with 10 other drugs used in the treatment of
HIV.
When I decided to become CEO, I had long admired Gilead's
remarkable contribution to health care and the high level of
innovation behind their medicines. Importantly, I knew I was
joining a company that was committed to the interest of
patients and dedicated to pursuing scientific excellence to
prevent and cure diseases. All of this is evident in Gilead's
approach to HIV, the commitment to developing HIV medications
that are safer, more patient-friendly, and more effective.
Gilead researchers have made contributions that fundamentally
changed the course of the HIV/AIDS epidemic, transforming the
disease from a death sentence to a manageable chronic
condition.
Gilead was founded in the midst of the AIDS crisis. At that
time people living with HIV were required to take a cocktail of
20-plus pills each day to treat the disease. Many of these
drugs lead to serious, often debilitating side effects. And
even when taken as directed, the therapies offered an average
life expectancy of less than 40 years of age with most people
dying within just a few years of contracting the disease.
In the early 1990's, Gilead began working to invent a
single-pill HIV treatment. Following nearly a decade of work
and about $6 billion invested in research, $1.1 billion of
which was devoted specifically to Truvada, Gilead launched
Truvada as one of the first fixed-dose combination pills for
HIV treatment in 2004. Today, Truvada and other Gilead
medicines have contributed to nearly doubling the average life
expectancy of people with the disease.
Although Truvada was initially approved to treat HIV,
researchers and public health officials knew for years that
antiretroviral drugs like Truvada could also be used to prevent
HIV infection, a technique referred to as PrEP. With this in
mind, Gilead supported clinical trials that ultimately led to
the approval of Truvada, the first and currently only
medication approved for PrEP.
To be clear, despite some media suggestions otherwise,
Gilead invented Truvada, no one else. Gilead developed the two
drugs that are combined in Truvada, invented the combination
that allowed these drugs to be taken as a single pill, and
invented the drugs used to treat HIV in combination with other
antiviral drugs.
I want to address the use patents on PrEP granted to the
CDC. Using Truvada for PrEP was well-known in the scientific
community long before CDC claimed it as an invention. We
believe the CDC patents are invalid, but we've chosen not to
challenge those patents because we value our collaborative
relationship with the agency.
Finally, I want to address access to Truvada. Gilead is
committed to ensuring that every American who needs Truvada can
obtain it. We offer a wide range of programs to help ensure
that people have access to Truvada when they need it. For
example, 98 percent of people who use our co-pay assistance
program have no out-of-pocket costs. In fact, according to the
CDC's own estimates, when taking our programs into account,
less than 1 percent of Americans who would benefit from PrEP
are in need of a financial assistance to obtain Truvada.
Moreover, we continue to work with advocates, providers,
and governments to remove the societal and other barriers to
broader PrEP usage. Last week, we took another important step
for expanding access by donating Truvada for up to 200,000
uninsured Americans each year.
We are committed to ending the HIV epidemic. We will work
with Congress and others to further expand access to PrEP, and
we will continue our scientific research in pursuit of a cure.
In representing Gilead, I can assure you that we take our
responsibility in HIV extremely seriously and will ensure you
that this is always evident in our actions.
Thank you for the opportunity to provide this testimony
today, and I'd be pleased to answer your questions.
Chairman Cummings. Thank you very much.
I now recognize Ms. Ocasio-Cortez, five minutes.
Ms. Ocasio-Cortez. Thank you. Thank you, Chair. Thank you
for agreeing told this hearing. And while I appreciate your
generosity in acknowledging the role our office played in this
hearing, I also have to give credit to the countless advocates
and activists that have been uplifting the issue of the price
of Truvada and PrEP.
And I have to say that is not because of me we are having
this hearing even in our office. It is because of a 23-year-old
staffer Ms. Claudia Pagon Marchena, who first dug into--who
first noticed this and first listened to the actual activists
that raised this issue. She took the opportunity to pursue it,
and if it wasn't for the openness and willingness of your
leadership and committee staff to take her concerns seriously,
we wouldn't be here today.
And so I just think it is an incredible testimony to--
despite the powerlessness we often feel in this political
moment, it shows that everyday people, no matter your age or
your identity, can make changes. And that is the reason why we
are having this hearing today, so thank you.
I also, before I begin, would like to submit to the
congressional record New York City Council Speaker Corey
Johnson, who himself is HIV-positive, his testimony to the
congressional record, so I seek unanimous consent to do so.
Chairman Cummings. Without objection, so ordered.
Ms. Ocasio-Cortez. Thank you so much.
So let's get down to, you know, the core of this hearing.
Dr. Grant, Truvada for PrEP is the only known drug that can
prevent the transmission of HIV, correct?
Dr. Grant. It's the only medication that's been approved by
the FDA. It's also known that tenofovir alone is prophylactic--
--
Ms. Ocasio-Cortez. Okay.
Dr. Grant [continuing]. for HIV----
Ms. Ocasio-Cortez. Thank you. And, Dr. Grant, it was your
NIH-funded research on PrEP that built on the earlier research
were patented by CDC researchers, is that correct?
Dr. Grant. Yes. My clinical trial was informed by CDC
research in two ways. One, the CDC demonstrated that the
preexposure dose was--added to the efficacy of PrEP and--yes.
Ms. Ocasio-Cortez. Thank you. Thank you, Dr. Grant. And I
would also like to seek unanimous consent to submit this Yale
School of Law study into the congressional record, which
concludes that the CDC's patents for PrEP were both valid and
enforceable against Gilead.
Chairman Cummings. Without objection, so ordered.
Ms. Ocasio-Cortez. Thank you very much.
Dr. Lord, thank you for your advocacy here today. Is it
true that the public invested $50 million to develop PrEP?
Dr. Lord. That is correct.
Ms. Ocasio-Cortez. Is it also true that Gilead relied on
publicly funded trials to obtain FDA approval?
Dr. Lord. Yes. If you look at their supplementary new drug
application, you'll see that every sponsor of Truvada as PrEP
was a non-Gilead sponsor.
Ms. Ocasio-Cortez. So the public invested to develop the
drug. The public invested and funded the trials for FDA
approval. Is it true that the pharmaceutical companies force
the public to pay twice first when investing in drug discovery,
but then it looks like these patient assistance programs that
they tout very often also have a public investment piece as
well, right? How are these public assistance programs funded?
Dr. Lord. Yes, so, you know, I think as far as like the co-
pay assistance program goes, it's important to also note that
it's--it only exists in its current state due to the work of
activists. We have worked for years to get them to increase
from initially a $300 a month co-pay assistance, which left
people with hundreds if not thousands of dollars of co-pay per
month. And then they really only increased it to $4,800 after
additional years of activist pressure, and that still left
thousands of dollars of donut hole potential for some patients.
And then it only took a New York Times op-ed that we published,
you know, to threaten march-in rights on this drug in order to
get them to raise it to the $7,200----
Ms. Ocasio-Cortez. Thank you.
Dr. Lord [continuing]. which is still not enough.
Ms. Ocasio-Cortez. Thank you. And even when it comes to
when folks can't access PrEP because it is so expensive and,
you know, the HIV epidemic continues, that also comes at a
public cost, right? So the public is paying--we pay to develop
PrEP, we paid to finance the publicly funded trials to develop
this drug, we also pay and foot the bill with patient
assistance programs. Also, as you noted, the existence of these
programs happen because of the public, and also we pay when the
HIV epidemic gets spread as well.
Very quickly, Mr. O'Day, you are the CEO of Gilead. Is it
true that Gilead made $3 billion in profits from the sales of
Truvada in 2018?
Mr. O'Day. Three billion in revenue.
Ms. Ocasio-Cortez. Oh, yes, in revenue, thank you. And,
very quickly, the current list price is $2,000 a month in the
United States, correct?
Mr. O'Day. The current list price is $1,780 in the United
States.
Ms. Ocasio-Cortez. Okay.
Mr. O'Day. And just to correct, the $3 billion was a global
figure----
Ms. Ocasio-Cortez. Okay. I see.
Mr. O'Day.--for Truvada for PrEP----
Ms. Ocasio-Cortez. So the list price is almost $2,000 in
the United States. Why is it $8 in Australia?
Mr. O'Day. Truvada still has patent protection in the
United States, and in the rest of the world it is generic. I
can't comment on the price in Australia of the generic
medicines, but it is generically available in other parts of
the world and will be generically available in the United
States as of September in 2020 based upon Gilead agreeing to
support----
Ms. Ocasio-Cortez. Thank you.
Mr. O'Day.--generic entries one year earlier.
Ms. Ocasio-Cortez. So I think it is important that we
notice here that we the public, we the people developed this
drug, we paid for this drug, we led and developed all of the
grounding patents to create PrEP, and then that patent has been
privatized. Despite the fact that the patent is owned by the
public, we refuse to enforce it. There is no reason this should
be $2,000 a month. People are dying because of it. And there is
no enforceable reason for it. We own the core intellectual
property for it. And, as a result, people are dying for no
reason, for no reason----
Chairman Cummings. The gentlelady's time is----
Ms. Ocasio-Cortez [continuing]. to develop this drug. Thank
you very much.
Chairman Cummings. The gentlelady's time is expired. Mr.
Armstrong?
Mr. Armstrong. Thank you, Mr. Chairman. And I agree. I
believe that prescription drug pricing, it is a conversation
that I get, it is one of the biggest ones we get in our office
both in D.C. and back in our offices in North Dakota, and it
should be a bipartisan endeavor. And in fact, we have had a
package of prescription drug bills that have come through two
committees here, and I know in at least one they passed
unanimously.
But unfortunately, we are in D.C. and, never allowing a
political opportunity to go to waste, they are going to get
marked up in Rules Committee, and we are going to vote on bills
this week that just quite frankly have no chance of becoming
law. So when we talk about bipartisanship, we had two sets of
packages that could come to the floor clean this week that
would pass, they pass the Senate, the President could sign them
by the end of the month, but that is not going to happen.
So, Mr. O'Day, it has been said that NIH spent $51 million
on clinical trials for PrEP, is that correct?
Mr. O'Day. Thank you, Congressman. Yes, it's important to
point out that Gilead has spent $1.1 billion developing this
medicine. Gilead has the patents on this medicine. And in the
course of the PrEP indication, it's also important to take us
back to that period of time of history with the HIV/AIDS
epidemic. It was a time when prevention of AIDS was actually
something that was highly controversial both from a scientific
standpoint, resistance, but also from public advocacy because
there were questions around the morality of providing a
preventive medicine that could take away from safe-sex
practices in others. So this was a public-health question that
needed to be answered.
And we partnered with several members of the community.
It's a very complex topic. For the PrEP indications, we
supported it with medicines. We have two of our Gilead
scientists that are co-authors on the fundamental--one of the
fundamental trials, the iPrEx trial that Dr. Grant has spoken
to before and to be an author on these trials in a highly
regarded 30-party publication--medication--publication, you
need to have sufficient involvement in those trials. So Gilead
had sufficient involvement in those trials. The NIH provided
$50 million in grant. The Gates Foundation supplied $17 million
in grants. And the Gates Foundation also independently funded
the second trial that was used for this indication with $70
million as well. So it was a partnership amongst public and
private institutions to get this indication.
Mr. Armstrong. And you said in your opening statement you
provide financial assistance to uninsured patients. How does
that work?
Mr. O'Day. So we have two basic programs to help with
patients. One is the co-pay assistance program. So patients
that have commercial insurance that have a high deductible cost
for their medicines, we have a program that supports them. In
fact, patients that access our co-pay programs during the life
of the patent that we have on the product, 98 percent of people
take nothing out of their pocket when they go to the pharmacy,
zero.
The other end of the spectrum we have deep discounts to
government programs that allow patients in Medicaid, Medicare,
ADAP programs to access our medicines at 70 to 80 percent
discounts for the list prices that we've discussed here today.
Finally, for the uninsured patient population that is truly
not met by these needs, we've been working with CDC and
announced the--one of the largest-ever donations of medicine
last week in conjunction with HHS and CDC for--by the CDC's own
estimates, they've estimated that out of the 1.1 million
patients that are susceptible to HIV, 200,000 are uninsured. We
have donated as a result of the announcement last week for all
200,000 of those patients to receive free Truvada for the next
10 years.
Mr. Armstrong. And I grew up in the early 1980's, and we
have come a long way since then and we have a long way to go.
But, I mean, particularly when we are talking about the
uninsured population as it relates to HIV and access to drugs,
I mean, it is a debilitating, crippling disease. We are working
toward prevention, we are working toward cure, but those
factors to that uninsured population are unique to this
healthcare crisis, are they?
Mr. O'Day. Well, yes, this is quite a unique circumstance
because of the fact that, at the end of the day, there are so
many things that are getting in the way of people that require
PrEP getting PrEP. There's access to the healthcare system for
sure, but there's also education, education for physicians,
education for patients, and there's a tremendous amount of
stigma associated with this disease, what comes into play for
the underserved communities. And this is something that Gilead
has been focused on, provided hundreds of millions of dollars
and supporting community associations to try to get at these
other root causes of PrEP, and it's absolutely what's required
to help eliminate the disease. I completely agree that we have
to attack it from both a prevention as well as a treatment
standpoint to eliminate this disease, and we're a big part of
that.
Mr. Armstrong. Thank you, sir.
Chairman Cummings. Thank you very much. I recognize myself
now.
Mr. O'Day, other drug companies sat in the very seat, that
very seat that you are sitting in like Martin Shkreli, and all
offer the same excuses and justifications, same thing. They
claim they have patient assistance programs to help those who
cannot access the drug, but the truth is that someone, somebody
is paying for these exorbitant prices. And that impacts
everybody in the system. That is one reason health care now is
so expensive. At the end of the day, it is the taxpayers who
bear the cost of these skyrocketing prices through government
programs like Medicaid.
Dr. Lord, isn't it true that in some countries the generic
version of this treatment is sold for a fraction of the U.S.
price? Is that right?
Dr. Lord. That is correct.
Chairman Cummings. And how much is it sold for overseas?
Dr. Lord. According to the Global Fund, you can purchase
this medication for under $5 a month.
Chairman Cummings. That is astonishing. Yet Gilead is
charging around 17, close to $1,800 a month?
Dr. Lord. Yes.
Chairman Cummings. Mr. O'Day, in your written statement,
you claim that your company spent $1.1 billion on research and
development related to Truvada. But you made $36 billion in
revenue on Truvada since it was approved in 2004. That is
according to your own company's SEC filings. Mr. O'Day, do you
believe that that is appropriate, and do you believe it is
moral?
You know, somebody said over here I guess it is a thing of
choices. One of my first employees died from AIDS, and I will
never forget it. And I described it, his dying on installment.
It is a mother. It is rough to watch somebody die from AIDS.
But anyway, you can answer my question.
Mr. O'Day. Mr. Chairman--and, you know, I'm very sorry to
hear about your----
Chairman Cummings. Employee.
Mr. O'Day. Employee.
Chairman Cummings. It was a person.
Mr. O'Day. Yes.
Chairman Cummings. An African-American young male about 25
years old, dead.
Mr. O'Day. I'm very sorry to hear that. The answer to the
question is that we have spent more than $6 billion over the
past--since 2020 on HIV research in general. And in fact, we've
taken the disease from a death sentence to a manageable chronic
condition with one pill once a day, but we're not done yet. We
still have medicines--because of the fact that we now have the
average life expectancy out to 78 years from 40 years, we never
anticipated that people would be taking these medicines for
decades. And some of the current generations of medicines have
kidney and bone effects that now our next generations that
we're launching will be able to have less of those effects and
allow people to live longer healthier lives.
And yet we're not done because we have to get to a stance
where people aren't taking a daily pill, where they're taking
it once a month, once every two months, or we hope we can get
to a cure where people can take a limited course of therapy
like in HCV, 12 weeks, and never have to worry about medicines
again. In order to do that, we have to continue to invest in
research for the patent life of our medicines. And, of course,
when a patent ends, generics come on like they are in other
parts of the world.
But during that patent period time, we also have a
responsibility to make sure that Americans get our medicines
when they're priced at a level that allows us to reinvest in
research. And that's where our access programs, co-pay
assistance, the donation to the CDC come in to allow us to make
sure the price doesn't get in the way during this period of
time of patent exclusivity.
Chairman Cummings. Can you tell me quickly about the timing
of the donation that you all are making of medication? I think
you said 200,000.
Mr. O'Day. Yes, Mr. Chairman. So it's 2.4 million bottles a
year, which equates to around--the PrEP treatments for around
200,000 patients for up to 10 years.
Chairman Cummings. All right.
Mr. O'Day. And this includes both our current generation
product Truvada, as well as our advancement, which may come to
market as early as later this year, which allows that better
safety profile if you like for patients.
Chairman Cummings. And how did you all come up with this
200,000? That is what I was trying to get to.
Mr. O'Day. Oh, that was a number that was requested and
discussed with the CDC. They acknowledged that in the 48
hotspot communities, District of Columbia; San Juan, Puerto
Rico; and the seven rural states, that that would be where--the
number of patients that would not qualify for Federal programs
or be involved in commercial insurance. So that number came
from the CDC, and we were happy to support them with that.
Chairman Cummings. And so if they had come up with a higher
number, it is quite possible you would have given more. Is that
a reasonable assumption?
Mr. O'Day. That's a reasonable assumption, yes.
Chairman Cummings. All right.
Mr. O'Day. We were trying to solve a gap that isn't
currently covered by our current access programs.
Chairman Cummings. You know, Mr. O'Day, something was said
here earlier, and I want you to be real clear. I have said this
to many of the witnesses in the pharmaceutical industry. I have
no problem with you all making a profit. I want you to make a
profit. I want you to make a profit because I have seen what
research can do. I have relatives that went, say, for example,
from a chronic condition with cancer--I mean, from a terminal
condition to chronic. I have seen it in a few years. And I also
serve with Dr. Gallo on the Human Virology Board in Maryland,
so we have been dealing with this a long time.
But, at the same time, I am talking about the people who
cannot get it, you know, the one who is getting ready to die
and will not be able to attend his daughter's wedding, that
one, or the mother who won't be there to see her children grow
up, that lady. And what I am saying to you is that, you know, I
want to work, we all want to work with the industry, but it is
kind of hard.
I mean, you can imagine when we hear about the $36 billion
or the $3 billion--and I know it is global, I got that--$3
billion, and then we go back to our districts and we see
people, and they see the cure. They know the cure is out there.
They know there is something out there called Truvada. They
don't know you, they don't know who makes it. All they know is
that it is something that could save their life. And they are
reaching, trying to get it. And then they hear about these
figures and they say--they just can't get there. They cannot
reach it. And I don't know whether those kind of things are
taken into consideration in the board rooms. Are they?
Mr. O'Day. Absolutely. I can assure you that if there is a
patient out there that cannot access Truvada because of
financial means, our programs are designed to capture them. I
mean, again, we have the co-pay assistance for people with
insurance. People without insurance that, you know, make less
than five times the poverty level, are provided with medicine
for free through our medication assistance program.
Chairman Cummings. And who pays for that?
Mr. O'Day. Gilead pays for that.
Chairman Cummings. So that cuts into your profit. Is that
what you are saying?
Mr. O'Day. It's important to us to make sure that every
patient can have access to the medicines, and it's absolutely
part of our responsibility.
Chairman Cummings. All right. I now recognize Mr. Jordan.
Mr. Jordan. Thank you, Mr. Chairman.
Mr. O'Day, what is the difference between Truvada and PrEP?
Mr. O'Day. Truvada is a medicine that's used for HIV
treatments and for prevention. It was discovered many years
ago.
Mr. Jordan. I guess my question is is it the exact same
drug; it is just used at a different time and in a different
way?
Mr. O'Day. No, PrEP is an indication--one of the
indications that Truvada is approved for.
Mr. Jordan. Right, but--so the drug is Truvada. It is
used--and when we say--because Dr. Lord talked about Truvada as
PrEP.
Mr. O'Day. Oh----
Mr. Jordan. It is the same drug?
Mr. O'Day. Yes, it's the same drug, is the same mechanism,
the same dose, it's the same----
Mr. Jordan. It is a different use?
Mr. O'Day.--frequency.
Mr. Jordan. Different use, different timing----
Mr. O'Day. What Truvada does is it reduces viral
replication of HIV, and that can be effective for----
Mr. Jordan. I just want to be clear for everyone, though,
that----
Mr. O'Day. Yes.
Mr. Jordan [continuing]. I think there can be some
confusion that Truvada and PrEP are somehow some different
drug. It is the same drug?
Mr. O'Day. Truvada is the drug. PrEP is one of the
indications----
Mr. Jordan. Right.
Mr. O'Day.--that the drug is used for.
Mr. Jordan. Got it. Got it. Okay. And, earlier, Dr. Grant
said Gilead did not provide leadership or funding for PrEP in
the studies at CDC. Is that true?
Mr. O'Day. No, that's not true. I mean, we have nine
scientists that were involved in the iPrEx trial itself, was
one of the two trials that went to the FDA to seek approval.
And of those, we have two scientists. Both are still with the
company actually that were authors in the primary New England
Journal article that is the iPrEx study.
Mr. Jordan. Okay.
Mr. O'Day. And to be an author on the New England Journal
of Medicine, you must have----
Mr. Jordan. So----
Mr. O'Day.--involvement in the trial----
Mr. Jordan. So----
Mr. O'Day.--in addition to the free medicine we provided
and the----
Mr. Jordan. So, Mr. O'Day, Gilead developed Truvada?
Mr. O'Day. Correct.
Mr. Jordan. You guys did that all on your own. Gilead
participated with CDC on Truvada as PrEP, right?
Mr. O'Day. Correct.
Mr. Jordan. And your drug has made a difference for
millions of people all over the world, right?
Mr. O'Day. That's correct.
Mr. Jordan. How many folks do you think have been
impacted--I would say people are alive today because of your
drug. Is that true?
Mr. O'Day. Oh, absolutely. And with 10 other medicines that
Gilead makes, absolutely millions of people living with AIDS
and preventing AIDS.
Mr. Jordan. And how long did it take to develop Truvada?
Mr. O'Day. Truvada was a long story. It goes back to the
early 1990's with--Truvada is a combination of two different
medicines. One is called, for the sake of simplicity, TDF, and
the other one is FTC. So this goes back to the early 1990's and
then into the early 2000's when FTC was evaluated by our
scientists, and it's the combination of these two medicines
that led to the first approval for Truvada in 2004 after a good
decade to 15 years of research and lots of failures, by the
way. I mean, 90----
Mr. Jordan. So over a decade of research and trials and all
kinds of effort to develop this miracle drug that has saved
millions of people all over the planet, my guess is that costs
a few dollars. What did it cost you to develop the drug?
Mr. O'Day. Well, in this case it cost $1.1 billion.
Mr. Jordan. So billions of dollars to develop this amazing
drug----
Mr. O'Day. Yes.
Mr. Jordan [continuing]. that saved all kinds of folks. And
no what are you doing with those profits? I think you said you
are trying to find a cure, right?
Mr. O'Day. We're--absolutely. We're investing them back
into research. We--our scientists and the colleagues--I'm so
inspired by Gilead. They will not rest. They will not rest.
Good enough was never good enough for them when we had this
generation of medicines that had these kidney and bone
toxicities, and we're now launching medicines that are much
more tolerable for patients today. But they're not stopping. So
we're looking at long-acting medicines that----
Mr. Jordan. Just last week you said for folks who can't
afford it, folks who don't have insurance, you are going to
give it to them free?
Mr. O'Day. Absolutely.
Mr. Jordan. Okay. So just let me get this straight. Over a
decade of research, over $1 billion into that research, you
develop a drug that saved millions of people, now can be used
as PrEP prior to, not just as something after the fact that
when people have been diagnosed with HIV. The profits you have
made from that you are now working on developing a cure and,
just last week, you announced folks who can't get the access to
the medication right now, you are going to give it to them
free?
Mr. O'Day. Yes, Congressman.
Mr. Jordan. But you are a bad guy. You are a bad guy. I
mean, that is what we heard from the other side.
Mr. Ezell, isn't that exactly how it is supposed to work
under the Constitution? People come up with a great idea, they
go to the Patent and Trade Office, they get a patent for it,
they get that patent for certain length of time to recoup the
billions of dollars it cost to make the product or the idea or
whatever they did that has helped millions of people, that has
been great for our--this is one of the things that makes
America the greatest place ever. Isn't that supposed to be how
it is supposed to work
Mr. Ezell. That's exactly right, Representative Jordan.
And, you know, it's interesting to hear the questions about,
well, how much cheaper is this drug in other countries of the
world. Well, part of the problem is that other countries of the
world are not as effective in innovating drugs because they did
not----
Mr. Jordan. They didn't make it. These guys made it.
Mr. Ezell. That's exactly right. We've put in place systems
to----
Mr. Jordan. Oh, I forgot to add one thing. I forgot another
thing. They are going to go off patent year early. Isn't that
right, Mr. O'Day?
Mr. O'Day. Yes, and generics will enter one year early.
Mr. Jordan. I mean, so one year early is going to go to a
lower cost. They don't have to do that, but somehow, they are
the bad guy, right? I just fail to--I appreciate what you have
done and the thousands of people that are being impacted as we
speak, the millions of people whose lives have been impacted,
the folks who are alive today because of the work you have
done. And we are going to beat you up.
So, Mr. Chairman, I appreciate this hearing, and I yield
back my time.
Chairman Cummings. I appreciate you, but let me say
something. Let me make this clear, and listen up. Nobody is
coming here to beat you up. I want to make that clear. I
applaud Gilead. But it is nothing like holding the hand of
somebody who is dying from AIDS. I am sorry. And all we are
trying to do is represent our constituents and help them stay
alive. When you are dead, you are dead. And when I think about
the fact that Truvada for PrEP is only getting to 10 percent of
the people that need it, what about the other 90 percent? What
about their families? I am not knocking you. I am just trying
to figure out how we can help you get to the people who are
dying as we speak, as we speak.
And we can holler, we can play all these games, but let me
be clear. Let me be clear. I speak for the dead and the living,
we are simply trying to get, again--I don't know who he is
talking about, but I applaud Gilead. I have been dealing with
this issue for 20-something years, so I know about it, and I
know the problems, and I know the pain. And I know about the
death by installments. So I want to be clear. Who is next?
Mr. Jordan. Well, can I respond, Mr. Chairman?
Chairman Cummings. No.
Mr. Jordan. You got like nine minutes and you just went
after me----
Chairman Cummings. Mrs. Maloney. Mrs. Maloney.
Mr. Jordan. Oh, that is wonderful. Thank you.
Mrs. Maloney. Thank you, Mr. Chairman.
Mr. Jordan. You had seven, eight minutes. I had----
Mrs. Maloney. Thank you, Mr. Chairman. I deeply appreciate
the passion----
Mr. Jordan. Would the gentlelady yield just for 1 second?
Mrs. Maloney. No, I will not.
Mr. Jordan. I wasn't playing games----
Mrs. Maloney. I appreciate the leadership and passion of
the chairman of this committee, Mr. Cummings, and I want to
thank the advocates who advocated for it and my colleague from
New York who----
Mr. Jordan. Get the----
Mrs. Maloney [continuing]. negotiated this hearing. And I
want to ask a question about the 90 percent that the chairman
talked about, the 90 percent of Americans that want to get
access to this drug. And I want to ask Mr. Horn because how
they get access is through the local healthcare system in our
cities and in our states that are dealing with people hands-on
every day.
But first I have to say that I find it a national scandal
that we are paying in this country $70 a pill while Australia
pays $7 a pill. How fair is that? And, Mr. O'Day, you say that
is because Australia negotiated a lower price. Well, we in
America are going to pass a law that allows our government to
negotiate a better price going forward.
And today, we have two bills on the floor that will strike
at this problem. It will end the abusive practice of drug
companies where they pay to delay the development of generic
drugs, a terrible abusive practice, keeping affordable drugs
from our people. And the other will stop the practice where
drug companies pay to block, they literally pay to block the
development of lifesaving drugs here in America where it was
pointed out it is the American taxpayer that puts the money in
on the ground and starts the research that then moves forward.
And then our people don't have access to it.
So, Mr. Horn, I want to ask you, how does this high cost of
PrEP limit the ability of states and local health departments
and clinics from scaling up and providing the drugs and support
to the 90 percent of people who need it that the chairman
mentioned?
Mr. Horn. Thank you, Representative Maloney. I--first, I
just want to sort of piggyback on one of your points and just--
something that's really important to recognize is when we
consider where we have the highest number of new infections in
the United States, if you overlap that map with another map of
like where we have not expanded Medicaid, for example, we
definitely see where there is a tremendous disparity.
So when we're thinking about those jurisdictions in
particular, this is where we find a number of people who are
vulnerable to HIV infection really do become increasingly
dependent on this incredibly complex patchwork in order to
access not just PrEP but all of the services that are required
to support PrEP, lab testing, supported services, counseling,
you know, engagement in care, access to a care provider, so on,
and so forth.
So--and I also just do want to reference that just with
respect to, you know, that cost certainly isn't our own issue.
We do have issues of stigma, discrimination, so on, and so
forth. But when we do take a look at what's happening with
health departments, I would just reiterate that for many of our
health departments--and we do have a number of states have
actually implemented state, you know, PrEP, your drug
assistance programs.
The one thing I will point out about that is that these are
state-funded programs, but they're not federally funded
programs. Therefore, they do not have access to 340B
discounting. Therefore, they are reliant on leveraging the very
complex system in order to guarantee access to PrEP and the
various services that are required.
Mrs. Maloney. I want to say that I have the privilege of
resenting New York, which has been at the forefront in
combating the AIDS epidemic. And, according to the city of New
York, we have been making some progress. New AIDS/HIV
infections in the city decreased by 36 percent between 2013 and
2017, but by increasing access to PrEP and making it
affordable, they believe that they can bring new infections to
lesson 700 cases a year. This would be a dramatic, dramatic
improvement. And I am afraid that by basing our public health
response largely on the generosity of a private company that
says they are going to make it affordable, it should be
affordable to everyone. It should be affordable to everyone.
They shouldn't have to negotiate having access to this drug. It
is just putting the whole program in quicksand. It is not there
to serve the people.
So I want to ask what do we need to do to make this
affordable to people in our public health system, in our
cities, in our states, in our clinics, in our local areas, Mr.
Horn?
Chairman Cummings. The gentlelady's time is expired. You
may answer the question.
Mr. Horn. Okay. We just need to be conscious of cost at all
point--I mean, we just need to make sure that we are able to
procure both PrEP and the services that are required for PrEP
at an equitable price and that we are moving in that direction.
We're moving toward generics. And we just need to keep an eye
on that. That really is the great unifier in terms of ensuring
access to everyone who requires preexposure prophylaxis. Thank
you.
Mrs. Maloney. Thank you for your service.
Chairman Cummings. Mr. Meadows.
Mr. Meadows. Thank you, Mr. Chairman. Thank each of you for
your testimony.
I would want to point out since my colleague from New York
talked about voting on bills today, candidly, those bills today
are nothing more than a political statement. There are both
Republicans and Democrats----
Mrs. Maloney. Will the gentleman yield?
Mr. Meadows. No, I will not. You didn't offer the same
courtesy to my friend from Ohio, so--I will say this. I am dead
serious on actually lowering prescription drug prices and
making sure that availability is here. I am willing and have
worked with my Democratic colleagues for us to put bills on the
floor that actually are not a product of bipartisanship. It is
not going to solve this problem. And so it is critically
important that we allow for the R&D that happens that has
groundbreaking drugs that come to market, that they continue,
and that we make sure that availability for all Americans and
indeed globally are there.
But with that, I am going to yield the balance of my time
to the gentleman from Ohio, Mr. Jordan.
Mr. Jordan. I thank the gentleman for yielding.
The chairman talked about playing games. I am not playing
games. I just want to thank a company who has developed a drug
that has saved millions of people and not beat them up for that
fact. I mean, you can look at--on one hand, you go after them,
and then you say, oh, but I am not really going after them.
Look at the title of the hearing, ``billions in corporate
profits after millions in''--you are going after them right in
the title of today's hearing.
Dr. Grant in his opening testimony said that Gilead had
nothing to do with it. I have gotten article, a peer-reviewed
article from the New England--in fact, I would ask unanimous
consent, Mr. Chairman----
Chairman Cummings. Without objection, so ordered.
Mr. Jordan [continuing]. Gilead signed this, participated
in this. I don't remember any member thanking them for what
they have done.
Chairman Cummings. I did.
Mr. Jordan. Not till after I did, that is for darn sure.
So, look, as my colleague said, we want prescription drug--
we want 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 who has developed an amazing
drug that has helped so many people, and they are taking the
profits from that now, working on a cure. I don't see where
that helps us.
So, anyway, Mr. Chairman, I would--or, excuse me, I will
yield back to the gentleman from North Carolina.
Mr. Meadows. I thank the gentlemen.
So, Mr. Ezell, let me come to you. Really at this
particular point what we have got is one of the greatest R&D
abilities in terms of pharmaceuticals on the globe. In fact,
most of the world looks to the United States for those
groundbreaking drugs. Is that correct?
Mr. Ezell. That is correct. The U.S. truly leads the world
in both investment in life sciences R&D and commercializing
drugs that come out of that R&D.
Mr. Meadows. And why do we lead the world in that? Is it
just that we have the greatest brainpower or why would we lead
the world and be able to do that? Why does that come from here
and not from some other country?
Mr. Ezell. It's a combination of factors, as I tried to
indicate. First, a really strong complementarity between
private and public investment. A lot of cases of public-private
partnerships bring innovative new drugs to market.
Mr. Meadows. So it is our coordination between the
pharmaceutical industry, NIH, other areas where we have this to
come up and have groundbreaking pharmaceuticals that actually
meet the needs of not just the United States but certainly the
world at large. Is that correct?
Mr. Ezell. That's a large part of it, also a wonderful STEM
talent and pipeline, some of the best scientists in the world,
and a system broadly that enables innovators to undertake the
risky process of investing hundreds of millions if not billions
into a drug and earned for a temporary period of time revenues
from those innovations that can then be reinvested into future
generations----
Mr. Meadows. So strong patents that actually help the
proprietary investment that many companies make, is that
correct?
Mr. Ezell. That's correct.
Mr. Meadows. So if we look at that, one of the number-one
complaints I get, though, is with the rise of prescription drug
prices and why can I get it cheaper, you know, in the E.U. and
other areas? Is it our delivery system at times, the way that
we have done this, and for me, a lot of this has come on in the
last five decades as we have had a number of competing things
that have happened with regards to the delivery system. Is
there a way that we can still protect the patents, allow for
research and development, and yet make sure that what both the
ranking member and the chairman are talking about is that
availability to underserved populations? Is there a way to do
that without having it a government-owned entity?
Mr. Ezell. I think there--yes, there is certainly a way to
do that without having a government-owned entity. The private
sector remains the best engine of innovation in the life
sciences.
I think there are interesting things we should do. One
thing, for instance, is we can think more thoughtfully about
how to increase R&D efficiency. The biggest problem in the
broader drug development system is so many drugs get to like
phase three clinical trials and then fail, and that's a massive
cost for both the companies and the system. If we could focus
on public-private partnerships like around translational
research that would focus on how we can bring more efficiency
to the R&D drug discovery process, that would be a very
important way that we could broadly illuminate some of the cost
in the drug discovery system.
Mr. Meadows. All right. I look forward to working with my
colleagues opposite, and I yield back. I thank the gentleman.
Chairman Cummings. Ms. Norton.
Ms. Norton. Yes, thank you very much, Mr. Chairman. This is
a very important hearing, particularly for people who represent
districts like mine, the District of Columbia. I am interested
in PrEP because it is of course the cornerstone of the
administration's HIV plan, so it plans to increase the use of
PrEP from a paltry 10 percent today to 50 percent within the
next 10 years, so everything is riding on PrEP.
I can't resist asking you a question, Mr. O'Day. It is kind
of a John Q. Public question. Instead of the donations you are
offering, even some of the reductions, why not simply lower the
price of PrEP?
Mr. O'Day. Thank you, Congresswoman. And obviously, your
district is extraordinarily important in terms of HIV
elimination and a part of the CDC program that we just agreed
for the donation of medicine.
So the answer to the question is that if we had lowered the
price of our medicines even a decade ago, we wouldn't be
sitting here today with the innovations that are changing the
face of HIV/AIDS.
Ms. Norton. Mr. O'Day, I think you testified that your
company earned $36 billion in revenue, and you are telling me
that at that rate of revenue, we just wouldn't have PrEP at
all?
Mr. O'Day. Without the investment back in research, we
wouldn't have PrEP today, and we wouldn't also have the
advances that we have with the talented scientists at Gilead
looking at long-term----
Ms. Norton. And so that price is justified?
Mr. O'Day. That price----
Ms. Norton. In order to get back any return on what you
have invested in order to develop PrEP. Otherwise, you would be
at a loss?
Mr. O'Day. Yes. The revenues are invested to a large
percent back into R&D, and I just point out that everything
that we start in early phase R&D trial has a 97 percent chance
of failing. So exactly to Mr. Ezell's point, this is a very
complex iterative process that requires a lot of investment,
but, more importantly, requires no----
Ms. Norton. But this one didn't fail--just reclaiming my
time. So I would like to go on and find out the feasibility of
the use of PrEP by asking Ms. Walensky how feasible is this
goal I mentioned to get from 10 percent to 50 percent within 10
years, after which you have heard Mr. O'Day testify, how
feasible that we will get there?
Dr. Walensky. Thank you. We aspire to laudable goals. This
one's going to be hard, and I will tell you----
Ms. Norton. Will reducing the price be necessary?
Dr. Walensky. I think we need to put PrEP in the water is
what I think we need to do in order to get this epidemic under
control and the places that don't have access to PrEP. I think,
you know, the data from South Wales that said that they were
able to decrease incidence by 25 percent, they essentially give
it to almost everybody. They did everything that they could to
get PrEP to a lot of people, and so we need to do everything
that we can.
We know that since PrEP has been available, there has been
no dent in incidents. It's been unchanged, and so if that's
going to be the case, we need to sort of figure out--that 10
percent access hasn't done anything to the incidents.
Ms. Norton. No effect. Mr. Horn, does it trouble you that
the administration's plan relies so heavily on the donation of
free drugs from Gilead? We are going to get there with these
kinds of donations?
Mr. Horn. Donations help. They don't solve anything. I'll
give you the example. When we have looked at the U.S. response
and I think the response globally, when we took a look at what
happened when we had our major innovator manufacturers who were
donating drug to low-income countries, that only got us so far.
What was really required there was a reduction in price. Really
that was spurred by robust generic competition to ensure
equitable access and affordability to our programs.
And so let me be clear. I think the donation will help, but
it is not the panacea that we require.
Ms. Norton. I just want Mr. O'Day to know that everybody
affords your donations and charity, but I think we would
actually prefer you to go back to old-fashioned capitalism and
reduce the price.
Thank you, Mr. Chairman.
Chairman Cummings. Mr. Norman?
Mr. Norman. Thank you, Mr. Chairman.
Mr. O'Day, I appreciate you justifying and coming up here.
You know, you are being put in a position of being a bad guy, I
mean, by the questions you are asked. Your company competes
with other drug companies. You are not the only company that
took the innovation and the time and the effort to go after a
treatment, which, as Congressman Jordan said, you are having
the people that ordinarily would not have a chance to live,
they are living now.
Now, I am all for lowering prices. You do that through
competition, through capitalism, so I want to thank you for
doing that and really for taking some of these questions, which
is really amazing to me.
You know, Australia, the drug that has been quoted for $8,
where were they when the innovation--where were they--why
didn't they invent the drug? Why didn't they go through the
trials and the studies that you did over time?
But, Mr. Ezell, you are in a good position to I guess
answer questions as far as the many times that this country has
led an innovation and putting drugs on the market that other
countries either couldn't or wouldn't or didn't do. What effect
if--go through the trials that failed and who foots the bill
for that with different companies, yours particularly?
Mr. Ezell. I'm sorry, could you restate the question? I
didn't--could you restate the question? I didn't entirely
understand what you are asking.
Mr. Norman. Could you--well, my question is, you know, part
of the reason--you are in a unique perspective on the
innovation that is occurring in this country. The U.S. is a
leader in innovation, as I have said. You succeed in bringing
lifesaving drugs to the market. And you improve the lives of
Americans who desperately need them, as has been said today. I
think part of the reason is because when a drug fails in the
pipeline, it is the company primarily who suffers the financial
loss. Could you elaborate on this point?
Mr. Ezell. Well, essentially--and that's exactly right. The
simple reality is that the process of bringing an innovative
new drug to market is risky and extremely expensive. I could
quote studies, the most recent one from Deloitte estimating
that--that study shows that over six of the past eight years
the cost to bring an innovative new drug to market has risen.
Now the average in 2018 was about $2.1 billion.
It really is the private sector of the United States.
That's the only entity at a large scale in the world who's
willing to undertake these incredibly risky and expensive
investments and be willing to accept failure rates that, as Mr.
O'Day has said, can exceed 95 percent. We have a system in
place to bring talent and capital to the world's most
innovative companies, to bring breakthrough solutions to
market.
And I would also ask the committee to understand that their
deliberations today importantly about the price of Truvada will
also have implications for a number of other drugs because we
care not only--although we care deeply about those patients who
suffer from HIV/AIDS, we care about those who are affected by
maladies that we currently do not have solutions to. And the
genius of America's life science innovation system is that
we're able to put in place a system that enables us to invest
to try to solve challenges that are currently unsolved by the
frontiers of medical science, and we're the best country in the
world doing that.
Mr. Norman. You are planning for the future and you are
reinvesting to help the lives that you are saving already,
making it better.
Dr. Walensky, some of my colleagues are advocating for
breaking the patent system in the United States as a way to
address drugs. Would this work?
Dr. Walensky. Well, you know, one of the things I want to
get to is the fact that several people have described that with
an earlier patent--an earlier-going generic, a year earlier, I
want to just emphasize that the only way drugs prices come down
in the generic market is if there's generic competition. So the
fact that this is going to be--the patent is going to be broken
a year earlier and there will be one company making a generic
drug is not going to decrease the price of Truvada. Maybe it'll
decrease it by five or 10 percent, but we're not going to get
the discounts that we need such that the patients who need to
access it will be able to access it.
I do think that--you know, it's not that I don't believe
that the companies need to profit. I do believe that companies
need to profit. I do believe we need new drugs. We certainly
need them in HIV, we need them in antimicrobials, we need them
in a lot of different places. But I do believe that Gilead has
already profited enough, especially in the context of a
Presidential call to end the epidemic here. So I think that
that would work here.
Mr. Norman. You think they have profited enough, and that
is your opinion.
Dr. Walensky. Certainly on this drug for this indication, I
do. I do. I think this is a public health mandate. Not all----
Mr. Norman. Thank you. Thank you so much. I yield back.
Chairman Cummings. Mr. Connolly.
Mr. Connolly. Thank you, Mr. Chairman.
My friend from Ohio, the ranking member, has attempted to
discredit the purpose of this hearing and in the process
discredit those of us who raise questions, legitimate questions
about the pricing of a lifesaving drug.
I am here because of one of my best friends. His name was
Rick. He developed AIDS in the late 1980's when there was no
cure. He died when my daughter was just a few months old in
1991. I spent a lot of time with him during the illness. I saw
its progression. I saw his suffering, terrible symptoms. It
ultimately went to his brain, and he started hallucinating.
Maybe there was a blessing there because he was not any longer
aware of his suffering.
He lost his job because of the illness and was uninsured,
and he didn't have access to health care. He went to a
homeopathic clinic because he was hopeful maybe that would
work. It seemed to only make his suffering worse.
So, Mr. Jordan, I am not here to discredit an American
company or Mr. O'Day. I am here for my friend Rick. I am here
to make sure no American has to go through what Rick went
through and that drugs are available to people who are
suffering. And I would say to you, Mr. Jordan, that is a
legitimate source of inquiry.
I am not going to yield because I am going to run out of
time unless the chairman grants me more time.
So I just want to make that really clear. Most of us
absolutely subscribe to the thought that a drug company has to
recover profits because it recovers cost and legitimate R&D
that can produce more lifesaving drugs. But the question in
front of us is how much is enough? How high do you go to the
point where it becomes a barrier to access? It may help your
bottom line, but it doesn't help people like Rick.
And I think that is a legitimate form of inquiry. And given
that, one notes that, right now, the cost of Truvada is about
$70 per day if you are paying full freight. Is that correct,
Mr. O'Day?
Mr. O'Day. That's correct.
Mr. Connolly. In Canada, it is $5 a day. In Australia, it
is $7 a day. And, to be fair, in Canada, that is generic. For
the branded product, it is $20 a day, not $70. Now, they have
different systems, but it is the same drug.
Mr. O'Day, when Truvada was first approved as a treatment
in 2004, you had a list price of $800 per month. By 2012 when
you were approved for preventing HIV transmission, that price
had almost doubled to $1,400 a month. In your statement today
you claim you did not increase the price of Truvada when it was
approved in July 2012, correct? That is in your statement.
Mr. O'Day. The--there was no--there was an increase in
2012----
Mr. Connolly. Yes.
Mr. O'Day.--so it was--over the past--since 2004, the
average increase has been around----
Mr. Connolly. But in your statement you said today you did
not increase the price of Truvada when it was approved. And I
would suggest respectfully that is a little misleading because
you had just raised the price six months earlier, and you
raised it again six months later.
Mr. O'Day. So, Congressman, I understand your point. What I
was trying to assert was there was no additional increase to
the price as a result of the additional indication.
Mr. Connolly. So let me ask a question in terms of
corporate deliberations. I worked in the corporate world for 20
years. When you look at pricing and when you looked at pricing,
did you have a discussion about, okay, corporate profit, we
want to maximize our profit, but on the other hand, we also
understand our, you know, community obligation to suffering
people and so we have to strike a balance here? Does that
factor into the pricing of the drug?
Mr. O'Day. Absolutely, Congressman. And there are four
things that we look at critically when we price a medicine.
First of all, what's the value of the medicine to the patient
and society? The most recent figure associated with the disease
HIV/AIDS that it can cost on average $880,000 per patient to
treat that disease, so that's given into context.
The second thing is what the comparable treatments that are
on the market today?
The third and potentially most important is exactly to your
point. What are the access limitations that might be created by
setting that price, and we anticipate that in advance.
And then the fourth one is our commitment to reinvest back
in research not just for this medicine and not just for this
disease but for other terribly devastating diseases that
inflict Americans and the globe.
Mr. Connolly. Well, Mr. O'Day, I appreciate that, and I
just want to say I hope today's hearing is something that will
give you thought and is something that maybe you will take back
to the corporate boardroom to reevaluate the pricing of a drug
that so many people need access to.
And I want to thank the chairman for having this hearing on
behalf of my deceased friend Rick, your deceased employee, and
the millions of Americans who have succumbed to this terrible
virus. Thank you.
Chairman Cummings. Mr. Hice?
Mr. Hice. Thank you, Mr. Chairman.
Mr. Ezell, could you explain in basic terms the law that
addresses intellectual property that comes from federally
funded research?
Mr. Ezell. Yes, Congressman. It's called the Bayh-Dole Act.
It was introduced on a bipartisan basis in 1980, but what it
does is it gives universities and public research institutions
the rights to innovations that stem from federally funded
research at their institutions.
Mr. Hice. And before 1980, before that law, do you have any
idea how many patents the U.S. Government owned?
Mr. Ezell. Yes, so in 1978 the Federal Government had
licensed less than five percent of the 30,000 patents owned at
the time. There was a massive underutilization and a lack of
commercialization of intellectual property and knowledge that
was sitting in laboratories across the United States.
Mr. Hice. So before the law, then, there were approximately
30,000 patents that the U.S. Government owned, only about five
percent of which, however, had commercial licensing. Is that
correct?
Mr. Ezell. That is correct.
Mr. Hice. All right. And why is that? It is a lot of
patents, a lot of potential great benefits out there, only five
percent in the commercial market to go out to the public.
Mr. Ezell. Well, that's right because, well, first,
government institutions and universities were not equipped or
expected or it wasn't their intent to incur the risk that would
be required to, you know, take those technologies or inventions
and bring them to the market as commercializable----
Mr. Hice. And neither is the government?
Mr. Ezell. In fact, an interesting story was from the year
1968 when President Johnson asked Elmer Staats, who was then
the comptroller general of the United States, to analyze how
many drugs had been developed from NIH-funded research, and
Johnson was stunned when Staats' investigation came back and
said that not a single drug had been developed when patents
were taken from universities for commercialization by the
Federal Government. Staats' report from 1969 found that--we
found hundreds of new compounds developed at university
laboratories that had not been tested and screened by the
pharmaceutical industry because the manufacturers were
unwilling to undertake the expense without some possibility of
obtaining exclusive rights for further development. It was not
until they put in place the Bayh-Dole Act of 1980 that we--led
to an explosive growth of innovations stemming from federally
funded research.
Mr. Hice. That is my point exactly where I want to go with
this. And so you had the Federal Government pretty much in
charge of all the patents until Bayh-Dole. Then things started
changing and actually patents were able to get into the hands
of commercial licensing and thereby get to the needs of the
population.
Can you briefly explain what the march-in provision is in
Bayh-Dole?
Mr. Ezell. Yes, so the march-in provision is language that
would in very specific limited cases give a government agency
the ability to, quote, ``march in'' and compel the divulsion of
the intellectual property or force additional licenses on an
innovation that was a result in part from some degree of
Federal----
Mr. Hice. And, real briefly, what would be--I am assuming
that would be like an emergency?
Mr. Ezell. Yes, so when the architects of the Bayh-Dole
Act, Bob Dole and Birch Bayh, designed the legislation in the
early 1980's, the reason they conceived of putting in the
march-in rights was primarily to ensure that a licensee took
the steps to commercialize the----
Mr. Hice. The whole point was to get it to the public when
there was a need?
Mr. Ezell. That's correct.
Mr. Hice. So has the march-in provision ever been used by
the Federal Government?
Mr. Ezell. No, not--no, it has not.
Mr. Hice. All right. So what kind of impact would using the
march-in impact have on research and development?
Mr. Ezell. I think there's a real risk that, if you ever
used march-in rights, it would substantially stifle the
potential of research and development. If the government ever
had the capacity to march in decades later and compulsory
license the IP on a pending pharmaceutical drug on the grounds
that some of it was contributed by federally funded research
and now some number of decades later the government declares
that that price is unreasonable, that will give enterprises
serious pause about investing the enormous sums required to
bring innovative new drugs to the marketplace.
Mr. Hice. So----
Mr. Ezell. It would stifle innovation.
Mr. Hice. So, in other words, there would be a great
disincentive for research and development in various companies
if they spent the billions of dollars, if they assumed the risk
to develop drugs, and then all the while knowing that the
Federal Government could march in and take that patent away
from them, you are saying that would massively disincentivize
R&D?
Mr. Ezell. That's correct, Congressman. There was a great
case from 1995, something called CRADAs, cooperative research
and development agreements, in 1989 the NIH inserted a
reasonable-pricing clause into those CRADAs. The amount of
collaboration between industry and government subsequently
cratered. And when that requirement for original pricing of a
subsequent innovation was repealed, the number of CRADAs
instantaneously rebounded in 1995 and we again stimulated
effective public-private partnerships toward developing new
drugs.
Mr. Hice. Thank you. Thank you, Mr. Chairman.
Chairman Cummings. Mr. DeSaulnier?
Mr. DeSaulnier. Thank you, Mr. Chairman. Thank you for
having this hearing. Thank you to everybody who has been behind
this.
As somebody who has a pill in my pocket that I will take at
three o'clock that keeps me alive that in Australia costs $6,
here in the United States it costs $400, Johnson & Johnson
distributes it. I am told it is going to $500, but it keeps me
alive, so I am happy that I have health insurance that pays for
it.
So I have spent a good deal of time in the last four years
since I was diagnosed with chronic lymphocytic leukemia trying
to figure this out. And what is a good reasonable rate of
return to get people from private sector to invest and what do
we get as taxpayers? NIH has a figure that shows since 1974 the
NIH's research has contributed $77 trillion to the U.S. GDP.
So having gone out there now multiple times and Dr. Grant
having--Mr. O'Day, as somebody who is a resident of the bay
area I take it now, as somebody who lives in the bay area,
moved to San Francisco in the 1970's, went into the restaurant
business, I sit here and think of the friends, the coworkers,
the people who worked for me when I owned restaurants who
passed away and what that did to the culture in San Francisco
having moved there from the west end of Boston--not a bad
facility, by the way, but it is no UCSF--and having one of my
oncologists be one of your colleagues, Dr. Kaplan at UCSF, who
put some work into this as well.
The numbers that I have from the Washington Post article is
the research that you got or the grants you received was $50
million, as has been said, $50 million from NIH and then about
$17 million from the Gates Foundation. Were there other
significant contributions from this company or others to your
research?
Dr. Grant. Gilead did not provide funding. They did donate
medications, and it was that donation that justified their
listing as authors on the publication cited before.
Importantly, my study was not the only study done in PrEP. The
CDC funded and performed its own study in Botswana and in
Thailand, and the NIH also funded a study in--called VOICE in
Africa. The total U.S. Government investment in PrEP is much
more than the $50 million from my project. It's in the hundreds
of millions of dollars paid by the U.S. Government for the
development of PrEP.
Mr. DeSaulnier. So, Dr. Grant--and actually, Mr. O'Day, I
think your career is a similar--I remember reading a book Our
Daily Meds years ago, and that reporter from the New York Times
did a wonderful job of doing an investigation of the influx of
venture capital into this pharmaceutical industry that
traditionally, 40, 50 years ago, the CEO of pharmaceutical
companies were researchers like yourself who went to work for
the private sector and moved up the chain of command. And they
weren't driven by the market forces that are currently driven.
So my question is--and I have an amendment on the floor
today that I would like to get bipartisan support, and it goes
to a little bit of the history that Mr. Ezell was talking
about. In her investigation, she says that investors looked at
professions that people trusted, and people with white smocks
people trusted. And that changed the culture. It brought a lot
of pressure to get return on investment.
Mr. O'Day is somewhat legendary, as I read your history,
about managing pharmaceutical industries. You are on the board
of Genentech. You are on the board of California Life Sciences,
which I have great respect for.
So my question is--my amendment is actually to get the
Academy of Sciences to do a study that does the history but
helps us understand what is the best investment and what is the
base that we get from NIH, which I believe is underestimated.
And then, to my Republican colleagues, what is a reasonable
rate of return that will bring investors in to do what they do?
So when you look back on your career, how much better would
it be now if we had that information and you could do the base?
And maybe it would be more efficient when we argue about patent
controls in the CDC and this company. Maybe there is a more
efficient way to do this for the consumer, for the shareholder,
but mostly, importantly, for the person whose life is being
extended, as they do in Australia, as I understand.
They have a discussion about, for instance, this drug or my
drug in Australia is $6 when it is subsidized when they go
through the process, and the risk to the client. If it is fully
loaded, it is like $35 a day, so I don't understand why it is
$500 a day here.
Dr. Grant. I don't understand that either, sir.
Mr. DeSaulnier. But we need to find that out to have a
rational conversation. And I invite my colleagues on the
Republican side for a more efficient look at how do you attract
these investments and get what we want, longer and higher-
quality lives for American citizens?
Dr. Grant. You know, I think you're raising all the right
points. And it's important to realize that both components of
Truvada, tenofovir and emtricitabine, were developed in
academic centers using public funding.
Mr. DeSaulnier. Right.
Dr. Grant. And then those property rights were purchased by
Gilead. And, you know, people at Gilead will say that they
invented those products, but in fact they were invented in
academic centers using public funds and then purchased by
Gilead, who then co-formulated, meaning mixed it into a single
tablet. And the mixture in the single tablet is what allowed
them to extend their patent rights beyond 2017.
And so when we look at innovations, the CDC brought us
preexposure dosing, they brought us information that the
mixture of two drugs was much more important than one drug and,
you know, Gilead's invention was really buying products
developed with public funding in the academic sector. So this
synergy between academics and private industry is important,
but I think that we need to be more honest, as you've proposed,
about who is doing what in all of this and how much should be
charged later.
Mr. DeSaulnier. Thank you, Mr. Chairman. I really hope we
continue to pursue this question because it clearly is a life-
determining question that needs to be answered by the American
people. Thank you, Mr. Chairman.
Chairman Cummings. Mr. Grothman.
Mr. Grothman. Thank you. Mr. Ezell, I kind of want to talk
to just in general an overview because I think the hearing
today touches not just on a particular drug but things across
the board. And we talk about the interaction between the
private drug companies and NIH funding. And really not till we
have this hearing that, you know, it occurred to me that we are
putting billions and billions of dollars a year into the NIH,
and I don't know whether we are getting bang for the buck or we
should be, you know, getting some other way to get cures for
these diseases.
Of the $37 billion we put into NIH, how much of that do you
think goes into pharmaceutical development if you had to guess?
We are not going to fact-check you.
Mr. Ezell. I'm not an expert on the share of the allocation
of the NIH's budget across its 27 research institutes. Their
funding of the NIH goes to a number of activities from training
future scientists to looking into very basic research trying to
understand the basic molecular processes of how diseases work,
trying to identify biomarkers that can single future targets
for innovation opportunities. But certainly the majority of
NIH's research is going into this basic science trying to
understand fundamental molecular activities, and a much smaller
portion of their research is going toward development-oriented
activities.
Mr. Grothman. Okay. As far as drug development, not just
what we are talking about today but collectively, do you feel--
or could you describe the different--well, do you know how much
is spent every year on what we will call drug development by
the private pharmaceutical industry? If you can't give me an
answer, we will ask Mr. O'Day.
Mr. Ezell. In the year 2013 there was $96.5 billion, as I
understand. The average over the past three years has been
about $80 billion per year.
Mr. Grothman. How many?
Mr. Ezell. Eighty billion dollars.
Mr. Grothman. Eighty, so we are going about 80 billion. So,
in other words, far and away most of the research in this
country done on drug development is done by private industry,
and what we get out of NIH is a small fraction?
Mr. Ezell. That's exactly right.
Mr. Grothman. Okay. Could you give me an example of other
success stories coming out of NIH?
Mr. Ezell. Well, there are a number. We can look at the
invention of Gleevec, treatments for chronic myelogenous
leukemia. That was a nice set of case studies that the original
research was conducted by Dr. James Allison I believe at the
University of UCLA I believe, and then some of his basic
discoveries into how genes work gave rise to a new form of
treating cancers called checkpoint blocking that we were able
to identify specific antigen growth factors in the body, and
then that set of basic research was ultimately licensed to the
private sector, and Bristol-Myers Squibb invested the hundreds
of millions required to now turn that into a first-in-the-
world----
Mr. Grothman. Do you feel overwhelming--and I don't mean to
put words in your mouth--overwhelming the number of
pharmaceuticals that are having an effect on our lives or
extending lives with people with various diseases? I suppose
there is a difference in the type of things that are financed
by NIH and the private industry. Could you comment on the
differences between which type of drugs each sector goal was
after or any reasons why you would feel one does a better or
worse job than the other?
Mr. Ezell. Well, it is the private sector that is primarily
incurring the risk of doing the applied research and in
conducting the grueling set of three stages of clinical trials
that are proving the safety and efficacy of that drug. And the
private sector is the one who is assuring that the formulation
is effective and works in the human body, and then of course
the FDA is working with the private sector to validate that
fact.
But the system we've put in place is now responsible for
the fact that there are 7,000 new-to-the-world drugs under
development globally, and it's estimated that at least 3,600 of
those are being led primarily by U.S.-headquartered
enterprises.
There's a lot to do. I'm not satisfied, as wonderful as Mr.
O'Day's drug is. We need a cure for HIV/AIDS. We need a cure
for various forms of cancer. It's wonderful that there's
competition in the workplace Mr. O'Day's--O'Day's company faces
the loss of competitiveness. It faces existential threats
hopefully from the innovators out there who are trying to build
a better solution, and I think it's important that we broadly
focus on the system we have in place in America that enables
competition and enables innovation so that we can try and come
up with some of these cures.
Mr. Grothman. Can I give you just one broad question? Does
the chairman mind?
Chairman Cummings. The gentleman's time is expired, but you
may answer this question.
Mr. Grothman. Okay. My disease of interest is Alzheimer's.
Do you feel, as far as we look for a cure there, that will more
likely come from the private sector or from NIH, or could you
comment on that?
Mr. Ezell. My organization actually did a study looking at
the economic impact if we were able to come up with a cure for
mental diseases. We estimated that the value to society would
be as much is $1.5 trillion. I would support an all-of-the-
above solution to innovate for cures like Alzheimer's. It's
estimated that the real-time net present value of curing
Alzheimer's alone would be about $50 trillion for the U.S.
economy. So these are massive numbers we're talking about over
a period of time, so I applaud research that's being supported
by nonprofit and foundational actors like the Gates Foundation
toward that end. That may be a pathway to innovating such a
drug.
But I note that there are hundreds of clinical trials
ongoing even now to solve various forms of mental diseases
being led by the private sector, and that's, I think, probably
a--I mean, historically, that--historically across a broader
set of disease states that's been a more likely pathway to
getting toward a solution toward a breakthrough cure.
Chairman Cummings. Mr. Rouda.
Mr. Rouda. Thank you, Mr. Chairman.
I would like to talk about two different issues. One is
just the government's commitment under the President's stated
objectives to addressing HIV infections and then also talk
after that a little bit about the balance between innovation
and drug pricing.
So, Mr. Horn, I will start with you. The President has
stated that he wants to reduce infections by 75 percent in the
next five years and 90 percent in the next decade, yet we have
seen systematic attacks on the ACA and funding for community
institutions and Medicare and so on. What kind of impact is
that going to have in our ability to address HIV infections?
Mr. Horn. It has a profound effect. We rely on these
systems, and we fight very hard for these systems. And I will
say that we actually fight very hard against these systems
sometimes just to ensure that.
But in order to do this--and I think that we realize this.
When we're just beginning to think about, you know, just
getting--just maximizing the number of people who are living
with HIV to getting them biologically suppressed. What is
making that possible, what is getting us there is the
Affordable Care Act, as all of the systems under the Affordable
Care Act. And I think when we do think about this in the
context of primary prevention or PrEP or just the prevention
for those who are vulnerable to HIV infection, the same holds
true. We absolutely need the ACA and, frankly, we need Medicaid
expansion to make that happen.
Mr. Rouda. And actually, if we had universal healthcare,
much of the issues that we are having when talking with Gilead
about and any other drug manufacturer about those costs, many
of those disagreements would go away because we would have
properly funded, systemwide care for all Americans.
Mr. Horn. That is correct.
Mr. Rouda. And, Mr. Ezell--and hopefully I pronounced that
correctly--you made the comment earlier that the NIH plays such
an important role in the development of new drugs, yet the
President has three straight years tried to make massive cuts
to the NIH. Wouldn't that diminish our opportunity to continue
to have innovation in the development of drugs through that
public-private partnership?
Mr. Ezell. Absolutely, Congressmember. In fact, this is
perhaps the most fundamental threat to the U.S. innovation
economy. If the United States--essentially, today, the U.S.
invests the least it has in federally funded R&D as a share of
GDP since 1995--1955. To match our investment on average in the
1990's----
Mr. Rouda. Sixty-five years roughly, 64 to be exact.
Mr. Ezell. Correct. On average, to match the Federal
Government's investment in R&D that we averaged in the 1990's,
we would have to invest 80 percent more per year today. And
we're seeing that manifest itself within NIH even. The average
age of first NIH ROI grant has increased from 34 to 42 years,
eight years later in life. The average success rate has
declined from close to 60 percent in 1962 under 20 percent
today. And if we don't make that right, we risk losing our----
Mr. Rouda. I understand.
Mr. Ezell [continuing]. international competitiveness.
Mr. Rouda. Thank you. And, Dr. Walensky, I am not sure if
this is the appropriate question for you, but I am just
curious. When we look at the societal cost of not doing
anything to making sure that we have proper medication and
putting a number on that versus the cost of providing these
drugs to all those, has that analysis been done, and if so, is
there any indication as to what it would do?
Dr. Walensky. I think--we haven't done what the status quo
is. We know that if we invest in this, it will be a cost-
effective investment. I want to just comment on something Mr.
Ezell said, and that is that, currently--and I've screened
every infectious disease fellow who comes in the door at
Massachusetts General Hospital. Nationally, we have .7
applicants for every infectious disease position in the
country. That is--the Indiana HIV outbreak that occurred, there
was no infectious disease doctor in that county. And if we
don't invest in the NIH to do----
Mr. Rouda. Right.
Dr. Walensky [continuing]. these things, we will not have
those physicians.
Mr. Rouda. Mr. O'Day, I heard testimony that the list price
is $1,780 to approximately $2,000. That list price, let's just
assume for simple math, $2,000. If you sell a monthly
prescription for $2,000, does that go to your revenue line?
Mr. O'Day. The $2,000 would go to the revenue line, that's
correct.
Mr. Rouda. And then the pharmacy benefit managers, PBMs,
about roughly what percentage of that $2,000 would be paid to
them?
Mr. O'Day. Well, actually, the discounting in the
commercial sector is actually quite small because the cost-
effectiveness of this medicine has not required that
discounting. When you look into the public sector, however, we
have very deep discounts, so 70 to 80 percent discounts, for
instance, for Medicaid, for ADAP, and for all the government
programs.
Mr. Rouda. And, one last question, the billion dollars of
investment that you noted earlier, is that an ordinary or a
capital expense on your income statement?
Mr. O'Day. That's ordinary, yes. I mean, there could be
capital components to that, but the vast majority is recurring
expenses, year-on-year invested in R&D, into people, and into
costs that support our research and development.
Mr. Rouda. Thank you, Mr. Chairman.
Chairman Cummings. Before we go to Mr. Comer, Dr. Walensky,
you said something about .7 percent. Can you say that again? I
think I misheard you.
Dr. Walensky. Unfortunately, you probably didn't.
Chairman Cummings. I hope I did.
Dr. Walensky. For every infectious disease fellowship slot
that we have in this country, we have 0.7 applicants. There has
been a New York Times editorial in the last week that--or in
the last month by Matt McCarthy that demonstrates that we are
going to have a shortage of infectious disease doctors. We know
we are anticipated a shortage of infectious disease doctors.
Some of the counties that have had HIV outbreaks, there have
been no infectious disease doctors in them. And so, yes, I
think we have a public health problem. Part of that is related
to NIH funding and seeing--because we are what we call a
cerebral field, we rely on NIH dollars to recruit applicants
into the field.
Chairman Cummings. Mr. Comer?
Mr. Comer. Thank you, Mr. Chairman. And we have already hit
on the important roles of private-sector versus public sector
in the R&D process and also the role of having strong patents
and the consequences if the government breaks patents on drugs
like Truvada. We have also hit on the major scientific and
regulatory risks and hurdles you have had to take in to market
Truvada.
Overall, though, I just want to reiterate the great role
that Gilead has played in innovations in antivirals, and I hope
we can continue to save lives because that is something that we
agree on in a bipartisan way.
Switching gears, I want to talk about the President's
initiative to eradicate HIV. From what I understand, the bulk
of the Trump administration's plan to eradicate HIV is the
ability to locate every American susceptible to HIV and provide
a drug and provide help adhering to the daily regime for the
rest of their lives. That is no easy task. The cost of doing
that will be daunting. About 1.1 million Americans have the
virus, and about 1 million are at risk of contracting it.
Finding, treating, and keeping them all on treatment experts
estimate would be more than the administration currently is
devoting, even in addition to the $20 billion the Federal
Government already spends on HIV prevention and treatment.
There are criticisms that if the patent on Truvada remains, the
Trump administration's plan to eradicate HIV would cost over
$20 million.
So, Mr. O'Day, let me start with a few questions. How many
bottles of Truvada has your company Gilead donated to the U.S.
Government?
Mr. O'Day. So our commitment is to donate 2.4 million
bottles per year for up to 10 years.
Mr. Comer. Okay. I think Mr. Jordan asked this question.
When is a generic version coming onto the market? Do we know?
Mr. O'Day. A generic version of this medicine Truvada comes
out into the market in September of next year, 2020, and other
generics will come on six months later.
Mr. Comer. And you did, as I understand, voluntarily
release the patent early?
Mr. O'Day. That's correct. In discussions with--and it was
a legal decision at the end of the day and an important
decision to avoid the cost of litigation and to bring this
medicine sooner to patients. It's important to note that when
the patent expires for Truvada, the next most safe, most
effective medicine will take its place in the donation----
Mr. Comer. Right.
Mr. O'Day.--for 2.4 million bottles for the next 10 years.
We want to make sure that the uninsured patient population in
America has access to state-of-the-art care at all times over
this decade.
Mr. Comer. With those developments, how much closer are we
to eradicating HIV?
Mr. O'Day. Well, I think, as has been mentioned, the--you
know, it's--I think it's within our grasp. It's clearly
challenging. It's, as I've tried to articulate, based upon the
Gilead programs. You know, it's really not about drug pricing.
It's about--in this particular case is about the wraparound
care. I think the administration and CDC and HHS' efforts to,
you know, reduce by 70 percent in five years and 90 percent in
10 years is within our grasp, but it does require a holistic
approach to the wraparound care.
Many people have talked about Australia here, which I think
is interesting to look at in some regards. In Europe, generics
have been available for three years, and even with the lower
cost of medicines in Europe, we've seen very little increase in
HIV PrEP, which goes to show you that there are many, many
elements of this system----
Mr. Comer. Right.
Mr. O'Day.--that have to be invested in.
Mr. Comer. Right. What proposals currently would hinder the
progress of eradicating HIV or any prospect of a cure or
vaccine to HIV? What proposals have you heard out there that
would hinder that?
Mr. O'Day. Well, I think that's--I mean, the current
initiative is focused on the available antiretrovirals, which
are very effective but have drawbacks in terms of getting them
into the hands of the patients at the right time. So what our
scientists are doing is they're working on longer-term
medicines. Those could be delivered once a month, once every
three months, long-acting, which I think could help us
desperately with this solution of HIV elimination and
eventually the cure. And the cure is still--it's I wouldn't say
within our grasp today. There'll need to be a lot of failures
to get there, but we're firmly committed at Gilead to investing
in that research, to keep having the 90 percent failure rates
and finding eventually that 3 percent cure, which we're firmly
committed to. We won't rest until we get there.
Mr. Comer. Right. Thank you. Mr. Chairman, I yield back.
Chairman Cummings. Ms. Hill?
Ms. Hill. Thank you, Mr. Chairman. I ask unanimous consent
to enter into the record a Washington Post article from 2016
entitled ``The drug company that shocked the world with its
prices dodged $10 billion in taxes,'' report says.
Chairman Cummings. Without objection, so ordered.
Ms. Hill. Thank you. We have talked about saving lives,
but, as a corporate executive, Mr. O'Day, let's talk about
money. Just as you are responsible for your budget, I am
responsible for our taxpayers' money, and in this case our
worlds collide. Mr. O'Day, how much does Gilead spend per year
in direct costs for patient care for people with HIV and AIDS?
Mr. O'Day. I don't have the exact figure, Congresswoman,
but it's in the tens of millions of dollars.
Ms. Hill. You pay for direct care?
Mr. O'Day. We pay--we fund community support groups that
support patients in a variety of different ways. We're the
largest corporate donor to community funding----
Ms. Hill. That's great. Is it true that you get a tax break
for those corporate donations?
Mr. O'Day. Yes.
Ms. Hill. Okay.
Mr. O'Day. Yes, it is.
Ms. Hill. Okay. So, effectively, you don't spend money on
direct patient care. But do you know how much the U.S.
Government does?
Mr. O'Day. No, we do spend money on patient care. We may
get some tax benefits of that, just to correct----
Ms. Hill. Okay. Okay, but----
Mr. O'Day.--but absolutely spend, and we have an outflow in
our P&L that's----
Ms. Hill. Okay.
Mr. O'Day.--associated with those costs----
Ms. Hill. Do you know how much the U.S. Government spends
on that treatment for patients with HIV or AIDS?
Mr. O'Day. I--what I know is that the current plan for HHS
and CDC has earmarked for the 2020 budget somewhere around $290
million for the HIV elimination program. Now, the fact that
Gilead will donate all of----
Ms. Hill. Well, hold up. Hold up. So what the U.S.
Government pays in direct care--this is through Medicaid and
Medicare--is $21.5 billion, so it is a much higher number than
what we are adding to the budget for research and elimination.
But, anyway, it is estimated that $470,000 in lifetime
costs is what it takes to treat someone with HIV infection, and
now we have 40,000 people with new HIV diagnoses in the country
each year, and so that cost to our taxpayers is going to
continue to rise.
So, as you heard from the title of the article I submitted,
Gilead is notorious for not even paying its fair share in taxes
that go toward HIV treatment. Gilead reported its 2018
financial performance to the SEC on February 26. It showed that
the company had revenue of about $22 billion--that number
sounds familiar--in 2018 with about $31 billion in cash
available. So I want to take a look at how Gilead is using some
of its profits.
Mr. O'Day, you just joined Gilead Sciences earlier this
year. Is that right?
Mr. O'Day. That's correct.
Ms. Hill. Your initial compensation package was reportedly
worth about $30 million, including both cash and stock options.
So the company agreed to pay you $30 million just for taking
the job. Is that right?
Mr. O'Day. That's correct. I mean, I should articulate that
half of that was for compensation that I gave up from my
previous assignment and have----
Ms. Hill. Okay. But it is $30 million for taking the job.
So, just out of curiosity, do you know what the median income
is for a U.S. worker according to the BLS?
Mr. O'Day. I do not offhand.
Ms. Hill. It's $46,800 or one-sixth of 1 percent of what
your signing bonus was, just thought you would want to know
that.
And Gilead has a long history of paying windfall amounts to
its corporate executives. In 2013 Gilead's former CEO John
Martin earned almost $180 million. His salary for the year was
$15.4 million, but he cashed out almost $160 million in stock
options that year. Mr. Martin appears to have timed his pay
well. According to Gilead's 2013 annual report to shareholders,
Gilead had, quote, ``record total revenues'' in 2013 of $11.2
billion. Twenty 13 was the year that Gilead's blockbuster drug
Sovaldi received FDA approval, correct?
Mr. O'Day. I believe so.
Ms. Hill. Sovaldi is a hep C drug that also made headlines
for costing $1,000 per pill.
I want to turn to another Gilead executive, your direct
predecessor John Milligan. He made a little less than you, just
$15 million. I understand Mr. Milligan resigned in 2018, but he
didn't lose his salary. In fact, he received what is called a
golden parachute, meaning that the company paid him extra just
for resigning. Mr. Milligan had previously received stock
options that were not worth anything because the company's
stock had gone down, but thanks to a separation agreement
between Mr. Milligan and the company, he was paid an additional
severance that earned him a total of $26 million just for
resigning from the company. That is true, right, Mr. O'Day?
Mr. O'Day. As far as I understand. Those decisions are made
by the board of directors.
Ms. Hill. Of course. Gilead is a private company and it can
pay its corporate executives whatever it likes, but Gilead also
makes a lifesaving drug that it has kept a U.S. monopoly on. We
have heard today about people who are not accessing this drug
because they cannot afford it. We have heard about local public
health officials that are straining under the financial burden
of providing this drug to everyone else that needs it to stay
healthy, and this drug, which has generated billions of dollars
for Gilead, was developed using tens of millions of dollars of
Federal funds.
So what Gilead chooses to do with its profits really does
matter to all of us. And I will say that the millions and
millions of dollars to corporate executives I take some issue
with. Thank you.
Chairman Cummings. Mr. Roy.
Mr. Roy. Thank you, Mr. Chairman.
You know, I came to this hearing hoping that we might have
a hearing where we spent some time diving into some of the
tough questions instead of preening and posturing for cameras,
attacking people for making profit in a capitalist society, but
that is what I just heard in rants for the last five minutes.
Now, Mr. O'Day, do you make Brentuximab? Do you know what
Brentuximab is?
Mr. O'Day. I do not. I'm sorry, Congressman. Brentuximab
vedotin is the drug that I took when I was suffering from
Hodgkin's lymphoma, a drug that was created, built,
manufactured, developed, designed, created by a private company
that made a lot of money. And I am really glad they did. I hope
they make a lot more, and I hope they make a lot more drugs to
save a lot more people and distribute a lot more drugs around
the world to save a lot more people.
Now, it is a reasonable question when patents expire, when
they should expire, when they shouldn't expire. It is a
reasonable question, how much money that NIH has and is
investing and how much we should factor that into the patent
life. But to sit here and attack the capitalistic system that
produces and distributes medicine to saving lives around the
world, I mean, it is just offensive.
I mean, I just cannot possibly understand why we are
spending time sitting here while I listen to people lecturing
companies about making money. I hope you make a lot of money.
It is a reasonable question what patent length should be. I
would like to have that conversation and dialog. I don't know
whether it should be one year, five years, 17 years. I don't
know. Let's have that debate. I don't know how much we should
factor in that NIH puts in $400 million, $50 million, I don't
know what it is, whatever the number is that has gone into the
production of this drug. I don't know how much went into
merging these two putting them together and then you guys
distribute it versus how much NIH has done. Fine. Let's have
this conversation.
But this absurd attack on profit being evil is undermining
the entire ability for us to have a rational conversation about
the serious questions that are actually before us here. We
don't go down--how much cash on hand does Apple have? Two
hundred and forty-five billion dollars. How much has Apple done
to go cure health? Is Apple in the business of providing direct
health care, Mr. O'Day?
Mr. O'Day. Not to my knowledge, no.
Mr. Roy. Right. Are you in that business?
Mr. O'Day. Yes, we are.
Mr. Roy. Do you provide medicine or do you run hospitals?
Mr. O'Day. Our role is to bring breakthrough medicines to
patients with devastating diseases.
Mr. Roy. Right. Do you hire doctors to go out and provide
care, or do you, for the most part, design, develop, and
manufacture medicine?
Mr. O'Day. My colleagues and I at Gilead are exclusively
focused on the design and development of medicines and getting
them in the hands of patients.
Mr. Ezell. And, if I may, Mr. O'Day, you employ 10,000
people at Gilead. There are some of the 1.2 million individuals
in America's--who are employed by America's pharmaceutical
companies who earn an average salary of $122,000. This is an
industry that supports over 5.5 million workers across the U.S.
economy considering direct and indirect effects, and it's an
industry that supports a high-value-added sector of the
economy, high-value exports----
Mr. Roy. Yes, but whatever, profit is evil, right? Making
money is apparently evil because never mind all those people
you just talked about who are making money and able to pay for
their jobs, their salaries, and be able to send their kids to
school and be able to buy their houses in our system. This is
somehow the wrong thing for us to do?
I mean, again, can we have a roundtable discussion? I am
happy to sit down with my colleagues on the other side of the
aisle and this side of the aisle and let's have two hours,
three hours. Let's get whiteboards up and let's go through all
of this stuff and come to a reasonable consensus on some of
these tough questions about patents. It is a real concern.
But can we dispense with the ridiculousness of hostility
toward profit. It is a good thing that Apple makes a crap-ton
of money making these things so that we can have them and
distribute them and use them and use them for great additions
and benefits to the world. And it is the same thing in
medicine.
Chairman Cummings. Before we go on to--Mr. Raskin, just a
moment.
Mr. Roy, I have been here--oh, he is gone.
Mr. Roy, I have been here since quarter of 10. I have heard
every syllable that has been stated here, and I am sorry you
had to leave, but I think the committee on both sides have
asked reasonable questions. And I am not beating up on anybody
for profit. We are just trying to make sure we understand what
the American tax dollars are paying for. We want to understand
why the price is so high, and we are trying to understand how
we can get the 90 percent of people who need this lifesaving
medication, how we can get it to them.
And, as a matter fact, I have applauded Gilead for their
research and what they have been able to accomplish. Now, we
are just trying to expand it. And Mr. O'Day has made it clear
that they are trying to figure out how to expand treatment and
the number of people also who will have access to this
medication. So in fairness to the committee, I just wanted to
make that clear to my colleague.
Now, we will hear from Mr. Raskin.
Mr. Raskin. Mr. Chairman, thank you for that thoughtful
comment. And I want to followup on Mr. Roy's very interesting
and provocative statement there because I think what we are
trying to figure out is precisely what are the various public
and private ingredients that go into our pharmaceutical system.
My friend Mr. Roy doesn't have to look across the aisle to find
people who are upset with big pharma. President Trump himself
has said that the pharmaceutical industry is getting away with
murder. Pharma has a lot of lobbies, a lot of lobbyists, and a
lot of power, and there is very little bidding on drugs. So I
think that it is not just members of this side of the aisle
that have noted some problems in the current system.
But, Mr. O'Day, let me come to you because we know that the
taxpayers, through the NIH, which is proudly in my district, in
the Eighth congressional District in Maryland, put in $49
million, and the Gates Foundation put in tens of millions of
dollars more into funding the development of Truvada as a
method for preventing HIV. And I think a lot of the discussion
here is about the fact that tens of billions of dollars have
been earned by your company. But how much did Gilead spend on
researching and developing Truvada as PrEP specifically as a
prevention drug?
Mr. O'Day. Thank you, Congressman. So it's hard to tease
out some of the PrEP activities with the other activities
because, at the end of the day, this medicine reduces the viral
replication. It's the same mechanism if you like for treatment
as it is for PrEP.
Mr. Raskin. Okay. So how much did you guys put into that
part of the process then?
Mr. O'Day. One point one billion over the course of
Truvada's development, which was really for all indications
associated.
Mr. Raskin. Okay. And then the infusion of money that came
from the taxpayers and the NIH was essential for the
development, I think you would agree, of Truvada for the
purpose of preventing HIV?
Mr. O'Day. Yes. The know-how and knowledge that Gilead put
in, the investment from the NIH and the $50 million, the
greater than $80 million donation from the Gates Foundation,
all of this was important to provide the body of evidence----
Mr. Raskin. Terrific. Okay. So while we can't imagine this
is some kind of Ayn Rand fantasy where the private sector did
it all on its own, right? Would you agree with me about that?
Mr. O'Day. I would agree, absolutely.
Mr. Raskin. Okay. But what has been the total revenue from
Truvada as PrEP?
Mr. O'Day. The total revenue for Truvada as PrEP is
difficult to kind of tease out. Again, we've talked about the
number of $36 billion globally for the entire medicine, but
it's very hard because the medicine is prescribed by
physicians----
Mr. Raskin. Got you.
Mr. O'Day.--who often don't know whether it's PrEP or
treatment.
Mr. Raskin. When you set the price for it for U.S. payers,
did you take into account the role of taxpayer funding in the
development of the drug?
Mr. O'Day. When we set the price for Truvada originally, we
took into account a variety of things, including the impact
upon the healthcare system, the ability to make sure we get
access to----
Mr. Raskin. All right. But you didn't take into account the
fact that the public was one of the investors in the research?
Mr. O'Day. Well, at the time we priced the medicine, the
public had very little to do with the invention of this
medicine.
Mr. Raskin. Okay. And you are choosing now to donate some
drugs rather than reduce drug prices. Will you claim the
donation as a tax deduction, as you testified that you did
habitually? There is nothing wrong with it, but it will be
claimed as a tax deduction presumably?
Mr. O'Day. I would--that's been my understanding is that at
a cost-of-goods level.
Mr. Raskin. Okay. But one of the shocking revelations from
the Senate Finance Committee's investigation into the pricing
of your hepatitis C product was that the $1,000-a-day price you
settled on was based on seemingly extraneous or arbitrary
factors like the likelihood of a public outcry at a certain
price point or the likelihood of receiving a letter from a
Member of Congress or the likelihood of facing a congressional
committee and a hearing like this. Did you use those same
political factors in setting the price for Truvada?
Mr. O'Day. So, Congressman, again, I was not at the company
at the time, but I've looked into those details. I think the
overriding factors for the setting of the price for the HCV
medicine were based upon both the cost of current treatment at
the time and the innovation of bringing this together in a
curative setting for 12 weeks of therapy to cure the disease, a
huge step up from what was done in the past. Those were the--
those are the prevailing means that go into account when we
priced----
Mr. Raskin. Okay. And then finally, last question, just to
follow through on the point Mr. Roy raised--and I am sorry he
is not here for it--but do you think it is inappropriate in a
constitutional democracy where the public invests in scientific
and medical research and helps to produce pharmaceutical drugs
that the public relies on, for that factor to be taken into
account in the pricing and distribution of pharmaceutical
drugs?
Mr. O'Day. Well, I think it's very important that you
consider the access question. Will the medicine get to the
patients that need it, including in the government sector and
the government-funded healthcare sector, as well as the private
sector. So absolutely I think you need to take a variety of
things into account in pricing.
Mr. Raskin. Okay. Thank you. And I wish I could ask you
about that access, maybe if we get another round, but I yield
back to you, Mr. Chairman.
Chairman Cummings. Thank you very much. Ms. Miller?
Mrs. Miller. Thank you, Chairman Cummings and Ranking
Member Jordan, and thank all of you all for being here today.
In my home county of Cabell County, there has been an
increase in HIV cases. In March there were 28 confirmed cases,
and in April that number has risen to 44. This number is a
sharp uptick from the case where we only had the eight cases
annually over the last five years.
Unfortunately, those most impacted are intravenous drug
users, which is a terrible result of the opioid crisis that has
devastated so many communities across the United States. I am
very glad that President Trump is taking the issue of HIV
seriously and has secured the donation of the 2.4 million from
Truvada for the Centers of Disease Control, and thank you for
doing that.
Mr. O'Day, if a patient cannot afford Truvada, are there
precautions in place to ensure access?
Mr. O'Day. Yes, absolutely. So we--if there are--if they
have private insurance and they can't afford their co-pay, they
can apply to our co-pay assistance programs, and 98 percent of
patients that have done that pay nothing out of pocket. And
then if they're uninsured or struggle with their medicine, we
have a medicine assistance program, which essentially evaluates
their financial needs and provides it for free.
Mrs. Miller. Thank you. Can you explain how the new version
of tenofovir if that is how you pronounce it----
Mr. O'Day. Tenofovir, right.
Mrs. Miller [continuing]. was--tenofovir was an improvement
to patients, and what new benefits does it provide?
Mr. O'Day. Well, thank you, Congresswoman. So what you are
referring to is actually a completely separate medicine from
tenofovir. It's a medicine that's called--or abbreviated as
TAF. And this is now to--you know, the advancement that we've
seen in both treating and preventing HIV/AIDS is that people
living with AIDS or people subject to AIDS have the ability to
take these medicines now for decades. Tenofovir, when taken
that long, a certain subset of patients have issues with their
kidney or with bone disease on such a chronic basis because
we've essentially transformed the disease to such a long-term
illness.
So the new medicine, so-called TAF, which will be combined
again with FTC and other agents, has a much lower incidence of
these side effects and is really designed for, if you like, the
new generation of medicines that will allow patients to be on
this longer-term without having to worry about other
debilitating side effects that they could get from their
medicines. We've launched this now into the treatment of HIV
setting with a medicine called Biktarvy, and we'll be bringing
this innovation--it's right now filed with the FDA, and we
will--hope to have a positive approval by the end of this year
for patients that are eligible for PrEP. So this innovation,
this new medicine that was completely discovered and developed
by Gilead scientists, is now kind of the next evolution of care
for HIV patients.
Mrs. Miller. How long did it take you to do that?
Mr. O'Day. Oh, my gosh, well, this was back in the 1990's
that we started this, so it's been more than two decades and
part of that $6 billion investment that we've had so far in
HIV.
Mrs. Miller. Wonderful. Would any new patents prevent
generics from being created against the original version?
Mr. O'Day. No, it's a completely separate medicine. It has
nothing to do with the patents of Truvada. It's patent-
protected from this new innovation that took decades to
produce.
Mrs. Miller. Thank you. Mr. Ezell, do you foresee a future
where the NIH could take on the entire of the drug development
process from start to finish?
Mr. Ezell. I simply do not think that would be the case.
First, the capacities are not there. The NIH focuses on basic
scientific research. What industries really bringing to the
table is the development aspect of it, doing the applied
research, conducting the clinical trials.
Now, this has been proposed. Dean Baker, for instance, has
written that, quote, ``We could expand the public funding going
to NIH or other public institutions to extend their charge
beyond basic research to include developing and testing drugs
and medical equipment.'' But Baker estimates that, were we to
try to do that, we would likely--quote, ``It would be necessary
to increase the amount going to NIH by at least $60 billion a
year'' in order to, quote, ``replace the funding currently
supported through patent monopolies. So no, I don't think
that's tenable. I don't think we're going to increase NIH
funding by $60 billion a year, especially if we can't increase
the--we pass a gas tax.
And more beyond that point, I think there is very little
reason to make that dramatic of a change to a system that, as
I've tried to say today, is in fact the world's most effective
and productive at generating new-to-the-world cures.
Mrs. Miller. Thank you.
Chairman Cummings. Mr. Khanna.
Mr. Khanna. Thank you, Mr. Chairman, and thank you to
Representative Alexandria Ocasio-Cortez for working to have
this hearing.
Mr. O'Day, I want to try to be constructive and not score
political points or embarrass you but just get some facts and
see if we can make some progress of your commitment. The New
York Times wrote that Truvada was developed significantly by
taxpayers. Is that a true statement?
Mr. O'Day. I think that's really inadequate--inaccurate I
should say.
Mr. Khanna. So you disagree with The New York Times
editorial board?
Mr. O'Day. Yes.
Mr. Khanna. And why is it not a true statement?
Mr. O'Day. Because the medicine was developed and
discovered within Gilead. Some of my colleagues have mentioned
that we licensed some initial compounds on this. That's
important. Those were very early stage ideas on the product. In
the case of TDF, which is one of the components of Truvada, it
was not a drug that--at the time, and it went through many
iterations before it got there.
Mr. Khanna. Did you benefit at all from the study that was
funded, $49 million by NIH and the Gates Foundation in terms of
understanding the drug could be used for preventing HIV?
Mr. O'Day. Absolutely. Of the $1.1 billion we invested, I
think that was an important contribution to supporting the
HIV----
Mr. Khanna. And did you----
Mr. O'Day.--story at the time, and I'm grateful for Dr.
Grant's----
Mr. Khanna. And----
Mr. O'Day.--leadership.
Mr. Khanna [continuing]. grateful is good. Have you paid
them anything?
Mr. O'Day. Well, I think there's different ways to look at
contribution to society. I mean, we have----
Mr. Khanna. Right. I mean, I am sure they appreciate the
compliments, but, you know, usually if I get something, I pay
something for it. I am just curious. It is a simple answer, yes
or--usually I don't like yes or no questions, but this one is
pretty yes or no. Did you pay them money or not?
Mr. O'Day. The donations that were provided by NIH and the
Gates Foundation did not come with terms suggesting that----
Mr. Khanna. No, I am not saying that they required it. I'm
just asking--so you didn't pay them anything for that?
Mr. O'Day. No, I think it's in the interest of public
health to advance a foundational medicine for additional----
Mr. Khanna. And it absolutely is. The difference is 99.9
percent of us don't get to profit when it is in the interest of
public health. You know, you have acknowledged that this is
something that you used to profit, and you haven't paid them
back. I mean, that is your decision. I just want to get the
facts.
One thing I want to get, are you--I appreciate that you are
going to donate these 200,000 drugs. Can you assure us that you
are not going to claim a tax write-off for those?
Mr. O'Day. You know, those will show up on our P&L balance
sheet----
Mr. Khanna. So you will claim a tax write-off. Can you
assure us that you will only deduct the manufacturing cost----
Mr. O'Day. Yes, I can assure you of that.
Mr. Khanna. So you are going to deduct $6. You are not
going to deduct----
Mr. O'Day. The $6 figure is not accurate.
Mr. Khanna. Okay. But you aren't going to deduct the
$2,000? You are going to deduct something closer to----
Mr. O'Day. That's correct.
Mr. Khanna [continuing]. $6?
Mr. O'Day. That's correct.
Mr. Khanna. So it is inaccurate that you would try to get a
billion-dollar tax deduction?
Mr. O'Day. Absolutely not.
Mr. Khanna. Okay. So let me ask you this. One thing that I
think you could commit to that would go a long way, there is
some misunderstanding on the 200,000 that you have pledged to
the President, and they are saying that that also includes
people who are already on your financial aid programs. Can you
commit that those 200,000 drugs are going to be in addition to
the ones of people who are already part of your financial aid
programs?
Mr. O'Day. Yes, absolutely. I mean, I think it's important
to note----
Mr. Khanna. So you are making that commitment. So in
addition to the people you have on financial aid, you are going
to do 200,000 new ones, and you are committing today that you
are not going to deduct anything beyond the cost on your
deductions?
Mr. O'Day. That's correct. We'll continue to serve patients
through our medical assistance program. Today, we have 20 to
30,000 a year. This is an additional 200,000, plus we continue
to support all the co-pays. So back to, you know, do we give
back, you know, to, you know, inventions that are supported in
us? I mean, the answer is yes, in different forms----
Mr. Khanna. Well, I am glad you have made a commitment
because in The New York Times editorial, you know, they will be
happy to know. I mean, there was legitimate concern about what
tax deduction you are going to take. It seems you are not going
to take that. You are going to do 200,000 in addition. Now, if
you would just commit to paying back something to the CDC, I
think it would go a long way.
Any final thoughts?
Mr. O'Day. Well, I think, you know, we are collaborating
with the CDC on the entirety of the program, so I think this is
a partnership. It's one where we provide resources,
intellectual know-how, medicine. The government provides
funding to support--we're all in this together to get to the
HIV elimination, so I think there's give-and-take on a variety
of sides, Congressman. Thank you.
Chairman Cummings. Mr. Higgins.
Mr. Higgins. Thank you, Mr. Chairman. Madam and gentlemen,
thank you for being here today.
Mr. Horn, has Gilead invested approximately $1.1 billion in
developing Truvada? Is that an accurate number?
Mr. Horn. I'm sorry?
Mr. Higgins. Approximately did Gilead spend $1.1 billion
developing Truvada?
Mr. Horn. I can't confirm or deny that.
Mr. Higgins. Can you answer that, Mr. Ezell?
Mr. Ezell. I would defer to Mr. O'Day, who's from the
company. I do not know myself how much----
Mr. Higgins. Okay. I was wondering if this was common
knowledge. Mr. O'Day, can you clarify?
Mr. O'Day. I can----
Mr. Higgins. According to our research, it costs $1.1
billion----
Mr. O'Day. Yes, I can----
Mr. Higgins [continuing]. to develop Truvada?
Mr. O'Day. I can confirm that, yes.
Mr. Higgins. And that drug has been quite successful at
treating HIV and AIDS, correct?
Mr. O'Day. It's been a cornerstone of HIV treatment, yes.
Mr. Higgins. Thank you. The drug Descovy, are you currently
investing a great deal of money perhaps on a similar level to
develop Descovy? Is that at phase three right now?
Mr. O'Day. The phase three trials ran out. They represented
at the AIDS meeting in March. It's now been submitted to the
FDA for the----
Mr. Higgins. How much money are you making on Descovy right
now?
Mr. O'Day. I don't have that number on the top of my head.
I apologize, but I can get back to you.
Mr. Higgins. Is it being sold?
Mr. O'Day. It is being sold for the treatment indication,
but the prevention indication will be new later this year.
Mr. Higgins. Very well. And that is because it is in phase
three right now----
Mr. O'Day. Yes, it finished phase three.
Mr. Higgins. And GS-9131, is that an HIV/AIDS drug?
Mr. O'Day. I believe so. I'm still getting the numbers
down.
Mr. Higgins. It is in phase two. Is money being spent to
develop that drug for HIV and AIDS?
Mr. O'Day. I'm just not familiar with this particular
number, Congressman, so I apologize. But we have a variety of
medicines in phase two right now.
Mr. Higgins. According to my research, you have four--
including Descovy, you have five HIV/AIDS drugs being
developed, three in phase one, one in phase two----
Mr. O'Day. Yes.
Mr. Higgins [continuing]. one in phase three.
Mr. O'Day. Yes, that sounds right.
Mr. Higgins. Is that reflective of--so the drugs that are
in phase one, these three drugs that are in phase one and treat
HIV and AIDS, is there money, tremendous amounts of money being
invested in the development of those drugs?
Mr. O'Day. Well, we spent about $3.5 billion U.S. a year on
R&D and around 40 percent of that goes into HIV/AIDS at this
stage. So yes, there's significant----
Mr. Higgins. And----
Mr. O'Day.--investment in----
Mr. Higgins. And prior to these drugs that are in
development right now being sold and marketed including levels
that are being questioned by this oversight committee, I think
appropriately so--we must protect the American people. We
wouldn't want to gouging, would we? And yet this clearly
indicates--our research indicates that you are investing a
tremendous amount of money right now into drugs being developed
to treat HIV and AIDS, which are not being sold, so you are not
making money on these drugs, you are spending money----
Mr. O'Day. Yes.
Mr. Higgins [continuing]. on these drugs?
Mr. O'Day.--Congressman, and many of those will fail
unfortunately.
Mr. Higgins. Thank you.
Mr. O'Day. But it's the nature of innovative research.
Mr. Higgins. The ones that succeed and they go to market
and they help Americans, perhaps millions of Americans, as
Truvada has, is that the corporation's only window to recoup
and retain moneys to invest in further research and
development? Is that not----
Mr. O'Day. Yes.
Mr. Higgins [continuing]. a logical formula to----
Mr. O'Day. Absolutely. That's basically our contract with
society. We invest a tremendous amount in R&D at a high failure
rate. Those that succeed we have a limited patent life to
recoup the investment back into investing it and finding cures
for devastating diseases. And then it becomes generic and
broadly available to society.
Mr. Higgins. In the interest of time--thank you for
clarifying, but I have limited time. According to our research,
besides the five HIV/AIDS drugs that are in development and
which you referred to as in the pipeline, you have 28 other
drugs that are in the pipeline at various phases of
development. Of those 28 additional drugs, would it be fair to
say that scores of millions of Americans could be helped with
diseases that currently suffer?
Mr. O'Day. Well, we're certainly hoping, yes. We're working
on some of the most devastating diseases----
Mr. Higgins. And when a drug is under development, is there
any guarantee that it will become a profitable drug for the
company?
Mr. O'Day. Quite the contrary. In phase one, 95 percent
failure rates; phase two, 85 percent failure rates; phase
three, 50 percent failure rates are the average. In fact, we
just had a phase three trial for a devastating disease called
NASH that failed.
Mr. Higgins. Thank you for clarifying, sir. I think it is
clear that this is a worthwhile hearing that should be
reflected upon in a balanced measure.
Thank you, Mr. Chairman.
Chairman Cummings. You mentioned African Americans not
getting the medication at a far disproportionate rate. Did you
mention that?
Dr. Walensky. I did.
Chairman Cummings. Can you tell me about that?
Dr. Walensky. Well----
Chairman Cummings. Because I am listening to you, Mr.
O'Day, and I am wondering--when I first got to Congress 20-some
years ago, one of the first issues that we addressed with
Maxine Waters was AIDS. And back then the treatment went to gay
white males. The African-American community was pretty much
left out. And so I am trying to figure out--when I heard those
numbers, I am just trying to figure out who is going to cover
the African-American communities and whether when you all make
those decisions, you know, about distribution, where does that
go? I mean, in other words, where do the drugs go and what role
do you all play in making sure that there is some equitable
distribution?
And I want you to understand I have heard a lot of talk
here this morning about how people are beaten up--it is not
about beating up. It is about being thankful that we have a
medication that can do just about everything but finally cure
it, AIDS, and wanting it to get to everybody that it can get
to. I mean, it is as simple as that.
So Ms.--Dr. Walensky. I am sorry.
Dr. Walensky. Great. Yes, so a couple of comments on that.
We know there are about 39,000 new HIV infections in the United
States per year. This past--the most recent data that we have
we know 80 percent of those new infections were on persons of
color. We know that----
Chairman Cummings. Eighty percent?
Dr. Walensky. Eighty percent were in persons of color. We
know that, of the new infections in 2017, 43 percent were in
African Americans. African Americans make up 13 percent of this
population. We know that African Americans suffered over 53
percent of the deaths of HIV and AIDS. And we know that PrEP is
getting to largely gay white men, which it needs to get to, and
about 75 percent, but only about 10 percent of its consumers
are people of color.
Chairman Cummings. Now, Mr. O'Day, what can we do about
that?
Mr. O'Day. This is a dire need. We completely agree. And
part of the program we've just agreed to with the CDC is
focused on 48 hotspot counties, seven rural states, you know,
District of Columbia and San Juan, Puerto Rico. These are areas
predominantly in the southern United States where the African-
American incidence is--we're not reaching and getting to. So
we've had programs that are continually focused on supporting
the communities, support services that are underway. Now--but
we have much more we have to do to get to these communities.
It's make sure that the medicine is not the barrier in
these communities, but beyond that, it's making sure we provide
the services to both address the issues relative to
inequalities in the healthcare system, lack of education,
stigma associated with the minority and African-American
communities. We need to do more. We're fully committed to
rolling up our sleeves to be a part of that.
In fact, I just received an email overnight from an
incredible organization in Jackson, Mississippi, that supported
400 patients to get PrEP over the past six years. It's a small
start. There's so much more to do. And when they started, they
were the only organization in Mississippi that did this. And,
fortunately, they have a system there where, once they identify
patients--and they're now using telemedicine to try to identify
patients--built into their protocols are the ability to access
the Gilead support services. And I'm pleased to say that they
said, of the 400 patients, none of the 400 had a financial
problem with getting the medicine.
But we need to do this in so many other communities, and
that's why we're rolling up our sleeves and hoping--and not
just hoping but committing to the CDC initiative and others to
get to this community.
Chairman Cummings. Ms. Pressley. Ms. Pressley.
Ms. Pressley. Thank you, Mr. Chairman, and thank you,
Representative Ocasio-Cortez and all the advocates who made
this hearing possible.
And, Mr. Chairman, just picking up on some of your
commentary and the comments of our colleague across the aisle
who is very impassioned, and I have an equitable amount of
outrage about the fact that people are dying. This is not about
the vilifying of profit. This is about the vilifying of
choosing profit over people. And if we know that a new person
is infected every 15 minutes and we have been here two and a
half hours, that is 10 more people who have been infected.
And so we have an administration, the occupant of this
White House, who sets an aspirational and achievable goal to
end this epidemic, and yet we don't have enough infectious
disease doctors. We have a cost-prohibitive lifesaving drug,
and it is not equitably being accessed. So that sounds like an
unfunded mandate. And we have been here before.
And this is the Oversight and Reform Committee, and so it
is our job to hold everyone from--you know, I served on the
city council before, but any time profit over people, whether
it is developers or pharmaceutical companies are engaging in
those practices, we are here to shine a light on that and to
keep us all accountable. So that is the role of this committee.
So, you know, we should be furious about what we have heard
here today. This is the world's wealthiest Nation. There are
40,000 new HIV diagnoses each year. In my home state of
Massachusetts, there have been over 140 new HIV cases since
2015, eight new cases in Boston over the last six months.
Now, we have heard a lot of sobering and damning statistics
here, but I don't want us to get lost in the numbers and allow
that to dominate the conversation because this is about people,
our family members, our neighbors, our friends, our
constituents like my constituent Matthew. He lives in
Somerville. He is a gay man. And Matthew knows he is at higher
risk of getting HIV, and for three years, he has been fortunate
enough to be on PrEP. His insurance coverage gives him access
to the drug at an affordable rate. However, he lives in
constant fear that a job change will push it out of reach for
him.
There are millions of Matthews in our country for whom PrEP
allows them to stand in their truth, safety, and unencumbered
by the fear of contracting HIV, but unlike Matthew, there are
millions more who need it and still cannot afford it.
It has been 40 years since the first HIV case in the U.S.,
and this disease still remains a global public health challenge
and, as reminded to all of us by our chair in your earlier
commentary, particularly for women and queer people of color.
It is my opinion that, Gilead, you have used your power to
manipulate our patent systems, monopolized the marketplace to
line your shareholders' pockets, and I think that is shameful.
Dr. Walensky, you have studied HIV transmission closely,
and, as a physician at Mass General Hospital, you are on the
frontlines of this epidemic. Since we are short on time, yes or
no, do you agree that by failing to get PrEP in the hands of
those most at risk, including people who inject drugs, we
undercut our ability to eradicate this disease?
Dr. Walensky. Yes.
Ms. Pressley. Thank you. Can you speak to how substance
abuse disorders specifically for those who inject drugs with
needles, have heightened the need for greater access to PrEP?
Dr. Walensky. Our hospital is full of injection drug users
right now. We have double our consult volume in the last decade
much due to injection drug use. And there's been an outbreak in
Lawrence and Lowell, as you know, in Massachusetts that was
reported in the MMWR by the CDC. So yes--an HIV outbreak I
should say. So yes, we need PrEP for all people at risk.
Ms. Pressley. Mr. O'Day, Gilead plans to donate millions of
bottles of PrEP and bring a generic product to the market in
the next few years. At face value, this seems like a good idea,
although, you know, two years is two years too long. But the
CDC estimates only a fraction of the 1.1 million people who
need PrEP have access to it. The donation your company
announced would reach even less people.
Now, I recognize your company's efforts to provide
financial assistance for people without insurance who can't
afford it, but given the uptick in HIV infection, these efforts
simply don't keep pace. They don't go far enough. Mr. O'Day,
can you guarantee that the donated medications will go to
people who do not already have access to the drug?
Mr. O'Day. Yes.
Ms. Pressley. Thank you. In Canada and Australia Truvada is
sold for less than $10 a pill. It seems to me if your company
wanted to, you can make the drug affordable for everyone. What
has stopped your company from lowering the price to a
comparable rate in the U.S.?
Mr. O'Day. The patent exclusivity ends, as you know, in
September of next year, and we will, you know--the pricing
between the countries is very different. It's a very
heterogenous systems between the United States and in other
countries, and the pricing, as set in the United States, takes
into account the innovation it brings, the cost of the health
care of treating an HIV patient, the ability to invest back in
research and development, and then also to make sure our access
programs are effective and that patients in America do not go
without receiving this lifesaving medicine.
Ms. Pressley. Well, it's----
Dr. Lord. It's greed.
Ms. Pressley. Yes. Okay. So I was going to say just, you
know, respectfully, in that every 15 minutes a new person is
infected, the more time we waste, the more lives that we are
losing. And again, this is an aspirational and achievable goal,
and so it is really infuriating. There are clearly many
barriers people are facing in accessing this lifesaving
medication, and price should not be one of them. Gilead could
make PrEP more affordable in the U.S. and therefore more
accessible if you want to, if there is the moral courage and
the fortitude and the commitment to do so. Your failure to do
so is indefensible. Your company brings in record-level profits
while holding hostage a drug that could end this epidemic.
There isn't a country in this world where this type of greed
and conduct will be tolerated, so I am not sure why we tolerate
it in this one.
Thank you, Mr. Chairman, and I yield back.
Chairman Cummings. Thank you very much. Ms. Tlaib.
Ms. Tlaib. Thank you, Mr. Chairman. And, Mr. Chairman,
thank you so much for always supporting us, especially us new
class of women that have come in to this U.S. Congress. It
speaks volumes to your character.
I also want to thank my sister from New York, Congresswoman
Alexandria Ocasio-Cortez, and the incredible advocates that are
behind her and making sure that we always speak truth to power.
What is evil, Mr. Chairman? And I talked with you about
this. What is evil is that people are dying a painful death all
because of corporate greed. How much profit is enough, Mr.
O'Day? When does it become immoral? And in my district I have
the third-largest population of those infected in the state of
Michigan. And as I think about you saying you are helping
folks, I look at numbers because it is important. And when you
say you are going to provide assistance, 200,000 people when
1.1 million people need your assistance, it is baffling.
And I agree with Dr. Lord. I agree that Truvada belongs to
all of us. And it is our responsibility in this chamber to make
sure that we are putting people before profit. And it is really
absurd that, as I hear my colleagues defending this practice
over the American people that brought us here, it is
disheartening because in the last five months, I don't care
which committee I go to, corporate greed is the issue always.
It is always about the money and about profit. And as Mr.
Chairman has constantly always said, there is no problem with
that, but when does it become immoral? When does it become so
unjust that we are seeing our neighbors die, die because drugs
are just not accessible to them, drugs that we created, the
Federal Government on behalf of the people?
And so I just want to urge Mr. O'Day to please take Dr.
Lord's recommendations. This is your time to do what is right
for the people and do what is right for our country.
And with that, I want to yield to my sister from New York,
who is, again, such a shed of light in this time of darkness in
our country, that is constantly always putting people before
profit, and that is Alexandria Ocasio-Cortez.
Ms. Ocasio-Cortez. Thank you. That is incredibly too
generous. Thank you.
And I would like to thank my sister and colleague from
Michigan because, you know, I see you go home every weekend and
connecting with your community and really bringing yourself to
hold that space and feel what your constituents feel.
Mr. O'Day, I just want to clarify and let you know that
this isn't about you, and I am not here to vilify the work that
you have done because you are responding to a set of
incentives. And you could, you know, resign today, there would
still be someone that would come up and occupy this seat,
responding to those same incentives, making the same decisions
that you make. So this isn't about you as an individual or who
you are or your character. This is about the system of
incentives that we have set up.
And when it comes to who to blame for this, I don't blame
you. I blame us. I blame this body because every single
developed country in the world guarantees health care as a
right except us, except the United States because we can't get
it together, because we don't have the fortitude to kick
pharmaceutical lobbyists outside of our congressional offices.
We have a leader here, Mr. Sarbanes, who has led in the
role of money and politics. We can't even reform our own
political system to make sure that we are more responsive to
the people and the electorate that we seek to lead and whose
votes we ask for.
And so this isn't your fault. This is our fault because for
some reason, for some reason the conclusion that every single
other Western or rather developed country in the world has come
to, we haven't been able to come to. In Australia, PrEP is $8 a
month. In the United States, it is almost $2,000 a month
because we have legislated a set of incentives, and we have
legislated a system that allows that to happen.
Out of every 10 people that need PrEP, nine of them cannot
access it, and that is largely due to the price. We heard
earlier today an impassioned plea about profits and about how a
corporation like Apple should be able to enjoy that. Well, I
know a woman, her name is Amy Vilela and her daughter died
because she went to a hospital and told them that she wasn't
insured and they said come again in a month when you do have
insurance. Well, her blood clot didn't wait a month. Her
daughter died at 22 years old. And the rub of it was that her
daughter, I believe, might have actually been ensured and just
didn't know it because she was in between jobs.
And so what Amy says, what Ms. Vilela says is this is a
commodity. Her daughter's life was not. People's lives are not
commodities. When we talk about economics, there is something
known as a demand curve with elasticity. And with every other
commodity, you can say how much is this phone worth to you and
you can say $100, $200. You can buy a Nokia phone. You cannot
have a phone at all, but you cannot ask the question how much
will you pay to be alive? How much will you pay to live?
Because the answer is everything. The answer is you will pay
$10, you will pay $1,000, you will go into debt, you will do
anything to live. And that is what makes the price of medicine
different than the price of an iPhone.
Thank you very much.
Chairman Cummings. The gentlelady's time is expired.
Mr. Sarbanes.
Mr. Sarbanes. Thank you, Mr. Chairman. I am tempted to just
say amen and stop talking, but I do have a couple of questions
I would like to----
Chairman Cummings. Me, too.
Mr. Sarbanes. Yes, I would like to get on the record. Mr.
O'Day, this new drug that is going through the process,
Descovy, is that how you say it?
Mr. O'Day. That's correct, Congressman.
Mr. Sarbanes. Yes, that is based on this component that has
TAF as opposed to TDF.
Mr. O'Day. Correct.
Mr. Sarbanes. Is that something you are going to pursue
exclusivity on in terms of the patent around that? What is----
Mr. O'Day. It's a brand-new medicine.
Mr. Sarbanes. Yes, brand-new----
Mr. O'Day. It has a patent life, as granted to it under the
patent statutes.
Mr. Sarbanes. I know there are some questions being raised
out there. I think it has found its way into litigation as to
whether Gilead knew back when it was developing TDF that the
TAF opportunity might be a safer one. And I am curious as to
whether you were aware of the safety benefits associated with
TAF at the time when TDF was being developed.
Mr. O'Day. Absolutely not. I mean, TAF was still in the
very early stages.
Mr. Sarbanes. Okay.
Mr. O'Day. We pursued the development of that for treatment
and for prevention in line with the natural course of
development.
Mr. Sarbanes. Dr. Lord, did you want to say something?
Dr. Lord. We know that Gilead in 2011, the ex-CEO actually
said that they stopped the development of the safer TAF drug
because they knew--they knew it was not as safe, and when they
were trying to launch Truvada versus another drug Epzicom at
the time--and this is a quote, they said ``and to have our own
studies suggesting that Viread''--which is part of Truvada--
``wasn't the safest thing on the market, which it certainly was
at the time, it didn't seem like the best.'' So we have
evidence from their CEO that they purposely delayed----
Mr. Sarbanes. Well, that----
Dr. Lord [continuing]. development of the safer drug.
Mr. Sarbanes. I appreciate that. And it is obviously going
to play itself out. I mean, we will----
Dr. Lord. See you in court.
Mr. Sarbanes [continuing]. the courts will decide, I guess,
whether these allegations are well-founded or not. But it is
interesting that the effect of this is that with the new
Descovy TAF-based drug that is coming, you are going to get
another period of exclusivity. So am I right that essentially
what is being achieved there is that by first pursuing the TDF-
based Truvada with apparently the safety risk and now pursuing
the safer TAF-based drug of Descovy, basically Gilead is going
to reap the benefit of two periods of exclusivity rather than
one, correct? I mean, that is just factual.
Mr. O'Day. Well, these are two completely different
medicines.
Mr. Sarbanes. Right, but----
Mr. O'Day. This is a step----
Mr. Sarbanes. I got you----
Mr. O'Day. This is a step change in innovation----
Mr. Sarbanes. That is going to be subject to debate and
whatever, but you are going to get a period of exclusivity,
which you are still in for the TDF-based Truvada, and then you
are going to get another period if this all works out for you
of exclusivity for the TAF-based Descovy. That is how it looks
to me.
I have got to move on real quick to one other series of
questions I wanted to ask you. I understand that Teva
Pharmaceutical got FDA approval for a generic equivalent for
its Truvada back in June 2017. And so it raises the question if
that generic drug was approved in 1917, why did it not enter
the market in 1917? And apparently, the answer is that three
years previously in 1914 Gilead had entered into a settlement
agreement with Teva under the terms of which Teva agreed not to
challenge Gilead's patents in court. And so in exchange, Gilead
allowed Teva to come to the market in 2020, which is a year
earlier.
So you made this deal with them that basically said we will
let you come in a year earlier if you, I gather, don't sue us
on the patent. And maybe you saw some weakness there, and this
was a good deal to make, but is that true that there is some
agreement that was made there with Teva where they are going to
be able to come in a year earlier in return for something that
was done? Is that true?
Mr. O'Day. So this is a fairly normal process of generics
coming in, challenging patents----
Mr. Sarbanes. Yes.
Mr. O'Day.--and then a determination is eventually made on
the cost of litigation, the potential litigation. We believe
strongly in the Truvada patents. At the end of the day----
Mr. Sarbanes. It is pretty typical. You are right about
that. And you have done it in I think nine other instances, the
effect of which--there are all these ways to extend your patent
control. One is pay for delay. This is a little bit different.
This is making a deal basically so people won't challenge the
patent, which to me signals maybe some concerns about the
weakness of the patent, but you have figured out a way to push
that off. So it just makes me concerned about how you are
conducting the business because the bottom line is these
generics don't get to the market as quickly as they could. And
I understand from Dr. Walensky that the benefits of that in
terms of the pricing may not be as much as we fantasize about.
But nevertheless, it is important that the generics be able to
get to market quickly or as quickly as they can. And we are
seeing some maneuvers on your part I believe that keeps that
from happening.
With that, I would yield back my time, Mr. Chairman.
Chairman Cummings. Ms. Speier.
Ms. Speier. Thank you, Mr. Chairman. Thank you all for
being here.
At the outset, it is important for me to disclose that
Gilead is a company in my district with 9,000 employees around
the world, many of them in my district.
Having said that, Mr. O'Day, I am glad that you are here. I
am glad that you have participated in the manner that you have.
I think you do have a responsibility to your shareholders. I
also think you have a responsibility to our country. And you
are doing what you are doing in large part--and I agree with
Ms. Ocasio-Cortez--because the system allows you to do it. And
we have got to take responsibility for the fact that when
Medicare part D was created, we tied our hands behind our backs
and did not allow Congress or the government to negotiate
prescription drug discounts.
Now, I am deeply concerned about the 1.1 million people
that Dr. Walensky talked about who warrant PrEP right now. They
are those most susceptible to potentially getting HIV. But only
150,000 of those 1.1 million people actually do, and of those,
they are 75 percent white. So the people that desperately need
this drug are African-American gay men. One in two black gay
men will be diagnosed with HIV in their lifetime.
So knowing all this, I want to know--and here I am
negotiating with you in public over something frankly the
government should have been doing a long time ago. Are you
willing to provide P.R. ads--you put lots of ads on TV, I see
them all the time for your drugs. Will you put ads on TV that
are targeted at the African-American gay men who should be
getting this drug and who are not and make them also aware of
the fact that you are making available this drug for free to
those who need it?
Mr. O'Day. Thank you, Congresswoman. Just to clarify, the
numbers that we have are around 200,000 people are on--of the
1.1 million are on the Truvada today. There's clearly a huge
unmet medical need to your point, and again, the CDC's own
studies suggest that, with the Gilead support programs, there's
only 1 percent that aren't on it for financial means.
We are firmly committed to working in a number of ways to
outreach----
Ms. Speier. Okay. Mr. O'Day, I don't have a lot of time.
Mr. O'Day. Right.
Ms. Speier. Will you commit to developing a P.R. campaign
for TV to target the African-American population that is most
susceptible to getting HIV and making them aware that the drug
is available and it will be made available to them for free?
Mr. O'Day. We do do television advertising today for this
community. We do digital advertising. We commit to----
Ms. Speier. That is not working.
Mr. O'Day. We commit to a variety of programs that are
getting at this community today. And it is increasing, but
there is much, much more to do, which is why the CDC
initiative, which it is their numbers that suggest that 200,000
people are uninsured of those 1.1 million, and we are providing
the total amount to make sure that we get that to patients, and
we'll continue to work----
Ms. Speier. But if people don't know about it, it doesn't
matter that you are making 200,000 doses or enough for 200,000
people. If they don't know about it, they are not going to
access it. So----
Mr. O'Day. Right.
Ms. Speier [continuing]. I feel that you have a moral
obligation to inform that population. We have to save these
lives. We do know that HIV is increasing because young gays,
particularly in my district, are feeling immortal now, and
since this disease is becoming chronic, that they can engage in
unprotected sex, and so HIV is on the increase. So, as the
biggest provider of the drug that protects these individuals, I
believe you have to do more, and I am asking you to do more.
Mr. O'Day. Yes, and we will continue to do more. We spend
more than $100 million over a 10-year period on a compass
program that specifically targets the southern states in the
United States that focuses on education, that focuses on access
to health care, and we'll continue to roll up our sleeves and
work with the community and work with other organizations to be
able to increase this presence. Absolutely we commit to that.
Dr. Lord. It's obviously not working, though, and this
donation really is not anything meaningfully different than
their medication access program, which they already have,
which, as you say, is not working. It's only reaching, as Mr.
O'Day said, 20,000 people----
Ms. Speier. Okay. So, Dr. Lord, what would you recommend?
Dr. Lord. I would recommend that they lower the price--that
they lower the price so that Mr. Horn's organizations can get
drugs to the people that need them. Instead of spending $2.6
billion, which is the domestic spend on Truvada, I say we spend
that money to develop programs for Mr. Horn's agencies to get
drugs to these people that need it. They don't just need a free
drug. They need programs, and we're not going to do that with a
donation. We're going to do that when we spend serious money,
instead of sending it to Gilead, to giving it to the states, to
the counties and municipalities that need it.
Mr. O'Day. And Gilead is spending hundreds of millions of
dollars on these programs.
Dr. Lord. We're spending $2.6 billion, so, yes, you give us
a few hundred million back, but we're giving you the vast
majority of that to begin with.
Ms. Speier. All right. My time is expired, but, Mr. O'Day,
I hope that you will take my request seriously and come back to
us with a campaign that will engage the whole community that is
not aware that your program exists. I yield back.
Chairman Cummings. We want to be effective and efficient.
Is there any agency that can identify who these people are that
need this treatment, Dr. Walensky? In other words, can we
pinpoint them, I mean, who they are? Do you follow me?
Dr. Walensky. Yes, I do.
Chairman Cummings. And that way you can go straight to
them.
Dr. Walensky. Yes, thank you for that question. I want to
go back to a number that keeps getting cited that is 98 percent
of people get access and 1 percent of people don't have--
don't--cite cost as the issue. Less than 1 percent of people
don't cite cost as the issue. That was a study that was funded
by the CDC, it was conducted by the CDC. It was a household
survey. So we know that--so we know that adults who are
surveyed in the household don't think that they have a problem
accessing PrEP. Well, I can tell you what, those are not the
people who actually need access to PrEP.
We know that of our youth that are--that about 10 percent
of our youth are gay. We know that of our homeless youth, 40
percent of them are gay. And you know what, they're not filling
out household surveys. So I think part of the challenge with
access to PrEP is that these folks are not easily coming
forward.
When we talk about gay black men, they don't have a good
reason to come forward. And I can promise you that teenagers
and 20-year-old gay men are not accessing health care. They
just don't come to the doctor. So----
Chairman Cummings. And how can we reach them? How do you--
--
Dr. Walensky. I think we needed to decrease stigma. I think
we need to have advertising. I think we need to open our doors
to these people so that they will come, welcomed and loved, and
access these drugs and come quarterly. So I know the other
statistics that's been thrown out is 200,000 people are
currently on PrEP. Two hundred thousand people have ever been
on PrEP. We learned at the HIV meetings in March 34 percent of
people don't take it for longer than a year.
Chairman Cummings. And, Mr. Horn?
Mr. Horn. Thank you. So we've been really discussing cost
as a considerable factor here, and cost does remain, you know,
a key issue here. But I think when we sort of open it up a
little bit, we really have to talk about really sort of
financing sustainable healthcare systems, you know, for the
individuals that we're trying to reach here.
And I just do want to circle back on one thing here. I
think that, you know--I think the--you know, the hearings, it's
sort of just centers around acrimony around like, you know,
that--we're against profit, that Gilead is the enemy. Neither
is true. Neither is true in that. And I am surrounded by
activists, by clinicians, by academics, by policymakers who
have all fought tooth and nail with health insurance companies,
with Medicaid to make sure that Truvada was covered.
However, what that comes back to is the issue of cost. And
even with the co-pay assistance program, again, that has been--
that has really been elementary in just ensuring access there,
but it really does come down to an issue of cost as to why
those programs are even necessary in the first place.
So we're all in this together. We're all looking for
solutions here. We're just not--we don't have one good guy, we
don't have one enemy. We really have to think about our entire
system and how costs manifest across that entire system and
what are we going to do about that going forward? Thank you.
Chairman Cummings. Mr. O'Day, do you all--your board--I
know it may be out of the ordinary, but does your board ever
hear from people like Dr. Walensky and Mr. Horn?
Mr. O'Day. Well, as you know, I just joined a couple of
months ago----
Chairman Cummings. Right.
Mr. O'Day.--so I don't know the past practices of the
board, but----
Chairman Cummings. No, I was just wondering.
Mr. O'Day. But I think the voice of the patient and voice
of the community is represented in the company in very, very
meaningful and serious ways. There's many, many community
leaders that have joined Gilead, many HIV top physicians that
are now part of Gilead. It is a part of the fabric of Gilead in
my--if you'll allow me--in my two and a half months, Mr.
Chairman, that you feel very connected with all aspects of the
continuum of care here. And people take it very seriously. I
mean, our role is to develop the next transformational
medicine, but it's also to work as a member of this community
in a very responsible way, and we take that seriously.
Chairman Cummings. Finally, where are the negotiations with
the CDC? Where are they right now? I mean, you did the 200,000.
Is that ongoing? Do you follow me?
Mr. O'Day. Well, yes, I mean, the details of the program,
how to implement it, those are all now ongoing. The commitment
is clear. And, as you said before, I mean, I think we would
respond to other requests for the commitment. But now we're
working through the details and trying to get it implemented as
quickly as we can.
Chairman Cummings. Mr. Jordan?
Mr. Jordan. I would just thank our panel and again thank
Gilead for the amazing drug they developed and the difference
it has made for, as I said earlier, millions of people around
the world.
Chairman Cummings. Without objection, letters the committee
has received about this issue are entered into the hearing
record from a number of organizations, including the Treatment
Action Group, the AIDS Vaccine Advocacy Coalition, and the HIV
Medicine Association. All of these groups have written to
express their concerns about the impact that the high price of
Truvada is having on their members, their communities, and the
American healthcare system.
Chairman Cummings. I would also like to thank our witnesses
for testifying today.
And without objection, all members will have five
legislative days within which to submit additional written
questions for the witnesses, and they should be submitted to
the chair, which will be forwarded to the witnesses for their
response. I ask our witnesses to please respond as promptly as
you possibly can when you receive those written questions.
With that, the hearing is adjourned.
[Whereupon, at 1:30 p.m., the committee was adjourned.]
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