Chairman Nadler Opening Statement for Subcommittee Hearing on Diagnosing the Problem: Exploring the Effects of Consolidation and Anticompetitive Conduct in Health Care Markets
Washington, DC, March 7, 2019
Today, House Judiciary Committee Chairman Jerrold Nadler (D-NY) delivered the following opening remarks during a Subcommittee on Antitrust, Commercial, and Administrative Law hearing on “Diagnosing the Problem: Exploring the Effects of Consolidation and Anticompetitive Conduct in Health Care Markets”:
“The Judiciary Committee has a strong tradition of bipartisan efforts to promote competition in health care markets, particularly with respect to helping to make prescription drugs, and other health care services, more affordable through the full benefits of competition.
“Over the past several years, the Subcommittee has held numerous hearings in this area, examining the topics of consolidation in the market for health insurance, competition in the drug supply chain, and anticompetitive practices by prescription drug companies.
“It is essential that we continue this important work through today’s hearing, and throughout this Congress, as we seek to provide meaningful relief to Americans who struggle every day with the high costs of medicine, insurance premiums, and hospital bills.
“Today, one quarter of Americans report that it is difficult to afford their medicines. In fact, exorbitant medical bills is one of the major causes of why Americans seek bankruptcy relief.
“It is painfully clear that the soaring costs of health care are bad for the health and well-being of American families.
“It is unacceptable that seniors cannot afford the arthritis medication they need to perform everyday tasks, such as buttoning their coats or opening a jar, without excruciating pain.
“It is unacceptable that hundreds of thousands of cancer patients are reportedly delaying lifesaving care, cutting their pills in half, or skipping drug treatment entirely due to high drug prices.
“And it is unacceptable that those suffering from diabetes have to worry about the life-threatening consequences of not being able to afford insulin because of its unaffordable cost.
“Last week, when confronted with the facts surrounding skyrocketing prescription drug prices, the executives of 7 major drug manufacturers responded by pointing fingers somewhere else, including insurers and pharmacy benefit managers (PBMs).
“But as many experts have noted, including some of the witnesses who will testify here today, the lack of competition in health care markets is one of the primary causes of escalating costs.
“In fact, the CEOs of some major drug companies acknowledge that competition plays a key role in driving down prices. For example, one testified just last week that “competition is a key component to reducing costs.”
“The significance of competition from lower-priced generic drugs, in particular, cannot be overstated.
“According to the Federal Trade Commission, the first generic competitor’s product is typically offered at a price 20% to 30% below the branded product’s price. Subsequent generic entry creates greater price competition, with price drops reaching 85% or more off the brand price.
“Similarly, the Congressional Budget Office reported in 2010 that the retail price of a generic is 75% lower, on average, then the retail price of a brand-name drug.
“In response to the threat of generic entry, which of course threatens the ability of branded drug companies to charge monopoly prices, these companies have engaged in numerous anticompetitive tactics.
“This Committee has been—and will continue to be—active in stopping drug companies from reaping monopoly profits at the expense of the health of working American families.
“For example, I am proud to be an original co-sponsor of H.R. 965, the ‘Creating and Restoring Equal Access to Equivalent Samples Act of 2019,’ or the ‘CREATES Act.’ This bipartisan legislation, introduced last month by Subcommittee Chairman Cicilline and Ranking Member Sensenbrenner, seeks to remove an obstacle to generic competition by making it easier for generic drug companies to obtain the samples they need to enter the marketplace.
“Another concern involves so-called ‘pay-for-delay’ settlements, which occur when a branded drug firm pays a potential generic competitor to abandon a patent challenge and, thereby, delay entering the market with a lower-cost generic product. These agreements are a win for both drug companies: the brand-name drug company gets to keep its monopoly, and the generic gets paid off with a portion of the monopoly profits. But consumers lose.
“According to an FTC study, pay-for-delay agreements are estimated to cost American consumers $3.5 billion per year—$35 billion over the decade from 2010 to 2020.
“That is why I plan to introduce bipartisan legislation this Congress to help end pay-for-delay settlements.
“As we all know, a lack of competition and anticompetitive conduct is not just limited to the pharmaceutical marketplace—these problems show up in hospital markets as well. For example, it is well-documented that hospital mergers can lead to higher prices and lower quality of care.
“Hospital consolidation also results in fewer options for patients. This is especially harmful for expecting mothers or women seeking reproductive health services who depend on a full range of options for care.
“I hope that our discussion today will continue our bipartisan work to diagnose the problems associated with consolidation and anticompetitive conduct in health care markets, as well as break new ground on confronting the harmful effects of hospital consolidation.
“Accordingly, I look forward to hearing from our witnesses today and I thank them for their participation.”