Dec. 12th 1:30 & 7:30 PM
Dec. 13th 1:30 PM
Adler Theatre - Davenport
Ballet Quad Cities premiere of The Nutcracker is less than 2 weeks away! Tickets are going fast, so make sure you have your tickets before they sell out!
Join us for an Afterglow party on December 12 after the 7:30 performance in the lobby of Hotel Blackhawk to meet the dancers & musicians.

Prepared Statement by Senator Chuck Grassley of Iowa

Chairman, Senate Judiciary Committee

Hearing on "Puerto Rico's Fiscal Problems:

Examining the Source and Exploring the Solution"

December 1, 2015

 

Good morning. The purpose of today's hearing is to learn more about the origin of Puerto Rico's fiscal problems, and what's needed to help restore fiscal balance and economic growth.  It's my hope that we'll have a valuable discussion based on facts, and informed by our witnesses' expertise.

Puerto Rico's debt crisis didn't happen overnight. It's been years in the making. Fundamentally, the starting point for any solution is to first identify the problem and understand its size and scope.  Unfortunately, confusion reigns as Puerto Rico has failed to provide audited financial statements for the past two years.

What we do know is that for many years as Puerto Rico's economy suffered, debt and spending increased to the point where the Island lost investor confidence. Puerto Rico has defaulted on certain debt obligations, lost access to the normal markets, and now faces a liquidity crisis.  The Governor and others have stated that the Island's current debt "is not payable."

Puerto Rico's economy has suffered for decades in part because of barriers to job creation and labor force participation. The federal minimum wage mandate, generous entitlement programs, bureaucratic red tape, and a bloated public sector have stifled business activity. This has a direct impact on Puerto Rico's residents, who are our fellow U.S. citizens. High unemployment rates have resulted in a declining population as Puerto Ricans have left the Island in search of jobs. A diminished population means lower tax revenues to fund government spending.

Despite these long-term economic challenges, for many years Puerto Rico maintained a balanced budget and high credit ratings on its debt. What, then, led to the fiscal crisis the Island faces today? While the economic challenges may be debatable, it's clear that since 2000, Puerto Rico's public debt has risen from 60 percent of GDP to now more than 100 percent. This is an indication of serious fiscal mismanagement.

Thanks to the highly attractive triple-tax exempt status of its bonds, it was easier for Puerto Rico to borrow and paper over deficits, rather than address financial shortcomings and economic realities in order to balance its budget.  The consequence of this decision is an accumulation of approximately $72 billion of debt, arising from roughly 17 different debt issuers.  This includes more than $18 billion in constitutionally protected general obligation debt.  And, also around $24 billion in debt issued by public corporations, like the Puerto Rico Electric Power Authority (PREPA).

Moreover, because of its triple-tax exempt status, a wide array of investors own Puerto Rican bonds. According to Bloomberg, Puerto Ricans alone hold $20 billion of the debt.  And nearly 60 percent of Puerto Rico's debt is held largely in the individual retirement accounts and 401(k)'s of regular folks throughout the U.S.  I'm told that approximately 16,000 Iowans are invested in funds that hold PREPA bonds. These folks aren't vultures. They're middle-class Americans who probably knew little about Puerto Rico's finances. They simply invested in one of many tax-exempt municipal bond fund's containing Puerto Rico's bonds.

Notwithstanding all of this, we're told that Puerto Rico's debt needs to be restructured in order to address its fiscal challenges.  Puerto Rico, though, lacks access to an orderly debt restructuring mechanism, like Chapter 9 of the bankruptcy code. Thus, Congress has been called upon to extend Chapter 9 to Puerto Rico's public corporations. Or to create a broad new bankruptcy regime, dubbed "Super Chapter 9," to restructure all debt, including the Island's constitutionally guaranteed general obligation bonds. According to a recent New York Times article, "advisers to the island's government have been urging the governor to default on the debt, saying that only a catastrophe would move Congress - especially Republicans - to help." I hope the Governor will tell us whether this is accurate. It would trouble me greatly if true.

This isn't the first time Congress has been asked to help address a situation like Puerto Rico now faces. In the past, we've provided help in a bipartisan way. During the 1990s, the District of Columbia faced its own fiscal crisis, as it was insolvent and unable to pay its bills. Congress worked with District and Clinton Administration officials to pass the District of Columbia Financial Responsibility and Management Assistance Act in 1995.  We'll hear more about the response to that crisis and others from our witnesses today.  I'll note that Congress considered extending Chapter 9 to the District of Columbia, but decided that there was "little practical significance or advantage to such a legislative gesture."  As the committee report to the bill stated, "the issues facing the District of Columbia . . . require political and structural, as well as financial remediation."

One of the reasons extending Chapter 9 to the District was rejected is because it's designed primarily to restructure and decrease municipal debt. The idea being that relief from creditors is what's needed in order to gain a fresh start. But Chapter 9 cannot bring about financial rehabilitation. It does not increase economic growth or alter the fundamental fiscal trajectory.  In short, Chapter 9 cannot address the root causes of fiscal problems, but instead pushes them off to future generations.

As for "Super Chapter 9," this is something that no State can do, and has been described as "unprecedented in the American context."  It would be a bad idea, with negative consequences, for Congress to permit Puerto Rico to walk away from its constitutional debt obligations.  Unlike other bonds, constitutional debt, whether issued by Puerto Rico or a State, has that government's full faith and credit commitment to repay the debt.

Let's not forget that Puerto Rico issued its bonds with the knowledge that Chapter 9 bankruptcy wasn't an option in the event of a default.  Is it fair to retroactively change the rules at the expense of these investors, if other options exist for addressing Puerto Rico's debt problems?  At the very least, this is an idea that should be at the end of the line, not the front.

The challenges Puerto Rico faces are great and require more than just short-term solutions that don't provide long-term relief. The debt is a symptom of a bigger problem.  Merely extending debt restructuring authority, absent tools to address the fundamental causes of the fiscal problem, is not a long-term solution that will help Puerto Rico.

Puerto Rico has struggled to make the difficult decisions to cut spending and balance its budget. If Congress is to act, then we must ensure that Puerto Rico has the tools to help itself out of this situation. Today's hearing can help us identify what may, or may not, need to be looked at for Puerto Rico to get its balance sheet back in order.

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WASHINGTON - Sen. Chuck Grassley of Iowa today released a report from his oversight and investigative staff analyzing 18 federal agencies' responses to his inquiries on paid administrative leave and endorsed the report's recommendations for reining in this largely unproductive, expensive practice.

"Everything I've seen shows a Wild West environment among agencies on paid administrative leave," Grassley said.  "According to this report, and others related to it, every agency uses this leave differently.  Some agencies use it too extensively, and the taxpayers get short-changed.  The statutory and regulatory vacuum on the use of paid leave has contributed to this problem.  As the report recommends, Congress should step in with legislation to fill the void. The legislation would make clear when paid administrative leave is allowable and when employees should be on the job instead.  This kind of leave shouldn't be a crutch for management to avoid making tough personnel decisions or a club for wrongdoers to use against whistleblowers."

The report analyzes responses from 18 agencies to an inquiry from Grassley and Rep. Darrell Issa in October 2014.  The report finds that agencies use the paid leave designation broadly, "for everything from negotiating collective bargaining agreements to returning from active military duty to investigating allegations of employee misconduct."  This is because agencies' policies on when this type of leave can be used and the appropriate length of time for paid leave vary widely.

Open-ended leave is expensive and unproductive for taxpayers, the report finds.   Seventeen agencies spent almost $80.6 million to place employees on paid administrative leave for one month or more in fiscal year 2014.  That amount might be lower than the reality due to the imprecise calculations some agencies provided.

Although requested by Grassley in his inquiry letters, agencies did not always provide sufficient justification for placing employees on administrative leave for more than one year, and their justifications varied widely.  When reasons were provided, they were vague, such as "investigations for misconduct."  Agencies did not explain why these investigations took so long.

The report finds that the use of paid administrative leave can be troubling for employees, such as whistleblowers, whose managers might use leave as retaliation.  Employees cannot appeal their administrative leave status.

The report concludes, "Based on the explanations and evidence received in the course of this inquiry, agencies are able to place an employee on administrative leave simply to avoid addressing an uncomfortable?or potentially even unjustifiable?personnel action. Maintaining this status quo serves neither the taxpayer nor the employee. Its costs are high, and its benefits dubious. Under current practice, employees who did commit misconduct can avoid accountability on a taxpayer-funded vacation, but employees unjustly accused are deprived of professional development and, more importantly, legal recourse, because employees in administrative leave status have no right to appeal its use."

The report recommends statutory changes and other actions to: authorize and define administrative leave in statute; encourage agencies to use options other than paid administrative leave; limit paid administrative leave to specific purposes and short-term duration; provide safeguards against the retaliatory use of administrative leave; preserve non-duty pay status as authorized by law and in the interests of the agency; ensure tracking and recording of administrative leave; and continue and strengthen congressional oversight over administrative leave.

Grassley is working on bipartisan legislation to implement the recommendations.  He is working with the Committee on Homeland Security and Governmental Affairs, with jurisdiction over leave policy, to develop and advance the legislation.

The report is available here.  The appendices are available here, here and here.

 

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How on earth do you find that perfect frame for that beautiful nature scene?

Or how about that golf ball which was your first hole-in-one? Perhaps that photograph of your ancestors needs a new home. One place that specializes in custom frames as well as contempory artwork is Woodland Gallery in the Village of East Davenport.

Located at 1111 Mound Street, owner Les Siebke said customers can have basically anything you want framed.

"We've framed musical instruments," said Les. "We can frame footballs, to Walter Payton jerseys to golf balls from hole-in-ones. Basically, any memorabilia you've got, we can frame."

But custom wood and metal frames just scratch the surface of what Woodland Gallery has to offer. Step inside the showroom and one can see a huge seleciton of artwork. Colorful, picturesque prints linen the walls and racks.

Paintings aren't the only artwork for sale. Photographers also have contributed to the store's stock, including Quad City area landmarks.

If it's not a particular artist that draws a customer to the store, perhaps that time comes during one of the Village of East Davenport's many festivals. Woodland Gallery has always welcomed customers during any and every festival, including the Civil War Re-enactments that are now part of the Village's past.

But, customers have one more reason to stop at the Woodland Gallery this year. Les Siebke is retiring, and therefore, is selling all of his merchandise. Everything is 40% off.

He opened the gallery in 1977, and in his nearly 40 years, he has operated locations in the Olde Town Mall, the Village of East Davenport, Southpark Mall, Muscatine & Williamsburg. Needless to say, the Woodland Gallery has been a Quad City icon for four decades.

Success has been gleaned through their custom framework and vast selection of artwork. "I think we do very, very good framing," says Les. "We have a large variety of artwork for people to choose from, whether it's photographs, posters, prints, limited editions, canvas pieces, originals...basically, we have something for everyone."

Les said he is glad to have experienced such success and happiness from the Woodland Gallery in the past 40 years. He is sad to be moving on from such happy and cherished memories, but looks forward to retirement and fishing in warmer weather! He added that artwork makes a perfect Christmas present, since is lasts a lifetime and the recipient will always remember the gift.

Quad City residents will have many fond memories of the Woodland Gallery. Their custom framing quality is unmatched and Les is right - there really is something for everyone in his gallery of beautiful artwork.

The Woodland Gallery is offering 40% off as part of their Happy Retirement Sale! Don't miss out on some hidden gems!

For more information, contact Stephanie Sellers at 563-505-8891 or saesellers@gmail.com.

The sale will be running through the end of the year.

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Take a break from the holiday shopping and enjoy a gourmet luncheon!

DAVENPORT, IA (December 1, 2015) - In the spirit of the holiday season, the culinary team at Senior Star at Elmore Place is thrilled to offer a complimentary gourmet Chef's Table dining experience at 12 p.m. on Friday, December 11 at 4502 Elmore Avenue, Davenport.

Chef Kevin Kintz, food and beverage director at Senior Star at Elmore Place, will introduce a delectable menu during this event.  Featured holiday healthy dishes will include mixed spring greens with fresh berries and a basil and lime vinaigrette dressing, herb-crusted filet of beef, roasted red potatoes in their jackets, baby green beans and white chocolate raspberry cheesecake.

"We welcome the opportunity to be able to host this unique dining experience," said Marc Strohschein, executive director at Senior Star at Elmore Place.  "The Chef's Table will give our Quad Cities neighbors and friends a break from their holiday shopping to enjoy a festive luncheon on our beautiful campus."

Space is limited for this complimentary luncheon to the first 15 people who RSVP by December 9.  Each attendee will be able to bring one guest.  Personalized campus tours will also be available.  Please RSVP by calling 563.359.0100.

About Senior Star at Elmore Place

Senior Star at Elmore Place, a Senior Star community, features 236 modernly decorated apartments spanning across 20 acres of beautifully landscaped property with many customized amenities to offer its residents three distinctive living experiences:  independent living, assisted living and memory care.  For more information, visit www.seniorstar.com.

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LECLAIRE, Iowa. Christmas in LeClaire, December 4-6, 2015: Friday, December 4 and Saturday, December 5 -10am-8pm and Sunday, December 6 - 10am-4pm.
Be sure and attend Christmas in LeClaire, the annual event offering fun for the whole family.  There will be baked goods, handmade crafts from local crafters, silent auction, and more at the LeClaire Civic Center (127 S. Cody Road). The Snow Lodge No. 44 (113 S. Cody Road) will be offering cookie tins with your choice of homemade cookies and bars, crafts, and lunch on Friday and Saturday.
Stop in at Reusable Usables (322 N. Cody Road) Friday from 3-6pm, Saturday 10am-5pm, and noon-4pm on Sunday for Free Family Drop-in Art. Kids can have Breakfast with Santa at Happy Joe's (119 N. Cody Road) on Saturday from 8-10am (Kids $4.50/Adults $8.50) and visit with Santa until 11:30am.
Other activities include First Friday and First Saturday celebrations from 5:30-8pm at the Mississippi River Distilling Co. and other participating shops and restaurants. Watch for the Strolling Santas from Around the World as they mingle in the downtown.  All the local shops will be offering a wide array of items for your shopping pleasure.  You're sure to find the perfect gifts for the Holiday Season.
Enjoy riding the Trolley from 11am-7pm on Saturday and from 11am-4pm on Sunday with stops throughout the town, and so much more! Detailed list of activities can be found at: http://leclairecivicclub.org/2015_christmasinleclaire_program.pdf
For more information, call Joyce: (563) 289-4205 or Diane (563) 370-3509.
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Be part of something meaningful by giving blood

PEORIA, Ill. (Dec. 1, 2015) - The American Red Cross encourages eligible donors to end the year with real meaning by donating blood for hospital patients in need.

Holiday activities, severe weather and seasonal illnesses, like the flu, can pull people away from their regular blood donation schedules. This creates a greater need for blood donations this time of year, especially around the winter holidays. To encourage donations, all those who come to donate Dec. 23, 2015, through Jan. 3, 2016, will get a long-sleeve Red Cross T-shirt, while supplies last.

Jamie Czesak made her first blood donation on Dec. 27, 2013. "As I spent Christmas with my family, I realized how lucky I was to have my health and how we never really know when our last Christmas will be. I decided that I would face my fears and do one of the few things I can do to help save someone's life donate blood."

Healthy donors with all blood types are needed, especially those with types AB, O, B negative and A negative. To make an appointment to donate blood, download the free Red Cross Blood Donor App from app stores, visit redcrossblood.org or call 1-800-RED CROSS (1-800-733-2767). Donors can now use the Blood Donor App to access their donor card and view vital signs from previous donations.

Upcoming blood donation opportunities:

Carroll County, Illinois

Savanna

12/28/2015: 10 a.m. - 2 p.m., Savanna Fire Department, 101 Main St.

Henry County, Illinois

Kewanee

12/17/2015: 7 a.m. - 12 p.m., Kewanee OSF Saint Luke Medical Center, 1051 W. South St.

12/17/2015: 12 p.m. - 5 p.m., Kewanee OSF Saint Luke Medical Center, 1051 W. South St.

Whiteside County, Illinois

Fulton

12/22/2015: 8 a.m. - 1 p.m., Robert Fulton Community Center, 912 4th St.

Rock Falls

12/16/2015: 2 p.m. - 6 p.m., Rock Falls Blood Donation Center, 112 W. Second St.

12/23/2015: 10 a.m. - 2 p.m., Rock Falls Blood Donation Center, 112 W. Second St.

12/30/2015: 2 p.m. - 6 p.m., Rock Falls Blood Donation Center, 112 W. Second St.

Sterling

12/22/2015: 10 a.m. - 3 p.m., Duis Center, 211 E. 23rd St.

How to donate blood

Simply download the American Red Cross Blood Donor App, visit redcrossblood.org or call 1-800-RED CROSS (1-800-733-2767) to make an appointment or for more information. All blood types are needed to ensure a reliable supply for patients. A blood donor card or driver's license or two other forms of identification are required at check-in. Individuals who are 17 years of age (16 with parental consent in some states), weigh at least 110 pounds and are in generally good health may be eligible to donate blood. High school students and other donors 18 years of age and younger also have to meet certain height and weight requirements.

Blood donors can now save time at their next donation by using RapidPass to complete their pre-donation reading and health history questionnaire online, on the day of their donation, prior to arriving at the blood drive. To get started, visit redcrossblood.org/RapidPass and follow the instructions on the site.

About the American Red Cross

The American Red Cross shelters, feeds and provides emotional support to victims of disasters; supplies about 40 percent of the nation's blood; teaches skills that save lives; provides international humanitarian aid; and supports military members and their families. The Red Cross is a not-for-profit organization that depends on volunteers and the generosity of the American public to perform its mission. For more information, please visit redcross.org or visit us on Twitter at @RedCross.

 

DES MOINES, IA (12/01/2015)(readMedia)-- Earlier this fall, my office launched a new financial literacy initiative introducing families across Iowa to the benefits of using a 529 plan to save for a loved one's higher education. College Savings Iowa InFocus is an interactive learning experience that serves as a testament to our message: by starting early, saving regularly and making smart investment choices, families can make their savings work for them.

Our 10 minute tutorial explores the ins-and-outs of 529 plans and details the specific benefits of College Savings Iowa. Along with this great learning opportunity, we are offering even more ways to grow your college savings: anyone who completes the tutorial is automatically registered to win a $1,000 College Savings Iowa account. For those families who take the first step towards saving, we are also contributing an additional $10 to the first 500 people who complete the tutorial and open a College Savings Iowa account. The newly established accounts must have a minimum $25 contribution and be opened within seven days of tutorial completion to be eligible for the $10 contribution. Visit Iowa529InFocus.com to complete the tutorial and see the official rules.

An investment in your children's education is an investment in their future. I encourage you to make time to evaluate your college savings strategies today. With the cost of higher education rising faster than inflation, nearly every family will face the question of how to pay for it when the time comes. Thankfully, the answer is quite simple - start saving today!

Also, be sure to join the college savings conversation by following us on Facebook and Twitter (@Iowa529Plan) to learn about future giveaways, college savings tips and events.

Help make college a reality for the children in your life by starting to save today - you will be glad you did!

Michael L. Fitzgerald

Treasurer of State

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Investment returns are not guaranteed and you could lose money by investing in the plan. Participants assume all investment risks as well as responsibility for any federal and state tax consequences. If you are not an Iowa taxpayer, consider before investing whether your or the designated beneficiary's home state offers any state tax or other benefits that are only available for investments in such state's qualified tuition program.

For more information about the College Savings Iowa 529 Plan, call 888-672-9116 or visit CollegeSavingsIowa.com to obtain a Program Description. Investment objectives, risks, charges, expenses and other important information are included in the Program Description; read and consider it carefully before investing.

December 2015 Marks 30th Anniversary for the Nation's Most Successful Voluntary Conservation Program

WASHINGTON, Dec. 1, 2015 - Agriculture Secretary Tom Vilsack today reminded farmers and ranchers that the next general enrollment period for the Conservation Reserve Program (CRP) begins today, Dec. 1, 2015, and ends on Feb. 26, 2016. December 2015 also marks the 30th anniversary of CRP, a federally funded program that assists agricultural producers with the cost of restoring, enhancing and protecting certain grasses, shrubs and trees to improve water quality, prevent soil erosion and reduce loss of wildlife habitat.

As of September 2015, 24.2 million acres were enrolled in CRP. CRP also is protecting more than 170,000 stream miles with riparian forest and grass buffers, enough to go around the world 7 times. For an interactive tour of CRP success stories from across the U.S., visit www.fsa.usda.gov/CRPis30, or follow on Twitter at #CRPis30.

"Over the past 30 years, farmers, ranchers, conservationists, hunters, fishermen and other outdoor enthusiasts have made CRP one of the most successful conservation programs in the history of the country," said Vilsack. "Today, CRP continues to make major environmental improvements to water and air quality. This is another longstanding example of how agricultural production can work hand in hand with efforts to improve the environment and increase wildlife habitat."

Participants in CRP establish long-term, resource-conserving plant species, such as approved grasses or trees (known as "covers") to control soil erosion, improve water quality and develop wildlife habitat on marginally productive agricultural lands. In return, FSA provides participants with rental payments and cost-share assistance. At times when commodity prices are low, enrolling sensitive lands in CRP can be especially attractive to farmers and ranchers, as it softens the economic hardship for landowners at the same time that it provides ecological benefits. Contract duration is between 10 and 15 years. The long-term goal of the program is to re-establish native plant species on marginal agricultural lands for the primary purpose of preventing soil erosion and improving water quality and related benefits of reducing loss of wildlife habitat.

Contracts on 1.64 million acres of CRP are set to expire on Sept. 30, 2016. Producers with expiring contracts or producers with environmentally sensitive land are encouraged to evaluate their options under CRP.

Since it was established on Dec. 23, 1985, CRP has:

  • Prevented more than 9 billion tons of soil from eroding, enough soil to fill 600 million dump trucks;
  • Reduced nitrogen and phosphorous runoff relative to annually tilled cropland by 95 and 85 percent respectively;
  • Sequestered an annual average of 49 million tons of greenhouse gases, equal to taking 9 million cars off the road.

Since 1996, CRP has created nearly 2.7 million acres of restored wetlands.

For more information FSA conservation programs, visit a local FSA office or www.fsa.usda.gov/conservation. To find your local FSA office, visit http://offices.usda.gov.

The Conservation Reserve Program was re-authorized by the 2014 Farm Bill, which builds on historic economic gains in rural America over the past six years, while achieving meaningful reform and billions of dollars in savings for taxpayers. Since enactment, USDA has made significant progress to implement each provision of this critical legislation, including providing disaster relief to farmers and ranchers; strengthening risk management tools; expanding access to rural credit; funding critical research; establishing innovative public-private conservation partnerships; developing new markets for rural-made products; and investing in infrastructure, housing, and community facilities to help improve quality of life in rural America. For more information, visit www.usda.gov/farmbill.

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WYDEN-GRASSLEY SOVALDI INVESTIGATION FINDS REVENUE-DRIVEN PRICING STRATEGY BEHIND $84,000 HEPATITIS DRUG

18-Month Investigation Reveals a Pricing and Marketing Strategy Designed to Maximize Revenue with Little Concern for Access or Affordability

 

Report Includes Landmark Release of Medicaid Data: In 2014, More than $1 Billion Spent by Medicaid Programs on Sovaldi Treated Less than 2.4 Percent of Enrolled Patients with Hepatitis C

 

Medicare Spent More on Gilead Hepatitis C Drugs in the First Half of 2015 than in All of 2014

WASHINGTON - Senate Finance Committee Ranking Member Ron Wyden, D-Ore., and senior committee member Chuck Grassley, R-Iowa, today released the results of an 18-month investigation into the pricing and marketing of Gilead Sciences' Hepatitis C drug Sovaldi and its second-wave successor, Harvoni. Drawing from 20,000 pages of internal company documents, dozens of interviews with health care experts, and a trove of data from Medicaid programs in 50 states and the District of Columbia, the investigation found that the company pursued a marketing strategy and final wholesale price of Sovaldi - $1,000 per pill, or $84,000 for a single course of treatment - that it believed would maximize revenue. Building on that price, Harvoni was later introduced at $94,500. Fostering broad, affordable access was not a key consideration in the process of setting the wholesale prices.

In the 18 months following Sovaldi's approval, Medicare spent nearly $8.2 billion before rebates on Sovaldi and Harvoni. Over that same span, Medicare's monthly spending on Hepatitis C treatments increased more than six-fold. In 2014 alone, Medicare and Medicaid combined to spend more than $5 billion on Sovaldi and Harvoni before rebates. That total is projected to climb in 2015. Gilead's recent financial statements show U.S. sales of Sovaldi and Harvoni, including through public programs and private payers, totaled $20.6 billion after rebates in the 21 months following Sovaldi's introduction.

Senators Wyden and Grassley will hold a press conference today at 11:15 a.m. in the Senate Radio/TV Gallery, S-325, to discuss the investigation. Details are below, including a streaming feed for media unable to attend in person. Further resources are also online and additional findings from the investigation are below.

 

"Gilead pursued a calculated scheme for pricing and marketing its Hepatitis C drug based on one primary goal, maximizing revenue, regardless of the human consequences. There was no concrete evidence in emails, meeting minutes or presentations that basic financial matters such as R&D costs or the multi-billion dollar acquisition of Pharmasset, the drug's first developer, factored into how Gilead set the price. Gilead knew these prices would put treatment out of the reach of millions and cause extraordinary problems for Medicare and Medicaid, but still the company went ahead. If Gilead's approach to pricing is the future of how blockbuster drugs are launched, it will cost billions and billions of dollars to treat just a fraction of patients," Senator Wyden said. "America needs cures for cancer, Alzheimer's, diabetes and HIV. If those cures are unaffordable and out of reach to millions who need them, Congress will not have met its responsibilities to the American people. I reject the idea that America has to choose between soaring, out-of-reach drug prices and one-size-fits-all government policies. Solving this challenge will take fresh, bipartisan thinking and political independence to bring people together."

"The Finance Committee has tremendous responsibility in overseeing the federal programs paying for prescription drug coverage," Senator Grassley said.  "With that responsibility, the committee should know how the costs to the public programs and private insurance companies of a single innovative drug entering the market without competition can have major effects on which patients get the new drug and when.  This report sheds light on one example of the pricing decisions made by one company with a new prescription medicine that entered the market without competition in high demand.  This might be an example that received the most attention in some time, but it won't be the last.  I look forward to discussions with my colleagues and the public on the policy questions in the report.  I encourage everyone to read the report for the level of detail into pricing strategy that we don't often see."

Additional major findings from the investigation include :

  • Gilead justified Sovaldi's high price point based on price-per-cure: Documents acquired during the course of investigation illustrate that Gilead was aware it was in a position to create clear savings for payers, but chose to pursue a "regimen neutral" price justified by "cost-per-cure" calculations that resulted in greater revenue per treatment than previous direct acting anti-virals [see page 42]. Given the increased clinical efficacy of Sovaldi, Gilead believed that it was more than justified in using the cost-per-cure pricing model [37, 46].
  • Gilead set a high price for Sovaldi with an eye toward ensuring a future high price for Harvoni: The documentation reviewed shows that Gilead considered a number of factors in determining a price point for Sovaldi, including costs for the existing standard of care for Hepatitis C treatment and setting a high baseline for the next wave of drugs, such as Harvoni [32-58]. In documents obtained during the course of investigation, Gilead officials noted the "value capture opportunity is in Wave 1," and "Wave 2 access will be enhanced with a high Wave 1 price." It went on to say that "[a]t any price, access for Wave 2 improves as the price for Wave 1 is increased, suggesting that Wave 1 will set a price benchmark against which Wave 2 will ultimately be evaluated." By elevating the price for the new standard of care set by Sovaldi, Gilead intended to raise the price floor for all future Hepatitis C treatments, including its follow-on drugs and those of its competitors [44].
  • Gilead underestimated the degree of access restrictions that it expected would result from its pricing decision: Gilead set a price as high as it thought the market would bear before significant access restrictions would be imposed [30]. Gilead's analyses were ultimately incorrect on this point as many payers adopted substantial access restrictions at the final price of $84,000 [81-88, 96-98].
  • Despite significant access restrictions, Gilead refused to significantly lower the net price: When confronted with the widespread initiation of access restrictions [99-106], Gilead refused to offer substantial discounts and did not significantly modify its contracting strategy to improve patient access. For example, Gilead offered Medicaid programs supplemental rebates of up to 10 percent; however, its offer came with the precondition that states had to drop some or all of their access restrictions [106]. For states already facing a steep financial burden, accepting that precondition in most cases would have increased the budgetary impact rather than easing it [107]. Only five state Medicaid programs reached agreements with Gilead to receive supplemental rebates in 2014 [138].
  • The burdens on Medicare, Medicaid, and the Bureau of Prisons were significant: The price of Sovaldi constituted a large burden?notably among state Medicaid programs, Medicare, and the BOP?and triggered access restrictions across public and private payers, thus limiting the number of Hepatitis C-infected patients who could access the new treatment options [81-88, 96-98]. For example, state Medicaid programs nationwide spent $1.3 billion before rebates on the drug in 2014. Even with that expenditure, less than 2.4 percent of the roughly 700,000 Medicaid enrollees with Hepatitis C were treated with Sovaldi [82-87]
  • Competition entered the market, prices responded, but there are still significant concerns: Three days following Viekira Pak's approval on December 19, 2014, Express Scripts Holding Co., the nation's largest pharmacy benefit manager, announced that it would make Viekira Pak its preferred treatment for Hepatitis C genotype 1 and would no longer cover Sovaldi and Harvoni for these patients [112]. Gilead responded in January and February 2015 by entering into discounting agreements for Harvoni and Sovaldi with CVS, Anthem, Humana, Aetna, and UnitedHealth Group. Cigna struck agreements with Gilead for Harvoni only [113]. Even as competition lowered prices for therapies, this report documents that concerns remain, particularly in the public payer community, about high costs for treating millions of people in the U.S. infected with Hepatitis C, as well as the budgetary effects of a future single source innovator that might not face competition as quickly [114-122].

The report in full is available here.

An executive summary is available here.

A timeline of events pertaining to Gilead, Sovaldi and Harvoni is available here.

A glossary of terms pertaining to the investigation is available here.

Letters from state Medicaid programs are available here.

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