tv Key Capitol Hill Hearings CSPAN November 24, 2015 12:00am-8:01pm EST
8quadrillion, and down at the bottom is emergency visits. we still have 4 million emergency room visits. in some cases if you have less use of antibiotics, fewer prescriptions, better but you have a lot more prescriptions. this is what we expect in the us marketplace between now and 2020. and the important thing is, and as i get older my eyes get a little bit weaker, and i, and i cannot read the screen -- read the screen here. we are expecting the growth rate to slow down. we expect the compound
between five and 8 percent between now and the end of the decade. it will slow down. at list price we will be looking at a market of 560 to 590 billion dollars, 34 percent increase over 2014 and we expect spending to stay about the same. let me leave you with some closing thoughts. i go a little late on this one, but i have two minutes to go through the slot. the new hepatitis c drugs are cures. the innovation are major
drivers of the trend, so we will see more patients treated. so the payer focus, and stevefocus, and steve miller will talk about this this afternoon is that hepatitis c gets out for the reasons i mentioned. the pd one orphan drugs, although i have not heard discussions. think for a minute, as the secretary said, 3 million patients treated with hepatitis d in the united states. the prices of these products came out around 100,000 and are now around the $50,000 range. , but $50,000 for 3 million patients is a hundred $50 billion. pts j 9 up to 100 billion.
td one is undetermined, but they are the next new thing, and orphancommand orphan drugs are often in excess of 200 million apiece. and to think for a minute if we developed the 1st successful alzheimer's or dementia treatment how many people have alzheimer's or dementia in the united states and how much that would cost. we will have this big challenge so that the innovation is there and we have the ability to treat more patients but trying to come up with the money. the more the prices will come down. and the application, the fda said they had 14 million patient cases of therapy.
the appropriate patient population is to make sure that you are getting the right drug and patient population and i think that they will be very clean -- keen on controlling that. we have seen that in hepatitis d and will see more in the future. my last thought was more appropriate use of medicines that will save money in the marketplace. with that, thank you very much for your kind attention. [applause] >> good morning. great to follow doug and aa pleasure to be with all of you on this important topic. healthcare, particularly for prescription drugs. critical for all americans and i appreciate the bringing together of diversity points. and i want to give a quick thanks. and i wish to pick up where
doug left off and going to a bigger picture around the trends and issues around value. they might be taken to address the challenge of achieving these goals of the same time. and talk about the options different issues for different types that you get from a pharmacy versus intravenous that are typically delivered by -- by a physician. and a few minutes at the end
rates as inclined by 20 percent. i mentioned hiv. 80 percent in the last 20 years and this is just the front end of changes that are coming. they are targeted therapies that fall into the specialty class because of high prices that are expected because of potential impacts which gets to a why this discussion is so important. several components, the impact on avoided healthcare cost which i have heard about already. enabling people to get back to work mentioned this
morning that the pharmaceutical industry brings with it but the most important thing to emphasize is the impact on the last., longer and better lives for americans. there have been some evidence to suggest significant downstream cost savings. ten to 20 percent would be off that. many -- nonetheless,
nonetheless, they are overall a pretty good deal. eighteen to 20,000, aa technical term that could capture the notion of cost-effectiveness. that. that said, a lot of drugs show very different estimates and there has been a wide estimate. the value of the drugs. there is a nice report on the one hand it is hard to capture all of these dimensions. patients that have different preferences cost issues and health outcome issues. on the other hand there is a
private health insurance growth has been particularly slow but overall spending trends are moderating for medicaid programs the growth rates expected to be higher than they have been in the past. and this means the prescription drugs are contributing more to overall health care spending, and there is some upward trend. according to the national health estimates prescription drugs have remained 10 percent of overall spending. much of the nonretail use of drugs, those administered in hospitals and other places, not in retail settings which could get the number to 13 or 14 percent and i highlight a point, if you
really want to address overall health care spending it is important to look at not only the direct cost but the impact on other parts of the healthcare system command i will come back to that as well. also out of pocket has been a significant issue for growing number of americans, and the overall context, it has been a significant part, but not the only story. again, highlighting the importance of speaking about drugs. that said come out of pocket spending is higher for patients with many kind of disorders. higher than out-of-pocket spending for hospital care, professional service care and other components of healthcare which suggests that there may be ways of addressing the costs by taking on how to bring down overall costs in the context
negotiation. pharmaceutical benefit managers, selective formularies and utilization reviews but may have impact on access. allowing more unrestricted pricing which many people talk about being part of a competitive market but most of these are paid by a 3rd party insurance plan which is why they are taking steps of limiting utilization. and that is why we have this debate, this balance.
they are taking to try to make the process more predictable that is unquestionably having an impact on drug development, and some cases substantially reducing the cost of drug development but it is important to keep in mind the cost of rejection is not related to the price and the value of the drug. that is why many efforts to look at a value of around cost-effectiveness and other systems i talk about are focusing on the actual price versus what the drug is doing. there is another type of policy reform proposal, the ones that promote access and
innovation. policy reforms strengthen the incentive for developing valuable treatment and at the same time encouraging high prices that don't look like a value and thus lead to unnecessary spending on pharmaceuticals, and you will here more later today as well. the role of government versus the private sector. so i want to talk about these efforts because they are different. on the one hand, the time to throw the type of drugs included and medicare type t and some of the big cost control efforts, the high-value involving
pharmacy benefit managers, tiered benefits, lower cost or more valuable drugs. in this area the proposals that have been put forward encourage innovation and spending. this is something that the fda not as part of the explicit policy has had a role in. others that were in development at the same time potentially accelerating both at the time the new treatment is available and bringing down brands. there have also been proposals for more accountabilities for
insurers. for example -- in the medicare program today, close to half of the spending is in the catastrophic part of the drug benefit, more use of higher-priced drugs that can have a very big impact. most are paid for by the government through additional costs with medicare covering 80 percent of the cost. a different model might put more on the insurers. manufacturers may have more accountability, and as we will talk about as well in broader effort to reform.
another type of drug use that involves intravenous, drugs that are generally administered, a lot of cancer drugs that come into play, a different type of pricing system that does not involve pvm and formulary management about whether medicare has a system where its payments to the drugs, organization is based upon the average sales price of the drug similar systems are used other third-party payers or if it is a
contributor. in terms of reform here some people suggested shifting toward those that have been used toward oral drugs. maybe as more alternatives come forward this could be a more viable option and there are proposals as you will here today, available to certain purchasers of drugs, medicare has had consideration they could get the same payment and once
again as alternatives which have their drawback shift to value -based payment. the 3rd category involves a generic bio similar drugs which are typically much lower. you heard from drug -- doug. the billions of dollars in savings that typically lead to 80 or 90 percent more price decline and i want to highlight the importance. it is not just bio similars, but the availability of drugs in the same class has led to significant price decline as well. you heard from doug about the increase in generic dispensing and even though
brand-name drugs make up a small part and now a smaller part of the total expenditures, prescription heading to over 90 percent of the total account for an increasingly important part. some issues involved here are that practice does not always match theory. high profile cases in the news are not for knew brand-name drugs by drugs that represent molecules that have been on the market for a long time and where the prices, high prices seem to persist with generic drug shortages or companies being able to wave prices and not
see a competitive response. further policy development involves finding ways to make the generic drug market work better. between generic drug user fees and other challenges, even small molecule drugs they are coming. there are policy issues on how it will impact formulary pricing. more significant, and many involve part b drugs there will be challenges around how to price those.
i want to and with comments about where things are headed next talking a lot about the alternative between higher prices versus more access and innovation versus availability and value -based payment. prior evidence. cost-effectiveness threshold set by government. to support these kinds of approaches, payment based on results and value -based inferences.
we are beginning to see that they have prices and formulary tears, value -based insurance pram, something like no co-pay for drugs that have the highest value that bring down the most. and then those doing less well. it is not quite the same thing as what we have now with specialty tears. in terms of getting to these approaches steps like risk adjustment are important. more payment into the insurance plan. take steps that make those jobs more available to high-risk patients. we have measures that can be observed in a timely way for
drugs like coronary artery disease, diabetes, hypertension, hiv, but in many other conditions we do not have these type of measures easily available. better outcome measures can help. also what is needed is better evidence. lots of other factors influence outcome. collaborative efforts to get through the healthcare system are important. in moving to knew payment models there are regulatory issues that would have to be addressed. they could be triggered by drugs that are highly valuable versus indications that are less highly valuable getting in the way. finally, ii would like to
end by highlighting the importance of including drugs and broader payment reform. a high level goal and a bipartisan goal and has been reflective, alternative payment models for physicians and other healthcare providers that they work with, many of whom right now could put more accountability on healthcare providers for using high-value laws effectively, clinical pathways, episode -based payment models where physicians are involved in care and could have to take on more accountability for using drugs efficiently, the accountable care organization and it is
important to think about the ways in which drug manufacturers might care based upon results of care, accountability for care. and this is an important feature of moving toward more personalized medicine. this will increasingly very based upon things that healthcare providers working with drug manufacturers can do, using the drug effectively with other treatments. there is not one intrinsic value. would it not be nice if some of the efforts around drug sales and other promotions or better aligned with getting the best outcomes at the lowest cost per patients , especially those who can benefit the most.
this might give way to the current sale 1st strategy, one that could work for you until you fail the others 1st. again, obstacles since our current systems are based upon the fee for service approach rather than this pay for value as part of an overall healthcare system approach. breaking down the separation between part d pricing and impacts on amd healthcare costs and incorporate and enabling the incorporation of drug price systems, a look at home medicaid best price and other. you will here more later today. these are not easy problems to solve but are absolutely critical command i am
confident we can do better than we can today. thank you for the opportunity. >> thank you. we have a $400 biopharmaceutical today. so a lot of growth. inherent in that, specialty drugs accounting for 35 percent of sales. oncology, have see, cps canine. generics, that is slowing down the issue and is
constituting 9 percent sales growth annually. what we have ahead of us is amazing and impressive. 7,000 rare diseases. a member of active substances. similar. and as you said powerfully we are getting value in terms of avoided health cost and expenditures. both of you reference cost-saving potential whether it is getting patients to adhere more to the drugs they ought to be taking, evidence -based treatment, correct use of drugs which you mentioned,
that human insulin came out at around $20 a vile. how could people possibly afford this. today it's over $250. so my question to you is, how either one of your organizations measured aside from the value that we have captured generics, the cost and trend in the new innovation what is the impact of the pure increase in the brands on the market and what more have we been paying as a country because of that issue. >> we have looked at policies that could help
make the generic market potentially work more efficiently. the whole point is it should be easy to come in if drugs are being priced above that cost of manufacturing and provide a lower-priced alternative. in generics, not the bulk of small molecule generics, that does not seem to be happening and is something that the fda seems to be looking into. the manufacturing and other requirements, ways to streamline the processes through manufacturing regulation but encouraging more competition. i identified a different kind of problem than that of
how to address the cause and provide access for knew specialty effective target securities. >> give us a quick sense of the price figures. >> i don't knowi don't know of an answer off the top of my head. a lot of things happen. the pbm, in a better position. the backlog at the fda is higher than it has ever been >> approval. >> higher and longer than it has ever been. not even taking a big blob at the backlog. >> the production is fractions of the sent.
using the value determinations in corporate sector approaches. >> as if we are having this meeting ten years from now a lot of this would be a moot. submerging around the world. that will lead to a much more value -based system. in the next ten years if you can demonstrate outcome you will have no income. >> the big question is how quickly and effectively we can get from there to where we are now. >> thank you.
right here next to me is heather block, consumer advocate and patient. next to her is ceo of the national health council, beyond good is with us, associate director for public depend -- public opinion and survey research. drug editor from consumer reports -- excuse me, consumer union. chief policy officer. each of these folks will tell us a little bit of their perspective. we will begin with you.
enough medical know how that i do not need to explain further. i have to dip into savings each month. i am outliving my prognosis. putting the majority through right now. my top issues are as follows , transparency. buried in price from 47 to 9800 per month, lot $270,000 in medical bills. i have no idea what the actual cost is. number to the under 65
and that is my day to day existence. i could be any of you. >> thank you very much. >> i wish to commend heather it is but it is all about. i also want to thank the secretary for convening this meeting with all of the stakeholders. organize to have organization is controlled. we have all stakeholders in membership.
we work to achieve solutions to complex situations that are patient centered but involve all stakeholders, and this is the only approach where we can address this issue. over the course of the last several decades we have done research on people with chronic disease and what they tell us routinely is they make money off of the development of treatments but also understand that it drives innovation and better care. more recently research has shifted on how plans are
structured. increasingly what we are finding is they are going into insurance products that have taken one was one of the most great benefits they find they hit their maximum out-of-pocket cost before they get there 1st medication which can for many people amount 20 percent of annual income. it discriminates against people with chronic condition. and people with chronic conditions are getting angry.
finding a solution will not be easy but as we heard, and it starts by identifying value and looking at value from the perspective of people with chronic disease. we cannot simply address the cost of one item without looking at the entire healthcare ecosystem. a hugely important part but we must look at the entire ecosystem and decide what is value and how we will promote value and we cannot define value without patient perspective which leads me to the fact that we continually conflate consumers and patients. while we are part of the same community we are on
opposite ends of the spectrum. they go in and use it as needed for an acute care incident. they go home as if nothing happened. when diagnosed with the disease were have a child who will wither and die before there 18th birthday you have an entirely different perspective on what value and innovation is. the public opinion context.
stems from the question we asked in april more than ten different topics but what we found was that making sure high-cost drugs were available and affordable, this ranks number one across parties. this should be a priority. the other thing was government action. again, to items came above a number of other issues
related to consumer protections, and we just re- asked this question and found similar results. this stems from the polls until we followed up with a number polls to see how. what we found is that drug costs are unreasonable but at the same time most say they are having an easy time affording them. still, they have a difficult
time affording drugs which is more of a problem for people in poor health. people taking three or four or more drugs i have type a teacher for. then report that it is not personally an issue because the issue resonates well with the public and is one of the key ways that the public interacts. nearly everyone can say they have taken a prescription drug in their lifetime. with pharmacies or care providers, much larger than when they are going to an office where those sorts of things and see the cost of the drug.
even if you are not paying much because you have insurance. one other thing is, it is important to keep in mind that these drugs impact a relatively small area of the public. and my last point, in general the public does not have the best view, but most like the product and have improved lives and make american lives better. ..
>> >> other people didn't realize they should have shopped around. we're going to talk about high price specialty medications but talking about more mundane drugs because our polls have shown if they cannot afford medications able to dangerous think there will not of the zero medication are taken as directed or switch without asking that
because of high medication cost sometimes they skip doctor visits, procedures or test. that could lead to a worse health outcome. and with that in mind i an editor of a program called best buy drugs we have comparative effectiveness research looking at how effective the day are. is a live just compared against a placebo. those that were effective and affordable.
those that have to pay the entire cost of their pocket may be the of formulas have changed so insurance as we don't cover it arabia has been dropped or high deductibles or a spike of a price so try to negotiate with your pharmacist. we had secret shoppers call hundreds of farmers these across the country.
one was that a supermarket in des moines iowa we rolled 75 the shopper said we're not using insurance so they came back and said $21. if you find yourself in the saturation shop around the same drug this theme string and same as the. can vary dramatically. we called around raleigh north carolina bill to you that nobody pays these
prices that is not exactly true. recalled independent pharmacies then that we called costco. they're telling us nearly $190 a they offered at 43. three actually agree on a lot of these issues. but to bring more stability to the marketplace as the been changed every 30 or 60 days. they want to see how well they work and how much they cost. a akio. [applause]
security or medicare beneficiaries it is only 23. twice the cost of the average specialty drug. 3-1/2 times for one drug. that is a lot. so most of our beneficiaries and though they're taking three more drugs based on the number of prescriptions they have to fill to be exorbitant. and consumers don't pay full price in one way or another they're all paying for these drugs the skin in the game
can sometimes break your budget and those that are coming on to market at $16,000 per year we calculate how much people have to pay out of pocket it could be $3,000 per year that is from one drug to take every year and importantly if you aren't personally taking one you will pay for it to through higher premiums and other ways it affects the system in 2016 the average price has moved 13% and it will
make every betty's premiums go up that is a lot of money we will all pay for one drug. known is not simply consumers complaining. we have heard about people not taking the drugs in recent studies found those that have not fill the prescription and while we talk about medical innovation to fully support treatments or major conditions it is meaningless if nobody can afford it. and we will talk about access and ways to control cost. many insurance companies or
medicaid programs for them to get the treatments that they need in many times you have to have well liver biopsy to qualify. but in others there are other barriers to think not only about access and affordability together. other countries are doing it if we look at the cost of drugs and united states many times 10 times are 100 times the cost of $60,000 of the united kingdom $900 and egypt they should not bear the full cost in richet use
the tools then we have to add additional tools to make sure that drugs are affordable and all patients have access. [applause] >> so what we have heard is affordability is issue number one. we have heard the number one or number two issue about the high cost if you want the government to do something about it. and pricing is a particular issue having a single drug that is not understanding with the variation is coming from as they go to get drugs
they have been on for quite some time. and then the ship as the consequence so we hear about the various plan designs whether medicare with the catastrophic cost or what is left of the doughnut hole. with disabled americans and we heard the affordable care act plans are issued but from voting by costa by deductibles protected that the maximum amount of pocket level and also have separate
deductibles better hitting a lot of people and there are consequences not always in the best interest whether it is not fulfilling prescriptions or getting other forms of care that you mention and there are some tips can avoid taken by shopping around i love the notion of haggling make your act a bizarre. there are other approaches as well their policy approaches. as they are particular issues especially.
with the policy discussion and let's start with the patchwork those two are medicare and disabled to go from place to place to attack the issues on a state-by-state level but what do you think? what about a patient who has seen since with that inevitability that consumers have skin in the game and not your liver. >> it is time for national legislation.
it was raised as an issue when it was being discussed and developed but never have been -- have been. so they left the state's destitute. i into them writing a bill that i copied from several states i got my information from kaiser by the way. they cannot expect every person under 65 is disabled ted to figure are how to draft the bill. but the other issues gave a six month window of your
medical - - medicare eligible they you could not be underwritten. >> now to abolish that plan. >> i am buying into a plan that is going away there will not selling any more. there's your people on the plan by premiums will skyrocket. that i will no longer be able to afford that and it's not sustainable. and for those of us that under 65 and are disabled.
>> en the way that minimizes the pain that aarp has been working for many years and now more than ever in the you are offering advice on that score so let's start with you. >> everything is giving a sit-down with my father-in-law to get his description to see with his plan is. you may have been the cheapest plan last year but
what are the drugs your taking rainout. sova to check between different pharmacies is important and talking to your doctor to make your but there are benefits that nature rather revocation what i was trying to address was the interline drugs so it'd -- a bit is the treatment for the of condition to really have that negotiating power.
>> one of the biggest those that assume by the employer plans that get into a rhythm that you don't really looking at your formularies to underscore this time of year double check your plans and be mindful of high a deductible plans. with those that have a chronic condition to start a family to turn into a health
care consumer. >> as we heard from nearly a panel that may be one way to address the there are some plans the move in that direction for very valuable drugs. if you have to take them on a regular basis. there is a lot of that in the market today. what is your assessment? how do consumers of to stimulate that market? >> first is coming from the consumer's standpoint. at the pharmacy counter for
something you take all the time. as they sign up for affordable health care many more are covered in coming into the pharmacy go they're beginning to be educated there are some rage and consumer frustration to spur better plans to be focused on compliance instead of chasing bottom-line. >> as the kaiser tracking poll did you drill down any
where do they rate these various alternatives but cost is not the primary issue with those that have chronic conditions that don't like the fact that they pay so much out of pocket to see the doctors and specialists to access their care there is a lot of agreement it is it working. now to recognize to compel plans to keep high cost individuals out of their plans we have not made the
rules agreed new arena that is what part of needs to be looked at with the affordable care act. but they try to provide really good benefits but there is opportunities in is a critically important issue. they will often tell you the allied the price very few understand what the price was. they don't have that information what they mean is there want access to that drug. the other point to go back to your comment and access
is a huge issue in the marketplace especially of a lower economic status. to channel one of my board members with the 21st century roundtable. so the vast majority of people with chronic conditions once a treatment that they have to get better. so now where science moves to a place and we have never seen before.
and how we make them affordable is also a priority for the we have to look at the entire health care ecosystem how do we pay for innovation and make data accessible to all? >> that takes us back those and will continue your survival. and as vast majority of cancer treatments going for river targeted their peas peas, high price tag attached assure the. we all have this desire that will extend lives and have them be affordable.
>> first of all, i am not on targeted there be but i wish i was the look at it that we have to have access to every single drug those that will keep us alive. i am okay not having that personally. to see that the field moves forward their balancing affordability with access there has to be some give on the access side. so in order to make treatment more affordable. >> you think most patient groups are there?
>> this is the second time i have met her in from the patient's perspective that is so we're looking at that. with the $220 billion of low value service. but people with chronic conditions what they want is access for them. so they have to move away as treating people of average but we have to look and how we do treatments for 20% the drive cost for the 70%. to build day system that is different to say i will spend the time with you to
understand what is going on with the goals and aspirations for crow to help them catch the right option for the right person less care and research that shows cost to improve outcome. of the same stage of disease progression that one person wants to richer the other ones to eliminate that impacts his life he may not get the one that is right for you. of the personal circumstances see you often
see less care you can have an opportunity to save money. so how we in mind the incentives i am all for incentivizing the plans in to develop a high value treatment to do this great project in chicago that pay doctors to spend 120 minutes that our high cost of their coordinated and to have much better outcomes. but we do and that creates
high innovation and we have to recognize we have to make it affordable because there are tens of millions of people that are dying. >> coming back to the question of what should be done for all of this with the approaches with the role of competition and then to see with the hepatitis c drug. with the value based payment
so. i think we need transparency as people deserve the right to know and how much was paid by a taxpayers to develop that drug arbor shirley with no information consumers don't have all the information they need. we should make that transparent to see the value of additional use of one drug over another. i also think there is whole list put out of policy recommendations that they can play an important role of a we are paying the price
still pavement's above those catastrophic amounts so that amount of protection even with the medicare marketplace can vary greatly in. >> two quick thoughts this discriminating against those with chronic conditions of socio-economic status. we have to recognize that and the plans put into place to compete on value so to help them solve the problem they are in in order to eliminate. i support spreading out the out-of-pocket cost month to month that the end of the day it will create pressure for other mechanisms.
we have to work with the plan to figure how they compete on value rather than excluding patients. >> in the case of california with a good drug copays there is some concern it doesn't get the larger pricing issues. >> it depends on how much they can afford but really it is an issue that we have to get the cost of the drug czar shared throughout the whole system.
the fundamental question what is the value of the individual drugs what happens to the patients and their families that do everything to pay for them that is the conversation we need to have so thank you for doing an your co-authors. but there is something we have vast about over time for quite some time now. >> with america is health insurance plans you and as mentioned me out of pocket maximum without protection it did not exist before and
you mentioned also regarding coinsurance with that socio-economic status. we have the of brief out that does the simple math before you are one of the 50 percent of poverty or ruled in the silver plan then has the price tag of $95,000 that pays less than 1% of the cost of the drug so i have to ask what is the problem of cost sharing? if you truly believe in their not sufficient then is
that the most efficient policy? because higher income people could buy a platinum is a much different cost. >> i agree with much of what you said that by putting it in the context of an analysis of the marketplace to open up a woman in the district of columbia who has are dizzies and retrograde arthritis eligible for cost subsidies to also be eligible for out-of-pocket cost she would pay almost 20% of annual income over
the course of the year and depending on the plan she selected it could be in the first two months of the plan so those cost sharing mechanism is now working as effectively and if she had hepatitis c the insurance company would have picked up a substantial part of that. they are acting completely rational but what we need to do is to alleviate the pressures so they can provide affordable coverage that is not impacted that allows you to compete on value. we had to cheat medical officers nominate themselves
because they want to work with us on these issues and i want to work with you on these issues as well. >> with a proposal of the cost sharing subsidies given that the majority of americans still do like the affordable care act and we know plenty out there want to kill the entire law what is your sense how they respond to that? >> well we see public opinion it is pretty divided overall but we do find the public likes the different provisions of the lot. -- of a lot.
-- bill like the individual mandates but they do like the pieces that are in it. >> it seems like it is one more band-aid to put the caps on your not dealing with the issue is a band-aid if we increase subsidies session to read it to the root of the day problem? i feel like i am part of the problem by creating a band-aid maybe we need to say that will not help figure out. so the drug that i am paying $91 a month how much of that went to develop it has been around it was doubling the dosage but how much did that
still dash is dead important issue. for what we haven't a myriad of the health care system. wilson is being done? >> the broader point we do waste a lot of money and impose costs on consumers because of that. if we would take some of that back we could potentially afford to spend money on these innovative treatments that is in the pipeline. having had your members
approach at question? >> we have to look at the entire health ecosystem but it is all intertwined and a keen dash cost represents many people from getting care. what is the impact on the family budget? there is no impact because they never see the specialist may have to let the entire system and then it is high value products and high touched delivery designs to help with complex
chronic conditions that are falling through the? simply looking at each issue bin isolation and all the estimates are $220 billion in waste the vast majority is on 30 percent of the population to provide care that is not aligned with personal circumstances with huge opportunities to drive high value intervention in oslo to drive the cost down. looked at the package. >> suppose you are named to
have appropriate treatment to make sure the data is released to have a clearer picture of what is going on. >> this is the behest of the other evidence based practiced centers or a network dedicated to these issues to make sure everything comes out. >> that the public really does see this as a priority for those that need the high a cost drugs are available
and therefore not any of my state. so again i could be any of you. >> back includes the of morning session. as a reminder you're not to move throughout the building on your own if you want to purchase lunch on the top floor please go get an escort there also options outside into the left we will resume promptly at 1245. thank you to the panel.
>> i hope you enjoy your break we will move on to the next presentation we have the acting administrator for medicare and medicaid services. to be responsible for cost cutting policy for the marketplace programs including health coverage to combat health care fraud with the delivery of health care to improve outcomes. [applause] >> thank you for being here
and what this end to end encryption technology is part of how they communicated. guest: no evidence has surfaced to suggest that end to end user encryption was a part of the terrorist attack in paris. immediately after the attacks, there were many people in the national security community who went to the airwaves and publicly used it as an opportunity to talk about what they saw as the dangers of and to end user encryption for law enforcement and intelligence. so far, it seems that the failures of law enforcement and intelligence were linked to interagency disputes, the ability of the french to communicate with the moroccans and other law enforcement agencies and the terrorists were s, short message communication. they used text messages. encryption, the evidence suggests that despite an
explosion of hoopla in the hours immediately following these events, it was not a tool used by these attackers. host: let's explain what and to and encryption is. guest: the sounds fancy but it is simple. sound mass to ensure that when you as a device owner send a message to someone, only the intended recipient can read that message. you have a public key and a private key. share and key you create a message and send it to someone else. they verified and they use a key to open it you can make sure that the intended recipient is the person that opened it. when we talk about that, we are talking about a system that is mathematically certain to ensure that only the intended recipients can leave that message.
there's a big debate now -- sinceover the last september of 2014 but before that even, big technology companies have come out and said this is something we would like to roll out to more and more consumers. we think this ability is very important for them. it's a key component of privacy. what it does is if law like apple,goes to for example, who says they want system haver next -- the standard. there is a variety of different services that are springing up to offer this thing. if law enforcement goes to one of them even with a warrant and says we want to be able to look and intercept this particular communication between these people, the company can say we are physically unable to give that to you. there is no way we can even comply with this warrant.
debate is that you've got the technology companies saying this is essential to make sure your passwords and data stays safe. that will cut down on cyber hacking and keep incidents of cybercrime down, cyber fraud down. it's essential for a more hygienic internet and you have various law enforcement types and you have the british prime minister who has called for a ban on some of these encryption services. in the united states, law enforcement has taken a more moderate approach. the director of the fbi has called very publicly for some means of law enforcement to get in and intercept those communications even if there is something like encryption. host: this is the key to the back door? guest: bright. -- right. host: this changed the debate on the sunday shows yesterday.
[video clip] darkllowing up on these spaces -- is there any evidence that encryption was used? have you seen any evidence? i think there are strong indicators that they did. that is precisely why nothing was picked up. there were some mornings about a general plot underway with nothing specific. these guys were talking to each other on their iphones. in my judgment, they were talking in the dark space. that's how they pulled it off with out detection and that's the challenge and homeland. we know that they are talking to people in paris and belgium but also in the united states. we have caught to medications were they talked to people in new york and d.c. and frankly everywhere. host: we are asking our viewers to join in this discussion.
if you have questions or comments, these are the numbers -- chairman maccoll was talking about the sophistication of isis. what we know about that? just did acomment common confusion as to what encryption really is. we know they were using cell phones. they come with sim cards. criminals in the united states and elsewhere for decades have used very cheap, disposable cell phones to communicate and it's not something that is magical and has nothing to do with end user encryption. there is a lot of evidence outside these attacks that isis or members of isis -- we are talking tens of thousands of fighters in syria, iraq and
elsewhere. there could be as many as 46,000-90,000 twitter accounts. there is evidence that suggests some of those people using corruption to communicate. it's not directly part of these is attacks but it's something they do. centers an isis help that people who support the -- andnd getting contact get in contact and learn how to use different cyber security tools with better encryption. time, it's important to keep in mind that these are tools we all use. to enable much better communication. it enables much safer communication and keeps data from going missing. there is a question of whether compromisinguld be
or building defects into tools that offer a lot to the public in terms of better cyber security and in terms of better data integrity in order to facilitate certain law enforcement operations. that is the question we will be asking. technologyker is editor for defense one we are getting your thoughts and questions and we will start with ryan from george on our line for independents. caller: good morning. like to know if you can tell me if nsa has the ability to crack aes? host: what are we talking about? guest: i don't want to get it wrong.
if it was something that was part of the snowden disclosures, i have not seen that. iwould come back to you if have a better idea of what that is but i have not seen anybody saying that is something that. -- that they do. making communications more secure is a tool people use. are you still there? host: i think we lost him. guest: i will google that after the show. centreville, virginia, line for democrats. caller: this is a general question. we have a lot of equipment we left over there. they are using it in the war and am not sure why they cannot find some other agency or even some of these young people who are super technical to be able to shut some of that stuff down.
they have the wagon thing and they can tell you there's 6 million cars that have a defect. why we are not trying to do something different with that or trying to take their money away financially through technology. i don't get that. it seems like low hanging fruit. i will take your answer off the air if you have one. guest: it's a good question and i think there is a lot of people who are in the pentagon thinking about going forward in building new equipment and selling kill switches so you can have better control that how they are used. efforts to part of better arm our allies great you cannot retroactively install a chill switch on a piece of equipment you do not possess. that's basically impossible. we are talking about pieces of
equipment that the united states government game to iraqi security forces that have fallen into the hands of isis and things like that. in terms of radio and communication equipment, this is something we designed. i don't know how much of that stuff they have but we know they have heavy arms and things like that in terms of radio communication. we designed this so it was secure. back to a piece of machinery you are not physically in control of and install something on it that will at you in -- that will let you in. on pieces of agreement going forward, this is something they are talking about. how does d christian work? if we are talking about building in keys for decryption, how do you make sure the keys don't fall into the wrong hands? guest: what some in the united states government would like is a set of private keys that allow them to access all of the
different communications that would happen on any devices or through any services they are looking at. you into it allows that particular piece of can occasion. it works hand-in-hand with the public key which is something everyone has. the private he is only supposed to be in possession of the user, the person that is in physical contact with the device. what many law enforcement want is for their only to be certain and thenf private keys they can have them in a file or something that they can use them to presumably with a warrant, they would use this capability only with a warrant, to intercept those medications. this is the thing that -- intercept of those communications.
people are upset about fundamentally weakening this incredible capability. backdoors into these systems come into this method of communication, then you render it almost meaningless. there was a fascinating exchange last february between the head of the information security chief. michael rogers took objection to the idea that we should call them back doors. he says it sounds creepy. we are looking at capability that would allow was in the keep the premise of an christian intact. encryption intact. on behalf of the technology community, it has also specific interest in this case. they want to be able to sell services into places like china. that's going to be hard to do
who feelumers in china the united states government has a backdoor into their communications. it's not just a philosophical perspective about the purity of encryption. they also have a business interest in making sure they can sell into that market and ensure perfect privacy for foreign consumers. host: you talk about objections from the technology community and there are members of congress registering their objections -- rand paul was on television yesterday. [video clip] many in the intelligence committee are saying if we only had the bulk phone collection program back. what they are not telling you is we still have the phone collection program in the united states, all fun records are being collected all the time. we still had the attack. they have bulk collection in france and surveillance of their citizens at thousand full
greater than what we have with little privacy protection and they still did not know anything about this. i would argue that you can keep giving up liberty but in the end, i don't think we will be safer. we may have lost to we are as a people in the process. i will fight to make your that doesn't happen. host: we are talking about this debate over and to end encryption, digital technologies that are out there and the debate in the wake of the paris attacks. fletcher, north carolina, line for independents. i'm concerned with the way the news media leaks out , any technical information are ways we have found out about attacks. they leak it out and a lot of these people are just simple loan wolves. byy know enough just
watching the news what to do and what not to do. i think the government and the media should separate a little bit and give our security people a little more room to do their work without having to notify everybody about how we find people. host: that's part of the debate. is, there is a question as to exactly how much information in today's environment you can keep secret even if you are in government. in many ways, i think the snowden disclosures are key example. whether you think edward snowden is a hero or a traitor or maybe a hero that committed treason, it does not matter. he thing is for sure is that is the most famous systems administrator whoever lives and he was a common human being. he was a third party contractor and the government was overwhelmed by the amount of data it had as part of this program and several other programs so they went to a third-party to help them manage the load.
edward snowden had incredible access because the government was desperate for some means to find people, find companies, that could help them with all of this stuff and he took that information and went to different journalists. he would've gone to other journalists. brings into question the ability for governments to keep secrets anymore. folks inlk to government, they say it is becoming harder all the time. we create that through everything we do. when you collect data, in order to use it, you have to reveal it a little bit. this is fundamental to the way we live now. imagine thatble to you can find some tactic the government can use to intercept communications of something that might the controversial and imagine it's not useful and collect data that will not get out. the records suggest that is
impossible. terroristsould-be don't just use reports in the open news media to figure out what's safe for them to comedic it with. the islamic state regularly tutorials for their followers to let them know which applications out there are safe. here is a charge from open what "the wall street journal." unsafe apps inhe the moderately safe and the safest. guest: earlier this week, the u.s. army revealed they have a tech support center. isise made fun of it, having a tech support center. you him actually call them if
you are supporting member and talk to them about different tools you can use to hide to hide communications and allow safer communications and use information technology that is beneficial to the islamic state. this is something that is key to how they operate. this is something we know. program in dual terms of how they reach out to people. if got public channels in public communication and public propaganda to disseminate people and make them curious and then they have private indications with individuals they used to nurture would-be recruits into isis. this is something that's fundamentally different from the way al qaeda was operating even though this method comes from al qaeda in iraq method of recruitment. it eventually became 90% of isis.
when youhe idea that talk to them, you listen to them and you hear what they have to say and they applied it to everybody you interact with on the web. there was a fantastic piece in "the new york times" that talked about a young lady in rural united states that was having daily conversations with representatives from isis over a variety of different channels including private ones. isolated ineeling her rural community, she could reach out to ices and have a conversation with them. this is key to the way they operate. frombasically invisible the aspect of ices can medications we perceive on the news and in the media. host: staten island, new york, line for democrats, good morning. caller: thank you for c-span. in case i get cut off, i want to balancetucker if he can
what he is saying that sms was used. have indications they used the dark wet. does nobody understand that every time there's a terror attack, we had the legal structure in this country wanting to pull up everything like after the terrible attacks of 9/11 and they shove it down our throats. i'm reminded of the testimony of herman goering. he said people can always be brought along to do the bidding of the leaders. they are the people that make the decisions. . just tell the people they are being attacked and they are in danger and announce the peacemakers relax of patriotism and exposing the country to danger. this was his testimony 1946 and it seems we are always
counterbalanced with this information that we have a dangerous situation we need to give of our liberties and there are supremely people of a higher at shallot who can take care of things -- of a higher echelon who can take care of things. we need to be quiet but don't be too meddlesome. publicly, nothing is been revealed that shows and arruption -- encryption was direct part of the paris terrorist attacks. having said that, there was one who was ayoung woman, cousin of the mastermind and the french authorities had a warrant to tap her phone. poors revealed today that communication between french and moroccan authorities led to some
signals on that being messed. the encryption was not part of it however, if that person decided to encrypt their phone messages, it would have been difficult for law enforcement to have those phone calls. we are dealing with very monday and intelligence failures across -- according to news reports. in terms of the broader question if we are giving up more liberty , the illusion of more security, this is something that many people feel. it's hard to say how much trust people have in a government surveillance structure that claims to protect them from things it has not been able to reveal. they cannot talk specifics about when or how it's needed to use those tactics. when you look at the u.s. government and things that have
been revealed, they were forthcoming about a lot of capabilities they developed. there are number of different rulings that suggest that some capabilities they have developed were illegal. the obama administration has said the bulk collection of metadata is not something it is in favor of human though that may or may not be the case. there has been a reversal. said they clapper has made changes in terms of transparency and that's a type of acknowledgment that the government was perhaps overreaching its capabilities in some of its activities and now it is stepping back. it could be a response to public outrage but it is a tacit acknowledgment that we acknowledge that perhaps we were too aggressive in some of these things. the public is asking how many tools you get to do with zero accountability? the cia director john
brennan had a statement last week -- we are taking your calls this morning as we discussed that topic in this debate in the wake of the paris attacks 10 days ago. fort lauderdale, florida, line for independents. caller: good morning and thank you for taking my call. make an observation that every time these terrorists succeed, we tend to lose some of their freedoms. i blame this on lawyers and the administration.
it seems like they are not attacking the enemy. they are trying to make them feel better or they are trying to understand them. meanwhile, we lose more freedom. this is just atrocious. remember that 9/11 happened because the attorney general lawyers did not want to kill osama bin laden when we wanted to. that's all i have to say. rand paul is concerned about losing liberties. here is another tweet -- salt lake city, utah, line for democrats, good morning. i have been watching c-span since it began. i think it was 1989.
i have learned more than i can ever tell you from watching your station. i am very grateful for it. the specific comment i would like to make is i feel like we need to use isis tactics and fighting them. we need to fight fire with fire. specifically, the message they use, we need to throw it right back at them. that's all i have to say. they worry me very much. mostis one of the frightening things i've ever heard of since hitler. thank you. host: thank you for watching for so long. we actually go back to 1979. we want to talk about the ability of isis to communicate. president obama said they have a
good online twitter message. twitter was created in the united states out of sms. the idea behind it was that you could communicate with a whole bunch of people at once with a text message. bizinteresting that stone, one of the founders of twitter, was asked what interest you have in the revolution in moldova. ofs an interesting example that it's incredible to use and is making a lot of money and is going beyond the intent of its creators. them the president called terrorists with social media. guest: the united states is limited in its capacity to
counter the isis message on twitter and other social media directly. there is a state department campaign through a terrorism center that is an anti-propaganda center that has about a staff of 65 and 25 are again,ed to the think turn away campaign to use social media to counter the isis message. five of those people were from the pentagon. sis can have a i variety of different communications with people, as many as 46,000 pro-ices twitter accounts at any given time. report,g to a brookings that was 2014 and the numbers may be different now. twitter is trying to take a stronger stance. 2014, you had 46,000 pro-- isis twitter accounts compared
to 25 people with a state department and five of those are with the pentagon. the numbers don't match up even remotely. if you are with the state department come you cannot get into a twitter argument with any jihadist sympathizer on twitter. the costs are enormous and the benefits are small. you will make the u.s. government look bad if you lose. have two conversations between lots of different people and have specific one-on-one conversation so they get to do with this service, things the united states cannot do. there are ideas that have been proposed for improving our ability to counter some of that social media messaging, specifically going to different marketing firms that are good at this sort of thing and contracting with them to create counter isis content for social media and reach out and have
conversations about isis that reveals more about them. time, this is not to say that twitter is not trying to get a handle on this. they enforce terms of service. some people at twitter's sake don't tweet videos of beheadings. if you do this, your account will be suspended. there is some indication that it is working. twitter will suspend very popular accounts that are related to isis and then they will reemerge elsewhere and people within the media center at isis will redirect people to those areas you go to an account with 100,000 followers and live audience with 40,000 followers. there is no single account on twitter that has 40,000
followers. mind that thep in way that isis uses social media, we hate hearing about it but it's an important aspect of intelligence collection. in june, one lieutenant general talked about a particular content that was created by syria.theyh isis in post a picture of themselves in front of a particular local headquarters. the air force was able to take that and match that with a location and initiate a strike on that target within 22 hours. we don't have boots on the ground in syria. a couple of weeks ago, the united states said we will expand our on the ground operation 250 special operations forces guys. we don't have eyes there in the same way we would in a place where we have a huge infantry presence.
the stuff some of that ices creates and puts into social media to understand what they are doing and where and how in order to have a very tactical effect on the ground. host: we will take as many calls as we can. of can check out the work patrick tucker at defense one.com. next up is cleveland, georgia, line for independents. caller: good morning. at the risk of being a wet blanket, i think this thing is a double-edged sword. we have a fair amount of war criminals in our country. we are not going to ever bring them to account so putting their information on the screen and whatnot, might be a check or balance with some of the stuff going on. there is no chance in hell we will get them in court.
start thinkingll clearer before they go acting stupid around here. when he something to change. have a good morning. host: anything you want to follow up with? when peopleow that from the united states go to syria, they become part of an fbi watch list. the fbi is reassuring the public they have a handle on this. the comings and goings say something about you and this is an important law enforcement tool. debate about the specificity of her medications is that we volunteer location data that is totally legal and public and can speak to how the vast majority of us are. it is useful for law enforcement. look at how this debate
will change, i think the specificities of whether it's able to break encryption will fall by the wayside as we begin to understand how to use all the other data we create in a way and is constitutional creates a broader spectrum of probability that is useful for law enforcement. i am being optimistic and i look at the potential of a data in the next two years and i see that is something that will making defective technology into something that people don't notice. host: bayshore, new york is next on our independent line. is isis atd morning, real thing question mark it boggles my mind that people can be allowed to walk around.
i got a file for a permit to open a business in this country. if i don't do that, they will throw me in jail. i have to listen to people talk about federal people watching them. there was a gun shop, a shooting range in my negative the woods years ago. these towel heads were shooting automatic weapons. host: we will just move on. we will stick to a productive conversation talking about technology and the ices use of technology. john is up next from farmingdale, new york, line for democrats. caller: good morning. is i see fear mongering going on. the media is pushing fear mongering. this is the united states of america and the land of the free and home of the brave.
the organization is being funded. where would get they get the equipment? so whyry is funding them do we find out who was funding them and take care of business? it blows my mind and it's heartbreaking. people say we don't want let the terrorists win. they are winning because everyone is in a panic and everyone is scared and locked down. they will watch communications? they are winning. --e one more thing to add the police presence -- if a person is willing to die with a suicide belt, to see a police officer standing there with an automatic weapon, the person has no fear, they will do it anyway. a firearm is not going to determine them. host: the first part of the
question is to follow the money. how is technology being used to better follow the money? guest: we understand a lot about the ices finances i --sis finances. it's pretty limited but you can follow it easily. most of their resources come from black market oil sales which is an active area of investigation and something we can follow. to --is some question as that will be a pretty consistent and stable source of funding for them. another source of funding that has dried up is robbing banks in places they took over. if you run out of money. the most recent issue of their online magazine has some call to raise funds. there is a question whether they are having financial difficulty.
raising money through private is something where they are employing a lot of tactics. that is definitely a source of active investigation there is question as to how effective the isis online money raising has been lately. at the same time, they are very well-funded and without directly targeting oil and logistics which we have begun to do, it d theme hard to de-fun because they are sitting on huge and active oilfields. host: nelson is online for independent in miami, florida. morning, i would technology, do
you know who is selling the weapons to isis? wars are made of two things, funding and military who sold to them. have you reach that place where you can find that out? host: the center for conflict armament research center -- is one. a organization that is run out of scott -- scotland yard that is used to track arms of the floor around the world. things coming out of eastern europe are difficult to track. of hoarseness in terms of weapons moving in and out. we know a lot of the stuff was left behind by the united states for the iraqi security forces. there is some questions as to whether or not they are beginning to run out of equipment. efforts to write
down serial numbers of different arms and see with a show on the battlefield, you are basically asking a very small handful of people to do an incredibly difficult forensic intelligence job that is very dangerous. this is something we could absolutely wrap up with better funding. it is a huge problem. the previous caller question about suicide belt and how to -- those -- how to fort thwart those. one of the interesting things i run about the last couple of weeks was a new system developed by the joint improvised explosive threat agency. using a combination of infrared and radiation scanning, it can actually see a suicide belt as far away as 100 meters. we talk about how we will have an effect on a situation by mass surveillance for limited
-- or limited surveillance or airstrikes, we are leaving aside the fact that we are creating everyday technology that keeps us safer in a way that does not make headlines. host: is that something that works through buildings? does it necessarily have to be eye to eye?i -- guest: there is aching ability that is emerging -- there is a capability that is emerging that they could implement. you can actually see the different materials. with enough funding, this becomes something like a game changer. every day, researchers around the world are creating things that could make us safer but we don't hear about them. if you are worried about this stuff, there is a lot of reason to be helpful. host: question from twitter.
the group of anonymous has pledged to interfere with isis' ability to communicate. can they break communication? guest: anonymous is an online collective of individuals that are unified around a broad agenda against what they see as corporate abuses and also asinst what they see overreaching government surveillance. , andare all over the world they have various levels of expertise. right now, their efforts against isis have been limited primarily sitesrming isis related with traffic to knock those sites off-line and limiting their ability to disseminate propaganda. there is also evidence they were able to release private and personal information related to some people that are affiliated
with isis. that is something called doxing. it is a volunteer army. they are going to be somewhat limited, but there is some controversy as to whether or not this is the sort of thing we should be encouraging. operate -- it's an enormous collective of different people. that yelp -- the legality of some of the activities of some people associated with the group is questionable depending on where you are talking about. broadly different people that otherwise have nothing in common are working together to solve a very complex problem that is isis. it is rare that you would see iran, russia, anonymous, the u.s., all responding to a single problem.
one of the great assets for alexandria campus is the location inside the capitol beltway and the proximity to washington dc. because of that location we have had the good fortune to be the host for a number of dignitaries state, federal, and international who have held forums to talk about matters of interest to the general public. today's activities and the townhall is one such event. in order to move us to that particular.the president of northern virginia community college who will introduce our speaker and outline the program. >> thank you, sir. >> good afternoon.
honored to have a special guest a very distinguished public service career and prior to becoming our 76 secretary of treasury as chief of staff for the white house, director of omb and even as higher education with new york university. your here among friends and we are excited to have you and is here today to talk with our students about proposed changes in our students often have opinions and questions come as you will find out. excited to share thoughts and ask questions. thank you for being in northern virginia community college. >> well, thanks. >> thank you very much. thanks to all of you for being here today. let me start to explain why i am here over the last few
this could be an opportunity to start a conversation in the country about what we should put on our currency if we want to reflect on an important topic. the topic that we chose was democracy. now, it happens that when this next bill is unveiled formally in the year 2020. that is the 100th anniversary of women's suffrage, getting the right to vote. as we looked at this and ii was briefed on this probably two or three years ago for the 1st time i learned it was 100 years ago that we had a woman,, over 100 years ago, last time we had a woman on our currency was washington on the other side of george washington. and the two things that we decided as we went through this redesign was in addition to security which will always come 1st we
want this new family of bills to represent the idea of democracy and putting the image of a woman ona woman on our currency for the 1st time in over 100 years to reflect on the contribution that women have made to building our democracy and the history of our country. and there has been a lot of discussion. only announce this undertaking website and social media responses of one kind or another range from handwritten letters and everything in between. i am hoping i can use the next period of time for me to hear from you to get your ideas about what it is that is important in terms of the images, themes and if you
have ideas in terms of what line you would like to see on our currency i would like to get your ideas on that as well. this is an exciting project. our moneyproject. our money is more than just something we do business with. our money is actually the back part of the global economy. when you go to institutions what they most recognize is the us dollar. and it is a reflection of who we are which is why it is so important that we get this right, listen and think hard and we have been in between everything else we have been doing over the past two years working hard on this over the last six months unhappy to answer
questions if you have them. show of hands. >> don't be shy. >> i think economics and tell my students before you do anything collect the data. the decision. >> well, there is a committee it works a lot of issues. i will give the exact components. it has to do with how much it is used, how often it is counterfeited, how difficult the design is or features on
the bill are: that is the trigger event on the next bill to be redesigned. over time we redesign all bills. it is not necessarily the bill that was the oldest to be designed because if you look at the hundred dollar bill or $20 bill they have more security features. it is a complicated set of factors that are examined, and it is examined by technical experts who spend their entire careers working on making sure currency is safe and secure. >> the redesign. over and above the cost of the redesign how much money will it cost to change? >> i am not sure that i can
break out what the cost of the changes because anytime you put a new piece of currency and circulation the whole system has to be built up for that purpose. the most expensive part of producing our currency is putting the security features on. without aa doubt the most expensive part will be the r&d and the production of security features that range from things you can see the things that you cannot see. you can feel the printing, the intaglio printing. that was enough to make it hard to counterfeit. we now have things in the paper on the surface, some of them that have a high tech components of them. and that is where the real expenses. the actual images and engraving that is not going to add materially to the cost.
the security features are quite expensive, we need to do that. increasingly incorporating security features in the place where currency is something that people can just count on being very difficult to counterfeit. >> if we are talking about the $10 bill does it mean removing alexander hamilton from it are putting some other feature on the other side? >> we have not said exactly what the final design will be. from the momentfrom the moment we made the announcement that we were undertaking this project, we will continue to honor alexander hamilton some something that has been important from the beginning of the project is that the man with the single largest contribution, building our economic system and in many ways our system of government will continue to be honored and currency.
the idea of having the image of a woman on our currency is something that is more than just a kind of passing interest. it has to do with recognizing that women have played a part in building this country hopefully that will come out of this review giving us the ability to tell more stories. and as i say will start with the $10 bill and then there will be additional things to come on other denominations as they come out.
i would say that this is an opportunity here about what kinds of images people in this room think would tell the story of democracy, and who will work on the best way to incorporate that on the front end other side of the bill. >> why do you know that i use coin? >> i feel like durability, and lasts longer than paper. >> we have dollar coins in circulation, and they have turned out not to be as popular with people as paper currency. so the attempts to reuse more coins is something that over time probably will catch on but has not caught on yet.
the thing that i found interesting as we have gone through the analysis behind how much currency we need in an economy that is increasingly relying on online purchases and swiping cards, the interesting thing i learned and i think is why this is not just a decision for today would probably a long-term decision, even though the amount of transactions being done without currency has grown rapidly over the economy is growing more rapidly, and the amount of currency in circulation is growing even though there are other ways that people are transacting business. there is more money in circulation now with the advent of online purchasing and the extensive use of credit cards and debit cards
, and it means that paper currency will be with us for a long time. theythey kinds of issues that we are grappling with as we talk about designing currency, i think, are going to be, you know, still something that we see on our currency ten, 20, 30 years from now. so it is why it is so important to us as we make a decision to here ideas that come from the broad public and people like you. >> i have more general questions. what do you think is the most important issue facing our global monetary system today? >> i think that the, if you look at the global economy,
what their global economy needs more of his demand, it needs more total activity. and in the aftermath of the recession we have used an awful lot of policy levers in the united states, fiscal policy, monitor policy, rewritten our financial regulatory laws, that structural reform, and the united states is not outperforming other economies. what i tell counterparts around the world is you need to use all of the leverage. you cannot rely extensively on anyone. that is the challenge that i see kind of singularly. there is an awful lot. >> i like the idea of using the $10 bill to express the idea of democracy.
alexander hamilton, pretty much incompatible. he was opposed to democracy. what about the $10 bill now? what about putting the image on one side and highlighting the fact that they were there as well so that you could have them in the forefront? the continental congress of the declaration of independence, thomas jefferson, equality on one side and writes on the other? >> we are looking, a lot of suggestions that relate to suffrage. and you have certainly picked off some of the individuals who played a key role in that. thomas jefferson is already on the $2 bill, so he has
his own piece of currency. but those are interesting ideas. thank you. >> a question about bit coin. it seemed like for a while people were getting excited about digital currency. maybe in the future, having a more globalized type of currency. >> if you look at the history of payment systems they usually come about through changes that seem disruptive or a littlea little bit kind of off of the beaten path at the beginning. you know, even money was introduced at a time when people were using things of
value and money was an abstract representation. so we must be open-minded about what innovation looks like because no 1100 years ago could have imagined a system that would be independent upon things like electronic transfers and credit cards and debit cards as we have today. i am not sure what the innovations that will drive the transaction flows in the future. one of the things about bit coin, different than a lot of other payment systems we have is it is designed to be anonymous. things that are designed to be anonymous have attributes that are not dissimilar from cash economies. hard to follow the flow. sometimes it is easier to use cash for illicit purposes and things that would go through a formal
banking system. so the treasury as we look at things like bit coin, how to overlay all of the things that we do to make sure that if there are things that are illegal for illicit going on with cash or currency we have the ability to look into the system in the same way. it is challenging because it is a different medium, but those are the kinds of questions. the preferred payments into the future to be worked out through the marketplace of individual choice which has made a lot of decisions over the last hundred years that have produced a range of ways to ease commerce, make it both more convenient and cheaper to do business, and i suspect if we were meeting here 20 years from today there would be things that
not even bit coin is looking at.at. someone over there had a hand up a minute ago. >> i would like to see a woman representing this country. >> that is an interesting idea. there is always a challenge between very recognizable images that tell stories that are well known and those symbolic a larger groups. it is an interesting suggestion. thank you. >> overall employment. i want to know how they are deciding.
is it nationwide? >> the leadtime for designing currency as long. we will be making a decision in the coming weeks on the basic shape of the design. i am looking forward to announcing at some point quite soon where we end up in terms of the design of the currency. there has been a long process to turn that into something coming off of the printing presses and going into circulation command you need -- >> a form that can be mass-produced and that is why there is a bit of a gap between the initial decision, the unveiling of the piece of currency itself and the mass production of it. the schedule is one for
those of us who are impatient and make decisions and implement them you have to get accustomed, but to go back to the 1st purpose of the redesign it makes a lot of sense because the piece that takes the most time is designing and producing this features. >> there has been a recent movement lately to abolish the use of opinion circulation and there was a peace talking about that same issue. there is nothing that you can make it out of. happening during your tender -- tenure. >> the value of the penny has gotten smaller and
smaller. the question of when and how is something we are looking at. it has been under review for quite a long time. so it is a question that we do have to ask because you have to make sure that the currency reflects with the needs of commerce are in the value of the currency. >> have you thought about putting multiple women on the -- >> we have thought about it, and one of the options is,
to carry images on our currency which is why using the bill to tell more of the story, which i think is the way even before you get to the question of having multiple bills, to reflect a depth and breadth of our history and in this case who has contributed to democracy. but we haven't made a final decision but is certainly a possibility. yes, in the back. >> i think if we have to did -- you would consider her devoting
all of her life to the college. [inaudible] >> thank you. >> two parts. is there a shortlist being considered on the 10-dollar bill and is the first female secretary of treasure being considered on that list? >> you know, there are a lot of names that have come up both within our internal review and public comment. i will say there is a lot of the same names keep getting recommended many many times in different places so while it's not a shortlist there are some
names that it got more attention than others. and we are still looking at a range of options. there are questions about what part of our history you want to tell and it's why is i say we are looking at ways to have a larger view of how many stories we can put on our currency to capture more of the richness of our history. so the answer to your question is there are still quite a few names of possible candidates. >> are you seriously considering jack kennedy or harriet tubman?
>> i'm not going to comment on specific people we are considering. again i can say that there have been a lot of people who have spoken in particular harriet tubman as a potential person to be on our currency. as she's certainly not the only one we have heard a lot of support for. the idea from my perspective it should be a compelling story where through the life work of the person, it shows an independent contribution to building the ideal and reality of democracy in our country and there are quite of few names that meet that definition. the fact that it's been over 100 years since a woman has been on our currency doesn't mean there
aren't a lot of candidates. >> i'm sure abigail adams may have come up many times but my real question is -- can they be alive or do they have to have passed? >> that is actually one restriction. underlie you can't put the image of a living person on our currency so the statutory framework that we work in is the dollar bill is set. congress said it's going to stay the way it is and you can't put the image of a living person on our currency. when we said that the theme of democracy was going to be there broad criteria for inclusion and when we said we were going to use the image of a woman, that kind of defined the universe and
that isn't limited to just one or two people. that is why we have gone through this process. the question of what period of our history is something that we have heard a lot of comments on. some people have said we should go back to the founding era. they said you should come to a more modern period to reflect the ongoing contribution in history and obviously in between depending on how you measure it. >> people ask questions about the changes that people have wanted in currency for a long time like getting rid of the penny or going to a higher point
of nominations and things like that. oftentimes it's easier in society at -- societal level to get young people to make change. when you're dealing with currency is there a behavior you would like to see younger people take on that stubborn older people are less inclined to do. >> one of the things, this is isn't exactly currency but i think to use a phrase cyber hygiene is something that we need to just be much better at. because of the amount of business we do, both commercial business but also personal business through the internet puts a burden on each of us to take precautions to make sure that we are being careful with
how we log on, whether we use the safety precautions that actually can do a lot to reduce the risk of somebody either hacking into or stealing your information. and, given the nature of technology, those issues have become more are found, not less profound overtime because of proliferation in cyberspace will only grow. on the currency issue, a few minutes ago ago i addressed the bitcoin question which is kind of where currency and cyberspace have met and that does present challenges in terms of just making sure that there is appropriate ability to track
transactions that might not be appropriate or legal, but you now on a personal level, i think all of us value our privacy and we certainly don't want anybody getting access to our financial accounts. we each have the responsibility to take the precautions we can and i suspect young people are probably better at that than others, but the rest of us are going to have to catch up. >> someone who has not asked. >> on the role of counterfeiting in our current climate around the world that's obviously a national issue. if you could talk about the role
that in terms of what's going on right now the threats from foreign governments or terrorist organizations? >> counterfeiting is one kind of the threat of funding either illicit activity or a terrorist organization but legal cash can be used for that purpose as well. that's why our ability, if you try to take a lot of cash out of the bank it sends up an alert and there's a record of that and it's appropriately noted by the bank and bank regulators. you know, the question about being able to see transactions through electronic means raises the same kind of issue. you don't want to see money transferred to terrorist organizations anonymously. on the other hand you don't want
to have your privacy violated in the process. i think our bank secrecy act protections would strike that balance in the current system where i don't think any of us feel particularly violated with the idea that you take it to the bank to bank notices. one of the risks in the modern world and i talked to my directional colleagues about this, there's a growing recognition tens of thousands or millions of dollars to acquire the means to do a fair amount of harm. weapons are not a bad expensive on the international market, so one of the things that i talked talk to my colleagues about around the world is how do you get visibility into those kinds of transactions and it's not easy.
it's not easy but is not just a question of counterfeiting. it's why we need to have appropriate levels of information exchanged by national authorities and appropriate visibility into financial transactions. but when the amount of money are relatively small to acquire a weapon, you just make the ability to stop the flow of money that much harder. we have a whole unit of treasury department that works on terrorism and threat financing and it's probably the most sophisticated unit of that kind in the world. and the events over the last couple of weeks just underscore how important it is to get even better at it. in the back.
>> sacajawea was on a coin. >> is that the cecily climbed? >> paper currency. susan b. anthony is on the dollar coin but on paper money the last image was martha washington in the 19th century. in the back over there. >> i have dealt with a lot of counterfeit money in retail and i know with a 100-dollar bills there have been marks that you can look at to basically tell if it's counterfeit but on the 10-dollar bill there is on the mark so is that going to be the
same markets? >> i can't tell you what the security features will be but you just put your finger on why the 10-dollar bill is next. has less security features in the 10,000 -- 10-dollar bill. and in terms of the number of transactions and the number of bills and the number of exposures to counterfeiting their next bill we need to work on is the 10-dollar bill. the 100-dollar bill is our highest technology bill and it has the whole different feel to it. i don't feel that many of them myself. i have more 10-dollar bills. >> you are in good company. >> i'm just curious on where does most of the counterfeit
currency come from? is it mostly small individual players or are there large organization counterfeiting on a large-scale? >> i'm not going to get too specific about where the counterfeiting goes on but it's not just domestic, it's international and some of it is pretty sophisticated. i think if you are doing it on a small scale it would be harder to have it look authentic. there are some pretty sophisticated actors out there which is why we keep trying to stay a step ahead of them. we put features on that they may not understand. we put features on that are hard to produce. someone asked about the cost. it's more expensive and if you just had a printing press that was putting ink of paper is a lot cheaper than putting in no
holograms and ribbons and threads and electronic things so if you think of the technology that it takes to make our money safe as an r&d project that's closer to write than if you think about a letterpress. modern money is really a combination of renting and technology and there are very sophisticated counterfeiters around the world. you have to try to stay a step ahead of them. the gentleman in the middle, right over there. >> you speak of democracy but wouldn't it be better to put in the public array of options? >> we have actually opened this process to the public more than
any decision of currency ever has been open before. you have to have some parameters for discussion in order to get information that you can make a decision with. some of the suggestions we have gotten would suggest that it covers most american history in a lot of people's minds. to me, what democracy means is the right we all have to have a voice in the right we all have to participate in government and the right we all have to live in a country where our laws are made by elected officials and that covers a pretty broad span of american history. there are a lot of people and there are a lot of symbols. in addition to images of people are our currency has traditionally reflected symbols as well so freedom was the theme for the last round of currency.
images like the liberty bell were represented on our currency. it's not just about the face of one person. it's about images, scenes, documents, physical things, symbols and we have gotten literally thousands, over 1.5 million responses and numbers of suggestions that cover all of the possible images and names that one could think of. ultimately you have to make a decision for each piece of currency, for what image, what person, what scene, what group of people and that's the process we are completing over these next coming weeks. >> one last plug.
>> what's the best way for us to -- before the weeks are over? >> you can write us at the new 10 at treasury.gov and that is one way. there is also a web site where you can logon and social media. we have gotten ideas through all of the media and every night it take, notebook that has a section in it where -- i wouldn't say everything. i couldn't read over 1 million individual entries but by the representation that reflects everything that we have been getting in, so this is an open process and we are looking forward to hearing from you and i look forward to having this conversation continue until we make a decision and even after.
thank you very much. [applause] i want to thank our nova students and faculty for taking your time to give your contributions and thoughts and ideas in particular they want to thank our secretary of treasury for giving your time to be here at northern virginia committed to college. we are proud that you are today and thank you for being with us. if you look give him a chance to exit when we will exit afterwards. thank you secretary again.
>> and i'll tell you, if people read that, you would know everything the general public needs to know about climate. i would know more than 95% of the people. if that's nod good enough the world society put out a 30-page written at 12th grade level. so there's -- it's not like oh, my god. i have to be michael man. no. there's literally the probably the amount of time that, you know, you would sort of spend on two commutes you would read enough to have a working knowledge of climate.
that's all. i'm not trying to like troll people to get master's degrees in science or something like that. what can you do? our kind of choices were you can have a really nice house that was 6 or 7 miles away from the university or drive away or we could have a smaller older house within walking to my office, and that's what we chose, we've upgraded the windows, we found a couple of pieces which was the pennsylvania rural style of architecture. there was no insilation.
they seem to be grumpy about that. we may not do that, you know. but there are things you can do when you buy your next car, you know, think about the gas mileage. i'm not saying that you have to have a bicycle and get rid of whatever. if you're working on a farm, you probably need a pickup. that's fair. if all you're doing is taking your kids to the hockey game and soccer game and you're in jacksonville, florida where it never snows, maybe you don't need a pickup or suv. so just, you know, this is not live in a cave and live a haired
shirt. we as americans, we all -- we waste about a third of our energy, a third of our food, a third of our water, roughly. so, you know, i just try to think of, okay, what little things can i do that sort of knock that down. am i perfect? no way, i would be the last person to say i'm perfect but we work on that. it's kind of for my science friends. we don't do a good job of monitoring the earth to understand in a consistent sort of time system's way. the m is monitoring. that's just supporting nasa and noa and the a is advocacy. and the way i look at this is whenever you, and i use the
broad, you, have an opportunity to engage with elected officials really at any level from federal on down, i mean, my question is sir or ma'am, what are you doing to stabilize the climate. so that's not do you support revenue neutral carbon tax. it's like dating 1 -- 101. even if you don't get a thoughtful answer, what you get is some where in that back of that politician's brain, a constituent cared enough to ask about this. congress probably won't lead on this issue but they will follow the voters because they want to get reelected. right now, i hate to say it, right now this issue doesn't really register. there's a few people really
committed. there's a few people think it's a b, you know what. it's like washing the dish pan washed around. it's really thin. it really dpeendz. -- friends. >> we need to have enough advocacy so that they feel he or she feels like i'm not going to get fired by the voters if i stick my hand up and say, you know, we need to look at this thing. in 2010 he said, you know, he can quote the bible, he said, you know, maybe these guys aren't crazy. maybe they're not crazy, maybe we should at least figure out what it is they're saying and
basically the voters, you know, gave them a blindfold and a cigarette and they shot him in the next primary. now he's a climate hero that's out of a job or at least out of congress. all the other people on the senate -- on the right, on the republican said, i don't want to be bob, that wasn't any fun. we are the ones who are ultimately provide that advocacy. we know this is super super important in the long-term. but it's super super super , sut to give congress enough cover so that they can take those oaths and not get fired by the lek --
electorate. yes, ma'am. >> hi, i was just wondering what governmental policy you would like to see from the united states. [laughter] >> well, the first thing to know is i probably wouldn't get elected as dogcatcher, so it's not going to matter what that is. i would at least explore and i don't do -- i don't do the detail policy so i probably should not even say anything, but i will. you know, i would explore some of the ideas that places or organizations like citizens climate lobby has, the so-called neutral carbon tax and if you really construct it so that it's revenue neutral, can you convince folks that think already that our government is too big or certainly should not
be bigger, that that money, in fact, goes back to people who need help with energy but at the same time probably remove sub said -- subsidies for fossil fuels and coal and you price, you know, have some sort of fair price for the kind of damage that the carbon pollution is doing. we are sort of being dumping the trash. you see the movies and people dumping the trash out their doorstep. that's kind of what we've been doing. so we haven't been picking up the trash for 150 years. a little factoid every man, wam and child in america generates about 120 pounds of carbon
dioxide pollution. that's the kind of number. that's a lot. now, we can't see or touch it, we don't really see it that way but it's a lot and -- and it does -- it has been harming the ecosystems and, again, why do i care about ecosystems because somebody brought it up. if the bad goes away, it's bad, if it's people that go away, that's not quite as bad unless you are a person. that's real harm to the things that sustain us, fresh water, the ability to have productive agricultural, the ability to have our cities and centers of commerces in places that we know
aren't going to get flooded out by the ocean. all those things. i'm actually writing something right now. hopefully it'll be published next week, you know, we are paying a carbon tax today. those $14.6 million in levies, $60 billion for sandy, that's kind of a carbon tax that we are paying today. the question is are we going to pay a carbon tax that we vote on or are we just going to keep paying carbon taxes after bad things happen and it's after the fact and we know we are going to do it. we are not going to talk away from new york city, we are not going to walk away from los angeles or napa, california, new orleans or miami. we are going to pay, we are going to pay. we can either decide how we are going to pay or we can just be told how to pay after the fact, but i would start with that. it may not be the best policy
and but i would start the discussion with that. >> sir, my question is to reducing fossil fuel consumption. my question is do we have a viable alternative because other than using fossil fuel we use it for plastics and so many other things. is there a way we can have a viable alternative? >> let me see, do i have the slide in this deck -- it'll be in the next one. what, i think, we look at is a couple of things. a lot of the renewables are starting to become competitive just on price. now, again, how much of that is
susidies and it's hard to disentangle all of that. by themselves are being closed. i would -- this gets back to your question, ma'am, if i were king for a day, which i will never be, but if you look at how the u.s. over the last 50 or 60 years and we all have a problem and we all say we have a problem, we tend to invest our research and development pretty heavily to try to fix that problem. so there is a graph, i'm afraid i don't have it in this deck, but maintained by the american association advancement of science, it's the nondefense research and development, i know it sounds geeky and all that kind of stuff, what it is, it's kind of color coded by what it is. you can see to the year or day when president kennedy said we are going to go to the moon and you watch the u.s. investment go like this and then go like this. you can see in 1973 oil shock
that believe it or not we've got -- we put a lot more money into investing in energy but then it all kind of went away. so we have a lot of rhetoric in the president's second term. we have the congress who hasn't bought into this by and large, when you look at the money, when you look at the budgets on research and development we really haven't done much. we've done a little but nothing that sort of aligns to what this country has done in the past when we say we've got a problem and we need to fix something. and i think that's going to be another way to drive the costs down and we've seen this time and time again. you know, if you invest heavily by in large, you can drive these costs down and you can get probably solutions that we're not even thinking of. the military has done this time and time again. we all know the stories. gps, the internet. all that kind of stuff.
but we are not going to do that at 2 or 300 million a year. we're just not going to get there. go ahead. time for the bonus rounds here. >> so i found it interesting that we were talking about how climate change creates conflicts globally, when it is a global fen only no, -- phenomena, an ie that affects everyone on earth, i think it's kind of hard for me to say, but i'm thinking there should be a synergistic and we get everybody reduced by a little bit and those are all great, i feel like this is such a global crisis that we need to be talking to other countries as well. so what kind of policies should we be or stands should we be
taking. i know we have global conferences in change but those are rather ineffective. i don't know if you have any other suggestions or how can rereally unit countries to fight to fight this issue? >> yeah, i mean, you're absolutely right. when you oh take a look at where the carbon pollution is coming from, in the u.s. is now number two, we are not even the single largest country. now per capita we are the single largest country, overall china has surpassed us. this is something, you know, we talked about evidence, this is a belief, i don't have much evidence but america can lead the world in many, many things, and the world in large cases does still look to american leadership, so yeah, i was talking about, you know, whether we invest tall way down to small-scale actions and getting out and supporting congress, we look like we have a unified
position for the outside world. they're serious now. that, i think, then puts our negotiators and our senior politicians in a much, much stronger and we are serious. if you want to set, you know, big hairy gold, how, let's say year 2110, power an average of what a european has today but how do you go figure out and it's not building of noncarbon is how you store the energy.
i think it start at home can credibility because otherwise it's talk, talk, but you guys aren't doing anything. but once you have that, i mean, i would use american leadership and maybe that sounds corny or not but i do believe that america can still lead but we have to have credibility to do that and tell everybody else that they should be fixing this problem. how are we doing? okay. any -- one last question? any last questions? sir. >> i appreciated nathan fox's question because that brings us back that i wanted to ask a couple of minutes ago. that is it seems to me that climate change is a scientific problem, political problem, economic problem, to me it's also a moral problem. it's a moral problem for the
following reason, if boston or miami or houston faced rising sea level, we have the technology and the money to respond, just as my adopted country of the netherlands but i was not fearing for my life. a number of countries around the world that are going to be severely threatened, i think, by rising sea levels have neither the technology, nor the money to resist, bangladesh, so one piece i would appreciate your comment on would be the moral dimension of climate change. >> yeah, it's a wonderful comment there and the reason i put this slide up is i think we've seen and i believe with good news very intentionally is -- is we have seen in the last couple of years more and more
different groups from their perspective including the moral perspective. so i have something -- i work with this group called catholic climate covenant. a layperson but superguy that runs this. pope had comeout. i was in a panel with a couple of bishops talking about that. i would do the science security thing. this is what the pope means here. it's a moral issue if you're a follower of catholic teachings. same thick -- thing with evangelicals. i'm doing a panel with some jewish organizations in philadelphia here in about two months. so what -- what i've seen and that moral component or religious component. let's say that's at 12:00 o'clock, you could sort of go around.
the insurance guys for insurance reasons are doing it, another moral component. it's kind of a cookie symbol i use by the divestment of fossil fuels from universities, you know, harvard did that. the president of harvard, in my personal opinion was condecending. they're going to keep pushing on that. i talk about the security aspect fine, you don't believe all my dat e. go watch chasing ice. it's pretty impressive. i do have my polar bear, we have to know the price, we've got to know this. i think it's very useful to have
all of these coming, talking to their stakeholders with credibility but we're all coming to the same answer of we have to deal with this, short-term we are going to have to adapt, long-term we have to get ourselves off carbon because otherwise the consequences, i mean, i think i was saying at lunch, the earth will be fine by the ecosystems may not make it, but we will make it. okay. -- is that it? all right. thank you very much. i appreciate it. thank you. [applause] >> french president françois hollande visits the u.s. today. he'll meet with president obama at the white house to discuss the recent terrorist attacks and the strategy for combating isis. the two are expected to hold a joint news conference after their meeting in the oval. you can watch it live.
in the afternoon we will have comments republican govern chris christie, that's part of our road to the white house coverage and we'll be live at 12:30 eastern here on c-span2. >> you'll find the candidates, speeches and debates and most importantly your questions. we will take the coverage into classrooms across the country with student cam contest. follow c-span student cam contest and road to the the white house coverage 2016 on tv, radio and online at c-span.org. ♪
>> last week the health and human services department hosted a forum on innovation within the pharmaceutical industry. [applause] >> good morning, everyone, welcome to this very important department of health and human services and pharmaceutical forum. today we really is a unique and important opportunity for shake holders to discuss the many opportunities as well as challenges that we face with respect to prescription drugs and stakeholders we all do, in fact, have stake in this discussion, as patients today or the caregivers of patients, we know that we want today and
tomorrow effective treatments for our loved ones. we know that we want a dynamic and innovative biopharmaceutical sector to create jobs, and as taxpayers as well as people covered by health insurance, we know we want the costs to be affordable and sustainable. all of these perspectives and more will be represented today. before we get started, i have just a few housekeeping items to cover. first of all, we do expect a full room today with every seat taken up by a human being, not by a briefcase or backpack, so, please, everybody move to the center of the room if you can. fill in each seats and make rooms for otherwise would be left stand standing. thank you for doing that. next, even though the commercials at southwest
airlines they tell you you are free to move about the country, you're unfortunately not free to move around this building today. please if you need the restrooms or need to get to the cafeteria and ask for an escort from one of the hhs personnel that have volunteered to provide companionship as need being. as a reminder, mute telephones, recordingson. now i have the great pleasure of welcoming our first speaker. the the the honorable sylvia burwell. welcome. [applause]
>> thank you for facilitating our discussion. i also want to thank everyone for joining us today. the consumers, health care professionals, manufacturers, government representatives that are joined us today. it's a very diverse group of stakeholders and each crucial of what a complex conversation we are going to have today. as we look at prescription drugs, we can see both possibilityies and challenges. we have opportunity to find new medicines, therapies and tours. we have the chance to help prevent many more. we can contribute to innovation in our economy, at the same time, when medical technology advances we must con front certain issues of access,
quality and affordability, hepatitis c, for example, affects around 3 million people in the u.s. and claims more lives than aids. new drugs have revolutionized treatments and improved our cure rates. treatments, however, can cost more than a $100,000 and that's an issue for both patients in the organizations and governments that serve them. since more than three out of four infected adults are baby boomers, it has cost one of the main cost drivers of medicaid program. recognizing that we need both access and affordability, we recently issued a notice to all 50 states medicaid directors to remind them of their obligation to cover these treatments based on medical evidence as well as the tools they have to manage. we also sent letters to drug manufacturers requesting information on pricing
arrangements and inside on how we can encourage the same ability in terms of pricing and increasing access to these drugs. new medical breakthroughs can change lives but we must make sure they're available to those who need them. for the sake of patients, healthcare system and economy we must simultaneously support innovation, access and affordability. today we know that too many americans struggle to avoid the medications they need. a recent survey showed that almost a quarter of americans have skipped filling a prescription over the last year. cost for medicines are up and that's even for pronounced in specialty drugs. in fact, about 65% of spending on new drugs over the last two years was for specialty drugs. also recently seen price increasing for drugs that are not new.
nationwide spending on specialty drugs was 87 billion and that's roughly 25% of the total drug spending, that's also a little more than 3% of national health spending. but it's been estimated that it could quadruple by 2020 reaching about $400 billion, that would be more than 90% of national health spending. this issue has ram -- ramifications. when patients can better manage their chronic conditions like diabetes and high blood pressure we can see admission in hospital admissions and we can see the benefit, the drug industry is a
dynamic engine for our economy and helps create jobs. i hear concerns about rising drug costs as i travel across the countryiv from state officials, ceos, providers and, of course, patients and families, many wonder if it's possible to have innovation and affordability. it's a complex problem and we know that the solution won't be simple but it is a problem that we can solve. and i know that none of us accept that we must choose between innovation and a healthcare system that can provide access to affordable medicines that can heal us and improve our lives. many of you have heard me say that i believe we have a historic opportunity to transform our healthcare system to one that delivers better care, smarter spending and healthier people. i believe that the same
principles cane guide us here d same fundamental approaches can be put to work on this set of issues. in the last five years the goals of access, affordability and quality have guided our efforts to reduce the number of unsured in america and we've made strides. estimated 17.6 million fewer americans are uninsured. with preventive care at no extra cost, we raised the quality of coverage for everyone. we are continuing to transform our healthcare system into one that delivers quality over quantity and puts the patient at the center of their care. we excerpted and implemented successful efforts for new payment models, we are changing incentives, improving how health care is delivered and using
information in better ways. througg h fda we are looking to find better ways to expedite and improve our review process. we are working with many of you in this room to find ways to deliver better care, spend healthcare dollars more wisely and power and engage consumers and patients as they take control of their health. as we work to strike the balance between innovation and keeping drugs accessible and affordable, we must lead the principles of putting the consumer at the center guide our thinking and i hope that principle will guide the thinking on today's discussion. the title of today's forum actually tells an ambitious story how our nation can lead in pharmaceutical innovation and deliver access to high-quality
affordable health care. our first panel how we foster innovation while providing smarter spending. next, we will be discussing access and conferreddability. -- and affordability. how can we make sure that patients have access to the drugs that they need? next we will talk about what's working in best practices. we want to hear about new value and outcome purchase strategies and best approaches and we want to think about ways that that can be implemented in both medicaid and medicare. we want to hear your thoughts on how to increase access to information and improve transparency and promote strategy that is incorporate value and outcome based models.
we believe that patients manufacturers provideers insurers all share a common goal. we can find common ground. were here today to listen and to learn and we are happy to have each of your voices in this discussion, with all of us engaged in this conversation, we can come together to find a solution that meets the needs of our wide and diverse community. we believe in a bright future and the possibilities to improve lives are endless, we believe that though this problem is complex, we know that action will be needed from all of us here today, and we know that we
can find solutions. we won't agree on everything but if we come together, we are going to move forward. together we can find a path that doesn't ask us to choose between innovation and affordability because our citizens deserve both of those. i look forward to this conversation and thank you all so much for joining us today. [applause] >> thank you so much secretary burwell and thank you for laying out the path that we will be exploring today as we discuss the benefits to patients, innovation and the issues around affordability,ef specialty drug, of courses and patients and consumers at the center of all of this. the program today is being web cast and the question and answer period that follows the presentations also will be web cast. after each panel we will have an
opportunity indeed for that question and answer session, we ask that you come to the microphone here in the center aisle to ask your question and even though we all have tendency to either ask questions or give short speeches today we would like you to, in effect, ask your questions in a succinct way. i will introduce panels more briefly, their full biographies in the website. drivers of costs and impact on those costs on the various stakeholders and the need to find a balance between innovation and smarter spending initiatives. to set that very important table
we are joined by two leading voices in this entire area. first we will hear from doug long. after doug speaks we will hear from mark mcclellam. mark is all of you will know has a long list of credentials but pertinence is the fact that he served as administrator among many other responsibilities during tenure. he also was former commissioner of the food and drug administration. doug is going to start with a look at the current environment and what we might expect in the
coming years from a comps perspective. so doug, welcome. [applause] >> thank you, susan. it's a pleasure and honor to be here. it's been a long here. i think it's number 85 that took me to ten different countries including belgium and france last month. what i want to do is level-set where we are today and we are going to be talking about the balance between innovation and smarter spending. first of all, since 2014, the u.s. market has been back to double-digit pharmaceutical growth. what i want to say is that we do this on invoice price and invoice price that we do not net out the rebates. so we are back to double-digit
growth. i've been looking at this market since 1989 and i would say that there have been three cycles that we have been in. we had double-digit growth from late 90's to 2003, the blockbuster era when lipitor came to the market and all of those. some people said in 1999 when we entered the next millennium that we would see pharmaceutical growth forever. that didn't happened because the generic wave happened. it started when prozac went off that. it's been a tremendous impact in terms of savings in the market. now, the cycle we are in now started off as the biological cycle and now i call it the specialty cycle and specially is 35% of the spending, some people
predict it'll be 50% of the spending in year 2020. when you look at this double-digit growth, in 2012 the market actually went down, that was the year lipitor went off patent and so forth. $35 billion of pharmaceutical value went generic. the next year was a modest year of 3.5 increase andle then we hd 2014. in 2014 the story was hepatitis c. if you recall it was introduced to the market in december of 2013 and one year's time it became the largest specialty and general product overall. and the story of hepatitis c is a, it's at cure and b it's the number of people that you're
able to treat now and a number of people treated today is six times more than it was five years ago. so we had the double-digit growth a and if you looked at lt year's 12.5% growth. you net -- if you looked at price contribution to this growth, this was 3.1 points of that 12 and a half percent. it is coming from utilize -- utilization, traditional pharmaceutical products products are growing at 8% rate. the net effect is 13%. we expect this trend to continue and a little later on tell you what particular areas that you should be watching out for. so i remember i said the generic era year 2000 to up in the day,
generics of - all the growth in the marketplace are contributing 9% of the market growth whereas in 2011 it was 40%. and we had some years in the previous decade is that that was 90% of the growth came from generics, all of this has turned around by innovation. we can't forget the contribution generics have made because of a study we make each year, recently revealed that we had saved by the availability of low-cost generic drugs. it's going to go a little higher, then we will stabilize. a summary of where wir today, we are now growing at 12.3% and we now have a marketplace that is
more than $400 billion for the first time and hepatitis c, diabetes, oncology are the primary, prescription growth is 1.2% of the year, substantial reduction from last year, the primary effect isub the hidrocon which cut thech market by 30%. and 75% of the new brand spending is on specialty. you can't look at the market here and around the world without talking about specialty. next year we expect to go off. this is what is driving spending growth. you can see hepatitis is at the
top followed by diabetes, oncology, multiple sclorosis, if you look close at the slide and i assume that you get copies of this later, you can see what the significant impacts are in each of these things and we break it down by new brands, what's growing on with protected brands, what's going on with the generics and secretary specifically looked at hepatitis c growth is because of innovation. innovation braus -- brought us first cure in 96% of the patients will be cured within eight to 12 weeks. this is revolutionary, diabetes is combination of innovation and what's going on in protected
brands, oncology has impact on a loss of exclusivity. in oncology, the difference today verses years ago it's a chronic disease than death sentence. when you look at new brand spending is the biggest impact is hepatitis c. ifin you just filed the chart yu see the impact of new brand spending in years going back to 2010 and you see that those numbers average 6.7 billion and went to $10 billion and jumped up to $25 billion with new brand spending and innovation in 2014 and through june of 15 in the last 12 months over $30 billion. you see the biggest chunk of that w is hepatitis c. and you also have orphan disease
drugs that are growing, also autoimmune and so support. when you look at the specialty market, characteristics are very different than traditional marketplace, you see the contrast from the left side of the chart andeu the right side f the chart. the first thing that you'll see on specialty is the value of innovation specialty, so the biggest reason why specialty growth is growing the way it is today is because innovation in the marketplace. andit the best example of that s the hepatitis c category. so if you file that category just fors a moment is that that category has been progressing for a long period of time. the previous generation of products came to the marketplace and they got a patient -- increase in patient population, but then all of a sudden they
came to a halt because people were waiting for the next new thing, which was the next new generation of hepatitis c products. it's no longer on the market because the newer generation, less side effects and you look at lost of exclusivity. and the role that you'll see playing be more biosimilars. generics have definitely impacted that trend through time. that trend is is lessoning. these are the top 10 categories of that spend pharmaceutical dollars on and they represent
56.5% of tall spending of what we spend on farm pharmaceutical. and just another note, just to keep in mind, is that pharmaceuticals are 10-12% of what we spend on health care. 88% we spend elsewhere. this is one of the better values. if we look at diabetes, followed by oncology, autoimmune, mental health, pain, hiv, regulators and many of these are specialty categories, those are the ones that have increases. if you look at the increase on hepatitis c, that's 144% increase from the previous 12 months and most of the other ones in the range of 20 were 30%. now, just some notes when you look at the slide, diabetes category is up because there's more diabetic patients all of the time. there's more innovation in that
category, but there will be similar lower costs alternatives coming in that category within the next two years. oncology we have to look at pd1's, pd1's, they work with the immune system to help treat the cancer. so that category will go up. autoimmune, respiratory, advair, lost exclues i have in may of this year. pain, i just want to make a point about the last one which is lipid regulators, you see here is a $13.5 billion category. it once was a 25 billion-dollar category when all the products had patent protection.
generics have saved in access of $15 billion or so in the next few years and next year that category will be some $10 billion. the challenge will be is what we now have as pcsk9 which are cholesterol drugs. cvs said that if these drugs will add $100 billion to healthcare spending in the united states. if we were spending 125 billion, we had the risk that we could spend up to $100 billion on that. that's why appropriate use is going to be very important. these are some going up and going down. that is a function of nexium losing its patent. let's look at leading categories of growth. you want to look at the far right-hand side. these are the categories that are growing the most.
viral hepatitis, this is 12 months ending september 15. i can tell you that when we looked at 12 months ending june of 15, that number was in the 9 billion-dollar range so it looks as though that we may have started to peek in terms of the explosive growth in hepatitis. you look at number seven, these are the new what we call sglt, you see a lot of advertising on those, most of these things as you see on the list are specialty products all growing more than a billion dollars and add number 11 and 12. we have 12 categories in excess of $12 billion. the challenge is the generic conversion subtract $7 billion in spending and new brand is up over $30 billion. so that's -- presents a significant challenge to the
payers including the government and t medicare and medicaid and commercial insurance. now let's move to approvals and this looks at fda approvals from 2005 to 2014, and note that 2014 we have the most approvals than we had in the previous decade. 50 of these. and of those 50, 26% -- or 26 of them were specialty drugs and that meant 52% of all the approvals were spernlty -- specialty. if you look back in the years of 2005 to '14, the last five years has been 57% of the approvals. so more approvals are coming on specialty than on traditional pharmaceutical products. another way to look at that in the late stage pipeline, phase
one and phase two and three, there's 3,622 products that have been filed and the other significance is 779 of them are orphan drugs. so rare disease drugs have been pronounced in the last years. that's 250 products and administration is 30% of who ors and when you look at 55% of injection that goes hand-in-hand with specialty drugs. but still very pronounced. so we expect thatst the next fie years will be very pronounced in terms of -- of approval of new active substances, following indications. there's a lot more to come in the pipeline and the fda has
been productive in approving these products. , now, we just published a report that looked at the global look of medicines and i'm going the share a couple with you and if you need to get a hold of it, please contact me. here is what our notion is of what we are going to look at in terms of disease treatment. and the new medications will be specially in biologics. hepatitis c, autoimmune, heart disease and orphan disease and others by 2020. cancer treatment, oncology with 225 medicines expect to be
introduced within the next five years. technology will enable changes in treatment protocols, engagement and accountability and patient provider interaction . 470 drugs will be available to treat orphan diseases. there's 7,000 rare diseases, so we only scratched the surface on this and these have been revolutionary for people who have hunting disease, cystic c. one thing i did not mention earlier is that when you look at 35% of the united states, is
that only represents 1-2% of the prescriptions. 1-2% of the prescriptions is leading to 25% of specialty spent. so here is and i lust traición of the progress that we made worldwide in terms of -- in terms of innovation. the right-hand side shows which ones are going to be biologics and which ones traditional bioligics and specially small molecules. most of the growth is on specialty side. 91% of will be targeted versus
radiation, 33% of these will have biomarkers, we are moving in the direction that you'll be able to make sure that cancer drug is going to work on the person before you give it to them and even in cancer it's 33% in 2020, rare disease cancer drugs, for very specific specific-rare-types of cancer. this will show you the treatment pattern of what we've seen and expect from 2011 to 2020. you see the growing and the blue is growing as well, so the function is we are now treating six times more hepatitis c patients in the united states from what we are doing six years ago.
now i have a couple of other thoughts, is that one of the things that we are in the era of is biosimilars. the first one was launched last month in september, actually in september is a biosimilar version. just this week as the fda accepted a biosimilar application. the marketplace in the united states has finally started. it's been well established since 2007 in europe and finally started here in the united states and where you really see the price competition in the marketplace and yo su have multiple entries into that molecule, two or three or four and that's likely to happen in the next few years, why did i show this chart, because most of the biologics that we are familiar with their patent has
expired. at the same time the small molecule generic drought start to happen, just one note, it costs 1 million to 2 million to bring molecule generic to the marketplace where it costs 100 million to 200 million. that's going to be a very different dynamic. the secretary talked about avoidable costs, this is a tuid that we did in 2012 that said that we could save $213 billion per year if we did the six things on the right-hand side. the first thing is medication nod adherence. it's still a big problem in the united states. that accounts for half of the number. delayed evidence-based treatment, followed by antibiotic misuse, mismanaged
polypharmacy, senior citizens taking five different drugs by different doctors, you take fewer if they're reconciled. of the $213 billion there's $140 billion of that money is saved in hospitals, because what happens if you take a pharmaceutical or take one inappropriately, generally those people end up in hospitals. $140 billion and we could save as many as 10 million hospitalizations a year if we did that. the next big is outpatient visit, 75 billion. 45 billion or 78 million outpatient visits and then you see down at the bottom is emergency room visits, we still have 4 million emergency room visits and that's $6 billion. now what you see in prescriptions is that in some
cases if you have less use to antibiotics that's fewer prescriptions. now going forward in spending growth, between now and 2020, and the important thing is -- and as i get older my eyes get weaker and i can't read the screen here. .. we are expecting the growth rate to slow down. we expect the compound between five and 8 percent between now and the end of the decade. it will slow down.
at list price we will be looking at a market of 560 to 590 billion dollars, 34 percent increase over 2014 and we expect spending to stay about the same. let me leave you with some closing thoughts. i go a little late on this one, but i have two minutes to go through the slot. the new hepatitis c drugs are cures. the innovation are major drivers of the trend, so we will see more patients treated.
so the payer focus, and stevefocus, and steve miller will talk about this this afternoon is that hepatitis c gets out for the reasons i mentioned. the pd one orphan drugs, although i have not heard discussions. think for a minute, as the secretary said, 3 million patients treated with hepatitis d in the united states. the prices of these products came out around 100,000 and are now around the $50,000 range. , but $50,000 for 3 million patients is a hundred $50 billion. pts j 9 up to 100 billion. td one is undetermined, but they are the next new thing, and orphancommand orphan drugs are often in excess of
200 million apiece. and to think for a minute if we developed the 1st successful alzheimer's or dementia treatment how many people have alzheimer's or dementia in the united states and how much that would cost. we will have this big challenge so that the innovation is there and we have the ability to treat more patients but trying to come up with the money. the more the prices will come down. and the application, the fda said they had 14 million patient cases of therapy. the appropriate patient population is to make sure that you are getting the
right drug and patient population and i think that they will be very clean -- keen on controlling that. we have seen that in hepatitis d and will see more in the future. my last thought was more appropriate use of medicines that will save money in the marketplace. with that, thank you very te foryour k [applause] >> good morning. it's great to follow doug and a pleasure to be with all of you on this very important topic of getting innovation, better health access and affordability in the health care, particularly for prescription drugs. it's critical for all americans and i appreciate hhs bringing together such diverse viewpoints and undertake a very thoughtful approach to this very significant issue. also want to give a quick thanks to the commonwealth fund for their support for our work is closely related areas of what i'm going to talk about today. and that is about to pick up where doug left off and go to a bigger picture around some of
the trends in spending, issues around valley and some of the policy steps that may be taken to address the challenge of achieving all of these goals at the same time. i'm going to talk about health outcome in spending trends trying to frame up some of the comments that doug just made and then talk about some of the options of announcing access versus innovation or secretary burwell also highlighted are the approaches that could potentially improve access and improve innovation at the same time. want to highlight along the way there are different issues for different types of drugs, oral drugs that you get through a pharmacy versus intravenous drugs that are typically delivered by a physician in a medical office or hospital, and the role of generics and while some workers as doug noted. and spend a few minutes at the in highlighting some of the sessions you would about this afternoon around value-based
drug payment reforms and incorporating reforms affecting drug pricing into overall health care payment reforms, a big trend in this country right now. i want to start out with this point about one side of valley. there has been undoubtedly tremendous impact of pharmaceutical innovation with a lot more to come. as you heard about from doug. lots of diseases have been transformed, diabetes, hiv. i remember when i was in medical training and we couldn't do anything for an hiv patient in trying to make them comfortable. now that has transformed thanks to pharmaceutical progress. hepatitis c we talked a lot about already. coronary artery disease, many genetic disorders and other diseases that were much more likely to be fatal or much more impactful on the affecting patients health. cancer modality death rates in our by pushing have declined by 20% over the last two decades.
no small part due to drugs. hiv with mortality rate declined of 80% in the last 20 years and hepatitis c mortality and morbidity will be declining as well. this is just the front end of changes that are coming. as you heard from doug there are over 7000 drugs in development. most of these are first in class, targeted therapies to fall into the special the class because of their high prices that are expected because of its potential impacts on health. that gets to why this discussion of value of pharmaceutical is so important. there are several components. one is the impact on avoiding health care costs are i've heard about that today. second arson impacts on nonmedical costs, things like enabling people to get back to work or be more productive in their job. secretary burwell also mentioned this morning that the
pharmaceutical industry rings with a high level of r&d spending at a lot of economic growth with high quality jobs in the industry. i think the most important thing to emphasize about drugs and about other medical technologies is their impact on this last point, longer and better lives for americans. so taking have to see drugs, there's been some estimates that suggest some significant downstream cost savings but according to many of these studies that's not the full bow to of the treatment. by some estimates only about 10-20% the up front treatment cost would be offset even five years out and even 20 years out. not all of the price is offset. nonetheless, many of the studies of the cost effectiveness of these drugs have shown their over all a pretty good deal, route 18, $20,000 per quality life years.
that said, a lot of drugs show very different estimates and their has been a lot of emphasis in recent months and years on developing better ways to characterize the value of these new drugs especially the high cost specialty drugs, a number of groups involved in cancer care have come up with framework. there's a nice report by peter neumann in the journal this week about the different approaches and some the challenges in them. on the one hand, it's very hard to capture all of these dimensions in a way that makes sense for patients that have different preferences about how they want to trade off safety issues and cost issues and health outcome issues. on the other hand, there is a lot of evidence that the value of the drugs on the market today very tremendously with some drugs, some specialty drugs and some indications worth on the
order of $2000 per quality adjusted life, a very good value to others that $200,000, $500,000 or more. ever methods lead to different answers, challenging estimates to calculate but no question a lot of variation out there in the context of what has been some really valuable contributions to improving health. and with that framing, no wonder there's so much attention to the cost of prescription drugs and rising costs. we are seeing a shift in prescription drugs towards more person class of drugs. you heard earlier specialty drugs are approaching over 40%, headed towards 50% or more of spending. and we have had this bump in recent years of spending growth, which is probably hard to read but the vertical bar, or the annual spending growth rate for
prescription drugs, the line going up through the 2014 is the trends in over all national health expenditures. you can see that phase that doug mentioned earlier followed by a slowdown in prescription drug spending growth contributing to the overall slowdown in health care spending growth, and then a big push up recently due to such things as trends with hepatitis c drugs. that growth is expected to be moderated in the next few years as doug highlighted in detail. this is a chart that breaks out of the experience with prescription drug growth by different players. you can see the last couple of years have been a particularly tough time for spending growth for medicaid programs. i can related to hep c and specialty drug trends. private health insurance growth has been particularly slow but looking forward while the overall spending and trends are
moderating particularly for medicaid programs, the growth rates are expected to be higher than they have been in the past. this does mean, you would think is looking for prescription drugs are contributing more to overall health care spending, and there's an upward trend expected in that. according to the national health expenditure estimates, prescription drugs have remained around 10% of overall spending. this doesn't include much of a nonretail use of drugs. this is drugs administered in hospitals and other places. not at retail settings. that could get the number up to 13 or 14%. i want to highlight a point that doug may this will that if you really want to address overall health care spending it's important to look at not only the direct cost of drugs, the effective use of drugs or other parts of health care system. i will come back to that as
well. ut of pocket has been a significant issue for growing number of americans, and the overall context, it has been a significant part, but not the only story. again, highlighting the importance of speaking about drugs. that said come out of pocket spending is higher for patients with many kind of disorders. higher than out-of-pocket spending for hospital care, professional service care and other components of healthcare which suggests that there may be ways of addressing the costs by taking on how to bring down overall costs in the context of prescription drug use. so with that as a way of
pharmaceutical benefit managers, selective formularies and utilization reviews but may have impact on access. allowing more unstricted in contrast would be a lot more unrestricted pricing which many people talk about being part of a competitive market, free market pricing. but keep in mind that most of these prices are paid by a third party insurance plan. that's why they are taking steps for utilization review and other ways of limiting utilization since the price is not actually something that is paid out of pocket by the consumer. that's why we have this debate. it's a balance between how do you balance access versus innovation. a further point that has been raised to some of steps that fda industry and academic groups, nih are taking to try to make this process for developing drugs more predictable and
efficient, that can be supported by things like investment in precision medicine and better data systems that protect much more accurately which patients are going to respond. that is unquestionably have an impact on drug development. in some cases a substantial reduce the cost and time and uncertainty of drug development. it's important to keep in mind that the cost of production are not directly related to the price and the value of a drug. those costs are sunk at the time a drug comes to market. that's why many efforts to look at valley around cost effectiveness and other systems i talked about are really focusing on the actual price versus what drug is doing in terms of impact and outcomes for patients. there's another type of policy reform proposal that secretary also emphasized and those the ones to promote both access and innovation. how can you do both? those will be policy reforms
that strengthened the incentive for developing valuable treatments, that focus more support on those treatments, at the same time discourage high prices that don't reflec reflece and to lead to excess and cases where value is low or negative. and thus lead to unnecessary spending on pharmaceuticals. you're going to more about these kinds of proposals later today as well. also about the role of government versus the private sector in undertaking these kind of efforts. so i want to talk about some of these efforts in the context of specific types of drugs because they are different. on the one hand, oral self-administered drugs, the drugs include a prescription drug benefit in programs like medicare part d, generally obtained through pharmacies and some of the big cost control efforts, efforts to target the youth to high-value indications involved pharmacy benefit managers. benefits with some of the lower
cost and more about the drugs on the lower tiers. in this area some of the proposals that have been put forward that could potentially both encourage innovation and reduced spending growth are getting more competing drugs to the market faster. this is something fda perhaps not as part of the policy has had a role in. for example, the hepatitis c drug has been a big part of this cost discussion in the last few years were all approved under a new breakthrough designation pathway, for the fta that brought those of drugs to market faster. not just the first one that others were in developing at the same time, accelerate both the kind of treatment, a new treatment be available and competing branch to bring down prices and competition would be available as well. or have been proposals for more accountability for insurers to encourage them to take further steps to keep costs down. for example, in the medicare program today close to half of
the spending is in the catastrophic part of the drug benefit now. that's up and a reflection of the trend toward more use of higher price specially drugs that can have a very big impact. most of the costs in that range are paid for by the government, through help with those additional costs with medicare covering 80% of the cost in the catastrophic range. a different model may be putting more of that accountability on the insurers. also i'm going to talk more in a few minutes about models in which manufactures may have more accountability for the payments associated with the drugs and outcomes as well come and we will talk about as well during the course of the day including drug payment and broader efforts to reform health care payment. another type of drug use
involved intravenous or physician administered drugs, these are drugs are generally administered in a physician office or the hospital. this is where a lot of the specialty cancer drugs come into play. this is a different kind of pricing system that generally does not involve pbm's and formulary management just prescribe oral drugs. rather medicare as a this position where it's payment for the drugs for the organizations, the hospital, the doctor mentioned the drug is based on the average sales price. it's intend to reflect the price actually paid by providers. similar systems are used by many private insurers as well. they use the asp for their price negotiation and questions raised about whether setting a price like that that would be paid for by medicare and other third party payers it was the best way to encourage high-value or if it's contribute to some of those big variations that have been
highlighted in the valley of many part d drugs. in terms of reforms, some people suggest that shifting toward the same kind of pbm or forward-based approaches that have been used for oral drugs. this is turnout so far, far to be pretty difficult to implement but maybe as more alternatives come forward and intravenous drugs like the bio similars adult was describing, this could be more viable option. they are are also been proposals around pricing changes and whether later today about the program which is a version of that price available to certain purchasers of drugs. medicare has had consideration of the least cost alternative policy were drugs in medicare being similar to do the same thing and then once again as alternatives to those approaches which all have the drawback
shift to value-based payments or links to broader payment reform models. the third category of drug pricing and drug use and falls a generic bio similar drugs. these price are typically much lower. you heard from doug that billions of dollars in savings could have occurred as a result of generic drugs are coming available typically lead to 80, 90% or more price declines for the brand name drug also want to highlight the importance of similar brand drugs being available. this is not just biosimilars but over the last decade the availability of drug, drugs in the same class has also led to significant price declines as well. you heard from doug about the decline, about the increase in generic dispensing, projected to go even higher. and even though brand name drugs
make up a small part, now a small part of the total expenditures, generic drug prescriptions heading to over 90% of the total will account for an increasing important part of over all drug spending as well. some of the issues involved here are this practice does not always match the figure some recent high profile cases in the news about big increases in prices refer not do brand name drugs but drugs that represent, that event on the market for a long time, characterized as brand to generic import prices, high prices seem to persist with either a result of generic drug shortages or a result of companies being able to raise prices, and not see a competitive response. so in another important area for further development involves
finding ways to make the generic drugs market work better. fda has tried to take some steps to address this, but between generic drug user fees and some other challenges in getting products to market, even small molecule drugs especially at the market is not that they, like for some hiv specialty products, it may be hard for others to come in. to are probably some steps to be taken to address that. finally, on biosimilars, as doug said they are coming, they're still a lot of quality issues to work through a round naming, substitution, how they will actually impact pricing. i think it will be more significant than many people suggest, and then since many of these biosimilars involved are be drugs, they're going to be some challenges around how to -- they get separate codes which will have an impact on how they affect pricing and overall spending. i want to end with just a few comments about where things are headed next i think in terms of
payment for drug. talked a lot about some of the alternatives between higher prices versus more access to higher prices versus more access and innovation versus availability. want to highlight for value-based payment you anymore today about approaches based on prior evidence such as indication specific pricing. people like peter bock have proposed this approach. cost-effectiveness threshold could be set by government but their many approaches and the private sector based on some of the emerging methods, better evidence on drug treatments through support these kinds of approaches. payments based on patient results, so that's outcome based pricing. and value-based insurance. right now we are beginning to see this. most of the drug plans have prices and formulary tiers based on the cost of the drug a value-based insurance plan like
the one that premier new jersey isn't limited would have something like no co-pays for drugs that have the highest value, the most cost effective, maybe to bring down overall costs the most. and higher co-pays per drugs that do less well in terms of outcome impact for the drug spending and on a. that's not quite the same thing. that's what we have now with specialty tear tiers that are bd just on the cost of the drug. in terms of getting to these approaches, steps like risk the judgment are really important making sure that patients who have higher needs get more payment into the insurance plan. so this helps the insurer take steps to make those drugs more available to high-risk patients, better measures of outcomes on board. we have some measures that can be observed in a timely way for drugs like for coronary artery disease, diabetes, hypertension, hepatitis c, hiv, things like
viral loads. but in many other conditions we don't have these kind of outcome measures easily available for many cancers, there were degenerative disease for example. but that outcome measures could help are also what is needed is better evidence on the impact of drugs on outcomes. lots of other factors besides the drugs themselves influence outcomes. this is why steps like development and other collaborative efforts to get to a learning health care system are really important. and in view of these new payment models there are some new regulatory issues that would have to be addressed. for example, that medicaid best price approach i mentioned could potentially be triggered by drugs daughter highly valuable versus drugs for indications are less highly valuable getting in the way of adopting the new kind of payment model. and, finally, of which is like to end by having the importance of including drugs in broader payment reform. alternative payment models are a
high level goal for the department of health and human services and cms. also a bipartisan poll that's been reflected in recent physician payment reform legislation, macro to move to we payment models for physicians and for the other health care providers that they work with. many of these models right now could put more accountability on health care providers for using high-value drugs effectively. things like medical pathways based on measures of the evidence in support of a particular drug use, episode-based payment bundles where physicians involved in care, the hospitals involving care could have to take on more accountability for using drugs efficiently. person based bundles such as an accountable care organization. it's important to think of ways in which a drug manufacturers may also share in this kind of
accountability for financial risk based on results of care, based on accountability for care. .. of moving toward more personalized medicine. this will increasingly very based upon things that healthcare providers working with drug manufacturers can do, using the drug effectively with other treatments. there is not one intrinsic value. would it not be nice if some of the efforts around drug sales and other promotions or better aligned with getting the best outcomes at the lowest cost per patients , especially those who can benefit the most. this might give way to the current sale 1st strategy,
one that could work for you >> a lot of potential for value creation there but again, a lot of obstacles since our current payment system for drugs is based on fee for service approach rather than pay for value as part of the overall heal approach. this would be steps by breaking down the sparration and impact between part d pricing and impacts on amd healthcare costs and incorporate and enabling the incorporation of drug price systems, a look at home medicaid best price and other. you will here more later today >> these are not easy problems to solve and i'm confident that we can do better than we are doing today in terms of improving both access and innovation per prescription drugs. thank you very much for the
opportunity to join me. [applause] >> we have a 400 billion-dollar biopharmaceutical market today on a way to 600 billion-dollar. a lot of impact of specialty drugs for those accounting about 35% of sales, as you said. some of the new oncology drugs that have c drugs, psa9, cholesterol, etc. generic drugs, that's slowing down the impact of that as you said, doug, and with that constituting now about 9% of sales growth annually. as you described, both of you,
what we have ahead of us in the pipeline is amazing and impressive. 7,000 rare diseases with drug targets now. a number of active substances. biosimilars. and as you said, very powerfully, mark, we are getting a lotai of value out of these drugs in terms of avoided health costs, expenditures, etc. both of you referenced the cost savings whether it's getting patients to adhere or having more evidence-based treatment or coverage with evidence development. you mentioned correct use of antibiotics as wellf as you sai,
mark, quality options. we can look at some opportunities for as you said, putting part d more into integration of other payment. so there's lots of potential here to capture some savings and, yet, also achieve a lot of the value and care. so with that, let's open it up to some questions from all of you, again, if you would keep the questions succinct. >> good morning, my name is aileen, i'm a pharmacist for 35 years and you both talked about the value of generics and competition, in particular treating diabetes, so when i was a new pharmacists, came out at $20 ana hour, i thought, how
could people possibly afford this over the beef pork, today that insulin is over $250, so my question so you is have either one of your organizations measured aside from the value thatr we captured in generics, aside from the costs and trends in the new innovations, what is the impact of just the pure increase on the market and what more are we paying because of thatpa issue? >> mark, you did mention that briefly. >> that may be something more in doug's area. we have looked at policy that help make the generic market potentially work more efficiently, and the whole point of generic drugs is that there should be easy for additional
manufacturers that come in if the drugs are being priced abovt the cost the manufacturing and provide lower cost alternative. again, in some cases, generics, that doesn't seem top happening. that's an issue that fda is looking into with respect to things like the user fees charge for bringing generic drug to market, manufacturing and other requirements, waysth to streamle processes through better manufacturing regulations and encouraging more competition in brand and generics. that's sort of a different problem than the challenge of how toob address the costs and provide access for some of the new t specialty very effective that are coming along.
>> can you give us a quick change>> that's been due to phenomena. >> i don't know the answer off of the top of my head. ting pbm's, we are probably in better position than that than we are on that. >> approval of those. >> higher than it's ever been. >> right. >> improving but we have not taken a big whack at that. >> we know in particular there's a feeling, incremental cost of production and yet it's a thousand dollars and up. it's a sr. serious issue.
were you read the slide that there are 200 billion or more in drug costs associated with optimal prescribing, what i didn't see there was prevention benefits particularly in hiv early treatment, i wondered if the numbers factored when you determined what can reach in terms of avoid of a cost. we are in those numbers, but not oncology and not autoimmune and other specialty drugs. it is a big issue in terms of noncompliance and those other six things that if we are serious about it, it's a good way to save a lot of money. >> i'm afraid we are going to have time for one more question. we will try to pick up the questions in the next session, if we could.
>> value-based solutions were part of the solutions that mark just brought up. i wanted to know how we could overcome the barriers for an organization as part a of the question and part b that value requires the actual price cost payment, et cetera, and what is the role of price transparency to determine the real value of a transparent value. >> as you're pointing out, there's a difference between nonrebait prices and the actual prices and that difference may be increasing a bit over time. one of the things that i think the movement towards more value-base payment for treatments could accomplish is building that in and allowing
more donald -- data on it. >> that doesn't mean that's the only way to do it. in the u.s. there have been a number of efforts in the private sector under way to try to better characterize value and the data, the so-called is held by providers that are becoming more accountable for the overall costs themselves. maybe features in our drug payments that account for coverage with development, hopefully we can accelerate more of that underlying evidence. there's a lot -- just because the government doesn't do it, it doesn't mean it can't be done. i used an example of a pbm to
set different tiers and that certainly can be incorporated in the private-sector approach as well. >> i will just sayse if we are having the meeting ten years from now a lot of this will be a moot point. so how do these products work in the real world and that would lead to a much more value-base system. i woulild characterize that in e next ten years from now, if you can't demonstrate outcomes, you have no income or the other way to look at it, outcomes equals income. >> the big question is hownc quickly and effectively can we get to there where we are now in terms of capturing the evidence and using it effectively and strategically. >> thanks to both of you. you've not only given a 30-foot look and also zeroed down to the
ground level and have given us examples of the drugs we will see coming up and the challenges we will face to make this affordable. we are going to take a quick break now. reconvening for the first panel discussion at 10:30 a.m., if you need to bail yourself to the restroom, you need know where to find your escort. thank you, doug and mark for joining us. [applause] [inaudible conversations]