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tv   Pfizer CEO Ian Read Discusses the Pharmaceutical Industry  CSPAN  March 24, 2017 8:59am-10:02am EDT

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committee will now head over to the house chamber as the republicans' health care plan moves to the floor for debate. the house will first consider and vote on the amendment to the rule debated this morning by the rules committee. assuming that passes, we expect the house to start or general debate on the bill itself. again, president trump delivered an ultimatum to house conservatives yesterday. the hill reporting the president told those members he'll leave obamacare in place unless they get onboard with white house-backed legislation to repeal and replace the seven-year-old health care law. politico is saying today the vote is too close to call. according to the hill's unofficial whip list, this morning up to 33 house republicans could vote in opposition to the measure. it's expected that all democrats will vote no on the bill, and republicans need to get 215. if all this adds up, the numbers are not there for the bill to pass. the house gavels in at nine a.m.
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eastern this morning, that's literally seconds away. you can watch all the proceedings on our companion network, c-span. right now we're taking you to a national press club event from yesterday with the ceo of pfizer. this is c-span3 -- 2. [inaudible conversations] >> good afternoon, ladies and gentlemen. for those of you who are just now tuning in and our television audience, our public radio audience and on the internet, welcome to the national press club. where since 1908 we have been the embodiment of the constitution. before we get started, i want to remind our guests here in the audience of some housekeeping
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rules, those of you who may have come in a little late. please put your phones on, at least on vibrate because we know you want to tweet, and we want you to follow the action. and so on twitter follow us on that,@press club dc and use the hashtagging npc live. and i want to introduce the head table. so as i introduce each of you, please stand, and i will -- briefly, as your name is announced, will be from my left and your right, senior reporter at med tech insight and the treasurer of the national press club. michelle sal say doe, desk editor at the associated press and the membership secretary of the national press club. sally sussman, executive vice president of corporate affairs
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at pfizer. donna langland he jay, breaking news editor at "usa today" and a past president of the national press club. kenneth cole, senior vice president of government relations at pfizer. skipping over myself for a moment, the economy reporter for bloomberg news and deputy team leader for the national press club headliners' team which organizes all of our speakers here in the club. skipping over our speaker for a moment, danny zelnick, national press club member who organized today's luncheon. andrew topin, vice president of global media relations and digital communications at pfizer. kathleen parker, syndicated columnist for "the washington post". virgil dixson, washington bureau chief at modern health care.
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susan jaffe, washington correspondent for the lancet and a contributing writer for kaiser health news. alan -- [inaudible] chairman of the fourth annual wharton d.c. innovation summit. [applause] and i am jeff blue, news editor for the americas for al-jazeera. and now it's time to bring in our speaker. as we gather, a health care bill intended to replace president obama's signature legislative achievement is subject to small, maybe, internal conflicts within factions of the republican party. actually, massive. who along with president donald trump is driving the measure. some of the issues wrapped up in
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the debate for health care are accessibility and affordability and unnovation. innovation. some of the latter are tied up in obtaining life-saving pharmaceuticals with prices that seem to keep rising and not falling. one of the stewards of the drug industry is ian reid, ceo of pfizer pharmaceuticals. if you've heard of tetra sigh clean, the key ingredient to combat acne, lipitor, created to combat cholesterol, or that little blue pill, viagra -- well, you know what that's for. all of that falls under mr. reid's care. mr. reid doesn't come from research and development labs like penicillin which helped put pfizer on the map, but the financial house as an auditor. which may be good training, because mr. reid and his counterparts are under tremendous fire to make, for
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example, $100,000 cancer drugs more affordable without having patients needing to apply for a special assistance program. or in pfizer's direct case, under fire by being fined a record 84 million pounds -- or that's $105 million for you and me -- for overcharging britain's national health care system. it's also taken heat from both sides of the aisle, from the president of the united states and from democrats in past years like former senator carl levin for uprooting their headquarters from their humble beginningsing in brooklyn and going to ireland for better tax deals. which, they contend, is for better job growth. the trump administration, for its part, believes the price of prescription drugs can be lowered by simply cutting corporate taxes to keep companies from moving overseas. however, mr. reid feels that there is no need to alter its
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drug-pricing practices in the story in reuters in late january and that the president doesn't understand his industry. we will talk about these and other issues along with a robust question-and-answer period. but after opening remarks, please give a warm or national press club welcome to ian reid, the ceo of pfizer. [applause] >> well, good afternoon. is that close enough? can you hear me, all? thank you to the national press club and jeff ballou for this opportunity and wonderful welcome. i'm delighted to be here with you today. at pfizer, our culture values straight talk. i i actually have a coin, i won't bring it out today, it expresses that philosophy. so today i wanted to have a candid conversation with you about the risks of drug discovery and development, the
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economic contributions of our industry, the barriers to patient access to affordable health care including medicines and some observations regarding how we can create a health care system that supports innovation and provides patient access. drug discovery or and development. if you think back to what treatments were available in the 1940s -- i know most of us can't do that -- they were available for infections, depression, ulcers, blood pressure, parkinsons. there was almost nothing. you could look at a tv ad and see a patient in front of a doctor in black and white, and the medicine cabinet behind that physician, and he'd turn, and it was bare. today that is not the situation. today we have incredible medicines that have turned fatal
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illnesses like hiv and aids into chronic conditions. slow progression for rheumatoid arthritis. cure disease such as hep-c, help to prevent childhood illnesses with vaccines, provided treatment for painful ulcers and gurd, and if you have that, which is reflux, it makes your life a misery. it's not a trivial thing to be able to take a pill once a day and not have that issue. and, of course, that leads to cancer and other conditions. and in cancer we are developing new immuno-therapies that harness the ability of the body's immune system to recognize and fight cancer along with the other amazing discoveries we've made with small molecules and chemotherapy in the previous 20 years. in fact, in 2014 and '15, more than 40 new medicines were approved by the fda. many of these medicines were for
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rare diseases, cancers and other conditions where there were no good treatments available. the pipeline across the biopharmaceutical industry for new medicines has never been more promising. with more than 7,000 medicines under development around the world and an average 70% of drugs across the pipeline are potentially first in class medicines. that is, that drug has not been discovered before. that mechanism has not been discovered before. so what do we attribute this progress? i believe it's the result of focused investment in highly risky undertaking of drug discovery and development combined with advances in basic research from our universities and the nih and other types of institutions. from discovery through fda
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approval, developing a new medicine on average takes 10-15 years and costs $2.6 billion. now, that's the number from boston university. and in less than 12% of the potential medicines that make it to clinical trials are approved by the fda. now, you can look at this study, and it's complex, and you can quibble about how it was done. i can give you a very easy way of knowing what it costs. pfizer spends $8 billion a year. on research and development. the if we -- we're lucky if we produce three drugs a year. i don't need the study to know what it costs to bring new drugs to society in today's environment. for example, between 1988 and 2014, there were 96 unsuccessful attempts, only seven new drugs developed to treat melanoma. 96 unsuccessful attempts.
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in brain cancer there were 75 unsuccessful attempts and only three new drugs. and in lung cancer, there was 167 unsuccessful attempts and 10 new drugs, one of which was pfizer's. to discover and develop a new drug, the bio-pharmaceutical industry spends on average six times more on r&d as a percentage of sales compared to other major industries in the u.s. in 2015 the industry invested a combined $58.8 billion in research and development. that's $28 billion more than the entire nih health budget. of which only a fraction is dedicated to drug discovery. the drug discovery process is complex and not well understood. after 38 years in the industry, i tell you, it's probably one of the most complex undertakings that humanity has.
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to take an idea and shepherd it through the drug discovery process over 15 years, insuring excellence at every stage and data at every stage to finally get a drug that can be taken by humans with a positive risk benefit equation. so let's briefly review what it takes to discover, develop and bring a new medicine to patients in somewhat layman's terms. the process begins with basic research, undoubtedly done by researchers within institutions and government institutions like the national institute of health. these researchers find, postulate, sometimes find biologic pathways that give insights into a disease or possible approaches for treating that disease. this is a critical step. but it is light years away from having a med is sin that can -- medicine that can treat your condition. the pharmaceutical industry
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draws from this basic research findings once they've been validated. normally, you know, in academia you publish, it gets validated by somebody else, you understand, the understanding improves. at that point the industry may begin a drug discovery process from those original sign terrific findings. scientific findings. our scientists take this understanding and translate it into a research hypothesis often through animal models that begin 10-15-year journey to get a medicine to patients. we discover a molecule, create a molecule, synthesize a moll yule large or small that we belief will interact in the right way with the target pathway. we run studies to insure the molecules, large or small, have what we believe is the desired biological effect. we verify the compounds, dynamics profile and how it
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affects the body. and we run multiple toxicology studies to determine safety prior to beginning initial trials in humans. at that point, we then conduct early studies referred to as phase one and phase two to understand the right dosing and assess the safety, efficacy and quality of the compound and identify the right patient population. once phase two has been passed more safety and efficacy, we conduct large phase three trials, thousands of patients -- the largest one pfizer conducted was 85,000 patients -- to prove the risk benefit of the drug. and then we submit this data to a regulatory body like the fda for approval. this process has many interactions and false starts, very often you start with a basic drug substance you believe it's going to be efficacious, but it's toxic. or you remove the toxicity, and you find it's no longer efficacious.
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there's multiple attempts to try and get the right medicine with the right distribution. that's risk profile is favorable. to beth illustration this process -- best illustrate this process, i'll share with you our first in class drug for the treatment of advanced breast cancer, one of the deadliest and most poorly understood cancers. the medicine started with original research done by independent researchers that identified and characterized sigh clip-dependent -- [inaudible] which are key regulators of cell growth division. through research, at ucla, we were able to identify the right population for our compound, and by 2008 we had an acceptable molecule that we believe appropriately interfered with -- to disrupt the growth of tumors. this result was that after 25
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years of initial basic research, we had a cdk inhibitor. and seven years after the first patient was dosed in clinical trials, it was approved by the fda. more than 50,000 patients in the u.s. alone now have been treated since its approval in 2015. and before the drug was even approved and launched, we began conversations with the health care community. we spoke to more than 80 payers. more than 20 breast cancer experts and more than 100 oncologists to build an understanding of the value of this medicine. what it does, what it does against competition, what advances it gives, how it changes people's quality of life, how it extends their life k. and based on that input, we negotiated with the plans and the payers a price and access for ibrans. we have continued the make significant investments.
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it has been studied in patients with early breast cancer, and there are 34 ongoing investigative-initiated research programs across various non-breast cancer tumors. and after two years on the market, two years, there are two competitors; one approved and one in development. and that's how the market evolves. you get a patent on your molecule. you don't get a patent on treating the disease. your molecule has to have superior efficacy or superior characteristics to be successful, and more and more we're followed in very quickly by competitors with similar-looking molecules. today there are other therapy stories like ibrans. pfizer's alcorye, merck's -- [inaudible] for melanoma that and gilead's medicines for hepatitis c.
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these new therapies are a result of improvements in understanding technology, research with academic and research institutions and huge investment and risk taking by the industry. let's talk about economic contribution to the industry. a continued stream of new treatments won't flow if society is not willing to fund and support a modern bio-pharmaceutical industry that gets cures to patients. i'd like to note that in 2014 the bio-pharmaceutical industry in the united states represented 3.8% of total output which amounts to an impact of more than $1.2 trillion. when you take into account the value of goods and services produced by the industry and the total impact on the economy, $1.2 trillion. this includes the economic activity of its work force and more than 4.4 million jobs across the u.s. economy. including direct and indirect vendor and supply jobs.
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that being said, i want to be clear: we understand our responsibility. every scientist understands their respondent, everyone as pfizer understands our responsibility to produce medicines that bring significant value and that are competitively priced. we are working towards an understanding by society of the investment we make, the risks we take -- and by "we," i mean our shareholders, the people who fundamentally fund pfizer -- and an appropriate return on the totality of our investment. a successful drug will always, will normally be profitable. unfortunately, there's a lot of dry holes on the way to a successful drug, and you need to have a cash flow to support the entirety of the bio-pharmaceutical ecosystem. let's talk about access and transparency. we understand the access issues for patients and what they face with co-pays and high
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deductibles and the need for value chain transparency in this process. we give away for free to 250,000 patients in the u.s., 1.7 million prescriptions in 2016 because the process is broken. those patients need to come to us as a last resort because the insurance system is failing them. transparency should allow patients and physicians to make the right choice for the intervention that delivers the most value. that's transparency. how does a physician know what the best product is, how does the patient know that they're getting value from that product. however, we know that patients are paying higher out-of-pocket costs and a greater percentage of the costs associated with life-saving or medicines that improve their condition as compared to expensive interventions like hospital admissions, emergency rooms, physicians' diagnosis. on an average, patients in our
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insurance system pay 3% of the cost of hospital care out of your own pocket. however, you're asked to pay 15% out of your pocket of drug costs. this is not transparency. most consumers do not know this. rather, medicine reimbursement costs are often used by the system, unsurers and providers, to avoid adverse selection. adverse selection is when you have a higher proportion of sick people in your plan than your competitors. when considering transparency and patient access, the value of the entire health care system needs to be taken into account. not just pharmaceuticals which represent 12% of the total health care system's cost. we need to consider two factors, i believe; visibility and understanding of what you're getting for your insurance, make it clear to the patient, and a patient-focused benefit design that meets the patient's needs.
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i'd like to use the analogy that a patients need solid insurance, good insurance, similar to the type of insurance you have for your homes. if a person's home is destroyed by fire, their insurance company covers the majority of the cost to rebuild the house. people know what they're getting. they're able to rebuild their house. when it comes the your health, you should be able to have insurance that cover diseases like cancer or rheumatoid arthritis without having to bear the burden of the majority of the expense. individuals cannot afford modern pharmaceuticals. it has to be done through an insurance system or risk-sharing system. the cost to produce and bring safe, effective drugs to market out of the reach of individual pockets. however, the way insurance plans are currently designed, costs are shifting to patients in order to contain costs in the short term. a lot of the plans now have large co-pays, $6,000
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deductibles before you get to any repayment, no first dollar payment for pharmaceuticals. this is not good insurance. there are little incentives for the prevention or cure over the long term. in many cases, benefit designs are constructed to avoid sick patients. for instance, previous to the affordable care act, we have a product called chantix which helps you stop smoking. insurance companies wouldn't coffer it. cover it. why not? they don't want smokers on their insurance rolls. they're a bad risk. so is we had great difficulty getting access for chantix in the insurance system. hepatitis c, let's talk about that example. one example is the pricing discussion that occurred when hepatitis c treatment was introduce. the crux of the debate was not about the value of the drug. the evidence demonstrated it's cost effective, and i'll discuss that in a moment. the debate was really about the short-term impact on medicare
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and managed care budgets of an uninspected, expensive, high value medicine which they hadn't budgeted for. they had no risk adjustments for it. so before hep-c was available, the average annual cost to the system for treating a patient was $60,000 for patients with end stage liver disease, $112,000 per patient with liver cancer and $500,000 per patient for those receiving a liver transplant. an average expected rife time patient cost to treat all stages was $205,000. approximately. compare these costs with the fact that more than 90% of patients with the most common form of hep-c can expect to be cured with the new drug in as little as eight weeks. this is a lifetime cost now of slightly more than $40,000. and because of intense competition, the cost is now 50% less than the initial cost it was launched at.
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returns, let's look at returns of the industry. i think there are many ways that we can, the pharmaceutical industry we can point out the benefits to society. there are various ways of looking at it. the transparency bills you're seeing many most of -- in most of the states are not an appropriate way of measuring the benefit of the pharmaceutical industry. the drugs developed by the industry have built containment through patents. to jeff's point, after seeing that the drug once it's approved only has half of its patent life left -- it's not 20 years, e -- effective maximum is 14, once the patent has expired, the drug is broadly available in the form of generics. today more than 90% of new for instances are for generics in our health care system that are available forever to society at the price of swre networks. they would not have been
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available if they weren't discovered, if there was no innovation money for the discovery. another indicator broadly of equitable return is shown by the industry's financial performance. of course, the successful drug is highly profitable. that's a real insight. the if you look at the average return of the pharmaceutical industry over the last five years compared to 25 other major industrial sectors including consumer, software, services, telecom, energy and insurance and health care, managed health care, the pharmaceutical industry ranks 19th in terms of price earnings ratio out of 25. a key indicator of the growth prospects of a company, the price to earnings index. 11th in terms of return on ec questionty, 9th in terms of return on capital. i see no evidence of extraordinary return in the pharmaceutical industry compared to the other industries that are in the bloomberg index.
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it's also noteworthy that since march 2010 the return of the pharmaceutical industry has been lower than the largest health insurance companies including unitedhealth, cigna, humana and centine. as a whole, these companies outperformed the s&p stock index which returned 135% over this time period. collectively, they gained nearly 300% including dividends while the pharmaceutical industry returned 91%, less than the s&p and far less than insurance companies. overall, i think it's fair to say that we're being responsible when it comes to the pricing of our medicines. we're producing great value for society and simultaneously taking large financial risks to the urn certainty of -- uncertainty of the drugs. we don't set prices, we negotiate prices.
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we negotiate on the value of the drug, the value to society. and the arbiters of that are the insurance company and the payers. there are two examples to demonstrate if you want more specifically the value of what we do. in ten years statins use has generated nearly -- this is from an accredited magazine -- nearly $1.3 trillion in economic value to the u.s., of which around $950 billion was retained by society. around 20% of the value accruing to the industry through the revenue from selling the drugs. so we retained 25% of the total value of statins. at the same time, the cost of statins have now gone down 90%. society now has that benefit of that invention forever at generic pricing. from 1988 to 2000, improvements in cancer survival created an estimated 23 million additional
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life years creating $1.9 trillion of additional societal value. 81% of that value accrued to society. 19% accrued to the pharmaceutical industry. however, we understand that while drugs are highly cost effective, our health ecosystem is making it difficult for patients to get the health care they need at the cost they can afford. especially in life-saving medicines. i believe we have a collective opportunity to start mending our broken system by working with all stakeholders and making sure the voice of the patient is heard. we believe there are four tenets required to create a health care system that meets patients' needs. we need to provide all patients with access to quality health care coverage, coverage that includes prevent i care, access the cost effective interventions like medicine and comprehensive care for things like cancer. we stand willing to play our part or in helping patients have
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access to those medicines. we do already with our patient assistance programs. we need to have incentives for prevention-based health care that reward people for good health and provide financial incentives that enable providers to manage risk and encourage prevention. we need to get the right incentives in the system, incentives to pay for health, not for the treatment of illness. if health plans and providers were compensated for improving health over the long term and patients were rewarded for investing in their health, all parties would benefit, most especially the patients who would have good insurance and patient-centered benefit designs that cover high value treatments at affordable co-pays.
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get the right incentives for the whole health care sector in the right place. specifically to the pharmaceutical industry we need policies that spur public and private funding. most companies like pfizer have huge number of projects we don't progress. we just can't simply afford it. we can assume the cover the cost of capital. we need increased investment in manufacturing. we need regulatory reform that accelerates scientific advancement and accelerates the development approval of life-changing medicines while eliminating the backlog of generics. we need favorable tax and trade policies that create a level playing field, protect american intellectual property and remove barriers to access.
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we believe committing to each of these ideas can lead to an efficient market-based system for all segments of the healthcare system, providers, payers, biopharmaceuticals companies biopharmaceuticals companies and most importantly patients. with that i would be very pleased to take your questions. thank you very much. [applause] >> whereon. just the housekeeping note on questions. if you have a question and you here in the house you have the scars on your table. you may write down your questions and pass them up to either end of the head table. we will sort through them a try to get to as many as time allows. you like the gavel. it's a replication of george washington's gavel given to me during my inaugural. first of all as you can imagine with quite a few through the internet and so forth. we have a bunch of different questions. i have not seen all these
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questions in depth. and just for the record neither has ian read so he has not been prepped for these things as it should be. so this question actually comes from one of our board members who actually covers health care for national public radio. what do you think of the negotiations on the health care bill on capitol hill? specifically, lawmakers today are debating whether insurance policies should be required to have a minimum level of benefits to qualify for tax subsidies. these include prescription drug coverage, and do you think so-called essential health benefits should remain in law? >> i can't give you any prediction. i'm not a politician. i'm a businessman who's trying to get important care to patients. what i would say is we would support, or would you support, any system that ensures patients
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get access, that their incentives are in the right place, that there's choice in the system, and the people get the ability to choose the insurance they need for the particular time they are in their life, and we do believe old people should choose to have insurance -- all people. as regards to having such a benefits, i think a situation of my preference, less regulation and more market-based incentives is the right way to answer that issue. but you do need a safety net. so i believe that we should have an appropriate safety net for people who cannot afford insurance and who have pre-existing conditions. >> a quick follow-up because this is sort of breaking. the house freedom caucus chair says there's no deal on the house republican bill to replace the affordable care act. what's the impact on the industry from your vantage point?
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>> president trump is been say i want this bill. i think i can make a deal. i think, and he told you directly, something you criticized about that he doesn't understand your industry -- >> i don't believe there's any short-term impact for the industry. i think there is a tremendous impact for patients, short-term. short-term i think you see an affordable care act that is collapsing. its push into existence know for some coverage for pharmaceuticals, pushed into existence 6000 deductible before you get to any reimbursement. for instance, when king versus burwell was being discussed, we looked at what would happen if they struck down the federal exchanges and we decided that we would provide our medicines for free to everybody who are on the exchanges. cost to pfizer, $40 million a year. i mean, any $52 billion
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corporation, that's nothing. because no one is using our medicines in the exchanges because the exchanges don't provide them access. i think we do need to reform the health care the way it's delivered, and the consequences will be to the patient's. >> a lot of people have the perception that the pharmaceutical industry is a very powerful industry. couldn't you prevail upon, is it just a lame and thinking he can prevail upon the insurance industry to cut a decent deal for patients? >> the insurance business is in the business of taking more revenues than they pay out in premiums. >> true. [laughing] >> therefore, have no incentive to -- >> that's their business. >> well, moving on. [laughing]
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a questions of the audience. the american medical association, the american hospital association at the american association of clinical positions as well as many other health care groups have expressed their opposition to the current republican affordable health care bill. does pfizer also oppose this bill? >> we are in a democracy everyone can express their own opinion. pfizer has not expressed a formal opinion on the present bill in front of congress. we support principles that would like to see enacted, like ability to access medicines, reasonable co-pays, fairness in the system, choice in the system. system. we support those elements of any plan. >> what specific regulatory reforms would you like to see at the fda? >> i'd like to see a message from society to the food and drug association. they want the association, the
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fda to move more towards better balance between risk and benefit. i think the fda has been set up and has been conditioned by society com, condition by congrs to be extremely conservative, and not willing to take the appropriate risk to benefit view on the development of new drugs spirit speaking of which what you think of president trump's pick to head the fda? >> the doctor, the doctor come like madden in business situation. i think he's a respected physician. he sort of been a regular prick he knows the fda. i think he was there as a deputy at one point. we look forward to working with him and the administration to ensure that our drugs get to patients as quick as possible. >> what's pfizer doing to control the misuse and excessive prescription of its highly profitable opioid?
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>> well, i'm not sure i necessarily accept the premise, but we produce opioids because they are an extremely important part of the health care system to people who need to do with chronic pain. we promote these products strictly on label to positions, and also the product as you know, no locks him, rescue from an overdose. that we are making available at $11 from one treatment each i believe seems a very reasonable price to say somebody's life. it's one injection. we've also given $1 million to the the states and the million doses to the states your ravaged by this condition. opioid addiction is destroying families and destroying parts of our society. so we will support anything that is an appropriate use of opioi opioids. >> so if you can make that drug available for $11, why not know
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the cost of others? >> because with a look at what the value of high brands delivered to the health care system, and the cash flows we need to doing research and cancer. so it's a matter of what value is a drug deliver, and we need to recover that value because if we don't we can't continue to invest because his wife i use macroeconomics for you. if we had a return on capital 25%, then i think society could say. [laughing] , that's a pretty rich return on capital. -- say wow, it's not that healthy, the starting return on capital is eight or 9% that shareholders required. you have to understand that our focus is what's the value of the product, can recover a portion of that value? we recover 20% of the value so we are conscious of affordability. we negotiate with health plans
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to ensure that they see the value on what we have provided. that's how we price. >> different question. you harped on transparency a lot and accessibility. yet in message massachusetts yor company had to be subpoenaed to have information on your donations to patient assistance groups to see if because essentially the massachusetts prosecutors felt that you're contributing to the inflation of costs. >> that's their point of view. i would argue that what we do is totally within the rules of the oig. we feel we are completely within the present regulations and laws, and so we act accordingly but we are cooperating with the investigation. >> you mentioned that the insurance system is broken. health care obviously is front and center. what's one thing you want congress to know?
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>> get the incentives right. you get assistant to work, incentives are right, you don't get a system to work by regulation. you find to a system of regulations. you ensure some equity to regulations. but if i was to wake up tomorrow and redesign the health care system as one persons with you, most people stay in the same geographic area, they don't switch hospitals the way we switch insurance companies or providers or doctors. i think the risk and reward should be placed on the providers in our system. they should be compensated to taking that risk. if they're taking that risk they are totally incentivized to look at the health of the population and not the treatment they give the population. that would focus and truly on health care, and they would hold of the patient for most of their life of incentives and risk should be held there. insurance companies can provide a service of educating the level of sickness of the population so there are appropriate transfers
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to the providers. that would align incentives. >> there's a lot of questions as you can imagine about congress, about drug prices. what concerns do you have about congress getting into the drug pricing market as they debate this latest version of health care? >> i think that i, i don't believe that price controls in any part of our economic activity produce a choice or opportunity for innovation. and so i would advocate against any type of price control. it's a very blunt instrument. it won't allow innovation or the huge cures receipt and it will not allow diversity and choice so i think it's a bad policy. >> according to one out the trusted journalism trans-pesticides,, your company spent $2.7 million on political donations and another non--- 9.7
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on lobbying. what did it get you? >> well, what we spend on, and i can't really confirm or deny those numbers because i don't really know, i don't know where they come from, but my point of view is that we have to as part of society be part of a legitimate discourse with our regulators and the people who regulate us and the political class. we have to be involved or we have to advocate for choice and access and low co-pays. we have to be part of society. this expenditure is part of the political discourse which we think we are entitled to as a company. >> what does that mean for the little guy and gal who is not walking around with a kind of money in their pocket in terms of the voice of congress? >> i think every part of the site has different ways of expressing their views and they can join associations. they can express that use individual, they can write to
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the congressman. they don't spend a sort of money because they're not trying to interact with the 50 states and all of the congressman and all the senators and all other regulators and inform and educate so they don't need to spend that type of money. >> the use of veterans administration pays some of the lowest prices for drugs doing bulk purchasing. should that be expanded? >> it's not due to bulk purchasing. there's a deal that speed so you disagree with the premise of the question? >> yet. it was a deal struck a long time ago and united states is upon example of nobody pays the same price for their medicines. it's a marketplace. there was a deal struck the basically says that we as an industry accepted that the veterans are a population in need of additional care, and we provide our products close to noncommercial prices to the veterans. and we do that on the basis of
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those prices don't affect the prices that we sell to medicaid. and the prices we sell to medicaid, which are highly discounted, don't affect the prices we sell to the private sector. this allows us to create access for the most unfortunate members of our society while preserving a business model that allows us to continue to find innovation. >> there's no way to extrapolate that model and keep you industry solvent? >> yeah, you could -- no. you could extrapolate that model. model. this is what the europeans do. by the way, it's an oxymoron saying you negotiate with government. you don't negotiate with governments. you take what you offer you. if you got all your insects -- investments son. the result of extend those preferential prices would mean
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substantial reduction in the total volume spent on research and opportunities for new products. without the u.s. market they would not be the tremendous expansion in the innovative therapies that are available today and will be available in the future. europe using europe free writing on american innovation. >> how do you balance the scale? >> you need good trade agreements where intellectual property is protected speaking speaking of trade agreements. >> that's one solution spirit the president of course bailed on tpp. what's the impact? >> we didn't support tpp because it was really bad for intellectual property. it didn't give us 12 years on biologics in the u.s. if you canada, australia, new zealand or highly developed countries, all free writing on inventions in the united states. if you look at access to the population, i don't have exact
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numbers are but a think if you say there were 100 products, there were 100 new products authorized in the united states, australia and new zealand, the population lives access to 30% of them. the uk, access to 47% of them. normally two to three years later than the u.s. their citizens are not getting quality health care spirit so you think that's why canada is cheaper? >> candidate is cheaper because of the rations and because it can because it free rides off of american innovation. our ability come in our industry, let me be very clear. we have sunk all money up front. we are not paying for the pill. the pill is an artifact. what you are paying for it is clinical trials, all of that knowledge and experience a she which tells you that the pill pe will do what it will do. the pill is irrelevant. it's just a way of getting back
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into your body. once you've done all that work you are very subject to commercial blackmail. because you need to try and recover as much money as you can from the sale of that intellectual property and, therefore, your force by governments to say well, i know you get $100 in th the u.s. and that's a market raised price, but we're not ready to get access to our market at all. you have a choice. you can either say no, which case you get no funds to support your research, which means prices go up more in the u.s., or you say okay, what can i negotiate? and by the way if you say no, i'll give an example. there's a huge advance, it allows women with breast cancer,
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it gives them 2 24 months againt the standard of nine for survival. it is an incredible revolution in the treatment of this cancer. you go to the uk, and the uk government has assessed this as offering as pennies on the dollar. pennies. the problem is i can say no, which i have come and we will walk away. but novartis is it there. the next company is in there. all of them have invested the money up front and all are incentivized to try to recuperate something from the marketplace. you cannot negotiate with governments. >> but on a slightly related scale, you remember when former president bush teamed up with former president clinton on pepfar and other things going to third world countries to try to
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lower drug prices of their. can't that same sort of thinking be brought back here? >> we do. that's why we give away 1.7 million prescriptions. >> more than giving away the prescription. i'm talking about the pricing. >> the price has to reflect the value of what you produce if not, you don't have an economic system that makes sense. the price has to dictate where you put your resources. do you put into rheumatoid arthritis, cancer, mental disease? pricing reflects economic value, and you need that to give choice. so you can't, if you distort those market signals you distort everything we do. and so our responsibility is to produce the best and greatest medicines we can, make the biggest impact on human life.
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and then to price it at a value that allows us to continue to do that work, with a reasonable return to our shareholders. that's what we do. i have just shown you the indices, the return we get in the stock market is in the middle of the road. it's not at the higher end of what some industries are. so in the end it's not, it's societies decision of how much dido they want to pay for innovation. and if you don't want innovation and you don't want the next cure, and price control. if you don't want innovation, then say you have to sell all of the drug prices at the same as you give to the veterans. is it not economic prices. these are prices different segments of a population of great need. this industry needs to have a return that allows it to continue to do its research. >> but you get the perception
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that because of the revenues of yours and other related companies that was very popular during the presidential campaign -- >> is always populist. >> but you get the whole notion that there sank hey, you are earning umpteen million dollars in revenue. you can't cut us a break? don't you get that? >> that perception needs to be addressed by really good insurance. it needs to be addressed by saying that we as a society want to take care of women who have metastatic breast cancer. and we value, through our market mechanisms, this product at this price. spin are you saying it's not your problem? >> no. if we could advance, if we could speed up the fda, if we could get drugs to market and less than 15 years, if we had our regulatory system that encourage innovation we could bring lots more drugs to market which would lower prices.
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what i'm saying is we advocate the ways of making our industry more productive. the more productive we are, the lower prices will be. because there would be more competition, more products in the market. that's what drives pricing. >> cut down on the follow-ups aa little bit because we're short on time. you said effective patient life, patent life, sorry, it's close to 14 years. what are your thoughts on ever greening? the discovery of -- has even said the practice is unethical. >> i'm not quite sure, george's define what that term means, evergreen? let's assume i will take the common expression of it. it's where you take a molecule once a day and you change it so that it is now once a week. it has some value. if society wants to pay for it,
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they will. if they won't, they won't pick a market-based system i don't condemn it or applaud it. it's up to society to decide to do what it wants week treatment or once a day treatment? sometimes it's really important. if you're injecting yourself everyday that an advance. to taking a pill once a week, once a day, it's pretty relevant and nobody should pay a premium for that. and society does that. in the u.s. in fact, you can't make money i evergreen. we don't. we have lyrica which is a product that will bring out once a day formulation. but we start the research like 12 years ago and there was delays and delays in delays and it's come to the market too late and it won't protect our patent or protect our sales. i don't, in today's society, ever greening is a failed
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strategy spewing earlier this year bill gates offered seat might help develop vaccines for merging diseases that could lead to global epidemics. such a vaccine development is generally unprofitable for pharmaceutical companies. what should be done to encourage drug companies to embark on such research? >> simple. get the incentives right. you want antibiotics because there's a dearth of new antibiotics. it's the product that you want people to invent and discover, but you don't want them to sell because you want to keep the antibiotics in reserves. so you need to find a way of creating an incentive to develop the antibiotic that's not related to the economic return of antibiotic. pandemics, ebola, all of the diseases we could be subject to that, out of the tropical force or outside of the united states. you need cures but you can't
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make money from those cures. the way to do it i believe is a transferable exclusive action if the fda said to the community, if you bring up a new ad about it with these characteristics and we approve it, we will allow you to extend the patent to one of your existing products. that's an incentive. that would create, that would fuel not only the companies, everybody would be looking at antibiotic development because they would be able to sell small companies, it would be able to sell their development to larger companies. the whole ecosystem would be interested in fighting antibiotics he goes there is an incentive that is fair to society and fair to the capital that goes into funding these research projects. >> we had sylvia burwell matthews before she left her post. she feels health care is a right, not a luxury.
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your view? >> it's a right to the extent that society is willing to fund it and pay for it. and, clean water is right to the extent that we've got sanitation. sanitation. we pay for it, but we value it. i mean, i don't want to get too political or philosophical, but there are very few rights in our constitution. intellectual property is one of them. >> before i get to the last couple of questions, a couple of calendar announcements. upcoming elections include richard trumka on april 4. irs commissioner john kosten just in time for tax day on april 5. joint chiefs of staff chair general john dunford will be here on april 21, and valerie
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copeland will be here on april 17 talk about her new book on april 17. as a newsmaker and before i give you the last question, we have a tradition here. everybody from nelson mandela to benjamin tha at night you have received this mug. >> the same mug? [laughing] >> not the same mug. it's yours. >> thank you very much. [applause] >> final question. if you became bazaar of health care in the u.s. and had i guarantee that all stakeholders -- bazaar -- live up to doing what you were doing behind you, what would your recommendation look like? >> i think what i just described. i believe in choice and market-based solutions.
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i think our health care has been hugely distorted by a lack of incentives being in the right place. i feel that we need to go back to the physician hospital provider relationship with the patient but we need to provide incentives for the providers to look after their population and maintain health, and not be paid for how many more x-rays they can do on a transactional basis. forget the incentives right, a the physicians to keep people healthy and everything else will align very easily. >> thank you, mr. read, this concludes our national press club luncheon. more information please go to our website we are adjourned. [applause] [inaudible conversations]
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>> a live picture from the floor of the u.s. house where members have been debating the rule for considering the republican health care bill. it consists of four hours a jolt of eight the vote to follow. the hill unofficial web account says up to 34 republican members will oppose the measure. all democrats expected to vote no. republicans target is to 15 which at this point didn't have. life coverage on c-span. and charlie will hear from house minority leader nancy pelosian picture build everything. we plan to have that for you live in about 15 minutes right here in c-span2. until then british prime minister theresa may is talking about a terrorist attack earlir


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