china on the trade front, where there is pressure to relax both commercial pressure and requests from china? >> this report does not address the question of export controls. we do pay attention to china's investments and interest in proving its own defense industry and its capability to produce and dizziness or domestic variants and a variety of different military. obviously we pay attention to the dual use aspects of it. particular in summary where china's commercial industries have lead over or spin-off effects that can benefit the defense industry shipbuilding. we pay attention. we don't address the question of

export controls on the u.s. side. .. this report doesn't make an assessment between china's capabilities in their systems and must capabilities that that is an area china is interested in developing. >> my question is to i see a

report earlier this year in connection that china was able to develop technology and weapons faster than the u.s. expected? would hat is your response to t? >> i will let the u.s.-china economic report speak for itself the we have instances where china has developed weapons systems and capabilities that appeared earlier than we expected we were surprised when we saw. several years ago we were surprised by the occurrence of a new class of submarine that we had not seen before. that is something we have to anticipate and expect. we are paying careful attention to the modernization and we have been surprise in the past and we

may be surprised in terms of seeing new weapons in the future. part of this report and what many professionals try to do is minimize the extent to which we are surprised by that. >> you mentioned in your report -- [inaudible] >> the most threatening -- [inaudible] >> we continue to see china interested in making investments to improve their capacity for operations in cyberspace and that is something we pay careful attention to. there is the potential for these types of operations to be very

disruptive not only in a conflict can be destructive to the united states but other countries as well and that is one of the things about military operations in cyberspace with cascading effect that are hard to predict. we have concerns about this and this is why we created joint military platforms like a strategic security dialogue to talk about issues that we feel our potential for friction in the u.s./china relationship. cyber is one of those areas. we don't talk about space, nuclear and missile defense areas as part of the strategic dialogue. >> you mentioned last year spending was almost double what the public acknowledgment was. what things will you give us as examples that they are spending on this year?

you did not speculate on the number but what they are spending on this year but not publicly acknowledged? >> we think their nuclear force modernization occurs and research and development money that goes through their defense industry we also think is from a different budget, a different account. some foreign acquisitions come from a different account as well and some local contributions go to local military forces in china as well. win you at all that together, that helpshen you at all that t that helps us develop military expenditure. i don't have data on with their negotiating but they have required a number of platforms

from russia, submarines and fighters, so they acquired a number of weapons systems that include foreign acquisition of technologies as well. >> you used the term in report, informatizati informatization. i have never heard anything remarkably like that. >> the best way i could explain it would be this is how china is interpreting the revolution of military affairs. this is china's interpretation and understanding of the role of information and information systems not only as an enabler

of moderncombat at they watched forces from the persian gulf war in 1991 until our current operations today. one of the things the pla has highlighted is the role of advanced information technology not only for intelligence surveillance and reconnaissance but enabling precision fires. when they talk about fighting and winning local wars under conditions of informatization, that is what they're talking about. >> talk about the j 20. can you talk about how you define what i interpret as an i.o.c. in 2018? >> we don't expect it to be -- have operational capability

before 2018. that is when we expected to have operational capability. that reflects our judgment and interpretation of how far they are in doing research and development and flight testing of the prototypes. in terms of having an operational capability, we are talking about sufficient numbers of the platform and integrated weapons systems and pilot training to conduct the types of missions that would be designed for. i would have to defer on further specifics. something to talk to the air force about. >> washington times. you mentioned china is conducting its power out of its territorial reason -- region. is that a concern for you? >> we continue to watch as

china's military is developing. i indicated that we see the pla contending this new set of missions. the chairman of the commission, hu jintao has given. there are opportunities to partner with china in a variety of ways. it is a common threat and a common challenge all nations face but no one nation can tackle on their own. we would like to be able to have a conversation with china and china's military on how we can build the capacity to work together in support of common objectives. obviously we have concerns about china's activity that would run counter to cooperation but that is something we will continue monitoring and talking about. >> any such trends that

operations would run counter to? >> we highlight in this report as in previous reports some areas where we have concerns. we had concerns in china's investment and capability precisely to support denial missions and china's investment in technologies and capabilities to deny others access to use of space. >> i's territoriachina's territ? >> these are capabilities of the-there is no specific instance i can speak to but we watch carefully as china's operations from china not only when we can work with them but -- yes. >> follow up on that.

take you back to christina's or original question. not clear whether human there was a positive development or downside. >> the best way i would characterize it would be on their terms. in 2004, president hu jintao issued to the plo a mission that provide a guarantee of strength and consolidation of position and provide strong security guarantee for safeguarding strategic opportunity for national development, provide powerful strategic safeguarding national interest and plan important role in safeguarding world peace and promote common development. we see the p.o. a adapting to these missions and looking at ways to operate farther from china. we see an opportunity to work with china as they are adapting

to these new missions. we see as china has greater capacity and capability to operate at a distances from china it has a responsibility and international rules and support the international community's interests in peace and stability. we see opportunities to work with them and we would like to continue doing those things we have done like counter piracy and expand those areas where we cooperate. very positive potential. there are challenges. >> going back to cyberattack, many originated within china. this express'es much more. some of which appear to have originated within their .

what specifically caused this expression? >> i wouldn't read much into that. arkansas about some computer activiti originated from china. a number of operations appear to originate from china and as we learn about them we have to understand the nature of those operations and that helps us say with greater confidence that some of these are coming from china. >> why do you say china? >> from china. >> when you say for china you say the chinese government? >> to be clearly personal i said

from china. edge they appear to originate in china. >> i have not read the report. there has been some question about carrier killer of long-range ballistic missiles. this deals with operational -- >> we highlight continued development of the anti-ballistic missile or the f df2 df21d. it has limited commercial capability and that is reflected in that report. they continue to work on that and develop that. i think that is -- one more.

>> you talked about getting ready for the mission it was designed for. it was an attack aircraft. game change in offensive weapon. >> we have to watch this. we need to monitor developments to find out what china may intend to use it for. i would not speculate for what specific missions would be. >> really appreciate it. thank you for coming early on a friday morning. >> thank you very much. appreciate it. >> thank you very much.

[inaudible conversations] >> tomorrow on washington journal conversation about bipartisan efforts in the senate to change campaign finance laws. there next guest will be meredith mcleehee and capt. laurie manning of the education institute will be here to talk about the 14,000 support physicians in the u.s. military that are being opened up to when. a look at this weekend's meeting of the g-8 leaders at camp david. thomas right to have an update. washington journal takes your calls and e-mails every morning at 7:00 eastern on our companion network c-span. more from the road to the white house tomorrow when senator marco rubio will be speaking at a fund-raising dinner in south carolina. the florida republican has been mentioned as a possible vice presidential candidate on mitt romney's ticket and that will get underway at 8:30 eastern on

c-span. >> notables includes timothy noah lawn that haves that have nots in the great divergence. and a 24-year-old j. edgar hoover's war on a new type of american enemy, radical terrorism and at 3:20 narrow scientist david linden on why the good stuff feels so good in the compass of pleasure. on afterwards, alfred nobel and his nobel peace prize. >> there is this myth that you get this prize for peace out of guilt over his invention of dynamite. i say in my book is hard to know exactly into the man's head and heart but this seems not to be true. it seems he was proud of his achievements in the areas of explosives. what we would call infrastructure. >> sunday night at 9:00 eastern

and pacific on booktv every weekend on c-span2. >> the senate primary house on aging and subcommittee held a hearing on the high cost of hiv aids drugs and monopolies in the market. chairman bernie sanders introduced a bill that would lower costs and increase access by eliminating barriers to generic competition and creating a $3 billion pilots for drug research. witnesses include nobel prize winner and economics and former britain administration official joseph stiglitz. this is an hour and 45 minutes. >> the issue we are discussing today is of monumental importance. it may be controversial first within the halls of the united states congress but the american people understand this concept of the more support there will be. i think it is fair for me to tell you i do not expect the

legislation we will be discussing today to be passed tomorrow or in the next few months. the united states congress, this is a fairly radical piece of legislation. many billions of dollars of opposition will be out there from drug companies and other sources. i believe from the bottom of my heart that this issue is so important that discussion has got to begin as soon as possible and that is what we are doing today. the ideas people may be hearing on c-span may sound fairly radical but they're not because what we are talking about is common sense and in the best interests of the people of our country and throughout the world. i want to thank all of you for being here not just for being here but for the work that many of you have done for many years on this subject. r thought my approach to heali

care from a basic premise. that health care is a right, not a privilege. poverty, inability to pay for health care or medicine should not be a death sentence in the united states of america or anyplace else. yet this is a significant degree, that is the case. 40,000 americans die each year because they don't get to a doctor when they should and many others are suffering. to me one of the great moral issues of our day is there are people in our country suffering and in some cases dying because they are not able to afford a medicine that can be purchased for pennies for treatment. in other words it is one thing. we can all understand this. if somebody has an illness that is unable to be treated, we

don't know how to treat it, that death is a tragedy but it is a different type of tragedy. is a needless tragedy when somebody dies because they can't pay a few pennies for a drug that is out there that can cure them and ease their suffering and that is what we're talking about today. the analogy would be if someone were in the middle of a swimming pool and drowning and someone turned their back and says i am not going to jump in the pool and save that child. the united states has today as most americans should know the highest prices in the world, prescription drugs. according to the canadian madisons prices review board annual survey average prices of medicines in the united states in 2009 were 85% higher in the u.s. than in canada and approximately 150% higher than in france, italy or sweden or switzerland.

price differences on certain drugs are far greater. some i will talk about in a minute. the simple fact is the prices of patented medicine are significant barrier to access to health for millions of uninsured and underinsured americans let alone people in the developing world and people die because of that. this is an enormously important issue. it is an issue that says our health care system is a system which allows significant numbers of people to die and suffer because they can't afford medicine. according to the kaiser family foundation and harvard school of public health 40% of americans reported experiencing, quote, at least one of three costs related concerns in their family, 16% say it is a serious problem to

pay for prescription drugs. 29% say they have not fill the prescription in the last two years because of the cost and 23% say they have cut pills in half or skipped doses in order to make a medication last longer. i remember talking to a physician in northern vermont, primary-care physician in a working-class town and she said i write out a prescription but 40% of people don't fill them. what sense does that make? what sense does that make when people are unable to fill and pay for a prescription? people get sicker. they end up in the hospital at great cost for the entire system not to mention all of the suffering that is involved. stopped and think for a moment what these numbers really mean. we now take it for granted one of the great advances of the 20th century was the advent of modern medicine's capability of treating a wide range of debilitating and fatal illnesses

but all of that research and development doesn't mean a thing if somebody can afford to purchase that drug. the concept we are discussing today is relevant to all kinds of diseases. we have introduced legislation based on the prize model of all kinds of diseases but to date the legislation we are discussing deals strictly with hiv aids medicine. let me tell you why i have introduced separate images nation to deal with hiv/aids. the reason is it simply blew me away and i think it would blow anyone's mind away to understand that one drug, costs over $25,000 per person per year for cost of treatment. but a generic fda-approved

version of the very same drug is being purchased from a competitive supplier by a u.s. government program. that program is the president's emergency plan for aids relief for under $200 per patient for distribution in developing countries. let me repeat that again in case somebody in the c-span world didn't get it. that is the same exact drug which in a local pharmacy in washington d.c. will cost a patient $25,000 is being purchased by the united states government for distribution in the developing world for $200. twenty-five thousand dollars, $200.

according to the cdc, approximately 1.2 million people are living with hiv in the united states. each year approximately 50,000 americans are affected with hiv and approximately 17,000 people with aids die in the united states in 2009. globally of course, the numbers are staggering. according to the world health organization there are thirty-four million persons living with hiv/aids worldwide and 2.7 million more are infected each year. 90% of the thirty-four million hiv-positive persons live in developing countries over thirty million persons get only approximately seven million of them are receiving treatment. in the developing world the vast majority of people who are struggling with hiv are not getting much therapy they need. all the medicines can slow or

halt the advance of hiv many americans in the united states of america diagnosed hiv-positive are not taking the medicines they need because they cannot afford them. increased demand has overwhelmed federal financial support for the aids assistance program administered by the state's. fiscal year 2010 it serve to a record 229,000 people reflecting an increase of 24,000 people although fiscal year 2009 had a 40% increase sins fiscal year 2007. however during that same period, federal funding only grew by 9%. so here is where we are in the united states of america. not talking about south africa or the developing world. funding shortages caused adap's waiting list which was 361 people nationwide in 2010 to

grow to a high of 9,217 people in 12 states as of august of 2011 and they are still at 2700 people in 2012. two 69 americans last week need to be on treatment who are not. that frankly is only part of the story because many more are simply because being thrown off the waiting list due to eligibility retirements. if your income is a little too high or your state has a cap on the number of people who can enroll you might not get on a waiting list. to summarize, all over the world millions of people are suffering from hiv, not getting the treatment they need in the united states of america. people are suffering with hiv not getting the treatment they need all vote the treatment is

extremely inexpensive. that is the challenge we are going to address today. how do we deal with that? the approach that we are offering today and i am so happy that our distinguished panel is here to discuss it with us, is that in the case of aids, people can get the drugs they need at prices that they can afford. that is a radical concept that we have. people should not be dying because they can't afford a rather small cost for drugs. the solution we are offering is a prize fund proposal targeted to hiv/aids medicine at 11:38. that is the legislation we are discussing today. innovation would be rewarded annually from a $3 billion price for hiv/aids which would make

awards to developers of medicine based primarily on the added therapeutic value a new treatment offers and the number of people that benefits. products would have generic competition immediately after fda approval. the bill would eliminate today's high price marketing monopoly when a company says we know the -- we own the patent. nobody else can have it. we can charge as much as we want for the medicine in the case of $25,000 a year per patient. some of our witnesses will discuss companies receive a prize today for bringing a new drug to market. it is called a monopoly. that is the price they receive under the legislation we are discussing today.

instead of making money by charging their patients outrageously high prices, in the case of $25,000 per year innovative companies would be making their money by receiving prize payment for producing important medicines to ease suffering and save lives. once that medicine is approved for sale of that company can receive price payments but the medicine goes to the market at an affordable price because of generic competition. in the case of $25,000 generic companies are making it for $200. there are many other aspects we will discuss today but in essence the concept is designed to accelerate innovation and expedite access to life-saving medicines at the same time. more new ideas to tackle serious health problems facing humanity.

getting the product out to the markets as effectively as we possibly can. this legislation would reward the true innovation, even in a market incentive for copycat drugs and get all hiv/aids treatments to people who need that generic prices with some estimated to be under 1% on average. i believe by breaking the link between drug prices and rewards we can provide virtually universal access to medicines as soon as they are available on the market and restrict the formula and manage overall research and development incentives to be administered funds to provide significant rewards but only for new medicines that actually offer new value. the bottom line would be better products and add generic prices. all pharmaceutical products right away. not after ten years of astronomical prices.

it pays for itself and then some. the $3 billion per year fund may sound like a lot of money. when you compare it to the savings we would realize by paying generic prices for 9.7 million estimates estimates were spent on 2,011 on the top 15 brand-name hiv/aids drugs last year before taking to a discount, it is a bargain. the initial investment does cost money but we save money long term and that is why this bill would require all private health reimbursement and insurance programs to contribute to the prize fund in the proportion of hiv/aids patients couple by the plan. to conclude, the bottom line is the goal of our laws and policies for medicine must be to develop drugs as quickly as possible, drugs that are the most effective we can find for the diseases people are facing and to get them to every person who needs them as soon as

possible. that is what i tried to do for hiv/aids treatment. which reward innovators for developing these medicines in a way that people who need the drug to suffer and in some cases i. i want to thank the panel . i want to thank the panel we have with us die . i want to thank the panel we have with us . i want to thank the panel we have with us today. not only distinguished panel but people who are familiar with this issue. i want to thank them not only for being here today but the work they have done for so many years. let me begin with dr. mohammad akhter. dr. akhter is director of the d.c. department of health. dr. akhter has served as executive director of the national medical association, executive director of the american public health association and commissioner of public health of the district of columbia and he has been a

professor at howard university college of medicine and senior associate dean for public and international health. one of dr. akhter's stated goals is expanding hiv services including making them available on demand. dr. akhter, thank you for being with us. >> good morning, chairman sanders. appreciate the opportunity to be here. i want to thank you for holding these hearings and i am honored to be here to testify in support of your bill 1138. we thank you for all work you have done in the past. for many years, you have been always an advocate for the american people and want to make sure people have these services available and affordable to them. i think this bill is a continuation of your lifelong effort in making sure people have the access to the

medication people so desperately need in order to live. i want to share with you and members of the committee the successes we have had a washington d.c. in dealing with hiv/aids epidemic. the district of columbia has emerged as a leader in prevention. we have been doing hiv testing and educational programs and testing in clinics and emergency rooms but we are also testing where people come together for a driver's license, people get social services so it is made available and accessible. last year we tested 122,000 people. one out of five citizens of the district of columbia had a chance to get tested and to know their status but that is not all. we have also been very active in connecting people who want to be tested to the treatment. 75% of the people who tested

positive were connected to the treatment in three month. mayor gray and city council have been very active in support of hiv/aids treatment because treatment and prevention are now linked together. you can't do one without the other. we have made the treatment on demand available to all who test positive so nobody in the district of columbia is turned away. we know in other states the waiting list can come to the district and registered themselves so they could get the premeditation and that is a shame because everybody ought to be able to get the medication where they live and where they work. i want to say because of our working prevention and treatment we have been successful because of collaboration with the government. particularly with the centers for disease control and also

with the national institute of health. taking personal interest in the district to make sure we have the best available to be able to act on it. because of our work in the district along with community-based partners, sins 2009, there has not been a baby born in the district of columbia with hiv. the number of cases of people dying from hiv has been reduced by more than 50% in the last five years. number of persons and also because of preventive work, new cases for the first time started to decline in a number of cases. this is a success story. hiv/aids funding played a big role in terms of providing us the adap club we were able to

provide our residents but despite this success we talk about in the district of columbia, comes at a very high cost. first, a lot more people are living with hiv/aids today and every day the number continues to increase. second, more than half of people in the district of columbia are in their mid 40s. they are releasing medical care which is very expensive. we have been fortunate to move some of those patients to medicaid to get the other services that are available. in the district of columbia 01 patient per year is right now 9,400. that cost is going to go up. that is the minimum cost because we are starting treatment earlier and earlier on the diagnosis and i believe it is going to be not higher when everybody who needs the medication needs to be going to the treatment.

in 2009 there were 755 cases in the district of columbia, new cases and they added two twenty-eight million and after all at the end of the day taxpayers end these costs and we all pay for it, these exorbitant costs. we are encouraged by the bill you have introduced and looking forward to having a good discussion on the bill and hoping it will eventually pass so we cannot only take the situation at home but also abroad. thank you for the opportunity. >> thank you for your presentation and all the extraordinary work you are doing. the next finalist is frank oldham, director of the national association of people with aids and sir if on the board of directors for the national minority aids council. mr. oldham was center coordinator on the mayor bloomberg -- assistant commissioner of the chicago department of public health,

hiv/aids public policy and deputy assistant commissioner of the bureau of hiv services for the new york city department of health. he launch the faces of aids project in 1999 which spawned two books at a touring the exhibit showcasing the people who have aids. he advises policy planning bodies in new york city and the centers for disease control in washington d.c.. mr. oldham, thank you for being with us. >> distinguished members of the committee, thank you for the opportunity to share our thoughts with you on a subject that is so important to 1.2 million people living with hiv/aids and america. national association of people with aids is the largest and oldest patient advocacy group for people living with hiv aids and also seen as the most suffered voice of our community because of our longstanding

independence next year. napa has a bittersweet milestone. return 30 years old. i say bittersweet because we would like nothing better than to see an end to this epidemic which has already taken the lives of 620,000 americans. we're thrilled to be alive to do the good work organization needs to do to educate the needs of people living with hiv/aids. these are 30 years that friends of mine lost in the early years of the aids epidemic in the 1980s and 90s they never had a chance to live. with this in mind we think the industry, the fda and the brilliant researchers for creating anti retrovirus. i am living proof they work. i have been positive for 23 years. we are at a brilliant beginning of saving the lives of people living with aids.

according to recent studies less than 25% of people prescribe anti retrovirus treatment is because they get nauseous especially when they first start. others because of barriers to medication and have the potential to increase risks for long-term organ damage. while premature death at the age of 70 is practical to premature death because of aids at age 30, napa does believe we can work to support research that will find better treatment that will give those of us with hiv/aids the same quality of life and expectancy as those who don't have hiv. one of my friends and colleagues taking anti revivals is thrilled to be alive but he takes an additional ten skills to manage the side effects of this class of medication. please keep in mind when factoring cost burden of the

status quo please keep this in mind. our 30th anniversary is not only bittersweet because the epidemic is still here but it is bittersweet because we're fortunate to have treatment that dramatically extend survival but not an acceptable end game. we can and must do better. for the last two years at the national conferences napwa research has involved creating figures for the immune system to allow a patient's natural self-defense to kick in and work against hiv. this involves therapeutic vaccines to be living -- given to people living with hiv after they have been infected. to explain very quickly, many children get smallpox. despite being treated for the virus lingers in the background for the rest of the person's

life. in most cases it remains in check but in some people as adults emerges as shingles. researchers are working on a shingles vaccine given despite the virus in a person's body. the vaccine is designed to prevent further outbreaks within the person who is already infected. so too would this be the case for hiv therapeutic vaccines. the result has been emerging recently. one company has shown therapeutic vaccines used in monkeys were intentionally high infected with the monkey version of hiv was able to achieve a functional secure -- cure in some monkeys. no detectable viral was reported even in the most hard to reach reservoir of the animal. this represents significant progress. another company based in norway

has shown the therapeutic vaccines reduce the viral baseline in patients significantly better -- this offer is an insurance policy to all people living with hiv who have no access to -- can afford the treatment. no longer responsible leaders believe can't stop taking a vaccine once it is a new to continue. i want to make two other points. both of these jurors -- cures may fail because these companies do not have tnot have the money them. we need to rethink as this bill says how we actually get companies to invest and

incentivize companies to find treatments. the national association of treatment of people with aids will be here as long as there are people living with hiv/aids who want to be partners with senators and members of congress and industry representatives who are prepared to roll bar sleeves and take an assessment of what does and does not work when it comes to incentivizing drug developments in hiv. we applaud you for thinking creatively to figure out new incentives that could result in faster results. we did not want to come back 30 years from now without a cure. all possible incentive options should be put on the table to provide a bridge to complete your. >> our next panelists is dr. suerie moon who is co-chair of the forum on global governance,

harvard global health initiative and harvard school of public health and co-director of the project on innovation and access technology and sustainable development, sustainability science program at harvard school of government and previously worked for doctors without borders and consulted on access to medicine policy and madison patent pool, unit aid and the who and is a member of the board of directors of drugs for neglected -- in north america. the proposal review committee of the unitag and the who project on local production for access to medical projects. thank you for being with us. >> thank you very much. i want to talk about the link

between drug prices in the united states and global access. two topics that are often discussed separately but are closely interlinked as you pointed out this morning. i want to provide an update where we are today and how we got here. global access to hiv medicine has increased over the last decade to reach a total of 7.4 million people as of 2010, 90% of whom live in developing countries. this was unimaginable ten years ago. two of the factors that were key for increasing access in developing countries in particular was the dramatic reduction in retro viral medicine and availability of international funding. in developing countries the annual price has drop from 10 to $15,000 per patient per year to as low as $100 or less today. less than 1% of patented u.s. price. these came about due to robust competition among generic producers through a number of

measures. americans can be proud of these accomplishments because the government played a key role in three elements of this sorry. first for major investments by the n i h starting in the 1980s which allowed the treatment today. second is the fact the u.s. is the largest single global fund of hiv treatments in the global fund and these contributions have strengthened the public image of the u.s. overseas. for the first time in five years it seems the u.s. will be decreasing its competition and i urge you to do everything you can to prevent this reversal. most recently, as i alluded to earlier the nih funded research last year demonstrated therapy cannot produce the risk of transmission of hiv by 96%. this research finding is the closest we have to an hiv vaccine but we are far from a vaccine as my colleagues have pointed out but this is an amazing finding and it could potentially bring benefit to

millions more people and potentially help the epidemic. ironically, a painful irony, just as the science shows we need to find ways to reach more people domestically as well as internationally international funding for hiv is in a crisis in the u.s. putting the drugs out of reach. too many americans living with hiv are unable to access treatment. the same drugs cause $220 overseas cost $25,000 here. the question is what explains this difference? in my view the availability of low-cost generic drugs in low-cost countries is part of men and within global political bargain. people living in the u.s. continue to pay higher price for medicine in order to reward companies for their investments in r&d and people in the poorest countries of the donors who support them will essentially pay for generic drugs near the cost of production. that bargain is based on an

assumption which is that people living in rich countries will in fact get access to care through government programs. if this is no longer true and prices are too hard to insure access even in the wealthiest country in the world than that bargain is not sustainable and that is a problem for people everywhere in the u.s. and abroad. as others have pointed out this crisis stems from the way in which research and development for new medicines takes place and the fact that we recuperates r&d investments through a higher prices. this pricing system has terrible consequences especially when we know the drugs are manufactured for less than 1%. we know if everyone in the world pays that 1% generic price than it would evaporate. is there a better system? what i find so promising about the hiv price fund you put on the table is it would try to achieve both. it would improve innovation as

well as insuring the broadest access to the fruits of scientific research and through a powerful concept which was recently endorsed by an independent in fed national expert group of the who looking at new mechanisms. i will leave it to other panelists to go into detail how the price fund works but i wanted to highlight one key feature of linkage which is it would decrease marginal costs -- decrease the marginal cost of extending access to more people and this is the critical principle we need to keep in mind when thinking about how to get access to millions more people, how to get access to millions more people so we cannot use treatment and prevention as well as stable lives. let me make one final comment about the international level. at the end of your bill you mentioned the possibility of a donor price fund and the with

the donor price fund can function is to incentivize companies to share their problems with a new incentives

those provided hmmm share of the un commission for funding the financial system and a member of the cftc advisory committee on emerging regulatory issues and foreign policy magazine named him one of the top 100 global leaders. thank you for being with us. >> thank you very much for holding this hearing. i welcome the opportunity to share with you my thoughts on senate bill 1138 and broader subject how to finance research on hiv/aids and health more generally. i should begin by saying the approach taken by the bill is exactly right. the approach i have been arguing for, and how globalization works by academic varieties and i have been fortunate enough to play over the last two decades.

the top of this hearing cannot be better after the release of the consulting group on research and development financing and coordination of the world health organization. i was able to present a keynote address a week ago. interestingly but not surprisingly these concern the organization and financing of research at and development coincide closely with this bill. after reviewing a wide range of alternative proposals. i will not spend time reiterating the seriousness of the hiv/aids problem. madison made enormous progress in alleviating some cost and suffering and further research problems made a bigger dividend. the problem is the madisons are costly and the price charged for them is very high but the cost of production is a fraction of the price charged according to

the sentence made earlier that the cost of production is 1% of the price charged. this is the inherent consequence of the innovation system. the curious aspect of the system is the government directly or indirectly has both health r&d through public support and indirectly through public purchases of madison thin medicare and medicaid programs. given that government is financing most of the research is important to be done in a way that is the efficient. there are many dimensions to we efficiency two of which i want to talk about today. the first is knowledge is acquired and used efficiently. thomas jefferson described knowledge as being like a candle. when one candle lights another does not diminish the light of the first. knowledge is disseminated and used as widely as possible. the desire to have knowledge used as widely as possible can run counter to another concern. we have to have incentives to do research. our patent system tends to balance the concern for

providing a temporary monopoly power the results of which is there is restricted use of knowledge for limited period of time. increasingly we have become aware of other limits to the system. providing incentives it does not provide incentives that correspond to returns. the health-care sector may be more profitable to meet two drugs and development of a drug that makes a difference. the patent system may have adverse effect on innovation because the most important input to any research is prior ideas and the patent idea at encourages secrecy. the opposite of openness as the hallmark of success to universities and academia more generally. there are ample ways to steer the circle like blinking research and development centers from drug prices and that is what f s 1138 proposes to do in the context of new medicine to treat hiv/aids. does this through simple

mechanism. the tax system is a surprise that the temporary monopoly power results in distortions i described above. we use the power of competitive markets to ensure want the drug is discovered it is made available at the lowest possible price. competition in shores the knowledge is used as widely as possible in contrast with monopolies where prices are raised to restrict benefits that accrue with knowledge. the true contribution as opposed to the current system where research efforts maximize it ends achieved from maximizing others. what is innovative about this bill is section 9 corbin source dividend. it recognizes there is an alternative to a collaborative approach to innovation which has proven itself enormously successful in a number of areas of research and not just i t. research and previous research

by providing incentives to ensure more knowledge is in the public domain the bill will contribute to the maximum knowledge in this vital area. .. need to increase efficiency is excelling. the difference what the drug companies charge and the government and the cost of production is until the tens of billions of dollars a year. dean baker estimates the gap at 207d billion a year. money that goes to drugs could be better spent. we need more of the health

research to be spent on diseases that matter. much of the difference between the cost production of what is challenged does not go into research but advertising and markets much of that is not spent to transmit information to better health. therefore increasing power in profits. moving from a patent system to a effective price system. use ensure -- critical step in creteing this more efficient invasion system. america is the most innovative country in the world. it has the best universities, attracting the best mind from around the world. but america also has the least i efficient health care system in the world. spending in the advance central countries. spend -- dgp on the health care sector than any other country in getting for a outcomes. we need to harness our invasion

system to work to drive down cost and improve information and improve performance. it is not just a matter of economics. it is in many cases, a matter of life and death. we can do it. a essential step in doing this is delinking the research and development inventives in the prices and promoting grater sharing? snick knowledge. it model for further reforms in the health invasion system. thank you. >> thank you very much. my next panel lists is lawrence. who is the royal professor of harvard law school and director of the edth six are at harvard university. professor found in the center for internet society in law school and was previously on the faculty at the university of chicago law school. he serves on the boards of creative commons maple light,

the american economy, berlin wasa research fund and on the advisory board of the sun light foundation. he's a american philosophical association and received numerous awards. and being named one of scientific persons top fifty visionaries. thanks very being us. >> mr. chairman, thank you for the opportunity to testify. as you know, since the beginning of this republican, there has been a fierce debate about how best create incentives and innovators to discover and bring to market advances in sentence and address important public needs. on one side of the debate had been supporters of exclusive right.constitution gives congress the power to secure such rights with and since the earliest days of the reason, congress has by law established mechanisms which secure exclusive rights to inventers.

on the other side of the debate, skeptics about exclusive righted at least with some demands of invasions. these have not doubted the need for incentives. they worried the cost of the systems of incentives secured through government-granted monopolies outweigh the benefits. they are are property rights but -- coast road in 1959, quote, all property rights interfere with the ability of people to use resources what has to be ensured the game for interference more than offsets the harm it produces, end quote. these cost for many, and in my view simply ignored. they include the copyright system, but also the cost imposed upon the environment of discovery itself. many for example, one unintended cost for the act has been to inhibit the sharing of scientific knowledge among academics.

technology transfer officers and universities have reinstructed researchers that secrecy is necessary to protect inveighses. we have no way to be certain about the cost of such a change. but we need to worry about whether such cost outweigh the benefits of the system. my view in general has provided importance ever important support for invasion. it's important that congress innovate with alternatives and test alternatives to see whether it is the best system in all areas of invasion and whether there are better systems for areas of invasion. i've been addressed one particular important part of the bill. open source fund in section 9. it builds upon the insight that we see in the beginning of the internet where scientists have been experimenting with alternative ways to share scientific knowledge. the traditional scientific journal provided an important service. but the process and constraints

of journal production were grounded in the technology of physical printing. the significant investment in publish justified the vying -- provide the revenue necessary to support even nonprofit journal production. free access was simply not feasible. but as the traditional mode of scientific public cage is moved to the internet. the templation of at least some has been to exploited market power to radically increase the cost of access. in one study, for example, the american -- association of research libraries calculated that between 1986 and 2004, the cpi increased 73%, the unit cost for serial public indication -- like wise in a study published in 2004 found that the average cost per page of a four-profit

journal was four and a half times the cost of not profit journal and the cost per citation was 9.2 times the cost nonprofit journal. the differences don't reflect the relative inefficiency. they reflect, a business model that seeks to exploit interlasting demand that some have for scientific journals. whatever e whatever the price, harvard university will pay it. for many publications the elite universities more than outweighs the lost from institutions that can no longer afford access. the internet changes this dramatically by offering a free digital platform. and not public indication data as well. this work too, needs revenue to support its provision. and so journal such as the public library of science make publish work available for free. but author must pay publication

fees in order to make it available. while the fees fees are sub sooned within research budgets. the research budgets could benefit from the support that the open source dividend prize offers to make it so more scientists can make their work available in the particular way. finally, let me make one final comment about the hearing and the bill. i spent the last five years of my career working on the cynical story of congress. and the cynical story of congress would predict such a bill and hearing would never occur. and indeed it's not surprising we have a bill with a one senator sponsoring it, and the hearing with no senator except for the sponsor present. when jamie asked me to come any initial reaction was why waste my time? i think it's extremely important, and i commend you, senator, to give america a convention of how legislation could occur where it was sense

and not campaign dollars that drove the bottom line of what congress did. i thank you for the opportunity to fling myself down here for the purpose at least and i strongly support the invasion you're trying to add to the field. thank you. >> thank you very much. last but certainly not least of the panel list is jamie love. he is the directs of knowledge ecology in international the win ore a award. i get a little bit intimidated with you smart poem. people. the noble peace prize winners. the creative institutions. he is the consumer dialogue and committee. and chairs the essential invasions board of directors. he serves an agency -- organizations and nongovernmental organizations and invasion and intelligent property works and has been working on the medical invasion for at least a decade. and jamie is somebody i've known

for a long time and much admire. jamie, thank you for being with us. >> thank you. i'd like to start saying my prepared statements 14-pages long, and rather than attempt to read it in five minuteds, i will provide a summary. today we're asking that the congress should undertake a radical and transformative change in our incentive system for hiv/aids. and this is a big -- of course, so why should congress consider something that is radical and transformative as it relates to aids. part of the answer is the current system is flawed in important ways. many of which were referred to

bit other speckers. but these floss and warrants would be acceptable if there was no other feasible way to stimulate the the invasion. i'm here to -- the prize fund approach is better than the existing system. indeed, so much better that logic, evidence, and duty excel compel the congress to make the change. as elected represents, we ask you to improve our lives and find better ways to solve old problems. the prize fund is a reform that builds on everything that is well-known about the economics of invasion. it eliminates the artificial scarcity of new medicines and addresses well-known flaws in the current system of granting product monopolies. the current system places a crushing financial burden on

patients of the broader public. often at the expense of access itself. the current system does not appear to be sustainable or appropriate for dealing with the hiv pandemic which requires high levels of access it new drugs not only in the united states, but throughout the world. others have referred to a number of basic facts that the united states has 1.2 million persons living on hiv, and with new infections that number is growing every year. i can remember when the size of the community was considered 200,000 people. now it's 1 % 12 million people. five years from now it'll be more than 2 1 % 12. -- being $25,000 a year. that's a fairly inexpensive cocktail of drugs in the current environment in the united states. somebody more expensive regimes

even for drug treatment patients could be as much as $5,000, and for people that develop drug resistance which a lot of people that will happen to them over the period of the treatment is a life-long treatment current and present. the treatments can be $50,000 to 5eu7d ,000 per year. i don't see how you take a country with 1.2 people and impose that cost. the cbc says 64% of the people living in the united states that are hiv positive are not receiving drugs. recent studies show that people when they are taking drugs the risk of reinfects goes down by as much as 95%. some of the companies are trying to encourager not hiv positive to take drugs in order to prevent retransmission. there's no way you can do that.

the bill proposes a $3 billion reward fund for invasion. split into three different types of invasions. it has an end product price which is similar to the economic intentives so you at the monopoly. but it's better. because it rewarded invasion based upon the proof outcomes. it stops the rewarding of products which are just come rabble to existing drugs. ly note the 50 largest selling products in the united states today for aids 13 of the 15 were registered by the fda after 2003. i'm sorry before 2003. they're like 9-year-old products in terms of the underlying drugs. some are the combinations that have come on the market earlier. they are made up of older drugs, basically. we spend probably easily,

abouted billion a year more every year we have to for aids drug at current prices. to support the cost of the monopoly. with that you have approximately one drug a year after the last twenty five years which most of them are no better than the existing drugs and minor variations of the drug. a product first registered in 1995. so the price on reform that inventive by instead of saying you get money with rep indication of other drugs, it would say it would what you do to improve health outcomes. -- but would incentivize things that is medical new and benefit the patients most. that's the reform of the end product. and it's calibrated by the way with three times what the

industry says the cost produce a single drug on the -- just for the u.s. market which is only 4% or 25% of the gdp. it's fairly a generous allocation. it also ads an open source dividend of $150 million a year to incentivize people open source access to libraries, data, materials and pat tent interventions which there are thousands in the hiv area. to make it easier for drug developmenters to get the kind of research that the professors remp to are necessary for the rd process. finally, it opens the door if the development of competitive iareas. fund upextreme research through a competitive system where employers and insurance companies would choose the manager of their money for the dealing with the issues referred to as the so-called valley of debt in the area. taking together collect evely,

this is like a nuclear option for the pharmaceutical sector. instead of one sector and the aids sector. if can it would work there which is a completely dysfunctional. things are unsustainable. you have literally the unability and the present to with the population and the growing demand. you have tens of millions of people outside the united states. suffering a huge crisis in funding right now and sustainable for industry outside the united states. it would take this market, if it would work here it would create a enormous pressure to rethink the rest of the problem. >> somebody may hear you. so the challenges is the government doesn't work and it's about invasion can you innovate and can you do something different? thank you very much. >> thank you very much. let me start off, let's do this

let me start off with an ethical question. i noticed in the biography among many other achievements. you deal with ethics. >> i think the average american upset to know that people are dying not because we don't know how to treat those people, that's one sad aspect of life, but that they can't afford what is in fact with a minimal cost in terms of the real production of the product to save their lives. it's like somebody over there dying and nobody's going out and reaching out a hand. what rat what are the ethical implications of this? i agree there is a significant ethical question raised by the problem you described to somebody not voluntarily stepping toward and saving a drowning child. i think this problem is worse.

as jamie was emphasizing. the government is intervening in the market all right. the intervention in a form of exclusive right called the pat tent. the consequence of that intervention is to produce a market where only a tiny slice of those who are affected by the disease can actually get access to the drug. there's a different way for the government to intervene. the government could intervene as the professor described the bill has made possible in a way that would facility a wide range of people being able to have access to the drug. i think the precise ethical question ask when you have two modes of intervention, and you collect one that certainly will exclude the vast majority of people who need access to the drug what possible justification could there be for that? >> in other words the government is proactively preventing people from getting the treatment. >> by choosing one and the way

the system is designed the public's money is not being used in a equatable way. let me add to that and tell me what i'm missing here. ideally what i think medicine is about providing the treatment when people need it. we have a couple of physicians up here, at least offer if somebody does not get the medicine they need and their illness continues and they end up in the hospital, and at a huge expense are we saving money as a system by not providing the medicine when somebody needs it? must be a financial implication. >> mr. chairman, we see this every day. it's obviously a lot more exinsive whether somebody gets to the hospital and have to be the intensive care unit. you spend millions of dollars during the -- no good outcome at that point.

and so it is basically foolish to be in that position when you could do some preventive work upfront. when you can provide the medication when you save the person's life and you present the transmission of the disease to others. you are not only providing the treatment to the individual. you are also protecting the society. thing is the bigger question for us to discuss. >> so for $200 roughly speaking, for the hiv/aids cocktail, by not providing the $200 somebody will end up in the hospital, suffer a great financial cost to the society, that does not make a whole lot of sense. it does not make economic sents, professional sense, but make public health sense. >> right. >> where you are leaving the individual untreated and the

enperson can spread the disease to others. >> other thoughts on the general subject? >> yes, i think that one of the things we mentioned we are living in a time of treatment as prevention. if the treatment is going to be $25,000 opposed to -- $200 300,000 people of the 1.2 don't know their acted. go by the strategy and try to get them in treatment. we have to be able to afford do that. this legislation would make that more possible. >> other thoughts? >> yeah. >> we've been told in cases where some jurisdictions where people are not testing to see if they're hiv positive. the inmates in prison unless they are released because the institution doesn't want to bear the high cost of paying for the drugs. it would be sponged to that would be -- responding that would be

laughable if not so tragic. not diagnosing somebody because you can't afford to pay for the treatment. yeah? >> thank you. i think there's a point that the -- importance of prevention and the preventing new infections woat both in the country and worldwide has been everyone sized. if we imagine how the pub vaccine were developed $25,000 $35,000 per person per year. i think that drives the ethical we're facing. some of the big challenges. i want to get back to the point regarding the fact that ip systems systems are government interventions in the system the u.s. interconveniences in the market here in the u.s. the u.s. government has been pushing for a more strine gent ip standards worldwide including in developing countries starts in the 1980 wz the trips agreement and more recently through demanding certain types of provision in free-trade

gleements are being negotiated. demanding higher and higher ip standards knowing what the implications are. i think the ethical questions reach for a beyond the. >> let me ask you a question which i know the answer. but some people watching this may not know why is that? what are the economic forces involved here? is it an accident of the united states government is telling poor people around the world in the essentially saying they are going to have pay more for drugs to keep beam alive how does it happen? >> there ares on the panel speak more on the problems with the way our government is functions and the own trade policies are designated. but sorry, our decided upon. but i think one rational that has been put forward why it is in the u.s. interest to push for stronger ip.

we want other countries to pay higher prices and contribute more to the research and development. of course, whether that's not effective and whether or not that acceptable in countries where people are living on $100 per year. $200 per year is another issue. i think what is quite interesting to consider today there are interesting alternatives that have been put on the table at the world health. 193 states will come together to debate the recommendations that governments come together to find a -- more and fair message for getting calculating contributions to every country to r&d and we don't have to rely on high fries. >> everyone want to add to the question how it happies that the united states government goes around the world telling the developing countries they have to pay in some cases practice

for drugs that people simply can't afford. >> yeah. >> yeah. first let me highlight the seriousness of this issue. we have bilateral trade agreements with a number of countries proposed them with others. one of the developing countries that we had a proposed an agreement was the. the was a doctor. and he assigned the given the hip hippocratic oath do no harm. i explained to him it was inconsistent for him to sign the bilateral trade agreement with the united states. by doing that, it would deny access to life-saving medicine to the people. the reason these provisions are including are obviously clear,

they the united states special interest -- these are not pretrade agreements we have. they are manage trade agreements. and -- if they were pro trade agreements. they could be a couple pages long. we would get all of your trade barriers our subsidies and their subties. these go on for hundreds of pages because they are really special interest pieces of legislation. and a special interest that has played a very important role in shaping trade negotiations are property interests. entertainment industries particularly. the concerns have been more to maximize the ranks they get out of their drugs than maximizing invasion or maximizing the health of the world. so an example of a particularly provision of particular concern

goes well beyond issues of patents. goes to issues like data exclusivity. which means that in other country website they cannot use data even when it's partly pronounced by the u.s. government to to license generic drugs that would provide the basis of, you know, that are equivalent and that would enable poor people in the countries to get access to drugs as you pointed out, as little as 1% of the cost of the current patented drugs. whole structure of many of these agreements is to discourage generic medicines. and therefore to make medicine less accessible, which means to hurt health. >> let me jump from the -- yeah. >> add to that.

there was the policy going after medicine really took off in the '70s initially. and toward the end of. the clinton's term there was a hiv act cyst access to drugs in africa. and. the -- vice president gore..bush, theyr position. president clinton issued an execsive issue. george bush kept the reforms and may 10 of 2007 he entered into a agreement with the democrats and house of representativeses to protect access to medicine in developing countries. they dealt with by eliminating -- qoping country that was agreement they reached. to moderate the demands on patent extensions and other issues. now the obama administration is

in a new trade agreement called transpacific partnership meeting. they're pleating in dallas as we speak on this issue. the obama administration is now on the may 10th agreement. they're not reuping the demands for data exclusivity. vietnam is part that have negotiation. per rue is part of the negotiation. it's designed to affect poor countries. and the new proposal, the u.s. government has is called the team proposal access to medicine. it's secret except if you're a drug campaign lobbyist. you get a clear advisory board you have access to the information. and they refuse to present the theax that the u.s. is proposing on this. ordinary citizens and taxpayers. it's only available if you can find yourself in one of these advisory groups that the u.s. government has. one other point, india recently

issued a compluls lair license on a cancer drug. the drug was priced at $6 ,000 per year for cancer patients for kidney and liver cancer in india. the country had recently had a per-capita-income of $13 ,000 per year. the government said $69,000 was not reasonablily affordable. i agree with that conclusion. subsequently, the secretary of commerce, the united states traveled to india a few weeks ago and meant to clan about it and they listed the issue on the recent may 1st august 31st of the special 301 report. yeah, it's a huge problem. and i think one way i sort of think about this is in the united states we're increasing the ipr protection and raising the prices internationally do

it. nobody thinks it's enough to do anything about. it's like we're a frog that's being put in a upon of water it's being turned up one degree at the time. we're going to be cooked. if you look at where we are going to be twenty years from now. the ipr system is worse than it was five or ten years ago. so you to ask yourself where is it going to be twenty years from now. the bill is an atoament build bridge to the fiewmp so the future is something that's consistent with human rights, consistent with the universal access, consistent with our values. >> one point, as jamie intervention makes clear. it's a problem that doesn't afflict one party in this government. so let me amend my excellents about the uniquenesses of this event. it's also significant that this is an independent senator raising the issue.

obviously, the need to keep ip interest, both pharmaceutical companies and hollywood happy is something that the both democrats and republicans are addicted to. there's no way out of that particular addiction so long as we have the structure. >> pick up on that. a number of years ago with when i was in the house of representatives, i went on a congressional delegation to south africa. it was buy buy bipartisan. i will never forget i was sitting in a room with the african government, he was being berated for standing up to the pharmaceutical industry at that time. and suggesting that the people it's a very poor country needed drugs that they could afford. it was being attacked by democrats and republicans. you're right. i guess this is very much a bipartisan concern. i want to jump to another

issue. i speak now as a member of the committee, former mayor of the city, what is -- when we talk about very, very expensive treatments for hiv hiv/aids at the time when we know the same treatment is available abroad because of the u.s. funding, by the way, at 1% of cost. what does it mean you have educational problems. you have infrastructure problems and every state in the country, virnlly every state is feeling serious financial constraints right now. what does it mean to be paying very high prices for medicine when you know that it should be available at the lesser price? >> mr. chairman, with the that neither affordable nor sustainable. not only in washington, d.c. but any other state. this is a major cost process for a number of years, a number of patients who continue to

increase. the cost will continue to increase. and the current way it continues, who knows where it will end up. it end up rashing in this country. right now 9,000 people don't get it. maybe 100,000 people will not get it. that's where things are. but speaking strictly frat budgetary standpoint. it is a budget buster. and the federal government something, the city governments don't have much control over it. we have gone through every avenue we know to get the discount prices. that's how 9,400 come to be. we do this but for the private citizens go buy the drugs, a person who is on unsured it could be $25,000 or $35,000 a year. this is not sustainable. if you look life-time cost minimum of $300 ,000 it is

equivalent to the equity people have their homes, average american living in vermont or missouri. this is really not affordable, not sustainable. there is another issue also, cost are so high. people who have no health insurance, or people who can't afford it, they then go and buy -- try to buy it from other countries. try to smuggle into it or try to come in and register in washington, d.c., where it may be available and end up doing something that's illegal. we're asking people who are otherwise law-abiding paying their taxes. they've been working very hard, we're asking them to do this illegal things because we don't have the medications available to them. i think that's the fundamental human question in addition to the budget question. >> let me jump to another issue. we have been talking about the impact of high-costs on individuals, people dying because they can't afford the

artificially high price. we talked about the problems facing city and state and federal government. but let me raise, go back it a question or issue that jamie raised as well. not only is the current system forcing, in some cases, mandating that people die because they can't afford the treatment, and cities to bear undue financial burden u because of the high prices. apparently the system didn't doing all the that well in temples much new research and invasion. we are not seeing the kinds of breakthroughs, and i think others have mentioned, i think dr. stying ma and others have mentioned in many instances drug companies can make more money from doing products rather than invest in the most important health crisis facing americans and people all over the world. dr. love, do you want to stay a word on that?

anybody. >> i'm not a doctor. i'll set the record straight on that. but, i mean, the good news is there's been about 25 different new chemical energies that have come on the market in the last 25 years. i think patients need a implicated mixture of medicines. a lot of them use four products. some people use more than that. and the feasible combinations are complicated and people offer assistance and so it's a positive thing that they've, you know, there's been a pipeline of drugs and so i think everyone that works on those issues in a very minimum wants to protect the fact they're continued invasion products with fewer side effects. the reality is, i mentioned 13

of the 15 largest selling products are based on drugs that are nine years old. so given the fact we're spending $8 a year to support the monopoly system on this, you know, you maybe have two drugs on this thing that have come on the market since ninth. 1999. the i have to say the only way you can justify the economics of the if you didn't try to justify it impaired to anything else it has to be compared to nothing at all. it cannot possibly be compared to the price system. i know, that the national academies has been asked to look at this. we're hoping they'll take a deep look at it. the most profitable drugs for companies -- the most -- that's not you. the most profitable products or chronic products are the product use take every day for the rest of your life.

it's the goal of the country. look at the total maximum. you mention lifetime earn pings tps. exactly life. they want to look what is a lifetime cap on insurance or something. the -- obviously with 1.2 million people that are hiv positive, the number is headed north, you know, it just is a isn't really feasible. what you want to have are products which, you know, you want the money that you are spending which is probably -- i don't know what the exact numbers. if you asked people what is being spent on drugs the dislr 9 billion. you have to stay how much are the companies reinvested in r&d. is it $1 billion? well, you don't know. i think you make some estimates based on the people number in clinical trials. and what's spent. >> in other words what you're

saying what we would like is the drug companies to be investing in trying to find solutions to the most serious illness that we face. >> well, they do make investments. what we don't know give the high cost of the system is how much they -- >> right. >> in other words if you -- if prices are higher by $8 billion. how much of that trickles down to r&d. >> you are a doctor. >> not a real doctor. >> doll for the committee. -- not a real doctor. it'll do for the committee. >> the inventives provided by the intelligential property system do not direct attention to the areas that are the most socially productive. that's the fundamental problem. so if the returns are highest for a me 2 drug that doesn't add any real value or very little value that's what they're doing go.

it's been proven successful by dividing somebody else's profits in half. we know we can do it within it's been proven. the inventives for the direction of research are -- do not accord in any way with social returns. particularly true if we look at it from a global point of view, because many of the diseases are diseases that poor people, and one of the attributes of poor people is, they don't have money. when you don't have money -- >> you need to be an economist to know that, that's my question. >> the result of that is, they aren't going to be the profit standard for -- we are all effected by that. in a globalization of diseases, viruses, bacteria, don't carry bass poreds and don't know about have a disas. we can all be exposed to diseases that originate at one time, the disease of the poor

and they become diseases in the more advanced industrial countries. the broader point which jamie is emphasized, if you lack at the differrings between the what we pay government or we as a nation pay for drugs and the cost of production, that's huge amount. i mentioned in my oral testimony, studies that show that the gap for the government alone is something like a quarter a trillion dollars a year over ten years. that's, you know, over $2 trillion. we've talking about how do we make up for the our budgetary. this is a big potential. if all that money went into productive research, you might say, well it was money well spent. but in fact, a relatively small fraction of that money goes into productive research.

more money is spent on advertising with marketing, and as i again pointed out, much of that goes to trying to reduce the e last citiesty of demand to increase market power, to increase monopoly profits rather than to seminate information, to make sure our health care system is working better. >> mr.holden. >> i want to reintegrate something. these two companies had the therapeutic vaccines. they don't have the money to produce it. one of them has a -- works on human beings. you have to get enough money to get through the second level of trials for the fda so they could say we have something that works. some of the med casings we yo have to take complicated retch

mens. it's worth it because it saves or prolongs life. it may fit into a more realic in people's lives. people who have hiv are not going to have take care of family, raise money, do things like that. you may not adhere to your regimen. the vaccine is a breakthrough i expect that kind of difference. we don't have enough money to develop it. >> okay. >> thank you. yes? >> i think he raises a important point on prices that we have not touched. the benefit of the mechanism it opens up a problem to be served to a broader population of potential solvers. i think what we has reminded us of despite the major therapy does offer it's for a from perfect. it's difficult to maintain. there are in fact, lots of area areas of ?irveg inquire that

could yield -- that encourage risk taking that encourager breakthrough invasion are needed. one of the strengths of the price is the possibility of the encouragerring solvers from everywhere to come forward and put their ideas on the table. >> okay. does had anybody, we've been here for an half now have is there anything that everyone wants to add or raise that we haven't touched upon? >> yeah? >> in my written statement on page 5 and page 6, i made some reference to the cross-licensing agreements between the companies. on the face of it, you think you have a lot of competition in the aids drugs markets. there are eight different manufacturers that are among the leading people who have the drugs. and you have a --

you have a lot of be 2 drugs that suggest you have competition within the same therapy piewtic class. you have eight or nine products that are in in the same thorough piewt -- part is that the legal coluges that you observe between company website bristol meyers and america, pfizer, gsk, abbott and roash all cross license their products in various ways until the hiv area. and or outside of the hiv area. and there are so often in bed with each other back and forth. and in some cases one company will sell the drug in the united states and other in europe or other countries. there might be a fixed dozed combination that involved products from both in the united states bristol meyers, and gill

yet. so it's hard to know are they partners or competitors? and the prices would suggest they're more like partners than competitors. >> let me -- >> two comments i want to add. i think we're right thinking about this as an experiment an invasion and invasion. and thinking about how we can develop another innovation system for aids and beyond health for research for broadly. i want to reintegrate in think abouting the innovation system, there are a couple of other parts. the patent system will continue to play some role for instance, idea that's we haven't even think about in health. the price system is particularly

well suited because we have a more well formulated notion of with a we need. and therefore it's a particularly effective in that area. some other areas where the s sinks in climate change it can be particularly effect of. we know what we need in terms of the more efficient batteries. there are certain areas where the price system is very well suited. other areas where the patent system may play a role. the third important part is government funded research itself. that has been effect i have in area of health nsf, nia, and that in thinking about allocation of resources, to prizes and innovation, one has to balance that the all three of these components of our innovation system. and then more particularly in the area of health, one of the points that was referred to

earlier was that our system of testing is a very costly one. and drugs to be made available have to go through a set of tests. there's a lot of belief that testing system is inefficient. and certainly raises problems of conflicts of interest. because typically the drug company does the own testing. we know some dramatic stories that have conflict of interest playing out in ways that lead to probably the death of other people. so i think one thing that went want to consider going forward is thinking through more deeply reform of ways that are sfm testing is cubilitied. our next system of testing is one of the mechanism by which the drug companies exercise monopoly power. and act as barrier to intrade to making our r&d and the drug

market less competitive. so i think that one -- this is an important bill, and in opening the door, i do hope you'll pursue trying to push that door further. >> let me say this in thanking all of you for being here. i am more than aware that there is only one name on the piece of legislation and i'm also more aware that i've been the senator at this hearing today. but i believe and i think you all agree with me that the time is long overdue for us to place that flag down. and to move forward vigorously in a concept that can save millions of lives around the world that can open up huge distance of new research and development and make our health system much stronger and much more cost effective. all of us, nobody here is

naive. we know the on statisticallies that stand in front of us. we know the very powerful special interest that spend huge amounts of money on campaign contributions who not want us to proceed. the idea that as a result of the work that all of you are doing in the separate areas. it is an idea that is spreading not only in the country but around the world. i think more an more people learn about together what we are trying to do they in legislation like this is passed will come sooner. when it comes sooner it will be a profound importance to the people in the country and around the world. i want to thank you not for being here. i know, each and every one of you has spent a lifetime or many years working on this issue and issues like that. and we very much appreciate you coming to the senate today. thank you for the contributions. thank you. hearing is adjourned.

[inaudible conversations] [inaudible conversations] saturday on washington journal we'll have a discussion about

baip efforts in the senate to change combine finance laws. our guest is her death. then refired captain of the women's research and education substitute will be here to talk about the 14,000 support positions in the u.s. military that are being open to women. and a look at the weekend's meeting of the garages a leaderses at camp david. thomas wright the brookings institution will have an update. washington journal taking your calls and e-mails starting at 8:00 a.m. eastern on c-span. >> when immigrants start to show up in significant numbers, which is somewhat the case in the 1820s and '30s very much the case in the '4*z and afterwards. they're showing up into a political environment where they're qualified to vote as soon as they become citizens. to give you a sen of politics we're talking about. this is is an image from harpers weekly in 1885 after election

time. it shows a saloon and polling place. if you wanted to vote, you can see the door way in the back. you had to go in there to vote. >> this weekend in lectures in history from indiana the professor james conly exams immigration, voting, and the roots of poor lymph in united states. saturday night at 8:00 eastern. part of the american history tv on c-span 3. thursday a house science sub committee held an oversight committee on the fire administration. it addressed priorities of the fire service community for future research, development and training activities. authorization of the fire administration expires on september 30th of this year. this is just over an hour. technology and innovation.

good morning, welcome to the entitled working for fire safe paragraph. the united states fire administration priorities. in front you packages containing the written testimony, biographies and truth in testimony disclosure for today's witnesses. i'll recognize myself for five minutes an for opening statement. today's hearing hearing is being held to review the fire service communities for the future of the united states fire administration. the u.s. fa. the u.s. fa was established following the 1983 report of the national commission on fire prevention and control. america burning was recommended the creation of a federal fire agency to provide support to state and local governments and private fire organization and their efforts to reduce fire deaths, injuries, and property loss. the u.s. fa is a substantial public safety admission. a lot it continues to decline, it is higher than more than half of the industrialized countries. usfa prepares first responders

and health care leaders to react to terrorism emergencies. it supports the efforts of state and local governments by providing trainers for first responders, educational program and targeted outreach for communities and conducted and coordinating the research of technologies for the fire service. the u.s. fa also assisted with data collection, analysis, and the dissemination for the nation's fire prevention and control in emergency medical@s. in recent years there's been an escalation of severe wild fires resulting in home and property loss. can be attributed to expanding development in wild land areas. 2011 was an exceptional year for wild fires in the united states. and major blazes affected my home state of arizona. and late may 2011, the fire raised across arizona forcings evacuates of thousands of residences and bushing more than

469,000 acres. making it the largest in arizona's history. the fires believed to have started after a camp fire blew out of control and spread quickly. over 4,000 firefighters were assign to the wallow fire. currently, there are hundreds of firefighters working to obtain more blazes in central and eastern arizona. this represents just a fraction of the thousands of first responders and firefighters who risk their lives each and every day battling fires across the country. the u.s. fa supports these individuals. they don't take the responsibilities lightly and i as an authorizer and neither do i. the testimony of our witnesses this morning should help the members of the sub committee understand the priorities of usfa. in order to better enable the continued efforts to reduce fire death website injuries, and property loss. we thank our witnesses for being here today. i recognize the lady from

indiana mrs. edwards for her opening statement. >> thank you, mr. chairman. and thank you for calling the hearing to exam the activities a preen priorities of the united states fire administration. very pleased to welcome chief mitchell and other witnesses here today so we can hear more about the vision for the administration particularly pleased to welcome my good friend kevin 0'connell as as well as our other witnesses. i want to thank you for taking your time out of your schedule. it was created in 1984 with the goal of reducing the number of fire-related deaths by half from the staggering 12,000 per year. through the good work, met the goal in 1988. the number of fire-related deaths continued to decline. but unfortunately the fire-related death late is the highest in the centralized world. it is citiesed in 2009 it cost the united states over $3 31 billion inec