they give for inviting me here today. mr. chairman and members of the subcommittee on european and eurasian and the threat to europe is my honor and pleasure to be here for this important and timely sharing. of a senior fellow at the kennedy school of the government at harvard university my opinions written and verbal testimony are my own. i come before you today to talk about the fighters returning to europe and what the united states could and should be doing as a political appointee. and especially europe. and with that complex process that they prey on young muslims and to threaten stability replied.

and to explain what i had seen to win the ideological war against extremism. i firmly believe we can win. i know firsthand of the men and women serving our nation with commitment and steadfast determination to keep us safe from harm. i am honored to work with them and for them i also know the respect all presidents have for all faiths. both administrations have openly said that he this act represents the religion. my interest and involvement in the issue is not typical being involved in the h. w. bush administration it was there in 1993 and focus on national security and awarded of grant during the delicate and unstable time.

and to understand that power of ideology and a way of life. i felt called to serve after graduate school after 9/11. al qaeda would define my country and religion i could not sit back and watch. for more than a decade i have worked on the history of the impact of muslims. during my tenure in that conflict with isis broke out of the founders also prepared that something that happened in copenhagen could have any effect. then assistant secretary for eurasian affairs asked me to serve as a senior adviser to focus solely on muslims in europe than recalibrate the way we engage with muslims

our country never had that position and the ambassador understand how vital it was be reached at to gain an understanding of their diversity and analyze the impact on them of the extremist narrative. for two years i travelled across europe to know what is happening within communities between generations to push back for past breaking initiatives opposed by the extremist these initiatives was in muslim communities and by partnering with them could help to wield greater influence. several of love these initiatives continue to operate today independent u.s. government.

from those thousands of conversations to have the identity crisis. and filling that intellectual vacuum and governments were ill-equipped as a similar dynamic continues to unfold before our eyes with even more gruesome implications. in order for isil or other extremist organizations to persuade someone to joint they must be able to appeal emotionally to a young person eager for a meeting and a sense of belonging to one to make five points on one american it could do to fight back yesterday we saw a report that an austrian teenage girl who'd joined isil is pregnant it the male recruits is the important changes the landscape.

policymakers should be concerned not just those the leave their home countries to fight but that ideology that will spread among those left behind. third. european civilization does not construct a national identities in a uniform way as a result we must be new ones in our approaches. forth. we can win the ideological war with extremism by investing significantly in soft power. fifth free borders in europe today represent the whole story. keeping the cycle of hatred turning by free ideas to feat of more virtual -- virtuous cycle but comprehensive attention we could change the patterns of discourse within the community with positive

consequences for europe and united states and allies. the ideology is the greatest threat of our time. but to be digitally connected to address that ideological threat head on this is winnable. if we act proactively. thank you again for the opportunities. >>. >> i'm sure we will have some serious questions for you now we have the next witness. senior fellow for defense democracies you may proceed. >> faq for having me here today to talk about this issue we have been tracking for and fighters to go to syria for awhile now.

it is betting that today we have more foreign fighters in serious and afghanistan. that is the incredible metric and it creates all sorts of security challenges. and then the possibility to use terrorist attacks that most of them will not come back hallway but will invest in the iraqi and syria. they can become partners to dispelled the mythologies of a grandiose quest to serve our messengers that people going off to fight in syria is not what it pretends to be.

but as foreign fighters increases for shooting at the museum in brussels where we don't know if he was under correction but it is the serious threat. somebody known as the psychopath for those individuals traveling around. he had been a identified in 2013 that we have that sort of threat. we have the more nuanced one thinking about to create an 11 between 10 and 20,000 what al qaeda was doing was trying to identify the most talented and dedicated groups to report this. that gave us the trial from

germany and afghanistan. they were committed and skilled to fly planes in two buildings but those recruits actually wanted jihad against the russian government and not recruited originally for the u.s. but this is how jihad could be repurchased very quickly. but the skilled professional terrorist it is not against us. but the consensus seems to me they cannot plan at the moment. but i will pause on that.

but these threats seibald very quickly going from of a regional security was basically a nine or 10 months. there is a lot we don't know we did not know that muhammed was the al qaeda operative several months after that 11. it worries me what we don't know just because we don't take they have the ability does not mean they cannot in the near future. but finally everybody is concerned about isil watching iran goes through to the nation states but i have a slightly different view but the greater near term threats is the al qaeda operatives carter very rude about catastrophic attacks against us they were embedded with that branch of

al qaeda and is a rival of isil today. this is how complicated as it comes from multiple directions. you have skilled operatives dispatched to syria. they're carefully sorting through the piles like something along those lines. that is the bigger year term concern. and to be deeply imbedded in an insurgency very popular and realize just today there is a big vote on funding to trade the rebels the my caveat is hal they act they are not isil but yet they are al qaeda and oppose suicide?

is that complicated game and i don't hear a lot of discussion about that. this is just my own be careful how we do it. finally back to your point of the recruits traveling there was the suicide bomber he managed to travel to and from his home in florida from syria as he was indoctrinated to blow himself up in syria. they decided not to try to use it and did the attack against the u.s. but they learned how he got in and out of the country that is how we should take about that. thank you. >> 84 that testimony.

i will yield to the ranking member. >> they give both for your testimony. the perception of ideology of how they carry things out that was very clear in both testaverde and i appreciate that but to focus the shared commitment to strengthen women's rates globally. in transitional society such as iraq and part of that is ideological flourishing is occurring within families. the chairman and myself held a hearing on the importance of women to battle violent extremism.

and you mentioned about sisters against violence that women are the first educators of the children and a unique position to spot radicalization and extremism and also in a pivotal position to try to deal with it. we have to empower women to recognize this a give the tools how to deal with that but it could you comment on that overall effort to use with it more effectively to quash this ideological thought? >> i talk a lot about the ideology i don't have to explain how important family is that the young person grows up the millenials are

experiencing something no other generation has experienced it in the coat -- the context of post 9/11 1/4 of the planet? 1.6 billion people, the 62% is under the age of 30. they have grown up looking at the life in a different way. everybody has the ditty crisis but something is happening to that generation asking questions that their parents and grandparents did not ask. as they look for this sense of identity answers they always go to our not necessarily traditional it is not the older person in the village or the town but it is then shake we answer

the lot of the questions for them. why women are important they are that of mothers first teachers if you look at that policy mothers talk about what they have seen that there is another piece of this bet how you use women to mobilize their perspective globally. that is where we begin to look at a model that would work at local level and inspired by a regular people. in the bush administration reluct at trump driving to say how did that get off the ground?

what would happen if we began to build a network of like-minded women you could push back against violent to extremism in to give her a small grant to get this off the ground now all these years later is the independent organization added chapter level that has mobilized within to push back and talk about to put the lessons you learned on the table. yet there is what is happening to muslim women. >> that was my second question. >> it my role as special representative the what i thought had have been did europe was not just

minorities but majority countries as well. so this idea from malaysia to argentina led matter to us. -- led matter to as. that does not leave with it out of the picture. they are connected with the movement of their speaker to i see a special representative? i see a change in the way this generation of women began to take about themselves so you see a lot of -- see a two-pronged issue to stop the radicalization. the other point is we begin to see women getting radicalized.

steve lecter is the irony there. anything but that level of authority and power by ec isil use these groups the then soldiers but social networking and communication to shape people's ideology where the average age is 25 years old. so just continue that is the second point i wanted to make. >> you are correct. they're beginning to be mothers themselves in raising their children in a particular way. to be gauged with the outside or retreat. so you look at said datapoint is -- at the data points.

it does not take a lot of imagination. this summer we have others doing the same vein if we use our imagination and it is very scary. >> but the point even in the boston marathon bombing what his mother had on his radicalization i will not comment because of the trial pending but i will say clearly but i yield back. >> thank you for your thoughtful questioning. >> mr. chairman we thank you for your testimony and i thank you are right. we see this happen now.

most radicals don't come back. we know there was only 19 and 500,000 but they could change quickly now we have these organizations that are more coal last to the radical groups will organized and well funded with isil getting 3.$5 million per day in the single -- sale of oil on the black market. . .

assimilating in becoming americans and adapting our ideologies. we are having a hard time with that. that scares me because we are growing that type of thing that we are seeing now. as you brought out the person for florida and the person from minnesota going over and becoming radical jihad, we have to have always -- and this goes back to a bigger problem with

our immigration policy. i think that we are all -- we all want responsible immigration, but we have to do it right to bring people over here. but going back to the isil threat, removing the path from these people to get passports from these people, we remove these passports -- i lost my train of thought here. the european allies defend themselves from the threat of these depending foreign fighters a western passport. they can go over there and come back. they are a u.s. citizen, and i think britain has started to take these passports away. is that right? >> britain has a number of security restrictions to put in place. >> okay. with that i am going to yield back. mr. chairman, i appreciate your time. >> thank you very much. a couple of questions.

are these the uneducated -- overseas, are these the uneducated people of lower class is it cannot get jobs? or are they from the upper crust who are actually very well-educated and not necessarily just a product as a fifth not just schools but instead people conclude that their choices and had made -- have made the choice that their religion is better than everything else. >> is not easy to typify in that regard. you look at a common example of the suicide pilots on 9/11, highly educated, come from good families.

you find this over and over and over again. is the strength of the ideology cannot necessarily any socioeconomic factors. >> let me know before we move on that it is vitally important that we do not try to lump all muslims into the category of terrorists, otherwise we are doing exactly what the terrorists want us to do, which is create a dichotomy between the western world and all muslims and thus expand dramatically their strength and potential danger. so we should make sure we reach out. again, this is -- you were talking about the muslim community in the crisis going on with different people. do you think that there is a threat to that we could have an

overreach year and push muslims and to the radical terrorism can't? do you see that happening at all ? >> one of the things that is important for us to understand is why we have learned over 13 years to look at the radicalization process. what government and communities can do. the strengths and weaknesses have played out over the course of 13 years did you ask a really important question about thought to are these people, how well educated, where they come from. one of the things i was talking about in my testimony is the nuanced approach to understand the distinction within certainly -- here today we are talking about europe. which generation are we talking about, which at this cities, how are they looking at the particular issues that there dealing with. the success is going to come from the community level. if you look at the responses across europe and our governments are looking at the

threat they're is a wide range of reaction to this growing problem. but when you are looking at the scoreboard, the distance, opportunities for recruitment, we have to start with the immediate family, the communities, and make sure that the communities are getting information about what we have learned, looking very deep at all of these issues and not sort of separating the immediate. >> i will have to say, the world has faced many different challenges from a murderous groups over the history of the planet. muslim extremism or i should say , i know a lot -- the word is law, a lot of us are having trouble with that. want to be respectful of their fate but cannot help but notice that the people who are

murdering people are doing so in the name of their faith. and it really pulls on a lot of us because we know it -- i mean, i know many muslim people who are wonderful people and would never dream of it. i do not think their fate is doing anything but adding to their life. obviously those people we fear now are identified with the islamic muslim face, the motivator that has motivated them to do that. they are announcing it to the world. i am not sure. listening to your testimony, you know, 50 years ago and 60 years ago the oil world was threatened by these the nazis who had no muslim connection at all who were basically from a christian company of -- country and japanese militarism which had its own -- you could identify

addition to religion that they were a part of that glorified the ancestors especially who were very militarily successful. you could see that direct line, but to be fair about i do not think that the greatest generation in the united states spent time trying to psychoanalyze my people became not cease or why people often live the people of japan backed up their military swing. we went out and had to defeat them and that is where we are now. we want to understand, as you were sitting in offices and into decent were involved with the medical to resolve fifth respecting the fact that most muslims are not that way. but the job now is not some long-term analyst cut instead fifth to try to defeat it this evil forces that would murder

our families. >> and the threats that allen's as fixed and vincent pointed out fifth to ideological with sandals and all five of the country's fifth case seriously thought of the ideal of peace. be investigated if it, hard and soft power to defeat death if we have not done that mouth

i don't know if you have seen that are not but i saw a couple of handouts indicating it is unfair to that group. maybe i'd reflect one or two people in the group took it vantage of the situation. we have challenged our fellow americans who are muslims to join us and help us win this battle because, as we are learning today, it is -- what is

happening in syria, there will be a wave that hits us here in the united states and is already beginning to be felt in europe. let me ask about their share threat that we have with our european allies. do we not also share this threat is? and mentioned this in my opening statement. do we not share this threat with russia? should we not cooperate with russia? i actually went to moscow and met with their intelligence operatives and got a briefing on those peoples who were involved with the bombing of the boston marathon. >> i will preface this by saying there are a lot of ways in which our interest and russia is divergent. but, you know, to your point, when you study who is in serious right now, the

chechen jihad, these are not freedom fighters, deeply opposed to the russian government to my very much on either side of isil corporation al qaeda in syria. this hearing is happening because of the isil military gains on the ground in iraq and syria. while the top military commanders in syria is a chechen for isil. he is actually the one who really gave them the military victory in eastern syria which has opened up the pathway into iraq. really the most committed skilled and oftentimes tacticians. they are a threat to russia, our interest. their is a common threat to. one of the interesting things we are talking about the radicalization of women, one of the biggest examples is that chechen black widows , the widows of fallen jihad who go on to become suicide bombers and

operations. so there is a common bond in that one, narrow sense in terms of the threat. >> would you like to add to that? >> thank you, mr. chairman. i wanted to say that you made a very good points about the push back against the ideology of extremists. what you are seeing over the last 13 years since 9/11 is the increase of forces pushing back coming from muslim communities. and you are seeing new networks of former extremists that have been built to push back, but that needs to be wrapped up. those are the voices that matter, the credible voices. to your point about russia and the black widow example that my colleague has just raised, that, to me, is a illustration of the worst case scenario. what we ought to be looking at is not the tip of the iceberg of what is percolating. what is happening to get in there. that is where we have to

stand pat their radicalization process. if we do not we will not. >> i cannot understand why they really just extremist group that appears on the surface to be so anti freedom for women and so compressive saying that women have to where i garment and hide themselves can't have regular jobs. i cannot comprehend how there would be women joining the ranks of people who held those believes in order to try to create a society space upon those standards perritt -- x army, some to

it because they are so invested death in the ideology of building a so-called caliphate. there are many reasons why, but their sense of belonging in terms of where they are, if you look at the two law who ran away from home to join chechens' how these, this is an illustration of the kind of things that are happening. grew up in an open and free environment. how did they get radicalized ? and so the last point i would say is the other role that women are playing is the enticement role. someone on the other end of a u-2 video or chat room that is eager to bring women

on board very persuasive. >> major challenge and not just for democrats or republicans but uniting one challenge but people of various religious faiths, including muslim community and christian community and jewish community here in the united states and elsewhere. we need to have some unity behind this to help save mankind from this senseless murder of innocent people. when you talk about people being terrace, their purpose is to terrorize. that means to win the battle through terrorizing a population to letting them achieve their goals through that sarah. we americans are not going to be terrorized into giving

up our rights and freedom and ability to be part of the world. i think that we need to stand with our european allies and our allies in the muslim world who are being killed and murdered at a much higher rate. a closing statement? >> thank you, mr. chairman. i think what was interesting with this hearing among many things was how we were dealing with how this radicalization occurs, the steming of it, however is nurtured. think we do not put enough emphasis on that. we are going to have to. we have to do it in europe and we have to do it safely through the mideast. i look at the examples of what they're doing and how sophisticated they are doing things, they are actually making great efforts,

radicalized groups associated with al qaeda to this dry muslim history, not just orally, but actually through the discussion of artifacts and the destruction of antiquities and profiting from the sale of those. they are destroying, creating a new narrative that is not historical, traditional, religious. we touched on that and go forward. i think that is something we should put greater emphasis on. want to thank our to witnesses for touching on those things today in their testimony. >> thank you. >> thank you, mr. chairman. thank you both. as we are talking about -- and i am sure you have read the book by samuel huntington talking about the majority of the conflict in the world is muslim to muslim.

they come together and we become a common enemy. how much of the growth of radicalism comes from the hatred of the west's ideals of liberty and freedom versus the western foreign policy, or are they connected in your opinion? >> i will say, the ideology is deeply anti-western. a lot of times a few our foreign-policy through a conspiratorial lens which does not reflect reality. on the side of moslems during the conflict in the 1990's, osama bin lawn was able to nationalize critiques of u.s. policy because we did not deliver arms to force is quick enough. more ideological. foreign policy driven. >> weren't they australian background, born there, of muslim descent? >> it was austria. i believe that they were born there.

>> the lone wolf starting to develop in this country like that who had supposedly murdered for american men in the name of jihad against the west but we just of want to see that over here. we look forward to dealing with you in the future. design policies that prevent this. thank you both. have a great weekend. >> i want to think the witnesses and my fellow colleagues. the american people need to know that we are taking this very seriously and that there is a threat that is emerging with this battle that is waging in syria. it will impact our society and our safety. we have to pay attention to it. the people in europe are now

beginning to experience those people coming back from this conflict. we will experience as well the way that it will hit us, and it is -- what we do about it, we have to use our heads and the courageous. again, we need to make sure that all americans, including muslim americans are recruited in this effort . so i want to think the witnesses, and this hearing is adjourned. [inaudible conversations]

[inaudible conversations] is on.

[inaudible conversations] >> good afternoon and welcome. my name is john hughes and i am an editor for bloomberg first word and that is our breaking news guesser in washington. and i'm vice president of the national press club. the national press club is the world's leading professional organization for journalists and we are committed to programs such as this. we foster a free press worldwide and for more information about the club, visit our website at press.org. on behalf of our members worldwide, i would like to welcome of our speaker and all of you attending today's launch. our head table includes guests of our speaker as well as working journalists who are club members. if you hear closet could be from members of the general public who attended a luncheon. it is not necessarily evidence

of a lack of journalistic objectivity. and i would like to welcome our c-span and public radio audiences and you can follow the action on twitter using the hash tag mpc lunch. after our guest speaks, we will have a question and answer period. now it's time to introduce the head table and asked each person to stand briefly as their names are announced. please hold your applause until everyone has been introduced. from your ride, alison fitzgerald, senior reporter at the center for public integrity and the press club board member. peter urban, a reporter for stephens washington bureau. jennifer shellenberger, assignment editor at fox business, deena merrin, editor

at scientific american and mathieu peron, reporter for associated press. a guest of our speaker and cvs telecommunications officer. and jerry of the press club news. getting of our speaker for a moment, john welch, account supervisor and the speakers committee member who helped organize today's lunch. thank you, john. tom is a guest of our speaker and the cvs chief strategy officer and general counsel. virgil dickson is a reporter at modern health care and mark keller is a reporter at bloomberg and terrence shea, former editor at hr magazine.

please give a round of applause for our head table guests. [applause] rematch here are two things that you can count on. there is no smoking at the national press club. [laughter] [applause] and now -- and now you cannot buy smokes at cvs. [applause] and the second largest retail pharmacy chain voluntarily gave up about $2 billion in annual sales when it announced this year that it would stop selling tobacco products. the company viewed cigarette sales as contradicting its plans to expand its health care business. for instance, cvs plans to expand in-store minute clinics from 900 to 1500 by 2017.

we recently changed our name to cvs health to reflect this shift in direction. the stock market seems to be reacting favorably to the changes in the price of shares fell slightly today the company announced it was going tobacco free. and i saw the shares were down a little bit yesterday. but this week shares are trading at their highest level this year. the man in charge of all these of these changes is our speaker today, the company's ceo, larry merlo. the first person in his family to attend college, larry merlo graduated from the pharmacy school at the university of historic in 1978. and he took a job as an assistant manager and pharmacist at people's drug store. by 1990 he was a regional manager for the chain and that is when it was acquired by cvs.

much of larry merlo's career has focused on acquisitions and job growth that he has long held that cvs would be an important part of the aleutian to repairing a bog down health care system and he joined us to discuss the role of corporate america in improving health outcomes for consumers or it ladies and gentlemen, please join me for giving a warm press club welcome to larry merlo. [applause] >> thank you, for that warm welcome. today i will focus my remarks on the transformative changes taking place in our health care system and the impact that that of that is having on consumers and employers and health care

providers as well as our government. i often describe some of the solutions we that we are bringing forward to address what many have referred to as cost quality access conundrum that helps what we are facing today and i will share more about how cvs health is evolving as an integrated health care company and how that led to our decision to stop the sale of tobacco products. i think that everyone is familiar with our brand. but let me share a little bit of our history because last year we actually elevated a mexican milestone and it was our 50th milestone and we have come a long way since that very first store opened in lowell, massachusetts, in 1963. all along the way we have work hard to stay true to our focus on the customer and creating value and constantly innovating to meet the customer's needs. i am sure that you know us best

per cvs pharmacy stores and we have 700 locations across the country. we actually serve about 5 million customers each and every day. however, we are much more than a retail pharmacy business. we have provided prescription benefit coverage to 65 million people across the country ranging from large and small employers and health plans and government-sponsored care and when you think about both medicare and medicaid. we also operate more than 900 retail medical clinics and our nurse practitioners have now treated more than 21 million patients. finally, specialty pharmacy is one of the fastest-growing areas in health care and we operate a leading national provider of infusion services and we actually treat more than 20,000 patients per month and we treat them at home or at one of our ambulatory infusion sites. for those of specialty patients

were managing oftentimes multiple and complex diseases, we offer a corded case management services and we have 17 specialized programs that focus on whole patient care. so when you think about all of this is mrs. ima it is really the unique combination of assets working together as a single integrated model that allows us to create real value for our patients and customers and our client all across the country. now, i am sure that many of you in this room has dean and work for companies that, you know, have their mission and they have their vision and add cvs health we work hard to help people on their path to better health. all across the organization, it serves as our guide was as we think about business decisions and focus on health care innovation and i will come back to that in just a bit. so with that as a backdrop i would like to spend a few minutes looking at some of the

dramatic changes in the health care environment. what that really means for employers and community leaders and importantly health care consumers, we will start with the current health care environment because it is clear that the system today is stressed and according to the independent office of the actuary, cms, the centers for medicaid and medicare services, the health care share of gross domestic product will increase to more than 19% by 2023. while this is slower than the growth experienced over the last two decades, health spending is still growing faster than average economic growth. the real world translation to the numbers is the fact that it becomes more challenging for people to quickly access quality care through the traditional care channels.

if you asked questions have questions how do we get there and if you look at over the past 15 years, it shows us that health care coverage has been dominated by employer funded insurance and while employers and health care companies have worked to bring innovation to the market in terms of improving the quality of care, we also know that millions of americans remain uninsured and often without needed medications. at the same time there is tremendous growth in medicare driven in large part by what we like to call this silver synonymy and the fact that there are 10,000 baby boomers who become eligible for medicare every single day. this means over 16 million new people becoming medicare eligible by 2019. and it also means that we are facing a long-term increase in the demand for services and the use of medications. in another challenge is the increasing prevalence of chronic disease. does it surprise you to know

that half of all americans today suffer from one or more chronic diseases? this is expected to continue to rise for the next 20 years. chronic disease accounts for nearly three out of every $4 being spent on health care. at the same time the number of people who don't take prescription medications as prescribed, we are calling it an epidemic because there are many studies out there that talk about the act that medication adherence is costing our health care system about $300 billion per year in avoidable and unnecessary costs. so i think that you can see that there are a lot of factors that are contributing to health care spending and there is no question that we must and can do more to slow the growth of health care costs. now, i think that we can all agree that the health care system is also evolving. first there was the affordable care act and when the law is fully implemented, we will see more than 30 million newly

insured americans with coverage provided by americans and new insurance marketplaces and medicaid or other programs and health plans as well as the government are going to play a growing and important role. at the same time with the major thrust of the affordable care act focusing on this, payers and providers are innovating for this cost lemma and they have health plans that are piling on trent piloting new outcome based models and a fee-for-service environment where they are compensated for volume and not outcomes and this is beginning to change as they now take on more risks for participation in accountable care organizations and patient centered medical homes and as a result, they are now incentivizing to focus on cost efficiency. at the same time, from the is an important part of that equation and cvs health is playing an

important health care roll and health care partner to physicians and physician practices. and another important trend, consumers are more informed than they are beginning to play an increasingly active role in health care decisions. when you look at the growth of private exchanges and the emergence of public exchanges, they are putting the decision for planned choices directly into the hands of the consumer and at the same time there is growth in consumer directed health plans that is also driving consumers to be more involved and take more fiscal responsibility for their health care choices and cost. finally, there is this transition to a digital society and we are all experiencing it, it has transformed how we live and how businesses behave and how consumers act within their

day-to-day lives. although this transition has been slower in health care, significant and lasting change is underway and i think the reality is that this kind of innovation is not optional, but there are many that believe the health care industry will change when the next 10 years than it has in the past 50 years. that health care will be purchased and delivered and it will be managed very differently going forward. i am convinced that one important avenue to improve is quality cost and access and that is rooted in quality care. it's one of the many things we are doing to drive solutions. if you look back in history, people have traditionally thought about pharmacies as dispensaries but we know that a pharmacy is much more than that, they are extending the frontlines of health care to deliver better outcomes more affordably to the people that we serve.

and cvs health is driving so many innovative approaches with the ultimate goal is once again help more people on their their path to better health and in the the ways in which we are going to do this, we are very different from how he serves customers in the past i want to talk about a few of those. i think one of the greatest assets that we had to drive innovation lies in our people. pharmacists are in a unique position to help and they are highly trusted resources for patients and the annual gallup poll has ranked pharmacists among the top three most trusted professionals. pharmacist today help what a broad range of counseling and interventions and one of the biggest opportunities that we can addresses that issue that i mentioned earlier, patients not taking medications as prescribed. now, if you go back to the statement that i made earlier that about half of americans suffer from chronic disease and

most chronic diseases are treated with some kind of drug therapy and this is where the statistics get alarming. one out of every three patients who starts a maintenance prescription will decide to discontinue treatment before their first refill is the video. in less than one half of patients take their doses as prescribed by their physician and three out of four people will stop taking medication within the first year of beginning therapy and this includes not inherent and obviously solving this medication adherence epidemic presents a huge opportunity to improve health and lower costs. we have a solution and we call it a pharmacy advising and it's a program to help people manage

chronic disease and it connects patients with pharmacists who help them stay on their prescribed medication and prevent complications and these touch points can range from phone counseling and e-mail reminders to in-store counseling and home consultation for some of the most complex cases. research is showing that it is working and we have interventions for people with diabetes and the fact that they were very effective at not just creasing adherents but a return on investment as well. for every dollar spent there was $3. a pharmacy advisor is available for cardiac care, to diseases ranging from osteoporosis. we also have another program called specialty connect regarding how patients access to specialty medications.

if you're wondering where the specialty is matt, this is action therapies for conquest conditions like hepatitis, cancer and in addition to being very costly oftentimes in drugs were prior special storage requirements and the patient can choose to get prescriptions by mail or to drop off their specialty prescriptions in any cvs pharmacy. this increased flexibility and access makes it easier for people to get on and stay on their therapy. the clinic is another innovation helping us to address access to care issues that is being created by this influx of newly insured and at the same time growing shortage of primary care physician. the clinic is continuing to stand for print as mentioned earlier, we plan to have 1500

clinics by 2017. and today the clinic provides convenience, affordable, high-quality care for acute and long-term wellness needs for vaccinations, screenings, chronic these monitoring, the clinic is staffed by trusted family nurse practitioners and we are holy accredited by the joint commission and we accept nearly every insurance plan including government programs and we are open seven days a week including evenings and holidays and we see patients on a walk-in basis with no appointments required and you might find it interesting to know that about 50% of all of our business actually occurs during the evening hours on weekends. and we believe that the clinic as replacing the use of higher cost, such as emergency room care and we are getting access to primary care in both of those

activities will help to hold down the overall cost of care. at the same time i want to be clear on one important point. we do not believe that the family physician is going away or should go away. her clinic offering is both complimentary and collaborative and helpful to our health care system of law. finally there is a focus on digital innovation and we are using customers with retail and prescriptions with an integrated view of their medications and the ability to easily resell or transfer them between the retail channels. we have added features for mobile app, like skin your refill and check drug interactions, giving customers on the go to important prescription information and in the next few months we will be

adding additional tools like a virtual pillbox and reminders to help patients and caregivers actually track medication adherence. so i think that you can see how our unique business model is allowing us to deliver programs and services to improve health and income lower cost. these are just some of the ways in which we are helping people on their path to better health. and that brings us to the topic of something and that is tobacco. the numbers here once again are pretty staggering. more than 42 million adult smoke, 480,000 people die each year from tobacco related illness. smoking today costs 87% of lung cancer death deaths and 79% of all cases of chronic obstructive pulmonary disease. the economic cost attributed to smoking and exposure to smoke is approaching $300 billion per year on an annual basis.

and as a company we have wrestled with the inconsistency of tobacco sales in a place where health care is delivered for some time now. at the same time, there is $2 billion in annual tobacco sales yet to be considered and we listen to what our colleagues and customers and communities in which we live and serve are saying about tobacco as well as leading health advocacy groups and we stepped back and we have used that again in helping people on their path to better health and we have brought multiple viewpoints to the table, including those of our chief medical officer and colleagues from finance, merchandising, human resources, the list goes on. and we have weighed the short-term and long-term opportunity. as you might expect, there was a very thoughtful debate and discussion and as a unified management team along with our people we've made the decision

to quit for good. we announce that back the very fifth and six months later we are officially tobacco free, one month ahead of schedule and we are proud to say that we are the first national pharmacy chain in the country to take this action support the well-being of our patience and our customers. [applause] and we engaged leading health organizations including campaign for tobacco free kids, american lung association, cancer society, the ama, the american pharmacists association. these organizations and so many others have rallied behind the vision of public statements, adding to the course and why retailers should be tobacco free. social media has also amplified the conversation with countless

statements and support from consumers and celebrities and political leaders and there is no question that a national conversation about tobacco has been reignited. and we do believe that reducing access to tobacco products will help reduce tobacco use. our chief medical officer recently shared the results of a new study that showed the effects of enacting policies to a limited the sale of tobacco products. in boston and san francisco where retailers are not permitted to sell tobacco, there was up to a 13.3% decrease in the purchasers of tobacco products and at the same time, including tobacco, we also launched a comprehensive and you uniquely personalized smoking cessation campaign to help the seven in 10 smokers that want to quit and we've consulted with many experts and took their guidance about what works to

build a comprehensive smoking cessation campaign and it kept her entire chain of stores in our 900 clinics and leading people, the fact that we have 26,000 promises and nurse practitioners across the country including four critical components in an assessment to determine the smokers readiness to quit and education to provide smokers the information and tools that they need to quit. medications support to curve the desire use tobacco and finally coaching to help individuals stay motivated and prevent any relapse. the combination of medication and coaching can be very powerful and it can nearly double the rates from percent to 15 might be surprised to know that it takes on average seven times before somebody is successful in quitting and we want those people to never quit quitting until they are successful. so to september 3 was also a

historic day for our company for one more reason. it is the day we announced our new name, cvs's and it is inspired by that purpose once again of helping people on their path to better health. i think that all of us have been truly humbled by the out pouring and encouragement and the words of transport we have received since announcing quitting tobacco. and it is vital that the private sector continue to take a leadership role on tobacco, working with nonprofits in the public sector to address and prevent tobacco related disease. it's the right thing to do, just like our decision to quit selling tobacco products because it has no place in a health care setting including pharmacies. so to sum it up, we don't see the sale of tobacco isn't just an important decision for us but

for public health. and so in closing, let me come back to where i started, because as dramatic change takes place in health care, i believe that pharmacies can bring solutions that will make a big difference in the health and the well-being and the financial outlook of our country. and as a pharmacist myself, i know the value that our profession can play in the lives of others and i also know that there is even more at the pharmacy can and will do to improve both care and affordability and our 200,000 cvs colleagues will join us to continue to provide better and more affordable care to people young and old all across the country and help them on their path to better health. so thank you and i will turn it back over to you and we will open it up for questions. [applause]

>> thank you. not surprisingly, you've got a lot of questions on the tobacco decision and initially when you announced the decision back in february, october 1 was going to be the date and when you moved it up, as of this month, you're no longer selling tobacco. why did you move toward a month? two well, when you think about there are 7700 stores coast-to-coast, there is a lot of work to do to transition that states that previously had tobacco. we thought that it would take us until october 1 to get that work done and i have to say that i'm proud of the team that mobilize and got everything together. it was simply a situation that we were able to execute a little quicker than what we had thought. and i referred earlier to your stock price. to what extent do you think there has been a cause and effect to near decision on

tobacco and the company's online and stock market performance, and have all these comments support from the white house and elsewhere, have they translated into helping the bottom line? >> that is a great question, when we made our announcement back in february, we were pretty transparent in terms of the financial impact and the fact that it was $2 billion in revenue. and at the same time we firmly and wholeheartedly believe that it is the right thing to do for the long-term growth of our company and i have talked the about a house some of the things we are doing is playing a delivery in the health care system. or a, you know, a large health plan and as we engaged in those discussions we saw the sale of tobacco is an obstacle to warming new partnerships.

so i think that the financial community certainly understands the value proposition associated with cvs and cvs health and i think it's hard to sit here and say that there's anyone singular event or announcement that makes a difference, but i think collectively as i mentioned earlier, we have been humbled by the outpouring of support and i that collectively it is resonating in terms of whether they are investors consumers or potential clients and the value dead cvs health offers in the marketplace. >> electronic cigarette and to be becoming more popular. you foresee selling them at any point and will they be treated the same as tobacco products from your standpoint to . >> you know, that's another great question and something that, you know, we are asked a lot. we have never sold electronic

cigarettes and we do not plan to. i think one of the things that we are troubled by is if you go in a store later today that sells these cigarettes, you see the devices that are branded as hello kitty or the liquid that is put into those devices, you know, bubblegum flavor or tootsie roll. i think it raises a question in terms of what is the role that electronic cigarettes are playing in this country and who is the target consumer. so we don't sell that to them we have no plans to as we go forward. [applause] >> how do you assess the risk of your decision going forward? they saw a 7-eleven down the road promoting that it sells cigarettes with an outdoor sign. perhaps trying to capitalize on your decision, as they are a

risk out there, do you think giving that up? >> well, i think it goes back to the statement that i made earlier that we think of ourselves as a pharmacy and health care company. and you think about many of the factors that i mentioned earlier like the 10,000 baby boomers turn 65 every day. folks over the age of 60 take three times the number of medications as the younger population. so we certainly see a much bigger opportunity to grow the health segment of our business and the fact that there are many elements of our pharmacy stores that we have an opportunity to extend the pharmacy experience into. whether it's over-the-counter products or the beauty cautiously felt in our stores, recognizing that there are many more products today and the list

goes on. and that is where our focus will be. >> to this point, none of your competitors have called you for forgoing tobacco sales. why do you think they are doing what they did? >> you really want me to answer that question in a different way. well, i certainly can't speak for our competitors and i think that they, they have to go through the same process that we went through. we had to ask the hard questions and look in the mirror and we have to use our focus in terms of how we saw ourselves as a company. somebody had to be first and we are proud to say that it is cvs. >> as you mentioned, you are branded the store cvs health,

but you are still selling things that are not necessarily good for a person. i have been known to go down and back on track by a bag of snack foods are not particularly good for me. where would you go in looking at other products or do you think that other products might follow tobacco he will decide not to sell them? >> either way, i have to say that i love the cupcakes at the table, so thank you for whoever came up with that idea. but no, i think that that is a question we get asked a lot. and we have had many discussions with leading health experts, whether you're talking about a candy bar or a bag of chips and soda or in some places we sell wine or a glass of red wine, those products taken in operation or the occasional use, if you're talking to your assertion or nutritionist, they

would tell you that they have not been proven to cause medical harm. but the emphasis is on occasional and moderate use. you can't say the same thing about tobacco because there's no amount of tobacco that can be considered safe and not the at the same time i do think we have an opportunity to educate consumers in a more holistic way about healthier choices and i think as we go forward you will see the introduction of healthier products and we just launched a new product line within last couple of months and it's called balance and it is a healthier alternative to some of the products. so you're going to see those things as we go forward and there will be more information at the point of decision when the consumer is picking those products off of the shelf. that is why our focus is that we do not have plans to illuminate

other categories within the stored. >> washington dc where the national press club is located in the city that has approved the use of marijuana for medical use, medical marijuana. as cvs and cvs health look at the issue of marijuana being used for medical purposes, how do you assess that? >> we have no plans to get into that and we may find it interesting. i have been asked this question many times and i think that people believe in some of the states where the law passed because you operate a pharmacy, if you choose to sell marijuana you can do that. but the license that we has within pharmacy does not permit us to sell marijuana and we would have to go out and be relicensed as another, you know,

provider and we have no plans to get into that line of business. [applause] >> this question is if obamacare plays any part in your tobacco care products and is it a net positive or is it a net negative and why two. >> let me take the second question first. as we looked at 2014, and this is information that we have in the financial community, we thought from a business point of view that the affordable care act would be a modest benefit to our business this year. and as we fast forward, we are almost nine months into the year and that is pretty much how it is played out. we are seeing more of a benefit

from the affordable care act as a result of medicare expansion than we are from the enrollment in the exchanges and i think that there are many studies out there when folks are trying to, you know, answer the question with the 6 million plus that have enrolled in the exchanges and how many of those enrollees are new to health care coverage? the numbers are all over the board. they are as low as 25% to as much as 80%. so i'm not sure that we know the numbers in terms of what percent of insurance and that's not the same in medicare and medicaid. and i think that as we think about the tobacco decision, the affordable care act really did not play a role in that decision. i think it goes rack to one of the comments that i made in my prepared remarks.

the 30 million uninsured, the fact that they should have this, but at the same time we have to begin to focus on cost and quality and our current health care trajectory, when you think about what percent of health care makes of gdp, it is not sustainable. >> this question asks about the role of prescription drugs in overall health care in coming years and they say that consumers are facing pressure to rising costs and premiums and co-pays with prescriptions. do you expect that to continue and do you expect consumers to become more cost conscious in their prescription spending? >> i think that some of this goes back to the role that prescriptions play in chronic

disease in the fact that it when you think about whether it's someone who has high cholesterol and by the way, when you think about the role that generic prescriptions play and i don't know if you'll be surprised to hear this, but when we look at a prescriptions that we dispense, between 83 and 84% of all prescriptions are generic at a much lower cost than brands and products and as you look across those chronic diseases that i mentioned earlier, i think in every one of those diseased conditions there is a generic drug that is available to treat a particular disease, whether we are talking about high cholesterol or hypertension or diabetes and the list goes on. i think that we all believe and substantiate the fact that christian medication is very

effective from a cost-benefit point of view and then in keeping someone on the drug to prevent a heart attack, i think the average cost of a heart attack today's 30,000 dollars. and so we remember that example that we used. for every dollar invested in keeping a diabetic adherence to their prescription regimen, there is a 3-dollar return in terms of reducing overall health care costs than we were very excited about, less than two years ago, the congressional budget office that actually came up and scored the fact that keeping people at your into their medications will reduce overall health care costs. so we will work diligently and we were work tirelessly to make sure that our patience and our clients and every one of the stakeholders across the delivery system understands the role that

prescription therapy and prescription adherence plays not just in keeping people healthier but at the same time reducing overall health care costs. >> this questioner says that he or she believes that every part of the health care sector is sacrificing and changing to hold down costs under obamacare but he or she does not see the pharmaceutical companies acting that way and treats them as being very protective from change. so the question is do you agree that that is the case and is there anything that can be done to change it? >> i think for years it has been commonly known that the prices of prescription medication in the u.s., those same products in another country cost significantly less than the fact that the u.s. subsidizes the

cost of research and development and what it takes to bring a particular drug to market. as well as the pharmaceutical manufacturers that are rewarded in 17 year patons and i don't want to mislead anyone. by the time they are at the market, they have burned up many of those years with clinical trials and et cetera. but i do think that there is more competition entering the pharmaceutical space, whether it is coming from generic drugs as the lose their patent protection. and there are more new products entering the market that are clinically effective and thinking of them as products within a clinical disease state. much like all of us here, we are consumers and we choose

competition in the marketplace which drives where we choose to shop and i think that we will see increased competition because of more product introductions that will hopefully work to reduce the overall cost of pharmaceuticals. >> you talked earlier about the minute clinics. this questioner asks to what degree might the minute clinics contribute in a tiered health care system whereas those that have the time and resources will go through their primary doctors while those primary care doctors previously received little or no care will depend on the next instead of a position. will will this result in a kind of a tiered health care system of the haves and have-nots?

>> i think that is a great question. and i will give you an example because we have 200,000 of my colleagues. and it's a great opportunity with our lab. so many years ago we worked at our employees that had access to utilize one of our minute clinics and what we have found and that means a percent lower health care costs. and if you turn on and say what's driving that? remember i mentioned 50% occur nights and weekends and one of the key things is getting that into the clinic with a factor with the average cost of emergency room visit can be as

much as $800 even though it varies geographically. and so my answer to that question is in the health care system, someone made a comment to me that quality -- how do you define quality and cost. someone said that it's really health care value and health care value is defined as the intersection of quality and cost. >> so you think about the fact that we are delivering high-quality low cost care at the clinics and across our delivery system would have to begin health care value is being worshiped the caribbean ministered at the lowest possible cost. and we have performed more effectively and more costly with

a more accessible convenient way for the patients and when you think of the way that pharmacists play in vaccinations today. five years ago it was the exception that a pharmacist administered a flu vaccine and it is becoming much more commonplace all across the country. and there is a role for pharmacists plan there is a role for nurse practitioners to play. >> we packaged movies together. do you think that down the road perhaps cvs could get in the role of primary care in providing primary care and another questioner says access to dental care could be much better from urban neighborhoods and will communities and would they ever consider addressing

that need by opening retail dental clinics. >> that is another great question. and, you know, we don't have any short-term plans as we think about the role that we may play in dental. although one of the services that are nursed back to shooters provider, the folks that come in and they might have a dental abscess and it becomes one of those emergency visit until they can get to their dentist or and honest. i think the fact that our health care system is evolving, we continue to evaluate broadening our services and we are doing more today than what we were doing three or four years ago. i think that there are some things that we will begin to pilot next year that will broaden our services and once again we do not see those

services except for being complementary to primary care but we do not see replacing the role of the primary care physician. >> this questioner asked about prescription painkiller abuse is a growing problem nationwide and wonders how cvs health handles that issue and what you can do at your stores to make sure that this problem can be held in check. >> that's a great question that has all of us in the pharmacy profession worried. because there's a number of things that we are doing today and i think as an industry we are working together across the country in terms of things like shared databases so that we can separate an eye while described as the liars from the outliers, if you will. we are participating in drug

takeback oh grams. i encourage all of you. look in your medicine cabinet. how many painkillers are sitting there and maybe you have a dental procedure or a simple procedure and the physician wrote a prescription and you took a few and started feeling better and yet you don't need this anymore but they are sitting there, it's not good to put them, we are working and we need to do it and it environmentally friendly way. one thing as a pharmacist goes, i never thought that i would see, and there are some licensed prescribers that are not running ethical practices and although they are licensed, they are writing those narcotic restrictions for all the wrong

reasons. and today we have stopped filling prescriptions for over 100 positions because they have not been able to validate the legitimacy of their practice and we will continue to work and support our pharmacists so that they are doing the right thing in terms of making sure that the right people are getting the medication they need and at the same time, working with all of that stakeholders, whether it is the dea or law enforcement and others that are involved to make sure that we get rid of this other segment that is really driving this across the country. >> we saw congress acting in the last few days with a continuing resolution to keep the federal government funded temporarily and you talked earlier about the importance of research to these products. how much do you worry about federal funding pipeline being diminished or cut off as

congress struggles more and more to find revenue to balance the budget? >> i do believe that is a concern. i think the folks in this room know that there are many universities across the country that are research oriented grants from other government entities and those grants have led to some terrific innovations in the market and i think that that is certainly something that has those universities concerned and other research stakeholders across the country as well. and that is something that must continue to receive ongoing attention and management as well and i think that we have to make sure that we don't cut to the bone and that we compromise future research and if you think

about it, we have not found a cure for alzheimer's as an example are you so we want to see the research supporting cures for that and this includes debilitating diseases and more to come on that as well. >> what do you see as the role of medicine and technology, particularly in the rural areas where people could be a distance from your store and may not have transportation to get there. do you look at integrating more of those services? >> there is no question that technology plays an important role in solving the challenges that i mentioned earlier and i have talked about our focus on digital. we are experimenting with telemedicine and we have several sites in southern california and texas and they are staffed by licensed nurses and so if a patient comes in and they are

actually through technology seeing a nurse practitioner and assistant. .. i think we are off to a terrific start. i do believe telemedicine will

play an important role especially when you talk about the rural areas of the country that do not have access to a primary care physician. so we are almost out of time but before i asked the last question i have a couple of housekeeping matters to take care of. first of all i want to remind everybody about upcoming speakers. on september 23 we will host former virginia senator jim a web and on october 15, deborah rider president of the john f. kennedy center for the performing arts will be our guest at a luncheon and on october 20 labor secretary thomas perez will be here. another piece of business, i would like to present you with the coveted national press club mug. [applause]

you cannot get one of those at cbi. but you can't have healthy drinks in that mug that are good for you. so the last question. this is the voice of a customer coming through so once in a while these customers find a way to get their voice heard and their questions in. this customer says, how can you possibly run minute clinics when you can never fill any of my prescriptions in less than 20 minutes? [laughter] >> a fair question. you know i think there are a number of things that we are doing to create efficiency and effectiveness. i think we have done an awful lot with technology and i can remember the early days as a pharmacist where when people came in you fill the prescriptions in the order that

they came in. we are doing a better job albeit probably not perfect in terms of being able to separate people that just left the dock and might have a sick child and they want to get home and get started on the antibiotic from someone who is voting in a refill and is going to pick it up tonight or tomorrow. we are doing a number of things with the automated refill programs. i know i talked to some of you earlier and you appreciate getting those text messages or phonecalls reminding you that your prescription is ready to be picked up. so we are working hard to make sure that prescriptions can be ready when promised by using technology and additional features like that. [applause] >> i was going to say how about a round of applause for her speaker but you took care of that. thank you larry.

[applause] we thank you for coming today and thanks to our audience here at the national press club for those wonderful questions. i would also like to thank the national press club staff including its journalism institute and broadcast center for organizing today's event. remember for a copy of today's program and to learn more about the national press club he can go to our web site press.org and find all that information. thank you for being here and we are adjourned. [applause] [inaudible conversations] [inaudible conversations]

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