fair and thoroughly considers the available evidence. the cornerstone of our military justice system is the independence of decision-makers following a thorough investigation such as this one. we will study what went wrong and take the right steps to prevent it in the future. as i said in an earlier statement, this was a tragic mistake. u.s. forces would never intentionally strike the hospital, or other protective facilities. our deepest condolences go to all the individuals and families that were affected by this tragic incident. we will offer our assistance to doctors without borders in rebuilding the hospital in kunduz. doctors without borders is a respected humanitarian organization that does import life-saving work, not only within afghanistan but around the world. alongside afghan partners we will work to assist and support him in this critical role that

they play in this country. again thank you very much for your time. i will be followed by the general as he will take your questions. >> good evening, ladies and gentlemen, at good morning to those you joining us washington, d.c. i'm the spokesman for resolute support and u.s. forces-afghanistan. regarding the investigation what we said from the beginning is that we're determined to ensure this investigation is both a thorough and transparent. de facto even doing this press conference today is unusual but a secretary carter has said, we are committed to ensuring full accountability on this incident.

this investigation is an important step but it is only one step in the overall process. u.s. authorities may determine that additional investigations are required. and if so that prices will take additional time. we also have to ensure that due process for anyone who may be involved in this process. in an effort to be transparent we are going to share everything that we possibly can at this point. once the investigation is redacted, the full report will be posted to the u.s. central command website and will provide you a link to that at the completion of his press conference. at this time i will take your questions and, glenn o'donnell, let's start with you. >> thank you. [inaudible] followed the due process, et cetera, among the multiple violations for which you bring up as human error, there is a chain of command.

where does the buck stop? does it stop with general campbell? [inaudible] the other thing that interest me is that afghan officials have said all along that the hospital -- [inaudible] where does the nds coming to this? in terms of, i think like contradiction so i'm just wondering -- between u.s., nato and afghans going forward?

>> to the first part of your question, the investigation found that some individuals involved did not follow the rules of engagement. in terms of what happens next, as i said the investigation itself is an important step in the process but it is just one step toward full accountability. based on his findings investigate officer made several recommendations. general campbell has decided to retain some of those recommendations at his level, and he is referred others to the commander of the u.s. so, for his review and action as appropriate. the individuals most closely associated with the incident have been suspended from their duty positions. i will not comment on the recommendations that have been made while those reviews are underway and it will not come in on individual cases that are

underway as we have to allow for due process for those involved, and we must allow for the independent review by the decision-makers involved. to the second part of your question, i will not speak for the minister but i will point out that on the civilian casualties since the team investigation that was done, that wasn't just a u.s. investigation but it was a nato investigation. the members of the team consisted of coalition partners, u.s. and non-u.s., consisted of seven afghans that were appointed by resident tony. on the civilian casualties assessment team -- president ghani. the purpose was different from the 15th expect it was narrow and purpose. it was designed to determine the basic facts and then develop it was not these casualties have occurred to do that. the results of the assessment team report informed the

investigation. as to your final question we remain committed to working with the afghan partners to build sustainable security in afghanistan. thank you. >> can you tell us how many individuals were suspended? >> and all i can take is that some individuals have been suspended from their duty positions. i can also say that u.s. authorities made additional investigations to determine whether further action on awarded regarding actions of specific individuals that were involved. should additional investigations be required? those will be public once --

those who made public once complete and redacted. >> and the general campbell? >> i will not gamble on -- comment on general campbell's position as he is revealing some of the recommendations that had been made in his capacity as the appointing officer of the investigation. [inaudible] >> roger, can you hear us from the pentagon? >> we hear you just fine. can you hear us? >> we got you. but go ahead. >> hello, bob burns from associated press, general. question for you about, you refer to the rules of engagement were violated. aside from reaching the point where there were a combination of human error and other malfunctions, was the basic decision to use air power under these circumstances justified,

given a noncombat role that the u.s. assumed at the end of 2014? in other words, there are very limited, narrow circumstances under which is the force is permitted. did this get that circumstance? thank you. >> under certain circumstances, u.s. assets can be used to support afghan forces if they request their support for all the way that decision is enhance of a u.s. commander. i won't get into the specific rules of engagement on that but i will tell you that we're determined to learn the right lessons from this. we are committed to ensuring this doesn't happen again. we will evaluate all the recommendations in this report and use them to improve our systems and our processes. we take all reports of civilian casualties seriously and we

review each one of them really. general campbell has already directed a thorough review of our planning process as well as our targeting process. this will take place at all echelons of command and we will conduct a thorough examination of how we develop and how we use no strike lists. spit in general, a very quick follow-up from bob burns. to understand your answer to mean that no, this is not the proper circumstance under which to use combat power? is that what you're saying? >> the investigation found that some of these individuals involved did not follow the rules of engagement. >> nbc news, general, doctors without borders which is proven

to be a pretty reliable source in regard to what happened there in kunduz said that they made at least two phone calls, one just prior to anyone during the airstrike. into the pentagon. we have been told that information was relayed from joint staff to the mnc see. that they were under attack. did that information ever reach the operative there in the battlefield? >> what i'd like to do is to better answer the question just briefly viewed the sequence of events leading up to the issue at hand. approximately 12 minutes after the firing commenced, doctors without borders called to report the attack. unfortunately, by the time u.s. forces realize the mistake, the aircraft had stopped firing.

it's important to remember that this was a complicated and a chaotic situation. be ac-130 had already been shot at by a surface-to-air missile. u.s. personnel at the time were focus on doing what they've been trained to do. that said, chaos does not justify this tragedy. let me be very clear. we did not intentionally strike the hospital. we are absolutely heartbroken over what has occurred here and will to upload everything in our power to make sure that it does not happen again. you mention doctors without borders. we have great respect for the important life-saving work doctors without borders does in afghanisafghanis tan and throughout the world. we are committed to working with them. we are committing to help them as general campbell matching to rebuild the hospital and provide condolence payments to those affected by this terrible tragedy. we appreciate their dedication

towards easing the suffering of those affected by conflict and will do everything within our power to enable their efforts. >> pentagon, go ahead. >> just a couple of quick follow-ups. did the flight crew aboard the ac-130 ever expressed any concern or question, the validity or legality of the target they were about to strike? and if there were so many problems with systems and with communication and with identifying targets, why was not, why was that attack allowed to proceed? >> i'll tell you that the investigation found that some of these individuals involved did not follow the rules of engagement.

>> , from npr. general, tom bowman, a couple questions. one was the msf call, looks like less than halfway into this attack and it took 17 minutes, you guys say, for the commander to realize they made a mistake. that's almost half the amount of time of the attack itself. why did it take so long? did you ever get an edge to that? and also if there's no fire coming from the hospital, nuclear threat, why would they think this was a legitimate target? >> -- no clear threat. >> the investigation found that the medical facility was misidentified as a target by u.s. personnel who believed that they were striking a different building several hundred meters

away where there were reports of combatants. i think it may be helpful to put this in context. at the time of the incident, u.s. and afghan forces in kunduz have been fighting for five days when the incident occurred. both u.s. and afghan forces had reports of taliban throughout the city of kunduz. again, we were are determined to learn the right lessons and committed to ensuring that this does not and cannot happen again. let's go to a question here. [inaudible] >> so general campbell has already directed all u.s. personnel in theater receive training on targeting

authorities and on the rules of engagement. general campbell has also directed that we conduct a comprehensive review of our planning process as well as our targeting process at all echelons of command. is directed a thorough examination of how what we develop and how we use no strike lists. you me, please. do you have a follow-up? [inaudible] >> again, i will state we remain committed to working closely with our afghan allies as we assist them in their efforts to build sustainable security for this country. >> "washington post." a few hours before the msf strike, india's -- was hit by airstrike. the location totally known, how

do you account for the discrepancy a few hours later, the coordinates shift and as you say, the msf hospital mistaken for india's building a just a few hours earlier but had been an attack there had been a strie in that area. spent the investigation found that u.s. special operations forces commander did rely on information provided by the afghan partners and the location of the nds compound their caliber the investigation determined that those grid coordinates even by the afghan forces to that nds compound were correct. and let me comment on just a minute on how we came to that conclusion. the investigative team went to great lengths to ensure a full and impartial accounting of the facts and the circumstances. they were driven by the need to be thorough, not by a timeline.

investigative team consists of three general officers and a dozen subject matter experts. they spent a full three weeks completing the report. they visited the doctors without borders site they visited other sites within kunduz again get over 65 witnesses and they compiled over 3000 pages of documentary evidence. they also visited and engaged with each echelon of the chain of command. we stand by their findings and recommendations, and we support the process by which they conducted the investigation. [inaudible] >> i'm sorry, could you repeat the first part of your question?

[inaudible] >> thank you. general campbell did meet with representatives from doctors without borders. when he met with them they provided their initial review. general campbell read and considered that initial review. he also gave it to the investigative team. they read it and they consider that as they wrote their reports. i will also point out that the findings of the u.s. national investigation, the 156, were consistent with that of the ccat, the combined civilian casualty assessment in. so again were confident with those who investigation come to the same conclusions we are confident in those findings. >> are you going to allow an international independent investigation was general

campbell -- [inaudible] is there any problem with that? while not an intentional strike, every u.s. serviceman from basic training -- soundtrac [inaudible] why would more training be considered? >> the investigative team has completed a thorough investigation, and we are confident with the facts and evidence collected. with regard to question on the rules of engagement, the investigation -- [inaudible] >> i can tell you what the investigation found the

investigation found that some of the u.s. individuals involved did not follow the rules of engagement. with regard to question on proportionality, the investigation found that the actions of the air crew and the special operations forces were not appropriate to the threats that they faced. the investigating officers recommendations on this have been referred to the proper authorities for disposition. i cannot comment further on that port as that matter is under review. again, we did not intentionally strike the hospital. and were absent a heartbroken over what has happened here spend what about an independent investigation? >> the investigative team has completed a thorough investigation speak no, an independent -- [inaudible] they are ready to go but they need the americans and afghans

to begin. >> we believe the investigation completed was full and impartial, and we stand by the findings and recommendations, and we support the process by which it was conducted. >> how can it be impartial? >> again, general campbell has decided to reverse some of the recommendations to the command of u.s. thank you for his review and action as appropriate. [inaudible] >> we are determined to learn the right lessons from this ever committed to ensuring it doesn't

happen again. the civilian casualty assessment team process that invention is part of this headquarters procedures, whenever we have an indication of civilian casualties or an allegation of civilian casualties allegation of civilian casualty figure allegation of civilian casualties but it provides is us the means of looking into it very quickly to determine if a further investigate is needed. if further investigation was needed as well as in this case that will be done and will use that investigation as the basis for adjusting our systems and procedures so that this does not happen again. we have time for one more question. [inaudible] so when the building was hit -- [inaudible] so what kind of message --

[inaudible] >> i can tell you the investigation found that u.s. special operations forces commander did rely on information provided by the afghan partners. the investigation also found that that information was correct. as i stated earlier the investigation found that some of you as individuals involved did violate the rules of engagement and we will take a proper action on that -- [inaudible] >> it looks like your systems were not working. [inaudible] >> the investigation found that the actions of the air crew in a

special operations command were not appropriate to the threats that they faced. the investigating officers recommendations on this matter have been referred to the proper authorities for disposition, and i will not comment on the for the. at all the time i have a question but fort to port highway to emphasize we made a terrible mistake that resulted in unnecessary deaths. we have been committed from the beginning to a transparent and thorough investigation, and will do everything possible to prevent this from happening again. this investigation was an important step in this process, but it is just one step toward full accountability. and finally, we would never ever do anything to harm innocent civilians. 90. thank you. >> all right. thanks, everybody.

>> our congressional freshman profile interviews continue to more on c-span with republican congressman eddie carter of the georgia and new jersey democrat donald norcross. >> what did you routine here in washington? >> first of all i'm in the same office. there is a god directly behind me. in a, i remind you it is the top of the line. my wife is pregnant extend. it came from bed bath be on. it's got wooden slats, a firm mattress but it it's top of the line so i'm very proud of that. but i do sleep in my office. are over 80 members of congress who stay in office. we have a members jim that we pay dues and we've got lockers and showers and washing machine, dryer, just like living in a dorm. right now they would is good for me because you build up a lot of camaraderie when you see guys every morning. i've built up a lot of, roddick to that and it becomes very good friends with those guys.

>> my father was a union leader in southern new jersey, and back and i guess it was 72, my mother ran as a delicate for hubert humphrey, and that i remember running around the neighborhood hanging out fliers door-to-door and i was sort of my opening. certainly being with my father as he would go around to different sites as a union member, union leader in talking about making sure that workers were treated respectfully and they had the dignity of the pension and health care. >> did your mom make it to the convention speakers she absolutely did not. she nominated my father for vice president dick i think he got one vote. my mother. >> you can see c-span congressional freshman profile of congressman buddy carter and congressman donald norcross tomorrow morning at 10 eastern on c-span.

>> will john hinckley of course was the person shot president reagan and president reagan was not wearing a bulletproof vest that day. it was a short trip to the white house but the thing is john hinckley was stalking jimmy carter before this. >> sunday, ronald feynman, talks about various assassination attempts of physical threats made against presidents and presidential candidates throughout american history. >> have been 16 presents a faced assassination threats although none are likely since ronald reagan put 16 presidents that i also cover three presidential candidates. i talk about huey long to a 1975 was assassinated and a talk about robert kennedy in 1968 he was assassinated and george wallace who was shot and paralyzed for life in 1972. so i cover candidates as well as president, and it's a long list.

>> sunday night at eight eastern and pacific on c-span's q&a. >> now a conversation on vladimir putin's leadership of russia and his approach to domestic politics, foreign policy. with george washington university, this is about 90 minutes. >> okay. good morning, everyone. my name is henry hale. i'm professor of political science here at the institute for european, russian, and eurasian studies at george washington universities elliott school of international affairs and also codirector of the program on new approaches to research and security integration together with my colleague, corey. cory. we are very happy to welcome you today to an event on putin and putin -ism come exactly what communism is our esteemed

panelists will be happy to discuss with you today. we are pleased to in particular brian taylor who will lead off and his professor of political science at the maxwell school at syracuse university. his research focuses on the domestic political a state coercive organization such as military and police. is the author of two books so far and another in progress. the first one got his first one was politics and the russian army which came out in 2003 with cambridge university press. and his more recent one is state-building in putin's russia which came up with the same press in 2011. then our next speaker who we are very fortunate to have fun all the way from moscow, one of the i think it's fair to say russia's top political analysts and scholars working on russian politics today, nikolay petrov committees at the head of the

center for political geographic research and he was previously chair as many of you know of the carnegie moscow center's society and regions program. before that he worked at the institute of geography at the russian academy of sciences. so is also the author of many publications. most recently two books, the state of russia, what comes next just out in 2015. and then a couple years ago russia 2025, which he co-edited, centers for the russian future. i think it should be a very interesting discussion so we will start out with brian and turn it over to nikolai and then opened up for questions with answers. so please take it away, brian. >> i've also mentioned were grateful that c-span is covering us today. so thank you for that interest. >> great, thank you, henry. gets rid privilege to be here with two old friends and colleagues, henry and nicolas to talk with putin and putinism.

if the euro may don part tended you are going to let you down a bit of a weapon could talking a lot about you can get me to talk about russia. we can talk about ukraine if people like. miquelon and i left i decided i should go first which were given the opportunity to critique everything i said in my talks but since i'm going first i also get to set any questions about the syria situation and turkish planes shooting down russian planes will be handled i nikolay. i believe that for him. all right. brief outline. i'm going to talk briefly about putinism, it will have to be brief given the time constraint on what to give an overview of how i think the system generally and then i will say that it about how it was already evolving for euromaidan. and then talk about how it's changed in the last two years after the ukrainian defense and ago to talk briefly about the

implications of the changes it's gone through since 2014. i think nikolay to say more about that in his presentation. the basic claim i'm going to make is that over the last two years russia's move into the kind of mobilization rule in response to the quote-unquote emergency situation they find themselves in. and that this is a short-term temptation and a medium-term traffic what do i mean by that? the temptation is that it's easier to rule them to govern. what i mean by that distinction i hope will become clear during the talk. and the trap is that when you rely on ruling rather than governing, you often are prone to make mistakes. state policy becomes ineffective and ultimately you take steps that we can both the system and the country. so what is putinism? first thing i will call for our purposes super, super presidential -ism. what we mean by that?

this is a formal institutional structure of the political system which in 1993 the new constitution was already super presidential, designed to be super presidential debate the president the most powerful person in the political system. but the constitution also sets out a series of what we might call an american context checks and balances a recount of ballots force of the separation of powers and the college so that parliamentary system with the federation council. this constitutional court with judicial review. there's a system of federalism with some powers centered racial conference and there's a series of guarantees in the constitution both for civil society actors and individuals in terms of rights of the free praise, rights to demonstrate and so on. -- free press. when going to claim is under putinism we'v we have seen thisr presidential system that he inherited become even more super, super presidential by weakening all of these alternative sources of power set

out in the constitution. weakening the parliament, civil society, taking control of the media, constructor with the collect article upon which weakens the power of regional leaders and so the that's on the formal institutional side of putinism. at the same time in parallel to the system is the informal political system which is made up of a series of competing plans that were networked together and they compete across institutionalize come across the lines between politics and economics, the resources and for influence and for power. i would say the combination of these two factors, the sort of electoral authoritarian if you have a formal political system and then the informal network system come into a political scientist which is one of the key quote-unquote findings about russian politics. i think this is a widely accepted point about post-soviet russian politics. it has many names. richard calls it the dual state. nikolay petrov had a chapter in a book on the network state

which is a similar idea. henry hale excellent book on, about the same thing from a formal side. and some people even call it just the system, including the former putin and kremlin adviser. and pop lost he says something one of his books that i think is quite apt. he says putin is the president of the formal state and the boss of the informal network state. that's the import of his role in the system. so far we are on the institutional, formal and informal but i'm going to suggest there's a third element that's not institutional that's what i would call a mentality and elsewhere i've called the code of putinism. for those want to hear more about this there's a memo that came out called the code of putinism. so very briefly the idea is that we can't think of, we should think of putin simply as a

rational actor pursuing power at will or whatever other things political actors might pursue but these motivated not only by a set of ideas but i don't think he's an ideologue but there are some ideas underlying his behavior. is also like any other human being some less emotion, as a set of habits and tendencies that influence the types of decisions that he makes. i can't call attention to all the ones i outlined in the memo of these include things like statism as a guiding principle that he articulated early on both in terms of how the russian state should be structured domestically and how it should be powerful domestically and how russia should become a great power again in the international system. it's conservative in its essence and is made a bit of controversy here but in general i see but a somewhat illiberal, somewhat distrustful individual action and countervailing cleavages added pursue is your date as much as possible adheres in some

sense reforms to make the stabilize the system. is more of a conservative at heart. i think his habits that he developed in his career prior to becoming president and towards a feeling of the need to establish control and order and getting a disorder that was allowed under both gorbachev and yeltsin was debilitating and he needs to establish order, he needs to be destroyed under establishes a strong state system. system. that i think is also on the emotional level an element of resentment about the way that he feels. is not just putin but other members of the elite, feel the rush has been treated in the post-cold war environment, feel that they were not adequately respected by the west and that they do not get their due in international politics. these are some the things i see going into the mentality of putin and those people around him that influences the way that every act to various political challenges they face. all right.

so now i want to move to the period between 2011-2012 and 2013-2014 what i call of putinism pc, which is putin before crimea. cassie our minds although about 2012 there was a concerted crackdown launched when putin returned to the presidency in 2012. we saw this in many different realms and the crackdown came as the response to the series of protests that broke out in moscow and other cities in 2011-2012 after the 2011 parliamentary elections. this came in many different responses. it came in terms of a new kind of political strategy i would argue that targeted what the regime saw the conservative majority in the country, russian orthodox voters, rural voters, working-class voters, state employees, people who work in the power structures like law enforcement and the military.

and a reliance was put on those actors and there was a subconscious wraps ditching of the middle-class. this came in many different guys. they are increase fines for participating in protests. is a series of trials that one could perhaps call show trials designed to communicate to the opposition the danger of engaging in protests and you see some of these events reflected in this life. there's been a 20 to protest which turned violent and about 20 people were arrested and charged with crimes as a result of that is ordered that broke out. there was the infamous fried case of course which was designed to show that the opposition -- riot passionate and there were a series of trials, the most prominent being against alexi who is pictured there, first row and the sum of 2013. they're also a series of laws cracking down on what recalled

foreign agent and ngos. the so called gay propaganda law, said. there was this concerted and more conservative, or anti-america more authoritarian tendency before crimea happened. putinism a.d. which is putin after the dawn boss has gone more in the direction they were tending towards in 2012-2013. and in terms of what i described as the mentality of putinism we see more emphasis on this notion of russia as a besieged fortress. beset by external enemies working with internal enemies trying to destabilize the country. one person who has been out in front entrance of articulated his vision is the secretary of the security council and a longtime ally of putin from st. petersburg are used to work in the kgb, used to that its successor organization, and the articulated in an interview this summer his idea that the

americans are trying to drag rush into an interstate military conflict using the ukrainian events to bring about a change in power in russia and the final analysis, dismember our country. and he and others like to point to an entirely fictional quote that they tribute to madeleine albright which allegedly sent but never in fact has been shoved aside that this is what the americans hope to do. what about buddhism in terms of the informal politics and plant networks? -- putinism. early on under putinism especially 2000-2003, 2004, putin would play the role of the first among equals arbitrating between the chi chip different . some of them inherited from the yeltsin period, some new which came within from st. petersburg and other business interests that were circulating around the kremlin. and over time gradually has managed to concentrate more and more authority as the boss a

different plans that put himself at the center for the system. ..

in this post-ukraine environment. they have russia is true interest at heart. and it refers to the decision in february 2014 annexed crimea and his logic is because there was a huge shift in the balance of power among the elite and the pro-western lost a lot of power instantaneously in the so-called keys and the people that have background in the ministries oregon military or similar security organizations instantly gained a lot of power. so there's been a shift and some of the people like the defense minister and alexander the head of the foreign intelligence

service from the security council and then the chief of the presidential staff also the ally from st. petersburg vladimir putin. i'm not suggesting this is a single unified team. for example there are rumors that the defense minister may not even have been consulted about the decision when it was taken and there's also rumors he was reluctant to take the military option in crimea. i think that it's fair to say that since february 2014 those elements in the security and foreign-policy elite and that

remains true to this day. i will call nationalized meaning if you look at the career tracks of the children of all of these people below here they all work for a state affiliated bank or corporation. they were not educated abroad for some of the children they are a different sort of political profile and they are more nationalized which has been a priority of putin since even before 2014. final thing i want to talk about briefly is brewing rather than government and what it implies for the decision-making. so at the top you may recognize

the minister for russia and the russian minister was in the news last week because of the scandal. but i will give you one guess where he's from houston minister of sports. and nikolai might want to say more about it later. he comes from st. petersburg and has a background in the kgb and in the last picture i will give you one guess where he's from he's from st. petersburg and worked with the police previously and he actually had the federal security service, so the issue that brings these three actors together is the russian football association and the board of the football association in summer 14 and

that means soccer in this context context someone leaked the transcript of the executive board meeting and an opposition newspaper and he sent a request to the board to bring three football clubs into the russian association and the executive committee was supposed to rule on this decision. you might think that this was an easy decision but the people who were on this board, some of them are billionaires, the rest of them are multimillionaires and they are all on football clubs in various cities around russia and they were instantly nervous about this proposal and one of them instantly said we might get sanctioned if we take this position. who's going to get mtv are not sanctioned and another said who is going to compensate me for my losses if we are sanctioned into the third one says what happens if it decides after this decision to take away the 2018 world cup coaches' held in moscow so all of these various

elite economic actors are pushing back with this idea thinking it might harm their interest and get after the life he's had enough of this. he breaks in and assess what is the matter with you people. you are calling crawling on your belly before the last. putin is standing alone. he's alone, he is under attack in and as citizens we need to support his stance. so we are going to approach this a bit differently and they say of course if the country has to suffer some losses for the good of the state we are willing to do that. if there's an order we will do this no question but what if he doesn't really want this maybe this will be against what he himself once. maybe we should ask him. and he says it would be unethical to approach the president about this decision. >> and he's as i can imagine this if i go to putin and say we

are having this discussion about the football clubs and impolite english he would say buzz off. one of the owners if we take this decision without consulting him and we lose the world cup. it's worth $30 billion if i have to for the good of the country go fight i'm going to go fight. that's the term he used first used first persons we better check with the first person and decide before we do this and so we decided to wait a few days until someone was sent to check whether this was the right decision and then the adopted the decision to bring these three football clubs into the football association.

so what is the point of the story? what does the person think about what to do site you can imagine how this would make the decision-making process other inefficient if people at lower levels in the system are wondering all the time may be putin doesn't want us to do this or wants us to go further so we have to consult with him. another interesting thing this episode was that you couldn't have had a lot of status in the discussion. these groups of elites were trying to push back to protect their interest within the constraints that they saw

themselves coming under some even earlier i described him as even more he isn't totally. they still have their interest that they try to pursue. the problem i think for russia is when you have a decision-making system that is concentrated and focused that is this much focused on the rule of the boss rather than the governing of the president of medium and long-term challenges tend to get neglected and that is why i think we are seeing an inability of the system to come up with a coherent economic response to the current economic crisis they find themselves under due to lower oil prices and to to international sanctions and so it was an easy decision to make in some sense so there were fewer constraints but also a trap that is leading to mistakes and policies that in the medium term are not going to be healthy either for russia or the political system. thank you.

moscow next speaker will be nikolai mixed up the berlin book i can just add several things to look at what will happen next. the reason for all those changes that we see in russia and those changes could go in a different way perhaps without crimea and perhaps they would take place later but preparations for those changes were taking place since

2012 and there are understandable reasons why it has been done. one is connected in the political development and the crisis of legitimacy which couldn't effect at the time when they studied to go down by the usual means and that's why they switched to a different kind of legitimacy. for the expense of losing in the political wind in the economic sphere and another option to keep its monopoly at the this monopoly at the expense of economic growth and the oligarchs. so where is russia now.

they have much more dependence from that which creates the new political geometry. there is no place for the domestic politics in russia and various foreign-policy. so there have been legitimacy. it is very important because in order to keep that you shouldn't

wait for elections. you should invest over time in the aging victories in sports or military victories and that's why all the scandals are so important for the regime. you can develop or you should develop with regards to the west exploiting the image of a fortress or you should use repressions and this is exactly what we see now in russia so to formulate in short i would say all the moves made in 2014 did make the country.

we have several opportunities and now it looks like most of them are cut off and there is only one line there would be an extremely powerful and cannot change this trajectory. so what he can do is to regulate speed to make the movement faster or slower and it can appear to the trajectory so there is no way to go out and been there are three possible outcomes. outcome number one is the plane leaves the ground. and the new one will be better due to the absence of any political institutions. the second option is the team is able to replace the leader which

is hardly possible now not only did the fact there character remarks like those that existed in the union which did have had tend of magic land that could decide something. putin is dealing with all of these on a bilateral basis, so it is hardly possible to think about any replacement of the leader if only he himself does not want this and the thoughts of option and this is perhaps what putin has in his mind is the miracle can happen to bless the plane out of the tailspin. and it will make ukraine has happened in 2014 not that important and land the plane under putin's leadership to go out of these tales span.

it's got a dynamic and it's not like keeping motionless. it's sliding down and cannot last forever which makes the regime in its present shape transition everyone. so it is transitional and there are understandable limits to its existence that can add it up to financial and economic resources which are pretty much limited and that's the new budget which should be accepted pretty soon and the plans for the reserve fund meaning that the next year it's impossible to keep all the proportions and they should be revised in a very essential way. second, if it is the belief readiness by india to show us

the top and they can conceive of what is going on profitably in the sense that yes they did lose one half of their fortune but they kept the monopoly. another problem is with the medium level he he leads they lost the opportunity to go somewhere else to keep their children abroad to spend money they are earning in russia and more comfortable countries so they feel like being in the camp and it will not last for long so they are eager to get their paper forced to reduce crime and so another reason to think that these movements will not last

for long is connected with the qualms of the multiplied fumbles. so not only this, but it consists of several important finals which are shrinking and going down. the first one is a shrinking time for the growth and instability it's absolutely irrational to make investments and this time horizon is extremely short now and it's becoming shorter and shorter because of the inability and lack of desire he elite. the second is connected with the fact that what we call the

syndrome not only passed after the crimea annexation but we brought approximately the same downgrade in the way the society looks at different problems like say corruption is 20% less now than it used to be and problems with the caucuses so it looks like society is done and it's easy to think there are no other problems. they are described and the

problem is that when being exercised for long. there is a selection of personnel which cannot make any decisions. it's around the fights. we see more of the elites.

so the danger of making decisions which are in the interest of certain lenses but not in the interest of the whole system. and if it is increasing all the time. there is about one year of life expectancy [inaudible] and with the probability of almost zero.

it's to demonstrate the constructive role russia can play at the international stage. this never was the goal to change something in theory absolved and to keep them in place. it goes in line of what the appeal of the need to keep legitimacy. no way to keep the new military legitimacy due to ukraine that's

why russia is defined page is due to the propagandist machine that was already achieved into the position of a strong leader and it makes it possible for him to claim the switch of the relations with the west to change the confrontations to the cooperation and cannot be seen from the position of the weak leader. i think that the exit strategy can be active with replacement by somebody else but it will be done by putin so we can see it not necessarily in 2008 he can

keep being in power having one position and the name of this position is putin said he doesn't need to be the president or prime minister he can keep in power by himself and what is important is the country is coming to the new elections during the electoral cycle and there are elections held next september and i would wait if it can explain why they are early to address the nation and to declare because the elite understood that china cannot replace the last in terms of

money and keeping the flow to the russian economy and being reserves to keep without radical changes. thank you. [applause] >> thank you. i think we can go ahead and open up discussions to members of the audience. we have microphones? so if you could identify yourself if you have a comment or question and bring over a microphone for you. yes please. and if you could identify yourself. >> i certainly have an interest in that situation and i was intrigued about you saying that

the general of the armed services wasn't involved in the initial decision and i wonder do you know that was also the case and what the more extreme factor of the invasion of eastern ukraine which i think has also been less rewarding. >> thanks very much for the question. it wasn't consulted on when the first decision was taken is moscow rumor. no one has said publicly on the record of who exactly were the four people that putin said he consulted with that night. he has unofficially said in an interview there were four of us and at the end of the night,

that he turned to them and said we have to bring it back to russia and there's a list of names that are bandied about. that doesn't mean he wasn't one of the four of many people think he wasn't. later there were decisions about implementation that he would have been involved in and actually some of the deputies played an important role in crimea that the claim is the initial decision was made without the defense minister's participation. and there were quite a few rumors to the effect of many people in the eu leaders were opposed to the decision and force feeding some of the potential consequences. but putin has the one and only important vote in this respect. in terms of the military action in eastern ukraine by that point the defense ministry is clearly involved in those decisions. also, it's hard to see exactly how the operation is managed

quite frankly. it looks like the federal security service was running again a number of the administration staff had cleaned to -- the political forces and that the military also had its actions and it doesn't seem to me looking at it from outside that it was well coordinated all the time and there's certainly rumors that the head of the council was often clashing with the person that works for the administration about the lines of authority for the operations. >> i would focus on the fact that due to some other news agencies there are myths about how the decisions are made in

russia and who exactly is making this decision. i would look at the decision in general as consistent as three different decisions. the first major one with the last should be by shareholders shareholders not by managers and shareholders are those like the so-called oligarchs. the second decision in case you ukraine and the third decision about concrete and could be made by these generals and now one of

the very informed russian journalists is trying to explain his decision and he reminds us of the decision has been made on the invasion into afghanistan where the general staff to try to oppose the meeting and he was told we did invite you not to tell us about your opinion, but we didn't write you to pick our opinion, so this perhaps could that this perhaps could have been with regards to crimea as well. >> thank you very much for the excellent presentation. for the reserve fund is a minor thing. so the deficit for next year

with the $40 billion as planned and the total results is printed $65 billion. so that's a lot of loop to hang themselves with and first, hasn't it been replaced by the security council meeting quite regularly. you talked about the elites but among the others we have different beliefs and they seem to be rising and the other is the state enterprise managers

[inaudible] it would be more interesting if you could discuss is this really happening on the indications of the founding and how you look at the situation and we have elaborated and touched off now to what has been a factor in how should you see that ukraine is now being played down and i would instruct that in four days as well as i've seen it mentioned the capital to ukraine

>> to control everything including the central ban. and you can easily fix these problems and this is exactly what is going on in this deficit the story about the fact that the just on the eve of the project the draft of the budget to a state the government which planned to military spending for this idea perhaps they did consult, whom they should consult and how they managed to do this at the very last moment

they changed the expected prices to increase them. it was connected with these wise decisions. there is consulting agencies with the public bureau. in my view it's a little misleading due to the fact that at the time of the soviet union central committee bureau was a formal institution where they had been represented and should meet decide to make important decisions.

this is a very different body. it's not so much the institute. it's more like substitute. it's the security council chaired by the president who can either make decisions on the base of the discussion or who cannot make this decision. the security council cannot make any decisions by itself and it can combine certain formal institutions like the houses of the russian parliament whose chairs do not play any essential role in decision-making at certain settlements and managers like security agencies, so there are no oligarchs almost no oligarchs there which makes this

body not the kind of real space where decisions are made. if we look at major shifts within the eu made i would completely agree that it's a time of war, military and secret service guys who play more important .-full-stop though we do see the same so-called liberal economists and government, the goal now is to minimize damage. so this is very dangerous i think for putin because his role is to keep the balance between the major events. he cannot allow any of this to win against others because it will make his position not that influential and it will make him a hostage of this elite and i

can hardly imagine what can be done in order to restore the balance and elites. speaking about ukraine, i'm afraid that both moscow and kiev are not interested in any kind of radical solution for eastern ukraine. they are more interested to keep its shape of the controlled conflict. i don't think there is anything positive they can get out of eastern ukraine but it can avoid at least the negative consequences connected with many different things, connected with the fact that they should find enough money to keep it afloat or they should get a pretty big number of which can come back to russia so it's much more

effective to keep certain control to demonstrate something is going on to avoid the sanctions to make them easier but not to look for the final solution. >> there's a couple of responses in terms of specific question about a split between the cronies versus the managers of the state enterprises it has been very interesting the way that the efforts began taking access to the reserve funds has been blocked. and there seems to be some indication that putin is looking more closely at how the

enterprises have been managed or mismanaged into situation in the situation of declining economic resources there's closer attention to what's going on there but whether that entails a coming shift despite leaving the russian railway i don't see that because it isn't clear exactly where putin would return. i find it hard to believe that he would opt for a manager type problem the way that he has in the russian railways and of course it's connected to one of the cronies that you mentioned. on the crony side, some people think he lost favor because of his unwillingness to get involved in the difficult and expensive project to build a bridge to crimea and therefore he raised his influence. i don't know whether we can

protect out that out a long way. i think a strictly he was much more powerful so it would be a shift of important portions if that is flipped now. in terms of ukraine i think that it is an interesting story because it does seem that on the part of putin there is some fatigue because things didn't work out the way that they had hoped and projected they would if he doesn't quite know how to get out of it. he can't get out of it by walking away. he feels like she he needs to maintain some kind of leverage to keep it from drifting closer to the west. so the forces are leverage he can use at any point and he is hoping at some point the government is forced to do the deal basically and recognize the forces are somewhat legitimate

actors that are in power to negotiate on behalf of some kind of a federalism solution but the government isn't going to give him that but he's also sort of willing to walk away from it so he's kind of stuck and he wants to keep as low as possible and hope that the west eventually gets tired of the sanctions regime and even if he doesn't get everything he wants wants into local politics of the walk back with some of the sanctions on the part of europe in the next year that may be good enough for him. >> [inaudible] thank you very much.

the issue is dividing and making a difference between the program and psychological. thank you. i wanted to do the same way that you do in ruling and keeping the power and governing and being about the state because to a certain extent they are both about the state it's more than each of the institutions and how the decisions are made and we

have seen over the last 15 years steady but fairly wondered actual move towards weakening any formal institutional constraints and increasing the importance on informal structures. so in that sense i think that it reflects a general tendency that putin has expressed openly that he doesn't believe that russia is currently capable of ruling on automatic institutional procedures and that russia needs manual steering. he said that quite clearly in the interview he said we are coming out of a huge crisis. we are not able to work in the automatic regime in terms of the manual regime and until we get all the institutions in place legal and institutional and so

on we have to work in the manual regime and that will take at least another 15 to 20 years. from the time he said that that would put us to 22 or 27 and of course he stands for the reelection in 2018 inserts another six years that puts us in the middle of the 15 to 20 year period. he thinks he has another year to go. so thinking about 20-24 is very far off in a short-term time horizon's but at least within the logic that he laid out earlier when things were going better he was indispensable to keeping things running giving the institutions and the problem of disorder if he were to step aside. >> very different models of the elite and in our studies that did use four of them one was already mentioned there is a

motto and another can be called because of the kremlin. there are many and so the problem is how stable are these towers. and everybody in the team around him so the influences defined by the existence and when repeating they confirmed a friend reconciliations not for long so this is about the planned groups. now there's a fourth model on the board where putin is considered to be the chair. the problem until recently he is the chair of the poor board and he should do with the board decides. unfortunately now he is much less dependent from the boards

and perhaps it's not deciding a lot now and there is a motto according to which there are some experts, those that are trusted by putin in different spheres and there are a few strategies. the problem i think is connected with the fact that the political geometry doesn't get anybody except putin to overuse the results of that new and that's a problem because different parts of the power machine act in its own interest and nobody can do this in the interest of the whole system except for putin himself so for those that are different between loyal servants and managers and strategies are saying that while it looks like he can be definitely seen as a

strategist from the site of the liberal economies and the chief of staff can be seen from the opposite side. >> thank you very much. i walked in on this a bit late. i worked with central asia. first part of my question is what do you see in terms of recruitment from the caucuses through isis tosyria and he made wants to exert some interest but given the economic challenges, how realistic is that into the future? >> do you want to take that?

>> he moderated to publish a wonderful book on their regimes and these are regimes in the space and problem so i would speak about the age and look at crimea in the aging regime. and the problem is what exactly will happen if and when the aging leaders are coming out of power and nobody can predict that. there are no institutions. anything can happen. and central asia is very dangerous where there is a huge pressure not necessarily the radical but different islamists

which can react and can have negative constituencies at the time they will leave. so i don't think that this is the real problem into the with the russian authorities to try to do something about it. there is a very short time horizons are they try to deal with problems as the problems do appear meaning that they are not in a position to make some fruitful efforts in order to be more ready to deal with the conflicts or even a civil war in central asia at the time when it will appeal. when speaking about black swans the russian caucuses are in a

bad shape and when the government is coming out of it it or not only means it cannot keep spending in a way that it's been going on the last decade but it also means that it cannot pay their regional elites for their loyalty and we will hear very negative consequences in terms of the northern caucasus. another is connected in the fact that in my view the term that took place in 2014 was about closing the integration project and it was more about the nationstate and there are many asians and it's not only russia which can develop but there are internationalism as well. so, i would say that in my view,

one of the most dangerous consequences, one is connected with the society and the other is estimated so i would use the image of moses leading his nation for 25 years and then came back to egypt meaning that we lost the first generation and it should take another 40 years to change this society which not only is drunk now but when the experience would be a shock especially for the young generation and the second problem is connected with the risk of the growing nationalism. and i can say that nobody can guarantee that explosion at the

explosion of the caucuses because they will not take place due to very different reasons not only that which is under the control of another dictator, but they try very different approaches and it makes it a pretty dangerous place in terms of stability in the future. >> in terms of central asia since we are talking about this to a certain extent to remind us that all of this started because of the issue of the association agreement and putin at the same time was pushing for ukraine signing up for the economic union and just as the old lion was the soviet union can't exist

without ukraine logically the union makes a lot less sense without ukraine and a few other quite small countries, so it was important that they make their own choice and it didn't work out well for him in the long run. so even now in central asia they are signed up and i think russia in the medium term is destined to lose more influence to china in central asia given the power the two countries yield. in terms of the recruitment in the region i'm not a specialist on this but the numbers you see go from the hundreds to the thousands in terms of the recruitment from russia who may have gone to fight. there are even conspiracy versions if of it is encouraging certain militants to bleed so they fight rather than stay and fight in the north caucasus

there is no evidence that is true but you hear that in various places. but it is interesting, and i think potentially problematic for russia that it has aligned itself so clearly with iran and the security and regime that is dominated by most russians and most inside russia are sunni and this could be creating a source of additional instability in the country not immediately but in the coming years. >> i'm interested in the relationship between the decision on crimea and southeast ukraine.

you mentioned the february 23 meeting and that's the official version but there's also an argument that the decision was made in november and december at least to prepare something so what's the relationship of outside the sort of entrepreneurs like the orthodox oligarchs who have ideological agendas and think in terms of things to the actual decision-making process and is it your opinion because there is a certain strategic version versus any other as an improviser and the rest is constant tactics what is your perspective on that would help tactical was that decision maybe it was just to go into annex

when there was no response to the but they sort of made it up and then is that there's that sort of a speculative thing or larger and strategic? i suspect you know as much as i do but i will give you my own interpretation and it's not pretty larger strategic vision. i see the decision coming on the heels of many people believe to be a great success in the olympics and the americans were so desperate to engineer right on the eve of his greatest

triumph and my sense is that this is something that is the peeved among others in the inner circle that might have been because of the western instead duration. i don't think it is believed in that context in this process and a tactical decision was made that if the americans are willing to go this far we need to do something to secure the interests in ukraine and we cannot tolerate a situation in which the american naval base might come in which is completely out of the question but that's how it was perceived inside the kremlin. and then once you have made that move, and you reflect upon it you wake up to the fact that if you take in ukraine coming you have lost -- if you've taken crimea is lost ukraine in terms of sociological and demographic dimensions of ukrainian politics

the crimea was always a pro-western sort of force within the country. and so, that's not really what they had hoped to accomplish two win over the territory but it gets even closer to the eu, so i see the application as being improvised in response to understanding the negative consequences of the first decision. and sure there were entrepreneurs that had been working this for a while but i see the important decisions taking place as a much more short-term reaction to these events. i should add i could be wrong but that's my interpretation. i grew up in the crimea and i want to say that it's important to understand that before all of

these events, they were much more eager to consider it as part of russia banned the northern caucuses and general. so they moved it position putin as the guy that represents the interests and expectations of the society although among the russian political elite they claim to take crimea back and they are absent for something only over time playing this card but that so it came in line with expectations of the majority of russians and it's very telling that not only are all the guys who can remember this union or

the young generation who cannot remember but everybody not only communist but even some liberals, they do support this move and it's really supported in a crimea itself in its pretty long story about crimea which was inhabited most of all by ethnic russians. ..

>> a very important thing. >> i actually have a couple of points i would like to raise at this point. i wonder to what extent yo think this is a useful analogy or term. is it just something that might connote or something that taps that reach russia, do people see him as something that connects back to history, and my second question is maybe more specific to ryan but putinism could

transcend and leave a legacy like peron in argumenta. i wonder if there's a future even beyond put inn. >> it's not a perfect analogy and i don't expect putin to try to pass power when he least a scenes. i don't see a monarchy coming about. i think it's also a reflection of some of what people call the

personality around putin that treats him not only as an ordinary politician that transcend the office. various coats to close to people, a gift from god that safed russia from collapse. that kind of language about him goes beyond simply an institutional-kind of thing that we would expect from a head of state. in terms of the quod of putinism and can it transcend him, that's an interesting question. just to fill in something that nikola said, how much do u -- we

think of putin connected to society or phenomena around putin as elite. there was a collective trauma of the collapse of empire, communism capitalism, and in that sense putin is to powerful not only because they control the media and other forms of communication, he responds what the average person in russian society was looking for after the so-called wild 90's. i think it is a commonly-held view. not even a feeling but a view.

i don't think that necessarily mean it can transcend chronologically in the future. after 15 years of being in power and still plenty of disorder. the moscow commentator said a couple of weeks ago, everyone is talking about how putin restored order but that's totally wrong because if you have order, an official can't run over a pregnant woman on the street. that's not order, that's disorder. the problem is that the people who work for the state don't understand that that is, in fact, disorder. so i think this putin order thing is more a myth than a

reality and i don't think it can persist the difficulties the system is in today. >> first of all, i would like at putinism and this leads me to the problem of russia constitution which has been adopted in 1993, he won in his fight against the parliament and it was clearly presidential constitution. he was not that evil to exercise all powers given to him. although experts used the image of the elected monarchy with regard to the regime. now the first person can enjoy

almost all these powers. the constitution is pretty much the same way, the power of the first person by any, any institutions and institutions are extremely weak and they became weaker after 2014 in the political regime and to think -- first of all, i would say that putinism cannot survive putin. i hope ta -- that putin will survive putinism. [laughter] >> isn't the eternal cycle of history what what arbitrary and centralized of power, peter the

great, and then people forgetting the injustices of the arbitrary regime and looking, you know, this power is arbitrary, the cycle seems to keep repeating itself without end? >> okay, it can be seen as a vicious cycle. i would look at federalism or lack of federalism. russia is a huge country by its size and should do federal state. federalism is absent and this is due to the fact that none of russian rulers including present day rulers was eager exercise federalism specially those who came from military structures and for whom it's not imaginable

that somebody of their subordinants in the right to decide without their permission. i would look at what is going on with russia political regime now not so much as consequence of this or that coming to together but a very understandable and rational results of all this move connected with the fact that russia is centralized state, it's perhaps overcentralized state and being a centralized state russia should be a state. there's no way to keep such state if there's no federalism. >> i understand many things we see under putin look like

traditional patterns in russia history and it's easy to draw the kind of analogy that you do and analysts kind of do, seeing putin as a reflection of russian traditions, products of geography, culture. i am personally not a fan of those interpretations because i think russia as a society and the international order has changed a lot since those traditional periods that we're making analogy to. i actually think if we look at russian society it is in many respects, not all respects, but many respects quite modern. it's almost 100 literate. the distribution of wealth is not particularly equal. it has a lot of tools in a society for a more liberal

order. i see putinism as a problem preventing political and economic order than a return to some kind of national tradition of close policies and close economics. >> i would stress one important difference in the present state of russian state with regard to earlier stages. i think the regime, we cannot are reproduce itself. there's no way for putinism to survive putin, and this is unlike all other guys you've mentioned, then we can include stullen there. now it's different. i can use such a namage.

russia is call it had hybrid regime. it's not so much hybrid now. it's full-scale regime. but manager hybrid it can be seen as a result of -- well, the children of two parents like, say, you can take horse, donkey and it cannot reproduce itself. take another horse and a new donkey in order to come to the new stage of this regime. [laughter] >> well, i think that's a certain kind of note to end on, so please join me in thanking our speakers for leading off a very interesting discussion. thank you. [applause]

[inaudible conversations] >> tonight here on c-span2, discussion of food regulation, school lunch program, and labeling modified foods and reducing sugar consumption. here is a preview. >> no specific set for sugar on the united states. >> i'm aware of no defense -- >> poison, sometimes described as. there's a political story of why we don't and that is true and i think that to expect politics to be absent from politics is silly. [laughter]

>> i think products with a lot of sugar in them do not want to have information on the label and the reason is very straightforward. it is incredible how much sugar is in most products. i know this and i teach this and yet every day i'm amazed as to how much sugar is in most products. >> you can see the entire discussion in philadelphia tonight starting at 8:00 eastern starting at c-span2. >> four days of nonfiction books and authors on c-span2 book tv. from washington, d.c. friday it's the 32nd annual miami book fair. our all-day coverage begins at

8:00 a.m. eastern and saturday afternoon at 3:00 and robert poole at arlington national cemetery and sunday night, roberta who >> we got the case and i got a call from the trial level of attorney saying, basically we need 30 days. we need time to decide. i'll be honest with you, i didn't believe her. i thought she was stalling for time. first of all, i don't get to be a plaintiff all that time. so it was very worried, to make sure that eddie was still alive and made sure she enjoyed it.

forget it, no extensions. >> she's interviewed by law journal and legal times reporter. watch book tv all weekend every weekend on c-span2. >> the washington institute this week hosted a discussion on french forng and domestic policies following the paris attacks, this is about 90 minutes. [inaudible conversations] >> good morning, welcome to the washington institute. good afternoon if you're in paris. i'm delighted to welcome you at the institute. tomorrow preñ president hollande will be meeting in washington to discuss with president obama

next steps of strategy to address the great challenge of isis, the broader challenge of soonie-gentlemen -- jehadism and everything from the refugee flow to home-grown terrorism. this is an important moment. it's an important moment for all of us in the west, in the middle east, around the world. people who are committed to addressing the profound challenges that we face. we are delighted to be able to host a special panel of french

experts on the middle east, french experts on foreign policy , french experts that can provide a unique insight, not just what happened in paris. i need to turn down the volume on that. the top right there. the top row. french experts who not only have unique insight but the implications for what is going on, french society, politics, foreign policy and how that fits into broader, broader european and international efforts to address the challenges on this agenda. we've never quite done a program that featured only french experts. it is not -- well, we match an

outstanding expert in paris who i will introduce in just a moment, we have the great benefit of having two french experts here on our staff this year. one diplomatic resident and the second an outstanding french scholar of syria that we've been endeavoring to bring to washington for some time, we are delighted that we have such a scholar with uch right -- us right now. speaking with us is one of europe's most eminent expert with islam, the middle east and the relationship between europe and the west and the middle and

that is the professor capel. he has spoken here before at the washington institute. he's professor of political studies paris. his numerous works have been translated into multiple languages. he's about to come out with his newest book. [speaking in native tongue] >> i'm delighted that gilles can join us from paris. speaking after gilles is fabrice, visiting fellow here at the washington institute. fabrice is one of the rare experts in the world with expertise in syria, his thesis

and will offer remarks about russian-syrian strategy in the context of challenge of isis. and then i'm very pleased to introduce olivier, he's a diplomatic residence here at the washington institute. he comes directly from tahran. and he brings a truly unique inside in washington given that we have little diplomatic experience in iran over the last several decades. so the contribution he makes to our understanding of the iranian angle and of how all this is occurring and the impact on french porng policy is truly priceless. i should underscore that olivier is speaking in his sole capacity

as a smart frenchman and not representative of french government. i'm sure that president hollande can speak of himself when he comes here tomorrow. welcome. >> hello. can you hear me? >> yes, we hear you just fine. we hear you just fine. >> okay. so -- >> the floor is yours. >> hello. >> the floor is yours. >> sorry, i thought you wanted to ask me something. so good morning to you and good afternoon to us. we are now more than a week after the events of friday the

13th of november and in a way things are being put into shape, that is to say what happened on friday is being put into perspective. you know that this year 2015 in france started with the attacks on the supermarket and on the french policemen and we hope nothing else is going to happen in december with the attacks of friday the 13th. both attacks belong exactly to the same pattern. i mean, they are part of a strategy. what i call in this forthcoming book which you mentioned and it's going to be out in three weeks now, they belong to the strategy that was designed in

2005 approximately by this syrian-born posted on the internet called for global islamic resistance, where he considers europe is the soft underbelly of the west, attacking new york and washington on the 11th of september was misplaced and that it shows the reaction by george w. bush which ultimately will destroy al-qaeda. europe is much weaker and in europe there are millions of young people from muslim decent coming from colonial immigration title waves who are not

integrated and ready to go to radical is slam as ideology to fight against their home. and what was called the islamic states, something of the same as their real as their place of belonging. what has to take place is some sort of civil war in europe, some sort of war between what he thinks are muslim, radicalized, the would be-desh people on the one hand. translated literally in europe

and that will lead to the ultimate demise of europe. if i may say so jokingly looks like a dream in reverse. now,i notice the need to divide european societies and mobilize all muslims who are supposed to be assassinated under their banner, what they called in his day for -- [speaking in native tongue] >> knights under the prophet's banner. terrorize the enemy and on the other hand gather support. now, if we look at that and we

compare what happened in january, what happened in november, the tragedy is the same, the tactics are quite different. they were enemies of ala. the policemen from muslim decent or caribbean policemen, someone that could have looked like muslim and also jews. this led to a huge demonstration of january 11th, biggest demonstration ever to have taken place on the french soil since the era but that lead also a

breaking in the racks. [speaking in native tongue] >> well done in north africa which was posted on and on on the social networks and that led to sort of heated debates in france, whether society instead of unanimous dimension that the 11th of january demonstrations showed, in spite of the fact that head of states from all over the world came to paris, nevertheless whether there was fault in ramp in society. this one in november was quite different. the killings undiscriminate and anyone who was attending a concert on the 11th and tenth,

mixed area, brooklyn area of paris if i may try this comparison. and the sample of people killed wounded, killed, it's a sample that's presentive of crowds today where people coming from all walks of life, a number of them being sons and daughters of the post colonial immigration from muslim decent also, and therefore, even if they achieved believe was their first aim, ie, terrorized society, terrorized the enemy, it proves and has proven far more difficult to galvanize and we have seen very few expressions of solidarity

exempt from within the core group of what we call here the jihadist from syria. it's not among the so-called range of sympathizers who found excuses to the killing in january. so this is wonderful, how can we explain it and provide it proves to be the case because we are not reacting as we say here and the one thing that we may think about, one difference what i call the second phase al-qaeda, ben laden is that 9/11 was something that was planned from the top. al-qaeda was --

>> opposes al-qaeda and what they are doing now -- [speaking in native tongue] >> it's a system not an organization. he paid for plane tickets and pilot lessons, he sent people that would implement what they had to do that followed their road map. you have sort of bird's-eye view you're going to see civil war, right, but you're not going to see every detail at the top level. you're going to leave a very wide margin of appreciation for the guys who are going implement and you're going to recruit

whatever you have at hand and maybe some of them decided they were volunteers. in the reform, those competition, as you know, to prove that they have gods and the foreigners, foreign fighters were not considered, you know, very, very well by the local, but the iraqis and syrians and they had to prove that they were good at doing something else than blowing themselves and holding prisoners. having this major from france, belgium now. a means to have a bigger say in the daesh system. those guys who implement it, the terrorists attacks, are not really high -- petty criminals

who served time in jail for assaults, for drug dealing, for rape or some of them and who within the sort of prison incubator where you had a lot of the third-generation jehadism come to work from 2005 till now and they met and they would have predicators or preachers. it's not jury fault. the misbehaviors of society have put you there and you have to use your violence and your crime, not for criminal issues but for -- to implement radical jehad. out of jail they would meet again and go to syria, they would train and we have a number of stories like that. the problems that those guys are not, you know, they are not

strategist like bin laden or others, some are serving time in american jails that belong to second-generation. they just hope they would kill as many people as possible in france and they used the ways and methods of criminals. they have this rampage shooting. they took people hostages in cinema and musical and kill them like you play a video game one after the other. it was not pretty well organized. there were many victims, of course, and this is a very saddening phenomena but what they had in mind was very different. for the first time in france, they had -- they sent a number of people with suicide vests which should have detonated

themselves with 80,000 people in the stadium and german prime minister and for some reason they could not get into the stadium and their vests outside and they just killed themselves past one passer-by. for those who are -- who hate jews more than anything else, they had their attacks on a friday night, so they did not as opposed to what happened in january, they did not really succeed in targeting a number of jews as they would have wanted and as the book should follow says. right, so this is something that shows that this issue was not very, very prepared

strategically. also the fact that they targeted everybody and has led to, you know, feeling among muslims in france that they were a bunch of criminals and so and so, so i wonder to what extent, if the 13th of november was not for this generation of jehadist, something that could be compared with what happened in the late 1990's or the first generation afghans there -- afghanistan ths coffee shop in nigeria and then in egypt, nigeria in the fall of 1997 there was the sheer violence in egypt from the

islamic group in nigeria which alienated society at large. you know, they were like fish outside of ponds. people just turned their back on them and this was the failure of phase one which lead to phase two, ie, ben laden and al-qaeda. it was successful. but at the same token, a process of reaction that could lead to the demise of a phenomena. to what extend 13th of november

torques what extend is it a water-shed thing, turning point. is it going to lead to tremendous difficulty of recruitments in the nearby future. this is really a question mark. it's impossible for me to go further and as you know i was attacked when i said in 2000 there was an extension in decline in islamism and had no background. it was in 2000. i would not know what would happen later on. i think i was right in saying that the first phase was declining. i couldn't foresee the second phase. it was taking place. and then to what extent is it now the beginning of the third

phase, daesh system now under duress. let me ask the question and discuss issues that lead to the coalition that you mentioned earlier and maybe we will have more to say about that. i hope it was clear enough with the best look. it looks like i'm a moron but it looks like you got what i said. >> you came out loud and clear. thank you very much. very useful, insightful. i'll turn it over to fabrice. >> thank you. >> we will come back gilles after the presentations. >> after the attacks on paris to ask for more strike and not on the other rebel. i don't think vladimir putin

should agree. it will just strike everybody more. vladimir putin is not only -- [inaudible] yes, okay, thank you. his agenda is clear to win the war and to stay until his dead in the power as his father. for both blid mirror putin and bashar al-assad the attitude to isis is more strategic. bashar al-assad is ally.

russia can establish rebellion in the coast. vladimir putin will realize to other food in sea. wanted to open the gate to the sea in the 19th century but didn't succeed and we see vladimir putin in syria succeed. vladimir putin come back in the center again. sir -- syria is a perfect leverage and refugees. two major problem of the european, europe cannot anymore support this confrontation, we

will see next january the european commission renew of the economic sanction on russia. the price of assad has also become too expensive in europe and france, many people are looking about assad strategy specially it does not fall. european countries because they are afraid in syria. they cannot officially support him so they let russia to do it. the coalition is too shy and still able to struggle outside like in paris. so for european if russia could present, countries should reconsider the sanctions, for instance. at least russia thinks that the

cure is the major process in the middle east. need support and would be grateful for whom will head them cannot support only a certain limit pure nationalism. we can see in the maps. 19 million in turkey and it's principal for turkey. but if the western countries cannot support certain limits, in fact, russia doesn't have this problem b and it can help, for instance, to asheaf their -- achieve their conquest

particularly the area of assad because to get this area. [inaudible] >> also against turkey. assad doesn't agree but he has no choice and he can benefit also of the alliance. it would be more easy to destroy the other rebels. strategy in the world since the beginning. we had 30 years of peace, the strategy were vus clear. -- was very clear. killing hundreds of people and exploiting millions of the other assad strategy.

isis cannot be the alternative. we have to recognize that bashar al-assad didn't create isis. it just -- [inaudible] >> western countries, in fact, of the assad regime, it was not so weak as they said the opposition. western countries didn't want to be involved in syria, turkey saudi arabia and qatar in syrian conflict. but that's exactly what assad

wanted. so we are in front, assad and isis because the time is quick and the other alternative solution is not working very well. initial strike didn't target the isis the first weeks but since a few times and mover -- moreover the russian planes. main objective is to assad. they are close to assad territory as you can see in the maps. you can see the rebel groups.

it's more afraid than isis in the east of syria. isis is in this area that we have the concentration of the troops and the offensive of the syrian army. russia strike in this area is for protect and to get back the strategic airport areas, with the help of the russian strike to get back a few weeks ago. and syrian army is protected from isis on the east is free to launch strong offensive on the

west and the syrian army is going to -- by the west and aleppo also by the west. the border area is very strategic. for instance, tourists will been to paris last week use this door because turkish border is not close. of course, russia refuses and i don't think we need to state want to support also this project. but after paris attacks,

terrorists are using this gate to turkey and to europe. russia agrees to expedite in this area. in conclusion, isis will not be defeated quickly, also because assad on russia need it. if isis rethreats, russia allies assad but not for the other rebels. isis is pushing in assad arms, syrian people threatening as we can see on this map, the religious in syria, are in the syrian army area in the rebel

zone, there's no more minority. under assad control but it's the exception they are in control. france is going to strike isis and russia the other rebel but the rebel will not do the difference between french and russian bombs. we are probably be considerateed and tactical ally of assad on russia. but, in fact, it's too high in

france and destroy the isis organization to prison future attacks, another massive attack in france would be disastrous for the coalition. will bin for the first time and in 2017 we will have the presidential election and sure that it would be again and we expect that she will not be the next president of france, but we have to destroy organization. it's a problem that now we are obliged to work with russia and probably assad. thank you. >> okay. thank you.

very interesting. thank you, fabrice. olivier. >> what i am going to try to do is outline the foreign policy response for the attacks in paris. first of all, i should say that large part of the response is actually domestic response. most of president hollande response a week ago were devoted to domestic issues, homeland security mainly and also the necessity to maintain national unity. so setting this apart, i will focus more specifically on the foreign policy elements of the response, which are key given that the attacks, although, they were mainly conducted by french citizens born and raised in france, were planned and prepared in syria and also in --

within a network expanding in european countries specially belgium. president hollande's visit is response to the attacks. the first i mentioned is to step up french military operations against isis. french air strikes have intensified a couple of days after the paris attacks. today the french carrier has arrived in the east mediterranean and starting organization, this will triple french power in the area. this would be directed at key isis infrastructure command centers, oil infrastructures, et cetera, both in raqqa area.

but their strikes alone won't defeat isis. there's need for action on the ground that might not necessary be french operations. this is to give you an idea of the sinking in paris right now, yesterday the french minister gave an interview on the french radio and he pointed out as an example to the deliberation of which was as a result of combined coalition strikes and local forces on the ground. in that case the turkish. the address to parliament a couple of weeks ago president hollande expressed the help to those who are fighting daesh on the ground. prior to more military action,

there are diplomatic efforts. the goal by the french president to create a large united coalition that would include russia. that is the meaning of un security council resolution that was passed last friday, the first week after the attacks that caused upon members of state that have the capacity to do so that they do issues against other internationally recognized groups. this is also the presence of prime minister, meet president obama and then angela merkel and then vladimir putin in moscow. the view of the french authority right now is that no definite is

possible without a possible solution to the crisis in syria. in fact, daesh has been defeated once in iraq and taking advantage of the conditions in syria. progress has been made in a couple of sections in the past few weeks. the calendar has been agreed upon. but the french view is that bashar al-assad cannot be the outcome of the process. if i may add, syria is, of course, the main focus but there's need to be political process on reconciliation in iraq and also a way out of the

libyan crisis. france talks to all powers involved in the crisis including iran, that's what the president said in parliament, but russia's political weight right now in syria makes it key to the solution and this will -- probably more about that when president meets with counterparts on thursday and syria will be the core of the conversation then. another french priority is to get europeans on board. france decided not to go to nato but invoke article in the european union that is collective defensive introduced in the european institutions in 2009. the rational for that choice is daesh is not only a threat to france but europe as a whole. as you know today, brussels is completely paralyzed by

terrorist operations. homeland securities in between of the neighbors, the french demand that measures be taken to share passenger data and also that european partners show understanding to the cost for french public budget of the additional security measures. in military terms, support is expected to the european partners for ongoing french missions in iraq and syria, meaning additional striking capabilityies and burden sharing in africa, republic where france for years has been the defense line and the daesh may consider that it's the soft of the west,

certainly not the soft-belly of the west as far as france is concerned. they are encouraging signs this morning prime minister cameroon said he would open one of the british sovereign basis to french operations and provide refueling. last week german talks about the possibility of 500 german troops joining french operations. but a lot to do. prime minister is start to go get strikes in syria, debate on who it is actually a war that we are facing and the terror attack on friday might have some european countries hesitate about the need to come with their troops. the french says it's actually more needed now.

>> major importance of nato. as a conclusion i'd say that the french for reaction fits within the pattern of france's diplomatic options and traditional diplomatic strengths. key partners lean but muscular and are listing in higher numbers in the french military. this is a healthy reaction. some have feared that they would be retaliation against them in community and that would be playing by daesh play book. this is on the whole not what is

happening, this is once again healthy and if you look at who is showing up, it's the reflection of the diversity of the french, which is also a very good sign. another aspect and the defensive of the continent. tomorrow president obama's strong words to defeat isis. we will see what the conversation will be like tomorrow. jehadism and not only daesh, france is also fighting al-qaeda in north africa and authorities alike as a long-time threat and likely to shape french policy,

although we've also kept the rest of the show going and it was a sign of both dissolved and cold blood that the climate summit in a couple of weeks in paris. growing importance of french policy and domestic politics. probably never before have foreign policy been discussed to that extend. traditionally with france by the consensus of foreign policy, probably will be more talks about that, including because some aspects of the fight against daseh or domestic fight, fighting weapon trafficking, radical ideology, defending of terrorism, etc. if you like me, i would like to end up on a very positive note, the reactions to

the attacks all over the world are very discovery even of french themselves, all over the world people rallied around french symbols by the way -- [inaudible] >> strategic weapon in the fights became viral. this is also very important in a situation where our countries are targeted because of its own values and way of life and when the war against isis is a war of ideology and a war of ideas as much as it is a war on the ground. >> very good. thank you, gentlemen. lots to discuss here. i'm going to come back to gilles now. there's a sub text of maybe

analytical disagreement and i want to play it out a little bit more. the convention wisdom such as conventional wisdom can emerge in just a matter of days, was that this was a very well-planned, coordinated attack that took, you know, extreme precision, et cetera, etc. gilles you offered a somewhat different view that the attack -- the attackers were brilliant, there was as much problem and poor planning as there was brilliance in what they were able to implement, and you also added that this is -- i don't want to put too many words in your mouth, i heard the import of your remarks say that this is -- the downward slope, what

we've seen this second phase of jehadism reach itself apex, this is probably where we are heading downhill from here. that would suggest, that may have implications for the urgency for attack on isis, and so i would be interested in our views on whether you share the sense that the intense urgency to go in now, partner with who you can, do deals with the devil if necessary to destroy isis or at -- at

altenatily is isis on its way out? >> first, i don't know. i can't judge after a week or so . but whether or not -- i should not say on its way out implemented on the 13th of november was not up to the expectations of the strategist if there is such a thing in daesh or isis as we say here. because they sort of will have difficulties in bringing about the recruitments of the movement in middle to wide circle of

would-be sympathizers. this does not mean that you have -- they will disappear. the outside france which was just mentioned by olivier and so by fabrice, i believe that we have reached a new step. for many reasons within the so-called wide oh coalition agat isis, as the president would have said way back, the second contradictions, the turks, for

instance, they did not like isis but they left the border open and even though they said they are now checking the border, looks like belgium and syria came back to turkey without difficulties and they needed isis to counterbalance the kurds. particularly their syrian branch. now that aran has won the elections, he needs to recount his viginity in the west. he may be interested in having effective policy against isis. look at gcc, the governments

always said they were interest isis, nevertheless there was a lot of money flowing from different gcc countries to boost isis because they were the real, you know, the good soonie guys, whether it would be hezbollah, look what happened. bashar al-assad, and so on and so forth and iraq. so that was something that, you know, they would not put all their strength in this issue. look at russia and fabrice mentioned it. that's for the propaganda and as far as they're concerned, they were interested in moderate

jihadist as some say in this part of the atlantic, so that you would have bashar al-assad on the one hand, on the one side, daesh on the other one and no one in the middle and then bash aide -- bashar and they could side with them. now things have changed. i believe after the downing of the russian plane by daesh, even though there's no public opinion in russia comparable to what we have in america and to what we have in france, putin has to show some muscle and also has an interest for the time being in striking isis. also what happened in paris is a sign that this can happen elsewhere and even though

states, actors, governments even more are short-term people, nevertheless the feeling that you may have such a thing in london, in germany and so and so forth, i was in moscow last year and had some talks at the russian of foreign affairs and also spent some time primakov, the only arabist in the world that came prime minister. when you become prime minister of the president of america we will reconsider all of that. we -- there's not a hope. they said to me, you know, it's not that we like assad that much, it's that we don't want to

be ousted from the region. from the time we have no other choice. it's not a catholic marriage. and the problem with this, you know, this irritance in syrian is that we have hundreds of that will come back and abaud and the others have come back to france. they all remember what happened in the theater. to some extent the bataclan in a way is a reminder of the takeover on a smaller scale. this is a big, big threat. i believe -- this is my understanding. i believe that olivier you surely are better experts than i am on this matter, this is the understanding of the ones abalah

and putin the other day. it's very important even in order to deal with what is happening with europe with the domestic crisis in europe. isis in base provides a sort of, you know, romantic figures, they are the robin hoods of jehadis that stands up to the empires of evil and what have you. i looked a lot in depth into their ideology here and what they have in social networks and there's a tremendous bizarre blend of antilanguage that lends

into language there. so there is -- in a way time is right for striking from the west and i believe that they have common interest in doing so and if the territorial base is severely damaged, then, you know, it would be more difficult to go there and from what i hear, some open sources in france that the number of people actually going there is -- is lower, you know, france is the first explorer in jehadist by german in relative numbers but we have less people going because it's become very dangerous, you will be killed, it's terrible, it's bombed all of the time.

not much of the mystic that you will see on the web, praising, paradise on earth and syria. so this is one thing. what is taking place on the domestic front is different. on that i'm not sure i entirely buy into our official language here that says france is at war with islamic state or the so-called islamic state, that it's a jehadist army. we are at war in syria and iran. at home it's an issue of police, it's an issue of security and the raid that was conducted on the hideout of -- when abaud, southern morocco was killed, sure that there was as olivier

the france is no soft underbelly of the west. this is one of the reasons, not the only one, but one of the reasons why it's particularly targeted. the issue here is not -- we are not at war with france. daesh or isis wants to have war in france and civil war in europe which we are not going to buy in desire. we are not looking at image that isis shows, of course. it's an issue of police, it's an issue also of underlining what makes it in french society that social deprivation leads to the in some networks, why it works so well in our prison system, for instance, and for that we have to look deep into ourselves

and we have to look into the european model and as one of the three of you mentioned, unless i rant about it, we are going to have elections in two weeks in france and the extreme right is, all oppose say that it's going to have an amtrak. more because people are frighten to what they see and attraction of anything foreign that the extreme right is -- is carrying. so for that we will have to be very careful and to understand how to create european societies which are more inclusive and in saying so, i do not mean that we have to negotiate with isis or accommodate whatever their claims are, there's no doubt that there's no -- nothing by

confrontation here. but the -- you know, in france it's different. what is being done is military, what is being done in europe or what has to be done in europe has to do with police insecurity on the other and with social engineering also. >> okay, thank you. >> let me -- i just want to ask our other panelists about a debate which we have in america and it implied in gilles' last remark and that's the boots on the ground debate. on the one hand i'm hearing a sense of great urgency because the people want us to act and on the political level if we don't take care of this isis problem

by x date, the far right may -- may inherit the political spoils. so there's -- there's both popular urgency and political urgency which is compelling a more forceful action, but on the other hand, we are hearing also no -- no calls for on-the-ground activity. we are hearing more of a an american-style expand the existing approach, more air strikes, help our local partners do more, but not a different approach. is there a collision here? is there a point that the french debate, the european debate might change or are they so deeply engrained, perhaps a legacy of experience, reflection

of america's itself to get more deeply involved on the ground, that it's just not going to happen in the french context? gentlemen. >> in france hollande against to send troops in syria and iran. he's afraid if we sent soldiers in europe is what expecting isis because it will be a nice to fight against french people in syrian in france. but they think if we don't send troops in syria, it's not enough with the strike because we have to show that we are also close to people that are fighting. >> i think there's no shyness in

principle on part of the french to send troops on the ground. that's basically what happened in mali years ago and on the rather large scale. those consideration, the syrian terrain, there's the idea local boots can be an alternative to boots on the ground and also the necessity to take into account or partners on constraints and views on the issues. i think this is how things are evolving. i mentioned this interview by the french yesterday on french radio, an example of how things can be done on the ground and i think that's the kind of scenario that is being explored right now. >> okay, very good. let's turn the floor over to

your questions, if you could be kind enough to identify to whom you're posing the question, that will be very useful. so in front first mohamed degani and then in the back. it doesn't bite, mohamed. take the mic. >> the boots on the ground, we noticed that whenever there's an escalation of terrorism against the west, their response is bombing and the problem is that isis has been able to protect itself against the bombing while the civilians are not and so the civilians are paying a heavy casualty at the same time they are being deprived of the food on the land from all this land being bombarded and companies

have closed their doors. my question is this, is there a possibility in a sense, the idea of not putting boots on the ground is based on the fear for casualties. is there a chance of having french army of soldiers to go muslim army to syria and to fight isis so it does not -- so it is not the french fighting the isis or syrian, muslim who are for peace and who are for democracy and who are for all the values that people stand for against this destructive force which claims to be muslim? maybe talk about jewish in the

second world war, something to give a chance for those muslims who are in the west who are against isis to take a stand. >> organize a muslim foreign legion. >> the muslims have a recall on services for more than a hundred years now, but the -- i mean, within the framework of the french military we don't differentiate between soldiers. so that wouldn't be legally possible and whoever is fighting in a french military unit is the french army from a legal point of view. it would be interesting and people interest to get into the army and interesting to see the recruitment by the french which recruits nationals too, but

building up muslim legion as you suggested seems to be, from a legal point of view and the tradition that's not what is contemplated and forces already existing on the ground and supporting these forces is more immediate prospect than such a legion. if muslims both in france and outside france joined the military and french muslims do join the military and some of the french soldiers were targeted were actually muslims, that's not a no -- novelty. >> olivier, i'm sorry, fabrice. >> we are going to fight in syria with the kurds.

with the syrian, christian we have some french christians that feel and to fight against isis. at the moment it's small but after the attacks we could have more people volunteer, and we are afraid of civil war in france because these people are going to fight in syria against isis, they fight in france against called jehadist people. >> yes, please. in the back. >> hi, i work for bfm, french news network. my question is about françois hollande's visit to washington tomorrow. what do hollande and obama can

talk about that hasn't already been discussed and what can france expect from the united states in the fight against isis >> gentlemen. [laughter] >> a question for the french embassy here. all we mentioned today, i think, is going to be part of the conversation. building a coalition, the military, military action, who is going to play what role, etc. but this visit is part of larger series of meetings, so you have the meeting this morning with prime minister cameroon, you have the meeting with president obama tomorrow, the meeting with chancellor merkel and addressing vladimir putin back from iran

and so one of the questions about the russians in the syrian crisis is whether they can deliver the iranians or not and i bet president putin will have interesting things to say when he's back from tahran and meets president hollande. basically all the topics we touched upon today need to be part of the discussion. >> i'll add from a moderator's -- i'll take my hat off for a moment. one might expect that unique rare moments like this is an opportunity for one would call the big-ask, the major request. if not now, when. it's unclear that there will be such a big ask and as this has -- as much to do with how over the last number of years french leaders may have internalized

the patience and has to do with lingering impact of the syrian redline issue a couple of years ago when there was a bad taste left in the mouth of our french allies and so i think it's -- i think you will get a very serious discussion of all these incremental measures that are being talked about, academy -- accelerating air strikes, accelerating assistance to partners on the ground, trying to get soonie arabs in the field. it sounds unlikely that there will be that big ask, the major profound request, get engaged in a new and different way than what you've gotten engaged so far. i may be wrong. we may have a huge announcement

tomorrow afternoon. but i will be surprise if there's that big ask. ..

completely overlap and as you mentioned in the course of the conversation the issue of the occasion and central asia. so that's not the only reason they were there but it's not something that iran shares with us for instance. they also have remained a much more active channel in the west and in the region and basically the uranian's are in those talks. they keep talking to the gulf countries and turkey and its much more regular so there are differences.

russia is probably not looking for the same type of strategic production and they are certainly less concerned with hezbollah. so the question is when and how those differences would materialize and if the russians can deliver to the schedule substantial negotiation. >> did you see any sign yet and whether the disagreement is in syria? >> today of course they are showing are on the north and the

south and in damascus it would be also for the future of asad because theory is important for -- syria is important and if we are making the concession we could have the head from putin but they wouldn't agree, so i think that in the future in one or two years we could have disagreement on the future between the moment because they are going to win the war and to win the peace.

>> in the center. >> thank you. can i direct this after you? i am wondering if france now might show a tendency of to keep away from controversial middle east issues they said you are at war against the islamic states with reacting against the islamic state but whether it's about north africa, the palestinian issue is an pressure on saudi arabia or yemen etc. maybe the trend would be we better keep your distance it's too dangerous. >> on the contrary event for the domestic reasons it's now in the negotiation where he is under

the extreme right on the contrary. ibp has changed is when it took place there was a strong feeling in the circles close to the states that as one of their top ideologues that meant that everything had to be done and we had to boost the opposition. the problem is that we did nothing. and we had a verbal policy at the there was the implementation they didn't change anything on the ground and to some extent that open up the way to a number of people that wanted to take that into their hands and given

the humanitarian reasons it was something very different so this i believe has now been defeated but it's a different policy but a policy which has taken into consideration is the fact that so i believe that this is the meeting. originally we were an ideology which led to the serious mistakes even under domestic grounds and now there is another

line. this doesn't mean that we have to step back contrary to what you suggested. on the contrary, it seems means that we have to find command when i say that we, i mean we have to find a common policy with others that the focus is targeting isys because we have to destroy the base of the problem that we have in france and europe and on that basis will try to help find a solution in the aftermath for the new process in the middle middle east is that this is not at all the same policy as the one that was issued before. >> very good. yes in the far back. >> and the bureau chief and my

question is whether the experts can answer it. it's striking to see the reaction would be the opposite. what a lot of people expected knowing that isis is only empowered for murdering innocent people and how everything was a revolution against the dictatorship and now the reaction was completely the opposite when we saw that ignoring what is happening into thinking that we could contain it and actually fight back on the west and france, everybody is right now probably threatened that they have only been empowered and there would be something about the source of extremism. and we see people now trying to

say that it's to find a common ground. even though there is no syrian refugee involved. why should we be reporting this diabolical plan. by letting him off the hook and letting them deal with it in the future.

to implement the moderate opposition. we did it so that asad was strong to do it. so we do have to do anything strong in syria and not have to risk because it was done quickly and people say nevermind we do not have any sectarian and so in this misunderstanding of the situation that's why we are in this mess and it is protecting

people to move in and it was the like libya. so we are very pragmatic and realistic and very busy to solve the problem and the target is isis and we see -- >> i don't think that the response is to accommodate assets. it's too tight isis in an even better manner with more military means. if you want to see the equilibrium of the french politics it is an onset the enemy is isis but the solution shouldn't have that outcome so that is not exactly what you

describe. >> on the refugee issue if you could put this in the context of what now seems to be the most significant flow of muslims to europe in modern history this is a major controversy of course because in the passing of the electoral campaign and the extreme right is to say that the refugee program to france is meaningful. on the one hand as you just said this is going to change the balance. there is this feeling of some circles that is to say that the european population and this is something perhaps you could read

in some books by bernard lewis in the past that europe was only to become the annex and this is the coming of the population from the stance is going to make the situation and possible, and this is going to lead to new religion in europe and so on and so forth so this is a very [inaudible] bottled the entrance but also mrs. merkel who did well particularly for everything is in dire straits in germany because her policy to accept refugees is challenged in the inside. i was in central europe a couple of weeks ago and someone told me

so this is clearly something which would have some sort of political weight in the policies of all european countries starting with france. the other issue is whether or not there are within the refugees who returned to france. the young lady that spoke maintained that the passports were found near and was not one of that of the person whose name was a soldier that died the passport was forced under the control of the position and from

the fingerprints that were taken and that corresponded to the ones that remained it was probably part of the refugees. and this of course has raised enormous anxiety and put a name in the other campaign so this clearly is a challenge that we shall have to face and this is not that even though it has flowed from syria come it is important in terms of the numbers and the influx coming through the failed state and in the southern parts of tunisia to

italy which is the entry to the channel as they say in britain. and we do not have a campus migrants trying to get into the top all in order to go to britain which is cheering a heavy debate. in spite of all of that, there is no violence or anxiety but if we have a significant amount for the extreme right there are now 13 big regions in france. and if they show they will win the north and the south and

maybe a third region, this would be a major problem in the policy and something which will probably be any number of other countries. denmark already has the coalition in power and so is the case with the netherlands. things that are in echo that happened. so we have to be careful about that. they would rather have an extreme right of movement in power at least in some places because they are sure this will bring what they call islam a phobia and it will bring

everyone under the banner of the radicals. so, we have to be very careful about and i don't believe there is much support in europe for welcoming the migrants. this may be sound in terms of human rights but at least would be translated in the forthcoming elections. >> it's fair to say from the extent that we haven't had before one of the implications is that internal european politics will be on our agenda because of the blowback impact and implications for europe and american relations and the challenges in the middle east so just another issue on our research agenda.

thank you very much for joining us in this discussion and in the visit of the french president to washington tomorrow. thank you. [applause] what is more is your routine is more routine is your routine and washington fax >> first of all i stay in my office. there is a cost directly behind me. and i would remind you my wife spared no expense for that. it came from bed bath beyond and it's got a firm mattress and its

top-of-the-line so i'm very proud of that. but at least there are over 80 members of congress to stay who stay in their office. we have a gym we pay dues and we've got lockers and showers and washing machines. it's like living in a dorm. it really is good for me we built up a lot of come artery disease could -- camaraderie with these guys. >> i guess that was back in 72 when mother ran as a delegate in the neighborhood we were handing out flyers door-to-door and that was my opening and certainly being with my father as he was on account of different sites as a union member and the union leader talking about making sure that the workers were treated with respect to fully inhabit the

dignity of a pension and healthcare. >> did your mom make it to the convention? >> she did. she nominated my father and i think that he got one vote. [laughter] >> you can see the congressional profiles tomorrow morning starting at ten eastern on c-span congress continues

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available as a hardcover or e-book from your favorite bookstore or online bookseller. he sure to order your copy today. >> the department of department of health and human services last week posted a four among how to address growing drug costs while continuing the development of new lifesaving drugs. health and human services secretary sylvia burwell opened up the conference and was introduced by suzanne of the robert wood johnson foundation. >> good morning everybody and welcome to this very important department of health and human services for him to become for them -- for him to discuss the many opportunities as well as the challenges that we face with respect to perception drugs and stakeholders we all do in fact

have stakes in this discussion with the caregivers of patients for the treatment and participants in this economy want a dynamic and innovative pharmaceuticals inc. sector to create these cures and jobs. they are covered by the various forms of health insurance and we know we want the cost to the affordable and sustainable. all of these perspectives and more will be represented today. before we get started i have just a few housekeeping items to cover. first, we do expect a full room today with every seat taken up by a human being, not a briefcase or backpack so please, everybody move to the center of the room if you can come and

fill in each seat to make room so thank you for doing that. next, even though the commercials that southwest airlines may tell you that you are free to move it out of the country you are unfortunately not free to move her out of the building today. please if you need need a rest room or you need to get to the cafeteria or to do something else, please go back to that registration table behind those. please mute your cell phones. now i have the great pleasure of welcoming the first speaker the u.s. secretary of health and

human services. madame secretary, welcome. [applause] thank you for joining us for this important debate and for facilitating our discussion. i also want to thank everyone for joining us today, the consumers, healthcare professionals, employers, manufacturers, insurance issuers, government representatives and other partners that have joined us today. we can see possibilities and challenges with an explosion of innovation we have an opportunity to find new therapies and cures. we have the chance to improve the quality of life for those suffering from disease today and help prevent many more.

we can contribute to innovation in our economy. and at the same time, when medical technology advances, we must confront certain issues of access, quality and portability. hepatitis c for example affects around 3 million people in the u.s. and claims more lives. more drugs revolutionized treatment and improved the cure rate. treatment however can cost more than $100,000 that is an issue for both patients and the organizations in the government government could serve them since more than three out of four infected adults are baby boomers the disease has become one of the cost drivers for the prescription program. impacts have also been significant in the medicaid programs across the country. and recognizing that we need both access and portability, we recently issued a notice to all 50 state medicaid directors to remind them of their obligations

to cover these treatments based on medical evidence as well as the tools they have to manage. we also sent letters to drug manufacturers requesting information on the pricing arrangements and ideas on how we can encourage sustainability in terms of pricing and increasing access to these drugs. new medical breakthroughs can change lives but we must make sure that they are available to those who need them. for the sake of patients, health care system the healthcare system and the economy we must simultaneously support innovation, access and portability. today, we know too many americans struggle to afford the medication they need. a study shows almost a quarter of americans have a prescription over the last year. costs for medicine are up and that's even more pronounced in specialty drugs. in fact about 65% of spending on

new drugs over the past two years were for specialty drugs. we've also recently seen price increases for drugs that have been due. so they are spending on specialty drugs about 87,000,002,012. and that is roughly 25% of the total drugs spending. that's also a little more than 3% of national health spending but it's been estimated that it could quadruple by 2020. reaching about $400 billion. that would be more than 9% of the national health spending. this issue has ramifications across the whole system. drug treatments can mean hundreds of millions of dollars in spending for states. it can also bring health costs down. when patients can better manage their chronic conditions like diabetes and high blood pressure, they experience fewer publications. we can see a reduction in

hospital emissions and we can see the benefits of pharmaceutical innovation beyond the cost. the industry is a dynamic for our economy and helps create jobs. i hear concerns about rising drug costs as they travel across the country from state officials, ceos, providers, insurers and of course patients and families. many wonder if it's possible to have that innovation and affordability. it's a complex problem and we know that the solution won't be simple. but it is a problem that we can solve. and i know that none of us accept that we must choose between innovation and a healthcare system that can provide access to affordable medicine medicines that can heal us and improve our lives. many of you have heard me say that i belief that we have a historic opportunity to transform our health care system

to one that delivers better care, smarter spending and healthier people. i belief the same principles that guide the transformation can guide us here and some of the same fundamental approaches can be put to work on this set of issues. in the last five years the goals of access, affordability and quality have guided our efforts to reduce the number of uninsured america coming as it made strides. in fact as the provisions have gone into effect in the estimated 6 million fewer americans are uninsured. with new benefits like prescription coverage and preventive care is no extra cost, we not only drastically increase access we've also raised the quality of coverage for everyone. we've continued to transform the health-care system into one that delivers quality over quantity and puts the patient at the center of the care.

we've experiment and implemented successful efforts to find new payment models. we are changing incentives, improving health care delivered, and using information in a better way. we are also working to find ways to expedite accelerated drug pathways and improve our review process. and while working with many of you in this room to find ways to deliver better care. they guide the thinking. as you can tell from the agenda there are several areas we have to focus on and the title of

today's forum tells an ambitious story of how the nation can lead in pharmaceutical innovation and deliver access to high-quality affordable care. our first panel is going to focus on how we foster innovation while promoting stronger spending. we need to understand both the potential impact of new drugs on patient care and help these breakthroughs in fact the rising cost. next, we will be discussing access and affordability. what is happening in the doctor's offices in around the kitchen table and policy conversations. how can we make sure patients have access to the drugs they need. next we will talk about what is working and best practices and the best approaches. we want to think about ways that that could be implemented in both medicaid and medicare. we want to hear your thoughts on

how to increase access to information and improve transparency, promote competition and develop innovative purchasing strategies that incorporate values and outcomes-based models into the public and private sector programs. we believe that patients come in manufacturers, providers come insurers and government all share a common goal and with the common goal we can find a common ground. working together we can deliver for the people we serve. americans are depending on us to find innovative new drugs and access to care they need. we are here to both listen and to learn and we are happy to have each of your voices in this discussion. with all of us engaged engage in this conversation we can come together to find a solution that meets the needs of our wide and diverse community. we beat even a bright future and the possibilities to improve

lives are endless and we believe that vote the problem is complex enough that actions will be needed from all of us here today and we know that we can find solutions. we won't agree on everything but if we come together, we are going to move forward. together we can find a path that it doesn't ask us to choose between innovation and affordability. cause our citizens deserve to have those. i look forward to this conversation and thank you also much for joining us today. [applause] >> thank you for laying out the path that we will be exploring further today as we discuss the benefits to patients innovation issues around affordability for specialty drugs of course and patients and consumers at the

center of all of this. the program today is being webcast and the question and answer here code that follows the presentation also will be webcast. after each panel we will have an opportunity indeed for the question and answer session. we ask that you come to the microphone at the center aisle to ask your questions and even though we all have a tendency to either ask questions or give short speeches masquerading as christians today we would like it if you could all in effect ask your questions in a very distinct ways we can get to as many questions as possible. i will be introducing the presenters very briefly with the name and affiliation and their full biographies are available on the forum website. as the secretary said we are going to start with some table settings. the first presentation examines the balance between innovation and smarter spending. the drivers of the drug cost

currently. the impact of the costs on the various stakeholders and the need to find a balance between innovation and smarter spending initiatives. such is at that very important people we are joined by two leading voices in this area, first we are going to hear from the vice president of the industry relations at the largest pharmaceutical information company. they offer services to the pharmaceutical industry and others in more than 100 countries around the globe. after he speaks people here from mark mcclellan to senior fellow and director of healthcare innovation and value initiative at the brookings institution in washington. mark as all of you know has a long list of credentials but of particular pertinence is the fact that he served as the administrator of the center for medicare and medicaid services here charged with implementing the medicare part d. prescription drug programs among

many other responsibilities during the tenure he also was formerly the commissioner commissioner of the food and drug administration. he's going to start with a look at the current environment and what we might expect in the coming years from that cost perspective and then seamlessly turn the podium over to mark. welcome. [applause] thank you susan at a pleasure and honor to be here. it's been a long year and i think this might be my last speech of the year that took me two different countries including belgium and france. as a, but i the, what i want to do this kind of level where we are today, we are going to be talking about the balance between innovation and smarter spending. first of all, since 2014, the u.s. market has been back to double-digit pharmaceutical

growth. but i want to say is that we do this at a list price that we do not get out the rebates. i've got some opinions about what the market looks like. we are back in the double-digit growth. i've been looking at this market since 1989 and i have seen the three cycles that we have been in. the previous cycle we had to double-digit growth from the double-digit growth from the late '90s to early 2003 was what i called the primary blockbuster era when lipitor came to the market into some people said in 1999 when we enter the next next money and that we would see the next growth forever. that didn't happen because the generic way that it happened. it happened probably starting in earnest when prozac went off patent. and for the last 15 years, it's been a tremendous impact in

savings in the market. now the cycle that we are in start as a biological cycle and now i call it the specialty cycle and that is 35% of the spending some people predict that it will be 50% of the spending year 2020. when you look at the double-digit growth in its the market actually went down. that figure lipitor went off patent, lexa pro went off patent and so forth. $35 billion of the pharmaceutical value went generic during the course of that year. the next year year with was modest of 3.5% increase and then we had 2014. in 2014, the story was for the titus. if we recall it was free to do is go introduced in the market in december of 2013 and in one year time it became the largest

single specialty in the general product overall. the story of the titus c. is the cure and the number of people that you're able to treat now. the number of people treated today is six times more than it was five years ago. so, we had the double-digit growth and if you look at last year's 12% growth if you mac the price contribution to this growth that was 3.1 of the 12.5% so most of it is coming from utilization and not anything else and that's because of the innovation we have in a marketplace. so special about 35% of the spending you can see that it's increased each year and it's growing at a 24% rate by traditional power products is growing at 8% rate. and so we expect the trend to continue and we will later on

told you what particular areas you should be watching out for. so the generics have made a competition i remember i said in the generic it's when the generics of all of this dollar growth in the marketplace is only country in 9% of the market growth whereas in 2011 it was 40% and we had some years in the previous decade that was 90% of the growth came from generics so all of this has kind of turned around by innovation and we can't forget the conservation generics have made to save the health care system money because of the city that we do each year recently revealed that we have saved $1.7 trillion in the last ten years of availability of low-cost generic drugs. almost $250 billion in the last year now we are up 83% of generic and it's going to go little higher and it will

stabilize. suggest a kind of summary of where we are today we are growing at 12.3% and we now have a marketplace that is more than $400 billion for the first time and hepatitis c come in diabetes and oncology are the primary drivers of the spending. prescription growth is 1.2% for the year that is a substantial reduction from last year. the primary effect is the rescheduling of hydrocodone to the more restrictive schedule which cut a market by 30% and also you have more chronic care prescriptions. and 75% of the new spending is on the specialty so you can't look at this market here without talking about specialty but you also have this year off patent

the bill of rights the generic competition. and next year we expect a store to go off. so this is what is driving the spending growth you can see hepatitis is at the top followed by diabetes and oncology, multiple sclerosis, respiratory nervous system and so forth and almost all of the big five are in the specialty area and if you look closely at the slide you can see what the significant impacts are in each of these things and we break it down by new brands what's going on with protected brands and what's going on with the generics so when you look at the hepatitis and the secretary specifically looked at this most of that growth is because of innovation and this innovation has brought the first cure that we've ever

seen and 96% of the patients will be cured within eight to 12 weeks. this is revolutionary. diabetes is the combination of what's going on in growth and protected brands you see it has a little bit of impact on the loss of exclusivity to still see that still see that in the oncology and a lot of innovation and a lot of growth of existing brands and the oncology the difference today versus ten years ago. when you look at the new brand spending it's the biggest impact is the titus c. so if you just look at this chart alone you see the impact of the new grant spending in the years going back since 2010. so you see that those numbers average 6.7 billion then went to about $10 billion they jumped up to $25 billion for the new spending or innovation in 2014

and through june of 15 to last 12 months over $30 billion using the biggest chunk of that is the titus c.. and you also have orphan disease drugs also oncology, multiple sclerosis, autoimmune and so forth. and when you look at the specialty market, the characteristics of the specialty market are different than the traditional pharmaceutical marketplace and you see the contrast between the left side of the chart and the right side of the chart. the first thing that you will see on the specialty is the value of innovation specialty so the biggest reason why it's growing the way it is today is because of the innovation in the marketplace. the best example of that is that the titus c. category. if you file the category just for a moment, that category has been progressing for a long period of time and in 2011 the previous generation of hepatitis

products came from the marketplace. and because the increasing patient population. but then all of a sudden they came grinding to a halt because people were waiting for the next new thing which was the new generation of the titus product. what's interesting is that previous generations were no longer on the market. as the newer generations had side effects that were mortifications. so the innovation innovation and then you look at the market exclusivity or the generic but played very little role in the specialty. and the role that you will see being played out more will be on the generics going forward. if you look at the traditional, you will see that the generics have definitely impacted that trend although it is listening. 2012 was the big year that i mentioned. you see that innovation is up and a lot of the activity is the growth on the protected brands, some of which would be price

increases. these are the top ten categories of what we spend in the pharmaceutical dollars and they represent 56.5% of all the spending over what we spend on the pharmaceuticals. and just another notes to keep in mind is that pharmaceuticals are ten to 12% of what we spend on health care so that means we spend 88% of the money elsewhere so this is one of the better values. so if you look at the diabetes and autoimmune respiratory mental-health pain come hepatitis, multiple sclerosis, hiv, with its regulators many of these are specialty categories into those are the ones that had increases. and if you look at the increase on hepatitis c, that is 144% increase from the previous 12 months and most of the other

ones are in the range of 20 or 30%. just some notes when you look down the slide is that the category is up because there's more diabetic patients all the time and there is more innovation in that category but there will be some bio sellers or lower-cost alternatives. they look at the system to help treat cancer so that category will go up. the autoimmune should stay respiratory and there will be some generic and one of the bigger places. mental health is already going down because of the five largest drug and mental health in may of this year it will move up and then i just just wanted to meet want to meet a point about the last one which is what lipid

regulators. $13.5 billion category and a 25 billion-dollar category when all these products had their path protections of the generics have saved in excess of $15 million or so in the last few years and last year when pressed or goes off that category will be $10 billion. now it will be the specialty cholesterol drugs. cvs has said that these drugs if everybody got them on at $100 billion in health-care spending in the united states. so, we were once spending $25 billion on cholesterol we had a risk that we could spend up to $100 billion. it's going to be very important. these are the next ten, some going up and some going down and losing its patent.

now let's look at the leading categories on growth and here you want to look at the far right-hand side and these are the categories that are growing the most. this is ending september 15. i can tell you when we looked at 12 in june of 15 is that number was in the 9 billion-dollar a. so it looks as though we may have started to peak in terms of the explosive growth in hepatitis. when you look at numbers 70s are what we would call fg lt. you see a lot of advertising on those but most of these things you see on the list are specialty products growing more than a billion dollars if you probably have 12 categories. the problem is the conversion is

only subtracted $7 billion so that present a significant challenge to the payers including but government and the commercial insurance. let's move to the approvals. this looks at the approvals from the 2005 onto 2014 and note we had the most approvals than in the previous decades. they were specialty drugs and that meant 52% of all the approvals were specialty drugs. if you look back between the years of 2005 to 2014 especially representing 53.5% of the approvals, the last five years it's been 57%.

so more approvals are coming on specialty van on the traditional pharmaceutical products. other retail look at that in the last pipeline is phase one, two and three. they have been filed and the other significance of 779 of them are orphan drugs. as a come of rare disease drugs have been very pronounced in the last few years. 32% are in the late phase and that is 250 products and 55% injection stand 15% other and when you look at the injunctions

we expect the next five years will be very pronounced in the approval of the substances there's a lot more to come and in an approving of these products. now we just published a report this week that looks at the global use of medicines and we -- i'm going to share a couple charts with you and if you need to get ahold of it please a hold of it please contact me on this but here is what our notion is and what we are going to look at and disease treatments between now and 2020. so in 2020, worldwide over 943 new active substances introduced in the prior 25 years. and the new medications with the especially in biologics. patients that have greater access to breakthrough medicines through the privacy, autoimmune,

heart disease, organ and others by 2020. cancer treatments or oncology will represent the largest categories with 225 medicines expected to be introduced in the next five years. technology will enable changes in treatment protocols for much of the patient engagement accountability and patient provider interaction accelerating the adoption of the behavior changes proven to improve patient. 270 drugs will be available to treat orphan diseases and just think about there is 700,000 rare diseases, so we only scratched the surface on this and these will be revolutionary for those that have these diseases, cystic fibrosis committees have been revolutionary for them and then the other thing is the spending on orphan drugs worldwide will

be one to 2% of the spending in 2020, but it will be as much as 10% in the u.s.. one thing i didn't mention earlier is when you look at specialty spend just 35% of the united states but only represents one to 2% of the prescriptions, so one to 2% of the prescriptions is leading to 35% of the specialty spend. so here's an illustration of the progress that we've made worldwide incomes of innovation into the right-hand side shows you which ones are going to be specialty biologics and which ones need traditional biologics and traditional molecules and especially small molecules and you'll see that most of the growth is happening on the breakdown in the middle chart that shows you what the state that is. now to give you an illustration of this and of how the world is going to be different is just

take cancer for a minute. cancer by 2020 is 91% of the cancer drugs will be targeted versus the hormonal radiation. 33% would have biomarkers so we are moving in the direction that we will be able to make sure that cancer drug is going to work. and even then it is 33% in 2020 these will be rare disease cancers. when you look at fantasy, this is worldwide to show you the treatment pattern of what we've seen and what we expect from 2011 to 2020 and the green uc is growing in the blue is growing

as well so the function is as we are trading six times more hepatitis patients in the united states from what we were doing six years ago. so one of the things we have now is a bio similar is. i started in september or can actually september was a similar version. just this week the fda accepted a similar application on the next generation which is called neulasta so it is finally started. has finally started. it's been well-established since 2007 in europe and it's finally started here in the united states. and where you will really see the price competition in the marketplace when you have multiple entries into that molecule, two or three or four

that is likely to happen in the next few years. why i showed this chart, because most of the biologics that we are familiar with some of the patents expire between now and in the end of the decade. as a kind of coincidentally at the same time that the molecule opportunities generic starts to have an is that there will be opportunities in the similar marketplace. so it costs 1 million to 2 million to bring a small molecule generics to the marketplace where it costs 100 million to 200 million to bring a similar one to the marketplace comes to that idea very different dynamic. ..

so that's $140 billion, and we could save as many as 10 million hospitalizations a year if we did that. then next big is outpatient visits, 75 billion, or 45 billion or 78 million outpatient visits.

and then down at the bottom is emergency room visits. we still have 4 million emergency room visits and that $6 billion. now, what you see on prescriptions is that in some cases if you have less use of antibiotics that leads to fewer prescriptions. if you have better managed pharmacy that's fewer prescriptions but you have a lot more prescriptions if people are more compliant. going forward in spending growth, this is what we expect in the was marketplace between now and 2020. the important thing is come and as i get older my eyes it a little bit week and i can't read the screen here. is that you are saying is that we are expecting the growth rate to slow down. we expect the compounded growth in this marketplace to be five to 8% between now and the end of the decade.

right now we're kind of in the bulge so to speak and it will slow down. it at list price went to work at a workplace of 560, $590 billion. that is a 34% increase over 2014 and we expect brand spend to stay about the same. now let me leave you with some closing thoughts. because you have electric shock up here if i go a little eight on this one, but i think i've got two minutes to go through this slide, is that special is spent is on the rise as i showed you. and it's 35% of the dollars and 2% of the prescriptions. the fastest growing areas are the pepsi, oncology and orphan drugs. and hepatitis c drugs are cures. the first specialty cures that we have seen. and innovation and more patients

treated are major drivers of this trend. so we're going to see more patients treated. so the payer focused and i think steven without all of it about this this afternoon, is that hepatitis c, it's on the pc is k-9s for the reason i mention of the potential to be $100 billion category. -- psck9s. although i've not heard a lot of nice discussions on orphan drug. just think for a minute is that the secretary said there's 3 million patients treated, that hepatitis c in the united states. is the prices of these products about around 100,000, and most of you are not because of their negotiation there in the 50,000 range. if you assume $50,000 for 3 million patients, that's $150 billion of spent. you have the pc is k-9s of potential up to $100 billion of

spent. the pd1s been determined but they are the next new thing and orphan drugs are often in excess of $2000 apiece. and then just think for a minute if we develop the first successful alzheimer's or didn't you treated come out of people have alzheimer's and dementia in the united states? how much would that cost what we're going it is the challenge so that innovation is there. we have the ability to treat more patients but not trying to come up with the money is a different thing. so management tools i think you'll see more of generics, generics will not see them much in the specialty space. we will see biosimilars and more biosimilars you have in the market the more the price will come down. and these are safe. application to fda said they had 14 million patient days of therapy in europe on their version of -- you make sure

you're giving the right drug to the right patient population and i think that it would be very keen on controlling that. exclusive contracts, we stand on hepatitis c and i think we'll see more of that in the future and my last thought was we need more appropriate use of medicine which will save money in the marketplace. with that, thank you very much for your kind attention. [applause] [applause] >> good morning. it's great to follow doug and his replacement to be with all of you on this very important topic of getting innovation, better health access and affordability in health care and particularly for prescription drugs. it's critical for all americans and i appreciate hhs bring together such diverse viewpoints and trying to take a very thoughtful approach to this very significant issue. also want to give a quick thanks to the commonwealth fund for their support for our work and

some close would areas of what i'm going to talk about today. and that is our to pick up where doug left off and go to a bigger picture around some of the trends in spending comes some issues around valley and some of the policy steps that may be taken to address the challenge of achieving all of these the goal at the same kind or am going to talk all of it about health outcome and spending trends try different up some of the comments and i've just made, and talked with some of the options around the axis versus innovation or secretary burwell also highlight from our the approaches that potentially improve access and innovation at the same time. i want to highlight along the way that are different issues for different types of drugs, oral drugs that you get to the pharmacy versus intravenous drugs that are typically delivered by a physician in a medical office or hospital, and several of generics and biosimilars as doug noted.

and spend a few minutes at the in highlighting some of the sessions you hear about this afternoon around value-based drug repayment reforms and incorporating reforms affecting drug pricing into over all health care payment reforms, a big trend in this country right now. so want to start out with this point about one-sided value. there have been undoubtedly tremendous impact of pharmaceutical innovation with a lot more to come. as you heard about from doug. so lots of diseases have been transformed. diabetes, hiv. i can remember when i was in medical training and we couldn't do anything for an hiv patient in trying to make them comfortable. now that's transformed thanks to pharmaceutical progress. hepatitis c we talk a lot about poverty. coronary artery disease, many genetic disorders and other diseases that previously were much more likely to be fatal or much more impactful on effecting

patient's health. cancer mortality death rates in our population have declined by 20% over the last two decades. no small part of that duty drugs. hiv with mortality rate declines of 80% in the last 20 years, and hepatitis c mortality and morbidity will be declining as well. this is just a front end of changes that are coming. as you heard from doug there are over 7000 trucks in development, most of these are first in class, targeted therapies that fall into the specialty class because of their high prices that are expected because of these potential impacts on health. and that gets to why this discussion of value pharmaceuticals is so important. there are several components of his. one is the impact on avoided health care costs. i've heard about that already today.

second arson impacts on nonmedical costs, things like enabling people to get back to work or eating more productive in their job. secretary burwell also major this many -- being more productive -- this brings with a high level of r&d spending and a lot of economic growth with high quality jobs in the industry. i think the most important thing to emphasize about drugs and other medical technologies is their impact on this last point, longer and better lives are americans. so taking the hep c drugs, there've been some estimates suggest some significant downstream cost savings but according to many of these studies it's not the full value of the treatment. by some estimates only about 10-20% of the up front treatment costs would be offset even five years out and even 20 years out your not all of the price is offset. nonetheless, many other studies of the cost effectiveness of these drugs that have been

performed have shown their overall a pretty good deal, route 18, $20,000 per quality -- around 18 -- me to capture this notion of cost effectiveness. that said, a lot of drugs show very different estimates and there has been a lot of emphasis in recent months and years on developing better ways to characterize the value of these new drugs or special of the high cost specialty drugs, a number of groups involved in cancer care. there's a nice report by peter neumann in the new england journal this week about the different approaches and so the challenges in them. on the one hand, it's very hard to capture all of these dimensions in a way that makes sense for patients that have different preferences about how they want to trade off safety issues and cost issues and health outcome issues. on the other hand, there is a

lot of evidence that the value of the drugs on the market today very tremendously with some drugs, some specialty drugs and some indications worth on the order of $2000 per quality adjusted life year, a very good value. others at $200,000, $500,000 or more. again different methods lead to different interest. these are challenging estimates to calculate that no question a lot of variation out there in the context of what have been some really valuable contributions to improving health. and with that framing, no wonder there's so much attention to the cost of prescription drugs and rising costs. we are seeing a shift in prescription drugs in spending towards more first in class of drugs. you heard earlier that specialty drugs approaching over 40%, headed towards 50% or more of

spending. we have had this bump in recent years in spending growth. this chart is probably hard to read but the vertical bars are the annual spending growth rate for prescription drugs. the line going up through up to 2014 is trends in overall national health expenditures. you can see that phase that doug mentioned earlier followed by a slowdown in prescription drug spending growth contributing to the overall slowdown in health care spending growth, and then a big push of recently due to such things as trends with hepatitis c drugs. that growth is expected to be moderated in the next few years, as doug highlighted in detail. this is a chart that breaks out the experience with prescription drug growth by different players. you can see the last couple of years have been a particularly tough time for spending growth

for medicaid programs. i didn't related to hep c and specialty drug trends. private health insurance growth has been particularly slow but looking forward while the overall spending and trends are moderating, particularly for medicaid programs, the growth rates are expected to be higher than they have been in the past. and this does mean, you think this would mean that prescription drugs are contributing more to over health care spending, and there is some upward trend expected and that. according to the national health expenditure estimates prescription drugs have remained around 10% of overall spending. this doesn't include much of the non-retail use of drugs. that's those drugs administered in hospitals and other places. not at retail settings. that could get the number up to 13 or 14%. i want to highlight a point that doug made as well which is that if you really want to do overall health of spending, it's

important look at not only the direct costs of drugs, or the ineffective use of drugs and other parts of the health care system. and then come back to that as well. also out of pocket drug spending has been a significant issue for a growing number of americans who depend on these specialty drugs. and in an overall context it has been a significant part of overall health care spending, but not the only story. again highlighting important think about drugs in the context of overall spending. that said, out-of-pocket spending is higher for patients with many kinds of disorders, as out-of-pocket spending for drugs is higher than out-of-pocket spending for hospital care, for most professional service care and other components of health care. and that suggests there may be again some ways of addressing the out of pocket costs by taking on how to bring down

overall costs in the context of prescription drug use. so that is the way of framing up a bigger cost and value issues that were brought up by doug's discussion of specific trends in pharmaceutical use. i want to turn to some of the policy options. these debates all i think it's a couple of different categories. one category is around how much to emphasize access now, getting affordability now, versus incentives for innovation. this is where we have debates about how long should a drug patent license because how should it be easy for by a similar drugs to come in and compete? also in this category is pressure on pricing. event a lot of proposals for medicaid price negotiation our government price negotiation with which is about to is basically saying that medicare like medicaid should get the

best price for particular drugs, not really negotiation. there is a lot of negotiation that goes on as you heard from doug that pharmaceutical benefit managers are involved in in terms of selective formularies and utilization review and other steps that can help bring down prices but may also have something backs on access. in contrast would be allowing more unrestricted pricing which many people talk about being part of a competitive market, a free market pricing. but keep in mind that most of these prices are paid by a third party insurance plan. that's why they are taking steps through utilization review and other ways of limiting utilization since the price is not actually something that is paid out of pocket by the consumer. that's why we have this debate. it's a balance between how do you balance access versus innovation. one for the point that has been

raised in some steps that fda and industry and academic groups, nih are taking to try to make this process for developing drugs more predictable and efficient, that can be supported by things like investments in precision medicine and better data systems to predict much more accurately which patients are going to respond. that is unquestionably have an effect on drug development. in some cases substantially reduce the cost and time and uncertainty of drug development. it's important to keep in mind that the costs of production are not directly related to the price and the value of a drug. those costs are sunk at the time a drug comes to market. and many, that's why many of the efforts to look at value about cost-effectiveness and the systems i talked about earlier are really focusing on the actual price versus what drug is doing in terms of impact and outcomes for patients. there's another type of policy reform proposal that secretary

also emphasized, and those are the ones that about both access and innovation. how can you have both? those will be published reforms that strengthen incentives for developing valuable treatments, that focus more support on those treatments but at the same time discourage high prices that don't reflect the value of don't reflect the values and to lead to excess utilization, cases where value is low or negative. and thus lead to unnecessary spending on pharmaceuticals. you are going to hear more about these kind of proposals later today as well. also you hear about the base stuff, role of government versus the private sector in undertaking these kinds of efforts. i want to talk about some of these efforts in the context of specific types of drugs because they are different. on the one in oral and self-interest of drugs, the kinds of drugs included in a prescription drug benefit in programs like medicare part d, generally i think through pharmacies and some of the big cost control efforts here in effort to target use to

high-value indications involve pharmacy benefit managers, benefits with some of the lower costs and more about the drugs on the lower tiers. and this area some the polls that have been put forward that could potentially oath encourage innovation and reduced spending growth are getting more competing drugs to the market faster. this is something fda perhaps not as part of the policy has had a role in. for example, the hepatitis c drug has been a big part of this cost discussion in the last few years were all approved under a new breakthrough designation pathway for the fda that brought those drugs to market faster not just the first one but others that we develop and at the same time potential exhilarating both the new treatment and competing brands to bring down prices and competition with the available as well.

there've also been proposal for more accountability for insurers. encourage them to take further steps to keep costs down. for example, in the medicare program today close to half of the spending in a catastrophic part of the drug benefit now. that is up and that's a reflection of the trend towards more use of higher priced specialty drugs that can have a very big impact. most of the cost in that range are paid for by the government through help with those additional costs with medicare covering 80% of the cost in a catastrophic range. a different model might be putting more of that accountability on the insurers. also i'm going to talk more in a few minutes about models in which manufacturers may have more accountability for the payments associated with the drugs and the outcome as well. and as we'll talk about as well during the course of the day,

including a drug payment in broader efforts to reform health care payment. on another type of drug use involved intravenous or physician administered drugs, these are drugs that are generally administered in a physician office or the hospital. this is where a lot of especially cancer drugs come into play. this has a different kind of pricing system that generally does not involve pbm's and formulary management, just prescribing for oral drugs rather, medicare has a system or its payment for the drugs to the organizations, the hospital or the doctor administering the drug is based on the average sales price. it's intended to reflect the price actually paid by providers similar systems are used by many i'd insurers as well. they use asp as a reference point for the price negotiations enter some questions raised about whether that a price like

that that isn't paid for by medicare and other third party payers is really the best way to encourage high-value. with the to contribute to some of those big variations that have been highlighted in the value of many part b drug. in terms are before. some people suggested shifting toward the same kind of pbm or from their base approaches that have been used for oral drugs. is turned off so far to be pretty difficult to implement but maybe as more alternatives come forward and intravenous drugs like the biosimilars that doug was describing how this could be a more viable option. there are also the proposals for pricing changes. i think you here later today about the 340 b. program which is a version of the best price available to certain purchasers. medicare has had consideration of a least cost alternative

policy were drugs that medicare d and simmer could get the same payment. and then once again as alternatives to those approaches with all have the drawback shift to value-based payments are links to broader payment reform models. the third category of drug pricing and drug use and falls a generic and then to come biosimilar drug your these prices are typically much lower. you heard from doug that billions of dollars in savings that have occurred as a result of generic drugs are becoming available and take the lead to 80, 90% over price declines for the brand name drug. also want to highlight the important of similar brand drugs being available. it's not just biosimilars but over the last decade the availability of drugs in the same class, branded drugs that also led to significant price declines as well.

you heard from doug about the decline, but the increase in generic dispensing that is projected to go even higher. and even though brand name drugs make up a small part, now a smaller part of the total expenditures, generic drug prescriptions heading to over 90% of the total will account for an increasingly important part of overall drug spending as well. some of the issues involved here though are that practice doesn't always match the three. some of the recent high profile cases in the news about big increases in prices refer not new brand name drugs but drugs are represent molecules that event on the market for a long time, probably could be characterized as granted generics and where the prices, high prices seem to persist with either a result of generic drug shortages or a result of

companies being able to raise prices and not see a competitive response. so in another important area for further policy development involved find ways to make the generic drug market work better. fda has tried to take some steps to address this, but between generic drug user fees and some other challenges in getting products to market, even small molecule drugs especially at the market which is not that big which for some hiv specialty products tha it may be hard for other manufacturers to come in. there are probably some steps that could be taken to address the. finally, on biosimilars, as doug said they're coming. there's still a lot of policy issues to work to around naming, substitution, how they will actually impact formulary pricing. i think they will be more significant than many people suggest, have been since many of these biosimilars involve part b drugs there will be some challenges around how to price them.

naked separate jako detective of terms which will have an impact on how they affect pricing in overall spending -- they get -- i wanted and with where things are headed next i think in terms of payment per drug. doug talked a lot about some of the alternatives between higher prices versus more access, higher prices versus more access and innovation versus availability. want to highlight for value-based payment you will hear more today about approaches based on prior evidence such as indication specific pricing. people like peter block just proposed this approach. cost-effectiveness threshold, these can be set by government but their many approaches and the private sector based on some of the emerging methods, better evidence for drug treatments through support these kinds of approaches. payments based on patient results, so the outcomes-based pricing. and value-based insurance

design. right now we're just beginning to see this. most of the drug plans have prices and formulary tiers based on the cost of the drug. a value-based insurance plan like the one that new jersey is implemented would have something like no co-pays were drugs. had the highest value, the most cost-effective, maybe they bring to the overall cost the most. and higher co-pays per drugs that are judged to do less well in terms of outcome impact further expanding and on up. it's not quite the same thing. in terms of getting to these approaches, steps like risk adjustment are really important, making sure patients have higher needs it more payment into the entrance plan. so that helps the insurer take steps to make those drugs more available for high-risk patients. better measure of outcomes are

important or we have some measures that can be absorbed in a timely way for drugs like for coronary artery disease, diabetes, hypertension, hepatitis c, hiv, things like viral loads. but in many other conditions we don't have these kinds of outcome measures easily available for many cancers, for neurodegenerative diseases for example, but also what is needed is better evidence on the impact of drugs on outcomes. lots of other factors besides the drugs themselves influence outcomes. this is why steps like other collaborative effort to get to learning health care system are really important. and in view of these new payment models are some of the rate of issues that would have to be addressed. for example, that medicaid best price approach i mentioned before could potentially be triggered by drugs that are highly valuable versus drugs for indications are less highly valuable getting in the way of

adopting that new kind of payment model. and then finally i would just like to him by highlighting the importance of including the drugs in broader payment reforms. alternative payment models are high level gold for the department of health and human services and seabiscuit also a bipartisan of gold has been reflected in recent physician payment reform legislation, to move to alternative payment models for physicians and for the other health care providers that they work with. many of these models right now could put more accountability on health care providers for using high-value drugs, things like clinical pathways based on measures of the evidence in support of a particular drug use, so-based payment bundles where the physicians involved in care, the hospitals involved in care could have to take on more accountability for using the drugs efficiently.

person based payment bundles such as unaccountable care organization. it's important to think of ways in which drug manufacturers might also share in this kind of accountability for financial risk based on results of care, based on accountability for care. you think about this this is really an important feature of moving towards more personalized medicine. the value of the drug in a particular patient is an increasingly varied based on the patient's features and based on things that health care providers working with drug manufacturers could do to improve the value of drugs, or using the drug effectively with other treatments. there's not just one intrinsic value for a drug for all patients in an era of personalized medicine. wouldn't it be nice if some of the efforts around drug sales and other promotions were really better a live with getting the best outcomes at the lowest cost per patient to really improve the access to special

invitations who can benefit the most. this might be a great alternative of the current sale first strategy we don't get a really valuable effective drug that could work for you in an era of personalized medicine until you fill all of the others first. a lot of potential for value creation of their but again a lot of obstacles since our current payment systems for drugs are based on a fee-for-service approach, pay for panel approach rather than this paper ballot as part of an overall health care system approach. this would mean steps like looking at breaking down the separation between part d pricing and impacts on ap health care costs which are an incorporate in that enabling in the drug prices system, a new look at hub medicaid best price, anti-kickback regulation and other approaches. you wil here more about these approaches later today.

these are not easy problems to solve but they are critical problems to solve, and i'm confident we can do better than we do today in terms of improving old access and innovation for prescription drug. thank you very much for the opportunity to join you. [applause] >> thanks so much to both of you. as we heard from doug have about $400 billion biopharmaceutical market today on its way to close to $600 billion by a farm market as you said by the end of the decade. so a lot of growth. inherent is that as we heard a lot of impacts of specialty drugs. those accounting for about 35% of sales as you said. so the new oncology drugs, the hep c drugs you spoke about, pcsk9, anti-cholesterol drugs, et cetera. generic drugs which, of course, would extort of the patent cliff of the last decade, that's

slowing down, the impact of that as you said, doug. and that constituting out about 9% sales growth annually. as you described, both of you, what we have ahead of us in the pipeline is amazing and oppressive. 7000 rare disease with drug targets no, a number of active substances, biosimilars as you suggested. and as you said very powerfully, mark, we're getting a lot of value out of these drugs in terms of avoiding health cost, nonmedical expenditures, et cetera. now, both of you referenced a cost savings potential that we still have fear, whether it's kicking patients to adhere more to the drugs they are to be taken, whether having more evidence-based treatment, coverage with evidence

development, a correct use of drugs. you mentioned that correctly use of antibiotics. plus of other management tools that we have as well as you said, quality options we would look at different approaches for incorporating drugs to some of the new payment models. we can look at some opportunities for, she said, putting part d more into integration of other payments. so there's lots of potential here to capture some savings, and also achieve a lot of the value and care. so with that let's open it up to some questions for all of you. again if you would keep the questions the sink, introduce yourself by name and affiliation. >> my name is eileen would. i'm a pharmacist for 35 years and you both talked about the value of generics, competition and to particularly concerned about treating diabetes. the one example into my

question. so when i was a new pharmacist, insulin just came out and it came out around $20 a vial. and we thought how could people possibly afford this over the beef pork? today that same vial of insulin is over $250. so really nothing has changed. it's not a new product. so my question to you is, at either one of your organizations measured aside from the value of, that we captured in generics, aside from the costs and the trends in the new innovations, what is the impact of just the pure increase in these brands on the market, and what more have we been paying as the country because of that issue? >> mark, you did reference that reflate so why don't you take a first crack at that? >> that maybe something more in doug's area. we have looked at policies that

could help make the generic market and especially this brand of generic market potentially work more efficiently. the whole point of generic drugs is that should be easy for additional manufacturers to come in if the drugs are being priced above the cost of the manufacturing and provide a lower price alternative. and in some areas, brand generics, not the bulk of small molecules, that doesn't seem to be happening and that's an issue under fda is looking into with respect to things like the user fees charge for bringing a generic drug to market, the manufacturing and other requirements, that there are ways to streamline the processes to better manufacturing regulations. keeping the drug safe but again encouraging more competition in branch of generics.

that's a different sort of problem than the challenge of how to address the cost and provide access for the new specialty their effective targeting features that are coming along. >> can you give us a quick sense of what the share price increases is due to this phenomena this because i do know that answer off the top of my head. i said but i see the list of the invoice price. lots of things happened between list and what action is paid. i think the pbm's would probably be better position than we are. the other thing i would just mention to your point about generics is a backlog at the fda is higher than it's ever been on generic drugs come into the marketplace. higher than it's ever been longer than it has ever been. it's improving but we've not taken a big whack at that backlog. >> we have a particular the

health plans are feeling this comes in criminal cost of production on some of these drugs are fractions of a cent and yet the price low as $1000 up so it's a very serious question. >> you had a slight the show there are 200 billion or more in affordable prescription drug costs associate with less than optimal prescribing. what i didn't see was the potential prevention benefits taken in the context of hiv and aids early treatment. so i'm wondering if this number to her at all factored into when you determined what can reach in terms of avoidable cost? >> in the case of hiv and hep c were in those numbers, but not oncology and not autoimmune and not some of the other specialty drugs. but it is a big issue in terms of noncompliance and the other

six things that if we are stressed about it is a good way to save a lot of money spent on afraid we'll just have time for one more question. we will try to pick up your additional questions in the next session if we couldn't. >> value-based solutions were an important part of many of the solutions market just brought up with the u.s. doesn't have a fair arbiter of what the true value and he wanted to know how we could overcome the barriers for an organization as part eight of the question. part b is the value requires we know the actual cost price payments et cetera and what is the root of price transparency to determine the real value in a transparent manner? >> but mark, could. >> i think that's a topic that will come up later today as i think you point out there's a difference between the non-rebate prices and the actual prices and that difference may

be increasing at it over time. one of the things i think the movement towards more value-based payment for treatment would accomplish is building in and developing more data on it. it is true that many european countries ca, the european countries generally gives the government are quicker to set these rates. that doesn't mean that the only way to do it. in the u.s. there's been a number of efforts and the private sector under way to try to better characterize the value and most of the david akin will inform this, most of the so-called real world evidence is held by health plans, i provided groups that are now becoming more accountable for overall cost themselves. so between steps to use that evidence more effectively, particularly health care system, and maybe features in our drug payments that account for coverage with evidence of

development, hopefully we can accelerate more of the underlying evidence. there are a lot of, just because the government doesn't do it doesn't mean it can't be done. i mention an example of the pbm that using these value determinations, and that can be incorporated in private sector approaches as well. >> i would just say as what having this meeting 10 years from now, a lot of this will be a moot point because we have this whole thing of real world evidence emerging around the world. out of these products work in the real world, and that will leave desperately to a much more value-based system. and i would characterize it that in the next 10 years from now if he can demonstrate outcomes you have no income. or the other way to look at it, outcomes equal spin, spin the big question is how quickly and effectively can make it to their for me are now in terms of capturing the evidence and using it effectively and strategy to get more value spent a question

we'll be discussing at great lakes later today. of thanks to both of you. you have not only given us a wonderful 30,000 but look in google earth fashion, you as you're down ground level and given us some specific examples of the kinds of drugs we are going to be seen coming on the marketplace, the value and the challenges that we'll face in making all of his affordable. we are going to take a quick break now, reconvening for the first panel discussion at 10:30 a.m. if you need to bail yourself to the restrooms you know where to find her escort. join me in thanking mark and doug for a terrific discussion. [applause]

>> the second part of health and human services forum on prescription drugs focus on guaranteeing access to life-saving medicines for people who need them. [inaudible conversations] >> if you would all take your seats now we will get started with our next panel. as we said earlier we going to focus now on addressing patient access and affordability of prescription drugs. our discussion now is going to highlight the challenges that patients face accessing biopharmaceuticals. we're going to discuss the types of plan coverage they have and how that affects the access as well as the types of clinical and financial information that would help increase access and

incentivize value. for those of you are joining us via webcast, all of today's biographies are available on the conference website. but introduce you now to our terrific panel. writer next it is heather block as a consumer advocate and a patient going to share personal experience in the realm of health care and pharmaceuticals. next to her is marc boutin to see you of the national health council analyze patient organization. bianca dijulio is with us, the associate director for public opinion and survey research at the kaiser family foundation. next is lisa gill who is drunk editor from consumer reports and right next at the end i should say is debra whitman, chief policy officer from aarp. we test each of these folks to tell us a little bit of the perspective from the organization, or in heather's

case from her experience as a patient and then highlight if they would the top challenge of the top opportunity over individuals as patient and her pulse as we work our way through these issues. so heather wheeler begin with you. tell us a bit of your store and then give us a sense of how you see the opportunities and the challenges. >> to begin with, kind of a shadow to the hhs staff. i started my career many years ago. haven't been in this building and decades. it's still the same so kind of interesting to be back. under very different circumstances because asses mention i'm representing my so. i may be the only person in the room wa who is representing himf which is a lot easier on the one hand and harder on the other. everyone's cancer story is unique and huge to them, but pretty boring and perhaps frightening to everyone else. suffice it to say i had a false negative mammogram, no family

history, was in my 40s and living in afghanistan working for the u.n. fortunately, i was on cobra three previous employer at the time. i know stage four breast cancer that has metastasized to my liver and lungs. i think there's enough medical know-how in this audience that i don't need to explain further but that prognosis means. vicki goetze i live on disability. i have to dip into savings each month as either good news-bad news that outliving my prognosis. u.s. taxpayer and use government is putting the majority of my drug costs for medicare right now, yet i still these financial insecurity and eventually bankruptcy if i live that long. my top issues for this forum are as follows. number one, transparency. for drugs that i am on now have buried in price and 4700, to 9800 per month for the same drug at the same dosage. i have about $270,000 in medical

bills just in the last three years from one drug. that was built liability with actual cost is. i've have been able to figure that out. number two, the under 65 disabled population is under a patchwork of state regulations and legislation. i had to work with my state legislature and past microbial to get supplemental coverage. i could not afford to pay a 20% co-pay come yet the insurers in my state had the right to turn me down and refuse the order they offered me ridiculously expensive premium such as $3000 a month with one code. that's with 20% coverage. that bill passed and thus no longer the case in my state, yet each state is different and it's a huge issue for cancer patients in many places such as virginia and about half the states across the country. my third issue is there's no out of pocket maximum for medicare part b. as art and the earlier presentation many cancer drugs

are filled under part b as our mind. it's expected that day comes i cannot afford my supplemental coverage i will be paying a 20% co-pay which today on the drugs i'm on that would be between 1000-$2000 per month just for the one drug, not my doctors, cat scans, everything else. the aca did we get it out of pocket maximum. this remains a problem just or medicare recipients. number four, cancer care progresses and i'm glad to see there's lots of drugs in the pipeline, maybe they can help keep me alive a bit longer. drugs are increasingly stacked when i can only expect that my costs will escalate in the future. lastly, skin in the game. i have grown to despise this term. congress has chosen to do a with the most comprehensive medicare plan as a field and encourage

unnecessary tests, treatments one. i always want to ask whenever toxic skin in the game is is part of my liver enough? is most of my savings enough and why must every about financial insolvency as much as a word about cancer? that's my day-to-day existence. i'm a middle-class american that happened to get cancer. i could beat any of you. with that, thank you. >> thank you very much, heather. [applause] >> thank you, susan. as a patient advocate of what to commend heather for her advocacy, or work. it's what it's all about when you're a patient advocacy. so tremendous work better. i also want to thank the secretary for convening this meeting with all the stakeholders which with the national health council way. our organization is controlled in terms of its governance by the ceos of the patient

advocacy organizations. with all stakeholders and membership that includes providers, payers in the biopharmaceutical sector, device sector is in the generics association. we work to achieve solutions to very complex situations that are patient-centered but involve all stakeholders so that we can truly make these solutions work, and this is the only approach where we can address this issue. i wanted to talk to you about three specific issues in my opening comments. first is over the course of the last several decades we have done research on people with chronic disease and their family caregivers. what they tell us routine it is they hate the fact that there are industries both insurance companies and the biopharmaceutical sector that make money off the development of treatment or providing care to them. but they also understand that it drives innovation for the

development of new treatments and for better care. more recently our research has shifted and the tone has begun to focus in on how plans are structured. and increasingly what we are finding our people with chronic conditions is that they are going into insurance products that have taken what was one of the greatest benefits in the affordable care act, the maximum out of pocket cost, and then turned into a weapon by frontloading those costs so that for many people with chronic conditions they find that they get the maximum out of pocket costs in that first month or two. sometimes even before they get their first medication or are able to see the specialist. that can for many people and on average amount to 20% of their annual income. it's an effective the bar and it

discriminates against people with chronic conditions that are of low social economic status. and people with chronic conditions are getting really angry about that. the second point i'd like to make is that finding a solution to this will not be easy. but as we heard from the previous speakers, it starts by identifying value. and looking at value from the perspective of people with chronic disease. we cannot simply address the cost of one item without looking at the entire health care ecosystem. medicines are hugely important part for all people in the system. we have to look at the entire ecosystem, and collectively decide what is value and how are they going to promote value. we certainly cannot define value without the patient perspective.

and that leads me to my third and final point. and that is this. we continually conflate consumers and patients. and i'm here to say that while we are part of the same stakeholder community, we are on opposite ends of the spectrum. consumers go into the health care system. they use it as needed. typically for an acute care incident. they go home to the family, their jobs and their lives as if nothing happened. when you're diagnosed with the disease for which there is no effective treatment, or one that is deadly or have a child who will wither and die before their 18th birthday, you have an entirely different perspective on what value does and what innovation is. we have to include that perspective with all the other perspectives when we work through these complicated issues. thank you.

>> thank you to hhs for having me today. i'm happy to be. my role is going to be deterred got a look at about what the public opinion context around the issue is, sort of put the issue perspective of how the public feels about of what their perspectives are. kaisers recently on the topic of prescription drugs and pricing really stem from the question we asked back in april we asked about more than 10 different health policy issues and whether they should be a priority for the congress and president moving forward. what we found we asked that question, this was 10 different topics covering a range of issues of health policies, but what we found was making sure the high-cost drugs were available for people with chronic conditions and making sure they were affordable to those who need them. this ranked number one. it ranked number one across party. the most americans were saying that this should be a priority

for the president and congress moving forward. the other thing that ranked second with government action to lower prescription drug prices. again these two items that were related came above a number of other health policy issues, issues went to the aca and issues related to in tumor protections like that work protections or transparency in health plans and that sort of thing. we just asked this question in our october tracking poll and we found similar results. most of what i'm going to be talking about today really stems from the holes we have done since our april fool women found that drugs are coming from the top of the public prayer in terms of health care. so we called up with our normal kaiser monthly tracking poll to sort of see how the public views of these issues. what we found is that roughly three quarters of the public thinks that drug costs are unreasonable. but at the same time most who

are taking drugs say that they're having an easy time afforded them. many of whom have been charged that helps protect them from the costs. but still a quarter taking drugs say you have a difficult time affording their drugs. this is more of a problem for people with low incomes or people who are in poor health or those who are taking multiple drugs. people who are taking three or four or more drugs are more likely to say they are having a harder time affording their drugs. one of the reasons such a large share of the public can view the cost is unreasonable but then report that it's not personally an issue for them is really because the issue resonates very well with the public. is one of the key ways that public interacts with the health care system. nearly everyone can say they've taken a prescription drug in their lifetime. just a sheer number of transactions that people have with their pharmacist or with their care providers about drugs

is much larger than just what, when they go to an office visit or those sorts of things. they see the cost of the drug on their bottle oftentimes. you can often see the cost of the drug even if you're not paying that much because of health insurance that helps cover some of the cost. one other thing i want to put out there as we think about access to drugs that's coming from the strokes it's important keep in mind that these are drugs impact the relatively small share of the public. what i'm talking about today is holding the event of the public at large, then i specifically those who are facing is really extreme prices. and then my last point is that just in general we found that the public could have the best of the pharmaceutical industry but we did find that most would you like the products and think that drugs that these companies are making have improved the

lives and make american lives better. so i will leave it there for no. >> terrific. thank you. lisa? >> thank you. i am excited to be here today on behalf of consumer reports representing consumers in the marketplace. consumer reports is an independent, unbiased, nonprofit organization whose mission is to empower consumers in the marketplace. so that's the entire contents of my discussion today will be about what consumers experience when they're at the pharmacy counter specifically. i want to share a little bit, kaisers pull is fantastic and with a super bowl also asking about when people have experienced in the last year with their prescriptions. i want to share just a few points about that because i think it's germane to this topic. we asked a nationally representative survey of americans what they were experiencing in the last 12 months. they told us, 30% of people told

us, one out of three people to take a prescription drug told us they have seen their cost at the counter spike unexpectedly. ..

if people cannot afford their medication they will do somebody dangerous things. they won't fill prescriptions that way they are supposed to, they may not take the medication after acted, they might split without asking the doctor or pharmacist. so those are some pretty bad things but consumers also told us that because of high medication costs, sometimes they they skipped dr.'s visits are scheduled and procedures or tests and so all of these things are leading to potentially worse health outcomes so it becomes a very key component of what we do and with that in mind, i want to say as an editor of a program what we have done for the next ten years is poor through the comparative effectiveness research and so for those of you that may not be a health professional in the audience, that's when studies are done with drugs against each other looking at how effective they are compared to other asians usually in the same class but

not always instead of just being compared against the placebo. we have pored over the years poured over the years looking for high-value medications that were very effective and relatively affordable with the idea of a proved compliance and part of the effort is to understand the affordability issue so once we get the high-value medications we'll call it the best way to shop for and what's the best way to save for it and i'm going to share three tips doubled consumers because it's important to illustrate what's wrong in the marketplace and these are work around solutions that will make some of us shift in our chairs but it's important to hear and the first one is this. in some cases using your insurance may not actually be the best deal. the four-man shows almost every single discount drug list in the united states and retailers

across the country and its big-box stores. you can get a prescription from most form and for about $10 for a three-month supply. the second piece of advice is for people who find that they may have to pay the entire cost of the medication out of their pocket and there's a lot of reasons that could happen. it may be that formularies have changed. the entrance is either not covering the drug at a high enough rate and could be the drug has been dropped and also they could have high deductible insurance plans. it could be that they've experienced what feels like an overnight spike in the price because the manufacturers have taken advantage of the loophole that they found as the drugs have gone through astronomically. so if the consumer finds the situation is happening to them that you're not going to believe this but we felt people might try negotiating with your

pharmacist because you can actually negotiate the price of drugs you are paying for them out of pocket. i will give you a great example. they called hundreds around the country praising and one in particular was at a supermarket in des moines iowa. what is your price for the generic drugs used to treat type one diabetes and they told us it was $75 the secret shopper said well i'm not going to use my entrance, so can you give me a better price and the pharmacist came back and said how about $21. the third point is if you find yourself in this situation, shop around because like header pointed out, drug prices for the same strength even within the same zip code can bury dramatically.

in the raleigh north carolina area we started calling around and they gave a price of $220 or $190 a. it's phenomenal and we were very happy. going long way towards helping to bring more stability to the marketplace. a formularies are being changed every 30 days.

[applause] thank you, suzanne and mr. secretary for holding this important meeting. i am here on behalf of the 37 million members who break out into a cold sweat every time they go to pay their drug costs. the cost of drugs as many of you have heard on the panel many of you know from their own visits to the pharmacy the answer is going up and up and up particularly the specialty drugs that are coming to the market you heard about in the first panel. the costs are exorbitant. today we released a report that shows the average price in 2013 of the specialty drugs with over $53,000. $53,000 for the average price of a specialty drug.

and let me put it into the context. the median income in the u.s. for a household is just over $52,000. if we look at our numbers, social security, medicare beneficiaries, we look at the median income is only 23 twice the cost of their annual income for the average specialty drug. i always like to put out the amount of $15,000 on average. that's 3.5 times for one drug. now, that's a lot by any measure but more importantly, most of our beneficiaries in older members are not just taking one drug, two thirds are actually taking three or more. so when you multiply the cost of the number of prescriptions they have to fill the places can be exorbitant.

some say that the consumers to pay the full price of the drug. but they do in one way or another. all consumers are paying for these drugs. importantly, as you heard from heather, the skin in the game of the payments sometimes can break your budget. so even if we look at the new ones that are coming up to the market of $15,000 a year, again roughly equal to the average average social security check. and we calculate how much people are going to have to pay out of pocket. it can be about $3,000 a year. it's a third of the social security checks. and that's from one drug that they will have to take every year. and importantly, even if the people if you personally are taking the drug you will be paying for it during higher premiums and other ways that it affects the system.

we know that in just 2016 the average prices are up 13%. and recent estimate will make everybody's premiums go up by over $124. that's a lot of money that we will all be paying for one drug. it's not simply consumers complaining about the costs that they have. we heard a lot about people not taking drugs that needed it in a recent study found that about 35% haven't felt filled the perception because they couldn't afford to. and while today's conversation is on medical innovation and we fully support new treatments for chronic conditions from the major conditions, medical innovation is meaningless if nobody can afford it.

importantly also we are going to talk about access and we used to control costs. now i do want to also raise the status issue. many insurance companies, many medicaid programs are creating very high bars for people to get the treatment that the need. some medicaid programs have to have more biopsy in order to qualify. in others there are other barriers. so we need to think not only about access and affordably together. finally i just want to say there are ways to address the cost. other countries are doing it. far better than we are. if we look at the cost of drugs in the united states many times there are 100 times the cost of the other people pay. it costs $80,000 in the united states.

about $50,000 in the united kingdom. and $900 in egypt. the united states taxpayer consumers should bear the full cost of innovation and we should use the tools that we have and add additional tools in order to make sure that drugs are affordable and all patients have access to the needed care. [applause] >> thank you to all of you. so, what he had heard really is a portability is issue number one for american consumers. we heard that it's a number one or number two issue on the tracking poll and the number one concern about the high cost and number two we want the government to do something about it. when he we heard that pricing is a particular issue. you mentioned having a single drug that you are taking this

twofold and just not understanding where the variation comes from. we heard about the price spikes that increasingly patients are encountering and use it as they go to get so they've been on for quite sometime and see the rather large cost increases or that we see the premiums in the plans shooting up 13% of this years as a consequence. we heard about this difficulty with various plans under its medicare come of a catastrophic cost or even what's left of the doughnut hole into representative or an gordon particularly on the disabled americans who are qualified for medicare as is true in your case. we heard that some of the affordable care and plans plans with qualified health plans as the pivot frontloading the costs but by virtue of the high

deductibles and the plans and people may be protected at the maximum amount that they had the costs right away and know a lot of the plans not only have the price high deductibles but they have separate deductibles that are hitting a lot of people and we heard there are consequences to all of these things that are not always in the best interest of the health of consumers, whether it is as you said, lisa, not killing perceptions, skipping medications, skipping other forms of care, etc.. yet you mentioned there are some tips and you offered a few of those for consumers to avoid taking those draconian steps by way of shopping around. i love the notion of haggling with your pharmacist ensure you portray that over the weekend with your own pharmacist but there are other approaches as well and those are policy approaches and you mentioned

some of those we may want to take into consideration. as all of you said these are particular issues for low-income and elderly americans especially many of whom will have multiple conditions. so let's go back to some of the policy discussions that you all have started to read into. and heather let's start with you you mentioned the patchwork of state and federal regulations that particularly affect people who are on medicare and disabled and how it hurts people from place to place. it's obviously not going to be workable to attack these issues on the state-by-state level necessarily but what do you think? will be the policy agenda from your perspective as a patient who has seen this and sees the issue in the inevitability that consumers will have some skin in the game but we want to minimize

the skin in the game. >> what i see is that it's time for some national regulation or legislation even. we need to instead of -- raised as an issue from what i understand when aca was being discussed and developed but it never happened it was too difficult an issue talking about getting in the weeds so they left for the state. each state executes it differently. i don't even think there's any two states that are unlike. i ended up writing a bill i copied from several states which by the way i got my information from kaiser originally selected start calling health insurers and estates to find out but i can't expect every person that under 65 and disabled is going to have -- it's good to feel good enough number one in the second have the wherewithal to figure out how to draft the bill and get it passed and now of course -- via their issue other

issue is that is all changing so while we gave a six-month window so that when you become medicare eligible you could be medically underwritten. they couldn't ask about the disease. while that happens then when they quit selling certain plans as the congress has not washed the plan as i don't know what happens to people like me because we are not fond of and i still -- i know i'm really into beads here so bear with me. i'm biting into a plan that's going away and they are not selling any more obviously that is fewer and fewer people in the plan and my premiums are going to skyrocket so there will come a time i can no longer afford to buy that and i'm back to paint 20% of my drugs cost which could be as of right now they are about $9,800 a month so you begin to see it's not sustainable, none of it is so

until you start to look at the national framework and included those of us under 65 and disabled, i believe that you're going you were going to just continues seeing the steady rise from people like me. >> i want to ask you all about the tapes of shopping around for health plans that will cover the drugs in a way that minimizes the pain that has been working for many years to assist consumers in choosing among the part of the plans which is obviously going to be necessary for consumers to do now more than ever and presumably it's for people not just in part d. but health plans generally. >> everything skipping isotonic

my father-in-law. the plan causes change your tv and you may have been the cheapest plan last year so going back into searching for what are the drugs you're taking right you are taking right now and what is the pharmacy you are using is important for consumers. checking between different pharmacies is also important. talking to your doctor about the number of drugs that were on as well to make sure, again many people have multiple doctors and plus prescriptions. there are benefits to make sure that you are on the right medications. there are things consumers can do to a degree. again what i was trying to address are some of the larger structural costs. shoppers can shop but if somebody is taking a very expensive cancer drug that is the treatment for their condition or is not a part d.

drugs but it's where they really have no negotiating power, all of the false way >> i would add to that one of the biggest mistakes consumers can make during the season is not taking any action and unfortunately a large portion of people assume the plan will remain the same and it's particularly for the plans where you sign up every year and you don't really look at the changing formulary. so i would first_the consumers always this time if you doublecheck your plans and that they cover the things that you still need them to cover and the other thing in so doing is to be very mindful of how to beat the high deductible plans. a lot of employers have moved these plans. they can be good in certain circumstances but for people

that have a chronic condition or gland surgery coming up or maybe starting a family these plans may not be the best for their needs if at all possible. it does turn you into -- it is a healthcare consumer. the shopping and comparing. >> as we heard from the earlier panel it might be one way that we can address the affordability for the consumers. >> and eliminated co-pay. >> there isn't a lot a lot of the markets today. what is your assessment and how --

>> not having a co-pay is fantastic and it removes a barrier in the potential surprise of standing at the pharmacy counter being hit with a very high drug bill that you didn't expect. >> many more people are covered and begin to be educated about the issues of not having the kind of coverage we were hoping to and not being covered as well as they had intended in the consumer frustrations and that's part of what we are here to represent and may be able to spur the better plans.

the desire to see more government regulation of the drug prices did you drill down any further than that for people that really understand what they would like the government to do and have particular policies and might or do they just listed that we want somebody to do something? >> i think one of the matters at this point in the debate, so we have asked more specifically about different approaches policymakers may take to lower the price. it's allowing medicare to negotiate drug prices they can charge for drugs including drugs from canada.

in general seven seventh at half attempt the public is supportive of these different options. of the ones that actually got a little bit more but still pass the state that they are supportive of the option, so as this point it's still relatively early i think as the discussion is happening. at least in this go-round of the discussion. so, you know it is possible that there will be more differentiation in terms of what the public with peter. on the policymakers do as the proposals are honed in and as they come out with their objections to the proposals might be. and you know, just as the messages are developed and the policies are developed the public might end up costing a little bit more around the one option or the other. but right now we just need the

broad support for helping this issue. >> what about the membership of the national health council backs your patient advocacy organization, where do they raise these various alternatives or are they really at a consensus of the plan for what might be done? >> there are two issues that we are conflating here. let me address this question and i want to go back to the point about us all agreeing because it isn't the number one issue with respect to people with chronic conditions that they will tell you is they don't like the fact that to also see their doctors at it to see the specialist can access their care. and i think what you are hearing from us is that there is a lot of agreement that the planned design is not working especially for people with high-cost treatments. now i also want to recognize

that we created a certain sense of incentives that create the compote plans to compete on trying to keep individuals out of the plans. that's part of what needs to be looked at. there's a lot of opportunity if you look at the affordable care act a lot of them are going out of business because they try to provide really good benefits but the risk adjustment didn't work. there's opportunities to realign policies so that access can be made affordable and we can have the plans compete on the value that is a critically important issue when we speak with patients. very few of them actually understand what the price of the drug was they don't have that

information what they really mean is i want access to the drug. those are two very different elements. the other point i wanted to make him into going back to your earlier comment, but those people that have treatments, access is a huge issue in the marketplace. in the lower economic status and increasing if you are just middle income. but you have to recognize i'm going to channel the point board members who said we have between seven to 9,000 diseases. only 500 have effective treatments. the vast majority of people with a chronic condition, they want the treatment that they have to get better. that's the number one priority. and for a lot of them, they've got to have inexpensive option. we are now at the point where

science is moving to a place where you're developing treatments that we've never seen before. because this we have the spurs did these covers to specialty product. there's huge opportunities for people that is the priority. how we make them affordable is also a priori. but we have to look at the entire healthcare ecosystem and figure out as a society are we going to pay for new innovation and how are we going to make that accessible to all and not just the wealthy. >> that takes us right back to you because as you said quite powerfully you hope that there are new drugs coming out that will continue your survival and as we heard earlier, the vast majority of cancer treatment going forward are going to be targeted therapies, they are going to have high price tags attached. how do we balance this value

driven drug that will extend lives but also have them be affordable. >> you're asking me that? >> yes, you are here. [laughter] >> first of all and not on the targeted therapy. i wish i was. i look forward to hopefully not being around to be on 11 day but i do understand the balance that is needed, and i look at it as i am not sure that every drug that we have to have access to every single drug for the patient perspective and i'm not sure that we need to have access to every single drug out there which is what americans seem to want we want a drug that will keep us alive two more weeks. i'm okay with not having that personally. i want to see that it moves slower and that if we are balancing affordability with access that we have to have some give on the axis side.

i'm willing to give that up in order to make treatment more affordable. that's from my personal perspective. >> do you think that most are there on that point? >> they are really enjoying exactly that. the presenters earlier today said that there's $220 billion in the low value or that no value and some actually increase the cost by creating other complications. the people with chronic conditions they say they want access to everything but the reality is they don't want access to everything. they want access to what works for them and that requires us to move away from just treating people in the average because nobody has the average most people have multiple chronic conditions. we have to look at how we drug treatments for that 20% of drives to 70% of the cost with the 5% that drives 40 to 50% of

the cost and build a system that's different. we need to be able to look at those people and say we are going to spend the time with you to understand what is going on in your personal life. what are your goals and aspirations and then we look at the clinical options that are available, and we help them to match the right options for the right person and that often means less care, less invasive care and there's greater research that shows that you reduce cost and improve outcomes. and in fact when you look at individuals can't take the individuals with parkinson's, they are the same stage as the disease progression that both one person wants to ensure that nobody knows that they have and the other person wants to eliminate the tremors that are keeping him awake and impacting his life with the spouse. those are two entirely different options. and it requires two different

treatments. and yet on the card system that will give you the average. and you may not get the one that is right for you. it's often better care. so looking at the value system and how we align the incentives to drive the value for incentivizing plans to do this and for the pharmaceutical companies to develop the high-value treatment. we have to look at how we balance that. they are doing this great project in chicago where they are actually paying doctors to spend 90 or 120 minutes with a high touch base and that is high cost of actually align the care and coordinate it and eliminate the unnecessary ways and what they're finding is the reduced

cost and they are getting much better outcomes. we don't all need that. but for the five or 20% of the population of drive the cost, we do. and that creates room for the high innovation that is going to have a cost. we have to recognize there's going to be some cost and we have to make it affordable. there are people in this country that are dying as a result of their diseases and they want new and better treatments. >> coming back to the question of what the patient consumers members etc. think should be done about all of this. debbie mentioned a couple of approaches and of course on the first panel, we heard about a number more. we heard about the role of the competition having drugs approved as rapidly as possible, so they are a competitive drug in a particular class to drive

the price down and we have seen the phenomena play out in the hepatitis drugs over the past year and a half. we heard about the whole approach value-based payment of all of the panel discussion on that later this afternoon. debbie mentioned this some more regulatory approaches that other countries undertake to the reference pricing. giving the further sense if you ask the aarp number schiff, they are not all policy experts. but we take that as a stipulation. but what do people think is a meaningful set of approaches? stack i think you heard from the study study it is through the book at the problem. there are frustrated that the state doesn't have the capacity as individuals to negotiate. i think that the secretary burwell is a really smart cookie. she has a great team behind her and behind that is all of the medicare beneficiaries.

and that should be a powerful way to negotiate but she is forbidden to do so. >> and overcoming the provision is one way. i think we need transparency on how the prices are even developed. people deserve the right to know how and how much was paid by the taxpayers in the form of research to develop a drug. right now the prices are just set arbitrarily with no information. consumers don't have all the information they need. even second, so we should make that transparency you can see the value of additional use of one drug over another drug and understand those trade-offs for your self. i also think there is a whole list of marks put out earlier today of different policy recommendations.

all of these things together can play a really important role. but right now, we are doing very few of them in the country. >> we do want to once again open this up to questions for those of you in the audience people try to get to a few more that we are able to get to last time. so again if you introduce yourself by name and affiliation and make your questions the same that would be terrific. >> we advocate for people living with hiv and hepatitis at really appreciate the panel focused on the patient's and i would like to focus on the plan design and we have been seeing for the same drug some insurance companies are charging that patients $15.100 co-pay but other are asking to be 50% coinsurance to

talk about could be a lot of money and we also see medicare as well. so i guess i'm looking for the advice of the people that represent the patients on the panel. what can we do i know some people are putting the co-pay backs for patients and would be great if hhs would divorce the non- discrimination provisions of the affordable care act to take some actions against these plans. thank you. >> we talked a little about that. do you want to expand on what might be done there if we continue to educate people about the need to shop around? >> it's been a key concern among the consumer report cited the editor put the advocates of the union site is very focused on the issue particularly the out-of-pocket limits as i mentioned earlier and also several non- discriminatory plan

designs and the enforcement around the hhs and the only thing i can really say is that it's supporting both of these issues. it's not fair and it's not surprising. they use many mechanisms as a tool for the business formulas and that is part of the reason that you see each plan based on their own goals. but i think both of those are the consumer union has been -- connector is a lack of transparency around the pricing. but around the speech of >> from a consumer standpoint they wouldn't know or even understand. most are not aware that the rebate structure exists and that's why you wind up with these strange anomalies like what you described. >> a lot of people don't understand the co-pay from the market which can make a huge

different in the difference in the amount they have to cost chair and the different drugs could be on different tiers so it is very complex. there's still some of these specialty drugs. so the amount of protection that individual consumers have in the private market and even in the medicare marketplace can very greatly based on each drug. >> two quick thoughts. one, you are absolutely right it is for them to be discriminated against people with chronic conditions in particular those of the low socioeconomic status. we have to recognize that we also have to recognize that the plans have been put into place with walls that are not granular enough for them to compete on the values we have to work with the plans to actually help them solve the problem that they are in in order to eliminate these

issues. supporting the costs putting the out-of-pocket cost within the day is going to create pressure to create other mechanisms that can act as. we have to find a way to work with the plans to figure out how we can set the role rather than excluding the high cost of patient. >> we want to come back to what karl said particularly in the case in california we have a $200. there are some concerns that that will take the pressure off the fundamental pricing but it doesn't get at the larger pressing issue. >> they are both key issues for the consumer how much they can afford. at the end aligning price of the drugs, which is what i was trying to make is an issue that

we have to get because even if the individual co-pay is capped at a cost of the drugs are shared throughout the whole system so they may save on the copayment they are going to see the premiums across the entire population increase over time. we have to get a [inaudible] spinet i am an oncologist at the mayo clinic and i represent 118 wrote an article in the proceedings protesting the high cost of cancer drugs. very often i feel very discouraged and want to give up the fight because i'm busy doing research except when i see the patients like you we need to ask the questions why do we need to reinvent the wheel almost all western countries allow the negotiation of the prices on value. there are systems in place. we don't have to do that. the first thing that we need is

the need to be able to negotiate the prices. [applause] >> i think it was a hugely important article because you asked the fundamental question what is the value of the individual drugs. and you also told the story of what happens to your patients and their families that do everything to pay for those. i think that is a conversation that we need to have as a way to get the issue of the prices on the table and the issue of the value. so i think you and your co-authors for joining us on a. >> to add what the public thinks about that again, there is broad support for medicare negotiating drug pricing and it is something that we have asked about overtime and it has been broad support for that for quite some time now. >> from the american health insurance program, an excellent discussion focused on the price.

very important. question. you mentioned the out-of-pocket maximum in the affordable care act. very important consumer protection that didn't exist before 2014. and you mentioned also the problems with regards to the coinsurance particularly those in the socioeconomic status. but i think you left out the cautionary production subsidy which is also the important part of the statute. and we have an issue out of that we have on the website today that does its simple math. so if you are at 150% of poverty, and you are receiving the cost sharing production subsidy and rolled in the silver plan, when you look at a drug like c. which has a price tag of about $95,000, that person is a little socioeconomic status can be less than 1% of the cost of the drug. the whole plan is paying over 99%. so, i have to ask you what is

the problem of the cost-sharing, or is it the price if you truly believe that the cost-sharing reduction of subsidies are sufficient and isn't this the most efficient policy to increase the cost-sharing reduction in subsidies subsidies because higher income people can buy a platinum plan which has a much lower out-of-pocket cost. >> i agree with much of what you say that said but i've put it in this context. we did an analysis when the marketplace was opened up and one of the very specific examples we did was a woman and the district of columbia who had heart disease and she had rheumatoid arthritis. she was working above minimum wage full-time and eligible for the cost subsidies for premium and as she got to the plan which was challenging for a lot of

people because they don't understand that but as they got to the silver plan she was also eligible for the subsidies in the out-of-pocket cost. for that individual, she was going to pay almost 20% of her annual income in the out-of-pocket cost and depending on the plan selected it might be in the first two months of the plan. so i completely agree with you i think the cost-sharing mechanisms are not working as effectively as we would like. i also would agree with you if she was receiving the drug insurance companies would have picked up a substantial part of that cost. i'm not saying if the plans or doing anything wrong. what i said earlier and i stand by this, they are acting completely rational in the rules of the game. but i think we need to do is work with you to alleviate some of the pressures that are on the plans so that they can provide affordable coverage that is not

impacted by the social economic status and that really allows you to compete on the value. i know a lot of plans want to do that. we have to chief medical officers from the largest plans in the country nominating themselves to be on the board because they want to work with us on these issues and i want to work with you on these issues as well. >> let me just quickly ask the proposal for the cost-sharing subsidies be increased in the affordable care act to the plans given that the majority still don't like the affordable care act that the poll shows and of course we know plenty of people out there want to kill the entire wall. how would that slide and what is your sense of how the consumers would respond to that at this point? >> loyalty to the public opinion is pretty divided overall, obviously that jerry's depending whether you are democrat or

republican, but we do find that the public ask the different provisions of the law so when you break it down and ask about a the subsidies and other medicaid expansion, about preventive care, you know, different provisions of the specific provisions of the law, the majority do like what is in the law. they don't like the individual mandates. that's the one exception that we find when we ask this. but the public is divided. they do like the piece is better. >> i just want to say i think that it's kind of seeming obvious to me that it's one more mandate. i heard the comment when she said if we just keep putting these on we are not dealing with the issue it's just another band-aid if we increase the subsidies. so, shouldn't we get to the root of the problem is i feel like i've been part of that problem by creating band-aids. maybe we need to back up and say that's not going to help us figure out how much these cost. i want to know as a consumer the

drugs i'm on a $199,800 a month, how much of that is because of the r&d that went through the developing to innovate the drug has been around for a while, they doubled the dosage and got more effective. but how much does it actually cost. i checked the advocates and the costs are way off of your actual and anybody from the audience. >> the minimum minimum eyepieces four times higher. >> and what is the drug? is there anybody in the audience? [laughter] >> think you put that question. [inaudible]

[inaudible] we are having some microphone problems. there's a considerable there is a considerable amount of transparency on the side. i think this point was addressing more underpricing site for drugs. i will restate the question if we need to. >> [inaudible]

about $22,000 a year. the prescription drug when we survey the financial distress for doctors and hospitals and radiology [inaudible]

[inaudible] in the other areas as well as prescriptions we are talking about 10% of the total spent in especially the smaller percentage of that, so it is an important issue. but on behalf of the patients that we serve that are struggling with a myriad of costs in health care system and not just drugs by the way there's a lot of support for the patients in the marketplace. what else is being done across the spectrum? >> so the broader point is that we do waste a lot of money elsewhere in the healthcare system and if he could -- and we also impose costs on consumers because of that. if we were to gain some of that

money back we could potentially afford to spend money on some of these very innovative treatments. there are in the pipeline as we heard earlier. how do your members approached the larger question? >> i think that you are absolutely correct. we have to look at the system. we tend to think of the innovation ecosystem as a separate and then the delivery system as something else but it's all intertwined and for the patient perspective it is a cumulative cost that ultimately prevents many people from actually getting care. one of the questions we talked about as a group is what is the impact on the family budget? for a lot of people the socioeconomic status is that there is no impact on the budget because they never felt the first prescription and they never see the specialist. that is not acceptable. we have to look at the entire system and then we have to define what the value is if we have to go and create incentives

to drive the value. in many cases it is to be high-value products. it may be high value surgical intervention. it may be high touch delivery designs where you really help those people with chronic complex conditions that are not getting the services they need. if we simply look at each issue in isolation, we are leaving a lot of the opportunity on the table. and i go back to something i said earlier. all of the estimates are that there are $220 billion waste. the vast majority of that is spent on a 30% of the 30% of the population. the population that we represented a chronic disease and disabilities by providing care that is completely undermined in the circumstances. there's huge opportunities to drive down if we think about this different. there's huge opportunities to drive the value intervention and

there is also opportunity to drive the cost down. we have to look at it as a package. >> each of us has been named to the newly created the patient and family task force in the biopharmaceuticals. you each get to make one important recommendation to the president and policymakers and u.s. congress. you have a limited amount of time. let's call it the trigger recommendations. i want to start with you. what is the number one recommendation that you would make in that situation? >> we would address the access. >> and i will give you a second. >> the negotiations, price transparency, more value information for both consumers and payers.

>> i would say more focus on the comparative effectiveness studies so we have a clear understanding of how well the medications work against the comparative appropriated treatments, and in fact make sure that all the data is actually released so that we can see a picture of what is going on. >> and presumably i will give you a second one that is the patient centered outcomes institute and that is the kind of research that helps others undertaking. who else has to be in the game >> it has to be evidence-based practice centers and there has to be a large well funded network dedicated to these issues and very clear in the communications when they come out to make sure everything makes sense. >> the public doesn't see it as a priority and particularly

making sure that people make high cost drugs that are appropriate to those people and they think it is a priori even if they don't see some of the cost for themselves and i would also reiterate the prescription drugs are one piece of that puzzle and we see that in the polling with similar things like that deductibles. >> not just on the drug side. >> drive innovation, balanced appropriate access that is aligned with patient goals and personal circumstances and i would emphasize the point that i don't think has been stressed. we have to find the biomedical research enterprise in the regulatory science. the comparative effectiveness research patient centered outcomes research is the point

in time that we are driving patients into consumers and they are now looking in the world in a different way. technology is disrupting it. we need the information so people can make an informed decision and take the treatments that are correct for them. that is a very different environment that we are shifting to. >> and heather the last word for you. >> this is what his resignation for me. innovation is meaningless if nobody comes forth. so think about it. again i represent the middle class i'm not representing the low-income recipients. i represent any of you that work for the government and i spent a career. they didn't have the platinum healthcare and it's a struggle. it is really a struggle to pay for the treatment center to stay on top of everything that's happening. and i'm not talking medical

innovation i'm talking about planned changes i found out my treatment would only be covered if i went today private oncology office not a cancer center well into my treatment and there were not any in my state, none so my co-pay jumped from zero to 300 in that month. so those are the kind of things you are constantly trying to stay in front of. and again it could be any of you. >> so that concludes the morning session three of you are going to take a one-hour break for lunch. as a reminder you are not permitted to move around on your own if you do want to purchase lunch in the cafeteria on the top floor please go to the registration table to find an escort. as you know there's a number of express options located by the federal center southwest mentor station which is outside and to the left and we are going to resume probably 12:45.

join me for us to fall into thinking the panel on wishing heather all of the best. [applause] >> ..

>> [applause] thanks for being here today.

i hope to have enjoyed the meeting so far this morning looking forward this afternoon. is great to see leaders providers and manufacturers all here to come together for the same opportunity. to insure americans have and maintain access to life changes and life-saving treatment. your life sciences digital makes to cure disease like never before so i think zero florida discovery and development of these vital treatments and also your public concerns regarding accessibility of medicines. let me do my best for the

challenge and the opportunity and where i believe we most need your input into the challenges we are discussing today. at cms restart the discussion of the same plays restart everything, with 140 million beneficiaries and consumers that we serve. millions of our consumers whether medicare, medicaid, chip our marketplace rely on prescription medication to manage chronic illnesses illnesses, and treat acute conditions. the scientist innovation in jan create the medicines of the future are and instrumental component of the of quality of life of today and tomorrow's beneficiaries.

to tell us as cost goes up so does every once inside the about the wrong prescription medication and because we all planned to use the medicare program one day all of us have a stake in the long term accessibility. today's discussion designed to begin a dialogue to allow everyone in the room to church a path to encourage scientific discovery and insure those are accessible to those that needed. if we encourage the development of highly targeted impersonalized their fees, and strategies read access to these innovations is and all of our interest to have affordability and access to

support innovation and make people healthier. in 2014 cms spent $140 billion of prescription drugs were seniors, working for comment children and the disabled in the medicare/medicaid programs that does not include prescription drug spending or the marketplace were monthly premiums are made higher by prescription drug costs. medicine increased 13% in compared to 5% overall. drug cost are through part b

and those premiums are beneficiaries to pay 16 part of the bill. those costs increased by 11 percent, driven by increased spending at the catastrophic phases of the benefits. given the cost consumer access the survey suggests one of four americans cannot afford in do not fill the prescription. state medicaid agencies are in a difficult position to withhold vital their fees to people in need. so cures of the quality of

life are available to everyone. access is not a problem of the future better problem of today and it has been to just this trend of diminishing access will continue if we know work together on viable solutions. one element of the challenges a small fraction our one-third of all cost to grow very rapidly. they're expensive to develop and many failed investments that we need discussions and solutions to allow was to bear the cost fairly and reasonably and not have access to the people that the drug czar developed for. hepatitis c and the new

drugs available at this potential but medicaid budget struggle to provide access. one element of our strategy to approve generic for the country $200 but in some instances the prices of generics increase substantially without any additional benefit for patients. but particularly for those on fixed incomes as prices begin to grow.

how do we make sure they have the best but given the future with more people gaining coverage or under the expanded medicaid for the pipeline of drugs continuing to grow? , had a number of conversations recently with health plans and other stakeholders in this river and out a great interest to find a strategy the right ideas will in turn create bigger markets and should serve to create a more predictable climate for investors. we should not have to choose between innovation and

access that can work together to find a strategy is to achieve both. to approach this challenge beginning with the open dialogue and a search for the best ideas. the interesting and different views that we do believe there are a common set of objectives that we do believe providers and insurers all share a common goal to foster a health care system to deliver affordable high-quality medicine to resolve of people with stable access to the care they need. we can hear real practical ideas and proposals we are

interested to hear your ideas in the three domains. the first is the value based payments. they can be summed up a us a purchaser alogical question is are pre-getting good value? over the last year it has moved towards strategically to hospitals and other care providers to deliver better care to keep people healthier. we have committed within two years to pay to the alternative payment models is the dominant way to reimburse the patient.

with health care providers come experimenting experimenting, improving the model and publishing the results transparently. just as we pay for quality and care delivery to retake the entire health and the outcome of the individual's account how do we create rewards to keep people in their homes and out of hospitals or institutions to control chronic diseases while improving outcome? what is the best way to pay for targeted their peace working for some patients but not others? had we think in terms of episodes rather than the cost of uphill? this dialog on value today represents an important opportunity to understand how to invest in innovation.

we need to learn more information transparency and availability we don't have a common understanding to know the drug costs that there are list prices, wholesale prices, average also prices supplemental rebates markups from hospitals, markups from positions formulary tears, a mail-order prices can patent expirations, a compound sample the many other ways with the reality of the price paid and how would all influence as a treatment decision. most of that is not available or understood by the public making it hard to have confidence we have a truly transparent market the

truth is we don't have enough public information on the effectiveness of the drugs in the real world prices are rebates structures with the generic price increases to draw significant attention sort order to avoid reacting to misinformation must increase the transparency of the information available. how do we make public or educate the public? the measures of effectiveness? how do we treat visibility help the public have been informed view of the expenditures or the unit cost of patient value created?

the best way to take steps to improve transparency the third is incentives and hurdles. we have to understand what has gotten this year to make progress are their rules and regulations? what should we look at with other parts of hhs what other hurdles are there? what incentives are driving up cost? what incentives are change for hospitals or pharmacies. in each domain the jubes purchasing, and transparency , barriers and incentives and others are committed to taking and all ideas we know everyone will

not always agree on every step so we can move forward and improve. in the effort to solutions that we spoke about today for everyone to better understand the role we play in this process considering how it contributes over the coming years. i hope today's public dialogue kicks off a commitment that working together to improve access and affordability for those ahead. there are no easy answers there is significant benefit to all of them because the

public is relying on our ability. thank you. [applause] [inaudible conversations] >> thank you so much andy slavitt and as he has said that we will keep the engine of science and innovation humming with the kinds of

treatments and cures that we want, yet keep them affordable and accessible to patients, we will need strategy's. but just before we begin a refresher course that this is being web cast to wrap up the initial discussion and please keep your questions distinct if you do need to get to the restroom please go back to the registration table for a and escort. photographs and recordings are not permitted.

we will share information to uncover those barriers or challenges to implement the new strategies. with the better understanding of current models for are those approaches to go forward and how we have a the smarter purchasing for prescription drugs. with utilization management and much more. i will introduce the panel asking them to give a quick sketch of their role of the discussion to address the notion of those strategies

from their perspective so first i am happy to introduce the president and ceo of the generic pharmaceutical association purpose we have heard about generics how do you view float this perspective? >> don in behalf of gpha it is good to be your today's starting the chorus to thank you to do dr. burwell to put this with various stakeholders it when the building has ben reference in a short period of time they give to the department and the secretary. within the construct of this session with utilization management, it is important

to keep in mind is how do we go about to richer in the u.s. market we can continue to lead in areas of innovation while making the affordability issues that are there and our real so no small task to design that utilization management that we could talk about today. we have covered relevant data with the savings to the verge. -- delivered but there has been a lot of discussion and may lead about generic standard pricing, in 2014 generic saved over a quarter of a trillion dollars. into context if you add up

the federal government spent medicare, i try care and drug and on drug chip related it would cover all of those for two years with $50 billion left over. so administrator slavitt just said something important that there will always be stories of anecdotes and lately some of those are not generic some of them are portrayed as generic and they're not we have to be mindful to set policy decisions on anecdotes can drive unintended consequences for a marketplace i can tell you based on my experience the most intensely competitive sector of the entire health care system.

we can talk about that later but as far as an opening statement, there is legitimate concerns for affordability. and often it is said that americans pay the highest prize for medicine in the world but per-capita if you compare us to europe or to canada we pay less for generics than those markets and i can speak to that which is why at his confirmation hearing, the fda commissioner talking about importing drugs from canada but not generics because they are more expensive bin can a the banned united states. i would forward to a conversation around that.

>> next we will hear from the vice president of health benefits. >> i am here today as is studying drug trends in 2014 cost increased 13% largely driven by specialty cost that is unprecedented battle they represent the volume over the next few years the financial impact is more than 50%. but the specialty drugs come with a price with wide changes for over the last 100 years life expectancy has increased from 47 up that 78 years. death related hip has dropped 80% and due to cancer 20% and hepatitis c

is curable led 95% and those treatments of rheumatoid arthritis actually follows the progression of the disease and in some cases remission. so there are multiple strategies and approaches to haul we balance the rise of up care and access. utilization management strategies to manage medications from a medical perspective as well. this is a constant balance to reassure the right member gets the right drug in the right amount. it needs to be prudent financially but also giving

value, so the cost does not add up for the employees and families. >> accord to come back to hear more. we have manager pharmacy benefits and policy at ohio public employees retirement system so give us a greater sense. >> i am involved with the public sector a, active and retirees with the health care roundtable that has $15 billion of health care spending. we appreciate the opportunity to share our story here today with everyone. especially in the area that is considerable concern from an affordability perspective we do the best we can to have affordable prescription

, a copays like for dollar generic copays sense of value based insurance for different diseases and we try to keep premiums low but we are struggling doing the best that we can with regard to contract in the medicare population, we have a contract for the population and a commercial contract. we using a good majority of those that will be beneficial. for those are helping to keep the co pay load looking for eartha value discussion

and the affordability discussion with the indication based contract are very attractive to someone in a public retirement system. that could be a potential solution to keep health care costs under control and to be encouraged for what they're doing. >> by that you mean? the actual cost comparatively. >> we're very happy the deputy secretary for medicaid is with us. give us a sense as the

stakeholder in the medicaid program. >> thanks dude department of hhs for having us here today to give us a perspective on an issue where the importance cannot be overstated the state programs paid for in enormous amounts of pharmacy with an enormous response ability with respect to health care and public health. we serve 4 million floridians said any given time during the course of the year it is our perching $2 billion and special the drugs have had an incredible impact of for the last couple of years in december 2013. last year we build in 18% in our state i don't think that is that of the ordinary.

it is probably worth mentioning that every time there is a massive increase of the cost and a special the drug we have $130 million on hepatitis c treatments with the back of the envelope calculation that would fund between 20 or 25 retirees for the year it is enough to fund the entire state park system but the education component is important because the state's the to make investment in public health the best investment you could create make to spend education dollars if you can do that you can lower the obesity rate, the pregnancy rate, lower the std rates

and make enormous strides with health as opposed to health care. has the speech to like in the system to a river for those that after they have gone over the waterfall for treatments and cures but not enough on prevention and to make an effort there. where we have to spend an enormous amount of money on the medicaid program year after year for the state of florida, the fact you have to cover education and other priorities are put on the chopping block as a result as it takes a greater percentage of state budgets for go there required to have balanced budgets, they do not have a license to print money.

we do have a partner where does so that makes an odd word environment to talk about those utilization strategies. it is a critically important issue for the state's. >> and now we will hear from the u.s. country and president from of artists corporation. >> thanks for having me here today i may say a little bit when i and is not see from the pharmaceutical industry but i am happy to join the dialogue. before this is leaders of by care and pharmaceuticals -- pharmaceuticals and right now we are in a moment of innovation with novartis to help people wander and healthier lives for the last

year and 50 new medicines were approved last year which is the most in the highest in about 20 years. so some of us have seen this take place with a change in our own families. my mother was diagnosed with breast cancer of 49. and in those days it was the chemotherapy with the toxicity and she passed away this same year the inhibitors were improved - - approved she had access we would add up to another five years with her to create special moments together now fast forward my sister is diagnosed with bone marrow cancer very difficult. we almost lost her.

with seven months of life expectancy she was on five different medicines, after her bone marrow transplant from the first to the second medication then failed after one year. luckily we together on a combination of medications every month she went to fill she had to wait until the dose was done and then in the 24 hours a drug testing, a survey to major the paperwork was faxed and all had to happen right and she said to me it's okay if imus a dose she said i cannot she said i missed six last month so even with that but luckily after the last treatment it failed in three

months it was long enough to the drug was approved just one week ago so now we can spend another thanksgiving together that i am grateful for. i say that knowing that we need to make sure patients can access innovation is people are living longer and healthier lives. more people are turning 65 vendor over 65 and that will double. every single minute seven people are turning 65 so costs are going up. two out of every three are living with an illness. two-thirds of the health care dollars are spent on that population so if we increase the cost, we do need to come together to say

how does one affect the other? were is the value and what do we pay for? that note -- at novartis who want to be part of the solution and embarked on this a few years ago we have many states we have outcomes' base contract thing we must prove the value of our product but you need to get the value you thought from the trial or we will give larger rebates. and new drug was approved this summer for heart failure it is to reduce debt by 20 percent of heart failure patients patients, hospitalization but 20 percent, we did missions within 30 days and 44%, it was proven by these

external bodies to be cost-effective yet when the fda gave accelerated review to approve it, it was blocked for any patient medicare to have access doctors cannot get it to their patients even when it is cost-effective. so when you have something that is innovative we should pay for that for the value then if you have a product or a generic then you will save money or 85% of the cost and then we can save $44 billion by 2020 for with the bias in mahler's -- similar. so i type of approach to say there is value in the system

what should we be charging breach intervention we want to be a part of that submission. >> coming back first to talk about those management strategies you put in place before with hepatitis c drugs with 130 million and over the past year. and then to say you have an obligation so what utilization management strategy did you put in place? in what will be effective in the future?

>> that is interesting. and with that dynamic that in that manner with that fraud and waste. the with utilization management strategies to characterize those but it is something to be concerned about. to me $28,000. and the bay are diverted to other sources. >> to get the drugs and actually sell them? >> yes.

and we have real concerns about this. but to spend money in the state medicaid program, it is of major black guy to the program. it ended in that area but if that happened so you can overcome that. but then you have to be tested before you take the drug and then have it tested again. to make sure you are in the

95% but for the most part there are ways to get the drug at level two. >> that's correct. to have one drug we were dealing with there is no effective competitor for about one year so when you go to negotiate a supplemental rebate you don't have much leverage once additional products came out they can negotiate that the state's level starts.

and then to use the drug end then to verify that. and that is the way tax payers have warned that. sova how will they adapt that strategy? into be drug specific one that has it gotten much bad much attention was the news is stick by birch's drug -- cystic fibrosis drug but

that doesn't get as a much attention as hepatitis c. but with those dangers associated with then that would push upward. but with those expensive we don't see the dangers is much more comfortable web and then they would get knocked sideways. >> with those effected a set of tools. for those two engaged in but

two of all strategy's of mail orders and formulas with that specialty's year in particular our employer thinks with the utilization and strategy. >> depends the strategy is the total business strategy. >> but it is available with the utilization management. to make sure they are having

different formulary options. en to feel that those are enough. with those types of arrangements that christie was describing that they do not be as effective. >> it is dependent upon the strategy and we gave to focus. >> and the point he was making an with the health

insurance side and from your perspective thinking about the most important tools. >> and then using the same tools to help us realize savings that we save 9% paillette to be at 22% last year so that's not enough. to the health plans to do something different with

those indication based contracting with the increase is your life span and talking with the health plans of the value based contract saying and then to save what is going on? but there's not much i can do about it. and then to have those caps with inflation.

>> so to bring about those domains that say in the referenced to gain some insight in value based payment. to talk about the generic price increases it to mention some that are not really generic. to have more transparency and more information aerosol whole patchwork of arrangements where do we go?

>> to me one of the most important things we have to do is the collective desire we're at the very early stage but in that context of those reimbursement systems but one of the things that has been made clear to me there is more specialty beds