this is a very efficient process. trying to streamline the process so that we can get it right the 1st time. under that scenario this year 15 months starting in october ten months. we still have to deal with the backlog which we are cranking out approvals of 12th they were -- they started in 2012. already 40 months old. they will not get any younger. their time to approval will be more than 40 months. these newer ones we approve drugs and ten months under the new program. >> i wish you well.

efforts in the pharmaceuticals to try to get away from that perception. they have used backlog to capitalize on a system that allows them to pillars of market. >> times when there were no backlog and there were still no generic competition to them, other reasons that for a very small segment, the 88 pet for small segments there is no generic competition. she we at the end of the 1st program will have eliminated the backlog and be in a steady-state type of activity, stillactivity, still the problems with drugs that don't have generic competition.

>> bio similars. do you think they can play a part in a patient's access to the drugs they need? >> absolutely and is what they are intended to do. we have vigorously enacting the program. we have had a vigorous response. >> aa patient and healthcare professional confidence and bio similars is essential for savings to occur? >> i believe it is the number one issue. we completed studies of seizure drugs because all these years later in the drug -- the urologist is not believe they were equivalent. they showed no different. >> your efforts of moving them forward will assist. thank you and i yield back. >> the german from massachusetts.

>> the children from tennessee's line of questioning. the costs are prohibitive in terms of trying to develop some of these drugs. massachusetts and in the boston area we have blessed with 29 ipos, small pharmaceutical companies, companies come the market in the last two years. so we do have some growth in the industry. they are not dominating like they were before. she did not do a lick of research, but the drug, and the gentle lady from district of columbia pointed out the next day it went from $13.50 per pill to $750 a pill overnight. and that is disgraceful.

there is not a lot of shame at the table today. but this is disgraceful. it is well-known the impact would be great home of the public. so after you in august increase the price of the drug by 5,000 percent people who had no alternative on august 18 attorney employees an e-mail you were cced on regarding the increase in price, and she said that she wrote, and i quote, there are patients now waiting for products to have a $6,000 co-pay. you just said that -- and you are under oath. you are subject to perjury charges.

she is saying that these patients had a $6000 co-pay and you are saying in error had to pay more than a penny for a pill. >> allowing to provide some context. she said there was a $6000 co-pay, however we paid the majority. >> majority. >> everything but a penny? >> we pay the co-pay. >> glad to get you on the record on that. incredibly high co-pays. >> in another e-mail. of the mountain thousand. did not compare access.

>> he did not want to impair access. >> the axis excuse had nothing to do with the price. to enough they were based on gaps in the distribution network. >> our reclaim my time. she asked the question because there was a patient ina patient in north carolina with a co-pay of $16,830. >> yes, and we paid that down. >> four days later. >> the presentation on patient access. and this is your presentation. patients experiencing increased co-pays and delays in claims approval, one has a 50% coinsurance percent coinsurance resulting in a

co-pay of 16,830. that is your own company and presentation. >> leadership. >> those. >> those were the subsidies. >> i think we got a solution. >> congress has the power. i would suggest are regulations that we adopt an amendment that would anybody acts like touring is acting and increasing the price congress can suspend the exclusivity period, we can eliminated the next day and contract with darpa, our research arm of government research labs producer drugs at no cost to the consumer.

the problem is it will impact the good companies that are actually doing research, not the hedge funds. >> i didn't ask you a question. i'm telling you what we can do. it will hurt a lot of good companies and you are trashing the pharmaceutical industry doing a great job from organ transplants to cystic fibrosis, good research is that are out there doing great work for your trashing that industry and are going to cause us to have to put heavy regulations on good companies and choke off of the drugs that will come into the pipeline. what is the impact? >> we are going to ask cues doctor woodcock per our

previous arrangement in the lower to hopefully make the next hearing without any hesitation as we change this name place. previously introduced and was also sworn in. he too is under oath. four to five minutes. >> i thank you, mr. chairman. explain further. >> sure. >> we reengaged a consultant that have been engaged previously by the prior owners. the made a presentation the conclusion was that given the reimbursement for the procedures size 12 or 14

thousands of cases, there were significant opportunities to increase the price without impacting on making it unprofitable for the hospital. >> it is neurology and other divisions. therapeutic categories. >> they lost a patent. >> a patent. >> they lost their patents, but there is not generic competition. >> of a hospital settinga hospital setting, part of a procedure clinic.

it is not the patient. they are actually in a hospital. their blood pressure is going through the roof and the dr. has no other choice but to use your chart. you raise the price 252 percent, $257 for a 2-milliliter vial. >> correct. >> laying there in the icu in your blood pressure go sky high the dr. doesn't ask you. whatever you charge the hospital for they have to pay. >> that is correct. it is used in emergency. >> in the same way. you raise the person that 525 percent from $215 to 1,346 a while. you have an arrhythmia in your heart, things are circling the drain in a hurry to the doctor doesn't

have a choice. he has to get that drug. >> they are subject to the volumes. >> a you're saying that you raised one 212%212 percent and 1525 percent they are so gracious is to drop the price 30 percent? >> we have gone to the hospitals that have the largest users, large cardiac departments who would be most impacted to make sure they have a significant impact. when you look at the overall portfolio we tried to address the issue of price by 10%.10 percent. and by dramatically increasing the amount of patient -- >> i picked up something in your opening statement. i think anyone who has been a patient that comes home from

the hospital, they get a big bill. somewhere in that bill is the medicine used. the patient doesn't up paying for that in the end. >> these type of transactions thought we have purchased some drugs. we raise the price, as you you mentioned. we were too aggressive. >> way too aggressive. >> we will not be looking for this kind of acquisitions going forward. >> you also did the same thing. it's a unique dragon people don't have much for choice. you're giving it to for a penny. your making a lot of money. he would not even answer question he was so ashamed of himself. you are basically saying you are doing these people a favor.

bottom line is, your company made aa heck of a lot of money on this drug in there only a handful of patients that needed. >> we did not make a lot of money on the drug actually. the committee has our financial statements. you will see that it is being offered. >> offered. >> people are hurt right now seeing increased premiums and deductibles. in this type of thing does not help. thatthat gas station can jack the price and people have to pay it. you guys are rest of the same thing. >> thank you, mr. chairman. this unsustainable situation.

in springville hospital wanted to buy that over they have to pay you? >> who introduced a hospital discount program. >> what would they have to pay? >> a hundred count it would be roughly $35,000. roughly $11,000. >> how much does that come to? >> $750 is the list price. they are offering discounts. >> 1100 is the discount. >> no. 50 percent off. >> brookville hospital one of the bible. >> blue cross blue shield and it was covered. over they pay?

>> that would depend on the copayment and coinsurance. about 25 percent. the examples that were mentioned above. the patient willthe patient will be asked to bring co-pay of $65,000. you would pay all that except a penny. >> except $10. >> what if they were on obama care? what would be the cost for that bill? >> on obama care. if they are medicaid patient. >> medicaid. >> medicaid patient. patients that are treated

through the 340340 b program, they can get the medicine for 1 penny per pill which represents two thirds of the business. >> who pays the rest? >> that is the price. nobody pays. >> why is impossible to just have a price or anyone who wants to know what the prices can go to a website and see. do you provide that? >> we provide a list price which does not reflect the price that patients makepay, hospitals pay, other government programs pay. the government program there are often mandatory statutory reasons. >> reclaiming my time, the list price is just a starting point. >> that is correct. those people have no idea what the price will be. >> that's correct. that's the way pharmaceutical pricing works >> that's a mess in the industry.

we have had a lot of outrage at the next year. we cannot under do it. we have a broken market, and there is a challenge for us as members who represent the public a hammered with this to deal with the broken market. anything we can can do to help with the fda we should, but on the other hand you have market power without competition and it is resulting in ripoffs, glaringly represented and i hope we can have an action plan to streamline getting the drugs to market and deal with ripoff approaches where the companies are often times extending the license of the patent,, imitating a drug that is on the market.

slight changes that don't increase the efficacy. bringing generics to market faster. and let's after two cups of transparency and pricing. that is the legitimate cost. incidentally taxpayers, 30 billion, nih, that is our contribution. the bottom line is that we know prescription drugs are life extending and pain relieving. but we are getting killed the price. >> the children yields five seconds. >> trying to do the right thing.

>> think the gentleman. >> i just have one. >> the benefit management industry a paper by applied policy. >> without objection. >> i will yield back my time. >> let's start recognizing mr. walker for five minutes. >> i appreciate the time. thank you for being here and testifying on this panel. i want to go back a littlea little bit and talk about what you said the shareholders. as far as mr. shirley, you said he is a shareholder that you are unaware he is

you largest shareholder. would you dispute that? not aware of that. >> a major shareholder. i was not aware he was the largest. >> as far as code of conduct most organizations, la clipper is that ever part of the discussion? do you have anything in your bylaws? prevent somebody from being so outlandish and behavior? >> thank you for the question. is no longer ceo of the company, and subsequently our chief compliance officer just published a code of conduct for the organization which is customary for

pharmaceutical companies. >> said published it when? >> she published it a few weeks ago. >> was that code of conduct published to push back a little bit of behavior? >> again, he is no longer a party to the organization and the code of conduct was put in place to make sure current employees behaved in a manner that reflected her values. >> i find it odd that all the sudden you have a code of conduct but as far as you know there is no link with the institution of this code of conduct with the behavior. >> touring is a young company, just one -year-old. we brought on our chief compliance officer who are still the process of putting together policies and procedures and happened to you the code of conduct out a few weeks ago.

>> a mere five days after he was in the emails about the timing of the price increase. and e-mails dated august 12 he asked when the price will be updated which is a compendium of drug pricing used by healthcare. he said i need an answer. when he said the last amended this was he referring to the 2,000 percent price hike that he implemented in his former company? >> i'm not sure, but i'm happy to check. >> we could you get that back? >> i can get it back. >> by the end of the week. >> sure. >> i want to come back and make sure i am clear earlier you said there was 600 manufacturers waiting to here back from the fda approval. is that part of the backlog camargo's all-new? you are trying to reduce it

for 15 months to ten months. can you explain the new manufacturer versus the old? use the microphone please. >> let me see if this answers most of the question. there is basically two big buckets of work. an incoming submission, something that comes in right now beginning october we will have a ten-month goal. that is a big part of much older submissions. those have been at fda before they started. >> give me a number value. >> it was 2,866. abbreviated new drug applications in october 2012. >> ranking2012.

>> ranking back as far as 40 months or three and a half years. >> forty months after october 2012, and many have been long pending fda before the user fee agreement started. so now we clear out the backlog anytime we approve an old the approval time aside. >> aside. >> what makes you think you go from 15 to ten? >> we made very substantial improvements to the program like rebuild the factory, described and dr. woodcock short testimony. >> now recognize the gentleman from virginia. >> thank you. mr. flanagan, just to try to

understand how pharmacological pharmaceutical research works, basic research a lot of it is done by the government. >> yes. >> i understand. your understanding of our research is done as a precursor to the development is usually done for the government. >> on technical expert. >> in testimony in response to storms question but how could you go, whatever it was. ..

>> the company we bought drug from was not doing any promise to the goat research for toxoplasmosis. >> are you doing basic research. >> as we're doing early research. >> but you said other conditions as well. >> can you provide the committee with the list of these basic

research efforts that this revenue is financing? >> i believe we can, i am not involved in the day-to-day operation of the research and development but i can check. >> but it is your testimony on behalf of your company is the what you're doing with this revenue. that was the rationale are part of the rationale for jumping the price of 5000%. >> yes, i, i believe we provided the committee with the research and development, the correct? >> i'm been a little more specific, in answer to ms. martin's question. i would like to see the correlation. i like to see where that revenue is going. from this increase. your testimony that it was funding other good thing then the only way presumably we could do that is with this 5000 presenting price increase. let me a few question, a corny question, in your company to the

public interest ever come up in terms of by jacking up the price we really could affect access? we could have unintended consequence of people's health, especially since we produce a drug no-no's produces. with produces. the only drug for this condition that exists on the planet and we just bought it, we control it and we have just increased the price 5000%. was there any discussion at the corporate level about the morale, the ethics of that in terms of impact on people's health and lives? >> as i said in my testimony, is comfortable with that price increase. first because of the company's commitment to invest generously and patient access programs, both are important. we do we do not want the price increase to disadvantage patients in any way.

second, the company's commitment to reinvest in research and development. i will just say that we believe there is a need for a new and better treatment for toxoplasmosis. >> would you agree, whatever your motivation and your ultra stick instincts, that promote public relations point of view it did not work out so a? >> we had challenges from a public relations point of view. i believe it was because there is a lot of misinformation. there continues to be misinformation out there. >> i would suggest and i know he is no longer your ceo, but when you have an individual behave the way he did when he was ceo and in the public appearance today, and in his tweet, he has put a pretty ugly face in front of the public in terms of the industry on his motivation comments prophet motivation, his

concern for patients, and a sense of ethical responsibility. i would echoing mr. lynch mr. lynch said, it has unfairly damaged the entire industry because of the practice of one ceo at one company. i just think, i would hope that it would cause a profound re-examination about the practice of jacking up prices the way touring did with this one. i you'll back. >> i think you. i now recognize the gentleman from georgia for five minutes. >> thank you mr. chairman. if it's true that your organization, pbmc pharmacy managers three of those companies control over 75% of the pbm market. >> i don't have the exact number. >> i have a, 70% to be exact. 70% are controlled by three different companies. >> they get discounts-make. >> are you aware of the terms maximum reliable house. that's a pbm generated list of

drugs that an insurance will pay for medication. in other words words they tell the pharmacy what you're going to pay. >> is created by medicare. >> and there are no two with that of the same. each pbm can have their own separate lists, correct. >> right. they have their own list. >> they choose their product that they want, they're the ones who dictate that. so on the other side, pbm's also have a list on how much they will charge the insurance company. that is a different list is that correct? >> sometimes come all the companies are different. >> all the different companies are different. they have one less fear that they will reimburse the dispenser, they have another list here that they're going to charge the insurance company that they are representing. so you have two different list here. don't you find that somewhat awkward. don't you find it to be a situation where a pbm could

distort the market greatly? >> no, because that is a decision that negotiated him a contact between the client on a pbm. pbm. there are millions of the contracts including those, the client thinks is in their interest -- >> if the point is you're deciding what you're going to reimburse the dispenser for and what you're going to charge the insurance company for. therein lies the difference. are you familiar with the print spread pricing. >> f. >> and you understand what sprint pricing is. >> f. >> that's when the price of the drug goes up, cause the pharmacy more to buy it, but yet you're still reimbursing at the lower right. for instance and touring when they when the drug was $13.50 a pill, if you had it on. >> at $13.50 cents, viewed in increase that mac and she went up to 750 per pill you would still be reimbursing that dispenser $13.50. you would be charging the insurance company $750.

that is spread pricing. that's was happening. you are not increasing, you're not updating the pbm's are not operating. >> that's an accurate. >> that is accurate. if that's inaccurate and let me let me ask you, why is it that just recently let me quote here, at a recent hurry of the judiciary committee one of your largest member companies who are not here today and i'm disappointed by that. i'm sorry that you have to represent them. we invited them and they decided not to come. anyway the judiciary committee one of your largest member company to testify december that they have people who constantly update the list is that correct. >> i don't know about the specific company but industrywide pbm's update this regularly. >> that was the testimony in the judiciary committee. if if that's true, don't you find it somewhat odd that cms found it necessary to mandate, to require

that these mac less be required every seven days. in 26 states have passed laws requiring pbm's to increase and to update their mac lists. if i met someone if you have teams of doing this. >> we just don't why this happened. they lobby for changes and got him. >> drugstores want to get paid what they're paying for. when companies go up from $13.50 to 700 dollars, that's a a problem. when we are only getting reimbursed $13.50 cents. that is what spray pricing comes inches i noticed the profits of the pbm's have increased enormously over the past few years. in fact, almost double. i find that very disturbing particularly when you're talking about spray pricing. let me ask you this real quick as you know, i formally owned

three independent retail pharmacies. i have a family member who got a prescription filled at my pharmacy, she got she got a bill that my pharmacy, later on that night she got a call at home from the insurance company encouraging her to use mail order pharmacy. a mail order pharmacy that is owned by the pbm. don't you find that the conflict of interest when a pbm not only owns the pharmacy but they are reimbursing here? is that not a conflict of interest? >> they said they are no conflicts of these. >> that is a conflict of his interest. i've had experience when i was adjudicated if you don't know what adjudicate me it tells me what they're going to pay me, i've adjudicated clients and it tells me they were going

to cover it. while this patient was still in my lobby. they got a call from the pbm saying hey, you can use our mail order pharmacy. that the conflict of interest. thank you mr. chairman. >> think mr. gentleman out no recommends for five minutes. >> thank you for calling this hearing, i'm obviously concerned about these price increases on a number of levels. one of the levels is a former hospital director myself, mr. schiller because isobel and nitro press hospital administered drugs, and his hospitals that are bearing the biggest burden of your price increases. am i correct in that. >> that is correct. >> last year the cleveland clinic reported that price increases for isopropyl and nitro press added $8.6 million to its budget.

isopropyl and nitro press about her medication. >> correct. >> given the choice between paying higher prices and risking the lives of their patients, most hospitals choose to pay the price, am i correct in that? >> icing that is correct. so my raising the price of these medications exponentially, your your words and hospitals to make that decision between their budgets and the patient's live in well beans, almost like holding their own patients hostages against them. valiant was not the first company to raise prices, baxley bought isobel and nitro press from a company called marathon pharmaceutical. >> correct. >> marathon pharmaceuticals acquired the drugs in 2013 from another manufacturing, marathon also raised prices the tears in

the years it owned and by 400 percent. so it had a net impact to the cleveland clinic, at that time of $2.8 million. the cleveland clinic is not alone in bearing the burden of rising prescription drug prices. the john hopkins hospital sustained and impact of $20 million in which 4 million was attributed to price increases for injectable drugs like isopropyl and nitro press. these price increases heard hospitals in ways that reach far beyond the immediate care of patients. they also divert much-needed funding for research and other programs and technologies that improve care. the truth is hospitals are struggling in this country, we have to keep hospitals alive. there is no greater impact to

your healthcare then when your local community hospital has to close. i've seen this. they trimmed their budgets, they absorb the price increase, the absurd the cost of uninsured care and they absorb it until they can't absorb it anymore. they can cut back nursing and staff anymore and patient's lives become endangered and they have to close. there is no greater impact to them when your local hospital close so that when you are having a heart attack it is not a ten or minute drive to the hospital, it's a 40 or 50 minute drive to the hospital. that can be the difference between life and death. i understand from understand from information your company is provided to this committee that valiant has spent a nominal amount of money on research and development for isobel and i depressed, my correct and that. >> that is correct. >> the usual vindication of these exponential drug price

increases that we need to do this because it is funding research, but you have admitted there is a nominal amount of money, the very drugs that are experiencing, let me ask you this, isn't it also true that one of the key elements of your company's operating policy and i quote do not bet on science, but on management. have i have i quoted that correctly? >> that is a quote from mike pearson, i don't know what the date is on the. but i would say that this company has changed quite a bit. >> mike pearson, your company. >> if he is. >> and you have turned over newly sent him. >> if mike were here you look at his cause of the last year two, he has changed the way has described her company and her focus and emphasis on research

and development. out outside in the pharmaceutical industry it is rare to trace the dollar revenue to a dollar r&d. >> i understand that shareholder return is your primary concern and objective but i say it is unconscionable to deprive hospitals of the resources they need to fulfill their primary objectives caring for patients in developing new and better treatments for the future. again, i appreciate you bringing this hearing and calling all of this information to light. i you'll back. >> i think the gentlemen. we now recognize the gentleman from texas for five minutes. >> they give mr. chairman. you test them by your seven and $50 drug nobody pays for. some people get get for a penny, some people for $20. how much of my pain for that? rest of that is either coming from the federal government, medicare medicaid, state

government or from the insurance company that is being funded by the premium that i pay and hopefully will never need the drug. you make it sound like nobody's getting hurt by this. but everybody in this room is getting her by these prices are they not? >> there are only 3000 patients in the united states that are treated with the drug. 2525% are covered by commercial insurance. >> right, so that's my insurance rate who has done great up under obama care. >> so the overall impact in terms of the budget print healthcare plan is very, very small. >> but you're potentially setting another trend in the industry. by. by these urban drug and jack up the price, or gone by a generic manufacturer that is the only manufacturer of a generic drug which brings me to the fda.

you're saying you're getting down to ten - 15 months, but you basically said the ten - 15 month monopoly monopoly for anybody with a single source of a generic drug to do that kind of price increase and name their price for that drug, that not correct mr. flanagan? >> can you ask a question differently, keep their fight? >> so the amount of time it takes the fda to approve a generic drug manufacturer, if there is only, if there's only one manufacturer in the generic market they basically got the 15 month it takes and i'm going to argue that number with you, they have an exclusive ability to sell that drug for 15 months at 1,000,000 dollars per pill they choose to do that. >> right. >> so what take so long to do this? >> i'm not an expert within all in a place to manufacture drugs. i assume that if you can manufacture xyz drug in a place

then you have a clean facility, no roaches on the assembly line, if you if you want to add another product why should it take 15 months to get that approved? i assume you can test what other drug you make and see if it is what they say, what else is involved there? and if they do screw up making up 1800 bed drug is going to bankrupt the company. >> so basically to review a generic drug there is a scientific and technical review by chemistry manufacturing controls and stuff like that. >> how much of this is really necessary and how much of it is regulations that are what colors the toilet paper? >> so the reason we have 80% prescription penetration in the united states is because when you or your family go to the pharmacy to get a generic drug that you can be confident that is the same as the brand.

>> why does it have to take 15 months, how difficult is it to get output and analyze and see how it is. i can't believe it takes 15 months. the tsa tsa in a matter of seconds can televise have a bomb in a matter of seconds. why are we using technical technology. every day you delay getting a competitor in the market is a day that companies can screw the consumer. let me ask you another question on your numbers before i'm out of time. when doctor woodcock was my bs detector went options that we have a number of application way down but she also mentioned a great many of them were in return due to technical defect. so are you artificially decreasing your numbers and wait time is a result of someone turning something in without a t crosser and i doubt it? >> no. >> so what are those give me an

example of a technical defect. i fit with the virginia all the time in the case work i do. while you don't have this piece of paper, you don't have that. you go to the back of the line. my fears we have a bureaucracy at work here discussing the taxpayer money in the amount we have to reimburse medicare medicaid for discussing the insured money based on higher rates they have to pay for the premium so the taxpayers are having to pay for premium supplements under obama care. >> cert, please answer way. u.s. route two example. one example would be if the application doesn't show that the generic drug would be bioequivalent to the grant so we want to make sure it is going to work the same as the brand. another example would be at the

facility it is manufactured in is substandard and cannot produce the same quality drug. >> again, the amount of time this takes is criminal in 20 that we have a system with plenty of attorneys willing to go after any company that screws up the slightest. this has to be fixed. >> the gentleman makes a good point. i .. i left further questions on this. >> went to remind you that you are under oath by the way. when you increase the price of the drug by more than 5000% on august 11, 2015 your hoping to avoid attracting attention for the media and the public that right? public is that right? >> yes, poor. >> yes, despite your best efforts it became a major news story. they sent an e-mail to a member of the board of directors laying

out a pr strategy, i'm sure he paid a lot for pr here for responding to this unwanted attention. the board removed mr. correll is ceo and i quote as early as next week,". it also suggested that turing reduce the price of the drug. is that correct. >> i believe that's correct. >> i believe that's correct. >> you don't know? >> your memos regarding, do you have an answer for me. >> yes, that's that's correct. >> so he wrote, and i quote the rights drop have to be significant and tied to something. this cannot be seen as something that appears to be as arbitrary as the price hike in the first place, do you remember that. >> yes, i do. >> if they recommend touring issue a press release announcing a quote, package of patient assistance program for patients,

do you remember that. >> if they do. >> did you all those instruction. >> not all of them. >> okay, let's talk about that. they also recommended specifically type profits from the drug to the research and development of a new and more effective treatment for those patients you remember that. >> yes i do. >> and that's what you're doing today. the consultant also suggested a long-term strategy and i quote, forcing a focus on turing as a research and development company, not a farmer, has run hybrid, do you remember that? >> yes, i do. >> of this email was forwarded to you by a board member, do you recall receiving then. >> i believe i, yes. >> it seems that turing followed most of the consultant's advice with one glaring exception.

you never lowered the price of the drug. let me read another e-mail you received on october 2, 2015. since you're so can certifications and discounts, she read she said it's pretty clear now, it is price. she continued to say we all realize that we need a solution as soon as possible but we don't want to commit to something beyond the smaller pack that would potentially debilitate the business and risk of future revenues. you remember that? >> yes, do. >> this e-mail indicates that turing was aware that its price increase created issues for inpatient hospitals and it also indicates that turing was

unwilling to do anything to risk of future revenues including actually lowering the press for everyone. is that fair, that a fair reading? >> no it's not. >> will give me what it is. >> yes, we did learn the price was an issue with hospitals. in november we announced the discounting program for hospitals up to 50% based on feedback from hospitals we introduced a small account bottle to alleviate. >> i'm glad you said that, now let's move on. let me read an excerpt from an e-mail. he asked if there is a lower price that would discourage generics from entering the market and generate positive pr? he replied to that quote, it is the best we don't pr something

like that unless we are willing to commit to doing. he added, the only thing to pr is a patient assistance program in the r&d. he replied jokingly and this is a maybe you can interpret this for me, maybe its millennial thought, says my ours bring in a d in my can't wrap. >> you know what that meant? >> no answer and do not. >> but this was sent to. >> i read it but i don't know what that whole sentence mean. >> there are very real issues for people compromised immune systems. this e-mail indicates that despite the promises of lowering the price turing has no desire to actually fix what it is broken. the thing that really gets me, the former ceo who just sat

there walked out of this hearing a few minutes ago before he got out of the door he sends a tweet : everybody on this committee, imbeciles. did you know that? >> i was not aware that. >> so instead you spend all of your time strategizing about how to hide your price increase the time positive pr and coming up with the stupid jokes while other people were sitting there trying to figure out how they were going to survive. >> no, that's not true. >> i said said it before, this is about blood money. one question for you, you said and i quote a few minutes ago you said in some cases we have

been too aggressive and increasing prices you remember saying that? >> yes, i did. >> know just so we can be effective and efficient what we do, are you going to reducing prices? >> we have looked across our portfolio and we have reduced prices. >> are you going to continue to reduce prices? >> if you said you learned your lesson, you said the you have a new attitude. i want people watching this that know that they are not being ripped off. >> we look to cross our portfolio, we took a 10% reduction% reduction in two of our largest business unit, hard to retell ophthalmology, we reduced up to 30% major press and isopropyl. we increased our patient assistance program, will continue to look at ways to improve access at affordable prices. at the same time manage our business so we can invest in r&d, manufacturing, manufacturing places like rochester and greenville, south

carolina. we have made mistakes, we are acknowledging those mistakes and we are going to change, we to be a responsible corporate citizens part of the healthcare community we have made changes. >> so you're going to continue to make those changes. >> we are always going to look to do the right thing. we have made significant changes. >> thank you very, very much. >> thank you now recognize myself. the proper role of congress is not to micromanage a private company. it is not my role and i do believe in the right to profit. i think it's a motivator to do a lot of good. i also do believe that it is imperative that people tell the truth, that there truth, that their ethical, that they not mislead the public, that they properly represent the truth. would you disagree that her

disagree with that. >> i agree with that. >> let me show you a video a few weeks ago i believe it was on channel five. [inaudible] >> if it's up to the company which you raise prices and don't take that cash and put back into the research i think it's despicable you should not be in the drug company. we we take all of our cash, all of our extra prophet suspended on research for these patients and other patients who have terrible, life-threatening illnesses. >> is that true? >> we invest 60% of our net revenues into research. >> that's not all of it is that? >> he may have met profits he may have misquote.

>> he said we take all of our cash, all of our extra profit, what's extra profit? >> i'm not sure what he meant by extra profit, it could have meant that once we deal with expenses, operational and we take

>> you says that you are giving out increases and bonuses. we have a document from the agenda of october 15, 2015. one person had a pay increase of 250,000 dollars to 600,000 $250,000 to $600,000, correct. >> correct. >> another person 275,000

dollars to 600,000 dollars, correct. >> correct. >> another person 160,000 correct. >> correct. >> another person $160,000 to $800,000, correct? it went from an additional $160,000 to 800,000 dollars. >> i'm not aware of that one. >> we will release and look at it. it's from your agenda. it's from your agenda. so people can make a prophet and pay exorbitant salaries but don't say in front of the american people that were not making any money. and the person who is the major investor who says we invest all of our cash into research and development. we don't even know if they are. we wanted to make sure that's even part of the plan. it sounds like a contrived pr plan in order to do that. you do that. you know who metro yacht charters is? >> yes i do. >> why would you know them? >> i believe we rented their

charters for a sale for many. >> for a party, 23,000 $3000. did you spend money on fireworks? >> yes. >> did use been money on a cigar roller for 800 bucks. >> yes we did. >> so don't tell me you are losing money. don't try to pretend and tell us that $750 is dollars is justified when you have a woman who has aids and what she's supposed to do? is she supposed to tweet and try to get that for a penny is that how it works? >> no that's not how it works. >> so who pays the $750? >> $750 is paid primarily by commercial insurers and that represents the minority patients, about 25%. that's a very small number of patients. >> but it generates a lot of

money doesn't it? >> who pays visitors? are those the those the insurance companies, who are they, who pays their money who then has to pay you. >> i suppose big companies were insuring their companies were insuring their patients. >> again because there are so few the impact on their budgets, the budget impact is very, very small. >> what is your first year revenue? >> this year's revenue, gross sales were 98, are 20 million. >> is one drug that services 3000 people. then you wonder why the average person who is trying to scrape by missing insurance rates go up double digits, screaming high is because the people like you. that's why they are going to. it is one of the key reasons. >> i i will add and i think i need to be clear that touring is

a specialty pharmaceutical company. we are 139 employees. 36 of nine employees. thirty-six of which are dedicated to r&d. we are committed to taking that revenue that we generate from the drug and invested in next-generation treatments as well as other neglected diseases. that's a fact. >> i think that is legitimately part of what you're doing. but what your former ceo is saying publicly, to say that you're losing money, it's not true. if you're going to continue to lie to the american people congress is going to continue to pro. i can investigate under this under the house rules. the house of house of representatives, the oversight committee can investigate anything at anytime. >> i am being truthful. i'm looking at our income statement and operating profit for 2015. >> i have additional questions i've gone far past my time.

let's recognize this lauren. >> thank you mr. chairman. i have just before i started just want to date that heart disease and stroke kills one in three women. more than all the cancers combined. i personally experienced the miracle of medicine and the need when my husband had a heart attack. i really want to talk about r&d. in the 2014 proxy statement filed with the fcc, valid reported that one of the key elements of the company's operating philosophy and i quote, do not bet on science, bet on management. it has been reported, financial reports that balance r&d was equal to only 3% of sales

between 2014 and 2015 is this correct, 3% of sales is r&d #speemac the past year would have been about 4% of the total sales, but a big chunk of our portfolio, consumer products were generics which do not require r&d. if you look. if you look at our branded pharmaceuticals the number is 8%. last year if you look at what we spent to acquire late stage projects which we later commercialize was over $1 billion. so we have a significant commitment, we have over 200 active programs and r&d, we expect to get approval for significant new law, drug and a new logic for the treatment of moderate to severe plaque psoriasis. we are projects and phase one, two, three which we hope would

bring new products in the future there is the risk associated with it but that comes with the territory. we will continue to invest in our portfolio. >> 3% for r&d you said was $1 billion. what is 3%? >> if you look in her total revenue we spent about 4% of revenue, again we have a very significant percentage of our revenue which is consumer-products for four generics where there is no r&d required. so it's about 80% on our branded pharmaceutical business which does require r&d. additional we spend $1 billion on acquiring late stage product last year, over $1 billion. >> committee staff received an e-mail from doctor benjamin -- who is conducted in nih funded

research on exercise, and heart failure. i so i so probably the drug that simulates and causes the heart rate to go up uses the same biological pathway. now doctor levine uses this drug to conduct his research and has been impeded in meeting his commitment to nih because of the increase of cost of this drug. he has attempted to reach out directly to your company to no avail. here we have a dr. who is focused on doing real research for people's lives. what should doctor levine do so that he can use this drug in his research to fulfill the

requirements and perhaps extend the lives of individuals. what you recommend? >> i am not aware of that. now that you have made me aware but i think if you could give me his number i will call him tomorrow to make sure we help them wherever we can. make sure it is in a compliant passion. >> sir, you have to know the connection. your research that your funding, but also if you are increasing the drug that are being used in research you must recognize the impact you're having. >> of course we do, if there's ever a situation where we need to do something about access that is something where want to do. i'm happy to talk to him tomorrow and see if we can rectify the situation. i am assuming it is all compliant. i'm assuming we can take care of that tomorrow.

>> i just want to say before my time runs out. in america, while we are a leader in the world of r&d and medical research in some areas, we have to focus for medicine be part of the healing of people to a profit-making industry. every business should make a profit but it has turned from profit to greed. this is why this is important to me. i know there are senior citizens who are making decisions between food and drugs , the medicine they need to live. then there is someone in your industry that is buying a yacht. i want you to be able to be part of the american economy and pay salaries that are, that will

allow basic and even an advanced based on education quality-of-life. we are at the point where greed is not acceptable in america. i'm very concerned about that. >> thank you. your time is expired. i recognize the gentleman from north carolina for five minutes. >> thank you mr. chairman. thank you for holding a hearing. further thinking the staff for bringing this to the attention of the american people. it was obviously the work of this committee about majority and minority where we have highlighted this issue but it is truly the issue be addressed. the best way to address it is to put companies that do the kind, to use the tweeted out word, imbecile pricing strategy, strategy, to put you out of

business. so the barrier putting you out of the business obviously mr. flanagan, the fda plays a role in that. let me tell you why i am concerned. i hear from a number of stakeholders that they are afraid to even give me the details review retribution from fda in terms of the potential approval process that we go through. the reason my companies like this can compete is because there is no one to compete against them. they're small little drugs, orphan orphan drugs, things that for the average company don't pay, for big pharmaceutical company doesn't pay. but there thousand, to have 20 million-dollar sales, $97 million in, lots of companies that would be willing to take that on, smaller companies.

so doctor woodcock gave her testimony, did you agree with all of her testimony? >> yes, sir. >> said he agreed with her. she her. she testified also in the senate just a few days ago and are you familiar with her testimony there. >> yes, sir sir. >> so with that senate testimony we talk about the practice where making and how we are 90% we have made great progress, but i look at her testimony looks like you have only approved 25% of the applications over a three-year period. do you call that a you winning percentage? >> so right now -- >> yes or no, winning percentage 25% over three years. >> i can answer can answer the question yes or no. it usually takes on average for review cycles to approve generic drugs. it's not that way for the brand side. on the brand side there's about

a 90%. >> i'm talking about generics. so let's look at this. if you put up the first five or me one of those concerns i have is with the ambiguity and we have this particular letter which is actually a letter from doctor woodcock says the terms of the application process, that with certain types they will go ahead and allow the application to be filled out with less than 12 months of stability data, says generally we will allow it to happen with six months. on other drugs we will allow the application process to be started with three months of stability. would you agree that. >> i'm not the expert on stability. that the pharmaceutical. >> so. >> that's a different office for me. >> okay. i thought you were the technical expert is what you said a few minutes ago.

so would you agree that this is typically the way the fda does business? >> , that they get faster approval for generics in the application process? >> i don't think -- >> limited to the to the chase. put up the other slide which actually when the k2 spy. here's my concern, i have a number of stakeholders throughout north carolina across the country who are willing to compete with these two companies. they're willing to provide the drug to compete with the and they have been told by the fda, we have to get a little more information, we have to wait for 12 months for stability data. instead of going with their own internal data, if you look at says the company initially submitted three-month long term

accelerated process for three batches. can you do that consistently produce about these that want to compete with these, companies? >> i understand your question, the the same issue. it's a stability issue. is out of the office of pharmaceutical quality which is a different office. >> is there anything the fda can do to make sure we can speed up the process so we can compete with companies who are willing to price gouge on a regular basis. can you speed up your process? >> mr. chairman, can i answer, and another rules work. so two things. first, if the submission comes into the door and it's for product for which there is not in her for which there is a drug shortage we consider those to be priorities and we expedite the

review. >> is interesting because i have a letter that says from doctor woodcock that would suggest that shortage is not part of your decision-making process. >> so you're saying her letters right? >> i need to see the letter. we for sure consider -- >> will follow up questions on be on my time. we'll now recognize the woman from new mexico. >> thank you mr. chairman. i really appreciate you holding this hearing. quite frankly i share my colleagues outrage. i think outrageous to soft of a word given what we have heard today, what we knew before today, what we still don't know after today, about what's really going on to make sure there is fair pricing, protected access from the patient x to

life-saving drugs and treatment. so i want want to talk a little bit about my statement think it's my question about fda approval make sure we do everything we can hear to give the right opportunity so that we are focused on the right thing here. that is patience. that's the right thing to focus on. and all the e-mails that you have, members review and i have an e-mail mild, they make it very clear, particularly from touring that fda approval in that r&d, that none of those issues were issues that cause the price gouging that we are talking about today. so as we are figuring out what we can do better i'm interested in what we should be doing to make sure there's accountability into the entire industry that is made at their practice to put

profits and not small profits, outrageous profits to the patient. actually you certainly indicate it is not patients who pay, it's hospitals. its insurance companies, there's a lot of companies people that don't love insurance companies. amount try to shift the focus. pretty think the majority of their reimbursements come from? >> again, as i i said there so few patients treated with the drug a very few are covered by commercial insurance. >> when you're dying. >> the impact is very small into. >> i'm going to interrupt you, so in the 3000 people have their hiv drugs shifted somewhere else and my out-of-pocket cost goes up, my hospital access goes up

and you know was pan am? medicare, medicaid, veterans, tricare, medicaid, veterans, tricare, guess who pays for those? i do. every member in this audience does. every member of this committee does. i cannot believe that your indication here is that the cost really, in terms of the number of people who are impacted is so small that that is not really the issue. it is is the issue, let's talk about some other drugs. let's talk about gilead, the hepatitis c drug. other drugs that retail at $84,094,000 for 12 week course. we can treat, but because the profit we are not going to cure. instead will create an environment where people will have to have liver transplant. i see a pattern here that is incredibly frightening for the overall aspect of getting a handle on healthcare costs, and

clearly is a shift from moving from protecting patients in this design and it isn't the result of r&d. we we have many e-mails that would indicate that directly. we just passed 21st-century cures which is another indication. congress is interested in making sure innovation and research, development and fda approval without minimizing patient safety is a streamlined as we can. yet that is not an indication, at at least that is the result of this hearing. that's really an issue of how we determine what drug costs are, and greed is how we determine the cost. given what you have stated today and give them the questions, the e-mails that you provided during this hearing about touring, would you say the practices that touring the same practices for all pharmaceutical companies? this is really, really just an issue for your company?

>> touring pharmaceuticals is a research-based pharmaceutical company that invests. it's committing to developing drugs for rare diseases. >> said this is not the practice of everyone of this is your. >> i cannot speak on behalf of other companies. what i can tell you is we are not to go pharmaceutical company. as i said in my testimony i was with the price increase of the drug provided the company was willing, and it was to invest. >> i'm going to reclaim my 5-cent. >> this is how this works in i get to reclaim my time. the issue is i think it's clear today that that is not your intent or motor. we have provided information that we not to suggest that clearly identify the opposite of that. >> i recognize the gentleman from georgia for five minutes. >> and mr. chairman. i want to go quickly to

mr. flanagan regarding the generic backlog when mr. meadows was talking about. can you provide clarity as to how the fda is prioritizing applications to expedite the review process? >> yes, sir. there is a policy that's available online, you can find it on the website basically certain categories of submissions like first generic second essentially open the market to competition drugs and to mitigate shortage, hiv drugs and a couple of other specific categories. >> so it's based on disease, disease, the prioritizing, so what you're saying? >> summer based on the disease, the shortages just based on whether there's a shortage out there and providers.

first generic the pens on whether the market has already been opened up. >> there's no real standard policy. >> all there is a standard alliance were review cycles? >> is hard to answer that question because it depends on how long it takes the applicant to respond back to. >> okay targeted action dates are assigned and yet they're aspirational, noncommittal, what's the point of having a targeted action action date if it basically means nothing? >> industry very strongly requested them. you avenue user fee program beginning in year three you get a cold day which tells you when were going to act in your submission. everything prior there were no gold dates. industry needed some kind of information so they could plan product launches and conduct other types of business planning, they strongly

requested that we disclose them what her aspirations. >> is a true that they are virtually meaningless because there's no commitment there? >> no. >> will corning 20 said there aspirational but noncommittal and it appears that we have month, 50 months plus before we ever get these prioritized and get something going to the targeted should be basically meaningless. >> beginning, congressman industry strongly requested that we did the. >> were all requesting something be done, that's the problem. you have targeted dates but the backlog is not getting any better, getting worse. >> the target action date say when were going to take action on each of the submissions on the backlog. but the way of organizing the backlog and disclosing to the companies who have submissions in there, here's what we think

we will move on your submission. >> okay mr. chairman, i'd like to yield the remainder of my time to my colleague to georgia. >> thank you. was it a medic special medications then? >> does not. >> i describe one that's only available through specialty pharmacy. you said yourself that access to the drug was a problem problem when the price went up. i reclaim my time. when the price went up it became distributed only through specialty pharmacy, i cannot, my it did, you created a specialty medication and you did it intentionally because you had a limited limited market with only 3000 patients. you knew you were not going to be able to make a profit let's you went up on the drug and it became a specialty medication. you abuse the system is what you

did. the pbn owns the specialty pharmacy and now you use it only through specialty pharmacy. let me tell you, i've been practicing pharmacy for many years. i've spent my adult life dispensing medication to help people get well. i find it repulsive what you have done. i've seen advances in medicine that had been amazing to me. sometimes are practicing, we have advances that are just amazing, and i have always been amazed at the pharmaceutical companies. when amazed at the pharmaceutical companies. when you come in and you rape the public and you give this a black guy, i find it repulsive. mr. jamie and i want to thank you and your staff for bringing this hearing and for all those involved. you have been most cooperative and i thank you for this. >> mac recta statement statement. >> sure, go ahead. >> when we purchased the drug it was always in a close distribution model.

subsequent. >> then why did you say that access to the drug was a problem when the price went up. you said that yourself. >> access to the drug was a problem because of the distribution model we inherited from the previous distribution. subsequent to that we have taken action,. >> you said when the price went up and wait became a problem. >> i do not believe the price was a problem with the access problem. >> that's not what you said earlier. >> i think you. we now recognize the gentleman from new jersey. >> thank you mr. chairman. i want to follow up on mr. carter's line of questioning i don't quite understand now. before you acquired the drug was there a problem with access to a? >> yes, there was. >> your desire to acquire this drug for which there was

supposedly a problem with access, does that mean those people who are suffering from infectious associated with hiv and aids did not have access to it the way they needed it. >> in june, that was three months before we acquired, the previous manufacture did they went to a specialty distribution model, the close distribution. >> three months before you purchased it. what was going on before those three months? was it still that close distribution. >> no it wasn't there is a broader distribution. >> was that a result of perhaps conversations with your company in anticipation of your company buying it. >> absolutely no not speemac, we believe that. >> there is plenty of proof that the arrangement with a specialty pharmacy originated, it back now with the previous manufacture but the manufacturer before that. >> walgreens which is the close distribution, right, they said

in a form to all they're concerned about access to the drugs and access to their patients, other pharmacies. what did you do in response to that. >> we have added a specialty distributor that eliminates a lot of the red tape. if they distribute the product to roughly 90% of hospitals we are in the process of adding additional specialty pharmacies to the network. we have worked with a different state to make sure the processes are in place so they can access seamlessly. these these are the most vulnerable patients who are covered. >> so once you acquired this drug and you increased the cost associated with this drug, it still eludes me why this was done, other than to make someone very wealthy. you all anticipated that there

is going to be pushed back from human rights organization, advocacy organizations. from what i have read then from internal memos it did not seem that your company with at all concerned about ensuring that people who needed this drug can have access to it. it is about managing the message for your company. >> that is not true. the action we took reflect differently. we put in place multiple patients. >> it seems like you all ensure and respond to a bunch of pressure and you have serious issues that you have to contend with now. your company is a very bad physical, public image right now. if you care to know that. i come from they, new jersey, we

have large pharmaceutical companies, large universities, we do a lot of r&d. the people who engage in research and development are not trying to make someone a bill, they're trying to cure people. that is not even the issue here. you all weren't trying to do r&d, you, you were manipulating access to a medicine that already showed the benefit of treating a very dangerous disease and with that i yield my time back to. >> i now recognize from illinois. >> thank you mr. chairman. i would think both you and the ranking money for your collaborative efforts to resist you. want to set up by talking about a couple in my district. there 7374 years old respectively, they're stressed everything a month to cover stressed everything a month to cover their expenses. the wife is diabetic and she has a number of medical conditions, for 2016 it will will probably

turn out apart prescription possibly 600 dollars. her husband out-of-pocket expenses for prescription will be about $1900 per year. since they retired their seriously anxious about their finances, how will they continue to work for their healthcare. the wife feels endlessly guilty because her medication are the most expensive. even with some coverage they together face overwhelming pressure of having to manage the family's budget which after medical expenses only about $20000 per year. this is to pay their home loan, property taxes, food, utility, this is, this is a crisis that is too common across the country. when i hear this raised and then i hear about 200,000-dollar bonuses for executives and a pharmaceutical company that purposefully shutdown

distribution distribution of life-saving drug so they could make that money, it disgusts me. it's absolutely disgusting. the witnesses that testify today use many different tactics to downplay the harmful effects of their price increases. they want to ship the the blame and shift the attention and say the patient population is so smile on tran small. they're not being effective and it's actually the large insurance company, not individual patients that their burden. let me tell you every one of us pay the insurance company. maintain offices in the obama care, we pay those insurance companies. this hearing has shown that this is hardly the case. isn't it true that during the

price increase lead to astronomically higher co-pays for many of your privately insured patients? >> yes it did, but through her co-pay program we cap add $10. >> really? your internal memo identifies that one patient has insurance co-pay raise up to 50% increase, up to $16000. others have co-pays up to $6000. as a true some doctors treating patients in hospital settings were forced to switch to secondary alternative therapies because they cannot access the drug? >> i suppose that's true but in response that we have discounted the drug by 50% and introduced a smaller bottle to better meet their needs and that seems to have resolved the issue. >> doctors are saying they had to switch and it was not there preference for what they would

treat their placement. >> we are offering discounts now so the drug can be available for this patient. >> making firm that before turning own did it was widely available. >> yes it was covered by most insurance. i don't don't know what you mean by widely available. >> is it true that your price increases on ice up really nice repressor cut into hospital budgets. >> it certainly would have hit into their budgets, the the price increase was meant to stay underneath the reimbursement for the bundled rate. it would have had their budgets. >> it absolutely did, back to the hospital there said they do plead important savings and result in less funding for research, programs and technologies that improve care. he further says that the high cost threatens patient access to

critical treatment and creates financial burdens on low and middle income patients. these are only two of the many drugs your company owns and increase the price that is that correct. >> yes. >> how many other drugs have increase the price. >> i don't know if a.m. >> so you have so many that you don't even know how many other drugs the object of the prices on for everyday hard-working americans who are suffering from diseases. that's bothersome. your test by before tyrus tyrus and you don't even know how badly socket to the american public. >> we have 1800 products around the world. we certainly raise the price on some and a number that you have mentioned. we acknowledge mcstay, we acknowledge going forward that we would not be looking for those opportunities to purchase these older drugs.

when i took over at the beginning of this year we froze all price increases. >> have you returned to third price increases back to where they were before you raise them. >> ideal back. >> time has expired, there is a vote on the floor the committee will go into recess and we will come back no sooner than 1215. within a recess.