patients by 25%. that is a very small number of patients. >> but it generates a lot of revenue, doesn't it? and who pays those insurers? are the big bad insurance companies raking in all these profits? who are these insurers? who pays their money that you have to pay you? >> those are big companies, that are insuring their employees. ..

turing is a specialty pharmaceutical company. we are 139 employees. 36 of which are dedicated to r&d. we are committed to taking that revenue that we generate at investing in next-generation treatments as well as other neglected diseases. that's a fact. >> i think that is legitimately part of what you were doing, but what mr. shkreli is saying publicly, what are you putting up to the public to say you are losing money, it's not true. if your going to continue to lie to the american people, the congress is going to continue. i can investigate under the house rules. the house of representatives, the oversight committee can investigate anything at anytime. >> i am being truthful. i'm looking at our income

statement right now and are operating profits for 2015. >> i have additional questions. i've gone past my time. let's recognize the gentleman from michigan, ms. lawrence, for five minutes. >> thank you, mr. chairman. i just want to comment before i start my questions, state that heart disease and stroke kills one in three women. more than all cancers combined. personally experienced the miracle of medicine and the need for my husband when he had a heart attack. so i really want to talk about r&d. in the 2014 privacy statement filed with the sec, valeant reported that one of the key elements of the companies operating las vegas, and i quote, do not bet on science,

bet on management. and it's been reported, financial reports that valeant's r&d was equal to only 3% of sales between 2014-2015. mr. schiller, is this correct, 3% of sales is r&d? >> this past year it would've been about 4% of total sales, a big chunk of our portfolio, our consumer products for generics, which don't require r&d to get a look at our rented pharmaceuticals the number is 8%. last year if you look at what we spent to acquire a stage projects which were later commercialized it was over $1 billion. we have a significant commitment. with over 200 active programs in r&d. we expect t be sure to get approval for a significant new glaucoma drug and a new biologic

for the treatment of moderate to severe plaque psoriasis. we have projects in phase one, two and three which we hope would bring fruit and new products in the future. there's tons of risk associated with it, but that comes with the territory and will continue to invest in that portfolio. >> 3% to r&d you said was a billion dollars of that? what is 3%? >> take a look at our total revenue that we spent around 4% of revenue, but again we have a very significant percentage of our revenue which is consumer products towards generics, where there's no r&d required. so it's about 8% at our branded pharmaceutical business which does require r&d. being in addition we spent $1 billion on inquiry late stage projects -- products last year.

over $1 billion. >> staff received an e-mail from dr. benjamin levine who is conducting nih funded research on exercise intolerant and heart failure. and -- promising that correct? isuprel statements the beta receptors of the hard natural pacemakers and causes the heart rate to go up using the same biological pathway. now, dr. levine uses his truck to conduct his research and has been impeded in meeting his commitments 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 doctor who is doing real research for people's

lives. mr. schiller, what should dr. levine do so that he can use this drug in his research to fulfill the requirement, perhaps extend the lives of individuals? what do you recommend? >> i'm not aware of that. but now that you have made me aware of it, give me his number and i'll call him tomorrow and make sure that we help them where ever we can, make sure it's in a compliant fashion. >> you have to know the connection. your research that you're funding, but also if you are increasing the drugs that are being used in research, you must recognize the impact you were having. >> of course we do, and if there's ever a situation where we need to do something about access, that is something we're going to do. i am happy to talk to him tomorrow and see if we can

rectify that situation. assuming it's all compliant, i'm assuming we can take care of that tomorrow. >> i just want to say this 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 turned the focus from medicine being a part of healing of people to a profit-making industry. every business should make a profit, but it has turned from profit to greed. and this is why this is so important to me. i know there senior citizens who are making decisions between food and drugs, medicine that they need to live. and then there's someone in your industry that is buying a yacht.

and i want you to be able to be part of the american economy and pay salaries that will allow a basic, and even an advanced, based on education, quality of life. we are at the point where agreed is not is acceptable in america, and i'm very concerned about that. >> now recognize the gentleman from north carolina, mr. meadows, for five minutes. >> thank you, mr. chairman. thank you for holding this hearing, and further thank the staff are bringing this to the attention because the american people, it was obviously the work of this committee of both majority and minority where we have highlighted this issue. but it's truly an issue that must be addressed. the best way to address it is to put companies that do that kind

of, to use a tweeted out word, imbecile pricing strategy. put you out of business. so the barrier to putting you out of the business obviously, mr. flanigan, fda plays a role in that. let me tell you why i am concerned. because i hear from a number of stakeholders that they are afraid to even give me the details for fear of retribution from fda in terms of the potential approval process that we go through. and the reason why companies like this can compete is because there's no one to compete against them. they are our small little trucks and orphan drugs, things that for the average company don't pay for the big pharmaceutical company, it doesn't pay. but you are thousands, i mean, to have $20 million sales, 90 some million dollars sale that was just testified.

lots of companies that would be willing to take that on, smaller companies. so dr. woodcock gave her testimony. you agree with all of her testimony, mr. flanagan? >> yes, sir spill so you agree. she testified also in the senate just a few days ago. are you familiar with her testimony there? >> yes. >> with that senate testimony we are taught to all the progress we are making and how we are 90%, and we've made great progress. i look at her chest when it looks like you've only approved 25% of the application over a three-year period. do you call that a winning percentage? >> so right now -- >> yes or no? 25% over three years. is that a good track record speaks i can't answer the question yes or no. it usually takes on average for

review cycles to approve a generic drug submission. so 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 would put up the first slide for me. one of the concern i have is with the ambiguity. we have this particular letter which actually is a letter from dr. woodcock that says that in terms of the application process that was sort and i still go ahead and allow the application to be filled out with less than 12 months of stability. it's is generally we will allow it to happen with six months, and we will allow that application process to be started with three months of stability. would you agree with that? >> actually not the expert on stability. that's the office of pharmaceutical -- >> so you are -- >> it's a different office then

they spit out at you with a technical expert is what you just said a few minutes ago. >> just in my space. >> so would you agree that this is typically the way the fda does business? that make it faster approval for generics in the application process. >> i don't think -- >> let me cut to the chase. i've got one minute left. put up the other slide which is actually going to case number two slot if you would. here's my concern. i've got a number of stakeholders throughout north carolina and across the country who are willing to compete with these two companies, if you're willing to provide the drug to compete with them, and they been told by the fda, well, we've got to get all the more information, we've got to wait for 12 months, stability data. instead of going with their own

internal data, it says a company initially said that three by the long-term accelerated process for three batches. can you do that consistently all these that want to compete with these kind of companies? >> so i understand your question. it's the same issue. it's a stability issues are out of the office of pharmaceutical quality which is a different office. >> so let me close with this. is there anything the fda can do to make sure that we can speed up the process so we can compete with companies who are unwilling to price gouge on a regular basis but can you speed up your process, mr. flanagan? >> mr. chairman, can i answer but i don't know how the rules work. >> please, yes. >> so two things. first is if a submission comes in the door and it's for a product for which there is a

generic competition, or for which there's a drug shortage, we consider those to be priorities and expedite their review like -- >> that's interesting because i have a letter that basically is from dr. woodcock that would suggest that shortage is not part of their decision-making process. so you're saying her letter is wrong? >> i need to see the letter. we for sure consider drugs speed we'll follow up on a number of other questions. i am way behind my time spent the gentleman's time has expired. we would not recognize that gentlewoman from new mexico for five minutes. >> thank you, mr. chairman. i really appreciate you holding this hearing and quite frankly i share my colleagues outraged. i think outrage is actually too soft a word given what we've heard today, what we knew before today, what we still don't know

after today about what's really going on to make sure that there is fair pricing, protected access from the patient's perspective to life-saving drugs and treatments. so i want to talk a little bit in my statement and get to my question about fda approval and making sure that we do everything we can here to give the right opportunity so that we are focused on the right thing here, which is patient's. that's the right thing to focus on. but in all the e-mails that you had members review and i have an e-mail of my own, if i've got time that i'm going to read to make it very clear, particularly from turing, but fda approval and that r&d, that none of those issues were issues that caused the price gouging that we are talking about today. so trying to get what we can do better.

i'm not interested in what we are to be done to make sure there's real accountability in an entire industry that is made it their practice to put profits, and not small profits, outrageous profits to the patient. and actually, ms. retzlaff, user indicated that will it's not patients who pay. its hospitals and insurance companies. there's a lot of people that don't love interest of a hospitals so we will shift and try to shift the focus. where do those the majority of their reimbursements come from? >> again as i said are so few patients treated with their print and only about, very few that are covered by commercial insurance speed when you are dying -- >> the overall impact is very, very small. to our knowledge -- >> i'm going to interrupt you. when 3000 people have hiv/aids drug shifted someplace else and

my co-pay goes up in out of pocket cost welcome by hospital access goes up in this country is under bed in the hospital. been who is paying? medicare, medicaid, veterans and tricare. tennessee-based for those? id. every member in this audience does. every member of this committee does. i cannot believe that your indication here is that the costs will in terms of them of people who are impacted is so small that that's neve that's ne issue. it is a big issue. let's talk about a couple other drugs. let's talk about another company, let's talk about the hepatitis c drug which retail at 84,094 -- 84,000, 94,000 respectively for 12 reports. we can cure hepatitis c but because of profit we are not going to tear it. instead will g go to great and a viable people are going to have liver transplants. so i see a pattern here that is

incredibly frightening for the overall aspect of getting a hand on health care costs. and clearly is a shift from moving from protecting patients in this design. it isn't a result of r&d. we've got many e-mails from the company would indicate that directly. we've just passed 20% teachers which is another indication that congress is interested in making sure that innovation and research and develop an come and fda approval without minimizing patient safety is '80s screen might as again. and yet that isn't an indication, at least not as a result of this hearing, that that's really an issue about how we determine what drugs -- greed. is my question. given what you've stated today and given the questions and e-mails that we provided during this hearing about turing, would

you say that the practices of turing are the same practices for all pharmaceutical companies? or is this an issue for your company? >> turing pharmaceuticals is a research-based pharmaceutical company that invests come is committed to developing and commercializing treatments for rare and neglected diseases. as i said in my testimony speed so this is not the practice of our hotels. this additional practice? >> i guess practice? >> i can't speak on behalf of other companies but what i can tell you is that we are ethical pharmaceutical company. as i said in my testimony i was comfortable with the price increase, provided the company was willing, it was to invest -- >> i'm going to reclaim my five seconds. this is how this works industry. i get to reclaim my time. the issue is i think it's clear today that that's not your intent or your motive. we provide plenty of information you that would not just suggest that clearly identify the

opposite of that. thank you, thank you for exposing these issues. >> i disagree respectfully. >> i recognize the gentleman from georgia, mr. hice, for five minutes. >> thank you, mr. chairman. i want to go quickly to you mr. flanagan regarding generic backlog what mr. meadows was talking about the could you provide more clarity as to the fda has prioritized applications to expedite the process? >> yes, sir. so there's a policy that's available online, like on the website. and basically certain categories of submissions, like first generics, that can potentially open the market to competition, drugs that can mitigate shortage, pepfar or hiv drugs and a couple other specific categories to speak so it's based on the disease, the prioritizing of is that what you're saying? >> the pepfar ones are based on

the disease. the shortages is just based on whether kind of whether there's a shortage out there in providers. and first generics depends on whether the market has already, you know, opened up to generics. >> so there's no real standard policy? >> there's a standard policy. >> how long is for review cycles? >> guitar to answer the question because it depends on how long it takes the applicant to respond back to us. >> okay. the targeted action dates, they are a sign and yet they are noncommittal. was the point of having a targeted action dates if it basically means nothing? >> industry very strongly request for them for the following reason. we have this new use of the program beginning in year three it can get a date this as we were going to act in your submission but for everything prior to your three there were no golden age. industry needed some kind of

information so they could plan product launches and conduct other types of business planning. they strong requested that we disclose to them what our aspirational -- >> is the treaty states are virtually meaningless because there's no commitment? >> no. >> according to what you said they are aspirational, noncommittal when it appears we've got months and 15 months plus before we ever get, prioritize and get something going. a targeted action dates basically are meaningless. >> well again, congressman, industry strong requested that we do -- >> we are all requesting something be done. that's the problem. you have these targeted dates. the backlog is not getting any better. it's getting worse. >> the target action dates and say we were going to take action on each submission on the backlog. it's a way of organizing the

backlog and disclosing to all the companies who have submissions, here's what we think we're going to move on your submission. >> mr. chairman, i've got other questions i would like to yield the remained of my time to my colleague from georgia spent i thank the gentleman from georgia. ms. retzlaff, when turing balked come was especially -- to mitigation? no, it was not? >> it depends on how you define -- >> i define special medication available only through specialty pharmacies. you said access was access when price went up. i reclaim my time. when the price went up it became distributed only through specialty pharmacies. i cannot -- that my firms i cannot buy it. you create a specially medication and did it intentionally because you at a limited market of only 3000 patients in you knew you were going to be able to make a

profit unless you went up on that drug and it became especially medication. you abuse the system is what you do. now using it only through specialty pharmacy. you know, ms. retzlaff, mr. schiller, mr. schiller, let me tell you i've been practicing pharmacy from yours. i have spent my adult life dispensing medications will people get well. i find it repulsive what you have done. icing advance advances in medict been amazing to me. since i started practicing, we've had advances that are just amazing. i've always been amazed at the pharmaceutical companies. when you come in and you rape the public pension make, give this a black eye, i find it repulsive. mr. chairman, i want to thank you and your staff for bringing this hearing and for all those involved. you been most cooperative and i thank you for this. >> i correct a statement speak with sure, go ahead. >> when we purchased daraprim it

was already in a close dissipation model so we inherited that from the previous manufacture. subsequent -- >> so then why did you so access to daraprim was a problem when the price went up? you said that yourself. spirit access to daraprim was a problem because of the distribution model that we inherited from the previous manufacture. that's what i said. subsequent to that we have made, we've taken action. we've added -- >> you said when the price went up it became a problem. >> i don't believe price was not accessed. >> that's not what you said earlier. mr. chairman, -- >> thank the gentleman. will now recognize the gentleman from new jersey. >> thank you, mr. chairman. i think i want to follow-up on mr. carter's line of questioning because i think i understand now. before you acquired the drug, was there a problem with access to a?

>> yes, there was. >> so your desire to acquire this drug, which was supposedly a problem with access, does that mean that those people who are suffering from infections associate with hiv and aids did not have access to it the way it needed it? >> so in june that was three months before we acquired the assets. the previous manufacture did what they, they went through specialty distribution model. they close distribution. >> what was going on -- >> after -- >> what was going on before those three months? was and still that close distribution? >> it was a broader distribution. >> was that a result of conversation with your company in anticipation of your company buying the drug? >> absolutely not. >> why would we believe that? >> there's plenty of proof that a racial with the specialty pharmacy originated, a fact that

with the previous manufacture but they manufacture before that. >> walgreens which is the distribution unit, right? walgreens and said, informed you all they're concerned about access, this drug access to a patient's of the pharmacies and et cetera. what did you will do in response to the? >> we added a specialty distributor that addresses, eliminates a lot of the red tape and distribution of the product to roughly 90% of hospitals. we're in the process of adding additional specialty pharmacies to the network. we have worked with different state a testament to all processes are in place of the get access. is the most vulnerable patients by the way who are covered. >> once you acquire this drug energy increase the costs of social with this drug, which still eludes me why this was

done other than to make somebody very, very, very, very wealthy, you all anticipated that there was going to be pushed back from human rights organizations, from add this key passionate advocacy opposition. what i've read, from internal memos, it didn't seem that your company was at all concerned about ensuring that people who needed is the drug could have access to it. it was about managing the message for your company. >> no, that is not true. the actions we took reflective early. we put in place multiple patient -- >> it seems you all. it seems to me you all respond to a whole bunch of pressure. you have your serious issues yet to contend with now. your company has a very bad

physical public image right now. if you care to know that. i come from a state, new jersey. we have large am a single companies have large universities. we do a lot of r&d. the people that engage in research and development, they are not trying to make somebody a billionaire. they are trying to cure people. that isn't even the issue because you all were not trying to do r&d. you were manipulating access to medicine that already showed the benefit of treating a very dangerous disease. and with that i yield my time back to you. >> no recognize that gentlewoman from illinois, ms. duckworth. >> i want to thank both you and the ranking member for your collaborative effort to raise this issue today. i want to start by talking about a couple in my district. they are 73 and 74 and they are

stretched every single month to cover their expenses. the wife is diabetic and she has a number of medical conditions. and for 2016 will probably lead to an out of pocket prescription price tag of around $4600. her husband out of pocket prescriptions are going to be about $1900 a year. since they retired they are serious anxious about the finances. how are they going to continue to afford for the health care? and get this. the wife feels endlessly guilty because her medications are the most expensive. even with some coverage they together faced overwhelming pressure of having to manage the families budget which after medical expenses and only about $20,000 a year. this is debate home loan, property taxes at health food and utilities. this is a crisis that is far too common across the country. when i hear about stories like this are my constituents in the eighth congressional district and i hear about $200,000

bonuses for executives in a pharmaceutical company that purposefully shut down distribution of life-saving drugs so they can make that money, it, it is absolutely disgusting. you know, and witnesses have testified today have used many different tactics to downplay the harmful effects of the price increases. they want to shift the blame and want to ship the attention and say that the patient population is so small that the price increase doesn't affect larger health care system. and individuals that are paying on the mainstream drugs. those 3000 people because there's only a few of them. that is the large insurance companies, not individual patients that bear this burden. let me tell you everyone of us pay the entrance compass. my office isn't obamacare. we pay the insurance companies.

so this thing has really shown that this is hardly the case. ms. retzlaff, isn't it true that turing's price increase led to astronomically higher co-pays for many of your privately insured patients? >> yes, it did but for co-pay program we kept them at $10. >> really? >> yes, it's true. >> your internal memo identified one patient had an insurance co-pay raised up to 50% increase, the $16,000. and others have co-pays ranging from 1000-$6000. is it to some doctors treating patients in hospital setting were forced to switch to secondary alternative therapies because they could not access transport? >> i suppose that's true but in response we discounted 50% and introduce a smaller bottle to better meet their needs and that seems to have resolved the iss issue. >> doctors are saying they had to switch and it was not their

preference for what they would treat -- >> in hospital setting we are offering discounts now so daraprim can be available for those patients. >> can you confirm that before turing own daraprim it was affordable? >> yes, it was covered by most insurance but i don't know what you mean by widely available. >> mr. schiller, isn't it to your price increases on nitropress and isuprel have cut into hospital budgets? >> yes, it certainly would have hit, cut into the budgets. they were price increases were made to stay underneath the reimbursements for the bundled rate but it would serving have hit their budgets. >> absolutely. at johns hopkins hospital their chief pharmacy officer in baltimore said these to plead

important savings that result in less funding for research programs and technologies that improve care. this is daniel ashby. he says the high cost threaten the patients access to critical treatment and creates financial burdens on local middle income patients. mr. schiller comp is only two the many trucks accompany owned and has increased the price on, correct? >> that's correct. >> him and other drugs have increased the price? >> i don't know offhand. >> you don't even know how many other drugs you have jacked up the prices on everyday, hard-working americans were suffering of diseases. you are come to testify before congress and he don't even know how badly -- >> we have 1800 products around the world. we certainly raised the price on some. a number that you all have mentioned we have acknowledged mistakes. would also acknowledged that going forward it will no longer looking for those opportunities

to purchase these older drugs. when i got, when i took over at the beginning of this year we froze all price increases. >> happy returns the price increases got to where they were before you raised them? i yield back. >> there's a vote on the floor. ticket is going to go into recess with the intention of coming back no sooner than 12:15 p.m. taken a stance in recess until that time. -- the committee stands in recess until that time. [inaudible conversations] ..

>> there were conversations. >> who is involved? >> the leadership.

>> which would be? >> myself-- >> and a person's name? >> our chief officer, which would have been peter miles-- let's see, i'm not-- >> can you furnish us a list of all the people involved because i don't think you should be the only one enjoying the fun of answering these conversations. did anyone raise their hand and say, this may not be a good idea >> i think what the conversations we had were around ensuring if the price went up that we would have the appropriate programs in place to ensure no patients were left behind. >> so, no one thought an increase of 5000% thought it was a bad idea? >> we provided that we had the mechanisms in place to ensure patients did not suffer from a price increase and second, that

we were committed to investing in r&d for next-generation treatment, which we are doing currently. >> so, to help other people on the backs of those folks that had a 5000% increase, interesting. mr. schiller, my question for you, when you made the decision to go from $250 to $1356, a 525% increase on the drug, who made that decision? >> our all neurology and other division where these products set initially did their review-- >> the review of? >> the pricing, the markets for that drug. >> and who are those people. >> steve somewhere is a man who -- >> so, he made the decision by himself? >> no, he organized a meeting with senior management, which

michael pearson and myself are included in that meeting where it was discussed and the price was decided. >> did anyone raise their hand and say, you all, increasing 525% may not be a good idea? >> there is always discussions and dissent, but the bottom line is the decision was made-- >> was the decision made at an actual meeting or did everyone votes, all those in favor? opposed? >> definitely not a meeting where there was a votes, can't or call a final decision was made, but as i mentioned, we acknowledged that it was too aggressive-- >> can you send us a list by next week of all the people involved making the decision? >> i can try and if that list exists i can get it for you. >> that's the best effort and again, within the next week it would be great to have a list of the people involved.

also, for nitro press going from $257 to $800, a 212% increase, with the same individuals involved in making that decision imacs a meeting. >> excellent, i yield the balance of my time to the chairman. >> i would actually night-- like not to recognize the gentleman from alabama. >> how large is this workforce? >> 20-- 22000 people, plus or minus. >> how many do you have engaged in r&d? >> roughly 1000 people. >> how much do you spend on your own in-house r&d. >> this year we will spend in excess of $400 million. >> how may products are in the pipeline? >> over 200 active programs, 100 of which we would consider significant and we expect and hope to get an approval for a glaucoma drug and a biologic for

the treatment of moderate to severe-- >> i don't need a list. i just want to get an idea in how much you are investing in r&d versus what you are doing in terms of buying other branded drugs and there is suggestion that you operate your models more along the line of the hedge fund in that regard. how would you respond to that. >> i would disagree with that characterization. we have 22000 people and operate in 100 countries. we have 1800 products, a vibrant r&d effort with 16 manufacturing facilities in the united states and we are investing heavily. with 76 products in the last two years and investing heavily in vocation assistance, so i think we are just like any other pharmaceutical company. >> i want to talk, raise questions with doctor woodcock.

where prices are high and i think we all understand that, do you agree that you get these generic drugs and pipeline pending that if we could get those 4000 generic drugs into the market place it would have an impact on pricing? >> yes. >> let me ask you this, does the fda prioritize-- there is an issue about that the fda blames sloppy application for the current backlog. have you considered compiling a preferred providers list to try to move it some of these drugs up and get them approved quicker >> we fast track all first generic, so giving special

attention, we move them through and recognize the consequences. in the last several years the first generic, there might be 14 applicants who would be the potential first generic and we don't know who will get finished first, so we expedite that class of filings, that set of applications. >> 10 years ago the meeting approval time for generic drug was about 16 months and now it's a 42 months, that's almost four times as long. can you explain why that takes so long. i mean, if these generic drugs are coming from a branded drug that has already been approved. >> yes, as i said in my oral testimony, we were a victim of our own success. 88% of dispense prescriptions are generic, thousands of generics on the market and they have been very successful, but

the industry grew as a response to that just like a factory that had a great product and we got many many more applications, but our resources against that workload did not grow and we have backlog and as result we were able to negotiate user preprogram with the industry to provide resources to get it done, but we had a backlog and in 42 months, that is reaction to that because we had 3500 applications waiting when we started the user fee program and that was 40 months ago. they are not going to get any younger when we approve them. they are at least 40 months pure read the new ones have a much shorter clock-- >> you're talking about the first generic drugs or new applications applications? >> new applications. the first generic in that 2500 are very few. we are expediting those. >> okay.

of the current backlog, can you tell me what percentage of those are for generics? >> very very-- it depends on how you define backlog herein if you are talking about the 2500 that were there when we started the user fee program, it's a very small percentage. >> you had 1400 submissions in fiscal year 2014 i'm a but only approved 409 of those, so you are adding to that. >> under the agreements that has a 15 month clock for getting back to the sponsor, so we are planning to meet those goals and get back to the sponsor and complete the review in 15 months. now, because generics typically have multiple cycles of review, the time to approval may be longer. in my testimony i think you see

that in the prescription drug worldcom the new drug world, we are up to 95% last year first cycle approval, but that took a lot of work and effort to get it right the first time and that's what we need. we have-- we need a writer first-time application and then starting in october, we will approve them in 10 months. >> and you expect to do that in what timeframe? when do you expect to be at 10 months approval? >> the applications as amended october 1, 2016, and beyond if they are right first time, they will get approved in 10 months. if they are deficient, they will get an answer in 10 months to tell them what they have to do. we got some we go out and we find that the bio quitman's data -- or some of the manufacturing has been falsified so we need time to make sure these the standards for the us

because people are going to be forced to take these, okay? if we approve them they have to be corrected. >> my time has expired, but one last quick question, is the fda catching up or falling further behind? >> we are definitely catching that. we are doing a great job. >> my time has expired. >> unanimous consent request in the first one is statement from the congressman of georgia. we also have congressman duncan who has a letter of december 15, 2015, that he had received from doing mac lum and i ask unanimous consent to enter that into the record and without objection. covers and blom also a statement for the record without objection we will enter his as well, so so ordered. i have a few questions as we start the second round here. doctor woodcock, thank you for joining us. since the passage of this

generic drug user fee act of 2012 has passed, the intention here was to generate roughly $1.5 billion in user fee money coming out. in the office of generics, people working on this, tell me what has happened to the staffing levels in 2012? >> well, across the program we have hired over 1000 people. >> working specifically on the approval process for generics? >> correct. >> can you give us a very specific number. not right here in this hearing, but as a follow-up i want to be able to see that. >> i need to understand your question. i don't understand your question. >> i want to see which offices they are actually working in and i want you to break that down, not verbally off the top of your head, but i suggest as a follow-up to this hearing can you provide this committee that information? >> yes. >> i want to get into these

priority review vouchers that were intended to incentivize treatment for rare pediatric and tropical diseases. the vouchers were supposed to shorten the fda review time or roughly four months. companies have figured out how the value these-- valuable these are. recently, there have-- there was one voucher in august, that was sold for $350 million and that means roughly they were willing to pay-- they thought it was a good business transaction to pay roughly $2 million a day just to get in line a bit quicker. i'm concerned that not everyone can buy their way to the front of the line, but this does demonstrate how backlog and how problematic the demand is at the fda. does the fda have a necessary authority to prevent the alleged

abuse of the system? do you think there is any abuse to the system? should they be sold the way they are being sold? >> again, this is an economic issue intended to incentivize development. these recent vouchers apply to products that were already in development because it's early-- is connected out how to actually sell those drugs. they don't actually have to market those drugs; correct? >> correct, but they need to be approved. >> again, so they could be used for a variety of different things that don't necessarily because if you develop one you'll get this priority review voucher, but you can use the priority review bachelors of the another event that category; correct? >> yes or no has what has been done and i do have to comment on what you said. the priority review vouchers are applied to novel drugs and have nothing to do with generic drug review process. that program is completely on time and the reason people use

priority review vouchers is to move in front of competitors and reach the market faster than a competitor who may be developing a drug in the same space because for a new drug, a novel drug it is first on the market-- i know nothing about this, but apparently must have a great deal of value. so, it does not apply to generic drugs or generic drug process. >> but, you can see how this can be manipulated. do you see evidence of manipulation here? >> i don't know-- it depends on how you defined manipulation. >> are they eating these up to get the voucher with no real intention of marketing, producing or investing in the smaller drugs? >> the companies that we have awarded vouchers to have fulfilled the requirements of the statute or been eligible to be awarded a priority review. >> the worry is the statute is inadequate and provided a market way that people can get in line

sooner, they are willing to pay hundreds of millions of dollars to do so and we are concerned about spurring innovation of actual drug development. >> it was supposed to-- the existence of this was supposed to spur those developers of tropical diseases or rare pediatric diseases to enter that space because they would get this reward at the end for-- >> i think that is one of our questions is are they actually spurring innovation? should there be limitation on the resell of those vouchers? again, when you have a difficult disease that affects such a small population it is difficult. not everyone can just act alter a sickly. there has to be some degree of profit motivation, but then this rise has gone from tens of millions of dollars to hundreds of millions of dollars to it that four-month edge and when i see 350 million-dollar transactions for a four-month

edge, that catches a lot of people's attention to her he i'm just asking the fda if they see, is it fulfilling its original mission and do you see any abuse? >> there are two sides to this. is it stimulating development in rare pediatric diseases or tropical diseases. i think it's too early to say because it takes a long time to develop one of these products. >> let me read a quote. john jenkins director of fda's office of new drugs has publicly criticized the program is" the program has-- as diverting quote time and resources away from other important public health works such as reviewing other applications for potentially much more serious conditions or drafting of guidance documents on issues related to drug development". is he in your opinion right or wrong? >> that is true, that would have

to implement and this program is established by congress and we will implement it. >> okay. we will continue to have this discussion because i do think it won't solve all problems, but it is an interesting thing. basic concern here is to worrying or valiant or any other company has the right, i believe, to enter the marketplace, but when you have a rapid rise in pricing, a dramatic rise in pricing, natural economics with suggest that it would create opportunity for others to come in and create more of a balance to the true market pricing if there was competition, but if they connected through the process with the fda in order to enter the marketplace and compete with someone who is rapidly right-- rising the price of goods in the market factors are out of balance and i think it is incumbent upon us to accelerate the process so that if someone is taking advantage of price

elasticity the only way you make it more elastic is to provide competition and what i don't do is have government control government price controlling, but it's difficult when you see patients that are suffering and they don't have access and they don't know how to go through the convoluted process. they look at that equation and say do i buy food for my kids or do i just take and suffer myself and so that is why it's so pertinent. i have gone down my time and we will now recognize-- [inaudible] >> thank you. >> sorry. >> that is all right. >> as long as you set from california, i am fine. >> the gentleman from california. >> thank you to the chair. i just want to say it-- as an observer, the history of this industry i think it's fascinating and certainly the gentleman to my left given his

professional experience and he understands this better than i do, but as an observer, 30, 40 years ago people invested in pharmaceutical companies because it was a relatively low rate of return. i don't think that addition of more capital to this industry is necessarily a bad thing and meeting with people in the public sector and my district in the bay area and the private sector in particular that you cf and hearing that amazing things that we are in the verge of doing whether it's cancer or cardiovascular disease because of some of these investments, but also public investment, but the concern i have is that although, your companies and eight individual are getting a lot of press that in transition of the pharmaceutical industry although there has been benefit to increase capital in the marketplace that this is more a symptom of an overall cultural problem and if i were a free marketeer, which to some degree i can be, you would be eight

similar up what's wrong with my philosophy because as medicine once said, if it people were angels they would be no need for government and this is an example of less than angelic behavior, so just to ask you to sort of comments on we have examples of quotes for instance from writers headline, hike of us prices over 100 drugs to read the "washington post", prescription drug prized jumper than 110% sure you'd bloomberg, everyone is hiking drug prices. so, you have pr that the ranking members talked about and e-mails from your former ceo who refused to speak on the record here. is my impression that you are doing what companies doing terms of controlling what was a bad episode in your company, but it seems like you are on a track to

repeating the same mistake because of market pressures. that is also indicative to the whole industry, so tell me that you have learned your lesson and that there is a place where your shareholders can be satisfied, but the consumers can be fairly full of confidence that this will not repeat itself because it certainly seems like following some of the comments from the ranking member that you may retire, but we are set up for failure again and this is just a symptom of a larger problem is. >> so, you were not here, but this is a research-based pharmaceutical company and we have 139 employees, 36 are dedicated to research and development. that increase revenue, 60% of them are reinvested into research and develop it, which is critical. then we also invest very

aggressively in-- and generously and patient access program, so our goal with patients is to ensure that they don't incur any incremental out-of-pocket costs because of our price increase. another thing i will note is that almost two thirds of patients who are on daraprim benefit from government program pricing, which is 1 penny for tylan those are your most vulnerable patient populations and i am proud of the work that we are doing for toxoplasmosis, if the second leading cause of death in the united states due to foodborne illness, 750 patients still die each year, not all patients respond to daraprim, some don't tolerate it it doesn't behave on the parasite when it is dormant phase and many people go blind-- >> can i ask you to wrap up because i don't want to use all of my time. >> i don't believe my company has done anything wrong and i believe that the decisions we made struck the right balance between the need to ensure

patient access, innovation as well as shareholder value. >> i don't think you answered my question, so i'm mr.schiller, i will try with you. there are a lot of people in your industry that practice as what i would describe as responsible consumer practices. yours, i would not include in that group. ..

with walgreens where we are reducing prices by 10% on average and in two of the largest franchises, dermatology and ophthalmology prescription drugs. we went to a 30% volume-based discount structure of isuprel and increased the patient assistance programs to be a going forward, our focus is going to be on developing the franchise around term ontology, gastrointestinal disease can, ophthalmology, women's health and some of our other smaller franchises. we will continue to invest bringing in products to the market to continue expanding the manufacturing. >> thank you mr. chairman and i appreciate those responses. i would say although i

understand why you respond that way it does suggest to me the cultural changes we need in the company and i hesitate to have confidence that you've actually learned the necessary lessons that you need to learn for the chairman's question about avoiding more government regulation so with that, i will return. >> now the gentleman from georgia. >> thank you mr. chairman. if i can follow up, doctor woodcock, you were not here but one of my colleagues from north carolina was asking about the process of drug approval and i would like to ask you something. it's my understanding the fda can expedite a new drug application to help with the drug shortage problem but i understand right now you're putting more emphasis on the

standards we all applaud but you can in fact approve a drug if indeed there is a drug shortage and that has been number four. you can address an issue issue of shortage could you not? >> we wouldn't do do that but.com pounders could potentially offer -- >> you control the list of ingredients they are allowed to compound, correct? you could add one to that one-two that if there were a drug shortage and you've done that in the past, correct? in 2012 they waved their authority against the compound at the version yes i see your staff nodding that's to lower the risk from premature birth when the approved version became

too expensive. this could have helped us in this situation. it could have helped the american public and the situation. >> the public that you are referring to its enforcement discretion. when a new drug is approved, then other versions are not supposed to be marketed. >> we could have addressed this issue because is because of a significant price increase and that has been done before. there is precedent. one other thing, through the omnibus that was recently passed by congress we instituted a rule on office use compounding and i know there was a language in the bill that directed the fda to issue guidance on that. can you give me an idea on how you are working on that? >> we are working on guidances

for the changes and i would hope that would come out this year in the draft. >> another question asked by my colleagues from new mexico you just repeated over and over again. how long is it taking the research to the development? >> so you are calling yourself a research company. it's a stretch to even call you a pharmaceutical company. and i will tell you that when a company that calls themselves a research pharmaceutical company puts in 5% of the profits in research and develop and i think that proves the point they are indeed not a.

before that it was only 5% so i beg to differ with you on that. you said was being distributed it was being distributed in the specialty pharmacy. are any of them owned by pbm? >> the answer is yes. i want to ask over the past week or so there has been much in the press about a problem for the largest health insurers in the country to reach the negotiations said they can't reach a deal in the $3 billion settlement. if that is the case for one of the largest insurance companies how do you expect a small

independent pharmacy to stand a chance against a giant pbm when of one of the largest insurance companies in the world can't even negotiate with you? >> that is a contract dispute between two companies i do know that i do know that the pharmacies -- >> can you imagine between a company that is one of the smallest in the united states and one of the giants? stomach drug stores that are drugstores that are parts of giant companies negotiate on behalf of others. >> i am concerned about the current marketplace because i believe that it creates to shut out the independent and i say that because of the competition decreases the price will increase. it's one of the worst things of the affordable care act how many insurance companies we have left only three or four that is what is going to lead us to destroy the greatest hope chrysostom in

the world. i know you are not specifically the problem and you represent an association that i can tell you we have to have transparency in the world and the representative just introduced a letter for the record and i can tell you he has a bill that deals with transparency and i hope this is something we will continue to deal with in this committee. it is important that we do and again i want to thank you, the ranking member and all of your staff for hearing us today. >> i want the witnesses to know that i fully support mr. carter and his efforts because i have a lot of people in my district in very concerned about enough issue and i plan to join you in your efforts because you're right. you are you're interested in isuprel and nitropress. the company that owned the drugs before you dramatically

increased their prices by roughly 400% each. the johns hopkins hospital by the bay which is smack dab in the middle of my district five minutes from where i live and the hospital budget was significantly impacted by marathon's price increases. that's why i wrote a letter asking about the drugs in october, 2014. then in february, 2015, your company came along and jacked up the prices of these critical medicines even more, 525% in 212%. it increased the budget even further. you testify that they are offering a 30% discount to some hospitals that use these products. what we have heard is unclear whether they are able to access this discount but even if they are, a 30% discount on a 500%

price increase hardly makes a dent. your business does that sound like a good deal to you? >> what we try to do is address the issue from a portfolio point of view. >> do you realize how much that hurts hopkins and i don't know if you heard the questions from earlier. the hospitals are suffering big time and that means they are not like johns hopkins, one of the best in the world but they are suffering big. my father who only had a third grade education, i didn't understand it to then but i understand it's now. he said somebody's going to pay. somebody's got to pay. the hospitals are paying big time. now, coming back to you,

ms. retzlaff i am concerned about the documents showing your company was more concerned about managing the backlash of the price increase than ensuring patients have access to daraprim and these are not my documents, they are your documents from the data. listen to this, this is incredible. hiv patient advocacy may react to a price increase. hiv community is highly organized, sensitive and action oriented. significant increases that affect the community could result in a backlash from patient advocacy groups particularly if the increased cost sharing with patients, "-end-double-quote. i am concerned about this because in the district i live in, the zip code has one of the

worst situations in the world and so that's why you're going to hear me talk about this. it would be legislative malpractice for me not to and it appears turing was aware of the price increase is going to adversely affect the hiv aids community if the companies that chose to increase the price by 5000%. you can sit here now until forever and tell me about all your little discounts. you are raising the price. >> did anyone stop and think about the effect this would have on such a vulnerable population beyond the anticipated bad pr? >> if we yes we did, and we took action on it so that's why again it's important that we

participate. we offer turing db daraprim at 1 penny a pill. >> you were worried, weren't you? you were worried about the pr, not the patients. >> we were worried there would be misinformation in the public domain and that's exactly what happened so our effort from the pr perspective or to correct the information and make sure that the patients understood that we have these programs in place that they could access daraprim at a very affordable price. >> one thing there was a memo from october 12, 2015 and it said this would give groups like the human rights campaign to continue to fight for the people they represent that this is a quote that says the human rights campaign has been vocal about the pricing issue and is the

most vocal organization able to garner media coverage while the motivation is primarily political given their actions, we think it would be important to get anything with the ceo in an attempt to slow the stands and work with them to understand that the company so you thought it was political they were trying to make sure people suffering get the proper medication they need. is that the problem? >> we thought we needed to engage all stakeholders to make sure they were aware the most vulnerable patients suffering over two thirds of the use can access the product at a penny per pill. >> i just have a few more questions mr. chairman. it has been reported that in 2014 the price hikes were raised

62 with an average of 50%. in 2015 they continue to bat with the highest average increase in the industry 65% across 50 drugs. according to the data, five of the ten brand-name drugs that the largest price increase in july 2015 are valeant drugs. of those, too increased by more than 500% and one was by 600% and one by 800% and one skyrocketed over a thousand% in just 15 months. one in particular used to treat patients with type ii diabetes increased by 800% over a six-week period is that true?

>> i am not familiar with all the numbers that directionally that is true. >> the massive price drop was so preposterous that it cost the manager to announce on january 29, 2016 but it's intended to remove from its formulary and this is what they said. they said to protect clients and patients from unnecessary drug spending we will remove it from the preferred formulary the fda approval of the generic equivalent. i asked you a little bit earlier and you danced around it very nicely. you did a great dance what were you going to do. you admitted under oath that you all have gone too far. i'm asking you are you going to tell the public, who is watching this by the way, what are you

going to do further? you talk about what you've done that what you're going but what you're going to do because as far as i'm concerned we still have problems. >> first of all, you're right we made some mistakes. >> you said that before. spec i acknowledge that. we have frozen all price increases other than the gastrointestinal drugs this year -- >> until what the about the end of the year? the >> i can't can't connect. we've raised it at the board level and we decided to freeze any price increases that had been proposed for 2016. we also rolled out the walgreens program would take a 10% average price discount off the drugs. the 30% discount has been rolled out in any of the users of that will be unveiling themselves up

to 30% price increase -- price decrease. going forward we are not going to be looking for those opportunities. it will be on the core franchise as it has always been around a apology, up apology, castro, women's health, consumer healthcare. that's where the focus will be on the pipeline and on the manufacturing and delivering administrative drugs. we have have to do a good job of getting the balance right for good corporate citizens and a good partner in the healthcare system and we will work hard to get that balance right. >> i appreciate -- i have to say this i cannot tell you how much i appreciate this hearing. >> the gentleman from new york. >> i joined a ranking the ranking member and thanking you for this hearing it's important. mr. schiller, how much

compensation have you received since joining valeant including salary, bonuses, stock-based compensation? is it more than 20 million including the current stock holdings? >> it is. >> basically how much is it? >> i haven't added up. it was $27 million in 2014. i am incredibly fortunate and well compensated. >> if you could get it back to us in writing we would appreciate it. throughout this hearing, everyone is fighting consultants as the cover i would say of increasing prices. would you please identify those consultants? >> first of all wildly mentioned consultants, we do not want to blame anyone.

we accept responsibility for our actions. the consultants that we refer to was from a firm called msmb. >> can you get back to writing the consultants that you used and all the price hikes in the business and also misses retzlaff, what consultants did you use for these price hikes? >> we didn't use any consultants >> i was stunned by the internal documents that the majority secured in particular in exchange with mr. pearson where he shows in three different graphs that the increase in earnings was almost completely and totally price increases and i refer to she cites everything

except the u.s. grew in a total of 26 million so the other firms overseas event according to his craft and the remaining 305 million growth came totally from the united states. he goes on further and says out of this, 61 million of the growth came from volume whereas the remaining 244 million of growth came from price increases. my question is how do you justify these price increases particularly on drugs that are the sole source of treatment. there is no other manufacturer. how do you justify these increases and did you ever think about the impact on patients, hospitals, other providers cut

the government, the taxpayers? you say very likely that this will be covered by health care or medicaid or medicare or whatever. that comes from the american taxpayer. and the copayments. many people tell me their copayments have gone to hundreds of thousands of dollars which they can't afford. how do you justify that and how does your company justify that? >> when we decided on the prices in the past we took in a number of factors including the clinical value, alternative therapies and patient access to which is critical -- may i add that in the memos that we got from you, the patient access was decreased and the major hospitals like in boston

couldn't even get access to these drugs. they were not covered by any other form and people couldn't get treatment. >> i am not aware that people were not able to get access. isuprel and nitropress -- >> i will send you the memos do we read. i started reading last night and i couldn't go to sleep. i don't even think this is a hearing i think this is a scandal, and absolute abuse of power, abuse of the pharmaceutical industry, and it is a scandal. i would like the permission to put into the record additional questions in writing for you to answer, both of you and i will yield back the balance of my time. >> as we wrap up here, tell me again the factors that you take into consideration when pricing a drug. >> a number of factors including

clinical value, alternative therapies, patient access and obviously it is quite subjective some of the situations we've talked about we have gotten it wrong. >> anything else on the checklist? what considerations does turing take into place considering the price? >> the value of the medicine or the clinical value. we take into account the size of a patient population and other products in the category that's needed to invest in innovation and the assessment of whether or not there are mandatory rebates and things like that and then i think i mentioned immigration and the need to find a patient access programs.

>> can i tell you candidly again i'm a conservative guy. i want people to make a profit. do you know why i feel like you're you were both lying to us? you did it right in there and say profit and if you don't include that as a factor in how you price a drug, you are lighting and you are not telling the full complete truth. you can tell me about access and all the other things but profit is the motivator. i think that you are purposefully avoiding it and i don't think that you are telling the full and complete truth. we want people to make money. you can't be in business and not want to make money. >> of course we expect to make a profit. >> them is that part then is that part of the consideration? why didn't you list that out? >> we expect to make a profit. what's critical and i did mention in the form of the need

for innovation because in the research-based -- >> i don't believe you. that is not the history of turing. >> turing is a brand-new company. >> and it's a better model to understand because valeant has over a thousand different items. they have a long history and we can be fairly critical of certain things but when you have a drug that is a choir that's been on the market since 1953 or so, then you start to understand what happened here and again when it gets abused and it goes too far and you are taken advantage of and you lie to the public, you go on television -- not you personally, but the person that has the property of the company lies and is cheating the american people and i think that you are both being disingenuous and incomplete in your answer and i want you to

reconsider in the future profit is of course a motivator and of course part of your calculation. you don't have don't don't have cfos that don't calculate the profit. you don't go out and rent yachts and fireworks and all that kind of stuff unless you are able to jack up the price and what i'm worried about is you are marketing a drug that does not $750 you're telling even the geordie of the people just discount that down to a dollar. who is paying the 750? doctors and -- the suckers the american public because we pay your premiums and do the right thing. we go to the hospital to pay our bills command your extravagance is something we have to pay for. >> if pennies. don't tell me that if pennies. you're right you have a drug that affects less than 3,000 people out of 330 million but you multiply what you're doing

over the course of everybody else and you are taking advantage of the system and that's why he again the pressure comes back to the government to increase the competition so that there is a proper balance. you can find the right amount of profit, not have congress dictate or setup price controls and that's why we will continue to do this. this has been a very fruitful and enlightening hearing. >> you have a research department? is that you spend all this money on research. >> i will get to the development in a minute. research. how many scientists do you have? >> 36 people of the 139 employees. >> you have 36 scientists. >> 36 people in research and development having a science

background signed background is a requirement to work in r&d. >> so you have 36 doing research and so the money that you are spending, how much of that -- what percentage of that is development? >> again i'm putting development and research aside and over here. >> i don't know if i have the exact number but i can go back and get that information. >> according to you -- how soon can i get that? >> as soon as possible. i will call them when we are finished here. >> one question for you mr. schiller do you ever meet with the hospital association's? because there's a lot of hospitals probably almost every hospital in this country that needs those drugs that we were talking about. do you all meet with hospitals? and it probably affects

everybody. you know that if they affect hopkins to your affecting other hospitals. do you meet with them? the >> i haven't personally. the head of the division has reached out to the major users of nitropress and isuprel for discussions and we also reached agreement with the purchasing organizations that buy for the hospitals to make sure those that need the discount are getting the discount. >> when we see those that need a discount you need to tell me some people will come up and say we can spend those millions extra of the problem is that what you are trying to tell me? >> that was a poor choice of words. >> why don't you tell me what you mean. >> we want to make sure that heavy users do not have a big burden from the price increase so that's why we look at the heavy volume users so they will

get a 30% discount and then they would get a smaller discount. >> if you have a hospital that is a small hospital that needs those drugs desperately then they don't get as much of a discount. >> so that might hurt them even more. it is a big international hospital and they are complaining big-time. mr. cart right i think made some good points about these hospitals. they are doing the best they can with what they've got and this is all cutting into their bottom

line. when it gets to the point that it's about greed. >> i'm with a private company. >> i'm sure you are making a nice sob. >> not as much as mr. schiller. >> while the people in my district are making like $30,000 a year, $40,000 a year probably the money that you spend in a day or a week they make in a year.

are you in contact with mr. speedy 11? >> on the occasion. >> again i want to thank you all for being here. >> thank you. the kennedy stands adjourned. [inaudible conversations]

conversations link back >> the unemployment rate fell to 4.9% from 5% of the lowest level since february, 2008. employers added 151,000 jobs in january. however the labor department says while more jobs are being created, the rate of growth has slowed compared to the previous months. c-span takes you on the road to the white house as hillary clinton and senator bernie sanders will be speaking at a democratic party dinner in manchester new hampshire. live coverage gets underway at

7 p.m. eastern. the candidate donald trump says he will take part in xbox two news debate posted by meghan kelly. he says he's resolved the issue with the network however the next debate is being hosted saturday they abc news. the candidate that is not going to be there is carly fiorina. she started off an appearance in manchester and sure i talking about saturday night republican presidential debate. here's what she had to say. >> it is positive the game is rigged and that's why i'm running for president because we have to take our country back. you may remember when all of this stuff started in media and the political establishment in washington said the voters can't handle so many candidates we have so many candidates so then they came up with all these criteria to decide which candidates.

while a funny thing happened this week. the people of iowa voted and in that vote i beat two guys are sitting on that stage and i'm tied with jeff -- in delegates and the last thing i knew votes and delegates counted but apparently the political establishment in washington and the media establishment in new york city decided of the votes don't matter, delegates don't matter the only thing that matters is we establish criteria using a pole so we are going to stick to that so guess what, they think they get to pick presidents. it's an insult to the people of new hampshire. you pick presidents, you are the first in the nation primary and they are taking away your power. i have observed up close and personal how serious do you take this responsibility.

nobody ever heard of me when i launched this thing but you showed up in living rooms and dining rooms and town halls and museums and you listened and because you take your responsibility serious, you listened to us over and over again. i got to see you five times. i respect that and you also know that even in this day and age in media that there is nothing like sitting and looking at a candidate in the eye asking them a question and understanding how they are going to respond. it's not the same as an ad or a nationally televised debate. i think you can handle eight candidates on the stage but the political establishment and abc says you can't. i am counting on you to do your job and pick a president.

>> of the citizens in the granite state are not easily one. at the meeting places are hotbeds of political discussion. ♪ in the towns and cities the voters are in snow and sleet to cast their vote. thanks to the people of new hampshire -- >> the first in the nation primary. >> new hampshire. >> it's great to be back in new hampshire. >> one reporter called new hampshire's primary the most cherished american political travel rights. [applause] governor, thank you so much for coming. [applause] this is a place you can observe a candidate in the heat of a dialogue and tough questions.

it's not just a place there is a scripted speech. new hampshire takes the first in the nation primary status really seriously. this is one of the whole series of town hall meetings we are going to be having. this is my 20th town hall meeting. >> welcome to the 115th town hall meeting here in new hampshire. ♪ members of the british house of commons questioned the uk policy representatives from google, facebook and twitter regarding the approach to countering terrorism. witnesses discuss content reporting policies and cooperation with law-enforcement and how terrorists use social media as a recruitment tool. this is about one hour and 20

minutes. >> order order. can i call the commission to order and ask everyone present to note the interest rate interests of the committee are noted and can i welcome our witnesses today as a part of our ongoing inquiry to counterterrorism and the counter narrative. obviously the issue that has been the public is about the attacks of the company. the committee isn't concerned about this because you will be evidence to the sister committees next week but as an opening question, do you have anything to add on this issue? >> i would simply say thank you for having me here to discuss the urgent work that you're doing and my colleagues will be appearing before the committee

next week. >> the largest company in the world bigger than norway, australia and columbia. congratulations. it was reported in the times today but you have to that you had set aside 2 billion on the tax bill but it doesn't include the united kingdom. >> thank you very much for inviting me to the committee. i'm aware i'm speculating in the media and facebook hasn't made a statement about this and i'm unable to help you. >> have you given any evidence as well? >> i put just say like all companies, we have the regular where we operate and there is a complex matter [inaudible]

>> all local tax laws. >> we had evidence from the head of the counterterrorism and the independent and both expressed concern that when they had approached your company's -- and each of you can answer the questions and they will be directed to one witness, in respect to handing over information on counterterrorism in particular to use these phrases that some internet terms would deliberately undermine counterterrorism investigations refusing to hand over potential

evidence or threatening to tip off suspects to protect customer privacy. do you think that criticism is fair? >> we have a long history of working together with government and law enforcement authorities to make sure they have the information they need to pursue investigations. our cooperation is obviously governed under the uk and u.s. law but we do our best to provide information in the cases of investigations. in that case we have long published statistics about the interaction with law-enforcement authorities and for the uk as an increasing number of requests i think it's gone up from 1200 in the first half of 2013 to about 3,000 in the first half. >> what about facebook? >> it is a similar number, three

to 4,000 but just to be clear that about a matter of things not just counterterrorism but the expert that we have with confirmed the increase in the first half of 2015 we received 299 requests and i think one of the things that requests is a public platform so you can look at the account without even having it yourself. there's a huge amount of information available. >> you understand the concern with the head of counterterrorism says that you are undermining. he didn't name the companies and he went on to talk about people being kicked off. in fact in the report they published in june of 2015 z. some service providers will tip off the company that they are under surveillance a must unless

to sway them not to do so by court order. have you tipped off customers that were on this debate? >> this is an issue where they haven't helped find a policy. >> you don't have to rely on better. you can tell us how few tipped off customers that are under surveillance? >> the first question is are they under surveillance. under many jurisdictions around the world there are legal frameworks to provide a notice to the user. one of the things we are very clear about, he said he wasn't aware of any circumstances where the situation had occurred. >> reminded what he that he said of june of 2015 the what your

saying is you do tip people off but you have to do so because if the uk authorities ask you there are other jurisdictions in the world where you have to tell the customer. >> in the u.s. and other jurisdictions there is a legal framework that provides a certainty. our policy is very clear there are exceptions to prior notice that may include exigent or counterproductive circumstances so we work on a case-by-case basis to make sure that we do not disrupt those investigations >> we just want a simple answer if the head of counterterrorism says we would like this information, or you duty bound by your policy or another

country to actually tell the user that this information has been requested, it is a yes or no. >> by our policy we allow ourselves to not notified a user where it is counterproductive so we don't have to. we would like to tell the user's -- >> that you don't have to tell them that this information has been requested? >> we do -- it is context specific. let's say the police request information versus a journalist or member of parliament he would seek to get noticed because give notice because in that case it is reasonable to do so. >> we have plenty of time, don't worry. if it is an mp or journalist requesting information, you would tell those people? if it was counterterrorism --

>> i said it is context specific. it may be more reasonable to give user notice. >> we understand the word reasonable. we have to deal with these words all the time i'm just asking you for the facts do you tell people other than journalists and mps that the authorities have asked for information? >> yes. >> mr. miller are you in the same position? that you don't tick off people tip off people and tell them when information is requested? >> we don't do it in the uk. >> do you do it in america? >> sometimes but not every case. it's dependent on the rules in the particular jurisdiction and it's a matter in the committee. >> in the uk we don't and even if we could we would never do this in the counterterrorism cases.

>> so if someone says we want this information, is the terrorism investigation you would never -- he would just hand over the information that came in the criteria. >> we would review every case on a case-by-case basis. >> thank you. succumbing yes and a definite no from facebook in the uk but america -- but what is the situation with google? >> the same as facebook it is jurisdiction dependent. we follow the law of the jurisdiction where we operate in the context of the investigation. >> with respect to taking down items we also received a lot of evidence over the last few months and indeed in the previous report the person-to-person radicalization has been placed by the

radicalization including on the net, internet companies obviously are important in that context. we also have evidence that in the 289 days, the groups like anonymous and goes to security have taken down and reported 2,555 websites and reported 19,568 pages and reported 14,000 suspected terrorist materials in total on the internet. do you have figures as to the number of websites that you all have taken down that he would you would deem to be websites that propagate terrorism? >> we don't break out by the specific criteria. i think it is probably putting it into the context where we obviously operate youtube and we

operate a search engine. where we are hosting the materials and we reset the community guidelines to set the rules of the road to what is accessible via the zero tolerance approach for years we first put up a flag in 2008 and we've adopted the policy over time to take into account new ways people are abusing the platform to make sure that it's put into effect. >> so how many have you taken down in total? >> on the youtube site we receive about 100,000 a day but that is across all types. and the 2014 is the last year for which we have numbers but we've removed 14 billion in 2014 and again that's for all types of abuse. >> are you able to be more specific in the future would you be able to look at the number of

websites and the number of items that have a terrorist content? >> we are certainly open to and thinking about ways that we can be more transparent about what we remove and what it violates but it's worth noting one of the reasons it is difficult is because if somebody is offended on youtube they go to the flag procedure and lots of them overlap so it could be for terrorist content but that's say that it's for hate speech or violence and those are all different so in the present we are not able to count that way but it is something that we are keen to thinking about. >> it was pretty critical a few days ago about what was the content on the net. she said she felt it had become a place where hate was being

disseminated. what prompted her to say that and how many pages or profiles has facebook taken down in the last year relating specifically to counter terrorism? >> what prompted her to say that and then i will take around later. what prompted it was the announcement of the initiative called the online civil initiative announced a couple weeks ago in berlin and the joint mission we added to it to the uk organization to achieve the dialogue and the institute for capturing extremism for researching the extremism at the college and this is one that combines the support for those that are trying to use the internet for the campus speech to research what works and then

training around it. >> why did your government say this after all these years? >> it's something that as a company we have taken very seriously for a number of years but of course as the events of the world have unfolded its become the number one policy issue that i talk about with governments across the many countries they cover as well as the uk. this is just another policy agenda and as it was written up as well what we want to do is ensure that we are learning from organizations that work on the ground from the academic research providing the best support. >> are you going to publish the outcomes of the initiative? >> this is a three-year long three year long initiative and there will be more to follow.

>> we don't provide the same level of detail. we provide similar information around the request but at the moment we don't provide provide public data on the number of the pieces of content. >> the turkish government find twitter $20,000 for refusing to remove what it considered a terrorist propaganda. i've just been looking at the pages and the messages they sent out today. one says i asked and it was said there was no path shorter. this is pretty hot stuff. what are you doing about those that are using better to propagate because it is quite obvious you don't need to be in

counterterrorism for using twitter. >> we have taken down tens of thousands of accounts. we are thinking about how we can do more -- [inaudible] >> it would be the last 12 months. >> are they broken down between counterterrorism and other areas in the cases of the company's? >> about a specific figure is related to the extremist accounts. >> tens of thousands. you take them to take them down, tens of thousands. >> we are currently considering how we can do more because we are interested in having discussions about whether there's more we can do to provide extra data and if we are able to we would be happy to provide the committee with the data. >> would you be able to publish this because we need to select committee of the house house to

get this information. >> we publish six reports the one question we are asking is can we have this kind of data to the reports that we've already published. >> but you all accept, yes or no , it's the number one way and people are being recruited on the internet for extremism? >> the question is is the internet the number one way people are being grouped, i'm afraid i don't know enough about how people are grouped online to answer but it's something we take very seriously. >> i'm not sure that i do a great. it would be better talking talking with people at the clinton foundation and the dialogue and the study of radicalization and i apologize for getting their name but they are the experts. we are the experts on how we can keep the content off [inaudible] >> i would agree, he's written a lot about this and i would recommend him to the committee.

>> i just want to follow up on one point around you said you removed 40 million videos which is a very strong figure that shows the current policy is a team of reviewer's working around the clock to look at the videos manually. are you confident it is succeeding removing the dangerous material quickly enough in terms of preventing people from being radicalized? >> it's something we think about and it's worth noting 400 hours are uploaded every minute and the vast majority of that is people using the product in the way that it's intended, not to abuse anyone or radicalizing so since it has grown we've had to

think about what is the best way of doing this and continuing to this day we have a billion people on the platform and the best way to get this stuff done quickly and reliably is to have people fighting it and then removing it which does happen quickly. >> the initiatives that are taking place at the moment have recently come into the public domain as a public policy issue and most of us would argue that it's been an issue for a long time and now it's going forward and accepting some responsibility that you have an issue on the company grounds because they seem to be hijacked by the terrorists organizations what would you say to them?

>> this isn't something we've only just started thinking about. have a zero tolerance policy for content in 2008 finally implemented the flag. we hosted our first summit on violent extremism in 2011. .. home office since 2012. we hosted a counter speech event with the home office and then with you fairly soon after that. this is a multiyear commitment. in 2013 -- it's been something we've been doing for years. obviously obviously there's more work to be done. >> how can videos appear to enable them to support terrorism.