scout who really got a buzz cut yesterday. almost didn't recognize him. our beloved pets provide a constant source of joy and love to as well as unconditional love and i forgot to bring my box of dog biscuits and a careful contain ayala my constituents to feed our friends as well. it to fully appreciate how large the marketplace is and how important veterinarians are to keeping our companions healthy, all you have to do to stop and think about how many of our friends, loved ones, colleagues and neighbors have pets. ..

the economy is still on shaky ground after a lackluster recovery. affordable options for cronic and acute medical conditions are kitchen table issue. pet safety is also of highest importance. i should also note, that one of our state universities, michigan state, is one of the premier institutions in terms of training of vets to get to the marketplace. we should strife to strike a balance between consumers having a marketplace of options to choose from to make sure their pet's safety receives the care it needs but doing so without break the bank. we also need to make sure consumers that they need to make an informed decision with their vets about the best care for their pets. so i'm interested in hearing from all of the witnesses about the state of the petmedcation

industry today, what the states are doing to address these issues. with we can learn from the ftc's deep dive into the nuances of this industry. i want to be clear just as pets are part of our extended family, our vets are trusted part too of that equation to keep them healthy and happy. we're here to understand what role if any the federal government ought to play. we want safety priority for all the folks in michigan and around the country. and i yield back. >> gentleman yields back. i recognize the ranking member of the full committee. mr. pallone. >> and about the choices that are currently available to pet owners. and as has been stated by my colleagues many pet owners consider a pet to be a member of their family since everybody's talking about their pets i will have to add that our dog, valetta is certainly a member of

the family although i have to say she likes my wife a lot better than me. >> we all do. [laughter] >> thank you, mr. chairman. so in any case, access to safe, effective and affordable health care for their pets is important. in 2015 u.s. families spent more than $60 billion on their pets and significant portion of those dollars in the growing ped medication market. the ped metcation industry is in period of transition. both over-the-counter and prescription petmedcations have been. many believe the existing system has not evolved accordingly. in 2012 the federal trade commission held a public workshop to explore changes in the ped medication market.

including veterinarians, pet owners, drug manufactures and retailers and stakeholders. they can art officially inflate prices and limit consumers access to medication choice. for example, some retail outlets have difficulties to insure they have brand medications available for customers. some vet main ears have difficulties insuring generic medications have available at their clinics. others report consumers are not sufficiently informed options available when purchasing the pet medcations, including receiving a written copy of their vet's prescription from the veterinarian after reviewing stakeholder comments the ftc issued a report in 2015 on the pet medcation industry. highlighted troubling lack of generic pet medcations available for purchase and increased generic pet medcations could produce significant savings for consumers. the comparison to the human

medication market is notable. of the top 20 human medications that lost patent protection between 2005 and 2007, 100% had a generic version made. of the top 20 pet medcations during that time only 20% went generic. we know that generics have profound impact on health care by drastically low lowering drug prices and improving access to effective treatment. ftc referred a number areas of study regarding pet medcation distribution and may be causing inefficiencies and disincent citing development of new generics i encourage the ftc to proceed with that study. i'm hopeful the hearing can address other challenges facing the pet medcation industry. i look forward to hear from our witnesses to insure affordable pet medcations for all our pet owners. i yield back, mr. chairman. >> gentleman yields back. the chair thanks the gentleman. this concludes opening statement.

the chair reminds all members pursuant to committee rules members opening statements will be made a part of the record. we want to thank our witnesses being here this morning taking time to testify before the subcommittee. today's hearing will consist of two panels. each panel of witnesses will have the opportunity to give an opening statement following which there will be questions from members. once we conclude with the questions of the first panel, we will take a previous recess to set up for the second panel. our first witness for today's hearing is miss tara cos low, deputy director of office of policy planning at federal trade commission. we appreciate you being here this morning. director koslov you're have five minutes to make an opening statement. >> members the sub committee, thank you for let me appear before you today. i'm tara koslov.

the commission has submitted written testimony describing the ftc's recent work in this area including our october 2012 workshop, staff reviewing and consideration of over 700 public comments received in response to the workshop and ultimately our may 2015 staff report. my oral testimony and responses to questions reflect my own views and not necessarily those of the commission or any individual commissioner. if your household is among 65% in the u.s. with a pet you know first-hand that pet medcations are a major and growing expenditure for many american consumers. pet owners spend over $7 billion per year over prescription and over the counter pet medcations. the figure is expected to grow to over 8 billion in 2018. they purchase medications from trusted veterinarian after a office visit. over the past decade, retail pharmacies and outlets compete with veterinarians to sell pet medcations. they include on ion pharmacies,

own and operated by licensed veterinarians and focus on filling prescriptions. existing competition already appears to led to lower prices for certain pet medcations as well as better service, greater convenience, more choices and other consumer benefits but recognizing the size of the industry and large number of affected american consumers ftc staff examined two interrelated issues that affect competition for sale of pet medcations the first issue whether consumers know about or have access to portable prescriptions. that means a consumer can obtain prescription from veterinarian and purchase pet medcations other than her veterinarians office. based on our findings the commission believes consumers likely would benefit from increased pet medcation prescription portability which would enhance competition between veterinarians and other retailers of pet medcation. consumers especially likely to benefit this can shop around for lowest prices and greatest

convenience purchasing preventative pet medcations or long term therapeutic treatments for complication. they may not be appropriate for certain acute care or specialtive medications only properly dispensed by veterinarians. consumers may less likely shop in urgent care situation where pet needs short-term treatment. we analyzed various arguments before or against prescription release. where they would provide a portable prescription whether a client requests one. as report notes many veterinarians honor their clients request for portable prescriptions as required by some state laws and ethical codes. some veterinarians may offer portable prescriptions as well. complaints exist all requests are not honored. consumers don't know they can did for portable prescription. they may know but uncomfortable asking especially when veterinarian asks for fees or

liability waivers making disparages statements by other providers. to the degree that these concerns are legitimate, existing regulatory measures may be sufficient to address them. we are aware of arguments that automatic prescription release may erode veterinary practice revenues and force veterinarians to compensate by increasing their service fees but as our report details it is difficult to reconcile this argument with simultaneous claims that consumers already aware of and have complete access to portable prescriptions and that pet medcation prices already fully account for the competition that exists between veterinarians and other pet medcation retailers. thus we believe the greater prescription portability would likely enhance competition for the sale of pet medcations that consumers would benefit from the competition in form of lower prices. the second issue ftc staff examined that most manufacturers of pet medcation have exclusive distribution policies to provide medications only to veterinary practices.

they may adversely affect competition. non-veterinary retailers have trouble purchasing medications directly from manufacturers or authorized distributors. retailers often rely on secondary suppliers. consumers likely benefit from lower prices, this exclusive distribution were, strictly enforced this secondary distribution system may be inefficient and prices might be even lower if there were no such constraints. as report highlights enhanced prescription portability may increase consumer demand to buy pet medcations from non-veterinary retail sources. this might incentivize manufacturers to change distribution points because of choices. it could increase competition and lower prices for pet medcations in both veterinary and retail channels. thank you for the opportunity to chair the commission's views and discuss our efforts to promote competition and protect consumers. i am happy to respond to your questions. >> chair thanks the gentlelady for your testimony and, we'll

move into the questions portion hearing. i will begin by recognizing myself for five minutes for questions. director, you mentioned the issue of liability for writing prescription. is that actually an issue? did you come across in the course of your study in preparing the report last may, did you come across issues of liability that veterinarian might encounter for either writings or not writing the prescription? >> so liability for not responding to a request for a prescription? >> i guess i was thinking along the lines of professional liability for the prescription, either not being filled in timely fashion for filled correctly? were there medical practice or veterinary practice liability questions that occurred? >> as we explained in the report our understanding is that veterinarian would not be liable

if a pharmacy made an error in filling affordable prescription. existing regulations that govern the pharmacists would cover that if it wasn't dispensed as written. >> that would be just part of normal practice of a dispensing agency, correct? >> that's correct. it would be as same as it would be for human prescription. if you take a prescription to pharmacist they are required to dispense it as written. >> why would it come up someone would ask someone to sign release of liability if the prime minister was not dispensed at office? >> as explained in the report we're not sure why there would be a request for release of liability because it is our understanding that the existing regulations would already cover it and you would not need an additional layer of liability release. >> that would be my thought as well. so, committee really, subcommittee really appreciates the amount of time the agency spent putting the report together. obviously it's, it was a

significant report, 700 public comments, is that correct? >> over 700, yes. >> is that so people get a context, is that unusual amount of comments or is that about standard when you do an investigation like this? >> so it's fairly standard. it was a little bit higher than average for this type of workshop. there were a number of comments that we received similar to each other. our understanding a number of veterinarians may have been encouraged to send in comments so they all did. that was large group. we receive ad large number of substantive comments from a variety of stakeholders as well. >> the conclusion of all that, you put the together the report, is there any type of economic analysis you at ftc do as far as implications of the report that you're dispensing? do you consult with any other agencies or anybody in the administration, bureau economics, office of management and budget, cost of implementing the procedures in the report? >> sure.

so when we initiate a process of designing a workshop and holding a workshop and generating a report the staff team aims includes a number of people from our bureau economics. that is just our standard practice within the agency. so our petmeds workshop team worked with the bureau of economics. it reflects significant economic analysis by our staff internally , and understanding how economic theory would predict how prescription portability might impact prices for pet medcation. >> what are the general conclusions of the bureau of economics? >> so -- >> if you can summarize them. >> sure i would absolutely refer you to the report for greater details. it is woven in throughout the report an. on prescription portability, this is ultimately about consumers. it is about giving consumers information so they can exercise their choices in the marketplace.

that is fundamental principles of competition that work throughout our economy. we would think it would work the same here. if consumers have more access to information and more choices in the marketplace they're more likely to go out to use that information to generate competition and that should tend to drive down prices. we think it already has. we see for some pet medcations products where veterinarians may already be facing competition from alternative retail distribution, that has tended to bring down prices. so we would expect to see more of that. as far as impact on veterinary practice if they were to lose revenues from the sale of pet medcations because we understand that is a portion of their revenues right now, i think average is probably about 20% for our practice. 20% of the revenues come from pet medcation sales. so, if they are going to lose some of those sales, they might need to adjust their services and raise them to compensate. on other hand, if as we have heard there is already a significant amount of competition and veterinarians

already are building that competition into the price at which they sell their medications then we would not necessarily expect there to, them to lose very much revenues because their prices already would reflect that competition. >> just as, along, in your report, one of the statements made is more information regarding the secondary distribution system for pet medcations could allow for deeper analysis of the economic product safety concerns. in the year since this report was published have you in fact done that deeper dive? >> we have continued to observe what's going on in the secondary direction market. >> is there any supplemental statement the ftc has at this point a year later from where you were last may when this report was issued? >> we do not have a supplementary statement. as best we can tell things have not changed very much in the year since the report was issued. >> i thank you for your prompt answers to the questions. miss schakowsky, you're recognized for five minutes for

questions. >> as you said most manufacturers of pet medcations use 30 party distributors to sell products rather than selling to veterinarians or alternative retailers. they say it is thousands of veterinary clinics and hard for manufacturers to reach them without a centralized distributor. we heard many manufacturers and distributors signed exclusivity agreements that limit what products distributors can carry and who they can sell those products to. now the ftc has found that exclusively agreements are common in the pet medcations industry. could you tell us what terms these agreements require? >> we have not had access to or look closely at individual contracts so i can't tell you precisely what the terms of those are. our general understanding based on the workshop research.

a manufacture you are might reach agreement with distributor that distributor would only carry that manufacturers product or manufacturer, distributor would carry that product but not competing generic product. >> how do they differ between brand products and generic products? >> we think they have possible affect on generic competition. there are factors that affect generic entry. one of them would be if you don't have sizable market for generic drugs because consumers are not getting prescriptions for them there might not be big enough generic market for entry. we have the system that provides for automatic substitution of generic drugs. we also have situation where we mostly have insurance. so our insurance provide

remembers constantly putting pressure to drive down drug prices that leads to more of us seeking generic drugs or seeking generic drugs. we don't have that in the petmed industry so that affects the medication industry. >> i think you answered this. we want generic drugmakers to get their products to veterinarians and retailers to have access to branded and generic branded drugs. how can we have pet owners have that choice? >> so the position we've taken in our report we want more choices in the marketplace that will generate more consumer demand where consumers would ask is there a safe generic alternative? they would have a conversation with their veterinarian as part of that trusted relationship and start to explore those options. that in turn might put more pressure on manufacturer you

ares and the marketplace to create more generic alternatives. >> i'm looking at this chart. i don't know who prepared it. potential savings for pet owners. and we're looking at, like, remidil, generic savings, 53% over what would happen at the veterinary clinic typically. so, you know, there is a lot of money to be saved potentially. in the ftc report you noted that requiring automatic prescription release without addressing effect of exclusivity agreements would not solve the greater issue facing the pet medications market. can you explain why? >> the interdependence between those two issues as i explained in my oral remarks, if you have greater prescription portability, but the dribbletores of the medications don't have access to enough supply to fill prescription then all the prescription portability in the world won't really help consumers.

we see them as interrelated. >> is there a way to to indemand for generics without changing the current distribution system and distribution channel? >> i think by educating consumers about these options in the marketplace and again encouraging them to have conversations with their trusted veterinarians. these are deep relationships between people who care deeply about the health of the animal. access to affordable medications is a huge part of taking food care of your pet. i think if more consumers have the conversations with the veterinarians and talk about the price constraints they're facing, what options do i have out there in the marketplace? what can we do that is safe for my annal? i think those conversations will start to affect the marketplace, based on consumer demand. >> thank you very much. i yield back. >> gentle lady yields back. we recognize the vice chairman of the subcommittee, mr. lance, five minutes for questions. >> thank you, mr. chairman and

good morning to you, director. as i understand the issue, the bill that has been drafted may be based upon the model used regarding contact lenses and the thought was that this would increase access to contact lenses through online sales. but, there have been some negative consequences in my judgment in that space, mainly as online retailers may have abused the law to market and sell contact lenses to consumers without prescriptions, and that may have put consumers at risk by lessening the doctor-patient relationship and i am concerned if we replicate that model there may be concerns of safety regarding family pets and i'm interested in your views on that. and i'm also interested in what the agency is doing regarding contact lenses. this is a significant issue in

the district i represent. we are the medicine chest of the nation in north central new jersey. >> so we do see analogies between the situation with contact lenses and situation with pet medications. >> yes. >> we enforce the contact lens rule. we've seen in that market enhanced prescription portability has really opened up an entire marketplace of options for consumers. we think generally there have been significant benefits for consumers. i recognize safetying concerns you're citing. as a matter of fact, just recently in the last couple weeks the ftc sent out a series of warning letters relating to enforcement of the contact lens rule. some of those enforcement warning letters went to circles of contact lenses who might not be following the contact lens rule because they're filling expired or invalid prescriptions. however a number of warning letters went to prescribers who may not be honoring prescription portability requirement of contact lens rules. we're looking both sides but obviously safety is a

consideration. >> and do you believe that you will be able to give congress a follow-up report on what is occurring regarding the contact lens situation? >> we continue to look closely at contact lenses. there is a rule making proceeding open right now because the contact lens rule is up for review. so as part of that process we have solicited and received a large number of public comment. >> i believe in that space you received 600 and one this comments, is that accurate? >> that sound about right. thank you, mr. chairman, i would like analysis of this issue in relationship to the contact lens issue because i believe there are many similarities. i hope as the discussion moves forward we can examine this space based upon the experience in another space. i yield back the balance of my time. >> gentleman yields backs. chair thanks the gentleman. chair next recognizes i believe gentleman from california,

mr. cardenas for five minutes. >> thank you very much, mr. chairman. miss koslov, thank you for conducting public workshop to advance the understanding of this important issue. our family has three family members that are directly affected by today's committee topic and our chihuahua yorkie mix, sophie who thinks she is a person really appreciate this. she will act like she understands everything we're saying. our chocolate lab cocoa knows he she is dog. she is more well-balanced. and our cat gracecy knows she rules the house. we appreciate it and rest of the family. our entire family appreciate this committee is carefully evaluating the -- pet medication industry today. in your testimony you discuss automatic prescription releases and i have some questions. is, did the workshop that the federal trade commission conducted conclude automatic prescription release is the best

way to give a pet owner their portable prescriptions? >> the report did not make a judgment on what the best way would be to approach this. but we did conclude that greater prescription portability would be a very important way to enable greater competition in the marketplace. >> okay. did the workshop evaluate what the cost passed on to veterinarians for automatic prescription release might be? >> there is an extensive discussion in the report of potential costs an benefits, including costs that might be incurred by veterinary practices, yes. >> okay. apparently there is great interdependence between prescription portability and product distribution. is this second distribution system resulting in higher prices for pet owners? what is the effect there? >> we don't know the extent which the secondary distribution system, we have not been able to quantify the extent that might be increasing prices. based on our economic modeling and our understanding of

dynamics of industry we certainly think the way the secondary distribution system is operating right now is not as efficient as it would be if distributors had direct access to drugs for manufacturers. there is room to push prices down if we could fix some of the problems there. >> if product distribution remains the same, how much will portable prescriptions actually be used? what's the extrapolation there? >> portable prescriptions are already being used. there are a number of situations where veterinarians do honor requests of their clients. there are a number of times where a veterinarian doesn't carry a particular drug and they offer a prescription to their client. so this is already going on. i think additional prescription portability would enhance competition and lead to even greater competition in that space. i think if consumers are asking for more product ultimately manufacturers may need to rethink how they're handling distribution which may lead to more product flowing into the

secondary distribution network. >> so on that point in order to enhance choice should manufacturers be able to sell directly to alternative retailers? >> manufacturers can choose however they would like to sell their products. >> today? >> today. they choose today. they will continue to. they can unilaterally decide what is most efficient for them, what is most cost, profit-maximizing for them. i think as the marketplace changes and evolves i think many manufacturers may be rethinking their own economic models. their profit structure in trying to figure out how to respond to the changes in the marketplace. >> i have a good friend, cesar millan, who knows a lot about dogs. he told me something interest. when he went to germany, he found out if you have a pet, the pet doesn't need a license the human being need as license to learn how to have that person, that pet become a family member. i thought that was incredibly advanced. that being said, did your report

in any way analyze what best practices around the world might help us understand the dynamics they figured out over there, that we might learn from? >> so we did not look at that licensing issue. we did look generally -- >> what i'm saying on this subject matter, for example, germany, maybe they have crossed this kind of dialogue and these kind of regulations et cetera in their own country. that's what i mean. with all due respect us as americans we think we have done everything first or better than anybody in the world but when it comes to pets maybe we can learn from other countries of the that is my point of the did your analysis look at other practices around the world? >> we looked at other practices in the u.k. and that was area they're interested. fda has working relationship with competition and down terp parts in other countries. we were talking with our counterparts in the u.k. because they were looking at issue at the same time.

>> were we able to learn anything from them. >> mr. cart dean has, you're into your time, the bells are not working because of construction. i apologize to members we let things go. i want to let your question time go through. but we are going to take a brief recess. we will reconvene immediately after this vote series. it will not take long. [inaudible conversations].

[inaudible conversations] >> as you can see the hearing has now taken a break for a series of house votes. the votes are on a bill as the houseworks to authorize washington, d.c.'s school voucher program for another five years. we'll return to our live coverage when they return from the series of votes. meantime, here's segment of this morning's "washington journal on

mental health care funding. >> host: congressman tim murphy, republican from pennsylvania, congressional mental health caucus co-chair, you were featured in the student video. >> guest: remarkable video by a student. shows tremendous insight what happens with mental illness in america. lack of access for care. huge cost of lives. of the cost of productivity. great cost of pain and whether it was elected officials from oklahoma speaking or clinicians speaking from there and around the country it really is america's greatest health care embarassment. >> host: what is the federal government's role when it comes to mental health care right now? >> federal government under hhs, under health care and affordable care act, medicaid, medicare, pretty sizable it pays bills but creates barriers from people getting care. in terms of paying bills comes at multiple levels.

we pass ad mental health parity law, led by congressman patrick kennedy, led the charge. private insurance provides other health care should be on par for the brain health of mental illness. up to this point, still in many cases there is a certain wall that prevents people from getting care inpatient, outpatient. the second thing that occurred understanding what medicaid pays. 5%, this is staggering, 5% of the population who use medicaid consume 55% of the medicaid spending and almost all of them are mentally ill. it is a huge, huge cost. why is that? because a person with serious mental illness, 75% of them have at least one other chronic illness, half have at least two, a third have three. cronic illness, heart disease, lung disease, cancer, diabetes, huge costs in spending. they are don't follow through on care. they do not believe they have problems.

their lives are deteriorating. not taking care of themselves. they're homeless. also cost of jail, that you're 10 times more likely to be in jail than a hospital if you're severely mentally ill. if you're a minority it is even worse. these things multiply. there are federal barriers currently exist, if you are low income like medicaid, they don't let you see two doctors in the same day for the same sort of problems. so if you see a physician, family physician, and that doctor says, ma'am, your son is really showing some bad symptoms here. he is depressed, he is withdrawing from activities, his grades are going down. he is blacking windows in his room. he is irritable, all those things are zones something needs to happen right away. we have psychiatrist in our practice. we want you to see him right now. if you're in medicaid, that door is closed. we create incredible prejudice against impoverished mentally

ill. if you're mentally ill, three times more likely to be in poverty. you're in slow motion death spiral, cron illness, blocking care for you. you go to prison where prison costs are 20 times higher than outpatient care. two other major barriers the federal government has. one is the six teen bed rule. you can't go to a private hospital has more than 16 beds. they send you to emergency room. send you to general hospital bed. general hospital bed is much more expensive. private hospital, psychiatric hospital, may be 5, $600 a day. if they go to general hospital, 1000, $1200 a day. emergency room, few thousand dollars a day. you're sitting there waiting, in some cases laying on gurney a hall they don't have room. you're blocking other patients coming in. if the patient is violent, tie them to the bed at wrist, their legs and waste. they sedate them. this is cruel embarassment of america's mental health system.

what we're left with is a staggering number of people homeless, in prisons or if they are at home, and their family is told, we are sending them back home, good luck, then families say, tell us what is the diagnosis? what are we supposed to do? how do we handle this? we're not allowed to tell you anything because of hipaa privacy laws so good luck. so federal barriers continue to make it most difficult for the people with the most difficulty and the costs skyrocket in this process. >> host: we'll put phone numbers on screen. mental health care in america and role of the federal government. divided by political affiliation. tim murphy is also a trained psychologist forethe last three decades. congressman, what is the 16 bed rule that you? >> guest: it's a strange rule that you can't have more 16 beds in psychiatric hospital and get treatment.

i should say, cms, center for medicare & medicaid services came up with a variation which we're happy about but not totally helpful. that is they're changing for some cases a person can have up to 15 days per month of care, rather than worrying about 16 beds. 15 days per month. doesn't matter size of hospital. but here's the problem. if you're admitted on june 13th you need 20 days of care, you can stay there. if you're admitted on june 1st, and reach the 15-day limit it stops. i talked to head of cms what are they supposed to do? get transferred to general hospital bed or emergency room. wait a minute, costs are not only going up, but can you imagine if you were having heart surgery halfway through the doctor says, you know what? my shift is over. that is all they pay for. new doctor comes in, what am i supposed to do? we would never do that with any physical care but incredible

bigotry towards mental illness. we'll transfer you to another hospital. staff doesn't know you. even more important the patient doesn't know them. building confidence and understanding history is absolutely essential treating mental illness effectively. we will say, go with you will at stranger that don't know anything about you your nuance, symptoms or building empathic bond we'll start all over. federal government comes up with these bizarre notions that is helpful and it is absolutely not. if that is the case, if they come up with the rule, we're saying we'll work with them but we want them to collect data and tell us what happens to these people. i think it will cost a lot more than saying going to the emergency room, self thousand a day as i said or another hospital. what happens to them clinically? are they getting care or getting worse and discharged back on the street? many of folks with severe menial illness, not aware of they have a problem, about 40%, they don't know they have a problem.

they think their hallucinations are real, many end up going to jail. they go out have some violence, commit a crime. may be okay on medication initially and destablize after the medication begins to wear off. in the problems cascade. this is -- i don't get it how the federal government thinks they're saving money and saving lives. but we'll work with them on this and see what happens. >> host: in discussing this topic with the executive producer of "washington journal, if we walked across the street, saw somebody with broken leg we know how to deal with that, you call 911. you see somebody you think is mentally ill, what do you do? >> well, if that person is walking down the street, i see that the, if i'm walking in streets in washington, d.c., homeless person, ranting, raving, talking to themselves. they may be lying on a subway grate in wintertime. if that person is not in

immediate danger the police say say, is he harming anybody? no. some places they may check up on person, but if the person is not imminent danger they let them go. notice i said police. if you see some one twisted their ankle or grabbing chair chest, paramedics show up. paramedics are treating because it is a illness. when it is mental illness, bliss show up, if the person becomes combative, handcuffs and off in the squad car you go. by the way, estimates are a third, to half of mentally ill people in police encounter end up dead. have mentally ill person, think what happened in the capitol month or so ago, a man supposedly with mental illness, known to the capitol police, entering visitors center, see in his x-ray and backpack an pistol he reaches for it, pellet gun, police don't know that, but if you're police officer someone points a gun at you they shot

him. incredible restraint on part of policemen. they wounded him. didn't kill him. lots visitors around. 20 or more policemen, could have been disasterous scene, that situation repeats across the country every day how we treat the men alley ill and it shouldn't be that way. >> host: you have a bill to reorganize how mental health is, mental illness is treated in the u.s. and how 130 billion or so that the federal government spends is allocated. >> guest: yes. general accounting office told us that is the number. vast majority of that number is disability payments not treatment. of that then, there are some portion goes towards treatment but it is a farthing. we sinned 500 million to the states for block grant for mental illness. 600 million to the states for block grant for substance abuse. but the former head of the national institute of mental

health said the amount of money we spend in it country, dealing with mental health, health care issues, the lost wages lost opportunities all those things together is 444 billion, if you add the criminal justice system, we are at 500 billion a year. notice what i said. we send 500 million to the states. the cost is about 500 billion across the country. and, and, doesn't make sense. we're spending so little. states put money into that too. often times it is in the criminal justice system because after all if a judge has a mentally ill person who committed some crime they send him off to prison and state has to provide for them. if judge says, look it, we heard time and time before, it is not a crime to be crazy which i think is disgusting statement to make. not a crime to have heart attack, not a crime to have diabetes or cancer but we don't say we're not going to do anything for you. so we have this perverse notion is most compassionate compassion

is do nothing at all and let the person live in filth and squalor and dehumanizing environment. we relegate them to the back room or alleys of mental health care. if you ever saw community mental health clinic, unless it is new one, old, usually not that nice. furniture is old. you go into a cancer treatment center, heart treatment center, something like that, beautiful buildings, hospitals, show them up front, look what we do, don't do the same for mental health. that is part of a stigma that maintains low level. my bill would change a lot of things. we would restructure the organization of smsa. have accountability for grant programs. they have some good programs. we want to make sure some of the things they fund that aren't very smart change. we want assistant secretary of mental health to work on 130 billion -- it is 112 programs that the federal government has for mental health across eight departments hud, hhs, va, et cetera, those programs don't talk to each other.

26 homeless programs the federal government funds. don't need the money in washington, d.c., get it out to help the homeless. same day doctor rule, 16 bed rule, some confidentiality rules all those things our bill addresses hr-2646. >> host: we'll get calls in. john from pennsylvania. you're on with congressman tim fur my. >> caller: thank you, congressman. my question was i had seen a thing on, remember when the reporter was shot on live and the fired employee that worked there? i had watch ad show. he had been shuffled around. he had been suing the stations. he had definitely had mental problems. and hr, they didn't want to deal with him because they didn't want to get sued. then the tragedy happened. and then instead of dealing with the mental issue of this gentleman, it was all put on the guns. let's get rid of the guns. the guns is the issue.

that's what i'm saying. they don't want to deal with mental health. they don't want to stigmatize the people. they don't want to put them in institutions because that doesn't seem right. but yet, when these people get ahold of guns, in this case this gentleman got it legally. he purchased a handgun legally to commit the crime, nothing was said about it, nothing was said about the responsibility of hr and stations. it was all dumped on the law-abiding gun owner. >> host: let's leave it there, get a response from congressman murphy. >> guest: john, you're bringing up great point, when these tragedies occur, 1200 homicides occur by a person mentally ill. granted most mentally ill are not violent at all but we know those with severe mental illness, if they're not in treatment, they're 16 times more likely to be violent than someone who is not.

not always homicidal violence but even worse, men alley ill, 16 times more likely to be victims much fraud, of rape, of abuse, of homicide. around so those things should also drive to us do something. when you mention about asylums, yes we used to put people into asylums. we need to get away from those days. those were massive warehouses of cruelty. they began in the 18 hundreds. dorothy dix was person to get those things moving. to get them ought of jails and housed and shackledded to walls and abused. you know what? as we come full circle, we closed asylums because of abuses an importance of protecting someone's right. we closed them. what have we done? we haven't changed much. we replaced psychiatric hospital bed with jail cell or homeless person on the street or unfortunately, county morgue.

i believe that is, reasons why we should be dealing with this and not talk about what is in their hands. let's address what is in their minds. >> host: woody calling in from poughkeepsie, new york, on the independent line. you're on "washington journal." >> caller: good morning, senator, congressman, sorry. >> guest: don't demote me. that's good. >> caller: i'm from poughkeepsie, new york, we used to have large psychiatric center in the area. it was closed down in the name of privatization which promised cheaper and more effective. now we both know that, those two words are mutually exclusive from each other, okay? so i'm just wondering could we go back in that direction? you were just talking about asylums. i wouldn't categorize this institution that we had here as an asylum but they were giving,

you know, good care and probably as good a care that -- i work in the health field and i work in a nursing home. i would say better than 80% of the people have we have some sort of psychiatric problem. and it's not being done as effectively because once again, cheaper, or effective, they just don't. >> guest: let me address how this works in the movement to close those large institutions, it was driven by two parts. some people thought they could save money because they were significant part of state budgets and another group working on rights of patients because many people were assigned to those places, maybe police, court and family members and stay there for long periods of time. it was important to protect their rights so they weren't simply put into institution without their options of having control of their treatment. what happened was states didn't

replace it with as much community-based care as needed. that's where people ended up being arrested and going to jail. because we've also focused on this issue of their rights and saying you can't force someone into treatment, you can't do this, can't do that. what we refer to them as letting them die with their rights on is terribly cruel. new york changed some of this. i think it was kendra's law, aot, assisted outpatient treatment. what happens there, if person has history of violence and incarcerations and falling apart basically, they're not in treatment, a judge may see them so their rights are protected and say that, look, when you are in treatment you do better. we'll assign you to outpatient care, not in institution, but outpatient care. what they have found is the results are staggeringly positive in terms of not only are people saying, hey, my caseworker was doing well, i did well, but found reduction of near 80% of arrests and incar

races,0% homeless reduction, for other health care costs and costs went down by half. so i think that's much more humane to do that. new york has had some positive aspects. it was nice to see that but new york also spent more money on outpatient care. i think overall they're seeing much improvement there in many cases but they're not done. >> host: mark from sebastian, florida, on democrats line. go ahead. >> caller: good morning, thank you for my call. i have questions for representative murphy. he is school exist or psychiatrist? >> guest: psychologist. >> caller: i was watching a program this morning with a committee, congressional, talking about immigration and how many people they let n when the congressman get up there, they're there for two years, they get up and go into this badgering the witness or the expert. why don't you know -- very

simple thing. isn't it sick and tired of hearing our congressman, no matter what party, no matter what division of the senate or the house, we can not leave this to our children on grandchildren. we are leaving it to our children and our grandchildren. >> host: mark, in sebastian, florida. he is little bit off topic here, congressman. as a trained psychologist, what is your take? you're in your seventh term of congress. what is your take on congress and mental health? >> guest: addressing that issue i'm chairman of oversight and investigation subcommittee of commerce. we have witnesses before my subcommittee dealing with issue of mental health, dealing with health care, sometimes a witness is stalling. they haven't done their work or giving information that misleading, when members of congress say wait a minute, tell me the truth on this. when we have had hearings with the smsa, substance abuse and

mental health administrations services. why are you spending money $25,000 on a painting two people sitting on rock, $400,000 on website for sing along songs for children? why are you giving grants for people to make a fruit smoothie if they're stressed. website for people in new england stressed about snow? please, that has nothing to do with serious mental illness. they don't mention schizophrenia or bipolar in their 40,000 word document. it is appropriate to say where is the money going and what are you doing there? with regard to the overall issue -- i don't diagnose my colleagues but i do know this. tension is part of politics since cane and able first started disagreeing. even though somebody may disagree how we do this there are some very compassionate people among my colleagues who want to do something. we might disagree how we do it. that is where you debate an talk.

let me tell you about another thing, members of congress are representative of america, just like americans struggle with mental illness in their families, a lot of my colleagues know this first-hand too, themselves, their spouses, kids, friends. come to them to say, how do i handle this? they feel that same pain. they feel the same misery trying to do something. quite frankly they feel same levels of stigma and embarassment, what if word got out of my struggles? i say we all deal with this. it is time we say, that it is okay to acknowledge that just like you may have had heart disease or cancer. they have struggle with this. in america we make it so difficult to get care and we say embarassment to have a brand of mental illness we overcome that. when you see members stand up with courage, go back to patrick kennedy, courageous man, he and i didn't vote same way on many things but you know what? i admire him he said he had

substance abuse problem. struggled with aspects of mental illness. he is proud to say he is getting help and getting better. god bless him. i want more people to do that. congress have good people that try to do right thing. that doesn't make good copy for the news. >> host: what is the status of your legislation? >> guest: it is in energy and commerce committee. moved out of the health committee. fred upton out of michigan. we're working on wording that help deal with some of the differ provides on this. >> host: where are the divides? >> guest: biggest divide before was cost, before the congressional budget office said 10 years 40 or $50 billion to deal with the 16-bed rule now that cbo, center for medicare, medicaid services says they will move forward on this 15 day rule, that now scores zero. i believe we should codify that, authorize that, go with that and

then do intense study over next year how is that working. that was probably the biggest hurdle was the cost. we are also looking on structuring some other things. we're working for a while how do we handle the hipaa rule, what i call compassionate communication some people say never release any records to anybody if that patient doesn't authorize it. i look upon this as clinician, talking with so many thousands of families across the country, when a person hit this is wall of, they don't understand their illness, may be hallucinating or delusional, may have diabetes or infectious disease and not seeking care, don't understand it, i want there to be a little keyhole of compassionate communication where a doctor tells a family member, not telling you therapy or noll at the timing you anything else, but your son needs endocrinologist because his diabetes is getting out of control or you have infectious disease and need to continue to taking antibiotics. we're trying to work on that

satisfy members concerns and deal with this problem. >> host: mary from scranton, pennsylvania on republican line. you're on with congressman tim fur my. >> caller: yes, i have a comment for mr. murphy. i want to congratulate you. you made a comment on the television a few minutes ago about the people in the hospitals, how they get transferred around from one hospital to another and how the prices go up. sometimes you're in the emergency room on a gurney and you know, you're there for hours. i am in very poor health. i've been in the hospital and out. last time i was in, i got -- from the doctor, tells me what am i doing here again? you don't have enough to admit you. and i did. mood blood pressure was over 200. and something has to be done with the mental health for the

people in our area. they're being treated terrible. the prices are terrible. they don't even want to pick up the prescriptions or go to the hospital anymore because we can't afford it! >> host: thank you, mary. >> guest: it is important for americans to understand that i want to show you. i don't know if your camera -- >> host: hand it to me i can put it under the camera. >> guest: national poll came out last week people who support the legislation. the numbers are staggering. we did a poll would people more or less likely vote for member of congress support this bill. we saw among republicans democrat, independents, the numbers, in 60, 70, 80 percentile. americans want there to be changes in these things. we'll drive that home. >> host: well, then with this kind of support, do you have democratic cosponsors? do the democrats have their own alternative? >> guest: 51 democrat cosponsors.

180 in all. democrats have alternative. they're well-intended. some of the things we have in there to accommodate particularly grant programs. we need providers, more minority providers. there not enough latin, african-american, native-american psychologists out there. half the counties in america don't have any psychiatrists or school it ifs -- psychologists at all. we want more telemedicine. people are used to talking over the cell phone and computer. there are many aspects there. they have good points. want to accommodate those and continue to work together. >> host: is there issue with gun control on democrat side? >> guest: that is separate issue. people, as i said before, most mentally ill are not violent. when we see a mass murder however, about half of those involve someone with serious mental illness. only 10% of murders over all are

tally ill but one is too much. we see big headline events and find that person was untreated or undertreated mental illness it is concern. we can deal with that to help them. the idea is to treat tear illness. people say should never force a person into treatment. keep in in mind, most states have on the books a law says if a person has involuntary commitment, their name goes on the list, they can not purchase a begin. so i caution those who are against any involuntary commitment at all, those are folks saying we have pretty serious problem. i think in those cases they shouldn't be able to purchase, possess or transfer a firearm. but, what we can do is continue to work with people to help them be better. people have anxiety, stress, depression. many veterans i work with, i'm a navy psychologist. they have no concerns about going hunting or as a sport for them. they have their illness under control. that is fine. we need look at other things

enforcing laws out there. more focused getting treat illness treated. >> host: joanna in maryland. go ahead. >> caller: good morning. i'm retired case manager with a number of clients with severe mental illness. i see the same problems exist today when i was in practice. . . and also a lack of supportable programs. the o are a number of people wih serious mental illness who, if

come with support and appropriate medication can actually be productive and work. it's flushing to me because i don't know if the problem is a lack of money. i think that is the case in terms of treatment programs and -- >> we were in the portion of the member questions and we adjourned. so the church as public to recognize the gentleman from indiana five minutes for questions >> thank you, mr. chairman. like so many americans and the n like some of the panel we heard from our members were from today, animals have been an integral part of my life since childhood including the 10 f. year-old yellow lab more than just a companion or hunting dog with my husband but to a member of our family. and like them in that we need to make sure he has the medicines come all the up-to-date vaccines to keep them healthy and active. i also know because indiana is

the home of one of the nation's largest animal health distribution and manufacturing companies that it takes a lot with respect to create medication and vaccines and so forth for our treasured pets. whether it is price competition from medication, i know these things that don't affect consumers but also affect the manufacturers and the scientists in indiana developing these products so i'm looking forward to hearing not only from you but to the second panel as well. ms. koslov were you able to gather the information and what have you done with respect to the analysis of i believe about 36 days right now but either the state or independent licensing boards of self-policing associations, what can you tell us about whether not veterinarians are actually withholding prescriptions from pet owners across the country? wind 36 states already have laws on the books and in place, can

you share with us a bit more about what practices you most concerned about? >> so it is our understanding for a number of states to have these laws on the books, and we realized that many veterinarians are on the client request for prescription. however, there are some states that do not have these rules in place. moreover, there are no states that require a veterinary government would offer a prescription. and in our experience base on anecdotal evidence and the testimony of the workshop we think there are large number of consumers who just are not aware that they have the right to ask for prescription and that would give them the opportunity to to shop around and work a place. so we are looking to enhance that part. >> i have listed all 36 states requirements but certainly of the 36, people who ask for a prescription in all likelihood, this afternoon is required to provide one, correct?

>> it is our understanding they would be required to provide one. however, we've received a number of anecdotes and, as part of the workshop that some consumers are not getting prescriptions when asked whether. >> wouldn't that be a licensing problem or something that the consumer would then be able to file a complaint with the licensing board if it were to take place at least in the 36th its? >> so consumers could choose to file some sort of complaint with the licensing board, or in some states it might be a law or a regulation. so it could be the board or it could be if it's an ethical code industry that requires veterinarians to do it there might be other place they could complaint. >> you know if those states have been filed, if so how many? >> we did not do an exhaustive study of how many complaints were filed in each state. >> have any been filed? >> are not aware of was in have been filed in those days. we did receive a number as part of our comment process. >> with a number the end of 36 states or any other states that

have not yet moved in that manner with respect to regulations? >> i don't know which state they were in. >> as the ftc ever done any consumer campaign to inform consumers that they can ask for a prescription? >> so they would issued the pet medications report last may we did issue at the same time a consumer education peace that came to our consumer protection. we should with a number of stakeholders in this industry and encouraged them, veterinarians and other interest groups so that concerned would get better information and be educated. >> you are aware of concerned by the fda regarding medications obtained online and also were of some safety issues regarding something that congressman plans from jersey product with respect to contact lenses obtained online. has the ftc taken any steps to educate consumers about safe sources of was its contact

lenses or whether it's online pet medications? and if so can you explain what the ftc is done with respect to online purchases of medication? >> in that consumer education peace, one of the guidance pieces we get to consumers was that it would be helpful to look at the mac that is accredited pharmacy if you are looking at purchasing medications online. that process involves a number of safety mechanisms to ensure the authenticity of the medications had to make sure the process is the safest possible. we did encourage consumers. >> is the ftc conducting any investigations of online purchases? >> i can't comment on any non-public investigations and whether we're doing that or not. we are generally aware there's a robust online market place for pet medications and we're doing our best to keep an eye on it. >> thank you. i yield back. the gentlelady yield back. seeing no other members of the subcommittee, it would now be my

great honor to recognize a member of the full committee from oregon for five minutes for questions. you might have to move to a microphone that is actually working. thank you for being here, doctor. >> thank you very much, mr. chairman. ms. koslov, i appreciate you being here. difficult position, ftc trying to talk about health and safety and price competition at the same time. i guess make a comment. in your own report you acknowledge there is increase competition in the veteran a prescription marketplace. prices are going down already. pet med express consent to put 5 million customers, 50% of the business being prescription meds. i guess i would ask where is the problem? where is the problem? >> we thin think the consumers benefit whenever that additional information that enables them to exercise their choice in the market place. based on the record we developed

as part of this workshop, although our understanding is many consumers have a very close and trusting relationship with her veterinarians and having the discussions, we think there's room for improvement. improvement. >> there's probably always room for improvement anything. it's a point of diminishing return. the talent a little bit is impugning my profession. i've been a veterinarian for 35 years, and i could make a lot more money and a lot of other professions. i went to school for an exhaustive period of time, in my opinion and i told you i just veterinarian medicine because i love working with animals. the prescription peace as a small part of what we do. some of the testimony with all due respect is outdated. 20% of the business being prescriptions, i'd wager you in this day and age it's much less. my own practice over time back in the dark ages when i started, medications were big part because the were not a lot of opportunities elsewhere. that has to change. i think it's changed for the

better for a lot of the folks out there, whether the client or the actual content itself to the trend just a you are aware and my colleagues is to pay for services, not for items suspend. much like what we're seeing in human medicine. is a value-added reimbursement system. veterinarians have voluntarily over recent years, last i would take six, eight, 10 years reduce the number of vaccines they did because research shows they don't need to be doing that. i think that's a tribute to the profession. it's not about making money. it's about providing the best health care to the pet. i appreciate the ftc comes from a different point. that's not what veterinary medicine is all about. we are about protecting the health and safety of these animals. to be honest, as ms. brooks pointed out, these so-called

complaints you can verify where they come from, who the alpha. my guess is they come from the pet med strippers after who are come one single motivation is to make money. i respect that this is america. it's a market system but they didn't have the best interest of the pet at all in their site. the biggest thing i would recommend ftc also look at as they go on with come if they will go on with this, is to look at what's the implication of allowing these big national distribution chains to issue prescription medications at liberty? in other words, will we find into veterinary fiel feel that u have a prescription this is 30 days worth of thyroid medication for your animal, and pet med will come back and give them 120 days. how does that give the veterinary a chance to make sure the client does not go get what you say for the pet to make sure

that that is getting the data checked to make sure the medication is working correctly for them? there's a huge disconnect between where i think you're going with regard to veterinarians act as a real worry is how these prescription distribution business companies, purely to take advantage of a marketplace. i am all in favor of the free market enterprise. i don't try, i always encourage, most veterinarians to get the best deal. they come to us initially, he did an initial prescription, if it's chronic medication. consumers are sophisticated. and maybe if you don't understand they can go online or get medications elsewhere but i think in this day and age most of them are versus 50. i have clients as i can i get my hard-core from somebody else? sure, because i'm not making much money. probably losing money on it because of the competition. that's good but it's there and kiss my clients need in a crunch. they know i will be there for them.

pet meds may take 24, thirds hours to get them there need medication. i would ask, at the health and safety thing. that's something that has been totally missed in the discussion at this point in time. the other issue i bring up real quick and hopefully it will be commented on the second is the idea that some of the distribution system is limiting generics for veterinary patients or clients. nothing could be further from the truth. i get calls all the time as a veterinarian, member of the kind of congress on we're having trouble getting generic medications. it's not because of the distribution network. it's because the consolidation that's gone on the generic industry, some of the health and safety standards, some of the people doing these things. as a whole different subject. the idea this is a problem for generic distributions is completely wrong. as a matter of fact, if you can't get it through distribut

distributor, most of the prednisone prescription for go through a pharmacy for goodness sakes. that's getting to be difficult to afford compared to the oldend days. prednisone used to be very inexpensive, wide, broad array of effectiveness. one gene to check on. it could cause serious problems. even if it's generic doesn't mean it doesn't need veterinary supervision. it's important to understand what's going on. the basic issue we have is who do you trust ask is this about trusting pet meds, purely from a business standpoint to make money off of your pet? or is this about trusting your veterinary which is the best interest to you and your pet in my. put all but of the heart into the business background you're using as you before. with that i yield back. >> the gentleman yields back. the chair recognizes the gentleman from from oklahoma

mr. mullin to five minutes for your questions please. >> i'm not sure you follow that up. i think you summed it up pretty well. i've also got a letter here about 2% of the record from oklahoma state university from the team that also opposes this. -- the dean. i would like to follow up on a question. was there an epidemic that people were reaching out to you on asking for this to happen? was there an over swell of the public that was saying you're being cheated, we are being taken advantage of? we wanted to be required that all veterinarians write a prescription before they can give the drug to us we have an option? was that taken place? >> our study was part of a legislation original introduced in 2011. the reason we -- >> prompted by what?

>> we don't know what it was probably by but the legislation is enacted would'v would have gs rule making authority. given that -- >> what did the study come up with? did you find out there was a large outcry from the public that was wanting to speak with one of the things we need to study was that the legislation would require prescription -- >> no, but i know, but did the study come out and say wow, there's a huge problem here? >> we found that there were and number of consumers who were either unaware of -- >> what's the percentage that use? it does look, i've lived on a farm my whole life, and this whole comparison that you're using the same legislation for contact lenses, huge difference, big difference. contact lenses people didn't even know they need a prescription. they didn't understand the difference between glasses and contact they didn't understand the reverse effect would happen. my kids wear contacts and so did my wife until she had lasix, but

they didn't understand a different matter you put into i could cause problems. they didn't understand there's a difference between one contact brand at the next brand. this is that macs that are there with their patients, that are prescribing the medication right thing. is already over 30 states that already have legislation in place that says that if a patient asks for it, that the vet will provide it. and i would say the other states, the vet we do it anyway. so why? tell me the percentage to make you say that this has to be the legislation that you guys are proposing. all that sounds like is more regulation on an industry that is struggling the way that it is now. there is a shortage of vets, especially in rural america. we cannot find enough of them. this is just another reason to

keep people out of it. >> said the commission hasn't taken the position on the pending legislation, so the report focus more qualitatively on what's going on in the market -- >> but you supported so you have -- >> the commission has not come out in support of any specific legislation. >> which is essentially saying that you support the legislation without saying you support the legislation. that's the way we do all the time up here. so my point is, is why? what was the percentage that prompted you to think that this is a good idea? >> i don't have a specific percentage for you. the report focus much more on -- >> just another piece of regulation that is being pushed out without the need for it. >> well, we are not pushing the legislation. we are responding to the legislation. we identified a need from consumers. consumers need more information -- >> was there a lack of information?

>> our understanding of -- >> what was the study, you are speaking to was a lack of information so speak in specifics by saying -- i don't want assumptions. what's the percentage that said that there's a lack of information to the consumer? >> i don't have a percentage for you. i would point you to the record of a workshop and our -- >> so you're saying there is a lack of information to the public. you are making that a general analysis, and you're making it off of your belief that there's no analogy to back that up. >> we are making it based on the record of the testimony at a workshop, several public comments and additional research about -- >> what was the percentage of the 700? >> we did not quantify what percentage of consumers -- >> i think that would be pretty important. don't you? if we're going to come out in favor of legislation which i know you haven't but you have, wouldn't that be important for this committee to no? >> i don't think that we need to be able to quantify a specific

percentage of consumers who -- >> yes, you would because if there's a few bad apples, let's go after the bad apples, let's not go after the entire industry and one size fits all approach that we do so often up here. i appreciate the position you are at and appreciate you coming and talking to us, but even though you're not supportive, you are speaking in favor of it, yet you are not able to tell us why you wer you are speaking inr other than you're saying that consumers need it but you can't tell us why the consumers need to. i yield back, mr. chairman. >> the gentleman yields back. the chair recognizes the gentleman from -- say no other members wishing to ask questions, i do what you think i would is for being here today. ms. brooks had to leave and we will try to get a question for the record inviting it to you. i think this is an important point, the number of complaints received in the types of complaints that were received. so if we can get some

quantification of that, i think that would be helpful to the subcommittee. i do also want to stress this is not a legislative hearing. this is a hearing that was called on the basis of the report. and as you commented, you did the report because you saw legislation that would require you to enter rule-making so it is proactive. and i appreciate having preventive medicine. i am a believer in preventive medicine but i do want to stress this is not a legislative hearing on a particular piece of legislation. does the gentleman from illinois seek -- >> i just want to make a comment. this hearing was requested by the majority based on a report that came from legislation that had been suggested, and i just felt the tone of the questioning was a bit of badgering of the

witness who was fulfilling her job. and i appreciate it at the federal trade commission. and given the number of pet owners, i think the issue is certainly important to many, many people regardless of whether or not there is a percentage known of how many people. the idea, the possibility of more competition was raised in a piece of legislation that would have affected the federal trade commission the so of want to thank you for the study that was produced and that, of course, it's always up to us on whether not we proceed forward with any kind of legislation. i yield back. >> the gentlelady yield back. the chair thanks the gentleman. i do want to thank award is for being here today. appreciate your forbearance through the voting process that we took. this will conclude our first panel. we will take a brief, underscore

brief recess to set up for the second and the committee will resume at that time. the committee stands in recess. [inaudible conversations] [inaudible conversations] [inaudible conversations]

[inaudible conversations] [inaudible conversations] [inaudible conversations]

[inaudible conversations] [inaudible conversations] >> i will call the subcommittee back to order i want to thank everyone for the patients, taking the time to be a today. we will move into the second bill for today's hearing. we will follow the same format as the first ever each witness will be given five minutes for an opening statement and then we will have questions for members. for our second penalty of the following witnesses. mr. nathan smith, the vice president of true science, and

doctor john de jong, chair of the board of directors of the american veterinary medical association. we appreciate both of you being with us to this point. will begin the panel with you, mr. smith. you are recognized five minutes for an opening statement. >> mr. chairman, ranking member schakowsky and members of subcommittee. i am the vice president of strategy and international for true science. i appreciate you all i need to testify today. true science is a pet medication and wellness company founded in 2010. we deliver premium prescription and over-the-counter medication and veterinarians recommend a product but we are dedicated to pet owners, the two other immigrant households had at least one dog or cat. americans love their pets. they provide companionship and comfort. it's a part of our families. which begs the question, shouldn't we have the same access to affordable medications for our pets as we do for

medication for our children? to think access to generics, the same right to choose our pharmacy. we believe we should. that is why we support the fairness to pet owners act, a bipartisan bill to give pet owners the right to copies of pet prescriptions so they can shop around for the prize, service and convenience which suits them best. this bill will help pet owners and their pets. first, the 80 million at household is a pets will save money, have more choices and better access. second, the marketplace will be more competitive and grow. we know competition and free markets work. third, our pets will be better off with medications more affordable and easy to obtain. pet owners will be better able to care for the dogs and keep them longer. at the outset let me make clear we cherish our vets come as to pet owners. we entrust them with the care of the pets we love. this is not an us versus them type issue.

we see them workplace and its potential differently. we believe that if the market for pet medications is open to competition, everyone will benefit, manufactures, veterinarians, pet owners and pets alike. today the market for pet medication is bifurcated between those who can afford to buy pet medication and have reasonable access to clinics, and those with low incomes or who did not have ready access. for pet owners who get their prescription, the savings can be significant. if we can pull up the chart, and this is the page that was referred to earlier, our guard is a leading heartworm preventative. pet owners can save around 20% if you buy from a big box or club star. 25% buying online and 35% if they purchased the generic. a painkiller used for treating arthritis in pets.

pet owners can save 22% at big box clubs or stores, 28% online and 50% if they purchased a generic. mr. chairman, in announcing this hearing you asked whether the federal, whether federal involvement is needed in the back of their prescription medications base. that is an important question since american households spend $7 million every year on pet medications. 5.2 billion of which requires a prescription. the fact is the federal government is already involved in the pet medication space, and in a major way. the government prevents pet owners from purchasing most pets without the approval of the prescriber, including medications pet owners and other industrialized countries can purchase over-the-counter. if the federal government is going to help pet owners you can't buy this without a prescription, shouldn't he give those owners the right to copy their prescription so they can shop around for the price,

service and convenience they prefer? the problem is anytime the government restricts access to a product by making it available only by prescription but permits the prescriber to sell what they prescribe, it sets up a conflict of interest in which the consumer is but squarely in the middle. pet owners must ask the buccaneering on whom to rely for the pets health care for permission to take their business elsewhere. that is only if pet owners know they have a choice. policies and laws requiring pet owners to ask her copy of the prescription simply do not work. we know they don't work. otherwise far more pet owners would be buying generics and saving 50%. just like they do with human medication. these policies do not solve the conflict of interest. they don't let consumers know they have a choice. they lead to discriminatory prices. they deter interstate commerce and they are not enforceable.

rather the solution to this is simple, it's easy and it is proven. simply give pet owners the right to a copy of the prescription without having to pay a fee, signed a waiver. there is an easier more efficient are more effective way to let pet owners know they have a choice to its work with human medication, with eyeglasses, contact lenses. they will work with pet medications. thank you for considering our views. i look forward to answering your questions. >> that chair recognizes dr. de jong for five minutes. >> good morning. my name is dr. john de jong, chair of the board of directors of the american veterinary medical association and timely companion animal practitioner in massachusetts. the american veterinary medical association represents more than 80,000 members worldwide in case of why friday a professional activities and dedicated to the art and science of imaginary medicine. everyday my staff and i strive

to serve the best interest of older animal patients and their human owners to weather to routine visit or an emergency we all want our pets receive the very best care. veterinarians understand their clients must make financial decisions when planning and paying for services and medications. which is exactly why we support policies that give our clients the flexibility choose where they fill their prescriptions. however, the fairness of the pet owners act will require patronage to provide a written copy of every prescription for companion animal whether or not the client needs or even once it. this is unnecessary and will place undue regulatory and additional burdens on veterinarians and small businesses. though not required by federal law, the avma's ethics and its policy on client request for prescriptions call on patronage to write a prescription in lieu of dispensing medication would decide by clay. the majority of states have similar laws or policy.

in some cases medications are only available through a veterinarian. negating the need for a written prescription. in other situations the client might choose to the medication dispensed by the veterinarian for a variety of reasons including convenience and timing is. but if this bill were to pass on veterinarians were to be required to provide the written prescription to these clients, take a piece of paper back and dispense the medication. this creates an administrative burden to veteran into should be spending the time and resources taking care of their animal patients. although some of the bill's advocates claim veterinarians are only interested in profiting from prescriptions and ask him that is not the case. the report issued by federal trade commission staff in 2015 did not find evidence of veterinarians withholding written prescriptions from their clients. until we have real evidence showing a problem exists, it is premature to consider such a sweeping federal mandate. 36 states have laws, regulations or policies that require veterinarians to provide their

clients with a written prescription upon request. if claude steele these requirements are not met, they confront a complaint for unprofessional conduct within the state's veterinarian licensing board. even states that is not adopted laws or regulations, state boards of veterinary medicine could find that it failed to honor a client request for prescription constitutes unconditional conduct leading to discipline against a veterinarian. in addition to the threat of discipline veterinarians and other incentives to honor claims request for prescriptions. affectionataffectionate who dens unrequested risks alienating clients and harming his or her practice, in cases where the patient's condition may worsen quickly without medication, and the client wishes to fill the prescription at a pharmacy, denial of a written prescription may place a veterinarian at legal risk. the ftc report concluded more study is needed on whether competition in the pet medication industry is affected

by consumer knowledge of and access to portable prescriptions. there is no evidence consumers in states without the requirement are adversely affected as to price or quality of pet medication services. in addition to consumer outcry that would demand such a dramatic remedy simply does not exist. if pharmacies believe consumers are unaware of the option to opt in products from them, then they are free to market and advertise their services. much like they do for other products. we understand the financial burdens facing many of our clients and we all want what is best for a pets welding. what we do not believe that this legislation will advance those goals. we are honored by the ongoing confidence and trust of pet owners, and we look for to maintain that trust. thank you. >> that chair thanks the gentleman. that chair would first recognize mr. mullin from oklahoma five minutes for questions, please. >> thank you, mr. chairman. and if i come across, you know,

i guess badgering them is not managing. its passion and frustration. because badgering to me seems like someone that's trying to pick a fight. i am not someone to pick a fight, but i do have frustration when we have something that is claimed to be needed and it's not needed, and yet the vets themselves and associations are saying they don't like it but yet they ar are saying the undecideds think there is a need for it. mr. smith, as you and i spoke in my office yesterday, the day before yesterday, we had a cordial conversation and we agreed to disagree on the issues. but i do take some, i do take, have some concerns about one thing that you said a while ago. you said that if the system doesn't work, you said if it did work essentially there would be more prescriptions being bought online or from pharmacies.

and by summing up your opening statement what you said? >> as part of a consortium of organizations that support this bill, we work with a lot of the leading pharmacies in the country, but also have online pet pharmacies that are part of the. everyday experience thousands of people who -- >> but you said it wasn't working because there wasn't enough prescriptions being bought online and through pharmacies. is that fair to sum up what your statement said? >> as a result of people not being able to get the prescriptions and having the intent or -- >> but you are basing that on what? the fact that there's not enough people buy it or maybe there's not a problem with that? >> i am basing it on experience the members of our consortium -- >> which are who? >> the national committee pharmacist -- >> but these are not the patients are the vets? >> these are the licensed pharmacies that have -- >> but they are not [talking over each other]

>> i'm saying you are basing your opinion not on the vets or the patient's, the consumers. our data when asking for it or is it your clients pashtun are they the ones asking for it speak with everyday thousands of pet owners show up to licensed -- >> i'm asking -- >> and we are basing it on data. spent on the asking for it speak with yes, they are asking for it. >> who is asking for it. >> pet owner succumbing to every walgreens, wal-mart spent they already have prescriptions. >> no. 10% of people who show up have a prescription. despite wanting to buy because of -- >> did ask, have they asked the vets for one speak with yes dear spirit the doctor who just has that says there is a system in place. the question i submitted for record already specifically stated to to regulations that require them to do that even

outside the states that don't have it. so i don't think you're actually getting the correct information. also want to get a deferment out of time. you making this doesn't go to large animals. it specifically goes to companion pets. is that what you told them i office? >> yes. >> what is considered a companion pet? pigs are considered companion pet now. wouldn't that open the door to large animals? i mean, shetland are considered a companion pet now. a lot of people consider those forces. wouldn't that be opened the door to large animals? >> as we discussed in your office, our intent, the $7 billion be spent on pet medications is largely for dogs and cats. >> but this, my point was this intent opens the door to larger regulation. they goes into unintended consequences. once you go down this road, how

do you stop at? how do you put it back in a box? and i'm really concerned that we are going after an issue that you're in favor of that isn't needed. pitches under regulation as i stated earlier that is already hurting your i haven't had anybody to actually give me the numbers of was causing the support for this to go through, other than assumptions. that's simply what i'm hearing from you, too. while i support your position to be able to have an opinion, i do think you're on the wrong side on this. i yield back, mr. chairman. >> the gentleman yields back. the chair recognizes the gentleman from illinois. >> so as we have heard

exclusivity a crevice between manufacturers and distributors, to acquire the medications they sell, the secondary distributo distributors, as much as 25% of all pet medication being sold in the united states may have been acquired through secondary distributors. mr. smith, is this they get consistent what you are saying in your experience? >> yes. we are a second or distributor here so we supply all the leading human pharmacies, the pet medications they have available, both rx medications required a prescription and some of the leading over the county -- counter medications. we've had in terms of attempts to supply our generic, for instance, to veterinary clinics, the leading distributors for drugs going to veterinary clinics often times have agreement that will not allow

our generic medications to go to the veterinarians so long as the brand from the pharmaceutical company is being offered through the distributor. >> to obtaining the medications, second or to sugars have to buy products that are diverted from the traditional supply chain. in some cases secondary distribution require medications by purchasing overstock from veterinarians, is that correct? >> yeah, that's correct. resource in a couple getaways. sometimes just as you mentioned will buy excess inventory from veterinarians. sometimes we buy straight from distributors. and at other times we even had we been able to sourced direct from manufacturers. so different drugs travel in different ways. we carry a wide range of medications, but we have a broad array of ways that we get the product to then sell on to human

pharmacies. >> so dr. de jong, has the american veterinary medical association survey veterinarians to find out how widespread the practice of reselling to secondary distributors is? and if so, what was the result of? >> we've never surveyed our members as farce that specifically. we do find out from our veterans all of the country after strong opposed to this legislation. but as far as what percentage are buying incentives into distributors, could not tell you that. >> so let's consider a brand flea and tick medication over-the-counter being sold at a big box for the manufacture has made the medication and sold at the distributor who sold it to a veterinarian facilitate secondary distributors who sold it to an alternative retailer, who then sells it to a consumer. it's not uncommon for pet medications to be sold three or

four times within the dish dish network before they are ever sold to an actual pet owner, correct? >> that's correct. the supply chain is longer. the are more players, more expensive moving things, additional profits being taken by each player. despite that, on example you mentioned, frontline, frontline plus, generally speaking those will still despite additional cost of a 20% lower price than the price speed but is it fair to say that everybody in the supply chain is hoping to make a profit from these transactions, or at least to recoup their administrative costs? >> for sure. >> most of them are not selling a product at a loss. >> no. >> it is possible the price of these pet medications have been marked up multiple times long before they're sold to consumers, right of? >> that's correct. >> how much does this affect the prices that pet owners end up

paying out of pocket for pet medications? i heard you say they're still at the end of the day can be a lower price for consumers, but this does not seem to a sufficient supply chain today in terms of best buy for the consumer. >> prevailing prices, and we don't know exactly, but you would imagine prices could fall an additional 15-30% is on the elimination of those extra steps in the supply chain. >> thank you and i yield back. >> the chair thanks the gentleman and that she would like to exercise the chairman's prerogative and ask mr. schrader if you'd like to go next and the question and i will yield five minutes to you. >> take you very much mr. chairman. i appreciate it. mr. smith, where are you from? >> utah. >> do you know where the sponsor of the bill, pet ferret is medication is from? >> yes, i do.

>> where is that? >> utah. >> okay, okay. could you tell me all of it about how you distribute your two products that you manufacture? how do you distribute them and what do you manufacture? >> we manufacture generic versions of off patent medication. we also manufacture pet treats and wellness products. including hip and joint kind of, a medicinal line for hip and joint, dental products. so we had a wide range of things that we manufacture and sell ourselves. >> you also manufacture as i understand - >> we do. it's called true -- >> good commercial. that's fine but i'm okay with that. good businessman. so is my understanding is the only direct to pharmacies, correct? >> yes, we sell to human

pharmacies spent just to pharmacies, isn't that correct? >> we've attempted to sell through the leading distributors of all the medications to veterinary clinics but because of the blocking agreements, we have been told that they're unable to carry substantially similar generics to the brands without losing their ability to distribute the brands. >> that hasn't been my experience. dr. de jong, do you want to comment? >> not necessarily. >> what we've seen here is there's usually a lot of opportunities. the fact you are prescribing and distributed only to pharmacies as opposed to direct to the patients, direct to other distributors, secondary market that congresswoman schakowsky talked about. what are you not distributing direct to them? >> we are a six-year-old business, so our initial start wednesday with a big pharmacies. our whole infrastructure is set up to work in large quantities sufficient to meet the needs other countries because

pharmacies in the country. spin what you done is make a business choice to limit the distribution of your product to make money. i get that. doesn't this fly in the face of the argument a moment ago about increased competition and making sure it is visible for all different outlets? >> as our company has grown our intent actually is to expand tomorrow direct veterinary opportunities. we start the process of trying to figure out a way to sufficiently distribute broadly -- >> but currently the bottom line is you restrict access to your medications. to be honest with you, mr. mr. chairman, i think applies in the face of what we're talking about. i don't know too many businesses that are advocating for more federal involvement particularly in a that's not a problem. just last comment if i may. i am very concerned about the tone that what we are trying to do with this type of approach,

distribution of prescription medications and other things that frankly needs some sort of a doctor-patient relationship on an ongoing basis. it flies in face of a lot of what we passed yesterday out of our full committee. we are concerned about overprescription come over use of opioids. and here we are going to have to track of trying to make these medications can many of which are very dangerous to our pet populations, more widely distributed, more subject to potential abuse. base of was -- with as many works on this flies in exact opposite direction or i would argue the administration has made it a point to be very concerned about the overuse of antimicrobials, other medications and livestock operations. and again we tried to pull the back of some of the over counter used not because we don't want the farmers are branch communities to be successful. we are worried about inadvertent circumstances and problems without direct supervision. so mr. chairman, with all due respect i think this whole

approach to the distribution and, frankly, the impugning of the veterinary community is exact opposite with this committee has been going and hope this is the first and last yeahearing we have on this sortf bill. with all due respect. appreciate everyone's time. thank you. >> the gentleman yields back. the chair recognizes the gentleman from -- dr. sutter touched on something that i was going to ask and it will anyway. because it's now my time and i viewed myself five minutes for questions. a lot of payloads to the contact lens legislation from 2003 have been drawn. one of the concerned that has come up now several years later is contact lens prescription is written and then it is refilled, yes the prescribing physician has an opportunity to interject some professional opinion when

it is presented for a refill to the online contact lens dispenser, but there's also a fairly finite period in which the prescriber can reply, if they don't by default it was approved. so you get into these situations where the office was created but perhaps it was the wrong kind of day, the time frame was short, nobody respond. so yes, it took a competition stuff, we will ship it this afternoon. doctor schrader brought up the question, or an observation, with a medication like it is on. prednisone is a want to be thinking about. you just would never want to write an indefinite prescription for prednisone to take forever, even though recognize there are some conditions were a patient, in this case a pet or an animal is going to require the medication over long period of

time. still there needs to be some real physician or veterinarian interactionism questions asked. is that something which you were in general agreement about, that would be a hazard just by the indefinite building of prescriptions if we follow the same path as the contact lens legislation? >> absolutely. i think it's important we monitor our patients on a regular basis. if they're being given any kind of medication that have side effects that just about every medication after potential it does have side effects. if you were to give an indefinite prescription without monitoring the patient you could do real harm to the patient. >> everybody else is talked about their pet today. i didn't as i start my opening statement and now i'm regretting because if my dog is watching i'm sure he feels left out. but february a year ago our little dog sammy who at that time was 15 years old develop signs and symptoms of congestive heart failure. i want to come to the vet and

said please, what can you do what we witness our friend. he said i can't do much but i will give you some stuff and we might get one, two or three months out of the. doggone it, that little dog is still going strong today but every month basically i wife goes back to the vet to get the medications, sure we could get them from -- i did know he would live this long, if i had made a would have but i thought it was a short-term venture but it's also hopeful. because there is interaction that takes place. how is old sammy doing? is he looking good? does he need to come in for a recheck? impact of the recommendation has been made and followed and medication adjustment has been made which we would have had the opportunity to do, i guess you could of taken a picture with the iphone and send it into the one i it into the 1-800 numr and gotten some advice back but let's face it we're not to that level of sophistication. i realize that's anecdotal and

uproar of anecdote is not data, naked fat. but at the same time i think there is some value in the -- people should be able to make their own decisions. have you ever denied a patient or an animal owner a written prescription if asked you for one? >> never. i can think of any veterinarians or colleagues that i know that half. i can tell you that in my almost 30 what is in practice next month, i have had plenty of clients ask comic and give me a written prescription, or can i call online and have it sent in? we get them in our office everyday but i've never ever experienced a client site is not an option? i think the knowledge base of the consumer, of the general public is well aware, the amount

of commercials for online pharmaceuticals are on every tv station in america. and the consumers today are educated with the advent of the internet and commercial advertising, they know it is out there. speed i agree. i think that's a positive thing that consumers do know that they have more choices. i just have to make one other editor. many people have said today that we spent a lot of money on pet medications, true enough we be. and she would not have the same options for our pets that we do our families? i would just caution people to be careful what you wish for. i know my dog would not want to go to an hmo. the fact that my dog is taken care of by a veterinarian or it's a cash transaction. i recognize they make it a little better attention than i get when i go to my hmo. and there's nothing like a cash business. people ought to be careful what you wish for because after all our pets are pretty darn

important. is there anyone on the panel that wishes they follow our visual or redirect the question? seen no additional members wishing to ask questions for this band, i do want to thank our witnesses for being here today. before we conclude i would like to submit the following documents for the record by unanimous consent. a letter from the animal health institute, a letter from consumers union, a letter from oklahoma state university, pursuant to committee rules i remind members that have 10 business days to submit additional questions for the record and ask the witnesses that they submit their responses within 10 business days upon receipt of those questions. so without objection the subcommittee is adjourned, and thank you all for being here. >> thank you. [inaudible conversations]

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