today, there's a whole host of very deeply structural long-term problems that the growing economy had to contend with. i imagine we'll get to those in a moment. things like demographic shift, what the impact would be for the jobless underclass, concerns of productivity and income inequality is something that was never discussed in my phd and now it's certainly the top three biggest issues on the policy agenda. they're all long-term structural problems and yet the people who are charged with overseeing the regulatory and policy environment are very short-term in their frame. >> watch "after words" sunday night at nine eastern on c-span2 book tv. >> it afternoon. i'm lynn goldman. i'm the dean of the institute school of public health and i'm delighted to have everyone join us for this discussion. we have an author of an incredibly important book

here, rosemary gibson. her book explores the topic of a dramatic shift in where our medicines come from. as china looks at its position as the pharmacy of the world. i think many of us in the medical and public health profession have been unaware of this shift. we may notice at times there are shortages, that their contamination issues, there's other problems, but i think we are not unaware that there is a systematic issue, a major change in the system for manufacturing and delivering pharmaceuticals. the implication of one country are astounding no matter what country we may be thinking about. what if there is a global pandemic and it's hard to move product across the world because of that. what if there are heightened tensions within the south

china sea. everyone could be vulnerable, everyone could be put at risk. the role of the fda cannot be overstated because the fda cannot be as effective in assuring the safety of our medicine in areas of the world as it can at home. many of us are not aware of the face-to-face contact that the fda has with those were manufacturing our drugs, the inspections that they conduct the hands-on work is involved in making sure the manufacture of drugs is safe. they certainly set up offices all over the world to do that, but that is not the same as having offices, having a manufacturer in your own countr country. with the u.s. losing capacity, the situation could become even more severe. today we will discuss these critical issues as well as

possible solutions and i look forward to robust discussions but first let me introduce you rosemary gibson. she is senior advisor at the hastings center and the principal author of china rx, exposing the risk of america's dependence on china for medicine. she is recipient of the highest honor from american writer society in 2014 for getting the public voice and their interest to critical health issues of the day. she gave a 2015 inspiration lecture that we had annually here at the school of health. she was chief architect of a 250 million-dollar decade-long to discuss inpatient that now. [inaudible] she received the lifetime achievement award and worked

with bill on the pbs elementary on our own terms. she is recipient of the lewis bachman safety award. rosemary is also principal author of medical meltdown, battle over health care, treatment track and the wall of silence. her books have been reviewed in publishers weekly, reference and proceedings of the u.s. senate, congressional testimony, noted in the wall street journal, new york times, "consumer reports" and other news outlets. she is chair of the board of a nonprofit research organization in ann arbor michigan. she graduated from georgetown university. please join me in welcoming rosemary.

[applause] >> can i take over for now? is the microphone working back there? think you ladies in german. good afternoon. doctor goldman, i want to thank you for making this event possible. it's a very timely and fitting that we are here at the school of public health, a very preeminent school of health of the nation's capital to discuss the health implications as well as the national security risks associated with our dependence and growing dependence on a single country. it's timely for another reason. the president is set to give a major speech in the coming days and weeks about drug prices. we know many americans are suffering under the burden of the high cost medicine but we have to be mindful of unintended consequences. companies might feel pressured to reduce their prices and reduce their cost which could

potentially drive more manufacturing to china. we will have to keep a close eye. if there's one lesson we draw from today, it's the intersection of our medicines and trade policy. who would've ever thought of that. i'm looking at leah binder who wrote a wonderful piece on the blog last week that actually made this very brilliant connection. it goes very deep. i wrote this with the purpose of informing the public of the very big shift in where our medicines are coming from. for many of us growing up, our medicines were made here in the united states and europe and japan, but now there has been a dramatic shift eastward. i wrote for my mother so my mother could read it, but also for policy wonks and academics because i think we all need access to this information.

we want to trust the medicines we take. those medicines that can mean the difference between life and death. we need to know where do our medicines come from? why are we dependent increasingly on a single country? one of the risks and what can we do about it. i was going to bring my smart phone and my medicine bottles. one of the questions i get asked the most is how come i didn't know about this. how come i didn't know that there is growing dependence of the united states on china for so many of our medicines. if you take a look at your smart phone and you look on the back, at least mine says designed in california and assembled in china. if you've ever gotten those amber colored plastic bottles with white caps that tells you how to take your medicine, what the doses, but it doesn't tell you where comes from. there's no reason we should

kno know. let me tell you about what this dramatic shift in where medicines come from looks like. one of the first things that's never been done before in china rx is that we actually name the medicine that are being made in china by chinese companies and sold here in the united states. they include in a biotics, antidepressants, birth control. a lot of young women are really interested to know that. medicines for all summers, parkinson's epilepsy, high blood pressure, hiv aids, and much more. right now china is just beginning to get into the manufacturing of generic drugs. it has a plan to become the pharmacy to the world. i predict within a decade, maybe less number may be more china could overtake india as a dominant generic drug

manufacturer. right now china's biggest footprint in the united states is making the active ingredients in so many of our medicines. there the part of our medicines that give us the therapeutic value and they make thousands of active ingredients for many of our medicines that we find in our home. medicine chest and in hospitals all over the country. many people that we spoke to both former government officials and from industry said that of china shut the door on exports, within months pharmacy shelves in the united states with the empty and hospitals would cease to function. so, how did we get here? what about other countries? one of the most interesting fact that i learned is that even india which is a dominant

generic drug manufacturer, even india is dependent on china for the active ingredients and raw materials in many of the medicines it makes not only for its own people but also for export. it's a fascinating article in the economic times which is an indian newspaper and it started out with a story of a soldier who is on the border between india and china. they share a long border and there's lots of tension in the neighborhood and that part of the world. this is something to the effect of imagine an indian shoulder on the border and he sees in medicine and is running out. that soldier is dependent upon the other people on the other side lap order for the components to make essential medicine. that's a fascinating situation. the article went on to say this is a national security issue. i've yet to see an article in the united states posing that

question and talking about that here. i applaud the indian media for being transparent about it. if there's any interruption in supply that would not only affect the health of the population, their military, but it would also affect a very important part of their economy because they make an export many generic drugs. so where are we? what's the biggest risk? as doctor goleman said, the biggest risk is when we have a centralization or the concentration of so much of our medicine within a single country. no matter what country that is. if there is a fukushima type event and companies are shut down for months and months, if there's a global health pandemic in countries have to line up for medicine, that could be a global catastrophe, or of tensions and

consultancy, that the hotspot right now and block traceroute. where does that leave us question that's a challenge with concentrating any important product we need for life in a single country. so how do we get here? how did this happen? i'm to start with the story of my prescription that i got two months ago today. it was in amniotic, it was amoxicillin, a form of penicillin, a great drug that work really well. i was back to mild felt about two weeks but penicillin tells the story of what happened in making of that particular product. some of you might remember during world war ii when right before the normandy invasion on d-day, the federal government and industry, including companies like pfizer made sure there was enough penicillin manufacturing capacity here in this country to help all the

wounded soldiers that would walk away from that event. by having that penicillin availability, it saves hundreds of thousands of light where government and industry work together to ensure we had an adequate supply of that miracle drug. let's fast-forward a couple decades in 2004, new york times reported that the last penicillin manufacturing in the united states was about to shut down. that was a bristol-myers squibb plant in turkey's new york. the new york times intel back story. what was really going on in the global market? thanks to some european producers that are very public spirited and have information out on the internet about what happened during that period, we can learn a little bit about what was going on in the

global market. in 1980, china very wisely invested heavily in penicillin fermentation capacity on a massive scale. twenty years later they began to see chinese companies come in on the global market and they dumped penicillin at below market prices and it effectively drove out american european and even indian companies from that business because they could not compete. european producers call this a landslide. then what happened is there was a spectacular price increase for all of us, it was visible to us. in china rx we call that the penicillin cartel. that's not the only cartel that was happening. if you read china rx, you can

read about the vitamin c cartel. i'm sure many of you take vitamin c. : : : raise the price again spectacularly. clear violations of antitrust. we could have a whole session stand by them in the cartel because that continues. orders are still arguing over it and has tremendous implications

for a lot of our medicine and other products we get from china. we have talisman and -- penicillin and vitamin c cartels. what is this tell us? we are losing control over the supply of our medicine. we as a country in our losing control. others are taking the price and they are taking the supply. and we have to ask ourselves, is this a situation want to be in. so what was driving this? what were some undercurrents? we identify two. the first is the generic drug law, which is 1984 for those of you remember at the hatch waxman act and it made generic drugs available to the american public. a wonderful, wonderful step forward. it made them affordable for millions and millions of people. but that meant that companies that they had to sell products

more cheaply were looking for a place to make them more cheaply. and though, they pivoted east to asia. but at that time, the fda wasn't equipped to oversee and regulate the global industry. and what else was happening? in our research, i have a very boring a very boring life and you find all kinds of things on the internet late at night. one of the most interesting things i found was a memo written by a very dedicated fda employee, a chemist. and he asked the question or said we have no idea for all of these folk drugs active ingredients are coming from and they could get to the president. so we had a period of time in the united states where was the wild west and we didn't know where some of these products were coming from. let's fast forward to the year

2000. there is another major event that is triggered u.s. dependence on china and that's why right here in washington congress and the white house agreed to grant china access to the u.s. market and also, china joined the world trade organization. it was fascinating to see within a very short period of time after that that the cartel was formed from in the vitamin c cartels was up and running. the united states prospering manufacturing plants from the same playbook, dump product on the u.s. market. local producer couldn't compete without a business. something very important also happened in 2004. a major health care company and united states, baxter health

care switch suppliers of a very important ingredient for a product they make. that product is called heparin. it's a blood thinner in its widely used in hot riddles. if even a hospital, you probably have heparin. a couple years after baxter switched suppliers from the u.s. to a china-based supplier, it turns out there was a contaminated ingredient that was found in baxter's heparin product. it came from china. there was deliberate contamination for economically motivated reason and there were 250 deaths in the united states associated with that contaminated heparin. in the extraordinary reforms did progress to try to fix what we basically had a deregulated

environment and other countries where we were getting our medicines. but it is still far from perfect. there are a couple lessons here. the first is this has effectively been a form of the regulation. you don't need any laws to change the regulatory structure. just move production overseas. that's effectively deregulation. the united faces had the highest standard. the fda and industry developed to make sure we have high-quality medicines every pill every time. we are effectively outsourcing the manufacturing of medicine to countries that have few if any standards. it is really remarkable. back in the spirit in 2007, some of you might remember the news report where the head of the chinese -- the equivalent of the fda in china was executed for

taking bribes and government officials in china with all candor said we are still at a very early stage of being able to manufacture high-quality medicine. but that didn't stop the market moving to a place that acknowledged it had very few standard. really a remarkable transition. the other thing that is fascinating and again the lack of transparency turns up in the trade trade deficit with china in pharmaceuticals at least 2014. i've never seen a public official and knowledge we have a trade deficit in pharmaceuticals. maybe it is fair enough to see it if you caught a glimpse of it. please send it to me. over the decided. i do find the data points in a speech that dr. margaret hamburg avon china to an audience of chinese who are probably very happy to hear that there is a trade deficit for the united dates in china in

pharmaceuticals. somehow the lack of transparency so how dependent are we on china really? i'll give you a couple really fascinating examples. in 2015, the fda inspected a plant in china. it did that because it was getting a lot of customer complaints, presumably industry complaints about the active ingredient they were getting from this plant. it was back to real contamination in some of the products did not have their full therapeutic value. antibiotic or chemotherapy that could be devastating. so the fda went in and found that they called systemic data manipulation. this is the fda, chinese fda and other inspections over many years. so the fda banned 29 different

products from coming into the united states. but because the united states is so dependent, the fda had to exempt 14 of those products and some of those products included antibiotics are ingredients for antibiotics, ingredients or chemotherapy because the fda was concerned about drug shortages here in the united states. that is how dependent we are as a country. there is a fascinating dory about the availability of tax to cycling after the anthrax attacks. some of you might remember in washington and new york that the u.s. military needed to buy a whole lot of doxycycline. so they went to a very reputable company in europe and this was reported in bloomberg and of course in writing the book i spoke to the ceo of the company and he said yes, you had to get the starting material from china. so think of this. the u.s. military needed

doxycycline after the anthrax attacks in the material was that came from china. and if someone from the industry said, so what if china is the anthrax attacker. our medicines can be used as a strategic weapon. and then there are other examples. when india said they may be military spending, i thought what about the united states? so i called up the defense department and communicated the logistics agency which purchases medicine on behalf of the military family members retirees and they acknowledged beginning in 2012 that i had to begin purchasing a limited number of drug products from china apparently because there wasn't any other source. and what about our veterans? veterans hospitals now.

the federal government has made it easier for the va to purchase drugs made in china simply because that is where the commercial market is going. so what about the risks? what are the costs of cheap drugs? we don't see them. in china we identified with some of these risks are. what about consumer protection and product liability? i called up an american lawyer who works in china and advice this western company. he says you have to understand the attitude is one of the reasons our product is so cheap is because we assume no liability for it. it is buyer beware. so let's take an example. do you take a medicine that is made in china by a chinese

company and its sold here in the united states by a distributor. chances are the distributor has no financial assets for very limited assets. you effectively have no legal recourse. so the hidden prices of cheap drugs is the last of consumer protection. and then what happens in the fda goes into plants in china. there is a plant that was making an epilepsy product and the plant lacked any temperature humidity control system to save money. and so when the fda inspectors went in. it is a hot day in humid city employees open the window. but this is a product supposed to be made under to pressure controlled environments. so it's a way that you save money. another hidden cost of cheap drugs. seven years after the heparin tragedy, and the fda went into a plant in china that makes

heparin or sedatives. and what it found was that the company that supposedly was making it is not the actual manufacturer. the real manufacturer was another company that apparently the fda had banned because the prior possible complicity in the heparin tragedy years before. the show factory and the shadow factory. and one of the most stunning things that we found while doing the research is even american companies who have plants in china don't meet the standards that we would all come to expect. a major u.s. company from the fda went into its plant in china inside of the plant because it had no handwashing facilities. no place to wash her hands in the toilet was an open pit in the floor.

this is what happens when we outsource production from the highest standards in the world to a place that is still on a growth track to read. that aside, we have to be clear that there are some plants in china that are close to anger meet western standards. but there is variability. and it's going to take a long time for those who have ever worked quality control and quality improvement and it takes a long time to build up a culture in meeting standards in safety and to sustain it. so those are some of the risks we face. i will close with what we do? where do we begin? one of the first recommendations as we need to have a change in our minds that the broader medicine. right now there like a cheap commodity no different than a

t-shirt. how could we them at the cheapest possible price you with a few cents different than if it be found drama product. we need to view or medicine as a strategic asset just like we do oil, our energy supply and basic food commodities like wheat and corn. let's treat them like a strategic asset. the second thing we need to do is set up a tracking and forecasting system. so we know where our medicines are coming from, global supply, global demand and forecast forecast production and know where the hotspots in the risks are. you can go on the department of energy website and they track this. so we don't run out. the same is true for food. we don't want to run out of food. the strategic asset is something that the country will pull apart if we don't have it. we need to consider medicines as a strategic asset.

they are made by private companies, but they serve a very important public or press and so we have to work more together to ensure that we have our medicines, we have controlled the supply of those medicines that we rely on every day. finally, we have to make sure that we maintain manufacturing capability here at home. it takes knowledge, skill and experience to make strokes and we can't let that go. i spoke to a person who runs a manufacturing plant for a brand-name drug. she said we do everything right and i can tell that she does. she says i get people coming in looking for a job and fair company built a new plant and they are not using it. this person wonders who is going to do this when i retire. what is going to happen when our companies when they just end up having public relations and

marketing and pr without any substance. we can't let that happen. so i will stop there. i just want to say we are here at the university. "china rx" opens up a whole landscape and i hope there were students and faculty here and others and journalists that we dig deeper, but we keep this on the radar and that we understand what's going on in this very important market that can only do that if more people are interested. thank you very much. i hope you'll buy a copy of "china rx." tell your family and friends. it took three and a half years of research. it's not a transparent industry. so thank you. >> will go to discussion with our distinguished panel appeared here before going into that, i do such thank you very much for your research and bringing this issue forward in a way -- and in some ways a bit of a wake-up

call for many of us in terms of realizing that this is a very real issue in terms of how medicine in this country. i thought it would first turn to dan appear on the panel. he's former commissioner of the u.s.-china economic and security review commission and expert in industrial policies in china. i think they are all aware that in today's current political context, there's a lot of concern about globalization of trade and commerce. a lot of concern about the movements of manufacturing. some give on how this occurred for medicines and other things, but also how they continue to unfold in what we are in today. >> this is a country whose

supplies almost all of our medicine. a country that steals between 250 and $600 billion a year of our intellectual property according to the fbi. a country who subsidizes their advance manufacturing industries co. which includes pharmaceuticals in violation of the trade dollars. a country that protects their domestic manufacturing industries in violation of the trade dollars. a country who forces technology transfer from foreign companies doing business in china in violation of trade. a country who freely buys our advanced manufacturing companies

come in 98 and the last four years and done on a strategic basis where we are prohibited from buying their advanced manufacturing companies. in a country that uses trade as a weapon. three years ago, the chinese seas in iowa and off the coast of the philippines nona scarborough show that the confrontation arose between the philippine coast guard and the chinese navy. overnight china canceled the banana shifted into china. bananas are 10% of the philippine economy. billions of bananas rotted on docs. about two years ago, the japanese seas of chinese fishing vessel and arrested the crew. the chinese immediately stopped shipping rare earth minerals to

toyotas that caused them to shut down. the japanese police through. so this is a country that we have now become dependent upon for our drugs. we are moving from a relationship but a competitor to a relationship of an adversary. the chinese have one aircraft carrier. they are building three more aircraft carriers. aircraft carriers are an offensive weapon. they are building ports all over asia. they are seizing east and china see through the philippines, japan and vietnam. they are militarizing the islands and putting missile

bases on these locations. they are militarizing space and now have the capacity to take out our gps system in space. so in addition to that, they are spending hundreds of billions of dollars improving paramilitary. they are reaching parity with us on fighter jet, submarines and missiles. in their stated intention is to push us out of the eastern pacific. so you don't have the military expert to see what is going on here on what this may lead to. i speak all over the country are they always say that i've met the enemy and it's not china. the enemy is us. and allowing this irresponsible business procedure to proceed

with such a critical component. so my hope is we can raise the alarm here such as start to pressure congress to do some things in a responsible way to protect the american people. and i'll stop there. >> dan, to follow up, the way i first became aware of this actually was in the contacts of heifer and what some of the heparin from china was contaminated and they think rosemary talked about that a little bit. i learned that older heparin in the u.s. is coming from china. most though it is a blood thinner. i think people aren't aware that it's more of that. because cid basically from clotting so you can have ivs.

when they flush or iv, that is a heparin flush. so it is an absolutely essential drug not only for folks who need it as a blood donor, but anybody who needs an intravenous drip feeds have her in. it is hard for me to understand kind of how could that happen. how could something that essential, that's basic to medical care could be that completely offshore. >> heparin [inaudible] what was going on over there, it became the industry for houseflies living in small villages in china were pulling the guts of these animals out in very unsanitary conditions in

literally many of these cuts have no running water and shipping them to distributors. it was from that basis that the problem developed. the fda is trying to get inspections on site in china. the chinese have restricted the number of inspectors they would allow him and that has become completely in effect is. >> i mean, if you're talking about hundreds of thousands involved in the production of this product, it would seem to be a very difficult one to inspect. that much of any enforcement and all. do you have any comment on that? >> to do a nasty inspection here in the united states and 10,000 miles away. i think dr. goldman, the real issue is what happened at the

world's largest port producer. i know you are certainly familiar with the transaction. so where did all those intestines go here in virginia? by the way, if you have a game on new year's day or pico to mcdonald's for sausage, that work is coming from smithfield, which is now owned by a chinese company. so we had a problem. do you want to talk about that? smithfield controls a very substantial portion of the population here in the united states and that company was sold to china and we lost, potentially lost and we don't know because it's a private company and they have no authority over them to ask. so are you shipping them over to china or are they sitting here in the united states to make this very important drug called

heparin? >> of you can imagine from a smithfield was the largest producer of pork in the united states. they had markets in a company called shang wei bought them and had a huge 30% premium for this company. port is 50% of the diet is china. china is the only country in the world that has a pork reserve. we have an oil reserve in the united states. you can imagine every six months they have turned the server. the problem is the average chinese base 40% of their disposable income for food. in the united states we spend 11%. so slight increases in food prices create instability in china and that is why they did

this. the chinese have learned it was better to buy the coal mine. they come by all the pork they want on the commodities market, but they chose to buy this company. not only did they get this company, but they got all of the technology, the genetics, all kinds of very sophisticated technology that this company originally got from the department of agriculture on our tax dollars, which the chinese have it. the real problem is the pork is now coming back into the united state with the smithfield label. and so, you have no idea what you're really eating. we have a lot in the united states called for cool law and

there are 18 exemptions. so you go when to paris and you want to buy pork, you look at the package you might say packaged in the united states are processed in the united states. it ultimately comes from china. i know from testimony that 85% comes from china, for example. if i have to laugh yet that 85% chance of coming from china. so it became a real problem not knowing what we are even buying in the issue in congress was should they allow this to take place under a law called 50 years it ultimately was determined by congress that this was not a national -- pork was not a national security item in

the allowed the sale to take place. >> thank you for that. i'll turn out to patrick mike hamar second distinguished analyst. patrick is the assistant secretary of the u.s. department of commerce where he was responsible for the international trade administration during the clinton administration and before this, patrick and i were talking a little bit about we were both in the clinton administration at the time the wto was created. in fact, were actually both in geneva. this was not a smooth process creating this thing called the wto. there were a lot of concern members of the public. but yeah, most of us at this time were quite up to mistake, particularly about the prospects of bringing china into some kind of international trade agreement

we could see some potential risks, but we could see the potential upside. i thought i would start with that issue 25 years later i guess. what has been the upshot of all of that? do you think that has met our expert patients in terms of bringing china into the wto and opening up trade? >> i first went to china in 1981. china was a poverty-stricken country. they had what they called their humiliation were their whole civilization was taken over and crushed by western powers beginning with the opium war, a second opium war, the fall of the emperor the japanese invasion. the whole thing fell apart.

took control of 49 and tried to build an economist country. they couldn't get their economy going. he said we need foreign investment, foreign technology, foreign know-how in foreign market and that's the way will build a powerful china can get our wealth and power back. they want to be numero who know. they want it back. so we accept that and i think it's pretty accepted among a lot of thinkers now. the wto was created 45 until 93 when the wto was created when i was there in geneva. i was there to keep financial services out of it. i was on the banking committee.

we did not want financial service to be covered by the wto because there's something meaning if i give written, very low tariff, it is the most favored nation treatment in you have to do that in the wto. china did not commit in 94 when it was created. they came into the wto in 2000. because china is a communist country, we could not get them more than one year at a time because there was a law that said we couldn't get china more than one year at a time. but we were giving them enough then. why would they want to get into the wto? because they wanted permanent enactment of congress had to change our law. the congress was persuaded to do so in all the lobbyists was this

will increase american exports with china. when china came into the wto, in 2000. 2001 they actually came in. congress gave them mfn in 2002 the bush administration brought the men in december 2001 with a partisan, both parties are part of this. we had $80 billion trade deficit with china. right now we have a $370 billion trade deficit with china. congress was told this would help increase american exports and decreased $80 billion trade deficit. it did not. the whole thing was about investment. there was an article to give a permanent mfn. saying this was never about export. those two satisfied chinese markets and to ship accurate and that's exactly what happened.

i was in the senate committee. we have a corporation had the stakeholder obligation. the business roundtable, which was a big organization said to their customers, employees, to their community is coming to shareholders and to their country. in 1991, 1999 when the business roundtable put out what their obligations were, it was to their shareholders. that is the. their own compensation is tied to the ability to make shareholders wealthy. so american corporation develops responsibility in china now is in the wto and we are locked in

to give them very low tariffs. two by 5% on average. that does not mean ownership is to china we face about 11%. so mfn means you give it your best trading partner. that's all they got. the incentive is for american companies go to china and ship back here. if you read the book that our author has put together coming you'll see that is exactly what happened. our company is, we have very talented high-level people in this country who were dismissed from their jobs and the other factors were taken from here to china. that is what is driving this whole process. ralph, ray, the former chairman of the loan foundation and the president of ibm has written extensively on this whole issue

capitalism and what a detrimental effect we've had on this country. as you see, the average ceo used to make 50 times the order. now they are making four or 500 times. they are concentrating well among the very small group in this country and they are undermining the average middle-class job in this country. this is an important issue when you put your finger right on it in this book pointing out that the national security implications to what we are doing and our country really hasn't grasped it yet. the american people know something bad is happening in trump tapped into this when he won the election. he talked about the issue. not sure he has the policies in place to address it because in it because the most to do with this issue of corporate governance committee will not deal to do with this issue. is that helpful to you? >> affected us follow along with

that. we know particularly drugs and products like.contain a tremendous amount of intellectual property that's gone into their development. but also an enormous investment in all the sciences research whether the crisis we paid that is done privately by the nih and research all the rest is up. i'm happy to see the world benefiting from that. but as we are now entering into this. where there is increasing conflict between our country and china. we are seeing products including intellectual property including the drugs. talk a little bit about why those would particularly be targeted and what the impact of the tariffs might be.

>> pharmaceuticals -- the chinese have put up something called project 2025. i have 10 key industries that they want to be the world leader in come both in terms of satisfying the market and global market and they are pumping subsidies. they are stealing intellectual property is from american companies. when american companies invest in china, you transfer know-how and technology are a plus if you want to do well in china, to be considered a friend of china and you'll get better treatment in china. so all of that is going on. what the administration is doing is something called section three 01 of our trade the process if we identified unfair trade practices, we can target

those practices with terrorists. that's exactly what bob lighthizer in this industry are doing. you're stealing intellectual property. we are going to start restricting access to the american market because we're not going to help you make those industries global leaders because we are not going to get access to your market and secondly, you'll destroy the rest of what we can do here at home and be flooding us. right now, since china came into the wto, we've run for $.2 million worth of trade deficits for china. there's a big discussion among economists. the gdp house for fact there is. negative net exports at a very

major rate 750 million in manufacturing last year that is a very detrimental effect of wealth in your economy. we've got to get this trade situation straightened out. i am all in favor of what they are doing on section 301. i do not think it's adequate. we has to reshape that are corporations have responsibility to this country and not just the shareholders. >> in that crossfire, what do you think? i guess it's hard for me to understand all of the economics. the one thing i can understand that if the fundamentals is the extent to which the crisis of medical care in this country and the differentials of what we pay for the same drugs in this country compared to what people pay up there in canada, europe,

australia. some us trillions in comparison to others. is there some hope to be able to reverse the flow or other policies they would need to do for solutions on the horizon? >> for us, one of the reasons drug crisis can be so high in the united states may have nothing to do with china, but our own internal market manipulation and for those of you who are watching, all the middlemen and the women from the point they drug is manufactured to appoint as a pharmacy there's a lot of things going on. what should be a costco model with open competition is been turned upside down to be one of the most expensive ways we could sell medicine and a lot of people are making money off the mental process that can make

drug prices very high. >> i have to say most of us are just dumbfounded when we see if we have insurance that covers the prescription drug that we see the price at $125, but what we paid fire insurance co. company is like $12. 90% of the price goes away so the negotiation is rather difficult. >> where we need to be 120 degrees in the blazing sun is here in drug crisis, how they are set because there is no organized constituency to demand veterans aaron c. i want to respond to appoint the patrick was making about the impact of our loss of industries and communities. in the book i talked about

connecticut were at the place where pfizer has had substantial operations in its research program. when lipitor went off patent, and plus when pfizer was investing in china, billions and billions for research and development, pfizer stepped back and had very substantial layoffs. what it has done to the local economy. people who spoke in real estate and the guy who runs the bowling alley and a gentleman who has an insurance company and he described what has happened to the housing crisis and jobs. the guy from the bowling alley said would have been with all these layouts is industry has moved offshore and we lost protection.

it is changing rapidly. a couple weeks ago. a man who ran an insurance company and he says thank you, but i've got to shut down my business. the loss of these businesses have a profound effect on businesses around the united states. you might hear it in the local paper, but it is devastating to people, to their families. some are devastated and setting up high investments in china than they are hiring the phd researchers had a third of the cost. we have these germanic dislocations that have a huge impact on our economy. the final point is we have to decide is a country, do we want

to have an industry like pharmaceuticals here in the united states? do we want to have it? do we want to maintain that manufacturing capability? the answer is no, we are good to go. just let things happen. if our answer is yes, what do we need to do differently? that is what we hope "china rx" stimulates a conversation about. >> she has a terrific -- let me just read something from the book. pharmaceutical manufacturing plants are among 70,000 u.s. plants that have shut their doors when china joined the wto in 2001. it had been a tremendous outsourcing of u.s. capabilities. everybody says we are going to be the innovators. when you are not making things, you are not going to be the

innovators. in controlling the price of these drugs. do not necessarily going to get cheaper drugs that they are the supplier because they will be in a monopoly position. when a very hazardous road and the american people are waking up. i see it going on about hardee's. >> that's why like this issue of our medicines. what can i do to with steel and auto in alumina but we can identify with the pills in her mouth that things will i have to take care of our infections. >> is that arguably you need those other things, devices, all kinds of health care. it's dependent on those things, too.

you know, and talking through these issues about the intersection between the rules of the road for trade and the things you describe to us about how china is actually capturing these market. i am having trouble kind of clearing the circle here. it doesn't make sense to me that this is helpful given the kinds of what i thought, the ability to kind of use the trading machine to enforce that people follow rule the rule. >> unfortunately, the rules were set up on the wto on the basis that everybody was going to follow the rules in the chinese shows to only follow rules that will push them. the mechanism is so slow and so

difficult to enforce that it is ineffective. in addition to that, you have to have a company in american companies are so intimidated by the chinese that we can't even get them to file the complaint. and so, if they import an automobile into the united states, the terraces to point a percent. if we import an automobile into china, it is 25% and the auto parts is 20%. why aren't we complaining? we can get auto companies. they are so intimidated by the chinese government. >> i is a public health official would not have standing.

>> you have to provide government with the information to bring your case. if they are hesitant because the chinese will punish them with their operations in china if they provide the government with the information come you'll see many of these countries wanting to testify. though how the trade group testified for the china commission. i worked in the senate banking committee for 15 years. i'd suggest a close. we would wonder, when boeing made the sale of china come and they said you have to make a part of the plane here. why is that? so if it's them in the wto. china completely ignores us and say they are doing it on their own. well of course they're doing it on their own.

they make their shareholders wealthier. or a short-term problem very bad for the united states in the long run. >> going to have each of you comment on what might we the possible paths forward. trying to think constructively because it seems we have gone down a path that is leading us out of this. >> okay. you have the united states is process oriented. you have constitution, treaties and for the most part we follow them. then you have a country, china, in which the end justifies the means. stealing, lying, cheating, anything else is fostered by the

chinese government. so you have these two desperately different systems that can blend together. and so, i think the albany -- we are the only industrialized country in the world that doesn't have an industrial policy. germany, canada, china, japan. everybody else has an industrial policy. what we have to do is if we go start to subsidize or advanced manufacturing industries, we will see that whole industry to china. they have completely wiped out the electronics industry. the entire industry has moved to china. layers, sensors, digital. all the stuff of the future is now in china because they were

in the process of moving the entire semiconductor industry from the united states to china. imagine having all their chips made in china. the white house asked us to look at a company called global foundries in california and they were moving to china. i called the president of the company up. he said to me, the chinese offered us free use of a $4 billion chip manufacturing plant, no taxes for 10 years with all of our workers and it goes on and on and on. he didn't know how to talk to the u.s. government. it would have made any difference. he said to me, what would you do if you were me? of course the incentives were so great that we were moving to china. they are doing this. the u.s. government starts to

incentivize these companies to stay here. there's a lot of problems with the fact spill, but we had to get her corporate income tax down to everybody else. that was the problem in the corporate income tax in china said ireland at 12 and the united states was 45, was that? so we were way out of whack. that was a good first step. there's things the u.s. government can do to incentivize these companies to stay here. we actually were incentivizing them to move because a profit that a company made overseas was not sent to to the u.s. corporate income taxes of my favorite features of the money. they would just leave it over there and continue to build other fact there is.

the answer to the drug problem we're talking about here today is that the united states has to incentivize companies to manufacture here and that is a function of providing them with r&d facilities, eight for r&d. in the software industry, some i cannot or industry, one of their biggest problems is they can't find enough electrical engineers. they have plenty of electrical engineers in china. when the u.s. government could do is to say we will pay your tuition. anybody who studies electrical engineering at state university in the united states, we will reimburse your tuition if you graduate and stay here and work. it is things like that we need to do. otherwise we are going to lose. imagine artificial intelligence, supercomputing.

the other thing we are doing -- the other thing that we are doing is supercomputing the basis for innovation in the united states for advanced technology. it is critical. the united states opens up the first supercomputing station in california in 1846. up until a few years ago the united states led the world in supercomputing. two years ago the chinese exceeded the united states and now the gap is getting wider. so what does congress do? they cut the budget of lawrence livermore. it's like eating your seed corn. this is the insanity. i've met the enemy and it not china. we do all of these crazy things

that just harmless. so for 150 years, we didn't have to do anything. we didn't have to have an industrial policy because we dominated the world from an economic point of view. but those days are over. if we don't do anything, we are going to lose all of these critical industries. >> here is what i think. a famous article written by warren buffett in "fortune" magazine said -- that was the name of the article. when you're running a series trade deficits, they are not sending those dollars to buy your goods. that's what is happening now. president kennedy does not know how to get him into the moon. he set a national goal because he thought it was in america's interests. they figured out how to get him into the bed. we are going to set national:

balance of trade and then figure out how to do it. but this corporate governance reform is a big part of it. part of it is providing the incentive for our own children. to begin in science technology education in the united states. in three, i would have done it a different way. i would've said if you're an american company and you produce in the united states, we would give you a very low tax. if you're apple you do all your production in china. we are going to have a different tax rate for you. we want to be incentivize production and jobs in the united states of america. there's a lot of room to do this, but she got ascetical. once you set a goal you figure out how to do it. >> the other thing and i'll stop after this, what is really hurting this company or by fax with corporations buy their stock. ronald reagan changed the

securities law that prohibited corporations for doing that because it artificially inflated their stock. reagan changed that. today in the first three months of this year, tens of billions of dollars of stock had been bought back by corporations. that means instead of those revenues being used to grow the company were to put into r&d, it is going back to the major stockholders for the president for the chief executive and some hedge funds. it hurts the economy and it hurts the country and that is another law that we need to put into place to stop the stock buybacks. that money should be used to grow companies, not to be enriching ceos. >> you guys have been thinking about how confused our priorities are. you talk about china, subsidizing the manufacture of

yours and we subsidize sugar and it's very sad. that is very sad. rosemary, i'm going to give it to you to talk to us about the path forward. >> the reason that i wrote "china rx" so my mother and father could read it because we have to bring in the commonsense norms of ordinary people. if you look at the media today, there's more stories about the dangers of getting your drugs from canada than stories about the reality of what is happening to our drug supply. this is a story hidden in plain sight but frankly they don't want us to know. and so, we have to draw in and expand the conversation to know that people come to washington, the inner circle, relatively small group of people making policies that have created the situation we have now from corporations and government and it's not working for ordinary

people. and so i hope with this book we can expand the conversation with people who know that something is not right. one of you said that. the american public knows that there's just something not right, but they are not being educated because we frankly have had a news lockout. ..

speeseventeen. >> if we have any questions if you don't mind introduce yourself. >> with the state

representative. and when those were released. with those pharmaceuticals. and to do what you are intending. and with more production in china? >> so my understanding with the focus with china. in one of those is biotechnology. but with those subsidies the

chinese is giving but for those goods to come into the united states are more expensive so more people would have those products developed here?? >> of my understanding. >> building off of that but it isn't the answer to reduce with those pharmaceutical sectors and those critical minerals used. and with those incentives in the tax bill you mentioned putting

pressure on congress and what are some ways in doing that? >> one thing they can do is declare that certain drugs are critical to the national security of the united states. so we cannot be 100% dependent and then to require them maybe they issue those subsidies but that would protect us from any adversary all action.

>> that i will jump in while you are thinking. but there are researchers that are making progress so we don't have to rely on china but that incentive to turn synthetic is not good because what we have now is very cheap so the market is blind to buy that the more expensive product. and without strategic medicine. so in that research to preserve and protect us. but from that pandemic preparedness with the government stockpiles in case of a major

pandemic so it isn't a foreign concept but what really happened was the problem and felt that it would be sensible and to imagine why that would be the case. but that that was how we manufactured ourselves so they did shift that. and to say we had a better way to monitor for freon's to detect those levels and to feel that is

safe. but then to talk about things like that. >> but as i said without 88 reed bill that was 30 years ago. with senator byrd and jim wright before each committee of how to make u.s. more competitive. we haven't done that in 30 years that congress needs to get into this business and develop that different provision to help us compete better in the global economy. in that 88 trade bill reflexivity is long -- a -- a

lot of great things in that bill but china was not in the wto. we have to update the whole strategy and you have to do that through congress. >> and with those pharmaceuticals as a preface. and what does this look like? the next so to bring this up but to identify a group of experts to identify what we need to have or should not be allowing other countries to produce in such a

substantial a substantial share of the market. so to have physicians, most have no clue about the situation we are in. that would be a first step for those products that we need. how much can we stockpile? to have a more discreet event and then to have that manufacturing capacity. >> but there is another point with a a new technology that is appropriate called continuous manufacturing. so that hasn't taken advantage of technology but that would be another role how congress and the federal government can incentivize company there some drugs you can make within 24

hours it was founded by european company that was pre-fabricated that china buys from general electric. why are we buying them here? without pharmaceutical manufacturing is another step in the right direction. >> my question is for rosemary. we have. we have been hearing for a while that 40% of finished drug products are made in foreign countries. but the fda has not updated that since between that and the last labeling laws your drug only has to stay where it's manufactured or who labeled that or where it was distributed how can you figure out the number of

pharmaceuticals is growing?? because a great question i think they obfuscate that is the people who work in the industry and talk turkey and we don't have the good official numbers and have to ask the question why not? that the station for the active ingredient i don't want to do that is also what they don't want to do is split up the active ingredients so in the may be making the active ingredient but they rely on gina mann -- china for the material. they don't get into that type of detail. so to answer your question from people in the field who said china shut the door we have to

shut down the hospitals. and frankly we should have the answer to that information. with supply and demand we don't do that in the public interest. and it's nobody's job in the federal government to do that we wouldn't allow that for oil and energy supplies there is a lot of people that don't want that to get into us but is a proprietary secret for national security to open up that can of worms and shine a light on that 180 degrees. >> it is a complicated industry.

>> and then to be formulated. and then the containers where they were actually packaged and to show those ingredients where they were before they were packaged in the final product. >> there is conflicting data that requires companies to put the country of origin have to label where the active ingredient comes from. and we don't use that very well.

but then it is the wild west or the retail package. but then to be complicated. >> but there is a place you can check the label of the medicine and in some cases those indicate who is the manufacturer, where, and in some cases the active ingredients if you can't find that out from the label then you can try to call the company some will tell you and others will not. >> how much of this does the fda know because they have not given out a new breakdown? >> they know. why can't they tell them?

so if you want to stay in our supply chain then stay with the lower cost. are they pressuring the american companies like pfizer and others to move their operations to china to stay in their supply-chain? how does this work? >> it out. >> it out know how to answer that but to hammer down a manufacturer's you can't underestimate what it takes to run a high quality manufacturing facility perhaps the lack of sophistication or maybe it doesn't matter because those companies want to make sure we

get the lowest possible price. and to challenge between quality and safety. this is where we need the transparency because it's so complex. >> i would love i would love for members of congress to do that. >> thanks to our speakers. to all of you this was enlightening speeseventeen. [inaudible conversations] [inaudible conversations]

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trying to manage the worklife balance i work full-time so does my husband, with, with a part-time job with three children trying to take care of everyone. >> we have the yellow hospital it that means kindness, community, agreeable, humility, and patience. if we could all promote and live within this a low-cost spirit we could all be in a better place across the nation.