what we don't know given the high cost of the system. in other words, if prices are higher by $8 billion, how much of that trickles down into r&d? >> dr. stiglitz, you are a doctor, right? why don't you -- >> not a real doctor. >> it will do for this committee. >> the fundamental problem is that the incentives do not direct attention to the areas that are the most socially productive. that's a fundamental problem. so if the returns are highest for a drug that doesn't add any real value or very little value, that's what they're going to do. it's been proven successful. it provides somebody's profit by half and we know we can do it because it's been proven.

>> you need to be an economist to know that? that is my question. >> and the result is they aren't going to be a profit extender. but we are all affected by that because we're a global -- because they don't carry passports and know about visas to go across boundaries so that we can all be exposed to diseases that originate. at one time, the disease are the poor and they become the more diseases in the advanced industrial countries. the broader point which jamie has emphasized is if you look at the difference between what we

pay government or we as a nation pay for drugs and the cost of product, that's a huge amount. i mentioned in my oral testimony study that's showed that the gap for the government along is something like a quarter of $1 trillion a year over ten years, we're talking about how do we make up for the -- our budgetary. this is a big potential. if all of that money went into productive research, you might say, well, it was well spent. but, in fact, a relatively small fraction of that money goes into productive research. more money is spent on advertising marketing. as i, again, pointed out, many of that goes to trying to reduce

the demand to increase market power, to increase monopoly profits rather than disseminate information, to make sure our health care system is working better. >> i just wanted to reiterate something. these two companies who have the therapeutic vaccines, they don't have the money to produce it. one of them has a way. this works on human beings but you have to have money to get through the second level of trials the fda actually says they have something that actually works. because some of these medications you have to take some complicated regiments and it's worth it because it saves lives or prolongs it. it may be more realistic in people's lives.

if i'm feeling healthy and i have hiv at an old level, i have to take care of the family, raise money, do things like that. the therapeutic vaccine is something that we may not have enough money to develop it. >> thank you. yes, dr. moon? >> i think this raises a very important point about prizes. it opens up the problem to be solved to a much broader population of potential solvers than other methods. and i think what he has reminded us is despite the therapy it does offer it's far from perfect. it's difficult to maintain, that there are, in fact, other areas that we could have conflict and mechanisms of innovation that encourage break through innovation are needed. that's one of the strengths, really, is the possibility of

encouraging solvers from everywhere from every corner to come forward and put their ideas on the table. >> okay. we've been here for an hour and a half. and i don't want you keep you any longer than necessary. is there anything that anyone wants to add or raise that we haven't touched upon? yeah, jamie. >> mike, in my written statement on page 5 and page 6, i made some reference to the cross licensing agreements between the companies that sell aids drugs. on the face of it, you would think you would have a lot of competition in the aids drugs market. there's eight different manufacturers right there that are among the ability of treating people that have antrovial drugs. while you have a lot of me, too, drugs, that suggests you might have a lot of competition. within the same therapeutic class. you have in some classes eight or nine products that are in the same therapeutic class.

why is it you don't observe much price competition? part of it is the legal collusion you observe between companies. bristol-myers and gilead, merck, pfizer, gsk, abbot and rosche all cross products, their products in various ways in the hiv area or outside of the hiv area. and they're so often in bed with each other, back and forth, in some cases, one country will sell the drug in the united states and others will sell it in europe. or there might be a fixed dose combination that involves products from both in the united states, bristol-myers, and gillian. so it's hard to know, are they partners or are they competitors? and the prices would suggest they're more like partners than competitors.

>> let me -- yes, dr. stiglitz. >> two comments i want to add. i think you were right in thinking about this as an experiment and thinking about how we can develop a better innovation system, not just for aids, but for health and beyond health for research more broadly. and i just wanted to reiterate that in thinking about the innovation system, there are a couple of other parts. the patent system will continue to play some role in, for instance, ideas that we haven't even thought about. in health, the price system is particularly well suited because we have a more well formulated notion of what we need. and, therefore, if it's particularly effective in that area, some other areas where

where, for instance, in climate change, it can be particularly effective, we know what we need in terms of the more efficient batteries. so there are certain areas where the prices are very well suited, other areas where the patent system may still play a role. and the third and important part is government funded research itself that has been very effective in areas of the health, nih, nsf, and that in thinking about allocation of resources to prizes across innovation, one has to balance all three of these components of our innovation system. and then more particularly in the area of health, one of the points that was referred to earlier was that our system of testing is a very costly one, that drugs that have to be made available have to go through a set of tests.

there's a lot of belief that that testing system is inefficient. and it certainly raises problems of conflict of interest because typically the drug company does its own testing. and we know some very dramatic stories of that conflict, of interest playing out in ways that probably led to the death of other people. so i think one thing that went one ought to consider thinking through more deeply reform the ways that our system of testing is conducted. and that system of testing is one of the mechanisms by which the drug companies exercise monopoly power and act as a barrier to injuries to making r&d and the drugs less -- the drug market less competitive. so i think that once -- this is a really important bill.

and opening the door. i do hope that we'll pursue that further and -- >> let me just say this in thanking all of you for being here. i am more than aware that there is only one name on the piece of legislation. i am also aware that i am the only senator at this hearing today. but i believe, and i think you will all agree with me, that the time is long overdue to place that flag down and move forward vigorously in a concept that can save millions of lives around the world, that can open up huge v vistas of research and development and make our health system much stronger and much more cost effective. all of us -- nobody here is nai naive. we know the obstacles that stand before us. we know the powerful special interests that spend large amounts of money on campaign

contribution who is do not want us to proceed. but i think we have an idea as a result of the work you are all doing in their separate areas. it is an idea going around and around the country. and when it comes sooner, it will be of profound information. will be of profound importance around the world. i want to thank you not just for being here, because i know each and every one of you has spent, perhaps, a lifetime working on this issue and issues like that. and we very much appreciate your coming to the senate today and thank you very much for your contributions. thank you. >> hearing is adjourned.

c-span's congressional director is a complete guide to the 112th congress n. it you'll find contact information for each member of the house and senate as well as district maps and committee assignments. you can also learn more about the president's cabinet, supreme

court justices, and the nation's governors. pick up a copy for $12.95 plus shipping and handling. order online at c-span.org/shop. this is c-span 3 with politics and public affairs programming throughout the week and every weekend 48 hours of people and events telling the american story on american history tv. get our schedules and see past programs at our websites. and you can join in the conversation on social media sites. in a few moments the senate aging committee looks at ways to help unemployed older workers. then in a little less than an hour, a pentagon briefing that includes an update on the oxygen system in the f-22 stealth fighter. now a hearing on efforts to help unemployed older workers. the senate special committee on aging heard from the government accountability office and the head of a local program that helps workers. this is about an hour.

good afternoon. we'd hike to thank our witnesses and at the same time welcome everyone attending today's hearing. while americans were hit hard by this recession, the ramifications for older workers were particularly severe. once older workers lost their jobs, they struggled far more than other groups to find work again. in 2007 less than one in four unemployed older workers was out of work for more than half a year. but only four years later more than half of unemployed workers over 55 are confronting long-term unemployment. as a bipartisan opinion in "the

new york times" over the weekend stated, this problem is, quote, nothing short of a national emergency. one solution that shows real potential was developed in connecticut by one of our witnesses here today, joe carbone. he has created an innovative program called platform to employment that works. individually with those out of work to ensure they have updated skills to thrive in today's economy. the program partners with local businesses to place these workers into internships. so far 70% of those internships have it turned into jobs. this program shows real promise. they get people back to work. i believe it needs to be spread across the country. however, it's also important that we look at some of the other reasons why older workers have been kept out of work for so long and address what we can do about it. we ask gao to look into the

issue and it found that employers are weary of hiring older workers sometimes because they're concerned about health care costs, but other times because they assume that if with one is over 55 or has been out of work, then your skills are not up to date. gao surveyed experts who highlighted a number of approaches the government could take to help address this problem. one suggested approach addressed in my older workers opportunity act would provide tax credits for businesses employing older workers with flexible work programs. another area the experts mentioned is discrimination. today i am announcing my support for the protecting older workers against discrimination act, a bill authored by senators harkin and grassley that is aimed at restoring the rights of older workers to pursue claims of age discrimination. one common theme we've heard is that older workers want to keep

working not only because they need the money but because they want to remain relevant and productive members of society. we need to encourage this. left unchecked, long-term unemployment among older workers is a problem that will continue to grow as our workforce grades. in only four years from now the bureau of labor and statistics projects nearly one in four workers will be over the age of 55. we hope this hearing raises awareness about this growing problem and provides some solutions to consider. we'll now go to witness introductions. our first panelist today is sheila whitelaw, a philadelphia woman who has been out of work for more than two years. she has served as executive director for three nonprofitses, worked as a nanny and office manager and spent over a decade in the retail industry.

next we'll be hearing from charles jeszeck. he's director for education workforce and income security issues at the u.s. government accountability office. he has spent over 26 years with gao working on issues concerning the contribution pensions. the pbc, social security, unemployment insurance plus older worker unemployment issues. next we'll be hearing from joe carbone, president and ceo of the work place in bridgeport, connecticut. mr. carbone has developed the platform to employment, a public/private partnership that provides participants with placements at local companies. his program has been featured on "60 minutes" in a segment titled "trapped in unemployment." next we will be hearing from diana furchtgott-roth.

she's a senior fellow at manhattan institute for policy res research, formally mrs. furchtgott-roth served as chief economist of the u.s. department of labor as well as chief of staff for president george bush. finally we'll be hearing from christine owens, she's executive director of the national employment law project. miss owens previously served as director of public policy for the afl-cio and founded and ran the workers options resource center which fought for an increase in the federal minimum wage. before we hear from our first witness, we'd like to turn to senator corker for whatever comments he has. >> thank you. i know we're having a series of votes and thought for a moment this hearing had been called off. so i apologize for being a few minutes late. thank you for being here and i appreciate your focus on long-term unemployment among seniors. i know we have some great witnesses here today, and i

think we all recognize that long-term unemployment is actually hitting lots of demographic groups and obviously we don't want to pick winners and losers in that. i'm happy we're having this hearing and look forward to questions and comments after. and thank you for calling it. >> thank you very much, senator corker. ms. whitelaw? >> good afternoon. my name is sheila whitelaw. i am british by birth and i am proud to say an american citizen. i have been an executive director of three nonprofit organizations. i have also worked as a nanny and an office manager and have spent over a dozen years in the retail sector. i have been promoted in many of the jobs i have had and have never been fired. i have an impeccable work history, but now i am out of work and no one will hire me. i came to this country with a bachelor's degree in english literature, i married and had two daughters. we moved from the city of philadelphia to the suburbs so that my daughters could receive

a great education. once my children got a bit older, i decided i needed to go back to work. i found a position as an office manager and stayed for eight years. i then worked for three nonprofit arts organizations. my final position as executive director was cut short as my daughter was diagnosed with leukemia. our family moved out to seattle for five months so that my daughter could receive a bone marrow transplant. upon returning to philadelphia i cared for my daughter for another year. i was in more of a care giving mode and at that time i found a part-time nanny position. i stayed with the family for four years and then decided that i missed working with adults and found a job selling women's clothi clothing. in my 12 years at the boutique i worked my way up from from sales associate to manager. but, unfortunately, in january 20 2010, the store lost its lease and the owner decided not to

reopen. i applied for unemployment benefits and was approved. then came the hardest part of all. looking for work as an older worker. i didn't know how long it might take to find a job. the economy was in such bad shape. these past two years have been a complete nightmare. i have sent out hundreds of resumes and made many cold calls as well as attending job fairs. i spend several hours every single day, including weekend, searching for openings on the internet. i have had over 15 interviews but rarely have i received a response. i gather that many employers can calculate my age by looking at my resume or looking me up online. many applications require that i put my date of birth to even submit the forms and i suspect i am weed ed out in that process. i have also stopped putting the

date of the boutique closure on my application for fear that employers will see how long i have been out of work and judge me because of that. last summer, as my unemployment benefits ran out, i had to put my husband in a nursing home because of his increasing inability to take care of himself with alzheimer's. i moved to a smaller apartment and took a position in a hotel gift shop. the conditions were absolutely deplorable. and after finding mice droppings in my handbag, i quit. although the state informed me that i might be eligible for a recent extension of unemployment benefits, i had forfeited my eligibility because i left the job after four days of work. i now live on my social security and $35 a month in food stamps. life is exceedingly hard. i am working with a social worker to find subsidized housing for me in the future.

i can work. i need to work. and i want to work. but that seems very far off right now. i didn't have any real retirement money and a small savings account is almost deple depleted. at this point i don't expect to retire. even if i'm able to find a job. i plan to keep working as long as i am physically able, and i am blessed to be in good health. contrary to what employers think, age is just a number. my age does not define my ability, negate my work experience, or reduce my dedication to the job at hand. i thank you for the opportunity to tell my story today, and i look forward to answering any questions that you may have. thank you. >> thank you very much, mrs. whitelaw. mr. jeszeck? >> mr. chairman, members of the committee, thank you for inviting me here today to discuss the labor market experiences of older workers

since the recession of 2007. the recession has had a devastating effect on millions of workers of all ages, resulting in lost economic growth and reduced income and in the stress of having to seek new work simply to pay the bills. my comments are based on the findings of our report this committee is releasing today. in particular i will focus on the growth of long-term unemployment among older workers and its implications for their retirement security. in summary while older workers are less likely to lose their jobs compared to younger workers, it takes them longer to find new work. further, if they are lucky enough to be rehired, they are more likely to be reemployed at lower wages. regarding retirement, long-term joblessness can lead to reduced future accruals for workers with traditional pensions while workers with 401(k) plans will lose contributions or may draw down their accounts. in each instance older workers have less time to recoup their losses than do younger workers.

as in past recessions, the jobless rate for older workers has been lower than for younger workers. the jobless rate for workers aged 55 and over peaked at 7.6% in february 2010 compared to january 2010 peak of 10.6% for all workers. however, older workers consistently suffer longer spells of unemployment. in 2007, the median duration of unemployment was ten weeks for older workers compared to nine weeks for prime age workers aged 25 to 54. by 2011 the median duration for older workers had increased to 35 weeks compared to 26 weeks for prime age workers. also in 2011, over half, 55% of jobless older workers were unemployed for 27 weeks or more and 15% were jobless for two years or more. we hired older workers displaced from work between 2007 and 2009,

also generally sustained greater earnings losses than prime age workers. the median earnings replacement rate for these older workers was 85%. meaning that on average they earned only 85% of their previous wage. this is compared to 95% for prime age workers. about 70% of these retired older workers sustained some job loss compared to 53% of prime age workers. job loss can affect the retirement security of older workers in many ways. for those fortunate enough to have a traditional pension, long-term unemployment can lead to fewer years of accruing benefits from growth in wages and service, and may prevent short tenured employees from investing. for those workers with 401(k) plans, long-term joblessness can result in lost employee and employer contributions and can lead a worker to draw down her account balance. in our report we analyzed the

worker 55 years of age with an average 401(k) balance of $70,000 that was unemployed for two years, drew down half of her account for living expenseses and then reinstituted contributions upon reemployment. using rate of return assumptions from ssa we found that she had still not made up the losses to her account by age 62. such draw downs may be fairly common. in october 2011, a survey of workers aged 50 and over found that nearly a quarter said that they had used all of their savings during the past three years. lo long-term joblessness also hurts those workers who rely primarily on social security. although it favors low earners, because social security retirement benefit formula relies on claimants 35 years of wages, long-term joblessness of a year or two could reduce their benefit. further, long-term unemployed workers nearing age 62 may 0 opt

to claim benefits earlier than if they had still been working. the ssa office of the chief actuary has estimated that about 6%, 139,000 more older workers, filed for benefits between 2007 and 2009 than have been expected without a recession. claiming benefits early, particularly for lifelong low earners can increase the risk of poverty at older ages. even in the best of times a secure retirement is a difficult prospects especially for those workers with no traditional pension and little retirement savings. the effects of the recent recession illustrate how daunting that endeavor will be for many in the years to come. that concludes my statement, mr. chairman. i will be happy to answer any questions you or other members may have. >> thank you very much, mr. jeszeck. mr. carbone? captions copyright national cable satellite corp. 2008