prevailing wages solo. but the caller makes a good point. what we found is that, because some employers have had access to capital, not very many, obviously -- in statesville, we have seen a decline in textiles and furniture, the manufacturer of medical supplies. we have to what we need to do is pass this jobs act right away.

the president is not of the opinion -- and, of course, i cannot speak for the president. it is obvious that the president believes the jobs at needs to be passed pretty much as a whole. there are some details that are up for discussion. the prevailing wage increase -- is so low in the state. we need higher-paying jobs in space bill. it is true that manufacturers are getting capital equipment in that increases worker productivity so much they do not have to hire as many people. that is a factor as our economy shifts, particularly in western piedmont north carolina, chefs into more of service related businesses. we are going to see the prevailing wage dropped because we simply do not pay witnesses

as much as we pay people who are involved in plastic-injection molding host: caller: iatthree comments i would like to make. we have a national debt of $14.30 trillion. if we took $100 million a day and pay back earnestly in a row, it would take to lead to 89 years to pay off the national debt. -- 289 years to pay off the national debt. as far as the economy, we are burnt toast. china, india, japan, russia, and brazil are the top five countries in the world as we speak today. i do not even know that america is in the mix. i am not concerned about the $9.20 million -- 9.2 million

unemployed. i am not concerned about the foreclosures are the debt ceiling that was raised a couple of weeks ago. my concern is about losing the reserve currency of the world. i would like everybody listening to this to chat and called the supreme court and checked a case that eliminated the imposter that now occupies the white house. host: mr. parker, respond as you wish. guest: people have been betting against this country periodically. naysayers back in the '80s said japan was. to overtake the united states and that japan was the way of the future. we found that this country stood strong and proud and continues to be the economic engine of the world. is china prospering? yes, but only on the perimeter.

there are vast reaches on the interior of china that have not seen any of this economic prosperity. we are about connecting all of the people, connecting all of the dots. when a caller from florida says he is not concerned about unemployment, i would point him back to john donne's claim as devotional from the 1600's saying no man is an island. we are all part of the main. it is not for whom the bell tolls, it tolls for me. when someone in montana losing a job, the gentleman in florida is adversely impacted because it reduces demand. i am it -- i do not know how he is getting by. we are connected. i hope people realize that. this is not time to throw up high walls and pretend that the rest of the country is not in trouble. it is time to reach out to our brothers and sisters all across the country whether they are at

in florida, north carolina or florida. we have to understand we are all in this together. we the people make this country strong. if this sounds like i am on a soapbox, so be it. i believe the democratic party is all about the middle class. when we raise the fortunes of the middle class, the rich do better, the working class does better, the poor does better. when the middle-class is empowered, charitable contributions go up. that is something we do not talk about very much. the churches in this country are working hard to make sure that contributions come into those churches. so many of the churches in this country are doing one of jobs. they are making a difference in people's lies. we are all connected. host: john in north carolina. he voted for carter and after a long hiatus, president obama. he will vote for another

democrat in another 40 years. the next call is from michigan. caller: good morning. guest: good morning. caller: i want to thank you for hitting the topics right on the nail. we definitely need to go after the upper income people because, as in backing the great depression, it did two things. it made the wealthy get off the money. it also made them free of jobs. without a strong middle-class, this country is never going to survive. in michigan, we have a 10% unemployment rate. it is basically because of foreign trade policies that we have agreed to. we need to start taking care of our own in the united states. getting back to what the person said about president obama taking a vacation, back here in michigan, the legislature takes two months of treaty summertime.

nobody needs to be taking two months off in the summertime. i want to cut short and by mr. parker for speaking the truth. guest: i want to respond if i may. i love that advertising campaign of imported from detroit. it shows this country has muscled. the state of michigan has muscle. the american car industry is coming back. look what we did in bailing out -- is a derogatory term, but it is true -- but what we did we bailed out gm. gm is coming back profitable. quite frankly, i like the cars. they look good. they look powerful. they look american. i am proud of what the country did to keep gm going. hopefully a will have an impact on michigan. host: we go next to roxburgh, north carolina. caller: i live here in roxburgh. when bill clinton passed nafta,

the fabric industry went to mexico. on top of that, there are mexicans all over the place imported from mexico. all the poor black people do not have a job. i work with a lot of black people. the ones i work with, some of them have two or three jobs. democrats want to keep people poor so that they can always have that vote. they do not care about the american people. they do not care about the middle class. they care about that vote. it is disgusting and reprehensible. it has to stop. thank you. host: mr. parker? guest: that is why democrats try to enact policies that favor folks who are down on their lot. the fact of the matter is we are all in this together. if there is a lead demand for

jobs and people will fill the demand for jobs, it is good to get people employed. there is no pattern of discrimination here. we hear this kind of diatribe from republicans fairly often. the fact of the matter is the poor do not vote. a lot of those folks the caller complained about, undocumented aliens, they are not united states citizens and do not vote. the comment is speeches. the attack is inappropriate. it is based on hatred. one of the things that has happened in north carolina, unfortunately, is the republican party in this state as they have in other states has decided the hatred is not only hispanics and other persons of color, but they have decided it is convenient and easy to bully day people for no reason. that does nothing to increase the quality of life. the caller's. does not improve the quality of life or the ability of people to find work in this country.

these kinds of personal attacks, making people the object of hatred, is anti-american. this country and north carolina passed the bill of rights in 1789. we demand it so the rights of the minority could never be trampled on by a oppressor or bullying majority. right now we are seeing is bullies like that caller that has this this taste in their mouth and this hatred. those folks simply need to respect the rights of the minority, whether it is a minority of religion or a minority in sexual orientation or a minority in the way of thinking. again, we are all connected in this. i am am connected -- i am connected to this person as much as i am not the host of the show and the college in michigan. we are all in this together. that is what we need to pass

this jobs act right away. that is what this democratic convention is about in charlotte as well. it's to the first democratic tibetan that has been funded exclusively by the people. we are not taking money from lobbyists. we are not taking money from large corporations. this convention here in charlotte, just like our democratic party, is about raising money for the people. it is truly the people's convention. i would be remiss in not saying that people who want to volunteer for this convention and the part of this dialogue ought to go to charlottein2012.com and volunteer. it involved in the people of a conviction. it is an exciting time to be in north carolina. there are volunteers from all over the country coming in.

the last numbers i heard is literally thousands of people have volunteered. we will be using some 8000- 10,000 volunteers in charlotte to put this convention on. it will be a fantastic week. it is an exciting time. >> we have about five more minutes. caller: hello. david, how are you? guest: i am doing good. hope you are. caller: the jobs bill is a great plan. when we look at the country over all, we have a 9.0 deficit as far as jobs, not hiring. here in ohio we have a 9.1. when you go to apply for a job,

this is due to a temporary agency. they do not -- the company that you went to the temporary agency to be hired from gets all of your social security and everything to make it look like you have employment here, but you do not. you call on a regular basis to see if they have anything. i do not have an assignment, but guess what? you still do not have a job. they can have you listed as working. as far as the national deficit, they are saying that we really do, but we do not. guest: you raise a good point. there is an underemployment problem here in this country. there is an unreported unemployment problem in this country. that is why we have to get consumer confidence back up. if you build up the middle class and you increase demand for

products, then you will see a rise in employment. cleveland, like toledo and the other cities and in the northern part of ohio, are very tied in with the automotive industry. tied in with shipping, tied in -- i used muscular before on cars, but they are tied in with the american economy. we have got to get folks back to work. that is one of the reasons why the president has gone to ohio to talk about jobs. it has to be passed right away.

under reporting is a problem. we simply have to have more jobs. we have to have a good paying jobs. one of the things we run into in cities like cleveland is people that have those great jobs making $30-a $35 an hour now find themselves in jobs making minimum wage or making less than $10 an hour. they cannot pay their mortgages or keep up their car payments and keep life. as it is. the cannot keep their kids in college. they are worried about whether the scholarship programs republicans have cut are going to be there for their kids. if you do not have access to capital, and most of us do not in this horrible credit situation we find ourselves in -- the banks are holding so much in reserves -- if you do not have access to capital, the only

other approach you can have to break through is access to public education. the republican party seems to be committed to tearing down public education and privatizing as much of it as possible through the various plans they have. this is got to stop. public education in the corner is -- cornerstone of american prosperity. the caller's point is an excellent point. like so many parts of the political discussion, there are many ripples that come out in the pond. host: what is the breakdown in your state republican voters to democratic voters to and dependent voters? guest: we are edging towards a third each. we are not there as far as straight ticket democratic voting. democrats still have a plurality against republicans. in third place our independence. but in terms of strength, a democratic vote straight ticket more than republicans.

the fact of the matter is independent voters are critically important. republican voters need to understand that the republican party upholds the republican party -- the republican party of abraham lincoln is no more. the republican party of north carolina is the republican party of jesse helms. there are jesse helms disciples that out completely of traded what was a noble party, doing work at one time in this country. that has changed. the southern republican party has become a party of john birch people like the koch brothers. that unfortunately has permeated the state. i think we will overcome it. i believe strongly that barack obama will carry north carolina again. north carolina will be a bellwether for this entire country. i am looking forward to the reelection of barack obama at

the president of these united states. host: the washington post rated disapproving revolt -- approval rating at 53% for job performance so far. guest: we are early on. the election is 13-14 months away. as you look to the job approval rating for bill clinton at this time in his first term, i think you'll see similar patterns. do not quote me on that, but i think you'll see that. this economic recovery is not coming along as quickly as it would like to. republicans -- we have a republican "do nothing" congress. people will blame the president. the republican strategist know that. that is why they are doing nothing. the guy who called from cleveland, ohio who as france on unemployment. the caller who called in from winston-salem who sees folks out of work milling about on the

streets need to call their congressman and tell them you have got to vote for this jobs act and you need to do it right away. we cannot wait. put the economy over politics. politics will come and go, this economy is having a devastating and long-term implications for those folks who find themselves either out of work or grossly underemployed. host: last call, from santa barbara, california. mike on the democratic line. caller: good morning mr. parker. i am really concerned about the way this country is going. i feel it is no more than a coup attempt by the republican party to disarm all of the things that are put in place to advance the republican party. i also feel the immigration policy in this country is no more than invasion of our sovereignty.

i will cross over and vote for governor romney if he has the politics to get the immigrants out of here. thank you for your time. host: final thoughts, mr. parker? guest: the immigration problem is complex. in california and in all of the states that are in the southwest and pacific, it is a complex problem and one that is a distraction, unfortunately. the most important issue in this country, whether it is important politically or not, the most important issue in this country is putting people back to work. we have to pass this jobs act. we have to pass it right away. we are going to be talking about the need for jobs in this country. i hope that we are not still talking about it in september of 2012 when the country peace in

on charlotte, n.c., because i hope this republican congress will have already passed the jobs act by then and actually done something. the republican congress is doing absolutely nothing. we get distracted by these issues. i am not saying it is not important. immigration is a very important issue. but it is very of -- it is more important it -- to take care of the economy and put people back to work. middle-class tax cuts stimulate demand. putting teachers back in the classrooms. putting cops back on the beat. putting firefighters in the fire houses. it is critically important. rebuilding our ever structure. we've not talked about that very much. it is a boring topic. nobody cares about a bridge as long as they are driving over it safely, but when the bridge wobbles or there is a structural problem where you cannot cross over the ohio river from kentucky into ohio, it becomes a real issue.

we have to rebuild our infrastructure. we need to do it right away. host: david parker is the chairman of the north carolina democratic party. >> tomorrow on washington journal, a discussion of securing ballot assets and third-party candidates with elliot ackerman. after that, a look at europe's fiscal troubles with stella dawson. later, what employees can do to secure their employee pension with wrecrick rodgers. that is live at 7:00 a.m. eastern on c-span. >> sunday on c-span's newsmakers, lamar alexander on his decision to step down as chairman of the republican conference and how, rents -- how progress has changed over his four years in leadership area that is at 10:00 a.m. and 6:00 p.m. eastern on c-span. >> in my opinion, i think the

bounds of academic freedom have been pushed too far. >> in the faculty lounges, naomi riley says the entitlement mentality need to go. >> there are professors of cooking -- professors of nutritional studies, who wrapped tenure now. -- who have tenure now. someone in nutritional studies need to be able to say something controversial about obesity. >> that and other reasons why you will not get the college education you paid for sunday night on c-span's "q&a". >> you do not play politics at the upside of natural crisis. you do not play politics with the economy and you never play politics with people's jobs.

>> with the british house of commons in recess, annual party congresses are underway. what's that the prime minister nikolai's keynote from the conference this sunday on c- span. in the weeks ahead, partly covered this with ed miller band and david cameron. >> the house judiciary subcommittee on competition held a hearing on the proposed merger between pharmacy benefit management companies scripts and medco. witnesses included the heads of the company, a committed to a pharmacy owner, and a former representative of the trade commission. this portion is almost two hours.

>>express scripts and medco are pbms. they are the least understood businesses in america. the act as middlemen between health insurance plans that offer prescription drug benefits and the pharmaceutical companies and pharmacists who manufacture and dispense prescription drugs to the plan's beneficiaries. just because most americans may not have heard of pbms does not mean they are anything less than a enormous businesses with a significant impact on prices and competition in the market for prescription drugs in america. when a person with health insurance fills a prescription, it is likely a pbm was involved and setting the copiague, determining the pharmacist compensation, determining

rebates, and billing the health insurance plan for the drugs. or billing at -- i also act as the pharmacist. they now control a majority of the mail-order pharmacy business. their position in the center of the american prescription drug market has proven very lucrative. in 2010, express scripts and medco are day combined profit of $2.50 billion. the proposed merger we examined today will combine two of the three largest pbms and create a company that would be involved with about a third approach rigid drug sales in mon-khmer -- in america. they would control about 60% of the mail-order drug market. the combined company would be the incumbent holding the pbm contract. this consolidation would come in a market that has already come

under considerable scrutiny for alleged abuses of market power. small pharmacists have long complained that the leveraged market power to force pharmacy's into unfavorable an unfair contracts. my colleague, mr. marino of pennsylvania, has led efforts to ease bargaining power between pbs and pharmacies. the has introduced the hometown pharmacies act to empower small pharmacies to negotiate on more even terms. in addition to pharmacies, they enter contracts with essentially every major player in the supply and payment system for prescription drugs. a pbm with too much market power could command larger rebates and discounts from drug companies, capturing more of their profits and perhaps leading to decreasing competition and innovation to bring new drugs to market. a pbm exercising unlawful market

power could decrease rates for pharmacies selling prescription drugs to levels that would make traditional pharmacies are probable and push more business to their own mail order promise it -- pharmacy business. a pbm unchecked by competition could potentially raise the prices it charges employers and other health insurance plan sponsors for administering their prescription drug benefits. if this merger leads to a decrease in the supply a prescription drugs and pharmacy services or raise their prices, then america's prescription drug consumers will bear the burden. it is by no means clear that the de's merger will have any of these negative effects. the parties argue that far from raising prescription drug prices, they are essential to controlling medical costs by negotiating the best possible deal with health insurance plans and the consumers who are covered by the plants. there is evidence that pbms do

save health care cost and mergers can help pbms realize efficiencies and scales that allow them to save even more money for their clients. one study released yesterday estimate that clients would save almost $2 trillion of health care cost of the next decade. another fact to consider is that nearly every major plan sponsor who is responsible for administering a health-insurance plan hires a pbm to administer the prescription drug benefit under that plan. if they did not save money for plan sponsors, then, presumably, plan sponsors would not continue to engage them. this hearing will examine all the issues surrounding this merger. i look forward to hearing from our expert witness panel today, but i would like to it conclude my remarks by raising a larger concern that goes beyond >> in the anniversary call

announcing the merger, the express scripting c.e.o. and the medco c.e.o. who are here today as witnesses mentioned the president's health care reform as a major factor motivating the merger. mr. snow said, "i believe you are going to see all sorts of combinations across the speck trumps of health care as everyone realliance to health care reform and the demand the government is making." i am concerned that mr. snow may have been right. in the 18 months since the health care bill became law, we have seen a wave of mergers in various levels of the health care economy. -0 afraid -- i am afraid this may be a system.

are enforceable by the department of justice, the federal trade commission and private persons. the proposed benefits between pharmacy managers, express

scripts and health solutions is currently under examination by the federal afraid commission, signaling that the f.t. c. is paying attention and that the deal has raised anti-trust concerns with the regulators. the f.t.c.'s so-called second request demonstrates that the attention attract in the marketplace. in aid of this investigation, the f.t.c. has the authority to compel detailed confidential information to which we as legislators do not have access, making it far more likely that an proacht determination will be made based on the facts and not on political pressure.

it should come as no surprise that i believe, as i indicated in prior hearings before the committee that our oversight function is best reserved to address legitimate concerns. for ex-, agency -- for example, agency impropriety or inexpectable action or as is more likely in this budget cutting fiscal environment, the agency is so under staffed or under funded that is ill-equiped to discharge its responsibilities at all. fortunately, no such claims have yet been raised with respect to this merger. in the area of pharmacy benefits managers this committee in prior sessions of congress has considered whether a limited anti-trust exemption is it appropriate to permit

community pharmacy to collectively negotiation the terms and conditions of insurance contracts in order to produce plans that would protect the patient's choice of pharmacy. to the extent this hearing sheds light on whether we should revisit that question, i believe it could be helpful to the committee. there are also other legislative issues. for example, the lack of transparency of the p.b.m. call structures that the ways and means committee could appropriately consider. i look forward to hearing from the experts assembled here today. i know that their testimony will provide the public with a fuller understanding of the issues at happened. but let me be clear. the ultimate determination as to whether this merger imper miserably restrains competition or violets the anti-trust laws lies with the f.f.t.c. and not

with the house of representatives or the judiciary committee on which we sit down. i yield back and thank the chairman. >> i thank the ranking member. the chair will now recognize the gentlemen from pennsylvania for an opening statement. >> thank you, chairman. i would like to thank you for holding this hearing today on the proposed merger between express scripts and medco, and particularly for inviting my constituent to testify. i believe this hearing gives us the unique opportunity not just to discuss the merits of this particular merger, but to discuss the broader challenges that many community pharmacists are facing. in the 10th congressional district of pennsylvania, local pharmacies are the foundation of many communities. people know their pharmacists and have trusted their advice

and guidance for years. my daughter takes a great deal of medication on a daily basis. my pharmacist is always there. he know us on a first-name basis. there have been situations where we have gone away and foreen or ran out of a prescription. we just call our pharmacist, and he makes the arningse, and we are taken care of wherever we are. it is personal service like this that makes community pharmacies so valuable. nothing has highlighted the importance of local pharmacies and the role they play in the community more than the recent events that occurred in northern pennsylvania over the past few weeks. it is my understanding that they are prepared to discuss in more detail a personal story about this. but i can tell you that without community pharmacies, a horrible situation for our friends and neighbors could have been much worse. community pharmacies are now

facing a number of challenges that are threatening their ability to continue to provide personal services to communities and neighborhoods that need them the most. as a result, we seen the number of community pharmacies deadline nearly 50% since 1980. this is a disturbing trend, especially because it is small businesses such as the pharmacy that will lead us out of these difficult economic times. as lawmakers it is our job to focus on laws and policy says that create jobs here in the united states. i have serious questions and concerns that the merger we are discussing today could worsen the climate for independent pharmacies and could lead to less access and higher costs for patients. i am especially concerned about the consolidation this merger would cause in the mail order and specialty drug markets.

according to 2011 atlantic information systems data, the combined mail order facilities would concentrate 59% of the mail order market, and in 2009 the combined specialty drug market's share for express scripts and medco was 52%. there have been a number of reports where patients are being directled a way from local specialty pharmacies to ones that may be much further and way and owned by the p.b.m.'s. while i am concerned about the effects of this merger, it is important to recognize that regardless of the outcome of the federal trade commission review, independent pharmacies will still face substantial difficulties. for this reason, i have introduced h.r. 1946 for preserving our whom town independent pharmacies act that would be one step towards

leveling the playing field for community pharmacies. this would allow independent pharmacies to join together to negotiate the terms and conditions of insurance contracts, to produce plans designed that would better protect the patient's access to their pharmacy of choice and are fair to the pharmacies. this legislation would put an end of take it or leave it tactics that small pharmacies are forced to accept. many of my colleagues have already joined me by c.e.o. sponsoring this legislation. in conclusion i would like to enter into the record a letter i received from the pennsylvania house of representatives chairman of the health committee, matthew baker, in opposition to the merger. in the letter he stated p.b.m.'s record of controlling costs is credible. the proposed merger would limit the ability of the private and public sector to control health care costs, thus resulting in a

significant reduction of competition. again i would like to thank the chairman for holding this important hearing as the f.t.c. commits its review and continuance of this proposed merger, i would ask they pay special attention to what it would do to patient access to local pharmacies and the perm care these pharmacies provide. i look forward to working with you to ensure that we are doing everything we can to give hometown pharmacies the opportunity to grow and create jobs while providing the best care for our families, thank you. >> i thank the gentleman. without objection the letter will be made a part of the record. we are pleased to be joined by the ranking member of the full judiciary committee, the ya from michigan. i am pleased to recognize him. >> thank you, chairman, and

ranking member. i have said before that i have rarely met a merger that i liked, but this is one that i like more than the ones that i don't like. the biggest problem i have here is that the small pharmacies and independents are urging me not to support it. i hope i hear persuasive discussion that will lead me to go along with this circumstance . >> this is the case of a small

company taking over a bigger company, isn't it? which is also quite unusual. here we come with these intermediaries, these folks that work in between the pharmacy benefit managers. how did they get into the picture? where did they come from? what created them? i understand there are more than 40 floating around. i think -- and i hope i heard my leader, mel watt, say that we determine what violates

anti-trust, not the f.t.c. that is what is in our jurisdiction anyway. i come here thinking that in the long run, somebody is going to go out of business if they don't merge. i don't want to try to tell you i've looked at the books of anybody, but what i'm hearing is that if this merger doesn't take place, it is not unlikely that somebody will go out of business so that from a jobs perspective, this is a strong case for the merger.

and so i will introduce into the record my complete statement and ask that all of you expect me to discuss the chairman's observation that the wave of mergers were the result of the ill-conceived health care bill. i hope that you are all prepared to answer that question. i thank you, chairman. >> i thank the gentleman. it is now my pleasure to introduce our witnesses. we have a distinguished panel of witnesses. before i introduce them, i would like them to stand and be sworn. do you and each of you swear that the testimony you are about to give is the truth, the whole truth and nothing but the truth so help you god? >> thank you and please be seattled. each of the witnesses' written

statements will be entered into the record in its entirety. i ask that each witness summarize his or her testimony to five minutes or less. to help you, there is a timing light on your table. when the light turns from green to yellow, you will have one minute left. when it turns red, that's it. the five minutes have expired. our first witness is george paz, chairman and c.e.o. of express scripts incorporated. our second witness is david snow, chairman and c.e.o. of medco health solutions. our third witness is joseph lecht, our independent communicate pharmacist from pennsylvania. our fourth wesley is dennis weizner, a senior director of the h.e.b. grocery chain for

responsibilities for privacy, pharmacy and government affairs. our fifth witnesses is dan gustufson. and our sixth and final win is stephanie canwick. well begin with you, welcome. you may want to turn on that microphone and pull it close. >> all right. thank you, mr. chairman and members of the subcommittee. thank you for this opportunity to explain how the combination of these two innovative companies can benefit the nation's patients and public and private purchasers. i believe that today's hearing will common straight that this merger is one of the best prospects to secure saver and more affordable prescription

drugs for tens of millions americans. i want to address jobs. health care costs are a worrisome part of running a business. yesterday an important new study was released which i asked to be included in the hearing record. it concludes that for every one percentage point reduction in prescription costs, 20,000 jobs can be made. they have a proven track record. there are many proven tools available through p.b.m.'s that reduce drug costs, and this merger will sharpen and expand the vainlt of these tools. four of us on this panel are part of the same noble mission. patients in need of medicine rely on us for access to affordable care. each of us is committed to the highest ideals of the practice of farm ace, accuracy, safety,

affordable care and service. we are the p.b.m. for blew cross of northern pennsylvania, the insurer that covers many of his customers. we work with thousands of independent pharmacies like those across the country, and we value those relationships. mr. wise ner's employer, h.e.b., has been our client for many years. his chain of stores are also an important part of our network. let me acknowledge the service on the texas board of pharmacy, where he is developing the next generation of skilled pharmacists to serve patients. i am proud to report that one of my employees was named outstanding young pharmacist of the year by the texas pharmacy association. we should ask ourselves what is in the best interests of the patient when they are there to

fill a prescription, and who is there to ensure the family is getting the best value for their money. they get the best possible deal while improving safety. we make the use of prescription drugs saver and more affordable. after a patient has been seen by their care giver and has a prescription that needs to be filled, they are hardly in a position to negotiate with a drug company or a pharmacy. they just know they need the prescription filled as their ticket to getting well. if they are one of our patients when they walk interest a pharmacy, they have all 13,000 employees standing with them. before they have receive their medicine, over 100 safety checks are conducted by our system, one of the most advanced systems in the world. in less than two seconds we determine if there is a clinically appropriate, less costly generic drug available. we make sure the patient is not subject to adverse drug events.

further, what patients pay is reduced on average by 30% to 40%. for other pharmacies, they receive safety information, and they are assured payment, eliminating $7.3 billion in bad debt to pharmacies each yore. niece are all giant leaps forward for patients and pharmacies that companies like ours help to create. we make these benefits crable to over 65,000 pharmacies in every corner of the united states. i believe drug costs are still too high for american families. when the big drug companies' charge for their medical since keeps going up, and large drug store chains want to dictate prices, i want a fair teal for our patients and employers. that mission goes to the core of what our companies are all about. we are fully aligned with our patients and employers. we make money by saving them

money. this union of our two companies will strengthen our ability to do just that. in my formal testimony i go through many of the tools we have developed to drive down drug costs while improving health outcomes. we have a proven track record. there are other benefits to the health care system by combining our two companies. for example, one, we increase patient add harnse and reduce unnecessary medical expenses. two, we help the f.d.a. monitor drug shortages and identify safety concerns quickly. three, we emmour federal and state responders to respond to natural disasters. and four, we help law enforcement address fraud, waste and abuse. in conclusion, the merger of express scripts and medco is the best opportunity to continue to lower drug costs while improving health care today and for the immediate future. mr. chairman and members of the subcommittee, i thank you for the opportunity to speak to you

today. >> thank you for your testimony be and without objection the study you researched in your testimony will be made a part of the record. mr. snow, welcome. we are pleased to have your testimony. >> chairman, ranking member, and members of the committee, thank you for this community to discuss the proposed merger of medco and express scripts. my name is david snow, and i am the chairman and c.e.o. of medco. medical exo is an. we develop innovative solutions that thrifere value to priffed and public employers, health plans, labor unions and government agencies of all sizes. everyone recognizes that the ever-rising cost of health care in america is unsustainable. as the health care industries focuses on reducing cost, we face the fact that we must do more with less. the services that p.b.m.'s

provide are very much part of the solution. by merging medco with express scripts, we will accelerate our efforts to reduce officer all cost of the health care system and improve the efficiency of care delivery. to understand the value of the combination of our two companies, it is critical to recognize the marketplace in which we operate. our competitors include 40 p.b.m.'s, household names. and others who may not be so well known but maybe major inest investments. and perhaps most snskly, united health group -- nisketly, -- significantly united hell

group. new entry remains a very real prospect. that competition will only be enhanced by the merger. it was within the context of this competitive marketplace that the merger of our two companies was conceived. the essence of the p.b.m. business is to bring lower drug prices and hire quality care to patients, employer and taxpayers. the combination will accelerate our efforts to achieve that goal in a number of ways. i will just mention two, volume and improved clinical practices. first we will be able to lower drug and patient user cost by achieves greater discounts from drug manufacturers, there by lowers costs to consumers and employers. under the terms of our existing employer contracts, the ones we have in place today, $1 billion in savings will be passed back to our clients guaranteed. second, the merger will control synergies by combining the best

of our complementary patient centered care programs. we are proud of our specially trained pharmacists who use clinical protocols and counseling to help chronically ill americans manage their conditions. the result, an estimated $900 million in savings from reduced hospitalizations and associated costs last year. but we have only scratched the surface. we as a nation could save a total of over $350 billion a year by addressing medications that are under prescribed, misprescribed or simply not taken as directed by their physical -- physician. taken taking, the merger will help the government, businesses and the economy as they reduce the cost of entitlement programs. as is the case with the private sector, better management of costs in the medicare and

medicade programs can achieve savings without the need to reduce benefits. at a 12% of payroll, health care is the most costly benefit expense for employers. improving outcomes while reducing costs is the definition of doing more with less, and it will make our nation's businesses more competitive and successful. we recognize that many have voiced concern about the impact of a merger on retail pharmacies, particularly on independent pharmacies. more than 85% of medco customer prescriptions are filled through our network of over 60,000 retail pharmacies nationwide. there is nothing we plan to do that will change this. as our written testimony details, we are proud that our partnership with the community pharmacist has provided technology and information that have helped independent pharmacies protect and grow their business in an environment that favors national change and big box

retailers. the examples of i have provided today demonstrate that our health care system does best when many companies and different models of all working together. this breeds collaboration. it is a catalyst for experimentation and progress, leading to break through sligses. we all know the future belongs to those who deliver more for less. we will build a strong competitive company that helps millions of people to live longer, healthier lives, plus the nation's goal for an affordable health care system. thank you for listening to my testimony, and i would be happy to answer any questions you may have. >> thank you, mr. snow. thank you, we are pleased to have you here. >> good afternoon chairman, ranking member, and members of the subcommittee.

thank you for conducting this hearing and for the opportunity for sharing my view for the merger. i am the owner of five independent retail community pharmacies in rural northeast pennsylvania and have been a practicing pharmacist for 30 years. i am a member of the national community pharmacists association, which represents the pharmacist owners, managerers and employees, more than 23,000 independent community pharmacies across the united states. they dispense nearly half of the nation' retail prescriptionings. i would like to thank congressman marino for the active role he has taken in trying to level the playing field between community pharmacies and pharmacy benefit managers. we thank him for introducing the save our home town pharmacies act, endorsed by the group representing the chain pharmacies. thank you. as a health care provider, my primary concern is the health and well-being of my patient.

access to prescription medications is essential in maintaining the health of those patients. as you are aware, pennsylvania like many other states was recently devastated by flooding. many people in the area where i am from were evacuated from their homes with nothing but the clothes on their back. the morning after the rains started, the roads were so bad that my usual 30-minute commute took two hours. i is a saw mr. slater standing in front. he and his wife had been plucked from an upstairs window of their home and taken by boat to safety. they were unable to retrieve his 16 medications, and her eight that they need on a daily basis. i assured them i would provide them with their prescriptions. but what would happen in cases such as this if pharmacies such as mine disappeared from the communities that they rely on. the fact is communicate pharmacies are closing. this is just one story.

there are thousands just like mine of communicate pharmacies stepping up to assist patients and getting their much-needed prescription medications. during the flooding, the congress and his staff got their feet way as they participated with lech pharmacy and red cross in prescription and supply deliveries from our pharmacy. our three pharmacies were the only ones open in the county three days. the reason i am telling you this bm already have some much control over the marketplace it concerns me what would happen if this merger would to occur. i have seen larger pharmacies gobble up smaller pbms to reduce

competition. currently, there are three that overwhelmingly dominate the marketplace. express groups, petco, and cbs. i am aware -- and cvs. i believe this will continue to negatively impact community pharmacies and the patients we serve. the recently announced proposal will exacerbate the problems patience and firmness his face. the merger of these would create a mega pbm in markets critical to health care costs. i believe it will harm patients by reducing choice, decreasing access, and ultimately leading to higher prescription drug costs. the proposed merger is the tipping point in terms of market concentration. the merger will cause a substantial reduction in price

and non-price competition. it would improve over 40% of the drug market. large national health plans, insurance companies, and government sponsored health plans are already limited. there will be fewer administration alternatives, which will allow the merged entity to dominate plant designs and benefit structures that the expense of purchasers. the merger will create the largest mail order operation, accounting for over 60% of mail order business in the u.s. the will have the increased ability and incentive to force consumers to utilize the mail order portion of their business. in misconception put forth is that the switch to mail order will lower drug costs for consumers. evidence demonstrates the opposite. mail order pushes up your

generic, thereby lowering generic dispensing rates. if more and more switched to mail, in many cases a pharmacy is unable to stay in business. this is particularly hard in rural areas, where pharmacies function as health-care providers when a disaster such as a hurricane, tornado, or funding strikes. this merger, if approved, will cost local economies jobs and tax revenues. due to the number of firms is that will likely be out of business, this merger will harm small business and cost jobs, something our economy cannot take it this time. in conclusion, i will add that i enjoy being a pharmacist. i love what i do. i believe i am making a difference to the patients who depend on my pharmacies. however, i am concerned this will reduce patient access,

leading to higher drug costs and the reduction in competition. i think the invitation, welcome questions, and would like to enter this document, which believe the members have received in a packet, called "waste not, want not," dealing with waste in prescriptions. >> without objection, the report will be made part of the record. thank you. we are pleased to have you with us today. >> members of the subcommittee, thank you for the opportunity to testify. i am a pharmacist and i have worked in community pharmacy for over 40 years. i have grave concerns about this proposed merger. it would be a tipping point in market consolidation, harming patients as well as government and private health plans and employers.

there is only one stakeholder that would benefit. members of congress, insurance commissioners, state attorneys general, and state legislators have expressed concerns to the federal trade commission. this would be a merger of two of the big three pbms. nearly a third of americans would require on a single company. it would control over 40% of prescription volume, 60% of the promising market, and more than 50% of specialty pharmacy sales. patience and particularly will be harmed -- in particular will be harmed to reduce choice, decreased access to essential services, the separation of the prescription medication records that could result in adverse patient health outcomes, disruption to normal

prescription service, and potentially decreased medication adherents. reducing patient choice and access will lead to higher prescription costs, adverse outcomes, and hired downstream costs. there is no proof the passalong the purported savings to health plans are consumers. there have been deceptive and fraudulent practices. in recent years, cases brought by state attorneys general have resulted in over $370 million in penalties. the have accepted rebates from manufacturers in return for placing higher priced medication, old switch prices, and have not passed on the enrichment to the health plan and employer.

they already operate in an opaque manner. they are in a unique position. there would be even greater ability to dictate and favorable policies to health plans and employers, harming consumers. this is why we seek legislative relief. policies that refuse to be shut out of the networks that provide pharmacy services to their neighbors and huge purposes of american consumers. war would be forced into using mail order facilities as opposed to choosing their local pharmacy. there would be valuable face-to- face counseling. there is a firm commitment to serve all the citizens in all our communities. that commitment is stronger today than ever?

-- stronger today than ever. being able to serve the needs has been threatened by the one- sided nature of arms agreements. we have seen firsthand the unilateral nature of these contracts. the are allowed to establish the basis of cost for prescription medication, change it with little or no notice, and second- guess or override the prescription order. claim submitted and approved are routinely approve retroactively and payment recouped, due to inadequacy in the system. our internal health benefits team provides health-care services to over 140,000 individuals. they feel strong that this merger will limit competitive options the result in costs increasing. promises help ensure patients

understand their medications as directed. local health care doctors will assist in the vacation decisions. community pharmacies also provide critical cost effective services like monitoring, health education, and screening programs. together, these sources improve patient health and reduce outcomes. we support legislation to rein in their more egregious actions, including a turn 1971 and a turn 1946. -- including h.r. 1971 and h.r. 1946. but the fleet drug costs for health plan -- they inflight drug costs and limit payments to pharmacies. patience appear to be an afterthought. there would be an increased ability to engage in similar

conduct, to the detriment of pears and policy providers. -- payers and policy providers. >> thank you. we will hear from mr. gustafsson. an >> thank you for providing me the opportunity to testify. i practiced antitrust law in minneapolis. i am working with the group that the american interest institute to evaluate the proposed merger. although our work is preliminary, we have identified several potential concerns. before i identify these concerns, let me emphasize that the time for careful evaluation is now. although antitrust enforcement

can sometimes undo the effects of already concentrated markets or anticompetitive conduct, preventing such conduct before it occurs is more effective than public policy. for that reason, we applaud the second request for information, as it continues to evaluate this merger proposal. pbms touch most american lives in their roles as managers of prescription drug benefits, to pharmacy claims, formulary management, and home delivery pharmacy services. the also negotiate discounts and rebates from pharmaceutical companies. the market for national services is already concentrated. cvs, express scripts, and medco control over 80% of the market when it comes to large contracts.

the company will overwhelmingly dominate the it services market, covering nearly 150 million prescription drug consumers and over 50% of large sponsored. no other would remotely approached them. -- approach them. as a result of our evaluation of this merger, we raised several concerns. will the merger reduce competition of services? although there are numerous smaller entities, they operate only in regions. some serve only in special niche markets such as government services. others offer limited services in areas such as specialty drugs or claims processing. the lack the ability to negotiate the same discounts and rebounds -- and rebates. they may be unable to

constrained potential anti- competitive conduct. will it lead to increased prices or reduce services in the distribution of specialty pharmaceuticals? significant concern exists. there will only largest specialty pharmacy businesses. there will be a share of the firms to market segment. there are important treatments to people with chronic and life- threatening illnesses. we monitor patient therapy and play a role in medication and compliance issues. to reduce competition could lead to increased costs and reduced services to consumers that depend on them the most. will the proposed merger increase the exercise of firepower to reduce the delivery of traditional pharmaceutical services? we're concerned they already

possess the ability and incentive to exercise market power over retail, independent, and chain pharmacies. the reimbursement is a major source of their revenue. the proposed merger could enable the remaining two large companies to push the retail pharmacy compensation's below competitive levels, leading to reduced services for their consumers. this proposed merger would also create the largest mail order pharmacy in the united states, accounting for nearly 60% of mail order scripts. they could divert prescriptions to their own mail order facilities instead of traditional pharmacies. they could maximize their own gains if they select drugs from which the receive superior rebates from manufacturers. this harms consumers. it may be enhanced by the creation of a dominant pbm and

the elimination of one of its only competitors. we need to be careful to examine the claimed efficiencies to determine if the savings proposed a specific to this merger and cannot otherwise be obtained by means unrelated to the merger. the careful analysis made as to whether and to what degree these claimed efficiencies will be passed on to plans and therefore consumers. pass consolidation in this industry provides sufficient data to evaluate previous efficiency promises that have been made. the recent spike in profits suggest less and not more competition, and higher prices of plans for consumers. thank you for providing me the opportunity to testify. i am happy to answer any questions you might have. >> we are pleased to have your testimony. >> thank you. i am honored to be asked to testify here today. i want to know i am not

testifying on behalf of either party to this merger. but given my antitrust and federal trade commission background, i have been asked to testify about how the agency is likely to view the merger based on both federal marshal law as well as its previous and extensive studies and letters relating to pbm's. i have great respect for the ftc's expertise. the agency is very knowledgeable about the entities they interface with and how competitive the market is. as noted, the ftc is going to subject this merger to very close scrutiny. here is the ultimate question in antitrust lange go. will its substantially lessen competition. -- will its substantially lessen competition? will there be substantial competition that will promote

lower prices for consumers and result in higher quality and more access to prescription drugs? as the federal merger guidelines make clear, just enacted by the department of justice last year, antitrust merger law is about the impacts of the merger on cost and quality for consumers. it is not concerned with the impact on individual competitors in that market. here is how the ftc is going to be looking at its merger. it is going to be looking and both have set up -- both halves of the pbs -- both hats of the pbms. my testimony outlines in detail multiple reports and investigations which are found the market competitive and found pbm customers have choices. the ftc has repeatedly in

letters and studies talked about how they are pbm's, buried, and how some are buying groups of independent pharmacies. it is a fluid market where entries and exits are frequent. i will give you one example recently. walmart has recently entered the space. the bottom line is that the ftc has found in a study where its subpoenaed information that customers both large and small have multiple choices and frequently can and do switch if they are unhappy with service or pricing. they can negotiate contracts that benefit their members and themselves as both prices and quality -- whatever they want. the second question the ftc is going to ask is the impact on retail pharmacy.

the representatives of retail pharmacies have an eloquent in condemning this merger, but i want to make a practical and a legal point. as you have heard, they need it retail pharmacies and pharmacists. they need them. they have to assure their customers can fill prescriptions at various locations. access standards in programs like part the medicare -- they are very strict on networked adequacy standards. in urban areas, 90% of beneficiaries have to live within 2 miles of a retail pharmacy. it is important port there to be extensive retail pharmacy networks. legally, you have also heard discussion about whether this will adversely affect retail pharmacists. under antitrust law, we're concerned with competition in

general, not individual competitors. the ftc is coined to look -- this is a long section of merger guidelines -- at whether it brings efficiency to the market. a past merger case talks about how a merger is pro-competitive if it results simply in a shift of purchases from an existing store to a lower-cost, more efficient source, rather than a reduction in purchases. taking costs out of the system, a merger can be very pro- competitive. in conclusion, the merger guidelines say the ftc should look at whether a proposed merger is competitively harmful, but also supposed to avoid interference with what the guidelines call competitively beneficial mergers. that is right out of the guidelines. the ftc is going to look at this merger in light of previous

conclusions in this area. it has found the market is competitive. thank you for your time. >> will not proceed with questions for the witnesses. paz.start with mr. isn't there a benefit in having a personal relationship with the community pharmacist? hallwood mail order drug inherent programs be as effective in promoting proper use of prescription drugs -- hallwood eight mail order drug problem be as effective in -- how would a mail-order drug problem be as effective in promoting proper use of prescription drugs, compared to

a pharmacist? >> lafco access at retail and mail order level. it is important to keep all the prices competitive. we do not choose one versus the other. most of our clients, who are sophisticated, want access. we supply access. with respect to the actual pharmacist's -- >> i want to interrupt and ask if your resistance to walgreen's promoting 90-day prescriptions to retail customers -- is that at least partly motivated by your desire to fill prescriptions for your own pharmacy? >> it is not.

the 90 day prescriptions are set by plan design. we do not govern them. we shall the costs. mail order is cheaper. we can sell over 100,000 prescriptions a day with six sigma quality, less than two defects per million. that is very, very low. what ends up happening is the plant ultimately decides what because structure is to be. a company in economic trouble is much more confined. those clients that do not have economic issues may be less forceful in these areas. for example, setting co-pay levels. the more a company has to say, the higher the co-pay. we set those levels. the plants at those levels. we a bannister those on behalf of our plans.

90 day retell -- >> i have to interrupt you because i have a bunch of questions to as a bunch of people and only five minutes. >> we do not want to stand among the community of pharmacies. >> let me direct a question to mr. snow. are testified that pbm's dependent on strong retail pharmacies and engage in collaboration with beneficial pharmacies. if it is mutually beneficial, why is the attention, criticism, and distrust among pharmacists? >> that is a very good question. there are a number of factors that go into that. i understand the plight of the independent pharmacist. if you look at the competitive landscape today, retail

pharmacies continue to open each and every year. they're independent pharmacies. they are chain pharmacies. there are gross restore pharmacies. the number continue to grow. when i walked on the street in my home town, 10 years ago there was one pharmacy that serve my community. >> why is the tension there? why would i visit? >> here is why. now there are to chain stores within 100 yards of that independent pharmacy. in every grocery store since 10 years ago, they have their own pharmacy. you have enormous competition for foot traffic. patients are making choices. there is competition for foot traffic. it is a very competitive environment. it does put stress on the economic or independent pharmacy. >> let me ask you about

competition. what was the largest contract medco has bid for a lost in recent years that went to anybody other than express script or cvs/carekarmk? -- caremark? >> it is a well-known account that was about a billion and a half dollars. it went to one of those companies i mentioned in the second-tier in terms of capitalist rx. that was 18 months ago, two years ago approximately. >> my time has expired. i recognize the gentleman from north carolina. >> i think the testimony benefits how -- reflected a technical and precise this analysis will have to be, and illustrates the point i made in

my opening statement. let me see if i can ask a few questions to try to clarify my own thinking. mr. snow, i understand that medco, the special me schmidt co has -- the special chic -- niche you have in north carolina is in the specialty drug industry. >> we are a full-service -- we do not have a specialty angle. >> you are denying what some people have told us? >> i do not believe we have a specialty pharmacy and carolina. >> if you do, and the testimony is correct that this combination will give more than 50% control

over the specialty market, would that be a relevant consideration, as far as you're concerned? >> it would be. but the facts on this are in the space broadly there are 48 competitors today. in the specialty space, there are hundreds of competitors. if you look at the specialty space, look at the disease level. >> i am not looking for a treaty's on the way the industry works. ms. kendrick, let me pull out the specialty drug. here, assumed the combination of these companies and is up with more than 50% of the specialty drug market. how is that likely to play out before the ftc?

>> first, we have to decide -- the ftc has to look at as the market for antitrust purposes. 50% is relevant. as a caution, market shares do not mean very much. what is interesting is market power companies can exercise. >> you are saying a company that has 50% of the market does not have more market power than somebody that has 5% of the market? >> specialty drugs are another kettle of fish. manufacturers of specialty drugs drive the distribution process. it is a different process than with lipitor. >> is that more mail order? >> it can be. there are specific administration issues related to specialty drugs, for cancer, multiple sclerosis, hemophilia, etc.

>> the ftc may segment this whole analysis on specialty drugs and analyze that as a separate impact situation? >> it made, if they choose to do so. >> efficiency, you have made some claims about it. how do we know that the results of those are being passed along to customers? >> i will start. and you can chime in. if you look back at our history, it is one of acquisitions. we have done many transactions. if you look at our contract, we are proud to serve our men and women in uniform. over the course of the if you look at the pricing the pricing has stepped down. we saved the department of defense over half a billion dollars over our contract term.

>>that's fair. let me ask this question. mr. snow and mr. paz, you all have been competitors for a number of years. what -- what benefits have there been from your being competitors that will go away as a result of the merger? as you see it? that's not a trick question. i don't see the benefits going away. >> mr. snow's company, medco has a different approach to the administration of the drug benefits than my company. i think they're both very good but together combining the best takes us to a new level of clinical expertise and the ability to drive more costs and

health outcomes. >> what do you say on that mr. snow? >> the reason that companies hire us >> us is that -- that's not what i asked you but if you want to answer a different question i'm asking what benefits were there from the competition between the two of -- the two companies that will go away as a result of the merger? >> as mr. paz said we honestly see no benefit going away. we only see benefits added. >> the chair now recognizes the gentleman from florida, ms. adams for five minutes. >> thank you, mr. chair. mr. paz we know that health care costs are on the rise. and a lot of us here want to know what can be done to further of prescriptions both in the commercial market and medicare and medicaid market? one of the most important things we can do is elimb nat

fraud, waste and abuse. it is the biggest issue we face. in florida it is a great example. we helped the law enforcement agency by turning over pharmacies that were pill fills where we could see undo uses of -- controlled substances. too used to the industry jargon. but getting people to stay on the medication and get them on the right medication and looking for gaps in care are important for eliminating costs in the equation. >> so what we're here to talk about competition today. so i'm curious as to how many pbms compete with express scripts on a contract how often contracts? lose on those right. >> from a competitive

perspective the most clients enter into three-year contracts. they invite, seven to eight to nine different companies to bid that contract. they take it down to two or three which are the finalists. when you look at the purchasers of our product, these are very specific sophisticated buyers. they understand. the big fortune 500s and health plans they hire people who know prescription drugs and have been in the industry, are pharmacists by education or have a medical background. they hire consultants and they come out of our industry as well. it's an incredibly competitive process bought by sophisticated buyers. >> can i add something? >> sure. >> an important fact that for the fortune 50 there are ten different pbms serving the fortune 50 to give you an idea

how competitive the market is. >> would you agree that health care costs, it's waste, fraud, and abuse or would you believe it is competition that could add to lowering of the cost? >> i would focus on something else. when we pull the companies together you get more. but i believe and it involves all pharmacies a we as a country need to focus on the better management of patients with diabetes and other chronic diseases. they spend 75% of the medical money in this country. it is estimated we waste $350 billion a year each year because of the poor management of the chronic and complex disease. seeing gaps in care, helping pharmacists when they are seeing a patient and knowing there is a gap in care get in enormous amounts of noup help the system. we in your state are doing a

project with retail pharmacies where we push information about the patient and all the trucks they are taking from all the pharmacies they are going to so they can see up against evidence-based protocols what the gaps in care are so they can close the gaps in care. we have worked with states to help the pharmacies to get patients. reimbursed for that time with it's not what the retail pharmacies cost. they are an important part of the system. but we are wasteful in the way we deliver total health care. and we need better system to support the patient in that care. that is what we want to continue to do. >> do you want to add something to that? you looked like you were thinking about what he was saying. >> oh, yeah. >> i could tell. >> i think we are confusing matters here. is it the pharmacists who have gone to school to become

pharmacists. is it not a pbm. it's not all the technology that they talk about that makes that difference. we need the thing that the pbms do. we need the reports. but we've got to twist it by the way these gentleman to my right are describing it. somewhere in their testimony they mentioned that a pharmacy is complimentary to the pbm industry. i'll tell you what, as a professional as a pharmacist they have that backwards. they are the compliments to us. it is our profession. it is our art. it is our science that, you know in a sense, they are getting in the way of. they have become burdensome and fat to use that word and i believe the reason why they are fat is because of the profits they are extracting by the way they have been able to self aggrandize themselves and through this marketing thing and release a study i that is

funded by them on the day of the hearing. rather than go on and on about that we have to put things in perspective and put the power into the pharmacist's hand. we have the technology now. we may not have everything he is talking about. but we have computer systems that bring up interactions. the only ones i get are the ones refill too soon. i get them from the software and the online that i prescribe to for the pharmacy's use. and we also -- we need one -- it is ideal if a person had one pharmacy and one pharmacist. people travel and that that stuff. but we have to have a health care system that directs persons to a pharmacy home just as a medical home.

when a doctor writes a prescription that's the beginning of my job. and you get a diagnosis and you get an examination and you get some lab tests that you want. his job is done to that sense my job starts. and these guys are there to compment me in doing that. >> my time is expired. >> the gentleman from michigan. your time is recognized for five minutes. >> thanks, chairman. mr. snow, how has the health care bill complicated or made more convenient your life as a pharmacist? >> i would tell you that the health care bill has not necessarily complicated my life other than the fact that underneath the policy congress passed, the rules are not yet written. so it's very difficult to manage my company and my 23,000 employees and set direction for tie don't know what the administrative rules are under

the policy because many of the things that were promulgated were not effective until 2014 and 2015. but i'm a big believer that the thing we are trying to do in health care are important. chairman good lot mentioned that health care reform is driving many mergers. it's happening with physicians health plans are buying physician practices. i'm not saying these are bad things. i'm saying that what is happening in our environment is people know that this combination and scale drives enormous efficiency that drives costs out of the system which is really at the root of what health care reform is all about. >> who wants to add their view to this discussion? okay then i'll call on somebody.

>> the efficiencies are very important. very important. we need to work together in doing that. >> mr. snow, you support the bill and its objectives? >> i support many elements of the bill. i would also say that the bill is a first step along an evolutionary path. we have to do more. >> mr. lech, have you heard of a universal health coverage? >> certainly, congressman. >> okay. how does that figure into your plans for health care for all americans as a independent pharmacist? if universal health care coverage means that every american has health care then it 100%. everybody agree with that?

manynow, i don't get volunteers for my questions. i'm wondering are you trying to -- see we have a fundamental philosophy here in the law making process. my good friend the chairman thinks that this was an ill conceived effort in health care. >> do you, ms. kanwit? >> yes, mr. congressman. i think portions are the bill are beneficial. the medicare demonstration project to see if that can drive costs out of the system and get more value in the health care

system. do you think the bill is unconstitutional, mr. paz? >> sir, i'm not a lawyer. i will tell you that i think good. that part of the bill, again, is good. i think we are one of the richest countries in the nation. and people should have access to health care. i think that we did not do enough to address the cost side. i see it in my business every day a lot of wasted spend. the $300 billion that mr. snow day. was discussing we see it every day. we didn't address that, sir. >> did you guys meet before this hearing? no. but i'm trying to find out -- that's right. you're under oath too.

so you got to tell me the truth. where does this issue of a pharmacy practice. we have three people for this bill. we've got three people against the bill. how does the obama care health care plan affect your business? >> may i volunteer? >> yes. >> okay. the way to think -- i think about the president's health plan bill and congress's bill is that health care reform is a three-legged stool. access, cost, and quality. we have done a good job at beginning the process of trying

to get universal access, fundamentally important. however we as a nation need to finance that access. and to mr. paz's point. i agree with him. we need to do more on the cost quality equation side to pay for the access. so i think that's where more evolution will occur. and i think that is where the public private partnership between health care providers and government will bring the best result. is it underway but will continue to evolve. you with seeing the policies evolving as we work with them and learn there is a better way. that's expected. >> can i get a half minute more? >> without objection. the gentleman is recognized for an additional minute. >> how does this saving from fraud, waste, and abuse, how will that be affected by whether or not this merger is approved?

>> under this merger one of our continuing focus is to bring the best of both of our tools together to look for those gaps in care to find out where prescriptions aren't being properly written and contact the doctors, work the pharmacists and pharmacies to make sure that we can take that waste out of the system. many diabetics are not getting drugs for hypertension and lower their cholesterol. we are not doing that today. >> you are the first if somebody else agrees with you on the panel i have never heard a pharmacist to call up doctors to tell them they prescribe the wrong thing. >> it happens all the time. practically daily. >> that is a daily occurrence, sir. >> let me recognize my friend over here.

>> congressman i wanted to answer the question about fraud and abuse. i would suggest that the best thing that will combat the fraud, waste, and abuse would be more vigorous competition. if these companies are forced to fine tune their operations in order to lower their costs to their customers that alone will generate the best cost- saving through saving fraud, waste, and abuse. and congressman watt what will be missing if the companies combine, what will be missing is a national bidder in each of these accounts. what will be missing is a company that is capable of making a bid on those contracts. >> in regard to fraud, waste, and abuse if i could reference waste not, want not it shows the waste part of it.

i think we need to differentiate between fraud, and abuse. fraud is fraud. if it's criminal, it's criminal. that's black and white. it has to be dealt with in that way. waste can be underuse, overuse. excessive prescribing. so abuse could be a narcotics that are taken too much, the dosages that are wrong for the patient. but if you look at the pictures these are things that i see and every pharmacist sees where patients bring in bags of things they have been automatically firms. shipped from the drug mail order long ago when i was a young buck i testified in pennsylvania in erie with state senator peterson. and the mail order companies at that time considered a drug called back you taken which is

now in a rems program. they regard it and it was express scripts. they regarded it as a maintenance medicine. and a teenager was taking these for maybe a week all this extra medicine with a medicine that could cause -- known to cause a fay tool birth defect. so this is pretty telling, i believe as far as the waste that happens. i think they could do a better job of fine tuning that. maybe a better way is to allow the pharmacist who knows which patient could use of a 90-day supply because of cost or danger might be drugs that shouldn't be 90-day supplies, a pretty common sense thing. take it a patient or a drug at a time.

i think there is a problem with that. >> the time for the gentleman -- >> thank you, mr. chairman. mr. lech how would my legislation be a positive impact on independent pharmacies if it would be? >> i believe it would be because the ability for an independent pharmacy with one or two or not many locations is at a disadvantage when compared to other folks that maybe able to negotiate certain prices. may or not be able to negotiate prices. it would give us the ability to have access provided for the patients which i think the federal trade commission need tots consider.

-- needs to consider. i understand from the testimony they are. i would suggest that a way that that could be done is to get out a the office and into the pharmacy and see what happens in those pharmacies. but it would give us the ability to have a fair, level playing field. money, paid more money. we're not asking to be paid more we just want to be able to compete. and there is nonprice issues also that can be addressed. >> i will get a couple more questions in here. mr. paz, mr. snow, respectively, do you agree with that statement? >> i am not a lawyer but i do not believe that allowing anyone in american business to co lewd -- collude makes sense. it allows people to come against -- together and negotiate price against -- >> isn't that you do with the group of large chains who have stores that get a cheaper price? >> first of all they don't

necessarily get a cheaper price. >> are you telling me that the volume business that you do -- i'm an independent individual owning a pharmacy. and let's just say xy and z owns a hundred stores. you're telling me i'm going to get the drugs generally speaking at the same price as xy and z pharmacy. >> what determines price is the competition in a given area. we have stores in alaska, north dakota and other areas that get much more -- you are dodging my question. >> i am not, sir. >> are you telling me that as an independent i'm going to get the same price as somebody owning my region? >> what i'm telling you is that if you have 100 stores in a given region and there's a lot of competition, the plan design

ultimately determines how many >> -- what if 100 stores with one company and three independent pharmacies. are the independent pharmacies getting the same price as the hundred stores? >> i can't answer the question blanket. >> as an 18-year prosecutor, you are dodging my question. and you do not want to answer it. mr. snow do you warnlt to answer it? >> sure. i would like to. at medco we recognize the plight of a retail pharmacist who is independent without the scale or purchasing power of the bigger chains. is it not uncommon for our independent retailers to have higher reimbursement rates than the larger companies who have the ability to negotiate price. number 2001 one. number two, one of the things in place today and you may be aware of it but i want to say it for the record there are group

purchasing organizations that many individual retailers join so they can get purchasing scale relative to buying their drugs, buying the things they put in their store so that they can at least begin to create critical mass to drive the kind of price their competitors do. >> i understand your answer. thank you. do either of you, mr. paz or mr. snow, do you disagree with my legislation? >> i would say, sir that as mr. i would -- paz said i'm not a lawyer. >> gentleman stop with i'm not a lawyer. >> i would like the independent retailers to survive. i would like them to have the right footing in a way that doesn't violate antitrust. whatever the lawyers and the ftc and congress decide i think what you are trying to do for the retail pharmacist is the right thing to do.

how to do it i'm not as sure but that's not my job. i agree with what you're trying to do. >> thank you. do either of your companies own retail pharmacies? >> no. we do not. >> no we do not. >> do you own mail order businesses related to pharmaceuticals? >> yes, we do. >> we are a mail order pharmacy. >> and am i correct in assuming that you do direct your customers to 367 from your mail ordering as opposed to independent pharmacies? >> if the client wants it. i'm not trying to dodge your questions, congressman but let me fully answer that question. >> thank you. >> some clients to not, mail order. it is a decision -- mail order

costs less than three tell pharmacists. there are better economics. we can deliver cheaper. >> thank you. can i have 30 seconds, please? >> you can have 2 additional minutes. >> without objection, the note -- motion is agreed to. you are saying that this legislation has nothing to do with the merger or no merger. do you understand that? my legislation is to give the independents able to form a group to purchase stronger in a power situation where several individuals is purchasing drugs

as opposed to one. are you saying that with this merger, i'm going to put you on the spot, that you are guaranteeing you will be selling drugs to the consumer at a cheaper price than you are selling it now? >> the total drug cost will lowdown. -- will go down. that depends on not what the customer designs. we have fortune 500 companies that all specify. >> i get your answer. anders stand it. i have limited time. he said a total cost. companies from the business sector, i know what a total cost

means. and mean anything from it is going to be cheaper to maintain the building, i'm going to be able to hire somebody. if i purchased drugs from you, tomorrow, and i am -- am i going to get them cheaper tomorrow than today? >> yes, you will. can i explain my -- the reason i said it the way i said it is that there are certain drugs were there is no other drug competing against it. it is a single drug in the class. you have no leverage. many drugs are that way. where there is competition and you have leverage, you can get better pricing. you can get better procurement prices for drugs. >> the time has expired. the chair recognizes the gentlewoman from california for five minutes.

>> i am hearing from my community pharmacist who are concerned about this merger creating more buying power for pbms. they expressed concern that the large pbms will create a more unfavorable contract terms and will have to make the decision to choose between inefficient reimbursement rates or exclusion from the network. they do not have the bargaining power to negotiate better terms. they often agree to more on favorable terms. would you comment on that? >> i did not get into the practice of a pharmacy to think that i would be forced out by a decision of myself or someone else that made that decision. the last thing i want to do is stop providing what i do to my

patients and customers. when the time comes i would like to transfer that to my son's. one is a pharmacist. or to someone else if my sons do not want to do that. if there came a time when, because of onerous restrictions, price or not price, there are dozens of things i could be included in that.

if the science and technology proves to be the best business decision. when the epa announced limits on fluorocarbons in vehicle air conditioners, the auto industry insisted it would cost -- at $12,000 to the cost of every car, but the real cost turned out to be as low as $40. in that case, did the benefits

to eliminating fluorocarbons outweigh the $40 in your opinion? >> i am sure they did, although i do not know the exact ratio. they were already waited when we proposed the rule. it was a happy coincidence of the renovation. it was much cheaper than we expected. >> why do you think this is the case? why do affected industries and their high paid lobbyist up here, why do they so often overestimate the costs? >> there has become this dance done inside washington where we propose public health protection in accordance with the law and then the costs are overstated, even though the history shows that is not the impact. it seems to me to be deployed of concern for the real people who would be most affected, and that is the american people who want clean air, clean water, and jobs as well.

>> i do not think they are mutually exclusive. a lot of these examples prove that. >> the gentleman from california and is recognized for five minutes. >> has there been an air district anywhere in the country, not in the world, that has reduced its total emissions more than the south coast air base in los angeles? >> i can double check that, but they have made significant reductions. >> significant. >> they still have significant challenges. >> the question is is there another non attainment area anywhere in the country that has more regulatory control over emissions than loss angeles? >> california, because of their big challenges, our older at -- have older and better established regulations in general. >> are you aware also that

california and the air resources board in the air district have been a leader, not just nationally, but worldwide again air produced it -- air pollution reduction and technology? >> they have their own at epa moving forward on trying to address public health issues. >> you are aware we have the highest, second only to nevada, unemployment right now? 12. both sides can talk about the nile of impact held twice and economic, let's be up front free anybody with a straight face says we can do these regulations and they will help the environment and drive the economy is still playing in our 1970 illusion that there is not an impact on both sides. i do not think either side should be in denial that there is a cost to the economy and a benefit to the environment. if you retreat on some of these

in our middle issues, there will be an impact on an environmental health and a benefit to the economy. apples -- echoes back-and-forth. we have been playing this game in california long enough. we of an extraordinary things to try to make it work out. there is a cost and there is a cost both ways. i think we need to seriously address that. let me ask you -- that is why i think the dialogue is polarized. i want to bring this back to cost and benefits. do not deny the cost. do not deny the benefits. in the 1970's, is it not true that through the environment regulations and fuel efficiency regulations the federal government drove the private- sector towards diesel operation for about five-six years? they converted their fleets to a large degree over to be so? >> i cannot confirm that. >> i will confirm that for you. those of us old enough to

remember that will remember that hideous experiment. that was an environmental regulation that drove the private sector to diesel, which you and i know is a very toxic emission -- a very big help issue. it was an economic and in our mental mistake that we made. i would like to shift over from the other side. what is the responsibility or what is the participation of local and state and county government operations? >> in the camp -- government operations in the employ and asian -- in the implementation of these roles? you are not the economic destruction agency. what is the local and state responsibility in addressing air pollution and toxic emissions and what is their major goal

emperor dissipation in this process? >> at a minimum, state governments are primarily responsible for implementation of most aspects of the federal clean air act. some states have their own laws. in california, local and county governments do. >> how much reduction have we had in government operations and procedures in emissions in comparison to the private sector reductions? would you not agree that probably overwhelmingly in the 90% that the private-sector has reduced their emissions proportionally -- that the reduction has been in the private sector and the public sector has been less than a very aggressive at reducing our emissions and our operations to reduce our footprint? >> i am not sure i understand your question. some have not done it voluntarily. >> the epa had a science to -- scientists coming out of kansas

say you could reduce emissions by 20% with a single regulation. do you not think the epa would be interested in implementing that role? >> of course. >> what are you doing about mobile sources caused by an appropriate traffic control the city, county, and state governments? >> we are implementing the clean air act. we allow states to come up with the implementation plans to determine how best to reduce air pollution. the mercury and air toxics standards are different. they are under a different section of the clean air act. >> in other words, local and state governments -- our job is to make the private sector clean up their act. where you can identify a single mobile source that government control that we have done nothing as a comprehensive approach to reduce it because we focus on cracking down on the private-sector, who are the job

generators, water giving them a free ride. that 20% we could reduce in government is 20% that the private sector would not have to do while they are laying off employees. that is the responsible dark -- responsible strategy of like to see both sides. >> the german from massachusetts is recognized for five minutes. >> thank you mr. chairman. the republicans have stepped up their assault on clean air and clean energy. both this committee and the full house have begun a legislative repealathon that denies the science, the regulations, and the efforts to protect the health and security of millions of americans. take today, the floor action. we have 100 year flood every few years. we have had tornadoes ripped through the country telling people and destroying property. hurricanes have called floods, -- caused floods.

texas is on fire. 48 states have made emergency declarations so far this year. we have set all-time records of 83 major disasters declared this year with three months of the year still left to go. the planet is warming and the weather is worsening. receive it here with our hurricanes, floods, fires, and tornadoes. we see it overseas where famine in somalia threaten civil war. how does the tea party response? maybe we can find the money for disaster relief for people who are suffering or people who are desperate, people who have lives that have been altered permanently by these disasters, but we are going to make the taxpayer pay. the republicans say we are going to pay by cutting the hundreds of billions of dollars we spend on our nuclear weapons program because we all know we do not need to build any more nuclear weapons. they would not do that.

are we going to cut the tens of billions of dollars in subsidies we get too big oil and coal as the report record profits? we cannot touch those, they say. we cannot even talk about cutting those programs. what can we talk about? we can talk about, they say, cutting the clean car factory funds. we can talk about cutting incentives to make super efficient cars that do not need the oil sold by potentates in saudi arabia, ceos in texas. we can talk about cutting the program that can remove the need for the very same oil that creates the greenhouse gases that are warming up the planet and causing the disasters that cost more and more money to remedy as each year goes by. as if all this was not enough, the republicans are also which is an all out war on the clean air act. this committee and the house has already passed legislation to prevent the epa from doing anything to reduce the amount of

oil used by ayer cars and trucks. this week in this committee and on the floor we are considering bills to require in this study of the cumulative impact of all, epa air regulations on all industries. just for good measure, we are going to pass legislation that repeals the regulations that have already been set, extend the deadline for implementation, and weaken the underpinning of the clean air act. the republicans are providing the american people with a false choice. we do not have to choose between air quality and air conditioning. we do not have to choose between concrete and cancer. we do not have to choose between manufacturing and mercury poisoning or asthma or cardiac arrest. we do not have to choose. in their insistence that we

consider the cumulative impacts of all these regulations, there are some other cumulative impacts of their actions that republicans refused to acknowledge. administrator jackson, republicans are cutting programs to incentivize the vehicles that can run without using a single drop of oil. they also passed legislation preventing epa from moving forward to require a 54.5 miles per hour fuel economy standard by 2025. when you look at this thinktively, do you these actions would hurt or help our efforts to reduce our dependence on foreign oil and back out those we take from opec and funds those countries' governments? >> i think efforts to make a smart dependent on gasoline are our energy independence. >> what are the benefits are cleaning up particular matter?

-- particulate matter? >> particulate matter causes premature death. it does not make you sick. it is directly causal to stop -- to dying sooner than you should. the impact of delaying cost- effective efforts to address particulate matter are more people dying in our nation. >> how does it compare to the fight against cancer? >> if we could reduce particulate matter to help the levels, it would have the same impact as i did a cure for cancer in our country. >> could you say that one more time? >> if we could reduce particulate matter to levels that are healthy, it would have the identical impact to have finding -- identical impact to finding a cure for cancer. the difference is we know how to do that. >> republicans are also proposing to delay standards

regarding mercury, benzene, and led from industrial polluters. when you look at these health effects cumulatively as republicans insist we must and the tea party insist we must, would we be avoiding the thousands of that otherwise would occur? "the gentleman's time has expired. >> let me just say this for the sake of the discussion. mr. bilbray did not ask his question until 1:05. if you would have notified them as well, then i think i probably would have understood what the rules were. >> there are no rules, you could do what you want with your five

minutes. >> the gentleman from virginia is recognized for five minutes. thank you. >> when you say reduced particular matters to levels that are healthy, what is that level? >> i do not have it in my head right now, but i will get it to you. >> at one point in history where we at that level? is it not true that a lot of particulate matter comes from natural causes? >> most of the natural causes of particulate matter are coarser. there is some particular matter in dust storms. >> if you could give me a date as to which the earth achieve that maximum help the level, i would appreciate that. i am sure your scientists could up with that. whimpered a lot about mercury today. the department of energy says when it goes back and looks at mercury that even in 1995, coal-

fired power plants in the united states contributed less than 1% of the world's artery in the air. since that time, we have actually dropped. i guess my question is, because we hear this all the time in this committee that we must be against clean air, because we do not support all the epa posses proposals we must be for dirty air. chairman waxman said this would dirty air week. i have to ask, even though i know the answer in advance, you would not submit that being opposed to some of your regulations mean you are get free -- you are against clean air would you? >> it would depend on the regulation, sir. >> you would not say the president is against free air because he opposed a proposal would you? >> no.

>> or clean water. >> no. >> when people make blanket statements that because they oppose an epa regulation, that does not mean that we are necessarily in favor of dirty air does it? >> it depends on the regulation, sir. >> in regard also, there is the comment that somebody wanted to know with all these job killing regulations, they want to know where the jobs are. i can submit to you some jobs in the ninth district of virginia that have been lost by proposed legislation. is it not true that your own analysis shows that the boiler proposals will in fact cost jobs? is that not correct? they create some clean energy jobs. >> that is not entirely correct. the job analysis -- >> the they lose jobs or not? >> we did an analysis. it ranges from a gain of 6500

jobs to a loss of 3100. it is not a perfect science to look at this. we try to be as precise as possible. >> you are aware that in regard to some of your roles of various power plants across the country have already announced shutdowns of power plants and a net loss of jobs? you are aware of that are you not? >> many of those plants are making business decisions. >> are you aware they are laying off people? >> i am aware that plants need to make business decisions so that they can stop polluting. >> can i then assume -- i am asking a simple question -- >> i am aware of the announcement. i do not believe the announcements are always fair or accurate. >> you are aware that they have announced layoffs activities are concerned about the loss of high-paying jobs in rural areas where high paying jobs or not common. you would agree with that? >> i am aware of the announcements. i know that some of their

announcements are not accurate or fair. >> do you think the department of energy is accurate or fair when it said that only 1% of the mercury in the world's atmosphere is coming from coal- fired power plants in the u.s.? are you aware of that? >> used -- i heard you say it. i would like to see the website before a comment. >> there you go. do you all have data that indicates similarly that since 1995 without these regulations going into effect that the amounts of mercury in the air in the united states has actually diminished? >> almost half of the power plants in this country currently comply with the regulations that we are scheduled to adopt in november. it can be done cost-effective lead. it is a matter of fairness.

some plants are in meeting retreat and others have already addressed that pollution. >> in fairness, some of that deals with municipal waste incinerators. i have never been one of those that says the epa does not have a purpose. it does some good. that is part of the reason the mercury has dropped in this country. we are already at fairly low levels. the balance we have to make as policy makers as your president made on the ozone rules is between deciding whether to -- whether the gain is worth the cost when the cost is people not having jobs. you can understand why many of us are concerned about the rise in poverty and can agree that is a negative, would you not? >> in your consideration, i ask you to look at benefits that are between -- that is what the benefits of the mercury role is

estimated to be. >> the gem of time has expired. the gentleman from louisiana is recognized for five minutes. >> thank you mr. chairman. thank you administrator jackson. i tore my a cl play basketball last week. the packers game was a little rough, but we had reduction against the bears. we will do well this weekend, too. i am glad we can agree on that. we definitely do. we have been talking about clean air, clean water, and all of us support clean air and clean water. we are trying to get at where is that balance and has there been a crossing of the balance as it relates to some of the rules and regulations we of seen coming out of the epa. i am also concerned about jobs.

during the break, a lot of us went back home and met with our small business owners, talking to people there on the front line of job creation. there was a recurring theme i heard from every single small business owner i talked to. you ask them, what kind of things can we do to help you create jobs? surprisingly, the recurrent theme was regulations and laws coming out of washington and this administration are their biggest impediment to creating jobs. it is very important that we look at these regulations that are coming out and saying what is the justification? it seems that a lot of times these numbers are attached and each rule and regulation is going to save lives. each rule and regulation is going to stop people from being sick. those are all lofty goals, but unfortunately it seems like they are numbers being arbitrarily thrown out just to justify a

radical regulation that has nothing to do with improving health and safety. i will start with the ozone ruling. what were the justifications' you made when you came out and proposed that role? how many lives is that going to save? how many sick days is that going to prevent? >> the national air quality standards are based on peer review data at look at the health impacts. it is made based on determining what constitutes a safe level. >> for that ruling did you have numbers assessed as to how many lives were saved? how many people would not have to go to the emergency room. did you have numbers like that for that role. >> we will double check and give you the data. what we look at is trying to assess whether the number be 75, 70, what have you -- where indict -- where in that spectrum

you protect human health. >> would you propose that role you said this is going to do some things to protect public health, right? >> the implementation of the standards over time. you take the health-based standard and overtime you implement the standard to achieve that level >> i am using that as an example because for those of us to agree with that, before the president made his decision and came out with his executive order say we are not going to go forward with that, there would have been people on the other side saying you do not care. lookit all those lights we would have say. you are trying to block that will from coming out. all of a sudden the president even said you went too far. that regulation would not have done those things. i am will not speak for the president, but i have to imagine the president had to disagree with your assessment that that would have saved lives or improved health because he would not have rejected that

rule if he thought rejecting that rule would make people were sick. i would just hope that the tone goes forward. as we look depose rules and regulations we know are killing jobs -- our job creators are telling us how many jobs these rules are killing. you want to talk about health and safety, these are people who do not have jobs. the did not help health- insurance or a lot of things because they do not have that job. you look at the assessments made by the epa. the president of knowledge that the things you were saying were not accurate, at least to his belief. he would not have rescinded the role if the thought that was coined to do something to improve health. all of these things should be put on the table. just because somebody says we are going to save 20,000 hospital visits, that does not mean you're going to save 20,000 hospital visits. >> with the gentleman yield. >> we do not agree that what the

president was saying is right now with the way the economy is, now is not the time to employment. he is not saying somewhere in the future. >> i will reclaim my time. if the president really thought implementing that role would save lives or improve health and stop people from going to the emergency room, i do not think he would with ford with it. >> i am not going to speak for the president. i will simply say that not every regulatory push works out well for the country or the environment. in 2008 and agency called transocean cut corners. >> they cut corners. they -- >> they passed a regulation of their work. >> they played by all the rules

and they're being shut down today even though they did not do anything wrong. while you may want to carry out your agenda, even the president has the knowledge to have gone too far. we have to be concerned about jobs. i want to put this into the record and ask a final question. i want to talk about the spill prevention containment and countermeasure role that has been extended to farms. it was one to be a five year implementation. your agency role that out and said in two years they have to comply. are small farmers are going to get to put containment measures. our commissioner of agriculture has asked york agency over a month ago if you would review either rescinding the role are giving them an extension. they have not heard back. i would hope you would look at that. i will give you a copy of the letter. look at the role in general. but the effect that regulation will do to our local farmers. >> the reason i think we are

looking at it very hard is because of flooding in the midwest and other parts of the country, a lot of folks have not had time to comply. it is a preventive role as well. >> i would hope you would look at that letter. i am sure others are out there too. i appreciate it. >> hyping the minority would like to look to your document first before we ask unanimous consent to do so. madam administrator, we are going to go around a second round. you are kind enough to be here. sorry. the gentleman from camaraderie. i thought you unspoken. you are recognized for five minutes. >> thank you for your time today. i have been told that the epa's compliance and enforcement insurance is verbally asking active hard rock mines to voluntary grant blanket access to epa personnel to conduct investigations.

they have been described the inspections as part of an ongoing national enforcement initiative to focus on a hard rock mining. are these related to the epa's stated intention to promulgate a role imposing additional financial entrance requirements to hard rock mines? >> not by your description. that sounds like this as a result of a national goal to reduce pollution. >> could you clear up confusion about the reason for these inspections? are they part of the national enforcement initiative? >> , i believe they are the former, but i will double check. >> is there any link between the two? "not to my knowledge, but i am happy to check. >> how did these inspections relate to the epa's will making? >> i do not believe they are

related, but i will double check that for you. >> would you provide copies of policies related to development of any program of the initiative to identify hard rock mining ore mineral processing sites that may be visited by epa represents his or contractors of epa or as part of the development for april that would impose financial insurance requirements on facilities in the hard-rock mining industry? "certainly. what do you have any of that material with you today? >> no, sir. >> i know the committee called the office and warned this question was coming. will any of the data gathered during these inspections be used in the emerald making process? >> could you repeat the question? >> will any of the data gathered during these inspections be used in the rule making process? >> i do not believe so, but that is the same question. i will double check. >> how much money as been

budgeted for this national hard rock mining enforcement initiative for fiscal year 2012? >> i will see if i have that on any of the background i have. i do not have a line item for that. i will be happy to get it for you. it is budgeted under our office of enforcement. >> that would be great. i have been told as well these companies may be facing some cost for these inspections and the companies will spend considerable time working with the epa showing the contractors on site, resources necessary to gather the data. will these inspected companies be expected to bear any of the costs for epa personnel and epa contractor to visit the sites? >> enforcement cases are generally a brought for violation of the law. when they are, the penalties are

generally assessed as penalties, but not necessarily court costs. quite these seem to be inspections. are you aware of these -- this initiative at all? >> every year the epa and knowledge is what is federal parties are for pollution and enforcement. this is one of our priorities. >> is this an inspection -- is this an inspection or an enforcement action? >> you do the inspection and nothing wrong there is no need for enforcement. >> is the plan to go into these mines and inspect? >> certainly. part of our party allows us to go in and determine compliance with federal law. >> is this initiative part of your circle efforts? >> i believe they would look for violations of all and are metal laws, including violations of the circle law, but it would not be limited necessarily to that.

it could be the clean air, or clean water act. >> do you have a listing of the mines you intend to inspect? >> i do not know if such a list exists, but if it does, it could be enforcement confidential. you may not get a true picture of what they are really doing. >> just a couple of questions on energy prices. do your regulations have an impact on electricity prices? >> yes, sir. >> what is an acceptable price increase for electricity? >> what we generally do is look at a price increase to determine impacts on the economy and also on the liability issues. what we know, i cannot answer your question, but what we know is the roles that have been discussed this morning have a low impact on electricity prices. >> would increase a lecture to

prices 5%? would that be acceptable? >> it would depend on the role. we looked at cost and benefits. we also look at how those costs and benefits roll out over time. >> it might be acceptable? >> it could potentially. >> what about 10%? >> it is a hypothetical i simply cannot answer. >> who bears the burden for the increased elected to the prices? >> who bears the burden? >> who does it hurt the most. >> the ratepayers pay for electricity. >> does it hurt the poor more? >> 4 people for whom energy is a large section of what they spend -- >> the answer is yes. >> the gentleman's time has expired. >> you are welcome to answer that. >> yes, it can if it is a greater portion of their disposable income, then they can be hurt. >> we are now finished with the first round. we will have another round.

i will start with my questions. a small business person talk to me about the epa will call the "mud role." in the event of constructing a site, storm water that washes off or may wash off, epa has stipulated exactly how construction of the site, including the layout of the mud, has to be. this increases the cost of construction. it creates liability, particularly in light of the fact that the epa says if you do not comply, it is $37,500 every day for every infraction. do you not think those kind of penalties are deterring business operations? it is important with a struggling economy you do not put that fear that you could have almost $40,000 a day feat

for how you structure mud when you are dealing with construction for a storm water washout that may or may not occur? >> the majority of water pollution in this country is caught by storm water runoff. as the epaater actio to develop national standards. >> do you know about the mud rolule? >> i know about storm water regulation. they call it the mud or rule. when you mix water with dirt, some people would call that mud, i guess. >> you just said yourself that we have had 40 years of impact of the clean air bill and it has worked pretty good, yet you seem to be pretty strong on increasing more regulation even with your own admission that the clean air act has been working for over 40 years. i am tried to give you an

example where the storm water at is creating problems. >> $37,000 or whatever figure -- i would be happy to talk to them, but those are probably the statutory maximum penalties under the clean water act. i am not aware of any specific incidents were that has been levied. >> how many employees do you have? >> we have somewhere over 17,000. >> i think it is 18,000. what is your yearly budget? >> it depends on you, but i believe it is a $0.50 million. >> do you have town meetings? the you get around to see what those 18 dove and employees are doing? do you have a strong appealing as 18,000 people are needed? we just had in missions that the clean air act is working.

it does work for 40 years. do we need to continue to have 18,000 employees at the epa? the you think you should have more? >> no, sir. i am not advocating for more employees. in fact, as you will see in budget discussions, epa has been losing employees. >> would you agree the epa has the responsibility to committee with the. experts when assessing the impact of its rules? >> yes, sir. >> would you agree the federal energy regulatory commission gives you a party on ellis took reliability and the federal government? >> i think that is the case. >> the you believe the epa with respect to electric reliability has the same level of expertise as fercs? >> i believe we know our rules better than their staff. >> you do not think they know the rules better than you do? >> no, i said my roles.

they know their roles. >> what about with respect to electric or reliability? >> that is their domain. >> i think i have a slide here. slide #5. if you look at the estimates -- do you have a copy there? she does. i think we just give you a copy. lookit the estimates from ferc assessing the cumulative and price of the epa's rules compared to the analysis. which should the public trust? >> i am and not familiar with the study. i know the chairman has already testified that it is based on that information. it looks at proposals whenever adopted. lsi worst-case scenarios are not accurate. i do not think we should look at this data as accurate. >> mr. chairman, where did this chart come from? it does not seem to have an

attribution. >> is there an attribution for the chart? i think it is ferc staff. that would be possible. before i finish here, let me make an observation. on this side of the aisle, the democrats keep saying republicans do not care about clean air or clean water because we oppose some epa regulations. but the president, himself, has come out against these proposed ozone roles. could you say under that scenario with the democrats are saying, just because the president came out against the ozone roles, is the president as clean air or clean water? of course not it is hyperboloid for democrats to suggest republicans do not care about clean air. the president and republicans agree that epa regulations are

continuing to hurt this economy and is costing us jobs and there has to be a balance. i republicans treat the same water. we breed the same air as democrats. so does the president. we do not accuse him of these things the democrats are accusing us of. the president recognizes that we need to throttle some of these regulations so we can get this economy growing again. >> the president supports the air pollution. >> the ozone wrote you wanted to propose, which he asked you to stop, is an indication to me that you cannot accuse him of being against clean air or clean water is what my point is. the democrats say because we are against these regulations, including the mud role, it just does not make sense. with that, i recognize the gentle lady from colorado. >> we are trying to figure out

the genesis of these slides you have been using today. we'll keep working on that. >> there is such addition to all of them. >> no, there is not. we will figure that out. i do not want to take my time to talk about these slides. i want to ask you, miss jackson, my friend from northern colorado was asking you about do utility rates, if they go up, do they disproportionately affect the poor? obviously that is true. i wonder if you can talk very briefly about the effects of pollution on the health of poor people. particular pollution, but other types of pollution -- to the disproportionately affect the poor? >> for those who are poor who do

not have as much money to spend on health care on either of prevention or dealing with the help effects of pollution -- asthma, bronchitis, premature death -- it has a huge toll in lives on, miss days of work, ms. days of school, missed opportunities. >> as you know, i represent a very urban districts. there are large pockets of poor people in my district. i see numerous studies over the years that indicate poor people are disproportionately affected by pollution because they live in areas that tend to have more factories. in fact, we have several superfund sites in my district, neighborhoods that have been contaminated by factories. children have a higher incidence of asthma and other kinds of illnesses because they are closer to industrial areas. are you aware of the studies?

>> i am. i agree they show that poor people are disproportionately impacted by pollution because of where they live and because of sources of pollution in their communities. >> mr. d great ask you, i noticed a trend today of the sort of seminal question the guest asked after the time has expired, thereby limiting your response to that question. he asked you a question about the health effects of particulate pollution, but did not let you answer the question. i want to ask you if you can tell us right now what your answer to that question is about the health effects of lowering the amount of particulates in the air. >> without a doubt, it has been proven by independent peer review science that particulate pollution kills. the causes premature death. that is not epa scientists,

those are independent scientists. it is subject to peer review, which is the standard by which this science is just. it is backed up by public health officials. >> when your at agency promulgates rules, did you make up the scientific studies to support those rules, or do you rely in promulgating rules on independent scientific analysis? >> we rely on independent peer review scientific analysis. >> in my initial set of questions, i think i asked you also make cost-benefit analysis, correct? >> that is right. all of our rules go with information on cost and benefits. we also do job analysis. >> the roles that you promulgated, do the cost-benefit analysis seem to bet -- seem to indicate that a large number of

jobs would be lost than health benefits to americans? >> no, in fact job losses when they occur are minimal and, in some cases -- for example, the mercury rule proposal, there was a 37,000 estimate. those are actual job increases. >> when you do this analysis, do you also account for the number of jobs that would be created in the industry's that develop and manufacture the technology to comply with the roles, or are those additional jobs become outside of the cost-benefit analysis? >> we look at that, but in the benefits analysis, i do not believe we look at job benefits. we look at public health benefits. i will double check that. >> that would be helpful. mr. bilbray seems to imply that

because of unemployment is high in california right now it is because of the environmental standards that were enacted by the state of california at some 20 or 30 years ago. has the epa seen any connection to current unemployment in california to the california environmental standards? >> i am on aware of any economic study or any economist try to link the current unemployment status in california or anywhere in this country to epa regulatory actions. >> thank you very much. >> the gentle lady's time has expired. the gentleman from texas is recognized for five minutes. >> thank you. thank you madam administrator for still being here. we appreciate that. i want to rephrase the question i asked you in the first round. i in your opinion is it better to have a plant in compliance with existing regulations

continue to operate or to shut that plant down because it cannot comply because of the cost of a proposed regulation? >> in my opinion, that is rarely a choice that need to be made. >> answer the question period which is better? that is the question that hundreds if not thousands of individuals in the private sector are going to be deciding in the coming years if all these proposed regulations go into effect. >> our job analysis does not show that, sir. >> in my home state of texas just last week, one company announced the closure of two coal mines and probably two coal-fired power plants in or near my congressional district. >> i realize that. i realize with the company said. i know the company is limited.

i would "the headline from the houston chronicle which says, "do not blame the epa." i have financial issues. they are far beyond the epa. >> that is the $64 question, madam and illustrator. is there any evidence of any criteria pollutant that is currently regulated by the clean air act that is increasing in frequency in the united states? >> i am sorry. could you repeat that? >> is there any evidence -- monitor data evidence -- of any criteria pollutant under the clean air act that is increasing in density? in other words, is the air getting dirtier anywhere in the united states? >> no, but there are places.

>> if the epa had not strengthened the ozone standards in the last several years, those would be in compliance. in any event, they are coming into compliance. so, this republican initiative in this congress is not to roll back regulations, we are not lowering standards. we are not reducing standards. we are basically saying let's take a time out until the economy can regain its footing. that is what the president acknowledged when he pulled back on the ozone standards you had announced. on that standard, madam administrator, did you support the president's decision to pull back or did you oppose it? >> i respected the decision when he made it. >> i know that, but before it

was made, you have some input into his decision. did you support him rolling it back or did you oppose him rolling it back? >> that is not an accurate question. he made the decision. i respect his decision. >> so you opposed his decision. >> that is not right. i am and limiting the decision. >> i understand that. >> i made a different recommendation. that is no secret. i recommended a lot lower than the current level of 75. it was 70. >> you recommended a different level. >> that is right. >> i want to comment on something that chairman waxman said about the whitefield amendment. we have a requirement in that that as regulations are proposed, the use monitored data when available. why would you oppose using

monitor data when it is available as opposed to model data, which is not based on the real world? >> it is not whether i oppose it if it is available, it is saying only monitor data. it is impossible to meet. you would forgo all the health benefits. >> that is not true. [talking over each over] to determine whether or not the sulfur dioxide emissions come from plants in the country are affecting illinois or louisiana, we are monitoring. "that is not what the amendment says. but your input monitor data. you input real data into the model. you do not use model data. that is what we are trying to get at. in the case of this cross state

air pollution rules for texas, it is the epa model data, not the monitor data in the state of texas, illinois, or at michigan. the monitoring data says they are in compliance. the model data says they may not be. >> the model data shows that the transport from the plants in texas will cost noncompliance downwind. air blows across the country from west to east. the emissions in texas affect places other than texas. >> in texas, the prevailing winds are from the north to the south, madam. not from the south to the north. >> yes, but it does blow. the wind blows pollution across and around the country. >> my time has expired. >> the gentle lady -- digitally from illinois is recognized for five minutes.

-- the gentle lady from illinois is recognized for five minutes. >> i want to correct what i think was implicit, mr. chairman, in what you were saying that ferc opposed the roles that are affecting power plants. i just want to quote some of the testimony at a september 14 hearing of our energy and commerce committee. the experts did set the record straight. the federal energy regulatory commission chairman told the committee, "we do not need to stop these rules from going forward. i think these rules are appropriate. these rules do what things -- do what needs to be done in this country." to mr. john norris testified, "i believe the epa has adequately addressed reliability concerns

and its statutory obligations with the rules established to date and i have no reason to believe it cannot continue to do so as it finalizes proposed rules." we have the former doe secretary for policy saying there is no reason to delay the implementation of the clean air transport rule or utility tax roll. we had actually heard testimony that i think counters the implication that you were making. but here is what i want to ask you, madam administrator. you identified 35 regulations that will be subject to a near- term review process designed to streamline and update the rules administered by the epa. is that right? >> that is right. >> can you highlight a few of

the roles you intend to update? >> we have 16 short-term wrote -- reviews we are taking this calendar year, 2011. those include equipment leak protection to reduce the burden. that kingdom the american petroleum institute. increasing regulatory certainty for farmers. that is working with the usda and states. electronic reporting, which i believe came in from the regular terry -- regulating sector on a variety of statues. vehicle regulation. the list goes on. >> actually, i would like to make sure that part of the record does include, mr. chairman, the list of 35 regulations that will be subject to near-term reduced. >> does the gentle lady of a copy of those? >> can i keep them until the

hearing is over? >> you can certainly send them in to us. >> i guess the point i wanted to make is that regulatory efficiency and effectiveness is a part of your agency's process. it always has been, if i am right. is that correct? >> it has been, but we are also complying with the president's order to do a retrospective look back. that will be done every five years. >> can you discuss how that retrospective makes the regulatory process more efficient? >> regulations are on the books. it makes good sense for agencies to constantly be scrubbing through them to make sure that as technology changes, as we move into a computer age, for example, or cars that have

secondary vapor recovery on their gas tank, having it on the actual popped is redundant. there are clearly opportunities, which we found in our 20 public meetings and to be no public comment periods for places to make our roles more efficient. >> there was some question about whether industry has that input. you solicited that, not just in the comment period, but beforehand. >> we had meetings across the country. we also have a website that went up very early on. we had two comment periods. >> i in your testimony, your ported agency reforms be finalized prior to the president's executive order are going to save $1.50 billion over the next five years. i want to congratulate you on an impressive record.

again, any implication that the epa is looking just to maintain in place or even propose regulations that are redundant in any weight, not necessary to your mission, is just not true. thank you very much. >> the gentleman from texas is recognized for five minutes. >> thank you, mr. chairman. thank you for indulging us in a second round a question today. members of the texas delegation right before the august recess concerning the prostate air pollution rule and the seeming and sensitivities to the problems of our state. have you communicated with the officer, the management of budget about these