number one, that issue of making sure that we are having health providers having the tools and information that they need. we put out the guideline. and now we are taking a number of steps to make sure that guideline goes out. . in addition, in our i.h.s. just last week, indian health service, we have announced they will be using pdmp's. they're the first federal agency to make sure that they will be required in terms of the prescribing both for prescribers and pharmacies that are part of the indian health service to make sure that we're closing that gap and some of those gaps exist in your states. we've also heard some of the clinicians say they were concerned that one of our c.m.s. surveys and the payments ere causing encouraging the -- encouraging the prescription of opioids. while we have not found evidence of it because of the way the money works, we have

actually taken that question out in terms of the financing for the surveys, so that no one can even if, whether it was a monetary incentive or not, if people were thinking and believing that, we wanted to take the action. now, going to part two, that medication assisted treatment, which i know you all are working deeply on, we are as well, you may have heard that last week we announced that we have put out a final regulation that will increase the numbers that doctors who are prescribing, as long as they meet certain conditions, because we want to make sure we do this in a safe way, that they're able to do. in terms of that expanding medication assisted treatment. as well as -- we're also today releasing two reports on ways to help pregnant women and new mothers. because that's a part of this, with the medication assisted treatment. i see head nods. this is something you all have told us is one of the problems. we've got two reports coming out to help with that treatment

in terms of pregnant women. today we're announcing $9 million in grants, from a.r.c., which is our quality part of h.h.s., to focus on medication assisted treatment. finally, the other area as parent our three-part strategy is making sure there's access to that drug. we're making sure we get that access out weembings done some grant making, but additionally, f.d.a. also has approved recently a pace inle spray. what that will do -- a nasal spray. what will do is allow nonexperts to apply and use it. some of your states are leading in an ability to get that out. we also recently convened 18 rural communities about the issue of these drugs to define best practices so we can share those more broadly with all of you. these are good steps. but we know there are critical areas where we need to know and do more and last week we also

announced 12 additional studies on the issues of pain and opioid use and abuse and addiction. we are going to continue together with our colleagues who are doing some work on these issues as well, to work on it. we're going to keep working. i think you all know, one of the things we think is very important is the $1.1 billion that we asked for. that's to get the money to you all. i think you all know, $920 million of that is about moving money out. to the states. so you all can get that access to treatment. these funds would make sure that folks in your states have that access to treatment, gap that i is a think we consistently see. it would help us also develop more effective ways to make sure we're doing that treatment and recovery services. part of that money actually is for evaluation, so you'll know, so we can work with you to know what is actually working on the ground in your states. i think you all know, a bill was passed in the senate this week.

while we'll sign the bill, you the real question is, does that bill truly make a difference without the attendant funding to get the medication assisted treatment out? we said consistently that the legislation includes important objectives. but we are concerned that without funding -- and so you'll know, we're already planning for september when they come back, because we want to continue that conversation. we think it's an important one that should not go until next year. if we watch the clock, in terms of the months that could happen before we get that, so we will be back at that when folks come back. the other thing just in terms of that access is medicaid. we're working with you all on a number of states to make sure that medicaid is able to provide as much access to treatment as possible. and also while we're on medicaid, i will never fail to mention, for those states who have not expanded, you know my door is always open. and will be for six months and

four dales. lastly, i just want to close on zika. because i would be remiss if i were not with all of you. while things surprise us and while many of you are not in the states, some of you are in the states that are the high-risk states, and certainly the governor of puerto rico understands this fully, i want to just make sure i touch on it for a second. i want to thank you all for your partnership, each of your states is participating in putting together the plans and approaches and moving information. so many of you, even if you're not at risk of the mosquitoes, you have the travelers. and you know that because you're getting the cases in your states. even if you're in places. so you know that's an important part, i think everyone knows, the severe risk of birth defects, we're going to start seeing those numbers. to give you a sense, numbers were updated yesterday. in the united states, we have 4,200 cases of zika. in terms of that, in the continental u.s., there are

almost 300 women who are pregnant who have tested positive for an indication of zika. a very serious issue, and we expect local transmission, which already occurs in puerto rico, meaning the mosquito bites another person and passes it that way, we expect that may happen during the summer months here. we're working with everyone to make sure the plans are in place. at the same time we need to develop a vaccine and we need to develop better tests. because when this happens, and whoever has local transmission first, the governor knows it, the period of testing is sometimes challenging in terms of how long it takes and people are going to be very anxious for answers. continue to work on that. and mosquito control tools. in terms of what we can do to do that. we've already -- will be awarding $100 million from c.d.c. in terms of the moneys we moved around. and we stand ready to work with each of your states and send in an emergency response team if you need it, let us know, we

will be ready. i also i think it is important again to mention the importance of the financing and the funding, without the supplemental, during august we will have to slow the work towards a vaccine. that is going to happen. because we will run out of those funds during that period of time. it also inhibits our ability to get a best practices approach to vector control in place, as well as move forward on the diagnostics and the research we need to do to understand more. quickly, i'll just close with the fact that this is my last time together with you all. in the health space, whether it's protecting people from something in a medicine cabinet or a mosquito, it is something that we do together. just in these last next months, you all have my deep commitment that we're going to do everything we possibly can to work on the issue that we are discussing today. so that when we leave, we leave both in the federal government and to you all the states the best and most progress that we

can make and pass for more success. excited to continue working with each of you on this and all the other issues that h.h.s. has that we work together with. thank you. mr. baker: thank you very much, madam secretary. [applause] questions, observations? i have one. the first n.g.a. meeting i went to was a summer meeting. you talked about i think 240 opioid prescriptions in the u.s. written in 2014 maybe. do you know what that number is for 2015? ms. burwell: the data is -- the lag in data is one of the big problems we have. we depend on you all for it. i do think that our next numbers we will see some improvements, in the number of prescriptions. i don't think we have finalized numbers. but i think we will have some improvements in the numbers of

prescriptions. i think you're starting to see that in some states' data. i don't think we have good enough aggregate data yet. but i think we will see some. i think the real question we also have to challenge ourselves with, i think kentucky and west virginia are two states that are seeing some of the prescribing numbers go down. but i think we have to check ourselves with, are you seeing the number of overdoses going down? because that's the real outcome that i know we are all interested in. we obviously have to get the prescribing down, but we've got to get the overdoses down as well. mr. baker: my follow-up on that, just quickly, would be, and we've talked a little bit about this, but we've also talked as governors, is there something we can work with you folks on with respect to fentanyl? which i think is driving some of the deaths in some of the overdoses? ms. burwell: i'm sure you all know better than i do, fentanyl is the problem on steroids. in terms what have it's doing.

i think we think many of the tools we have in place are the correct tools. but the question we're asking ourselves, and i've put together a working group at h.h.s., is, should those tools be enhanced or changed for the specifics of fentanyl? in terms of how it gets created and how it's getting used. we're working on that. but this is a place where this dialogue and this conversation is so important. because if you're seeing things that are working in your states, please let us know. because we are very specifically focused on the question right now. ms. hassan: i would just add to that. one of the things we did in new hampshire was update our criminal code to make the dealing of illicit fentanyl on par with the dealing of heroin. we also started to work with our public safety officials and public health in trying to develop protocols for how you investigate an overdose scene so you can prosecute somebody for causing the death through

fentanyl. when medical personnel respond, they rightly focus on saving the life of the person before them. but that often means that criminal investigators don't have any evidence to work with effectively to try to prosecute. while this is both a public health and safety problem and we certainly need to go at the supply of fentanyl and the production of it in a different way, it's worth talking to your public safety and public health and first responder folks about how you can make sure it is clear to those dealing illicit fentanyl that they will pay a rice for doing so. mr. baker: one quick comment. it was a good question. as the number of prescriptions goes down, will there be a subsequent decline in the number of overdoses? i would caution folks to realize, has been our experience to this point, not immediately or necessarily should it be assumed that there

will be. >> ironically it almost exacerbates the problem a little bit. prescriptions, legal prescriptions, go down. people are driven to feed that habit through other sources. there are no doctors prescribing black tar heroin and yet there's more people using it as a result of the fact that there are fewer prescriptions. it isn't to say that there should not be fewer prescriptions. but there has become already the addiction. the addiction is going to be fed by something and this is what has given rise to the fentanyls and others that have come in, these synthetics that have crept their way into the market place. so i think we're actually at the front end and it's sobering and scary for us, every one of us, to realize, i think america is at the front end of the number of overdose deaths that wear going to see for some period of time. that's why it is so critical that we start nipping it in the bud now. ms. burwell: the other thing is there should be some time lag, we think. there is some time lag in the prescription reduction and the

catchup. we think there will be some. but we, you know, think we have to quickly focus. that's why the medication assisted treatment and the narcan are an important part of the strategy. had while we don't have governor scott here, florida interestingly, governor baker and i were just discussing, florida has seen more of an -- a parallel movement of the lines. what we're trying to do is understand why did that happen in florida and better understand that, so if there were things that happened in florida that we need to repeat other places, that we can share that with those of who you are making progress on the prescription reduction. mr. baker: i think the secretary has time for one more. mr. hutchinson: i wanted to thank each of you for your leadership on this. the panelists, i particularly want to thank secretary burwell, not just for your attention to this matter, but also your cooperation with the

governors, your responsiveness every step of the way during your leadership. wanted to recognize that and also i wanted to be nice because i still have some pending matters before you. [laughter] in regard to this issue, you know, in arkansas methamphetamine is still the number one drug. -- drug challenge that we face. i wanted to decline but -- want it to decline but i don't want this to be number one. we are trying to address this and i share the concern. we have another panel after this on some of the enforcement side, which i'm very interested in. because we have to address the demand side, which we're working on, and we have alternative treatment courts in arkansas we need to invest more n. the law enforcement side has to be a part of it as well.

is secretary burwell, are you all coordinating your efforts with the d.e.a. and other law ebb forcement agencies? ms. burwell: we are. one of the announcements over the period, i should have highlighted, i'm glad you raised it, doing the takebacks has been an important part of our d.e.a. partnership in terms of that work, as an important thing. this was feedback from the governors. you've told us, get v.a. engaged. we got them engaged. many of the steps we've taken. takeback's an important part of the feedback. i think the other thing where the d.e.a. is taking the lead is the issue of heroin itself. and the illegal and illicit drugs that start that way. prescription drugs can become, you know when they're not used, illegal. that's where they're focusing the most. our connection occurs through the office of the national drug policy coordinator at the white house, but also the chief of staff has taken an interest. dennis and i have been

interested in this issue for a long time. so he actually even has a person in his office who works directly on the issue with us together. that's how we get our biggest connect with our colleagues at d.e.a. mr. baker: again, on behalf of the n.g.a. i want to thank you for your help and assistance, not just on this, but on so many other issues. we wish you nothing but the very best. in whatever comes your way. ms. burwell: thank you. i want to close by saying thank you. where i began when i came in july of 2014, one of the things that is always great about being with you all is actually i think on a day to day basis, in terms of what you have to do and how you actually have to deliver, you know, in terms of being in the executive branch, it is a place where i'm with people who hopefully you know, i feel your pain and you feel mine. [laughter] thank you all for all the partnership. because with that, and with all we work on, there have been so many places, as i look around

this table, that in your states, you know, we have made progress for the citizens of your state. and that is an exciting thing for me and i look forward to doing more in the six months and a few days. thank you. [applause] mr. baker: at this time i'd like to welcome our three other speakers up to the stage. they're each going to speak for a couple of minutes. by the way, one's going to talk a little bit about medical and prescriber education. one's going to talk about drug enforcement and the other's going it talk about one state's experience with treatment. first is dr. gary franklin. who is one of the nation's foremost experts on opioid rescribing guidelines. dr. frank little bit's a research professor -- franklin's a research professor at the university of washington, medical director at the washington state department

of labor and industries. thank you very much for joining us. mr. franklin: thank you very much, governor baker, governor hassan, ladies and gentlemen. i'm gary franklin. medical director of the washington department of labor and industries and research professor at the university of washington. most importantly, i'm co-chair of the agency medical director's group, representing all of the public agencies that purchase or regulate health care in washington. i've been working on the issue of prescription opioid overdose for more than a decade. in fact, i reported the first deaths in 2005 from unintentional overdose of prescribed opioids in a scientific journal. these were injured workers who entered the system with common, work-related injuries such as back pain, only to later die from prescribed opioids. by 2006, the public programs in washington already had over 10,000 citizens on doses greater than 100 milligrams a day. more even if equivalent. this is one of the strongest

risk factors for overdose. by 2008 this resulted in 508 deaths from prescribed opioids, more than half in the medicaid program. in partnership with leading pain clinician -- clinicians, washington developed the first lines in the u.s. with a recommended dosing threshold in 2007. the principles of the guideline were put in the state regulation in 2010, most recent addition of our guideline is highly consistent with the new c.d.c. guidelines. these efforts have led to a 37% sustained decline in prescription opioid deaths in washington state. washington has also seen a reduction in high dose opioid prescribing and our medicaid population -- in our medicaid population. to reverse this tragic man-made epidemic we must, one, prevent our citizens from becoming addicted or diing from inappropriate prescribing. two, optimize the capacity to

effectively treat pain and addiction by insenting evidence-based alternatives to opioids and expanding access to m.a.t. and three, to implement standard metrics to monitor progress. i'm going to focus on areas where washington has already had success, as well as efforts currently under way or that are pending executive action by governor inslee. the first key to prevention is to repeal the overly permissive language passed in more than 20 states in the last 1990's -- in the late 1990's which provided a safe haven for overprescribers. doing so in washington allowed us to take action. just yesterday against the most egregious prescriber in state history, with more than 18 deaths. states need to adopt and operationalize the new c.d.c. guidelines by setting new prescribing standards through the state licensing boards and leveraging public insurance programs and their plan contracts. this effort will only be

successful if governors take action, as governor inslee did, to mandate collaboration at the highest levels of state government across all of the public programs and with leaders of the medical community. a second key to prevention is to protect our teenagers from potential abuse and a path to heroin addiction, by limiting prescriptions to no more than three days or 10 tabs of short-acting opioids for self-limited acute pain conditions. such as dental extractions and sports injuries. there's strong interest in washington to implement such a limit. this type of focused approach is easier could -- easier to operationalize than limiting all acute prescribing with a wide range of exceptions. the key to improved treatment is to deliver regional, coordinated step care services aimed at improving pain and addiction treatment. this includes delivery of effective services like cognitive behavioral therapy and graded exercise, aimed at

improving function, overdose case management and m.a.t. for patients with opioid abuse disorder and much broader use of telpain services. because most of these patients are managed in primary care settings, the lack of access to coordinated services is a severe threat to the integrity of our primary care safety net clinics. incorporating collaborative care sources into state contracts would address this issue and is consistent with governor inslee's call to integrate behavioral health with physical health. nd primary care by 2020. finally, the development of a common or standard set of metrics will be critical to tracking state progress on reversing the epidemic and helping to identify effective strategies. this would also provide guidance to public and private health plans, to improve quality. these metrics could also be used to provide useful feedback to outliar prescribers, similar to the provider report card

shown in the slide. i applaud your effort and the substantial work of your staff to date on the road map and the compact. thank you again for the opportunity to present washington's work and strategic direction. mr. baker: thank you, dr. franklin. i must say, i just couldn't help but share the headline of your presentation with my co-pilot here. reversing the worst man-made epidemic in modern medical history. pretty strong words. mr. franklin: that's what it is. mr. baker: we'll get to q&a after we give each of the presenters a chance to speak. second up is karen flowers who will provide insights from diarra on a growing threat of -- d.e.a. on aing threat of heroin and fentanyl. she leads d.e.a.'s efforts to crack down on illegal drug activity in indiana, wisconsin, minnesota and north carolina. welcomement --woman come.

ms. flowers: thank you. good afternoon. thank you for the opportunity to speak to you today. we are in the midst of a heroin and opioid epidemic that is at historic levels. this does not care who you are, the color of your skin, your age ory you -- where you live. and the way to push back is not a new tactic. but it needs to be looked at from a per speblingtive of collaboration -- perspective of collaboration across all three pillars of our nation's drug control strategy. prevention, treatment and enforcement. there's no surprise on the order of the panelists today it mirrors the strategy. this effort exerted on each pillar is a decisive factor in the outcome. and all three are of equal importance. as you can see in this slide, deaths involving prescription drugs are higher than all other drugs. heroin deaths more than tripled

from 2010 to 2014. with over 10,000 americans dead. synthetic opioid deaths, which include fentanyl, also increased in 2013 to 2014. this map shows the rate of heroin drug poisoning deaths per 10,000 population by state. you can see the deaths are concentrated in the northeast, midwest, as well as the pacific northwest, and new mexico. where d.e.a. has reported teady increases in heroin use. heroin availability is increasing in most areas of the u.s. seizures have increased 254% since 2008. and the seizure size has doubled. heroin is everywhere. it's easy to get. it's cheap. and the -- these facts, merged

with the large number of people addicted to prescription pain med cathecations, are destroying -- medications, are lives.ing families and fentanyl is a powerful and deadly synthetic opioid which has high potential for abuse. pharmaceutical-grade fentanyl is widely used in medicine as a high strength cancer drug and an end of life drug. in addition to seeing fentanyl laced with heroin sold on the streets, in 2015 there was a marked surge in the availability of illicit fentanyl pressed into counterfeit prescription opioids. in many cases, the shape, coloring and markings are consistent with-on-authentic prescription medications. -- with athen tick prescription medications. fent -- with authentic prescription medications. it also was discovered in a black tar heroin form in california. but it was fentanyl.

much of the illegal fentanyl are produced in china and shipped through the u.s. mail system directly to mexican criminal trafficking organizations. because of its low dosage range and potency, one kilogram of fent follow purchased in china for $3,000 to $5,000 can generate up wards .5 million ly of $1 in revenue to the drug trafficker. this map shows large fentanyl seizures and depths through june, 2016. states shaded in red reported a fentanyl-related death while yellow stars indicate bulk seizures of fentanyl. in 2015, d.e.a. seized more febt normal -- fentanyl than any other year in our history. fentanyl can be absorbed through the skin or inhaled. thereby endangering our public safety personnel. on march 18, 2015, d.e.a. issued a nationwide alert to

the u.s. law enforcement officials about the dangers of fentanyl. d.e.a. continues to use its regulatory authority to make emerging synthetic drugs like fentanyl illegal. in 2015, due to a recent spike in overdose deaths, d.e.a. emergency scheduled and made it an illegal drug. this year we made two other fentanyl analogues illegal. our d.e.a. agents stationed in beijing, china, are working with the chinese government to stop the manufacturing of this. last october, china implemented controls on 116 new psycho active substances to include six fentanyl substances. d.e.a. target street level suppliers in mexico and china. to compliment this action, d.e.a.'s also piloting its new 360 strategy in four cities.

which lev rangs existing federal, state and local partnerships to address the problem on three different fronts. law enforcement, diversion control and community outreach. enforcement activities are directed at the violent cartels and drug trafficking gains responsible for feeding the heroin and fentanyl into our communities. while working -- while also working with our community partners to reduce demand and educate a very vulnerable youth. this opioid, heroin, fentanyl epidemic is deadly and it touches every segment of society. no one is i mufpblete we -- is immune. we all recognize that prevention, treatment, enforcement have to work together against this epidemic. i'm going to go off script here and comment, yesterday in chicago we made a seizure of 5.5 pounds of one of the

fentanyl analogues that d.e.a. emergency scheduled as illegal. along with a 5.5 pounds was a pill press. a rolls-royce. and approximately $100,000 in cash. this is not a problem that i see going away any time soon. i think it's imperative that we educate our citizens of the dangers of prescription pill abuse and how that might lead more susceptible to use a pill named zahn ax which might be fent -- xanax which might be fentanyl. thank you for your time. [applause] mr. baker: thank you very much. to give us a sense on how one state has chased some of these issues, dr. harry chen, who is a vermont health commissioner, has been gracious enough to join us here to talk a little bit about their hub and spoke

initiative. which is leading the nation in many ways and expanding access to high quality addiction treatment. mr. chen: thank you, governor baker and governor hassan. faced with steep increases in the number of climates seeking addiction treatment for opioid addiction, increasing opioid overdoses, and increasing the number of criminal cases involving opioids, the governor devoted his entire state of the state speech to the opioid crisis in 2014. channeling him, he'd say it was a lonely place. to be out in front in early 2014. the actions he took immediately were to add more funding for treatment resources, to support legislative and regulatory changes in both health and criminal justice systems. vermont at the same time adopted a plan to address this public health crisis. it is comprehensive, including strategies encompassing prevention, enforcement,

intervention, treatment and recovery support. it's essential to recognize that whatever we do in all of these spaces to stem the tide of the opioid problem, it rurs a coordinated approach -- requires a coordinated approach on the federal, state and community levels. so here we were. ready to invest money in treatment, but at the same time our waiting lists were getting larger and larger. we just didn't have the capacity. so it was clear at that time we had to do something different. doing something different really meant reforming our health care system. we developed an integrated approach to health care reform, combining the health homes provision of the affordable care act, to actually get 90% reimbursement for medicaid for eight quarters. we were able to leverage this in our current payments and delivery system reform called the blueprint for health, using community health teams and advanced practice medical

homes. this was a partnership between the health agency, which was the substance abuse authority, and the medicaid agency, which provided the outpatient treatment. importantly, we had to measure our outcomes and our costs to know if we were making progress. from this came the caroline for opioid addiction. it was a regional approach for therapy to providers who suffered with opioid drug addiction. the carolinas was designed to coordinate addiction treatment with medical care, counseling and support services using this infrastructure of the community health teams to effectively treat the whole person as they make their way along the path to recovery. we know from the literature that medication assisted therapy works. it's an effective treatment that involves prescribing medications, methadone, and combination with counseling.

we know the outcomes of this approach include reduced drug use, retention and treatment, better social functioning, better health, reduced criminal activity, reduced disease transmission, and, importantly, reduced drug overdose. getting more details about the care alliance, the pieces include the hub, which is a regional opioid treatment subject -- center responsible for coordinating the care and support services for patients who have the most complex addictions. those with disorders. patients at the hubs are generally treated with methadone, but can be treated with others. in addition there's the spokes which are really a medical home such as a primary care practice or health center responsible for coordinating the care and support services for patients with addictions who have less complex medical needs. generally they are treated with drugs in the spokes. depending on the individual needs, support services may

include mental health and substance abuse treatment, pain management, family supports, job development and recovery supports. so how are we doing? well, in terms of health care costs, we all are worried about the black hole of substance abuse treatment in our budgets. but overall the health care costs for individuals treated with medication assisted treatment did not increase in total. there was a reduction in high cost emergency department and hospital utilization, there was more primary care and less specialty care, in terms of the important concept of social functioning, employment, family life and quality of life, retention and treatment in the hub and spoke system resulted in much improved outcomes and maturely, left pre whether it be from leaving, moving or going into corrections, had a lower level of improved functions. other costs, importantly, must be considered, such as the cost of corrections and social

services. we have plans to evaluate that but it's a pretty remarkable undertaking. in terms of recommendations to this group. treat addictions like any long-term chronic disease. we know that in chronic disease, 20% of the people use 80% of the dollars. this is true of those with addiction. ensure adequate capacity and a system of care to support individuals through treatment and recovery, to have enough providers that are prescribing methadone or others. bring specialty addiction treatment together with primary care. that's an important integration for ongoing patient support and integrated and holistic system. obviously the question is, can you afford it? i think the answer is you can't afford not to do it. finally, the clear that every day reminders have to be part of the solution. to that end, we have two state-wide campaigns. one, vermont's most dangerous leftovers, educates people about how to use and dispose of drugs. and the second one is paradox. educating parents about their role in talking with their

children about drugs and alcohol. so thank you for the opportunity to share some of our experiences in the opioid crisis and addiction and overdose in vermont. i'm optimistic wear seeing light at the end of the tunnel. we still have a long way to go. thank you. mr. baker: thank you very much, dr. chen. [applause] thank you, ms. flowers and dr. ranklin as well. uestions from the governors? eah. >> thank you, both of you. from the members of the panel. i just want to bring up a little bit of a touchy subject. not for discussion, but to see if there's any consideration to -- from any of your states or d.e.a. , a i was state senator

brings to me some articles and studies that he thought that i should consider. i paid little attention to him until a couple of years later, i went to a conference where he was giving to many people. he explained, and then i went back to those articles. i ask and i thank n.g.a. staff and my staff to be included in one of those articles. all of us have it right now. law professor, on drug decriminalization in portugal. this is a very touchy subject, i know. but just to give you numbers. 2001, people that died by

opioid in portugal was 281. n 2006 it was 133. they decriminalized all drugs. just -- i know it's a very touchy subject. but i think it's a good article to take a look at. that e 18 there's a table hows how decline number of dead people by consumption of illegal drugs. it's something that i haven't been able to put forward in puerto rico. i wish. but i just want to bring serious consideration. i just want to know from you, study these or what's your opinion on these case studies, it's happening with great success in portugal.

mr. baker: nice softball to start the conversation with. [laughter] fire away, dr. franklin. mr. franklin: i didn't have time to go through kind of how all this started. if you don't understand how it all started in the late 1990's, you're not going to be able to reverse it. one of the things we recommended, you know, most health care delivery is regulated at the state level through boards and commissions. the folks that wanted to make it more permissive to use opioids, we had language in -- language in our state that said, no doctor shall be sanctioned for any amount of opioid written and more than 20 states included language like that that was so permissive that even if you had an egregious provider or a pill mill, it was very hard for our medical boards and commissions to take action against that sort of stuff. it's important to realize that

it's the oversupply and overprescribing that has led to this and it was based on false teachings by some of our leaders and drug companies back n the late 1990's. mr. baker: i'm looking forward to readsing this report too. the main -- the part i struggle on this, when people talk about decriminalizing this, is we did. it is legal. the 240 prescriptions that secretary burwell was talking about, those were all legally prescribed for the most part, written into this country, and part of the authorized approach to pain management that grew out of the reforms of the early 2000's. i'm one of these people who thinks we're dealing with that right now. so the very hard to -- for me to understand how that fits with. this but i'm looking forward to reading it and seeing what it says.

mr. chen: the only thing i'd add to that. this is a complex issue of addiction. which is not all about pills. although we know that doctors overprescribed in the 1990's. in hospitals and encouraged them to do so because of satisfaction surveys and the joint commission created pain as the fifth vital sign. but at the same time, in essence, when we actually use m.a.t. to some ex tent you could say that's legalizing, right? we are giving people opioids to make them stable, to make them -- to make them healthier, and to allow them to become productive members of society. so they don't have to steal to actually get drugs or to risk the overdose related to the illicit drugs. >> a couple of different questions real quickly. just a quick question of the d.e.a. what if anything can be done to stop that flow from china to mexico? the one that you cited.

are there simple things that can be done to target like a laser on that channel for fentanyl in this instance? ms. flowers: yeah. there's a multilair are layer a-- multilayer approach. we have an office in beijing and state democratics in our headquarters. working groups in the d.c. area. working on that issue and diplomatic relations with china and how we can augment or assist or educate them on the problems here and what these substances, the habits they're creating. i think that we've had a very successful relationship with the chinese government and their medical community and keeping that dialogue open. i'm optimistic with their recent, you know, they basically criminalized over 100 chemical substances, six of those were fentanyl analogues. i'm optimistic in that point, in that the dialogue is open and they are sharing information with us. as we're seeing more of it, we showed more examples of here's

the chain of evidence that shows it came from this chemical company and this location in china, you know, what are you going to do about this? i think that's something that we're going to continue to do and push forward with. >> dr. franklin, your thoughts, i'm curious your thoughts on a drug, it's sort of a brand name, your thoughts on the effectiveness of it. do you know if anybody's done a study as to the percentage of it you? mentioned that dr. chen is -- you mentioned it, dr. chen, as one of the spokes. has anyone studied the percentage that's prescribed by the individual to whom it was prescribed versus that which is sold on the street? mr. franklin: i don't know the answer to that. dr. chen? >> but your thoughts on it as a drug. do you feel it's an effective drug for treating opioid addiction? mr. franklin: i believe it is an effective -- effective drug to treat opioid addiction. but we also need to take an approach.

this is a special population that started out with prescription opioids. and our state guideline and our workers comp guideline are focusing on, first of all, trying to taper the drug in patients and having algorithms for primary care and pain clinics to taper, along with the possibility of medication, and if -- you can taper it 10% a week or something like that. we actually have no data as to how often that could be done. that would be the first step. then, if that fails, either in primary care or in a specialty, with addiction help, then we would probably allow medication assisted treatment for opioid use disorder. because some people think that that's a brain disorder that's going to be there the rest of your life. we really have no empirical da to say, you could get -- data to say, you could get half of

these people off. we have evidence of workers who were on huge doses that got off within a fairly short period of time and did well. we need more data on that approach. mr. chen: if i could try to address your question. i think one point is that we know from the evidence that methadone works very well. we've been using it for decades. we also know that the other does work in a similar way in terms of the outcomes measured against in terms of criminal activity, in terms of health. your point about street use of it is a good one. i think there are two issues to that. i spent a morning in a clinic prescribing it to people. i happen to have my -- as a pinch hitter. i asked every one of them how they started. i asked every one of them what things they went through. and a lot of them actually started with the street drug. this is really self-medication as much as anything. some of them said, yeah, i got high a little bit in the beginning. but after that, it was just

about not withdrawing. and so if you have demand that's not meeting supply, then they're going to buy it on the street. i think there are ways to be more mindful about how you regulate the prescriptions. we have to be very careful we're not just going to get into another set of pill mill situation. are drugs. ls now strong regulation and best practicals -- practices about how you prescribe it in a system of care is very important. >> one final question/comment. it's something i would challenge us as governors to think about. i don't know what the number is, but i would think a significant portion, percentage of the doctors that are educated every year in the united states are educated in our public universities. certainly some high percentage of them are. one of the things, i've looked at this, one that's affected kentucky significantly. communication is critical. part of the communication, the

points you're making, as well as education, you've been calling people's attention to this for a decade-plus. i've talked to doctors who have had no real education whatsoever in pain management prescription. they really haven't. it's not a part of the protocol for them to become doctors. it is starting to potentially become part of it now. but i wonder if we could not collectively, if the n.g.a. in some way, working perhaps with you, perhaps with you and others who have lookered at this for a long period -- looked at this for a long period of time, come up with a course, for lack of a better term, that would be standard. that every single doctor, start with our public universities that we have more control over, but ultimately that every doctor in america would have some basic level of training in understanding the pain management drugs more so than they now do. i wonder if we did not all put ourselves behind it, and sort

of demand it, at some fundamental level, at least within our public university medical schools, that we might not be able to turn this. because i think we are now reaping what was sewn many, many years ago, that some you have found earlier than others. but a lot of this prescription problem came out of a lack of understanding and a fundamental trust that was placed in information that has turned out to not be what we believed it to be. i don't even know if that's a question. it's just a thought. i'd be curious if you have any thoughts as to whether that's even fisa feasible. mr. baker: just so you know, one of the elements of the compact talks about educating prescribers. i know in massachusetts, the medical schools, all four them, including the public one, dental schools, and the nursing schools, have all committed to opioid therapy curriculum, which you can't graduate unless you take and pass. we also have a statutory

requirement that if you're going to be a prescriber every two years, you have to incorporate opioid therapy as part of that. i know that's happened in a number of other states. i certainly look forward to what the doctor and the team come up with. but i think, i tell you, i can't tell you how many clinicians have said to me, when we've gone into pretty pointed conversations about this, you know, i really don't know as much about this as i probably should. most of the docs who write most the prescriptions are not orthopods and they're family practice and primary care. this is a really big and really important issue in this conversation. i think the idea of getting everybody state cool, if you go to medical school or nursing school or dental school, i think that's a really good dea.

>> just briefly, to underscore and endorse your observation, i would imagine that the piece that we'll be doing in partnership with the n.g.a. will not only identify the kinds of guidelines for providers on the front line, but also what's necessary in the educational process, to improve the circumstances. walk walk thanks. on the point -- mr. walker: thanks. on the point, i'm sure this is true. a lot of the states, both those who have panelists here and other governers who are represented, two things come to mind on your question. partnership and cooperation. we found the same thing true not only with our medical schools, but going to speak with our state medical society. realizing this is something we could do them, we needed them

to be invested. there still needs to be that. because it's that just changing their mind or the medical schools, it's changing the mind as patients. the example i often give, you go to urgent care, my kids are in their 20's now, when they were younger i can remember spend being every other weekend in emergency rooms or urgent care with a bunch of other football parents along the way. but some injury along the way. but every time you go into urgent care, what's that sign you see up there? it's the sign with the different faces that tell you what level of pain that you have. that's instinctive. they were trained not just because of reimbursements and things of that nature, but just in general, that patients said, doc, give me something, i'm in pain. the thing they were missing wasn't the lack of how to deal with that pain, it was how to deal with it effectively without going down the path that we're on today. we've got to get people to buy into that and the going to take a comprehensive approach, at

least we found in our state that -- and we're, you know, i love the things that we heard from the panelists here today, we're going to take that back and match it with the things we're already doing. it's certainly something that we can't either in state or at the federal level just dictate to people and expect it's going to work unless we get them to have some buy-in, whether it's medical schools, dental schools , our nurses and otherwise. t's got to be a partnership. >> i just want to make the following point. our state, connecticut, has been dealing with this issue, i've been governor for six sessions and we passed comprehensive legislation on this issue five of those years. and thought we got ahead of the problem. i'm going to say this and some people certainly can have the right to disagree. i think our discussion today is largely about where the problem

was three years ago. mr. malloy: we're coming up with a response for what we probably should have taken on three years ago at this rate. i think what i would say is the lasting effect of the introduction of some of these opioids, and now with the addition of easily accessible fentanyl is the cost of heroin or its alternative is now so low and will remain so low that we're seeing people becoming addicted not, first of all, to a prescription, but it's moved to a very rapid becoming addicted to something you can uy at a dose for $3.50 to $10. and a product, if it's pure, if it's heroin, without fentanyl, is up to 71% purity as opposed to 15% or 30% purity when many

of us were growing up in this room. so, yes, we have -- we do have a prescription drug transference problem. i'm not denying that. but i think people have to understand how cheap this is, how quickly people become addicted to it, and then of course the added factor of fentanyl, when introduced as a mixing agent or a replacement for heroin, when the person runs out of heroin to put in the packets. is causing death. as i've said, in a four-year period of time, we've seen fentanyl in our taxologist reports go from 14 deaths to this year where we're predicting 170 deaths. doesn't mean the person intentionally took fentanyl, they took heroin or thought they were taking heroin, it had a percentage of fentanyl and they end up dying of the combination. final thought, in new haven, just four weeks ago, we had --

someone was selling as heroin mixes that were largely fentanyl. three people died immediately. 5 people in total lost consciousness. some of those folks, this was a relatively new product for their ingestion. final point, i think we need to be talking to our high schoolers, our junior high schoolers, we can all worry about people our age having knee replacements or dental surgery, but this stuff is so accessible, it is ubiquitous in our communities and you don't need to get hooked to something else before you get hooked to this. mr. baker: well said, governor. we're about to run out of time here. so i do want to take a minute to thank dr. mcginnis and dr. franklin and agent flowers and dr. chen for your presentations and your participation today. it was all very educational. we look forward especially to working with dr. mcginnis and with you and your colleagues

going forward. i do want to give vice chair hassan a chance to offer final thought here. ms. hassan: thank you. i join governor baker and all of the governors here in thanking our panelists. i'll leave with this thought. because i think all of the comments have reflected where we are, what work we still have to do. but i was -- saturday, just the day before easter, hoster our easter egg hunt on the front lawn of our capitol. as happens, i would expect to most of us, if not all of us, people throughout the day came up to talk to me and often would talk about this very issue. a loved one they had lost, child's friend who had just died of an overdose, another person, maybe a colleague they knew, who had been rescued by narcan. but perhaps the most poignant thing for me was a woman who approached me holding a baby,

introduced herself, introduced her baby, i asked, how old he was, she told me, and i said, he was very cute. glad she had brought him to the easter egg hunt. and she looked at me and said, you know, this is actually not my son. he's my grandson. we lost my daughter to an overdose last month. his mother. i admired the bravery of that grandmother in coming to the easter egg hunt the month after she lost her daughter to an overdose. it reminded me of the urgency of this issue and we look at this life clock today, i think it's three more lives have been lost since we started this discussion this afternoon. i am reminded in that story of the bravery of all of the survivors and people in recovery who have been willing to overcome the stigma that has been part of this problem.

and i also admired her optimism in bringing her grandchild to the easter egg hunt, trying to make sure that that child will have the future we all want all of our children to have. so while there is much work to do, i have great confidence in our capacity to do it. and i think the people of our states do too. so let's get to work. thank you. [applause] r. baker: thank you, governor. thank you all for being with us today. very much appreciate it. look forward to everybody working on their compacts and chasing this one as hard as we can. thank you. [captioning performed by the national captioning institute, which is responsible for its caption content and accuracy. visit ncicap.org] [captions copyright national cable satellite corp. 2016]

>> on c-span, our live coverage continues from the national governors' association summer meeting. one more session to go this afternoon focusing on jobs and the economy. should be getting started shortly. in washington today, president obama addressed the terrorist attack in nice, france, yesterday, which so far has killed some 84 people, wounding 202 others. the president making those comments about an hour ago at the white house and after we wrap up our live coverage here on c-span, we'll show those to you as well.

>> if we could get as many

governors as possible to sit down. i really enjoyed the previous session, i've done a lot of reporting on opioid catastrophes in various communities around the united states, and it is such a difficult problem and it is so frustrating. but i also, having spent a career trying to get in the same room and on the same program as many of you as i possibly can and some of my colleagues who worked at "nightline," they've tried to get as many senators as possible to simulate a working group session between elected leaders and policymakers and stake holders like doctors in this case, working on really, really hard problems. mr. hockenberry: it's so hard to achieve in television and in broadcast. but i really had a strong feeling here that everyone in america should see just how engaged everyone was in that last session.

i think it would be such an important optic, to use an overused term these day, see how engaged and authentically involved in solving a significant problem that everyone was here, regardless of politics and it was just a really striking and wonderful thing to see. we're going to shift gears and talk about something very different. in many ways, part of the problem in communities that have meth addiction problems and opioid problems, relates to economic development and the fact that there are few opportunities for other kinds of meaningful roles in the community and direct investment and investment in your economies is a way of changing that. i want to introduce the panel thisand we're going to see issue framed in a way that maybe is a little more illuminating

and inspired than some of the rhetoric we've heard about trade treaties over the past several weeks and months because when we do talk about trade, we're also talking about direct foreign investment and i think direct foreign invest suspect a boon. it's been an extraordinary boon in america and it's a remarkably untold story. i'd like to first recognize the governors who are here from japan. [applause] it's great to see you mixing with the governors here from the united states and in many ways, part of the mission here is to create these relationships, as all of you were telling me before, and we have an hour and a half really to get to know each other and to make all that happen. let me introduce the people on the panel up on stage who represent the mechanism of direct investment and people who have benefited from that here in the united states. directly here to my left, dennis

kerigan, executive vice president of zurich north america, please welcome him. [applause] and the president of the japan external trade organization in new york, it's a company that monitors business conditions for japanese companies in north america and is always looking for new opportunities for japanese companies. peter fannin is also here with us, vice president of panasonic in the united states. [applause] a ri oshaka is part of company building innovative products. and finally, riota ishiki

executive advisor of toyota motors, no panel could be complete without toyota. >> on behalf of the organization for international investment, it's a trade association with more than 175 global companies with u.s. subsidiaries, i'd like to thank the governors as well as the n.g.a. for giving us this opportunity to talk about such an important topic and what i'd like to do is frame the issue of foreign direct investment in the u.s. and then also look at the specific lens through japanese companies who have u.s. subsidiaries and the tremendous positive effect that they've had on the u.s. economy. so let's start by framing foreign direct investment in the u.s. or f.d.i. so as you can see, more than 24 million jobs supported through foreign direct investment that the u.s. subsidiaries of global

companies. of that more than six million workers directly employed by those subsidiaries. then you have another 18 million ancillary jobs supported so a multiplier of 3-1 which is quite conservative in economic terms. from a compensation standpoint, studies have shown that these subsidiaries actually pay wages that are 33% higher than the normal average in the united states. now, you're measuring the historical inflows over time it's been more than $2.9 trillion. if you think about the market share of those inflows, we actually, the u.s. has 23% of the market share. which is a positive figure, no doubt but that's actually down from the year 2000 when the u.s. was capturing more than 40% of those global inflows. in my experience, what that

shows is, it's a very competitive global economy right now. countries, regions, and as you know, states are fighting very hard for economic development and economic investment and i know that as we go on today we'll talk more about what we need to do to make sure that each of your states is competitive in seeking foreign direct investment. if you talk about what the impacts are of the f.d.i., it's really interesting. you look at manufacturing, which is a crucial part, i know many of your state economies, pound for pound, foreign direct investment actually shows up very, very well in the manufacturing sector. particularly skilled manufacturing. so among the f.d.i. community, 37% of the f.d.i. jobs are in the manufacturing sector. and that's disproportionately higher than the regular u.s. economy, which is about 9%. two million manufacturing jobs

provided by foreign direct investment in the u.s. right now. that's 18% of the manufacturing work force in the u.s. so basically one in five manufacturing jobs in the u.s. is the result of global companies operating urs subsidiaries. now it's because of that that ofii often highlights manufacturing as a key benefit of having positive policies toward foreign direct investment. likewise from an innovation standpoint, research and development, i think u.s. subsidiaries of global companies also show up well pound-for-pound and definitely carry their weight. u.s. companies spend $53 billion annually on r&d. if you think about f.d.i. companies as being only 1% of u.s. firms, you can see disproportionate investment they're making and then lastly exports which is i think one of

the good story, but maybe one of the untold stories about foreign direct investment in the u.s., global companies invest in the u.s. often to sell products around the world and so it should come as no surprise, u.s. subsidiaries last year produced 3% of u.s. exports and i know we'll talk more thabet positive effects that japanese companies have had but japanese based affiliates actually produce more exports in the u.s. than affiliates of any other nation. just a little bit about my company, too, and our story on foreign direct investments. zurich is one of the largest insurance companies in the world and we're proud to have been doing business in the u.s. for more than 100 years. starting on state street in downtown chicago and we're about to move in in october in our new north american headquarters in illinois, about 15 minutes from o'hare,-year all invited to the ribbon cut, please see me

afterwards -- >> so that's what those f.d.i. insurance premiums buy. >> absolutely. it's a 700,000 square feet facility at a cost of over $400 million, provided more than 2,000 construction jobs, including 700 vertical construction jobs. it's a siphon the positive effects that pro-f.d.i. policies can have on a state economy. pass art of our work in deciding to build our new headquarters in the area we had an economic study commissioned by the university of illinois which show wed had a $1.3 billion effect on the state economy each and every year: by way of metric, we have about 3,000 employees in illinois and another 7,000 around north america. hen another 40,000 globally. if we dig deeper on the story

especially with japan. japanese companies nsted more than $373 billion in total over time, making them the second largest investor in the u.s. economy. d if you go back a year ago, 2014, japan invested $373 they were in 2014 the number one investor for that year. it's a positive story. as you can see the amount of outward foreign direct investment they've had globally in the white bar chart, it's been rising over time, totaling $1.2 trillion in 2014 and the u.s. has done a great job of attracting that investment. but at the same time if you look

at the red line, which is actually the relative percentage of japanese investment, the u.s. is falling behind. so the red line shows that in 2000, we were actually attracting 57% of japanese outward foreign direct investment. that's dropped to just 31% in 2014. so i know one of the questions we'll explore as we go along is, what policies can we change to make the u.s. more competitive in attracting this kind of global market share. then just to dig a little deeper into some of the japanese numbers, again, a very positive story, japanese direct investment in the u.s. supports over 800,000 u.s. jobs. those workers earn over $65 billion in total compensation. if we move the lens to manufacturing, again, a critical part of any state economy, the investment actually supports $348,000 manufacturing jobs and that's actually 43% of all japanese inbound investment.

turning to the export side again, companies coming into the u.s. to invest, to sell their goods to the rest of the world, japanese companies exported $69 billion worth of goods annually and they invest almost $8 billion in r&d. so that just frames the issue. gain, of fimbings -- ofii is trying to create a level playing field in the u.s., insourcing companies. it's a very positive story and with that, i turn it back to you. >> thank you, dennis. i want to get each person on the panel to give a sense of what they dueview as the opportunity united states for japanese companies and japanese investment as quickly as you can. i want to get a quick comment from the governors who are here, and then i want to have an opportunity for you to interact because i know you have to go at 3:30 and we don't want to disrupt the schedule but i want

us to begin on a really good footing here between governor to governor relationships and governor to governor communications because i do think that bypassing the middleman in this case, washington, d.c., has apparently had some great impacts already. we can see some of those right here before our very eyes. ut one of you begin. >> thank you. japanese investment in the u.s. have been significantly increasing. so let me briefly talk about the background. , they december of 2012

started and corporate investment in japanese companies have increased 30% in two years and investment increased 15 years. investment.japanese why? jetro has been conducting surveys for the japanese companies for 35 years. in the u.s., more than 80% of japanese companies have positive business profits, the second highest since 1991 and higher han europe, asia, and china. japanese investment to u.s. has declined but significantly covered and now it's surpassing asia and europe,

still maintaining a very high level. taking account of the global economy situation. this trend will continue. when i have people at japanese banks, they are giving money to japanese companies all over the world but it's increasing in the u.s. they said they increased 50% just three years. >> so let's stop there on that fact. that's interesting that bank loans are stalled on investment everywhere in the world but the united states and with interest rates this low, it would seem that this is a boom that anyone in the united states could take advantage of. just hold that thought right there. peter, let's get a quick sort of outline from you, what you think the principal opportunity here is in the united states for japanese investment. >> i might mention first off that while bank loans are positive, there is a threat to

further investment for foreign-owned companies in the u.s. under proposed i.r.s. recommendation, so-called section 385, which would treat loans from your own parent company overseas as equity and in turn raise your tax obligation. so companies like mine worry a great deal about whether regulations like that, which are intended, of course, to stop inversions, quite understandably, they're trying very, very hard to ensure we can maintain here in the u.s. investments that we need and we don't want them outflowing, but at the same time, we think this particular regulation has gone entirely too far and we hope the i.r.s. won't rush to judgment at the end of the calendar year, which they're currently planning to do and will rethink how things are define sod companies leek mine, which rely on investments from our parent company in japan, for example, gigafact roy ry

with tess la in nevada, which will bring 2,000 new jobs to nevada, to buy huffman refrigeration company and invest hundreds of millions of more in that activity in missouri, or to buy a.v. -- audiovisual software companies in texas. but frankly, we're ham strung if those regulations go through the way thear proposed. that's a downside. the upside is the u.s. is perhaps the only place that sort of primary place these days with every other global economy stalling or slowing dramatically. ours is still improving, albeit not as much as we'd all like. this is the perfect opportunity for us to take advantage of investment in the u.s., and my company is constantly looking for possibilities there. so there are employment and skilled labor issues that are

essentially permn't but also cyclical issues that relate to this particular moment in time being very, very propitious for this kind of investment. and the president of toro dustries, give me a sense of what your outlook is. >> our company is a chemical company, different from other industries, that contribute to the consumer directly. ut -- as long as the u.s. have positive growth, and also the chemical industries used a lot of energy so the energy advantage is also strong benefit in an area of the united states.

nd the material, the currently the carbon composite is used for struck choufers aircraft and there are two big giants in the world, one is in u.s., one is in europe. ll the material. now the $1 billion investment is carrying on in south carolina, that is supporting big program. the real objective of our business, getting into the united states. >> so certainly some regional advantages, great experiences to be had in the south. again, working in the background, as long as there's growth in the u.s. economy, the kind of industries you support are going to be positive investments. >> and also competitiveness of the utility here in the united states. >> competitiveness of the what?

>> utility, energy. >> great. give us your view. >> thank you very much. almost 60 years have passed since we started business here in the united states. it's a long time. and long time commitment. and growing together with the community. it's enabled us to grow together with the people here in the united states. advantage might benefit but at the same time, the credibility to us from the community and commitments on our side also benefit. so i would like to touch upon

the issue of what work force development. that is also beneficial for us and at the same time, i believe the community in the states. >> thank you very much. we'll come back to all of you. they have plenty more to say. this is your chance, governors, before you leave. you have questions for our investment panel here and we want you to interact with the governors here. any of you have a we on your mind? how come toyota favors kentucky? how come not me? this is the time to ask those questions. the governors over here can maybe give you some advice in dealing with the investment and business folks. any questions? anybody want to be daring. >> unfortunately, we do have to hop out momentarily but all of us have people in the room who will want to hear the answer to that. was that a rhetorical question, as to why toyota chooses kentucky? i think it's obvious.

but we are -- we are great. it's a wonderful relationship, we're grateful for it. the question i have for each of you and each of your respective companies, investments, electronics, automotive, etc. what is it that not any individual state might do, but what is it that states, period, can do to make it easier for you and your companies to make investments in the u.s.? because there is great geopolitical unrest. there is this opportunity of people looking for safety. and yet there are barriers that exist as a result of maybe it's taxes, maybe it's work force development. maybe it's -- i don't know what. i don't want to lead the witness. if you could just tell us from each of your perspectives, what is the one thing, or if there's two perhaps that if those were out of the way, maybe a prere-pay tration of dollars, profits, maybe the ability to invest without taxes, what are those things specific to states if possible so that we can

individually and collectively start to address them and make it easier for you to do business with us. >> that is the essential point. before you leave i want to give the governors here from japan, , the iroshima prefolkture governor -- prefolkture, the governor. prefecture. and did you want to say something in particular to the american governors before they leave? >> yes, i wanted to make one point. you know, the importance of the relationship between the local governments for attracting investments and growing those investments and businesses. you know. might find this is a case with

mexico but developed very good relationships between the mexican state and investments in jobs growing very rapidly based on these relationships. so that's what we're kind of looking for with the u.s. states, too, so we're looking forward to, for the discussion about this. >> that will guarantee a callback, right? maybe not from his office but rom your office. grateful because of pe great hospitality of

governor. first of all i want to express my confidence about the instance. a special , we had was permanently destroyed but in the city children will go through their ay in peace. those are the words of president obama. we are attacking the same bias, tissue the same problems, job creation, child care.

we can schafer best prackities between the united states and japan. this do hope to enhance type of conversation, dialogue, between us. >> to amplify that, the weapon that fights terrorism is cooperation, not isolation. and anything that can reduce the propensity of people to live in isolation, to reach out and embrace in communities that is the antidote to terrorism. governor? >> i want to mention, i've been to japan 16 times, the first time i came to japan, mike mansfield was the ambassador and he did a great job of convincing me we need to really build a strong relationship, even before i became governor we have a ister state with yamanoshi

prefecture, japan, going back to 1960. i found the midwest japan association which represents states prefectures and in the mevt and companies, that's a great vehicle, it's going to be in missouri this year. last year it was in tokyo. it's in japan one year, in the mevt the next. that's been a great opportunity for us to exchange ideas and to work together and we're very appreciative, we have a number of japanese companies that have invested in iowa and we obviously do a lot of business in japan as well. so i want to welcome our japanese guests and say how much we appreciate the relationship over these very many years. thank you very much. >> i gather you folks have to go. thank you so much for your time. i know that our japanese governors wanted to give you a

sense of respect and thanks for your hospitality here. thanks so much. we'll give you a moment oleave. [applause] so let's talk about work force development. that seems to me to be, you know, exactly the kind of thing that americans don't think about when they think about the positives of the u.s. economy. there's all kinds of, you know, we don't have stem education, we're behind the rest of the world in this, that, and the other thing. yet part of the reason why the direct investment comes from japan is because of the work force as it is and can be. >> when it comes to the assembly

plant, at least 2,000 people are needed to work with us. and almost the equivalent number of people are needed working at suppliers' plants. so at least 4,000 employees needed at the level of that consumer can evaluate the model is work force of human development. the human itself makes the quality. and when we want to expand a facility and have the next line, we also need 2,000 or 1,000 people. how can we recruit those people t the same site?

big needs for people development. maybe the same thing could happen. >> you need 4,000 people to operate two lines. >> more than that. >> more than that. you guy have robots, why not ust do robots? >> i believe the human is the main factor that decides the quality and that decides our business itself. >> just again, talking about work force development, do you work with educational institutions? >> yes. >> i'd like to show my . esentation sheet here. so i wanted to briefly address the challenge that we all have

with private industry or the public sector, i think, is work force development. because we believe the key to making quality products is to develop quality people. seek ways to identify trained, skilled people. one thing we have collaborated on is the advanced manufacturing technician problem. and as you can see here, we now have partnership in eight states and look forward to supporting any of the other states, we educate young people in the states. >> i should mention too that these work force development issues are not just in the manufacturing or stem areas. it's also in knowledge workers and the service industry, so last year we started a first of its kind apprenticeship program. basically importing the european

apprenticeship model to the was a grant from the department of labor and the support of the department of commerce, we partnered with a local community college to create a first of its kind insurance apprenticeship program, where basically 20 students are going through the program right now and they work halftime at our facility, for pay, and halftime they go to school, learning the insurance business. at the end of two years, they're going to graduate with an associate's degree and also have a job waiting for them. we're really happenity pi to find, as illinois is the center for insurance, we now have another insurance company signed up as well as two major insurance brokerages to provide those jobs as well. it's not just manufacturing. you can actually apply those work force development models into knowledge work, which is important. >> if i may, in our case just to mention an example, not unlike toyota's, making batteries in

the new tess la giga -- in the ake tesla gigafactory will t upwards of 3,000 new jobs. and for all of those we are working, because these are skilled jobs, these are not just materials management jobs but they are largely skilled jobs and the skills rarely regularly exist all in one place in this country or anywhere else. so in our case, we're working with universities and vocational schools in nevada and the southwest to create training programs and extend long-term education programs that orient toward the skills needed for those jobs. we have in our overall case here in north america operations with 12 major universities that, for example, at georgia tech we have an automotive innovation center on the campus which takes in both coe-op and paid students

through the course of undergraduate and graduate degrees. in newark, new jersey which is our headquarters, we're focused on education initiatives starting in grool. so our panasonic foundation tries to help schools improve their overall curriculum and manage their schools most effectively even while we take coe op students, as many -- co-op students, as many as 500 in the course of the year, similar to dennis', help grow the enthusiasm for science, technology and related skills that are basically required for electronics and the kinds of business solutions we're aiming at. >> if i'm a student and i want to take advantage of some of those opportunities, what's my what 's my front end, door do i knock on? >> you can literally knock on my door but also through the universities that we coordinate with, for example, in new

jersey, new jersey institute of technology, which is right there in newark, rutgers university, which has a cam bus in -- campus in newark and the big campus down the road. and a few other school, monmouth and others. as students arrive they're told about industrial opportunities or corporate opportunities and in our case, we interview them early on and try to decide whether there's a reasonable placement for those students. >> does every job have to have a placement at a particular facility in new jersey, for instance? it occurs to me that some of the governors here in the room or some of the staffs could pilot programs for direct foreign investment starting with community college. would panasonic view a, you know, student from alaska or texas or florida coming aened doing the same kind, developing the same kinds of skills in their state, even if there wasn't a panasonic facility

there? >> typically we work in and around panasonic facilities, big ones in california and on the east coast in particular. but practically speaking, they're basically open to anyone who is looking for an entry level. our human resources department, i'm happy to say, doesn't just take the paperwork side. they follow up with the people. it's a great operation. and because the breadth of skills, you know it as a television company or a camera company but less than 15% of our business is in those arenas. the things you don't know us for are under the hood in a car, they're in the airplane avionics systems, they are -- >> you mentioned the gigamax factory in arizonaful. >> did i mention the battery factory, 7,000 of those go in your tesla model s. when that factory is up and running, it will more than

double the entire world's output of lithium ion batteries, in that case all going to tesla. >> let's make sure they don't have headlines like last week. >> and the expectation on the slightlye, the -- it's different. he nature of the business, typical industries are new materials. the people in u.s. do not have enough knowledge to contribute this the development of the technologies. usually the expectation of the work force is to just absorb the technologies, and then come ply with the know-how. and make copies. all the work force in the united states this is what we're

expecting. first stage. t since we started the program, people start absorbing knowledges, then we expect them to develop the design capabilities through their know-how. so it may take us five or 10 years of time, so that means the -- it's up to the stage of the industry itself. heavily e work force supported by the company in ashington state. and also schools in washington and georgia. and in california, just we have started operation.

we expect the u.s. people to develop or design all the material, this is kind of history and i think this is kind of quality of the work force. we expect the u.s. people to do. >> i want to talk about that because i think you really have describing the inflection point or transformative moment that exists right now in global trade and in global investment. and how in this environment of also fear of change that that moment could be squandered in some way. we'll talk about that in a moment. at jetro, how do you see the broadest possible potential in the united states beyond manufacture, beyond battery wizards and people who are really good at, you know, designing cars or assembling car parts? beyond insurance even.

> now other than those we have people in central and south america for industry, they start the siness and then go to cities like chicago or houston or dallas. so now many industries, for toyota try to move there, now the other industries, , ch as account are open now

there are so many possibilities for movement happening in the united states. >> do you see entertainment in asia centering in nashville or memphis or possibly even california? let's do a quick, you'll enjoy this raise your hand if you know descendants of the sun. here on the stage. it's the biggest television property in the world. it's part of the sort of sci-fi soap opera, actually the biggest tv program going. and it's produced in asia. it has a billion viewers around the world. all on sort of livestream. and you know, it's an example of the entertainment business that is moving away from hollywood audiences nding huge

but the production techniques still need to be done and that's a skill that we have here in the united states. can you imagine a j-pop studio in nashville -- a k-pop studio? could jetro facilitate something like that? >> yeah. try to bring man fwmbings a in the united states. -- japanese creator >> university of colorado-denver

has a manga program in its arts department. you should check it out. dennis what is this moment, how could it be squandered with the kinds of rhetoric we're hearing about the trade pacs and the things that ignore the kinds of numbers you were presenting a moment ago? >> i think it's important to be specific in our language. rhetoric is often, particularly the anythingtive rhett reck is quite general about foreign companies, etc. and they ignore the good story about global companies with u.s. subsidiaries actually insourcing jobs and people are often surprised to hear about these so-called foreign companies and who they really are, companies like ben&jerry's, owned by unilever, annheuser-busch, dannon yogurt. my company being here over 100 years. these are global companies who made the affirmative choice to do business in the u.s. if we're not careful, we're all

in a global competition for capital from our parent subsidiaries. they're looking to make investments. yes, the u.s. is one of the largest and most competitive marketplaces in the world so companies will probably not pull out of the u.s. but the question is where will we spend the incremental investment dollar we're competing against my asian subsidiary, my latin american subsidiaries, when the group is allocating capital around the world? and the rhetoric doesn't help us in that argument, just like tax policy, trade policies, regulatory certainty, work force development, infrastructure, which is something i hope we talk about as well. all those issues come together in that constellation that our corporate parents look at when they're choosing to invest additional dollars. and that's why the rhetoric can be very damaging and i think, you know, the key would be to move the conversation to specifics and talk about companies like ours that have

tens, if not hundreds of thousands of workers in the u.s. who are making a very good wage and contributing to the u.s. economy. >> let's talk about the infrastructure, where and what needs to be improved and what do japanese investments -- investors think about deteriorating infrastructure in certain parts of the united states and answer governor bevins' questions about what needs to be removed? what's the low-lang hanging fruit if there is any? >> one, to the governor's question, states should be very careful, as should the feds, not to impede innovation. and innovation includes cross fertilization with other places overseas. companies leek ours. bring intelligence and share intelligence and help grow the innovation in the u.s.

states have been very focused on this, which is terrific, and there can probably not be too much focus to help companies like ours and american-based companies really improve both their efficiencies and operations and advance to the next level. my company went through a really bad patch about five years ago, we lost $15 billion. if we did that one more year we literally after 100 years would have been out of business as a $70 billion. >> i can't lose $15 billion in even one year. one year, i'm done. >> but that completely reversed the thinking of our senior management. and our focus now is on things such as infrastructure development. for example, we always had a big business along these lines in japan, which is the home company, that's where things started 50 years before coming here. a great example of this is our work with the city of denver and the governor in colorado and mayor hancock in denver have led the effort to create a smart city infrastuck haveture.

our contribution to that, which was announced at the c.e.s. a year and a half ago, includes everything from smart street lights that also include security cameras and facilities, tai ta analytics to move the energy more smartly, an infrastructure with excel energy a new microgrid with a high energy storage capacity to use to store the energy that isn't used immediately when it's generated. large pany is actually a solar energy company for medium and large-sized businesses and now utilities. we've created entire smart cities in several places around the world, the first being in japan and just outside of tokyo. the second one is under way in yolk ha ma. we have three under way in

china, one in singapore, one in india, and now here in denver. the effort is to not just in new build but in retrofit, to your question about infrastructure improvement. overcoming the issues of old infrahave chuck wur -- infrastructure with new solutions, both hardware and software. >> how bad are the infrastructure issues in the united states? we've seen op-ed pieces in the united states describing our airports as, i won't even use some of the words that have been described, that you know, you travel for -- president obama has even said he travels around to singapore and asia and come back to the united states and he airports are just a mess. there's a feeling that you get of pride when the infrastructure is working wonderfully. but what does that mean in terms of atracking investment and attracting business?

>> thanks to the governors' help, we could have a successful long history here in the united states. 30 years in kentucky. this year is very memorable year for toyota. 30 years in kentucky. 0 years in indiana and west virginia. and alabama, 15 years. and mississippi, only been in peration for five years. >> americans would say that has nothing to do with infrastructure, it's that you got cheap labor. onehe ability of the labor, of the elements we consider for having a plant in the states. the infrastructure,

including the highway access, transportation, and of course water and electricity stability. and also the factors that affect our members to stay and to leave, like real estate costs and the cost of living. and those are also -- those also affect a lot for us. beyond that, predictable regulatory environment is also very important for us. we have a long commitment to the area and we are growing together ith the community, which means it's needed. >> predictable regulatory environment could either mean no regulations or steady regulations that don't have the political whims, or it's regulations that work exactly according to you and nobody else. how do you work collaboratively with a state government to come up with intelligent regulations

that meaningful for consumers but also benefit you as well? >> we have discussion with the states and the regulations for the councilmen and also for the plant, the business. so we need to collaborate and hink of the long term. >> one of my roles is chief legal officer for north america. oversee legal, regulatory and affairs. >> have you detected stable regulatory environments in the united states? >> insurance is heavily regulated. i have to give a lot of credit to economic development organizations that work for the various governors, re, and cities. i understand your point on predictable regulation but it's

not lax regulation. i call it regulatory certainty. we just want to know what it's going to be and we will adapt to it. so it doesn't always translate into lax regulationle. it's just the certainty so we can make the right invests, we know our products are appropriate, that we're marketing, and we know that things aren't going to change radically from jurisdiction to jurisdiction. o us it's really important and -- when we did our study five years ago and where we were going to loathe our headquarters. we found our employees in illinois flew 7 millionaire miles. being next to or adjacent to a reliable airport that has both international and national flights was crucial to us. and i think it's important for people to realize, particularly the governors that infrastructure