dr. kesselheim? >> we could do more to advise the positive profits and outcomes that come from these products into the biomedical enterprise specifically. when you look of pharmaceutical manufacturers and how much money they devote to research and development only 20% of pharmaceutical manufacturer sales are devoted to research and development enough that they stand on the street and advertising far more than the amount they spend on innovative research and development on the level of less than 5%. what we need to be doing is considering ways of taking the enormous profits that emerge from the pharmaceutical industry and plotted them back into the biomedical enterprise that in many cases provided the underlying discoveries that allowed the profits to be made. >> there is much conversation in the opposite direction with drug company profits. perhaps i could get you involved in this, dr. mazzucato. there is talk about cutting corporate taxes for companies that traced profit back to patents or other for

dr. kesselheim. >> thanks. excuse me. thank you. it is my pleasure to talk about my research in the sources of transformative medicines. the wholly grail of drug research and development are transformative medicines. innovative drug with ground raek breaking drug and care. patients have worried about the reduction of new products despite a drug development process there is controversy over therapeutic of new medicines. arguing public ins tucsons niegs nih support medical innovation that is distinct from the process of drug development. while this drug development remains vital i want to focus my comments on the valuable yet under recognized role played by public investment. i led a survey of clinical leaders in a dozen different medical specialties to determine what they thought were the most transformative drugs approved by the fda in the last 25 years. the experts came to a consensus of 26 drugs and drug classes an then i examined the development history of each of the drugs. a full result of the investigation are available in pap

dr. kesselheim, according to the data here, between july 2013 and june 2014, at least 1200 generic drugs more than doubled in price. are you aware of this? >> yes. >> there is one generic drug on the lot that could reverse the effects of heroine overdose or opiods in minutes. according to cdc, heroine related overdoss nearly group ruineleled over the last decade. and yet the company that makes this in the nasal formula increased its prices across the country by more than 50% over the past year. and baltimore, where i live, the cost of this more than doubled in less than one year. doctor kesselman, are you aware of these price hikes? >> yes. >> the only explanation for these price increases seems to be that this company see tess increase in demand for the product and it sees the lack of competition and it is increasing its price toes make additional profits. this year, i introduced a medicaid generic price fairness act. this bill would require generic drug manufacturers to pay rebates when prices increase faster than inflation. brand name drugs already pay these rebates. my big would simp

dr. kesselheim, i look forward to this congress -- this conversation. sen. we convene as part of the prosperity project. today, we will examine our nation's investments in research and development, charting the past progress for our economy. over seven decades and the end of world war ii, sending the middle-class jobs in the process. we will examine how cuts to these investments, and unpredictability in funding for research and development has affected our future progress. american ingenuity is unmatched in the history of the world. the united states harnessed creation, and help new discoveries leap from the lab to the marketplace anyway that is the envy of countries all over -- in a way that is the envy of countries around the globe. the federal government is the nation's largest supporter of basic research. it funded more than half of basic research in the u.s. in 2012. as a result of funding appropriated by congress, the national science foundation, the national institute of health the department of energy, the department of defense, and other agencies aw

dr. kesselheim received his degree from harvard, medical law degrees from university of pennsylvania.so earned his masters in public health and the harvard school of public health. he is certified in internal medicine and he served as a primary care physician at the center for primary care at brigham and center we are very pleased to have you today and thank you for letting the expertise to this panel. and also i am honored to welcome dr. mariana mazzucato who is the chair in economics of innovation at a science policy research unit at the university of sussex. dr. mazzucato received her degree in new york. she is the author of the entrepreneurial state debunking public versus private sector myths, which was included in the 2013 book of the year list issued by the financial times. so thanks each of you for being here and for being here and you could each provide some opening remarks and then we will get started with questions. ..

dr. kesselheim? >> thank you. it's my pleasure to talk about the resources and sources of transformative medicines. the holy grail of drug research and development are transformative medicines, innovative drugs that have a ground breaking effect on patient care policymakers physicians and patients have worried about a reduction if the number of new such products, desite an increasingly cost intensive process. to best encourage transformative drugs, it's important to direct policies towards the sources of these products but there's controversy over the importance of different contributors to the process of developing therapeutics. the pharmaceutical industry has contended its research leads to the development of most new medicines while arguing public institutions like nih support medical innovation that is distinct from the process of drug development. while the contribution of industry-based research to drug development remains vital, i want to focus my comments on the valuable yet underrecognized role played by