Cli clinic reported that price increases added 8. 6 million to its budget. And isoprell and gneiss nitropress are both heart medications, am i correct in that . Correct. Given the choice between paying higher prices and risking the lives of their patients, most hospitals choose to knuckle under and pay the press, am i correct in that . I assume that is correct, yes. So by raising the price of these medications exponentially, you are forcing hospitals to make that decision between their budgets and essentially their patients lives and wellbeing almost like holding a hospitals own patients as hostages against them. Of course valiant was not the First Company to raise prices. Valiant actually bought isoprell and nitropress from a Company CalledMarathon Pharmaceuticals, correct . Correct. And Marathon Pharmaceuticals acquired the drugs in 2013 another manufacturer. Marathon also raised prices in the two years it owned isoprell and nitropress by about 400 averag each. Marathons price increase had an impact on the Cleveland Clinic at that time by 2. 8 million. The Cleveland Clinic is not alone in bearing the burden of rising Prescription Drug prices. Johns hopkins in baltimore sustained an impact of;w9n 20 million last year of which 4 million was attributed to price increases for injectable drugs like isoprell and nitropress. These price increases hurt hospitals in ways that reach far beyond the Immediate Care of patients. They also divert muchneeded funding from research and other programs and technologies that improve care. Look, the truth is hospitals are struggling in this country. We have to keep hospitals alive. Theres no greater impact to your healthcare than when your local Community Hospital has to close. Ive seen this. They trim their budgets, they trim their budgets, they absorb these price increases, they absorb the cost of uninsured care, and they absorb it and they absorb it and they absorb it until they cant absorb it anymore and they cant cut back nursing and staff anymore, and patients lives become endangered and they have to close. And there is no greater impact to you than when your local hospital closes so that when youre having a heart attack, its not a ten or 15minute drive to the hospital. Its a 40 or 50minute drive to the hospital and that could be the difference between life and death. So mr. Schiller, i understand from information your company has provided to this committee that valiant has spent a, quote, nominal amount of money on research and development for isoprell and nitropress. Am i correct in that . That is correct. Well, thats the usual vindication of these exponential drug price increases, they cant need to do this because its funding research. But youve admitted theres a nominal amount of money on research and development for isoprell and nitropress, the very drugs that are experiencing this exponential price increase. Let me ask you this, mr. Schiller. Isnt it also true that one of the, quote, key elements of your companys operating philosophy is, and i quote, do not bet on science, bet on management . Have i quoted that correctly . That is a quote from mike pearson. I dont know what the date is on that. But i would say that this company has changed quite a bit. Mike pearson at your company . Yes, he is. And you have turned over a new leaf since him, is that it . No, if mike were here, if you look at his quotes the last year or two, hes changed the way hes described the company. Our focus and emphasis on research and development. In the pharmaceutical industry its very rare to trace a dollar of revenue to a dollar of r d. Mr. Schiller, i understand that shareholder return is your primary concern and objective. But i say it is unconscionable to deprive hospitals of the resources they need to fulfill their primary objectives, caring for patients and developing new and better treatments for the future. And again, mr. Chairman, i appreciate your bringing this hearing and calling all of this information to light. And i yield back. I thank the gentleman. I will now recognize the gentleman from mr. Texas for five minutes. Thank you, mr. Chairman. Mr. Retzlaff, you testified that your 750 drug, nobody pays that. Some people get it for a penny, some people get it for 20. So how much am i paying for that . Because the rest of that is either coming from the federal government, medicare, medicaid, state governments, or from an Insurance Company that is being funded by the premiums i pay and hopefully will never need that drug. You make it sound like nobodys getting hurt by this. But everybody in this room it actually getting hurt by these prices, are they not . So there are only 3,000 patients in the United States that are treated with deraprim. 25 of those are covered by insurance. The insurance thats gone up under obamacare. The impact for the budget for any Healthcare Plan is very, very small, pennies. You guys are setting another trend in the industry, buy these orphan drugs, jack up the price, which brings me to the fda. Youre saying youre getting down to ten and 15 months. You basically agreed that a ten or 15month mondopoly for anyboy who is a source for a generic drug, they can name their price for that drug. Is that not correct . Can you ask the question a different way . Can you clarify, please . So the amount of time it takes the fda to approve a generic drug manufacturer, if theres only one manufacturer in the generic market, theyve basically got the 15 months it takes, and im going to argue that number with you, theyve got an exclusive ability to sell that drug for 15 months at 1 million a pill if they choose to do that . Right. So what takes so long to do this . Im not an expert in whats involved in manufacturing drugs. I assume if you can manufacture xyz drug in a place, you have a clean facility, no roaches on the assembly line, if you want to add another product, why should it takes 15 months to get that approved . I assume you can test whatever drug you make and see if it is what they say. What else is involved there . If they did screw up making it, 1800baddrug is going to bankrupt the company. Basically with a generic drug there is the scientific and technical review, bioequivalence, manufacturing controls, stuff like that. How much of this is really necessary and how much of it is regulations that are, what color is the toilet paper . So the reason we have 88 prescription penetration in the United States is because when you or your family go to the pharmacy to get a generic drug, that you can be confident that its the same as the brand. A review why does it have to take 15 minutes . How difficult is it to analyze what it is . The tsa can tell in a matter of seconds whether or not i have an explosive in my bag by swiping something on it. Isnt there a technology that will make it faster and better . Why arent we using it . Every day you delay a competitor getting on the market is a day that companies can screw the consumer. All right. Let me ask you one other question on the numbers before im out of time. When dr. Woodcock was testifying, my bs detector went off. She said, ive got a number of applications way down. But she also mentioned a great many of them were, i think her words were, returned due to technical defect. Are you artificially decreasing your wait time as a result of someone returning something without a t crossed or i dotted . No. Give me an example of what one of those technical defects would be. I see it with the va all the time with the casework i do, you dont have this piece of paper, you dont have that, you go to the back of the line. My fear is weve got a bureaucracy at work here that is costing the taxpayers money in the amount we have to reimburse medicare and medicaid for, and its costing the insured more than based on higher rates they have to pay for their premiums, and the taxpayers are having to pay in Premium Supplements under obamacare. Mr. Chairman, can i you have the time to answer. Please answer the question. So you asked for two examples. One example would be if the application doesnt show that the generic drug would be bioequivalent to the brand. So we want to make sure its going to work the same as the brand. Another example would be that if the facility its manufactured in is substandard and cant produce a safe quality drug. Again, the amount of time this takes is i think criminal. Add to that weve got a tort system with plenty of attorneys willing to go after any company that screws up even the slightest. This has got to be fixed. Thank you, i yield back. The gentleman makes a good point. I will now recognize the Ranking Member, mr. Cummings. Mr. Retzlaff, i remind you youre under oath, by the way. Concerning the increase of d dieaprim, you were hoping to evade attention from the public, is that right . Yes, sir. Despite your efforts, it became a major news story on october 8th. An outside consult sent an email to the turing boards laying out a pr strategy for turing to respond to this unwanted attention. The consult suggested that the board move mr. Shkreli as ceo, and i quote, as early as next week, end of quote. The consultant also suggested that turing reduce the price; is that correct . Come on, talk to me. I believe thats correct, yes. You dont know . Youre getting these memos. Do you have an answer for me . Yes, thats correct. Okay. So he wrote, and i quote, the price drop has to be significant and tied to something. This cannot be seen as something that appears to be as arbitrary as a price hike in the first place. Do you remember that . End of quote. Yes, i do. All right. The consultant recommended that turing issue a press release announcing a, quote, package of patient assistant programs for patients, end of quote. Do you remember that . Yes. Did you follow those instructions . Not all of them. All right. Well talk about that. The consultant also recommended that turing, quote, specifically tie profits from diaprim to the research and development of a new and more effective treatment for diprim patients. Do you remember that . Yes, i do. And thats exactly what youre doing today. And the consultant also suggested a Long Term Strategy of, and i quote, forcing a focus on turing as a research and development company, not a pharma hedge fund hybrid, end of quote. Do you remember that . Yes, i do. Now,s mr. Rems. Retzlaff, do you recall receiving this . Yes. It seems that turing mold most of the consultants advice, with one glaring exception. You never lowered the price of diaprim. Let me read another email you received from turing Marketing Executive on october 22nd, 2015, since youre so concerned about patients and discounts. She wrote, and i quote, the cause of the inpatient hospital issue is pretty clear now. Its price, end of quote. She continued the quote, this is what she said. We all realized that we need a solution as soon as possible. But we dont want to commit to something beyond the amount that will potentially debilitate the business and risk future revenues, end of quote. Do you remember that . Yes, i do. Now, ms. Retzlaff, this email indicates that turing was aware that its price increase had greeted issues for inpatient hospitals that mr. Cartwright was just saying. It also indicates that turing was unwilling to do anything to risk future revenues, including actually lowering the price for everyone. Is that fair . Is that a fair reading . No, its not a fair well, give me what is a fair reading. Yes, we did learn that price seemed to be an issue with hospitals. So then in november, we actually announced a Discounting Program for hospitals of up to 50 . And then based on feedback from hospitals, we introduced a smaller count bottle to alleviate im glad you said that. Lets move on. Lets look at an email from the director of business development. He asked if there was a lower price turing could announce that would discourage generics from entering the market and generate positive pr. The reply to that quote, its best we dont pr Something Like that unless its something we are willing to commit to doing. He added, quote, only thing to pr is a Patient Assistance Program and the r d. He replied jokingly, and this is a quote, and maybe you can interpret this, minute its millennial talk, on, he says my r is banging a b and my pap cant rap, end of quote. Do you know what he was saying . Im sorry, i do not. This was sent to you. You didnt read it . But i dont know what that last sentence means. There are very real issues for people with compromised immune systems. And this email indicates that despite the promises of lowering the price internally, turing has no desire to actually fix what it has broken. And the thing that really gets me, mr. Shkreli, who just sat there, your former ceo, is that right, walked out of this hearing a few minutes ago, and probably he probably got out of the door, he sends a tweet calling everybody on this Committ Committee i mbeciles. Did you know that . I was not aware of that. You spend all your time trying to hide your price increase behind positive pr and coming up with stupid jokes while no, no while other people were sitting there trying to figure out how they were going to survive. No, that is not true. And ive said it before. This is about a lot of this is about blood money. Mr. Schiller, one question for you. You said, and i quote, a few minutes ago, you said, in some cases we have been too aggressive in increasing prices. Do you remember saying that . Yes, i did. Just so that we can be feff and efficient in what we do, are you all going to be reducing prices . We have looked across our portfolio and we have reduced prices. Are you going to continue to reduce prices . You said youre earning your lesson, you said that pierson now apparently has a new attitude. I want people watching this to know that they are not being ripped off. We looked across our portfolio. We took a 10 reduction in two of our largest business units, our Dermatology Division and our ophthalmology division. We reduced by up to 30 nitropress and isoprell. We increased our Patient Assistance Programs. Well continue to look at ways to improve access at affordable prices. At the same time, manage our business so we can invest in r d, manufacturing, places like rochester, greenville, south carolina. We have made mistakes. We grew very quickly. Were acknowledging those mistakes. Were going to change. Were going to be a responsible Corporate Citizen and part of the healthcare community. And weve made changes. So youll continue to make those changes . Youll continue to make changes . Were always going to look to do the right thing. We have made significant changes. Thank you very much, mr. Chairman. I now recognize myself. Ms. Retzlaff, the proper role of congress is not to micromanage a private company. Its not my role. But and i do believe in the right to profit. I think profit is a motivator that does a lot of good. But i also do believe that its imperative that people tell the truth, that theyre ethical, that they not mislead the public, that they properly represent the truth. Would you disagree with that or agree with that . I agree with that. All right. Let me show you a video. This is just a couple of weeks ago. This is i believe on channel 5. This is mr. Shkreli. If its up to the company, if you raise prices and you dont take that cash and put it back into research, i think its despicable. I think you should not be in the drug business. We take all of our cash, all of our extra profit, and spend it on research for these patients and other patients who have terrible lifethreatening, lifeending illnesses. Is that true . We invest 60 of our net revenues into research and development. Thats not all of it, is it . He may have meant profits. He said, we take all of our cash, all of our extra profit. Whats extra profit . Im not sure what he meant by extra profit. What he could have meant is once we deal with expenses, you know, just operational administrative expenses, then we take that money and we are you really testifying that youre losing money . Yes, i think you have seen our financial statements. Yeah, youre not losing money. Youre bringing it in hanover fist as fast as you can. Are you planning another price increase . No, i am not. Thats not what the documents show. Well release them to the media and you can fight that one in the public. But based on this, do we know who adam stone is . Hes an investor. Yeah. And he wrote to mr. Martin shkreli. He wanted the Public Relations to calm down, wanted the politicians to slow down a little bit. And mr. Shkreli said, quote, we can wait a few months for sure. It sounds like a planned price increase to me. What was the timing of that email . December. December, that was subsequent to that. Mr. Shkreli is no longer the ceo. So i will have final call on those business decisions. And well see what happens with that. The company has been in business how long . We started operations in february of last year. So about a year. Yes. Close to a year. And within the first year, youve given out raises . Yes, we have. Giving out bonuses . I dont believe weve given out bonuses as of yet. Your spreadsheet said 30 across the board, everybody gets a bonus. But we havent paid out any bonuses. We have this document from the agenda of october 14th, 2015. One person had a pay increase of 250,000, to 600,000, correct . Correct. Another person had a pay increase of 275,000 to 600,000, correct . Correct. Another person had a pay increase of 160,000 to an annual salary of 800,000, correct . Im sorry. What was that one . An additional 160,000 to 800,000. Im not aware of that one. Well release it. You can look at it. Its from your agenda in october. Now, again, people can make a profit, they can pay exorbitant salaries. But dont come before the American People and cry and shed a tear and say, were not making any money. And dont have the person who is the major investor into the company come and say, we invest all of our cash into research and development. We have emails that show here theyre not even sure if theyre going to invest in research and development. A person wanted to check up and make sure that was even part of the plan. And it sounds like a contrived pr plan in order to do that. Do you know who metro Yacht Charters is . Yes, i do. Why would you know them . I believe we rented metro Yacht Charters for a sales force meeting. For a party. 23,000. Did you spend money on fireworks . Yes. Did you spend money on a cigar roller for the yacht night, 800 bucks . Yes, we did. Okay. So dont tell me that youre losing money. Dont try to pretend and tell us that this 750 is justified when youve got a woman whos got aids, and what is she supposed to do . Is she supposed to tweet martin and try to get that for a penny . Is that how it works . No, that doesnt work. It doesnt work, get it. Thats not how it works. Who pays the 750 . 750 is paid primarily by commercial insurers. That represents the minority of patients, about 25 . Again, thats a very small number of patients. But it generates a lot of revenue, doesnt it . Who pays those insurers . Are they just the big Bad Insurance Companies who are raking in all these profits . Who are these insurers . Who pays their money . I suppose its Big Companies insuring their employees, for the most part. No, its people. And again, because there are so few patients treated with deraprim, the budget impact is very, very small. What is your first year revenue . This years revenue . Our gross sales were 98. Our net sales were 20. 20 million, right . 20 million, yes. That comes this is a drug that services about 3,000 people. Then you wonder why the average person who is trying to scrape by and they see their insurance rates go up double digits, screaming high. Its because of people like you. Thats why theyre going up. Its one of the key reasons. I will add, and i think i need to be clear here, is that turing is a specialty Pharmaceutical Company. We are 139 employees. 36 of which are dedicated to r d. We are absolutely committed to taking that revenue that we generate from deraprim and investing it in next generation treatments as well as other neglected diseases. Thats a fact. I think that is legitimately part of what youre doing. But what mr. Shkreli is saying publicly, what youre putting out to the public to say that youre losing money, its not true. And if youre going to continue to lie to the American People, the congress is going to continue to probe. I could investigate, under the house rules, the house of representatives, the Oversight Committee can investigate anything at any time. I am being truthful. Im looking at our income statement right now and our operating profit for 2015. I have additional questions. Ive gone far past my time. Lets recognize the gentlewoman from michigan, ms. Lawrence, for five minutes. Thank you, mr. Chairman. I just wanted to, before i start my questions, just state that Heart Disease and stroke kills one in three women. More than all the cancers combined. Ive personally experienced the miracle of medicine and the need for my husband had a heart attack. I really want to talk about r d. In the 2014 proxy statement filed with the sec, valiant reported that one of the key elements of the companys operating philosophy is, and i quote, do not bet on science, bet on management. And its been reported, Financial Reports that valiants r d was equal to only 3 of sales between 2014 and 2015. Mr. Schiller, is this correct . 3 of sales is r d . This past year it would have been about 4 of total sales. But a big chunk of our portfolio, our Consumer Products for generics, which dont require r d, if you look at our branded pharmaceuticals, the number is 8 . If you look at what we spent to inquire late stage projects which we later commercialized, it was over a billion dollars. So we have a significant commitment. We have 200 active programs in r d. We expect this year to get approval for a significant new glaucoma drug, a new biologic for the treatment of moderate to severe plaque psoriasis. We have projects in phase i r, and iii that we hope would bring products in the future. Theres risk associated with it but that comes with the territory and we will continue to invest in that portfolio. 3 for r d you said was a billion dollars of that. What is 3 . If you look at our total revenue, we spent around 4 of revenue. But again, we have a very significant percentage of our revenue which is Consumer Products for generics where there is no r d required. So its about 8 on our branded pharmaceutical business, which does require our r d. Then in addition we spent a billion dollars on acquiring late stage products last year. Over a billion dollars. Committee staff received an email from dr. Benjamin levine, who has conducted nihfunded research on exercise intolerance and heart failure. Isoprell, am i saying that correct, is a drug that stimulates the beta receptors of the heart, natural pacemakers, and causing the heart rate to go up using the same biological pathways. Now, dr. Levine uses this drug to conduct his research and has been impeded in meeting his commitments to nih because of the increase of costs of this drug. He has attempted to reach out directly to your company to no avail. Here we have a doctor who is focused on doing Real Research for peoples lives. Mr. Schiller, what should dr. Levine do so that he can use this drug in his research to fulfill the requirements and perhaps extend the lives of individuals . What do you recommend . Im not aware of that. Now that youve made me aware of it, if you would give me his number i will call him tomorrow and make sure we help him wherever we can, make sure its in a compliant fashion. Because sir, you have to know the connection. Your research that youre funding, but also if you are increasing the drugs that are being used in research, you must recognize the impact youre having. Well, of course we do. And if theres ever a situation where we need to do something about access, that is something were going to do. I am happy to talk to him tomorrow and see if we can rectify that situation. Im assuming its all compliant. Im assuming we can take care of that tomorrow. I just want to say this before my time runs out. In america, while we are a leader in the world of r d and medical research in some areas, we have turned the focus from medicine being a part of healing of people to a profitmaking industry. Every business should make a profit. But it has turned from profit to greed. And this is why this is so important to me. I know theres Senior Citizens who are making decisions between food and drugs, medicine that they need to live, and then theres someone in your industry thats buying a yacht. And i want you to be able to be part of the American Economy and pay salaries that are will allow a basic and even an advanced, based on education, quality of life. We are at the point where greed is not acceptable in america. And im very concerned about that. Thank you. Thank you. The gentlewomans time has expired. I recognize the gentleman from North Carolina, mr. Meadows, for five minutes. Thank you, mr. Chairman, thank you for holding this hearing. Further, i thank the staff for bringing this to the attention of the American People. It was obviously the work of this committee, both majority and the minority, where weve highlighted this issue. But its truly an issue that must be addressed. And the best way to address it is to put companies that do the kind of, to use a tweetedout word, imbecile pricing strategy, is to put you out of business. So the barrier to putting you out of the business, obviously, mr. Flanagan, the fda plays a role in that. Let me tell you why im concerned, because i hear from a number of stakeholders that theyre afraid to even give me the details for fear of retribution from fda in terms of the potential approval process that we go through. And the reason why Companies Like this can compete is because theres no one to compete against them. Theyre small little drugs, orphan drugs, theyre things that for the average company dont pay. For the big Pharmaceutical Company, it doesnt pay. But there are a thousand i mean, to have 20 million sales, 90somemilliondollar sales that was just testified, lots of companies would be willing to take that on, smaller companies. So dr. Woodcock gave her testimony. Did you agree with all of her testimony, mr. Flanagan . Turn on your mike. Yes, sir. Okay. So you agreed with her. She testified also in the senate just a few days ago. So are you familiar with her testimony there . Yes, sir. So i guess the question, with that senate testimony, were talking about all the progress were making and how were 90 , weve made great progress. But i look at her testimony and it looks like youve only approved 25 of the applications over a threeyear period. Do you call that a winning percentage . So right now yes or no. Winning percentage . 25 over three years. Is that a good track record . I cant answer the question yes or no. It usually takes on average four review cycles to approve a generic drug submission. So its not that way for the brand side. On the brand side, theres about a 90 im talking about generics. So lets look at this. If you put up the first slide for me. One of the concerns i have is with the ambiguity. And we have this particular letter, which actually is a letter from dr. Woodcock, that says that in terms of the application process, there were certain types that they will go ahead and allow that application to be filled out with less than 12 months of stability data, going to it says generally we will allow it to happen with six months, and on anda drugs we will actually allow that application process to be started with three months instability. Would you agree with that . Im actually not the expert on stability. Thats the office of pharmaceutical so youre expert its a Different Office than me. All right. I thought you were the technical expert, is what you just said a few minutes ago. So would you agree that this is typically the way the fda does business . That they get faster approval for generics in the application process . I dont think that our okay. Let me cut to the chase. Ive got one minute left. Put up the other slide, which actually is go to the case 2 slide, if you would. Here is my concern. Ive got a number of stakeholders throughout North Carolina and across the country who are willing to compete with these two companies. And theyre willing to provide the drug to compete with them. And theyve been told by the fda, well, weve got to get a little bit more information, weve got to wait for 12 months of stability data, instead of going with their own internal data, if you look, it says a Company Initially submitted three month long term accelerated process for three batches. Can you do that consistently for all these that want to compete with these kind of companies . So i understand your question. Its the same issue. Its the stability issues are out of the office of pharmaceutical quality which is just a Different Office. All right. So let me close with this. Is there anything the fda can do to make sure that we can speed up the process so we can compete with companies who are willing to price gouge on a regular basis . Can you speed up your process, mr. Flanagan . Mr. Chairman, can i answer . I dont know how the rules work. Please, yes. So two things. First is, if a submission comes in the door and its for a product for which there isnt generic competition or for which there is a drug shortage, we consider those to be priorities, and he expedite their review. Thats interesting, because i have a letter that basically is from dr. Woodcock, that would suggest that shortage is not part of your decisionmaking process. So youre saying her letter is wrong . I need to see the letter. We for sure consider well follow up on it. Im way beyond the gentlemans time is expired. We do expect votes on the floor soon. Well recognize the gentlewoman from new mexico for five minutes. Thank you, mr. Chairman. I really appreciate you holding this hearing. And quite frankly, i share my colleagues youll rage. I think outrage is actually too soft a word, given what weve heard today, what we knew before today, what we still dont know after today, but whats really going on to make sure that there is fair pricing, protected access from the patients perspective, to lifesaving drugs and treatments. I want to talk a little bit in my statement and get to my question about fda approval and making sure that we do everything we can here to give the right opportunities so that were focused on the right thing here, which is patients. Thats the right thing to focus on here. But in all the emails that youve had members read to you, and i have an email of my own, if ive got time then im going to read, they make it very clear, particularly from turing, that fda approval and that r d, that none of those issues were issues that caused the price gouging that were talking about today. So as we sort of figure out what we can do better, im really interested in what we ought to be doing to make sure theres real accountability in an entire industry that has made it their practice to put profits, and not small profits, outrageous profits, to the patient. And actually, ms. Retzlaff, you certainly indicated that really its not patients who pay, its hospitals and Insurance Companies. Theres a lot of people that dont love Insurance Companies and hospitals. So well just shift and try to shift the focus. Where do you suppose the majority of their reimbursements come from . Ms. Retzlaff . Again, as i said, there are so few patients treated with deraprim, and very few that are covered by commercial insurance. You know, when youre dying the overall impact is very, very small. To our knowledge im going to interrupt you. So when 3,000 people have their hiv aids drug shifted someplace else and my copays go up and my out of pocket costs go up, my hospital access goes up, and this country is underbedded in the hospitals, and do you know who is paying them, medicare, medicaid, guess who pays for those . I do, every member of this audience does, every member of this committee does. I cant believe that your indication is the costs in terms of the number of people who are impacted is so small that thats not really the issue. It is the issue. Its talk about a couple of other drugs. Lets talk about gilead. Lets talk about the hepatitis c drugs, civaldi, which retail at 84,000 and 94,000 respectively for a 12week course. We can cure hepatitis c, but because of profit, were not going to cure it, instead well create an environment where instead people will have to have liver transplants. I see a pattern here that is incredibly frightening for the overall expectaspect of getting handle on healthcare costs, and clearly is a shift in moving from protecting patients in this design, and it isnt a result of r d. Weve got many emails from your company which indicate that directly. Weve just passed 21st century cures, another indication that congress is very interested in making sure that innovation and research and development, and that the fda approval without minimizing Patient Safety is as streamlined as we can. Yet that isnt an indication, at least not as a result of this hearing, that thats really an issue about how we determine what drug costs are. Greed is how we determine what drug costs are. So heres my question. Given what you have stated today, and given the questions and the emails that weve provided during this hearing about turing, would you say that the practices at touring are the same practices for all pharmaceutical companies . Or is this just really an issue for your company . Turing pharmaceuticals is a researchbased Pharmaceutical Company that invests, is committed to developing and commercializing treatments from rare and neglected diseases. As i said in my testimony so this is not the practice of everyone else, this is just your practice . I cant speak on behalf of other companies. What i can tell you is we are an ethical Pharmaceutical Company. As i said in my testimony, i was comfortable with the price increase of deraprim provided the company was willing, and it was, to invest im going to reclaim my five seconds. This is how this works in this hearing. I get to reclaim my time. The issue is, i think its clear today that thats not your intent or your motive. Weve provided plenty of information here that would not just suggest but clearly identify the opposite of that. Mr. Chairman, thank you. I disagree, respectfully. I recognize the gentleman from georgia for five minutes. Thank you, mr. Chairman. I want to go real quickly to you, mr. Flanagan, regarding the generic backlog, what mr. Meadows was talking about. Can you provide more clarity as to how the fda is prioritizing applications to expedite the process . Yes, sir. So theres a policy thats available online, you can find it on the website. Basically certain categories of submissions, like first generics that could potentially open the market to competition, drugs that can mitigate shortage, pepfar or hiv drugs and couple of other specific categories. So its based on the disease, the prioritizing, is that what youre saying . The pepfar ones are based on the disease. The shortage is just based on whether kind of whether theres a shortage out there in providers. And first generics, it depends on whether the market has already been, you know, opened up to so theres no real standard policy . Oh, theres a standard policy. How long is four review cycles . Its hard to answer that question, because it depends on how long it takes the applicant to respond back to us. Okay. The targeted action dates, theyre assigned, and yet theyre aspirational, noncommittnon committ commital. Whats the point of having that if it Means Nothing . Industry strongly requested that for the following reason. You have a new user program that tells you everything in your submission. Prior to year three, there were no goal dates. Industry needed some kind of information so they could plan product launches and conduct other types of business planning. And they strongly requested that we disclose to them what our aspirational but is it true these dates are virtually meaningless because theres no commitment there . No. All right. So according to what you said, their aspirational but not committal. Weve got 15 months plus before we ever get these prioritized and get something going so the targeted action dates basically are meaningful. Again, congressman, industry strongly requested that we do this were all requesting something be done. Thats the problem. You have these targeted dates, but the backlog is not getting any better, its getting worse. The target action dates say when were going to take action on each of the submissions in the backlog. Its a way of organizing the backlog and disclosing to all the companies that have submissions in there, heres when we think were going to move on your submission. Okay. Mr. Chairman, ive got other questions, but i would like to yield the remainder of my time to my colleague from georgia, mr. Carter. I thank the gentleman from georgia. Ms. Retzlaff, when turing bought the company, was it selling specialty medications . No, it was not. You said yourself that access to deraprim was a problem when the price went up. I reclaim my time. When the price went up, it became distributed only through specialty pharmacies. I cannot at my pharmacy, i cannot buy it. It did. You created a specialty medication and you did it intentionally because you had a limited market of only 3,000 patients and you knew you wouldnt be able to make a profit unless you abused the system, is what you did. A pbm owns a special pharmacy and youre using it only through specialty pharmacies. Ms. Retzlaff, mr. Schiller, let me tell you. Ive been practicing pharmacy for many years. Ive spent my adult life dispensing medications to help people get well. I find it repulsive what youve done. Ive seen advances in medicine that have been amazing to me. Since i started practicing, weve had advances that are just amazing. And ive always been amazed at the pharmaceutical companies. And when you come in and you break the public, and you make give this a black eye, i find it repulsive. Mr. Chairman, i want to thank you and your staff for bringing this hearing here and for all those involved, youve been most cooperative, and i thank you for this. My i correct his statement . Sure. Go ahead. So when we purchased der aprim it was already in a closed distribution model. We inherited that model from the previous manufacturer. And subsequent then why did you say that access to deraprim was a proble. We inherited from the previous manufacturer. Thats what i said. Subsequent to that we have taken action. We have added you said when the price went up it became a problem. I dont believe the price was the driver of the access problem. Thats not what you said early ellier. Well recognize the gentle woman from new jersey ms. Watsonecole man. Thank you very much. I want to follow up on mr. Carters line of questioning. I dont understand now. Before you acquired the drug, was there a problem with access to it . Yes, there was. So your desire to acquire the plug and there was a problem with access, does it mean people suffering from infections associated with hiv aids didnt have access to it the way it needed it . If june, three months before we acquired the asset the previous manufacturer went to a special ti distribution model and closed distribution. That was three months before we purchased it. After what was going on before those three months. Was it the closed distribution . No. It was broader. Was that as a result of it shall in an tis tags of your Company Buying this drug . Absolutely not. There is proof that the arrangement originated not with the previous manufacturer but the manufacturer before that. Yet walgreens which is the closed distribution, right . Yes. Walgreens informed you all they were concerned about access to patients, other pharmacies, et cetera. Yes. What did you do in response to that . We have added a specialty distributor to eliminate a lot of the red tape and distributes the product to roughly 90 of hospitals. We are in the process of adding Additional Special ti pharmacies to the network. We have worked with different state aid apps to make sure the processes are in place because these are the most vulnerable patients covered. Once you acquired this drug and you increased the costs associated with the drug, it still eludes me why this was done other than to make somebody very, very wealthy. You all anticipated that there was going to be pushback. From human rights organizations. From advocacy organizations. So from what i have read and i believe some of this is obviously from internal memos. It didnt seem your company was at all concerned about insuring that people who needed this drug could have access to it. It was about managing the message for your company. No. Thats not true. In fact, the actions we took reflect differently. We put in place multiple it seems it shall thank you very much. It seems to be you all respond to a bunch of pressure and you have your serious issues that you have to contend with now. Your company has a very bad physical public image right now. If you care to know that. I come from a state, new jersey. We have large pharmaceutical companies, large universities. We do a lot of r d and the people that en gauge in research and development, they are not trying to make somebody a billionaire. They are trying to cure people. That isnt even the issue here. You all werent able to do r d. You were manipulating access to medicine that already showed the benefits of treating a very dangerous disease. With that, ile yield my time back to you. I want to thank you and the Ranking Member for your efforts to raise the issue today. I want to start off by talking about a couple in the district. 73 and 74 years old. They are stretched every single month to cover expenses. The wife is diabetic and has a number of medical conditions. For 2016 it will lead to an out of pocket prescription price tag. How can they pay for health care . The wife feels endlessly guilty because her medications are the most expensive. Even with some coverage together they face overwhelming pressure of having to manage the Family Budget which after medical expenses is only about 20,000 a year. This is to pay the home loan, property tax, food and utilities. This is a crisis thats far too common across the country. When i hear stories like from this district and i hear about 200,000 bonuses for executives in a Pharmaceutical Company that purposefully shut down distribution of the lifesaving drug so they could make the money, it disgusts me. It isle absolutely disgusting. And the witnesses have testified today and used many different tactics to down play the harmful effects of price increases. They want to shift the blame and shift the attention and say, oh, the Patient Population is so small. The price increase doesnt affect the larger health care system. Individuals that depend on the more main stream drugs arent affected. Its those 3,000 people. Its actually the large Insurance Companies and not individual patients that beare the burden. My office is on obamacare. We pay those Insurance Companies. So this hearing has shown this is hardly the case. Isnt it true that the price increase led to astronomically higher copays for many privately insured patients . Yes, it did. Through our Copay Program we capped them at 10. Really . Yes. Well, you know, your internal memo identified that, you know, one patient had an insurance copay raised up to 50 increase to there 16,000 and others from 1,000 to 6,000. Correct. Isnt it true some doctors treating patients in hospital settings were the first to switch to secondary alternative therapies because they could not access deraprim . I suppose thats true. We have discounted deraprim by 50 and introduced a smaller bottle to better meet their needs. That seems to have resolved the issue. Well, doctors are saying they had to switch and it was not prior preference for what they would treat in the hospital setting we are offering discounts now so deraprim can be available for those patients. Can you confirm before turing owned deraprim it was widely available covered by most insurance and affordable . Before you owned it. Yes. It was covered by most insurance. I dont know what you mean by widely available. Isnt it true your price increases on isopril and nisoprest cut into hospital budgets . Yes. It would have cut into the budgets. Price increases were meant to stay underneath the reimbursements for the bundled rates. It certainly would have hit the budgets. It absolutely did. At Johnshopkins Hospital their chief officer said these deplete savings and result in less funding for research, technology that help care. The high cost threatens Patient Access to critical treatments and creates Financial Burdens on low and middle income patients. These are two of the many drugs your company owns and increased the price of. Thats correct. How many other drugs have you increase ed the price of. I dont know offhand. You have so many you dont even know how many other drugs you have jacked up the prices on every day of hardworking americans suffering from diseases. Youre coming to testify before congress and you dont even know how badly you socked it to the American People. We have 1800 products around the world. Okay. A number that you all have mentioned, we have acknowledged mistakes. We have acknowledged that Going Forward it would no longer be looking for the opportunities to purchase these older drugs. When i took over at the beginning of the year we froze all price increases. Have you returned price increases back to where they were before you raised them. Thats the question. Ile yield back. There is a vote on the floor. The committee will go into resesz with the intention of coming back to later than 3 15. The committee stands in recess until that time. We are live on capitol hill this morning with Federal Reserve chair janet yellen testifying before the house financial sees