disempowers places like vermont, oregon, oregon, california that want to do more. that i think is unfortunate. >> unfortunately we are out of time. i hope you'll allow me a minute or two to say it is rare opportunity for a moderator to say and be completely truthful, when he says, we have been so lucky tonight to have the two best experts in the country, two of two of the finest people in the country to talk about in credible issues. i want to thank you both for sharing your time and expertise with us. [applause]. >> on the next washington journal. an update on afghanistan operations with major general bird and davis, in kabul. then brendan duke of the senate for american progress and stan bowyer, of the american enterprise institute on the state of the u.s. economy. that is followed by a look at the working congress to update the no child left behind legislation. our guest is allison klein of education week. washington journal, live every morning at 7:00 a.m. eastern, you can join the conversation with your calls and comments on facebook and twitter. >> all persons haven't business before the honorable the supreme court of the united states give their attention. >> coming up on c-span marquesas,. >> they showed a piece of paper and they demanded to see that paper and read it and see what it was. she refused to do and she grabbed it out of his hand to look at it and a scalpel started and she put this piece of paper in her bosom. and the police officer put his hand in the boot up it into her bosom and retrieve the paper. while the police officers. >> in 1957 the cleveland police went to her home suspected to be harboring a bomber. she refused access without a warm. later returning with a document they claimed was a warrant, they force themselves in the home and search the premises. not the premises. not finding their suspect, please instead confiscated a trunk containing pictures in her basement. she she was arrested and sentenced to seven years for contraband. she sued and her case made it to the supreme court. we will examine will examine the case and explore the matter of evidence obtained through illegal searches and seizures and how these transformed police laws nationwide. for background in each case while you watch, order your copy of the landmark cases companion book. it is available is available for a 95 plus shipping and sees and.org/landmark cases. >> now an interview with ian reed, ceo of the pharmaceutical country. he sat down with wall street journal financial editor dennis berman and a discussion that covered drug prices, government regulation of healthcare, in the future of health technology. this is an hour. >> so without further do we have lots to discuss, lots of interesting things. there's. there's so much going on, we have particularly tough things. in the world over healthcare more generally, we been reported with wall street journal on this extraordinary state of merger activity going on in the healthcare section. their massive massive changes going on in this country and around the world and the way healthcare is organize. we are delighted to have for the next hour, this really fascinating and timely discussion. please welcome ian reed, chairman and ceo of pfizer, dennis berman of the wall street journal. [applause]. good morning. anything you would like to talk about? [laughter] >> i will just take your lead. >> okay, from page of the wall street journal, pfizer implement a discussion with 115 or hundred 20 billion-dollar plus deal. >> it's amazing what you'll do to fill the room. we have an official position that we do not comment on the speculation of potential. if you don't mind, i i will not picking your pocket. okay. >> so without commenting on the specific thing you have been vocal and clear with your investors about what you feel about consolidation. why should visor, honestly big-company are ready, what is the value in getting bigger? >> we have laid out in the discussions with their investors that we have various scenarios. one is to continue to look for growth, are in-line products are doing well, we have a number of exciting new launches and we had a really good quarter. so we could look at it as a strategy but as a way of facilitating strategies and accelerating if possible return to shareholders. we can do bb, business development if it will ask valerie value shareowners. or we could also sit tight and decide to do a split, if we decide that was the best or we could do a bbm into a split. we have all whole field of strategic alternatives and we by what we believe will produce the best long-term value. >> so scale is in a poor world in healthcare. you look at health insurance, two huge two huge deals going on right now. if you look at pharma, for some reason you take this deal is a 500,000,000,000 dollars worth of farming deal from 2015 alone. you look at hospitals and see consolidation there. drugstore and see consolidation there. drugstore chains, walgreens and rite aid, the deal broke in the wall street journal as well. what the heck is going on with every part of the healthcare system getting bigger and bigger? >> i think the pressures on the providers is being driven by changes in the healthcare reimbursement system. that is true both for payers and for the providers. i don't think pharmaceutical industry as of yet is being driven to consolidate. because of the consolidation of the other parts of the system i think the consolidation is being more driven by companies that have the cash and want to look for waste of accelerating their portfolio. i do think there may come a point if we continue to see concentration on the other side, if we do see more governments involvement in healthcare that we have today, that consolidation would be a road you need to take. >> why would you need to take that? >> well because generally when you do business with governments it doesn't work out very well for free enterprise. you don't get an ability to recover the value of your product, you you are dealing with a monopoly purchaser. that tends to force consolidation to remove costs. to give you so you have more weight in the negotiation. unfortunately, it reduces innovation. it reduces the opportunity for innovation. >> outage you feel when hillary clinton, especially and there are others, in the presidential field when she went after a drug company like yours, not by name but certainly those at your level, what is your response to that? >> well pricing is always an issue, access is always an issue. it is important for patients and consumers to know we are vitally important to the healthcare system. can you imagine going into your dr. or into a hospital and not having pharmaceuticals? can you imagine doing an operation without modern medicine? you couldn't do it. so we are in a port part of it. unfortunately we are an easy target because we do not interact directly with consumers. we have huge restrictions on our ability to talk to consumers. for politicians and the political moment they tend to try to make news and get votes by doing what politicians do. i think good public policy will dominate. pricing has been an issue in the united states were 40 - 50 years. it always will be. it peaks up at election periods but then it always comes back to what the republic policy is. that is where pharmaceuticals can't defend on the healthcare costs, we have built-in pricing mechanisms that reduce the cost of pharmaceuticals by eloise. so if you look at price increase in 2015 for the company it was net after rebates about 6%. but if you look at it in a different sense, a sense of what was the cost to society of our innovations, there is no increase. >> what he say that? >> because products have gone, exclusivity which is in the mechanism to reduce price and if you look over the five-year period of 2010-2015 our prices in fact, if you're talking about prices of therapies that were in the marketplace and coming to the market place and have price increases, was every year will accumulative 4% negative. >> okay couple points on that. it seems from the number i sigh recently, about one third of the revenue increases came from the rate that affected themselves. in terms of the net adding your revenue, morbid is, morbid is coming from the price increase themselves. >> well i don't know. >> well viagra was up 57%. >> well i don't get into specific products. we price them based on value. they deliver. and i would like to point out when we launch a product we do not price it to recuperate the full value to society. if you look at studies that have been done in staten for instance, sten was a very reputable health economic journal, sent had been calculated over a period of eight decade or 20 years 20 years and created $1.3 trillion of value for the u.s. economy by life savings, quality of life improved protein productivity. >> so maybe you have been underpricing drugs? >> i would say we would never price art drugs for the full societal value. it is an affordability issue. >> but maybe you been under price last two decades? maybe they should have been priced higher. >> according to the benefits deliver to society you can make that argument. i've been satisfied that we have the right pricing policy. it enabled us to fund more investment research, the point i'm tried to make is that we increase prices because expenses increase, because the fda requires a bigger and more lyrical trials and because we have a risky business. and the drugs are adding value to society. >> but you can lend it in muscle response when a consumer is used to an old product getting cheaper in price, they see now, they see on the news and perhaps they see him when they go to the pharmacy themselves, they see that price going up and up. >> you might be totally right but the emotional response, and therefore the political response is based on their experience with think things to get cheaper over time. >> let me give you two counter arguments. number one, 12 million people use a drug and it got 90% cheaper since 2005. so drugs get cheaper. they get cheaper when they go off exclusivity and that's a bargain for society. we teach huge risk and when they go off patent they get extremely inexpensive. number two, the cost to the consumer of our medication is really determined by the way society decides to allocate its resources to healthcare. we have comprehensive insurance in the united states, but it is no longer acting like insurance. >> what is it acting like. >> it's acting like a service provider. >> explained that. >> most insurance companies today the risk is taken out. they have reset by the government for medicare, medicaid, large part of the business is really no insurance. the government is saying here is the premiums, this is what you can charge, you have to offer as a premium increase. these are the mandated benefits have to give. here the subsidies. they become service providers for the government. so the incentives are not constructed right. >> how would you construct those , that's an interesting point. >> i think insurance insurance companies need to have an ability to take risk and's ability to price their product and then award them to ensure the long-term health of their patients. >> their rates get set on the diagnosis of their one-year basis. so dependent they have more cancer patients their risk get changed. but if a new technology comes in like likes a dolly, they can recuperate the cost, i, i don't blame them. they can't recuperate because there's something that says there's no medicine that comes and that is fabulously important , it cures hepatitis c, saves the the economy hundreds of millions of dollars or trillion over long period of time, but we are not going to change your risk are. they pay for it in that year it is a total loss for them. >> so i think that's a perfect example, every oak year really thought. >> and real change in prices. soon as competition comes and prices dropped 40 percent. it's a very competitive industry speemac@we know very competitive industry. >> at we know i'll come best approaches like the one you describe are hard to measure, there's so many efforts going on both small and large across the country, how do we actually make that happen. is it a political decision in the end? or does it come from the bottom up? if what your sign is correct and it may well be how does it actually occur? >> you have to let the marketplace work. that is what we don't do. we don't have a have a marketplace that works. we have government interfering with the risk card goes off, with the gap between your policy on risk. i think there's clearly a place in government to provide a safety net. the government has gone way beyond that so there's fears of working in the marketplace. i think that the bottom line. were country that leaves the marketplace with reasonable regulation can produce the best result. or we believe a central government can dictate, and i for one don't believe that works. look at europe and you can see doesn't work. >> why does that work in your? >> look at the statistics for people who get cancer in the u.k. and see what happens. if you get cancer in the u.k. you don't want to be in the u.k. >> you look at the access to modern technology in europe, it's heavy rationed. it's very difficult to get an appropriate for the technology when you have a monopoly purchase speemac's let's say hillary kling calls yet, maybe she is. maybe she calls up tomorrow tomorrow says let's meet for a drink, you meet for a drink and she says to you, this is set up for a joke but it's not, she says to tell me the one thing i need to know about the president of a night states to resolve the problems you're describing here. what would you tell her #. >> i would say you got to create appropriate regulations, incentives for for the providers, the insurance companies in the pharmaceutical, but needs to intern an incentive them to do that. we also need to make sure the patient has incentive. we don't have that. there is not an incentive for people not smoke, to keep their weight down, not to become diabetic. now some people become diabetic because it's unfortunate, genetic. but a lot of it is lifestyle. we don't have those type of incentives in the system. >> is it eventually take us to a path, maybe in the near future toward genetic testing and been able to judge whether that person is making behavioral choices or it occurs by genetic outcome? >> sometime in the future but it is not just genetics. there so many factors. i just think you can go so far but if you don't take the drug di yhocant coeeque. yobe s oualnon t >> well, the three difficult, for instance people get diagnose and they need a cholesterol treatment. in six months 50% have stopped taking them. 50% of stopped. >> because? >> because people are like that. we can understand it. we have no amount of research to try to increase the adherence to medical tatian it's a behavioral question. people who take a means to press and therapies and they stopped taking it. i don't think it's an easy solution but the central government dictating the allocation of resources i interfering with the pricing mechanism. >> left on the government for a second. this is my word and i would use the word insane. for a company of your size to potentially go for a transaction in which it would be tax inverting, in an election year, without commenting on how many exec transaction, you have been vocal about the tax regime and the issue, what is your view on it now? how has visor taken it if they have inverted across to u.s. shores. >> my view is that i believe this is a country of laws. i think the laws, at least for congress are clear. i think i have the beauty to move to increase or defend the value of the company for my share holders and i also have a duty to our colleagues. i want them to have a company that that is robust and can grow, and they can have careers in, i feel were at a tremendous disadvantage right now in that race. i have foreign companies have tax rates of 15%, who can invest two - 3,000,000,000 billion more in research than we can. we are fighting with one hand tied behind her back. your comment to me will this is not the appropriate time, tell me the last ten years ten years when it was the appropriate time. what level of confidence you have that in the next ten years will see rational tax reform. >> you have already been through the process with your potential with too much political throwback on the issue. >> well know, i don't think so. i don't think don't think there is any real political blowback. there is no political blowback in the uk. there are quite willing to have them do that transaction. we just and have no will to sell. it's sell. it's simple as that. we did have a capital market system which would make for efficient transaction. >> are you ready for visor's name to become an election talking point? >> i'm only for visor's name and myself to say that we are doing what we need to do to ensure that we can continue to innovate, continue to bring cures, continue employment and to be a successful company. the problem is, our tax code is hugely disadvantageous to american high-tech multinational companies that i personally have been to washington in the last two years, i have talked to almost anybody who would listen to me. i have tried to get this is an urgent issue that we need to fix and i have been totally unsuccessful. >> what is that conversation my? >> will they will understand, they say yes we know the tax code needs to be fixed, yet there is no political way to fix it. >> so that leaves you no choice perhaps. >> that leaves me under the assumption that even where there may be political wills it will still be a very difficult process with no guarantee of a competitive outcome. european nations have a broader tax base. their corporate tax, personal personal tax, and vat. this allows them to drive it corporate rate down to the level of that the united states cannot speemac, chest you you have overseas? >> it fluctuates and depends on where the money is at the time it can range between 20- 50 billion. >> that's lotta money right. arguably, and this is an argument for inversion, with your lower tax rates you can do more investment in the united states. >> yeah, if you are a foreign company, the issue is it is not that we don't as a company want to be in the united states. i think the united states is a fabulous place to do business. you have great schools, great intellectual property, rule rule of law, most of the time. there is no competitive advantage in the u.s. are domiciled outside of u.s. in fact there's a huge disadvantage. >> .. we need to have an engine for growth. we looked at a very fundamental way to look at what our success rate has to be and what they are in large margins and what is the cost it will take to bring products forward. when do we fail? how do we fail? do we fail early and often or late? >> you are overspending, basically. >> we were over spending. >> was there a spreadsheet where you saw and you said oh my god? >> no, this is judgment. the more i get confident, that the new pathways, the new knowledge the culture is right. the scientists are being productive. the more you build trust, the more you're willing to spend. investors are the same way. success bring success. if were extremely successful then we will be successful with our people. >> what made the equation out of whack? >> lack of good leadership. lack of appropriate culture. we've taken a lot of steps to improve our science base and improve where we are, the competitiveness of our science and a certain element, to be honest, is also very often luck. this is a very difficult exercise. if you picked the wrong area to go down or you make a mistake and you hit a blind alley and you don't know for ten years, you made the wrong bet. so there's lock and there's management and there's judgment, and it just got out of whack. >> was there somehow a cultural, something was out of whack in r&d? this isn't just with pfizer but across the industry that matters is it viewed as mattering more than it should? >> most people who come to work at pfizer want to make a difference and scientists really want to make a difference and they invest time in their intellectual capital in these projects and it's very hard for them to give up a project. you need a culture that rewards the team that says we want to kill this. we've spent five years of our life on this but it's not going to make it, let's move on. that's part of the culture change. >> saying no. >> right, saying no. we also at pfizer, frankly were late to change the nature of the mix of our scientists. we were heavy in chemistry and we are still probably one of the best chemistry, innovative chemistry organizations in the world as it relates to pharmaceuticals, but we were slow in new pathways on biology and we were probably in the wrong places. traditionally pfizer put its research sites where it had big manufacturing sites. we had manufacturing sites where we have lots of water in rivers. that's not very conducive to attracting the best scientists. while you may attract the best scientists, but then ten years later you're not still attracting the best scientists. i think our movement to san francisco and cambridge and la jolla offer certain scientists to allow us to be more competitive. >> if you had top phd students from around the world and you want these three disciplines at the top of the list, who would you put there? right now if you were hiring. >> chemistry, biology, fundamental biology, in those areas. >> define epigenetic's and how medicine is moving? >> my understanding is it's the way the genes will chains change and the proteins in the structure and how they will change based on the signals the body receives. so two people can have the same genes like identical twins but if they have different environments and eat different foods and have different stress levels in different danger signals will all have different outcomes. the genes don't dominate. it's what happens to the genes by outside environment. we may need to call and in a scientist to confirm that but that's the way i can explain it. >> even microbes in your gut can affect whether you're going to be healthy or not. some people become extremely ill and you have to have some pretty difficult procedures. >> on the other side of the r&d model is a company called valiant. they been under a lot of pressure and observation lately themselves. when you see a company like that, do you think they are good for science? >> i think they are a part of a free enterprise system. everybody has a low in the ecosystem. they certainly push companies to be more efficient. they used a lot of very sophisticated financial techniques to be able to take out companies who were undervalued. i believe it's a dead-end. there is no research, there is no future. they are relying on underappreciated assets. they are coming in and selling them at close to full value and making some money at it. is it fundamentally helpful for science? no. will the marketplace take care of it? yes. >> so you're saying they're currently operating as a dead-end. >> i'm saying it's a dead-end for research. >> is a dead-end for a business standpoint. >> eventually run out of undervalued assets. in our business you have to remake yourself every ten years so from that point of view, i don't see that business model is sustainable. >> their use of specialty pharmacies is sort of in the weeds around the distribution network. but it's an important one for them. do you do that?? >> i don't know what their use of specialty pharmacies is. we do use specialty form pharmacies but there's no type of agreement that reportedly, we use those pharmacies to deliver ecology drugs for patients who need a higher level of attention from the pharmacy. >> if you read the reporting in the "washington journal" yesterday they were specialty but really they're specialty was getting the consumers to pay. >> i don't know anything about their business model. >> fair enough. what is the nature of your relationship? >> frankly i'm not aware of a particularly profound relationship with them. i'm not aware of any contracts or how we deal with them. i'm aware of how we ethically operate in the marketplace and i am satisfied that we ethically use them in the way they should be used. >> so it's not really on your radar. >> no. >> where does pfizer go from here? from the r&d perspective you've had some good success. what's the next iteration? whether a deal or not happens, what does visor in 2020 look like? >> i didn't talk about vision and mission when i first came in. then later on we started talking about purpose and mission. our mission is to become the premier pharmaceutical company by the end of the decade. we describe that as being highly respected and having people want to work for us. having life-saving medicines and being involved in conversations that can change the structure and the outcome of the industry. and having the right culture. i want people to want to come to visor. i want them to tell their families and their friends that this is a great place to work. >> how do you change a culture of 80000 employees? slowly and you need to get out and talk. you would be amazed at how much work management is that if you want to change culture you have to talk about it and make sure that you are consistent. we have something called own it which is owning the business. winning the business. >> in a politically correct atmosphere to come out and say no jokes with discussed behavior. you can't ask the local people. yet everybody knows a joke when they see one. no one wants to work for a joke. if you want to attract the best and the brightest, it's your manager and if your managers a joke you don't want to be there. so no jokes are important in our culture. so your conversation with the lawyers went like what? like well you can't do this this is like putting a brand on people. it's naming them. you can't say you shouldn't be saying people are of this persuasion are that precision. i said all right were not saying you're permanently a joke, were saying no jokes in the discussed behavior. it's a recognition that you should work with someone and tell them if they don't change their behavior we don't want them in the company. >> of course you famously have a coin that you like to share. >> i do not have it with me. >> tell us about that coin. >> part of the problem is in any system part of the problem is to get the people who are intimately involved in the business to tell you the truth. and to tell the organization what they believe. we have a saying at pfizer which was coined by somebody in australia saying bad news early is good news. bad news late is really bad news. right? so we need a culture where people don't feel intimidated and can stand up and talk. they need to be able to take on the hierarchy of their supervisor. >> what is the hardest conversation you've had with someone who said look you want me to tell you the truth, here's the truth. >> it was thank you, i needed to know that. now we can bring the resources of the company to work on this. if you knew this two months ago you should've told me two months ago so we had more time to work on this. we had a filing to the fda. first time it had ever happened. i pulled people together and i said what happened. they said while we knew it was a bad file. everybody individually new was a bad file, but nobody spoke up. so that's all we started talking straight talk. get the coin out and say look it may not be your area but if you're uncomfortable with something you have to speak up in the coin is a mechanism. it's a symbol. it's a way of saying the coin is on the table and i'm protected and i wanted tell you you what i believe is wrong about this. i don't think people necessarily know what's on the coin so. >> got a good prop here. everybody has it. we didn't want to pay for them, but see it ceos like that. so straight talk is what you can put down if you feel your and in an environment where things have not been talked about. the elephant in the room has not been talked about it. you can put it on the table and you can use it like that or on the other hand, on the other side there is an own it where you can tell a colleague, own it. you're not owning it. it happened to me. a very simple example, but i was , it has let's discuss behavior which is very important and no jokes. i was at the christmas celebration and we had a small instance but it's very telling and we have a carol organization and they were singing and i don't have a voice and i was walking by and they said come on you gotta get up and sing with us we do this every year were volunteers and would be great if you get up and sing with us and i said no and 70 said come on, own it. so i had a go go out and sing. they got me. so this is powerful. it sounds hokey but it's really powerful. people now don't use the coin but i'll just say let's have straight talk or were not owning this. >> where did you get the idea? this idea came from our head of hr. he was a top gun pilot in his career before joining hr and he came up with the idea of using this tool. >> so is that a patent, will ago on patent soon? >> no this is our culture. it's a permanent competitive advantage. >> so you mentioned were talking about pfizer going forward. you mention they might put up into three parts. there's a lot of different ideas. walk us through that process of how your thinking about that. >> we have two basic businesses in the company. that's a result of being in the business for a long time and doing acquisitions. we have an innovative is nuts that's focused on creating new cures and dedicating a lot of money into research and education as well as discussions and working on guidelines. that we have another part of the organization that is selling products that are patent or about to go patent. they sell them differently in different markets in the u.s. in the u.s. they go to people in a room and they monitor shortages and needs and prices. in other markets they do it with change field forces and selling on the brand. these are two different distinct differences that need a different strategic set, probably different managers. so the idea is does some of the pfizer eaglets part or is it smaller than its parts? >> in other words is a slow moving products business, is it dragging down the value of the innovative or vice versa? or are we not operationally being as efficient as we can? or are we taking money from the established business and subsidies subsidizing research? >> some companies don't. clearly innovation becomes established but ours is half-and-half. we have competing strategic visions. so the question is, if we split those up would we unlock value?? >> what's the answer? >> we don't know. >> what will determine the answer? >> we are creating separate operating units and giving as much economy as we can within visor. we are giving enough information to the street and will start giving them balance sheets. then at the end of 16 at the latest, when i have the ability to do a transaction if i wanted to, we will look at the company and say do we believe these two divisions are working, could they work better outside? is there trap value? and can we realize that value? >> like on wall street, nothing happens for no reason. the thought that flashed in my head was oh my gosh, he's going to break up pfizer. >> no, no decision has been taken. we may arrive at the conclusion that the sum of the parts is equal to the whole and investors are satisfied with our capital allocation and there are no major difficulties in running those two businesses in the same corporate shell. the decision has not been made. >> and that decision will be made. >> probably in 2016. >> other questions from you? the audience? we have microphones, i think. >> we talked about pressure and pricing and outcomes and a little bit about the questions on marketing and distribution. what about the positive side? we have the health tech industry that's growing really fast in google life science in google lends and sensors that can technically detect cancer early. does that cause you to think about changing your business model and is that a culture pressure as well? >> you know, i think the biggest change in our business model will be gene therapy. it is coming. they have gene therapy for blood disorders. if blood therapy comes in and it's a one time cure, cure, it's really going to change. lose the patient if he's cured? if you're an insurance company it's a real dilemma. i think what you're talking about will enable a better use of pharmaceuticals. i think their embryonic at the moment but as the become more sophisticated, sophisticated, i mean their arm no such things as in managed dose. ideally, i would like an artifact that someone could come up with that would be monitored constantly by measuring blood and tell the patient if they can adjusted dose to maximize results and then the dose would become perfect for every patient. we don't do that today. we take averages. then the doctor can adjusted dose through his or her experience with the patient. early detection of cancer cells, i think that technology has some promise but i don't see it as a competition, i see it as a facilitator. >> you would almost be a real-time monitoring device for cancer, in a way. >> any medication you're taking that you want to measure the parameters on the body. >> how far away is that? i would guess between five and ten. if you're going to pierce the skin, you need to say what's the benefit. you have to have a benefit if you're going to create a potential infection site. you just can't go and say i'm in a measure all these things and see what happens later. they're not going to allow that. they're gonna say you're measuring these things in your invading and what's the benefit. regulatory will slow it up but as you say, the blood tests are opportunities. >> like to pick up on the previous question. many major industries, whether it's consultation, our d&d, entertainment, you have destructors that are changing the background from a competitive standpoint of traditional industries. when you look at biopharmaceuticals in your sector, do you see, as you look ahead, much this disruption coming up and you think those trends would come from several sectors or from countries who traditionally don't fall under those umbrellas? >> the disruptor in our industry will be in an ability to take a product to market in half the time. it took us 19 years to bring a product to market. anything, the disruption for our business model is the speed to market. it's a huge creator of value. a disruption will be gene therapy. i don't see the previous issues we were talking about as disruptive. disruption would be political change which will say society is not willing to continue to support innovation or they don't believe the model we have is right. that would be disruption. i don't see disruption coming from countries that are not highly technologically advanced. >> please state your name. where you from? >> in your talk about profound change, as a result of all the changes, in ten years how do you see the business model changing in some way and how are you preparing for that? >> the business model is changing. there are two parts to the business model. there's what you do to get to market and part of that is what science you have and how quickly can you move and validate. so we would hope to see it progress and we hope to see the regulatory side catch up. no use of big data, clinical trials,. [inaudible] people only count in the states, which is very unfortunate. they only get hammered when they make a mistake. it makes them naturally cautious. i feel for their dilemma. we do need society to say we are willing to take more risk and that would change her business model. the science, the regulators, and the communication to physicians. using better technology and better way to get to physicians to communicate the knowledge. >> what's the best idea that you talk about internally to do that? that's a really interesting point. >> which. >> to communicate with physicians. >> their experiencing using electronic methods and webinars and conferences with laptops and phones. some receive messages from the congress. if the representative goes into see a physician it's usually up personal relationship that they develop with physicians because they're extremely busy. there are some restrictions around what we can say to a physician given the regulatory environment. for example, if we have an investigator who develops a drug and has experience on the drug and we want to talk to 200 physician, if somebody gets up and says dr. i heard this drug could be used in this way and that's not an approved use by the fda, we have to get up and say we cannot answer that question. if we don't, we get sued by the fda. >> can you buy lunch for those people? >> we can take them to lunch, but one-on-one is not very efficient. >> right. >> okay so we publicize and publish all of that. we use ipads now so we can be in front of the doctor and the doctor can ask the question and the question is because it's not in our label, so he uses the iphone and puts the doctor on the iphone to a physician advisor who can answer the question medical to medical. >> do we need pdm's anymore? >> i think if they exist it's because of the regulations in the marketplace. i'm a big believer in that and i think if you change the way drugs but they negotiate better prices. that has good and bad. if they have a large base of older products and they're making a lot of money on the rebates and a new product comes in, they don't really have any interested in giving the new product a chance because the not making the rebates on it. so it is a positive and negative system. >> i think we have time for one more question. >> i've enjoyed your talk so far. you are very nimble, that's a compliment compliment. i have a question on washington. the house of representatives has just changed it speaker or is about to. do you feel they would be any more willing to consider some of the tax changes, notwithstanding the fact that the house is still divided and has fractions that will be run by someone who's interested in tax policy? >> representative ryan is extremely interested in tax reform. but, that being said, said, there is no dynamic scoring and i believe this is the biggest issue the united states has that the budget offers. we cannot dynamically score the impact of policy changes. it's very difficult for congress to craft a policy change that would be very positive for the country and job creation with negative scoring. i think it's very difficult to see radical change coming out of congress. we go into an election year and there are so many restraints where a unless you have a majority in the senate you can't get a bill to the president's desk and so the fact that one side has majority doesn't really mean anything if they can't get bills through to the president if he ever decides to play hardball. it it makes it difficult to move things forward quickly. to give you an example on dynamic scoring. we have an american act that was passed to your and a half ago. the unintended consequence of the act was, and part of