Before we get started, i want to remind our guest is in the audience and those who may have come in late, please put your phones at least on five right. Vibrate. Because we know you want to tweet. We want you to follow the action. On twitter, you can follow us. Using npclive. I want to introduce the head table. Se stand and i will desperately as your name is announced, from my left and your right. The Senior Reporter at med tech insight and the treasurer of the National Press club. The desk editor at the Associated Press and the membership secretary of the National Press club. The executive Vice President of Corporate Affairs at pfizer. Breaking news editor at usa today and past president of the National Press club. Kenneth cole, senior Vice President of Government Relations at pfizer. Skipping over myself. The economy reporter for Bloomberg News and Deputy Team Leader for the national has club headliner team which organizes all of our speakers. Skipping over our speaker, the senior Vice President for business wire. Vice president of globally test of global media emissions and of global media relations. Syndicated columnist for the washington post. Washington bureau chief Monitoring Health care. Washington correspondent for the lancet and they can shipping writer for Kaiser Health news. Chairman of the Fourth Annual wharton d. C. Innovation summit. [applause] and i am just and i am just. It is time to bring in our speaker. As we gather, a Health Care Bill intended to replace obamas signature achievement is just with and factions of the Republican Party within factions of the Republican Party. Donald trump is driving the measure. Some of the issues wrap up in a debate for health care are accessibility and affordability. And innovation. Some of the latter are tied up in obtaining lifesaving pharmaceuticals with prices that seem to keep rising and not falling. One of the stewards of the joint industry is ian read, ceo of pharma of pfizer pharmaceuticals. Lipitor created to combat cholesterol. Or the little blue pill, viagra you know what that is for. All that falls under mr. Reid reads care. Mr. Reid and his counterparts are under to misfire to make 100,000 cancer drugs more affordable without having patients needing to apply for special assistance. Or in pfizers direct taste, under fire for being find being fined for overcharging Britains NationalHealth Care System. It is also taken heat from both sides of the aisle from the president and from democrats in past years like carl levin who are operating for uprooting and going to ireland for better tax deals, which they contend is for better job growth. The Trump Administration leaves the price of discussion drugs could be lowered by cutting corporate taxes to Keep Companies from moving overseas. However, mr. Reed feels there is no need to alter its drug pricing practices. In reuters in january and the president doesnt understand this industry. We will about these and other issues along with a robust question and answer period. After opening remarks, please give a warm welcome to ian read the ceo of pfizer. [applause] reid good afternoon mr. Reid good afternoon. Im delighted to be here today. At pfizer, our Cultural Values straight to work. I have a coin that expresses that. I want to have a candid conversation with you about the risks of Drug Discovery and development. The economic observations of our industry. The various to Patient Access to formal Health Care Including medicines, and some observations regarding how we can create a Health Care System that supports innovation and provides Patient Access. If you think back to the drugs that were available in the 1940s, they were available for infections, depression, ulcers, blood pressure, parkinsons. There was almost nothing. You could see a tv ad in ca patient in front and see a patient in black and white. He would turn and it was bare. Today, that is not the situation. We have incredible medicines that have turned like hiv into a chronic condition. Slow progression for Rheumatoid Arthritis, cured disease which is pepsi, helped test which is pepsi provided treatment for painful ulcers and gerd. If you have gerd which is reflux, it makes your life miserable. It is not a trivial thing to be able take a bill to be able to take a pill once a day. Cancer, we are developing new immunotherapies that harness the natural abilities of the bodies immune system to recognize and fight cancer, along with the other amazing discoveries we have made with small molecules and chemotherapy and chemotherapy. In 2014 and 2015, over 40 new medicines were approved by the fda. Many were for an array of diseases where there was no good treatment available. The pipeline across the pharmaceutical industry for new medicines has never been more promising. With more than 7000 medicines under development, around the world, and an average 70 of drugs across the pipeline are potentially first in class medicines. That drug has not been discovered before. That mechanism has not been discovered before. What do we attribute this progress . I believe it is the result of focused investment in highly risky undertaking of Drug Discovery and development, combined with advances in basic research from our universities in the nih. From discovery through fda approval, developing new medicine on average takes 10 to 15 years in costs 2. 6 billion. Less than 12 of the potential medicines make it to initial trials you can look at this and you can quibble about how it was done. I can give you a very easy way of knowing what the costs are of the drug. Pfizer spends a lean dollars a year on research spends 8 billion a year on research. If we are lucky, we produce three drugs a year. I dont need a study to know what it costs to bring new drugs to society in todays environment. For example, between 1988 and 2014, there were 96 unsuccessful attempts. 96 unsuccessful attempts. In brain cancer, there were 75 unsuccessful attempts and only three new drugs. In lung cancer, there were 167 unsuccessful attempts and 10 new drugs. One of which was pfizer. To discover and develop new drugs, the biopharmaceutical industry spends six times more r d compared to other Major Industries in the u. S. In 2015, the industry invested 50. 8 billion for research and development. That is 28 billion more than the entire nih health budget. Of which only a fraction is dedicated to Drug Discovery. The Drug Discovery process is complex and not well understood. After 38 years in the industry, it is one of the most complex undertakings that humanity has. To take an idea and shepherded through the Drug Discovery process, ensuring excellence at every stage and data at every stage to finally get a drug that can be taken by humans with a positive riskbenefit equation. Lets briefly review what it takes to discover and bring new medicine to patients in laymans terms. The process begins with basic Research Done by researchers within academic institutions. These researchers find postulate find, postulate and get insights into a disease and approaches for treating the disease. This is a critical step. It is light years away from having a medicine that can treat your condition. The pharmaceutical industry draws from this Research Findings once it has been validated. Normally, you publish, it gets validated. You understand. The understanding improves. At that point, the industry may begin a jug discovery process a Drug Discovery process. It is translated into research hypothesis, often through models that begin 10 to 15 year the begins at 10 to 15 year journey to get medicines to patients. We create a monocle a molecule that we believe will interact in the right way. We run studies to ensure the molecule have what we believe is a desire the desired biological effect. We run multiple doxology studies prior to trial to humans. At that point, we conduct early studies referred to as phase one and phase two and assess the safety of the compound and identify the right patient population. Once phase two has been passed, for safety and advocacy, we can chip we conduct large phase three trials. To prove the riskbenefit of the drug, and then we submit this data to a registry body like the fda for approval. This process has many interactions and. And full stops. You remove the toxicity and you find theres multiple attempts to get the right medicine with the right distribution. That riskbenefit profile is favorable. I will share with you our first in class drug cash it started it started in 1990 with a result done by independent researchers that identified and characterized kindnesses which are key regulators of cellblock division. Through collaboration we were able to identify the right nation population for our compound. By 2008, we had it an acceptable molecule that we believed improperly interfered with the cycling to disrupt the growth of tumors. This result was that after 25 years of initial, basic research, we had an inhibitor. Seven years after the first patient was toast and critical trials and was dosed Clinical Trials dosed in Clinical Trials. Before the drug was even approved, we began conversations with the Health Care Community and we spoke to more than 80 pairs, more than 20 Breast Cancer experts to build an understanding of the value of this medicine. What it does, what it does against competition, what advances it gives, how it changes peoples quality of life. Based on that input, we negotiated with the plans and the payers, access for i brands. We have continued to make significant investments. It has been studied patients with early Breast Cancer. After two years on the market, there are two competitors. One approved and one in development. That is something market evolves. You get a patent on your molecule, you dont get a 10 on treating the disease just get a patent on treating the disease. More and more, we were followed in very quickly by competitors with similar looking molecules. Today, there are other therapy stories. Gileads for hepatitis c. These are therapies with results for improvements in biology. Huge investments in risktaking by the industry could less about economic District Economic commission. They continued stream of treatments wont flow if society is not willing to fund and support a modern biopharmaceutical industry. That gets cures to patients. I would like to note that in 2014, the industry in the United States represented 3. 8 of total u. S. Output. An impact of 1. 2 trillion. When you take into account the amount of Goods Services and the total impact on the economy, 1. 2 trillion, this includes the Economic Activity across the u. S. Economy, including supply jobs. I want to be clear, we understand our responsibility. Every scientist understands the responsibility. Pfizer understands our response ability to produce medicines that bring value and are competitively priced. We are working toward an understanding in our society of the investment we make, the risk we take. And by we, i mean our shareholders. Appropriate return on the totality of our investment. A successful drug will always will only be profitable. There is a lot of dry holes. You need to have a cash flow to support the entirety of the biopharmaceutical ecosystem. Lets talk about access and transparency. We understand the access issues for patients. What we face with copays and high deductibles. We give away for free to 250,000 patients in the u. S. Prescriptions in 2016 because the process is broken. Those patients need to come to us as a last resort, because the insurance system is failing them. Transparency should allow patients in the test patients and physicians the right choice. That is transparency. How does a patient know they are getting value from that product . A great percentage of the costs associated with lifesaving as compared to expensive interventions like hospital admissions, emergency rooms, physicians diagnosis. Patients in our insurance system page 3 of the cost of hospital care out of their own pocket. You are asked to pay 15 out of your pocket for drug costs. This is not transparency. Most consumers do not know this. Rather medicine reimbursement costs are used by the system, insurers and providers, to a to avoid adverse selection. It is when you have a higher proportion of six people on your plan and your competitors six people sick people on your plan and your competitors. Pharmaceuticals represent talk percent of the total Health Care System costs and we need to consider two factors, visibility and understanding of what youre getting from insurance. Make it clear to the patients. A patient focused benefit that meets the patients need. I used the analogy that patients need solids insurance, the type of insurance you have for your home. If a persons home is destroyed by a fire, their Insurance Company covers an majority of costs. People know what they are getting. They are able to rebuild their house. When it comes to your health, you should be able to have insurance to cover diseases, like cancer or Rheumatoid Arthritis without having to bear the burden of the majority of the expense. Individuals cannot afford modern pharmaceuticals. It has to be done through an insurance system. The cost to produce and bring safe and effective drugs to market is out of the reach of individual pockets. But the way that insurance plans are designed, costs are shifting to patients in order to contain cost in the short term. Many of the plants now have large copays, 6000 dollar deductibles before you get to any repayments. This is not good insurance. There is little incentive for the conventional cure over the long term. In many cases, benefit designs are construct it to avoid sick patients. For instance, previous to the Affordable Care act, we had a product that helps you would not smoke. Insurance companies would not cover it. Why not . They do not want smokers. On their insurance rolls. They are bad risks. So we had great difficulty getting access to this medicine in the insurance system. Hepatitis c is a good example. When hepatitis c treatment was introduced. It was not about the value of the drug. The evidence demonstrated it was cost effective. The debate was really about the shortterm impact on medicare and managed care budgets of an uninspected, expensive highvalue medicine that they had not budgeted for. There was no risk adjustment for it. So before have see was available, the annual coverage the cost was 60,000 a year for patients with in stage liver disease. And 500,000 per patient for those receiving a liver transplant. An average expected lifetime patient cost to treat all stages was 205,000. Approximately. Compare these costs to the fact that more than 90 of the patients with the most common form of this can expected to be toward with this drug in as little as eight weeks. This is a lifetime cost now a slightly more than 40,000. And because of intense competition, the cost is now 50 less than the initial cost it was launched at. Returns let us look at the returns of the industry. I think there are many ways that we can put the pharmaceutical industry we can point out the benefit to society. The various ways of looking at it. The transparency we are seeing in most states is not inappropriate way of measuring the benefit of the pharmaceutical industry. The drugs developed. When the drug is approved it, it only has half of its patent life left. Once the patent is expired, it is broadly available in the form of generics. 90 of the pharmaceuticals on prescription today are in generics. They would not have been available if they had not been discovered. Had there been no innovation money for their discovery. Another indicator of equitable return is a financial performance. The successful drug is hardly profitable, that is a real insight. If you look at the average return of the pharmaceutical industry over the last five years compared to 25 other industrial sectors including consumer, software, telecom, energy and insurance and health care the pharmaceutical industry ranks 19th in terms of pricetoearnings ratio. Out of 25. A key indicator of the Growth Prospects of a company. 11th in terms of return on equity. Ninth in terms of return on capital. And nights in terms of return on assets. There is no evidence of extraordinary return in the pharmaceutical industry compared to the other industries in the bloomberg index. It is also worth noting that since 2010, the return of the pharmaceutical industry has been lower than the Largest HealthInsurance Company including united health, edna, cigna, humana, and 17. As a whole, these companies outperformed the s p 500 stock index which returned 135 over this time period. Collectively, these companies gained nearly 300 looting dividends. While the pharmaceutical industry turned 91 including dividends. Less than the snp and far less than the returns companies. Overa