System. [inaudible conversation] good afternoon ladies and german. For those of you who are just tuning in in our Television Audience and our public Radio Audience and the internet, welcome to the National Press club worsens 1908 we have been the embodiment of the constitution. Before we get started i want to remind our guests in the audience, if you have a phone, please put it on vibrate because we know you want to tweet. We want you to follow the action, and so on twitter you can follow us at rest club d. C. Using and pc live. I want to introduce the head table. As i introduce each of you, please stand and i will briefly, as your name is announced, it will be from my left and youre right. Senior reporter at med tech insight and the treasurer of the National Press club. Michelle, desk editor at the Associated Press and the membership secretary of the National Press club. Sally sues men, executive Vice President of Corporate Affairs at pfizer. Donna, breaking news editor at usa today and the past president of the National Press club. Kenneth cole, senior Vice President of Government Relations at pfizer. Skipping over myself, economy reporter for Bloomberg News and Deputy Team Leader for the National Press club Headliners Team which organizes all of our speakers in the club. Skipping over our speaker, danny, senior Vice President for business waters policy wire and the National Press club member who organize todays luncheon. Andrew, Vice President of Media Relations and Digital Communications at pfizer. Kathleen parker, syndicated columnist for the washington post. Virgil diction, Washington Bureau chief at modern healthcare. Susan jaffe washington correspondent for the lancet and a contributing writer for health news. Allen, chairman of the Fourth Annual wharton d. C. Innovation summit. [applause] i am jeff blue, news editor for the americas for al jazeera, and now it is time to bring in our speaker. As we gather, a healthcare bill intended to replace president obamas signature legislative achievement is subject to small internal conflicts within factions of the republican party. Actually massive, who along with President Donald Trump is driving the measure. As they shoot back on capitol hill, some of the issues wrapped up in the debate for healthcare rss ability 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 drug industry is ian read, ceo pfizer pharmaceuticals. If you have heard of tetracycline, the key ingredient to combat acne, lipitor which combats cholesterol or the little blue pill, viagra, you know what thats for. All of that falls under mr. Reids care. Mr. Reid doesnt come from research and Development Labs like penicillin which helped put pfizer on the map, but the financial house, as an auditor, which may be good training because mr. Reid and his counterparts are under tremendous fire to make 100,000dollar cancer drugs more affordable without having patients needing to apply for special assistance programs. Or, in pfizers direct case, under fire by being find a record 84 Million Pounds or 105 million for overcharging Britains NationalHealthcare System. It is also taken heat from both sides of the aisle, from the president of the United States, and from democrats in past years like former senator carl levin for uprooting their head cords from the Humble Beginnings in brooklyn and going to ireland for better text deals, which they contend is for better job growth. The Trump Administration, for its part believes the price of Prescription Drugs can be lowered by cutting corporate taxes to keep the companies from moving overseas. However, mr. Reid feels there is no need to alter its drug pricing practices in riders in late january, and the president doesnt understand his industry. We will talk about these and other issues, along with a robust questionandanswer period. After opening remarks, please give a warm National Press club welcome to ian read, ceo of pfizer. [applause] good afternoon. Is that close enough, can you hear me . Thank you to the National Press club for this opportunity and wonderful welcome. I am delighted to be here with you today. At pfizer, our culture of values is straight talk. I actually have a coin but i wont bring it out today that expresses that philosophy. Today i want to have a candid conversation with you about the risks of Drug Discovery and development, the Economic Contributions of our industry, the barriers to Affordable Health care including medicine and some observations regarding how we can create a Healthcare System that supports innovation and provides patient access. Drug discovery and development. If you think back to what treatments were available in the 1940s, i know most of us can do that, they were available for infections, depression, ulcers, blood pressure, parkinsons. There was a most nothing. You could look at a tv ad and see a patient in front of the doctor in black and white and the medicine cabinet behind that physician and he would turn and it was bare. Today that is not the situation. Today we have incredible medicines that have turned fatal illnesses like hiv and aids into a chronic condition. Slow progression for Rheumatoid Arthritis, cure disease such as hepatitis c and prevent childhood illnesses with vaccines. Provided treatment for painful ulcers and gerd, and if you have gerd, which is reflux, it makes your life a misery. Its not a trivial thing to be able to take a pill once a day and not have that issue. Of course gerd leads to cancer and other conditions. We are developing new immunotherapies that harness the natural ability of the bodys immune system to recognize and fight cancer. Along with other amazing discoveries weve made with small molecules and chemotherapy in the previous 20 years. In fact, in 2014 and 15, 40 new medicines were approved by the fda. Many of these were for rare diseases, cancers and other conditions where there were no good treatments available. The pipeline across the industry for new medicines has never been more promising. More than 7000 medicines under development whic around the wor. 70 of drugs across the pipeline are potentially first in class medicines. That is that drug has not been discovered before. That mechanism has not been discovered before. So to what do we attribute this progress . I believe its the result of focused investment in highly risky undertaking of Drug Discovery and development, combined with advances in basic research from our universities and other types of institutions. From discovery through fda approval, developing a new medicine on average takes 10 15 years in costs 2. 6 billion. Thats the number from boston university. In less than 12 of the potential medicines that make it to phase i are approved by the fda. You can look at the study and its complex and you can quibble about how it was done. I can give you a very easy way of knowing what it cost to develop a drug. Pfizer spends a billion dollars a year. Thats on research and development. If we are lucky if we produce three drugs. Year. I dont need to study to know what it cost to bring new drugs to society in todays environment. For example, between 1988 and 2014 there were 96 unsuccessful attempts, only seven new drugs developed to treat melanoma. Ninetysix unsuccessful attemp attempts. In brand cancer there was 75 unsuccessful attempts and only three new drugs. In lung cancer there was 167 unsuccessful attempts and ten new drugs, one of which was from pfizer. To discover and develop a new drug, the pharmaceutical industry spends, on average, six times more in r d as a percentage of sales compared to other Major Industries in the u. S. In 2015 the industry invested a combined 58. 8 billion in 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, i tell you its probably one of the most complex undertakings that humanity has. To take an idea and bring it through the Drug Discovery process of 15 years 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 develop and bring new medicines to patients in somewhat laymans terms. The process begins with basic research, undoubtably done by researchers and government institutions and National Institutions like the National Institute of health. These institutions postulate, sometimes find biologic pathways and insight into a disease or possible approaches to 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 basic Research Findings once they can validate it. Normally you publish and it gets validated by some realtor and you understand, the understanding improves, at that point the industry may begin a Drug Discovery process from those original scientific findings. They take this understanding and translated into a research hypothesis, often through animal models that begin 10 15 year journey to get the medicine to patients. We discover a molecule, create a molecule, synthesizer molecule, large or small that we believe will interact in the right way with the target pathway. We run studies to be sure the molecules, large or small have what we believe is the desired biological effects. We verify the compounds form of dynamics profile and how it affects the body and we run multiple Toxicology Studies to determine safety before beginning trials in humans. At that point, we then conduct early studies referred to as phase i and phase ii trying to understand the right dosing and assess the safety, efficacy and quality of the compound and identify the right Patient Population. Once phase two has been passed, for safety and efficacy, we conduct large phase three trials, thousands of patients, the largest we conducted was 85000 patients, to prove the riskbenefit of the drug. Then we submit this data to regulatory body like the fda for approval. This process has many interactions and false starts. Very often you start with the basic drug substance that you believe will be good but its toxic. Or you remove the toxicity and its no longer effective. Theres multiple attempts to try to get the right medicine with the right distribution whose riskbenefit profile is favorable. Ill share with you an example. We have a first in class drug for Breast Cancer. One of the deadliest and most poorly understood cancers. We started in 1990 with original Research Done by independent researchers that identified and characterized key regulative cell Growth Division in the cancer. Through collaboration with researchers at ucla we identified the right Patient Population for our compound. By 2008 we had an acceptable molecule that we believed appropriately interfered with the cancer cells to disrupt the growth of tumors. This result was that after 25 years of initial basic research, we had a cdk inhibitor. Seven years after the first patient was dosed in clinical trials, it was approved by the fda. With 50000 patients in the u. S. Alone now have been treated by the since the approval in 2015. Before the drug was even approved and launched, we began conversations with the healthcare community. We spoke to more than 80 payers. More than 20 Breast Cancer experts and 100 oncologist 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 and how it extends her life. Based on that input, we negotiated, with the plans and the payers, a price for access to this drug. We continue to make significant investments in the drug. It is being studied in patients with early Breast Cancer and there are 34 ongoing Investigative Research programs across various non Breast Cancer tumors. After two years on market, two years, there are two competitors. One is approved and one in development. That is how the market evolves. You get a patent on your molecule. You dont get a patent on treating the disease. Your molecule has to have a superior efficacy or characteristic to be successful. More and more we are followed in very quickly by competitors with similar looking molecules. Today there are other therapy stories like patients with advanced nonsmall cell cancer and for melanoma and gileads for hepatitis see. These therapies have Huge Investment in risktaking by the industry. Lets talk about Economic Contribution to the industry. A continued stream of new treatments wont flow if society is not willing to fund and support a modern biopharmaceutical industry. That is what gets cures to patients. I would like to note, in 2014 the bio pharmacy industry represented 3. 8 of total u. S. Output which amounts to an input of one point to trillion dollars. When you take into account the value of goods and services produced by the industry and the total impact on the economy, one point to trillion dollars. This includes the Economic Activity of the workforce the more than 4. 4 million jobs across the u. S. Economy including direct and indirect vendor and supply jobs. That being said, i want to be clear, we understand our responsibility. Every scientist understands there responsibility and pfizer understands the responsibility to produce medicine that brings significant value and are competitively priced. We are working towards an understanding by society of the investment we make, the risks we take and by we i mean our shareholders. The people who fundamentally fund pfizer. An appropriate return on the totality of our investment. The successful drug will always be, will normally be profitable. Unfortunately there are a lot of dry holes on the way to a successful drugs. You need to have the cash flow to support it. Lets talk about access and transparency. We understand the access needs of patients and what they face with copays and high deductibles and the need for valued chain transparency in this process. We give away for free to 250,000 patients because the process is broken. Those patients need come to us as last resort because insurance system is failing them. Transparency helps patients and physicians to make the right choice for the patient that delivers the most value. How does the doctor know they have the best product and the patient knows theyre getting value from the product. How do we know patients are paying higher outofpocket cost and a great amount of cost is associated with medicines improving their conditions as compared to expensive interventions like hospital missions, emergency room visits and others. We paid 3 of the cost of hospital care out of your own pocket. However you are asked to pay 15 out of your pocket for drug costs. This is not transparency. Most consumers do not know this. Rather medical reimbursement costs are often used by the system to avoid adverse selection. Adverse selection is when you hirhave a higher proportion of k people in your plan than your competitors. When considering transparency and patient access, the value of the entire Health Care System needs to be taken into account. Not just pharmaceuticals which represent 12 of the total cost. We need to consider two factors. Visibility and understanding of what youre getting for your insurance, make it clear to the patient, and a patient focused benefit design that meets the patients needs. I would like you to use the analogy that patients need solid insurance, good insurance, similar insurance that you have for your homes. If a persons home is destroyed by fire, their Insurance Company covers the majority of the cost to rebuild the house. People know what theyre getting. They are able to rebuild the house. When it comes to your health, you should be able to have insurance 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 or risk sharing sys