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 .