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RedLock CISO: China Chip Hack May Be Just The Beginning · Bloomberg Intelligence

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  Speaker 1: Welcome to the Bloomberg P and L Podcast. I'm pim Fox.
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  Speaker 1: President Pence has been speaking at the Husband Institute in Washington,
• 0:34
  Speaker 1: d C. Among his comments, he said that Chinese security
• 0:38
  Speaker 1: agencies have masterminded the wholesale theft of American technology, including
• 0:43
  Speaker 1: cutting edge military blueprints. Of course, this is incredibly relevant,
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  Speaker 1: especially in light of the blockbuster Bloomberg business Week story
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  Speaker 1: that just came out talking about a micro chip implanted
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  Speaker 1: in computer motherboards that were used in everything from the
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  Speaker 1: pencil Gone to Amazon to Google. Joining us now is
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  Speaker 1: Matt Chiot, vice president chief information security officer at Redlock
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  Speaker 1: in Philadelphia. Matt, I want to just start with that
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  Speaker 1: story reported by Bloomberg business Week. Are you concerned reading
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  Speaker 1: that that China has gotten access to the to our
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  Speaker 1: biggest technology companies in the United States as well as
• 1:20
  Speaker 1: potentially the military. You know, absolutely, I think that this
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  Speaker 1: story right now. Mindly, all of this is allegedly reportedly.
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  Speaker 1: But if what is being reported is true, this could
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  Speaker 1: be very, very dangerous. Why Well, it could be dangerous
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  Speaker 1: for a number of reasons, but number one, most of
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  Speaker 1: the time when we talk about cyber security, we're talking
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  Speaker 1: about software based hacks. In this specific incident, we're talking
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  Speaker 1: about hardware. Hardware hacks are really ever talked about. It's
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  Speaker 1: usually just something that has talked about as being theoretical,
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  Speaker 1: something that could happen. If this did in fact happen,
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  Speaker 1: we need to remember that allegedly, these chips are so
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  Speaker 1: small that they can barely be seen by the human eye.
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  Speaker 1: And what happens is with these chips, allegedly is that
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  Speaker 1: they allow code to be inserted into the operating system
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  Speaker 1: that's running on top of this hardware. This could let
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  Speaker 1: somebody do any number of things, including potentially expilter, expiltate data,
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  Speaker 1: or do other things perhaps far more Nefaria matt As,
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  Speaker 1: the Chief Information Security Officer of Redlock and previously the
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  Speaker 1: head of Cloud Security and Global Head of Cloud Security
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  Speaker 1: at Cognizant Technology Solutions. If you received a telephone call,
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  Speaker 1: in email, a communication from a client asking what should
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  Speaker 1: I do? What would you say as a result of
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  Speaker 1: this revelation. The first thing that we would advise them
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  Speaker 1: to do is to begin start looking at as part
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  Speaker 1: of their third party risk management program to ensure that
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  Speaker 1: they are actually looking at the security of the hardware.
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  Speaker 1: I have been in many differ and corporate security programs,
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  Speaker 1: in very very few of them actually look at the
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  Speaker 1: security of the hardware. It's usually implicitly trust. In right,
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  Speaker 1: the chip comes from manufacturer X, I don't even look
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  Speaker 1: at it. I just trust that it will be there
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  Speaker 1: securely in just directly, how do you do this? How
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  Speaker 1: do you do it? I mean, do you actually take
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  Speaker 1: the box apart and look at the original design and
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  Speaker 1: match what's there with the original design. Most corporate security
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  Speaker 1: programs do not have the technical resources to do this.
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  Speaker 1: What's been reported, especially back in right with Amazon Web
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  Speaker 1: Services that allegedly found this, they actually didn't even have
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  Speaker 1: the expertise. Allegedly, they sourced this out to a hardware
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  Speaker 1: security firm that found this. Right, and we need to
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  Speaker 1: give major kudos to AWS for finding this if in
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  Speaker 1: fact this is true. Um apportedly they were the only
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  Speaker 1: ones that found this, and then of course this went
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  Speaker 1: to other companies, but absolutely if somebody called me today
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  Speaker 1: and they were asking what should we do, they need
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  Speaker 1: to immediately invoke a hardware security firm, because more than
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  Speaker 1: likely they do not have this expertise in house. I
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  Speaker 1: guess one thing that I'm struck by is what don't
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  Speaker 1: we know as far as what's been hacked and what
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  Speaker 1: has already um, you know, been infiltrated in some way
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  Speaker 1: or another. I mean, do you think that the sort
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  Speaker 1: of infiltration not just by China but other foreign nations
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  Speaker 1: as well, into US check is much broader than people
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  Speaker 1: could ever begin to imagine? Well, you have to remember, right,
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  Speaker 1: I mean we're talking about super micro, a legendly right,
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  Speaker 1: this is the company that supposedly the People's Liberation Army
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  Speaker 1: of China supposedly infiltrated. They produce a great number of
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  Speaker 1: the world's motherboards, right, I remember motherboards there in everything
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  Speaker 1: right there, and everything from m r s too, special
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  Speaker 1: purchase computers to weapons systems. We don't know at this
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  Speaker 1: time how how many systems this actually got into, but
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  Speaker 1: if it did, we have got some very serious things
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  Speaker 1: to look at in the coming days. What kinds of
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  Speaker 1: effort do you believe that the private sector has already implemented,
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  Speaker 1: if any, in order to work with the US government
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  Speaker 1: to prevent these kinds of infiltrations at this time. I mean,
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  Speaker 1: from what I have seen, again, most corporate security programs
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  Speaker 1: really don't have much expertise when it comes to hardware security.
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  Speaker 1: I think what we're going to see in the coming
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  Speaker 1: days and months is that there will be probably an
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  Speaker 1: expansion and I think just the public interest in this
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  Speaker 1: because you know, this goes very broad right again, computers
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  Speaker 1: run everything these days, from voting machines right to mobile phones,
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  Speaker 1: et cetera. It's going to get very very broad and
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  Speaker 1: right now. You know, again, it's been reported that this
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  Speaker 1: is still part of an ongoing top secret probe. So
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  Speaker 1: we may not get a lot of answers now, but
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  Speaker 1: I can guarantee you in the coming days, this is
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  Speaker 1: something that's going to have a lot of attention, just
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  Speaker 1: like election security. Matt, just real quick here, I'm wondering,
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  Speaker 1: do you think that the US has the capacity to
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  Speaker 1: generate to produce some of the parts necessary and motherboards
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  Speaker 1: necessary for our computers. I think we do. We definitely
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  Speaker 1: have the technology to do it. Now. Again, we're talking
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  Speaker 1: about output the ability to manufacture this. That could take
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  Speaker 1: a while for that to come online. But I think
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  Speaker 1: you know the other thing that's really important here, and
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  Speaker 1: I guess this just might be the bottom line for this.
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  Speaker 1: You need to remember motherboards, these kind of chips. They're
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  Speaker 1: in everything from voting machines to mobile phones and m ris.
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  Speaker 1: And again this was only once talked about as being hypothetical,
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  Speaker 1: but now allegedly it's become a reality. So companies need
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  Speaker 1: to immediately step up their third party risk management programs
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  Speaker 1: and to begin to really dig deeply into not only
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  Speaker 1: software development, but now hardware as well. I really sure
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  Speaker 1: that this is only the beginning. Thank you very much
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  Speaker 1: for being with us. Matt Chiandi is the vice president
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  Speaker 1: and chief information security officer for Redlock. They are based
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  Speaker 1: in Philadelphia, and the topic is hacking and infiltration of
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  Speaker 1: hardware systems in the United States. The topic is trade
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  Speaker 1: and the effect on the industry that brings you many
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  Speaker 1: of the products that you enjoy, such as shoes and
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  Speaker 1: clothing and various apparel items. Because the final tariff list
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  Speaker 1: that the President Donald Trump's has put together along with
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  Speaker 1: his trade representative for China includes textiles and many of
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  Speaker 1: the products that are used in the United States that
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  Speaker 1: then go into various types of apparel. Here to help
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  Speaker 1: us understand the topic is Edward Hertzman. He is the
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  Speaker 1: founder and the president of Sourcing Journal. Edward, thanks very
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  Speaker 1: much for coming into the studio. Can you just describe
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  Speaker 1: for people the role that China plays currently in the
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  Speaker 1: supply chain for let's say the apparel industry. Well, China
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  Speaker 1: is has a huge role in the apparel and footwear
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  Speaker 1: industry here in America. Just to put it roughly into
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  Speaker 1: some numbers, about thirty three of apparel coming into this
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  Speaker 1: country is manufactured in China, and about fifty to sixty
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  Speaker 1: percent the numbers could even be closer to seventy this
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  Speaker 1: year of all footwear imported into America are coming out
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  Speaker 1: of China. UM if twenty billion dollars of apparel came
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  Speaker 1: from China this past year. In two thousand and seventeen,
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  Speaker 1: UH India, which is also a mega player in the market,
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  Speaker 1: UH exported four point five billion into America. So that
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  Speaker 1: shows you how vast of a difference and how large
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  Speaker 1: of an advantage China has in this market. So I
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  Speaker 1: just before we get into some of the recent trade
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  Speaker 1: agreements that we've struck. I'm wondering the tariffs that we've
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  Speaker 1: seen so far implemented, UH, particularly in this space on China,
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  Speaker 1: do you expect those to reduce the proportion of apparel
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  Speaker 1: and footwear that comes here from China. Well as it
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  Speaker 1: stands today, UM, the majority of the tower that have
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  Speaker 1: been put into place are not affecting apparel and footwear.
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  Speaker 1: The concern that that the industry has is that UM,
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  Speaker 1: the next round which he is threatening of two hundred
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  Speaker 1: seventy five billion, which would basically include all five million
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  Speaker 1: plus five hundred billion plus coming out of China, would
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  Speaker 1: have to include at that point apparel and footwear, and therefore,
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  Speaker 1: UM people are scrambling to figure figure out contingency plans. UM.
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  Speaker 1: The harsh reality here is, since China has so much
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  Speaker 1: market share and it's such a vertically integrated country, meaning
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  Speaker 1: that they not only sold the garments, they produced the fibers,
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  Speaker 1: the fabric, you know, the raw materials, it's gonna be
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  Speaker 1: very very difficult for people to move and a short
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  Speaker 1: period of time and even in a long period of
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  Speaker 1: time to these outside countries, just because whether it's Vietnam
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  Speaker 1: or in the year, or Pakistan or Cambodia. They just
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  Speaker 1: don't have the capacity available to to make up the
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  Speaker 1: market share that China has, and there's gonna be baked
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  Speaker 1: in inflation into the system. So well as a rush
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  Speaker 1: to these countries. Being that there's limited capacity, they these
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  Speaker 1: countries are going to charge more money and therefore, whether
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  Speaker 1: it's China or another country, the prices are going to
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  Speaker 1: go up at the factory level. In looking at things
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  Speaker 1: like air freight demand global air freight, what is the
• 10:13
  Speaker 1: trend right now? Well, you know, speed to market has
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  Speaker 1: been top of mind for everyone right now. You know,
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  Speaker 1: we like the study models like Indie TEGs, Era, and
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  Speaker 1: what makes them so successful is their ability to get
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  Speaker 1: goods into the market very quickly, reduce inventory liability, get
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  Speaker 1: goods into the market quickly. That allows them to react
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  Speaker 1: if things are working, and if it's not working, their
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  Speaker 1: inventory liability is less as it's not as you know,
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  Speaker 1: it's not as large. So one of the trends that
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  Speaker 1: we're seeing is while it's more expensive upfront air allows
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  Speaker 1: us to react very quickly. We don't have to wait
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  Speaker 1: for a you know, a twenty day boat to get
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  Speaker 1: stuff in, So it's we're seeing more of a trend
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  Speaker 1: as it applies to speed to market. Um, people are
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  Speaker 1: trying to utilize that as a means to get product
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  Speaker 1: in quicker. All right, So let's let's get to the
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  Speaker 1: trade agreement that we recently struck with Mexico, the US
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  Speaker 1: and Canada. Uh. Some people are saying their aspects of
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  Speaker 1: it that are more free trade act parts of it
• 11:09
  Speaker 1: that are more protectionist. Where do you stand? What do
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  Speaker 1: you think the retail industry will stand when this all
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  Speaker 1: shakes out, will be in a better position or worse? So, UM,
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  Speaker 1: there's a pro and eicon to this recent agreement. So
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  Speaker 1: it's now no longer NAFTA, it's the U S m
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  Speaker 1: c A, the United States Mexico. I can't. I can't
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  Speaker 1: get this acronym down U S m c A. So
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  Speaker 1: United States, Mexico China agreement. I think that's I think
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  Speaker 1: that's it, UM on a on a high level. The
• 11:41
  Speaker 1: the the positive is that it shows that Trump is
• 11:44
  Speaker 1: not completely against global trade policy and global trade. So
• 11:48
  Speaker 1: he is, you know, maybe the bark is a little
• 11:50
  Speaker 1: bit bigger than the bite. He did not completely dismantle
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  Speaker 1: this agreement. But if we get into the nuances of it. UM.
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  Speaker 1: There's a little bit that we have to we have
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  Speaker 1: to realize here is that he's changed aaging some of
• 12:00
  Speaker 1: the conditions of the agreement. So if you're manufacturing, and
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  Speaker 1: it's really going to impact auto and apparel the most.
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  Speaker 1: So if you're looking at the apparel industry, UM, the sewing, thread,
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  Speaker 1: the pockets, the fabric all have to come from one
• 12:16
  Speaker 1: of the countries that are part of this agreement. And
• 12:18
  Speaker 1: if we look at Mexico largely it's a CMT based country,
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  Speaker 1: a lot of the fabric or or components may be
• 12:25
  Speaker 1: imported in stitch there and then sewn into America. So
• 12:28
  Speaker 1: the question that a lot of people have is, well,
• 12:31
  Speaker 1: how quickly can a country like this become vertical? How
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  Speaker 1: much of its UM accessories and inputs are they getting
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  Speaker 1: from China UM, So, how much will be business as
• 12:40
  Speaker 1: usual and how much will be a scrambled to figure
• 12:42
  Speaker 1: out how to continue importing the goods into this country
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  Speaker 1: duty free. In that same context, is it possible that
• 12:51
  Speaker 1: Mexico has the technology, the workforce, and the infrastructure to
• 12:55
  Speaker 1: let's say, be a much bigger player in the footwear industry? Well? Yes,
• 12:59
  Speaker 1: I mean apps really they have the workforce, they have
• 13:02
  Speaker 1: the skill set. UM. A company like Flex who works
• 13:06
  Speaker 1: with Nike has a factory there, you know they're they're
• 13:11
  Speaker 1: really leading the charge in some of the automation UM
• 13:14
  Speaker 1: in the footwear space. The question is not if, The
• 13:17
  Speaker 1: question is when and how quickly can can these countries
• 13:21
  Speaker 1: um position themselves to to be a larger player. And
• 13:26
  Speaker 1: if something happens in China or if if there is
• 13:29
  Speaker 1: a larger impact with Mexico, um, there is going to
• 13:32
  Speaker 1: be a period of time where there will be uh
• 13:35
  Speaker 1: a lot of chaos happening, because nothing happens overnight in
• 13:38
  Speaker 1: this industry. Just I'd love to get your thoughts quickly
• 13:40
  Speaker 1: on just in general. Given President Trump's current positions on trade,
• 13:45
  Speaker 1: imposing tariffs, and given the precedent that we have with
• 13:48
  Speaker 1: this new agreement with North America, do you think that
• 13:51
  Speaker 1: things are going to get substantially harder and more expensive
• 13:54
  Speaker 1: for retailers just based on the supply chains. Absolutely, there's
• 13:59
  Speaker 1: no way around it. So you know, there's there's there's
• 14:03
  Speaker 1: not an anonymous agreement on this, but most of us
• 14:07
  Speaker 1: believe that he will impose the balance two billion in tariffs,
• 14:12
  Speaker 1: which therefore will impact all apparel and textile coming out
• 14:15
  Speaker 1: of China. If that's the case, um anywhere from prices
• 14:20
  Speaker 1: of goods in order to maintain the current margin and
• 14:22
  Speaker 1: retail will have to go up ten to just to
• 14:25
  Speaker 1: keep the status quo. Companies like UM, Walmart, and Gap
• 14:29
  Speaker 1: have already been public in saying that they're going to
• 14:32
  Speaker 1: have to raise prices in order to uh, you know,
• 14:36
  Speaker 1: incorporate these increased tariffs, you know, especially for lower margin
• 14:40
  Speaker 1: retailers and brands. There's no way around it. Edward Hurtsman,
• 14:43
  Speaker 1: thank you so much for being with us. Thank you.
• 14:56
  Speaker 1: Chinese hackers have implanted tiny micro chip since servers that
• 15:01
  Speaker 1: made their way into the data centers of some of
• 15:04
  Speaker 1: the world's biggest companies, including Amazon and Apple. It's all
• 15:08
  Speaker 1: according to an investigation that was conducted by Bloomberg business Week,
• 15:13
  Speaker 1: and it's important to note that in emailed statements, Amazon, Apple,
• 15:17
  Speaker 1: and another company mentioned in this story, super Micro, have
• 15:20
  Speaker 1: disputed summaries of Bloomberg BusinessWeek's reporting. Here to tell us
• 15:25
  Speaker 1: more about this story is Jeremy Keen, Bloomberg editor. Jeremy,
• 15:29
  Speaker 1: thank you very much for joining us. Can you maybe
• 15:31
  Speaker 1: describe for our listeners the genesis of this story certainly
• 15:38
  Speaker 1: UM so Jordan Robertson and Michael Riley, who report on
• 15:41
  Speaker 1: cybersecurity for US out of Washington. They starting with the tip,
• 15:47
  Speaker 1: they began researching the story, pursuing lead's they talked to.
• 15:52
  Speaker 1: Eventually the number reached into the triple figures, more than
• 15:56
  Speaker 1: a hundred people they spoke to, and then a core
• 16:00
  Speaker 1: group of about seventeen UM people who gave us a
• 16:04
  Speaker 1: window into the story. So let's talk about what the
• 16:08
  Speaker 1: actual issue is. There was a micro chip that some
• 16:13
  Speaker 1: of these big tech companies found in happenstance, Yes, tell
• 16:18
  Speaker 1: us about that. Well, so you know, most people, I
• 16:21
  Speaker 1: think are used to hearing about software hacking, where you know,
• 16:25
  Speaker 1: people use code to to get data out of out
• 16:28
  Speaker 1: of places, And this story is more about the technology
• 16:31
  Speaker 1: supply chain and how UM official sources tell us that
• 16:37
  Speaker 1: they UM that they were able to at the factory
• 16:41
  Speaker 1: level get a small micro chip into a server motherboard
• 16:46
  Speaker 1: operated at plants that were subcontractors to an American company
• 16:50
  Speaker 1: they being China. That China was able to sort of
• 16:53
  Speaker 1: get this micro chip into the motherboard right, and then people,
• 16:59
  Speaker 1: this is a very This company sells a lot of
• 17:01
  Speaker 1: server motherboards it goes into servers and those go into
• 17:05
  Speaker 1: data centers UM for for clouds uh. In this case,
• 17:11
  Speaker 1: a video streaming company was one of the ones that
• 17:13
  Speaker 1: we focused on UM and then into the data centers
• 17:17
  Speaker 1: run by larger entities, all right, Just to try to
• 17:19
  Speaker 1: condense it, just at least from my mind. In Amazon
• 17:24
  Speaker 1: was looking to take over a company called Elemental Technologies,
• 17:27
  Speaker 1: and as part of the due diligence that they were
• 17:30
  Speaker 1: doing to make this acquisition, they're based in Portland. This
• 17:34
  Speaker 1: is Elemental, they had to ship some of the servers
• 17:40
  Speaker 1: that the company used that was supplied by a company
• 17:43
  Speaker 1: called super Micro or super micro Computer. They're based in
• 17:46
  Speaker 1: San Jose. They take these servers they shipped into a
• 17:49
  Speaker 1: third party to do an investigation, and what they find
• 17:52
  Speaker 1: on the board on the motherboard here for these servers
• 17:55
  Speaker 1: is a chip that was not part of the original design,
• 17:57
  Speaker 1: right exactly, yes, And what does this chip allow whoever
• 18:02
  Speaker 1: put it there? In this case, we maintain the Chinese
• 18:06
  Speaker 1: what does it allow you to do? So I want
• 18:09
  Speaker 1: to be clear that it's not that we're saying that
• 18:11
  Speaker 1: there's evidence that user data was taken or anything like that,
• 18:14
  Speaker 1: but they what it does, is it gives them deep
• 18:18
  Speaker 1: level access to a computer. So at the at the
• 18:20
  Speaker 1: level where UM an administrator might be able to access
• 18:25
  Speaker 1: the system, that's what you get. So it's possible that
• 18:29
  Speaker 1: that an attacker could get into a system without a password,
• 18:33
  Speaker 1: look at different parts of the network, UM, and and
• 18:37
  Speaker 1: that that kind of thing. Okay, But Amazon reported this
• 18:40
  Speaker 1: right when they were they were looking to make this
• 18:42
  Speaker 1: acquisition developmental and they found this out, they went WHOA,
• 18:46
  Speaker 1: and they contacted the Department of Defense right right, And
• 18:50
  Speaker 1: our reporting suggests, uh, they contacted the authorities. We don't
• 18:55
  Speaker 1: know exactly um who who it was in this UM,
• 19:00
  Speaker 1: they did UM, so that this one out and the
• 19:07
  Speaker 1: the government already had some intelligence to suggest that this
• 19:09
  Speaker 1: had been going to happen, and at the point that
• 19:11
  Speaker 1: they learned that there had been a citing, they began
• 19:16
  Speaker 1: to investigate it more deeply, and we report on that
• 19:18
  Speaker 1: all right, So just sort of to give a sense
• 19:20
  Speaker 1: of what the implications here are, because this is actually massive,
• 19:24
  Speaker 1: the idea that China systematically implanted chips in the hardware
• 19:30
  Speaker 1: that ended up on computers from everywhere from the Pentagon
• 19:34
  Speaker 1: to the biggest technology companies, where they could basically have
• 19:37
  Speaker 1: a backdoor entrance to a lot of different computers has
• 19:42
  Speaker 1: huge and vast ranging implications. I'm just wondering. I mean,
• 19:46
  Speaker 1: from what you were getting a sense of when you
• 19:48
  Speaker 1: were talking with people, was this the reason why we're
• 19:51
  Speaker 1: having trade tensions with China? Is this the reason why
• 19:54
  Speaker 1: you know that the US government has been increasingly tense
• 19:57
  Speaker 1: with the nation. What's going on here? Well, our report
• 20:00
  Speaker 1: shows that it's certainly something that's been of concern. We
• 20:03
  Speaker 1: report that there was a there were meetings that took
• 20:06
  Speaker 1: place in several years ago at the high level that
• 20:11
  Speaker 1: in which it was technology companies were asked, can we
• 20:14
  Speaker 1: find a solution to this? Um? And no, no evidence
• 20:19
  Speaker 1: that we've found one has emerged yet. UM As to
• 20:23
  Speaker 1: what's going on, you know, behind behind the scenes, Uh,
• 20:26
  Speaker 1: we don't know the extent to which is a motivating factor,
• 20:28
  Speaker 1: but we do report that it's a reason for their concern.
• 20:31
  Speaker 1: All right, Jeremy Keene, thank you so much for being here.
• 20:34
  Speaker 1: This is not going to be a one day thing
• 20:36
  Speaker 1: because the implications here are pretty substantial. We don't know
• 20:40
  Speaker 1: whether China necessarily used this backdoor exit I believe to
• 20:44
  Speaker 1: access any information, but it does have pretty broad implications
• 20:47
  Speaker 1: for UH, the supply chains that we have with China
• 20:50
  Speaker 1: where they make a lot of this technological equipment, as
• 20:53
  Speaker 1: well as the ongoing tensions with respect to trade. Jeremy Keane,
• 20:57
  Speaker 1: thank you so much for being with us. Jeremy Keane
• 20:59
  Speaker 1: is Bloomberg editor who was working on this story that
• 21:02
  Speaker 1: was reported out over a year with interviews with hundreds
• 21:07
  Speaker 1: are actually more than a hundred individuals and Lisa brom
• 21:09
  Speaker 1: WIT's along with my co host Pim Fox, and this
• 21:11
  Speaker 1: is Bloomberg Markets. We turn our attention now to g
• 21:25
  Speaker 1: W Pharmaceuticals and I want to introduce the chief executive,
• 21:29
  Speaker 1: Justin go Over, and g W Pharmaceuticals is set to
• 21:32
  Speaker 1: launch it's cannabis drug after receiving a favorable drug classification
• 21:37
  Speaker 1: review from the Drug Enforcement Agency. It has been previously
• 21:42
  Speaker 1: approved by the US Food and Drug Administration. Justin go Over,
• 21:46
  Speaker 1: thanks for being with us. Tell us about the the
• 21:49
  Speaker 1: schedule for the launch of this cannabis drug and what
• 21:52
  Speaker 1: it's designed to do. Well, thank you for having me
• 21:55
  Speaker 1: on the show. So so, this drug is called Epidialects.
• 21:58
  Speaker 1: It's been approved by FDA for two forms of childhood
• 22:03
  Speaker 1: onset epilepsy, so these are patients with seizures that have
• 22:07
  Speaker 1: proven very difficult to control with existing anti epileptic drugs.
• 22:12
  Speaker 1: The drug is UH contains a molecule called cannaby dial
• 22:16
  Speaker 1: or CBD, which is a part of the marijuana plant
• 22:19
  Speaker 1: that does not make you high. And the product itself
• 22:22
  Speaker 1: has been standardized and formulated to f d A standards
• 22:26
  Speaker 1: to produce a medicine that can be prescribed by doctors,
• 22:29
  Speaker 1: reimbursed by insurers, and so on. So that medicine was
• 22:32
  Speaker 1: approved at the end of June m The d e
• 22:35
  Speaker 1: A had three months after the end of June to
• 22:39
  Speaker 1: put the product into a schedule. They did that about
• 22:43
  Speaker 1: a week ago. Now, um, it's the lowest form of
• 22:46
  Speaker 1: class restriction classification within the scheduling regulations, and the drug
• 22:53
  Speaker 1: will be available on prescription in about a month or so.
• 22:56
  Speaker 1: How does the price of the drug compare with other
• 23:00
  Speaker 1: anti epileptic medications. We've priced this medication such that it's
• 23:06
  Speaker 1: in line with the other branded anti epileptic drugs that
• 23:10
  Speaker 1: these patients use. So um, the philosophy behind that is is,
• 23:16
  Speaker 1: you know, we believe that obviously this isn't an innovation
• 23:21
  Speaker 1: of first in class therapy providing relief where other drugs
• 23:25
  Speaker 1: have failed. But with that, with all of that said,
• 23:27
  Speaker 1: we we we've taken a pricing approach which is essentially
• 23:30
  Speaker 1: to be in line with with the care that these
• 23:34
  Speaker 1: patients now receive. Justin you're also working on other types
• 23:39
  Speaker 1: of therapies, Can you give us a hint of your pipeline?
• 23:43
  Speaker 1: Certainly well At GW Pharmaceuticals, the company were founded actually
• 23:48
  Speaker 1: twenty years ago with the sole focus of looking at cannabinoids,
• 23:53
  Speaker 1: cannabinoids and molecules in the cannabis plant as potential pharmaceutical products.
• 23:59
  Speaker 1: So what I mean by that is not medical marijuana
• 24:02
  Speaker 1: and not sort of unstandardized, unregulated oils, but actually science
• 24:06
  Speaker 1: based solutions with formulations that have been manufactured appropriately and
• 24:10
  Speaker 1: taken through the FDA process. So, in addition to epilepsy,
• 24:15
  Speaker 1: our work so far suggests that cannabinoids have promise within
• 24:19
  Speaker 1: the field of multiple sclerosis, within pain, within psychiatric disease,
• 24:24
  Speaker 1: even oncology. So what we believe is that the approval
• 24:29
  Speaker 1: and rescheduling of epidialects is the epilepsi medicine really opens
• 24:33
  Speaker 1: up a brand new field for cannabinoids as therapeutics for
• 24:38
  Speaker 1: the future. And you know, we at GWC ourselves very
• 24:41
  Speaker 1: much as leaders in the field worldwide and and have
• 24:45
  Speaker 1: have real hopes now that a number of these future
• 24:48
  Speaker 1: medications in different therapeutic areas can realistically become available as
• 24:54
  Speaker 1: prescription medications in the future. And justin definitely a lot
• 24:57
  Speaker 1: of people are interested in the cannon by it based medications,
• 25:01
  Speaker 1: but there obviously is a lot of interest in medical
• 25:04
  Speaker 1: marijuana use because people think that maybe it will have
• 25:07
  Speaker 1: a direct tie to recreational use. And I'm wondering, is
• 25:11
  Speaker 1: there anything that you've seen with respect to the study
• 25:14
  Speaker 1: of marijuana and its potential effects that will make it
• 25:18
  Speaker 1: more palatable for the f D day, f d A
• 25:21
  Speaker 1: or the government to declassify it as an illegal drug. Well,
• 25:26
  Speaker 1: I think that the central approach and philosophy that underpins
• 25:31
  Speaker 1: our research is that when it comes to treating patients
• 25:35
  Speaker 1: who are sick, that the appropriate way to do that,
• 25:38
  Speaker 1: if at all possible, is through the utilization of prescription
• 25:42
  Speaker 1: medications that has been approved by the FDA. After all,
• 25:46
  Speaker 1: you know that that is what we are used to
• 25:48
  Speaker 1: in our day to day lives. When we go to
• 25:50
  Speaker 1: a physician, we expect to have a medication for which
• 25:53
  Speaker 1: we understand the dose thing, the safety profile, the efficacy
• 25:57
  Speaker 1: and so on. So you know, I think, um, the
• 26:00
  Speaker 1: impact of of of medical marijuana and its impact on
• 26:04
  Speaker 1: recreational uses A is a parallel U is a parallel discussion.
• 26:10
  Speaker 1: And I think what the f d A made a
• 26:12
  Speaker 1: point of saying, and the d e A reiterated it
• 26:15
  Speaker 1: last week, was that when FDA approved epidialects with specific medication,
• 26:21
  Speaker 1: they were not approving marijuana. They were not approving even
• 26:25
  Speaker 1: the molecule in various forms. Yeah, justin justin medication, justin
• 26:30
  Speaker 1: go For. We have to leave it there, unfortunately, really interesting,
• 26:32
  Speaker 1: justin go For, Chief executive of GW Pharmaceuticals, based in California.
• 26:37
  Speaker 1: Thank you so much for being with us. Thanks for
• 26:42
  Speaker 1: listening to the Bloomberg P and L podcast. You can
• 26:45
  Speaker 1: subscribe and listen to interviews at Apple Podcasts, SoundCloud, or
• 26:49
  Speaker 1: whatever podcast platform you prefer. I'm pim Fox. I'm on
• 26:52
  Speaker 1: Twitter at pim Fox. I'm on Twitter at Lisa Abramo.
• 26:56
  Speaker 1: It's one before the podcast. You can always catch us
• 26:59
  Speaker 1: worldwide ID on Bloomberg Radio. H