[House Hearing, 113 Congress]
[From the U.S. Government Publishing Office]
TWENTY-FIRST CENTURY CURES: EXAMINING THE ROLE OF INCENTIVES IN
ADVANCING TREATMENTS AND CURES FOR PATIENTS
=======================================================================
HEARING
BEFORE THE
SUBCOMMITTEE ON HEALTH
OF THE
COMMITTEE ON ENERGY AND COMMERCE
HOUSE OF REPRESENTATIVES
ONE HUNDRED THIRTEENTH CONGRESS
SECOND SESSION
__________
JUNE 11, 2014
__________
Serial No. 113-151
Printed for the use of the Committee on Energy and Commerce
energycommerce.house.gov
______
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COMMITTEE ON ENERGY AND COMMERCE
FRED UPTON, Michigan
Chairman
RALPH M. HALL, Texas HENRY A. WAXMAN, California
JOE BARTON, Texas Ranking Member
Chairman Emeritus JOHN D. DINGELL, Michigan
ED WHITFIELD, Kentucky Chairman Emeritus
JOHN SHIMKUS, Illinois FRANK PALLONE, Jr., New Jersey
JOSEPH R. PITTS, Pennsylvania BOBBY L. RUSH, Illinois
GREG WALDEN, Oregon ANNA G. ESHOO, California
LEE TERRY, Nebraska ELIOT L. ENGEL, New York
MIKE ROGERS, Michigan GENE GREEN, Texas
TIM MURPHY, Pennsylvania DIANA DeGETTE, Colorado
MICHAEL C. BURGESS, Texas LOIS CAPPS, California
MARSHA BLACKBURN, Tennessee MICHAEL F. DOYLE, Pennsylvania
Vice Chairman JANICE D. SCHAKOWSKY, Illinois
PHIL GINGREY, Georgia JIM MATHESON, Utah
STEVE SCALISE, Louisiana G.K. BUTTERFIELD, North Carolina
ROBERT E. LATTA, Ohio JOHN BARROW, Georgia
CATHY McMORRIS RODGERS, Washington DORIS O. MATSUI, California
GREGG HARPER, Mississippi DONNA M. CHRISTENSEN, Virgin
LEONARD LANCE, New Jersey Islands
BILL CASSIDY, Louisiana KATHY CASTOR, Florida
BRETT GUTHRIE, Kentucky JOHN P. SARBANES, Maryland
PETE OLSON, Texas JERRY McNERNEY, California
DAVID B. McKINLEY, West Virginia BRUCE L. BRALEY, Iowa
CORY GARDNER, Colorado PETER WELCH, Vermont
MIKE POMPEO, Kansas BEN RAY LUJAN, New Mexico
ADAM KINZINGER, Illinois PAUL TONKO, New York
H. MORGAN GRIFFITH, Virginia JOHN A. YARMUTH, Kentucky
GUS M. BILIRAKIS, Florida
BILL JOHNSON, Missouri
BILLY LONG, Missouri
RENEE L. ELLMERS, North Carolina
Subcommittee on Health
JOSEPH R. PITTS, Pennsylvania
Chairman
MICHAEL C. BURGESS, Texas FRANK PALLONE, Jr., New Jersey
Vice Chairman Ranking Member
ED WHITFIELD, Kentucky JOHN D. DINGELL, Michigan
JOHN SHIMKUS, Illinois ELIOT L. ENGEL, New York
MIKE ROGERS, Michigan LOIS CAPPS, California
TIM MURPHY, Pennsylvania JANICE D. SCHAKOWSKY, Illinois
MARSHA BLACKBURN, Tennessee JIM MATHESON, Utah
PHIL GINGREY, Georgia GENE GREEN, Texas
CATHY McMORRIS RODGERS, Washington G.K. BUTTERFIELD, North Carolina
LEONARD LANCE, New Jersey JOHN BARROW, Georgia
BILL CASSIDY, Louisiana DONNA M. CHRISTENSEN, Virgin
BRETT GUTHRIE, Kentucky Islands
H. MORGAN GRIFFITH, Virginia KATHY CASTOR, Florida
GUS M. BILIRAKIS, Florida JOHN P. SARBANES, Maryland
RENEE L. ELLMERS, North Carolina HENRY A. WAXMAN, California (ex
JOE BARTON, Texas officio)
FRED UPTON, Michigan (ex officio)
C O N T E N T S
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Page
Hon. Joseph R. Pitts, a Representative in Congress from the
Commonwealth of Pennsylvania, opening statement................ 1
Prepared statement........................................... 2
Hon. Frank Pallone, Jr., a Representative in Congress from the
State of New Jersey, opening statement......................... 4
Hon. Fred Upton, a Representative in Congress from the State of
Michigan, opening statement.................................... 6
Prepared statement........................................... 7
Hon. Henry A. Waxman, a Representative in Congress from the State
of California, opening statement............................... 8
Witnesses
Marc Boutin, Executive Vice President and Chief Operating
Officer, National Health Council............................... 10
Prepared statement........................................... 12
Answers to submitted questions............................... 121
Sam Gandy, Chair, Mount Sinai Alzheimer's Research Center, on
Behalf of Dr. Kenneth Davis, President and CEO, Mount Sinai
Health System.................................................. 21
Prepared statement........................................... 23
Answers to submitted questions............................... 128
Alexis Borisy, Partner, Third Rock Ventures...................... 31
Prepared statement........................................... 33
Answers to submitted questions............................... 135
Mike Carusi, General Partner, Advanced Technology Ventures, on
Behalf of The National Venture Capital Association............. 40
Prepared statement........................................... 42
Answers to submitted questions............................... 144
Steven Miller, Senior Vice President and Chief Medical Officer,
Express Scripts Holding Company................................ 51
Prepared statement........................................... 53
Answers to submitted questions............................... 150
Fred Ledley, Professor, Natural and Applied Sciences, and
Management Director, Center for Integration of Science and
Industry, Bentley University................................... 58
Prepared statement........................................... 60
Answers to submitted questions............................... 154
C. Scott Hemphill, Professor of Law, Columbia Law School......... 72
Prepared statement........................................... 74
Answers to submitted questions............................... 156
Submitted Material
Statement of the Premier Healthcare Alliance, submitted by Mr.
Pitts.......................................................... 110
Statement of the Generic Pharmaceutical Association, submitted by
Mr. Pitts...................................................... 113
Statement of the California Public Employees Retirement System,
submitted by Mr. Pallone....................................... 116
TWENTY-FIRST CENTURY CURES: EXAMINING THE ROLE OF INCENTIVES IN
ADVANCING TREATMENTS AND CURES FOR PATIENTS
----------
WEDNESDAY, JUNE 11, 2014
House of Representatives,
Subcommittee on Health,
Committee on Energy and Commerce,
Washington, DC.
The subcommittee met, pursuant to call, at 10 a.m., in room
2322 of the Rayburn House Office Building, Hon. Joe Pitts
(chairman of the subcommittee) presiding.
Present: Representatives Pitts, Burgess, Shimkus, Murphy,
Blackburn, Gingrey, McMorris Rodgers, Lance, Cassidy, Guthrie,
Griffith, Bilirakis, Ellmers, Upton (ex officio), Pallone,
Engel, Schakowsky, Matheson, Green, Barrow, Christensen,
Castor, DeGette, and Waxman (ex officio).
Staff present: Clay Alspach, Chief Counsel, Health; Gary
Andres, Staff Director; Matt Bravo, Professional Staff Member;
Noelle Clemente, Press Secretary; Paul Edattel, Professional
Staff Member, Health; Brad Grantz, Policy Coordinator,
Oversight and Investigations; Sydne Harwick, Legislative Clerk;
Robert Horne, Professional Staff Member, Health; Carly
McWilliams, Professional Staff Member, Health; Krista
Rosenthall, Counsel to Chairman Emeritus; Chris Sarley, Policy
Coordinator, Environment and Economy; Heidi Stirrup, Health
Policy Coordinator; John Stone, Counsel, Health; Tom Wilbur,
Digital Media Advisor; Ziky Ababiya, Democratic Staff
Assistant; Eric Flamm, Democratic FDA Detailee; Karen Nelson,
Democratic Deputy Committee Staff Director for Health; and
Rachel Sher, Democratic Senior Counsel.
OPENING STATEMENT OF HON. JOSEPH R. PITTS, A REPRESENTATIVE IN
CONGRESS FROM THE COMMONWEALTH OF PENNSYLVANIA
Mr. Pitts. The subcommittee will come to order. The chair
will recognize himself for an opening statement.
Today's hearing provides us with an opportunity to examine
an important aspect of the 21st Century Cures Initiative:
whether current economic and regulatory incentives are
sufficient to encourage robust investment in the research and
development of innovative new drugs and medical technologies.
I am particularly interested in better understanding what
we can do to make it more attractive for companies and venture
capitalists to invest in the development of therapies that
would provide hope to patients without adequate treatment
options. After all, as we have learned, there are only
effective treatments for 500 of the 7,000 known diseases
impacting patients today.
To help close this innovation gap, as part of 21st Century
Cures Initiative, we must take a fresh look at the challenges
facing innovative companies and make certain the right
incentives are in place so America is home to the next
generation of cures.
The Hatch-Waxman Act created the modern generic drug
industry as we know it and has brought great benefits to our
Nation's patients and health care system. Nonetheless, as
Senator Hatch recently explained, since the early 1980s, ``the
cost of developing a drug has doubled, as has the number of
clinical trials necessary to file a new drug application.
Further, the number of participants required for those trials
has tripled.''
We continue to hear about the many unique challenges of
developing and testing therapies for patients with rare
diseases and certain types of cancer. However, we cannot lose
sight of the fact that new products targeting diseases that
impact large patient populations such as diabetes and
Alzheimer's take much longer to get to market and are therefore
becoming less attractive for investors and companies to pursue.
Innovative trial designs with surrogate endpoints are almost
unheard of in some of these areas, despite the fact that
patients and our health care system would greatly benefit from
new treatments. If and when they ultimately get to the market,
these products are often left with the least amount of patent
life and are granted the shortest exclusivity periods. We must
reexamine the incentive structure, particularly for small-
molecule drugs, before we are left wondering who will be
developing the next generation of treatments and in which
country.
Finally, for a variety of what are oftentimes different
reasons, investment in new medical technology companies is at
startlingly low levels. There are only 11 venture capital firms
remaining in this space, down from almost 40 in in 2007. In
2013, we witnessed the lowest level of initial funding activity
in more than two decades. This is not only a cures issues; this
is a jobs issue and one we must address head on.
I want to welcome our witnesses today and look forward to
learning more about the incentives necessary to encourage vital
investment in biomedical innovation across the board.
[The prepared statement of Mr. Pitts follows:]
Prepared statement of Hon. Joseph R. Pitts
The Subcommittee will come to order.
The Chair will recognize himself for an opening statement.
Today's hearing provides us with an opportunity to examine
an important aspect of the 21st Century Cures Initiative:
whether current economic and regulatory incentives are
sufficient to encourage robust investment in the research and
development of innovative new drugs and medical technologies.
I am particularly interested in better understanding what
we can do to make it more attractive for companies and venture
capitalists to invest in the development of therapies that
would provide hope to patients without adequate treatment
options. After all, as we have learned, there are only
effective treatments for 500 of the 7,000 known diseases
impacting patients today.
To help close this innovation gap, as part of 21st Century
Cures Initiative, we must take a fresh look at the challenges
facing innovative companies and make certain the right
incentives are in place so America is home to the next
generation of cures.
The Hatch-Waxman Act created the modern generic drug
industry as we know it and has brought great benefits to our
nation's patients and health care system. Nonetheless, as
Senator Hatch recently explained, since the early 1980s, ``the
cost of developing a drug has doubled, as has the number of
clinical trials necessary to file a new drug application.
[Further,] [t]he number of participants required for those
trials has tripled.''
We continue to hear about the many unique challenges of
developing and testing therapies for patients with rare
diseases and certain types of cancer. However, we cannot lose
sight of the fact that new products targeting diseases that
impact large patient populations such as diabetes and
Alzheimer's take much longer to get to market and are therefore
becoming less attractive for investors and companies to pursue.
Innovative trial designs with surrogate endpoints are almost
unheard of in some of these areas, despite the fact that
patients and our health care system would greatly benefit from
new treatments. If and when they ultimately get to the market,
these products are often left with the least amount of patent
life and are granted the shortest exclusivity periods. We must
reexamine the incentive structure-particularly for small-
molecule drugs-before we are left wondering who will be
developing the next generation of treatments, and in which
country.
Finally, for a variety of what are oftentimes different
reasons, investment in new medical technology companies is at
startlingly low levels. There are only 11 venture capital firms
remaining in this space-down from almost 40 in in 2007. In
2013, we witnessed the lowest level of initial funding activity
in more than two decades. This is not only a cures issue; this
is a jobs issue and one we must address head on.
I want to welcome our witnesses today and look forward to
learning more about the incentives necessary to encourage vital
investment in biomedical innovation across the board.
Thank you, and I yield the remainder of my time to --------
------------------------------------.
Mr. Pitts. Thank you, and I yield the remainder of my time
to the vice chairman of the subcommittee, Dr. Burgess.
Mr. Burgess. Thank you, Mr. Chairman, and I want to join
you in welcoming our panel of witnesses. I certainly look
forward to hearing your testimony today.
Once again, we are examining the role of various market
incentives on the development of new drugs, biologics and
devices. From bench to bedside, the timeline right now is about
12 years, and that is a long time. Of all the drugs that enter
pre-clinical testing, only five of 5,000 will make it to human
testing. Balancing the importance of facilitating innovation
and expediting patient access has been a priority of this
committee. Many of these incentives have been actually quite
successful over the years. Hatch-Waxman--we have a robust
market. The Orphan Drug Act--we have encouraged manufacturers
to develop and test existing products for the treatment of rare
diseases. The bottom line in each instance, patients have
benefited.
The greatest market incentive is a developer knowing that
there is a market for their product and that it will be
covered. Whether the payer is the Federal Government or the
private insurance, payers need to know what is coming down the
road so that they are prepared to integrate the new treatments
into their coverage because really, what difference does it
make to the patient that a product was developed if they have
got no access to it.
Really, the headline in all of this should be, we have the
ability to develop cures that no generation of doctors has been
able to deliver to patients ever, and we can't let the
regulatory side get in the way. We want to be facilitators. We
want to be catalysts.
And again, we thank you for being here. We welcome your
testimony this morning, and I yield back.
Mr. Pitts. The chair thanks the gentleman and now recognize
the ranking member of the subcommittee, Mr. Pallone, for 5
minutes for an opening statement.
OPENING STATEMENT OF HON. FRANK PALLONE, JR., A REPRESENTATIVE
IN CONGRESS FROM THE STATE OF NEW JERSEY
Mr. Pallone. Thank you, Chairman Pitts.
When we talk about medicines and disease, there is a
natural emotion that comes from the personal stories we hear
from our constituents as well as from our own lives, and many
of us know all too well about the pain and suffering families
face when battling an illness and losing those we love.
As Members of Congress, we typically speak about treating
disease in sound bites. Innovation, cures, discovery,
incentives and, of course, access are some of the key words
that we use. In today's hearing, we will hear about the
thousands of diseases with little or no treatments and we will
examine whether additional steps need to be taken to accelerate
biomedical discoveries in this country.
Innovative new drugs for decades have made major
contributions to our lives. In many instances, they have
allowed us to watch our loved ones get better and live longer,
sometimes even healthier lives, and now we are even seeing some
new drugs curing diseases outright, discoveries certainly
worthy of praise.
But we must be careful in this debate. We can't look at
these issues filled with emotion and we certainly can't look at
these issues in a vacuum. It is complicated with far-reaching
effects, and we continue to battle thousands of rare diseases
affecting small populations for which there are no known causes
or cures. We need to address this problem. The Orphan Drug Act,
which includes tax incentives and market exclusivity, has been
successful, leading to a number of medical treatments, and many
of these treatments, while they can be expensive, serve a
fairly small number of patients.
When we think about diseases like Alzheimer's or chronic
conditions like diabetes, we may be talking about treating
millions of people for decades, and what is more, baby boomers
are aging into Medicare at a pace of thousands a day, so we
absolutely need to encourage innovation and help to ensure that
new treatments emerge but we also need to make sure that
patients have access to affordable treatments. Otherwise we
will bankrupt families for which new medicines may be the
difference between life and death. And we will strain our
federal health care system. Cures and cutting-edge medicines
are of no value if their high costs put them out of reach of
the patients who need them.
Thirty years ago, Congress sought to address the high costs
and access to medicine, and as a result, the Hatch-Waxman Act
was negotiated to strike an important balance between providing
incentives to innovative new and better medicines and access to
lower-cost medicines. Since then, there has been a tremendous
public health and economic benefit. Today, generic drugs
account for 84 percent of all prescriptions in the United
States with savings amounting to $217 billion annually. But
Hatch-Waxman isn't just about lower-cost drugs. Fundamentally,
I believe its existence has resulted in competition,
innovation, and great discoveries. Without the threat of
generic alternatives, brand companies would have little reason
to engage in research on new drugs to outpace their
competitors. Furthermore, there are real examples of brand
companies spurring innovation amongst other brands.
So as we move forward, it is important that we do not alter
the central construct of Hatch-Waxman. However, that doesn't
mean there aren't additional ways to find further balance in
our development ecosystem. In 2012, the committee worked to
pass the FDA Safety and Innovation Act, or FDASIA, which
included a number of additional economic incentives. One
example was the GAIN Act for antibiotics for serious or life-
threatening infections. In that provision, we carefully
constructed narrowly focused incentives for companies to
advance in the antibiotic space. At only 2 years old, there is
promise with nearly 17 applications in the pipeline and one
approval so far.
So Mr. Chairman, I believe that there are many factors to
encouraging and ensuring robust investment in medicines.
Federal funding is one notable example. It is the foundation of
our biomedical ecosystem and is one of the best investments we
can make to spur economic prosperity, drug and device
development and cures for the 21st century.
And I would like to yield the remainder of my time, Mr.
Chairman, to Ms. DeGette, a member of the full committee who
joins us today.
Ms. DeGette. Thank you very much. I appreciate you
yielding, and I am very proud to be co-chairing the 21st Cures
Initiative with Chairman Upton.
This is our second hearing focused on the initiative. The
first hearing broadly touched on the eight recommendations
provided in the President's Council of Advisors on Science and
Technology report on propelling innovation and drug discovery
development and education. The hearing today focuses on one of
those recommendations, studying current and potential economic
incentives to promote drug innovation.
We know there are many types of incentives in place right
now--some of the other members have mentioned them--to help
spur research and development in both the drug and device
space. These range from funding for research and public-private
partnerships to tax credits and various exclusivity periods.
I look forward to hearing form the witnesses talking about
some of these incentives. For example, the recently implemented
exclusivity provided under the GAIN Act seems to be spurring
investment in antimicrobial and antifungal drugs. And so there
are other initiatives too.
I want to thank you, Mr. Chairman, for having this hearing
and I look forward to this continuing discussion that we are
having.
Mr. Pitts. The chair thanks the gentlelady and now
recognizes the chairman of the full committee, Mr. Upton, for 5
minutes for an opening statement.
OPENING STATEMENT OF HON. FRED UPTON, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF MICHIGAN
Mr. Upton. Thank you, Mr. Chairman.
We did launch the 21st Century Cures Initiative with the
goal of accelerating the discovery, development, and delivery
of innovative new treatments and cures to patients, ensuring
that the United States remains the biomedical innovation
capital of the world. 21st Century Cures aims to close any gaps
between the science of cures and how we regulate those
therapies, and this must be an ongoing conversation.
Today we are going to hear testimony about whether our
current legislative and regulatory framework encourages
innovators to pursue the development of drugs and devices that
are crucial to helping our Nation's patients. I am so proud of
the fact that this committee recently came together on a
bipartisan basis to address this innovation gap in the context
of antibiotics, but it is clear that our work is far from over.
We lack effective treatments for almost 95 percent of the
known diseases affecting patients today and over 95 percent of
drugs in development do not make it to market. In addition to
working with the FDA and others to decrease the time and cost
it takes to bring new products to patients, we have got to heed
the advice of the President's Council of Advisors and take a
fresh look at current and potential economic incentives to
promote innovation. As we have seen in the context of orphan
diseases and most recently for antibiotics, periods of market
exclusivity are powerful tools for us to consider in ushering
in the next generation of treatments and cures. This is
certainly a balancing act, and I am committed to pursuing any
such changes only after engaging in a thorough and thoughtful
dialogue with all interested stakeholders, which is precisely
why we are here today.
The Hatch-Waxman Act is an enduring piece of legislation
that will undoubtedly form the basis for any such conversation.
I agree with Senator Hatch, who recently said, ``The foundation
laid by Hatch-Waxman Act 30 years ago will continue to be the
mechanism by which the management incentives development of
lifesaving drugs but we do have an obligation to periodically
reevaluate how the balance can be adjusted to account for the
sweeping changes in the broader health care sector.''
The time and cost of bringing an innovative product to
market today is much different than it was in 1984, and yet
under Hatch-Waxman, the same baseline exclusivity period is
still granted to new drugs. We have an opportunity today to
assess whether we still have the right balance in place,
particularly for products meeting unmet medical needs.
We also have an opportunity to hear about incentives for
new devices. This committee has worked with FDA and
stakeholders to help make the regulation of devices more
predictable and consistent, but it is clear that we have to
continue that collaboration to not only improve FDA but also
coverage and reimbursement.
So I want to thank everyone that is here. Please continue
to share your ideas with [email protected]. Working
together, we are going to make a difference.
I yield the balance of my time to the vice chair of the
committee, Ms. Blackburn.
[The prepared statement of Mr. Upton follows:]
Prepared statement of Hon. Fred Upton
We launched the 21st Century Cures initiative with the goal
of accelerating the discovery, development, and delivery of
innovative new treatments and cures to patients, ensuring that
the United States remains the biomedical innovation capital of
the world. Twenty-First Century Cures aims to close any gaps
between the science of cures and how we regulate those
therapies. This must be an ongoing conversation.
Today we will hear testimony about whether our current
legislative and regulatory framework encourages innovators to
pursue the development of drugs and devices that are crucial to
helping our nation's patients. I am proud of the fact that this
committee recently came together on a bipartisan basis to
address this innovation gap in the context of antibiotics. But,
it is clear that our work is far from over.
We lack effective treatments for almost 95 percent of the
known diseases affecting patients today and over 95 percent of
drugs in development do not make it to market. In addition to
working with FDA and others to decrease the time and cost it
takes to bring new products to patients, we must heed the
advice of the President's Council of Advisors and take a fresh
look at current and potential economic incentives to promote
innovation. As we have seen in the context of orphan diseases
and most recently for antibiotics, periods of market
exclusivity are powerful tools for us to consider in ushering
in the next generation of treatments and cures.
This is certainly a balancing act, and I am committed to
pursuing any such changes only after engaging in a thorough and
thoughtful dialogue with all interested stakeholders, which is
precisely why we are here today.
The Hatch-Waxman Act is an enduring piece of legislation
that will undoubtedly form the basis for any such conversation.
I agree with Senator Hatch who recently stated, ``The
foundation laid by the Hatch-Waxman Act thirty years ago will
continue to be the mechanism by which the government
incentivizes development of lifesaving drugs'' but we do have
``an obligation to periodically reevaluate how the balance can
be adjusted to account for the sweeping changes in the broader
health care sector.''
The time and cost of bringing an innovative product to
market today is much different than it was in 1984, and yet
under Hatch-Waxman, the same baseline exclusivity period is
still granted to new drugs. We have an opportunity today to
assess whether we still have the right balance in place--
particularly for products meeting unmet medical needs.
We also have an opportunity to hear about incentives for
new devices. This committee has worked with FDA and
stakeholders to help make the regulation of devices more
predictable and consistent, but it is clear that we must
continue our collaboration to not only improve FDA but also
coverage and reimbursement.
In closing, I want to thank those folks who have responded
to our call for input in this 21st Century Cures initiative--we
appreciate the thoughtful contributions, especially the
responses from everyday Americans. Please continue to share
your ideas with [email protected]. Working together, we will
make a difference.
Mrs. Blackburn. Thank you, and I appreciate that we are
having this hearing today and focusing on 21st century cures.
The United States has done so much to advance health and
wellness in the country. Just looking back over some of the
recent accomplishments, in children, 90 percent of all leukemia
is cured. You have survival rates for melanoma post 5 years
that have doubled. Kalydeco for cystic fibrosis. Diabetes--they
have done away with the twice-daily shots. You have got the
pump. Now they are working on the artificial pancreas. The list
could go on and on talking about different vaccines, but I have
to tell you, I am very concerned because when you look at the
investment that has taken place in medical devices from 2007 to
2013, it is down 40 percent. This isn't good for us and we want
to make sure that the incentive is there to come back into that
marketplace just as the chairman and Ms. DeGette have both
mentioned. We have got to reverse that trend for 21st century
cures.
Some of the incentives, the protection of intellectual
property, the use of new pathways in order to move through the
maze of FDA regulation and of course FDASIA has the
breakthrough therapy designation, clarity around reimbursement
issues that focuses on the value of treatment. These incentives
provide an investment in our Nation's fiscal future as well.
Alzheimer's disease is a great example of this. It is one
where I have a particular interest and focus. It is something
that costs our Nation $215 billion a year. That is about
$50,000 per patient, or the median household income, to care
for an Alzheimer's patient.
So to focus on these cures is an imperative. It is the
proper use of our time. I welcome you and I yield back the
balance of my time.
Mr. Pitts. The chair thanks the gentlelady and now
recognizes the ranking member of the full committee, Mr.
Waxman, 5 minutes for an opening statement.
OPENING STATEMENT OF HON. HENRY A. WAXMAN, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF CALIFORNIA
Mr. Waxman. Thank you very much, Mr. Chairman.
This hearing today has very real implications for patients
everywhere. How do we ensure that drug and device companies
have the right incentives to discover important new treatments
for disease? We cannot legislate scientific advances. In some
areas, the lack of new treatments is attributable to a lack of
scientific knowledge, not the lack of incentives. To tackle
these problems, we will need more investment in research.
That is why our country has been so far ahead of the rest
of the world. Our taxpayers want basic research to be funded
through the National Institutes of Health, and I would assume
everybody that cares about this problem is outraged when we see
cuts at the NIH budget. But in other areas, incentives can play
a key role in sparking and sustaining innovation. That is why
it is important for us to consider how the incentives that
exist today are working and whether they can be improved.
The good news is that innovation in this country is
flourishing. More important new drugs are launched here than
any place else in the world. A key reason is that our system
recognizes that both competition and market exclusivity can
spur innovation. We have led the world in developing new
treatments because we have sought to get the balance right.
There are a variety of types of incentives: tax credits,
monetary prizes, and public funding of basic scientific
research, to name a few. I hope we will focus today on this
wide range of incentives. I suspect, however, that much of our
time will be spent on patents and marketing exclusivities.
Let me say a few words about these tools because I don't
think anyone in Congress has worked longer or harder on getting
their use right than I have. I authored the Orphan Drug Act,
which provides 7 years' exclusivity to incentivize development
of drugs for rare diseases. The 7 years was justified because
the small populations in need of these drugs did not provide an
adequate market. The Act has been a resounding success. Prior
to enactment, only ten drugs for rare diseases had been
developed. In the 30-plus years since enactment, over 400 have
been approved and many are in the development stage and are
being used without the final approval.
I was the co-author of the Hatch-Waxman law, which
established our generic drug system. The Act struck a balance
between generic competition and maintaining adequate incentives
for brand companies to continue to innovate. We allowed
generics to rely on the brands' safety and effectiveness data
in order to avoid wasteful duplicative clinical trials. In
exchange, we gave the brands 5 years of exclusivity to store
some of the patent time lost during the FDA review process. The
law has been an enormous success. Today, over 86 percent of
prescriptions are generics, yet spending on generics accounts
for only 29 percent of total drug spending, and at the same
time, the brand industry is booming.
Most people understand that the introduction of generic
competition has drastically lowered our national drug bill. But
generic competition also has another critical effect that may
seem counterintuitive: it also spurs innovation. An innovator
company that knows generic competition is just around the bend
needs to develop new products. In contrast, excessive periods
of exclusivity allow innovators to sit back and relax. Why
spend a lot of money on discovering the next groundbreaking
product, if it can continue to charge monopoly prices for 10,
12, or even 15 years on a drug that has already been approved?
Too much exclusivity is as bad as too little, if not worse.
Innovation is stifled by the lack of competition, and American
patients foot the bill by paying higher prices for their drugs.
When our committee considers these issues, the first
question should be whether new or additional incentives are
really needed in any particular area and what is an appropriate
incentive. We should insist on getting the answers that are
supported with data demonstrating this need. If new marketing
protections are warranted, they should be narrowly focused to
achieve a targeted aim. Otherwise we run the risk of allowing
companies to reap huge windfall profits, windfalls that are
paid for by American patients and the government and insurance
companies in this Nation.
So I urge caution when considering patents and exclusivity
as incentives. These are not the only tools, and in many cases,
they are not the best ones for ensuring the development of new
cures.
Thank you, Mr. Chairman.
Mr. Pitts. The chair thanks the gentleman. The written
opening statements of all members will be made a part of the
record.
That concludes our opening statements by the members. We
will now go to our witnesses. We have one panel with seven
witnesses. I will introduce them in the order of their
speaking.
First is Mr. Marc Boutin, Executive Vice President and
Chief Operating Officer of National Health Council. Then Dr.
Sam Gandy, Chair, Mount Sinai Alzheimer's Disease Research
Center on behalf of Dr. Ken Davis, the President and CEO of
Mount Sinai Health System. Then Mr. Alexis Borisy, Partner,
Third Rock Ventures; Mr. Mike Carusi, General Partner, Advance
Technology Ventures on behalf of National Venture Capital
Association; Dr. Steven Miller, Vice President and Chief
Medical Officer, Express Scripts Holding Company; Dr. Fred
Ledley, Professor, National and Applied Sciences, Management
Director, Center for Integration of Science and University,
Bentley University; and finally, Mr. Scott Hemphill, Professor
of Law, Columbia Law School.
Thank you all for coming. You will each have 5 minutes to
summarize your testimony. Your written testimony will be made a
part of the record. There is a little system of lights on your
desk so you have 5 minutes when the green light will be on.
When the red light goes on, we ask that you wrap up your
opening statement.
So at this time, Mr. Boutin, we will start with you. You
are recognized for 5 minutes for an opening statement.
STATEMENTS OF MARC BOUTIN, EXECUTIVE VICE PRESIDENT AND CHIEF
OPERATING OFFICER, NATIONAL HEALTH COUNCIL; DR. SAM GANDY,
CHAIR, MOUNT SINAI ALZHEIMER'S RESEARCH CENTER, ON BEHALF OF
DR. KENNETH DAVIS, PRESIDENT AND CEO, MOUNT SINAI HEALTH
SYSTEM; ALEXIS BORISY, PARTNER, THIRD ROCK VENTURES; MIKE
CARUSI, GENERAL PARTNER, ADVANCED TECHNOLOGY VENTURES, ON
BEHALF OF THE NATIONAL VENTURE CAPITAL ASSOCIATION; DR. STEVEN
MILLER, SENIOR VICE PRESIDENT AND CHIEF MEDICAL OFFICER,
EXPRESS SCRIPTS HOLDING COMPANY; DR. FRED LEDLEY, PROFESSOR,
NATURAL AND APPLIED SCIENCES, AND MANAGEMENT DIRECTOR, CENTER
FOR INTEGRATION OF SCIENCE AND INDUSTRY, BENTLEY UNIVERSITY;
AND C. SCOTT HEMPHILL, PROFESSOR OF LAW, COLUMBIA LAW SCHOOL
STATEMENT OF MARC BOUTIN
Mr. Boutin. Good morning, Chairman Pitts, Ranking Member
Pallone, Ms. DeGette, members of this subcommittee.
There are more than 133 million people living with one or
more chronic conditions. That is more than 40 percent of the
population. Effective treatments are available for some but for
many patients, all they have is hope.
My name is Marc Boutin. I am the Executive Vice President
and Chief Operating Officer at the National Health Council. We
provide a united voice for people with chronic disease and
disabilities.
As a child, I remember growing up in a tiny town in
northern Maine. Every surface of my home was covered in floral
wallpaper, including the light switches. You actually had to
rub the wall to find the switch. The wallpaper, the rugs, the
furniture, everything was covered in flowers, and when my mom
sat perfectly still in her floral dress, you couldn't see her.
In my 30s, I remember sitting in the doctor's office when my
father was told he had incurable cancer. My mom became his
primary caregiver even though she had multiple chronic
conditions herself. I held my father's hand when he took his
final breath. My mom soon died on my birthday. Dismantling our
family home was difficult. All the memories, all that
wallpaper. Getting the house ready to sell was not easy but it
had to be done.
Nearly every person in this room has been touched by the
burden of disease. Michael Gollin sitting behind me is an
intellectual-property lawyer. He is also living with ALS, or
Lou Gehrig's disease, which progressively robs you of your
ability to walk, talk, swallow and even breathe.
Thirty years ago, Representative Waxman coauthored the
Hatch-Waxman Act, which updated our innovation ecosystem and
made medications affordable for millions of Americans. But as
Senator Hatch recently wrote, ``We cannot rest on our laurels.
We have an obligation to periodically reevaluate and adjust to
account for the sweeping changes in the health sector.''
Our current innovation ecosystem was built decades ago,
long before we mapped the human genome, had supercomputers or
advanced diagnostics. Much like my family home, the ecosystem
has not kept pace with time. No one is to blame for this. It
just happens. You get used to the wallpaper.
The 21st Century Cures Call to Action provides an
opportunity to update, to modernize. While we may not all yet
agree on the specific solutions, consensus is emerging on some
of our most pressing challenges. Let me address two.
First, we all know that you need a patent to develop a new
medicine but just because you cure Parkinson's or lupus doesn't
mean you get a patent. Some of the best science is not
translated into treatments simply because they don't meet the
technical requirements of the law. From a patient perspective,
this makes no sense, and Congress can fix it.
Second, our current system encourages the fastest, least
expensive innovation, not necessarily the treatments that are
most important to society or individual patients. As you know,
patents run concurrently with clinical and regulatory review.
As a result, the best and most promising medicines sometimes
receive the shortest protection from general competition. For
example, conditions which progress slowly like Alzheimer's can
come to the market with the shortest periods of protection.
This also encourages the development of treatments for late-
stage illness rather than early-stage illness despite the huge
social and economic value of addressing and preventing disease
early. From a patient perspective, this makes no sense, and
Congress can address it.
The MODDERN Cures Act, introduced by Representative Lance
with bipartisan support, is the first legislative attempt to
address these two challenges. It promotes the best science, not
the best patent, but only for drugs that address an unmet
medical need.
On behalf of my dad, my mom, Mr. Gollin and nearly everyone
in this room affected by disease, thank you for including the
patient community in this multi-stakeholder approach. We stand
willing, ready and able to help you solve this and other
complex challenges. It is time to take down the wallpaper. It
is time to modernize our innovation ecosystem. Thank you.
[The prepared statement of Mr. Boutin follows:]
[GRAPHIC] [TIFF OMITTED]
Mr. Pitts. The chair thanks the gentleman and now
recognizes Dr. Gandy 5 minutes for an opening statement.
STATEMENT OF SAM GANDY
Dr. Gandy. Chairman Pitts, Ranking Member Pallone,
distinguished members of the Subcommittee on Health, thank you
for inviting me here today. I am Dr. Sam Gandy. I am Professor
and Chair of Alzheimer's Disease Research at Mount Sinai
Medical Center and Director of the Center for Cognitive Health
Care. Dr. Ken Davis was meant to be here addressing you but he
became ill at the last minute and was unable to come. Thank you
for allowing me to present in his stead.
In the 1970s, as a young researcher, Dr. Davis was the
first to show that Alzheimer's symptoms could be improved by
restoring levels of a brain chemical called acetylcholine as
required for memory function. His work eventually lead to FDA
approval of three of the four drugs currently on the U.S.
market for Alzheimer's disease but that was decades ago, and
incredibly, in terms of caring for Alzheimer's patients, almost
nothing has changed.
The need for breakthrough medications for Alzheimer's is
greater than ever, and the public health impact and the
economic impact of Alzheimer's are both escalating.
Alzheimer's affects more than 5 million American seniors
today, and by 2050, that number will rise to 15 million. Fully
one-half of everyone over age 85 is demented. That means that
everyone across the country and everyone in this room who lives
past age 85 will be either a patient or a caregiver.
The financial implications are staggering. This year,
Medicare and Medicaid are expected to pay $150 billion in
acute, chronic and hospice care for individuals with
Alzheimer's. The Medicare cost of caring for Alzheimer's will
increase more than 600 percent over the next 35 years, rising
to $627 billion.
Alzheimer's symptoms begin when people are in their 70s, so
if we were able to slow the progression of the disease by half,
most of these individuals would not develop symptoms until
their 90s, and indeed, many would not live long enough to
develop the disease at all. If we could simply delay the onset
of Alzheimer's by 5 years, that would cut costs to all payers
by half a trillion dollars by 2050.
Scientific opportunities for breakthrough oral medications,
in other words, pills, have never been more promising. An
extraordinary series of recent studies have found that most
people who will eventually develop Alzheimer's accumulate in
their brains clumps of a material known as beta amyloid, and
this begins two decades or more before symptoms. My own
research career began in the 1980s when my team identified the
first model drugs that reduce amyloid buildup.
The FDA appropriately requires that safety and efficacy of
new drugs must be demonstrated in two independent and most
commonly sequential trials. Developing a drug for Alzheimer's
is a slow process. Unlike antibiotic medications, for example,
that can be tested over a few weeks, Alzheimer's trials require
3 to 5 years. When that is added to, say, 2 years to recruit
patients and another year to analyze the results, virtually all
the drug's patent life will have lapsed. Because of this, many
drug companies, I would say most, are reducing their emphasis
on Alzheimer's.
As you well know, Congress has stepped in before to provide
market incentives for research. We now need an exclusivity
policy for orally administered pills that slow Alzheimer's. Why
do I stress the need for a pill? Because infused biologics can
cost as much as 20 times the cost of ordinary medication. For
Alzheimer's, that kind of cost would provide no fiscal
advantage.
In conclusion, Alzheimer's science is poised to accelerate
but business incentives must be realigned in order to provide
for the public's best interest. By providing market exclusivity
for pills, we would allow innovators to receive a return on
their expenditure of resources. In exchange, we would bend the
dementia cost curve and reduce the number of individuals
suffering from Alzheimer's disease.
I would like to thank the subcommittee for inviting me here
today and for shining a spotlight on this important issue.
Thank you.
[The prepared statement of Dr. Gandy follows:]
[GRAPHIC] [TIFF OMITTED]
Mr. Pitts. The chair thanks the gentleman and now
recognizes Mr. Borisy 5 minutes for an opening statement.
STATEMENT OF ALEXIS BORISY
Mr. Borisy. Good morning, Chairman Pitts, Ranking Member
Pallone and members of the subcommittee. My name is Alexis
Borisy, and I am a Partner at Third Rock Ventures. At Third
Rock, our mission is to create, launch, and grow innovative
companies that will make a meaningful difference for patients,
for physicians, for our health care system overall. I applaud
this committee for initiating the 21st Century Cures Call to
Action to ensure that U.S. biopharmaceutical and life sciences
industry is best equipped to maintain global leadership and
deliver lifesaving medicines.
Successful development of new medicines is dependent on
policies that support the entire life sciences ecosystem from
the lab to the patient. Disrupting any part of the ecosystem
weakens the entire enterprise. This endeavor is high risk,
taking over a decade and more than a billion dollars to deliver
a single new drug. But there can be no question of the reward.
Over the last 20 years, we have provided medicines that have
changed and saved the lives of patients with diseases such as
cancer, heart disease, HIV/AIDS.
This hearing is focused on a critical component of ensuring
a forward-learning biopharmaceutical industry, life sciences
industry. What incentives are needed to advance treatments and
cures? One key to a robust life sciences industry is a national
commitment to support basic research. The United States has
long been a world leader in basic research but funding for NIH
has been flat or declining for the past several years.
Diminished support for basic research will lead to a smaller
pipeline of next-generation medicines and impede our country's
innovation potential.
Building from that base, venture funding is the lifeblood
of small biotech companies. However, early-stage venture
investment is under significant pressure in the life sciences.
A primary reason for its decline is the increased time and cost
of developing new treatments. These struggles are especially
acute for drugs designed to treat chronic diseases with larger
patient populations. The decision to deploy capital is directly
impacted by regulatory and reimbursement behaviors. Better
enabling and encouraging FDA to utilize flexible approaches and
modern tools would have a positive impact on venture funding.
For example, since the implementation of the accelerated
approval pathway, over 80 drugs have been approved, most in
cancer and HIV. Likewise, in recent years, FDA has shown an
increased willingness to work with companies to develop more
effective clinical development programs for rare diseases. The
majority of designations under the new breakthrough therapy
program are also for cancer and for rare diseases. The time
required to put a drug on the market is usually longer than the
length of time of a typical venture capital investment fund.
The modern approach to regulation that exists now for
cancer and rare diseases attracts investment for three
important reasons. First, the regulatory process is more
interactive, flexible and reflective of the disease and patient
being treated. Second, the amount of investment required to
fund a company through proof of concept is better understood,
and third, the next step in the innovation ecosystem, be that a
larger company or public investors, feel more confident about
the development and approval process going form that step
further.
The results are clear. Over a third of recent drugs
approved have been drugs for rare diseases, and oncology
remains one of the hottest investment areas. However, the same
cannot be said for chronic diseases where the regulatory
requirements are greater. Without improving these processes,
early-stage investment in those areas will continue to
struggle. We must ask ourselves how we can learn from rare
disease and oncology and work to improve how we treat
conditions like obesity, diabetes and Alzheimer's, which have a
dramatic impact on our long-term health care costs. We must
advance to a system that critically determines whether the
information required is actually informative as to the
potential use of the drug in the real world. Creating approval
pathways that enable the development of drugs for
subpopulations of patients in these chronic diseases could be a
game changer.
There is also a need to provide incentives for the
development of new diagnostics. I applaud Congress for passing
PAMA, which includes a provision designed to significantly
improve reimbursement for diagnostics but its ultimate impact
will be determined by the rule writing process. I would like to
recommend that we consider a program for diseases important to
the public health with high unmet dg needs where we could
identify these diseases critical to the Nation's health and
establish a payment policy for these desired diagnostics. Clear
reimbursement policies for personalized-medicine tools combined
with modern regulatory approaches would advance personalized
medicine by leaps and bounds.
Congress has the opportunity to support a policy
environment that fosters the search for the next generation of
cures and treatments, and I applaud the committee for taking
steps to improve this process.
Thank you for the opportunity to share my thoughts.
[The prepared statement of Mr. Borisy follows:]
[GRAPHIC] [TIFF OMITTED]
Mr. Pitts. The chair thanks the gentleman and now
recognizes Mr. Carusi 5 minutes for an opening statement.
STATEMENT OF MIKE CARUSI
Mr. Carusi. Chairman Pitts, Representative Pallone, members
of the subcommittee, thank you for the opportunity to testify
today on behalf of the National Venture Capital Association.
Chairman Upton, Representative DeGette, thank you for
spearheading the 21st Century Cures Initiative. It is important
work.
My name is Mike Carusi. I have been in the venture capital
business for over 16 years. Over the course of my career, I
have had the privilege of helping innovative companies develop
therapies for some of the most daunting diseases of our time
including heart disease, diabetes and cancer.
I am here today to share my perspective on what is
happening with medical technology innovation. Simply put, we
are facing a crisis, and the continued leadership of this
committee is needed more than ever. Without changes in public
policy, the United States will no longer lead the world in
developing lifesaving treatments, and American patients face a
grave risk of losing access to these innovative cures.
The promise and importance of innovation has never been
greater. Our understanding of the origins of disease and human
physiology are growing. We see dramatic advancements in
engineering, material science, information technology. As the
population ages, new and improved medical technologies can play
a critical role in not only helping to improve patient care but
also in reducing long-term costs as well. But despite our
patients' needs and our ability to meet them, funding for
innovative medical technologies has declined substantially in
recent years. As Congresswoman Blackburn noted, between 2007
and 2013, medical device venture investments fell by a total of
40 percent. In 2013, we witnessed the lowest level of medical
device initial funding activity in more than two decades with
just 44 companies receiving first-time funding--44 companies.
Poor investment returns have resulted in institutional
investors such as universities, pension funds and foundations
fleeing the device sector. It is important to note that these
are the very groups that we get our money from. As a result, an
estimated 70 percent of all medical device venture investors
have or will exit the business over the next 5 years, and most
of these departures are not by choice.
Another equally troubling fact is that for those with
capital, we are shifting more and more of our resources
overseas. In my firm's case in particular, 25 percent of our
future investment will focus out of the United States. This is
a big change from the way we have done business in the past.
So why is this shift occurring? First, access to capital.
Countries like Ireland and Singapore are offering powerful
economic incentives to groups like Lightstone to invest.
Second, and more importantly, the regulatory path in these
markets is simply faster and more predictable. It is now
commonplace for our companies to seek regulatory approval and
commercialize new products in other markets ahead of the United
States.
We have talked at length about the path to FDA approval,
about the challenges in this path, about the delays in the
unpredictability, and I am happy to say that progress has been
made to begin reducing these regulatory barriers. The 2012
FDASIA bill included a number of important provisions which are
beginning to have a positive effect. The veterinarian community
and medical device incubators also has enjoyed a productive
dialog with CDRH Director Shuren and other members of his
leadership team in working to further improve the medical
device regulatory process. We are by no means done and we have
more work to do to continue to build on this progress, but FDA
has no longer become the greatest obstacle to innovation. That
obstacle is now reimbursement.
Obtaining coverage and reimbursement for innovative
products has become an increasingly difficult process that can
add another 3 to 5 years to the development of a new product.
It is a process that lacks transparency, predictability and
consistency. I have experienced this firsthand--changing
standards for data, no clear benchmarks, an ever-moving bar. It
is an extraordinarily frustrating process that you simply need
to go through once to clearly see that the system is broken.
In my written testimony, I have included several specific
recommendations on how we can improve on the system. At its
core, I would bring us back to transparency, predictability and
consistently, similar themes that we echoed in our discussion
on FDA. These are the three hallmarks that we need as investors
to have confidence in moving ahead.
Again, it is important to underscore that none of these
steps alone will ensure a reinvigorated medical technology
ecosystem. There is no silver bullet. But I believe a renewed
focus on drastically improving the coverage and reimbursement
situation is sorely needed.
Again, thank you for the opportunity to testify today. I
love what I do, I love the process of innovation, I love
developing treatments for patients. That is why the work of
this committee is so important and so necessary. We look
forward to working with you, and I am happy to answer any
questions you might have.
[The prepared statement of Mr. Carusi follows:]
[GRAPHIC] [TIFF OMITTED]
Mr. Pitts. The chair thanks the gentleman and now
recognizes Dr. Miller 5 minutes for an opening statement.
STATEMENT OF STEVEN MILLER
Dr. Miller. Thank you, Chairman Pitts, Ranking Member
Pallone and members of the committee.
Mr. Pitts. Can you push the mic?
Dr. Miller. I appreciate the opportunity to testify today.
I am the Chief Medical Officer for Express Scripts but a former
transplant nephrologist and former Vice President and Chief
Medical Officer for Washington University and Barnes Jewish
Hospital. I started my career in primary drug discovery and
hold many patents and have been with Express Scripts for the
last 9 years. Express Scripts is the largest pharmacy benefits
manager, administering the benefits for 85 million Americans on
behalf of clients including health plans, large and small
businesses, and the Department of Defense. Each day we work to
make the use of prescription drugs safer and more affordable.
The current system works very well to drive innovation.
There is more than 5,000 drugs in human testing in the United
States today, more than any time in my 30-year career. But for
payers, this is concerning. Whether highly or mildly
innovative, these advances come at enormous cost to patients
and payers. These new therapies cost tens of thousands of
dollars per patient, and the challenge is made clear by one
recent approval, Solvadi. Solvadi is a new treatment for
hepatitis C. In the first quarter of 2014, its sales exceeded
$2 billion. Cost of Solvadi varies by nation, but in the United
States, it is $84,000, or $1,000 per pill. You compare that to
Canada or Europe where it is $55,000, and in Egypt, $900, which
is less than a single dose in the United States.
Solvadi is a breakthrough with a high cure rate but varied
analysis suggests that Solvadi may not be worth the price. A
study from the California Technology Assessment Forum found
that even over a 20-year horizon, the cost-benefit is only two-
thirds of the original $84,000.
Solvadi is valuable to patients worldwide but should it be
the United States' role to pay the lion's share where Solvadi
manufacturers have the most incentives available to promote
innovation. Americans will pay more for the medicine than
anywhere else. Incentives available for Solvadi or other
include, one, market exclusivity. In addition to the usual
patent protection afforded to high-tech products, brand drug
manufacturers receive a period of exclusivity under Hatch-
Waxman where they are protected for competition. Two is they
get breakthrough approval designations. Since 2012, drug makers
have had the ability to see a breakthrough therapy designation
by the FDA to expedite the review of new drug applications that
demonstrate substantial improvements over existing therapies.
Three, we have a free market to sell medicines. Unlike other
nations, the new drug approval process doesn't include cost-
effectiveness comparisons. Manufacturers are free to sell their
medications at prices they determine without government
intervention, validation or approval. And four, NIH support.
The NIH supports drug makers with bench science, basic research
and support for clinical trials.
The price of Solvadi should be disappointing to lawmakers,
who have worked to foster innovation and encourage a
marketplace in the United States for brand drugs. Any action
that Congress considers should explore the need for an
environment where America doesn't pay the lion's share for
research and development that is benefited worldwide. Congress
should consider the proven ideas. One: Support NIH with
additional funding. Drug discovery begins with excellent work
by the team at the NIH. Two: Support the FDA. Given the success
of Fast Track, accelerated approval, priority review programs,
without compromising safety and effectiveness of drugs, these
hastened timelines can become the norm of new drug approval if
additional funding is provided. And three: Reserve marketplace
incentives for true innovations. Market exclusivity is
invaluable to drug makers and it should only be granted to new
drug applications that substantially improve upon existing
therapies. What better way to promote innovation than to more
carefully grant monopolies to drug manufacturers?
In conclusion, existing incentives for innovation are
working. Today we have more companies doing drug discovery than
ever. The industry is healthy and profitable. Express Scripts
is concerned by the idea that rewarding certain types of drug
development with additional market exclusivity will pervert the
commercial market for prescription drugs. It will inhibit
innovation. It artificially restrictions competition and it
affords the same reward to breakthrough therapy as to less
innovative product improvements. Most importantly, it places
the burden for funding this additional incentive solely on the
back of payers of health care rather than socialized equally by
society through the tax code. Proposals that seek to expand
market exclusivity in any situation need to be approached very
carefully, very narrowly to ensure the right solution to the
underlying problem.
Thank you very much for this opportunity.
[The prepared statement of Dr. Miller follows:]
[GRAPHIC] [TIFF OMITTED]
Mr. Pitts. The chair thanks the gentleman. Dr. Ledley, you
are recognized for 5 minutes for an opening statement.
STATEMENT OF FRED LEDLEY
Dr. Ledley. Good morning, Chairman Pitts, Ranking Member
Pallone, members of the committee. My name is Fred Ledley. I am
Director of the Center for Integration of Science and Industry
at Bentley University, where we focus on studies aimed at
accelerating the translation of scientific discoveries for
public benefit. I have been an investigator of the Howard
Hughes Medical Institute, the founder of an early company in
the field of gene therapy, gene medicine, the president and CEO
of another startup, which was a pioneer of personalized
medicine, and I am the holder of 10 U.S. patents.
My takeaway message today is very simple, that the role of
incentives should be exclusively to promote 21st century cures
based on 21st century science. This requires sustained support
for translational science from the early stages of basic
research that comes out of the NIH through drug discovery and
drug development. It requires patent rights that protect the
inventor's priority to novel art. It requires predictable
pricing, and it can be inhibited by statutory exclusives
granted to older products, which draw resources away from the
discovery of new cures and innovations that could reduce the
cost of health care.
While testimony before this committee has celebrated the
many advances scientific advances of recent decades, our
research suggests that few of these advances are being
translated into cures. Let me give you an example. Monoclonal
antibodies are one of the most important classes of new
medicines now covering the market but the basic science that
enabled that dates to 1975. My colleague, Laura McNamee, has
recently studied 100 new medicines approved by the FDA since
2010 and found that these products arose from basic science
that was on average 40 years old. Thus, in the second decade of
the 21st century, the pharmaceutical pipeline is not providing
21st century cures but rather cures based on 20th century
science.
One reason the pharmaceutical industry is facing the
dwindling pipeline and a patent cliff is that it has depended
for too long on the products of old science--``me too'' drugs,
product extensions and the eternal hope that there will be a
blockbuster around the corner. I urge the committee to focus on
incentives that will move the pharmaceutical industry forward,
forward from reliance on old science towards these 21st century
cures.
Now, patent rights are essential for this innovation.
Patents transform scientific discoveries into economic capital
that can be monetized through technology transfer, capital
investments by our venture colleagues, licensing fees or
royalties. Innovation can be incentivized by more efficient and
timely patenting of these discoveries.
Statutory exclusives can have the opposite effect. Extended
exclusivity makes companies less likely to commit resources to
the always risky business of translational science. Such
companies are less likely to discover and develop modern cures,
less likely to enter into alliances with startup companies and
less likely to acquire those companies. Extended exclusivity
granted to products that are late in their lifecycle or dormant
are particularly problematic since they explicitly favor the
products of old science over modern science. Statutory
exclusivity can promote science, as we have seen in Hatch-
Waxman, in the Orphan Drug Act and in the Best practices
Pharmaceuticals for Children Act, which I remind you achieved
this goal with 6 months of extended exclusivity.
Even with market incentives, the path to 21st century cures
needs to be nurtured. I started a gene therapy company 25 years
ago. I have been working in the field for 30 years. There are
no gene therapy products on the market. One of the reasons is
that while more than $4 billion has been invested in gene
therapy companies, all this money went to technologies that
were immature and not likely to develop drugs. This is a long
process that requires sustained, continuous investment.
Incentives that engage stakeholders in the long-term success of
innovation can promote innovation. These could include
accounting standards that assign value to R&D spending,
valuation models that consider the intermediate products of
innovation or differential tax rates or even shareholder rights
that favor long-term over short-term investments.
The reason we are here today is that the treatments and
cures that were developed from 20th century science are just
not good enough. There are critical unmet needs and incurable
diseases and the ever-increasing cost of health care.
Incremental improvements are not what we are after. I urge the
committee to focus on the mission of advancing 21st century
cures that move the industry forward to using 21st century
science.
Thank you very much for the time.
[The prepared statement of Dr. Ledley follows:]
[GRAPHIC] [TIFF OMITTED]
Mr. Pitts. The chair thanks the gentleman and now
recognizes Mr. Hemphill 5 minutes for an opening statement.
STATEMENT OF C. SCOTT HEMPHILL
Mr. Hemphill. Thank you. Mr. Chairman, Ranking Member,
members of the subcommittee, my name is Scott Hemphill, and I
am a Professor at Columbia Law School. I write and teach about
innovation and competition. My research examines the incentives
for drug innovation and affordable drug access provided by
patents and regulation. Thank you for the opportunity to
testify today about these important issues.
I think we can all agree that innovative drugs have made an
enormous contribution to longer and healthier lives. Patents
and regulation are the key to that success by supplying
incentive to innovate, thereby justifying large investments in
research and clinical testing. Patents and regulation also
serve a second goal, which is to ensure low-priced access to
lifesaving drugs. This is the balancing act discussed by
Chairman Upton and others.
As an engine of drug innovation, of course, the patent
system is not perfectly tuned. Sometimes a patent can't be
secured, for example, or a drug development takes too long and
the patent expires too soon.
Now, this issue is not a new problem but rather a
longstanding focus of drug regulation. For example, as you have
heard, the Waxman-Hatch Act fills in the gaps in patent
protection by giving drugs special non-patent protection from
competition, and to help make up for long development time, the
Act extends the term of existing drug patents, and the Orphan
Drug Act serves a similar purpose.
Now, to the extent that there is a problem even after these
extra protections, the question arises, what should we do about
it, and we have heard a few options. One option is to rethink
and speed up clinical trials. Another is targeted public
support where appropriate. A third option is to expand existing
legal exclusivity. Now, the key here, I think, is to limit the
expansion and target it to situations where it is truly needed,
and one possibility here is Dr. Gandy's suggestion of narrower
protection to help address Alzheimer's disease.
The MODDERN Cures Act also expands exclusivity but not in a
way that is narrow or targeted. It would grant a large increase
in protection for essentially all novel drugs. The Act gives 15
years of protection for so-called dormant therapies. Now, when
I first heard the term ``dormant therapy, '' I figured this
would be a limited, targeted expansion along the lines of the
Orphan Drug Act but I think that conclusion is incorrect. The
key point is that a drug must address a so-called unmet medical
need but unmet medical need is defined quite broadly. It is not
just a drug for a disease that has no treatment but any sort of
improved outcome. So even a drug that merely improved patient
compliance or increased convenience would count under the Act.
Now, in effect, the Act grants 15 years of protection to
any drug with a novel active ingredient, and 15 years is a long
time. It is about 3 years longer on average than even novel
drugs get today, 3 years longer than biologics, and is 4 or 5
years longer than protection in Europe. The result, I fear, is
a large windfall through longer exclusivity for many drugs that
would have been developed anyway. Billions of dollars will be
transferred from drug purchasers to drug makers, and worse,
where patients pay in whole or in part for the drugs, this
would also reduce access to drugs.
How big is this problem? Well, we can consider just the
novel drugs that experienced generic entry over the decade
between 2001 and 2010 and imagine that all of these drugs had
gotten a 15-year term instead of the average 12 or so that they
do today. That roughly 3-year extension would suggest an
overpayment for these drugs of more than $120 billion. In other
words, purchasers are likely to pay a lot more for drugs that
would have been produced even without the extra protection.
Beyond the windfall problem, the Act seems quite vulnerable to
evergreening strategies that would extend protection beyond the
15 years, and as we have already heard, risks placing a
disproportionate burden on U.S. purchasers, and I am happy to
discuss these issues during the question-and-answer period.
To conclude, claims that larger drug maker rewards would
increase innovation are easy to make but hard to pin down. The
right next step here is careful study to determine the scope of
the lost innovation problem in practice, and if warranted, a
solution narrowly targeted at that problem.
Thank you again for the opportunity to discuss these
important issues with the subcommittee.
[The prepared statement of Mr. Hemphill follows:]
[GRAPHIC] [TIFF OMITTED]
Mr. Pitts. The chair thanks the gentleman, and that
concludes the opening statements of our panel.
I would like to ask unanimous consent to submit for the
record a statement submitted by the Premier Health Care
Alliance and a statement submitted by the Generic
Pharmaceutical Association. Without objection, so ordered.
[The information appears at the conclusion of the hearing.]
Mr. Pitts. We will now begin questioning, and I will
recognize myself 5 minutes for that purpose.
In a statement issued by the California Public Employees
Retirement System related to this hearing, they state that
``Despite historic breakthroughs in scientific research,
clinical trials and new lifesaving therapies, many common
diseases remain incurable. Heart disease and stroke continue to
be leading causes of mortality. Psychiatric diseases are
serious burden on patients, their families and society as a
whole, and infectious disease presents new critical challenges
in terms of drug resistance.''
I will note that the committee acted in an overwhelmingly
bipartisan manner to pass the GAIN Act as part of FDASIA, which
was a needed first step towards addressing this innovation gap
by granting an additional 5 years of exclusivity to new
qualified infectious-disease products. We must build on this
momentum in the antibiotic space as well as in other areas of
unmet medical need and where public health demands innovation.
We will start with you, Mr. Borisy. Have there been
breakthroughs in clinical trial designs for chronic diseases
that impact large patient populations?
Mr. Borisy. So we have seen--if the goal is ultimately to
get medicines to patients and to our society that needs them,
we have seen through breakthrough therapy, through accelerated
approvals in multiple different disease areas an adoption of
approaches that have helped to speed those therapies to the
patients that need them. So it becomes a question of, what is
the information that is necessary to understand how a drug will
be in the real world setting and are we applying the current
best understanding of biomarkers, of personalized medicine
subsets of patients in some of these other disease settings,
could we move things more quickly.
Mr. Pitts. How long does it typically take to conduct a
clinical trial for a new therapy targeting a chronic condition
such as heart disease or stroke?
Mr. Borisy. The total time in clinical development for
those types of chronic diseases are usually longer than 10-plus
years.
Mr. Pitts. Are venture capitalists investing in the
development of new products targeting chronic diseases?
Mr. Borisy. It is very difficult to do so. If our focus is
on patients and bringing through those innovative breakthrough
medicines, if the time in clinical development is going to be
on the order of 10-plus years, building from wonderful basic
research that has been done, there still is usually additional
years before you ever get to the clinic to create that drug
that can then go be in the clinic for another 10 years of
development. So as a venture capitalist, if you are considering
deployment into an area that is going to take 15-plus years
before it may get to the market, that is very challenging. It
is challenging in that time period is longer than the length of
our investment funds, which means that we will be dependent on
other entities, recognizing that that is an important product
for patients, but other entities, if they have uncertainty
about how long it will take them to continue developing it or
what risks may be involved, we will not recognize the value
that we have created early on. So that long period of time and
uncertainty makes those very conditions which as a society and
as a Nation we need to be some of the most challenging to
invest in from a venture-capital perspective.
Mr. Pitts. Thank you.
Dr. Gandy, in your testimony you note that the lack of
therapeutics for chronic conditions such as Alzheimer's places
an enormous strain on our country's finances and that without
novel therapies, costs will only escalate. At this rate, will
the next generation of Americans that develop Alzheimer's be
taking the same medications that were approved over a decade
ago, and what would this mean to health system costs?
Dr. Gandy. At this point, the medications that are used to
treat Alzheimer's disease are the same that were developed in
the 1970s, so we have nothing new on the horizon. Those
medications don't change the progression of a disease. They
relieve symptoms briefly. They always wear off. So we continue
in the current cycle of having no way to slow the progression
of the disease.
Mr. Pitts. And Mr. Boutin, the California Public Employees
Retirement System asserts in their testimony that the market
exclusivity period of 5 years for brand drugs is ``appropriate
to properly incent innovation.'' Can you comment on whether 5
years of exclusivity is appropriate to properly incent
innovation for chronic diseases?
Mr. Boutin. It is clear when you look at the number of
conditions that lack treatments that it is not. It has worked
in some cases but we now have approximately 7,500 conditions
without treatments, and I hear Representative Waxman's comment
of ``the science is not always there'' but the incentives are
clearly not there to drive the innovation we need for many of
the conditions. We hear from NIH-funded researchers that they
develop treatments or potential treatments that could come to
market but lack patent protection and therefore they don't. We
hear repeatedly from our patient organizations and the
organizations they work with on developing treatments that the
timeline is taking too long to bring many of these products to
market. We have a huge opportunity to incentivize them.
Now, I think the question is, what is the right balance
point of incentivizing them. I think we agree that the need is
there, and I want to just take issue with the notion of unmet
medical need. Unmet medical need is really important to people
with chronic conditions. Alzheimer's is clearly an unmet
medical need but so is ALS, so are countless other conditions
without effective treatments. Our challenge is to incentivize
those highly innovative, highly valued products to address
those needs. We can quibble over what that balance is but this
Congress has an opportunity to do the hard work, figure that
out and incentivize treatments for people who are dying now
waiting for them.
Mr. Pitts. The chair thanks the gentleman. My time is
expired. The chair recognizes the ranking member, Mr. Pallone,
5 minutes for questions.
Mr. Pallone. Thank you, Mr. Chairman.
I wanted to ask some questions of Dr. Gandy and Dr. Miller.
Let us start with Dr. Gandy.
In reading your testimony, it is apparent that you share my
concern about the seemingly ever increasing cost of drugs and
its impact on both patients and on the health care system as a
whole. You mentioned the Affordable Care Act and the
biosimilars provision, which provided for 12 years of
exclusivity for innovator biologics, and as you point out,
biologics are extremely expensive, 22 times the cost of
ordinary drugs, so if a biologic at that price were to be
discovered for Alzheimer's, it would cost as much, if not more,
than it currently costs to treat and care for patients with the
disease. It would also not alter the unsustainable trajectory
for Medicare as your testimony explains.
You mention an Alzheimer's Association report that
concluded that if there were an effective Alzheimer's treatment
that could delay the onset for 5 years, American taxpayers
would save $447 billion in the year 2050 and the human
suffering brought by Alzheimer's of course heartbreaking and
obviously the projections for how much of our health care
system will be spending on the care of those with Alzheimer's
are dire. So it would be a tremendous public health advance if
we could get this treatment and see that kind of savings, and I
share your goal in trying to bring this treatment to market.
Your recommendation to the committee is that we would consider
extending the current 5-year term of exclusivity for drugs to
treat Alzheimer's but I seriously question whether a lengthy
exclusivity will achieve the kind of savings we all hope to see
or whether it would necessarily give patients access to
treatments they can afford, and your testimony seems to assume
that if we extend exclusivity for traditional or small-molecule
Alzheimer's drugs, the price of these drugs would be lower than
we are seeing in the biosimilars area. I think we have seen
recently that is not a safe assumption to make, and your
testimony points out that ideally a novel Alzheimer's treatment
would start to be given to people in their 50s before they
develop symptoms in order to slow the development of plaques.
So Dr. Gandy, if we are talking about giving a drug that
could actually prevent Alzheimer's, how many people do you
estimate would need to take it? Obviously the dosage might take
different forms. If it is an oral solid, I would guess that it
might need to be taken daily, maybe even more than once a day,
and that potentially means taking a drug every day for decades.
So I guess I wanted to ask, if we were talking about that kind
of drug, how many people do you estimate would need to take it?
I just have to ask a series of questions, if you could.
Dr. Gandy. Sure. The number of people who would have to
take the medication would be in the tens of millions.
Mr. Pallone. And what if the cost of this new Alzheimer's
treatment was $1,000 per pill, and if we extended the term of
exclusivity for that treatment beyond the current 5 years to,
say, 12 years, as you suggest, or even 15 as some of my
colleagues suggest, what would that look like for an individual
patient and what would it look like for the health care system
overall?
Dr. Gandy. I think the details of how to focus the
exclusivity and target it narrowly are sort of a second-
generation problem. I mean, I think we are really trying to
find ways to deal with what we clearly observe as the retreat
of the pharmaceutical industry from Alzheimer's both at the
venture level and at the large pharmaceutical level, and this
is at least a way to begin to do that, but I share your concern
about the expense, and it is difficult to know exactly which
business model to use to get started. But think of the
financial savings from the polio vaccine, think of having
people who would be on iron lungs for their entire lives. There
clearly needs to be some balance between the exclusivity and
the cost savings.
Mr. Pallone. Well, let me ask Dr. Miller. Would you comment
on it? Would you care to comment?
Dr. Miller. Yes. I am very familiar with Alzheimer's. I am
on the board of an Alzheimer's cure at the University of
California San Francisco and so have studied this quite a bit.
It turns out these models of savings often are never seen in
reality so it doesn't matter if you are looking at drugs,
devices, imaging or even robotic surgery, they often have these
models when they try to get to the marketplace but their
savings are rarely appreciated when they get to the market,
therefore, the health crisis we have today.
If you look at this drug, though, and you were to take your
scenario, you just make it the price of a traditional oral
solid branded product, you would quickly actually mitigate if
not swamp any potential savings that are there, especially when
you consider drug price inflation. That model that you are
speaking to prices the new therapy at zero. It is free. And so
the savings of a half trillion dollars or when the drug is
free. If you have to truly treat the tens of millions that you
are talking about, you would never have any savings.
Mr. Pallone. And the problem I have is if we grant
exclusivity, we are essentially giving the pharmaceutical free
rein to charge whatever it wants during that time period, and
we are removing the effect of market competition forces, and I
don't think we have any guarantees that a company developing a
new groundbreaking drug treatment would do the same thing and
obviously that is my concern.
Dr. Miller. Well, it has been our experience that they
don't because they do have the ability to freely price in the
United States, and if you are going to treat Alzheimer's, there
is a lot of reasons to treat Alzheimer's. This is not about an
economic argument. This is because it is the right thing to do
for patients, but the likelihood of us seeing savings
downstream are much less likely, especially if you extend
exclusivity.
Mr. Pallone. Thank you very much. Thank you, Mr. Chairman.
Mr. Pitts. The chair thanks the gentleman and now recognize
the chairman of the full committee, Mr. Upton, 5 minutes for
questions.
Mr. Upton. Well, again, we appreciate all your testimony
this morning.
Mr. Carusi, the fact that the number of venture capital
firms investing in medical technology has dropped from 39 in
2007 to just about 11 or 12 today is certainly concerning to a
lot of folks. Who is going to provide the necessary startup
capital for innovative new medical technology companies? How
can we grow that number back to where it was before?
Mr. Carusi. Well, I think that is exactly the challenge
right now. I think at its core, venture capitalists raise money
from institutional investors, so we raise capital from
universities, endowments, pension funds. As a part of that
process, we also have a fiduciary duty to generate returns.
That is the agreement that we are entering into. We can get
that number back to 20, 25, 30, 35 if we can fix the math
problem that we have, which is that it is very difficult right
now to generate the kind of returns that our investors need to
see when you look at the delays of FDA, you look at the delays
of reimbursement. So I think this Congress and we as a device
community, if we can find ways to get back to streamlining that
innovation process, the math starts to work better and that
starts to bring these investors back into the fold. Until then,
we have been forced to go elsewhere, and as we like to say, we
have been looking for a new set of best friends. That is in
part why I am spending a lot of time my time overseas, and so
we have seen other countries that are very interested in
building their own life sciences ecosystem invest in venture
capital funds directly in return for us locating our companies
in those local geographies. So there are ways to access capital
but it does come with strings and some of those strings are
that we need to start to conduct business outside of the United
States, and we are doing that right now to fill the gap.
Mr. Upton. So are those venture capital companies that are
helping companies overseas, are they located overseas
themselves or are they U.S. firms that are investing and then
encouraging those companies to in fact develop those products
overseas?
Mr. Carusi. So will speak for my own firm. Our new fund,
Lightstone Ventures, it is a U.S.-based fund but we are--in
fact, we just announced that we are opening an office in
Dublin. We are moving one of our partners to Dublin, and a part
of what we will do, not all, but a part of what we will do will
be to look for innovative ideas and innovative technologies but
to reside those companies overseas and to build those companies
overseas. And so they are U.S. funds that are locating
elsewhere.
Mr. Upton. Is any part of that equation that decision
making part of the tax code consequences? I know we lost a
company in my district to Ireland--Perrigo--in terms of their
headquarters, in large part because of the tax rate of 35
versus 10 \1/2\.
Mr. Carusi. So that has certainly been in the press and
certainly tax rates and lower tax rates and more attractive tax
rates play a role but recognize the fact that our companies are
very far from revenues and very far from profits and so the
bigger driver for our companies is really around, A, the access
to capital, and B, the regulatory environment in those markets,
and it comes back to the fact that we can get a device product
approved in Europe 3 to 4 to 5 years ahead of what we can get
that product approved in the United States. The fact that
product is approved 3 to 4 to 5 years ahead of time then allows
us to start to do the studies that the payers want to see to
start to try to generate some of the cost data. In the United
States, we are behind in that cadence and so consequently given
the fact that we are now running these trials in Europe and
seeking European approval, we like to be close to our
companies. We don't just invest and so we are naturally moving
overseas to be closer.
Mr. Upton. Mr. Borisy, you referenced the expected patent
life and market exclusivity of a drug in development does
impact the investment decisions, and you also indicated earlier
that the size and cost of clinical trials is an impediment to
investment and innovation. What are other thoughts that you
might have in advancements and technology that can help make up
the difference for those?
Mr. Borisy. So for any drug that is being brought forward,
as a society we are putting a level to say what is the
information that we need to have that drug will be useful in
the real world population and make a difference for patients
and have the requisite safety information associated with it.
We have in areas as has been discussed here in the committee in
cancer and rare genetic diseases been willing to adopt the use
of biomarkers, surrogate endpoints, and a recognition that the
full understanding of the use of that drug will come post
approval with experience in the real world.
For some of these areas that are outside of cancer and rare
genetic disease, there are likewise opportunities to take some
of those modern approaches, and we can be doing that both pre
approval as well as post approval. I think an important point
to recognize is to the comment of we are in the 21st century
now and not the 20th century with electronic medical records,
with information technology, we are able to know an enormous
amount about what is actually happening with a drug in the real
world. So when we are dealing with the question of how do we
develop drugs for some of these chronic diseases, some of these
things affecting such large swaths of our population and we are
dealing with the question of how do we make sure that
innovation invests in those areas. We should ask, can we use
some of these modern technologies to make that process more
doable, more stable, more predictable.
Mr. Pitts. The chair thanks the gentleman and now recognize
the ranking member of the full committee, Mr. Waxman, 5 minutes
for questions.
Mr. Waxman. Thank you very much, Mr. Chairman. I appreciate
all the testimony. I am sorry, I had to go to another
subcommittee and didn't hear all of your oral presentations.
The chairman has often said to me, I ought to clone myself, but
we don't know how to do that, and it probably wouldn't be
allowed anyway, and nobody would want it.
Mr. Hemphill, I want to ask you some questions about this
MODDERN Cures Act, because that is a legislative proposal that
has been put forward. In your testimony, you said it is likely
that some drugs are not developed because the exclusivity
rewards are not large enough, but it is unclear how large a
problem this is, and I would like to explore that with you.
Certainly we ought to be willing to use patent term extensions
and exclusivities as an incentive to spur the research and
development of new drugs. That was the basis of some of the
laws that we are all praising like the Orphan Drug Act. In that
law, we gave 7 years of market exclusivity for drugs to treat
rare disease. That meant that these were rare and didn't offer
a huge profit potential because they weren't a lot of people
that were likely to buy the drug but this MODDERN Cures Act
gives not 7 but 15 years of exclusivity and post-approval
patent protection to so-called dormant therapies. Do you see a
reason why we would need an even longer period for these drugs
than we gave for orphan drugs? The Orphan Drug Act has been
very successful. We have a lot of new drugs for people with
these rare diseases.
Mr. Hemphill. So I would say no, not necessary under the
MODDERN Cures Act as it is currently conceived, given the
breadth of applications of unmet medical need and its
applicability to essentially any new drug. I leave open the
possibility that in principle, there could be therapies for
which the lead time is so long that some kind of targeted
additional protection would be worthwhile. I just think the
MODDERN Cures Act goes way beyond that in its current breadth
of application as well as its duration.
Mr. Waxman. In a biosimilars provision in the Affordable
Care Act, we gave 12 years of exclusivity to biologics. That is
7 years longer than we gave in Hatch-Waxman for small-molecule
drugs. I have always believed that the 7 years was too long.
However, the argument was made that a lengthier time was needed
because biologics were harder to develop and their patents were
weaker. Do you see any reason why dormant therapies would need
3 years longer exclusivity than biologics?
Mr. Hemphill. Well, I think in principle, it is always
possible that longer protection would elicit additional
innovation, and then the question is, at what cost to the
therapies that we would get either way, which is why I think it
is so important for us to do careful study to figure out where
those gaps are, if anywhere.
Mr. Waxman. Well, you mentioned the evergreening provision
in your testimony. Now, that is not just a one-time event, that
could go on forever wherever a small change can produce another
15 years of exclusivity. There was an interesting statement.
Mr. Boutin in his testimony claims that MODDERN Cures has the
strongest anti-evergreening language ever included in
legislation. Do you agree with that? Do you think that that law
prevents evergreening or could companies get multiple 15 years
exclusivity?
Mr. Hemphill. I don't agree. I am very concerned about
evergreening in this bill. There may be a difference in what we
mean by ``evergreening. '' One particular issue that I am very
concerned about is product hopping where you get close to the
end of the exclusivity and then the drug maker switches the
patients over to a new version of the same drug. We have been
talking about Alzheimer's, and Namenda is a nice example. The
existing Namenda treatment is going away this summer and all
the customers are being--all the patients are being shifted to
a once-a-day version, and this extends the exclusivity, and I
don't see how the MODDERN Cures Act is going to get around
that.
Mr. Waxman. This MODDERN Cures proposal, the sponsors point
out it is only for therapies that address an unmet medical need
for serious or life-threatening diseases. On the surface, that
sounds reasonable. Do you think it is appropriately targeted to
only those drugs whose development would warrant and be
appropriately stimulated by such extraordinarily long periods
of exclusivity and patent protection?
Mr. Hemphill. It looks like it would apply to roughly any
drug that currently gets new chemical entity protection. Maybe
there are small exceptions to that but I think it extends quite
a bit further than what would you normally think of by unmet
medical needs.
Mr. Waxman. And that could be a huge windfall?
Mr. Hemphill. Correct.
Mr. Waxman. Mr. Boutin, I know you met with our staff on
several occasions, and I understand you are trying to get them
data and information to show whether there are significant
numbers of dormant therapies out there waiting to be developed.
Have you had any success in collecting this data? And I would
also appreciate data justifying why 15 years of exclusivity and
patent protection are necessary for these therapies.
Mr. Boutin. So with respect to the data question, there is
data that is available but it is very limited. It is very
challenging to collect that information because the incentives
are not there to exist, and when we speak with companies, they
routinely tell us that when they had a good product that they
shelve because it has gone dormant because there is not enough
time to develop it, they routinely shred the data. What we have
seen with the filing of MODDERN Cures is, companies now are
starting to keep that data in-house. So they are starting to
look at how they might potentially recapture these lost
opportunities.
Mr. Waxman. Well, it is important that we insist on
receiving more information as we look at this law because this
is a huge windfall in some cases, and we want to know if it is
necessary. If it is necessary, we certainly want to do what
will help spur innovation.
Mr. Boutin. Well, in----
Mr. Waxman. But we know, Mr. Chairman, in conclusion, that
there have been many laws where we have just overpaid. We have
overpaid the drug companies to do research on dosages for kids
and we look at how much money that costs them to do it and that
exclusivity was so much more valuable. We have overpaid for
even some of the orphan drug laws, and we are overpaying at the
expense of patients going without drugs or the payers for drugs
not being able to afford it or the Medicare system and the
Affordable Care Act not being able to sustain these kinds of
costs. So we have got to get the balance right and we need the
data to make sure that we are doing that. Thank you.
Mr. Pitts. The gentleman's time is expired. The chair now
recognizes the vice chair of the committee, Ms. Blackburn, 5
minutes for questions.
Mrs. Blackburn. Thank you, Mr. Chairman, and I want to
thank everybody for being here and we have a hearing downstairs
as well as here so we are kind of back and forth.
Mr. Carusi, I want to come to you. I would like to talk
with you a little bit about your due diligence process as you
look at funding a startup with a concept, and being from the
Nashville area where a lot of health IT is taking place and
Health Box is active there, the Entrepreneur Center, when I go
over there and I talk to some of these innovators and you look
at what is taking place from concept to commercialization to
distribution, it is a pretty long timeline. In preparing for
the hearing and reading through your testimony, I want you to
just talk to me about that due diligence process, what you are
looking at, how the FDA approval process affects that, how that
window has changed in the past 10 to 15 years.
Mr. Carusi. I would be happy to. I think it is important to
note that at my firm, so at Lightstone, we are involved from
the very early stages. In fact, about a third of our companies
have been created either in-house or in coordination with
incubators that we work with. So this means that we are
literally sitting down with an entrepreneur, a physician, an
inventor looking at a market and inventing. So we are involved
at that early stage. We then have to take a look at that
starting process. We have to look at the technical risks, the
development risks, the risks in the clinical trials, what kind
of a study can we run. If we run that study, will we get FDA
approval. How long will that take. We then have to make a
determination as to whether or not we will have created enough
value that we can then find another player, be it at the public
market or one of the major players take on that project or if
we have to keep going. If we have to keep going, then we have
to look at the whole reimbursement process, what is involved in
getting coding, coverage, payment. At the end of the day, we
have to get the product from the ideation phase all the way
through to the point where we are generating revenues and we
are generating profits. That is what we do. If you look at that
timeline, and Mr. Borisy has already mentioned this, that
timeline is now pushing anywhere in devices up to 8 to 10 to 12
years with a great deal of uncertainty along the way, and one
of the things that we as venture investors hate the absolute
most is seeing our companies fail late. We would rather
introduce experiments where we can have these companies fail
early and move on. But what is happening is, these companies
are either failing at the point where they get in front of
panel for FDA approval, even if we have met the appropriate
endpoint, or they are failing when they get into the morass of
reimbursement, and then they become restarts. Nobody wants to
fund a restart. It is easier to give birth than resurrect, and
the reality is, if these companies then die and we have to move
on and it is dragging won the returns of our industry and it is
dragging down innovation, and that is the process that we are
facing right now.
Mrs. Blackburn. You mentioned the challenges with the IDE
process. Do you want to add anything more to that?
Mr. Carusi. Yes. So I mean, again, on the IDE process, that
is the process to actually initiate our clinical studies to
then demonstrate the safety and the efficacy of the device.
What happened over the years is the data requirements to start
those studies, it was as if we were actually going for
approval. We are not going for approval; we are going for the
approval to start the trial. And again, some of these are going
to fail. They are not going to work. If you start to layer on
additional preclinical requirements, additional bench
requirements that aren't necessarily adding to the safety of
these products, then again you are adding to the cost of time
before we actually get to the experiment where we can run the
clinical trial and see if the product is safe, more effective
and good for patients, and if it costs too much, capital is
fungible. We will go somewhere else.
There was just a discussion around Alzheimer's. We are not
funding Alzheimer's drugs. We can't. We can't bring them to
market. And so the math won't work, and so it is simply a
matter of making sure that the right incentives are in place so
that we don't kill innovation. At the same time, we are in the
game of disrupting things. That is what we do for a living. So
we don't want to see incumbents sitting on drugs and new
devices down the road but we need enough incentive to make sure
that the math works so that we can fund them to begin with, and
right now in a lot of spaces, we are not able to do that.
Mrs. Blackburn. Thank you, and I will yield back my time,
Mr. Chairman.
Mr. Pitts. The chair thanks the gentlelady and now
recognizes the gentleman, Mr. Matheson, 5 minutes for
questions.
Mr. Matheson. Thank you, Mr. Chairman.
I want to talk a little bit about the issue with medical
devices, small manufacturers in particular. They are the ones
in the marketplace who are really creating some of the
groundbreaking technologies. They rely heavily on venture
capital, as we just heard in the last answer. And I think that
as should be expected, venture capitalists are going to only
take on a certain amount of risk both in terms of product
performance and uncertainty and regulatory uncertainty as well
because uncertainty in business is a cost. I think that sounds
pretty basic but I think that is something Members of Congress
need to be reminded of.
One area in which I believe venture capital firms consider
when deciding whether to make an investment in medical device
is the likelihood of adequate and predictable reimbursement
from Medicare because once you get FDA approval, that doesn't
mean Medicare is going to give you reimbursement.
Over the past several years, I have heard from device
manufacturers and venture capital firms that Medicare is
requiring more data to obtain appropriate coverage of payment,
and I appreciate that CMS wants to put forth an effort to spend
taxpayers' dollars in an efficient and responsible manner, but
this change in standards, if you will, and the lack of clarity
surrounding what the standards are from what I understand has
made it increasingly difficult for VC firms to make an educated
and informed decision about the viability of a device once it
gets through the FDA approval process. So if an FDA-approved
device is not approved by Medicare, its viability in the
marketplace and the ability for patients to access the
technology obviously is greatly reduced.
In order to help alleviate some of this uncertainty, I have
cosponsored legislation authored by my friend and colleague,
Congressman Paulson, the Accelerating Innovation in Medicine,
or AIM Act, which would give device manufacturers the
opportunity to make an FDA-approved product available on a
self-pay basis for an initial 3-year period before approaching
CMS about Medicare coverage on reimbursement. This program
would be entirely voluntary. It would allow manufacturers the
time to collect needed data to justify reasonable and adequate
coverage and payment for Medicare down the road, reducing some
of the uncertainty associated with the Medicare coverage
process and hopefully providing the venture capital community
with a measure of certainty in the device and more broadly in
the market in general.
So Mr. Carusi, I wanted to ask you if you had heard of this
or were aware of this proposal and do you feel it would assist
both the venture capital community and the small device
manufacturers in reducing some of the uncertainty in the
process and bringing products to the market on a more expedited
basis?
Mr. Carusi. Yes, I am familiar with the AIM Act, and I
think it very much goes to the heart of one of the challenges
that we are facing, which is to your point. We now have FDA
approval but we are now in a process where we have to generate
more data. As we are generating that data, we are not
profitable entities. We are burning $500,000 to $2 million a
month, and in fact, that number tends to go up because we now
have to start marketing these products. So the question comes
down to, we can't as small companies continue to fund these
products through that next phase of development. So I think
what the AIM Act does or could potentially do is help to
provide a source of funding during this period of time so that
we can continue to generate the data that payers, that Medicare
would want to see.
Look, the world has changed. We recognize that data is
everything. Clinical data is our sole focus, so generating that
data is necessary, it is important, but if we are going to have
to add more years, more uncertainty and more disruption, then
we need policies like the AIM Act, and I would say that is one
of several potential approaches. That is not going to do it. We
need more things and more creative ways to try and think about
how we can as an ecosystem help the ecosystem generate this
data. It is not simply about device companies or biotech
companies. It benefits hospitals, payers, patients. So what is
the right mechanism to fund this additional data-gathering
exercise?
And then the other thing I would add is, and then what is
the data that is required. Don't move the bar. Tell us--and we
have had this conversation with FDA. If it is X, we hit X, then
you are going to get paid, and right now that bar is constantly
moving so we don't even know if we generate that data if we are
going to get payment and coverage.
Mr. Matheson. I appreciate that.
Mr. Chairman, I will yield back.
Mr. Pitts. The chair thanks the gentleman and now
recognizes the vice chair of the subcommittee, Dr. Burgess, 5
minutes for questions.
Mr. Burgess. Thank you, Mr. Chairman, and Mr. Carusi, just
briefly before we leave that point, it was the intention or the
desire of this committee 2 years ago when the reauthorization
of the Food and Drug Administration came to our committee that
many of these problems would be, if not solved, at least
managed or mitigated, and that has not been the case?
Mr. Carusi. No. On FDA, that is having an impact, and so I
think we are starting to see benefits from FDASIA, and
certainly with FDA and improved dialog with Commissioner Shuren
and his leadership, we are seeing improvements. So that is why
in my testimony I moved from FDA, we still want to continue to
improve it, but to the reimbursement side of the equation
because parallel to the discussions we had several years ago
around FDA and a lack of transparency and predictability and
consistency, that is what we are now facing in reimbursement.
Mr. Burgess. Let me ask you a question because it came up
yesterday in a Rules Committee hearing over the appropriation
for the United States Department of Agriculture, which for
reasons that escape most of us includes the FDA. But the whole
issue of special protocol assessments came up and the fact that
the rules might be changed late in the game in that
environment. Can you speak to that just briefly?
Mr. Carusi. Yes, I can. Again, I think that has been
utilized more on the drug side, which is frankly less where I
play. It is probably more where you play. Again, I think the
intention of SPAs is terrific. I think the intention is to
provide again a bar where if you hit a certain data
requirement, you have certainty that you will get approval.
That is the right intent. Where it runs into problems if that
doesn't prove to be the case. So in other words, if you are now
three-fourths down the process, you are in the middle of your
clinical trial and the bar has changed, the bar has moved, you
have to start that clinical trial all over. You have just taken
a step of 3 to 4 years back. In many ways you may have flushed
$50 to $100 million down the drain. So I think the intent is
right but we can't monkey with the SPA, unless there is some
meaningful new clinical piece of data that has emerged one that
has been established.
Mr. Burgess. I thought it was telling, your comment, fail
early, avoid the rush, you certainly get why that concept is
there.
Dr. Gandy, I really appreciate you being here and
appreciate the work you are doing in Alzheimer's. It must have
been as startling for you to hear as it was for me that Mr.
Carusi is no longer funding Alzheimer's research. But let us
talk about that for a minute because one of the first things
after I was elected to Congress in 2003, I asked for a meeting
with Dr. Zarounian out at the NIH and we talked about things on
the horizon, things in the future, and he related that
statistic that you gave us, that 5 years delay in the onset of
symptoms, big savings on the other side. So if I have done the
math calculation correctly where I am now into my third of
those 5-year intervals but as you relate, it hasn't really
happened, has it?
Dr. Gandy. No, that is right. We currently don't have
anything on the horizon that will make an impact on the course
of Alzheimer's, on the progress of Alzheimer's disease.
Mr. Burgess. Well, what about actions like establishing
clinical trial networks in the study of Alzheimer's?
Dr. Gandy. The NIA has established a nationwide network of
Alzheimer's centers, and that is the mechanism by which it uses
to recruit and test new drugs--recruit patients and test new
drugs, and that system, that network often partners with
industry to test new industry drugs as well.
Mr. Burgess. And that in turn then spur new investment,
perhaps get Mr. Carusi again involved and invested in our
research?
Dr. Gandy. I think what we need is a success, and I think
that would attract more investors. I mean, we have
relationships and actually a number of public-private fora for
discussion but I think the thing that would really build the
enthusiasm is some success.
Mr. Burgess. And would things like standardizing
biomarkers, would that help?
Dr. Gandy. That certainly is the--the NIH has established
what is called the Alzheimer's disease Neuroimaging Initiative,
which has been really a landmark study, ongoing study, in
defining a number of biomarkers of the natural aging process,
of the conversion from aging to mild cognitive impairment and
then conversion from mild cognitive impairment to Alzheimer's
disease.
Mr. Burgess. Thank you.
Dr. Ledley, you brought up a gene therapy, and I can
remember reading in the newspapers in the mid-1990s, late 1990s
about some promising gene therapies and then unfortunately
there were a series of unsuccessful problems, and then it kind
of went away. Can you kind of give us an idea of what is on the
horizon with gene therapies?
Dr. Ledley. So the short answer, gene therapy works. The
last couple of years have been incredibly exciting. It has seen
some very high-profile IPOs in the past couple years. So people
are happy about it again. I think it is a classic story where a
lot of--there is a real disconnect between the good support for
therapy for NIH, venture capitalists who made a lot of profit
early in the field and found a lack of sustained support for
the innovations required to take immature technologies and make
them mature, and we believe the field has slowed by that. It
was a difficult process. There are very important pricing
issues for that field to work out in the next couple of years
but it is a great example of where the basic science is now
ready for investments that can take advantage of discovery and
the type of review process which is put in place at the FDA.
Mr. Burgess. All right. I have more questions, Mr.
Chairman, if we have time for a second round, but I will yield
back.
Mr. Pitts. The chair thanks the gentleman and now
recognizes the gentleman from Texas, Mr. Green, 5 minutes for
questions.
Mr. Green. Thank you, Chairman, and both you and the
ranking member for asking our witnesses to testify.
First of all, it is frustrating what my mother-in-law went
through with Alzheimer's in the 1990s. There is no drug today
different from that than Aricept. It wasn't really useful then,
slow delay of the illness but we are just not there. And Dr.
Gandy, I appreciate all your efforts, and I even appreciate
your purple tie, Mr. Carusi, from working with our local
Alzheimer's group in Houston.
But let me get to my other issue. The need for greater
antibiotic drug development is something I, along with
Congressmen Gingrey, Shimkus, DeGette and others, have long
championed. We have successfully started getting the ball
rolling with GAIN Act last Congress and we are already seeing
positive signs. However, as much as it pains me to say, it has
not done enough to fully set our country back on a path of
investment and development in new antibiotics. We need to
combat ever-emerging and deadly diseases. The health of our
soldiers and veterans is particularly at risk. An article that
ran in The Hill yesterday titled Fighting Superbugs by
Developing Targeted Weapons in which the author was Rear
Admiral James Kerry stating that many soldiers and civilians
have lost their lives because we do not have the drugs we need.
It is time to mount an urgent defense against superbugs and use
all the tools at our disposal to put new weapons on the field.
Mr. Borisy, I know that knowing that you know about the
antibiotic space today, the risk-reward profile, would you
advise your clients or colleagues to invest in antibiotic
development today, and why or why not?
Mr. Borisy. Investment from a venture perspective in new
antibiotic development is very challenging. As an optimist from
the science and the medicine perspective, I actually believe we
have the tools and the technologies today that if we applied it
and focused the capital around it, we could come up with the
tremendous innovations that we need against some of these
superbugs and areas of very important need to our society in
infectious disease.
Mr. Green. OK. I only have 5 minutes. But if Congress were
to create additional incentives on antibiotic development, do
you believe that it might help move the needle with investors
such as yourself?
Mr. Borisy. Yes.
Mr. Green. If so, what types of reforms or incentives would
be needed to improve your outlook on investment in this area?
Mr. Borisy. So one of the most important would be again
drawing the analogy from cancer and from rare genetic diseases,
which is if we accept it for these antibiotic infections,
allowing to develop for those specific populations to show that
if we could show that a drug works in those specific
populations, that would have a tremendous impact.
Mr. Green. I, along with my colleague, Congressman Gingrey,
have introduced the ADAPT Act, which is a follow-up on the GAIN
law from last Congress. It would create a special designation
for critically important antibiotics with a goal of improving
FDA process around them. If we could demonstrate to industry
leaders such a process would shorten approval times for safe
and effective products, would that help increase the worth of
antibiotic products on the market?
Mr. Borisy. Yes, it would. It would have a direct impact.
Mr. Green. Thank you. Without new antibiotics, medical
advances and new cures to treat other diseases will largely be
moot since treatments like chemotherapy, even a miracle future
therapy could be too dangerous to patients because of the risk
of infection and no antibiotics to protect them, and I urge my
colleagues to take swift action and aggressive action because
we do not have a moment to waste, and again, hopefully our
subcommittee will look at the ADAPT Act as a follow-up to the
success we are seeing with GAIN. I know just recently there was
one of the pharmaceuticals approved.
Mr. Chairman, I will yield back my time.
Mr. Pitts. The chair thanks the gentleman and now
recognizes the gentleman from Illinois, Mr. Shimkus, 5 minutes
for questions.
Mr. Shimkus. Thank you, Mr. Chairman. It is great to be
here. I am way down on this side. And it is great--I too am in
the other subcommittee so I am bouncing back and forth, but it
is really important to hear the plethora of the panel because
it really just gets your mind going. It drives staff crazy
because they want us to direct our questions, but you start
thinking. So I am going off script for a second.
Mr. Hemphill, Alzheimer's, everyone has been touched by it.
So you hear the testimony. Obviously the capital community is
not here. There is no return on investment, can't make the
case. It is an epidemic. It is going to--so this whole brand
exclusivity stuff, I mean, doesn't that not make a case for
creating a market condition where capital will flow so they can
get a return so we can solve this disease?;
Mr. Hemphill. So----
Mr. Shimkus. I have got to be quick so----
Mr. Hemphill. I am off script.
Mr. Shimkus. I am off script too. That is right.
Mr. Hemphill. I completely agree that in principle if you
have a situation where you otherwise would not have a drug----
Mr. Shimkus. Like this, I mean right now, we got it.
Mr. Hemphill. Well, I am not sure the case is proved from
the fact of long development.
Mr. Shimkus. But I will just say, there is no money going
right now so the market is making the case now.
Mr. Hemphill. The absence of investment doesn't necessarily
tell us that a different legal regime would yield a different
result.
Mr. Shimkus. OK. Let me move forward. That is part of the
challenge, this debate that we have to get to.
I also want to just highlight--Mr. Matheson did a great
job. I am a cosponsor of the AIM Act for all the reasons that--
I am not going to go into it in detail, but I would encourage
my colleagues to look at that and get on it.
Mr. Chairman, I would encourage you to--I don't know if we
want to wait on this 21st century cures thing or you may want
to consider trying to at least get it through the process so we
can see where we are because I don't see a downside to it. I
just don't. It helps bring capital in the early formation. It
is outside the Medicare morass, coding issue. It brings more
certainty than less at a time when you are looking for capital
flow.
So now I will get on script, Chris. But we are trying to
focus in--and a lot of this debate has been on obviously the
lifesaving drug that will emerge and the cost, but I think as
important in this debate is the diagnostic portion because the
way the world is changing and the science behind this, you can
target specific drugs to specific conditions based upon markers
and the like.
So Mr. Borisy, starting with the premarket approval
process, what types of incentives do you believe might spur
development in this space? Were you thinking it might be
constructed similar to a drug-like postmarket incentive
structure or something different?
Mr. Borisy. So for diagnostics, a clear and predictable
understanding of reimbursement, which does not exist today,
would have a direct connection to capital formation for
innovative new diagnostics that we mean and that clear and
predictable reimbursement in diagnostics, whether that was in
some form of postmarket exclusivity, whether that was just in
clear Medicare rules and understanding that clarity and
transparency would make a tremendous difference.
Mr. Shimkus. In your testimony, you recommend the committee
consider a process whereby CMS create a program for diseases
important for public health with high unmet diagnostic needs.
Can you tell us more about how such a program might work and
for instance, could it help cut down the time between FDA
approval and the CMS coverage?
Mr. Borisy. So if we take an example that we have been
talking about at the hearing today such as Alzheimer's and if
we said from the work that Dr. Gandy and others are doing that
we had a diagnostic imaging biomarker that we felt was
meaningful and predictive, understanding how that would be paid
for, just simply having that clarity and stability would allow
then the development and proof of that diagnostic. That
diagnostic would then enable the development of therapeutics to
Alzheimer's that we have been bemoaning here today as lacking.
Mr. Shimkus. Yes, and I just want to throw--Mr. Miller is
here and in part of his testimony he said on Alzheimer's, it is
just the right thing to do. So we have got to change our
programs and processes to address this, and hopefully we can
get there working together. This is a very exciting time but
there are unmet needs that we should be about meeting, and with
that, Mr. Chairman, thank you and I yield back my time.
Mr. Pitts. The chair thanks the gentleman and now
recognizes the gentlelady from Florida, Ms. Castor, 5 minutes
for questions.
Ms. Castor. Thank you, Mr. Chairman. I want to thank the
panel for your expert advice today and also commend my
colleagues for focusing on this important issue for American
families.
We have today about the MODDERN Cures Act, which would
extend the period of exclusivity for essentially any new drug
to 15 years. That is 3 years longer than any other term of
exclusivity currently in the law, and the intent of the bill is
very good, but I have been listening closely and I haven't
heard today that a case has been made for why there would be a
need to extend exclusivity for such a lengthy term, and a
number of you have testified to that today and to some of the
negative effects of lengthy periods of exclusivity.
Dr. Ledley, could you explain in greater detail how in your
view greater exclusivities would discourage uptake by hands of
smaller biotech companies?
Dr. Ledley. Sure. Fifteen years is a very long time in the
progress of science. We don't use 15-year-old computers
anymore, and by the time a drug has been on the market for a
certain length of time, science is able to come up with
something better and should, and the public needs it. So there
needs to be a return on the investment in the original drug and
there needs to be an immediate turnaround to invest in the next
drug that is that much better, and 15 years is just out of
proportion to the space of scientific progress.
Ms. Castor. And I am also extremely concerned about the
price tag for providing extended exclusivities. Dr. Miller,
your testimony mentions the Solvadi situation, the hepatitis C
drug that is now about $1,000 per pill. It is an extraordinary
price but coupled with the fact that we have over 3 million
Americans that could have their hepatitis C cured, they would
benefit greatly. So that has raised these difficult questions
for public and private payers especially. Could you describe
for us the tradeoffs and compromises that payers are having to
make as a result, and could you tell us why Solvadi is unique
or could it be part of a trend or are there other similarly
priced drugs on the market?
Dr. Ledley. That is a great point. So what you see is that
for manufacturers, they don't have just exclusivity as a lever
to pull, they have pricing. So in this country we allow them to
freely price, and that is what has happened with Solvadi. If
you treat all 3 million patients in the United States, you will
spend over $300 billion, which is equal to the entire drug
spend for the United States, and when you look at the pipeline,
of that 5,400 drugs that are in human testing, there are many
that are going to be breakthrough products that also will be at
prices that we can't afford. And so it is no good having drugs
that people can't afford and so access has to be considered in
your policies when you consider extending exclusivity because
you are guaranteeing higher prices for longer periods of time.
Ms. Castor. And one of the issues that confronts us as the
population ages and the call on Medicare will be greater is the
fact that we don't allow negotiation of drug prices in America.
It is kind of un-American that we don't negotiate by law. This
means that drug companies can charge almost any price that they
would like, particularly for lifesaving drugs that are the only
treatments or cures for a particular disease. In such cases, it
is hard to imagine the need for extending the length of time
for which they are shielded from price competition by generics.
Professor Hemphill, is America, in having that policy
against negotiating drug prices, do we subsidize drug use in
other countries?
Ms. Castor. Well, certainly, U.S. payers and patients pay a
disproportionate part of the research and development that
ultimately has a global benefit.
Ms. Castor. Well, I thank you for your testimony, and I
want to end on the note of even though we might have
differences of opinion on the panel on the Cures Act, I think
everyone that I heard today was united in the fact that we need
to make sure we are committed to basic research, and the fact
that the budget battles, sequester, government shutdowns of the
past few years has taken a bite out of NIH and sent scientists
possibly looking at careers in other countries, is really
something that this committee has got to focus on. Dr. Collins
said NIH has lost 25 percent of its purchasing power. We are
throwing away half of the innovated, talented research
proposals. This really should be the committee's primary point,
and maybe moving medical research from a discretionary category
to something we have a long, sustained commitment.
Thank you, and I will yield back.
Mr. Pitts. The gentlelady's time is expired. The chair
recognizes the gentleman from Georgia, Dr. Gingrey, 5 minutes
for questions.
Mr. Gingrey. Thank you, Mr. Chairman, Ranking Member
Pallone, and to the witnesses for testifying today.
You know, the GAIN Act of course was an important first
step in addressing a lack of new antibiotic drug development
and we have already seen the first successes of the GAIN Act. I
am real happy to have worked with Mr. Green, Ms. DeGette, MR.
Shimkus and others on the committee in a bipartisan way to
develop the GAIN Act. Obviously--and Mr. Green talked about
this a little bit earlier about the ADAPT Act, which of course
is follow-on to GAIN and the work that we need to do in regard
to that.
I wanted to direct my questions mainly to Mr. Borisy. When
making investment recommendations, Mr. Borisy, can you explain
how not just potential economic returns but clinical trials and
the approval process impact the likelihood that you would
recommend to your team investing in a particular drug?
Mr. Borisy. So me and my partners at Third Rock focus
fundamentally on early-stage investments in areas of science
and medicine where we can make a breakthrough, make a big
difference for patients. So if we talk about infectious
diseases as an example, coming up with therapies that would
work for something where, you know, it is a superbug and
nothing works and it is a critical need, that is the type of
thing that we would like to do.
When we are considering an area to invest, when we are in
the process of translating those out of the basic research that
has been done, a lot of work, multiple years before it can even
get to the clinic to refine it into being a drug has to be
done. This takes tens of millions of dollars. Then we go into
the clinical development period of time, and the questions
focusing us are two, which is how much money and how long is it
going to take until we can get that proof of concept that we
have created something that really makes a difference for
patients, not the final bar of approval perhaps but that smart
people looking at it say that is important, and the second is,
does other parts of the ecosystem that we have talked about
recognize that as important. That could be public investors so
we could take the company as an IPO. It could be a larger
pharmaceutical company that is going to take it across the
finish line. Things such as ADAPT where we know that the
clinical study can be faster, quicker in a specific targeted
population that we can really show it works and makes a
difference, if that is more doable, then that is what enables
our capital formation to invest in that.
Mr. Gingrey. Well, cutting right to the chase, let me ask
you this follow-on. And I think Mr. Green asked you this
question but maybe I would like for you to elaborate a little
bit more.
Knowing what you know about the antibiotic space today, the
risk-reward profile, would you advise your clients or
colleagues to invest in antibiotic development today, and why
or why not?
Mr. Borisy. And this is not an academic question to us.
Actually yesterday morning before flying down here to
Washington, D.C., I was looking at an innovative technology in
infectious diseases that could do exactly what we all here
talking about want it to do, and it is a very difficult
question for us right now because it is that question of
regulatory uncertainty in the area, and so it is something that
we want to be able to do but as we have talked about, the
question of if we can do what we have done in areas of cancer
and rare genetic diseases with breakthrough therapies,
accelerated approvals, it could make it very doable.
Mr. Gingrey. And the last question in my remaining minute,
again, Mr. Borisy, my colleague Gene Green and I introduced, as
you know, the ADAPT Act, which 23 other members of this
committee have cosponsored. The legislation allows the FDA to
approve antibiotics that treat serious and life-threatening
infections for specific patients based on smaller and then more
rapid clinical trials. Do you believe if Congress could
streamline the approval process for such products without
lowering the FDA's safety and effectiveness standards the
climate for investing in new antibiotics wou8ld improve?
Mr. Borisy. Yes, it would.
Mr. Gingrey. Well, I thank you very much, and I don't have
time to address the other members of the panel--it is a large
panel--but again, I am grateful that you all are here.
Without new antibiotics, advancements in new cures to treat
other diseases would largely be moot since treatments like
chemotherapy, even a miracle future treatment, would be too
dangerous to patients if you didn't have these antibiotics
because you wipe out the bone marrow, you lower their
resistance to infection, and as you well know, in many cases
the patient doesn't get the cure because they get wiped out and
get overwhelmed with an infection and die before the bone
marrow has a chance to recover. So all of this is interrelated
very closely.
Thank you very much, Mr. Chairman. I yield back.
Mr. Pitts. The chair thanks the gentleman and now
recognizes the gentlelady from Virgin Islands, Dr. Christensen,
5 minutes for questions.
Mrs. Christensen. Thank you, Mr. Chairman, and I thank the
panelists for being here this morning.
I am going to direct my questions to Mr. Hemphill. Your
testimony describes various types of market protections that
are granted to brand drugs in current law and you assert that
those protections are, for the most part, functioning quite
well. So I am correct in interpreting that in your testimony,
that they are functioning quite well?
Mr. Hemphill. So my testimony is that they have been
effective in providing strong incentive for drug makers to
innovate.
Mrs. Christensen. OK. Obviously there are many diseases for
which no effective treatments exist. You mentioned the
possibility that some drugs are not developed because
pharmaceutical companies do not view current protections are
providing an adequate reward but you state that the scope of
the problem is unclear, and I would assume it is also unclear
whether weak market protections, if they exist, are actually
the cause of failures by companies to develop new treatments.
Can you say more about the impact of so-called weak market
protections?
Mr. Hemphill. Sure. So two brief points on this. One, I
think we just don't know a lot about the innovation that
doesn't happen. We have anecdotes but we don't have hard data
so the data collection effort that was mentioned earlier seems
really important.
Second, even though limited protection, the limited non-
patent protection that is provided, for example, by the Hatch-
Waxman Act, has a big effect. We have therapies on the market
that have no patent protection. An Alzheimer's drug, if it a
great Alzheimer's drug, suppose they only get 5 years of new
chemical entity protection but 20 million people are taking it,
and each are a $1,000-a-year business for the brand, not an
unreasonable amount judged from what other chronic diseases
have as a pay. A thousand times 20 million people, 10 million
people times 5 years, and that is a $50 billion business which
I think would focus the mind if you have the kind of excellent
drug that we are talking about. Now, that is not going to
answer every question but I think for some drugs, a lot of
times the existing protections are going to be adequate.
Mrs. Christensen. Are there other factors that might be
causing delays in the emergence of new lifesaving treatments
that we haven't discussed?
Mr. Hemphill. Well, sure. I mean, we have talked a bit
about just the nature of scientific inquiry and the
uncertainties in solving really tough problems like Alzheimer's
and cancer.
Mrs. Christensen. It is clear we have a lot to learn about
how much a problem this even is but we are hearing a lot of
conclusions from some of our witnesses today about insufficient
patent protections being the cause of pharmaceutical
development failures. Mr. Hemphill, have you heard anything in
the other testimony today that convinces you that others on
this panel have new facts and new data to substantiate this
problem?
Mr. Hemphill. So I think we certainly have new anecdotes,
and it is quite possible that in principle that as we get
better at science, the remaining problems are harder and
therefore require new solutions. I think the question is
nailing down what that other world would look like were we to
engage in the kind of changes that are being proposed.
Mrs. Christensen. And finally, we have heard a lot today
about the need for new incentives. A major focus has been on
marketing protections like exclusivity and patent extensions.
Mr. Hemphill, your testimony briefly described some other
incentives that you indicate could be affected such as
providing government funding for certain research and
development itself. Can you maybe give us some more ideas about
what other incentives are out there and whether you think they
hold potential to spur innovation?
Mr. Hemphill. Sure. Just briefly, we hear about extremely
lengthy trials sometimes being a problem vis-a-vis patent
protection because if the patent runs out before you can get
your drug to market because of the long trial, the Hatch-Waxman
renewal or extension of patents might not be enough. But in
those situations where we feel some confidence that this is a
worthwhile project to pursue, you could readily imagine, it is
a subsidy, it is a government outlay to support those trials.
We see this sometimes in cancer, and I think that has been
effective, and that is the kind of targeted solution that I
think we should really be paying a lot of attention to.
Mrs. Christensen. Thank you. Thank you, Mr. Chairman. I
yield back.
Mr. Pitts. The chair thanks the gentlelady and now
recognizes the gentleman from New Jersey, Mr. Lance, 5 minutes
for questions.
Mr. Lance. Thank you very much, Mr. Chairman.
I am the Republican chair of the Rare Disease Caucus, and
in that capacity, I frequently meet with patients and families
where there are no medicines, and I am the sponsor of MODDERN
Cures. MODDERN Cures is completely bipartisan in its
sponsorship, and I want to thank all of my colleagues who have
become cosponsors including, for example, Mrs. Eshoo, Mr.
Butterfield, Mr. Tonko, distinguished members of this committee
on the Democratic side, as well as Republican cosponsors I see,
Mrs. Ellmers and Mr. Bilirakis right in front of me.
Mr. Boutin, can you give your perspective on the incentives
in the Orphan Drug Act, which is an improvement in orphan-drug
therapies from the original Hatch-Waxman Act, a monumental
piece of legislation, whether regarding the Orphan Drug Act and
whether you think it is sufficient to incentive rare-disease
research or should we be doing more?
Mr. Boutin. Thank you for the opportunity.
Mr. Lance. Certainly.
Mr. Boutin. Orphan Drug Act is a monumental piece of
legislation. I think everybody in the room recognizes that. But
at the same time, we have approximately 8,000 rare diseases.
Mr. Lance. Yes.
Mr. Boutin. We have 500 treatments.
Mr. Lance. Yes.
Mr. Boutin. Clearly, we need to do more.
Mr. Lance. Yes. And regarding Alzheimer's and the moving
questioning of my colleague, Congressman Green, would it be
fair and is this the consensus of the panel that we need to do
a much better job regarding Alzheimer's and somehow have to
reach a solution to bring that to a better situation for the
hundreds of thousands, indeed millions of patients who will
suffer from Alzheimer's? Is that the consensus of the panel?
Mr. Boutin. Without question.
Mr. Lance. Is there anyone who dissents from that? Thank
you.
Professor Hemphill, in responding to Congressman Shimkus's
questioning, I believe you said--and I am paraphrasing and I
certainly want to give you the opportunity to respond fully--I
believe you said that the absence of new drug therapy doesn't
necessarily mean that we need a new legal regime. Is that what
you said? And I certainly want to give you every opportunity to
express your point.
Mr. Hemphill. Yes.
Mr. Lance. You did say that?
Mr. Hemphill. Yes. Do you want me to explain?
Mr. Lance. Of course.
Mr. Hemphill. So the idea here is simply that we don't know
simply by the fact of increased legal protection that we will
thereby have new cures.
Mr. Lance. Yes, I am an attorney, and we do not know. It
seems to me we need some progress in these terrible rare
diseases and not so rare diseases like Alzheimer's, and of
course, we cannot be conclusive that a new legal regime would
bring that about. Is it possible that modification of the
current legal regime would bring that about?
Mr. Hemphill. As I said, in principle, it is possible. What
is tricky here is that we know a lot about the costs from
length and exclusivity vis-a-vis drugs that are going to be
elicited either way and we know almost nothing about the
theoretical improvement that we would get from a longer period
of----
Mr. Lance. That is why we need a healthy discussion to
reach a balance.
Mr. Hemphill. Agreed about a balance.
Mr. Lance. And at the moment, there is the balance in
Hatch-Waxman and then there is the balance in the Orphan Drug
Act and we are trying to move forward in rare diseases, I, as
the Republican chair of the Rare Disease Caucus. We need a
healthy balance, and that is what this committee in particular
is trying to strike, and I would encourage all on the panel to
determine what that healthy balance should be, and Mr. Boutin,
you believe we need to update or at least modify orphan drugs
regarding rare diseases?
Mr. Boutin. Without question, we need to update the
balance, strike it better, and two quick points. The anti-
evergreening issue that was raised applies to every
medication----
Mr. Lance. That is precisely accurate.
Mr. Boutin [continuing]. Not what would be on MODDERN
Cures. The issue around costing currently applies to every
medication, not what would come out of MODDERN, just to be very
clear.
Mr. Lance. Thank you.
And finally, Professor Hemphill, I don't think we have ever
met before. You are welcome to come into my office at any time
to discuss my legislation, MODDERN Cures. I understand you
teach in Upper Manhattan and live in Manhattan, and I assure
you, the Lincoln Tunnel, the Holland Tunnel and even the George
Washington Bridge are all open, and I welcome healthy
discussion on my completely bipartisan legislation, MODDERN
Cures Act.
Thank you, Mr. Chairman.
Mr. Pitts. The chair thanks the gentleman and now
recognizes the gentleman from New York, Mr. Engel, 5 minutes
for questions.
Mr. Engel. Well, thank you very much, Mr. Chairman. I live
on the other side of the George Washington Bridge, the side
that people couldn't get to when it was blocked, so I want to
thank all of you for your testimony and especially give a call
out to the New Yorkers, Dr. Gandy and Mr. Hemphill. Always good
to see New Yorkers down here in Washington.
The 21st Century Cures Initiative creates an important
bipartisan opportunity for us to consider creative new
approaches to incentivize getting new treatments into the hands
of patients as quickly and safely as possible. I am the
coauthor of the Paul Wellstone Muscular Dystrophy Community
Assistance Research and Education Amendments of 2008 and 2013
along with my colleague on this committee, Dr. Burgess. I have
seen how new research models have produced great advances in
our understanding of the various forms of muscular dystrophies.
So I raise this now because I think we can use the Wellstone
Muscular Dystrophy Research Centers' model to incentivize other
forms of research. Much like the National Pediatric Research
Network, the Wellstone Centers use a network approach that is
designed to ensure that research is not conducted in silos, and
I believe this network approach fosters collaboration and
allows government funding to be supplemented by nonprofits and
patient advocacy dollars and by private biotech and
pharmaceutical funding.
Let me ask you, Dr. Gandy, given your experience with
Alzheimer's research at Mount Sinai, could you comment on how a
network approach to research can serve as a force multiplier to
incentivize treatments and cures for patients?
Dr. Gandy. I think the network approach is essential. For
one thing, the network standardizes the approach to medication,
the approach to diagnosis across all centers, and by disbursing
the person power across the country enables the rapid
recruitment of new subjects for trials. I think in terms of
operations, there is really no other way to do it.
Mr. Engel. Are there any other models of public-private
partnerships that you think would be constructive to consider
in addition to the Wellstone Center approach?
Dr. Gandy. No, I think that is a reasonable place to start.
Mr. Engel. OK. Thank you.
I would also like to ask about the development of treatment
and cures for patients with rare diseases. Within our rare-
disease research communities, more and more personalized
approaches to therapeutic development are becoming possible but
these lifesaving personalized drug therapies have small
consumer markets and are among the most expensive therapeutics
ever created. So let me ask Mr. Borisy and Dr. Miller, could
you comment on how we can continue to attract biotech and
pharmaceutical industry partners into this space and how we can
support industries' work with payer groups to ensure access
once therapies are approved?
Mr. Borisy. So on the investing in new potential companies
that are focused on rare genetic disease, if we believe the
science and medicine is there to really make a tremendous
different for the lives of those patients, my partners and I
are one by one working through those opportunities and forming
multiple companies to do exactly that. Part of that is based on
the understanding as we have talked about here today on the
path through regulatory approval. A second part is
understanding the reimbursement as being there, and when we are
talking about diseases that might have a couple thousand
patients, a couple hundred, or some that are even as few as 100
patients that are involved, that necessarily means a high price
associated with those, and we know those are challenging
issues. There are potential therapies that could make a huge
difference for patients. If we have stable reimbursement, even
at those high prices, then innovation in those rare diseases
will continue.
Mr. Engel. Thank you.
Dr. Miller?
Dr. Miller. Yes. What has been proven that makes a
difference for these diseases is, one, NIH funding, so having
basic science to support it. So even when we look at
Alzheimer's, it is rarely about the basic science that is going
to drive the industry development. Second, it is actually the
FDA. You have heard from everyone, it's regulatory and
reimbursement certainty. That is actually their bigger risk
than looking for added incentives, and so if you are really
going to concentrate on the things that help everything from
antibiotics to Alzheimer's to rare diseases, it is really about
regulatory and reimbursement certainly.
Mr. Engel. Thank you. I see my time is up.
I was wondering if I could just ask one more. Many of you
have mentioned that funding basic science through funding the
NIH is critical to the goal of creating incentives for
innovation, and I certainly agree.
So let me ask Dr. Miller and Dr. Ledley, if either of you
could tell us more about how basic science gets translated into
cures that can then be capitalized upon by drug makers and what
effect have recent cuts to NIH's budget had on this process?
Dr. Miller. So I started as an NIH investigator. My wife is
the Chairman of Medicine at Washington University. The NIH
budget cuts have been devastating to basic science research at
universities. The great thing about the NIH is they allow the
investigators to actually spin these products off and work with
the venture capitalists to start new companies. When you stop
that process, when you choke off at NIH the basic science
level, the rest of the process doesn't work and so it is
crucial that we restore and even improve funding for basic
science.
Dr. Ledley. I think we have heard big numbers about how
many rare diseases and how many unmet needs there are, and
there are enormous numbers. I think it is useful to look at the
number of grants the NIH puts out every year relative to that
number and ask how many investigators do we think should be
taking independent new initiatives for these diseases, each one
of which harbors the potential for the new cure that can then
be developed.
Mr. Engel. Thank you, Mr. Chairman.
Mr. Pitts. The chair thanks the gentleman and now
recognizes the gentleman from Louisiana, Dr. Cassidy, 5
minutes.
Mr. Cassidy. Thank you, Mr. Chair. I really enjoy the
panel.
Now, Mr. Hemphill, I have to say when I read your
testimony, your spoken testimony had something different. I say
this not to challenge, merely to understand. You said listen,
you don't think extending exclusivity is necessarily important
but when you spoke you said except maybe as Dr. Gandy
suggested. Now, clearly you left a door open there. Do you see
that there is circumstances in which this extension of patent
protection exclusivity for something particularly like I think
you used the example of an oral therapy for neuromuscular
disease or neurologic disease would indeed be helpful?
Mr. Hemphill. So I certainly didn't intend any
inconsistency between my written testimony and my oral. I feel
strongly that if we have clear evidence that a targeted
increase in exclusivity would work, we should take that really
seriously.
Mr. Cassidy. Now, hang on, and again, this is a great
conversation, so I am not saying this to challenge but there is
a certain existentialism about this, right?
Mr. Hemphill. Right.
Mr. Cassidy. Now, we cannot know the future, and so we are
always going to have the anxiety that oh, my gosh, I made the
wrong decision.
Mr. Hemphill. Right.
Mr. Cassidy. I do that whenever I buy a stock. So that
said, we know Gandy. He is an incredible investigator, which by
the way, the NIH 20 years ago was advised to redirect their
funding to things which have more importance to modern disease.
They have not done it in 20 years. So as we speak of the NIH,
let us note that the IOM has suggested that they redirect
funding and they have not done so, and in a period of
constrained resources, we have to call upon them perhaps to be
a little bit more directing towards your diseases.
Now, that said, I go back to my point. Is there a kind of
situation in which indeed these sorts of incentives would be
important?
Mr. Hemphill. Yes. Certainly that is possible, and I also
don't mean to suggest that certainty has to be our standard. As
you say, we are investing, we are gambling, but we are gambling
with the public's money to the extent that----
Mr. Cassidy. I agree.
Mr. Hemphill [continuing]. Existing drugs get this
extension, which is why I say narrowing our view not to every
single drug and probably not every single----
Mr. Cassidy. So let me challenge you. Are you ready, man?
Mr. Hemphill. Yes.
Mr. Cassidy. You are a bright guy. Figure out that metric
and give it to Lance. That would have an incredibly important--
because I look at Alzheimer's, and there is few models I think
outside of Down's kids of where you know they are going to
develop disease.
Now, as the son of a man who died of Alzheimer's, this is
so incredibly important. If you could figure out that metric
talking to Gandy across town, that would be fantastic for our
country. So I say that just to kind of put the plug in.
Mr. Hemphill. I appreciate that.
Mr. Cassidy. Yes, thanks.
Dr. Miller, good to see you, man. Listen, I have some
problems with your California study. I am a hepatologist. And
so if you look at the intention to treat, I do think they
underestimate the impact of Solvadi upon outcomes. Every time I
still see patients mentally ill and such who are not candidates
for interferon, wouldn't be included in a clinical trial so the
47 percent cure rate that that paper posits, it doesn't happen
among my patients with addiction disorders or mental illness.
That said, I am struck that you suggest that we need to have a
mechanism by which we would limit what a company could charge
but you don't mention that mechanism. And I say that because
your company is incredibly disruptive. I mean, you all are
good. So you think about how markets work. Do you have a
suggestion how the Federal Government could limit what
companies charge without squelching the innovative drive that
has given us a drug which is truly a breakthrough drug?
Dr. Miller. If you interpret what I said as the government
should be price-setting, the answer is absolutely not. We do
not believe the government----
Mr. Cassidy. And you didn't say that but I didn't know
where you would go with it.
Dr. Miller. No, we actually believe it is a free market
solution that has to be required, and so we look at it the
exact opposite. We think that they have taken advantage of it,
which is just a warning to you all that when you talk about
extending the period of exclusivity, remember that that is not
the only lever that these people have. They have pricing as a
lever and they clearly have exercised it, and Solvadi is a
great example of it, but we believe that the pushback to
Solvadi has to come from the marketplace, not from the
government.
Mr. Cassidy. So if we are talking about patent protection,
it seems like there is limited levers to push back form the
marketplace. Is that a fair statement?
Dr. Miller. So you know----
Mr. Cassidy. And again, we are kind of guessing what their
true cost is to develop a drug, which is an incredible drug.
Dr. Miller. So we actually know in this particular case
their true cost of developing it because they didn't develop
it, they bought it for $11 billion and they will make that back
in the first year alone. The trouble is, is that you also need
the pharmaceutical manufacturers to act responsibly in their
pricing, but even in that absence, there is going to be
competitors to the marketplace and they will have to pay a
consequence if the competitors can create a product that is
equally good because, as you said, we will shift our market
share to someone that is willing to give us a better price.
Mr. Cassidy. Well, I am out of time. I really enjoyed the
written testimony and I wish I had more time to ask questions,
and thank you each for your good work. I mean, I thank you each
for your good work. Thank you.
Mr. Pitts. The chair thanks the gentleman and now
recognizes the gentlelady from North Carolina, Ms. Ellmers, 5
minutes for questions.
Mrs. Ellmers. Thank you, Mr. Chairman, and thank you to our
panel for being here today.
You know, the 21st Century Cures is certainly something
that I have considerable passion for, and I think it is
certainly the right approach for us to take in government when
unfortunately, many times we are always reactive rather than
proactive.
My first question is for Mr. Borisy. We have all discussed
the challenges of costly cures to come up with for diseases.
Again, Alzheimer's is a devastating disease. Certainly I know
many of us have been touched by this personally. My mother died
of Alzheimer's, and we all want a cure, and I hear this from my
constituents all the time, ``I don't understand, you spend so
much money in Washington on so many different things, why can't
you come up with a cure for Alzheimer's, why can't you come up
with a cure for diabetes.'' We know how much this affects the
American people.
I think I have a better understanding from listening to the
testimony that you are all giving today, that the cost and the
benefit are not necessarily adding up, and that forces some of
the innovations, research, and the development outside of our
own country. What can we do here in Washington, right now, as
part of this 21st Century Cure, what changes in policy can we
make and what specifically--I know a lot of it is the length of
time--it is the FDA. If you had one thing that you could say
would change this dramatically, what would it be?
Mr. Borisy. So we want to bring these innovations to
patients, as you just very eloquently said. Of course, the
science and the medicine, the basic science and medicine has to
be there, but with it there, what we can do is if we can apply
the tools that we have learned from accelerated approval, from
breakthrough therapies with FDA to say as a society that we
want to apply those for these chronic diseases like diabetes,
like Alzheimer's, that simple act alone will change the
consideration of the game. It doesn't guarantee we will
successfully create----
Mrs. Ellmers. Right. No guarantees. That is never----
Mr. Borisy. But it totally would change the game that if
there are ideas and sparks out there, it makes it something
that is investable in to go take that risk.
Mrs. Ellmers. So again, it is getting back to uncertainty
that is out there and the unfortunately--we are talking about
dollars. I mean, we are talking about investment. We are
talking about folks putting their hard-earned money behind
these initiatives, and there has to be a payoff, and you know,
sometimes that is hard for us because again, we are passionate
about the issues and it is a very emotional and personal issue.
Mr. Carusi, one of the things--again, it gets back to the
availability to be developing drugs. I have a business company
in my district, Entera Health, which is a medical foods
company. Basically, this is one of the innovations that we are
seeing moving forward. For patients, medical foods, and helping
patients who are taking many of these medications for HIV,
Parkinson's, Alzheimer's, rheumatoid arthritis, irritable bowel
syndrome, and helping the patient to respond better to drugs.
How can we help this process when we are talking about
reimbursement? How can we do a better job to make sure that
there again we are making this advancement? What changes at the
FDA level would you say would streamline this process for
something that is on the edge as we are talking about medical
foods?
Mr. Carusi. Yes. Medical foods is not an area where I have
been heavily focused or invested, but again, I think the theme
that you have heard is one of consistency, transparency and
predictability, and when you start to have, as you defined it,
devices, drugs, therapeutics that are on the fringe, the
pathways start to become less defined, less certain, and so as
a result, any of these approaches, we need to know with clarity
starting with FDA what the path is and then with reimbursement
if these were indeed reimbursed products what that looks like,
what the bar is and will they be reimbursed. Alternatively,
some of these may be self-pay opportunities and that has its
own set of discussions. But all of these testimonies and all
these discussions, it comes back to transparency, certainty,
and predictability.
Mrs. Ellmers. Thank you. I have just one quick question.
Does CMS now have the authority to create codes? Because I know
this is a conversation we have had in the past where we have
reached that level and then we have to unfortunately see
another level realized. Do they have that authority right now?
Mr. Carusi. To create codes?
Mrs. Ellmers. To create codes.
Mr. Carusi. My understanding is--around medical foods
specifically or more----
Mrs. Ellmers. Well, not necessarily around medical foods.
Mr. Carusi. My understanding is yes, but again, this is
starting to get to the--there are others that are more
knowledgeable in that area than me.
Ms. Ellmers. Thank you, Mr. Carusi, and I have overstepped
my time, so thank you, Mr. Chairman.
Mr. Pitts. The chair thanks the gentlelady and now
recognizes the gentleman from Florida, Mr. Bilirakis, 5 minutes
for questions.
Mr. Bilirakis. Dr. Gandy and Mr. Borisy and also Mr.
Carusi, let us talk about increasing incentives. I know that it
was mentioned earlier. We want companies to continue to invest
in new and innovative treatments, but it seems to me there are
so many diseases that currently go without treatment options.
In your testimony, you all touched on extending exclusivity and
patent life. Can you elaborate on how market exclusivity, data
exclusivity and patent life play a part in driving innovation
for treating neurological diseases such as Alzheimer's or
perhaps Parkinson's, and how if we do nothing this could hurt
the development of new innovative therapies? Why don't we start
with Dr. Gandy?
Dr. Gandy. I would say in my experience over the past 30
years, I have watched the pharma and VC investment in
Alzheimer's research dwindle and the single reason that is most
frequently cited is the regulatory path, the challenge for
getting approval and then having sufficient patent life left to
recoup any of the investment. Alzheimer's disease moves very
slowly. The clinical trials require hundreds of patients. They
take years to complete, and it is a monumental task, and we
don't have yet any templates. We are trying to do something in
biology we have never done before.
Mr. Bilirakis. Thank you. Mr. Borisy, please.
Mr. Borisy. Two weeks or so ago, I was talking with a
senior pharmaceutical executive who is running a program in
Alzheimer's, literally spending billions of dollars over many
years. If we are to try to create and invest in a company that
is going to pursue Alzheimer's therapeutics, given that type of
scale of time and money that is required, we need to have
confidence that if we get to some early stage of proof of
concept in the clinic that a future partner, be that a
pharmaceutical company or be that public market investors, will
believe or be willing to take on the risk from there, we need
to be able to hand the ball off to the next stage in the
ecosystem for it to have been a viable place to put our money
in the beginning. If for the next step in the ecosystem they
literally are spending billions of dollars and an indefinite
period of time, then they will say you have created that
innovation but there is no protection left for that product and
therefore even if we show that proof of concept, they will say
but that has no value to us. That is a fundamental impediment
to us investing in companies in the area.
Mr. Bilirakis. Thank you. Mr. Carusi, please.
Mr. Carusi. Yes, I think it comes back to time, and so I
want to give an example. In my portfolio of companies, we have
a company GI Dynamics, and GI Dynamics is developing a device-
based approach to treat type 2 diabetes and obesity, two of the
biggest chronic-disease issues we have in this country. We
first started that company in 2004. It is now 2014. We are
still in the midst of running our clinical trial for FDA
approval and we are starting to commercialize the product
outside of the United States. If you had asked me today, oK,
you know, 10 years back, would you invest in this company
knowing you weren't going to have approval until 2015, 2016, I
wouldn't have made the investment despite the fact that what
they are doing is tremendously valuable. So it comes back to
the incentives and whether or not if it is going to take this
much time and this much money that again we can make a
reasonable return on that investment, and to me, it is a math
problem and that is what this comes down to, and I do think
there are certain areas, and I think they are in the chronic-
disease field, where there are big studies a lot of times huge
potential but we are going to need help, and I think that is
what we are asking for.
Mr. Bilirakis. Very good. Thank you.
Can anybody on the panel give me a rundown on Parkinson's
disease, if there are any promising therapies, breakthroughs,
maybe delaying the onset of Parkinson's disease? Is there
anybody on the panel that would like to discuss that?
Dr. Gandy. The Parkinson's disease field is now following
in the template of the Alzheimer's field in terms of generating
these networks that are nationwide looking for biomarkers. I
think that they have the advantage of having a little more in
terms of impact using transmitter replacement and manipulation
than has happened with Alzheimer's, so there are some new
medications there targeting some new receptors for symptomatic
relief, but they haven't yet changed the progression of the
disease, and that is really what the key is, to slow the
progression.
Mr. Bilirakis. Anyone else?
Dr. Ledley. A lot of good work on gene therapy. This came
up earlier, but this is one that is a challenging target but
clearly a feasible and difficult one, but a lot of good work.
Some of the companies that have raised money lately are doing
it aimed at Parkinson's.
Mr. Bilirakis. Very good. Thank you.
Thank you, Mr. Chairman. I appreciate it. I yield back.
Mr. Pitts. The chair thanks the gentleman. I hate to cut
this off, but this has been the best interaction we have had
with members and witnesses, and frankly, this has been one of
the most informative, helpful, exciting hearings that we have
had. So I want to thank each of the witnesses for your
testimony. We have a UC request?
Mr. Pallone. Thank you, Mr. Chairman.
Let me echo what you said about the hearing and the value
of it. I totally agree.
I just would ask unanimous consent to enter into the record
the statement of Ann Boynton, Deputy Executive Officer for the
California Public Employees Retirement System.
[The information appears at the conclusion of the hearing.]
Mr. Pitts. Without objection, so ordered.
There will be follow-up questions. We have members at other
hearings on the floor. Dr. Burgess is having to manage time on
the floor. We have follow-up questions. We will submit those to
you in writing. We ask that you please respond promptly. I
remind members that they should submit their questions by the
close of business on Wednesday, June 25th.
Again, thank you so much, a very good hearing. Without
objection, the subcommittee is adjourned.
[Whereupon, at 12:38 p.m., the subcommittee was adjourned.]
[Material submitted for inclusion in the record follows:]
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