[House Hearing, 113 Congress]
[From the U.S. Government Publishing Office]






21ST CENTURY CURES: EXAMINING WAYS TO COMBAT ANTIBIOTIC RESISTANCE AND 
                      FOSTER NEW DRUG DEVELOPMENT

=======================================================================

                                HEARING

                               BEFORE THE

                         SUBCOMMITTEE ON HEALTH

                                 OF THE

                    COMMITTEE ON ENERGY AND COMMERCE
                        HOUSE OF REPRESENTATIVES

                    ONE HUNDRED THIRTEENTH CONGRESS

                             SECOND SESSION

                               __________

                           SEPTEMBER 19, 2014

                               __________

                           Serial No. 113-178


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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, Kentucky7
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

                              ----------                              
                                                                   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.........................     3
Hon. Phil Gingrey, a Representative in Congress from the State of 
  Georgia, opening statement.....................................     5
Hon. Henry A. Waxman, a Representative in Congress from the State 
  of California, opening statement...............................     7
Hon. Louise M. Slaughter, a Representative in Congress from the 
  State of New York, prepared statement..........................     9
Hon. Fred Upton, a Representative in Congress from the State of 
  Michigan, prepared statement...................................   146

                               Witnesses

Janet Woodcock, Director, Center for Drug Evaluation and 
  Research, U.S. Food and Drug Administration....................    10
    Prepared statement...........................................    12
    Answers to submitted questions...............................   162
Kenneth J. Hillan, Chief Executive Officer, Achaogen, Inc........    43
    Prepared statement...........................................    47
    Answers to submitted questions...............................   179
Barbara Murray, President, Infectious Disease Society of America.    55
    Prepared statement...........................................    57
    Answers to submitted questions...............................   184
Adrian Thomas, Vice President, Global Market Access and Global 
  Public Health, Janssen Global Services, LLC....................    76
    Prepared statement...........................................    79
    Answers to submitted questions...............................   193
Kevin Outterson, Professor of Law, Boston University School of 
  Law............................................................    92
    Prepared statement...........................................    94
    Answers to submitted questions...............................   202
Allan Coukell, Senior Director, Drugs and Medical Devices, The 
  Pew Charitable Trusts..........................................   112
    Prepared statement...........................................   114
    Answers to submitted questions...............................   209
Dr. John H. Powers, Assistant Clinical Professor of Medicine, 
  George Washington University School of Medicine................   125
    Prepared statement...........................................   127
    Answers to submitted questions \1\...........................   213

                           Submitted Material

Article entitled, ``Andrew J. Moyer and Penicillin: Saving Lives 
  on a Grand Scale,'' in Moment of Indiana History, August 23, 
  2010, submitted by Mr. Burgess.................................   147
Statement of the Flag & General Officers' Network, Inc., 
  submitted by Stephen Parente...................................   149
Statement of Cubist Pharmaceuticals, submitted by Mr. Pitts......   151
Statement of California Healthcare Institute, submitted by Mr. 
  Pitts..........................................................   159

----------
\1\ Dr. Powers did not respond to questions for the record.
 
21ST CENTURY CURES: EXAMINING WAYS TO COMBAT ANTIBIOTIC RESISTANCE AND 
                      FOSTER NEW DRUG DEVELOPMENT

                              ----------                              


                       FRIDAY, SEPTEMBER 19, 2014

                  House of Representatives,
                            Subcommittee on Health,
                          Committee on Energy and Commerce,
                                                    Washington, DC.
    The subcommittee met, pursuant to call, at 9:00 a.m., in 
room 2123, Rayburn House Office Building, Hon. Joseph R. Pitts 
(chairman of the subcommittee) presiding.
    Present: Representatives Pitts, Burgess, Shimkus, Gingrey, 
Lance, Bilirakis, Ellmers, Pallone, Green, and Waxman (ex 
officio).
    Also Present: Representative DeGette.
    Staff Present: Clay Alspach, Counsel, Health; Gary Andres, 
Staff Director; Sean Bonyun, Communications Director; Leighton 
Brown, Press Assistant; Noelle Clemente, Press Secretary; Paul 
Edattel, Professional Staff Member, Health; Sydne Harwick, 
Legislative Clerk; Robert Horne, Professional Staff Member, 
Health; Carly McWilliams, Professional Staff Member, Health; 
Tim Pataki, Professional Staff Member; Chris Sarley, Policy 
Coordinator, Environment and Economy; Heidi Stirrup, Health 
Policy Coordinator; Ziky Ababiya, Minority Staff Assistant; 
Eric Flamm, Minority FDA Detailee; Karen Nelson, Minority 
Deputy Committee Staff Director For Health; Rachel Sher, 
Minority 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.
    According to the World Health Organization's Antimicrobial 
Resistance, Global Report on Surveillance 2014, antimicrobial 
resistance, AMR, is an increasingly serious threat to global 
public health. British Prime Minister David Cameron warned in 
July that if we do not confront the threat of antibiotic 
resistance, we could be ``cast back into the dark ages of 
medicine where treatable infections and injuries will kill once 
again.''
    And just yesterday, the President announced an executive 
order focused on efforts his administration plans to take with 
regards to the antibiotic resistance issue. In 2012, this 
committee sought to help combat this global threat by passing 
the GAIN Act as part of the Food and Drug Administration Safety 
and Innovation Act of 2012. The GAIN Act was an important first 
step in the fight against antibiotic resistance and a great 
example of how bipartisan collaboration on this committee can 
save lives. And I want to commend the bipartisan authors that 
made GAIN possible, including Representatives Gingrey, Green, 
Shimkus, DeGette, Whitfield, and Eshoo for their leadership.
    I also want to commend the FDA for its role in making GAIN 
a success since its passage. But what is clear to many in this 
room is that GAIN did not fully fix the problem, and much more 
is needed if we are to incentivize the type of drug development 
needed to combat this global threat.
    And to that end, Congressmen Gingrey and Green have 
introduced another piece of legislation, the ADAPT Act, which 
would seek to address problems related to the FDA approval 
process of antibiotic drugs. It is one of a series of proposals 
that warrants serious consideration by this committee as part 
of our 21st Century Cures, and I want to thank them for their 
continued efforts in this space.
    I would like to thank all of our witnesses for being here 
today and yield the remainder of my time to the vice chair of 
the subcommittee, Dr. Burgess.
    [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.
    According to the World Health Organization's (WHO) 
Antimicrobial Resistance: Global Report on Surveillance 2014, 
``Antimicrobial resistance (AMR) is an increasingly serious 
threat to global public health.''
    British Prime Minister David Cameron warned in July that if 
we do not confront the threat of antibiotic resistance, we 
could be ``cast back into the dark ages of medicine where 
treatable infections and injuries will kill once again.''
    And, just yesterday, the President announced an Executive 
Order focused on efforts his administration plans to take with 
regards to the antibiotic resistance issue.
    In 2012, this Committee sought to help combat this global 
threat by passing the GAIN Act as part of the Food and Drug 
Administration Safety and Innovation Act of 2012.
    The GAIN Act was an important first step in the fight 
against antibiotic resistance and a great example of how 
bipartisan collaboration on this committee can save lives.
    I want to commend the bipartisan authors that made GAIN 
possible including Reps. Gingrey, Green, Shimkus, DeGette, 
Whitfield and Eshoo for their leadership.
    I also want to commend the FDA for its role in making GAIN 
a success since its passage.
    But what is clear to many in this room is that GAIN didn't 
fully fix the problem and much more is needed if we are to 
incentivize the type of drug development needed to combat this 
global threat.
    To that end, Congressmen Gingrey and Green have introduced 
another piece of legislation, the ADAPT Act, which would seek 
to address problems related to the FDA approval process of 
antibiotic drugs.
    It is one of a series of proposals that warrants serious 
consideration by this Committee as part of our 21st Century 
Cures and I want to thank them for their continued efforts in 
this space.
    I would like to thank all of our witnesses for being here 
today, and I yield the remainder of my time to Rep. ----------
------------------.

    Mr. Burgess. Thank you, Mr. Chairman, and I certainly 
appreciate the fact we are having this hearing today. It is 
necessary as we proceed with the Cures initiative to talk about 
some of the things that are most important, some of the things 
that are relied upon and familiar in our front line of our 
ability to fight infections and those are antibiotics. 
Antibiotic resistance, specifically resistant strains, is a 
growing problem. Equally troubling, despite widespread support, 
is the lack of a pipeline of new drugs that can improve on 
previous generations or fight drug resistance strains. A lot of 
facets to this issue, and there is no single silver bullet 
solution.
    But here is the deal, our drug arsenal is our drug arsenal. 
Today the committee continues to probe the various market 
reasons why we are not producing new antibiotics, and if the 
proper market incentives and regulatory pathways exist to 
encourage the development of new drugs. Very important strides 
that have been made in the FDA Safety and Innovation Act, most 
notably through the GAIN Act, but they were just the first 
steps. Part of the deal is once nature adapts, it is hard to 
force nature to unadapt. These resistant strains are out there, 
and they aren't going away. Once this evolutionary leap has 
taken place, we are not going back, and that is why we need a 
continuous pipeline of new drugs.
    I would also just point out on a historical note, since the 
election in Scotland was yesterday, and Scotland is going to 
remain part of the British empire, and of course, it was a 
famous Scotsman, Sir Alexander Fleming who developed, or is 
credited with the discovery of penicillin, but Sir Alexander 
Fleming couldn't produce a lot of penicillin, and it was Andrew 
Moyer from Indiana, who actually developed the deep 
fermentation process that allowed the penicillin to be mass 
produced and really made a significant difference in the lives 
of our soldiers returning--or the saving of lives of our 
soldiers returning from World War II, and parenthetically 
dropped the cost of a course of penicillin from $20, at that 
time was a significant amount of money, to less than 50 cents.
    So we know we can do this and we know we should do this, 
that is, we have done it before, so the forefront of 
innovation, and that is what the Cures Initiative is all about, 
and I think that is an important part of our discussion. I will 
submit this article on Andrew Boyer for the record.
    [The information appears at the conclusion of the hearing.]
    Mr. Pitts. Without objection, it will be entered into the 
record. The chair thanks the gentleman and now recognize the 
ranking member of the subcommittee, Mr. Pallone, 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. In 2006, in my 
State of New Jersey, a 17-year-old honor student named Rebecca 
Lohsen went to the hospital and within days died from a 
resistant strain of MRSA. Though her doctors were able to 
identify the infection and treat it with the available 
antibiotics, it failed to respond to treatment, advancing 
rapidly and cutting her life short. And stories like Rebecca's 
are all too common and all the more frustrating given the 
remarkable advances in American medicine.
    The threat posed by antibiotic resistant bacteria or 
``super bugs'' is growing, yet the supply of new antibiotic 
drugs is dwindling due to drug manufacturers' declining 
interest and ability to produce new drugs to meet this threat. 
In a CDC report released last year, they find that 2 million 
Americans are infected with antibiotic resistant bacteria each 
year, and unfortunately, 23,000 will eventually die as a 
consequence of their infections. Additionally, 5 to 10 percent 
of patients in American hospitals will acquire an infection 
during the course of their treatment. And, though the majority 
of these infections can be treated, this complicates the 
recovery process and ultimately imposes greater costs on 
patients and the healthcare system.
    Due to the current state of the market, manufacturers are 
incentivized to focus their efforts elsewhere, at the expense 
of the research and development with new antibiotics to combat 
these rapidly evolving strains of bacteria. This reason is why 
Congress included many of the provisions of the GAIN Act in the 
FDASIA legislation, which was signed into law in 2012. The GAIN 
Act was an important step toward solving this problem. Through 
GAIN, we are supporting manufacturers in the development and 
introduction of new drugs largely through the use of marketing 
exclusivities. So far we have seen meaningful progress.
    Because of GAIN, FDA has approved a number of new drugs 
through the Qualified Infectious Disease Product designation. 
With priority review, these drugs are able to combat an 
imminent infectious disease threat and reach patients at an 
accelerated pace.
    However, we should also remember why other laws such as the 
Hatch-Waxman Act, are so successful. If Congress decides to 
intervene in the market, using the carrot of marketing and 
regulatory exclusivities, we should be sure that it achieves 
the necessary impact on the pipeline of new drugs to safeguard 
the public health.
    In pursuit of the greater good, government struck a balance 
between the interests of private industry in the public, and 
society reaped the benefits. And so that is why I have concerns 
about ideas such as transferable exclusivity, the practice of 
giving a specified period of exclusivity to a company to use on 
any product it wishes as a reward for developing a new 
antibiotic. This is a recipe for higher cost drugs with no 
direct connection to the cost to developing new antibiotics.
    Yet, there are some ideas that are worth further 
examination, such as the ADAPT Act introduced by Congressmen 
Green and Gingrey. That bill would establish a limited 
population approval pathway that would permit FDA to approve 
drugs based on smaller clinical trials. So Mr. Chairman, there 
are a number of angles the government and private industry can 
take to meet this problem head on. I think we all agree this is 
an issue which warrants further action, and I welcome the 
opportunity to hear from our witnesses today. A special welcome 
to Adrian Thomas from Johnson & Johnson, which is headquartered 
in my district. I am always pleased to see you represented in 
front of our committee.
    So I would like to yield the remainder of my time to Mr. 
Green.
    Mr. Green. Thank you, Ranking Member, for yielding. Few 
issues in the public health today are as grave and urgent as 
combating the growing threat antibiotic resistance. I am 
pleased to learn that yesterday the White House announced the 
President's Executive order on the national Combating 
Antibiotic Resistance Bacteria, CARB strategy. We need to 
control bacteria and carbs, I guess.
    Recently, both the World Health Organization and the United 
Kingdom joined the United States in recognizing antibiotic 
resistance as a global threat. Fighting antibiotic resistance 
is both a public health and a national security priority. It is 
a threat that I take seriously and believe Congress has a 
strong role in answering. The FDA has played a central role in 
this important effort, and I thank the agency for their work. 
We must all work together to ensure that we have effective 
antibiotics for the future.
    In 1929, Alexander Fleming invented the process for the 
first antibiotic wonder drug, penicillin. Such discoveries for 
the 21st century can happen as well if we encourage greater 
investment in the development of novel antibiotic drugs. 
Antibiotics have saved millions of lives by treating infections 
caused by bacteria and made through therapies like surgery, 
chemotherapy, and care for neonatal infants possible. By 
nature, bacteria evolve and become resistant over time. In 
addition, misuse and inadequate diagnosis have contributed to 
antibiotic resistance, and most antibiotics are now less 
effective or ineffective against infections.
    The consequences of antibiotic resistance must not be 
underestimated. With each day, many more patients will have few 
or no therapeutic options because of the resistance to 
available therapies. I thank the chair and ranking member for 
this hearing today. Antibiotic resistance and development must 
be a high priority for this committee and central to the way we 
treat and cure disease in the 21st century. I look forward to 
the hearing, and again, I want to thank my colleague, 
Congressman Gingrey, for partnering both on the GAIN Act last 
Congress and also on the ADAPT Act this Congress, and I yield 
back my time. Thank you.
    Mr. Pitts. The chair thanks the gentleman and now 
recognizes the gentleman from Georgia, Dr. Gingrey, 5 minutes 
for an opening statement.

  OPENING STATEMENT OF HON. PHIL GINGREY, A REPRESENTATIVE IN 
               CONGRESS FROM THE STATE OF GEORGIA

    Mr. Gingrey. Mr. Chairman, I want to thank you. I want to 
thank you for calling today's hearing within the 21st Century 
Cures Initiative entitled, ``Examining Ways to Combat 
Antibiotic Resistance and Foster New Drug Development.'' Let me 
first commend Chairman Upton and our colleague from Colorado, 
Ms. DeGette, for spearheading this bipartisan endeavor that 
really looks at ways we can address emerging challenges in the 
healthcare industry.
    I have participated in a number of the hearings and 
roundtable discussions and have found each to be very 
beneficial to all the members of this subcommittee. Mr. 
Chairman, we all understand that antibiotic resistant pathogens 
are a growing concern not only across the country, but across 
the globe. According to the CDC in Atlanta, each year more than 
2 million Americans get infections that are resistant to 
antibiotics, resulting in the deaths of some 23,000 people and 
costing our healthcare system nearly $20 billion in direct 
cost, probably $35 billion more in indirect cost, lost time 
from work, et cetera.
    This year alone, both the World Health Organization and the 
U.K. have acknowledged this looming threat. Just yesterday, the 
Obama administration took action on antibiotic resistance as 
well. Through the signed Executive order, the national strategy 
on Combating Antibiotic Resistant Bacteria and the President's 
Council of Advisors on Science and Technology, referred to as 
PCAST, will be issuing a report, this is an issue that is now 
receiving global attention. Unfortunately, though, according to 
the FDA, new antibiotic approval has decreased by 70 percent 
since the mid 1980s.
    A combination of barriers, including, of course, the high 
cost of drug development and the small profit margins have 
helped to drive companies out of the anti-infectious space to 
markets where the return on investment is much higher. You 
think of your favorite drug, whether it is for arthritis or 
whatever, they simply can make a lot more money and there is a 
lot bigger market. These few incentives for companies to 
produce new antibiotics have yielded a stagnant research and 
development pipeline for antibiotics, and it is ill-equipped to 
keep up with the evolving bacterium.
    Mr. Chairman, I am glad that Congress has been a true 
leader in this arena. With the partnership of my colleague from 
Texas, Gene Green, as the other lead author/sponsor of the GAIN 
Act, we were able to find a path for this legislation to be 
signed into law, and it was, in July of 2012. As many of the 
witnesses' testimonies state, the GAIN Act has been an 
important step to encourage new development of antibiotics by 
focusing on economic incentives to keep companies in the game, 
in the market. However, despite these advances, there is still 
more work that needs to be done. That is precisely why Mr. 
Green and I authored H.R. 3742, the ADAPT Act during this 
Congress.
    This legislation, a logical next step to the GAIN Act, 
develops a new pathway at the FDA for antibiotics aimed at 
treating merging threats in limited and high-need populations 
when they have no available option at their disposal. The ADAPT 
Act will also streamline the process by which the FDA updates 
break points information so doctors and medical researchers 
have the most up-to-date information in which to expedite the 
decisions in the drug approval process.
    Mr. Chairman, the model of the 21st Century Cures 
Initiative work on the GAIN Act and the ADAPT Act has been a 
true bipartisan product, and I commend Mr. Green for his 
continued efforts with me on both pieces of legislation. 
Earlier this morning, both of us spent an hour on Washington 
Journal discussing our efforts addressing drug resistant 
bacteria with a sense of comity befitting our committee, and I 
think Mr. Green and the moderator and hopefully all the viewers 
and listeners would agree with that. And with that in mind, I 
look forward to hearing from all of our witnesses today, the 
first and second panel.
    I had the pleasure yesterday of meeting with Dr. Barbara 
Murray, who will be on the second panel, the President of the 
Infectious Disease Society of America, and after hearing some 
of her anecdotal accounts of life-threatening infections with 
her own patients, I am even more motivated to continue the 
fight against drug resistant bacteria.
    I will give a real quick anecdote, Mr. Chairman. I know I 
am running out of time, but my brother is 1 year older than me, 
and in 1941, he was sick as a gourd, home with pneumonia, and 
the family doctor came to the house and told my parents that he 
was going to die unless he gave him a shot of this new 
antibiotic called penicillin. And my brother James got that 
shot of penicillin and fortunately he lived. Now, there have 
been some days since then that I wish he hadn't. He beat me up 
every day since then and still does, but that is my own little 
anecdote, Dr. Murray.
    Mr. Chairman, as we continue with the 21st Century Cures 
Initiative, we must work in a bipartisan manner to address this 
growing problem across our country. Ultimately, I believe that 
the ADAPT Act is the next step in the fight. It is my hope that 
we will mark up this legislation during the lame duck session 
later next month. Until then, I welcome the testimony that we 
will be hearing today to further educate members of the 
subcommittee on this critically important issue.
    Make no mistake, the cost of inaction in the fight against 
life threatening infections is grave, and the CDC has already 
provided us with the statistics to prove that. Today's hearing 
will serve as a great way to raise awareness on this important 
issue.
    Mr. Chairman, thank you for allowing me the time normally 
reserved for Chairman Upton, and I look forward to continuing 
to work with all of my colleagues as this process moves 
forward. Thank you for the extra time and being a little soft 
on the gavel, Mr. Chairman, as I yield back.
    Mr. Pitts. The chair thanks the gentleman and thanks him 
for his leadership on this issue.
    Now recognizes the ranking member of the full committee, 
Mr. Waxman, for 5 minutes for 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. We held 
hearings in this committee in 2010 on the problem of antibiotic 
resistance and the fact that it is a growing and dangerous 
threat to public health. It is certainly an issue that deserves 
the full and complete attention of this committee, so I am 
pleased you are holding this hearing. Our overarching goal 
should be to ensure that people continue to benefit from these 
life-saving treatments, both here and in the United States and 
around the globe.
    This is an inherently difficult goal to achieve. After all, 
when we use these antibiotics, it leads to the development of 
pathogens that can no longer be treated by those antibiotics. 
Rather than use it or lose it with antibiotics, it is use it 
and lose it.
    So we are at great risk of losing much of the progress that 
has been made in fighting infection and subsequent disease. 
Many Americans die or are infected each year from antibiotic 
resistant microbes. We pay a high price in other ways as well, 
additional hospital stays, hospital readmissions, increased 
doctor visits, all add unnecessarily to the Nation's annual 
healthcare bill. It will take a multi-pronged approach to 
overcome this very serious problem. There is no question that 
our arsenal of effective antibiotics is dangerously low today 
as a result of antibiotic resistance, so we need to replace 
ineffective antibiotics with new ones.
    In the 2012 FDA user fee legislation, we enacted a law 
designed to create incentives for companies to replace those 
antibiotics and develop new ones. That legislation included 
provisions from the what was called the Generating Antibiotic 
Incentives Now Act called the GAIN Act, and that granted a 5-
year period of exclusive marketing for new antibiotics for 
serious and life-threatening diseases.
    I look forward to hearing today from our witnesses about 
what impact that legislation is having on investments in these 
drugs. Exclusivity rewards drug companies by allowing them to 
charge higher prices. As a result, it also imposes a 
significant burden on patients and on the healthcare system 
overall, so we need to approach this particular form of 
incentive with great caution.
    One bad idea, in my opinion, is the concept of transferable 
market exclusivity which is sometimes called the wildcard 
exclusivity. This form of exclusivity would give a company that 
developed a new antibiotic the ability to transfer a term of 
exclusivity to another drug, any other drug that they have, and 
this is a hugely costly idea that leads to unfair cross 
subsidies. If AstraZeneca were to develop a specified 
antibiotic, it could earn a term of exclusivity that it could 
transfer to Nexium, a treatment for heartburn which is the 
second highest grossing drug last year and earns over $6 
billion. Even if the term of exclusivity were just 6 months, 
that would result in a reward of almost $3 billion. That means 
Nexium patients pay higher prices for longer even though they 
may never actually take the antibiotic itself.
    As we tackle the problem of antibiotic resistance, we need 
to ensure that whatever form the incentive takes, it bears some 
reasonable relationship to the amount of the investment the 
company is making. I hope we will discuss today another 
approach to getting new antibiotics on the market. That is what 
has been referred to as the ADAPT Act, or the Antibiotic 
Development to Advance Patient Treatment. That bill would 
establish a limited population approval pathway that would 
permit FDA to approve drugs based on smaller clinical trials. 
This is an idea worth examining.
    If we do create such a pathway, any drugs approved as a 
result would need to be clearly marked with a prominent symbol 
to alert providers and patients that the safety and 
effectiveness of these drugs has only been assessed on a 
limited population. Requiring a designation is integral to the 
idea of a limited population approval pathway because providers 
have to know that these drugs are to be used only when 
absolutely necessary. Otherwise, they will not only put 
patients at risk but will contribute to the more rapid 
development of antimicrobial resistance to the drugs.
    In addition to incentives for developing new antibiotics, 
we ought to find ways to cut back on the overuse and misuse of 
these drugs. Patients cannot expect to get them every time they 
come down with a cold, and physicians should only prescribe 
them when they are truly necessary. Perhaps most important, the 
indiscriminate administration of these drugs in animal 
agricultural operations needs to stop. We should mandate an end 
to this practice, but if we cannot take that step, we should at 
least have better data about how and where antibiotics that are 
important for humans are being used in food animals. We know 
practically nothing about this situation.
    As a recent Reuters article points out, the data exists in 
the hands of major corporations producing these animals. I 
would like, Mr. Chairman, another 30 seconds.
    Mr. Pitts. Go ahead.
    Mr. Waxman. Like Perdue and Tysons, and I have a bill that 
would finally give the public access to this information, H.R. 
820, the DATA Act. I hope this commonsense bill can be included 
in the 21st Century Cures legislation.
    I thank the witnesses for being here today and for their 
testimony. And Mr. Chairman, I would like to ask unanimous 
consent that a statement prepared by Congresswoman Louise 
Slaughter be included in the record. She is talking in her 
statement about ways to combat antibiotic resistance and foster 
new drug development.
    Mr. Pitts. Without objection, so ordered.
    Mr. Waxman. Thank you, Mr. Chairman.
    [The prepared statement of Ms. Slaughter follows:]

             Prepared statement of Hon. Louise M. Slaughter

    Mr. Chairman, thank you for the opportunity to submit 
remarks for the record this morning. I appreciate the attention 
being paid to the crisis of antibiotic resistance and the 
immediate need to address it. While I appreciate that the focus 
of today's hearing is on the development of new antibiotics, I 
cannot let the opportunity pass to discuss the overuse of 
antibiotics in agriculture and the connection to the 
development of superbugs resistant even to some of our last 
line of defense antibiotics.
    Almost 70 years ago, Alexander Fleming first warned about 
the possibility of a post-antibiotic era, warning that--quote--
``the ignorant man may easily underdose himself and by exposing 
his microbes to non-lethal quantities of the drug make them 
resistant.''
    I'm not sure Dr. Fleming could have envisioned that the 
biggest threat to antibiotics in the future would come from 
factory farms--where 80 percent of the antibiotics in this 
country are used in animals that eventually end up on our 
dinner plate. His warning rings true today: the daily 
distribution of antibiotics in feed and water at sub-
therapeutic levels is creating resistant superbugs, and 
destroying the effectiveness of these miracle drugs.
    According to a recent report from the World Health 
Organization, ``Antibiotic resistance is now a bigger crisis 
than the AIDS epidemic,'' and if we do not curb our antibiotic 
overuse, ``a post-antibiotic era-in which common infections and 
minor injuries can kill-far from being an apocalyptic fantasy, 
is instead a very real possibility for the twenty-first 
century.'' This would redefine modern medicine. Routine 
infections like strep throat could be fatal. A skinned knee 
that became infected could become fatal. Life-saving surgeries 
like open-heart surgery or organ transplants that require 
antibiotics to stave off infection would become too dangerous 
for doctors to consider. All of these medical advances would be 
thrown away because we are wasting these critical antibiotics 
on the farm.
    There are those who say there is not a connection between 
overuse of antibiotics on the farm and resistant diseases in 
humans. I struggle to understand their decision-making process 
when the National Antimicrobial Resistance Monitoring System 
(NARMS) reports that antibiotic resistant bacteria exist in 81% 
of ground turkey, 69% of pork chops, 55% of ground beef, and 
39% of chicken breasts, wings and thighs found in grocery 
stores. More than 27% of bacterial isolates found on retail 
chicken are resistant to more than five classes of antibiotics.
    Just this week, the top scientific minds in this country 
who make up the President's Council of Advisors on Science and 
Technology released their report on antimicrobial resistance 
and confirmed what I and over 450 of the leading medial, 
scientific and consumer groups in the country who support my 
legislation have been shouting from the rooftops for years. 
Allow me to quote that report:
    ``Substantial evidence demonstrates that use of antibiotics 
in animal agriculture promotes the development of antibiotic-
resistant microbes in animals and that retail meat can be a 
source of microbes, including antibiotic-resistant microbes. 
Moreover, antibiotic resistance can spread between microbes 
(through the transfer of DNA elements, such as plasmids, 
between species) and antibiotic-resistant microbes can spread 
from animals to people who come into contact or close proximity 
with them. For example, poultry workers in Maryland and 
Virginia have been reported to be much more likely to be 
colonized by gentamicin-resistant E. coli and are at a higher 
risk of infection by multi-drug resistant E. coli than 
residents of the community surrounding the poultry operation. A 
survey of over 900 adults in Wisconsin and Minnesota found that 
drug-resistant E. coli bacteria isolates present in humans were 
similar to those in poultry meat, whereas drug-susceptible E. 
coli bacteria isolates were not. A study of veterans in rural 
Iowa reported that the frequency of resistant Staphylococcus 
aureus was 88% higher among veterans living within one mile of 
a high-density swine-feeding operation.''
    Despite the substantial evidence and despite the nightmare 
scenario of a post-antibiotic era, both our federal regulatory 
agencies and the Congress are still refusing to acknowledge the 
devastating role that antibiotic use in agriculture is having 
on the future of medicine in the United States. I am imploring 
you today, as you consider the future of antibiotic development 
in this country, that you also consider that the routine 
overuse of future antibiotics would result in the same 
conditions we face today. We must preserve those antibiotics 
critical to human health for use in treating disease--not for 
growth promotion or disease prevention. Antibiotics are for 
treatment of illness--period.
    My legislation--the Preservation of Antibiotics for Medical 
Treatment Act -would save eight critical classes of antibiotics 
for human use while still allowing the treatment of sick 
animals. I've carried this bill for seven years now, and I'm 
not going to rest until it becomes law. There are too many 
lives at stake to give up. We can and must preserve 
antibiotics--the future of modern medicine depends upon it.
    Thank you.

    Mr. Pitts. And I have a unanimous consent request. I would 
like to submit the following for today's hearing record. First, 
a letter from the Flag and General Officers' Network, an 
official 501(c)(19) War Veterans Organization representing 
three-quarters of all living U.S. Armed Forces Flag and General 
Officers. Secondly, a statement from Cubist Pharmaceuticals, a 
global pharmaceutical company headquartered in Lexington, 
Massachusetts. And thirdly, a statement from the California 
Healthcare Institute, CHI, their statewide public policy 
organization representing California's leading biomedical 
innovators, over 275 research universities in private, non-
profit institutes, venture capital firms, and medical device 
diagnostic biotechnology and pharmaceutical companies. Without 
objection, so ordered.
    [The information appears at the conclusion of the hearing.]
    Mr. Pitts. All members' written opening statements will be 
made a part of the record. At this point, we have two panels to 
present testimony. On the first panel today, we have again Dr. 
Janet Woodcock, the director of the Center for Drug Evaluation 
and Research, U.S. Food and Drug Administration. Thank you very 
much, Dr. Woodcock, for coming. Your written testimony will be 
made a part of the record, and you will be given 5 minutes to 
summarize your testimony before questions. So at this point you 
are recognized for 5 minutes for your opening statement.

    STATEMENT OF JANET WOODCOCK, DIRECTOR, CENTER FOR DRUG 
   EVALUATION AND RESEARCH, U.S. FOOD AND DRUG ADMINISTRATION

    Dr. Woodcock. Thank you, Mr. Chairman, and members of the 
committee for holding this hearing on this really important 
issue. There is broad agreement that antimicrobial resistance 
is a worldwide crisis that is going to require major efforts to 
combat. In 2012, the Congress took a significant step in 
passing GAIN Act which we have been implementing. In Europe, 
the Innovative Medicines Initiative, which is a public/private 
partnership launched a major research effort on antimicrobial 
resistance. Yesterday, the Administration released a national 
strategy for combating antimicrobial resistance. A high level 
task force was established by Executive order to carry out and 
develop an action plan to carry out the goals.
    The strategy is a multi-sector effort to attack this 
problem in all its diverse forms by bolstering basic research, 
enhancing product development, improving the surveillance, 
which has already been alluded to, of resistance and use of 
antimicrobials, modifying the use of antibiotics in food 
animals, and strengthening international collaboration.
    PCAST, which is the President's Council of Advisors on 
Science and Technology also released a scientific report and 
scientific recommendations yesterday.
    Over the past year, the Center for Drugs at FDA has been 
very busy on this issue. We have issued many new or revised 
guidances on antimicrobial drug development. We approved three 
drugs designated under the GAIN Act. We recently cosponsored a 
workshop on this topic with the National Institutes of Health. 
Of course, our fellow center, the Center for Biologics has been 
working on vaccines, another way of addressing this problem, 
and the Device Center working on testing methods.
    Despite all this progress, we must recognize that a robust 
pipeline of new investigational antimicrobials does not 
currently exist, nor is there a large number of drug discovery 
laboratories out there working to bring forth the next 
generation of candidate drugs. So, we don't have a robust 
pipeline. The reason for this, apparently, is primarily the 
absence of commercial incentives to antimicrobial development. 
This problem must be solved one way or another if we are going 
to prevail in our fight against the ever-changing microbes.
    We don't just need new treatments for resistant organisms, 
although we need those urgently, we need to keep introducing 
additional treatments against common conditions as well, since 
our existing armamentarium is inevitably going to weaken over 
time. We don't just need to respond to the current crisis, we 
need a robust pipeline going forward.
    Because this is such a multidimensional problem, we all 
must work together to prevent the loss of these critical 
weapons against disease, so I am very happy to answer any 
questions.
    Mr. Pitts. The chair thanks the gentlelady.
    [The prepared statement of Dr. Woodcock follows:]
    
    
    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
    
    
        
    Mr. Pitts. I will begin the questioning and recognize 
myself 5 minutes for that purpose.
    Dr. Woodcock, yesterday FDA Commissioner Hamburg posted a 
blog post titled, ``FDA's Take on the Executive Order and 
National Strategy to Combat Antibiotic Resistance Bacteria'' 
where she wrote ``Few issues in public health today are as 
critical and time urgent as combating the growing threat of 
antibiotic resistance. It is a high priority for FDA to work 
with our partners to find solutions for this serious public 
health problem.''
    Would you explain the urgency of this situation for public 
health and national security?
    Dr. Woodcock. Well, as many of the members have already 
stated----
    Mr. Pitts. Press your----
    Dr. Woodcock. Sorry. As many of the members have already 
stated, for public health, we are already seeing excess deaths, 
and we are seeing people who in fact cannot be treated with any 
existing therapy that we have, and I think the threat here to 
public health is that we can have emerging epidemics of these 
organisms that they will spread. Right now they are fairly 
limited and sporadic, but will spread, and we will be in a 
situation where we literally can't treat an infection that is 
unfolding in a wider sense.
    In addition, each year we are seeing greater and greater 
resistance problems for ordinary microorganisms, and so doctors 
are having to turn to what we would call second or third line 
antimicrobial agents, agents we use to reserve for very 
selected situations. And as that occurs, more resistance to 
those will evolve, and so eventually we are going to be empty 
handed.
    Mr. Pitts. OK. In the case of antibiotics, even slight 
variations in the bacteria's genetic makeup can be the 
difference between a drug working or not working. Understanding 
that bacterial resistance compounds this problem many times 
over, why is it important for our antibiotic drug pipeline that 
we have multiple drug options for the same class or family of 
drugs?
    Dr. Woodcock. Yes. Well, what we know is when we develop an 
antimicrobial it evolves over time after that antimicrobial is 
used, and after time, it may be that it can be effective 
against certain forms of an organism and not against other more 
resistant forms, and the mechanism of resistance is different. 
There are many different mechanisms of drug resistance. That is 
why having a large number of drugs in a class or even 
improvements in a class can be extremely helpful in this 
situation because you can match the antimicrobial to the 
organism you are trying to treat.
    Mr. Pitts. Do we have the type of drug redundancy 
highlighted above that we need to effectively combat this 
problem right now?
    Dr. Woodcock. We do not because that is sort of the cutoff 
line. The antimicrobials that are no longer useful against many 
infections is getting higher and higher every year, especially 
for certain types of bugs.
    Mr. Pitts. Do you believe that we need to further 
incentivize new drug and diagnostic development if we are to 
appropriately address the issue of antibiotic resistance, and 
if so, what would you recommend?
    Dr. Woodcock. I do believe we must incentivize it because 
the current situation shows that the incentives have not been 
enough to stimulate development in this area. So for drug 
development, apparently, developing antimicrobials is still not 
attractive enough. It still doesn't appear that it might not be 
a loss to business, that there isn't an attractive enough 
business model to build those robust programs that are needed 
to both discover and then develop new classes of 
antimicrobials.
    For diagnostics, I will tell you that Louis Pasteur and 
Alexander Fleming would recognize the methods we use today 
because they invented them, and so there is a lot of room at 
the top for improvement. We are using genetic sequencing of 
human genome, which is huge compared to the microbial genome, 
but using clinical practice of advanced methods is not the 
norm, and that, improving diagnostics would tremendously 
simplify clinical trials and also treatment.
    Mr. Pitts. Now, we are talking about incentives here. Do 
you believe that such incentives could be used in other unmet 
need areas beyond just antibiotics?
    Dr. Woodcock. Well, of course, I believe that that is 
possible. However, as I think Mr. Waxman said, there are 
tradeoffs you have to balance. There are always tradeoffs in 
putting these incentives in place, and I, being a physician and 
a scientist, am not the most qualified person to make those 
tradeoffs. I think Congress really has to weigh those.
    I can tell you that the public health urgency for this 
problem is severe and will continue, and I think you'll hear 
that from other experts as well. We are not over the hump here. 
We have not succeeded in developing a system that will continue 
to generate effective new antimicrobials. We don't have that. 
We have sort of heroic efforts here and there.
    Mr. Pitts. Thank you, Dr. Woodcock. My time is expired. The 
chair recognizes the ranking member, Mr. Pallone, 5 minutes for 
questions.
    Mr. Pallone. Thank you, Mr. Chairman. Both the Executive 
order issued yesterday and the report of the President's 
Council of Advisors on Science and Technology emphasize the 
danger of antibiotic use in the agriculture industry.
    While it is clear we should do more to encourage greater 
research in development of new drugs, it also makes sense that 
we should be investing in efforts to limit the further spread 
of drug resistant bacteria strains and make the best use of 
existing drugs so they can remain effective for longer periods.
    So Dr. Woodcock, in your testimony, you point to FDA's 
cooperative effort with CDC to promote greater stewardship, 
including the ``Get Smart'' campaign. I would like you to 
elaborate on this partnership, and on FDA's role in the 
initiatives laid out in yesterday's Executive order.
    Dr. Woodcock. Well, obviously there needs to be better 
stewardship both in human and agricultural uses of 
antimicrobials, as has already been said. About half, CDC 
estimates, of antimicrobial outpatient prescriptions are not 
necessary, given the condition the patient has, and that leads, 
especially if people only take the drugs for a little bit, can 
lead to big problems, and also in the animal world. Now, in the 
human area, FDA is collaborating with CDC on these efforts, but 
CDC is primarily the lead on improving better use in health 
care, and that is a multi-faceted effort.
    In the animal health space, FDA had put out a guidance to 
the Center for Veterinary Medicine calling on manufacturers to 
cease use of important human antimicrobials for growth 
promotion in food animals, and they have secured the 
cooperation of all the manufacturers who are engaged in that 
space, to my understanding, and then there will be a process 
whereby those indications are withdrawn. And then use in food 
animals would be required under the supervision of a 
veterinarian for a health condition in the animal, so that 
would be a great improvement.
    Also, as was discussed in the report yesterday, though, we 
need better surveillance and data to understand the link 
between antimicrobial use in animals, or humans, in the 
development of resistance. That is still rather poorly 
understood.
    Mr. Pallone. All right. Thanks. I wanted to get FDA's views 
on certain aspects of the ADAPT Act. As I understand the 
purpose of the bill, its goal is to facilitate FDA's ability to 
approve new antibiotics that have been tested only in a limited 
population, and for which the need for the drug is critical. I 
know you already do approve drugs tested in limited 
populations, for example, drugs for rare diseases, so I would 
like you to explain if and why the existing accelerated 
approval mechanisms aren't meeting the current need. I would 
also like you to address whether you believe the ADAPT Act as 
currently drafted provides the FDA with sufficient authority to 
ensure that ADAPT antimicrobials would be labeled in a way that 
clearly distinguishes them as different from other 
antimicrobials.
    It seems that if we are considering allowing drugs on the 
market tested only in very limited clinical trials, we need to 
be confident that providers and patients understand the care 
with which these drugs must be used.
    Dr. Woodcock. Yes. Well, we think the ADAPT Act has 
elements that we have been discussing for a long time. Let me 
explain some of the situation. We approve drugs for limited 
population all the time, orphan drugs, rare subsets, but 
generally speaking, the clinical community is not tempted to 
use those for somebody with a cold, right. It is for some rare 
enzyme deficiency or some cancer, rare cancer or whatever. With 
antimicrobials, the big problem is really the use outside of 
where it would really clinically be indicated, and one of the 
barriers for these highly resistant organisms is that their 
occurrence is sporadic.
    We are very lucky that there are not widespread outbreaks, 
right, but because there are not widespread outbreaks, it means 
the testing of the drugs in broad populations is difficult. 
Actually, that is good news because otherwise we would really 
be in trouble, all right, if there were large numbers of people 
suffering like this.
    So that means, by definition, if you are going to get these 
drugs on the market for these small populations of resistant 
organisms, you are going to have to have small trials, and you 
will have more uncertainty about the effects. So more 
uncertainty about the effects, and worries that the drug will 
be used in conditions where it is not warranted, those are the 
two issues we are trying to address.
    In orphan conditions, yes, there is uncertainty about the 
effects, but the orphan community that uses these drugs, 
usually those are sub-specialists who are treating a very rare 
disease, and they have a very good understanding of what 
studies were done on the drug and so forth. It often may be the 
only drug ever studied for that condition.
    So our thoughts, and the Administration has not taken a 
position on this, but we have thought about this, that to offer 
very small development programs is a big incentive, but the 
quid pro quo really is to send a signal to the clinical 
community, some kind of signal, some kind of message that this 
is special. That there is more uncertainty and also use good 
stewardship with this particular product because using it in a 
lot of conditions where it is not warranted would also more 
rapidly increase the development of resistance.
    Mr. Pallone. Thank you.
    Mr. Pitts. The chair now recognizes the gentleman from 
Georgia, Dr. Gingrey, 5 minutes for questions.
    Mr. Gingrey. Mr. Chairman, thank you for recognizing me. I 
know that the vice chairman of the subcommittee, my colleague, 
Dr. Burgess, was scheduled to go next, and Mike, thank you for 
letting me ask my questions now.
    Dr. Woodcock, thank you, too. As a witness, we have had you 
before our committee many times since I have been on the 
committee, and you are just always so straightforward and you 
explain things in a very clear way, and I mean that sincerely. 
You do a great job, and we appreciate that very much.
    I want to continue in the line of questioning that Mr. 
Pallone started, and again, I have limited time, so let me get 
right into that. Congressman Green and I had been working on 
this ADAPT Act, as you know, and it is legislation that 
supports the FDA's flexibility to consider all forms of 
evidence in addition to data from clinical trials when 
considering novel antibiotics.
    How important do you believe adaptive and unique trial 
designs can play in encouraging new antibiotic drug 
development? And before you answer that part, and I am sure 
everybody in the hearing probably knows this, but in your 
typical phase 3 trials before a drug can get to market, you are 
going to have to have a population of 1,000 or more people that 
you are treating, and there are also other requirements that 
they can't have had an antibiotic within 24 hours of the start 
of the trial, or at one point it was 3 days, I think, and then 
we got it down to 24 hours.
    But you are going to have a limited population of people 
that have these diseases, and when they get to the hospital 
sick as heck, the first thing the doctor is going to do, the 
emergency room physician is going to hang some antibiotic, even 
if it is wrong, they are going to start treating them, and 
then, all of a sudden they are not eligible, and you have a 
limited number of people. If you wait till you get 1,000, it is 
too late. So if you will kind of take that a step further and 
discuss that for us.
    Dr. Woodcock. Thank you. And thank you, and Mr. Green, for 
your leadership on this. I think it is very important.
    Yes, there is a range, and I think that is what people have 
to recognize. There is a range of development programs that are 
needed. For common conditions, outpatient pneumonia, we have a 
lot of drugs out there that still work. If we introduce new 
drugs, we want them to be just as good as the other drugs, and 
they are going to need larger development programs, and that is 
true for many. But for these very rare, fortunately, resistant 
organisms that are multi-drug resistant, there is almost 
nothing to treat them. These cases are occurring sporadically 
here and there or in outbreaks in ICUs or something like that, 
and we have to think of different ways of evaluating new 
treatments. We can't just set up a trial and wait for all this 
to happen and expect we will be able to enroll thousands of 
people. And it is true, in fact, if we enrolled thousands of 
people, it will have been too late, this would be a terrible 
thing.
    So it is true that all antimicrobial drug development is 
very difficult. In addition to the economic problems, there is 
this huge difficulty in doing trials, especially in people who 
are really sick. You can't use a placebo, obviously. You don't 
know, because of the problem with diagnostics, you may not know 
for a few days what organism they are infected with. So there 
are all these technical problems that make it very difficult to 
do antimicrobial drug development.
    So because we have a tremendous unmet medical need for 
people--where there is no treatment available, typically what 
we do in that case is we accept more uncertainty, and that 
means novel trials that we might do.
    Mr. Gingrey. Dr. Woodcock, speaking of that uncertainty, I 
think that is probably why, and I commend the President for 
this in his executive order of just yesterday, the $20 million 
award for the development of these point-of-care diagnostics so 
someone could take a pill or a piece of tape or something and 
put it inside their mouth. If it turns a certain color, you 
know what you are dealing with right there, and you don't have 
to just shotgun approach.
    Dr. Woodcock. That is right.
    Mr. Gingrey. You can immediately go right to what you need, 
so I think it is a great thing.
    Dr. Woodcock. I agree. I mean, if we could bring diagnosis 
of infectious disease into the 21st century, we would have made 
a huge advance and really accelerated the development of 
therapy, so that is a good thing.
    Mr. Gingrey. Thank you very much, Mr. Chairman. I yield 
back, and thank you for your courtesy.
    Mr. Pitts. The chair thanks the gentleman. Now recognize 
the ranking member of the full committee, Mr. Waxman, 5 minutes 
for questions.
    Mr. Waxman. Thank you, Mr. Chairman. I also want to say to 
you, Dr. Woodcock, this may be the last hearing where you and I 
will have the opportunity to publicly talk like this, but you 
have done a wonderful job at the FDA, and your responses to 
questions from both sides of the aisle have been very, very 
thoughtful, and I want to commend you for the work you have 
been doing and thank you for it.
    I want to echo the comments by Mr. Pallone about the 
importance of strong labeling statement or logo in the context 
of the ADAPT Act. I think it is essential that the drug bear a 
prominent statement describing the abbreviated pathway by which 
it came to market. Without this requirement, I am not sure that 
the whole thing would work. It would be much less likely to 
achieve its purpose of fostering and facilitating the 
development of critical new antibiotics for life-threatening 
resistant pathogens. And additionally, inappropriate or 
injudicious use of a drug developed through this pathway could 
result both in patient harm and in more rapid loss of the drug 
to antibiotic resistance, so I just wanted to underscore that 
point.
    I want to ask you about a concept that you mention in your 
testimony designed to spur development of new antibiotics. That 
is delinkage. As I understand it, under this model, the sale of 
antibiotics would be delinked from the returns on investment. 
After all, we don't want to say that we want more antibiotics 
sold. We want to make sure that the antibiotics that are sold 
and used are antibiotics that are going to stay effective for 
as long as possible.
    So some other funding mechanism would be created besides 
the traditional way of selling more drugs to ensure that a 
company was able to make a profit from developing an 
antibiotic. As others have noted, the usual pharmaceutical 
business model doesn't fit very well in the case of 
antibiotics.
    We need to, however, recognize companies need to be able to 
recoup their investment and make a reasonable profit. Others 
have raised the notion of a wild card exclusivity. I mention in 
my opening statement I think it is a very dangerous idea. We 
don't want to force patients taking one type of drug to fund 
development of another, so ensuring that antibiotic developers 
still can make a profit without linking that profit to how much 
antibiotic is actually sold seems like a brilliant way to 
approach this problem. Could you elaborate on this, tell us 
more about what ideas you have along these lines?
    Dr. Woodcock. Well, yes, because right now we have 
incentives that actually weigh against our objectives. Our 
objectives are that we have the most judicious use of new 
antimicrobials possible, and yet the incentive, if you have 
spent $500 million developing the drug, you need to recoup that 
amount of money and a fair profit to stay in business and 
develop the next generation. And so these incentives are 
sideways to each other and countervailing, and so that is one 
idea that has been raised that we mentioned to delink the need 
to have a large volume of the antibiotic used which would then 
lead to faster development of resistance. So if that were 
delinked from the----
    Mr. Waxman. Do you have ideas on how to do that?
    Dr. Woodcock. I, as I said, I am really not good at 
financial matters, and so I am sorry.
    Mr. Waxman. We could count on you for everything, economic 
advice as well as pharmaceutical and food and other things that 
FDA does.
    Well, let me talk to you about another issue and that is in 
stewardship, using antibiotics judiciously. It seems to me this 
is a critical component of any effort to address the antibiotic 
resistance problem. The just released report on Combating 
antibiotic resistance from the President's Council of Advisors 
in Science and Technology, or the PCAST, stresses the 
importance of increasing the longevity of current antibiotics 
by improving the appropriate use of existing antibiotics and it 
discusses the need to look at both human use and animal use of 
existing antibiotics.
    We know there is a lot of inappropriate use of antibiotics, 
both on the human side and I believe on the animal side. The 
PCAST report describes the important role that diagnostics can 
play in reducing this type of inappropriate use. Do you agree 
that diagnostics are important for stewardship efforts? And you 
alluded to this earlier, but can you describe how the 
widespread adoption of diagnostic tests would help preserve 
existing antibiotics, and is FDA taking any actions to foster 
the development in the use of these tests?
    Dr. Woodcock. Well, I believe diagnosis should be the 
foundation of therapy, and unfortunately, in the infectious 
disease space, often you are treating well before you know or 
before you ever know what the person has, and this is a 
fundamental problem. Like I believe the advent of rapid strep 
testing has really reduced the use of drugs for presumptive 
strep that often is colds or something, upper respiratory 
infections of one sort of another.
    So if we could get more certainty into the diagnosis early, 
be able to reassure the doctor and the patient or family that, 
no, this is not a dreaded bacterial infection that needs an 
antimicrobial, we could go a long way, I think, to lowering 
this inappropriate use. So diagnostics are the key. It is just 
we are far away from that right now and need to stimulate that.
    Mr. Waxman. Give more incentives for that?
    Dr. Woodcock. I believe so, uh-huh.
    Mr. Waxman. Thank you. Thank you, Mr. Chairman.
    Mr. Pitts. The chair thanks the gentleman. Now recognizes 
the vice chair of the subcommittee, Dr. Burgess 5 minutes for 
questions.
    Mr. Burgess. Thank you, Mr. Chairman. And Dr. Woodcock, 
again, welcome to our humble little subcommittee. Your last 
statement, diagnostics are the key, now, this is not part of 
this discussion today, but we have had discussions on 
diagnostics, and I realize it is not your part of FDA that is 
talking about increasing the regulation of testing, 
particularly laboratory diagnostic tests, or laboratory 
developed tests, rather, but that that factors into the 
equation. I mean, yes, we are talking about the length of 
drugs, of time it takes drugs to get through the pipeline, but 
if it also takes the testing longer to get through the 
pipeline, we are actually making things harder on ourselves, 
are we not?
    Dr. Woodcock. Yes. Well, recently, for example, we have had 
a workshop with Brookings on this issue of the co-development 
and the technical issues. On the final guidance that we put out 
recently on co-development and companion diagnostics said for 
life-threatening disease, we are going to go ahead and approve 
the drug even if the test isn't fully baked yet.
    There are technical problems in getting these tests 
developed right now, and I think all of us believe that for 
many of the genomic tests, that next generation sequencing is 
really going to be a key and really rapidly improve this 
situation. So I have great hope that that will be coming soon 
because we are facing it now. Every disease--say cystic 
fibrosis, for example, there are 150 different mutations in 
that gene, each of which may translate to a slightly different 
phenotype in prognosis, and that goes with cancer and many 
other diseases. We really need to rapidly get to a point where 
we have a true standard that we can all agree upon so that we 
know what we are dealing with, and that, yes, that will rapidly 
improve development of drugs for these serious conditions.
    Mr. Burgess. Well, I share your enthusiasm for genomic 
testing. I am somewhat more pessimistic because it seems like I 
can remember Dr. Elias Zerhouni in my first term on this 
committee, which was many, many years ago talking about some of 
these same things and where it is sort of the Jetson's flying 
car. We are still waiting for that to happen.
    On the issue, and at HHS, you did your study on antibiotic 
initiatives, the incentives for development of new drugs, 
vaccines, and rapid diagnostics for bacterial disease, and then 
talked about moving the needle in monetary terms for companies 
by a reduction of the time for clinical trials, correct?
    Dr. Woodcock. Yes.
    Mr. Burgess. Is it really possible to move the needle on 
that?
    Dr. Woodcock. Well, I believe for the limited population 
antibiotic development use that is possible. That is only one 
factor, but if you have a very high bar to getting on the 
market, then you are going to need much stronger incentives. I 
believe for those very rare, right now, resistant organisms, we 
could have very small development programs and that there be a 
societal agreement that having a treatment available for those 
is better than having nothing. And so we could have very small 
development programs.
    We simply would like to have a signal then to say to the 
clinical community, ``No, that this is different, OK. No, this 
didn't have a huge development program. We are offering you a 
tool, but you ought to be aware and provide good stewardship of 
this tool.'' So we do believe in most cases it is possible, and 
even for common diseases, we have worked with new guidances to 
try to lower the cost of a development program so that the 
pipeline can be, you know, more robust.
    Mr. Burgess. On the issue of judicious use and stewardship, 
and I hear the birds that are set on that, but when you talk 
about using things outside their area of indication, we tend to 
think of the world in which we live, but I am from Texas, and 
just a little bit south of Texas there is a different world 
where there is not a prescription required and people can 
simply go to the farmacia and say I need this----
    Dr. Woodcock. Right.
    Mr. Burgess [continuing]. And the pharmacist may direct 
them to a particular drug or they may just simply come in with 
a recommendation from a family member and make that purchase. 
So it is obviously harder to control that within the 
jurisdiction of the United States when it is happening right 
outside; is that not correct?
    Dr. Woodcock. I totally agree. Everywhere is right outside 
with modern air travel, and so we are getting soldiers back 
from combat who have acquired very dire resistant infections. 
We have travelers who are coming back in the United States who 
have been in--there are many countries where antimicrobials are 
used very freely and may be available to consumers without 
intermediaries.
    Mr. Burgess. And it concerns me that we want to put the 
onus on the doctor treating the patient in an emergency room 
with a sick kid and a concerned family, and we are putting all 
the onus on our physician here when the greater wide world none 
of those constraints exist. I agree with labeling. I agree with 
making the indications well known, but I don't think we should 
ever try to put the Federal Government in the position of 
second guessing the judgment of a physician.
    Dr. Woodcock. Well, we agree with that. Because treatment 
is empirical, we can't indicat. It has to be suspected. You 
can't say you can't treat a patient because this wasn't studied 
in clinical trials if there is nothing else available, or if 
clinicians, as you said, must use their best judgment when a 
patient presents before them. We agree with that. We want to 
give the best directions and information to the clinician so 
they are aware of not only what clinical situation they are 
dealing with but how much information pertains to the drug and 
what kind of drug it is.
    Mr. Burgess. Thank you, Mr. Chairman. I will yield back.
    Mr. Pitts. The Chair thanks the gentleman.
    Now, recognize the gentleman from Texas, Mr. Green, 5 
minutes for questions.
    Mr. Green. Thank you, Dr. Woodcock, for being here this 
morning. It is always a pleasure to have you before our 
subcommittee.
    I want to commend you and the FDA on the efforts on the 
GAIN Act. I know at least two drugs have been released, and I 
also want to thank you for your efforts on the ADAPT Act 
legislation I cosponsored with my colleague and good friend, 
Dr. Gingrey.
    When Dr. Hamburg participated in last week's Cures round 
table, she spoke about the troubles with large clinical trial 
designs in the antibiotic space.
    Can you tell me your thoughts on how the unique nature and 
incentives, or even disincentives, inherent to the antibiotic 
space can sometimes make large clinical trials prohibitive?
    Dr. Woodcock. Certainly. Well, not only is it actually kind 
of hard to discover new antibiotics, it is expensive to develop 
them, and the reason is you have a--it is really what Dr. 
Burgess was talking about. You have a patient before you with 
pneumonia. They could have all sorts of different organisms 
causing the pneumonia, and without rapid diagnostics, you don't 
know what is causing the pneumonia.
    And so when a physician is trying to use an investigational 
drug, you have a sick person in front of you, you have a 
prolonged consent process where you have to have informed 
consent; people are not going to wait, often, to go through 
that process to start a sick person on antibiotics.
    And so then we have the issue that the patients are 
pretreated with different therapies until they get into the 
clinical trial, and then you have all the heterogeneity, and 
then you have existing therapies. It is not ethical to have the 
comparison group have no treatment usually. And so you have to 
compare it. You have to do a comparative trial against existing 
therapy. Those are typically called non-inferiority trials 
because you may not expect to be better than existing therapy; 
you simply want to show you're statistically as good as.
    So those challenges tend to increase the number of people 
needed to be enrolled in a clinical trial to a very large 
number, and they are hard to get. They are hard to enroll 
because clinicians often don't want to take sick people and go 
through all the paperwork to get them in a clinical trial.
    Mr. Green. OK.
    The ADAPT Act envisions a scenario where more adaptive 
clinical trials may be used to help drug developers seeking to 
create the next antibiotic effective against drug-resistant 
bacteria.
    Can you tell me your thoughts on how the pathway laid out 
in the ADAPT Act may benefit drug companies in pursuit of these 
new and novel antibiotics?
    Dr. Woodcock. Yes. Well, we envision that you can make 
trade offs based upon the medical need, and we do this in many 
cases. So if you have a tremendous medical need, people are 
going to die quickly, and you have nothing to treat them with, 
then you will accept a lot of uncertainty about the estimates 
around safety and effectiveness in exchange for something that 
may work for that patient. Right? And so that means you can 
have shorter, very small development programs, if the need is 
huge.
    On the other hand, if we are talking, for example, about 
another drug to treat pneumonia, which is a more common 
infection for which therapies are available, that situation 
would not be covered by the ADAPT Act. With ADAPT we are 
talking about rare resistant organisms where there are really 
very few treatment options available. And we actually think 
there are multiple development programs that could be done, 
depending on this level of need.
    In some cases, you may only have ten infections in the 
United States a year of this certain organism. In other cases, 
you may have hundreds. You could get a more robust program 
there, right? But then you are going to be exposing more people 
when you approve the drug because there are hundreds of people, 
maybe thousands of people, out there that have the condition.
    So you would basically match the development program and 
the medical need together and put that together, but then we 
would like to have a very strong signal or symbol or whatever, 
not of a fearful signal or whatever, but an informative signal 
to the clinician that the drug had gone through this kind of 
development pathway so they would understand that.
    Mr. Green. Thank you.
    And I hope with this hearing today and we will be able to 
move the ADAPT Act across the line in the future.
    In the coming weeks and months I expect to continue our 
dialog with interested parties and stakeholders, including our 
second panel today, on ways to strengthen this proposal and 
complete the next step in fighting our public health crisis.
    I want to thank you and your staff for your hours you have 
spent working with our offices during the August recess, and I 
know we can continue that effort because this is important. And 
again, thank you for being here.
    And I yield back my time, Mr. Chairman.
    Dr. Woodcock. And I thank you for your leadership.
    Mr. Pitts. The chair thanks the gentleman.
    And now recognizes the gentleman from New Jersey, Mr. 
Lance, 5 minutes for questions.
    Mr. Lance. Thank you very much, Mr. Chairman.
    Good morning to you, Dr. Woodcock.
    Dr. Woodcock. Good morning.
    Mr. Lance. As members of the committee, we have heard 
firsthand the urgent need for greater incentives to encourage 
new drug and diagnostic development in the antibiotic space.
    Some of the witnesses on the second panel have recommended 
a wide range of incentives that would encourage greater 
development.
    Do you believe that incentives we identify in the 
antibiotic space might also benefit other areas of unmet need 
such as rare diseases?
    Dr. Woodcock. Well, as I said earlier, I believe that there 
is a tradeoff between the incentives you offer. There is always 
some tradeoff there, and there are various orphan diseases for 
which there are many, for which no development is occurring. So 
I think you have to determine whether, those tradeoffs, those 
economic tradeoffs and I am not qualified to say what is the 
right course. I think that Congress makes those decisions.
    However, I can tell you that antimicrobial development is 
urgent and it is a public health issue. The orphan drugs, those 
people are suffering from those, have a tremendous need for 
therapies to be developed, and few are being developed.
    We are doing some things such as working with the National 
Organization for Rare Diseases to get better natural history 
studies that will incentivize development and make it easier to 
understand what is the course of this orphan disease so we 
understand what is needed to study it. However, there are still 
major financial obstacles.
    Mr. Lance. Thank you.
    As you know, I chair the rare disease caucus on the 
Republican side, and I have in my office virtually every week 
parents of children who suffer from rare diseases where there 
are no medicines at all, and as a society, we have to do a 
better job, and I have read the testimony of those on the 
second panel, and I hope we can move forward.
    And you say you may not be qualified, but I think you are 
one of the great experts in the country on all of these issues, 
and we look forward to working with you in that area.
    Yesterday the President announced an executive order on a 
five-year plan to combat antibiotic resistance. What role, Dr. 
Woodcock, will the FDA play in helping to facilitate the 
President's order?
    Dr. Woodcock. Yes. Well, we have been working with the 
planning group on this, and the FDA has a wide range of 
responsibilities, everything from animal health and those 
issues, the surveillance activities which are done of 
antimicrobial resistance, for which CDC is the primary lead, 
but FDA, for example, works with CDC and USDA on the National 
Antimicrobial Resistance Monitoring System, NARMS, which is 
mentioned in those reports which monitors antimicrobial 
resistant organisms in foods and so forth, and these things are 
intended to be strengthened.
    In addition, we will work on redoubling our efforts to 
streamline antimicrobial development from a regulatory 
perspective, and obviously there is interest in better 
diagnostics which is put forth in that report. So we have 
multiple roles to play.
    Mr. Lance. Thank you.
    And finally, Dr. Woodcock, may Bucknell win all of its 
games in football this autumn except, of course, against 
Lehigh.
    I yield back the balance of my time.
    Dr. Woodcock. Thank you.
    Mr. Pitts. The chair thanks the gentleman.
    Now recognize the gentleman from Illinois, Mr. Shimkus, 5 
minutes for questions.
    Mr. Shimkus. Thank you, Mr. Chairman.
    And, Dr. Woodcock, it is good to see you back here again, 
but I think you are being too coy. The business model to 
whether it is going to be in diagnostics or testing is the same 
business decisions that we make in our home. It is simply about 
risk and reward, and so what is the reward that will encourage 
them to stay and what is the amount of risk, and I think you 
all are going to play a big role in that, and we would hope you 
will work with us to do that.
    I have been very excited about this debate of the 
diagnostic space, and in your opening statement, and I had to 
go onto the World Wide Web. All new technology allows us to do 
that without telling staff to go find it and then get it back 
to us.
    Fleming was born in 1881. Pasteur was born 1822.
    Dr. Woodcock. Right.
    Mr. Shimkus. Surely if they could recognize our testing 
procedures now, we have got work to do to ramp it up, I think, 
and that is the whole biosimilar debate and the genetic 
markings and all this other genome stuff that is going on. So I 
am very, very excited.
    Also I have been involved and helped along with following 
Dr. Gingrey's lead. Appreciate the work he has done. And Gene 
Green, I look forward to working with Gene as we move forward 
in the next Congress, and we are having discussions to do that.
    So you hear the same questions right from us? And so I 
think what we really want to do, and we will hear it from the 
next panel, is let's get a handle on this risk and reward, and 
I am not so adverse to incentivizing the private sector in 
something that they are moving on that is going process and 
helping them do that if then they are going to take and then go 
in places that no one else is going to go.
    So one of the first questions was, as you have seen of 
companies leave the field of antibiotics, are they small, 
medium, or large? How would you classify them?
    Dr. Woodcock. Well, I would say that the larger companies, 
most of them have left the area for better pastures, so to 
speak, where they see a business model that provides a return 
on investment, and similar with many of the medium companies.
    There are many small startups that are trying to get into 
the antimicrobial space and that is good news, but I must 
recognize they aren't always as successful and they may only 
have one product that they are trying to develop.
    Mr. Shimkus. So, and we have talked a lot about the ADAPT 
Act today, and there has been some success in that process.
    Do you think there are some additional things we can do to 
incentivize? What other things can we build on to encourage 
additional incentives for the ADAPT Act or other processes that 
we are talking about?
    Dr. Woodcock. Well, I think you have to think about what 
are the alternatives. All right? I know there is some 
government development--there are government awards. Those are 
usually under contract. They are for certain entities--
molecular entities.
    So there are a few of those, but what are the other ideas 
to develop a robust--you need drug discovery effort, and that 
means scientists working full time in laboratories trying to 
figure out the new molecules. This is way before a drug gets 
tested in people, and it doesn't really involve the FDA, and 
what I understand from the community, the discovery community, 
is actually antimicrobial discoveries are quite hard.
    And I didn't know that until I talked to them, that they 
have screened large numbers of molecules and pathways and so 
forth, and it is harder, it is hard to find the next generation 
of products. And so that means a very robust scientific effort 
has to go on in the basic science of microbes and also in 
discovery of these new molecules, and to do that, somebody has 
to have the faith that they are going to make money from that 
10, 15 years hence. OK? And they don't have that faith right 
now, I can tell you.
    So I don't think whatever has been done is enough. And 
because you have to consider, if it is not going to be 
commercial development, how is it going to happen? Where is it 
going to happen?
    Mr. Shimkus. And would help us as we go through this 
process, help this committee to identify ways that we can help 
incentivize?
    Dr. Woodcock. Absolutely.
    Mr. Shimkus. I mean, because you are talking with these 
folks. And we will too, but we will need a lot of ears on it.
    And I am going to end just with this, this labeling debate, 
the way I understand it. We went through this debate with the 
paper labelings and the information on pill bottles that no one 
reads. Everybody knows that. So labeling through the Web and 
labeling through--there has got to be a better way than just to 
keep putting stickers on pill bottles or things, because they 
are just overwhelmed, and I would like some simplicity in that. 
That is just a statement.
    Dr. Woodcock. Could I respond to that?
    Mr. Shimkus. Please do.
    Dr. Woodcock I think the FDA--CDER is working on developing 
a patient information leaflet. All right? A one-pager that you 
get either electronically or at the pharmacy that tells you--
every other country has this kind of thing. OK? So it tells you 
how to take the drug, what it is for, and so forth.
    But then we have proposed and we are interested in going to 
an electronic physician label which is that thing that is 
folded up inside the pill box. We would like to move that to 
electronic with some paper options for those who are still 
electronically impaired, shall we say.
    But most of the world can easily get that information at 
Drugs@ FDA, and many other sites.
    Mr. Shimkus. Thank you.
    Mr. Pitts. Chair thanks the gentleman.
    And now recognize the gentleman from Florida, Mr. 
Bilirakis, 5 minutes for questions.
    Mr. Bilirakis. Thank you, Mr. Chairman. I appreciate it.
    And thank you for your testimony, Dr. Woodcock. We 
submitted some questions for the record in November, and to my 
knowledge, the committee hasn't received many responses. So I 
want to ask you one question again.
    Can you tell me how many treatments were approved with 
novel biomarkers used for the first time within the last 5 
years? Have any accelerated approvals occurred with a novel 
marker and a never before treated disease within the last 5 
years? How many new biomarkers did the FDA accept for first 
time use in the last 5 years? If you can provide that answer.
    Dr. Woodcock. Yes. We are working very hard on this. That 
was a very provocative question and, actually, we had a very 
long debate last week among our senior people on the definition 
of a biomarker, and which of these end points, such as FEV1, 
which is how fast you can breathe into one of those machines, 
is that a clinical end point or is that a biomarker? Clearly, 
in my opinion, it is a biomarker, but not everyone agreed with 
that. So we are working very diligently on that.
    The answer is yes. We approve a large number of drugs on 
biomarkers end points all the time. A very significant 
proportion of the drugs we approve are based on that, and we 
have approved novel ones in the last 5 years, but to get you 
the count has taken a little bit more effort because we had to 
resolve these definitional issues, disputes with that.
    Mr. Bilirakis. When do you think we might get some answers 
with regard to the count?
    Dr. Woodcock. I am not in control of that time frame, but I 
can tell you we are working very diligently, and I believe you 
will get this response.
    Mr. Bilirakis. OK. Well, continue to follow up.
    Dr. Woodcock. It was a good question. It really provoked 
some thought internally.
    Mr. Bilirakis. Thank you.
    There was approximately $450 million in direct funding in 
Fiscal Year 2014 to address the antibiotic crises. These funds 
were allocated across HHS, the VA, of course, DOD, and USDA. 
About 75 percent was used for basic and applied research with 
the rest directed toward stewardship and surveillance.
    Currently how do these various agencies coordinate their 
efforts?
    Dr. Woodcock. Well, there has been a longstanding 
antimicrobial task force at the agency level across the 
government that was headed at HHS, and FDA has been a part of 
that.
    The Executive order conceives and directs formation of a 
higher level task force in the government that will direct the 
implementation of the strategy that was announced.
    But there has long been coordination across the government 
agencies, and I believe the PCAST report discusses that.
    Mr. Bilirakis. OK. On this how is the U.S. coordinating 
with the World Health Organization and other organizations as 
well as other countries working to combat antibiotic 
resistance?
    Dr. Woodcock. Yes. We do have, we, the FDA, CDC, and many 
others have relationships withthe World Health organization, 
and I think the Executive order yesterday and the strategy 
conceives of much tighter collaboration with WHO in a very 
concerted way.
    Mr. Bilirakis. OK. Thank you very much.
    And I yield back, Mr. Chairman. Appreciate it.
    Dr. Woodcock. Thank you.
    Mr. Pitts. Chair thanks the gentleman, and now recognize 
the gentlelady from Colorado, Ms. DeGette, 5 minutes for 
question.
    Ms. DeGette. Thank you very much, Mr. Chairman.
    I think this has been an excellent discussion, and I just 
wanted to ask you to clarify one thing, Dr. Woodcock.
    Mr. Outterson on our next panel is going to talk about the 
report on initiatives by the Eastern Research Group, and what 
that report concludes is that shortening clinical trial time 
frames is an unlikely contributor to innovation.
    We have been hearing counter arguments to this that without 
something like the approach taken in the ADAPT Act that I am a 
cosponsor of, it just isn't feasible to do clinical trials on 
drugs intended to treat the most serious and resistant 
pathogens.
    So from that perspective, ADAPT might be considered a 
necessity but not a sufficient condition for developing the 
most needed antibiotics, but also it would need to be paired 
with other incentives to spur investment in that area.
    So I am wondering if you can just spend a minute giving us 
your views on this issue because, really, it seems to go to the 
heart of whether we should even go forward with the ADAPT Act?
    Dr. Woodcock. Well, clearly there are multiple barriers to 
antimicrobial drug development for antimicrobial resistance. I 
do agree that the streamlining of clinical trials for testing 
drugs that treat resistant organisms will stimulate development 
in that area. Why? Partly because developers have told me that.
    But two, because we know from experience that if we have a 
clear path to market and people understand it, they are willing 
to put their money down, betting that they will have a molecule 
that can get approved.
    But this is clearly not sufficient. Number one, we are only 
talking about the most resistant organisms here and a small 
cadre of drugs to treat them.
    We also need a robust pipeline of discovery that will lead 
to new drug candidates for all different kinds of infections.
    So the limited population antibacterial drug idea and the 
streamlining of clinical trials, which wouldn't just decrease 
the time frame, it would also decrease the cost and the number 
of people needed. So it would do a number of things.
    That is one thing that we can do at FDA that we think would 
be beneficial and would be beneficial for patients, but it is 
not going to fix this problem we have of investment.
    Ms. DeGette. Thank you.
    Mr. Chairman. I yield back.
    Mr. Pitts. I think that concludes this round of 
questioning. We will have follow-up questions, I am sure, from 
members. We will send them to you and ask that you please 
respond.
    But, again, Dr. Woodcock, you are a terrific witness. Thank 
you for your being so forthright and clear in your answers.
    And we will now take a 3-minute recess as we set up for the 
second panel.
    Dr. Woodcock. Thank you.
    [Recess.]
    Mr. Pitts. The subcommittee will reconvene on our second 
panel.
    Today we have and I will introduce them in the order that 
they will make their presentations.
    First, Dr. Kenneth Hillan, Chief Executive Officer of 
Achaogen; Dr. Barbara Murray, President, Infectious Disease 
Society of America; third, Dr. Adrian Thomas, Vice President of 
the Global Market Access and Global Public Health, Janssen 
Global Services; and then Mr. Kevin Outterson, Professor of 
Law, Boston University School of Law; Mr. Allan Coukell, Senior 
Director, Drugs and Medical Devices of the Pew Charitable 
Trust; and Dr. John Powers, Assistant Clinical Professor of 
Medicine, George Washington University School of Medicine.
    Thank you all for coming. Your written statements will be 
made a part of the record. You will each have 5 minutes to 
summarize your testimony.
    And we will begin with Dr. Hillan. You are recognized 5 
minutes to make your opening statement.

 STATEMENTS OF DR. KENNETH J. HILLAN, CHIEF EXECUTIVE OFFICER, 
   ACHAOGEN, INC.; DR. BARBARA MURRAY, PRESIDENT, INFECTIOUS 
DISEASE SOCIETY OF AMERICA; DR. ADRIAN THOMAS, VICE PRESIDENT, 
 GLOBAL MARKET ACCESS AND GLOBAL PUBLIC HEALTH, JANSSEN GLOBAL 
   SERVICES, LLC; KEVIN OUTTERSON, PROFESSOR OF LAW, BOSTON 
UNIVERSITY SCHOOL OF LAW; ALLAN COUKELL, SENIOR DIRECTOR, DRUGS 
AND MEDICAL DEVICES, THE PEW CHARITABLE TRUSTS; AND DR. JOHN H. 
   POWERS, ASSISTANT CLINICAL PROFESSOR OF MEDICINE, GEORGE 
            WASHINGTON UNIVERSITY SCHOOL OF MEDICINE

               STATEMENT OF DR. KENNETH J. HILLAN

    Dr. Hillan. Thank you.
    Good morning and thank you, Mr. Chairman and members of the 
committee for inviting me to testify today.
    It was also heartening to hear the recognition of the work 
of Alexander Fleming, my fellow countryman. Of course not only 
did he discover penicillin, but actually when he received his 
Nobel Prize, he also spoke of the danger of the ignorant man 
who may easily underdose himself by exposing the microbes to 
non-lethal doses, make them resistant. That was back in 1945.
    I am the chief executive officer of Achaogen, a company 
focussed on discovery, development, and commercialization of 
novel antibiotics for multi-drug resistant gram-negative 
infections.
    It is a small company with fewer than 50 full-time 
employees and is based in the San Francisco Bay area. We are a 
member of the Antimicrobial Innovation Alliance, a coalition 
created to address the unique challenges that we have heard 
about today.
    As you have already heard, antibacterial resistance is one 
of the most significant medical challenges our country faces 
today, and at Achaogen, we are committed to trying to find 
solutions.
    Our lead product candidate, plazomicin, which has been 
engineered specifically for multi-drug resistance is currently 
being evaluated in phase 3 clinical trial in patients with 
bacterial infections caused by carbapenem resistant 
Enterobacteriaceae, and the carbapenems are considered to be 
our last line of antibiotic defense in settings where 
antibiotics are no longer active.
    The phase 3 trial utilizes a superiority designed to 
demonstrate a reduced number of deaths in patients treated with 
plazomicin based therapy versus the best available standard of 
care, which, unfortunately, is not very good today.
    We have also developed the diagnostic assay that has being 
used in the phase 3 trial to measure plazomicin blood levels to 
try to help to individualize dosing for patients which we 
believe will improve outcomes.
    The innovative design and incorporation of the diagnostic 
assay required close consultation and coordination with both 
the drug and diagnostic branches of the FDA, and we find our 
interactions with the agency to be extremely collaborative and 
believe this approach serves as a model for how the FDA can 
help to facilitate companies with development of antibiotics in 
settings of urgent unmet medical need.
    The plazomicin program is also benefited by receiving the 
first contract awarded through the Broad Spectrums 
Antibacterial program from the Biomedical Advanced Research and 
Development Authority, also known as BARDA, and this contract 
is designed to advance plazomicin through approval by the FDA 
and could provide over $100 million in total funding.
    However, even with plazomicin in a groundbreaking phase 3 
study, a great team back at Achaogen, and exciting early stage 
pipeline, a successful IPO, and significant government 
investors aboard, it has not been easy, and there remains 
significant barriers for companies developing antibiotics, and 
we can and must work together to address these obstacles so 
that effective antibiotics will always be available for 
patients.
    We would like to propose significant changes in four key 
areas.
    First, we believe new economic incentives are key. There is 
a need for reimbursement reform for antibiotics and for 
additional incentives, both push and pull mechanisms. The 
economics of developing new antibiotics is not currently 
attractive to the pharmaceutical industry, and many leading 
companies have exited from the antibiotic space. This has lead 
to a decline in the number of new antibiotic approvals, and has 
heralded the increase in antibiotic resistance.
    Commercial returns for an antibiotic are limited by the 
fact that generic antibiotics are cheap. New antibiotics are 
used sparingly to preserve their use. Reimbursement at 
hospitals is limited to a fixed payment system that is intended 
to cover the total cost of patient care, and because longer-
term returns are eroded by the unavoidable development or 
resistance.
    Furthermore, other therapeutic areas such as oncology or 
diabetes provide pharmaceutical companies with much more 
attractive opportunities for a return on their investment.
    We believe the DISARM Act sponsored by Congressman Pete 
Roskam and Danny Davis has been proposed for reimbursement for 
qualifying antimicrobial products in a hospital setting. We 
belive this would provide a powerful incentive as currently the 
payment to the hospital is the same regardless of the price of 
the antibiotic. So hospitals are incentivized to use the 
cheapest but not always the best and most effective antibiotic. 
By providing separate reimbursement for qualifying antibiotics, 
the DISARM Act would eliminate an important barrier to the use 
of more expensive antibiotics.
    Achaogen supports passage of the DISARM Act, and we would 
like to see reimbursement for qualifying antibiotics extended 
beyond Medicaid and Medicare patients to patients covered by 
private insurance.
    Second, the FDA needs authorization for greater flexibility 
for approval of antibiotics based on limited clinical data 
sets, and we have heard the rationale for that today.
    Plazomicin is following a streamlined development program 
with a single phase 3 trial. However, due to the need to power 
the study to demonstrate statistical significance for a 
mortality end point and the relative rarity of these infection 
times, the enrollment period for this study is expected to take 
3 years.
    In contrast in Europe, recent EMA guidance extends more 
flexibility in the scenario of unmet clinical need and does not 
require inferential statistical testing for antibiotic 
approvals.
    In order for new drugs to be available ahead of the 
emergence of unacceptably large numbers of drug resistant 
infections, Congress must enact legislation that authorizes the 
FDA to approve new antibiotics for limited patient populations 
based on smaller clinical trial data sets, but where the 
totality of the available evidence supports a favorable benefit 
risk profile for the antibiotic while acknowledging and 
reflecting the greater uncertainty associated with limited 
testing in the product label.
    Achaogen supports passage of the ADAPT Act to provide the 
FDA with the increased flexibility that we believe it needs.
    Third, there is a need for more rapid point of care 
diagnostic tests and a more streamlined approval path for 
diagnostics. For serious infections, a delay in the 
administration of the right antibiotic by just one hour 
significantly increases patient mortality. Traditional 
diagnostic tests, as we have heard, from the days of Louis 
Pasteur may take 72 hours to complete, and we believe the 
Federal Government could make a significant impact by providing 
support and incentives for the development of rapid and cost 
effective point of care diagnostics that advance antibiotics 
stewardship and clinical care.
    There is also an opportunity to streamline the regulatory 
process for development and approval of companion diagnostics 
tests. There is a need for an expedited and iterative approach 
to diagnostic development and approval through regulations that 
are anchored in consideration of the urgency of the unmet 
medical need and the overall benefit/risk for patients.
    The regulation should provide the FDA with flexibility to 
streamline the required analytical studies as well as a testing 
related to quality manufacturing software and documentation for 
the diagnostic device.
    And, fourth and finally, we need sustained funding for 
antibiotic research and development. We must be prepared to 
take a long-term perspective in order to fully realize the 
public health benefits that will be derived from increasing 
funding for antibiotic research and development.
    The funding that Achaogen has received from BARDA, NIAID, 
and the Department of Defense have been essential, and we 
believe it illustrates how public/private partnerships can 
successfully advance antibacterial research and development.
    We support increased funding on an ongoing and predictable 
basis for BARDA's broad spectrum antibacterial program and the 
expansion of BARDA's mission to allow investment and programs 
designed to address the public health threat posed by 
antibacterial resistance.
    We also support continued funding through NIH devoted to 
antibacterial discovery and development.
    We appreciate the opportunity to contribute to the 
discussion today, and strongly encourage Congress to take 
additional measures to mitigate the very significant public 
health threat posed by multi-drug resistant gram-negative 
bacteria.
    Mr. Pitts. Chair thanks the gentleman.
    [The prepared statement of Dr. Hillan follows:]
    
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    Mr. Pitts. And now recognizes Dr. Murray 5 minutes for an 
opening statement.


                STATEMENT OF DR. BARBARA MURRAY

    Dr. Murray. Thank you very much, Mr. Chairman.
    Thank you for inviting me to testify on behalf the 
Infectious Diseases Society of America, IDSA, on the public 
health crisis of antibiotic resistance and the urgent need for 
new antibiotics in diagnostics.
    IDSA is grateful for this subcommittee's continued 
leadership on these critical issues.
    Physicians are seeing more and more patients with very 
serious infections that are resistant to all or almost all 
antibiotics. For example, I recently saw a young woman with 
severe lupus, an autoimmune disease, who developed a very 
painful bile duct infection that persisted despite multiple 
antibiotics, endoscopies and surgical interventions. The 
infecting bacterium invaded her blood stream and it developed 
resistance to every antibiotic available, including colistin, a 
toxic antibiotic usually of last resort. Finally, all we could 
do was send her to hospice for palliative comfort care while 
she waited for the infection to claim her life after a very 
prolonged and expensive stay in the hospital.
    A colleague of mine recently took care of a very active 
patient in his sixties following a prosthetic knee replacement, 
he developed a serious pseudomonas infection that, despite 
removal of the implanted joint and multiple antibiotics, could 
not be controlled and he had to have an above-the-knee 
amputation.
    This summer I cared for two diabetic women with urinary 
tract infections, or UTI, who had to be admitted to the 
hospital, not because they were so seriously ill, but for IV 
therapy because their infecting organism was resistant to all 
oral antibiotics.
    For anyone who has had a UTI, which is going to be most of 
the women in this room and some of the men, having to be 
hospitalized for such a common infection is inconvenient, 
decreases productivity, and markedly increases our health care 
costs.
    Antibiotic R&D, as you have heard, faces significant 
barriers. Discovery is hard. Scientific challenges lead to very 
high development costs. Economically, antibiotics have a very 
poor return on investment because they are typically priced 
low, used for a short duration, and held in reserve by us to 
try to control antibiotic resistance.
    IDSA thanks the subcommittee, and especially 
Representatives Gingrey and Green, for its leadership in 
enacting the GAIN Act in 2012, which is beginning to address 
some of the economic barriers. We hope you can now build on 
these efforts and address current regulatory barriers.
    Specifically, extensively resistant bacteria currently 
infect relatively small numbers of patients, making it 
virtually impossible, as you have heard, to populate 
traditional, i.e., large clinical trials, but we need to 
develop new drugs before there is an epidemic. Think of how our 
fear for Ebola would be much less if there were already 
effective therapies.
    Representatives Gingrey and Green introduced the ADAPT Act, 
which would address this regulatory conundrum by allowing FDA 
to approve certain antibiotics with smaller trials. This 
approach would only be for antibiotics to treat serious 
infections where there is an unmet medical need. ADAPT would 
make trials of highly resistant bacteria feasible, possibly 
less costly, and it would allow FDA to assess the risk of a new 
antibiotic relative to its potential benefit to this limited 
population.
    IDSA is deeply concerned that without ADAPT many of the 
most urgently needed antibiotics would not be brought to the 
market. The strategy of a limited population approval pathway 
was also suggested in the PCAST report that you heard 
yesterday.
    ADAPT includes safeguards to help ensure that these drugs 
are used appropriately. It also contains multiple important 
provisions to ensure that susceptibility tests, interpretive 
criteria, or break points, which predict whether a patient will 
have a good response to an antibiotic, are quickly updated and 
made publicly available.
    Up-to-date information is crucial for clinical care and to 
ensure that antibiotics are not misused or overused.
    IDSA urges the subcommittee to mark up the ADAPT Act 
swiftly.
    As also mentioned in the PCAST and earlier today, 
additional economic incentives are required, such as public/
private partnerships; support for Federal agencies that invest 
in antibiotic researched; improved reimbursements and/or tax 
credits.
    Ernst & Young estimated that an IDSA tax proposal targeting 
R&D for these needed antibiotics would result in an additional 
five to seven new antibiotics in the pipeline every year.
    While new antibiotics are critical, IDSA is also committed 
to a multi-prong response to antibiotic resistance, including a 
well-coordinated Federal leadership, as mentioned in the PCAST 
report; sustained involvement of nongovernment stakeholders; 
antibiotic stewardship programs in every health care facility; 
enhanced surveillance of antibiotic use and resistance 
patterns; and research on novel strategies to prevent and 
control antibiotic-resistance organisms. These steps are 
critical to protect patients, the public health, and the 
Federal investment in new antibiotics.
    Lastly, again, as you have heard, it is extremely important 
to promote the development and clinical integration of new 
diagnostics. Rapid point-of-care diagnostics can reduce 
inappropriate antibiotic use which drives resistance by 
lessening the need for empiric or shotgun therapy.
    IDSA recommends increased investments in diagnostics 
research, regulatory approval pathways, strengthening in 
reimbursement, and supporting outcomes research to demonstrate 
the impact of diagnostics on patient care.
    Thank you again for allowing me to testify here and for 
your continuing efforts in this very important area.
    Mr. Pitts. Chair thanks the gentlelady.
    [The prepared statement of Dr. Murray follows:]
    
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    Mr. Pitts. Now recognizes Dr. Thomas. Five minutes for 
questions.


                 STATEMENT OF DR. ADRIAN THOMAS

    Dr. Thomas. Thank you, Chairman Pitts and members of this 
committee for this opportunity to come before you today.
    I am Dr. Adrian Thomas, vice president at Global Market 
Access and head of the Global Health function at Janssen which 
is the pharmaceutical business of Johnson & Johnson.
    On behalf of Johnson & Johnson, I applaud you for 
organizing this hearing and commend all the leaders in this 
room for giving voice to the dire situation of antibiotic 
resistance.
    We also recognize this committee's and Congress' 
leadership, as well as the leadership of President Obama on 
this important issue, and we offer our support for the national 
strategy announced yesterday.
    Today I bring the lens of a private sector physician 
through more than 30 years' experience in public health from my 
early career in the Australia's Flying Doctor Service to my 
current role overseeing Janssen's portfolio of production and 
services for diseases of high public health impact, which 
include HIV, tuberculosis, and also more recently, Ebola.
    I am a clinical pharmacologist and physician by training, 
with additional expertise in a variety of areas in the health 
care industry. The majority of my 17 years in the private 
sector has been with Johnson & Johnson.
    As many of you know, Johnson & Johnson is the world's 
largest and most broadly based health care company, with a 
portfolio that also includes diagnostics and devices as well as 
the consumer products.
    We are an innovation-based business, and it is critical, as 
you think about this issue, that we address incentives that 
apply and are relevant to many different stakeholders in the 
area of innovation, not just large companies, but discovery, 
academic research, biotechs and start-up in the public sector.
    Our place in and reach across the health care innovation 
ecosystem allows us unique visibility into both the number and 
the status of projects underway across areas of unmet need, 
including antibiotics. It also leads me to comment that as we 
consider incentives for antimicrobial resistance, we should 
also consider incentives in vaccines and other preventive 
mechanisms and diagnostics if we are truly going to make 
progress against this terrible issue.
    Our work also brings us into proximity with patients facing 
life-threatening illnesses, including patients with these 
infectious diseases. Their stories affirm what we have heard 
day; that we must do more to meet their needs.
    First and foremost, we must work together and think 
differently to bring forward new therapies. We have heard in 
some detail today that despite the need in recent efforts to 
improve it, including legislative efforts, the innovation 
climate for antibiotics and other antimicrobial R&D remain 
suboptimal. That is, in large part, because the basic science 
with this field continues to be very difficult with high rates 
of failure. If failure is no longer an option given this 
critical and growing global health security, I would term it, 
crisis, then we need to take different measures.
    We can learn lessons and warnings from the Ebola crisis, 
which was also neglected, and which now we have companies 
scrambling, including our own, to try and provide new vaccines 
within unfeasibly short time frames and unfunded mechanisms.
    While strategies for better stewardship of antibiotics on 
the market are vital in the fight against resistance, current 
conditions demand that we need a new framework for innovation 
in antibiotics R&D. We have to track the world's best and 
brightest to this challenge, including the private sector.
    As is done in other areas, the U.S. can and should lead the 
world in creating enabling conditions. We cannot wait for the 
European's Medicines Initiative to solve the problems for us.
    It is our hope that this committee and the Congress will 
give serious consideration to new legislative proposals. Beyond 
this, we believe there remains the need to put forward a 
comprehensive set of both push and pull incentive options 
specific to antibiotics that address the need for R&D across a 
wide range of stakeholders.
    We must create a broad set of highly attractive although 
financially manageable incentives to engage the many different 
biomedical innovator companies large and small in this work, 
including academic networks.
    The policies can and should be able to take into 
consideration a holistic view of the costs and risks of this, 
and also the costs and risks of developing, introducing, and 
supporting these products worldwide. And how those risks are 
different for different stakeholders and the incentives must 
address, therefore, those different stakeholder perspectives.
    I would like to talk a little bit about transferable market 
exclusivity. We have heard different perspectives on this 
topic. As our company has undertaken its own in-depth analysis 
of different incentive proposals for antibiotic R&D, it is 
apparent that many existing proposals only offer marginal 
valuations.
    In addition to being a physician, I serve on the investment 
committee of our pharmaceutical business. I balance the 
difficult choices we have to make about, is Ebola, is multi-
drug resistant tuberculosis, is diabetes, is cancer a more 
important public health question, and is it also financially 
feasible for us to balance our research efforts in this area.
    Spending almost $5 billion annually in research in 
pharmaceuticals, these decisions are not easy, and often have 
timeframes of 10 to 15 years.
    Thinking about transferable market exclusivity, the notion 
of an exclusivity that can be applied towards another product 
not only gives certainty the investments be made in very high-
risk areas, but also disincentivize activities that might 
otherwise undermine both the public health stewardship and the 
protection of these products and assets need to offer against 
emerging and developing antibiotic resistance to encouraging 
appropriate use.
    The bottom line to our proposal is we believe we have to 
have more shots on goal, more basic research, more discovery, 
more biotech start-ups, more academic partnerships, more 
companies investing, and the in-house facilities to recognize 
and take up new assets, and to conduct the expensive research 
necessary to deliver and develop these products to the 
marketplace.
    In conclusion, we welcome the changes in public policy to 
stimulate new antibiotic R&D, and thank you very much for your 
time today.
    Mr. Pitts. Chair thanks the gentleman.
    [The prepared statement of Dr. Thomas follows:]
    
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    Mr. Pitts. And now recognizes Mr. Outterson. Five minutes 
for an opening statement.

                  STATEMENT OF KEVIN OUTTERSON

    Mr. Outterson. Good morning, Mr. Chairman, and thank you, 
for inviting me to testify today.
    I am a professor at Boston University. I also serve on the 
Centers for Disease Control and Prevention Antimicrobial 
Resistance Working Group, and at the Royal Institute for 
International Affairs in London as a visiting fellow at Chatham 
House.
    My remarks today are my own, but at Chatham House, the work 
that we have been doing for the past year is focussed onto 
linkage.
    I think today we need to focus and act decisively because 
the business model for antibiotics is broken. Not only for 
antibiotics but for other things that treat and prevent 
infectious diseases such as diagnostics, vaccines, infection 
controls, and related devices.
    And so I have a couple of slides here to look at the 
business model, and the slides are based on the study that was 
done by the Eastern Research Group of which I was a part, I am 
a co-author of that study, for the department of Health and 
Human Services.
    This first slide no one in the committee needs to see this, 
honestly. We know that this a huge problem. The actual number 
of deaths in the CDC threat assessment was 37,000 per year 
because they included Clostridium difficile. It is a huge 
problem.
    So let's look at the business model, and we are looking at 
the net present value from a private perspective. This is a 
company looking to make a decision about whether to invest in a 
molecule at an early stage. And this is a typical decision tree 
which tries to analyze for the company what is the chance of 
failure at each stage and how much it will cost to advance the 
molecule through.
    Every company uses a model like this. Everyone might use 
slightly different assumptions or numbers in it, but this is a 
typical thing done in the industry. In fact, there is in 
England right now at the Office of Health Economics using 
AstraZeneca data there is another study almost completed which 
comes out with I must, sad to say, much gloomier numbers than 
what we present here today.
    So the business model is broken. The first thing we looked 
at, the FDA and Health and Human Services asked us to look at 
six bacterial indications, and it is hard to read, and I am 
sorry for that, but what you need to see is that the companies 
were hoping for $100 million net present value. That was the 
money that they would get in return.
    And you see here on the arrow bars and on the colored 
things that for several of these indications they have a 
negative net present value. They are actually going to lose 
money after they build a factory to make this drug. And for 
others there was a positive one but nowhere here the $100 
million threshold that was necessary for companies to move 
forward.
    The red arrow bars, the little light thing, is the 90 
percent confidence interval. For every single indication, the 
confidence interval included a negative number. So it is really 
difficult for companies to commit to research programs in that 
sort of space.
    The second thing we were asked to look the is the social 
net present value. How valuable are these drugs to society. 
Now, we didn't have speculative numbers here. We didn't look at 
the effect on reducing resistance. We didn't model how it would 
keep us all working. You know, the kind of ancillary effects. 
We just looked at the direct cost for society. And yet the 
numbers we came up with were huge. These numbers are in the 
billions, and the arrow bar ranges are huge. So the social net 
present value for many of these drugs was two orders of 
magnitude higher. Several billion dollars for several of these 
drugs.
    In other words, society would be getting a tremendous 
bargain if it was able to procure one of these drugs for even a 
fraction of that amount.
    As a comparison, I compared for each of the six indications 
the social and the private, and if you look real carefully, you 
can't even see the private on the same scale because it is in 
blue. It is so small it is almost impossible to see. There is a 
huge gap here.
    So I did just one and tried to stretch it out across the 
slide, and you can barely see the blue for HABP/VABP. OK? And 
so what I did here is I truncated everything at 100 million. 
Those red bars really would go up another 15 feet on the wall 
if I allowed them, and that is the gap between the social and 
private value. It is another way of saying we are tremendously 
under reimbursing for antibiotics.
    We also looked a incentives, and given that I have 30 
seconds, I will get down to the key chart in which we modeled 
which incentives could we change in order to solve this $100 
million benchmark. We looked at every incentive ever published, 
I promise you, and then put them in the different categories 
and fed them into some model.
    The short answer is that if you do something that affects 
the cost of capital, it has to be fairly significant in order 
for it to work. So if we had tax credits or BARDA funding, it 
better be significant in order to kick in; something on the 
range of a billion dollars per molecule we would want coming 
out the other side. So we are not talking small change. It is 
large.
    Yesterday's proposal from the president $800 million under 
BARDA, they are hoping for one drug per year out of that. I 
think it is a reasonable number.
    Things that don't seem to work based on the model. We even 
had unlimited perpetual forever patents. It still didn't get 
the companies anywhere near the $100 million threshold.
    Similarly, to reduce clinical trial times, you would have 
to reduce it by 75 percent. So ADAPT could be very useful to 
bring a new drug to market for the people who need it today, 
but it should not be viewed as a powerful economic incentive 
for a company early in the stages to decide now is the moment 
to green light this drug. It doesn't have that sort of effect. 
What the companies need is money, not the promises of earlier 
approval.
    Thank you.
    Mr. Pitts. The chair thanks the gentleman.
    [The prepared statement of Mr. Outterson follows:]
    
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    Mr. Pitts. Now recognizes Mr. Coukell 5 minutes for open 
statement.

                   STATEMENT OF ALLAN COUKELL

    Mr. Coukell. Mr. Chairman, I would like to thank you and 
the ranking member and the members of the committee for the 
opportunity to be here today.
    My name is Allan Coukell. I direct drug, medical device, 
and food programs at the Pew Charitable Trusts. We are 
independent research and policy organization with a 
longstanding focus on the urgent need for new antibiotics.
    As you have already heard, the dwindling pipeline of 
antibiotics is a potential public health crisis. Every one of 
us will need one of these drugs in our lifetime, and most of us 
already probably know somebody who has had a resistant 
infection.
    Children and seniors are particularly vulnerable, as are 
members of the military. One-third of those injured in Iraq and 
Afghanistan came back with an infection, some of them resistant 
to almost all existing drugs, and among the broader population, 
23,000 Americans die every year from resistant infection.
    So a comprehensive response requires infection prevention 
and surveillance in reducing unnecessary use and better 
diagnostics. But my focus today is steps to reinvigorate the 
drug pipeline.
    And the state of the pipeline is not good. A Pew analysis 
included in my written statement finds 38 drugs, antibiotics, 
now in clinical testing. Five of them in advanced development 
have some potential to treat Gram-negatives, which are probably 
the most serious immediate threats. That may sound encouraging, 
but let's recognize just based on general trends that 80 
percent of those won't reach market. They will fail because of 
reasons of toxicity or lack of effectiveness.
    What is more, very few of the drugs now in development 
actually have novel mechanisms of action that would 
significantly delay the onset of resistance.
    So what can be done? By passing the GAIN Act two years ago, 
this committee has already taken a leadership role. GAIN, 
introduced by Dr. Gingrey, Mrs. DeGette, and Mr. Green extends 
market exclusivity for certain antibiotics. This gives 
companies a better chance of a positive return in investment. 
GAIN also ensures swift FDA review of these drugs.
    That was an important first step, and more is needed, 
especially for the infections that are hardest to treat, and as 
has been mentioned, trials of antibiotics are hard because only 
a small proportion of the population with, say, pneumonia has a 
resistant bug at any given time.
    So to help address these challenges, Dr. Gingrey and Mr. 
Green and a long list of bipartisan cosponsors have introduced 
the ADAPT Act. ADAPT would create a new FDA approval pathway 
for antibiotics to treat patients with few or no other 
treatment options. This approach, which is also called LPAD, 
for Limited Population Antibacterial Drug, meets both a public 
health goal and helps streamline development.
    So let me make it concrete with two different scenarios. 
Imagine drug A which is approved for a range of bacterial 
pneumonias, some easily treated, some resistant. When FDA 
approves drug A, it has to consider the universe of people who 
might get it. Some of them have lots of treatment options and 
won't be willing to accept greater uncertainty.
    Now take a second drug, drug B, which is an LPAD drug only 
for life-threatening pneumonias caused by a resistant organism. 
The patient with this infection may well die if he doesn't take 
drug B. So the potential benefit may be greater against the 
uncertainty.
    And the FDA, in making a benefit/risk calculation only for 
patients like our patient, can accept less data in approving 
the drug. That reduces development costs.
    To be clear, this does not change the standard of approval. 
It merely targets a specific population that is different from 
the general population.
    For LPAD to work as intended, health care providers have to 
know and understand that the drug is approved for the limited 
population based on limited data. The drug's special status has 
to be clearly communicated through drug labeling and any 
marketing materials.
    To vet this concept, Pew has worked with the Infectious 
Disease Society, antibiotic stewardship personnel, drug 
companies, health insurers, the FDA, and others, and this 
legislation has the support of numerous and diverse 
stakeholders, and yesterday PCAST, the President's Council of 
Advisors on Science and Technology, also called for such 
legislation.
    This committee has long understood the threat of antibiotic 
resistance and has done much to bring it to the national stage, 
and we appreciate your leadership and continued commitment.
    Let me conclude with the observation that we face many 
intractable problems in many diseases that seem intractable. 
This is not one of them. Bacterial infection is a solvable 
problem. Penicillin and the heyday of the drugs that followed 
effectively conquered bacterial illness for a time, and we can 
get back there if we commit and ensure that we do it again.
    I thank you and I welcome your questions.
    Mr. Pitts. The Chair thanks the gentleman.
    [The prepared statement of Mr. Coukell follows:]
    
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    Mr. Pitts. Now recognizes Dr. Powers 5 minutes for an 
opening statement.


                STATEMENT OF DR. JOHN H. POWERS

    Dr. Powers. Thank you very much, Mr. Chairman. Thank you 
for inviting me to testify.
    I am a practicing infectious diseases and internal medicine 
physician, and a medical researcher who actively cares for 
patients. I was a scientist at FDA for almost a decade and the 
co-chair of the Inter-agency Task Force on Antimicrobial 
Resistance, and I am a member of the WHO Advisory Group on 
Antimicrobial Resistance.
    I am speaking today on behalf of the National Physicians 
Alliance. NPA is a professional home to physicians in more than 
40 medical specialties. We share a commitment to patient-
centered health care, evidence-based health policy, and 
professional integrity. NPA does not accept pharmaceutical 
company funding. We believe in the advancement of knowledge 
through research that is free of financial conflicts of 
interest, transparent, and peer reviewed. NPA's FDA Task Force 
was established to support our work in defense of a strong 
scientifically rigorous FDA.
    As members of this committee have pointed out, studies of 
infectious diseases in the early 1900s, at a time when there 
were no effective therapies, were the first to use the modern 
methods of adequate and well-controlled trials that are a part 
of law today. Investigators and then members of Congress 
realized that appropriate study methods are critical in order 
to separate the harmful from the helpful for patients.
    The problems of antibiotic resistance and the scientific 
and regulatory responses to it are also not new. Dr. Scott 
Podolsky in his recent book, The Antibiotic Era, recounts that 
during the rise of resistance the common staphylococcal 
infections in the 1950s, drug companies marketed numerous 
ineffective antibiotics based on supposed superiority in the 
test tube.
    Dr. Maxwell Finland, the first president of the Infectious 
Diseases Society of America, with 19 other prominent infectious 
disease clinicians, pointed out the need for adequate and well-
controlled studies in patients. He said, ``Properly conducted 
clinical studies may support the claims and justify the 
enthusiasm for these antimicrobial agents, but it is incumbent 
upon those of us who are intimately concerned with the welfare 
of our patients to wait until such data are presented before we 
accept and acclaim any new agents or recommend them for general 
use.''
    In 1962, Dr. Finland made these same points at the Senate 
hearings that resulted in adding the requirement for 
effectiveness for new drugs based on substantial evidence from 
adequate and well-controlled studies showing that, like with 
other drugs, antibiotic effectiveness cannot be assumed based 
on test tube tests, animal studies, or mathematical modeling, 
but can only be verified by studies that ask the right 
questions with the right outcomes in the patient who might 
benefit from experimental drugs.
    The problem of antibiotic resistance today is the same as 
it was in years past. The unmet medical need exists in those 
patients who have no effective therapies. The need for 
treatments with improved effectiveness compared to older 
treatments on the outcomes of decreasing death or irreversible 
disability, not alternative outcomes. The program described by 
Dr. Hillan exactly focuses on this population and these 
outcomes.
    Drugs marketed as life saving should actually be shown to 
save lives in adequate and well-controlled studies using 
appropriate diagnostics such as those we have discussed this 
morning and advocated in yesterday's PCAST report to select the 
patients who would receive added benefit from those drugs. And 
susceptibility criteria should be based on patient outcomes, 
not mathematical modeling from sources without conflicts of 
interest.
    Drugs that are highly effective need few patients to show 
those effects in adequate and well-controlled studies. 
Therefore, the sample size of a study is related to how 
effective the drug actually is.
    It is ethically questionable to expose our patients who 
have any current effective and safe options to less effective 
treatments in order to have a robust pipeline or as an economic 
stimulus to companies. It is scientifically invalid to test 
drugs in patients with disease due to susceptible organisms and 
then assume effectiveness in older sicker patients with disease 
due to resistant pathogens based on assumptions from modeling 
and individual and anecdotes.
    Recent clinical trials of new antibiotics carry warnings on 
FDA Web site of increased death compared to older effective 
drugs despite promising test tube tests, animal models, and 
mathematical modeling. A recent study by AHRQ showed a lack of 
evidence that this kind of mathematical modeling has been shown 
to result in better patient outcomes. This shows that now, as 
in past years, preliminary information is not a substitute for 
clinical studies in patients.
    Patients who wish to take an informed risk should have 
access to these drugs through requirements for expanded access 
under existing FDA programs for patients who do not qualify for 
ongoing clinical research studies, as was done in the early 
years of the HIV epidemic to allow access to new therapies 
while the drugs are continued to be evaluated in adequate and 
well-controlled studies prior to widespread marketing.
    FDA labeling should accurately reflect the benefits, the 
types of patients who benefit, how clinicians should select 
those patients, and the information used as the basis for 
approval. Telling clinicians a drug has not been studied 
properly does not help clinicians prescribe new drugs 
appropriately.
    Our written testimony provides NPA's plan for a 
comprehensive approach to development, disease prevention, 
stewardship, diagnosis and reimbursement strategies for 
improved therapies of infectious diseases in line with the 
recommendations from the president's PCAST report released 
yesterday.
    Dr. Finland sums up the issues we discuss today and that we 
as physicians still agree with today when he said, ``Clinical 
investigators and authors of medical and scientific 
publications have the duty to protect the medical profession 
and the public against the abuse of preliminary scientific 
information and against the improper and premature exploitation 
of conclusions based on inadequate data.''
    Thank you very much for the opportunity to testify.
    [The prepared statement of Dr. Powers follows:]
    
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    Mr. Pitts. The chair thanks the gentleman, thanks to all of 
the presenters for their testimony. We will begin questioning, 
and I will recognize myself 5 minutes for that purpose.
    Dr. Thomas, you mentioned in your testimony that a multi-
pronged strategy is needed that includes both stewardship and 
antibiotic innovation incentives. If you think about the path 
to cures as being three phases, discovery, development, and 
delivery, do you believe that we need incentives in all three 
phases to have an effective incentive strategy?
    Dr. Thomas. Thank you for the question, Mr. Chairman. Yes, 
I do, because I think often the players or the stakeholders who 
are conducting that research at those different stages are 
different. And what incentivizes academic or biotech startup 
might be different from what incentivizes a multi-national 
corporation like Johnson & Johnson, might be different from 
organizations that are involved in healthcare delivery.
    So one incentive is not going to--as we have seen, frankly, 
since we have had incentives introduced, we still have an empty 
pipeline of incentive is not going to solve this problem. It 
may well be that large grants or so-called prizes would attract 
academic researchers and startups. A very different incentive 
needs to encourage venture capitalism to go and back startup 
companies with a much higher level of risk. And for a company 
like Johnson & Johnson, we look at a portfolio of investment 
opportunities, need to understand which of those is both most 
important medically and to human impact but also which is most 
viably able to be conducted, and finally, which enables us to 
balance our risk and our return.
    Mr. Pitts. All right. Let's look at each phase. First of 
all, what types of discovery or R&D incentives do you believe 
would encourage companies to develop new and novel antibiotics?
    Dr. Thomas. I think we need to look at the discovery 
incentives not just for antibiotics, but also for antibiotics 
in adjacent technologies. Here it is absolutely critical that 
we focus on point of care diagnostics, biomarkers, new 
capabilities of being able to diagnose, and also to advance 
clinical research in this field. For this sort of endeavor, 
this is where large grants, funding, prizes would make the most 
sense, tax credits, because they will encourage broad-based 
academic research as well as broad-based technology company 
research that is often shorter in duration and is able to be 
managed in a different way.
    As we think about the incentives for development, 
development in the pharmaceutical process is the most expensive 
piece. We recently brought a new product called SIRTURO, which 
is indicated for multi-drug resistant tuberculosis. With 13 
years of R&D and early development, we had proof of concept 
that was compelling, and through the leadership of agencies 
like the FDA and the European Medicines Agency and the World 
Health Organization had a conditional approval on early phase 2 
results.
    We still have more than 15 years of clinical trials 
evidence generation showing safety and effectiveness in 
children, showing safety and effectiveness versus other drugs 
in real-world use in the field and proving out the hope that we 
saw in the phase 2 studies. Having spent well over $200 million 
to date with no commercial return foreseeable for this product, 
and nor necessarily should there be, we are now looking at a 
further 15 years of investment and many hundreds of millions 
more.
    Tax credits are not enough to spur that sort of effort on a 
broad base across the industry. And I think for drug 
developers, we need to make sure that there is a very definite 
incentive for 2 things: One is, how can they justify 
maintaining the infrastructure in-house, the competency to 
understand what is a good asset and how to develop it, whether 
or not they have one of those assets themselves, and that is 
critical because lightning doesn't always strike in New 
Brunswick where our headquarters is. Lightening for innovation 
strikes all over the world, and we have to be able to 
understand when it hits, what that technology is worth.
    The second thing is we have to be able to encourage 
companies to actually invest in the long-range risks associated 
with the large dollars for drug development, and the way to do 
this is not to hope that they have a certain expertise in one 
drug. The way to do this is to say we want as many shots on 
goal as possible by as many large players as possible so that 
we can see a sustainable and continual pipeline to evolve, and 
for this activity, this is where the concept of tradeable 
vouchers or exclusivity additions comes in because what you are 
not doing is incentivizing people to go down a loss-making 
path. You are saying we understand that you have to go down a 
profit-making path in some of your business and we will trade 
off against these activities.
    Finally in the area of the delivery side, this is really 
problematic. By the nature of the sort of research we conduct 
to get products approved for antimicrobial resistance, we are 
looking at non-inferiority studies. From a payment perspective, 
that usually means in most countries in the world that you get 
price parity. Despite the fact that your price parity with what 
is on the market was for costs that were achieved many, many 
years ago and may not no longer be relevant, and that is why 
the ENPVs you heard about before are usually negative, so the 
notion of a price premium or reimbursement incentives are 
certainly attractive in that area.
    I would posit, however, and use as an example our own 
experience in multi-drug resistant tuberculosis, when you are 
talking about highly resistant bugs, highly transmissible bugs, 
you want the drugs used only in the people who need them, only 
for the bugs that need them, and by people who understand how 
to treat and use those products in an appropriate way. That is 
not really a very strong economic model for understanding how 
your product, even with a reimbursement incentive, is actually 
going to be successful. In fact, it is probably a negative 
commercial model in most areas.
    Mr. Pitts. The chair thanks the gentleman. Now recognize 
the ranking member of the full committee, Mr. Waxman 5 minutes 
for questions.
    Mr. Waxman. Thank you, Mr. Chairman. Last Congress we 
passed the GAIN Act to provide new incentives for the 
development of important antibiotics, and under that Act, 
antimicrobials and antifungals intended to treat serious or 
life-threatening infections can be designated as qualified 
infectious disease products, or QIDPs. We receive a priority 
review, that is helpful. If they are approved, they get an 
additional 5 years of protection from generic competition. That 
is a strong incentive. FDA has already granted QIDP 
designations to almost three dozen different antibiotics, so 
companies clearly are interested in this program.
    A major impetus for the GAIN Act and for today's hearing is 
a need for new antibiotics to treat the growing number of life-
threatening pathogens that are resistant to all or virtually 
all antibiotics. However, in your testimony, Mr. Outterson, you 
note that there is nothing in the law that requires QIDP 
designations be only given to antibiotics intended to treat 
resistant pathogens. As a result, you assert that essentially 
every antibiotic ever approved by the FDA would qualify as a 
QIDP.
    Some of us, during the FDA Safety and Innovation Act 
negotiations tried to limit it, that designation to those 
antibiotics that would fulfill an unmet medical need. However, 
we were unsuccessful.
    Can you tell us how many, or what percentage of the QIDPs 
are for antimicrobials intended to treat highly resistant 
pathogens, and are their public health impacts we should be 
concerned about as a result of the lost failure to prioritize 
drugs for resistant pathogens, and how could we better 
incentivize the development of the drugs we most need?
    Mr. Outterson. Thank you for your question. The definition 
of Qualified Infectious Disease Product is built on a previous 
definition of a qualified pathogen. And that list does not 
require any of the pathogens to be resistant. It includes most 
species known to cause any disease in humans. So, because it is 
difficult sometimes in these trials to run them where it 
historically hasn't been done, to run them on people only with 
resistant pathogens. So you are correct in saying that the 
qualified infectious disease product will apply probably to 
every antibiotic that will be approved in this next decade or 
two, which is a question about whether the incentives are 
properly targeted.
    On the incentives themselves, when I talk to companies 
privately, large companies as well as small, they all say that 
the incentives in GAIN were in the correct direction, but there 
is a quiet walk when what we should be doing is running, that 
the economic value to them, of these incentives is really very 
small. They will take them and register, but it is 1 percent of 
the way to where we need to go to change the economic model. It 
is a small change, and we should be doing something else.
    Mr. Waxman. So tell us how to change this economic model. 
You talked about that in your presentation. How much do we have 
to keep giving in order to give the right incentives? And we 
ought to know how much this is going to cost the American 
people and whether it going to be successful.
    Mr. Outterson. To use the three stages that the chairman 
mentioned. On the discover side, our NIH budgets need to be 
dramatically increased. We need basic science.
    Mr. Waxman. Yes.
    Mr. Outterson. It was the PCAST report yesterday.
    Mr. Waxman. And we have been cutting back on that.
    Mr. Outterson. It has been flatlined or slightly negative 
for the past half decade to the best of my knowledge on 
antibacterial research in the NIH. The second piece on 
developing, I think tax credits are a piece of that. I think 
BARDA is a huge piece of that. Some of the best gram negative 
molecules in development now have a lot of money in them from 
BARDA.
    Mr. Waxman. We have given tax credits. We want to shorten 
the time at FDA to get this review done as quickly as possible 
to get the drug out there. We want to help companies decide its 
in their economic interest to do this. What do we need to do?
    Mr. Outterson. The last piece is when it is delivered to 
the public, and I would agree with Dr. Thomas that there is a 
reimbursement problem, but I don't particularly like the 
solution. At the Chatham House work, we are looking at the 
linkage, which is just saying the companies will be generously 
rewarded but on something that has nothing to do with volume.
    I think everyone here would agree we don't want to put 
$100,000 price on a drug and give a company a reason to over-
promote it. And so there needs to be significant price-type or 
BARDA grant-type rewards for companies, possibly based on an 
insurance model, which is what GlaxoSmithKline has suggested, 
to give significant rewards to the companies after they have 
delivered a drug to the market.
    Mr. Waxman. Well, I would suggest that we may be better off 
putting much more money into biomedical research at NIH and 
throughout universities around the country because they don't 
have the profit motive and what they do helps the companies 
because that science is then used for these products.
    But if the companies are having too difficult a time 
without enough incentives to make a lot of money, well, let's 
make sure that we get the work being done at the public expense 
because otherwise, we are going to pay a lot of money and we 
may not see the results that we need. You agree?
    Mr. Outterson. I completely agree. If we do not have enough 
basic science, the pipeline that flows to venture capital and 
then to the larger companies runs dry.
    Mr. Waxman. Thank you. Thank you, Mr. Chairman.
    Mr. Pitts. The chair thanks the gentleman. Now recognizes 
the gentleman from Georgia, Dr. Gingrey, 5 minutes for 
questions.
    Mr. Gingrey. That was a very interesting line of 
questioning from the distinguished ranking member of the 
committee, and Mr. Outterson, your response was not unexpected. 
But there is something to say for the profit motive as well. 
You give more and more and more money, taxpayer money to NIH or 
wherever basic research is being done, and you don't have this 
profit motive that you are talking about and the wrong 
incentive, misguided incentive, but if you don't have somebody 
with the profit motive, a company, a pharmaceutical company, 
big or small, you can sit there doing basic research for 100 
years, and maybe some brilliant scientist, many of them could 
be very comfortable in their labs and enjoy that to a fare thee 
well. I think I would. But you never really get to where you 
need to be in regard to drugs that treat patients that cure 
these terrible bugs that are killing them.
    So I am going to shift my question to Dr. Murray as 
President of the American Society of Infectious Diseases to 
basically ask you the same question, Dr. Murray. The business 
model for antibiotics, diagnostics, and vaccines is broken. I 
think we will all sort of agree with that. That is what we have 
learned this morning in this rather long two-panel hearing, but 
it has been good, but it a broken model. What specific steps, 
Dr. Murray, do you think Congress should take to address this 
crisis? Do you agree with Mr. Outterson? Do you agree with Mr. 
Waxman? What do you think?
    Dr. Murray. Well, I could take Dr. Woodcock's approach and 
say I am not an economist, but I will try to address it. I 
think basic research input is an important component. I am 
biased. I do basic research in my laboratory, but I agree also 
there has to be a reward at the end, and the suggestions I have 
heard from others, and they are not my own, include taking 
certain drugs out of the DRG so that they are not part of the 
total hospital budget, which means everybody is trying to 
attack on antibiotics as one place to decrease cost.
    That or the other model is buying up a number of doses at 
the end of a product, so they are bought up. I think perhaps 
that is what you meant by the insurance model. So you hope you 
never have to use them. They would be there but it guarantees 
the industry some return on their dollar. So those are the 
two--in addition to, of course, in the development phase, the 
tax credits, but the end product, I have heard it for many 
years, there has to be--they answer to taxpayers. I mean, I am 
sorry, they answer to stockholders. They don't answer to 
taxpayers, and so the companies cannot just be motivated by the 
greater good.
    Mr. Gingrey. It is kind of like when we talk on this 
committee about energy and the energy policy that we should 
have, and all of the above policy is the one that I like the 
best, and I think really in regard to this, too, because I 
mean, as Mr. Waxman said, you are talking about tax credits, 
you are talking about what you just said, Dr. Murray, of buying 
back a certain volume that is not used because you don't want 
to just incentivize based on sales, and more grants to the NIH. 
All of the above, really. I think that is the way we ought to 
look at it.
    I have got a little less than a minute left, and I want to 
shift to Dr. Hillan. You mention in your testimony that half of 
the investment cost necessary to support your drug, SIRTURO; is 
that correct?
    Dr. Hillan. Plazomicin.
    Mr. Gingrey. Yes.
    Dr. Hillan. Plazomicin.
    Mr. Gingrey. Will be required. Half of the investment cost 
necessary to support it, that drug, will be required after the 
point of the United States regulatory approval. What drives the 
cost of these investments post-FDA approval? What is the big 
cost driver?
    Dr. Hillan. Sure. So I'm not sure if it was me, but I am 
certainly happy to answer that. There is an ongoing process 
after a drug is approved so that you actually understand the 
safety and effectiveness of the use of the product in the real 
world. There are additional pediatric studies which are very 
important. How do you--we believe our drug will be dosed in 
small----
    Mr. Gingrey. Well, let me shift. Just I have got no time 
left, but Mr. Chairman, if you will bear with me because I 
really--and thank you, Dr. Hillan, and I really want to address 
this question to Dr. Thomas, so if you could quickly respond. 
Mr. Chairman, if you will bear with me.
    Dr. Thomas. Sure. And thank you for the question. Getting 
regulatory approval is really the start of a long process of 
paying for regulatory approval all over the world in a 
sequential basis for maybe over 100 countries. There is 
completion of commitments and unknown questions about safety. 
There is, as I said, 15 years of pediatric research, so with 
antibiotics that sometimes have toxicity starting at a 15-year-
old and proving that, then a 10, a 12 and a 2 and so on. There 
is drug safety reporting requirements that when you have a 
commercial product, these are all costs of doing business, but 
when you have a product where the aim is not to use it unless 
you absolutely have to, it is just a tremendous overhead that 
you can't really discount any other way. It is the right thing 
to do and it is the way that we do it today, but it has caused 
a significant overhead.
    Mr. Gingrey. And I thank both of you for your response to 
that question. Thank you very much. Mr. Chairman, I yield back.
    Mr. Pitts. The chair thanks the gentleman. Now recognize 
the ranking member, Mr. Pallone, 5 minutes for questions.
    Mr. Waxman. Mr. Pallone, would you yield to me 1 minute?
    Mr. Pallone. Yes, surely.
    Mr. Waxman. I thank you for yielding. I don't think Mr. 
Outterson or I thought or would want anybody to believe that we 
thought you don't need a profit and you don't need the private 
enterprise, and I argue we need to put much more in the 
research side of it, but we do need a business model that says 
to a company if you do this work, you are going to make a 
profit. You have got to make a profit; otherwise, they are not 
going to do it, and to make a profit, we don't want to just 
sell more antibiotics. We want to make sure they get a profit 
so that we want to guarantee we could take their investment, 
guarantee a certain percentage, and say that is how much the 
government will pay you. That is one idea.
    I don't know if it is the only idea, but it is obviously a 
different kind of incentive that we have in other areas. So I 
thought Dr. Gingrey was right when he said all of the above. We 
got to do whatever we can, and I believe a lot more in public 
investment because the pharmaceutical engineers are not going 
to make a lot of investment in this area when their research 
investments can result in a blockbuster drug, but this is a 
social need, and they have got to do what we need them to do, 
but they are not going to do it without making a profit. So 
thank you for giving me that chance----
    Mr. Pallone. Sure.
    Mr. Waxman [continuing]. To add that additional thought.
    Mr. Pallone. Thank you. Thank you, Mr. Waxman. I wanted to 
ask Dr. Murray and Mr. Coukell. I know that IDSA and Pew have 
worked very closely with the sponsors of the ADAPT Act, and 
they are strong supporters of it, I would like to get your 
views on a few aspects of this legislation. First, I am 
concerned that as currently drafted, FDA may not have adequate 
authority to require that an ADAPT antibiotic be labeled in a 
way that calls attention to the fact that it is intended only 
for special populations. I don't think putting such a statement 
in the prescribing information is adequate, and I am concerned 
that if such drugs are used more widely than appropriate, that 
we could end up both harming patients and losing the 
effectiveness of the drug to antibiotic resistance.
    So what are your views about the adequacy of the current 
labeling language in the bill? Do you agree that it is critical 
that there be a strong and prominent labeling statement to 
signal to providers that they should use the drug only in 
circumscribed situations? And I guess we could start with Dr. 
Murray and then go to Mr. Coukell.
    Dr. Murray. Well, I think it is important to have some 
label there. In a practical sense, what we do in the hospital 
to prevent overuse of certain drugs, is we already have 
stewardship in place in our county hospital, certain 
antibiotics, be they for cost, toxicity, or whatever reason, 
have to go through an infectious disease approval. That is 
already in place.
    Another thing we sometimes do is we don't report on the 
chart of the report that goes to the patient's chart, the 
susceptibility to certain antibiotics. If you are in infectious 
diseases or smart enough to know what is going on, you know to 
call the laboratory and ask for that susceptibility so the 
doctors that are actually caring for these multi-drug resistant 
infections know to do that. Usually it is done because there 
are certain combinations that even though the antibiotic is 
susceptible, you wouldn't use it alone.
    The third way with the electronic records that might be 
possible that I was thinking about last night is that when this 
drug is written for, there is an automatic pop-up. We have all 
sorts of automatic pop-ups now, and an automatic pop-up could 
say this has been approved in a limited population. I think in 
many ways--there may not be as much of a problem as people are 
imagining. These infections occur in certain settings, usually 
in intensive care units, they are complicated. Infectious 
disease physicians are usually involved in these patients.
    For someone to try to use this drug or a special drug that 
has been approved in this fashion for an ordinaryE. coli 
infection, there is not a need to do that. The companies are 
not going to be able to be out there marketing for that 
purpose. FDA will be overseeing what goes into the promotional 
materials, so I am not sure the ordinary physician--certainly 
the one out in the community is never going to even think about 
using it. These are IV drugs by and large. So I think there is 
some inherent safeguard.
    Mr. Pallone. OK. Mr. Coukell, do you want to respond?
    Mr. Coukell. Thank you for that question, and let me build 
on what Dr. Murray has said that we have worked very closely on 
this bill, and we think this is the one place that we really 
would like the see some improvements. And as I said in my 
testimony, it is so important that we convey to the provider 
community the special status and nature of these drugs, and 
let's recognize that the labeling is not just effective when 
somebody goes and looks at the fine print, but the labeling is 
the start of the process of how information about the drug is 
promulgated into the community through the medical record, 
through the marketing materials, and so on.
    We have called for a logo to distinguish these drugs. There 
may be other ways, as long as it is communicated very clearly 
that these drugs are different, and that is part of what 
Congress is doing, too, by creating this designation.
    Mr. Pallone. All right. Thanks a lot.
    Mr. Coukell. One more point.
    Mr. Pallone. Sure.
    Mr. Coukell. The other thing that is in the bill that we 
think is important is the need to monitor how the drugs are 
used when they are out there so that we have some feedback and 
we know that the indication is working as intended.
    Mr. Pallone. All right. Thanks.
    Mr. Pitts. The chair thanks the gentleman. Now recognize 
the gentleman from Illinois, Mr. Shimkus, 5 minutes for 
questions.
    Mr. Shimkus. Thank you, Mr. Chairman. This has been a 
tremendous hearing, and I am glad I stayed. I think you see the 
importance that this subcommittee puts on these issues. You-all 
on the panel, turn around and just turn around and see Dr. 
Woodcock is right there. Wave to her. And I want to make sure 
everyone knows she stayed, and I applaud her for doing that. So 
this is kind of a silly question but it is really, would you 
consider you-all Facebook friends with the FDA or in a 
relationship? Anyone want to answer? Are you friends or you not 
even--had a friend notification out there and they didn't even 
accept.
    Dr. Hillan. Maybe I could speak to that because obviously 
it is important that the pharmaceutical industry is regulated 
by the FDA both in terms of drugs and also in diagnostics, so I 
don't know we would call ourselves friends, but we are 
certainly, I would say, professional colleagues that work 
together.
    Mr. Shimkus. Yes.
    Dr. Hillan. We have had----
    Mr. Shimkus. Well, the point is this only gets solved with 
the people in this room. It gets solved with you at the panel, 
it gets solved with the FDA, and it gets solved with the public 
policy folks here, and so we have to have that communication. 
We have to be in a relationship, and that is what I am taking 
from this because a lot of ideas. And I couldn't believe it. I 
was also looking at stuff. The Pentagon was--the groundbreaking 
was September 11, 1941. The dedication was January 15, 1943. So 
in this issue, these are timelines. Thirteen years to get to 
one point; 15 years still down the road. We have got to switch 
those timelines, and there are people who are willing to accept 
some risk. And besides, we have heard numerous testimonies on 
this 21st Century Cures debate and how do we do that 
effectively.
    The question I have by listening to the testimony is 
government is historically bureaucratic and not flexible and we 
are very rigid, but in this process, you are the experts, you 
are the doctors, you are the scientists and stuff, how do we 
write into legislation the flexibility to incentivize while 
protecting public health? And can we do that? And then that is 
what we are going to move on legislatively, but am I right in 
that analysis and do you think we can get there? And I only 
have 2 minutes left, so why don't we just go down and let 
everybody weigh into that if you would like.
    Dr. Hillan. So, it obviously has to be done appropriately, 
but much of this is about building trust. We are working 
towards the same goal of bringing forward new antibiotics to 
patients. We have interacted with the FDA, and I can tell you 
the FDA has really facilitated the development of plazomicin. 
They came up with really good ideas, totally appropriate ideas 
actually the company hadn't thought about. BARDA has been 
incredibly supportive and brings technical expertise to the 
table as well, so we can work effectively together and we are 
all working towards the same goal. So I would hope that we can 
continue to do that in the future, and it does need to be 
flexible. We need to trust people to use good judgment so that 
we can all look after patients.
    Dr. Murray. I think one of the benefits of the PCAST report 
and the new structure that there will be, will include external 
stakeholders, be included, and I certainly agree with that, and 
external to the government, and I think their input is needed, 
and that may help keep driving the process.
    Dr. Thomas. I think it is absolutely possible to write 
legislation that is flexible and also impactful. I also like to 
say that we want to be part of that discussion. We believe it 
does take a different way of thinking, and we have to be 
willing to test things that may not necessarily seem so 
palatable. I just want to finish with saying it is no accident 
that breast cancer is almost a curable disease today. It is no 
accident that many bone marrow tumors are curable of chronic 
diseases today. It is no accident that people can live with 
diabetes. It is because the incentives for everyone are to 
innovate in those areas. So if you don't want this to be an 
accident, we need to design the right incentives.
    Mr. Outterson. We need billion-dollar incentives hanging 
out there for companies, big incentives, not little. It is hard 
to write what you will need in 10 years, though, into 
legislation when we don't know what the diseases will exactly 
look like.
    BARDA is a wonderful model. One of the most encouraging 
things I took from yesterday from PCAST was significant 
additional funding being proposed for BARDA because they can 
contract, given flexibility, based on what is happening now. 
The only other person who is not in this room are the pairs, so 
I would like to see Blue Cross and Blue Shield, insurance 
companies, Medicare, this is a pay-for-performance, pay-for-
value issue. Let's pay more to keep it valuable.
    Mr. Coukell. There is no single solution here. There are 
things that Congress can do now and do quickly and should do. 
There are places where there needs to be continued 
collaboration. I think we have seen that with FDA and companies 
and stakeholders, and PCAST called for more of it. There are 
more important basic science questions that are not industry 
questions, are academic questions, but questions that will be 
solved when we have them effectively working together not just 
with more money but with smarter science, so there is no one-
size solution here, but there are things we can do now quickly 
to move this along.
    Dr. Powers. I think we talked a lot today about the history 
of resistance and how we got to this point, and actually there 
is already tremendous flexibility built into FDA's regulations 
already. When FDA came out with the regulations in 1970 on what 
an adequate study was, the pharmaceutical companies immediately 
sued. And when it went to the courts, the courts actually found 
that the regulations allowed tremendous flexibility for FDA and 
how the studies can be designed.
    I think what we were trying to say this morning, and Dr. 
Outterson brought this point up several times, is that these 
studies should actually show added value for patients, that 
really what we are trying to say is if we are going to give 
perks for companies, it ought to be perks for performance, not 
perks for potential, that the studies should actually show, as 
Dr. Hillan pointed out and how his study is designed, that the 
drugs actually save lives in the people that we need to use 
them in.
    Mr. Shimkus. Thank you, Mr.--and thank you--a minute ago--I 
want to end on this or not----
    Dr. Murray. Could I add one additional comment? Would that 
be----
    Mr. Pitts. Yes, you may.
    Dr. Murray. Thank you very much. I want to get back to the 
point of BARDA being a good model, and that is a wonderful 
model. NIAID could serve the parallel role of helping to 
develop drugs for--thanks. That BARDA is not directly 
applicable to, and they already do have an antibiotic 
resistance leadership group whose path is to help design trials 
for antibiotic resistance organisms, but I think the BARDA 
model is a good one. It does not necessarily have to be BARDA 
that would carry it out.
    Mr. Shimkus. And I appreciate that. The last comment. I 
just will say that these companies, I really--and Mr. Waxman 
just raises my ire every now and then, too. Because it is not 
perks. These guys raise capital, assume risk to try to save 
lives, employ thousands of people, and pay taxes, so they are 
the ones who are raising the capital and assuming a risk. So, 
if we go down the route of trying to beat up corporate America 
in this process, we are not going to be friends. We will be 
defriended and we can't. We got to be all in this together, and 
with that, I yield back my time.
    Mr. Pitts. The chair thanks the gentleman. The gentleman 
from Georgia wanted to make a point of clarification.
    Mr. Gingrey. Mr. Chairman, thank you, and I don't disagree. 
In fact, I do agree with the comments from my colleague, the 
gentleman from Illinois, Mr. Shimkus, in what he just said. But 
I also want to, Dr. Powers, let you know that the concerns that 
you express in your testimony are not lost on me at all, and I 
don't think other members of the committee, and also, the 
ranking member of this health subcommittee, Mr. Pallone, and 
his concerns about labeling, and that is not lost on me either. 
And staff is working almost as we speak on that issue, Frank, 
to try to get that right and to lay those concerns.
    Mr. Chairman, this has been fabulous. You-all are great, 
both panels. Dr. Woodcock, we are so grateful to you, and I, 
like the other members that stayed over, and didn't get an 
early flight back to Atlanta, I am grateful that I stayed 
because this has been most, most informative, and we are deeply 
appreciative. Thank you very much, and I yield back.
    Mr. Pitts. The chair thanks the gentleman, and I would like 
to say it is good to hear of the collaboration that is 
occurring between the public and private sectors, and that is 
so important. And I might mention, Dr. Woodcock has been before 
this committee many times, and she is one administrator that 
always stays through the whole hearing, and you should be 
commended for that, and we thank you for your responsiveness.
    Now, other members will have questions, and we will have 
follow-up questions. We will send those to you. We ask that you 
please respond promptly. I remind members that they have 10 
business days to submit questions for the record. That means 
they should submit their questions by the close of business on 
Friday, October 3rd. Very good hearing, exciting, very 
informative. Thank you very much for your participation. 
Without objection, this subcommittee is adjourned.
    [Whereupon, at 11:35 a.m., the subcommittee was adjourned.]
    [Material submitted for inclusion in the record follows:]

                 Prepared statement of Hon. Fred Upton

    Today's hearing is an important opportunity to review the 
growing threat of antibiotic resistant infection--a global 
health crisis. To quote the CDC: ``The loss of effective 
antibiotic treatments will not only cripple the ability to 
fight routine infectious diseases but will also undermine 
treatment of infectious complications in patients with other 
diseases.'' This public health crisis is an important topic for 
us to explore as we continue our work on the bipartisan 21st 
Century Cures initiative and work to bring more effective 
treatments to patients more quickly.
    Make no mistake: we are losing effective antibiotic 
treatments because the pace of new and novel drug development 
has not kept up with these organisms' ability to build 
resistance to the treatments available today.
    Passage of the GAIN Act in the 112th Congress as part of 
our efforts to reauthorize the FDA User Fee legislation was an 
important step in incentivizing antibiotic drug development, 
but much work remains to be done.
    Committee members Congressmen Gingrey and Green have put 
forward one such idea--the Adapt Act--and I want to commend 
them for their continued leadership in addressing these 
important issues.
    The President's own Council on Science and Technology (or 
PCAST) just yesterday released a call to action on the issue of 
antibiotic resistance. This plan included a number of 
initiatives it intends to undertake over the next 5 years, 
including incentives for the development new drugs and 
diagnostic tests. We will continue to engage on this issue as 
part of our bipartisan 21st Century Cures agenda.
    Today's witnesses will provide important perspectives on 
the types of incentives to help drive the types of new drug 
development necessary to meet this growing threat and whether 
such incentives might also address other areas of unmet need.
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