[House Hearing, 108 Congress]
[From the U.S. Government Publishing Office]
PROJECT BIOSHIELD: CONTRACTING FOR THE HEALTH AND SECURITY OF THE
AMERICAN PUBLIC
=======================================================================
HEARING
before the
COMMITTEE ON
GOVERNMENT REFORM
HOUSE OF REPRESENTATIVES
ONE HUNDRED EIGHTH CONGRESS
FIRST SESSION
__________
APRIL 4, 2003
__________
Serial No. 108-10
__________
Printed for the use of the Committee on Government Reform
Available via the World Wide Web: http://www.gpo.gov/congress/house
http://www.house.gov/reform
______
87-141 U.S. GOVERNMENT PRINTING OFFICE
WASHINGTON : 2003
____________________________________________________________________________
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COMMITTEE ON GOVERNMENT REFORM
TOM DAVIS, Virginia, Chairman
DAN BURTON, Indiana HENRY A. WAXMAN, California
CHRISTOPHER SHAYS, Connecticut TOM LANTOS, California
ILEANA ROS-LEHTINEN, Florida MAJOR R. OWENS, New York
JOHN M. McHUGH, New York EDOLPHUS TOWNS, New York
JOHN L. MICA, Florida PAUL E. KANJORSKI, Pennsylvania
MARK E. SOUDER, Indiana CAROLYN B. MALONEY, New York
STEVEN C. LaTOURETTE, Ohio ELIJAH E. CUMMINGS, Maryland
DOUG OSE, California DENNIS J. KUCINICH, Ohio
RON LEWIS, Kentucky DANNY K. DAVIS, Illinois
JO ANN DAVIS, Virginia JOHN F. TIERNEY, Massachusetts
TODD RUSSELL PLATTS, Pennsylvania WM. LACY CLAY, Missouri
CHRIS CANNON, Utah DIANE E. WATSON, California
ADAM H. PUTNAM, Florida STEPHEN F. LYNCH, Massachusetts
EDWARD L. SCHROCK, Virginia CHRIS VAN HOLLEN, Maryland
JOHN J. DUNCAN, Jr., Tennessee LINDA T. SANCHEZ, California
JOHN SULLIVAN, Oklahoma C.A. ``DUTCH'' RUPPERSBERGER,
NATHAN DEAL, Georgia Maryland
CANDICE S. MILLER, Michigan ELEANOR HOLMES NORTON, District of
TIM MURPHY, Pennsylvania Columbia
MICHAEL R. TURNER, Ohio JIM COOPER, Tennessee
JOHN R. CARTER, Texas CHRIS BELL, Texas
WILLIAM J. JANKLOW, South Dakota ------
MARSHA BLACKBURN, Tennessee BERNARD SANDERS, Vermont
(Independent)
Peter Sirh, Staff Director
Melissa Wojciak, Deputy Staff Director
Randy Kaplan, Senior Counsel/Parliamentarian
Teresa Austin, Chief Clerk
Philip M. Schiliro, Minority Staff Director
C O N T E N T S
----------
Page
Hearing held on April 4, 2003.................................... 1
Statement of:
Fauci, Dr. Anthony S., Director, National Institute of
Allergy and Infectious Diseases, National Institutes of
Health, Department of Health and Human Services; Dr. Mark
McClellan, Commissioner, Food and Drug Administration,
Department of Health and Human Services; Michael Brown,
Under Secretary for Emergency Preparedness and Response,
Department of Homeland Security; and Dr. Dale Klein,
Assistant to the Secretary of Defense for Nuclear, Chemical
and Biological Defense Programs, Department of Defense..... 15
Rapoport, Frank, attorney at law, McKenna Long & Aldridge, on
behalf of Aventis Pasteur; Michael Friedman, chief medical
officer for biomedical preparedness, Pharmaceutical
Research and Manufacturers of America; Una Ryan, president,
Avant Immunotherapeutics, Inc., Needham, MA; Katherine
Bowdish, Ph.D., president, Alexion Antibody Technologies,
Cheshire, CT; and John Edwards, chief of infectious
diseases, Harbor-UCLA Medical Center, on behalf of the
Infectious Diseases Society of America..................... 65
Letters, statements, etc., submitted for the record by:
Brown, Michael, Under Secretary for Emergency Preparedness
and Response, Department of Homeland Security, prepared
statement of............................................... 39
Davis, Chairman Tom, a Representative in Congress from the
State of Virginia, prepared statement of................... 3
Edwards, John, chief of infectious diseases, Harbor-UCLA
Medical Center, on behalf of the Infectious Diseases
Society of America, prepared statement of.................. 105
Friedman, Michael, chief medical officer for biomedical
preparedness, Pharmaceutical Research and Manufacturers of
America, prepared statement of............................. 77
Klein, Dale, Assistant to the Secretary of Defense for
Nuclear, Chemical and Biological Defense Programs,
Department of Defense, prepared statement of............... 45
McClellan, Dr. Mark, Commissioner, Food and Drug
Administration, Department of Health and Human Services,
prepared statement of...................................... 20
Rapoport, Frank, attorney at law, McKenna Long & Aldridge, on
behalf of Aventis Pasteur, prepared statement of........... 68
Ryan, Una, president, Avant Immunotherapeutics, Inc.,
Needham, MA, prepared statement of......................... 94
Shays, Hon. Christopher, a Representative in Congress from
the State of Connecticut, prepared statement of............ 13
Waxman, Hon. Henry A., a Representative in Congress from the
State of California, prepared statement of................. 7
PROJECT BIOSHIELD: CONTRACTING FOR THE HEALTH AND SECURITY OF THE
AMERICAN PUBLIC
----------
FRIDAY, APRIL 4, 2003
House of Representatives,
Committee on Government Reform,
Washington, DC.
The committee met, pursuant to notice, at 9:30 a.m., in
room 2154, Rayburn House Office Building, Hon. Tom Davis
(chairman of the committee) presiding.
Present: Representatives Tom Davis, Shays, Waxman,
Kucinich, Van Hollen and Norton.
Staff present: Peter Sirh, staff director; Melissa Wojciak,
deputy staff director; Keith Ausbrook, chief counsel; Randy
Kaplan, senior counsel; John Hunter and David Young, counsels;
David Marin, director of communications; Scott Kopple, deputy
director of communications; Teresa Austin, chief clerk; Joshua
E. Gillespie, deputy clerk; Susie Schulte, legislative
assistant; Corinne Zaccagnini, chief information officer; Phil
Barnett, minority chief counsel; Karen Lightfoot, minority
communications director/senior policy advisor; Mark Stephenson,
minority professional staff member; Earley Green, minority
chief clerk; Jean Gosa, minority assistant clerk; and Cecelia
Morton, minority office manager.
Chairman Tom Davis. Good morning. A quorum being present,
the Committee on Government Reform will come to order.
We are here today to examine an administration proposal
known as the Project BioShield Act, which is designed to
protect the health and safety of the American people in the
event of a bioterrorist attack. This proposal, first announced
by the President in his 2003 State of the Union address,
authorizes the government to conduct and support the
development, acquisition and distribution of vaccines,
treatments and other biomedical countermeasures to use during
public health emergencies, including bioterrorist attacks.
Over the past few decades, we have seen rapid progress in
the development of treatments for many serious naturally
occurring diseases. Pharmaceutical and biotechnology companies
are highly capable of producing diagnostics and treatments to
meet consumer demand. However, there has been little progress
in treatments for deadly diseases like smallpox, anthrax, Ebola
and plague, which currently affect few, if any, Americans. The
reality is that for these diseases there is little manufacturer
interest in developing necessary treatments, since there is no
significant market other than the government.
Should the United States be attacked with these deadly
pathogens, however, the need for vaccines, tests and treatments
would be great; and it would be immediate. The administration's
Project BioShield initiative is designed to ensure that the
United States is prepared. The bill would stimulate companies
to develop modern and effective vaccines, drugs and devices to
protect Americans in the event of a bioterrorist attack or
other public health emergency.
The bill has three main components: First, it sets up a
process to expedite research and development of biomedical
countermeasures. As part of this process, the Secretary of
Health and Human Services would have flexible acquisition
authorities to quickly and effectively buy cutting-edge
products and services to support research, development, and
production of vaccines and treatments. Additional acquisition
flexibilities are put at the Secretary's disposal for the
creation of a stockpile of these critical countermeasures. The
Secretary would also have streamlined authority to hire
technical experts and consultants.
Second, the Secretaries of Homeland Security and Health and
Human Services would be required to work together to identify
and evaluate bioterrorist threats and determine which
countermeasures are needed to combat these threats. The bill
would also create a permanent funding authority designed to
spur the development of medicines and vaccines by the private
sector.
Third, during national emergencies, the bill would permit
the government to make available new and promising treatments
prior to approval by the Food and Drug Administration.
A version of the Project BioShield Act is introduced by
Senator Judd Gregg in the Senate and was reported out of the
committee last month. I intend to introduce a House version in
the near future.
We have assembled an impressive group of witnesses who will
help us better understand this bill. I am particularly
interested in learning how Project BioShield would assist in
addressing the current public health emergency created by the
epidemic known as Severe Acute Respiratory Syndrome [SARS].
More than 2,000 suspected cases of this mysterious disease have
been reported in 17 nations, including the United States, with
78 fatalities. So far, there is no effective treatment or
vaccine to combat this deadly syndrome.
I thank all of our witnesses for appearing today. I look
forward to their testimony.
I would now yield to Mr. Waxman for his opening statement.
[The prepared statement of Chairman Tom Davis follows:]
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Mr. Waxman. Thank you very much, Mr. Chairman.
I want to welcome the distinguished members of the panel,
this first panel, and the subsequent panel as well.
We are holding a hearing on a proposal by the
administration which I think all of us would support in its
intent. We want to accomplish what the proposal would seek to
have us accomplish, but our responsibility as Members of
Congress is to scrutinize it carefully, to try to think about
the unintended consequences, and to make sure that the job is
done right.
The development of effective countermeasures to
bioterrorism is certainly vital to our natural security. The
Project BioShield represents a proposal to encourage the
development of these products. We all support trying to do
that, but we have a responsibility to look closely at the
provisions of the legislation, and some of those provisions
give me some cause for concern.
For example, the proposal removes important protections
against waste and abuse that are standard for government
contracts. I understand the concern that these protections, in
an emergency situation, could impede the development of
necessary products. However, any exceptions should be made only
when necessary and should be subject to review. This proposal
would make it nearly impossible for the courts, for Congress
and even the executive branch to rein in abuses. The provision
eliminating the government's access rights to contractors'
books and records is particularly troubling.
Another provision permits products to be distributed
without FDA approval. Here again, I recognize there may be
unusual circumstances that would require this step in case of a
dire emergency. However, the proposal's language is overly
broad and could be used to support products that are simply not
safe enough for FDA approval. This provision could also permit
widespread distribution of unapproved drugs without informed
consent, recordkeeping or reporting of adverse events.
The BioShield proposal also provides for unlimited
guaranteed spending for procurement of vaccines and other
countermeasures with little congressional guidance or limits on
how much to spend.
This is a blank check approach. It could be looked at as an
abdication of congressional responsibility. We should work to
improve this proposal in such a way as to preserve oversight
and recognize that, in order for BioShield to work, we need to
assure that commitments made will be honored.
In this regard, it is ironic that the administration does
not support a similar approach of assuring that commitments
will be honored in the case of a smallpox vaccine compensation
program. Here, the argument for mandatory spending is strong,
because nurses, firefighters and other first responders deserve
to know that they and their families will be supported in the
case of severe injury or death. Yet in the case of smallpox
vaccination compensation, the administration has proposed
limiting compensation to the amount appropriated each year,
explicitly refusing to guarantee its commitment to those
Americans on the front lines of a bioterrorist attack. This
inexplicable failure to assure funding is one of the reasons
that the House voted down the administration's legislation on
smallpox vaccines compensation last Monday.
I raised this issue last week in the Commerce Committee to
point out the inconsistencies. At the time I did that, many
people raised the point, why should we allow automatic spending
in this area? They argued we shouldn't allow automatic spending
in any area.
But Secretary Thompson made the case last week that we want
to assure that funding will be there so that the companies that
are taking the financial risk of developing these products know
that they will be able to count on those funds.
I thought that was a strong argument to make. But, equally
strong is to make the assurances clear that if a first
responder gets immunized for smallpox that they are going to be
able to count on funding should there be, in rare
circumstances, but nevertheless in some circumstances, an
adverse event.
Let me conclude by pointing out that the BioShield proposal
includes provisions for public health emergencies, not just
bioterrorism threats. The idea of including public health
emergencies in a BioShield makes sense, because infectious
diseases that occur in nature can claim many lives, can even
become bioterrorist agents if intentionally spread.
What justifies government intervention to support
countermeasures is that the market fails to encourage their
development on its own. This rationale also applies to the
development of treatments for potential public health
emergencies.
In 2002, not a single new antimicrobial drug was approved
by FDA; and apparently only a handful are in development by
major pharmaceutical companies. One reason may be that the
market for the few cases of multidrug-resistant bacteria is
currently quite small. That leads to a market failure. And yet
the need for such treatments is enormous.
Just yesterday, the New England Journal of Medicine carried
the first report of a common bacteria that is extremely
resistant to an antibiotic that is usually the last line of
defense.
If properly designed, then, BioShield can serve valuable
purposes, improving our preparedness against bioterrorist
attacks and natural epidemics.
I look forward to hearing from the witnesses today to help
us understand this proposal and find ways to improve it. We
need to work together collaboratively for what is certainly a
shared goal that we all have.
Thank you.
Chairman Tom Davis. Thank you very much.
[The prepared statement of Hon. Henry A. Waxman follows:]
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Chairman Tom Davis. The gentleman from Connecticut, the
vice chairman of the committee, is recognized. Mr. Shays.
Mr. Shays. Thank you, Mr. Chairman, for convening this very
important hearing.
I come to this discussion with significant skepticism, not
about the urgency of the problem of countering biological
threats but about the adequacy and efficacy of the proposed
solution.
Buying biologics is not like buying bullets. The cold war
model of short-term research incentives and artificial markets
to sustain defense contractors may not fit the intensely
entrepreneurial pharmaceutical and biomedical industries. The
Department of Defense [DOD], Joint Vaccine Acquisition Program
and the Anthrax Vaccine Immunization Program should serve as
cautionary tales. The latter rushed to procure last century
technology to the detriment of research and development of a
modern anthrax vaccine. The former spent 6 years and more than
$300 million but has yet to finish a single vaccine.
As the current outbreak of Severe Acute Respiratory
Syndrome [SARS] attests, we remain hard-pressed to maintain our
defenses against nature's evolving arsenal of biological
threats. Hasty acquisition of medical countermeasures available
within 5 years, as proposed in BioShield, applies only a short-
term bandage to a long-term illness.
Massive caches of stockpiled vaccines, antibiotics and
drugs will protect no one if they cannot be administered
quickly and safely. The missing element of the protective
shield envisioned in this proposal is public health capacity.
Surveillance systems, diagnostic tools and trained medical
personnel are prerequisites to any effective defense against
natural and man-made biological outbreaks.
I look forward, Mr. Chairman, to discussing the BioShield
proposal and biopreparedness priorities with our witnesses this
morning. This is truly a very important hearing and one to
which we should pay close attention.
Chairman Tom Davis. Thank you very much.
[The prepared statement of Hon. Christopher Shays follows:]
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Chairman Tom Davis. We now move to our first panel of
witnesses. I want to thank our witnesses for appearing today.
We have Dr. Anthony Fauci from the National Institute of
Allergy and Infectious Diseases; Dr. Mark McClellan, the
Commissioner of the Food and Drug Administration; from the
Department of Homeland Security, we have Michael Brown, who is
the Under Secretary for Emergency Preparedness and Response;
and rounding out the first panel is Dr. Dale Klein, who is the
Assistant to the Secretary of Defense for Nuclear, Chemical and
Biological Defense Programs.
It is the policy of this committee that witnesses be sworn.
So if you would stand with me and raise your right hands.
[Witnesses sworn.]
Chairman Tom Davis. Dr. Fauci, we will start with you and
move right down the line. Thank you for being with us.
STATEMENTS OF DR. ANTHONY S. FAUCI, DIRECTOR, NATIONAL
INSTITUTE OF ALLERGY AND INFECTIOUS DISEASES, NATIONAL
INSTITUTES OF HEALTH, DEPARTMENT OF HEALTH AND HUMAN SERVICES;
DR. MARK McCLELLAN, COMMISSIONER, FOOD AND DRUG ADMINISTRATION,
DEPARTMENT OF HEALTH AND HUMAN SERVICES; MICHAEL BROWN, UNDER
SECRETARY FOR EMERGENCY PREPAREDNESS AND RESPONSE, DEPARTMENT
OF HOMELAND SECURITY; AND DR. DALE KLEIN, ASSISTANT TO THE
SECRETARY OF DEFENSE FOR NUCLEAR, CHEMICAL AND BIOLOGICAL
DEFENSE PROGRAMS, DEPARTMENT OF DEFENSE
Dr. Fauci. I appreciate the opportunity to discuss Project
BioShield with you today.
As you know from the legislative language, the purpose of
Project BioShield is to accelerate the research, development
and purchase and availability of effective medical
countermeasures against chemical, biological, radiological and
nuclear terrorism and public health emergencies.
Project BioShield, as you, Mr. Chairman, summarized so
well, is a three-pronged program. It increases the authorities
of and flexibilities of the NIH to expedite research, it
establishes a secure funding source to purchase
countermeasures, and it establishes an FDA emergency use
authorization.
I am going to very briefly discuss the first two components
in the context of how they relate to the work at the NIH; and
my HHS colleague, Dr. Mark McClellan, the FDA Commissioner,
will discuss both the procurement issues and how they relate in
the context of the FDA's responsibilities.
The NIH research system has served the country and the
world extraordinarily well for many decades. The NIH employs
traditional funding mechanisms that include grants, contracts,
cooperative agreements and other partnerships as well as time-
tested personnel functions, a system that has resulted in
numerous major advances that have improved the health of the
Nation, including the development of interventions for a number
of emerging and reemerging infectious diseases.
However, the events of September 11, 2001, and the
subsequent anthrax attacks have changed, probably forever, how
the biomedical community is going to respond to emerging
threats. We are now in a wartime mode and are compelled to
modify the way that we do business without compromising the
elements that have made us so successful.
With regard to the first component of Project BioShield,
the legislation provides for a number of special authorities at
NIH that will have the aggregate effect of expediting the
research process. This is what we call the push toward the
countermeasure development. Among those, BioShield provides for
expedited peer review of grants and contracts, and I emphasize
without compromising the scientific, technical and programmatic
standards. It also streamlines procurement authority, bolsters
authorities for acquisition and renovation of facilities,
expedites personal services contracts and provides flexibility
with regard to personnel authority. We feel that these expanded
authorities will considerably hasten the pathway from basic
research concept up to and including effective countermeasure
development.
Let me switch gears quickly and speak briefly about the
mandated appropriations authority for the procurement of
countermeasures. We at NIH and our colleagues at DHHS have had
numerous occasions to discuss the development of
countermeasures with companies ranging from small biotech firms
to big PLRMA. These are our industrial partners that are
essential to bringing countermeasure development to fruition.
Many of those firms are willing to help in the development
of biodefense countermeasures, but the fact remains that they
are business and are not nonprofit organizations, and they need
a tangible incentive to get involved.
Now when it is evident that a given product has a potential
to make a profit, few incentives are needed to engage industry.
However, when you are dealing with a product for which there is
no guarantee of a return or for which the market is tenuous,
these companies clearly need some assurances that there will
ultimately be a return for their investment. Without such
assurances, they will simply pursue the development of other
products.
When we meet with companies, we hear one of two things.
First, they may already be involved in the early stages of
development of biodefense countermeasures on their own
initiative. They are willing to take on a fair amount of risk,
but they want some assurances if they are actually successful
that there will be a market for their product. Many state,
quite frankly, that they do not want to be vulnerable to the
vicissitudes of the cyclical appropriation process, as sound as
that is in so many arenas.
The other scenario in which we are trying to engage
reluctant companies to get involved, namely people who have
many other things to do with their efforts and with their
expertise, in this instance, we do as we are doing now. We push
with discretionary research dollars.
However, in our experience, that does not seem to be
enough. With Project BioShield, we will further be able to tell
these companies that they can partner with us such that if at
their end they meet milestones and come up with a licensable
countermeasure they have our assurances that there will be
money available to them for advanced procurement and,
ultimately, purchase.
These are examples of what we call the pull of the process.
In summary, the accelerated development of effective
countermeasures against terrorism requires a new research
paradigm and new ways to engage our industrial partners.
Project BioShield will help us meet the challenges of
bioterrorism effectively and expeditiously.
Thank you again, Mr. Chairman and members of the committee,
for the opportunity to testify today about this important
initiative to improve our homeland security; and I would be
happy to take questions after the others.
Chairman Tom Davis. Thank you, Dr. Fauci.
Dr. McClellan.
Dr. McClellan. Mr. Chairman, Congressman Waxman,
distinguished members and staff of the committee, thank you for
inviting me here today to discuss the Project BioShield Act of
2003.
As you know, FDA has been engaged with other government
agencies and the private sector in an accelerated major new
focus on helping to develop and make available better
countermeasures for biological, chemical, radiological attacks
and other types of attacks. This bill will significantly
enhance those efforts and improve our ability to protect our
citizens from these threats. In light of the heightened
security risk facing our Nation and our troops, we appreciate
your timely consideration of finding better ways to acquire the
countermeasures that we need.
I am pleased to tell you that in the last 2 months alone we
have approved safe and effective treatments for certain nerve
gases and radiological agents. We have enhanced our stockpiles
of vaccines and treatments for smallpox and other possible
agents of biowarfare.
Working with the Department of Health and Human Services,
particularly NIH, as well as DOD and the Department of Homeland
Security and private companies, we are taking further steps to
determine as quickly as possible whether other available agents
may be of benefit. Such products include drugs that may be
active against smallpox and viral hemorrhagic fever, new
treatments for exposure to radiologic agents, as well as novel
treatments for smallpox and anthrax vaccines and
immunoglobulins to treat botulism or complications of smallpox
vaccinations. We are also working on some new diagnostic and
treatment methods for the Severe Acute Respiratory Syndrome.
FDA recognizes that early and ongoing consultation with
product developers is essential to get rapid approval of safe
and executive products.
We focused intense efforts on the rapid turnaround of
requests for information, review of study plans and data,
development of plans for appropriate product production and use
where needed under streamlined investigational new drug
procedures for agents of terror, for treating agents of
terrorism.
Our experience with the approval of a new treatment for the
effects of a certain nerve gas, pyridostigmine, was approved
under a new animal rule as a result of legislation last year.
In this case, FDA worked closely with the sponsors of the
application to define not only the criteria that would help in
evaluating the drug's safety and effectiveness for this use, we
also worked closely to develop appropriate animal models that
ultimately helped us verify safety and efficacy.
At the same time, we realize that we can't easily solve the
problem of getting safe and effective countermeasures to the
public with the existing financial incentives for developing
them. Our close work with the developers of these new products,
which now includes around 200 professional staff in our
biologic program alone, has reminded us that proof of concept
is still a very long way from large-scale production of
effective countermeasures that pose acceptable safety risks.
In some cases, we have done the work to demonstrate safety
and effectiveness of certain products for counterterrorism use,
but we don't yet have companies willing to produce these
products. To bring badly needed, safer and more effective
countermeasures to our Nation's defense, we are going to need
to do more to encourage all parties, basic science researchers
and government labs as well as the major medical companies, to
take up the cause of developing countermeasures.
Consequently, while the countermeasures we have made
available already have given us a deeper and more effective
stockpile of treatments, in many cases they are based on old
technologies. For example, monoclonal antibodies have changed
the way that we treat everything from heart disease to cancer.
It is considered a master technology in many biomedical
circles.
Many researchers believe that this technology can be
effectively applied to developing countermeasures from anthrax
and botulinum toxins to even the Ebola virus. Yet there is only
limited research at the developmental stage into the
application of these bioterrorism countermeasures. Instead,
there is currently available an antitoxin to botulism, which is
based on a technology that was available when the FDA came into
existence in 1906. This is a useful and very-much-needed
treatment, but there is strong reason to believe that new
technology can produce antidotes and vaccines that are even
safer and more effective and so much more valuable, and that is
what has been available to us now.
So I agree with Congressman Shays about the need to get to
a next generation of countermeasures through this approach.
Research and development into next generations
countermeasures has been much slower for naturally occurring
diseases, largely because there is no clear financial reward
for success. Many companies that I have talked to, just like
Tony has, know that the development of medical products is a
very uncertain process. They are used to taking risks and
knowing that they might fail, but what they want to know is
that if they succeed there is a certainty of a reasonable
financial reward.
Today, when it comes to countermeasures, there are plenty
of risks but few clear defined rewards; and that is why Project
BioShield is critically important. It includes new procurement
authorities to provide certainty of payment in advance for the
delivery of effective new products. By creating conditions for
a market that is reasonable, predictable and consistent over
time, government will set the stage for the private sector to
make the investments and problem-solving efforts required to
develop more effective next-generation countermeasures.
Furthermore, in the event that a national emergency has
been declared, the bill allows for a limited and highly
targeted use of countermeasures for treating a select agent
without the completion of the full FDA process. To be clear,
this would only occur if a product in the approval pipeline is
urgently needed because there are no effective approved
treatments available and if we conclude that in the emergency
the product's potential benefits outweigh its potential risks
for those persons who don't have a better alternative.
We expect more antidotes and vaccines to flow out of
BioShield, and at FDA we are ready to help facilitate their
development and to make sure the best available treatment can
be used effectively in an emergency. We live in a new
biomedical era today. It is an era of great promise but also of
very serious risks in the years ahead from those who would
deliberately use biological, chemical, radiologic and other
agents as weapons of mass destruction.
In addition to the great need for translating biomedical
research breakthroughs into effective new treatments for
naturally occurring diseases like cancer and Alzheimers and
antibiotic resistant bacterial infections, we also need to
create much-needed new incentives and authorities to respond to
these unnatural threats.
We are proud to be able to participate in this process to
help the Nation, and we appreciate the strong bipartisan effort
in both the House and the Senate to respond to this urgent
critical challenge.
Thank you, and after the panel's introductory statements, I
will be glad to take questions as well.
Chairman Tom Davis. Thank you very much.
[The prepared statement of Mr. McClellan follows:]
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Chairman Tom Davis. Mr. Brown.
Mr. Brown. Thank you, Mr. Chairman, Mr. Shays and Mr.
Waxman.
My name is Michael Brown. I am the Under Secretary for
Emergency Preparedness and Response Directorate of the
Department of Homeland Security. I am honored to appear before
you today on behalf of Secretary Ridge to discuss our role in
bioterrorism preparedness in general, and in BioShield
specifically. Preparing our citizens for the event of a
bioterrorism event is one of several significant challenges
that the new Department faces.
But before I discuss the Emergency Preparedness and
Response's role in BioShield, I want to give you a broader
perspective about our mission.
Members of Congress have been very good to us in our years
as an independent agency, the Federal Emergency Management
Agency. But we are pleased to join the Department of Homeland
Security and bring a wealth of knowledge from our experiences
in preparing for, mitigating against, responding to, and
recovering from disasters of all kinds.
I want to assure the members of this committee that EP&R
will not lose sight of its responsibility of helping people and
communities affected by disaster. The mission statement of the
Directorate--to lead the Nation to prepare for, mitigate the
effects of, respond to and recover from major domestic
disasters, both natural and man-made, including acts of
terrorism--contains the same core responsibilities that guided
the Federal Emergency Management Agency.
During fiscal year 2002, FEMA expended nearly $3.9 billion
in disaster funds to aid people and communities who were
overwhelmed by disasters, which included earthquakes, floods
and ice and winter storms, fires, hurricanes, tornados and
tropical storms. FEMA has responded to 42 major disasters,
including 37 States and 4 of the U.S. territories. I assure you
that role will not change, it will only expand, and the
Department is committed to helping our country and citizens in
time of disaster.
The risk associated with acts of terrorism poses a
significant challenge for the Emergency Preparedness and
Response Directorate. FEMA's rapid and decisive response to the
events of September 11th demonstrated our role in consequence
management. As a result, the Nation is looking to the emergency
management community to face this new challenge.
Project BioShield was announced by the President in his
January 28th State of the Union Address. The doctors on the
panel discussed many of the program's specific details, so I
want to limit my comments to a few brief statements.
Our Director has the direct responsibility to do a couple
of things: One, allow the Federal Government to purchase
critically needed vaccines or medication for biodefense. There
is $900 million in permanent indefinite authority in the
President's 2004 budget.
Two, ensure the adequacy of the Nation's stockpiles of
pharmaceutical, vaccines and other medical supplies that can be
delivered to emergency sites in 12 hours or less. $400 million
are proposed in the President's 2004 budget for this.
And, third, to remove the barriers to the development and
production processes, the Department of Homeland Security's
role is to do three things: One, serve as the national incident
manager coordinating the preparedness and response to any
incident that overwhelms or has the potential to overwhelm the
resources of State and local government as declared by the
President.
We will also work with the Department of Health and Human
Services to jointly determine that adequate countermeasures do
not exist for a particular threat without the use of BioShield
authorities.
Third, along with the FDA, the Department of Homeland
Security must declare that chemical, biological, radiological
or a nuclear threat is real and requires the use of the
BioShield provisions. For this intelligent assessment, we will
be looking to the Information Analysis and Information
Protectorate Directorate within the Department of Homeland
Security.
In short, Homeland Security will coordinate with Health and
Human Services to trigger the use of BioShield. We will fund
the program's activities and will make a product available
through the Strategic National Stockpile.
I am committed to working closely with the various
components of the Department of Health and Human Services as
they identify the contracting and procurement mechanisms within
the pharmaceutical industry, as they work to certify the safety
and efficacy of developing new medicines, and as they make
recommendations for programmatic progress in areas of needed
improvement.
As the custodian of these significant Federal dollars, the
Department of Homeland Security is committed to working closely
with Health and Human Services to make sure that BioShield
authorities are triggered after its use is determined in the
Nation's best interest.
Emergency Preparedness and Response is assuming the
responsibility for several biopreparedness activities,
including developing a bioterrorism response plan called Bio-
Watch, participating in the Metropolitan Washington Council of
Government's Bioterrorism Task Force, and participating in
major bioterrorism response exercises such as TOPOFF 2 and
Exercise Silent Night.
First, Emergency Preparedness and Response has assumed the
responsibility of maintaining and deploying the Strategic
National Stockpile together with the Center for Disease Control
and Prevention. The Strategic National Stockpile is made up of
pharmaceuticals, vaccines and medical supplies housed in
various areas around the country in cases of emergency. By
dispersing these assets, the goal is to deliver the necessary
supplies to disaster sites in 12 hours or less.
Bio-Watch, which we have talked about, is also included in
the responsibilities of Homeland Security and is our effort to
make sure that we are ahead of the game in case of emergencies.
The Metropolitan Washington Council on Government's
Bioterrorism Task Force is another area that we are working in,
including the exercise that we have done in TOPOFF and Silent
Night.
The National Disaster Medical System I have already
mentioned is also a responsibility assumed by the Department of
Homeland Security under the act. This system assists State and
local governments by providing primary care to disaster victims
in the field, patient evacuation disaster areas, and definitive
care when needed. Our Federal partners include the Departments
of Health and Human Services, Defense and Veterans Affairs.
While I have not limited my remarks to BioShield, I think
it gives you a good overview of our responsibility in the
Department of Homeland Security. We are happy to work in this
area and are pleased to answer any questions the committee may
have at the close of these opening remarks.
Chairman Tom Davis. Well, thank you very much.
[The prepared statement of Mr. Brown follows:]
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Chairman Tom Davis. Dr. Klein.
Dr. Klein. Chairman Davis, distinguished members of the
committee, I am pleased to be provided the opportunity to
appear before you today. As indicated, my name is Dale Klein;
and I currently serve as Assistant Secretary of Defense for
Nuclear, Chemical and Biological Defense Programs.
Within the Department of Defense, I have the responsibility
for all matters concerning the formulation of policy and plans
for nuclear, chemical and biological defense programs. In this
role, I am responsible for the Department of Defense programs
to develop and field biological countermeasures our warfighting
forces need.
Due to the support of Congress and with the help of the
resources you have made available to the Department, our
fighters that are now in the vicinity of Baghdad are much more
prepared than they were in 1991 under Operation Desert Storm.
The Department of Defense is very interested in the prompt
approval of the administration's Project BioShield initiative.
New authorities are needed with appropriate safeguards to
assure rapid and effective medical treatments can be introduced
quickly to counter weapons of mass destruction. The President's
Project BioShield initiative would enhance the Food and Drug
administration's ability to make needed medical products
available in response to declaration of an emergency.
DOD stands ready to assist civilian agencies in their
efforts to provide modern, effective drugs and vaccines to
protect against attack by biological, chemical, nuclear or
radiological weapons.
The Department looks forward to working closely with
Congress, the Department of Health and Human Services and the
Department of Homeland Security to collaborate as the lessons
of the 2001 anthrax attacks are fresh in our minds.
Currently, we are working with the Department of Health and
Human Services and other Federal agencies to develop the next
generation anthrax vaccines for future use and several other
programs.
Mr. Chairman, in summary, I request that my full statement
be placed in the record; and I want to reemphasize that the
Department of Defense supports the President's Project
BioShield initiative.
I will be happy to answer questions you may have later.
Thank you.
Chairman Tom Davis. Well, thank you very much.
[The prepared statement of Dr. Klein follows:]
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Chairman Tom Davis. I want to thank all of the panelists.
We are going to start the questions. I just have a quick
question before I yield to Mr. Waxman, and then we will get
another round.
Dr. Fauci, next week this committee is going to be holding
a hearing on the Severe Acute Respiratory Syndrome [SARS]
epidemic. Can you give us an update on what we now know about
SARS, including how it is transmitted, how far it has spread
and what we can do to protect ourselves?
Dr. Fauci. Certainly, Mr. Chairman.
SARS, standing for Severe Acute Respiratory Syndrome, has
now spread through several countries, at least 17 countries.
There are over 2,200 cases, and about 80 deaths. There has now
been 100 cases in the United States in 27 States.
This is a new disease. It is what we refer to as an
emerging microbe, an emerging infectious disease. The data from
the CDC and from other laboratories indicate that the corona
virus, which is an interesting group--it is a very common
virus. It is what causes about 10 to 20 percent of the common
colds. There are two groups of corona viruses. This is likely a
member of a new third group. It has not been definitively
demonstrated that this is the, or the only, cause of SARS, but
the evidence is mounting every day from a variety of approaches
that we are taking.
It has the capability of being a very severe syndrome. The
death rate in this is 3.5 percent, which may sound small, but
when you think about the possibility of infecting hundreds of
millions of people, this can turn out to be a major public
health threat. In fact, in parts of the world it already is,
leading to such draconian measures as quarantines and isolation
in several countries.
The CDC has done a magnificent job thus far, and we know
that they will continue to, in not only identifying and
tracking but essentially now moving ahead in collaboration with
the NIH and a variety of other agencies, the FDA, in developing
diagnostic therapeutics and on our way to a vaccine.
So, in summary, Mr. Chairman, it is a serious threat. We
must take it very seriously. We don't feel there is a need to
panic at this point, but we must continue to do the very
stringent public health measures that we are approaching, as
well as the research that is going into it.
Chairman Tom Davis. Thank you. That is just a synopsis. We
will have a fuller hearing next week with more questions. But
thank you for that.
Let me yield to our ranking member, Mr. Waxman.
Mr. Waxman. Thank you very much, Mr. Chairman. That was
very interesting, what you had to say about this SARS. Our
committee is going to hold a hearing on it next week. I think
it is important for us to understand this very looming threat
to the public and how best to deal with it.
On this BioShield proposal, the administration is
suggesting that NIH conduct a research and development program
for biological countermeasures. It then authorizes the
procurement of countermeasures but only after determinations by
the Secretary of HHS and Homeland Security and Presidential
approval. But, Dr. Fauci, who makes the decisions about the
research and development phase?
Dr. Fauci. We do, sir; and that is the point that I alluded
to briefly in my opening remarks. There is the push and the
pull. The NIH and other research agencies make a scientific
decision about the kinds of research that we need to do. We
rely heavily, as others do, on intelligence reports,
particularly from the new Department of Homeland Security about
the threat assessment. But the fundamental basic research, that
is our decision; and the way we execute this research is a
scientific decision.
Mr. Waxman. You will be making decisions about research
into countermeasures at the same time you oversee research
against present threats to health.
Dr. Fauci. Yes, sir.
Mr. Waxman. Should Congress be worried that traditional
medical research will slow down as NIH focuses on biodefense?
Dr. Fauci. I don't believe so, Mr. Waxman. There is always
a concern when you have to rev up and ratchet up your
activities that there will be resources taken away from other
areas, but if you look now thus far at the track record of the
providing of resources for biodefense at the NIH, it has been
quite extraordinary. We appreciate not only the administration
but the Congress and their bipartisan support of that.
But if you look at the other areas of the naturally
emerging and reemerging diseases, that has not suffered and in
fact has grown at a rate commensurate with the rather
substantial growth of the rest of the NIH. So, in fact, we have
not seen that.
Mr. Waxman. Is there a potential for dual use where the
research of biodefense may well lead us to research
breakthroughs for other diseases?
Dr. Fauci. I think it is not only a potential, Mr. Waxman,
I think it is inevitable that there will be an important
contribution to the research that we put into emerging and
reemerging diseases to inform us about biodefense research, and
it is without a doubt that the research that goes into
biodefense will help us with naturally occurring.
Because as a matter of fact, as we have discussed before,
as you know we feel that deliberately released microbes is just
another form of emerging and reemerging disease. Instead of
occurring naturally, it is done with malice and deliberately,
but the end result can be the same.
In some respects, nature itself can be our worst
bioterrorist. So the resources and the manpower and the
expertise that goes into one will naturally flow seamlessly
back and forth into the other.
Mr. Waxman. Let me ask you about antibiotic resistance.
This certainly poses a threat to public health now and a
potential bioterrorist threat for the future. Yet drug
companies have few antibiotics in development, and some people
believe there is a market failure for drugs to treat resistant
bacteria. How urgent is the crisis in antibiotic resistance and
does it make sense for BioShield to cover research into new
antibiotics to treat resistant bacteria?
Dr. Fauci. The answer to your question is it is a serious
threat, and it has been a threat for some time. I think you
alluded to, in your opening statement, the fact that, you know,
as months go by, we are pushing the envelope further and
further about the emergence of resistance to microbes for which
we have maybe one last firewall of an antibiotic against that.
We are recognizing this at the research level, and we are
putting more resources into it. But I believe, and we all
believe, that the basic research that we will be doing on
microbes for biodefense will directly and indirectly address
the concerns that you have and the concerns that we have.
For example, as part of our biodefense research endeavor,
we are involved in a major program for the sequencing of
pathogenic microbes, not only those on the category A or B
list, but microbes for which one can, by a simple mutation,
lead to a microbe that would be a bioterror weapon.
So that kind of research that we have been doing before in
emerging and reemerging disease research and that we have
accelerated greatly with biodefense will address the question
you are concerned about.
Mr. Waxman. As you know, our vaccine infrastructure is very
fragile, and we always have to be concerned about the vaccines
for childhood diseases. Do you see any potential where the
efforts to develop and produce bioterror vaccines could
negatively impact childhood vaccine capabilities?
Dr. Fauci. I don't think it would negatively do that at
all. In fact, if we can, which I hope that we do, that the
long-range effect would be to add a degree of robustness and
vigor to the whole field of vaccinology, that there will be
positive spin-offs.
You are quite correct. We are walking a very thin line,
notwithstanding biodefense in the whole field of vaccinology,
because of so few companies that are involved for a variety of
reasons.
We feel that if we get both the basic research and the
actual production flow of vaccines in general that this will
have positive spin-offs on vaccines for childhood diseases as
well as adult nonbiodefense vaccines.
Mr. Waxman. Thank you very much.
Dr. McClellan, the BioShield proposal would allow the
Secretary of Health and Human Services to waive virtually all
of the consumer protections in the Federal Food and Drug
Cosmetic Act in case of an emergency. Moreover, the proposal
would then severely curtail judicial review of the Secretary's
decision. What is the rationale for allowing informed consent,
recordkeeping, adverse event reporting, and other key
requirements to be waived; and what is the rationale for
severely limiting oversight of these extraordinary powers?
Dr. McClellan. The rationale for the emergency use
authorization is to provide the most potentially effective
treatments to Americans in emergency situations. This is a
limited authority program that only applies when the Secretary
and others have determined there is a national emergency
because of a bioterrorism threat or another type of public
health emergency, and it only involves agents where there are
not effective approved treatments already available but where
there may be treatments in the pipeline where the potential
benefits outweigh the potential risks. We have a few now that
are marching as quickly as possible toward approval and toward
a full demonstration of safety and effectiveness. That remains
our goal.
I would highlight that we are going to have even better
incentives for that under the BioShield program. You don't get
full payment for development of a countermeasure under
BioShield unless it is approved and licensed, fully licensed,
fully shown to be safe and effective by the FDA. That is a
strong incentive for getting to the finish line that doesn't
exist today and would move us out of the world we are in now,
where there are a lot of products that may be of use, but no
companies, as I talked about before, are willing to make the
investments and come up with the good ideas needed to translate
proof of concept into a truly effective treatment.
Mr. Waxman. I understand that. That is an important part of
why this bill is necessary. But in creating this balance we let
the Secretary waive all of these consumer protections, and it
looks to me like this authority is quite broad to waive FDA
approval standards. Will that give incentives that are needed
to conduct the kinds of safety and efficacy trials that are
needed, or are some of these companies going to figure they can
get around that?
Dr. McClellan. I agree we need more incentives to conduct
the needed safety and effectiveness trials. That is the main
reason for the procurement authority for BioShield that only
makes payment on delivery of--a full payment for an approved
product.
The emergency use authorization does include a number of
protections to make sure that in the limited circumstances of
the emergency we do as much as possible to limit distrubution,
limit who can administer, require studies, require
recordkeeping and access to records. All of those are elements
of the BioShield proposal, and the Secretary would specifically
design its use with our recommendations and those of others to
do as much of all of those activities as possible.
Mr. Waxman. You are giving me assurances that we are not
going to pay these companies unless they do what they are
required to do, but I am concerned about the broad authority to
waive some of the consumer protections like informed consent or
making sure we know about the adverse events and other aspects,
where right now the law is set up to not just make sure the
company does what it needs to do to get paid but the consumers
and adverse consequences--the consumers are monitored with and
dealt with adequately.
Dr. McClellan. Right. We want to get to approved treatments
as quickly as possible. But with these products in development
there may be a number that have been shown to have potential
benefits for conditions where there are no effective treatments
approved. Under those circumstances, we think it is
appropriate, with all of these restrictions in place, to do as
much recordkeeping as possible, as much monitoring and
standards for production as possible, as much mandatory
reporting of adverse events, and informing the consumer,
informing the public as possible about appropriate use as can
be done under the circumstances. I would be happy to continue
to work with your staff to make sure that we tailor that
language appropriately.
We think the bill does a pretty good job now of getting as
much done as possible on informing consumers, on collecting
adverse event data and the like. We think that is very
important in the emergency use process. But it is an emergency,
and it is a very special limited use condition that requires
some special considerations.
Mr. Waxman. Your answer is very useful. I have other
questions, but we will pursue them in a subsequent round. I
appreciate your offer to work with us to improve the bill.
Mr. Shays [presiding]. As the ranking member points out, we
will have a second round.
What we are doing is we are doing 5-minute doubles, so we
are doing a 10-minute questioning period. I will recognize
myself.
I would like to ask each of you, what is your assessment of
the seriousness of the threat we face with bioterrorism? Just
start with you, Dr. Fauci.
Dr. Fauci. I think the threat is serious. The risk of it
happening is something that we can't quantify. But if one looks
at the history of what has gone on in the production of weapons
of bioterrorism decades ago, that we have no real assurance of
their full accountability, for example, by the Soviet Union,
the recognition of weapons of bioterror that were clearly
recovered in the first Gulf war, and right now obviously we
need to see what happens in the current engagements.
The fact that we have already been hit in the fall of 2001
and the potential for this has us feel strongly that we need to
err very strongly on the side of preparedness. So it is
difficult to quantify a risk, but we are concerned.
Mr. Shays. Dr. McClellan.
Dr. McClellan. I agree with that assessment. There is a
real reason for concern.
In addition to the specific risk that Dr. Fauci has
outlined, I would like to highlight that, as part of our
preparedness efforts, we have already undertaken a number of
threat assessments and at FDA we have got responsibility for
the security of most of the food supply.
As Secretary Thompson has said, he is very concerned about
the real risk of bioterrorists or other type of terrorist
events involving foods. I would like to highlight that it is
not only bioterrorism that we are concerned about here.
Recently discovered terrorist cells in Europe that were
attempting to manufacture Ricin and previous episodes of
cyanide poisoning highlight that various chemical agents also
pose a real risk to the health of the public.
Mr. Shays. Mr. Brown.
Mr. Brown. I want to emphasize what Dr. McClellan just
said, the threat is real. But I want to add a different
dimension to it. Even if terrorists are not successful in
launching a wide-scale biological attack or a chemical attack,
they will launch a small-scale attack, just for the effect, for
the terror effect alone. So that even if they don't infect a
wide, broad spectrum of society, if they can put the fear in
the American public that they have this capability, by
launching a small attack somewhere, they will do that.
Mr. Chairman, it is real.
Mr. Shays. Dr. Klein.
Dr. Klein. Mr. Chairman, I would also like to acknowledge
that the threat is real and serious. I think the events of
September 11th demonstrated that. The anthrax attacks also
demonstrated that.
The Department of Defense has a fairly significant
monitoring program; and I think, on the biological threat side,
one of the reasons that is a concern is the capital investment
to produce those materials are less than it would cost to
develop, for example, a nuclear weapon.
Mr. Shays. I am going to work backward, Dr. Klein. We will
go the other way. What do you think the future of bioweapons
will be? Should we focus mostly on natural pathogens or
enhanced pathogens? And what enhancements to these pathogens
should concern us most?
Dr. Klein. Well, Mr. Chairman, I think when we look at what
specific threats we look at, we have a process, both at the
Department of Defense and with our interagency colleagues, to
define what those threats are. So we have a process to evaluate
those specific threats.
What we look at at the Department of Defense, for our men
and women in uniform, we look at not only what is it that might
be available but what can be weaponized.
I think my colleagues at the Department of Homeland
Security and the Department of Health and Human Services have
other areas where the terror threats would be different. So I
think what we need to do collectively, and I think BioShield
addresses this, is that we need to work collectively as an
interagency to define those threats.
Mr. Shays. Just quickly. The other part of the question,
though, is it the natural pathogen or the enhanced pathogens,
in other words, the altered biological agent?
Dr. Klein. In my opinion, in the near term, it will be the
natural ones that have been modified for a weapon. Then we will
look at the modified ones.
Mr. Shays. Mr. Brown.
Mr. Brown. Based on the intelligence I have been receiving
and looking at, I think it is the natural pathogens, those that
they can use quickly and easily.
Mr. Shays. Dr. McClellan.
Dr. McClellan. We rely on the Department of Homeland
Security and others for help with these threat assessments, so
I defer to them. I do think we need to be prepared for both
types of agents, both naturally occurring and modified ones.
Some of the technologies that we have outlined that we
think would result from a BioShield initiative such as
monoclonal antibody techniques and better techniques for
producing vaccines quickly will support our ability to deal
with modified pathogens as well as the naturally occurring
ones. So the approach that we are outlining here would provide
a useful strategy for addressing both.
I would like to emphasize again, though, that the only
threats out there are not bioweapon agents. Also, chemical
agents and radiologic and nuclear agents are real threats, too.
Mr. Shays. Thank you.
Dr. Fauci.
Dr. Fauci. I agree with my copanelists' statements. We also
rely heavily on the Department of Homeland Security for threat
assessment. But the strategic plan and research agenda for the
NIH is weighted to both naturally occurring as well as
genetically modified microbes.
Mr. Shays. Dr. McClellan, I will start with you and work to
Mr. Brown. How many medical countermeasures, diagnostic drugs
and vaccines do you estimate we will need in the end to protect
ourselves?
Dr. McClellan. I can't give you a specific number. One of
the things that comes out of the threat assessments and that
will come out of our work under BioShield is a much clearer
assessment of what is possible.
Mr. Shays. When will that be?
Dr. McClellan. By passing this legislation we will generate
a higher level of interest among the private sector researchers
and others in identifying countermeasures.
We have identified a number that we think can be developed
right away, including better treatments for smallpox, better
treatments for botulism, better treatments for anthrax. But we
think there are a lot of other opportunities out there, so I
can't give you an exact number.
But I do think that, because this is an unexplored and
really underutilized area----
Mr. Shays. You have explained. I want to move on.
Mr. Brown.
Mr. Brown. Homeland security has to rely on their expertise
for those kinds of matters.
Mr. Shays. OK. You have no sense.
Dr. Klein.
Dr. Klein. It is difficult to say exactly which numbers. I
agree with my colleague, Dr. McClellan, it is difficult to come
up with an exact number. But we will--if we have a system in
place that can be versatile, I think that is what would protect
the American public.
Mr. Shays. OK. The Defense Science Board listed 19 priority
bioterror agents.
First, Dr. Fauci, would you just respond to the question,
and then I want--the question I started with Dr. McClellan. The
question is, how many medical countermeasures, diagnostic drugs
and vaccines do you estimate?
Dr. Fauci. Difficult to assess. But we are at least aiming
at the six high-priority category A and several on the category
B list. So I would say the number we cannot tell you for sure,
but we want to be flexible enough to move as new threats arise.
Mr. Shays. OK. I will ask whoever can answer this. The
Defense Science Board listed 19 priority bioterror agents, and
found that today we have none of the diagnostics we need, none
of the vaccines we need, and only one of the therapeutics we
need to deal with them. Is this list of 19 pathogens the
definitive list, or do we need to prepare for these and many
other pathogens, some of which don't even exist yet?
Dr. Klein. As you might expect on that list, we do have
some vaccines available. For example, anthrax is on the list,
smallpox is on the list. So we do have vaccines and treatments
available. We need to continue those. That list is relatively
accurate but, again, as others have indicated, there will be
future threats that are not on that list.
Mr. Shays. CDC list, 36 selected agents. Do we need
countermeasures for all of them? Dr. Fauci.
Dr. Fauci. Potentially we do. We are using that list which
includes the top priority category A list of six that we are
putting our major effort on, but there are several on the
secondary or B or C lists that we are also developing
countermeasures, or at least studying the basic biology of the
microbes to prepare us better in case genetically modified
microbes appear.
Mr. Shays. Let me just ask about the issue of surveillance
diagnostic tools and training medical personnel. Isn't that
more important than any of the stuff that we are talking about
right now, to be able to have a surveillance system and
diagnostic tools and training medical personnel? Do these come
first?
Dr. McClellan. It is all part of a comprehensive strategy
with dealing with the new threats of terrorism to this country.
We need effective surveillance and supporting research on
better diagnostic techniques as well as building up our
laboratory and monitoring capabilities is an important part of
the response, but so is research on developing effective
countermeasures and strategies for containing an event if it
actually occurs.
Mr. Shays. Anybody disagree with that?
Dr. Fauci. Agree.
Mr. Shays. Let me just ask this one last question then. We
are in a dangerous position with regard to antibiotics and have
few antivirals. Do we need some major research breakthroughs to
develop products that we need to protect ourselves against a
bioterror attack and antibiotic-resistant organisms?
Dr. Fauci. The answer is yes. That is a problem, as I
mentioned in response to Mr. Waxman's question, and it is an
important part of our biodefense program in general as well as
our nonbiodefense emerging and re-emerging disease, which I
believe shows you the seamlessness between the two programs.
Mr. Shays. In my second round I want to ask about the DOD
joint vaccine acquisition, and I will be asking you, Dr. Fauci,
some questions and Dr. Klein about that.
And, Mr. Van Hollen, you have the floor for 10 minutes.
Mr. Van Hollen. Welcome to all of you, and I am very proud
to have both the NIH and the FDA in the Eighth Congressional
District, so it is great to see both of you and have a chance
to visit with you. I appreciate your willingness to work with
our office on not just national issues, but some of the local
issues as well.
Much ground has been covered, but I want to followup on a
couple of things just so I am clear in my mind. The
determination as to what the priorities are going to be in
terms of what--whether it is biological weapons, chemical
weapons, which ones we focus on as a priority, is that
decision--I understand it is part of a collaborative process,
but is it part of the Department of Homeland Security to say
that these are the ones we want to focus on? Who is responsible
for making that decision as to what the priorities are for
investing resources?
Dr. Klein. Congressman, I think what happens in that regard
is that we--both the Department of Defense and Department of
Homeland Security will both work together to determine those.
Sometimes they are slightly different. What the Department of
Defense considers is not only the threat, but has it been
weaponized to negatively impact the men and women in uniform
accomplishing their mission.
What we do, we will come up with that threat list. We will
evaluate it through our intelligence system. Certainly as we
develop those lists, we will work with the Department of
Homeland Security. But which list is more important than
others, it depends on exactly what your mission is, for
example, whether it is a warfighting mission or protecting
civilians.
Mr. Van Hollen. I assume we are going to be putting
together a plan. What is your time line in terms of deciding--
there are a lot of chemical agents out there. There are lots of
potential biological agents, a lot of different mutations, I
understand. What are we----
Dr. Klein. We already have that list, and it is
prioritized. We have them ranked. We typically don't publicize
that list at the Department of Defense.
Mr. Van Hollen. You have that list, and NIH is doing
research based on that list?
Dr. Klein. The Department of Homeland Security and
Department of Health and Human Services also have a list, and
their list, Department of HHS, their list A and B, and it is
publicized.
Mr. Van Hollen. Does that also deal with the production of
countermeasures as opposed to research? Who makes the decision
as to what point we need to move into the actual production of
the countermeasures?
Dr. McClellan. The production is a decision that is made
with input from the Department of Health and Human Services
based on the threat assessment. Where we ought to focus our
resources and BioShield more generally is based on the
combination of where the greatest threats are and where the
greatest opportunities are, and where you get that match, the
potential for bringing new countermeasures forward that will
address a significant terrorist threat, that is the priority in
BioShield.
Dr. Fauci. I see where your question is going, because
there really needs to be distinguished both the basic
fundamental research that informs any list. The decisions about
that and how you track that is an NIH decision when it comes to
research and FDA or CDC decision in the Department of Heath and
Human Services. As we mentioned earlier, we rely heavily on our
colleagues in DHS and even in DOD in helping us to get a better
feel for the actual threat assessment. However, there is a
formal process in BioShield that Dr. McClellan just referred to
that when you trigger the procurement component of it, it is
the Department of Homeland Security and Secretary Ridge
determines that this is a serious threat that we need to have
the countermeasure for, and then the Department of Health and
Human Services executes the research and public health measures
to go into getting that particular countermeasure.
Mr. Van Hollen. Have there been any decisions to date with
respect to the need to move forward on the production of any
countermeasures?
Dr. Klein. In terms of looking at production, we need the
R&D to develop a product, and then as soon as that is
evaluated, all of our agencies look with the limited resources
how can we best meet the threats as we see them. We at the
Department of Defense have an anthrax producing program. We
work closely with Department of Health and Human Services with
the smallpox, for example.
Mr. Van Hollen. I remember at the time there was a lot of
questions about whether we had adequate anthrax supplies or
not. Other than anthrax and smallpox, have there been any
decisions with respect to moving ahead on countermeasures on
other agents whether chemical or biological?
Dr. McClellan. We have worked with the Department of
Homeland Security and others to identify some of the immediate
opportunities that we think BioShield would help us fulfill
even more quickly. So, for example, a better vaccine for
anthrax, a better, safer vaccine for smallpox, and better
antitoxins for botulinum toxin are all areas where the
technology exists, and what's needed is the funding to get
companies to follow through to produce the actual products.
Mr. Van Hollen. Thank you, Mr. Chairman. Next round of
questions I do have a concern that Mr. Waxman raised with
respect to resources--we have limited.
Chairman Tom Davis [presiding]. Keep going. You have 5 more
minutes.
Mr. Van Hollen. One question. Obviously there are all these
possible threats out there, biological, chemical, nuclear. As a
Nation we obviously have to evaluate the threat--the level of
the threat posed and the likelihood--what kind of damage it
will cause, and the likelihood of that threat versus what we
know are very known threats that we are facing every day, heart
disease and a whole range of medical problems that NIH is
engaged in research with right today. And I am concerned that
this will--you know, it is one thing to add additional
resources to this effort at a time since September 11th, an
emergency and a focus on this, but I would hate to see it come
at the expense of what we know are diseases that are harming
and killing Americans every day.
And so my question is of the amount of resources that is
being invested in this effort and research, how much of that is
coming out of what otherwise would be invested in nonbiological
and chemical research?
Dr. Fauci. If you look at the resource curve of the last 2
years, which have been heavily weighted in the arena of
biodefense, the other areas, in fact, have not suffered. Now,
obviously the NIH has gone through a doubling, which it has
completed successfully. The next few years, obviously if one
looks at what is coming forth as the budget from the
administration as was expected, it is not going to continue at
that level, it is reaching a point of plateauing. But within
the framework of that, again, we have tried as best as possible
to not damage the effort and the momentum in other areas. So
what has happened thus far with the doubling of the budget has
not taken away from other areas. It has been a substantial and
very generous increase in NIH's budget.
Dr. McClellan. I would like to respond to that from the
standpoint of product development. After you have done the
basic research, approve the concept, is this going to take away
from the development of much-needed new products for cancer,
heart disease and other priority areas? We have seen over the
past decade a huge expansion of the biotech sector,
pharmaceutical research and development and so forth. While
NIH's budget has been doubling, the research investments in
development and applied stages on the private side have also
been doubling as well. And what is responsible for that is the
potential for some real breakthroughs especially in naturally
occurring diseases that the private sector is trying to step up
to address. By adding on these additional financial incentives
for BioShield, we provide more incentives to get more
investment activity, research and development in these other
priority areas as well.
As long as the financial incentives are there, the
incentives to develop products will be there. We aren't taking
away incentives in cancer, heart diseases and naturally
occurring diseases. We are correcting a deficiency that exists
in these unnatural diseases.
Mr. Van Hollen. Thank you, Mr. Chairman.
Chairman Tom Davis. Thank you very much.
I have a question for the panel. Do you consider the
acquisition flexibilities that are contained in the Senate
bill, do you think they provide adequate incentives to spur the
development and supply of critical countermeasures?
Dr. McClellan. We do think that they would provide some
much-needed incentives. Obviously there have been some
different views expressed about what's needed to actually bring
these next-generation products to the public, and we are
absolutely willing to work with this committee and other
experts on making sure we have the right framework in place to
do that.
I do think the most critical element's there, making sure
that there's a certainty of payment, sometimes years in
advance, if an effective, highly valuable product is actually
developed, approved and delivered for use by the public in the
event of a terrorist or other emergency health threat.
Chairman Tom Davis. There is a consensus here that we just
don't have the in House capability to take this in government
and do it by ourselves. Everyone agree with that? There is no
way we could build that up in a short period of time. So we are
by necessity forced to go to the private sector to incentivize
them to do things they otherwise wouldn't do.
Dr. Fauci. Of which they do very, very well. They do it
very, very well.
Dr. McClellan. It's not easy to develop a product that is
safe and effective and reliably produced even after you have
gotten through the basic research and have a proof of concept.
There is a lot of testing that needs to be done of potential
toxicities that need to be determined in each individual case.
There is effectiveness testing, which is particularly
challenging in this area because you can't do normal testing on
humans. And there are all kinds of challenges to getting ramped
efficient production, labeling and delivery of the product.
These are things that the private sector does extremely well in
many other areas of medical technology, and we have seen the
benefits of that for the public. We haven't seen the same kinds
of benefit here, and we need them.
Chairman Tom Davis. I guess one of the differences we have
is--in the next panel, we are going to hear concerns that the
BioShield does not really afford manufacturers of the
biomedical countermeasures enough protection against product
liability lawsuits. Obviously they are going to be engaging in
research and development and manufacture of things they
wouldn't do otherwise. We are trying to get them to do it. If
they are exposed to massive lawsuits, it could bring the
company down, expose the rest of their business. I don't know
what the right balance is. That is something we need to try to
find. And the companies, I think, are trying to get as much
protection as they can. Anybody have a feel for the right
balance here?
Dr. McClellan. As a general matter, the administration has
expressed some concerns about problems of liability exposures
for manufacturers creating roadblocks to developing needed new
treatments, and in this case it is something that we all need
to think carefully about. We believe that there's a lot that
can be done under authority, Section 85-804 authorities, that
we have and under the Safety Act to provide protection for
manufacturers for products that are being purchased by the
government and used in these emergency situations. But
obviously this is an issue that needs careful attention and
should be addressed effectively.
Chairman Tom Davis. It has been a tough issue in the
Congress. The House and Senate are a little divided on it as
well.
Finally, the administration's proposal gives the President
permanent funding authority for research, development and
production of biochemical countermeasures. What do you think
this could end up costing at the end of the day?
Dr. Fauci. The initial projection that was made based--and
again, this is something we try to scope out because you are
dealing with scientific opportunities that can change due to
breakthroughs as well as change in the risk assessment, but in
the President's proposal, the 10-year proposal for the Project
BioShield procurement was about $5.6 billion over 10 years.
Chairman Tom Davis. Our problem, of course, is we don't
know what diseases could come forward.
Dr. Fauci. It could be more, it could be less.
Dr. McClellan. I would like to emphasize, though, that none
of this money gets spent unless, No. 1, we make a determination
that the countermeasure is needed and is truly valuable. We set
the term for the contract. If we don't think a countermeasure
is worth the cost, it is not going to get a contract, and we
don't actually pay--we don't pay any significant amount unless
that countermeasure actually gets delivered and does work.
Chairman Tom Davis. What's clear is that the current law
does not afford us the flexibility that we need to encourage
industry.
Dr. Fauci. We can't give assurances to them, as I said in
my opening statement. We can't tell them and say we want to get
involved in this. We are willing to take risks even. We have
people who come to us and say, we've reached a certain point,
and now we need to go to the next step of building a new plant
or investing another $100 million or so, but we are willing to
take that risk, but we're not willing to take a risk of being
successful in what we do and then finding out that no one wants
to buy the product. So can you give us an assurance under
current law given the vicissitudes of the appropriation
process? We really can't give them firm assurances that if they
deliver, as Dr. McClellan said, a licensable or licensed
biomedical countermeasure, we can't give them the kind of
assurances under the current situation that we would be able to
do under Project BioShield.
Chairman Tom Davis. Any other questions over this side?
Mr. Waxman. Thank you, Mr. Chairman.
Let me ask about the streamline procurement acquisition
procedures. There is a simplified acquisition authority here,
and these authorities in the law were established for
commercially available items such as office furniture and
automobiles. And the idea is there is a developed market for
these products, and the government can rely on market forces to
keep the prices low. When the government is bidding for a
special government service, however, there is no market that's
available to keep costs low, and two basic safeguards have been
developed; one, requirements for bidding and full and open
competition and, when the contract is cost-based, the ability
to inspect the contractors' books.
As I understand it, the procurement provisions waive or
relax both of these standards. I am in favor of speeding up the
procurement where there is a need, but at the same time how do
we protect the taxpayers? If the contract is cost-based, how
does the government know it is not being overcharged if it
can't audit the contractors' books? Anyone want to respond?
Dr. Fauci. I'll take just a brief shot at it.
We appreciate that concern, and there's obviously a lot of
scrutiny in what we'll be doing, because we're acting in only
special circumstances. But your point is very well taken, and
we're very sensitive to it. The main concern that we have is
that we do not slow down the procurement process to the point
where it interferes with the responsibility for what we have.
We are not dead set against relooking at that with you, and we,
in fact, would be willing to work with you and the committee on
that concern which you've expressed. But the critical, really
bottom-line issue is that we really cannot slow down the
process, and if we can figure out a way to get it to do that,
we would be----
Mr. Waxman. I understand that, but we are changing the
procurement law, and if the government doesn't have a market to
drive the prices lower, and it is a cost-based reimbursement,
and we don't have the ability to look at their books and know
whether they're getting ripped off, that puts us in a position
of being deep pockets. And I think we've got to evaluate that
balance here to make sure we're protecting the taxpayers and
not just the American public.
Dr. McClellan. And if I could add, the whole goal here is
to create something like a market. You're right, there is no
market that exists now, but the contracting authorities that
BioShield would create would permit more than one firm to
compete to get this countermeasure produced first. And again,
we're paying for results primarily, not for just costs along
the way. The simplified acquisition authorities have been shown
to work pretty well in combination with antikickback laws and
fraud laws and the like to prevent those kinds of concerns in
many cases.
Mr. Waxman. It will be a while before there would be a
market. If you're helping a company develop a product for which
there's no availability at the present time, do we help them
with money, and then we streamline the process for them, and
they develop it, and we give them the patent, and they'll have
exclusivity over that, and then we're buying it from them, and
we want to be sure since there's no real competition we're
protecting our taxpayers' money?
Dr. McClellan. I do think we can create some competition
there by contracting with more than one company and giving a
larger payment to the one that gets there first.
Chairman Tom Davis. Would the gentleman yield?
Mr. Waxman. On the antikickback, that's a protection, but
as I understand it, the antikickback law is exempted under the
proposal, so we wouldn't have that available to us if that's
something that won't come into play.
Chairman Tom Davis. I think the gentleman raises an
interesting point. On the other hand, for the most part we're
going to give this on a results-oriented basis. If companies go
out and do research, and they come up with basically a dry
hole, they probably get nothing; is that correct?
Dr. McClellan. That's right.
Chairman Tom Davis. Unlike a lot of IT contracts where we
end up buying information technologies and spend billions and
sometimes get systems that don't work. At least it is results-
oriented, which cuts down the fraud, waste and abuse that could
come otherwise. But there is a question of balance, and it's
how sophisticated are we on our side, and look forward to
working with Mr. Waxman and others trying to find the right
balance.
Mr. Waxman. Let me ask a question on this liability issue.
I understand why we want to give liability protection to the
manufacturers of these products, and it is very much on their
minds if you want to give them all the incentives. But on the
other hand, if we're going to indemnify the companies that
manufacture countermeasures by providing the liability
protection, some of these products still may harm consumers. If
the administration can guarantee liability protection to
manufacturers, should it also compensate those who are injured
by the products?
Dr. McClellan. There is a lot of discussion ongoing now
about compensation in the case of smallpox, which is a
countermeasure that does have some significant adverse effects
in certain cases. The idea for the kinds of technologies that
we hope to develop here is to have some that are significantly
safer and more effective that would reduce the need for those
kinds of compensation activities. And also the use here will be
under conditions that are very much defined by the government
in emergency situations and the like and that we at FDA approve
and determine that treatments are appropriate for use under
these circumstances. So it is a more limited case and problem.
I know smallpox is on your mind, but it is a much more limited
situation than that.
Mr. Waxman. Mr. Chairman, I want to take advantage of the
fact that Dr. McClellan is here to ask him about a different
issue unrelated to the BioShield. At a hearing----
Chairman Tom Davis. I am sure that wouldn't happen, but
that's fine.
Mr. Waxman. If he doesn't feel ready to answer the
question, I would certainly accept that response. But we had a
hearing on Internet pharmacies, and a representative from the
Federal Trade Commission testified that any claim that a
dietary supplement containing ephedra is safe would be false
and misleading under his view at the Federal Trade Commission.
I want to know if you agreed with their view on the safety
claims on ephedra products, and to ask you whether you are
aware of any studies that prove that ephedra containing dietary
supplements are safe for the general public.
Dr. McClellan. We just completed a review by the RAND
Corp., that I know that you are familiar with because we talked
with your staff about it, on the safety and effectiveness of
ephedra. And as you know, under the dietary supplement law we
don't get the evidence up front on dietary supplements if they
are safe and effective before they go on the market. We have to
prove a safety problem or an effectiveness problem before we
can take any regulatory action, and that was the point of the
RAND study.
Subsequent to the RAND study, we have reopened the record
on FDA's old 1997 regulation to restrict use of ephedra based
on safety and effectiveness concerns, and we have asked for
comments from the public, and I noted today we just got one in
from the American Heart Association, and I hope that there's
going to be more coming before this comment period closes. That
is going to help us address this issue of ephedra safety.
What the RAND report said, as you know, was that while
there have been some serious adverse events associated with
ephedra, they could not prove a causal link between ephedra use
and those events.
Mr. Waxman. Let's flip it the other way. If you can't show
that it's harmful, do you know of any studies that prove that
ephedra-containing dietary supplements are safe?
Dr. McClellan. It hasn't been proven to be safe, but the
statutory standard is not----
Mr. Waxman. I am not asking about the statutory standard. I
understand that is important. But what do you think about the
comment by the representative of the Federal Trade Commission
if there was a claim that the supplements that contained
ephedra was safe, that this would be a false and misleading
statement?
Dr. McClellan. It could well be a problem with truthful and
not misleading standards, which do govern both FTC's
advertising regulations and our labeling regulations. So that
is a potential concern. My hope is we can do more to address
the concerns that exist today about the way that ephedra is
marketed, and that's the reason that we reopened this comment
period and have laid out our preliminary view that the law
doesn't require us to prove that ephedra is unsafe; rather we
need to demonstrate that it presents an unreasonable risk to
the public as it's currently marketed, and we hope that we'll
get comments from you about how we can best address that as
well.
Mr. Waxman. Thank you very much.
Chairman Tom Davis. Mr. Shays, any more questions?
Mr. Shays. Yes, I do.
Dr. Fauci, what is the relationship between NIH and DOD
joint vaccine acquisition of the JVAP program?
Dr. Fauci. Thank you for the question, Mr. Shays. The NIH
has worked in the past with DOD and in some respects with the
JVAP program, and we are now increasing our collaborations
particularly with USAMRIID. The Joint Vaccine Acquisition
Program, which was operational in 1998, was focusing more on
the long-term development of products against biological
warfare, and we at the NIH feel that it doesn't directly
address the urgent and civilian needs and demands that we have.
And that's one of the reasons why we've looked for alternative
ways to hasten the development and interest in industry in
vaccine development. Although we've interacted with them on
JVAP, but even more intensively, broadly with USAMRIID, this is
not an important part of our program.
Mr. Shays. So your basic position is it's not going to fit
into the Project BioShield program.
Dr. Fauci. No, it's not in our minds, sir.
Mr. Shays. Has the JVAP been the subject of third-party
evaluations?
Dr. Fauci. Yes, it has. In December 2000, there was a
report called the Top Report, a report to the Deputy Secretary
of Defense by an independent panel of experts, and they came up
with some areas that were problematic with regard to JVAP and
talking about ways that need to be improving it. And I think
instability of funding was cited as a major deficiency as well
as some lack of scientific oversight. So it has been somewhat
of a problem. I haven't----
Mr. Shays. Are you being a little gentle in describing the
evaluations? There is $300 million that's been spent? I mean,
weren't the reviews pretty strongly critical?
Dr. Fauci. They were quite critical of the program, yes.
Mr. Shays. Dr. Klein, how would you kind of respond--first
off, Dr. Fauci, is there anything you want to say about this
program? You are basically telling me you're not going to--you
don't see being involved in the BioShield program. Are there
lessons we have learned from this in terms of what we do with
BioShield?
Dr. Fauci. I think so. We learned a lot of lessons along
the way. One of the things I think we've learned that we have
to have is we have built into BioShield a significant amount of
scientific oversight and stability of funding and some
strategic planning of where you are going to go and to try to
bring in the very best of industry and not give them the full
component, as Dr. McClellan has mentioned, until we have a
deliverable product.
One of the difficulties with putting a lot of money up
front and up forward without getting a guarantee of a product
is that there is always the risk of failure, and that's what
we're trying to avoid by making the stipulation of BioShield
that you have to have a licensable product that's delivered
before you get your full payment.
Mr. Shays. Dr. Klein, is there anything you want us to know
about JVAP?
Dr. Klein. Congressman Shays, I think the comments made
earlier are quite accurate. As you know, this program was
started in about 1997. It's a 10-year program. So it was a
start. But I think our experience with JVAP demonstrates
BioShield's value; for example, incentives for companies to go
toward making products. And then the other one I think is more
important, certainly after September 11th, is that the
interagency cooperation between DOD, DHHS and Homeland
Security.
So I think we really need to look at this in a more
comprehensive manner. As you know, JVAP was intended to meet
the needs of the men and women in uniform. That was its initial
intent. After September 11th I think we realized they are not
the only ones that need these vaccines.
Mr. Shays. So far the program has spent a lot of money, and
it has been found wanting, correct?
Dr. Klein. The original JVAP, the intent was good, but it
has not been as successful as we wanted.
Mr. Shays. Let me just ask, Dr. Fauci, if we manage to
engage the industry, what is the most useful role for NIH and
its grantees? How does it focus on research that is not
competitive and duplicative with that of the industry?
Dr. Fauci. Traditionally, and we hope it continues and
amplifies, that the NIH research has really been the fuel that
fires the engine toward the ultimate translation into products,
which the industry does so well. That is not to say that the
industry does not do some very important research themselves,
but it has really been essentially a continuum where NIH
grantees provide the basic research, the proof of concept, and
even the development up to, but not including, advanced
development. We generally push the envelope into phase 1/phase
2 trials and the early part of development. That would be a
natural marriage that we would see work well with BioShield to
then call upon industry to make the investment, and what they
do so well is delivering a product. So it's quite
complementary, sir.
Mr. Shays. Mr. Chairman, may I ask one more question?
Mr. Brown, what are the problems the government faces in
trying to engage biotech and pharmaceutical companies in
launching research and development projects to develop medical
countermeasures?
Mr. Brown. I think it's the lack of a secure source of
funding. They need to know that if we make the determination
that there is an imminent danger and real threat out there, and
they can produce what is results-oriented, they can show us a
product, they're going to get paid for it. It is the lack of
incentive.
Mr. Shays. Thank you.
Thank you, Mr. Chairman.
Chairman Tom Davis. Thank you all very much. We appreciate
it very much and thank you for being here. It has been very,
very helpful, and we are ready to move to our next panel of
witnesses.
Our second panel includes industry and academic experts who
will give us their views on this proposal. We have Frank
Rapoport an attorney representing Aventis Pasteur. Next we will
hear from Dr. Michael Friedman on behalf of the Pharmaceutical
Research and Manufacturers Association of America. We also have
Dr. Una Ryan, president of the AVANT Immuno-therapeutics
located in Needham, MA. And Dr. Katherine Bowdish. She is
president of the Alexion Antibody Technologies located in
Cheshire, CT. And rounding out the panel is Dr. John Edwards,
chief of infectious diseases at UCLA.
Give everyone a minute to make sure we have your name tags
appropriately, and thank you for bearing with us through the
questioning of the first panel.
We have a light in front, and it will be green for 4
minutes, and then it turns orange for the last minute. When it
turns red, we want you to sum up. Your entire testimony is in
the record, and we and our staff have read it all and have
questions prepared on that, but you can use your 5 minutes to
highlight.
I'm going to ask you to stand with me to be sworn in.
[Witnesses sworn.]
Chairman Tom Davis. We will start with Mr. Rapoport and
move straight down the line.
STATEMENTS OF FRANK RAPOPORT, ATTORNEY AT LAW, MCKENNA LONG &
ALDRIDGE, ON BEHALF OF AVENTIS PASTEUR; MICHAEL FRIEDMAN, CHIEF
MEDICAL OFFICER FOR BIOMEDICAL PREPAREDNESS, PHARMACEUTICAL
RESEARCH AND MANUFACTURERS OF AMERICA; UNA RYAN, PRESIDENT,
AVANT IMMUNOTHERAPEUTICS, INC., NEEDHAM, MA; KATHERINE BOWDISH,
Ph.D., PRESIDENT, ALEXION ANTIBODY TECHNOLOGIES, CHESHIRE, CT;
AND JOHN EDWARDS, CHIEF OF INFECTIOUS DISEASES, HARBOR-UCLA
MEDICAL CENTER, ON BEHALF OF THE INFECTIOUS DISEASES SOCIETY OF
AMERICA
Mr. Rapoport. Good morning, Mr. Chairman and members of the
committee. I am Frank Rapoport, a partner in the Philadelphia
office of McKenna Long & Aldridge, where I practice government
contract and public health law. I had the privilege of working
both in the Reagan and Carter Justice Departments in the
Government Contracts Section and more recently was involved in
both smallpox procurements, the first one pre-September 11th,
and the anthrax procurement more recently at NIH on behalf of
Aventis Pasteur, the largest vaccine manufacturer in the world
devoted entirely to vaccine research, development and
manufacturing, manufacturing a billion and half doses annually,
based in its headquarters in northeast Pennsylvania.
My purpose today is limited to offer some technical
amendments to this bill which may make the difference between
success and failure in either attracting the best and the
brightest or simply those who have nothing to lose but
accepting government money. I offer five points to achieve
broader and bolder procurement authority, all giving discretion
to the various Secretaries to use as arrows in their quiver.
There is no doubt that the existing government regulations,
known affectionately as the FARS, give contracting officials
ample authority to make contractors perform. Our five points
today will protect the contractor against all but its own
failure.
Point one, the bill, quite frankly, is a little stiff. It
does not amply provide for a single procurement that combines
both research and development and a guarantee of production.
There must, in our view, be a linkage to get the attention of
companies like Aventis, who are going to be passing up lost
opportunities and feeling the uncertainty without commitment
for production.
Point two is related to this. These contracts should also
recognize the costs of capital and return on capital. It should
assure payments sufficient to amortize investment, which would
include return of capital and return on capital. The point is
if we're not going to be accepting government money under R&D
within this contract, we need to make sure that our investors
feel comfortable that there is a product at the end of the
pipeline and in the event, most importantly, of an early
termination for convenience because, for instance, Dr. Fauci
has found yet a better drug. The company must know that it's
going to get reimbursed for the work that it spent under its
own nickel under that government contract. The existing
termination for convenience regulations do not allow for
recovery of what we would call loss of interest or investor
cost.
So when I suggest the bill is a little stiff, we feel it's
a very good bill, but you need to be heard loud and clear that
we want to give much broader authority to the Secretary to
encourage companies to perform. How can this be accomplished in
one contract vehicle? It would be one contract where research
and development is included. We're not suggesting who's going
to pay for that. That's up to the government to negotiate with
the company. At the same time, there's a guarantee of
production, but the cost of the units will not be determined
until the research and development is over. This is always done
in a privatized procurement. We call it price determination.
That can be done to include the estimated costs of production
as well as a capital charge.
Point three, we strongly encourage to move beyond plain
vanilla government contracts, something you're well aware of
which this committee called ``other transactions'' and is used
routinely by DARPA and NASA and actually generated the
Predator, the unmanned vehicle that is being used in
Afghanistan. These are commercial-like arrangements that entice
and allow government contractors like Aventis to feel free that
they will get to protect their rights.
Point four as proposed in the bill, a 5-year contract
without subsequent guaranteed appropriations appears to run
afoul of 31 U.S.C. 1341. You certainly can take a minor
correction to make sure that this act is taken care of.
Finally, the issue that you've heard already today,
indemnity. We truly understand the urgency of this bill, but we
feel obligated to note the issue of liability protection
remains a concern for us. Both HHS and DHS have authority under
Public Law 85-804. It has been used rarely. Most recently
President Bush signed an Executive order which even cuts back
on the authority of Public Law 85-804. Currently, while HHS has
used this act, we understand it is not until after a contract
is awarded. Imagine a bidder looking at dealing with inhalation
airborne anthrax, doing clinical studies. A bidder company such
as Aventis would like to know for its shareholders that it can
bank on likelihood of indemnity postaward.
In summary, Mr. Chairman, thank you for the opportunity to
testify on this important issue. As you know, we were the donor
of 85 million doses of smallpox vaccine. We will be committed
to supporting the efforts of the Secretaries to contributing to
our common defense. Thank you again.
Chairman Tom Davis. Thank you very much.
[The prepared statement of Mr. Rapoport follows:]
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Chairman Tom Davis. Dr. Friedman.
Dr. Friedman. Thank you, Mr. Chairman and distinguished
Members. On behalf of the Pharmaceutical Research and
Manufacturers of America, I am pleased to be here today to
share with you the views of the research-based pharmaceutical
industry and the President's Project BioShield Initiative.
Biological weapons represent an increasingly serious danger
to people around the world. The dynamic complexity of the
problem is demonstrated by science's difficulties in dealing
with naturally occurring infectious disease as well as
intentional bioterrorist threats. While PhRMA companies are
developing more than 200 new medicines to treat or prevent
various infectious diseases, reports by the National Academy of
Sciences, the NIH Blue Ribbon Panel for Biodefense Research,
and the U.S. Defense Science Board make it clear that an even
larger number of more diverse types of countermeasures must be
developed, and they must be developed promptly.
Although the basic science research required for
countermeasure development is being supported by Federal
agencies, it is widely recognized that more sponsored research
is needed. There also needs to be more flexible authority and
more resources for regulatory agencies; in short, those things
which will advance the development and production of the
countermeasures.
PhRMA member companies have been active in moving forward
on countermeasure research and development. As indicated in my
written testimony, for example, PhRMA is working with CDC, DOD,
NIH, FDA and academia to support invitro studies of five
important pathogens as model systems for antibiotic testing.
Several companies are working with the National Institutes of
Allergy and Infectious Diseases to help test existing
antibiotics against plague. Other examples of ongoing
collaboration are outlined in my testimony.
A cooperative and collaborative research and development
effort which engages industry, government and academia will,
however, be essential to this effort. PhRMA believes that
Project BioShield is an important step toward this, and we
support the three main components of the President's proposal.
The President's proposal speaks primarily to the early and
to the later stages and the lengthy high risk and costly
process of bringing new medicines to the market. It does not,
however, speak to the time-consuming and resource-intensive
middle portion of that process, which is largely our
responsibility. Further, research into biothreat
countermeasures presents challenges beyond those ordinarily
encountered in nonbiodefense R&D. These include scientific
challenges, economic challenges and legal challenges, and I
will enumerate a couple, if I may.
For example, some products will be distributed without the
typical battery of clinical trials that are required for FDA
approval. All medicines present inherent and unavoidable risk
of adverse events. As a result manufacturers may be exposed to
devastating product liability suits. Private insurance can be
unavailable or prohibitively expensive.
Second, the need for rapid development of countermeasures
may require the sharing of scientific information and
cooperation among companies; for example, the sharing of data
by researchers working in different laboratories. Collaboration
and cooperation in this research might create exposure under
current antitrust laws.
Third, diverting resources from research and development of
other medicines will affect the future availability of
treatments and cures for patients with other serious health
conditions, especially since only a tiny percent of all drugs
that enter testing ever demonstrate sufficient human safety and
acceptable efficacy.
The allocation of resources can be particularly difficult
with few products in the pipeline. In order to best meet the
public health needs of our citizens, PhRMA looks forward to
working with in, a transparent manner, Congress and the
administration to enact measures that will provide appropriate
product liability protection for products that are procured
under BioShield and for products that are distributed under the
emergency authorization procedures of BioShield. Although
existing indemnification authorities are a helpful step in the
right direction for some government contractors, they are not
an appropriate model for legislation implementing Project
BioShield. Instead, we would urge Congress and the
administration to expand and, as appropriate, modify the
liability protection model that this Congress has already put
in place for smallpox.
PhRMA also looks forward to working closely with Congress
and the administration to enact narrowly tailored measures to
address existing antitrust constraints as appropriate in order
to allow needed collaboration and consortium among scientists
and industries. My written testimony includes the memorandum
from outside counsel explaining both the need and the precedent
for a narrowly tailored antitrust provision that would apply in
this very special context.
Cooperation and strong commitment from all parties will be
necessary in the months and years to come as our Nation seeks
to protect itself against the terrible threats of biowarfare
and bioterrorism. America's pharmaceutical companies look
forward to doing our part. I thank you for this opportunity to
address you and look forward to answering your questions. Thank
you.
Chairman Tom Davis. Thank you very much.
[The prepared statement of Dr. Friedman follows:]
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Chairman Tom Davis. Dr. Ryan.
Ms. Ryan. Mr. Chairman and members of the committee, thank
you very much for inviting me to testify before you on Project
BioShield. I am the president and CEO of AVANT
Immunotherapeutics, a small 60-person biotech company in
Massachusetts. I am also on the board of the Biotechnology
Industry Organization, and I am chairman-elect of the
Massachusetts Biotechnology Council.
As the Federal Government embarks on BioShield, a new and
challenging program to fight bioterrorism and biological
warfare, let me assure you that the biotechnology industry
stands ready to contribute and work toward its success. Our
eagerness to participate, however, cannot be unqualified. As
the leader of a small company, I cannot embark on the
development and supply of biodefense vaccines if doing so
doesn't make business sense.
Let me, if I may, give you my view of BioShield from the
perspective of a small company. AVANT is a small company, and
it's a vaccines company. Prior to September 11th we made
vaccines for protecting travellers against cholera, typhoid
fever and dysentery. We make antiviral vaccines for diarrhea in
babies, for food safety, and we even have a vaccine that raises
your HDL, your good cholesterol.
After September 11th, we moved to apply our advanced
vaccine technologies to biodefense, as they have much to offer.
For example, the current inventory anthrax vaccine provided to
U.S. troops is administered through multiple injections, about
6 over about 18 months, which are often painful with side
effects. And once the injections have begun, the protection
develops gradually over several months. We think we can do
better, and to my great pride we signed a contract in January
that allows us to supply most advanced vaccine know-how to the
biodefense effort. Under our contract with DVC, DynPort Vaccine
Co., the prime contractor to the Defense Department's JVAP,
Joint Vaccine Acquisition Program, we have begun development of
a single-dose oral vaccine that will protect our troops against
both anthrax and plague at the same time. This vaccine will
have the same features as our cholera vaccine developed for the
travellers' market, administered in a single oral dose, safe
and well tolerated by the recipient, with immunity developing
very rapidly in days, not weeks or months. Manufacture of this
vaccine is easy and inexpensive to current--by comparison with
current generation vaccines. And in addition, we can provide
this in a form that does not require refrigeration.
Under the current plan we expect to complete preclinical
development of this vaccine by the end of calendar year 2004.
To my knowledge, it is the most advanced vaccine technology
currently under development anywhere in the government's
biodefense program, civilian or military.
So how does this experience shape my view of BioShield?
Here are the central characteristics that I'll be looking for
in BioShield. First, BioShield must create a market of
sufficient size to convince the industry that we have a partner
who understands the costs and complexity and risk of developing
therapeutics and bringing them to market. Now, the research in
any clinical stages may take tens of millions. But as you move
through the final stages of clinical development over the
finish line, it takes hundreds of millions, and biotech
companies will want to see a Federal program of sufficient size
to convince them that our effort can be funded throughout the
life cycle of the program.
Second, there must be a long-term commitment of funding.
The development of biomedical countermeasures takes time; 5 to
10 years is very aggressive, and more than 10 years is not
uncommon, and although we are making quick progress on things
such as anthrax and plague, there are other less well known
agents that may become terrorist threats. And we have heard a
lot of talk about SARS, and we have barely begun to work on
that yet, though some of the technologies will apply. To meet
the nuclear missile threat, the government has spent a minimum
of $3 million annually for I think now 20 years. That kind of
long-range commitment will convince companies that the
government is serious about defeating biological threats.
Third, there must be careful coordination, and we touched
on this earlier, among the agencies, including a program
management function that can bridge the divide between the NIH
and the early discovery and research phases and the procurement
at the Department of Homeland Security. And one of the most
experienced acquirers of complex products is the Department of
Defense, and in the Department of Defense, in JVAP, they have a
program management function that I think could well be applied
through the life cycle of products as they progress through
BioShield and bridge the gap between the NIH and the Department
of Homeland Security.
Fourth, two of my colleagues have mentioned it, there must
be adequate liability protection. I am not going to go into it
further, but simply say that from the point of view of a small
company, it isn't even a meritorious legal case that is a
threat; even just the threat itself of liability is enough to
prevent investment and put small companies out of business. So
this is a risk that small companies simply can't take.
The bill introduced by Senators Lieberman and Hatch also
provides for liability protection. Their legislation offers us
protection in the context of comprehensive incentives for
biotechs, and perhaps an approach like that can be incorporated
into the BioShield concept of government-created markets that
pull firms into this worthy effort.
So although I am very optimistic about the opportunity for
success, I want to close with a personal experience that
actually leaves my hope tinged with concern and, frankly, keeps
me awake at night. We at AVANT have put huge amounts of
resources into our program for a single-dose oral anthrax/
plague vaccine, and we have a partner who is willing, the Joint
Vaccine Acquisition Program, but we found that the 2004 budget
has been slashed from the level it received in fiscal 2003. So
even if we are successful and deliver absolutely on the
contract that we have now for the preclinical 2-year program, I
am very concerned about the future of what is a really
outstanding vaccine approach, because, as you heard, there may
be rather little incorporation of the Department of Defense
programs into BioShield. So I want to be sure that this doesn't
become an example of how, despite the best of intentions,
failure of the many agencies involved to keep their coordinated
eye on the biodefense ball could undermine effective programs
and partnerships.
So I remain hopeful that working together the government
and industry can make BioShield work for the national interest.
I applaud your leadership in holding this hearing and meeting
the challenge, and I assure you that our industry will be a
willing partner.
Thank you very much, and I will be happy to answer
questions.
Chairman Tom Davis. Thank you very much.
[The prepared statement of Ms. Ryan follows:]
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Chairman Tom Davis. Dr. Bowdish, thanks for being with us.
Ms. Bowdish. Chairman Davis and distinguished members of
the committee, I am honored to present this testimony on the
application of monoclonal antibodies, the very latest biotech
solution for defense against the very real threat of
bioterrorism facing our Nation today. It's my understanding
that the BioShield Initiative is designed to give key Federal
agencies what amounts to fast-track authority for the review
and approval of private sector solutions to fight the agents of
bioterrorism. I wholeheartedly support the concept behind this
and other legislative approaches such as the Lieberman-Hatch
bill in the Senate. There is no better way to generate new
therapies than to let the top people in their respective fields
bring the best ideas to the table.
I know these legislative efforts importantly address long-
term problems, but I also hope that NIH and other Federal
agencies will take immediate steps that address the very real
threats that we all face right now. As we saw in the attacks
against our Nation in 2001, inhalation anthrax is a highly
fatal disease if not identified early enough for antibiotics to
be of use. Death usually occurs within a few days of the onset
of acute symptoms, primarily from the toxins produced by the
anthrax bacteria, not the bacteria itself.
In addition to antibiotics directed against the bacteria,
successful anthrax defense will require agents against the
toxins otherwise known as antitoxins. Monoclonal antibodies are
among the most logical and natural antitoxins that could be
developed for the treatment of anthrax. Human monoclonal
antibodies have been proven safe and effective for many
therapeutic purposes, and I am confident that they will have
similar success as bioterror antitoxins.
Alexion has successfully isolated human monoclonal
antibodies with therapeutic potential for biodefense. For over
a year we have had antibodies that could provide the most
complete protection from anthrax toxin available. These
antibodies, either alone or in combination, may be useful as a
prophylactic at the onset or during or at the course of an
active infection. As detailed in the written testimony, this
work has been discussed with and presented to a large number of
scientific experts on anthrax and biodefense in industry,
academia and government. All of these individuals agree that
the approach we are taking is a necessary and achievable
component to U.S. biodefense initiatives.
Alexion's biodefense program against anthrax has been
entirely self-supported to date. We saw a need, and we
recognize that we had the ability to offer our technology and
our expertise. And most importantly, we have demonstrated that
our approach works. It is our hope that Congress can help us
ensure that the appropriate decisionmakers in our Federal
Government are aware of our critical and highly relevant work
for consideration for civilian and military defense.
It is our desire to coordinate with government officials to
see that our antibodies and our expertise are utilized for
emergency stockpile generation to protect both the civilian and
military populations. Building the necessary emergency
stockpiles is certainly something that no one company can or
should accomplish solely with private funding. Therefore, we
are looking for assistance from the Federal Government through
NIH for the final phase of development of this critical
therapy.
Further, we are currently applying the same technology to
additional agents of bioterror in our research laboratories.
Preliminary results suggest we will have similar successes with
smallpox, botulinum, plague and others. At the minimum, we hope
emergency stockpiles of monoclonal antitoxins would deter
would-be terrorists and alleviate public anxiety. Above all it
is my hope we never have to look back from another bioterror
attack and wonder what more could we have done and why did we
wait.
I thank the committee for this opportunity to present this
testimony, and I welcome any questions.
Chairman Tom Davis. Thank you very much.
Dr. Edwards.
Dr. Edwards. Chairman Davis and members of the committee,
thank you for inviting the Infectious Diseases Society of
America [IDSA], to present our views on the administration's
Project BioShield. I am Dr. John Edwards, a professor of
medicine at the School of Medicine at UCLA, and chief of the
division of infectious disease at the Los Angeles County/
Harbor-UCLA Medical Center.
Before I begin, I want to thank Dr. Fauci for his work on
Project BioShield and his work at infectious diseases in
general. He is a member of our society.
I am testifying today on behalf of the IDSA to convey our
strong support for Project BioShield and the novel incentives
it creates. However, the United States' most pressing
infectious disease problems are not limited to infections that
terrorists may propagate. An immediate crisis exists currently
in U.S. hospitals and in our communities as naturally occurring
infections become increasingly resistant to approved
antimicrobial products. Additionally, naturally occurring
infectious diseases exemplified by meningitis pneumonia,
tuberculosis and AIDS are still the leading cause of death
worldwide and the third leading cause of death in the United
States. Furthermore, emerging infections such as Severe Acute
Respiratory Syndrome [SARS], and West Nile virus are continuing
threats.
Antimicrobial resistance whereby microbes mutate and become
less susceptible to drugs has created special concerns. You
probably know of the cases of vancomycin-resistant
Staphylococcus aureus [VRSA], that occurred in Michigan and
Pennsylvania last year. This occurrence is highly significant
since vancomycin is typically a last resort agent. Similarly
methicillin-resistant Staphy aureus, which previously affected
mainly hospitalized patients, now is infecting healthy and
strong individuals and communities across our country. Upon
this background, the IDSA has learned that a, ``perfect
storm,'' if you will, is brewing as many pharmaceutical
companies are considering or already have withdrawn from anti-
infective drug development. Many companies have greatly
curtailed, wholly eliminated or spun off their anti-infective
research components especially over the last 5 years. A list of
these major pharmaceutical companies is provided in our written
statement.
Antimicrobials work often quickly and with successful
results. Understandably, pharmaceutical and biotechnology
companies are inclined to develop products that treat long-term
chronic illnesses because such products provide greater returns
on investment. As U.S. demographics shift toward a more elderly
population, we predict that companies will focus even more on
chronic diseases in the future. Within the context of these
realities, it is highly unlikely we can reverse the
antimicrobial market failure without some form of specific
well-designed intervention. Therefore, a national solution is
needed to solve this national crisis.
Project BioShield's long-term legacy will be enhanced
significantly if it is amended to address the precipitous
decline in the development of antimicrobial products to treat
naturally occurring and resistant infections.
Such amendments are supported by recommendations made by
the Institute of Medicine in the Microbial threats report
issued on March 18th. Thousands more Americans will succumb to
naturally occurring infections in the next 10 to 15 years than
to agents of bioterrorism, even if a bioterrorism attack
occurs, and yet no plan is currently on the table to address
this immediate public health crisis.
We strongly support the concept Project BioShield, but we
unequivocally urge that it be amended to include a framework
for action to protect Americans against naturally occurring and
drug-resistant and emerging infections that are increasingly
present in our hospitals and communities.
Chairman Davis, in your opening statement, you asked how
can BioShield assist to address the SARS outbreak. In its
current form, its assistance would be tangential. However, with
amendments it could do much.
In closing, we sincerely thank the chairman and all members
of the committee for the opportunity to discuss the urgent need
for new technologies and tools to protect U.S. citizens and
global populations from both the threat of bioterrorism and the
highly prevalent naturally occurring infections.
The IDSA is available to assist in any way that it can.
Thank you for sharing these concerns with us.
Chairman Tom Davis. Thank you very much, Dr. Edwards.
[The prepared statement of Dr. Edwards follows:]
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Chairman Tom Davis. The point you make, that with some
amendments we may be able to shape this legislation up where it
can help us with the SARS or the next Ebola or whatever, is
very, very important.
Sometimes we get an opportunity like this legislatively
when we want to make it as inclusive as we can. So I think your
point is well taken.
We don't know what will happen from a bioterrorism point of
view over the next decade. Hopefully nothing. But there are
going to continue to be SARS and mutations and things that the
private marketplace is going to be reluctant to get into
without strong Federal help.
And having a system up that could include these areas, I
think would be very, very helpful. So we will take all of your
comments into account as we try to write this legislation and
move it through.
I am concerned, and I am--I guess I will ask everybody.
Putting--if we get this fund up, we put limited liability and
the other things that are asked for in the legislation, a
concern of an unintended consequence downstream being that all
of a sudden putting so much into biomedical countermeasures,
could it affect other biomedical research into more
conventional areas?
Can you find pharmacy companies all of a sudden putting
their research into these areas where you have a guaranteed
fund at the end that will pay for these, instead of taking the
chance in the marketplace, and how will this affect more
conventional research and development?
Dr. Friedman. Thank you. I will begin. I am sure others
will join in as well.
The problem is, in a sense, caused by the fact that there
are so many opportunities that are available. These are
opportunities that have been made available because of the
scientific investments that have been made in this country over
the last 40 or 50 years.
I think it is true to say that whether you are talking
about an academic medical center, a pharmaceutical company, a
large pharmaceutical company or a small company, there are
vastly more promising ideas for helping people today than we
have the time, the energy, the resources, the expertise or the
dollars.
And that is a continuing challenge for us all. As was
pointed out, one of the reasons why pharmaceutical
manufacturers have been putting less emphasis on infectious
disease over the last decade is that there have been more
urgent public health opportunities, cancer, Alzheimer's, other
very serious diseases, where companies thought that important
investments made there would help more patients.
As we have come to recognize that the threats to our health
change, we must rebalance the equation. There are no simple
answers. There aren't enough resources or people or time to
address all of the scientific and medical questions that
legitimately exist. It is a real challenge for all of us to try
and define what that right balance is.
We must make those assessments and then we must constantly
reevaluate and question those and decide how we can make the
greatest contribution to the public health, with which source
of investments of our energy and time and people.
Chairman Tom Davis. I mean, in all fairness, you want to
make contributions to public health, but you have a bottom line
to your shareholders too. And if the money is available out
there in these--in some of these other areas, it may be a more
sure investment than some of the other areas.
Dr. Friedman. It is theoretically possible. I think by far
the more driving consideration will be how likely it is to be
successful. So if we have a wonderful insight into multiple
sclerosis or diabetes, the opportunity to contribute there--as
you are well aware, because you understand this, there is a
huge number of things that are screened and begin testing, and
a tiny, tiny percentage that end up--not because people are
sloppy or because they don't care, because we don't have the
biological insights. As sophisticated as we are, we are not
sophisticated enough.
Chairman Tom Davis. This is tough stuff. Dr. Ryan.
Dr. Ryan. I think the unintended consequences will be all
benefits. If you look at the countermeasures and the
technologies we can offer now, they were all built on peacetime
research and activities.
And much of what I think we would benefit from in
developing needle-free, nonrequiring-refrigeration vaccines,
would be equally useful for travelers' vaccines, food safety
vaccines, vaccines for global health. So it is the same
intellectual property and technology that we would be
leveraging into another area. So I would see all of the boats
rising, and I wouldn't see competition being a problem at all.
Chairman Tom Davis. All right. Thanks.
For a countermeasure to be appropriate for procurement
under the Project BioShield as envisioned by the
administration, the Secretary of Health and Human Services has
to make a determination that the product is either approved by
the FDA or is likely to be approved within 5 years.
Is that a reasonable approach? And what type of products
would be covered by this timeframe? And what type do you think
would be excluded by this timeframe? Any thoughts on that?
Ms. Bowdish. I believe that monocromial antibodies will be
able to be approved in this timeframe. I think that in our
case, speaking from a small-company perspective, we already
have antitoxin therapy available for anthrax. I think it will
take us the next 6 months to get it through the next series of
studies that we need to do, and then likely into phase 1 safety
studies.
I think that our approach will be successful against the
other agents that we are working on now and will be working on
in the future. I think that we can very quickly have a rapid
success with antitoxin therapies and antiviral therapies in the
case of monocromial antibodies.
Chairman Tom Davis. Thank you. One of the areas you are
going to see debated on both sides of this is, are we giving
away too much to the companies? Are we in fact not being tough
enough, that they are going to walk off with big profits? Are
we giving them too many protections and the like?
But the bottom line for us is to be able to get incentives
so the companies will step forward, take the risk, do the
research. It is clear from the last panel that government
doesn't have this in-house capability. We have got to go out to
private sector.
We can write a law here that may have all kinds of
safeguards and protections so that the government isn't getting
taken. But if companies don't step up to the plate, the losers
at the end of the day are going to be the consumers and people
are who are suffering from this.
What we wrestle here with is striking the right balance. As
we look at the administration's proposal, does it have enough
incentives for private companies to begin research and
development? Do you think it has enough? Do you think it needs
more? Do you think it goes too far? We ought to bring other
safeguards in? I think all of you have different perspectives
on that. But does anybody want to take that?
Dr. Friedman. Very briefly, sir. I think there are some
incentives that are being discussed. I think equally important
is addressing the disincentives that exist to try and optimize
the system. I think that at the totality of what we are trying
to create for the American public balances careful discussions.
These are complicated issues. And, as others have said, we
look forward to working with you and others to try and craft
this. Specifically, where there are special descriptions in the
legislation, we think those should be transparent, they should
be clear, and they should be well focused.
Chairman Tom Davis. OK. Thank you. Anyone else on that?
Dr. Ryan. What I like about the 5-year idea is that there
is a clear philosophy to support product opportunities, not
just support research.
What I don't like about the 5 years is I think it is a bit
tight. I mean, if somebody is progressing extremely well, I
think it would not be useful to the country to cut it off if it
went another couple of years.
Chairman Tom Davis. So, some waiver extension?
Dr. Ryan. A question of progress. Again, as I keep
stressing, program management through the life cycle from
research to having a product that could actually be used.
Chairman Tom Davis. I mean, your company spends a lot of
money that sometimes ends up going nowhere, right, with the
research?
Dr. Ryan. Oh, yeah.
Chairman Tom Davis. What percent? As you go off on a trail,
how much times does it lead nowhere?
Dr. Ryan. Most of the time, is the depressing thought. But
in fact the research is still useful. Others studies have been
done, not just by my company, but when you get to the end of
the road, it is 1 in 100 is what makes it through to success.
Dr. Friedman. I think it depends where you start. It could
be as small as 1 in 10,000 or 100,000 if you look at the very
earliest steps, when something begins clinical testing. You are
happy if it is 1 in 100. Again, this is not just for anti-
infectives, but for a variety of different medications.
Mr. Rapoport. Mr. Chairman, I think the incentives are
there, but they need to be firmed up. And let me give you a
specific example. In the last anthrax procurement, which was
won by a company whose name I can't recall, but the basic
provision, the RFP, was for research and development only.
So you stand back, and you are chairman of a multinational
drug company. And you look at, am I going to do research and
development? I would love to help. I want to be there. In fact,
it looks like the government is paying my way.
What happens at the end of the contract? Nothing. You get
no widget. You get no promise. In fact, the procurement said
there will be another RFP at the end of the research and
development. And you wonder, as outside counsel, how do you
advise your company on, well, do you get the rights to the work
that has been developed by the other companies that have won
the R&D?
So it is very simple in the sense that if you want to
attract companies like Aventis, I think they are willing to
share the risk, but they need to know that if they show you
their stuff and they are successful, there is a guarantee that
there is going to be a market there.
It is as if to say we fight a war in Iraq, and Boeing is
not there, Lockheed is not there, Northrup is not there. We
have got some very sophisticated companies, but we need some of
the big players with unlimited resources to participate in this
as well.
Chairman Tom Davis. Thank you. I mean, that is the American
system. There is a huge up-side when you get success. If you
don't get success, you end up eating the cost. But there is a
huge up-side. And what you are saying here is there is no
assurance of that in some of these cases. Thank you very much.
Mr. Waxman.
Mr. Waxman. Thank you, Mr. Chairman.
I want to thank all of the witnesses for their testimony. I
had a conflict in my time schedule so I wasn't here to hear
you, but I have had a chance to review the testimony and will
certainly take into consideration all of the things that you
have given us because I think it is very helpful.
Mr. Rapoport, you testified you assumed checks and balances
are in place to ensure appropriate stewardship to protect the
taxpayers' money. It seems to me that the bill eliminates many
guarantees to protect the taxpayers' interest: eliminating
government access; rights to the books of contractors, for
instance, seems questionable.
What kind of checks do you think are in place?
Mr. Rapoport. I noticed from your earlier question that you
were concerned about that. Remember, the simplified acquisition
is only up to $25 million. After that, the full panoply of
Federal Acquisition Regulations, with the masses of government
auditors that are already over the pharmaceutical industry,
they will be there.
In my days at the Justice Department, we had the FBI, we
had the IG. There is everybody there from those enforcers to
the contracting officials who ask for one thing: Get the stuff
out the back door. As long as you can keep producing, there
will be no audits.
So the $25 million, quite frankly, is a very low number to
receive a relaxation of government acquisition enforcement.
Most of this will be far in excess of $25 million.
Mr. Waxman. Well, the production side, however, it is not
limited to that $25 million.
Mr. Rapoport. It is our view that the production side
doesn't even have this simplified acquisition in it. There is
no relaxation. There is total--in fact, it is a very aggressive
position which says that if you don't produce, Mr.
Pharmaceutical Co., within 3 years, we are going to terminate
you for default. That didn't have to be in there. There is
already that ample authority under the FAR.
Mr. Waxman. You have testified that companies need the
certainty that research and development contracts will lead to
a manufacturing agreement. This is an important part as far you
can see to tie the two together?
Mr. Rapoport. Yes. We are not assuming that the price has
to be decided until later in the contract. But the government
does this type of price determination midway through a
procurement all of the time.
Mr. Waxman. Do companies make money on research and
development contracts? And, if so, why would you need a
guarantee of a manufacturing agreement up front?
Mr. Rapoport. There is probably a difference between a
company like Aventis and a biotech. We are not anxious to
accept government money, as you suggest. We are not government
contractors. The pharmacy industry, I guess the Wall Street
Journal calls them the new biodefense contractors.
But a large pharmaceutical company wouldn't have the
institutional competency to deal with what Boeing and Lockheed
has. So they are not anxious to take government R&D money
simply to earn a 7 or 8 percent profit on top of the R&D. It is
the manufacturing capability that they want, and that they are
best at, that they deliver. That is really why they are where
they are.
So at the beginning when I said our tinkering with the
bill--and it is a good bill--is simply not only to encourage
biotechs who absolutely have to be there, but also the
companies that have the ability to produce masses of quantities
of vaccines. And they don't need the government's R&D money as
long as they know that there is some kind of back-end
commitment.
Mr. Waxman. Dr. Friedman, good to see you again. You have
indicated the importance of the liability protection. Why
wouldn't the government contractor defense shield you from
liability?
Dr. Friedman. I am sorry, sir?
Mr. Waxman. You indicated that--the concern about the
potential liability companies manufacturing these
countermeasure could face, and their inability to retain
private insurance. I am trying to understand why wouldn't the
government contractor defense shield be adequate for
protection?
Dr. Friedman. This is an area that skirts my expertise in
terms of legal understanding. But as it has been explained to
me, and I believe it is accurate, the indemnification
activities that exist for many kinds of contractural procedures
are really not anywhere near as flexible or appropriate or
useful as some of the liability kinds of protections that
exist.
I believe the recent example of how smallpox has been dealt
with is a very reasonable model for us to take forward. And if
I may just expand on my answer for a moment, to answer a
question not--that you didn't address to me, but you did
address earlier, because I really feel it is worth some further
discussion.
Our feeling is that the liability protection should be
afforded not just to the manufacturer. We think there is a very
strong case for that. I am happy to further define that. But we
also believe that there should be some equitable, appropriate
consideration of the people who are receiving the product, and,
I would even add, the people who are delivering the product;
that is, the health care providers, physicians and so forth.
The reason is I think that we are operating--anytime you
have a product considered, even approved by the Food and Drug
Administration, there is a balance of what we know and what we
don't know.
At a certain point the FDA and its scientists say, we know
enough to say that this is relatively safe and relatively
effective, because there is nothing that is absolutely safe and
absolutely effective. And we have confidence when there is a
lot of information there.
Our concern is that for some of these products, because of
the difficulty of testing them, because of the fact that they
may be in the midst of development, that balance will be
shifted and we won't know quite as much as we would like to.
And there will be more unknowns about risks and benefits.
Mr. Waxman. So you think that the manufacturers should be
protected from liability to give the incentive to development
of these products, but the public that is exposed to them, that
may have some adverse effects, should also be compensated?
Dr. Friedman. Yes, sir.
Mr. Waxman. Dr. Edwards, I want to welcome you because you
are from UCLA, among other reasons. There was a report in
yesterday's New England Journal of Medicine that a common
bacteria is now highly resistant to Vancomycin, one of the most
powerful antibiotics in modern medicine.
Do you believe that more research needs to be done to find
alternative treatment for Vancomycin-resistant bacteria?
Dr. Edwards. Absolutely. This is just a major problem that
we are facing every day in our hospitals. And in fact, I would
like to give a very brief example that sort of summarizes a
conundrum. In our institution we recently had a patient who was
a 60-year-old, brought in by her family, her daughter and her
grandchildren, and had severe asthma and also had evidence of
an infection that seemed to be mild. A deliberate decision was
made not to put the patient on Vancomycin, because that drug
has become so valuable, and there is so little in the
background available to counteract the Vancomycin-resistant
organism.
So the patient was relatively stable at the time she came
into the hospital. But she rapidly decompensated and died,
unfortunately. And at the time of her autopsy, an organism that
was multiplying resistantly to antimicrobials was recovered,
but it was sensitive to Vancomycin.
And this example illustrates how we are faced with the
situation now of trying to conserve the use of specifically
that agent, but also others, because there is so very little in
the background for support for resistant organisms.
And the situation is very complex and intricate. And I
think this example displays some of those intricacies of the
kinds of decisions that are being made in hospitals all over
the country now based on this resistance problem.
Mr. Waxman. Do you think there are natural security
implications?
Dr. Edwards. Absolutely. The resistance issue is tied to
some of the basic science of bioterrorism agents as well.
Mr. Waxman. Thank you. That is very helpful to have on the
record.
Thank you very much, Mr. Chairman. And I want to thank the
panel.
Chairman Tom Davis. I want to thank the panel as well. It
has been very helpful to us as we try to formulate some
meaningful legislation over the next few months.
Anyone want to add anything before we go? If not, let me
just again thank you. I want to thank the staff for working on
this hearing. We will be following up on a SARS issue at a
hearing scheduled for next Wednesday, April 9th, at 10 a.m.
We will keep the record open for 2 weeks if you want to
supplement your comments. If you think of anything you didn't
say or respond to, please feel free to do that. And the hearing
is adjourned. Thank you.
[Whereupon, at 11:50 a.m., the committee was adjourned.]
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