[House Hearing, 108 Congress]
[From the U.S. Government Publishing Office]
NIH: MOVING RESEARCH FROM THE BENCH TO THE BEDSIDE
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HEARING
before the
SUBCOMMITTEE ON HEALTH
of the
COMMITTEE ON ENERGY AND COMMERCE
HOUSE OF REPRESENTATIVES
ONE HUNDRED EIGHTH CONGRESS
FIRST SESSION
__________
JULY 10, 2003
__________
Serial No. 108-38
__________
Printed for the use of the Committee on Energy and Commerce
Available via the World Wide Web: http://www.access.gpo.gov/congress/
house
__________
88-429 U.S. GOVERNMENT PRINTING OFFICE
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COMMITTEE ON ENERGY AND COMMERCE
W.J. ``BILLY'' TAUZIN, Louisiana, Chairman
MICHAEL BILIRAKIS, Florida JOHN D. DINGELL, Michigan
JOE BARTON, Texas Ranking Member
FRED UPTON, Michigan HENRY A. WAXMAN, California
CLIFF STEARNS, Florida EDWARD J. MARKEY, Massachusetts
PAUL E. GILLMOR, Ohio RALPH M. HALL, Texas
JAMES C. GREENWOOD, Pennsylvania RICK BOUCHER, Virginia
CHRISTOPHER COX, California EDOLPHUS TOWNS, New York
NATHAN DEAL, Georgia FRANK PALLONE, Jr., New Jersey
RICHARD BURR, North Carolina SHERROD BROWN, Ohio
Vice Chairman BART GORDON, Tennessee
ED WHITFIELD, Kentucky PETER DEUTSCH, Florida
CHARLIE NORWOOD, Georgia BOBBY L. RUSH, Illinois
BARBARA CUBIN, Wyoming ANNA G. ESHOO, California
JOHN SHIMKUS, Illinois BART STUPAK, Michigan
HEATHER WILSON, New Mexico ELIOT L. ENGEL, New York
JOHN B. SHADEGG, Arizona ALBERT R. WYNN, Maryland
CHARLES W. ``CHIP'' PICKERING, GENE GREEN, Texas
Mississippi KAREN McCARTHY, Missouri
VITO FOSSELLA, New York TED STRICKLAND, Ohio
ROY BLUNT, Missouri DIANA DeGETTE, Colorado
STEVE BUYER, Indiana LOIS CAPPS, California
GEORGE RADANOVICH, California MICHAEL F. DOYLE, Pennsylvania
CHARLES F. BASS, New Hampshire CHRISTOPHER JOHN, Louisiana
JOSEPH R. PITTS, Pennsylvania JIM DAVIS, Florida
MARY BONO, California THOMAS H. ALLEN, Maine
GREG WALDEN, Oregon JANICE D. SCHAKOWSKY, Illinois
LEE TERRY, Nebraska HILDA L. SOLIS, California
ERNIE FLETCHER, Kentucky
MIKE FERGUSON, New Jersey
MIKE ROGERS, Michigan
DARRELL E. ISSA, California
C.L. ``BUTCH'' OTTER, Idaho
Dan R. Brouillette, Staff Director
James D. Barnette, General Counsel
Reid P.F. Stuntz, Minority Staff Director and Chief Counsel
______
Subcommittee on Health
MICHAEL BILIRAKIS, Florida, Chairman
JOE BARTON, Texas SHERROD BROWN, Ohio
FRED UPTON, Michigan Ranking Member
JAMES C. GREENWOOD, Pennsylvania HENRY A. WAXMAN, California
NATHAN DEAL, Georgia RALPH M. HALL, Texas
RICHARD BURR, North Carolina EDOLPHUS TOWNS, New York
ED WHITFIELD, Kentucky FRANK PALLONE, Jr., New Jersey
CHARLIE NORWOOD, Georgia ANNA G. ESHOO, California
Vice Chairman BART STUPAK, Michigan
BARBARA CUBIN, Wyoming ELIOT L. ENGEL, New York
HEATHER WILSON, New Mexico GENE GREEN, Texas
JOHN B. SHADEGG, Arizona TED STRICKLAND, Ohio
CHARLES W. ``CHIP'' PICKERING, LOIS CAPPS, California
Mississippi BART GORDON, Tennessee
STEVE BUYER, Indiana DIANA DeGETTE, Colorado
JOSEPH R. PITTS, Pennsylvania CHRISTOPHER JOHN, Louisiana
ERNIE FLETCHER, Kentucky JOHN D. DINGELL, Michigan,
MIKE FERGUSON, New Jersey (Ex Officio)
MIKE ROGERS, Michigan
W.J. ``BILLY'' TAUZIN, Louisiana
(Ex Officio)
(ii)
C O N T E N T S
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Page
Testimony of:
Barker, Anna D., Deputy Director for Strategic Scientific
Initiatives, National Cancer Institute, NIH................ 17
Gardner, Phyllis, Senior Associate Dean for Education and
Student Affairs, Stanford University....................... 46
Lindberg, Donald A.B., Director, National Library of
Medicine, NIH.............................................. 7
Mullin, Theresa, Associate Commissioner, Office of Planning
and Evaluation, Food and Drug Administration............... 21
Neighbour, Andrew, Associate Vice Chancellor for Research,
University of California Los Angeles....................... 53
Rohrbaugh, Mark L., Director, Office of Technology Transfer,
Office of the Director, NIH................................ 12
Sigal, Ellen V., Chairperson, Friends of Cancer Research..... 67
Soderstrom, Jonathan, Managing Director, Office of
Cooperative Research, Yale University...................... 60
Additional material submitted for the record:
Braun, Susan, President and CEO, The Susan G. Komen Breast
Cancer Foundation, prepared statement of................... 77
(iii)
NIH: MOVING RESEARCH FROM THE BENCH TO THE BEDSIDE
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THURSDAY, JULY 10, 2003
House of Representatives,
Committee on Energy and Commerce,
Subcommittee on Health,
Washington, DC.
The subcommittee met, pursuant to notice, at 10 a.m., in
room 2123, Rayburn House Office Building, Hon. Michael
Bilirakis (chairman) presiding.
Members present: Representatives Bilirakis, Burr,
Whitfield, Norwood, Wilson, Buyer, Brown, Eshoo, Stupak, Green,
Strickland, Capps, and DeGette.
Staff present: Cheryl Jaeger, majority professional staff;
Jeremy Allen, health policy coordinator; Eugenia Edwards,
legislative clerk; John Ford, minority counsel; and Jessica
McNiece, minority staff assistant.
Mr. Bilirakis. I call this hearing to order.
I would like to start by thanking our witnesses for taking
the time to join us today. Are our witnesses in the room? They
may not be.
I am sure that these two panels of experts will help
members of the subcommittee better understand the dynamic and
successful relationship between taxpayer-supported Federal
research and private industry, and how this relationship
ensures that Americans have access to cutting edge biomedical
technology.
I am going to hold for a minute or 2. Please take your
seats as soon as you can.
We have a journal vote coming up, and that is why we are
trying to rush through these opening statements. So please help
us out by getting settled.
Can we shut those doors, please?
As everyone here today is aware, we recently completed our
effort to double the budget of the National Institutes of
Health. I often say that while we are not famous for following
through on our promises up here at Washington, this is one case
where I think Congress really came through for the American
people. However, it is our job to ensure that we get the most
out of this massive investment of resources.
Today's hearing is another in a series of hearings that
will examine different aspects of NIH, and we will focus today
on how private industry's partnership with the Federal
Government helps move new discoveries from the bench to the
bedside. After all, what good is the bench without it getting
to the bedside?
As we will no doubt discuss today, the 1980 Bayh-Dole Act
laid the foundation for our current system of technology
transfer. Prior to Bayh-Dole, the Federal Government held the
patent rights to new technologies that were developed using
Federal funds. This greatly discouraged private sector
innovation and the translation of these discoveries into useful
products.
Bayh-Dole changed all of that by permitting entities such
as universities and small businesses that develop new
technologies using Federal funds to retain title to these
technologies. In addition, Bayh-Dole allowed Federal agencies
to license inventions that are developed through intramural
research.
While we will spend the majority of this hearing learning
more about technology transfer and its role in speeding new
therapies to patients, it is safe to say that Bayh-Dole created
a highly successful model that helps fuel our research-driven
biotechnology and pharmaceutical industries. As we will hear
from our witnesses, the technology developed using Federal
resources is often far from any potential commercial uses.
Considering the substantial investment needed to turn these
discoveries into therapies, it just makes sense for the Federal
Government to partner with private entities willing to incur
the necessary risk to bring new products to market.
I am glad that we have a variety of perspectives on this
important issue before us. I think that after today every
member of the subcommittee will have a much better
understanding of the relationship between the Federal
Government, the research community, and the private sector.
And, again, I would like to thank our witnesses for being
with us today.
And with that, I would now yield to the gentleman from Ohio
for an opening statement, and we might be able to go through
two or three opening statements, and then, of course, we will
have to recess for the vote, and then return.
Mr. Brown.
Mr. Brown. Thank you, Mr. Chairman. I think Ms. Capps and
Mr. Stupak both want to forego their opening statements, so
they can do longer questions. So perhaps we can get through
that.
I want to welcome our witnesses and look forward to hearing
their testimony, and thank the chair for calling this hearing
on this very important issue. Each year for the last 5 years
NIH has been allocated several billion dollars to support basic
research in biomedical science. In doing so, the Federal
Government is investing taxpayer dollars in the future of
health care, improving health care through promoting scientific
curiosity and discovery.
Universities, hospitals, and institutes in my own State of
Ohio have accepted the challenge, as they have elsewhere, in
using public dollars to promote discoveries that some day will
improve the health of not just Ohioans but people in nation
after nation around the world.
Case Western Reserve University School of Medicine is among
the 20 top recipients of NIH research funding among the
Nation's medical schools. Just yesterday Ohio State was awarded
a grant as part of a public-private partnership initiated by
the Friends of Cancer Research, yet today House Republicans are
asking my Democratic colleagues on the floor to--asking all of
us to vote on an appropriation bill for the Department of
Health and Human Services that jeopardizes the progress we have
made.
This bill falls short of what is needed merely to keep up
with inflation and research costs, which NIH estimates at 3.3
percent for fiscal year 2004. As is everything else around
here, all important public functions like that have been cut in
order to make room for a tax cut that goes overwhelmingly to
the most privileged people in our society.
I will vote against this bill on the floor, because Federal
funding of biomedical research is a worthy investment.
Questions about Congress' commitment to NIH research underscore
the importance of understanding, in both qualitative and
quantitative terms, the government's return on its investment
in biomedical research.
The reason for today's hearing--and, as I said, I thank the
chair for this--is to talk about how basic research investments
are realized as a public health benefit. This process is a
complex system of many parts, each critical, each contributing
to the success of the whole. For this process to work, it must
never forget that this process has a face--the face of a
patient who 1 day can benefit from cancer vaccines or from stem
cell research or from a novel diagnostic technique.
Policy tools like patents, the Bayh-Dole Act, the
Stevenson-Wydler Act, and incentives for commercialization, are
important links in the bench to bedside chain, but they are
ineffective if, at the end of the day, a patient cannot afford
or does not have access to treatment. They are ineffective if
they discourage rather than nurture research formally in the
domain of open scientific discourse.
Congress has long recognized that the value of an idea is
in using it. Bayh-Dole allows universities to patent and
license discoveries made in the course of government-sponsored
research. But growing concerns about the prohibitive costs of
prescription drugs and their effect on the health care system
overall has renewed debate over the licensing of inventions.
There are also concerns that some of the incentives can
hinder rather than accelerate research. In this context, our
witnesses' views on key issues are extremely important. Among
others that Chairman Bilirakis raised, those issues include
whether American taxpayers should accept an ``ends justifies
the means'' approach to justify the outrageous costs of
prescription drugs when they have already subsidized the
research on those drugs on the front end and seeing drug prices
significantly lower in other nations, as well as whether and to
what extent patents may actually be hindering what our
constitution explicitly states is the intention of patents--
promoting science and the useful arts.
I look forward, Mr. Chairman, to an enlightening
discussion. I thank you for calling this hearing.
Mr. Bilirakis. The chair was going to recognize Mr. Buyer.
Let us see, Mr. Stupak.
Mr. Stupak. I waive opening statement.
Mr. Bilirakis. Thank you.
Ms. Capps.
Ms. Capps. I waive an opening.
Mr. Bilirakis. No? All right.
Well, that ends opening statements.
[Additional statements submitted for the record follow:]
Prepared Statement of Hon. Barbara Cubin, a Representative in Congress
from the State of Wyoming
Thank you, and good morning.
There is no denying the fact that America sets the standard in
medical research. We are the ones constantly pushing the envelope to
find that ultimate diagnosis--that cure we know is out there.
It is what makes research at NIH virtually undisputed in this
country and around the world.
Year in and year out, Congress devotes billions of dollars to this
agency, believing it to be not only worthwhile but honorable.
I often question what it is exactly that makes us so determined to
conquer the diseases of the human mind and body. Is it financial gain?
Is it notoriety? Is it arrogance? I don't think so.
The answer to this question comes down to a common experience that
each of us will face during our lifetime.
It is that moment when we walk hand-in-hand with a sick loved-one;
when we listen as the doctor tells them, ``I'm sorry there is nothing
else we can do''; when we feel powerless to the disease that is taking
our family member away.
That is when I as an individual and we collectively as a country
put our frustration to good use and say we will find a cure. That is
all the reason we need.
There is no single motivating factor greater than personal
experience. I know that first-hand and, the reality of the human
condition is such that, you will likely know it too--if not today, then
someday.
With each dollar we channel toward medical research, we improve the
quality of someone's life--perhaps for as little as a day, but maybe
for years to come. That is what makes all the difference, and that is
why we do it.
I commend NIH for its steadfast ability to take something from the
drawing board and turning that into the miracle drugs and treatments we
have today. The full extent of how they do that is not clear to me, and
that is why I would like to learn more about it.
I look forward to hearing from our witnesses, and appreciate you
holding this hearing today, Mr. Chairman. I yield back the remainder of
my time.
______
Prepared Statement of Hon. W.J. ``Billy'' Tauzin, Chairman, Committee
on Energy and Commerce
Thank you, Mr. Chairman, for holding this timely hearing today.
The National Institutes of Health serves one primary purpose: to
generate knowledge that can be used to protect the public health.
Through NIH research investments, scientists are making huge strides in
the fight to better diagnose, treat, and ultimately prevent and cure
disease. Because the NIH shares the results of its research to the
broader scientific community and the public, creative minds are
presented a unique opportunity to translate this information into
tangible products and therapies that improve the quality of life.
What began as a single laboratory in a military hospital has grown
to an amazing institution. NIH research programs now operate in almost
all parts of the United States and internationally. NIH research
programs also involve more than 16,000 scientists on NIH intramural
research campuses alone--truly an amazing amount of manpower dedicated
toward such important purposes.
What is even more impressive, besides the sheer size of the
National Institutes of Health, is the real world impact the research
findings at NIH ultimately have on patients. The volume of information
generated by NIH is enormous. I am pleased that we will hear testimony
today from one of the most prominent ``librarians'' in the world, the
Director of the National Library of Medicine, Dr. Lindberg. This is a
person who effectively catalogs some of the most important information
generated by the NIH.
As new communication mediums unfold, such as the Internet, it is
critical that our research resources are made as widely accessible as
possible. I applaud Dr. Lindberg for his dedication to ensuring the
National Library of Medicine rises to this challenge. It certainly is
not an easy task to constantly reorganize entire databases so that
researchers can readily access the most recent scientific findings. But
the Library of Medicine is doing just that.
Generating knowledge for public health is the primary purpose of
the research undertaken at the NIH. We want to ensure that the private
sector applies the knowledge gleaned from NIH research so that we can
discover newer and safer ways to treat patients.
Today, we will hear testimony from the Director of the Office of
Technology Transfer at the NIH about the technology transfer policies
in place that create incentives for private sector investments. We will
have the opportunity to learn more about how technology transfer
policies impact industry, universities, and patients. These are risky
ventures where failures are many and successes few. But, every success
story represents a win for patients. We may not translate all basic
research into commercialized products, but when we do the American
public benefits. That's part of the dichotomy of technology transfer.
Finally, I am glad the Committee is recognizing a new collaborative
project underway at the Department of Health and Human Services between
two agencies with distinct missions, the NIH and the Food and Drug
Administration. Often we speak of the need to create more ``public-
private partnerships.'' Equally important is the goal of ensuring
collaboration between agencies whose work compliments each other. I am
excited about the new interagency agreement being developed by the
National Cancer Institute and the FDA to help speed the approval of
cancer therapies and improve the post market surveillance of products.
If this collaboration works, it will become a model for future
interagency agreements. I am encouraged by the potential of this
project.
Mr. Chairman, I look forward to learning more about the critical
technology transfer policies that are being utilized by the NIH. As our
Committee continues its oversight over this important agency, there can
be no more critical challenge than for us to promote policies that move
the maximum amount of research from the laboratory bench to the
patient's bedside. We have invested a great deal of resources in the
NIH in recent years. Now it's time to ensure that taxpayers and
America's patients are getting a good return on that investment.
Thank you and I yield back the balance of my time.
______
Prepared Statement of Hon. Gene Green, a Representative in Congress
from the State of Texas
Thank you, Mr. Chairman, for holding this hearing on research at
the National Institutes of Health (NIH).
For the past five years, the Congress has provided unprecedented
increases in funding for biomedical research within the NIH.
I have been a strong proponent of these increases, as I have been
able to witness firsthand some of the miraculous medical breakthroughs
occurring at Baylor College of Medicine in my home town of Houston,
Texas, as well as at facilities across this country.
And while I certainly support additional increases--certainly
larger increases than the meager 2.5 percent increase in this year's
Labor HHS appropriations bill--I think it's fair for us to spend some
time investigating how NIH spends its money, whether we are getting a
``good rate of return'' on this investment, and whether there are
things we should be doing differently to ensure that this research
benefits all taxpayers.
The issue of technology transfer is a complex one, but I think it
is an important one for us to look at.
The technology transfer process ensures that the groundbreaking
research being done at NIH reaches patients when they need it.
I am interested in learning more, however, about whether this
process hinders the development of some areas of scientific research
that are perhaps not as commercially profitable.
For example, I know that a constituent of mine suffers from
scoliosis, and is frustrated by the lack of research being done at NIH
to find better treatments or a cure for this condition.
I know her frustration is compounded when she hears about research
into drugs like Viagra--which certainly earn the pharmaceutical
industry a lot of money.
Now I don't know whether Viagra was developed through the NIH, but
I would like to know how NIH goes about determining where resources are
allocated, and whether there is more that we can or should be doing to
encourage research for conditions such as scoliosis.
This is certainly an important issue, and I look forward to
learning more about it.
With that, Mr. Chairman, I yield back the balance of my time.
______
Prepared Statement of Hon. John D. Dingell, a Representative in
Congress from the State of Michigan
Mr. Chairman, thank you for scheduling this hearing. The laws,
policies, and practices that govern the process of technology transfer
are one of the keys to improving public health. The National Institutes
of Health (NIH) will spend approximately $28 billion this year on
biomedical research. Other government programs will also make
multibillion dollar contributions to this kind of research. This will
be augmented by nearly $30 billion in research and development
expenditures by the pharmaceutical industry. Philanthropies and
individuals will also make significant contributions to biomedical
research.
In order for this level of support to be sustained or enhanced, the
translation of basic research into useful therapies needs to occur at
an acceptable pace. We have an excellent array of witnesses who will
inform us of what is working well, and what could be improved, in our
biomedical research and development technology transfer programs.
The Bayh-Dole and the Stevenson-Wydler Acts were passed in 1980 to
address the need to convert federal investments in basic research into
useful innovations that improve public health. The ensuing years have
shown that these programs, augmented by others, have led to some
notable successes. Bayh-Dole is one of the key reasons we have a robust
biotechnology industry. Training programs for scientists and medical
personnel, as well as advancement of knowledge, have flourished at
universities in every state. We have many new therapies that are
enabling persons with serious and life threatening diseases to live
longer, suffer less, and enjoy life to a greater extent. These
activities and products provide thousands of jobs and stimulate our
economy.
This compels me to mention some matters that could adversely affect
some of the good things we will hear from today's witnesses. NIH is
doing a good job, yet the budget provides a meager increase for its
programs. In addition to my concerns with the budget, I am especially
disturbed by the so called ``strategic human capital management''
initiative and the ``competitive sourcing program.'' These twin
blunders are already having a corrosive effect on NIH morale and should
be shelved immediately. The NIH has a unique role in public health. I,
for one, do not want to see it run just like a business. The NIH funds
research that the private sector would never support. This is important
for finding effective therapies for many diseases and conditions that
are not profitable. NIH also supports large scale biomedical science,
such as the human genome project. In sum, the private sector and the
government play vital, yet distinct roles, and they should not be
effectively consolidated into one.
Mr. Bilirakis. We are going to take a break. As soon as we
get back, we will get right into the witnesses. Thank you very
much for your patience.
[Brief recess.]
Mr. Bilirakis. The chair apologizes. You are also very
important people, and we treat you this way, but that is the
way things are.
The first panel consists of Dr. Donald A.B. Lindberg, who
is Director of the National Library of Medicine with NIH; Dr.
Mark Rohrbaugh, Director of the Office of Technology Transfer
from the Office of the Director of National Institutes of
Health; Dr. Anna D. Barker, Deputy Director for Strategic
Scientific Initiatives with the National Cancer Institute with
NIH; and Dr. Theresa Mullin, Associate Commissioner, Office of
Planning and Evaluation for the Food and Drug Administration.
Welcome, again, to all of you. Thank you so much for being
here.
I will set the clock at 5 minutes. But obviously, if you
are on a roll in terms of making your point, I will let you go
for a little while longer. Obviously, your written submittal is
part of the record, so we would hope that you would sort of
complement and supplement that.
Having said that, if we can all be in order here, we will
recognize Dr. Lindberg. Please proceed, sir.
STATEMENTS OF DONALD A.B. LINDBERG, DIRECTOR, NATIONAL LIBRARY
OF MEDICINE, NIH; MARK L. ROHRBAUGH, DIRECTOR, OFFICE OF
TECHNOLOGY TRANSFER, OFFICE OF THE DIRECTOR, NIH; ANNA D.
BARKER, DEPUTY DIRECTOR FOR STRATEGIC SCIENTIFIC INITIATIVES,
NATIONAL CANCER INSTITUTE, NIH; AND THERESA MULLIN, ASSOCIATE
COMMISSIONER, OFFICE OF PLANNING AND EVALUATION, FOOD AND DRUG
ADMINISTRATION
Mr. Lindberg. Thank you, Mr. Chairman, for this opportunity
to brief you and your colleagues about the National Library of
Medicine. The role of the Library is important to the Nation's
health, and this is due in large part to the strong support we
have received from the Congress historically.
Progress in health care is a cyclical process, much as the
title of your hearing implies. It starts with a problem
recognized by a medical practitioner. This leads to experiments
or experimental observations. Scientists describe the results
in what we now call the peer-reviewed scientific literature.
This informs the next cycle of experiments, which in turn are
read by clinicians to use in patient care, and by patients to
inform their participation in treatments and cures.
The National Library of Medicine--NLM--collects about
27,000 scientific periodicals from across the world, and
includes about 5,000 of the very best in the printed Index
Medicus and the online Medline file. The print version started
in 1879; the computer version effectively in 1965. NLM is the
biggest medical library in the world, again, due to the
encouragement and support of the U.S. Congress, plus gifts of
many historical holdings by scholars. The Library is a major
scientific and medical resource in the U.S. and abroad.
Let me give a measure of the information available to
physicians. Medline holds the descriptions of over 14 million
scientific reports. Each year we add 500,000 new ones. Clearly,
no doctor or scientist can possibly know all that is described
in this library.
Consider the case of a conscientious medical practitioner.
Let us imagine the doctor faithfully reads every night before
going to bed two articles from the specialty journals he or she
buys. May one imagine, then, that the doctor has by this method
kept up with progress? Really, no. By the end of such a year,
this good doctor will have fallen 648 years behind on reading
the new publications. So in reality what good doctors do is
search the NLM files--without charge and available night and
day on the Internet--and read the best one or two articles for
the particular patient problem of the moment.
We can tell you countless examples of getting a tough
diagnosis made through this system, of selecting the best new
drug for treatment, and even of coming to understand new terms
and ideas through reading the right paper at the right time.
Special files cover complementary and alternative medicine,
space medicine, bioethics, AIDS, and toxicology. There is also
a version of this knowledge that is aimed at patients,
families, and the public. We call this MedlinePlus. This is
organized into about 600 health topics, including genetics
information for the public.
An additional important computer resource for linking
laboratory discoveries to clinical practice is
ClinicalTrials.gov. Here one can find out over 7,700 clinical
trials in over 75,000 American communities, including the
purpose of the trial, the enrollment requirements, and the
telephone number of the investigator who can take on new
patients.
The system began in 1998. It was created by NLM with
initially the participation and support of all NIH Institutes,
and subsequently inclusion, too, of trials supported by the
major pharmaceutical manufacturers. The stimulus for creation
of this system was congressional; namely, the 1997 FDA
Modernization Act, which required that FDA, NIH, and NLM make
some such system available for serious and life-threatening
diseases.
Mr. Chairman and members, so far I have described three
major NLM computer-based information systems that provide the
fundamental infrastructure that connects doctors, scientists,
and patients with worthwhile writings and publications on human
health. This has worked well for, really, about 160 years, but
now a new science challenges us--the Human Genome Project. This
and similar genomic studies on literally thousands of animals,
plants, and microorganisms make our traditional books to some
extent inadequate.
The human genome alone contains billions of nucleotide
bases, tens of thousands of genes, hundreds of thousands of
biological proteins to do the work of the genes. I am sure my
colleague Francis Collins discussed this with you in earlier
hearings before the committee, and doubtless more skillfully
than I.
The simple point I want to make now is that genomic
information simply is not readable from printed books. It is
accessible only through a computer system that can present the
right portions of the data along with the desired
relationships.
This is comparable to the child looking at a drop of pond
water. The life of the teeming protozoa and bacteria is visible
to today's schoolchild just as it was to Leuwenhoek centuries
ago only through the lens of a microscope. At NLM, that
microscope to modern medicine is the National Center for
Biotechnology Information--NCBI.
NCBI was authorized by the Congress in 1989. It has the
responsibility to collect, annotate, and provide creative
access to all the human genome data from the U.S. and abroad,
as well as much else. The spectacular new anticancer drug
Gleevec, for example, came directly from clever use of these
data by scientists in academia and at Novartis Labs.
Taking together all of the NLM computer knowledge sources I
have mentioned, these are used online more than a million times
a day, 500 million uses per year.
I apologize for describing only the outline of these
systems, in order to stay within my time. I will submit a more
detailed description for the record. And, of course, if you
wish, I would be happy to go into more detail or do my best to
answer any questions.
Thank you for the privilege of appearing before you.
[The prepared statement of Donald A.B. Lindberg follows:]
Prepared Statement of Donald A.B. Lindberg, Director, National Library
of Medicine, National Institutes of Health, Department of Health and
Human Services
Thank you, Mr. Chairman, for this opportunity to brief you and the
Subcommittee about the National Library of Medicine, which is part of
the National Institutes of Health within the Department of Health and
Human Services. The role of the Library is central to the Nation's
health, and this is due in large part to the strong support we have
received in the Congress.
Progress in health care is a cyclical process, much as the title of
your hearing implies. It starts with a problem recognized by a medical
practitioner. This leads to experiments or experimental observations.
Scientists describe the results in what we now call the peer-reviewed
scientific literature. This informs the next cycle of experiments,
which in turn are read by clinicians to use in patient care and by
patients to inform their participation in the treatments and cures.
The National Library of Medicine--NLM--collects about 27,000
scientific periodicals from across the world and includes about 5,000
of the very best in the printed Index Medicus and the on-line Medline
file. The print version started in 1879, the computer version
effectively in 1965. NLM is the biggest medical library in the world.
The Library is a major scientific and medical resource in the U.S. and
abroad.
Let me give a measure of the scope of information that is available
to today's practitioner. Medline holds the descriptions of over 14
million scientific reports. Each year we add 500,000 new ones. Clearly
no doctor or scientist can possibly know all the discoveries that are
described in this library. Consider the case of a conscientious medical
practitioner. Let us imagine the doctor faithfully reads every night
two articles from the specialty journals he or she buys. May one
imagine then that the doctor has by this method kept up with progress?
Really, no. By the end of such a year, this good doctor will have
fallen 648 years behind on reading the new publications. So in reality
what good doctors do is search the NLM files--without charge and
available on Internet night and day--and read the best one or two
articles for the particular patient problem of the moment. We can tell
you countless examples of getting a tough diagnosis made through this
system, of selecting the best new drug for treatment, and even for
coming to understand new terms and ideas through reading the right
paper at the right time.
There is also a version of this knowledge that is aimed at
patients, families, and the public. We call this MedlinePlus. This is
organized into about 600 Health Topics.
An additional important computer resource for linking laboratory
discoveries to clinical practice is ClinicalTrials.gov. Here one can
find out about over 7700 clinical trials in over 75,000 American
communities, including the purpose of the trial, the enrollment
requirements, and the telephone number of the investigator who can take
new patients. The system began in 1998. It was created by NLM with
initially the participation and support of all NIH Institutes, and
subsequently inclusion too of trials supported by the major
pharmaceutical manufacturers. The stimulus for creation of this system
was the 1997 FDA Modernization Act, which authorized FDA, NIH, and NLM
to make some such system for all serious or life threatening disorders.
Mr. Chairman and members of the Subcommittee, so far I have
described three major NLM computer-based information systems that
provide the fundamental infrastructure that connects doctors,
scientists, and patients with worthwhile writings and publications on
human health. This has worked well for more than 100 years, but now new
science challenges us: the Human Genome Project. This and similar
genomic studies on literally thousands of animals, plants, and micro-
organisms make our traditional books to some extent inadequate. The
human genome alone contains billions of nucleotide bases, tens of
thousands of genes, hundreds of thousands of biological proteins to do
the work of the genes. I am sure my colleague Francis Collins from
NIH's National Human Genome Research Institute discussed this with you
during the May 22, 2003, hearing before this Subcommittee--and
doubtless more skillfully than I. The simple point I want to make now
is that the genomic information simply is not readable from printed
books. It is accessible only through a computer system that can answer
questions and present the right portions of the data along with the
desired relationships. This is comparable to the child looking at a
drop of pond water. The life of the teeming protozoa and bacteria is
visible to today's schoolchild just as it was to Leuwenhoek centuries
ago only through the lens of a microscope. At NLM, that microscope to
modern medicine is the National Center for Biotechnology Information
(NCBI), which was authorized by Congress in 1989. It has the
responsibility to collect, annotate, and provide creative access to all
the human genome data from the U.S. and abroad--as well as much else.
The spectacular new anti-cancer drug Gleevec, for example, came
directly from clever use of these data by scientists in academia and at
Novartis Labs.
Taking together all of the NLM computer knowledge sources I have
mentioned, these are used on-line more than one million times each day,
500 million uses per year!
I apologize for describing only the outline of these systems, in
order to stay within my time. I am submitting for the record a more
detailed description of these services. If you wish, I would happily go
into more detail now or do my best to answer any questions.
Additional Material for the Record
The National Library of Medicine has a number of databases and
services that are involved in biomedical research, health care
delivery, and information for the public. Three of the most important
are PubMed/MEDLINE, MEDLINEplus, and ClinicalTrials.gov.
PubMed/MEDLINE
The ``literature'' is the touchstone of progress in medical
research and practice. In the health sciences, the standard reference
source since 1879 has been NLM's published bibliography, Index Medicus.
For the past 30 years it has been supplemented by MEDLINE, an online
database derived from the Index Medicus. MEDLINE (and its backfiles) is
a constantly growing online resource that at last count contained more
than 14 million references and abstracts to articles from about 5,000
medical journals. When it appeared in 1971, it was truly a pioneering
effort in information technology, and it is today the most
authoritative entry point into an ever-expanding biomedical literature.
The MEDLINE files extend from the nineteen fifties to the present, and
the Library is now adding data from even earlier years. PubMed/MEDLINE
is by far the most widely used medical information database in the
world. Each day the 14 million records are queried more than 1.3
million times by 220,000 unique users. This is roughly a half billion
searches per year.
The sophisticated yet easy-to-use access system for searching
MEDLINE on the Web is called PubMed. Since the launch of PubMed in
1997, continual improvements have been introduced, and today it offers
a high degree of flexibility. For example, there are now Web links to
almost 4,000 of the journals represented in MEDLINE, allowing users to
have access to the full text of articles referenced in the database. In
addition, NLM has introduced CAM on PubMed, which provides the public
with access to citations from the MEDLINE database regarding
complementary and alternative medicine.
An increasingly popular service on the Web for the scientist and
health professional is an extension of PubMed known as PubMedCentral.
This is a digital archive of life sciences journal literature, created
by NLM's National Center for Biotechnology Information (NCBI).
Publishers electronically send peer-reviewed research articles, essays,
and editorials to be included in PubMedCentral. A journal may deposit
material as soon as it is published, or it may delay release for a
specified period of time. NLM undertakes to guarantee free access to
the material; copyright remains with the publisher or the author. There
are at present more than 50 journals in PubMedCentral, with more soon
to come online.
MEDLINEplus
The National Library of Medicine, in 1998, introduced an
information service directed at the general public--MEDLINEplus.
MEDLINEplus is a source of authoritative, full-text health information
from the NIH institutes and a variety of non-Federal sources. The main
features of MEDLINEplus: more than 600 ``health topics,'' from
Abdominal Pain to Yeast Infections, detailed and consumer-friendly
information about 9,000 brand name and generic and over-the counter
drugs, an illustrated medical encyclopedia and medical dictionaries,
directories of hospitals and health professionals, a daily health news
feed from the major print media, and 150 interactive and simply
presented tutorials (with audio and video) about diseases and medical
procedures. With one click in MEDLINEplus, one can even do a search
using PubMed/MEDLINE to retrieve references and abstracts (and in some
cases, full text) of biomedical journal articles. The most recent usage
figures for MEDLINEplus attest to its growing popularity among the
public and health professionals. In June 2003 there were more than two
million unique visitors who viewed almost twenty million MEDLINEplus
pages.
The Library has learned that many health professionals are finding
MEDLINEplus to be an excellent source of information. They use it to
keep current on medical subjects outside of their specialty. Others are
referring their patients to MEDLINEplus for up-to-date and
authoritative information about their health conditions. One reason
physicians feel comfortable in doing this is that they trust the
imprimatur of the National Institutes of Health and the National
Library of Medicine. They know that highly trained NLM information
specialists follow strict guidelines in selecting Web pages that are
appropriate to the audience level, well-organized, easy to use,
educational in nature, and not selling a product or service. NLM
receives a constant stream of testimonials from both the public and
health professionals about how useful--clear and comprehensive--the
system is.
Like MEDLINE, MEDLINEplus is a constantly evolving system. Links
are checked daily and new health topics added weekly. In the days
following September 11, entries on anthrax, smallpox, and other
bioterrorism-related subjects were quickly compiled and for a while
were even more heavily accessed than cancer information. The latest
improvement is MEDLINEplus en Espanol, introduced in September 2002. It
provides hundreds of links to health information in Spanish and is
being constantly expanded. The next major improvement in MEDLINEplus
will be to link users to local resources--city, county, state, and
regional agencies and support groups. In this regard, a successful
prototype of a statewide system has been developed with NLM support and
introduced in North Carolina.
ClinicalTrials.gov
The MEDLINEplus health topics have links to a database of ongoing
and planned scientific studies--ClinicalTrials.gov. Trials are
conducted when there is no proven treatment for a specific disease, or
to test which treatment works best for a particular disease of
condition. ClinicalTrials.gov is a registry of some 7,700 protocol
records sponsored by NIH and other Federal agencies, the pharmaceutical
industry, and nonprofit organizations in over 75,000 locations, mostly
in the United States and Canada, but also in some 70 other countries.
The stimulus that brought the FDA, NIH, and NLM together to create
ClinicalTrials.gov was the 1997 FDA Modernization Act. NLM designed the
system and coordinates all input from the National Institutes of Health
and, through the FDA, from industry.
ClinicalTrials.gov includes a statement of purpose for each study,
together with the recruiting status, the criteria for patient
participation in the trial, the location of the trial, and specific
contact information. The site is used extensively by patients and
health professionals, and hosts over 8,000 visitors daily. NLM has
worked with the Food and Drug Administration in crafting FDA's
``Guidance for Industry: Information Program on Clinical Trials for
Serious or Life-Threatening Diseases and Conditions.'' Within six
months following its release, ClinicalTrials.gov received over 400
protocols from pharmaceutical industry sponsors.
Human Genome Information
The National Center for Biotechnology Information, a component of
the NLM authorized by the Congress in 1989, designs and develops
databases to store genomic sequence information and creates automated
systems for managing and analyzing knowledge about molecular biology
and genetics. With the release of the ``working draft'' of the human
genome, the global research focus is turning from analysis of specific
genes or gene regions to whole genomes, which refers to all of the
genes found in cells and tissues. To accommodate this shift in research
focus, NCBI has developed a suite of resources to support the
comprehensive analysis of the human genome and is thus a key component
of the NIH Human Genome Project.
One of the principal resources is the GenBank database, a publicly
available, annotated, collection of all known DNA sequences. The NCBI
is responsible for all phases of GenBank production, support, and
distribution, including timely and accurate processing of sequence
records and biological review of both new sequence entries and updates
to existing entries. GenBank is growing rapidly with contributions
received from scientists around the world and now contains more than 15
million sequences and more than 14 billion base pairs from over 100,000
species; it is accessed on the web 200,000 times each day by some
50,000 researchers.
Scientists use not only the sequence data stored in GenBank, but
avail themselves of the sophisticated computational tools developed by
NCBI intramural investigators, such as the BLAST suite of programs for
conducting comparative sequence analysis. Entrez is NCBI's integrated
database search and retrieval system. It allows users to search
enormous amounts of sequence and literature information with techniques
that are fast and easy to use. Using this system, one can access NCBI's
nucleotide, protein, mapping, taxonomy, genome, structure, and
population studies databases, as well as PubMed, the retrieval system
for biomedical literature.
Continued progress in our understanding of the relation between
genes and disease requires that our information-handling capabilities
keep pace with the voluminous data being generated by scientists. The
assembled and annotated human genome sequence is allowing researchers
to identify diseases genes, decipher biological mechanisms underlying
disease, and design and develop therapeutic strategies for treating and
preventing disease.
Mr. Bilirakis. Thank you very much, Dr. Lindberg. And, of
course, there will be questions, and so you will have that
opportunity.
Dr. Rohrbaugh, please proceed, sir.
STATEMENT OF MARK L. ROHRBAUGH
Mr. Rohrbaugh. Chairman Bilirakis and members of the
subcommittee, I am pleased to present to you a synopsis of NIH
technology transfer activities both within the National
Institutes of Health and at institutions receiving NIH funds.
First, I would like to speak to the NIH mission, which is
to uncover new knowledge that will lead to better health for
everyone. In furtherance of this mission, we conduct our
technology transfer activities with the following goals in
mind--to expand fundamental knowledge about the nature and
behavior of living systems; to improve and develop strategies
for the diagnosis, treatment, and prevention of disease; and to
communicate the results of research to the scientific community
and the public at large with the goal of improving public
health.
One of the greatest challenges to realizing the promise of
the NIH mission is the ability to translate basic research
findings into drugs and therapies for patients. Translating a
new drug discovery from the laboratory to an initial clinical
evaluation in patients requires navigation of a multi-step
review process involving several critical implementation issues
over the course of 6 to 10 years.
This ``bench to bedside'' pathway often begins with the
transfer of an early stage technology developed in the course
of federally funded research to a private sector partner. While
this is but one step in a lengthy and expensive process, it is
often the step that jump starts the development of a new
therapeutic product.
The overwhelming majority of the NIH budget--over 80
percent--is devoted to the support of scientists at
approximately 1,700 organizations. This is what is known as our
extramural program. A much smaller portion of our budget--
slightly less than 10 percent--supports research and training
conducted by the Federal scientists at NIH facilities. This is
known as our intramural research program. I believe it is
important to make this distinction while discussing technology
transfer activities, because these two areas are governed by
different legislative authorities.
In its broadest sense, technology transfer is the movement
of information and technologies from research findings to
practical application, whether for further research purposes or
commercial products. At the NIH, we transfer technology through
publications of research results, exchange of data, sharing
materials, public-private partnerships, as well as the
patenting and licensing of technologies.
The NIH Office of Technology Transfer administers over
1,500 active licenses and approximately 2,400 patents and
patent applications. In fiscal year 2002, we received more than
$51 million in royalties from licensees. This accounts for
about two-thirds of the royalties collected by all Federal
laboratories combined.
About 200 products have reached the market that include
technologies licensed from the NIH; 17 of these are vaccines
and therapeutics. We view these products as the best and
ultimate measure of our success in facilitating the transfer of
technologies that the private sector develops into products
that benefit the public health.
This leads me to a brief discussion of the Bayh-Dole Act of
1980, which applies to recipients of Federal funds. As you
mentioned, Mr. Chairman, the Act provides incentives to move
federally funded inventions to the private sector where they
benefit the public. With a few exceptions, the legislation does
not prescribe methods to be used in the licensing of these
inventions, but the institutions must agree to pursue practical
application of inventions, and to provide the U.S. Government
with a royalty-free right to use the inventions for government
purposes.
That Federal Government right does not extend from the
federally funded technology to the final product, except in
those rare cases where the technology is the final product.
Moreover, this government right applies only to the patent--
that is, the intellectual property--not to the materials
themselves that constitute the physical embodiment of the
invention. In most cases, a federally funded technology is
combined with other intellectual property or know-how, often
proprietary to a company, to develop the final product.
NIH-funded technology is usually at the earliest stage of
development and requires much further investment to bring the
technology to the marketplace. Thus, technology transfer is a
high-risk venture, and few inventions ultimately result in
products that reach the marketplace, yet the NIH has been
fortunate in having a number of its technologies licensed and
incorporated into methods of making, administering, or as
components of new products.
In summary, the field of technology transfer facilitates
the movement of research findings to promote further research
or to develop them further into products of use to the public.
It is through our statutory framework, unique institutions, and
public-private partnerships that the Nation has created the
most envied research enterprise in the world.
I can assure you, Mr. Chairman, and members of the
subcommittee, that the NIH is committed to its mission of
improvement of public health and will utilize all of the
mechanisms it has to achieve this mission.
I thank you for the opportunity to come before you today,
and I welcome any questions you may have.
[The prepared statement of Mark L. Rohrbaugh follows:]
Prepared Statement of Mark L. Rohrbaugh, Director, Office of Technology
Transfer, Office of the Director, National Institutes of Health, U.S.
Department of Health and Human Services
Chairman Bilirakis and Members of the Subcommittee, I am pleased to
present to you a synopsis of NIH technology transfer activities both
within the National Institutes of Health (NIH) and at institutions
receiving NIH funds. I would also like to refer the Subcommittee to a
report developed by the NIH, with input from patient advocacy groups,
academia, and industry, on ensuring that the taxpayers' interests are
protected. This report, titled ``A Plan to Ensure Taxpayers' Interests
are Protected,'' was submitted to the Senate Appropriations Committee
in July 2001 and provides excellent background information on the
nature of Government-funded research and drug discovery, the history of
Federal agency technology transfer legislation, including the Bayh-Dole
Act, and the ways in which the NIH ensures that the American taxpayers
benefit from our technology transfer activities.
First, I would like to speak to the NIH mission, which is to
uncover new knowledge that will lead to better health for everyone. In
furtherance of this mission, we conduct our technology transfer
activities with the following goals in mind: (1) to expand fundamental
knowledge about the nature and behavior of living systems; (2) to
improve and develop strategies for the diagnosis, treatment, and
prevention of disease; and (3) to communicate the results of research
to the scientific community and the public at large with the goal of
improving public health.
One of the greatest challenges to realizing the promise of the NIH
mission is the ability to translate basic research findings into drugs
and therapies for patients. Translating a new discovery from the
laboratory to an initial clinical evaluation in patients requires
navigation of a multi-step review process involving several critical
implementation issues over the course of six to ten years. These
include issues relating to preclinical efficacy evaluation, drug
production, preclinical safety assessment, regulatory documentation and
approval, protocol design and approval, and a range of logistical
issues regarding execution of the trial itself. This ``bench to
bedside'' pathway often begins with the transfer of an early-stage
technology developed in the course of federally-funded research to a
private-sector partner. While this is but one step in a lengthy and
expensive process, it is often the step that ``jump-starts'' the
development of a new therapeutic product.
Our success in meeting the goals of our technology transfer
activities depends on the ability to disseminate and share research
findings with the research community and, when possible, to transfer
findings into research and diagnostic tools and devices, and to assist
in the development of therapeutic drugs and vaccines. Despite the
lengthy and expensive process to bring research findings to use by the
research community and the public, the NIH and federally-funded
institutions have been able to bring new technologies forward to
enhance the research enterprise and public health. This is due in part
to the enactment of legislation to overcome a number of the issues that
hampered research and development and the licensing of federally funded
technologies for further development into products. Prior to the
passage of the Bayh-Dole Act in 1980, many inventions arising out of
government research sat on the shelf and were never commercialized into
products to treat patients. Since 1980, these incentives have paved the
way for the development of many new drugs, vaccines, and medical
devices. These activities have also stimulated economic development and
the creation of new jobs in the United States. My remarks will provide
you with several examples of NIH technologies that have been of benefit
to public health, and other speakers will be able to enumerate the
successes they have been able to produce with Federal research funds.
The overwhelming majority of the NIH budget, over 80%, is devoted
to the support of more than 200,000 scientists and their collaborators
in the extramural research community who are affiliated with
approximately 1700 organizations, including universities, medical
schools, hospitals, and other non-profit and for-profit research
facilities located in all 50 states, the District of Columbia, Puerto
Rico, Guam, the Virgin Islands, and points abroad. This is what is
known as our extramural program. A much smaller portion of our budget,
slightly less than 10%, supports research and training conducted by
Federal scientists at NIH facilities. This is known as our intramural
research program. I believe it is important to make this distinction
when discussing technology transfer activities, because these two areas
are governed by different legislative authorities.
In its broadest sense, technology transfer is the movement of
information and technologies from research findings to practical
application, whether for further research purposes or commercial
products. At the NIH we transfer technology through publications of
research results, exchange of data, sharing of materials, public-
private partnerships, as well as patenting and licensing technologies.
Technologies licensed from the NIH include the HIV Test Kit, marketed
by several companies including Abbott; Videx (ddI), marketed by
Bristol-Myers Squibb for the treatment of HIV/AIDS; Vitravene, marketed
by Isis Pharmaceuticals for the treatment of cytomegalovirus infections
of the eye and the first product of its class; Zenapax, manufactured by
Hoffman La Roche for the treatment of non-Hodgkin's lymphoma and the
first radioimmunotherapy to be approved; and Fludara, marked by Berlex
as a treatment for chronic lymphocytic leukemia (CLL).
I direct the central technology transfer office at the NIH, which
is located in the NIH's Office of the Director. Our responsibilities
can be viewed as twofold. First, we are responsible for the
identification, evaluation, protection, marketing, and licensing of
technologies arising out of NIH laboratories to achieve the agency's
mission. As a part of that activity, we monitor our licensees' progress
and collect royalties from licensed technologies. Secondly, we provide
policy direction to the agency and to scientists and administrators
receiving NIH funding. We also represent the Department of Health and
Human Services on technology transfer matters. Other technology
transfer transactions, such as the negotiation of agreements to
transfer materials and collaborations with private institutions, are
conducted by technology transfer staff who are employed by the
individual Institutes and Centers at NIH.
The activities of the Office of Technology Transfer are carried out
by a well-qualified staff and supported by contractors, including 11
patent law firms. Members of our professional staff generally have at
least one advanced degree, such as Ph.D., J.D., or M.B.A., and many
have more than one advanced degree. Our staff administers over 1500
active licenses and approximately 2,400 patents/patent applications. In
Fiscal Year 2002, we had 331 Employee Invention Disclosures, 173 patent
applications filed in the United States, and 88 patents issued, and we
executed 231 license agreements.
While we have these metrics as outputs of our activity, we have
initiated through the GPRA process the development of a new metric to
measure the ultimate outcomes of our activities. We have developed a
system of case studies for technologies developed at the NIH and
licensed to private sector partners for further development and
commercialization. To date, we have completed two case studies: Havrix,
the first vaccine against Hepatitis A; and Synagis, a therapeutic for a
lower respiratory tract infection in infants and small children. This
new metric provides a more complete view of the technology transfer
process by providing a time line for the development of a technology
into a final product, a description of the respective roles of the NIH
and its private sector partner, and the impact of that new product on
public health. It is that final measure that, we believe, provides the
best indicator of success, since it addresses the NIH mission to
improve public health. We expect to have three additional studies on
our web site by the end of the calendar year, and we will be
contracting for support to accelerate this process for all of products
and materials that have reached the market utilizing at least in part
technologies licensed from the NIH.
NIH intramural research technology transfer activities, as is the
case for all federal research and development technology transfer
activities, are governed by the Stevenson Wydler Act, the Federal
Technology Transfer Act, and subsequent legislation. The original
legislation was enacted in 1980 as part of an economic stimulation
package for the U.S. economy. The legislation calls for the Federal
laboratories to review their research findings to determine if they
constitute new inventions, whether patent protection should be sought,
and finally to use mechanisms such as licensing to move these new
technologies to the private sector for further development and
commercialization.
Our license agreements provide rights to use NIH technologies in
return for royalty fees and, in the case of commercialization licenses,
a commitment to bring the technology to the market. Fees are assessed
usually on an annual basis throughout the term of the license or when
certain milestones are reached. When a product reaches the market, our
licenses call for a negotiated percentage of sales to be paid to the
NIH. We have been able to generate strong returns from licensing
activities. In Fiscal Year 2002, NIH generated $51M in royalty income.
That amount represented about two-thirds of the royalty income
generated by all the Federal laboratories combined. Over the past 9
years, we have generated over $325M in royalty income. By law, we pay a
prescribed portion of royalty income to inventors, and the remainder of
royalty income is used for technology transfer activities and for
further research.
Our licensing policies, including the manner in which we grant
licenses and structure the terms of those agreements, are also designed
to promote the overall mission of the NIH. Exclusive licenses, which
constitute a small portion of our total license portfolio, are granted
when necessary as an incentive for a company to invest in the high-
risk, long-term commercial development of a particular technology.
While our statutory authorities for licensing inventions prescribe the
conditions under which we can grant exclusive licenses, we go a step
further in ensuring that exclusive licenses encourage the broadest
development of new technologies for the public good. For example, the
scope of a license to a single technology with broad applicability is
usually limited to include only those aspects of the technology the
company intends to develop and demonstrates the capability to develop.
Thus, multiple aspects of a single technology may be exclusively
licensed to multiple parties. For example, a technology for treating a
variety of cancers might be licensed to one company for lung cancer
therapeutics and to another for liver and pancreatic cancer
therapeutics. In addition, we require licensees to provide a plan to
ensure the rapid development of the technology. Our monitoring group
has post-licensure responsibilities to ensure that the company
reasonably complies with these terms.
This leads me to a brief discussion of the Bayh-Dole Act, which
applies to recipients of Federal funds. This 1980 Act brought about a
major change in governmental operations by permitting institutions
receiving Federal funding for research and development, as grantees and
contractors, to retain title to any invention developed with the use of
Federal funds. Prior to this time, title to these inventions generally
reverted to the U.S. Government, where they rarely were moved to the
private sector and thus did not benefit the public.
In return for the right to hold title to inventions developed with
Federal funding, institutions agree to pursue practical application of
those inventions and to provide the U.S. Government with a royalty-free
right to use the invention for Government purposes. That Federal
Government right does not extend from the federally-funded technology
to the final product, except in those rare cases where the technology
is a final product. Moreover, this Government license right applies to
only the patent, that is, the intellectual property, not the tangible
property that constitutes the physical embodiment of the invention.
The legislation did not prescribe methods to be used in the
licensing of those inventions, with a few exceptions. Institutions
electing title are required to give preference to small, U.S.
businesses in licensing their technologies; exclusive licensees are
required to manufacture their product substantially within the US when
a product is to be used or sold in the US; licensing terms should not
encumber future research and discovery; and non-profit organizations
must obtain Government approval to assign title to third parties.
In most instances, NIH-funded technology, both in our intramural
and extramural activities, is at the very early stage of development
and requires much further research and development to bring the
technology to the marketplace. The discovery may be a basic research
finding without any animal testing or human clinical trials, a method
for making or using a material, or a material that is only a part of
the total technology that must be brought together to create a new
product. As early stage technologies, they are highly risky projects
for anyone to pursue and require a great deal of time and money to
bring them to fruition. The closer a technology is to the marketplace,
the lower the risk and cost to the licensee, and the more valuable the
technology from a royalty standpoint.
However, in both academia and Federal laboratories, technology
transfer is a high-risk venture, and few inventions ultimately result
in products that reach the marketplace. The NIH has been fortunate in
having a number of its technologies licensed and incorporated into the
process of manufacturing, administering, or as one of the ingredients
in making new prescription drugs, therapeutics, and vaccines. In most
cases, a federally-funded technology is combined with other
intellectual property or know how, often proprietary to a company, to
develop a final product.
Due to the regulatory requirements on technologies that involve
products used in humans, the development of biomedical technologies may
take from 7 to 10 years to reach the market, if it ever reaches the
market due to a high failure rate. This makes the biomedical technology
development process expensive and risky.
The NIH has been quite successful in its pursuit of technology
transfer activities and is viewed by many as one of the premier
biomedical technology transfer operations in the world. We are pleased
to report that NIH technologies have been licensed as part of the
development of 17 prescription drugs and vaccines approved by the FDA.
Again, we have not developed the final products; our technology is only
a part of the process for making or administering the product or
ingredients incorporated in the product. Overall, about 200 products
are sold utilizing, at least in part, technologies licensed from the
NIH.
I would also like to bring to your attention our biomedical
research resources policy, known as our Research Tools policy. It is an
important part of NIH's role to serve as a provider of technical
assistance to NIH and recipient institution scientists and
administrators. This policy arose from concerns in the scientific
community that there appeared to be reluctance on the part of some
institutions and researchers to share unique research tools at all or
at least under reasonable terms. These tools include cells lines,
strains of mice, reagents, monoclonal antibodies, and in some instances
software. In response to the concern, the NIH asked a subgroup of the
Advisory Committee of the Director to conduct a review. Their review
found that these concerns were well founded and consequently
recommended that the NIH develop guidelines for the research community
to follow in combating the problem.
In 1999, NIH issued a document entitled, ``Sharing of Biomedical
Research Resources, Principles and Guidelines for Recipients of NIH
Research Grants and Contracts.'' The policy applies to research tools
developed with NIH funds and calls for the sharing of these tools among
non-profit organizations with minimal terms and impediments. In the
passage of the Technology Transfer Commercialization Act of 1999, P.L.
106-404, language was added in support of the tools guidelines when
they amended the Bayh-Dole Act's purpose. The language was changed to
state that inventions made under Federal funding are to be brought to
practical application in a manner to promote free competition and
enterprise without unduly encumbering future research and discovery.
This policy is now a term and condition of NIH grants, and the
latest information we have gathered indicates that this policy has
significantly improved the sharing of materials between non-profit
institutions, has improved sharing between non-profit institutions and
for-profit entities, and reportedly has also improved the sharing by
for-profits with non-profit entities. We continue to monitor this area
to ensure that our recipients are complying with the intent of the
policy.
While my comments have centered mostly on licensing activities, I
have mentioned other technology transfer mechanisms including public-
private partnerships, such as Cooperative Research and Development
Agreements (CRADAs) and Clinical Trial Agreements. I would be pleased
to provide information on these mechanisms if the Subcommittee so
desires.
In summary, the field of technology transfer combines legal,
business, and scientific skills to bring about the movement of research
findings to promote further research or to develop them further into
products of use to the public. It is through our statutory framework,
unique institutions, and public-private partnerships that the Nation
has created the most envied research enterprise in the world. I can
assure you, Mr. Chairman and members of this Subcommittee, that the NIH
is committed to its mission of improvement of public health and will
utilize all of the mechanisms it has to achieve that mission. I thank
you for the opportunity to come before you today and I welcome any
questions you may have.
Mr. Bilirakis. Thank you very much, Doctor.
Dr. Barker?
STATEMENT OF ANNA BARKER
Ms. Barker. Good morning. Thank you, Mr. Chairman and
members, for the opportunity to be here today to discuss a new
task force that the NCI has established with the Food and Drug
Administration. I have the privilege of co-chairing that task
force, along with Dr. Mullin, who will speak after me.
Before highlighting the mission and work of this task
force, I would like to focus just briefly on the stunning
advances in biomedical research over the past few years that
recently led our Director at the National Cancer Institute,
Andy von Eschenbach, to challenge the cancer community with a
goal, and that goal is to eliminate suffering and death due to
cancer and to do it by 2015.
That is a daunting and challenging goal for all of us. Why
do we believe that that is a feasible goal, even though it is a
major challenge? The reason is that progress in research over
the past few years has led to unimagined advances across the
entire research continuum of discovery, development, and
delivery. As a result, we have reached an inflection point in
research, meaning that progress from this point forward can be
unprecedented and nearly unimagined.
The sequencing of the human genome, which you heard about
from Francis Collins recently, and associated progress in new
areas such as genomics and proteomics, are allowing us to
dissect out the genetic changes and mechanisms that actually
produce cancer. We now understand that cancer is a process--a
process with multiple opportunities to develop new, more
effective interventions to detect, treat, and prevent this
disease.
The development of targeted therapies and preventives for
cancer is really within our grasp. For the first time in our
national effort to conquer this devastating disease, we have
proof of concept. What do I mean by that? With new targeted
drugs, such as Gleevec that you just heard about from Dr.
Lindberg, we are on the threshold, we believe, of a paradigm
shift in the way we treat cancer. This new approach is based on
targeting specifically molecular defects in tumor cells, and we
believe this will allow us to move from a model of toxic,
moderately effective agents, to highly efficacious drugs with
minimal toxicity.
Genomics and proteomics, combined with progress in
bioinformatics, immunology, nanotechnology--and I could go on--
other areas of science, also offer us the ability to detect
cancer early before it metastasizes, and to adopt rational
approaches, finally, for preventing the disease.
To achieve this goal of eliminating suffering and death
from cancer, we must match the extraordinary advances in basic
science fueled, in large measure, by the doubling of the NIH
research budget over the last 5 years. We must also make
progress in translating that research into patients and
delivering those agents to people in need.
To optimize and hopefully accelerate efforts to translate
these advances from the laboratory into the clinic, we have
undertaken a range of new initiatives. Our new partnership with
the FDA is one of those initiatives. There are others.
NCI has a long history of working with the FDA to deliver
safe, more effective drugs to patients as soon as possible. For
example, a currently ongoing program at the NCI and the FDA in
clinical proteomics is allowing our agencies to jointly provide
the foundation for the new development of proteomics-based
diagnostic technologies.
These new revolutionary technologies developed through the
clinical proteomics program have generated protein
fingerprints, or patterns, that may provide early warnings of
cancer and offer new ways to measure drug side effects. This
collaboration has yielded the identification of more than 130
proteins in cancers of the breast, ovary, and prostate, the
change in types and amounts as the cells in these tissues grow
abnormally, and they can be detected.
NCI and FDA staff will continue to develop this particular
program and use it as a foundation, along with others, to build
initiatives in other areas, such as diagnostic imaging and
molecular targeting.
Although it is early in the work of this taskforce, Dr.
Mullin and I and our colleagues have just begun. We have
identified several areas of common interest across this
continuum of research, including the development of a formal
interagency agreement, which will allow us to do several
things, common bioinformatics platforms, and joint programs to
further optimize the processes that we undertake to develop
drugs, including science-based models for endpoints to assess
clinical benefit patients.
And, finally, joint training programs and appointments for
staff--although I don't have time during my opening comments to
discuss each of these activities, we anticipate that each of
these focus areas will be valued in our joint efforts. For
example, a common bioinformatics platform will be key to
improving the reporting of data across the continuum of drugs
and device discovery and development, especially in areas such
as reporting of clinical trials.
This is a key step in evaluating the safety and efficacy of
new drugs and technologies in patient populations. Since both
agencies have significant strengths in these areas, we are
exploring ways to leverage both of our capabilities.
The task force will also examine science-based strategies
that could enable the development of standard approaches for
evaluating potential biomarkers of clinical benefit. Some of
these biomarkers and technologies may some day serve as
surrogate endpoints for the conventional measures that we
usually use to measure clinical benefit and clinical trials.
Finally, all of these initiatives will benefit from staff
training and joint appointments of staff and fellows, who will
have training rotation at both agencies. The task force is
currently assessing existing programs that offer opportunities
for joint training and appointments, as well as determining
needs for efforts in areas such as new technologies.
In conclusion, the goal of this task force is to ensure
that the NCI and the FDA work together more effectively than
ever before for the benefit of cancer patients and their
families. With over 1.4 million Americans expected to be
diagnosed with cancer this year, and 560,000 people expected to
die from this disease--1,500 people today--NCI is committed to
meeting the challenge of eliminating suffering and death from
this tragic disease.
We anticipate that this new alliance with the FDA will
facilitate a seamless continuum across discovery, development,
and delivery of new cancer drugs and devices that will be
needed to achieve our goal.
Our Director, Dr. von Eschenbach, features on the cover of
our plan for 2004 made the following statement, ``When I look
into the eyes of a patient losing the battle with cancer, I say
to myself it just doesn't have to be this way.'' We are
committed to ensuring that it just doesn't have to be this way.
Thank you again for this opportunity to discuss this new
initiative. We are excited about this new collaboration with
the FDA. And I would be happy to answer any questions when we
get to the question period.
Thank you very much.
[The prepared statement of Anna Barker follows:]
Prepared Statement of Anna Barker, Deputy Director for Strategic
Scientific Initiatives, National Cancer Institute, National Institutes
of Health, Department of Health and Human Services
Good morning, I am Dr. Anna Barker, Deputy Director for Strategic
Scientific Initiatives for the National Cancer Institute (NCI) of the
National Institutes of Health within the Department of Health and Human
Services, and Co-chair of the NCI/FDA Oncology Task Force.
Thank you, Mr. Chairman and distinguished members of the
Subcommittee, for the opportunity to be with you this morning to
discuss the National Cancer Institute's recent announcement of the
formation of joint Task Force with the Food and Drug Administration
(FDA). The mission of the Task Force is to work together to explore
areas of mutual interest and responsibility that could better inform
and optimize the development and review processes for new cancer drugs
and technologies. The scope of this Task Force includes several areas
of common interest including the extension of current collaborations
and the development of: 1) a formal interagency agreement; 2)
bioinformatics platforms; 3) joint programs to further optimize each
agency's research and regulatory processes; 4) science-based models for
endpoints to assess clinical benefit in patients; and 5) joint training
programs and appointments for staff. NCI is committed to meeting the
challenge of eliminating suffering and death due to cancer by 2015; and
we anticipate that this collaboration with the FDA will help to achieve
that goal by providing safe, more efficacious cancer drugs to patients
sooner.
With over 1.4 million Americans diagnosed with cancer each year,
NCI recognizes the need for a closer collaboration with the FDA in
order to best serve patients' needs. NCI's goal, in furthering all of
its collaborations with the FDA, is to work jointly to improve
communication and outcomes in key areas of cancer drugs, especially
targeted agents and diagnostics development. This alliance with the FDA
will focus on the development of a seamless continuum between
discovery, development, and delivery of new cancer drugs and devices.
Exponential growth in biomedical research and the explosion of
enabling technologies have resulted in a ``new science'' of oncology.
Since there is still a great deal that we must learn about cancer, we
must continue to support the biomedical research that drives this
engine of discovery. In parallel, it is critical that we translate our
understanding of cancer beyond the cell into the individual and into
specific populations. The sequencing of the human genome and our
sustained investment in all areas of biomedical research have led to an
ever-increasing fundamental understanding of cancer as a disease
process. This foundation of knowledge now provides us with multiple
opportunities to intervene at various steps of this process through the
development of new drugs and technologies to detect, prevent, and treat
cancer. We must capitalize on this 21st century ``inflection point'' in
cancer research, accelerate the translation of knowledge into new
interventions for cancer patients, and ensure that they are delivered
to all who are in need.
The collaboration between the NCI and the FDA will be formalized
through an interagency agreement. Interagency agreements between
government agencies allow and facilitate the exchange of services,
supplies, advice, counsel, and funds. NCI has several successful
Interagency Agreements already in place with the FDA, including the
Cooperative Center for Biologics Evaluation and Review-NCI Microarray
Program for the Quality Assurance of Cancer Therapies and other
Biological Products, and the FDA-NCI Clinical Proteomics Program. The
clinical proteomics initiative has allowed our agencies to jointly
provide the foundation for the development of proteomics-based
diagnostics technology.
Proteomics is the study of the proteins that are produced by cells
to carry out the specific tasks that underlie most of our life
processes. New technologies that were developed through the Clinical
Proteomics Program have generated protein fingerprints that may provide
early warnings of cancer and offer new ways to measure drug side
effects. This collaboration has yielded the identification of more than
130 proteins in cancers of the breast, ovary, and esophagus that change
in types and amounts as the cells in these tissues grow abnormally. The
assessment of these patterns may provide new means of diagnosing and
treating cancers earlier. Most recently, this collaboration has
produced a new technique that may allow physicians to monitor patients'
responses to molecularly targeted drugs. In one study, researchers
successfully identified specific proteins that may be useful in
monitoring patients treated for breast and ovarian cancer. This
approach could assist physicians in monitoring patients on therapy to
determine if a particular drug is working effectively. The NCI-FDA
proteomics team has developed new tools for visualizing and analyzing
protein patterns that reduces the risk of error, increases
productivity, and provides an efficient method to analyze large sets of
protein data. NCI and FDA staff will continue to develop this clinical
proteomics collaboration and use it as a foundation to build
initiatives in other areas, such as diagnostic imaging and molecular
targeting.
The FDA-NCI Task Force will also explore opportunities to
facilitate the sharing of information technologies and tools that may
further optimize the drug and device development process. To this end,
the Task Force has established a working subgroup to examine the
potential of creating an overarching and inclusive bioinformatics
structure that is capable of capturing and integrating data from
preclinical, pre-approval, and post-approval research across all the
sectors involved in the cancer drug development and delivery process.
Bioinformatics is a key linkage across the discovery, development, and
delivery continuum--and common data platforms for communication will be
key to future progress. A new NCI initiative, the NCI Cancer
Bioinformatics Grid (CaBIG), which will be piloted in a selected number
of NCI cancer centers and programs this year, will provide tools and
expertise to support the achievement of this goal.
Common bioinformatics platforms will serve to facilitate the
performance and reporting of clinical trials--a key step in evaluating
the safety and efficacy of new drugs and technologies in patient
populations. The Task Force also plans to identify opportunities to
optimize other interfaces that occur across the continuum of drug and
device development and delivery. An additional focus of the group's
efforts to optimize the work of all sectors is the further development
of biomarkers; which have the potential to optimize and accelerate both
the discovery and development of new targeted cancer drugs for
treatment--and to improve diagnostics for early detection of cancer.
The group will mutually examine science-based strategies that could
enable the development of standard approaches for evaluating potential
biomarkers of clinical benefit. Some of these biomarkers and
technologies may someday serve as surrogate endpoints for the
conventional measures of clinical benefit currently being used to
assess new agents and technologies. NCI and FDA will explore ways to
develop the science required for the development of evidence-based
standards and approaches to evaluate these endpoints. A portion of this
effort will also be dedicated to further study of standards and
processes that could facilitate the development of safe agents for
cancer prevention, especially chemoprevention.
Finally, all of these initiatives will benefit from staff training
and joint appointments of staff and fellows, who will have training
rotations at both agencies. The Task Force is currently assessing
existing programs that offer opportunities for joint training and
appointments as well as determining opportunities for new efforts in
areas such as new technologies.
In conclusion, the goal of this Task Force is to ensure that the
NCI and FDA work together more effectively than ever before--for the
benefit of cancer patients and their families. We have a tremendous
opportunity to optimize and hopefully to accelerate the development
process for new cancer drugs and diagnostics. Bridging the gaps between
research and regulatory processes benefits everyone involved,
especially cancer patients. Building on past collaborative efforts with
FDA, and working toward the development of a seamless continuum between
the discovery, development and delivery of safe and effective drugs,
will help the NCI achieve its goal of eliminating suffering and death
due to cancer by 2015.
Thank you again for this opportunity to discuss NCI's new
collaboration with FDA to optimize and accelerate the development of
safe and more effective drugs and technologies to detect, prevent, and
treat cancer. I will be happy to answer any questions that the
Subcommittee may have.
Mr. Bilirakis. Thank you very much, Dr. Barker.
Dr. Mullin?
STATEMENT OF THERESA M. MULLIN
Ms. Mullin. Good morning, Mr. Chairman, Ranking Member
Brown, and members of the subcommittee. I am Theresa Mullin,
the Assistant Commissioner for Planning at the U.S. Food and
Drug Administration.
And since January of 2003, I have been directing FDA's
development of a new strategic plan, have played the lead role
in coordinating the Agency's new initiative to ``Improve
Innovation in Medical Technology Beyond 2002.'' And I am co-
chairing with Dr. Barker the Interagency Oncology Task Force,
and we appreciate the opportunity to testify with NCI about our
collaborative efforts to facilitate drug development.
Today, I would like to provide FDA's perspective on why we
are entering into this collaboration and what we hope to
achieve.
FDA's primary role is to ensure the safety and
effectiveness of drug products through pre-market drug review
and post-marketing safety. Today I will focus on our role in
the pre-market phase.
There are several phases to drug development, and FDA
interacts with product sponsors all along the way. This enables
the sponsor to focus research on studies of compounds that are
likely to lead to approval. And after completing and analyzing
their research, sponsors, including NCI-funded researchers,
file an application with FDA. The application provides evidence
from clinical trials to demonstrate that a product is safe and
effective for its intended use.
By setting clear standards for the evidence that we need in
order to approve a product, we can take the guesswork out of
the process. Under the prescription drug user fee program, FDA
is committed to goals for fast review and action on submitted
applications. For example, we are committed to completing the
review and acting on 90 percent of submitted priority
applications within 6 months.
In 2002, FDA continued to meet those review goals, but the
number of approvals for truly new drugs is now at the lowest
level we have seen in about 10 years. This is directly related
to the decline in the number of applications submitted to FDA
for new drugs, new molecular entities, and biologic licensing
applications. But this is a worldwide phenomena right now.
This chart you see over here with the bars shows you the
trends in filed applications and those approved. The line shows
the number of filed applications, and this is just looking at
new molecular entities. That is the really new drug
applications and biologic licensing applications, and the bars
show the number of approvals for those kinds of products. And
you can see that there really is a pattern that follows. What
we get submitted to us is what we can work with for approvals.
But we think that this is temporary, because at the same
time that that is occurring the government and industry are
spending significantly increased amounts of funds on research
and development, and there are a lot of complex and innovative
new products in development, as Dr. Barker was describing and
others have described. And so we see this as an opportunity for
FDA and NCI to move more products to applications.
In January of this year, FDA launched an initiative to
improve innovation in medical technology, and that focuses on
trying to maximize our efficiency in reviewing and
communicating with sponsors, and also trying to put out the
best guidance possible for sponsors to speed development all
along the pipeline.
My second chart shows the drug development pipeline, and
the lettering in orange--it is too small for you to read I
think from where you are sitting, but it describes some of the
problems that sponsors may face in trying to develop products
all along the way. And below that we have in green, which I am
afraid you also can't see, what FDA--the kinds of actions that
FDA is trying to take all along the way to help products move
as quickly as possible.
And as part of that initiative, we will be clarifying
regulatory pathways for some emerging technologies, for
example, cell and gene therapies. And we are developing
guidance to help specify the clinical endpoints for clinical
trial design, and so that we can get the best quality
applications possible submitted, and that allows us to avoid
delays in approval and helps reduce development costs.
Our collaboration with NCI and the interagency task force
is really a great fit to what we are trying to do in this more
general way and allow us to expand and strengthen our work in
trying to develop new cancer drugs and helping with speeding
the drug--development of cancer products.
The NCI/FDA collaboration will provide FDA reviewers with
some exposure--additional exposure to state-of-the-art
technologies, and that will give them a better understanding of
those technologies for products in development. By the same
token, NCI researchers could benefit from hands-on experience
with the FDA review process to understand better the kinds of
evidence of safety and effectiveness that are looked for for
quick approval of new products.
Although the interagency task force is at its early stages,
we are considering several areas--I will be brief here, because
Dr. Barker has described them--but joint training and
fellowships, development of markers of clinical benefit,
including surrogate endpoints, information technology
infrastructure to better collect and share data, and improve
the development process.
We look forward to collaborating with NCI in building on
the Institute's cancer bioinformatics infrastructure to
streamline data collection, for example, integrating data
analysis for preclinical, preapproval, and postapproval
research. This spans all of the sectors in development and
delivery of new cancer therapies, and we are hopeful that that
collaboration will ultimately help reduce the reporting burden
for clinical investigators and improve the quality of the data.
The Tufts Center for the Study of Drug Development has
noted that faster development times and quicker decisions to
terminate unsuccessful compounds and higher success rates
provide industry with substantial savings in drug development.
But NCI is also engaged in development and, clearly, they
should also benefit from those opportunities. So the
discussions of our task force will probably yield additional
ideas for streamlining the process.
In conclusion, FDA's safety and effectiveness standards are
viewed by many as the gold standard, and FDA is recognized as a
world leader in both quality and speed of regulatory review. We
believe that FDA and NCI's new interagency oncology task force
will further our goals in providing new drugs for patients who
need them as swiftly and cost effectively as possible.
I am happy to answer any questions you have.
[The prepared statement of Theresa M. Mullin follows:]
Prepared Statement of Theresa M. Mullin, Assistant Commissioner for
Planning, Food and Drug Administration
INTRODUCTION
Mr. Chairman, Ranking Member Brown and Members of the Subcommittee,
I am Theresa Mullin, Assistant Commissioner for Planning at the U.S.
Food and Drug Administration (FDA or the Agency). I advise and assist
the Commissioner concerning the performance of FDA planning, evaluation
and economic analysis activities. Since the beginning of January 2003,
I have been directing FDA's development of a new strategic plan and
have played a lead role in coordinating the Agency's new initiative to
``Improve Innovation in Medical Technology Beyond 2002.'' I am also Co-
Chair of the National Cancer Institute (NCI)/FDA Interagency Oncology
Task Force, which involves senior staff from both agencies.
We appreciate the opportunity to testify with NCI about our
collaborative efforts to facilitate cancer drug development. As you may
know, we are at the very beginning of this new initiative, but this is
a goal that both agencies have shared. Today I will provide FDA's
perspective as to why we are entering into this collaboration and what
we hope to achieve.
FDA'S DRUG DEVELOPMENT PROCESS
FDA's primary mission is to protect and promote the public health.
One way we do this is by promptly and efficiently reviewing
investigational new drug applications (INDs) for clinical studies
within 30 days of submission by the product sponsor. In addition, FDA
reviews new drug applications (NDAs) and biologics license applications
(BLAs) and does so on an expedited basis for applications with priority
status, such as those for new cancer drugs. We also monitor on-going
clinical studies to ensure that subjects who volunteer for studies are
protected and that the quality and integrity of scientific data are
maintained.
There are several phases to drug development, and FDA makes itself
available to interact with product sponsors during this process (see
Attachment A, Drug Development Pipeline). Meetings requested by the
sponsor provide an important venue for communication. Formal meetings
were established by Congress under the FDA Modernization Act of 1997,
and FDA has committed to performance goals for such meetings under the
Prescription Drug User Fee program. These meetings can occur from the
pre-IND phase all the way to pre-NDA/BLA submission. FDA receives
requests for and convenes over 1,000 such meetings with sponsors each
year. Meetings with FDA can help sponsors to clarify research questions
that need to be addressed, identify earlier the unsuccessful compounds,
and focus research on studies of compounds that are likely to lead to
approval. The Tufts Center for the Study of Drug Development has cited
earlier consultation between FDA and sponsors as a key factor in
reducing drug development time. Tufts estimates that shifting 5 percent
of all clinical failures from Phase III/regulatory review to Phase I
would reduce out-of-pocket clinical costs by up to $20 million.
Upon completing and analyzing their research, sponsors, including
NCI-funded researchers, send us applications providing evidence from
clinical trials to demonstrate that a product is safe and effective for
its intended use. We assemble a team of physicians, statisticians,
chemists, biologists, microbiologists, pharmacologists, and other
scientists to review the sponsor's data and proposed labeling for the
drug. By setting clear standards for the evidence we need to approve a
product, we try to take the guesswork out of the process and help
medical researchers bring new products to American consumers more
rapidly.
Once a drug is approved for sale in the United States, our consumer
protection mission continues. We monitor the use of marketed drugs for
unexpected health risks. If new, unanticipated risks are detected after
approval, we take steps to inform the public and change how a drug is
used or even remove a drug from the market. We also monitor
manufacturing changes to make sure they will not adversely affect
safety or efficacy. We evaluate reports about suspected problems from
manufacturers, health care professionals and consumers.
As the pharmaceutical industry has become increasingly global, we
are involved in international negotiations with other nations to
harmonize standards for drug quality and the data needed to approve a
new drug. This harmonization can assist in reducing the number of
redundant tests manufacturers do and help ensure drug quality for
consumers at home and abroad.
CURRENT STATUS OF FDA NEW DRUG APPROVALS
By the end of 2002, FDA was able to meet all of the review goals
for NDAs and BLAs established under the Prescription Drug User Fee Act.
We evaluated many new drugs that offered important treatment options
for Americans. Thanks to the enormous growth in research investments,
more complex and innovative products are in development. We see this
situation as one of great opportunity, and FDA is doing its part to
help sponsors capitalize on the opportunities presented. However, we
are concerned that the number of approvals for truly new drugs is at
the lowest level in a decade, and this is directly related to the
decline in the number of new applications for drugs and biologics being
submitted to the Agency for approval. This trend is illustrated in the
bar chart depicted in Attachment B. This pattern is occurring at the
same time that the government is allocating significantly more
resources to promote research, and the pharmaceutical industry has
increased spending on research and development to more than $30 billion
per year.
FDA MEDICAL TECHNOLOGY INITIATIVE
In January of this year, FDA launched an initiative to improve the
development and availability of innovative medical products. We
recognize that early communication with sponsors is essential to
achieve the Agency's goal to further reduce delays and avoidable
product development costs, and also to improve the quality of new
product applications. With the complex new technologies in development,
FDA sees an opportunity to reduce the uncertainty for product
innovators, including small companies with limited experience bringing
a medical technology to commercial development. We are working to
clarify regulatory pathways for emerging technologies, by, for example,
working to further characterize, and define the dosing for new products
like cellular and gene therapies. Also, we think it would help sponsors
for FDA to update current guidance and provide new ones that specify
clinical endpoints, including surrogate endpoints, such as tumor
shrinkage, that will provide good evidence of safety and effectiveness
for new treatments for particular diseases. FDA hopes to facilitate the
development of new technology by addressing and clarifying regulatory
uncertainty and by increasing the predictability of product
development. Some of the steps FDA is taking under its new initiative
to more quickly facilitate the drug development process are listed in
Attachment A.
In addition to doing what we can to help sponsors improve the
quality of their data and submitted applications, the Agency is also
taking steps to further improve its application review process by
identifying and addressing the causes of avoidable delays in new drug
review. This month we expect to publish a request for proposals to
conduct both a retrospective analysis and a prospective evaluation of
our review process and to provide us with ideas for possible process
improvements based on comments from both FDA staff and drug sponsors.
NCI-FDA COLLABORATION
FDA is committed to finding better ways to get safe and effective
treatments to patients with life-threatening diseases as quickly as
possible. FDA's participation in the NCI-FDA Oncology Task Force is
consistent with the Agency's initiative to improve the development and
availability of innovative medical products. FDA's role is to help
ensure the safety and effectiveness of drug products through the pre-
market drug review process and through post-marketing programs. Through
basic and clinical biomedical research and training, NCI conducts and
supports programs to understand the causes of cancer; prevent, detect,
diagnose, treat, and control cancer; and disseminate information to the
practitioner, patient, and public. NCI's clinical research for new drug
development is also subject to FDA regulation and oversight.
The NCI-FDA collaboration will provide FDA with exposure to state-
of-the-art technology that will enable the Agency to have a better
understanding of new products in development. Similarly, NCI will
benefit from hands on experience with FDA's review process that will
help it to conduct and oversee research to provide evidence of safety
and effectiveness, resulting in faster development of approvable
products. We are hopeful that our collaborative efforts will result in
better communication between reviewers and researchers, which we
believe is essential to improving the development and availability of
innovative medical products. Though the Task Force is in its early
stages, we are considering several areas of collaboration including:
joint training and fellowships; developing markers of clinical benefit,
including surrogate endpoints; information technology infrastructure to
better collect and share data; and ways to improve the drug development
process.
Joint Training and Fellowships
Staff capabilities can be enhanced through collaborative training,
joint rotations, and joint appointments. We hope that bridging gaps
between research and regulatory processes will make the drug
development process more efficient. As noted above, early effective
communication between researchers and reviewers is critical in product
development. Cancer drugs are typically designated by FDA as priority
review products and are eligible to be designated as ``Fast Track''
products. Beginning in fiscal year 2004, FDA will be piloting two
programs to provide earlier FDA review and feedback for ``Fast Track''
products while they are still in development.
While a primary goal of the NCI/FDA collaboration is to provide
cross-fertilization between the two agencies, the Task Force will also
explore the possibility of a nationwide program to rotate fellows
through FDA and NCI who have completed their training in medical
oncology.
Developing Markers of Clinical Benefits
The Medical Technology Initiative that FDA announced last January
included a series of collaborative discussions with the American
Society of Clinical Oncology to identify appropriate endpoints for
clinical trial design for cancer therapies, by type of cancer and stage
of disease. NCI is also involved in this process. These identified
endpoints will be published in guidance documents. Such guidance
documents, developed in collaboration with other government and
academic organizations, the pharmaceutical industry, health
practitioners and patients, can help sponsors structure claims, offer
proven standardized approaches to evaluating efficacy, and give
insights into safety testing. In NCI-FDA's Interagency Task Force
discussions to date, there has been interest in further extending this
work and in further identification of clinically valid surrogate
endpoints.
NCI and FDA will also continue their current collaboration
involving proteomics, the discovery of protein markers in the blood
that can be used to detect and monitor disease course and drug
response. In addition, FDA's Center for Biologic Evaluation and
Research is currently collaborating with NCI on a Microarray Program
for the Quality Assurance of Cancer Therapies including therapeutic
cancer vaccines and other cellular and gene therapy biological
products. The Microarray Program has provided a foundation for the
identification of new molecular targets, understanding of the mechanism
of action of targeted cancer therapeutics, and characterization of
complex therapeutic cancer vaccines. As potency and identity of these
cancer vaccines is difficult to assign, the genomics (study of genes)-
based technology provides a novel approach to achieving this goal.
Information Technology Infrastructure
FDA looks forward to collaborating with NCI building on its cancer
bio-informatics infrastructure to streamline data collection,
integration and analysis for pre-clinical, pre-approval, and post-
approval research across all of the sectors involved in the development
and delivery of cancer therapies. We are hopeful that this
collaboration may ultimately reduce the reporting burden for clinical
investigators and improve the quality of reported data. Some proposals
being considered are: creation of a shared repository for clinical
investigator Curricula Vitae (CVs) to keep current and to eliminate the
requirement of repeated submissions of such CVs. Another proposal being
explored is for development of templates for INDs and clinical trial
protocols to simplify the process of creating and submitting these
documents and improve the quality of submissions. NCI grantees may also
be product sponsors that FDA regulates. Given this dual role, there may
be duplicative reporting requirements that we may be able to streamline
through this collaborative effort.
Improving the Drug Development Process
Tufts Center for the Study of Drug Development has noted that
faster development times, quicker decisions to terminate unsuccessful
compounds, and higher success rates would enable industry innovators to
reap substantial savings in the cost of new drug development. NCI is
the sponsor of many cancer studies regulated by FDA. They too can
benefit from faster development times, quicker decisions to terminate
unsuccessful products, and higher success rates.
CONCLUSION
The safety and effectiveness standards for drug review and approval
in the U.S. are viewed by many as the ``gold standard.'' FDA is the
recognized world leader in both the quality and speed of regulatory
review. The scientists at FDA constantly strive to maintain these high
standards and we believe that the new NCI-FDA Interagency Oncology Task
Force will further our goals of providing new life-saving drugs to
patients who need them as swiftly and cost-effectively as possible.
I am happy to answer any questions you may have.
Mr. Bilirakis. Thank you very much, Dr. Mullin.
I hear your testimony, and all I can think of is wow. Yet
at the same time, think back--I lost my sole surviving brother
this last April to lung cancer, and, you know, it makes me
wonder. You know, all of these good things are taking place,
but he wasn't helped.
Let me ask Drs. Barker and Mullin very quickly, is the task
force--has the task force been created--and it sounds like
gangbusters to me, so I commend you for it. But was it created
because the feeling was that there is just a lack of proper
coordination among NCI and FDA? What would you say there?
Ms. Mullin. I will speak first, if Dr. Barker----
Mr. Bilirakis. Yes, very quickly.
Ms. Mullin. I think we actually see that we have a lot of
good success, that it looks like a great opportunity to build
on what we have got already. There are a number of
collaborations going on, and we want to take it up to the next
level, I think, and do it more broadly. We see a lot of
synergy.
Mr. Bilirakis. Should the same thing be done regarding
other diseases, other institutes, etcetera?
Ms. Mullin. I think so, and I know our Commissioner, Dr.
McClellan, is reaching out. And we are looking for
opportunities to do this.
Mr. Bilirakis. Is he? Great.
Ms. Mullin. Yes.
Mr. Bilirakis. Okay. Dr. Barker, is there anything you
wanted to add?
Ms. Barker. I would just add, actually, I think it is more
opportunity than anything else. In the cancer arena especially,
we have a pipeline of a hundred, maybe thousands of
opportunities for new drugs and diagnostics. And I think we
want to do everything we can to help the FDA by bringing our
science forward in ways that can inform these processes.
And it helps that I think that within 24 hours actually of
Dr. McClellan's appointment, Dr. von Eschenbach was in his
office offering him the opportunity to work with him. Dr.
McClellan was enthusiastic about this, and the task force just
grew out of that almost immediately. So I think we are all
committed to this.
Mr. Bilirakis. That is terrific, and I do think it should
be considered for other diseases.
Dr. Lindberg, are you aware of any research materials
produced largely in part by federally funded projects that are
not made publicly available? And if they are, if that is the
case, why aren't they?
Mr. Lindberg. I don't, but there is a variety of mechanisms
involved. NLM really deals with the published scientific
literature, and generally speaking there is not a great amount
of delay in bringing forward those announcements.
In addition to the literature itself, of course, this
sometimes involves materials--organisms or tissues or
whatever--as an integral part of the research. And NIH has
taken the formal position of stating that it wants to encourage
the ready availability of both kinds of results of research
funded by public funds as quickly as possible.
Mr. Bilirakis. Well, you illustrate in your written
testimony how health care providers are able to access journal
articles on Medline in order to get up-to-the-minute
information, etcetera. Obviously, it is an undeniable benefit.
But I am curious about what type of doctors have been able to
take most advantage of this service. Are the patterns of
utilization different between doctors who practice in urban
areas versus those who practice in rural or frontier
communities?
And, of course, I would ask: does the Library have the
capability to track this type of information? Otherwise, you
wouldn't be able to answer my question, right?
Mr. Lindberg. We are concerned about all of those things.
Historically, actually, the Library has taken the point of view
that it would pay for the communication costs, even before
there was Internet, so that there was exact parity whether you
practice in a rural area or a metropolitan area, because the
communication costs were absorbed in what were earlier the
charges for the search.
We do, however, worry more about the availability of
computers and Internet connections on the part of the public,
because we think probably only half of the people really have
that access. And so we have initiated a string of experiments
with public libraries, because they are more numerous and they
are more likely to be at a community level, asking ourselves
whether the public would bring medical questions to the
library, what are the nature of the questions, how good are the
answers, how can we help.
And in all cases, we found that it is actually a very good
strategy. People do bring questions to the libraries. In many
cases, they get very, very good answers, and what worried me
was, how can we help? Because I was afraid that they were going
to say that we would like you to provide $10 interlibrary loans
to 100 million people.
But, in fact, the answer was that the public library people
would like instruction from the medical people on how to do
these sort of searches, and that, of course, is readily
available. So that is a somewhat long-winded answer to your
good question.
Mr. Bilirakis. Well, you have indicated a possible lack of
computers, but could a country doctor, for instance, pick up
the telephone and call the Library of Medicine and----
Mr. Lindberg. Oh, absolutely.
Mr. Bilirakis. [continuing] get the information that they
might need?
Mr. Lindberg. Yes, sir. Happens all the time.
Mr. Bilirakis. It happens all the time.
Mr. Lindberg. Yes.
Mr. Bilirakis. So my son who is an internist--I don't know,
how long has he been out of medical school now? Ten years I--
anyhow, he would know that the Library of Medicine is available
for this type of information?
Mr. Lindberg. I am pretty certain that he would. We get
about a million calls a day.
Mr. Bilirakis. I guess I will have to ask him that. You do,
a million calls a day?
Mr. Lindberg. Yes.
Mr. Bilirakis. Wow.
Mr. Lindberg. And of that, about 30 percent actually are
non-doctors, non-scientists, ergo members of the public. Of
course, we know we can all wear more than one hat. But
basically about a third of the use of the Library is now the
public, and we are very happy about that.
Mr. Bilirakis. Okay. Thank you. Thank you very much.
Mr. Brown?
Mr. Brown. Thank you, Mr. Chairman.
I would like to ask all four panelists one sort of
central--at least central in my mind--question. I would start
with the technology transfer of Taxol, which has been a very
successful--for the public and successful for Bristol-Meyers
and successful for the government--drug.
I think that the facts generally are well known--the GAO
report of earlier this summer. NIH invested $484 million on
discovering/developing Taxol, most of that from the National
Cancer Institute. Some of that money was to begin the clinical
trials. Bristol-Meyers told GAO, although GAO seems to look at
this number with a bit of skepticism, that once they were given
the drug to produce and market they spent somewhere in the
vicinity of a billion dollars, including their clinical trial
costs.
The government began the clinical trials. Bristol-Meyers,
during that period, provided--supplied the drug, $90 million or
so worth of the drug it cost them, and then, as I said, they
told--Bristol-Meyers has told GAO they spent about a billion
dollars total on the clinical trials.
Bristol-Meyers made $9 billion in profits. For several
years running, they made a billion dollars a year. But overall,
from 1993 to 2002, they made $9 billion. NIH negotiated a
royalty rate of five-tenths of 1 percent, which resulted in the
government getting back $35 million in royalties.
I would add also that of the $9 billion in profits in those
10 years, a significant amount of that came from the
government--Medicare, I assume, and hospital costs, because
Medicare, as we know, doesn't have a drug benefit. Medicare
paid Bristol-Meyers $687 million over the period 1994 to 1999.
I don't have the numbers for the entire 10 years.
So, in other words, we have a drug that taxpayers put
basically a half a billion dollars in--very quantifiable, very
proven number of dollars. We have a drug that was almost given
to a company, who has done a good job of developing it, further
developing and marketing. They claim a billion dollars; that
number is probably high. But even if it were a billion,
Medicare paid $600 million of that. So of $600 million, it
was--they made $9 billion in profits. Government gets a paltry
$35 million.
My question is: is that fair? Is that a good system that
way? And my more specific question is: should we consider a
larger but still modest return--royalty rate for the
government, considering what the government put in and what
Bristol-Meyers has reaped?
Now, understanding this doesn't happen every time, but when
it does, if Bristol-Meyers or any biotech firm or drug company
makes this kind of money, these kinds of huge profits off a
blockbuster drug, when the government has done almost all, if
not all, of the basic research and really discovered this
product, is there something we should do differently from the
way we do it now?
Mr. Lindberg. I don't think I can offer you any wisdom on
that topic. Sorry. I am just not an expert in it.
Mr. Brown. What about as a taxpayer?
Mr. Lindberg. Well, what I am remember is the people in the
street claiming that we are going to strip the planet of yew
trees because of Taxol. And I was grateful that the synthetic
chemists were able to make it in a lab. I think it is a great
outcome, and I don't know--I really don't know the answer to
your question, what is a fair return. I simply don't.
Mr. Brown. Dr. Rohrbaugh?
Mr. Rohrbaugh. Well, at the time that the National Cancer
Institute started working with Bristol-Meyers-Squibb, they were
looking for partners to move forward an important--what they
perceived as an important, potentially therapeutic,
chemotherapeutic drug. And it has been quite a success with
over a million people treated, primarily women, for ovarian and
breast cancer and now lung cancer.
It is a generic compound that is being combined with a
number of other therapies by many different companies in
treating now more than a million people. So from the
perspective of our mission to benefit the public health, this
has been a great success.
With respect to the return, the only mechanism we have to
receive a return is to license inventions made by government
scientists. And the only invention here that was made by a
government scientist was a method of administering the drug,
and this method was not required for FDA approval, it is not in
the packaging insert, it is not in the instructions.
It was only a small part of the total package, so to speak,
of the drug that went forward. And we licensed that technology
to Bristol-Meyers-Squibb for a reasonable amount, considering
the technology that we had licensed. But ultimately, our
mission is to benefit public health, and this has been a great
success.
Mr. Bilirakis. Dr. Barker? All right, yes. Very quickly, if
you can go--Dr. Barker?
Ms. Barker. It is a complex question, and I am not wise
enough to answer it in terms of the return on investment
issues. But I am able to tell you that Taxol is a revolutionary
drug in terms of the treatment of ovarian and breast cancer
specifically, and now lung cancer.
I have a personal story in that regard, actually. My
mother, who was suffering from breast cancer at that point, was
one of the first people on a clinical trial, and probably
gained an additional 2 years of life because of that drug.
So from our standpoint in the National Cancer Institute,
this was an extremely successful venture in terms of this
particular drug. So I think for us it was a success story.
Ms. Mullin. Mr. Brown, I don't think I have a good answer
to your question. It is a really difficult one. I think,
prospectively, it is hard to know how things will work out
often when you are developing a product, and in hindsight
things may look different as well.
Mr. Bilirakis. Mr. Buyer for 8 minutes.
Mr. Buyer. I don't villainize drug companies, so the answer
is not a difficult one. What is excluded, I think, out of the
proposition that Mr. Brown has given to you in that question is
that if we, as the government--i.e., you are going to take
public dollars and make this investment--we believe that in the
end we are going to improve the quality of life of our society.
And from that, there are tremendous benefits, both that are
tangible and intangible, whether it is quality of life and
productivity, and is it meaningful to have a mother for a
child. I mean, the list goes on and on and on. So get out the
pen and paper, Mr. Brown, and try to calculate all those other
things. That is what I would ask.
But, you know, it is a lot more fun in politics to
villainize somebody or something out there. That is the
politics of it, and that is what is unfortunate, and it just
turns my stomach. I applaud your answers.
I do have a question that is outside of the scope perhaps
of the hearing. It was sort of stimulated as I was listening to
your testimonies. The more you want to collaborate, that is all
wonderful. The access to the Library, that is all wonderful.
What was stimulated in my thinking--and I don't know the answer
to this question that I am about to ask--is about your
information technology enterprise architecture.
So you can talk about how you want to collaborate and talk
to each other, but if under HHS, and you have got NIH and CDC
and HRQ and FDA, can you all talk to each other in an architect
enterprise? And then, you have got institutes below each of
them--let me just ask the two doctors. Here we have got Center
for--we have got the Cancer Institute and FDA. Can you all talk
to each other? Can you send e-mail? Can everybody talk to
everybody within----
Ms. Mullin. Everybody is on the same network. Yes, we can
pull up names on our, you know, Outlook and every----
Mr. Buyer. So everyone within HHS----
Ms. Mullin. Yes.
Mr. Buyer. [continuing] is all on the same enterprise
architecture, there are no little cultures out there that are--
that you can't access.
Ms. Mullin. We certainly have a lot of things in common at
this point, common platforms.
Mr. Buyer. That is great.
Ms. Barker. I think the challenge for us in science
actually is the explosion of data from genomics and proteomics
in areas of science that has evolved very quickly has prompted
us specifically at the Cancer Institute to create a grid to
connect our cancer researchers, specifically the physicians
with the scientists.
And so that is a challenge that we are actually rolling out
this year, a new information grid that is--but it is totally
connected to everything else we just talked about. So we are
actually in pretty good shape, I think.
Mr. Buyer. So between your hardware, your storage, and your
servers, and your software, it is all compatible, and you all
can talk to each other, and there are no problems?
Ms. Mullin. I think that that is a major initiative and
goal for our department, and in following the President's
management agenda. But I know that HHS is working very
diligently to--we have a lot of things in common. We are
working to have everything possible that makes sense to have
common and interconnected.
Mr. Buyer. Working toward that goal. So we are not there
yet.
Ms. Mullin. I think there are some----
Mr. Buyer. Dr. Lindberg, do you have anything you can add
to that?
Mr. Lindberg. Well, I think just at the level of
communicating I don't think there is any problem whatsoever.
But I would attribute that as much to the Internet as I would
to our own department. Now, whether there is reason to
communicate, that is, of course, an administrative matter.
But I have been delighted. I have been in government only
since 1984, but I have been delighted to see how many good
people there are in each of the agencies, and how easily they
do work together. I think it is a myth to say that they don't
work together when there is reason to.
Mr. Buyer. I am not proposing that there is even a myth. I
just wanted to make sure, if you want to corroborate, that you
have got the architecture to actually do it. So what I
discovered in our work with other departments and agencies, you
would be shocked to find out who has got what funding stream,
and somebody goes out and buys whatever they want, and finds
out that they can't talk to each other.
Thank you. I yield back.
Mr. Bilirakis. The chair appreciates that.
Mr. Stupak for 8 minutes.
Mr. Stupak. Thank you, Mr. Chairman.
Let me just follow up a little bit on what Mr. Brown was
saying. He used Taxol, but just about any of these drugs that
the government helped to develop, a lot of us feel that the
return we are getting is inadequate.
Taxol, if you use Mr. Brown's numbers, the government put
forth $500 million and royalties--to date it has been $35
million. A lot of people believe that we should at least go a
dollar for a dollar, get our return on the money. Do you think
that would stifle research if we did that? Does anyone care to
answer that?
Mr. Rohrbaugh. In the late 1980's, early 1990's, we had a
reasonable pricing clause in our agreements. And there was
concern by the mid-1990's that this was causing companies not
to even consider collaborating with us. We held----
Mr. Stupak. What is reasonable reimbursement? You said you
had a reasonable reimbursement clause. Can you define that for
me?
Mr. Rohrbaugh. That is part of the problem.
Mr. Stupak. You can't define it.
Mr. Rohrbaugh. It is difficult to define, but all we had
was the clause that said that the price would be reasonable.
Mr. Stupak. So you moved from reasonable to what?
Mr. Rohrbaugh. And in 1994, we held two public hearings
with members of the public constituency groups, etcetera, who
determined that the clause inhibited the formation of
potentially beneficial scientific collaborations without
providing an offsetting benefit to the public. And some
question whether we had----
Mr. Stupak. Okay. I don't mean to rush you, but I want to
get through a lot of questions, and I don't want to take 8
minutes on trying to get this one answer. What is the standard
now?
Mr. Rohrbaugh. There is no----
Mr. Stupak. It was reasonable. It is gone now. What is it
now?
Mr. Rohrbaugh. There is no control in our license
agreements over the pricing of----
Mr. Stupak. So each is negotiated.
Mr. Rohrbaugh. We negotiate a standard licensing agreement
based on the technology we are licensing, and industry tells us
if the government has control over its costs, they would not
work with us. And, therefore, these drugs would not reach the
market. So I think our choice is: does the government----
Mr. Stupak. How would you have control over their costs?
When they spend $2 on advertising for every dollar on research,
that is the problem some of us have--they spend twice as much
on advertising as they do on research and development, and
government seems to be supplementing it. And we are getting
five-tenths of 1 percent return?
Mr. Rohrbaugh. Our mission at the NIH is to facilitate the
development of new information and new products that are
brought to the market by the private sector with a great deal
of time and investment by the private sector.
Mr. Stupak. I don't disagree, but if you have a
reimbursement program, a lot of us feel it should be
reasonable. By that, I mean at least a little bit more than
five-tenths of 1 percent.
Let me move on to something else. Dr. Mullin, you indicate
in your testimony that FDA is there to make sure that we have
safety and effectiveness of a drug is--is paramount in your
mission statement. We have done hearings on the ImClone and
Herbitex. And while the drug was being developed in the initial
application to see if it was going to be a beneficial cancer
drug, there was a lot of hype in that drug through USA Today,
Business News, even 60 Minutes.
FDA testified they were appalled at the statements or
claims being made. Should not the FDA then step in, when these
drugs are being promoted and hyped, while they are still in the
initial stages of development, and say, wait a minute, folks.
If you are concerned about safety and effectiveness of a drug,
that the hype you just saw on USA Today or 60 Minutes
shouldn't--don't you have a responsibility to step out and say
that is not true, that is not what the tests are showing?
Ms. Mullin. I am afraid, Mr. Stupak, that I can't--I don't
know the legal constraints on the agency with respect to what
we can say when a product is still under IND.
Mr. Stupak. Sure. But under IND, when they are making
claims that can't possibly be true, to protect your mission, to
continue to be the gold standard, as you like to be referred
to, don't you have a responsibility as the FDA to say these
claims are not going to the effectiveness or the safety of a
drug, it is in IND as you call it? Don't you have a
responsibility to let the public know that this isn't true?
Because, as we saw, we had all kinds of investor fraud and
everything else associated with that.
Ms. Mullin. I would like to be able to follow up with you
and with the people who are most familiar with that drug and
that issue, so I can give you an accurate answer on that, if
that is all right.
Mr. Stupak. Okay. You further go on and testify that drugs
are being approved now 90 percent within the 6 months
underneath PDUFA. During this 6-month period, have you been
able to get all of the information you requested from the drug
companies?
Ms. Mullin. I think maybe I was--I didn't say it clearly
enough on what that meant. FDA won't approve a product until
all of our questions are answered, but we--what we will commit
to is a complete review and a letter and an action. The action
might be a letter that says this is not approvable, or it is
approvable, but the following questions must be satisfactorily
addressed.
So it doesn't mean an approval within 6 months, unless the
application does answer all of the questions and there is
adequate demonstration of safety and effectiveness. So I didn't
mean to imply that we approve them and guarantee anything of
that kind. We will approve a product when it is shown that it
is safe and effective, and we are satisfied that we have that--
the evidence that is necessary.
Mr. Stupak. Well, if we are concerned about the safety and
effectiveness, and some of us are concerned at how quickly some
of these drugs are being approved, when we take a look at it
underneath this new system we have had in place we have had
more drugs withdrawn in the last few years than you did in the
whole history of the FDA, because they have been approved so
quickly they had to be later withdrawn.
And the answer we usually get with the FDA is, well, if it
is 3 or 4 percent that have to be withdrawn, that is what it
was before. Even though we are approving more drugs quicker
now, we are still withdrawing about 3 or 4 percent of more
drugs, which would result in about 1,200 tests.
Is quickness the standard you are using? Or what is the--
are you under a legislative timeframe to do it in 6 months? Or
is it really safety and effectiveness that should be the goal
here?
Ms. Mullin. Well, the review process--there is a
legislative timeframe, although we have--which is 180 days. But
we work with and are committed to trying to meet the PDUFA
commitments that are not legislative but that FDA has committed
to, and that is just for review.
We don't have particular timeframes for withdrawal, and
what those statistics that you are referring to mean is on
average. And what we looked at in the 3 to 4 percent that you
describe is the average over a longer term in terms of
withdrawal rates for approved products.
And one of the things that you are seeing is a great--a
much greater uptake of new products once they are approved, and
there is a much greater use of new products within----
Mr. Stupak. Greater drugs are being approved, but a greater
number are being withdrawn when you just look at the raw
numbers.
Ms. Mullin. Greater numbers----
Mr. Stupak. Later being withdrawn.
Ms. Mullin. Well, actually, and the rate of withdrawal has
not gone up and----
Mr. Stupak. No, it has not gone up. But you have got more
drugs, you are withdrawing more drugs. So how is that an
improvement upon the safety factor, is what I am asking.
Ms. Mullin. Well----
Mr. Stupak. Let me ask you this. My time is almost up. You
said on page 4, once a drug is approved for sale in the United
States, our consumer protection mission continues. We monitor
for the use of marketed drugs for unexpected health risk, and
we take steps to inform the public.
Other than a public health advisory to doctors or to
prescribing physicians through MedWatch, how do you inform the
public? And what mechanism is in place to do post-marketing
review once a drug is approved for sale?
Ms. Mullin. Post-marketing review--what we--as part of the
prescription drug user fee reauthorization last year, we have
actually established--we have enlarged our post-marketing
safety and oversight and have additional funds now to do that
activity.
One of the things FDA is currently doing through, as I have
mentioned, our strategic action plan that we are developing is
to try to get, work with others who collect data to get the
largest capability to do active surveillance that we can, Mr.
Stupak, because we know that drugs are--they are used according
to labeling, and they are also used in a way that is not always
according to the labeling.
And it is very important that we get the earliest and best
information that we can to understand what the problem is, if
there is a problem on a product. We need to analyze whether it
is the product or how it is being used----
Mr. Stupak. Right, realize all of that, but----
Ms. Mullin. [continuing] to work that out. So we have----
Mr. Stupak. But there is no scheme in place, like 6 months
later review it, a year later----
Mr. Norwood [presiding]. Mr. Stupak, your time has expired.
Let her finish answering the question, please.
Mr. Stupak. Sure. Well, I was just trying to get to the
meat of it.
Mr. Norwood. I know. I understand.
Ms. Mullin. What we are doing--if I just--one quick thing
on that. We have this program in place now for risk management
in the post-market period, the first 2 to 3 years when if we
are going to see something unexpected, that we didn't pick up
on in clinical trials, we are doing a lot more active work, and
over the next 5 years expect to spend about $70 million on
post-market safety, which is so much better than we have been
able to do in the past.
So I think we will be very vigilant in those first few
years, because that is when a lot of the safety problems
happen, and we pick up on them.
Mr. Stupak. And then, my other question was: how do you
inform----
Mr. Norwood. Mr. Stupak?
Mr. Stupak. [continuing] the public--can she just answer--
--
Mr. Norwood. Your time has expired, and it has expired a
good bit.
Mr. Stupak. Other than MedWatch, do you do anything else to
inform the public?
Mr. Norwood. Ma'am, don't answer the question, please.
Your time has expired.
I want to remind myself that when the yellow light comes
on, it means your time is almost up. When the red light comes
on, it means your time is up, and it gives all members an equal
opportunity to question the witnesses.
Mr. Whitfield, you are now recognized for 5 minutes.
Mr. Whitfield. Mr. Chairman, thank you very much.
I suppose this question would go to Dr. Mullin. But of the
approvals that you give for new medicines, would you have an
idea what percent of those would be coming from what I would
refer to as small, maybe startup companies, versus companies
like Merck, Bristol-Meyers, the large, large drug companies?
Ms. Mullin. You know, I don't have that number on the top
of my head, but we do keep track of that information, and I can
get that information to you.
Mr. Whitfield. Do you have any idea at all?
Ms. Mullin. I am going to hazard a guess that it is at
least 20 percent, but I think higher than that from small
companies.
Mr. Whitfield. Twenty percent? And I suppose this would go
to Dr. Barker or someone else, but are there funding mechanisms
in the government that helps bridge this R&D phase of drug
development and assist small companies to bring a drug through
the FDA clinical trials for a new drug application?
Ms. Barker. The National Cancer Institute has several of
these mechanisms, including, of course, the SBIR and STTR
awards, which many small companies use to develop drugs, and
that is probably one of the most I think effective mechanisms.
Those are partnerships generally with universities and small
companies.
We also have at the NCI two other programs for technology
development--one called the unconventional innovation program--
UIP--the second one is called the IMAT program. Both of those
programs actually are good vehicles for small companies to
actually bring their drug forward. Small companies often don't
know going into these kinds of development activities how much
they are going to cost.
So we are actually looking more closely at that at the NCI,
because we do have a lot of interesting cancer, as you might
imagine, in the biotechnology companies. And many of these
small companies just don't succeed, and we are looking for
mechanisms to capture some of that technology or to lend some
different kinds of assistance, maybe through some of our
university relationships. It is an issue we are very interested
in.
Mr. Whitfield. The very first two you mentioned, one was
SBIR, and what was the other one?
Ms. Barker. STTR. One is more of a technology-focused grant
for diagnostics and other kinds of technologies.
Mr. Whitfield. And do you have any idea how many dollars
are available for those programs each year?
Ms. Barker. In the case of the SBIR program, it is in
proportion actually to the amount of dollars that you receive
as a Federal agency. And I don't exactly--I don't have that
number right at hand. I can certainly get it for you.
Mr. Whitfield. Okay. Thank you.
This I guess would be going back to FDA again, but I notice
in your testimony you refer to at some point priority approval
and standard approval.
Ms. Mullin. Right.
Mr. Whitfield. Would you explain to me how you determine
what is a priority and what is a standard?
Ms. Mullin. FDA determines whether an application will be
priority or standard. And the priority applications are ones
for treatment or therapies that represent a new approach to
diagnostic treatment, and just--so it is something that offers
an approach or a therapy that hasn't--that doesn't already
exist. So, for example, it is the first of a kind in an area
for diagnostic or treatment.
Mr. Whitfield. And you mentioned also new drug applications
and biologic license applications.
Ms. Mullin. Yes.
Mr. Whitfield. Would either one of those include--or would
it be separate--a new drug delivery technique, for example?
Ms. Mullin. A new drug delivery system, for example, might
involve a device component and a biologic or device and a drug
combination, and those--we refer to those as combination
products, and they may be classified as a device and be in what
is called a PMA. It will be jointly reviewed by a device center
and the center that would handle, say, the drug component of it
or the biologics component of it.
We actually have a new Office of Combination Products to
facilitate and make sure those reviews occur in a very timely
fashion.
Mr. Whitfield. But if the drug delivery system consisted
only of some new chemical mechanism or, for example, a system
that would disguise the drug being used so that your own immune
system would not attack it, would that be considered a device,
or would that be a drug delivery system or----
Ms. Mullin. I don't think I can answer that, I am sorry to
say. And, actually, it can be kind of complex sometimes to
figure out what the--where the home of it or where the review
will be primarily done. And there are increasing numbers of
products that are combination products that are very effective.
Mr. Whitfield. Thank you, Mr. Chairman.
Mr. Norwood. Thank you, Mr. Whitfield.
Ms. Capps, you are now recognized for 8 minutes.
Ms. Capps. Thank you, Mr. Chairman.
I thank you for your presence here today, this panel, and
for the committee for organizing it.
I was not here when the goal of doubling the funding for
NIH was started, but one of my proudest moments was to see that
goal realized. And we will be needing to leave to speak on the
floor because of our funding appropriation that we are dealing
with today, which includes NIH funding. And I am dismayed that
we have actually gone backward the very next year by flatlining
the budget.
I really so support what you all do, that umbrella of NIH
that includes each of your particular positions. I think the
fact that Congress took this on, to double the funding, speaks
to the value that the American people place in what you do. And
that is, well, for some folks, and me included, research is to
be valued for its own sake.
I was married to an academician for over 30 years, and that
whole life means a lot to me. And I think you get such
wonderful unintended results sometimes from trips to the moon
or wherever people decide--what people decide to do with their
intellect. So I would value it for its own sake.
But now we see clearly--and I have the experience of having
a daughter in the battle of her life for a year with lung
cancer, and I know what clinical trials are about. And so to
the extent that we see close up the impact of what you are
about, it makes this a very significant arena for our
deliberation as Members of Congress as well.
We are raw, some of us, from having gone through the
Medicare modernization, including prescription medication
debate right here a few weeks ago, and then 2 weeks ago on the
floor. And so that is why there is feeling about the high cost.
And I want to use this little time to explore the
relationship between what you do, valuable as it is in itself,
and then the close relationship that exists in the private
sector which allows--to the degree that that is an ingredient
that is essential to having that really make a difference in
people's lives.
And so I don't even know where I am going to address this,
but I am going to start with the fact that Bayh-Dole was
initiated with a relationship with universities, and I know our
second panel is going to get us more there. And I am not going
to go so far as to say, how can we get more of a return on some
of these very lucrative byproducts, because I don't know that
you can anticipate that in advance. And you wouldn't want that
to be the issue.
But I was taken with a comment--I think, Dr. Rohrbaugh, you
mentioned a method by which a standard agreement is negotiated.
And maybe that is a good starting point, to hear from you, and
ways that perhaps with our leadership we should develop--or
should we revisit Bayh-Dole, or should we--what advice can you
give someone like me? Start with that. Very open, I am sorry.
Mr. Rohrbaugh. Well, Bayh-Dole applies to the recipients of
Federal funds.
Ms. Capps. Yes.
Mr. Rohrbaugh. There is the Stevenson-Wydler Act and
amendments to the Federal Technology Transfer Act that apply to
Federal agencies and direct our activities in technology
transfer.
We license technologies at a very early stage. We often
don't have much more, if we are fortunate than a proof of
principle often before that point of time. So industry takes on
a great risk in having very early stage risky technology that
may not prove to be a benefit, may fail, most of them fail in
the process of development. That is just the way things work.
Ms. Capps. Yes.
Mr. Rohrbaugh. And we license our technologies that are
invented by government employees under standard licensing
agreements, with terms that are negotiated based on the value
of the technology, the stage of the technology, and its overall
value. And what we license ultimately is typically a small
part, or only one part, of the final product.
Even if we have a chemical entity that becomes ultimately a
drug developed by a company, the company may--usually provides
an awful lot of other important proprietary technology in
formulating it, in encapsulating it, in developing it, in
finding ways to make it better and cheaper and bringing it to
market.
So ours is only a small part of the final product, then,
typically.
Ms. Capps. I am not saying that you don't need to defend
the private sector. I am just concerned that there--from some
of your remarks that I heard earlier, it seems like they are
holding hostage to some degree, that they won't--if you go too
far down the road, they are not--and limit the amount that they
can make or do any kind of things that impinge on that, that
they won't have a relationship with you. What is that like?
Mr. Rohrbaugh. Industry and investors in industry are
reluctant to--the investors are reluctant to invest, and
companies are reluctant to take on technologies at a very early
stage, as our technologies are, if we have some control over
the final price of the product. It is too far downstream. They
have to invest so much money into it. Ours is a small part of
the final product. They just will not work with us under those
conditions.
Ms. Capps. I will wait until the second panel to get into
more that the university might have a different relationship
with you in terms of that partnership. But I will--I don't want
to--I am looking at the clock, and, Dr. Barker, I do want to
get in one question about the National Cancer Institute and the
mapping of clinical trials. And maybe that isn't even what you
came prepared to discuss, but that is certainly a very big
interest to many people.
Ms. Barker. Could you clarify your question?
Ms. Capps. To make it easier for--and it wouldn't just be
cancer, but that is certainly an area where life-saving
depends--can often be seen as getting into a trial. And how can
we make that work more efficiently for----
Ms. Barker. I know you are very familiar with this process.
Ms. Capps. Yes.
Ms. Barker. As you know, also, we only have about 3 percent
of patients go on clinical trials who have cancer, and that is
a very complex--there is a whole series of complex reasons why
that is true.
We have undertaken a lot of activities at the NCI, ranging
from new communications tools to actually new bioinformatics
systems, to ease the burden of actually putting people on
clinical trials in the communities, increased funding basically
for the cooperative groups to actually make them more
competitive in terms of actually really enhancing opportunities
to put people on clinical trials.
And clinical trials actually is a major initiative across
the National Institutes of Health is part one of Dr. Zuhini's
road maps this year.
Ms. Capps. Okay.
Ms. Barker. So we have an enormous number of initiatives,
especially in the National Cancer Institute, to actually
increase accrual and to make it simpler for patients to access,
know about the trials, and ultimately be enrolled, and for
physicians to actually have enough resources to put patients on
clinical trials.
Ms. Capps. So this is an area--and I know my time is up,
but this is an area that funding could really be useful in--
that there would be a real impact on consumers.
Ms. Barker. Well, I think the doubling of the NIH budget
has actually allowed us to do an enormous number of things in
clinical trials. And certainly, going forward, that would be
beneficial to continue to improve this for cancer specifically,
but I think for other diseases as well.
Ms. Capps. Thank you.
Mr. Bilirakis. Dr. Norwood for 5 minutes.
Mr. Norwood. Thank you very much, Mr. Chairman. I am
enjoying this immensely and having a lot of my questions
answered by others' questions. So I would like to take my 5
minutes and yield it to Mr. Stupak and let him finish his line
of questioning.
Mr. Stupak. I thank the gentleman for yielding and
appreciate the courtesy, because I was trying to ask Dr.
Mullin, in the information we have--and I asked you about, how
do you notify the public, then, about the effectiveness of a
drug or the safety of a drug, because they say you issue public
health advisories to doctors, which are commonly called Dear
Doctor Letters, or else there is the MedWatch.
How does the public know about the safety of a drug? If you
have a question, how do you communicate that to the public, I
guess is what I am asking.
Ms. Mullin. Mr. Stupak, if FDA has a question or----
Mr. Stupak. Well, the FDA has found something wrong, so
that is when you do a Dear Doctor. You have to notify the
prescribing physicians that you have to watch for this or do
something like this.
Ms. Mullin. Right.
Mr. Stupak. How do you inform the public? Because you said
in your statement, again on page 4, if new, unanticipated risks
are detected after approval, we take steps to inform the public
and change how a drug is used or even remove it from the
market. So I am asking, how do you inform the public?
Ms. Mullin. Actually, as part of this planning effort that
I have described this year, we are identifying a number of
partners through--both public and private to try to both get
the data--as I mentioned before, we see information technology
as one key to trying to get a more complete picture as quickly
as possible. We are going to be partnering with grantees for
the AHRQ, with the CDC networks----
Mr. Stupak. Okay. But there is no mechanism like launching
some kind of program to inform the public?
Ms. Mullin. Well, on the other part of that----
Mr. Stupak. It is still being developed?
Ms. Mullin. Yes. And we are trying to partner with--well,
as you know, the list of MedWatch partners, there are various
practitioner groups and specialties, and we are basically going
to be disseminating information through as many conduits as we
can to health care professionals.
Mr. Stupak. Yes, health care professionals. But I am asking
the general public. So we, the patients, and eventually the
victims when a drug goes wrong, how do we know to watch for
things?
Ms. Mullin. Well, we are also looking for ways to get
better information to the media and better ways, which is a
very effective way to reach patients and refer them to their
physician. And we actually have been pretty successful in that
mode of having people become aware through the media, and then
people ask their doctor or can visit FDA's website, or get more
information at that point as they need to.
Mr. Bilirakis. Has the gentleman--the advising of the
provider, of the medical doctor, are you satisfied in terms of
how that is done?
Mr. Stupak. The question was to the public. Advising the
medical doctor doesn't help the patient or the families, if the
problem----
Mr. Bilirakis. Well, I was just----
Mr. Stupak. [continuing] to clarify----
Mr. Bilirakis. [continuing] the doctor ought to know.
Mr. Stupak. Sure. They should, yes. The key word is
``should.''
Mr. Bilirakis. Are you satisfied as to how that is done? I
don't know whether that----
Mr. Stupak. Oh, no. I am satisfied that they notify the
physicians.
Mr. Bilirakis. All right.
Mr. Stupak. But how do you get it--her statement was to the
public. I am just trying to say, how do we get it to the
public?
Ms. Mullin. Well, and I think that is--we absolutely agree
with that, and we have the patient safety initiative going on
at FDA to identify every mechanism possible to reach people, to
do it through media, we think every venue, every channel you
can go to to try to reach people as quickly as possible.
Mr. Stupak. Let me ask you this. If you are going to have
to change a label because of a safety concern on a drug, do you
have that labeling that is found on a drug product, does that
have to be changed within so many days or months or years,
wherever it is going to be?
Ms. Mullin. I know there is a timeframe for it, Mr. Stupak,
but I don't know what it is. I can get that information.
Mr. Stupak. If you would, I would appreciate it.
With that, I will yield back to Dr. Norwood. Appreciate
your courtesy, Dr. Norwood, for letting me follow up on that
question.
Mr. Norwood. Thank you. Thank you very much.
Mr. Chairman, I will just get in one quick one, since I
have got a minute left. I am a big fan of NIH. I am very
pleased with the work that you do, and I presume that I
understand it right when you do basic science, you do research.
It comes out basically through the National Library. That is
where people actually pick up on that. Is that--do I understand
that right?
Mr. Lindberg. I think that is right. I think I could add
something to the question Mr. Stupak asked, actually, because
there is a phenomenon we call clinical alerts. Now, when
Medline searches are done, and they are done a million times a
day, we have a banner in certain cases that announces a piece
of emergency information.
So, for example, when the women's health trial, the
estrogen-progestin trial, when it reached a point where they
could conclude early that it should be stopped, the arm of the
combined drugs, that was a clinical alert. That was announced,
and the decision was made by the director of the relevant
Institute, in that case Heart/Lung.
Now that was an alarm. That said stop doing it, because you
are endangering people. But in happier circumstances, a trial
will be terminated early because of a very good result. So, for
instance, the use of massive doses of corticosteroids for acute
spinal cord injury, was tested in 20 academic centers and NIH,
and it ended early because they were so effective.
So that was a clinical alert that announced that we don't
want anyone on the control side of that one anymore. We want
everybody getting the treatment. So we do have at least that
mechanism, and it relates to drugs but not directly. It more
relates to clinical trials.
We fought very hard to get it in, because the--in some of
the better journals--the New England Journal of Medicine, for
instance--there had been a rule that if you are going to
announce these results before it is published, we won't take
your paper.
So in order to put through this particular scheme, we
convened a meeting at National Library of Medicine in which the
editors of New England Journal and JAMA and certain other major
papers all agreed that this should happen, these clinical
alerts should be permitted, and it would not bother anybody's
acceptance or non-acceptance of the paper. So I am just
suggesting that this is yet one other mechanism which we do
use.
Mr. Bilirakis. Ms. Eshoo for 5 minutes.
Ms. Eshoo. I didn't make an opening statement, Mr.
Chairman.
Mr. Bilirakis. Under the rules, you have to be here in
order to waive the opening.
Ms. Eshoo. Oh, all right. I am sorry.
Well, I would like to welcome the panelists here, and say--
repeat what I always say when anyone from the NIH comes before
us, that it represents I think to our country the National
Institutes of Hope. And I think really that is why you are here
today to talk about the undertakings that are a part of that
mission of hope, and I salute you for the work that you do and
what it is producing for the people of our country, and
certainly for the world.
You are the gold standard, and we want to keep you that
way. I think the investments that have been made are amongst
absolutely the best that the Congress has ever made. Absolutely
amongst the best. And so I want to start out with that, because
I have enormous respect for each one of you and the work that
you do, and the work that has come out of the--our National
Institutes.
I would like to just say something about some of the
conversation that took place earlier in the committee's
hearing. I don't know how many members know that earlier this
week--I think it was Monday--that a GAO report found that the
Federal Government, while it has been licensing agreements for
only four of the top 100 drugs dispensed by the DoD, that there
are only four.
I think that the case is not as large as maybe it was
referenced, and I think that members should avail themselves to
this GAO report, because even though it is being charged, you
know, this whole case that the Federal Government is paying X
number of dollars, getting very little out of it. I would say
that it is important to read the report, because there are four
drugs. There are only 4 out of 100 that are actually dispensed
by the DoD.
The Federal Government contributes 1.6 percent in terms of
bioresearch. So while we are a player, and a very important
one--and I think that we should be doing more, most frankly--
but because, again, I think this is amongst the most important
and the greatest impact return for the investment dollars, it
is 1.6 percent.
It reminds me of constituents at town hall meetings that
believe that 25 percent of the Federal budget represents
foreign aid, and it is widely exaggerated. There are those that
don't support any dollars for foreign aid, but I don't think
that we should lose sight of the context here. And as we don't
lose sight of the context, we will, I think, more fully
appreciate what 1.6 percent is bringing back to us.
To any of the witnesses, how often has the NIH turned over
fully completed drug products to a drug or biotechnology
company? Has that ever happened?
Mr. Rohrbaugh. I am not aware of any.
Ms. Eshoo. Anyone on the panel aware of any? That is what I
thought, but I think that it is a question that is worth
asking.
Dr. Rohrbaugh, you mentioned that the reasonable pricing
clause had a detrimental effect on public-private partnerships.
Can you elaborate on that? And do you have statistics showing
that?
Mr. Rohrbaugh. Those conclusions were made based on public
hearings that were held in 1994. I don't have all of the
statistics, but the report that I would be happy to refer to
you is on the website from those committees. And they did
conclude that it was having a chilling effect on the interest
of industry to work with the National Institutes of Health
collaboratively and in licensing technologies.
Ms. Eshoo. And it is now a decade later, since that report.
Do you believe that what----
Mr. Rohrbaugh. Yes, it has had a positive effect. And since
then from the standpoint of our statistics, our licenses, our
royalty income, all of the measures of our tech transfer
activities are higher, much higher than they were at that time.
And new and better drugs are being developed from our partners,
who invest their time and money in these early stage
technologies.
Ms. Eshoo. I thank you all again, and I think that you are
really a great source of pride to our country in terms of what
you do. I am so impressed with what the Library is doing. I
thought that the national ``do not call list'' had a lot of
hits, but I think that you are right up there, and that speaks,
excuse the expression, volumes about what you have and what you
do. Thank you very, very much.
Mr. Bilirakis. The chair thanks the gentlelady, and you
certainly made a point that I tried to make, and that is--it is
a wild thing to me that they do so much. And what is
available--if only the people--the patients, and particularly
the medical providers are aware of all that is available to
them. And that is something that concerns me. I don't know
whether it should or shouldn't.
Let us see. Mr. Burr is recognized for 5 minutes.
Mr. Burr. I thank the chairman. I won't take 5 minutes.
I would like to pose two questions probably to Dr.
Rohrbaugh and Dr. Barker. The first one is: what do you see the
future of combination products playing in the delivery of
health care in this country? And the second question would be:
as we look at the plus-up that Congress has made in the NIH
budget over the last several years, and hopefully a plus-up
that will continue, how much of those extra dollars have been
used for extramural research?
Ms. Barker. As you know, the majority of our work at the
NIH is in the extramural community, and certainly that is true
at the National Cancer Institute. So most of those dollars have
gone to the extramural community.
In terms of your first question, it is intriguing that you
are--I think everyone is beginning to see that the future of
medicine actually is going to be in genomics. And as we know
more about genomics, we are beginning to understand that these
molecular defects are very rarely due to a single defect. It is
going to be multiple defects.
So we are challenged to address that issue. And at the
National Cancer Institute especially, we are looking at all
kinds of ways to do that, all the way from computational
biology and systems biology to be able to use approaches to
predict what that should look like, to very specific kinds of
models and animals to actually effectively predict that before
we can go into humans.
And the future, of course, is even more interesting because
areas like nanotechnology, where we will be able to very
specifically deliver multiple ligands or signatures within
cells, also sits there. And we are just beginning to exploit
that for cancer. And as you go forward, you are going to be
able to see how you are going to be able to combine imaging,
for example, with therapeutics.
So the future is just--what I said in my opening comments
is so true. It is just unimagined what we can accomplish in the
next probably as few as 5 years, and even at 10 years I think
we will look back and wonder how we were so naive in terms of
our approaches to therapy and diagnostics and prevention today.
So I think you are right on in terms of the issues of
combinations. That is where the world is going to go,
especially for us in cancer.
Mr. Burr. Well, my hope is that you devote some time to
spend not only with FDA but possibly with CMS as it relates to
understanding the world of combination products. My greatest
fear is that we make tremendous progress at NIH and through the
extramural programs, and then we hit this permanent red light
that deals with the approval process that we continue to--we
improve and we have improved.
But the combination product decisions are much tougher down
the road than what we have had up until this point, and I
believe it has been even tougher to try to determine a
reimbursement scheme as it relates to those products. And many
times our great work is only for naught if, in fact, we can't
get it to the patient.
Ms. Barker. I would agree with that.
Mr. Burr. Thank you.
Anything to add?
Mr. Rohrbaugh. No, I don't.
Mr. Burr. Great. Thank you, Mr. Chairman. I yield back.
Mr. Bilirakis. The chair thanks the gentleman.
Mr. Allen to inquire.
Mr. Allen. Thank you, Mr. Chairman, and thank you, in
particular, for allowing me to participate in this hearing
today. Though a member of the committee, I am not a member of
this particular subcommittee, and a lot of good work is done in
this subcommittee.
I want to thank all of the panelists for being here today.
This is a very helpful and informative hearing.
Dr. Mullin, I would like to begin with you. I have
introduced a bill in June called the Prescription Drug
Comparative Effectiveness Act of 2003. It is a bipartisan bill.
It would fund studies of comparative effectiveness and cost
effectiveness of prescription drugs that are used to treat
particular diseases or conditions, specifically those which
involve high amounts of expenditures for Medicare and Medicaid.
The bill authorizes $50 million for NIH and $25 million for
the Agency for Health Care Research and Quality to carry out
these studies on comparative effectiveness and cost
effectiveness.
And, Mr. Chairman, with your approval, I would like to
offer for inclusion in the record an editorial in the July
issue of Clinical Therapeutics, which explains the bill.
Mr. Bilirakis. Without objection, that will be the case.
Mr. Allen. The FDA--it is assumed under the legislation
that the FDA would cooperate with NIH and AHRQ in doing this,
dealing with this issue. I assume you haven't had a chance to
review the bill.
Ms. Mullin. Right, I haven't.
Mr. Allen. But I wondered if you could comment briefly on
the value of having better information and how drugs that treat
a particular disease or condition should be compared to other
drugs that treat the same disease or condition, and ultimately,
of course, you know, the question of relative cost
effectiveness. You are probably familiar with what Oregon has
done in this--along these lines.
Ms. Mullin. Well, I especially can speak to the different--
looking at weighing the therapeutic benefit of one versus
another in the review process. I am not a reviewer, but I know
very well that they make those decisions about approval of a
new product with all of the other options in mind, what is
already out there available to patients.
And FDA has a trove of information and experience, and
because of where we are in the process we see everything. We
see all of the detailed clinical data, and so I--and we will
be, I am sure, collaborating. I know we have conversations with
AHRQ already underway, you know, and we want to share what we
know more.
And there is a summary that is always provided at the end
of a review process when a drug is approved that talks about
that product and this clinical--and within the armamentarium of
what is available to treat patients with the condition. So I
think we see that as an opportunity.
Mr. Allen. Well, thank you for that. Of course, this goes
beyond the FDA's traditional mission of safety and efficacy,
but it is an important area.
Dr. Rohrbaugh, we have a--you were talking earlier about
the conversations you have with industry when something that
has been developed at NIH is ready to go out and be further
developed for the market. We have a staff memorandum here that
says that in July 2001, NIH submitted to Congress a plan to
assure taxpayers' interests are protected, and talked about
greater transparency.
And it said you would modify your existing extramural
policy manuals to assure that grantees and contractors report
to the agency the name, trademark, or other appropriate
identifiers of a therapeutic drug that embodies technology used
by NIH, that you would make that information available on a
web-based data base that--anyway, I just wondered if you could
clarify just where that process is. I mean, is that kind of
information now being developed, and is it available on a data
base that could be used by the public?
Mr. Rohrbaugh. It is. What we have done for the intramural
program, the program that I oversee, is list on our website all
17 FDA approved technologies, drugs, therapeutics, vaccines,
that include, at least in part, technologies licensed from the
NIH.
With respect to our recipient--the recipients of Federal
funds, that was handled by the Office of Extramural Research,
and they have implemented that program. And on their website, I
believe there was only one reported drug last year. I don't
know if any have been reported this year.
Mr. Allen. But there should be more as we go forward?
Mr. Rohrbaugh. Yes.
Mr. Allen. Yes. Well, it is important, I think, just
because if we are going to understand this process, we need to
know how much of the value--or how much of the research that
went into a particular drug was publicly funded, and then we
can discuss the policy implications of that later.
Mr. Rohrbaugh. Exactly.
Mr. Allen. Thank you.
Thank you very much, Mr. Chairman.
Mr. Bilirakis. And I thank the gentleman.
Yes, we are going to go into our second panel now, but I
want to thank you all. You were just tremendous, as usual. We
will have questions in writing to you as per the way it is
usually done. We would appreciate timely responses to them.
And, you know, the second panel has sat through the
audience and listened to you. And then, of course, you are all
busy people, so you will probably be leaving. And that is why I
told the staffer, hey, I want one panel, everybody to be here
together to hear each other, and what not.
But I would hope that if you can't stay for the second
panel you would maybe ask someone from your particular, you
know, office to stay in your place and take notes, and what
not, because I think it is--I know you are concerned. I mean,
you are certainly interested in the comments that will be made
by the second panel.
Thank you so very much. Thanks.
The second panel consists of Dr. Phyllis Gardner, Senior
Associate Dean for Education and Student Affairs, Stanford
University; Dr. Andrew Neighbour, Associate Vice Chancellor for
Research, University of California Los Angeles; Dr. Jonathan
Soderstrom, Managing Director of the Office of Cooperative
Research, Yale University; and Dr. Ellen V. Sigal, Chairperson,
Friends of Cancer Research located here in Washington, DC.
If you will take your seats, please. Again, your written
statement is a part of the record, and we would hope that you
would complement and supplement it orally. We will set the
clock at 5 minutes, and I would appreciate it if you could stay
as close to that as you can, but certainly I won't cut you off
if you are on a roll regarding a particular point.
Okay. Let us start off with Dr. Gardner. Thank you very--
thank you all for being here and for your patience and, you
know, waiting and having to wait while we have votes and that
sort of thing. But anyhow, Dr. Gardner, please proceed.
STATEMENTS OF PHYLLIS GARDNER, SENIOR ASSOCIATE DEAN FOR
EDUCATION AND STUDENT AFFAIRS, STANFORD UNIVERSITY; ANDREW
NEIGHBOUR, ASSOCIATE VICE CHANCELLOR FOR RESEARCH, UNIVERSITY
OF CALIFORNIA LOS ANGELES; E. JONATHAN SODERSTROM, MANAGING
DIRECTOR, OFFICE OF COOPERATIVE RESEARCH, YALE UNIVERSITY; AND
ELLEN V. SIGAL, CHAIRPERSON, FRIENDS OF CANCER RESEARCH
Ms. Gardner. Chairman Bilirakis and members of the
committee, I am pleased to testify before you today regarding
technology transfer issues as they relate to the biotechnology
industry. Thank you for your continued leadership in the area
of health care.
I am here today representing Biotechnology Industry
Organization, or BIO. BIO represents more than 1,000
biotechnology companies, academic institutions, and State
biotechnology centers. BIO members develop medical and
pharmaceutical products as well as agricultural, industrial,
and environmental products.
My testimony is based on my own experience in both the
academic and private sector. I have been a tenured associate
professor in the departments of molecular pharmacology and
medicine since 1984 at Stanford University. I am a former
Senior Associate Dean for Education and Student Affairs.
In addition, in the past 10 years, I was associated with
ALZA Corporation--a pharmaceutical company acquired by Johnson
& Johnson--as the vice president and head of their Technology
Institute. I have been on biotechnology company boards. I have
served on the boards of private and public biotechnology
companies, I have founded companies, and I have advised venture
capital firms as a partner and advisor.
I want to emphasize three important points today, and ask
that my written testimony be submitted for the record.
Point one, the biotechnology industry differs significantly
from large pharmaceutical companies. There are over 1,400
biotechnology companies in the U.S. In contrast to large
pharmaceutical companies, many biotech companies are small, not
publicly traded, and have not achieved profitability yet. While
large pharmaceutical companies tend to pursue blockbuster drugs
with market potentials of a billion dollars or more, many
biotechnology companies pursue products with much lower market
potentials, including orphan drugs.
The biotechnology industry is the most research and
development industry in the world. In 2002, the industry spent
$20.5 billion on R&D focused on new targets and highly
innovative therapies. No industry spends more on R&D per
employee. No industry faces a lengthier or more complex
regulatory process to bring products to market. And you all
know the statement--a biotech company typically spends 15 years
and hundreds of millions of dollars to complete testing and
secure product approval.
Point two, the Federal Government funding plays a small but
important role in biotech R&D. As Congresswoman Eshoo pointed
out, only 1.6 percent of the industry's R&D funding in 2002
originated from the Federal Government. Thus, public support
for biotechnology and the far greater dollars is key to the
success of the industry. Federal R&D programs must be flexible
enough not to stifle the private sector investment that is so
critical for bringing products to market.
Point three, partnerships between the Federal Government
and private sector foster innovation and improve health.
Passage of the Bayh-Dole Act, which has been discussed much
today, and the Federal Technology Transfer Act, established
vehicles, including licensing and the cooperative research and
development agreement, or CRADAs, for tech transfer from the
public to the private sector.
Prior to these laws, Federal agencies rarely relinquished
ownership of federally funded inventions, and valuable
technology was left languishing on the shelves of research
institutions.
In addition to CRADAs and licensing, biotechnology
companies also rely on direct financial support from the
government through small business innovation research
programs--the SBIRs--and advanced technology programs, or the
ATPs. The SBIR program is a competitive three-phase government-
funded program. It is used overwhelmingly by seed stage
companies for startup and early development stages of product
development.
The advanced technology program, by contrast to supporting
product development, it supports enabling technologies
essential for the development of new products, processes, and
services across diverse application areas. Both of these
vehicles support seed stage companies in critical early phases.
This early support is critical to support the large private
investment for subsequent development and commercialization.
They are particularly important in down markets when VC and
other sources of private funding divert to later stage, less
risky companies.
BIO does suggest one change in SBIRs, or one change to the
Small Business Administration--that is, that they redefine the
definition of size of small business and equity ownership, so
that it will not preclude venture capital backed funding for
small business--the venture capital backed companies from being
funded.
In conclusion, BIO supports the various vehicles that
Congress has authorized for transferring valuable technology
from the public to the private sector. Given the significant
technological breakthroughs achieved in medical and health
fields, BIO believes that Federal dollars invested in
biotechnology research have yielded significant benefits
generally for the health of the Nation and specifically for the
Federal Treasury.
Thank you, again, for your support of biotechnology's
efforts to contribute and advance the health of the United
States. I would be pleased to respond to questions from the
committee.
Thank you.
[The prepared statement of Phyllis Gardner follows:]
Prepared Statement of Phyllis Gardner, Associate Professor of Medicine,
Stanford University, on Behalf of the Biotechnology Industry
Organization
Chairman Bilirakis and Members of the Committee, I am pleased to
testify before you today regarding technology transfer issues as they
relate to the biotechnology industry. I would like to thank the
Committee for its continued leadership on issues related to Americans'
health. I am here today representing the Biotechnology Industry
Organization (BIO). BIO's membership includes more than 1,000
biotechnology companies, academic institutions, state biotechnology
centers and related organizations in all 50 U.S. states. BIO members
are involved in the research and development of health-care,
agricultural, industrial and environmental biotechnology products.
My comments today are based on my years of experience on biomedical
research in both the academic and private sectors. I have been a
tenured associate professor in the departments of molecular
pharmacology and medicine at Stanford University since 1984. I am also
the former Senior Associate Dean for Education and Student Affairs.
In the past ten years, I have also been associated with ALZA
Corporation--a leading drug delivery and pharmaceutical company,
recently acquired by Johnson & Johnson--serving as Vice President of
Research and Head of the ALZA Technology Institute. In addition, I am
or have been a member of the board of directors of several public and
private biotech companies, including Aerogen, Inc., Aronex, Inc.
(acquired by Antigenics, Inc.), BioMarin Pharmaceuticals,
Pharmacyclics, iMEDD Pharmaceuticals, Health Hero Network and Elim
Biopharmaceuticals, Inc. I have also served on a number of advisory
committees to the National Institute of Health. In addition, I serve as
an adjunct partner of Essex Woodlands Health Ventures, a BIO member,
and am an advisor to Draupnir, LLC, a private equity firm.
THE PRIVATE SECTOR ANNUALLY FUNDS BILLIONS OF DOLLARS OF RESEARCH AND
DEVELOPMENT IN THE BIOTECHNOLOGY FIELD
The biotechnology industry is the most research and development
intensive and capital-focused industry in the world. R&D in the
biotechnology world is robust, focusing on new targets and highly
innovative therapies. No industry spends more on research and
development per employee and no industry faces a lengthier or more
complex regulatory process to bring products to market than the
biotechnology industry. There are over 1,400 biotechnology companies in
the United States, of which about 25 percent are publicly traded. The
revenue of these companies was about $35 billion in 2001 with a market
capitalization of $206 billion in mid-2003. This research-intensive
industry spent $20.5 billion on R&D in 2002 1, with the top
five companies spending an average of $133,000 per employee on R&D.
Biotechnology companies rely heavily on public-private partnerships in
their R&D initiatives. Importantly, however, only approximately 1.6
percent of the industry's R&D funding in 2002 originated from
government sources.2
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\1\ Source: Ernst & Young, ``Resilience: America's Biotechnology
Report 2003''
\2\ Source: BioWorld Online, ``2002 Grants and Awards to Biotech
Companies,'' April 7, 2003. Grants and awards to biotechnology
companies from federal government agencies totaled $326.1 million in
2002.
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Biotechnology companies range from very small, private companies
with few employees to larger public ones such as Amgen and Genentech.
Generally, however, biotechnology companies are either privately held
or have much lower market capitalization than the large pharmaceutical
companies and very few have yet achieved profitability. While large
pharmaceutical companies tend to pursue development of ``blockbuster''
drugs with market potentials of $1 billion or more, many biotechnology
companies will pursue products with lower market potentials, including
those products whose projected revenues may only be 10% or so of the
acceptable market potential for a large pharmaceutical enterprise.
Biotechnology companies use living organisms to make their
medicines rather than the chemicals used by pharmaceutical companies.
As well as--entailing very complicated R&D efforts, this also requires
enormously complex manufacturing capabilities. The manufacturing
facilities, whose role is to define the biotech medicine, are subject
to strict FDA licensing requirements. In addition, both the facilities
and the medicine itself are very tightly regulated.
The biotechnology industry is also a dynamic one. The industry
supports 437,000 U. S. jobs, including approximately 200,000 jobs
directly in the industry, in sectors as varied as agriculture,
industrial products and pharmaceuticals. As a whole, the industry is
not yet profitable, but biotechnology companies make tax payments of
about $10 billion per year, including income, corporate and other
federal, state and local taxes.
Moreover, unlike the pharmaceutical industry, the vast majority of
biotech companies spend more than 50 percent of their operating
expenses on research and development. This is necessary given the huge
investments required to bring a product through the discovery and lead
optimization phase, preclinical testing, and then clinical trials
required to gain market approval. With the consolidation in the
pharmaceutical industry and the risk-averse culture of many of the
largest companies, the bulk of early stage research and early clinical
development is now performed by the biotech industry, especially in
areas focusing on newer targets and featuring the most innovative
therapeutics approaches.
It is the early stages of drug development that are most vulnerable
to perturbations in the capital markets. While it has been relatively
easy for entrepreneurs to obtain seed financing, it is the follow-on
financing, the second and third rounds of venture investment required
to fund companies beyond ``proof of concept'', that is often the most
difficult. Through the first six months of 2003, follow-on venture
financing has represented only twenty five percent of the total venture
financings. The total amount of venture financing raised during this
period is down twenty seven percent from the same period in 2002. The
same challenges also confront smaller cap public companies that have a
difficult time raising capital through secondary offerings with
depressed stock prices. It is this critical link in the drug
development value chain that could be jeopardized if investors become
concerned about the government seeking additional compensation for
participation in early stage ``proof of concept'' research.
THE BAYH-DOLE ACT HAS BEEN AN EFFECTIVE ENABLER FOR TECHNOLOGY TO BE
TRANSFERRED FROM FEDERAL AGENCIES TO UNIVERSITIES AND INDUSTRY
As the Committee examines the effectiveness of the transfer of
biotechnology from federal laboratories to universities and private
companies, it is important to understand the historical and current
framework for these transfers.
Over twenty years ago, Congress enacted the landmark Bayh-Dole Act
to promote the transfer of government-sponsored research to
universities and small businesses. This action was taken in response to
concern that the majority of technologies developed with federal
funding were not being commercially exploited.
Prior to Bayh-Dole, federal agencies would rarely relinquish
ownership of federally funded inventions to the academic and private
institutions, even when private sector scientists and engineers
actually contributed to the inventions. Valuable technology was left
languishing on the shelves of research institutions. For example, in
the 1960s, the U.S. government asserted that it owned rights to 5-
fluorouracil (an important anti-cancer drug) even though it had
provided merely a fraction of the funding that went into discovery. As
a result, market entry of this critical product was unnecessarily
delayed and industry distanced itself from federally funded university
research.
Bayh-Dole authorizes universities, non-profits and small businesses
to elect title to inventions made under federal funding agreements.
Additionally, Bayh-Dole authorizes federal agencies to grant exclusive
licenses in their technologies to private companies. Later, President
Reagan extended the policy of Bayh-Dole to large for-profit businesses
which today are able to elect title to many inventions they make under
federal contracts and grants. The ability to elect title to inventions
and to further license valuable technologies gives companies the market
exclusivity they need to achieve commercial exploitation.
At the same time, Bayh-Dole reserves to the government a royalty-
free license to use the invention for government purposes.
Additionally, Bayh-Dole gives the government so-called ``march-in
rights,'' which enable it to compel licensing of a federally funded
invention if the patent owner has not commercialized the invention in a
reasonable time.
Since the enactment of Bayh-Dole, technology partnerships have led
to the founding of more than 1,100 companies based on NIH and
university research. These technology partnerships and the patents on
which they are based are particularly important to small biotechnology
companies, which focus their research on breakthrough technologies that
arise from basic biomedical research.
At Stanford University alone, over 1,200 ``spin-off'' companies
have been established by current or former students and faculty.
Recognized early on by then University President Fred Terman as an
important strategy for seed funding of translational research and
innovation, the vast majority of these companies were founded with
technologies initially developed under government funding. Successful
``spin-off'' ventures help bring valuable products to market, and also
develop the vibrant Silicon Valley surrounding Stanford, which leads in
high tech, biotech, and medical device industries. This thriving
business ecosystem, in turn enables further R&D initiatives and two-way
technology flow between academia and industry. Stanford's Office of
Technology Licensing has a robust record of licensing university
patents, with royalty income that flows back to the university and the
individual inventor. The Cohen-Boyer patent for gene splicing, for
example, was supported by NIH grant funding. That patent yielded $30
million per year in royalty revenue at its peak, for a total value of
over one quarter billion dollars to the University, which was spent on
further research and education.
THE SMALL BUSINESS INNOVATION RESEARCH PROGRAM IS A VALUABLE SOURCE OF
SEED FUNDING FOR THE BIOTECHNOLOGY INDUSTRY, BUT SHOULD BE IMPROVED TO
ALLOW GREATER PARTICIPATION BY COMPANIES THAT ARE SUPPORTED BY VENTURE
CAPITAL FUNDS
The Small Business Innovation Research (SBIR) program is a
competitive, three phase, government funded program that was designed
to encourage commercialization of promising technologies. Federal funds
are used for the critical startup and early development stages--i.e.
those stages that provide proof of concept to attract private equity
into further funding rounds. Because the private sector is expected to
take over 100% of funding by the third stage, companies are
incentivized to expedite commercialization of a particular technology,
product, or service.
Since the enactment of the Small Business Innovation Act in 1982,
SBIR funding has helped many biotechnology companies compete for
federal research and development awards. To qualify for SBIR awards, a
small business must be owned by U.S. individuals (as defined by the
Small Business Administration's [SBA] guidelines) be independently
operated, for-profit and limited to 500 employees. Ten federal
departments and agencies, including the Department of Health and Human
Services, are required by SBIR to reserve a portion of their R&D funds
for award to small businesses.
Because they help biotechnology companies evaluate new technologies
and products at their earliest stage, SBIR awards can be very useful in
helping companies to initiate new commercial opportunities. Before--
most biotechnology products can become commercially available, however,
typically 15 years of work and hundreds of millions of dollars of
investment capital are required to complete adequate testing and to
secure the necessary approvals.
While SBIRs serve a very useful role, particularly when private
equity may be plentiful but directed to late stage private and public
companies where the investor's exit strategy is clear and risks are
lower, they are by no means a substitute for sustained equity
investment. SBA's implementation of the program makes it difficult for
companies who also have venture capital (VC) funding to participate in
the program.
Under the SBA's current regulations a company applying for SBIR
funding must be more than 51% owned by ``individuals'' who are US
citizens or permanent resident aliens and must have less than 500
employees. The SBA has interpreted ``individuals'' to mean only
``natural persons'' and not venture capital firms and employee pension
funds. Many biotechnology companies have less than 500 employees and
obtain the bulk of their funding from venture capital investment.
Typical small start-up biotechnology companies that are backed by VC
funds are generally more than 51% owned by the VC syndicates. The
``individual'' shareholders that make up the VC syndicates are often
the founders, employees, friends of the company, and angel and family
investors. The most promising companies are the ones that attract VC
capital. This typical combination of venture funding, industry
collaboration and only modest investment directly by individuals boosts
``non-individual'' ownership above the 51 percent level very early in a
company's existence and, in virtually every instance, renders the small
business ineligible for SBIR funding. Most if not all start-up
biotechnology companies would be ineligible for SBIR funding as
interpreted by the SBA.
The SBA has proposed new regulations to clarify the ownership
criteria for SBIR awards. However, the proposed regulations do not
address the concerns of the industry with respect to VC-backed
companies. BIO believes that a provision to remove VCs from
determination of size eligibility would allay the concerns of our
member companies and fulfill Congressional intent behind the statute.
See attached comments filed by BIO. We urge this Committee to express
its support for a revised definition of small business that would not
penalize those small businesses supported by venture capital funds.
COOPERATIVE RESEARCH AND DEVELOPMENT AGREEMENTS ARE AN IMPORTANT
VEHICLE FOR PUBLIC-PRIVATE PARTNERSHIPS ON BIOTECHNOLOGY R&D AND SHOULD
BE CONTINUED
The Federal Technology Transfer Act (FTTA) allows government and
government owned contractor operated laboratories to enter into
Cooperative Research and Development Agreements (CRADAs), in order to
promote collaboration between the federal government and the private
sector. In the medical arena, the goal is to take research ``from the
bench to the bedside''. Under a CRADA, the government shares resources
such as personnel, facilities, and equipment with private entities, but
does not make cash outlays to the private sector participant. The
private sector funds its own activities under the CRADA, thus sharing
the total cost of the collaboration.
CRADAs typically allow the private sector participant to retain
intellectual property rights to inventions it makes under the CRADA.
Also, under recent amendments to the Stevenson-Wydler Act, the private
sector participant has a first right of refusal to license any
inventions the government makes under the CRADA. Further, technical
data that is developed by the government under a CRADA may be protected
from disclosure for a period of five years, thus giving the private
sector participant a potential competitive advantage in the
marketplace.
For biotech companies, CRADAs can be an important opportunity to
gain or retain intellectual property rights on biomedical inventions.
They can also be helpful by allowing private companies to utilize
specialized equipment or tools that are sometimes only available in
federal laboratories to test the validity of innovative concepts and
new ideas. CRADAs are thus important tools to enable startup
biotechnology companies to jump the gap between a useful idea or theory
to a successful and profitable product.
NIH has entered into over 400 CRADAs since 1985. One of the most
successful CRADAs with NIH was entered into with Aviron (which has
since been acquired by MedImmune) in 1995. The CRADA was for a
promising influenza vaccine invented at the University of Michigan in
the 1960s under US Army sponsorship.----This vaccine had been the
subject of NIH-sponsored clinical trials through the 70s and 80s.
Despite the lack of a committed industrial sponsor, NIAID had built an
impressive base of scientific knowledge around this flu vaccine and its
novel form of administration via the nose. Under the CRADA, Aviron and
NIAID jointly funded the clinical trials resulting in FDA approval of
the vaccine now known as FluMist tm.
THE ADVANCED TECHNOLOGY PROGRAM HAS BEEN AN IMPORTANT VEHICLE FOR
BIOTECHNOLOGY RESEARCH AND SHOULD BE FULLY FUNDED
The Advanced Technology Program (ATP) was instituted in 1990 under
the management of the National Institutes of Standards and Technology.
The ATP does not fund product development. Instead, it supports
enabling technologies that are essential to the development of new
products, processes, and services across diverse application areas.
This innovative program provides cost-share funding in the critical
early stages of R&D, when research risks are too high for other sources
of funding. Funding under the program is available to pay up to
$2,000,000 in direct costs over a period not to exceed three years for
a single company and up to half of the total project costs for a
maximum of five years for a joint venture involving more than one
company.
Twenty percent of the Advanced Technology Program funding has gone
to biotechnology applications. ATP grants are designed to fill the gap
in financing the development of high-risk technologies that
biotechnology companies often encounter, and that cannot be financed by
venture capital.
ATP grants make a tangible difference to the competitively chosen
small companies receiving the assistance, especially during periods
when seed investment to fund early, technology-validating R&D is
scarce. For example, a grant of $1.2 million during a biotech
investment trough in 1998 accelerated the development of the stem cell
culturing device by two years and helped its fledgling developer
subsequently attract more than $70 million in private investment.
Another small biotechnology company had just 17 employees when it
received a grant in the mid-1990s to develop systems of gene expression
analysis. The company leveraged the ATP research into five patents and
$100 million in corporate partnerships, growing rapidly into a billion-
dollar company with more than 300 employees and a solid balance sheet
that will fund the technology's translation into new medicines.
Since its inception, ATP has fostered development of dozens of
biomedical technologies that might otherwise have been delayed for
years. Examples of ATP success stories include: an autologous stem cell
culturing device that eliminates the need for bone marrow extraction or
multiple (up to 140) skin punctures to withdraw blood; an enzyme used
in DNA sequencing, including the Human Genome Project, and another
enzyme that may replace radioactive substances in diagnostic aids; and
a mammography innovation that lowered the cost and widened availability
of this life-saving diagnostic procedure. More apropos to today's
technology needs is the development of miniaturized, automated DNA-
analysis ``chips'' that are becoming invaluable for rapid, accurate
genetic analysis.
The ATP program is of course subject to Congressional
appropriations. Notwithstanding the multiple successes of the program,
Congress has not consistently funded the program at the necessary
levels. BIO believes that continued funding for ATP would reap benefits
for health and medical research far in excess of the federal funds
invested.
CONCLUSION
BIO supports the continuing efforts of federal agencies to utilize
the various vehicles that Congress has authorized for transferring
valuable technology from the public to the private sector. As noted,
licensing of federally funded inventions and partnering under CRADAs
are two critical vehicles for private sector companies to gain access
to technology developed with federal support. Additionally, the SBIR
and ATP programs provide critical financial assistance to small and
emerging biotechnology companies. BIO supports modifications to the
SBIR program that would increase the opportunities for companies to
participate in the program. Additionally, BIO encourages the Congress
to continue fully funding the ATP initiative. The federal government's
support helps small companies attract the necessary private sector
investment to bring good ideas to the market.
Given the significant technological breakthroughs that have been
achieved in the medical and health fields, BIO believes that the
federal dollars that are invested in biotechnology research have
yielded significant benefits generally for the health of the nation and
specifically for the federal treasury.
However, while continued federal support is key to the future of
the biotechnology industry, federal funding still represents only about
1.6% of the total funds raised for research and development by the
industry. Thus, federal R&D programs must be flexible enough not to
stifle the private sector investment that is so critical for bringing
products from the bench to the bedside.
Thank you again for your support of biotechnology's efforts to
contribute to the advance of health in the United States. I would be
pleased to respond to questions from the Committee.
Mr. Bilirakis. Thank you very much, Dr. Gardner. And,
again, thank you for coming such a long way to be here to help
us out.
Dr. Neighbour, please proceed.
STATEMENT OF ANDREW NEIGHBOUR
Mr. Neighbour. Chairman Bilirakis, members of the
subcommittee, on behalf of the University of California, I
welcome and thank you for this opportunity to testify before
this subcommittee.
As Executive Director of Research Administration at UCLA, I
am responsible for managing publicly and privately sponsored
research on our campus, and for the transfer of its innovative
technologies to the marketplace. I hope to demonstrate today
that there exists an effective collaboration between American
universities, the life sciences industry, and NIH, that yields
enormous benefit for our society and for mankind. I will
briefly describe some of these benefits as well as several
challenges and controversies that have the potential to impede
this success. I would ask that you refer to my written
testimony for greater detail.
As you have heard already today, university tech transfer
began approximately 23 ago with the passage of the Bayh-Dole
Act. A prime example of successful technology transfer occurred
in 1973, however, well before the Act was contemplated or
enacted with the invention, by Cohen and Boyer, of recombinant
DNA technology known as gene splicing.
Funded in part by NIH, these two scientists at Stanford at
the University of California discovered how to insert genetic
material into native DNA. This technique launched a new
industry called biotechnology.
At that time, ownership of NIH-funded inventions rested
with the government. However, because of a special patent
agreement with NIH, the two universities were allowed to own
the patent and assume the responsibility for its
commercialization. Stanford's Technology Transfer Office
licensed the patent to more than 300 emerging companies.
Recognizing that effective license was beyond the
government's resources, Congress, in a bold and inspired move,
passed the Bayh-Dole Act, and universities took over the
responsibility. And since 1980, NIH has played a lead role in
implementing the Act, and universities have built effective
programs for managing their intellectual property while
maintaining their commitment to provide public access to the
results of their research.
Major NIH-funded discoveries at the University of
California, or UC, have included new technologies for improving
radiographic imaging, improved methods to develop and develop
therapeutic drugs, and novel diagnostics for people and
animals. In addition, NIH funding has formed a major platform
for research that has fostered additional Federal and private
funding sporting a plethora of high value products.
Unfortunately, success has led to criticism, which I
believe is founded mostly on three misunderstandings. These
are: firstly, many think tech transfer is a simple linear
process that speeds inventions from the bench to the bedside.
In reality, it is a rather complex, slow, and resource-
intensive activity, often spanning many years.
UC, for example, spends almost $20 million per year in
managing a portfolio of more than 5,000 inventions and 1,000
active licenses. Almost 1,000 new inventions are disclosed to
us each year, and that is with less than 5 percent of those
ever being commercialized.
The process is more of a circle with multiple inputs and
outputs than something linear. Federal funds encourage support
from industry and other sources. Academic research produces
early stage scientific knowledge, and that in turn stimulates
the development of commercial products. Partnership with
industry is invariably essential to convert the results of NIH-
funded endeavors to products that can directly aid the public.
The second misunderstanding is that money is often used to
measure technology transfer success. This metric ignores the
many additional benefits that derive from technology transfer.
The education of students that go on to feed the workforce, new
companies and jobs that aid regional economies, and the
products themselves that save lives and improve the quality of
life.
And, finally, many people believe that universities do tech
transfer to make money or to get rich. After all expenses are
paid, even those universities with gross revenues from
licensing in excess of $20 to $50 million only retain $5 to $10
million of that. And this is reinvested back into the research
enterprise. While these funds are of great value to the
university, few institutions would view this as an effective
way to increase their capital assets.
Imagine a world without knowledge of the human genetic
code--recombinant DNA tools to splice and correct genes, ways
to map and fingerprint DNA to convict the guilty and free the
innocent. All of these technologies, together with vaccines and
new drugs, began in universities that were financed in whole or
in part by NIH.
It is my fervent belief that this alliance between the NIH,
the universities, and the industrial sector, is working well.
We must preserve it, but we must also continue to strive to
enhance its effectiveness and to ensure that arbitrary
impediments are removed for the health of the public and of
this Nation. With a greater knowledge and understanding of the
tech transfer process and the accomplishments of NIH, and their
academic partners, you on this committee I believe will play a
key role in protecting these beneficial outcomes.
Thank you very much for the opportunity to testify before
you today.
[The prepared statement of Andrew Neighbour follows:]
Prepared Statement of Andrew Neighbour, Associate Vice Chancellor for
Research, The University of California, Los Angeles
Chairman Bilirakis, Ranking Member Brown, Representative Waxman and
Members of the Subcommittee: On behalf of the University of California,
I welcome this opportunity to testify before this subcommittee on the
topic of ``NIH: Moving Research from the Bench to the Bedside.'' As the
Executive Director for the Office of Research Administration at UCLA, I
am responsible for the management of both publicly and privately
sponsored research for the campus, and for the transfer of its
innovative technologies to the marketplace. I have enjoyed more than
twenty years working in the realm of technology transfer in both
academic and corporate sectors. I also serve as a Board Member of the
Council on Governmental Relations (COGR), an association of more than
150 leading US research universities, and am the incoming chair of
COGR's Committee of Contracts and Intellectual Property.
BACKGROUND
Over the past twenty years or so, the NIH and research universities
throughout the United States who receive their funding support from
extramural NIH grant programs have developed a collaborative and
effective alliance that yields enormous benefit for our society and for
mankind. In my remarks today, while I will describe some of these
benefits, I will also discuss the challenges and controversies that
have the potential to impede this success.
The passage of the Bayh-Dole Act in 1980 was a bold and inspired
move that shifted from the government to universities the
responsibility for protecting and commercializing inventions made with
federal funds. The Act applies to research funded by any federal
agency. However, because most life sciences and biomedical research is
supported through the NIH, and this segment tends to generate the most
intellectual property, it is the NIH that plays perhaps the most
visible role in Bayh-Dole implementation. Over the past twenty years or
so, the guidance, oversight and coordination provided by NIH has served
to build a collaborative alliance between academe and the government
leading to more and more effective technology transfer.
In the University of California alone, more than 6,500 individual
scientists have reported new inventions since the enactment of Bayh-
Dole representing the creation of a vast research enterprise that has
brought immeasurable and invaluable benefits to society.
Perhaps the prototypical example of the benefit of federal/
university collaboration is the 1973 discovery by Cohen and Boyer of
recombinant DNA technology, otherwise known as ``gene splicing.'' In
research funded by the American Cancer Society, National Science
Foundation and NIH, these two scientists at Stanford and the University
of California discovered the means to insert genetic material
artificially into native DNA. This technique launched an entire new
industry called ``biotechnology.'' As you will note, this invention
predated Bayh-Dole. However, because of a special ``patent agreement''
with NIH, Stanford and the University of California were allowed to
elect title to the patent and, in so doing, assumed the responsibility
for licensing the invention. During the life of the patent, Stanford's
technology transfer office executed and managed more than 300 non-
exclusive licenses with this growing biotechnology industry.
With this experience in view, many individuals and organizations
believed that the task was well beyond the means and capabilities of
the government. Consequently, they encouraged the Congress to consider
moving the responsibility for commercializing federally funded
inventions from the government agencies to the University receiving the
federal grants. Passage of Bayh-Dole conferred not only the right to
take title to inventions arising from government-funded research, but
also an obligation to commercialize these inventions diligently for the
benefit of the public. With this mandate, Universities began the
difficult task of developing technology transfer programs equipped to
steward their newly acquired intellectual property assets.
TECHNOLOGY TRANSFER AT THE UNIVERSITY OF CALIFORNIA
With the largest academic research enterprise in the US and perhaps
the world, the University of California system has built a technology
transfer program that many consider to be among the most effective yet
developed. Initially, the program was centered in the Office of the
President as a central Office of Technology Transfer. As experience
grew, the University realized the merits of moving some of the
activities to the local campuses, particularly those with large
research programs. Presently, the larger campuses (and the federal
laboratories managed by the University) perform most of the technology
activities at the local campus. The systemwide OTT provides
coordination, oversight, policy review, legal support and some
licensing support. The individual campuses that have their own
technology transfer offices manage the licensing of their portfolios
locally. The system as a whole expends approximately $10-12 million per
year in operating expenses and the same amount in ``out-of-pocket''
patenting costs to manage almost 1,000 new inventions received each
year. The University has accumulated a total portfolio of more than
5,000 active inventions in its systemwide portfolio and monitors almost
1,000 patent licenses with industry. In FY02, the University executed
125 new patent licenses and 55 plant licenses. In summary, the process
involves the evaluation of inventions, protection of the intellectual
property through patent or copyright, marketing to industry,
negotiating and executing licenses, and monitoring the licensees'
diligence in commercializing inventions.
Since the Cohen-Boyer invention, major discoveries that resulted
from NIH-funded research at the University of California have included
new technologies for improving radiographic imaging, improved methods
to develop and deliver therapeutic drugs, and novel diagnostics for
people and animals. In addition, NIH funding has formed a major
platform of research that has fostered additional federal and private
funding spawning a plethora of high value products. UCLA alone has
brought to the public many valuable advances in healthcare including
devices to correct brain aneurisms, the nicotine patch to control
tobacco addiction, positron emission tomography (PET scanning), and new
diagnostics for breast and prostate cancer. All of these examples were
either directly or indirectly supported by NIH and the technology
transfer process.
Unfortunately, however, these very successes have turned a
spotlight onto the process which, in turn, has caused some to ask just
how successful are we? Are we getting too rich from tax-payer supported
research? Or perhaps we are wasting this resource and not realizing
adequate return on investment.
While oversight and monitoring of federally supported programs is
clearly appropriate and desirable, some of the criticisms appear to be
founded on misunderstandings of the process and the drivers that
motivate its participants.
In my view, there are three myths that underlie most of the
criticism of the technology transfer process. They can be briefly
summarized as:
(i) Technology transfer is a simple linear activity from ``bench to
bedside;''
(ii) Money is a sound measure of performance and value; and
(iii) Universities commercialize their inventions to create wealth for
themselves.
I will now amplify each of these myths.
MYTH #1: TECHNOLOGY TRANSFER IS A LINEAR ACTIVITY
Previous speakers have provided definitions of the term
``technology transfer.'' Many people who are not familiar with
technology transfer conjure in their minds a somewhat linear activity,
whereby federally funded research in the university results in a new
discovery. Then driven by the Bayh-Dole Act, the university technology
transfer office: reviews the invention for commercial viability; elects
title; files a patent; markets it to industry; negotiates a license;
and the product, perhaps a new therapy for a major disease, goes to
market. In other words, an academic researcher discovers a new drug and
soon afterwards it shows up in the pharmacy.
Like many other things, this process is not as simple as that. In
observing that gravity could bend light waves, Einstein showed nearly a
century ago that the shortest distance between two points is not a
straight line but a curve. Thus, we too should imagine a technology
transfer process that is not linear, but rather one whose beginnings
and endings merge to form a circle. For example, while public funding
supports discovery, the early stage inventions made in the basic
science laboratory of a university frequently attract support from the
private sector. Collaborations with industry that follow may then lead
to the building of new products on the knowledge and platform
technologies made by the university scientist. Industry turns these
through lengthy development cycles over many years into products. Most
product candidates wither along the way; few make it through
development and testing to the market. Product sales generate profits
and wealth, some of which is returned through taxation to restore the
federal coffers. In addition, through sponsored research and
philanthropy, industry reinvests some of this wealth into new research.
Sometimes new discoveries become the platform for the creation of new
companies that bring new jobs to our communities and sustain economic
development through taxes. Royalties paid to the university are shared
with the inventor and the university portion is used to sustain the
technology transfer process, build new research infrastructure, and
support new discovery programs.
In fiscal year 2002, 973 new inventions were reported to University
of California technology transfer offices adding to a total invention
portfolio of more than 5,000 active cases. On receipt of a new
invention disclosure, the first task for the technology transfer office
(TTO) is to determine what funding sources were used to support the
research yielding the new discovery. This is done to establish whether
prior rights may be attached to the invention based on commitments to
the funding source. If supported with any NIH grants or contracts (or
any other federal agency), the invention will fall under the conditions
of the Bayh-Dole Act requiring that we report the invention and decide
whether or not to elect title and file for intellectual property
protection through the US Patent and Trademark Office. To arrive at
this decision, the TTO must exercise professional judgment based on a
scientific, technical and business assessment to determine the
commercial viability of the invention. Is it a profound scientific
breakthrough with no commercial utility? Is it perhaps, simply a better
mousetrap for which there is no market need? Or perhaps it is so new,
that there are no comparable products in the market. The point being
that technology transfer is not a straightforward process in which
research by NIH always generates inventions with an obvious value in
the marketplace. A certain medical school dean once asked me why we
didn't only patent ``the good ones.'' Because many University
inventions are so unrefined and untested, it is difficult to determine
with certainty the future path for the majority of the inventions that
faculty researchers disclose. Illustrative of the process is the oft
used axiom of the princess kissing frogs in search of a prince.
Once the patent application is filed, the TTO sets about marketing
the invention to appropriate industry partners in the hope of finding
one willing to develop the invention into a product under a suitable
contract or license. Frequently, the inventions themselves are valuable
not as an actual saleable product, but as a technology that will assist
the corporate partner in developing their own products. A common
example arising from NIH-funded research might be the discovery of a
new cellular component that is responsible for triggering cancer
growth. It may be possible to gain a patent on the discovery of this
protein and on its use as a target for drugs that might inhibit its
function and stop cancer cells from spreading. The drug, in this
example, would be developed exclusively by the company. However, they
might need a license to the original invention and access to the
knowledge and skill of the university inventor in order to develop
their commercial product effectively.
Having found a company interested in licensing the invention, the
TTO negotiates a license that establishes the obligations of the
licensee to develop the invention diligently at its expense and to pay
fees and royalties against future product sales in return for the
license to make, use and/or sell the invention.
The ``frog-prince analogy'' is a good one as there is an enormous
winnowing effect with very few discoveries getting through this process
and reaching the marketplace. On average, the University of California
files new patent applications on 45-50% of the new inventions disclosed
each year. Approximately 30% of these will issue as US patents, and
less than half of those will ever be licensed. To recap, of the 973 new
discoveries received in 2002, only 5% will be licensed. Many of these
will fail to reach the market.
To close the loop on this circular process, however, it should be
stressed that the discovery is often the beginning of a new process.
Exposure to the researcher and his or her invention by the company
frequently generates a new interest that results in the company
becoming a private sponsor of a new research program in the inventor's
laboratory. In addition, under those rare circumstances where a highly
commercial invention does yield a successful product in the
marketplace, income earned from royalties by the University is
reinvested into research, and the companies tax obligations result in
sources of revenue to fund future agency research appropriations,
thereby completing the circle.
From this discussion, I hope the Subcommittee will appreciate the
complexity of technology transfer and the relative difficulty of moving
inventions from bench to bedside.
MYTH #2: MONEY IS A SOUND MEASURE OF PERFORMANCE AND VALUE
For the external observer, it is tempting and easy to measure
technology transfer by the amount of money it yields. For any given
University, this would mean examining the annual gross revenues derived
from licensing its inventions. The technology transfer circle is like a
catherine wheel, a firework (popular in Great Britain) consisting of a
disk with rockets equally spaced around its perimeter. When lit, it
spins at high speed and showers energy and light in a broad
circumference. Indeed, some licenses generate income, but the research
enterprise yields so much more. In reality technology transfer includes
the training and graduation of students who move into the world as
trained scientists and professionals. Knowledge is created and shared
through publication and presentation. Faculty scientists serve as
consultants and advisors to the public and private sectors. While some
inventions must be patented to ensure commercial interest and value,
not all discoveries benefit society through licensing and
commercialization. Counting dollars to quantify technology transfer
ignores these other sometimes more valuable benefits that accrue from
federally supported research activities in the University.
A letter from Carl Feldbaum, President of the Biotechnology
Industry Organization, dated June 11, 2001 to Dr. Maria Friere, then
Director of Technology Transfer at NIH, succinctly and thoroughly lists
the varied and significant returns on investment that accrue to the
public from NIH-sponsored research. These include basic science
knowledge and understanding; the development of new therapeutics and
diagnostics; scientific training that provides employees for a rapidly
growing new biotechnology industry; research tools to advance
scientific research; and the licensing of new inventions from both
intramural and extramurally-funded research.
Furthermore, a quantitative performance assessment is predicated on
the assumption that more money means greater societal value. Is a
University that makes many millions of dollars from an improvement in
cell phone technology necessarily more successful at technology
transfer than one that develops a cure for a rare disease that may
yield less than one hundred thousand dollars?
Critics of academic technology transfer who focus on the revenue
streams derived from licensing often erroneously contend that
universities should not get rich from exploiting tax payer's funds.
Simply put, universities do not ``get rich'' from their technology
transfer activities. The University of California, widely held to be
one of the most successful university systems in the field of
technology transfer averages an annual gross income from licensing of
approximately $80 million. After payment of legal expenses, the cost of
providing technology transfer services, and the inventor's share, $20-
25 million is returned to the system to support ongoing research. This
amount represents less than one percent of the total research
expenditures of the UC system. The annual survey published by the
Association of University Technology Managers (AUTM) shows that fewer
than ten universities generated more than $20 million in gross revenues
in FY2002. In virtually all cases, this was because each had a single
invention that yielded the majority of the income. At the University of
California, 25 inventions from its total active portfolio of 5,000
produced 68% of its annual income.
Similarly, few individual inventors receive significant funds from
their inventions. Since most inventions yield less than $10,000 in
gross royalties per year, few faculty inventors realize any significant
gains from the 35% revenue share that must be split with their co-
inventors.
It has also been argued by some that royalty bearing licenses of
federally funded discoveries contribute to unreasonable pricing of
``blockbuster'' drugs. While it has been clearly documented that few if
any of these drugs arose directly from federally funded research, it
has been unequivocally demonstrated that drug pricing is determined by
the high cost of development and testing required before a drug can be
sold, and that royalty obligations have negligible effect on market
price of these treatments.
Paradoxically, NIH was recently criticized for not charging a high
enough royalty for technology it developed that was part of a major
drug now marketed by Bristol-Myers Squibb.
Therefore, measuring technology transfer accomplishments by the
amount of money an invention generates for the university or the
inventors fails to capture the broader benefits to the public that
accrue from NIH-funded research and the larger research enterprise.
MYTH #3: UNIVERSITIES COMMERCIALIZE THEIR INVENTIONS TO CREATE WEALTH
FOR THEMSELVES
Focusing on the income derived from licensing for one moment, an
experienced businessman would conclude that based upon return on
investment ratios, University technology transfer is largely
unsuccessful. A quick search of the Patent Office database shows that
the Regents of the University of California have been awarded 4,313 US
patents since 1975. That's more than Pfizer, Inc., (2,774) and less
than Merck (6,346). While the University may thus be in the same league
as certain Fortune 100 companies, there are fundamental difference in
its commercialization strategies. For profit companies focus their
research in market segments in which they do business. Typically, they
support internal research and development for the purpose of expanding
their targeted strategic business interests. Universities not only
attempt to broaden their research enterprise across all disciplines,
they do not direct the research objectives of their faculty. Another
particularly critical point is that the university relies on their own
faculty to decide if it is best to publish their findings or to seek a
proprietary position on their discoveries before they are more broadly
disseminated. Protecting the right of its faculty to select topics on
which they conduct their research and to publish whatever and whenever
they see fit are among the basic tenets of academic freedom.
Consequently, university inventions that may have great potential value
do sometimes find their way in to the public domain for all to use
without the exclusionary protection of a patent. If universities were
to run technology transfer as a business, we would behave very
differently.
The mission of the research university is education, the pursuit of
knowledge, and public service. Basic academic studies of bacteria in
hot springs in far away places may seem eclectic to some. But imagine
how a drug for cancer would have been discovered by a major
multinational pharmaceutical company had it not been for laboratory
processes that use enzymes isolated from these very bacteria to
manipulate genes to produce the drugs that now treat patients.
The primary purpose of technology transfer in a research university
is to provide a supportive and sustained environment for the researcher
to flourish. Licensing generates corporate collaborations building
partnerships with industry. Companies have resources that Universities
cannot afford that academic scientists need access to for their
research. Some inventions will stall without corporate involvement.
Many potential life science-based discoveries need the formulation,
manufacturing, testing and marketing skills of corporations to turn
them from an academic discovery to one that can be dispensed from the
pharmacy. As indicated above, revenues from technology licensing
represent less than one percent of our total research budget and a
fraction of a percentage point of total operations. Given the cost of
technology transfer and the relatively low cash returns, this is an
ineffective source of operating capital and the University does not
view its purpose to be one of budget supplementation.
Universities measure their success by their contribution to the
spinning catherine wheel. Not only how many inventions has it yielded,
and how many have made it into the market to provide benefit to the
public, but also how many graduates has it prepared for the world.
State universities support and contribute to local economic
development. Growth of its research enterprise creates jobs in the
university itself. Sometimes it generates new ventures that grow into
new companies. The leading biotech companies like Amgen and Genentech
all grew from academic origins. At the University of California alone,
more than 200 new companies have been spun out based on new
technologies invented by its faculty in recent years.
CONCLUSION
In supporting the Bayh-Dole Act and our role in technology
transfer, universities are faced with a conundrum. On one-hand, some
believe that we are getting rich using tax payers' support through
federal grants from NIH and other agencies. Conversely, some argue that
we should derive a greater financial return on investment and criticize
us for being incompetent and wasting federal or public funds.
The reality, however, is revealed when one measures the broader
value and benefits that emanate from the university academic
enterprise--namely the fundamental advances in knowledge and technology
arising directly and indirectly from the creative efforts of hundreds
of thousands of expert academic scientists and their students. The
enablement of new products that have changed our world, especially in
the form of improved understanding of disease, of accurate diagnostics,
and effective therapeutics that allow the dying to live and improve the
quality of life of so many.
What would the world be like today without our knowledge of the
human genetic code; recombinant DNA tools to splice and correct genes;
ways to map and fingerprint DNA to convict the guilty and let the
innocent free? All of these technologies together with vaccines and new
drugs began in universities that were financed in whole or in part with
federal funds through the NIH. Imagine a world where our collective
expertise that has been built over the past 20 years to bring these and
other innovations forward is eroded and impeded by changing the law
because a minority feel it's not working--a feeling founded on a lack
of knowledge and understanding of the complexity of the task.
The alliance with NIH is working. Guidelines developed and
promulgated by the agency encourage the broad dissemination of research
tools developed in universities that can facilitate new research
discoveries. Giving Universities the opportunity and the right to
manage their inventions assures that they will be transferred
diligently and effectively in a manner beyond the capabilities and
resources of the agency if it were to carry this responsibility alone.
Mr. Chairman, Subcommittee Members, it is my fervent belief that
this alliance between the NIH, the universities and the industrial
sector is working well. We must preserve it, but we must also continue
to strive to enhance its effectiveness, and to ensure that arbitrary
impediments are removed for the sake of the public and this Nation.
With a greater knowledge and understanding of the technology transfer
process and the accomplishments of NIH and their academic partners, you
will play a key role in protecting these beneficial outcomes.
Thank you very much for the opportunity to testify before you
today.
Mr. Bilirakis. Thank you, Doctor. And I will say to you all
when we finish up that we would very much welcome suggestions
from you in terms of how we can improve the overall process. So
please be thinking of that. Help us to help you, so to speak.
Dr. Soderstrom?
STATEMENT OF E. JONATHAN SODERSTROM
Mr. Soderstrom. Thank you, Mr. Chairman. And I echo the
comments of my colleagues here in welcoming the opportunity to
address what we think is a very important topic for this
government to face.
In my role as Managing Director of the Office of
Cooperative Research, I have exactly the same responsibilities
that my colleague Andrew Neighbour has. So I won't bother to
repeat those.
What I would like to underscore, however, is that in the
course of fulfilling our research and educational missions,
university scientists often create intellectual assets that
have the potential to benefit society and further the
university's educational goals. Some of these assets, but by no
means all, may result in patentable inventions.
As they initially emerge from the university's
laboratories, however, these inventions are not--and I
underscore are not--commercial products. Rather, they require
substantial investment of time, energy, and financial resources
to unlock their potential. That is not the role of the
university. That is the role of the private sector. This
process is best realized through the significant commercial
sector involvement.
Under the protection of the license agreement that we
negotiate with companies, they can confidently invest in
transforming these intangible assets into tangible products.
Prior to the enactment of the Bayh-Dole Act, companies faced
significant hurdles in negotiating such agreements with
universities. Because the government lacked the resources and
links with industry needed to develop and market these
inventions, hundreds of value patents and many new chemical
entities were sitting unused on the shelves of laboratories
throughout the United States.
In addition, U.S. industry was not inclined to brave the
government bureaucracy to license these patents. Thus,
technology transfer from universities was primarily
accomplished from--by publishing the research results, training
students for the workforce, and, in some cases, with land grant
universities' agricultural extension services.
The ability, however, to retain title and, thus, license
the inventions has been a healthy incentive for universities to
become much more involved in the technology transfer process,
and such incentive was needed. We have ample evidence of that,
since participation prior to that was so underutilized.
Since then, we have seen that patent and licensing
activities has encouraged faculty and the universities to get
involved in a rather time-consuming activity, which has to be
done in addition to our primary missions of research and
education. University patenting and licensing efforts under
Bayh-Dole have fostered the commercialization of many new
technological advances that impact the lives of millions of
people across this Nation.
Numerous pharmaceutical and medical products,
environmentally friendly, or manufacturing technologies,
inventions which improve public safety, and information
technology services have resulted from the transfer of
federally sponsored research results from academic laboratories
to the business community and ultimately to consumers.
In many instances, these products and processes would not
have reached the public without the incentives that are
afforded by this Act. Indeed, the British News Weekly--the
economists recently concluded that the Bayh-Dole Act was
possibly the most inspired piece of legislation ever to be
enacted by the American Congress in the past half-century. I
agree. If you look at the results, I think you will as well.
Over the last 23 years, nearly 23,000 license agreements
have been enacted and are currently active. Last year alone 360
new--I am sorry--in the last 5 years, over 1,500 new products
have been introduced in the marketplace. Last year 494 new
companies were formed based on licenses from academic
institutions. And since 1980, 3,800 new ventures have been
created. I think those are astounding results. And if I just
look at my own institution--Yale University, which happens to
be a substantial recipient of NIH funds--I see the same effect.
The result of the support of NIH funding has been a wealth
of new knowledge that has led to discoveries that are
transforming our understanding of human disease. Translating
this knowledge into new means of diagnosis, prevention, and
treatment has yielded new inventions, with the potential for a
profound and positive effect upon the welfare and health and
safety of humankind.
But if I look, in particular, at one issue that hasn't been
mentioned yet today but I want to draw attention to, which is
the transformation of the local economy based on this. And
based just on Yale's strength in the biomedical sciences, we
have been able to help build a biotechnology industry in and
around an economically depressed area of New Haven,
Connecticut.
The results from the formation--have resulted in the
formation of 25 new biotechnology companies in the greater New
Haven area. In the last 2 years alone, those companies have
attracted $1.5 billion in private sector investment, all of
which is going into further development of NIH-funded research.
More importantly, those companies now employ 1,300 people, and
they have begun the transformation of more urban areas.
Mr. Chairman, I want to bring to your attention something
that I think exemplifies the heart of my testimony. I recently
had a conversation with the Vice Chairman of the NASDAQ stock
market. In the course of that conversation, he related to me
that he believed that based on his estimate 30 percent of the
companies that are currently listed on the NASDAQ exchange owe
their value to the results of government-sponsored research and
development.
Technologies licensed from academia have been instrumental
in spawning entirely new industries, improving the productivity
and competitiveness of those companies, and creating new
companies and jobs. The Bayh-Dole Act continues to be a
national success story, representing the foundation of a
successful union among government, universities, and industry,
and the success of this three-way partnership cannot be
overstated.
Thank you, Mr. Chairman.
[The prepared statement of E. Jonathan Soderstrom follows:]
Prepared Statement of E. Jonathan Soderstrom, Managing Director, Office
of Cooperative Research, Yale University
Mr. Chairman, thank you for the opportunity to testify before your
Subcommittee on the important topic of translating research from the
bench to the bedside.
My name is Jon Soderstrom. I am the Managing Director of the Office
of Cooperative Research (OCR) at Yale University. The Office of
Cooperative Research is the patent management organization for Yale
University. I also serve as the Vice President for Public Policy the
Association of University Technology Managers known as AUTM. AUTM is a
nonprofit organization created to function as a professional and
educational society for academic technology transfer professionals
involved with the management of intellectual property. AUTM was founded
in 1974 as the Society of University Patent Administrators. That group
laid the foundation for the association that exists today--more than
3,000 members strong representing over 1,500 institutions and companies
across the globe. Neither Yale nor AUTM have received any federal
grants, or engaged in any federal contracts or subcontracts that
require reporting under House rules.
TRANSLATING UNIVERSITY INVENTIONS INTO COMMERCIAL PRODUCTS
In the course of fulfilling our research and educational missions,
university faculty often create intellectual assets that have the
potential to benefit society and further the university's educational
goals. These assets may include patentable inventions, copyrightable
works or ideas that form the basis for commercializable intellectual
property. As they initially emerge from the university's laboratories,
these inventions are not mature commercial products. Rather, they
require significant investment of time, energy and financial resources
to unlock their potential. This process is best realized through a
strategy of attracting commercial sector involvement. Under the
protection of a license agreement, companies can confidently invest in
transforming these intangible assets into tangible products. Prior to
the enactment of the Bayh-Dole Act (P.L. 96-517), the ``Patent and
Trademark Act Amendments of 1980'' on December 12, 1980, companies
faced significant hurdles in negotiating such agreements with
universities.
The Bayh-Dole Act created a uniform patent policy among the many
federal agencies that fund research. The Act enables small businesses
and nonprofit organizations, including universities, to retain
ownership of inventions resulting from federally funded research and to
manage the licensing of them to industry for commercial product
development in the public interest. Prior to the Act, ownership of
patents resulting from university discoveries was largely controlled by
the federal agencies that sponsored the research. Because the
Government lacked the resources and links with industry needed for
development and marketing of the inventions, hundreds of valuable
patents were sitting unused on the shelf. Government policy at that
time was generally to offer non-exclusive licenses under all inventions
that it owned--a licensing stance administered under some 24-26
different non-uniform agency policies, which proved to be highly
unsuccessful. Under these conditions, U.S. industry was not inclined to
brave government bureaucracy to license patents. Thus, technology
transfer from universities was accomplished primarily by the publishing
of research results, training of students for the workforce and some
extension programs established by the land-grant universities. The
benefit to U.S. industry of such an unstructured process is
undocumented and highly speculative. As the authors of the Act, former
Senators Birch Bayh and Robert Dole, recently noted 1:
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\1\ Birch Bayh and Robert Dole, ``Our Law Helps Patients Get New
Drugs Sooner,'' Letter to the Editor, Washington Post, April 11, 2002;
Page A28
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Government alone has never developed the new advances in
medicines and technology that become commercial products. For
that, our country relies on the private sector. The purpose of
our act was to spur the interaction between public and private
research so that patients would receive the benefits of
innovative science sooner.
The ability to retain title to and license their inventions has
been a healthy incentive for universities to become involved in
transfer of technology from their laboratories to the marketplace. Such
incentive is needed, since participation in patent and licensing
activities is time consuming for faculty, and must be done in addition
to our primary research and teaching missions. University patenting and
licensing efforts under the Bayh-Dole Act have fostered the
commercialization of many new technological advances that impact the
lives of millions of people across the nation. Numerous pharmaceutical
and medical products, environmentally friendlier manufacturing
technologies, inventions which improve public safety, and information
technology services have resulted from the transfer of federally
supported research results from academic laboratories to the business
community and, ultimately, consumers. In many instances, these products
and processes would not have reached the public without the incentives
and procedures afforded to higher education institutions by the Act. As
a recent article in The Economist noted 2:
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\2\ The Economist, ``Innovation's golden goose,'' December 14, 2002
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Possibly the most inspired piece of legislation to be enacted
in America over the past half-century was the Bayh-Dole act of
1980. Together with amendments in 1984 and augmentation in
1986, this unlocked all the inventions and discoveries that had
been made in laboratories throughout the United States with the
help of taxpayers' money. More than anything, this single
policy measure helped to reverse America's precipitous slide
into industrial irrelevance.
A recent national survey conducted by AUTM 3 reports
that 70% of the active licenses of responding institutions are in the
life sciences--yielding products and processes that diagnose disease,
reduce pain and suffering, and save lives (Attachment 1: AUTM Licensing
Survey, FY 2001). Most of these inventions involved were the result of
federal funding from the National Institutes of Health. While it would
be impossible to list all such inventions, a few examples of
technologies and products originating from federally funded university
discoveries include:
\3\ The Association of University Technology Managers, ``AUTM
Licensing Survey, FY 2001: A Survey Summary of Technology Licensing
(and Related) Performance for U.S. and Canadian Academic and Nonprofit
Institutions, and Patent Management Firms.'' AUTM: Northbrook, IL,
2002.
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Artificial lung surfactant for use with newborn infants, University
of California
Cisplatin and carboplatin cancer therapeutics, Michigan State
University
Citracal ' calcium supplement, University of Texas
Southwestern Medical Center
Haemophilus B conjugate vaccine, University of Rochester
Neupogen ' used in conjunction with chemotherapy, Memorial
Sloan Kettering Cancer Institute
Process for inserting DNA into eucaryotic cells and for producing
proteinaceous materials, Columbia University
Recombinant DNA technology, central to the biotechnology industry,
Stanford University and University of California
TRUSOPT ' (dorzolamide) ophthalmic drop used for glaucoma,
University of Florida
These examples of successful new technologies demonstrate that a
strong national infrastructure to support technology transfer has been
established at academic institutions across the nation since passage of
the Bayh-Dole Act. The royalties received from the licensed inventions
support such an infrastructure. The Act requires that royalties
received by universities from federally-funded inventions be reinvested
for research and education purposes, after payment of a share to the
inventor and payment of incidental legal expenses associated with
patenting and licensing of the invention.
University use of royalty income is complex and diverse. Most
frequently royalty income is used for research and educational expense
of graduate students, start-up research costs for new or junior
faculty, seed money for innovative new projects or initiatives (often
provided through an intramural research competition), computer
equipment and laboratory facilities renovation. Universities have used
royalty income for a variety of innovative programs or initiatives.
Examples include summer programs for female undergraduate students
interested in science careers, technical assistance programs which
provides high technology urban planning and architectural visualization
services to inner city communities based on the agricultural extension
service model, and new laboratory buildings to support the demands of
21st century medical research.
For most universities royalty income does not represent a
significant source of revenue when compared with their federal funding
or sponsored research expenditures. The Council on Government Relations
(COGR) estimates that overall the aggregate university share of royalty
revenues is in the range of 3% of total federal funding and of total
research expenditures 4. Some universities do better than
others in terms of royalty income received. Most universities, however,
do not derive substantial revenue from royalties by almost any standard
of comparison. For those universities that derive substantial income
from royalties, that success often tends to be associated with one
particular invention. There is considerable annual fluctuation in
income received, and one-time occurrences (e.g. settlement of a legal
dispute over rights to an invention) can result in very large
perturbations in income amounts. Thus, relatively few universities
derive substantial revenues from royalties, and universities as a whole
are not reaping ``windfall profits.''
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\4\ Letter from Katharina Phillips, President, Council on
Government Affairs to Dr. Wendy Baldwin, Deputy Director Extramural
Research, National Institutes of Health, June 5, 2001.
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Nevertheless, in 1980 there were approximately 25-30 universities
actively engaged in the patenting and licensing of inventions. It is
estimated that there has been close to a ten-fold increase in
institutional involvement since then. The AUTM survey reflects the
impact of this growth in activity:
Over 4,000 new license and option agreements were executed with
nearly 23,000 such agreements currently active.
Nearly 360 new commercial products were brought to the market under
license to a commercial partner. Since 1998, more than 1,500
new products have been introduced to the marketplace.
494 new companies were formed based on a license from an academic
institution. Since 1980, over 3,800 such ventures have been
created.
Approximately $30 billion of economic activity each year, supporting
250,000 jobs can be attributed to the commercialization of new
technologies from academic institutions.
Technologies licensed from academia have been instrumental in
spawning entirely new industries, improving the productivity and
competitiveness of companies, and creating new companies and jobs. In
summary, the Bayh-Dole Act and its subsequent amendments created
incentives for the government, universities, and industry to work
together in the commercialization of new technologies for the public
benefit. The success of this three-way partnership cannot be
overstated.
YALE'S EXPERIENCE
Yale's Office of Cooperative Research was created in 1982 in
response to the passage of the Bayh-Dole Act that encouraged
universities to seek commercial partners to move their discoveries out
of the laboratory and into the marketplace. The OCR was charged with
extending and expanding Yale University's interaction with the private
sector. The duties of the OCR include oversight for patenting and
licensing activities, as well as development of university inventions.
OCR staff work with Yale researchers to identify inventions that may
ultimately become commercial products and services useful to the
public.
In FY 2002, approximately $335 million or 80% of Yale's sponsored
research and training was supported federal agencies such as the
National Institutes of Health (NIH), National Science Foundation (NSF),
Department of Defense (DOD) and Department of Energy (DOE). The largest
federal sponsor is the NIH, which provided $257 million of grants and
contracts during 2002. The result of this support has been a wealth of
new knowledge that has led to discoveries that are transforming our
understanding of human disease. Translating this knowledge into new
means of diagnosis, prevention and treatment has yielded new inventions
with the potential for a profound and positive effect upon the welfare,
health and safety of humankind. Researchers in the Department of
Pharmacology of the Yale School of Medicine, for example, together with
their research collaborators at other institutions, have played
significant roles in developing two key ingredients of the so-called
drug cocktail: the reverse transcriptase inhibitor d4T, known
commercially as Zerit, and 3TC, known as Epivir. These medicines have
fundamentally changed the nature of AIDS therapy during the past
decade.
William Prusoff, Ph.D., Professor Emeritus of Pharmacology, has
spent a 45-year career at Yale investigating potential antiviral and
anticancer compounds, part of the traditional, small-molecule approach.
In the late 1950s he synthesized idoxurine, an analog of thymidine,
which was the first antiviral compound approved by the FDA for therapy
in humans. It was used to treat herpes infection of the eye. Dr.
Prusoff and his long-time collaborator, the late Tai-Shun Lin, Ph.D.,
discovered in the 1980s that a thymidine analog, reported in scientific
literature by researchers from Wayne State University as a poor
anticancer agent, was very effective in slowing the production of HIV.
This compound is known as d4T or stavudine. Bristol-Myers Squibb
developed the drug under the trade name Zerit and brought it to market
in 1994.
Yung-Chi (Tommy) Cheng, Ph.D., the Henry Bronson Professor of
Pharmacology, has worked on a parallel course. While Drs. Prusoff and
Lin found drugs that work against AIDS, Dr. Cheng has sought ways to
reduce their toxicity. Long-term usage of anti-retroviral AIDS drugs
leads to a decline in the mitochondrial DNA of certain organs,
impairing their ability to function properly. After a month or two of
use, these agents can cause problems in nerves, the pancreas, muscles
and the liver. Dr. Cheng's laboratory team studies drugs that will be
active against the virus but will have no toxicity to the mitochondrial
DNA.
One such drug turned out to be 3TC, a compound with positive and
negative forms that mirror one another. Originally synthesized by a
Canadian researcher and identified as an antiviral agent, samples were
sent to Dr. Cheng for study of the drug's toxicity. He found that 3TC's
negative form reduced side effects when used in combination with AZT.
The combination increases 3TC's efficiency at inhibiting an enzyme HIV
uses to reproduce its genetic material. Dr. Cheng identified 3TC as an
agent that would be less toxic to mitochondrial DNA than other
retroviral drugs.
A new approach to combating AIDS may grow out of work led by John
K. Rose, Ph.D., Professor of Pathology and Cell Biology. The agent he
developed, based on a common virus found in cattle, has killed HIV-
infected cells in culture. He also sees the possibility of developing
an AIDS vaccine, using recombinant form of the virus as a vaccine
vector. Researchers hope the vaccine will stimulate both parts of the
immune system: antibodies to neutralize any free-floating HIV and
specialized immune cells to kill any cells that HIV does manage to
infect. Early results using a form of the engineered virus showed
promise against SIV, the simian form of HIV, for use in animal trials.
Dr. Rose is working together with scientists at Wyeth Pharmaceuticals
in conducting further animal tests. If it is proven safe and effective
in animals, human trials could follow.
These are only a few examples of the life-changing discoveries
resulting from Yale's scientific endeavors. Currently, Yale's has
licensed eight (8) novel therapeutic drugs being tested in thirteen
(13) different clinical trials for such life-threatening diseases as
various types of cancer, Hepatitis B and AIDS (see attachment 2: Yale
Pharmaceutical Pipeline). The benefit to the public derived from these
and other inventions created through the research at Yale and other
academic research institutions is incalculable.
THE IMPACT ON LOCAL ECONOMIC DEVELOPMENT
In many communities around the country, the scientific research
undertaken by universities has been a powerful engine of local economic
development. As President Richard C. Levin recently pointed out
5, without critical mass in electrical engineering and
computer science, Yale--and consequently New Haven--missed out on the
technological revolution that spurred the development of Silicon Valley
and Boston's Route 128. But Yale has impressive strength in biomedical
sciences with unexploited potential to build a biotechnology industry
in and around New Haven. With the administration of President Levin,
which started in 1993, Yale heightened its involvement in community
economic development through specific operations backed by financial
investments and increased professional staffing. The results include:
\5\ Richard C. Levin, ``Universities and Cities: The View from New
Haven,'' Inaugural Colloquium, Case Western Reserve University, January
30, 2003.
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A commitment to spend over $500 million to renovate every science
laboratory on campus as well as construct 5 new state-of-the-
art research and educational buildings.
A commitment to spend an additional $500 million to renovate the
laboratories at the Medical School including the construction
of a recently opened 457,000 square foot building for disease-
based research that increased the total lab space by 25%.
Twenty-five new biotechnology companies have been established in the
greater New Haven area, seventeen within the city limits. These
firms have attracted over $1.5 billion in capital and together
they now employ 1300 people.
Attracting Winstanley Enterprises of Concord, Massachusetts to
purchase the 550,000 square foot former headquarters of the
Southern New England Telephone Company one block from the
Medical School that it transformed into the George Street
Technology Center housing eight biotechnology spin-offs from
Yale.
Working with the State of Connecticut and City of New Haven to
attract Lyme Properties (the developers of Kendall Square in
Cambridge, Massachusetts) to convert 1 million square feet of
former factory space at Science Park into labs, offices and
restaurants for additional spin-offs from Yale.
Although these results are just from New Haven, Connecticut,
similar scenarios are being replicated at numerous sites across the
country. On a nation-wide basis, the results support the conclusion
that the Bayh-Dole Act has promoted a substantial increase in
technology transfer from universities to industry, and ultimately to
the public. There has been a tremendous acceleration in the
introduction of new products through university technology transfer
activities. These benefits have been significantly enhanced by the
adoption of federal policies encouraging technology transfer. Such
policies have led to breathtaking advances in the medical, engineering,
chemical, computing and software industries, among others. The
licensing of new technologies has led to the creation of new companies,
thousands of jobs, cutting-edge educational opportunities and the
development of entirely new industries. Today, the Vice Chairman of the
NASDAQ Stock Market,6 estimates that 30% of the companies
listed owe their value to the results of government sponsored research
and development. Accordingly, the Bayh-Dole Act continues to be a
national success story, representing the foundation of a successful
union among government, universities, and industry.
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\6\ Personal communication with .
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Mr. Chairman, thank you again for your time and attention. If there
are any questions, I will be pleased to answer them.
[Attachment 1 is available at www.autm.net]
Attachment 2: Yale Pharmaceutical Pipeline
----------------------------------------------------------------------------------------------------------------
AGENT LICENSEE INDICATION STAGE PATENT EXPIRATION
----------------------------------------------------------------------------------------------------------------
Zerit ......................... Bristol-Myers HIV/AIDS.......... Marketed.......... June 2008
Squibb.
Coviracil ..................... Triangle Hepatitis B....... Phase III......... January 2010
Pharmaceuticals.
Pexelizumab TM.................. Alexion Cardiopulmonary Phase III......... Pending
Pharmaceuticals. Bypass.
Troxatyl ...................... Shire Acute Myelogenous Phase II.......... April 2017
Pharmaceuticals. Leukemia.
Troxatyl ...................... Shire Solid Tumors Phase II.......... April 2017
Pharmaceuticals. (pancreatic
cancer).
Triapine TM..................... Vion Leukemia.......... Phase II.......... January 2011
Pharmaceuticals.
Triapine TM..................... Vion Metastatic Breast Phase II.......... January 2011
Pharmaceuticals. Cancer.
Clevudine TM.................... Triangle Hepatitis B....... Phase II.......... December 2013
Pharmaceuticals.
Elvucitabine TM................. Achillion Hepatitis B....... Phase II.......... May 2014
Pharmaceuticals.
Elvucitabine TM................. Achillion HIV/AIDS.......... Phase II.......... May 2014
Pharmaceuticals.
TAPET TM........................ Vion Anticancer....... Phase I........... March 2013
Pharmaceuticals.
TAPET-CD........................ Vion Anticancer........ Phase I........... March 2013
Pharmaceuticals.
VNP40101M....................... Vion Anticancer (Solid Phase I........... March 2010
Pharmaceuticals. Tumors).
VNP40101M....................... Vion Anticancer Phase I........... March 2010
Pharmaceuticals. (Leukemia).
IoddU........................... Achillion Epstein-Barre Pre-clinical...... Pending
Pharmaceuticals. Virus.
ACH0630......................... Achillion Hepatitis B and C. Pre-clinical...... Pending
Pharmaceuticals.
VSV Vaccine..................... Wyeth HIV/AIDS.......... Pre-clinical...... Pending
Pharmaceuticals.
----------------------------------------------------------------------------------------------------------------
Mr. Bilirakis. Thank you, Doctor. You know, we talk about
the Bayh-Dole Act and its accomplishments, and think back how
much medicine might have progressed if that Act had taken place
earlier. And I am told by staff, and I guess some of you all
can verify this, that it took about 20 years of discussions
before we could get to that particular point. So, my God----
Mr. Soderstrom. That is absolutely correct, sir.
Mr. Bilirakis. Well, Dr. Sigal, please proceed.
STATEMENT OF ELLEN V. SIGAL
Ms. Sigal. Mr. Chairman, members of the committee, I am
very happy to be here today. I am here in two capacities--one
personally and one as Chairman of the Friends of Cancer
Research.
As a personal story, I think you should know that everyone
in my family has died of cancer. Everyone. My mother just
recently died of pancreatic cancer. My sister died at 40 years
old, leaving a 4-year-old child. And my father died of prostate
cancer. So I have devoted my life to making a difference in
these matters.
Friends is a coalition of all of the major groups in cancer
research. It has the professional organizations, the American
Cancer Society, ASCO, AECR, it has all of the patient groups,
lymphoma, breast cancer, prostate cancer, and many individuals
who care and make a difference.
The investment in the NIH and the results and what we have
gotten out of it has been staggering to the patient. It has
been enormous and well-spent money, and it will--it has made a
difference, and in the future it will make an enormous
difference.
Patients gain when scientific knowledge and understanding
grows, is rapidly disseminated. Patients benefit when they have
improved access to meaningful information about their diseases
and conditions, and their options for treatment are
participation in clinical trials. Patients benefit when the
discoveries of the NIH scientists and those researchers
supported by the NIH are transferred to the private sector for
the complex, risky, and expensive process of development into
commercial products.
The United States technology transfer policies are the envy
of the world, because the NIH, under the direction of Congress,
has made the creation of new products a central goal of the
American biomedical research. The most important benefit is it
benefits patients and people.
Since Bayh-Dole, Congress has implemented a policy
structure that recognizes and builds upon the fact that the
marketplace can be a powerful tool in promoting innovation. It
is private sector firms that produce the overwhelming
percentage of goods and services that underlie the dynamic
American economy in the United States.
However, the government, in this case the NIH, plays an
important role in expanding the basic understanding of science.
It is the knowledge explosion that has been facilitated by
dramatic increases in Federal funding for biomedical research.
But as Congress after Congress has recognized, the faster, more
easily technology can get into the hands of the private sector,
the greater the likelihood that a product will be developed and
marketed.
As a patient representative and advocate, I want to discuss
one concern that arises in discussions of technology transfer.
Some well-intended policymakers have urged the government to
impose price controls as a pre-condition to private sector
licensing or government discoveries. This has been urged in
explicit ways and through policies that have a similar net
effect.
I can tell you from experience that seeking to guarantee
access at a fair price to products using the mechanism is
troubling and will not work and will not help the patient, who
is the most important part of this equation.
First, reasonable pricing clauses of the NIH have not
worked in the past. The number and quality of discoveries that
were licensed declined during a 5-year period when such a
policy was in effect. Companies who can undertake the risky and
expensive process of drug development estimated at over $800
million per product, do not want vague agreements that have
disadvantaged terms when they can invest those resources to
pursue a product without strings attached.
Second, companies do not--cannot bear the risk of not
knowing what price will be considered reasonable. Government
discoveries are licensed so early in the product development
that the stage--very little knowledge is known about the
potential product. Therefore, it is impossible to define what a
reasonable price will be.
Any steps to assure fair prices should be applied uniformly
to all products, rather than penalize products created from the
NIH. Second, narrowly crafted measures in Medicaid and certain
other special Federal programs now are assuring fair prices.
Finally, the Congress should recognize that drug price
competition is stimulated by policies that advance the
development of new products.
It is in the interest of the patients to have more than one
therapy on the market. This is critical. This is how we gain
knowledge, and this is how we get better products. Recently,
yesterday, Friends of Cancer Research announced a public-
private partnership with five pharmaceutical companies of the
National Cancer Institutes to really work on clinical trials,
early stage trials, in the community for underserved patients
and geriatric patients.
It is a model of the way a partnership should work between
the government and the private sector. Five competing companies
came together for this knowledge to help the government, and
we, at the National Cancer Institute, work with them for the
benefit of patients in the community. That is a positive model
of public-private partnerships.
This kind of partnership celebrated yesterday was symbolic
of the kinds of relationships that government and the Congress
should be fostering. We cannot expect the government to do
everything, but neither can we expect the private sector to
fund every bit of fundamental research. We need to support and
grow partnerships between the government and the private
sector, so that patients can be assured that both are pursuing
the common good of expanding access to clinical trials by
patients, and the developments of new products to treat and
cure serious and unmet medical needs.
As the Committee on Energy and Commerce continues its
hearings on the National Institutes of Health on behalf of
patients and patient advocacy groups, I urge you to keep the
following fundamental principles in mind. First, do no harm.
The current system of knowledge and management, information,
dissemination, and technology transfer at the NIH works
remarkably well. Please do not be tempted to undertake actions
that would fundamentally jeopardize the record of success and
the patient.
Second, as you contemplate the NIH, please keep in mind the
necessity of positive partnerships and collaborations between
government and the private sector. Patients can ill afford a
public process that demonizes either the pharmaceutical
companies, biotechnology companies, and the industry, and the
outstanding scientists and researchers at the NIH.
Thank you very much for the opportunity to participate, and
I am happy to take questions.
[The prepared statement of Ellen V. Sigal follows:]
Prepared Statement of Ellen V. Sigal, Chairperson, Friends of Cancer
Research
Summary:
Health care progress in the United States over the past 50 years
has been remarkable. A key ingredient in many of those improvements has
been the evolution and growth of the National Institutes of Health. The
success story of the NIH has many sources, especially the vital support
given to the NIH by the Congress and this Committee. Another building
block relied on by the NIH has been a series of policy decisions that
have, in the main, facilitated dissemination of knowledge and
appropriate transfer of technology. Patients gain when scientific
knowledge and understanding grows and is rapidly disseminated. Patients
benefit when they have improved access to meaningful information about
their diseases and conditions and their options for treatment or
participation in clinical trials. Patients benefit when the discoveries
of NIH scientists, and those of researchers supported by the NIH, are
transferred to the private sector for the complex, risky and expensive
process of development into commercial products. The United States
technology transfer policies are the envy of the world because the NIH,
under the direction of the Congress, has made the creation of new
products a central goal of the American biomedical enterprise.
Background about the Friends of Cancer Research:
Friends of Cancer Research, a Washington, D.C. based not-for-profit
focused on public education about the importance of federal investment
in cancer research. Friends of Cancer Research has played a leading
role, along with our colleagues in the cancer and patient advocacy
communities, to advocate on behalf of the NIH and expanded funding for
cancer research. The Friends of Cancer Research consists of members of
the patient community, government leaders, and firms and institutions
in the for profit and non-profit private sector.
Background about Federal Technology Transfer Policy:
In broad historical terms the Congress has--over the past 20 to 25
years--committed itself, in a broad, bi-partisan way to new and
improved ways of facilitating technology transfer. For many of the
early years in the post-World War II era there was a sense that
government research should be owned by the government and that any
transfer to the private sector should be avoided. Beginning with work
in the Carter Administration and the legislative work of legislative
leaders like Senators Dole, Bayh (Birch Bayh), Congressmen Wydler,
Kastenmeier, Railsback, Moorhead, and Senator Stevenson the Congress
enacted a series of laws to expand the technology transfer of
government funded research and development efforts. This testimony is
not the time or place to review all these laws, but it is appropriate
to comment on the fundamental underlying philosophic premise of these
efforts.
Congress has consistently acted over the past several decades to
implement a policy structure that is designed to recognize that the
marketplace can be a powerful tool in promoting innovation. It is after
all private sector firms that produce the overwhelming percentage of
goods and services that underlie the dynamic American economy. It is
not the government that produces wealth or develops and markets new
products. The government--and in this case the NIH--plays an important
role in expanding the basic understandings of science. It is that
knowledge explosion that has been facilitated by dramatic increases in
federal funding for biomedical research. But, Congress after Congress,
for decades has recognized the faster and more easily technology can
get into the hands of the private sector the greater the likelihood
that a product will be developed and marketed.
As a patient representative and advocate let me address one
persistent red herring issue that arises in discussions of technology
transfer policy. Some well-intended policy makers have urged that the
government either engage in explicit government imposed price control
measures as a condition to be imposed before any government discoveries
be licensed, or policies that have a similar net effect. I can tell you
from experience that seeking to guarantee access at a ``fair'' price to
products using this mechanism is misguided and will not work.
First, we have some considerable experience with ``reasonable
pricing'' clauses at the NIH. A policy of that nature was in effect for
about 5 years and the number and quality of discoveries that were
licensed declined. Companies who can undertake the risky and expensive
process of drug development (according to recent independent research
by Tufts University the cost, fully loaded, and including the cost of
failed research and opportunity costs, exceeds $ 800 million per
product) do not want vague agreements which create disadvantageous
terms and conditions compared to other opportunities, including pursuit
of internally developed drug and biological candidates.
The second reason that companies did not favor licenses with a
``reasonable price'' clause was the inherent ambiguity of interpreting
what is reasonable. At the time of a technology transfer license is
entered into so little is known about a potential new product clarify
in defining reasonableness is impossible. The likelihood of a compound
making it through the screening process into human clinical trials is
daunting (often fewer than 1 out of 5,000 chemicals finish this
process). Even those products which enter human clinical trials few
(less than 1 out of 100), make it all the way through to marketing.
Even the products that make it on to the market are not guaranteed to
make money. In fact, according to independent research by Tufts
University, only 3 out of 10 marketed products make a positive return
and only 1 out of ten generate a substantial return. If, as happened,
under the discredited ``reasonable price'' regime the government waits
to determine reasonableness until after the product is developed and
marketed there is an inherent bias against successful product
development.
If the government wants to obtain a fair price for a product it
should act broadly, and fairly, with respect to all drug products and
not impose special and onerous rules only on products created from an
NIH supported technology transfer process. The Congress has effectuated
a series of measures that do, in fact, assure fairness to the
government in pharmaceutical purchases. First, the Congress has already
underway effective means to securing fair prices to the government
through the promotion of a process for the approval of generic drugs.
Unlike most other developed nations the United States has a vibrant
process of using generic drugs to assure savings to the government and
the patient community. The recently adopted amendments to the Medicare
bill on generic drugs further the policies embedded in existing federal
law and FDA practice.
Second, the Congress has also crafted measures in Medicaid and
certain other special federal programs to assure fair prices. Finally,
there needs to be broader realization that price competition for drug
therapies is stimulated by policies that advance the development of new
products. It is after all in the interest of patients to have more than
one therapy on the market for a disease or condition. The second,
third, fourth or fifth product approved in a particular class of
products offer patients the opportunity of improved health outcomes,
increased ease of administration, better compliance or often price
competition within a particular disease sector. There is no need for
the government to either expand the government pricing programs or to
create a new, counterproductive scheme within the NIH to review prices
for yet undeveloped products.
Comments about Government Private sector partnerships:
On July 9, 2003 the NIH Foundation, in cooperation with the
Department of Health and Human Services announced awards for
partnerships with the private sector. The companies and partners
recognized included Aventis, Bristol-Myers Squibb, Eli Lilly and
Company, GlaxoSmithKline, Novartis, as well as the Association of
American Cancer Institutes and the National Cancer Institute. This
partnership is designed to speed cancer drugs to the market by
improving the ways in which early stage cancer trials are designed and
conducted. This partnership is geared towards underserved and geriatric
patients in the community. Today, only 3-4% of all cancer patients
participate in clinical trials and most of those are children. Of
children with cancer about 60-70% of them participate in clinical
trials. One goal of these partnerships is to dramatically increase
access to early stage clinical trials for adults with cancer.
The kind of partnerships celebrated yesterday are symbolic of the
kinds of relationships that the government and the Congress should be
fostering. We can not expect the government to do everything. We can
not expect the private sector to fund every bit of fundamental
research. We need to support and grow partnerships between the
government and the private sector so that patients can be assured that
both are pursuing the common ground of expanding access to clinical
trials by patients and the development of new products to treat and
cure serious and unmet medical needs.
Conclusions:
As the Committee on Energy and Commerce continues its hearings on
the National Institutes of Health, on behalf of patients and patient
advocacy groups, I would urge you to keep some fundamental principles
in mind. First, do no harm. The current system of knowledge management,
information dissemination and technology transfer at the NIH works
remarkably well. Please do not be tempted to undertake actions that
would fundamentally jeopardize that record of success. Second, as you
contemplate the NIH please keep in mind the necessity of positive
partnerships and collaborations between the government and the private
sector. Patients can ill afford a public process that demonizes either
the pharmaceutical and biotechnology industry, or the outstanding
scientists, researchers and administrators at the NIH. Finally, the NIH
has been successful in recent years because of its outstanding senior
management, including the outstanding NIH Directors, Varmus and
Zerhouni, and Institute Directors. While it is appealing to some to
seek a centralization of control within the Department of Health and
Human Services, considerable care should be exercised. There is a risk
that by undermining the relative independence and autonomy of the NIH
and its institutes morale will deteriorate and the biomedical
enterprise will suffer.
Thank you for the opportunity to participate in this hearing. On
behalf of the Friends of Cancer Research and the entire patient
advocacy community, we wish you well in your important oversight and
policy making role. You can, and should be, justifiably proud of your
role in creating and nurturing the greatest advances in human health in
history.
Mr. Bilirakis. Thank you, Dr. Sigal. Thank you for being
here, for sharing that with us, and for your courage and your
dedication.
Well, I--frankly, virtually every question has been
answered already by your testimony. I would ask--in terms of
university research partnerships, how do--is there a difference
in how, and what is the difference between working with the
Federal Government versus the private sector?
Mr. Neighbour. A complex question, but I think an
interesting one. With funding from the Federal Government, we
are obviously very concerned about basic knowledge, and we are
a lot freer to push the boundaries of knowledge to explore new
areas that we think may have 1 day a potential of being a
platform for the development of product.
We typically focus on mechanisms, on systems, and
understanding diseases, not specifically on creating little
white powders that will become drugs to be injected or given to
patients. So the nature of the research from the outset is
quite different.
The second, probably most fundamental issue that consumes a
lot of my time, are the intellectual property issues. As soon
as we begin to work with a company, the company has to protect
its business. And, consequently, significant concerns about
ownership of inventions, access by that company to that
intellectual property, become a fundamental part of the
negotiation between us and the company.
And we need to maintain certain basic academic tenets which
are important to the university, particularly freedom to
publish, protection of our institution, and an opportunity to
use the results of our research to support other researchers
and other activities in the future.
The company tends, of course, to want to establish a
monopoly position and take that knowledge forward, invest in
it, and develop the product. So there are some fundamental
differences, but I think we have learned since the emergence of
Bayh-Dole how to manage those differences and create
partnerships that serve everyone's needs quite well.
Mr. Bilirakis. Thank you, Doctor.
Dr. Soderstrom? Dr. Gardner? Whatever.
Mr. Soderstrom. I would just like to add one thing to----
Mr. Bilirakis. Sure.
Mr. Soderstrom. [continuing] my colleague, Andrew's
comments, because I was actually going to ask--the answer I was
going to give you was going to be fairly glib. I was going to
say, ``Quite well. Thank you.'' In part because over the last
20 years, as Andrew was pointing out, we have begun to develop
norms of behavior and activities, which are mutually
supportive.
I want to use one example from Yale that I think
illustrates this point, and I actually mention it in my written
testimony, so I will refer back to that. But one of the things
that the National Cancer Institute has done is funded a number
of laboratories around the country that are specializing in
certain types of biological assays, which can then be used to
test different compounds for activity against a particular
disease.
In the case of Yale, the laboratory of Dr. Young Ji Chang
is world-famous for screening against things like Hepatitis-B.
Also, he was one of the original for setting up--original
investigators setting up assays against HIV as well. In the
context of that, we receive many compounds from small biotech
companies and major pharmaceutical companies, which we then
test against these assays, which the NIH funded the development
of.
Out of that, we are able to discern things like which ones
will have the lower levels of toxicity, less side effects,
etcetera, and we are able to give that information back to the
companies. That type of partnership I think is particularly
effective if we look at just one drug--3TC, which we all
recognize as Epovir.
Epovir, the original formulation of 3TC, had many different
analogs. But using the techniques that Dr. Chang and his
colleagues at Emory University had developed, we were able to
identify the specific version of the compound that would have
the lowest profile of toxicity, and the most efficacy,
particularly when combined with AZT. I think that is an
exciting partnership which was afforded by the abilities that
we have under Bayh-Dole.
Mr. Bilirakis. Dr. Gardner?
Ms. Gardner. I would just like to add that the vast
majority of funding at most research-intensive universities
comes from the Federal Government, and that is the kind of
funding that fits more with the core values of a university
endeavor. The core values of a university endeavor are to
pursue fundamental knowledge and disseminate information
freely, in the course of that educating the next generation of
scientists.
I have worked in both sectors. The core values in industry
are product development, and in that context intellectual
property and confidentiality are extremely important. So you
can see there is a divergence in the core values.
The partnership of the NIH and universities is profoundly
successful and very good, because they have similar core
values. And my--and this isn't to say that--to knock either
set. They are both important, but it does go to the question
of, how valuable is the license that comes from NIH or
federally funded research through a university or from NIH to a
pharmaceutical company?
By nature of the core value of this kind of research,
fundamental knowledge, early knowledge dissemination, there are
very early stage ideas, nascent ideas. They have not gone
through formulation or any of the stages of product development
that are so expensive. So it is understanding that that should
help to diverge away arguments of high royalty rates or price
controls on drugs that have a very early stage or small part
from the NIH, important as it is.
Mr. Bilirakis. Well, thank you. Dr. Lindberg is still in
the room. And I don't know whether any of the other people are
here, but I know they are certainly represented here, by
request. And I know that they all feel good about what they
have heard you say.
I didn't hear any criticisms from you or bureaucratic
things that can be cleared up, so hopefully if there are you
might furnish them to us in writing later on or possibly even
mention them during the further questioning.
The chair now recognizes the gentlelady from California,
Ms. Eshoo, for inquiry for 5 minutes.
Ms. Eshoo. Thank you, Mr. Chairman.
I want to thank the panelists and welcome you here today. I
think it was President Kennedy that said that--when he made the
remarks about the Nobel Prize winners that were gathered in the
White House that only one other time had there been such great
intellect--I am paraphrasing, of course--that was gathered
there, other than the time that Thomas Jefferson dined alone.
So I am reminded of that today, because you are a very
distinguished panel, and I think that you have informed the
committee very well about your work.
I want to extend a special welcome to Dr. Phyllis Gardner,
who, Mr. Chairman, is my constituent and serves with great
distinction as the Senior Associate Dean for Education and
Student Affairs at Stanford University.
But the background that she just spoke of I think is very
important, because there is an enormous linkage and, really, a
symbiotic relationship between the universities, both public
and private, in our country and then what flows out to the
private sector. Dr. Gardner was the President of Research at
ALZA Corporation. ALZA, of course, has been acquired now by
Johnson & Johnson. But that speaks to a part of it, and so how
we fund this research, and how it works through our
universities, both public and private, is one of the great
stories of America.
This is a unique American story, and I think that if there
is anything that--and I said this to some of the panelists
before we began--that we somehow have come to a place of such,
happily, full appreciation or near full appreciation of this.
But I think that we have this pettiness about--that we will
always have this, that somehow this is always going to remain.
We have a very full and serious obligation to protect this,
to keep the investment in it going, and to do everything that
we can relative to the technology transfer that does take
place, to Dr. Sigal and her courage. When she said that
everyone in her family has died of cancer, that is our
challenge. That is our collective challenge. And I think that a
society, obviously, is measured by how it takes care of its
people, and that is what you are here to talk about today.
Dr. Gardner, what do you think Stanford's technology
transfer program has done for the Bay area? Of course, that is
a softball to you.
But I think that it is an important story. And how are the
technology transfers helping regions, outside of the obvious
benefits to health care?
And then, my second question to you is is that a number of
my colleagues have asked why the Federal Government doesn't
recoup more of its investment in research that leads to
products. Why do you think more royalties on products should
not be returned to the government? And then, to the full panel,
what do you think an appropriate return on investment is for
the government?
Now, I have a little different take on this than some of my
colleagues on the committee. But I think that it is still--
these are still worthwhile questions, so thank you----
Mr. Bilirakis. Very worthwhile questions.
Ms. Eshoo. [continuing] all of you.
Mr. Bilirakis. I wish you had given the panel 5 minutes in
order to answer those questions.
Go ahead, Dr. Gardner.
Ms. Gardner. First of all, the Bay area is a thriving
economy, both in the high tech and the biotech sectors--the
high tech sector, starting with Fred Terman and funding Varian,
Hewlett-Packard, etcetera, through some government funds, and
then proceeding thereon. And then, with the Bayh-Dole Act, also
the Cohen-Boyer patent, which brought in a quarter of a billion
dollars total to the university at a royalty rate of a tenth of
a percent.
That has set--that put forth this thriving economy in the
Silicon Valley area. That is the envy of the world that brings
people from all over the world to try to imitate it. It is even
the envy of many parts of the Nation, and there are other
centers that are important. Certainly, San Diego, the research
triangle in North Carolina, certainly Ohio State is trying to
get there.
I am on the board of a company where they are pushing hard,
but we are--we have been at the forefront, and the numbers of
jobs created, the affluence created in the local economy, is
profound, and that is one of the reasons why I would--not only
do we recoup investment from savings--from the better health
care that people have, which is a profound savings, and the
estimates are in trillions of dollars because of better health
of workers.
And not only do we get that, but we also have the stimulus
to the economy, to the knowledge-based economy that the rest of
the world is trying to imitate. And I just hope that we do not
rock that boat, because I believe it comes back to the Federal
Government in spades through those two mechanisms.
Mr. Neighbour. Mr. Chairman, if I could add that one return
that has not been mentioned, and is often not measured or
talked about by critics of drug pricing, is taxes. It seems to
me that at the end of the cycle, the successful drug company
that has to cover its manufacturing costs, its development
costs, the winners and the losers ends up with a profit that
generates taxes that come back into the economy and support NIH
appropriations.
They also sustain a health that employs a large number of
employees who, like you and I, are taxpayers. And so that
measurable benefit is a very real one and is the basis on which
this society is built. So I think return on investment, if one
is focusing on dollars, if you do the math, will actually come
out ahead.
But I think the more important thing is to not do the math.
I think the most important thing is to think about the quality
of life and what we would not have if companies and
universities and NIH and the other Federal agencies were not
sustaining this incredible research enterprise, which, as has
been stated, is the envy of the world. There is hardly a day or
a week in my office that I am not hosting a visitor from Chile,
Korea, Japan, Italy, Germany, the great--Great Britain--
Freudian slip there--that wants to know how it is done.
And we know how it is done. We have done it right. And I
think anything that would interfere with that process, other
than creative improvement, would be a deficit for this Nation.
Mr. Bilirakis. I just wish the entire subcommittee were
here to----
Ms. Eshoo. I do, too.
Mr. Bilirakis. [continuing] listen to these comments. Dr.
Soderstrom?
Ms. Eshoo. This is extraordinary.
Mr. Soderstrom. I am going to add one more to that which--
the list, and I alluded to it earlier, which is increased
productivity, which we all know that Chairman Greenspan has
pointed to as being the engine of the economy right now.
Anyone who read The Wall Street Journal yesterday knows
what happens if we don't have healthy workers in our businesses
driving our economy. We can only look at Africa, where
President Bush is today, and see what happens. We don't face
that today. We don't face that because of many of the
discoveries that were made with NIH funds that have been
translated from academic research into the biotech and
biopharmaceutical industry. And I think that is one of the
costs--I am not an economist, but I would add--has to be
factored in.
Mr. Bilirakis. I don't know whether you have anything to
add to that, Dr. Sigal, but----
Ms. Sigal. Just very briefly. I think it is very clear that
the mission of the NIH must be innovation, discovery, and
knowledge for the public good. Once we start getting involved
in returns of investment, we are really going to be in trouble.
The return on investment is the public health of the people all
over the world.
Mr. Bilirakis. Amen to that. Thank you.
Ms. Eshoo. Thank you, Mr. Chairman.
Thank you to the distinguished panelists.
Mr. Bilirakis. Mr. Allen, would you like to inquire?
Mr. Allen. Thank you, Mr. Chairman.
I very much appreciate the comments of the panel today. And
though I have been a frequent critic of pharmaceutical industry
drug pricing, there is--I agree with much of what you have to
say. But because I am a little concerned that what you say may
be taken in a broader context than what you actually said, I
want to make a couple of comments.
The passion that drives Dr. Sigal, the cancer in her
family, is something we feel in many of our constituents,
because there are two parts to this equation about the
availability of prescription drugs. One part is innovation, and
I don't believe there is a single person in the Congress who
wants to shut down that innovation. And in that sense, you have
all of our support.
But the other half of the problem is distribution. And in
Maine, I can't tell you--there are thousands and thousands of
my constituents who can't possibly afford to take the drugs
that their doctors tell them they have to take. And we are next
to Canada. Women who are fighting for their lives with breast
cancer in Maine have finally learned that Tomoxifen costs one-
tenth as much in Canada as it does in the United States, and I
assure you the industry is still making a profit up there.
And so what we are--what we try to do is figure out how to
deal with this particular problem. And many of you talked about
the disadvantages--and I agree with this--of trying to price a
product somehow while it is not--while it is still within the
NIH framework or in that sort of early research framework. And
I don't think we buy that at all.
But we do have a serious problem with Medicare, and it
seems to many of us wrong that Medicare beneficiaries should
pay the highest prices in the world. They are in the biggest
health care plan in the country. If they were organized, that
plan would provide them, as Aetna beneficiaries and Cigna
beneficiaries and United beneficiaries, with some discount in
the price that they pay. But they don't get that, because
essentially they have to pay whatever the industry would
charge.
And so just a comment to set this in context--that is the
issue that I think many of us are struggling with. We don't
quarrel with the importance of innovation. We believe in Bayh-
Dole. We think that this partnership with the--between the
universities and NIH is extraordinarily valuable. But we have
to figure out how to make sure the people who need
pharmaceutical products can actually get them.
I think it was Dr. Soderstrom mentioned a couple of other
comments. I think you mentioned Africa and diseases in Africa.
It has always seemed to me that we ought to expect the private
sector to do what the private sector, with the assistance of
universities, does best. That is, develop innovative new
products.
It is not so good at producing products that don't yield a
return. Whether it is sleeping sickness or malaria, or
whatever, many of the diseases other than AIDS that are
afflicting Africa are not getting the attention they deserve.
And, Dr. Sigal, one quick comment. Because in your written
testimony you had a reference to the study done at Tufts, I
simply can't resist making a couple of comments about that
study. The $800 million that the industry has repeated over and
over again is the total cost to bring a new drug to market is
based on the study at Tufts.
I view that study as flawed. First of all, half of that
$800 million--half of that $800 million, according to the
study, is opportunity cost. That is what the money could have
earned by being invested somewhere else, but there is no more
profitable industry in the country than the pharmaceutical
industry. So there are reasons why the investment is so heavy
in R&D in the pharmaceutical industry.
The second thing I would say is I think they looked at
about 66 different drugs, none of which--none of which--were
funded initially by NIH. And so the drugs that they took as--
for a sample are--is wildly different from the way most drugs
come to the market. That is, most drugs come with some at least
initial research that is government-funded through the NIH. And
so for those reasons, many of us quarrel with that study a good
deal.
But we are with you completely on the need to keep this
industry going. We respect, Dr. Gardner, the differences
between biotech and pharma, and we simply have to find a way to
deal responsibly with the other half of the problem, which is
how we get the drugs to people who need them.
I have taken all of my time. I haven't given you time to
respond. I apologize.
Mr. Bilirakis. Yes, time is up. You know, I have been
hoping that this hearing would focus on bench to bedside, which
is certainly very, very significant. And for the most part, it
has.
I thank you so very much. I know it makes me feel an awful
lot better from the standpoint of research, and what it
accomplishes, and so many things, the byproducts of research
that you all went into, which is just terrific, in addition to
the health and the quality of health care, the byproducts
economically.
I thank you very much for being here. We will have
questions to you in writing. We would appreciate your
responses.
And, again, please feel free to let us know--if there are
things that you suggest that NIH should do, or FDA or National
Institute of Cancer, or whatever, Cancer Institute, or
whatever, that you think that maybe we should address or take a
look at or ask--raise questions about, or whatever, please let
us know.
Dr. Sigal, you are shaking your head, so please feel free
to do that. You have got an open invitation.
Thank you so very much for a great hearing. Hearing
adjourned.
[Whereupon, at 1:10 p.m., the subcommittee was adjourned.]
[Additional material submitted for the record follows:]
Prepared Statement of Susan Braun, President and CEO, The Susan G.
Komen Breast Cancer Foundation
Chairman Bilirakis, Rep. Brown, and distinguished Members of the
Subcommittee, thank you for the opportunity to submit testimony about
the importance of moving research from the bench to the bedside. The
Komen Foundation acknowledges and thanks you for your continued
leadership and support for improving the quality of care cancer
patients receive.
I am privileged to serve as president and chief executive officer
of the Susan G. Komen Breast Cancer Foundation. Nancy Brinker
established the Komen Foundation in 1982 in honor of her older sister,
Suzy Komen, who died of breast cancer at the age of 36. Our mission is
to eradicate breast cancer as a life-threatening disease. To this end,
we have had to change both the clinical and cultural landscape of
breast cancer, and we have.
Today, the Komen Foundation includes more than 75,000 volunteers
working through a network of Affiliates and events like the Komen Race
for the Cure ' to eradicate breast cancer by advancing
research, education, screening, and treatment. The Komen Foundation has
become the largest private funding source of breast cancer research and
community outreach programs in the United States. Since its inception,
the Foundation has raised nearly $600 million in the fight against
breast cancer. The Komen Foundation continues to forge many public-
private partnerships to produce real clinical results and a better
quality of life for thousands of women and men living with breast
cancer. The Foundation has awarded more than 850 grants totaling $112
million for innovative research. Through funding of programs and
resources like the Komen Foundation Award and Research Grant Program,
the Komen Affiliate Grant Program, the Komen National Toll-Free Breast
Cancer Helpline, the Komen Foundation Website, and other educational
materials, the Komen Foundation today is the recognized leader in the
fight against breast cancer.
I. BACKGROUND
As the Committee recognizes by holding this hearing, diseases
cannot be cured in the lab alone. Eradicating disease requires
translating research discoveries into innovative, high-quality patient
care. If there is to be any meaningful advancement in eliminating
cancer and other diseases, what we learn from biological bench research
must be translated to the clinical setting and, ultimately, delivered
to patients to advance integrated care and improve quality of life. In
addition, these advances must be available expeditiously and in the
appropriate manner. Given the Komen Foundation's experience as a
supporter of breast cancer research and a champion for early detection
and treatment innovations, we believe that our experience can provide
the Committee with a ``case study'' for understanding what is working
and what is not in translating research from the bench to the bedside.
Each year in the United States, more than 200,000 women and men are
diagnosed with invasive breast cancer. In 2003, approximately 40,600 of
breast cancer patients will lose their lives to the disease. Even
though breast cancer mortality has declined, the incidence (i.e., the
number of individuals diagnosed with the disease each year) remains
steady. Research, awareness and education are primarily responsible for
lowering the mortality rate because of improvements in screening,
diagnosis and treatment.
The Komen Foundation strongly believes that more research will lead
to curative interventions in the future. Although research has yet to
produce a cure, it has provided important progress in our fight against
this deadly disease, and many important innovations hover on the
horizon. These advances--once translated to treatment options--will
help to lower mortality rates even further and lead to improved and
more efficient care and thus a better quality of life for those
diagnosed with breast cancer.
In the area of breast cancer, there have been enormous research
discoveries that offer a great deal of promise. Yet, breast cancer
patients have not been able to realize the full potential of these
discoveries because of a widening gap between research and patient
care. It is imperative that society eliminates (or at least minimize as
much as possible) this gap immediately. To achieve this goal, we must
first understand what the gap is; second, consider the impact of access
to care issues on the gap; and third, work toward its elimination.
II. UNDERSTANDING THE GAP BETWEEN RESEARCH DISCOVERIES AND TREATMENTS
FOR PATIENTS
Barely a day goes by when there is not some exciting new research
development announced. Patients hear these announcements and want
access to the treatments promised. And yet, bringing that promise to
patients is becoming much harder. As the gap between research
discoveries and patient care widens, the worst imaginable situation
becomes possible: curable innovations are developed but patients cannot
get them.
Because of our role in funding innovative research related to
breast cancer, the Komen Foundation is particularly concerned about
ensuring that bench results translate as quickly as possible into
bedside treatment. Although it is true that recent research discoveries
have outpaced the ability of scientists and physicians to develop
treatments related to them, we believe the widening gap, more
importantly, results from two systemic problems within the research and
medical fields: (1) challenges created by the existing process by which
bench research is translated into clinical treatments, and (2) the
decline in the number of physicians who understand how to integrate
innovative treatments into their practices or cannot do so because of
problems within the insurance reimbursement system.
A. The Fast Pace of Research Discoveries
One important reason for the widening of the gap between innovation
and patient care is due to a positive development--the explosion of
advancements in human genomics. Since James Watson and Francis Crick
discovered the structure of DNA, researchers have worked diligently to
determine how it functions. We achieved a major milestone when public
and private scientists finished mapping the human genome ahead of
schedule. Advances in our understanding of human genomics offer the
promise of new ways to attack disease. For example, we can now evaluate
diseases in terms of specific, molecular-level changes and propose
molecular-level interventions. The genome map opens a new world in
terms of defining inherited diseases. Microarray technology will allow
for rapid testing of compounds that can target specific proteins or
molecular structures in cells, permitting doctors to use new drugs to
treat specific kinds of breast cancers/tumors, eliminate painful side
effects, and promise longer survival. And, as we learn more about the
genetic causes of disease, we will also gain a better understanding of
how the environment contributes to diseases and perhaps one day, find a
way to prevent certain diseases altogether.
The promises of the advances are extraordinary with researchers
working feverishly to apply the new information into treatment
contexts. For example, researchers at M.D. Anderson Cancer Center used
pharmacogenomics (the study of an individual's genetic expression
patterns to tailor treatments for him/her) to analyze tumors' specific
genetic make-up to guide treatment decisions. They were able to predict
with 75 percent accuracy whether chemotherapy would eradicate tumor
cells. Eventually, pharmacogenomics may provide information on the
probability of metastasis and the likelihood of a patient developing a
recurrence of cancer, as well as predict medical outcomes for the
individual.
However, these incredible discoveries are not the problem when it
comes to translating research results into treatments. Researchers face
some difficult systemic challenges that must be resolved quickly to
ensure that patients benefit from these advances.
B. Barriers Created by the Existing Clinical Trial Process
One troubling barrier to eliminating the widening gap between
research and treatment are challenges inherent in the existing clinical
trial process. As you are aware, obtaining a positive result in a
laboratory is only the first step of a long process toward producing a
medically acceptable treatment. The Food and Drug Administration (FDA)
oversees this process. Once a researcher makes an important laboratory
discovery, he/she must determine whether it can be translated into
medical practice. Often initial discoveries are found using animal
models. However, not all animal model results can be translated into
human treatments. After all, as researchers are fond of saying, ``mice
are not men!''
If a result can be moved from an animal model to a human context,
the researcher must shepherd it through the FDA's clinical trial
process, in the case of new drugs or devices. This process requires
many clinical trials and studies. In addition to the logistical issues
involved in developing and conducting an appropriate clinical trial,
many researchers are finding it difficult to obtain the appropriate
number of research subjects. Participation in clinical trials remains
low; less than 5 percent of adult cancer patients currently participate
in clinical trials. This may be due to several reasons, including the
failure of insurance companies to cover the treatment costs associated
with participation in such trials, physicians' lack of time and or
resources to administer such trials, and patient barriers ranging from
a fundamental mistrust/misunderstanding of the clinical trial process
to access issues (i.e., transportation, child care, etc.). Whatever the
reason, low enrollment in trials delays the finding of results and
often renders the results obsolete (e.g., if the trial protocol is no
longer the current standard of care due to scientific progress). If the
results of a clinical study are positive, the FDA will consider a new
treatment for approval. The timing for approval varies significantly
from treatment to treatment. And, of course, completing this process
takes money.
Even if a discovery is not ``successful'' in terms of translating
into a new treatment, reporting a negative result is just as important
as reporting a positive one. However, with the idea of ``publish-or-
perish'' dominating most laboratories, many researchers are reluctant
to publish negative results. This leads to duplication of efforts and
resources and hinders progress toward the ultimate goal of curing
diseases.
Another problem is that the current clinical trials system is
simply not designed to handle the results of the genomic revolution.
For example, the results of mapping the human genome are already being
used to shift clinical practice toward individualized medicine. Yet,
the existing clinical trial process still requires large numbers of
patients to participate in studies that will lead to FDA approval.
Although we appreciate the need to ensure statistically significant
results, the process must take account of the fact that in the realm of
individualized medicine, it will not be possible nor is it appropriate
to conduct trials using the same old parameters.
Another important concern arises from the ability to categorize an
individual's disease more specifically. For example, patients today who
have ``breast cancer'' may in the future be diagnosed as having a BRCA
1 or 2 cancer, an environmental cancer, or another subspecies of
cancer. Cancers will be treated based on their genetic make-up, rather
than their location. As diseases are broken down even further, the
financial incentives to conduct these expensive trials will also break
down, potentially reducing the willingness of private companies to
accept the continuation of the existing system.
Finally, the current clinical trial process takes a long time to
complete and is overwhelmed with applications. There is an enormous
backlog within the FDA. In 2001, more than 400 cancer drugs were in the
development ``pipeline'' at various stages of the approval process.
Although we support and recognize the need to maintain a process that
ensures safety and efficacy, the process should not be so time-
consuming and onerous so as to inappropriately restrict access to life-
saving treatments.
C. Barriers to Adoption of New Treatments by Physicians
Once approved, a new treatment still may not make it to the bedside
immediately. Translating bench results into clinical treatments also
requires physicians to integrate innovative treatments into their
practices. Because of the complex nature of the research, more
specialty knowledge is required. However, professionals who treat many
diseases become highly specialized. For example, in the oncology
specialty, there is a tendency to focus on certain types of cancer in
order to keep current and provide the most recent treatment innovations
to patients. Gone are the days when a cancer patient walked into
several oncologists' offices for treatment. Now, the patient is more
likely to receive care from a physician who specializes in a particular
kind of cancer. Compounding this problem is the decline in the number
of physicians entering the oncology specialties.
Incentives must be available to keep health care providers
knowledgeable, trained and willing to provide care to all patients. For
example, more funding is needed for provider education programs, such
as the Komen Foundation's Interdisciplinary Breast Fellowship Program.
This program prepares highly motivated, talented and compassionate
physicians for careers devoted to serving the multi-specialty needs of
breast cancer patients. The Program awards individuals grants of up to
$30,000 over a two-year period for dissertation research. Three-year
grants of $45,000 per year for postdoctoral fellowships are also
available. The Program also enhances physicians' understanding of
patients and seeks to develop a better treatment environment for future
patients. Through this program, physicians develop the skills they need
to integrate new treatments into their clinical practices. However,
more programs like this are needed.
In addition to doctors and patients learning about new treatments
and their willingness to adopt them, reimbursement issues must also be
resolved. Before a treatment is used widely, Medicare and other third-
party insurers must accept the treatment and provide adequate
reimbursement for it. Generally speaking, there is a lag between the
availability of a treatment and its approval for reimbursement. Even if
an insurer agrees to pay for an innovative treatment, it will often
establish complex reimbursement requirements that physicians find
burdensome, decreasing the likelihood that the treatment will be used.
This issue is not trivial. A recent Lewin Group survey found that
increased reimbursement documentation is of more concern to oncologists
than is the stress of dealing with the issues of death and dying.
Without adequate and straightforward reimbursement policies in place,
physicians are likely to avoid integrating innovative treatments into
their practices.
We are concerned about recent trends toward cutting reimbursement
rates for necessary, life-saving cancer treatments. For example, both
the House and Senate versions of the Medicare prescription drug benefit
would cut cancer care reimbursement by 30 percent! Without adequate
reimbursement rates, patients who cannot afford to pay out of pocket
for their treatments will not be able to receive innovative therapies
and the dollars poured into research will have been for naught.
IV. THE IMPACT OF ACCESS TO CARE ON THE GAP
Even if we overcome these systemic challenges, additional barriers
continue to block research discoveries from reaching a patient's
bedside. Of most concern to the Komen Foundation is the issue of access
to quality care. While the Komen Foundation greatly appreciates the
Federal government's commitment to funding cancer research, we are
concerned that the War on Cancer appears to be morphing into the War on
Cancer Care as funding for programs directed toward improving access to
care are left to wither with little to no funding increases or
experience cuts. To ensure the translation of research innovations into
treatment advancements, it is essential to ensure that every American
has access to these improved clinical practices.
The access problem does not lie with patients. They are eager to
apply the new medical advances. Rather than focusing on their doctor's
advice alone, patients now come to visits armed with data and expecting
high quality care. The news of scientific achievements is fast
breaking, and the Internet helps disseminate information about new
innovations faster than ever before. Eight years ago, there were 124
cancer drugs in the pipeline of biotechnology and pharmaceutical
companies. Today, there are 402. Patients are demanding that these
innovations be made available rapidly.
Until a cure is available or until cancer can be prevented,
patients are demanding quality cancer care today, and they won't settle
for anything less. For Americans with breast cancer, quality cancer
care means a great many things. It means hope. It means a chance at
survival. It means receiving guidance to make the best decisions about
comprehensive and integrative treatment. Concurrently, patients use
complementary methods of care and advanced spirituality to improve
outcomes, to manage side effects, to sustain their ``wholeness'' and to
advance their healing. Numerous surveys indicate that breast cancer
patients are among the most frequent users of complementary and
alternative therapies during the course of their cancer care. Cancer
care is not quality care if it does not include the proven range of
essential conventional, complementary and integrative services that
help breast cancer patients battle their disease.
Yet, their excitement and enthusiasm for these new treatments is
quashed when they learn that they will not be able to access these
innovative treatments. As already described, before patients have
access to new treatments, physicians must be willing to provide them,
and reimbursement for them must be adequate. If not resolved, these
problems will only lead to an even wider gap.
In addition, outreach programs must be adequately funded to ensure
that all Americans have access to these therapies. The under- and
uninsured are truly disadvantaged by the current system. For the breast
cancer community, the National Breast and Cervical Cancer Early
Detection Program (NBCCEDP) works to remedy this gap. But, for it to
succeed, it must be funded at adequate levels. The Komen Foundation is
a strong supporter of NBCCEDP, but also a realistic one. While the
program has helped hundreds of women, even more have been turned away
because of a lack of funding. Other outreach programs are suffering
from similar funding concerns.
The Komen Foundation recognizes, however, that outreach and
education are not jobs for the Federal government alone. We also
provide funding and support for outreach and educational efforts at
both the National and Affiliate levels. Patients must learn about what
standard of care they should receive and what questions they should ask
of their providers. The Komen Foundation helps to address this void
through its Helpline, Website, and educational materials and programs
for both patients and providers. Komen Affiliates nationwide address
this void through their support of unique local outreach programs that
meet the specific needs of their communities.
V. ELIMINATING THE WIDENING GAP
The promises of treatment innovations should not be overshadowed by
the concerns raised today. We must continue to work to bring the
promises of research to cancer patients. A quick fix will not eliminate
this widening gap. Therefore, we suggest that the Subcommittee focus on
(1) understanding the problems that have led to the gap through formal
studies and evaluations; (2) examining the current clinical trial
process with an eye toward revising it to take account of new
biomedical advances; (3) providing adequate reimbursement rates for
cancer care; and (4) calling for adequate Federal funding for physician
training programs and patient outreach and educational programs.
As the Subcommittee considers how to minimize the gap between
research developments and clinical treatments, it is important to
understand the problems that have led to the gap. First, we must learn
more about how bench research translates into bedside practice. At a
minimum, it is essential to ask:
What is the strategic direction for the research? Who sets it?
How is collaboration fostered and duplication avoided?
How does the research process help or hinder elimination of the gap?
How is a research idea translated to a research project, then to
clinical trials, and then to approval by the FDA?
How does a clinically proven treatment become a standard of care?
Where does this process break down?
Second, it will be necessary to review and assess in a
comprehensive manner the existing clinical trial process and the FDA's
role in approving new treatments. This means:
Evaluating the existing clinical trial process to determine what
changes must be made to make it more responsive;
Increasing participation in clinical trials;
Educating patients and physicians about clinical trials;
Reviewing reimbursement policies related to care provided to clinical
trial participants;
Ensuring that the clinical trial process is appropriately structured
to address issues related to individualized medicine; and
Assessing the FDA's structure and funding to determine how to
eliminate the existing backlog of ``pipeline'' drugs.
Third, it is necessary to evaluate reimbursement amounts in both
the private and public insurance markets. Medicare reimbursement
amounts often set the standard for private insurance rates. Therefore,
it is critical that these amounts provide physicians with adequate
reimbursement for their services. We encourage the Committee to examine
reimbursement policy to ensure adequate coverage for innovative
treatments, especially in cancer.
Also important is reducing the paperwork burden and the ``audit
fear factor'' in reimbursement procedures and streamlining the
processes for providing reimbursement codes for new technology. There
should also be incentives to ensure that the newer, targeted biological
innovations are available quickly to patients for whom other treatment
options have been exhausted.
Fourth, for research to continue to produce the innovations at the
speed that modern knowledge will allow, sustained support of the
Federal research budget is mandatory. In addition, funding for
physician training programs should focus on expanding specialist
education opportunities, both within medical training programs and
continued medical education. Funding for patient outreach and
educational programs must be increased to eliminate access to care
barriers that block research advances from reaching the bedside.
As a first step, the Komen Foundation urges you to call for a study
by the Institutes of Medicine (IOM) to measure the disincentives that
block rapid dissemination of proven innovations, using breast cancer as
a ``pilot area'' from which further research can be designed. A
Federally sponsored demonstration project focusing on integrated care
and its effect on quality care, quality of life, efficiency and cost
effectiveness would also provide important information about how the
research and treatment gap can be diminished. The Komen Foundation
would welcome the opportunity to work with you on developing such a
demonstration project.
This process will be difficult and time consuming, but valuable. We
applaud the Subcommittee's willingness to undertake this review, as
well as its desire to work with the scientific, medical and patient
communities to eliminate this troubling gap.
Please be assured that the Komen Foundation will continue its
commitment to not only fund ground-breaking research to help put an end
to breast cancer for future generations, but also to support those
currently fighting breast cancer who must use the technology of today
in their efforts. We appreciate the opportunity to submit this
testimony, and thank you very much.