[Senate Hearing 109-193]
[From the U.S. Government Publishing Office]
S. Hrg. 109-193
ROUNDTABLE DISCUSSION: WHEN TERROR STRIKES--PREPARING AN EFFECTIVE AND
IMMEDIATE PUBLIC HEALTH RESPONSE
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HEARING
OF THE
COMMITTEE ON HEALTH, EDUCATION,
LABOR, AND PENSIONS
UNITED STATES SENATE
ONE HUNDRED NINTH CONGRESS
FIRST SESSION
ON
EXAMINING AN EFFECTIVE AND IMMEDIATE PUBLIC HEALTH RESPONSE IN THE
AFTERMATH OF A TERRORISM ATTACK
__________
JULY 14, 2005
__________
Printed for the use of the Committee on Health, Education, Labor, and
Pensions
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22-568 WASHINGTON : 2005
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COMMITTEE ON HEALTH, EDUCATION, LABOR, AND PENSIONS
MICHAEL B. ENZI, Wyoming, Chairman
JUDD GREGG, New Hampshire EDWARD M. KENNEDY, Massachusetts
BILL FRIST, Tennessee CHRISTOPHER J. DODD, Connecticut
LAMAR ALEXANDER, Tennessee TOM HARKIN, Iowa
RICHARD BURR, North Carolina BARBARA A. MIKULSKI, Maryland
JOHNNY ISAKSON, Georgia JAMES M. JEFFORDS (I), Vermont
MIKE DeWINE, Ohio JEFF BINGAMAN, New Mexico
JOHN ENSIGN, Nevada PATTY MURRAY, Washington
ORRIN G. HATCH, Utah JACK REED, Rhode Island
JEFF SESSIONS, Alabama HILLARY RODHAM CLINTON, New York
PAT ROBERTS, Kansas
Katherine Brunett McGuire, Staff Director
J. Michael Myers, Minority Staff Director and Chief Counsel
(ii)
C O N T E N T S
__________
STATEMENTS
Thursday, July 14, 2005
Page
Burr, Hon. Richard, a U.S. Senator from the State of North
Carolina, opening statement.................................... 1
Hatch, Hon. Orrin G., a U.S. Senator from the State of Utah,
opening statement.............................................. 2
Enzi, Hon. Michael B., Chairman, Committee on Health, Education,
Labor, and Pensions, opening statement......................... 3
Prepared statement........................................... 4
O'Toole, Tara, M.D., MPH, ceo and director, Center for
Biosecurity of the University of Pittsburgh Medical Center;
Elin Gursky, M.D., Msph, principal deputy for biodefense,
National Strategies Support Directorate, ANSER; John M.
Clerici, McKenna, Long, and Aldrige; George Barrett, president
and chief executive officer, Teva North America; Chuck Ludlam,
Esq., former legal counsel to Senator Joseph Lieberman; David
P. Wright, president and chief executive officer, PharmAthene;
Clay Elward, benefits plan design manager, Caterpillar Inc.;
Leah M. Devlin, State Health Director, North Carolina
Department of Health and Human Services; Bronwen A. Kaye,
senior director, Government Relations; George W. Conk, adjunct
professor, Fordham Law School; David Franz, director, National
Agricultural Biosecurity Center; and John Pournoor, 3M
Corporation.................................................... 12
ADDITIONAL MATERIAL
Statements, articles, publications, letters, etc.:
Gursky, Elin A., Sc.D., principal deputy for biodefense,
National Strategies Support Directorate, ANSER, prepared
statement.................................................. 43
Response to questions of the committee by Chuck Ludlam....... 45
Response to questions of the committee by Mr. Wright......... 49
Elward, Clay, benefit plan design manager, Caterpillar, Inc.,
prepared statement......................................... 51
Response to questions of the committee by Clay Elward........ 52
Pournoor, John, 3M Company, prepared statement............... 55
(iii)
ROUNDTABLE DISCUSSION: WHEN TERROR STRIKES--PREPARING AN EFFECTIVE AND
IMMEDIATE PUBLIC HEALTH RESPONSE
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THURSDAY, JULY 14, 2005
U.S. Senate,
Committee on Health, Education, Labor, and Pensions,
Washington, DC.
The committee met, pursuant to notice, at 10:03 a.m., in
room SD-430, Dirksen Senate Office Building, Hon. Richard Burr
presiding.
Present: Senators Enzi, Burr, and Hatch.
Staff present: Dr. Bob Kadlec, David Schmickel, Kira Bacal,
David Dorsey, and Jennifer Romans.
Opening Statement of Senator Burr
Senator Burr. Good morning. Let me call the Roundtable to
order, if I can, and let me take this opportunity to welcome
all of our guests.
As is the fashion on the Hill, our plans are going to
change, and I want to apologize to everybody in the room. We go
into a series of votes momentarily, a series that will probably
last well past noon. I have asked Bob Kadlec to chair this
Roundtable in our absence and I have asked the appropriate
committee staff people to be available to ask questions. So we
are trying to adapt to make your time as efficient as we can
and to also get the valuable information that we need as we
proceed further down the road to the constructive legislation.
But let me thank all of you for coming this morning to the
first formal Roundtable. For the purposes of a time line, let
me suggest to you that we will hold two additional hearings
this month. It is our intent to be at a point where we can
begin to talk about legislative language at that point. Next
week, I think we will have the authors of the current
legislation that has been introduced, who will testify in front
of the subcommittee. And the last hearing, probably the last
week of July, will deal specifically with surveillance. So we
have covered a lot of ground in a very short period of time,
and we are certainly anxious to listen to the information that
you are here to provide us with today.
Clearly, I am grateful to this distinguished group of
panelists who have come today to help us try to overcome the
challenges and take advantage of the opportunities that
confront us. My subcommittee, with the support of Chairman Enzi
and Senators Frist, Hatch, and Kennedy, is committed to draft
legislation that will significantly improve our Nation's
ongoing biodefense efforts; now, as I see it, to be prepared
for the inevitable--a disease outbreak that is deliberate or
accidental or, in fact, natural.
Before inviting my two colleagues on each side to make any
opening remarks they would like to, let me introduce our
participants, if I can.
Ms. Bronwen Kaye, Senior Director of Government with Wyeth,
welcome.
Dr. Elin Gursky, Principal Deputy for Biodefense, ANSER.
Mr. Clay Elward, Benefit Plan Design Manager at
Caterpillar.
Mr. David Wright, President, CEO of PharmAthene
Pharmaceutical.
Dr. Leah Devlin, whom I am proud to have here, State Health
Director from my home State of North Carolina.
Mr. John Clerici from McKenna Long and Aldridge.
Mr. Chuck Ludlam, former Legal Counsel to Senator
Lieberman. Welcome back, Chuck. You never thought retirement
would be like this, did you? Just a different side of the
table, right?
Dr. David Franz, Director of the National Agricultural
Biosecurity Center at Kansas State University.
Dr. Tara O'Toole--welcome back, Tara--CEO, Director of the
Center for Biosecurity at the University of Pittsburgh Medical
Center.
Dr. John Pournoor from 3M Corporation.
Mr. George Barrett, President and CEO of Teva
Pharmaceutical.
And finally but not least, George Conk, Adjunct Professor
for Fordham Law School.
At this time, I would like to recognize Senator Enzi.
The Chairman. I defer to Senator Hatch, who was here before
I was.
Senator Hatch. Oh, no, that is fine. I defer to you. We are
always happy to defer around here to our friends.
Opening Statement of Senator Hatch
Senator Hatch. Let me thank Senator Burr for convening this
and, of course, holding this meeting as part of a series of
hearings on the area of public health preparedness. As you all
know, this topic is one of great concern to the three of us
here and, of course, Senator Lieberman as well.
Senator Lieberman and I, joined by Senator Brownback,
introduced S. 975, the project BioShield II. And as we will
hear, this bill provides a comprehensive approach to engaging
private enterprise in the area of bioterror prevention and
countermeasures.
I appreciate the committee's desire to ensure that we will
pass the best possible bill by investigating all of the
possible options. I want to say on a note of caution, however,
that this issue is just plain too large and too serious for us
to just nibble around the edges. Only broad, sweeping,
innovative approaches will allow us to realign the Public
Health Service, develop the necessary medical countermeasures,
and protect our agriculture.
Now, this is my belief and I believe it is shared not only
by the cosponsors of BioShield II, but also by the groups that
have endorsed our bill, including the Infectious Diseases
Society of America, the International AIDS Vaccine Initiative,
and of course the American Society of Tropical Medicine and
Hygiene. To me, this is an extremely important bill and it is
extremely important that we have the best input and ideas that
we can possibly get.
I want to particularly thank the members of the staff of
the various Senators involved--Mr. Chuck Ludlam here, who is
more than a good advisor. I have to say he has been around here
a long time and understands this place very well and has been
very helpful. And I want to thank all of you for being willing
to participate and assist us here in this understanding.
We are sorry that we have these votes so the members are
going to have to be over there on the floor. But we are going
to pay very strict attention to what you folks suggest to us
and hopefully we can all come together and do what is right for
our country.
Thanks, Senator Burr.
Opening Statement of Senator Enzi
The Chairman. Well, I do want to thank Chairman Burr for
putting together this Roundtable and I want to thank this great
group of participants from very diverse backgrounds that can
supply us with answers to at least three key questions that we
posed. We found the Roundtable format to be a quicker way of
gaining more knowledge and involving more people. And one of
the ways of involvement, of course, would be through written
questions that we will have in some other areas of your
expertise that we hope that you will respond to following the
hearing. This helps us to build a body of knowledge that is
very useful when we come to drafting the legislation, and
probably even more critical when it comes to selling the
legislation. None of it is worth anything unless we get it
finished, although there are a lot of spinoff ideas that come
out of roundtables such as this, that often can be put into
effect even without legislation. So you will have some short-
term effects, you will have some long-term effects.
We do appreciate all of you participating in it. The
attacks last week in London served as a reminder that there is
some terrorism out there yet and there is an important job to
be done. And while we pray for the victims of the atrocity and
their families, we also have to strengthen our resolve and
ensure that we do the right thing in all of the areas of
terrorism that will keep this country safe.
We have made some remarkable strides, but we have to
identify and address our Nation's weaknesses in regard to the
biological threats. We know that there is a lot that still has
to be done. At present, our pharmaceutical industry is not
commercializing enough drugs to fight infectious diseases,
whether they spread naturally or through the intentional or
accidental efforts of man. Last week the New York Times
reported an outbreak of influenza in Cambodia that inundated
hospitals with thousands of infected children. In this country,
the rise in incidence of antibiotic resistant infections is
troubling and demands our immediate attention.
As I have said before, the lack of productivity in this
area is not a market failure but a reaction to the incentives
that encourage companies to allocate resources to tackle
chronic diseases instead of infectious diseases. We have to
enact legislation now that encourages new resources to be
allocated to address the threat posed for infectious diseases.
Mr. Chairman, I would ask that my full statement be
included in the record. It will save a little time.
Senator Burr. Without objection.
[The prepared statement of Senator Enzi follows:]
Prepared Statement of Senator Michael B. Enzi
Thank you Mr. Chairman for holding today's Roundtable on
the scope of our biodefense bill. I look forward to continuing
to work with you as we lead the HELP Committee in the work that
must be done to craft a bill that will enable us to respond
effectively and immediately to a biological outbreak or a
bioterror attack.
The attacks last week in London served as a harsh reminder
of the importance of the job that is before us. While we pray
for the victims of this atrocity and their families we must
also strengthen our resolve to ensure we are as prepared as we
can be for an attack in this country. Although in the past
couple years we have made remarkable strides in the effort to
identify and address our Nation's weaknesses with regard to
biological threats, the fact remains that more must be done.
More countermeasures are needed to protect us from infectious
disease. The public health system needs to be strengthened and
we need to ensure our Nation's food supply is safe and
protected from harm. Our bill must address all of these
challenges.
At present, our pharmaceutical industry is not
commercializing enough drugs to fight infectious diseases--
whether they are spread naturally, or through the intentional
or accidental efforts of man. Last week the New York Times
reported an outbreak of influenza in Cambodia that inundated
hospitals with thousands of infected children. In this country,
the rise in the incidence of antibiotic resistant infections is
troubling and demands our immediate attention. As I have said
before, the lack of productivity in this area is not a market
failure, but a reaction to the incentives that encourage
companies to allocate resources to tackle chronic diseases
instead of infectious diseases. We must enact legislation now
that encourages new resources to be allocated to address the
threat posed by infectious diseases.
When the public health system was conceived and developed,
bioterrorism was not even a remote consideration. With an
appropriate infrastructure and information technology systems,
infectious disease can now be tracked and addressed. The public
health infrastructure can grow to help us with bioterrorism and
infectious disease.
Each weekend when I travel to Wyoming I see miles and miles
of beautiful farm land that is vulnerable to attack. That
vulnerability needs to be addressed, too.
When it is written, the committee bill will include
provisions to encourage product development, strengthen the
public health care system and protect our food supply. This
Roundtable and the hearing next week will help shape the scope
and terms of our bill.
In this country, we are blessed with the resources we will
need to respond to these challenges. Our economy is very
dynamic. We are home to some of the greatest minds in the
world, and industry in this country has risen to meet similar
challenges before. This committee has harvested our American
power to innovate before. For instance, the pharmaceutical and
biotechnology industries responded to the orphan drug
legislation championed by my colleagues and friends Senator
Kennedy and Senator Hatch. The challenge of that legislation
resulted in treatments for diseases like multiple sclerosis,
where no therapies had existed before. It may be that more of
those incentives are needed, or that a new paradigm is needed
with a different role for government to play in the battle that
lies before us.
Again, I thank Chairman Burr and each of you for coming
here today to engage in this Roundtable discussion of how we
might best address the challenges that lie before us.
The Chairman. I defer back to you so you can get started on
gathering information.
Senator Burr. Thank you, Mr. Chairman.
Before we begin, let me just sort of give you the ground
rules. At about 10:30 I will adjourn from the formal nature of
this Roundtable for what I understand to be Senate procedural
reasons, at which time the staff will take over and we will
take your answers in the same way we did if we were in a formal
Roundtable.
We have provided for each of you three questions, and I
think, for the most part, we have received answers to those. I
will try to delve into some specific areas that I think we need
further guidance and knowledge on. I think staff will continue
on that format. These questions will be thrown open to our
entire panel. If you feel the urge to respond, which I hope you
will, if you will raise your hand. I was going to have you turn
your cards, but I see a piece of tape on your cards, so that
might be a little more difficult. So if you would just raise
your hand, we will call on you.
And if I could get under way specifically as it related to
Question 1, which was: What additional incentives or other
measures will ensure the timely availability of sufficient
amounts of effective biodefense medical countermeasures, and is
the cost of such incentives acceptable?
Let me focus on liability, if I can, for a second. What are
our options for liability protections, and should liability
protections for countermeasures be something that we consider
on a case-by-case basis versus a statute that covers
everything?
Chuck.
Mr. Ludlam. Mr. Chairman, I think it is an absolute minimum
for BioShield II, and I mean a minimum, to cover the liability
issue. And I think what you have to say to the companies is
that if they enter into a contract to produce something, risk
their capital to produce a product that we need either for
infectious disease or bioterrorism, they will absolutely get
liability protection without any doubt whatsoever. You have to
tell it up front before they risk a single dollar of their
capital to develop the product. And if you don't tell them
that, the conversation will end.
Dr. Clerici. Mr. Chairman, if I can add to that--and I
worked very closely with both Chuck and Senator Hatch and
Senator Lieberman as well as Senator Gregg on the liability
provisions both in S. 3 and in S. 975. That work on those bills
was informed by our experience in working with companies such
as Sanofi Pasteur that bid on the initial BioShield
procurement, the anthrax vaccine procurement. And quite
frankly, liability was the threshold issue that prevented
Sanofi, or at that point Aventis Pasteur, from proceeding.
We have seen again and again companies of any sort of
size--quite frankly, anyone who is publicly traded--shy away
from this market because of shareholder liability issues as
well as the manufacturing capacity challenges of manufacturing
for a market that is unknowable and puts the company at
completely unknowable risks.
These products that will be derived from BioShield will be
administered without the usual battery of tests and FDA
approval that a normal drug will have. They can be administered
under emergency use authority having been only tested in
animals, not humans. To ask a company, particularly a publicly
traded company, to participate in this market without liability
protections is, frankly, irresponsible to the shareholders and
is an absolute--I agree with what Mr. Ludlam said. A threshold
question has to be overcome.
Senator Burr. I want to go to Tara, but can I ask for a
better understanding of whether, John, you and Chuck talked
about two different things or whether it is the same. Chuck
talked about the liability protection is a key to triggering a
capital investment on the part of research and development by
anybody. Yours was sort of that future liability that was
focused after the approval process. Are they connected? Or let
me ask more specifically, Chuck, if there was a mechanism where
that cost for research and development was not incurred by the
company, does that now change how we look at the liability
piece?
Mr. Ludlam. Well, as I think you know, I think that for the
Government to become a bio--to set up a biotech company of its
own and basically to take on either the R&D responsibility or
maybe even just the manufacturing, probably it will be the most
costly, least effective way to proceed. So the Government could
try that. I think if the Government sets up any kind of a GoCo,
any kind of a mechanism like that, it will definitively end the
interest of the pharmaceutical industry in its research. They
will say basically, whew, we don't have to do it. The
Government is going to do it. We won't be blamed for not doing
it. The Government can go off and spend any amount of money on
a defense contract or model, and whether it will succeed or not
is their problem; it is no long our problem politically or
scientifically or medically or legally.
So I think that is an extremely risky last-gasp desperation
strategy if we have tried every other possible way to get this
industry to play at their own risk and their own expense, which
is obviously the preferred method in BioShield I and BioShield
II.
So if they spend the money and they take the risk, then
they are entitled to both dramatic incentives at the end,
including liability protections, because they took the risk.
Because if they don't succeed, they don't get the procurement,
the IP, or the liability protections. And that is the way it
should be. We should shift the risk to them instead the
Government trying to take it on itself.
Senator Burr. Tara.
Dr. O'Toole. Following your second question, Senator, I was
going to say I think there are a lot of different aspects to
this liability question. I think if the bill does not address
the liability associated with giving a drug that doesn't go
through the usual safety testing procedures in an emergency
situation and giving it to large numbers of people, if the
companies aren't protected from nonnegligent harm in that kind
of crisis situation, that will be read by the pharma-bio
industry as the Congress not being serious about BioShield. I
don't think it will trigger anything, but I think it will be a
bellwether and seen as a very serious signal of intent or lack
of seriousness on the part of the Congress.
There are a lot of other aspects to liability even in that
narrowly defined space of what happens in an emergency, such as
what is the animal -- all about, what are the FDA regulations
for getting something through that cannot be tested in the
usual clinical trial format? All of that has to be delved into
and made much more transparent than is the case.
I also think, however, that you are going to have to
consider some form of at least minimal compensation for people
who are harmed--again, not through negligence, but who suffer
harm in the event of a public health crisis when we are asking
everybody, for example, to be immunized in a certain city. If
you don't do that, you are going to have the kind of situation
we had with the smallpox vaccine where a lot of people were
reluctant to put their livelihood or their lives on the line.
So I think it is a complicated question.
Senator Burr. Something like the children's vaccine
compensation program?
Dr. O'Toole. Yes. Exactly.
George.
Mr. Conk. I think there are a lot of false alarms. I don't
think that there's any significant change in the liability
system that is needed. What is needed is a more considered
approach to what the actual threats are. Protection from
nonnegligent harm is the norm. Companies are only liable if
they are negligent. That is, if they fail to produce a product
that conforms to specification if it is negligently designed or
if they withhold necessary information. So that is the norm.
I don't think that--let's look at the points that have been
raised about emergency measures. The essence of fault-based
liability is that you are liable only if, under the
circumstances, you acted unreasonably. If an emergency compels
us or if technical necessity or ethical necessity prohibits us
from doing anything more than animal testing and releasing
medicines after they have been tested on animals but it wasn't
possible or wasn't permissible to test them on humans, then
there is no fault and there is no sound basis for liability.
Every law student in America learns in his first year in
law school, his or her first year in law school that the rabies
vaccine, which carried substantial health risks and faced the
patient with the choice of developing rabies if the animal
proved to be rabid or taking the medicine and saving his life,
but at significant risk, is not a defective product. And there
is no reason to believe that a vaccine developed with animal
testing would be considered to be defective and a basis for
liability.
As to who should be compensated, I think those who are
compelled to assume risks and those who volunteer to assume
risks should be compensated. That means children who are
compelled to be vaccinated we provide for. I think volunteers
who do things like take the smallpox vaccine, I think
participants in clinical trials who volunteer and assume risks,
I think they should be compensated. As to everyone else, I
don't think we should volunteer to just wildly assume--I am
sorry, unqualifiedly assume costs, and I think that we should
essentially leave the current system in place, making
individual product-by-product, situation-by-situation
adaptations.
Senator Burr. George.
Mr. Barrett. Yes, Mr. Chairman, I think we have discussed
liability, at least around the table here, in two different
ways, and maybe one is liability and one is risk. I do believe
that as a pharmaceutical company who is engaged both in
production of generic pharmaceutical and a company that does
patent-based research pharmaceutical, the issue of product
liability is relevant. If we are going to fast-track the
approval process, which I think is a very workable and
appropriate measure to consider as we think of this effort,
then liability protection would be, I think, a natural
connection to this.
The other question that I heard, which was one of liability
related to the production, is really one that I think is
addressable and may not be in these provisions, but this is the
idea of guaranteed purchases of that material that has been
stocked. So I think that that would be--not just, by the way,
for new products but for existing products that are in the
system, a guaranteed purchase of material that was prepared for
this effort, I think, would be appropriate and would go a long
way in encouraging us to work on this.
Senator Burr. Let me assure you, I feel certain you will
field questions as it relates to the current procurement
process and the clarity of understanding of it today.
David, I am going to allow staff to come to you. I have to
formally adjourn this Roundtable. It will resume in an informal
capacity when Bob Kadlec steps to the table.
Let me once again thank you on behalf of all of the members
of the subcommittee and full committee. This may be the single
most important thing we do, and we have a lot of things that
are going to come out of this committee this year. Some of you
have volunteered to be here multiple times, and I can't thank
you enough for that. I think it displays just how difficult the
task is for us to craft something that addresses a robust
willingness to participate, the protection that one needs if
there is a difference between public and private companies, and
the recourse, George, that I think you expressed. And the
question is, can we find a way to encompass all of that. And
that is certainly the first intent.
If that can't be done, then the decision has to be made
where do you begin to pare back and find the balance that we
need. And to do that in the context of not knowing in the
future what the threat is, but also not knowing whether we do
this in a period of time that has a sense of urgency of a
matter of years or a matter of months or a matter of weeks to
be able to produce something is, in fact, a target that is
ever-moving.
So I can't thank all of you enough for your willingness to
be here.
The formal Roundtable is now adjourned.
[Whereupon, at 10:25 a.m., the formal Roundtable was
adjourned.]
Dr. Kadlec. If I could just for a moment here invite my
fellow staff members to come forward. If we could just limit it
to one from each Senator's office. We will make brief
introductions so you know the people asking the questions. And
I do want to pick up--apparently there was one other--oh. We
had one other comment to make on the liability, and we will
continue that theme of questioning from my colleagues here.
Senator Burr was kind enough to make a brief introduction.
I am Bob Kadlec, the staff director for the Subcommittee on
Bioterrorism. I will turn to my left and just introduce David
Schmickel, who is with Senator Enzi's staff in the Health,
Education, Labor, and Pensions Committee. To his left is Kira
Bacal, who is with Senator Hatch's office. David Dorsey, to my
right, from Senator Kennedy's office, and Jennifer Romans from
Senator Frist's office.
Do we have any others?
So if you will pick up the discussion on liability, if we
may, at this point.
Bronwen, please.
Mrs. Kaye. I wanted to address briefly what Mr. Conk had
talked about; liability and being related to negligence. I
think maybe that is the way it works on paper, but
unfortunately it doesn't play out that way in the court. I
would like to point out, as manufacturer of oral polio vaccine,
as an example, it has been a well-known, well-established fact
that oral polio vaccine in about 1 in every 3 million
recipients will cause a vaccine-acquired case of polio. It is a
known, warned-of side effect. We had a judgment in the past 2
or 3 months, $8.5 million against us. We have had $10 million
judgments. There was clearly no negligence involved and there
was no design defect.
I think another unfortunate thing that happens with
products like vaccines, which I think everyone views as a
cornerstone of biopreparedness, is that they are given across a
broad population and one suffers liability costs even for
occurrences that are not connected to vaccine just because they
are given to an entire population, and inevitably certain bad
things will happen to certain people at any given point in
time. And if it occurs in a temporal relationship to vaccines,
vaccines get blamed.
I would like to offer a slightly different perspective here
since we are talking about vaccines as a cornerstone, that we
have a very tenuous ability in this country to manufacture
vaccines. There are only four companies that manufacture the
routinely available vaccines. Only three of those companies
manufacture in the United States, and only two of them are U.S.
corporations. And that precarious situation has the potential
to become even more tenuous because of the liability burden
that we are facing right now, which, by the way--going to this
negligence issue--has to do with an allegation where scientific
evidence has already shown that the vaccine does not cause this
particular injury. And yet, we are facing a crushing litigation
burden.
I think if we want to have companies that are available and
willing to make vaccines, it is not a viable business to be an
only-bioshield type situation; you have to be in the commercial
market as well. It is too expensive and too difficult to make
vaccines to not have a commercial side of your business. And
the commercial side of the vaccine market is under threat from
liability right now.
Dr. Kadlec. Mr. Wright.
Mr. Wright. Thank you. Just two quick points. No. 1, I
think this applies not only to vaccines, but to therapeutics.
And it does because whether or not the current system works--
and I won't get into that, but there has been a lot of debate
whether the current system is even working--the fact is the
current system is based upon known events. With the products we
are talking about, the testing is much less than will occur on
any product that reaches the market through commercial avenues.
There are going to be--there has been proposed that safety
tests for an anthrax therapeutics will be around 300 subjects.
There has been proposed that the safety test for an anthrax
vaccine will be somewhere around 2,000 to 5,000 subjects. This
is a fraction of the number of people who would undergo testing
if these products were normal commercial products. And it is
for the reason of it is unethical to put a product in a patient
who hasn't got a condition. And so when you treat these
subjects that aren't patients, you have to do lower numbers.
So there are going to be side effects and there are going
to be conditions which we are not going to know about until
these are used in mass populations. And that liability has to
be protected against. And a company cannot afford, especially a
major company cannot afford to bring a product to market with
that kind of liability facing them.
Thank you.
Dr. Kadlec. Mr. Conk.
Mr. Conk. I think the problem there is that companies don't
accurately perceive what the law is. This whole area of law had
its origins in the asbestos cases, where virtually no testing
was done. Here, what you have is a highly regulated environment
in which publicly determined necessity determines that only
limited testing can be done. In such cases there is no fault
and there is no basis for liability.
Regarding the polio vaccine, it is absolutely correct that
in a small number of cases people get polio. We don't use that
vaccine anymore. Five years ago, we came to the belated
decision that we should have made 20 years earlier, when France
did, to stop using that design and to stop using live polio
vaccine--and to use the enhanced injected killed virus which
was adopted in Europe in 1968--and which we persisted in using
for over 20 years.
And so if you have a handful of people every year who end
up gravely injured for life and the legal system compensates
them for that enormous loss, I submit that that is just fine.
Dr. Kadlec. Mr. Clerici.
Dr. Clerici. I learned before my first day of law school
that in America anyone can sue anybody for anything at any
time, and they do.
Dr. Kadlec. And lose.
Dr. Clerici. Well, but in the process of losing, these
companies are losing--certainly Ms. Kaye's company and other
similarly situated companies are spending upwards of $50
million in defending these needless and, quite frankly,
baseless lawsuits. And remember, in the context of this
question we are not talking about entering a market that is
particularly profitable, that is particularly a broad market
that people want to get into. We are talking about this
question of liability in the terms of incentives: How do we
incentivize companies that are responsible, that are capable of
entering this market.
I agree 100 percent that if you are coming into a market
where your profit and your market are both unknowably large,
then perhaps that risk is better borne by the company that is
taking that market choice electively. That is simply not the
case with the biodefense market. And if we want the best and
brightest companies in the world to participate, we need to
incentivize them and protect them against this unknowable
liability.
Dr. Kadlec. If I may, Chuck.
Mr. Ludlam. Just to follow up on the same point, we are
dealing with an industry that has essentially no interest in
this market at all to start with. Basically none. I was in one
of the large pharmaceutical firms several months ago, one of
the only ones left with an infectious disease division at all.
And they were hanging by a thread. As soon as a merger happens,
they are gone. They are finished. That is what has happened in
a number of other firms.
Now, the vaccine industry has basically been destroyed. We
basically don't have one at this point. We have essentially
nothing in the pipeline for antibiotics, and we are facing an
antibiotics resistance crisis even without bioterrorism. As a
former Peace Corps volunteer and a future Peace Corps
volunteer, I am going to see people--I have seen people die of
infectious disease and I will see more of them in Senegal when
I get to Senegal. And we don't have products for them. We don't
have an antiviral that kills the AIDS virus. And until we do,
millions more will die.
That is the problem. And to recreate almost from scratch in
the face of massive disincentives to play in this space, we
need to take unbelievably aggressive actions which, at an
absolute minimum, include liability protections and all of the
rest of the stuff which I assume we will get into in the
discussion. And if we don't do it, we will be facing infectious
disease and bioterrorism forever on a scale that could be
absolutely ruinous to the economy, ruinous to the
civilizations. And that is the threat that we face.
So it is time to get serious, and liability protection is
an absolute bare minimum.
Dr. Kadlec. Tara O'Toole.
O'TOOLE, TARA, M.D., MPH, CEO AND DIRECTOR, CENTER FOR
BIOSECURITY OF THE UNIVERSITY OF PITTSBURGH MEDICAL CENTER;
ELIN GURSKIY, M.D., MSPH, PRINCIPAL DEPUTY FOR BIODEFENSE,
NATIONAL STRATEGIES SUPPORT DIRECTORATE, ANSER; JOHN M.
CLERICI, MCKENNA, LONG, AND ALDRIGE; GEORGE BARRETT, PRESIDENT
AND CHIEF EXECUTIVE OFFICER, TEVA NORTH AMERICA; CHUCK LUDLAM,
ESQ., FORMER LEGAL COUNSEL TO SENATOR JOSEPH LIEBERMAN; DAVID
P. WRIGHT, PRESIDENT AND CHIEF EXECUTIVE OFFICER, PHRMATHENE;
CLAY ELWARD, BENEFITS PLAN DESIGN MANAGER, CATERPILLAR INC.;
LEAH M. DEVLIN, STATE HEALTH DIRECTOR, NORTH CAROLINA
DEPARTMENT OF HEALTH AND HUMAN SERVICES; BRONWEN A. KAYE,
SENIOR DIRECTOR, GOVERNMENT RELATIONS, WYETH; GEORGE W. CONK,
ADJUNCT PROFESSOR, FORDHAM LAW SCHOOL; DAVID FRANZ, DIRECTOR,
NATIONAL AGRICULTURAL BIOSECURITY CENTER; AND JOHN POURNOOR, 3M
CORPORATION
Dr. O'Toole. If I could echo that a little bit. You know,
the chairman said that these issues are very complex and you
can't solve the problem of biosecurity in one bill. And that is
certainly true. Although I can understand a desire to kind of
break the different parts of our security into modules and
address them one by one--take on liability, for example--I
think there is an urgent need to talk and think in strategic
terms and to put before the country in these bills what is at
stake, as Chuck said, and what we are really doing here.
There are public implications for how we handle liability
that go way beyond legalistic claims and financial
considerations. We need to find a way to signal to the public
that if we use these countermeasures it could well be in a time
of national crisis when the existence of the country is at
stake. We are going to be using medicines and vaccines that
have not been tested in ways that the American people have come
to expect. And we have to signal to them way in advance that
that is the case, that the Government understands that this is
going to be a lot more risky than oral polio vaccine and yet we
think it is a good idea to take this pill or accept this
immunization. And that is part of what liability is going to
have to do.
We are also going to have to invent whole new procedures in
FDA for figuring out what is sufficient testing. There is a
huge gray morass in terms of what is safe enough. I mean, you
know, you are talking like a lawyer. Speaking like a physician,
we don't know nuthin'. We are going to be guessing at what is
good enough and hope that the benefits outweigh the risks. For
some people that won't be the case.
But the public messages we are sending about the overall
import of biosecurity and biodefense are as important as the
specific parts of these bills.
Dr. Kadlec. Let me just follow up with a question, I think,
which really was the opener that Senator Burr raised and asked:
What are our options? I think it has been highlighted that it
seems like comprehensive liability seems to be the suggested
approach, if you will, for the manufacturers. I think it was
mentioned, also, the notion of protecting those who provide the
product as well as providing liability coverage.
Is there any reason to believe that you can create a case-
by-case liability provision that would make sense? Or what
would be, if you will, the ying and the yang of liability
options as it is considered today?
Mr. Conk. Well, let's look at a couple of epidemics and see
how they were dealt with in the legal system. One that I am
personally familiar with is a small group of companies that
were completely immunized by what is called the blood shield
laws, and those were the companies that developed the
concentrated protein that substituted for the genetic defect in
hemophiliacs. They had complete immunity. All their patients
got hepatitis and/or HIV, and virtually all of them died. And
no liability burden was borne. There was a token settlement in
product liability litigation of $100,000 a claimant and there
was a compassionate payment afforded by the Congress.
I count that up as Exhibit A on why complete immunity from
liability should not be afforded. The pasteurization of those
products was perfected within 12 months of the time that the
alarm went off when AIDS was identified.
Let's look at a more recent epidemic, one that didn't
happen. That was the epidemic from complications of vaccinia on
the smallpox issue. Now, I think that that has certain
strengths. And the strength of that compensation was based on
the fact that we asked, virtually required, health care workers
to assume a risk to their own health in the face of no
identifiable risk at all. It turned that there wasn't any risk.
And people didn't volunteer. So I think that the compensation
nonetheless that was afforded was a good idea and could help if
properly handled, encourage people to volunteer for such
efforts.
And I do think that the point regarding public education of
the inevitability of risks is key not just for these
medications but for all medications, that FDA approval is not
an on-off switch, it is simply a stage in our study of a drug
and its effects on the human organism.
Dr. Kadlec. Mr. Clerici.
Dr. Clerici. I think your question, Dr. Kadlec, was what is
the current regime--or what is the one-up regime that we are
living in today. There is a statute on the books which has been
used in this context. The supplier of the smallpox
manufacturers, the companies that donated the old existing
vaccine following the events of 9/11, received indemnification
under a statute that is over 50 years old, Public Law 85-804.
And that is, quite frankly, the way that the Government has
approached liability to date, because there is no substitute
for Public Law 85-804 that Congress has addressed. It doesn't
work. The predictability of whether or not a company is going
to receive indemnification from the Federal Government is not
enough to incentivize the company to scale up a manufacturing
facility, to dedicate its production and its opportunity costs,
if you will, to a biodefense market. It just doesn't happen.
The second problem with that is one of pure fiscal
concerns. In the political environment we are living in, Public
Law 85-804 puts the Government on the hook, if you will, so the
Government steps in the shoes of the manufacturer and itself
faces unknowable and unlimited liability outside of the
appropriations of Congress. We have seen again and again the
Office of Management Budget refuse to grant this authority and,
quite frankly, it simply doesn't work as an incentive to get
companies to participate in this market.
Mr. Dorsey. If I can shift gears just a little bit. The
definition of countermeasures includes products that affect or
would treat the side effects of any countermeasure. And many of
these many, many vaccines or treatments have very common side
effects, like headache, you know, upset stomach, things that
people encounter all the time and for which there are extremely
large commercial markets now.
So it is conceivable, given the way some of these proposals
have been drafted, that products with very large commercial
markets would be--all of the incentives that these proposals
provide would be available for all of such products. So we
might see a waiver of product liability, for example, with
respect to a vast majority of the largely commercialized drugs
on the market. Is that an acceptable approach?
Mr. Ludlam. BioShield, at least as we have drafted it, only
applies to what the Government chooses to procure in that
market. It doesn't apply outside of that context in the way
that both are drafted. There is nothing that applies to the
vaccine market generally. Maybe it should. It doesn't apply to
the antibiotics market generally unless the Government procures
it under BioShield. If the Government decides that that side
effect is sufficiently serious, that it wishes to deploy the
scheme in BioShield in favor of that and whatever that entails
in terms of liability or tax, IP, whatever else, it can do it.
But I think you have to think it is quite unlikely, if there is
a substantial commercial market, that they would feel it
necessary to deploy BioShield in order to secure the
development of that product at the industry risk and expense.
They could, but as a practical matter I think it is extremely
unlikely.
Mr. Dorsey. But to follow up, certainly it makes sense that
the Government would want to stockpile such measures for
treatment in the case that they have to deploy a
countermeasure.
Mr. Ludlam. Maybe.
Mr. Dorsey. So under your proposal, there would be--you are
suggesting that there should be product liability protections
for a product that, arguendo, has gone through the complete FDA
approval process, no just studies in animals, studies in
humans, we have a lot of knowledge about its use in the
marketplace because it is a commercialized-use product. What is
the justification for liability protection then?
Mr. Ludlam. Well, if the Government decides that it--I
mean, the BioShield is about getting things done that would not
otherwise get done. The only purpose of it is to involve the
Government to secure the development of products that are not
going to be developed for some other reason already without the
necessary tools of BioShield. Now, if the Government--if this
is going to be developed anyway because there are lots of dual
use, I don't see any reason to deploy BioShield. And certainly
wouldn't need to stockpile it. If there is just a substantial
regular commercial market, there is no reason for the
Government to stockpile it. It will exist in the pharmacies
around the country and they can use it.
Mr. Dorsey. Well, I mean, as we learned with Cipro, there
was a substantial commercial market for Cipro, but there
weren't adequate supplies of Cipro available at the time to
respond to the anthrax threat that we experienced in October of
2002. I mean, there were stockpiling issues with an otherwise
commercially available product.
Dr. Kadlec. Tara, if I may, and then Mr. Wright.
Dr. O'Toole. I think there is a big difference between
covering vaccinia immunoglobin, which is probably the classic
case of something that would be used to treat a side effect of
the smallpox vaccine, and covering aspirin or something else. I
think the test of what gets covered under a liability rule--and
I think there should be one rule, should be something other
than did we acquire it for the stockpile. I think that should
be a kind of product-by-product decision made at the time we
start supporting the product as early in production as possible
and there is one liability coverage for everything. But I think
part of the, I think this ball got rolling because of the VIG
issue. And, you know, ought to be more narrowly construed.
The problem with Cipro is if we are going to be using it
for conditions for which we do not have much scientific
evidence. So you may have a product that is in wide commercial
use for many conditions other than inhalational anthrax that
you are now going to use in a context that we have very little
data on. That probably needs some kind of coverage.
Mr. Dorsey. Is the data we don't have data on efficacy or
data on safety, in that context? Isn't it mostly on efficacy?
Dr. O'Toole. Both. I mean, you know, clearly people with
inhalational anthrax are desperately ill very quickly.
Mr. Ludlam. I have to add that there Cipro is the perfect
case for some of the larger points here. That was the case
where it wasn't procured for BioShield. They had some
stockpiles, I presume. But it wasn't used for that. Unlabeled,
because Bayer, at their own expense had gone forward and gotten
a label for anthrax at the Government request. It was the
stupidest thing Bayer ever did. Because as soon as we got hit
with the anthrax attack, the Government said--Bayer donate 4
million courses of Bayer (sic) to the Government--donated. And
the Government, we would like to buy 2 million doses. And by
the way, if you don't give it to us at one-fourth your market
price, we might challenge your patent. And that came partly
from the Hill and partly from HHS.
Now, the Government had no basis for challenging the
patent, but it would have tanked the stock price of Bayer. It
was their lead product. And then every other person who bought
Cipro came in and said, we want it at one-fourth the market
price. Now, Bayer has never gone public with the damage that
was done by this little incident. But it has plagued our
ability to engage this industry in this research. They
understand if they have the perfect product, in the middle of
an attack, whether there was procured under BioShield or not,
the Government will steal it. That is what they believe.
Now, that is why we have to overcome--that is the
suspicions we have to overcome in BioShield II. And that means
liability, tax, patent, procurement, the lot. Because we are
dealing with uninsurable risks, political risks that a senior
Government official will play a mafioso tactic against a
company and tank their stock price.
Dr. Kadlec. David, if I could, I would like to get Mr. Mr.
Wright.
Mr. Wright. I think we are getting into many issues here. I
think the first step, if we want companies to develop products
for BioShield, there has to be protection, liability protection
for those products approved under the animal rule. All right?
And that is a simple first step.
The issue of Cipro is much more complex. And I totally
agree, the Government cannot steal products from companies. And
that has kept a lot of investment out of this industry. Our
company was almost not financable because of that and because
of what was expected that could be done if we spend all this
venture capital money developing these products and then all of
a sudden someone comes along and takes them away.
Products, though, that are on the market, that have gone
through human testing, who are used on label, the liability
issue is different from those products who are being used
either off label, at the Government's request, or products who
have not been through the standard FDA approval and have been
approved by the animal rule. And that is where the first step
needs to be taken, in my opinion.
Thank you.
Dr. Kadlec. Mr. Elward.
Mr. Elward. Well, I think, you know, Caterpillar has to
face the risk-reward in every product we develop, and I don't
think this is any different. Whether or not we have protection
out there is just going to affect, you know, to Mr. Ludlam's
point, we are going to have to have higher rewards in place. So
there is a continuum there. And one size never fits all. That
is why we will have to evaluate it on a case-by-case basis,
just like any commercial industry does, or business does out
there, look at it on a case-by-case basis. And if the
protections aren't there, then we are going to have to have
higher incentives in place at the end, you know, at the end of
the day to get the action that we want.
Mr. Dorsey. Mr. Conk suggested that companies that are
protected from liability don't have an incentive to exercise
due care in producing or manufacturing their product. That was
the example suggested by the blood products he mentioned. If we
afford liability protections to companies, how do we ensure
that we do in fact exercise due care when they--the best care
they can, when they make a countermeasure?
Mrs. Kaye. The swine flu situation was another example, an
analogous situation where the Government stepped in and
provided liability protection for manufacturers because
manufacturers were unwilling to produce that vaccine in any
other scenario. And in that instance, the Government had the
right to subrogate claims, so if there was some negligence on
the part of the manufacturer, the Government could turn around
and do that. I actually think that is a far better way to deal
with these situations than throwing this open to regular
plaintiffs and juries.
Getting, again, back to this polio situation, it is a very
analogous situation. That is a vaccine that the U.S. Public
Health Service said needed to be used in this country. It is
the only effective vaccine when there is circulating wild polio
virus. And the U.S. Government said this is the vaccine you
must use in this country. We as a company manufactured that
vaccine according to specifications, and suffered a lot of
liability on account of it. It is a very analogous situation.
No negligence involved.
I absolutely think that it is important to have a standard
across-the-board liability system in place, product by product,
it can be decided whether this product should have this system
available to it. But I hope what you are not suggesting when
you talk about should this be on an ad hoc basis is that
different products would have different levels of protection,
because then you would never know what you were getting
yourself into when you started down the path.
Dr. Kadlec. John.
Dr. Clerici. There are legislative proposals being floated
now that have a bad actors exception to this, and I think that
that would probably be acceptable to the majority of folks that
I work with. In other words, if there is clear proof of gross
negligence or willful misconduct, companies are more than happy
to accept that sort of exception to any sort of liability
regime, because, you know, the responsible company is not going
to be willfully negligent or commit gross misconduct.
Dr. Kadlec. Mr. Barrett.
Mr. Barrett. Yeah, I just want to make a comment about the
Cipro discussion. You know, we have talked--it started with a
discussion, I think, as to whether or not you can carve out,
from a liability standpoint, the treatment, the use when it is
in a countermeasure versus the broader use. And I think there
are people at this table who are far better equipped to answer
that legal question than I am.
I just want to make sure that we--because I heard the Cipro
discussion as the example here and I am not sure that we don't
take the wrong messages from that Cipro example. I don't know
if we are going to come back to it--I hope we do. But there are
ways of ensuring there was information available on other drugs
that could be used as treatment for anthrax. We did
eventually--Secretary Thompson did respond, after this occurred
and information was circulated to the medical community, there
is work that can be done ahead of time to look not just at how
do we get that drug into the system, but are there other
possible treatments. And again, I think that it is going to be
important for us, as we think about Cipro, to take all the
lessons from it. And I am not sure that I would necessarily
draw the same conclusion that I heard earlier.
Dr. Kadlec. If I may at this time, maybe we can shift gears
slightly. I won't say we answered all the issues on liability,
but certainly what has been discussed here has certainly, I
think, moved our thinking and understanding of the number of
issues associated with it very forward.
But if I could turn now to maybe, we could shift to the
issue of intellectual property, something, again, not so
contentious, I am sure.
Mr. Dorsey. Another small issue.
Dr. Kadlec. And I would invite my colleagues, if there are
any questions on intellectual property, we could open it up at
this point. Otherwise, I do have one. And really, it is a more
general one, is to just kind of get a sense of the page here,
what are the varying opinions on intellectual property and what
should we--we, being Congress--be mindful of as we move forward
with consideration of a number of potential intellectual
property-related considerations or provisions, that run from
wild card patent to patent restorations and others?
So with that, I will just open it up to seek comments from
the panelists.
David.
Mr. Wright. I think if we want to get Large Pharma involved
in this industry, we are going to have to do something dramatic
to make it worth their while. BioShield legislation has put
$5.6 billion over 10 years into a pot to cover all the
products. And while that seems like a large number, if you do
the math that is $560 million a year. In most large pharmas,
that is not a big enough market for them to even look at a
product in. All right? They would not spend money developing.
In most large pharmas today, it is $750 million to $1 billion
market opportunity before they will spend their money trying to
develop a product for that.
So there is somehow that we are going to have to increase
an incentive for them to get involved and spend their money. It
takes just as much money to develop a biodefense drug with a
market cap of $150 million possibly over 3 years, maybe, if the
Government decides to buy it, if they think they are going to
need it. It takes a Bigco just as much money to develop that
product as it does to develop a billion-dollar product. And
shareholders just will not stand for it.
So whether it is patent extension, whether it is on other
products for every product that is developed in that field, or
something like that, and while there are those that will say
that is, you know, using Peter to pay Paul, it is somehow going
to have to be done. Otherwise, big companies are not going to
be able to get involved.
Dr. Kadlec. Mr. Elward.
Mr. Elward. I would agree that we definitely need to have
the right incentives in place. Caterpillar is the world's
leading manufacturer of--mining equipment, and we currently
provide health care benefits that cover more than 140,000 lives
here in the U.S. and we spent last year over $600 million on
that. Like other companies that provide quality benefits, we
are concerned about rising health care costs and prescription
drug costs in particular. In the past couple of years, our
prescription drug costs have increased 20 percent and there is
no end in sight to that.
But to help address that trend, we have encouraged our
employees and retirees to opt for generic drugs when available,
and they do that quite frequently. When that is out there and
they know about it, 90 percent of the time they are using
generic drugs. And that is a huge savings for them. When they
use generics, our employees save over 80 percent of what they
would have spent on name-brand drugs. And our company benefits
substantially as well. It is not uncommon for us to save 30
percent on our drugs-spend when our employees use those drugs,
so it is both good for them and it is good for us as an
employer and allows us to continue to provide those benefits to
our employees.
We do believe that Congress can and should strengthen
BioShield I and we need to have certain incentives in there--
product liability protection, guaranteed purchasing, tax
incentives, and the like. But in the current form, we could get
some unintended results. And these higher prescription drug
costs for our consumers and reduced pharmaceutical access for
uninsured are those risks, especially our employees, our
retirees who are on fixed incomes.
So those two areas of concern: One, the legislation could
actually undermine the goal of developing novel countermeasures
by merely encouraging minor changes to already approved
products. And two, the legislation offers patent extensions,
which would delay the introduction of new generic products to
the marketplace, which is so important to our being able to
provide those benefits and for our employees and retirees to be
able to support their families that way.
So we believe that Congress can and should implement some
additional incentives to help this legislation, but we need to
make sure it is equitable and that it doesn't end up negatively
impacting the people that rely on this so much.
Dr. Kadlec. Mr. Barrett, and then I will get Chuck and then
Tara.
Mr. Barrett. Yeah, again, I would like to remind everyone
that we are a large producer, the second-largest pharmaceutical
company in the United States, measured in prescriptions
produced. And we are both a generic company and we are a,
again, patent-writing, filing, research-based pharmaceutical
company. So I think maybe we bring a slightly different
perspective to this.
We are very supportive, and I think all of us here,
obviously, of some of the provisions that we have seen in both
BioShield I and BioShield II. We talked about some of them this
morning--product liability protection, fast track, etc, etc.
Our concern with some of the intellectual property provisions,
that they really are indirect and we wind up essentially
shifting the cost of our homeland security into the health care
system.
And so, particularly as we started to look at the wild card
provisions that we have seen in legislation, our concern was
that it would have these unintended and really unmeasurable
consequences related to the health care system. They lack
transparency, as ability to know where you are spending the
money and where it is going, and proportionality.
So in particular, we thought that anything that essentially
slows down the access of affordable drugs probably was bad
policy. There are direct ways of encouraging innovation and
there are direct ways of encouraging our existing
infrastructure to make products available to us. But the use of
an indirect tool usually leads to a bad outcome. If you create
an incentive that is indirect, we are unquestionably going to
wind up with an unintended consequence. To me, the idea of
putting that consequence into the health care system rather
than dealing with it as part of the national defense and the
homeland security seems like questionable policy.
Dr. Kadlec. Chuck.
Mr. Ludlam. If we don't get the products we need to deal
with these pathogens, we absolutely know for certain already
that millions of people will die--from AIDS, malaria, TB. We
know we will have an antibiotic resistance crisis and people in
the United States will die of earaches. We will be in a
postantibiotic era. We know if SARS gets loose that hundreds of
thousands or millions will die. If avian flu gets loose, at its
current lethality rates of 55 percent, millions, probably
hundreds of millions, perhaps a billion people will die. We
will have Rwandas and Cambodias all over the world. The 1918
flu was 1.8 percent lethal. Avian flu is currently running 55
to 70 percent lethal.
The question is what wouldn't you do to make sure that we
have products that deal with these pathogens. And I think the
answer is absolutely nothing that we shouldn't be willing to do
to fill this gap with these medicines.
Now, I am absolutely certain, based upon hundreds of
conversations with Big Pharma people, that probably the only
incentive in the bill, the bills that are pending, the only
incentive in the bill, assuming you do all the rest of it, the
only incentive in the bill that will work, that will actually
turn their heads and actually convince CFOs to play in this
space are the IP provisions included in the wild card. Phil
Russell in the Wall Street Journal article on Monday said God
help us if we don't get some of the Big Pharmas to play. There
is nobody with more credibility in this space than he is, and
more frustration at trying to get these products developed. OK.
We want to get one large pharma company in every RFP that
the Government puts out to get any countermeasure for any
countermeasure for any pathogen, at least one. And then we want
the small companies as well, because they are obviously
innovative as well. It clearly is an indirect subsidy, there is
no doubt about it. The generics have one or two legitimate
points to make. And the Congress has to decide whether or not
that argument, which I think is classically a NIMBY argument--
it is a good argument, but it is a NIMBY argument--is trumped
by the larger concerns.
Dr. Kadlec. Tara.
Dr. O'Toole. Well, again, I think we have many compelling
and conflicting public issues at play here. If you believe that
biosecurity is a real problem, if you believe that a
bioterrorism attack, or indeed, a natural pandemic is an
existential threat to the country, then the biopharma industry
becomes a critical national security resource that we have got
to protect and indeed promote. We have to find a way to not
only ensure U.S. preeminence in these industries, but to
promote innovation. And intellectual property and the ability
to make money on it is one of the ways that we have succeeded
historically in promoting innovation.
And we certainly need countermeasures. And I have heard
from Big Pharma companies--I am not a Big Pharma company nor am
I a small biotech company, but I have heard from Big Pharma,
too, that what they are most interested in is these indirect
incentives, which everybody agrees, I think, are a nightmare to
manage, from the Government's point of view, and will indeed be
an indirect cost on the health care system. And we don't want
to crush the health care system in our pursuit of bioterrorism
countermeasures.
So what to do. I do not think there is any way out of this
pickle unless we figure out how to rapidly accelerate the time
needed to make new drugs and vaccines. Time is the real cost
here. And we need to be able to predict the winners and the
losers a lot earlier in the process than we can now. I think
the Government should enter into a long-term very ambitious
commitment to radically accelerate the production of drugs and
vaccines, and figure out how to get Big Pharma and the
universities and the biotech companies involved in such a
measure. If we don't drive down the cost of drugs and vaccines,
we are cooked, both from a health care perspective and from a
biodefense perspective.
Dr. Kadlec. John.
Dr. Pournoor. Actually, I would like to maybe blend a
couple of themes that were emerging in our discussions here.
The central intent of any business is to develop a sustainable
business model. I think risk management, protection of patents,
expenditures in areas of R&D to be able to augment what is
already--and R&D infrastructure in many companies are the kind
of themes we need to emphasize.
I am also a believer in the fact that the long-term
sustainability of it definitely has to do with not only
development of new pharmaceutical, but these patients, above
and beyond needing pharmaceutical and vaccine, will need
hospitalization at some point in time, may need isolation. We
need to register and credential health care workers--the kinds
of themes that I think you would see probably emphasized from
the public health perspective here. Decontamination, personal
protective equipment--all of these will carry some level of
risk with them and some level of liability. Clear articulation
of the boundaries, I think, are fairly important.
But in the intellectual property area specifically, to
incentivize companies to participate I think three key areas
are quite important. First, I would say, is the initiatives
around patent reform, from first to invent to first to file. To
us, it is a key area that needs emphasis so that if there are
activities going on in organizations in their R&D functions
which, before filing, is unbeknownst to anyone in the world--no
one really would know that that activity is going because it is
confidential, proprietary information--that there is sustenance
in that moving forward.
Prior user rights, I think, is a theme that we would like
to see emphasized. With prior user rights, you give extension
and a larger domain to investments that do not carry as much
risk if they do not make it to filing in time.
And also research exemptions so you can see what the
tangential extrapolations from existing themes that people are
doing R&D on in the long run are going to be.
To us, those three pillars, from an IP perspective, I
think, are important. But again, indemnification boundaries is
yet another aspect of risk, as well as, I think, the amount of
R&D investments that it is going to take. Sustainability of the
overall business model requires a right cocktail of the various
components.
Dr. Kadlec. Mr. Barrett.
Mr. Barrett. I want to back us up a little bit. I think we
do ourselves--I don't think we take ourselves in the right
direction when we frame this as a generic/Big Pharma question.
The question, really, is how do we mobilize our entire
pharmaceutical productive capacity around the country to kick
into this effort.
And again, I just want to remind you, companies like Wyeth
and Pfizer, Major Pharma, are significant producers of
pharmaceutical products in this country, as are companies like
Teva. Three of top five largest producers in the U.S. economy
of pharmaceutical are generic companies as well. So we need to
mobilize the entire system. And the question is how do we do
that. And I think there are aspects of IP that should be
examined. The use of wild card, as I said, for me has really
significant policy implications for all of us and I think, for
that reason, should be looked at with some concern.
But when we look at the development of a truly novel
treatment, if it is superior to anything that is available, if
it is unique and there is no other therapy, then we should look
carefully at whether or not there are tools that we can use in
the IP area. But it should be direct. We should be able to see
what we are spending, what we are spending it on, and what the
outcome is that we want. And that is the reason that I express
this concern about these indirect tools.
But I think, again, we will do the most work if we ask
ourselves how do we mobilize the entire system. That includes
all manufacturers, wholesalers, distributors, everyone, to
participate at the right time, at the right speed, and at the
right scale to be effective.
Dr. Kadlec. Mr. Elward.
Mr. Elward. What we are talking about here is insurance
policies. And nobody wants to buy insurance. I don't want to
but insurance, nobody here does, but we feel like we have to,
and in this case, the national interest, we decided we want to
do this. And it is like air defense. We don't want to go to
Boeing and spend a bunch of money with Boeing to build fighter
jets if we didn't think, you know, if we didn't think we needed
them and we hopefully don't have to use them.
But I can't imagine going to Boeing and saying, OK, we are
going to--we want you to build the latest and greatest in
avionics for the next generation of fighter jets, and to
incentivize you to do that, we are going to protect you from
competition on the commercial side of your business. So don't
worry about the next generation of AirBus competing with you on
the 777 because they are not going to come--you know, they are
not going to be in the game here if you can do this.
It drives completely the wrong behavior and it is not in
the best interest of consumers and competition. And that is
what we are all about.
Dr. Kadlec. Dr. Franz.
Dr. Franz. Thanks. I would just like to underscore a point
that Tara made about our ability to respond very quickly. I was
involved in a study on the use of vaccines in biodefense in the
last year, and I essentially concluded that, beyond smallpox
and anthrax, because of the nature of the agents, because of
the way they present themselves, and because vaccines by
definition are prophylactic, there may be very little space for
vaccines in bioterrorism and emerging infectious disease. Our
system just does not respond quickly enough.
To give you a concrete example, in 1996, at USAMRID we
produced the first GMP lot of RPA, the recombinant anthrax
vaccine which is now the subject of the BioShield I
legislation. That is almost 10 years ago. We were at that time
trying to get the animal rule in place. We were talking about
the animal rule in place, putting it in place in the mid-1990s.
It is finally in place. There is only one product, to my
knowledge, that has gone through that system, and that is
pyridostigmine, a prophylactic for chemical defense.
So I believe there are areas where the Government does have
control in which these processes can be speeded. It is very,
very difficult, even with the animal rule in place, to get
answers from the FDA about how to move these products forward
into advance development.
Dr. Kadlec. Mr. Ludlam and then Mr. Wright.
Mr. Ludlam. I am absolutely delighted at George's comments
about where we can go on the intellectual property provisions.
And I think actually it forms the basis for a consensus,
perhaps, on these issues that look to be so intractable.
Because BioShield II says, page 79, lines 19 through 24, that
it must be a novel product, not previously approved ever. And
on page 80, lines 1 through 4, it must be superior. The word
``superior'' is also in the bill. It has to be novel and
superior. And no wild card could possibly be granted unless it
is both novel and superior. And I think George has suggested
that that is a place where perhaps intellectual property
incentives might be useful.
Previous to that, it says that in addition to those flat
limitations, which always apply, it can only be deployed at the
discretion of HHS when they find that there is nothing
available, the other factor--considered. It is a truly a last
resort in the most dire cases. That is the way it is drafted. I
in fact was working with some of the generic pharmaceutical
firms when I drafted it, under the table, behind the scenes.
They actually came to me, they actually provided me language,
they made sure that I was drafting something that didn't seem
inadvertent. I won't reveal who it was because I told them I
wouldn't out them on the process. Very carefully drafted, and I
think George's statement gives us a great way to move forward.
Dr. Kadlec. Mr. Wright.
Mr. Wright. Just a comment. I think the comparison to the
biodefense and the defense arena is very appropriate, because
what we are talking about are incentives. And what we are
talking about here is giving an incentive for a company to
develop a product that they would not ordinarily develop.
Now, when the aerodefense agencies are asked to develop a
new F-15 or F-16 or Stealth bomber, there is a process by which
they risk none or very little of their money in developing
that. There is a competition that goes forward; they are paid
for that. There is then a certain set of milestones that are
set up, that if they meet and develop this product, then it is
brought forward, they develop it, and it is purchased. And they
know up front that they are going to have a market, that X
number are going to be purchased, and that they will be able to
make a profit and a return for their shareholders.
This does not currently exist in this business. Pfizer,
Wyeth, Roche--and I can't speak for them, but I am a cochair of
the Alliance for Biosecurity, that has all those people on it
and I have heard them talk. And I am not speaking for the
alliance here today. But what they say is we are not going to
go out and develop a product for anthrax just because we have
money to spend to do it. There is no reason to do this, there
is no market.
So whether it be wild card, whether it be a totally
different system, I think the point that I would like to make
is that something has to be done to get everyone involved. Do I
want Big Pharma in here? No. I am a small biotech company. I
can't compete with Big Pharma. I have nothing to gain from
having Big Pharma in. But the country has everything to gain
because of the millions of people and the economic devastation
that could occur from one anthrax attack.
Dr. Kadlec. Dr. Devlin.
Dr. Devlin. From a public health perspective, we certain
appreciate the issues that are being discussed here today, and
we recognize that there is a governmental role to providing a
sustainable, predictable market for these countermeasures. And
also, the liability issues have got to be resolved.
We learned a lot in the small pox vaccination issue. The
public health workforce is going to be the one that delivers
the medications that we're talking about today. We have got to
be strong. We have got to make a very strong commitment to the
public health infrastructure or this conversation is
meaningless.
We manage the IND process, which is cumbersome. We manage
the adverse effects process around small pox. We learned a lot.
In the last year's flu vaccine shortage, we were very
grateful that the Federal Government and industry were able to
get together to commandeer the amount of vaccine that was
available and manage that through the public governmental
infrastructure.
That is the only way that we are going to get maximum
health protection when resources are short and the need is
great. And the public health workforce is also going to be the
ones that manages that public information and that public fear.
When you send anthrax through the mail, that puts every
person in this country at risk and on alert. And managing fear
is a huge part of any management of a vaccine or antidote
distribution.
So I want to say we were grateful for industry and
Government at the Federal level's participation last year. And
I want to say that we have a strong vaccine distribution system
for children's vaccines. We do not have that for adult
vaccines. And that is a real problem.
So we were kind of flying by the seat of our pants last
year. We were lucky that we had a light flu season, but we do
need to work that system out.
And last, is I ask for your support here on the Hill and
with our Senators of the public health system so we can get
these drugs to the people that need them.
Thank you.
Dr. Kadlec. David, if you have a question.
Mr. Dorsey. I have a question about the level of incentives
needed to get companies to play in this area. The argument is
made is that is costs $800 million to a billion dollars to
produce a pharmaceutical. And we need to make the market big
enough to be people to play in that.
And I am wondering if that truly is the case with
countermeasures. Countermeasures, everyone is arguing , are
products that are not tested in humans or in very small numbers
of humans. My impression has always been that the high cost of
developing pharmaceutical is mostly, at least in a majority and
perhaps even mostly in the clinical trials needed to get the
products to market. But we do not apparently have that with
countermeasures because they will be tested in animals, very
small numbers of humans.
To what extend does that reduce the cost of developing
these things and therefore suggest that we do not need the kind
of large incentives that some have proposed to get these things
developed?
Dr. Kadlec. Mrs. Kaye.
Mrs. Kaye. I think you bring up a valid point but in terms
of whether the large scale clinical trials will be the largest
portion of the costs for a product, I think it will vary from
product to product.
On a biological product and a large part of the expense is
the scale up and the development of the process, which you
would have whether or not you had large clinical trials.
On a chemical entity, what you are seeing is probably
correct because the scale up on the development of a chemical
entity is not as significant a part of a cost of bringing a
product to market.
But I think one thing that also needs to be kept in mind is
that for large companies, I think there may be some analogies
to the aerospace industry, but not completely. My understanding
of companies like Boeing is that their opportunities in the
commercial market are pretty limited, and they are struggling.
Whereas, in the bio-pharmaceutical industry, we routinely
turn down research projects that are in our pipeline that we
could develop because we have to limit. We do not have endless
resources, and we have to pick only certain projects that we
can fund and let others go by the wayside.
So we are talking about opportunity costs in Big Pharma
companies saying, well, we are going to shelve this commercial
product that could have a large commercial market and instead
devote our scientists to this BioShield measure. And that is, I
think, something that needs to be overcome in order to
incentivize large companies that have a large portfolio of
possibilities out there.
Dr. Kadlec. Mr. Wright.
Mr. Wright. In addressing the cost, you are absolutely
right. The cost of developing a product that does not have to
go through full clinical trials is less. So it may be $150,
$500 million to develop a bio-defense product.
Our little company so far has worked on three products. The
first product we worked at, we had spent almost $35 million of
our money on and then found out it did not work.
OK, so while that is costs that are sunk, and it is this
type of costs that it may take $200, $300, $400 million until
you find a product that works. And then you have to develop it.
I also agree that Big Pharma opportunity costs are key,
because it takes just as much time to develop this product that
they may make $100 million on as a product that they make a
billion on. And shareholders just do not tolerate that.
Dr. Kadlec. Mr. Barrett and then Mr. Ludlam and then Mr.
Conk.
Mr. Barrett. Yes, I think that--I want to back up for one
second, because as much as I love it when somebody agrees with
me, I wanted to clarify something from earlier. [Laughter.]
It does not happen often enough.
My comment about the IP is very important, that my
objection to wild card is across the board, and I want make
that clear. And I appreciate your observation.
So my comment really was about IP provisions that would
possibly provide extensions to specific products or the
restoration of specific products. But wild cards, from our
view, are bad policy.
On this issue, it is important to consider whether or not
direct funding of clinical work is actually much more efficient
that in the direct system. And that, while it seems expensive
for the Federal Government to consider the real funding of the
work, it is probably considerably less expensive than some
system where we are going to pay the price and some way we do
not see or do not have visibility on.
So I would encourage us to consider systems in which we
actually pay directly for the clinical work, for the scale-up
if it is a bio-tech facility or whatever it may be. And that
may seem on the surface quite expensive. In the long run, I
think it is actually very productive. And we should really be
considering it.
Dr. Kadlec. Mr. Ludlam and then Mr. Conk.
Mr. Ludlam. I knew you would oppose--I did not say you did,
I just thought I would be a gentleman.
I completely agree that if there was a way to pay through
the front door, that would be the way to do it.
We are heading for a budget collapse. We are heading for an
implosion of Government finances. And the idea that the
Government is going to put billions and billions of dollars as
the procurement for products it may never use, I think is
unlikely. And in fact, one of the strategies--I will be
honest--in BioShield II, who has to pay the industry in ways
that do not involve discretionary appropriations alone. Pay
them through tax. Pay them through IP. Pay them through
liability.
That is all money. Now if we could pay them entirely with
procurement and maybe liability and forego the tax and patent,
fine, I think that is completely out of the question in terms
of what the Government will actually pay.
Five billion six hundred thousand dollars for this entire
space is a joke. It is absolutely a joke. We are spending $9
billion this year on missile defense. Now if we are spending
that kind of money on these products, yes, maybe we can pay
them through the front door.
Anyway, I am just being honest. We did put the IP on the
table because it was a form of money that we could pay that
does shift costs to the health care sector. That is true. I
would say that is a small price to pay for the collapse of the
health care system if we get hit with a pathogen for which we
have no countermeasures. Fine.
In terms of the animal models, we are assuming we have the
animal models. One of the massive problems here is we do not
have the animal models. And we need a whole animal model
industry.
If you go Jackson Labs or Charles River, why are they going
to create an animal model for a product that may never go into
animals? Because there are other reasons why the industry is
not playing.
You have to have the animals on line, and alive in quantity
in BSL III, IV facilities before they will start the research.
You have to have manufacturing facilities for biologics on
line, ready to go, available before they will start the
research.
So that is why our bill applies to research too as
including animal models. It applies all of this energy,
including wild cards to research tools. Because if we do not
have better research tools within the animal models, the
industry will never start the research for that reason along,
aside from the other disincentives.
Dr. Kadlec. Mr. Conk.
Mr. Conk. Well, if what Mr. Ludlam says is true, as far as
what drives Government policy, I think that is a shame.
What I would like address is the point first raised by Dr.
O'Toole and the whole idea about accelerated development.
It is true that what we are talking about is the down side
of biodiversity. We do not know what little scrapes of RNA in
birds or cat-like animals in China or somewhere in the African
rain forest are going to succeed in reproducing in humans.
But if we want to look at this whole picture, let us start
with the basics. The question I think we should ask first is
how does each of these things serve our public health system,
which is the fundamental structure through which we are going
to administer public education and all mass medical defense
regardless of its origin whether criminal or naturally
occurring diseases.
If we are to accelerate these processes and do with kinds
of testing that may be shorter and perhaps less thorough than
we hoped for in the past, then what we need to do as a
corresponding measure is we have to greatly increase the amount
of money that we spend in studying the biological effects of
the various substances, whether biological or chemical, that we
are administering to the population.
We have this idea, and this affects the liability
discussion too, that when something is approved by the FDA,
that it is an open gate and everything is free now. I think
that we should look at the whole thing in a staged way.
FDA approval of marketing we should see as the beginning of
a new stage in product development. Unfortunately, today it is
a stage that I think we could describe as the mass poorly
controlled experiment stage where we not take small numbers--we
have small numbers of people on whom we have tested, and now we
have tested it millions and do very little to see how that is
carried out.
So I think that the burden on companies for stewardship of
their products is something that we should increase
correspondingly to the advantages of accelerated testing, etc,
that have been proposed.
Dr. Kadlec. Well, thank you, Mr. Conk.
What we are going to do is now if you do not mind, is we
are going to transition to question two.
I think the public health people have been quietly waiting,
biding their time to address this. Just so we have some idea of
the timing of this, under normal circumstances, 11:30 the
formal round table would conclude. But I think given that staff
members are now running the show, so to speak, we will go as
long as it takes-- [Laughter.]
Dr. Kadlec. I think to address the issues that we have
before us. So if we could open this question two. And what I
would like to do is kind of blend an issue here a little bit
and that is talk about the workforce, the public health work
force first, but also kind of highlight, if you will, something
that I think is relevant to the bio-defense industry and that
is the issue of immigration requirements and the need for
providing grants in education and increased training.
So if we could kind of open that up as our segue to the
public health discussion. I would like to open that first and
then maybe broadly discuss what we know or do not know in terms
of the status of our public health infrastructure, particularly
the readiness of it and what does it mean to be ready? What are
the metrics around that?
So if I could just open that up first with the workforce
part, and then we will transition, if you will, to what does it
mean to be prepared?
Dr. Devlin.
Dr. Devlin. I think I mentioned earlier the notion that it
is going to be the public health workforce that has to carry
out the early detection of any kind of intentional or
unintentional disaster and respond with quarantine, isolation,
also the distribution of the vaccine and any counter measures
that would be developed, going all the way through mass care to
recovery to public information.
All of that requires a well-trained workforce. And we have
a tremendous variety of professionals working in teams in the
communities, in the States. They are nurses. They are
epidemiologists. They are laboratorians. They are environmental
health specialists, industrial hygienists, all of them
requiring a specific amount of expertise to be able to
contribute to the preparedness effort.
It is very difficult to recruit these individuals. About 20
percent of the graduates of schools of public health actually
go into the practice of public health. They are in your
industries. They are in hospitals. They are in research,
academic centers and so forth.
So we have also an aging workforce. Our public health
workforce in general is about 7 years older than the rest of
the State Government, local Government workforce.
We have nationally about half of our nurses would be able
to retire, and that is our largest group of the workforce
within the next several years.
So we have concerns about preparing the workforce,
retaining, recruiting, all of those challenging and effective
local, State, Federal response to preparedness. So it is a
critical issue, and I am very glad that you have had that on
your sights.
There is a bill, Senate bill 506, by Hagel and Durbin, that
has been developed in partnership with Federal, State, local
officials. It would be similar to the rural health act of maybe
30 years ago where there would be funding created for
scholarships for recruiting students into the field from the
schools of public health and also loan repayment programs.
We think this is a very important tool for the future of
the public's health in terms of getting the expertise into the
communities in a sustainable way.
Thank you.
Dr. Kadlec. Dr. Pournoor.
Dr. Pournoor. Under current HRSA requirements, general
readiness levels for public health are set at a minimum level
of 500 per million. Being able to receive 500 patients per
million in population. That is 500 of 1 percent of the
hospitalization rate. So this is sort of a threshold national
readiness that collectively we are working toward.
If you take that 500 per million and extrapolate what the
number of individuals needed and the amount of space for this
surge of patients, even at 500th of 1 percent, there is a
requirement for a greater workforce than we have sustainable.
One of our challenges today is that we reward our health
care systems in a very lean manner, in a just-in-time manner.
And just-in-time operations means that you have only as many
beds as you need. You have a lean staff to be able to minimize
the investment of and time and energy and dollars in your
system. And also, you carry a minimum of inventory or products
that would help the patients that would be coming in.
In a just-in-time consumption and production world, the
worst thing that can happen to it is an epidemic or a pandemic.
Because very little demand elasticity exists in the system.
Whether it is demand for pharmaceutical or medical supplies
or staffing, I think the challenge is really focusing on
demand-planing tools and demand-planning models that give us a
recognition of what the boundaries of the problem may be and a
strategy to be able to absolve ourselves of some of the issues
in a practical manner.
Dr. Kadlec. Dr. O'Toole.
Dr. O'Toole. There is lots of evidence that the public
health workforce and our capacity to respond to the
professional needs in mass casualty disasters is a mess. It
just is very, very scanty.
Half of all of the Federal workforce now engaged in bio-
defense is eligible to retire in the next 4 years. And that's a
small number to begin with.
People do not go into public health in part because the
schools of public health do not teach anything about public
health practice. And I think docs, for example, are mostly
doing disaster response as assistance professors and as an add-
on task that is assigned to them by their department chairs.
There is, I agree, no coherent process for hospital
preparedness at all. And that is something the bill has to
address in one form or another.
I think the solutions to the workforce problems are very
simple and very cost effective. But they are going to be
costly. We ought to have training programs keyed in to
requiring medical schools and schools of public health to offer
practical training to people who wish to go into these areas.
And there ought to be Government service pay back either at the
local, State or Federal level in exchange for those kind of
scholarships.
We ought to also make it a lot easier for more senior
people who have experience under their belt in medicine or
public health to come in and out of the Government, which would
require personnel changes in the Federal workforce and would
help everybody. It would acquaint the medical and public health
systems with what Government is really up against and who they
can look for an allies. And it would also help, I think, the
workforce in the Federal work place.
Dr. Kadlec. Elin.
Dr. Gursky. Thank you.
Thank you for the opportunity to speak here today, and I
look forward later on to be talking about the system as a
whole.
I agree with Dr. O'Toole. We have a number of very serious
public health system issues that we need to discuss, not the
least of which is the public health workforce.
I concur that we most definitely need to incentivize people
going into public health as Dr. Devlin has discussed, but I
think it is long overdue that we develop a credentialed
professional public health workforce, and would suggest that
merely incentivizing people to take public health training
without requiring to get some kind of license or certificate,
would be a very shortsighted approach.
Our tatoo artists and our hairdressers in this country need
to have a license and have to have proof that they are
competent to do what we expect them to do. And we should have
no less a standard for people who are very much responsible for
life and death decisions, for risk communications, for releases
of vaccines to medical facilities for postexposure.
So the treats that we have been facing in the past two
decades, the threats that are coming at us from African rain
forests and strange looking cats and whatever else Mother
Nature and terrorists have to throw at us, must be met by a
workforce that is educated, not just trained.
As I look at some of the anecdotal reports of the past few
years, the bioterrorism funding, I see a lot of training
courses. And it is my opinion that what we are doing is not
just training people in new pathogens and bioterrorist threats.
We are actually training people in some of the fundamental
skills they should have in public health practice.
And in fact, because we are not assuring governors that
funding is sustainable, we are not really building into our
public health workforce. We are hiring people who are short-
timers and people who are contractors. So the turn over is
great, and then we wind up having to train over and over again.
So I think in terms of the potential catastrophic
ramifications to the health of the country and costs, the most
cost effective measure we can make right now is to look to the
year 2010 and say that people graduating from public health
schools who wish to practice must have a certain standard of
education and a license.
Dr. Kadlec. Chuck.
Mr. Ludlam. Just two quick points. The 9/11 Commission said
that our failure on 9/11 was a failure of imagination. And I
think we have a total failure of imagination regarding public
health, consequences of an infectious disease outbreak or a
bioterror attack.
Talk to the officials in Toronto and China about what
happened with SARS. There is not anything we would not throw at
this problem in terms of resources, training, incentives or
everything else in this country. Beijing, Shanghai, Hong Kong,
they were closed down for several months.
Now what if we close down DC, New York, and Boston for a
few months?
There was a death sentence on the books in China for the
willful spreaders of SARS. The first thing they lost were some
of their hospitals because people go to their hospitals.
You can lose your hospitals for all of the other things
that hospitals are doing. And the worst situation is if you do
not have medicines to treat people with. And you say, I do not
know what it is. It is whatever you are going to quarantine.
And that is the absolute collapse of the health care system.
In the center of attack, they said, get your ass on Cipro
and stay on it until you get off and you will be fine. And
there was no panic.
And we tell them we do not know what it is, that we do not
know how to treat it, that we have no vaccine, we have no
therapy. We do not even have a diagnostic. We cannot separate
the worried well from the people who were exposed.
We have no diagnostic for small pox right now. We've got to
wait and see whether they break out.
OK, the last issue is command and control. There is no
consensus on who is in charge federally. It is absolutely a
muddle created largely by the Congress between DHS and HHS. And
this committee and the Homeland Security Committee have to work
this out in this bill.
We have got to know who is in charge, and they have to have
resources.
NDMS, the administration proposed to cut funding for NDMS.
MMRS is a complete mess also. We have hardly any boots on the
ground to send. We have no way to coordinate them with the
State and local officials, who are the principle work forces in
this area.
We are probably going to have to deploy the National Guard.
They are totally unprepared for this.
We are not taking this seriously in the slightest.
Dr. Kadlec. Dr. Bacal, I think you have a question.
Dr. Bacal. I am Kira Bacal from Senator Hatch's office.
I would like to build on what Mr. Ludlam and Doctors Devlin
and Gursky's comments and ask we have often, particularly and
appropriately this morning, tended to focus our discussion on
biological threats be they weaponized, small pox or new
diseases like SARS. But I think it is also important to
remember that our public health system must also respond
conventional attacks such as mail bombs in Israel, shopping
malls or car bombs in Oklahoma City.
And particularly, after last week's attack in London,
subway as well as Secretary Chertoff's comments about
reorganization as Chuck was saying of the Department of
Homeland Security.
I would be very interested in hearing some remarks and some
comments about what our guests feel should be the template for
our Federal, State and local authorities to work together on
both conventional as well as biological crisis.
Dr. O'Toole. If in the event of a explosive device or a car
bomb, even a very big explosion--let's leave out nukes and rads
for the moment--the real response is going to be the medical
system, not the public health system, particularly immediately.
And that has been a neglected piece of homeland security
preparedness in general that really needs a lot of attention.
The problem is that that system is disconnected from
government and highly fragmented. And as was said earlier,
very, very pressured financially and just operationally. So it
is going to be very difficult to fix.
I think the way forward for dealing with mass casualties
situations is we are going to have to create regional consortia
of hospitals for starters. No one knows who the organizing
authority to put that consortia in place is going to be. For
the most part, mayors and governors have not been interested in
messing in those worlds. But some organizing authority to
ensure hospitals could cooperate and collaborate is going to be
absolutely essential.
And then we are going to need to spend money on thinking
through how to get them prepared in a cost-effective way.
One critical aspect of all kinds of responses is going to
be the ability to have situational awareness both in the
medical care system and in the public health system. And the
key component of that is being able to move information from
the hospitals to public health. So public health has a broader
view of what is going on. Is this one anthrax case? Is this
100? Is this one hospital? Is this every hospital in my region?
Is everybody overflowing with burn victims, etc, etc?
We need to start drilling down with great specificity on
what aspects of the huge spectrum of public health and medical
response we really think are the most essential and start
building those systems. And they are systems.
I would offer that the medical and the public health
systems--and I have been part of both--are so broken and so
stressed that there is no hope of tweaking these systems and
getting them into good-enough-to-go fashion. We are going to
have to start building whole new systems and committing
ourselves to that.
Dr. Kadlec. Pardon me, Dr. Devlin and then Dr. Gursky.
Dr. Devlin. One of things that happened well after 9/11 is
that the funding for public health preparedness and the funding
from CDC and then the funding from HRSA for the trauma system,
hospital preparedness, did come to public health.
And we have done, if I may say so, a very fine job in North
Carolina of integrating those two systems so that we do have
the specificity that you are talking about. We can tell you
what beds are available and move people around in terms of mass
care.
And then homeland security, of course, has funding for
equipment that supports hospital work. So it is integrated in
some States. And we are working on it in all States. If I
might, I would like to hand out North Carolina's story. I will
not go through it, but I will say that what we see the biggest
issues are is that we do have to consider that this all threat,
all hazards, and that we are dealing with radiological,
nuclear, biological, chemicals. And we are dealing with
hurricanes. And we are dealing with explosives. And that early
detection, surveillance are absolutely critical. And that it is
going to take a strong workforce at a local level, a regional,
State, a multiState approach as well as the Federal response,
because these are not respecters of any kind of boundaries.
So we understand this. And so the other notion is that, we
talk about certainly we want to do everything we can to save
lives. And we are going to have some devastating epidemics. I
mean, we are at 36 years since our last flu pandemic. It is
time.
So there is lots of national things that can wrong too. But
the reality of it is, we are not funding the public health
workforce and effort in a sustainable way.
Last year we had redirected $39 million for the cities
readiness initiative. Not that we don't need to protect major
populations, but we are all at risk, the school in every
community, the nuclear power plants and we could go on and on.
This year the administration recommended a $130 million
reduction or transfer to the SNS but taking it from the State
and local public health infrastructure. The Senate has
concurred with that, it is my understanding. The House did not.
But we are not putting everything that we can out there to
protect, to detect, to put in place interventions that are
going to literally save lives in addition to the industry
issues that are here today.
So I thank you for your question and for yours.
Dr. Kadlec. Dr. Gursky.
Dr. Gursky. If I may, I would like to move a little bit
from workforce to systems given the question that is on the
table. Because I think systems is the issue we have to address.
We do not have a public health system in this country. We
have 50 State and 3,000 local health departments who work very,
very hard on behalf of their citizens and has been extremely
taxed over the past 25 years by new pathogens, clearly with no
end in sight.
We are long overdue for rethinking the need for the
building of something that works systematically in this country
for public health.
And the question I frequently raise is what does a 21st
century public health system look like?
We have already discussed one of the issues, which is
workforce. So you know my thoughts on that.
Having an educated workforce that can respond quickly,
agilely to new threats, to be able to make the decisions needed
to deploy stockpiles and to provide risk communication
messages.
One of the things fundamental for this would be an
information sharing system, a health intelligence system. We
have seen evidence of building parts of information systems now
for a lot of years, on top of which we are building early
warning and detection systems.
This should not be rocket science. In fact, we know how to
build information systems pretty darn well. What we have done
is give a lot of funds to our States and special cities to
build systems without giving them requirements first, without
providing the standards and the architecture.
If, indeed, we want to be serious about dealing with 21st
century global threats, we have to build a system where we can
rapidly share information, the situational awareness that Dr.
O'Toole discussed, the connectivity between the public health
medical and hospital sectors, as well as intelligence and law
enforcement. That is absolutely critical.
The third thing we have to decide is, indeed, who is
responsible for what. And as we saw on anthrax, it was very
unclear if it was local, State or Federal CDC responding to
events. We have that same problem in terms of anticipated
relief at this point. I speak with people, public health
professionals who feel the National Guard is going to be
deployed to help them. CDC is going to be deployed and come to
the rescue of multiple cities at one point in time. The
Department of Defense is going to be deployed.
And maybe these are all possibilities, but our assumption
of who is going to be involved and who is going to be in charge
in a large mass health disaster has got to be decided so that
we can plan efficiently and so that we can use our preparedness
dollars efficiently.
Putting preparedness dollars in a community that has a
public health staff of 13 people and allowing them to hire a
14th person is not going to make them more prepared.
We have to look at 21st century solutions. We have to look
at what Dr. O'Toole was discussing in terms of regional
approaches and bringing all of the potential responders and
important stakeholders to the table and deciding what the
response paradigm is going to be.
Dr. Kadlec. John.
Dr. Clerici. I think as Chuck pointed out, this issue of
preparedness is one that is actually driving the decisions on
countermeasures being purchased. And we've seen this first
hand. The issues need to be dealt with together.
Mr. Barrett in Chuck's exchange reminds me of one that
President Bush and Senator Kerry actually agreed on in the
debates and that was that the number one threat facing America
is nuclear detonation.
A few weeks ago Governor Keane and Lee Hamilton both said
that it is not a matter of if, it is a matter of when there
will be a nuclear detonation on U.S. soil.
And yet, as we sit here today, there is nothing in the
stockpile to treat acute radiation sickness. And the reason why
is the Government is waiting for a cure that can be delivered
within 12 hours via push-pack. That is not going to work. That
is not going to treat the victims of a nuclear blast that are
going to be downstream of the plume that are going to be
exposed to radiation. And we do have something at hand that can
be purchased. It just cannot be distributed in a way because
the system is broken in order to get it to the potential
victims in time.
Interesting the way the Government relies on the fact that
they've stockpiled drugs such as Neopugen. Neopugen has to be
administered in a hospital by a doctor. There are not enough
hospital beds in America to treat the potential victims of a
single nuclear blast in any major city.
So until these two halves of the equation are talking to
each other, we are not going to be protected. And the
countermeasures that are going into the stockpile are not going
to help us.
Mr. Ludlam. Just to follow up on the same point, we
obviously did pass BioShield I. So we are supposed to be on the
road to procuring a few things.
I have to say that the administration of BioShield I, which
I basically wrote, is grotesque. One, it is not being used, you
know, about one tenth as much as it should be. They do not have
the long list of things they are trying to procure, including
the radiation countermeasures. So the industry has no idea of
what is the 5-year plan under BioShield. How many products are
you going to procure and give us some warning.
They are asking the companies to have an IND before they
bid. The company would have to preposition themselves with an
IND. That takes lead time of a year or more to get ready to
even bid on a BioShield contract.
So there is no sort of scheme here. Are they going to have
20 products or five products or 80 products? Or what is it?
Nobody knows.
The few procurement that they have put out, I mean the
anthrax RFP procurement, was utterly and totally bizarre. I
mean, this is the disease that killed people in 2001. We still
do not have any effective countermeasure for late-stage
inhalation anthrax. Cipro does not help you. At that point the
toxins start going, you are dead.
OK, they're trying to get a therapeutic. Fine. But put out
a procurement that says, we'd like 10,000 to 100,000 courses of
this product. And the industry said, 10,000?
Well, I mean if somebody dropped a pound of anthrax in a
tall skyscraper even, it would infect 10,000 people, let alone
if they did it upstream, upwind in Bethesda.
Then they said, we will take your product and we will test
it in some animals, and we will not tell you what animals we
will test it, and then we will get back to you, because there
are several animal models in the field. And the industry was
not sure which animal model would be used or how they would be
testing it.
Now they are still dickering on it and still adding clauses
to the contracts. I am not sure if they will ever meet with any
company that will play.
Now this is leaving the public health system without
countermeasures which we probably could get, you know, in a
reasonable period of time. Not all of them but a few of them.
Dr. Kadlec. Tara.
Dr. O'Toole. I think we need a lot more focus on systems
and less on stuff. And let's talk about what we might be able
to do.
I would urge you to consider something radical. For
example, perhaps we should require all governors to create a
conduct of operations plan with doctrine and assigned
responsibilities for dealing with a mass casualty event. And if
they do not and if it does not get approved by HHS, they do not
get a certain percentage of Medicare funding.
I mean, obligate them in some way that really conveys the
seriousness of the situation.
If you do that, let me tell you that will get the hospitals
to the table real quickly if they think they are suddenly going
to be told what to do by their commissioners of health.
I think also that we need to talk with much more
specificity and clarity about the public health system, versus
the health care deliver system. They are not the same, and they
are not even connected. And right now, when we say public
health preparedness, the health care delivery system assumes
that does not include them.
I would suggest shifting some of the operational
responsibilities for epidemic response, in particular, such as
giving out vaccines and antibiotics to the medical care
delivery system. I think they are going to be better at it, and
it would depressurize public health.
North Carolina may have this under control, but a lot of
the big States just are not going to be able to do it with
their public health system.
I also think there are innovative things we can do for
distribution. For example, a lot of the flu vaccine in this
country gets given out by Giant and Super Fresh and Costco. And
we have done research on this recently. All of those entities
are willing to participate. They don't know how to connect with
the public health system, which is frankly too busy and
overburdened to reach out to the private sector. But innovative
ways of doing massive distribution I think are available, but
somebody has to be the catalyst.
We are being too global and too general in our approach to
public health preparedness. We need to really drill down on
what systems and what capabilities we need in the next year and
what we want to build for 5 and 10 years and start off all of
it at once. But we have got to get very concrete and very
specific. And you have got to assign stuff in ways that are
meaningful.
Dr. Kadlec. I was just going to ask, and again not to
truncate the discussion here, but ask a follow on question to
the system question, and that really involves, if you will, the
food safety piece and the ag piece. Because there is an
entirely different set of systems, but yet overlapping and the
public health community seems to be the nexus for that.
I was just wondering what is the state of affairs, if you
will, in the good safety and ag piece of this that give us
confidence that the agricultural world, the traditional
veterinarians and ag health community is connected with the
public health and the medical care community.
Dave.
Dr. Franz. Just to follow on a point that Dr. Gursky made
in that regard, and Dr. O'Toole as well, talking about
communication among the various sectors, medicine and public
health, for example, I think, it is very important. In one
portion of the ag threat, we have that kind of communication
with the veterinarian and agricultural sector as well.
I split the threat really into two pieces. One is
preharvest, and one is postharvest. The postharvest one is the
one that we are talking about here, and this is adulteration of
the food chain that eventually affects humans.
It is a public health problem much like bioterrorism is a
public health and medicine problem.
And that is where the communication has to occur because
many of those are zoonotics or they are food adulteration
issues.
Then there is the other sector of the agricultural threat
that I think we have to parse out because it is strictly an
economic problem. Because of the way we value human, animal and
plant life, and we should, when animals or plants are injured
in some way, that is an economic problem. And that one is
fairly easy to sort out actually because there are a lot of
small kinds of effects that can occur which involve millions or
tens of millions of dollars much like what occurs when we have
a high-path avian influenza outbreak in our fighting roosters
in California and it spreads to commercial flocks or when we
have an outbreak of soybean rust or something like that.
Those are things that our systems are resilient enough to
deal with.
There is one big outlier in agriculture with regard to
economics and that is foot and mouth disease. And we have to
separate that one out and look at it very carefully,
specifically as we have done with small pox and anthrax on the
human side.
So I think as we look at all of this, we need to lay that
out and see that there is a public health piece to the ag
threat and an economic piece to the ag threat, and clearly the
public health piece because of the zoonotic issues has to be
carefully integrated with what we have just been talking about.
Thank you.
Dr. Kadlec. I was going to go to Chuck. I wanted to come
back here, but we will just come across.
Mr. Ludlam. I think this zoonotic disease issue is
obviously critical. SARS is zoonotic, avian flu is zoonotic,
ebola is zoonotic, West Nile, malaria, TB, they're all zoonotic
diseases.
They go back and forth to animals.
Some of them will be obviously chronic diseases. I mean,
maybe the avian flu becomes a chronic disease or SARS and we
can never get it out of our populations because they are wild
flocks, for example or they are in pigs or whatever.
So and in market failures for developing products to treat
these diseases in animals, similar market failure that we have
for treating diseases in humans.
Surveillance issues, very similar. Obviously, surveillance,
we ought to do surveillance in zoos. I mean, that it not quite
the same as surveillance of human beings, but we need
surveillance in zoos. We need surveillance in natural
populations or in agriculture populations.
So I think that this is actually a critical part of the
bill.
Now to be clear, the ag title is not in the jurisdiction of
this committee. The tax title is not. The IP title is not in
the jurisdiction of this committee. Command and control is only
partially in the jurisdiction of this committee.
Decontamination, this is EPA, is not in the jurisdiction of
this committee. You get into export licenses, that is in the
Commerce Committee. We have accounting issues dealing with the
pediatric vaccinations; that is in the Banking Committee.
S. 3 doesn't have ag at all. Obviously, BioShield II has
got all of these issues.
Now the big question on any of the issues we are talking
about is how do we get to a comprehensive bill?
This committee, I think, could not be exercising better
leadership, more decisive leadership, more visionary
leadership, but you have about one-tenth of the jurisdiction
that you need.
And the only person who can move us to a comprehensive bill
is Senator Frist, the only individual anywhere, who wrote the
book called, ``When Every Second Counts,'' his book about
bioterrorism. And every second is now counting on whether he
will lead and bring all of the committees together. Because
what I fear is he will hang the HELP Committee out to dry and
not bring in the other committees. And you'll report out a
bill. And Senator Burr and Senator Enzi will be managing a bill
that will be an embarrassment, a trivial bill, another
incremental, ineffective bill.
And the only way to get the help of the other committees is
Senator Frist.
So the entire success of this effort depends on him and
ultimately also the administration to work with him.
So that is the challenge that we have here is that we don't
have leadership at the top yet. We have got it here in decisive
ways, and we do not have it where it counts with Senator Frist
and the administration yet.
Dr. Kadlec. Dr. Devlin.
Dr. Devlin. I was just going to say two points. One is that
I am going to respond to the food security issue, but just that
I just want to make the point that we have a public health
system that is Federal, State and local. The investment is 3
year's old in asking public health to assume their
responsibilities on the frontline with the police, fire, crime
control and public safety.
We have come an incredibly long way in this effort. And we
really need to sustain that. And I am sorry things are not good
in Pennsylvania, but I am aware of many, many States that are
just doing outstanding networking with their medical
colleagues, with their agricultural colleagues.
We have a one-medicine approach with our veterinarians in
North Carolina. It is all the same.
Now I had the opportunity to participate at the Federal
level on the Government coordinating council and the industry
coordination council as we try to bring--I am switching to food
safety now--bring Government and the food industry together to
talk in open communications. And we have a farm to fork
approach. And we have got to talk about the threats. You know,
they are an industry that we regulate. There is some discomfort
there about telling us where their vulnerabilities are, or
accepting our insights into where we think their
vulnerabilities are. We have got to communicate. We have got to
assess the threats. We have got to harden the different nodes
that are vulnerable along the farm to fork continuum. We have
to got to share out data and have a common multithreat data
base that is automated, that we share so that we have good
surveillance, farm to fork, of what is going on in the food
industry so that we can again detect something early and make
an appropriate intervention.
So we have to have a plan. We have to exercise it. And we
have had wonderful cooperation. We actually fund veterinarians
through our terrorism initiative in agriculture. We use their
trucks. They use our radios. We use our command centers
together.
We have a very strong partnership with agriculture. Of
course, we are a $62 billion industry in North Carolina.
Twenty-two percent of our income is agriculture. So it is a
very critical infrastructure, not just in North Carolina but of
course in the whole country.
So it is something that we have got to get more serious
about. And we have not funded agriculture at all. We have
funded food security at all. What we have been dealing with for
the last century is food safety--are hot foods hot and are cold
foods cold.
We do not know about the driver that brought the food in
the back door and whether the back door was locked before they
got there.
So there is a lot we need to do around food safety and
security. We are just beginning.
Dr. Pournoor. 3M of course is a global company. In January
I launched an avian influenza campaign in Asia. There are a
number of countries that are approaching us asking us to help
them with getting themselves prepared both from a public health
as well as a hospital perspective. And I think that speaks to
some of the infrastructure questions that came up.
One of the very boring topics that nobody seems to focus on
is supply chain issues. It is not as flashy as developing
pharmaceuticals, and it is not as exotic as some of the other
things we emphasize, but supply chain, in essence, feeds our
hospitals, our public health systems to be able to sustain
themselves as they respond to all sorts of emergencies.
One of the facts that we often gloss over is the situation
where today, as we manage all of the goods and services that we
need to deliver the care that is required, these goods and
services partly are produced in the United States and partly
abroad. If there is an epidemic or a pandemic, how is global
trade influenced and how can the flow of goods and services
from various countries to and from the United States affect it?
I see that as something that, for instance, is not touched
upon.
I think we have the wherewithal and the knowledge amongst
folks in this room and beyond in being able to put good demand
plans together. Logistics and demand planning are sort of two
critical links in the chain. Demand planning requires that our
intuition about what happened in an event be brought down into
quantitative, tactical and operational detail.
We have developed some demand planning tools that we use to
work with first responders and public health officials in
trying to help them, but to go from very generic statements
that believe at generic levels because we want each State to
have the autonomy to implement them the way they wish, is a
long way from making those generic statements about
preparedness to actually having tactical and operational plans.
And not everyone is taking those statements of preparedness,
minimal levels of readiness, and implementing it in the same
manner.
Implementation--the devil is in the details--and demand
planning and logistics I believe is one of the key pieces.
Dr. Kadlec. If I could just maybe leverage what you just
said as a last question, and to clean this up as we get to the
close of this very informative roundtable is really kind of
open in terms of what is the view concerning our status or
State of preparedness for avian influenza? And I think you
touched on that, and maybe we will be here for another two
hours.
Dr. O'Toole. [Off microphone.] [Laughter.]
Dr. Kadlec. Yes, really. It is all relative, Tara, as you
know.
Mr. Barrett.
Mr. Barrett. I think the thing that John spoke to about
the, as he described it, boring issues of execution and supply
chain, are really in a way the low-lying fruit. And while the
conversation that we had in the earlier part of the day is very
important, and obviously, we need to work on both these
dimensions, I think there is so much here in the flow of
information, the flow of product, the flow of services that can
be dealt with.
Again, there was a comment earlier about we need to take
extraordinary action. All true. We also need to take
extraordinary action on this very mechanical part of the
process, and that is the part that at times does, again, from
my perspective, seem a bit absent, and it is really this detail
that I think could bear some fruit for us.
Dr. Kadlec. And again, could I just solicit some comments
about avian influenza as we kind of wrap up? Elin?
Dr. Gursky. I think we need to leave here with both the
strategic issues and the tactical, and they are both equally
important, and I cannot afford to not say once again what we
want the 21st century public health system to do.
And we have heard from Dr. O'Toole and Dr. Devlin, and
these both have validity. I think it is a matter of what we
wish to invest, what our expectations are, and from that
decision we clearly have to look at the tactical issues because
right now we have 3,050 different approaches to delivering risk
communications, stockpiles, exercises, and it is really a
recipe for disaster.
Dr. Clerici. I will come back full circle, Dr. Kadlec.
Until we address the liability issue, we are not going to be
prepared for a pandemic. The pandemic vaccine manufacturers
will not produce product absolutely 100 percent without
liability protections. They are not bluffing. You are asking
them to displace their entire manufacturing process. Childhood
vaccines, adult vaccines will not be produced in the event when
we turn to pandemic production, and they will not play until a
pandemic is addressed. And if I can take one thing away from
that, the issue of pandemic liability must be addressed now.
We have a luxury, frankly, with bioterrorism because we can
stop, we can arrest, we can use intelligence to prevent the
terrorists from hitting us. There is nothing we can do about
pandemic, and unless and until we address it, we are very much
at risk. It is absolutely the scariest thing I work on every
day, and the thing that keeps me up at night.
Dr. Kadlec. Tara.
Dr. O'Toole. I think the situation of avian flu in Asia is
terrifying. I am in a State of disbelief at how little America
is doing to understand the threat or to respond to it. We ought
to be leading the world. We are essentially doing nothing. And
I suspect that rather than bioterrorism, our supine posture and
failure to act, let alone lead the world in meeting this
threat, is going to be probably the most important statement on
where America is and where it is heading of our generation, to
sum up.
Mr. Ludlam. Avian flu is not the last new disease we are
going to see. Certainly, I mean it is one of 20 we have seen in
the last 20 years, 20 new diseases. The capacity of
bioterrorists to concoct new things, hybrid GM, or
sophisticated chemical weapons like bioregulators and
biomodulators is completely unbelievable. What the Soviets had
in 1992 was unbelievable.
Now, if we do not have the ability to more quickly develop
products in response to Mother Nature or things we first see
from terrorists, if we cannot go from bug to drug, or bug to
vaccine, or bug to diagnostic, in a fraction of the time that
we now have, we are going to be surprised because we do not
know what avian flu is going to look like in its final--of the
human. Maybe it is similar to what we have seen, or maybe it is
sufficiently different that whatever we might have developed
will not work. Maybe the diagnostic will not work. Maybe the
vaccine will not work. Maybe the therapeutic will not work.
So the single most important revision in every bill I have
drafted on the subject is the research tool provision, saying
that whatever we do in the way of creating products for known
threats--and obviously we ought to knock those off in a
discrete period of time with dramatic incentives to create
antidotes to all of the things we know about--we need a
research tool industry, including animal models and all of the
rest, so that we can tear the pathogen apart and find its
vulnerabilities, find out how to attack it, figure out how to
develop a product, and do that in a fraction of the time at a
fraction of the cost, with much more reliability than we can
now.
We have to know in advance whether it will work and who it
will hurt. We do not know that now. We are getting products
like Vioxx was pulled after years on the market, and this is
the failure of research tools. We are making terrible mistakes
already. Products are dying in Phase III clinical trials or
after they are approved. We need to know much more about what
we are creating, how it is going to work, if it is going to
work, and what the side effects are going to be in advance. And
this is research power that we need in the infectious disease
context like we need it nowhere else.
And ultimately the only preparedness will be more powerful
research tools, assuming we have stockpiled all the products
for the known diseases.
Dr. O'Toole. Could I say one thing on that because I do not
want to leave--I agree with everything Chuck says except that I
think it is very dangerous to lump avian flu in with all the
other emerging diseases or bioterrorism attack. It really is
special because of the way it spreads, the fact that you are
contagious before you are symptomatic, and because of the
immunological naivete that is definitely going to be there
whatever the final bug is that ends up spreading in humans, if
in fact that happens.
There ought to be something going on in Congress right now
to look at what we could do about avian flu. I know there have
been lots of hearings. My impression is that the administration
says everything is fine, we are under control. We do not need
any more money. That is ridiculous. We ought to actually have a
list of things that we could be doing right now about avian
flu. Someone in the Government has to generate that, and we
ought to be doing it right now. There are things to be done.
Dr. Kadlec. Dr. Devlin.
Dr. Devlin. Just in conversations this week with
representatives at CDC, they were indicating, in a more
specific response to your question, that we are at least 3
years away from enough vaccine for the whole population and
probably 18 months or so away--and I know you all have to make
it, but that is what they are saying--and that we would be
about 18 months away from having enough antivirals in place,
which is also something that we are very short on.
Having said that, you know, the first thing that is going
to happen is that we are going to have to put in the time-
honored restraints on movement and place of people, and that we
are going to have to be into quarantine and isolation, not
holding the ball game, and looking at whether schools are open
or not. So there are going to be some very dramatic things put
in place very quickly that contain the spread of the infection
while we wait on the antivirals and the immunizations.
But one thing I know that we were trying to be creative in
how we break down the stockpile, exercise the plans, get the
medicines out to the population, and the administration is
considering some other innovative strategies like using the
workforce in the postal system, and some pre-event deployment
of medical kits. We have some great questions about pre-
deployment to the populations of medicines that they may use
when something else happens, or that they may lose, or they may
get outdated. We believe that--I mean I have some questions
about if something happens in one part of the country but you
have pre-deployed your assets somewhere else, that is a real
concern. So I just mention that.
Dr. Kadlec. Thank you. We will leave that as, if you will,
the final word.
First of all, on behalf of my colleagues, I would like to
thank you very much, to all the panelists for kind of hanging
in here maybe a little longer than you anticipated, but it was
of great value and will be great value to our members as we
will be highlighting many of the points that you have raised
here today. I can only thank you all for your travels,
particularly those who have come out of State, and certainly
your time. But again, unless there are any further comments or
questions, I just say thank you and wish you safe travels home.
Have a good day.
[Additional information follows:]
Additional Information
Prepared Statement of Elin A. Gursky, Sc.D.
``what is necessary to build and maintain a robust national public
health infrastructure to meet future biodefense requirements?''
SUMMARY REMARKS
Health security is threatened by the intentional release of
biological weapons and the occurrence of natural disease outbreaks;
these events are likely inevitable and potentially catastrophic.
Although the responsibility for communicable disease containment has
historically resided within public health, today's homeland security
challenges and microbial burdens exceed the capacities and capabilities
currently residing within this sector.
Following the 2001 anthrax attacks, the authorization of almost $1
billion through the Frist-Kennedy bill (S. 1765) and subsequent awards
and supplemental funding have provided critical support to a long-
neglected public health infrastructure. However, we must acknowledge
woefully limited evidence of strategy and systems that can work
consistently, uniformly, and durably on a national scale in the event
of a deliberate or naturally occurring infectious disease epidemic.
Such an event will stand little likelihood of being confined within a
single State, and will represent a crisis of national security
significance.
Bioterrorism preparedness has exposed the frailty of the patchwork
quilt that is comprised of the country's 3,000 local and 50 State
health departments. Our public health agencies are a local enterprise,
with a tradition of employing unique activities to promote the health
of their communities and serve the needs of their local elected
officials. However, the capabilities required--and in large part absent
to protect populations include decision-support to manage uncertainty
during a large-scale infectious disease outbreak; training in the use
of sophisticated technologies that sustain disease surveillance,
detection, and information sharing; leadership to integrate efforts
with the medical, legal, and intelligence communities; and skills to
coordinate mass care such as prophylaxis and vaccination.
Twenty-first century threats require a re-envisioned public health
system that is agile, well trained, accountable, and uniformly
effective across the Nation. Before investing another $3 billion, we
must develop a strategy that will ensure the health security of our 280
million citizens.
______
Few experts dispute the inevitable and potentially catastrophic
threat of a large-scale biological attack from Mother Nature or
terrorists. The decades concluding the last century offered ominous
insights into the evolutionary transmutations of emerging and
reemerging pathogens such as hantavirus, West Nile virus, and HIV-AIDS
fueled by ecological change, the global migration of humans and
agriculture, and drug resistance. The 21st-century awoke to SARS and
monkeypox; outbreaks of avian influenza, Ebola hemorrhagic fever,
Marburg hemorrhagic fever, and polio can be found in areas less than a
day's plane ride away. The threats to health security from terrorists
by the dispersal of biological weapons such as smallpox and anthrax or
by dispersal of naturally occurring diseases such as Ebola or plague
are augmented through their arsenal of time, resources, and
increasingly sophisticated biotechnology. Whether the pathogen is
exotic and bioengineered or common, bioterrorism expands the element of
intervention upon standard public health management. Bioterrorism can
be a single attack with a single pathogen, or multiple attacks with
multiple pathogens on multiple targets. Interventions in the attack(s),
in the behavior of potential victims, and by the requirements for
swiftly administered medical prophylaxis are among the challenges that
must be rapidly and accurately assessed and to which a coherent
response must be generated.
The majority of experts agree that it takes a special army to
combat these threats--an army that understands incubation periods, the
transmission of infectious agents across susceptible populations, and
strategies such as isolation, mass vaccination, and prophylaxis to
control an epidemic. The army is the public health sector. The Frist-
Kennedy bill (S. 1765) authorized almost $1 billion following the 2001
anthrax attacks to build public health infrastructure and strengthen
our response to bioterrorism, a prescient acknowledgement of the
critical role of public health in this war against bugs. Subsequent
Federal awards and supplemental funding followed. Four years and $3
billion later we can see evidence of strong preparedness initiatives in
a number of States.
However, before we spend another $3 billion, we must acknowledge
woefully limited evidence of strategy and systems that can work
consistently, uniformly, and durably on a national scale in the event
of a deliberate or naturally occurring infectious disease epidemic--an
event that will stand little likelihood of being confined within a
single State and that, not which will represent a crisis of national
security significance.
The responsibilities facing today's public health departments are
broad. Beyond communicable diseases, health departments confront a wide
spectrum of tasks that include chronic disease screening and education
(cancer, diabetes, asthma, and hypertension); community outreach to
seniors; family planning, maternal health, and prenatal care; dental
health; injury control; and social marketing to decrease tobacco use,
teen pregnancy, and violence. Moreover, public health departments find
themselves increasing the level of effort they must devote to serving
as a medical safety net as the number of uninsured Americans rises to
45 million. Historically, crisis management has not been a developed
capability of public health. In fact, the skills and talents required
to accomplish and manage uncertainty and to lead effectively during a
biological attack are quite dissimilar to those needed in outreach
efforts for chronic disease.
Bioterrorism preparedness has exposed the frailty of the patchwork
quilt that is comprised of the country's 3,000 local and 50 State
health departments. Both research data and anecdotal reports indicate
that preparedness efforts have interfered with routine day-to-day
responsibilities and have engendered frustration and resentment as
State budget crises force cuts or curtail traditional public health
programs designed to promote community health status and provide a
social good. Preparedness for events such as anthrax attacks have not
been embraced as a ``core mission'' of public health, but are perceived
as usurping fundamental responsibilities of the community. We must
concede several key tenets before redoubling our preparedness efforts:
Our amalgamation of State and local health departments is
a local enterprise, bounded by the principles of federalism and
directed by the needs of governors, county managers, and mayors.
Fifty State and 3,000 local health departments comprise a
sector--not a system. There are few shared practices across that sector
that can translate into a systematic approach evidenced by regional
public health response paradigms, ``mutual aid,'' or surge capacity.
Public health itself is highly fragmented and represents a wide
spectrum of professional interests and backgrounds.
Confusion regarding public health authority and
responsibility abound. As was seen during the anthrax attacks and
remains evident still as Federal preparedness funds flow from State to
local health departments, there is no consensus regarding the roles and
responsibilities of CDC, State, and local public health agencies during
a large-scale biological attack. Note that the median number of staff
in our local public health agencies is 13. Note also that after several
phone calls to the CDC and speaking with 15 different individuals, it
is apparently not known how many of its 9,000 staff is deployable and
fully trained for a response role in the field.
There is no terminal degree or education that defines a ``public
health practitioner,'' and a large portion of our public health
workforce relies upon on-the job-training. This may well serve their
health promotion responsibilities, but is inadequate to effectively
address health protection and security challenges of the 21st-century.
The public health sector remains essentially disconnected from many
critical partners, especially the medical and hospital sectors,
creating a dangerous gap between efforts to detect a disease outbreak
and assure the rapid medical interventions necessary to avert a full-
scale epidemic. Historically, the majority of emerging diseases and the
anthrax events of 2001-02 were recognized by clinicians in clinical
settings, typically outside the realm of public health. The Nation's
medical system is in crisis, with very little spare capacity with which
to care for an increased number of patients. Medical facilities are
largely not-for-profit businesses that acutely experience the effects
of changes in health care funding and liability.
Despite the availability of exercises and short courses implemented
since 2001, the public health sector and the vast majority of clinical
caregivers remains untrained, inexperienced, and naive regarding the
scope of a potentially lethal and unremitting infectious disease
outbreak. Note that at the June 9th Library of Congress meeting led by
Senators Burr, Clinton, and Lieberman, and Representative Cox, former
Deputy Homeland Security Advisor to President Bush, Richard Falkenrath,
stated that no public health department could swiftly distribute and
administer medical countermeasures from the Strategic National
Stockpile.
Prudence compels us to assess the return on our preparedness
investment thus far as we proceed on a course to protect America's most
critical infrastructure--its 280 million citizens--many of whom will
bear the responsibility of treating the sick, operating utilities and
transportation systems, assuring civil order, and maintaining our
business and industry in the event of a ``catastrophic'' disease event.
Twenty-first-century threats require 21st-century public health
strategy. We must balance public health's traditional role of promoting
the health of Americans, while ensuring a critical new role protecting
the health security of America. Should we re-purpose public health and
remove the financial and labor-intensive burden of persuading Americans
to overcome their proclivity to obesity, lethargy, and tobacco? Should
we retain health promotion responsibilities at the State level and
federalize the public health protection components? Should we continue
to invest in the entirety of the public health infrastructure, hoping
we will accrue critical capabilities for detecting and responding to
pandemic influenza or plague? Should we invest in more practitioners,
or in technology-based solutions like BioWatch?
Difficult decisions are necessitated by the exigencies of the
current threat environment, heightened just a week ago by the bombings
in London. The 21st-century demands that we build a public health
system, an entity that responds with consistency, uniformity, and
efficiency across the Nation. A number of efforts will help us
implement the necessary systematic approach to disease detection,
intervention, and containment.
I would urge this committee to consider the following short-term
steps:
We must focus efforts and resources to build a national health
security information infrastructure that connects our public health,
hospital, and medical communities (and also law and intelligence).
Current efforts are languishing from a State-by-State approach that has
been absent national standards and requirements. Real-time response to
infectious disease occurrences are a critical component of national
security. Note that four cases of cutaneous anthrax went unrecognized
prior to Bob Stevens' diagnosis with inhalational anthrax.
We must rebuild our public health workforce through
principles not unlike those applied in the DoD's force transformation
efforts. We must strive to achieve public health ``special forces'' to
address the war on emerging and deliberately released pathogens. Grants
and loans will help recruit new cohorts of public health professionals,
but we must require that those choosing to be practitioners (not
researchers or academics) attain a level of skill demonstrated by
earning a license or certificate. The individuals who make critical
decisions about the health of populations must be subject to
professional accountability as are our physicians, attorneys, and even
tattoo artists and hair stylists. Schools of public health must devise
specific public health practice curricula. National credentialing exams
must be formulated and administered by an impartial outside agency.
We must clearly articulate the roles, responsibilities,
and authorities of local, State, and Federal (CDC) public health
agencies during a large-scale public health crisis. Specifically, the
horizontal connections between agencies sharing responsibility and
authority in a biological attack must be strengthened.
We must foster closer integration of roles and operations
between the public health and hospital sectors, through such strategy
as joint planning and funding. Hospitals must receive funding to
incentivize increased training and capacity and be assured relief from
liability during crisis response. Public health has authority to direct
care, and hospitals have capability to provide care for victims. This
linkage should be specifically supported and exercised.
We must assess the effectiveness of preparedness through
strict measures of accountability and through performance in rigorous
full-scale and tabletop exercises. To fully stress and shape the public
health response systems, we must avoid instances where public health
writes, participates in, and then evaluates its own performance.
Demonstrated competence and capabilities, not attendance at a course or
tabletop, are the goals.
The job of leading the effort to protect the public from
potentially lethal infectious diseases falls to public health. But 4
years after the 2001 anthrax attacks, the burden of overcoming decades
of underfunding, shrinking ranks, and expanding chronic health and
medical care responsibilities has hampered the public health
preparedness effort. Bioterrorism has not become a core mission, and
funding State and local agencies has thus far demonstrated that the sum
of the parts will not make up a ``whole'' national preparedness effort.
Before we invest another $3 billion, we must take the necessary
steps to build a 21st-century public health system! Thank you.
Response to Questions of the Committee by Chuck Ludlam
By way of introduction, I have spent the last 4 years of my public
service career on a crusade to highlight the near total lack of
preparedness of our Nation and the international community to the
bioterror and infectious disease threat. I was the principal author of
the 2001 Lieberman bioterror bill, the 2002 and 2003 Lieberman-Hatch
bioterror bills, and the 2005 Lieberman-Hatch-Brownback bill, BioShield
II, S. 975. I was also the principal author of S. 3, the Republican
Leadership bill. And I was the principal organizer of an international
panel of 600 experts to draft these bills.
Now that I have retired from public service, I am finally free to
say what I know to be true: The response of the Administration and,
with some notable exceptions, the Congress to these critical challenges
has been grossly inadequate. As for the Administration, it has been
reported to me that a high-ranking Administration official admitted
that it proposed BioShield I solely to protect its right flank when
Senator Lieberman was running for President, not as part of a serious
bioterror strategy. It's obvious that BioShield I was poorly calculated
and the industry response to it has been to yawn. Yet, despite the
introduction of S. 3 and S. 975, there is no indication that the
Administration will join in the effort to enact them. As for the Senate
Democrats, in crafting the four Lieberman bills, and despite extensive
efforts, I was never able to recruit a single Democrat to cosponsor
these bills. The reason they all give is that ``the generics hate it.''
Finally, in terms of Senator Frist, we've seen bold words, but few
discernable actions. He is, of course, the only person who can ensure
that the Congress takes up a comprehensive response to these threats.
If we fall short in enacting some combination of S. 3 and S. 975, it
will be principally his fault.
On the day I retired from public service, June 24, I sent a
``parting shot'' email to my panel of 600 experts and a copy of it is
printed below. It's being made public here for the first time. I am
happy for it to serve as my valedictory regarding the quality of my
efforts and the Congressional response.
Unfortunately, it may take overriding political considerations to
drive consideration of the deadly serious public policy issues
addressed in this roundtable. On June 23 Mort Kondracke wrote a
prescient article in Roll Call entitled, ``Avian Flu Could Become Top
2008 Issue. Seriously.'' He accurately quotes me as saying, ``You have
a fascinating conflation of presidential politics and serious substance
at work here. You have three presidential candidates interested in this
issue--Sen. Frist, Sen. Hillary Rodham Clinton (D-N.Y.) and Sen. Sam
Brownback (R-Kan.), a co-sponsor of the Lieberman bill. [Also, Evan
Bayh] Whoever is out in front will look pretty good if the worst
happens. Anyone who's behind the curve will look like a dolt. There
will be 9/11-style commissions all over the place and hundreds of
Richard Clarkes testifying that they warned about what was coming and
higher-ups didn't listen.'' I stand by these words. I am proud to have
issued these warnings and provided this leadership.
Question 1. What additional incentives or other measures will
ensure the timely availability of sufficient amounts of effective
biodefense medical countermeasures, and is the cost of such incentives
acceptable?
Answer 1. The Lieberman-Hatch-Brownback BioShield II legislation,
S. 975, was developed with the active assistance of my panel of 600
experts and it reflects a consensus of that group. It proposes in 29
titles and 360 pages a comprehensive and aggressive strategy of
incentives for the development of effective bioterrorism and infectious
disease medical countermeasures and addressees a host of other critical
issues. The cost of the proposed incentives is trivial compared to the
cost of a bioterror attack or infectious disease outbreak. If we are
hit with a bioterror attack, or a pandemic, and if we have not secured
the development of these medical countermeasures, we're likely to see
public panic on a scale similar to that depicted in Spielberg's War of
the Worlds, Camus' The Plague, and Bergman's The Seventh Seal. We'll be
forced to go straight to quarantines, which will be exceedingly ugly.
Those enforcing the quarantines might be given ``shoot to kill'' orders
to enforce the quarantine.
Unfortunately, we are almost totally lacking in these medicines. In
the summer of 2000 the Defense Science Board found that we had only 1
of the 57 diagnostics, drugs and vaccines most needed to respond to a
Bioterror attack. At the time, the Board projected that we'd have 20 of
the 57 within 5 years and 34 within 20 years. But, 4 years later, we
have only 2 of the 57 countermeasures; we've added a diagnostic for
anthrax. At this rate, we won't have 20 countermeasures until 2076 and
34 until 2132. This list doesn't include medicines for bioterror
pathogens engineered to be antibiotic resistant, hybrid pathogens (like
the Plague-Diphtheria hybrid developed by the Soviet Union),
genetically modified pathogens, and a host of other exotic pathogens
like autoimmune peptides or antibiotic induced toxins.
To be clear, it makes no sense to focus solely on countermeasures
for bioterror pathogens. We know that Mother Nature is a terrorist who
will attack even if terrorists don't. We need vastly more effective
medicines to cure and prevent AIDS, malaria, TB, and a host of
intestinal parasites, naturally occurring antibiotic resistance (where
we face a national crisis), and a host of other debilitating diseases,
like Hepatitis A, B, and C--that kill millions each year. In terms of
the death toll, this is a moral and practical crisis similar to World
War I and II combined, yet the public policy response has been
pathetic.
Because the infectious disease threat is evolving, we need to
establish biodefense, infectious disease, and vaccine industries able
to develop countermeasures, perhaps hundreds of them, as the threat
evolves. The Administration's $5.6 billion budget for BioShield I is
not remotely realistic. The procurement cost for these medicines will
run in the many tens of billions of dollars and it'll be worth every
penny.
We also need to establish a research tool industry that will give
us the power to more quickly develop countermeasures to new threats.
Ultimately, this is the only way we can respond to novel pathogens. We
need to repeal the NIH Research Tool Guidelines to establish sufficient
economics to establish a research tool industry and not divorce it from
NIH funded research regarding new tools.
From the industry's point of view, it's obvious that the
``markets'' for infectious disease products are deeply flawed. I am
intimately familiar with the industry viewpoint because I served for
7\1/2\ years as the principal lobbyist for the biotechnology industry.
For example, I've heard many executives say it'd be ``crazy'' to engage
in research on AIDS because of ``forced genericization.'' BIO and PhRMA
played no role in the drafting of the Lieberman bills because their
members don't want Congress to enact incentives that would press them
to take up research in which they have no interest. Some in the
industry have told me to ``shut up'' about incentives they feel would
press them to ``risk their company.''
They say, ``Look what happened to Bayer,'' which was subject to
virtual expropriation of its antibiotic, Cipro, by HHS following the
2001 anthrax attack. In fact, the outrageous actions of HHS in that
case have plagued our ability to engage this industry in this research.
We must have credible Administration officials state categorically that
these Mafioso tactics will never ever be seen again against a company
that develops countermeasures for infectious pathogens. The companies
must be rewarded, not vilified.
S. 3, and even more so BioShield II, propose bold and innovative
incentives to create a viable market for these medical countermeasures.
These bills seek to shift the cost and risk of development of these
countermeasures to the biotech and pharmaceutical sector in exchange
for substantial and appropriate rewards if--and only if--these
companies successfully develop the countermeasures we need to defend
ourselves against an attack or outbreak. This is no windfall for the
industry. Companies are rewarded for success, not subsidized for
running their meters. Conveniently, this is the business model the
industry prefers; the better companies all believe that is the
government funds the research, the companies will receive a cost-plus
rate of return, which is totally inadequate to satisfy their investors.
Creating a GoCo will definitely end any possibility that we'll be able
to recruit the industry to take up this research. In fact, the industry
tells me that they'd welcome a GoCo because it'd let the industry off
the hook. Adopting a defense contractor model, where the government
assumes all the risk as in a ``Manhattan'' model, has been tried and
proven to be the most expensive and least productive way to proceed. S.
3 and BioShield II are premised on the notion that we can and should
use the biopharma industry's entrepreneurial culture to our advantage.
This is the only approach that might succeed.
The opposition of the generics to the intellectual property
incentives in S. 3 and BioShield II constitutes a classic and
predictable NIMBY response. Its opposition is based almost entirely on
misstatements about the terms of the proposed incentives and
exaggerations about their potential impact on the cost of health care.
It is true that there might be some increase in the cost of healthcare
if bio/pharma companies assume the risk and expense of this research
and successfully develop a high priority new chemical entity that we
need to protect ourselves against a bioterror attack or to cure AIDS or
another deadly pathogen, but this cost should be weighed against the
devastating costs if we fail to secure the develop the needed medical
countermeasures. In the end, the Congress must calculate the costs and
benefits of the IP incentives, such as it did when it voted to provide
patent extensions when biopharma firms secured pediatric labels on
pharmaceuticals.
Biopharma industry representatives have told me on innumerable
occasions that the ``only'' compelling and realistic incentives in S. 3
or S. 975 are the IP incentives that the generics oppose. They say that
if we enact all of the proposed incentives in S. 3 and S. 975 without
dilution, we stand a reasonable chance that we will be able to overcome
the deep industry skepticism about this research. It's imperative that
we do so. In Monday's Wall Street Journal Retired U.S. Army Major
General Phil Russell, a physician who until recently was a senior
adviser to HHS on biodefense issues, States, ``God, if Merck or Glaxo
or Aventis were involved, it would make life infinitely easier. With
small companies, you have to watch them like a hawk.'' If you want the
large pharma companies to help us, you have no choice but to enact bold
incentives, including IP incentives. If the Congress buckles to the
opposition of the generics and fails to include these IP incentives, it
is quite likely that the legislation will fail to achieve its
objectives in terms of countermeasure development and we will remain
vulnerable to catastrophic morbidity and mortality, public panic, and
quarantines.
If you interview the officials in Toronto or China about what they
experienced with SARS, it'll transform you're approach to this
legislation. You'll conclude, as I have, that developing medicines for
these pathogens is an unprecedented and overriding national imperative
that justifies the most aggressive and innovative incentives. You will
brush aside the NIMBY opposition to these measures.
The IP and tax incentives proposed in BioShield II are not, of
course, issues pending in the HELP Committee. I have suggested that the
HELP Committee report out a bill with the architecture for a
comprehensive bill with brackets, each of which would be left blank
except to say ``Judiciary Committee,'' ``Finance Committee,''
``Agriculture Committee,'' etc. (indicating where to insert the
contributions of the other committees). This is the only way for the
HELP Committee to demonstrate that it supports enactment of a
comprehensive bill. S. 3 includes subject matter within the
jurisdiction of at least 4 Senate Committees and S. 975 at least 8
committees. Only Senator Frist can bring all the committees together to
fashion an appropriately comprehensive bill.
Finally, BioShield II also addresses the entrenched ineffectiveness
of the NIH technology transfer program, undoubtedly the most
bureaucratic and risk averse program anywhere. It proposes to
strengthen the NIH approach to technology partnerships and protect the
value of its patents. If this is not done, then essentially nothing
that is funded at NIH will be useful at the beside to patients. The
academics who receive NIH grants, represented by AAMC, oppose these
reforms because they oppose holding NIH and its grantees accountable
for the impact of NIH funded research on ``healthcare,'' but this puts
AAMC deeply at odds with the patient groups for whom ``healthcare'' is
the only bottom line. Of course, it was the patient groups, not the
academics, who won the doubling of NIH funding. I suggest that the NIH
reauthorization be folded into S. 3/S. 975; the two are complementary
and interrelated.
Question 2. What is necessary to build and maintain a robust
national public health infrastructure to meet future biodefense
requirements?
Answer 2. BioShield II, S. 975, also proposes an effective strategy
for building and maintaining a national public health infrastructure to
meet future biodefense and infectious disease requirements. One key
issue is command and control. To be blunt, today no one is clearly in
command in the event of an attack or outbreak. This issue must be
resolved by the Senate Homeland Security and HELP Committees. Again,
this will only happen if Senator Frist brings the committees together
to fashion a comprehensive bill.
Question 3. What is necessary to protect our food supply and
agriculture from biodefense threats?
Answer 3. BioShield II, S. 975, also includes an effective strategy
for protecting our food supply and agriculture from bioterror and
infectious disease threats. Approximately 60 percent of the infectious
disease pathogens we fear, including Avian Flu, SARS, Ebola, Marburg,
Malaria, Chagas, Schistomiasis, Hantavirus, and Lyme Disease/West Nile
Virus, are zoonotic--they go back and forth between man and animals.
Only Senator Frist can ensure that we engage the Senate Agriculture
Committee.
Overall, with regard to S. 3 and S. 975, we need to act as if the
fate of civilization depended on it, which is a fair characterization
of the reality of the situation.
______
``PARTING SHOT'' E-MAIL FROM CHUCK LUDLAM TO 600 BIOTERROR AND
INFECTIOUS DISEASE EXPERTS (JUNE 24, 2005)
This is my last e-mail to this group. It's now 40 years since my
first day as an employee on Capitol Hill. Paula and I leave to start
Peace Corps training in Senegal on September 25. I very much appreciate
all the kindness that you have shown to me. It's been quite
overwhelming. Several hundred of you helped us to write BioShield II.
It is urgent that you maintain very high expectations of Senator
Frist and the Administration. The fate of this legislation lies almost
entirely in their hands. Senators Lieberman, Hatch, Brownback, Enzi,
Burr, and Gregg have provided superb leadership, but there are severe
limits on what they can accomplish without the leadership of Senator
Frist and the Administration.
Only Senator Frist can bring together all of the Senate Committees
with jurisdiction over elements of BioShield II. And nothing will
happen until the Administration finally states unequivocally that we
need to enact something like BioShield II.
The key problem is jurisdiction. The HELP Committee has limited
jurisdiction. Senators Enzi, Burr, and Gregg can only report out a bill
covering a few of the subjects in S. 3 and even fewer from S. 975. I
have suggested to the committee that it report out the architecture of
the entire bill, with open brackets to accommodation the contributions
of the other committees. This is a way to force Senator Frist to lead.
He's given a sensational speech at Harvard on these issues, but it
contains nothing about his plans for the legislation. This is odd for a
person in his position when he has command of what the Senate will
fashion as a response.
I have sent out hundreds of emails to this group. Senator Frist's
staff has received them all, and so have about 40 top ranking members
of the Administration. We have here a public record of the warnings
that are contained in these e-mails. If they do not heed these
warnings, there is no possible excuse.
For anyone who understands the potentially catastrophic
consequences of a bioterror attack or infectious disease outbreak,
BioShield II is a modest and minimal proposal. Those that seek to cut
back on what we're proposed in BioShield II--particularly the generic
pharmaceutical industry and their Senate supporters--take a terrible
risk with the public health. If they succeed in limiting the incentives
in BioShield II, they will bear personal and moral responsibility if we
experience an attack or outbreak for which we are unprepared. Their
Nimby position and reflexive hatred for the pharmaceutical industry put
the nation in peril. Given the dire nature of the threats we face, the
misrepresentations they have spread about the terms of BioShield II,
particularly the Wild Card patent, cannot be excused as routine
lobbying hyperbole. It is possible that thousands and millions might
die in an infectious disease outbreak. With Avian Flu running at a 55-
70 percent lethality rate, it's possible to see a billion people
dying--the lethality rate of the 1918 Flu Pandemic was 1.8 percent and
20-100 million died.
To those who say that BioShield II and this email are ``over the
top,'' I am happy to let history judge. Others can take full
responsibility for ignoring the warnings I have published here. They
can also take responsibility for the millions who may die if we delay
development of an anti-viral that kills the AIDS virus, a malaria
vaccine, and a new class of antibiotics. There is simply no price that
is too high to pay for the development of these critical medicines.
Unfortunately, I expect in Senegal to see many of my villagers die of
infectious disease and in every case I will blame the opponents of
BioShield II. My only consolation is in knowing that I have done
absolutely everything possible to secure the development of these
medicines, with no holds barred.
In terms of the Congress and Administration, there is zero
political risk from backing an aggressive set of incentives and
programs. The only risk is in not taking these threats seriously enough
and cutting back on BioShield II. If politicians do not lead, they also
will bear personal moral responsibility for our lack of preparedness.
Thank you all again for you support. This is your legislation to
win or lose. It's yours to win now. My role is over. I wish you the
best and will be forever grateful for your support.
Chuck Ludlam.
Response to Questions of the Committee by Mr. Wright
Question 1. What additional incentives or other measures will
ensure timely availability of sufficient amounts of effective
biodefense medical countermeasures and is the cost of such incentives
acceptable?
Answer 1. There are a number of incentives that will improve the
Nation's ability to acquire effective countermeasures in a timely way.
These include:
Transparency--The USG should define and guarantee the
countermeasure market. This includes a clear and predictable process--
timelimes, deliverables, and deadlines should be articulated clearly
and as early as possible. It is difficult for companies to make long-
term business decisions about which countermeasure programs to invest
in if there is not a clear message from the government regarding what
it intends to buy, how much, and when.
Valley of Death--There is a funding gap between proof of
concept and advanced development including scale up and production.
Successful countermeasure development is dependent on a partnership
between industry and the USG. Funds should be made available to bridge
the current funding gap. DOD has experience funding countermeasures and
is a good case example for Project BioShield.
Contract Funding--BioShield I allows DHHS to provide up to
10 percent of the value of a procurement contract in advance payment to
support development activities associated with fulfilling a the
contract, however, DHHS has interpreted the law to only allow payment
upon product delivery. We believe progress or milestone payments are
appropriate, particularly in the absence of ``valley of death'' funding
and the financial commitments required for scale up and production.
Coordination--A number of agencies and Departments are
involved in the countermeasure requirements process. These include
DHHS, DHS, DOD, OMB and many others. The process is too complicated and
cumbersome and it is unclear who or which department has the ultimate
decision-making authority. The process should be streamlined. It may be
appropriate to consider moving all of the various components (threat
analyses, research, development, and procurement) to one agency or
department to improve better coordination and cooperation. The
Biodefense agency could be housed at DOD, which is familiar with the
development of complex weapons systems, with no commercial market, or
at DHHS. If housed at DHHS the research and development (NIH) piece
should be much more closely linked to OASPHEP. Greater coordination
between the two would allow the identification and support of promising
technologies at a much earlier stage.
Liability--Currently, companies must negotiate liability
protection as part of the contract process. This is not a rational way
to do this and it leaves companies with potentially untenable exposure
for the development and use of, in some cases, unapproved products
under an emergency use authorization. The USG should provide explicit
liability protection for companies and provide fair compensation for
those harmed.
Manufacturing--Scale up and production requires extensive
up front financing. Further, U.S. capacity to manufacture biologics is
limited. We believe DHHS should consider as part of any procurement
contract, directly funding scale up and production as has been the case
with the VaxGen anthrax vaccine and the Acambis smallpox vaccine.
Additionally, ex-US manufacturers should be considered for Project
BioShield procurements.
Funding--$5.6 billion is insufficient to adequately
support the breadth of technologies needed to protect this Nation. If
the USG is truly committed to a strong biological and chemical defense,
it will need to commit the funds necessary to do it right.
Question 2. What is necessary to build and maintain a robust
national public health infrastructure to meet future biodefense
requirements?
Answer 2. Efforts to improve communication and coordination between
CDC, local public health agencies and target providers are necessary.
In our discussions with hospital officials who would likely administer
our products in the event of an emergency, we found that there was a
disconnect between the CDC's plans for SNS countermeasure distribution
and management and how hospitals on the front line view their role.
Public statements by CDC officials indicate that CDC plans to use the
existing public health infrastructure to distribute SNS IND products
during an emergency. Distribution would occur within 12 hours and CDC
would work with local public health officials and target hospitals to
coordinate protocols, screening, tracking (adverse events, response
rates), safety monitoring, protocol adjustments, and liability issues,
etc.). However, discussions with a key hospital in the Washington area
with likely responsibility for patient care in the event of an
emergency identified the following issues:
The hospital had little, if any, interaction with the CDC
regarding emergency planning and the USG's plans under Project
BioShield.
The hospital was not aware that the USG planned to
stockpile and distribute (when appropriate) IND products.
The hospital would have a very difficult time during an
emergency obtaining approval from their IRB (which they would have to
do) for use of an experimental product. Staff had little confidence
that hospital attorneys could work through liability issues, if not
vetted in advance.
The hospital had little confidence that the local public
health infrastructure could handle/coordinate distribution of SNS
products.
The hospital did not have a good understanding of the
expanded nature of the SNS. They are familiar with the distribution of
push packs etc., but did not view that process as compatible with what
would be needed in a bio/chem. emergency.
Activities that might improve the local public health
infrastructure and ensure that needed countermeasure products are
provided to those who need them quickly and efficiently in the event of
an emergency include:
Instituting mechanisms now to involve target hospitals in
key cities that are likely to be impacted in an emergency to
participate in strategy discussions with the USG.
Providing funding through the procurement process to
support company lead efforts to educate front-line hospitals about
products being purchased for stockpile after contract award. This
education process would ensure hospital staff:
Become familiar with the products--given many would not be
licensed or if licensed likely unavailable for other uses,
Learn how to administer and store them,
Develop protocols for their use, and
Place on formulary or whatever mechanism is necessary to
allow use during an emergency, and vet any legal or liability issues in
advance.
Allowing the distribution of SNS products through
established drug distributors (McKesson, and Cardinal, etc.) rather
than relying on CDC and the public health infrastructure to get drugs
out in an emergency. Develop these plans and execute agreements now in
advance of an emergency.
Providing small stockpiles of SNS products to hospitals in
advance of an emergency.
Coordinating with DOD to develop plans for countermeasure
distribution and administration in the event of an emergency.
Prepared Statement of Clay Elward, Benefit Plan Design Manager,
Caterpillar, Inc
Dear Senator Burr, Senator Kennedy and members of the committee,
thank you for the opportunity to participate in this important
Roundtable ``When Terror Strikes--Preparing an Effective and Immediate
Public Health Response,'' as part of the national discussion of
America's readiness in the face of a bioterrorist attack or other
source of infectious disease epidemic.
Caterpillar is committed to working with you and the Administration
to strengthen America's biodefense response in ways that will
accelerate research, development and manufacturing of novel
countermeasure agents \1\, as well as diagnostic and environmental
warning/detection devices. We believe that this committee can and
should strengthen Bioshield I by considering the addition of certain
incentives, such as needed product liability protections, guaranteed
purchasing, expanded tax incentives, additional Federal research
dollars, and fast-track FDA review of drug and device applications.
---------------------------------------------------------------------------
\1\ The term ``novel'' as used throughout this document means new
molecular entities and new and modified vaccines.
---------------------------------------------------------------------------
However, as explained below in response to the specific questions
posed by the committee, the provisions in the Project Bioshield II Act
of 2005 (S. 975), though an admirable effort to protect U.S. citizens,
will have unintended consequences in higher prescription drug costs for
consumers and will actually undermine the goal of the development of
novel countermeasures by merely encouraging minor changes to already
approved products.
Introduction
For more than 80 years, Caterpillar Inc. has been building the
world's infrastructure and, in partnership with its worldwide dealer
network, is driving positive and sustainable change on every continent.
With 2004 sales and revenues of $30.25 billion, Caterpillar is a
technology leader and the world's leading manufacturer of construction
and mining equipment, diesel and natural gas engines and industrial gas
turbines.
And like all employers--including other members of the Coalition
for a Competitive Pharmaceutical Market, a group of businesses,
insurers, generic drug manufacturers and others--Caterpillar is very
concerned about the costs of healthcare in the United States today. Our
company provides benefits that rank among the best available anywhere,
covering 140,000 lives. But at a cost of more than $600 million a year
and rising, that commitment comes with challenges that must be
addressed. Rising U.S. health care costs--including double-digit
increases in pharmaceuticals, the fastest growing category of health
care costs--have become a significant, long-term competitive issue that
is impacting our ability to compete with a U.S. manufacturing base in a
global market. From 2002 to 2004, our prescription drug costs increased
20 percent.
Caterpillar is addressing health care cost issues at every turn.
We're working hard with providers to address cost and quality issues.
We established networks to capitalize on large concentrations of
employees to take advantage of the economies of scale. And we've asked
health plan participants to help share more of the costs. We are asking
them to be better consumers of healthcare, specifically in the area of
prescription drugs, and providing them the tools to do so. As a result,
our plan beneficiaries are choosing generics 90 percent of the time
when they're available and that is helping control costs without
impacting quality of care.
Moreover, as an industry leader, Caterpillar understands and
appreciates the value of innovation. Our company has received more than
2,500 patents in the last 5 years and in 2004 alone, we spent $928
million on research and development. We also understand the competitive
environment and the value of a level playing field in patent
protection, which is why we have serious concerns about provisions in
S. 975 that would add additional patent protections and market
exclusivities to the law but would do nothing to facilitate the
development of these new medicines.
Response to Questions of the Committee by Clay Elward
Question 1. What additional incentives or other measures will
ensure the timely availability of sufficient amounts of effective
biodefense medical countermeasures, and is the cost of such incentives
acceptable?
Answer 1. Caterpillar believes that the Bioshield I legislation
enacted last year provides a solid foundation for meeting the challenge
of preparedness against bioterrorist attacks. Indeed, we believe that
this law exemplifies what can result when the Federal legislative
process works best--producing bipartisan legislation that uses private-
public partnerships in research, procurement and contracting to ensure
that our Nation has the countermeasures we need, when we need them
most, without imposing addition cost burdens on America's health care
system.
As Congress seeks to enhance Bioshield I, Caterpillar recommends
the following additional provisions:
Product Liability Protections: These necessary provisions
protect drug manufacturers as they develop and produce these
potentially life-saving novel treatments.
Guaranteed Purchasing: The Federal Government must commit
to and follow through on purchases of countermeasures in sufficient
quantity to stockpile so manufacturers have predictability for their
business models.
Research and Development Tax Incentives and Manufacturing
Grants: The majority of pharmaceutical research in America is
outsourced by brand drug companies to biotechnology and other smaller
companies. The expansion of Bioshield I's funding approach would
energize these entities to create a biodefense pharmaceutical sector.
Also needed to ensure production are tax credits, grants and consistent
government funding throughout the full development cycle of
countermeasures . . .
Support Building Facilities In America: Domestic
production facilities will facilitate additional manufacturing capacity
and assure availability.
``Fast-Track'' FDA Review: Allowing the Food and Drug
Administration to expedite the introduction of countermeasures to
marketplace will help ensure countermeasures are available when needed.
Full Funding: Pharmaceutical companies that attract
investment for research and development often experience financial
hardship while awaiting Bioshield procurement contracts to materialize.
The time lag creates a ``valley of death'' for companies developing
countermeasures that could be overcome by full funding.
Americans deserve strong protections against bioterrorism, but this
security must not--and need not--cripple our Nation's health care
system through dramatic cost increases. As Congress considers
incentives for the creation of new and better countermeasures against
terrorist threats, it must strike a balance between the cost of the
program and the potential benefit. Under Bioshield I, Congress
established a straightforward government contract and procurement model
that spreads the burden of this national defense initiative among all
U.S. citizens. But S. 975 moves away from that model and places the
cost burden on only one segment of the population--America's sick--
forcing those that are most vulnerable to pay for this Nation's
biodefense pharmaceutical preparedness. And, unlike the current
proposals, an appropriate model will reward only the actual production
of a novel medicine designed to address a specific security need
without jeopardizing the future affordability of the healthcare system.
Several incentives being debated would not facilitate the development
of new medicines. As Congress seeks to enhance Bioshield I, Caterpillar
opposes the following additional provisions:
Broad definition of the term ``countermeasures:'' By broadening the
definition of ``countermeasure,'' many drugs in today's medicine
cabinets--such as hypertensive medications and cholesterol lowering
drugs--would qualify as a countermeasure, and would be eligible for
patent extensions. The term ``countermeasure'' is not limited to novel
countermeasures and could apply to drugs to treat indirect or secondary
effects of an attack (e.g. Post Traumatic Stress Disorder) as opposed
to direct harm caused by the bioterror agent. Therefore, already
marketed treatments would therefore receive ``windfall'' benefits.
Simply put--a broad definition of ``countermeasure'' (1) does not
properly incent companies to bring new products to market to better
protect the American people and (2) unnecessarily adds cost to the U.S.
health care system.
Patent term extensions: Apply to prescription medicines that are
already on the market--not entirely new products, and not drugs that
are solely related to bioterrorism.
Current law grants market monopoly status to a brand company that
holds a patent for a new, or novel, drug product. The length of this
status, or patent life, is determined by two calculations: the amount
of time it takes the Food and Drug Administration to review the new
product, and the amount of time that the brand company conducts its own
research on the product. Brands are allotted up to 5 years of patent
restoration time to account for FDA's review time. They also are
allotted up to a total of 14 years of monopoly status for the
development of the product, although the patent life is frequently
longer because of other provisions in current law, such as pediatric
exclusivity.
S. 975 would lift all of the caps on this monopoly status,
extending it indefinitely. The bill removes entirely the 5-year patent
restoration limit for the FDA review and sets no limit on the monopoly
status awarded for the overall development period. And, instead of
counting the monopoly time from when the drug application is being
researched and reviewed by the FDA, it begins when the product is
submitted as a rough idea in an application to the Patent and Trademark
Office (PTO). Thus, the monopoly would stretch for a much longer time
period than 14 years.
Of additional concern, under S. 975, a brand company could conduct
a small study--related to bioterrorism or otherwise--on a drug that is
currently on the market and has a capped patent life. By doing this
study, the product would be eligible to receive additional monopoly
status based on the time that the product was submitted to the PTO.
Thus, a product whose patent is about to expire could enjoy a new
extended monopoly period. Even more egregious is the fact that the
product only needs to be ``successfully developed''--the product never
has to be approved or reviewed by the FDA, nor must it be produced or
stockpiled. It merely needs to be studied for a countermeasure
indication.
The provisions in this bill allow brand pharmaceutical companies to
game the patent system and block affordable medicines from coming to
market for an indefinite period of time. At a time when consumers are
struggling to manage increasing prescription drug costs, the brand name
pharmaceutical industry should not be asking Congress to extend their
monopolies and maintain higher prices for consumers for years to come.
Extended Marketing Exclusivity: Marketing exclusivity delays the
entry of generic drugs despite expired patent protections. Truly novel
medicines already receive 5 years of marketing protection under current
law. Extending the length of this exclusivity to 10 years would
unfairly delay consumer access to generics.
Wild card exclusivity: The wild card is a 6-month to 2-year patent
extension that could be placed on any product in a company's
portfolio--even a product that is completely unrelated to bioterrorism.
The countermeasure does not have to be related to a bioterror agent,
but could include drugs to treat non-weaponizable diseases if the
Department of Health and Human Services deems those drugs to be in the
national interest.
A brand company also could apply more than one wild card to the
same product, thus extending the monopoly and maintaining higher prices
for consumers. Brand drugs are covered by 10 or more patents, and each
of those patents could be extended. This is an unreasonable and costly
incentive that provides a windfall to the brand name pharmaceutical
industry, while imposing huge costs on an already overburdened
healthcare system.
Taken together, those provisions would inflate drug expenditures;
impose major obstacles to the entry of generic drugs into the market;
worsen the healthcare crisis for uninsured and older Americans who pay
for prescription drugs, and impose and inequitable burden on health
care purchasers. Thus, the proposed provisions in S. 975 give a blank
check to brand companies in the form of a patent extension on non-
bioterror blockbuster drugs.
Question 2. What is necessary to build and maintain a robust
national public health infrastructure to meet future biodefense
requirements?
Answer 2. Caterpillar believes that we owe it to our employees,
communities and shareholders to look toward the future and make
decisions today that enable continued success tomorrow. That is why we
support measures that will build upon the foundation of Bioshield I to
ensure America's biodefense preparedness.
In addition to the product liability protections, guaranteed
purchasing and stockpiling, research and development tax incentives and
manufacturing grants, and fast-track FDA review tools proposed above,
Caterpillar also recommends that the Committee focus on incentives for
biotechnology companies and universities that research novel
countermeasures--not for entities only interested in extending current
product monopolies that are already economically viable.
Question 3. What is necessary to protect our food supply and
agriculture from biodefense threats?
Answer 3. When Caterpillar was founded in 1925, we offered only one
product: the track-type tractor. The machine quickly became our
flagship product and a favorite among farmers because of its reduced
soil compaction. Although Caterpillar does not manufacture agriculture
specific products today, we do supply the industry with components
including diesel engines and drive trains. In addition, farmers
continue to find multiple uses for Cat equipment such as skid steer
loaders on farms--large and small--across the United States.
Caterpillar supports the Unites States Department of Agriculture
(USDA) in its biodefense readiness endeavors. Through their coordinated
efforts, the USDA can focus on key areas of America's food supply and
agriculture production. Caterpillar endorses the USDA's focus on
protection through prevention, for example avoiding the introduction of
agriculture health threats at our borders and reducing the opportunity
for disease outbreaks and pest infestations among our farm animals and
crops. In addition, the USDA's efforts to increase laboratory capacity
for testing to identify hazards, such as biological agents, and monitor
food-related consumer complaints will help ensure American's enjoy a
safe supply of meat, poultry, and egg products.
Conclusion
Caterpillar thanks the committee for the opportunity to participate
in this critical national debate. Given the high cost implications for
all involved, it is Caterpillar's hope that policymakers will adopt
means to assure the safety and security of U.S. citizens without
jeopardizing the future affordability of our health care system as done
by the above-identified provisions in S. 975.
We look forward to continuing to work with the committee and the
administration on this matter.
Summary
Caterpillar Inc. is honored to participate in the Senate Health,
Education, Labor, and Pension Committee's Roundtable, entitled ``When
Terror Strikes--Preparing an Effective and Immediate Public Health
Response.'' The discussion, to be held July 14, 2005, will help
Congress put measures in place to advance America's readiness in the
face of a bioterrorist attack or other source of infectious disease
epidemic.
As a global business headquartered in Peoria, IL, Caterpillar
supports the work of Congress and the Administration to strengthen
America's biodefense response. Of primary focus for Caterpillar are the
implications of bioterrorism preparedness activities on the U.S. health
care system. Clay Elward, Benefit Plan Design Manager, will represent
Caterpillar before the panel.
Currently the Senate HELP Committee is considering the Project
Bioshield Act of 2005 (S. 975) as a means for improving protections of
the American people from bioterrorist attack. Caterpillar supports much
of the proposed legislation, including provisions, which will
accelerate research, development and manufacturing of novel
countermeasure agents, as well as diagnostic and environmental warning/
detection devices.
However, while the company applauds the intent of the legislation,
it has concerns with particular provisions of the bill.. If implemented
in its current form, S. 975 could produce the unintended result of
higher prescription drug costs for American consumers, reduced
pharmaceutical access for the uninsured and added strain for the
delicate U.S. health care system.
We believe that Congress can--and should--implement additional
biodefense legislation to help protect the United States, but in so
doing, it must strike a balance fair to all Americans.
About Caterpillar Inc.
For 80 years, Caterpillar Inc. has been building the world's
infrastructure and, in partnership with its worldwide dealer network,
is driving positive and sustainable change on every continent. With
2004 sales and revenues of $30.25 billion, Caterpillar is a technology
leader and the world's leading manufacturer of construction and mining
equipment, diesel and natural gas engines and industrial gas turbines.
Prepared Statement of John Pournoor, 3M Company
Mr. Chairman (and members of the committee): I would like to thank
you for calling today's round table on ``Preparing an Effective and
Immediate Public Health Response,'' and for inviting 3M to share its
experiences and perspective in this area.
3M is a diversified global technology company with international
operating units in 65 countries and more than 67,000 employees
worldwide; roughly one-half of our employees are located in the United
States. 3M's worldwide sales in 2004 were $20.0 billion, of which 61
percent--or $12.1 billion--were international sales outside the United
States. Of note, exports from our U.S. plants were a critical component
of our international sales: In 2004, 3M exported almost $3.8 billion in
finished and semi-finished goods that were manufactured in our
facilities in the United States. This ranked 3M as the Nation's 39th-
largest exporter in 2004, up from the 50th-largest exporter in 2003,
giving 3M an almost 4-to-1 trade balance in favor of exports. 3M also
annually invests more than $1 billion on research and development. We
manufacture over 50,000 products and are world-class producer of
respiratory protection products, medical supplies, and food
microbiology solutions among many other categories.
Mr. Chairman, I chair CBRTA, an alliance of industrial, non-profit
and academic institutions successfully leveraging our own investments
in R&D with both accountability and IP protection to more rapidly
prototype needed government solutions. CBRTA focuses on chemical,
biological and radiological solutions. I have facilitated State
homeland security exercises, and have worked with our teams on our
Public Health Solutions initiatives, and recently launched, with our
international teams, our Avian Flu preparedness campaign in the Asia-
Pacific region.
3M works with many local, regional and national agencies and
institutions on fulfilling requirements for emergency preparedness and
response. Our products and service offerings help local and State
governments in areas of patient surge, isolation, registration and
credentialing, stockpiles, personal protective equipment,
decontamination, triage and trauma, information technology, education,
training and preparedness exercises. My role has placed me at the
crossroads of needs and capabilities in certain areas of Homeland
Security, Defense and Public Health. It is from this tactical and
operational perspective that I would like to share our perspective with
members and participants in this forum.
Mr. Chairman, today, the United States is investing in a variety of
national preparedness programs stretching in outcomes from the
development of new vaccines, to stockpiles of pharmaceuticals, personal
protective equipment and medical supplies and many others in order to
raise our levels of readiness in response to natural or man made bio-
events.
Because we operate in a just-in-time and lean manufacturing economy
that also applies to health care delivery systems, little supplies
inventory exists to respond to a sudden surge of patients for threats
like epidemics, pandemics or mass casualty events. Accordingly, the
timely availability of effective bio-defense medical countermeasures
requires that first, projections of potential patient loads be made,
and then proportional demand plans be put in place to respond to such
patient loads. NIH, HRSA and CDC are stimulating and fueling
consideration of preparedness levels and augmentation of the system
with needed caches. These demand plans must address adequate supply,
purchase and distribution of needed medical countermeasures as well as
stratification of priority groups receiving care.
The wrinkle in this new era of public health demand planning is
that not only both the local characteristics of the health care
networks and the epidemiology of the event must be considered, but
supply chain and logistics factors must also be incorporated. Supply
chain and logistics is often not viewed as a function of public health.
Yet, it happens to be one of the core competences of U.S. industry and
a requirement for effective public health surge-response. This suggests
an opportunity for public-private pre-event planning and partnership
assuring uninterrupted flow of needed goods and services during a bio-
event. 3M is developing unique demand planning tools aligned with each
of these principles in such areas as health care personal protective
equipment, decontamination, medical supplies, and mass clinics.
One can zoom out from the view of flow of needed goods to local and
regional health care systems to the global economy and the flow of
manufactured goods across borders. In many cases our consumption
demands are met with production both at home and in other parts of the
world. Uninterrupted flow of these goods and services requires that we
assure continuity at a global trade levels during worldwide bio-events.
This makes it even more imperative that, today, during the pre-event
period, we build a cushion for a future surge in demand in the system.
Surge in demand during an event will cause a surge in production and a
consequent surge in needed capacity and needed raw materials. These
core elements of good manufacturing practices are to now be also viewed
as fundamental elements of an effective public health response.
Aside from preparing for greater supply-demand elasticity during a
surge in needed health care resources, measures can be taken to
stimulate development of new solutions in response to new challenges
and threats. Some of these opportunities have or will be touched upon
by other participants at this round table discussion.
Creation of incentives to leverage commercial investment in
technology towards developing new solutions is key imperative. The
incentives for such a leverage span from continued R&D funding of
government-industry partnerships from small businesses to large ones,
clear articulation of risk management and indemnification boundaries,
protection of intellectual property rights and ultimately development
of sustainable and practical business models around bio-defense.
We know intimately how R&D expenditures--and the protection of
intellectual property assets--can spur innovation. Last year for
example, 3M received close to 600 U.S. patents--a direct result of our
$1 billion-plus R&D investment. In the intellectual property area,
patent reform, prior user rights, and research exemptions can play a
significant role in reducing risk of R&D investment. In this area a
good place to observe lessons learned is the Orphan Drug Laws. We
believe creation of analogue tracks to spur commercialization of bio-
defense solutions is appropriate.
3M and I are thankful for the opportunity to provide input and work
toward solutions with you. I hope I was able to touch on a few key
topics from a manufacturers perspective in the time allotted to me and
will be happy to answer any questions you may have.
[Whereupon, at 12:20 p.m., the Roundtable was adjourned.]