[House Hearing, 112 Congress]
[From the U.S. Government Publishing Office]
DEPARTMENTS OF LABOR, HEALTH AND HUMAN
SERVICES, EDUCATION, AND RELATED AGENCIES
APPROPRIATIONS FOR 2013
_______________________________________________________________________
HEARINGS
BEFORE A
SUBCOMMITTEE OF THE
COMMITTEE ON APPROPRIATIONS
HOUSE OF REPRESENTATIVES
ONE HUNDRED TWELFTH CONGRESS
SECOND SESSION
________
SUBCOMMITTEE ON THE DEPARTMENTS OF LABOR, HEALTH AND HUMAN SERVICES,
EDUCATION, AND RELATED AGENCIES
DENNY REHBERG, Montana, Chairman
JERRY LEWIS, California ROSA L. DeLAURO, Connecticut
RODNEY ALEXANDER, Louisiana NITA M. LOWEY, New York
JACK KINGSTON, Georgia JESSE L. JACKSON, Jr., Illinois
KAY GRANGER, Texas LUCILLE ROYBAL-ALLARD, California
MICHAEL K. SIMPSON, Idaho BARBARA LEE, California
JEFF FLAKE, Arizona
CYNTHIA M. LUMMIS, Wyoming
NOTE: Under Committee Rules, Mr. Rogers, as Chairman of the Full
Committee, and Mr. Dicks, as Ranking Minority Member of the Full
Committee, are authorized to sit as Members of all Subcommittees.
Susan Ross, Kevin Jones, John Bartrum,
Allison Deters, Jennifer Gera, and Lori Bias,
Subcommittee Staff
________
PART 6
Page
Budget Hearing for Department of Health and Human Services--
Secretary......................................................... 1
Budget Hearing for Department of Health and Human Services--NIH.. 173
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________
Printed for the use of the Committee on Appropriations
DEPARTMENTS OF LABOR, HEALTH AND HUMAN
SERVICES, EDUCATION, AND RELATED AGENCIES
APPROPRIATIONS FOR 2013
_______________________________________________________________________
HEARINGS
BEFORE A
SUBCOMMITTEE OF THE
COMMITTEE ON APPROPRIATIONS
HOUSE OF REPRESENTATIVES
ONE HUNDRED TWELFTH CONGRESS
SECOND SESSION
________
SUBCOMMITTEE ON THE DEPARTMENTS OF LABOR, HEALTH AND HUMAN SERVICES,
EDUCATION, AND RELATED AGENCIES
DENNY REHBERG, Montana, Chairman
JERRY LEWIS, California ROSA L. DeLAURO, Connecticut
RODNEY ALEXANDER, Louisiana NITA M. LOWEY, New York
JACK KINGSTON, Georgia JESSE L. JACKSON, Jr., Illinois
KAY GRANGER, Texas LUCILLE ROYBAL-ALLARD, California
MICHAEL K. SIMPSON, Idaho BARBARA LEE, California
JEFF FLAKE, Arizona
CYNTHIA M. LUMMIS, Wyoming
NOTE: Under Committee Rules, Mr. Rogers, as Chairman of the Full
Committee, and Mr. Dicks, as Ranking Minority Member of the Full
Committee, are authorized to sit as Members of all Subcommittees.
Susan Ross, Kevin Jones, John Bartrum,
Allison Deters, Jennifer Gera, and Lori Bias,
Subcommittee Staff
________
PART 6
Page
Budget Hearing for Department of Health and Human Services--
Secretary......................................................... 1
Budget Hearing for Department of Health and Human Services--NIH.. 173
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
________
Printed for the use of the Committee on Appropriations
________
U.S. GOVERNMENT PRINTING OFFICE
75-968 WASHINGTON : 2012
COMMITTEE ON APPROPRIATIONS
HAROLD ROGERS, Kentucky, Chairman
C. W. BILL YOUNG, Florida \1\ NORMAN D. DICKS, Washington
JERRY LEWIS, California \1\ MARCY KAPTUR, Ohio
FRANK R. WOLF, Virginia PETER J. VISCLOSKY, Indiana
JACK KINGSTON, Georgia NITA M. LOWEY, New York
RODNEY P. FRELINGHUYSEN, New Jersey JOSE E. SERRANO, New York
TOM LATHAM, Iowa ROSA L. DeLAURO, Connecticut
ROBERT B. ADERHOLT, Alabama JAMES P. MORAN, Virginia
JO ANN EMERSON, Missouri JOHN W. OLVER, Massachusetts
KAY GRANGER, Texas ED PASTOR, Arizona
MICHAEL K. SIMPSON, Idaho DAVID E. PRICE, North Carolina
JOHN ABNEY CULBERSON, Texas MAURICE D. HINCHEY, New York
ANDER CRENSHAW, Florida LUCILLE ROYBAL-ALLARD, California
DENNY REHBERG, Montana SAM FARR, California
JOHN R. CARTER, Texas JESSE L. JACKSON, Jr., Illinois
RODNEY ALEXANDER, Louisiana CHAKA FATTAH, Pennsylvania
KEN CALVERT, California STEVEN R. ROTHMAN, New Jersey
JO BONNER, Alabama SANFORD D. BISHOP, Jr., Georgia
STEVEN C. LaTOURETTE, Ohio BARBARA LEE, California
TOM COLE, Oklahoma ADAM B. SCHIFF, California
JEFF FLAKE, Arizona MICHAEL M. HONDA, California
MARIO DIAZ-BALART, Florida BETTY McCOLLUM, Minnesota
CHARLES W. DENT, Pennsylvania
STEVE AUSTRIA, Ohio
CYNTHIA M. LUMMIS, Wyoming
TOM GRAVES, Georgia
KEVIN YODER, Kansas
STEVE WOMACK, Arkansas
ALAN NUNNELEE, Mississippi
----------
\1\Chairman Emeritus
William B. Inglee, Clerk and Staff Director
(ii)
DEPARTMENTS OF LABOR, HEALTH AND HUMAN SERVICES, EDUCATION, AND RELATED
AGENCIES APPROPRIATIONS FOR 2013
_______________________________________________________________________
Tuesday, March 6, 2012.
BUDGET HEARING FOR DEPARTMENT OF HEALTH AND HUMAN SERVICES--SECRETARY
WITNESS
HON. KATHLEEN SEBELIUS, SECRETARY OF HEALTH AND HUMAN SERVICES
Mr. Rehberg. Madam Secretary, good afternoon, and welcome
back to the House. Sorry we are late.
Before we begin our discussions about the Fiscal Year 2013
budget request, I want to raise a number of financial
management issues related to HHH, including the more than $1.4
billion Anti-Deficiency Act violations submitted to Congress
last July.
For those who may not be familiar with an Anti-Deficiency
Act violation, the act and related funding statutes restrict in
every possible way the expenditures, and expenses, and
liabilities of the government so far as executive offices are
concerned to specific appropriations for each fiscal year. In
general, agencies that violate funding restrictions violate the
Anti-Deficiency Act.
On July 14th, 2011, HHS notified Congress that it had
identified 47 out of 176 contracts, slightly less than 30
percent, which had an ADA violation. These violations primarily
related to a lack of applying general appropriations and
contracting principles and laws properly.
This small identified violations in the HHS General
Department Management Account, Agency for Health Care Research
and Quality, the Centers for Disease Control, various
components of the National Institutes of Health, and the
Substance Abuse and Mental Health Services Agency.
The notice stated a substantial lack of understanding
throughout the department of the legal limits on Federal
contracts, in particular, contracts that required effort or
deliverables over a period of several years.
The committee consulted with HHS Office of Inspector
General, and understands one contributing cause is the lack of
legal review of contracts, grants, and similar funding
mechanisms throughout HHS. The violations seem to indicate
either a fundamental misunderstanding of contract and
appropriations principles, or deliberate disregard for the law.
A number of other improper financial management concerns
have been raised recently. For example, a February 6th, 2012
joint letter to the Secretary from the Senate Finance Committee
and House Committee on Ways and Means summarizes a number of
issues supported in a recent independent audit by Ernst & Young
on HHS' Fiscal Year 2011 financial statements. Some of the
issues highlighted in this letter include Anti-Deficiency Act
violations, so-called mystery money, funds that seem to
disappear in the Fiscal 2011 financial audit, and HHS processes
that date back to the 1980s.
These themes are certainly echoed on the July 14th, 2011
ADA notice to Congress. We understand the ADA violations date
back to as far as 2002, and may go back several
Administrations. However, blame is not the issue; it is
accountability and corrective action.
Agencies must report and correct ADA violations according
to Section 1351 of Title 31 of the U.S. Code. The agency shall
report immediately to the President and Congress all relevant
facts and a statement of actions taken. A copy of each report
shall also be transmitted to the Comptroller General on the
same date the report is transmitted to the President and
Congress.
The agency must note if they suspect that the violations
was knowing and willful, provide significant information on the
appropriation or fund account for each violation, provide the
name and position of the officers or employees responsible for
the violation, and include all the facts pertaining to
violation and action taken, including any new safeguards
provided to prevent reoccurrence of the same type of violation.
The HHS notice from last July, however, asserts it will not
take corrective adjustments to these accounts, that the HHS'
own judgment are that these corrective adjustments would have
serious programmatic repercussions. A self-determination of
this magnitude by HHS is a precedent of unparalleled
proportions, in my opinion.
The Comptroller General in 1937 once expressed the
principle HHS and the Administration should follow, and it is
equally applicable here. Where a payment is prohibited by law,
the utmost good faith on the part of the officer, either in
ignorance of the facts or in disregard of the fact, in
purporting to authorize the incurring of an obligation, the
payment of which is so prohibited, cannot take the case out of
the statute. Otherwise, the purported good faith of an officer
could be used to nullify the law.
We have consulted with GAO on the matter and understand
that GAO advises agencies in these circumstances to adjust
their accounts accordingly, and then, if they do not have
enough budget authority to do so, they should report the ADA
violation. They also advise agencies to record an obligation
where they neglected to do so, and if they do not have enough
budget authority to do so, report an ADA violation. If the
impact of the violation results in programmatic shortfalls, HHS
has an avenue to request funds to cover any shortfall through a
supplemental or deficiency appropriation request in the notice.
Madam Secretary, I call upon HHS to go back and do
everything it can to lawfully do to correct or mitigate the
financial effects of the ADA violation, and make the
appropriate adjustments. If a supplemental or deficiency
appropriation is needed, it should be requested. We cannot
ignore the law and due process.
I am frustrated it took more than two years to report
violations to Congress. This does not meet my definition of
``immediate.'' The notice to the Comptroller General was even
further delayed. It did not occur until after our committee
contacted GAO to discuss the violations in September.
The requirement of naming the accountable is not in the
notice. It is surprising that HHS' leadership does not hold
itself accountable. Our citizens expect Federal agencies,
especially the one that desires to run the Nation's health care
system and hold others accountable with mandates, to stand up
and identify an accountable party for each violation.
I was pleased HHS has updated some procedures and
implemented one-time training for its contracting, finance, and
budget personnel. Given the systematic and cultural
entrenchment implied in the notice, HHS should ensure all
senior officials get training. Further, I suggest HHS should
require all contracts, grants, cooperative agreements, and
similar actions to receive legal review, as suggested by the
HHS OIG to ensure they do not violate ADA and other funding
restrictions.
In addition, I believe HHS should have its OIG immediately
and for the next several years conduct a statistically sample
of all contracts, grants, and similar agreements, starting with
Fiscal Year 2010, vehicles to ensure the training is effective
and that no ADA or other funding restriction violations occur.
Madam Secretary, I would like an update within 30 days on
the implementation strategies and status of these suggestions.
Finally, I understand Congress may expect another HHS ADA
violation in the near future related to a pay restriction
violation, and I do appreciate the advance notice. My
understanding is the potential violation primarily impacts NIH
as a limited number of employees were paid more than allowed by
law. I look forward to a speedy notice with details to allow
the committee more understanding on the issue.
I am, however, surprised the budget request does not
include financial management corrective action initiatives,
given the morass of issues. Therefore, Madam Secretary, I would
like you to provide within 30 days a detailed 3-year corrective
action initiative to rectify HHS's financial system and prevent
ADA violations.
Please ensure the annual cost for operating division is
identified for each year. The committee must be prepared to
take steps to strengthen financial stewardship throughout HHS.
My desire was to start this hearing out on a more positive
note. Unfortunately, our oversight and stewardship
responsibility cannot be ignored. The confidence of the
American public trust does matter.
I yield to my ranking member, Ms. DeLauro, for an opening
statement.
Ms. DeLauro. Thank you very much, Mr. Chairman, and thank
you all, and good afternoon. Let me thank the chairman for
convening this important hearing.
I want to say a thank you to our witness today, Secretary
Kathleen Sebelius. Madam Secretary, thank you once again for
coming before our subcommittee. Thank you for all of your hard
work in implementing the Affordable Care Act, including the
recently announced preventive measures for women to be covered
without a co-pay. It is heartening to work with an
Administration that understands and respects women's health
needs.
I would just make a note that I think I am correct that the
Anti-Deficiency Act violations that were reported occurred over
a long period of time starting back in 2002, and I am sure what
the Secretary will do is you will lay out for us the actions
that you have taken to correct the underlying problems and make
sure that similar violations do not happen again.
As we consider the President's budget proposal for 2013, we
should also bear in mind the context in which it comes. These
new proposals arrive after 2 consecutive rounds of budget
cutting. Under the 2012 legislation enacted in December,
appropriations for the Department of HHS are $3.4 billion less
than the comparable level two years earlier. That is the cut in
actual dollar terms without taking into account the rising
costs, growing population, or unusually high levels of need.
Some very important programs and services have been cut:
the Low Income Home Energy Assistance Program, or LIHEAP, has
been reduced by $1.6 billion, almost one-third, between 2010
and 2012. This has happened at a time when heating oil prices
are at record levels, other energy costs remain high, and the
lingering effects of the recession leave many people still in
need of help with their winter heating bills.
Another key priority is medical research at the NIH, the
National Institutes of Health, to find better treatments and
cures for diseases like cancer and Alzheimer's. While we were
able to provide a modest increase for NIH in 2012, it was not
enough to reverse the cut enacted for 2011. And due to the
combination of reduced funding and rising costs, the number of
research project grants made by the NIH is now at the lowest
level since 2001.
For the Center for Disease Control, appropriations have
been reduced by $735 million over the past two years, meaning
cut backs in capacity to detect and control epidemics, and to
reduce the prevalence and burden of both chronic and infectious
diseases.
Programs that help to train doctors, nurses, and other
health care providers have now taken a $90 million reduction
since 2010. Mental health programs have been cut by about $50
million.
Yes, the Department of Health and Human Services has
received additional funding through the Affordable Care Act for
some of the programs that receive appropriations in this bill,
though the ACA funding is not enough to make up for the loss in
appropriations. But that funding was intended to supplement and
expand funding for programs that increase the availability of
health care and preventive services, not to simply allow
equivalent cuts in regular appropriations.
And we are now facing the prospect of new rounds of much
deeper cuts. There is the threat of sequestration under the
Budget Control Act, which could mean an additional 8\1/2\
percent reduction in HHS appropriations for 2013.
We also hear that some on the majority side do not consider
the current caps stringent enough, and want to use the budget
resolution to reduce those limits still further. The contenders
for the Republican presidential nomination seem to be trying to
outdo each other with budget plans calling for huge, though
mostly unspecified, future spending cuts. If any of these
possibilities materialize, the past cuts I have been describing
will look small by comparison.
So, that is the context for the 2013 budget we are
discussing today, a proposal which involves a small further
reduction in overall HHS appropriations. There are some good
things in the proposal. For example, there is a $325 million
increase for child care, a critical need for working families.
There is also funding to meet the department's responsibilities
in operating Medicare and implementing the Affordable Care Act.
And there are small, but important, increases for food safety
and control of health-care-acquired infections.
There are also some things in the President's budget that
cause me concern. There is yet another reduction to LIHEAP,
this one amounting to $452 million. There is a renewed proposal
to cut the Community Service Block Grant almost in half, and
there are additional rounds of cuts to the CDC, to mental
health and substance abuse programs, and to the children's
hospital graduate medical education and other health
professions training programs. I very much hope that we will be
able to find ways to alleviate and to avoid these reductions.
Secretary Sebelius, I look forward to your testimony and to
a discussion of these and other issues.
Thank you, Mr. Chairman.
Mr. Rehberg. I understand that Mr. Rogers is coming, is
going to want to make an opening statement. We will do it after
the Secretary's testimony if he is here in time. Mr. Dicks.
Mr. Dicks. Should we wait until then?
Mr. Rehberg. Okay.
Mr. Dicks. Yeah. The only thing I wanted to say is welcome
the Secretary here today. I would like to thank you for your
help and giving attention to the Medicare geographic and
disparity problem. I understand phase 2 of Institute of
Medicine Study is due out in the spring. I hope that we will
see some actionable recommendations on how to change the
geographic adjusters to ensure they reflect accurate data and
result in better access to care for seniors. I know we can
count on you and your leadership in ensuring appropriate
policies are implemented to resolve the geographic disparity
issue.
And that is all I have, Mr. Chairman. I want to associate
myself with the comments of the ranking member, Rosa DeLauro.
And, you know, last year we were able to work out things. It
started bad, but it came out pretty much okay. And I know we
are concerned about this year's, but I am also very concerned
about avoiding sequestration.
Thank you.
Mr. Rehberg. Thank you, Mr. Dicks. And, again, welcome,
Secretary Sebelius. You may proceed.
Secretary Sebelius. Okay. That is on? Okay, thank you. That
is why I asked.
Opening Statement
Thank you for having me here today. I just want to start by
saying, Mr. Chairman, we share your concerns about the Anti-
Deficiency Act violations. We did report them to you eight
months ago. We have been working closely not only with our
Office of Inspector General to retrain people and set up new
procedures, but we are also working closely with the Government
Accounting Office to put in place corrective action. I will be
happy to submit a full report for your review, and want to
assure you that although the grants were not structured
appropriately, the dollars paid out were not in excess of the
grant amounts. And we take this very seriously. We want to
correct it in the future. It clearly was a process that has
been underway for years. That is not an excuse, but to assure
you that I will certainly respond.
The Budget before us today helps create an American economy
built to last by strengthening our Nation's health care,
supporting research that will lead to tomorrow's cures, and
promoting an opportunity for America's children and families so
everyone has a fair shot to reach their full potential. The
Budget makes the investments that we need right now while
reducing the deficit in the long term to make sure that the
programs that millions of Americans rely on will be there for
generations to come.
And I look forward to answering your questions about the
Budget, but first I want to share some of the highlights.
The entire discretionary budget for our department is just
under $77 billion, and this Committee oversees almost $70
billion of those dollars.
Over the last two years we have worked to deliver the
benefits of the Affordable Care Act to the American people.
Thanks to the law, more than 2 and a half million additional
young Americans are already getting health coverage through
their parents' plans. More than 25 million seniors have taken
advantage of the free recommended preventive services under
Medicare, and small business owners are getting tax breaks on
their health care bills that allow them to hire more employees.
This year we will build on that progress by continuing to
support states as they work to establish affordable insurance
exchanges by 2014. Once these competitive marketplaces are in
place, they will ensure that all Americans have access to
quality, affordable health coverage.
Because we know that the lack of insurance is not the only
obstacle to care, our Budget also invests in our health care
workforce. The Budget supports training more than 7,100 primary
care providers and placing them where they are needed most.
We also invest in America's network of community health
centers. Together with fiscal year 2012 resources, our Budget
creates more than 240 new access points for patient care, along
with thousands of new jobs. All together, health centers will
provide access to quality for 21 million people, 300,000 more
than were served last year.
This Budget also continues our Administration's commitment
to improving the quality and safety of care by wisely spending
our health dollars. This means investing in health information
technology. It also means funding the first of its kind CMS
Innovation Center, which is partnering with physicians, nurses,
hospitals, private payers, and others, who have accepted the
challenge to develop a new sustainable health care system.
In addition, the HHS Budget ensures that 21st century
America will continue to lead the world in biomedical research
by maintaining funding for the National Institutes of Health.
At the same time, the Budget recognizes the need to set
priorities, make difficult tradeoffs, and ensure we use every
dollar wisely. That starts with continuing support for
President Obama's historic push to stamp out waste, fraud, and
abuse in the health care system.
Over the last three years, every dollar we have put into
health care fraud and abuse control has returned more than $7.
Last year alone, these efforts recovered more than $4 billion,
which is now in the Medicare Trust Fund and returned to
Medicaid throughout the States. And last week, our
Administration arrested the alleged head of the largest
individual Medicare and Medicaid fraud operation in history.
Our Budget builds on those efforts by giving law enforcement
the technology and data to spot perpetrators early and prevent
payments based on fraud from going out in the first place.
The Budget also contains more than $360 billion in health
savings over 10 years, most of which comes from reforms to
Medicare and Medicaid. These are significant, but they are
carefully crafted to protect beneficiaries. For example, we
have proposed significant savings in Medicare by reducing drug
costs, a plan that also puts money back in the pockets of
Medicare beneficiaries.
The Budget makes smart investments where they will have the
biggest impact, and puts us all on a path to build a stronger,
healthier, and more prosperous America for the future.
Thank you again, Mr. Chairman, and I look forward to our
conversation.
[The information follows:]
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SECTION 220
Mr. Rehberg. Great. Thank you very much. We will begin our
questioning then at this time.
And, Madam Secretary, Section 220 of the Fiscal 2012
omnibus requires reasonable transparency and sharing of
information with the public through a website on how the $1
billion prevention and public health fund will be awarded and
spent. In the 2011 State of the Union, the President said, ``In
the coming year, we will also work to rebuild people's faith in
the institution of government. Because you deserve to know
exactly how and where your tax dollars are being spent, you'll
be able to go to the website, get that information for the
first time in history.''
In fact, in the Fiscal Year 2012 omnibus, signed into law
by the President on December 23rd of 2011, it included a
provision making this promise a reality. I was quite surprised
to note, however, that the President's Fiscal Year 2013 budget
proposes to eliminate a reasonable transparency requirement for
the Prevention and Public Health Fund. The request would remove
Section 220 in its entirety.
How does eliminating the public reporting website fulfill
the President's commitment to transparency? In my mind, it does
just the opposite. Can you help us understand the policy behind
this proposal?
Secretary Sebelius. Well, Mr. President--I mean, sorry, Mr.
Chairman.
Mr. Rehberg. That is okay. [Laughter.]
Not yet.
Secretary Sebelius. It is not typical for an Administration
Budget to give ourselves direction of how to report. I can tell
you that we take transparency very seriously. That is why this
morning the website recommended in the last year's fiscal year
2012 Budget is up and running, and so you will be able to go to
the website and see very clearly where tax dollars are being
spent. We eliminated the reporting requirement, but fully
intend to comply with the website for ongoing budgets.
BUDGET RESOURCES AND PUBLIC HEALTH
Mr. Rehberg. Okay. The President's request appears to make
a policy shift from supporting using discretionary funds for
traditional public health programs in favor of what I would
call health access programs. For example, the President reduces
the Centers for Disease Control by the $668 million, while
increasing the Centers for Medicare and Medicaid by $1 billion
to implement exchanges.
Although the CDC does get increases from other resources,
like the Public and Prevention Health Fund, an evaluation set-
aside, such that the total program level is only a reduction of
$222 million, these reductions are all primarily from public
health programs.
Another interesting observation I make regarding the
President's request is that what appears to be a cut in a
number of programs that provide support for children, women,
and minority populations. For example, the following programs
all reflect reduced funding in the President's budget: CDC's
birth defects, development, disability and health programs,
HHS's Office of Minority Health, HHS's Office of Women's
Health, HHS' Office of Civil Rights, elimination of the racial
and ethical approaches to community health at CDC, and an
unanticipated reduction in NIH's National Children's Health
Study, Children, Youth, Women, and Families HIV/AIDS programs.
Please explain your apparent disproportional shift from women,
children, and minority programs and the anticipated impact. I
assume you believe the request provides sufficient support to
public health activities, but please describe what public
health factors you considered in deciding on the appropriate
level of resources to shift out of public health.
Secretary Sebelius. Well, Mr. Chairman, as you know, this
is a challenging budget atmosphere. The President requested all
of his Cabinet officers to make strategic choices and determine
the best use of our resources. I can assure you that there is
no reduction in our interest in women, children, and minority
health programs. In fact, I can assure this Committee that more
activity and more focus has been directed toward these programs
in the last three years than probably in the last several
decades.
What we have done is ask each of our agency directors,
including Dr. Frieden at the Centers for Disease Control and
Prevention, my Assistant Secretary on Health, and other leaders
to identify program duplication ideas, to efficiently reach the
population served, and flexibility to States so they can
address the target populations. In a number of the cases that
you mentioned, we are eliminating programs that either sat on
top of others or did not allow the effective use of resources.
The Budget includes increases in a whole variety of
programs aimed at children and families. The Budget increased
child care programs by $825 million so that the numbers are
increasing. HRSA health centers are increasing their output to
sites and providers so that we will serve additional women,
children, and families. The CDC vaccines for children program
is increased. The IHS program, which actually serves some of
the most vulnerable families in the country, is increased--the
Agency for Children and Family Head Start Program. So, we are
trying to be strategic and trying to use our resources as
efficiently as possible.
Mr. Rehberg. Thank you. I will try and hold pretty tight on
the time, myself included. And so, I apologize if I gavel you
all down or you, Secretary Sebelius. But just so everybody gets
a fair shot.
Thank you, Ms. DeLauro. And, Mr. Rogers, if you would like
to give an opening statement.
MANDATORY SPENDING
Mr. Rogers. Thank you, Mr. Chairman. I apologize for being
tardy.
Madam Secretary, welcome.
Secretary Sebelius. Thank you, Mr. Chairman.
Mr. Rogers. This is truly a historic time in our country's
history. I do not have to tell you that we are borrowing 40
cents on every dollar we spend. But it is high time, and the
people have told us this. It is high time that we get serious
about reducing spending for the debt and the record-setting
deficit that we are running every year, now four years running,
of the trillion dollars plus, running our debt now to some $16
trillion.
Fully 89 percent of your budget is mandatory spending. Of
the total budget that you have proposed, $604.4 billion, the
mandatory portion of that is 89 percent, which is outside the
jurisdiction of this committee, subcommittee. It is automatic
spending that comes out of the Treasury whether we act or not.
I think the onus is on the Administration to tell us how we
can stabilize these out of control entitlement programs. I see
an old proposal in your budget request to put some sort of
discipline on the wildly growing mandatory side of the budget.
We have known about these shortcomings for years now, and
yet on top of this spending sits the President's controversial
health care law. Regardless of whether you support or oppose
the Affordable Care Act--many Americans do not--the reality is
Obamacare is a budget buster. The CBO has reported that this
law will cost billions more than we were told when we voted two
years ago, but I will not be surprised to see even these
ominous estimates skyrocket once the rosy assumptions utilized
by CBO do not materialize.
What is potentially more egregious than the vast increases
in mandatory spending created by this law are new slush funds
created in the Treasury outside the control of Congress and the
staunch oversight of this committee. Meanwhile, the
unprecedented layers of Federal bureaucracy created by this law
and the countless mandates on employers, insurance providers,
doctors, and patients, have increased health insurance premiums
that families pay at a time when long-term unemployment remains
at historical highs, and family budgets are squeezed by higher
gas and electric prices.
Certainly I hope you recognize the peril and the
unsustainability of this constant rise in mandatory spending,
particularly where Medicare is concerned. We have been told
that Obamacare will help alleviate the looming shortfall in
Medicare through various new programs, boards, payment schemes,
that will bring savings to the program. However, the CBO
recently reported that demonstration projects aimed at
achieving savings in the health care sphere have historically
failed to do so, and that the payment reductions envisioned in
this law likely will not be put in place.
Yet even if savings are achieved through these various
schemes, these funds have already been earmarked to pay for new
entitlements created by Obamacare, not to save Medicare. You
cannot count that money twice.
These are not trivial issues. If mandatory spending is not
brought under control, these programs will fold, and the vital
needs they address will go unmet.
I think it is critical that we stop living in a fantasy
land where the money never runs out.
This past calendar year, this committee passed two Fiscal
Years of appropriations. That has never happened before, to my
knowledge. What has not happened since World War II is we cut
discretionary spending two years in a row. That is a real
rarity.
The discretionary spending is not the problem. If we zeroed
out every penny we appropriate of the discretionary budget, we
would still be in the red every year because of the mandatory
entitlement spending. And yet we blindly go ahead without
tackling the problem, and it is a growing problem. And unless
we deal with it, I am afraid for our future.
I wonder what you think about it.
Secretary Sebelius. Well, Mr. Chairman, I think that in the
two years since the Affordable Care Act has been passed, we
have some good news to report. I share your concerns about the
deficit looming for our children and grandchildren, and also
about the survival of entitlement programs. And as you know,
there are two very different approaches. One approach is to
address the entitlement programs. This approach would fix the
dramatic rise in underlying health care costs, which not only
helps the Federal government's budget, but it also helps
private payers. And, the other is to blow up the programs as we
know them, and shift the costs on to beneficiaries. We have
chosen to go down the earlier described path.
And what I can tell you is that the Budget figures for the
Affordable Care Act, which is fully paid for, does not add to
the deficit, and will save $100 billion in the first decade,
and a trillion dollars in the second decade.
We are seeing good news on the Medicare front, as
predicted. The spending of Medicare prior to the passage of the
Affordable Care Act was rising at the rate of about 8 percent,
just under 8 percent a year. We are now seeing the growth rate
for the last two years slow to just over 6 percent. That is
good news, and that is not only money going back to the
Medicare Trust Fund, but it is money in the pockets of
beneficiaries. The program is stronger than ever. This budget
adds an additional couple of years to the Trust Fund life.
But we certainly support the initiative of working with
Congress to preserve the important promises made to
beneficiaries about 45 years ago; that we will provide security
for seniors and the most disabled citizens in this country as
they move forward. We will take advantage of what we think are
incredible opportunities to change the trajectory of the
overall health spending in this country because it is not just
the public programs going broke, but it is the health care
system that is bankrupting business and private payers alike.
Mr. Rogers. Thank you, Mr. Chairman.
Mr. Rehberg. I am going to try to get back to a little bit
of regular questioning. Ms. DeLauro.
AFFORDABLE CARE ACT IMPLEMENTATION
Ms. DeLauro. Thank you, Mr. Chairman.
Madam Secretary, as you started to outline, there are a
number of important protections for patients and consumers in
the Affordable Care Act, and those have already taken effect.
And I know your department has been working with the States to
implement that.
I am going to ask you about the status of the
implementation efforts and the main provisions that are now in
place and working, and what results have been achieved so far.
I will ask the follow-up now that there have been repeated
attempts in this House to cut off funding for the Affordable
Care Act implementation. And if such a funding prohibition were
to become law, what would happen to the department's ability to
implement and enforce rules, such as the ban on excluding
children's preexisting health conditions from insurance
coverage?
Now, I will say that, but I also wanted to commend to my
colleagues something called The Affordable Care Act is Already
a Success. I know the chairman asked about women and children.
I think one ought to take a look at the $14 million in school-
based health centers that increased the number of children
served by about 50 percent, 350 new community health care
services, 2.5 million young adults who gained health care, who
got insurance coverage. And millions of women who are taking
advantage of the no-cost-sharing preventive health services in
2011 will have access to women's preventive health services,
and including those that would be effective in August.
There is a wonderful chart, which I would include in the
record, which shows the 54 million Americans estimated to be
receiving expanded preventive services coverage under the
Affordable Care Act.
[The information follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Ms. DeLauro. And you will see, quite frankly, that children
and women are taking advantage of the new efforts that have
gone into effect.
Madam Secretary, let me ask you to comment on the status of
the implementation, the main provisions in place, the results
so far, and then what would happen if the funding is gone as
some of our colleagues would like to see enacted.
Secretary Sebelius. Well, Ms. DeLauro, I think you have
outlined some of the changes that have taken place, but let me
put it in a couple of buckets.
There are some fundamental changes that have started to
take place in the insurance market. Companies can no longer
deny children with preexisting health conditions the ability to
be in the insurance market. That is great news for parents.
Children and young adults can stay on their parents' plan up to
age 26, and we know that about 2 and a half million of those
young adults have taken advantage of that. Companies can no
longer dump somebody out of the market because of a technical
mistake on their application; the so-called rescissions are now
illegal. Insurance companies will no longer be able to put a
lifetime limit on benefits, and while this affects a very small
number of people, this situation is a life and death situation
when these limits are reached in the midst of a health care
treatment.
Preventive services and new health plans are now available
without co-pays or co-insurance, and that not only is true for
the private market, but it is true for Medicare. And we know
that millions of people are taking advantage of getting the
preventive colon cancer screenings, mammograms and preventive
checkups that they need.
Seniors are now seeing a 50 percent discount in their brand
name prescription drugs when they hit the so-called donut hole,
and that has impacted millions of seniors this year with real
money in their pockets. We have new rates that have been
negotiated for Medicare advantage plans thanks to the tools
that we have gotten. So, more people are enrolling, but the
rates are down, which is, again, good news for seniors.
In addition, new community health center access sites are
being developed. And, that is in a little under two years.
AFFORDABLE CARE ACT FUNDING PROHIBITION
Ms. DeLauro. If the funding prohibition goes into law, what
happens, Madam Secretary?
Secretary Sebelius. Well, I think it is safe to say that a
number of those programs either would vanish or be seriously
threatened. And I am not quite sure what happens with our
ability to operate Medicare programs because so many of the
changes in Medicare are ones that were directed through the
Affordable Care Act. So, we have staffers and funding that are
available through that Act.
Also, I would tell you that the toughest anti-fraud
measures ever passed in this Congress in history are part of
the Affordable Care Act. And as I said, $4 billion was returned
last year, and another $375 million was identified. We have
also built predictive modeling. That is a 7 to 1 return on
dollars in, dollars out. Again, I think all of that is
threatened and jeopardized if the funding goes away.
Ms. DeLauro. I compliment you on the anti-fraud measures.
Thank you.
Mr. Rehberg. Mr. Alexander.
FRAUD AND ABUSE
Mr. Alexander. Thank you, Mr. Chairman.
Madam Secretary, you were just talking about the fraud and
abuse, and we have made some pretty good strides over the
years, as you indicated. But you mentioned the relatively high
rate of return on the investments for fraud and abuse dollars.
But the question is, how much of that money that we are
providing for fraud and abuse goes to the so-called pay and
chase, and how much is actually dedicated toward prevention,
because we know that there could be a lot of fraud and abuse
cases stopped if we prevented it to begin with.
Secretary Sebelius. You are absolutely right, Congressman.
And I think one of the great opportunities we have had with
some of the new resources and some of the new tools given to us
as part of the Affordable Care Act is to build a new data
system, bringing all of the Medicare bills into one place so
that they can be viewed across the Department.
But more importantly is our ability to build a predictive
modeling data analysis system so we can do what the private
sector has done for years, which is to spot errant billing. The
way we identified the doctor in Texas who allegedly is the ring
leader for this massive home health service fraud was using the
kind of data analytics that just did not exist a couple of
years ago.
So, those new tools are all about prevention. But, we still
are doing some of the other techniques like paying and chasing
and trying to spot errant bills before they go out the door.
But I think that our efforts can only get better over time.
Mr. Alexander. And you also stated that the budget makes
Medicaid more flexible, and that by 2013 it would be critical
in working with States to set up the infrastructure for the
exchanges in the health care plan. In Louisiana, that exchange
will be a Federal exchange set up by CMS, which is supposed to
be up and running in about 22 months from now. Yet to date, we
are hearing from the State Medicaid officials that they have
not yet had guidance from CMS on the coordination activities
that will be required between the Federal exchanges to set that
program up.
So, can you tell me what plans HHS or CMS has to do this,
because our State Medicaid programs are concerned, extremely
concerned, about it. And can you also give us more information
on the flexibility mentioned in the testimony?
Secretary Sebelius. I would be glad to, Congressman. We are
working very closely with States, and, in fact, had a number of
meetings just 10 days ago when all the governors and their
staff were in town.
We have put out guidance in terms of the framework for both
the exchanges and the Medicaid enhancement and enrollment.
States will be principally responsible for the Medicaid piece
of the puzzle, whether or not it is in a Federally run
exchange, a State-run exchange, or a partnership program, which
are the three models that States are looking at. And we are
trying to anticipate questions, issues, and have a lot of
hands-on work going on with States around the country,
including your home State of Louisiana.
I can tell you that the Budget request that is before this
Committee that the Chairman referenced earlier, which includes
some enhanced funding for administration at CMS, will be used
for one-time costs to establish the framework around the
Federally-based exchanges. That is a critical part of this
puzzle to make sure that we are up and running for the States
that choose not to operate their own exchanges, or the States
that want to be in a partnership effort.
But the goal will be that when a consumer wants to take
advantage of an exchange program or health insurance, that they
will be able to come through one portal and determine whether
they qualify for an exchange with the tax credit, or whether
they qualify for Medicaid and be pretty seamlessly enrolled.
Mr. Alexander. Thank you.
Mr. Rehberg. Ms. Roybal-Allard.
PREVENTION PUBLIC HEALTH FUND
Ms. Roybal-Allard. Welcome, Madam Secretary.
I co-chair the Congressional Study Group on Public Health,
and in that role I have been closely following the public
health portions of the HHS budget for several years. And while
I commend you for your efforts to address difficult financial
decisions, I am concerned that CDC and SAMHSA budgets are being
cut and back filled with monies from the Prevention and Public
Health Fund, which was intended to get a step ahead of the grim
reality that we spend approximately 70 to 75 percent of our
health care dollars on treating chronic, preventable diseases.
I know that you are a strong supporter of CDC and SAMHSA,
and that you champion the PPH Fund in the Affordable Care Act.
So, I would like to know the rationale for targeting the two
public health agencies for the department's largest budget
cuts, and how you anticipate that they will be able to continue
with their mission.
My concern is heightened also by the fact that $5 billion
was taken out of the Prevention Fund earlier this year to pay
for the District of Columbia fix. And will any of this money be
coming out of CDC and SAMHSA core programs, which our budget
proposes back filling with the PPH Fund?
Secretary Sebelius. Well, Congresswoman, I assure you that
your concerns about a strong public health infrastructure are
certainly shared within our Department and within the
Administration. The President also shares those concerns.
And the use of some of the Prevention and Public Health
Fund dollars for some of the CDC mission is one that we
certainly would not do in a better budget time, but given the
budget constraints, we are both not only enhancing CDC's budget
with some of the funds, but also making sure that the funds
focus on some new initiatives going forward.
SAMHSA has made some recommendations in the Budget, which
we are presenting to you again, to more efficiently, I think,
use some of their funding. It is programmatic restructuring at
the State level that they feel will not diminish the public
health infrastructure, but rather will allow these dollars to
be used in a more flexible way by their State partners, so that
I think in both cases we can make a strong argument that the
public infrastructure is being protected.
Would it be preferable that 100 percent of these budgets
were funded, plus a full use of the Prevention Fund? That would
be the goal, but I think given the restraint on spending and
our interest in making sure we contribute to the overall budget
picture, we feel that these recommendations are probably the
best way to go about that.
SECTION 317 IMMUNIZATIONS
Ms. Roybal-Allard. Well, one of the concerns that I have is
that given the fragility of the support for the Prevention Fund
in today's political climate, that CDC and SAMHSA are made
vulnerable in their ability to continue to carry out their core
functions if this fund is eliminated or used for another pay
for.
Another concern that I have about the proposed reduction is
in the 317 Immunization Program, which, as you know, has been a
huge success in providing the infrastructure for the Vaccines
for Children Program. Vaccination programs have proven to be
some of the most cost-effective approaches to preventing
disease and reducing health care costs, and the Children's
Vaccine Programs are estimated to be a 10 to 1 savings a
paycheck.
A Fiscal Year '11 report to this committee from CDC
estimated that the 317 Program was underfunded by hundreds of
millions of dollars. If this is still the case, how do you
anticipate addressing the impact of cutting this program by $58
million or close to 10 percent?
Secretary Sebelius. Well, again, Congresswoman, I think
that it is the view of Dr. Frieden and the experts who work
with the Children's Vaccine Program that the resources that we
have requested will allow us to continue to run this very
successful program in partnership with States around the
country. We are continuing to do outreach to maximize these
resources, and are hopeful that this cut will not jeopardize
the important public health initiative that the Children's
Vaccine Program represents.
Mr. Rehberg. And you can always provide additional
information for the record, Secretary Sebelius.
Ms. Lummis.
MEDICARE
Ms. Lummis. Thank you, Mr. Chairman.
Madam Secretary, as you know, we spend almost twice as much
on Medicare in this country as we take in. And Medicare cannot
go on like that. It is going to be broke soon. And for the
fifth consecutive year, the Medicare trustees have issued a
Medicare funding warning, which means that general revenues do
account for more than 45 percent of Medicare funding. So, under
this trigger, the President is legally required to submit a
legislative proposal to Congress to address Medicare's solvency
within 15 days of a budget submission.
Now, President Obama's predecessor complied with that law
and submitted legislation in 2008. But President Obama has
never complied. So, was there ever a conversation between you
and the President about complying with the law? And what led to
your decision not to comply with the law?
Secretary Sebelius. Congresswoman, the President has
submitted a Budget which very much complies with the law, and
it is a legislative proposal. And he feels that that is
sufficient to comply with the trigger.
I am one of the Medicare trustees. I know that trigger
exists, and that is why he has a Budget which reduces the
overall deficit and leaves Medicare solvent in the future.
Ms. Lummis. Tell me specifically how his budget complies
with that specific law.
Secretary Sebelius. The budget----
Ms. Lummis. Yes.
Secretary Sebelius [continuing]. Taken as a whole reduces
the deficit and fully funds Medicare. And it does comply with
the Medicare figure.
Ms. Lummis. It reduces the budget by the 45 percent, the
full 45 percent every year that is being augmented by the
general fund?
Secretary Sebelius. I think if you look at the 10-year
Budget that the President has submitted to Congress this year--
--
Ms. Lummis. Does it do it every year?
Secretary Sebelius. Last year, the year before, it does do
it, Congresswoman.
Ms. Lummis. Year by year, is it back end loaded?
Secretary Sebelius. I think it is complying with the law.
That is what we have interpreted, and that is what was
submitted to this committee.
INDEPENDENT PAYMENT ADVISORY BOARD
Ms. Lummis. I have a question about the Independent Payment
Advisory Board in that regard. The President's budget makes
reference to a value based benefit design. What does that mean?
What is a value based benefit design?
Secretary Sebelius. Well, I think if you talk to a lot of
the best health systems in the country, they will tell you that
paying for volume, such as the number of things done to a
person, the number of days in the hospital, the number of tests
run, is probably not only driving up costs, but is
counterproductive because great health care systems, which keep
people healthier in the first place, are financially penalized
by that type of activity. What is more effective is to look at
strategies which actually keep people healthier in the first
place, reduce the acute illnesses, try and eliminate
preventable harm to patients, everything from hospital-based
infections to preventable readmissions. And that is a value
based proposal--there should be a funding mechanism that does
not penalize systems and providers for keeping people healthy,
but rather actually rewards them.
Ms. Lummis. I am told there will not be a rulemaking on
this, so it is going to be up to the board to define these
terms? Is that correct?
Secretary Sebelius. I do not really know what it is that
you are talking about. The Board----
Ms. Lummis. The board will define value based----
Secretary Sebelius. The Independent Payment Advisory Board
will make recommendations to Congress. If a certain trigger is
met by Medicare, if Medicare spending exceeds a projected
level, they will be making recommendations to Congress about
ways to reduce Medicare spending. So, I am not----
Ms. Lummis. So, the Independent Payment Advisory Board will
define value based benefits.
Secretary Sebelius. I apologize. I can go back to the
statute, see where it is in the statute, try and figure out who
defines it. But I do not really know in what context it is that
you are putting that.
The Independent Payment Advisory Board, I can tell you,
cannot make recommendations that ration care, raise beneficiary
premiums or cost sharing, reduce benefits, or change
eligibility. Can they make recommendations about better ways to
deliver health care? I hope so.
Ms. Lummis. And my concern here is that this board will set
Medicare policy unless a super majority of Congress stops them.
And so, if the board has things called like value based
benefits, but nobody knows what that means because there are no
rules, and the board is telling people what that means, how are
we supposed to know?
Secretary Sebelius. Well, again, Congresswoman, the Board
does not have any authority beyond making recommendations to
Congress. A simple majority in Congress can either accept their
recommendations or substitute recommendations. So, it is not a
super majority, it is a simple majority, in both the House and
the Senate, is the way the rules are written.
If Congress fails to act, if Congress fails to keep the
costs of Medicare below the trigger, and then fails to accept
the recommendations, then I am directed to move on the
recommendations. But a simple majority of Congress can act, and
the IPAB, as I say, is prohibited, by law, from rationing care,
raising premiums, reducing benefits, or changing eligibility.
Mr. Rehberg. Mr. Dicks.
HEALTH CENTERS
Mr. Dicks. One of the most useful things about the health
care reform, as far as I am concerned, is the additional
funding to greatly expand the network of health centers,
building on the base of support provided in the Labor, HHS
appropriations bill.
As the Affordable Care Act increases the number of people
who have health insurance, health centers can help provide a
place to use that coverage in areas that are otherwise short of
good primary care. The goal is to help people stay healthy, as
you have mentioned, and to get people detected and treated
before they become seriously ill and expensive. That improves
health and, in the end, it also helps lower costs.
Can you tell us how the department has been making use of
the combination of funding provided in the bill and the
Affordable Care Act to expand health care sites and services?
Secretary Sebelius. Yes, I can, Congressman.
First of all, I want to recognize that I think community
health centers are a topic where there has been a lot of
bipartisan support and a lot of leadership from this Committee
over the years, and certainly have been an enormously important
infrastructure for lower cost delivery of primary care and
preventive care.
We are in the process of not only using the resources
provided by the Affordable Care Act, but also by the Recovery
Act, to expand access points in sites, to match newly trained
health care providers with the most underserved areas. And with
the funding of this Budget, we look forward to the opportunity
to have about 21 million Americans throughout this country in
the most underserved areas have access to this high quality,
lower cost preventive care.
Mr. Dicks. You know, in my district we have a number of
these health care clinics, and I think they provide a
tremendous service to the people in our area. And I have often
thought that with all the controversy, maybe we should have
just expanded this program to take care of everybody who needed
help. It might have been less controversial. But, again, I just
urge you to keep moving forward on that particular program.
HEALTH CARE FRAUD
You mentioned the health care fraud. Now, we had a problem
last year. We did not get the extra money necessary to expand
the program. And as you said, we save $7 for every $1 invested,
so it seems to me this is like the IRS agents that were going
to be cut last year, and we finally got that straightened out.
I mean, I think we should, especially since you have just
had this great success, we should keep the pressure on and get
the right people involved, and try to shut down a lot of these
rackets that are going on around the country.
Secretary Sebelius. Well, Congressman, I share that view. I
think unfortunately our Inspector General's Office was hopeful
that the full funding was forthcoming in the fiscal year 2012
Budget so that it could have expanded some additional
resources. They are going to hold tight now, but we would urge
the Committee to look at the additional $270 million that would
strengthen the efforts, and I think is, again, a real win-win
situation.
We are building this very aggressive partnership with not
only law enforcement and our Inspector General's Office, but
also with U.S. attorneys and inspectors on the ground. And we
now have strike forces in nine cities. We would like to expand
that further. We think that the efforts are really beginning to
pay off, and think that anything that this Committee can do to
make sure that those investments are fully funded would be very
much, not only appreciated, but I think appreciated by the
taxpayers.
EXCHANGES
Mr. Dicks. One of the increases you are seeking at CMS is
for expenses involved in setting up the new insurance exchanges
that are scheduled to begin operation in 2014. What has to
happen in order for this to move forward?
Secretary Sebelius. Well, Congressman, the original
Affordable Care Act passed and signed into law in March two
years ago appropriated $1 billion for implementation of health
reform. At the time, the Congressional Budget Office estimated
that it would cost about a billion dollars a year in
implementation costs until it was fully realized.
I think the good news is that we have spent under that
estimated amount. We are now two years in, and have spent about
$475 million. But the remainder of that billion dollars we
anticipate being gone by the end of fiscal year 2012. We have
requested in this Budget a new----
Mr. Dicks. Does the money expire? Is that what you are
saying?
Secretary Sebelius. No. It is being expended and drawn
down.
Mr. Dicks. Okay. But it will be gone.
Secretary Sebelius. That is correct, so that this fiscal
year 2013 request is for a billion dollars, $200 million of
which will be spent on Medicare and Medicaid, and about $800
million will help build the primary infrastructure, a lot of
one-time costs for the Federally-run exchanges.
Mr. Dicks. Thank you, Mr. Chairman.
Mr. Rehberg. Thank you. Ms. Granger.
DRUG SHORTAGES
Ms. Granger. I just want for a comment to second what Mr.
Dicks said about community health centers. The ones I have been
involved in have done excellent work.
And my question is, as you know, there have been shortages
of critical drugs, including drugs to treat pediatric cancers
over the past years. I do not know of anything that really is
more serious than that. But my understanding is that there are
several potential sources of this problem: the closing of
factories that produce the pharmaceuticals, low payment rates
for these drugs, and a shortage of the raw materials that
produce these pharmaceuticals.
I know the FDA has taken action to require companies to
provide FDA notification of upcoming shortages, but what are
you doing to solve this problem of shortages of really critical
pharmaceuticals?
Secretary Sebelius. Well, Congresswoman, I think this is a
very high priority within our Department, and we are really
looking at all the tools that we have.
Currently we do not have a mandatory reporting, and we are
trying to work with Congress to see if that can be put into
place because what we know is that since the President's
executive order was signed in October, about 100 additional
shortages have been eliminated by companies ramping up their
voluntary reporting. So, that is a big step.
We also are expediting at the FDA re-inspections, looking
around, the importation possibilities as drug shortages become
available. At least as far as we can determine, and we would be
happy to share this with you, the pricing issue is really not
as much of an issue as some of the others because the prices
are negotiated well in advance by the purchasing contracts. And
so, it is not the end user that is negotiating the price; it is
really kind of pre-determined at the hospital level.
But certainly capacity is being expanded with the
manufacturers, and I think that is another very critical piece
of the puzzle. And we are committed to expediting those
inspections as rapidly as possible.
But it is an issue that we are trying to analyze what
levers we have and how fast we can move. But I think the
mandatory reporting that is currently before Congress would be
a big step.
Ms. Granger. Good. Thank you.
GRADUATE MEDICAL EDUCATION PROGRAM
The second question, at the budget hearing last year, we
discussed your decision to eliminate the Children's Hospitals
Graduate Medical Education Program funding. And at that
hearing, you said that this was one of the toughest budget cuts
that had to be made in this request, and in better budget
times, you said, you would not have recommended this. I was
pleased that your budget request for this year did not zero out
this funding, but it still proposed a severe cut in the
program.
When I look at the funding for HHS that was included in the
health care law, I was surprised that you do not think that you
are in better budget times. Your budget request for 2013
includes funding for implementation of the health care law,
including the $1 billion increase for CMS that you cited in
your testimony.
So, could you please help me understand how new programs in
the health reform law were supported in your budget, but the
Children's Hospital Graduate Medical Education Program, a
program you acknowledged as having had substantial success, was
subject to a severe cut?
Secretary Sebelius. Certainly, Congresswoman.
The Budget request that we have pending before this
Committee is our estimation for what it will take to cover the
direct costs for the pediatric residents that are in training.
What it does not cover is the indirect costs of those
residents, so we are hopeful that this will preserve the number
of teaching slots.
We also are looking at the number of other programs which
also support training in pediatrics, including the National
Health Service Corps. We have a new teaching health center
graduate education program. Many of these are funded through
the Affordable Care Act, as you just have referenced, so we are
focusing some of those resources on this very critical area.
The primary care training and enhancement, we have got
scholarships for disadvantaged students, including those
training to be pediatricians, maternal health and child
training programs, a new pediatric loan repayment.
So, using some of the Affordable Care Act funding for the
workforce initiatives, we are trying to redirect that funding
as much as possible to focus on primary care, and particularly
on some of this pediatric training. So, we are looking at the
range of issues. But the children's health graduate medical
education payments are designed to support the direct costs of
those pediatric residents.
Ms. Granger. Thank you.
Mr. Rehberg. Mr. Jackson.
Mr. Jackson. Thank you, Mr. Chairman, for yielding me the
time, and let me welcome Secretary Sebelius back to our
committee. Let me also----
Secretary Sebelius. It is not your birthday this year. What
is the deal with that? Where are the cupcakes? I mean, you
know----
Mr. Jackson. Thank you for reminding me. [Laughter.]
Secretary Sebelius. Just to put you all on notice, you
know.
Mr. Jackson. We actually did talk about that. [Laughter.]
Mr. Jackson. I trust, Mr. Chairman, that did not come out
of my time. [Laughter.]
LOW INCOME HOME ENERGY ASSISTANCE PROGRAM
Mr. Jackson. Let me also apologize in perfect candor for
the position that we have put the Secretary of Health and Human
Services under because, from my perspective, this Congress'
inability, Madam Secretary, to pass a jobs bill and recognize a
real need for the American people, that we should be putting
Americans to work. If there were more Americans working, we
would be paying more money into the Treasury. And many of the
programs for which you have had to make difficult cuts, we
would be in a position to not look at zeroing them out.
Towards that end, in 2011, the Low Income Home Energy
Assistance Program served about 460,000 households in Illinois,
which 83,955 recipients were in the 2nd congressional district.
In the State, 50 percent of the funding was allocated to
families earning below 75 percent of the Federal poverty level,
and 24 percent was allocated to recipients between 75 and 100
percent poverty. Thirty percent of the recipients are elderly,
33 percent disabled. Twenty-two percent are under the age of 5.
And these services are vital for the well-being of many of my
constituents.
Madam Secretary, the Administration for Children and
Families Budget states that, ``Funding is prioritized for
programs protecting society's most vulnerable.'' Clearly, the
LIHEAP Program serves the most vulnerable among us, so why does
the Administration's budget propose such a significant decrease
in the LIHEAP Program? And would you also comment on the
expected impact of the Administration's proposed 33 percent
decrease from Fiscal Year '11 for LIHEAP and what its impact
will be on low income recipients?
Secretary Sebelius. Well, Congressman, this is a very tough
budget cut. It is about $450 million above the 2012 Budget, but
we understand that it still is seriously under the budget from
two years ago where there was a substantial increase in LIHEAP,
and we have not been able to sustain that increase.
There is no doubt that the cuts fall on the low income
families in a more difficult way, and certainly there is
nothing more important than heating and cooling when you are
talking about people's ability to stay in their homes.
So, I think that this will have an impact on folks. We are
trying to look at how much we can allocate at the front end.
And, as you know, we hold some funds in reserve to make sure
that as temperatures change over the course of a season, and
States have different needs for this funding, we can allocate
it to not leave people in dire circumstances. But it is a very
difficult cut.
HEALTH CAREERS OPPORTUNITY PROGRAM
Mr. Jackson. Madam Secretary, I know you have a difficult
task in selecting how to spread proposed funding reductions
across the budget proposal. However, I am disappointed in the
Fiscal Year 2013 recommendation to eliminate the Health Careers
Opportunity Program, or HCOP. The budget justification explains
this reduction by stating the funding allocations for training
are being focused on programs that have a direct link to a
training program for primary health care professionals.
Unfortunately, this does not take into account the importance
of preparing individuals from disadvantaged backgrounds or
medically underserved communities for a health career.
Study after study demonstrates that individuals from
medically underserved communities are far more likely to return
to their communities as a health professional. If no effort is
made to provide opportunities for disadvantaged students from
medically underserved communities, like through HCOP, the
training funds are more likely to be distributed among those
who will end up serving in non-medically underserved
communities. I do not see how this helps reduce health
disparities, and it does not, from my perspective, narrow the
health status gap.
Should we not be dedicating our limited funding to a
demographic that is in greatest of need?
Secretary Sebelius. Well, Congressman, I think that, again,
we are trying to do that. There are definitely lines of funding
specifically aimed at minority and underserved communities.
There is almost a $50 million scholarship programs for
disadvantaged students who want to become health professionals.
We have the National Health Service Corps, which, as you know,
not only trains folks, but pays off loans for people who agree
to serve in underserved areas, and they are doing that with a
particular focus at this point to not only reaching into
underserved communities to recruit those trainees, but also
looking at returning veterans. We have a commitment to train
and hire veterans returning who have qualified skill sets. And
that program has tripled over the last three years. We have
some primary care training and enhancement programs that are,
again, looking at streams of funding for underserved
communities and for students coming out of minority
communities.
So, I would agree that that is a huge issue, and one that
we are trying to pay careful attention to as we expand these
programs.
Mr. Rehberg. For the record, you got an additional 30
seconds beyond the 20 we wasted.
Secretary Sebelius. And we still do not have cupcakes.
Mr. Jackson. Forty-seven and 30 seconds. Thank you, Mr.
Chairman.
Mr. Rehberg. Mr. Kingston.
HEALTHCARE PREMIUMS
Mr. Kingston. Madam Secretary, putting on your hat as a
Medicare trustee, I am concerned, and I would think that the
Trustees would be very concerned, with some of the rosy
assumptions of the President's budget. Some would call them
gimmicks. For example, under the category of deficit spending,
he counts war savings, which according to the recent
developments in Afghanistan even though the President says he
has calmed it down because of the Koran burning, it does not
look like the war is going to wind down exactly as planned. He
also makes some great assumptions about tax increases and
economic growth.
I do not know if you have seen those, but I would recommend
as a trustee that you go back and review that because it would
appear to me that his assumptions of deficit reduction are
really irresponsible, very political, but also to the trustees
they would be considered irresponsible. So, I would recommend
that to you.
Also, you had said that in response to the success of the
health care bill that there is a high enrollment of seniors,
children, and high-risk people. And I understand that. But
reacting to free money and government money is not necessarily
a sign of success. What I am more disturbed about is that the
President claimed that Obamacare would bring down the costs
premiums for the average middle class family to $2,500, and yet
the Kaiser Foundation estimates that the total premiums have
gone from $12,860 in 2008 to $15,073 per year. So, instead of
decreasing the American middle class families' premiums by
$2,500, Obamacare has, in fact, increased premiums by $2,213.
And the point being is when we say, well, this is
wonderful, the kids are now,--and I do not know why we call
people the age of 26-years-old kids, but now they are taking
advantage of some good program and they get to stay on mom and
dad's health care. There is nothing really remarkable about
that. It is just, hey, free money, come and get it. And yet,
when they look at their premiums, the middle class families are
picking up the tabs.
So, as you may suspect from my comments, I have some
philosophical disagreements with the Administration on this
program. But I want to say that to you as a trustee because to
me it scares me to think that the trustees are really counting
on the Obama budget to give a realistic picture of the future
of Medicare when we do know Medicare is going broke. And I
would assume that the trustees would be concerned about that.
Secretary Sebelius. Mr. Kingston, I think the trustees are
very concerned about the long-term solvency of Medicare, and
are eager to implement the strategies that I told you are
already beginning to show very promising impacts.
I would say in terms of your analysis of the private
insurance market, you are absolutely correct. And it is even
more glaring if you could look at what has happened in the
decade before the passage----
Mr. Kingston. So, well, you would admit then that the
President----
Secretary Sebelius. Mr. Kingston, could I just respond to
the----
Mr. Kingston. Well, let me reclaim the time then. You would
admit that the President's assumption on claims that premiums
were going to be reduced $2,500 was wrong then, because that
was what he was claiming the premium savings would be.
Secretary Sebelius. No one ever claimed that premiums would
be reduced until there was a new insurance market, which does
not exist yet.
Mr. Kingston. Okay.
Secretary Sebelius. So, you are absolutely right. You are
looking at what has happened to the private insurance market,
but it well pre-dates the passage of the Affordable Care Act.
This market is on a death spiral where younger and healthier
small business owners, and others, are leaving the market as
health care costs spiral. Our plan includes a new insurance
exchange run at the State level or the backup plan to be run at
the Federal level, because the market is broken. It is broken
for small business owners. It is broken for individuals buying
their own policies. They are paying the brunt of these
skyrocketing costs.
And you are absolutely right, that has not changed yet
because the new market is not in place until after 2014.
LOBBYING
Mr. Kingston. Well, when we hear some of the assumptions
that are made--for example, the stimulus bill was supposed to
bring down the unemployment to, I think, 6 and a half percent,
and we are still lingering at around 9 percent. So, I get very
concerned when I hear the government making these great
promises.
Let me ask you this very specifically. The Prevention and
Public Health Fund is about a billion dollar fund. And part of
the resources by the Philadelphia Department of Public Health,
which received a $10.4 million CDC grant, were used to lobby
for a 2 cent per ounce tax on sugar sweetened beverages. And I
was wondering, is that the purpose of that grant, to let a
local government lobby for a higher tax increase?
Mr. Rehberg. I will ask you to answer very quickly because
we are trying to make it all the way through all of our
members, and you asked the question right at the end of your
time. So, if you could answer very quickly.
Secretary Sebelius. Well, our long-term guidance, both
within the Department and through OMB to grantees, has always
prohibited lobbying either at the Federal level or lobbying at
the State level.
The Congress added some additional language to our fiscal
year 2012 Budget which is new, and for the first time talked
about grantees not being able to either lobby administratively
or to local units of government. We are updating our guidance
and going to make sure that that happens.
Nothing prohibits any group from using their own funds to
lobby, and nothing prohibits them from using Federal funds to
provide technical assistance or education.
Mr. Kingston. Thank you.
Mr. Rehberg. Ms. Lee.
H.R. 2954
Ms. Lee. Thank you very much. Hello, Madam Secretary. Good
to see you.
As you know, I introduced a comprehensive bill this
Congress--it is H.R. 2954 on behalf of the Congressional Asian-
Pacific American Caucus, the Hispanic Caucus, and the Black
Caucus--to help address racial and ethnic disparities.
Now, this bill, it actually builds on the health care
reform bill and includes additional tools necessary to address
these challenges, especially around the area of data
collection, culturally and linguistically appropriate health
care and health information technology.
Now, many challenges, but one let me call your attention
to. A study released last week showed that only 42 percent of
eligible limited English proficient adults in California are
expected to take part in the health benefit exchange. This
means that some 100,000 Californians will miss out on health
care expansion due to language barriers.
Now, I was pleased to see that you launched the action plan
to end health disparities, but I am also concerned about some
of the budget cuts that may undermine now all of your efforts,
especially the 26 percent cut in the Office of Minority Health.
And I understand the consolidation and coordination
requirements. And certainly your agency has done a heck of a
lot more than Secretary in any Administration in the past. But
I am worried now that with the progress being made that this
cut is going to really, really hurt.
And so, I would like to just get a sense of how you intend
to provide targeted support to help reduce racial and ethnic
disparities in health care, and also this whole issue with
limited English individuals.
And then, secondly, nursing shortage. I was glad to see the
$20 million for Advanced Education Nursing Program. There is a
nursing shortage, yet about 40 percent of new graduates cannot
find jobs. And so, there is this huge disconnect. And I have an
100-year-old aunt, and 87-year-old mother, a 91-year-old aunt,
a sister who has multiple sclerosis. I am in hospitals and
emergency rooms all the time. And every time I am there, there
is a traveling nurse. And I am trying to get to the bottom of
this.
And they are wonderful. They know what they are doing, but
I go outside of the hospital, and then I am faced with my
constituents who cannot get a job as nurses, even though they
have graduated and have the credentials and experience.
So, I am trying to get to the bottom of this and try to see
what we can do about making sure that nurses, especially
minority nurses, get these jobs because they are just not
getting them.
Secretary Sebelius. Well, let me try to address the nursing
issue first because it is certainly one that we share. And what
we know is that without a sustained production of new nurses in
the workforce, we are going to be in terrible trouble. So, we
are trying to use the resources directed to us to expand the
pipeline, and expand the capacity, and continue to train
nurses.
Having said that, we also know that there is not
necessarily an accurate match between where the nurses are
located and where the shortages are. Our Health Resources
Services Administration is trying to do updated analysis of
that pipeline, making sure that we are trying to get people to
the spots where they have the training, locate centers where
they can be trained. The expansion of the health center and the
expansion of nurse run health centers is a part of that
strategy. But we would love to continue to work with you. I
know it is a huge issue for you.
I also think that, Congresswoman, we do have for the first
time plans that are coming into place not only around the
closing the gap on health disparities with very clear
measurements and a timeline, thanks to a lot of the work of
your leadership in the Congress. But in terms of the outreach
to people who might be in the most underserved communities
about the opportunity to enroll in health plans, that is
certainly part of our outreach effort as we go forward.
In your State of California where they are likely to have a
State-run center, we are working closely with the State to look
at their resources to make sure we reach in, and the Federally-
run centers will do the same thing.
But getting people the information, particularly in the
most underserved communities, about how they can take advantage
of the benefits and the new health insurance opportunities is
one of the big challenges.
Ms. Lee. Thank you. Mr. Chairman, I would like to submit
the rest of my questions for the record.
Ms. Lee. And then, Madam Secretary, I would like to follow
up with you with regard to the tri caucus disparities bill and
talk about some of these policy and programmatic initiatives
that we may be able to work on together.
Secretary Sebelius. Great. Thank you.
Ms. Lee. Thank you.
Mr. Rehberg. Mr. Flake.
HEALTHCARE PREMIUMS
Mr. Flake. Thank you. Madam Secretary, I want to follow up
on a question that Jack Kingston talked about. This $2,500
reduction in premiums was not just one campaign promise tossed
out once. It was said again, and again, and again, and again. I
have actually 15 instances here of just in a few months where
the President said we will start by lowering premiums by as
much as $2,500 per family. Sometimes he said ``by as much as,''
and other times just we will lower it by $2,500. I know you are
saying that really cannot be accomplished until you have a
State exchange, which we will not have until 2014.
Tell me, was that $2,500 promise a promise to lower
premiums simply by shifting the cost to the taxpayer? And, if
so, how does that jive with the budget figures and the
assumptions that have been made going ahead? And if not, if it
truly is a savings, tell me what is there inherent in this plan
that drives down cost? I mean, there is not real competition
that I can see. There is no tort reform. There are not
requirements forcing insurance companies to compete across
State lines. You just do not have things that typically in
markets bring down costs.
So, I guess the first question is, is that $2,500 figure,
is that savings or is that a cost shift to government, to
taxpayers?
Secretary Sebelius. It is not a cost shift to government,
Congressman. It is projected savings based on, again, not our
analysis, but by the Congressional Budget Office.
I would disagree that there is not any competition. The new
rules around an insurance exchange for the first time will
introduce real competition into the insurance marketplace. They
will have to compete for service and price as opposed to cherry
picking, who might not get sick and could be included in
programs. Consumers for the first time ever will have a very
transparent way of making choices. They cannot be locked out or
priced out of the market. And there is an estimation that there
will be a serious reduction in overhead costs.
And we are already beginning to see some of that, glimpses
of some of that with the 80/20 rule, the medical loss ratio,
which requires companies for the first time in history to spend
80 cents out of every premium dollar on health expenses, not
overhead costs. And we are seeing companies begin to reposition
and remarket. And for the first time in this calendar year,
consumers will start to get rebates based on the fact that
companies did not meet those costs estimates.
So, there are a series of steps. Small business may be the
biggest winners because they are currently paying 18 to 20
percent more for exactly the same policy because they do not
have any market leverage. They will be included in a larger
pool by virtue of being part of an exchange. They will see cost
reductions.
So, the cost reductions are real and based on competition,
lower overhead costs, and the ability to be in a pool situation
which most people cannot get unless they are in a large
employer plan.
Mr. Flake. I am glad you mentioned the CBO because in 2008,
the President promised his health care would cost between $50
and $65 billion a year when fully phased in. That is not what
the Congressional Budget Office is saying. They are actually
saying that Obamacare will cost $229 billion in 2020 and $245
billion in 2021.
What is responsible for the fourfold increase in projected
cost?
Secretary Sebelius. Congressman, I do not know exactly what
you are referencing. I would be glad to get you an answer very
specifically in writing. But I really do not know what CBO
numbers you are citing and what you are comparing them to. So,
if you could provide those numbers then I would be delighted to
get you an answer.
Mr. Flake. Let me just say in the time remaining, this
assumption that we are going to get $2,500 in savings, net
savings, not shift to the taxpayer when these exchanges start,
is fanciful at best. I just do not know how to say it because
nothing that has happened so far has suggested that there is
anything really to drive down costs here. And I think that
these are rosy assumptions.
I yield back.
Mr. Rehberg. Ms. Lowey.
TITLE X
Ms. Lowey. Thank you, and welcome, Madam Secretary, and
thank you for your important work. And I apologize, but I had
an urgent meeting I had to run to.
An important component of health reform is the requirement
that insurers provide free preventive services to women.
Contraception we know is beneficial for women for a number of
reasons, ranging from planned pregnancy to decreasing the risk
of some cancers. In addition to the many health benefits,
contraceptive coverage provides significant economic benefits
for American families and the government.
It was really disappointing for me that the last two
spending bills this subcommittee wrote, H.R. 1 from last year
and Chairman Rehberg's draft Fiscal Year '12 bill, would have
eliminated funding completely for the Title 10 Family Planning
Program.
Can you share with us your views? Does reducing access to
contraceptives increase overall health costs?
Secretary Sebelius. Well, Congresswoman, currently Title X
serves about 5 million individuals a year who access Title X
clinics. What we know is that they are often younger women.
About 3 million of them are under 25 years old. And
comprehensive coverage includes both family planning and
related reproductive and preventive health services, such as
everything from HIV prevention, education screening, reduces
not only unintended pregnancies, but infertility and related
morbidity issues.
It is a health issue for both women and their families that
has been enormously effective through the Title X program.
Ms. Lowey. Thank you. I thought you were going to go on.
CDC GRANT CONSOLIDATIONS
I also want to talk to you about the CDC consolidation. In
addition to concerns I have with the overall proposed funding
level for the CDC, and along with the proposals Congress
previously rejected to consolidate numerous programs, including
chronic disease, birth defects, developmental disabilities, and
environmental health.
I understand that the fiscal climate may make it difficult
to fund disease-specific programs at the levels we might seek,
but providing a relatively small amount of funding to specific
diseases facilitates partnerships with national organizations
that really do tremendous work improving public health.
I have spoken with Dr. Frieden about my concerns with
consolidation, and I had hoped that the Administration would
abandon its consolidation plan, particularly after Congress
rejected the idea last year.
Could you tell us why the department is again proposing to
consolidate so many programs within the chronic disease, birth
defects, developmental disabilities, and environmental health
accounts? What does it accomplish? Why is it a good idea?
Secretary Sebelius. Well, Congresswoman, I think a lot of
the budget recommendations in the CDC budget are driven by
conversations and consultation with our partners at the State
level. And as you know, a lot of State public health budgets
have been decimated over the last several years as resources
have been slashed.
What we are trying to maximize is the flexibility at the
State level to maximize public health impact by addressing
public health needs, not in siloed programs, but in a flexible
stream of funding where the States then can address their most
pressing needs.
So, this recommends, as you say, consolidation of chronic
disease, and birth defects, and developmental disabilities,
asthma, and the Healthy Homes Program, in a way to try and use
these resources as efficiently and effectively as possible to
get to the public health goals I think we both share.
NATIONAL INSTITUTES OF HEALTH
Ms. Lowey. Well, I hope we can continue that discussion
because I think I strongly disagree with you on it.
Just briefly in the couple of, what, seconds, minutes I
have left, the President talks about winning the future. And I
agree that we have to prioritize investments that make sure
more competitive. But it seems to me that investing in the NIH
is absolutely essential. I would increase it because not only
is it the global leader in innovative life-saving biomedical
research, it supports more than 325,000 high paying research
positions at more than 3,000 facilities across the country. So,
I am sure we can all agree on that.
Why does the budget request not include an increase for the
National Institutes of Health?
Secretary Sebelius. Again, Congresswoman, I think that NIH
is about 40 percent of our Budget, and we are trying to
maximize resources. Sharing your interest in biomedical
research, what I can tell you is that the current Budget will
allow the NIH to distribute about 672 new grants, about a 7.7
percent increase in grants. So, we will continue to enhance the
research going on.
Thanks to the work with Congress last year, the new
National Center for Translational Sciences is moving forward.
The Cures Acceleration Network is moving forward. They both
have additional resources in this year's Budget. So, Dr.
Collins feels that this presentation, again, given our Budget
restrictions, is the way to maximize grant opportunities,
maximize strategic opportunities, and keep life-saving
medicines moving forward.
Ms. Lowey. Thank you. Thank you.
Mr. Rehberg. Secretary Sebelius, as we started late, I want
to respect your time. Do you have a little additional time that
you could stay? We figure that if we started the second round,
as I look at the number of members here, it would take about a
half an hour.
Secretary Sebelius. I do not have a half an hour, Mr.
Chairman, I am sorry. I was told that 4:00 was the----
Mr. Rehberg. If you can grant us at least 10 minutes, I
could ask an additional question and the ranking member, Ms.
DeLauro, could ask an additional question. Can you grant us at
least 10 minutes?
Secretary Sebelius. Yes, sir.
STRATEGIC NATIONAL STOCKPILE
Mr. Rehberg. Thank you very much.
First of all, and I may yield some of my time if you want
to finish your questioning having to do with the lobbying,
because I know I cut you off. But I wanted to ask you about the
Strategic National Stockpile. And as you know, that is the
preparedness providing resources, 12-hour push packages and
managed inventory, chem packs, Federal medical stations.
And I noticed in the President's budget, and I am sensitive
to this because I used to be a lieutenant governor. Disaster
preparedness is something that has been very important to me.
And I noticed that the President's budget proposes a reduction
in the Strategic National Stockpile by 9 percent or $48 million
in the Fiscal Year 2013. I just would like to have you explain
how such a large reduction can possibly not impact the national
preparedness posture.
Secretary Sebelius. The Budget request will allow the
Centers for Disease Control and Prevention to replace the high
priority expiring counter measures, such as small pox and
antibiotics for the treatments of Anthrax. And that is one of
the issues that we have to pay careful attention to--what is
going out of stock.
But it will continue the ability to explore the methods of
distribution, implement the national policy for Anthrax-related
event, and continue to purchase, and warehouse, and manage
medical counter measures. So, we feel that this is an important
initiative moving forward.
Mr. Rehberg. Thank you, Secretary. I am going to follow up
with a letter----
Secretary Sebelius. Okay.
Mr. Rehberg [continuing]. Because I do want to address it
in the larger bill. And so your staff has an opportunity to
come up with an explanation or a description. I do not disagree
necessarily. I just need to find out. I want to find out.
Secretary Sebelius. Sure.
Mr. Rehberg. Mr. Kingston, I will yield three minutes.
LOBBYING
Mr. Kingston. Thank you, Mr. Chairman.
Madam Secretary, we may need to just put these on the
record, but I guess one of the questions is since the
Philadelphia Department of Public Health was acting not in
accordance with the law, I would like to know what happened,
for example, if somebody abuses a grant like that, are they
banned from getting future grants?
Secretary Sebelius. Mr. Kingston, I do not know that they
did not act in accordance with the law. I do not know if they
used their funding or Federal.
Mr. Kingston. Oh, I thought you said----
Secretary Sebelius. The law with regard to Federal funding
being used for certain purposes.
Mr. Kingston. Okay. We will follow up with you on that
then.
Secretary Sebelius. Sure.
SUPPLEMENTAL NUTRITION ASSISTANCE PROGRAM
Mr. Kingston. And now, on WIC, there is a limited menu. As
you know, it is for nutrition, whereas on SNAP there is not.
And I know that is not your jurisdiction. But recently, the
USDA turned down the City of New York or New York City who
wanted to try a limited menu for SNAP. And I would be
interested in your thoughts about that, but only academically
because I know it is not in your jurisdiction, or perhaps some
of it is. I am not certain.
Secretary Sebelius. No, we do not have jurisdiction over
the program.
Mr. Kingston. But if you had any thoughts along that line,
that would be of interest to me.
And then I wanted to mention also, you do have some overlap
on food deserts. You have an interagency working group or
anything like that on food deserts?
Secretary Sebelius. The Department of Agriculture did some
mapping, and we have a grant program that we run out of the
agency----
Mr. Kingston. But you use the same definition.
Secretary Sebelius. Pardon me?
Mr. Kingston. You use the same definition?
Secretary Sebelius. We use their definition. We do not----
Mr. Kingston. Do you think that that definition should be
revisited, because one of the things is that if you are in an
urban area a mile away from a grocery store, you are in a food
desert, which I would think in so many cases is ridiculous.
Have you looked at their definition?
Secretary Sebelius. We have, sir.
Mr. Kingston. And you think it is a good one?
Secretary Sebelius. Well, I think it is very difficult for
a family buying groceries if they have to walk a mile with bags
of groceries. It may be too far to get healthier food, so----
Mr. Kingston. You really think that.
Secretary Sebelius. I do.
Mr. Kingston. Because I suspect in this room most of us
might live a mile away from a grocery store. And it is a
broad----
Secretary Sebelius. And you walk a mile to get to the
grocery store?
Mr. Kingston. Well, I do not think the walking part is in
the definition.
Secretary Sebelius. Well, I am just suggesting to you, sir,
that----
Mr. Kingston. But it is not in the definition, so, I mean,
you know, it would also be bad if, you know, if you did not
have a driver's license, but that is not in the definition, so
that is not relevant.
Secretary Sebelius. We would be happy to look at the
definition, but----
Mr. Kingston. I think we should in terms of the spirit of
what a food desert should be. And I have interest in that, so
let me yield back.
Mr. Rehberg. Okay. Ms. DeLauro.
Ms. DeLauro. Thank you very much, Mr. Chairman.
Madam Secretary, I am going to try to get in two questions.
I will be brief.
CONSUMER OPERATED AND ORIENTED PLANS
Co-op insurance plans, I know that the Affordable Care Act
authorizes loans to set up these co-op health plans, to
increase competition. These are non-profit -profit health
insurance with customers making up the majority of the
governing boards.
I understand you have just made 7 loans for startup costs,
in New Mexico, Oregon, Iowa, Nebraska, Montana, New York, New
Jersey, Wisconsin. There have been a number of attempts to
reduce or eliminate funding for the co-ops. In the 2011
appropriations bill, $2.2 billion was rescinded. The 2012
Labor, HHS bill would have rescinded all remaining funding by
shutting down the program before it made its first loan. In the
final conference agreement we were able to considerably reduce
the size of the rescission.
What is your view of the prospects for the co-op loan
program? Is the department getting good applications? Do you
think the program has promise? What would be the consequences
of further rescissions?
Secretary Sebelius. Well, Congresswoman, it is designed to
have competition in the marketplace, and as we have heard, that
is a good thing. When monopolies exist among insurance
companies, often it is very difficult to get pricing down.
Competition tends to drive down prices. So, I think the program
has great promise, and we have had some good initial
applications, and we look forward to more.
AFFORDABLE CARE ACT TRANSPARENCY PROVISIONS
Ms. DeLauro. I want to talk about transparency in the
Affordable Care Act.
In 2009, less than 1 in 5 of the insurance plans that sold
in the individual market included comprehensive maternity
coverage. Now, maternity care is one of the 10 bundles of care
that must be covered by plans as part of the essential health
benefits package.
The agency announced groundbreaking transparency
provisions. Plans that participate in the health insurance
exchanges will have to use a helpful, concise, easy to
understand summary of benefits coverage. I have an example of
the form right here and the summary of important questions. Two
clear examples of how the insurance plan would cover two
things: having a baby and managing type 2 diabetes.
Can you tell me when the provision will be implemented?
When will our constituents be able to use these helpful pieces
of information instead of the hundreds of pages that the
insurance company throws out at you and then you have to try to
figure it out. Do you believe that it will help consumers make
decisions about their health insurance options?
Secretary Sebelius. I do. A couple of things. I have just
been told that the implementation for the transparency is
October 1st of this year, so that the forms will begin to be
revised, and folks will not have to wade through pages of
small, fine print. And as a former insurance commissioner, I
know how complicated that is for people to find out what
actually their coverage includes.
We also, as you know, Ms. DeLauro, have in place right now
in Healthcare.gov a website where for the first time consumers
can get comparative information about plans, and deductibles,
and prices in their own neighborhoods. That has never existed
before, and we were directed to do that by the Affordable Care
Act, and I think it has been an enormously important tool for
people to find out about what they had in the marketplace, and
how much it was going to cost before they went to an agent to
try and buy insurance.
PREVENTION PUBLIC HEALTH FUND
Ms. DeLauro. Thank you for that. Also thank you on the
anti-fraud measures. I think you have laid that out.
A final question, if I can get it in, and this is about the
Prevention and Public Health Fund, which my colleagues keep
talking about. But for the past two appropriations cycles,
Congress has failed to exercise its authority to determine the
uses of the fund. I believe that is because of a reluctance on
the part of some of our majority colleagues to have anything to
do with anything connected in any way with the Affordable Care
Act. As a result, the priority setting for the Prevention and
Public Health Program has been turned over to the executive
branch.
Tell us your approach, what that has been, to allocating
and using amounts of the Prevention and Public Health Fund.
What have you accomplished and what do you hope to accomplish
in 2013? You are not going to have a chance to answer all those
questions. We can follow up. But at least what is your
approach, and what do you think you have accomplished?
Secretary Sebelius. Well, I think the approach is, as it
was designed, to focus on strategies that actually reduce
health costs and create a healthier population. Tobacco
prevention, the new Community Transformation Grants, which are
focusing on enormously promising health strategies, HIV/AIDS
work, public health workforce, State epidemiology and
laboratory capacity, coordinated disease prevention, are all
areas that have been funded. And we would look forward to
working with Congress on the allocation.
As you know, since there was no directed allocation by the
Appropriations Committee, we did have informal conversations
with bipartisan staff members from both the Appropriations
Committees in the House and Senate. I tried as much as possible
to follow their direction, but look forward to having those
conversations in the future.
Ms. DeLauro. Thank you. Thank you, Madam Secretary. Thank
you for the job you are doing.
Mr. Rehberg. Thank you.
Members are allowed 14 days to submit questions for the
record.
Mr. Rehberg. Secretary Sebelius, I thank you for making
your presentation today, for being patient with us, and giving
us a little extra time. Thank you.
Secretary Sebelius. Certainly.
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Tuesday, March 20, 2012.
BUDGET HEARING FOR DEPARTMENT OF HEALTH AND HUMAN SERVICES--NIH
WITNESSES
FRANCIS S. COLLINS, M.D., PH.D., DIRECTOR, NATIONAL INSTITUTES OF
HEALTH (NIH)
THOMAS INSEL, M.D., ACTING DIRECTOR, NATIONAL CENTER FOR ADVANCING
TRANSLATIONAL SCIENCES (NCATS) AND DIRECTOR OF NATIONAL INSTITUTES
OF MENTAL HEALTH (NIMH)
Mr. Rehberg. Good morning, and welcome. Let me begin by
thanking the subcommittee for providing the leadership that
resulted in an increase in Fiscal Year 2012 to support basic
science. We recognize NIH's mission is to invest in basic
biomedical research. We made policy choices to support the
pipeline of investigators and the extramural basic biomedical
infrastructure across the Nation.
The Fiscal Year 2012 Appropriations Act included a number
of important items and statements of managers' provisions, and
I expect NIH will ensure that both the letter and the spirit of
this language is followed.
Specifically, our efforts provided a much needed base
increase in specific language for the Clinical and
Translational Science Awards (CTSA) and Institutional
Development Awards (IDeA) programs.
We also continue support for the National Children's Study
(NCS), which is of interest to both the ranking member and
myself as co-founders of the Baby Caucus. The NCS is a
necessary study of 100,000 children from birth to age 21. It
aims to examine the effects of the environment on growth,
development, and health of children across the United States.
The Fiscal Year 2013 budget request provides vaguely
described changes to the study and an unanticipated reduction
in the cost. A transparent discussion is needed to ensure the
proposed changes do not undermine the scientific value of the
study. As I think we all agree, it is important to finally
gather a large body of scientific data which in the future can
improve the health and well-being of our children.
I agree with one of the key NIH 2013 budget request themes,
to invest in basic science. It is important, I believe, to
support the historical level of 55 percent of NIH resources
towards basic sciences. I would suggest that NIH develop a
governance process towards this end; otherwise, the increased
focus on translational research could squeeze out NIH's primary
mission, that of basic science. We do not want to wake up in
the future to find a NIH director without a stable full of
science available for translation because we took our eye off
the ball of basic science.
Another trend of concern is incremental decreases that
continue to divert funds from the extramural to the intramural
science programs. Again, I suggest NIH find a governance
process to resume the historical balance of 10 percent for the
intramural programs.
Finally, I cannot imagine supporting NIH's request to
reduce the base of the IDeA program below the level of Fiscal
'12. This program supports diversity, capacity building, basic
science, and developing young investigators in 23 States for
less than 1 percent of NIH's budget.
Today, we have expert NIH and outside witness panels to
discuss issues related to NIH and the National Center for
Advancing Translational Sciences. I believe we have provided
NIH with a more focused authority to study steps in the
therapeutic development process, consult with experts in
academia, biotechnology, and the pharmaceutical industries to
identify bottlenecks in the processes that are amenable to
reengineering.
The specific mission of NCATS is to coordinate and develop
resources, to leverage basic research, to support translational
science, and develop partnerships in ways that do not create
duplication, redundancy, and competition with the industry
activities.
NCATS has authority to support clinical trials and
infrastructure activities, in addition to a reasonable, but
narrower, level of authority to take drugs into phase two
clinical trials. Congress did not provide or envision NCATS or
NIH to have authority to compete with industry or become a drug
developing organization. I repeat, Congress did not provide or
envision NCATS or NIH to have authority to compete with
industry or become a drug developing organization. The focus of
NIH and NCATS is to study the process and leverage basic
science towards the goal of providing tools and methods to
industry which can one day speed up drug development process.
I am looking forward to the discussion, but let me first
ask my ranking member, Ms. DeLauro, if she has any comments
before we turn to the panels.
Ms. DeLauro. Thank you very much, Mr. Chairman. I do have
comments.
Also let me just personally thank you for inviting me to
come up a few minutes early. Unfortunately I could not do that.
I hope I will have an opportunity to get a chance to at least
shake hands with everyone who is testifying this morning. I
actually was on the phone with a staff member in our district
office whose mother is struggling with cancer, and I think my
last comment to her was, well, you know, maybe I will get on
the phone and call the NIH. So, you are our touchstone. I mean
that very, very sincerely, when it comes to illness and disease
in this country.
And as we meet here to discuss the National Institutes of
Health, the House is preparing to debate a budget plan for the
upcoming fiscal year. The House majority is renewing its
demands for more and more drastic cuts that, in my view, will
harm medical research and many other priorities vital to our
well-being and to our future.
What the NIH does, and the research it supports at
universities, hospitals, and institutes across the country, is
unquestionably important to each of us. It alleviates
suffering. It saves lives. And so many of you know that I am a
cancer survivor--26 years this month. I am here because of the
grace of God and because of biomedical research.
Just last year, researchers found that anomalies in a
single gene were present in nearly all of the most common types
of ovarian cancer, a finding that may lead to more effective
diagnostics and treatments. That is but one example of why NIH
is the gold standard for biomedical research, not only in the
United States, but in the world.
Medical research at NIH and elsewhere has led to, among
other things, dramatic reductions in death rates from heart
disease and stroke, more effective treatments for HIV/AIDS,
improved survival rates for cancer, and better ways of managing
diabetes. That is why we came together in a bipartisan way to
double the NIH budget nearly 15 years ago, and why members of
this subcommittee on both sides have continued to support NIH
funding, even in the face of budgetary constraints.
The work of NIH also brings substantial economic benefits.
Every dollar in funding is estimated to result in more than $2
of business activity and economic impact. A report released
yesterday found that NIH funding supports nearly half a million
jobs in our country, and another study found that our
investment in the human genome project created nearly $800
billion in economic growth.
I doubt that we would have had the wherewithal to invest in
the human genome project a decade ago if the discussion in
Washington, D.C. today had taken place then. And think of what
we would be missing. Medical biotechnology industries fostered
by this research, are among the keys to our future growth and
world competitiveness of our economy, new technologies, and
more personalized treatments to improve the health of
Americans.
Despite these benefits, recent budget choices have shrunk
NIH. Total funding for the NIH is now $86 million less than it
was just two years ago, and that is without considering
inflation, meaning that those same dollars are able to support
even less research. When adjusted for increasing costs of
medical research, the NIH appropriation has lost 5 percent of
its purchasing power since 2010, and 16 percent since 2003.
NIH estimates that it will be able to support 767 fewer
research project grants in 2012 than it did in 2010, and 2,700
fewer grants than in 2004. Ten years ago NIH was able to fund
almost 1 out of every 3 applications for research grants. Now,
that ``success rate'' is down to less than 1 in 5. The erosion
of resources may just be the beginning as the majority party
demands still more cuts to the programs that are funded in
appropriations bills. It appears that the 2013 budget
resolution walks away from the multi-year agreement negotiated
last summer, and instead reduces the limit on overall
appropriations down to roughly the level of 2011, that package
which was passed in the form of H.R. 1.
If the funds available to this subcommittee decrease, it is
hard to imagine that the NIH will not shrink along with that
total. After all, the NIH is one-fifth of our bill. H.R. 1,
which the majority now seems to want to repeat, would have cut
the NIH by $1.6 billion.
Budget debates may be conducted using fake terms like
``domestic discretionary spending,'' but in reality we are
talking about things like NIH research that saves lives.
What is at stake is whether national investments in medical
research will be continued and expanded or whether we will
scale back these efforts, lose jobs, and cede leadership to
other nations.
At today's hearing, Chairman Rehberg has asked the
witnesses to focus particularly on the new National Center for
Advancing Translational Science, and to address issues of
possible overlap and duplication with the work of private
industry. The purpose of that new center is to consolidate and
focus NIH resources aimed at improving the science of
translating research, and to better treatments and cures for
patients. That is a critically important mission. It will be
good to get an initial progress report.
Possible duplication with the private sector is an
important issue to explore. But the most important question
should be whether this new focus will help to speed cures,
diagnostics, and treatments to patients.
We will hear from two distinguished panels this morning.
The first consists of leaders from the NIH. The second has
experts from the pharmaceutical, biotech industries, along with
a leading research from a non-profit foundation that works to
advance therapies for Parkinson's disease.
Welcome to each of you. I look forward to your testimony
and to the questions that follow. Thank you very much. Thank
you, Mr. Chairman.
Mr. Rehberg. Let me begin by thanking you, Ms. DeLauro, for
your input in the hearings that we are going to have over the
course of the next couple of days.
Ms. DeLauro. Thank you.
Mr. Rehberg. It was very important to hear your
suggestions.
Ms. DeLauro. Appreciate it.
Mr. Rehberg. We were able to fit some of them in.
Ms. DeLauro. I know. I appreciate it. And this is one that
is particularly important as you know.
Introduction of Witnesses
Mr. Rehberg. Great. I am going to introduce both panels
first. And our first panel includes the one and only NIH
director, Dr. Collins and the acting director of NCATS, Dr.
Insel. Welcome. They will discuss what regulations, policies,
and guidance are being established in Fiscal Year '12 within
the NIH and NCATS governance system to ensure it does not
compete with, duplicate, or invest in redundant activities in
industry. See a theme developing in my statement?
I asked NIH to highlight how input from industry will be
collected and evaluated to ensure NIH complies with the law. In
addition, I hope NIH will discuss how the Fiscal Year '13
request ensures basic science is not negatively impacted, given
its recent focus on NCATS. I will not repeat it. You got it.
Our second panel will discuss key hurdles observed with
pharmaceutical development which hinder the advancement of
translational science, and how NIH or NCATS can coordinate
activities to leverage basic science in ways to improve how the
pharmaceutical industry can accelerate moving discoveries into
treatments. We have three very distinguished witnesses in Dr.
Roy Vagelos, former chairman/CEO of Merck and Company, Dr.
Scott Koenig, M.D., Ph.D., president and CEO of MacroGenics,
and Dr. Todd Sherer, Ph.D., CEO, of the Michael J Fox
Foundation for Parkinson's Research.
I hope you will be able to stay for the second panel. I
think that you indicated you were going to be able to do that.
I appreciate that very much. It is always good to hear it one
more time from an outside source.
So, Dr. Collins, the floor is yours.
Dr. Collins' Opening Statement
Dr. Collins. Well, thank you, and good morning, Mr.
Chairman, and members of the subcommittee. I am very pleased to
present the President's Fiscal Year '13 budget request for the
National Institutes of Health. And I must begin by thanking
you, Mr. Chairman, for the $1 billion increase you proposed for
NIH in your draft Fiscal Year '12 bill, and for the ultimate
Fiscal Year '12 appropriation which maintained NIH's budget at
the Fiscal Year '11 level.
We are also grateful for your leadership in creating this
new National Center for Advancing Translational Sciences or
NCATS.
In addition to Dr. Insel, who is sitting next to me, I
would like to mention that Dr. Harold Varmus and Dr. Tony Fauci
are also here, leaders of the National Cancer Institute and the
National Institute of Allergy and Infectious Diseases,
respectively.
This morning, I would like to highlight a few of NIH's many
contributions to our Nation's health and its economy, as well
as discuss NIH's commitment across this wide spectrum of basic
and translational research.
Let us start with health. NIH funded research has prevented
untold human suffering by enabling Americans to live longer,
healthier, and more productive lives. These benefits include a
70 percent reduction in the death rate for heart disease and
stroke over the last half century, a 40 percent decline in
infant mortality in the past two decades, and much more.
And then there is the economy. As our Nation struggles to
recover from a difficult period, it is worth pointing out that
government investments in biomedical research are a terrific
way to spur economic growth. Eighty-four percent of the NIH
budget goes out in grants to researchers located in every one
of our 50 States, and each dollar NIH sends out is estimated to
return $2.21 to the local economy in just one year.
NIH supports approximately 432,000 high quality American
jobs, and when our partnerships with the private sector are
factored in, this rises to more than 8 million jobs.
Technological advances are driving rapid progress in
medical research today. No less a futurist than Steve Jobs once
said, ``I think the biggest innovations of the 21st century
will be the intersection of biology and technology.'' He was
spot on. A striking example: The cost of sequencing a human
genome, all of the DNA in our instruction book. Twelve years
ago, it cost $400 million; five years ago, $10 million, today
less than $8,000. And within the next year or two, a couple of
U.S. companies plan to sell machines that sequence a genome in
a single day for $1,000 or less. Those machines used to be the
size of a phone booth. Here is one of them today. That is a DNA
sequencing machine. This will revolutionize how doctors
diagnose and treat diseases and will allow researchers to
pursue previously unimaginable scientific questions.
Mr. Chairman, NIH is the leading supporter of basic
biomedical research in the world, and this year has been the
case for many years. Slightly more than half of NIH's budget
will support this kind of fundamental research, which I
understand is a major concern of yours, and I agree with that.
There is no competition, though, between basic and applied
research at NIH. I support basic research that makes possible a
wide range of new biological discoveries, discoveries that in
turn can then be translated into new strategies for diagnosing,
treating, and preventing disease, and which, in turn, in a
virtuous cycle triggers new ideas in basic research.
But there is much work to be done. Despite phenomenal
progress in basic science, we still lack effective treatments
for far too many diseases. And this translational pipeline to
get there is long, 14 years on the average. And it is leaky.
A recent article in the Journal of Nature Reviews Drug
Discovery found that despite huge and growing investments in
research and development from both public and private sectors,
the number of new drugs approved per billion dollars spent has
fallen steadily since 1950. Bottlenecks continue to vex this
process resulting in long development times, very high failure
rates, and steep costs.
We need to re-engineer this pipeline, and that is why this
new center, NCATS, is already working with industry in a
complementary way to develop innovative ways to speed the flow
of new therapies to patients.
Mr. Chairman, I have described the synergy between basic
and translational research at NIH, but I would like to close
with a story that ties these points together. As toddlers,
twins Alexis and Noah Beery were diagnosed with a rare and
devastating movement disorder called dystonia. Although they
initially responded to empirical treatment, their symptoms
reappeared and worsened as they entered their teenage years.
Noah developed severe tremors in his hands. Even worse, his
sister, Alexis, began falling frequently and had frightening
episodes where she could not breathe.
Desperate for answers, doctors at Baylor College of
Medicine sequenced the twins' genomes. The result? Discovery of
a never before described genetic mutation affecting neuro
transmitters in the brain. After being put on a new treatment
regimen tailored to their unique genetic profile, the twins'
symptoms began to improve within just two weeks.
I saw a video last night of the two of them doing tricks on
a trampoline. In fact, Alexis' breathing is so much better
today, she has joined her school's track team.
Now, while this story centers on two teens with a rare
disease, this outcome carries a message of hope for all of us.
It points directly to the promise that NIH research offers to
patients of today and tomorrow.
So, thank you for this opportunity, Mr. Chairman, members
of the subcommittee. I will be glad to answer your questions.
[Prepared statement and biography of Dr. Francis Collins
follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Dr. Insel. I do not have an opening statement. I think we
can just get right into the discussion.
[Prepared statement and biography of Dr. Thomas R. Insel
follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
IMPACT OF NCATS ON BASIC RESEARCH
Mr. Rehberg. I had better turn that on. Tell me about the
governance within NIH and how you are going to maintain the 55
percent. How does this, first of all, the Fiscal Year '13
budget allow for that based upon the budgetary request? And
then work into a little bit of NCATS.
It is no secret today. I did not necessarily like the way
NCATS came about. I am a supporter. I encourage it. And yet
this, you know, for those of us who are kindly more process
oriented, the loosey-goosey attempt of creating an
infrastructure without some meat on it always makes at least
this member nervous. And so, convince me that you have got a
plan that is going to, one, protect NIH extramural activities,
maintain the 55 percent, and then as it relates to NCATS, how
you intend to see this work over the course of the next few
months.
Dr. Collins. Well, thank you for the question and for your
support, Mr. Chairman.
And I know that the way in which NCATS came to this
committee occurred in a fashion that did not have the number of
details that you would have normally hoped to see during the
regular budget process, and for that we apologize.
I will admit to being an impatient physician researcher
charged with leading an organization, the largest supporter of
biomedical research in the world, and feeling that an
opportunity had arisen that could be, in fact, capitalized
upon, and, therefore, was moving as swiftly as possible to see
it come true. I guess trying to go against the idea that the
government always moves slowly, we were maybe moving a little
too fast for the pleasure of this committee. But I do think we
can defend what has come forward now as part of NCATS in very
strong ways.
To answer your question about the 55 percent for basic
research, actually it is 54 percent, and in some years it has
been 53 percent. But over the last 20 or 30 years, that
percentage, as we define basic versus applied research, has
remained essentially constant, and I do not expect that
percentage to change in any significant way in the coming years
because as you have rightly pointed out, NIH is the main
supporter of basic biomedical research. These are the kinds of
work that would not go on in the private sector generally
because they will not connect to something that would result in
a product. And so, it is our job to carry out that kind of
research.
But at the same time, as I mentioned in the opening
statement, we have the chance to capitalize on a deluge of
basic science discoveries because they are pouring out of
laboratories now, and to try to make sure that those do not
remain for too long untouched.
And there is this valley of death, Mr. Chairman, which is
commonly cited between some basic discoveries and ultimately
arriving at a therapeutic or a diagnostic benefit where
oftentimes things go to die. And if NIH can assist by the
formation of this new center in identifying the bottlenecks
that keep those successes from happening, then my sense is, and
I get much encouragement from this from the private sector, and
you may hear some of that in the second panel, that this is a
role that we could play without skewing our investments in the
favor of translational versus basic, but basically taking the
translational efforts and putting them together under one
center with the synergies that can create, with a hub that is
created by that.
Most of the translational science that goes on at NIH is
not going to be at NCATS. It is in our 27 institutes--the
Cancer Institute, the Infectious Disease Institute. They have
been in this space for a long time. That is why you can see so
many vaccines, for instance, coming forward, so many new drugs
where NIH played a major role.
But what we are trying to do is to identify the pipeline as
the problem and to see how we could engineer that in a way that
would break down these bottlenecks. That is what NCATS is
about.
Dr. Insel. If I can just add in one point of clarification
to make sure we are all on the same page. This is indeed a new
center, but with a very tiny exception. It is not new money.
This does not shift the balance of anything because all of the
programs that are in NCATS existed last year and the year
before. What we are doing is building a new adjacency so they
are now sitting next to each other interacting.
These were all funded before sitting at different parts of
the NIH. The one exception is the 2 percent of our budget in
NCATS that goes towards the Cures Acceleration Network. That is
new, that $10 million program.
Mr. Rehberg. Ms. DeLauro.
CURES ACCELERATION NETWORK (CAN)
Ms. DeLauro. Thank you very much, Mr. Chairman, and I want
to also welcome Dr. Varmus and Dr. Fauci. It is wonderful to
see you.
Mr. Chairman, it is wonderful to have these folks here.
This is one of the most exciting efforts that our government is
engaged in and has been engaged in through the years. We are
really the leaders in the world on this effort, and we have to
maintain that standard. I am just so excited to have you here.
And I just will mention, with regard to the valley of
death, it may be the place where drugs or some science goes to
die. Quite frankly I am excited that you want to break the log
jam of the bottlenecks because, quite frankly, the valley of
death is for people who do not survive because we have not
found a diagnostic or a therapy or a cure. That is really what
the issue is. It is getting this so that somebody can take
advantage of it and live. I mean, that is what we are about.
With that, your budget proposes a substantial increase in
spending authority for the Cures Acceleration Network. That
program received its first appropriation of $10 million in the
2012 bill. The budget proposes an increase to $50 million for
2013. Please tell us what the Cures Acceleration Network is
intended to do, why you consider it important, and what more
this proposed expansion would allow you to accomplish.
Dr. Insel. Well, thank you for the question.
The Cures Acceleration Network is indeed the one new
element within NCATS that was not there before. And this is the
piece where we hope to be able to push forward an agenda that
looks at fixing some of those log jams that you talked about.
When we have listened to industry about what are the main
impediments to progress for them, we hear about two. One of
them has to do with toxicity, that about a third of medications
fail in trials because data about toxicity from animals does
not predict what happens in the clinic.
Ms. DeLauro. Explain toxicity for a second. What is it?
Dr. Insel. So, a drug that you develop for one indication
has an adverse event, an adverse effect that keeps you from
being able to develop it further. Sometimes we just cannot
predict from what we have seen in animals. And so, that was one
of the issues we heard.
The other one we heard about was what they call efficacy.
It just does not work well enough. Those two together explain
about two-thirds of the failures. And drugs fail 95 percent of
the time when they get into the clinical pipeline. So, this is
a big problem that all of us have a stake in.
What we hope to do with the Cures Acceleration Network is
to establish a set of programs that can address this. One would
be creating what we call tissue on a chip. These are human
tissues now, not animal tissues, that would be able to screen
compounds that are in early stage development to find out
whether they do have toxicity. This is a lung, a human lung, on
a chip that allows us with some efficiency for the first time
to be able to look using what we call microfluidics. It is a
technology recently online to go very quickly into looking into
a whole series of different compounds to find out whether they
are tolerated by human tissues, in this case lung tissue. We
would like to do this across the board for human tissues to be
able to predict toxicity in a dish. So, that is the kind of
thing that we see the Cures Acceleration Network doing.
PERSONALIZED MEDICINE
Ms. DeLauro. How does that translate into an individual
treatment? In other words, you are taking tissue, et cetera,
from a lung. That is general. It is not an individual person or
so forth. But in your route toward personalized medicine, what
kind of application is----
Dr. Insel. So, you are asking about the second piece----
Ms. DeLauro. Right.
Dr. Insel. The things that are just more effective, and to
get those into the pipeline. And the problem with that is often
we just do not know enough about the biology of the diseases,
the problem that we define as understanding the target you are
going after. And that is really another important area for the
Cures Acceleration Network is trying to figure out ways of
working with many partners, because these are complex problems,
to identify better partners, and then better targets, and also
to think about ways that we can begin to use medications that
might be there already developed for one indication and try to
use them in a new one.
Ms. DeLauro. In another one.
Dr. Insel. So, there are a lot of opportunities out there
that are part of reengineering this pipeline.
Ms. DeLauro. My time is going to be up in a second, so I
will yield back. No, that is fine. Thank you very much. Thank
you.
Mr. Rehberg. Mr. Alexander.
IDEA PROGRAM
Mr. Alexander. Thank you, Mr. Chairman, and good morning to
you all.
Dr. Collins, my State of Louisiana is eligible for the
National Institutes of Health Institutional Development Award
IDeA program. It is a program which has played a significant
role in building and strengthening biomedical research in the
State.
The Louisiana IDeA Networks for Biomedical Research
Excellence Program, called INBRE, has impacted 21 different
colleges and universities within the State. It has enabled
researchers to produce more than 100 journal publications and
secure more than 80 additional research grants totaling $12
million in funding.
Louisiana INBRE has supported more than 650 students,
staff, and faculty in biomedical research, as well as
supporting summer research programs for students of which more
than 100 have graduated and are now in graduate schools, and
medical schools, and professional schools across the country.
At Louisiana Tech, INBRE has helped the institution recruit
and retain talented junior faculty. From one grant alone, the
researchers involved with the grant have now served on more
than 16 NIH scientific review panels since obtaining support
from the INBRE program.
The question is, why does it seem that the IDeA program is
in a low priority as evidenced by the $51 million cut
recommended for the program in the NIH budget?
Dr. Collins. So, Congressman, thank you for the question.
We are enthusiastic about the IDeA program, and as you
pointed out, in the State of Louisiana and some other States
represented here at the table. Montana, for instance, Idaho.
This program has been a way in which NIH can support individual
investigators at institutions in States that have not had the
same tradition of research intensive universities that some
States have. Those 23 IDeA States do, in fact, receive the
support for this enterprise through a number of programs, and
you have mentioned the INBRE program, which is an IDeA network
for biomedical research excellence, and the COBRE programs,
which are also centers of biomedical research excellence.
We were grateful for the additional increment of funds for
the IDeA program in the Fiscal Year '12 budget, and we are
following what was the sense of the Congress in terms of using
those funds to fund two new centers for translational research
as well as an additional set of eight COBRE centers with that
additional funding.
But our understanding of the way in which this increment,
you know, could be utilized was this was a much needed, one-
time boost. And given the tightness of the budget in Fiscal
Year '13 for many other areas, we, therefore, in the
President's budget see that the funds for IDeA have been
reduced roughly back to where they were in Fiscal Year '11.
I promise you the Fiscal Year '12 dollars will be spent.
But considering the number of other pressures on the system,
including the fact that investigators anywhere in our portfolio
have seen the lowest success rates ever, and Congresswoman
DeLauro mentioned those numbers, we felt that this was the most
reasonable way to balance. And that is how the President's
budget lays out the plan for IDeA.
Mr. Alexander. It has also been brought to my attention, of
course, that the groups of IDeA researchers have sought to meet
with you since you became the NIH director. They have met with
NIH directors in the past. To this date, they have not been
given a meeting. Can you help us understand why?
Dr. Collins. So, the IDeA program moved as part of the
changes in structure of NIH in Fiscal Year '12 from where they
had been located in the National Center for Research Resources,
into the National Institute for General Medical Sciences
(NIGMS).
I am not aware whether they have made a plea to meet with
the director of NIGMS, Dr. Judith Greenberg, but I will say
here in front of this committee, I would be glad to meet with
the leaders of the IDeA program and discuss their concerns.
Mr. Alexander. And at some point we would like to invite
you to the State of Louisiana to look at some of the work going
on there. Thank you.
Dr. Collins. You have a fine State, and I would enjoy the
experience.
Mr. Alexander. Thank you, Mr. Chairman.
INTENT OF IDEA FUNDING
Mr. Rehberg. If, Mr. Alexander will yield for a moment. Dr.
Collins, we did not suggest in the Fiscal Year '12 that these
were 1-year funds. We suggested that each of the programs be at
50 percent. So, I guess I do not understand the hesitation or
the confusion or at least the difference, I think, of answers
as I understand it.
Dr. Collins. Well, again, I believe in the President's
budget. The proposal was that the dollars for IDeA in Fiscal
Year '12, much appreciated as they were, were treated in the
President's budget as a one-time addition to that program, not
as a change in the base.
Mr. Rehberg. Not in our--excuse me, not in our Fiscal Year
'12 budget. Not as we sent it out of here. It might have been
in the President's suggested budget or his budget request, but
that is not the way it went out of here as a one-time
allocation. It was 50 percent in each program.
Dr. Collins. I am not sure I understand the 50 percent.
Mr. Rehberg. Identified for each program as opposed to
being a one-time allocation, so it was an ongoing opportunity
within the various programs.
Dr. Collins. Well, again, I think that is why were are here
talking about Fiscal Year '13 is to figure out what the
Congress' intentions would be going forward with the IDeA
program. I guess I am here to represent what the President's
budget put forward, which was an interpretation that this was a
one-time allocation and not an adjustment in the base.
Mr. Rehberg. Okay. Ms. Roybal-Allard.
COMMUNITY BASED ORGANIZATIONS AS RESEARCH PARTNERS
Ms. Roybal-Allard. Dr. Collins, as we increasingly look to
NIH investments in clinical and translational research, the
engagement of communities and partners in NIH research is
essential to advancing NIH research investments.
As more community based organizations enter into research
partnerships with NIH funded academic institutions, and
initiate and conduct research, there is an increased need for
NIH to provide them with direct support for research capacity
building and research infrastructure.
Unfortunately, the current funding mechanisms and peer
review processes at NIH are designed to support academic
institutions, even if technically CBOs are among the
organizations eligible to submit applications.
What funds are you requesting in the NIH 2013 budget to
directly support the research capacity building and research
infrastructure needed in community based organizations?
Dr. Collins. Well, thank you, Congresswoman, for the
question, and we certainly agree that there is a great deal of
strength in community based organizations both in terms of the
services that they provide and the research opportunities that
they can conduct.
I think a major area where we see this happening and have
been gradually supporting in an increasing way is through the
Network of Clinical and Translational Science Awards, the
CTSAs. This is NIH's most major investment in clinical research
now amounting to almost $500 million supporting 60 centers
across the country.
And as part of those centers, community outreach is a
component of their activities, especially urging them to link
up with community organizations in their own geographic area
where they will know them the best and try to build those
networks of research capacity.
The CTSAs have actually moved to the National Center for
Advancing Translational Sciences, so I will ask Dr. Insel to
say a word about the CTSAs and the plans we have for them now
because it is a moment of specific opportunity.
Dr. Insel. Well, again, let me emphasize that for NCATS,
for this new center that we are here to discuss, that we are
talking largely about drug development. Eighty percent of our
budget is the CTSA program, these 60 centers around the country
that are, as Dr. Collins said, our largest investment in
clinical research in this arena. So, those have had as part of
their remit over the last five years, they are about five years
old now as a program, the increasing engagement of communities,
not only as a source of patient volunteers or research
volunteers, but increasingly to get them in at the front end to
help define what the research problems need to be and to bring
them in as a full partner. And that has been one of the great
successes of the CTSA program, one that we hope to leverage in
the next five years as we go forward.
PANCREATIC CANCER: LONG-TERM STRATEGY
Ms. Roybal-Allard. Okay. I would like to move on to another
subject that has been of a great deal of concern to me, and
that is the fact that while the survival rates for many cancers
are steadily improving, in some cases nearly 70 percent, the
survival rate for pancreatic cancer, one of the most lethal
forms of cancer, is only about 6 percent. And after submitting
report language for many years, I was pleased that NCI finally
released an action plan for investing in pancreatic cancer
research. However, as I understand it, it was disappointing
that the action plan is mostly a summary of research that is
already under way.
So, when can we expect to see a long-term research strategy
for pancreatic cancer that establishes concrete objectives for
the future and sets a goal of increasing the 5-year survival
rate?
Dr. Collins. Congresswoman, I certainly share with you the
sense of urgency about dealing with this very, very serious
malignancy with currently 5-year survival rates that are lower
than most other cancers.
There are two areas that perhaps are particularly exciting
to contemplate right now to do something about this. First of
all, pancreatic cancer clearly is diagnosed in general after it
has been present for a very long time. Estimates are probably
20 years from the time the cancer starts until it is actually
recognized, in part because it arises in a part of the body
that is very far away from detection by the usual means.
If we had better means of detection of this disease early
on, that would clearly make a huge difference. And right now,
we do not have for pancreatic cancer those kinds of measures,
and that is a big priority for research right now.
But furthermore, we do need to understand at the DNA level
what is driving a good cell to go bad and become a malignant
pancreatic cancer cell.
The Cancer Genome Atlas, which is this very bold initiative
of the Cancer Institute and the Genome Institute, has
pancreatic cancer on the list of cancers that are being
unraveled in unprecedented detail, revealing what exactly is
going on in those cells and revealing in the process new
potential targets for therapy that might be much more
successful in terms of curing this disease than in the current
approaches which depend on chemotherapy.
Mr. Rehberg. Dr. Simpson.
NCATS
Mr. Simpson. Thank you, Mr. Chairman. I had two of my
favorite hearings this morning, my favorite institutions, NIH
and the Smithsonian down in my committee. So, I am glad I could
make it up to it.
But NIH, as I have often said, is one of the best kept
secrets in Washington. That is also one of the bad news stories
in that the public needs to know what NIH does, and how we get
that message out to the general public is some debate we have
had over the last several years.
But I think as I listen to everybody on this panel, nobody
disagrees with what we are doing with NCATS. That is a good
direction that we ought to hit. But as I listen to people on
the panel and to the general public, there is concern that it
is going to take resources away from what has traditionally
been used, as an example, the IDeA program and other things.
And so, I get questions submitted to me that, you know, can you
ensure the committee that the continued development of NCATS
will not take resources away from other basic science
initiatives, or hamper programs like IDeA? And can you detail
how the National Center for Advancing Translational Science
plans to engage all of the NIH institutes and centers and the
opportunities it puts forward particularly given that they were
all tapped to contribute to the formation of this new center?
I think that is the main concern here is that any time you
start something new, people wonder where you are going to get
it, particularly in these budget times, and they are worried
that it is going to come out of what they have been doing in
the past, which we all agree with also.
Dr. Collins. So, maybe I will start and Tom may want to
add. In the discussion about NCATS, this did not happen sort of
overnight in a vacuum. So, basically going back now two years,
the notion of whether NIH would benefit and whether the public
would benefit from a hub for this sort of translational
activity, even though there is a great deal of this work
already going on the Institutes, was brought forward to our
scientific management review board, a very distinguished group
of experts. And they deliberated and took testimony and talked
to lots of people and ultimately recommended that we should do
this.
That then led to numerous other consultations, including,
of course, with all the institute directors at NIH. And there
was a lot of shaping of the program that went on during those
months, and a very beneficial shaping it was. And now I think
it is fair to say the NIH as a family is supportive of this
enterprise and excited about it, not that it is going to
compete with things that the other institutes are doing very
well already, but providing particularly this focus on
bottlenecks in the translational process, which otherwise would
not get attention.
We consulted also with people in the private sector,
distinguished leaders and pharma biotech venture capital in a
working group that was put together. They came forward. Very
enthusiastic in support of what this could do.
But we recognize that resources are tight; they are
terribly tight. And so, the way in which NCATS came into being
on December 23rd, as you heard from Dr. Insel, was largely to
take programs already funded through other parts of NIH and
bring them together, providing new synergies that were not
there before.
The amount of new funds going to NCATS is a very small
amount indeed, some bits of it in Fiscal Year '13, which Tom
mentioned a minute ago. But we are trying to be very careful
about this. We believe that we could do a lot with modest
resources at this point simply by doing the focus on the
bottlenecks, the way an engineer would do in a way that has not
been possible, and by working with the private sector and
making sure we are building on those kinds of relationships in
new ways. And we are very vigorously involved in those kinds of
workshops, and planning processes, and steering committees that
have come together because of NCATS' existence providing the
nucleus for it to do so.
Mr. Simpson. But certainly you can understand how people
that are involved in other parts of NIH and have other
interests, such as the IDeA program and stuff, when they see a
proposal that reduces the IDeA budget by $15 and a half million
and the development of NCATS, they look at it that is where
they got the money.
Dr. Collins. Well, I really would like to speak to that
because that is not the sort of connected lines there is any
sense at all. We are, of course, dealing with tight resources.
You heard that effectively we have lost about 18 percent of our
buying power since 2003.
I have to tell you the thing that wakes me up in the middle
of the night, Doctor, is the realization that there is
wonderful science that could get done, and that we have to make
very tough decisions about what will get done because we do not
have the resources to support all the great ideas, all the
great investigators.
And so, it is constantly a struggle, but it is a struggle
that involves some very bright, thoughtful, visionary minds in
an ongoing process, practically weekly, trying to decide how
should we set those priorities. I do not think we are perfect,
but I think we do get the inputs that you would want to see us
get in making those decisions.
Mr. Simpson. Thank you.
Mr. Rehberg. It is the chair's intent to have a second
round before I recognize Ms. Lummis. But we will quit this
segment at 11:30, so do not feel compelled to ask a second
question if you do not want to.
Ms. Lummis.
IDEA
Ms. Lummis. Well, thank you, Mr. Chairman. I can see that
this is a popular topic because I want to focus on IDeA as
well.
I used to sit on my State's EPSCoR Committee, and the
proposals that came through us that we vetted and referred on
to NIH were truly remarkable at the University of Wyoming. So,
again, if I am emphatically reinforcing things that are
previously said, excuse my redundancy.
Have you ever visited one of these IDeA programs at a land
grant school?
Dr. Collins. I have not personally since I became NIH
director, but I have in the past when I was directing the
Genome Institute.
Ms. Lummis. Okay. I would sure encourage you to do so. And
if I could be so bold, I would recommend the University of
Wyoming Center for Neuroscience. [Laughter.]
Dr. Collins. And your colleagues might say Montana, or I
would say Idaho.
Ms. Lummis. Yeah. You could make a intermountain tour that
we would be happy to accommodate.
Dr. Collins. And Louisiana, we got to get Louisiana in
there, though, so we got to----
Ms. Lummis. Well, and that can be the icing on the cake.
The President proposes, what, $225.5 million for IDeA, that
is a $50 million reduction, in order to fund other research
priorities. What are those other priorities that would be
higher research priorities than the ones you are receiving
through the IDeA program?
Dr. Collins. Well, again, Congresswoman, NIH is a big fan
of the IDeA program. I agree with you. We get wonderful
proposals. We see wonderful science being conducted. But we see
that across our portfolio and many other programs as well.
I think the fundamental area where there seems to be some
friction or misunderstanding or difference of opinion is
whether, in fact, faced with the circumstance where the
resources are so tight for everything, whether we could
sustain----
Ms. Lummis. And I apologize for interrupting, but I would
like you to direct your specifically your proposal to seek a
$64 million increase for NCATS, which is a new program, and an
almost $40 million increase for Cures Acceleration Network,
which is another new program. So, that is where I would like
you to focus your response.
Dr. Collins. Again, I would not want you to see a direct
connection between what decisions were made in the President's
budget about the IDeA program and about NCATS. Those are not
the same dollars that just got moved from one box to the other.
This is part of a big overall plan to try to figure out where
the scientific opportunities are most pressing.
Ms. Lummis. But it does cut one place and add another, one
of which is a new program. And maybe it is not exactly the same
dollars, but, you know, dollars are dollars, and they are all
borrowed money. So, we are just looking, since we are borrowing
this money from China and Saudi Arabia, Japan, let us find out
where to put it.
Dr. Collins. So, the dollars that go into the Cures
Acceleration Network, that is actually part of NCATS, so that
$40 million is part of the $60 that you mentioned. Those are
not separate buckets. Cures Acceleration Network is a program
within the National Center for Advancing Translational
Sciences.
Congresswoman, that program aims to take advantage of an
exceptional moment in history. If you look at the 4,000 rare
diseases that currently exists, there are only treatments for
250 of those. Twenty-six million people in this country are
affected with one of those rare diseases, and we see an
opportunity to do something about that in a way we could not
have four or five years ago. That is the motivation for this
center. I would not be a responsible director of the NIH if I
did not respond to that opportunity.
Ms. Lummis. Thank you, Mr. Chairman. I yield back.
HEALTH ECONOMICS
Mr. Rehberg. Thank you. We will start round two, but we are
going to shorten the time to three minutes apiece so that we
all have an opportunity to do it.
And in relation to funding and such, as I was going through
the budget book, one of the questions I asked is what is the
Common Fund, and I got a pretty good explanation of it. But I
was aware of an awards presentation that was made in Fiscal
2011 having to do with about $2 and half million coming from
that, which centered in on economics. And, you know, we had
this whole conversation about basic science and all the various
grants, and so I asked staff, of the $2 and a half million that
was given in 2011 for economics studies, how many grants would
that equate into. And we came up with 6 additional grants.
I guess the question is, why are you even involved in the
economics? And just looking at it, one of them is, and it has
been an issue that I have been intimately involved in, is the
Class Act. Now, the President suspended the Class Act, and yet
there is still a grant going out for the purposes of sending
the Class Act as it relates to the economics within the health
care provision. And I just wrote some notes.
Let us see here. Another category of research is titled
integrating comparative effectiveness research finding into
care delivery through economic incentives. So, I guess the
question is, first of all, why are you involved in economics
when we have hundreds of Federal agencies that deal with that.
And as it relates to the President's health care reform
legislation or act, why not take the money and put it into the
grants and the basic sciences as opposed to using this, I do
not want to call it a slush fund, but essentially every
director has one, and you do. Why are you involved in the
economics of health care anyhow as an institute?
Dr. Collins. So, Mr. Chairman, I will probably have to
respond to the record about the specifics of the two grants
that you mentioned because I am not familiar with the details.
The Common Fund, I would say, maybe ``slush fund'' is not
the term I would have chosen. It is our venture capital space,
and it was very much advocated for by my predecessor, Dr.
Zerhouni, and then became a reality in the NIH Reauthorization
Act passed by this Congress in 2006. It is where we try to
support research that no single institute would be able to do.
Mr. Rehberg. But this is not research. This is an economic
study----
Dr. Collins. Well, it is research trying to understand----
Mr. Rehberg. What I am talking about.
Dr. Collins. Again, I am not sure I can respond about the
specifics of one or two grants. The overall program in health
economics is an effort on the part of NIH to understand
particularly what are the economic benefits of the research
that we conduct. We are asked oftentimes, including by the
Congress, what are you doing in terms of being able to support
the economy, jobs, and so on. And we have not always been
confident we had sophisticated answers to that, and this part
of a program to try to figure out whether, in fact, what we are
doing is maximizing the taxpayer's investment.
I do not know about those two grants, but that was the
overall plan behind the fund.
Mr. Rehberg. But at that time there were $2 and a half
million worth of grants given in that year, and I would like to
have an explanation because it is something I am going to be
looking at as chairman----
Dr. Collins. I would be happy to provide that for the
record.
Mr. Rehberg. As to whether that is an appropriate role for
the NIH as opposed to others looking into the same issue.
Dr. Collins. I would be happy to provide that.
Mr. Rehberg. Thank you. Ms. DeLauro.
SUPPORT FOR YOUNG RESEARCHERS
Ms. DeLauro. Thank you, Mr. Chairman. Just a quick comment.
Fifteen years ago, this subcommittee made a determination
on a bipartisan basis to double the amount of money that went
to the NIH to specifically do the kinds of things that would
lead us to, you know, to hold on to our cutting edge in terms
of research--and both basic research and applied efforts. So,
that ought to be our goal again with this subcommittee.
Let me try to get in two quick questions for you, Dr.
Collins. I will not go through explanation here. What would be
the--well, for young researchers, what are your chances of
winning a grant from the NIH these days? How does it compare to
your chances 10 years ago? What has happened to the average age
of researchers typically? And when they receive their first
grant as an independent investigator? We are always concerned
about getting new, bright young minds into this effort. What is
the status of that effort? And what would be the effect on the
biomedical research conducted and sponsored by NIH if across
the board cuts in the realm of 8 to 9 percentage range were to
occur in 2013?
Dr. Collins. Very quickly.
Ms. DeLauro. Young researchers.
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Dr. Collins. The young researcher, your chance of getting
funded today when you send in your grant to NIH is about 1 in
6, the lowest in history. And 10 years ago it was 1 in 3. And
you can imagine what that does to a young investigator's
circumstances.
In terms of the age at getting your first grant, it has
been constant over the past several years at age 42, which we
believe is much older than is healthy for the biomedical
research enterprise, and we have a number of new programs that
are trying to do something about that.
In terms of your question about a cut, I assume you are
referring to the sequesters.
IMPACT OF SEQUESTRATION
Ms. DeLauro. That is right.
Dr. Collins. If, in fact, the sequesters were to kick in on
January 2nd, 2013, that would result, according to the CBO, in
a loss of about 7.8 percent of the NIH budget, $2.5 billion. As
a result of that, 2,300 grants that we would have planned to
give in Fiscal Year '13 would not be able to be awarded. It
would be devastating.
INTERNATIONAL INVESTMENT
Ms. DeLauro. So, your buying power would continue to
decrease between 18 and 20 percent. The research, if it is not
done here is done elsewhere. What is happening internationally?
Are they eating our lunch?
Dr. Collins. It is interesting if you look across the
board. China just announced a 26 percent boost in one year for
their support of basic research. India has been in double digit
increases for several years. European, despite their
difficulties, plan to increase research spending by 40 percent
over the next seven years, and even Vladimir Putin last week
announced the intention to increase support for Russian basic
research by 65 percent.
Ms. DeLauro. We ought to double the amount of money so that
we continue on that trajectory of providing the NIH with the
resources that it needs in order to be able to look at new
efforts as well as to continue the research and other efforts
which are important to the well-being of this Nation both
physically and economically.
Thank you, Mr. Chairman.
Mr. Rehberg. Thank you. Mr. Alexander.
Mr. Alexander. Do I get a star if I do not ask----
Mr. Rehberg. Absolutely. [Laughter.]
Mr. Rehberg. I will give you a cupcake, but somebody quit
bringing those. [Laughter.]
Mr. Rehberg. All right. Ms. Roybal-Allard.
NIMHD INFRASTRUCTURE
Ms. Roybal-Allard. Dr. Collins, the National Center on
Minority Health and Health Disparities has been elevated to a
national institute, which expanded its responsibilities and it
has given it a more defined role in the NIH research agenda.
The Institute has also assumed additional responsibilities
with the transfer of the research centers and minority
institutions program. Yet despite this expanded authority and
the fact that the law provides for administrative support, the
NIMHD continues to be understaffed and underfunded.
How do you expect that the Institute on Minority Health and
Health Disparities will meet its core mission, administer the
RCMI program, and fulfill the Institute's other expanded
responsibilities without the adequate funding it needs and
staff?
Dr. Collins. Thank you, Congresswoman, and you have been an
eloquent and consistent supporter of health disparities
research at NIH, which is a personal priority for myself and
many of us who lead that enterprise.
The National Institute--now it is an institute--for
Minority Health and Health Disparities has, in fact, in the
course of the last year expanded its efforts by the arrival of
the RCMI program, which is, I think, a wonderful place for that
important part of what we are doing in terms of minority
institution research to be placed.
We have also worked with Dr. Ruffin, the director of the
Institute, to deal with the concerns about shortages of staff,
and have identified ways to assist with that by the addition of
quite a number of additional staff positions to NIMHD, even
above the ones that were coming through the RCMI program
migrating into that Institute.
And we are supporting strongly, the formation of an
intramural program in NIMHD to provide them with additional
health research capabilities to undergird all of their efforts
in health disparities.
It is important, though, also to point out that while NIMHD
is the hub of this activity at NIH, that all of the institutes
have engagement in health disparities. The total spending in
health disparity research stands right now at about $2.7
billion this year.
PANCREATIC CANCER GRANT FUNDING
Ms. Roybal-Allard. I would like to go back to the
pancreatic research issue. It is my understanding that in the
Fiscal Year '2011 plan, that 17 newly competing grant proposals
and 59 grant renewals focusing exclusively on pancreatic cancer
were funded after falling within what you call the zone of
uncertainty. I would like to know how do we figure comparative
grants for other cancer types in the zone of uncertainty, and
what is the difference in overall funding levels? And also,
what criteria are used to determine whether or not a proposal
in the zone of uncertainty is being funded?
Dr. Collins. So, Congresswoman, all of the NIH institutes
have a two-level basis of doing decision making about grant
funding. There is the initial study section which reviews the
proposals, assigns a priority score, and then there is a second
level, an advisory council that then looks at program relevance
and balance, and tries to make sure we are spending every
dollar in the best way. That is where this second level of the
zone of uncertainty kicks in.
In terms of the specifics about pancreatic cancer, I would
need to ask my colleague, Dr. Varmus, to answer that for the
record because I do not know the specific details of how that
compares with what has happened with other cancer applications.
Mr. Rehberg. This would be an appropriate time to say that
the opportunity exists for the subcommittee members to ask
additional questions in written form and have them----
Ms. Roybal-Allard. If you would submit that information for
the record----
Mr. Rehberg. And have that submitted, correct.
Dr. Collins. Happy to do that.
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Mr. Rehberg. Dr. Simpson.
Mr. Simpson. Well, for the benefit of my chairman, the
reason we study economics and the reason we have economists is
to make astrology look respectable. [Laughter.]
DENTAL RESEARCH
I would be doing less than my job if I did not ask a dental
question. On March 6th, the New York Times ran a feature story
about the rise in the number of preschoolers with cavities,
citing that in some cases, the decay is severe enough to
require surgery under anesthesia. What is the NIH research
doing about cavities in this early childhood group? And also,
where are with saliva research?
Dr. Collins. Thank you for the question. And my good
colleague, Dr. Tabak, who is now my principle deputy, indicated
to me that you might potentially ask dental questions, Doctor.
So, in terms of early childhood caries, yes, there are
serious difficulties encountered, particularly in minority
communities, and it may relate to a combination of a limited
access to fluoride, but also to dietary practices that are
resulting in sometimes very severe consequences.
The National Institute of Dental and Craniofacial Research
(NIDCR) is certainly very interested in this and has a research
program to try to uncover the causes both in terms of
biological and behavioral, and is conducting research through
centers in dental research that are focused particularly on
particular populations that are vulnerable to this problem. So,
this is a health disparity, just like what we were talking
about a moment ago.
In terms of saliva as a window into the body, maybe not the
soul, but the body, these days if you are going to have a
genome test, what you usually do is spit in a tube, so you know
there must be DNA in there. And there is a lot of other stuff,
too. Saliva does sort of become a filtrate of what is going on
inside the body, and so it is a way in which experimental
protocol, looking to see early evidence of a heart attack from
saliva. And certainly this is also a place where with some new
technology, one can develop tools for looking at possible signs
of oral cancer. The NIDCR has investments in research in both
of those areas, and they are going quite well.
Mr. Simpson. Thank you, and thanks for all you do out
there.
Dr. Collins. Thank you.
Mr. Rehberg. Ms. Lummis.
DRUG REPURPOSING
Ms. Lummis. Well, thank you, Mr. Chairman.
I want you to know I really have a lot of regard for what
you are doing. I want to echo what Dr. Simpson said. This is an
area where I believe the Federal government has a role because
there are so many diseases that are suffered by people that
will never have a cure because unless the Federal government
gets involved in research because the economics just is not
there.
So, I want to give you a chance to put NCATS' best foot
forward. One of the areas where it looks to me like there may
be duplication with what the private sector can already do is
in the area of a drug repurposing program. So, I want you to
explain to me how that might operate.
It seems to me if there is already a drug out there that
has one application, that the entity that would be the most
interested in seeing if there are any other efficacious
applications would be the drug company that holds the patent.
So, why would you want to spend time and dollars duplicating
what the private sector might do with its own patents rather
than exploring areas where there has been almost no research
into a disease solution?
Dr. Collins. Again, let us talk about rare diseases. I
think that is a big part of the answer because drug companies
because of their commercial circumstance and their
stockholders' expectations are not likely to see it as
commercially viable to try to develop a new treatment for a
disease that only affects a few thousand people.
But maybe in the freezer is the drug developed for some
other purpose which turned out not be successful for that
purpose that now with many new discoveries coming forward with
rare diseases might be just the thing.
NIH's goal here is not to step in here and pry things loose
from any company that does not want to offer it. But we hear
companies saying, we are really interested in this, and in
having NIH serve as an honest broker, a sort of clearinghouse,
for compounds to find new uses, and to enlarge, therefore, the
universe of opportunities beyond what a company might
themselves see as a practical way of repurposing.
Ms. Lummis. So, you would only use the repurposing program
for a currently existing drug if the patent holder or
intellectual property holder asked you to?
Dr. Collins. Exactly. They would have to make the compound
available and say we are interested in having this one looked
at by other investigators who might have a new idea about how
to use it.
NCATS PRIORITIES
Ms. Lummis. Okay. And with regards to other components of
NCATS, can you give examples of specific diseases that you see
as being priorities for your initial foray?
Dr. Collins. Again, NCATS' focus is really on finding those
bottlenecks in the pipeline, and so it is more of a generic
strategy. There is a component of NCATS called Trend. Dr. Insel
might mention a couple of the program's specific diseases, but
they are sort of proofs of principles to show that this de-
risking process can work.
Mr. Rehberg. Very quickly, please.
Dr. Insel. Right. So, there are 14 projects across 14
diseases, many of which you have never heard of because they
are very rare. But they are not chosen because of the disease.
They are chosen, as Dr. Collins just said, because they provide
a prototype for us to reengineer. This is what NCATS is all
about. It is looking at the pipeline, figuring new ways to
develop compounds, new ways to develop diagnostics.
Ms. Lummis. Thank you, Mr. Chairman.
Mr. Rehberg. Thank you. This segment will conclude. As I
suggested, the record will be left open for additional
questions if you would respond in a timely fashion.
Mr. Rehberg. And we will invite the next panel up, please.
Thank you, gentleman.
Dr. Collins. Thank you.
---------- --
--------
Tuesday, March 20, 2012.
BUDGET HEARING FOR DEPARTMENT OF HEALTH AND HUMAN SERVICES--NIH
WITNESSES
SCOTT KOENIG, M.D., PH.D., PRESIDENT AND CEO, MACROGENICS, ON BEHALF OF
BIOTECHNOLOGY INDUSTRY ORGANIZATION
TODD SHERER, PH.D., CHIEF EXECUTIVE OFFICER, THE MICHAEL J. FOX
FOUNDATION FOR PARKINSON'S RESEARCH, NEW YORK, NEW YORK
P. ROY VAGELOS, M.D., CHAIRMAN OF REGENERON PHARMACEUTICALS, INC.,
RETIRED CHIEF EXECUTIVE OFFICER AND PRESIDENT OF MERCK CO., INC.,
AND POLICY ADVISOR TO THE PUBLIC AFFAIRS ADVISORY COMMITTEE,
AMERICAN SOCIETY FOR BIOCHEMICAL AND MOLECULAR BIOLOGY
Mr. Rehberg. All right. We will begin. Dr. Koenig, why
don't you start, if you would, please.
Dr. Koenig. Good morning, Chairman Rehberg, Ranking Member
DeLauro, members of the committee, and ladies and gentlemen. I
am Scott Koenig, president and CEO of MacroGenics and chairman
of the board of AGTC.
I worked at the NIH and the biotech industry for the past
28 years. I have been involved in the development of biological
products. I am appearing today on behalf of the Biotechnology
Industry Organization.
It is my privilege to testify before the subcommittee. I
have submitted testimony discussing the importance of NIH
funding in order to maintain our global leadership position in
biomedical innovation to ensure a robust biotechnology industry
in the United States, and to deliver the next generation of
medicines to patients.
My comments today will focus on the National Center for
Advancing Translational Sciences, or NCATS.
BIO is supportive of the NCATS' stated mission to catalyze
the generation of innovative methods and technologies that
enhance development, testing, and implementation of diagnostics
and therapeutics. It is important for NCATS to establish a very
focused set of priorities for each of its initiatives that
individually and collectively will serve to improve research
and development processes.
BIO also agrees with the language in the 2012
appropriations report and statements made by the NIH that
research undertaken by NCATS should not be duplicative of the
research and development done by industry.
The primary metric for determining the success of NCATS is
whether the initiatives will yield significant reductions in
time and expenses in the development of new therapeutics,
expanded terrain of novel targets and pathways, and ultimately
improve the delivery by drug developers of the next generation
of medicines to patients.
In order for NCATS to achieve its goals, they must develop
substantive partnerships and collaborations with industry
regulators, principle investigators, life science investors,
and patient organizations. It is crucial that research
priorities are developed with input for those who are working
in the trenches and are most knowledgeable about where
scientific barriers lie and where adjustable inefficiencies
exist.
Among the inaugural programs that have been highlighted by
NCATS is NIH-DARPA-FDA collaboration to identify methods and
tools that will enable drug developers to better predict
toxicology in humans, and early in the drug development
process, the so-called tissue chip that Dr. Insel showed you
this morning.
Such an initiative should be universally endorsed. It is a
winning proposition if they are successful. Likewise, efforts
to identify and validate drug targets more efficiently would
help to maintain a robust pipeline and potential breakthrough
treatments.
The question that was asked at the end of the last session,
the program to repurpose and rescue drugs, is a perfect example
where collaboration between NCATS and industry is vital.
Industrial partners will be required to develop, manufacture,
and market these drugs, and we encourage NCATS to identify
partners early with industry so they may ensure that they are
addressing issues, such as intellectual property, quality
assurance, and the design and conduct of clinical trials.
NCATS' efforts should not be redundant with translational
work being done at other centers at the NIH, but we believe
that NCATS can serve as a point of contact and convener for
meetings as a way for public/private partnerships, industry,
and other stakeholders to reach out to NIH with potential new
research collaborations and maintain a dialogue in a systematic
and transparent manner. The vast majority of NCATS' budget is
dedicated to the CTSAs that you heard about earlier.
We encourage the engagement of CTAs and clinical
investigations that help to validate bio markers, identify the
impact of specific genes or epigenetic factors that would
predict clinical efficacy or safety signals within certain
populations or within particular classes of drugs, and
establish principles to conduct in clinical studies with
innovative designs, particularly those that demonstrate
synergies among classes of molecules that would lead to better
therapeutic options for patients.
NCATS has a real opportunity to take a leadership role in
improving the science of drug development. The success of these
discoveries will only be realized if they are adopted in
advance by industry, and it is imperative that NCATS work
closely with the FDA to foster the development and adoption of
these new tools and practices.
Finally, I would like to briefly discuss the Cures
Acceleration Network Program. BIO has long supported this
initiative. We think this provides a unique opportunity for
industry and other stakeholders to collaborate with NIH and FDA
on innovative drugs to treat diseases of critical importance to
public health, and to fund programs, such as treatments for
ultra-rare diseases that are generally not supported by the
private sector. BIO is interested in continuing to work with
NIH as this new program evolves.
So, in conclusion, Mr. Chairman, we believe that there is a
real opportunity to systematically identify key scientific
areas of research, such as predictive toxicology, tools and
methodologies to accelerate target identification and
validation, and to improve clinical trial efficiency so that
ultimately it would serve to enhance the development of new
drugs as a whole. And I thank you for the opportunity to
testify today, and we look forward to continuing to work with
Congress and the NIH as this new center evolves.
Mr. Rehberg. Thank you, Dr. Koenig.
And welcome, Dr. Sherer.
Mr. Sherer. Thank you, Chairman Rehberg, and Ranking Member
DeLauro for inviting me to testify today on the National Center
for Advancing Translational Sciences.
I am the CEO of the Michael J. Fox Foundation for
Parkinson's Research. Our foundation has a single mission: fund
research that will speed the cure for the 1 million Americans
suffering from Parkinson's disease, a debilitating
neurodegenerative disease without adequate treatment.
Since our launch in 2000, our foundation has developed more
than 100 Parkinson's disease therapeutic targets, pushing
dozens of these closer to the clinic for relevance in patient's
lives. Our urgent goal is to prioritize our limited resources
within the complicated drug development process for the maximum
impact for patients' lives. To produce one drug for Parkinson's
disease can take over 15 years and up to a billion dollars of
investment. I frequently have used the alphabet as an analogy
to highlight the complexities that result in the high costs and
long lead times.
In the first part of the alphabet, say, letters A through
F, there were aha moments where an academic scientist looks at
some aspect of biology and asks, can this be important? This
discovery science is the backbone of all drug development that
occurs. Our foundation's impact is possible because we
strategically build off the Federal government's ongoing
investment in discovery science through the NIH. But when it
comes to developing cures, questions at this level are the
first step of a thousand mile journey.
The next chunk of the alphabet, say, letters G to P, is
translational research. This is the applied work where
scientists hone in discoveries from the A to F phase, looking
for disease specific effects. Translational research asks the
questions that must be answered before we can take the critical
leap to test the potential therapy in humans. The problem is
this is far easier said than done.
This phase has been dubbed the valley of death because of
the chronic funding and expertise gap that is crying out to be
addressed like an institute, like NCATS. For now and
fortunately, this is where potential treatment breakthroughs go
to die.
The very few novel approaches that do make it out of this
middle phase still have to navigate the final part of the
alphabet--call it Q to Z--which is largely handled by the
private sector. In this final stage, potential new drugs
initiate clinical testing and ultimately will seek regulatory
approval. But funding capital here is becoming more and more
risk adverse.
NCATS can play a vital role in making drug development more
efficient and effective for generations of Americans, and I
would like to share a few learnings from the time and work at
our foundation that may be helpful in thinking about NCATS.
First, the research enterprise is made up of multiple well-
intentioned, but differently incentivized stakeholders. For an
academic researcher, success means publication and promotion.
For industry, it is patentable assets. But for patients, it is
critically needed new treatments. No one is orchestrating the
efforts of all these different players. As Michael J. Fox has
said, there is no department of cures.
Progress requires a conscious decision to elevate
translational science, including an appreciation for what it
is, why it is vital, and what strategies can help foster
success. Creating a culture of translation within the NIH is
bigger than any single disease and bigger than the work of our
foundation.
Second, our foundation realized early on that to drive
Parkinson's breakthroughs, we need to make investments in
applied biology to transform basic discoveries into practical
treatments. This does not happen on its own. The tough truth is
that our system largely fails us right where it should be
working the hardest. A successful NCATS would make a tangible
difference by strategically building the right pools of
expertise where they are needed most, at the Q to P
translational phase by supporting creative, higher risk
approaches to drug development and leveraging collaborations
with patient organizations, academia, and industry. This will
ultimately move projects faster through the drug development
pipeline for the benefit of all Americans.
Third, at the core of our foundation's daily work lies a
single purpose: allocating resources wisely with Parkinson's
patients benefit in mind. NCATS can seize the opportunity to
represent patient relevant investment on a larger scale,
impacting the lives of countless Americans. This means not only
orchestrating work within the translational stage, but also
stepping in to champion projects that would otherwise languish
because they hold no incentive for the private sector. It means
repositioning existing drugs that hold promise for untreated
disease, and importantly investing in pre-competitive research
tools that can move the entire field forward faster.
Fourth, we have heard from those who believe that the
private sector alone bears the responsibility for bringing new
treatments to market. In our experience, this just does not
work. The challenge is not getting the private sector to pick
up a promising idea that has made it all the way to letter Q in
the clinic. The challenge is getting it that far in the first
place, particularly when economic realities and research
challenges are making it harder, not easier, for companies to
invest in high risk science.
The drug development system impacts generations of
Americans. I hope the core values for translation I have shared
today, aligning stakeholders to enable better handoffs from one
stage of research to the next, adequately investing in applied
science, maintaining a patient oriented perspective, and
reducing risk in order to position projects for private sector
investment will be helpful in shaping the future of NCATS. It
is one of our greatest hopes that we will have the opportunity
to work with NIH and NCATS leadership to usher in this new
institute.
I would like to thank the committee for the opportunity to
be here today. As Michael J. Fox has said, the answers we want
are not going to fall out of the sky. We have to have ladders
and climb up and get them.
Thank you, and I am happy to take any questions.
Mr. Rehberg. Thank you. Dr. Vagelos, welcome. Good to have
you.
Dr. Vagelos. Chairman Rehberg, Ranking Member DeLauro, I am
happy to be here. You have seen my statement, so I am not going
to read it.
Mr. Rehberg. Thank you.
Dr. Vagelos. Yes. I would like to just make a couple of
comments that might be helpful.
The reason I outlined my background is that I have had,
because of a long history, experience in clinical work, having
taken care of heart patients. I have done basic research. I was
10 years leading the Merck Research Laboratories, and then for
9 years I led the company. I had to retire at age 65 because of
board policy, and then became chairman of two biotech
companies. So, I have a broad experience across the field.
My message to you is one, and that is we have heard it two
times. Dr. Insel and Dr. Collins both referred to the lack of
knowledge to do various things. Pancreatic cancer for one. I
have forgotten what Dr. Collins landed on.
The history of the success in our country in the biomedical
sphere is based on the basic research that is funded almost
entirely by NIH and in public funding. The translational or
applied research typically is done in industry and done well.
We have a wonderful history.
I have outlined the history of the development of the
statins, which the first one introduced by Endo in Japan, that
is a compound was discovered, was found to have problems in
humans, and that is when the Merck competitive spirit took over
and produced the first statin in the world. And then that was
lovastatin, Mevacor. And then when the doctors who believed in
the cholesterol hypothesis used it, others did not because they
said, lowering cholesterol, what good is that? Merck brought
along the second statin, which was simvastatin, Zocor, and did
a huge outcome study which demonstrated over a 5-and-a-half-
year period that one could reduce mortality by 30 percent and
decrease that from heart attacks by 43 percent. That was
introduced and started the statin revolution of cardiovascular
disease treatment.
So, we have a history at Merck. We introduced the first
vaccine against Hepatitis B, a virus that causes liver cancer.
And, of course, Merck introduced a second vaccine that prevents
cancer, and that is a vaccine that gets human papilloma virus
that prevents cervical cancer. So, the company has been
involved in first drugs for glaucoma, osteoporosis. It goes on
and on. And much of that started while I was at Merck.
And so, my issue is that we have an enormous need for more
basic research. We have succeeded up until now. We do not want
to change that paradigm. Is the paradigm broken? Is basic
research evolving that is now picked up quickly? Thank God.
Now, I do not have to shout. [Laughter.]
And my answer is no. When basic research, which we
desperately need in all disease areas, becomes available,
companies move fast. I will give you two examples that are in
racing in the clinic today. One is we know very definitely that
LDL-cholesterol, lowering that causes a reduction in coronary
heart disease. And there is a new mechanism that has been
identified in the last four or five years that targets a new
enzyme other than what the statins do. And that is PCSK9. And
if you can block that as found in people who are normal,
walking around, and never get coronary heart disease, but have
extremely low density for protein cholesterol, if you can do
that, they are predicting that one could take another step in
prevention of heart attacks.
There are probably at least four companies racing to do
that. They have gone through phase two, and that has all
happened in the last five years at one of those companies,
which apparently is in the lead, is Regeneron, the company I
chair, by the way.
Now, the other one is SMA, skeletal muscular atrophy. This
is a terrible hereditary disease that affects thousands of
children in this country and the world. And the defect was
identified very recently, and there are three companies racing,
one of them already in the clinic, two others going into the
clinic.
So, my message is we lack basic research. Some of the
things NCATS proposes to do are certainly worthy. There are
some of them that I would say are not worthy of support. And
when I know that only 17 percent of people who finish their
work and are requesting their first grant, only 17 percent are
being funded, that is a direction for disaster in this country
competitively.
Mr. Rehberg. Great. Thank you very much.
You have done it all, which is interesting, and I
appreciate the opportunity then to ask you, you know, there are
some of us that are specialists and some of us that are all
arounds. But it sounds like you have been involved in just
about every segment.
So, I would like to ask you what or who, if you were the
NIH god and became the director tomorrow, how would you
implement NCATS? What would you do to change the relationship
between industry and the government, the Federal government?
Obviously I think your focus was on basic research, which is
fine. But could you expand a little on how you would design
NCATS and change functions within the NIH to better provide the
efficiencies that are necessary based upon the dollars we
spent, but, more importantly, on providing the service to the
public that we intend?
Dr. Vagelos. Chairman Rehberg, I probably would not have
started NCATS. In the priority of things, I think that while
NCATS, the things that they are proposing to do can be helpful,
they are not the limiting issues in development of new drugs.
They just are not.
Just look at relative budgets. The budget of the NIH is
about $30 billion. NCATS is about $575 million. The budget of
industry, pharmaceutical biotech industry, I do not know what
it is. I think it is about $50 billion. Now, does anyone in the
total audience believe that there is something that NCATS is
going to do that the industry thinks is critical and that they
are not doing? I think that is incredible to think that. If you
believe that, then you believe in faeries.
Mr. Rehberg. Okay. Dr. Koenig. Maybe you have had the
experience. I do not know if you have been involved in clinical
studies.
Dr. Koenig. I absolutely have been involved in clinical
studies. I have worked at two biotechnology companies for 22
years, and have been involved in clinical research, actually
improving the implementation of these studies. And it is sort
of a vast field. I mean, we have been involved in immunology
research that transcends autoimmunity, cancer, infectious
diseases. So, we have a widespread view of the applications of
various drugs and what they can do.
With all due respect to Dr. Vagelos, I think that there is
a unique opportunity that NCATS has sort of pointed out. We
definitely agree that when a particular target has been
identified, the drug industry, which includes biotech industry,
is best suited to ultimately develop that drug and do it well.
But what has proposed are sort of new initiatives to fill the
gaps, and the things that I have sort of highlighted today in
terms of predictive toxicology, this is not an initiative that
drug companies would be working on to move advances in a
particular drug for a particular indication.
The idea of identifying surrogate markers. Now, one of the
biggest troubles in terms of the whole development process is
that we do not know what ultimately how a drug will work in
every way, shape, or form. And so, if we are able to reduce
this in a laboratory test to identify something that will give
a response that ultimately years down the line will produce a
clinical benefit, we have an ability now to shorten that whole
process of drug development and get drugs to patients much
earlier.
Again, this is not something that the drug industry spends
a lot of time and effort on. So, these are two of many things.
Mr. Rehberg. If I could stop you there just so Dr. Sherer
has an opportunity to answer. I have about a minute left on my
time.
Mr. Sherer. Yeah. Also I guess I have a different take on
this than how it is presented because I know from the work of
our foundation, we have about $50 million of research each
year, and we feel we are making a significant impact because
there are clear areas that the industry does not focus on. And
I think things that NCATS can do that would actually make the
$50 billion that industry is spending more efficient and have a
greater chance of actually leading to more therapies, things
like clinical trial efficiencies, how clinical trials are
conducted, diagnostic tests.
And then this comment about identifying targets,
identifying targets, as I mentioned in my statement, is the
first step. And with the technologies that Dr. Collins was
talking about, we are identifying thousands of new targets. And
there needs to be work done to really prioritize those for the
industry because the industry is not going to pick up on all of
these targets.
So, I think there is a lot that can be done by NCATS with
the budget that they have to make a significant difference.
Mr. Rehberg. Great. Thank you.
Ms. DeLauro.
Ms. DeLauro. Thank you very much, and I want to thank the
panel for their testimony. I want to get to Dr. Sherer.
But, Dr. Vagelos, I think you have made the case for NCATS
here this morning in that this is not an issue of what industry
needs, quite frankly, or the top five illnesses. But it is a
question of what patients need and the therapies and the
treatments, et cetera. And it is what the rare diseases that
are out there need, the orphan diseases that are out there,
quite frankly which the top five or big pharma is not
undertaking.
And with that, let me move to Dr. Sherer because I want to
just probe a little bit more with you what you started to talk
about.
I think your presence here today really keeps us focused on
the prime effort of medical research, develop better ways to
prevent and treat disease and to improve health. The foundation
is very focused on not just improving our understanding of
Parkinson's disease, but also translating that understanding
into things that will actually be available to help patients as
quickly as possible.
What can the NIH do to help organizations like yours that
are seeking to bridge that gap between advances in basic
science and the availability of new treatments for patients?
What role would you like to see NCATS play that individual
organizations like yourself cannot? And if you have time, what
issues related to Parkinson's or neurology would you like to
see NCATS take on?
Mr. Sherer. Thank you for the question.
I think this is really an important issue in that every
disease can have a champion like the Michael J. Fox Foundation,
but there are pretty significant challenges about developing
drugs for neurology that are beyond the scope of activity that
an individual foundation can have. And they are not being
picked up and dealt with right now by the pharmaceutical
industry, who needs also the help that NIH can provide or
NCATS, for the benefit of patients. And these include some of
the issues that were talked around safety and toxicology, some
of the issues around the fact that we work on Parkinson's.
There are a lot of age-related neurodegenerative diseases
that have commonalities--Alzheimer's, Parkinson's, Huntington's
disease, some common challenges that NCATS can address related,
again, to safety, toxicology, clinical trial efficiencies,
diagnosis, tracking of the disease. These are really critical
issues that can be addressed by an entity like NCATS that would
benefit not just people with Parkinson's, but people with all
diseases.
Ms. DeLauro. Okay. Let me just ask Dr. Koenig, do you want
to comment on any of that? This was specific to Parkinson's,
but go ahead.
Dr. Koenig. Not specific about Parkinson's, but, again,
actually if I think of what NIH can do with organizations like
patient organizations and working with companies, I actually
think back to my days at NIH and the evolution of how industry
has interfaced with NIH. And I think over the years it has
become closer and closer because we understand that there are
gaps that industry can fill, and that NIH needs to provide. And
this actually is reflected even in the granting process.
What I have seen from the history of grants is that many of
these grants now are actually seeking partnerships between the
basic researcher and companies to work on new initiatives. And
I actually implore that in this NCATS initiative that they
actually spend a lot when they go out working with the new
grants initiatives, that they include that as a preferred way
of conducting research because actually as a team we can work
together ultimately to get a better pathway and assure the
development of new drugs.
Ms. DeLauro. There is a short time, Dr. Vagelos, and we are
going to come back. But you----
Dr. Vagelos. I just wanted to say one thing to speak to the
rare diseases and diseases that are not going to have profits,
orphan diseases. A small company, Regeneron, worked on CAPS, C-
A-P-S, which is an acronym for a disease that affects a couple
hundred people in this country, and developed a drug and put it
on the market, really making very little money at all. A tiny
company whereas Merck had a drug for animals, killing of
parasites, called Ivermectin. And we discovered that it worked
in parasitic diseases characterized as river blindness in Sub-
Saharan Africa. That was going to make no money at all. We knew
that when we started.
We carried out an eight-year development program to show
that it was safe and effective, and then started giving it away
in 1987 to all people in Sub-Saharan Africa and other parts of
the world, and are treating at this time. Merck is now
treating, let me see, 95 million patients a year free.
Ms. DeLauro. I would just say, let me just finish this, Mr.
Chairman.
Mr. Rehberg. You may.
Ms. DeLauro. My point was not about the money. My point was
that the decision, as you put it, you know, it is what industry
decides we should move forward on. I just do not happen to
believe that that is the way that we ought to make a
determination of what efforts, and what research, and what
science we move into. That was my only point. It had nothing to
do with money.
Mr. Rehberg. Mr. Alexander.
Mr. Alexander. Thank you, Mr. Chairman.
The question is for whoever wants to answer it. But what
can we do to coordinate efforts between the NIH and NCATS to
improve the way the pharmaceutical companies can move more
quickly from discoveries to treatments?
Dr. Koenig. As I described in my testimony today and in
testimony, I think that NCATS has a great opportunity now to
sort of be the convener, the go to part of NIH that can be
bridging the relationships between patient organizations,
industry, and others where they can hold meetings, where they
are very transparent on what their initiatives will be. And it
gives an opportunity now for industry and NIH to get together
so that industry can propose new research collaborations.
I think that ultimately the aha moments that were described
earlier occur when we put together the drug developers, the
patients, and scientists who are working on basic research in a
room. And it happens typically at meetings working on
particular diseases.
But this is an opportunity now with a focus on, again, the
things we talked about, predictive toxicology, and looking at
surrogate biomarkers, how these teams can work together.
So, again, forming a sort of a consortium between the
various members here could, I think, help to accelerate the
development of new drugs.
Mr. Sherer. I would just echo those comments, and I think
the centralization of this information and expertise will be
very critical. It does not just look necessarily at one
disease, but can look at the application broadly for human
health. Bringing the stakeholders together would be important.
Dr. Vagelos. I do not think there will be any acceleration
at all by the NCATS of things that are recognized as important
by people in the community, by people in industry, and by
people in academia because industry is so focused to get
something done when the science is available, and the science
can impact a disease. Whether it be a large disease or a small
disease, they really are critical, and they have the passion
for drug and vaccine development.
And the amount of money that is funneled at that is huge,
and, therefore, I think that the money that is going to NCATS,
if it could support those other than the 17 percent of young
Ph.D.s and M.D.s who are getting their first grant so that we
support more of those, we would be doing a lot more good for
getting important new drugs on the market.
Mr. Sherer. I would actually just like to come back to what
Ranking Member DeLauro said because we have seen even in our
space, in Parkinson's, the changing landscape in the
pharmaceutical industry, we have seen many of them merge and
combine in the last couple of years. And I do not share the
view that in all cases the decisions are solely made on a
scientific or patient focused basis.
So, I think obviously our foundation strategy is to de-risk
projects and get industry more involved in Parkinson's, and
work with them as part of the collaborative network. But I
think it does need to be a collaborative network of patients,
the government, and industry, and not just solely relying on
one entity alone to sort of help us all in the end.
So, just it is my view, but I think that is kind of the
evolving framework of the industry, and we should understand
that and now figure out our goal is to develop treatments for
patients, and let us try everything we can and not just the
same old thing that has been tried in the past.
Mr. Rehberg. Ms. Roybal-Allard.
Ms. Roybal-Allard. As you know, moving therapies further
down the development pipeline is one of the focuses of the
newly-formed National Center for Advancing Translational
Science through its Therapeutics and Rare and Neglected
Diseases Program. Yet in your testimony you encourage NCATS to
otherwise focus primarily on pre-clinical and early clinical
studies.
What is your view of the proper boundaries between the work
of NCATS and that of the private sector, and what is best for
government, and what is best for industry? And how do you
recommend that NCATS directly contribute to both early and more
advanced translational research without being duplicative of
efforts already under way by industry, medical research
institutions, or other NIH grantees?
Dr. Koenig. Thank you very much, Congresswoman, for the
question.
I did, in fact, emphasize in my written testimony that the
focus of the NCATS should be on the early clinical assessment
of these opportunities, again, in the context of things which I
talked about, treatments for rare diseases, which could go a
little further into phase two development, because, again, the
concern that the private sector does not support this as well
as it should.
But I think there is an opportunity for NCATS to actually
give a focus on smaller populations where they can get insights
on how a drug may be developed, identifying these new surrogate
markers that could be worked on.
I agree with Dr. Vagelos here that once industry has a drug
that has a proven safety record, that they do the latest stage
development, phase two developments, the design of those
studies much better than what would be done by NCATS and the
NIH. And I think that it is important that when NCATS moves
into phase two development, they reach out to industry for
their advice because I have seen many cases, for instance,
where a principle investigator wants to do a phase two study
with a compound, and then will spend millions and millions of
dollars doing that study, and it is done under circumstances
that ultimately when that data comes out cannot be used for the
registration of that drug down the line with the FDA.
And so, I think there are lost moments there when in the
rush and the design of these later stage studies by the NIH
investigators supported by the NIH, they are not looking at
sort of the full long-term view of the value of that clinical
trial and later stage drugs for the ultimate registration of
the product. So, that is where I think industry definitely
needs to have a hand, work if it actually gets to phase two,
with the NIH investigators. But ultimately I think it is
industry that needs to move forward in phase two and three
development.
Ms. Roybal-Allard. And, Dr. Sherer, with regards to your
foundation, can you elaborate a little bit on what progress the
foundation has made on Parkinson's therapies, and what
contributions has NIH sponsored research made to that progress?
Mr. Sherer. Yes. So, one of the areas that we have focused
a lot on is what we call target validation. This is really that
first stage of translation where you are taking discoveries out
of NIH funded labs that maybe have identified a new target that
may have potential as a treatment for Parkinson's, and now you
are doing some of the more specific direct tests for
Parkinson's.
And there are a number of specific examples where we then
had funded some work in the pre-clinical testing, moved that
target now to early clinical testing, and we now have phase two
trials being conducted by the pharmaceutical industry on those
targets for Parkinson's.
So, it really was a targeted focus on that gap I talked
about, the middle of the alphabet. NIH funded research had
provided very clear promising new discoveries, and then we came
in with our focus on Parkinson's, how to accelerate this as
quickly to the clinic for patients. We had pharmaceutical
companies working with us to prioritize the studies, and now
they have molecules being tested in the clinic.
So, our foundation has already been around for 10 years. I
have talked about the timeline, so we are hopeful that some of
these trials will result in new therapies, but we know that
there are new trials happening because of that work.
Ms. Roybal-Allard. This may have been somewhat answered in
the past, but what role do you believe NIH can and should play
in fostering the development of therapies for rare and
neglected diseases where there is less incentive for
involvement by industry?
Mr. Sherer. So, I think it is a similar role that we have
played for Parkinson's that could be looked at more broadly,
and really looking at what is coming out of the basic science,
what are the most promising avenues, and move those forward
from a therapeutic perspective.
But I think even more important if you even wanted to
encourage more industry investment in some of these areas, is
understanding the clinical testing in those diseases. How will
that happen? Make it more efficient. Put the tools in place
that could be used in future trials because it is a lot to ask
a company to develop the drugs and the tools and all the
information. And I think this is where NCATS could really
coordinate all of that effort with the patient interest, the
pharmaceutical expertise, and the academic knowledge.
Ms. Roybal-Allard. Thank you.
Mr. Rehberg. Ms. Lummis.
Ms. Lummis. Well, thank you, Mr. Chairman.
It was fun to hear that Ivermectin has found a use outside
of our uses. You know, I will bet between Mr. Rehberg and I, we
have administered tens of thousands of doses of Ivermectin to
our livestock. And what a neat thing to find out that there was
an application for human use and to alleviate human suffering.
In my job, you know, I seek counsel from the Bible for my
soul. I seek counsel from Merck's veterinary manual for my
livelihood and my stewardship obligations. [Laughter.]
Mr. Rehberg. Ms. Lummis, for those of us who maybe
sometimes accidentally jabbed ourselves, it is also nice to
know it is safe. [Laughter.]
Ms. Lummis. Exactly. Yeah. I have been vaccinated for red
nose, black leg, you name it, as have you. Yeah, Bang's
disease.
Let me go on to, I am trying to hone in on where the
Federal role ends and begins, and where the private sector role
ends and begins, if we can get there.
It is my understanding that NIH uses a more academic model
for its clinical trials, and industry may have to repeat
clinical trials conducted by the NIH because they do not meet
FDA standards. So, my question would be, how do we create some
fairly clear lines? And have there been discussions between the
private sector industry and NIH about how to set those lines?
Yes, sir.
Dr. Koenig. So, let me comment that the NIH conducts its
clinical research with FDA guidance and approval, so they are
not below standards, meeting what is appropriate for patient
population with regard to safety and oversight for those
trials.
However, as I was trying to allude to before is that
industry will sometimes include testing, oversight, quality
assurance, that NIH does not have the infrastructure to do. And
so, ultimately as the point I was making, it is fine for NIH to
conduct phase zero and phase one studies and early phase two
studies, again, particularly in the case of rare diseases
where, again, I think industry could do a better job, but is
not incentivized there. But once it gets to that phase, it is
very important that we use drug industry standards, biotech
industry standards for conducting these trials for oversight
because it could be as important as is how that drug is made.
So, in particular, biological molecules, if they are not
appropriately characterized in full and they go through this
clinical process and get into phase two without the right to
oversight on how to manufacture this at scale. If you have to
now go back to phase zero and one testing, you have now lost a
lot of opportunity and a lot of money that was put into those
phase two studies that cannot be used for registration of those
drugs.
So, I think, again, as a little blurring of the line, I
would say phase zero, phase one, NIH some phase two for certain
indications. Work with industry, but once it gets to phase two,
particularly two development, three development, et cetera,
that should be in the bailiwick of industry.
Ms. Lummis. Dr. Vagelos, do you have a comment on that?
Dr. Vagelos. My comment is that I cannot emphasize enough
the need for new knowledge because it was referred to by both
Dr. Collins and Dr. Insel to really make important new drugs.
And that is what we lack. And that new knowledge is going to
come from NIH funded research, young people finishing their
post-doctoral training, and getting grants. It boils down to
that.
We are shrinking that groups whereas the Chinese are going
into it, the Russians are going into it, the people in India
are going into it big time.
Ms. Lummis. Yep.
Dr. Vagelos. We have been the leaders of the world up until
this time.
Our young people are still coming to the universities to
get their degrees, but what they are hearing now is grumbling
among their mentors and the professors who are struggling to
get their research funded. And this is discouraging. It is
discouraging to the young people who are the blood of the
future of our competitive position in the world. And we cannot
be in this position.
Now, if we are going to be starting other initiatives and
not fulfilling that need, I think we are not doing the right
thing.
Mr. Rehberg. Thank you. Mrs. Lowey.
Mrs. Lowey. Thank you very much. And, first of all, Dr.
Collins, Dr. Insel, Dr. Fauchi, Dr. Verma, I apologize because
of an urgent commitment that I could not be here. But as you
know, I am a strong supporter of the National Institutes of
Health, and that is why I am so dismayed that the budget
request proposes level funding. I understand we are in a
difficult fiscal climate, but NIH research saves lives, creates
jobs, makes us more competitive.
I think it is imperative that we provide the NIH with a
minimum of $32 billion, and then we could solve so many of the
other problems.
Secondly, I am sorry I missed your panel, but I am
delighted to welcome Regeneron here. Regeneron is in my
district, and I know that Regeneron started with four
employees; you are up to 1,700 employees in the United States
of America. And so, congratulations. I am very thrilled.
Now, with regard to scientists, I remember very clearly at
one of the roundtables I had where Regeneron participated, one
of the smaller companies, three employees, said they went to
China, they met with all the appropriate people, they said,
what are you going to do for us. Come back at 4:00--it was
about 1:00 I think. I do not remember it exactly. Come back
about 4:00, and we can provide 40 scientists to you to work
with you in this small company. So, what you are saying, Dr.
Vagelos, is absolutely correct, and very frustrating to me.
And I would like to ask you two questions. Number one, you
already said something about the NIH. What else could this
committee do to support the training of young scientists?
And then I would like you all to respond. I read parts of
the book, and I have been in discussions with people who are
talking about industry doing ``me, too,'' drugs. And a lot of
the energy and the focus can be put on new challenges rather
than the ``me, too,'' drugs.
And, thirdly, you talked, Dr. Vagelos, about statin drugs.
Now, what should people like us do, choose between diabetes,
losing our mind, or a heart attack? [Laughter.]
You can answer in what order you choose.
Dr. Vagelos. Whatever order. Yeah, thanks, Mrs. Lowey.
Mrs. Lowey. Because I know we have limited time.
Dr. Vagelos. It is nice seeing you in person.
First, what can we do about training new people? I think
support of graduate programs, both Ph.D. and MDPh.D. programs,
and post-doctoral fellows is crucial to keeping the pipeline of
exciting young people coming in in both academia, and NIH, and
industry. That is crucial.
What we are talking about is a finite amount of money and
how you carve it up. I think that is a very important area to
continue supporting.
Secondly, ``me, too,'' drugs. ``Me, too'' drugs are
generally when a company starts research on a drug target, they
may or may not be the first one on the market. If they are not
first, they hope to have a better follow-up drug, and so they
continue. But if they finish and they have put now $100 million
into it, and they have one that is only as good as what is out
there already, the marketing people go ahead and sell it. So,
that is sort of a mistake along the way, and I do not support
those things on the market, but that is a different thing.
Those are failures of the industry frankly.
Thirdly, solution. What was your third aspect? Remind me.
Mrs. Lowey. No. We have all read the research about statin
drugs.
Dr. Vagelos. Oh, the statins, okay. The statins are
probably one--I would look around this room and say, how many
people are on a statin? And those of you who are not raising
your hand, you are making a mistake because they are
incredibly--they have been studied probably more than any class
of drugs that I am aware of. They are taken very broadly. They
have enormous benefit.
If there are risks that we still are not sure about because
I am not sure if any of these things that have been raised,
like fuzzy, loss of memory, diabetes, which have not been found
in any of, I would say by now, hundreds of trials, they must be
extremely rare, and the benefit is so enormous that I have
continued taking statin.
Mr. Rehberg. Mrs. Lowey, I am going to allow you to burn up
the rest of the time. You kind of win the lottery today. I did
intend to close the hearing at 12:30, which does not afford
enough time for the rest of us to do a second round, so if you
want to continue the questioning so that we can get a complete
answer from everyone.
Mr. Sherer. I just wanted to quickly comment----
Mr. Rehberg. No, you do not have to hurry because you have
got----
Mrs. Lowey. The statin?
Mr. Sherer. On the statin comment, because there was
actually a discussion before about a role related to
repositioning, and the role that someone like NCATS can play.
There is a lot of data that shows that taking a statin could
decrease your risk of Parkinson's including Zocor.
So, someone should do a trial to test that as a treatment
for Parkinson's disease. The patent is going to run out. Who is
motivated to do it? This is a role that the government can play
in something like that, you know, broadly across different
diseases.
Mrs. Lowey. Well, let me say this, because I do not want to
get into personal situations. Some of us have been taking
statin for years. The recent reports about diabetes and losing
mental acuity are of great concern, and yet you do not want to
go have a heart attack or something else in the meantime.
So, the question is, when this information is released--I
probably should ask the NIH about it, too--how carefully is
that information--you want to answer. I would rather hear from
you. You know what I want to know.
Dr. Koenig. Yeah. I mean, I have a couple of answers to
several of the questions. This drug has been given to so many
people. Let us be very clear. Every drug has side effects, and
the question is, do they have a frequent occurrence or a rare
occurrence? And ultimately the way we are forced to make these
decisions is to expose millions of patients to get a rare
occurrence to find this thing.
And so ultimately, the population has to understand this is
not a risk-free situation, that there is a balance between the
salutatory properties of a drug and potential side effect
profiles.
Having said this----
Mrs. Lowey. Are you on statins?
Dr. Koenig. Yes, I am. I have been taking statins for 15
years.
Mrs. Lowey. Which one? [Laughter.]
Dr. Koenig. Actually the Merck compound. Okay.
Mr. Rehberg. I may call this to a close.
Mrs. Lowey. But we do not have any good studies as to
adverse reactions.
Dr. Koenig. But let me----
Mr. Rehberg. Please either ask----
Dr. Koenig. So, let me finish, I am sorry----
Mr. Rehberg. To claim time or go through the chair. I will
maintain control of this committee.
Mrs. Lowey. Thank you. I just was seriously asking the
question because among all of us, there have been many
discussions, so we were using this opportunity.
Dr. Koenig. So, I just want to finish off is that, again,
what was described today in terms of predictive toxicology to
be able to now find those rare safety events in the laboratory
as opposed to exposing millions of patients would be a major
advance that NCATS could do in their initiative.
I have other comments on the other things, but it is----
Mr. Rehberg. That will be----
Mrs. Lowey. Thank you, Mr. Chair.
Mr. Rehberg. Thank you very much. Thank you all for your
insight. So I get this correct, and I will read this. We will
hold the record open for 14 days for the subcommittee members
to submit questions for the record.
In addition, I understand the NIH's center directors have
submitted statements for the record. We will distribute them to
subcommittee members and include them in the record.
[The prepared statements and biographies of the National
Institutes of Health, Institute and Center directors follow:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Mr. Rehberg. Again, gentleman, thank you, and the audience
as well. Thank you.
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