[House Hearing, 112 Congress]
[From the U.S. Government Publishing Office]



 
  FDA USER FEES 2012: ISSUES RELATED TO ACCELERATED APPROVAL, MEDICAL 

GAS, ANTIBIOTIC DEVELOPMENT, AND DOWNSTREAM PHARMACEUTICAL SUPPLY CHAIN 
=======================================================================



                                HEARING

                               BEFORE THE

                         SUBCOMMITTEE ON HEALTH

                                 OF THE

                    COMMITTEE ON ENERGY AND COMMERCE

                        HOUSE OF REPRESENTATIVES

                      ONE HUNDRED TWELFTH CONGRESS

                             SECOND SESSION

                               __________

                             MARCH 8, 2012

                               __________

                           Serial No. 112-126


      Printed for the use of the Committee on Energy and Commerce

                        energycommerce.house.gov





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                    COMMITTEE ON ENERGY AND COMMERCE

                          FRED UPTON, Michigan
                                 Chairman

JOE BARTON, Texas                    HENRY A. WAXMAN, California
  Chairman Emeritus                    Ranking Member
CLIFF STEARNS, Florida               JOHN D. DINGELL, Michigan
ED WHITFIELD, Kentucky                 Chairman Emeritus
JOHN SHIMKUS, Illinois               EDWARD J. MARKEY, Massachusetts
JOSEPH R. PITTS, Pennsylvania        EDOLPHUS TOWNS, New York
MARY BONO MACK, California           FRANK PALLONE, Jr., New Jersey
GREG WALDEN, Oregon                  BOBBY L. RUSH, Illinois
LEE TERRY, Nebraska                  ANNA G. ESHOO, California
MIKE ROGERS, Michigan                ELIOT L. ENGEL, New York
SUE WILKINS MYRICK, North Carolina   GENE GREEN, Texas
  Vice Chairman                      DIANA DeGETTE, Colorado
JOHN SULLIVAN, Oklahoma              LOIS CAPPS, California
TIM MURPHY, Pennsylvania             MICHAEL F. DOYLE, Pennsylvania
MICHAEL C. BURGESS, Texas            JANICE D. SCHAKOWSKY, Illinois
MARSHA BLACKBURN, Tennessee          CHARLES A. GONZALEZ, Texas
BRIAN P. BILBRAY, California         JAY INSLEE, Washington
CHARLES F. BASS, New Hampshire       TAMMY BALDWIN, Wisconsin
PHIL GINGREY, Georgia                MIKE ROSS, Arkansas
STEVE SCALISE, Louisiana             JIM MATHESON, Utah
ROBERT E. LATTA, Ohio                G.K. BUTTERFIELD, North Carolina
CATHY McMORRIS RODGERS, Washington   JOHN BARROW, Georgia
GREGG HARPER, Mississippi            DORIS O. MATSUI, California
LEONARD LANCE, New Jersey            DONNA M. CHRISTENSEN, Virgin 
BILL CASSIDY, Louisiana              Islands
BRETT GUTHRIE, Kentucky              KATHY CASTOR, Florida
PETE OLSON, Texas
DAVID B. McKINLEY, West Virginia
CORY GARDNER, Colorado
MIKE POMPEO, Kansas
ADAM KINZINGER, Illinois
H. MORGAN GRIFFITH, Virginia



                        Subcommittee on Health

                     JOSEPH R. PITTS, Pennsylvania
                                 Chairman
MICHAEL C. BURGESS, Texas            FRANK PALLONE, Jr., New Jersey
  Vice Chairman                        Ranking Member
ED WHITFIELD, Kentucky               JOHN D. DINGELL, Michigan
JOHN SHIMKUS, Illinois               EDOLPHUS TOWNS, New York
MIKE ROGERS, Michigan                ELIOT L. ENGEL, New York
SUE WILKINS MYRICK, North Carolina   LOIS CAPPS, California
TIM MURPHY, Pennsylvania             JANICE D. SCHAKOWSKY, Illinois
MARSHA BLACKBURN, Tennessee          CHARLES A. GONZALEZ, Texas
PHIL GINGREY, Georgia                TAMMY BALDWIN, Wisconsin
ROBERT E. LATTA, Ohio                MIKE ROSS, Arkansas
CATHY McMORRIS RODGERS, Washington   JIM MATHESON, Utah
LEONARD LANCE, New Jersey            HENRY A. WAXMAN, California (ex 
BILL CASSIDY, Louisiana                  officio)
BRETT GUTHRIE, Kentucky
JOE BARTON, Texas
FRED UPTON, Michigan (ex officio)

                                  (ii)


                             C O N T E N T S

                              ----------                              
                                                                   Page
Hon. Joseph R. Pitts, a Representative in Congress from the 
  Commonwealth of Pennsylvania, opening statement................     1
    Prepared statement...........................................     3
Hon. Frank Pallone, Jr., a Representative in Congress from the 
  State of New Jersey, opening statement.........................     5
Hon. Phil Gingrey, a Representative in Congress from the State of 
  Georgia, opening statement.....................................     6
Hon. Janice D. Schakowsky, a Representative in Congress from the 
  State of Illinois, opening statement...........................     8
Hon. Henry A. Waxman, a Representative in Congress from the State 
  of California, opening statement...............................     9
Hon. Leonard Lance, a Representative in Congress from the State 
  of New Jersey, prepared statement..............................    40

                               Witnesses

Janet Woodcock, Director, Center for Drug Evaluation and 
  Research, Food and Drug Administration.........................    10
    Prepared statement...........................................    12
    Answers to submitted questions...............................   192
John Maraganore, Chief Executive Officer, Alnylam Pharmaceuticals    44
    Prepared statement...........................................    46
Jeff Allen, Executive Director, Friends of Cancer Research.......    57
    Prepared statement...........................................    59
Barry I. Eisenstein, Senior Vice President, Scientific Affairs, 
  Cubist Pharmaceuticals.........................................    68
    Prepared statement...........................................    70
John H. Powers, Associate Professor of Medicine, George 
  Washington University School of Medicine.......................    79
    Prepared statement...........................................    81
Michael Walsh, President, LifeGas, on Behalf of Compressed Gas 
  Association....................................................    86
    Prepared statement...........................................    88
Shawn M. Brown, Vice President, State Government Affairs, Generic 
  Pharmaceutical Association.....................................   143
    Prepared statement...........................................   146
    Answers to submitted questions...............................   199
Elizabeth A. Gallenagh, Vice President, Government Affairs, and 
  General Counsel, Healthcare Distribution Management Association   158
    Prepared statement...........................................   160
Timothy Davis, Owner, Beaver Health Mart Pharmacy, on Behalf of 
  National Community Pharmacists Association.....................   169
    Prepared statement...........................................   172
Allan Coukell, Director, Medical Progams, Pew Health Group, The 
  Pew Charitable Trusts..........................................   177
    Prepared statement...........................................   179
    Answers to submitted questions...............................   206

                           Submitted Material

Statement, dated March 8, 2012, of the Infectious Diseases 
  Society of America, submitted by Mr. Pallone...................    97
Letter, dated December 12, 2011, from Michael Tiller, President, 
  Compressed Gas Association, to Mr. Lance, submitted by Mr. 
  Lance..........................................................   120
Letter, dated January 9, 2012, from Joseph M. Pietrantonio, Vice 
  President, Global Operations, Air Products and Chemicals, Inc., 
  to Mr. Lance, submitted by Mr. Lance...........................   122
Letter, dated December 29, 2011, from Thomas S. Thoman, Division 
  President, Gas Production, Airgas, Inc., to Mr. Lance, 
  submitted by Mr. Lance.........................................   123
Letter, dated December 28, 2011, from Ted Schwarzbach, Executive 
  Vice President Risk Management, Matheson Tri-Gas, Inc., to Mr. 
  Lance, submitted by Mr. Lance..................................   125
Statement, dated March 6, 2012, of California Healthcare 
  Institute, submitted by Mr. Gingrey............................   130
Statement, dated March 8, 2012,of the National Association of 
  Chain Drug Stores, submitted by Mr. Pitts......................   133
Statement, dated March 8, 2012, of the Pharmaceutical Research 
  and Manufacturers of America, submitted by Mr. Pitts...........   141


  FDA USER FEES 2012: ISSUES RELATED TO ACCELERATED APPROVAL, MEDICAL 
GAS, ANTIBIOTIC DEVELOPMENT, AND DOWNSTREAM PHARMACEUTICAL SUPPLY CHAIN

                              ----------                              


                        THURSDAY, MARCH 8, 2012

                  House of Representatives,
                            Subcommittee on Health,
                          Committee on Energy and Commerce,
                                                    Washington, DC.
    The subcommittee met, pursuant to call, at 10:16 a.m., in 
room 2322 of the Rayburn House Office Building, Hon. Joe Pitts 
(chairman of the subcommittee) presiding.
    Members present: Representatives Pitts, Burgess, Shimkus, 
Murphy, Gingrey, Latta, Lance, Cassidy, Pallone, Dingell, 
Townes, Schakowsky, and Waxman (ex officio).
    Staff present: Clay Alspach, Counsel, Health; Andy 
Duberstein, Deputy Press Secretary; Nancy Dunlap, Health 
Fellow; Paul Edattel, Professional Staff Member, Health; Debbee 
Keller, Press Secretary; Ryan Long, Chief Counsel, Health; 
Carly McWilliams, Legislative Clerk; Chris Sarley, Policy 
Coordinator, Environment and Economy; Brett Scott, Staff 
Assistant; Heidi Stirrup, Health Policy Coordinator; Alli Corr, 
Democratic Policy Analyst; Eric Flamm, FDA Detailee; Karen 
Lightfoot, Democratic Communications Director and Senior Policy 
Advisor; Karen Nelson, Democratic Deputy Committee Staff 
Director for Health; and Rachel Sher, Democratic Senior 
Counsel.
    Mr. Pitts. This subcommittee will come to order.
    The Chair recognizes himself for 5 minutes for an opening 
statement.

OPENING STATEMENT OF HON. JOSEPH R. PITTS, A REPRESENTATIVE IN 
         CONGRESS FROM THE COMMONWEALTH OF PENNSYLVANIA

    Today we are taking a more in-depth look at several issues 
related to the FDA user fee programs. First, we will hear about 
FDA's Accelerated Approval process for certain new drugs that 
treat serious or life-threatening illnesses and provide a 
greater therapeutic benefit over existing drugs and therapies. 
Accelerated Approval has been successful in speeding cancer and 
HIV/AIDS drugs to market, and I am particularly interested in 
how the process can be better utilized for rare diseases.
    Earlier this week, Representative Stearns, along with 
Representatives Bilbray and Towns, introduced the Faster Access 
to Specialized Treatments, the FAST Act, to help expedite new 
drugs through the approval process.
    We will also hear about FDA's regulation of medical gas and 
the need for targeted regulations for these substances, due to 
their differences from most drugs.
    Representative Lance has introduced H.R. 2227, the Medical 
Gas Safety Act, which would reform the current FDA regulation 
of medical gases to create an appropriate process for medical 
gases to be approved. It would also remove the current 
regulatory uncertainty for medical gases by establishing 
targeted regulations that take into account the unique 
characteristics of medical gases. Representative Lance's bill 
is bipartisan. It is cosponsored by members of the full 
committee from both sides of the aisle.
    Next, we will address the lack of new antibiotics in the 
pipeline and how Congress and FDA can act to incentivize new 
antibiotic development.
    Dr. Gingrey's Generating Antibiotic Incentives Now Act, or 
the GAIN Act, H.R. 2182, targets this problem. This bill would 
extend the exclusivity period for new prescription antibiotics 
and add an additional 6-month period of exclusivity for a 
manufacturer if the new antibiotic identifies a companion 
diagnostic test. The GAIN Act also has bipartisan support, 
including eight Democrats and 15 Republicans from the full 
committee.
    Finally, the subcommittee will hear about the dangers and 
weaknesses to the current pharmaceutical supply chain from 
manufacturers, to distributors, to pharmacies, and how best to 
ensure that counterfeit, adulterated or stolen drugs do not end 
up in the hands of patients.
    Representative Bilbray and Representative Matheson are 
currently working in this area, and Dr. Cassidy's Online 
Pharmacy Safety Act, H.R. 4095, aims to educate the public 
about which Internet pharmacies are known to be safe and 
legitimate.
    We have three panels today. I would like to thank all of 
our witnesses for being here. I look forward to their 
testimony.
    [The prepared statement of Mr. Pitts follows:]
    [GRAPHIC] [TIFF OMITTED] T1518.001
    
    [GRAPHIC] [TIFF OMITTED] T1518.002
    
    Mr. Pitts. So at this time I recognize the ranking member 
of the Subcommittee on Health, Mr. Pallone, for 1 minute--oh, 5 
minutes. I am sorry.

OPENING STATEMENT OF HON. FRANK PALLONE, JR., A REPRESENTATIVE 
            IN CONGRESS FROM THE STATE OF NEW JERSEY

    Mr. Pallone. Thank you, Chairman Pitts.
    Today we are holding another hearing to examine important 
FDA-related issues that could be considered as a part of the 
user fee agreements, or the UFA legislation. These include 
changes to the current expedited approval process for new 
drugs, the regulation of medical gases, antibiotic drug 
development, and the downstream pharmaceutical supply chain. It 
is my hope that our witnesses that will help the subcommittee 
examine the ways in which these issues can be or should be 
addressed in our upcoming legislation.
    Accelerated Approval is one of the processes by which the 
FDA approves certain New Drug Applications that offer 
meaningful therapeutic benefit over existing treatments for 
serious or life-threatening diseases. This process has been 
responsible for the great strides in medicine to treat HIV and 
cancer, and has provided patients with speedier access to 
important new medicines.
    According to the FDA, over 80 new products have been 
approved under Accelerated Approval since the program was 
established including 29 drugs to treat cancer, 32 to treat 
HIV, and 20 to treat various other conditions. There are also 
two other programs that help expedite the approval of certain 
promising investigational drugs known as Fast Track and 
Priority Review.
    Some have stated the accelerated approvals may be working 
for certain conditions but it had limited success in developing 
medicines to treat other rare diseases. As such, we will 
examine different proposals today that would clarify and 
improve some of FDA's authorities. While I am open to such 
proposals, it is important to note that any changes we make 
must not lower the safety of effectiveness standards by which 
FDA approves new medicines.
    Today we will also discuss the regulation of medical gases. 
Medical gases are among some of the most widely prescribed 
drugs and have been in use since before the enactment of the 
Federal Food, Drug and Cosmetic Act in 1938. Many of these, for 
example, oxygen, are often used with other medical products 
such as a device. As I understand it, most of these core gases 
have been marketed for many years without an approved New Drug 
Application. According to the industry, medical gases are 
different than other traditional drugs and should be treated as 
such. Therefore, they have proposed a new regulatory system for 
dealing with medical gases that would cover things like good 
manufacturing practices, labeling, distribution, registration, 
listing and product tracking requirements. I believe there is a 
great value to this conversation so that members can understand 
the issues involved. However, I wonder whether an entirely new 
regulatory system is the answer.
    Development of antibiotic drugs is a critical public health 
issue. As chairman of this subcommittee last Congress, we held 
a hearing on the increasing of antibiotic resistance and its 
threat to public health. Unfortunately, the Nation's ability to 
counter this threat could be limited because of the lack of 
antibiotics being developed. Antibiotics were among the most 
impactful medical innovations of the 20th century. A routine 
treatment to combat bacterial infections, they are one of the 
main contributors in the decline of infectious diseases. But 
bacteria are living organisms, and as such, as they can and 
will mutate with time to be able to resist the drugs that have 
been developed to combat them. We now find ourselves in a 
situation where our triumph over infectious disease is in 
jeopardy. More and more bacteria are proving to be resistant to 
the antibiotics currently on the market.
    I am eager to hear from FDA and witnesses today about the 
proposed legislation that would create financial incentives for 
companies to develop more antibiotics drugs and spur 
advancement of these products, particularly whether that 
approach will help solve the issues our system faces but also 
what would be the shortfalls of that approach. For example, how 
do we limit the uses of these new antibiotics so that we don't 
see the same type of resistance we are seeing now with old 
medicines?
    And one of the more complicated but critical issues is the 
downstream safety of the U.S. drug supply chain. In order to 
ensure that we do not have counterfeit stolen drugs entering 
the supply chain and harming patients, this committee has heard 
for a long time about the call for greater oversight of the 
drug supply chain. The need to set up a system that would track 
and trace the movement of drugs once they enter the marketplace 
has been the common theme. Just last month, we saw a 
counterfeit version of the cancer drug Avastin found in the 
United States. The counterfeit did not contain the medicine's 
active ingredient, proving to be ineffective, and this is 
dangerous and in some cases life threatening.
    I think we can all agree that Congress needs to get serious 
about securing the supply chain and that a national system is 
necessary to prevent these drugs from reaching patients. Some 
States are beginning to pass their own laws. California, for 
example, has a law that will go into effect in 2015.
    I am interested to hear about the different approaches 
being proposed, specifically, the positives, negatives and 
feasibility of each. However, as we contemplate moving forward, 
we must not rush to legislation. These are really complicated 
and dense processes, and if we are looking at setting a 
national standard, it is critical that it be a strong, robust 
standard that is most beneficial to the consumer.
    So just let me close, Mr. Chairman, by thanking everyone. I 
look forward to our panels today. Your testimony and insight 
will remain useful in the months ahead. Thank you.
    Mr. Pitts. The Chair thanks the gentleman and yields 5 
minutes to Dr. Gingrey from Georgia.

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

    Mr. Gingrey. Mr. Chairman, thank you for yielding to me. I 
am going to confine my remarks to the shortages of antibiotics, 
and of course, that is the bill that the chairman referred to.
    Mr. Chairman, again, I appreciate you holding this hearing 
and the three panels of witnesses. The need for new antibiotics 
is well established and beyond question. Antibiotic resistance 
is a threat to global public health as well as United States 
national security. Drug-resistant bacteria like those featured 
in the movie Contagion threaten American patients and troops in 
much the same way. Whether transmitted from person to person or 
contracted from biological weapons, the overall threat is the 
same. As a physician, I understand how important it is that 
medical providers use antibiotics judiciously, but no matter 
how judiciously we use the current supply of drugs we have or 
will have in the coming years, we need more. To quote the 
testimony of Dr. Janet Woodcock of the FDA, the United States 
is, and I quote her, ``at a critical juncture with regards to 
drug development. We are in urgent need of new therapeutic 
options to treat the resistant bacteria that we currently face 
and we will need new therapeutic options in the future.'' This 
critical juncture requires immediate action if we are to 
prevent a public health disaster from hitting our shores in the 
next decade.
    I want to thank Dr. Woodcock for being here today, and I 
personally thank Dr. Margaret Hamburg for her leadership on 
this important issue as the Director of the FDA.
    To Dr. Woodcock's testimony, antibiotic resistance cannot 
be solely solved by the development of new drugs but it also be 
solved without them. In fact, we can answer every other problem 
with regard to antibiotic resistance, but if we fail to address 
the lack of incentives for drug companies and research and 
development experts and new antibiotic drug development, let me 
say this emphatically, we will lose this fight.
    As a group of bipartisan Members of Congress, my coauthors 
and I have forwarded H.R. 2182, the Generating Antibiotic 
Incentives Now, or GAIN Act, to encourage new drug development. 
The legislation is product of years of thoughtful 
consideration, and it strikes a balance between the need for 
drug companies' incentives and the needs and requirements of 
good public health policy. That balance is attested to in the 
nearly 50 organizations that currently support our effort. 
Their testimonials, which I will be entering into the record 
shortly, underscore the potential that the GAIN Act holds to 
ensure patients will continue to have the lifesaving 
medications that they need. Among those we count public health 
leaders like the Pew Charitable Trust, patient organizations 
including Kids v. Cancer, medical providers like St. Jude's 
Children's Hospital in Tennessee, and organizations 
representing 2.5 million veterans and wounded warriors, among 
others.
    The legislation as drafted focuses incentives on a list of 
unmet needs and life-threatening pathogens from which 
infections arise. These pathogens were identified by the 
Infectious Disease Society of America as looming threats to 
public health because little or no treatment currently exists 
to combat the infections that they cause. The legislation also 
includes, and this is most important, Mr. Chairman. The 
legislation also includes the ability for the FDA to update 
this list to meet new and emerging threats so that we continue 
to encourage the therapeutic options that FDA will testify are 
needed.
    To be clear, drug researchers and manufacturers in early 
development focus their efforts on identifying products that 
work against as an identified pathogen as an example including 
their ability to kill a specific or variety of deadly bacteria. 
Only after a compound is identified as working against a 
specific pathogen do the societies then focus on infection 
sites in the body in order to measure the efficacy of that 
potential drug.
    Some have questioned the need to be so specific with 
regards to the types of killer bacteria that we are focusing on 
in the GAIN Act. To that issue, let me read to you a sentence 
from one of the many support letters we have received. ``The 
GAIN Act definition ensures that unmet medical needs get the 
attention they deserve in an industry where other therapeutic 
areas often hold greater commercial promise.'' However, the 
incentives for development decrease dramatically if we are 
unable to know with a high degree of certainty that a product 
would qualify for the incentives in the GAIN Act in early phase 
development. In short, our ability to demonstrate to companies 
the incentives in the GAIN Act as early in the drug development 
process as possible is the foundation upon which our efforts 
rest.
    Mr. Chairman, I have gone over time. I will go ahead and 
submit the rest of my comments for the record, and I look 
forward to the testimony of the three panels of witnesses.
    Mr. Pitts. The Chair thanks the gentleman and recognizes 
the gentlelady from Illinois, Ms. Schakowsky, for 5 minutes for 
an opening statement.

       OPENING STATEMENT OF HON. JANICE D. SCHAKOWSKY, A 
     REPRESENTATIVE IN CONGRESS FROM THE STATE OF ILLINOIS

    Ms. Schakowsky. I really have just about a minute to say 
this, but I wanted to put it on the record.
    I wanted to say that I strongly support the development of 
drugs to enhance therapeutic options for patients with rare 
diseases. There is no question that both patients and their 
families must cope with unusual and unique issues when they 
have a rare disease. I can appreciate the desire on the part of 
patient groups and their families as well as industry to create 
an accelerated approval for drugs to treat rare diseases. I 
both understand and support that goal, but I also want to 
ensure that in seeking to accelerate drug approval that we do 
not expose patients to unnecessary and unacceptable risks. 
While I am committed to efforts to accelerate the development 
of rare-disease drugs, I want to make sure we maximize drug 
safety efforts and that we do not encourage expedited FDA 
approval if doing so would jeopardize that goal.
    So I am looking forward to hearing you, Dr. Woodcock, on 
how best to address this issue, and I will yield back my time.
    Mr. Waxman. Will the gentlelady yield to me?
    Ms. Schakowsky. Of course.

OPENING STATEMENT OF HON. HENRY A. WAXMAN, A REPRESENTATIVE IN 
             CONGRESS FROM THE STATE OF CALIFORNIA

    Mr. Waxman. Thank you very much for yielding to me. We have 
all the subcommittees scheduled at the same time, and I was 
trying to get up here as quickly as possible. I am pleased to 
have this opportunity to make an opening statement because we 
are going to be looking at some important proposals today. We 
haven't yet seen the legislative text, but the proposed list of 
user fee add-ons is long, and as each day passes I am 
increasingly concerned about whether we will have time to get 
to a bipartisan agreement on such an ambitious package of 
bills.
    The policies we will be discussing today involve complex 
public health issues. For us to do a responsible job on these 
proposals, we need time and we need bipartisan agreement. We 
should not rush this work. We should prioritize getting it 
right, not just getting it done, and if we are able to come to 
a bipartisan agreement in the time available, it makes sense to 
move them along with the other bills. Otherwise, I hope we can 
all agree it will be better to wait so that we do not 
jeopardize the passage of the underlying user fee bills.
    Let me turn to some specific proposals. We have learned in 
a series of hearings this subcommittee held in 2010 that the 
problem of antibiotic resistance is a dire public health threat 
and our arsenal of effective antibiotics is running dangerously 
low. So clearly we need to look at ways to incentivize the 
development of new antibiotics. The GAIN Act is a good first 
step at achieving this goal. However, we should ensure that the 
bill is narrowly tailored to drugs that treat dangerous 
infections for which we don't have adequate treatments. 
Otherwise, we risk worsening the problem of resistance. We also 
need to ensure that the bill mandates that FDA and other 
agencies involved take steps to ensure that the efficacy of 
these newly developed antibiotics is preserved once they are on 
the market.
    We will also hear today about FDA's Accelerated Approval 
system. We can all agree that we want the most effective, 
innovative medicines to be available at the earliest possible 
time. So if there are improvements that could be made in the 
way FDA reviews these medicines, we should consider them. But I 
am concerned that some of these proposals are driven by 
unsubstantiated claims that FDA has become too demanding of 
drug companies, requiring too much data, and thereby allegedly 
keeping drugs from patients and driving innovation and jobs 
abroad.
    As we have heard at previous hearings, there is apparently 
no reliable data to back up these claims. To the contrary, as 
the testimony of Friends of Cancer Research and FDA has shown, 
FDA actually approves novel drugs faster than its counterparts 
in Europe or anywhere else in the world. In the past, the 
National Organization for Rare Disorders has also testified 
about its study showing that FDA is quite flexible in its 
requirements for approving orphan drugs.
    We want drugs approved as quickly as possible but we want 
the FDA to do its job, and it is a difficult one. We want to 
give you the tools and we want you to have the flexibility to 
do that job as quickly as possible while meeting the 
requirements of the law.
    I am open to considering whether legislation can help FDA 
work with companies to get more breakthrough medicines to 
patients more quickly. However, we need to ensure that any 
adjustments don't alter FDA's approval standards.
    Today's hearing will also examine efforts to improve the 
integrity of our drug supply chain. This is an important issue. 
There is a regulatory void at the Federal level because the 
United States does not currently have laws requiring the 
tracking and tracing of pharmaceuticals. Consequently, some 
States have stepped in and enacted their own laws, and we are 
going to hear today about California, which currently has a law 
that would mandate one of the most robust pedigree systems in 
the country. Many have suggested that there is a need for a 
single Federal system that would preempt these State laws. I 
believe having a system at the Federal level could make sense 
if done correctly but I would have grave concerns about 
preempting a strong State law, especially in California.
    Thank you, Mr. Chairman.
    Mr. Pitts. The Chair thanks the gentleman. That concludes 
our opening statements.
    Our first panel will have just one witness, Dr. Janet 
Woodcock, Director of the Center for Drug Evaluation and 
Research at the FDA. We are happy to have you with us today, 
Dr. Woodcock. You are recognized for 5 minutes for your opening 
statement.

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

    Ms. Woodcock. Thank you, Mr. Chairman, and good morning.
    Mr. Chairman and members of the subcommittee, I am Janet 
Woodcock. I am Director of the Center for Drug Evaluation and 
Research at the FDA, and I really appreciate the opportunity to 
testify on these important issues that are before the panel.
    The mission of the drug program at FDA is to make sure that 
medicines are of high quality, safe, effective and available. 
The quality of the United States drug supply has long been 
taken for granted by, I think, the health care community but 
the drug supply can be threatened by poor manufacturing 
practices, by economically motivated substitute, as we saw in 
the heparin problem, and by counterfeit drugs, all problems 
that we have observed in the last several years and that are 
increasingly. The FDA must continue to be vigilant to maintain 
the quality of drugs in this country, and we must have the 
property tools to maintain a high-quality medicine supply.
    At the same time, health professionals and patients 
continue to rely on FDA standards for safety and efficacy so 
that the benefits and risks of medicines are studied and that 
they are described in the drug label at the time of approval 
and that we remain vigilant for unexpected side effects once 
the drugs are marketed. In considering new steps to enhance FDA 
regulations, we should not diminish the historic protective 
standards for safety and efficacy that have served our patients 
so well.
    And finally, drugs should be available. The current drug 
shortage crisis has highlighted how important a reliable drug 
supply really is. The drug user fee proposals FDA has delivered 
to Congress are targeted to strengthen the availability of 
drugs for Americans.
    The prescription drug user fee program that Congress has 
authorized four times already has really assured that the 
United States is the leader in developing and introducing new 
important drugs to the public so that Americans have access to 
that cutting-edge science and to drugs that will treat life-
threatening conditions.
    The new generic drug user fee proposal is intended to 
strengthen our generic drug review program that provides access 
to affordable, high-quality drugs and also addresses FDA 
oversight of drug quality around the world. And FDA's 
biosimilars program is intended to provide access to more 
affordable biologic drugs.
    While these FDA programs are strong and successful, it is 
clear there are continuing challenges in drug regulation, many 
of which will be discussed at this hearing. I look forward to 
working with you to find solutions that will benefit our public 
that we serve mutually. Thank you.
    [The prepared statement of Ms. Woodcock follows:]
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    Mr. Pitts. The Chair thanks the gentlelady, and I will 
begin the questioning and recognize myself 5 minutes for that 
purpose.
    Dr. Woodcock, what can we do to expand Accelerated Approval 
to further help patients including those with rare diseases?
    Ms. Woodcock. First, let me say that the Accelerated 
Approval program has been very successful and has brought 
access, early access to lifesaving drugs to patients with HIV, 
patients with cancer, and to many patients with orphan and rare 
diseases. However, we believe more could be done as far as 
clarity of use of this proposal. We have found that both in the 
industry, in the academic community and even sometimes within 
the FDA itself there is confusion about the use of Accelerated 
Approval. So we believe that additional clarity in the use of 
this would be very beneficial. We also plan to issue guidance 
that will also clarify the use of Accelerated Approval and will 
explain our evidence standards more clear.
    Mr. Pitts. Thank you. Despite the success of Accelerated 
Approval for cancer drugs, I have talked with patients and 
innovators and investors, and they indicate that some in FDA 
intend to limit the use of the Accelerated Approval pathway for 
cancer drugs. This is very concerning to me. As you know, if 
FDA goes down this path, patient access to important new cancer 
drugs will be decreased. Investment in new cancer therapies 
will continue to drop. That would be unacceptable. Rather than 
limiting the use of Accelerated Approval in cancer, shouldn't 
we be looking for ways to expand it? Would you please comment 
on this?
    Ms. Woodcock. Certainly, and I believe we are looking for 
ways to expand the use of Accelerated Approval in cancer. For 
example, we will soon issue a draft guidance on the use of a 
new surrogate called pathologic complete response, which would 
be used in high-risk breast cancer as a mechanism to do 
Accelerated Approval. So I believe that we have been successful 
in cancer, and in fact, over the last year we have approved 
cancer drugs using Accelerated Approval, sometimes using what 
are called historical controls, which means that the drug is 
treated in patients and their response is compared to what 
would have happened if they had had standard therapy.
    So we are not really backing away from that. However, we 
have had discussions about the magnitude of the response. What 
does that mean? That means that if you see in a historically 
controlled trial, maybe you see a 5 percent response rate or a 
10 percent response rate, you really don't know the amount of 
benefit to the patients, and so that is the level of 
disagreement that is going on. It is very technical and it is 
within the oncology community. But please be assured, we are 
not backing off with Accelerated Approval for cancer. In fact, 
we would like to find more endpoints we could use for 
Accelerated Approval.
    Mr. Pitts. OK. Thank you. We all agree that it is important 
to prevent counterfeit drugs from reaching our Nation's 
patients. What steps is the agency taking to prevent this?
    Ms. Woodcock. We have for a long time had extensive effort 
on counterfeits. We are working with our foreign counterparts 
around the globe to try and identify gaps in the supply chain 
and inspection coverage and so forth, have early notification 
between all regulatory authorities when counterfeits are 
discovered. Our Office of Criminal Investigations also handles 
a lot of investigations into counterfeit drugs. However, we do 
believe that additional authorities are necessary for us to be 
able to stem this tide.
    Mr. Pitts. All right. Now, you mention in your testimony 
that a system to track and trace prescription drugs through the 
supply chain would help ensure the integrity of our drug 
supply. Do you believe the most effective track-and-trace 
system would involve a uniform standard throughout the country, 
and what are the elements of a cost-effective system?
    Ms. Woodcock. Because drugs are shipped all around the 
country and across State lines, we believe uniform standards 
are important and we are developing elements of standards that 
we would publish suggested standards that could be used. The 
most important features of track and trace are the following. 
Number one, that you can identify the product as it moves 
through the supply chain and particularly in real time so that 
patients aren't being exposed to counterfeits before you 
discover that they have entered the system, so that is one 
point. Another point is that modern drug manufacturing makes 
lots of drugs, in other words, batches, but it isn't like you 
might think of, you know, what you might compound or whatever. 
A batch may be a million pills or tablets or more. And so 
instead of a batch moving through the supply chain on a pallet, 
OK, a batch would be a lot, would be broken up and go all over 
the country in different--so a lot--tracking to the lot level 
is not that helpful, would not be that helpful if we wanted 
real-time detection, say, drugs that have been stolen from that 
lot and then diverted and reentering the supply chain or a copy 
had made of that lot number and then put back into the supply 
chain at some point. We would not be able to detect that unless 
we are tracking that lot as it goes along by unit, not by whole 
lot.
    So we recognize that there are tradeoffs between cost of 
these systems and the benefits that they would provide, but if 
we want out patients not to get counterfeit drugs, which has 
happened even recently--they have been administered to cancer 
patients--we are going to need a system that tracks to the unit 
level and identifies the movement of the drugs in real time.
    Mr. Pitts. The Chair thanks the gentlelady.
    The Chair recognizes the ranking member, Mr. Pallone, for 5 
minutes for questions.
    Mr. Pallone. Thank you, Mr. Chairman.
    Dr. Woodcock, I wanted to ask you a question about the GAIN 
Act and then a couple of questions about medical gases. I think 
we can all agree that we need to find ways to encourage and 
facilitate development and approval of important new 
antibiotics. The GAIN Act is one attempt to achieve that goal. 
However, I know FDA and others have had concerns about the 
current definition of which drugs would be eligible for the 
incentive. I believe that IDSA and others have suggested that 
GAIN should be limited to new antibiotic for treating serious 
infections for which there is an unmet medical need. I think 
the focus on treating serious infections has not been 
controversial but I wanted to know your views on the other two 
components, that the antibiotics should be a new chemical or 
molecular entity and that it should meet an unmet medical need, 
if you could just tell me your views on that, and then I am 
going to get to the medical gases. Go ahead.
    Ms. Woodcock. A new chemical entity is simply an attempt to 
make sure that this incentive applies to new drugs that are 
being developed and not to re-studying older drugs. So I think 
that particular provision is really up to Congress as far as 
how that--but what we really need is new molecular entities or 
new chemical entities that have new mechanisms of action that 
will be put against these threats.
    Now, the second question?
    Mr. Pallone. The other one is that it should meet an unmet 
medical need.
    Ms. Woodcock. By definition, we would want it to meet an 
unmet medical need. People who are facing infections where 
there is no current satisfactory treatment would meet the 
definition of an unmet medical need.
    Mr. Pallone. OK. Let me get to the gases, and that is the 
H.R. 2227. From what I understand, medical gases are regulated 
by the FDA as drugs. However, because they differ in some ways 
from most other drugs, FDA has tried to adjust its requirements 
to fit them and has taken a risk-based approach to enforcement. 
However, the Compressed Gas Association believes that medical 
gases are different enough from other drugs that they warrant a 
new set of regulations. So my questions relate to that. Can you 
explain how FDA regulates gases now, in particular, the 
commonalities and differences between your regulation of gases 
and your regulation of other drugs and the safety profile of 
gases? And then, you know, as I said, this bill provides for a 
streamlined process that would deem certain gases approved if 
the applicant submits a certification that the gas is among 
certain designated gases that are considered to be well 
understood and safe. So what is your view on that? And then 
last, what do you think about establishing a separate 
regulatory system for gases that covers things like good 
manufacturing practices, labeling, distribution? Do you think 
we should have a separate system? I am throwing these all in 
because we only have 2 minutes, so try to cover it if you can.
    Ms. Woodcock. Number one, for designation, certain uses of 
medical gases have been used so long in medicine that they 
actually didn't fall under the FDA review process that was 
instituted when the Food, Drug and Cosmetic Act was passed and 
so technically those uses are unapproved because no 
applications have been submitted, and so we feel for those 
traditional medical gases for traditional uses that a 
designation process would be useful.
    As far as a whole new regulatory regime for medical gases 
on manufacturing, we believe that might not be necessary. We 
believe we could work with the manufacturers and actually I 
would commit to working with the manufacturers to develop an 
appropriate and flexible interpretation of our regulations and 
their application to medical gases for traditional uses that I 
think would be mutually satisfactory.
    Mr. Pallone. Obviously, one of the things that they have 
said to me is if there was some way that you could meet with 
the Compressed Gas Association to see if there is some way to 
accommodate their needs and eliminate the need for legislative 
action. You seem to be suggesting that. Is that fine?
    Ms. Woodcock. I would be happy to meet with them 
personally.
    Mr. Pallone. All right. Let me just ask one thing. Did you 
respond to the question about the streamlined approval process?
    Ms. Woodcock. What I said was that some designation process 
would probably be most satisfactory. These oxygen----
    Mr. Pallone. These are streamlined for the ones that have 
been around for a while?
    Ms. Woodcock. Exactly. For all medical gases, we could 
conceive of high-tech new uses that actually should be studied, 
but traditionally, giving someone oxygen because they have low 
blood oxygen, it is really not that controversial.
    Mr. Pallone. So the streamlined would be for the one that 
have been around?
    Ms. Woodcock. Yes.
    Mr. Pallone. All right. Thank you very much.
    Thank you, Mr. Chairman.
    Mr. Pitts. The Chair thanks the gentleman and recognizes 
the gentleman from Texas, vice chairman of the subcommittee, 
Dr. Burgess, for 5 minutes for questions.
    Mr. Burgess. I thank the chairman for the recognition.
    Dr. Woodcock, always good to see you. The last time we were 
together, we talked a little bit about drug shortages, and in 
fact, in October, the President put out an executive order, and 
you were kind enough to receive myself and my staff out at the 
FDA about a week or so later. We talked about this. This was 
early November. Then you came to the committee a few weeks ago 
and we talked extensively about a particular shortage called 
Doxil, or doxorubicin. I think sterile methotrexate came up in 
the discussions as well, and of course, I was very glad to see 
then shortly thereafter we found a way to circumvent some of 
the problems with Doxil. There was difficulty in establishing 
bioequivalency because in order to do the studies to establish 
bioequivalency meant that the drug had to be taken away from 
patients who were dependent upon it for therapy, those patients 
suffering from ovarian cancer who really couldn't afford a 
lapse in therapy and the FDA didn't really provide a way out of 
that. So now you have, and I am grateful for that, and that 
involved actually I guess the use of some of the same compound 
or similar compound that was available overseas. I am not quite 
sure how the methotrexate got resolved but I am glad to see 
that it did.
    But you provided us with a really extensive list of drugs 
that were in shortage, and of course, some of them were sterile 
injectables, the cancer drugs which are clearly pretty 
important stuff. So I guess my question to you is--and you have 
also testified, if I remember correctly, that this is a complex 
problem. It is not the same thing causing the shortages across 
the board. So we look at it and say we are going to draft 
legislation, we are going to fix this problem, we are going to 
stop it, but it is difficult to do because the problems are so 
complex and yet your agency had the ability to reach out 
somewhere and solve these two very serious problems for 
patients across the country. So I guess my question to you is, 
what can you do as a regulatory agency to go down that list? Do 
you have a task force that is trying to identify the most 
critical needs, the most critical shortages, get those things, 
whatever we need to do to get them through the regulatory hoops 
in a safe and efficient manner and get them delivered to 
patients of this country?
    Ms. Woodcock. Yes. We certainly have a shortage team who is 
really working overtime, and we have augmented that team with 
additional people. We have looked at every one of the drugs on 
the shortage list, and if we have had a generic applicant that 
is pending, we jump the queue. We expedite the review of that 
application and try to get that approved as soon as possible so 
that additional sources could be on the market.
    In addition, even when a shortage is impending, we think 
there is an impending shortage, we will start looking at 
alternative supply? Can other manufacturers in the United 
States ramp us their production? We contact them, we talk to 
them. Are there X U.S. manufacturers with acceptable facilities 
and product that could increase their production and thus cover 
the U.S. drug supply as well? So we do all this. Despite this, 
we are still experiencing shortages, primarily because a lot of 
facilities in the United States making sterile injectables have 
been experiencing manufacturing problems.
    Mr. Burgess. Yes, let me ask you about that because some of 
the manufacturing problems actually relate to the company's 
ability to get a return on investment or even break even in the 
process, and they say look, it is not worth it to us to revamp 
our manufacturing line for this product. Is there anything you 
can do at the FDA as far as providing the incentives so that 
company will stay in the business because then they don't have 
to go through the whole reapplication and all of the approval 
process again?
    Ms. Woodcock. We have very little to do with the economic 
side of drug production and reimbursement. We focus on making 
sure that the facilities and processes are in place to make a 
reliable drug product. I don't think that cutting corners in 
manufacturing sterile drug products is the answer because the 
problems that these facilities have experienced are 
significant. They include endotoxin contamination, bacterial 
contamination and particulates in injectables, and these types 
of problems do not result in useable sterile injectables.
    Mr. Burgess. I need to interrupt you because time is 
running short. I have some things I am going to submit in 
writing about conflicts of interest, stuff we have covered 
before to some degree and I have got some new questions. But 
can you update us on--the New England Journal of Medicine had 
an article probably back in 2010 or maybe 2009 on the curious 
case of colchicine, and colchicine is a drug that has been 
around for 3,000 years to treat gout and familial Mediterranean 
fever, as I recall, and because of some things that happened at 
the FDA, suddenly this drug spiked in price and was becoming 
more difficult for patients to receive.
    Ms. Woodcock. That situation still continues. The FDA has 
something called an Unapproved Drugs Initiative, and we are 
trying to get drugs that are not approved by--there is no 
approved version by the FDA into the fold of proper drugs in 
the United States, and sometimes these efforts do have 
unintended consequences and I certainly I have heard--I am a 
rheumatologist. I certainly have had from a large amount of the 
community and patients about this particular issue of 
affordability of this medicine. We are trying to make the 
balance between availability and affordability and the ability 
to assure a reliable supply of a drug. When drugs are not FDA 
approved and they are simply on the market, there are many 
opportunities for problems. So we try to walk this path, but 
believe me, we are very aware of the problems that have been 
created for patients.
    Mr. Burgess. Thanks, Mr. Chairman. I will yield back.
    Mr. Pitts. The Chair thanks the gentleman and yields to the 
ranking member of the full committee, Mr. Waxman, for 5 minutes 
for questions.
    Mr. Waxman. Thank you very much, Mr. Chairman.
    Dr. Woodcock, I want to ask you about Accelerated Approval. 
There is a bill by Mr. Towns and Mr. Stearns, and Dr. 
Maraganore will discuss this on our second panel. The act would 
clarify and improve FDA's ability to use surrogate and clinical 
markers for the Accelerated Approval pathway. Dr. Allen, also 
on our second panel, describes in his testimony another 
approach for breakthrough products. This approach would ensure 
that the FDA works closely with companies in helping them 
develop clinical trial designs that would expedite approval of 
important drugs showing promise in early trials. And then we 
also have the Infectious Disease Society of America, and they 
submitted testimony for the record that discusses yet another 
approach, and this one is focused on facilitating approval of 
drugs that would treat serious diseases in limited populations.
    My biggest concern in looking at these proposals is whether 
they do or have the potential to change the approval standard, 
which is something I hope we can all agree we don't want to do. 
Can you briefly, because I have another set of questions, 
describe for us what you see as any benefits of these proposals 
as well as any concerns you have with any of them?
    Ms. Woodcock. On Accelerated Approval, as I said earlier, I 
think the main point is a clarity of our ability to approve 
drugs on an early clinical endpoint or a surrogate endpoint 
that is reasonably likely to predict clinical benefit. But I do 
not believe that changing the standards for safety and 
effectiveness would be a benefit to patients. So it is more 
about clarifying what approval mechanism we can use but not 
changing the evidentiary standard.
    As far as breakthrough therapies, I have had several people 
who are involved in the AIDS epidemic and the development of 
drugs to address that epidemic say to me if we had treated that 
as business as usual, we would never have solved this epidemic, 
we would have never gotten effective drugs available. And HIV 
is not the only terrible, life-threatening problem that people 
face. So breakthrough therapy is not about the approval 
standard. It is about getting all hands on deck when we find--
when early in development a product is found to potentially 
have a tremendous benefit, a life-changing benefit in a serious 
disease. And we all should get together at that point--this is 
my professional opinion--and figure out the most effective and 
efficient way to evaluate that therapy to see if it really has 
the promise that it appears to have, so if it does, patients 
will not have to wait years to have that therapy.
    Mr. Waxman. Do we need legislation to do that?
    Ms. Woodcock. No. However, I believe that designating that 
as a very important process that the agency would have would 
provide benefit.
    Mr. Waxman. I want to ask you about the integrity of our 
drug supply chain and preventing safety crises. You have 
already indicated you think that we ought to require drugs to 
be tracked all the way down to the unit level, not only require 
that supply chain entities track a lot number of the product. I 
want to ask you about the question of the pharmacies because in 
the coalition bill, the pharmacies are essentially excluded 
from that proposal, and I am concerned about preempting State 
laws as strong as California's. So I would like to know FDA's 
views of the importance of the differences between the two 
models. You have already talked about the supply chain. You 
might just repeat it again, but what do you think about 
excluding the pharmacies? And if we have a single Federal 
system, how important do you think it is that pharmacies be 
included and that drugs are traced to the unit level instead of 
the lot level?
    Ms. Woodcock. If our goal is to prevent our patients from 
receiving counterfeit drugs before they receive them rather 
than going back and trying to reconstruct what happens after 
they have received counterfeit drugs and we have detected them, 
then we are going to have to have a system that is a real-time 
system that tracks the drugs through the system down to the 
pharmacy level. Why? Because diversion and insertion of 
counterfeits can occur at any point during the drug 
distribution chain and you leave a big gap there for the 
criminals, and we know there are a lot of criminals out there 
outside of our country who want to make profit by putting 
counterfeit drugs into our distribution chain or by stealing 
drugs, perhaps adulterating them and then reinserting them 
back.
    Mr. Waxman. You would include pharmacists and pharmacies?
    Ms. Woodcock. We have had some cases like that.
    Mr. Waxman. This is going to be expensive, and I suppose 
that the technology advances quickly and gets cheaper over 
time, so we need to work as robust a system as possible but 
realize that we have to phase it in, I suppose.
    Ms. Woodcock. Right. I think that there are costs, 
significant costs, associated with it. You have to balance the 
costs against the potential benefits, and I think we have to 
ask ourselves, are we going to wait until we have a mass sort 
of poisoning from insertion of counterfeit drugs or when we 
assume those costs, is the benefit worth the costs. There is no 
doubt that there will be costs to all members in the supply 
chain to do this.
    Mr. Waxman. Thank you, Mr. Chairman.
    Mr. Pitts. The Chair thanks the gentleman and recognizes 
the gentleman from Illinois, Mr. Shimkus, 5 minutes for 
questions.
    Mr. Shimkus. Thank you, Mr. Chairman. Welcome, Dr. 
Woodcock.
    My first question is kind of really a response to an answer 
you gave to Congressman Pallone on the discussion on the GAIN 
Act. I am an original sponsor on Dr. Gingrey's bill along with 
Dianna DeGette, Anna Eshoo, Gene Green and other members, and 
we have been working a long time. The intent is to list the 
biggest unmet needs, the pathogens, and then allow you all to 
add new pathogens.
    Ms. Woodcock. Yes.
    Mr. Shimkus. I think in the question-and-answer period, the 
concern was removal and flooding of the market with ones that 
aren't needed. We have concerns about that, and let me address 
the concerns. The intent is not obviously to try to remove 
folks. First of all, there is really not a market unless there 
is something that really happens bad. So our concern is someone 
developing an antibiotic to meet a specific pathogen that is on 
the list and then all of a sudden they get pulled off the list. 
Now, what incentive would that be for anyone, really, anyone, 
to go in and try to take advantage of this process?
    Ms. Woodcock. Well, I would say that the FDA has various 
processes such as orphan drug designation and other designation 
processes now that we operate, and generally the simpler the 
rules, the easier these are to operate administratively. We 
also have a process that was established under the user fee----
    Mr. Shimkus. Yes, and I was real involved with the orphan 
drug provisions, but really, the question still is, there will 
be a debate, it sounds like, on both sides on the ability to 
remove. I think our basic analysis is, one, there is no need to 
remove; two, it is really a disincentive. And I would ask you 
to look at that provision from the folks who want to innovate, 
those who may have already spent a lot of money and then all of 
a sudden it is off the list.
    Let me go to my other questions. As Dr. Frieden of the CDC 
testified in 2010, antibiotic resistance is a public health 
problem of increasing magnitude and finding effective solutions 
to address this problem is a critical focus of the CDC 
activities. Is it safe to say that you feel similarly that 
finding solutions to addressing this problem is a critical 
focus of your activities?
    Ms. Woodcock. Yes.
    Mr. Shimkus. And how important is new drug development in 
the fight against this public health threat?
    Ms. Woodcock. It is crucial.
    Mr. Shimkus. Thank you. It kind into this whole obviously 
the GAIN Act in which we are focused on today, part of it we 
are focused on today.
    One of the issues is on the ventilator-assisted pneumonia 
example where our rules are that it can't be tested if the 
population has already received antibiotics so a lot of this 
testing occurs overseas, and then as I have stated numerous 
times, there is a concern with that because you are there, you 
are testing, you are spending money. You may segue into the 
E.U. system and then we may lose that population. How do we get 
around, or is that exclusion of testing a population that has 
never received antibiotics, is that really a hurdle that we 
can't overcome in our testing aspects here in the United 
States?
    Ms. Woodcock. We are currently in discussions both with the 
industry and the Infectious Disease Society of America and 
other interested parties about what the drug development 
paradigm should be for multi-drug-resistant organisms, and we 
actually feel that a much abbreviated development program, a 
very small development program which would be an incentive for 
developing these types of antibiotics would be highly feasible 
if in fact it were linked to the concept of good antibiotic 
stewardship post market.
    Mr. Shimkus. So there is hope?
    Ms. Woodcock. Absolutely, but I think that is something 
that we need to discuss more as far as the good antibiotic 
stewardship aspect of this.
    Mr. Shimkus. Great. Thank you, Mr. Chairman. I yield back 
my time.
    Mr. Pitts. The Chair thanks the gentleman and recognizes 
the Ranking Member Emeritus, Mr. Dingell, for 5 minutes for 
questions.
    Mr. Dingell. Mr. Chairman, I thank you for your courtesy.
    Dr. Woodcock, welcome.
    Ms. Woodcock. Thank you.
    Mr. Dingell. One way to address the threats in a supply 
chain is to know who is responsible for the pharmaceutical 
product at each point in the supply chain. I am sure you agree 
with that. Yes or no?
    Ms. Woodcock. Yes.
    Mr. Dingell. As you know, the PDSA proposal would provide 
for lot-level traceability. Would lot-level traceability be 
helpful in identifying where in the supply chain a violation 
occurred?
    Ms. Woodcock. It might be difficult due to the size of 
lots.
    Mr. Dingell. But you would be better off than you are now?
    Ms. Woodcock. I think the benefits of doing that would have 
to be balanced against the costs of even enacting such a 
system.
    Mr. Dingell. Now, some have advocated for unit-level 
traceability over lot level so that you could track individual 
products and identify threats before incidents occur. Would 
unit-level traceability be helpful in the instance of 
contamination or entry of a counterfeit product? Yes or no.
    Ms. Woodcock. Yes.
    Mr. Dingell. Now, one concern I continue to have is 
contamination or diversion of prescription drugs by persons 
outside the supply chain. Would lot-level traceability help the 
FDA to identify the path of a contaminated product as it 
traveled through domestic distribution?
    Ms. Woodcock. Only partially, and would have to be 
reconstructed I think after the fact.
    Mr. Dingell. What would be the obstacles or the 
difficulties there?
    Ms. Woodcock. Because large numbers of any given lot are 
manufactured, then determining if some counterfeits of that lot 
were added at some point would be difficult unless you had 
real-time tracking and you kept account of the volume.
    Mr. Dingell. Now, in the instance of contamination or 
diversion, would lot numbers be helpful if a particular lot of 
drugs traveled through multiple distributors and reached 
multiple pharmacies?
    Ms. Woodcock. It would be helpful in retrospectively 
determining perhaps the point of entry of the contaminated 
version but it would not be helpful, I don't think, in real 
time.
    Mr. Dingell. Thank you. Now, I happen to believe that 
manufacturers, distributors and dispensers should keep accurate 
and thorough records detailing who is buying and selling a drug 
throughout the distribution chain. I am sure you agree with 
that.
    Ms. Woodcock. I agree.
    Mr. Dingell. Would it be helpful to FDA to have each entity 
in the supply chain--manufacturers, wholesale distributors, 
dispensers--accountable for the authenticity of their product 
here?
    Ms. Woodcock. Yes.
    Mr. Dingell. Now, again, I want to commend the industry for 
their work on the Rx proposal. Traceability is a vitally 
important tool in securing our drug supply and one I believe 
would complement the drug safety proposal that I have been 
pushing. I look forward to working with industries and my 
friends on the committee to ensure that traceability proposals 
move through this committee in a way that will best achieve the 
mutual goal of preventing counterfeit and contaminated products 
from entering our drug supply.
    Doctor, thank you for your presence.
    Ms. Woodcock. Thank you.
    Mr. Pitts. The Chair thanks the gentleman and yields to Dr. 
Gingrey from Georgia for 5 minutes for questioning.
    Mr. Gingrey. Mr. Chairman, thank you.
    Dr. Woodcock, thank you. The GAIN Act is squarely focused 
on serious bacterial pathogens with equally serious unmet 
medical need including Gram-negative bacteria, a specific one 
that was dubbed Iraqibacter due to the propensity of infections 
among our wounded soldiers in Iraq. It is an increasing cause 
of hospital-acquired infections in intensive care units leading 
to tens of billions of dollars in expenses and it is 
increasingly resistant to numerous drugs, leading to a high 
number of fatalities. It can show up as pneumonias, complicated 
skin infections, tissue infections, and indeed even septicemia, 
which is better known in common parlance as bloodstream 
infections. Most worrisome, Doctor, the pipeline for novel 
therapies against something like Iraqibacter is slim to 
virtually nonexistence. Now, Dr. Fauci, the Director of the 
CDC, testified before this committee in April of 2010 that our 
focus should be on infections derived from problematic 
pathogens like this Gram-negative bacteria Iraqibacter. Dr. 
Woodcock, do you agree with Dr. Fauci that encouraging drug 
development to combat infections that arise from Gram-negative 
pathogens like Iraqibacter is an appropriate role for Congress 
and the FDA?
    Ms. Woodcock. Absolutely.
    Mr. Gingrey. According to the Web site of the FDA, you have 
launched several initiatives to combat antibiotic resistance 
including encouragement of the development of new drugs, 
vaccines and improved tests for infectious diseases. Yet many 
public health organizations, patient groups and drug companies 
have stated that greater incentives are needed if we hope to 
increase new antibiotic drug development. Do you believe that 
current FDA actions are enough to encourage the numbers of new 
antibiotics we need to meet the growing public health threat 
that antibiotic resistance poses?
    Ms. Woodcock. No, clearly it is not enough.
    Mr. Gingrey. So the provisions in the GAIN Act, very 
specifically, Dr. Woodcock, like increasing the time of 
exclusivity from 10 to 15 years and to be very specific in 
regard to the pharmaceutical community that are developing 
these new drugs and biologics, do you agree that they need to 
know ahead of time that all of this cost and expense and 
innovation and research and development that literally the rug 
is not going to be pulled out from under them by some 
indiscriminate decision after the fact that the FDA might make 
in regard to a list of pathogens that we already know are 
causing serious medical illnesses no matter where they might 
strike, whether it is in the bloodstream or in the lungs 
causing pneumonia or in the skin causing things like 
necrotizing disease, which indeed can be deadly. So my question 
in regard to all of this is, don't you agree, or do you 
disagree that being very specific about the pathogens and 
things like MRSA, methicillin-resistant staph aureus, and a lot 
of these Gram-negative bacteria, enterococcus and things like 
that, these need to be designated on the front end, and of 
course, the Director of the FDA has the opportunity or the 
Secretary of HHS, you know, to add additional things to the 
list. So comment on that for us.
    Ms. Woodcock. Certainly. It is obvious, and we know from 
experience that industry needs, because of the cost and the 
risk, a very clear pathway to market, and that is a big 
incentive if that is very clear and laid out, so that is 
extremely important. I agree with that.
    As far as how to do this in this specific instance I think 
we are more administratively looking at how administratively 
you would set such an incentive up, and because antibiotic 
resistance evolves rapidly and this is a dynamic field and 
actually many organisms are implicated in this, it would seem 
that in general for Congress to set up some more general 
criteria and then have FDA designate that way. We then could 
make agreements with companies about the designation at the 
time they come and talk to us about their development program 
and what the pathway would be. So it just seems that 
stipulating in the statute certain things rather than what the 
criteria might be, maybe setting the criteria would be a better 
way to go.
    Mr. Gingrey. Mr. Chairman, I realize I am over time, but 
let me just conclude here.
    Dr. Woodcock, I think you answered my question or my 
premise in the affirmative, and this is sort of what I think 
Mr. Shimkus was getting at in regard to the ability to add to, 
and you have that in the GAIN Act. You have that ability as 
things develop to be able to add to the list but I think the 
list at the outset in the law should be very specific.
    So with that, Mr. Chairman, I yield back, and thank you for 
your patience.
    Mr. Pitts. The Chair thanks the gentleman and recognizes 
the gentlelady from Illinois, Ms. Schakowsky, for 5 minutes for 
questions.
    Ms. Schakowsky. Thank you, Mr. Chairman.
    As I said in my opening statement, I am interested in the 
balance between hurrying the drugs that we need to market and 
making sure that we protect safety. It seems to me that most of 
the claims about FDA's poor performance have in fact been 
disproved, and you described quite powerfully how effective FDA 
has been at using its current Accelerated Approval authorities. 
So it is surprising to me that we are still talking about the 
need for yet another accelerated approval pathway, and I hope 
we can all agree that we have to be somewhat cautious in this 
area. At the very least, we need to ensure that we don't force 
FDA into a position where its approval standards are lowered 
and the agency ends up force to approve ineffective or unsafe 
drugs, which is in no one's interest.
    So let me just ask you this. Does the FDA have concerns 
about H.R. 4132, the FAST Act, for example, having the 
potential to lower the approval standards?
    Ms. Woodcock. Well, we would look forward to working with 
Congress and the committee on any given language and providing 
technical assistance. I think it is important to not lower the 
standards for safety and efficacy and to be clear in the 
language while we do support the idea of clarifying what can be 
used as the basis for Accelerated Approval.
    Ms. Schakowsky. And do you take into account the fact that 
people who are gravely ill are in fact willing to take more 
risks, and what is the mechanism for doing that, for separating 
out those individuals who in fact willing to take some more 
risks?
    Ms. Woodcock. Well, we always balance benefit and risk. 
Obviously, cancer drugs aren't as safe as headache drugs, and 
so we are taking that into account. The user fee program, the 
prescription drug user fee program that is before Congress now, 
will have as part of it a formal mechanism where we go out and 
solicit patient input into these tradeoffs, especially for 
diseases that aren't well understood and so that we can 
understand how much risk people are willing to take for a 
certain amount of benefit. And then after marketing, typically 
there is patient information and we are moving toward getting 
uniform patient information in the United States so that when 
people get a prescription drug, they understand the benefits 
and the risks and they can make that tradeoff for themselves 
because individual values differ.
    Ms. Schakowsky. And do we distinguish between people who 
are pretty desperate to try things as opposed to sort of for 
the general population? I mean, is there any flexibility in 
that way?
    Ms. Woodcock. Well, what we typically do is have--the drug 
is studied and so understand the magnitude of the benefit and 
then all the risks are described, and then it is determined 
between the patient and the physician when that treatment 
decision is being considered that they would discuss both the 
upsides and downsides of the therapy so the patient can make an 
informed choice.
    Ms. Schakowsky. So the obligation then of the FDA is to 
just make sure that there is complete disclosure of the--let me 
ask you this. Do you need more authorities to speed new 
therapies to market?
    Ms. Woodcock. No, we don't think that new authorities are 
needed. Perhaps some clarification might be useful but, no, we 
feel that we can get safe and effective drugs, that more risk 
is tolerated for cancer, for life-threatening diseases and so 
forth. We can get these therapies to the patients with an 
appropriate balance of benefit and risk.
    Ms. Schakowsky. Thank you. Unless someone wants my time, I 
yield back.
    Mr. Pitts. The Chair thanks the gentlelady and recognizes 
the gentleman from Pennsylvania, Dr. Murphy, for 5 minutes for 
questions.
    Mr. Murphy. Thank you for being here, Dr. Woodcock. I 
always appreciate your testimony and find you to be a very 
trustworthy source, and thank you for your leadership.
    I want to ask you about drug shortages in particular. From 
what I understand, many of these are cancer drugs. Can you 
explain why we are facing shortages in cancer drugs?
    Ms. Woodcock. I think the HHS Assistant Secretary for 
Planning and Evaluation report has the best explanation of what 
happened. Most of these cancer drugs are off-patent sterile 
injectable drugs and they were very few manufacturers in the 
United States making them, sometimes only one manufacturer. 
They were making a large list of sterile injectables also. And 
they developed some manufacturing problems. Multiple 
manufacturers developed problems making the drugs and had to 
shut down their lines or interrupt production, and this, as I 
said last time, is a perfect storm where this all sort of came 
together. Multiple manufacturers of the few that existed in the 
United States for sterile injectables all developed problems. 
As the report shows, many manufacturers had added newer 
injectable drugs that probably had increased profit margins as 
they came off patent, added them to their list and so they were 
producing a very extensive list of products, and when they 
ceased production or had to restrict their production, then 
there were other places to turn in the United States.
    Mr. Murphy. Is the FDA taking any steps to change some of 
these things to address the shortage issue?
    Ms. Woodcock. Yes. The steps we take, number one, we work 
with the manufacturers. We do everything we can to keep these 
particular shortage drugs in production. We have even gone to 
the lengths of testing the drugs, see if the particles could be 
filtered out and allowing them to be shipped to the patients, 
to the doctors if they would filter them at the time of use. 
OK. That isn't what you would want of a drug supply but it is 
better than not having those drugs available. We also expedite 
any applications for making additional sites or additional 
manufacturers who want to make these drugs, we expect their 
generic drug applications. If we have to, we work with foreign 
suppliers who may be making these drugs and see if they can 
ramp up their production and import temporarily into the United 
States to cover the shortage situation, and we have some of 
that happening right now.
    Mr. Murphy. Let me ask about another area. I am a 
psychologist by training and worked in pediatrics also. I 
served in the Navy and worked with PTSD and TBI veterans. And 
one of my concerns is also the abuse of drugs. It is a sad 
story that we have to address, and of course, the abuse of 
drugs also is associated with some shortages. Some of the 
stimulant medications used for attention disorder, for example, 
have shortages. That hurts those who really need them but there 
is also people using that shouldn't be having them and other 
class II and III drugs that are being used too, and I wonder 
about addressing these as other issues of taking care of the 
shortages by doing such things on a Federal level, an issue I 
am working on legislation much like a couple of States have 
done, and that is, requiring a photo ID when people pick up 
some of these drugs. It is not difficult and it is not a secret 
that someone could take a Medicare patient's prescription, take 
it to the drugstore, fill it for Vicodin or something else, and 
next you see Grandpa can't find his prescription, the doctor 
writes another one, and these things go on. It is similar for 
abuse of some of the drugs used by children which they may sell 
or they may redistribute, and I get particularly concerned when 
we have so many veterans who end up self-medicating themselves 
out of their pain. So I wondered if this is something that in 
terms of States, I think Maine and North Carolina have put in 
some laws in effect requiring a photo ID or a designated person 
to pick up the drug when that person can't do it. If you know 
of any research in terms of, is this addressing some of the 
issues with regard to reduction of abuse or at least helping a 
situation where drugstores are not put in the middle of 
basically becoming suppliers to drug abuse networks?
    Ms. Woodcock. Thank you. We are doing quite a bit in this 
area. The Administration last year announced an initiative to 
try to combat the epidemic of prescription drug abuse in the 
United States, and we have multiple efforts that we are working 
on. I am not familiar with the results of the research on photo 
ID and what impact that might have on decreasing diversion to 
people who are not supposed to get the prescriptions, but it is 
clear that we need to take additional measures to control this 
epidemic. It is ravaging some communities.
    Mr. Murphy. I appreciate that. I am aware of one chain, 
CVS, requires on their own a photo ID, contacting the 
physician, asking for the diagnosis to verify a number of these 
steps in that process, and that helps, and I certainly know 
when I have talked to some pharmacists and they languish with 
this idea that say someone shows up with a prescription, we are 
filling it but worried that it is actually being abused, so I 
would love to be able to with you more in addressing this, and 
I do appreciate your dedication to this. Thank you so much.
    I yield back.
    Mr. Pitts. The Chair thanks the gentleman and recognizes 
the gentleman from Louisiana, Dr. Cassidy, for 5 minutes for 
questions.
    Mr. Cassidy. Hi, Dr. Woodcock. How are you?
    Ms. Woodcock. I am fine. Thanks.
    Mr. Cassidy. I have concerns about online pharmacies. As I 
gather, they are unregulated. It is kind of a Wild West out 
there and lots of issues associated with them. The latest 
article in the Wall Street Journal of course is on online 
pharmacies. Now, we have heard testimony recently about abuse 
potential drugs and the problems of prescription drug abuse. So 
both adulterated and abuse potential. Can you comment on the 
role of online pharmacies in these two issues?
    Ms. Woodcock. It is clear that online pharmacies can be----
    Mr. Cassidy. By the way, just to be clear, there are 
legitimate and illegitimate pharmacies, so I am sorry, 
continue.
    Ms. Woodcock. No, I agree with that. There are obviously 
sites around the world that can pose as pharmacies and are 
distributors and may introduce improper drugs or provide drugs 
without a prescription or sometimes provide drugs that are 
counterfeit to people. The VIPPS program, which certifies 
certain Internet pharmacies as appropriate and has criteria, is 
one guide to consumers. We have educational material that we 
have tried to put out and tried to educate patients and 
consumers on what proper procedures might be for ordering drugs 
over the Internet because unguided they may well run into harm.
    Mr. Cassidy. Now, is it fair to say, though, that--now, 
first, I am a physician who happens to be a Congressman who is 
married to a doctor, and I had never heard of the VIPPS program 
until today, which is not a criticism of FDA. Frankly, it is a 
criticism of my wife. Just kidding. But that said, is it fair 
to say that the current mechanism has some inadequacy if even 
someone who theoretically would be educated such as I does not 
know?
    Ms. Woodcock. I think it is a very difficult problem. The 
whole system was set up for brick-and-mortar pharmacies. Our 
whole control system was set up that way. Now we have the 
Internet. As you said, it is the Wild West, and definitely it 
is putting American patients and consumers in harm's way.
    Mr. Cassidy. I am struck that as we speak about unit-level 
tracking, really, that doesn't mean anything if I am buying 
online from something which I think is legitimate but which is 
illegitimate and I am getting an adulterated drug from another 
country. Is that a fair statement too?
    Ms. Woodcock. Absolutely.
    Mr. Cassidy. So until we can actually do something about 
the online pharmacies, we are going to continue to have a leaky 
bucket allowing things to come in which should not?
    Ms. Woodcock. That is correct.
    Mr. Cassidy. Any sense of how much of the drugs that are 
abuse potential being used here would come in through online 
pharmacies? Do we have a sense of the scope of the issue?
    Ms. Woodcock. We do not.
    Mr. Cassidy. And do we have a sense of how many of the 
online pharmacies are legitimate versus illegitimate?
    Ms. Woodcock. Again, the Internet is a very rapidly 
changing and evolving----
    Mr. Cassidy. Fair answer. Now, let me ask you again, I am 
aware of the issue of valid prescriptions versus invalid and 
would just like your comments upon that.
    Ms. Woodcock. Well, I think the definition of a valid 
prescription is an important keystone of any efforts and we 
have to do that in light of, you know, now the electronic 
prescribing and phone prescribing and so forth, but I think 
that is a very important component.
    Mr. Cassidy. So the valid prescription, just for those who 
may not be familiar with it, currently pertains to a controlled 
substance but not to an uncontrolled substance. So I can get an 
antihypertensive, which doesn't require a valid prescription, 
but the Vicodin, I would, but the absence of the requirement of 
a valid prescription for the antihypertensive may mean I get an 
adulterated drug. Fair statement?
    Ms. Woodcock. Yes, if you happen to order from an 
inappropriate pharmacy on the Internet.
    Mr. Cassidy. So ideally, we would come up with--we apply 
the definition of valid prescription--I am just saying this to 
see if you would agree--the definition of a valid prescription 
which would apply both to controlled and non-controlled 
substances?
    Ms. Woodcock. Yes.
    Mr. Cassidy. I know we are about to vote and so I yield 
back to other members. Thank you.
    Mr. Pitts. The Chair thanks the gentleman and recognizes 
the gentleman from New Jersey, Mr. Lance, for 5 minutes for 
questions.
    Mr. Lance. Thank you very much, Mr. Chairman, and I 
respectfully request my opening statement be placed into the 
record.
    Mr. Pitts. Without objection, so ordered.
    [The prepared statement of Mr. Lance follows:]
    [GRAPHIC] [TIFF OMITTED] T1518.015
    
    Mr. Lance. Thank you, Mr. Chairman.
    I want to follow up on questioning from Congressman Pallone 
regarding medical gases, and I know that you are working on 
this issue. As I understand it, the six medical gases that make 
up 99 percent of the prescriptions in the United States--
oxygen, nitrogen, nitrous oxide, carbon dioxide, helium and 
medical air--are mostly derived from the air that we breathe. 
The FDA has a long history of using its enforcement discretion 
in exempting medical gases from its New Drug Application 
process but recent changes to Federal policy, I believe, have 
left both manufacturers and patients uncertain of the future of 
FDA-approved medical gases.
    The legislation that Congressman Pallone referenced, 
legislation I have introduced, the Medical Gas Safety Act, 
which is bipartisan in nature--I have introduced it with my 
colleague, Congressman Murphy, Chris Murphy--tries to address 
this situation in a bipartisan capacity. I want to work with 
you in this regard. Can you comment on where you might be going 
regarding this issue?
    Ms. Woodcock. Certainly. We feel also that there are long-
recognized and medically acceptable uses of these traditional 
medical gases and that some designation would be very useful 
rather than having an application process, approve something we 
already know, all right?
    Mr. Lance. Yes.
    Ms. Woodcock. But as far as some of the other issues 
relating to the manufacturing process and so forth, we believe 
that our regulations are sufficiently flexible that we can work 
out an approach without additional legislation that would be 
mutually satisfactory to the industry and to the FDA.
    Mr. Lance. Thank you, Doctor. I know that your staff has 
some reservations about developing separate, current good 
manufacturing practice regulations for the medical gases. 
Codifying current regulatory experience with medical gases is, 
in my judgment, the best way to resolve some of the confusion, 
and the Compressed Gas Association, which is the safety-
standard-setting organization for the industry, has offered its 
full resources to assist in the rulemaking process. I want to 
thank you for your willingness to meet and work with the 
association, with the staff here on this committee, with my 
staff on this issue.
    I do not necessarily think that guidance can remove the 
requirements from existing regulations, so I do think that some 
changes in the regulations are necessary, and I respectfully 
request that we continue to work together on this issue as 
PDUFA is reauthorized.
    Ms. Woodcock. We will be happy to work with you.
    Mr. Lance. Thank you very much, Mr. Chairman, and I yield 
back the balance of my time.
    Mr. Pitts. The Chair thanks the gentleman and recognizes 
the gentleman from Ohio, Mr. Latta, for 5 minutes for 
questions.
    Mr. Latta. Well, thank you, Mr. Chairman, and Dr. Woodcock, 
thanks for being with us today. If I could just kind of go back 
to a question that was asked by Dr. Burgess and one also that 
was asked by Dr. Murphy. One of the questions that Dr. Burgess 
asked, and I want to make sure that I wrote it down correctly 
when you said that, that he asked what can the FDA do to help 
incentivize businesses to stay in business in the manufacturing 
process, and your answer was at the time that, you know, your 
focus is really on that reliability. And Dr. Murphy then had 
asked a question in the same vein because there is a lot of 
questions about there on the drug shortages, that the question 
as to manufacturing problems and that you had stated that in 
trying to address that problem you would work with the 
manufacturer. Is there a difference between trying to keep 
people in business and those companies out there that are 
manufacturing right now?
    Ms. Woodcock. Can you rephrase the question?
    Mr. Latta. Well, the first part of the question is that you 
had said that as Dr. Burgess had asked the question, he asked 
what can the FDA do to help incentivize businesses sustain 
manufacturing processes of producing the product, and you had 
said in response to his question that your only focus is really 
on the reliability end and not on trying to keep them in 
business. So that would be a company out there that, you know, 
might be trying to incentivize somebody to stay in that type of 
a process in manufacturing but Dr. Murphy had asked the 
question as to if there are manufacturing problems and keeping 
pills out there or other drugs in the manufacturing stream to 
get to the patients and that you would say that you would work 
with those manufacturers. I am just trying to figure out what 
the difference between the two is on the reliability and 
working with them.
    Ms. Woodcock. My understanding of Dr. Burgess's question 
was, did we help with the economic incentives, and we don't 
have really any role in the economic aspects of drug production 
and marketing and so forth. We do work with manufacturers to 
try to keep them manufacturing shortage drugs or any other 
drugs and we try to work with manufacturers to keep them 
manufacturing a reliable supply of the medicines that they 
produce. I do believe that the generic drug proposal that is 
before Congress right now will help with this because it will 
help us clear out our backlog of generic drug applications that 
have decreased the predictability of a generic drug review 
process and hopefully we may encourage more entrants into that 
process. So we do work with them but we are not involved in the 
marketing and reimbursement or any of those aspects.
    Mr. Latta. And also in answer to some of Dr. Murphy's 
questions, could you define when you say you would help filter?
    Ms. Woodcock. Yes. Manufacturers of sterile products--that 
would be that go into your vein--we are finding they had 
particles in their products. That is bad. That is very bad but 
they can go into your lungs and get stuck and so forth, so it 
is not acceptable. So when those were in shortage, rather than 
say you can't send them out, we tested to make sure that a 
filter would take out the particles and not take out the drug, 
and then we let the drugs be shipped with a filter so that at 
the point of delivery, they could be filtered and get the 
particles out and the patient would still get that drug rather 
than have it be in shortage. So I think that is an illustration 
that we try to work with the manufacturers to keep these drugs 
out there.
    Mr. Latta. And also, other countries that are out there 
that have experienced drug shortages, how have they met the 
shortages like say in Europe?
    Ms. Woodcock. They work much the same way that we do, and 
we work with the European regulatory authorities to try to make 
sure the international drug supply remains robust. So they take 
the same sorts of actions we do.
    Mr. Latta. Again, just one last question, if I may. With 
the 1981 flu pandemic that might have killed between 25 to 75 
million individuals, it is being pretty much attributed now not 
to the flu but to tuberculosis, and in January of this year, a 
completely 100 percent drug-resistant form of TB was identified 
in India that would not be treatable with any known antibiotic. 
What is the FDA doing right now to try to prevent that from 
getting to these shores?
    Ms. Woodcock. Yes. Well, we certainly are working with the 
coalition that is working on developing new drugs for multi-
drug-resistant tuberculosis. This is a serious threat. We 
recognize it and we are doing everything we can. Our 
combination investigational drug guidance, which is realize is 
very technical, that we put out that showed how you could 
develop several investigational drugs together to deal with a 
threat such as this I think is helpful in this effort. And as I 
said earlier, we believe that if provisions for good antibiotic 
stewardship were able to be instituted and we were sure that 
such a drug would only be used only for drug-resistant 
tuberculosis, we could have a very small development program 
that would allow that drug to get on the market. That would 
provide, I think, a tremendous incentive to manufacturers to 
get into this space and develop drugs for multi-drug-resistant 
TB.
    Mr. Latta. Thank you, Dr. Woodcock.
    Mr. Chairman, I yield back.
    Mr. Pitts. The Chair thanks the gentleman. That concludes 
the questions. Go ahead, Dr. Cassidy, for one follow-up.
    Mr. Cassidy. Mr. Lance brought up H.R. 2227, medical gas. 
Just to confirm that this would not apply to already approved 
substances, correct?
    Ms. Woodcock. Correct.
    Mr. Cassidy. They would continue to be regulated as they 
currently are?
    Ms. Woodcock. That is my understanding.
    Mr. Cassidy. Thank you. I yield back.
    Mr. Pitts. Thank you, Dr. Woodcock, for appearing before 
the subcommittee this morning. We really appreciate your 
testimony and answering all of our questions. That concludes 
panel one.
    Ms. Woodcock. Thank you.
    Mr. Pitts. We will now call panel two to the witness table, 
and I would like to thank all of these witnesses for agreeing 
to testify before the subcommittee today. I would like to 
quickly introduce our expert panel. First of all, Dr. John 
Maraganore is CEO of Alnylam Pharmaceuticals. Dr. Jeff Allen is 
the Executive Director of Friends of Cancer Research. Dr. Barry 
Eisenstein is Senior Vice President of Science Affairs at 
Cubist Pharmaceuticals. Dr. John Powers is the Assistant 
Clinical Professor of Medicine at George Washington School of 
Medicine. And Mr. Michael Walsh is the President of LifeGas. 
Mr. Walsh is appearing on behalf of the Compressed Gas 
Association.
    Again, we thank all of you for coming this morning. We have 
your prepared statements. Dr. Maraganore, we will begin with 
you. You are recognized for 5 minutes to summarize your 
testimony.

STATEMENTS OF JOHN MARAGANORE, CHIEF EXECUTIVE OFFICER, ALNYLAM 
  PHARMACEUTICALS; JEFF ALLEN, EXECUTIVE DIRECTOR, FRIENDS OF 
 CANCER RESEARCH; BARRY I. EISENSTEIN, SENIOR VICE PRESIDENT, 
  SCIENTIFIC AFFAIRS, CUBIST PHARMACEUTICALS; JOHN H. POWERS, 
 ASSOCIATE PROFESSOR OF MEDICINE, GEORGE WASHINGTON UNIVERSITY 
 SCHOOL OF MEDICINE; AND MICHAEL WALSH, PRESIDENT, LIFEGAS, ON 
              BEHALF OF COMPRESSED GAS ASSOCIATION

                  STATEMENT OF JOHN MARAGANORE

    Mr. Maraganore. Thank you, Chairmen Upton and Pitts and 
Ranking Members Waxman and Pallone. It is my privilege to 
provide testimony before the subcommittee today. My name is 
John Maraganore and I am the Chief Executive Officer of Alnylam 
Pharmaceuticals.
    As a scientist and a businessman, I have over 25 years of 
experience in biopharmaceutical research and development. I 
serve on the board of several biotechnology companies and I am 
also an advisor to Third Rock Ventures and a member of the 
Biotech Industry Organization Governing Board.
    Founded in 2002, Alnylam is a small, nonprofitable 
biotechnology company located in Cambridge, Massachusetts. We 
are developing new medicines based on the science of RNA 
interference, or RNAi, which is a major breakthrough in biology 
that was recognized by the award of the 2006 Nobel Prize for 
Medicine or Physiology.
    Today our company has 120 employees who are working on a 
pipeline of innovative medicines that could truly be 
transformative in the lives of patients afflicted with a number 
of genetic diseases including diseases such as systemic 
amyloidosis, hemophilia, sickle cell anemia, severe 
hypercholesterolemia, Huntingdon's disease, liver cancer and 
also respiratory syncytial virus. If we are successful in our 
efforts, we can create a whole new class of medicines and treat 
disease in a fundamentally different way.
    I am here today to discuss the importance and the benefits 
of Congressman Stearns' and Towns' Faster Access to Specialized 
Therapies, or the FAST bill, which would modernize the 
Accelerated Approval pathway at the Food and Drug 
Administration. The Accelerated Approval pathway, implemented 
in 1992 by the FDA and codified by the Congress in 1997, has 
indeed been a great success story but only in part. While its 
applicability has been largely limited to certain disease 
areas, mainly cancer and HIV/AIDS and certain situations, the 
pathway has stimulated an explosion of investment and 
innovation in those diseases and has brought immense benefit to 
patients suffering from those diseases. There are several 
reasons why the Accelerated Approval pathway should be expanded 
and in fact modernized.
    First, as I just mentioned, the Accelerated Approval 
pathway has worked but only in part. That is, it has been 
largely limited in practice to drugs that treat cancer and HIV/
AIDS along with a handful of other situations. While this is 
great news for patients afflicted with cancer and HIV/AIDS, it 
is not good news for patients suffering from other serious and 
life-threatening diseases. Nothing in the words of the current 
statute limits the Accelerated Approval pathway to just 
oncology and HIV/AIDS. In fact, the statute is worded broadly 
but the current FDA practice leaves many other treatments for 
rare and serious conditions effectively excluded from the 
pathway. We need certainty about how the FDA can apply 
Accelerated Approval in the future by ensuring that the pathway 
is available for all therapies which treat serious or life-
threatening conditions by enacting the FAST Act.
    Second, it is important that the ability to utilize the 
Accelerated Approval pathway is both better understood by 
sponsors and more consistently applied by the FDA. This is 
especially true when it comes to FDA-accepted clinical 
endpoints including those that could be measured earlier than 
irreversible morbidity or mortality to demonstrate a reasonable 
likelihood of overall clinical benefit. While the pathway 
allows for approval based upon effects on clinical endpoints 
that are reasonably likely to predict clinical benefit, in 
practice, the lack of clarity surrounding such approval options 
has led to a very limited use of Accelerated Approval by 
sponsors and the FDA.
    Third, it is time to have an expanded and modernized 
Accelerated Approval pathway that incorporates the remarkable 
advances in the life sciences that have and will provide an 
unprecedented understanding of the underlying biological 
mechanisms and disease pathogenesis. These advances can enable 
novel drug development strategies that employ leading-edge 
methodologies and tools such as biomarkers and novel clinical 
trial designs that can overall improve how we implement 
Accelerated Approval. The FAST bill would achieve all of these 
objectives described above by expressing the sense of Congress 
that the FDA should utilize the Accelerated Approval pathway as 
fully and as frequently as possible while maintaining, very 
importantly, FDA's safety and effectiveness standards and by 
codifying, modernizing and expanding FDA's Accelerated Approval 
pathway with four targeted revisions.
    I thank you very much for your time and attention and I 
urge Congress to consider the FAST Act.
    [The prepared statement of Mr. Maraganore follows:]
    [GRAPHIC] [TIFF OMITTED] T1518.016
    
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    Mr. Pitts. The Chair thanks the gentleman.
    We are presently voting on the floor. We are going to try 
to get through a couple more of you. Dr. Allen, you are 
recognized for 5 minutes.

                    STATEMENT OF JEFF ALLEN

    Mr. Allen. Thank you. Good morning, Chairman Pitts, Ranking 
Member Pallone and members of the subcommittee. I am Jeff 
Allen, Executive Director of Friends of Cancer Research, a 
think tank and advocacy organization based here in Washington. 
I would like to thank the staff of the committee who have 
worked very hard in putting together this important hearing. It 
is an honor to be here today.
    While compelling progress continues to be made within the 
field of oncology, there is much more to be done. This year, 
cancer will claim the lives of over 570,000 Americans. This, 
Mr. Chairman, is roughly equivalent to every citizen in your 
home county of Lancaster, Pennsylvania.
    With such a profound toll, improved ways to combat cancer 
and other diseases are desperately needed. While there are many 
factors that make development of new drugs complex, assessments 
of the process often focus on the FDA. Critics have frequently 
portrayed the FDA as slow and inefficient compared to other 
countries. However, our research reveals that FDA is approving 
anticancer drugs in a more timely fashion than the European 
counterpart. In fact, since 2003, FDA has approved 42 new 
cancer medicines versus just 32 by the EMA. Of the 28 common 
approvals, all were available to U.S. patients first.
    A cornerstone of the FDA's standard for approvals was 
established in 1962 by Congress requiring that all new drugs 
demonstrate not only their safety but also efficacy. Without 
this requirement, American patients would have continued to 
have been given medicines that actually provided no improvement 
to their health. As this committee seeks to optimize and 
improve FDA practices and maintain its standing as the global 
leader, the requirement that new drugs demonstrate both safety 
and efficacy must be upheld. While the need for new treatments 
is immense and the challenge is significant, the solution is 
not to arbitrarily lower this important standard that has been 
in place for 50 years.
    In 1992, as science progressed, and in acknowledgement of 
an increased public health need, regulations were developed to 
establish the Accelerated Approval mechanism. This is shown to 
be an important tool used by the FDA to uphold the rigorous 
scientific standards while facilitating timely access to 
lifesaving treatments. For example, in oncology, Accelerated 
Approval has been used for over a third of new cancer drug 
approvals since 1999. However, since 2007, the number of 
oncology drugs approved through this mechanism has decreased.
    In order to optimize the use of this tool, Congress should 
take action to enhance Accelerated Approval to ensure that it 
is applied consistently, efficiently and effectively. This is 
not to suggest in any way that the standards of safety of 
efficacy should be altered but rather to examine additional 
opportunities in which Accelerated Approval is the optimal 
approach.
    Today, much like at important times throughout recent 
history, the FDA needs an updated mechanism to respond to the 
rapid advancement of science. With the expansion of knowledge 
about the biological basis of complex disease, new targeted 
therapies are being developed. For these new treatments that 
show remarkable benefit early in development, the traditional 
approach may not be appropriate. Currently, there are no clear 
guidelines to expedite subsequent studies that would generate 
the needed evidence and minimize the number of patients who 
would need to be assigned to the current standard of care.
    In order to address this, Congress should establish a 
mechanism that would allow the FDA to designate a new compound 
that shows substantial clinical activity in early-phase trials 
as a breakthrough product. Upon designation, the sponsor, 
working closely with FDA, would develop trial designs to 
abbreviate or combine traditional phases of development. This 
would avoid giving larger numbers of patients a potentially 
harmful or ineffective drug as part of a control arm while 
maintaining current safety and efficacy standards. This 
establishment of this new designation would help FDA respond to 
highly innovative new medicines quickly and consistently across 
the agency as well as to communicate and encourage drug 
developers to pursue trial designs that are able to show 
potential benefit earlier in development.
    I conclude my remarks today by reiterating that rigorous 
FDA standards cannot be compromised. The FDA should be given 
the ability to respond to cutting-edge science and the most 
promising therapies through an enhanced Accelerated Approval 
mechanism and a breakthrough product designation.
    I thank you for your time and I am happy to answer any 
questions you may have.
    [The prepared statement of Mr. Allen follows:]
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    Mr. Pitts. The Chair thanks the gentleman.
    The ranking member and I have consulted. The last time we 
did this, we missed a vote, so we had better break at this 
point. We will recess and come back to the panel as soon as the 
last vote of the series is over. The subcommittee stands in 
recess.
    [Recess.]
    Mr. Pitts. Time of recess having expired, we will 
reconvene, and the Chair recognizes Dr. Eisenstein for 5 
minutes for an opening statement.

                STATEMENT OF BARRY I. EISENSTEIN

    Mr. Eisenstein. Chairman Pitts, Ranking Member Pallone and 
members of the subcommittee, thank you for the opportunity to 
testify today on the urgent need to spur greater innovation and 
accelerate the development of new antibiotics to combat the 
threat of drug-resistant pathogens. I am Dr. Barry Eisenstein, 
Senior Vice President of Scientific Affairs, Cubist 
Pharmaceuticals, a company focused on the research and 
commercialization of antibiotics. Headquartered in Lexington, 
Massachusetts, we currently market Cubicin, a first-line 
intravenous antibiotic for the treatment of methicillin-
resistant staphylococcus aureus, better known as MRSA.
    Mr. Chairman, on behalf of patients and health care experts 
alike, I wish to commend the subcommittee for holding this 
hearing and for the leadership of Congressmen Gingrey and Green 
and others for the introduction of the Generating Antibiotic 
Incentives Now, or GAIN Act of 2011. The bipartisan GAIN Act 
would directly promote the research and commercialization of 
new drugs and diagnostics against resistant pathogens. It 
offers our best hope to stimulate American innovation, 
particularly within small and mid-market companies, and 
strengthen the hand of clinicians and scientists in the fight 
against drug-resistant pathogens both here and abroad.
    Annually, at least 1.7 million Americans acquire a 
bacterial infection in the hospital and nearly 100,000 of them 
die, and we have heard the heartbreaking stories. A young high 
school football player loses his life to a bathe with MRSA, the 
woman who just had mastectomy surgery acquires a resistant 
post-op infection and goes into kidney failure. ICU patients in 
American hospitals and our troops in the Middle East alike are 
suffering untreatable Acinetobacter infections at alarming 
rates, referred to earlier as Iraqibacter. Two years ago, the 
U.S. Air Force testified on the challenging epidemic of multi-
drug-resistant infections that has resulted in a shortage of 
safe and effective antibiotics.
    Just as antimicrobial resistance is rising, we are faced 
with a disturbing and dangerous lack of new antibiotic drugs, 
particularly against Gram-negative bacteria. The Pew Charitable 
Trust warns us that the antibiotic pipeline is dwindling and a 
global crisis looms. This threatens much of modern medicine 
because antibiotics are crucial from surgical recovery to 
cancer treatment. As Dr. William Evans, the CEO of St. Jude's 
Children's Research Hospital noted, ``We don't want to find 
ourselves in a situation in which we have been able to save a 
child's life after cancer diagnosis only to lose them to an 
untreatable multi-drug-resistant infection.
    The antibiotic pipeline is running dry because antibiotics 
uniquely are wasting assets. Bacteria evolve so quickly that 
the development of resistance is inevitable. Thus, each new 
antibiotic has only a finite lifespan. Appropriate stewardship 
is an important component of antibiotic use. That said by 
itself doesn't increase the supply of new compounds. Because 
antibiotics are used for acute conditions and for a short 
period, much of the biopharmaceutical industry does not invest 
in antimicrobial development and has instead turned its efforts 
to products aimed at more chronic diseases.
    The GAIN Act is targeted at precisely this problem. By 
building on current law and extending the new drug 
exclusivities created by the 1984 Hatch-Waxman Amendments only 
for urgently needed antibiotics, it would dramatically improve 
the prospects for tracking new investments for the development 
and approval of new antibiotics so needed by our patients. The 
act would send a powerful signal to scientists and investors 
exploring new molecules and forming new companies as well as to 
large established biopharmaceutical companies that Congress 
recognizes the unique challenge in this area and is opening the 
door to new innovation, new investigations and greater investor 
interest. The enhanced exclusivity for antibiotics as well as 
the straightforward designation of qualified infectious disease 
products is based on what Dr. Janet Woodcock of the FDA 
recently described as the wildly successful Orphan Drug Act.
    Mr. Chairman, this committee has a unique opportunity to 
take timely action against a serious public health threat. The 
market failure that has strained our pipeline of important new 
antibiotics remains. I urge the members of the subcommittee to 
move the GAIN Act through committee and enact it into law 
during this 112th Congress.
    Thank you for the opportunity to testify today. I look 
forward to your questions.
    [The prepared statement of Mr. Eisenstein follows:]
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    Mr. Pitts. Thank you, Dr. Eisenstein.
    Dr. Powers, you are recognized for 5 minutes for an opening 
statement.

                  STATEMENT OF JOHN H. POWERS

    Mr. Powers. Good afternoon. Thank you for inviting me to 
testify today. My name is John Powers, and I am a practicing 
infectious disease and internal medicine physician and a 
medical researcher who actively cares for patients. I was a 
scientist at FDA for almost a decade, and while there, I was 
one of the co-chairs of the Interagency Task Force on 
Antimicrobial Resistance.
    I would like to share with you today my perspectives as a 
clinician, researcher, and having been a patient myself on 
appropriately developing incentives for antibiotics where there 
is the greatest need. My remarks are my own views, and I am not 
representing any agency or organization, but I am here speaking 
on behalf of the patients for whom I care. Several patients and 
consumer and public health groups have expressed the same views 
as I will present here today.
    Government intervention is needed to spur antibiotic 
development because antibiotics are less profitable for drug 
companies than other therapeutic areas resulting in decreased 
investment. The Generating Antibiotic Incentives Now, or GAIN 
bill, provides those incentives to develop new antibiotics.
    In any policymaking, as in science, one must first outline 
the problem, then come up with potential solutions while 
minimizing unintended consequences, implement that policy, and 
then measure whether it has its intended effects. The problem 
of serious diseases for which there are no effective therapies 
has been well outlined. The question now is, how best can GAIN 
address these problems. If the public to make an investment on 
new antibiotics, the public should get something of measurable 
value in return while not worsening the problem of antibiotic 
resistance. Several changes to GAIN might help it focus to best 
address public health needs while limiting potential adverse 
consequences.
    First, GAIN should focus on patients and their diseases 
rather than organisms. I have never had a patient tell me their 
E. coli hurts or that their Klebsiella is killing them. 
Patients present with disease syndromes like pneumonia, and I 
have certainly heard enough people in this room coughing today 
to show that symptoms are a problem.
    The human body contains more bacterial than human DNA, and 
organisms do not cause problems for patients until they cause 
disease. In fact, the word ``pathogen'' implies pathology and 
disease. Any list of organisms in the bill would be quickly 
outdated and hard for FDA to implement. In addition, FDA 
regulations appropriately point out that drugs are approved for 
recognized diseases or conditions, and organisms are neither. 
Use of antibiotics to eliminate organisms in the absence of 
disease would paradoxically increase antibiotic resistance.
    Second, GAIN should focus on the treatment of serious and 
life-threatening diseases where lack of safe and effective 
therapies results in death or serious disability. Antibiotic 
resistance in the test tube has little effect on patients who 
would recover without antibiotics but it is inappropriate use 
in these settings that has worsened antibiotic resistance. 
Despite efforts by CDC, FDA, and others, a substantial portion 
of antibiotic prescriptions are still not warranted, provide no 
benefits to patients, and cause the problem of antibiotic 
resistance we are trying to control.
    Third, there should be valid scientific evidence based on 
FDA's standard of substantial evidence from adequate and well-
controlled trials that these drugs actually unmet medical 
needs. In a 1979 landmark Supreme Court case, Thurgood Marshall 
pointed out that people with terminal diseases should not 
receive less protection under the law from unsafe and 
ineffective drugs than persons with curable diseases. Test tube 
and animal studies are helpful in choosing drugs to study in 
people, but people are not rodents. The complexity of the human 
body is totally humbling. Three-fourths of antibiotics 
submitted to FDA for review with promising test tube and animal 
studies ultimately fail to show safety and efficacy in human 
disease. Approving antibiotics today hoping for some future 
promise makes no sense as resistance is inevitable with all 
antibiotics, sometimes occurring before the drug is even 
marketed. There is no guarantee that a drug approved today will 
address resistance tomorrow. In a study from Boston, almost 
half of antibiotics approved since 1980 have disappeared from 
the market, either because of safety and efficacy issues or 
because of poor sales because they did not address public 
health needs. Therefore, numbers of drugs approved is not a 
measure of public health benefits.
    Fourth, we need new tools to evaluate antibiotics that will 
make trials more efficient and less expensive for companies to 
perform. Determining who needs and who does not need 
antibiotics and developing better outcome measures to evaluate 
directly how patients feel and function are urgently needed so 
we can get the valid evidence we need to know if the drugs 
actually meet unmet medical needs.
    Fifth and finally, any incentives should go hand and hand 
with programs for appropriate stewardship of antibiotics. For 
any scarce resource, conservation should accompany increased 
production. Unfortunately, we as physicians have been only 
moderately successful at policing ourselves to appropriately 
use antibiotics but greater efforts are underway. FDA should be 
given the authority to develop strategies to evaluate and 
ensure appropriate antibiotics where they are most needed and 
to minimize antibiotic resistance. An HHS-level internal group 
to address issues related to antibiotic resistance would help 
strengthen ongoing efforts of the interagency task force.
    Focusing the GAIN bill on the five ways I have just 
outlined will result in addressing the goals it sets out to 
achieve: developing new and safe antibiotics with an 
appropriate evidence base to positively affect patients' lives 
while simultaneously limiting antibiotic resistance.
    Thank you very much.
    [The prepared statement of Mr. Powers follows:]
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    Mr. Pitts. Thank you, Dr. Powers.
    Mr. Walsh, you are recognized for 5 minutes.

                   STATEMENT OF MICHAEL WALSH

    Mr. Walsh. Thank you. Mr. Chairman, Mr. Ranking Member, 
thank you for inviting me to testify today. My name is Mike 
Walsh. I am President of LifeGas. This is part of Linde North 
America. We are headquartered in New Jersey. We have about 
4,500 employees in the United States.
    I am here today to testify on behalf of the Compressed Gas 
Association, of which we are a member. CGA represents companies 
engaged in the manufacture and distribution of compressed gases 
including medical gases.
    The Compressed Gas Association was founded in 1913 and 
currently has more than 120 member companies. CGA serves as a 
safety standard-setting organization for the medical gas 
industry. The medical gas companies in our coalition employ 
about 21,000 employees and have around 4,500 locations, half of 
which are small businesses. I personally entered into this 
industry, the medical gas industry, as a small business owner.
    Linde and other members of the Compressed Gas Association 
provide medical gases that are used by doctors, primarily for 
respiratory care. You can find our products in hospitals, 
clinics, doctors' offices and in homes across the country.
    On behalf of the CGA, I want to offer my thanks to 
Congressman Leonard Lance and Chris Murphy for introducing the 
Medical Gas Safety Act. Your leadership role in this issue has 
been pivotal. I also want to thank Chairman Pitts and Ranking 
Member Pallone for your willingness to address these issues in 
the very important bill you are working on now. Naturally, I 
also want to thank Chairman Upton and Ranking Member Waxman of 
the full committee as well.
    Medical gases, like oxygen, are used by medical 
practitioners as prescription drugs every day. We have over a 
million patients using it in a variety of conditions. Medical 
oxygen has been used for more than a century. Medical gases 
were in use for decades before the FDA was created and a New 
Drug Application process was initiated. And here is the really 
key point. Medical gases have a long, long history of safe and 
effective use. The most common ones are derived today, things 
we are breathing today. These common medical gases are a unique 
class of drug products that are different from traditional 
pharmaceuticals in a lot of ways. We have different properties 
than pharmaceutical drugs: we have a different delivery method, 
we have a different manufacturing process, we have a different 
type of container that holds the product. Medical gas 
manufacturers make no medical claims for medical gases, which 
is very different for traditional prescription drugs.
    However, the FDA currently regulates medical gases with the 
same regulatory system as traditional pharmaceuticals. This has 
created significant and growing regulatory issues. These 
practical issues create uncertainty and drive up compliance 
costs for our industry. Medical gases need a separate 
regulatory system that takes into account these unique 
characteristics.
    The Medical Gas Safety Act addresses a number of critical 
regulatory issues facing the medical gas industry. It 
establishes an appropriate approval process for medical gases. 
It requires the creation of separate regulations for medical 
gases. It ensures that FDA fees do not disproportionately 
impact medical gas manufacturers, many of whom are small 
businesses. This legislation will create regulatory certainty 
for our industry. It will ensure that patients in the medical 
community have access to these lifesaving products. It will 
remove current uncertainty regarding the Federal regulations of 
medical gases for Federal and State inspectors.
    The FDA has recognized the unique nature of medical gases 
for a very long time. Until now, the FDA has generally used its 
enforcement discretion not to require medical gases to go 
through the New Drug Application process. Recently, the FDA 
began the Unapproved Drugs Initiative, which is intended to 
eliminate all unapproved drugs from the marketplace including 
medical gases. If the Unapproved Drugs Initiative is applied to 
medical gases, this would remove access for patients to gases 
as simple as oxygen.
    Recent changes in enforcement policies related to the 
export of unapproved drugs have also created serious challenges 
for our industry. Also, the regulatory system in place for 
medical gases does not take into account the unique 
characteristics of medical gases. In response to concerns 
raised by the Compressed Gas Association, the FDA stated in 
1976 in the preamble to the original Current Good Manufacturing 
Practices rulemaking that they intend to develop separate 
regulations for medical gases. No such regulations have been 
developed.
    This legislation will provide a clear, targeted regulatory 
structure for medical gases, creating a process for medical 
gases to become approved drugs and establishing specific 
regulations for medical gases which will reduce uncertainty, 
improve compliance and improve safety in what is already a very 
safe industry.
    I applaud all of you again for your willingness to address 
these important and longstanding regulatory issues. Thanks 
again on behalf of the CGA for the opportunity to testify.
    [The prepared statement of Mr. Walsh follows:]
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    Mr. Pitts. Thank you. Thank you for your testimony. The 
Chair thanks the panel for being patient waiting while the 
members voted. We will now begin questioning, and I will 
recognize myself for 5 minutes for that purpose.
    Dr. Maraganore, in your testimony, you cite the success of 
FDA's Accelerated Approval pathway for HIV and AIDS and cancer 
treatments but indicate the Accelerated Approval framework has 
done little to help expedite treatments for rare diseases. Can 
you elaborate on why the accelerated pathway has not led to 
gains in the rare-disease space that you would all like to see?
    Mr. Maraganore. Yes. I think it really speaks back to the 
comments that Dr. Woodcock in terms of the clarity around the 
utility and the usefulness of the Accelerated Approval process 
for diseases outside of cancer and HIV/AIDS, and clearly what I 
think is being proposed in Congressmen Stearns' and Towns' 
proposal is a way of significantly enhancing and modernizing 
our understanding of Accelerated Approval to the point where it 
will be used more frequently, I would expect, for the purposes 
of rare or orphan diseases where there significant unmet 
medical need and certainly an important desire I think for 
patients and physicians to have access to medicines faster.
    Mr. Pitts. Now, some experts believe that FDA is seeking to 
limit the use of Accelerated Approval for cancer drugs. Is this 
the case? Rather than narrowing the use of Accelerated Approval 
in cancer, shouldn't we be looking for ways to expand it, and 
what should Congress to prevent FDA from limiting its use?
    Mr. Maraganore. I think there has been some concern around 
potential changes within the FDA's views on how Accelerated 
Approval would be used in cancer based on some hearings that 
were held about this time last year. You know, clearly, the FDA 
has used this approach for cancer-based medicines. We believe 
that the FDA will continue to do so. I think our desire is 
really to see it expanded and clarified as a system while very 
importantly maintaining the safety and efficacy standards that 
exist today for the approval of medicines.
    Mr. Pitts. And how would the FAST Act incentivize research 
and development of innovative therapies and treatments for 
serious diseases?
    Mr. Maraganore. Well, clearly, the ability of having a 
clear and established framework whereby medicines in the 
context of very serious unmet medical needs can be approved 
through an Accelerated Approval pathway would certainly 
encourage the investment that is needed to ultimately bring 
these types of products to the marketplace. Clearly, innovative 
medicines are increasingly being discovered by, you know, young 
companies like ours, of which there are many in this country, 
in a very vibrant industry, but this industry as been 
challenged by the increasing time it takes to get drugs to the 
marketplace and the increasing costs, and Accelerated Approval 
in the context of very serious unmet medical needs would 
provide a framework for getting drugs to patients faster in a 
way that would be more acceptable to the investors that have to 
put capital at risk to ultimately bring these products to 
market.
    Mr. Pitts. Thank you.
    Dr. Eisenstein, while the threat of antibiotic drug 
resistance is a looming public health crisis, the drug 
development pipeline has not kept pace with this threat. What 
can we do to turn this around?
    Mr. Eisenstein. Thank you for your question, Mr. Chairman. 
I believe that the GAIN Act as presently formulated provides us 
with precisely the right tools to provide the incentives 
needed. To cite Dr. Woodcock's earlier testimony: ``We need 
economic incentives beyond the regulatory ones for these bad 
bugs.'' Industry needs a clear pathway to the market. I could 
not have said that better myself, and when one looks at the 
enormous success of the Orphan Drug Act that was enacted in 
1983, the Office of the Inspector General in reviewing that in 
2001 declared, A, that it was extraordinarily successful in 
enabling at the time over 200 new drugs. We are now over 350 
new drugs through the Orphan Drug Act. But I would say equally 
importantly, they pointed out that the increased market 
exclusivity was the most important determinant of the success 
of that program. So I believe we have everything we need in the 
GAIN Act as it presently written.
    Mr. Pitts. Thank you.
    Mr. Walsh, I understand that FDA regulation has caused 
problems for many in the medical gas business. Many of these 
are small businesses. Can you explain how and why FDA 
regulation has caused these problems?
    Mr. Walsh. Yes. Thank you. I was one of those small 
business owners, and when I had started this business, we were 
under the guidelines of a grandfathered product, and if I would 
have known today what I had known back then, I would not have 
started this business. We went on and created through our 
employees a great organization with nearly 1,000 employees but 
we are marketing, distributing and selling an unapproved drug, 
and so you are asking to invest in that and then the 
regulations if we were forced to go under a strict 
pharmaceutical standard would be too expensive for the small 
companies to follow.
    Mr. Pitts. My time is expired. The Chair recognizes the 
ranking member for 5 minutes for questions.
    Mr. Pallone. Thank you, Mr. Chairman.
    I wanted to ask Dr. Allen a question and then I wanted to 
ask Dr. Powers a question. Let me start with Dr. Allen. I think 
we all agree that FDA needs to be able to be flexible in 
determining approval requirements and we have heard from Dr. 
Woodcock and your testimony, there is ample evidence that FDA 
does in fact use its authority in a flexible manner, and that 
has enabled FDA to get important drugs through the regulatory 
process in a timely manner and some circumstances based on 
quite limited data. That being said, I recognize there can be 
advantages to clarifying and improving some of FDA's 
authorities to facilitate its use of Accelerated Approval 
pathways, and I think the pathway you propose for breakthrough 
therapies deserves serious consideration as does the pathway 
put forward in the FAST Act by Representatives Stearns and 
Towns and the Special Population Limited Use pathway proposed 
by IDSA in its submitted testimony.
    My main concern, Dr. Allen, is about any proposal to help 
speed new therapies to market is that it doesn't lower the 
safety or effectiveness standards by which FDA approves new 
medicines. Now, I know you mentioned that you don't want to--I 
think you actually said in your testimony ``I don't want to 
lower the safety or effectiveness standards.'' But I just 
wanted you to basically expand on that a little. Do you agree 
that whatever improvements we make--well, you said that you 
don't think they should lower the safety and effectiveness 
standards but if you would spend a little time just giving me 
some more information on that.
    Mr. Allen. Well, thank you for the question. First of all, 
I absolutely agree that the current standards of safety and 
efficacy that have been in place for decades need to continue 
to be upheld, first and foremost. I think the difference in 
what we are proposing here through the idea of a breakthrough 
designation, it is important to distinguish that Accelerated 
Approval is an approval mechanism where the breakthrough is a 
designation or a process-oriented question, and what we are 
seeing, and I am most familiar with oncology, of course, is 
that there are new drugs being developed that are highly 
targeted and being used in select populations where they 
achieve the greatest benefit and the lowest amount of toxicity, 
and in those cases, the traditional development plan of a phase 
I followed by a phase II followed by a phase III trial may not 
always be appropriate, and there may be ways to expedite that, 
and we have worked with several expert groups including the 
National Cancer Institute, the FDA, the Brookings Institute and 
others to look at those strategies, and while it was mentioned 
that there may not need to be new law, I think that the 1.5 
million Americans that will hear the words ``you have cancer'' 
this year would appreciate looking at all policies that will 
help expedite promising new therapies to them quickly.
    Mr. Pallone. Well, thank you.
    Now, Dr. Powers, one of the things you alluded to is the 
issue of making sure the use of antibiotics is targeted to 
infections for which they are actually useful and making sure 
that the patients actually have those infections. One feature 
currently included in the GAIN Act is the availability of 6 
months of additional exclusivity for an antibiotic if its 
manufacturer develops a companion diagnostic test to use with a 
new antibiotic. I understand that in order to really accomplish 
the goal of directing new antibiotics to the right patients, a 
test would have to help identify where in the body an infection 
is, what kind of bacteria is causing it, and should suggest or 
ensure that the antibiotic in question is an appropriate 
treatment for the infection. Did I get that right? Can you tell 
me more about whether you think it is possible to develop tests 
that accomplish this and how to make sure that we are not 
giving additional incentives for tests that may not help us 
conserve precious antibiotics?
    Mr. Powers. That is correct, and I think it gets back to 
the issue of disease versus just harboring an organism in your 
body. So if we were to develop diagnostics that merely tell you 
that you have an organism on your nose, that wouldn't help us 
if we then treat all those people when that treatment wouldn't 
help. On the other hand, if we specifically develop diagnostics 
to show that people have a disease, that would be more helpful, 
and through the current 510(k) process that FDA utilizes for 
medical devices, you don't necessarily need to show anything 
other than you can detect an organism. So we would need to go 
beyond that and actually have helpful information, not only for 
clinical trials so we can enroll the right people but also 
those could be useful in practice as to who to direct 
antibiotics to and who not to treat.
    Mr. Pallone. But you think it is possible to develop tests 
that accomplish this, right?
    Mr. Powers. I think the technology is there, and I think 
that is why it is helpful to develop incentives that would help 
people to do this.
    Mr. Pallone. Thank you.
    Mr. Chairman, if I could ask--I know we gave this to you a 
little while ago, ask unanimous consent to include in the 
record the statement of the Infectious Diseases Society of 
America?
    Mr. Pitts. Without objection, so ordered.
    Mr. Pallone. Thank you.
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    Mr. Pitts. I thank the gentleman and recognize the 
gentleman from Georgia, Dr. Gingrey, for 5 minutes for 
questions.
    Mr. Gingrey. Mr. Chairman, thank you. I am going to start 
out with Dr. Eisenstein. I almost said Dr. Einstein after 
reading his resume, and I am most impressed with that.
    Dr. Powers testified that almost half of antibiotics 
approved since 1980 have disappeared from the market, either 
because of safety and efficacy issues or because of poor sales 
because the drug did not address public health needs. This is a 
question. Do you agree with Dr. Powers that current FDA 
oversight of antibiotics and the reality that market forces 
such as poor sales will help ensure generally that only those 
drugs that provide an unmet need will ultimately find their way 
to the market, or most importantly, be financial wins for the 
drug companies? Is that enough?
    Mr. Eisenstein. Well, I agree that for a drug to be 
successful needs to demonstrate utility with patients. What the 
FDA process does is provide evidence of efficacy and safety. It 
doesn't translate necessarily to effectiveness, which is what 
happens in the broad population. That said, with the enormity 
of medical need that we presently have with the enumerated 
organisms plus others that I can talk about if you like, there 
is clearly a medical need and there is clearly a market failure 
in terms of being able to provide the appropriate incentives 
for companies to be able to make the investments in 
antimicrobials, and it appears that all of my colleagues on 
this committee are in complete agreement with that notion. That 
is again why I feel the GAIN Act as presently designated does 
provide exactly that sort of assistance.
    Mr. Gingrey. Well, I thank you for that, and there was one 
part of Dr. Powers' testimony, and maybe he will have time, Mr. 
Chairman, to respond to this as well, but I want to stay with 
Dr. Eisenstein for just a second. In regard to your comments in 
your testimony about the GAIN Act, the fact that we have been 
working on it for a number of years, it has wide bipartisan 
support, especially here on the Health Subcommittee of Energy 
and Commerce and listing these pathogens, these known 
pathogens, and I reference that in my opening remarks, whether 
it is MRSA or whether it is some Gram-negative--we talked about 
the Iraqibacter problem with the troops returning from 
Operation Iraqi Freedom and other conflicts. It is important, I 
think, and I think you pointed it out, that these are known 
pathogens.
    Now, Dr. Powers is suggesting that nobody comes in and says 
oh, this Klebsiella is killing me or I can't stand this 
Iraqibacter--you know, they say well, I am coughing and I think 
I may have pneumonia or I have got this horrible skin infection 
and my skin is sloughing off--to make a case for I guess some 
change to this carefully worked on piece of legislation, the 
GAIN Act, and to me, if I could make an analogy in the criminal 
justice system to say that if you have got a known thief out 
there that you don't make every effort to apprehend him or her, 
but rather you take all your law enforcement and your security 
measure and you pick two or three banks in the local 
neighborhood to protect because those are the areas where he 
might strike next. I don't know if that is a great analogy but 
I hope everybody understands the point I am trying to make. 
What say you about that? And then I will go to Dr. Powers and 
let him comment on that.
    Mr. Eisenstein. It is absolutely true what Dr. Powers says, 
that bugs by themselves don't mean that one has disease. If I 
were to look around the room here, that may be, what, 50 or 80 
folks in the room, probably 20 of us have staph aureus and 
maybe 30 of us have staph aureus in our noses right now, and 
that about a third of the people that walk in this room have 
staph in their noses all the time, and the two-thirds left, 
about half of those have staph that come and go at various 
times, and we are seeing increasing numbers of those staph 
being MRSA staph. So perhaps 10 of us are walking around with 
MRSA staph in our noses right now, and yet, as an infectious 
disease physician, I wouldn't think about treating any of us 
for any of that. One has to have a condition, a disease, that 
says I am an infection causing a problem for this patient that 
goes along with certain manifestations. If it is pneumonia, the 
patient will have cough, will have shortness of breath, will 
have chest pain, will have fever. There are a constellation of 
methods that one can detect that. You are a physician as well. 
You understand that one makes the diagnosis based on what the 
patient shows, what the patient is saying, what your own 
examination of the patient shows.
    That said, if the patient appears to have a pneumonia and 
you are able to recover a pure culture of staph aureus from the 
expectorated sputum, you know that the patient is suffering 
from staphylococcal pneumonia, and every hour that goes by that 
you don't treat that patient, the likelihood of the patient 
dying goes up significantly, and if we don't get drugs on board 
fast enough, we may lose 25 to 30 percent of even relatively 
healthy individuals.
    Mr. Gingrey. To put it in really simple terms, and I know I 
am beyond my time, Mr. Chairman, I appreciate it, I will yield 
back, but it is like closing the barn door after the horse is 
long gone, so I thank you very much for that response.
    Dr. Powers, I apologize. I didn't have time to go you.
    Mr. Pitts. Dr. Powers, if you would like to respond?
    Mr. Powers. Sure, I would. I mean, I understand what you 
are saying. To use your thief analogy would be sort of like 
saying--and first I want to say, I think everyone is very 
appreciative about GAIN because we absolutely need to do 
something about this, and I think the question that I tried to 
bring up in my testimony is, can we focus the bill so we make 
sure that we do what we think we want to do without causing 
more harm. So I guess the concern is that, you know, if you see 
a bank robber and he is wearing a blue coat and the police say 
we are going to go out and arrest everybody who is wearing a 
blue coat, and so the thing that Dr. Eisenstein brought up is, 
these same organisms can cause less-serious disease and they 
can also cause more-serious disease.
    And Dr. Gingrey, all the diseases listed when you spoke 
earlier to Dr. Woodcock, they are all serious ones, but FDA 
actually has approved 64 new drug applications for these same 
kinds of organisms for non-serious, non-life-threatening 
diseases since 1980. So that is why I think the history shows, 
and also those are the more profitable areas to go because 
those less-severe infections are more common in patients. So I 
think that is the issue of trying to focus it to--we are all 
talking about serious and life-threatening diseases here. The 
question is if that is what we are talking about, could we 
actually focus the bill to that.
    Mr. Pitts. The Chair thanks the gentleman and recognizes 
the ranking member of the full committee, Mr. Waxman for 5 
minutes for questions.
    Mr. Waxman. Thank you very much, Mr. Chairman.
    Dr. Powers, let me pursue that issue with you. The GAIN Act 
seeks to create incentives that would prompt drug companies to 
develop and market new antibiotics. Specifically, it would give 
5 years additional exclusivity if a company gets a new 
antibiotic approved. If we are talking about giving such a 
generous reward to companies, I think we need to ensure that 
two things are in place at a minimum. First, we need to make 
sure that we are only providing exclusivity for the kinds of 
drugs that will truly benefit the public health. Only 
antibiotics to treat dangerous infections for which we do not 
already have effective treatment should be covered in my 
opinion.
    As currently written, the bill would provide exclusivity 
for drugs if they are targeted to treat specified bacteria. 
Some including you have expressed concern that this kind of 
model is both inappropriate and unusual for the FDA, and have 
instead suggested that we look at targeting drugs that treat 
specific infections instead of just bacterial species. More 
significantly, some believe that GAIN should be limited to new 
antibiotics for treating serious infections for which there is 
an unmet medical need. Can you explain a bit more about why 
focusing on specific infections is appropriate and why we 
should reserve incentives for drugs that treat serious 
infections with unmet medical need?
    Mr. Powers. Again, I think the issue is that antibiotics 
can be used to treat a wide array of infections caused by the 
same exact organism, and I can give an example of when I worked 
at FDA, several companies came in asking for indications for 
pneumonia that was caused by multi-drug-resistant organisms. 
Now, that was completely appropriate. At the same time, they 
asked for approval for multi-drug-resistant organisms for sinus 
infections and ear infections in kids and other things that 
predominantly get better on their own, sometimes even without 
antibiotics. So the history of what has happened before shows 
that--and in a sense, you can't blame a company for asking. FDA 
didn't grant those, though, because they applied the same exact 
standard that we are talking about today. It is not clear 
whether resistance in the test tube has much of an impact on 
patient outcomes in a disease where people will get better 
anyway. So it seems to make sense to focus on the areas of 
where, when you have a resistant disease, that is what is going 
to kill you.
    The other thing is that this sort of comports with 
everything that FDA has ever done in the past related to 
providing incentives. Priority Review, Accelerated Approval 
that we are talking about today, and Fast Track designation as 
well as subpart E approvals all are based on serious and life-
threatening diseases, unmet medical needs and added benefit 
above available therapies. So it fits in with the regulatory 
paradigm already, which of course would make it easier to 
implement as well.
    Mr. Waxman. Well, the second thing I think needs to be in 
place is a robust stewardship program. We need to make sure 
that any antibiotics that are approved under this kind of new 
system are protected once they are on the market. We have seen 
far too many antibiotics lose their effectiveness because the 
bugs they seek to treat become resistant, and that is a problem 
caused in large part by overuse of these drugs. So we need to 
make sure that doesn't happen with these new antibiotics that 
we have all invested so much in, after all. When extended 
exclusivity is granted, we all pay higher drugs for a longer 
period of time. Do you agree with that concept?
    Mr. Powers. I think that is absolutely key, and they have 
to go hand in hand. To pass something about giving incentives 
to develop new drugs now hoping that we will approve something 
about stewardship later probably doesn't make a whole lot of 
sense. These really need to be linked to each other because 
developing new drugs without the ability to use them in the 
appropriate places they need to be used is really a dangerous 
thing. That is kind of how we got to where we are today.
    Mr. Waxman. Can you elaborate more on what ideas you have 
about stewardship?
    Mr. Powers. I think that there is--I put a couple in my 
testimony in terms of how I think that allowing FDA to have the 
authority to designate where drugs should be used appropriately 
is a big step. In the past, FDA has had the authority to 
restrict drugs where they weren't safe and effective. Here we 
would be saying well, maybe these drugs could be used in less 
life-threatening diseases but we really think they ought to be 
reserved for these specific serious diseases. That would be 
novel. So I think giving FDA the authority to do that would be 
really important.
    The other thing is, having been on the Interagency Task 
Force myself, I know somebody said to me once, you know, it is 
different when it is your 25th job at the bottom of your list 
of things to do versus you come into work and every day that is 
exactly what you have to focus on. So I think developing an 
HHS-level internal group that consists of agencies that address 
this problem might highlight the issues associated with 
antibiotic resistance and allow people to spend their time 
focusing on it.
    Mr. Waxman. Thank you very much.
    Mr. Pitts. The Chair thanks the gentleman and recognize the 
gentleman from New Jersey, Mr. Lance, for 5 minutes for 
questions.
    Mr. Lance. Thank you, Mr. Chairman.
    Mr. Chairman, I ask unanimous consent to place in the 
record letters of support for the Medical Gas Safety Act from 
the Compressed Gas Association and three manufacturers: Air 
Products, AirGas and Tri-Gas.
    Mr. Pitts. Without objection, so ordered.
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    Mr. Lance. Thank you, Mr. Chairman.
    To Mr. Walsh, can you give the committee a couple examples 
of why FDA's current regulations are not a good fit for medical 
gases?
    Mr. Walsh. Sure. I think first of all, I would like to--
because I don't think I testified for it, we do feel very 
fortunate that we have the FDA.
    Mr. Lance. Absolutely, and we are working well with the FDA 
and it is an excellent agency.
    Mr. Walsh. We have existed before the FDA came along and 
then the two of us have been working down this precarious path 
of discretionary enforcement and we are fortunate that we share 
the same principles that we want to send our employees home 
safe at night and we want our patients to be safe, so I think 
that is critical to say to say that we have been keeping it 
together because we are fortunate that the CGA and the FDA work 
so closely together.
    Having said that, the medical gases fall under a 
pharmaceutical standard yet our manufacturing processes are 
different, our containers that hold the drugs are different, 
and the characteristics of our drugs are different. From a 
manufacturing standpoint, a typical pharmaceutical company may 
have one plant that distributes their product nationally or 
perhaps even globally. We have 4,500 plants in the United 
States producing and selling oxygen, which occurs in a very 
tight radius of about 100 miles. And in terms of our 
containers, many of you probably have loved ones that you have 
seen on oxygen. They pull around a cylinder, which is about 
2,000 psig under pressure. After it is empty, we pick it up, 
bring it back to our location and refill it. If the label, if 
you can still see the label and it is still in good working 
condition, it stays on there, or in large cases, you might see 
it at a hospital, a large cryogenic container where as it gets 
low, we come to fill it. You compare that to a typical disposal 
pill box that gets thrown away. And then the characteristics, 
most of our medical gases are on the periodic table. They never 
expire, which is very different from pharmaceuticals.
    Mr. Lance. Thank you, and what would the effect, in your 
opinion, be on patients if the FDA were to require an NDA, a 
New Drug Application, for medical gases?
    Mr. Walsh. I think Dr. Woodcock said it very well today in 
her goals. It is having a safe, effective and available 
product, and what gets me particularly concerned is the 
available if we have to go through an NDA process. An NDA is a 
long process to go through. We have 2 million patients alone on 
oxygen in the homes, not to mention in hospitals and doctor 
offices. So it could really have an impact on supply to these 
existing patients that we are supplying. And to what safety 
benefit? Our products have been used--oxygen we used as an 
example has been used for over 100 years. You could Google it 
and find physicians talking about oxygen therapy in the 1850s.
    Mr. Lance. Thank you. Google it now, not 100 years ago.
    Mr. Walsh. Google it now. Do not Google 100 years.
    Mr. Lance. Do you see some problems in particular of the 
current system for small business medical gas manufacturers?
    Mr. Walsh. I do, and I said before, I started from a small 
business, and if would have known--I was very young when I 
started the business, but if I would have known then what I 
know now, I would not have started that business because you 
are investing in something that is not approved. It is not 
under the approved drug status. Plus, if the FDA chose to 
enforce us to a strict pharmaceutical standard, many of the 
small companies would get out of the medical gas business.
    Mr. Lance. Thank you. I look forward to working with Dr. 
Woodcock on this issue and with those on the panel, and with 
that, Mr. Chairman, I yield back the balance of my time.
    Mr. Pitts. Do you have a follow-up?
    Mr. Gingrey. Mr. Chairman, I do, and thank you for 
yielding. First I would like to ask unanimous consent to submit 
a letter, a statement from the California HealthCare Institute 
in support of H.R. 2182, the GAIN Act. Do I have unanimous 
consent to submit that for the record, Mr. Chairman? Mr. 
Chairman, I thank you for that, and I know the ranking member 
would like to look at it, and that is appropriate. I did want 
to ask one follow-up question if you will allow.
    This issue of stewardship, and again, I will go back to Dr. 
Eisenstein. This issue of stewardship, the judicious use of 
antibiotics, and this has come up a few times in testimony, and 
for members of the panel today and from the committee members, 
in fact, the ranking member of the committee. So I want to ask 
you this: Dr. Eisenstein, can we solve global resistance 
through a Congressionally mandated stewardship program? And I 
think Dr. Powers referred to this as well. Are other forms like 
maybe the World Health Organization better suited to tackle 
this issue of antibiotic resistance from overuse, over-
prescribing, etc.?
    Mr. Eisenstein. That is an excellent point. The problem 
with drug-resistant organisms, Dr. Gingrey, as you know, is 
they know no boundary. So when the New Delhi beta beta-metallo 
proteinase was discovered in strains of Klebsiella and other 
Gram-negatives in India, within 6 to 12 months we saw patients 
infected in the United States, in Canada, in the United 
Kingdom, etc. I was at a meeting recently where an individual 
went to an unnamed southeastern country in Asia and showed five 
different pharmacies, one after another, where any individual 
could go into any one of those stores and choose any antibiotic 
essentially that they wanted. This is a much broader problem, 
and clearly, stewardship must be part of the solution. I would 
submit, though, that that is not the place for the GAIN Act.
    Mr. Gingrey. Well, I thank you for that, and very quickly, 
Mr. Chairman, I will go to Dr. Powers now.
    Dr. Powers, you had sort of suggested just a few minutes 
ago that maybe there ought to be some Federal mandate in regard 
to best practices and how infectious disease specialists such 
as yourself should prescribe antibiotics in the most judicious 
and efficacious manner. It would seem to me that maybe that 
should come from the American Academy of Infectious Disease 
Subspecialists and their best practices paradigm, but you seem 
to think, if I understand your testimony correctly, that maybe 
the Federal Government should do that. Would you suggest that 
that would be within the auspices of the FDA or maybe from some 
other government bureaucracy such as IPAB?
    Mr. Powers. I don't think they are mutually exclusive. To 
answer the question you asked to Dr. Eisenstein, resistance is 
both global and local, and that is that there have been 
countries where their antibiotic usage has decreased, where 
they have been able to decrease local resistance. That doesn't 
mean that we shouldn't have a global approach. I think what I 
was trying to suggest was that FDA should have the authority to 
be able to designate drugs for special uses. That doesn't mean 
they are regulating the practice of medicine or telling doctors 
how to use it, but having worked at FDA, I certainly understand 
the importance of giving doctors the information they need to 
be able to practice appropriately. That is more of what I was 
suggesting, not that FDA should designate who can use what. And 
I think that means working with those other outside 
organizations and developing stewardship programs at hospitals.
    Mr. Gingrey. Thank you, Dr. Powers.
    And Dr. Eisenstein wanted to make another comment. Is that 
OK, Mr. Chairman?
    Mr. Pitts. Yes.
    Mr. Eisenstein. Yes, just to continue on two points that I 
would like to make, or actually three points. One of them, in 
terms of the FDA being able to approve a drug because it 
happens to get a very bad organism, you still have to--the 
manufacturer still has to go through normal procedures to 
demonstrate efficacy, which means that the drug is better than 
placebo and that the agency has got to designate it, therefore 
approved on that basis. That is point number one.
    Point number two, the practice of medicine, as you know as 
a former practicing physician, has changed dramatically over 40 
years. I graduated from medical school 40 years ago, and 
antibiotics were used essentially willy-nilly at that time. In 
the last 10, 15 years, the stewardship that we see already in 
place in hospitals is so exact, we could not get our own 
antibiotic on formularies anywhere in this country without it 
being severely restricted so that only infectious disease 
experts were able to give the approval for the use of that 
drug, and in part, because of that, we believe Cubicin, the 
drug that we now have had approved for 8 \1/2\ years, still has 
a 99.9 percent susceptibility rate against MRSA despite 8 \1/2\ 
years on the market. So we can use drugs appropriately and they 
have been used appropriately.
    And lastly, I would just like to wholeheartedly agree with 
the Society of Infectious Disease Pharmacists who noted that 
inclusion of stewardship language in the GAIN Act may broaden 
the scope of the act and take the focus away from the 
appropriate incentives that we are talking about. If you try to 
put too much in the way of disincentives back in this bill, you 
are actually creating the same problem that we are trying to 
solve.
    Mr. Pitts. The Chair thanks the gentleman.
    The unanimous consent request of Dr. Gingrey with the 
letters is approved.
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    Mr. Pitts. The Chair recognizes the ranking member for 5 
minutes for questions.
    Mr. Pallone. Thank you, Mr. Chairman. I just wanted to ask 
Mr. Walsh, you heard Dr. Woodcock, who is still here, on the 
first panel say that FDA is concerned with the concept of 
creating an entirely new regulatory structure for medical 
gases, and she said she would be willing to meet with you 
personally to discuss whether there are other ways to addressed 
the Compressed Gas Association's concern short of legislation. 
So I am trying to get you together here, you see? Would you be 
willing to meet with Dr. Woodcock to see if there is a 
different solution here?
    Mr. Walsh. We definitely have an interest in working 
directly with Dr. Woodcock and her staff to come up with the 
actual legislation that can give us the guidelines and 
regulations specific for medical gases.
    Mr. Pallone. OK. Because I think it sounds like you have 
some valid concerns but I just hope the FDA can be responsive 
and find a way to resolve these issues without actually having 
to pass legislation. That is my hope, so we will see if you can 
get together. It would be helpful.
    Mr. Walsh. I do think legislation is important. We have 
been operating under the guidelines for many, many years, and 
so I think it is important that we have something very strict 
and by law that we can operate off of.
    Mr. Pallone. All right. Well, let us see what develops out 
of the meeting in any case. Thank you.
    Mr. Pitts. The Chair thanks the gentleman, and I would like 
unanimous consent to enter into the record statements from the 
National Association of Chain Drugstores, and Pharmaceutical 
Research and Manufacturers of America. I think you have seen 
this. Without objection, so ordered.
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    Mr. Pitts. That concludes panel two. Thank you very much 
for your testimony, and we appreciate your patience.
    We will now go to panel three, and I would like to call 
them to the witness table, and I would like to thank all of you 
for agreeing to testifying before the subcommittee today, and I 
will quickly introduce our final panel.
    First of all, Mr. Shawn Brown is the Vice President of 
State Government Affairs at the Generic Pharmaceutical 
Association. Then we have Ms. Elizabeth Gallenagh, who is the 
Vice President of Government Affairs and General Counsel for 
the Healthcare Distribution Management Association. And Mr. Tim 
Davis, who is the Owner of the Beaver Health Mart Pharmacy and 
representing the National Community Pharmacists Association. 
And Mr. Allan Coukell, the Director of Medical Programs at the 
Pew Health Group.
    Again, we thank all of you for coming. We have your 
prepared statements. Mr. Brown, we will begin with you. You are 
recognized for 5 minutes to summarize your testimony.

STATEMENTS OF SHAWN M. BROWN, VICE PRESIDENT, STATE GOVERNMENT 
   AFFAIRS, GENERIC PHARMACEUTICAL ASSOCIATION; ELIZABETH A. 
  GALLENAGH, VICE PRESIDENT, GOVERNMENT AFFAIRS, AND GENERAL 
   COUNSEL, HEALTHCARE DISTRIBUTION MANAGEMENT ASSOCIATION; 
TIMOTHY DAVIS, OWNER, BEAVER HEALTH MART PHARMACY, ON BEHALF OF 
NATIONAL COMMUNITY PHARMACISTS ASSOCIATION; AND ALLAN COUKELL, 
     DIRECTOR, MEDICAL PROGRAMS, PEW HEALTH GROUP, THE PEW 
                       CHARITABLE TRUSTS

                  STATEMENT OF SHAWN M. BROWN

    Mr. Brown. Good morning, Chairman Pitts, Ranking Member 
Pallone and members of the House Energy and Commerce 
Subcommittee on Health. Thank you for inviting me to testify 
before the subcommittee on the important topic of securing our 
Nation's pharmaceutical supply chain.
    I am Shawn Brown, Vice President of State Affairs at the 
Generic Pharmaceutical Association. GPhA represents the 
manufacturers and distributors of finished does generic 
pharmaceuticals and suppliers of other goods and services to 
the generic industry. We appreciate the efforts of members of 
this committee particularly Congressmen Matheson and Bilbray, 
to address this important issue and we share their goal of 
ensuring the security of our supply chain.
    For many years, GPhA had worked closely with multiple 
stakeholders across the supply chain to ensure U.S. consumers 
benefit from the safest and most secure prescription drug 
supply in the world. Both industry and FDA are exceptionally 
vigilant against the distribution and sale of counterfeit and 
adulterated medicines.
    GPhA believes the problem of counterfeit medicines raises a 
significant public health concern that must be addressed on a 
range of levels from local to global and throughout the drug 
supply chain. Our commitment to this issue is further evidence 
by the Generic Drug User Fee Act, which recognizes that while 
providing earlier access to effective medicines is critical, 
FDA's central mission is ensuring drug safety. It is worth 
noting that generic drugs are rarely, if ever, targeted by 
counterfeiters. The primary focus of counterfeiters is on more 
profitable and expensive brand name products. GPhA is not aware 
of a single instance of a counterfeit generic product occurring 
within the normal chain of distribution in the United States.
    Nevertheless, the generic industry has been a leader in 
supporting numerous anti-counterfeiting efforts and developing 
methods to further protect the integrity of the pharmaceutical 
supply chain. As these efforts move forward, however, it is 
vital to ensure that any system is practical, focused and 
uniform across the country. The uniform system, founded on 
reliable technology and business practices, would avoid 
creating cost barriers to the distribution of safe and 
effective medicines.
    For example, some anti-counterfeiting efforts such as the 
California model taking effect in 2015 would require 
implementation of full unit-level track and trace capabilities 
where theoretically the entire distribution history and 
location of every unit in the supply chain can be determined at 
any time. GPhA believes that adoption of the California model 
or a similar one would raise the cost of medicine by billions 
of dollars over time, would be prone to error, and would have 
at best similar results to the less expensive, more efficient 
model that we support.
    With billions of units moving quickly and efficiently 
through the supply chain to fill more than 4 billion 
prescriptions per year, the magnitude and complexity of such a 
system is not technically feasible. The California law does 
include language providing for preemption of its requirements 
in the event that Federal legislation is enacted. With 
California's initial effectiveness date fast approaching, GPhA 
has helped lead an effort to develop a more efficient model.
    In partnership with stakeholders from every area of the 
pharmaceutical supply chain, the Pharmaceutical Distribution 
Security Alliance, or PDSA, has developed a consensus 
technological model that we believe will deliver greater 
patient safety and help to achieve FDA's stated goals for a 
supply chain security system.
    The PDSA is a multi-stakeholder initiative whose membership 
spans the U.S. pharmaceutical distribution system including 
manufacturers, wholesale distributors, third-party logistics 
providers, and pharmacies. As a member of the PDSA, GPhA 
strongly supports the alliance's proposed electronic 
traceability system, known as the Pharmaceutical Traceability 
Enhancement code, or RxTEC. This system would increase patient 
access to safe medicines while improving the security of our 
country's drug distribution system. In addition, the RxTEC 
system would aid State and Federal agencies in tracing the 
distribution history of suspect products, replace the 
inconsistent and inefficient patchwork of State laws, increased 
efficiency throughout the drug distribution system, and 
establish foundational technology for future enhancements.
    The PDSA model is based on technological solutions that are 
achievable and scaleable, and unlike a full track and trace 
system, which is not technically feasible in the near term, the 
RxTEC system would provide immediate measures to increase 
supply chain security. The legislation would provide regulators 
with new authorities to establish new penalties to address 
counterfeit products, cargo theft and illegal online drug 
sellers and create new rules regarding e-labeling that will 
increase patient safety. It would also improve the efficiency 
and effectiveness of drug recalls and returns, and enable 
health care providers to leverage technology for recordkeeping 
purposes. We urge the inclusion of the proposal in the user fee 
package to accomplish these goals.
    In conclusion, Mr. Chairman, GPhA and the industry share 
the concerns of the committee with regard to maintaining the 
security of our drug supply and preventing the entry of 
counterfeit, diverted, stolen or other substandard medicines. 
The development of a uniform national system is needed to give 
regulatory authorities another tool for enforcement, make it 
more difficult for criminals to breach the supply chain, and 
enhance the ability of the supply chain to respond quickly when 
a breach has occurred. We believe the RxTEC model proposed by 
the PDSA achieves all of these goals
    Thank you, and I would be happy to answer any questions.
    [The prepared statement of Mr. Brown follows:]
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    Mr. Pitts. The Chair thanks the gentleman.
    Ms. Gallenagh, you are recognized for 5 minutes.

              STATEMENT OF ELIZABETH A. GALLENAGH

    Ms. Gallenagh. Good afternoon, Chairman Pitts, Ranking 
Member Pallone and members of the Subcommittee on Health, I am 
Liz Gallenagh, Vice President of Government Affairs and General 
Counsel at HDMA. Thank you for the opportunity to inform the 
subcommittee today regarding this critically important issue of 
prescription drug pedigree, traceability and pharmaceutical 
supply chain safety. I would also like to thank Congressmen 
Bilbray and Matheson for their bipartisan leadership in this 
area.
    The pharmaceutical distribution industry's primary mission 
is to operate the safest, most secure and efficient supply 
chain in the world. As part of this mission, HDMA's members 
work to eliminate counterfeit and diverted medicines by 
capitalizing on the technological innovation and constant 
improvements in efficiency that are the foundation of our 
industry.
    Today, I am here to express HDMA's strong support for a 
national uniform approach to pedigree and the traceability of 
medicines throughout the supply chain. HDMA believes that 
reform should have tighter wholesaler licensing standards and a 
new Federal ceiling for pedigree requirements to improve safety 
and uniformity across the country while establishing targets 
and parameters for longer-term electronic traceability 
solutions.
    In addition to fundamentally addressing counterfeit and 
diverted medicines, we also believe that Federal pedigree may 
have some potential as a useful tool in discouraging gray-
market activity associated with drug products in short supply. 
After many years of debate, 2012 is the best window of 
opportunity to enact national pedigree legislation. This is in 
large part due to broad consensus among supply chain partners 
as well as the possibility of attaching national pedigree and 
traceability provisions to PDUFA reauthorization.
    Basic guidelines for pedigree were set forth nearly 25 
years ago with the enactment of the Federal PDMA. Since that 
time, activity at the State level has varied with some enacting 
complex electronic pedigree laws and other never going further 
than the original 1988 guidelines. Based on our experience, the 
complexities of dealing with multiple approaches in the States 
will only get worse if we fail to solve this problem now at the 
national level.
    Since Florida's first foray in raising pedigree and 
licensure requirements in 2003, we have seen dramatic variation 
across the country in both legislation activity and regulatory 
interpretation. This has occurred despite our attempts to work 
in every State along with our fellow stakeholders and 
interested legislators to achieve more uniformity. Today, for 
example, 29 States have acted beyond the Federal PDMA 
standards. For instance, the States of California and Florida 
are thought to be the most stringent and leaders in this area. 
However, they take completely different viewpoints with Florida 
considered to the most stringent today and California thought 
to be the most complex in the future in 2015 when their law is 
implemented.
    This patchwork not only creates operational challenges but 
also creates openings for bad actors to shop for more lenient 
States rules, openings that could mean the difference between a 
fake or diverted medicine being dispensed or administered to an 
innocent patient in need of treatment. Because of this State-
by-State variation, we believe that pedigree and traceability 
should be under the purview of Congress and the FDA.
    HDMA is currently a part of an industry alliance, a 
consortium of other industry partners called the PDSA. PDSA's 
consensus model calls for the following: national requirements 
for wholesaler licensing standards and for direct purchase and 
standard pedigree upon the effective date of the legislation; 
manufacturer serialization at the unit and case levels, 
enabling unique identification of prescription drug products 
for the first time; the development of electronic systems to 
facilitate traceability and transaction data exchange to 
provide additional efficiency and safety benefits within the 
supply chain; appropriate transition time and development 
phases for the migration to traceability for each segment of 
the supply chain. Further, Federal legislation must also 
preserve the critically important role of the States, for 
instance, in the area of wholesaler licensure and enforcement. 
There is no single element that will protect the supply chain 
from every threat but rather a comprehensive solution should 
incorporate each of these elements.
    We urge the subcommittee to consider this important issue 
for inclusion in PDUFA legislation. Now is the time for 
Congress to act to bring cohesion and consistency to our 
national drug supply chain. Thank you.
    [The prepared statement of Ms. Gallenagh follows:]
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    Mr. Pitts. The Chair thanks the gentlelady.
    Dr. Davis, you are recognized for 5 minutes.

                   STATEMENT OF TIMOTHY DAVIS

    Mr. Davis. Chairman Pitts, Ranking Member Pallone and 
members of the subcommittee, thank you for conducting this 
hearing and providing me an opportunity to share my views and 
my perspective as an independent pharmacist on the issue of 
securing the pharmaceutical supply chain.
    My name is Tim Davis of Beaver County, Pennsylvania, and I 
own the Beaver Health Mart Pharmacy in that town and county. I 
have been a practicing pharmacist for 12 years, and I am here 
today representing the National Community Pharmacists 
Association. It is an association of over 23,000 independent 
pharmacists, and we are the pharmacists that represent over 40 
percent of the prescriptions dispensed in this country.
    It is my belief that the pharmaceutical supply chain in the 
United States is largely safe and secure. I believe that today 
most practicing pharmacists have a heightened awareness of the 
possibility of counterfeit or diverted drugs and therefore 
recognize the critical importance of purchasing medications 
only from trusted wholesalers or trading partners. In addition, 
most pharmacists today make a concerted effort to carefully 
examine and make note of drug packaging and the appearance of 
the drug itself to make sure that there are no suspicious 
anomalies.
    It has been my observation that certain types of 
prescription medications tend to be the target of 
counterfeiters. High-dollar medications that can be easily 
produced and readily sold generally enable counterfeiters to 
create an attractive profit margin. Presently, generics are not 
typically a target for this type of activity. Some drugs that I 
have seen are particularly susceptible and are lifestyle drugs 
such as Viagra, as well as a number of very expensive 
injectable medications, and most recently, Avastin. These are 
typically not carried in community pharmacies but rather 
dispensed through consolidated specialty pharmacies or directly 
through physicians.
    In my career, I have seen an example of counterfeiting at 
the local level. We received manufacturer information that a 
particular drug had entered the drug supply chain in 
counterfeit form, and the manufacturer instructed us on how to 
recognize the genuine product versus the fake. Upon receipt of 
a daily shipment in the morning from our wholesale distributor, 
we checked and found that the item we received was indeed one 
of the counterfeit products. We immediately contacted and 
discussed the situation with the wholesaler. Our answer was to 
stop doing business with them due to lack of believable 
responses.
    That being said, NCPA does believe that there are a number 
of different approaches or tactics that could be employed to 
provide further confirmation of integrity. These strategies 
could include national uniform Federal licensure standards for 
wholesale distributors, increased oversight or security 
measures to deter pharmaceutical cargo theft and illegitimate 
online drug sellers, and lot-level form of tracking for 
prescription drugs to assist the FDA or State authorities in 
the event of recall or to investigate suspect product.
    Raising the standards for wholesaler licensure in a uniform 
fashion would provide the community pharmacist at any location 
in the United States with an additional layer of confidence in 
the integrity of the medications purchased from such companies. 
Therefore, NCPA recommends that the U.S. government set 
national uniform and Federal licensure standards for wholesale 
distributors. At the present time, these distributors are 
licensed at the individual State level, which has resulted in a 
patchwork of requirements of varying rigor.
    There are a number of other approaches that could also 
further secure the pharmaceutical supply chain. S. 1002, the 
SAFE DOSES Act, would expand the penalties for pharmaceutical 
cargo theft, and in addition, H.R. 4095, the Online Pharmacy 
Safety Act, would create a publicly available white list of 
legitimate Internet pharmacies. This list would help to 
eliminate rogue Internet pharmacies that exist and often prey 
on consumers looking for bargain-priced medications.
    NCPA is a member of the Pharmaceutical Distribution 
Security Alliance, a working group comprised of representatives 
from all sectors of the pharmaceutical supply chain. It has 
been collaborating on a comprehensive proposal to address 
supply chain security issues. The RxTEC Act is currently in 
draft form. However, it includes language that would create the 
registry of legitimate online pharmacy Web sites, increase the 
penalties for counterfeiters as well as provide for tracking of 
prescription medications at the lot level.
    The actual tracking of prescription drugs through the 
supply chain is a topic that has been discussed for a number of 
years, and independent community pharmacists have had 
significant concerns in the past about the cost of the 
hardware, software and employment burdens placed upon the 
association. This is a complex issue both in terms of the 
technologies necessary to implement it as well as the fact that 
each of the sectors involved in the supply chain operate under 
very different business models and very greatly in terms of 
financial resources and technological sophistication. Community 
pharmacies are largely small businesses. Any system that would 
require a pharmacist to electronically scan each item would 
create a burdensome and time-consuming exercise that would 
further limit the amount of time that we have to provide 
patient care and counseling or any other activities necessary 
to keep that small business running.
    The tracking system proposed under RxTEC Act is one that is 
lot-based tracking, would require that the encoded information 
on each unit be both machine and human readable, and would 
allow for collaboration between all members of the supply 
chain. The proposed system is one that could be built upon in 
the future if it was determined that this course of action was 
advisable but is one that would not impose an undue burden 
either financially or as it relates to work flow upon 
independent community pharmacists.
    I have a greater degree of confidence in the United States 
drug supply than I did just a few years ago, largely due to 
heightened awareness of those in the supply chain and the 
possibility of counterfeit or diverted medications being 
discovered. That being said, community pharmacies take very 
seriously our role in ensuring the safety of medications that 
we personally dispense to our patients and we remain committed 
to working with our colleagues in the supply chain, other 
pharmacy organizations, wholesalers and manufacturers as well 
as with State and Federal authorities to make any needed 
improvements. Moving forward, it is essential that all 
stakeholders make a concerted effort to keep the lines of 
communication open so that consumers can continue to implicitly 
trust the integrity of the medications that they depend on.
    I thank you, and welcome any questions.
    [The prepared statement of Mr. Davis follows:]
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    Mr. Pitts. The Chair thanks the gentleman and recognizes 
Mr. Coukell for 5 minutes for a statement.

                   STATEMENT OF ALLAN COUKELL

    Mr. Coukell. Chairman Pitts, Ranking Member Pallone, 
subcommittee members, thank you for the opportunity to present 
testimony. Thank you for your work on this issue and especially 
to Representatives Bilbray and Matheson for introducing a 
bipartisan bill that would help protect Americans from 
counterfeit and diverted drugs.
    My name is Allan Coukell. I am a pharmacist and Director of 
Medical Programs for the Pew Health Group of the Pew Charitable 
Trusts.
    The safety of the drug supply has been a long-term focus 
for Pew. Last year we issued a major report, and one of the key 
findings was that we currently have no national system to 
detect or prevent counterfeits, and with close to 2,000 
individual wholesalers and many more individual pharmacies and 
actors, it provides multiple points of entry to our system.
    Let me illustrate the risks with just a few examples of 
diversion, theft and counterfeiting. First, the black market 
for diversion and resale of drugs that have already been 
dispensed to patients and paid for, often by Medicaid. Two 
years ago, Federal officials in Florida brought down a ring 
that illegally purchased $13 million worth of prescription 
drugs, buying them from patients and then selling them to 
pharmacies through a licensed wholesaler in Texas. Similar 
schemes have been documented in other States.
    Drug theft is another threat. In 2009, thieves stole a 
tractor-trailer containing 129,000 vials of insulin. After 
disappearing for several months, some of this temperature-
sensitive drug was later found on the shelves of chain 
pharmacies in Texas, Georgia and Kentucky. In another case, 
thieves cut through the roof of an Eli Lilly warehouse in 
Connecticut using forklifts to load a truck with $75 million 
worth of prescription drugs. The fate of those drugs isn't 
known, but some experts believe that the thieves may be letting 
the alarm die down before selling them back into the system.
    And then finally, we have incidents of outright 
counterfeits. In recent weeks, a counterfeit cancer drug, 
Avastin, made its way reportedly from Egypt through multiple 
European countries to a licensed U.S. pharmaceutical wholesaler 
that had been supplying numerous clinics. In 2001, counterfeit 
Serostim, a high-cost injectable for AIDS patients, was found 
in at least seven States and passed through multiple 
wholesalers. The manufacturer of that drug has since put in 
place a secure distribution program with a unique serial number 
assigned to each vial that must be verified by the dispensing 
pharmacy.
    Unlike for that drug, for most drugs there is no currently 
no way to check whether they are authentic or counterfeit. Some 
State laws exist. California is implementing a comprehensive 
system under which manufacturers will put a unique serial 
number on each unit, and wholesalers and pharmacies will check 
to ensure that the drugs they buy and sell are authentic.
    A strong national standard would be preferable to a 
patchwork of State laws, but a national system has been under 
discussion for years and won't happen without legislation. 
Congress is now considering a compromise proposal developed 
between various industry sectors, and Pew supports a number of 
the elements of this proposal including strengthened standards 
for wholesaler licensure, but the proposal falls short in a 
couple of crucial aspects.
    First, the key to improved security of drug distribution is 
knowing who handles the drugs as they move from manufacturer 
through a succession of wholesalers to the pharmacy or the 
hospital and ultimately to the patient. The industry proposal 
calls for tracking drugs at the lot level, but a lot, as we 
heard already this morning, can contain numerous cases and many 
thousands of individual bottles and each case or individual 
unit can be sold separately, and tracking by lot doesn't allow 
industry or regulators to ever know who bought and sold a given 
drug.
    Maintaining data about lots may provide an incremental 
benefit over the status quo, but it would fail to catch unsafe 
drugs in many scenarios. If part of a lot was stolen and 
illicitly reintroduced into commerce, a pharmacist or a patient 
would have no way to tell if the product on their shelf was 
compromised. That same lot will be sitting on the shelves of 
dozens or hundreds of pharmacies, but if individual units are 
tracked, specific stolen bottles could be identified.
    While the PDSA proposal would result in a unique serial 
number being placed on each unit of sale, keeping track of the 
drugs would be impossible unless the serial numbers can be 
associated with the case in which they are shipped. Even if we 
decide that we don't need unit-level tracing now, the PDSA 
system proposed would make it difficult or impossible to track 
drugs at the unit level in the future.
    Next, under the proposed system, neither the pharmacy nor 
any other party in the system would ever be required to verify 
the authenticity of drugs. A criminal could sell a vial of 
counterfeit drug with a fake serial number, and no one would 
detect it because no one would be required to check it. Pew 
supports required authentication of drug products by the 
companies involved in distribution as outlined in H.R. 3026, 
the Bilbray-Matheson bill.
    Let me conclude by noting again that the impending 
California law creates momentum for a single national standard. 
Such a standard should product Americans today and provide the 
flexibility of future refinements.
    Thank you, and I welcome your questions.
    [The prepared statement of Mr. Coukell follows:]
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    Mr. Pitts. The Chair thanks the gentleman and thanks all 
the witnesses, and we will begin questioning. I will recognize 
myself for 5 minutes for that purpose.
    Let me ask a question to all of you first. You can each 
respond. We are all concerned about the safety of our drug 
supply, and we want to ensure that diverted drugs and 
counterfeit drugs do not reach our Nation's patients. However, 
as we look at policies to help, we also have to think about the 
cost to our Nation's small businesses. They are struggling 
right now. We need to take them into account as we analyze 
every policy idea.
    The first question, how do we ensure the safety of our 
prescription drugs in the most cost-effective way? And then 
two, why is a national standard necessary? Mr. Brown?
    Mr. Brown. I think I would say the PDSA model, we have got 
a consensus throughout industry from chain drugstores, 
independent pharmacies, secondary wholesalers, third-party 
logistics providers, brand and generic manufacturers. We 
believe this is a scaleable system and a feasible system that 
we are proposing, and I think that this will help to achieve 
all of FDA's stated goals, one of which being to prevent 
introduction and to help identification of counterfeit 
medicines. We are concerned about the cost as well, but the 
system that we are proposing is exponentially less than the 
system would be if we had to implement the California model, 
which we don't think is technically feasible.
    Mr. Pitts. Ms. Gallenagh?
    Ms. Gallenagh. I would agree with Mr. Brown. We believe 
that the best approach is something that is done at the 
national level, and our members have told us that it would be 
more cost-effective to operate the RxTEC proposal that PDSA has 
put forth and that we have worked on rather than work toward 
California and then deal with potentially New York or Illinois 
or whatever State is next in this arena. We are already--as 
wholesalers, we see firsthand the 50-State patchwork that you 
hear so much about, and that really is a reality for our 
members in terms of dealing with 50 different laws, and so 
automatically we think that we get greater efficiencies and 
cost benefits from going with the PDSA proposal.
    Mr. Pitts. Dr. Davis?
    Mr. Davis. The PDSA proposal also looks at the problem in a 
multifaceted approach. The only place that rogue pharmacies can 
get counterfeit or diverted medications is from rogue 
wholesalers, so we need to look upstream. I think the PDSA 
looks at creating national standards to help us feel that the 
drug supply above us is intact. I also feel that it takes a 
look at the rules and regulations set against counterfeiters to 
prevent that sort of activity long before it gets to a pharmacy 
level, and I think that the infrastructure built on the 
serialization and lot numbers included in the RxTEC Act prepare 
this for adaptation in the future. We need a system that is 
going to adapt to the health care needs of the near future, not 
necessarily the legislative needs that we foresee coming, and 
this market is going to continue to change and the products 
that we are going to experience are going to continue to 
change, positioning us very well to scale effectively.
    Mr. Pitts. Mr. Coukell?
    Mr. Coukell. Mr. Chairman, along with the compliance, or 
the costs of compliance that my colleagues raise, I think the 
other argument for a national system is that the companies 
involved in drug distribution work across State lines, so in 
the case of Avastin, it was a Tennessee-licensed wholesaler 
that sold the drugs but they ended up in Illinois, Texas and 
California, or at least those are the practices that have been 
mentioned. So that argues for a national standard, and clearly 
we have to do it in a way that has the least necessary cost 
impacts. So it is important to say what are the goals of the 
system, do we want to be able to identify counterfeit drugs 
when they come in, and if so, what is the most effective way to 
do that, and secondly, do we want to be able to track product 
as it moves through the system and what is the most cost-
effective way to track the product at the level we want to be 
tracking it at.
    One of our concerns with the proposal is that companies are 
going to make a capital investment to be able to serialize 
their product, and we certainly recognize they are stepping 
forward to do that, and I think the question we have to ask is, 
if we think that eventually we want to get to a system where we 
are tracking individual units and we are putting into place an 
infrastructure now that is lot-level tracking, are we going to 
be back here in 5 or 8 years when we have a crisis because have 
counterfeit drugs on the shelves asking them to invest again in 
a new system to track at the unit level or should we get it 
right now.
    Mr. Pitts. Mr. Brown, can you speak what would the costs be 
to manufacturers if the California approach were adopted?
    Mr. Brown. Yes, I can give you an approximate estimate. If 
we think about the number of packaging lines that serve the 
consumers in the United States, it is about 3,000. I have heard 
some estimates higher, some lower, and per packaging line, my 
manufacturers tell me that it ranges between $500,000 and $1 
million per packaging line. So at the highest, I would say it 
is near $3 billion just to implement the camera infrastructure. 
We are not talking about the data management costs or the costs 
of the barcodes, the ongoing costs. We are just talking about 
getting the infrastructure set up into the packaging lines.
    Mr. Pitts. My time is expired. The Chair recognizes the 
ranking member for 5 minutes for questions.
    Mr. Pallone. Thank you, Mr. Chairman.
    I was going to ask actually each of the panelists this 
question. In addition to the various provisions related to 
development of the RxTEC system, the proposal from the 
Pharmaceutical Distribution Security Alliance contains a number 
of provisions related to Federal licensing of parties involved 
in the manufacture and distribution of pharmaceuticals. I 
understand these provisions are intended to create Federal 
uniform for the regulation of these parties and could help 
prevent bad actors from engaging in the drug supply chain. But 
I would like to ask each of you if you support the provisions 
requiring Federal licensure for manufacturers, distributors, 
repackagers and third-party logistics providers, and if not, 
what concerns they have. And I am just looking for a yes or no 
at this point.
    Mr. Brown. Yes.
    Mr. Pallone. Ms. Gallenagh?
    Ms. Gallenagh. We support the provisions that are contained 
in the proposal, but if I could clarify, on the wholesaler 
licensure piece, we support Federal standards and still retain 
the issuances of licenses with the State.
    Mr. Pallone. OK.
    Mr. Pallone. Dr. Davis, do you agree with that?
    Mr. Davis. We agree as well.
    Mr. Pallone. Mr. Coukell?
    Mr. Coukell. As do we.
    Mr. Pallone. Now, let me ask Mr. Coukell, I understand that 
from the patient safety perspective, the best system would be 
one in which the pedigree system goes to the unit level--you 
talk about this--in which the pharmacist verifies the pedigree 
of all the units he receives for dispensing. I also understand 
that the current industry proposal does not have serialization 
information down at the unit level but it enables tracing back 
only to the lot level. You stated that, or one of you did. 
Meanwhile, that proposal does not require a pharmacist to 
verify any pedigree information whatsoever before dispensing, 
although it would facilitate traceback once the problem has 
been identified. So it appears that the industry proposal does 
not go as far as some would like and certainly not as far as 
the California law appears to go. However, what many of us have 
heard is that the California law is proving much more difficult 
to implement than anticipated and that the industry plan can 
serve as a building block towards reaching the goal that 
California law sets out.
    So my question, I will ask you first, Mr. Coukell, is, do 
you agree with that, what I just said, or do you see the 
industry proposal as a step that while containing many useful 
items ultimately puts a roadblock in front of ever reaching 
unit-level tracing and verification, and I will ask Ms. 
Gallenagh if you would respond as well?
    Mr. Coukell. Thank you for that question. If I could begin 
with one point of clarification, under the industry proposal, 
there would be a unique serial number on each vial. It just 
wouldn't be tracked as it moved through the system. So 
potentially, on a case-by-case basis, somebody could look that 
up and check it. But what you don't have is at the point where 
there is no suspicion that vial being checked and, you know, 
these counterfeits are pretty good. You can't by the naked eye 
in a lot of cases detect them and so there is no system here 
where a flag is automatically thrown up.
    So I think the key question in looking at how to move 
forward is, what are the basic elements that we want now and 
what are the basic elements that we are going to want within a 
reasonable time frame, and does this system give us enough to 
build on, and as I said already, we are a little concerned that 
if we go with this system, then we may not be able to get where 
we need to go in the future.
    Mr. Pallone. OK. Ms. Gallenagh?
    Ms. Gallenagh. Sure. Thank you, Congressman. I think a 
couple of things in this area. One, I am to agree with Mr. 
Coukell's explanation. There is an SNI or serial number 
included in the RxTEC data, so the 2D barcode would include the 
SNI information as well as lot and expiration. What we think is 
that that would alone for the first time provide unique 
identification of medicines and would be a very big step for 
the industry. Today we don't have that at all, and we are 
dealing with paper and electronics sometimes, always lot level 
and no real standard in terms of what different States are 
doing across the country. I think we also would think that 
going with the PDSA proposal is not a roadblock but sticking 
with the 50-State patchwork may be a roadblock to actually ever 
getting to a true electronic system across the country. I think 
that, you know, we need to take a broader perspective of this 
issue and that patient safety really does belong in the purview 
of Congress right now. Right now is probably the best 
opportunity we have, and we do have industry consensus and that 
is something that we have never achieved before, and so I think 
that goes a long way, and I believe that my members, other 
industry partners, once those things are in place that are put 
forth in the PDSA proposal like unit-level serialization, I 
think that building on the innovation that we have built on in 
the past and the efficiencies that can be achieved as we learn 
more about the technology, we may eventually find other uses 
for the technology and it may go further than what we have 
initially set out to do.
    Mr. Pallone. Thank you.
    Thank you, Mr. Chairman.
    Mr. Pitts. The Chair thanks the gentleman and recognizes 
the vice chairman of the subcommittee, Dr. Burgess, for 5 
minutes for questions.
    Mr. Burgess. Thank you, Mr. Chairman.
    Dr. Davis, you were probably in the room earlier when Dr. 
Woodcock was here and you heard our exchange about the drug 
shortages. She had been here 3 or 4 weeks ago, and this was a 
lot of follow-up to that. Can you tell me from a community 
pharmacist's perspective what you are encountering in the drug 
shortage arena?
    Mr. Davis. A single day doesn't go by where drug shortages 
don't affect patients in one manner or another. So of the 
hundreds of prescriptions that we fill daily in my pharmacies, 
we know we have to have a conversation every single day with a 
patient to alter therapy, to choose a different therapy or to 
come to a consensus with the prescribers and other caregivers 
as to how to change therapy to still get the best result for 
that patient without the agent available that we need.
    Mr. Burgess. Can you give us some examples of how that 
might come up in the course of your day? What are the ones you 
are seeing very frequently? You heard my exchange with Dr. 
Woodcock. We had the executive order in October, and as far as 
I can tell, not a darn thing happened. But then when we had a 
very intense discussion about Doxil 3 or 4 weeks ago, suddenly 
you got some movement on that and people were able to find oh, 
yes, there is some supply that we could free up. So help me 
here. Tell me what you are having the most trouble with. I will 
write a letter to Dr. Woodcock. We will see what we can do.
    Mr. Davis. The most trouble that is arising is mostly solid 
dosage forms. At the community pharmacy level, we dispense very 
few injectable medications or infusible medications so the 
cancer drugs that you are referencing are not necessarily a 
problem in the community, but what we do see are the ADHD 
medications, solid dosage forms of those, medications in some 
neurological disorders as well. Methotrexate has been recently 
a problem for us in the treatment of RA and a couple of other 
disease states. And in those cases, they are patients that were 
managed and well managed on these medications and now we have 
disruption of therapy. So we have to make a decision, can we 
still achieve the clinical outcomes with another agent, and it 
is proving to be burdensome. It is proving to burn time that we 
shouldn't necessarily have to burn because this patient has 
already been managed effectively and efficiently within the 
system.
    Mr. Burgess. How involved do you get with cost of 
prescriptions? I get to do a number of telephone town halls 
with other Members of Congress because they like for me to be 
there, and invariably a caller calls and they are on whatever 
and it is frightfully expensive, and then you kind of know in 
the back of your mind, there is a generic available for that 
that probably is much less. How do you handle that at the 
community pharmacy level when somebody is having difficulty 
paying for their medication and there might be a generic or 
there might be something that is just a little bit different 
but perhaps suitable? Do you communicate with the physician, 
the prescribing physician, in those instances?
    Mr. Davis. Absolutely. Something to keep in mind is, we are 
probably the only health care professional that actually gets 
to see the cost of care as it is rendered, so as someone is 
standing in front of us approaching the instance of therapy, we 
know what that is going to cost and how that is going to impact 
that patient. We are also the only professional that still has 
one-on-one time to render to those patients to help them 
understand and navigate the waters associated with the cost of 
those medications. So we do reach out to our prescribers in the 
community and offer recommendations based on what we understand 
to be the outcomes and efficacy of that drug while still 
maintaining the integrity of the intent of that prescriber but 
being able to do it at a lower cost.
    Pharmacists are doing it each and every day over and over 
again throughout their day. It is not necessarily a recognized 
function but we have transitioned from being the makers of 
salves and potions into clinically based social workers and 
helping people to navigate Medicare, helping people to navigate 
Medicaid, helping people to understand what is going on with 
the PBMs and the cost of their medications.
    Mr. Burgess. Let me ask you this because the issue of 
Avastin came up, and I have to admit, a couple weeks ago I was 
pretty taken by surprise. Now, I get why Viagra might be a 
counterfeit and why there might be a market, you know, the 
incredible markup that occurs on that, but Avastin is hardly 
something you would just buy on the Internet and use. What is 
going on there?
    Mr. Davis. So the concern that I have is, it is a high-
dollar medication so clearly to be able to counterfeit and move 
that into the supply chain puts a lot of value not only on the 
people that are actually counterfeiting and entering it in the 
supply chain but the hands that may touch it during the supply 
chain itself. And that is why I said, the integrity of our 
trading partners is of utmost importance, especially being the 
end dispenser of that. So to understand the components of the 
supply chain that come before us, to understand who your 
wholesaler is, to understand the integrity associated with that 
wholesaler and how they conduct business is vital to what we do 
at the community and ground level.
    With the case of Avastin, I understand that that particular 
medication changed hands through multiple sources multiple 
times after entering this country and did not necessarily enter 
through the channels that we would normally consider as part of 
the trusted lines.
    Mr. Burgess. It wasn't in the legitimate stream of 
pharmaceutical commerce?
    Mr. Davis. Correct.
    Mr. Burgess. Thank you, Mr. Chairman. I will yield back.
    Mr. Pitts. The Chair thanks the gentleman.
    That concludes our third and final panel. It has been very 
informative. We thank all of you for your testimony.
    I will remind the members that they have 10 business days 
to submit questions for the record, and I would like to ask the 
Director and witnesses to respond to the questions promptly. 
Members should submit their questions by the close of business 
on Thursday, March 22nd.
    Without objection, the subcommittee is adjourned.
    [Whereupon, at 2:35 p.m., the subcommittee was adjourned.]
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