    [Senate Hearing 114-102]
    [From the U.S. Government Publishing Office]

                                                           S. Hrg. 114-102

                       UNLOCKING THE CURES FOR AMERICA'S
                              MOST DEADLY DISEASES

    =======================================================================

                                    HEARING

                                   BEFORE THE

                        SUBCOMMITTEE ON SPACE, SCIENCE,
                              AND COMPETITIVENESS

                                     OF THE

                             COMMITTEE ON COMMERCE,
                          SCIENCE, AND TRANSPORTATION
                              UNITED STATES SENATE

                        ONE HUNDRED FOURTEENTH CONGRESS

                                 FIRST SESSION

                                   __________

                                 JULY 14, 2015

                                   __________

        Printed for the use of the Committee on Commerce, Science, and
                                 Transportation

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                                U.S. GOVERNMENT PUBLISHING OFFICE
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            SENATE COMMITTEE ON COMMERCE, SCIENCE, AND TRANSPORTATION

                        ONE HUNDRED FOURTEENTH CONGRESS

                                 FIRST SESSION

                       JOHN THUNE, South Dakota, Chairman
    ROGER F. WICKER, Mississippi         BILL NELSON, Florida, Ranking
    ROY BLUNT, Missouri                  MARIA CANTWELL, Washington
    MARCO RUBIO, Florida                 CLAIRE McCASKILL, Missouri
    KELLY AYOTTE, New Hampshire          AMY KLOBUCHAR, Minnesota
    TED CRUZ, Texas                      RICHARD BLUMENTHAL, Connecticut
    DEB FISCHER, Nebraska                BRIAN SCHATZ, Hawaii
    JERRY MORAN, Kansas                  EDWARD MARKEY, Massachusetts
    DAN SULLIVAN, Alaska                 CORY BOOKER, New Jersey
    RON JOHNSON, Wisconsin               TOM UDALL, New Mexico
    DEAN HELLER, Nevada                  JOE MANCHIN III, West Virginia
    CORY GARDNER, Colorado               GARY PETERS, Michigan
    STEVE DAINES, Montana
                        David Schwietert, Staff Director
                       Nick Rossi, Deputy Staff Director
                        Rebecca Seidel, General Counsel
                     Jason Van Beek, Deputy General Counsel
                     Kim Lipsky, Democratic Staff Director
                  Chris Day, Democratic Deputy Staff Director
           Clint Odom, Democratic General Counsel and Policy Director
                                     ------

              SUBCOMMITTEE ON SPACE, SCIENCE, AND COMPETITIVENESS

    TED CRUZ, Texas, Chairman            GARY PETERS, Michigan, Ranking
    MARCO RUBIO, Florida                 EDWARD MARKEY, Massachusetts
    JERRY MORAN, Kansas                  CORY BOOKER, New Jersey
    DAN SULLIVAN, Alaska                 TOM UDALL, New Mexico
    CORY GARDNER, Colorado               BRIAN SCHATZ, Hawaii
    STEVE DAINES, Montana

                                C O N T E N T S

                                  ----------
                                                                       Page
    Hearing held on July 14, 2015....................................     1
    Statement of Senator Cruz........................................     1
    Statement of Senator Peters......................................     2
    Statement of Senator Wicker......................................    47
    Statement of Senator Udall.......................................    50
    Statement of Senator Johnson.....................................    52

                                   Witnesses

    Tom Coburn, former U.S. Senator from Oklahoma....................     5
        Prepared statement...........................................     8
    Christopher Frangione, Vice President, Prize Development, XPRIZE.    11
        Prepared statement...........................................    13
    Peter W. Huber, Senior Fellow, Manhattan Institute...............    17
        Prepared statement...........................................    20
    Dr. Keith R. Yamamoto, Vice Chancellor for Research, University
      of California, San Francisco; Executive Vice Dean, School of
      Medicine; Professor, Cellular and Molecular Pharmacology.......    26
        Prepared statement...........................................    28

                                    Appendix

    Response to written questions submitted to Christopher Frangione
      by:
        Hon. Steve Daines............................................    61
        Hon. Gary Peters.............................................    61
        Hon. Amy Klobuchar...........................................    62
    Response to written question submitted to Peter W. Huber by:
        Hon. Ron Johnson.............................................    63
    Response to written question submitted to Dr. Keith R. Yamamoto
      by:
        Hon. Ron Johnson.............................................    65
        Hon. Steve Daines............................................    65

             UNLOCKING THE CURES FOR AMERICA'S MOST DEADLY DISEASES

                                  ----------

                             TUESDAY, JULY 14, 2015

                                   U.S. Senate,
                   Subcommittee on Space, Science, and
                                       Competitiveness,
            Committee on Commerce, Science, and Transportation,
                                                        Washington, DC.
        The Subcommittee met, pursuant to notice, at 10:07 a.m. in
    room SR-253, Russell Senate Office Building, Hon. Ted Cruz,
    Chairman of the Subcommittee, presiding.
        Present: Senators Cruz [presiding], Wicker, Fischer,
    Johnson, Peters, and Udall.

                  OPENING STATEMENT OF HON. TED CRUZ,
                        U.S. SENATOR FROM TEXAS

        Senator Cruz. Good morning. This hearing will come to
    order. We are here today to discuss an issue that is important
    to every one of us. We are here today to discuss cures--cures
    to life threatening diseases, cures to diseases that devastate
    the lives of millions.
        We are here today to discuss what we are doing well and
    what we could be doing better to open new frontiers.
        The United States has led the world in path-breaking
    medical research and yet there is far more we could be doing.
        In the year 2015, it is estimated almost 600,000 Americans
    face cancer. Another 700,000 with Alzheimer's Disease are
    expected to die this year. Nearly 500,000 people in the United
    States suffer from the effects of Parkinson's Disease. 795,000
    suffer strokes each year. 25.8 million people are afflicted
    with diabetes, and 95 percent of other rare diseases currently
    have no recognized treatments or cures, leaving most of the 30
    million patients afflicted by them with few or no options.
        The path to achieving medical breakthroughs in cures is
    long and capital intensive. Often it seems when it comes to
    medical research we are pennywise and pound foolish, that we
    pay billions or trillions on the back end, dealing with the
    consequences of horrific diseases, rather than investing and
    creating the incentives on the front end to cure these diseases
    once and for all.
        The average cost to get a single drug approved by the FDA
    is between $1 billion and $2 billion. In addition, the
    regulatory burdens and bureaucratic unpredictability slow the
    ability of innovators to create new cures. Regulatory burdens
    and uncertainty are also having an effect on private
    investment.
        In 2011, the National Venture Capital Association issued a
    report confirming that U.S. venture capitalists are reducing
    their investments in biotechnology and medical device
    companies, and are shifting their focus overseas to Europe and
    Asia, primarily due to the persistent regulatory obstacles of
    the FDA.
        Despite these daunting and persistent challenges, I
    continue to believe that incredible American ingenuity still
    has the power to fuel a revolution and open medical
    breakthroughs.
        As former FDA Commissioner Andrew von Eschenbach has
    stated, ``We stand on the cusp of a revolution in health care.
    Advances in molecular medicine will allow us to develop
    powerful new treatments that can cure or even prevent diseases
    like Alzheimer's and cancer.''
        As we begin a discussion this morning on how we can unlock
    cures for America's most deadly diseases, we will take a global
    look at examining how the American regulatory system compares
    with the rest of the world, and how incentives can change so
    that in the coming years we have more and more breakthroughs
    rather than less and less bureaucratic inertia.
        Whether it is increased Federal funding through direct
    medical research, whether it is using tools such as prize
    competitions, whether it is intellectual property reform or
    easing the burdens for approving new drugs and medical devices,
    all of those are steps that are going to need to be examined
    closely if we are going to take major steps toward new cures.
        American poet Robert Frost once stated ``Freedom lies in
    being bold.'' That is the approach all of us hope we take, that
    it is in that spirit that I welcome our panel of distinguished
    experts and friends to engage in a discussion of creating bold
    solutions that will enable medical discoveries to cure and to
    prevent deadly diseases.
        Senator Peters?

                    STATEMENT OF HON. GARY PETERS,
                       U.S. SENATOR FROM MICHIGAN

        Senator Peters. Thank you, Mr. Chairman. Thank you for
    convening this hearing, and thank you to a very distinguished
    panel to talk about a very important issue for me and I think
    for the whole country.
        Without question, scientific discovery and technological
    breakthroughs drive our understanding of the world, from the
    airplane to the MRI to the Internet, innovations in science and
    technology have transformed the United States from a rugged
    frontier nation to a global economic super power.
        Even today, U.S. researchers continue to search for the
    next big thing, that game changing innovation that will spark
    new industries, create jobs, build the economy, and further the
    United States' technological leadership.
        The Federal Government is helping lead the way. Investments
    from the National Science Foundation, the National Institute of
    Standards and Technology, the National Institutes of Health,
    NASA, and other Federal agencies work across a broad range of
    science and engineering topics to help educate a world class
    science and technology workforce and bring us continuously
    closer to breakthrough innovations.
        A few weeks ago, I had the privilege of joining some of our
    nation's brightest minds at a panel discussion by the Science
    Coalition. We looked ahead to the year 2034 and imagined some
    of the exciting discoveries that could be possible based on
    Federal investment into basic research.
        One panelist was working to develop a new class of
    regenerative drugs that would provide effect treatment for
    diseases like Parkinson's and Alzheimer's. Her work was
    supported by the NIH. Another was working to develop safer and
    quicker produced vaccines in pill form, enabling us to keep
    pace with multiplying infectious disease threats. Her work has
    been supported by both NASA and the NSF.
        These examples are just a small part of a long history of
    critical Federal Government support for research and
    development.
        Tragically, however, overall Federal R&D spending has
    fallen to below 1 percent of GDP. This is unacceptable. When we
    examine global funding trends in biomedical research, we see
    that private investment in the U.S. has begun to fall off as
    well. In fact, Mr. Chairman, I have a chart that highlights
    that that I would like to enter into the record with unanimous
    consent.
        Senator Cruz. Without objection.
        [The chart referred to follows:]

    U.S. Funding for Medical Research By Source, 1994-2012

        Source: Hamilton Moses III, MD, et al., The Anatomy of Medical
    Research: U.S. and International Comparisons, Journal of the American
    Medical Association, 2015.

        Senator Peters. Studies point to a number of contributing
    factors to this fall off. For one, some private companies are
    shifting their research overseas due to the availability of
    foreign government incentives and access to well educated and
    relatively inexpensive science and technology work forces.
        If we look more closely at these global funding trends,
    particularly for the past 20 years, one conclusion is
    abundantly clear, private investment in the U.S. correlates
    very closely with government investment. When government
    investment in R&D shrinks or stagnates, the private sector
    pulls back as well. When the government grows its investment,
    the private sector follows suit.
        The trends are clear and so are the actions that we must
    take. First, we must develop our science and technology
    workforce through education, inspiration, and opportunities.
    Companies looking to perform innovative breakthrough research
    will go where the talent is. We need to make sure that our
    science and technology workforce is second to none.
        Second, Federal investment in science and technology must
    at least keep pace with the growth of our economy. If the
    stagnant trend we have seen in the last few years is allowed to
    continue, the buying power of our Federal research budget will
    slowly erode with inflation and private investment will shift
    overseas in search of greener pastures.
        Third, we need to keep our Federal research portfolio
    balanced. The challenges of our age are increasingly
    interdisciplinary in nature from biomedical science to behavior
    research to space exploration. Only a broad and balanced
    science and technology investment portfolio will preserve
    America's place at the forefront of innovation for generations
    to come.
        Finally, we need to find creative policy avenues to
    incentivize breakthroughs and reduce barriers to innovation.
        The University of Michigan's fast forward medical
    innovation program is an example of the right step to take.
    Funded by NIH, this program is nurturing commercialization in
    entrepreneurship with the ultimate goal of getting more medical
    devices, diagnostics, therapeutics, and health information
    technologies to the market sector.
        We cannot forget that we are in constant competition with
    other nations that have learned from our example and are
    rapidly growing their commitments to scientific research.
        Now is not the time to slow down. We have to step up in
    Congress on both sides of the Capitol and on both sides of the
    aisle to strengthen our commitment to basic research, to
    education, and to translating new knowledge into the next big
    thing.
        Thank you, Chairman Cruz, for holding this hearing today,
    and I would like to thank all of our panelists once again for
    appearing before us. I certainly look forward to both your
    testimony and the discussion to follow. Thank you.
        Senator Cruz. Thank you, Senator Peters. I would now like
    to welcome each of our distinguished panelists. We begin with
    Dr. Tom Coburn, who is a friend to each of us here. It is good
    to see you, Tom. Welcome back, you are looking good.
        Dr. Coburn has had an extraordinary career. He began his
    career as Manufacturing Manager at the Ophthalmic Division of
    Coburn Optical, which under his leadership grew from 13
    employees to more than 350. He captured 35 percent of the U.S.
    market.
        He then became a medical doctor and has personally
    delivered more than 4,000 babies. He was elected to the U.S.
    Congress and served from 1995 to 2001, and he served as a
    colleague of ours in the U.S. Senate from 2005 to 2014. He was
    an extraordinary leader in this body and is a good friend.
        Our next witness is Christopher Frangione, who is the Vice
    President of Prize Development at XPRIZE. He brings more than
    15 years of experience in the strategy and operations fields
    with energy companies and as a management consultant.
        He received a Bachelor of Arts from Colby College and a
    Master in Business Administration and Master of Environmental
    Management from Duke University.
        Our next witness is Mr. Peter Huber, Senior Fellow at the
    Manhattan Institute. Mr. Huber is an author of numerous books
    including ``The Cure in the Code, How 20th Century Law is
    Undermining 21st Century Medicine,'' and ``Orwell's Revenge,
    The 1984 Palimpsest,'' and I am not sure what that book is
    about, but it is apparently on Facebook CEO Mark Zuckerberg's
    2015 reading list.
        Mr. Huber has had a remarkable career as well serving as
    Associate Professor at MIT, clerking for both Ruth Bader
    Ginsburg when she was a judge on the D.C. Circuit and then
    Sandra Day O'Connor in the U.S. Supreme Court, and he is a
    partner at the Washington, D.C. law firm of Kellogg, Huber,
    Hansen and Todd.
        Finally, Dr. Keith Yamamoto, Vice Chancellor for Research,
    University of California, San Francisco. Dr. Yamamoto received
    his Ph.D. from Princeton University, my alma mater. He is also
    a Professor of Cellular and Molecular Pharmacology at the
    University of California, San Francisco.
        Throughout his career, Dr. Yamamoto's research has focused
    on signaling and transcriptional regulation by nuclear
    receptors. He uses structural, mechanistic, and systems
    approaches to pursue these problems in molecule cells and whole
    organisms.
        Dr. Yamamoto also chairs the Coalition for the Life
    Sciences, and he serves on the Advisory Committee for the
    Division of Earth and Life Studies for the National Academy of
    the Sciences.
        The Committee is honored to have such distinguished experts
    with us, and we welcome you, and we will begin, Dr. Coburn,
    with you.

                       STATEMENT OF TOM COBURN,
                   FORMER U.S. SENATOR FROM OKLAHOMA

        Dr. Coburn. Thank you, Mr. Chairman and Senator Peters for
    inviting me. I just want to give a little background. I am
    probably the only person in the room that has been subjected to
    FDA controls as a manufacturer. I remember when Gerald Ford
    signed the Medical Device Act. Two, has had manufactured
    products under FDA's guidance, and used their products as a
    physician after approval and saw the high cost and delayed
    onset of many products not just medical devices.
        Three, have been a patient, and very interested in what is
    happening in terms of modern medicine, especially in terms of
    breakthrough technologies because it becomes very personal when
    you have advanced cancer, that new breakthroughs and new
    methods of approving new drugs are very important.
        Finally, as a practicing physician, seeing the interaction
    between family and patients with Alzheimer's, and knowing that
    if we had breakthroughs in those areas, the tremendous
    difference not just in family interaction and family costs and
    family effort, but also in terms of economic costs and economic
    effort to our country.
        I just want to put in perspective, I have kind of been all
    around the FDA, and as a legislator, and I would point you to a
    couple of things. Number one, the last piece of major
    legislation was FDASIA, and I would ask you to go look at what
    FDA has done, what Congress has mandated and signed by the
    President three years ago, and what you will see is not much,
    even though you mandated that things be done.
        Whatever we do, the 21st Century Cures Act is a good start
    that came from the House. It needs to be refined and perfected.
    It is a bipartisan bill. That is what ought to come out of the
    Senate, a real look at what we can do and cover all the bases.
        I want to make four main points with you today and I will
    finish, my testimony has obviously been available to you.
        The first point I would make is technology is moving power
    back to patients and physicians, not to the FDA. No matter what
    you do, more and more decisions are going to be made outside of
    government regulation, because that is where the science and
    technology has taken us.
        We need to incentivize breakthrough innovations, not just
    incremental advances against major diseases like Alzheimer's.
    They need to be incentivized.
        I will give you a great example, and I was involved in
    this. In the AIDS epidemic, what happened at FDA? A large group
    of people who were extremely interested in seeing the process
    speed up and cures come to fruition demanded the FDA, not
    Congress, but activists demanded that the FDA respond. Guess
    what they did? Today, we have a chronic disease instead of a
    life killing disease. That did not come through Congress. That
    came through activists being persistent in pushing a regulatory
    agency.
        The barriers that Congress faces in addressing FDA reform
    are often self created, you create them. Let me give you a
    great example. The FDA did a wonderful job on the approval
    process of the drug, Vioxx. They did not make one mistake,
    according to their approvals. There is no way you can be
    perfect 100 percent of the time in what we have set up for a
    regulatory regime for new drug approvals, but what came out of
    Congress on Vioxx? Tremendous beating up of the FDA.
        If any of us had been running the FDA, running it per
    protocol as it should have been, we would have done exactly the
    same thing, except Congress beats them up.
        The other thing with Vioxx is nobody ever thought about the
    millions of people who were back at work because they did not
    have chronic pain anymore because of Vioxx. Everything is a
    balance.
        We have lost a great drug that had a rare side effect and
    the trial bar got a hold of, but you have millions of people
    now who do not have available a drug that allows them to go to
    work every day that is not a narcotic.
        We sometimes as Members of Congress are our own worse enemy
    in terms of beating up the FDA. What happens when the FDA hears
    that, it makes them less likely to take a chance on something
    that could be very, very beneficial to the country because if
    there is a consequence of something going wrong, then they want
    to protect the agency, and they do not want to hear the screams
    that come from Congress.
        The third point I would make is reimbursement and
    intellectual property reforms that reward breakthrough
    medicines that are curative and offset other types of health
    care spending are just as critical as FDA reform.
        Payment reforms and intellectual property reforms, you can
    change the FDA, but if you do not change the payment reforms,
    and if you do not change the intellectual property reforms, one
    of the reasons drugs are failing in this country today is
    people do not know that if they invest capital that they will
    still have any capital left to take advantage of intellectual
    property when they get through the process, because the process
    takes so long.
        That needs to be a thought if we really want to get new
    advances, and we really want to hurry up to cures, not just
    improvements but cures, then what we have to do is change
    intellectual property and we have to change the way we pay for
    it.
        For example, 12 years of data exclusivity, not talking
    about patents, talking about bringing exclusive data to the
    FDA, say we have a new breakthrough on a biological marker,
    here is the way this works, we have the data, protect it.
        Then what you have is capital invested. We are losing
    capital investment in this country because of the questionable
    nature of whether or not you will be able to take advantage of
    that capital investment, because the intellectual property will
    not be covered.
        Finally, transparency and peer engagement is one of the
    most effective tools we have for rapidly advancing science and
    reducing FDA's risk aversion.
        I do not blame the FDA for being risk adverse, the way
    Congress treats them. I do not blame them. It would be really
    courageous to ignore what Congress has to say to them since you
    control totally their budget outside of some of the small
    advancements.
        In the field of biomarkers, if we force the FDA to become
    collaborative and cooperative and transparent, you are going to
    see things move at a very rapid pace in this country. If you
    allow the FDA to continue to not be cooperative, continue to
    not be transparent, and continue to not be collaborative when
    it comes to biomarkers, you are going to see all this industry
    and all this intellectual property go outside of this country.
        The 21st Century Cures legislation is a great move towards
    that, but it has to be better. It has to have some teeth in it
    to force the FDA to become transparent, to be collaborative,
    because they have not been. If we do that, what you will see is
    a marked move forward in terms of advances in cures for new
    diseases, not just treatments but cures, and the identification
    of new pathways, and it will build on itself.
        It is happening now, and it is going to continue to happen
    because private capital, massive computing, and great medical
    record searching right now is causing us to find new treatments
    all the time with existing drugs, repurposing drugs, and we are
    going to see more of it. If the FDA becomes a block to that,
    then we are in trouble.
        Finally, the concern of regulators and even policy makers
    is too often about what might happen if something goes wrong.
    Something is already deeply wrong in our country. Millions of
    Americans are suffering and dying from untreatable diseases or
    the lack of better treatment options, not because it has to be
    that way but because we have a regulatory scheme that makes it
    that way.
        Too many medicines or medical devices are never developed
    because it takes too long and costs too much to bring them to
    patients.
        We need a drug development system that encourages
    innovators to pursue breakthrough cures and allows patients and
    physicians fighting serious illnesses to take informed risks
    when we have good information about the mechanistic effects of
    drugs and the relationship to known causal pathways, and allows
    everyone to learn from the real world evidence about drug
    safety and efficacy.
        That is not the system we have today but it is the one we
    need to face the health and fiscal challenges for our future.
        The double blind placebo controlled study in the future
    will have very limited value to us if we want to propel our
    country ahead in terms of leading on new innovation and new
    cures.
        Thank you. I would be happy to take your questions.
        [The prepared statement of Dr. Coburn follows:]

      Prepared Statement of Tom Coburn, former U.S. Senator from Oklahoma
        First, I'd like to thank Chairman Cruz, Ranking Member Peters, and
    the other members of the Committee for inviting me to speak today about
    an important subject that is near and dear to my heart: advancing cures
    for the tens of millions of American patients and their families
    battling life threatening or disabling disorders.
        The battle is personal for me in many ways. As a physician, I see
    elderly patients suffering from symptoms of early dementia, and
    eventually Alzheimer's, without a real treatment in sight. The burden
    of the disease falls not only on patients, but on their families and
    caregivers. Their plight is agonizing. And I can't offer them any
    effective treatments.
        As a three-time cancer survivor, I'm excited by the progress we've
    made against this deadly disease, but also mindful of how much further
    we have to go to conquer it. Cancer remains the second leading cause of
    death in the U.S.; for patients diagnosed with metastatic solid
    tumors--of the lung, colon, pancreas, or ovaries--far better diagnostic
    and treatment options are desperately needed. Diagnosing these diseases
    late--as we do all too often today--means that we can only delay the
    inevitable, at great human and financial cost.
        But I'm also deeply optimistic, because I've seen firsthand the
    inventiveness, dedication, and entrepreneurship of America's leading
    researchers and companies. I'm watching a flood of new information
    emerge that is helping researchers map out cancer's vulnerabilities at
    the genomic level and develop personalized treatment programs for
    patients tailored to their unique tumor profile. These approaches are
    being made possible by advanced computing platforms for rapidly sorting
    through this torrent of information, guiding doctors and patients to
    the best treatments. For instance, IBM's Watson is analyzing millions
    of journal articles, patient records, and data on approved and
    experimental drugs to help developed personalized cancer-care regimens
    faster than any single physician alone could ever do. Watson and other
    ``big data'' and machine-learning approaches are literally getting
    smarter every day--and will, one day, expand state of the art oncology
    services to every cancer patient in America in their own communities,
    not just patients with access to leading cancer centers.
        The advent of systems biology and, more recently, quantitative
    systems pharmacology are helping us unravel the molecular networks of
    complex diseases at an unprecedented pace; simulate the effects of
    candidate compounds in computer models; weed out drugs likely to fail;
    and identify those most likely to succeed, all before a single human
    patient is dosed. Companies are also perfecting the art of developing
    targeted medicines, including genetically modified T-cells, monoclonal
    antibodies, and new gene-editing technologies. This approach heralds a
    day when researchers will use molecular scalpels to target disease-
    causing cells and genes--and kill or replace them with healthy
    versions.
        Is this the Golden Age of Medicine? Not yet. How long it takes us
    to get there rests with you. It depends on the 21st Century Cures
    legislation just passed by the House, on steps that you can take to
    improve it even further, and on decisions that Congress will make over
    the next few years to enhance the climate for breakthrough innovation
    in the United States.
        The way we approve new medicines and diagnostics must change. It's
    got to be completely transformed. I know that word is overused and
    we've been talking about transformation for a long time. We don't need
    another committee to study it, or hold another conference about it. We
    need to do it.
        I'm honored today to be testifying beside Keith Yamamoto, vice
    chancellor for research at UCSF, one of America's leading medical-
    research universities. He is one of the visionary leaders of the
    precision-medicine movement, and one of the architects of the pivotal
    National Academy of Sciences committee report Toward Precision
    Medicine: Building a Knowledge Network for Biomedical Research and a
    New Taxonomy of Disease. That report talked about the need to develop a
    true molecular taxonomy of disease through a knowledge network that
    patients and physicians could consult and upload information to in real
    time--moving us away from an outdated classification of disease based
    on clinical symptoms and toward one based on molecular pathways.
        We've made and continue to make rapid progress toward precision
    medicine. But the way the FDA approves new medicines is still mostly
    rooted in those clinical signs and symptoms. It is based on cutting
    edge science--cutting edge in 1962, when we couldn't identify the
    molecular mechanisms of disease, let alone design drugs to target them.
    It's how we got the double-blind, placebo-controlled trial (preferably
    two of them) as the ``gold standard'' for approving new drugs. That
    gold standard is increasingly out of date, as we gain confidence that
    we actually are targeting the pathways causing the disease or disorder
    in question. And we can also design trials that, as they proceed, help
    unravel those pathways in a learn-as-we go strategy using targeted
    medicines. We can't continue to ask one narrow question at a time, in
    one trial at a time. The current drug development and approval system
    is too expensive, too time consuming--and, frankly, likely unethical
    when there are better approaches available.
        What we should be doing instead is ensuring that all trials that we
    run attempt to match new medicines to the biology of the patients
    taking the medicine: we know that different patients with the same
    clinical symptoms can respond differently because of a variety of
    genetic factors that affect drug metabolism (or indicate that one
    patient actually has a totally different disease that needs a different
    treatment).
        We're moving in this direction--rapidly in cancer and much more
    slowly for other indications. Far too many drugs are still tested and
    developed based on 1962-era science. It's a one-size-fits-all approach
    to innovation that causes too many drugs to fail that could succeed if
    they were tested in the correct order, in the correct groups of
    patients.
        While the FDA remains concerned about approving ineffective or
    dangerous drugs, alternative approval pathways--based on molecular
    signatures called biomarkers, followed over time in patient registries
    via electronic medical records--could bring potential treatments to
    desperate patients much sooner, with appropriate requirements for post-
    market trials verifying long-term safety and efficacy. That approach is
    the exception today but should be the rule. Despite its best
    intentions, and despite repeated pronouncements since 2004, it's clear
    that the FDA isn't embracing clinical-trial transformation to the
    degree that it could. The rapidly falling cost of genetic testing, the
    ability to share tens of thousands or hundreds of thousands of detailed
    patient medical records and the rise of analytic infrastructure,
    ``bioinformatics,'' that can rapidly comb through massive, complex
    datasets all make it increasingly possible for individual physicians to
    develop personalized treatment profiles that leap ahead of the FDA's
    approved drug labels--which might be years or decades out of date.
        In 2013, researchers at Stanford University screened FDA-approved
    drugs with known molecular targets, with the molecular expression
    profiles of known tumor types. They found a match between a 50-year old
    class of anti-depressants and small cell lung cancer. They then tested
    the drug in cancer cell lines and animal ok models, and found that the
    match predicted by their software killed tumor cells. It turned out
    that the anti-depressants caused certain cancer cells, called
    neuroendocrine tumors, to self-destruct, through a process called
    apoptosis.
        Neuroendocrine tumors are found in subsets of other types of
    cancer, including pancreatic cancer, so the drugs may be effective
    there as well. The drug quickly went into mid-stage efficacy testing in
    small cell lung cancer, potentially shaving years off development
    timelines. Atul Butte, now a colleague of Dr. Yamamoto's at UCSF and
    one of the developers of this drug repurposing strategy, observed:

            ``We are cutting down the decade or more and the $1 billion it
            can typically take to translate a laboratory finding into a
            successful drug treatment to about one to two years and
            spending about $100,000.''

        That's tremendously exciting; but imagine if we could do this at
    scale. By scanning millions of real-world patient profiles, researchers
    might discover that some patients, ``exceptional responders,'' are
    already being cured with off-label drugs, or rehabilitate medicines
    that the FDA considers ``failures'' in broader populations. Researchers
    could also discover evidence that patients who take certain types of
    commonly prescribed drugs (statins, newer classes of anti-depressants,
    etc.) have lower rates of some types of cancer or Alzheimer's, making
    them powerful off-the-shelf options for preventing or treating chronic
    illnesses. With enough data, the right analytics, and the correct
    strategy for adaptive clinical-trial designs, researchers can unravel
    the right time and sequence for using existing or experimental
    treatments to produce better outcomes and even cures.
        In short, we can harness the many petabytes of data we're already
    collecting to discover, test, and validate new treatment approaches
    without waiting for the FDA's overly cautious bureaucracy to catch up.
    Properly harnessed, data can deliver new treatments and cures at a
    fraction of the time and cost required by the FDA's 50-year-old
    paradigm for testing new drug candidates.
        To revolutionize outcomes for patients, Congress must require the
    FDA to collaborate with the broader scientific community to establish
    clear guidelines for unleashing the full potential of digital medicine
    to transform drug development and enable precision medicine prescribing
    by physicians. Congress must set overarching goals for all Federal
    agencies that touch digital medicine, especially the NIH and HHS:
    streamline bureaucracy, reduce waste, and coordinate research efforts,
    and hold agencies accountable for doing so through annual or biannual
    performance reports.
        We need reimbursement reforms that reward breakthrough innovations.
    Many curative technologies will be very expensive at first, but will
    save the health care system vast amounts of money in the long run by
    reducing hospitalizations, use of nursing homes, and the need for
    repeat physician visits and tests. A one-shot cure for leukemia or
    sickle-cell anemia may be extremely expensive by historical standards,
    but may still be extraordinarily cost effective for public and private
    payers in the long run. New approaches to funding and paying for those
    breakthrough treatments will be needed if we are to address our massive
    entitlement spending challenges for Medicare and Medicaid. A cures
    strategy is a strategy that fiscal conservatives should embrace, as
    long as we are truly paying for outcomes.
        Don't mistake my optimism for naivete. There are real challenges we
    have to overcome to embrace a cures strategy for American health care.
    Existing electronic medical records, for instance, don't capture much
    of the data we need to support rapid development of personalized
    medicine protocols. Many physicians still are not well-equipped to
    interpret results from genetic testing. While Medicare has required
    EMRs for reimbursement purposes, they haven't helped streamline the
    physician's workload or enhance patient care. If anything, they've
    detracted from it.
        But these challenges are largely engineering problems--problems
    amenable to technical solutions. The basic tools enabling precision
    medicine are available and are widely used across the Internet, as well
    as in numerous industries, from retail to the Department of Defense.
    (The Defense Advanced Research Agency is building a machine-learning
    engine to identify and predict all of the genes and signaling networks
    driving all cancers.) Several large hospital systems, such as
    Intermountain Healthcare, are developing sophisticated electronic-
    records systems and diagnostics platforms that can serve as proving
    grounds for rapidly scaling up new digital medicine strategies, as well
    as for sharing such data.
        What will it take to enable a cures strategy for America? There are
    many good ideas in the 21st Century Cures legislation; but the biggest
    one is yet to be embraced. The FDA will have to pivot from being a
    gatekeeper to a collaborator, one that works with many stakeholders to
    develop evidentiary standards for enabling digital, precision medicine
    on a national scale. Power will have to shift from centralized
    bureaucrats to empowered patients and physicians. But I have no doubt
    that the country that brought us Google, Intel, Amazon, and Salesforce
    can tackle the challenge of disrupting the FDA's nearly 50 year-old
    framework for advancing innovation.
        Regulators will resist--just as they resisted the demands of AIDS
    activists in the late 1980s. Yet now, as before, when successes
    accumulate, regulators will take credit for embracing reform.
        By sending the 21st Century Cures legislation to the Senate,
    Congress has taken one powerful stride to advance precision medicine.
    Your responsibility is to put your own stamp on the legislation, to
    ensure that the transformational potential of digital and precision
    medicine is realized for patients as swiftly as possible.

        Senator Cruz. Thank you, Dr. Coburn. Mr. Frangione?

       STATEMENT OF CHRISTOPHER FRANGIONE, VICE PRESIDENT, PRIZE
                          DEVELOPMENT, XPRIZE

        Mr. Frangione. Thank you for having me today. I would like
    to thank the Committee, Chairman Cruz and Ranking Member
    Peters, for the opportunity to testify today.
        We welcome the Committee's attention to solving cures, and
    more importantly we welcome your attention to learning about
    how and when prizes could be one of those tools in helping find
    cures.
        I am the Vice President of Prize Development at XPRIZE
    Foundation, which means my team designs the prizes and brings
    them to launch, and then we hand them off to the operations
    team.
        We are the global leader in the creation of incentivized
    prize competitions. We are a 501(c) non-profit organization.
    Our mission is to bring about radical breakthroughs for the
    benefit of humanity, and we do this by shining a global
    spotlight on the problem, and incentivizing people from around
    the world, and that is important, from around the world to
    solve that problem by offering a multimillion dollar purse. We
    do not care where you live, where you went to school, or what
    you have done before.
        Some of our cures can be figured out by somebody that has
    none of the experience that anybody in this room has, and we
    believe in that. To date, we have awarded five prizes ranging
    from highly fuel efficient vehicles to oil spill clean-up and
    health, worth over $27 million, and we have five active prizes
    right now worth over $64 million, including our recently
    launched Barbara Bush Foundation Adult Literacy XPRIZE focused
    on developing mobile applications for U.S. adult learners that
    are illiterate.
        We also have a health prize in our Life Sciences Group, and
    that is our $10 million Qualcomm Tricoder XPRIZE. This is to
    create a device that can diagnose your health without a panel
    of doctors any time, anywhere.
        We are actually in our testing stages of that right now,
    seven teams delivered 30 prototypes that were actually tested
    on consumers. The idea is that the winning team that most
    accurately diagnoses a set of disease states without a health
    professional, really allowing you to take care of your health,
    and know when it is important to go see a doctor or when you
    can just stay home.
        One of those top seven--they are from four countries--is a
    team of undergraduates from Johns Hopkins University. Some of
    them are industry players and some are from outside the
    industry.
        We are seeing a lot of successes in prizes in the health
    space but there are only a few places where prizes really work
    in health and there are places where prizes do not work in
    health. I will quickly highlight those.
        Where they do work is where new forms across disciplinary
    collaboration is needed, by bringing people together that would
    not otherwise speak to each other or work together, bringing
    the FDA and the innovators together, or where research is under
    funded or there is a small patient pool driving inefficient
    market activity, or where an engineering type solution can come
    to bear.
        I will give you an example. We are working with the
    American Society of Nephrology on a kidney disease prize. It is
    a technology prize to give better patient experience to folks
    and help solve the problem. That is an engineering type prize.
    You can imagine wastewater engineers or people from completely
    outside the industry coming together to solve that problem.
        Where we do not think prizes work, it is where early stage
    research and discovery is needed, that basic research that
    Ranking Member Peters was talking about. It is too hard because
    the teams are looking for that end market and they are going to
    spend too much money and too much time getting there, or where
    these large longitudinal studies are needed. If there is a way
    to bypass those, a prize would be able to work better.
        Even where we believe prizes work well, they can always
    complement traditional forms of funding and should never
    replace them.
        We are also currently exploring a prize in Alzheimer's. We
    are working with 10 individual donors, and Senator Wicker has a
    keen interest in this, and we thank you for that. We have been
    working with his staff on how do we partner on that.
        Prizes are powerful for many reasons. You can leverage your
    investment. If you go and put out a $5 million grant, you are
    going to get $5 million worth of work. If you put out a $5
    million prize, you can expect to get $20 million to $50 million
    worth of work because the teams are spending their own money.
    You are democratizing innovation. You are bringing in those
    outside innovators I talked about, people you would never give
    a grant or contract to because you wouldn't think they were
    going to be successful.
        We find that we do not care if you have 20 years of
    experience or 20 days of experience, as long as you solve the
    problem, you win.
        Prizes allow you to reduce your burden of risk. You are
    putting a lot of risk on the teams. The teams are spending
    their own way and you are only paying for success. In order for
    prizes to work, you have to design them well, and this is where
    we want to help the government do better.
        The teams are not competing for the prize purse. They know
    that only one, two, or three teams are going to get the prize
    purse. They are competing for that end market. What can you do
    to help them get to the end market in terms of education,
    business plans, road shows, in terms of testing, what can NIH
    do for them that would cost them lots of money or somebody
    else, or in terms of access to funders or whomever?
        We believe that prizes work really, really well when you
    have great partners. I will highlight one that we actually have
    with the FDA. We have a partnership with the FDA on our
    Qualcomm Tricoder XPRIZE where the FDA has volunteers that will
    actually answer the phone when our teams call to help them
    understand what they should expect. It is all off the record,
    but it gets the teams from outside the industry some
    understanding of what would happen next in the regulatory
    process.
        For prizes to work, you really need to offer these
    additional incentives.
        In summary, we believe that the public and private sectors
    must work together to utilize every tool available, and prizes
    are one of those tools. It is not the only tool, but it is a
    really, really powerful tool you can use.
        Thank you.
        [The prepared statement of Mr. Frangione follows:]

         Prepared Statement of Christopher Frangione, Vice President,
                           Prize Development, XPRIZE
    Introduction
        On behalf of XPRIZE, I'd like to thank the Committee, Chairman Cruz
    and Ranking Member Peters for the opportunity to testify today. XPRIZE
    welcomes the Committee's attention to incentivizing cure development
    for the world's deadliest diseases. XPRIZE welcomes the conversation
    regarding how and when prizes can be an appropriate and effective
    mechanism for the Federal Government to incent innovation, economic
    growth and solutions to some of the biggest problems facing our Nation
    today. I'm Chris Frangione, Vice President of Prize Development. I am
    responsible for overseeing the design of XPRIZEs from conception to
    launch.
    Background
        XPRIZE is the global leader in the creation of incentivized prize
    competitions. As a 501c(3) not-for-profit organization, our mission is
    to bring about radical breakthroughs for the benefit of humanity,
    thereby inspiring the formation of new industries and the
    revitalization of markets. XPRIZE works to accelerate the pace of
    innovation across sectors through the implementation of prizes that are
    audacious, yet achievable. XPRIZE looks to find ``white spaces'' where
    breakthroughs can bring about exponential shifts.
        Founded in 1995, we are the recognized world leader for creating
    and managing large-scale, global, incentive prize competitions that
    stimulate investment in research and development worth far more than
    the prize itself. To date, XPRIZE has successfully awarded five prizes
    with combined purses of over $27 million. These prizes spanned multiple
    sectors, including Progressive Insurance Automotive XPRIZE for highly
    fuel-efficient vehicles, the Wendy Schmidt Oil Cleanup XCHALLENGE for
    better surface oil cleanup technologies, the Northrop Grumman Lunar
    Lander XCHALLENGE, the Nokia Sensing XCHALLENGE, and of course the
    Ansari XPRIZE for commercial space flight. In most of these
    competitions, we collaborated with the U.S. government, the private
    sector, and the research community.
        We also have five active prizes with combined purses of $64
    million. These include the $30 million Google Lunar XPRIZE that
    challenges teams from around the world to land a rover on the Moon and
    send back live video; the $2 million Wendy Schmidt Ocean Health Prize--
    a competition to create breakthrough pH sensors that can help us begin
    the process of healing our oceans; the $15 million Global Learning
    XPRIZE that challenges teams to develop new learning solutions to
    empower children and communities around the world; and the $7 million
    Barbara Bush Foundation Adult Literacy XPRIZE, which challenges teams
    to develop mobile applications for adult learners that radically
    improve their literacy skills in just twelve months.
    Life Sciences
        Specific to today's discussion, XPRIZE has a Life Sciences Prize
    Group aimed at stimulating innovative breakthroughs in molecular
    biology, stem cell research, bionics, organogenesis, synthetic biology,
    and artificial intelligence in order to improve health care and extend
    healthy living. XPRIZE seeks to accelerate the real-world impact of
    science, technology, and information related to the worldwide
    optimization of health and the elimination of illness and disease.
        We recently awarded $2.25 million to competition teams for the
    Nokia Sensing Challenge, a medical sensor challenge aimed at
    accelerating the availability of hardware sensors and software sensing
    technology that individuals use to access, understand, and improve
    individual health and well-being. We believe innovation in sensing is
    an important component to creating a means for appealing, usable,
    smarter digital health solutions.
        DNA Medicine Institute (DMI) of Cambridge, Massachusetts, took home
    the grand prize of $525,000 for developing a portable device capable of
    running hundreds of clinical lab tests on a very small sample of blood.
    Results are available in a matter of minutes and are highly accurate.
    Five other teams--from Switzerland and England, and Illinois, Minnesota
    and California in the U.S.--also took home $120,000 each for their
    sensing innovations.
        Our current life sciences prize is the Qualcomm Tricorder XPRIZE, a
    $10 million global competition to stimulate innovation and integration
    of precision diagnostic technologies, helping consumers make their own
    reliable health diagnoses anywhere, anytime.
        Advances in fields such as artificial intelligence, wireless
    sensing, imaging diagnostics, lab-on-a-chip, and molecular biology will
    enable better choices as to when, where, and how individuals receive
    care, thus making healthcare more convenient, affordable, and
    accessible. We will award the team whose technology most accurately
    diagnoses a set of diseases independent of a healthcare professional or
    facility, and which provides the best consumer user experience with
    their device. In fact, we just recently down-selected to the top 7
    teams from 4 countries--the United States, Taiwan, Canada, and India--
    who are currently in the process of testing.
        With that said, understand that prizes don't work well across the
    entire healthcare spectrum owing to major barriers to entry, cost and
    time-intensity. So, where do we think they do work well?

       Where new forms of cross-disciplinary collaboration are
            needed;

       Where research is underfunded or there is a small patient
            pool driving inefficient market activity; and

       Where ``engineering'' type solutions could bring
            breakthroughs to bear.

        Where prizes don't work well in healthcare (and where other
    programs should be continued):

       Early stage research/discovery; and

       Large, longitudinal research efforts which are too long for
            a prize (10+ year studies).

        Even where we believe prizes work well, they can always complement
    traditional forms of funding, and should not be seen as a replacement
    for traditional forms of funding.
        Currently, we are exploring additional prizes in organogenesis,
    kidney disease and Alzheimer's.

       Organogenesis: Nationwide, the supply of viable organs
            simply does not meet the growing demand. In 2012, 114,690
            transplants were performed according to the World Health
            Organization's Global Observatory on Donation and
            Transplantation. This number of transplants represents only
            approximately 10 percent of the roughly one million organs
            needed worldwide. It also demonstrates stagnant growth from the
            numbers reported in 2008, largely due to a lack of growth in
            the number of available organs donated for transplant. XPRIZE
            is exploring a prize that challenges innovators to demonstrate
            the successful function of a bioengineered human tissue and/or
            human organ (heart, lung, liver or kidney).

       Kidney Disease: Kidney disease is caused by approximately
            100 different diseases and disorders. Kidney disease treatment
            has seen little innovation in nearly 40 years. Investment and
            innovation is low and the market is dominated by large, for-
            profit dialysis providers that meet Medicare reimbursement
            standards. Significant research is needed to address those
            causes, but we do not develop XPRIZEs for basic research. This
            prize is designed to be a bridge between the current state of
            treatment (which is very expensive and has terrible outcomes
            for patients) and potential and/or the ability to grow new
            organs for transplantation. An XPRIZE will bring public
            awareness to the problem of kidney disease and the lack of
            innovation in treatment by focusing a community of innovators
            on key breakthroughs. Thus, XPRIZE is working in partnership
            with the American Society of Nephrology to develop and
            capitalize this prize.

       Alzheimer's: In partnership with 10 individual donors, we
            are exploring an Alzheimer's prize. While we are in the very
            early stages, we are seeking to improve diagnostics and
            effective treatments to alleviate symptoms of the disease.
            Senator Wicker has a keen interest in this issue and we have
            had very productive conversations with his staff about ways to
            encourage relevant agencies like NIH and OSTP to support a
            prize around Alzheimer's. We applaud his leadership aimed at
            accelerating discovery and development of cures for Alzheimer's
            and related dementia.
    The XPRIZE Prize Model
        XPRIZE believes we can make the impossible possible by creating an
    infrastructure where our world's innovators create breakthroughs that
    both catalyze industries and have a measurable benefit to humanity. We
    do this via large-scale, incentive prize competitions.
        Prizes are useful tools for solving problems for which the
    objective is clear, but the way to achieve it is not. By attracting
    diverse talent and a range of potential solutions, prizes draw out many
    possible solutions--many of them unexpected--and steer the effort in
    directions established experts may never take, but where the best
    solution may nonetheless lie.
        Prizes are powerful for many reasons, the most important of which
    include leveraging your investment, democratizing innovation, and
    reducing risk.
        Throughout the course of a competition, teams spend their own money
    to compete for the prize. We find that teams spend research and
    development dollars that, aggregated across all teams, is four to ten
    times the value of the prize purse. So, you could give a grant or
    contract worth $5 million and get $5 million worth of research and
    development, or you can put out a prize with a purse of $5 million and
    get upwards of $20 to $50 million worth. In a time of fiscal
    constraint, prizes are an extremely efficient tool to help spur
    innovation.
        At XPRIZE we say, ``Why find the needle in the haystack when that
    needle can find you?'' Hosting a prize does just that. Prizes inspire
    teams from around the world to compete to achieve your goal--and often
    those that are inspired are not the current industry incumbents. Some
    solvers are from tangential fields and have a solution that could be
    tweaked to solve the challenge at hand, while others possess little to
    no experience at all. A prize does not care if someone has 20 years of
    experience or 20 days of experience--as long as they meet the goal of
    the competition. Using a traditional grant or contract, you would be
    very unlikely to find such innovators. Your focus would fall on the
    known players who comprise your target audience. Let me give you some
    examples. In the 1714 Longitude Prize--established by the British
    government to reward the precise determination of a ship's longitude--
    everyone assumed it would be a ship's captain or astronomer who would
    win. But it was a clockmaker. In the 1919 Orteig prize for the first
    person to fly between New York and Paris non-stop, everyone assumed the
    winner would be one of the aviation leaders. They all failed because
    they were too conservative in the design of their planes and how they
    flew. Instead, it was won by a relatively unknown, 25 year-old mail
    pilot, Charles Lindbergh. In our Progressive Insurance Automotive
    XPRIZE, we had a group of high school students surpass much of the
    competition. In our Wendy Schmidt Oil Cleanup XCHALLENGE, a tattoo
    artist made it into the finals. And although his team did not win, it
    still did better than the industry standard at that time. In fact, in
    that prize, four of the ten finalist teams were new to the industry.
    Most likely you would have never awarded a grant or contract to these
    innovators because (1) you would have seen it as too risky, (2) you
    never would have known they existed, and (3) they never knew they had
    an interest in solving the challenge prior to the prize. To get
    disruptive innovations, we need to democratize innovation--encouraging
    anyone, from anywhere, with any background, to help solve our grandest
    challenges.
        Third, prizes reduce risk. What separates prizes from traditional
    R&D and other funding mechanisms is that the burden of risk is wholly
    on the teams, since the prize is designed only to reward success. That
    is, you only pay when a team meets your goal. In a traditional grant or
    contract, you would award it to the known players because that is less
    risky for you. But the known players want to be successful, so they are
    not going to take those risks that are necessary to result in a truly
    transformational breakthrough. Failure is a necessity of invention,
    because innovation must build upon unsuccessful attempts. Those
    competing for the prize are willing to embrace this risk because they
    have little to lose. As we say at XPRIZE, ``The day before anything is
    a breakthrough, it's a crazy idea!''
        As you can see, prizes are extremely powerful and should be one of
    the primary tools in any innovation toolkit.
        But, for prizes to work well, you need to ensure they are designed
    well. I just spoke about passing the risk to the teams and paying only
    for success. That leads to the question of why teams compete for
    prizes. Many point to the prize purse--and that is true--but the prize
    purse is only one of the incentives for teams to compete. We have found
    the best prizes offer valuable operational incentives for teams to
    compete. A prize purse is often not enough for teams to compete because
    teams know that only one or two or three of them will win the prize
    purse.
        The teams are really competing for the end market--for the ability
    to go out into the marketplace and become a profitable company. As
    such, we have found that the best operational incentives align with
    helping teams prepare to win that market--these include incentives such
    as marketing, testing, milestone prizes, partnerships, and education.
        A well-designed prize markets the prize, the teams, and the
    solutions. This allows the teams to show their progress and results to
    the world--including potential funders and customers.
        Testing is key to incentivizing teams to compete. Often teams come
    out of our competitions with independent, third party verified data--
    data they can take to the marketplace to help raise funding or data
    that they can show to potential customers. Sometimes this testing costs
    us millions of dollars, but it is necessary to prove a winning solution
    works and has the added benefit of being extremely valuable to teams.
    For example, in our Adult Literacy XPRIZE, the top five finalists will
    have their solutions tested on 1,000 adult learners each over a 12-
    month period. Imagine a small startup doing this testing on its own, or
    even a large company. It would be very difficult, but the value of the
    data collected is enormous.
        Milestone prizes are mid-way prizes that we offer during many of
    our competitions. They reward teams for certain successes along the way
    or reward those teams that make it through a down select. These are
    extremely valuable to teams insofar as they provide them with a small
    amount of funding to push forward and get press around their early
    wins. That press, again, helps them to raise funds and/or bring in
    potential customers.
        Partnerships in terms of access to potential funders or investment
    funds, additional testing, advanced market commitments, and the like
    provide teams with other ways to market, test, and raise funds. We try
    to develop partnerships with organizations relevant to the prize area.
    I will focus on these partnerships more a bit later in this testimony.
        We all know that sometimes the best innovators are not the best
    business people. Because the way to truly disrupt an industry or change
    the world through the prize is to get as many of the teams out in the
    market place with successful technologies--not just the winners--we
    believe that significant effort should be placed on educating the teams
    on how to formulate business plans, perform road shows to raise money,
    understand the regulatory impacts of their business, and other valuable
    business functions. Without this education, the prize may end up with
    good solutions, but the teams may not be able to commercialize the
    solutions.
        In order to get the best results, we believe that you must provide
    additional incentives and value to the competing teams beyond the prize
    purse.
    Prizes are One Way to Spark the Innovation Cycle
        We strongly believe that the private and public sectors must work
    together to utilize every tool available to facilitate meaningful
    innovation that drives economic growth. Prizes are not a replacement
    for traditional financing mechanisms, but are augments to them. They
    are one of many innovation tools that agencies and the Federal
    Government should consider utilizing in tandem with other financial
    mechanisms such as grants, contracts, investments and incentives.
        It is important to note that the resulting technology solutions are
    not replacements for behavioral change. Understanding how and where
    prizes work best will help ensure that they are used most efficiently
    and effectively. One of the hallmarks of an XPRIZE is its ability to
    create and/or catalyze industries. In this regard, the XPRIZE's impact
    does not begin at its launch, but with its award. Prizes, therefore,
    are the beginning, not the end, of the innovation cycle, maximizing the
    impact on emerging industries, scaling new ideas, and ultimately
    contributing to the economy.
        Prizes provide a mechanism to discover breakthroughs that generate,
    operate and become part of the industrial base. They can catalyze an
    industry in order to have a real set of benefits for humanity. When an
    industry undergoes a catalyzing event as the result of a breakthrough,
    everyone benefits--humanity, industry, and the public perception of
    what's possible.
    Importance of Policy to Send a Signal
        The Federal Government has rightly recognized the power of prize
    competitions to draw out the latent innovative vision that simply
    hasn't found the means or the outlet to reach its potential. Following
    passage of the 2010 America COMPETES Act, which granted agencies the
    authority to operate prizes, and President Obama's ``Strategy for
    American Innovation,'' which called on agencies to use Grand Challenges
    as an innovation tool, there has been an up-tick in the utilization of
    prizes by the Federal Government. In 2015 alone, 30 agencies self-
    reported a total of 97 prize competitions and challenges. The prize
    opportunities ranged in value from as low as $2,500 to greater than $1
    million, across industry sectors. These prizes have enabled government
    agencies to establish ambitious goals, pay only for success, and
    utilize novel approaches from outside partners to achieve their goals.
        Now, Congress has an opportunity to once again use policy as a
    driver for innovation by passing the Science Prize Competitions Act--
    which passed the House of Representatives earlier this year. We look to
    the leadership of this subcommittee and the full Senate Commerce
    Committee to complement the bipartisan efforts of the House by
    introducing and passing policy supportive of prizes, much as it did in
    2010 with the America COMPETES Act. We believe legislation that
    provides guidance to utilize high-impact prizes as an economically
    efficient way to incent innovation sends a strong signal to Federal
    agencies, and also to the private sector and innovation community, that
    the Federal Government believes in the power of prizes as a source of
    innovation.
    The Value of Public-Private Partnerships
        At the crossroads of policy-driven innovation and ``garage ideas'',
    I have witnessed remarkable breakthroughs brought about by critical
    partnerships between the public and private sector. For example, XPRIZE
    partnered with the Department of Energy to support a $10 million global
    competition to inspire a new generation of viable, safe, affordable,
    and super fuel-efficient vehicles. We brought together government and
    the private sector, including our lead sponsor Progressive Automotive
    Insurance. Our top prize-winner, Oliver Kuttner, a commercial real
    estate developer who loved to tinker with cars since taking auto shop
    in high school, maxed out his wife's credit cards to invest in chasing
    his dream--which culminated in his construction of a four-seat, 830-
    pound vehicle that ran on a one-cylinder, ethanol-fueled internal
    combustion engine that achieved 102.5 miles per gallon fuel efficiency.
    Today, Kuttner's company, Edison2, is continuing to develop extremely
    light, super fuel-efficient vehicles including an electric version.
    That is the kind of citizen innovation we take pride in fostering at
    XPRIZE.
        Another ongoing example of government playing a supportive role
    even without supplying any financial support is the Qualcomm Tricorder
    XPRIZE. The U.S. Food and Drug Administration (FDA) is an integral
    partner in the effort, which XPRIZE is supporting with funding from our
    lead sponsor, the Qualcomm Foundation. In addition to assisting teams
    in preparing for future regulatory clearance post-competition, this
    prize competition is helping the FDA maximize its own readiness for new
    regulatory submissions in the direct-to-consumer diagnostics space.
        Partnerships such as these have a history of maintaining a
    commitment to scientific excellence by guiding the conception, safety,
    and deployment for various technologies that have paved the way for the
    breakthroughs of today.
    Conclusion
        We strongly believe that the private and public sectors must work
    together to utilize every available tool to facilitate meaningful
    innovation that drives economic growth. As Congress explores ways to
    innovate in healthcare, prizes are one such essential tool that
    agencies, and the private sector, can, and should, consider.
        Policymakers can encourage greater and more strategic use of prizes
    by agencies by supporting prize policy such as the House-passed
    ``Science Prize Competitions Act''. Passage would send a signal to
    agencies, the private sector and the innovation community that the
    Federal Government views the prize mechanism as an important solutions
    driver.
        We look forward to continuing the dialogue with Congress about the
    power of prizes to unlock innovation towards finding cures for
    diseases, in addition to some the world's greatest challenges.

        Senator Cruz. Thank you, sir. Mr. Huber?

    STATEMENT OF PETER W. HUBER, SENIOR FELLOW, MANHATTAN INSTITUTE

        Mr. Huber. Thank you, Chairman Cruz, for having me here
    today, and thank you also for your list of diseases you
    mentioned specifically in your opening remarks, and also the
    thousands and thousands of rare diseases. Senator Peters, you
    mentioned ``what the next big thing is.'' The next big thing is
    already here.
        I am quite confident we actually have today in hand the
    tools that will end up, and here the phrasing gets a little
    delicate. I would still call it ``curing'' but you would
    probably call it ``preventing.''
        I think almost every disease you mentioned, Chairman Cruz,
    has a genetic origin of some kind. We are born with those
    diseases. We just don't see the symptoms until we are much
    older, but the genes that make it likely that they will develop
    are embedded in us, and we know what they are. We have gotten
    very good at tracking diseases back down to their origins.
        In the last five years or so, we have also developed, not
    me personally, but we have developed a remarkable array of
    tools that let biochemists reach down into live cells and turn
    genes on or off or chop them out or embed a new one in there.
    These have been tested quite intensively in labs. They do work.
    We can actually go in and take away bad genes. We can replace
    them with sort of neutral genes or quite often other genes that
    make people extremely good controllers of disease-causing
    factors.
        If you are born with the right genes, you will never
    develop high cholesterol because you have a feedback mechanism
    inside you that is based on a mutant of PCSK9, (I am sure that
    clarifies things), and it will keep your cholesterol levels low
    throughout your life. We know what it is. They have a drug now
    that simulates it as well.
        We can go in there. We can take problem genes out. This is
    quite controversial. Many people think immediately oh, we are
    going to have designer babies and all sorts of abuses of these
    things, but we are not talking about that at all.
        By the way, we also have, finally, the discovery of
    interfering RNAs by Philip Sharp, Nobelist at MIT, that has led
    to a whole new category of drugs, which do not involve the
    genetic engineering but they can be prescribed to turn genes on
    or off. If you have bad genes, at the very least, you can
    neutralize them.
        Why are these treatments not out there already? They are
    out there in labs. They are being tested in clinical trials.
    This is not pure speculation by any means. I will jump to the
    end. If we want to get them out there fast, we should get the
    FDA to begin not generally approving their use by doctors, that
    would be much too fast, but getting them out to doctors who
    specialize in the treatments of these various disorders and
    have a lot of experience with struggling to cure the currently
    incurable.
        We should get them out under ``treatment IND'' protocols
    which leave the doctors with broad flexibility to test out
    different options and try to understand and get early reads on
    whether these treatments are working, and we should get that
    data pooled. It should go into databases that begin to tell us
    which patient profiles are likely to respond well to these
    treatments, hopefully most of them, but it is almost never the
    case that a drug or anything else is 100 percent effective.
    There will always be some variations of patient chemistry out
    there that just do not let it work right.
        These are serious treatments. You do not want to begin
    going in reprogramming people's bodies, unless you are pretty
    confident you have a high level of success, and we are going to
    get that only by letting doctors develop this stuff, gather the
    data, and get criteria which will let us predict which patients
    will respond well.
        The FDA does not do that at all often. I think if we do
    that, if we unleash these tools to the right doctors and let
    them use them, they will be the first ones to know that this
    drug ought to be out there more generally available for doctors
    with somewhat less expertise than they bring to bear.
        What I am describing falls somewhere between ``adaptive
    trials,'' which the FDA has endorsed with lukewarm enthusiasm,
    and the ``treatment INDs,'' which were mentioned by Dr. Coburn,
    the notion that yes, we can learn a lot by treating patients
    with stuff we have and learning as we go. The standard reason
    for not allowing that and requiring placebos and so on has
    always been doctors are subject to selection bias, they really
    hope it is going to work so they see success even when it is
    really failing.
        I think that is a problem, a legitimate problem, but you
    know, there are plenty of very good high level centers where
    the doctors really are committed to getting things right and
    working on the new cures. We ought to trust them more than we
    currently do.
        It will take quite some doing to get any of this accepted
    by the FDA, but we should be moving in that direction.
        What would the doctors be learning that would not be
    learned in a standard FDA trial? Let's say I am going to go
    begin reprogramming somebody's body, which is what we are
    talking about, you begin asking yourself what do I reprogram,
    do I do this for the whole body, do I do it for stem cells, and
    then return them to the body and let them proliferate and sort
    of spread the wealth and so on.
        We are talking here about a completely new kind of
    treatment. A gene is not a drug, right. You put a real good
    gene into somebody's body, it does absolutely nothing on its
    own. It has to rely on enzymes and adjacent genes. They work
    collaboratively. It is basically one set of instructions in a
    much larger program.
        One hopes most of the time they will work just fine, you
    put in the gene, and everybody is pretty much the same
    everywhere else, but it probably won't work out that way. You
    have to begin looking systematically for the molecular criteria
    that will make such treatments work well. It is a procedural
    thing at the FDA. It is arcane. Most people's eyes glaze over
    on this, but we have to get these treatments out there.
        I might add finally we are so certain about the genetic
    correlations in a number of these diseases that to my mind, and
    I am not a doctor and it is not for me to think these through
    for doctors, but I think it is beginning to border on the
    unethical if the FDA says sure, we have this genetic
    engineering system that may be--for example, I am taking it out
    of the blue but it is only because it is a much discussed
    example--if your daughter is born carrying two BRCA genes, she
    is probably going to get breast cancer once she is older. It is
    almost that certain. Not 100 percent certain but somewhere up
    there.
        We know what the genes are. We can detect them an hour
    after she is born or we can wait 20 years later. Do we wait to
    post-puberty because there is no breast tissue to go cancerous
    before that?
        These genes are going to be there from day one, so how soon
    do we go there? Do we have to fix cells all over the body?
    These are things that doctors think through, they try out, they
    explore. It does not currently happen under any FDA protocols.
    We have to get doctors involved earlier in this business.
        I am past my time. My apologies.
        [The prepared statement of Mr. Huber follows:]

        Prepared Statement of Peter W. Huber, Senior Fellow, Manhattan
                                   Institute
        The FDA's mission as set out in statutory language written over 50
    years ago, is to see to it that drug companies generate and doctors
    receive on the FDA-approved label that accompanies ever drug, the
    information they need to prescribe the drug safely and effectively. For
    the most part, the agency continues to use drug trial protocols
    established in the 1960s, well before pharmacology developed the
    diagnostic and tools for designing precisely targeted drugs that make
    precision medicine possible.
        The clearest evidence that the FDA has not kept up with the
    advances in the science and technology of precision medicine is that it
    is losing its grip on how drugs are prescribed. In steadily growing
    numbers, doctors that specialize in the treatment of complex diseases
    are taking the initiative, using the state-of-the art technologies and
    analytical tools to develop the science themselves, and relying on
    their own analyses and databases to guide the safe and effective
    prescription of drugs to their patients.
        And that fact alone points to a serious problem. Doctors can't take
    the lead in working out how to prescribe a drug to the right patients
    until the drug has been approved. Which under the existing statutory
    language means that the drug first has to perform well in FDA-approved
    clinical trials. But to perform well in a clinical trial a drug has to
    be prescribed to the right patients.
        It has become clear in recent years that traditional symptom-based
    definitions of diseases that are used to frame most clinical trials
    ignore what matters most in modern pharmacology--the same symptoms can
    be caused by a cluster of different molecular processes, and a
    precisely targeted drug can only control one them. A drug's efficacy
    and safety can also depend on a wide range of other molecular factors
    that are hard to identify in advance. We still speak of ``developing a
    drug,'' but ``developing the patients'' would be more accurate. Both
    matter, of course--pharmacology isn't a science of one hand clapping--
    but all the complex biochemical details lie on the patients' side of
    the applause.
        Oncologists have led the way in recognizing the limitations of the
    FDA's drug-approval process. In 2007, the Cancer Biomarkers
    Collaborative (CBC), a coalition of cancer experts drawn from the
    American Association for Cancer Research, the FDA, and the National
    Cancer Institute, started investigating the ``growing imperative to
    modernize the drug development process by incorporating new techniques
    that can predict the safety and effectiveness of new drugs faster, with
    more certainty, and at lower cost.'' A summary of the conclusions
    published by the CBC in 2010 noted that ``traditional population-based
    models of clinical trials used for drug approval are designed to guard
    against bias of selection, which may form the antithesis of
    personalized medicine, and accordingly, these trials expose large
    numbers of patients to drugs from which they may not benefit.''
        Other medical disciplines are following oncology's lead. Two years
    ago, for example, the National Institute of Mental Health (NIMH), the
    world's largest funder of mental health research, announced that it was
    ``re-orienting its research'' away from the disease categories defined
    by psychiatrists in their Diagnostic and Statistical Manual of Mental
    Disorders. Henceforth NIMH funded researchers will be encouraged to
    search for molecular pathways that transcend the symptom-based
    categories. In the words of the NIMH's director ``patients and families
    should welcome this change as a first step towards `precision
    medicine,' the movement that has transformed cancer diagnosis and
    treatment.''
        Other diseases are being analyzed in similar ways. The National
    Institutes of Health's Accelerating Medicines Partnership, recently
    announced a $230 million, five-year plan to collaborate with 10 big
    drug companies and eight non-profit organizations focusing on specific
    diseases, to unravel the molecular pathways that lead to Alzheimer's,
    Type 2 diabetes, rheumatoid arthritis, and lupus--and to investigate
    new methods to track a disease's progress that could provide early
    reads on how a drug is affecting it. The objective is to ``ensure we
    expedite translation of scientific knowledge into next generation
    therapies.'' A Pfizer representative emphasized that the Alzheimer's
    project will focus on developing a better understanding of the
    molecular pathways and networks that propel the disease. It will also
    include searches for molecular factors that can be used to develop
    drugs that intervene much earlier, intercepting diseases before they
    become irreversible and untreatable.
        The advent of tools to unravel the molecular pathways of diseases,
    and drugs precisely designed to target them have called into question
    the conventional symptom-based medical taxonomy of diseases, and thus,
    indirectly, the central role it still plays at the FDA. In 2011, a task
    force convened by the National Research Council (NRC) released Toward
    Precision Medicine, a report written at the request of the NIH to
    address the need for ``a `New Taxonomy' of human diseases based on
    molecular biology.'' We do indeed need one, the report concludes, and
    to facilitate its development, the report recommends the creation of a
    broadly accessible ``Knowledge Network'' that will aggregate data
    spanning all molecular, clinical, and environmental factors that can
    affect our health. Working out the molecular etiology of complex
    diseases will require an analysis of ``biological and other relevant
    clinical data derived from large and ethnically diverse populations''
    in a dynamic, learn-as-you-go collaboration among biochemists, clinical
    specialists, patients, and others.
        The report also includes an illustration of how we currently rely
    on dumb luck to help drugs that target complex disorders stumble their
    way through the FDA's testing protocols. In 2003 and 2004 the FDA
    granted accelerated approval to two drugs, Iressa and Tarceva, on the
    strength of their dramatic therapeutic effects in about one in ten non-
    small-cell lung cancer patients. Over the course of the next two years
    the drugs were prescribed to many patients whom they didn't help, and
    several follow-up clinical trials seemed to indicate that the drugs
    didn't work after all--probably, we now know, ``because the actual
    responders represented too small a proportion of the patients.''
    Meanwhile, the report continues, the molecular disassembly of lung
    cancer had begun its explosive advance. In 2004, researchers identified
    the specific genetic mutation that activates the EGFR enzyme that these
    two drugs inhibit. ``This led to the design of much more effective
    clinical trials as well as reduced treatment costs and increased
    treatment effectiveness.'' Under current, blinded trial protocols,
    however, such launches often depend on luck and circular science. The
    original clinical trial happens to include just enough of the right
    patients to persuade the FDA to license the drug. The fortuitously and
    just barely successful completion of the first clinical trial then
    starts the process that may ultimately supply the information that,
    ideally, would have been used to select the patients to include in that
    first trial.
        In early 2005 Iressa became the first cancer drug to be withdrawn
    from the U.S. market after the required follow-up trials failed to
    confirm its worth to the FDA's satisfaction. After further trials
    failed to establish that Iressa extends average patient survival, and
    serious side effects surfaced in some patients, the manufacturer halted
    further testing in the United States.
        We do however, know that Iressa survival times and side effects
    vary widely among patients. And we have a pretty good idea why. As
    Bruce Johnson, a researcher at Boston's Dana-Farber Cancer Institute
    and one of the doctors involved in the original Iressa trials, remarked
    in 2005, ``For us as investigators, at this point, there are at least
    20 different mutations in the EGF receptors in human lung cancers, and
    we don't know if the same drug works as well for every mutation . . .
    which is why we want as many EGFR inhibitor drugs available as possible
    for testing.''
        When the FDA rescinded Iressa's license, it allowed U.S. patients
    already benefiting from its use to continue using it. One such patient
    who started on Iressa in 2004, when he had been given two to three
    months to live, was still alive eight years later, and walking his dogs
    several miles daily. Rare cases like his have no influence at the FDA
    but are of great interest to doctors and researchers. In 2013, the
    National Cancer Institute (NCI) announced its Exceptional Responders
    Initiative. Four major research institutions are analyzing tissue
    samples, collected during clinical trials of drugs that failed to win
    FDA approval, to identify biomarkers that distinguished the minority of
    patients who did respond well from the majority who did not. The
    analysis of roughly a decade of prior trials in the first year of the
    study identified about 100 exceptional responders. As of March 2015,
    more than 70 cases have been provisionally accepted for further
    analysis, with hundreds more anticipated. Accepted tumor tissue samples
    ``will undergo whole-exome, RNA, and targeted deep sequencing to
    identify potential molecular features that may have accounted for the
    response.'' When the molecules that distinguish the exceptional
    responders align with what the drug was designed to target, these
    findings could well lead to the resurrection of drugs that might have
    helped many patients over the last decade.
        In one such trial the drug failed to help over 90 percent of the
    bladder cancer patients to whom it was prescribed. But it did wipe out
    the cancer in one 73-year old patient. A genetic analysis of her entire
    tumor revealed a rare mutation that made her cancer sensitive to the
    molecular pathway that the drug modulates. Similar mutations were found
    in about 8 percent of the patients, and the presence of the mutation
    correlated well with the cancer's sensitivity to the drug. Similar
    analyses of a decade of other trials have identified about 100
    exceptional responders and could well lead to the reexamination and
    approval of drugs that could have started saving many lives years ago.
        Which brings us back to why doctors who specialize in treating
    complex diseases are increasingly confident that they should work out
    how to practice precision medicine independently, without relying on
    FDA-approved labels. In brief, it comes down two things. Researchers
    have developed the tools needed to work out the details of how
    molecular processes that go wrong deep inside our bodies spawn and
    propel diseases. And drug designers have developed a remarkable array
    of tools to design precisely targeted drugs that can disable or control
    those pathways.
        New devices now make it quite easy to collect large amounts of
    genetic and other medically relevant data from many people. Amazon and
    Google are reportedly in a race to build the largest medically focused
    genomic databases. According to Google's genomic director of
    engineering, Google aims to provide the best ``analytic tools [that]
    can fish out genetic gold--a drug target, say, or a DNA variant that
    strongly predicts disease risk--from a sea of data.'' Academic and
    pharmaceutical research projects are currently the company's biggest
    customers, but Google expects them to be overtaken by clinical
    applications in the next decade, with doctors using the services
    regularly ``to understand how a patient's genetic profile affects his
    risk of various diseases or his likely response to medication.''
        Medicine will also benefit from the fact that the statistical tools
    needed to unravel causal pathways from complex datasets are of great
    interest in other sectors of the economy as well. The ``overarching
    goal'' of the ``Big Mechanism'' program recently launched by the
    Defense Department's Advanced Research Project Agency (DARPA) is to
    develop methods to extract ``causal models'' from large, complex
    datasets and integrate new research findings ``more or less immediately
    . . . into causal explanatory models of unprecedented completeness and
    consistency.'' To test these new technologies DARPA has chosen to focus
    initially on ``cancer biology with an emphasis on signaling pathways.''
    It's a good call, and excellent news for oncology. Viewed from a data
    analytics perspective, the variability, complexity, and adaptability of
    cancer cells and terrorists have much in common.
        Drug companies rely on our ability to expose disease-causing
    molecular chain reactions to identify key targets that if disabled or
    controlled by drugs will cure the disease. The tools currently used to
    design precisely targeted drugs have been widely used in developing
    effective later stage treatments and clearly have the potential to
    identify and take control of the factors that launch diseases at the
    outset. Many serious disorders develop slowly however, and there is
    little doubt that successful interventions at a very early stage will
    often be the best, sometimes the only, and almost always the most cost-
    effective way to beat them. The development of effective cures will
    depend on tracing their causes back to their molecular origins and
    addressing the root causes of the disease rather than attempting to
    treat the symptoms that surface much later.
        The tracing is already is already well underway. We know that the
    genetic seeds of many disorders are planted at the time of conception
    and lie dormant inside our bodies for many years before they start
    morphing into lethal diseases. An array of tumor suppression and DNA
    repair genes, for example, protect most of us from cancer for most of
    our lives. Hereditary variations in those genes affect how well they
    perform, and some are strongly linked to the development of specific
    cancers--breast, skin, or colon cancer, for example--or, in some rare
    cases, a propensity to develop cancers throughout the body.
        Now emerging are gene therapies that offer a broad range of
    radically new medical interventions. Researchers have recently mastered
    powerful and flexible methods for selectively adding, deleting, or
    replacing genes in a live cell's genome. These tools can do in weeks
    what often required months or years of work using previous gene editing
    tools. And a new family of ``RNA interference'' drugs have the
    potential to regulate gene expression and thus take direct control of
    genes involved in the earliest stages of disease development. Most gene
    therapies are still in the investigational stages of development. But
    their feasibility and great promise is no longer in doubt. And no other
    currently known process has the potential to provide complete cures for
    the many rare but often deadly disorders caused by hereditary genetic
    mutations.
        The next step could well be vaccine-like treatments that provide
    protection before cancers and other disorders start to develop.
    Researchers are investigating a number of different vectors for
    reprogramming the genetic code of cells inside a patient's mature
    tissues and organs. In early trials, for example, young adults blinded
    by a rare genetic flaw experienced significant visual improvements soon
    after a viral vector was used to insert a healthy version of the gene
    directly into their retinal cells. Similar procedures are reportedly
    being developed to treat cystic fibrosis, brain cancer, and muscular
    dystrophy.
        Genetic therapies administered early enough to replace pathological
    variations in gene repair and tumor suppression genes could offer many
    people a significant, lifelong reduction in their risk of succumbing to
    what is currently the second most common cause of death in the United
    States. Rare variations in a single gene make some people prone to
    develop very high levels of cholesterol and suffer heart attacks in
    their teens. A more common variation in the gene has the opposite
    effect, and researchers are investigating the possibility of
    reprogramming cells to replace the high cholesterol versions of the
    gene with the low-cholesterol versions. The HIV retrovirus pries its
    way into our immune system cells by latching one of two proteins on the
    cells' surfaces. A recent trial demonstrated the therapeutic potential
    of genetically engineering a patient's own immune-system stem cells to
    replace or disable the gene that codes for the HIV-entry protein. In
    the words of one of the doctors involved in the trial ``This study
    shows that we can safely and effectively engineer an HIV patient's own
    T cells to mimic a naturally occurring resistance to the virus, infuse
    those engineered cells, have them persist in the body, and potentially
    keep viral loads at bay without the use of drugs.''
        While NIH researchers, doctors, and drug companies have
    demonstrated their confidence in relying on the analysis of the
    disease-causing molecular pathways when designing drugs and prescribing
    them to patients, the FDA has made clear that it will almost never
    approve a new drug on basis of a clinical demonstration that the drug
    can take shut down or repair a pathway. The FDA asserts--correctly--
    that a drug's demonstrated effect on a single, disease-specific
    molecular pathway often fails to predict its ultimate clinical effect
    on patient health.
        But much of the time we already know why, or can find out if we
    wish to. However precisely targeted it may be, a drug's overall impact
    will almost always also depend on how it interacts with other parts of
    the patient' body. How the drug is metabolized by the liver, tolerated
    by immune system, or interacts with other parts of the patient's body
    to cause side effects can affect the drug's overall performance. Cancer
    cells and HIV virion mutate rapidly, so the disease itself keeps
    changing and effective treatment will then required more than drug
    prescribe to track the changes. Factors like these however, are at
    least equally likely to undermine predictions made by the FDA-approved
    label when its contents are based on what was learned in a conventional
    clinical trial.
        The only way to work out how most of such factors affect a drug's
    performance is by prescribing it to a wide variety of patients and
    analyzing how differences in patient chemistry affect is safety and
    efficacy. In a tacit admission of the limits of its own trial
    protocols, the FDA itself helped launch a nonprofit consortium of drug
    companies, government agencies, and academic institutions to compile a
    global database of ``rare adverse events'' caused by drugs and link
    them to the genetic factors in the patients involved.
        The need to involve doctors and patients in the process of
    developing precision prescription protocols was also recognized in a
    2012 report ``on Propelling Innovation In Drug Discovery, Development,
    and Evaluation'' written by the President's Council of Advisors on
    Science and Technology (PCAST). ``Most trials. . .imperfectly represent
    and capture. . .the full diversity of patients with a disease or the
    full diversity of treatment results. Integrating clinical trial
    research into clinical care through innovative trial designs may
    provide important information about how specific drugs work in specific
    patients.''
        The British government appears to have reached similar conclusion.
    It recently announced plans to integrate clinical treatment into drug-
    development efforts on a national scale. As described by life-sciences
    minister George Freeman,''our hospitals will become more important in
    the research ecosystem. From being the adopters, purchasers, and users
    of late-stage drugs, our hospital we see as being a fundamental part of
    the development process.'' Britain's National Health Service will
    become ``a partner in innovative testing, proving and adopting new
    drugs and devices in research studies with real patients.'' While the
    details have not yet been made clear, the Times of London reports that
    ``Ministers want to bypass traditional clinical trials by using
    patients as a `test bed' for promising new drugs, linking [national]
    health service data to pharmaceutical company records to discover much
    more quickly how effective treatments are. Firms would be paid
    different prices depending on how well drugs work for individual
    patients. . . . Ministers argue that the system of assessing new
    treatments is no longer up to the job and that the National Institute
    for Health Care Excellence needs to catch up.''
        U.S. oncologists are already engaged in ``rapid learning health
    care,'' a term coined in 2007 by a group of health care experts
    convened by the Institute of Medicine. In brief, the workshop
    participants proposed a process for continuously improving drug science
    using data collected by doctors in the course of treating their
    patients, with a particular focus on groups of patients not usually
    included in drug-approval clinical trials. By 2008, as discussed in a
    recently published paper authored by two experts in the field, several
    major cancer centers had established networks for pooling and analyzing
    data collected by doctors in their regions. These systems are being
    used to identify new biomarkers, analyze multidrug therapies, conduct
    comparative effectiveness studies, recruit patients for clinical
    trials, and guide treatments. Several commercial vendors now offer
    precision oncology services.
        As discussed in the same paper, the powerful analytical tools and
    protocols now available, or under development, can use data networks to
    recommend treatments that would ``avoid unnecessary replication of
    either positive or negative experiments . . . [and] maximize the amount
    of information obtained from every encounter'' and thus allow every
    treatment to become ``a probe that simultaneously treats the patient
    and provides an opportunity to validate and refine the models on which
    the treatment decisions are based.'' Analytical engines like these take
    statistical analysis far beyond the one-dimensional correlations
    traditionally relied on by the FDA in the drug-approval process, and
    thus lead to far more precise prescription of the drug in question.
        The FDA does have in place a regulatory framework--``treatment
    IND''--that could be used to integrate clinical trial research with
    clinical care called the.
        It was originally developed to provide unapproved drugs to AIDS
    patients in the early years of medicine's struggle with HIV. The
    original plan was that treatment-INDs would be used for more
    comprehensive investigation. In the late 1980s the National Institute
    of Allergy and Infectious Diseases (NIAID) began funding ``community-
    based AIDS research''--studies of not-yet-licensed drugs in doctors'
    offices, clinics, community hospitals, drug addiction treatment
    centers, and other primary care settings. The treatment-IND framework
    remains available to provide investigational drugs to patients for the
    treatment of serious and life-threatening illnesses for which there are
    no satisfactory alternative treatments. This is done, however, only
    when the drug is already under investigation or standard trials have
    been completed, and the FDA has concluded that enough data has been
    collected to show that the drug ``may be effective'' and does not
    present ``unreasonable risks.'' The drugs are provided for treatment
    but doctors also collect safety and side effect data.
        More recently, the FDA established a ``Group C'' treatment IND was
    established by agreement between with the National Cancer Institute
    (NCI). The program allows the NCI to distribute investigational drugs
    to oncologists for the treatment of cancer under protocols different
    from those underway in under the FDA-approved protocols. Treatment is
    the primary objective, though here again safety and efficacy data are
    collected. The FDA usually authorizes Group C treatments only when the
    drugs have reached Phase III of standard clinical trials and have
    ``have shown evidence of relative and reproducible efficacy in a
    specific tumor type.''
        A third FDA-approved initiative has also tiptoed toward integrating
    clinical trial research into clinical care. Sponsored by the Biomarkers
    Consortium, a partnership led by the Foundation for the National
    Institutes of Health (FNIH), which includes representatives of the FDA
    and the NIH), are investigating up to twelve different breast cancer
    drugs simultaneously in the I-SPY 2 trial. Patients are initially
    treated with the drug that targets the pathway that is propelling their
    cancer, but the trial uses adaptive protocols that allow the doctors
    involved in the research to use data from obtained from patients early
    in the trial to guide which treatments should be used for patients who
    enter the trial later. The data are fed into an analytical engine as
    soon as they are collected, and immediately verified and shared with
    participants. Drugs may be abandoned if they perform badly and other
    new drugs may be added. And the sponsor say that this is just a
    beginning that ``holds tremendous promise for many cancers and diseases
    in addition to breast cancer'' and also may lead to adaptive treatments
    within patients as new, successful drug-patient molecular pairs are
    identified.
        These are steps in the right direction that, as the FDA asserts,
    will accelerate the drug approval process, reduce its cost, and
    substantially increase the likelihood that by improving prescription
    protocols during the trials more drugs will end up being approved. But
    all of three initiatives continue to require trials that continue long
    enough to demonstrate clinical efficacy. Even though it is becoming
    clear that we have the tools to work out disease molecular pathways
    correctly. Doctors confirm this every time they match a drug's
    mechanism of action to a pathway that is known be active a patient to
    successfully prescribe the drug off-label. By refusing to accept
    evidence that a drug can disrupt a pathway as sufficient evidence that
    the drug will have desired clinical effects the FDA is, in effect,
    requiring a demonstration that the pathway does indeed cause the
    disease. But that can be established independently, and often is,
    before the drug is designed. New drugs could be approved even faster
    and at still lower cost if the FDA would accept that body research as
    sufficient proof that proof that pathway disruption is proof of
    efficacy.
        Experience has also already established that data collected by
    unblinded doctors during the course of treating their patients can be
    used to create databases that can be successfully used to guide drug
    prescriptions going forward. The approval of a targeted drug to treat a
    specific disease is, in effect approval of the drug's ability to target
    a pathway that propels the disease and thus approval of the science
    that led to the development of the drug by linking the two.
        The FDA could and should go further, at least when dealing with new
    drugs that target serious, life threatening diseases that are currently
    untreatable.
        Following threshold screening for toxicity and an early
    demonstration in what could be a small clinical trial that the drug can
    indeed disrupt the pathway that it was designed to target, the drug
    will, at the sponsor's request, be made available to selected centers
    that specialize in treating the disorder in question. The treatment
    protocols adopted by its doctors will be monitored by independent
    outsiders, at the FDA itself or designated by the agency, or by perhaps
    by one of the NIH institutes that sponsors research addressing diseases
    of that type. The doctors involved in the integration of clinical trial
    research and clinical treatment will work unblinded and without
    placebos, and be given broad discretion to adjust treatments, collect
    data, and analyze responses, as they do. The molecular pathway that
    propels the disease is important but there are usually other pathways
    that that also interact with the drug to cause side effects or in other
    ways that affect clinical outcomes, and many of them can't be
    identified without prescribing the drug to patients and analyzing why
    patient responses differ. And if one accepts--as many doctors do--that
    the biological science has reached the point where it can be trusted to
    predict clinical benefits on the basis of a drug's pathway-disrupting
    effects, doctors will have to start considering whether it is even
    ethical to conduct blinded placebo-controlled trials of a new drug that
    has already demonstrated its ability to have those effects to the
    doctors' satisfaction. Studies have also established that patients are
    much more willing to participate in trials if they are assured of being
    treated with a drug, not a placebo. And this approach will also address
    the increasingly vocal ``right to try'' demands from patients suffering
    from serious diseases and who desperately want immediate access to any
    drug that might help.
        As is standard procedure in conventional trials the doctors will
    monitor for side effects and the overseeing authority would have the
    authority to halt use of the drug in response. The doctors will also
    use any available tools that can track the drug's effects on the
    progress of the disease, among them intermediate end points based on
    what is known about the normal rate of progression of the disease when
    left untreated. All data from all treatment centers will be pooled and
    all doctors will have access to the data and the continuously updated
    analyses of the data and use them to guide prescriptions going forward.
    If there is no good way to assess the drug's efficacy other than to
    continue the trial as long as a conventional trial would continue, and
    wait for clinical effects to surface or not surface that is what is
    what will be done. If doctors are, instead, able to demonstrate that
    steadily improving prescription protocols are steadily reducing the
    likelihood that the disease will steadily progress the doctors
    themselves will take charge of notifying the FDA when, in their view,
    more patients should be accepted for investigative treatment with the
    drug by more doctors at more treatment centers. If rate of positive
    outcomes continues to rise, at some point the FDA, again advised by the
    doctors who have been treating the patients could approve the drug for
    general distribution. But as medical records go digital, the more
    likely and better approach in the longer term will be to continue to
    track and analyze how patients respond to the drug indefinitely into
    the future, and continue refining prescription protocols for as long as
    the drug remains on the market. New side effects often surface as much
    as a decade after a drug is approved, and human bodies get reconfigured
    every time a new child is conceived.
        It is worth noting, finally that there are times when relying
    entirely on a drug's molecular effects to demonstrate efficacy is
    indispensable: insisting on the use of clinical endpoints in
    conventional trials will only ensure that no treatment gets developed
    and approved. Requiring clinical endpoints means conducting trials that
    can't be completed any faster than diseases typically progress to the
    point where they cause clinical symptoms--and will take even longer
    than that when preventive drugs are designed to intervene before the
    diseases start to develop. The trials are very expensive, and the clock
    of drug patents keeps ticking while trials are conducted. . . . A 2006
    article in the New England Journal of Medicine attributed the complete
    absence of drugs that would prevent, rather than just alleviate, the
    late-stage symptoms of diseases such as Alzheimer's or osteoarthritis
    to a drug approval process that ``makes it hard, if not impossible'' to
    move the drug through Washington before its patent expires. ``[D]espite
    considerable advances in our understanding of such diseases, there is
    no validated and tested path to successful FDA approval of a drug to
    prevent these conditions. This lack of a clear plan for drug approval
    adds high regulatory risk to the already high scientific risk of
    failure.''
        Conventional clinical endpoints also present a more fundamental, if
    rarely noted, problem. Chronic diseases can cause irreversible effects,
    but when no treatment is available, there is little incentive to
    diagnose the disease early, so it usually is not diagnosed until
    clinical effects surface. At that point, a drug may be able to deliver
    so little clinical improvement to most patients that it is viewed as a
    failure.
        Very rare diseases present another problem: there are often too few
    patients to conduct a statistically robust double-blind trial, and
    focusing on molecular scale effects is the only alternative. Moreover,
    rare hereditary diseases are often strongly and unequivocally linked to
    specific genetic mutations and the flawed proteins that they code for,
    and a drug's ability to block the protein's pathological effects or a
    genetic therapy's ability to replace the mutant gene with a normal one
    should be accepted as a concomitantly strong demonstration of the
    therapy's efficacy. This will be particularly important when dealing
    with genetic therapies. Because they are genetic, the disorders can
    start developing very early in life, and to be effective the genetic
    therapies will have to start equally early. But these disorders are
    usually slow to develop--if they very quick killers, the faulty genes
    probably wouldn't have lasted in the human gene pool for long. So to
    meet standard FDA requirements of demonstrated clinical benefits,
    groups of patients who receive these treatments might have to be
    monitored for many decades. Few drug companies will be eager to invest
    in these treatments if that is how long they are likely to have to wait
    for a return.
        As Dr. Janet Woodcock, currently the head of the FDA's Center for
    Drug Evaluation and Research, noted over a decade ago, molecular
    biomarkers ``are the foundation of evidence based medicine--who should
    be treated, how and with what.. . .. Outcomes happen to people, not
    populations.'' Precision medicine is inherently personal. The treating
    doctor and the patient are the only ones who have direct access to the
    information required to prescribe drugs with molecular precision. We
    will greatly accelerate, improve, and lower the cost of the drug-
    approval process by relying much more heavily on doctors who specialize
    in the treatment of complex diseases.

        Senator Cruz. Thank you very much, Mr. Huber. Dr. Yamamoto?

          STATEMENT OF DR. KEITH R. YAMAMOTO, VICE CHANCELLOR

              FOR RESEARCH, UNIVERSITY OF CALIFORNIA, SAN

          FRANCISCO; EXECUTIVE VICE DEAN, SCHOOL OF MEDICINE;

             PROFESSOR, CELLULAR AND MOLECULAR PHARMACOLOGY

        Mr. Yamamoto. Good morning, Chairman Cruz, Ranking Member
    Peters, and distinguished members of the Subcommittee. I am
    Keith Yamamoto, Vice Chancellor for Research at the University
    of California, San Francisco.
        I am honored to discuss with you today the impact of
    innovative biomedical research and precision medicine on
    preventing and curing disease and the role of Federal
    investment, policy, and regulation in enabling those advances.
        Precision medicine is a new concept that will collect and
    analyze vast amounts of basic research and patient data using
    computational tools to build a network of knowledge that allows
    effective diagnosis and treatment decisions or provides disease
    prevention advice tailored to individual patients.
        Why the need for all these data? Because we humans sense
    and respond to countless signals, internal ones like elation or
    anxiety, external signals like viral infection or a glass of
    fine wine, and each individual's responses to unique
    combinations of signals uniquely affects his or her health and
    likelihood of disease.
        Precision medicine is like Google Maps, where the full
    picture is derived from stacking together many layers of
    different types of information, but instead of topology and
    roads and gas stations, it is DNA sequence and blood glucose,
    blood levels, and exposure to secondhand smoke while growing
    up.
        Together, many layers of data gathered from many people and
    from laboratory experiments produce a knowledge network, an
    increasingly precise picture of human health and disease.
        The good news is that the network need not be complete to
    produce useful results, adding a single new data layer to those
    traditionally used to inform a therapeutic decision, for
    example, can have a tremendous impact. The progressive merging
    of small insights begins to reveal the full picture.
        At UCSF, many precision medicine project pilots are
    underway, most of them in collaboration with industry,
    startup's, national labs, or other universities. These are
    underway across our whole research endeavor, basic, clinical,
    social/behavioral research, and our emerging knowledge network
    already has begun to impact our research, our health support,
    and our treatment of disease.
        Projects around the country as well as at UCSF defining
    what it will take--what the needs are--for precision medicine
    to succeed, to unlock the cures for America's deadliest
    diseases.
        Let me mention just four such needs. First, expanded and
    sustained support for fundamental discovery, that is, basic
    research. New discoveries remain essential both to define
    biological processes and to develop powerful new research
    tools, as Dr. Huber mentioned.
        For example, after examining the genomes of bacteria that
    grow in a toxic superfund clean up site, brilliant basic
    scientists created an astonishing technology called ``CRISPR/
    Cas9,'' which rapidly and economically allows any precise
    change to be introduced into the DNA of any living cell,
    potentially enabling, for example, the repair of disease
    causing mutations, increased crop growth or nutrient content,
    neutralization of disease carrying insects, and much, much
    more.
        Only government agencies such as NIH, NSF, DOE, and DARPA
    can support the research that produces fundamental discoveries.
    Those Federal investments empower private sector developments.
    Understanding a disease mechanism, for example, can direct the
    design of drug candidates, define the structure and endpoints
    of clinical trials, limit the composition and size of trial
    cohorts, and shorten the duration of trials.
        Each of these steps reduces costs and increases the
    likelihood of success. In fact, it really goes further than
    that. Drug companies approaching Phase III trials, the most
    costly and demanding of the FDA-mandated series of tests, have
    already invested hundreds of millions of dollars and need to
    make a decision on the probability that their drug candidate
    will succeed in Phase III. Knowledge of the mechanisms can
    inform their stratification of patient groups, thus reducing
    the size and length of trials, and increasing their success
    rates.
        The fact is that many trials simply do not get done, that
    drug companies made business decisions, for lack of scientific
    understanding, not to carry out the trials. The chance of
    having a drug evaporates at that point.
        Number two, transdisciplinary research. Precision medicine
    requires the concepts and tools of physics, chemistry,
    engineering, and computer science, integrated programs such as
    those envisioned by OSTP, crossing the boundaries of NSF, NIH,
    FDA, DOE, DARPA, and NIST, and partnering with industry are
    crucial. Research programs sponsored jointly by two or more
    agencies can spur the types of discovery and tool building that
    are needed.
        Number three, big data, interoperable data sharing,
    computational learning, and data security. New technologies for
    analysis massive sets of diverse data types, at scales that
    necessitate efficient and secure data sharing, will be
    developed in partnerships between Federal agencies, national
    labs, and private industry. Some of that work is well on its
    way.
        Thus, these capabilities will require that patients and
    well people agree to provide and share data, a willingness that
    in turn requires government policies that address privacy,
    security, ethical, legal, and social issues.
        Number four, regulatory science and regulatory policies.
    NIH, NSF, NIST, and especially FDA, recognize deep needs for
    science based regulatory technologies and methodologies to
    accelerate clinical trials, enhance post-market vigilance, and
    create standards for genome sequencing, novel trial design,
    cell based therapies, and risk/benefit assessments of devices
    and therapies. In fact, a lot of new programs are underway or
    planned at the FDA to address these needs, and deserve to be
    recognized.
        A national precision medicine knowledge network deserves
    Federal support with its promise to improve health and prevent
    disease, and unlock cures for America's deadliest diseases.
        If precision medicine fulfills its promise for a healthier
    and more productive workforce, better control of chronic
    disease, smaller and more successful clinical trials, and
    avoidance of unnecessary tests and ineffective therapies, the
    slope of the currently unsustainable health care cost curve
    could decline.
        Thus, precision medicine holds the potential to produce
    broad positive outcomes for science, for society, and for the
    economy.
        Thank you, Mr. Chairman. This concludes my testimony. I
    would be happy to respond to questions.
        [The prepared statement of Mr. Yamamoto follows:]

       Prepared Statement of Dr. Keith R. Yamamoto, Vice Chancellor for
    Research, University of California, San Francisco; Executive Vice Dean,
       School of Medicine; Professor, Cellular and Molecular Pharmacology
        Good morning Chairman Cruz, Ranking Member Peters and distinguished
    members of the Subcommittee, I am Keith Yamamoto, Vice Chancellor for
    Research at the University of California, San Francisco; I serve also
    on the Advisory Committee of the Division of Earth and Life Studies for
    the National Academy of Sciences, on the Advisory Council of the
    National Academy of Medicine, on the Board of Directors of
    Research!America, and chair the Coalition for the Life Sciences. I am
    pleased to provide this testimony for the record.
        It is an honor to appear before you today to discuss public-and
    private sector efforts in biomedical research innovation and precision
    medicine, and their impact on preventing and curing disease.
        It is an especially opportune time for this discussion. A
    confluence of the physical, technological and health sciences has
    created the opportunity for a transformational leap forward--a
    revolutionary change in biomedical research, health and healthcare.
    Thoughtful and timely Federal investment, policy and regulation will be
    essential and critical drivers of these advances.
        Precision medicine\2\ is a major new concept that will collect,
    integrate and analyze comprehensive data across basic research and
    massive patient cohorts, creating an interactive network of knowledge
    that allows effective, mechanism-based diagnosis and treatment
    decisions for each individual patient, while at the same time
    empowering further research and advancing clinical care. It differs
    dramatically both from current medical practice, in which diagnosis and
    treatment decisions are based on a patients medical history and
    analysis of her/his presented symptoms, and from personalized medicine,
    which improves diagnosis and treatment decisions by collecting more
    detailed information about the individual, but does not integrate
    discoveries from basic science or information from other patients.
        Why is it important to do precision medicine? Because we humans are
    complicated--and for good reasons. Rather than being hardwired by our
    DNA, we sense and respond to internal (e.g., hunger, anxiety) and
    external (e.g., infection, environmental exposures) signals, and the
    combined output of hundreds of complex contributing factors and
    interactions influences our individual health status as well as the
    onset and course of any disease. Thus, a defining assertion of
    precision medicine is that our genomes, our individual DNA sequences,
    are powerful determinants, but in no way provide enough information to
    understand or predict human physiology and human disease. Myriad other
    components--molecular, developmental, physiological, social, and
    environmental--also must be monitored, aligned, and integrated to
    arrive at a meaningfully precise and actionable understanding of
    disease mechanisms and of an individual's state of health and disease.
    The 2011 U.S. National Academy of Sciences (NAS) report entitled Toward
    precision medicine: Building a knowledge network for biomedical
    research used the analogy of Google maps to illustrate the value and
    necessity of aligning and integrating diverse, often unstructured, data
    sets into a comprehensive knowledge network if we are to understand the
    complexities of human health and disease.
        Thus, precision medicine is not a new field of study or a
    subspecialty but rather an approach to acquiring knowledge that
    integrates across the spectrum of biomedical research and clinical
    practice; it is a platform for organizing, synthesizing, and
    rationalizing information in ways that change fundamentally how we
    conduct biomedical research and care for patients. The success of this
    approach will depend on the engagement of wide stakeholder communities,
    basic and social scientists, clinicians, patients and healthy people,
    pharma and high-tech industry, payers, and of course the Federal
    Government.
        President Obama's Precision Medicine Initiative gives voice to this
    complex task, with his call to create a million-citizen cohort to
    contribute and share their health data while maintaining privacy and
    security. Similarly, California governor Jerry Brown has created the
    California Initiative to Advance Precision Medicine, providing funding
    to motivate public-and private-sector teams to collaborate and to
    contribute resources.
        Clearly, the precision medicine effort is massive and daunting in
    scale, demanding sustained effort likely to be measured in decades. But
    here's the good news: efforts already underway demonstrate that the
    knowledge network need not be complete to produce success. Adding a
    single new data layer to those traditionally used to interrogate a
    disease mechanism or inform a therapeutic decision can have substantial
    impact. And the progressive merging of small insights will begin to
    reveal the full image. At UCSF, where precision medicine is central to
    our institutional strategy and vision, various pilot projects, most of
    them collaborations with industry, startups, national labs or other
    universities, are underway across basic, clinical, and social/
    behavioral discovery research, and our knowledge network, initially
    rooted in cancer and neurological disease, is spreading to include
    other disciplines and disease areas. Our still-early efforts are
    already impacting our basic research, our understanding and support of
    human health and our treatment of disease.
        In addition, from pilot projects at many institutions across the
    country, we are gaining a sharper focus on what it will take for
    precision medicine to truly succeed. As these needs align strikingly
    with the focus of today's proceedings, I shall enumerate several of the
    most compelling, with particular emphasis on critical investment,
    policy and regulatory instruments from congress and Federal agencies.
        Expanded, sustained support for basic research. Despite remarkable
    progress, our understanding of biological principles and processes
    remains rudimentary, and it is certain that learning the fundamentals
    is essential for establishing the basis for disease, the features that
    make disease proceed differently in different individuals, and for
    development of new technologies that produce progress in leaps rather
    than steps. For example, reading the genomes of bacteria that thrive in
    the harsh environment of a SuperFund cleanup site has created, in the
    hands of brilliant basic scientists, ``CRISPR/Cas9 technology'', which
    simply, rapidly and economically allows precise changes to be
    introduced into the DNA of any living cell--potentially enabling repair
    of disease causing mutations, increased crop growth or nutrient
    content, neutralization of disease carrying insects, and much much
    more.
        Only the Federal Government, e.g., NIH, NSF, DOE, DARPA, can
    support basic research at the level and scale needed to produce a flow
    of fundamental discovery. By contrast, the private sector must maintain
    tight foci on mission-oriented goals. The Federal investment then
    empowers development and application by the private sector. In
    precision medicine, the public and private efforts can increasingly be
    productively linked. Knowledge of a disease mechanism, for example, can
    motivate the design of drug candidates, define the structure and
    endpoints of clinical trials, tightly stratify and reduce the size of
    trial cohorts, and shorten the duration of trials. Each of these steps
    reduces the cost of drug development while increasing the likelihood of
    successful outcomes.
        Transdisciplinary research. As a quantitative endeavor, precision
    medicine must power its biological inquiry with the concepts, tools and
    methodologies of physics, chemistry, engineering and computer science.
    Integrated programs, funded across agency lines (e.g., NSF, NIH, FDA,
    DOE, DARPA, NIST) such as those envisioned and effectively promoted by
    OSTP, will be increasingly essential and impactful.
        Big data, data sharing, computational deep learning, data security.
    A computational challenge to devise technologies for acquisition,
    integration and analysis of massive sets of diverse data types must be
    met by research supported by Federal agencies, national labs and
    private industry. With those capabilities must come establishment and
    embrace of a new social contract by patients and well people, a
    willingness to provide and share data underwritten by policies that
    address privacy, security, ethical, legal and social issues.
    Cooperative science and policymaking efforts across funding and
    regulatory agencies, and likely legislative action as well, are
    essential here.
        Standards and regulatory guidance, interoperability of data sensing
    and reporting devices and records. Efforts toward standardization and
    interoperability are beginning with management of genomic data and
    integration with electronic health records, but the challenges are
    broad and deep. Device builders in the private sector will be motivated
    by clear regulatory guidance. Cooperative scientific and policy efforts
    across FDA, NSF, NIST are essential.
        Regulatory science and regulatory policies responsive to precision
    medicine needs and opportunities. There are deep needs for science-
    based regulatory technologies and methodologies. NIH, NSF, NIST, and
    especially FDA recognize and have begun to address a range of
    challenges, including accelerating clinical trials, enhancing post-
    market vigilance, and creation of science-based standards for next
    generation sequencing, novel trial design, cell-based therapies,
    predictive toxicology, risk:benefit assessment for devices and
    therapeutics, and validation of generic drugs. Those efforts, within
    and across those agencies, merit increased support.
        Precision medicine is envisioned as a national or international
    enterprise, an audacious aspiration to be sure. However, success in
    much smaller increments is demonstrating how insights gained from
    integrating many data elements will advance us, through modeling, and
    testing of predictions, toward a detailed mechanistic understanding of
    fundamental physiological principles and processes. This knowledge--
    evidence-based and predictive in nature--will, in turn, promote new
    strategies for prevention, early diagnosis, treatment, and cure of
    diseases. Moreover, if precision medicine yields a healthier, more
    productive workforce; better control of chronic disease; smaller,
    faster and more successful clinical trials; and avoidance of
    unnecessary tests and ineffective therapies, the slope of the health
    care cost curve could decline--a welcome outcome in the United States,
    where health care costs are >17 percent of GNP, and still rising
    unsustainably. So, precision medicine holds promise for improved health
    and less disease, and of broad impacts--scientific, societal and
    economic.
        Thank you, Mr. Chairman. This concludes my testimony. I shall be
    happy to respond to any questions.

        Senator Cruz. Thank you very much, gentlemen. I thank each
    of you for your learned testimony and for the time you have
    taken in preparing to come before this committee.
        I want to start by focusing on research into medical cures.
    If you look at six of the diseases that impose the highest
    costs, both in terms of human sufferings and lives lost and in
    terms of dollars and cents that are spent with treatment, we
    have heart disease where in 2010 $444 billion was spent in
    treatment. In Fiscal Year 2014, we spent $1.2 billion in
    medical research on heart disease.
        In 2010, cancer, we spent $77 billion in direct costs
    dealing with treatment as a result of cancer. On the research
    side, we put $5.4 billion in Fiscal Year 2014 into cancer
    research.
        If you look at chronic lower respiratory disease, in 2010,
    roughly $50 billion in treatment costs was spent for chronic
    obstructive pulmonary disease. We invested approximately $1.5
    billion in medical research in fiscal year 2014.
        Stroke in 2010, we spent over $71 billion in medical
    treatment, and yet in Fiscal Year 2014, invested just $291
    million in medical research.
        Dementia and Alzheimer's, in 2015, it is estimated that we
    will spend $226 billion in treatment for Alzheimer's, a truly
    terrible disease my grandmother died of. Yet, in Fiscal Year
    2014, we are investing just $666 million in medical research.
        Finally, diabetes, in 2012, we spent $245 billion in direct
    treatment costs, and invested roughly $1 billion in medical
    research.
        All total, for those six diseases, we are spending over
    $1.1 trillion a year in treatment costs, and we are investing
    collectively about $9.9 billion in medical research.
        My question to the members of the panel is, does that ratio
    seem appropriate, not only in terms of dollars and cents, but
    in terms of the human lives that are dealing with the terrible
    consequences of these diseases?
        Mr. Huber. Could I just ask a question? Are you including
    all private investment or is that just government?
        Senator Cruz. That is government investments. That is not
    focusing on private research, that is focusing on the NIH and
    other government-sponsored research.
        Mr. Huber. I know quite a few drug companies who would love
    to cure Alzheimer's. I would go even further. Drugs are cheap
    at the price, they really are, even when the sticker shock is
    enormous. It is much cheaper to churn out cures in vats and
    then ship them everywhere than to have beds with people
    hovering over them. I think that is seriously under
    appreciated.
        I might add there is a solution to the sticker shock
    problem. We get these new drugs coming out and reading stories
    all over about $30,000 a pill and stuff like this. Congress is
    responsible for this because those numbers--these are early
    adopter problems. We are loading all of the costs of developing
    a really important new drug on a very narrow window of time and
    therefore a small number of patients.
        There are ways to spread these costs--the costs of these
    drugs and databases that ought to be built and are being built
    regardless one way or another and that are going to be saving
    lives for generations to come. Human bodies change over time,
    but basically we do not evolve as fast as fruit flies. Our
    children and grandchildren are going to look pretty much like
    us, and they are going to be cured by the same drugs. Spreading
    these upfront costs of treatment much more evenly, and you will
    take away the sticker shock.
        The solution is not to say let's just tell the drug company
    we will not buy this stuff, we will take our ball and go home.
    If you do that, you are going to put the patient in the
    hospital and spend even more. It can be done. There are schemes
    for spreading costs more evenly. I have outlined some myself.
    Spread the costs some more.
        Senator Cruz. Dr. Coburn?
        Dr. Coburn. First, I would tell you that I think the NIH is
    woefully under funded. I do not think you would have any
    problem finding the money because as you guys know, I can show
    you $260 billion to $270 billion worth of duplicative things
    that are not generating anything for the American public today.
        I think we are way underfunded, but I think we need to have
    better oversight because they make some errors in funding that
    are just plain stupid and cause people not to want to support
    them.
        I think funding is important, but I think also this idea--
    it is really important that every member of this committee gets
    this--the way we are going to approve new drugs in the future
    has to change. We cannot spend $2 billion and take 10 years to
    approve a new drug, especially when we have precision medicine,
    with novel new ways of actually knowing the molecular pathways
    the disease is progressing through, and then using tremendous
    massive computer analysis of looking backward, not just looking
    forward, but looking backward.
        Dr. Yamamoto's own organization on oat cell carcinoma and
    carcinoid syndrome and carcinoid cancers has already proven
    that you can do this.
        It has to change. You cannot use what has been the gold
    standard for the last 50 years, which is the double blind
    placebo controlled, and expect to get faster products more
    economic, and you are not going to get capital.
        If we change the way that we actually protect intellectual
    property, incentivize investment, you are going to get money
    pouring in, more money pouring in. If you enhance NIH to $60
    billion a year, which is what I would do, you would also get
    another $30 billion or $40 billion in the private sector going
    into it as well, but it all hinges on how does the FDA respond
    to the new technology that is out there, rather than shutting
    it down, how does it become collaborative.
        Senator Cruz. Let me ask a final question on this, if we
    were to set a moon shot goal of developing breakthrough cures
    for each of those six diseases we discussed, in the judgment of
    the experts on this panel, what specific policies or tools,
    whether Federal research dollars, FDA reforms and changes and
    incentives, prizes, what tools in the judgment of this panel
    would have the greatest efficacy incentivizing the development
    of those breakthrough cures?
        Dr. Yamamoto?
        Mr. Yamamoto. I will address that question directly, but
    let me back up and first say that the numbers that you cited I
    think are problematic at both ends. That is the amount of
    investment we make in research and the health care costs that
    are being expended.
        Let's start with health care costs and then I will get back
    to your specific question. The fact is that we are in a policy
    and economic era in which the expenditures for health care do
    not correlate in a simple way with the cost of development of
    drugs or devices.
        Drug companies have one way to make money, and that is to
    sell drugs that get approved by the FDA. That means the prices
    are reflective of not only the cost of development of the drugs
    that get approved but also includes the cost of the drugs that
    did not get approved. There is no other way for the companies
    to make money.
        Given that reality, it seems that we have in our hands the
    potential to be able to be much wiser about the ways we create
    and test drugs based on some of the things I talked about.
    Knowing the mechanism of a disease changes entirely the profile
    by which tests are carried out.
        I will give you a specific example from a drug that is well
    known. When Sue Desmond-Hellmann was vice president for product
    development at Genentech, she was charged with making a
    decision about whether to move forward with a Phase III
    clinical trial for a drug candidate that eventually became
    Herceptin, a drug that has helped so many metastatic breast
    cancer patients that overexpress a gene called HER2.
        It turns out that they knew at the company the drug
    candidate they had was attacking this HER2 protein because they
    had done the basic research that identified HER2 as a marker.
        She asked the thought question: what would have happened at
    Genentech if they did not know that mechanism, and that instead
    they simply knew they had a drug candidate that seemed to be
    working on some metastatic breast cancer patients and not on
    others. Taking us through the numbers, she shows that the
    length of the trial and the size of the patient cohort would
    have been so long and so large that the company would have
    decided not to carry out the trial, and there would never have
    been a drug.
        Other Phase III trials fail because a very small number of
    patients react badly or die, in the course of the trial. Two
    patients do not make it through Phase III and the FDA rules the
    drug candidate a failure, the drug company goes back to square
    one and starts over.
        If we knew the mechanism by which those two patients had
    failed the drug trial, then a black label indication could
    protect patients with that negative indication from
    prescriptions for that drug, and there would be a drug
    effective for others on the market.
        You can see this amplifies very strongly this idea that we
    are going to increasingly have drugs that are tailored to
    specific small population sectors. This concerns some drug
    companies because of the way our drug regulation currently
    works, but if we could change that profile so that drugs could
    be tested in a more open and transparent way, then we could,
    for example, reveal the results of negative trials, currently
    is not permitted, then we could focus on mechanistic studies
    that could advance trials.
        We would be able to move that cost expenditure curve very
    substantially, and this is true with devices and other things
    as well. I am just using drug development as one example.
        On the other side of your problematic numbers, Mr.
    Chairman, increased investment in research, you asked what
    would actually make a big difference, sustainably increasing
    Federal funded for research would make a huge difference,
    because we have in our hands, as Dr. Coburn said, the
    opportunity to be able to determine the mechanisms of disease,
    to go to the root causes, find cures and actually be able to
    prevent diseases that are now costing our society so much
    money.
        That incentive for scientists to be able to carry out the
    work that we know can be done would not only change the
    outcomes of the knowledge discovery that is needed but as you
    said at the beginning of your comments, would incentivize the
    private sector to enter the arena and go forward.
        Drug companies cannot do basic research. One of the main
    reasons that it has pulled back, as you pointed out, is that
    the success of a pharmaceutical company is measured in quarter
    over quarter and year over year performance. Basic research
    does not work that way. Companies are forced to make business
    decisions that dictate the kind of work that they can do.
        What we need is increased, more effective partnerships--
    between academic researchers, researchers in national
    laboratories, and at the NIH, and pharmaceutical companies. We
    know how to do the things that would incentivize increased
    activity at the private sector end as well.
        I think that the main incentive would be to increase
    funding for research at the basic level. This is where only the
    Federal Government can effectively contribute and would
    substantially increase the flow in the rest of the pathway.
        Senator Cruz. Very briefly because we are over time, Mr.
    Huber.
        Mr. Huber. I am glad that the two doctors at this table
    both say understanding the mechanism of action of diseases and
    one might add drugs, the two have to go together, is very
    important.
        I would add the private sector has recognized this. Google
    and Amazon are in a race now to build the biggest data bases of
    DNA evidence and clinical evidence. These people are really
    good at analytics. They know more, I guarantee you this, about
    software and computers than most of this city and certainly
    more than the FDA does, and the statistical tools you need for
    this are very elaborate. They are predicting a 10 or $15
    billion industry emerging. I expect they will be right.
        There are precision oncology services that are operating
    now commercially. There is a private sector there, and some of
    you I believe are favoring private initiative. There is a lot
    of private initiative, and I am sure there are ways to
    incentivize that as well.
        Meanwhile, the NIH does have a $230 million project going
    to investigate, Alzheimer's is on their list for mechanistic
    analysis, and they have four other diseases. They have 10 drug
    companies pitching in money as well. It is being done through
    the FNTH.
        I am all for doing it in government but I will tell you,
    the FDA has not led the way on this, and the private sector
    has. The doctors are doing this and the drug companies are
    doing this insofar as they can. They need it to find targets
    for their drugs.
        I would look creatively at moving outside the city, too.
        Senator Cruz. Very good. Thank you. Senator Peters?
        Senator Peters. Thank you, Mr. Chairman, and thank you for
    your testimony, the panelists today.
        I just want to follow up a little bit. Dr. Yamamoto, you
    talked about the importance of investing in basic research and
    how important that is. As I mentioned in my opening comments,
    that has been declining.
        In fact, Mr. Chairman, I would like to introduce another
    chart that actually goes beyond the one I introduced
    previously, just to kind of track where trends in R&D funding
    have been in this country as it continues to slow downward,
    particularly after the sequestration and arbitrary caps we have
    put in place, if I could enter this into the record as well.
        Senator Cruz. Without objection.
        [The information referred to follows:]

        [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        Senator Peters. Thank you, Mr. Chairman. We are continuing
    on this downward slope in basic research, which is our basic
    seed corn for our country. I have one question related to that
    just to kind of follow up with you, Dr. Yamamoto. You mentioned
    the CRISPR technology, which is a very powerful technology.
        As promising as CRISPR is, as you alluded to, the
    researchers were not looking for a huge medical breakthrough
    but rather they were collaborating with an environmental
    scientist on a very obscure bacterial project, research
    project.
        What lessons should we here in Congress take away from
    that? Maybe Mr. Huber you would like to add to that if you
    would like. Dr. Yamamoto?
        Mr. Yamamoto. Sure. CRISPR is a great example of a basic
    research study that was funded to characterize the genomes of
    weird bacteria that thrive in adverse conditions, very high
    metal and acid content in a SuperFund clean-up site.
        It would be impossible to predict that such arcane work
    would eventually lead to probably the most stunning
    technological advance in the course of my career-- and I am in
    my 40th year of research support for my laboratory from NIH and
    NSF-- the greatest potential immediate application for both
    basic research and application in medicine and other fields of
    societal interest and import.
        The very unpredictability of that outcome underscores the
    values of basic research and the role of the Federal Government
    in supporting it. Vannevar Bush said it first in 1945 in his
    remarkable essay, ``Science, the Endless Frontier.'' President
    Roosevelt had asked him to project the ways government should
    remain involved with scientists following the World War II
    effort.
        He surprised perhaps everyone by asserting that the Federal
    Government should support basic research, with confidence that
    the private sector would learn from that work to develop
    applications.
        Current day examples like CRISPR demonstrate dramatically
    that we must continue to be supportive of fundamental inquiry,
    and that we can rely upon the brilliance and creativity skills
    of basic scientists to see how the fundamental discoveries can
    be brought to application in the private sector.
        Senator Peters. I would like to go beyond that, too, if we
    may, broader than looking at some of the basic biological
    research. In your testimony, you state that precision medicine
    ``Will depend on the engagement of wide stakeholder
    communities,'' including social scientists as well.
        When we are talking about basic research, it does not
    necessarily mean some of the hard sciences, chemistry, physics
    and others. What role do you envision that social and
    behavioral scientists may play in making precision medicine the
    success that it promises to be?
        Mr. Yamamoto. You know, it is interesting. I am a molecular
    biologist. I think many in my field bought into the idea that
    what we do is objective, firm, and solid. I was trained this
    way at Princeton--whereas the work of the social scientists is
    relevant but perhaps not ``real science.''
        The formulation of precision medicine demonstrate that this
    is a very misguided notion--that not only can we discover how
    social forces, behavior, environment, exposures, childhood
    nurturing, come into play in real people's lives, but that we
    can correlate information about those elements to the objective
    data that I was comfortable with, resulting in a much clearer
    understanding propensity for disease and the course of disease.
        What we have learned in precision medicine is that all of
    these parameters need to be considered. Now more than ever with
    this opportunity in precision medicine we need to be collecting
    data on social and behavioral elements and their impact on
    disease, so those scientists and their work should be
    increasingly important.
        Senator Peters. Along those lines, if I may, Mr. Chairman,
    I am entering a number of things in the record here, if I could
    add another one. It is a report from McKinsey that talks about
    ``Changing Patient Behavior, the Next Frontier in Health Care
    Value,'' which I think goes along the lines of what Dr.
    Yamamoto is entering, if we can enter this into the record as
    well, I would appreciate it.
        Senator Cruz. Without objection.
        [The report referred to follows:]

        Changing Patient Behavior: The Next Frontier in Healthcare Value

    By Sundiatu Dixon-Fyle, PhD; Shonu Gandhi; Thomas Pellathy; and Angela
                                 Spatharou, PhD

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        Senator Peters. Thank you. This report suggests that more
    than two-thirds of the health care costs are heavily influenced
    by consumer behaviors, and yet interestingly enough, the
    National Science Foundation Social Behavior and Economic
    Research Account is under constant attack here in Congress for
    the efforts they make and some of the funding that goes into
    those efforts.
        Just a final question, as we are out of time here, Dr.
    Yamamoto, there is roughly $250 million to $300 million per
    year that the NSF currently invests in social and behavioral
    science, which is a very tiny fraction of the total amount that
    is spent, and yet it is a significant portion of what we need
    to know and understand in order to have effective treatments
    and effective research.
        Do you think it is wise to redirect? Some in Congress have
    asked to redirect that $250 million to $300 million to some
    other areas of science. Are we in fact under investing in what
    is a critical area?
        Mr. Yamamoto. We are definitely under investing. As I said,
    it is increasingly important. I can actually cite a clinical
    trial, a very interesting one, that was done for diabetes, one
    of the major disease areas that Senator Cruz mentioned in his
    opening comments.
        There were four arms to the trial: Metformin, which is the
    standard drug that is given for Type 2 diabetes, a new drug
    candidate, a control, and finally a set of imposed behavioral
    changes. It turns out that trial arm for the new drug candidate
    was stopped early because of adverse effects, and that the
    recommended behavioral changes/modifications actually
    outperformed the standard drug, Metformin.
        We need to be able to continue to pursue these studies. And
    because it is not just in medicine that these social/behavioral
    elements are important, it is fully appropriate that such work
    be supported by the National Science Foundation.
        Senator Peters. Thank you.
        Senator Cruz. Thank you. Senator Wicker?

                  STATEMENT OF HON. ROGER F. WICKER,
                     U.S. SENATOR FROM MISSISSIPPI

        Senator Wicker. Thank you, Mr. Chairman. I think this is a
    pretty exciting hearing. It might seem small and not well
    attended. In terms of the future and in terms of alleviating
    human suffering and saving a ton of money for the taxpayers,
    this may be the most important hearing we will have all year.
        I appreciate the brain power in front of me, and I
    appreciate having an opportunity to have a little give and
    take.
        Senator Coburn, my friend of 21 years now, is back here and
    he is looking good, he is once again making a lot of sense.
    Senator Coburn mentioned risks, transparency, and peer
    engagement at FDA. I hope the House legislation is improved on,
    I hope it passes, I hope the FDA is listening. I would commend
    to everyone's attention a simple straightforward bill that I
    have introduced called the Patient Focused Impact Assessment
    Act.
        This bill was introduced with the help of my friends in the
    Duchenne community. It would promote transparency by simply
    requiring the FDA to share how they use patient and advocate
    input in the approval process. I would commend that bill to the
    attention of the members and suggest it would be a small step.
        Let me say how thrilled I am that Chris Frangione is here,
    and I appreciate the work that he has done with me and my staff
    in moving toward introducing legislation later on this year to
    create a prize working with the XPRIZE foundation, trying to
    work in partnership with NIH on developing a prize and
    identifying achievements with regard to curing and alleviating
    suffering from Alzheimer's.
        Chris, you mentioned that you do not care who wins the
    prize. It could be somebody that is in college. It could be
    somebody you hardly expect.
        A lot of us are reading David McCullough's book on the
    Wright Brothers. Who would have picked out two bicycle
    manufacturers from Dayton, Ohio to give a grant to create the
    machinery that would crack this problem of human flight. As a
    matter of fact, government agencies on both sides of the
    Atlantic were awarding grants to other people. It happened
    these people were working toward the formula and used a
    scientific method, tried over and over again over the course of
    years, and actually got it done. I appreciate what you said
    about that, Chris.
        Let me just say that with regard to Alzheimer's, I do think
    this may be a critical moment. Mr. Chairman, you mentioned
    700,000 people will die this year from Alzheimer's Disease. A
    breathtaking number. It is also the most expensive disease in
    America. Of course, we know it is 100 percent fatal.
        A report released earlier this year estimates that the
    caring for people with Alzheimer's will cost the United States
    $226 billion this year, including $153 billion to Medicare and
    Medicaid. In 2015, one in five Medicare dollars will be spent
    on someone with Alzheimer's, one-fifth.
        Unless we find a cure or a new drug therapy to halt the
    progression of this disease, treatment costs will continue to
    rise. By 2015, the annual costs will grow to $1.1 trillion,
    including a 500 percent increase in Medicaid and Medicare
    spending on Alzheimer's, a disease which I think we can get to.
        Thank you, Mr. Frangione, and thank you to your CEO, Dr.
    Diamandis, for working with my staff and me and with a group
    called USAgainstAlzheimer's, on finding a way to encourage the
    Government to spur innovation in Alzheimer's research through
    prize-based challenges.
        Later on this year, I will be introducing the EUREKA Act,
    Ensuring Useful Research Expenditures is Key for Alzheimer's,
    EUREKA. I will be asking you, Mr. Chairman, and Mr. Ranking
    Member, and all of my colleagues both in the Senate and the
    House, to work with us on this.
        I appreciate the positive imprimatur of the XPRIZE
    Foundation in making us believe this can work. In the five
    minutes that I have, I will just ask one question. With the
    prize, you pay only for success. How much would we pay, how
    much would society pay for a cure to Alzheimer's, but given
    these numbers, in 35 short years, we will be spending $1
    trillion a year, how much would society pay for a cure?
        I have learned in dealing with the Foundation that there
    are prize-able steps that get us concrete results and save us
    concrete amounts of money.
        If, Mr. Frangione, you could comment on that for the
    benefit of the Committee. Of course, the ultimate cure would be
    a wonderful event, we would set off fireworks around the world
    on Independence Day. We could do that.
        How can we have prizeable events that get us concretely and
    amount to success that is worth paying for?
        Mr. Frangione. Sure. Thank you so much for your leadership,
    and Sarah Lloyd on your team has been great to work with. We
    appreciate that.
        Prizes can get you along that spectrum without getting you
    all the way there. Getting all the way there is going to be a
    really, really big moon shot. There are lots of places prizes
    can play and one, especially as Dr. Yamamoto was talking about,
    is collaboration.
        We see in prizes you can bring together disparate folks to
    work together on a problem, whether it be people from the
    engineering community or people from the health community or
    people from the social sciences or wherever.
        In fact, I talked about well-designed prizes. One of the
    things that we do at XPRIZE is when teams register, we actually
    ask them are you missing any components to your team, are you
    looking for any other people? We also allow individuals to
    register that have specific expertise and knowledge that can
    then join these teams to build that collaboration.
        In terms of Alzheimer's, you can see a bunch of different
    steps along the way. Imagine starting off with finding a prize
    that can look for the biomarkers or whatever it is that can
    allow us to diagnose Alzheimer's way earlier than we currently
    do. Right now, you are pretty far along for us to be able to
    diagnose you. Or as an intermediate step, we are actually
    working on an AI prize. Could that AI prize become an AI human
    brain augmentation? You can actually help people with
    Alzheimer's artificially bring back some of their brain
    functions. Or imagine you have a prize out there in robotics,
    so you are bringing all these people from robotics, you are
    creating a human helper to take away some of the burden on
    family members and the medical community, and you can augment a
    human with Alzheimer's with a robotic helper.
        There are lots of different directions you could go
    ultimately on the way to finding that cure. You can incentivize
    different steps along the way.
        Prizes can find cures or biomarkers, prizes can help you
    solve the problem, essentially put a Band-Aid on it, but a
    really important Band-Aid that will give somebody a much better
    quality of life, or prizes can help you do things through AI or
    Big Data. There are lots of things we could do, and we are
    actually looking at all those right now at XPRIZE, as are
    people outside of XPRIZE, looking at different ways to augment
    it.
        Senator Wicker. Thank you very much. Thank you, Mr.
    Chairman, for your indulgence. Mr. Frangione, if someone within
    the sound of our voices today called you up and had an idea
    they would like to share, you would be happy to hear that, I
    take it?
        Mr. Frangione. I would be very happy to hear it.
        Senator Wicker. Thank you very much, so would I.
        Senator Cruz. Thank you very much. Senator Udall?

                     STATEMENT OF HON. TOM UDALL,
                      U.S. SENATOR FROM NEW MEXICO

        Senator Udall. Thank you, Chairman Cruz, and Ranking Member
    Peters. Excellent hearing. I could not agree more with what
    others have said. It has been very insightful, and I think if
    we just worked with each other and took a little guidance from
    you, we could really make a difference on some of these issues.
        Dr. Coburn, you really do bring an unique perspective from
    how you talked about it, and I could not agree with you more in
    terms of NIH being woefully underfunded, and also we need the
    oversight to make sure there is the credibility there.
        I think the other thing the panel brings forward is you all
    talk about how important basic research is, and we need to be
    investing in the National Science Foundation's work to fund
    basic research at universities and that kind of activity across
    the country.
        My first question for Dr. Frangione, I would like to ask
    you about XPRIZE. XPRIZE is trying to solve some of the really
    tough questions. You mentioned several of them, Alzheimer's,
    which Senator Wicker talked about, kidney disease.
        As difficult as these challenges are, I think American
    ingenuity can solve many problems like these. We just need to
    get more innovators and researchers to focus. That is why I
    find it to be so valuable about the XPRIZE model of using
    challenge prizes to encourage innovation and new thinking, and
    as you have said, to get the interdisciplinary work going on
    between various parties.
        In fact, I plan to introduce legislation in the Senate soon
    that is a companion to the House-passed Science Prize
    Competition Act. This legislation would update the authority of
    Federal agencies to encourage the use of challenge prizes to
    solve problems.
        Agencies like DARPA, the Department of Energy, NASA already
    have a solid track record when it comes to challenge prizes,
    but I think we could be doing more to encourage other agencies
    to consider this approach to problem solving.
        Could you expand on your testimony as to why XPRIZE
    supports the Science Prize Competition Act?
        Mr. Frangione. Sure. Thank you for your leadership on this.
    What we like about the Act is it just gives clearer guidance.
    All the agencies have authority to do prizes right now, but
    this gives clearer guidance on it. Everybody is doing it
    slightly different. You named some that are doing it really
    well. A lot of general counsels are interpreting the
    legislation differently. This Act really gives clearer
    guidance, and we think that is really important.
        It would actually send a really strong signal to the
    Federal Government that the Congress supports prizes. In
    addition, one of the things that you are allowed to do in the
    government is partner with private organizations in launching
    prizes.
        Passing this legislation would also send a strong signal to
    the private sector, to folks like us, non-profits or for profit
    prize companies, that everybody is in support of this and we
    should really look toward really great ways to use it.
        I will give you an example of this collaboration which will
    help people understand how important prizes could be in playing
    a role in innovation. We recently concluded an ocean health
    prize. This is to find better sensors to measure our oceans. We
    do not know what is going on with our oceans in terms of
    acidification right now. We are going to be awarding this on
    July 20.
        There were a bunch of teams, and there is a high school
    team, a high school team that made it to the semifinals, and
    they could not afford to get to the semifinals. They went out
    and put out a GoFundMe campaign. Their largest contribution of
    $1,000 was from another team in the competition competing
    against them for $2 million. They actually funded them so they
    could go compete against them.
        That is the type of collaboration and that is why things
    like this Act are really important to spur that collaboration,
    spur the collaboration Dr. Yamamoto was talking about, to
    really drive us forward as one versus a bunch of siloed
    expertise where people are not talking to each other, because
    they do not know how to talk to each other. There is an
    invitation to talk to each other, and a prize and prizes create
    that invitation for people to talk to each other if the prize
    is designed well.
        Senator Udall. Thank you very much. Dr. Yamamoto, I would
    like to ask you about precision medicine and tackling rare
    diseases. We have an uncommon genetic blood disease in New
    Mexico called cavernous cerebral malformations that impacts
    people of Spanish descent.
        I have a piece of legislation dealing with research on
    that. Can you discuss some of the recent developments in
    precision medicine that can help tackle rare genetic diseases
    such as CCM?
        Mr. Yamamoto. I think Dr. Huber pointed out that all
    diseases have a genetic basis--that they are grounded in some
    place in genetics. That is likely true. But a mutation, a
    ``disease gene'' is rarely a certain predictor of disease. We
    need to link those genetic alterations with other molecular
    parameters, as well as social, behavioral and experiential
    parameters.
        Being able to massively collect data on genome sequences
    and many other factors, and then correlate those findings with
    defects similar to those you are talking about is going to
    uncover the causes of rare diseases and will allow us to attack
    them directly.
        This is being approached in many ways. We are sequencing
    cancer patients at UCSF and tying those data to each patient's
    electronic health record, by sequencing blood spots from
    newborn babies, and looking for correlations with subsequent
    health matters through their lives.
        The precision medicine approaches offer a tremendous
    opportunity to be able to find the root causes of rare diseases
    and approach them directly.
        Drug companies, as you know, have been loath to try to
    develop pharmaceuticals, therapeutics, for rare diseases,
    because of market concerns. If we knew about mechanisms, again,
    directed work could be carried out and that would be very
    effective, and the drug companies would be incentivized to move
    forward.
        Senator Udall. Thank you very much. Thank you, Mr.
    Chairman.
        Dr. Coburn. Can I comment on that? One of the things Dr.
    Yamamoto did not mention is if you do it the way he suggested,
    it is going to cost a whole lot less and take a whole lot less
    time. $100,000 to get a cure for one of these rare diseases
    versus billions. It is a real shaking change in terms of
    outcomes.
        Senator Cruz. Thank you. Senator Johnson?

                    STATEMENT OF HON. RON JOHNSON,
                      U.S. SENATOR FROM WISCONSIN

        Senator Johnson. Thank you, Mr. Chairman. Tom, great to see
    you. I thank all the witnesses here.
        That is only going to work if people have the freedom to
    access that, and we reformed the broken model of the
    gatekeeper, the FDA, a completely risk adverse process.
        My daughter was born with transverse resistant arteries.
    Two things I learned very quickly, not being a doctor, there is
    a reason they call it ``medical practice,'' with emphasis on
    ``practice.'' That is not denigrating the field, that is what
    medicine is all about, advancing it through a series of trial
    and error.
        The other thing I learned very quickly, there are centers
    of excellence. I had the freedom back in 1983 to access those
    centers of excellence and then find the most advanced surgical
    technique, which is still experimental, for my daughter's
    condition. My daughter is 32 years old, she is doing
    tremendously well. Now we do the actual aorta switch. It is
    advanced.
        Coming from a manufacturing background, I am looking for
    the root cause. I understand why the FDA is so unbelievably
    risk adverse, but when you are so risk adverse and when you do
    not give patients the freedom to choose, I think we are going
    to really hamper medical advancement in moving toward these
    cures.
        Listen, I think it is great, XPRIZE, that is great, but a
    $10 million prize is not going to incentivize breakthroughs in
    something that literally costs hundreds of millions of dollars
    to develop. The prize really is a free market system. We need
    to let that free market system operate without the impediments
    of spending $100 million, cut it off because it is not worth
    the risk.
        Dr. Coburn, you said we have to move the power back to
    patients and doctors. That is not the direction we are going in
    this country, is it?
        Dr. Coburn. No, but if you see what is really happening out
    there right now, especially in the field of cancer, which will
    be applied in so many other areas--actually, I am getting a
    treatment product based on that very idea right now--using an
    approved drug for something else because we have found through
    precision medicine and biomarkers that it actually has
    application over here, FDA cannot stop that.
        Senator Johnson. Today, they cannot.
        Dr. Coburn. They are not going to stop it because of the
    uproar. I would make two points. FDA changed when the AIDS'
    activists came and said change. They demanded change. You are
    seeing science move so far ahead of the FDA. FDA knows they
    cannot keep up with this. They know they do not have the
    capabilities. Janet Woodcock has actually said that.
        The question then comes what do you all do in legislation
    that takes the monkey off FDA's back. It is still responsible,
    but makes them the collaborative, cooperative agency that they
    need to be, you can still punish bad actors, but we are going
    to find out a whole lot more data by being freer with the
    process rather than tighter.
        Senator Johnson. The point I was trying to make with the
    centers of excellence, let them be more involved in the
    process, let the FDA cooperate with those centers of excellence
    for different diseases and let the process move forward.
        Dr. Coburn. That is right. The great example right now is
    on biomarkers. They have not--they have the ability under the
    law to go out, set up, and have this cooperative process and
    bring everybody together and be transparent with it, so we
    actually find more and more information and share more
    information, but that is not happening right now.
        Part of the hope with the 21st Century Cures is to actually
    give the FDA some relief. They need more money, I will tell you
    that, they do. We keep adding things to them to do, and yet
    their budget does not necessarily increase, so they do need
    more money to accomplish some of this, but also if we
    transition to this collaborative process where we take areas
    like the University of California in San Francisco and let them
    be one of these collaborative/cooperative areas, then what
    happens is in the long run, they will have less budgetary needs
    because they are actually in cooperation.
        They cannot go out and compete with the private sector on
    the best and the brightest. They cannot compete with the
    universities and they cannot compete with the private sector.
    They are not going to be able to do it.
        The way to move forward is in a way where we actually
    assume that people are going to do the right thing, not the
    wrong thing, and we have an agency that has everybody assuming
    they are going to do the wrong thing, and that is a very
    expensive regulatory process.
        Senator Johnson. I also want to ask your assessment of two
    other large dangers, I think, as it relates to advancement in
    innovation, and that is the medical device tax, which I think
    is a tax that literally is shipping jobs overseas, certainly
    restraining investment in medical device manufacturers, but
    also the Independent Payment Advisory Board, those two aspects
    of Obamacare.
        Can you comment and give us your assessment of how those
    two measures are hampering innovation?
        Dr. Coburn. We have already seen 40,000 to 50,000 jobs
    leave this country on medical devices. We will see more because
    the burden and the taxation both are negatives for innovation
    and capital formation.
        We do not know what the Independent Payment Advisory Board
    is going to do, but the fact is--here is the other thing that I
    think is important in terms of new drugs, and Mr. Huber made
    this point. Some of the good drugs are going to be
    fantastically expensive, but if you measure in terms of the
    cost/benefit to society, they are cheap.
        If they take an Alzheimer's patient and slow down the
    process where they have five more years of active life in terms
    of inputting in society that is not costing such, it is a
    tremendous difference to us.
        If you look at our overall budget picture where we have
    unfunded liabilities of $142 trillion, that is where we are
    today, 42 percent greater than the entire net worth of the
    country, and we can make those kinds of changes, we start
    seeing some way out. That is why Senator Cruz is calling for
    this hearing, if we break through on diabetes, if we break
    through on Alzheimer's, if we break through on all this cancer,
    we break through on Parkinson's, the cost/benefit ratio is
    unbelievable to us as taxpayers.
        Most of the dollars even with the Affordable Care Act, more
    and more of the dollars are going through the government, so it
    is to all our benefits that we have an efficient regulatory
    process that encourages rather than discourages the
    development, encourages collaboration rather than discourages
    it, encourages cooperation, and the assumption has to be we are
    all in this together, let's see if we cannot get some
    breakthroughs, and then share it.
        Let's change--the other key point--you have to change not
    only the reimbursement pattern but you have to change the
    intellectual property so the private capital comes into this.
        If you spend 10 years on a drug and your patent is running
    out, the market is X, you are going to say I am not going to
    the Phase III trial because here is another $30 million to $50
    million going into this drug, and I only have a year and a half
    left on the patent. They are just not going to do it.
        We have to have intellectual property change so we do not
    stop good stuff, even though Dr. Yamamoto can go back and look
    at the research if we are collaborative and figure out another
    way to use that same drug if it is safe.
        Senator Johnson. Those are my main points. What is going to
    drive innovation are the benefits and rewards of a free market
    system. We know that works. The other point is it is the road
    blocks that Federal Government policies create for those
    innovators for that free market capital system.
        Thank you, Mr. Chairman.
        Senator Cruz. Thank you, Senator Johnson. We are going to
    do one final round of questioning, and we will thank the
    witnesses for being here.
        In the written testimony, one of the portions I found very
    interesting, Mr. Huber, was your discussion of very rare
    diseases, and particularly when overlaid, you describe in your
    written testimony how with very rare diseases there are often
    too few patients to conduct a statistically robust double blind
    trial.
        Very rare diseases in the aggregate, according to the
    National Organization of Rare Disorders, there are roughly 30
    million Americans with very rare diseases. In the aggregate,
    they are not all that rare, even though individually they may
    be.
        Mr. Huber. It goes even further than that. To begin with,
    very rare diseases often have a more common variant. One very
    rare disease drives your cholesterol levels sky high and you
    die of a heart attack, get this, at 5 years old, it is
    hypercholesterolemia.
        You have statins today because a Japanese researcher found
    a statin by trial and error, very clever guy, because two U.S.
    researchers, Brown and Goldstein were working in this country
    on treating a hypercholoesterolemia patient, and they were able
    to test the first statin drug in their laboratory. You learn a
    ton about individual genes, so there are more payoffs than
    that.
        Yes, the very rare diseases, it is just nonsense to even
    think about prescribing a placebo when testing a drug to treat
    them, and I might add when these diseases are hereditary, you
    have incredibly powerful evidence from day one that the disease
    has a genetic cause and you can identify the molecular
    mechanism of the disease very quickly.
        There is a second factor which I think matters a lot. A lot
    of these diseases develop very slowly. Genes do not persist if
    they kill people right away. They have to live long enough to
    have children and pass on the disease.
        Take a drug aimed at one of these diseases to the FDA. By
    the way, this is very relevant to Alzheimer's, which everybody
    seems to be interested in, there is an article in the New
    England Journal of Medicine, that I mention in my written
    testimony that says you simply could not bring an Alzheimer's
    drug to Washington because by the time given the scientific
    risks and the risk of not getting through the trials and then
    the patent clock ticking, no sensible person would do that.
        The very rare diseases now, to its credit, the FDA is
    fairly flexible with very rare diseases. They are willing to
    take evidence from animals and lab tests and so on.
        Once you understand mechanisms, you should be doing that
    with all diseases. In fact, Dr. Yamamoto and a very
    distinguished group of other experts wrote the National
    Research Council report, where they said our whole definition
    of ``disease'' is basically antiquated, if you care about drugs
    and you want to beat diseases with drugs, you have to define
    diseases by their molecular mechanisms of action, because that
    is where drugs do their thing.
        The day will come and hopefully sooner rather than later we
    will begin approving drugs by their mechanism of action. You
    prove that the drug can actually reach down into a body and
    reasonably safely turn that pathway on or off or disrupt it.
        We should license it because certainly in oncology and many
    other areas, that drug is going to be used wherever that
    pathway is found. It is just amazingly weird and encouraging
    that you find the same pathways common to a lot of diseases.
    This is the cheapest possible drug development process you
    have. You just take a drug that is already on the market, you
    find an antidepressant that is suddenly curing cancer.
        Thalidomide is a licensed drug today, and actually for 10
    different uses, because it turns out it is a cytokine
    inhibitor. We knew that or we worked it out long after it had
    been banned, and by the way, it also got to market largely
    thanks to the HIV and AIDS' challenges of the 1990s. You work
    out the mechanism of action of the drug, you begin finding it
    is a cytokine inhibitor. You begin finding cytokine problems in
    all sorts of other diseases, and Thalidomide is then prescribed
    for them.
        The rare diseases are an opportunity, an important research
    opportunity, they will pay you twice.
        Senator Cruz. Also, underscoring the human cost. There has
    been multiple references to the AIDS epidemic and the pressures
    that came to develop treatments to deal with it.
        On the human cost, there was a wonderful movie a couple of
    years ago, the Dallas Buyers Club, which powerfully
    demonstrated patients that were being told they could not
    access potentially life saving medicines in America, so as a
    result they had to fly overseas to try to save their lives or
    prolong their lives.
        Address for a moment the rights of patients to acquire, to
    get access to potentially life saving medicines even if there
    are risks of side effects, if you are facing a certain or near
    certain death, people will take informed risks. I would be
    interested in the panel's views on that.
        Mr. Yamamoto. Let me say something about what is going on
    at the FDA right now. It turns out the FDA has a tough hill to
    climb because of the regulations that are imposed on them and
    the way they operate. There are a lot of smart people there
    that I think really know the direction they should be moving.
    They have developed centers of excellence, as Senator Johnson
    was talking about. There are four of them now, centers of
    excellence in regulatory science and innovation, CERSIs.
        Those groups, among the things they are pushing on, a very
    strong focus on mechanistic studies that can then be used to
    move forward in drug development or other kinds of treatments.
        There are people within the FDA that understand these
    things and know the direction they should be moving. They know
    there is a revolution coming at all of us in devices, things
    that will measure physiological parameters in the course of our
    daily lives, and I am wearing one. These things are just the
    beginning of what is coming to us.
        There is also a center for device and radiological health
    within the FDA that is pushing hard on those.
        There is a very good consciousness within that agency of
    the things that need to be done, and in part, the things that
    need to be done collaboratively. They do not have the budget or
    the personnel to be carrying out these mechanistic studies, but
    they know they have to be done. The centers of excellence are
    doing these collaborative events within academia.
        I think that is the good news. The question is can we make
    sure we can keep them on pace, look at the regulatory policies
    that are actually holding them back in being able to move
    forward, and allow these things to actually come to fruition.
        I think that is where the focus of the Federal Government
    should be. They need and deserve more funding. Commissioner
    Hamburg, before she left office, liked to point out that the
    FDA moves at two paces, too fast and too slow. Depending on who
    the observer is and what the needs are.
        Patients should own their data. It is very important.
    Simply owning their data really has to come with two tools. You
    just referred to one of them, and that is the ability to have a
    say about decisionmaking on being able to utilize drugs. Very,
    very important part of the risk/benefit assessment that the FDA
    is increasingly paying attention to, talking to patients.
        The second one, of course, is arming patients with the
    information. Simply handing someone their DNA sequence does not
    help them very much. We also need to be developing tools, and
    we are doing this with a precision medicine profile, to be able
    to inform patients what this vast amount of information means.
        Senator Cruz. Let me ask one final question. Often when it
    comes to changing the law, we think based on the existing body
    of law with years of accumulated practices, procedures, rules
    and regulations, if each of the members of this panel woke up
    tomorrow, and you were czar for a day, and you could implement
    one reform at the FDA, in your judgment, what would have the
    greatest positive impact, facilitating life saving drugs
    reaching markets and impacting people's lives?
        Dr. Coburn. I think changing their charge from safety and
    efficacy to safety. I think the medical community wants
    efficacy. I do not think there is any doubt about that. Safety
    is their number one charge.
        I will give you a great example. We now have drug tamper
    resistant narcotics, but the FDA last year approved another
    non-tamper resistant narcotic. The question is why. It
    certainly is not safe. Yet, they say their number one charge is
    safety and then efficacy.
        I think if we emphasize safety and everybody that is
    working with precision medicine is interested in safety, but
    lightening up on efficacy because the only way this thing is
    really going to fly fast in a collaborative fashion is if it is
    efficacious. That is what they found at UCSF in terms of oat
    cell carcinoma, and also carcinoid tumors. They found efficacy.
    They already knew it was safe.
        If you emphasize safety and let efficacy go on the basis of
    trusting your collaborative partners to say this works. We know
    not everybody is honest. We have seen research work that has
    been fabricated. That may happen.
        The overall benefits tremendously to patients and
    scientists in this country and physicians is going to far
    outweigh any bad character actor that you get out there. Most
    of these people, 99.9 percent of them, are dedicated to helping
    people. They are not going to falsify data.
        Senator Cruz. Thank you. Senator Peters?
        Senator Peters. Thank you, Mr. Chairman. I just want to
    follow up and clarify maybe some of the comments, Dr. Yamamoto,
    you made. I found some of your responses to the Chairman's
    questions were very interesting and certainly we have heard a
    great deal about the promise of precision medicine and a number
    of government reforms, and you talked about some of the work
    that the FDA is doing right now.
        Is the FDA now a fundamental impediment to the next
    generation of disease preventions, therapies, and cures, or are
    there other major issues that you think are up there as well,
    or yes or no, do you see the FDA as the major impediment to us
    moving forward, and if not, what are some of the other concerns
    or other things we should be considering as a committee here?
        Mr. Yamamoto. The FDA is not the major impediment. I
    suggest that we reorient this question, and instead recognize
    an opportunity in front of our entire community, whether it is
    academic researchers doing basic science that leads to CRISPR,
    or clinicians that are focusing on specific disease, some of
    them rare and very difficult to study, or investors and
    companies capitalizing on the tools of precision medicine to
    link diseases thought initially to be unrelated to each other,
    and discover there are drugs in one disease area that are very
    effective in the other.
        I think the impediment, perhaps better viewed as an
    opportunity, is to recognize that by understanding diseases at
    the level of mechanism, we can more efficiently define and
    pursue research directions, drug tests and regulatory policies
    that are much more closely aligned.
        To the extent there are FDA policies that presently may
    impede that pathway, it is a reminder that we all are entering
    a new frontier, and that we need to recognize across the
    Government that adjustments and refinements are needed.
        Senator Peters. Dr. Coburn, you talked about the dual
    mission of the FDA and how should we focus on safety as a
    primary focus. Yet, I have also heard from the panel some
    criticisms of the clinical trial process. Would you comment
    that obviously if we are concerned about safety, clinical
    trials, are they still an important element of it, and how
    would you reform that, that does add to delays. What are your
    thoughts on that?
        Dr. Coburn. Thank you. I think it is balance. I think Dr.
    Yamamoto talked about the trial on a drug that had two deaths.
    The fact is did we as a society learn something from that. What
    was the mechanism of those two genetic codes that caused them
    to succumb when the others did not.
        The point is how you look at that. I am not opposed to
    double blind placebo controlled studies. I am if when we put
    everything and say it all has to be in this box to prove
    efficacy because we are already seeing in precision medicine
    with biomarkers, with massive computer analysis, because we do
    not need to do that to advance a whole lot of benefit to the
    American society by going another way.
        What you are doing there is talking about drugs that have
    already been approved for safety, and using them in totally off
    label usages that have never been approved by the FDA, which I
    as a physician have the right to do today. If it is approved, I
    can use it, whether I am smart to do so or not.
        Here is the point I would make. If we really want to move
    forward, what we have to do is change the dynamic at the FDA.
    Part of the reason the dynamic is there is because of Congress.
    You beat the crap out of them when something goes wrong, so
    their underlying statement is never do what is best when you
    can do what is safe.
        I do not blame them. The criticism is so severe. If we
    change it to where we say we are going to allow a growing
    opportunity for change within the FDA, change within the
    medical research community, change within the oncology
    community, and the physician community, we are going to work
    some new ways, they are all going to be collaborative, they
    also are going to be transparent, so we all get to see what
    does not work, not just a small group.
        If you really want that to work, you have to have
    intellectual property protection and advancement, and you have
    to not worry about what it costs. You have to measure what it
    costs based on terms of true cost/benefit analysis, not the
    sticker shock of some new drug because of what it comes out to.
        Mr. Huber. Can I add one thing about safety? The strongest
    argument for more FDA involvement is always it takes a long
    time to expose all the possible side effects, and that is
    absolutely true. The FDA has also conceded that the long time
    is actually infinite time, because there is simply no way to
    prove a negative. It is always possible the drug just has not
    yet encountered the patient with the weird biochemical profile
    who is going to keel over dead as soon as they get the drug.
        The FDA therefore relies on doctors to do the hardest
    safety stuff. There is an international coalition, they gather
    case reports from all over the world, apparently doctors just
    observing things can teach the FDA something, too, and they
    also do the genomic analysis. The FDA set up this whole thing
    as a global program.
        It is exactly what we are advocating, and on the efficacy
    side, you asked originally, Mr. Chairman, for one sentence, and
    I do not think you got one sentence from anybody and you are
    not about to, but I think everybody agrees you want the
    threshold screening for toxicity and lab tests.
        The FDA has actually done a lot of very good work on that.
    They are increasingly willing to work with cell cultures and
    other tests of that kind. You want to continue with phase one
    tests on healthy volunteers to see if these things are
    immediately toxic. I am not about to volunteer for most of
    these, but apparently there are people who are willing to.
        You have to do that. I do not think most of us propose
    doing the efficacy by just saying look, every doctor in the
    country, possibly the world, can have this drug. I think almost
    everybody would agree we should put these through groups who
    specialize in these things, and they should be gathering a lot
    of data, pooling it, making it available.
        They should also then play a large role in saying when you
    are ready to give this larger distribution, but the safety
    argument is compelling and the FDA has already conceded it
    cannot do it all.
        Senator Peters. Dr. Yamamoto, final thoughts?
        Mr. Yamamoto. I am a little bit surprised by Dr. Coburn's
    comments about guarantees of safety because he also pointed out
    that as a physician, he can prescribe drugs for off-label use,
    completely independent of the FDA.
        My view is the FDA, perhaps due in part to expectations and
    sanctions from Congress, or perhaps on their own accord, has
    perhaps drunk the Kool-Aid that says that FDA approval,
    ``Safety'' means there is no chance for anything to go wrong,
    when they know very well that the Phase II trial, as good as it
    may be in terms of scientific control, is never large enough,
    as Dr. Huber pointed out, to rule out the possibility there is
    some patient out there who may experience an adverse response.
        Post-market surveillance is one of the things FDA is
    increasingly paying attention to. Risk/benefit, I think, is a
    much clearer metric than the claim of safety. What patients and
    physicians and the community will sustain depends very much on
    the weight of risk are against the relief provided by benefits.
        Cancer patients are much more willing to take risks on
    therapies than somebody with poison ivy. Obviously, that is as
    it should be.
        We should really be talking about risk/benefit,
    acknowledging that nothing is completely safe, and moving
    toward policies with such standards. The FDA is increasingly
    doing that, and as I said, including patients, in being able to
    make that assessment.
        Senator Peters. Thank you. Thank you for your testimony,
    all of you.
        Senator Cruz. Thank you very much. The hearing record will
    remain open for two weeks. During that time, Senators are asked
    to submit any questions for the record, and upon receipt, the
    witnesses are requested to submit their written answers to the
    Committee as soon as possible.
        With that, I want to thank each of the learned members of
    this panel. I think this was a very useful, productive and
    important hearing today. I thank each of you for your time,
    wisdom and judgment that you brought.
        With that, this hearing is now adjourned.
        [Whereupon, at 12:01 p.m., the hearing was adjourned.]

                                A P P E N D I X

        Response to Written Questions Submitted by Hon. Steve Daines to
                             Christopher Frangione
        Question 1. In your testimony, you mention 30 Federal agencies
    utilizing smaller prizes, $2,500 to $1 million, to spur innovation. You
    state that government can utilize monetary prizes as an economically
    efficient means to incentivize innovation. As you describe, such prizes
    can be cost effective, reduce risk, and focuses rewards on success.
    Given the time frame for many research and development projects, how
    can we ensure that political changes in Congress or the Executive
    Branch do not have a negative impact on the directive of prizes? Or
    should these prize structures be left to non-governmental
    organizations?
        Answer. Prizes are good for many reasons. One main benefit is the
    return on investment. When you grant 1 million dollars you will get 1
    million dollars of work. But when you put out a 1 million dollar prize
    you will get $10+ million in work. We are democratizing innovation.
    These are things that we have found leaders on both sides of the aisle
    can agree is good. We at XPRIZE believe that both the public and
    private sector must work together to see the innovation we want. This
    partnership can be a powerful tool in solving the most complex problems
    of today and enhancing the future. As such, we must support policy that
    enables Federal prizes which is why we support H.R. 1162, ``The Science
    Prize Competitions Act'' that amends the Stevenson-Wydler Technology
    Innovation Act of 1980 to encourage agencies to utilize prize
    competitions.

        Question 2. Our society is faced with many low prevalence diseases
    which have a high capacity for significant personal and societal loss
    if there were to be a pandemic, such as Ebola. In your testimony, you
    discuss how financial prizes often do not cover the full cost of
    research, rather it is the ability to get a product to market and
    become a profitable company that is the motivator. How do we create
    incentives for cures when there is currently no market for a product,
    but the need for those products could arise at any point?
        Answer. As I mentioned in my testimony, incentivized competitions
    work better in some areas than others. We believe that in the
    healthcare space, prizes work well under the below conditions:

       Where new forms of cross-disciplinary collaboration are
            needed;

       Where research is underfunded or there is a small patient
            pool driving inefficient market activity; and

       Where ``engineering'' type solutions could bring
            breakthroughs to bear.

        Additionally, what we have found to be critical across all issue
    areas is the need for an end-market. We know that teams compete
    primarily for the end market--for the ability to go out into the
    marketplace and become a profitable company. If little or no market
    exists, we can try to encourage a market through advanced market
    commitments. While we know that teams secondarily compete for
    additional incentives such as marketing, testing, milestone prizes,
    partnerships and education, that end-market is critical to spur
    audacious advancements and innovations within a sector.
                                     ______

        Response to Written Questions Submitted by Hon. Gary Peters to
                             Christopher Frangione
    Topic: Prize Competitions
        Question 1. In addition to funding cash prize purses, Federal
    agencies can provide non-monetary contributions to prize competitions.
    For example, the Food and Drug Administration is supporting the teams
    competing in the Qualcomm Tricorder XPRIZE by helping them prepare for
    post-competition regulatory clearance. Are there any legal impediments
    to Federal entities offering ``in-kind'' contributions or otherwise
    participating in prize competitions?
        Answer. All Federal employees, including the FDA's assisting the
    Qualcomm Tricorder XPRIZE, must adhere to the Standards of Ethical
    Conduct for Employees of the Executive Branch. This statute ensures
    that Federal employees will give impartial treatment to any private
    organization or individual. President Obama's 2009 executive order,
    ``Strategy for American Innovation'', calling for agencies to increase
    their ability to promote and harness innovation by using policy tools
    such as prizes and challenges, helps facilitate and encourage public-
    private partnerships to achieve innovation. In times of question,
    governmental agencies should seek the advice of counsel, but, in
    general, Federal employees can be a resource to teams competing for a
    prize as long as they do not use their position for personal private
    gain.

        Question 2. University researchers appear less likely to
    participate in prize competitions, perhaps because the prize funding
    model is not as amenable to sustaining a research lab over a long
    period of time. What can be done to better tap into the brilliance of
    our university researchers and to encourage them to compete for
    innovation prizes?
        Answer: Prizes help facilitate collaboration that otherwise would
    not take place. While university researchers are often engaged in long
    longitudinal studies, the teams that are competing in our prize
    competitions are usually focused on an end-market for the product they
    risk their own money to develop. Grant funded university research
    provides us with essential early research and discovery in areas we
    know little about. This research allows us to define challenges and
    create prizes that incentivize teams around the world to find effective
    solutions. We can encourage university researchers to be involved in
    the prize competition process by connecting them with teams and
    facilitating cross-industry collaboration that leverages research
    already conducted in a university lab. Prizes can be structured in a
    way that fosters partnerships between researchers and teams competing
    for a prize, allowing university researchers to amplify the ultimate
    impact of the research they have completed.
                                     ______

       Response to Written Questions Submitted by Hon. Amy Klobuchar to
                             Christopher Frangione
        Question 1. Alzheimer's presents one of the toughest medical,
    economic, and social challenges facing our country. Right now, close to
    5.2 million Americans are living with Alzheimer's including nearly
    100,000 Minnesotans. These numbers will grow dramatically in the coming
    years with the aging of the Baby Boomer generation.
        Mr. Frangione, by 2050, an estimated 13.5 million Americans will be
    living with the disease-triple the number of people affected today. In
    2015 we will spend $226 billion caring for people with Alzheimer's
    disease and other dementias. By 2050, these costs will reach $1.1
    trillion. In comparison we only invest about $586 million in
    Alzheimer's research this year. What will be the social and economic
    impacts of not investing in Alzheimer's research?
        Answer. The impacts will be catastrophic and saddening. This is a
    prevalent disease that needs the attention it deserves. The social and
    economic costs are rising and affect more people as you mentioned. Of
    that $226 billion spent to care for people with Alzheimer's, Medicare
    and Medicaid will spend an estimated $153 billion caring for patients.
    Roughly one in every five dollars spent by the government on Medicare
    is related to Alzheimer's treatment. We need to spur innovation and
    harness ideas from all over the world to find a cure to this disease.
    XPRIZE supports government efforts to develop an Alzheimer's prize to
    help address this need.

        Question 2. Mr. Frangione, in your testimony you mentioned a prize
    for Alzheimer's research. Why is it important? How is the XPRIZE model
    accelerating innovation in comparison to the way the government
    traditionally funds research?
        Answer. As you mentioned, by 2050 an estimated 13.5 million
    Americans will suffer from the effects of Alzheimer's. That is not the
    complete picture, families suffer as well, and therefore the number of
    people negatively affected is significantly higher. We need to respond
    and take proactive steps to address this ever-growing disease. That is
    why XPRIZE is exploring an Alzheimer's prize focusing on screening and
    treatment.

        Question 3. I am proud to lead the Muscular Dystrophy Community
    Assistance, Research and Education (MD CARE) Act with Senator Wicker.
    The bill supports medical research and policies to boost life
    expectancy and quality of life for muscular dystrophy patients. I have
    had the pleasure of touring the Paul and Sheila Wellstone Muscular
    Dystrophy Center at the University of Minnesota, an institution that
    benefits from this legislation and seeing first-hand the critical work
    they do, particularly to maximize the significant federal, nonprofit,
    and patient advocacy research funding.
        Mr. Frangione, why are public-private partnerships important? Are
    there other models of public-private partnerships that would have
    similar benefits and outcomes as the Wellstone Center across other
    areas of Federal research to explore treatments and cures for other
    diseases?
        Answer. Public-private partnerships are a critical aspect to
    innovation because they catalyze collaboration that can produce
    unimaginable technology to help improve lives and to solve complex
    challenges. President Obama signed an executive order in 2009 calling
    for agencies to increase innovation by using policy tools such as
    prizes and challenges. The America COMPETES Act Reauthorization of 2010
    gave agencies a clear legal path to use prize competitions in order to
    bolster their own missions and encouraged agencies to partner with the
    private sector and non-profits. Since then numerous agencies and
    departments have spearheaded prizes that incorporate private and/or
    public industry partnerships. For example, XPRIZE partnered with the
    Department of Energy to support a $10 million global competition to
    inspire a new generation of viable, safe, affordable, and super fuel-
    efficient vehicles. We brought together government and the private
    sector, including our lead sponsor Progressive Automotive Insurance.
    Our top prize-winner, Oliver Kuttner, a commercial real estate
    developer who loved to tinker with cars since taking auto shop in high
    school, developed a four-seat, 830-pound vehicle that ran on one-
    cylinder with an ethanol-fueled internal combustion engine that
    achieved 102.5 miles per gallon fuel efficiency. Today, Kuttner's
    company, Edison2, is continuing to develop extremely light, super fuel-
    efficient vehicles including an electric version.
        Public-private partnerships like this have a history of maintaining
    a commitment to scientific excellence by guiding the conception,
    safety, and deployment for various technologies that have paved the
    road to where we are today.
                                     ______

         Response to Written Question Submitted by Hon. Ron Johnson to
                                 Peter W. Huber
        Question. Mr. Huber, you testified that scientists already have the
    tools that will end up curing/preventing disease and emphasized that
    every disease Senator Cruz mentioned has a genetic origin. You were
    optimistic about the array of tools that lets biochemists study the
    genetic correlations of diseases that might lead to real cures.
        In your direct testimony you gave the example of a baby born and
    tested immediately for BRCA genes which show she is highly likely to
    get breast cancer in her lifetime and you posed the question of the
    appropriate place for scientists to begin to intervene. It was just
    announced that a University of Wisconsin-Carbone Cancer Center
    scientist will be leading a part of a unique national effort to match
    cancers to drugs based on their genes and not on where in the body the
    cancers begin. Dr. Kari Wisinski, a breast cancer oncologist, will lead
    one arm of the National Cancer Institute's NCI-MATCH trial.
        People who enroll in the trial will first have a biopsy of their
    cancer tissue. Four labs will analyze the cancer cells, looking for
    4,000 different variants across 143 genes to figure out which genetic
    mutation is likely driving their cancer. If the abnormality matches a
    drug or drug combination that targets that mutation, they will be
    assigned to that arm of the trial. The trial begins this month.
    Overall, researchers plan to screen 3,000 people in order to match
    1,000 into treatments that target their particular mutation.
        Do you think these trials can bring about real progress, and at
    what point, if ever, should a priority be put on them, in terms of
    Federal research investment?
        Answer. The MATCH trial raises a number of very important issues
    that have far-reaching implications for the advance precision medicine.
        It will certainly serve an important purpose of demonstrating that
    drugs can be designed to precisely target specific molecular pathways
    and clinical trials can and should be framed in ways that involve what
    the FDA currently calls ``enrichment'' by which it means stacking the
    deck to prescribe a new drug to patients selected to participate
    because they present the pathway that the drug was designed to target.
        As researchers continue to unravel the molecular pathways that
    propel diseases that approach should become the norm in the drug-
    approval process, and Federal funding should be channeled accordingly.
    Many seemingly common disorders--common as conventionally defined by
    their clinical symptoms--are in fact clusters of biologically distinct
    disorders. Their molecular chemistry often varies significantly across
    patients. When multiple drugs are then developed to target the
    different pathways, both patients and drug developers will benefit from
    trials structured in the same way as the MATCH trial. The patients will
    be much more likely to receive the treatments they need, and when new
    as yet unapproved drugs are included in the trials the drug developers
    will be more likely to get their drugs approved, and approved more
    quickly and therefore at much lower cost.
        Because they are for now a departure from conventional single-drug
    FDA trials and not currently addressed by any familiar FDA trial
    protocols it is a good idea that trials of this kind should begin under
    the supervision of researchers and doctors who have experience and
    expertise in treating the disease being targeted. Having funded and led
    much of the research in cancer molecular biology the NCI is an
    excellent agency to take charge of that.
        The scope of the molecular data collection and analysis involved in
    the NCI-MATCH program is also valuable on its own. Which brings me to a
    closely related and broader issue that should be addressed as well, and
    going forward it should receive at least as much Federal funding. As
    you mention in your question molecular research that spans thousands of
    variants across 143 genes will be conducted during the course of the
    MATCH trial. It is quite likely that those analyses will uncover cancer
    mutations and pathways that aren't currently known, and that aren't
    targeted by any of the currently approved drugs that will be involved
    in the MATCH trial.
        Ideally, discoveries of that kind would launch the development of
    new drugs to target those new biomarkers. Those drugs would of course
    have to undergo clinical trials as well. But they won't perform well in
    the trials unless tested in patients who present the new targets they
    are designed to modulate. Which, under current FDA policies, can't
    happen until the FDA has evaluated and approved the science--qualified
    the biomarker in FDA jargon--used to link each biomarker to development
    of a specific clinically defined disorder.
        While the FDA recognized the important role that biomarkers should
    play in the drug-approval process over a decade ago, the Agency has, so
    far, declined to promulgate substantive evidentiary standards for
    biomarker qualification. Led by the NIH, experts in the field have been
    urging the FDA to promulgate such standards for over a decade.
        There are now promising signs that the FDA intends to move forward
    rapidly on that front. Perhaps in response to reform proposals that
    were being considered by members of Congress involved in drafting the
    Cures Act senior FDA staffers, analyzed the state of biomarker science
    at the Agency, assessed the agency's own shortcomings, and published
    their findings on April 13, 2015 in Clinical Pharmacology and
    Therapeutics. The authors forthrightly acknowledge that while the
    Agency does have ``an important role to play in qualifying potential
    biomarkers for regulatory use, it does not have all the requisite
    expertise, resources, or--in the case of inadequate scientific
    research--the mission, to address these key barriers to biomarker
    development.''
        The authors also acknowledge that ``while the ultimate decisions
    regarding qualification of proposed biomarkers currently rest with the
    FDA, the process could be accelerated if diverse experts and
    stakeholders came together to identify and prioritize needs, gather
    relevant scientific information, and develop community consensus in an
    open and transparent process.'' An ``uber-consortium'' of this kind,
    they suggest, would ``conduct substantive reviews and make
    recommendations to FDA on the sufficiency of data packages developed by
    industry and public-private partnerships to support qualification of
    new biomarkers.''
        Ideally, the NCI and other experts involved in the MATCH trial--
    experts like Dr. Wisinski and her colleagues, for example--would be
    involved in framing those disease-specific standards. As noted on the
    website that describes it the MATCH trial ``employs the expertise of
    the NCI and of specialized investigators and scientists within NCI-
    Designated Cancer Centers and networks who are at the cutting edge of
    precision medicine in oncology, as well as clinical oncologist and
    community practices that are experienced in clinical trials.'' If the
    FDA commits to promulgating substantive standards for biomarker
    qualification and continues to rely on MATCH-like trials overseen by
    experts from various branches of the NIH further Federal funding of
    those trials should be a very high priority.
        The 21st Century Cures Act, as passed by the House of
    Representatives on July 10, 2015, does require the Secretary of Health
    and Human Services (HHS) to consult with external consortia in the
    promulgation of a FDA guidance on biomarker qualification that includes
    evidentiary standards. But no single guidance will suffice. Standards
    will vary based on a biomarker's context of use, the state of the
    underlying science, and the risks and benefits associated with a given
    disease state, and the availability of alternative treatments or
    diagnostics.
        Now that the FDA has acknowledged that it cannot go it alone, and
    that the external scientific community must play a key role in setting
    evidentiary standards for biomarker qualification, Congress should step
    in to mandate what the agency itself says is needed. In drafting
    companion legislation to the Cures Act, the U.S. Senate should include
    a provision that requires the FDA (with adequate and sustained funding
    and staffing) to publicly consult with external scientific experts to
    develop disease-specific evidentiary standards for biomarkers that can
    be used in the drug-approval process and establish transparent
    procedures for independent external experts to participate in the
    process of deciding when the standards have been met.
                                     ______

         Response to Written Question Submitted by Hon. Ron Johnson to
                             Dr. Keith R. Yamamoto
        Question. Dr. Yamamoto, in your testimony you noted the substantial
    need for expanded sustained support for basic research and that Federal
    funding is a vital part of the research that produces fundamental
    discoveries. One successful example of this symbiosis could be the
    University of Wisconsin's trial called NCI-MATCH, which stands for
    Molecular Analysis for Therapy Choice.
        It was co-developed by the National Cancer Institute (NCI), part of
    the National Institutes of Health, and the ECOG-ACRIN Cancer Research
    Group. The UW-Carbone Cancer Center is part of the National Clinical
    Trials Network, a partner in the trials. The trial is for adults with a
    wide variety of cancers, including some rare cancers, solid tumors and
    lymphomas. It will soon begin enrolling patients, and will test up to
    3,000 people whose cancer has stopped responding to treatment. It is
    part of the precision-medicine initiative announced by President Barack
    Obama during his State of the Union address in January.
        Given your own experiences, and the precision medicine genomic
    mapping movement, specifically for cancer, what are your thoughts about
    the need for a long-term commitment of Federal funding for precision
    medicine programs?
        Answer. Thank you, Senator Johnson, for this thoughtful question.
    It is exciting that your outstanding research institution, the
    University of Wisconsin, home to many superb investigators (including
    many of my close friends), is playing a key role in the President's
    Precision Medicine Initiative through its leadership of the NCI-MATCH
    trial. As you know, clinical trials are essential for collecting and
    organizing observational data, and for rigorous testing of therapeutic
    drug and device candidates.
        The findings that suggest and enable these trials, including UW's
    3000 patient NCI-MATCH trial, arise from fundamental discoveries about
    biological processes--the outcomes of basic research. And as you also
    know, neither basic research nor the full three-phase clinical trial
    process, both critical steps for precision medicine, can be carried out
    on predefined schedules. Thus, it is the ``long-term commitment of
    Federal funding for precision medicine programs'', supporting and
    extending President Obama's Initiative, that will truly motivate
    researchers and clinicians to team up and carry out this important
    work.
                                     ______

        Response to Written Question Submitted by Hon. Steve Daines to
                             Dr. Keith R. Yamamoto
        Question. In my home state of Montana, we have the Rocky Montana
    Laboratories (RML) operating under the National Institute for Allergies
    and Infectious Diseases in Hamilton. This is one of the few biosafety
    level (BSL) 4 labs in the United States. The Lab employees 450 locally,
    but it contributes globally with its research on contagious diseases
    such as Rocky Mountain spotted fever, Q fever, and Lyme disease.
        Based on your experiences at University of California, San
    Francisco (UCSF), how would adding a financial incentive change the
    dynamic of research being conducted at a public facility under the
    purview of the National Institute of Health, such as RML?
        Answer. Thank you, Senator Daines, for your insightful query. RML
    is world-renowned for the many important research projects carried out
    in its laboratories. My friend Dr. Stanley Falkow of Stanford
    University in the San Francisco Bay Area, who is described by Wikipedia
    as ``the father of molecular microbial pathogenesis, which is the study
    of how infectious microbes and host cells interact to cause disease'',
    was a Hamilton resident for many summers before his retirement, carried
    out research at RML that has had enormous impact on public health
    world-wide, and continues to consult with RML microbiologists.
        I can say with certainty, based on my 40 years as an NIH-funded
    researcher at UCSF, and as in my role as Vice Chancellor for Research
    there, that it is the potential for Federal funding, especially from
    NIH but also from other Federal agencies, that has incentivized and
    enabled remarkable research studies at UCSF, RML and 1700 other
    institutions in all 50 states. This is an investment of Federal dollars
    that has truly had, and continues to have, a spectacular impact. At
    this time, when the Federal budget is so limited that only about one in
    ten NIH grant applications to carry out microbiological research can be
    funded, there is absolutely no doubt that additional support would
    increase both the motivation and the productivity and impact of
    research being carried out at all of these institutions.

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