[House Hearing, 118 Congress]
[From the U.S. Government Publishing Office]


                   HEARING ON EXAMINING POLICIES THAT
                 INHIBIT INNOVATION AND PATIENT ACCESS

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

                                HEARING

                               BEFORE THE

                      COMMITTEE ON WAYS AND MEANS
                        HOUSE OF REPRESENTATIVES

                    ONE HUNDRED EIGHTEENTH CONGRESS

                             FIRST SESSION
                               __________

                              MAY 10, 2023
                               __________

                           Serial No. 118-16
                               __________

         Printed for the use of the Committee on Ways and Means
         
                  [GRAPHIC NOT AVAILABLE IN TIFF FORMAT]         
                  
                               __________

                    U.S. GOVERNMENT PUBLISHING OFFICE
                    
54-352                   WASHINGTON : 2024                    


                      COMMITTEE ON WAYS AND MEANS

                    JASON SMITH, Missouri, Chairman
VERN BUCHANAN, Florida               RICHARD E. NEAL, Massachusetts
ADRIAN SMITH, Nebraska               LLOYD DOGGETT, Texas
MIKE KELLY, Pennsylvania             MIKE THOMPSON, California
DAVID SCHWEIKERT, Arizona            JOHN B. LARSON, Connecticut
DARIN LaHOOD, Illinois               EARL BLUMENAUER, Oregon
BRAD WENSTRUP, Ohio                  BILL PASCRELL, Jr., New Jersey
JODEY ARRINGTON, Texas               DANNY DAVIS, Illinois
DREW FERGUSON, Georgia               LINDA SANCHEZ, California
RON ESTES, Kansas                    BRIAN HIGGINS, New York
LLOYD SMUCKER, Pennsylvania          TERRI SEWELL, Alabama
KEVIN HERN, Oklahoma                 SUZAN DelBENE, Washington
CAROL MILLER, West Virginia          JUDY CHU, California
GREG MURPHY, North Carolina          GWEN MOORE, Wisconsin
DAVID KUSTOFF, Tennessee             DAN KILDEE, Michigan
BRIAN FITZPATRICK, Pennsylvania      DON BEYER, Virginia
GREG STEUBE, Florida                 DWIGHT EVANS, Pennsylvania
CLAUDIA TENNEY, New York             BRAD SCHNEIDER, Illinois
MICHELLE FISCHBACH, Minnesota        JIMMY PANETTA, California
BLAKE MOORE, Utah
MICHELLE STEEL, California
BETH VAN DUYNE, Texas
RANDY FEENSTRA, Iowa
NICOLE MALLIOTAKIS, New York
MIKE CAREY, Ohio
                       Mark Roman, Staff Director
                 Brandon Casey, Minority Chief Counsel
                                 ------                                

                         SUBCOMMITTEE ON HEALTH

                    VERN BUCHANAN, Florida, Chairman
ADRIAN SMITH, Nebraska               LLOYD DOGGETT, Texas
MIKE KELLY, Pennsylvania             MIKE THOMPSON, California
BRAD WENSTRUP, Ohio                  EARL BLUMENAUER, Oregon
GREG MURPHY, North Carolina          BRIAN HIGGINS, New York
KEVIN HERN, Oklahoma                 TERRI SEWELL, Alabama
CAROL MILLER, West Virginia          JUDY CHU, California
BRIAN FITZPATRICK, Pennsylvania      DWIGHT EVANS, Pennsylvania
CLAUDIA TENNEY, New York             DANNY DAVIS, Illinois
BLAKE MOORE, Utah
MICHELLE STEEL, California

                         C  O  N  T  E  N  T  S

                              ----------                              

                           OPENING STATEMENTS

                                                                   Page
Hon. Vern Buchanan, Florida, Chairman............................     1
Hon. Lloyd Doggett, Texas, Ranking Member........................     7
Advisory of May 10, 2023 announcing the hearing..................     V

                               WITNESSES

Tony Gonzales, National Early-Stage Advisor, Alzheimer's 
  Association....................................................    11
Ted Okon, Executive Director, Community Oncology Alliance........    17
Dr. Darius Lakdawalla, Professor of Pharmaceutical Economics and 
  Public Policy, USC Leonard D. Schaeffer Center for Health 
  Policy & Economics.............................................    28
Dr. Joshua Makower, Director, Stanford Byers Center for 
  Biodesign, Stanford University.................................    37
Dr. Aaron S. Kesselheim MD, JD, MPH, Professor of Medicine, 
  Harvard Medical School.........................................    42

                    MEMBER QUESTIONS FOR THE RECORD

Member Questions for the Record and Responses from Ted Okon, 
  Executive Director, Community Oncology Alliance................    95

                   PUBLIC SUBMISSIONS FOR THE RECORD

Public Submissions...............................................    99

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     EXAMINING POLICIES THAT INHIBIT INNOVATION AND PATIENT ACCESS

                              ----------                              


                        WEDNESDAY, MAY 10, 2023

                  House of Representatives,
                            Subcommittee on Health,
                               Committee on Ways and Means,
                                                    Washington, DC.
    The subcommittee met, pursuant to call, at 2:11 p.m., in 
Room 1100, Longworth House Office Building, Hon. Vern Buchanan 
[chairman of the subcommittee] presiding.
    Chairman BUCHANAN. The committee will come to order.
    Thank you for being with us today for the hearing focused 
on innovation and some of the biggest roadblocks.
    We can all agree that America is a global leader of 
innovation, and the government should do everything it can to 
foster an environment that promotes greater innovation and 
patient access to innovative care.
    Unfortunately, we have all seen the news about recent 
examples of government getting in the way: CMS' restrictive 
coverage mandate for new, promising Alzheimer's treatment, 
repealing the Trump admin rule with no replacement still, CMMI 
considering changes to cover for part B drugs that receive FDA 
accelerated approval, USTR's TRIPS waiver of critical IP 
protection for COVID vaccine, and the so-called government 
negotiation of drug prices implemented under the Inflation 
Reduction Act.
    In fact, just last week data was released on a third 
promising Alzheimer's drug, showing it significantly slows the 
progression of the disease. But it will still be a subject of 
recurrent restrictive CMA mandates.
    The landscape has changed since June 2021. The Aduhelm was 
approved, but CMS refuses to consider it, the coverage, despite 
evidence showing they are very effective in treating 
Alzheimer's in its early stages.
    This is progressive, and 6.7 million Americans living with 
it don't have time to wait on CMS to come to its senses. This 
delay means many things to a lot of the different patients, and 
it has been a big challenge. In fact, in April, 26 bipartisan 
attorney general across--26 attorney generals across the 
country sent a letter to Secretary Becerra and the 
administration on CMS to consider a requirement for covering 
these drugs.
    And I am submitting this letter for the record today.
    [The information follows:]

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    Chairman BUCHANAN. As someone who has firsthand been 
devastated in terms of the impact, in terms of Alzheimer's, my 
own father, and because I am one of the oldest districts in the 
country, this issue is personal and important to me. In fact, 
in the effort to push CMS to do their job the right way, I 
introduced the bipartisan MERIT Act earlier this year to 
require CMS to consider each new drug on its own rather than as 
a class.
    FDA approval, whether traditional or accelerated, is a full 
approval and CMS should not be second-guessing the scientists 
at FDA who granted the approval in the first place.
    Additionally, as a former ranking member of the Trade 
Subcommittee, the TRIPS waiver for COVID vaccine is of 
particular concern to me, given it is directly undermines the 
mission of the USTR to vigorously protect Americans' interests 
abroad, including protecting intellectual property rights.
    I have led multiple letters signed by the House--my House 
colleagues, opposing the TRIPS waiver, because there no reason 
to continue pursuing such a waiver. It will be only our 
adversaries to access critical IP that they have no other 
possession.
    The pandemic is over. The public health emergency ends 
tomorrow. And we have an abundance of vaccine doses that are 
available for people in the furthest, farthest reaches of the 
Earth. Unfortunately, the physical infrastructure doesn't exist 
to get the dosage to those people. Instead of giving away our 
IP to other countries, we should be helping to teach them how 
best to update their outdated infrastructure.
    If we continue down this path of working against 
innovators, we will start falling behind countries like China 
that are willing to do whatever they can to pass us by.
    Finally, I want to mention CMMI because, despite having 
innovation, it is one of the greatest barriers to actual 
innovation and healthcare. Since 2010, CMMI has released many 
demonstration projects, some of which were mandatory. But it 
has not realized savings greater than the amount of the money 
Congress has spent on the agency.
    We all want Medicare and Medicaid to run efficiently, but 
it is time that Congress reasserts its control over these 
decisions that works to truly help promote American innovation. 
There is bipartisan interest in many of these topics we are 
going to talk about today, and we should find bipartisan 
solutions to them.
    I am in the business personally of trying to get to ``yes'' 
with my colleagues. So, I would like to challenge my friends on 
the other side of the aisle to work with us on a way to unleash 
American innovation.
    We all want America to lead the world in medical 
innovation. And we want America to have access to the newest, 
best groundbreaking treatments as soon as possible. I hope we 
can leave this hearing today with a renewed sense of 
bipartisanship and willingness to work together on policies 
that protect and enhance innovation.
    I am pleased to recognize the gentleman from Texas, Mr. 
Doggett, for his opening statement.
    Mr. DOGGETT. Well, thank you very much, Mr. Chairman.
    And I certainly share those objectives with you, and I want 
to sincerely thank you personally for reaching out to me last 
week regarding the CMS demonstration project. I think that you 
are known for seeking bipartisan action, and I hope that we can 
do that as much as possible in this committee.
    Unfortunately, on this first hearing regarding payment for 
drugs subject to accelerated approval and related issues, I do 
have some significant policy differences with you regarding how 
to assure access to innovative new drugs without paying 
monopoly prices.
    Twenty years ago, in this room the Medicare prescription 
drug program was narrowly forced through the Ways and Means 
Committee, and then it took an almost all-night session and a 
lot of arm twisting to get enough Republicans to vote for it to 
pass it in the House and make it law.
    With one notable line in that very lengthy bill, Big Pharma 
ensured it would retain monopoly power and the ability to 
charge the very highest prices in the world through a complete 
prohibition against any negotiation over drug prices by 
Medicare.
    Finally, last year Democrats provided a very narrow carve-
out to eventually allow negotiation on a very small number of 
drugs that offers no hope of lower prices to most Americans. So 
extremely narrow and restrictive was that carve-out that the 
financial services firm Raymond James said, quote, Pharma's 
CEOs are likely popping champagne and smoking cigars, end 
quote.
    Yet unwilling to yield even this smallest sliver of 
monopoly power, Big Pharma promotes scare tactics that insist 
we cannot have both reasonable prices and essential innovation.
    All of us want to encourage cures and treatments for 
dreaded diseases long before we or a loved one face a troubling 
diagnosis. Despite its overly generous tax incentive, its 
taxpayer-funded research, its monopoly profits, Big Pharma, I 
believe, has actually been doing far, far too little to secure 
the type of new medications which we all would like to see.
    Worried about a competitor with a better idea, monopolies 
and oligopolies are not known in any industry for being 
particularly innovative. Over a decade, 78 percent of new drug 
patents were not for new cures that we need but were small 
modifications to existing drugs designed simply to extend 
monopoly power and monopoly prices.
    Among the ten 6 top-selling drugs in this country, 66 
percent of the patent applications were filed after FDA 
approval and an average of 74 patents were granted on each 
drug. And while there are pathways intended to get innovative 
drugs and devices to market quickly, the FDA's accelerated 
approval program and the Medical Device Breakthrough Program, I 
believe, are deeply flawed. In fact, the data is out there. In 
about 40 percent of all drugs that are granted accelerated 
approval fail to complete their confirmatory clinical trials 
after coming to market as is required by law. Those trials are 
critical to ensuring drugs have a clinical benefit and meet all 
safety requirements.
    Similarly, in its first 3 years, the FDA granted a 
remarkable 222 devices as breakthrough designations, despite 
poorly designed studies that did not demonstrate real benefit 
on many of these devices and some safety studies that showed 
substantial risk to patients.
    I have long been concerned with medical device safety, and 
it is apparent that the FDA has increasingly become a captive 
of those that it is charged with regulating. It has not been 
forceful enough or creative enough, early enough to protect 
patients' safety.
    At a bare minimum, physicians ought to be required to 
report device safety issues and the FDA ought to provide unique 
device identification numbers, as I have urged it to do in the 
past, so we can remove faulty devices from the market very 
quickly.
    Despite these many significant concerns, our Republican 
colleagues would have taxpayers pay monopoly prices for 
questionable drugs and devices. Such thinking has fueled our 
flawed patent system and reimbursement system which actually 
disincentivizes innovation. With a government-granted monopoly 
and guaranteed Medicare coverage, it is much easier to tweak 
and repackage existing drugs rather than to develop the new 
cures that we need.
    While Big Pharma may claim the billions that they earn on 
these drugs are devoted to research and development and new 
cures, the reality is that manufacturers are spending more on 
marketing and propaganda than R&D, more on stock buybacks and 
dividends than R&D.
    The real angel investors in research and development for 
new cures in in America are none other than American taxpayers. 
Over the last decade every single newly approved drug relied on 
taxpayer-funded research, and taxpayers funded the majority of 
total research and development spending.
    U.S. taxpayers remain the largest source of R&D funding in 
the entire world. Yet American patients continue to face the 
very highest prices, forcing them to ration or skip necessary 
medications all together.
    Finally, Mr. Chairman, we have a responsibility to ensure 
that patients come first and that it is their health and their 
livelihoods, not drug prices, which must be non-negotiable. 
Unaffordability and inaccessibility are not the unavoidable 
side effects of innovation. They are the result of unrestrained 
monopoly power.
    I thank each of our witnesses with differing views for 
joining us today to examine that monopoly power. And I hope 
that moving forward we will not once again yield to the power 
of Big Pharma, instead, move to advance reasonable solutions 
that promote competition and achieve lower prices.
    Thank you so much.
    Chairman BUCHANAN. Thank you, Mr. Doggett.
    I am pleased to recognize the chairman of Ways and Means 
Committee, Chairman Smith, for his opening statement.
    Chairman SMITH. Chairman Buchanan, Ranking Member Doggett, 
it is pleasure to be with you once again.
    And I want to thank all the witnesses for being here.
    I want to thank you for the opportunity to share a few 
thoughts on how current White House policies are threatening 
medical innovation and patient access to care.
    Across America, millions of patients are anxiously hoping 
for new breakthrough cures and devices that will improve their 
quality of life or even give them more years with their loved 
once.
    The scientists that research these cures, they rely on 
Congress to craft policies that support innovation. Patients 
deserve peace of mind that these therapies will be available to 
them when approved. Poor policymaking through both Congress and 
executive action, however, could have a chilling effect on the 
development of and access to the next drug, next device, or 
treatment. Unfortunately, that is what we are seeing today with 
decisions made by agencies such as CMS.
    Broadly restricting coverage for Alzheimer's treatments, 
the first approved in nearly 20 years, is a devastating blow to 
the patients and caregivers relying on new innovations. 
Importantly, these restrictions are disproportionately felt by 
those living in rural America who don't have access to 
qualifying clinical trials.
    I applaud subcommittee Chairman Buchanan's work on this 
issue, and I hope that in the light of continued positive data, 
such as the study released last week, CMS will reconsider this 
decision.
    I also have concerns that the CMS Innovation Center's 
proposed policy to devalue accelerated approved drugs will slow 
access to breakthrough innovation such as many cancer 
therapies.
    Congress shares much of the blame, too. The Inflation 
Reduction Act established a new drug price control scheme. We 
all want to make medications more affordable, but making 
Washington the price setter will only lead to fewer cures and 
less access to them. Experts warn that price controls will lead 
to 135 fewer cures and discourage the development of generic 
and biosimilar competition, a far more patient friendly 
approach for lowering drug prices.
    Patients relying on breakthrough medical devices are also 
facing uncertainty after a Trump-era innovative coverage rule 
was repealed by the administration. I know members on both 
sides of the aisle will be closely watching for a meaningful 
replacement.
    Lastly, the Biden administration's decision to waive IP 
protections for vaccines and potentially expand the 
therapeutics and diagnostics is setting a very dangerous 
precedent and opening the door for countries like China to 
steal our innovation.
    Right now, there are 322 different medicines being 
developed to treat cancer, 192 for rare genetic diseases, 83 
for Alzheimer's disease, and hundreds of others. Patients 
cannot afford Washington's anti-innovation policies. I look 
forward to working with all my Ways and Means colleagues, both 
Republican and Democrat, to promote access to these future 
cures.
    And I yield back, Mr. Chairman.
    Chairman BUCHANAN. Thank you.
    I now want to introduce the witnesses.
    Mr. Gonzales, who is a National Early-Stage Advisor for the 
Alzheimer's Association, I personally want to thank you for 
your courage and taking the time to be with us today.
    Okon is the Executive Director of Community Oncology 
Alliance.
    Dr. La--whatever--I am sorry--is the Professor of the 
Pharmaceutical Economic and Public Policy at the University of 
South--Southern California.
    Mr. Makower, Dr. Makower, is the Director of Stanford 
University Byers Center for Biodesign.
    Mr. Kesselheim is a Professor of Medicine at Harvard 
Medical School.
    The committee has received your written statements and will 
be a part of the formal record.
    Mr. Gonzales, you are recognized. For 5 minutes.

   STATEMENT OF TONY GONZALES, NATIONAL EARLY-STAGE ADVISOR, 
ALZHEIMERS ASSOCIATION, ACTING PROGRAM EXECUTIVE DIRECTOR, U.S. 
                 DEPARTMENT OF VETERANS AFFAIRS

    Mr. GONZALES. Chairman Buchanan, Ranking Member Doggett, 
and members of the subcommittee, thank you for the opportunity 
to testify before you today and share my story about what 
access to innovation means to me.
    It means more time with my wife, my kids, and my grandson. 
My name is Tony Gonzales. I am 48 years old, from Santa Maria, 
California. And last year I was diagnosed with mild cognitive 
impairment. I know this disease can destroy careers, 
relationships, and every day it robs me more and more of my 
memories.
    A few years ago, my family and I noticed the first few 
signs that something was wrong. Then one day I got lost coming 
home from work. I was in my hometown. I was in my car, on a 
road that I had driven thousands of times. And I had no idea 
where I was. I had no idea where I had been or where I was 
going. All I knew was I needed to call my wife for help.
    I spent the next couple of years, couple of years searching 
for an answer. Two years after my initial symptoms, I finally 
received a diagnosis: Mild cognitive impairment. When I was 
diagnosed, it would have given me so much hope to have the 
opportunity to access treatments that can give me more time. I 
would like to have the chance to make the decision if the 
treatments are right for me and my family instead of Medicare 
making that decision for me.
    I became a member of the Alzheimer's Association Early-
Stage Advisory Group to help raise awareness of this disease, 
especially for those people who are under 65 and not typically 
the face of the Alzheimer's disease.
    When I am in a meeting and someone tells me they have never 
met someone with dementia, I say to them, well, now you have. 
You see, I want people to see the impact of this disease that 
it has on real people and real families in America.
    The incredible bipartisan support for increases in 
Alzheimer's research funding at the NIH over the years are 
starting to pay off. In the last year and a half, we have seen 
two treatments get FDA approval and another one that we will 
submit to the FDA soon. These treatments have the able to 
change the course of this disease. The fact that they exist and 
are approved by the FDA and yet people like me cannot access 
them because of Medicare is frustrating and humiliating.
    As many of you know, CMS is restricting access to these 
breakthrough therapies by creating additional hoops to jump 
through. This creates even more of a barrier to care for people 
living in rural and underserved communities like those in my 
hometown.
    Medicare is treating people with MCI and Alzheimer's 
differently when they apply this restriction to an entire class 
of drugs, current and future. This action has a ripple effect 
as well. Private insurance and health systems follow Medicare's 
lead. If Medicare won't cover, chances are that other 
insurances won't either and health systems won't make it 
available, thus, taking more time away from people including 
for me and others who aren't on Medicare.
    This is an urgent issue. The Alzheimer's Association 
estimates more than 2,000 individuals aged 65 or older 
transition per day outside eligibility for these treatments. As 
of today, that number is approximately 248,000 people who have 
progressed past the point of eligibility since approval in 
January. Keep in mind this number doesn't even include people 
like me who are under 65.
    Earlier this year nearly 100 bipartisan members of 
Congress, including many on this subcommittee, sent letters to 
the administration, raising concerns with CMS' coverage 
policies around these FDA-approved Alzheimer's treatment. Thank 
you.
    As recently as last week, another company announced 
positive top-line results for their new Alzheimer's treatment. 
This innovation will mean nothing without access. CMS must 
immediately reconsider. They must look at the clear evidence 
now before them. And when they do, I trust they will 
acknowledge that these treatments are absolutely reasonable and 
necessary for people like me with a terrible progressive 
disease and no other treatment options.
    Refusing to take another look at NCD further expands the 
divide between CMS and the Alzheimer's community. We are losing 
time, and this is unacceptable. More time is more than just a 
number of months or years that I may gain from such treatments.
    I wake up every day, hoping to know who I am, who my wife 
is, who my kids are. When I wake up and I realize that it is a 
win. So, I live for today. I want more time to be with my 
grandson, Sandy, take him to the park, and to be able to do 
that on my own. I don't drive anymore, but I can still hang out 
with him and spend time with him.
    You see, when you get a death diagnosis, it becomes very 
clear to you having more time means everything to me. It would 
allow me to walk my daughter down the aisle, meet another 
grandchild. It gives me another chance at living my best every 
single day, time to live again, time to hope again.
    It truly is an honor to speak with you today and share my 
story. I hope it inspires all of you to continue your work, 
urging CMS to treat those with Alzheimer's fairly.
    And, lastly, I hope you remember to live for today. Love 
those around you. I wish you all good brain health, and I look 
forward to answering any questions you may have.
    Thank you.
    [The statement of Mr. Gonzales follows:]

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    Chairman BUCHANAN. Thank you. That was very inspiring.
    Mr. Okon, you are recognized.

 STATEMENT OF TED OKON, EXECUTIVE DIRECTOR, COMMUNITY ONCOLOGY 
                            ALLIANCE

    Mr. OKON. Chairman Buchanan, Ranking Member Doggett, and 
members of the Health Subcommittee, I am the Executive Director 
of the Community Oncology Alliance, a nonprofit organization 
dedicated to cancer patients and their independent oncology 
providers.
    My wife, Susan, practiced as an oncology nurse for 10 
years. And we have had family and friends with cancer living 
with it and dying from the disease. I want to make it very 
clear that my overriding goal is to ensure that every American 
with cancer, regardless of the demographic, financial, or other 
status, has access to the highest quality, most affordable 
cancer care close to home.
    I also add that both my wife and I are Medicare 
beneficiaries. I am alarmed at the rising cost of cancer drugs. 
Clearly, drug companies have primary responsibility because 
they determine the launch and subsequent list prices of 
prescription drugs.
    However, our country has a bizarre, convoluted health 
system where the price of drugs and the cost of patients are 
two very different and often disjointed things with drug costs 
to Americans fueled by intermediaries like PBMs and so-called 
nonprofit 340B hospitals.
    As Dr. Mark Fendrick of the University of Michigan and 
creator of Value-Based Insurance Design has often lectured me, 
when Americans talk about the high price of drugs, they are 
really referring to the high cost to them of what they pay out 
of pocket.
    Our Nation has made great strides in cancer treatment, 
especially with the increasing availability of immunotherapies. 
As I was preparing my testimony, an oncologist called me about 
a 35-year-old woman who had recurring gastrointestinal, 
esophageal, and brain cancer since she was 18 years old. Six 
months ago, she developed a cancer in the small bowel that 
spread to her other organs. She was put on a treatment regimen 
including immunotherapy. After 4 months, she is in complete 
remission.
    My wife calls these immunotherapies nothing short of 
revolutionary, as she has seen firsthand in administering them.
    We must not only ensure that all Americans with cancer have 
access to these innovative, cutting-edge therapies but also 
that we foster their development. That is why I am concerned 
that our already overregulated Medicare system is getting even 
more regulated by the government.
    As I explain in more depth in my written testimony, there 
is a fundamental lack of understanding of the life cycle of 
cancer drugs, how uses in different types of cancer and sub-
cancers are researched and developed over time after a drug is 
first approved by the FDA, sometimes for a single indication.
    Certainly, drug companies won't stop researching new 
innovative drugs due to the IRA because that is their 
lifeblood. However, the threat of government negotiations will 
be a huge obstacle to research and developing new using in 
different types of cancer over time.
    Ask yourself if you would invest research funds in new uses 
of cancer drugs with the looming threat of price cutting by 
government negotiation. How CMS figures out how to negotiate 
the single price for a drug with multiple indications, values, 
and therapeutic competition is nearly impossible.
    This also is truly alarming, especially since I believe 
that the threat of drug price negotiations will simply fuel 
drug launch prices higher. The unintended consequence of the 
law meant to lower drug prices may actually increase them.
    Additionally, both the IRA and the President's recent 
executive order using the CMS Innovation Center to lower drug 
prices in certain situations of accelerated drug approvals uses 
physicians as variable hostages between the government and drug 
companies. Physicians will feel the brunt of lower drug 
reimbursement and an operational nightmare of dual 
reimbursement systems in the case of the IRA. Poor public 
policy, dare I utter the word sequestration, and regulation 
have already caused massive consolidation of independent 
physicians and expensive mega-health systems, costing patients, 
Medicare, employees, and taxpayers more for drugs and medical 
care.
    And let me explain that the CMS Innovation Center, rather 
than being a testing center to innovate payment reform, has 
become a vehicle for now three administrations to attempt to 
lower drug prices by end-running the Congress in existing law. 
This was not the intent of Congress in creating the CMS 
Innovation Center.
    I fear we are heading down a dark path in this country 
where innovation is stifled, consolidation fuels increasing 
healthcare costs, and America have less access to the medical 
providers of their choice.
    Like with cancer treatment, we just can't treat the 
symptoms of our healthcare system by Band-Aiding it with 
regulation upon regulation. We need to treat the underlying 
disease, which includes runaway hospital consolidation, 
profiteering middlemen, and obstacles to fostering true drugs 
competition. Every American with cancer and other serious 
diseases is counting on us.
    Thank you for the opportunity to testify, and I will answer 
any questions.
    [The statement of Mr. Okon follows:]

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    Chairman BUCHANAN. Thank you.
    Dr. Lakdawalla, you are recognized.
    I tried. I tried get a little bit better.

  STATEMENT OF DARIUS LAKDAWALLA, PROFESSOR OF PHARMACEUTICAL 
 ECONOMICS AND PUBLIC POLICY, USC LEONARD D. SCHAEFFER CENTER 
                 FOR HEALTH POLICY & ECONOMICS

    Mr. LAKDAWALLA. I appreciate it. Thank you.
    Chairman Buchanan, Ranking Member Doggett, and honorable 
members of the subcommittee, thank you for the opportunity to 
testify today about the impact of Federal policy on medical 
innovation.
    My name is Darius Lakdawalla. And I am an economist, a 
professor at the USC Mann School of Pharmacy and Pharmaceutical 
Sciences and Price School of Public Policy, and the Director of 
Research at the Schaeffer Center for Health Policy and 
Economics.
    As background, I have been studying medical innovation for 
nearly three decades. And I co-wrote the chapter on biomedical 
research in the Handbook of Health Economics. The opinions I 
offer today are my own and don't represent those of the 
University of Southern California or the USC Schaeffer Center.
    Over the last 50 years, medical breakthroughs have lessened 
the scourge of cardiovascular disease, cancer, and many other 
conditions. Researchers have estimated that longer lives 
provided annual value equal to half of GDP. The question is: 
How can we sustain the pace of technological innovation, while 
ensuring patients have access to new technologies?
    Medical innovation is costly to pursue. 90 percent of 
medicines that undergo human trials will fail to launch. Firms 
will pursue risky innovations only if they expect commensurate 
financial rewards which are ultimately paid by American 
consumers.
    This tradeoff between innovation incentives and patient 
access is often framed as an either/or proposition. Either we 
reward innovators with high prices, or we restrict prices to 
make new therapies more accessible.
    For example, in the early days of part D, our research 
estimated Medicare price negotiation could lower drug prices by 
20 to 25 percent. But the resulting innovation slowdown would 
cost future Americans about half a year of life expectancy. 
Though it sounds modest, this is equivalent to every surgeon in 
American forgetting how to perform heart bypass surgery.
    Fortunately, there are solutions. Our study also 
demonstrated that expanding prescription drug coverage is worth 
the cost because it simultaneously rewards innovators and makes 
innovation more accessible.
    Today's drug prices determine tomorrow's drug launches. 
Research suggests that every $21/2 billion of revenue removed 
from a drug class costs society one new drug approval. For 
every legislated reduction in Medicare drug prices, as the 
Inflation Reduction Act promises, we will lose future 
treatments.
    To lessen this risk, we should pursue a more surgical 
approach to restraining prices. Rewards should be lower for 
technologies producing less value to patients but higher for 
those producing more.
    Measuring the value of new medicines is hard, but we have 
the tools to do it properly. Old-fashioned methods like 
quality-adjusted life years, or QALYs, fail to measure value to 
patients properly. A new method called Generalized Risk-
Adjusted Cost-Effectiveness, or GRACE, corrects these errors 
and does not discriminate against patients with disability or 
terminal illness as older methods do.
    The IRA provides an opportunity to better align price and 
value for individual drugs but only if CMS employs evidence-
based and scientifically validated measures for measuring value 
to patients. To align prices and value, USC Schaeffer Center 
researchers have proposed a different model, starting with 
lower drug prices at launch and encouraging uptake for 
clinically eligible patients and accelerating real-world 
evidence collection.
    Subsequently, drug prices would change according to 
evidence-based real-world benefit. Finally, robust generic or 
biosimilar competition would drive down prices when the drugs' 
exclusivity period ends.
    Innovative drug pricing policies like these require careful 
implementation. CMMI's efforts to develop new payment 
mechanisms for drugs launched under accelerated approval are a 
potential path forward, but success depends on payments that 
accurately reflect value to patients.
    Policy precedence exists for the controlled launch of new 
technologies such as CMS' Coverage with Evidence Development 
Paradigm. However, under CED, as currently implemented, many 
technologies still languish, even after years of restricted 
access. While CMS has a legitimate interest in evaluating real-
world evidence on medical necessity, restricting access 
undermines CED's original evidence-gathering goal.
    Other reforms are needed. IRA inflation rebates and several 
other part D program features encourage higher, not lower, 
launch prices. And by reducing prices for established branded 
drugs, IRA discourages generic entrants by lower their rewards 
from challenging patents.
    By ensuring generous prescription drug insurance, drug 
prices that reflect the value they deliver to patients and 
effective competition throughout the pharmaceutical supply 
chain, we can achieve improved health for Americans today and 
also for Americans tomorrow.
    Thank you, and I look forward to your questions.
    [The statement of Mr. Lakdawalla follows:]

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    Chairman BUCHANAN. Thank you.
    Dr. Makower, you are now recognized.

  STATEMENT OF JOSHUA MAKOWER, M.D., DIRECTOR, STANFORD BYERS 
           CENTER FOR BIODESIGN, STANFORD UNIVERSITY

    Dr. MAKOWER. Thank you, Chairman Buchanan and Ranking 
Member Doggett, for the opportunity to testify today.
    My name is Josh Makower, and I have dedicated the past 34 
years of my life to developing therapies and technologies to 
improve patient care.
    Over this time I have founded ten independent medical 
device companies which collectively have improved the lives of 
millions and created thousands of jobs in the United States.
    In addition to being a physician, inventor, and 
entrepreneur at Stanford University where I am a professor of 
Medicine and Bioengineering, I am also the cofounder and 
director of the Stanford Byers Center for Biodesign.
    For 22 years, we have been teaching students, fellows, and 
faculty the process of medical innovation. And innovations our 
students have created have touched the lives of 8 million 
patients to date.
    My opinions and my testimony today are my own and do not 
represent the opinions of the organizations I am affiliated 
with.
    I am here today because of a growing concern that threatens 
our ability to continue to deliver the improvements to health 
outcomes innovators like myself have worked so hard to achieve 
over the years. Increasingly, medical technology innovators are 
confronting a valley of death where their technologies have 
received FDA authorization, but no CMS or insurance coverage is 
in place to allow patients to gain access to them. Simply put, 
America's seniors and patients across the country are all too 
often not getting timely access to critical medical 
technologies for many years, if ever.
    Being science and data-driven, my colleagues and I at 
Stanford Biodesign Policy program have taken some time to just 
study how difficult the environment has become. In work we 
published last January, we surveyed 336 healthcare innovators 
and investors to ask how long based on their own experience it 
took for breakthrough technologies to achieve Medicare 
coverage, coding, and payment.
    Our research found that Medicare patients often wait many 
years to get access to FDA-authorized technologies. Surveys 
respondents reported that nationwide Medicare coverage for 
breakthrough medical technologies takes an average of 4.7 years 
following FDA authorization.
    While the survey of opinions of the innovators was a place 
to start, our group followed up this work and used publicly 
available data to determine what the actual reality is. And it 
is much worse than we thought.
    In the second study, we discovered of novel medical 
technologies authorized by the FDA between 2016 and 2019, only 
44 percent achieved nominal Medicare coverage by the end of 
2022 and the median time to achieve this nominal coverage was 
actually 5.7 years, a whole year longer than our initial survey 
indicated. We are working towards publishing the results of the 
second study in the near future.
    In our original study, over half the innovators said that 
they were unlikely to take on a breakthrough medical technology 
project without some form of accelerated reimbursement pathway. 
The reimbursement pathways are so challenging right now that 69 
percent of respondents who made investments in companies 
developing breakthrough medical technologies said they would be 
less likely to do so again unless there was an expedited 
reimbursement pathway.
    While we have not studied the impact of these delays and 
decisions on actual patient morbidity and mortality, given that 
these diseases address--I am sorry--these technologies address 
diseases such as diabetes, stroke, cancer, heart disease, 
spine, and orthopedic disorders, we are confident that, when we 
do this further analysis, we are likely to find the impact on 
patients will be significant.
    We are eagerly awaiting the release of a new proposed rule 
from CMS and hopeful that it is a meaningful and impactful 
proposal that will accelerate patient access to critical 
medical technologies.
    The tragic truth is, while this valley of death remains, 
patients throughout the United States in each of your 
congressional districts are being impacted, unable to access 
breakthrough medical technologies that have been proven safe 
and effective by the FDA.
    In addition to CMS' rulemaking, Congress has introduced 
legislation to address these serious concerns for the past 
three sessions with strong bipartisan support including in the 
last session Cures 2.0. At root, the concept that would be 
ideal is to obtain coverage very shortly after FDA 
authorization, allowing for any continued evidence collection 
to be obtained as the process of adoption begins.
    As a physician and innovator, I encourage all of you to 
continue the strong bipartisan work towards achieving this--
towards addressing this growing concern. The work that we have 
invested in inventing and developing cures, therapies, and 
diagnostics are only beneficial when patients and providers can 
access them.
    Thank you, Chairman Buchanan and Ranking Member Doggett, 
for the opportunity to testify today.
    I also want to thank the entire committee for their support 
of the science that has led to these important breakthroughs. 
And I look forward to working with you and all the members of 
this body to achieve our common goal of improving patient care.
    And I look forward to answering your questions.
    Thank you very much.
    [The statement of Dr. Makower follows:]
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    Chairman BUCHANAN. Thank you.
    Dr. Kesselheim, you are recognized.

  STATEMENT OF AARON S. KESSELHEIM MD, JD, MPH, PROFESSOR OF 
                MEDICINE, HARVARD MEDICAL SCHOOL

    Dr. KESSELHEIM. Chairman Buchanan, Ranking Member Doggett, 
members of the subcommittee, my name is Aaron Kesselheim. I am 
a primary care doctor and Professor of Medicine at Harvard 
Medical School where I run the program on Regulations, 
Therapeutics, and Law, or PORTAL, at Brigham's and Women's 
Hospital.
    I want to focus my comments today on meaningful drug 
innovation because not all innovation is the same. Meaningful 
drug innovation provides useful benefits to patients with 
diseases that don't have effective therapies or measurably 
improves upon existing treatments.
    One way the government generates meaningful innovation is 
through funding by the NIH. While individual manufacturers 
certainly contribute to drug development, NIH funding provides 
extensive contributions, usually at the earliest stages when 
the risk is greatest and private companies are not willing to 
get involved.
    One highly visible recent example that occurred--occurred 
with the mNRA COVID vaccines. Here, the U.S. Government 
invested about 432 billion to develop, produce, and purchase 
vaccines and provided a guaranteed market for the final stages 
of development, almost completely derisking the investment for 
manufacturers.
    In my written comments, I review the substantial and 
essential role played by public funding in transformative drugs 
like sofosbuvir for hepatitis C, TDF-FTC for HIV prep, 
buprenorphine for opioid use disorder, as well as every cell 
and gene therapy available in the U.S.
    But meaningful drug innovation is unfortunately quite rare. 
In the last decade, fewer than one third of new drugs 
demonstrated meaningful added therapeutic benefits. Yet these 
drugs, like all brand name drugs in the U.S., are invariably 
expensive, costing far more than patients spend for the same 
drugs in other industrialized countries.
    Drug launch prices have increased exponentially, such that 
about half of new drugs are now initially priced above $150,000 
a year. Low additional-value drugs are also widely advertised, 
as anybody who has watched a football game can tell you, making 
up about three quarters of top advertised drugs.
    As a result, a large number of U.S. patients use low-added 
value drugs at substantial cost to them and the U.S. healthcare 
system. We found that over half of the 50 top-selling drug in 
Medicare had low-added clinical benefits, accounting for $20 
billion in annual net spending.
    Since the government through Medicare, Medicaid, and other 
programs is also the single biggest purchaser of drugs in the 
U.S., it must distinguish between meaningful drug innovation 
and innovation that doesn't add to patients' outcomes. In the 
case of aducanumab for Alzheimer's disease, the FDA approved 
the drug based on no clear evidence that it worked. And despite 
it causing potentially dangerous brain swelling and bleeding in 
up to 40 percent of the patients who took it, the manufacturer 
still price it at initially $56,000 a year which could have led 
the government to pay for this one drug more than the entire 
budgets of NASA.
    So, the CMS issued a national coverage determination to 
restrict payment to the context of a clinical trial, which is 
exactly what was needed to determine whether or not the drug 
actually worked.
    As a second example, CMMI recently announced a project to 
pay less for accelerated approval drugs which are FDA approved 
based on unvalidated surrogate measures only. Yet they are just 
as exceedingly expensive as traditional approvals. Why should 
taxpayers pay whatever excessively high prices the manufacturer 
wants to set for a drug without evidence that it affects 
clinical outcomes that patients care about, how patients feel, 
function, or survive?
    CMMI's plan also provides incentives manufacturers need to 
complete confirmatory studies in a timely fashion and get 
evidence for these drugs' actual clinical benefits. The price 
can then be adjusted if the drug is actually meaningfully 
innovative. In the past 2 year alone, about two dozen 
accelerated drug approval indications have been withdrawn after 
negative confirmatory study.
    As a final example, CMS under the Trump administration 
issued a problematic rule to require CMS to pay for every 
medical device labeled as a breakthrough by the FDA. But the 
FDA's criteria for this designation were so lax that, as 
Representative Doggett pointed out, over 200 device qualified 
in the first 3 years of the program. And some of those didn't 
actually show any useful benefits for patients and had 
important safety risks. Smartly, CMS has since walked back from 
this rule to avoid the government wasting taxpayer dollars.
    Congress can help further support meaningful drug 
innovation. I have three ideas for you today. First, the NIH's 
budget should be doubled. But shockingly, a bill passed by the 
House instead cut NIH's funding by $10 billion. This would 
devastate future transformative drug development and doom the 
prospects of the patients getting useful treatments in many 
areas of unmet medical need.
    Second, Congress should give the government more authority 
to reduce unnecessary spending on excessively priced drugs that 
do not provide meaningful clinical benefits to patients. For 
example, the Inflation Reduction Act vested in CMS the 
authority to negotiate prices for certain drugs based on their 
clinical value and other important factors. But the bill has 
numerous exclusions including having to wait at least 9 to 13 
years before negotiated prices take effect. Congress should 
build on the IRA to negotiate fair prices for all new drugs 
shortly after approval, as is done in all other industrialized 
countries.
    Finally, the U.S. should look for new ways to ensure 
patients and taxpayers only pay for meaningful innovation by 
establishing a new expert organization to provide evidence-
based reports on new drugs' added clinical value, pricing, and 
any disparities in access. This body can help patients better 
distinguish meaningful and less useful innovation and make 
important clinical decisions about them.
    All of these steps will better help ensure that meaningful 
innovation is incentivized and that patients aren't going 
bankrupt or putting their health at risk, spending money on 
low-value drugs or medical devices.
    Thank you very much.
    [The statement of Dr. Kesselheim follows:]

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    Chairman BUCHANAN. Thank you for--all of you for your 
testimony. We will now proceed to the questions-and-answer 
session, and I will begin.
    Mr. Gonzales, what an incredible story. I just appreciate 
your courage and you being here today to speak on behalf of 6.7 
million people.
    Mr. GONZALES. Yes, sir.
    Chairman BUCHANAN. You know, I have been impacted, you 
know, family member myself. So, I took care of my dad for 
almost 10 years. So, I know what that process of not just you 
are going through but your family and community and friends and 
everybody else.
    I guess: What more can we do to help you? What would be the 
top priorities? I want to give you a little bit more time to 
talk about where, you know, kind of where we go from here. I 
know in terms of the drugs there is a third one out that has 
possibilities, and it seems like it is getting a little bit 
better.
    But as someone said, you know, just taking the drugs, even 
if you get another 6 months of your life, if you start now, is 
a gigantic difference and there is a lot to be said for that.
    But I just want to turn it over to you and give you a 
little time to talk us through that.
    Mr. GONZALES. Sure. Thank you very much.
    Yeah, 8 months. I wake up with one day. I wake up with one 
day. And so, you are looking at me and saying what does 8 
months mean. Well, if you ever spent some time with me, you 
would see that in that one day I pack a lot. I pack time for 
family, friends, my community, my government, my religion in 
one day.
    You give me 8 months and see what I will do. See what many 
of these people will do that are not getting access to these 
drugs, and they are slipping away every day.
    So, for me, it means more time to be me again. I am already 
losing the memories. I am already losing who I was in my 
community. That is okay. Things have changed. But help me have 
a new beginning. This disease has changed. We are now in the 
era of treatment, and I need your help to take us the rest of 
the way.
    Thank you.
    Chairman BUCHANAN. Thank you very much.
    Mr. Okon, you talked about a lot of different things. I 
wanted to get your ability just to expand on some of the 
thoughts that you had in terms of the patents and innovation 
and stuff.
    Mr. OKON. Well, first of all, Mr. Chairman, I mean, you 
talk about the last decade, 10 years in cancer, it is 
remarkable. I have heard story after story. As I said, my wife, 
who was an oncology nurse for 10 years until 2019, when I asked 
her what was the breakthrough and she talked about IO drugs, 
she said it is just absolutely remarkable.
    And we live in an era now where the understanding of the 
genetic background's access to biomarker testings are really 
allowing to us do more precision medicine.
    So, my biggest fear is that when we talk about negotiating 
drug prices, in my world of cancer you are talking about a life 
cycle of drugs, that a drug being launched and introduced for 
one, maybe even two indications, and subsequent. In my written 
testimony, I refer to a drug, Imbruvica, that was, over 9 
years, had 11 different indications.
    So, my biggest concern is that we keep the innovation going 
in cancer care and not stop the innovation--not on a particular 
drug--on the indications after it is launched.
    Chairman BUCHANAN. Well, thank you.
    I now recognize the ranking member, Mr. Doggett, for any 
questions that he might have.
    Mr. DOGGETT. Thank you so much.
    I would say, first, I appreciate all the witness testimony 
but certainly the courage that you show, Mr. Gonzales, in 
confronting this cruel disease and in being here as very 
forceful advocate today. I have a long relationship with the 
Alzheimer's Association, and I recognize the true desperation 
that many families feel about this.
    I think that much of the research shows that a good way to 
get new cures is to invest in the NIH, the taxpayer-financed 
disease-specific research. There is some indications that a 10 
percent increase in NIH disease-specific research yields a 4 to 
5 percent increase in new drugs, and so I am particularly 
concerned that under what we have termed the ``Republican 
Default on America'' legislation that was approved a week guy 
that in a 22 percent cut in NIH funding is going deny us the 
very kind of cures that all of us today seek.
    And as far as Big Pharma is concerned, my concern is that 
it often intimidates patients and disease advocacy groups, that 
anything that touches their bottom line, that prevents them 
from charging all that those who seek a little more time with 
their families, that they can charge whatever the market will 
bear. I think paying outrageous drug prices hasn't resulted in 
innovation. In fact, I think it has had just the opposite 
effect.
    Dr. Kesselheim, you have cited the enormous contribution 
that NIH funding research has had. Can you just speak to the 
differences in research conducted by manufacturers who purely 
have a profit motive and the research that is being funded by 
the American taxpayer who has a strong interest in meeting 
public health needs?
    Dr. KESSELHEIM. Sure. So, the NIH tends to fund a lot of 
the early stages in drug development. As you pointed out, every 
single drug can ultimately trace its origins back to NIH 
funding and basic and translational science.
    But what we have found actually in some of the research 
done at PORTAL is that a lot of the most transformative, most 
important drugs are also, can also be linked to public funding 
in their later stages of development, as well, from the--from 
testing the original--from the original testing on the product, 
even to some of the clinical trials, as well. That tends to be 
where--where manufacturer funding of new drugs tends to 
predominate in those later stages.
    The risk is less. And actually as the trials get larger and 
larger, the risk gets smaller and smaller. And a lot of 
industry funding also goes into making small changes to drugs 
after they have already been approved to extend their market 
exclusivity on the underlying active ingredient as long as 
possible.
    Mr. DOGGETT. You know, as we have heard today, whether it 
is Alzheimer's or ALS or cancer, there is a desperation to get 
these new cures. I think that patients deserve a system that 
generates innovative research.
    But I would just ask you about the accelerated approval 
process and whether that is providing false hope in many cases 
or is providing real hope for cures?
    Dr. KESSELHEIM. I think that the accelerated approval 
pathway is a useful pathway when used correctly. It provides, 
you know, early access to very promising treatments on the 
promise that they will eventually do meaningful clinical 
testing.
    I mean, you mention the word ``cures.'' I think we all 
wants cures or meaningful innovation. The problem with 
accelerated approval drugs is that a lot of them are, when they 
aren't given accelerated approval, we don't actually know what 
they do. There is some suggestion there. There is some promise 
there. They need additional testing. They are not the same as 
drugs approved on the basis of showing changes to actual 
clinical endpoints like many traditional approval drugs are.
    Mr. DOGGETT. While my focus has been principally on drug 
pricing today, this hearing also, of course, deals with the 
question of medical devices. Through the years we have had some 
bipartisan concern about medical device safety. I have worked 
with colleagues from this committee, like Bill Pascrell and 
Brian Fitzpatrick. Senator Warren and Senator Grassley have 
sought greater accountability on post market surveillance of 
safety concerns.
    Dr. Kesselheim, knowing of the negative repercussions of 
misaligned incentives and Medicare reimbursement, as well as 
safety and efficacy concerns that arise from these devices, do 
you think it is appropriate for Medicare to guarantee 100 
percent coverage of so-called breakthrough devices?
    Dr. KESSELHEIM. It is not. Coverage in Medicare should be 
what is reasonable and necessary. That is not the same thing as 
the breakthrough therapy designation which is given by the FDA 
at extreme--at sometimes extremely early stages of device 
development when we don't actually know what effect the device 
will have on patient outcomes.
    Mr. DOGGETT. Thank you very much.
    Thank you, Mr. Chairman.
    Chairman BUCHANAN. Mr. Smith of Nebraska.
    Mr. SMITH of Nebraska. Thank you, Mr. Chairman.
    Thank you to all of our witnesses.
    Mr. Gonzales, thank you for sharing your story here today.
    I do want to associate myself with the concerns that 
Chairman Buchanan expressed regarding the TRIPS waiver. As 
chairman of the Trade Subcommittee, this is obviously an 
important issue that is of great concern to me, as well.
    However, in the interest of time, I would like to focus on 
my concerns with the CMS Innovation Center, known as CMMI. 
Tasked with testing payment and care delivery models in order 
to saved Medicare money and improve patient care quality, CMS 
has tested more than 50 models since its creation.
    Despite billions of taxpayer dollars spent setting up and 
evaluating these models, only six of these were found to have 
delivered statistically significant savings, actually a less 
than 12 percent success rate. Instead, these models have been 
used to make major, often controversial changes to fundamental 
parts to the Medicare benefit such as part B drugs, kidney 
care, oncology, and more, often generating bipartisan concern.
    For example, I do have a copy of a June 2021 letter which 
Congresswoman Terri Sewell and I sent to CMS, along with 247 
bipartisan co-signors, expressing concerns with the lack of 
transparency and stakeholder participation in CMMI's model 
development process.
    Mr. Chairman, I would request this letter be inserted into 
the hearing record.
    Chairman BUCHANAN. So, moved.
    Mr. SMITH of Nebraska. Thank you.

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    I have also worked on legislation which would create some 
commonsense guardrails for CMMI to ensure the design, testing, 
and expansion of these models is in line with congressional 
intent. This legislation has been bipartisan in the past.
    I introduced the first version of this bill during the 
Trump administration, proof that these longstanding concerns 
are not tied to a specific President or one particular model. I 
hope we can continue working on that legislation in a 
bipartisan fashion.
    Mr. Okon, your organization works with patients who have 
been impacted by CMMI models in the past. Based on your 
experiences, what do you feel are the most necessary guardrails 
to ensure the integrity of model testing without unnecessarily 
hurting beneficiaries or providers?
    Mr. OKON. Yeah, Mr. Smith, this is, as I said in my opening 
statement, we have now three administrations that have 
basically have gone over to what I call the little toy box 
called CMMI and pulled out and basically tried to basically 
end-run all of you in Congress to change drug reimbursement. 
And I think that is extremely, extremely dangerous.
    And I think that--so when you talk about guardrails 
specifically, if you go back and read the law, the ACA that 
created CMMI, the whole concept was that you would do a limited 
phase 1 model, that then if it worked and saved the money and 
didn't hurt patients' enhanced care, that you would do an 
expanded phase 2 model. That is not happening. This is, if you 
look at the President's recent executive order, it is let's go 
use CMMI to change drug pricing.
    So, I think there are a lot of guardrails. I think what you 
did, and Ms. Sewell, it just this should be duplicated again. 
And the entire Congress should put guardrails on CMMI so that 
it is not a vehicle to end-run the Congress. It is a true 
vehicle to test innovation.
    And one more thing. I was the biggest proponent of CMMI 
when it was created, the idea of having an Innovation Center in 
CMS. But I don't think it has upheld that charter.
    Mr. SMITH of Nebraska. Thank you. I appreciate your 
insight.
    Moving along here, I apologize for the brevity of our time. 
One of the healthcare sectors which stands to benefit the most 
from new and emerging technologies is care delivery at home. We 
know the care in the home allows patients to receive necessary 
care close to their families and caregivers without needing to 
worry about transportation, whether it is dialysis, other 
innovative approaches.
    So, ultimately, Dr. Lakdawalla, can you walk us through how 
innovators would factor potential Medicare coverage of a 
breakthrough product into their research and investment 
calculation and how that could be applied in home care, as 
well?
    Mr. LAKDAWALLA. Sure. Thank you for the question.
    I think part of what--part of the uncertainty that we face 
right now regarding the incentives for innovation is how CMS is 
going to think about setting maximum fair prices. And we don't 
know very much about it. My hope is that CMS will employ modern 
economic methods, to include value to patients, as part of 
their maximum fair price assessment. And, if it does so, then 
the kinds of issues that you raise, Congressman, would 
absolutely be part of the calculus regarding value to patients.
    Alzheimer's disease is a salient example here. It imposes 
considerable burdens on patients and families outside of what 
you might consider traditional healthcare spending. Those kinds 
of impacts in terms of caregiver burden, transportation, 
disruption to lives, are all part of value. And it goes to the 
question of paying more for more valuable technologies than 
paying less for less valuable technologies.
    Mr. SMITH of Nebraska. Okay. Thank you.
    I yield back.
    Chairman BUCHANAN. Mr. Thompson, California.
    Mr. THOMPSON. Thank you, Mr. Chairman.
    And thank you to all of our witnesses for being here.
    And Mr. Gonzales, thank you very much for your very 
compelling testimony. And I think everyone would agree that we 
need to do everything we can to make sure patients get the 
medications that they need and that will make them healthy.
    I would like to start by reminding folks that the Inflation 
Reduction Act, which we passed in the last Congress with no 
help from our Republican colleagues, reduced the deficit by 
$300 billion over 10 years. And the drug price negotiation 
provisions in that bill saved taxpayers $288 billion. We also 
capped the price of insulin at $35 a month and capped seniors' 
out-of-pocket costs at $2,000 per year.
    I am not sure what my colleagues who voted against this 
bill hear from their constituents, but I can tell you the 
seniors I hear from at home are pretty darn happy with these 
changes.
    I would also like to just make a couple of very obvious 
facts known: One, you can have the most exciting innovative 
drug in the world, but, if no one can afford to buy it, it 
doesn't help a single person; and, two, Americans pay more for 
the same drugs than people in other countries do; and three, in 
every other industrialized country, the government negotiates 
drug prices with manufacturers. They do not just take whatever 
price the manufacturer wants.
    And that is where I would like to begin my questioning.
    Mr. Kesselheim, or Dr. Kesselheim, you talked about the 
importance of funding the National Institutes of Health. We 
have heard a lot today about how high drug prices are 
apparently necessary to fund research and development.
    Can you talk a little more about how the research taxpayers 
fund at NIH has helped pharmaceutical companies develop their 
products?
    Dr. KESSELHEIM. Sure. The research that goes on at NIH is 
fundamental to drug development and manufacture--it helps 
identify targets. It helps identify the origins of disease. It 
helps identify the systems and create testing systems in which 
drugs can be tested. All of that information is then used by 
manufacturers when--you know, in developing particular products 
or moving particular products forward.
    Sometimes NIH funding even supports clinical trials and 
proof of concept. So, the NIH funding does a lot of work in 
developing and leading to drug development, particularly the 
most important drugs that we have.
    Mr. THOMPSON. Thank you.
    You also, in your testimony, stated that we should expand, 
not repeal the negotiation provisions that we passed in the 
Inflation Reduction Act?
    Dr. KESSELHEIM. That is right. We--right now, the 
negotiations in the Inflation Reduction Act occur at about 9 
to--or implemented at about 9 to 13 years after the drug is 
approved. And, you know, as you mentioned, in every other 
industrialized country, the prices are negotiated at the time 
of--near the time of drug approval.
    Those prices can be negotiated fairly, such that important, 
meaningful--clinically meaningful drugs are given a substantial 
reimbursement. But, most importantly, the--a lot of drugs out 
there do not offer added clinical benefits. Those drugs can 
be--the prices of those drugs can be restrained to where the--
and negotiated to a point where they are more reflective of the 
actual value that they provide.
    Mr. THOMPSON. So just a little more on criteria. If we were 
to expand drugs eligible for the negotiations, what sort of 
criteria should we use?
    Dr. KESSELHEIM. I think that all new drugs should be 
eligible for negotiation within a year of their being first 
approved by the FDA. That would be the most fair way of going 
about it.
    Mr. THOMPSON. And, if we have to do them piece by piece, 
are there drugs that are unfairly priced or drugs that are 
transformative for patients--should they be moved to the head 
of the line? How do you work all of that out?
    Dr. KESSELHEIM. Well, right now--right now, the way that it 
is done in Germany, for example, is that all drugs--the price 
for the drug is set by the manufacturer, and that is the price 
for the first year. And, during that first year, all drugs 
are--go through an evaluation process to determine how 
clinically meaningful they are. And then, at the 1-year point, 
the drug is negotiated in line with that--with that clinical 
meaningfulness.
    So, I think that that is--that is a model where you are not 
blocking drugs from getting on the market. Drugs can get on the 
market. Patients can get access to them. And then what we 
eventually do is, very soon thereafter, figure out what the 
fair price of those drugs should be.
    And I think that in taking into account that fair price, 
you definitely need to account if the National Institutes of 
Health or some other public entity was a substantial 
contributor to the funding of those products and de-risked the 
investment that the subsequent manufacturers made in them.
    Mr. THOMPSON. Thank you very much.
    Yield back.
    Chairman BUCHANAN. Mr. Kelly of Pennsylvania.
    Mr. KELLY. I thank the chairman. And thank you all for 
being here today.
    It is interesting, because we ask you all to give up a day 
of your life to come in and talk to us. And then you have 5 
minutes to try to get out what you have already presented to us 
in writing. And then we try to hurry up and ask you a question.
    So, Mr. Okon, what you all do and the doctors you work with 
are incredible.
    Dr. Wenstrup and I were talking. It would be good to get 
some actual operators, doctors who work through this every 
single day.
    As a Hyundai dealer, I am involved in something called Hope 
on Wheels. This is an effort between Hyundai Motor America and 
Hyundai Motor dealers. For every single Hyundai that is sold, 
there is a contribution that is made towards the development of 
or the eradication of childhood cancer, with the goal being 
that no parent, no family ever has to hear that your child has 
cancer.
    So far, we have raised about $225 million, which is 
significant, but not near enough. And so, I look at what it is 
that we are trying to do. Well, President Biden shares the same 
goal we all have. We don't want anybody to have to suffer.
    Now, his Cancer Moonshot Initiative is really admirable. 
And that is why I am so concerned that, at the same time he was 
relaunching the Moonshot, the administration was taking major 
steps to devalue the accelerated approval pathway for new drugs 
coming onto the market.
    Now, CMS did this first with Alzheimer's drugs. Then CMS 
Administrator Brooks-LaSure said she viewed accelerated 
approval as a--as being separate from traditional approval. 
About 85 percent of all drugs that go through the accelerated 
approval program are cancer drugs. So, if CMS is successful in 
expanding the Alzheimer's precedent to other categories of 
drugs like cancer drugs, patients will see their success to 
these innovative, new, lifesaving cures severely restricted or 
even cut off altogether.
    So, Mr. Okon, what effect will this have on cancer 
patients? I am--specifically, the children that I have seen.
    Mr. OKON. It is so important that cancer patients, because 
of the nature of this disease--it is not cancer, singular. It 
is over 200 cancers. And Mr. Kelly, when you look at certain 
cancers like breast cancer, there is HER2-positive, HER2-
negative, there is adjuvant, there is metastatic. And so, we 
have got to get away from the notion that this is a cookbook.
    We know now more about the genetic profile. We have 
biomarkers that allow us to do more precision medicine. And 
what may work on one individual who looks and talks like 
another individual, the drug may work on one and not the other.
    And I am particularly concerned about pediatric cancers 
that treatments typically get developed after, in the lifecycle 
of the drug, adult cancers. And, again, I go back to saying 
that, if you are facing and you are a manufacturer--if you 
are--you are a businessman. You are facing putting more money 
into research and you know the drug is going to get negotiated 
downwards, it is a problem.
    And I think one of the fundamental problems that you hear 
here is that there are very different drugs that we are talking 
about. When you talk about Alzheimer's, when you talk about 
cancer, that is very different than other areas of medicine, 
and that is what is so important.
    So, it is--it is alarming.
    Mr. KELLY. It is alarming. And, you know, the size and 
scope of the government is incredible. And trying to work your 
way through it is almost impossible. I admire all of you for 
what you do and the frustration that you must face every single 
day when you are trying to help people and cure people and 
knowing that the process you are going to go through is 
oftentimes more difficult than the answer you are trying to 
find.
    I think, too often, we concentrate on the cost of things 
and not on the effect of things. I wish we could get this 
reversed, but I don't know. I think it would be wonderful if, 
not just in this committee, but in all of the Congress, we 
could concentrate more on policy and less on politics. I think 
the answers and the developments would be incredible.
    I want to thank you all for being here.
    And you have given--Mr. Gonzales, you give a very inspiring 
time--the best time I have spent is with my grandchildren. I am 
hoping that, sometime in the future, they look back and say the 
best time they spent was with their grandfather.
    God bless you. Good luck with everything.
    And with the rest of you, thanks so much for what you are 
doing. We appreciate you being here today.
    I yield back.
    Chairman BUCHANAN. Mr. Blumenauer of Oregon.
    Mr. BLUMENAUER. Thank you, Mr. Chairman.
    I think we are looking at different aspects of this 
challenge. One of the things that hasn't been focused on here 
is that we are forcing American consumers to pay the highest 
drug prices in the world, assuming that this filters out in 
terms of innovation.
    Dr. Kesselheim, you point out that the majority of the 
innovations are more engineering patents, not new medicines. 
They are repackaging so that they can expect to gain more value 
over time.
    This high cost of medicine is driving this showdown that we 
have got over the deficit that is encouraging my Republican 
friends to vote for a 22 percent reduction in the National 
Institute of Health.
    We have got to get a handle on exploding costs, and it just 
seems to me--Dr. Kesselheim, you highlight some of the problems 
associated with rushed approval without showing benefits. You 
talked about the brain--you want to talk a little bit about the 
danger of giving people medicine that hasn't been fully vetted 
and shown that it provides benefits for people?
    We don't want to give false hope to folks if their brain is 
going to swell or something like that.
    Can you elaborate on part of what you put in your 
testimony?
    Dr. KESSELHEIM. Sure. So, as I think that that is a 
fundamental role that the FDA plays in this process, is to try 
to make sure that, when drugs are approved, that they are--that 
there is clear effectiveness that those drugs will have, and 
that those benefits outweigh the risks of those drugs.
    I think that the FDA, unfortunately, did not do its job in 
the case of Aducanumab because of the lack of clear evidence of 
benefits and the substantial risks that were associated with 
those drugs, including the risk of brain swelling and bleeding 
in up to 40 percent of patients who received that drug.
    And so, I think that, in that context, CMS did the best 
that it could by saying, Look, we are only going to pay for 
this drug if it is being tested to show if the drug actually 
works in the first place. I thought it was a totally reasonable 
approach given the fact that the FDA made a bad decision in 
approving that particular drug.
    And that, again, is why we have a process in which we 
want--we need to gather evidence about drugs and new devices, 
because they can be so dangerous. They can be so effective and 
so useful and transformative, but they can also be very 
dangerous. And that is why we need adequate testing of them.
    And, you know, the FDA--when the FDA is given flexibility, 
as in the accelerated approval pathway, to approve drugs before 
they are shown to have benefits, then we need a clear pathway 
to generate those after approval. And, you know, I think that 
that is what the CMMI proposal is intended to do, is intended 
to limit--limit spending on those drugs until we actually know 
whether or not they work, and then, of course, the price can 
be, you know, raised to the appropriate level.
    Mr. BLUMENAUER. In your testimony, you talked about 81 top 
advertised drugs, that only 27 percent of them were 
demonstrated of having high therapeutic value.
    Dr. KESSELHEIM. That is right. So, we are--we are deluged. 
So, as doctors, you know, doctors receive a lot of promotion of 
drugs. But the consumers are also deluged with drug 
advertising. And, in a study that we recently did and published 
in the JAMA Network, we looked at all of the top advertised 
drugs and found that only 20 percent of them were shown to have 
added clinical value to patients.
    And so, really good important drugs sell themselves. 
Doctors will prescribe them and use them, and patients will ask 
for them. And so, that is--I think is why we see a lot of 
direct-to-consumer advertising that involves drugs that don't 
have a lot of added clinical value.
    Mr. BLUMENAUER. I think this is very important. The 
pharmaceutical industry spends more money on advertising than 
they do on research. We need to be sure that we are getting 
high value.
    We are in the process of having this battle over the 
deficit. What we are talking about here is an opportunity to be 
able to rein in some of these extreme costs, to be able to give 
more value to the taxpayer, and not give them medicine that 
will give them false hope, or worse, even be dangerous.
    The American public is paying for the research for around 
the world, and it is doing so in a very inefficient fashion.
    And I appreciate, Doctor--it is not just because you are 
wearing a bowtie, but I appreciate what you put in your 
testimony talking about the downsides of rushing, undercutting 
a process to make sure that it actually has value and holding 
the industry accountable. We have all got experiences in our 
family of people who have suffered, for example, with 
Alzheimer's.
    I don't want to give false hope. Worse than that, I don't 
want to give medicine that will do damage, or that we are going 
to end up cutting services and research because we haven't been 
able to do our job right.
    I yield back.
    Chairman BUCHANAN. Dr. Wenstrup, Ohio.
    Mr. WENSTRUP. Thank you, Mr. Chairman.
    Thank you all for being here today.
    You know, it is discouraging to see at any time if we are 
doing things that inhibit innovation and limit patient access 
to the latest treatments or discourage investment in new 
technologies and cures. As a physician, I know how--I know 
firsthand how dangerous it is to delay or deny access of proper 
treatment to a patient. And I think Americans deserve better 
than that. That is the system we are living in.
    Dr. Kesselheim, you mentioned NIH. We have a Doctors Caucus 
here. We have been out to NIH. They do some wonderful things. 
There is no doubt about it. We have been very supportive of NIH 
in many, many ways. But it doesn't mean we shouldn't have 
oversight over everything that they do and where the money is 
being spent. And no one is that Godly, okay, that they can't be 
questioned on the type of research they do.
    And you mentioned the difference. We have had great things 
come out of the commercial industry, great things come out of 
NIH. But I will tell you what commercial industry has not done. 
They haven't funded research to create viruses that become more 
infectious to human beings and kill millions of people, okay? 
So, there is a difference there sometimes, and we have to watch 
over that as a country.
    But I will tell you, we as a Doctors Caucus, were meeting 
with CMS about 8 years ago, and they are telling us how great 
everything is working now, the things that they are 
implementing.
    I looked her in the eye, and I said, do you know why we are 
here? Do you know why we are in Congress? Because you have 
taken the joy out of taking care of people.
    And that is what has happened over time. You know, I hear 
my colleagues saying, I don't want to give anybody a medicine. 
You don't give anybody a medicine, my friend. Doctors do, and 
patients decide. They do this together.
    And so, what is really missing with some of the things that 
you are talking about, it takes away the power of hope. And I 
don't mean false hope. When you have good bedside manner, you 
talk about all the odds, and maybe this will help, and maybe it 
won't. And that is fair. And it is called bedside manner.
    But that is what is missing in these discussions up here. 
It is totally missing. We don't talk about the value of 
prevention up here. We don't talk about the value of cures and 
the savings. We don't talk about the value of someone's life. 
It is all dollars and cents. That is all it is.
    We don't talk about how someone may live longer and 
continue to go to work and pay taxes, right? We don't talk 
about the value of productive life because this medicine, even 
though you might have a chronic disease, is allowing you to 
live a life. And I know you understand this, Mr. Gonzales.
    And doctors that sit there every day with patients in front 
of them and look them in the eye and talk to them, they 
understand it. The people that wear the white coats, not the 
ones writing the white papers. I am sorry.
    So here we are. You know, it is--that we--look at MCIT, the 
MCIT rule. It has been more than 2 years. The Biden 
administration has not proposed a replacement rule for this. If 
you didn't like it and you canceled it, fine, but tell us why. 
And tell us what data you used that said you needed to cancel 
it. And there has been no discussion on this since.
    So, I am proud to work with Representatives DelBene, Blake 
Moore, Terri Sewell, to introduce the Ensuring Patient Access 
to Critical Breakthrough Products Act. It is bipartisan, a bill 
that would codify the MCIT rule and give millions of seniors a 
chance to live longer, healthier lives while supporting the 
companies and innovators who are investing in these critical 
medical technologies and devices.
    Mr. Okon, one of the most important reasons for providing 
this pathway is to give patients access to technologies that 
will improve their health and extend their lives. Mr. Okon, 
what does further delay in the MCIT rule mean for patients who 
are waiting for the next novel treatment?
    Mr. OKON. Well, again, I can say, Dr. Wenstrup, is that 
cancer patients, because of the knowledge that we have, as you 
know, about so much more of their makeup, they depend on 
innovation. They depend on new drugs. And so--and especially 
when you look at, you know, some of the rare cancer, pediatric 
cancer. So, I applaud all of you. I applaud anything 
bipartisan. And the idea that--that this would push the MCIT, I 
think, is absolutely key and certainly important in cancer 
care.
    Mr. WENSTRUP. And it is upon us to make sure that something 
like this----
    Mr. OKON. Yeah.
    Mr. WENSTRUP [continuing]. Is working and doing what it is 
intended to do, not just say, it is okay, let it go.
    And, Dr. Makower, how are the current challenges around 
Medicare coverage impacting investment into breakthrough 
technologies, and what impact could a bill like the Ensuring 
Patient Access to Critical Breakthrough Products Act or a new 
CMS rule have on the development of new technologies?
    Dr. MAKOWER. Thank you for the question.
    I think that it is often lost on people that most of the 
new and novel medical technologies are actually created by very 
small venture-backed companies that rely on investors to 
support their work.
    During the time that there was a belief that MCIT actually 
was going to be put into place, there was an amazing wave of 
enthusiasm and investment that went into breakthrough therapies 
that could really make a difference in people's lives, areas 
like diabetes, heart disease, very challenging and very 
difficult problems to solve. But given the encouragement that 
there would be a bridge to somewhere, an opportunity to bring 
their products to patients on the other side, that investment 
was spurred.
    When the MCIT was cast aside, there was definitely an 
impact in the industry and in the innovative community. And I 
would say, as our survey indicated, the impact of not having a 
clear pathway to coverage and reimbursement on the other side 
of all the work that goes into demonstrating that a product is 
safe and effective with the FDA, is a real depressing factor 
for further investment in very important therapies for 
patients.
    Mr. WENSTRUP. Thank you. Yield back.
    Chairman BUCHANAN. Mr. Higgins, New York.
    Mr. HIGGINS. Thank you, Mr. Chairman.
    Drug development, you know, firstly, is a long, drawn-out 
process. You know, on average, it takes 10 to 15 years to 
develop fully a drug. It is a public-private partnership. The 
Federal Government is typically involved in the front end, 
which is much less profitable. And then, when those drugs reach 
a point of going into clinical trial to test both safety and 
efficacy, the pharmaceutical industry becomes involved, and 
that is the profit-earning phase of drug development.
    You know, for example, the messenger RNA, which is the 
genetic material that tells or instructs a cell to make a 
protein, which was the active ingredient in the mRNA vaccine, 
was a result of decades of drug development financed by the 
Federal Government. So, the Federal Government isn't in the 
way. It is really leading the way. And that has to be 
acknowledged.
    You know, you think about it, in the first 7 months of 
COVID, the best thing that our healthcare system could do to 
somebody that was stuck with COVID is to give them Tylenol to 
reduce pain and fever.
    These drugs were developed, and they accrued to the great 
benefit of the private sector because of Federal Government-
financed basic research.
    For example, Moderna, which developed one of the messenger 
RNA vaccines, pre-COVID, was $20 a share. At the peak of COVID, 
it was $497 a share. So, it is always a public-private 
partnership. And virtually, every drug that came to market in 
the last 10 years, the Federal Government had a major financial 
role in bringing that drug to market. It doesn't really get any 
profit from it. It just does it because it is the right thing 
to do.
    So, you know, the whole idea of, you know, being critical 
of the Federal Government, I can see, Mr. Gonzales--you 
provided very compelling and thoughtful testimony. I thank you 
for that. But I think we need to understand the role that each 
has. And, you know, it is--you know, all these horrible chronic 
diseases, the pharmaceutical companies spend billions of 
dollars in advertising. And you watch those commercials. 
Everybody is happy. It is sunny. It is great news, and 
everybody is good looking.
    But the idea is to get consumers to say, Yeah, I want that 
because I want to look like that, I want to feel like that. And 
sometimes it is not the best treatment for an individual.
    The other thing is, you know, innovation, by its very 
definition is inefficient. Ninety percent of clinical trials 
fail. So, the only failure in drug development research is when 
you quit, or you are forced to quit because of lack of funding. 
So, let's recognize the important role of both the Federal 
Government and the private sector.
    Dr. Kesselheim, you noted in your testimony that the 
Republican bill just passed the House on the debt ceiling would 
result in significant cuts to the National Institutes of 
Health. That is the--exactly the opposite of what we should be 
doing right now. We should be increasing our investment in 
medical research, not slashing it.
    Do you care to offer some thoughts?
    Dr. KESSELHEIM. Yes. I think--I completely agree. I feel 
like, no, we should not be cutting the NIH budget, we should be 
doubling the NIH budget, because there is a long track record 
of success of the NIH investing in transformative drugs. And 
so, I think that, if we provide more opportunities for that, 
then we will get more drugs for unmet medical need, and--you 
know, and we will be able to help patients better that way.
    Mr. HIGGINS. Anybody else?
    Mr. GONZALES. For me, I heard a few things today, and I 
will try to explain this as best as I can.
    Meaningful and necessary. What is meaningful and necessary 
continually comes over and over in the data and the things that 
I see in the press. And I think I have demonstrated and talked 
to you about what is meaningful and necessary in my life.
    But let me ask you: What is meaningful and necessary in 
your life? What if this were you? I am not much older than you, 
and you are older than me.
    The government should not be having this conversation with 
me. This should be between myself and my physician. The fact 
that I have to travel across this country of ours, this great 
country of ours, and deal with this disease, not knowing where 
I am at, having my wife near me every single time, being cold, 
shaking, shivering, this needs to be between a patient and 
their doctor, period.
    That is what I need. That is what I want.
    Well, it was my understanding the accelerated approval was 
created to give people with unmet needs--it helps the 
innovation that they deserve. So, what the heck are we doing?
    I am here, yes, to tell you, my story. But think about 
those--while you are thinking about cost, and you are thinking 
about finance, let me let you in on what to think about. I 
don't get to have a checkbook anymore, sir. I don't get to have 
money with me anymore, because I can't be trusted with it, 
because I can't do the math anymore. I have a first-grade-level 
math, and I served as a CEO. I served well in business, real 
estate. And now--you can look at me. A first-grade-level math.
    What is reasonable and necessary is that we need this to go 
between the patient and the doctor.
    Thank you.
    Mr. HIGGINS. Yield back.
    Chairman BUCHANAN. Dr. Murphy of North Carolina.
    Mr. MURPHY. Thank you, Mr. Chair.
    I will just reiterate, Mr. Gonzales, patient-doctor, right?
    Mr. GONZALES. Yes, sir.
    Mr. MURPHY. Because what the last administration did with 
the whole damn vaccine fiasco was made it between a government 
and a citizen. I will just--I will go back to that. We were 
pro-vaccine, but dammit, everybody didn't need it. And it took 
the power of doctors of prescribing away.
    All right. I will get back to this issue because I think we 
have just kind of gone on a little bit disarray here.
    I will join every single Republican and Democrat here. We 
need to cut the cost of medicine. And, if we can pass a bill 
that gets rid of direct-to-consumer advertising, I hope we can 
make a unanimous vote, because I will tell you I have never, in 
my 30 years of prescribing, to this day, ever prescribed 
anything because of seeing people on the television.
    And patients will come in every so often and say, What 
about this drug?
    I said, this drug is nice, but you don't have that disease, 
okay?
    So, it provides no benefit. We are one of two countries in 
the world--New Zealand is the other one that provides direct-
to-consumer advertising. So, let's get rid of that.
    Let's attack PBMs, which have become an absolute parasite 
and extorted moneys from patients and pharmaceutical companies 
just to the expense of bottom line of insurance companies. 
Let's have some meaningful legislation on that. Let's really 
get to the problem of this in the United States, because no 
other country does that. They don't have direct-to-consumer 
advertising or PBMs.
    So, guys, you know, it just--it kills me here. I think our 
Democratic colleagues started out with well-intentions, but 
they did not think about the secondary, tertiary, quaternary 
consequences.
    Yeah, Moonshot Cancer is great. But, if you ain't got no 
fuel for the rocket, where is it going to go? If you can't do 
anything with that, it is not going to work.
    You know, Dr. Kesselheim, let me ask you a question: Do you 
know how much it costs to bring one drug to market--one 
molecule?
    Dr. KESSELHEIM. There are a lot of varying estimates of 
that.
    Mr. MURPHY. On average.
    Dr. KESSELHEIM. The estimates in the literature range from 
anywhere, on average, from a few hundred million dollars to the 
pharmaceutical industry estimates of a few billion dollars.
    Mr. MURPHY. I say mostly 2 to 2.5 is the most common thing 
I see quoted.
    For every molecule that comes to market, how many molecules 
are--go into that--go into the development of that drug, do you 
think?
    Dr. KESSELHEIM. Well, so there--again, it happens at 
different stages.
    Mr. MURPHY. Sure.
    Dr. KESSELHEIM. In terms of the beginning of clinical 
trials, there are about--there is about 10 molecules for 
everyone. But, for the most expensive, later-stage clinical 
trials, about half of drugs tested are approved. So, two to 
one.
    Mr. MURPHY. So, I have seen numbers higher than that, but I 
am not going to argue with that.
    So, we have a portion here where so much money and so many 
scientists are working on molecules with the hope of therapy. 
So many of our drugs do not start out doing what we think they 
are going to do.
    You know, you look at actinomycin for Wilms tumor. It was 
an antibiotic, by God. Same thing with all the other things. 
This is how we developed penicillin. Nobody knew that. It is 
accident.
    So, walk me through--Keytruda was started in 2000, I think, 
2014, right? Came out for the indication of melanoma. What 
happens now, because it is--now has an indication for small 
cell, the lung, melanoma, lymphoma, rectal tumors, GI tumors, 
other tumors, walk on and on and on.
    So, when we have these new indications for a drug--and I 
can walk you through about 10 of these drugs for that--I deal 
with prostate cancer, and Xtandi has done the same thing. I 
have seen such a miraculous change in 10 years from people I 
normally said, you had to go get your affairs in order, to say, 
Hey, you are going to see your grandkids live.
    So, as we walk through these indications, all of a sudden, 
we hit a wall--an artificial wall that has been put up because 
the IRA says, Nope, you can't explore this anymore, even though 
they could possibly cure one other thing and one other thing.
    And you know where it is going to hurt the most? It is in 
pediatric diseases, pediatric cancers, because you know what? 
We have to experiment on adults first. And, if we are not 
allowed to do indication upon indication to try to push things 
forward because of some artificial barrier, we are going to 
kill kids in the future.
    You look at what has happened with Wilms tumor, you look at 
what happens with childhood leukemias--things that are 
absolutely curable today. But they would not have happened if 
we had not been able to march forward.
    Yes, I want to cut drug costs as much as anybody. You know 
the $35 insulin? It is just like a balloon. You push in it 
here; it is going to push out somewhere else. That is the 
fallacy that is being told to the public.
    And, yes, I know drugs that don't work. Tell me about the 
27 percent of drugs that you don't think--excuse me--the other 
67 or 63 percent that don't work. Where are the--how do you 
define limited clinical value?
    Dr. KESSELHEIM. So, I said limited added clinical value. A 
lot of those drugs are drugs that do the same thing as drugs 
that are already on the market, or drugs that are generic that 
are already on the market.
    Mr. MURPHY. And you know that some people react different 
to every medicine.
    Dr. KESSELHEIM. Of course.
    Mr. MURPHY. And I will use epilepsy for an example. 
Somebody walks in your clinic, you can throw 50 drugs up on the 
wall, and if--50 different people will react different one 
every time. But, if you have added clinical benefit, you are 
going to pull away about 90 percent of those and say, well, if 
you fail this, you fail this, you fail this, good luck, you 
will never drive again.
    Dr. KESSELHEIM. But I wasn't saying you shouldn't approve 
those drugs. I was just saying you shouldn't pay more for them 
than the other drugs that are already on the market that work 
the same way.
    Mr. MURPHY. Yeah, but if you say that, for example, like 
Germany, they see one year and say which one they are going to 
ratchet that down. You can't determine data in one year whether 
something works or not. That doesn't--that just doesn't give 
you nearly enough time to determine clinical value.
    So, yes, there are things we can do to try to cut drug 
costs in this country, absolutely. But this is an asinine plan 
to do it, and I think it is going to hurt patients. We have 
already had drug lines taken off--clinical lines taken off 
because the pharmaceutical companies won't expend interest or 
won't expend money because they know they won't be able to 
recoup it.
    Thank you.
    With that, Mr. Chairman, I will yield back.
    Chairman BUCHANAN. Mr. Hern, Oklahoma.
    Mr. HERN. Thank you, Mr. Chairman, for hosting this hearing 
on innovation in healthcare.
    I thank our witnesses.
    Mr. Gonzales, thank you so much for being here. There is 
not a member up here or probably most in this room haven't been 
touched by Alzheimer's and the other disorders that really 
affect the livelihoods of our friends, our loved ones. So, 
thank you for being here.
    As an engineer, I am always fascinated by the incredible 
science and technology people have used to create lifesaving 
medical devices and drugs.
    I want to thank my two colleagues, two doctors up here, 
that are expert witnesses in their own right, expert 
questioners, who--who know what they are talking about, have 
been on the receiving end of this, have seen it. And I believe 
that, as I have said with many instances in Congress, we have a 
lot of people up here who talk about things they know nothing 
about. And, when you have people who know what they are talking 
about, it is refreshing.
    You know, in recent years, innovative software technology, 
known as prescription digital therapeutics, PDTs for short, 
have come to the market. These healthcare phone applications 
are studied in the clinical trials and reviewed by the FDA for 
safety and efficacy before they can be prescribed to patients 
in the healthcare and healthcare providers.
    You know, PDTs have been put to use in treating opioid 
addiction, veterans with PTSD, children with ADHD, and a host 
of other illnesses, including diabetes and mental health 
disorders. While the FDA has approved these digital health 
solutions, there are still roadblocks to widespread access. The 
current number of senior citizens on Medicare is estimated to 
reach nearly 61 million by the end of this year, and many of 
them have no access to these treatments due to lack of coverage 
from CMS.
    If America is to remain the leader in the healthcare 
technology innovation, we must ensure that the FDA and CMS 
approval process for DPTs are in sync. That is why I, along 
with Congressman Mike Thompson, along with a couple of 
Senators, introduced H.R. 1458, the Access to PDT Act, to allow 
CMS to cover PDTs.
    While I am on the topic of FDA and CMS synchronization, I 
want to echo the bipartisan support we heard today for the MCIT 
rule and Congressman Wenstrup's legislation to codify it. Our 
seniors deserve timely access to these lifesaving breakthrough 
treatments.
    Today, I also want to discuss rare disease drugs and 
treatments. Earlier this year in a hearing, I shared my 
personal connection to the rare disease community, and my 
concern about recent legislation discouraging innovation in 
this space. The IRA includes an exemption from the negotiation 
process for orphan drugs; however, the exemption is limited to 
orphan drugs that are already--they are only for one rare 
disease or condition.
    As many of you know, many rare disease drugs are often 
discovered as a second or third indication for a drug, as my 
colleague just indicated. It is clear the authors of this bill 
wanted to protect innovation in the rare disease space, but 
this provision falls short.
    I am calling on my Democrat colleagues to work with me on a 
technical fix to the bill to make sure that more rare disease 
drugs and treatments are protected from the negotiation 
process. I was really encouraged in our HHS budget hearing when 
Secretary Becerra committed to work with me to ensure the rare 
disease drug pipeline is not damaged. And, again, I really hope 
we can work on a bipartisan fix to this issue. I believe there 
is a middle ground we can find that prevents abuse of orphan 
drug exclusion but also protects innovation.
    My questions--I have got two short ones. Mr. Makower, or 
Dr. Makower, can you comment on the impact PDTs are having on 
patients and the need for a clear path to reimbursement?
    Dr. MAKOWER. Absolutely.
    Digital therapeutics have a tremendous opportunity to 
improve patient outcomes in care, and it is very, very 
important that we find a way to cover these technologies for 
patients. The fact that they are being currently, sort of in 
a--in a box, unable to be reimbursed because of a technicality, 
is really a problem and needs to be solved, and we really need 
some modernization around the entire benefit category process.
    Mr. HERN. Thank you.
    Dr. Lakdawalla, can you comment on the recent changes to 
rare disease drug policy, and what impact do you anticipate?
    Mr. LAKDAWALLA. Sure. Thank you, Congressman.
    It is likely that there will be reduction in innovation in 
rare disease, because follow-on indications are now potentially 
penalized under the IRA. It is also the case, more generally, 
there will be reductions in incentive to innovate.
    It is notable, though, that rare disease often features 
very high unmet need for patients. And, as an economist, I can 
tell you that that means the value of any given health 
improvement is greater because patients have so little health 
that even a given relatively modest improvement of health can 
be quite valuable. That needs to be accounted for in the way 
CMS sets maximum fair prices to at least mitigate some of these 
issues for rare disease, where value is at a premium.
    Mr. HERN. Thank you for your responses.
    And, again, thank each of you for being with us today.
    Mr. Chairman, I yield back.
    Chairman BUCHANAN. Ms. Sewell, Alabama.
    Ms. SEWELL. Thank you, Mr. Chairman.
    I want to thank our witnesses for your testimony today, 
especially Mr. Gonzales, whose testimony and life's journey is 
both powerful and inspiring. God bless, sir.
    Since the 116th Congress, I have been one of the leading 
champions of the Medicare Multi-Cancer Early Detection 
Screening Act, along with Representative Jodey Arrington.
    As a daughter that knows firsthand what it is like to lose 
a parent to pancreatic cancer, it has become my mission to 
ensure that every American has access to lifesaving, early-
detection tests, and all the treatments to help them get well.
    Last Congress, this legislation garnered support from 258 
bipartisan House cosponsors, and more than 400 leading advocacy 
groups across all 50 States. And in the 117th Congress, we hope 
to have more. This bill creates the authority for CMS to cover 
blood-based, multi-cancer early detection tests, and future 
test methods once approved by the FDA.
    With innovation increasing in the space of cancer 
treatment, it is imperative that our legislation promotes an 
agile, evidence-based process that prioritize safety and cost 
effectiveness.
    Mr. Kesselheim, my question is to you. The bill that I am 
talking about, my multi-cancer early detection bill, does not 
establish a coverage mandate for multi-cancer early detection 
tests, but rather, it gives CMS the authority to create 
coverage parameters through the national coverage determination 
process.
    In your opinion, how can we better ensure that our coverage 
policies are keeping at pace with medical innovation?
    Dr. KESSELHEIM. It is a great question, and it sounds 
like--and I think that it is a really important bill, because 
early detection of cancer is so important, and that is the time 
when we might be able to best intervene on--particularly on 
very--you know, very dangerous cancers like pancreatic cancer.
    So I think that if there were new early detection tests 
that were proven to actually reduce mortality from cancers, 
that it would be a no-brainer for CMS to cover them, and it 
would be important to--and I think that this is where 
collaboration between FDA and CMS can be very important in 
helping ensure that the information that is transmitted to FDA 
in getting a diagnostic test authorized can then be quickly 
evaluated and given the green light by CMS. And so, it should 
be able to be done efficiently.
    And I think what--hopefully what your bill can do is 
provide more resources and more guidance for it to allow FDA 
and CMS to do this in this context.
    Ms. SEWELL. It does, sir.
    I think that we should--we, the public, especially since we 
put so much money towards NIH and research and development of 
drugs, we should make sure that everyone has access to these 
amazing medical innovations.
    The reality is that there are ways that you can test blood 
and be able to screen for over 40 different cancers. And so, 
when that is actually approved by FDA, I don't want it to wait. 
I want Medicare to cover it, especially since we know that for 
cancer, age is a determinant in the diagnosis of cancer.
    So, look, I think that it is important, and I know for me, 
it is cancer. For you, sir, it may be Alzheimer's. The point is 
we have, as a Nation, really developed amazing medical 
innovation. The fact that we could come up with a vaccine in 10 
months for a global pandemic means that if we want to put our 
resources, our time, and our energy behind the best and 
brightest researchers and doctors, we can find cures for some 
of these diseases.
    And I believe that our job on Ways and Means, especially 
around Medicare, is to help facilitate that. And one of the 
things that I had hoped was the Center for Innovation with CMS 
would do that.
    Mr. Okon, can you talk a little bit more--elaborate more 
about the guardrails that we really need for CMMI?
    Mr. OKON. Yes. First of all, I want to say, whatever we can 
do, Congresswoman, in terms of pushing that and promoting that 
bill--I know how cancer has affected you. I know how it has 
affected me. We will do whatever, because the idea of catching 
these things earlier and screening through blood tests 
literally will not only save lives, it will save money as well, 
too.
    Ms. SEWELL. Yes. Absolutely.
    Mr. OKON. Let me just say briefly that you would never 
approve a drug without clinical trials, which demands informed 
consent by a patient.
    The same thing has to happen at CMMI. You can't conduct an 
experiment when the patient isn't aware and hasn't signed 
informed consent, and you can't do that without--as I said 
before, without a smaller test.
    So, the guardrails need to be that you can't just use this 
as an end-run game of a mandatory, big model that is going to 
do whatever CMS wants to do by using its Innovation Center. We 
need to put guardrails. So, the same way we approach a clinical 
trial and safety is the same thing at CMMI.
    And, once again, I will say, not just to be agreeable, but 
anything we can do to support that legislation and put 
guardrails on CMMI and return it to what it really should be as 
an innovation center, we are behind it.
    Ms. SEWELL. Thank you, sir.
    Thank you, Mr. Chairman.
    Chairman BUCHANAN. Yeah. Mrs. Miller, West Virginia.
    Mrs. MILLER. Mr. Chairman, I yield 45 seconds to Dr. 
Murphy.
    Mr. MURPHY. Thank you, Mrs. Miller.
    Thank you, Mr. Chairman.
    I just want to bring up one other point. We have talked a 
lot about cancer. We have talked about a lot of neurologic 
drugs. The great untold story right now is antibiotic-resistant 
bacteria. In 2019, more people died from antimicrobial-
resistant infections than HIV, AIDS, or malaria.
    So, if we are going to continue down this pathway of 
stifling research, we are going to--where we used to thought 
penicillin or a quinolone or anything like that, a sulfur drug 
would take care of things, more and more and more and more 
people are going to die.
    So again, a bad consequence of a bad bill.
    Mrs. MILLER. Thank you.
    Thank you, Mr. Chairman.
    From a State of 1.7 million people, West Virginia has 
39,000 people living with Alzheimer's disease. Patients that 
live in the mountainous rural communities of West Virginia face 
significant barriers in accessing primary healthcare, let alone 
specialized clinical trials.
    In a 2019 study of one of their clinical trials, WVU's 
Neurology Department found that more than 25 percent of 
patients had to travel more than 100 miles one way to 
participate in the trial.
    Furthermore, patients with neurodegenerative disorders, 
such as Alzheimer's, depend on family members or a caretaker to 
bring them to their clinical trial visits, which only increases 
the barriers for patients.
    That is why CMS' national coverage determination for 
Medicare coverage of the Alzheimer's drug Aduhelm, and all 
future drugs in its class, is so worrisome. I am concerned that 
rural patients won't be able to access an entire class of drugs 
just because of where they live.
    Mr. Gonzales, you touched on the difficulty of having to 
travel long distances to access tests and studies. Can you tell 
a little bit--some more of the difficulties that patients do 
face in their ability to participate in these trials?
    Mr. GONZALES. Sure. Thank you very much for asking the 
question.
    It is extremely difficult, and I am going to go on a 
different--kind of different route.
    Mrs. MILLER. Just do it quickly.
    Mr. GONZALES. When I have to go somewhere, my wife is with 
me. So, there is two of us each time we are going somewhere. 
You have costs in travel. You have costs in hotels. Then you 
have costs in meals. You have costs in what you are going to 
wear. And then, at the end of the day, there is the cost in me. 
There is what is going to happen to me. Every time I travel, it 
is about 2 days to get myself back to normal.
    Mrs. MILLER. It makes you tired. I----
    Mr. GONZALES. It does.
    Mrs. MILLER. I understand that.
    Mr. GONZALES. Tired and cold and shaky.
    Mrs. MILLER. Yes. Continuing with the theme of policies 
which are--disproportionately affect rural patients, I am also 
concerned about CMMI's accelerating clinical evidence model. 
This model slashes Medicare payments for drugs approved through 
the FDA's highly successful accelerated approval pathways until 
they complete traditional approval. This is entirely 
nonsensical, and I can't really understand why they do that.
    Mr. Okon, smaller medical providers, including oncology 
centers in rural areas, typically operate on a very slim 
margin. Don't you think that this attempt to slow 
reimbursements of accelerated approved drugs will have a 
disproportionate impact on these rural providers and, 
therefore, their patients?
    Mr. OKON. Absolutely. It is amazing, Congresswoman Miller, 
that the consolidation, that impact of Federal policy already 
has had in independent providers, and that consolidation, 
especially in rural areas. So what happens? They close their 
doors. And then patients don't have access.
    And the problem is specifically with this one model is 
that, again, it puts--as I have said, it puts providers--us as 
hostages in the middle between the government and the drug 
company, whether it be the IRA in the negotiation, or here, 
where, if a product doesn't have one clinical trial for one 
indication, they haven't done it properly, they are going to 
knock down reimbursement.
    And you knock down reimbursement--we have seen this, 
history has demonstrated it, you not only have cancer clinics, 
but other providers that close. And, as a result, who suffers 
the most? Patients in rural areas----
    Mrs. MILLER. You are right.
    Mr. OKON [continuing]. And also, patients who have--who 
we----
    Mrs. MILLER. I have one more question.
    Mr. OKON [continuing]. Targeted health disparities.
    Mrs. MILLER. One more question----
    Mr. OKON. Yes.
    Mrs. MILLER [continuing]. Okay? Because you have explained 
that, due to the IRA, drug companies probably won't invest in 
expanded indication research when a drug will be target on the 
government's negotiation. Therefore, this law will certainly 
limit research and development for new indications.
    What impact does this have on patients; specifically, 
cancer patients?
    Mr. OKON. Well, that is the problem, is we talk about drugs 
as if they are the same, whereas in cancer drugs, you are 
talking about different indications developed over the 
lifecycle of the drug. I am not apologizing for the 
pharmaceutical industry. We have a problem, as Dr. Murphy said, 
with high cost of drugs.
    But the problem is, as you get closer to this negotiation, 
you would not put funds forward to study a new indication, 
especially--especially indications that deal with pediatric 
cancers.
    So you have a real problem in terms of the nature of drugs 
and lifecycle development, especially when you talk about 
cancer drugs, as opposed to drugs that may have just one 
indication always.
    Mrs. MILLER. Thank you. I yield back.
    Chairman BUCHANAN. Mr. Fitzpatrick, Pennsylvania.
    Mr. FITZPATRICK. Thank you, Mr. Chairman.
    Thank you all for being here. As co-chair of the Bipartisan 
Cancer Caucus in Congress and also having lost a brother to 
cancer, there is an issue of particular interest to me, which 
involves the impact that the Inflation Reduction Act will have 
on the development of future cancer medicines, which oftentimes 
are small-molecule drugs.
    As you all know, under existing law, small-molecule drugs 
are now subject to price negotiations after 9 years. In 
contrast, biologics will have 13 years.
    This small molecule penalty, as it has come to be known, 
will have devastating impacts on the development of new cancer 
medicines and on other small-molecule drugs. To avoid this 
crisis, I believe we all must commit to working across the 
aisle to ensure that small molecules are afforded the same 13 
years as biologics are. And I would encourage all of my 
colleagues on both sides of the aisle to support this effort 
today.
    My question is for you, Mr. Okon. Are you concerned that, 
if the small molecule penalty remains in place, that it could 
lead to a halt of new cancer medicines and lead to developers 
investing more heavily in biologic products instead?
    Mr. OKON. I think, Mr. Fitzpatrick, that logic would 
dictate that you have a longer time before the negotiation 
takes place, that you are going to be tilting your investment 
in biologics, right? Biologics are great. They have done a 
remarkable, wonderful job in cancer.
    But the issue with these small-molecule drugs where they--
and I am not the oncologist here, but where they basically 
penetrate the blood-brain barrier, they are absolutely 
essential.
    So, in my written testimony, I gave the example of 
Imbruvica, a small molecule that has basically been developed 
over the course of 11 indications over 9 years. Nine years is 
the magic mark. So I think that you are going to have a tilt to 
the process, and I think, at the very least, you should have 13 
years for small molecules.
    Mr. FITZPATRICK. And what do you believe the intent in the 
IRA was of this disparity between biologics to small molecules?
    Mr. OKON. I just that there is a basic misunderstanding. 
Again, I live in the world of cancer. I think there is a basic 
misunderstanding of looking at a drug is a drug is a drug. And 
a small molecule is not as new, innovative as pronounced as a 
biologic. But, in cancer, they are essential.
    I mean, right now, we are even dealing with cancer drugs 
that are--that are in short supply that are generic drugs that 
have been used for over 20 years. We are at a crisis point. 
Literally today, we are at a crisis point. So, I think that is 
part of the reason why.
    Mr. FITZPATRICK. And do you believe that this will 
undermine President Biden's Cancer Moonshot goal of reducing 
cancer death--the cancer death rate by half in 25 years?
    Mr. OKON. Well, I think, until the Cancer Moonshot--and I 
have told this to the Cancer Moonshot people--become aware of 
what is happening in not just research and development, but 
what is happening in terms of provider reimbursement, access, 
consolidation, PBMs--you name it--until they realize that, you 
can't just have something that sounds great and innovative as a 
Moonshot without dealing with the reality of our total cancer 
care system.
    Mr. FITZPATRICK. Thank you, Mr. Okon.
    Mr. Chairman, I am going to be working hopefully in a 
bipartisan manner with this committee to address this very 
issue. And I also will be submitting a question for the record 
on another priority of mine related to the HELP Copays Act.
    But I am out of time, so I yield back.
    Chairman BUCHANAN. Mr. Evans, Pennsylvania.
    Mr. EVANS. Thank you, Mr. Chairman.
    Dr. Kesselheim, last year, Congress and the Biden 
administration passed the Inflation Reduction Act, which really 
will help the American people, including constituents of 
Philadelphia. This law is making healthcare more affordable and 
accessible to all people, especially in middle-income 
neighborhoods, which I care deeply about.
    For too long, the American people have been witness to 
government officials talking about the need to reduce the costs 
of prescription drugs, but little action has taken place.
    Through the Inflation Reduction Act, we are taking steps to 
actually reduce the cost of prescription drugs. Two examples. 
IRA caps Medicare part D spending at $2,000 per year. Over 
57,000 of my constituents are enrolled in this Medicare part D 
program. This provision potentially helps thousands in my 
district save money on needed medication next year.
    The IRA caps spending on insulin under part B and D at $35 
per month, is essentially over $140,000 in Medicaid benefits in 
my home State of Pennsylvania.
    This is one question--will you discuss the affordability of 
these drugs along with the impact on the health premium of out-
of-pocket costs?
    Dr. KESSELHEIM. Yeah. I mean, I think that this is another 
very important part of the Inflation Reduction Act, along with 
the price negotiation part of it. The parts of the Inflation 
Reduction Act that lowered out-of-pocket costs for Medicare 
patients, which, because of the extremely high prices for these 
drugs set by manufacturers in the U.S., because we allow 
manufacturers to set whatever price they want, we get extremely 
high prices for drugs.
    And Medicare beneficiaries were paying, especially those--
some of those with cancer were paying enormous amounts out-of-
pocket for those products. And so, I think it will be a very 
important step to reduce those out-of-pocket costs.
    But I think it is also important that the IRA, in addition 
to that, included a process for negotiating drug prices, 
because that can also help reduce the overall spending on drugs 
that is not just out of pocket, but also the spending of--that, 
you know--through the--from taxpayers in general on the costs 
of Medicare and Medicaid.
    Mr. EVANS. Do you have recommendations to address this 
affordability challenge?
    Dr. KESSELHEIM. Sure. I mean, I think that there are a lot 
of ways to try to address the affordability challenge for 
prescription drugs. I think the--so, first of all, we need to 
be making sure that we are prescribing the right drugs. There 
are many cases where patients are given prescriptions for 
brand-name drugs when a lower cost brand-name drug or a generic 
drug might be good--just as good for those patients.
    I think we also need to be thinking about what reasons that 
there are that why these drugs are so expensive, and one of the 
reasons that they can be so expensive is, as Congressman 
Doggett mentioned in his opening remarks, the fact that we 
allow drug companies to obtain dozens and dozens of patents on 
these products to extend their market exclusivity and prevent 
timely competition from other products as well.
    Dr. KESSELHEIM. So, I think we need to be thinking about 
those kinds of issues to try to understand why drugs are 
expensive and to try to figure out how we can ensure that 
patients are prescribed drugs that are--that are reasonably 
priced and the correct drugs for them.
    And then, if they are, you know, in cases where there are--
it is an expensive drug and there are no other opportunities--
options for patients, that is where insurance is supposed to 
come in and cover those costs. And that is why I think it is 
useful that we have the out-of-pocket caps as part of the 
Inflation Reduction Act, as well.
    Mr. EVANS. Thank you, Mr. Chairman.
    I yield back the balance of my time.
    Chairman BUCHANAN. Ms. Tenney of New York.
    Ms. TENNEY. Thank you, Mr. Chairman and Ranking Member.
    And thank you to our witnesses today.
    I really appreciate your testimony and your expertise and 
the time that you spend researching and trying to find cures 
and also having Mr. Gonzales here.
    And I--your family must be so grateful for every minute 
they have you. So, we--we wish you the best and we hope that 
some of these gentlemen here may be able to help you with 
research to get you a longer life and a longer life with your 
family.
    Mr. GONZALES. Thank you, ma'am.
    Ms. TENNEY. So, we appreciate you being here, because I 
know it is not easy to do this and sit in front of Congress.
    But, I want--you know, I want to make just a couple 
comments and I just, you know, the United States has proven to 
be the most important health innovation ecosystem in the world. 
We spend more than any other country by more than 28 percent. I 
think Germany is the next closest, Canada, Switzerland. And we 
put, we invest a lot of money into trying to find cures. And a 
lot of these groundbreaking cures, it is incredible.
    However, the success, we see these headwinds due to 
policies enacted under the Biden administration--I know the IRA 
has been brought up many times. But it takes on average right 
now 3.3 years for treatments approved by the FDA to be covered 
by Medicare.
    So, Mr. Makower, your ``valley of death'' discourages 
innovation, denies new treatment for seniors. While the Trump 
administration did some work to close the gap, the Biden 
administration quickly repealed role, which we have heard a 
little controversy over today, and has yet to replace it with 
another alternative in 2 years.
    And one of the things that I really picked up on that I 
wanted to go back and say we have gone back and forth.
    And, Mr. Okon, you made some comments that was exactly my 
experience. I took care of both manufacture parents, both with 
very serious illnesses. My dad was a survivor of a dissecting 
aortal aneurism. Ended up paralyzed, blind, and with multiple 
organ failure for the last 7 years of his life but was able to 
serve. So, he had a strong life force for sure.
    But you described something that just made me realize, had 
he not had a daughter who was a lawyer and someone who could 
advocate for him, you describe a bizarre, convoluted system, 
PBMs, nonprofit 340B hospitals, high cost of what it is to be 
out of pocket. This is what I see as, like, when we 
overregulate--and I think we should appropriately regulate.
    Tell us what--about this overregulation and why it is 
preventing us from having innovation, why this is--this sort of 
one-size-fits-all formula? I understand the need to regulate. I 
think our--you know, Big Pharma is being said in a negative 
connotation. But how can we make this, so we regulate 
appropriately, while maximizing innovation and understanding 
the protection for patients?
    Mr. OKON. Well, I will tell you, Congresswoman Tenney, to 
mention two things that you talked about, is that--and it is 
good to see that there is bipartisan now awareness that PBMs 
are a problem. PBMs are fueling drug prices in my world of 
cancer care. I can't tell you how many times a patient is 
denied or delayed a drug, a cancer drug, because of a PBM. And 
so we have got to do something about PBMs.
    But I will tell you--and I know it is a sore topic for 
some. But we did a study using the hospital's own data. These 
large nonprofit 340B hospitals, do you realize that they are 
marking up cancer drugs, the top cancer drugs on average five 
times? Our report is right on our website. It is the hospital's 
own data.
    So, again, to go back to what I said in my written 
testimony, in my oral that Dr. Mark Fendrick always says there 
is a difference between the price and the cost. I am not 
apologizing for the pharmaceutical industry. They do dumb 
things. But the fact of the matter is it is also the cost. And 
you walk into some of these big health systems, and you are 
literally in a cancer drug, having them marked up five times, 
even a lot greater than that.
    So, you--and the other thing we talk about other countries. 
You don't see other countries with this convoluted system that 
we have. You don't see PBMs that basically have merged with 
insurers, that are now hiring doctors. United Healthcare owns 
70,000 physicians. You don't see hospitals marking up----
    Ms. TENNEY. Could I--if I can just reclaim my time for a 
moment, I want to tell you I have a friend who is a 
veterinarian, owns multiple veterinary clinics. And he said it 
is lot cheaper to get an MRI for a dog than it is for a human 
being because there is so much intervention from government, 
insurance companies, and other nonphysician-based groups that 
have really kind of undermined our system.
    So I--although they all have a role, I just get very 
concerned about how they have taken control of our healthcare 
system and we have lost control. And the innovators and the 
people that we need to solve the problems that we have to come 
up with the cures, that we need for the future are being lost 
in this PBM, you name it, every type of bureaucracy that is 
preventing us from innovating.
    But I really--I had a bunch of other questions but I have 
run out of time.
    But thank you so much to all of you, and I am sorry I 
didn't get to everyone.
    Thanks again, and I yield back.
    Chairman BUCHANAN. Mr. Moore, Utah.
    Mr. MOORE. Thank you, Chair.
    Thanks for being here today, witnesses.
    Our capacity for innovation is among one of our Nation's 
greatest assets. Right? We have seen this play out time and 
time again as we have led the world in so many different 
circumstances. And, you know, I am primarily speaking of the 
healthcare sector, obviously, especially today.
    Disruptors, entrepreneurs, innovators continually enhance 
patient care and outcomes with new discoveries and 
developments. Utah, the State where I represent, is home to 
some of the most creative innovators in the industry. And I 
really do appreciate the chairman for assembling this group to 
ensure that America remains at the forefront of medical 
innovation.
    A couple of questions for Dr. Makower.
    In your testimony you mentioned that investors may be 
hesitant to support innovative medical devices because they may 
be trapped in the ``valley of death'' that my colleague from 
New York discussed, you know, that period where without 
Medicare coverage following an FDA approval. It is hard for 
folks to really wrap their heads around that, given that, you 
know, they are both government entities and the lapse that 
exists there. Right?
    So how has the situation affected patients who could 
benefit from potentially lifesaving or life-altering novel 
medicines? Give us some--your thoughts on that.
    Dr. MAKOWER. It is incredibly impactful.
    Many of these therapies have undergone rigorous clinical 
trials, substantial evidence, ultimately resulting in a 
rendering by the FDA that their technologies are safe and 
effective, diseases like heart failure, like cancer, diabetes.
    And in the sense that--let's just take one example, 
continuous glucose monitoring. We all know how tightened 
control of glucose can ultimately prevent very expensive and 
very devastating side effects, the loss of limbs, heart 
attacks, stroke. Those types of delays are very significant for 
patients as they wait for technologies like that to be 
available.
    Mr. MOORE. Thank you.
    It is. It is hard for folks--I mean, they think of these 
organizations as one and the same and they are derived from the 
same area. We have got to be more in sync with being able to 
deliver this care to these patients.
    We have also witnessed the consequences of MCITs which are 
all in Utah. Again, I bring up Utah. There is a local company 
with an FDA breakthrough device designation for Parkinson's 
patients, and it lost a significant amount of funding following 
the repeal of MCIT. This company has struggled to replace the 
lost funds. And as a result, Parkinson's patients may never 
have access to a product that could improve their motor 
function.
    My colleagues and I firmly believe that a pathway to MCIT 
is essential for Medicare coverage of innovative technology. 
So, I co-led a bipartisan bill with Dr. Wenstrup and 
Congresswoman DelBene and Sewell to reinstate an MCIT-like 
pathway.
    Can you share why a modification of the current coverage 
pathway is insufficient and why a pathway similar to MCIT is 
needed?
    Dr. MAKOWER. Absolutely. I think there is a 
misunderstanding that when a technology is deemed a 
breakthrough, it really means that that product has the 
potential to have a major impact on a debilitating or life-
threatening disease.
    After that designation, then there is a substantial amount 
of evidence that is necessary to clear FDA. Very few companies 
actually make it, or technologies actually make it to the FDA 
approval. Once they have finally crossed that gauntlet, to have 
proven themselves safe and effective with the FDA, especially 
for breakthrough technologies, that is where the opportunity is 
to give patients access to it. And I think as evidenced by our 
survey, innovators are very, very open to continuing to 
generate evidence development while it is available to 
patients.
    And I think that the proposal that has been put forward, 
which I think is a very supportable one, would allow that and 
give patients access, early access, to these therapies as soon 
as they are available by FDA, while continuing to collect any 
necessary evidence that CMS may require.
    Mr. MOORE. Thank you so much. I appreciate it.
    Lastly, Dr. Lakdawalla, the Biden administration has chosen 
to weaken intellectual property protections for vaccines and is 
contemplating a similar action for diagnostics and treatments 
in addition to that. How might this decision adversely affect 
our long-standing atmosphere of innovation and the future 
accessibility for the cure of patients?
    Mr. LAKDAWALLA. Thank you, Congressman Moore.
    In general, weaker IP protection we know lowers incentives 
to innovate simply because it also weakens the rewards for 
innovation.
    There is a narrow path for the usefulness of intellectual 
property waivers, but the problem is there is risk on several 
sides. We know if waivers are granted solely for very low-
income countries, it doesn't have much impact on innovation and 
it can have significant impacts on people's health.
    The problem is that if you waive IP rights in one country, 
there is the possibility and the expectation that it may happen 
for other countries that are not low-income countries. And it 
is that expectation that then can dampen innovation, even 
absent the actual waiver.
    So, it is opening Pandora's box. It is a possible strategy, 
if there are very tight guardrails, that we can do this 
successfully, but I worry that there are considerable risks 
when we go down this path.
    Mr. MOORE. Thank you for your perspective.
    I yield back.
    Chairman BUCHANAN. Mr. Davis, Illinois.
    Mr. DAVIS. Thank you, Chairman Buchanan, and thank you, Mr. 
Doggett.
    I want to thank all of the witnesses because this has been 
a very profound discussion that we have had this afternoon.
    Mr. Gonzales, I want to simply associate myself with what 
all of my colleagues have said about your courage, your 
determination, your advocacy, and the fact that you are with us 
this afternoon. Your testimony will linger with me for a long 
time.
    Mr. GONZALES. Thank you, sir.
    Mr. DAVIS. You know, when I think of healthcare, I really 
think of the evolution and development that has brought us to 
where we are.
    I grew up in the rural south, and most of the people that I 
knew when I was a kid had no access to real healthcare at all. 
There was one physician in the county where I lived. There was 
no Medicaid and Medicare which means that most of the people 
that I interacted with had no way to pay for healthcare.
    I also remember that there were no hospitals, and so Hill-
Burton got passed. Then we were fortunate that the war on 
poverty got going, the march and the demonstrations. And we got 
passage of what we called community health centers. And now we 
have a network of federally qualified health centers all over 
the Nation. And so, I call all of these great movements towards 
where we are.
    Then we got the Affordable Care Act that--the Obama bill, 
to some people, Obama medicine, and just recently the Inflation 
Reduction. Now we are at a level where we are talking about not 
just the reduction of cost but also the continuation of 
therapies and continuation of medications that can be helpful, 
and we subscribe that all of these have been very helpful.
    Dr. Kesselheim, I was interested in your testimony where 
you--and I agree with you that we ought to double the amount of 
money that we put into the National Institutes of Health. I 
believe that you can define the greatness of a society by how 
well it treats its old, how well it treats its young, how well 
you treat those who are infirmed, suffer with disabilities, are 
described as being disadvantaged. And I was wondering about 
that.
    And so, if you are not willing to put in the resources that 
are needed, you know, if you give tax cuts to the wealthy, if 
you disavow needs movement, does that move us towards where we 
need to be going?
    Dr. KESSELHEIM. It definitely doesn't.
    And I would say that I agree that if you double the NIH's 
budget that you would be able to put a lot more money into 
doing things that the NIH doesn't invest as much money in right 
now including trying to ensure that approved drugs are tested 
in populations like elderly patients or children, in doing 
comparative effectiveness studies to test drugs against each 
other, because drug companies refuse to do that, because there 
is a risk that their particular drug may not win.
    And so you don't get a lot of those essential tests that 
would inform physician-patient decision-making around--around 
those kinds of products.
    So I think you could move a long way towards the kind of 
society that you are talking about by providing additional 
resources that the NIH could then--could then use to invest in 
those kinds of testing to be able to, you know, to be able to 
understand how drugs works in these--in these kinds of 
populations, to improve disparities and access to them and in 
disparities and availability in the kinds of payment who are 
enrolled in clinical trials.
    All of those things are things that would morph funding, 
that the public infrastructure could better do.
    Mr. DAVIS. Thank you very much, Mr. Chairman.
    And I must say to you this has been a great hearing.
    Chairman BUCHANAN. Thank you.
    Mr. DAVIS. Thank you.
    And I yield back.
    Chairman BUCHANAN. Mrs. Steel of California.
    Mrs. STEEL. Thank you, Mr. Chairman.
    And thank you all the witnesses for long hours.
    And thank you, Mr. Gonzales, that your testimony was just 
really touching. And I try to understand that what you are 
going through, but I understand that what your families are 
going through because my mom was really sick before she passed 
away with cancer. So, I totally get that.
    This hearing is extremely important for the constituents I 
serve and for California's economy. The Medicare coverage of 
innovative technology pathway to accelerate Medicare coverage 
for breaking-through devices was supposed to be effective on 
March 15, 2021. President Biden delayed the effective dates 
numerous times, first to May 15 and then until December 15. And 
he only rescinded this rule which would speed up safe and 
effective new medical devices to Medicare beneficiaries.
    I am disappointed in President Biden's decision to rescind 
MCIT, and I am frustrated that it has been taking over 2 years 
for the Biden administration to issue a proposed rule for his 
version traditional coverage of emerging technologies.
    As our witness, Dr. Makower, said in the recent paper 
Medicare beneficiaries are more likely to have life-threatening 
or irreversibly debilitating diseases or conditions. They are 
more likely to benefit from access to breakthrough technologies 
that promise more effective treatment or diagnosis.
    With this in mind, Dr. Makower, can you share with us the 
breakthrough example and how it would directly improve patient 
care? And, secondly, could you comment on how rescinding MCIT 
without a replacement has made it difficult for California's 
life science community to innovate?
    Dr. MAKOWER. Absolutely.
    As I mentioned, we have just recently done a study with 
actual data from publicly available sources and in that data 
set are numerous technologies. Many of them do, I would say the 
vast majority of them apply to seniors. There are many examples 
of this. One other example, I have given the CGM example.
    Another example is technology, let's say, to prevent the 
likelihood of stroke during certain interventions. I think we 
can all say that to have a stroke is a devastating thing, and 
the cost of managing someone who has had a stroke is very 
expensive to the healthcare system.
    So, there is a long list of these, but I will go to the 
next part of your question to answer that one next. Certainly, 
patient impact is significant.
    In California, we have seen a retraction of dollars from 
investors willing to back these important new therapies. 
Valuations are down. Jobs are being lost. And, most 
importantly, patients are being impacted.
    I think that there is a reticence--and I teach students 
and, you know, encourage them to go out into the world and 
invent important solutions. And when they go out and they talk 
to their colleagues who are actually in the business of doing 
it and understand how difficult it is and how unlikely it is 
that they can be successful, they look elsewhere. That is a 
tragic phenomenon that we must reverse.
    And I think the key here is to be able to bring your 
product to market after rigorous testing, once it is validated 
to be safe and effective, to find a way to make it available to 
patients as soon as possible.
    Mrs. STEEL. Thank you.
    Dr. Lakdawalla, if I pronounce it right, before I begin, I 
would love to recognize you that you are a professor at the 
University of Southern California. I am happy that you are here 
as one of our witnesses. Fight on.
    Doctor, we have been seeing a 13 percent of in bioscience 
industry employment, nearing 335,000 jobs in 2021 and roughly 
$7 million in R&D expenditure alone in fiscal year 2020. There 
are roughly 13,000 life sciences establishments in California 
with $90 billion in output contributions alone in the Los 
Angeles area, Long Beach, Anaheim.
    Could you elaborate on how the U.S. International Trade 
Commission's assessment of a proposed waiver of intellectual 
property rights for COVID-19 diagnostics and therapeutics at 
the World Trade Organization could damage California's life 
science's ecosystem's proposed national security risk of IP 
theft by CCP and how expanding this waiver would threaten 
investments, research, and development work in our State?
    Mr. LAKDAWALLA. Thank you, Congresswoman Steel.
    I think there are two issues here. One is what actually 
happens, and two is what could happen.
    So, what actually happens here is the extent to which IP 
rights are waived will have a chilling effect on investment 
immediately or the technologies that are impacted. That is a 
direct effect that we can see.
    But the other kind of potentially more uncertain and in 
some ways more insidious risk is that if there is a waiver or 
if there are, as we see, waivers, then that has to be built 
into everybody's risk benefit calculus and investment. And 
there has to be an understanding that there is a chance of IP 
waivers and other disease areas, and that has a chilling 
effect, more broadly, outside of the areas where the waivers 
take place.
    So that is, I think, probably the bigger risk because that 
potentially spreads across a wider swath of the life sciences 
industry, impacting employment and innovation spending in our 
home State, as well as in firms all over the world.
    Mrs. STEEL. Thank you very much.
    I yield back.
    Chairman BUCHANAN. Mr. Smucker, Pennsylvania.
    Mr. SMUCKER. Thank you, Mr. Chairman.
    I would like to thank the chairman for allowing me to 
participate. I am not a member of this subcommittee, but it has 
been fascinating and I think a very important discussion.
    I would like to thank each of the witnesses for being here, 
particularly Mr. Gonzales. Thank you for your courage in 
sharing your story. That is, I think, really helpful for us to 
hear your story.
    I can tell you that I have heard from people all across my 
district who have been in similar circumstances with 
Alzheimer's and have seen the devastating impact but also other 
diseases. We have been touched in my family by cancer and heart 
failure I think someone mentioned. And so all of us, I think, 
have been impacted.
    And so, I am not an expert in this area. I am not a doctor. 
I don't have a background in healthcare. But knowing the value 
of your system here where we are known across the world as 
developing some of the best treatments and then seeing some of 
the potentials that we have, I am from Pennsylvania. And 
particularly the southeast part of Pennsylvania we have a 
really great biotech industry and a pharma industry. We have 
talked to a lot of companies that are developing things that 
could be absolutely life-changing and transformational going 
forward, I think someone else mentioned that, you know, to 
people but also could save a lot of money.
    And so, I support--I have supported, after hearing some of 
these stories, government funding to help drive some of this. 
So, NIH, I have always supported it, and research.
    But I think the really important thing--and I was a 
business owner. So, I understand a regulatory system that works 
well to encourage innovation, and I understand the risk and 
reward. You have to get that right. And So, I get very 
concerned when we do things that drive down that innovation. It 
is one of the concerns I had with the IRA. Our CBO said that 
there would be--they estimated 13 less new drugs developed. I 
think I have that number right. But other outside--13 fewer 
cures is what they said and other outside experts indicated 
that number could be as high as 135 different cures.
    Mr. Lakdawalla, do you agree with those estimates? And then 
I have a few other questions that I think are going to be 
follow-ups to some of the things that are discussed. But what 
do you think of those estimates? And tell me about the impact 
that will have on people if they are true.
    Mr. LAKDAWALLA. Thank you, Congressman Smucker.
    The best evidence and the peer-reviewed economics 
literature suggests that every 2-\1/2\ billion-dollar reduction 
in pharmaceutical revenues leads to one less drug approval.
    In principle, there are estimated to be hundreds of 
billions of dollars of lost revenue due to the Inflation 
Reduction Act, according to the CBO. So, one might do the 
multiplication and see that it is way more than what the CBO 
forecasts.
    Now in fairness, the effect might not be linear. So maybe 
it is not fair to just multiply in that way. And it is also 
just difficult to predict exactly what will happen because we 
are now embarking on a grand new experiment that no country has 
ever performed. The U.S. is the biggest global engine of 
innovation. So, what we do here has bigger impacts.
    Mr. SMUCKER. Yeah, so it will have an impact. I am 
concerned. I am running out of time.
    I do want to get to--there has been--other questioners have 
brought up this difference between traditional accelerated FDA 
approval. And I just want to understand that.
    In her testimony before the Energy and Commerce Committee 
back in April 26, CMS Administrator Brooks-LaSure said that CMS 
views FDA-accelerated approval in a different category that is 
different than full approval.
    What does that mean? And in your view what effect will that 
have on innovation?
    Mr. LAKDAWALLA. Well, I think it is a depressing effect on 
innovation. I think it is important to think about the 
rationale for breakthrough approvals in the first place, that 
it exists because there are situations of very high unmet need 
where the benefit risk calculus is different.
    When patients have very few alternatives, then it may make 
more sense to use a technology with more uncertainty.
    Mr. SMUCKER. That is why I support The Right to Try so 
much.
    Mr. LAKDAWALLA. Exactly.
    Mr. SMUCKER. But should we be thinking in Congress of 
taking steps to clarify that reasonable and necessary standard? 
Is that something we should be thinking about?
    Mr. LAKDAWALLA. Well, I think that standard is very 
ambiguous, and I think the more that can be done to clarify it 
for innovators, the better it is for incentives to innovate.
    Mr. SMUCKER. All right. I am out of time.
    Again, thank you so much for being here.
    Chairman BUCHANAN. Ms. DelBene, California.
    Ms. DELBENE. Washington.
    Chairman BUCHANAN. Washington.
    Ms. DELBENE. Thank you, Mr. Chairman and Ranking Member, 
for allowing me to join this hearing, focused on this important 
topic on ways we can boost medical innovation.
    I want to thank all of our witnesses for taking the time 
and joining us. Your feedback has been incredibly helpful.
    My home State of Washington is home to many leading medical 
device companies and promising startups that are developing 
cutting-edge therapeutics and diagnostics.
    Americans battling diabetes, cancer, heart disease, and so 
many other challenges depend on these innovators to develop the 
next breakthrough technology to improve and save lives. But if 
we want these medical advances to make a difference, people 
need to have access to them. And, unfortunately, even after the 
FDA has determined that a breakthrough medical device is safe 
and effective, it can take over 5 years for Medicare to cover 
it. And so, we have got to do better for Medicare 
beneficiaries.
    That is why I have championed the bipartisan legislation, 
along with my colleagues, Representatives Wenstrup, Sewell, and 
Moore, on this subcommittee called the Ensuring Patient Access 
to Critical Breakthrough Products Act. This bill would create a 
speedy and predictable pathway for Medicare coverage so that 
seniors have faster access to the newest cures and therapies, 
while ensuring that these technologies remain safe, effective, 
and relevant to the Medicare population.
    Dr. Makower, you talked about this a little bit earlier. 
But I wondered if you could discuss how speeding up Medicare 
approval for breakthrough technologies could actually lead to 
major cost savings for Medicare and any examples you might have 
on that.
    Dr. MAKOWER. Absolutely. Absolutely. And thank you for your 
support of that bill.
    The way that you can save money with devices is by avoiding 
complications, complications of the disease itself. I gave the 
example of diabetes. Heart disease, very expensive. Stroke, 
extremely expensive. The impact of losing a limb, also 
tremendously expensive. That, in exchange for a device which 
would allow someone to track their blood glucose and with more 
regularity and control to avoid those complications, is a very 
small price to pay for these savings and just an example of the 
types of savings that a device could provide to the system if 
it was able to be covered.
    Ms. DELBENE. And, you know, we are talking about the 
savings, the financial savings. But, clearly, in terms of the 
impact on patients and quality of life and better outcomes, 
that also may be more qualitative but incredibly important, 
too.
    Dr. MAKOWER. Absolutely right.
    Ms. DELBENE. What types of companies are developing 
breakthrough technologies from your point of view, and what are 
the barriers that they face right now?
    Dr. MAKOWER. I mean, to be a medical device innovator, you 
face tremendous barriers at every step of the process.
    Many of these inventions have never been accomplished 
before. It requires tremendous courage, the ability to convince 
other investors to join you on that journey, employees to join 
you on that journey. And every study, every clinical study, 
every advance, every iteration of the technology is always 
fraught with risk.
    Then the regulatory process begins and that is--that can be 
very long. And it can be very difficult. And the FDA has a 
fantastic safety record. It is not an easy process to navigate, 
even if you have a de novo 510(k) or a PMA, which are 
categorizations for usually breakthrough technologies.
    Upon the other side of it, you now have a fully staffed 
company with the, per regulations, a full-on team with salaries 
and jobs, all making sure that that product is going to be 
produced exactly the same every time and that the data will 
continue to be monitored and all the reporting requirements to 
the government.
    What happens next really matters. If you cannot sell your 
product, if you cannot get that into patients' hands, 
obviously, we have talked about the patient impact. But who 
funds that? Investors have to fund that. And as time goes on, 
they lose patience. And those companies may go out of business, 
depriving those patients of that therapy, ultimately.
    That is why timely, predictable, and, you know, speedy 
access to technology is so important, not only for patients but 
really for the innovation ecosystem.
    Ms. DELBENE. Yep. And making sure that we look at the data 
and the science behind it to get us there.
    Dr. MAKOWER. Absolutely.
    Ms. DELBENE. Thank you so much, everyone, for being here.
    I yield back, Mr. Chairman.
    Chairman BUCHANAN. Thank you.
    Last but not least, Mr. Arrington from Texas.
    Mr. ARRINGTON. I was worried, Mr. Chairman, you would 
introduce me as being from California, as well.
    Now that my greatest fear has been allayed.
    Chairman BUCHANAN. Should I say West Texas?
    Mr. ARRINGTON. I don't need anymore primary opponents. 
Thank you.
    Honored by your presence and your contribution to our 
discovery and our problem-solving exercise.
    Let me frame this up a little bit. In my opinion, America 
is the laboratory of innovation for maybe many reasons, but two 
key features are market economy and patent system: Market 
economy, creating value for consumers primarily through 
competition but other elements, and the patent system promoting 
innovation through protecting intellectual property.
    Would you nod your head if you agree so far?
    Okay.
    Well, the problem is government intervention, at least too 
much, the wrong kind can hurt the market economy side. And the 
private sector can--they are very resourceful--can exploit or 
game the patent side. And that is what I want to focus on for 
the purpose of my question.
    So, the patent system is set up to develop or encourage the 
development of novel products. But you will have drug companies 
that will create an original novel product. And then they will 
apply for a new application, if you will, of the original 
product.
    Now the question is: Is it truly a new product? But what 
they will do is build a wall or what they call a patent thicket 
of patents around we'll call it duplicative patents, or another 
name is terminal disclaimers. But it becomes this dense wall 
around this new patent application derivative of the original 
product.
    Well, any competitive group with a competitive product to 
challenge whether or not that innovation is, in fact, novel 
would have to go through layers of litigation of each of the 
duplicative patent. And it is onerous, and it is expensive.
    And if you are the original patent with the new 
application, you just spend $25,000 on all those patents. Maybe 
it is a million dollars to litigate each of them. And so maybe 
you are $10 million, $15 million to protect an extension of 
what I would call monopoly forces or an exclusive market. We 
will never know if that was a legitimate novel development 
because the competitors don't have the resources to litigate 
through that packet thicket.
    Now I did the best I could to explain what I believe is a 
major barrier to innovation, because the incentive system in 
too many cases is for the--for the company, the branded 
company, if you will, is to spend the money to protect all 
these patents as opposed to invest the hundreds of millions, if 
not billions, into creating novel value.
    So, the incentive is to do one, which is to prevent 
competition, anticompetitive monopoly forces, versus the money 
it takes to develop truly novel innovation.
    Now, Dr. Lakdawalla, I have done my best to explain that. 
Do you believe that system exists today? And does that system, 
in fact, inhibit innovation and ultimately as a result, limit 
patient access to new treatment and cures?
    I yield for your answer.
    Mr. LAKDAWALLA. Thank you, Congressman Arrington.
    I think that there are some foundational problems in the 
way that we price and sell drugs that come to a head in various 
different ways.
    One of the foundational problems is that prices often don't 
reflect value. And so, drugs are rewarded long past when they 
are actually producing incremental value and that then creates 
these kinds of distortions. So, I think the causality is a 
couple of layers beneath that.
    I think rewarding drugs for value would also stimulate new 
entry that results in more creative destruction via the entry 
of new drugs that can compete.
    I do think that there are a number of issues with 
biosimilar entry and generic entry that are problematic. We 
overpay for generics and the Schaeffer research center shows, 
for instance, that Medicare pays more than what consumers pay 
in cash at Costco.
    So, some of these are quick wins in the way generics and 
biosimilars function, but I think getting prices right would go 
a long way towards addressing a number of different symptoms of 
our various economic diseases in this market.
    Mr. ARRINGTON. Mr. Chairman, my time has expired.
    Chairman BUCHANAN. You are from Texas. You get an extra 10 
minutes.
    I would like to thank our witnesses for appearing before us 
today. I think it has been very productive.
    We have received several statements of support for this 
hearing in ensuring patients have access to innovative 
therapies.
    Without objection, I submit those for the record.
    Please be advised members have 2 weeks to submit written 
questions to be answered in writing later. Those questions and 
your answers will be made part of formal hearing record.
    With that, the meeting stands adjourned.
    [Whereupon, at 4:50 p.m., the subcommittee was adjourned.]
      

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