[House Hearing, 118 Congress]
[From the U.S. Government Publishing Office]
HEARING ON EXAMINING POLICIES THAT
INHIBIT INNOVATION AND PATIENT ACCESS
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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
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__________
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
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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
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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
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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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