[House Hearing, 118 Congress]
[From the U.S. Government Publishing Office]
FIELD HEARING ON ACCESS TO HEALTH CARE
IN AMERICA: UNLEASHING MEDICAL
INNOVATION AND ECONOMIC PROSPERITY
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HEARING
BEFORE THE
COMMITTEE ON WAYS AND MEANS
HOUSE OF REPRESENTATIVES
ONE HUNDRED EIGHTEENTH CONGRESS
SECOND SESSION
__________
JULY 12, 2024
__________
Serial No. 118-FC30
__________
Printed for the use of the Committee on Ways and Means
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__________
U.S. GOVERNMENT PUBLISHING OFFICE
56-531 WASHINGTON : 2024
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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 TERRI SEWELL, Alabama
LLOYD SMUCKER, Pennsylvania SUZAN DelBENE, Washington
KEVIN HERN, Oklahoma JUDY CHU, California
CAROL MILLER, West Virginia GWEN MOORE, Wisconsin
GREG MURPHY, North Carolina DAN KILDEE, Michigan
DAVID KUSTOFF, Tennessee DON BEYER, Virginia
BRIAN FITZPATRICK, Pennsylvania DWIGHT EVANS, Pennsylvania
GREG STEUBE, Florida BRAD SCHNEIDER, Illinois
CLAUDIA TENNEY, New York JIMMY PANETTA, California
MICHELLE FISCHBACH, Minnesota JIMMY GOMEZ, 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
C O N T E N T S
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OPENING STATEMENTS
Page
Hon. Jason Smith, Missouri, Chairman............................. 1
Advisory of July 12, 2024 announcing the hearing................. V
WITNESSES
Kasey DeLynn Shakespear, Parent of a Rare Disease Patient, Rural
Health Champion................................................ 4
Dr. Heloisa P. Soares, Associate Professor and Medical Director
of Clinical Trials Office, Huntsman Cancer Institute at the
University of Utah............................................. 11
Frank Watanabe, President and CEO, Arcutis Biotherapeutics....... 16
Kelvyn Cullimore, CEO, BioUtah................................... 28
LOCAL SUBMISSIONS FOR THE RECORD
Local Submissions................................................ 81
PUBLIC SUBMISSIONS FOR THE RECORD
Public Submissions............................................... 97
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ACCESS TO HEALTH CARE IN AMERICA:
UNLEASHING MEDICAL INNOVATION AND
ECONOMIC PROSPERITY
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FRIDAY, JULY 12, 2024
House of Representatives,
Committee on Ways and Means,
Washington, DC.
The committee met, pursuant to call, at 10:02 a.m.
Mountain, ARUP Laboratories, 540 S. Chipeta Way, Salt Lake
City, Utah, Hon. Jason Smith [chairman of the committee]
presiding.
Chairman SMITH. The committee will come to order.
Without objection, the gentleman from Mr. Utah, Mr. Owens,
and the gentlewoman from Utah, Ms. Maloy, are authorized to
participate in the hearing of the best committee in Congress
and ask questions.
Good morning. I want to thank everyone for joining us, and
especially thank our host, ARUP Labs, for welcoming us to your
impressive facility. It is incredible to be able to watch the
future of medicine happening right before us during this
hearing.
I also want to thank Congressman Moore for hosting us here
today. We had a great tour this morning of a private charity
that helps meet basic needs and uses the power of meaningful
work to help lift families out of poverty. And I am looking
forward to another great event here.
Everyone here should know that back in D.C., Blake is not
shy about sharing how Utah could be a model for the rest of
America at everything. So he is your advocate and he never
stops. And we are proud that he is one of our shining members
of the Ways and Means Committee.
The Ways and Means Committee is in Salt Lake City to listen
and learn directly from Americans making the next generation of
medicines and the patients who are benefiting from those
breakthroughs to see what Congress can do to encourage medical
innovation in America.
American innovators are the world's best. Our researchers,
scientists, and doctors discover and develop new tests,
treatments, and technologies that have improved the lives of
millions. Today, new treatments are providing levels of quality
care and transforming lives in ways that once seemed
unthinkable.
Today, tens of millions of Americans can consult with their
doctor, have their vital signs monitored, receive drug
infusions or even dialysis all from the comfort of their home.
Patients have more control over their care and, most
importantly, these breakthroughs are improving their health.
Thanks to the work of this committee, seniors are one step
closer to having access to more cutting-edge treatments. Just
recently, the committee voted, with support of both Republicans
and Democrats, to allow Medicare to cover anti-obesity
medication, multi-cancer early detection screenings, and
breakthrough medical devices. When these bills become law,
seniors will have access to some of the most advanced
treatments available. Importantly, the legislation is an
investment to help America tackle the explosive growth of
healthcare spending in the coming decades. With 95 percent of
adults 60 and older having at least one chronic disease,
innovation and access is a must for the long-term health of our
country.
America has the infrastructure, the people, and know-how to
stay the world's leader in medical innovation, but the next
groundbreaking cure or treatment will only be found because of
strong support for research and development. Policies coming
out of Washington must encourage more R&D to happen here in
America. We must act to ensure Americans stay at the forefront
of developing the best, most effective medical treatments.
One of the first steps to growing R&D is cutting the red
tape keeping new breakthroughs, like revolutionary Alzheimer's
medication, out of the hands of patients. Legislation also
approved by this committee this year would provide better
access to these innovative therapies.
The next step is looking at the Tax Code to foster an
economy where innovators want to take risks and invest in more
R&D. The 2017 Trump tax cuts encouraged American companies to
hire new workers, create new products, and invest in America.
More than $2 trillion was invested in new facilities and R&D
activities, but it also succeeded in another key way: jobs. The
R&D deduction supports 2 million jobs directly and 21 million
more indirectly. These pro-growth policies under President
Trump led to bigger paychecks for workers, low unemployment,
and a booming economy.
The House of Representatives took action earlier this year
to keep our R&D incentives strong, but a massive tax hike
awaits American families, farmers, innovators, and job
creators. Republicans on this committee have formed tax teams
to find ways to protect Americans from these tax hikes and also
find new ways the Tax Code can be utilized to better
incentivize research and development here in the U.S. and to
outcompete our competitors like China.
Members are fanning out across the country to listen to
Americans directly affected by these issues and turn their
ideas into policies that help workers, that help families,
farmers, and small businesses thrive. Part of that effort
includes this hearing today and listening directly to our
witnesses here today about their stories and ideas for keeping
medical innovation alive and well in America.
We also want to hear from everyone that is in the audience.
There will be clipboards, as you see before you, passed out,
and we ask that you take time to fill them out and let us hear
from you. It will be entered into the official hearing record,
and we will take those back to Washington as we consider how to
unleash medical breakthroughs across the country.
I am now pleased to introduce the host of this committee,
Mr. Congressman Moore.
Mr. MOORE of Utah. Thank you, Chairman.
And before we hear from our witnesses--that will be next,
correct?--I just wanted to echo that welcome to everyone.
To my colleagues that are not on this committee, Mr. Owens
and Ms. Maloy, thank you for also being here.
A sincere thank you to all the committee staff--we know
where this really all gets done--to be able to organize and
make all this happen. So thank you all for being here.
And to our witnesses, I look forward to hearing you in just
a moment.
But you sensed some levity when Chairman Smith joked that I
am not bashful, and I am probably a little outspoken on the
best practices that we see out of Utah. I am passionate about
it. I mean it.
And I want our federal government to operate a lot more
like some of the things that I have grown up with and some of
the things that I have seen work time and time again, from this
morning, where we go out of our way to help those in need, to
creating innovation that is not going to stymie our ability to
not only lower costs but provide care for those that need it.
So, again, thank you, Chairman, and thank you all for being
here.
I yield back.
Chairman SMITH. Thank you. Thank you, Blake.
I am pleased to recognize the gentleman from Utah, Mr.
Owens.
Mr. OWENS. Thank you. Are we ready to do the questions
right now or just----
Chairman SMITH. No.
Mr. OWENS. Okay.
Well, first of all, just know, back in D.C., Blake,
Celeste, and John, we are continually talking about this
remarkable state we live in. I have been blessed the last 10
years to be a Utahan, and I cannot say enough. Matter of fact,
I warn my colleagues whenever they come to visit--and they will
all tell you this--the warning is, if you come out to Utah too
often and stay too long, you become a Utahan.
So let's keep that up. Let's keep up with innovation. Let's
keep our service, our collaboration, which you do so well with.
And I am just very, very excited to be a part of this
panel. Thank you so much for the opportunity, and I look
forward to the things that will come out of this for sure.
Chairman SMITH. Thank you, sir.
I am pleased to recognize the gentlewoman from Utah, Ms.
Maloy.
Ms. MALOY. Thank you, Mr. Chairman. Thank you for being in
Utah. This is really important.
I have been in Congress for a short time, and some of the
best news and some of the worst news I have heard from
constituents comes out of the healthcare industry. Some of the
worst news is we have got constituents who struggle to afford
medications, rural patients who don't have access, independent
pharmacies that are going under, which harms patients. It also
harms Main Street economies, especially in our small towns, and
we have got families choosing between medical bills and
mortgages.
The best news is we have more telehealth access, more
remote patient monitoring, more home dialysis, and Utah
companies that are doing really innovative research that will
make people's lives better.
And so I am excited to be here supporting your committee
and talking to people in Utah about the need to unleash
American innovation both in technology, which we are sitting
right here looking at--they are working while we are talking--
and in policy, which this committee is doing.
So thank you for allowing me to be a part of it.
Chairman SMITH. Thank you.
I will now introduce our witnesses. We have, first, Kasey
DeLynn Shakespear, who is a parent of a rare disease patient
and a rural health champion. We have Ms. Heloisa Soares, who is
an associate professor and medical director of Clinical Trials
Office for the Huntsman Cancer Center at the University of
Utah. We have Frank Watanabe, who is president and CEO of
Arcutis Biotherapeutics. And we have Kelvyn Cullimore, who is
the CEO of BioUtah.
Thank you all for joining us today. Your written statements
will be made part of the hearing record, and you each have 5
minutes to deliver remarks.
Mr. Shakespear, you may begin when you are ready.
STATEMENT OF KASEY DELYNN SHAKESPEAR, PARENT OF A RARE DISEASE
PATIENT, RURAL HEALTH CHAMPION
Mr. SHAKESPEAR. My name is Kasey Shakespear, and I am here
today to discuss with you my family's medical journey with
innovation and the limitations of living in a rural community.
Chairman SMITH. Could you pull your mic a little bit
closer?
Mr. SHAKESPEAR. Sure.
In 2021, my wife and I were expecting our third child. We
found ourselves facing the unthinkable during an OB appointment
at 19 weeks gestation. Our unborn son was diagnosed with
bilateral renal agenesis, formally known as Potter Syndrome.
BRA is a congenital condition in which the fetus does not
develop kidneys. BRA is considered by medical text as a
universally fatal condition with no treatment options. One in
three BRA babies die before birth--thank you. One in three BRA
babies die before birth with the others dying shortly after due
to underdeveloped lungs.
When we received the news, my mind immediately went to
which cemetery will we bury my son in, and how will we explain
to our other children why their brother isn't coming home?
Unlike me, my wife did not accept defeat. She researched
and discovered an innovative clinical trial happening at a
handful of centers around the country called the Renal
Anhydramnios Fetal Therapy Trial, or RAFT.
RAFT is an innovative treatment program that involves
serial amnioinfusions of fluid into the womb with an
ultrasound-guided needle. The closest centers to us that
offered RAFT were in Denver, Colorado, 630 miles away, and
Pasadena, California, 380 miles away.
We chose to go to Pasadena and met with Dr. Ramen Chmait
and Dr. Martha Monson at L.A. Fetal Surgery. My wife and unborn
son were screened and deemed eligible to be entered into the
trial as a fetal-maternal pair. However, Dr. Chmait counseled
us that pursuing treatment would be a long road. If we
proceeded, it could threaten our marriage, my career, our
financial stability, our home, and the well-being of our other
children. And treatment was still a Hail Mary with a small
chance of success.
We considered the factors and decided to pursue treatment.
Doing so required us to temporarily relocate from rural Utah to
Pasadena, California.
Over the next 11 weeks, my wife received 11 serial
amnioinfusions. At 31 weeks gestation, my wife's sac began to
leak, and we had to halt treatment. The original medical plan
was for my son to be cared for at Children's Hospital Los
Angeles, but he was measuring too small to receive a peritoneal
catheter for PD dialysis. We found ourselves suddenly forced
360 miles north to Palo Alto, California, just 1 week before my
son's birth, at Lucile Packard Children's Hospital at Stanford.
In late 2021, my son was born with Apgar scores of 8 and 9.
The amnioinfusions had been successful, but over the next 5 and
a half months, he would battle for his life daily in the NICU.
He was placed on dialysis 2 days after birth with an Aquadex
machine, which was developed for adults with congestive heart
failure but adapted for neonates to receive dialysis.
He went through blood pressure issues that were ultimately
resolved with angiotensin II, becoming the first neonate kidney
patient at Stanford to ever be treated with this innovative
medication. During his NICU stay, he contracted a serious
infection, underwent multiple high-risk surgeries, experienced
seizures, and overcame it all.
At 6 months old, my son was transported via air ambulance
to Salt Lake City, Utah, where he was admitted for 2 weeks at
Intermountain Health Primary Children's Hospital. During that
time, my wife and I were trained on how to perform all the
necessary functions to care for our son and administer dialysis
on a nightly basis at home. He was discharged from the hospital
for the first time at 6 and a half months old.
It has been just over 2 years since my son was discharged,
and over that time, he has been readmitted five times for stays
varying from 3 days to a little over 3 weeks, each stay
requiring a life flight from St. George due to the complexity
of his condition.
Although telehealth has helped us connect with some
specialists, we have had to travel 9 hours round trip from St.
George to Salt Lake City every single month to attend mandatory
in-person dialysis appointments.
Our little Isaac is now nearly 3 years old and active on
kidney recipient lists in multiple regions. We hope to receive
a call any moment to bring him in to receive his kidney.
My wife and I have walked through hell to save our son, but
we were only able to do so because the stars aligned for us. We
received tremendous support from family, friends, neighbors,
members of our religious congregation, and complete strangers.
We found RAFT and were able to navigate the American
healthcare system because of our education. We were able to
overcome the cost of treatment because of insurance, and the
ability to continue working remotely, as well as the generosity
of so many people. And we continue to receive adequate care
thanks to programs such as Utah Medicaid's Medically Complex
Children's Waiver program.
Our story stands as a testament to the innovations and
technology that our healthcare system has to offer, but
according to HRSA, a little over 25 million rural Americans
live in health profession shortage areas. Innovations in
healthcare brought about lifesaving procedures for my son, but
our opportunity is not representative of so many others. My
wife receives messages on social media from frantic parents
trying to find treatment options for BRA and other similar
conditions almost on a weekly basis. Many rural Americans
simply cannot make it work to pursue care.
There are so many details and barriers about the challenges
that my family has faced that I wish I could share, but I can
testify that the cost of accessing these innovative treatments
coming from rural America is extremely high.
I applaud this committee for your efforts to improve care,
especially in rural communities, and I want you to know that
what you are doing makes a difference to families like mine.
But I implore you to keep working to ensure that every American
has an equitable opportunity to receive this type of innovative
care in their most dire moments.
Thank you.
[The statement of Mr. Shakespear follows:]
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Chairman SMITH. Thank you, Mr. Shakespear. Powerful
testimony.
Dr. Soares, you are now recognized.
STATEMENT OF DR. HELOISA P. SOARES, ASSOCIATE PROFESSOR AND
MEDICAL DIRECTOR OF CLINICAL TRIALS OFFICE, HUNTSMAN CANCER
INSTITUTE AT THE UNIVERSITY OF UTAH
Dr. SOARES. Thank you so much for the opportunity of being
here. Thank you.
I am Dr. Heloisa Soares. I am a medical oncologist at the
Huntsman Cancer Institute at the University of Utah, and I care
for patients with neuroendocrine cancers, a cancer that is very
rare and poorly understood.
Improving cancer care is particularly personal to me. My
father lives with a rare cancer for which there has not been a
lot of medical innovation in the last several years, and he
doesn't have any treatment options. In a twist of faith, my own
35-year-old brother was diagnosed with neuroendocrine cancer,
the cancer that I specialize at. It was devastating to me
initially, but he underwent his complex surgery and is now on a
clinical study.
He asked me last year if he should put his affairs in order
because of his cancer, and I look him in the eyes with
confidence and I told him, yes, but not because of the fact
that you have this cancer. You should always do that because
that is what responsible people do. Live your life, enjoy life,
and if you want to expand your family, do so. Live your dreams.
And I can say that with confidence because of the medical
innovations that we have been able to provide to our patients.
And I am not saying this out of nothing. I have here behind
me Charlene Edwards, who is a patient of mine, who has been
living with neuroendocrine cancer for the last 18 years. When
Charlene was diagnosed, the doctors gave her very little hope
and told her that there was only one treatment that was
available. At the time, she felt that she was without really
any hope. However, there are several new treatments that have
been developed to treat her cancer, and now I can think about
at least five other medical treatments that we can use for this
disease. In fact, Charlene has benefited from some of these
treatments in clinical trials and as a standard of care.
Which brings me to the fact that I am the medical director
for the Huntsman Cancer Institute Clinical Trials Office. I
oversee more than 250 active clinical trial treatments at a
given time. I can do that because the Huntsman Cancer Institute
and the National Cancer Institute-Designated Comprehensive
Cancer Center serves the entire Mountain West, including Utah,
Idaho, Montana, Wyoming, and Nevada.
Thirty percent of our patients that are in clinical trials
come from far away, from rural and frontier regions, more than
150 miles away from me. These trials represent lifelines for
these patients, offering novel treatments when there is little
hope with conventional treatments. We are constantly developing
new treatment strategies to care for our patients in the
frontier and rural population. One example is the development
of clinical trials using short course radiation for patients.
I had patients that had declined radiation treatment for
their cancers, because traditionally these treatments have to
be delivered within a span of 5 to 6 weeks. However, our
tireless radiation oncology teams and researchers have
developed the strategies to deliver these radiation treatments
effectively and safely in a much shorter span of time. So now
patients can receive the care that they need and continue to
live their lives and not have to go away from family for so
long, which can be a barrier because of financial issues, or
even because they have to care for their children or elderly
patients or spouses that are also sick.
To address distance as a disparity for our rural and
frontier populations, we have developed additional several
strategies. We collaborate very closely with different centers,
including Sweetwater Regional Cancer Center in rural Wyoming,
to enhance accessibility for patients to care and clinical
trials.
We also, an example that I am proud to say, we have our
neuroendocrine cancer designation care program providing
specialized care for patients who travel from far away, and
they can have access to our experts and the standard of our
treatments.
But to do all this, we need help. Federal support is
crucial to sustain these efforts. Innovative programs need to
be supported and recognized. Our nationally appraised Huntsman
at Home program delivers specialized care to patients at their
home, but programs like that need a sustainable funding
pathway, as they not fit the traditional reimbursement model
for inpatient or outpatient care.
So I am here in front of you to advocate for a few things.
Development of innovative payment models to support these new
care modalities, extending healthcare--telehealth services and
refining care models so I can care for the patients receiving
advanced therapies, such as cell therapy or theranostics, which
is the use of radioligand therapies in these patients, and I
can monitor them from a distance, leveraging technology and
novel strategies. And also, asking to leveraging AI and data
science to advance cancer care. There is a need for federal
support to enhance the infrastructure of data management and
sharing across healthcare systems.
Medical innovation is the cornerstone of our progress for
cancer care. Innovations had allowed me to conduct telehealth
visits, coordinate local care with patients at home,
administering treatments remotely, and significantly enhance
symptom management and the quality of life of our patients in
our community.
Another day Charlene, reminded me that Huntsman Cancer
Institute is located at Circle of Hope Drive. Thanks to medical
innovation that we have, I can share hope to my patients and to
my brother.
It takes a village to take care of our patients, and I ask
for federal support to continue doing so and continuing doing
our job. I am honored to be here in front of you, and I am
grateful for Congress' role in advancing innovations, and I
hope to receive the support that I can continue to care for my
community.
Thank you very much.
[The statement of Dr. Soares follows:]
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Chairman SMITH. Thank you.
I now recognize Mr. Watanabe. You are now recognized.
STATEMENT OF FRANK WATANABE, PRESIDENT AND CEO, ARCUTIS
BIOTHERAPEUTICS
Mr. WATANABE. Thank you.
Chairman Smith, Congressman Moore, members of the
committee, I am honored to share my perspectives as president
and CEO of Arcutis Biotherapeutics. In addition, I am also on
the board of directors of Bio.
Arcutis was founded in 2016 to develop novel treatments for
dermatologic diseases. The FDA approved our first product in
July of 2022, and has granted us two additional approvals
since; in fact, the third one this week.
We have grown from three employees in 2016 to nearly 350
today, with operations in all 50 states and employees in 39
states, including an office near here in Park City, Utah.
Turning to the broader U.S. biopharmaceutical sector, our
industry plays a vital role in improving public health in the
U.S. and around the world. Our innovations transform patient
care, improve outcomes, and give hope. Roughly a third of the
increase in Americans' life expectancy over the last quarter-
century can be directly attributed to biopharmaceutical
innovations.
For example, the American Cancer Society estimates that
cancer death rates in the United States have declined by one-
third since 1991, preventing 3.8 million deaths, and much of
that is due to better cancer treatments.
Biopharm also contributes to our economy, employing more
than 2 million people in more than 127,000 firms across the
country, and we constitute somewhere between 5 and 7 percent of
U.S. GDP. We also contribute directly and indirectly to U.S.
national security. It is my fervent belief that promoting our
sector should be a cornerstone of our government's policy
agenda.
Although we are the undisputed global leader in biopharm,
that leadership cannot be taken for granted. Today, we face
threats from both overt policy choices and long-term neglect.
We have seen what can happen in other critical industries like
semiconductors when neglect or misguided policies cause the
U.S. to lose our leadership position.
Biotech companies are committed to championing broad access
to transformative therapies. Policies that focus all of the
scrutiny on biopharmaceutical innovators ignore the real
barriers that affect American's access to innovative
treatments.
A significant factor in the high and ever-increasing cost
of innovative therapies in the United States is the growing
power of middlemen who, in most cases, pocket more than half of
what is paid for treatments. For example, my company only
realizes about 40 cents every dollar that is paid for our
treatment with the remainder going to intermediaries.
In particular, concentration in the PBM sector gives these
firms immense power to influence prices, control access to
treatment, and deny coverage. And the growing trend of PBMs
merging with other intermediaries only increases their power.
This vertical integration also gives intermediaries
significant power over physicians' ability to select treatments
for their patients with utilization management criteria like
prior authorizations and step edits substantially restricting
doctors' ability to tailor treatments for their patients.
Congress should urgently move forward with PBM reforms, and
the Lower Costs, More Transparency Act is an important step
forward.
Another major barrier to American's access to innovative
therapies is patient out-of-pocket costs, which insurers and
PBMs continue to increase through higher patient copays,
expanded high deductible plans, and increased use of patient
co-insurance. Congress should pass the bipartisan Help Ensure
Lower Patient Copays Act to reduce patient out-of-pocket
burdens.
The IRA is already negatively impacting drug development.
Fortunately, there are two bipartisan bills that could help.
First, the ORPHAN Cures Act would fix the IRA's disincentive
around rare disease drug development. And second, the EPIC Act
would fix the so-called pill penalty that favors biologics.
Both biologics and small molecules are critical to treating
patients.
Our R&D investment should flow to the best science that can
have the greatest impact, and these two bipartisan bills would
help make that possible.
Intellectual property protections are the foundation of our
industry but currently are under threat both at home and
abroad. I implore Congress and this committee to fervently
defend IP rights against those threats.
U.S. small and mid-sized biotech companies, or SMEs for
short, account for three-fourths of the global drug pipeline,
and roughly a third of all new drugs approved by the FDA since
2009 were developed by smaller biotechs. Congress should
prioritize fostering investments in SME biotechs.
My written comments contain details on specific policies,
and I would be happy to answer more questions on specific ideas
if you would like later.
Investing in domestic biomanufacturing, strengthening our
local workforce, and ensuring critical cutting-edge clinical
studies are conducted in the United States should be a core
tenet of our government's agenda.
Finally, the interconnected bioscience ecosystem is not
confined just to biopharmaceuticals. Promoting
biopharmaceutical innovation can also strengthen the broader
U.S. biotechnology ecosystem where innovators are applying
biotechnology to food security, sustainability, and climate
change.
Thank you for your time.
[The statement of Mr. Watanabe follows:]
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Chairman SMITH. Thank you.
Mr. Cullimore, you are now recognized.
STATEMENT OF KELVYN CULLIMORE, CEO, BIOUTAH
Mr. CULLIMORE. Thank you, Chairman Smith and distinguished
members of the committee. Thank you for the opportunity to
participate in today's hearing.
I am also grateful to Representative Blake Moore, our Utah
member of the committee, as well as Representatives Celeste
Maloy and Burgess Owens, members of the Utah delegation, for
engaging in these important discussions.
My name is Kelvyn Cullimore. I am the president and CEO of
BioUtah, the trade association for the state's life sciences
industry. BioUtah is a common voice for the industry consisting
of medical device development and manufacturing, diagnostics,
biotechnology, and biopharmaceuticals.
In addition to my position at BioUtah, I have personal
experience in the industry as a medical device entrepreneur. I
co-founded Dynatronics, a Utah-based manufacturer of physical
therapy products. I have also served for 13 years as the first
mayor of Cottonwood Heights, a Salt Lake City suburb. So I am
very sincere when I say thank you for your service.
We are immensely proud of what we are building here. We
have organized an onsite innovation showcase with nearly 20
Utah life sciences companies exhibiting their contributions to
healthcare innovation. We encourage you to pay them a visit if
you haven't already.
Despite the 100-degree temperature today, you may know that
Utah has the greatest snow on Earth, but you may not know that
over the past decade, Utah has been the third fastest growing
bio-innovation hub in the Nation.
One of the first COVID-19 tests to receive FDA emergency
use authorization was developed here in Utah, as was the
saliva-based test for COVID-19.
Utah companies are also creating lifesaving solutions for
stroke, advances in genetic-based cancer diagnostics, drug
discovery for MS, Alzheimer's, and other neurodegenerative
diseases, treatment for Parkinson's disease, regenerative cell-
based therapies that alleviate pain and restore function in
patients with degenerative diseases of the spine, improved
heart valve replacements, cutting-edge diagnostics for chronic
kidney disease, brain computer interface technology that would
make Elon Musk jealous. And AI-enabled drug discovery and more
are all part of Utah life sciences world.
I have seen firsthand the challenges faced by our industry
and, more specifically, how government's laws and regulations
can promote or impede innovation.
In Utah, we are very fortunate to have a state government
that supports our industry. However, no matter how favorable a
state's innovation landscape, misguided federal policies can
erode any home team advantage.
To that end, we offer a number of policy considerations.
First, we urge enactment of the Ensuring Patient Access to
Critical Breakthrough Products of 2023 to provide provisional
Medicare coverage for FDA-authorized breakthrough medical
technologies. Such a policy would accelerate patient access to
innovative treatments.
PhotoPharmics, a Utah company working on phototherapy to
treat Parkinson's disease, received that designation from the
FDA, opening the door for early coverage under the prior
Medicare Coverage for Innovation Technology, or MCIT, final
rule. But when this policy was reversed by the current
administration, the resulting uncertainty caused investors to
pull back, delaying efforts to bring this product breakthrough
technology to market and depriving Medicare patients of this
important therapy.
We applaud the committee for marking up this legislation
last week with strong bipartisan support. We also want to thank
the committee for agreeing to fix the drafting error that
inadvertently omitted diagnostics from the marked-up bill.
We thank our Representatives, Moore, Maloy, and Owens, for
supporting the bill. We have great hope this legislation will
better serve patients by breathing new life into this expedited
coverage concept.
Secondly, robust R&D is essential to creating solutions to
serious medical conditions. However, policies like the
Inflation Reduction Act or changes to R&D expensing under the
Tax Cuts and Jobs Act can put brakes on the R&D momentum.
We urge Congress to establish a pro-innovation tax
structure, including full and immediate expensing of R&D costs,
bonus depreciation for equipment, and other pro-innovation
provisions as proposed in the Tax Relief for American Families
and Workers Act of 2024.
BioUtah supports this House-passed bipartisan tax bill
which favorably addresses these policies. Furthermore, tax
policies related to capital gains and that operating losses
should be carefully crafted to attract investment in the life
sciences innovation.
Finally, the Federal Trade Commission and the Department of
Justice have overreached in restricting merger and acquisition
activity. This is particularly problematic for life sciences
where M&A plays a critical role in bringing new therapies to
market. That process is like a relay race where M&A allows
companies to pass the baton and leverage complementary
expertise which would otherwise be too costly or duplicative.
More details on these and other policy considerations can
be found in my written testimony.
To sum up, Utah has a thriving patient-centered life
science ecosystem fueled by entrepreneurship, a passion to
innovate, and a unique culture of collaboration. Federal
policies can either empower or undermine these strengths.
Creating a sound tax structure, ensuring timely Medicare
coverage of breakthrough products, and taking a reasoned
approach to M&A, Congress can help unleash the full potential
of life sciences innovation in Utah and beyond and spark the
next generation of technologies, treatments, and cures that
will change patients' lives.
I thank the committee for taking the time to come to Utah,
and I welcome any questions you may have.
[The statement of Mr. Cullimore follows:]
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Chairman SMITH. I want to thank each and every one of you
for your testimony, and we will now move to questions and
answers.
Mr. Shakespear, access to new and innovative treatments can
be a challenge in any community, but we know it can be
particularly difficult to those living in rural America.
As the parent of a son who was diagnosed with a rare kidney
disease, can you talk about the challenges you face coming from
a rural area in finding access to necessary innovative
therapies and how you are able to manage the logistics today?
Mr. SHAKESPEAR. Thank you, first of all.
When we were diagnosed, it was unknown to the physicians in
Utah that the RAFT trial even existed, and so the burden fell
on my wife and I to find that treatment. So as I mentioned, if
it wasn't for our educational backgrounds, then it would have
been impossible to find the treatment to start with.
But managing the back and forth, there is a lot of
logistics that go into relocating, you know, 500, 600 miles
away and having to stay there consistently. So that was a major
challenge, but now that we are back home, there is still a lot
of coordinating with physicians.
My wife is a full-time scheduler. She is the care
coordinator for my son, and she stays busy all week long and
usually has multiple appointments every week. And then we have
two older children, so it becomes quite a burden to manage all
of the schedules and care for everybody's needs.
But in addition to that, being on a kidney registration
list, if you have ever had an organ donation, you know pretty
much your entire life is tentative status, hoping to be able to
do things but waiting to see if you get that call that disrupts
everything.
Chairman SMITH. Mr. Watanabe, many tax provisions have
expired or have been phasing down over the past few years,
including those which reward innovation right here in the U.S.,
like research and development. Looking ahead to 2025, this
committee is exploring how the Tax Code can help better
facilitate innovation, especially in the biotech industry,
create new technologies, and encourage domestic manufacturing.
With your experience and understanding of drug development,
what would you recommend Congress look at when it comes to
supporting healthcare innovation through the Tax Code?
Mr. WATANABE. Thanks for that question, Chairman. Yes, I am
glad you asked that question.
I think there are a number of specific provisions. You
know, first one is restoring full depreciation, deductibility
for R&D investments. You know, the committee has already taken
that up. The bill has passed the House. We hope to see that
pass through.
You know, the challenge there is that small companies are
paying taxes even though they are not making any money because
they are not able to fully deduct their R&D expenses, and
particularly for smaller companies, that can be crippling.
I think another potential opportunity is looking at
monetization of net operating losses. Many small companies have
large numbers of NOLs, and an ability to monetize those in the
early stages when they can invest in R&D is something that
could make a meaningful difference in capital access for
smaller companies, which is becoming increasingly difficult.
Along with that, I think corrections to section 382 would
be an important consideration. In some cases, bringing
investments into a new company--into your company--new
investments in your company causes you to lose your ability to
use your NOLs, and correcting that would be an important
change.
Section 1202 is a very important tool for early-stage
investments. My company benefited from section 1202. Preserving
that and potentially even expanding 1202 I think would be
another important opportunity to foster investment in
especially early-stage R&D companies.
And then also, the passive activity loss rule in the 1986
tax reforms has really significantly impaired the ability of
investors to benefit from flow-through losses from their
investments. That would be another thing that the committee
could address that would particularly foster investment in
early-stage companies.
Chairman SMITH. Thank you. I was thinking you were a tax
lawyer for a second.
Dr. Soares, you have been at the forefront of innovative
treatments in oncology and helping cancer patients navigate
what is called the six scariest letters in the English
language.
This committee recently approved legislation introduced by
Representatives Arrington and Sewell that expands Medicare
coverage to multi-cancer early detection screening tests. Can
you discuss how having Medicare cover innovative early
detection tests can improve the care you are able to provide
your patients and ultimately lower healthcare costs?
Staff. We are going to pull pause for 1 second. We are just
going to get the mike's working again.
Mr. MOORE of Utah. Your time is still running, Chairman.
Chairman SMITH. Okay. My mike is working.
Mr. MOORE of Utah. Now mine is back.
Dr. SOARES. Oh, yes. Now it is back.
Thank you for the question.
I think novel ways to monitor cancer when it is already
diagnosed or detected are key. I think it is important to have
that validation.
I can share with you that now there are tests that are
available that I can use. There are blood tests that I can
monitor the tumor cells that are potentially present after
patients receive treatment, and that has been fundamental to
potentially helping decrease the need for patients to come to
the cancer center. I can alternate between doing CAT scans to
monitor recurrence versus these blood tests.
So that has been fundamental to keep patients on
surveillance, on monitoring, and then also decreasing the cost
of doing these scans and visits if I can do that with blood.
So I think there has been a lot of progress in monitoring
and detecting minimal residual disease in cancer patients, and
it has been substantially important to keep patients compliant
with their care that has been designed for them.
In terms of early detection, I think there are several
technologies that are very promised and then they are approved
to be safe. They will be fantastic for our patients and for
improving their survivals.
Chairman SMITH. Thank you very much.
I recognize Mr. Moore.
Mr. MOORE of Utah. Thank you, Chairman.
Again, I would like to welcome my colleagues. Just
appreciate you being here. I appreciate you taking the time out
of your busy schedules to be here. I really am honored that the
chairman would bring the committee here today so we can
showcase what Utahans are so proud of.
I would also like to thank ARUP for hosting us today. Utah
has some of the most innovative and fastest growing life
science sectors in the country. And as up here, we sacrifice a
little bit of our ability to hear, it just showcases there is
work to do, and this is a working lab, and, you know, there is
a lot to be done. And so we appreciate the productivity that
comes from this part of the First District.
As the IRA, Inflation Reduction Act, that was signed into
law last Congress is implemented, I remain concerned not only
about the law's impact on medical innovation, particularly for
rare diseases, but that it may result in increased use of prior
authorization in step therapy, fewer covered medicines,
narrower pharmacy networks, and fewer plan options for seniors
covered under part D.
A lot of times these pieces of legislation get branded as,
you know, a way to lower costs and this and that, but the
reality of what takes place during this is going to limit all
of the important aspects to providing care and getting that
care to individuals at a lower cost but at the same time
identifying cures and promoting that type of innovation.
There was bipartisan interest in reforming the Medicare
Part D benefit for several years prior to the passage of IRA.
So I would urge members of this committee particularly to work
together towards improving the Part D program for seniors.
So I just want to mention that, because I think it is so
important to all the companies and the things they are working
on in this area.
I am not going to rehash the fact that tax is going to be
important next year. Mr. Watanabe, you have already identified
so much of that.
I would ask Mr. Cullimore and--again, Frank, please share--
could you speak to net operating losses? You introduced it a
little bit. Just the specifics of how it can be beneficial to a
company, how they would use it, with some specific examples
about some of these tax implications that you have already
introduced.
Mr. Cullimore.
Mr. CULLIMORE. I feel inadequate to answer that sitting
next to what looked like a tax attorney, but let me take a shot
at it.
The NOL monetization concept is very important for early-
stage companies because, as they built up losses, as they are
doing research, they are building up these losses, but capital
becomes so critical to their success. And so the ability to
monetize those either through a device of being able to market
those like a tax credit could be marketed or to be able to
utilize those like an earned income tax credit on a personal
tax return, things of that nature, that generates capital that
further advances the work.
Now, we recognize there is a cost associated with that, but
there are abilities to get returns on those kinds of
investments.
Someone asked me, how would you pay for something like
that? The IRA, when it was passed, it supposedly generated a
lot of savings, they say. Most of those savings are being
redirected in other government programs. If even a fractional
portion of that were redirected to this, it would fully cover
any kind of cost associated with that.
Mr. MOORE of Utah. Thank you.
Anything to add, Frank?
Mr. WATANABE. I was going to say maybe just in terms of
putting it into operational practice, you know, our company has
been in existence since 2016. We have generated something like
a billion dollars in losses trying to get our first product to
market before we generated a single dollar of revenue.
You can't use your NOLs until you are profitable. I would
hope that maybe sometime in the next 5 years it will be
profitable, right, but that is a long time to be sitting in
that hole. Our ability to sell our NOLs to another company and
bring that money in to invest into R&D immediately would make a
huge difference for us and for earlier stage companies.
And, you know, it is not really a cost to the government.
It is just a shifting of when those NOLs are used because I
have a right to use them eventually. It is just a matter of can
I use that money today to invest in research and development
versus waiting another 5 years or so until I start generating
profits and can start to exploit my NOLs.
Mr. MOORE of Utah. Excellent. Thank you for those specific
examples.
Dr. Soares, as I wrap up, there is so much that the
Huntsman Cancer Institute does for this community. It doesn't
exist without strong private sector involvement in donations
and philanthropy. And just thank you for being here. That is
what makes this area thrive so much.
But just briefly, as you embrace AI and other types of
technologies, what barriers exist for you all that you can't
necessarily, you know, find those new next generation
innovative technologies that will help you find those cures?
Dr. SOARES. Yeah. Thank you so much for this question.
And I am very proud of living in Utah and being at the
Huntsman Cancer Center. As you said, you come here and this
place is amazing and you just stay.
There is a need for AI to be able to have data-sharing
integration and management. In management, there is a lot of
different electronic medical records that are very separate and
spread. The AI technology can leverage that. We can integrate
this data. We can share them in the proper ways, and that will
lead to so much more innovation.
So I think working on ways that we can safely integrate AI
and share data will be imperative for us to continue to advance
and also use that to identify the patients that will benefit
from new treatment options.
Mr. MOORE of Utah. Thank you.
Thank you for your indulgence, Chairman.
Chairman SMITH. Thank you.
Mr. Owens.
Mr. OWENS. Thank you again, Chairman Smith, for coming to
this beautiful Salt Lake City and for this important field
hearing today. I am so proud to sit next to my good friend
Blake Moore. He has been a fierce champion for Utah's unique
ecosystem, one that has helped our nation to thrive, our state
to thrive.
Today's hearing is highlighting medical innovation. Here in
this state, it is the fastest growing state in the union since
2010 and a national innovator in other fields of education,
workforce, transportation, IT, and aerospace. I am so proud to
see so many Utahans as witnesses today and eager to share our
story as a model for the rest of the country.
Mr. Cullimore, what has made Utah so successful in
developing in its life sciences industry, and what lessons can
we take from the entrepreneurial culture here?
Mr. CULLIMORE. Thank you, Representative Owens.
As you are aware, Utah is a great state for doing business.
We have been recognized nationally as the number one state for
doing business, the best state to open a business. The
entrepreneurial spirit here goes back to the pioneer heritage
that founded this state, and that heritage has carried on
today.
We have many large companies that operate in the state of
Utah, but many of them are here because they acquired
technology that was developed here in Utah. We have a
phenomenal academic system here with our universities who
generate great technology. We also have a great workforce here,
and we have the ability to generate great ideas because of the
existing critical mass of companies that are here that spin off
from other companies. You can trace many of the companies back
to other companies that were here, people who have spun off
from them.
And so we are very fortunate to have a very high-growth
industry in the life sciences here. Most people are unaware of
that. We are the number three state in the nation in density of
employment in life sciences behind only Massachusetts and New
Jersey.
So we are recognized as the life science hub, and that kind
of success begets additional success.
Mr. OWENS. Thank you.
You talked a bit earlier, you might want to elaborate, any
more on Utah's ability to track funding since the passage of
the Inflation Reduction Act in terms of shutting off
opportunities for future generic competition?
Mr. CULLIMORE. Well, the Inflation Reduction Act, I don't
think we have seen the full impact of that yet. I think as the
specifics come forward and we see the impact that can have, it
is going to have an even greater chilling effect on research
and development in the therapeutics field.
I think we are already seeing--and Frank can testify to
this better than me--how investors are very concerned and
withholding funding until they see how some of this pans out.
And I am afraid what they see will discourage them even
further. So that is a challenge.
That is going to be a challenge in the pharmaceutical area
for that, and Utah has a lot of early-stage pharmaceutical
companies. And so we have some concerns. Some of the things
that Frank talked about that could improve it are important
steps, but overall, the bill is still of great concern.
Mr. OWENS. Thank you.
Mr. Shakespear, you made some comments earlier. Any
additional comments or insight on how to support the rural
community for issues that you are having right now in the
health arena?
Mr. SHAKESPEAR. Absolutely. Thank you for the question.
I would urge you to put it in the hands of the parents in
rural America to decide whether they are willing to pay the
price to pursue these innovative treatments. It is difficult to
bring them to close proximity to everybody in rural America,
and I recognize that. And you have to understand as well that
not every urban center is even created equally, because the
treatments that saved my son are still not available in Utah.
But in many instances throughout our journey, medical
providers at times tried to make the decision for us on whether
we would be willing to pay the price to continue with
treatment, and I would just urge that in every situation the
parent gets the choice in that right. Let the patient choose
whether they are willing to pursue that or not, and don't make
assumptions about whether the patient is willing to go that
distance when making decisions about legislation and things
regarding continuing to research and develop these innovative
treatments.
Mr. OWENS. Thank you so much.
And I yield back.
Chairman SMITH. Ms. Maloy.
Ms. MALOY. Thank you, Mr. Chairman.
Mr. Shakespear, before I ask a question, I just have to say
I am really impressed. We asked you to come here and talk about
something really deeply personal and really emotional, and you
have been very poised about it, so thank you for that.
You know, I have spent most of my life in really rural
areas too. You and I were talking before the start about some
of the places that we both know. And we all know, we talk about
it all the time in Utah, how we are losing our rural kids to
urban areas. They have to leave to get jobs.
And the Governor of Utah has made a big push to bring more
jobs to rural areas, and that is wonderful. But your story is a
reminder that even when us rural kids grow up and can get jobs
in our small hometowns, if anything goes wrong, we still have
to move to urban areas where we can get medical treatment or
whatever else the problem is.
So thank you for being here and talking about the
challenges you are facing and what we can do to better support
rural areas because they are important to the economy. I don't
even have a question for you. I just want to say thank you.
Mr. Cullimore, you talked about how the state does a good
job of supporting the bio-life industries and how we need more
federal cooperation. Could you talk about what the state is
doing well and how we could support that from a federal level?
Mr. CULLIMORE. Well, the state of Utah has identified the
life sciences industry as one of its five target industries for
development. To that point, they have taken the approach of
providing funding in critical areas that encourage development
of these companies.
So, for instance, last legislative session, the legislature
passed a life science initiative bill to provide money to
develop a workforce specifically for life science needs, which
can be very unique. They have also established a fund called
the Utah Innovation Fund, which is intended to help bring
technologies that are early, early stage at our universities
and institutions out to an investable stage. It is really hard
to get these early technologies to a point where an investment
community will take a look at them. And so that is a key bridge
that they have helped to provide.
And they have provided research and development credits and
other kinds of incentives for companies.
So from a federal perspective, I think continuing to
provide the kinds of tax things that Frank articulated earlier
are critical to making sure that we have that, trying to limit
the kind of barriers that we face.
The life science industry is probably the most regulated
industry in the country, and finding ways to reduce those
barriers will help bring products to market a lot faster.
Medicare itself could be a great toolbox or a great sandbox for
doing some of that.
Ms. MALOY. Thank you.
Mr. Watanabe, you talked about PBMs, and it is something
that I hear about a lot. I have independent pharmacists and
even, you know, larger chain pharmacies that we have all heard
of. They come talk to me about how there is a middleman that is
making all the money. You talked about the same thing. I know
it is something all of us up here are hearing about. What would
your ideal PBM solution look like?
Mr. WATANABE. How much time do I have?
I do think that the intermediaries in the healthcare system
have become a real problem and are probably one of the major
drivers of growth. The concentration in the PBM sector and now
increasingly with the insurance sector is also a problem.
They have immense power vis-`-vis physicians, pharmacies,
and the innovators. They now control access to care in many
cases, right. They are dictating to doctors what drug their
patients can receive rather than the doctor making the decision
for themselves what is the best choice. And at the same time,
they are extracting large amounts of money from the companies
who are innovating, and they are not passing that money on,
those savings on to the patients, as it was originally
intended.
I think, you know, increased transparency is a very good
first step, but I think there are a number of other things that
Congress can look at to reduce the power of these
intermediaries and ideally to ensure that any savings that are
realized in the system are passed on ultimately to the patients
who need access and, you know, who are spending an immense
amount of their own money caring for themselves or for their
loved ones.
Ms. MALOY. Yeah. And we just heard Mr. Shakespear testify
he would like to have parents make more of those decisions, not
have them be made by somebody who crunches numbers in an office
somewhere. And I agree with him.
Dr. Soares, I am almost out of time, but quickly, what
federal policies do you think are acting as barriers to
Americans getting their cancer screenings and being responsible
upstream for their own health? Is there anything we can do to
support you there?
Dr. SOARES. I thank you for the question.
I think there are many things that can be done. Some of
them we touched about, step therapy and step therapy in
preauthorizations. This hugely affects how I can care for my
patients. Patients might elect not to continue treatment,
because if I have to start with a medication that I don't think
is ideal but step therapy requires me to do, they might have a
lot of side effects from that treatment. And they might decide
that they don't want to have the treatment anymore because they
got traumatized by the side effects.
But I have tools to help the patient. It is just that these
issues are limiting my ability of providing the best care that
I want.
And it goes also for testing, novel testing and
innovations. There are these preauthorizations that are put in
place that I cannot give the treatment or do the test that I
need for my patients. So that is an issue.
Also, we need to continue telehealth coverage. That is the
only way that I will be able to continue to provide the care
for my rural population. As you heard, at least 30 percent of
the patients that we have in clinical trials at Huntsman are
rural. So that is my people. I need to be able to provide care
for them. So we need federal support for that.
Ms. MALOY. Thank you.
My time is up, Mr. Chairman. I yield back.
Chairman SMITH. Thank you.
Dr. Wenstrup.
Mr. WENSTRUP. Thank you, Mr. Chairman.
And thank you all for being here today. I really
appreciated hearing from each and every one of you.
I want to say to Mr. Shakespear, it was several years ago,
probably about 6 or 7 years ago, it was actually a Member of
Congress whose daughter was one of the first to receive the
treatment that your son treated. And, you know, you mentioned
something about the stars aligning, and she was one of the
lucky ones where the stars aligned as well.
And, you know, this requires early diagnosis and treatment,
which is what we talk about all the time, and improving
medicine requires early diagnosis and treatment.
You know, a close acquaintance of my family who happens to
be on Medicaid had the same similar situation, but when she was
pregnant, she was only offered termination. And that is a sad
day in America.
Dr. Soares, you talked about home health and things like
that. We are working on that--home health, hospital at home.
And I do want to talk--and I will ask you something later--
about the delays that you brought up, the delays in care that
are offered.
And, Mr. Cullimore, you hit on a few things. You talked
about MCIT being repealed by the Biden administration, which
held up then new innovations getting to market. The Biden
administration promised they would come out with a new form of
it; they did not. And so we have our bill, which you mentioned,
and I appreciate that.
So you guys are hitting on all cylinders today, as far as I
think this committee is concerned.
You know, I am co-chair of our Doctors Caucus. And, you
know, really, one of the themes that we are trying to promote--
in Washington, too often, when you bring up healthcare,
everyone starts talking about Medicare, Medicaid, Affordable
Care Act, Blue Cross Blue Shield; they are not talking about
the health of patients. And that is a problem.
And our goal should be to make America the healthiest
nation on the planet and work towards that. Besides, that is
where the real return on investment is--prevention, cures, all
of these things that we are talking about today.
You know, I practice predominantly in an urban area, but I
represent urban and rural. So these issues are common
throughout, especially in underserved areas.
But one of the things that is a real concern to me in
medicine today--and we really need your voice out there so that
Congress does act on some of the things. Similar to what we do
with semiconductors, we need to do for pharmaceuticals,
especially generics. You know, we are reliant on China for our
generic medications. We have to turn that around. It is a
national security risk. It is a national health security risk.
When my daughter can't get amoxicillin for her ear infection,
that is a problem.
And so this is something that I would like to address. We
talked about, you know, pro-growth tax incentives. We are on
board. I have a bill to address the generic issue. Just, can we
at least look at our battlefield medicines? If you would have
told me when I was a surgeon in Iraq that I relied on China for
my protective equipment and my pharmaceuticals, how did we get
here? We have to turn this ship around. And we need everybody
talking about that and the dangers involved with that. So maybe
we can do like we did with semiconductors and address some of
those tax issues that would allow us to bring that back.
And I do have a bill up for draft discussion. If we can at
least start with our battlefield medicines, will that not tug
at some people's heartstrings to say, yes, we have make that
domestic? So we need your help in that area too.
But, Dr. Soares, you mentioned step therapy. I have had
that bill for years. I don't know why we can't get that
through. The Safe Step Act, as it is called, we are going to
continue to push that. Same with prior-authorization bills. It
is: Speed up care.
You know, you have decisions being made by people that
don't see patients, and some have never seen patients. And this
is a real problem in patient care. Because it all comes down to
that.
So one of the questions I have for you, Dr. Soares, it
comes to--you do clinical trials. Thank you for doing that.
That is how we get things to market. And you know the problem
with getting through FDA approval. But it is even tougher for
you, treating patients, when you get something approved by FDA
with the indication of something you are treating and Medicare
won't cover it.
Can you address that relationship with your patient and how
that is affected when someone else is deciding that they can't
get something that can make them healthy?
Dr. SOARES. Yeah. Thank you for question.
And this is very upsetting. I had several patients that I
would like to have provided a treatment--in this case, we are
talking radioligands, radioisotopes. And even though has been
approved by the FDA for one niche of what the therapy benefits,
it is not really paid by Medicare to all the indications. So my
patients die, because I cannot give them the treatment that
they deserve.
And, you know, thankfully we have done a lot of innovations
and I have many more treatment options for my patients, but
that particular treatment is the cornerstone of longer
progression for survivors and survival for these patients.
I had personally lost patients because I had not been able
to provide the treatments because I have been told they were
not covered by Medicare. And that is unacceptable to me.
Mr. WENSTRUP. That seems immoral and sinful to me, and
people that aren't standing over patients trying to help them
making those decisions.
Thank you. I yield back.
Chairman SMITH. Mr. Estes.
Mr. ESTES. Well, thank you, Mr. Chairman.
And, you know, once again, I want to thank you for holding
a hearing outside the bubble in Washington, D.C. I know many
Members like myself go home every week and listen to our
constituents, but having these hearings around the country is
really important for us to be able to talk with people in, I
will use the term, the ``real world,'' as opposed to what is
going on in Washington. And it is great that we are able to
take this information to make sound policy decisions.
I am just going to dive right into questions today. I have
a lot of things to go over.
And, Dr. Soares, thank you for your testimony. And I want
to thank you for what you do to help advance medical
breakthroughs in the country.
And cancer has impacted most of us, if not personally, then
a family member or a close friend. And there have been so many
innovations in the field of cancer treatment.
Can you talk a little bit about why it is important for the
United States to remain the leader in medical innovation?
Dr. SOARES. Thank you for the question.
We are extremely successful in medical innovation. There
are so many pathways that are so important for us to continue
to lead. It is important for our patients, for our communities,
for our economy. The amount of economic revenue that is
generated from research, in many aspects, is also huge.
So, from the aspect of healthcare, delivering healthcare to
our patients is key. It is also economically important. And,
also, if we keep our drugs here, we don't have to depend on
other countries to supply. Because, as was mentioned, drug
searches, this is a huge issue. And I also have not been able
to provide chemotherapy drugs and symptom control management
drugs to my patients because they are not here.
So it is such a multilevel importance that we continue to
lead all these efforts.
Mr. ESTES. Yeah. Well, thank you.
And, Mr. Watanabe, you have heard--and I know you talked
about it, our chairman talked about it--how important research
and development is, and the issues there, and just how
important that is for medical R&D to help save lives.
I have been a fierce advocate of making sure that the Tax
Code encourages U.S.-based research and development. And you
talked about it a little bit, but do you want to talk some more
about how the Tax Code helps or does impact the R&D that gets
developed? And what other points do we need to do in Congress
to help make sure that--and encourage innovation in the U.S.?
Mr. WATANABE. I think I mentioned in my comments, I think,
first of all, it is important to recognize that most of the
innovation that is happening now is happening in small
companies, companies like mine, and, you know, not companies
who are generating billions of dollars in profits from existing
drugs.
And, as a result, capital is probably the most important
thing for small companies like mine. It is very expensive to
develop drugs. I mentioned my company spent almost a billion
dollars getting our first product to market, with no revenue.
So this committee in particular and Congress more
generally--you know, policies that foster our ability to
acquire capital, like the Tax Code changes that I mentioned but
other measures that foster an environment that is friendly to
capital formation for small companies, is vital, because that
is what gives us the resources to run the clinical studies, to
do the basic research that leads to the medical innovation.
And then I think, you know, the other aspect that Mr.
Cullimore touched on is M&A. Most drugs are developed--new
drugs are developed by small companies, but they aren't
marketed by small companies. Typically, the company is bought
or the drug is bought by a large company. And that M&A activity
is critical to then getting the medication to patients. And
some of the steps by the FTC, in particular, against mergers
and acquisitions are really actually going to inhibit R&D and
the ability for us to deliver new drugs to patients.
Mr. ESTES. Thank you for those comments.
I mean, a lot of times, in my conversations, a lot of folks
have said, ``Well, research and development only helps big
companies,'' but it is really the small ones that are so much
more greatly affected through that.
It is critical that we keep innovation here in the U.S.,
but it is also critical that we make sure healthcare is
affordable. You know, in my home state of Kansas, there are a
lot of rural Kansans, as we have talked about today, and we
need telehealth to help make sure we have better outcomes.
And, unfortunately, some of the higher costs, driven by the
incorrectly named Affordable Care Act a decade ago, have
prevented Kansans from getting some of that medical care. And,
as we mentioned before, or has been mentioned earlier, the so-
called Inflation Reduction Act is only making it worse.
And so we need to make sure that--you know, as we look
ahead, CBO, the Congressional Budget Office, is already
projecting that premiums are going to go up and that seniors
will have fewer drug choices in their drug insurance because of
these disastrous pieces of legislation. So I want to make sure,
as we look forward, that we can actually implement policy that
helps make sure that we have drug treatments and other
treatments available to patients.
So thank you all for your time in being here.
And I will yield back.
Chairman SMITH. Mr. Hern.
Mr. HERN. Thank you, Mr. Chairman.
Congressman Moore, thanks for hosting us here in your
beautiful city.
I would like to thank the witnesses for being here.
It has been great to work on healthcare in Ways and Means
in my 4 years on the committee. And when we talk about
healthcare, things usually turn very partisan, with the
exception of innovation.
And you probably saw, last week we had a great markup. A
lot of bipartisan bills came out of there, a lot of, you know,
``kumbaya,'' ``let's go get 'em.'' And then we had CMS come out
and support the mental illness treatment using PDTs, so that is
great.
And while I wish everything could be as positive as last
week, it is sad that what we are dealing with is stifled
innovation and a decrease in patient access due to the
Inflation Reduction Act, a bill that had zero Republicans on
it.
And one consequence of the IRA that I am extremely
concerned with is the harm it is going to do to research of
rare diseases treatments, as we have been talking about. I know
on a personal level how having a rare disease can affect an
individual and their family. I will always advocate for those
who are suffering from a rare disease and support efforts to
bring treatments for these diseases to market.
Over 90 percent of rare diseases have no FDA-approved
treatment. And that is millions of patients across America with
no options.
According to the 2021 National Organization for Rare
Diseases report, about 25 percent of drugs on the market with
an orphan designation are approved for more than one orphan
indication. Under the IRA, there is no incentive for companies
to investigate these additional uses, because as soon as they
receive additional orphan designation, they are eligible for
government-mandated price controls.
That is why I am proud to co-sponsor the ORPHAN Cures Act.
This bill fixes one of the many IRA consequences that would
only hurt individuals who are already suffering enough. The
ORPHAN Cures Act would ensure that orphan drugs treating one or
more rare diseases are excluded from Medicare price
negotiations.
You know, this hearing we are having today, this markup, is
exactly what the Chairman wanted to do when he became the
Chairman of Ways and Means just almost 2 years ago, was to get
out and listen to the experts, listen to the people that are
receiving the brunt of, or the lack of, work from Washington,
D.C.
And you all have expressed, you know, intimately the issues
you are having in order to get to this--not some, you know,
politician, not some person on the Hill that has read something
in a book. You are telling us from your heart what is really
mattering. And we really need to listen to this.
And it is really sad, quite frankly, that we don't have any
of our colleagues from across the aisle that could be hearing
exactly what you are saying. This isn't political. This is
real. This is people's lives, as Dr. Soares said. This is
people's lives that we are not being able to help.
And, you know, Dr. Watanabe--Watanabe--I will get that
right in a minute--you know, it is sort of interesting, some of
the concepts that you came up with. Monetizing net operating
loss, that is interesting. The passive versus non-passive
investing. You are not asking for the federal government to
give you money; you are asking to have an opportunity for just
the timing of the tax.
That is something that, you know, everybody on this
committee needs to hear. Everybody--not just us on this side of
the aisle, but everybody--needs to hear that. So I really
appreciate that.
And can you tell us what is going to happen if there are no
fixes to the ORPHAN Cures Act? What is that going to look like
for, you know, the support to incentivize research and
development for rare disease treatments?
Mr. WATANABE. Yeah. Congressman, thank you for your
question.
You know, my own company doesn't work in the orphan disease
space, but a number of my colleagues at BIO, on the BIO Board
of Directors, do, and I can tell you that it is already having
an impact. Exactly as you described, the IRA has set up a
disincentive for pursuing any follow-on indications for an
orphan drug.
You know, historically, that has been the model, that you
get your orphan drug approved for its first indication and then
you look to see what other possible rare diseases that drug may
treat. And, you know, some of the best cures out there for
these rare diseases are repurposed from a different initial
indication. Companies are not pursuing those follow-on
indications anymore precisely, as you said, because the IRA
creates this disincentive for them to do that.
I think your ORPHAN Cures Act is an incredibly important
fix to the IRA. And we are really hope that we see passage of
that bill very soon, because, you know, every day that this
disincentive is in place is days that new innovations aren't
being developed for people who are suffering from rare
diseases.
Mr. HERN. Thank you for your comments.
We are already seeing, you know, what is happening to Part
D. You know, we have lost--you know, prices have gone up 21
percent. We are losing options in the marketplace. People are
leaving the market because of what is happening with the price
controls. It is something that we on this committee have got to
get fixed. It is disastrous for our seniors. And just because,
you know, somebody says it is great, the results of the actions
are showing something completely different.
So, again, we thank you all so much for your, you know,
expert testimony. And, again, we need to have all of our
colleagues out here.
And I want to thank the chairman once again for having
these field hearings on all the different topics we have had
this year related to the American people.
Thank you. I yield back.
Chairman SMITH. Mrs. Miller.
Mrs. MILLER. Thank you, Chairman Smith.
And I would like to thank all of you for being here today
so that we can have very good conversations back and forth.
I am from West Virginia. This is my third trip to Utah, and
it is incredible. But we have an expression in West Virginia.
Our mountains are a lot closer, they are a lot lumpier. And
there are areas that--the expression is this--and people will
look at me and go, what does that mean? And I will say, it
means the sun only shines between 10:00 a.m. and 2:00 p.m.,
because our mountains are so close. It is just so different.
But, you know, because I represent rural West Virginia,
where the access to care and innovation can really be a
challenge for all of our patients--and an issue that I am
particularly passionate about, of course, is care for patients
with end-stage renal disease. Kidney care doesn't often see
innovation--which I think you are a living example of--which is
an extremely pressing issue for us.
But we also have to consider the very basic challenges
rural patients face when they are trying to access lifesaving
dialysis services, which, again, we have already mentioned.
Many ESRD patients in my district have to travel for hours to a
dialysis center to receive the care they need, dialyze for two
or three hours, then drive back home those hours. And they must
do this three times a week just to survive.
This burden on some of our most vulnerable patients really
is unbearable. And, thankfully, the new technology exists for
patients to receive home dialysis. Home dialysis can be a
godsend for rural patients, people who have jobs or families,
or are without access to transportation. And I have worked very
hard in Congress to increase that access of home dialysis just
for our ESRD patients.
So, Mr. Shakespear, I am a mother, I am a grandmother, and
I was so touched by your testimony about your son. You know,
everyone here, your heart just aches, understanding, or trying
to understand, what all you have been through, and how any
parent would go to the ends of the Earth to save their baby.
Unfortunately, for parents like us in rural areas, as you
have pointed out, there are some patients that don't get care.
And it is just, care is so far away, it makes it difficult.
Can you sort of walk us through--I know you have talked
about it, but--what was it like finding the care for Isaac?
And, you know, can you explain, was it a pediatric nephrologist
or a dialysis clinic, or was it a social worker? How did you
work all that to navigate for healthcare?
Mr. SHAKESPEAR. One of the challenges has been that Isaac
has received care across many different organizations, and,
unfortunately, care coordination across different organizations
is very challenging.
So, when we initially found out about his diagnosis, he
received care from a high-risk fetal obstetrician, fetal
surgeon, with Dr. Chmait. And then we had to coordinate with
another high-risk OB at Stanford in order to transfer Isaac
from Los Angeles to Stanford for birth.
And then, throughout the process, in the NICU, he was cared
for by a wide variety of specialists--nephrologists,
neonatologists, and then lots of -ologists. But each condition
that he came across usually required a different specialist.
And then it was 24/7 care, and so we were dealing multiple
nephrologists, multiple neonatologists throughout the process,
and sometimes changing over in the middle of crisis situations.
And so most of the burden for coordinating that care has
fallen on my wife and I. But my wife has a bachelor's degree in
early childhood education. I have a bachelor's degree in
biology and a master's degree in healthcare administration and
public health. So, when I say it's because of our education, I
understand the system, I understand the biology, she
understands the development component. And so you could not
have picked a better set of parents to be thrown into that
situation. But I know that we are very unique in understanding
what is happening and being able to communicate those things
across different teams.
And so, throughout the process and every hospitalization,
we have had to be advocates for our own child and understand
the treatments that he was going through and ask questions and
be able to explain in clinical terms to the next provider.
Mrs. MILLER. I need to ask one more----
Mr. SHAKESPEAR. Uh-huh.
Mrs. MILLER [continuing]. Question, so thank you.
Mr. Watanabe, Chairman Smith recently created 10 tax teams,
because you all know about the Tax Cuts and Jobs Act, and we
are just focused on what we can do for 2025 and how we can put
these things in order. I am heading one of the tax teams, and
what I am hearing about the most is the corporate tax rate.
And because of President Trump's work and all of that that
happened, we tried to create a favorable environment for
companies engaged in R&D. And it is disturbing to me that our
medical supply chain is heavily reliant on foreign
manufacturers.
Could you explain to me the benefits of a 21-percent
cooperate tax rate and how that helps you?
Mr. WATANABE. Well, you know, as I mentioned earlier, the
smaller companies, most of us are not actually profitable, so
we don't pay taxes, at least at the moment, although we all
hope to at, you know, sometime in the very near future.
But I think, you know, it is also important to understand
that small biotechs exist inside of a much larger ecosystem.
And I mentioned earlier, for example, the importance of M&A to
finish development and to bring the therapies to patients. So I
think that any change that fosters the health of the overall
biotechnology sector in America, like the corporate tax code,
will have a very positive effect on R&D.
And I certainly don't want to suggest that large
pharmaceutical companies--I was employed at Eli Lilly and at
Amgen in the past. They invest immense amounts of money in
research and development. And to the extent that they have to
pay higher tax bills, all of those dollars are dollars that
they will not then spend on R&D and develop additional
therapies.
Mrs. MILLER. Thank you so much. I apologize.
I yield back my time.
Chairman SMITH. Mrs. Steel.
Mrs. STEEL. Thank you, Mr. Chairman, for having this
hearing here in Utah.
When Congressman Blake Moore said that it is over 100
degrees, I couldn't believe it, because I came here only to
ski, so I always thought that you have much cooler weather.
But thank you, witnesses, coming out here. Because when we
hear from you, then, you know, we know which direction that we
have to move. A lot of times, we try to introduce the bills,
and you know what? Sometimes those bills actually create more
loopholes, and then it is not really helping. So thank you very
much for coming out today.
And telehealth--I am so into telehealth. Especially
California, during COVID, we were totally shut down for a few
years. So telehealth has been a vital lifeline for patients
living in urban, suburban, and rural areas across the country.
And, last June, Ways and Means took a proactive step in
passing the Telehealth Expansion Act, which would allow 32-plus
million Americans with health savings accounts to have a
permanent access to telehealth and remote care services without
first having to meet their deductible.
This legislation must pass before--it is going to be
expired by end of this year.
And thank you, Mr. Shakespear, for, you know, you sharing
your personal story. And it is really sad, you know, what you
have to go through. Of course, you have happy times too, but,
you know, when baby comes, usually you have to be really happy.
Actually, my grandson was just born 2 months ago. Nine-
pounds premature, so he was in NICU for 8 days. And I remember
that, you know what, those 8 days, that, you know, I hoped that
he's going to come out healthy. Fortunately, he is healthy.
But, you know, what you are going through I cannot really
imagine.
But, you know, could you explain just a little more about--
since I know that you are chair of the Utah telehealth advisory
board at the same time that, actually, telehealth helped to
connect with the specialty care providers for your son. So
could you tell us how important it is that, you know, we have
to move forward with this?
Mr. SHAKESPEAR. Absolutely.
So understand that when we have to travel to Salt Lake City
for an appointment, it is not only 9 hours of our time but it
is the cost of gas to travel up here, it is the cost of
lodging--typically we have to stay oversight somewhere--it is
the cost of food.
And I do want to acknowledge, our insurance programs and
Medicaid do assist with us this. But when you look at raising
gas prices, inflation for the cost of food and for lodging,
those rates that we are reimbursed don't change when those
price goes up. And so those exacerbated prices make the problem
worse for us personally.
But being able to access telehealth from home just gives us
a component of being able to keep a consistent schedule, reduce
cost, and really protect our son, because taking him out into
public is dangerous until he has a higher immune system.
It has been huge to be able to get in quicker as well.
Oftentimes, if we are scheduling an appointment, sometimes it
is a month out, but telehealth, we can get in that week.
So it makes a significant difference in a number of ways
for us to be able to access that.
Mrs. STEEL. Thank you.
And another concern here is, I am concerned that, under
current Biden policies, seniors are seeing fewer Part D plans,
increased premiums, and fewer drug options.
I also think this hearing must address the CCP manipulation
on American companies. Economic diversification is an important
tool to halt our current dependency on the CCP on our
healthcare supply chain.
I introduced the Medical Supply Chain Resilience Act, which
would allow USTR to establish trusted trade partners, diversify
medical devices and pharmaceuticals. This framework can help
eliminate barriers to trade, expand supplier networks, and
allow for the investment in domestic manufacturing.
So I want to ask Mr. Watanabe and Mr. Cullimore: As the
CEOs, can you share your perspectives on the greater issues of
sole-sourcing products in China instead of in the United States
or with trusted allies? And what does the future hold if we
don't change that course?
Mr. WATANABE. So I guess I will start.
Yeah, this is a major issue, I think, that we need to
address as a country. And I think it is even more acute than
some of the issues that Dr. Wenstrup mentioned.
You know, for example, it is not just generic drugs that we
rely on. In fact, most of the drugs that we take in this
country are being manufactured with chemicals, starting
chemicals, that are coming from China. China manufactures the
majority of the starting chemicals. China has our entire
biopharmaceutical industry by a stranglehold.
You know, I think one of the challenges has been that, as
margins have been squeezed by pharma companies through IRA and
through PBMs and through a whole variety of things, we are
always looking for ways to reduce costs, and, unfortunately,
China typically is the cheapest place to buy supplies, it is
the cheapest place to run clinical studies, it is the cheapest
place to manufacture your product. And so companies looking at
their bottom lines are shifting overseas.
We, as a company, have chosen not rely on China for any
purpose, one, because, as a former CIA and former Naval
intelligence officer, I think we are in the middle of a cold
war with China. But, secondly, you know, we saw in the
pandemic, if we rely on overseas sources, particularly overseas
sources from a country that is not terribly friendly to us, and
something like the pandemic happens, we can't rely on those
sources anymore. And it would be far worse if our two countries
were to actually come into conflict.
So I fully support the BIOSECURE Act and the broader push
by Congress to build resiliency in the U.S. biopharmaceutical
sector.
Mrs. STEEL. You know what, my time is up, Mr. Chairman, so
I--is it okay?
So, Mr. Cullimore.
Mr. CULLIMORE. Oh. Just briefly, the pandemic shined a
bright light on this problem, and many companies have
recognized that and are trying to disentangle as much as they
can from those kinds of sources in their supply chain.
That said, it is very important, I think, that we be
judicious in how we approach it. Because sometimes major
tariffs or things of that nature can have an immediate effect
on U.S. companies that is very negative.
And so I think, while the concept of bringing and reshoring
is important, it needs to be done in a way that doesn't create
short-term harm that is very significant.
Mrs. STEEL. Thank you, Mr. Chairman. I yield back.
Chairman SMITH. Thank you.
Mr. Feenstra.
Mr. FEENSTRA. Thank you, Chairman Smith, for having this
today.
And I also want to give a special shout-out to my good
friend, Representative Moore. Thank you for having this in your
district. It is truly impressive, what you are doing here. It
really is remarkable.
And I thank each one of you for your witness and testimony.
You think about where the U.S. stands. I mean, in the last
couple years, last decade, we have for the most part been
number one in the world in innovation when it comes to
healthcare. And we are losing that. We are losing that grip on
what we can do.
And it just seems like, through IRA, that we want to go
back to that European-style government price control, the quick
solution to try to bend this curve, which is a false narrative.
And it really concerns me.
And, then, when we talk about supply chains, when we talk
about the tax ramifications, our tariffs, our regulatory
environment, there are so many things that are really pinch
points to us just being innovative.
So my question is, we are all sitting here trying to figure
out, what are the solutions?
And, Mr. Watanabe, I mean, if you look at the supply
chain--and you talked about, obviously, China and things that
are going on there--what would be the number-one thing that you
could say to us, hey, this is the first thing you need to
tackle? I mean, is it the amortization of R&D expensing, or
what would you look at and say, this is the key?
Mr. WATANABE. I think probably the single most important
thing that Congress can do to maintain our leadership in
biopharmaceutical innovation is to address access and
reimbursement issues in this country. Because if we don't fix
the currently broken reimbursement system in this country,
there isn't going to be any money for future innovations.
Mr. FEENSTRA. Boom. Thank you. Exactly. Reimbursement. I am
glad you said that. And that hasn't been really talked about
today.
Dr. Soares, you have also mentioned in your testimony that,
because of the IRA, that a lot of cures are going to be gone. I
mean, you talk about biologics, you talk about orphan drugs,
all these other things that are going to be on the sunset or go
away because of what is happening.
Can you address that? And what is any type of solution? You
know, do we have to roll back this? Or how do we fight against
this?
Dr. SOARES. Yeah, there are treatments that will go away,
and there are treatments that have already gone away and I have
not been able to offer to my patients.
I think continuing federal funds and reforms to allow them
to keep--that we can be able to incentivize the companies to
still have them, that will be key.
It is very disheartening when we have treatments that are
effective and, for reasons that are not in the physicians', in
the healthcare control, we cannot offer to them.
I cannot speak necessarily of a given policy. That is not
what I am expert on. But I can tell you for a fact that some of
the treatments have been going away and I have not been able to
offer to my patients with rare cancers.
Mr. FEENSTRA. Yeah.
I want to pivot, Dr. Soares. You and I are sort of kindred
spirits on talking about rural healthcare----
Dr. SOARES. Yes.
Mr. FEENSTRA [continuing]. And the rural access points. I
have done my research in maternal care. You have done it,
obviously, in cancer areas.
Can you talk and give this group here solutions to the
deserts that are out there in healthcare? I mean, what do you
see--I mean, I have done my research and said, all right, this
is X, Y, and Z. But for you, what do you see as the opportunity
for us?
Dr. SOARES. Yes. Thank you for that question. That is
actually one of my tasks, is to provide care and clinical
trials to our patients. And then there are several steps.
A, obviously, access to telehealth is key. And then
providers that have multi-license so they can even go outside
of their states and provide the care.
Access to being able to get the labs done locally so I can
monitor that for the patients, and I can also be coordinating.
Continued support of patient navigations that can be
reimbursed and help with all of this navigation of rural care.
Really, integration of the EMR systems, that it can talk, and
AI can help with that.
And regulations that allow us to send the drugs to the
rural patients. Because right now there is a lot of regulation
that shipping outside even state lines or farther can be very
complex and expensive.
Mr. FEENSTRA. Yes.
Dr. SOARES. We have multiple meetings at the Huntsman
Cancer Institute to brainstorm how we are going to give and
take and deliver cutting-edge therapies to other patients at
their homes. I can monitor them, but there are regulations that
are needed to be in place for me to be able to actually get, in
an affordable way, the drugs to the patients in their homes.
Mr. FEENSTRA. Yep. Yep.
Dr. SOARES. And I will be forever thankful for help with
that.
Mr. FEENSTRA. Yep. Thank you, Dr. Soares. Thank you for
those comments. And I will be working on those issues and try
to help in those areas.
Thank you very much. I yield back.
Chairman SMITH. Ms. Malliotakis.
Ms. MALLIOTAKIS. Thank you, Mr. Chairman.
I am pleased to be here in Salt Lake City for the first
time. And I want to thank our witnesses for sharing their
expertise and their personal experiences on the topic of
healthcare innovation and access.
Under the Biden administration, we have seen significant
barriers for Medicare beneficiaries' access to innovative
technologies and bringing new drugs to the market. It can take
up to 5 years after FDA approval for medical devices to get
Medicare coverage. Innovative treatments see that same lag
time.
Furthermore, the Democrats have made their intentions clear
to oppose the pro-growth tax policies from the 2017 Trump tax
cuts that have created a more competitive tax code, they have
created millions of jobs, they have helped encourage and
sustain innovation in the United States by giving businesses
the tools to grow, conduct research and development, and
reinvest back into their companies and employees and their
communities.
But even more concerning is the implementation of the so-
called Inflation Reduction Act and the harmful impacts the
Medicare drug price negotiations program will have on premiums
and the development of critical lifesaving drugs.
Mr. Chairman, I would like to submit for the record a study
by Milliman titled, ``Expected Impact of Inflation Reduction
Act Medicare Drug Price Negotiation Program on Medicare Part D
Beneficiary Out-of-Pocket Costs.''
Chairman SMITH. Without objection.
[The information follows:]
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Ms. MALLIOTAKIS. According to the study, the IRA's
government price-setting scheme will cause Medicare
beneficiaries' annual out-of-pocket costs to jump by $70, or 12
percent, for those who utilize these negotiated drugs under
part D in 2026. Low-income beneficiaries' out-of-pocket costs
will increase by a staggering 27 percent.
And on top of the rise in premiums, the Congressional
Budget Office's conservative estimates say that 13 fewer drugs
will come to the market over the next 30 years, with outside
experts projecting the number will be around 135 new cures.
I will start with Mr. Watanabe.
Thank you for your mention of the impact that this will
have on especially the orphan drugs. And I am also proud to be
a co-sponsor of the ORPHAN Cures Act.
The President said recently that the Democrats, quote,
``finally beat Medicare,'' unquote, and I am afraid that the
data in Medicare Part D would agree.
My question is, do higher out-of-pocket costs lead to
patients stopping treatment, perhaps, or maybe trying to ration
their medication? What impact would this have as a whole?
Mr. WATANABE. Yeah, there is no question that increased
patient co-pays has an impact on patients adhering to therapy
or even fulfilling therapy.
I think it is well-known in the biopharmaceutical industry
that anytime the patient is paying more than about $35 out of
pocket, the rate at which the patient refuses to accept the
medication at the pharmacy counter goes up.
And that is leaving aside, you know, conversations between
a doctor and a patient when the doctor says, ``Hey, I am going
to prescribe this medication for you, but the co-pay is going
to be X'' and the patient walks away.
And this unfortunately is occurring both across commercial
and Medicare plans, where there is constant increase in cost-
shifting to the patients, which is unfortunately impacting the
standard of care.
Ms. MALLIOTAKIS. And I see all your fellow witnesses
nodding their heads that they are in agreement that this is a
concern.
I want to also talk about manufacturing and R&D. I recently
introduced the bipartisan Supply Chain Security and Growth Act,
which will onshore critical supply chains in pharmaceuticals,
in medical devices, and other manufacturing back to the United
States by providing credits to companies who choose onshoring
their manufacturing.
Mr. Cullimore, can you speak to the importance of these
types of incentives as we work to onshore these particular drug
productions and, in particular, reduce our reliance on foreign
nations, Communist China, which we unfortunately rely on far
too much for APIs and other pharmaceuticals?
Mr. CULLIMORE. Thank you for the question.
It is really important to understand that the reason people
have gone to China and other places is because it is cheaper.
Now, to bring them back, to reshore those kinds of processes,
the investment of dollars to make that happen is significant.
We just met with a company that was looking at doing the
chemicals, the APIs, as they call them, that they are doing
overseas, bringing them here, acknowledging that it was going
to be a significant investment.
A bill like you are proposing would provide incentives and
a pathway for those kinds of reshoring activities to occur.
Because the biggest problem is not just the lower costs; it is
the investment that it requires to reshore and do all of those
kinds of things. So you are right on track with that.
Ms. MALLIOTAKIS. Well, thank you very much. I appreciate
that.
And, you know, we see shortages, about 250 different drug
shortages, things like antibiotics and chemotherapies. We need
to onshore this stuff. If COVID taught us anything, it is that
we cannot rely on countries, particularly a communist country
like China, for this.
And so we, as a committee, are working very closely to try
to address this issue, and hopefully we will be able to do it
in the near future.
Chairman SMITH. I would like to thank each and every one of
our witnesses for your testimony, for answering our questions,
for being here, and for your ideas.
I also want to thank each member of the committee. The
members of this committee are spread in thousands of different
directions, and for them to make it a priority to come up here
to hear from real Americans of the issues that you are facing--
I admire your hard work, and I appreciate the sacrifice that
you have all made.
Please be advised that members have 2 weeks to submit
written questions to be answered later in writing. Those
questions and your answers will be made part of the formal
hearing record.
LOCAL SUBMISSIONS FOR THE RECORD
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PUBLIC SUBMISSIONS FOR THE RECORD
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Chairman SMITH. And, with that, the committee stands
adjourned.
[Whereupon, at 11:45 a.m., the committee was adjourned.]
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