[Congressional Record Volume 145, Number 131 (Friday, October 1, 1999)]
[Extensions of Remarks]
[Pages E2002-E2004]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




DR. ARTHUR LEVINSON, PRESIDENT OF GENENTECH, DISCUSSES THE HUMAN IMPACT 
      OF BIOTECHNOLOGY AT HEARING OF THE JOINT ECONOMIC COMMITTEE

                                 ______
                                 

                            HON. TOM LANTOS

                             of california

                    in the house of representatives

                      Thursday, September 30, 1999

  Mr. LANTOS. Mr. Speaker, biotechnology is leading our world into a 
new century of improved health and happier and productive

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lives through revolutionary science. Today at a hearing of the Joint 
Economic Committee, my distinguished friend Arthur Levinson, the 
President and CEO of Genentech, testified about the life-saving results 
and remarkable growth of the biotechnology industry. That hearing was 
chaired by our colleague from the Senate and the Chairman of the Joint 
Economic Committee, Senator Connie Mack of Florida.
  Mr. Speaker, I am proud that Genentech has deep roots in my 
Congressional District. It was in South San Francisco that Genentech 
originally pioneered the research and therapies that generated the 
biotechnology industry.
  Genentech's President, my friend Dr. Levinson, has been a key force 
behind the firm's humanitarian mission to save lives. He earned his 
doctorate from Princeton University and was a post doctoral fellow in 
the department of microbiology at the University of California at San 
Francisco. He has served on the editorial boards of the journals 
Molecular Biology and Medicine, Molecular and Cellular Biology, and 
Virology. An outstanding active leader of the biochemistry community, 
there is no one more qualified than Arthur Levinson to discuss the 
merits and the mission of biotechnology.
  Mr. Speaker, Arthur Levinson delivered an excellent statement to the 
Joint Economic Committee, highlighting the importance of continued 
federal involvement in the industry in order for biotechnology to 
continue its progress in saving and improving the quality of our lives.
  Mr. Speaker, I submit the full text of Dr. Arthur Levinson's 
testimony to the Joint Economic Committee to be placed in the Record, 
and I urge my colleagues to give his testimony thoughtful 
consideration.

                 Putting a Human Face on Biotechnology

       Mr. Chairman and distinguished members of the Committee. 
     Thank you for the opportunity to testify today regarding the 
     most important topic of biotechnology and its impact on 
     people like you and me. It is truly an honor to testify 
     before you today. Your leadership on issues related to 
     innovation, and medical research and development has been 
     critical to the on-going development of new life-saving drugs 
     and breakthrough technologies.
       Without your commitment to such important policy 
     initiatives as funding for the National Institutes of Health 
     (NIH) and permanent extension of the research & 
     experimentation tax credit (commonly known as the research 
     and development tax credit), many remarkable products would 
     not be made available to those in need.
       The subject of today's hearing cuts to the core of what the 
     biotech industry is all about. As Carolyn Boyer and Lance 
     Armstrong's testimony demonstrates--the human face of 
     biotechnology is very real. All the cutting-edge science and 
     innovative technology of our industry is valuable only when 
     it ultimately results in the alleviation of human suffering 
     and the overall enhancement of human life.
       Our mission at Genentech is to be the leading biotechnology 
     company, using information and human genetic engineering to 
     develop, manufacture and market pharmaceuticals that address 
     significant unmet medical needs. We are committed to working 
     with patients, families, providers and payers to improve 
     patient care.
       At Genentech we say that we are ``In business for life''. 
     Our commitment to this is reflected in our history--a history 
     that marks the genesis of the biotechnology industry. 
     Genentech's founders, Herb Boyer and Bob Swanson, were the 
     first to conceptualize the process of cloning human proteins 
     for the purpose of manufacturing life-saving therapies. In 
     1976, Genentech was founded as the pioneering biotechnology 
     firm with research and development, manufacturing and sales 
     capabilities. By the early 1980s, Genentech had developed and 
     licensed the first two products of biotechnology--recombinant 
     insulin and alpha interferon.
       As a testament to our commitment to saving lives, Genentech 
     is among the most research intensive companies in the world. 
     In 1996, we invested $471 million, or 49% of our income, on 
     research and development. We reduced that amount to $396 
     million in 1998, or 34% of income, partially because 
     investors are hesitant to support one-half of income going to 
     research. But research is our lifeblood. It gives life to the 
     ideas we test to treat serious, unmet medical needs. Our 
     strong portfolio of products is a direct reflection of the 
     ideas our scientists have brought from the lab to the 
     patient. And, as evidenced by our robust pipeline, I firmly 
     believe the best of our science is yet to come.
       In an effort to further our commitment to our patients, 
     Genentech devised a ``Single Point of Contact'' (SPOC) 
     program to assist patients and their physicians in gaining 
     reimbursement for their care. In addition Genentech 
     instituted our own ``Uninsured Patient Program'' in 1986 when 
     we marketed our first product, Protropin. The program 
     provides free drugs to patients ensuring that a lack of 
     financial resources will not prevent anyone from gaining 
     access to our products.
       With this brief background in mind, there are a few issues 
     on which I wish to focus today, particularly: federal support 
     for research and development, permanent extension of the R&D 
     tax credit, and the Medical Innovation Tax Credit (MITC).
       Federal Support for Biomedical Research and Innovation is 
     Crucial. The scientific underpinnings of the industry 
     itself--namely, the discovery of recombinant DNA 
     technologies--was developed in the 1970s at Stanford 
     University and the University of San Francisco with the help 
     of federal funding.
       As the industry has matured and grown, the ability of the 
     federal government to either constructively nurture or 
     inadvertently harm the industry has increased commensurately. 
     The Joint Economic Committee (JEC)--particularly in hosting 
     the national high technology summit earlier this summer--has 
     played an enormously important role in highlighting some of 
     the critical ways the federal government can advance our 
     country by creating a more supportive environment for high-
     technology.
       Permanent Extension of the R&D Tax Credit. Except for small 
     increases in the past three years, direct federal support for 
     overall research has, for the most part, been declining for 
     over a decade. While a long-term commitment to increasing 
     funds available to the federal government for basic research 
     is important, maximizing private industry R&D through a 
     permanent R&D tax credit is a necessity. Numerous studies 
     have shown that a permanent R&D credit is a cost-effective 
     means of ensuring that high levels of private-sector 
     investment will continue to take place.
       A short-term extension of the credit is clearly preferable 
     to allowing the credit to lapse, however the lack of 
     permanence severely compromises the effectiveness of the 
     credit for the biotechnology industry. With biotechnology 
     R&D programs often planned five to ten years in the 
     future, uncertainty regarding the credit can prove 
     detrimental. The industry is required to work under the 
     assumption that the credit may not be in effect for the 
     entire life of the research project, which in turn means 
     less revenue can be committed to R&D. And, this translates 
     into fewer scientific discoveries--fewer therapies like 
     Herceptin.
       Returning to our theme of ``Putting a Human Face on 
     Biotechnology'', this uncertainty regarding the credit has 
     profound implications for the patients since our industry 
     spends much of its revenue on R&D. This uncertainty may 
     necessitate a small firm furloughing scientists engaged in 
     promising research. For a large firm it may mean making the 
     hard choice to terminate or curtail a significant project. 
     Either way, patients lose. I dare say that without the R&D 
     tax credit, Herceptin simply would not be a reality. Mr. 
     Chairman, you have long been the champion of this cause and I 
     know that others on the Committee have been long time 
     supporters of the credit. It is our desire to work with you 
     to make the credit permanent.
       Medical Innovation Tax Credit (MITC). Over the years, the 
     federal government has invested billions of dollars to create 
     a biomedical establishment of medical schools and teaching 
     hospitals deemed the finest in the world. The growth of 
     managed care, coupled with cuts in Medicare payments, 
     threatens the ability of these medical schools and teaching 
     hospitals to carry out their vital social mission of 
     research, training of health professionals, and the provision 
     of indigent care.
       The Medical Innovation Tax Credit would establish an 
     incremental 20 percent tax credit for clinical trials 
     performed at medical schools, teaching hospitals that are 
     under common ownership or affiliated with an institution of 
     higher learning, or non-profit research hospitals that are 
     designated as cancer centers by the National Cancer Institute 
     (NCI). This credit would partially offset the roughly 30 to 
     50 percent greater cost of doing clinical trials at these 
     institutions. It would encourage biomedical firms to do 
     clinical trials here in the United States while providing a 
     revenue source for medical schools, teaching hospitals, and 
     NCI-designated cancer centers. Clinical trials at these crown 
     jewels of our health care system have dropped from 82% of 
     clinical trials in 1985 to an estimate of 27% in 1996.
       This narrow credit is designed to complement the R&D tax 
     credit and has been scored by the Joint Committee on Taxation 
     as having negligible cost so long as the R&D credit is in 
     effect. The legislation--H.R. 1039 in the House and S. 1010 
     in the Senate--has attracted strong bipartisan sponsorship 
     and support. Mr. Chairman, thank you for your vital 
     leadership on this important issue. I know others on the 
     Committee are co-sponsors of this legislation, and we 
     appreciate their support and efforts as well.
       The Future of Biotechnology. The first quarter century of 
     biotechnology has been a period of astounding advance. The 
     next quarter century promises revelation and quantum leaps 
     forward. The industry is on the cusp of major breakthroughs, 
     breakthroughs that would have been the stuff of science 
     fiction--not science--a few short years ago.
       One example of where Genentech is headed in the future is 
     our use of computers and the new technologies of 
     bioinformatics to search large databases of information to 
     advance our own research and medical science. Genentech's 
     Secreted Protein Discovery Initiative (SPDI) builds on our 
     world-class expertise in cloning and expressing genes from 
     the human genome that encode proteins. SPDI focuses--through 
     the brilliance of computer technology--on identifying the 
     minority of proteins that are most likely to be of 
     therapeutic interest. And because SPDI is

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     just that--``speedy,'' it has dramatically enhanced our 
     scientific capabilities and is leading to new candidates for 
     research. For example, SPDI has already helped identify 
     proteins that may be useful as cancer therapies through a 
     process called ``apoptosis,'' which means the genetic 
     programming of the death of cells or, in the case of cancer, 
     tumor cells. This technology would not have been possible 5 
     years ago. Both the Human Genome Project and the increases in 
     computational capability through smaller, more powerful 
     computers make bioinformatics work. Both the Human Genome 
     Project and the advances in computer capability rely on 
     federal research as the platform for future breakthroughs.
       Our pipeline is very exciting and robust. In addition to 
     apoptosis, we are making headway on an advanced form of our 
     original product, tPA, which is effective in the treatment of 
     heart attack and stroke victims. We are also moving forward 
     with research on a product designed to block the cascade of 
     health problems associated with asthma and other allergies, 
     and are in the process of testing Herceptin on other forms of 
     non-breast cancers as well as on earlier stages of breast 
     cancer.
       As I hope I have illustrated for you today, the biotech 
     industry holds tremendous promise for the future and lives of 
     so many patients facing serious illnesses. Our resolve to 
     better their lives is unwavering, even in the context of an 
     unpredictable financial and regulatory environment.
       However, two things are predictable as we look toward the 
     future of biotechnology. As in the industry's first 25 years, 
     the next 25 years will require federal policies that are 
     supportive of biomedical research and innovation. And 
     finally, the industry as a whole will only succeed if we 
     continue to keep the patient--the human face in 
     biotechnology--first and foremost in all our decisions.

     

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