she wanted to make possible what patrick and terry and bob deleo already made possible for the citizens of massachusetts. it was what happened in massachusetts that became the model for the rest of the country, and they are now the beneficiaries of the leadership that we have asemibled here -- assembled here today. as peter said, for so many people, washington it just a distant concept. i'm from olden. my father was a milkman. i never visited washington, d.c. until i was worn in as a united states congressman on my first

visit to that city. all of us, when we arrived there, it is just this incredible moment of honor. here, at the kennedy institute, children from across this entire region, across this nation will be able to learn about how our government works, and it will inspire the next generation in the same way that the past several generations have been inspired by the kennedy family, by the brothers, who served as a beacon of hope, not just for the irish or the italians, but of every people of every nationality within this nation and across this planet. there was something born in the 1960s with the kennedy brothers, and it lives on today, and that

dawning of a bright light, a better future lifted up the spirit of an entire nation and throughout teddy's unmatched career in public service, he made sure that every one had access to it, and as the nation's greatest senator in history, he made sure -- [applause] that there was a democratization of access of opportunity through education and through health care for every child in this country so that everyone could have not just the dream, but a reality and millions of people across this country now are able to fulfill their dreams because of what teddy was able to do, but with teddy, it was always the make of the man, not just his level of political performance that caused the rest

of us to lift our gaze to the constellation of possibilities that were out there, not only our own possibilities, but our own potential, our possibilities to help the world within which we lived, this magnificent institute will give the next generation of americans the guide stars, service, historical understanding, and idealism which enlightened mind and encourage full participation in our vibrant democracy. teddy always knew that the past was just a memory and the future was the hard reality for the poor and the sick and the elderly and the disabled, and he never allowed nostalgia to

replace idealism that had us fighting for a future that was better for every citizen in our country, and he inspired all of us to take up that fight. the edward m. kennedy institute will be a learning laboratory where young men and women delve into the history of our country and participate in great debates on the issues that animate the american experience. the institute will be at the cutting edge of architectural design. of course, there's no building that could match the strength of teddy's soul. there is no material that could replicate the fiber of his character. there is no ark architecture that could even begin to scrape the heights of teddy's vision, but yet in this manmade edifice, it will be conveyed the essence of teddy, and it will be such a

fantastic and innovative structure. when i imagine the activity within the institute's walls, i think of all the incredible energy that will be generated. i imagine the son of an irish-american iran worker from pittsburgh dating the daughter of a brazillian-american bus driver. i think of the american teaming up with a son of a haitian american hairdresser to research proposals on early education programs #-b and i see the same debates taking place with the children of every state in our country and across the world here, here at one of the great urban universities in the united states, the right place for this institute, the university of massachusetts at boston led my keith motley, jack wilson, led

my all of these wonderful young men and women who are the heart and soul and future of our country, and it is those debates which will spread the dreams across town, across our nation, across the world building bridges of understanding. for teddy, education was always more than books. it was an opportunity, an experience to be grasped every day. teddy found knowledge while in the grip of a colleague or a constituent's hand. he found vision in grafting the tiller of his sailboat or at his lecture at the senate floor and found joy in his children and ground children and felt love in the arms of his dear vicky and fulfillment across multitudes of the victories in the world that

his good works were able to touch. now, with this incredible institute, this hub of history, the educational opportunities that teddy created will be multiplied and made available to students, to teachers, to legislatures, and to all those involved in public service at the institute and far beyond its walls, teddy's lion heart, and the echo of his words will stir new service enabling the leaders of tomorrow to learn, to participate, and to dream about a better world. thank you all so much and thank you, kennedy family, for what you have done. [applause] [applause] >> ed mentioned the university of massachusetts here at boston. i want to introduce to you one of the graduates of the university of massachusetts boston. man, i was proud to represent

rosanne me and the house of representatives for many years. congressman joe kennedy. [applause] [applause] >> when i started this job at the institute, i was talking to my young nephew, and he was saying he had met our next speaker a couple of times, and he said, so do you get to work with him? i said, yeah, i do. he said, he's way cool. [laughter] he is that. he is one of the great advocates, a man who leads this university, and you can see it on the edge of where it's going to always be a better and better place where everyone in this country can be proud of the people who were here, of what

they do here, and what they will do in our world, the way cool chancellor of umass boston, keith motley. [applause] [applause] >> i can't wait to go home and tell my children that. [laughter] when they see me in those gym trunks from 1980 -- [laughter] and those sneakers and all those things, they don't think i'm that cool. [laughter] good morning, everybody. >> good morning. >> welcome to boston's public university, the only one, the university of massachusetts boston. we're so grateful to have you here. it's your university, so thank you for coming out and being a part of what we see every day. it was unbelievable, vicky, to talk up here this morning and

feel the buzz of everyone in excitement, and so thank you, the family, the board, and everyone else for getting us here. now, i know i'm here to celebrate the educational partnership between the edward m. kennedy institute for the united states senate and the university of massachusetts boston, and i know i'm not supposed to tell you that this campus has 16,000 students and have unbelievable faculty and 900 students come from 30 different countries and speak 90 languages. the mayor is an alumni. i know i'm not supposed to say that, but we do support whole heartedly the goal of the institute to illuminate the great debates of the senate staff, but i'm al here to tell you that these moments in history inspire our present and

they also inform tomorrow's leaders, and i'm going to show you some of that, and we're going to see this work today. one such moment that we're so proud of in those times, and this is a time that many of us up in this room can relate to was the 1964 debate over the civil rights agent. this bill was filibustered for 57 days and timely broken in june of 1964. the first time in united states history that a filibuster had been broken in the senate on a civil rights bill. perseverance, per veerns, -- perseverance, perseverance paid off. our senator, our senator, ted kennedy, someone so near to my heart, understood that quality very, very, very well.

the edward m. kennedy institute will use historic senate debates like this to help make our legislative process accessible in engaging to a wide audience. it was senator kennedy's wish for visitors to the institute would come to understand how senators of both parties work together to address the great challenges facing our country. it was his hope that visitors would leave this institute inspired to civic action and inspired to involvement. now, in 1964, 47 years ago tomorrow, edward m. kennedy made his first spheech in the -- speech in the senate urging his

fellow legislators to pass the civil rights act. his eloquence, his passion of commitment to all will be echoed time and time again throughout his career as a united states senator, so on this historic day, it's both a preview of the educational offerings of the institute and a try butte to the champ upons of civil rights in the senate and also for me to show off the caliber of students we have at the university of massachusetts and particularly at the university of mass boston. we invited three of our students from the university of massachusetts boston to bring alive the historic debate on the civil right act of 1964. they will be reading excerpts

from senators hubert humphrey, democrat from minnesota, edward kennedy, democrat from massachusetts, and edward dirksen, republican from illinois. now, come up here, a junior and coordinator will read an excerpt from senator hubert's address delivered on march 30th 1964. [applause] >> thank you. it's an honor to be here. mr. president, i cannot over imp size the historic importance of the debate we are beginning. we are participants in one of the most crucial eras in the

long and proud history of the united states, and, yes, in man keep's struggle for justice and freedom which has gone forward since the dawn of history. if freedom becomes a full reality in america, we can dare to believe it will become a reality ever where. if freedom fails here in america, the land of the free, what hope can we have that it will survive elsewhere? the golden rule shows what we are attempting to do in the civil rights legislation. do unto others as you would have them do unto you. if i went to castle to try to do what you are doing, it would be to fulfill this great admiration

which is the human rule of relations. if we are to have justice, tranquility, peace, and freedom. the bill has a simple purpose, to give fellow citizens the same rights white people take for granted. it is no more than the constitution guarantees. surely, the goal of this bill is not too much to ask for the senate of the united states. thank you. [applause] >> oh -- here we go, here we go. [laughter] now, a senior marketing -- majoring in environmental earth and ocean sciences, but also an undergraduate student president, and so come on up.

he's going to read an excerpt from senator kennedy's first speech to the united states senate from april 9, 1964. [applause] >> how did i get so lucky? yeah, exactly. [laughter] i have to take this opportunity with all these great leaders here to mention i'm graduating. [laughter] [applause] i'm taking job offers. [laughter] i'm very eager and up spired by this institute to be a public servant, so i was a former union organizer. [cheers and applause] i'll probably be knocking on congressman markey's door because i share a passion for environmental sciences, health

care, thank you, speaker pelosi, and higher ed, so thank you, chancellor motley. >> you're welcome. [laughter] i'm honored to read a portion of this senate speech in april 1964 when senator kennedy said, mr. president, it is with some hesitation that i rise to speak on the pending legislation before the senate. a freshman senator should be seen, not heard, should learn, and not teach. it is true that prejudice exists in the minds and hearts of men. it can want be eradicated by law, but i firmly believe a sense of fairness and good will also exists in the minds and hearts of men. this noble characteristic wants to come out.

law expressing as it does the loyal conscious of the community can help it come out in every person so in the end the prejudice will be dissolved. as a young man, i want to see an america where everyone can make his contribution, where a man will be measured not by the color of his skin, but by the content of his character. i remember the words of president johnson last november 27th. no memorial or eulogy could more eloquently honor president kennedy's memory than the earliest possible passage of the civil rights bill for which he fought so long. my brother was a first president of the united states to state publicly that segregation was

morally wrong. his heart and his soul are in this bill. if his life and death had a meaning, it was that we should not hate, but love one another. we should use our powers not to create conditions of oppression that lead to violence, but conditions of freedom that lead to peace. it is in that spirit that i hope the senate will pass this bill. april 9, 1964. [applause] >> if you noticed, we -- our students learned to use their time well. [laughter] i know the senator is probably looking down saying what is wrong today with you, keith? you have these two guys up here,

and so now, finally, come on up here juliet. she's a junior and has a double major, and she will share the words of senator minority leader edward m. dirksen in june 1964. [applause] >> hi, everyone, i'm honored and humbled to be here. i'm just going to jump right into it. today, the senate is still mended in its effort to enact a civil rights bill. there's many reasons why cloture should be invoked. it is said on the night that he died, victor hugo wrote in his diary stronger than all the armies is an idea whose time has

come. the time has come for equality of opportunity and sharing in government, in education, and in employment. it will not be stayed or denied. second, years ago, a professor who thought he developed an incontra veritable premise submitted it. quickly, they picked it apart. he cried out is nothing eternal? to this, one of his associates replied, nothing is eternal except for change. to those who have charminged me with doing a disservice to my party, and there have been many, i can only say our party finds its faith in the declaration of independence which was pinned by a great democrat, thomas jefferson by name. there he wrote, "we hold these

truths to be self-evident that all men are created equal." that has been the living faith of our party. do we fore sake this article of faith now that the time forever our decision has come? there is no substitute for basic ideal. we have a duty to use the instruments at hand, namely the cloture rule to bring about the enactment of a good civil rights bill. i appeal to all senators. we are con prompted with a -- confronted with a moral issue. today, let's us not be found wanting. thank you, guys, very much. [applause] >> so, thank you, and thank all of you here today who are here to celebrate both this institute and this great moment in our

country's history to teach, inform, inspire, encourage future generations. thank you, thank you, thank you. [applause] [applause] >> we'll have more music from our choir in a little. keith, were the students from umass boston? [laughter] i just wanted to make sure. [laughter] in the video that you saw earlier that kara did such a great job on, there's part where there's a button that vicky and ted have for governor duval patrick, and they were happy warriors and campaigns for so many people, but i think for those of us who knew senator kennedy well, the pride he took in the nomination of the democratic party of duval

patrick and his election was one of the things he was incredibly proud of. .. and supporters of this extraordinary moment in incredible miles doing. i'm honored to be here to team that. i just want to thank you because i can tell you we need this institute right now.

decades, decade. [applause] decades of poisonous rhetoric about how government is bad, taxes are bad, greed is good. we have begun to jeopardize the spirit of this country. my greatest disappointment is the conservative movement is that stopping the optimism out of our country. ted kennedy was an optimist. the uniquely american blind of optimism and effort hope and hard work, the understanding in a deal was essential and a fine to make it real for people to make a real contribution and higher contribution of public

service. this institute will help not only honor that legacy, but remind ourselves to live it, to live it and knowing if we live it, greatest days are ahead. i'm so pleased and proud to be with you today. god bless you. [applause] >> how would you like to hear from a fellow who is a mountainous enough the mayor of boston, who up until tuesday, people with by the great judgment. [laughter] when senator kennedy asked me to chair the rose kennedy greenway conservancy, when he called called me to say you're free for lunch. i did look at the calendar. of course i was. he said i just called tom

menino. we were sat in a restaurant type of the greenway could be and should be enough. that schlossberg, such an inspiration for the institute and also an inspiration on the institute, on the greenway board, talking about open cream excellence in having as much green space as possible in the interest of the harbor in time it's ever going back and forth in the mayor had to leave. tommy is leaving the room to do you just love this guy? a man who has done an incredible job is mayor of boston up until tuesday, a guy you can't hope above, the mayor of boston, tom menino. [applause]

>> thank you, peter for the introduction. and you're on the payroll, so don't worry about it. [applause] we can always resend those and find some investigative reporter on this. we did a library card four years ago. [laughter] you know i left that one surely? because i was getting stuck with a check. [laughter] i know teddy. when they were doing an event in roxbury with bill clinton at the archer gardens community center, talking about youth violence and he says to go to lunch. bill clinton says yeah, great i.t. a good clinton says let's go to some fancy restaurant for

that. teddy had the smarts to say the mayor will choose a place to go. so he picked up this makes dinner and watch hester street. [laughter] and teddy likes to be. neal nevada. bill clinton doesn't of course i do. [laughter] the best part of the whole lunch was when the bill came. bill clinton says i don't have any money. [laughter] teddy says of course he had no money. [laughter] so who gets stuck with the click me. i don't say something, folks, this guy ted kennedy is a very special guy. we'll never have a guy like him ever again in this business.

[applause] some of the other elected officials, remember when he called your. the other thing you ask about is a sponsored bill. i forgot all about it. he said i'm going to pick the problem up now. he was one of those guys who really was in touch with people everyday. this government was 30, 40 years and i would government with pay. i'm really happy to join the key and all the family, members of senator kennedy's staff. yet the greatest staff of any elected official. there were just spectacular people. [applause] analogy to help dedicate this institute, a place of public

education and learning. a man who taught us all so, so much i tell you. we are so fortunate to have a presidential library right here next to one another. two great institutions name for two great public servant, both chancellor merkley, my only concern is, don't forget to leave some space for us alumnus. [laughter] you brought it down, okay. it was so inspiring to listen to the students read passages about the civil rights debate.

senator kennedy always new and always believed that young people are the future. i remember being that the school in charlestown, first school that was hardwired for the internet. he was there and so proud to see boston. he was also making sure. we always believed this was a civil rights issue of our time. i know the institute for the senate on civic learning and this institute will be welcoming people for many years. the truth is we may need to buy more red paint to extend the freedom trail is.

dozens of children and families will come here every year and may wear the pants and, but not the message. the opportunity we extend to all people no matter what their background. just think about the kennedy institute, the city of boston and our old. boston's children will no longer just read about the great debate to the senate. though visitor to experience them, too. washington natives in the senate will learn about their career in their own democracy is strengthened, aspiring public servants to her officials here, a career in public service and folks ask you now more than ever

to bring inspiring elected officials to what it's all about. they think we're off track. this government is not about teddy. teddy believed in people. an hour off track. we need to get back on track. the greater the potential to save the future and future young people. folks, we have less teddy's voice. we have not lost his example. his career was immoral for fighting to make sure everyone had success in this country. and that's the institute as well as regular history about some of of called the world most exclusive club. and share with people. i'm so happy it's right over

here in rochester, massachusetts. and especially at the university of mass campus. it's a great day. the groundbreaking is always a special day. i look forward to months and weeks later when we have the folks coming here and learn about government. learn what the senate really means. the fact it has on people's lives. i also think of some of the young people will find what a difference ted kennedy made in so many peoples lives, who he touched in so many different ways. i'm honored to say a few words this morning. thank you all of you, thank you. [applause]

there a lot of great days and our commonwealth come a day so we can all be happy and proud of what we do and the kind of leadership is commonwealth provides. today is one of those days. we've talked about the institute and we talked about it being a nonpartisan institute when we talk about the issues of the time and the issues of the past so we eliminate the future. a tribute to that sense of nonpartisanship and what we can do with the commonwealth. our next speaker, senator scott rowan. [applause] >> first of all, i want to just say welcome to the kennedy family. obviously patrick committed to see you as well. while the elected officials and friends here i haven't seen quite a while in college.

i want to thank the kennedy family for their history of service and sacrifice and i've had the privilege actually to speak with vicky on many occasions about her vision for this amazing facility in the sense that you don't learning. i was deeply moved by her passion and enthusiasm to do something very special for her husband and for the family and for commonwealth and for the country. i told you i would come. [laughter] a little surprise to everybody, isn't it? [laughter] all aside, what does think vicky and patrick for their warm welcome in the transition in becoming the new united states senator. one thing that she would know -- every window he is a legend. me if all people understand the large shoes i have to fill. one thing i always appreciate it was his dedication to service, his sense of humor and the fact

that he was so zealous in the way that he thought were the things he truly believed in. i'm not sure if you're aware of this, but i have a picture on my mantle of senator kennedy. one of the reasons i have a theory as to remind me that he worked with all sorts of people. here get democrats and republicans in young, old, black, white, everybody as long as they had a good hard committee came with an open mind willing to work with them. that's the type of legacy that i hope to lead and use his example in that regard. i just want to close by saying i'm enormously mindful every day of the greatest public honor in my life is the opportunity to serve in the united states senate and also to be here to see all of you. so thank you. i have to go into the business people as governor you were referencing. there are people who want to

move things forward regardless of their political party. so i'm going to be heading on a plane that the speaker and author of their colleagues and i apologize for leaving early, but thank you for including me. [applause] >> and just a moment, we will hear from vicky and folks in the family, but before we do come in just an interlude with the boston community choir. he done such a grand job not today, but other times. thank you so much. you bring such a wonderful, wonderful tribute to the day and to senator kennedy. thank you. [applause]

♪ oh happy day oh happy day oh happy happy day, oh happy happy day, oh happy day when jesus washed, when jesus washed. oh happy day, oh happy day. oh happy day, oh happy day. when jesus washed, when jesus

washed. when jesus washed, he washed my sins away. oh happy day, oh happy day. he taugh me how, to fight, fight and pray. and they taught me how to live rejoicing. ♪ every day. every day! oh happy day ♪ oh happy day, oh happy day. when jesus washed, when jesus

washed. ♪ when jesus washed, he washed my sins away. ♪ oh happy day, oh happy day. ♪ he taugh me how, to wash, fight and pray. ♪ and they taught me how to live. ♪ rejoicing, every day. every day! ♪ oh happy day, oh happy day ♪ oh happy day, oh happy day

♪ oh happy day, oh happy day ♪ oh happy day, oh happy day ♪ oh happy day, oh happy day ♪ and it's a happy day. ♪ good god, it was a happy day. ♪ oh happy day when jesus washed, when jesus washed

♪ he washed my sins away ♪ oh happy day ♪ yes, it was a happy day. ♪ oh happy day ♪ oh happy day ♪ oh happy day! ♪ [applause] >> thank you. thank you so much. thank you. there are those relationships, some that began in a neighborhood, some in an office, some with a boss or employee, where a friendship is a model

for all of us emerges, a man who has done so much for the kennedy library, the kennedy family, but most especially for our friend, senator edward kennedy, senator paul curt. [applause] >> thank you, peter. you're a great pal and you've done so much for the institute that's about to be in so much for city for your continued great career. members of the kennedy family, distinguished guests, is this choir way cool or what? [applause] thank you for helping to make

this a choice in glorious morning on columbia point. terrific. congratulations to all of those who for two years of hard work have made it possible to have this and not zero at the edward m. kennedy institute of the united states senate. you've done a great job. this will come as no surprise to you, but after 40 years of working together on political policy and professional issues and having enjoyed a fun filled and treasured friendship, the most meaningful public honor in my life was to receive the endorsement of the kennedy family and the appointment by governor duval patrick to

succeed edward m. kennedy in the senate of the united states. [applause] and so many of our private conversations, he would say, america is a promise. america is a promise our founders passed on to succeeding generations, each with an obligation to leave it better than they inherited it. to fulfill that promise, like his brothers john and robert before him, he chose a career in politics. ted kennedy was a politician and proud of it.

[applause] the institution he chose for his political service was a senate of the united states whose place in our democracy and whose role in our history he truly breviary. in his memoir, "true compass," he wrote the following: to say that i love the senate does not begin to convey what that institution needs to me. let me put it this way, after nearly half a century, i still cannot get a car headed for the capitol, especially in the evening and clemson in the distance without the hair in my arms stand in a period i've told vicky if ever that site does not move me, i will know it is time

to step aside. that elting symbolizes to meet the benevolent power and the majesty of our government. it is awesome to me. not awesome in the reflective way to young people use the word, but in its real sense, its older sense of the broken reference. being a senator changes a person he said. something fundamental and profound happens to you when you arrive there. and it stays with you all the time when your privilege to serve. i have seen the changes in people who have come into the senate. it may take a year or two years or three years, but it always happens. it fills you with a heightened sense of purpose.

edward m. kennedy in his own words. what follows are my word, but i am as sure of them as he was of his and they're worth repeating on this occasion. when histories and finally write the first 200 years of this republic, it will record that no individual budgets nature from any state or any political party or either house of congress worked harder or longer with the more heightened sense of purpose for the cause of keys and economic and social justice didn't edward moore kennedy, democrat of massachusetts --

[applause] the mayor of this institute. [applause] [applause] and despite that extraordinary record, he did not want this institute to be limited to his own career or to be a personal nostalgia from oriole to himself, nor to be partisan sender of education. he believed in being part of something larger than oneself and he envisioned a teaching institute larger, rocker and more far-reaching than even his

own world, a place for the entire history of the united states senate will, life and educate and inspire others to serve and to work to fulfill america's promise. while senator kennedy was proud to be a politician, in his own way, too, he was a teacher and an educator. one afternoon, early in my turn, one of his former colleagues approached me in the senate chamber and reflect gain on what the loss meant that body and how much they relied on hand to carry the tough fights and now he'd always share credit, no matter what the trees he had achieved, the senator said wistfully, ted taught us to be better senators and now we must

be. .. on the campus and in the city and the commonwealth he loves. next to his brother's library and museum which itself echoes

it patriotic call to service we can be certain that edward kennedy will live on and all who will be inspired by the educational mission in this great institute which will probably bear his name. congratulations and thank you all very much. [applause] >> as senator kirker was speaking leo lean over to me and said doesn't he sound like a u.s. senator. >> great appointment, governor patrick. thank you. [applause] when i first of the institute it was with vicki and ted and i think some people know this all

began as ted served 40 years in the senate and they began to talk to historians about what might become an institute breaking ground for today. and those historians met with ted and as a key and others the whole sense of what this could be frankly what it must be. has then what vickie has brought to the table again and again and again. with a sense of excellence, with the sense of purpose and of patriotism. it's a guiding light to the kennedy institute for the u.s. senate and vicki kennedy. [applause] >> thank you. thank you. i'm going to ask -- could i ask

that all of our family, up here. do you mind? , all of our nieces and nephews, too? could you, please? joe, could you, would you, let everybody see you? [applause] he would want it this way. would you let everybody? because i will try to talk fast. thank you. thank you. what a happy day indeed, and while everybody in our family i just wanted you to see everybody. [applause] this is so important to us. thank you. while everybody is piling up here, i just want to thank all of those who have been part of this program today and all of his colleagues from washington who serve now and those who

served before who've made the effort to be here today. all of the colleagues in the government here in the state. all of his friends and all of his staff and people have come far and wide to share in this magnificent day with us. thanks everybody. how great is this? how great is this. [applause] i just want to thank everyone who's done so much to meet today happen. when my husband was a young team, he went to washington, d.c. to visit his older he wrote another, his godfather, the newly sworn in congressman jack kennedy. his brother showed him around the site of washington, d.c.. the house office building, the senate office building, the

supreme court, the library of congress, and the beautiful dome capitol building itself. he was mesmerized, and it showed in his face and his brother could see it. but then his big brother turned to him and said teddy, it's great that you enjoy looking at these buildings, but take an interest in what happens inside of them. in those words literally changed teddy's life. and that's what we hope to do at the edward m. kennedy institute. encourage and interest what happens inside of our government buildings. and in the process change and enhance individual lives and the life of this great country if for. we want to show how throughout history men and women of good

will in both parties came together and address to the greatest challenges facing the nation, civil rights, human rights, equal rights, workers' rights, war and peace, health care, economic opportunity, education, and yes, the budget. she was at the center of many of these great debates. as we heard earlier, he made his senate speech on the civil rights act of 1964. and he sold that problems could be solved, senators could come together and deal with important issues for the good of the country. he knew that finding common ground was an easy but that was necessary. he once said we are americans.

this is what we do. we reached the moon. we scale the heights. i know it. i'd seen it. i have lived it, and we can do it again. and that is what we are going to offer the visitor saw the edward m. kennedy institute for the united states senate. it's the chance to know it and see it and live it so that people can be inspired to do it again. [applause] we are going to do this in a dynamic and exciting and cutting edge way because edward m. kennedy was dynamic and exciting and always on the cutting edge. we are developing study modules so that participants can hone their skills of persuasion and

negotiation. they can immerse themselves in issues, to on the role of senators and see if they can bring their colleagues along with them to learn the art of compromise so if they are studying the civil rights act of 1964 ferc sample, they will have the opportunity to see if they can break the filibuster. if they can garner the votes to pass that historic legislation. they will have all the possible research tools they need at their fingertips. but they won't have a script. the work of legislating if you will will be up to them. if they break the filibuster and pass the bill, they can learn about what came next. and if they don't, they will learn about the consequences of the failure to pass the legislation. will be real learning. they will know what it is to be in the trenches. they will learn about all of the parts of our daily life that we take for granted if they fail to

pass the legislation. like if they don't pass it they find out that the things we take for granted like no discrimination on the basis of race at restaurants and hotels and movie theaters. no federal funds for discriminatory programs in colleges and universities, no discrimination and employment and the elimination of differing requirements in order to register to vote. we take for granted because the centers can together and live the filibuster. until the filibuster had been broken at compromise had been reached. those are lessons ted kennedy learned and took to heart in the way that he legislated for his entire nearly 47 year career. my husband didn't want a memorial to himself or his achievements. he wanted to create a place that

would spark an interest and nurture the believe that public service can be a noble endeavor, that it can lift and change the will and our nation that each of us can make a difference, and all you had to do is try and talk to each other. at this institute, his dream

schaeffer center for health policy and economics at the university of southern california. and i would like to welcome you to this meeting. we are cohosting this meeting with the engelberg center for health care reform at brookings, and we are very pleased that you can join us today to talk about two issues that i believe are right at the forefront of health policy debate. that is, biomedical innovation and economic value. a few housekeeping notes before we get started. you should have received a folder that contains the agenda and speaker bios, discussion guide and materials from our keynote speakers. if you don't have a copy, there are copies at the registration table. there's also one agenda change, which is a former budget director peter orszag will be talking at 12:05.

throughout the program we have built in opportunities for audience participation after each keynote, as well as during the panel discussion. so if you have a question or comment, you can raise your hand, staff and will combined with the microphone. and for the benefit, for the benefit of participants in the overflow room, those who will be doing on either television or the webcast, please introduce yourself, please use the microphone. and as always, please try to avoid soliloquies. for those of you are watching next door in the overflow room, you can step into the main auditorium in the back and raise your hand if you would like to participate in the discussion. this event is being broadcast, and as well as webcast, but, unfortunately, we can't take questions from the webcast

audience. but everything will be archived on the brookings center website as well as our website. and if it isn't obvious, there are immediate here, so everything will be on the record. and finally, and most importantly, for all the speakers i want to draw your attention to michelle. michelle, raise your hand to please. she is going to be holding up timecards. it's important we stay on track. so now, let me introduce market -- actually know. before introduce mark i want to take this opportunity to make some comments. sorry, mark. so let me try to give you some background and then i'll introduce you to mark. the background i think is that kind of the old model and where we are starting from. the old model is that there is a

lot of r&d that goes on in the health care sector, and this involves a trade off. that is to say, in order to encourage innovation we need to reward manufacturers with higher prices. but the high prices limit access to drugs. and so there's attention. we would like to lower prices today, and that would benefit current generation. on the other hand, if you think about future generations, they benefit from the high prices today in the form of new drugs and new treatments and greater innovation. he can kind of see that in the work we've done at the schaeffer center your what this chart shows is the longevity of a person who has reached age 55. and in 2010, the person who is 55 on average can expect to live 24.2 years here and life expectancy is slowly rising. over time. so that in 2060, a 55 year-old

can expect to live 25-point for years under the status quo. but suppose we came along and we said, well, one way to deal with this problem of access is to just lower prices across the board, not thinking about this innovation trade off. it turns out that what that would do if the u.s. impose a decent price controls is it would limit, it would result in a decrement in life expectancy. that is to say, people will not let us longer. the reason why is we don't have new drugs. and, in fact, even for the current generation of 55 year-old, they will be harmed in terms of health by about .2 years, whereas for future generations of the cost is about .7 years. so, this is the kind of calculus we are doing right now. another way to see this is to think about a policy that is

similar to medicare part d. that is to say, we subsidize the cost of drugs, that is, we lower co-pays. and in that case you would actually increase life expectancy and you actually benefit. the reason why is this more people buying drugs today, that spurs more innovation and that leads to development of even more drugs going forward. so there are these dynamics that are very important to keep, to take into account. but i think the goal of this discussion, and i think it will come out as we go forward is, is that this older model presents what we believe is a false dichotomy. that is, it's not a trade off of revenue versus innovation necessarily, and the question is how do we design new reimbursement models that both reported value and innovation. and with that now i will let you come up, mark. thank you.

>> thanks, data. thanks are taking us all. i would like to add my good morning to all of you as well on behalf of the engelberg center at the brookings institution. welcome today for today's event. we are sponsoring this, as you know, with the dana goldman and his colleagues at the schaeffer center at usc. we're hoping this is the start of an ongoing collaboration that focuses on some practical implications of research and policy analysis that is going on to better understand this very crucial issue of how do we capitalize the most on the potential for 21st century innovation while keeping health care costs as affordable as possible. and to start the process i'm very pleased that such an outstanding group here with us today. experts, people with a lot of expense in the biomedical industry, researchers, all of you who are becoming part of this effort. it's vitally important one, very timely. the idea, the goal of biomedical

innovation with economic value is explaining important. i want to take just a few minutes to add to the frame that dana began a minute ago as we launched today's meeting. as you all know, promoting biomedical innovation is crucial for many reason. most importantly for the advance is that it provides in our ability to diagnose and treat diseases, to improve quality and length in life, and most importantly and increasingly to prevent health problems from developing in the first place. the contributions that our science industry makes to her nation's economy to are also crucial for america in the 21st century. this is a very exciting time for biomedical innovation your emerging fields of genomics, systems, biology, understanding what works best in terms of combinations of treatments for individuals, our earlier and earlier in the disease process as well as advances in device

technology, all this offers the promise, the potential of safer, more effective and much more personalized care. but there are issues to suggest our biomedical enterprise is not running as smoothly and quickly and effectively as it could. and so it's probably the potential benefits it could offer to us. productivity and biomedical innovation according to a range of standard measures has been declining. the amount of what we're getting out from what we're spending. the impact of recent breakthroughs in areas like genomics and these other new scientist that i just described have been tremendous in the lab but are limited an actual patient care. part of today's discussion is going to focus on the underlying there is, the more effective and efficient innovation. the specific innovation for regulation, reimbursement and evidence development, developing better evidence on what works fastest what can happen, and more time and effect impact on patient care is what's important. that's what i mean by value.

it's not issue of rationing or something like that. how do we get the most as quickly as possible out of the dollars we spend on research, how to make research to the most common on for improving our economy but improving the health of americans today and in future generations. in doing this we also need to do all we can to make sure that health care is affordable. this is a major challenge for many american families today. it's a major cause of cancer with our nation's fiscal outlook and with the fiscal outlook around the country. as all of you know the rate of growth in health care spending is a major contributor to the economic challenges that our nation is facing, into the challenges of americans being able to take advantage of all the modern technology may have to offer. our current trajectory health care costs consume more than a quarter of our gdp i 235. and that will increasingly force difficult decisions about benefits, about access and challenges like that.

so in very real ways rapidly rising costs threaten the potential for innovation. what we want to have is a virtuous cycle, more innovation, more growth in better health on a vicious cycle but more innovation raising more challenges about affordability and then leading to challenges. so our goal today is to identify practical staff based on new ideas, new research company thinking that is going on that can help us both promote biomedical innovation and avoid unnecessary costs. new bottles -- new models on what works, new models of supporting effective innovative and personalized care. if we don't address these kinds of challenges the consequences will be substantial. it could be tighter regulation of prices, could be outdated benefits and coverage policies that don't keep up with the potential of personalized medicine. it could be great uncertainty

for people who are investing in companies that are developing our or contemplating new medical products leading to a slow down in the development process. all of which would contribute to a further slowing of productivity in biomedical innovation. and most importantly to a slow death of potential improvements in health of the american public. the good news is that there are opportunities to promote innovation and avoid unnecessary costs. we will discuss these in greater detail over the course of our event today. these include ideas like investments in infrastructure that enabled the exchange and analysis of clinical data, that enables measurement of performance of all types of health care interventions, and enable us to learn much more from the routine delivery of care. for example, the beacon community program is using health i.t. in 17 communities around the country to learn more about what technologies work best in actual practice for

particular kinds of patient. also, we want to focus on developing better evidence on what works. the economic recovery act, other investments at the federal and state level and and the private sector are improving our capacity to learn more about the effectiveness of different treatments in individual patients. the patient-centered outcomes research institute has the potential to fill in gaps to support better individualized decision-making and better use of the combinations of treatments that are increasingly part of personalized medicine. similarly am agencies like the fda are working with the private sector on a nation is to learn more about how treatments are being used in practice, to build of evidence as well. it's critically important as we do these kinds of steps to focus more on paying for the kinds of development of evidence and the kinds of improvements in care that can make the biggest

difference for patients. paying more for medicare, not just more care. reforms like accountable care organizations and reforms in which medical product developers are being paid more when they take steps to improve health and reduce health care costs elsewhere in the system can be an important part of this effort. we will hear later today about the concept of performance-based payments. how it is being expanded to reimbursement for drugs, diagnostics and other medical technologies that can help reinforce some of these trends towards more effective innovation and better support for innovation that makes a difference in patients allies. and, finally, consumers, patients are an important part of this as well. through opportunities, through incentives when they make responsible decisions, effective decisions about their own health through approaches like value-based insurance design, they, too, can support better innovation to get to better health as well. and during the course of the day

he will hear about ideas that people have that are being developed to address these challenges, too. those ideas will start right now. the format for today discussion includes keynote presentation by speaker newt gingrich and by peter orszag, people have given a great deal of thought to these issues, about innovation and economic developers in our nation's fiscal outlook. between them will have three panel discussions involving a range of experts who also have some important perspectives on where our policies can go for innovation and avoid unnecessary costs in our health care system. the first panel will address how current payment systems and benefit designs impact biomedical innovation. what reforms could help promote innovation and greater economic value. the second panel will focus on whether linking medical product reimbursement to clinical outcome, the kind of results we

want, can promote innovation and avoid unnecessary cost. our third panel is going to talk about how we can improve our capacity to measure innovation and value in health care system, for individuals in health care system for individual and medical products, again supporting these kinds of reforms. so, what i would like to do now is introduced our first speaker, newt gingrich, it's a true pleasure for me to have him here with us today. speaker gingrich as you all know has a very distinguished career in congress which was marred by support for many efforts to improve the nation's health care system and in particular, to support innovation and health care, biomedical innovation and greater knowledge to make our health care system work better. some of his key contribution concluded co-chairing the republican task force on health, substantially increasing investment in biomedical research including part of the effort to double the budget of the nih, and acting fda reform

to provide new pathways for therapy for terminal and degenerative illnesses, to move more quickly through the regular process, a whole range of initiatives related to biomedical innovation and innovative health care. since retiring from congress, speaker gingrich has continued to devote much of his attention towards improving health care, i've had a chance to work with them on a number of this initiative since 2003 when he found the center for health transformation which brings together public and private sector leaders around the agenda of creating a 21st century health system with dual goals of saving lives and saving money. so very consistent with our theme for biomedical innovation today. in addition to his work with the center for health care, the health care transformation, speaker gingrich has served on the advisory board for the agency for health care research and quality, and on the board of regents at the national library of medicine. he is a member of the national commission for quality long-term care and i had the pleasure of working with them as well on the

alzheimer's study group. speaker gingrich has published extensively on a range of health care topics and a range of other topics, has received numerous awards and on. please let me in welcoming speaker gingrich to the podium. [applause] >> thank you, mark. i'm delighted to be here at brookings for this i hope a very useful conference in beginning to set up a new set of ideas and talk about the current state of the art of people who are working on this. i want to say at the center for health transformation would always lead to a chance to work with mark because he's one of the most thoughtful, innovators of the country. i also want to mention that david who is a vice president is here from the center and we are both delighted to be here. i want to particularly in terms of the talk, i want to commend jim peterkin who i think is that as much writing on the potential for fundamental breakthrough in health as anybody i know and has

helped me understand this. but let me put in context because i want to offer something very different. i really believe we want to fundamentally reset how we think about things as opposed to thinking better about how we currently think. and the analogy i want to draw is a match we had in 1904 conference on transportation opportunities. in which we had a significant amount of concern about improved wagon design, some concern about improved stagecoach management, and a fair amount of concern about the railroad as the centerpiece for long distance travel. and imagine i come to the conference and i said this is all very useful and in the short run will be very important. to do things i think you should look at our two bicycle mechanics who, in december of last year, flew at kitty hawk. and an edison electric

supervisor who is in the process of designing mass-produced cars. now, i guarantee you in 1904 the wright brothers and henry ford would have been laughed out of any washington gathering of experts. because it was clearly high in the sky their relevance. by 1918, in planning the campaign for 1919, virtually every aspect of modern air warfare is in the campaign plan. by 1908, the army signed its first contract with the wright brothers which was for one airplane for $25,000. by 19 tonight, the first large group of people see the wright brothers flight when a flight around the island of manhattan, and about a million people see. in 1916 across the border, john

j. pershing rants to cars to drive an american military post because he has no vehicles and when he leaves the expedition into mexico, the aircraft he takes with him are underpowered and can't get through the passes because of wind. now, all that changes literally almost overnight in world war i. and the great innovations, trucks, tanks, airplanes, by 1990 are the beginning of what became 20th century warfare. so i want to share with you a similar model which is easy think about post obamacare solutions, what is clear from the right budget, which is i think a historic and courageous effort to always get the right scale of thinking, is you cannot solve the cost of health care for an aging population within the current paradigm. it's literally impossible to what you can do is you can cut costs. you can ration, allow people to die early.

you can minimize treatments but let take one example that mark refer to. and when we lost to alzheimer's study group we did so because it's probably the largest single pain and cost in the next 30 years. the current estimates are the federal cost alone, not state, not personal, federal cost alone between now and 2050 is one and have federal deficits. federal debt. that tell you how big the federal debt is a 14 trillion. alzheimer's between now and 2000 it is projected to cost the federal government 20 trillion-dollar. you think jesus country with a serious leaders would look at a 20 trillion-dollar cost and which by the way up lies in amount of human pain, and families are fundamentally dislocated, talking about earlier today the incidence of depression among caregivers associate with alzheimer's is staggering. and yet there's no serious

conversation. there was once a cartoon that had a desk that had an indoor and outdoor and a two of hard. this is a city who is too hard boxes is enormous. it's a huge challenge. i want to suggest to you that bureaucratic cost controls will fail. they will lead to rationing and this is a 50 year cycle. we got into this in the '60s. it hasn't worked at also we keep doing things we know don't work. what happens is we grind down the system. more and more people refuse to go into medicine. it is less and less fun. we are now about to see hospitals decide to go through very ruthless cost approaches. i know of at least two major system that will analyze medicare and drop every procedure that doesn't pay for itself. humans react rationally to the signals that are sent. so the question is can we invent and alternative. what i want to suggest to you in a paper that will both be placed

year, i think with copies for all of you, it will be electronically available both at health transformation.net which is a sin for health solutions, and to be available at brookings. this paper arguing health solutions for longer lives, lower cost and more american jobs. i want to be quite clear. this is a deliberate fundamental argument against the entire current delivery system what it is the right wing version of the left wing version. it is an argument for fundamental resending of how we approach thinking about health and health care. the model i'm passionate some of you may want to be. i'm trying to find an iron lung. because i want you to the ireland the centerpiece of his whole new approach. in 1952 there were 60,000 polio cases. the projected estimate was polio patient would cost $100 billion a year. salk developed vaccines. he had the courage to give to

his own family in 1953. and in 1954, 1.2 million people were vaccinated. i want you to take him of trying to get some of this at brookings because i don't have a staff. but in the great defining intern to say laid over the development and implementation of polio vaccine from the current fda model. and figure coming additional people would've gotten polio during the 15 years that we went to the process of checking it out. let's go back and look at it once upon a time we were a country that had commonsense. we won the entire second world war in three years in eight months. 44 months from pearl harbor to the surrender. if we're determined and be willfully stupid, we can be. but it is very expensive. so take that model and i want to now outline for you seven major

steps to re- centering and rethinking the entire health system, starting with a comment when he was the head of nih in an interview and he said, i think this is what they but this is the kind of debate we need and u.s. congress, this is the kind when the debate in academic centers. he said for $10 billion in research and aids and hiv we saved approximate $1.4 trillion in health costs plus a notice about the pain, lost lives, et cetera. he estimate was 140 to one return on investment. i don't know if that is accurate or not. it may only been 70 to one. it is vastly more than we got out of the stimulus. it is fast and more, got out of cost-cutting we're about to go through. we are in a position of people who decided in the congressional budget, i strongly applaud paul ryan and i strongly applaud the courage to offer the right size argument, and i felt very sad

the president failed so totally to respond with the same level of seriousness, there are details i disagree with. one of them is cutting the investment of science and research. because it's essentially like saying i want to save money, we would not change the oil. and for about a year i can get away with it. been the engine will freeze up and we have to change the engineered if i have sco the scores oil that doesn't score engine i can replace the engine for free. because it will not count in the budget. so here are my seven proposals as a major step towards health solution, remember the health solution-based model for low-cost, longer lives and more american jobs. first, fundamentally rethink the food and drug administration. we will help a lot to be a marginal fix is in the world system. druker had a good rule. know what you were doing when you start. if the answer is no, why are you still doing it? so if you ask yourself what you want is a very scientifically

oriented, very collaborative system that start in the laboratory is nonadversarial, has a free flow of information, and is continuously modify and improving itself. when i go for example, the university of pennsylvania have someone get up and say they have a bioengineering devise which is the term that pennsylvania apparently as opposed to regenerative medicine, they have a bioengineering devise which is both biological breakthrough and a device, currently under fda organization that means it goes to two different departments. when i go to georgia tech and have a computer specialist who is working on brainwave patterns in order to have people who are quadriplegic or have a stroke victims, think and, therefore, move a robot to do certain behaviors and they tell me that three years ago they asked the fda for permission to give away their initial noninvasive breakthrough device, and they can't find anyplace in fda that

can save yes, it's okay. three years. this is just crazy. so fundamentally rethink food and drug administration from the beginning. here's the central point i think about to debate anybody in this country on. we will have the next 25 years four to seven times as much in size. there are more scientists alive today than all previous human history. they are connected by cell phone and internet. have better computers and better instrumentation every year. they are then connected by venture capital licensing and royalty. that's probably a conservative estimate. 65% of it will be outside of the united states. now, that implies, if you were to try to take a historical analog, we are currently in 1880 trying to understand 2011, as cover blessing in 2011 trying to understand 2036. we have no institutions, not medical schools, not continuing medical education, not the

bureaucracies like fda. we have no institutions that are designed for continuous daily adult patient to innovation on that scale. that's a big the breakthrough has to be. we have no payment models that are innovation and charging models. so what we do is become more and more out of touch with reality, more and more wedded to obsolete doctrines, and more and more insisted on paying for things that don't work because we can't forget because we can't bridge the gap. that's a fundamental this is. the first place to start is fundamentally rethinking food and drug administration. and insisting that it both have a cost-benefit analysis of saying no, say no has to have a cost attached to it. because today you have, it's free to say no and it's expensive to say yes because humans make a mistake of you have trial lawyers and congress and all the news media. if you say no, just kill me. just say die quietly, it's not embarrassing to bureaucracy.

so second you have to have a jobs cost benefit analysis. we should measure annually how many new products were introduced outside of the united states. i get to conference calls, all of whom played all major breakthroughs in regenerative medicine will be implemented outside the u.s. that means every new job, every new patent, every new royalty will be non-american. utterly irrational. second, we should dramatically increase the national science foundation, the biggest mistake i made as speaker and budgeting, we double the size of the nih. we should have tripled the size at the same time. nsf is much smaller. the fact is mathematics, physics, chemistry, developments in competition the power are all central to what nih does to nih is driven by the knowledge generated by nsf. we should see them in a combined state. as we think it working, on the study group that mark referred

to, it's clear the volume of knowledge will come out in brain size to properly requires two cycles of the above and computation power. to be able to cope with the dataflow. brains i fully to the same byte of information as astrophysics. about the same number of synapses in your brain as there are stars in the universe. the scale of mathematical capabilities, the scale of storage capacity will be generated by our ability to track a brains. literally beyond our current capacity. we will probably have to of two cycles of evolution in competition of power in order to bring science forward. nih need to both be funded better and we thought. 19 aei help -- i was for a much bigger budget under reagan and i want to see the pentagon get bigger and to tell people i'm a hawk but i'm a cheap hawk. i think we should fundamentally challenged to aspects of nih. the first is small grant to refute models are inherently conservative and inherently are much more inclined to be very

limited in their breakthrough capabilities. the second is that the entire model of using the taxpayers research money to subsidize academic bureaucracy should be fundamentally challenged. there is zero reason to pay overhead. it's terrific for the universities. they were all scream like crazy but i don't think that taxpayers should be told they are funding research when their funding dean's. i may have a bias of academics because i'm an assistant professor but i would suggest the one of the major problems is the degree to which self-serving bureaucracies get bigger, richer, more cumbersome, deeper and pretend that they are, in fact, providing -- well, just look at the overhead you pay for in the private sector then go look at the opry to pay for an academic will explain to me why we should tell the taxpayers that's their job. you can increase the number of researchers if you paid fewer bureaucrats. and i think that's worth

hearings. i think it's a legitimate question and i think, there are no sacred cows at the time of dramatic change. you have to be prepared to look at everything simultaneously. i also think if you look at things like the apollo project, manhattan project, the radiation lab at mit in world war ii. the way in which the evolution of the human genome problem -- project, because nih wouldn't do. ended up being accelerate dramatically by having a private competitor. you have to say to yourself what did we learn from those, what do we learn from the national cancer institute and the way it is organized and centers of excellence and information flow? what does that tells about how we should rethink and restructure nih? fourth, i believe we should take brain size india with a totally separate. the fact is that brain science is the editor of the greatest breakthrough. will get four to seven times as much science in general. will pocket 50 to 100 times new

sites in the brain size. it's the most complex thing we study. we did have good instrumentation into 15 or 20 years ago. we still have the kind of data we will have in 15 or 20 is. to have the largest return on investment of anything in health. a few simply postponed the onset of alzheimer's by five years, you cut the cost and have. because alzheimer's is a disease of older people. they get much older before they get a better have a very long. or they never get it. now, every time i talk to brain scientist they tell me they think the odds of our being able to postpone it by 2025 is very high. if we have the right research strategy and the right investment. that's about a $10 trillion savings we have to go to congress and say, good any private sector group and say, what would $10 trillion b. worth of ink on investments. there's a way to monetize that the what is a rational investment strategy that can save $10 billion.

it is radically more than we're currently spending. but we have tight budgets i've a very, very old proposal. take all of brain science off budget, move it out of nih, create a brand-new authority to go to the brain science community into which the maximum you can spend rashly over the next 10 years, fund it, issue of alzheimer's bonds and have a commitment that once you get the breakthrough if you'll say tenderly and dollars, the first tranche of savings the government pays off the bonds. something that would make perfect sense in the 19th century from abridgment seeking funds on to something that would make perfect sense in a world where capital was invested over time but it makes no sense to cbo and no since in the congressional appropriations. which is more of a comment on them than it is on the other that i think this is an important idea. if we could eliminate alzheimer's, by the way, i say all of brain science to get breakthrough jackets to the whole brain. when you study the whole brain

you also get schizophrenia and parkinson's, bipolar, you name it. so what would the return be on that scale of breakthrough? it would be vastly more for the investment. and return in human happiness, the return of people living full lives, the return of people being productive is just a rational that we don't do. fifth, when you do great and to great nfib for dramatically more entrepreneurial startups. with a substantial decline in the number of small biological companies, for example, to drop by 25% in four years. i am 40 capital gains as a tax rate. i think you get the better model you get more starts and i'm for the repeal of sarbanes-oxley which produce no useful information in 2008 and is is a fundamental inhibitor. but we need to think about the context where we want lots of aqaba to start a chat have a larger context that generates the resources and makes it

profitable. six, the congressional budget office should be challenged to have an intellectual reform kabul to the scale of what i have described it would be impossible today to score the airplane. i mean, you can ride, somebody from cbo or omb, they basically still scored going by stagecoach. so while they're on the 747, you realize the government this trip requires 14 days in phrase stages. they say we are fine. i guess it is a theoretical approach. we are not sure if i'd will be around very long. we don't want to score. socialistic, go ask cbo and omb to score, postponing alzheimer's by five years. they can't do it. i've got a note from david the other day, which last year senator lemole introduced the concept of going after fraud. we have evidence from ibm, evidence from american express,

with evidence from these at the american express is .03 of 1% fraud rate. as a taxpayer in your 330 times, 33000% more likely to be a crook through cms than your as a cardholder of the american express. the proposal was going by cbo is costing money. now, this is maniacally stupid. at cbo and omb defined the debate in the city and a major impediments maintaining the stupidity of current policy. they should be challenged head-on. they should be forced to score breakthroughs. and say okay, this project it works would lead to this. and they can't today. they have no model of dynamic scoring. finally, both cms and private insurance companies should develop new models of experimental and pilot project funding to be able to go and say and a specific example from scientist who's working on it,

if 10% of your kidney cells work, you do not need kidney dialysis. through regenerative medicine which is growing your cells and putting them back into, no problem transportation have no problem of rejection. in that model you could take dialysis had a. kidney dialysis is $27 billion a year, growing pretty rapidly the past the nih budget. you can't today be a commitment from anybody that if you had a regenerative model that don't pay for the extent to actually use it on people. you can't raise the capital because nobody less capital wants to risk it to get to the fda did into a payment system that probably will not pay for it. that's just foolish. two, one money, and two, quality of life. i had an ongoing spent seven years on dialysis three times a week. we would like it to be full

lives, fully productive, fully engage in less than fully earning a living. not having spent all the time as patients. that's the kind of payment reform we need, lots of small projects underway which probably requires litigation reform because after all if you got involved a small pilot project in anything went wrong you would probably be bankrupt by trial lawyers who are major inhibitors to scientific development. so, i'm delighted to the chance to chat with mark and i'm delighted to lay out these ideas. [applause] >> thank you very much, mr. speaker. and again, it's been, it was interesting to hear your ideas and seat in these next few minutes if we can draw you out from your very modest and incremental proposal. i wanted to come back to this discussion around health solution-based model, this vision for brain science that in your view sounds very transformative. and come back to a couple of

obstacles that may present challenges to getting there. you highlighted the importance of substantial increases of funding as well as the redirection of power -- how we are funding the research. that's not really what is on the agenda in washington right now. we've got real concerned about deficits and concerns about whether even the current level of research funding can continue. talk a little more about how we can get from that you do what you think we need to be. >> this is part of what after really challenge the whole congressional budget office, office of management and budget power. and the private sector, if you in a recession, a company that was in a high-tech area would always distinguish between research and investment, which is essential to its survival. and expenses. and yet there's no model in congress, no model in the executive branch for saying this is an investment, this is a cost. and so it starts there.

i mean, look, i realize having served for 20 years in congress and led a fairly significant amount of change as speaker, this is going to be a real fight. first of all people be puzzled by the ideas. the first reaction will be to say no. go back and look at the rise of the wright brothers who got such a big fight with the smithsonian, they wouldn't give them the airplane for 37 years. that's the sony had failed to invent the airplane. they were irritated these two mechanics from dayton had done it. what i am proposing is a fundamental rethinking at the level of the budget committee, the appropriations committee, the authorized committee, at the level of the office of management and budget, the level of the white house that says we are now going to distinguish between investments and expenses which is what we do. when i was speaker we decide to balance the federal budget. we consciously said thanks in

part to john porter and connie mack, that we're going to double the size of an age because we will set priorities. i think the country will support a smart effort to get to a balanced budget, the country will not support a cheap effort to get to a balanced budget. cheap effort will sell out the future on behalf of current interest groups. >> and then to follow up on that with more support for the basic research, there still are, as you've noted, a number of steps to get from that to insights to product that patients can ask are used to improve their care, to head off the brain diseases. you talk about some of the challenges with the develop process and it seems to me there's just as much of a need for improvements in the department sides, the collaborations you talk about, the ways to shorten that multi-year process of getting some good ideas in the lab to treatments that can be reliably used in patient but that seems to me as well to be an area that

following your model is more investment. and that investment involves the fda, the private sector, that's also participating in that process. there are two parts of this. noticed by the way i suggested you should not only find nih, you should also rethink it. i'd say the same thing you. i don't know that a 21st century effective fda would be more expensive or less expensive. but i want to back all around for a second to make this point. two of the most effective systems approaches in human history were world war ii and the cold war. both were characterized by very large-scale planning. and an ability to lay out a system, looking at all the linkage points and understand how they fit together. the reason i gave you seven steps is there is no single step that leads to breakthrough. and i would argue that design a large-scale model of the health

solution space health solution in the future would be any known as asset, and in chile which are missing. let me give you a couple examples. they have huge fonts of electronic data. which are not particularly used by nih. which has no set of electronic epidemiology. which are not particularly used by the fda. the fact is we have electronic data you can take much higher risk with improving things because you have real-time monitoring of huge classes of people. you could say this is not good for anybody who's on who's on an electronic health record, which by the way would accelerate everyone using health electronic records every night. you never again have to do a special class follow-up study because we were just track all the epidemiology everybody in the country who is on that particular drug. you could have real-time data every night. mcdonald's gets 37,000 stores worldwide every night. i'm not describing a distant future.

i'm describing government systems that are 25 years behind reality. now, i don't know if the fda would be cheaper or more expensive. what i know is what recovery say is in no to pay for the current bureaucracy and add 10% we need a lot more money because we refuse to become more efficient or to use i.t. ibm and dell and others at the takeout produced a report last year that said even the federal government as though it was a multinational high-tech company, you would save $125 billion a year. just by the flow of information in an intelligent way. so i can't say what is more expensive or less expensive because it is so different. it's flying to california more different or less expensive in a stagecoach? welcome in constant dollars and may or may not be. i think it is less expensive but it may or may not be. but in human cost is radically less expensive. >> i think with time for one question from here. do you want to go ahead? wait for the mic of him, please.

>> i run the va medical research programs i want to make three quick comment but one is you mentioned that secondly you know, somebody runs -- from the point of view of researchers we think a lot about top down versus bottom of programs, and while you're suggesting top down programs i think it's important to remember that the manhattan project started after the adam was split big the space program was an engineering development program that basic research was really investigated initiative type research that started it. so when you design a large program and give them a lot of money to an area, you have to consider how you're going to do it and how the guidance is going to be. the third thing i want to say is that while we talk a lot about the problems with fda in improving drugs and all that, bureaucracy related to that, researchers talk a lot about research bureaucracy and what they have to go through. i do think it enters into the public conversation in a.

i think people are afraid to talk about it. i think they'll be very important in the future. look at the bizarre consent forms. look at the consent forms that i don't understand even sometimes, and just take it from there. something has to be done. >> that's a terrific thing to end on because it helps us open up intellectually the world i'm describing. let me do it at two levels. i agree entirely that unless you've had the effect you can't get to the nuclear program come and that the manhattan project is, in fact, engineer. apollo is in getting. i've established between the two. so i agree with that. i think we have to think about -- my point is i believe we have crossed the proof of concept in brain science and it is clear that if you dramatically accelerated the rate of discovery and the rate of integrating knowledge, he would have enormous payoffs in brain science. i would not have said this -- i

was active in 1 19 a. i witnessed it in 1980 let's focus on brain science. we didn't have the technology. we didn't have the estimation. they would not have been a rational investment. second, and you is a different level what i want to suggest as a student of science, it's much more fundamental. and that is, when we figure out these big projects which i think are necessary and good, and when we redo and i think you raise a good point, congressional hearings on playing out the current foolishness of all of the layers of research application, all the layers of filling out forms, a very senior person at nih said to me than about doctors we get that are never read is amazing. and so, we really i do have the courage to look at all the stuff in the eye, and the truth is if you don't need it, don't do it. and to go back to apply for the manufacturing innocents to research application process, that would be a very useful

model and a great series of events. there's one other piece you have raise, i'm not a scientist and a student of history, clark had a great rule. he said the senior scientist tell you something can be done, it almost certainly is true. the senior scientist tell you something can't be done, you have no idea. and the example is einstein and planes. no senior physicist thought playing, quantum mechanics and einstein was right. so partly got to figure out as does the politics and culture of science very parallel to every other human institution. they become very conservative eyes and become very group thing. they become very risk and again coal look at my tectonics which was first developed in 1915, totally ridiculed, actually except by every paleontologist in the world was obvious. and doesn't become commonsense in geology until after the international geophysical year of 1958-59 what becomes

impossible to reject. so you have to say to yourself what are the areas and easy some of this with alzheimer's where there are certain patterns that would this is the future. but you have to get how would you one big projects, how would you continue in criminal progress in that we are not ready for big projects and how would you come and we do it by private foundations, but how to ensure the outlier is allowed to keep playing into the to bicycle mechanics invent flight, even while the congressionally appropriate $50,000 smithsonian project is sinking in the potomac. so i think that pattern, you're exactly right. >> i absolutely agree, and something we worried a lot about is one of these things to our peer review system. and i think that's something, for a millimeter ahead of everybody, you're a genius. if you're a five-mile site everybody you are crazy. >> someone who is also five miles and i sympathize with them. >> i think there's a great

point. thanks to getting the discussion going. >> thank you. [applause] .. [inaudible conversations]

>> while we're completing this process, i think where i want to start this panel is with a statement that former speaker gingrich made which is we have no payment models that are innovation-encouraging models. and the purpose of this panel is to think about how the current payment systems and benefit designs impact biomedical innovation. and we've asked them to talk about what reforms would promote innovation and economic value. each of you have five minutes of prepared thoughts, and after

that i hope we'll discuss it as a group. so let me briefly introduce the presenters. dr. jerry avorn is professor at medicine at harvard medical school and chief of the division of epidemiology in the department of medicine at brigham women's hospital. dr. scott gottlieb is resident fellow at the american enterprise institute and also a practicing physician. dr. freda lewis-hall is chief medical officer at pfizer and member of the board of governors for the patient-centered outcomes research institute, and dr. rob epstein is president of advanced clinical science and research and chief clinical research and development officer at medco health solutions. jerry, you've studied trends in innovation for a long time, maybe you could start. >> sure, happy to. and thanks for having me. i guess i could begin in the spirit of passover in asking why should the health care sector be

different from all the other sectors of the economy? [laughter] that we don't really hear the electronics industry which is another interesting science-driven, innovation-laden part of the economy which has brought us enormous improvements over the last 20, 30 years with quality for all of close with an iphone, and we don't hear steve jobs going public and whining that the market is impairing his ability to innovate. so why are our two fields which have so much in common behaving so differently? is it possible to take the question that has been put before us for the reimbursement system in health care to stifle innovation? and i would answer, yes, it is. look around at what we have today before any reforms have really kicked in. we have a reimbursement system that already is stifling innovation but maybe not in a way that some might think i mean. we currently have an untamed

loosey-goosey system that is doing that right now. for example, one interesting case study is the purple pill that everybody who watches the evening news knows all about. it started out as a breakthrough poe on the- pro on the-pump inhibitor, and as the patent began to expire, it was extended around a variety of not so clinically relevant issue like the coating and other aspects of the pill. and, ultimately, after many years of extension it was expired, and the manufacturer switched the mantle of the purple pill to a new drug which was simply the first drug which was pharmacologically pretty much identical and then marketed the hell out of it and kid very well financially with new york stock exchange yum instead of -- nexium instead of pry lo sec. and that's the way our current system rewards noninnovation. it was a profitable deal for astrozen ca, but it didn't bring

about any improvements for the patient although the cost was impressive. the same issues apply to many other things we do in the health care including what we physicians do. imaging studies, devices, we all have the same problem which is that the current system will pay for pretty much anything without a lot of ability to criminate between really -- discriminate between really breakthrough products and services and those which are kind of ho-hum, maybe not necessary and maybe even hurtful. another example is lexapro by looking at the isomer. same drug, and it now is the most widely-selling and costly antidepressant in the country. this is not about an fda problem. if you look at the fact that the productivity of the pharmaceutical industry has been really pretty lame, and i think even folks on wall street and within the industry will admit this after a couple of bills,

it's not what we've seen in the past. add a couple of biologics, and it's still not what we would expect from the dozens of billions of dollars that go into it. it's not the fda's taking too long and too tough, the inputs are lame as well. so the is the argument that we need our costly, inefficient health care system to be working at its current pace of inefficiency in order to have the excess dollars we need for innovation? i don't think so. i think that's a wasteful way to accomplish innovation. and in a sense, the speaker mentioned that if we give money to universities for research, they go and spend it on deans. well, my worry is that if we give money to pharmaceutical companies or device makers and ask them to spend it on research, they go spending it on marketing. the same kind of issues apply. we're only seeing about 15 or 20% of every dollar of revenue in pharma in the big companies going back to r&d whereas nih the number is much closer to

90-plus percent. if you ask any investor where would you rather put your money to get innovation, i don't know they would want to put it in the private sector even though the narrative we all live with is that that's where the innovation comes from. much of the alternative transfer of new science really, i think, would argue is coming from new industry. i'm sorry, from academia. funded, often, by taxpayer dollars. and we have a rather funny way that we arrange the patent law so that very little of that flows back to the folks who are really doing the transformative studies. let me end with some positive recommendations. i think all of us in health care need more focused incentives to really innovate and not just do me too products that we can make a bundle of money or, or for us physicians keep doing treatments that patients may or may not need or for the medical centers keep doing expensive tertiary care when a lot more low-tech care would work just as well. with we need an era of tough

love in which the reimbursement system is more responsive to the realities of comparative effectiveness and cost effectiveness. and to get there, we need the following: we need to do the comparative effectiveness studies so that a payor or a patient is going to be able to distinguish between things that are overpriced and not real helpful versus those things that are a good buy. and that is only going to come through systemic research which, in my view, needs to be publicly funded because we're not going to see that research coming from the creators of these products whether it is academic medical centers, device makers, doctors or drug companies. we want to pay more for smart, cost-effective care and pay less for things that are not as good and not as cost effective. and we, therefore, need to, a, know the difference which we cannot do with fda's current approval of is it better than placebo in achieving a surrogate outcome. if it lives, it will help us get

that information. and then we need to push it out to the doctors. the other big gap we have is getting physicians to actually have access to that information. and over the years we've been working on this thing called academic detailing where we send folks out from are a university base to, in a sense, sell evidence-based medicine. and that seems to be a way of getting the effector arm of that last hurdle so you can really transform care. we are already spending the money, and this is the last point i want to make. the idea that we are somehow running out of money in health care does not bear the scrutiny of comparing us to other countries in the world which, as i trust everyone here knows, are spending less per capita on health care, covering everybody and getting better outcomes. so it is not as if somehow there is some magic form ha that no one -- that no one can yet figure out. we just need to understand what those countries are doing. mostly what they're doing is not having everything in medicine be entrepreneurially-focused so it's all about maximizing revenue. there's some vision of a public

health concept for health care. and we can go them one better by being the leaders in the world in comparative effectiveness studies while leaving room for the occasional outlier patient who is not like everybody else, and we absolutely have to leave room for that. or we can go on and kind of be bullied that we are destroying innovation and sending research overseas. i can't help but comment that a lot of the reasons that regenerative medicine is thriving overseas is that one of the parties currently in office shut down stem cell research for a lot of years, and a lot of companies were forced to go overseas. but be that as it may, if we go on in our current pathway, i'm not the right person to ask what would happen. i think the right people to ask about that course of action of continuing without change would probably be standard & poor's or the central bank of china. thank you. [laughter] >> thank you, jerry. i guess i'll re-ask about reimbursement policy of our next speaker.

scott? >> i think the question is how do we come up with a reimbursement system that not just lowers costs, but also improves outcomes not just in the short run, but in the long run as well which is harder to measure. innovation might not improve outcomes, but it could improve the patient experience which is a significant advantage. i think the operative mace to look -- place to look to ask this question is medical devices and not necessarily drugs. i think that for a number of reasons. number one, when you look at med med -- medical devices, you see the impact the reimbursement system has had on innovation much more clearly than in the drug realm. and number two, we just don't spend a lot of money on drugs. i know the bill for biologics is growing quickly, but when you look at what we spend on drugs, about 10% of our $3 trillion overall. you've got almost 80% generic

utilization already, you're not going to drive that much higher. we spend 6% of our money on ancillary services like pt and optometry. i'm not saying we shouldn't be spending money on that. we spend about 5% on dental care, so we could literally adopt the u.k. approach to dental care and cut our drug bill in half. so, you know, there's a lot of places when you look at the total expenditures of drugs, it's just not that big of a bucket. so most of the spending is what physicians do, and that's driven by technology with respect to medical devices, new procedures, new devices. and so when you look at how folks who are thinking of innovating a medical device now think about getting reimbursement, i would categorize it in three big buckets. the first thing is what you're doing when you're developing the medical device is you're trying to develop a device that fits into a current code as articulated by medicare. and the problem with the coding structure of medicare is it

defines most of what happens in the private sector. so there's three big bucket, i would say, that innovators say. one is they try to develop a new device that's going to create incentives for doctors to use the device because doctors can inreese their e -- increase their revenues. doing a procedure earlier or allowing a physician to do a procedure that used to take three or four hours in one hour so they can do more in a day. the second big bucket is trying to improve patient outcomes, and when you're trying to develop a device that improves patient outcomes, morbidity or is a more comfortable approach to a procedure, that's heavy ri dependent on direct consumer advertising. you're often speaking to the president because in many places you're displacing current paradigms in medicine. a classic example is the uterinefy bodies, rather than doing a invasive hysterectomy. that required referrell away

from -- referral away from gynecologists, and the third bucket is a device that tries to lower costs. and in that case you're often making your pitch to a hospital or gpo or other purchasing system to try to say my new innovation is going to lower costs. what you're trying to do is develop a device that fits within a current rebecame usment -- reimbursement code, and it's an extremely inefficient system. if you're talking about a system that sends signals to entrepreneurs to just try to develop devices that prove long-term outcomes, lower costs, reduce morbidity, you could see how the current system forces you into one of these sort of preordained categories or preordained buckets. so what kind of reimbursement system do i think would be optimal? it's a very hard question, obviously, it's going to be a subject of a lot of debate here in washington. i don't think we have an answer. but certainly a system where the purchaser, ideally would be the patient but it's not the patient because we have third-party payers to health care, but where

the purchaser has a long-term perspective. you're not just trying to tie reimburstment to short-term measures of outcomes, but whoever's making the decision to finance the technology holds on to the patient or is held accountable for the long-term, durable outcomes of the patient. we have some experimentation that approximates that. i think medicare having to a degree -- advantage to a degree had that. the churn was very expensive to them. they were penalized for a lot of turnover, so they add an incentive to get -- had an incentive to get patients in the door, lower the cost of their care. i think massachusetts with the shared savings models where the payers are entering into long-term contracts with the provider communities. that has elements of the same thing incorporated into it. but the bottom line is the scheme we have right now particularly as it relates to medical devices which i think is the operate e pee in biomedical -- piece in biomedical innovation where we're going to see a lot of the costs being driven in the future

because it's so closely tied to what physicians do, the current schedule we have right now doesn't send signals to innovators to develop products that improve outcomes and lower costs. it signals them to develop products that fit within one of the reimbursement codes preordained by medicare and sort of fixed in time. >> thank you. freda and rob, you're on the front lines of these reimbursement questions from both sides, so, freda, perhaps you could start and talk about this. >> yes. so, first of all, i'd like to make the contact that i think we are all in agreement that the productivity that is coming out from are an innovative standpoint at this point is stalled at best. if you look at approvals over the last, well, since i was born -- [laughter] have remained around the same, and that was not yesterday. so we know that we're stalled in our advance, and it's such a shame because science is

certainly turning corners that we could potentially apply. and the question is, what will we need to do to turbocharge and to harness this cognitive surplus and the technology advancements to the advantage of innovation for everyone? you know, there are lot of ways in which to do that. certainly focus is one, and a new afill yative model, if you would, is another. and by that, briefly, i mean that, you know, previously innovation has been invented here. an invented here model. and i think we are going to have to get to a not invented here model where it's a much more collaborative model for sharing expertise, sharing data and then applying that to best outcomes. to transition into then what would a reimbursement platform look like that would further stimulate that, it's really the same thing that stimulates innovation in the first place

which is knowing, knowing outcomes. and there's a data dearth, if you would, on what innovations applied actually mean in terms of outcomes and how you take all of the variables that occur in the course of providing patient care to get to the right outcome. so is it the device, or is it its application, is it the new treatment, the new biologic, or is it the way in which it is incorporated into the health system and applied to the best outcome? and last but certainly not least is the definitional aspect of what is a good outcome at all? and i'm not sure that we're necessarily agreed on that in the first place. and, therefore, what we would consider value. in preparation for this i laughed and said if treatment of my foot were in a value-based platform, then i pity the fool that was responsible for evaluating what that value was. i was the worst and least compliant patient ever. and so i'm not sure what the

best efforts of the devices, the medications and the other innovations that were brought to bear on this would actually have borne for me at the end of the day because i just couldn't get with the program. so, you know, there are all kinds of environmental variables from a systems standpoint, from a patient standpoint and from a definitional standpoint that could potentially stand in the way of developing a system that, honestly, values value in a correct way. so what will we do about that? evidence, evidence, evidence. at the end of the day, i think, probably three things in big buckets. the first is providing data generation, analysis and communication system that allows us to the agree on a lexicon, on data standards and on outcome standards so that we're all speaking the same language. and then to have an infrastructure that allows us to quickly -- if not in realtime --

collect data, analyze it against these standards and within the context of these definitions and to be able to draw some important conclusions. so the data standards, the infrastructure. and then last but not least that system to provide some flexibility and some context. there's some things that are easy to put in that paradigm. a disease-modifying treatment for cystic fibrosis would certainly be easier to analyze on the obvious adding value end versus evolved treatments for chronic diseases for which we do not have a good, agreed-upon standards at this point. so, you know, adding together the data itself and some agreed definitions and analytics around those, a platform for sharing those and, very quickly, analyzing them from an infrastructure standpoint. and then last but not least, some flexibility in the system and a broadness to apply all of the things that we would need to analyze in order to actually

communicate at the end of the day to freda that she could get her best outcomes by doing the following things and that that conversation can be had and then reimbursed for. >> thank you. rob? >> thank you. thanks for being on the panel, it's a thrill for me to be here although following freda's always a tough act. glad to be here with you today, freda. also glad to be the token representative of the payer community on today's panel. [laughter] i just want to make a few background statements and then provide a few insights or thoughts. by way of background, i say it's absolutely true, as jerry pointed out, that 5-10 years ago the payer community would look at a drug that's two pills glued together or a once a day going to once a week or adding some inert ingredient to a device would all be considered innovations and, therefore, be reimbursed just willy-nilly. that was the case. but i don't think that's the case today. today it's more of the show me the comparative money, so i inserted the word comparative

because it's not just show me the money, but it's compared to usual care as freda pointed out in comparative outcomes. i was at a meeting with a scientist-based pharma company recently talking about their company and how they viewed a breakthrough innovation. i was pointing out there's three other molecules, and they said, well, that's an inelegant molecules, why would anyone pay for that? the scientists actually thought that the way it was constructed was inelegant and, therefore, nobody would purchase. so we have some room to go to bridge the gap between the science community and the payer community because that one blew my mind. i will say that innovations in contrast to one of the earlier talks, innovations that have the capability of bending the cost curve are very interesting to the payer community. so the payers actually find regenerative medicine and stem

cell research fascinating and really exciting science particularly because they have the opportunity to cure things and not just convert things into chronic maintenance drug therapy conditions. so by contrast to what was said earlier, i can tell you that the payer community's actually very interested in those new sciences. of course, let's wait and see what they actually produce. anyway, to get to a couple of points then that i would make about how to kind of use the payer system to be an accelerator for innovation, firstly i would say it's really important to engage payers earlier, earlier than, like, five minutes before a product launches. my observation has been that the biopharmaceutical community in the past, you know, really until very recently only in some companies' cases would come to the payer community with a cake in the o venn already being -- oven already being baked and say, you know, i've got this product coming maybe six months

from now, you're gonna love this cake. back to la placebo-controlled trial, how's it do -- you know, we don't pay for placebo, we pay for this other drug. did you think of this or that? they're like, no, no, no, the cake's in the oven, you're going to love this. so my thought about that is there is this notion around mandatory end of phase ii meetings that the biopharma companies come always, always, automatic at the end of phase ii and say, look, this is the cake we're going to bake. fda, what do you think? if we bake it in this way, will you approve this drug? that's the negotiation that always happens at the end of phase ii, there is no similar conversation with the payer community. i think there should be. i think it would be fantastic because then the cake can hit both the regulatory, but also the reimbursement system. i think it's a real accelerator for innovation. second thought there is that the payers can actually be collaborators, and you're probably thinking, how is that

possible? about six years ago we were interested in genomic science and trying to figure out, gee, how can we adapt or adopt this for the payer community, and what's missing? what was missing was understanding with or without the use of a genetic test would it reduce hospitalizations and actually have a return on investment for paying the test? so we turned to our payer community, and 29 payers raised their hand and said we'd like to collaborate on the design and the conduct of the study, which they did do. it provided the evidence they felt comfortable with, and today we have over 300 payers paying for that technology based on being collaborators both in the design and conduct of the study. something a little different. one last thought that i would like to just throw in there is i didn't hear anywhere in today's discussion funding or research into translational studies, translating something from the bench to the bedside. we really need that badly. we -- you know, it's great to fund all new, you know, genome

studies to find something new or to develop something which shows you can move a surrogate outcome measure, but how because that translate -- how does that translate in the real world where people don't live in academic medical centers and treat themselves according to that standard of care? how will that translate? because that's the world in which the payer is paying. one quick last an ec coat there -- anecdote there. the most important study in the world of cholesterol was conducted conducted and completed in the mid '90s which shows lowering cholesterol increases mortality. prior to that an increased in homicides and suicides, which i know if you take french fries away from me, that's definitely true. [laughter] so interestingly, though, this randomized trial, the first one ever completed, showed a 30% drop in all-cause mortality. 92% of patients at the end of 5.2 years were still on therapy and were still on placebo at 5.2

years. in the real world 50% of people drop off their therapy in the first year. 25% might make it to five years. so that translation of what you might want to believe you see in the rct environment doesn't always translate into the real world. now, you can blame the system, the patient, the doctor, you can blame everybody, but it is what it is. that's what the payers are paying for. so i would like just to put fort that we need -- put forth that we need more funding and research in the world of real world studies including translational studies. thank you for your attention. >> thank you, rob. so, jerry, you spoke about cer and comparative trials. scott, you spoke about demonstrations that promote value. freda, you emphasized measuring and promoting outcomes. and, rob, you emphasized bending the cost curve, reducing hospitalization as ways, criteria for reimbursement. i think, it's always hazardous for me to try to unify a theme, but what we're really talking about here is moving from a

model where we pay for health care to paying for health. and that's a fundamental change. and if you think about it, i think hiv which the former speaker gingrich raised is a very good example. when prior to the introduction of highly-active antiretroviral therapy in the mid '90s, hiv was relatively inexpensive to treat. but if you ask what is the price of health, that is how much would i have to pay to get to improve my mortality chances, the price was actually infinite even though the total expenditures were low. that is, no matter how much money you had, no matter how wealthy you had, you couldn't buy any health. and with the introduction of hart, of course, we lowered that price because we took hiv, and we moved it to a death sentence to becoming a manageable, chronic illness in many ways. and so the price came down, but, of course, there was a lot of

alarm about the price of these drugs because these drugs were in the tens of thousands of dollars. now with the introduction of generics, of course, we've been able to lower the price. so if you think about it as health economists would, we went from a disease where the price was infinite to where the price was about 10-$20,000 in those current dollars. but from a policy perspective people viewed it as going from a price of zero to raising the price substantially. so we need to think better about how we're going to reimburse on the basis of these health improvements and the data now show that the introduction of hart has generated about a trillion dollars in surplus which -- to society, which is the number that i think the former speaker mentioned. so i think that's a good -- would any of you like to comment on that? >> well, there's sometimes a

tendency for people to think that innovation is going to be cost saving. and hardly anything in health care is really cost saving. maybe aspirin for secondary prevention in high-risk patients of heart disease, maybe some kidney vaccines, but everything else is in the realm that you're describing of is it a good buy or a bad buy. but it's always going to add to what we spend. and that's okay. that's a good thing. it's when we begin to expect that it's going to drive costs down that we are in the realm of the probably not. and we just need to accept that and say that's an okay thing for a society to be spending money on. >> i would just, the only comment i'd make and the point's, you know, well taken is that costs get absorbed into the provider community often not very transparent. there was a very heavy cost to the treatment of patients with aids in the absence of hart. it just was distributed across the provider community in the form of intensive care unit stays and other kinds of very

expensive procedures as opposed to the drugs that was easily measurable. so the offsetting costs aren't readily recognized because they diffuse into the health care system, if you will, in the form of more procedures, more morbidity, more doctor visits, etc. >> right. and the evidence shows that there were reduced hospitalizations which, i think, would help meet the criteria that you laid out, rob. >> uh-huh. >> okay. so we have time for -- who's keeping us on track? we have, i think we have time for questions, so we'll open that up to the audience. >> stunned them into silence. >> well, then i get to ask some more questions. so, freda, maybe you could talk about, jerry raised the issue of comparative effectiveness, and there are some concerns about how will it treat populations,

for instance, that are in the minority in terms of how they respond to therapy and such. maybe you could talk a little bit about your, the industry's view on cer. we won't hold you to it for the entire industry, but maybe your personal views on cer. >> well, i actually believe and i think that it's a widely-held or agreed-to belief that good clinical comparative effectiveness is a really important piece of what we do on a day-to-day basis and should be continued, enhanced and grown. we, there are several kind of necessary to dos in this comparative effectiveness. first, a pill on pill, a device on device comparison is not necessarily an effective way to do a comparison. and i think that we've become much more sophisticated in understanding the complexity of our system, the system into which these new innovations go and how they should be compared

in terms of the outcomes that are produced. so if that's what we mean by comparative effectiveness, you know, i think that, again, this is an area ha we've all agreed is important. the question is, how are you then going to apply it? what are you going to focus on as end points? how will they agree? what are the data standards? some of the things i had mentioned before as the important paradigm for shaping the way comparative effectiveness moves forward. and the second thing that i think is really important and maybe rob would like to comment on this as well is the way in which we really throw a broad net not just comparing whether or not everything from weight goal watching to aggressive intervention has an impact on the outcome of a patient, but what new, novel ways we can apply to gee know typically

starting to cull out populations that would be better responders, for example, to a certain therapy over another therapy or group of therapies. and then who might be a nonresponder or who might be more likely to have an adverse event, therefore, reducing a risk benefit for treatment. so the idea that we have some science available to us to apply, to go from all diabetics to this population of diabetics or everyone with nonsmall cell lung cancer to a certain population of patients with nonsmall cell lung cancer becomes something that if we could find a way to clinically apply this in a meaningful way would not just mean something for us in the health care provision field, but would mean something to patients in terms of improving their outcomes. so i think it's a go. >> we have a question here. can we get a microphone? and if you could introduce yourself before you ask? >> ann bonham, association of

american medical colleges. i think rob made a very good point about the opportunity lost from not sending translation into widespread communities whether it's subgroups identified by freda or not. but right now there's no actual funding. federal funding agencies or as far as we can tell from payers. to think about dissemination science or the implementation in getting out to the broad swath of communities, and i was wondering if you could comment on that or, you know, give money for that. [laughter] thank you. >> well, you know, that's a great point, though, you're right. we we need to have some sort of, i believe, government subsidy of this kind of research. but the private community is self-funding these studies. so, for example, years ago we were looking at this issue about co-pays and just going too far with co-pay having unintended consequences. and can we actually published our paper in the new england journal where we found if you went too far with co-pay

increases, people would drop off their therapy. and we used that information to inform the payer community, be careful, you know, there are these unintended consequences of doing something like that. so i would agree with you, we absolutely have to have a federal funding mechanism to translational studies. it's not enough for, you know, individual payers to try to scrimp together a little bit of money to look at a question that, you know, somebody's asking them. we need to have the whole agenda and priority setting. and it's a shame we don't have it because those are the questions that are really, i think, decelerating innovation, not accelerating it. we can accelerate innovation if we just learn more about how to translate things or what the barriers are for adoption. one quick point on that which i think is interesting, at least to me. it's all about me at the moment. [laughter] but in the area of personalized medicine, we collaborated with the american medical association to do a physician survey just to see attitudes and awareness. and what we found was 98% of physicians responded that they

get the point that genes relate to drugs. but two-thirds of physicians don't remember ever having a course in genetics. only 12% have ordered a test in the last six months. so talk about translation. we can spend billions of dollars deciphering all sorts of ahas from the genomic world through the nih and other mechanisms, but if we can't get to the next hurdle which is translating that to an audience who doesn't know how to receive that, we're not going to get this out of the bedside. we're open to collaboration. not funding all of it, but perhaps being a way to get it distributed. [laughter] >> okay. we have time for one question, it's reserved for sean, but i'm going to ask a question while you're giving him the microphone which is what responsibility do payers have? rob, you mentioned the example of an elegant molecule. speaker gingrich was talking about alzheimer's which is a

social epidemic of, the magnitude of which we haven't seen in this country. treatments are limited. but what responsibilities do medicare and payers have to reward marginal innovation, but yet they may lead to something further down the road that's going to solve this? scott, maybe you could talk about this in the context of medicare. >> you know, there's been constructs created in the past to try to create technology pass-through payments, and sean knows far more about this than i do. of i don't think any of them have worked very well. i think medicare does have a responsibility as a government payer and also as a payer that what we say is no ordinary payer, drives the rest of the market. so i think the agency needs to be, needs to think about these issues, needs to be generous in how it reimburses things with the idea in mind that it could choke off innovation because it's such a big weight in the marketplace. but i don't think they have any capacity to contemplate these kinds of issues right now.

they just don't have in-house, the mechanisms, the expertise to think about these kinds of of issues. and then you get all kinds of gaming in the innovative sector that i don't think is necessarily sending the the right signals to entrepreneurs. >> if i could just add briefly after that, payers where it's medicare -- whether it's medicare or the private sector need to get better at this gray zone of new technologies that may pan out and may not. certainly, when mark was running cms developed a very good one of coverage with evidence development, this kind of passageway of this doesn't work, we're not going to pay for it to everybody has to have this. and it's a powerful way to learn things about how well things worked. and that's needs to be built into the payment mechanism. >> let me just jump in, too, in the context of rare diseases, so there are 4500 rare diseases

that 20 million americans suffer from. and i will tell you, you asked the question marginal innovation, any marginal innovation in the any of those diseases would be met with enthusiasm by the payer community because those are diseases where there's just nothing. talk about unmet needs, like nothing. >> right. >> so there's no one going to begrudge, there's no payer that will begrudge even a marginal innovation to help those folks. we need more unmet needs to be addressed, shot the met needs. >> i know. [laughter] i just really want to say a word about incremental innovation, and i know things like fixed dose combinations don't seem -- you know, seem like low-level innovation, but, you know, as a practicing psychiatrist, i can tell you that, you know, fixed-dose combinations that advance adherence for patients, for example, were important in the context of patient outcomes. so despite the fact that they're inelegant in many ways, they're

elegant for patient outcomes, and i just want to make sure that we don't minimize the impact of what appear to be marginal or incremental advancements in terms of their potential impact on patient outcomes. >> and not always easy to develop at a scientific level. >> i was with you until you said potential. >> no, no, demonstrated. >> demonstrated, thank you. >> the best example of that, of course, is hiv where you went from 23-pill-a-day regimens to one a day which allowed you to treat hiv in africa. sean, you had a question. >> yeah. it's actually on the same point of, you know, incremental or marginal innovation, whatever you want to call it. i guess it's mainly for freda, also for scott just because i like to hear scott talk usually because i disagree with him, but he makes so much sense. i'm still trying to puzzle my way through that. [laughter] >> i agree we half of that. [laughter]

>> so, jerry raised the example of the, you know, the purple pill, the l or s, and, you know, i think, you know, kind of the implication or maybe you actually said it was, you know, in that kind of context where there's, essentially, you know, one could argue whether there's any incremental benefit. you know, the reimbursement system should not differentially reward that in terms of pricing compared to, in this case it would be the generic. and i guess, you know, my question, you know, what i've also heard, though, is that incremental pricing is required in order to sort of, you know, fund or create the potential rewards that actually then promote investment and sort of innovation. and so you can't have a sort of a, you know, a value-based price that is linked to, you know, incremental improvement. and i guess so i'm interested in the how both of you think about this whole notion of, you know, esia