>> yes. >> you do have it? >> we have the authority to have flexibility in how we implement the regulations. regulatory discretion. >> i would like to add a further answer on that particular point. >> but the requirements are the same how one who reaches them is flexible. >> i would like to have a further statement on that we understand what the authority is. it's my understanding the fda has been working to address shortages of the medically necessary approach. can you please define what medically necessary means? >> medically necessary is defined as a product used to treat or prevent serious diseases and conditions to know the product available to act as a substitute. >> you indicated your testimony invest majority shortages experienced in the united states is attributable to the

injectable salk. is that correct? >> that's correct. >> according to your testimony 54% of the shortages were due to the product quality such as particular its microbial changes resulting in the personalization. is the right? >> that's right. >> are you finding those american pharmaceuticals or imports? >> we are finding them here in the united states. >> what about imports? >> those are the issues we try to prevent which is why importing is always a challenging issue. >> but you have no authority to address the question of the manufacturing practices abroad, no authority to do with good manufacturing practices, you have no real authority to see to it that the requirements opposed on the manufacturers for safety, efficacy are there and you have very little power to effectively

inspect those manufacturers either of the finished pharmaceutical products or components and constituents, right? >> that's correct. >> and the ability to know who is manufacturing these things and chase them through the product line, is the right? >> that is why the process has done very carefully and selectively. >> i have some legislation and i hope that we will shortly be addressing it in this committee. >> we would address the problem of the quality problems by the ministry process by requiring the drug manufacturers to implement effective system as complies with gmp. the quality system will also be required to ensure risk-management procedures that would address all relevant factors for the supply change and putting our original source materials and their origin and on-site audits and methods to

detect the potential risky substances. the believe that this manufacturers also have to maintain records to establish the drug was manufactured and distributed under the conditions that ensure its identity, strength, quality or with the legislation of this kind help you address quality issues? >> yes, tracking quality every step of the we would certainly appalled latest in a matter of which i work with the gentleman, my colleague mr. shimkus. it's been widely reported that information of the drug shortage in acted in a market tries to sell drugs in short supply to the pharmacist for hospitals. does this present a safety concern? >> yes it does, congressman. >> howell and what can you do about it? >> this is largely unregulated. the commission is involved in some degree but -- >> they don't have the expertise that you have. would you submit a proper answer

informing me of what we have to do to address that particular problem? >> i would be happy to do that. >> do you know of these drugs have been stored properly to ensure the effectiveness, whether they have been delivered or whether they are free of self and contaminants or -- yes or no? >> unfortunately we know very little about the products in the market. >> as i mentioned the many factors to maintain the records establishing the drugs and its materials would produce and putting all the information relative to the producers, and the manufacturers, distributors and importers with such legislation and such power assist with the safety of these kind of pharmaceuticals? yes or no? >> we want to appoint a safety and quality. >> american consumers and patience are facing three problems. one, are the drugs available and affordable, are the drugs they need a safe and number three, are they efficacious?

do they work? >> i believe the committee needs to examine these issues carefully. our colleagues on the senate, mr. harkin and mr. enzi have already called to improve the oversight of the pharmaceutical supply chain. i would hope the committee would follow suit but i would like to have you give a statement of what authority need to adequately carry that out. i don't believe in sending you a letter asking you to do something for which you have no authority. would you submit for the record because my time is up what it is that has to be done to give the authority to address those problems? >> i would be happy to. >> i think you for your courtesy and i ask unanimous consent that the responses be inserted in the record. >> without objection, so ordered. we recognize the gentleman from louisiana, dr. cassidy for five minutes for questions. >> callow. thank you.

>> you do have the ability from overseas obviously come and so those issues raised regarding the adequacy of quality control of you help with the def heparin from china causing many deaths, correct? one of the issues raised here in the previous hearing is that the inspectors as part of the union contract are not come can refuse to go overseas and so i think mr. pallone spoke about adequate resources, but the issue was year there is enough money to inspect the requirement to inspect the pharmaceutical every two years and then it is happening every nine and when i ask if we can redirect the resources to send that person over to e alleviate some of these standing in partitions it wasn't the unions would never allow this to occur the have the right to refuse the overseas assignment.

is that true? and to what extent is that limiting the ability to improve the api, i forget the acronym that you know what i'm speaking of. >> in terms of a shortage situation that hasn't been a big issue. for the most part when we have a circumstance where some inspection activity is necessary in order to prevent a drug shortage we find that our staff are extremely cooperative and willing to roll up their sleeves and stepped in. we are addressing the issue of inspection force more broadly in a parallel to this, but it hasn't been a critical issue in mitigating or preventing drug shortages. >> there's a lot of generics being manufactured in india and other third world countries.

so, are they just not producing the ones that we are in the shop to supply of or are we not confident of the quality of the product that they produce? >> i'm not sure that all the understand the question. >> is there a world wide supply of drugs currently in a shortage here it's just that we are not trusting the manufacturing process by which they are produced and therefore do not allow the importation? >> i would say the lack of the imported product has been unusual. if there is a foreign source we are usually able to work through and get it approved. there have certainly been circumstances where there have been important problems the would prevent that, but in most cases if there is a foreign source coming and going to a foreign source is necessary we are able to work through that. >> the gentleman who was going

to testify speaks about the dea having a quota for control products and that if somebody goes out of business it might not necessarily be assigned to another manufacturer and so you have a kind of centrally planned economy induced shortage. any way that we can address that? >> i can start. i know that controlled substances to represent only a very small part of the drug shortage situation we are talking about, so we do work with the dea but it is limited in several instances. >> it is more complicated having the dea involved with good reason does create an additional step and complicates this but we work closely with the dea when the controlled substance shortage is an issue. >> dalia understand that, but is there any plan to make it so that if somebody stops producing their quota as transferred to -- i gather that is in the

situation now and although we are working closely that is an obvious solution i'm not sure is being implemented from your statement. >> we are continuing to try to figure of how to expedite these kind of issues with the dea and i don't have an answer exactly when that will be resolved but we are committed to doing it as are they. >> they also mentioned, just because i like to read with the other panelists say that the word quote, speaking of a source in an active pharmaceutical ingredient in the say that the ta qualification process to identify supply can be onerous for the qualifying approval of the new api supply or alternative manufacturing side for the already approved supplier can take as long as two to three years. now i am channeling my inner what would be your response to that?

>> we are trying to show as much regulatory flexibility as possible when necessary. so, we are hoping to address these things to the maximum flexibility possible. >> and we already do. whenever there is an issue related to a supplier where it requires them to approve a new supplier or even a new facility that is one of the concerns we turned those around very quickly. these are not in a matter of weeks or two months. weeks to months these are not business as usual where there's a long wait time. we understand the patient said at the end of this at the end of the line and we need to do everything possible to get on the case and work with the company's and we have done that. >> i yield back. thank you. >> the gentleman from utah for five minutes for questions. >> thank you mr. chairman i appreciate you yielding time and holding this hearing.

i think we have established the problem lots of people have talked about in their district. i represent the university of utah and the project more than 360 products have been shortages and not many by the end of this year. just two weeks ago they were talking about the challenges they are facing so i guess everybody up here has a story but i thought i would try as my backyard as well. i wonder if you can address for me some of the concerns about the gray market activity as a result of the drug shortages and the integrity of what is out there in terms of the quality of the medications, the counterfeit or how we can address some of these challenges of the market in these medications. >> first of all, thank you for your commitment to research. we didn't say exclusively but we can say now that this issue is dramatically affecting clinical trials as well in a cancer and infectious disease in many parts

so that's very troubling to us as a nation that prides its scientific advances. the market unfortunately is very poorly in underserved and as we mentioned already it is largely unregulated and to have now this dimension complicating an already complicated situation is very disturbing. so, we appreciate the attention to that and want to address the factors. spriggs other others we should draw some degree market specifically or should we be addressing the shortage of these medications? is that the more viable way to address that would eliminate i guess if we don't have a shortage. islamic one of the questions asked previously is what we know about the products that appear on the grand market. do we understand when they expired, where they came from, and are they made by the company is experiencing a shortage? we don't, because we don't have

a tracking system for within the drug supply to know what product comes from what. >> high-yield by 32nd advertisement. i introduced our track and trace legislation for maintaining integrity in this country and the rule in 1988 when the world was changed. i think this country is getting beyond the topic of the hearing but i do think we faced too much money on the table for the counterfeiters and the u.s. pharmaceutical market place and i hope the committee can take a look at that legislation introduced because i do think it is an important factor for the integrity of the supply chain congenital. i appreciate you coming for the hearing and i will yield back. >> i recognize the gentle lady from tennessee for five minutes. >> i want thank to the witnesses for being here.

we did have the cylinder and oversight hearing going on downstairs, so we completed that one before coming up but we are grateful that you are here and our second panel of witnesses we are also looking forward to and i'm glad we got a tennessee in on the panel joining us. >> a couple questions. we are going to look how we address this issue and how having you here helps to inform and our decision making process. so a couple things i would like to know, and if you don't have the answer for me, please submit it to us so we can include it in our record. >> i wanted to see if each of you had any examples where you had worked closely and collaborative lee with your agencies, manufacturers of drugs where there is a known or projected shortage and see if you can articulate what that

process was, the nsa transpired there and if you have those examples now, please go ahead and give them and if not, we will accept them in writing. >> i can repeat the example we are proud to show for the first time that had to do with a life-saving drug used for acute lymphoma and it received tremendous national publicity, and the representative challenged for the cancer patients and so the fda worked with the industry on this particular drug and they found one of the issues complicating the production was the crystallization of the drug in the solution we warming it would restore the safety features that would allow infusion into patients. without collaboration between the fda and the industry that issue has been recently resolved

and we are very pleased to report that. i know my colleague as other examples. >> fi would like to expand on that one because there is the before the issue of the crystals in the finals where the shortage began that it was being made a predominantly by the company's but the majority of the supply was by one firm. they were experiencing significant production delays so with the fda did is contacted the other manufacturers to work with them to increase their production in order to be able to supply the market. in the course of increasing the production and trying to produce products rapidly, the crystallization occurred in both facilities. then came end of the -- said that preceded the crystals and we then resolve that activity as

well. so, in that case, we also when there was concerned whether we would find a solution to the crystallization we investigated alternative manufactures whether there were in the overseas we were not able to identify an alternate of manufacturers. >> let me interject. do you have examples, other than this one, examples where he worked with some of those alternatives manufacturers in the broader than in and then once you identify that there is a near shortage that is approaching do you think there is a way through the protection process or the compensation model to provide incentives so that you have a more predictable supply? >> another example we can provide for you, congresswoman, has to do with the proposal which is an agent that is used in anesthesia, and when a

shortage starts occurring the fda could facilitate temporary importation of an agent to help them leave the situation but that is yet another example and i know that the fda has many others. the economic issues here are so complex that usually the station requires a full analysis and they are trying to do more of that especially for the secretary's evaluation and we hope we can come out with more definitive answers for the area. >> we appreciate that. in the interest of time i will yield back. >> the chair thinks the gentlelady and recognizes the gentle lady ms. murray for five minutes of questions. specs before, mr. chairman. and thank you all for being here. i was also at another hearing so i'm sorry i missed your testimony and some of the questions. i was experiencing the same problems and our doctors we were

with them constantly with a particularly nasty as diyala shia don ecology. we have the same problems and it's scary from the standpoint of what could happen with somebody given another drug that doesn't work or they have a reaction to it or something. so we hope and think you very much for any efforts in trying to get to the bottom of it. and i wanted to ask if really the consolidation has taken place in the drug industry over the last few years and continues to take place. what affect or how does that contribute to the problem that we are seeing today? jeneane, is this a large contributing factor because of the fewer manufacturers available? >> thank you for your interest and support we feel it is one of the driving causes here and as you can imagine if you were denominator of a manufacturer

shrinks and anyone of them has a manufacturing problem it puts the owner and some of the others and of the affairs don't happen to produce that product in this particular company as a sole source producer then you have what we are seeing right now. ..

>> as mentioned, we also want to have more assurances that the products produced have high quality so that we don't run into quality manufacturing issues, so those are two things that would be very helpful to us. you find the companies work well with you? >> we have had excellent dialogue to date, and we want to do much more of that, not just the fda, but the entire department and also engage the public, and this is, as you've heard. >> thank you, i yield back, mr. chairman. >> the chair thanks the gentle lady and recognizes the gentleman from pennsylvania, mr. murphy for five minutes for questions. >> thank you. we appreciate your concern for our citizens' country. a couple areas here. are you meeting with the manufacturers? i want to ask a couple questions to find out here with regard to what the causes of the

shortage. you laid out these things well, thank you. cancer drugs, for example, why the shortages with cancer drugs? we know they are very expensive in many compasses. what is the reason for that? >> it's very disstressing to see these time honored life saving drugs caught in the middle of the crisis, and some of the agents we mentioned here, time honored agents shown to be effective for decades are now stuck in these shortages, so, again these are older, generic sterile injectable drugs that are typical. >> do we not have enough manufacturers, for example? working on these things? is that part of the problem? >> that's part of the problem again because the industry consolidated, and so we don't have the dozens -- >> of those there, are they not working at capacity? do we know if that's an issue?

>> i'm not sure i can address that directly. >> i think that what often happens in a lot of companies, they make dozens of products -- >> uh-huh. >> these sterile injectables can only be made in certain types of facilities, so there's a limited number of those, and base of the market and the few number of producers, there is pressure to produce and continually produce, and so maintenance of the facilities, themselves, is often put off because it requires an investment on these low profit margins. >> with their expense of the low profit margins -- >> some are not terribly expensive, but low profit margin. >> that's important what you just said. this is one of the concerns we have. >> right. >> certainly, we want medication to be affordable. why window shop when you can't afford, but in the push to make sure that drugs are affordable, are we also -- tripping over

ourselves 1234 is it hurting the patients when we say we want there to be such a low profit margin that it ends up backfiring, and we don't have the medications to save lives? is that part of the policy getting in the way for us? >> well, thank you for posing those questions, and ultimately obviously, our goal is to protect the patient and give timely delivery of the medications. >> do we know -- if you don't know the information today -- is that something you can advise us on? i'm looking for -- i want to know from the stand point of myself as a health care provider. if we're doing something saying we want drugs to be affordable, but cutting the price so much that people don't want to make them, that's a serious concern, and so my question is policy interfering. can you get back to us with that? >> sure, congressman. those are precisely the issues we're wrestling with as a department and country. thank you for posing that. >> i say that from the standpoint of -- look,

oftentimes on the him there's lots of acquisitions in politics. we can't afford to engage in any of that with these live saving issues. i appreciate the honest answers from one colleague to another. >> thank you very much, congressman. >> also, with regard to inventories, i'm hearing hospitals saying they have a hard time keeping their inventory. it's not an issue that they're not purchasing enough; correct? or is it? if a hospital says we can't have the things in supply because it's too expensive or difficult for us to keep using inventory because of special requirements on how to maintain them, secure them, and under special conditions, is that part of the problem too? they might not order them because for themselves it's very expensive? >> i believe it can be a problem. there also has been a trend, and it's not 100%, but there has been a trend in the industry that some people call just in time production. they don't have the long lead

time production that may be in certain -- particularly for the sterile injectables compared to others with long shelf lives. they make less and distribute it out in smaller amounts that certainly contributes to hospitals not able to maintain a supply in addition to a large supply and cushion in addition to what the other concerns that you made. >> inventory is one where they think they also have a small margin. look, we understand health care's expensive. >> yeah. >> sickness is more expensive, and we all want to work together there. i do appreciate and look forward to seeing information on this. thank you very much. i yield back, mr. chairman. >> the chair thanks the gentleman and recognizes the gentleman from georgia, dr. gingrey, for five minutes. >> thank you, mr. chairman, very much. i'm sorry i messed your testimony, witnesses, but thank you for being here.

let me address that in your testimony you cite there's 178 drug shortages in 2010, and the sterile injectable drugs make a up large share of the shortages, and by my count roughly 172 of the 178 were sterile injectables. of these drugs, can you tell me how many were in shortage in previous years? is this a long term problem or just more recently? >> a long term problem, congressman. unfortunately, the trend is going the wrong way and shortages are increasing year by year. we have data back through 2006, and the trend is getting worse since then. >> then tell me this, are there any other common characteristics that you are aware of among these 132 besides the fact that they are generic and they are sterile injust ainjectables?

>> for instance, are they drugs just on the market for years -- actually, you answered that. thank you. are the profit margins typically very low or any other issues you are aware of? >> first question, congressman, the irony is these are older generic drugs that we understand are very helpful, if not life saving, and so to have this situation is really ironic and tragic, and you're right -- there is an issue with respect to business forces here and the profit margin is understood to be low for many individual products. >> and my last question can go to really either one of you. help me understand something. earlier it was addressed. many of the drugs we are talking about are these older generics, not just the sterile injectables, where the profit mar gyp -- margins can be low.

the low profit margins can lead to little competition or even drugs which only one company makes the product. the point was raised about market prices, and maybe secretary koh, you tried to answer this for him. i just want to be clear. do either one of you have any thoughts as to why you get to the point where there's a limited number of manufacturers of a particular generic? why the prices at that point remain low? i mean, the market should be able to work. the market of supply and demand, and obviously when a brand name drug, which is very expensive, first goes generic, and you have several manufacturers jumping in and producing that generic, and at a much, much lower price, and then finally it's too low for some of them to survive, they stop doing it, and go on to something else; maybe another generic, and maybe one company

hangs on. it would seem because of supply and demand that that company would be able to raise their prices. are there any government rules, regulations, laws, pharmacy benefit managers, something that would cause them not to be able to raise their prices even though the market would certainly let them do that otherwise? >> yes, congressman. so, we have come to understand this is a complex business situation where the standard of economic principles of supply and demand do not easily apply, and we have manufacturers, we have purchasers, providers, hospitals. we have group purchasing organizations, and pharmacy benefit managers, so we have multiple forces all working here to the final outcome that ordinarily you would see with a

shortage arising in price and profit, but that doesn't apply here. this is why we need the extra analysis that our departments are doing and others, and we welcome new information and modeling to really help us understand root causes better. >> dr. qweda? >> the questions you raise are the questions we have as we try to understand the roots of 24 problem. what are the things that could be done to try to prevent shortages from occurring or even being at risk in the first place. >> well, i thank both of you for those answers then because, you know, the federal government trying to do the right thing, and in instances, i hope in all instances, and it seems that far too much of the time they screw it up. [laughter] that's why i ask you those question, and i hope that you'll continue to look at that so that market forces can continue to preville, and then i don't think we would be faced with these

shortages. >> gentleman yields back? that is round of questions for the subcommittee members. we have a couple members of the committee who joined us. chair recognizes mr. waldon for e couple questions. >> i thank the chair for having the hearing, and i appreciate the testimony from the two witnesses today. i got involved in this issue some time ago because of oncology that was brought to my attention and staff's attention, and the drug i recall he mentioned, and i'll try to say it right, doxirubison, an ovarian cancer drug, that he's

prescribed for a long time, an effective drug i'm told. what was the fda's role in interrupting the production of that drug? can you speak to that? >> i can speak to it very generally. there were several companies that produced the drug. one of them was a major supplier also was the same producer for the drug dr. qoh mentioned earlier. some of the issues were the same, facility issues, production delays because of, you know, chronic problems in an aging facility is the best way to summarize. what fda did is we worked with the other two producers to facilitate their ability to increase production. it did take awhile. they were, as i said, these are

complex products to make. companies just can't ramp up production over night. >> right. >> but in the meantime, a fourth company came in with a new version of the product, and they helped to make up the supply, so we worked -- we made sure to expedite review of that fourth company's application and any inspections, ect., that were necessary in order to turn this around. >> now, dr. koh, do you have comment on that? >> i think she summarized it well. >> so you feel like you've taken all the steps? this drug is now available on the market again without shortage? is that accurate? >> my expert tells me, yeah. the drug itself is. there's another version of the drug that's sort of a special formulation with a sole source that's a problem, but that's a different company. >> all right. >> same company.

>> you mentioned glass and metal in injectables that you were discovering that sends shivers up everyone's spines, but i heard with new technologies, scientists are able to see deeper into the drugs than we've ever seen before in parts per billion or whatever. again, this is your field, not mine, but are we looking deeper and finding things we never knew was there before, and is that really a problem from a health department standard, or is it a question, but may play a role? >> well, again, those examples, congressman, are very graphic examples of quality issues that we're facing. i must say, though, that again, the fda worked with companies so in the case of matters, pieces of glass, pieces of metal, first to identify the issue, but also advances in developing for a

filtering systems to filter them out and make the drugs safe to inject into patients, so that's another example of regulatory flexibility that has marked this chapter of our history. >> so i guess the end of my time's about to expire -- my time to ask questions is about to expire. [laughter] i want to clarify that. it'll be a short night. [laughter] it's the sense of urgency. i applaud you for bringing people together to figure this problem out, but as i hear from others in my district, there's this patient coming in, drug's not available, they prescribed it for years, it's effective, it works. they can't get it. my mother had ovarian cancer and died from it, so i have this sense of urgency. i know you feel that, both of you, we all do. if there's a way to play a constructive role here whether it's ms. degette's bill on

notification, i mean, she put a lot of work into this. you know, we have to do everything we can to be a partner in this to find a slews. i look forward to working with both of you to the extent this committee lets me play a role. >> the chair recognizes the gentle lady from colorado. >> thank you. mr. chairman, thanks for letting me participate. it's good to be back in my old stomping grounds of the house committee, and as i know you've been discussing, congressman roonny and i introduced in a bipartisan way that preserving access to life saving medications act creating an early warning system between fda drug companies and providers so that we can respond to these drug shortages quickly and efficiently. do i think the bill will solve the root problems of the drug shortage crisis?

no. do i think it's a necessary first step? absolutely. i appreciate the witnesses coming here to talk to the members of this committee. this bill came up because mr. rooney and i independently were going around, meeting with our hospitals and doctors, and suddenly they said to us, i was in the middle of a chemotherapy treatment of a child, and suddenly i couldn't get the drug. it seems to us -- i'm sure it didn't happen immediately, but it seems like it did. doctor, you're shaking your head. do you want to comment on that? >> well, to the prescriber, you know, they are not following, you know, websites. they just know they can't get the drug, and they have a patient who is ill and needs it today or tomorrow, and not in two months when the supply can be reuped, and that's a very difficult position to be in as a physician, and even worse as a

patient. >> and is there some reason why these shortages have increased recently? either one of you. >> we're trying to understand that, some of the things that we have identified is that these are products that are complicated -- most of the products that have been problematic are complicated to produced. >> yep. >> there's a limited number of producers, and they are all working, many of them are working in facilities that are aging and have had chronic challenges in maintaining production. or product quality. >> yeah, and, you know, i think you -- i think before i got here, mr. chairman, you discussed the current system which is reporting system for companies that don't have competition, and it's a voluntary system. even though it's much more limited, it's really worked.

in 2010, 38 drug shortages were avoided when the agency was given advanced notice, and i just want to give a couple examples. in august of 2009, espira know fitted fda of their intention to discontinue a drug in 2010 due to low volume. the drug is often critical for neonatal care. they received a note back from the fda drug shortage in september 2009 thanking them, and in march 2011, the other -- the other supplier of this drug, american region recalled the product because of a quality issue, so what happened then is in april 2011, the fda made them aware of the drug shortage caused by the recall, and asked them to assess their ability to return to manufacturing, and then in that same month, they told the agency they would return to manufacturing the drug

so that the patients could be served, and the fda -- and so it worked, but that's on a very limited basis, and so -- so i -- i just think that this could really work, and i guess i want to ask you, dr. koh, in my minute remaining, how will it work if we enact legislation like this to get the information into the provider's hands that there's an impending drug shortage because you folks had some experience with it. >> sure, and congresswoman, first of all, thank you for your leadership on the issue. it's very much appreciated. we all feel that establishing highest level of communication as early as possible about my potential shortage can give us the opportunity all to be proactive, and that's just not fda and hhs, but providers,

hospitals, and patients, so if we can do this together, understand that a potential shortage is on the horizon as soon as possible, make that information available to relevant parties and ultimately to parties in the public, then we can all work together in a proactive way. right now, it's a situation you summarized well where the information is voluntary and the fda does not know until it's too late, and then patients are stuck in a dire situation which is just not acceptable. we are looking forward to greater emphasis on earlier notification and communication. >> great, thank you. >> thank you. >> the chair thanks the lady. before panel two, we have a request for a follow-up. panel one, without objection, we'll let you ask the follow-up question. >> thank you. we have actually, my office and

i, looked into a drug and there was a problem we heard from you of a toxin being in the product, and it's unclear where in the manufacturing process that toxin had been introduced. now, obviously, that's an issue, and frankly, i called my constituent saying fda did the right thing. we don't know where it's introduced. it's disturbing to me that the toxins should be in the product, so the -- speaking about manufacturing problems, but really they are significant, so is it a pattern of manufacturing that know there's some sort of contamination for which in their gmp, they do not know where it's entering? that's a process problem of tremendous concern. >> the answer is yes. that's exactly the kind of thing that we're concerned about. when you find a product with

toxin in it, you have to figure out how the toxin gets in there in the fairs place. there's multi. multi. steps where that would be occurring. figuring that out is not easy and could take 5 long time to determine that and then a long time to fix it, so -- and it's particularly -- we see this with metal shavings in medicine, glass shards in viles. all things that would be unconscionable to give to patients, but the key is being on top of those good manufacturing practices, and maintaining facilities to avoid those kinds of events, and where you have facilities that are in 100% production mode all of the time, it's often difficult to maintain your facilities and modernize them in a way that's needed to, again, assure that for a company to assure that

they are producing a reliabilitibly high quality -- reliably high quality product. >> thank you. >> well, dr. koh, as was said earlier, classic economics would suggest that when a product is in demand, prices should rise and the market establish a new e quill equilibrium. we now have more shortages than the year before. i'm also curious why the market failed to establish an equilibrium because both discussed program constraints, and there's brand name drugs and not generics. is that correct that they only apply to the name brand and not generics? >> well, congressman, those economic issues are precisely the ones that we are analyzing right now, and we have,

especially our assistant secretary for planning evaluation and healthy economists looking at the economic principles and modeling to help us predict where we need to go in the future, so thank you again for raising these issues. these are very, very complicated business and economic models we have come to find. >> the generic drugs where we've seen most of the drug shortages in recent years, i mean, if there's that distinction, is that -- is that the problem? >> we do know that it's older generic sterile injectables that are making up about three quarters of these shortages, and that's where we focus our intention. >> i don't know if either asked you -- if you said you were going to get back, but i would really like to get some answers, you know -- i mean, obviously, you're not prepared or you don't feel you're having an answer

today, but i'd like you to get back to us through the chairman if you could. >> be happy to. there's an upcoming report from the fda to give further often sis and further economic analysis that are intensely underway right now. >> will that relate to this, or you don't know for sure? >> well, hopefully, we'll get a better understanding of root causes, and then of course -- >> all right, but, mr. chairman, if ce can -- he can get back to us on that because we asked the same question, and we would really like to know. >> sure. >> yeah, if the chairman can yield on this point -- >> go ahead. >> i thank my friend for following up on this debate and question, but in the opening statements, i just didn't focus on the government pricing. i did say insurers too. we're in this together, and if the market's going to work, it's got to work. i want to correct the record. i was not just picking -- >> no, i understand. i just wanted to bring up the

public program aspect. get back to us on it. i mean, to be perfectly honest, the questions asked today, we've gotten a response, and we have a little better idea, but i almost feel like more questions have been raised than answered today, and that's not anybody's fault, but that's where i feel we are right now, mr. chairman. >> all right. thank you. we'll -- if you'll respond to the questions in writing, we'll get those to the committee members, and i look forward to reading your report. the chair thanks the first panel. >> thank you very much. >> thank you, we'll call up at this time panel two, and the second panel consists of seven witnesses. our first witness is mr. johnanthan vice president of sales and market and testifying on behalf of teva pharmaceuticals.

next is mr. john grey, the president and ceo of health care distribution management association. our third witness is mr. kevin colgan, the corporate director of pharmacy at rush medical center in chicago. our fourth witness is mr. mike, chief operating officer of premier inc. next we'll hear from dr. charles testifying on behalf of crin call oncology. we have the vice president of operations at lain caster general health, and finally dr. robert, director of the cancer institute of new jersey. we thank all of you for coming. your written testimony is entered into the record, and we ask that each of you summarize the testimony in five minute opening statements.

.. representing tab of pharmaceuticals. teva pharmaceuticals is a global leader in grand generic ideological consumer-products. we are a market leader in many of the markets in which we serve. here at the united states where the market leader in generic --

generic products. we have a fast portfolio including made dosage forms, oral solid presentations, inject bold presentations that i look forward during the question period to share and site-specific to that important category. as reference, we are a market leader. teva is a market leader and we understand and embrace responsibility that does come with being a market leader in non-that context i'm happy to be here today. one side note, as all of us have been, we all have personal stories as it relates to family friends, people we know, individuals that have been impacted by not being able to get medications. in my particular situation, i have friends and family as well. given the role they play, i

maybe will to make a difference. unfortunately, many times i can't and it's very challenging. at the same time, given the role i played, ear from patients. i hear from family members of patients, constituents. i hear from positions. looking to the manufacturer to ask the questions why. i would respond and understand that. then at the same time, i see every day when i go to work hundreds and hundreds of people working tirelessly around the clock, sparing no expense to do whatever we can to return to historical production volumes so we can get these critical products back to america. as referenced in earlier testimony, this is a complex multi-stakeholder issue and it's going to require the court nation and communication amongst other stakeholders to resolve this issue. as noted earlier testimony as well, there are many factors

that impact the truck shortage issue. whether it be api being sourced and available. to discuss that. the industry has experienced manufacturing challenges. i'll go into greater detail specific to how it impacts a sterile facility versus oral solid facility. there has been regulatory impacts on facilities. as appropriate as required tsca regulates these complex facilities and projects to ensure that the manufacturing community is operating within full cgmp compliance ultimately to provide the highest quality of products in all of this are impaired as the manufacturer, we certainly embrace that. most of the shortages are unanticipated. those unanticipated shortages have boomerang effects, a finance supply chain. as noted in earlier testimonies, we getting greater detail a handful of manufacturers that

sometimes are unable to pick up the last supply from other manufactured in will go into detail about that as well. what is teva doing specifically to address drug shortage issues? we have significantly made embarrassment and enhancement of facilities as well as their quality systems. we've unrestricted access to resources globally and prioritize those people in those facilities they required to wear that needs to be done to get the products back to market. we have embarked on a very aggressive redundancy plan. there is no requirement to a manufacturer to have a secondary or tertiary facility qualified to manufacture these products. we have identified in combination with drug shortage division does not critically medically necessary products and we have five fda approved facilities and we put a team in

place that is actively working on redundancy planning for these critical products. as referenced also for the testimony, dr. krieger and dr. koh within the fda. just as it relates to resolving and mitigating these challenges. i can speak to a couple different references. one come a discussion earlier in testimony around court nation of importation of product to alleviate critical troop shortages. there was a specific instance in which we worked with the fda to bring a new product called leucovorin that's used in combination with chemotherapy to enhance the effect is said that treatment does so as to mitigate side effects. we brought it in and had a significant resources to work collaboratively with that and were able to help mitigate that problem. the solution that we are looking at recognizing as the multi-stakeholder issue. i do need to comment as it exists today, there is

tremendous cooperation within the truck shortage crippen manufacturing community. as referenced earlier, there is no formal process. it's an informal process and i can speak on behalf of teva and other manufacturers in the state that we too will collaborate with the fds testified earlier in the take that very seriously. we are responding where we can be a doctor ribs and example mentioned earlier. i received a phone cow to do what we can. we'll be able to work in collaboration with the get product release to market and we continue to prioritize those types of products. during question i'll be more than happy to go into greater detail about how we are seeing the court nation and effect this is how we would like to see a greater communication amongst multiple state kernels -- multiple stakeholders beyond the manufacturing fda. going forward, we had seen

discretion by the agency deployed to allow earlier availability of key products. that is working. we would like to see a process in which we can get that on the front end as well to potentially mitigate potential problems while incorporating remedial steps that have no impact or can you do the patient. i know i'm all for my time, chair, so i apologize. >> mr. grey company recognized for five minutes. >> good morning chairman pitt's, ranking member pullout. i have judd gregg, president and ceo of the management association in arlington, virginia appear to appreciate the opportunity to provide an some overview of the pharmaceutical distribution system and inform your committee and efforts regarding critically important issue of a drug shortages. a little history, each dna is a national association representing america's primary health care distributors, a vital link in health care

distribution. each business are 34 member companies ensure that nearly 9 million prescriptions, medicines and parties that delivered safely and efficiently to nearly 200,000 premises in clinics, hospitals, nursing homes and other providers nationwide. approximately 90% of all pharmaceutical product sales in the united states flow through our member companies. continued innovation have really set members apart to contribute about $42 billion in value to the nation's health care system. federal law defines wholesale drug distribution is the distribution of prescription drugs do other than consumer or patient appeared wholesale distributors have listed entities bound by range of federal and state ammunition distributors must comply with licensure requirements in every state in which they operate. support to note each dna members are primary distributors. they buy predominately predominately from