>> not only is actually kind of hard to discover new antibiotics, it's expensive to develop them. and the reason is it's really you have a patient before you with pneumonia who could have all sorts of different organisms

causing the pneumonia. and without rapid diagnostics you don't know what is causing the pneumonia. when you're trying to do an investigation with drugs, you have a sick person in front of you, a prolonged consent process where you have to have informed consent. people are not going to wait often to go through the process to start a sick person on antibiotics. so then we have the issue that they are pre- treated with different things until they get into the clinical trial and then you have all of the heterogeneity and then you have existing therapies. it is and ethical to have the comparison group have no treatment usually. and so, you have to do a comparative trial against existing therapy. those are typically called on an inferiority trials because you may not expect to be better simply you want to show you are statistically as good as. so, those challenges tend to

increase the number of people needed to be enrolled in a clinical trial through a very large number and they are hard to get and hard to enroll because clinicians often don't want to take sick people and go through the paperwork to get them in a clinical trial. >> the scenario where more adaptive clinical trials may be used to help drug developers seeking or create the next effective against a drug. at the halfway lead out how it may benefit drug companies in pursuit of these new and biotic lacks david cho? >> we -- and you can trade off like the medical need, and we do this in many cases. succumb if you have a tremendous medical need, people are going to die quickly and you have nothing to treat them with. then you will accept a lot of uncertainty about the estimates around the safety and effectiveness and in exchange for something that may work for

this patient. that means you can have shorter development programs if they need is huge. on the other hand if we are talking about another drug for knowing pneumonia there are multiple programs that could be done depending on the level of the need and in some cases you may only have ten infections in the united states of this certain organism and other cases you may have hundreds. you can get a more robust program but then you're going to be exposing more people than you approve the drug because there are hundreds of thousands of people housing the condition. so you would basically match the development program and the medical need together to put that together but then we would like to have a very strong signal or symbol or whatever but

an informative signal to the clinician that the drugs had gone through this kind of development pathway so they would understand that. >> i hope with this hearing today we would be able to move to that line in the future. in the coming weeks and months we will continue the dialogue in the second panel today on ways to strengthen this puzzling to complete the next step in fighting the public-health crisis. i want to thank you and your staff for the hours of working with the office during the august recess, and i know that we will continue that effort because this is important and again thank you for being here and i yield back my time. >> thank you for the leadership. >> the gentleman from new jersey for five minutes. >> thank you very much mr. chairman. good morning to you, doctor woodcock. members of the committee we heard first hand the greater need for the incentives to

encourage new drug and diagnostic development in the antibiotics they. some of the witnesses on the second panel have recognized a wide range of incentives that would encourage greater development. do you believe that incentives we identify in the antibiotics they spy also benefit other areas of unmet need such as rare diseases? >> as i said earlier, there is a trade-off between the incentives you offer there is always some trade-off and there are various diseases for which there are many know development is occurring so i think you have to determine whether those trade-offs, the economic trade-offs and i'm not qualified to say what is the right course. that is the position that congress makes in those decisions however i can tell you

that antimicrobial development is urgent and as a public health issue. people have a tremendous need for the developed and many are not being developed. we are doing some things such as working with the organization for diseases and so to get a better natural history studies that would incentivize development and make it easier to understand what is the course of this disease so we understand what is needed to study it. however there are still major financial obstacles. >> as you know i'd share the caucus on the republican side and i have in my office virtually every week parents of children who suffer from rare diseases where there are no medicines i'll. as a society we have to do a better job.

you may not be qualified you are one of the great experts in the country on all of these issues and we look forward to working with you in that area. the president announced an executive order on a five-year plan to combat antibiotic resistance. what role, doctor woodcock, while the fda play in helping to facilitate the president order? >> we have been working with the planning group on this and the fda is a wide range of responsibilities. everything from animal health and those issues and surveillance activities which are done of antimicrobial resistance which is primarily the cdc that the fbi norm system mentioned in the reports which monitors the antimicrobial resistant organisms in food and so forth into these things are intended to be strengthened.

in addition, we will work on a better doubling our efforts to incentivize antimicrobial development and obviously an interest in better diagnostics which is put forth in that report. succumb and we have a multiple role to play. >> finally, doctor woodcock maybe when all games except against lehigh. >> i recognize the gentleman from illinois for five minutes for questions. >> thank you researcher men. doctor woodcock, good to see you back here in. but i think that you are being coy. the business model, whether it

is going to be in diagnostics or testing is the same business decision that we make in our home. it's simply about risk and reward. so what is the reward and the amount of risk and i think you are all going to play a bigger role in that and we hope that you will work with us to do that. i've been very excited about this debate in the diagnostics space and in your opening statement and i had to go go onto the world wide web and new technology allows us to do that without telling the staff to find it and getting back to us. so born in 1881 and born in the 1822, surely if they can recognize the testing procedures now, we have work to do to ramp it up i think. and that is the whole debate in the genetic markings and all this other stuff that's going

on. so i'm very, very excited. i've also been involved and helped along with following doctor kingery's lead and i look forward to working with gene green in the congress and we are having discussions to do that. so, you know, the -- you have the same questions from us. and so, i think what we really want to do and we will hear from the next panel is let's get a handle on this risk and reward. and i am not so adverse to incentivize in the private sector into something they are moving on that is going through the process helping them do that and if they are going to take and then go and, you know, places that no one else is going to go. one of the first questions is as you have seen companies leave the field of antibiotics is a

small, medium they small, medium or large help you classify them? >> i would say that larger companies have left the area for better pastures so to speak when they see a business model return on investment. and a similar with many of the medium companies there are many small startups trying to get into that space and that's good news that we must recognize they are not always as successful and they might have one product they are trying to develop. >> we talked a lot about the act today and there has been some success in that progress. do you think there is additional things we could do to incentivize -- what other things can we build on to encourage additional incentives for the adaptive act or other processes that we are talking about? >> while i think you have to think about what are the alternatives, all right?

there's some government developed and awards that are usually under contract. they are for certain entities. you need to drug discovery efforts and that means scientists working full-time in laboratories. it becomes hard and i didn't know that until i talked to them that they had screened in the pathways and hits harder, it's hard to find the new generation and so that means a very robust scientific effort has to go on and do basic science of the microbes and also in the discovery of these new

molecules. so to do that, somebody has to have to face that they are going to make money from that and ten or 15 years they don't have that right now i can tell you so i don't think that whatever has been done is enough because you have to consider if it is not going to be commercial development, how is it going to happen? where is it going to happen? >> what you help us as we go through the process to identify ways we can help incentivize? because you you're talking with these folks and we will, too but we need a lot of years on end. we went through this debate in the paper labeling zend information. labeling through the web there has to be a better way than just to keep putting stickers on the laws for things because they are

just overwhelmed. and i would like some simplicity in math. -- in that. >> they are working on developing a patient information leaflet. one page that you get either electronically or at the pharmacy that tells you every other country has this kind of thing. so it tells you how to take the drug and what it's for but then we have proposed and that we are interested in an electronic position label which is that seeing that it is folded up inside of the pill bottle we would like to move to electronic with some paper options for those who are still electronically impaired shall we say, but most of the world can easily get that information with many other sites. >> we now recognize the gentleman from florida for five minutes. >> thank you mr. sharansky i

appreciate it. thank you for the testimony. we have some questions, we submitted some questions for the wreck or to november, and to my knowledge, we have -- the committee hasn't received many responses. so, i want to ask you one question again. can you tell me how many treatments were approved with the biomarkers in the last five years and have any approvals occurred in the normal marker. how many did they accept for the first time using the last five years so that you can provide that answer? >> we are working very hard on this. that was a very provocative question. we had a very long debate last week among our senior people on the definition of a biomarker and which of these endpoints, which is how fast you can breathe into one of those

machines come is that a clinical end point or is that a biomarker? not everyone agreed with that. the answer is yes, we have approved a large number of drugs on the biomarker and in point all the time. a very significant proportion of drugs that we approved are based on that and we have approved on the novel won in the last five years. but to get you the account has taken a little bit more effort because we had to resolve these definitional issues. >> when do you think we might get some answers? >> i am not in control of the timeframe that i can tell you working very diligently and i believe that you will get this response. >> it provoke some thought entirely. >> there was approximately 450 million in the direct funding fiscal year 14 to address the antibiotic crisis. these funds are allocated across

the hhs committed va, the dod and the usda. about 75% was used for the basic and applied research with the rest directed towards stewardship and surveillance. currently, how did the various agencies coordinate their efforts? >> while, there's been a long-standing of antimicrobial task force at the agency level across the government headed to the hhs. the executive order conceived the direct formation of a higher level task force and the government that would direct the implementation of the strategy that was announced. so there's long been coordination across the government agencies and i believe that the report discusses that. >> arctic or donating >> arnica were debating whether the health organizations as well as other countries working to combat.

we have relationships with world health and i think the executive order and in a tighter collaboration with the who and the very concerted way. >> the next gentleman we now recognize the gentle lady from colorado. >> thank you very much mr. chairman. i think this has been an excellent discussion and i just wanted to ask you to clarify one thing, doctor woodcock. to talk about the report on the initiatives on the eastern research group and what watch the report concludes that the clinical timeframe is an unlikely contributor to innovation. and we have been hearing

counterarguments to do that without something like the approach taken in the adapt act it isn't feasible to do clinical trials in the resistant pathogens. so, from that perspective, that might be considered a necessity, but not a sufficient condition for the developing of the most needed antibiotics. also it would need to be paired by other incentives to spur investment in that area. so i wonder if you could spend a minute giving us your views on this issue because it seems to go to the heart of whether we should even go forward with the adapt act. >> there are multiple barriers to the antimicrobial resistance and the drug resistance. i do agree that i think the -- i

think the streamlining of clinical trials and resistant organisms will stimulate the development in that area. why? partly because developers have told me that and part number two because we know from experience that if we have a clear path to the marketing of people understand that, they are willing to put their money down on, you know, he kind of that they would have a molecule that they could get through. but this is clearly not sufficient. number one, we are talking about the most resistant organisms here in a small cadre of drugs to treat them and we need a robust pipeline of the discovery that will lead to new drug candidates for all different times of infections. the limited population idea and the streamlining of clinical trials which would just decrease the time but also the cost and the number of people needed.

that's one thing we could do at the that the fda that would be beneficial for patients. but it's not going to fix this problem we have of investments. >> thank you. i yield back. >> that concludes this round of questioning. we will have follow-up questions i'm sure and send them to you and ask you to respond. but again, doctor woodcock, you are a terrific witness. thank you for being so forth right and clear in your answers and we will now take a three minute recess as we set up for the second panel. >> thank you.

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we will reconvene on the second panel. today, we have and i will introduce them in the order that they will make their presentations. first, doctor kenneth, chief executive officer of. doctor barbara murray, president of infectious disease america. third, doctor adrian thomas, vice president of the global market access and global services, and then mr. ken patterson professor of law boston university school of law.

mr. alleyne senior senior director of drugs and medical devices of the charitable trust and doctor powers assistant professor of medicine george washington university school of medicine. thank you all for coming. your written statement will be made a part of the record and you have five minutes to summarize your question. we will begin with doctor hillan you are recognized for five minutes to make your opening statement. >> thank you. good morning mr. chairman and members of the committee for inviting me to testify today. we are also going to hear the recognition of alexander fleming might fellow countryman not only did he discover penicillin but when he received his nobel prize he spoke of the danger by exposing the resistance that was back in 1945. i have to chief executive officer focus focused on the discovery development and

commercialization of the negative infections and it is a small company with fewer than 50 full-time employees and it is based in the san francisco bay area. we are a member of antimicrobial coalition created to address the challenges that we have heard about today. as you have already heard antibacterial systems is one of the most significant medical challenges the country faces today and we are committed to trying to find solutions. our product candidate has been engineered specifically as it is currently being evaluated in the clinical trials and the patients of the bacterial infections are caused by the -- considered to be the last line of defense in the antibiotic use that are no longer active. it utilizes a superiority design and the reduced number of deaths and the patients treated with therapy and the best available standard of care that unfortunately isn't very good today. we also developed a trial to

measure the blood levels to try to help to individualized dosing for patients that will improve the outcomes. did he sign required close consultation and coordination with both the drug and diagnostic agency to be extremely collaborative and believe the approach has a model for how they can help to facilitate companies with development to antibiotics and the unmet medical need. the program has also been benefited by receiving the first contract awarded the broad spectrum of the program from the biomedical advanced research and this is the signed through the approval to provide over $100 million in total funding. however, even with the groundbreaking study the team with the exciting pipeline has a successful idea of the significant support if

significant barriers for the companies developing antibodies and we can work together to address these obstacles to have effective antibodies that will always be available for patients. we would like to propose significant changes in the four key areas. first we believe in in a new economic incentives are the key for the need of the reform of the antibiotic. the economics of developing new antibiotics is not attractive to the pharmaceutical industry and many companies of antibiotic space. this has led to a decline in the number of antibiotic approvals and has heralded to increase in antibiotic resistance. commercial returns for the antibodies are limited by the fact that generic antibodies are cheap, new antibiotics are used sparingly to preserve their use their use for reimbursement of hospitals is limited to six payment system that is intended to cover the total cost of patient care and because longer-term trends are awarded by the unavoidable development of resistance. furthermore, other therapeutic areas such as oncology or

diabetes or by the pharmaceutical companies with much more attractive opportunities for the return on their investment. we believe that the act sponsored by the congressman has been proposed for the qualifying products and and bbv this would provide a powerful incentive as the payment to the hospital is the same regardless of the antibiotic. so the hospitals are incentivized to use the cheapest is not always the best and most effective antibiotic. but by providing the reimbursement for the qualifying antibiotics it eliminates the important barriers. the passage of the act would like to see the reimbursement for the antibiotics extended beyond medicaid and medicare patients covered by private insurance. second, the fda needs the authorization for the greater flexibility for the approval of antibiotics antibiotic space limited clinical basis of the rationale today.

it is the streamlined development program however for the mortality plan and be infection times in the enrollment period in the study is expected to take three years to read and contrast in europe the guidance extends more flexibility in the scenario of the unmet clinical need and doesn't require inferential statistical testing for the antibiotic approvals. in order for the new drugs to be available ahead of the emergence of unacceptably large numbers of infections from the congress must enact legislation that authorizes the fda to approve new antibiotics for the limited patient population spaced on smaller clinical trial data sets that the technology of the available evidence supports the risk profile financed antibiotic. while the technology and reflecting greater uncertainty associated with the testing and product of the product label. occasional support passages provided the fda with an

increased flexibility that we believe it needs. third, there is a need for the more rapid test and streamlined approval path of the diagnostics. for those in the administration of antibiotic by just one significantly increasing patient mortality. the traditional diagnostic tests as we have heard they take 72 hours to complete and we believe the federal government could make a significant impact providing support and incentives for the development of the the cost effective point of care diagnostics that have the clinical care. there is also an opportunity to streamline the process for the development and the approval of the companion diagnostic tests. there is the need for an expedited approach to the diagnostic development and approval through the regulations that are anchored in the consideration of the urgency of the unmet medical need and the overall benefit risk for patients. the regulation should provide flexibility to streamline the required analytical studies as

well as the testing related to the quality manufacturing software and the documentation for the diagnostic advice. for then finally, we need to sustain funding for antibiotic research and development. we must be prepared to take a long-term perspective to fully realize the public health benefits will be derived from increasing funding for antibiotic research and development. the funding that is received have been a sensual and we believe that it illustrates how about public-private partnerships are successfully advanced. on an unpredictable basis for the broad-spectrum program and the expansion of the mission to allow them designed to address public health records by the antibacterial resistance. we also support continued funding through the antibacterial discovery development. we appreciate the opportunity to contribute to the discussions and to strongly encourage congress to take measures to

mitigate the significant public health threat posed by the bacteria. >> we now recognize doctor murray. five minutes for an opening statement. >> thank you very much, mr. tran. thank you for inviting me to testify on behalf of the infectious diseases society of america on the public health crisis of the antibiotic resistance and the need for antibiotics and diagnostics. we are grateful for the subcommittee's continued leadership on these critical issues. the position of seeing more and more patients with serious infections resistant to all or almost all antibiotics for example i recently saw a young woman with lupus and autoimmune disease who developed a very painful infection that persisted despite topical antibiotics into surgical interventions. the infecting criteria and they did her bloodstream and developed resistance to every antibiotic available including that of last resort. finally, we sent her to hospice for comfort care while she

waited for the infection to claim her life after a very prolonged and expensive stay in the hospital. a colleague of mine recently took care of an active patient in his 60s following a prosthetic knee replacement he developed a and an affection that despite the removal of the joint into the antibiotics it couldn't be controlled and he have to have an above the knee amputation. this summer but i think women with urinary tract infections had to be admitted to the hospital not because they were so seriously ill but for the therapy because they are accepting organisms resistant to all of the oral antibiotics. for anyone that has had eight utis which is going to be most of the women in this room and some of them and having to be hospitalized for a common infection is inconvenient, decreases productivity and increases healthcare costs. antibiotic r&d as you have heard of faces a significant barrier and the discovery is hard. scientific challenges lead to development costs and economically antibiotics have a

very poor return on investment because they are typically priced flow can be used a short duration and held and reserved by us to try to control the antibiotic resistance. we thank the subcommittee and especially represent the leadership in an acting the act of 2012 which is beginning to address some of the economic barriers we hope you can build on the efforts to address current regulatory barriers specifically extensive resistant bacteria currently relatively small number of patients making its not virtually impossible it's not virtually impossible to populate the traditional large comical trials between the two develop new drugs before there is an epidemic. think of how the fear for able would be less if there was already effective their feet. it represents the act that would address the regulatory conundrum by allowing the fda to improve certain antibiotics with smaller trials and this approach would only be for antibiotics to treat serious infections where there is an unmet medical need. adapt would make trials of

highly resistant bacteria feasible, less costly and allow the fda to assess the risk of the new antibiotics relative to its potential benefit to this limited population. we are deeply concerned that without adapt most of the urgently needed antibiotics wouldn't be brought to the market. the strategy of the limited population pathway was also suggested in the report that you heard yesterday. adapting to the safeguards to help ensure that the drugs are used appropriately also contains multiple important provisions to ensure that the susceptibility and interpretive creek here you breakpoints predict whether a patient will have a good response to an antibiotic or quickly updated to make publicly available up to date information is crucial for kroc all care and to ensure that antibiotics are not misused or overused. they urge the subcommittee to markup the act swiftly. as also mentioned in the addition earlier today additional economic incentives are required such as public-private partnerships,

support for federal agencies to invest in antibiotic research, improved reimbursement, and or tax credits. ernst and young estimated that the idea proposal targeting the r. and d. for these needed antibiotics would result in an additional five to seven new antibiotics in the pipeline every year. the new antibiotics are critical. they've also committed to a multi-pronged response to antibiotic resistance including a well coordinated federal leadership as mentioned in the report. sustained involvement of the non- governmental takeover is coming antibiotic stewardship programs in every healthcare facility enhanced surveillance event of bionic use and resistance patterns and research on the novel strategies to prevent and control antibiotic resistant organisms. these steps are critical for the patient public health and the federal investment data due antibiotics. you have heard it is extremely important to promote the development and the plentiful integration of the new diagnostics. the rapid point of care diagnostics can reduce inappropriate antibiotic view

that the drive is resistance by lessening the need for the shotgun therapy. ideas recommended grace diagnostic research, pathways, strengthening and reimbursement and supporting outcomes research to demonstrate the impact of diagnostics on patient care. thank you again for allowing me to justify here. and for your continuing effort in this very important area. the stomach hispanic the chair thanks the gentle idiot recognizes doctor thomas. >> for this opportunity to come before you today i am doctor adrian thomas the president of the global market access and head of the global health pharmaceutical business of johnson & johnson. i applaud you and commend all of the leaders in the room that have given voice to the situation and antibiotic resistance. we also recognized as the committees and the leadership as well as the leadership of president obama on this important issue and offer our support to the national strategy

announced yesterday. from my early career in the service to my current role as a portfolio product service the disease of high public-health impact which include tuberculosis and also more recently ebola. i'm a clinical pharmacologist and physician by training with expertise in a variety of areas in the healthcare industry. the majority of my 17 years in the private sector has been with johnson and johnson. as many of you know johnson and johnson is the largest most broadly based healthcare that it also includes diagnostic devices as well as the consumer products. we are an innovation-based business and as critical as you think about the issue that we address incentives that apply in the relevant different stakeholders in the area of innovation not just large companies but the discovery of academic research, biotechnical startup into the public sector.

reaching across that ecosystem allows the unique visibility in the number and the status of the projects underway in the areas including antibiotics. it also as commented that we consider incentives for antimicrobial resistance we should also consider incentives incentives into vaccines and other preventative mechanisms and diagnostics if we are going today to progress against this terror will issue. we also bring this into the proximity of the patients facing life-threatening illnesses including patients with these infectious diseases and the stories affirm what we've heard today that we must do all we can to meet the needs. first and foremost we must work together and think differently to bring forward these new therapies. we have heard in some detail today that despite the need of the legislative efforts the innovation climate and antibiotics and other remains suboptimal. that is a large part because the basic science in the field continues to be very difficult with the highly.

if the failure is no longer an option given this critical global health security crisis that we need to take different measures we can learn the lessons of the crisis which is also neglected and which now we have companies scrambling including our own to try to provide new vaccines in a short timeframe and unfunded mechanisms. for the better stewardship of antibiotics on the market in the fight against resistance to current demand that we need a framework for innovation that antibiotics are indeed. we have to track them all best and brightest including the private sector. the u.s. can and should lead the world in creating the conditions we cannot wait for the europeans medicines initiatives to old problems for us. it is our hope the committee and the congress will give serious consideration to the new legislative proposals.

beyond this we believe there remains a need to put forward a comprehensive set of options specific to antibiotics that address the needs across the stakeholders. we must create a broad set of highly attractive although financially manageable incentives to engage the different biomedical innovative companies including academic networks. the policies can and should be able to take into consideration the view of the costs and risks of this and also the cost and risk of developing and introducing and supporting the products worldwide and how those risks are different for different state coders and the incentives to address the different stakeholder perspectives. i would like to talk a little bit about the exclusivity. we've heard different perspectives on the topic. as the companies undertake its own in depth analysis of the different incentive proposals for antibiotic r&d it is apparent that many existing proposals only offer marginally valuations. in addition to being a physician

i serve on the committee of the pharmaceutical business and i balance the difficult choices we have to make about is ebola and drug-resistant tuberculosis, cancer and more public health question and is it financially feasible to balance our research in this area. spending almost $5 billion annually on research and pharmaceuticals and these decisions are not easy and often have timeframe is a ten to 15 years. thinking about the exclusivity, the notion of exclusivity that can be applied towards another product, not only gives the investments to be made in very high-risk areas, but also this incentivize activities that might otherwise undermine both the public-health stewardship and the protection of the products and assets against emerging and developing antibiotic resistance to encourage appropriate use. the bottom line to the proposals as we believe we have to have more basic research, more discovery, biotechnical startup's and academic

partnerships, more companies companies investing in the in-house facilities to recognize and to take up new assets and to conduct the expensive research necessary to deliver and develop the products in the marketplace. in conclusion we welcome the changes in the public policy to stimulate the new antibodies and thank you very much for your time today. >> we now recognize mr. anderson >> good morning mr. chair. thank you for inviting me to testify today. i'm a professor at boston university and serve on the centers for disease control prevention and resistance working group. at the institute for international visiting fellow my remarks today are my own but the work that we've been doing the past year is focused on the linkage. i think today we need to focus and act decisively because the business model for antibiotics is broken. not only for antibiotics but other things that treat and prevent diseases such as

diagnostics and other devices. so i have a couple of slides to look at the business model and this is based on the study stunned study stunned by the eastern research group by which i was a part for the department of health and human services. the first slide no one in the committee needs to see this. we know this is a huge problem. the number of deaths on the assessment was 37,000 per year. it's a huge problem. let's look at the business model. we are looking at the present value from the private perspective. this is a company looking to make a decision about whether to invest in a molecule in an early stage. this is a typical decision tree that tries to analyze what is the chance of failure at each stage and how much it will cost to advance. every company uses a model like

this. everyone might use slightly different assumptions and members and this is a typical thing done in industry affect in england right now the office of health economic there's another study almost completed that comes out with much gloomier numbers then we present here today. the first thing we looked at is the six bacteria were indications. it's hard to read and i'm sorry for that. what you need to see is that the companies were hoping for 100 million-dollar net present value that was the money they would get in return and you see here that for several of these indications they have a negative net present value they are going to lose money after they build built a factory to make this drug and for others there was a positive one but nowhere near the threshold that was necessary for the companies to move

forward. the 90% interval for every single indication that confidence interval included a negative number so it's difficult for companies to commit to research programs in that sort of space. the second thing is that social net value. how valuable are the drugs to society? we didn't have speculative numbers, we didn't look at the effect of reducing resistance and we didn't model how it would keep us all working, the kind of ancillary effects but just the direct cost and the numbers we came up with were huge. these numbers are in the billions. so the social net present value was the two orders of magnitude higher. several million dollars for several of these drugs. in other words, society would be having -- would be getting a tremendous bargain if it was able to procure one of the drugs

for even a fraction of that amount. as a comparison, ie compared for each of the six indications the social and the private. if you look carefully, you can't even see the private on the same scale because it is in blue. it's so small it's almost impossible to see. there is a huge gap. so, i did this one and try to stretch it off across the slide. what i did here is truncated everything at 100 million. those bars would literally go up another 15 feet on the wall if i am out of them and that is the gap between the social into the private value. it's another way of saying that we are tremendously under reimbursing for the antibiotics. we also looked at incentives and given that i have 30 seconds, i will get down to the key chart in which we modeled which incentives could be changed in order to solve this on hundred

million dollar benchmark. we looked at every incentive ever published and then put them in the different categories. the short answer is that if you do something that affects the cost of capital, it has to be fairly significant in order for it to work. so if we have to we have to draw the funding it better be significant in order to kick and. something on the range of a billion dollars for the module molecule. yesterday's proposal from the president from 800 million they are hoping for more. i think it is a reasonable number. things that don't seem to work based on the model we even had unlimited perpetual's that still didn't get the companies anywhere near the 100 million-dollar threshold. to reduce the clinical trial times you would have to reduce it by 75%. so, at apt could be useful to ring the new drug to market for

the people who need it today. but it shouldn't be viewed as a powerful economic incentive for a company early to decide now is the moment to greenlight this drug. it doesn't have that sort of effect. what the companies need is money, not the promises of early approval. thank you. >> the chair thanks the gentleman and recognizes for five minutes for an opening statement. >> mr. chairman, i would like to think you added the ranking member for the opportunity to be here today. i directed the medical device food program at the pew charitable trust. we are an independent research organization with a long-standing focus on the urgent need for new antibiotics. as you've already heard some of the pipeline of the antibiotics as a potential public health tries health crisis and everyone of us will need those in our lifetime and already probably know somebody that had a

resistance to infection. children and seniors are particularly vulnerable. as the members of the military one third of those injured in iraq and afghanistan came back with an infection. some of them resistant to almost all of the drugs and among the broader population, 23,000 americans die every year from a system to infections. for the the company has a response requires infection prevention and surveillance and reducing the unnecessary use of the better diagnostics. but my focus today is the steps to reinvigorate the pipeline. the state of the pipeline is not good and included in my statements and 38 drugs antibiotics now in clinical testing. five of them them and advanced development have some potential to treat a negative switch are probably the most serious and immediate threat. that may sound encouraging but let's recognize based on the general trends come about 80% of those won't reach market and will fail because of reasons of toxicity or lack of effectiveness. very few of the drugs now in

development have novel mechanisms of action that would significantly delay the onset of resistance. so what can be done? passing the act the committee has already taken a leadership role and getting introduced in the extended market exclusivity for antibiotics gives companies a better chance of a positive return on investment and also ensures swift review of the drugs. that was an important first step and more is needed especially for those that are the hardest to treat. it trials of antibiotics are hard because only a small portion of the population would say pneumonia has a resistance bug at any given time suitable to dress the challenges a long list of bipartisan cosponsors have introduced the adapt act. at apt would create an fda approval path for antibiotics to treat patients with few or no other options. it's also limited population

antibacterial drugs with the public health goal and help streamline development. so what may make it concrete with the different scenarios. it's they range up to real pneumonia some treated in some resistance. when fda approves it has to consider that universal people who might get it. some of them have lots of treatment options and won't be willing to accept the greater uncertainty. now a second drug which is the l. pad is caused by a resistant organism. the patient with this infection would die if they don't take drugs be for the benefit might be greater against the uncertainty command of the fda making the benefit risk calculation only for patients like our patient can accept less data and approving the drug. that reduces the development cost. to be clear this doesn't change the standard of approval. it targets the specific population that's different than the general population.

for l. pad it to work as intended, providers have to know and understand the drug is approved for the population based on limited data. the drugs special status has to be clearly communicated in drug labeling and any marketing materials. to that concept, pew has worked with the infectious disease society can antibiotics per file, drug companies, health insurers, the fta and others into the legislation has the support of numerous and diverse stakeholders. yesterday the president's council of advisors on the science and technology also called for the subsequent. this committee has long understood the antibiotic resistance and has done much to bring into the national stage and we appreciate the leadership and continued commitment. what we conclude with the observation that we face. many problems and many diseases that seem intractable, this is not one of them. bacterial infection is a solvable problem. in the heyday of the drugs that have effectively conquered the bacterial illness for a time,

and we can get back there if we commit and ensure that we do it again. thank you. and i welcome your questions. >> the chair now recognizes doctor powers for five minutes for an opening statement. >> thank you very much mr. chairman. thank you for inviting me to testify. i am a practicing internal medicine physician and medical researcher that actively cares for patients. i was a scientist for almost a decade and a cochair of the task force on antimicrobial resistance and i'm a member of the who advisory group on antimicrobial resistance speaking on behalf of the national physicians alliance. npa is a professional home to physicians and more than 40 specialties. we share a commitment to patient centered healthcare, evidence-based policy and integrity. we do not accept pharmaceutical company funding. we believe in the advancement of knowledge to research that is free of financial conflicts of

interest, financial and peer-reviewed. the task force was established to support the work and defense of a strong scientifically rigorous fda. as numbers of the committee pointed out, studies of infectious disease when there were no effective therapies for the first used for the trials that are a part of wall today. investigators in the have congress realized appropriate methods are critical to separate the harmful from the helpful for patients. the problems of antibiotic resistance in the responses to it are also not new. the doctor in the recent book the antibiotic era recounts during the rise of the infections of the 1950s, drug companies marketed numerous ineffective antibiotics based on supposedly superiority in the test. doctor maxwell the first president of the infectious disease society of america with other infectious disease clinicians pointed out the need for adequate well-controlled studies have patients and said properly conducted clinical studies may support the claims and justify the enthusiasm for these antimicrobial agents but it is incumbent upon those of us intimately concerned in the welfare of our patients to wait

until the data is presented before we accept any agent or recommend them for general review. in 1962 doctor finland made the same planes that resulted in adding the the requirement for effectiveness for new drugs based on evidence from adequate well-controlled studies showing that like other drugs antibiotics effectiveness can't be consumed a summer tests come animal studies or mathematical modeling but can only be verified by studies that ask the right questions with the right outcomes and patient who might benefit from experimental drugs. the problem of antibiotic resistance today is the same as it was in the years past. a medical need exists with no effective therapies. the need for treatment is for treatment of improved effectiveness compared to older treatments on the outcomes of decreasing death or irreversible disability. not alternative outcomes. the program described focuses on this addition of these outcomes. the drug market and life savings should actually be shown to save lives and adequately

well-controlled studies using appropriate diagnostics such as those we discussed this morning and advocated in yesterday's report. to select the patient that would receive added benefit from those drugs and susceptibility criteria should be based on patient outcomes, not mathematical modeling from the sources without conflict of interest. drugs that are highly effective in a few patients to show those effects and adequate well-controlled studies therefore the sample size is related to how effective the drug actually is. it is ethically questionable to expose patients to have any current effective options to the most effective treatment in order to have a robust pipeline of or economic stimulus to companies. it is invalid to test the drugs and patients in the susceptible organisms and assume effectiveness in older patients with disease resistant pathogens based on assumptions from the modeling of individual anecdotes. ..

fda labeling should reflect the benefits of types of patients benefit, clinicians should select those patients and information used as the basis for approval. telling commissions the drug has not been studied probably does not help. our written testimony provides our plan for a comprehensive approach to development were disease prevention, stewardship and reimbursement strategies in line with recommendations from the pcast report released

yesterday. we as physicians to agree with today when he said clinical investigators and authors of medical and scientific publications have the duty to protect the medical profession and the public against the abuse of eliminate scientific information and against improper and richer exploitation of conclusions based on inadequate data. thank you very much for the opportunity to testify. >> the chair thanks the gentleman, thanks all the presenters for their testimony. we will begin questioning and i will recognize oneself five minutes for that purpose. dr. thomas, you mentioned in your testimony that a multi-pronged strategy is needed that includes both stewardship and antibiotic innovation incentives. these you think about the path to cure as being three faces, discovery, development, and delivery, do you believe that we need incentives in all three phases to have an effective

incentive strategy? >> thank you for the question, mr. chairman, yesterday. because i think often the players or the stakeholders were conducting that research at those different stages are different. what it instead of ice is academic or biotech startup might be different for instant fires of multinational corporations, johnson and johnson different organizations that are involved in health care delivery. one incented is not, since we've seen since the incentives introduced, we still have an empty pipeline. one incented will not solve the problem. it may well be that larg larger grants or so-called prizes will attract academic researchers and startups get a very different incented needs to encourage venture capitalists to go and back start companies with a higher level of risk. johnson & johnson, we look up a portfolio of investment opportunities to understand which of those is most important medically, but also which is

widely able to be conducted and finally which enables us to bounce our risk and our return. >> all right. let's look at each phase. first of all, what types of discovery or are in the incentives do you believe would encourage companies to develop -- r&d -- to develop new antibiotics. >> look at the discovery incentives not just her and her buttocks but for all animatics and adjacent technology. it is critical we focus on point of care diagnostics, new capabilities be able to diagnose and also to advance clinical research in this field. this endeavor, this is where larger grants, funding, prices would make the most sense because that will encourage broad-based academic research as well as broad-based technology company research that's often shorter in duration and is able

to diminish in a different way. as we think about the incentives for development, development and the pharmaceutical process is most expensive piece. we recently brought a new product, an indicator for multi-drug-resistant tuberculosis, 13 years of r&d and early development. we had proof of concept that was compelling and leadership agencies like fda and european medical agency in the world health organization had a conditional approval on early phases to resolve. we still have more than 15 years of clinical trials, evidence generation showing safety and effectiveness in children, showing safety and effectiveness to other drugs in the field, improving out the hope we saw in phase two studies to harry spent well over $209 today with no commercial return for siebel for

this product nor nusra should it be we're now looking at a for the 15 years of investment in the hundreds of millions more. tax credits are not enough to spur that sort of asset on a broad-based across the industry. i think for drug developers we need to make sure there's an incentive for two things. one is, how can they justify maintaining the infrastructure in house, the confidence he to understand what is a good asset and how to develop not they have one of those assets themselves. and that's critical because lightning doesn't always strike were headquarters is. lightning strikes all over and went to understand when it hits what that technology is worth. the second thing is we have to build a encourage companies to invest in a long range risk associate with a large dollars of drug development. the way to do this as not to hope that they have a certain expertise in one drug. the way to do this is to say we want as many shots on goal is of

possible bias the large players as possible so that we can see a sustainable and continual pipeline to revolve. this is where the concept of exclusivity comes in. what you're not doing is incentivizing people, saying we have to understand you to go and profit making path in some of your business and we've tried -- trade off against these activities. in the area of delivery side, this is problematic. by the nature of these with research we conduct to get products approved for at the micro the resistance, we are looking at studies. from a payments perspective that means in most countries in the world that you get price parity despite the fact your price parity is with what's on the market, with the costs that were achieved many, many years ago and may not, no longer be relevant and that's why they're usually negative. so the notion of a price premium our reimbursement incentives are attractive in that area.

i would posit, however, and use as an example our own experts and multi-drug-resistant tuberculosis but when you talk about highly resistant bugs, highly transmissible blogs, you want the drugs used only in the people who need them, only for the bugs that need and other people who understand how to treat and use those products in an appropriate way. that's not a very strong economic model to understand how your product even with the reimbursement incentives is going to be successful. it's probably a negative commercial model in most areas. >> the chair thanks the gentleman, no recognizes mr. waxman for five minutes. >> thank you, mr. chairman. last congress we passed that gain act to provide new incentives for the development of important antibiotics. and under that act, antimicrobials and antifungals intended to treat serious or life-threatening infections can

be designated as qualified infectious disease products, or q. -- q. idp, these received a priority review. that's hopeful. if they're approved they get an additional i've years of protection from generic competition. that's a strong incentive. fda has already granted q. idp designation to almost three dozen different antibiotics to companies clearly are interested in this program. major -- for today's hearing there's a need for new and biotic seeing the growing number of life-threatening pathogens. that are resistant to all or the chew and biotic. however, in your testimony, you know there's nothing in the law that requires qidp designation's the only given to antibiotics intended to treat resistant

pathogens. as result you assert that essentially every and biotic ever approved by the fda will qualify as a qidp. some of us during the fda safety and innovation act negotiations try to limit it, that designation to this antibiotics that would fulfill an unmet medical need. however, we were unsuccessful. can you tell us how many or what percentage of the qidp's are for antimicrobials entity to treat highly resistant pathogens? on their public health impacts we should be concerned about as a result of the failure to prioritize drugs to resistant pathogens, and how can we better incentivize the development of the drugs we most need? >> thank you for your question. the definition of qualified product is built on the previous definition of a qualified

pathogen, and that list does not require any of the pathogens to be resistant. it includes most species known to cause any disease in human. that was done because it's difficult sometimes in these trials to run them are historically have been done to run them on people only with resistant pathogens. so you are correct in saying that the qualified infectious disease product will apply probably to every antibiotic that will be approved in the next decade or two. which is a question about whether the incentives are properly targeted. on the incidents themselves when i talk to companies privately, ma large countries as well as small they all say that incentives in game with the correct direction but there's a quiet walk when what we should be doing is running. that the economic value to them of these incidents is really very small. they will take them and

register, but it's 1% of the way to where we need to go to change the economic model. it's a small change and we should be doing something about it. >> tell us how to change the economic model. you talked about that. how much do we have to keep giving in order to give the right incentives? and we have to know how much this is going to cost the american people and whether it's going to be successful spent to use of the three steps, stages the chairman mentioned, on the discover side our budgets need to be dramatically increased. we need basic science. it was in the pcast report yesterday. >> and we've been cutting back on that. >> it has been flat line or slightly negative to the best of my knowledge. on antibacterial research, nih. the second piece on developing, i think tax credits are a piece of that. i think barnett is a huge piece of the. some of the best brand negative malik is not have a lot of money

in them -- >> we want to shorten the time that fda to get this review done as quick as possible to get the drug out there. we want to help companies decide if it's in their economic interest to do this. what do we need to do a? >> the last pieces one that was delivered to the public and i would agree with dr. thomas there's a reimbursement problem. i don't particularly like the solution. at the chatham house work were looking at the linkage which is using the companies will be generously rewarded on something that has nothing to do with molly. i think everyone would agree we don't want but i $100,000 prize on a drug into the company a reason to over promote it. so there needs to be significant price type or bardic rant type reward for companies -- barda,

which is what glaxosmithkline has suggested. to give significant rewards to the companies after they delivered a drug to the market. >> i would suggest that we may be better off with much more money in biomedical research at nih at the universities around the country. because they don't have the profit motive and what they do helps the companies because science use for these products, but if the governments are having too difficult a time without if incentives to make a lot of money, let's make sure we get the work being done at the public expense because otherwise we're going to be a lot of money and we may not see the results that we need. do you agree the? >> i completely agree. if we do not have enough basic science, the pipeline that flows to venture capital and into the larger companies runs dry.

>> i.t. thank you, mr. chairman. >> chair recognizes the gentleman from georgia, dr. gingrey. >> that was a very interesting line of questioning from the distinguished ranking member of the committee. and your response was not unexpected, but there is something to say for the profit motive as well. you get more and more and more money, taxpayer money to nih or whatever the basic research is being done and you don't have this profit motive you're talking about in the wrong instead of misguided incentive. but if you don't have somebody with a profit motive, a pharmaceutical company, big or small, you can sit there doing basic research for 100 years,

and maybe some brilliant scientist, many of them could be very comfortable in their labs, you know, and joy that fairly well. i think i would. but you never really get to where you need to be in regard to drugs that treat patients that q. are these -- that q. are these terrible bugs that are killing them. so i'm going to shift my question to doctor murray as president of the american society of infectious diseases to basically ask you the same question, dr. murray. the business model by antibiotics, diagnostic and vaccines is broken. i think we will all sort of agree with that. that's what we learned this morning, this rather long to panel hearing, but it's been good. but it's a broken model. what specific steps do you think

congress should take to address this crisis works do you agree with mr. outterson, or do you agree with mr. waxman? what do you think? >> well, i could take dr. woodcock's approach is that i'm not an economist, but i will try to address that. i think basic research input is an important component. i am biased. 90 basic research in my in the laboratory but i agree also there has to be a reward at the end. the suggestion i've heard from others, and they're not my own, including taking certain drugs out of the drg so they're not part of the total hospital budget which means everybody is trying to attack on antibiotics as one place to decrease costs. that, the other model is buying up a certain number of doses at the end of a product so it is, there bought up, i think that's what you meant by the insurance model. so you hope you never have to use them. they would be there but it

guarantees the industry some return on their dollar. so those are the to come in addition in the development phase the tax credit but at the end product, i mean, i've heard it for many years there has to be, the interest, the answer to talks -- consular, the answer to stockholders, they don't answer to taxpayers. tom pernice cannot just be motivated by the greater good. >> it's kind of like when we talk on this committee about energy. the energy policy we should have have, and all of the above policy is the one that i like the best. and i think really in regard to this. because as mr. waxman said, talking about tax credits. you're talking about what you just said, dr. murray, buying back a certain volume that's not

used because you don't want to just incentivize based on sales. and more grants to the nih. all of the above really. i think that's what got to look at it. i've got a less than a minute left and want to shift to dr. hillan. you mentioned in your testimony that half of the investment costs necessary to support your drug -- will be required. half of investment costs necessary to support it, that drug come will be required after the point of united states regulatory approval. what drives the cost of these investments post fda approval? >> it's a big -- what's the big cost drivers? >> i'm not sure what you mean but i am certainly happy to answer. there's an ongoing process after

drug is approved so you actually understand the significance of use of the product in the real world. there are additional pediatric studies which are important, we believe -- >> let me shift just, i've got no time left but trying to come if you'll bear with me because i really -- and think you dr. hillan. i really wanted to address this question to dr. thomas. so if you could quickly respond, mr. chairman, if you'll bear with me. >> sure, and thank you for the question. getting approval is a start of a long process of paying for regulatory approval all over the world on a sequential basis of maybe over 100 countries. there's completion of commitments, unknown questions about basically that is 15 years of pediatric research. so if antibiotics that sometimes, started in a 15 year-old, proving that, drug safety reporting requirements.

when you have a commercial product these are all cost of doing business. we have a product with the aim is not to use it unless your absolute have to, it's just a tremendous overhead that you can't really get out of the way. it's the right thing to do and the way we do it today, but it's significant overhead. >> and i think both of you for your response to the question. thank you very much, mr. chairman to i yield back. >> the chair thanks the gentleman and now recognizes ranking member, mr. pallone. >> mr. pallone, would you yield me one minute? >> surely. >> i think you for yielding. i would want anyone to believe that we thought you don't need a profit. you don't need a private enterprise, and to argue we need to put much more in the research of scientific. but we do need a business model that system the company, if you do this work, you're going to make a profit. you've got to make a profit otherwise they're not going to do it. had to make a profit we don't

want them to sell more antibiotics. we want to be sure they get a profit so that we want to guarantee -- we could take their investment, guarantee a certain percentage and say that's a much the government will pay you. that's what i did. i don't think it's the only ideas but it's a different kind of incentive that we have in other areas. i thought dr. gingrey was right when he said all of the above. we've got to do everything we can under the a lot more public investment. because the pharmaceutical industry will not make a lot of investment in this area when the research investments can be result in a blockbuster drug. this is a social need and they've got to do what we need them to do but they're not going to do it without making a profit. so thank you for getting the chance to add an additional thought. >> thank you. thank you, mr. waxman. i wanted to ask dr. murray and

mr. coukell, i know that you have worked very closely with the adopters of the death act and are strong supporters but i like to get your views on a few aspect of this legislation. first unconcern is truly drafted fda may not have adequate authority to require an untapped antibiotic labeling the way the calls attention to the fact that it's intended only for special populations. i don't think in clean secretary of state in the prescribing information is adequate and i'm concerned if those drugs are used more widely at appropriate that we could in that both harming patients and losing the effectiveness of the drugs to antibiotic resistance. what are your views about the accuracy of the language in the bill? do you agree it's critical to be a strong and prominent labeling statement to settle to find they should use the drug only in circumscribe situations? i guess we could start with dr. murray and then go to mr. coukell. >> i think it is important to have some label there.

in a practical sense what we do in the hospital to prevent overuse of certain drugs is we already have stewardship in place. in our county hospital, whatever reason have to go through an infectious disease approval. that's already in place. another thing we sometimes do is we don't report on the chart of the report that goes to the patient's chart, the susceptibility certain antibiotics. if you're in infectious diseases or are smart enough to know what's going on you know to call the laboratory and ask for that so the doctors that are caring for this multi-drug-resistant infections know to do that. usually is done because there's certain combinations that even though the antibiotic is susceptible you wouldn't use it alone. the third way with electronic records that might be possible that i was speaking about last night was that when this drug is written for there's an automatic pop-up. with all sorts of automatic

pop-ups now an automatic pop-up could say this has been approved in a limited population. i think in many ways that may not be as much of a problem as people are imagining. these infections occur in -- their complicated. infectious disease physicians are usually involved in these patients. for someone to try to use this drug or a special drug that has been approved in this fashion for an ordinary e. coli infection it is not a need to do that. the companies are not going to be able to be out there marketing for the purpose. fta will be overseeing what goes into the promotional materials. so not sure the ordinary physician -- certainly the one in the community will never think about thinking about using a. i think there's some inherent safeguards. >> mr. coukell, did you want to respond to? >> let me build on what dr. murray has said. we worked closely on this bill and we think this is the one place we really would like to

see some improvements. it's so important that we convey to the provider community the special status and nature of these drugs and let's recognize the labeling is not just effective when somebody goes and looks at the fine print of the labeling is the start of the process of how information about the drug is promulgated into the committee for the medical records, marketing materials and so on. we have called for a local dentist in which these drugs. there may be other ways. as long as it is clear these drugs are different but that's part of what congress is doing by creating this designation. >> all right, thanks a lot. >> one more point. the other thing in the bill we think is important, they need to monitor how the drugs are used when they're out there so we have feedback and we know the indication is working as intended. >> all right, thanks. >> the chair thanks the gentleman and now recognizes the gentleman in illinois, mr. shimkus. >> thank you, mr. chairman. this is make a menacing and i'm glad i stayed but i think you see the importance that the

subcommittee puts on these issues. you all on the panel turn around and just, turn around and see dr. woodcock is right there. wave to her. i want to make sure everyone knows she state and i applaud her for doing that. it's a silly question but it's really, would you consider you all facebook friends with the fda, or in a relationship? [laughter] >> anyone want to answer? are your friends? or are you not have a friend notification out there and they didn't accept? >> maybe i can speak to that because obviously it's important that pharmaceutical industry is regulated by the fda both in terms of drugs and also in diagnostics. i don't know if we call ourselves friends but we are professional colleagues that work together. we have had -- >> the point is, i mean, the point is this can only get solved with the people in this room. it gets solved with you, the

panel. it gets solved with the fda and it did solve with the policy, public policy folks here. so we have to have that communication. we have to be in a relationship. that's what i'm taking from this. a lot of ideas. i couldn't believe it, i was also looking at stuff. the pentagon was a groundbreaking with september 11, 1941. the dedication was january 15, 1943. so on this issue these are timelines. 13 years to get to one point, 15 years still down the road. we've got, we've got to squish those timelines. there's people who are willing to accept some risk. as we've heard in numerous testimonies on this 21st century cures debate, and had we do that effectively. the question i have by listening to the testimony is, government

is historically bureaucratic and not flexible and we are very rigid. but in this process, you're the expert, you're the doctor, you want the scientists and stuff, can there be -- how do we ride -- right into legislation the flexibility to incentivize while protecting public health? and can we do that? then that's where we are going to move on legislatively. am i right in that analysis, and do you think we can get the? i only have two minutes left so why do we just go down and that everybody went into that if you would like. >> so it has to be done properly but much of this is about building trust. we are working towards the same goal of bringing pharmaceutical and bionics -- animatics to patient there but interact with the fda and they have facilitated the development of -- they came up with good ideas

com,totally appropriate ideas. the company hadn't thought about barda has broad expertise to the table as well. so we can work effectively together and we're all working toward the same goal. i would hope we can continue to do that in future and it does need to be flexible. we need to trust people to use good judgment so we can always cast our patients. >> i think one of the benefits of the pcast report and the new structure that they would be, include external stakeholders, be included. and i certainly agree with that, extra to the government and i think input is needed and that may help in keep driving the process. >> i think it's also impossible to write legislation that is flexible as well as impactful. i would also like to say that we want to be part of that discussion. we believe it does take a different way of thinking and we have to be willing to test things that may not necessary same so paula double. i want to finish this thing, it's no accident that breast

cancer is almost a curable disease today but it's no accident many bone marrow tumors are curable today but it's an accident pashtun is because of incentives for everyone are anything in those areas but if you don't just get accident we need to design the right incentives. >> we need billion dollar incentives hanging out there for companies. big incentives, not little. it's hard to write what you will need in 10 years ago into legislation we don't know what the disease is exactly look like. barda is a wonderful model. one of the most encouraging things i took from yesterday from pcast was a significant additional funding being proposed for barda because they can contract given flexibility based on what's happening now. the only other person is not in this room are appears to some like to see blue cross blue should come in to campus, medicare, this is a pay-for-performance, pay for value issue. pay more to keep it viable.

>> there's no single solution to the are things that congress can do nothing to quickly and should do. there are places where there needs to be continued collaboration. i think we've seen that with fda incompetence stakeholders and pcast called for more of a big or important basic science questions that an industry questions or academic questions but questioned the resolve women have them effectively working together. not just with more money but with smarter science. there's no one size solution but the things we can do no quickly that moves us along. >> i think we talked a lot today about the history of resistance until we got to this point. and actually there's already tremendously to the bill into fda's revelations already. when you kick them out in 1970 on what inadequate study was, the pharmaceutical companies immediately sued. what went to the courts, the courts actually found the regulations allow tremendous flexibility for fda and that the studies can be designed. i think what we are trying to

say this morning, and doctor brought this point up several times is these studies should show added value for patients, that was what we're trying to say is if we're going to get perks for companies that have to be perks for performance, not perks for potential. the studies should show as doctor who pointed out, but the drugs save lives and the people we need to use them in. >> thank you. i want to end on this -- >> that i had want additional comment speak with yes, you may. >> thank you very much. would get back to the point of barda being a good model and that is a wonderful model. they could serve the parallel role of helping to develop drugs for things that barda is not currently applicable to and they haven't antibiotic leadership group whose task is to design trouser antibiotic resistance organisms but i think the barda model is a good one. it doesn't message of have to be barda that would carry it out. >> i appreciate that. the last comment.

always say that these companies, i really, mr. waxman just -- it's not perks. these guys raise capital, assume risk to try to save lives, employ thousands of people and pay taxes. so they are the ones who are raising the capital and assuming a risk. if we go down the route of trying to beat up corporate america in this process, we're not going to be friends. we will be befriended and again. we've got to be all in this together. and without i yield back. >> the chair thanks the gentleman. the gentleman from georgia want to make a point of litigation. >> mr. chairman, thank you. i don't disagree, i do agree with the comments of my colleague, the gentleman from illinois, mr. shimkus in what he just said. but also doctor powell, let you

know that the concerns that you expressed in your testimony -- dr. powers, are not lost on me. i don't think other members of the committee, and also the ranking member of this house subcommittee, mr. pallone, his concerns about labeling. that's not lost on me either. and staff is working almost as we speak on the issue, frank, to try to that right and to lay those concerns. mr. chairman, this has been fabulous. you all are great, both panels. dr. woodcock, we are so grateful to you, and i like the other members who stayed over and didn't get that early flight back to atlanta. i'm grateful that i say because this has been most informative and we are deeply appreciative. thank you very much. >> the chair thanks the gentleman. i would like to say it's good to hear the collaboration that is occurring between the public and

private sectors. and that is so important. and i might mention, dr. woodcock has been before this committee many times, and she is one administrator that always stays through the whole thing, and you should be commended for that. we thank you for your responsiveness. now, other members will have questions and without follow-up questions. we will send a those to you. we ask that you please respond promptly. i remind members that they have 10 business days to soviet questions for the record. that means they should submit their questions by the close of business on friday, october 3. very good hearing, exciting, very informative. thank you very much for your participation. without objection this subcommittee is adjourned. [inaudible conversations]

>> you can watch this and i hearing again anytime on our website, c-span.org. we have coverage of governors debates tonight. live at 8 p.m. eastern into arkansas, democrat mike ross and former republican senator asa hutchinson will square off. you can see that on a companion network c-span. here's some recent ads those two candidates have put out. >> the democrat gazette said the attacks on mike ross are not true and they spent on his family business. there was never a justice department investigation of house ethics committee approved the sale. so what is hutchinson attacking his family for billing the small town business into a success was due to the fact that he got

caught cheating on his taxes. and the fact that jenson was a d.c. lobbyist who is a record putting millionaires before arkansas' middle-class. sorry, this cover-up will not work. >> for our schools, a choice for governor. there's asa hutchinson. he voted to cut college loans and preach a programs and he opposes mike ross' plan to expand free gay. -- pre-k. and preach a plan that works for arkansas. arkansas. >> a focus on training and college opportunities. >> i know mike -- my kids love it takes get it. >> that's why teachers have endorsed mike ross for education. >> have you seen this latest smear campaign? here's what they don't want you to know. asa hutchinson not a mistake in his taxes and reported the mistakes himself. many of us have made mistakes on

taxes. he was honest enough to admit it. but that doesn't stop team obama. they hope it works for mike ross as well. arkansas knows better. >> it's a $16 billion industry and arkansas' largest. with 90 some% of our farms family-owned, our next governor must fight on their side. when some criticize free trade, it only hurts our farmers. whether its rice, wheat or poultry, i want to keep arkansas business open to the world. it's the best way to grow our economy and create jobs. i am asa hutchinson. as governor we will hit the ground running and never looked back. >> also tonight at 10 p.m. eastern the first debate in the texas governor's race. it takes place in the rio grande valley seeking state senator wendy davis, a democrat, and republican dave addict.

that will also be on our companion network c-span. -- greg abbott. eurohere are some campaign ads running in texas. >> when you're battling cancer you pray for a cure. greg abbott did his best to keep my prayers funding answered. greg abbott was charged with overseeing the state cancer research fund but he let his wealthiest donors take tens of millions of taxpayer dollars without proper oversight. >> i pray greg abbott never becomes our governor. >> new allegations against texas democratic governor candidate wendy davis. a recent investigation finds democratic candidate wendy davis didn't always recuse herself when the city was considering projects that affected our business interests. >> in one instance she voted for

21.5 million in tax breaks for whole to developers who use for title insurance company in building the building. >> every week businesses leave california to escape high taxes and strangling regulation. they come to texas because we keep taxes low and regulations reasonable. i'm greg abbott. my job plan will build on the. he will unleash all and gas industry and keep taxes low so small business can grow. grow. together can we will keep texas number one in jobs. >> in a texas courtroom greg abbott made the case against our children. he thought for $5 billion in cuts to education made by his insider buddies, and now he is proposing giving standardized tests to four year olds. heard enough? wendy davis, she will reduce the

number of standardized test our kids take across the border chilcot report a waste and davis will use education to build an economy for all hard-working texans. you decide. who will be best for texas. >> on wednesday the house veterans' affairs committee held a hearing analyzing the finding of the inspector general's final report on the phoenix va health care system. the investigation identified 40 patients who died while awaiting up limits in phoenix have found that there was no conclusive link between delays in care and veteran deaths. veterans affairs secretary robert mcdonald and phoenix va health care system officials also testified.

>> [inaudible conversations] >> good afternoon. this ring will come to order. i think everybody for attending this hearing which will examine the oig report on the phoenix issue. i would also like to ask unanimous consent, he is not here yet, but that our colleague david schweikert from arizona be allowed to join us here to address this issue. without objection, so ordered. also members, we do have a series of votes that will start at 1:00. i apologize for that. this hearing was moved from its original schedule time because of the joint session of congress to th the president of the ukra. what we will do is immediately after the final vote move back as quickly as you can. we will resell him the hearing as quickly as we possibly can --

resume the hearing. so we do not keep the witnesses waiting any longer than absolutely necessary. on the 26 of august, the office of inspector general released its final report on the phoenix va health care system, which vaulted to national attention after our hearing on april the oig confirmed that 9. inappropriate scheduling practices are a nationwide systemic problem and found that access barriers adversely affected the quality of care for veterans at the phoenix va medical center. based on the large number of va employees who were found to have used scheduling practices contrary to veterans health administration policy, the oig has opened investigations at 93 va medical facilities, and it found over 3400 veterans who may have experienced delays in care from wait list manipulation at the phoenix va medical center

alone. the oig concluded by providing the va with 24 recommendations for improvement to avoid these problems from recurring. these recommendations should be implemented immediately, and this committee will work tirelessly to ensure that they are. mr. griffin, i commend you and your team for your work and continued oversight on these issues in the months ahead. with that said, and as we've discussed, i am discouraged and concerned the matter with which the oig report, the final report, was released, along with some of the statements contained within it. notably, prior to the release of the report, selective information was leaked to the media, apparently by a source

internal to va, which purposely misled the public that there was no evidence at phoenix linking delays in care with veteran deaths. as the days progressed, people actually read the report, not falsehood actually became obvious. what the oig actually reported, and what will be the subject of much discussion today, is this statement by the oig. we are unable to conclusively assert that the absence of timely quality care caused the deaths of these veterans. what is most concerning about this statement is the fact that no one who dies while waiting for care would have delay in care listed as the cause of death, since a delay in care is not a medical condition. following the release of this report, which found pervasive problems at the facility regarding delays in care and poor quality of care, committee

staff was briefed by the oig regarding its findings and how specific language was chosen throughout the drafting process. prior to this meeting, we requested that the oig provide us with the draft of the report in the form it was originally provided to va three weeks before the release of the final report. after initially expressing reservations, the oig provided us with the draft. what we found was that the statement i just quoted was not in the draft report at all. another discrepancy we found between the draft and final reports arose with statements to the effect that one of the whistleblowers here today did not provide a list of 40 veterans who had died while on waiting lists at the phoenix va medical center. first, the oig stated in the briefing to committee staff that va inquired why such a statement was not in the report, and the oig ultimately chose to include

it. further, additional information provided by the oig to committee staff shows that, based on the numerous lists provided by all sources throughout the investigation, the oig in fact accounted for 44 deaths on the electronic wait list alone, and an astonishing 293 total veteran deaths on all of the lists provided from multiple sources throughout this review. to be clear, it was not and is not my intention to offend the inspector general and the hard-working investigators he employs. however, i would be remiss in my duty to conduct rigorous oversight of the department of veterans affairs if i did not ask these questions. i would also like to point out that no one within the department, or any other federal government employee, including the members of this committee,

is beyond having the records scrutinized. as such, the committee will continue to ask the questions that need to be asked in order to perform our constitutional duty. it is absolutely imperative that the oig's independence and integrity in its investigations be preserved. full and transparent hearings like this one will help ensure that remains the case. with that i now turn to the ranking member, mr. michaud, for his opening statement. thank you very much, mr. chairman for having is the important hearing. i would like to thank all the panelists for coming today as well. today's hearing provides the opportunity to examine the va inspector general's final report on the patient wait times and scheduling practices within the phoenix va health care system. this report did not state a direct causal relationship between long patient wait times and veteran deaths. for some, that is a major concern, and accusations of undue influence by the va on the

ig report will be discussed at length today. what the ig did find is that the cases included in this report clearly show there were serious lapses in va's follow-up, coordination, quality, and continuity of health care to veterans. they also concluded that the inappropriate scheduling practices demonstrated in phoenix are a nationwide systemic problem. i do not need any more evidence or analysis. there is no doubt in my mind that veterans were harmed by the scheduling practices and culture at the phoenix facility and across the nation. the bottom line is this behavior, and its detrimental effect on veterans, is simply not acceptable. my heart goes out to the families of the veterans who did not receive the health care they deserved in phoenix and around the country. rest assured, we will understand

what went wrong, fix it, and hold those responsible for these failures accountable. as such, my questions to the va today is straightforward, what went wrong, what are you doing to fix the problem, how will you ensure that this never happens again, and how are you holding those responsible accountable? i applaud secretary mcdonald for taking forceful action to begin to address the systemic failures demonstrated in phoenix. we need serious, deep and broad reform, the kind of change that may be uncomfortable for some in va, but so desperately needed by america's veterans. i believe that such reform must be guided by a higher-level national veterans strategy that outlines a clear vision of what america owes its veterans, and a set of tangible outcomes that every component of american

society can align and work towards. earlier this week, i sent a letter to president obama asking him to establish a working group to engage all relevant members of society in drafting this national veterans strategy. we know from experience that va cannot do it alone. we must develop a well-defined idea of how the entire country government, industry, non-profits, foundations, communities and individuals will meet its obligation to veterans. va needs to become a veteran-focused, customer service organization. it needs to be realigned to become an integrated organization. it should do what it does best, and partner for the rest. it needs to be the government model for honesty, integrity, and discipline. we need to complete our investigation of the problems, and provide oversight on the

solutions. i look forward to today's additional testimony about what happened in phoenix, and how the va is working to ensure it never happens again. so once again, trying to i want to thank you for having this hearing at i yield back the bowels of my time. >> i would ask all members way their opening statements as customary in this committee. thank you to the witnesses that are here at the table, and those who agreed to set behind the principles. today we're going to hear testimony from acting inspector general richard griffin who is accounted by dr. john day, assistant inspector general for health care inspections, ms. linda halliday, assistant inspector general for audits and evaluation, maureen regan, counsel for the inspector general and transit, director of the kansas city office of audits for the office of inspector general. we are also going here from doctor samuel foote, former va

physician at phoenix the health care system, and doctor catherine mitchell, current whistleblower and medical director for the iraq and afghanistan post-deployment center at the phoenix va health care system. i would ask the witnesses now to please stand so that we may swear you in. if you would, raise your right hands. [witnesses were sworn in] >> and thank you. you may be seated and let the record reflect that all of the witnesses affirmed that they would, in fact, tell the truth, the whole truth and nothing but the truth. all of your complete written statements we made a part of this hearing record, and mr. griffin, you are not recognized for five minutes. >> mr. chairman, ranking member michaud, and members of the committee, thank you for the opportunity to discuss the results of inspector general's extensive work at the phoenix va

health care system. our august 26, 2014, report expands upon information previously provided in our ma may 2014 interim report, and includes the results of the reviews of the oig clinical staff of patient medical records. we initiated our review in response to allegations first reported to the oig hotline on october 24, 2013, from dr. foote, who alleged gross mismanagement of va resources, criminal misconduct by va senior hospital leadership, systemic patient safety issues, and possible wrongful deaths at phoenix. the transcript of our interview with the dr. foote has been provided to the committee, and i requested that it be included in the record. >> without objection. >> we would like to thank all

the individuals who brought forward your allegations about issues occurring at phoenix and other va medical facilities to the attention of the ig, the congress, and the nation. on august 19, 2014, the chairman of the subcommittee on oversight and investigation sent a letter to the ig requesting the original copy of our draft report prior to the a's comments, and adopted changes to the report. on september 2 a committee staff member at a summit request for a written copy of the original unaltered a draft as first provided to va on behalf of the chairman. concerns seem to come from our conclusion of the following sentence at a subsequent draft report that was not in the first

draft report we submitted to va. the sentence reads as follows. while the case reviews in this report documents poor quality of care, we are unable to conclusively assert that the absence of timely care caused the death of these veterans. this sentence was inserted for clarity to summarize the results of our clinical case reviews that were performed by our board-certified physicians, whose curricula the day are an attachment to our testimony. it replaced the sentence, the death of a veteran on a wait list does not demonstrate causality, which appeared in a prior draft, not the first draft that was requested but in a subsequent draft this change was made by the oig strickland on

her own initiative, neither the language nor the concept was suggested by anyone at va to any of my people. in the course of our many internal reviews of the content of our draft report, on july 22, almost a full week before the draft was sent to the department, one of our senior executives wrote this question. this is key, gentlemen and ladies. and i quote, did we identify any deaths that she needed to significant delays? this is on july 22. if we can't attribute any deaths to the weightless problems, we should say so and -- waitlist problem. we should say so and say why. the draft wording in the draft report was, were the deaths of many of these veterans related

to delays and care? this type of deliberation to ensure clarity continued, as it should, after the initial draft was sent to the department. in the last six years with issued more than 1700 reports. this same review and comment process has been used effectively throughout oig's history to provide the va secretary and members of congress with independent, unbiased, fact-based program reviews to correct identified deficiencies and improved va programs. these reports have served as the basis for 67 congressional oversight hearings, including 48 hearings before this committee. during these same six years, and our work has been recognized by

the ig community with 25 own words for excellence. we are scruples about her independence and take pride in the performance of our mission to ensure veterans receive the care, support and recognition they have earned through service to our country. i va secretary has acknowledged the department is in the midst of a serious crisis, and has concurred with all 24 recommendations, and has submitted acceptable corrective action plans to a recent report cannot capture the personal disappointment, frustration, and loss of faith that veterans and their family members have with the health care system that could often not respond to their physical and mental needs in a timely manner. although we did not apply the standard of determining medical