so here's the private sector given the money after arduous work to create a contemporary matter. that was one. the very day before sequestered

they announced they had lowered cancer rates in this country 12%. instead of pinning medals on people we were getting ready to hand out pink slips. i don't think that's the right way to govern. >> thank you, senator mikulski. senator isakson. >> thank you mr. chairman. this is my first time publicly to be able to acknowledge the great contribution of senator mikulski to public health in america enter service. i just want to publicly thank her for all she's done. it's a pleasure to serve with you on this committee. [inaudible] >> dr. hamburg, i don't want to be putting on but senator burr is right on target. this is a long lead up to the question and i apologize for that but it's a very important question that needs to be answered. you made a reference in your statement that some blame the lack of investment in biotechnology on the fda and you refuted that. but it is quite true that investment follows certainty and uncertainty follows regulatory

processes where industry knows where it is doing. i find it troubling the fda has so much difficulty working through the regulatory process. and last year's user the bill congress directed you to update your regulation to fix the enforcement problems that affected manufacturers and suppliers of medical gas. that was a year ago. we're still waiting on the report and something we've heard some say the resistance in the agency of doing so in issuing new regulation. instead the fda seems rely heavily and less formally on approaches such as draft guidance and untitled warning letters. these approaches do not offer legal certainty, regulatory certainty and in the case of untitled letters they fail to ensure any policies that are enforceable even among stakeholders or similar situated. last may chairman alexander, myself and members of the committee sent you a letter opposing specific questions about the agency's use of draft guidance. we received the answer 10 months later last night, 12 hours

before this hearing. and that letter you attached 172 outstanding draft guidance issues one of which goes back to 1988. how is this effective regulation and how has this affected processed? >> well, we are taking a very active look at the various guidances and what stage they are in. i think it's important understand a guidance is just that it's a guidance to inform industry about our current thinking. and the process of developing a draft guidance to a final guidance is all extremely useful in that process. the draft guidance going forward, it enables us to put forward how we are thinking about the problem and to ask some questions and get information back to further engage with all of the critical stakeholders. and it's an ongoing process. guidances are not regulations with the force of law but it helps provide especially when

there's a more dynamic issue at hand, it provides a mechanism to begin an important conversation with a broader set of stakeholders, and continued it to the final guidance. i agree with you that we should not have that many guidances in draft. i think that while the process of moving from a draft to a final guidance has value as well, having the final guidance is important and provides more certainty as we were discussing. so i hope that it won't be me coming back before you but i hope that soon we will be able to demonstrate what has been done with respect to some of those guidances that are in draft that may no longer really need to be updated into final and those where we can translate into final. this is an area where frankly we are not the only ones involved

in shaping a guidance process and the does had to go through a series of other reviews before it can be published final. but i take your point. >> one of the question that relates to the point in a different way. i'm a victim of melanoma twice. the surgeon general has issued a report that melanoma is costing america $8.1 billion a year. it's a major portion of his most recent statement that i have heard little from the fda regarding that and we work hard on the sunscreen innovation act which passed congress last to try to expedite application for ingredients to be approved for over-the-counter sunscreen products. we are still waiting for that to happen. can you tell me why the fda is so reluctant to follow through on what congress passed in the sunscreen innovation act? >> we are committed of following through and, of course, preventing melanoma is a high priority as well as developing exciting new treatments for melanoma. prevention comes first. we are committed to what was laid out in the sunscreen innovation act in terms of

responding to the identified timeline and process. we do need to work with industry to get the data we need to assess safety and effectiveness and that is of course because these products are used widely, applied often and hopefully with the right amount. they are used chronically ill need to understand about their absorption of these chemicals and what that means for safety and efficacy in the individual using them, including of course many young children who may be at greater risk in terms of chronic use. so we want to move forward. we want to have the american people have more options in terms of sunscreen products and the protection they can afford public want to work with industry to make sure that the ingredients in those sunscreens actually work and that they are safe, especially for chronic use use. >> my time is up but i would like to urge you to do everything you can to expedite

the implementation of those approvals. thank you very much. >> thank you senator isakson. i'm calling on senators in order of seniority if they were you at the time of the capital. so that's what -- senator bennet. bennet. >> conlin. thank you very much for holding this hearing, and thank you both for your leadership. dr. hamburg i'm sorry to see to which i know the chairman feels as well. i would like to ask a number of years ago call around a committee came to me and said we can't raise venture capital anymore in the united states. it's all going to europe, all going to issue. a lot of that had to do with the regulatory uncertainty at the fda. i had the opportunity in 2012 agenda to team up with senator burr and senator hatch to write legislation that now has created a pathway. under your leadership is responsible for -- a lot of people thought the only one of two drugs in the pipeline.

there have been 22 drugs approved as a result of that legislation and there are 55 more drugs in the pipeline, as i understand it. it has exceeded beyond our wildest dreams i think it's fair to say. and i want to thank you for that. as you begin to leave, and ask you to talk a little bit about the shift in the culture at the fda as result of that designation and how we're going to keep that going after you leave. >> well, first let me thank you for the work that you did on breakthrough and so many other things and for inviting me to talk to your biotech community in colorado, and i've done it in many other places as well including recently massachusetts. and those kinds of listening sessions with the medical device and pharmaceutical and biotech industries is incredibly important because we hear the concerns. we heard loud and clear early in my tenure but the issues that

predictability and consistency and we looked at her programs and delicate strengthened them. the breakthrough designation has been enormously successful as you know. were successful than we thought and it did not come with additional resources so it's an example of something we wanted to continue and extend. but it does come at a cost. the incredibly important lesson in culture change that is come with breakthrough have been confirmed by the success of breakthrough is the value of early engagement by the fda with the products to really help shape the product development and research agenda and then continuing contact. and that has really made a difference. we see it in other areas as well as we look at some of our recent approval. we can see in sort of informal analysis that when we engage early, especially pre we can help the product development process take critical time and

costs off of their product development because we can really say you don't need to do that study, but do this study, use this approach because it will get to the edges answers that will really make a difference in our approval process. i think that's been enormously exciting but it does signal changes to the future in how fda organizes itself and how we work with the broader research and industry communities. >> i hope that's right. i've heard the same thing from developers of these drugs. you're saying they feel the fda is engage with them in a much more productively than they used to. my hope is we are going to hear that around medical devices and other things going forward. one of the question. over the last few weeks we've heard about infections, even deaths that in california north carolina hospitals.

cdc director is called a nightmare bacteria, another area drug resistant bacteria has been directly affecting our wounded troops returning home from iraq. senator hatch and i as you legislation to require fda to establish new registered pathway to develop antibiotics to treat serious and life-threatening infections. the legislation -- your team is been enormously helpful in working with us on legislation. could you describe a look at how this new pathway will protect patient safety while ensuring that patients of unmet needs for antibiotics gain access to these important drugs? >> it's incredibly important as we face the were antimicrobial resistance is growing that we ensure that we have new antibiotics in the pipeline and especially new antibiotics for

infections that are resistant to the federal antibiotics. and we see increasingly outbreaks in many different settings including were antimicrobial resistance is causing a much greater in preventable burden of disease and death because we simply can't treat those infections. the pathway you're describing is an important one because if you look at an infectious organism and the disease cost it can be quite heterogeneous from much more minor infection to the antibiotic resistant, ones we're just talking about. so if you look across battle spectrum of patients who are infected you have a very different benefit cuts ocean that if you focus on the more extreme than serious life-threatening cases where there's antibiotic resistance. so if we can develop a product that is targeted to that part of

the spectrum the risk-benefit calculations and coming to a more clear focus. we know we need drugs and the risks can be higher because the benefits are higher in that context. we need to make sure that physicians using these drugs understand that they are really being approved for a limited use, a special population, and should be labeled as such and the needs the education and awareness. but it will enable i think more products to be developed more rapidly and to give to patients who need them. then we can continue to learn more about those products as they are in use and perhaps extend the indications for use but it enabled us to move much more quickly off the dime to get important proxy people increase in incidence i think for companies to get involved because they can see a pathway

that perhaps a shorter and more streamlined. >> thank you senator bennet. i have senator cassidy, white house, collins and warren are the next four senators. senator cassidy. >> dr. hamburg, one, great job. my picture you done remarkable progress so thank you for that. you recentlyyou of recently put out your fda's transparency initiative. i've tried to understand your agency but certainly don't understand the issue. there are different divisions that do different quality of work in terms of approving new applications. and intuitively there are some which have high turnover than others. i suspect those with lower turnover are the ones which have better output. now i see that as a diagnostic. frankly, i think it indicates in those divisions of high turnover and lower output there's probably some issue their that in management, leadership, you

name it that is problematic. in your transparency initiative will there be more information regarding that so we and oversight can look at that on a granular level trying to get a sense how your successor could perhaps improve those processes? >> certainly the transparency initiative was a multifaceted undertaking intended to both to expand understand what the fda is, what we do how we do it and why. but also told us accountable in critical areas of activity and really post for everyone to see the progress we are making on critical issues. you are right that different parts of the fda are functioning with somewhat different performance, respect to aspect of the work. it relates to both management and ensuring that we have consistent, high quality management and oversight. has to do with adequate

resources. >> the resources flow between the two so when division would have far more resources than the other? >> not always. >> so -- >> you were talking about -- >> i have limited time to let it go back to my point because i've a question to dr. collins. if you could make that information more available i think that would help us as would look on a granular level because that is our responsibility to provide oversight. >> just one point. the user these are often targeted to specific programs through negotiation process so those often have a bit more flexibility ad hocly more particularly in terms of resources. >> dr. collins, i'm a doctor and every dr. bennett doesn't want a gastroenterologist taking care of his cough. but that said cleared our goal is transitional research, great? >> yes. >> do you track what percent of those grants going to ph.d

result in research and those which go to indeed result in -- is there a different? >> we do track that. as you know our workforce is made up of a variety of different individual that different backgrounds. ph.d's are the majority action. in decent ndpg czars significant contributors. in general they indeed tend to be more focused on translation on critical critical effort by summer doing basic science. >> i get that. can you give us -- what percent -- put it this way. spent that taxpayer wants -- i come from academics and some people are content with writing a paper but not necessarily looking forward to translation. so when you track how much weight is given to someone success and if so it is with successful in translation perhaps not as good simply sellthrough successful in translation, how much does not wait towards their future

grants, being awarded a grant? and if you have precise statistics of like to know what percent of grants go to ndpg for indies, but it is going to ph.d succumbing are translated resulting in research and the m.d. it is a difference as you suggest it does seem as if perhaps we should wait more to the m.d. ph.d if that they're biased is towards translation speak i can to provide that data for the record. we have of course engorged translation at nih by the founding of the piston, the national center for advancing transitional sciences which is providing resources for ph.d's and m.d.s to enable the site. and might have trouble doing otherwise i themselves a we are focused on this. just a small caveat. i would say we need to be careful not to discount the value of the fundamental basic science which has been the mainstay of our success. >> i accept that but i do know

there's some that do not have the entrepreneurial kind of nextstep. >> and we can help with the. >> and i'm going to say this because i've said it before. in your test but you mentioned the great success that we've had with hiv in terms of around getting but i will point out it still seems be 10% of your budget. the alzheimer's dementia is $809 hiv is 3 billion which is 10% of budget. cbo just released and this will not show up well but our national debt which they say by 2025 will be 77% which they say is dangerous to our future. knowing that will go into pure of constrained resources because of our last six years as clay national debt, i would again push that if hiv as you mentioned a substantial address still problems that substantially and all sides, dementia is a balloon medicare and medicaid are just going to

go bankrupt dealing with this. we should start shifting more aggressively resources from that which has been addressed to that which we are confronted. just making the point once more. i yield back. >> thank you, senator cassidy. senator whitehouse. >> thank you, chairman. thank you both for being here today. rhode island is a small state and we tend to have a lot of small and entrepreneurial companies. and i'm concerned that when there is fda or other regulatory disadvantage that a company must bear to bring a product online that it's a lot hard on a small company than it does on the big ones. i noticed that in the accelerating medicine

partnership, all the participants seem to be the big manufacturers and, obviously if you're a big manufacture, and world in only which big manufacture and succeed as a goodwill because you don't face disruptive technology from little manufacturers so you'll probably not get a lot of objection from the big manufacturers. how do you push back against the incentive of big manufacturers to squeeze a little ones and make sure the little manufacturers get the attention that they need and are included in these types of processes and our help to your process quick since i mentioned the accelerate partnership, let me start with you dr. collins, and then ask dr. hamburg to jumping. >> we are very much in support of the idea that all the partners in this ecosystem meet the force of the public and the private. and aims to try to do that by making all of the data

immediately accessible to everybody including the small biotech companies. they get to see. this is a rather unprecedented kind of partnership, and recognize that the farmers taking part, 10 countries, are paying for half of the cost of the research. the $239 over five years, half of it from nih, half of the from companies all sitting around the same double -- table. so should our everybody on what we learned through this process and making the data accessible to be the only way to nih to go see this is something we could support. the companies have gone along with it which is really quite impressive on their part. in terms of other things with a very vigorous small business program that supports a lot of startup biotech companies. i could cite you a number of remarkable success stories that are highly profitable, copies of start out on the basis of an nih grant and we're increasing actually our support of proposals and shortening the timetable for review of those

because often weeks matter when you're a small company just trying to get started and you need that initial infusion of grant cash to do the experiment. we are very invested in this space and again i think probably one of my closest relationships in terms of working with industry is through the biotechnology industry organization, going to the beauties every year listening to the concerned concerns trying to be sure we're center just as with all africa continent in terms of finding new cures devices. >> my time is when he does let me ask you to comment on that but if you could also comment on were there a controlled pharmaceutical, the dea has a process that begins at the end of the fda process that the ultimate approval. to my knowledge dea has never come to the conclusion that it's different than the fda's conclusion, which makes the

wonder why we put the additional depend on the process if the outcome is inevitable. if you could talk about those two things, the dea process that follows yours and making sure that small providers have a shot against the big what. >> i will try to be quick. on the small business question it's a very serious area of focus and concern for us because many of the medical products, companies we regulate our small. on the medical device side and into biotech world and as dr. collins noted, often they are one product approval and/or a few weeks away from going under. but yet that's where a lot of innovation occurs. we have tried both to streamline our regulatory process these and provide more outreach and assistance through the process for small businesses to help with that process to be more

responsive and provide that additional clarity. we also, this is one of the reasons why this investment in regulatory size is important because there are, tools and approaches that can be used by smaller compass they can't make the same investments, whether it's in the biomarkers area or innovative medical trial designs. so we are working on small business, high priority. dea you you know it's a coveted system not one that we put in place and would be the way we would structure the process if we were starting from scratch? we make our decision based on public health and medical care, and our perspective doesn't always align with dea. we do try to work closely with them in medical aspects of making important drugs available for people, and then appropriate oversight of the use of scheduled drugs, but i would be

disingenuous if i didn't say that i think some of the disconnect that you've seen and i think it might be an appropriate time to sort of look at how best to align these different players in an important area of work. >> thank you. >> senator collins and then senator warren. >> dr. hamburg, first let me thank you for your service. you and i have discussed many times the technological breakthroughs that are making a real difference for people who are living with diabetes. and an example of that is the continuous glucose monitor, which is helping patients control their blood glucose levels which is key to preventing costly and sometimes deadly diabetes complications. the nih and fda have been

extremely supportive of these innovations and diabetes care. and that is why i was so surprised and troubled when cms decided that it would not reimburse or pay for insulin dependent medicare beneficiaries to continue to have their continuous glucose monitor. we have a situation where individuals with type one fewer covered with private insurance gets to be the age where the age into medicare and they lose the coverage for the cgn. this has led me to question whether cms consults with the fda and nih in making its coverage decision. do they consult with you?

and were your two agencies consulted in the case of this denial of coverage? >> i have to tell you i was not aware of the situation and i can see why it's concerning to you i think we'll have a lot more important breakthroughs in terms of medical devices and, of course, new treatments for diabetes that will make a difference. we work with cms. would work more with siemens. we're done some projects with cms to look at how can we do some of our decision-making in parallel rather than in series so that as data is being collected and product development space data that will meet the needs of both agencies can be gathered and examined. there are discussions with cms on various specific products, and as i said i think in our modern world we need to do more

of that. i would so your point speaks to issue that's been in high poverty for me and that i look at defeated like we still have not adequately addressed in which is part and parcel of what you're going to do here, which is we have to look at the whole ecosystem for biomedical product development and use, and recognize each of the different components that often operate in silos actually are very interdependent. one of the things for example, i am hearing now more and more from investors in biomedical researchers is that it's not the fda regulatory process that worries them and they see as a barrier, its reimbursement issues and getting that right picks i think we really need to take that ecosystem approach. >> thank you. dr. collins i'm going to switch to a different issue just because of the interest in time i hope you will respond for the record to my question. >> happy to. >> thank you. you put up a fascinating chart in which he showed tremendous

progress that we have cardiovascular disease, cancer death and with hiv/aids. and what they all have in common is congress has made a sustained investment over the years in nih research, and it is paid dividends in better treatment and in falling death rates. i am as you know very concerned about the trajectory of alzheimer's disease which is fast becoming our most costly disease in this country. as a society we spend $226 billion a year caring for people with alzheimer's. out of that amount 153 billion comes from the medicare and medicaid program. as dr. cassidy said, the trajectory is frightening.

it's going to bankrupt our health care system and it's also causing such suffering for the victims and their families. i know you mentioned the amp and the brain initiatives, and i'm excited about those but should we be doing even more to do a concerted effort targeted at alzheimer's, give them -- given what the trajectory of the disease is a? >> well, i do appreciate the question and i share the concern. when you look at the cost of alzheimer's disease and figured individuals afflicted but imagine the suffering of families go through, that individuals go through. we are on a trajectory that anybody who looks at it has to be deeply concerned about. we are certainly wrapping of alzheimer's disease research at a party unprecedented rate. i just looked at the numbers, between 2011 and the president's budget proposal for 2016 there will be a 42% increase for alzheimer's disease research,

greater than i think virtually any other area that nih supports but is it enough? no. franco we don't have enough that i could argue to support all the ideas and lots of other areas as well. the good news is that alzheimer's disease research is in a very exciting place. that we do new ideas about therapeutics. we have the ability to do drug screens on cells growing in tissue culture that represent alzheimer's compared to normal in a way we without a drink we had that ability as a model. is a human cells. we can start to figure out to address therapeutics in a systematic and rational way. there's a lot of excitement in theinthe field about seen that before. we are doing everything we can to find those partnerships. amp is one of them to be sure we build on the capabilities of other agencies and other sources of funding and the patient advocates are a wonderful group of supporters as well. but, frankly, it is an example of the fact we've lost about 23%

of our purchasing power for research since 2003. we need to be able to get back on a stable trajectory. that would benefit alzheimer's deal with this and a lot of other things that are out there as our population ages. >> thank you very much. >> senator warren. >> thank you, mr. chairman. and thank you dr. collins, dr. hamburg, for being here but i also want to say as others have thank you dr. hamburg, for your many years of service to the nation osha a great debt. over the past figures the american system of medical innovation has transformed the health of literally billions of people around the world. new treatments have given hope to people diagnosed with the kenya, hiv, breast cancer and other diseases that were once a death sentence. the basic mechanism for those remarkable achievements has two parts. a foundation of taxpayer investment in basic research followed by private industry investments that turn research into viable products. of the 21 of drugs with the

highest therapeutic impact approved between 1965-1992, two-thirds stamina drug from discoveries made to government supported research. a recent study in health affairs found most of are truly conservative modern drugs have their roots in public funding. this is no accident as we talked about here for decades. congress through the budget of the national institutes of health year by year. in the late 1990s both parties worked together to double the budget for nih. the support has dried up. since 2003 the nih budget hasn't kept up with the pace of inflation. as you know dr. collins, its purchasing power is down nearly 25%. dr. collins, can you tell us how the collapse in congressional nih funding has hurt the american pipeline of biomedical

innovation? >> thank you for the question because this is the thing that worries me most and keeps me up at night is that we're not taking advantage of the remarkable abilities of american science to innovate to come up with new ideas that prevent and treat disease. one can simply look at the ways in which nih has to do with the ideas that come to us and basically leaves about half of the ideas on the table that traditionally we would have funded. that tells you what we're doing here in terms of slowing down the process of innovation on the way from basic science through to clinical trial. you might ask, maybe the part we're leaving on the table is not quite as good as the stuff we are funding. we have looked at that and because when you look at the top third of applications, this is the really great science. we can't retrospectively go back and say that those who scored in the 25th percentile were not as good as those in the 10th percentile. what does that say? that saves we are leaving great stuff that's not getting supported and traditional would have been.

and we are of course the foundation in many ways for this wonderful success story of american science which is public and private working together. what we discover as you point out has led to those breakthroughs and now people take for granted. we can't keep taking it for granted if we don't supported. >> think of our first priority here would be to figure out how to have the nih, the resources it needs to replenish the pipeline of great research that is the foundation for better treatments and reliable cures. but instead congress is focused on whether lower the fda stands for approving drugs. i to the argument that this is a dangerous game. the painkiller made it through the fda's rigorous approval process but was later found to cause heart attacks. by one estimate it killed 38,000 americans before being pulled on the market. dr. hamburg what impact would

loan the fda safety effectiveness standards have on public health? health? >> as of september marks i think lowering the standards would be very, very dangerous. detrimental to health and safety of patients that the health care system but also bad for our wonderful preeminence in terms of our pharmaceutical, biotech and medical device industries in terms of their ability to actually deliver products for people who need them. we know that fda standards and our requirements around safety over the years have actually helped to shape our biomedical research, clinical research and translational research gets done. this notion of really structuring our investment in research so that we ask that question can we don't just publish papers as dr. cassidy was saying, but we actually make sure that we are leveraging the

opportunities in science and technology to get important treatments preventive strategy and cures. >> if i understand the high standards are important not only for public safety but also for help shaping the research that will give us the treat was that we need. >> athlete. >> i am certain of the changes we could make to help speed up the approval process and get rid of unnecessary bureaucracy. i am eager to make change. but lowering fda's approval standards will not increase innovation. we could abolish the fda tomorrow, and we see tons of new products on the market but the goal is an new product to boost profits for the industry. we don't want another vioxx. the goal is innovative, transformative the products that are safe and effective that will cure diseases, save money, save lives. and to achieve that goal we need

to start with the nih. nearly everyone in congress says they support funding that agency, but talk is cheap and congress have decimated the nih's budget. single-handedly choking off support for projects that could lead to the next major breakthrough in alzheimer's and many other diseases. congress has to step up and make a real commitment of real dollars for scientific research. thank you mr. chairman. >> thank you, senator warren. senator baldwin. >> thank you, mr. chairman and ranking member. i am encouraged by this bipartisan effort to examine the entire discovery and development process for medical treatment. as someone who was raised by her grandparents and my grandfather

was in an age funded scientist at the university of wisconsin-madison, you can understand how to have a long-term passion for a strong strong federal investment in basic research but i remain concerned that budget cuts mandated by the budget control act has put medical research at risk to contact we been talking about that this morning. dr. collins, you've cautioned we're putting an entire generation of scientists at risk. the average age of a researcher receiving her or his first grant is increasing. and budget cuts are discouraging young scientists from entering the field or forcing them to in some cases leave the country in order to continue their research. to help address this, last congress i introduced the next generation research act. it would coordinate efforts

within nih and streamline current programs to improve opportunities are new research to promote new policy to increase diversity and improve the success of investigators who are applying for the second grant. dr. collins we've discussed this issue a number of times before and i'm encouraged that you sure that interesting passion here. can you please discuss with the committee any products -- progress that is made through the nih's existing programs such as the early stage investigator program and the directors new innovator award to bolster this emerging research workforce? >> i really appreciate the question because this is such a fundamentally important issue if we're going to have a future where american biomedical research continues to flourish. we have in fact, instituted a number of programs that are aimed to try to encourage the

next generation easy success. once we've done and i think been quite helpful in the parties to make sure if you are an early stage investigator who hasn't come to nih before with the proposal, that you compete against other investigators of that sort as opposed to being thrown into the main pool with very experienced investigators have been at this for a while. that is done quite a bit to equalize the success rate among the newbies versus those who been in this business. that is one thing. another thing is increase the number of awards which are sort of abridged to independence from a postdoctoral fellowship to an academic position. which we're going to be a very successful way to make that leap from a train position to an independent faculty position in a research intensive university. we are also making sure that we have our graduate students

exposed to multiple different kinds of career paths because not all of them need to end up as research track faculty in intensive university jobs and industry there's jobs in polls journalism, many other place or ph.d level individuals are needed and we want to make sure people find the right match for themselves. we've started new programs and early independence award, one of quite excited about which basically allows a very talented ph.d to skip the postdoc and could record an independent position. i go to presentation every year of the new awardees and is the most exciting day of the year for me because of their vision and their ideas. we have this new innovator award winner you can't apply if you previous and h. crane and your identity out of the box groundbreaking in order for you to be allowed to apply for that prosal. and we look at the output of that it has been truly impressive, the kind of outcome we'vehad. all that is great but it doesn't solve the main problem we have

which is this loss in purchasing power for research. we can try to balance things as best we can to protect the young investigators. we can only go so far. we need to turn the corner. >> i appreciate that and resources are obviously key to this as well as the coordination of programs we discussed in the bill i introduced and will shortly be reintroducing. the flipside of that, dr. collins, is what would be impacted be of nih's current program for me researchers as well as the impressive new initiatives if congress should not reverse sequestration? >> i think we continue to see this downward curve which is very troubling. surveys have indicated close to 20% of researchers supported by nih are now contemplating moving to another country or to another kind of career path because of

the concerns they have. i just spent last week i was in san diego. i met with the training students, so-called medical scientist training program. there was a room full of the most incredibly gifted, talented future scientist you can imagine it in the past when that groups like that 10 years ago, it was all about the site and how excited they were. but this was a group whose brows were for road, -- for road really deeply anxious about whether there's a path for them. the questions to me were not so much about science as to whether i could give them some sense of optimism about their future. i tried but it wasn't as easy as it should've been given the talent in that room. >> senator casey. >> thank you, mr. chairman. i want to thank you and the ranking member for having this hearing. these are deadly serious issues, the ones that dr. collins just spoke to about, about the impact

of funding. it's probably the worst example of penny-wise and pound-foolish that we can imagine. sometimes it comes down to one name one person, one case. the young girl in pennsylvania, a nine year old, thankfully is healthy right now, emily whitehead had a particular kind of leukemia and the only way her life was saved is because of an experimental so-called t-cell therapy that was pioneered by folks, researchers i should say nih funded researchers at the children's hospital in philadelphia. i have to ask when it comes to these debates about funding levels, which, frankly are rather bizarre when you consider the outcomes, positive outcome that we have through nih, i have to ask what if down the road because we didn't make the

investment because congress failed, would the next emily whitehead be saved? so i think it's worth not just contemplating but using those examples as a supreme court to action. dr. collins, i just want to go back to something you mentioned before, and i know it's by way of reiteration but it's important people get the message better. did you say nih has lost 23% of its purchasing power since 2003? >> that is, in fact, accurate. i could show you a graph that would maybe make that more clear but if you look at the yellow line, that is the and h. budget adjusted for the effect of inflation. you can see the doubling that happened in 2003 and you can see the steady deterioration since then, that, in fact, adds up to about 22 23% loss in purchasing

power over the last 12 years. years. >> the other part which highlighted and one i had not heard the percent of those contemplating moving out of the u.s. because of the lack of funding or i guess would be uncertainty regarding funding to what% of that is that of researchers? >> of this particular survey it was 18% who said they were significant contemplating that kind of drastic step to i really appreciate your raising and we waited as an example of what many do more of. i met emily whitehead at the white house senator alexander was there that aren't as well. emily was there for the announcement as was her doctor. this is the kind of amazing success story that we believe is out there in greater numbers but we have to be sure that we are investing in all of the steps it takes to get there. what happened with emily you can trace back 50 years of hard work understanding the immune system and understanding cancer.

ultimately, getting to the white -- point. it didn't arise out of nowhere. >> i want to ask you about the present initiative, the precision medicine initiative. in the context of emily and other children tell me about how the initiative can come or any other undertaken or initiative that nih will be involved in that will focus more on the pediatric research the pediatric research that leads to those breakthroughs. >> well, the precision medicine initiative aims to have an early focus on cancer and a longer-term effort to try to build this million strong court across the nation to try to take advantage of a coalescence of really exciting technological opportunity. one is of course the genomic revolution, the ability to build to get information about dna and remarkably low-cost considering where we've been.

another is the advent of electronic medical health records. another is the ability to use wearable sensors that people are excited about having access to detect varies aspects of human physiology, whether it's something that detects blood glucose in a diabetic or something that is actually monitoring your environmental exposures or your diet or your blood pressure. all of those things are coming into their own. to have a very large scale distribution across gender, across geography come across socioeconomic status but we could begin to figure what are the risk factors for disease and what can we do about them and actively monitor and treat chronic disease more effectively. having that large-scale effort. this is a joint effort between and h., partners at fda and the folks at home in cedar involved with health record meaningful used to we are excited about the way this could transform our understanding of the biomedicine

biomedicine. >> mr. chairman, can i just had one brief comment? i just want to underscore that as you think about what can be done to really harness the extraordinary advances in science that are occurring today and the resources that nih so rightfully needs and destiny needs to ensure that important work basic clinical and translational gets done that you not forget nor to actually see those products, those ideas become real world products, it has to be accompanied by appropriate investment in fda that give us the opportunity to develop our area of science to forge that final bridge to a real-world product and to help make sure that should get nih is being done in the most efficient and streamlined way as they're trying to move the product through the development pipeline into the product or one of the

disconnects that worries me a lot, and on shrub i have to say because this is my last time before this committee, that everyone thinks that if you want to deliver on the promise of science, more investment in nih that is absolutely critical and foundational, but you do not want nfda that isn't fully equipped to oversee the products that are coming before them that isn't well staffed to do efficient modern revelatory reviews. and you want to be able to bring the knowledge and expertise of fda and product development into the early stages. >> may i say i agree with my colleague and would like to endorse everything she just said. >> i agree as well. doctor thank you for your service. >> thank you. >> thank you, mr. chairman for calling this hearing and thanks to you both for your service and dr. hamburg thank you i work close with a couple of things

and thank you for your service and we are sorry to see you go. and i also apologize for just getting here. i had a hearing in judiciary that was also very important. i am proud to represent minnesota as you know, dr. hamburg, and our medical device industry, and we spent some time working together. when i first got in this job and had dr. chireau came to minnesota and had some discussions with the industry, roundtables with him. and then as a kind of different culture between the regulars and the device manufacturer to i wonder why that would be. but and life science alley along with the fda did

something i think for the first time ever a private public consortium on regulatory science. i just want to ask you how you believe that's going. the name of it escapes me. >> medical device innovation consortium, in the icy spent yesterday which it says what it does. i like games like that but it can't recover them. the medical device innovation consortium. on your perspective how has that been working? >> i think it is an example of the kind of thing we can and should be doing more of. as you know bringing together private industry, academic researchers not-for-profit organizations and government together under one organization that is committed to advancing the regulatory science needed to

advance medical device development. it has grown enormously since it was star trek i think there was initially some skepticism perhaps but it has grown and it is identified critical areas of research whereby advancing research through this partnership it will benefit medical device development much more broadly because it's doing things like helping to design innovative clinical trial approaches that will make the clinical trials less cumbersome and make it easier for products to go into clinical trials to demonstrate safety and efficacy developing computer models -- computer models and other simulations without the costs, the time at the potential risks to patients. you can really examine whether a device is going to work and how the design should be treated et cetera. looking at how to better

integrate patient reported outcomes. and their expense of using a device into the development and review processes. so focus on some of the most important issues he for us doing it in a way that advances the science and in a way that actually creates knowledge that becomes a common good for other product development in the future. >> thank you. of that private public partnership is working. i want to talk a little bit about precision medicine, what it's done. and sometimes when i think about precision medicine i think i was born a little too early. i think of all you know what things are going to be like 20 30 40, 50 years from now. let's talk about -- the university of minnesota has developed a panel of more than

1200 genetic variations that can be tested to identify risk for specific genetic diseases. the mayo clinic which is in rochester, minnesota, has also made significant investments in developing evaluating but these folks are concerned that regulation that is not thoughtful are careful enough could hamper these life-saving potential and undermine the medical research designed to identify and target root causes of disease. i applaud the chairman and the ranking member for working with the fda and industry efforts the whole series of briefings on this will simply new topic. dr. collins i would like to know what role in h. will have been advising fda with regard to regulation of ltv to what extent are you to agencies

engage with one another, which i think senator collins talk about, no relation. as a researcher yourself what is your view on how the two agencies should work together for the most safe effective technology in a way that is ethical and safe for patients without anything with the innovative work? >> center, i appreciate the question at this isn't a nih and fda have been working together closely over the years and are particularly close working together right now to try to accomplish just what you said, to be sure that the kind of laboratory develop test in the field of genetics where things are growing so quickly offered to patients in a way that benefits them and doesn't slow down innovation but also has appropriate oversight particularly in high risk situations where false results can lead to decisions that can be quite harmful. fda released back in the fall guidance on risk-based oversight

of laboratory develop test. we think that is a very thoughtful document that business would become the foundation for multiple compositions and workshops including one just ever 20th that was held on the nih campus to try to get additional input about the what we can do but think is turning out to be quite a nice partnership in a specific way is we have already a database which samples across the entire medical literature what has been reported as far as this particular dna variation being connected with this particular disease or disease risk. so that database is being curated in which people can find information, but you can't necessarily do that and know which of these should you rely upon and which might be a result of one person found that someone else didn't. you need an expert panel on top of that, a group which is basic clinical genomics oversight, of expert. it looks at the database and

makes decision upon the evidence about whether a particular dna variation has been conclusively shown to be associate with a medical risk like a mutation that is been seen in many people with breast and ovarian cancer. and various levels of certain what they think about the whole set of information. fda is very interested of that particular nih funded effort in order for them to be able to have expert advice about what you can trust and what you can. but we are not the regular. fda house that will. this is a great i think opportunity for our relative role to be going. it will be critical as we see more and more of these opportunities playing out with this cohort of a million or more people we want to be sure that we feed them back information about themselves that they can trust it and it has been looked at by experts and reviewed by the regulatory agency. ..

for the conditions that they have it also, having accurate reliable diagnostic tests is crucial to our actually being able to do the fundamental research that will reveal the opportunities in treatment prevention, and care because of the test is inaccurate, all of that research isn't going to mean much. so we think that at the core of all of this is our responsibility to make sure that diagnostic tests work, whether they're laboratory developed tests or much more advanced next generation sequencing which is what dr. collins was talking

about at the end which is e is really using genomics to give us advanced sets of information so one diagnostic tells you information about thousand millions of potential variants not just one diagnostic, one disease. but at the end of the day our goal is not to increase unnecessary regulation but to insure american people health care providers and companies that make these products when a product goes into the marketplace it will do what it says it will do, and in fact that kind of regulatory foundation is common sense. it is also what enavailable enables innovation to be driven forward. some tests that are not held to the standard as other tests the incentives coming from the traditional device industry, developing fda regulated diagnostics, intend to stay in

that business when someone else can create a test and market it without any of the same assessment and review is problematic. so it is kind of an interesting example of why things get very complicated but at the end. day, fda's role is to help speed innovation to patients who need that innovation. we want innovation that works. innovation that will make a difference in promoting and protecting their health. that it will benefit our health care system and the industries that are so much part of the united states economy. >> thank you for doing that. i apologize mr. chairman, far going so far over my time. >> no that is fine. >> senator murray, do you have any concluding remarks? >> dr. hamburg well-stated. thank you to both of your testimonies. senator alexander i look forward to working with you on this. >> thank you, senator murray. dr. collins, just for the record if you know offhand the success

has declined over 30 years. what about the absolute number of grants, has that gone down too? >> the absolute number of grants we fund versus those we receive it has been bouncing around, under 10,000. >> about 30 years ago it was what? >> i have to get you the number. >> i was trying to compare that with the success rate. >> of course the biomedical research community has grown in that timetable. >> right. >> i can get you specifics. would be interesting to see that. thanks to both of you. dr. hamburg, thank you for being here. >> thank you. >> it is very important that you were here and we thank you for your six years of service at fda. i hope you will accept our invitation to stay in touch with us over, especially over the next year as we work on these issues. dr. collins, we're going to stay, you will still be here. >> i am. >> we're going to stay in close touch with you. this has been a good conversation. the fact that the two of you

were here helps signal the importance of it, the attendance of the senators. by 2017 we'll be in the midst of the user fee suggestion. issues we intend to get into here are different from those. what i would say to those in your agencies and the administration, this is a train on a track to get station. it will get somewhere. some of us are on the appropriations committee and we'll be working on the sequestration, the funding levels. that is one thing we can do but there is also the question as i mentioned that 42% administrative costs. if there are things we need to do, some laws we need to change, some other agencies, if you get that from 42 to 32, that is $3 billion one time. so there is the question of reallocation. the question of other obstacles you run into that you would say if you could change that that would make our life better. this is in no way trying to

diminish the accomplishments of the fda or the nih over the last few years, to say we're in this exciting era. the house, the president the senate, all headed direction. we would like to get there within a year or so. we would like your help making sure we do that and do that well. that is an unusual opportunity to get a result in a town that doesn't that often see the president and the republican congress on the same train headed in the same direction toward an important station. so i thank by your being here you helped emphasize that. we look forward to continuing our discussion. the hearing record will remain open for 10 days. members may submit additional information for the record within that time if they would like. thank you for being here today. the committee will stand adjourned. >> all right. >> the homeland security department is investigating another incident of misconduct by secret service agents who

allegedly crash ad car into a white house security barrier. this morning the head of the secret service joseph clancy will take questions at a house appropriations subcommittee hearing. watch live coverage at 10:00 a.m. eastern on c-span3. later in the day interior secretary sally jewel will talk about u.s. energy and environmental policy we'll have live coverage from the center for strategic and international studies at 1:00 eastern also on c-span3. next, labor secretary tom perez talks about job safety and regulations designed to protect employees from discriminatory practices. secretary perez spoke at the consumer federation of america conference.

>> good morning. i am barbara roper i'm director of the consumer federation of america. and it is my very great privilege and personal pleasure to introduce our next keynote speaker. secretary of labor thomas perez. a recent profile of secretary perez written upon his return from the negotiations in the west coast dock workers strike called him a star in the president's second term cabinet. and a hero among the liberal left. as a card-carrying member of the liberal left i can personally attest to the accuracy of this assess meant. secretary perez virtually spent his entire career in public service in one capacity or another including since 2009, as a member of the obama administration but he has only been in his current position for a little less than two years.

but he already has had an enormous impact not least on an issue i hold near and dear to my heart, strengthening protections for retirement savers. the fact that we stand here today with a real fighting chance to make this long embattled effort a reality is due in no small part to his leadership. from day one secretary perez took on this cause and made it his own. and in doing so, showed the same ability to reach out, to opponents, listen to all sides and by bringing people together, in a respectful, and reasoned conversation maybe not turn opponents into instant supporters. he is not a miracle worker. close. but at least dial down the volume of opposition to this process has the potential to move forward. there can be no doubt that he brings that same passion and

intelligence and deep personal commitment to the broader cause of building an economy that works for everyone. as afscme president lee sanders said he is the real deal. so please join me in welcoming secretary tom perez. [applause] >> good morning. i have a feeling first of all bash barb, thank you for your kind introduction. barb's the real deal and she has been a stalwart in so many areas, including the retirement space, but i want to thank you because you know, success in building an america that works for everyone is a joint venture. you've got to have folks in government like our president who get it and have those values and then you have to have folks outside of government like all

of you who get it and share our values. and that is how you define success. then you've got to have people working at the state and local level who get it and share our values. you have to have serial activist who is are doing the same. i have had the privilege of working as an elected official in montgomery county, maryland, for those of you not around here, seven or eight stops on the metro red line. i've had the privilege of working at a state level at state labor secretary in maryland. now i have this job which is another way of saying i guess the labor secretary has trouble holding a job. but we can have a conversation about that. i say all of this because i have the appreciation for the role of everyone. if we're going to build communities that work for everybody, we need to have the serial activists at the local level. one of the proudest things for

me in local government we enhanced and created an office of consume protection in montgomery county. we enhanced human rights organization so we could build protections for the county's residents. at state level, we had the first living wage law and things of that nature. i'm a firm bee believer what i call redundancy in law own forcement. laws are only as good as the political will of those who enforce them. at any given time that will may not necessarily be there at certain government levels. and so that redundancy in my mind is a good thing. and the constant is all of you. and that is why when barb invited me i was excited to be here because i want to start by saying thank you. you fight many uphill battles. the deck is, the odds are often

long. the days are hard. the setbacks feel like many. but you know what? a week ago, last weekend i was in selma, commemorating the 50th anniversary of bloody sunday. if there is anything i learned from going there it is that, you know the people who gave their lives in selma many whose names you know many whose names we don't, they were extraordinary people. they were actually, you know, we have extraordinary people like john lewis, who caused what he called good trouble. and then we had people whose names like, amelia boynton. you may have not heard of her but she was the woman in the wheelchair next to the president last weekend. and so many others who are martyrs in that movement. what that movement was about was, ordinary people doing

extraordinary things. ordinary people, who had a bold vision of inclusive america that works for everybody. an america which we feel the full team. everybody is treated with dignity. everybody has an opportunity to punch their ticket to the middle class. discrimination is a thing of the past. i was inspired last weekend to continue to make sure that we put in place that vision of america, and what that vision was about is, you know, a movement. then extraordinary individuals. and every issue i work on, you need that combination of the movement and extraordinary individuals. and, that is no different for any issue that i've been involved in. and you are part of that movement. for corn super rights. -- consumer rights. i look at pillars of vital families and vital communities

and the pillars are education security health care security employment security, housing security physical security, retirement security and that's been really the north star for this president. how do we build an america that works for everyone? how do we solidify those till lars -- pillars of security. last year the incarceration rate and the crime rate went down in the same era for the first time in 40 years because this president took a smart on crime approach. you look at health care security. our rate of, our uninsurance rates have dropped at their greatest levels in 40 years as a result of affordable care act. you know, i got this thing in my office, it is an album cover of ronald reagan in the '60s, medicare will lead to socialized

medicine. actually, if you listen to the album, because i got a little curious, i listened to the album, says medicare will lead to socialism in america. he was wrong. medicare led to retirement security in america for millions. and has become a staple of who we are. the aca is in the process of doing that same thing. thanks to folks in this room. you look at education security. education is the great equalizer. my favorite senator in college was a guy i never met was a guy named claiborne pell, because i without claiborne pell i would have never gotten into college. that is great equalizer. we don't need everyone to have a four-year degree because there are plenty of on-ramps to the middle class. because of president's leadership we are have the pillar of self-sufficiency. proof is in the pudding.

60 consecutive months of private sector growth of 12 million jobs. depths recessions seven job seek es for every job opening now they are 1.8 or 1.7. the odds are better. businesses are bullish. insources is the in word. outsource something yesterday's word. that jeep plant in ohio mitt romney said was going to china. i've been to toledo. guess what? he was partially right. the product that they're making in that jeep plant is going overseas but they have added over a thousand jobs because that is what is happening, as we see this manufacturing resurgence in america. you know you look at the housing issue, we see foreclosures are now down, significantly. you see what the president did recently for fha lenders to help them be able to get access to the american dream. you look at the work we're doing

to make sure and rich cordray and his leadership in the consumer financial protection bureau making sure that consumers have a meaningful voice. you know what? the whole consumer space and mortgage space is a fantastic example of the world of false choices. when we had the wild, wild west of 2005 and 2006, in the absence of regulation there is this notion that you either have a sound business climate for lenders, or, people go in the tank because regulation, you can't have common sense regulation. i'll tell you having settle the two largest fair lending cases in this nation's history i had a conversation with a very high-ranking executive who said you know what? in the depths of the wild, wild west in the mid 2000s, i was losing my best people to countrywide. countrywide was the industry bottom feeder. they had no rules.

you could go there for two years and retire basically because you made that much money preying on people. and so they didn't want to do that because they had ethics. and you know what? there was nobody minding the shop in the bush administration. it was the wild, wild west. as a result so many people, through the corrosive power of fine print fast talk had the american dream translated into the american nightmare because they said, i got, i sign on the dotted line. sign these 58 forms. little did they know that they were signing the fast-track to foreclosure. we must always reject false choices. when we have common sense rules in place, that doesn't simply help consumers. that helps responsible lenders. and we must always remember that. we live in a world of false choices. we think about policing. i spent a lot of time in that

space. there is this tendency to say, we either have safe communities or we have respect for the constitution. that's a fall choice. we can do both and we have done both. it takes time and it takes persistence. that brings me to the pillar that i want to spend the most time on, the pillar of self-sufficiency, and that is retirement because you know, i spend so much time in this president spends so much time building middle class economics. making sure that people con punch their tickerket to the middle class, that they have ladders of opportunity. by the way, not escalators. there is no free rides. they are ladders of opportunity for people willing to work hard. and there are jobs out there. the report we released three days ago. there are five million open jobs we speak, 500,000 which are in i.t. which pays something like

50% more than the average private sector job. there is a lot of good jobs out there. and as we move forward as a nation, i want people, and the president wants people to have good jobs that pay a decent wage. we want to having a aggressive enforcement of the wage and hour laws so people that work hard can't get bilked. that we have safe work places when you go to work in the morning you have a right to come home you will come home safe and sound at night, whether from a coal mine, whether from a police department whether from any business that you work at. those are pillars of middle class security. and, when you reach the end of your work life, all that hard-earned money we want to make sure that you have a good retirement. and you know what? times have changed you know? we're not in the "leave it to beaver" world anymore.

the "leave it to beaver" world ward and june were together. ward worked 40 years at the office. ward had a defined benefit plan. and you know, at the end of that career ward got a watch a handshake and you know what? ward and june didn't have to think about, you know, how am i going to invest my retirement because it was a defined benefit plan. you multiply 40 years times the formula, it may be 1.5 maybe two, some subset thereof you know you got your retirement. well, "leave it to beaver" land has been replaced by "modern family," okay? here we are in the "modern family" universe of defined contribution plans where people reach the end of a working career and now they have to make decisions on how to invest their money. i have said many times i'm the youngest of five. i'm a lawyer. all four of my siblings are

doctors. the three, i promised i would never be a plaintiffs personal injury lawyer. that is one problem they made me make. i kept that promise. i mean no disrespect to all my friends who are plaintiffs lawyers. they do an important job but i did make that promise to my family. and so i have tried to do something noble and i will rhett let you all decide whether that is the case. three of the most important types of decisions people make are medical, legal and financial. and so, you know for lawyers and doctors, the rules are pretty clear. you know, you have to look out for your patient. you have got to look out for your client, you know? if i got diagnosed with the cancer around i go to the doctor, i don't want her telling me, this is it a suitable treatment for you tom. suitability, yes. i want you to tell me what is the maximum way that i can live, okay? that is what they do.

you know, if i got arrested for something, you know, and i'm trying to figure out what my best defense is, i don't want my lawyer telling me, well that's suitable. you can do that. well, why do we allow this in the financial space? the answer is actually, there are many, many folks who hold themselves up to that higher standard of protecting and looking out for your client's interest. we have financial planner, who is a certified financial planner. and he looks out for us. so for instance, you know, i was in the federal government from 1989 to 2001 and then i left federal service and came back a few years later. we hired him in the early 2000s. one of his first pieces of advice keep your money in a think of the savings plan because it's a pretty good

plan -- thrift savings plan. that didn't get him any money but he was certainly looking out for our best interests when he said that. so with we've been doing in the consumer space the retirement space, we have to figure out what is in the best interest of the client. you know, one of the people that have met in the course of this journey on this issue and i think this is one of the most important, if not the most important thing that we can do in the next two years to help consumers in the retirement space is this rule that we are working on. because you know what? you know, i meet people like jack bogle. you know, i think he has been in the business, i know he has been in the business longer than i've been on the planet because i think he said 64 years he has been in the business. he looks very well, by the way, man. i want his water. and you know, he said something that really kind of simply summarize this is whole enterprise, which is, you know

what? i learned in this business of financial advice that when you put your customers first that is good for your customers and it is good for business. it is really that simple. and that is what he has done. that is what our adviser has done. he is a certificate need financial planner. that is important having this jugs not to paint with a unduly broad brush. not to be up fair to scores of people in this space who do fantastic work. i applaud those efforts. and during the course of our outreach, and i'm a firm believer that when you are doing a rule, the most important thing you need to do conduct the broadest table possible if you're not a good listener you're not a good regulator. that is what i do over the course of 18 months on the job.

we deliberately slowed this process down. we knew how important it was. we knew the value of listening and we knew we needed to engage a broader array of stakeholders. we knew we needed to talk to sec we have done that with regularitity and done that and i have great respect for mary jo white and her team and the dedicated professionals at sec who have been very helpful. and rich cord dry and his team who have been very helpful. industry stakeholders who we have met with regularity, because they have been helpful in enabling us to understand the business model and to understand how you thread the needle. i think you can thread the needle. i think it's a false choice to suggest that the only way to continue the business of providing financial service advice to folks is the status quo. i categorically reject that and you know, i have heard from

some, i don't understand the problem you're seeking to solve. with all due respect i can't believe that you don't understand the problem that we're seeking to solve. i really don't. and i don't mean that disrespectfully. and, fortunately, i have heard that less and less in recent months. i herd that at the outset. and, i hear that less and less. and that is the good news. and so, what are we trying to do? with our proposed rule? we're trying to, we're trying to solve the problems that have afflicted so many people. you know i think about the tofle family elaine and merlin. they saved $650,000 throughout their career. and they had that nest egg. they did everything right. and they tried to figure out how to save it. how to invest it. you know. because they were in the we're in the new paradigm.

they go to their local bank and they get put into a variable annuity. very complex instrument. the fees were something like $26,000 a year! my wife and i, we just bought a car. we paid $21,000 i think for it. and i'm thinking to myself, they're buying a new car every year. a nicer car than we have. by the way, it's a ford c-max. very nice car. could have gotten a car $5000 cheaper. they could have had that. anyway, that is a lot of money. and you know when i reflect on this i think about some of the concerns that have been raised. well, what about the small investor? you know to me the small investors are the people in the greatest need of getting advice in their bless interest -- best

interest, because they don't have margin of error. so when i hear that argument, i agree with the notion that small investors deserve advice. we need to get more advice for small investors. but we need to get advice that is in their best interests. folks who are wealthy who get conflicted advice, that is unfortunate and we would like to prevent that, but you know what? the consequences for them are less catastrophic than that family that saved $50,000 and is trying to figure out how to spend it. by the way that small investor who has 50,000 or 100,000, you know the vast majority of them, they need index fund or something really simple. that's why you know, business models have already emerged, that can help them. and, we want to make sure that we provide education, because i

think education is power. i think an educated consumer is indeed the best customer. and what we're going to do in this rule, is clarify the line between education and advice. because that is important. we heard from the industry, you know you can't ban commissions that would put us, that would, unduly upset our business model. we will not be banning commissions in the proposed rule. now they did that in the u.k. i will note something that is very interesting. i went to the u.k. because i told you you build a big table. you listen to folks. and you learn from them. i traveled over there because i wanted to learn with my own eyes and ears about the u.k. experience and what's really interesting is, what has happened in the aftermath of their rule, which is very different from we will be proposing. but what has happened is that it spawned