do, i think you're doing part of the work, which is putting a spotlight on research, science and innovation as a national treasure and as a national priority. if you're prioritizing the research system i certainly follow suit with what dr. collins articulated in terms of the resource issue. i don't think you can escape the responsibilities of congress to make sure these agencies are add kweltly funded. united for medical research is a group that came together around the issue of the nih and the alliance for a stronger fda is a group that i've had the privilege as serving as past president of. this is a group of all of the different stakeholders coming together to say the appropriate dollars that go to the fda are extremely valuable and they're not enough. i think that prioritizing the infrastructure has to happen. it's a critical necessity and i think if we're not listening to

that bell being running, then i believe that as you're doing this in terms of leadership function, we run the risk of really losing an enterprise is that the united states essentially pioneered. in terms of another priority that i think you're starting to hear a little bit about, we have to put patients at the center of this. so if you look at the statistics we have 7,000 diseases. yet, we have treatments for, i believe, dr. collins, 500 of those. the system is doing its work. it's churning through the science and getting the outcomes to the doors of the fda. the fda is doing its work and then we get some approvals and we put that out into the system. but at the rate we're going, i don't think that any of the diseases that we're all going to be afflicted with at some point in time really stand a chance of being covered in the near term. so i think the speed issue that's been articulated by many of you is of critical importance.

so i think as this group does its work, figuring out what are those points to derisk the system as the doctor articulated, that becomes a place that i think it's going to be a critical importance for all of these different stakeholders you gathered here today and you will, going forward to come to some agreement about what are those pressure points. we have seen in the world at faster cures we've had the privilege and opportunity to work with a variety of the different disease foundations. the cystic fibrosis foundation was noted and the prostate cancer foundation. the melanoma research alliance is out there. a multitude of these groups. what i think the system can learn from these groups and what we have studied is that they are one-stop-shopping in terms of understanding what science do we know and what don't we know and what do we need to be getting prepared for. where's the puck going to go? and how do you bring the patient

into the center of all of that? so a couple of points that i wanted to make sure i talked about at the topline is the sacredness of this 'innovation ecosystem and the real need for that stability to come and then the putting the patient at the center of it. i want to mack sure that as you do your work, we're making sure that happens. thank you. >> first of all, i want to thank you for convening this important committee and i want to thank congress for their work. actually, recently, through the reauthorization of the user fee act we had -- [ audio difficulty ] >> i'm trying. we had a mechanism that was sponsored by friends of cancer research bipartisan.

it was sponsored on the senate side, on the house side, the support of industry, patients, companies and a mechanism to get patients drugs faster but better. where there is evidence and unmet need. this was an extraordinary vehicle and i know diana to get sponsored on the house side and it was sponsored by senators bennett, and hatch on the other side so that's an example of how coming together in a bipartisan way with not just aspirational issues but really, strong evidence, can get drugs to patients that work, that are better for them, there are other opportunities and it is a little bit like a dickens novel. the best of times and the worst of times. so we have been extraordinary biomedical infrastructure and ih, fda are doing incredible

things. science has never been better but it is in danger but there are things that we can do better. we have foundations at the nih and at the fda that can be empowered and should be and are doing a lot but can be doing more. we're convening now with the ndriarijaona and the nih and in a public-private partnership on lung cancer. a master protocol for lung cancer will be will be at 400 sites all over the united states and nci is putting in $25 million into a companies are putting in another $125 million. it's for a deadly disease. it's for lung cancer where there are really no cures. nasdaq gen sequen -- next gen sequencing so there are novel ways we can get there and there are things we can do but we cannot take what we have for granted. if we don't really get this science there to the patients, we'll not ben if the and mostly,

patients won't benefit. >> first, thank you for the opportunity to be here today. one of the big inefficiencies and i would say barriers we face which is particularly acute on the medical device side is the ability to make optimal use of data that's collected. this is the impact that it's having. so in the medical device program at the fda, we've been looking at how we can reduce clinical trial burden on medical device innovators and what they need to bring their product to market be appropriate cases, shifting that data collection to the post market setting. and what we'd like to do is reduce that burr again even on the post market side by being able to better rely on data that's collected by doctors in their clinical practice. two weeks ago, we put out two guidances. one of them proposed a new path way for high dahigh-risk devicee

build off of experience from the drug programs of accelerator approval and add other features which allows for moving data that we otherwise premarket into post market. but here's the challenge. so if you look at how we collect data today in practice, a lot of electronics or otherwise, medical records. but it's very hard to identify which device was used. either it's not in there or it's hard to locate. so one of the solutions that you directed us to implement is to created a unique device identifier. a number that says who's the manufacturer. what's the product. what's the version of the device. the versions are constantly changing and put it on the labeling of the product and in the next few months for the first time the devices are going to start having those numbers because we should have had that last year. here's the next step. it's got to get into a

electronic health records. so what are the incentives that quarterback in place to build the field's in electronic health records to capture the information and for doctors and hospitals to put it into electronic health records. and then we can actually make use of it and use some of that data. the other part is sometimes you need more data than what's actually gathered in clinton kwal practice that doctors get when they see patients and those are device registries. challenges for exploring what are those barriers and what are the incentives that can be in place for creating those registries because when they're there we're stalking about's year-over-year data collection and even the case where the manufacturer doesn't need to get the data, so we very recently actually allowed for expansion of a labeling indication on a device where the company and two health care professionals societies were going to do a clinical trial and we told them, don't do it. don't waste your time. we looked at the registry data and we said, we think it's good

enough. ask us to expand the labeling and we'll do it. you don't need to. if we can have those kinds of investments in this country and that kind of infrastructure to allow greater use of data we collect every day, we thinking that have a big impact on reducing the burden for products to get to market. and yang critical incentives for more innovation in medical devices. >> i'd like to echo if sentiments of the other panelists. thank you very much for the opportunity. it's a great opportunity. >> hold it a little bit closer for the folks that are listening on -- >> i represent the charitable trust and delighted to be able to participate today and i'd like to follow-up on something that the doctor said. we heard from the other panelist that clinton kwal trials can, a barrier clinical trials can be a barrier so the question is what

can congress do? there's some opportunities to look at how technologiesing can used to support clinical trials to new tools for clinical trials. dr. woodcock talked about clinical trial networks which is particularly important in the area of antibiotics where there are real problems and we know that clinical trials are a barrier to ant bibiotics development. and we looked at the product registries. registries really do have the promise of being able to assess product safety and effectiveness, how health care is delivered. there's a lot of really interesting ways you could go. we have some registries in the united states doing some good work but we're not as advanced in this regard as we are in other countries. for example, there was article in the study in the new england

journal of medicine published last year about a trial in sweden using an existing clinical trial registry -- i mean, an existing clinical registry, the trial of a cardiac intervention. the study enrolled 10,000 patients. 7,000 of them were randomized. and the total cost was $300,000. 50 a patient for the 7,000 that were randomized. you could not do that in the united states. in the united states to do a trial like that for $300,000, you could probably dobility four patients. so there are definitely opportunities with clinical registries to actually help with product development and i encourage you to look at that as you're thinking about moving forward. and you're going to hear a lot about the challenges of trials and the answer is not to get rid of the randomized yol trial. that's the gold standard and we often need it at the end of the day. the regulators need the data in

order to assess the product and the patients need the data in order to know if it's the right product for them. so the question is, how to gather that data more efficiently. thank you. >> i want the thank this kwom again for taking on this extremely important issue in this way. i testified in front of this committee three years ago and talked in my capacity as a venture cal tap investor about the trajectory and i presented data showing that trajectory was in an alarming state of decline. as one indicator of the state of investment in biomedical innovation in this country. and i attributed that phenomenon felt to a relentless increase in the time and cost of developing new drugs and medical products, not just over the last few years but over the course of several

decades to the point where we now all talk about these statistics that it takes ten to 15 years and cost a billion dollars to develop the drug and we all feel like that's an unacceptable place to be. well, it's now three years later and looking at the same metrics in terms oven sure capital investment in new and innovative buyee technology compa biotechnology companies the picture is different. it appears much better than it did a few years ago and over the past years we've seen an resurgence in interest and resurgence in the dollars being invested in this industry if a venture cal tap point of view so maybe to answer the question of what we can do to build on that and further improve, part of the answer is to think about, how is it that we've gotten better, at least, on this one measure over the last three years? i would point to two factors that have driven the increase in venture investment in the sector. one is the breakthrough science.

the kinds of treatments, the kinds of cures that we're now investing in and bringing to patients are transformative in areas like cancer, genetic diseases and many others, we're seeing an impact on disease that really is remarkable and would have been hard to predict only a few years ago. that is a function of decades of investment in basic research and in fundamental understanding of biology and the mechanisms of disease over the course of decades. so that's number one, breakthrough science. number two, a dramatically improved drug development environment and regulatory environment by which i really mean, a renewed focus by all parts of this community led by fda but also, patient groups, industry, medical community, to work together to address these problems, recognizing that nobody is happy when it takes ten to 15 years to development

drugs. patients are waiting too long and it's driving investment away from this critical sector so when you look at things to highlight dr. seigle's point about the breakthrough therapy's decigarette nation that's emblem @ic of a number of initiatives that has led to a different dialogue about how we develop drugs and how we regulate drugs and we are need to think about, while always ensuring that we get good products that are safe and effective to patients, we do so as quickly as possible and as efficiently as possible, especially for those drugs that make a real dramatic impact on serious diseases, recognizing the amount of uncertainty and the amount of risk that patients are willing to take in accessing those drugs. so those two things have, in my mind, driven the resurgence oven sure capital and biotech so from a big picture perspective, let's focus on those two things. reiterating dr. collins' call to

make sure we have consistent funding for biomedical research and nih and fda. these are the investments that we make in the public sector that drive the opportunities to create these breakthrough cures. and second, let's continue what we start over the last several years which is a real mature dialogue about the regulatory process, about drug development and about benefit and risk and how we can responsibly accelerate bringing therapies to patients. >> thank you very much. go ahead. >> representing the health and science university of oregon and i, too, appreciate the attention you're giving to this critically important area. i come to this discussion with a background in -- >> bring the mic done a little bit. >> sorry. i come to this discussion with the background in physics and engineering and somebody who's tried to pay attention to the technologies that we're bringing

to bear to understand hugh it is that we can best explore this discovery development and delivery cycle. and i would encourage us to think about this as, perhaps, a four-step cycle rather than three-step cycle. i think one of the things that is limiting our ability to move drugs effectively into the clinic is the fact that we don't take advantage, take as much advantage of the trials we're conducting as we might. the technologies that we have today provide us an enormous amount of information about the behavior of the biological systems that we're trying to manipulate their their their therapeutically. the model systems that we're using aren't as informative as we might like them to be and yank today with the technologies that we have in hand, we have

the opportunity to learn in great detail, why it is the strategies that we're failing on do so. and to use that information to go back and improve the motel systems that we're using to guide the development of these treatments. so that requires that we change clinical trials so that we make sure that every -- we learn as much as we can possibly learn from every patient. that means we have to get the samples to analyze them. that means that we have to have broadly distributed the analytical technologies that we need to understand how they differ from the model systems. and we need to bring now, back, individuals from the basic sciences to help us understand why it was that our models didn't teach us as much as we needed to know. and so i think there's two things that i would suggest here. one of them is, in today's community, the basic science

faculty, if you will, researchers are being drug farther and farther towards the translational side of the house. in sort of away from unfettered basic science discovery. one of the things technologies are teaching us are the complexity of the biological systems that we're trying to manipulate. they'll really are much more complicated than we thought a decade ago but we have the technologies to understand these molecular machines of life. this is going to require that we invest in pretty basic science to understand how these molecular machines work. so i would call, first, for clinical trials that are designed to be as informative as we can get them. investment in true basic research, substantial investment in basic research, to understand what we don't know about our systems and then finally, this is going to require that we continue to invest in analytical

technologies in this country. this means microscopes, genome analysis capabilities. advanced computer system designed to securely manage the unprecedented amounts of data we're generating. we're really generating enormous amounts of data that have to be managed securely. we're going to take the new kind of computer industry to actually do that. but i think one of the problems that we have in this country today is that we're falling behind' in our technical infrastructure. it's difficult to acquire the instruments. it's difficult to replace them when they go obsolete and this is something that happens with pretty much an 18-month to two-year cycle these days. and we can't sustain them with service contracts. we're going to have to keep the infrastructure in this country technical infrastructure up or we'll cease to become competitive. we're already losing scientists to other countries who are doing a better job in making the instruments of science

available. >> mr. chairman, the white paper that you circulated with you're invitation for which i am as grateful as everybody else here, started, i believe, where a quote from a report of a perceived gulf between the basic science and the translation of this science into working drugs. i read quite extensively and i think this view iswidely shared. cancer is one of the most generously treated areas by the fda. there's a 2010 report from the biomarker consensus collective, i think was the title. which i believe included representatives from the fda and nih and the private industry and similarly saying, making this exact same point and some considerable detail and in no uncertain language that somehow or other the basic research was moving far ahead of our ability to transform it into working drugs. i think you can break the -- i'm

so sorry. -- >> just speak a little closer. >> thank thank you. >> i think, you know, you can break down the essence of the fantastic revolution that we're witnessing into place of business four rough categories. first of all we are for the first time in medical history, able to see everything. i mean, absolutely everything, right down to the molecular bottom. nothing comparable even remotely comparable to this revolution to the advent of germ theory 150 years ago. that transformed medicine. suddenly people could see what's killing them. that led very kwaikly to vaccines and antibiotics. the cost of doing that is dropping, not rising. we're putting it on chipgs and genome sequencing. we can see the proteins and we're really good as seeing what's down there and this is very useful because drugs do their thing at the molecular level. that's where the arks begins. it doesn't end there but if you can see it all that puts you in a completely different world

from the one that's been known for most of medical history. we're getting extremely good. if you show a bye you chemist a target today and say one-on-one if i can get my drug to this target can you mod late it, turn it on, kill it, destroy it, do something, they're really good at it. this is not the end of the the story so nobody should interrupt me. we have structure base drug design which we won a nobel prize. for in 1988. we've got antibodies which are basically targeted drugs and we're doing remarkable things now with live cell therapies. stem cells which can be drown drawn from the patient and genetically engineers, returned to the patient in a siblings group of therapies using white blood cells extracted from the patient and engineers, for example, to attack cancers of some stunning results coming. this is the newest area and you look at how the people involved are engineering these cells and it's as logical as writing

software for a cell phone. they take a gene because they know it does something or turning one off and sticking it in a cell and dispatching it to do something. this is in its infancy but it's stung. in the other areas we do lead the world. it will be interesting to see if the live cell therapies we can keep up. a lot of other countries are willing to break regulatory rules and move forward. we'll find out how that ends up sooner or later. i think this new technology and this new ability to see everything poses as presented us with a scientific and a policy question. the scientific part was alluded to by the doctor. we're finding out that things are way messier and more complex than we might have hoped this than they looked when it was one bacteria and we could go after it and kill it with antibiotics. large numbers of variations in

the structure of mom kuls that propel diseases. the networks are complicated and redundant and we're increasingly seeing molecular of slow-acting -- with the advent of hiv in the late '80s and through the 1990's and they're complex and they're slow. this means that at least using traditional fda trials, the process is slow and it is complex. we often don't get the right results from trials unless we're thinking in this is terms. the economics of drug development has been cited a large sfrax of that economics is centered on the clinical trial process. the time value of money is very large so you've got the clock ticking on all your up-front investment and the trials themselves are very expensive toi conduct and the clock is ticking on your patent. you get extension after that. that's the scientific challenge. you got to work out and see all this stuff down there and you can modulate and since your

passage of this and as best i can tell and i may be dreaming i think nih has launched a whole series of projects beginning around 2013, maybe earlier, the nih and the genomes project but since then they've one very interesting study going back to clinical trials of the past that have failed and working out while they failed and plucking out the exceptional reresponders and this is terrific stuff. the regret is we were not doing it all along. i'm not sure why we were not but anyway, they are the -- the program is absolutely a paradigm of what we should be doing to get this science right. they're looking. now we move into the jargon for the biomarkers to target selection is very important but also, for prognostic markers. the accelerated rule, we all

know about invented in the -- in the late 1980's but actually caught up or added to the component of federal regulations in materially 1990's. let's regulate not conditionally, not forever give accelerator approval on the basis of surrogate end points or intermediate end points and that hinges on the biomarkers of one kind of another. the nih to my mind is doing what ought to be done and -- i don't know if this is a reaction or not but they are doing it exactly right. most important thing we can do, i believe, to really seriously accelerate drug approval and lower the cost is get -- the fda is at the table for a number of these initiatives. i think if it's every one but the fda is at the table and giving input. others can fell me how details it is. i think we should have one process that makes these calls not do them multiple times in different agencies. yes, we want to bring many the

other stakeholders. but if we can get the process moving woebd we would substantially accelerate the approval of drugs and lower the cost and we would face less challenge and competition from other countries that are willing to do this, quite possibly, less well than us but willing to cut a lot of corners. >> thank you all. let me just say and i'm going to let my colleagues ask some questions here. i think -- i almost feel as though you are just bound to speak on the questions that we ask. you've been waiting. you're excited. you're enthusiastic and it's about time someone actually allowed you to answer some of the questions. and you're -- even though we asked just one it seems like many of you have covered all four so i'm not going to take the next three hours to do the next three questions. but instead, i know a number of my colleagues here and we would like to ask some questions and

what we'll do is sum up at the end and try to finish somewith between 5:00 and 5:30. we'll see where it takes us. henry, we're going to be very informal. no one will have limited time. if we can limit ourselves to a question or two and then let you all respond, maybe not each and every one of you but just help us. help us. okay? >> thank you for all your presentations today. it seems that the basic is the research investment in research, basic research is needed for the whole process to work. and if you ask anybody in the public what they think the best investment of the government funds it's at the national institutes of health but we've heard the term that we need more stashl and predictable leveling of funding. i'm concerned that we have spending caps, dr. collins, in

place for nondefense discretionary by as much as -- which would cut as much as 15% by 2015 and that would jeopardize critical federal funding as a result undermining the discovery process. we've also had sequestration which was supposed to never happen but did happen. and nih was severely affected by that. so i'm interested in reliable, certain adequate funding levels for the nih. that's my question to you. and for dr. woodcock there seems to be an underlying assumption that all the time it takes to get drugs approved is the problem of the fda. and i want to know if that's accurate or can you give us a more transparent understanding of what it takes a long time and should we lower the standards for approval of drugs without

knowing whether they're working or not? >> thank you for the question. various ways of assessing what is the state of health of buy yes medical research funded by nih. one can look at the trajectory over the last 40 or 50 years and you can see that, in fact, for most of that time, nih support was pursuinging a fairly stable trajectory of inflation plus about 4%. that was true from 1970 until 1998. it was enormously beneficial for ramping up the ability to do things faster and in a more risk-taking way. but -- which was bipartisan and which was certainly the expectation. i should have been more explicit when i said "around the table."

>> it was actually up to waxman. >> i think the expectation of everybody was that that was going to sort of set a new base but, in fact, what happened was that at the end of the doubling, essentially, nih's budget flattened off and it remained so with inflation gradually eating away at that purchasing power. the sequester added immeasurably to the pain of that experience, cutting a billion and a half dollars halfway through fy 13 which has not recovered. the consequence of that is in terms of purchasing power, that nih lost more than 20%. if you look at nih budget as a percent of gdp, we lost about that same percent relative to 2003. if you look at what other countries are doing, it's been exactly opposite direction since 2003, they've been growing as we've been shrinking and the consequences of that are quite

clear. in terms of what the average investigator experiences and this is the thing that -- >> doctor, my colleagues are instructing, if you take too long and i'm the only one that gets to answer the question, we don't have adequate funding and we have a budget that calls for severe decreases. do you think that makes sense? does anybody here think that makes sense for a system where we're trying to find cures? >> well, why is medical research discretionary? why is the health of our nation discretionary? why is our economy discretionary? there's something odd about the way in which this is all divide up on the budget table. from my perspective this is one of the most important investments the country can place of business. every other country in the world seems to see that to be the case. but we seem to have lost our way. >> thank you very much. i think that's a important point and the way that the house is already operating is to put in place cuts that are going to steak effect later. dr. woodcock, it takes so long to get these drugs approved.

is it all fda's fault and how can we improve? >> there are standards enforced by the fda as most parts of the development. after a drug is discovered, companies have to figure out whether it's worth investing in so they do studies to see whether they think it will work before they put it into people. and that's a good business decision. that's not driven by the fda. but there's also toxicology studies that have to be done in animals to make sure it's safe enough to put into those first human volunteers. there are few people who would say you shouldn't do that, actually. you know, if you're going to be a volunteer. and we have a very good record of many thousands of commercial trials. they're very safe. you get to people and there are side effects and they can be managed. the clinical phase is the most expensive and that's where the most arguments are about. it costs a lot per patient in the united states to do this.

and those studies are done to meet the fda standards to show that, as statutorily embodied to show the drug is safe enough and that it has effectiveness that it works. and at the end of the day it's a benefit-risk analysis. if it's a terrible disease, you don't have to be as safe, basically. so forth. and then the fda review time is really just a little blip here. if we approve drugs as fast as sometimes, 45 days or, perhaps, three months, ordinary drug with the goals that you passed, specify timeframes that are a year or under for the fda review of all the information. >> thank you. >> i'd like to address this issue of fda, it is a too fast or too slow. the answer is it's just about right. about three years ago the

largest cancer meetings in the world, and companies were telling us everything is faster in europe. this is for cancer. and we're really worried and we embarked on a study because, in fact, drugs -- patients were having access to drugs in europe faster than the united states. this was an issue. well, our research showed that opposite. as a matter of fact, it showed opposite. that everybody said they would never believe you unless you publish it and in fact we were faster. we were substantially faster. what is important is that we have to be better. what really is important is that these treatment treatments have to work for patients. so getting out faster, a drug that doesn't wooirk, that is toxic has no benefit for a patient or for a company. yes, we have a lot of issues with our clinical trial system and a lot of issues about how we design trials but at the end of the day what a patient wants is a treatment that works for them.

>> i want to thank the -- i don't know what to call you guys. panel, advisers -- participants? whatever. patriots -- for your opening remarks. i don't think it's a surprise that dr. collins wants a more stable and increase funding system that would be news if he didn't. i don't think it's a surprise that the ranking democrat on the committee agrees with him. i mean, that's not a news flash. and everybody else. but having said that, there are financial constraints that we have to operate under. i was gratified that there were a lot of comments by the folks that have been speaking about regulatory reform, unfunded mandates, drchltd woodcock mentioned something called a

clinical trial network. which i think has merit. we talked about reducing risk within the system. dr. suren asked about emproving or direct that can we improve electronic health record. mr. capri talked about something called a clinical registry. mr. grey was talking about greater investment in what he called the analytical technology. dr. hubert talked about process reform. so we have lots of ideas one thing that wasn't mentioned, mr. chairman that i like dr. woodcock to comment on, i have a number of small medical device manufacturers in my district who were coming up and getting approved by the fda, new devices and medical applications where

they do interactive on their -- with their electronic devices with their doctor and in therapy and diagnosis. the fda approves them but the cms medicare won't give thm a code or doesn't know where to fit within the current system. how do we handle something like that where it's a technology or a therapy that's been approved and they know it will help people and then we get bogged down many the bureaucracy of trying to code it and determine how to reimburse it through medicare? >> you may wish to ask dr. suren that. he's head of the device center. >> if he knows, if he's the man i'm willing to listen to the man. >> dr. woodcock throw mess under the bus so i can throw sam under the bus. what a great country we have. so i'll apologize by dancing a little bit around it because i

do have my colleagues at cms but you're raising an important point. if i'm a developer of the technology i need predictability not just to get to market but to get reimbursed and as a public health official and a physician what i care about is also, patient access. we know patients don't have real access in many cases unless there's also reimbursement. the technology, particularly if we deal with more expensive technology or part of an expensive procedure. many are disenfranchised because they don't have the coverage or the money for it so we need to think about whether there are circumstances where we can provide a more streamlined pathway and more guarantees if you're getting through fda, are there circumstances where you should be get paid for them? or there was a tie-in where you're paid for and there's that additional data collection. and cms will sometimes do that. they have something called coverage with evidence development. they say, you know what? we'll take it as it comes but there's additional information. but at least you're getting reimbursed for it.

and that's, i think that's a critical area to be looking at. how we can provide that greater payment predictability. >> thank you, mr. chairman. >> let me thank chairman upton and the congressman for putting this together. i think it's very beneficial and everyone who is participating. i just want to ask a sort of general question. i guess dr. collins or mr. grey or anyone could really answer it. the -- i constantly hear -- it was in the white paper, dr. collins mentioned, and mr. waxer mentioned, about funding. in other words, obviously not as much money available to nih as there used to be. you mentioned you know, a researcher who went to china because he thought there were better opportunities there.

mr. grey mentioned the technical infrastructure, you know, that we're falling behind. i'm trying to get a handle open. we're constantly told we're falling behind or in the sense that we're not keeping up. is it because of you know, lack of federal funds? is it because we're not investing in labs or technical infrastructure? when you eyes china it's hard for me to figure out what that really means because china is a communist state-run. here we have money for research and research being done by private companies, states quicking in. universities kicking in. is the advantage that china has strictly that they're a national government or their government is spending more money? or does it go beyond that? does it have to do with the fact that they organize all of this in a very dictatorial fashion? i'm trying to get, you know -- when we say what we can do. obviously we can spend who money

but is it just a question of federal dollars? or is it go beyond that in the sense that it deals with the infrastructure or it it's the way they get together to do their research and the way that we don't? >> so it's -- >> i know it's a general question but i hear this all the time and it's so difficult to see that comparison with china because it's such a different type of political structure. >> and china is not the only example. to answer your question about why they are able to do it so quickly clearly they have a decision process that's much more top-down and they basically can make such a decision and implement it quickly and they've been increasing their support of medical research by about 22% per year now for several years and within the next few years, they'll actually outstrip the united states in absolute dollars spent on medical research, that is their goal. they've been very clear about that. and they have a system that bay basically allows that to happen once that decision is made but it's not just china that's read

our playbook. singapore, south korea, brazil, leek at europe where i has not had an easy economic time. a country like germany or the united kingdom, recognizing that medical research is a strong component of the success of their economy. they've protected that and actually continued to increase the support even at a time where other things are being cut back. and they've looked at america's story and they're trying to learn from that. my greatest concern is not about the way in which this is affecting anything in the way of nuts and bolts or brings and mortar. it's the most important resource we have which are the scientists, the biomedical research community, particularly this next generation and they're under serious stress. they're spending 60 or 70% of their time writing grants because their success rate has dropped to 1 of 6 so most of the time it's another failure. they're getting discouraged and they're increasingly taking less risks because risky science doesn't seem like it's got much

of a chance. we're coming up with all sorts of ways to try to stimulate their innovative instinct but they're flagging a bit in that regard. if we really want to see our future we have to have that resource supported. that's what wakes me up at night. we're leading the great -- traditionally this would have been supported in the past and now is not. >> mr. chairman you placed the question at center. to my way of thinking, it's not about just investment or funding. it's about creating opportunity. and that's a much larger set of issues and it has a lot to do with some of the other things that go beyond funding like changing the infrastructure, froeg. but at the kwor of it is the point that mr. left made. that everyone around the world recognizes that this explosion in science and technology is changing and not just medicine,

but all the rest of the life sciences and, in fact, it's not just about nih or just about biomedical research. as dr. grey pointed out, we're seeing a convergence now of the physical sciences along with the biological sciences. and the emergence of material sciences nano technology, for example, computational science is as equally important as this opportunity for this country. so we should be paying attention even to the agencies and the government beyond the nih such as the department of energy and our national laboratories, which are an enormously important part of this future frontier and i think what the committee has laid before us is the challenge to get beyond just the question of are we funding, but more importantly, are we creating the opportunities and changing the ecosystem in a way that really

will keep us at the forefront? >> to really build on that, the creativity happens in large part, in universities where a job of somebody like me is to facilitate serendipity. oftentimes the innovations are at the boundaries between traditional disciplines. so one of the things that we're doing at michigan is how do we consciously bring engineering and the life sciences together? we have changed the biomedical engineering department from being solely in the college of engineering now to be joint in the medical school and the college of engineering. because it's the human-human interaction where the creativity occurs. there are critical facilitators,

finances, technology, much of the breakthroughs in medicine and our understanding are technology-dependent. so we're trying to figure out how do we give real problems to the engineers so that they can help us make advances in our understanding, not just of disease, but also of health which actually is the ultimate goal for where we are? so it's looking at the total ecosystem not just one piece, that's really critical to maintain our creative advantage and the lead that we've had for arguably, over the last century. >> just to continue this dialogue, i wanted to come back to the one of the consequences of the decline in real spending dollars that's happened over the last few years. one of the things that's happened is that science has

become hypercompetitive. dr. collins mentioned that people are spending a large amount of their time writing grants. they're actually spending a large amount of their time writing nonproductive grants. these are grants that are not going to get funded so you've taken the thinkingtime away from your scientific community that would be used to innovate and forcing the community to devote that to just pushing paper around. and that is a killer so one of the reasons that we're calling for stable funding, maybe it doesn't have to be increased vastly increased funding, but strategies to deploy funding that ensures that our best scientists and our most productive scientists are spending their time thinking about science and not spending their time writing grants and so if we could aspire to having long-term funding goals in this country with achievable granular objectives, then i think people

would feel confident this saying, okay, i can try some new things. i won't be out of a job because somehow i was -- i took on a ribs and we have to enable ours to break out of this hyper competitive cycle and we can do this by defining where we're going and what money it's going to take to get there and identifying the scientists that we need to get us there. >> so just to echo the point about it not just being china, i also want to sort of punctuate this idea that even the european community has really banded together because they see this as such an amazing growth opportunity so faster cures did a study of the consortia phenomenon, an element of what we're talking about here, how different entities come together to solve problems. there are lorts of consortia that happen in the united states. some are administered by the founder for the nih and some administered by the fda or they

have participation, but there are a whole heck of a lot of them in europe and number of consortia are going up, up, up so i look at it as a little bit less of is the u.s. declining and more of is everybody else catching up? perhaps if you can be thinking about it as what is it that we can use to keep the competitive edge, to keep the sort of secret sauce, you know, the american ingenuity and innovation, you know, what took place at the beginning of the biotech revolution, that are unique attributes i think in terms of how the american scientific enterprise operates that we don't want to lose for a whole lot of reasons because of what it has produced thus far and what we expect it to produce, so i think that the u.s. is still, you know, looked at as, you know, the place for everyone to kind of model after. they are modeling after the gold standard of the food and drug administration. they are modeling after the nih and the other science agencies

that the doctor articulated, but i think the question and the challenge in front of you all is what's that model going to look like in 10 years, 15 years. we're talking about bringing in dlincht collaboratives and team science. i have an 11-year-old daughter on a team tomorrow to simulate the westward expansion so we'll be hiking five miles with our little red wagon through the fields in virginia. you know, she at 11 understands teamwork in an entirely different way than i think any of us were schooled in, and i think if we want to entice kids like that to go into science careers, there has to be this sense of there's something for them to step into and i think, you know, if we lose that opportunity all of this work going on, whether it's china, europe, you know, lots of other places, it's just going to keep going because all those countries have prioritized this and said, you know, this is something that we need to be, you know, paying attention to. >> before i let sarah get the

last word here and then we're going to go to dr. burgess, dean caman is going to be one that we'll rely on. that's his focus in life. sarah? >> so thinking of this as an ecosystem, from our standpoint, is absolutely the right way to look at it, and you have talked about kind of a continuum of discovery development and delivery, and it raises the question of how you're going to make sure it's actually a feedback loop so we've been hearing about the need to invest in -- in research, and that's critical, but there's also the need to ensure that we have the tools to collect the data and to disseminate the data, so i spoke about a trial in sweden that was -- by american standards, very efficient, a lot more expensive, and they are able to do that in large part because they have the interoperable electronic health records. so as you think about the kinds of what needs attention in the

united states so that we can be competitive in terms of innovation, i urge you to keep in mind the need to make sure that we have the data systems that will allow for researchers to bring the products to market more quickly and then also to understand how these products are being used in the real world because, you know, it's one thing to see them in a clip call trial but then in the real world it's a different game, and what happens in the real world experience can actually inform the next generation of products so the -- the data collection is a critical component of this as well. >> thank you, mr. chairman, and thanks for convening this group. it's important to discuss the situation. i have an observation and then a question on the panel. the observation is in this very room the last thing we did in calendar year 2006 was reauthorize the national

institute of health and we reauthorized at a base level of $31 billion to increase by 5% every year. we were eviscerated at the time because that number was woefully small and then no subsequent session of congress, republican, democrat or divided government, actually came anywhere close to 5%, and it has been, as dr. collins pointed out, much less than that, so perhaps we should consider a reauthorization that has been now some years ago. perhaps we should consider reauthorizing nih. dr. collins, i would just point out to you that all buildings on your fine campus, and i've been there many times, but they are all named after appropriators. the authorizers who are your friends here, not the appropriators. now the question. i want to shift gears for a little bit and i will have to go to another hearing but you hear a lot these days about the right to try for people who have serious or terminal illnesses who may have -- find that there is the availability of a

clinical trial that they can't get on. can any of you address that? mean, i think the goldwater institute is doing some work on this, and it's one of those things that certainly pulls on the heartstrings of constituents back home. can we talk about that a little bit? >> i can, as far as for pharmaceuticals, all right? generally speaking, we have a very liberal policy about people getting on to what people call compassionate use but basically treatment protocols if they can't get into a trial for an investigational drug. and we -- i think i testified a little while ago, you know. we had 1,000 requests. we only turned down two in a year, and we get about that number of requests each year. however, companies for a variety of reasons are sometimes not willing to provide drugs under investigation -- that are investigational drugs to patients under treatment protocols, and they have a variety of reasons, shortage. they often say they are

concerned that a side effect will be found out in these patients that actually wasn't in the clinical trials and it will delay their development program. it's never happened, but they -- you know, that's often cited as a fear. and then there's a financial cost to providing the drug, although you can do cost recovery. you can't sell the drug at a profit in a treatment trial. so there are many people who have been unable to obtain drugs under treatment protocols from a company. that does happen. >> is there anything that we can do -- this is a roundtable about solutions. anything that we can do as far as providing companies the certainty that they would need or the liability protection that they might need? are there places we can go with that? >> i think you could ask the companies. i think from the fda standpoint we'd be very reluctant to for you to pass something that says

we can't look at their treatment experience because that would be unfair to the other patients, but, you know, otherwise. >> so this issue access or expanded access is something we're looking at. we're working with the brookings cancer research and there are actually some very interesting proposals on how we may approach that problem and actually not only get access to the patients but really get data that's important, because what's missing often when we get compassionate uses, we have no data on exactly what happened. so there is a very unique, a very interesting proposal by aska. we're looking at it in our meeting in november, and it will be interesting to see if there's a legislative need to do something on it, but it's a very legitimate issue. but at the end of the day we really need to get data. we want that -- to know what happened, if the patient did have access to it or it did or did not work and why so

capturing data will be incredibly important, but i think this is something that people are thinking about. >> trying to alternate between republicans and democrats. let me go to kathy and then joe and then leonard. >> thank you very much. let me thank chairman upton for leading this effort today and thank everyone here on this panel and thank you for devoting your professional careers to improving the lives of american families. i do think it's an exciting time for biomedical research in the u.s. and across the globe. i have too questions and two points mainly for dr. collins but for anyone else who wants to comment. many of you have already stated how much you value our scientists and researchers, and it's just fantastic to meet a lot of these young talented researchers. for example, at home at the moffitt cancer center in tampa,

university of south florida, all of the research universities across the country, and they are not shy in talking to policy-makers about the fear they have for the future, that they have -- that they are passionate. they believe in what they are doing. they are making progress. they see all the technological advancements, but they are very fearful that based on inconsistencies and uncertainty in funding levels that this isn't the career for them, and i hate to hear that from them. so i think the congress right now has a very important responsibility to make a new found commitment to the nih and to research, biomedical research in america. the budget this year, i offered an amendment in the budget committee to move nih funding from discretionary to mandatory. i think this is something that we should discuss. maybe we do it with dr. bray's

suggestion that there are certain benchmarks that have to be met or certain requirements, so if you could discuss that or are there other budgetary solutions? and then, number two, we don't have all of the resources in the world to spend. are you confident that monies are going to the right place in biomedical research? for example, when you look at much of the data, the aging population, it would seem like we've got to do a whole lot more in brain research, in alzheimer's, that when you look at the threats to the health of america, boy, that is just -- that's staring us right in the face so number one is shifting to mandatory funding, and, two, are we making the investments in the right place? okay. >> i appreciate the question. i appreciate this whole panel discussion. again, i'm not a budget guy so i'm not going to be a clever

respondent to this notion of shifting dollars from one place to another but what matters for biomedical research is to find a path forward that has this kind of predictable stability. again, we've lost ground. we need to sort of catch up but then to have a confident sense that we won't be on a roller coaster ride of feast and famine which is the most destructive thing that you can do to the research enterprise. if a mandatory source of funds was the way to achieve, that then i would stand up and cheer, but i'm not sophisticated enough to know about what those options might look like to get you there because i understand how complicated it can be to achieve that kind of special mandatory funding stream. with regard to how we are using the dollars we have, our right to ask that question. i'm always glad to have that question asked. we have to have the ability to respond to any query about whether the dollars that are being allocated by the congress are being wisely used, and we are looking every day at ways to try to achieve new efficiencies by partnering up with other organizations like we have with the accelerating medicines

partnership or working with darpa that we're doing and with fda on this toxicity chip and working on brain initiative, new effort which is going to be focused between nih and nsf and darpa and a number of private industries and philanthropies and trying to make sure that these kinds of interdiscipline efforts that jim woollscroft are looking into. we're looking at our peer review system while asking, while we claim it's the pest in the world are we really sure about that and are we sure that the peer review system is reflecting the scientific opportunities of 2014 and not some earlier stage, and do we need to rethink about the way in which the peer review panels are established as far as what disciplines they represent? we have the tools now with various kind of text mining to really look and see what is going on in science that we might want to make adjustments for so we're pretty bullish about that. another thing that we're doing, again, this reflects something

that joe gray said, is to try to see if there are opportunities to put some of our grant funding, more than we currently do, into programs where you give stable support to investigator over perhaps a period of five years with the expectation that once you have one of those awards you'll actually get that down to science and not spend all of your time righting and re-writing and getting discouraged with rejections. there's a program at nih that has been very successful with that. we're prepared to expand that beyond the common fund and do some pilot experiments. i think that that will be a possible way to deal with a terrible waste of people's time where they are spending so much of their time nun productive grant-writing and just getting frustrated. none of that will suffice. no magic where you can snap your fingers and say now it's fine when you've lost 25% of your purchasing power and people see the current circumstance. you're not going to be able to really fix that without getting back on that stable trajectory.

whatever we can do to achieve, that that's got to be job one. >> i think one of the most important points of this effort is the fact that you've committed to a long-term look at the problem, and i think there are some significant issues that need to be addressed just beyond the stable mechanism of funding. for example, are there new resources that can be tapped that would support the kind of investment that we need? for example, looking at monies that could be repatriated but done in a way that was directly related to funding what created those opportunities and dollars in the industry in the first place. the other thing that's quite difficult issue to take on, but i think it would be an important consideration in how we're spending the dollars, is to really look an interdirect costs and the issue of funding infrastructure versus funding ideas because one needs to actually roll up our sleeves and

begin to take a deep look at the problem if we're going to create an entirely new way of sustaining it for the future. it's not just a matter of a mechanism for more money. it's a mechanism also of where we're getting the money and how we spend the money. >> thank you. thank you, mr. chairman, and for this new initiative. is it on? okay. and this is just the first of a three-year process, and the first step is discovery. so you're the first briefing. we will have other briefings and hearings as a health subcommittee, and we will translate the information you've given us today to other members who are not here so that all of our members can participate in this. and if i were doing another "d"

i would add diagnostics, diagnostics. early medical diagnosis of the disease because the faster you can get the cure to the disease, the better and the least costly. i have a couple of questions. dr. woodcock, you mentioned something called clinical trial network. would you identify any barriers that you see, and do you need legislation to set this up? or what are the pairiers now that prevent us from having clinical trial networks? and how can we use our technology platforms to accelerate the cures to bring researchers and patients and innovators together? a couple of questions. >> well, these are all -- they are all related, and i think a lot of the barriers have been cultural and the way we've done things in the past, and this is how we've always done them so this is how we'll do them.

but the availability of electronic health records, availability to be able to reach out to clinicians all around the country, to join them together and then to do trials utilizing that infrastructure and training could provide all sorts of link networks. it could very rapidly answer questions which is really what direct development or device development is about. we ask questions. does this work? is it safe? you can rapidly answer those questions and you would get those products into patients and test them and get the answers out, so a network is simply a group of trained people who are earring and ready and have the protocols in place to evaluate something, maybe many things, and registries are where you identify patients and then you follow them, and you can do trials in that registry. can you randomize people in that registry in one treatment or another and then follow them so these things are all linked together. this type of infrastructure though we don't really have too

much in the united states except we're driven really by patient groups who have gotten this set up to advance their disease, so i think it's a tremendous opportunity, and what ellen is talking about was really driven by patient group. lung cancer trials and a couple others going on. that trial right now is going to start out with probably five different investigational agents that can be evaluated so that every single person with that type of lung cancer if they are screened, they can be a part of that trial. they will turn no one away. >> would clinical trial networks work with medical devices? >> it would. actually we -- we back in 2011 had talked about how you might better identify centers of excellence, clinical trial sites that can do a better job and try to put out, should there be a voluntary certification, not something that governments run but market can really drive that, and then that's open to innovators to say that we know that these centers are very good

in these areas. devices wouldn't be a one size fits all. some good at heart surgery and some bowel surgery and that can help. not only on the data collection for something prior to marketing. think about it with those networks in place you might be able to rely more on data collection after it goes to market because those networks are there. they will be using those technologies. they are already geared to gather that information. i mean, we would love to see something like that here in the u.s. >> i just want to respond to the clinical trial that dr. woodcock just referenced that will be started at the end of the month. first of all, fda is at the troibl and not only drugs, we're using next gen sequencing so we're using a very new and interesting platform. nih is at the table. it will be done at every cancer center and every community in the united states, maybe even canada, and it's public/private

so we will learn very quickly. first of all, no patient will be refused access to a drug so everyone will be screened. 100% of everybody on this -- on the trial will be screened with next gen sequencing. if we don't have a specific buyer marker for that particular patient they will go into a non-matched arm and get immunotherapy so we'll learn a lot and it's efficient. it's much cheaper than doing a normal clinical trial, and companies have been very eager to join it, and it is truly public/private. it is the way of the future, but i did want to say that this will -- we do have senior age drugs and nih at the table at this. >> thank you, mr. chairman, and this is among the most interesting discussions in which i've ever been involved in this room and i want to thank both of you for it. there will be a test. that's why i've chosen to stay,

diane. i favor stable funding, dr. clips, and you and i have discussed this and i think that the roller coaster has been unfortunate, and the roller coaster should be confined to disney world or coney island. however, from my perspective i'd be perfectly willing to discuss in a cordial fashion how we move forward on budgets long term. perhaps we couldn't be as generous as would be optimal, but, of course, we need a partner in the senate that passes a budget, and i hope that we have a partner moving forward and we can have an honest discussion as to how best to fund nih appropriately in the national interest, and perhaps one of the ideas that has come out of this discussion this afternoon, and dr. burgess raised it is somehow reauthorizing the nih and i think that that is a very

interesting idea, and i'm all for naming a building for dr. burgess. now, we have a discussion about china, and i think it's informative, but i don't think it's dispositive, and to the panel in general, as i understand the system in china. it's quite different from the system here. here we rely on governmental funding. we rely on the nonprofit sector so ably represented by a great university and great charitable trust, and we rely on the for-profit sector, including the drug companies, many of which are headquartered in the district i serve. and we rely on venture capitalists so i would ask mr. leff, that three-legged stool on the for-profit sector, what should we be doing, recognizing we have a greater responsibility with more stable funding for the nih, recognizing

regarding various universities we need to make the system better so that only the -- the fact that only one in six grants is awarded should change. we ought to make that system better. regarding the for-profit sector which to me is an indispensable part of a larger hole, what should we be doing, repatriating profits from abroad perhaps, but what else should we be doing to encourage the for-profit sector in what is after all a system quite different from china's? >> this is a great question, and thank you for that question. you know, we've talked a lot about the investment in nih and this country, just to put some numbers on it, invests about $30 billion a year in nih funding and for medical research, but private enterprise, private companies and investors put about $10 billion a year into r & d.

>> yes, precisely. >> and hopefully it's obvious to everyone here that this 30 billion and 920 billion are deeply intertwined, and in order for the private sector to make those investments there has to be raw material coming out of the basic research, and we've talked a lot about that. in order for that investment in basic research to create new cures, there has to be that investment in private sector r & d to develop those -- those scientific discoveries into cures for patients. so talking about that 80 billion is important, and it's also got the benefit of not being quite the zero sum game that we have to come up with government funding in order to solve the problem. in order to enhance that investment, that 80 billion which i think hopefully it's obvious that if that goes up, all other things being equal will get more cures and coming out the other end. >> we will be saving more lines. >> not only here but across the

globe and including in china. >> absolutely, and creating more jobs in this country as well as saving more lives. if that goes down then of course the opposite will be true, so i would encourage this committee as it thinks about that issue to treat an economic problem with economic solutions, that is to say -- the decision that investors make and companies make about whether to fund biomedical r & d and which projects to fund and how much money to put into it is fundamentally economic. i mean, we all want to do it to save lives, but ultimately investors will put their capital where the returns are, and if the returns to investment to biomedical r & d is less attractive than investing in social networks or new electronic devices or natural resources or whatever it may be, then capital will go elsewhere so it's an economic equation, and i think when you look at the

recent history of policies coming out of congress and this committee and elsewhere, you can see that impact. you can see the kinds of things that have been done from a public policy point of view that have enhanced investment in biomedical r & d. would i point to the orphan drug act which is a great example, where it was recognize that had r & d credit for investing in orphan drugs as well as exclusivity for developing orphan drugs ensure that there is a better economic equation for making those investments, and we have seen dramatic increases and huge productivity of investment in orphan drugs. it's a great example. i think we've seen already some of the fruits of the gain act which was part of the fda safety innovation act in 2012 where exclusivity was provided for antibiotics that address resistant infections and we've seen a resurgence of private

investment in that extremely important area so there's just a couple of examples. what are some specific examples of what we can do going forward? well, one is to continue to enhance this dialogue about empowering the regulators with the tools to help speed development of the most important new therapies and, you know, it really was fda who came forward and said we need breakthrough designation as a tool to do what we all want to do here and that's worked out extraordinarily well in lowering the time and cost of developing certain therapies and attracting investment. well, now more recently fda has come forward and said we could really use a new tool which is sometimes called the special medical use pathway. also, you know, called the l-pad, limited antibiotic development and there's been legislation introduced in the house to implement that.

now that's a great step forward in that it's providing the consensus and the will of congress and the will of this country to give fda the tools it needs to apply the appropriate degree of flexibility to accelerate the development of certain kinds of drugs. i believe and many believe we ought to try to give fda what is asked for there, that this tool should be applied to not only new antibiotics but every categories where it could help accelerate cures to patient. you know, that's one example. certainly, when we talk about tax reform and when we talk about economic incentives, these things matter, and they matter to the biomedical industry, and they matter to investment. you know, one other dimension to mention here is how we pay for these new and innovative therapies when they come to market and this is a really difficult issue because we all

know expensive therapies cost money. they cost the budget money and they create challenges for access to the patients who need the drugs. at the same time if we're not prepared as a society to pay for the real innovations that provide real value and real cures to patients, then investors won't make those investments and providing, i think, a -- a dialogue which recognizes the value of innovation and recognizes that it's appropriate for new therapies to have a period of exclusivity in which they can recoup their investment and for the ones that provide real value to patients and really save lives, we ought to do everything that we can to figure out how to accelerate them to market and then have a consensus for the way in which we pay for them in a manner that creates the cycle of further private investment. >> thank you. let me say that this is an issue that deeply interests me.

i hope that we can work collaboratively in a bipartisan capacity on what is a three-legged stool in this country, and, mr. chairman, and to the others who are leaders in this, i think we will as we will have to work with the ways and means committee because i think there's fundamental tax policy involved as well as the wonderful work that we do on this committee. thank you, mr. chairman. >> i know margaret has a quick thing and jim a quick thing. i just want to say, too, it's my understanding that dave camp will usher through the r & d tax credit very soon and i expect that on the floor very soon. margaret and then i'll let my colleague in crime say a few things and i'll close things out so we shouldn't be too much longer. >> two quick things on economic. so at the front end of the -- you know, sort of funding conundrum, the work of dr. andrew lowe has really achieved, you know, sort of star

status inters of the creation of a cancer mega bond, and you can insert any disease state or pathway. the idea is how do we aggregate risk in terms of funding that can go to companies that are doing development of products? i think that that is certainly one that the group should be looking at just in terms of the themes that he's articulated and then this issue of how we're going to pay so the global conference just convened a panel discussion on this that was extremely inciteful. if you build it, will they pay because now we have to worry about what do we do with this innovation? can we afford this in the larger health care system so i think there's an exciting opportunity here to close the circle a bit. if we can prevent disease, then, please, let's prevent it, and, boy, do we have a lot of prevention work that can happen. if we need cures let's figure out how to fix that part of the system so we can get the funding

and we can do that and do we need to pay attention to the other end, too. how are we valuing the information and how are we as a society going to be able to sort of take in what's coming through? i will say that in years past, you know, jonathan in his work and, you know, much of the work being presented here. when we were all at meetings on innovation, big bugaboo that you always heard, the boogie man, the fda. oh, fda is responsible for all the problems, not true obviously and not what you hear now. i e-mailed some colleagues at the fda. recently i was at mass bio and i said interesting, fda is not coming up at all. what's coming up is the specter of not being able to have products be reimbursed and so i think that that's one that everybody can really sort of lean in collectively and start talking about this value equation. >> so to further comment on the economic realities. one of my responsibilities is to

balance the budget for the medical school. while we get in 460 million in external funding last year, for each dollar that comes in, we spent about 25 cents and were very efficient in extra dollars that had to support the research enterprise, and that's to mr. barton's point and the importance of cms because where those dollars come from for most academic medical centers where there's a mission, not an option to invest other places, but it's the mission to do research and education. those dollars primarily come from clinical revenues. a little bit from philanthropy, but you do the math, and it's huge endowments that would be required to make up that gap, and that's why the decisions on funding that are made from cms which drive the privates are so critical to this research

enterprise because it's not just nih, but it's that supplement that every academic medical center puts in to the research enterprise where it's the mission to look for the cures. it's not an option. >> well, i just want to say this -- this met or exceeded my expectations, and i want to thank everybody for coming today, and i really want to thank -- most of the members have left, but i can't really remember a more robust discussion among members of congress that we've had either about looking in a visionary way to the future, so thank you all for participating in our introductory effort. fred, i'm excited to hear what your plans are next, but i just have a couple of comments. the first one is, you know, joe,

when you asked the question about funding, it wasn't just dr. collins who has a personal interest and creates funding for the nih. it was every single one of our guests today across all political backgrounds, all fields, all agencies and everything, but -- but it's really not just a matter of let's just increase the budget of the nih and/or the fda because it's not linear, you know. it's not like purchasing things. it's not like purchasing worships or something like that. you spent "x" amount of money and get "y" amount of cures and that's why these discussions are difficult. it seems to me that it is the. a funding, it really is. we still are the top -- we have the biggest commitment of anyone in the world to this kind of funding, and some of the legislation i've worked on over the years, when i did my stem cell legislation and traveled

with other countries and met with their researchers in these other countries, they were saying to me we need to have stable research in the united states because we're hocking on, you know. the israeli researchers or the people in singapore or in london or whatever, they are hooking on to our basic research so it's not just -- when we cut research here, it doesn't only affect our junior researchers. it affects these other researchers around the world, and no amount of increased investment by these countries can make up for that knowledge that we have, but that's also why we really have to make sure that we do keep the funding steady and robust because otherwise we won't have those researchers here who are doing that research that everybody else is hooking on to, so that's the first thing is we really do have to have a sufficient and robust research budget and it has to be steady over long

period. i think there's been a lot of good discussions today. the second thing is that we have to be able to maximize the results. this is something that -- nobody really asks this question also dr. burgess did bring it up a little bit is that when in 2007 when we reauthorized the nih, we did some pretty good restructuring, as you might remember, mr. barton, and we did that because when the nih was set up, it was set up with all of these different agencies which was wonderful, but the nature of research has really changed, and so you had to be able to do all kinds of interdisciplinary research, and that's why we did the structure of the nih at that time. we've made a lot of innovations over the years working in conjunction with the fda, and i'm very pleased to hear from the witnesses that a lot of that seems to be working. and this is all a very long way of leading up to my question which is -- and you may not even

be able to answer it today. one thing that fred and i are really thinking about as we look at this big picture view is are there ways going forward that we can restructure or tweak the structures of some of our key research agencies, not just the ones represented here today but cdc, the labs, other agencies, so that we can encourage more of that targeted interdisciplinary research so that that will not only help us find cures faster and help with diseases in this country and around the world, but also lead to a greater degree of efficiency and efficient utilization of resources. >> so i very much appreciate the question. i think actually the science agencies and the people who work within them are increasingly

pretty good at figuring out opportunities for interdisciplinary projects and doing them together, and you can see more and more evidence of that, but there are bureaucratic barriers that get in our way. and if one of the requests that you all are putting forward is to have some information about those, i think we could all make some suggestions. some of these may seem like small ball kinds of issues, but they can really get in our way. for instance, scientists cannot travel to conferences without an enormous amount of paperwork and oversight which is really quite deadning to the scientific community which ends up costing the government more money because the oversight is so slow and onerous that you often miss a registration for an earlier cost and pay a higher cost for the travel. i mean, it's actually pretty offensive to many scientists to have this kind of approach that is the lifeblood of how you build these interdisciplinary

connections and that's to get together to talk about the shared ideas. that's a place where we could use some help. i think jim woolscroft mentioned the things that come down on the heads of his researchers, effortless kinds of reporting. in terms of the many reports, i think many of you saw the "washington post" documenting more than 2,000 reports that are somehow still on the books that congress has asked for which it's not clear anybody reads and yet many busy people spend their time compiling these reports. a bit of housecleaning here would be most welcome, especially from those of us who end up spending a lot of our time trying to do that or asking our staff to. those sorts of things. are you interested in that kind of some feedback? i think we would all love to provide that. >> you know, i wanted to comment a little bit on the concept of

interagency interactions. i spent a fair amount of my career in the department of energy national laboratory, and i think one of the things that the biomedical enterprise benefited from in the early days of the atomic energy commission and d.o.e. and so on was the ability to bring to bear some of the really great engineering and physics skills, mathematical skills that are present in the national laboratories to bear on biomedical problems. and i think that one of the things that's happened over recent years is a certain degree of compartmentalization of mission so that the nih takes care of life sciences and the department of energy is worried about other aspects of biology and science, but there is, in my opinion, a great deal to be gained by bringing these agencies together so that they can combine the multiple disciplines that they each

encourage in pursuit of some of our really important biomedical problems. it would help us a lot if we can do that. >> jonathan beat me to the lpad punch, but i'm going to take this opportunity to talk about the adopt act that have been introduce for the production of new antibiotics. it does deal with the subject so bear with me a little bit. the fda would be given the flexibility to develop antibiotics for serious conditions meeting an unmet need with smaller data sets so that the indications would be targeted and the clinical trials would be more feasible, and it would be cheaper to develop these products for which there

is a great need and then that raises the question because these drugs won't be studied in broad populations, how do you make sure that they are not used in broad populations because there is ben fitted calculation which may not match up for someone with simple pneumonia, and so the adapt act uses cdc infrastructure, the national health care safety network, to monitor how these drugs are used. so it's not looking at an individual prescription but rather kind of a broader approach, just sort of looking at more broadly how the drugs are used to make sure that the drugs are used the way congress, if congress passes this legislation, intends it, and i think it's a really interesting way to use fda and cdc together to help bring -- to enencourage these new drugs and make sure that the -- that they are monitored. so it's something that -- it's a little outside box. you asked about collaboration in

terms of science on the front end. this is collaboration object back end which might be post-market surveillance and that goes to that theme and i think it's extremely important as well. >> thank you. you know -- go ahead. >> i want to echo but go further on this, calling smu or lpad. i think there's a compelling need for antibiotics, no question about it, but i also think there's a compelling need for alzheimer's and big diseases that we're not making a lot of progress on, and i would really encourage we look at how that can be done in whether there's a buy-in by fda and by companies and by other patient groups because there is a compelling need, and weary not going to get it just like on the lung cancer trial. one drug at a time and one patient at a time, and i think there are opportunities for us to come together and look at that and -- and not only look at maybe restricted use but really look at what we can get in a

post-market situation where you really are going to get a lot of good data. >> thank you. i just want to, first of all, thank the staff. they work very hard and the right witnesses here arranging for everybody's time, and really this has been for about five months we've been beginning to plan this event, and i have to say when i got my first gavel as subcommittee chair, the rule on my staff way back then was i really don't want more than four or five witnesses at the table because i'm going to lose everybody and votes are going to happen and we'll miss our planes and all of that. this was a little violation of the rule but you all, 11 of you, were really terrific, and i know you've got a lot more to say and we've got a lot more time to hear you as well. but more than you, there's a lot of other folks that want to contribute as well. that's what's exciting about this. because when we think about, you know, from the government side, how do we make the government

work better? how do we get faster cures? lots of -- so many talented people involved, but so many people, too. all the disease groups looking and patient groups looking for the answer that we can help provide, and that's how it's exciting. everyone talked about a uniform budget process. you know, you look at private sector a often it's a four or five or even eight-year plan that they know that they are going to be doing. for us in congress, it's not even year to year because you've got sometimes crs, continuing resolutions that are short-gapped. i was on the super committee. i was one of those that wanted a solution so that we didn't have to rely on the sequester, and, you know, the good news was that at the end of the day last december we actually did passion a two-year budget. that sets the stage for the appropriators to really do their work. for me as a longtime budget reformer i would like to see a

two-year budget always. it's a great step, but this now allows the appropriators to do their work. it's one of the things i know steny hoyer would have liked to say today, the right level within the hhs budget, and we're going to try to make sure that that happens. i hope that that bill makes it to the floor, and i hope that the level is adequate, and if not, i know there are republicans and democrats willing to find other offsets to make sure that it is the right level to -- to really do their job, but this is the first step. i think that's been a very thoughtful bipartisan for sure and no partisanship really, the first step of where we want to end up. i know that joe pitts and frank palone will be working hard a the chairman and ranking member as we think about the process. next steps, already diane and i have been listening about let's get the labs here. there's a lot of folks who we

want to hear from, and, remember, and dr. francis, dr. collins, i mean, the ideas of limiting the bureaucracy, limiting the paperwork, the crazy rules that are out there, we can fix that. but we can't fix it without hearing from you first, and that's what's important, and so for the folks that are not in this room that perhaps are watching today or maybe even next week as they watch a replay of this cures@mail.house.gov where you have direct impact to all of us, and we look forward to a lot more thoughtful hours as we figure out the course to make everybody's life one that we want to support. thank you. >> thank you.

tonight at 8:00, the annual net roots nation conference from earlier this year in detroit, including remarks from activists on a number of issues like sexual assault, gay rights and income inequality. here's a preview. >> you are drinking. what did you expect? those were the first words that someone told me when i confided in them eight years that i had been sexually assaulted. it was these questions about my choices as opposed to say the choices of my rapist that were some ways more painful than the violent act itself. i stumbled into rape culture, a world in which rape is seen as the norm and victims are blamed for their own assaults. you see, there are many myths about rape. it's a myth that there are blurred lines of consent. it's a myth that rapes are

committed by strangers jumping out of the bushes. it's also a myth that rape cannot happen to men. what's true is that rape culture is very real, and i know you've all seen this picture before. this picture is supposed to represent love and patriotism and romance, but what you might not know is that these two people are strangers which makes this picture an assault. fast forward to last summer when robin thicke's "blurred lines" was the number one song in the country and feminists and allies spoke out and said no, enough is enough. i refuse to accept this, and he went from number one on the charts to the number one creep just a year later, because when you see a statistic like this one that only 3% of rapists ever spend a day in jail, i want you to be as horrified as i am, because this is not just my issue. this is not just a feminist

issue. it's everyone's issue. >> that was a preview of tonight's airing of the netroots nation conference. watch the entire thing beginning at 8:00 p.m. eastern on speeches abe. here on c-span3, we continue our look back at the event of the summer of 1914 and president nixon's last weeks in office. tonight, part of the house judiciary committee's day long debate over article ii which charged president nixon with abuse of power. also, a conversation with the former director of the richard nixon presidential library and museum. he explains why the abuse of power charge was at the heart of the impeachment proceedings and how the committee's vote continues to shape our understanding of presidential power. that's all tonight beginning at 8:00 eastern here on c-span3. american history tv on c-span 3 this weekend. friday night at 8:00 eastern, watergate 40 years later with a

cbs special report and president nixon's address to the nation. saturday at noon eastern, a live call-in program with author and journalist john farrell on nixon's life, legacy and the watergate scandal that ended his administration. and sunday night at 8:00 on our series "the presidency," gerald ford becomes the 38th president of the united states. this weekend on c-span3's american history tv. the house ways and means subcommittee on health recently held a hearing on hospital coverage issues with the medicare program and the centers for medicare and medicaid services rules regarding in-patient and outpatient payments. witnesses include officials from johns hopkins hospital, the center for medicare advocacy, along with hospital physicians. this is an hour and 15 minutes. >> thank you very much.

made the introductions earlier so we will for the sake of time go right into testimony. you're recognized for five minutes and welcome to all of the second panel. >> chairman brady, ranking member mcdermott and distinguished members of the subcommittee, thank you so much for this opportunity to testify today and share the johns hopkins experience on these important issues affecting hospitals in the medicare program. i'm amy deutchendorf, i'm a nurse. i'm responsible for ensuring the appropriate utilization of patients in the right care setting and that includes care coordination and the readmissions reduction initiative. my remarks today focus on two major changes, the cms definition of an inpatient, the two midnight rule and the agency's audit contractor program, both of which are draining precious hospital resources which need to be redirected to quality patient care delivery. we know that the two midnight rule was spawned out of an

attempt to reduce lengthy stays but unfortunately the rule adds a new layer of complexity but does not meet the cms objective and has created confusion and stress for our providers and patient and has been operationally difficult to implement. our observation rate has increased by 33% as a result of the to midnight rule. it's taken away physician judgment in the determination of hospitalization as an inpatient and has instead required our physicians to become soothsayers as they they try to project whether a person who presents to the emergency department with a number of issues. more importantly under the to midnight rule we provide serv e services that only a hospital can provide sometimes in the intensive care setting and we're calling them outpatients in the new world. this concept belies any rationality and has created safety and quality of care

concerns. medicare patients are being billed differently than other patients in equivalent services. they are subject to paying deductibles and co-pays associated with part "b" benefits which could be up to 20% of their hospitalization. they think they are coming in for hospital care and their benefits cover that. we've had patients who have left and refused important diagnostic studies and medications as a result of increased financial risk. the to midnight rule is especially devastating for academic and safety net hospitals, a reduction in patient volumes as a result of the to midnight policy which has redirected dollars for necessary hospital care to the outpatient system, causing the loss of payments for critical community programs, indirect medical education, general medical education and disproportionate share payments at a time we need them more. since its inception it's created enormous financial burden on hospitals as we struggle to stopped to the plethora of

medical request questions and to the denials and mount appeal processes. it's targeted short stays. again, the assumption that these stays are medical unnecessary. in trout, short hospital stays are good and reflect the efficient and appropriate management of care, some of which can be very intensive. an though hopkins has a rigorous compliance process for which we review every day of every single medicare patient stay for medical necessity rac denied 60% of the medical records requested. only 60% were overturned to discussion even before the first level of appeal. the rest of our 92% are in the appeal process. the rac program is costing american hospital millions of dollars in administrative burden to manage the requests, denials and appeal processes as well as the financial hit for revenue losses for care that was

provided to patients. there are a lot of smart and committed legislators and policy-makers who have put their heads around these issues to come up with solutions that are workable. unfortunately, with each iteration and layer of new ideas come complexities and unintended consequences that seem to yield the opposite result. in the case of the to midnight rule, congress and cms should consider reverting to an earlier time, that before october 1st of 2013 and reinstate the determination of inpatient hospitalization based on physician judgment with one caveat, that patients who are hospitalized for greater that be two midnight for medical necessity and medically necessary hospital service should presume to be inpatients. if we're thoughtful about reform the short stay problem goes away and alternative short stay payment policies become unnecessary. congress should consider the formation of a multi-stakeholder collaborative working group to develop a sound alternative to

the current medicare audit program. we appreciate congressman gurleyiac and congressman crowley's leadership as the lead sponsor of hr-3698 and chairman brady, thank you for your attention to this issue and holding a hearing on it. having nearly half the members of this committee support this needed reform sends an important message to your hospitals and to cms that this issue must be addressed. the two midnight rule and the rac program are training precious resources and attention that need to be more effectively focused on patient care. johns hopkins and hospitals around the country stand ready to work with congress and cms to support these efforts. thank you so much for allowing me to testify. thank you. dr. evans. >> chairman brady, ranking member dr. mcdermott and members of the committee, thank you very much for this opportunity to testify before you today. i am dr. ellen evans, lead

physician with health data insights, the region "d" cms recovery auditor. i am a proud graduate of the university of texas medical school, residency trained, board certified >> i joined hci during the iraq demonstration program. at hdi, i oversee all of our medical and clinical reactivities. the recovery audit program is not focused on fraudulent payments. we review sclams to ensure compliance with medicare practices and, also, identify underpayments that are returned to the providers. this component is a critical care under medical operations because over $30 billion are improperly paid by medicare every year. since passed and implemented in 2006, over $8 billion in

properly-paid medicare dollars have been recovered as well as over $700 million in underpayments returned to providers. recovery auditors identify the types of claims that are most at-risk of improper payment by employing vast auditor experience and using federal publications such as hh.i.s. and survey reports. cms has limited to 2% of medicare claims for any given provider. all medical reviews are kukd by licensed and experienced clinicians who undergo extensive kov comprehensive training. the provider can initiate a

discussion period before formally appealing the denial. this is in addition to the usual cms appeals process. though the program has proven to be cost effective, recent restraints have caused a decrease. first, as part of the implementation of the two-night rule implementation for 18 months. second, the program would be suspended until new projects are in place. these two changes will result in over $5 billion of improper payments not being restored to the medicare trust fund. now, let me provide you some facts about the program. this means recovery auditors are incentivized to work accurately and precisely.

second, according to the most recent cms report to congress, 7% of all determinations have been overturned on appeal. third, recovery auditors are accurate. giving recovery auditors a couple la sill accuracy score of over 85%. finally, recovery auditors target improperly-paid claims of all types. yet, medicare data have noted consistent high-care dollars for in-patient stays. it is imperative for the lo longevity of the trust fund that it stays. expressed by the hospital communities surrounding the to midnight rule. we want to work with cms and the providers to bring clarity to the rules. as the committee moves forward on this important issue, i offer the following recommendations

for the program. first, we support the alj appeal reforms outlined in the november, 2012 hhs office of the inspector general report. second, we support education to increase support. lastly, we support increased dialogues to improve the direction of the program. we are pleased to be a part of the dialogue today. i appreciate the opportunity to appear before you all today and would be pleased to answer any questions that you may have. >> thank you, dr. siey. >> thank you for the opportunity to testify today on observation status, the to midnight rule and

related issues. i'm a physician in madison, wisconsin. i'm a hospitalist, which is a physician who cares for patients primarily in the acute care setting. i'm also a member of the association that represents the nation's more than 44,000 hospitalists. to a physician and a patient, the care provided is indistinguishable, but is considered out-patient not covered by medicare, part a. many beneficiaries ask how they can be outpatients. many ask me to change them to in-patient which is something i cannot do. the centers for medicare and medicaid services describes observation as a well-defined set of services that should last no more than 24 hours. we publish our university of wisconsin hospital data last summer. the average observation length of stay at our hospital was 33 hours and almost one in six lasted longer than 48 hours.

we also had 1,141 distinct observation codes. we concluded that observation status for hospitalized patients was markedly different from the definition i just stated. the stay was longer than 24 hours, observation stays above 48 hours was common and the observation codes show that this was not well-defined. real clinical practice is vastly different. any attempt to reform observation policy must recognize how far observation status has strayed. this problem is getting worse with more beneficiaries disadvantaged. 28.5% increase with a 12.6 decrease in charges over the same time period. as the committee is aware, cms whether i shalled a new policy for information status. as of october one, patients staying less than two nights

will be there for observation and enforcement. the to midnight rule has been challenges in observation care. for example, a medicare beneficiary may be hospitalized with pneumonia. if that patient happens to get sick and present to our hospital tuesday at 1:00 a.m., this means i would discharge them at 5:00 p.m. on wednesday, a one-midnight stay. but if they come at 10:00 p.m. on tuesday, i would discharge them at 2:00 p.m. on thursday, a two-midnight stay. this is not just a theoretical finding. in a second publication last year, we found that almost half of our university of wisconsin hospital, less than two-night encounters would have been assigned observation status. clinical

clinically, a patient with diabetic ketoacidosis may be sick enough with an extraordinarily amount of services that could be life saving. yet, these patients can improve quickly, sometimes in 24-48 hours. now, a short stay. even in the intensive care unit, can be considered outpatient. we need more transparency in oversite of medicare's all itting programs. the reality is the rap program costs all of us. we have won every single appeal. essentially, our hospital pays to repair these cases in order to prove we were right the first time. but the rack pays no penalty for generating this work.

on the process of defending themselves. in addition, the federal government ultimately pays for unchecked activity and the appeals process on the case backlog. at a direct cost of the federal government. to, again, consider the patient with diabetic ketoacidosis needing intensive care for two nights, why would i not just claim two-night status. this means an auditor who never met the patient in question, a year or more after the patient discharged his home, may decide to question an audit. the ability to do what is right can be trumped by the rap system. in conclusion, observation status certainly merits reform:

i would caution that observation reform to enforce observation rules. the society looks forward to working with the committee and identify workable solutions to problems mr. chairman, members of the committee. i'm a senior advocate for the center of advocacy. the center is a nonprofit, nonpartisan public interest law firm based in connecticut that provides education advocacy and legal assistance to medicare beneficiaries. we are very please today be invited to testify today about the impact of medicare patients of outpatient status and observation status. six years ago, a woman called our office with a medicare problem.