ruben speak sheryl sandberg, here's a preview. >> it's worth noting that nonus of really know anything about the future. we certainly don't know how economies perform and we live in a messy, dark, scary uncertain world,. >> but that said -- was that a scary, dark, uncertain world? >> i mean that is the normal state of mankind. >> slightly less dark. >> we're a lucky country. a much stronger country than any other major economy. and if you look at the

challenges we face as a country, they are pretty stark challenges and our politics are terrible. but i would think you would rather have our challenges than any major emerging economy around the world. >> watch that entire event from the milken institute's global conference tonight at 8:00 p.m. eastern on c-span. here are some of our featureded programs for this weekend on the c-span networks. on c-span, saturday starting at noon. politicians, white house officials and business leaders offer advise and encouragement to the class of 2015. speakers include former president, george w. bush and chair of dreamworks animation. at 9:15. former staff members reflect on the presidency of george h. w. bush. and sunday afternoon more commencement speeches from across the country with former secretaries of state condoleezza

rice and madeline albright. on c-span 2 saturday morning book tv is in new york city with events from book expo america beginning at 10:00 and live call-in segments throughout the day. sunday evening at 9:00. we look at a case that considered the constitutionality of proposition 8, and on american history tv on c-span 3 saturday evening at 7:00 eastern, a conversation with white house historian on first ladies with the most impact on the executive mansion. and saturday just before 2:00, the life and death of our 20th president, james garfield, who served almost two decades as a congressman from ohio, and was assassinated 3 edd 200 days into his term as president. get our complete schedule at

c-span.org. dr. francis collins recently testified on capitol hill on president obama's precision medicine initiative. it's a research effort designed to improvement treatments for diseases like cancer and leukemia by tailoring health care to the individual. not a one-size fits all approach. this is an hour and 40 minutes. >> the senate committee will please come to order. this morning we're holding a hearing on continuing america's leadership, realing the promise promise of precision medicine.

we'll have an opening statement, then introduce our witnesses, who are getting to be very familiar to us. we're very grateful to you for coming. after that, we will have time to ask five minute rounds of questions or two, depending how many senators are here. we are here today to discuss exciting new direction in our health care called precision medicine. what does that mean? well, those of us in the room a good representation of the population, they estimate one in ten of us would have diabetes. if doctors could use precision medicine, that is if they could look at our individual dna and genetic, molecular makeup of disease, perhaps they could tailor treatments to each individual rather than to more general category of diabetes. i was visited this morning by the head of philadelphia children's hospital who talked about their work in identifying a defective gene, mutated genetic defect that causes blindness, and how they have

developed a therapy that restores the sight in a child because of the therapy directed for that specific genetic defect. this is happening with cancer treatment. doctors can look at the cancer cell and assess how to treat it. news week reports genetic testing on tumors is starting to become the norm in the big cancer hospitals, like sloan kettering, all incoming patients have their tumors sequenced. this is all possible because of extraordinary achievement by a great many individuals on sequencing the human genome, none more important than dr. collins who is here today. we are grateful for that. today we want to discuss what

national institutes of health and private industry are doing in precision medicine, how the food and drug administration will regulate those innovations, how electronic health records can effect the ability to innovate and what this means for the american patient in the health care system. it is one of the most exciting new frontiers in medicine. senator murray and i are working on initiative to ensure our federal agencies are equipped to review medical products and processes produced by this kind of cutting edge medicine so american patients aren't waiting on the sidelines because regulatory science can't keep up. our innovation initiative is not just about precision medicine but precision medicine is an important part of our initiative. president obama announced a precision medicine initiative in the state of the union this year, he detailed his plans at

the white house and i attended that to demonstrate my support. the president proposed mapping gee gnomes of 100 individuals and making it available to medical researchers across the country. look forward to hearing more from our witnesses. there are similar private efforts under way. i am interested in hearing about that competition and about possible collaboration, for example, children's hospital of philadelphia that i mentioned has 250,000 individual children genomes sequenced there. i wonder how useful that would be to the one million dr. collins is putting together, how these scientific entrepreneurs, dr. ventner in california, philadelphia, other places, how that relates to the president's proposal for a million individuals. i look forward to hearing the cost. the cost to the human genome have been reduced in the last two decades. dr. collins testified i believe that he said 15 years ago would cost about 400 million to sequence the first human genome, whereas today it is about

$1,000. very often in health care innovation initially increases costs, doesn't mean we shouldn't innovate. they can increase costs but in the long term decrease health care costs. take alzheimer's which according to alzheimer's association will cost $226 billion this year, along with other dementia. we could use precision medicine to delay onset or cure of the disease. save precious dollars in health care systems and alleviate some grief and pain associated with it. the committee has spent time and will spend more on improving electronic health records. the federal government has spent $28 billion to drive the adoption of these record systems and the results is that doctors don't like the systems. they interrupt the doctor-patient relationship and haven't been worth the effort.

senator murray and i begun a working group to identify the five or six thing we can do to help make the failed promise of electronic records that something that physicians and providers look guard to. instead of something nay ensure. dr. desalvo, we look forward to working with you on that. and looking forward to results that you take administratively or we do legislatively. we have to get to a place where the systems can talk to one another and smaller physician's offices want to adopt the systems, can't afford the cost, can be confident their investment will be of value. dr. collins told us that a properly functioning electronic medical records system is tremendously important to the president's precision medicine initiative. it can help to assemble the genomes of the one million individuals. and second if we want to make genetic information useful, this

is complex stuff. it's going to take computers that operate easily and with a click of the house to help make it possible for doctors to actually prescribe prescriptions for individual patients. also would like to hear if we know dr. desalvo, at some point, how the $11 billion effort by the defense department on electronic medical records would relate to the $28 billion we've already spent, and whether those will be compatible and whether you'll be working with them. there's a lot to talk about today. this is a tremendously interesting and important effort. and i look guard to the witnesses' comments. senator murray. >> thank you very much, mr. chairman and thank you to the witnesses for being here today. each of your agencies plays a critical role in the topic we're talking about and i'm grateful to have you here to share your expertise. i've approached our bipartisan

effort to advance medical innovation focused on one question in particular, and that is what can congress do to help all patients and families get the safest most effective treatments and cure more quickly. our conversation today is about the promise of precision medicine and it's a crucial and truly exciting piece of the puzzle. there's in question we're at a critical moment in the medical field. researchers and medical experts are increasingly finding ways to treat patient, not just as the average patient but instead based on their own unique characteristics and history. this is the different in getting eyeglasses based on the average prescription and getting eyeglasses based on your own prescription. it's huge, especially for families across the country waiting and hoping for better

cures. i'm proud that nay home state of washington is home to several institutions that have been pioneer in this area, the university of washington, which is using this precision medicine technology to tackle breast cancer, eye disease and alzheimer's disease. i'm glad we have to opportunity today to discuss the ways in which precision medicine is changing and improving lives and how congress with help advance the new frontier. the president has proposed making significant investments in precision medicine. his physical year 2016 budget has a budget to advance the genomics and data management to shift away from the one size fits all medicine to treat tailored to specific individuals. this proposal could accelerate the advancement of precision medicine. as i discussed with dr. collins last week, i'm deeply troubled with the nih's purchasing power. they were able to come together to replace the harmful sequestration cuts to nih and

fda and other critical priorities like education, infrastructure and defense. i'm am hopeful that we will be able to work across the aisle and find a way to prevent these short sided cuts in kicking in again. this is absolutely critical to the kinds of investments we need to keep our -- make our families -- to help our families and grow our economy, including precision medicine. one of my top priorities on this committee is to look for ways to continue improving the quality of care patients receive and supporting precision medicine is essential to that goal. by offering patients and provider misare and much better health information, patients in consultation with their doctors will be empowered to make informed decisions about their care. and our health care system will

be better equipped to put their needs first. protecting privacy will be an important challenge throughout this process. in the last few months we've seen serious security breaches impacting families' health information. that is unacceptable. as researchers, providers and patients gather together, we need to be aware that data is being created that cyber criminals will want to exploit. that means we'll need to develop strategy to protect privacy that meet today's challenges. chairman alexander and i are investigating the current state of cybersecurity in the health sector and this needs to be an all hands on deck effort with providers, insurance and government working together. thank you to all of our witnesses for being here today and i want to thank chairman alexander for holding this meeting. and i look forward to working together with you, mr. chairman, and other members of the committee to support this important initiatives. >> thanks, senator murray. to the underscore what senator

murray said, this specific topic is an issue with the president which the committee in a bipartisan way is interested. we have three witnesses and i'll ask senator cassidy if he would like to introduce the first one. >> yeah. dr. karen desalvo and i know each other from way back when i was full time with lsu and she with tulane. i told her that we made the spread tulane green today. she's at the office of the national coordinator of health information technology. onc is the lead agency charged with formulating the federal government's i.t. strategy. i've been impressed. dr. desalvo has come to me personally. there's a friend back home who's having a lot of problems with her medical record and adapting to it. she clearly recognizes interop ability is key. she's listening to the physicians and developers of this product. he was a health commissioner for the city of new orleans, including and after hurricane katrina. >> we look forward to you testimony. we expect to get to know you pretty well here because all of us are interested in fixing the electronic medical records system. and you're on the point for that according to secretary burwell. we look guard to that. our other two witnesses, dr. collins, the director of the

national institutes of health who oversees the work of the largest supporter of biomedical research in the world. he's been the director since 2009. and of course he's known among other things for his leadership of the international human genome project. completely sequencing the human genome in 2003. dr. jeff shuren was here last week. he's at the food and drug administration for more than five years. they're responsible for sharing the safety, effectiveness and quality of medical devices, and

fostering device innovation. we welcome him back. if the witnesses would summarize their remarks in about five minutes, we would appreciate it. we have senators here who want to have a conversation with you. so let's start with dr. collins. >> well, good afternoon, chairman alexander, ranking member murray and distinguished committee members. it's an honor to appear before you to discuss how we can advanced americans' health. earlier this year the administration unveiled the precision medicine effort, a bold new initiative. we believe the time is right for this ambitious initiative and the nih and our partners will work hard to achieve the initiative. we've had to make decisions based on the expected response

of the patient. this one size fits all works for some patients in some conditions but not e others. precision medicine takes into account individual differences in patient's genes, lifestyles. blood typing, for example with has been used to guide blood transfusions for almost a century. the identification of the brca one and 2 genes has made it possible to provide options for women at high risk of breast or ovarian cancer. and the gene discovered in my own laboratory 25 years ago has led to wide spread ability of targeting therapeutics. but the concept of applying the

concept broadly has been dramatically approved by the development of affordable methods for characterizing biological information. that includes genomics, the recent revolution in mobile health technologies and the emergence of tools for analyzing large biomedical data sets. patients are increasingly interested in taking part in research. all of these developments will help make possible the dream of processing a wide range of health applications. we're thrilled to take a lead role in the multi-agency precision medicine initiative. this initiative will focus on cancer, accelerating efforts.

this component will include the molecular analysis of large numbers of individual tumor to see what gene mutations are driving the malignancy and matching that information with available targeted therapeutics provided by pharmaceutical industry partners. simple blood test will be developed that can detect early response or resistance to drug therapy. and a combination of drugs will be tested to see how best to achieve not just a remission but a cure. to put a human face on this, i would like to paint you a forward looking picture of what the precision medicine can deliver for cancer in a few years. consider the hypothetical case of lily, a 52-year-old woman of asian decent. in 2018 after battling bronchitis and a persistent cough were lily goes to her doctor ordering a lung screen along with a new blood test to look for dna and other biomarkers circulating in her blood. the ct scan detects a tiny spot

that could be inflammation from cancer. not clear. but it's revealed a genetic mutation that occurs with patients only with cancer. her prognosis from this cancer today would be pretty grim. but in 2018 that could all change. lily is treated with surgery to remove the tumor and the tumor dna undergoes molecular analysis. and she was treated for a target drug that was originally developed for skin cancer but has the right therapies for her tumor. with this treatment a decade later, lily remains cancer free. that's a hypothetical but quite realistic of what the cancer component of this initiative could achieve. as a longer term goal, nih will launch a national research

cohort of one million volunteers who play an active role in how their medical information is used to manage a broad array of diseases. the participants will be centrally involved in the design and implementation of this process. they will be true partners with appropriate privacy protections, they will be able to share genomic data, lifestyle information and biological samples all linked to their len electronic records. participants will be able to have access to their own health related information. new approaches for detecting and analyzing a wide array of variables will be initially tested in small pilot studies focused both on prevention and management of disease. ultimately the most promising

approaches will be utilized over time to collect valuable data that will be of great benefit to both researchers and patient partners partners. example of how this can benefit a specific person but also provide evidence for a new strategy for health maintenance that could be extended across the nation. consider the case of 38-year-old precision medicine initiative participant carla. it's 2020. carla feels healthy. she welcomed a chance to try out a wearable sensor that monitors her pulse, blood pressure and medical activity. but discovers that her blood pressure runs 150 over 200, too high, increasing her chance of stroke and kidney failure. carla is not alone. nationwide 78 million americans one out of three adults, have high blood pressure. many like carla, don't even know it. what's worse, nearly 50% of those diagnosed with

hypertension do not have it under control. carla consults with her doctor who confirms the need for treatment, suggests she takes an inexpensive diuretic drug. carla obtains a smart bottle that sends a message to her smart phone if a dose is missed. so she takes her pills on schedule, returning her blood pressure to the normal range, avoiding future medical crises. so the precision medicine initiative will also bring many types of health care monitoring into this new century. current evidence suggests that the annual physical exam and associated screening lab tests may not be as useful as one would hope. but new opportunities to incorporate specific indicators of individual health are emerging. this national research cohort will provide a powerful opportunity to ape says such strategies rigorously to see if they provide clinical valuable information and better health outcomes for the american people. in closing let me emphasize that

the impact of the precision medicine will extend far beyond the individuals who volunteered to participate. it will push the frontiers of discovery across the entire spectrum from basic science aimed at finding new research to translation science for maximum public health benefit. given the size of the project and its real world nature, evidence of improved health outcomes derived from this initiative will be attractive for immediate application across u.s. medical care. with sufficient resources and a strong sustained commitment of time, energy, and ingenuity from the scientific, medical and participant communities, the future of precision medicine appears very bright. we really look forward to working together to make stories like lily and carla a reality. that concludes my testimony. i look forward to answering your questions. >> thank you, dr. collins. dr. desalvo, welcome. >> thank you, senator alexander and ranking member murray and to the other distinguished senators. thank you for the opportunity to

be here today with my colleagues, dr. collins and dr. suren. i'm karen desalvo were the national coordinate at the department of health and human services. when i was a medical student at tulane i could never imagine that in my career i would see me medicine on the frontier of such a significant transformation. as a still practicing doctor it is thrilling for me to know we are on the cusp of being able to customize treatment for the patient in front of me based on their genetics, preferences and other key information, instead of having to treat them as the average patient. what is even more exciting is that precision medicine is not just a theory. it's already changing practice and saving lives in the u.s. we wouldn't be on this cusp but for health information technology, which is foundational to the president's precision medicine initiative. the the office of the national coordinator is the federal lead for health information technology. and onc's responsibility is to advance the health i.t.

infrastructure for what is six of the u.s. economy health care. we do this work through a mix of programs, meetings and technical assistance aimed at catalyzing the marketplace. we seek to spur and support innovation to help address important advancements like precision medicine. at the same time, we want to pro vid clear and steady direction. onc also has responsibility to ensure that all consumers are engaged and their interests are protected. congress created significant momentum in health i.t. when it passed the act in 2009. the act provided funding of the support of adoption of electronic medical records on technical supports for doctors on the front lines as they made the transition to use them. as the result of high-tech program and the work of health care providers we are bringing health care into the digital age, and we have reached a tipping point. this strong foundation of health information technology makes it possible to bring to the bedside personalized treatment through

precision medicine. the data and electronic health records married with advanced analytics, information from mobile health devices and other sources of data including patient preferences will provide the fulsome picture of a person's health and needs. this comprehensive data picture is necessary to identify the right prevention and treatment that is not only the most effective but also the most desired by the patient. this is not just a vision of what might come, but a reality already in places like tennessee, maryland, nebraska, florida. i could go on. thanks to the tools built into the electronic health record, doctors are able to taylor treatment today. i spoke to folks at the university of florida health where a patient's cardiologist can order a test to see if they carry a particular variant of a gene. this test will help the cardiologist know if they were using the best medicine to prevent a future clot in the patient's heart. this means that at a critical time in someone's life a doctor is choosing the right life

saving blood thinner tailored and specific for them. and though this kind of treatment is exciting, it is indeed only the beginning. we have much work to do ahead. to see that this is available to everyone in this country as part of routine care. and onc stands ready to undertake this work. to get there we'll need to stay the course in adoption to see that every american has an electronic health record. we also need to go beyond the pockets of data exchange and achieve true interoperability. we'll need to establish new data necessary, environmental exposures and patient generated information. we will build a trust framework that respects individual privacy and establishes strong security protections. we will work with the private sector to establish openly available apis which are doorways to unlock data. in all of this work we'll

remember what i hear consistently from consumers, who are our principle customer. they want to be able to access and share their health information, including with scientists, if they wish without blocking or delay. the president's precision medicine initiative is one of the most exciting ways that we can bring the right care, the right prevention to the right patient. only imagined a few years ago. it's because of advances like this and the underlying technology that we have to support it that we are on the cusp of realizing better care and health for everyone. onc stapdsnds ready with our colleagues at hhs and with congress. thank you and we look forward to your questions. >> thank you, dr. desalvo. dr. shuren. >> chairman alexander, ranking members murray and distinguished members of this committee. thank you for the opportunity to testify regarding fda's role in the precision medicine initiative. the success of precision medicine depends on having

accurate, reliable and clinically meaningful tests. because it's the results of the tests that determine which patients get which drugs or treatments and whether or not they get them. inprecise medicine results from bad tests. you have misdiagnosis. you get the wrong treatment or you get no treatment at all when you should. and as a result patients get harmed and health care costs go up. fda's role in the precision medicine initiative is a technology called next generation sequencing or ngs. ngs can sequence long segments of a person's dna or the entire genome. and as a result, we're moving away from the model of one test one disease. but a test that can identify one of many different diseases or even the risk of developing that disease. but today there are significant barriers in place for advancing

that technology. it affects our research. it affects development. and it affects our ability to use this optimally in health care. so let me tell you what some of those barriers are and what we're doing about it. if you're making a test an you want to know is it accurate, two of the things you need to know are the following. one, does it accurately measure what you're trying to measure? in this case, genetic variance. does it accurately measure what do you identify the right variance? we call that analytical validity. and secondly you want to know is there a good relationship between what you measure and the particular disease? if you say it's a test for breast cancer, is that variant in fact associated with breast cancer? we call that clinical validity. and today that's difficult to do for next generation sequencing. here's why. so think about the human genome. you have about 3 million variants, and your genes are

made up of components called base pairs. there are 3 billion of them. now you want to know how accurate is the test to measure all of that. normally you would look at each of the variants. you can't do that for 3 million you can't aassess the accuracy of 3 million variants. it would take forever. but there are good standards out there. people are struggling to make sure are their tests accurate. then if you want to know is it clinically meaningful, you need data for that. the problem is many of these variants are uncommon. so it's hard to get a lot of clinical data. it's difficult to do clinical studies, and that data tends to be siloed in the institutions that are doing the testing. so in december we proposed an entirely different framework for the oversight of next generation sequencing tests tests we've regulated for a long time but we and the developers have struggled on what to do with it. so for analytical validity, we need reference standard. essentially subsets of jegenetic variance, that if you can show accuracy with those it's

reasonable to infer that you're good at measuring the variants. we gave $2 million to the national institute of standards and technology the work with the scientific community to come up with the very first reference standard if the genome and they just released that last week. under this initiative and with additional funding support, we will continue to work with nist and the scientific community on developing additional reference standards. and as a result, developers wouldn't have to come to the fda to show they're analytically valid. they just meet that standard. and for clinical validity we need to leverage databases, curated databases. and then working with them and the scientific community develop standards and best practices for having these databases, for

doing the curation and then having clinical interpretation. you know what happens today? you can send your blood to different genetic tests labs and get different results. and that's what happens. so it may be because you missed the particular genetic variance or you interpret it differently. with those standards in place, we can now have consistent accuracy in testing and consistent and clinical interpretation and reduce the time and cost to spur research to advance technology development, and ultimately to achieve better health outcomes. thank you. >> thank you, dr. shuren. we'll now have a round of five minutes questioning dr. desalvo. in 1980 when i was governor of tennessee, i had the big idea that all eighth graders would become computer literate. so i flew to san francisco, meet with steve jobs and bought enough mac computers, they were big tall things then to put in all the middle schools.

it was a great idea. it sounded good. forget something. i forgot teacher training so nobody really knew how to do it. i didn't think it all the way through to the end. i think we have something of the same problem with our electronic health care system. we spent $28 billion. it's a great idea. it holds great promise, but it's not working the way it's supposed to. the current standards for meaningful use aren't clear, upgrades are expensive. the systems don't work well enough to share the data. we hear it's expensive to share the data because of the relationships between vendors and doctors. some of the doctors call this data blocking. you just released a report on data blocking describing these concerns. senator murray and i have set up a group, working group to work on this because of the large amount of interest in our committee on the subject. my question is, will you work with us, this committee, to

identify the five or six steps we could take to get our electronic medical records system functioning well enough so that it supports not just the precision medicine effort that we have but so that it functions and it's something that physicians and providers can look forward to using instead of enduring? >> yes, senator. i very much look forward to working with you all in identifying ways that we can make this work for doctors and others on the ground, on the front lines because that's where it really matters. where the work flows are sometimes not the way they ought to be. they can be clunky. we look forward to that. you can count on our participation very actively. we have some efforts underway. as the senator is likely aware we have been working on our rules for meaningful use for certification. but we know there's more work to be done and we look forward to that. >> what i'm talking about is actually beginning to get some results.

identifying the five or six steps we should take. you should know them better than we, really. although dr. cassidy has some personal experience in this he'll give us i'm sure. and then going step by step to get them done. if you can do them by administrative order, terrific. if we need to do something, we'll include them as part of our administration initiative and begin to do what we ought to do. dr. collins, 1 million genomes, mentioned i was visited by head of philadelphia's children's hospital. they have 250,000 sequenced gnomes. how, well, one question. how many, how many of these are already out there? i mean you want to assemble a million, they've got 250,000 in philadelphia. dr. ventner want to assemble a million. can you get those by going to the philadelphia children's hospital and using some of theirs? >> that's a great question.

and we're trying to come up with every possible way to assemble this million strong cohort by taking advantage of things that have been already been done instead of having to start from scratch. and we will, in fact have a major meeting in your state on may 27, 28 with a number of those who have been managing these large scale cohorts gathering together to see if there is a way to put them together in a way that would prevent -- >> can can you estimate the number of genomes that have been sequenced? >> i should be clear. when you say genome sequencing, some people are referring to a sampling of the base pair. a genome type a snip chip is the term that's often used. some are talking about sequencing just the parts of the genome that code for protein, we call that the exome. to do a whole genome sequence is becoming quite affordable. most of the cohorts have not yet done whole genome sequences. the group in philadelphia is

doing that with some of their parents, but not with many of them. dr. ventner certainly has the intention in his human longevity institute. and we believe to get the maximum information you want that. >> let me ask you quickly. a lot of whole genome consequencing. >> senator murray has emphasized the importance of making sure a representative group of everyone is included in this. what about children? the suggestion was made this morning that sequencing the genome of a child for a genetic defect leading to a particular disease can be less complicated than for an older person who may have a more complex disease. will you include children in and the single gene therapy treatment as part of what you do? >> that is an active area of investigation by our working group. let me explain, we have assembled a group of both public

and private experts on this whole question of this million strong cohort. they have met once last week and they were meeting again specifically to talk about what should be the constitution of this cohort? should children be included?? what we we do about individuals otherwise not asked to participate? we want to be sure this covers diversity of the population as well. some of the cohorts already out there mayotot be as diverse as we need. we will figure this out. there is a desire however, to have this be something that represents the broad swath of our country. so there will be a strong motivation for many people to include children. >> thank you again for being with us. we heard about how precision medicine is revolutionizing the practice of medicine developed for targeted cure of individuals but i'm interested in the economic impact of this word.

we know it is not only about treatment about about prevention and we have a lot to learn how factors like environment and impact individual health outcomes and how might these discoveries impact health care costs? >> well, i do appreciate that question. we all agree that health care costs need to be brought under control and a lot of the concern, i think, about our current system is that it is more a sit care system than a health care system. if we have the opportunity to focus more on prevention instead of waiting for illness to strike. we would improve the health of the nation and save money. the precision initiative aims to focus very intensively on prevention and to find out what actually works. i mentioned in my opening statement that the annual advise physicals don't collect the type of data you would like to have that might be a tipoff to something that needs prevention and many of these new tools as

well as these wearable sensors reporting on environmental exposures and body's performance under various situations should put us in a much better situation to monitor individual health before any illness strikes. i don't want to overpromise the value this will result in as far as cutting health care costs and bending that curve we all want to see start downward again. i think it's a longer term initiative but i would think over the course of time this is one of the best opportunities we will have to conquer health care costs. >> one of the exciting things about precision medicine is that it's an empowering patients and people to participate and be full partners in discovery of new treatments. you mentioned the new wearable and mobile health technologies out there that allow researchers to collect data on how participants behaviors impact their health outcome. all of the agencies are working ways to find new ways to engage

patients in their own health and sustained participation among people involved in research studies. what are the best practices in patient engagement to ensure sustained participation throughout these precision medicine studies. >> another great question there are a lot of cohorts that engaged patients about what their experience has been. kiser permanenty and mayo clinic and geisinger in pennsylvania. all of these have done a lot of work to find what it is people are looking for if they are going to participate. an important part of this initiative, not this think of the individuals as patients, they are really partners, participants, we want them at the table. we'll have a workshop july 1st and 2nd focused on trying to get input from individuals. what we can already say people expect if they are going to be part of this, their information

is going to help you. there's a lot offal truism in taking part and they want information back what's been learned about their own state of health. and what has this study led to in terms of broader discoveries that might not have happened otherwise. they want to be included and informed and be at the table. we promise that is the attitude we will bring to this. >> okay, very good. >> and let me ask you, doctor we've seen several high profile sophisticated attacks on healthcare organizations in the last few months. americans expert health care providers and researchers are taking the necessary precautions to protect their data. that's why i mentioned working with senator alexander on the current state of cyber security. can you tell us what steps onc is taking to help researchers keep the large amount of genetic and other health information they are collecting secure? >> thank you for the question,

we agree with you it's a major issue and on top of our mind every day. the steps we have taken most recently is to inquire in the electronic health records that data is encrypted at rest and in motion. data is moving across systems and needs to be secure and encrypted. we are working with, for example, department of homeland security with the national security council and others to ramp up the additional expectations because as data begins to move and be more liquid there's more opportunity to be security issues. it's a top priority. we have taken actions and have additional ones on the way. >> what is nih doing to protect patient privacy? >> we already initiated a genome data sharing policy because we have been conducting studies to understand genetic contributions

to alzheimer's and schizophrenia and heart disease. it is carefully overseen and qualified researchers can apply to see the data. because much is gained by having it accessible but it has to be overseen in a way to make sure individuals looking at the data are appropriately signing on to various restrictions such as not sharing with with third parties and acknowledging where it came from. that has been very successful over several years. we have a good framework. we think there are things needed in order to protect genetic privacy and make sure it is not acquired by individuals who do not have the right to do so and there should be something to avoid serp ip tishs without their consent. >> thank you to all of you, we appreciate the work you're doing and been following it for many years.

in utah we have a big data base too and i wonder if that could be the main decor up because we have as i recall it is the world's largest computerized family histories and 22 million public health and clinical records. scientists at the university of utah, many of use this resource to identify dozens of genes responsible for diseases. the utah genome project is harnessing the power of the utah large family discover new disease causing genes and underlying conditions such as diabetes obesity and cancer. these large families accelerate the pace of genetic discovery by magnifying our ability to identify disease causing genes. by harnessing these advantages,

it seems to me using these large families and cohorts, i think our folks in utah can make significant contributions what you're trying to do here. i would like to know if you think they would be useful and if i can play a role in getting the university of utah and you -- i think you already working together but you need to work with that group. >> we are indeed. thank you for the question. utah has been in a wonderful place as far as the ability to do remarkable research and genetics over many decades that i personally benefited from collaborating with over decades of my own research career. you're right you have an unprecedented level of depth. one of the things we are going to be wrestling with a bit in terms of this cohort what ought to be the involvement of

multigenerational pedigrees it brings considerable strength and this can be a topic of discussion later this month in nashville. i would say the inner mountain hgt care system which involves lots of folks in utah, you should have mentioned it those that already generated cohorts. they have a strong presence in this as well, i'm quite sure when the dust settles this precision initiative will have a utah connection. i saw that wonderful piece talking about some of this and there's a lot of excitement across the scientific community and across the country in what this might lead to. i appreciate you're volunteering to help us. >> thank you so much we do want to help you and university of utah athletics department as good as anybody can have. we've irritated harvard to death by enticing a number of very top research research, they like the mountains and skiing as much as

anything. we would like to be of assistance and personally appreciate all three of you. i've taken a great interest in what you do over these many years as i've been chairman of the finance committee, i haven't had as much time to spend in this committee, which i used to chair, i want to compliment the distinguished chairman for the good work they are doing. i want to personally express that. but thank you i appreciate all three of you being here and appreciate the work you're doing. >> thank you, senator. >> go ahead. >> thanks senator hatch, almost had to give senator warren equal time but she'll have -- just so you'll know, the order i'm calling on senators is based on who was here at the time the gafl went down and on the republican side, cassidy and

collins are next and franken and bennett and warren and murphy. senator franken. >> thank you mr. chairman. thank you to the ranking member for holding this hearing. those of us in minnesota thank you, dr. collins because mayo and university of minnesota have been doing a genomics project funded by you. very smart on your part. this is an exciting -- there's been a para dime shift and the way we think of health care in this country. in some part due to the health care reform law, health care providers and insurers are moving moving more toward person centers care and talk about coordinated care and medical homes and acos that provide

incentives and information that help doctors tailer their practice, their treatments, the therapies, to immediate the needs of individual patients. and that's who precision medicine is all about, making sure the angry patient gets the right treatment. and the right treatment doesn't -- as you were saying, dr. collins, doesn't necessarily mean it isn't treating people when they are sick, it's about health care not sick care and using personalized medicine should improve prevention and so we are doing health care and not sick care. i do want to talk to you about what you said, we're at a

tipping point. and i just want to talk about that for a second because we had a hearing on that not so long ago. and there are some barriers to adoption by some certain medical providers, some resistance some because of doctors who feel like i got 20 minutes with this patient and i don't want to spend eight of it inputting data. but on the other hand, we are -- this is where we're going. so what are you doing to address that and what are some good models? i've heard of things like having a xrooib who's job like a medical student, there with you and who's taking down the information. where -- we need to get there. what are we doing to get there? >> senator, thank you for raising the voice of a lot of

doctors, i hear similar things from my own family members and including my husband it's been a great advancement however the systems are note a part of the work flow in the way we want or expert the opportunities there include giving more time to implement the systems on front line so the senator may be aware in the last year we put forward rules for additional flexibility in the timing of records and upgrading to news ones and propose in the last set of rules, giving doctors the option of a more stream lined approach reducing burden or expectation on the amount of clicks theymy do to show they are functionally using the records. we're working towards a goal

this is going to be an enabler and i'm committed to continue in that path. the point about successes on the ground and tools doctors have used, that's important, we collect those. it varies by doc and office what's going to work for them. sometimes having assistance to tran describe over it and sometimes working with the electronic health record, they have had so much time they've been able to make the systems as seamless as possible and a state like minnesota is so far advanced in health it and many more years in to make sure systems are working -- >> i don't mean to interrupt you, i want to talk -- i want to get one quick question in i have a question about how the

test fda about the tests the fda is going to be assessing. one thing concerns me that some tests may get quite expensive and i want to make sure that i understand how they and the highly personalized care will contribute to everyone and won't contribute to health disparities in the country. will these tests be considered diagnostic tests or preventative tests and who is going to be paying for them? >> in the case of next generation sequencing they can be used for diagnosis and for predicting and prevention purposes, to show that can perform in such a way. in terms of reducing costs,

there's an opportunity for reducing costs for those technologies to be developed because we have standards i talked about and we have the data basis of information, it will be a lot less expensive. in the past you do a clinical study to show does your test actually predict or diagnose that disease with the data base, you might be able to point to the data. the clinical community is crowd sourcing the evidence. we just did that recently with two years ago with a test for cystic fibrosis, we approved the ngs test based on a sub set of variants and they were able to use data that was supported by the cystic fibrosis foundation and reducing study. who pays for it? hopefully the insurers will pay for it at the end of the day if you have good technology, it's of no value if you don't have

access to it and if they can't afford it, they won't have access. >> there's no question that the vision medicine can bring down our costs in certain ways, i don't worry about a brave new world where certain people have access to certain things. i would just -- i'm out of time and ask unanimous consent to submit a statement from senator clobuchar. >> thank you, it will be done. we've had a gao report in the past, they need to do much better to coordinate records clearly electronic medical records are critical to precision medicine, both the research thereof and implementation. now i hear there's an 11 billion dod krrt going out i'm not sure it's coordinating with the va

there's a lack of interoperability and two are those as lacking operability and i feel we're in a thicket and spend $11 billion on system that the system is not openerable with. please tell me i'm absolutely wrong? >> that's wuchb of the most important things to help on the health i.t. landscape. we are involved in that. they have embedded staff with us to make sure we're communicating the department of defense will be -- has agreed to lead the way in pointing to the standards -- senator asked me earlier, what are the steps we should take. >> i only have three and a half

minutes. >> there's some open source bidders but as concern they are not open source correct? >> those vendors will have to agree to use the standards that the department of defense wants to use which are the ones that onc has published. we're very pleased we're moving in a direction to have a core set of standards everyone will agree to so we don't run into a problem where the system -- >> you're telling us that the va will be able to share records or the local hospital will share records with dod? >> they have a different kind of technology but the goal is that become not only change but inneroper asability. >> when you mentioned the goal i accepted it as the goal but how likely is it to happen? you left wiggle room that the va has a different system and may

not communicate with dod? >> they have found a solution to exchange information you can see the records from the va and dod. they've taken that first step. the integrating of the data requires having the same core data elements. there's a technology issue which is solvable and policy and culture issue which is the harder one in what we're facing in circumstances like information blocking which is one of the things getting in the way of interoperability. >> you spoke of the open source that seems to not include information blocking. who's blocking info? >> that can happen sometimes from technology but what we see commonly is that the vendor systems will -- >> i accept that. let's take it back where it started. my fear is the ones blocking data are the ones bidding but then you mentioned open source

but return to the fact there could be blocking. will the final $11 billion project be something that i at baton rouge can access or will there be blocking? >> i would need the dod to answer. since we've put out the record that vendors try to make the problem go away. we have to keep putting on the pressure. >> i apologize, i'm already over time. if i can ask -- i'm almost out of time. my guess is it part of the initial rfp that they cannot block and that the va has to be able to share as does the community hospital? let me -- >> it is the intention but it is part of the rfp? >> yes, that's where they are going.

that's what i understand from what we have recommended as onc to the dod, i would have to defer to the dod. >> i sometimes find the recommendations are not adopted. >> i'll get back with you on that. i'm almost out of time but i yield back. >> mr. chairman i thank the witnesses for your testimony, you're fortunate to have on the cutting edge of all of this stuff. as i know you know there's a thriving movement of innovation and diagnostics under way, thanks to human genome project and investment over the past decade. there are a number of colorado companies like core genics which are developing new scenarios like ee bowlebola and cardiovascular

disease. recently lab developed test as i wrote in a letter a couple of weeks ago, we need to balance inno vacation and safety to ensure we create a fair and workable process. and there's some concern that the draft framework could require thousands of labs or minimum thousands of tests. i wonder if you can speak to this a little bit given the size and scope of the issue. do you think you intend to propose more formal regulations or open to congressional action here? would that be useful how do we get a handle on this and create predictability for people doing this work? >> first let me say laboratory developed tests are playing an important role in our health care system today and our goal is not shutting down laboratory developed tests and making sure we're both facilitating and the tests are accurate and clinically meaningful.

we try to strike that balance. i don't know we'll receive thousands of tests but what we've heard from the lab community is that a lot of tests they make are to address unmet needs. one of the things we put out o our proposal you're making a true test and health care facility is treating patients. there isn't a test out there that fda approved or cleared. you don't come in the door for premarket review. >> if consequently someone has that test, we know this test works, then our expectation is our people making that test should do the same because we now have data of that test is in fact accurate and clinically meaningful. i don't know we'll receive thousands. that said, we're working on it and we'll be making changes before we have the final -- >> if there is legislative work that needs to be done, you'll

let the committee know. i wanted to turn to one other topic around innovation. dr. colins mentioned how important mobile technologies have become here. in the blink of an eye this is all changing the way doctors practice medicine and patients monitor their own well being senator hatch and i reintroduced the act yesterday to ensure lower risk mobile apps are not regulated by the fda. i think we share the same goals on this and want to thank your team forgiving us technical advice all the way through can you talk a little bit about fd a's thinking in this area? >> first let me thank you for your ability to work on the act. we were looking at device functions that we had been regulating for a long time what

we found as we looked at it some of the lower risk functions we made better served by no longer acty vating them and spur more innovation but they are sufficient low risk. we don't need to provide that additional fda oversight and focus on higher risk medical device functions in the space. that is kinds of a nice balance but still assure patient's grid update. >> thank you i don't know if you have anything you want to add. >> the pro live race of really exciting opportunities is happening all around us and we see this initiative as a great opportunity to test those out. you not only want to have an application kind of cool and gives youting information, you want to know does it actually improve health and change outcomes? if we have a million individuals

excited about participating in research or essentially volunteering to become users of these kinds of technologies, whether it's the next version of a watch that measures all kinds of aspects of your body's physiology or something detecting in the air around you, this will be a great opportunity to find out what works and what improves health care and what to be extrapolated. >> senator collins. >> thank you, very much mr. chairman. dr. collins just this morning. i met with some advocates from maine, pushing for brain cancers such as glioblastomas. you said it is the choice for enhanceing the near term impact

of medicine and important advances have been made in this area. i very much look forward to sharing your testimony with this group of people from maine who are concerned about such devastating brain cancers. i'm wondering if you also see a role for precision medicine in neurodegeneral tif diseases like parkinson's als? are investments in these important areas also be considered as part of the precision medicine initiative? >> absolutely. we're learning that disorders like park insons and other conditions do in fact have multiple contributions to whether they happen or not to get an individual for

alzheimer's disease, 45 individual places variations placed in individual at higher risk. we know about one or two where individual variations actually are protected which is an even more potentially actionable finding because you'd like to understand that in order to develop the next generation. that kind of -- on the scale to try to -- everything we can about their electronic health record experience and using mobile health, are there ways we can come up with better systems in

terms of cognitive changes. that is an intention of this. it doesn't have to be about heart disease and all of those things it will have the scale to do so. and we have waited a long time to reach the point. we should not let this moment pass. >> i could not agree more. i think truly it is so exciting doctor, despite the sport that you mentioned in your testimony i continue to hear from smaller health care providers about the barriers that they face with electronic health record implementation. just yesterday i met with a

physician from bangor maine who shared with me that putting in place a comprehensive electronic data collection system for his small practice was going to cause in excess of $230,000 this was just for the software, not for the hardware. that's no small amount particularly for a smaller independent practice that is not hospital owned. to access information about individuals to improve diagnosis treatment and prevention of diseases, you discussed the important role, the absolutely essential role of health information technology and interoperability, including standards in technology that are going to be needed. as you work to build these

health i.t. systems for precision medicine how can we assure that we're not leaving out rural america, smaller practices, rural hospitals health clinics because of the cost? >> senator collins thank you for the question and particularly spotlighting the challenges of small practice and rural -- as the senator may be aware, that was a particular focus that we had early on in the high tech funding that was prior to joining the administration but the team really wanted to see rural america was not left behind and there was great success in the adoption in many of those communities across the country in partnership with the usda as an example. they are facing challenges of upgrading technology and one of the reasons last year because of some challenges they were having that we put out this flexibility rule to give them more time. the cost you're describing for this, i would be very happy to

follow up with your staff and that physician to see if we can understand what is happening there and perhaps the regional extension centers in your communities could follow up. but you are exactly correct. it's critical we get this and nobody is left behind and that we find a way to make it successful for everyone. >> thank you very much. i want to take you up on that. >> thank you. >> thank you, mr. chairman. >> thank you, senator collins, senator warren? >> thank you, mr. chairman the president's precision medicine initiative could be a big step forward for more targeted and effective therapy for any number of conditions. i think it's a great idea. we should have started years ago. dr. collins you first advocated for a national genetic study to determine how people's genes and environments contribute to diseases over a decade ago, 2004. is that right? >> in fact that is exactly right and it landed with a thud at that point, that's the

article up there on the screen. i published it in 2004. and in retrospect this was probably a bit ahead of its time because we didn't have the technology at the point where this would have been affordable or practical but it is now. >> well i'm glad to hear it is now, though if we started pushing and funding back then we could only wonder how much further we would be ahead right now. in fact over the past decade nih funding hasn't even kept space with inflation and that means we are behind. if we're serious about speeding up innovation and improving health and reducing long term cost we start by investing in nih, the house has a proposal called 21st century cures that's supposed to accelerate biomedical innovation. when it was first released by the republicans a few months

ago, it didn't include a single dime of new nih funding for congress. last week's new byipartisan draft seems to be moving in the right direction. it has $2 billion in new mandatory funding for the nih every year for five years. and i applaud the house republicans for acknowledging including newt gingrich and drug industry have been saying for years, nih funding is critical to accelerating cures. a few billion in temporary funding will not solve a decade of neglect. much less build a future we need. dr. collins, congress doubled the budget of nih. if congress had never doubled the budget of nih and simply

kept pace with prior investments, where would the nih budget be today? >> senator, i keep a graph in front of me all the time about this very question. i'll put it up on the screen because this is a documentation of the problems that we are now facing. what you're seeing there the yellow line is basically what nih has had as far as purchasing power, it's the appropriation as adjusted by deflation. the dotted green line is the trajectory that nih was on going ban back to 1970 when we had the wonderful doubling and getting undoubled ever since. if you followed the dotted green line and we stayed on that trajectory, we would be substantially higher up in the neighborhood of a little over $40 billion. >> just to get back on track and to reverse the damage of the last decade, nih, if i'm reading this right, would need more than $12 billion in just the first

year. and the house proposal doesn't even put that much in over the space of five years. so let me just ask based on what you've got here, in your expert judgment, was the annual rate of increase nih needs to get back on track on its funding? >> first let me say, we were thrilled also to see what's in the 21st century cures, a great jolt of excitement and some relief to a community that's been really quite stressed over the past 12 years as we've been losing ground. to get back on a stable trajectory that would result in a healthy biomedical system that our country has depended on with great success over 50 years i would estimate in my professional judgment we need to be in the space of inflation plus four or 5%. that's pretty much the dotted line and that was a healthy way to be sure that all of the talent and capabilities of this

country in terms of biomedical research where we have led the world for decades would be sustained and encouraged and innovation could go further the way wabts it to. >> $2 billion a year for five years, certainly better than nothing. let's not pretend that a small temporary investment that falls billions shot of what we're going to need to do the job there is a gaping hole in our nih budget and we need a sear yusz plan to fix it i have a medical innovation act that can add another $6 billion a year wouldn't cost taxpayers a dime. whatever we do, this committee has to get serious about medical innovation and that means we have to do better than the house proposal on this. >> thank you, mr. chairman. >> thank you, senator warren. senator whitehouse. >> let me start by echoing the

chairman's interest in having a review review. i read with interest your predecessor david braler and i think it makes a lot of sense and provides i hope some by part an foundation for us to work forward forward. i think the meaningless program needs to meet the new challenges over the past year since it was passed now present to us. thank you for agreeing to work with the chairman and the committee on the four or five key goals we should be receiving and i would urge you to think big in accomplishing that. let's not tweedle around the edges. let's get this right. dr. collins, to follow up a little bit on what senator

warren was saying i'm interested in what you've been able to document by way of consequences for failures to adequately fund our scientific and medical research it strikes me that you could probably tell me there's a return on investment from the research we do and if we don't fund the research, we lose that return on investment. it strikes me also you probably have examples of human benefits from the scientific research, which if foregone become human costs. and you also pay attention to the country's global

competitiveness in this field. if you can comment specifically in those three areas what you think is the payback or put contrarily the cost of not funding scientific research? >> i appreciate the opportunity to talk about these consequences. another graph, from beginning back in 2003, i'm showing you the opportunity an investigator that comes to nhi with their best ideas ends up getting funded? this is the main place where the work gets done. it has been in the space of 25 to 35% success rate one in three. that's not easy. that means two thirds of the people are sent away. but now it's about one in six.

that's very unhealthy. we have looked at what happened in the past when we can fund up to 30% and there's a lot of great science that falls in that space between the 16th percentle and 30th. about half of what we should be supporting by historical trends is left on the table. we don't know what we're missing in that regard. the next great idea about cancer may have been one of those things that didn't quite make the cut. in terms of your question about medical consequences, i'm a physician and the reason i love being at nih to hope this is going to change things for the better for people's health. our track record there is striking in terms of what's happened and long he havety of disease. it is frustrating we're going more slowly. i promise you when we sit around to figure out what to do we still prioritize and still try to push forward. we're going more slowly. we need more advances in cancer

and universal influenza vaccine but we could be going faster than right now. the a dollar of nih grant money returns $2.20 in the first year goods and services that are generated as a result. and support 4,000 jobs directly on all 50 states and those are high quality jobs. you asked about global competitiveness. we were the unquestioned leader of the world in biomedical research. that is no longer taken for granted when you see our losing ground and singapore and south korea, upping their investment sometimes in double digits, we're losing -- >> quick question on that. when they are making those increase in investments, do they have an eye on us as the target? or are they doing this? a general? >> it's a little of both.

they read our playbook from 20 years ago and saw what it did for america's economy and spinning off of small businesses that come out of this effort. they want to do what we did. i don't know if you would say they are gunning for us but trying to learn from our experience and recreate that in their environment. one statistic that is particularly renders this a very serious last year china filed more patents in bioscience than the united states did. that was not even a close competition a couple of years ago. those patents resulted in intellectual property claims that will ultimately spin off new businesses. we have to take that seriously. >> does that mean china will start respecting patents more? >> i think i better not comment on that. >> thank you, senator baldwin. >> thank you, mr. chairman.

i very much appreciate you and ranking member for holding this hearing. giving us the opportunity to learn more about the administration's precision medicine initiative. we're excited about it because it's life saving and we're excited about it because it's breakthrough potential. i'm excited about it having the honor of representing the state that's been a leader in setting the stage for some of the things we're talking about today in precision medicine from the isolation of the first embryonic stem cells to the discovery of short tandem complete polymorphisms which is a major discovery that i think a big impact on the study of human genetics and the clinic has since developed a very significant genetic biobank one

of the larger ones with information from over 20,000 central wisconsin residents. dr. colins, i know you've been asked this question before, by my colleagues on the committee, but if you have -- if you have more to add, i would like to hear more about how you'll utilize the existing data like data that i just described that was collected by the marsh field clinic and real word clinical data. how will you share those in new ways to crow ate personalized therapies? >> it's a great question. marshfield is a wonderful leader in this enterprise. i visited there myself several times and dr. murray brilliant, the person overseeing their large cohort is somebody that i think we're all looking to for his experience to share with us.

he was at the white house when the president announced this on january 30th. in this workshop we're going to hold at the end of this month at vanderbilt we'll really look hard at the ways in which marshfield mayo intermountain, gis geisinger could be assembled into a synthetic kind of cohort, not having to do the work from scratch because this kind of initiative really builds power by numbers and that's one of the reasons we're so excited about being able to say that word million, which would not have been in the vocabulary of most people planning these things until fairly recently. we want to take every kind of opportunity to build on the experience that's already been obtained in places like marshfield. one of the things they've done, they've found individuals who by looking at their dna sequence ought to be sick but they are not. they have some kind of

resilience. some people called them genetic heroes, there's something about them we need to understand. they have a resistance to disease that we could learn about and figure out how to share with people by the development of new therapy pitticpit ic therapeutics. >> i want to follow up on a discussion that you were just having about the research workforce, talking about funding and reducing the percentage of research applications that are actually funded. i'm curious to know what impact this initiative may have on the changing nature of the workforce? it strikes me that doctors who happened on discoveries of novel therapies in the course of treating patients, but others may not know that there are patients unique reaction to a

treatment holds the potential for a breakthrough in this field. what opportunities for new and nontraditional researchers are presented through this initiative? >> well, senator that's another great question. i'm glad you brought it up this precision medicine initiative will not reach its full potential if it doesn't lure and recruit all kinds of people from different disciplines to get together and work on this. a parallel here with the human genome project it was such april historic opportunity that people who never thought of themselves as working in that space decided to make it their passion. i think the same can happen here. we would want to have computational experts, we have large data sets and want to have technology developers of all sorts who can figure outweighs not only to look at dna sequence, gut what about the met tab lights floating in your system? we can look at hundreds of those

in a given situation. all of the technologies about mobile health, there's lots of opportunities there as well. and physicians who can begin to figure out how do you take this kind of data and implement that in a real world setting in order to improve health outcomes. i have to say when i look at the way we practice medicine today compared to when i was a resident medicine in 1979 or 80, it's not that different. we have such a long way to go here in terms of really incorporating all of the new technologies coming on. this is going to be a wonderful laboratory to get involved and figure out what kind of discoveries and what use we can put to them. i hope it is going to be filled with that innovative talent. >> mr. chairman, with your indulgence indulgence, for dr. sherman, there's incredible potential in what we're talking about but it

also strikes me that there's incredible potential for fraud for folks as this develops offering selling fraudulent interventions that claim to be personalized medicine. i would like -- again, it can be after this hearing, to hear from you more about how the fda will work to prevent fraud and insure patient safety in the age of precision medicine. >> i'd take a quick moment if it's okay -- >> senator murray and i would like to know the answer too. >> even just beyond fraud the point of having a test out there that doesn't work and being sold, this is one of the impetus of trying to actively regulate the subset there are great tests out there and bad tests out there. let me give you an example.

one in the precision medicine space, something called kif six. it's used for predicting people for people having coronary heart disease and their response to staten treatment. and this is a test where we had seen data on it and saw the test didn't work but laboratory developed tests are selling it. it was a met at a analysis, test doesn't work. then they performed a randomized pla seen bow controlled study on 18,000 patients and the test doesn't work. when this was put out around 2010, over 150,000 people got that test. we estimate the cost to health care system may have been upwards of $2.4 billion and that test is still available today. that doesn't serve patients well and doesn't serve precision medicine because it undermines our efforts to make sure we get accurate and reliable clinically meaningful tests out there and get the right treatment to the

right patient. >> senator murray, do you have any further remarks? >> how are consumers supposed to know that? >> right now they can't. you don't have oversight for knowing -- >> does that mean you don't have oversight for this? >> we do have the authority and what we proposed, it's time to exercise it. years ago when we set up the program, laboratory developed tests tended to be simple. used often rare conditions and we said we would exercise enforcement discretion. your subject requirements were not enforcing them but over time particularly with our being there, these tests have become increasingly more complex and being used nationally and coming inkreetsingly more important being relied on for health care decisions. as a result of that and seeing some of the bad tests out there is why you move forward to regulate them. i have to tell you, this

question has come up since 1990s, we had nih saying the fda needs to get involved and institute of medicine came out in the 2000s to say that so we've been trying to move forward in 2007, we put out a guidance to say we'll start regulating a subset and what we heard was don't chip away at this. put out an overarching framework and phase in implementation. we held a public meeting in 2010 and got that input and guide anss we put out and framework we proposed in late of last year was our attempt to do that. have a risk based program, balance innovation with patient safety and phase it in over a period of time. right now we're addressing comments and still working with the community on what the right policy should be. >> you're engaging for patient groups as you work through that? >> yes a lot of feedback on it. the american cancer society has

seen tests where they are incorrect. patients are getting diagnosed with cancer when they don't have and people who have cancer getting told they don't have cancer. they've said too, we need better oversight and need to make sure we have accurate tests and the tests do what they claim to do. >> important question. i have one more question, dr. ponds, why is one million the right number? >> it's a great question and there's nothing magic about one million except it's a round number we could aim for. i will admit that i would love if we could go beyond that. as i said a minute ago with conversation with senator baldwin, this is all about numbers. that's where you get the power of the analysis to find out what works. million is very ambitious and seemed like a goal we could set for ourselves to try to achieve but given the fact we already know there are cohorts which have enrolled more than a million people. if we can figure out how to do

this maybe -- >> just listening to committee members, every one of our states -- we have fred hutch in my state developing a database so i don't know how you'll work through all of this to get your cohort but again, diversity making sure that we represent everybody is really important. so i'm going to look forward to hearing how you do that. >> totally agree with you on that. if we tack together the existing cohorts, i don't think we would have the representation we need of the country. >> thank you. thank you, mr. chairman. >> dr. sheeran, on your following up with senator baldwin and senator murray this was the high risk low risk difference you were talking about in the laboratory tests. you're focusing your attention on high risk areas, is that right? >> well, the high risk/low risk we were talking earlier was on mobile technologies but here too

we try to put a focus on when we implement this to focus first on the higher risk tests as we phase that in. >> any of your enforcement -- is it all prior approval or is it where you might be acting on a complaint? in other words to let the marketplace run for a while on the lower risk items and police it in effect? >> so for the lower risk tests we would not enforce requirements on them other than tell us what you are and if there are problems enforce it and for rare disorders. some of these tests for unmet needs as well. >> this has been very useful. and i said this is -- this is kind of like going back to college. it's actually very interesting and we're very privileged to be students in a classroom with such distinguished teachers and

witnesses on an important subject that's so important. and one that the president and house of representatives and this committee all are committed to work on. it's my some schedule like that. we've got some other things we have to do as well. but the precision medicine proposal by the president would be incorporated within that. it would be part of all of it. we didn't talk about privacy today. who's going to figure that out? >> very important question. onc and nih and the white house

ostp have been engaged in this. we'll have a deep conversation about this july 1st and 2nd with the participant workshop that's coming forward. >> if you're going to have a million participants or more and you're going to use their data you have to figure out some way to protect that. >> we're deeply serious about doing that and most high-tech, thoughtful capable way with fair amount of experience to build on but we have to take that with great seriousness. >> i think you've heard from a variety of senators our interest in helping you figure out what the steps are to improve the electronic medical record system. see some real results, coordinate properly with whatever the defense department is doing. it's a will the of worklot of work to do. we're not trying to catch

anything. we'd like to work with you and to do that and do it soon. it basics many, many physicians. many, many hospitals and as heavy heard today in a couple of important says it's essential to precision medicine initiative. there's no other -- i've got a final page i'm supposed to read. hearing record will remain open for ten days. members may submit additional information for the record within the time they would like. i want to thank senator murray for the way she's helped us do this in a bipartisan way. we learn a lot more that way. the next hearing will be tomorrow on higher education. the committee will stand adjourned.

the senate will convene this weekend for a rare sunday session following a week long memorial day recess. they'll gavel in at 4:00 p.m. for legislative business. eight hours before the patriot act provisions are said to expeer. also make changes to the nsa's current bulk data collection program. now requiring nsa to get a warrant and ask the phone companyies for their records. roll call votes could happen

after 6:00 p.m. follow live coverage at 4:00 eastern on our companion network, c-span2. here are some of our featured programs this weekend. on c-span saturday at noon, politicians, white house officials and business leaders offer encouragement to the business class of 2015. former staff members reflect on the rezpresidency of george h.w. bush. on c-span2 saturday morning book tv is in new york city with the events from this week's book expo america and live segments with publishers and authors throughout the day. sunday evening at 9:00 on

afternoon wards. on american history tv 7:00 eastern a conversation with white house historian william seal on first ladies who had the most impact on the executive mansion and sunday afternoon just before 2:00, the life and death of our 20th president james garfield who served mm edd almost two decades as a congressman from ohio. get our complete schedule at c-span.org. national economic counsel director delivered a keynote address on the potential new rules at the bipartisan policy center. also a panel of current and former regulators, financial institutions and lawyers discuss

the future policies, protections they could avrdfford and unexpected consequences that could result from their implementations. good morning. i'm bill hokeland. welcome all who are here in the audience and those watching on c-span or on our webcast to a discussion that will prove to be very likely.

our keynote speaker will not be able to take questions but for the panel that follows him, those here in the audience you can submit your questions on cards provided and those of you who may be watching on the television can submit questions online. twitter hashtag bcp live. let us begin. some have dubbed this event the

policy throwdown surrounding the department of labor's fiduciary standards. we have champions and a few critics represented here today. a little over a year ago the bipartisan policy center launched a commission on retirement security and personal savings. the commission is headed by jim conrad. that commission is made up of some of the most prominent thinkers in this country surrounding pensions and savings.

it's narrowing final recommendation that we expect to release later this fall. this commission knows that being adequately prepared for once retirement is a function of the return one receives from the investments made in their savings. so we are here this morning to discuss the dol rule that president asked to be updated. it's a broad objective i think we can find bipartisan support

for. some have argued the unintended consequences might harm the exact folks it's expected to help. let me introduce our keynote speaker, jeffrey zites. he was appointed as the first ever chief performance officer of the united states in 2009.

let the throwdown begin. mr. zients the stage is yours. >> thank you. it was great to see a strong bipartisan vote in favor of trade mo motion last week in the senate. we were pleased to see this closer to getting down. middle class economics, the idea the economy does best when it grows from the middle out has animated everything the president has done since he's been in this office. this vision is unpinned by the basic promise of america. if you work hard and play by the rules, you can get ahead.

over the past six plus years the president has addresses twin challenges to that vision. increasing health care costs and reduced access. the good news is the data shows that under the president's leadership we've made real progress toward addressing these. 12.2 million jobs across 62 straight months.

the highest rate in history. more than 16 million additional americans with health insurance and health care cost growth that is near its lowest level in 50 years. we're now the number one producer in the world of oil and natural gas. the amount of electricity we generate from wind is up three times. the amount from solar up 20 times. we've set historic standards that will double the fuel efficiency of new cars by 2025. all of this progress while deficits have come down by two-thirds from nearly 10% of gdp to less than 10%, a level low enough to stabilize debt as a share of the economy. importantly, we're building this

economic progress on a more stable financial system. we put this place reforms that make it safer and stronger. our largest and most complex financial institutions have doubled their capital and cushions to unexpected losses and subject to annual stress tests. parts of the financial system that escaped adequate oversight before the crisis have been made more transparent and brought under stronger oversight and supervision. regulator vs regular la regulators have the tools. importantly, many of the worst financial products that contribute to the crisis had opinion curved or in longer exist. the president has been

relentless in his efforts to strengthen consumer protections. there's been $5 billion back in the pockets of more than 15 million customers. recently the cfpb took an important step toward cracking down on abusive practices and payday lending. we've made significant progress building a stronger foundation for long term prosperity while we worked our way back from the crisis. even as we are here today talking about how to move forward with stronger consumer protections some would like us

to go back ward. just last week senator shelby pushed through committee a partisan bill to roll back wall street reform. his goal here is clear to weaken oversight of some of the largest financial institutions and to tie the financial watchdogs in knots. we've seen this before and all damage it caused. the president has been very clear. no sequels here. the president will not accept any legislation that unravels wall street reform. recently republicans in congress have also tried to block common sense rules that protect military service members and their families from predatory lenders.

i have a simple message to congress. let's protect service members and their families from abusive, predatory loans. let the rule go forward. at the same time some republicans are trying to roll back reforms, we're going to continue to move forward with the president's consumer protection agenda. the conflict of interest rule making we're here to talk about today is a logical next step. it addresses one of the most important financial issues americans face, how to plan and save for retirement. the president believes all americans deserves every opportunity to retire with dignity and security. that's a central tenet of middle

class economics. the financial crisis rerace trillion -- erase trillions in middle class families. unless we do more, millions of americans will have a hard decision to make to work well past when they retire or live with less this retirement or to risk out living their savings and falling back to social security alone. social security is and must remain a rock solid guaranteed benefit that americans can rely on. too many americans don't have enough to supplement they're social security. that's why the president has put forward retirement proposals that would give 30 million more americans workers access to a new workplace savings opportunity. at the same time that we're

working to increase access to savings opportunities we need to make sure that americans who are doing the responsible thing working hard and putting enough aside for retirement are getting a fair share of their returns on their savings. today workers are responsible for their own retirement. instead of a defined pension plan mansioned by a professional with a guarantee stream of income. a retirement most american workers need to figure out for themselves how to invest and manage the risk of retirement planning. when they do they should be

able to trust their investment advisors always have their best interest in mind. lawyers are duty bound to represent their clients faithly, families saving for retirement should be able to rest assured that their financial advisors are always putting their best interest first. the current rules of the road don't actually require all financial advisors to put their clients first. today, unfortunately too many financial advisors have sales incentives to steer responsible americans into bad retirement investments with high fees and lower returns. you see these conflicts of interest leading to recommendations to roll over existing retirement savings out of low fee plans and into higher cost investments.

middle class families lose out on 1% of annual returns on their retirement savings. that adds up. it adds up to $17 billion of loss retirement savings per year. losses of tens of thousands of dollars for many individual families. in the mid-1970s eight track tapes were all the rage. irss were iras were a few months old and 401(k)s didn't exist. good investment advice is

absolutely essential. loopholes in these out dated rules allow some advisors to claim they're putting customers first while hiding behind confusing fine print and legalese. let me be clear. many financial advisors do have their clients best interest at heart and provide sound good advice. those advisors deserve to get fairly compensated for that advice. the department's rule will allow just that.

the rule will help the best advice win out. those already selling good products or giving good advice stand to benefit in a world where client's best interest has to be put first. if your business model bilks americans out of their money then you shouldn't be in business. as i look around this room, i see a lot of familiar faces. i want to thank everybody who is contributed time and effort to this process. as a result the proposed rule

already reflects a lot of feedback from industry consumer groups this feedback has helped the labor department shape the rule. for example based on industry feedback the proposed rule includes streamlined flexible exemptions that accommodate the common types of existing compensation practices. under one of these exemptions advisors can sign a best interest contract with their clients. the idea is pretty simple. firms can set their own compensation practices as long as they acknowledge they are fidicfid

fiduciaries. disclose any conflicts that may prevent them from doing so. firms will be held accountable if they break that account. this new approach, this is a new approach. they're already providing good advice and putting their best interest first. as you all know the rule is now out for public comment. atop of the feedback we've received oaf the past five years we'll have a total of more than four months for additional public comment any advisor acting in the best interest should support this rule making

and work with us to get it right. unfortunately, for some specific interest the only good rule on conflicts of interest would be no rule at all. that's not going to happen. i ask you to continue to be a constructive part of the process providing input to help us finalize the rule in a way that best accomplishes our goals. for every american who works hard and saves responsibly.

the conflict of interest rule is an important step forward in ensuring we have an economy that works for everyone. everyone who works hard and plays by the rules the get ahead. that's central to middle class economics and central to who we are as a country. i want to thank bill for hosting us today and thank all after you for helping to get this rule right. thank you. [ applause ] >> thank you. it's my great pleasure to introduce the moderator of our panel of champions and critics of the proposed regulation. we're honored to have floyd

norris moderate this panel. he spent 26 years at the new york times writing two columns a week going forward. if you have questions for the panelist jot them down on cards provided by kelly and carolyn over here. kelly's wac there. you can submit questions at twitter or e-mail.

>> i was assistant business ed tor. itor. >> i'm i'm going to introduce the members of the panel in a moment. i want to point out something that's struck me before we start. we've never been quite sure in this country whether we want to treat financial sales men the same way we treat most salesman. a car salesman can get in trouble if he lies about the car he's selling you and tells you it was not in an accident and it was if he rolls back the odometer. if he sells you a car you should not buy because you can't afford the payments really or because a different car would much better serve your needs, the salesman is not held responsible for your bad judgment, you are.

presumably in the days that we just heard about when most of us had defined benefit plans the companies offering the plans were sophisticated or new enough to hire somebody who was to help them figure it out. we're going to hear about the extra cost. we're going to hear about whether if the new rules requires getting rid of hidden fees.

we have six people on the panel. all of them are lawyers. i'm going to start to my left. mercer bullard teaches law at the university of mississippi and served on advisory groups for regulators. micah hauptman. he's fourth down. i misread my list. pamela everhart. i suspect many people in this audience have some money with them. i happen to as well. next one is felicia smith.

she's a senior counsel for regulatory affairs at the financial services roundtable. an organization of large financial firms. then mr. hauptman. sameera fazili is in the obama council and involved in writing the rule we were talking about. if some you have have questions about the rule that you would like to ask our previous speaker, you might consider directing it to her. finally, mark smith is partner is a leading lawyer. he represents financial services companies. one of the issues you heard discussed second-degree eded is the

question of whether moving money from 401(k)s that have low fees. is that a problem? should we do anything about it? >> i think we need to understand what motivates an individual to want to make a change in their investment plan. if you're fortunate enough to be in company that offers you a retirement savings investment like a 401(k) plan you have a certain venue of investment opportunities and you may allocate your contributions to those. when you leave the job you may have the opportunity to stay with the plan.

the number and scope of investment alternatives. whether that's appropriate for you or not is something that has to be discussed if you are the financial professional having that conversation with the investor to find out what is motivating them. in some cases they will fotnot want to stay with their current employers plan. maybe they are leaving with a not so happy experience behind them. maybe they already have several former employers and they want to consolidate their accounts and not have four or five different statements coming in from each of the account where is they presently have money. to say automatically moving over into an ira means there are higher fees and higher costs i think requires a lot more nuance because it's not always that case.

both initiated regulatory priorities if terms of their examinations to help refocus the industry on what their obligations are. >> do you think there's a problem? >> i don't think there's a problem on that large scale. i think there are probably some people who are bad actors in this area. they can and should be dealt with and the rules are already there to do so.

>> could i add one comment. i think you're right. there could be some bad a actors. for the most part we're focusing on what's important for the average worker. fidelity has 25 million customers. 17 million in 401(k) plans. wa we have seen often times is that when a worker is going to change their job and we're great because there's lots more jobs available. they have very, very difficult decisions to make and often times a lot of them have no clue as to their options. an example we had a par tis pants who had pant had been in plan for seven years. accumulated around $35,000 in their plan. wanted to change jobs. got a great opportunity with a start-up. the start-up company did not have a 401(k) plan. this participant wanted to figure out what are my options.

in taking this new job they were going to have to incur about $15,000 in moving cost. they called up not necessarily understanding all the options and said i'm terminating. i need about $15,000 to move and i want to cash out. we had a conversation with that customer around all of their various options. at the end of the day we were able to recommend to them that cashing out was not the option. they obviously had an option to stay in their current plan. the new plan did not have the -- the new employer did not have a plan. there was conversations around whether or not a rollover would make sense or a distribution. they were thinking about distribution or cash out would be okay regardless of the income taxes and the penalties. these conversations are very important to have because if

not, i think a lot workers would end up without inadequate security. >> we agree people need know about advice. they need advice in their best interest. currently, we're operating a regime that this is not matter of a few bad actors. this is what's legally permissible under the law. brokers can steer their client into high price, low performing products and retirement savers lose more than $17 billion as a result. this is a systemic problem that needs a problem solution and that's what the department of labor has proposed. >> i don't think it's necessarily the case that you're looking at a regime that is geared toward allowing the

average broker or advisor to abuse their client. if you're look at securities regulators on the broker dealer side, even though it's called a suitability standard the way it's enforced is you still have to put your best -- the best interest of your customer first. if you look on the security side my understanding from talking to people who have been in the room when charging decisions were made against registered investment advisors or registered broker dealers, they use the same measuring stick. it didn't measure to the staff that you were a broker dealer and your official duty was suitability. they measured the decision based on whether you acted in the best interest of that client. the decision to discipline you was made accordingly. if you look, also, at what is required of a registered investment advisor you don't see the word fiduciary in the

statute. years and years ago when it was first adopted and a court interpreted the law it was a duty and what the advisor's act does require is the advisor recommend suitable investments to its customer. you see the world suitable once again usinge ing used in a different context but focusing on what is in the customer's best interest. the only way to know that is the facts and circumstances surrounding that situation. >> a broker dealer is not subject to a suitability obligation. if you're interested in determines whether there are abuses in the industry you only go in the internet and listen to taped conversations gao created that have a number of sellers misrepresenting ira costs and trying to convince people to do rollovers. what i don't follow in this debate and it